The will to go beyond

Annual Report 2010

The will to go beyond

without the fear of getting lost

Contents
Chairman's Message Corporate DNA Milestones Corporate Information Management Team Profile Organizational Structure Six Year Financial Summary Statement of Value Added Notice of the Sixteenth Annual General Meeting Auditors’ Review Report on Compliance with Code of Corporate Governance Statement of Compliance with Code of Corporate Governance Faysal Bank Standalone Financials Directors' Report Auditors' Report to the Members Statement of Financial Position Profit and Loss Account Statement of Comprehensive Income Cash Flow Statement 53 64 66 67 68 69 07 08 10 14 18 22 25 42 44 48 49 Statement of Changes in Equity Notes to the Financial Statements Annexures Shariah Advisors' Report 2010 Faysal Bank Consolidated Financials Directors' Report Auditors' Report to the Members Consolidated Statement of Financial Position Profit and Loss Account Statement of Comprehensive Income Cash Flow Statement Statement of Changes in Equity Notes to the Consolidated Financial Statements Annexures Other Information Pattern of Shareholding Branch Network Form of Proxy 251 255 156 159 160 161 162 163 164 165 238 70 71 141 154

Annual Report 2010 Faysal Bank 04 .05 .

not only as individuals but for the institution as a whole as well. Achieving excellence in all that we do is our vision.T h e Wi l l t o G o B e y o n d The constant strive for per fection is a never-ending jour ney. Challenges along the way are inevitable. one that will continue to have us reach for new horizons and surpass new milestones. Surpassing the realm of the ordinary. our endeavours will not hold substance unless we are united in our attempts. Accomplishment is not an end-result for us. Our foundation is built upon working together in harmony. Building upon what we have already achieved is vital for progress. we must overcome them with the integrity and professionalism that are at the ver y heart of our institution. as we make our way through unfamiliar surroundings. . and means that we are forever moving forward. we must seize the opportunities that come our way and couple it with the will to go beyond. it is an everlasting quest. always striving to push past our limits.

. We now stand at further enhancing the available infrastructure.Going forward. we must capitalise on the various synergies that the acquisition brings to the table. client base and resource pool. product portfolio.

as well as complementing our ambitious growth plans. and we had the ability to acquire RBS Pakistan without placing any burden on our shareholders. product portfolio. and the merged entity took life at the close of business. This is an ideal time to take full advantage of the opportunities available to us to create value in the merged entity. Another part of our five year strategy involved the development of a greater Compliance and Risk Management culture.the Share Purchase Agreement was signed on 16th June. we are on track in the development of these two integral spheres. we completed the merger of RBS Pakistan in a record time of six months . the main objective of which was to grow. Going forward. This acquisition has taken Faysal Bank amongst the key players in Pakistan's banking industry .aggressive growth was necessary in order to compete with bigger financial institutions. We opted for the latter option. As challenges will continue to come our way in 2011. and grow profitably. So far. client base and resource pool. 2010. It was a buyer's market. as market values were low. Chairman of the Board Syed Naseem Ahmad . I have full faith that the future outlook is brighter for all. through extensive investment in human resources and technology in these fields. We now stand at further enhancing the available infrastructure. 2010. we formulated a five year strategy for Faysal Bank. we saw RBS Pakistan as an excellent fit to Faysal Bank's existing businesses. At a time when organisation size was crucial for sustainable profitability. This could be done either organically or by virtue of acquisition. we must capitalise on the various synergies that the acquisition brings to the table.C h a i r m a n ’s M e s s a g e Assalam o Alaikum In 2008. 31st December.

We uphold our customers' rights to demand efficient service. Together. We uphold regulatory obligations. we cooperate. Within functions. we aim for excellence and leadership in our chosen markets. Teamwork: We function as a team. Our Integrity: Our Identity. We appreciate and respect our profession and. Professionalism: We are proficient and ef ficient in all that we do. our bank. above all.09 . investors and regulators in high esteem. we collaborate. We provide banking ser vices knowledgeably and skillfully. We stand for and abide by honesty . Respect: We hold our customers. Threshold Values Values at the heart of our brand Integrity: We are recognised by our reliability.Corporate DNA Our Vision Excellence in all that we do. truth and transparency. timeproven principles of uprightness. Our Professionalism: Our Competence Annual Report 2010 Faysal Bank 08 . We believe in ethical. Our Team: Our Asset. credibility and character. Our Respect: Our Duty. Between functions. honourable.

Our Mission Achieve leadership in providing financial services in chosen markets through innovation. We are proactive and anticipate our customers' needs and wants. in thought. we are a family. We stand for originality. We are dedicated to a culture of improvement and modernisation. Responsiveness We are receptive to the need for change and improvement. in action and in belief. adjust or prepare for new realities. Compassion Our concern for our colleagues. we are a meaningful source of shared humanity. We go the extra mile in legitimate. our communities. acceptable ways. our customers. Innovation We pioneer novel and more efficient ways to deliver solutions. For each other. Our Innovation: Our Strength. Our Passion: Our Worth. To each other. We are excited to provide customers with the best or the best-suited. and our countr y sets us apar t. Differentiator Values Values that set our brand apart Passion We bring zeal and enthusiasm for banking to work. . Our Responsiveness: Our Distinguisher. We act quickly to modify. Our Compassion: Our Gift.

which enabled FBL to offer a wider range of products across all customer segments.including both local & foreign currency exposures with over 70 creditor institutions involved.a mark of confidence in our institutional strength. In keeping with a strategy of growth. out of which 13 are solely dedicated Barkat Islamic Banking branches.000 million to improve its Tier-II capital. consolidation. The two banks seamlessly merged into a combined entity on January 01. This acquisition has expanded FBL's footprint to over 225 branches. a complete rebranding exercise was undertaken all across Pakistan to convert RBS branches into Faysal Bank branches. FBL acted as a Co-Arranger for a PKR 8.150 million Privately Placed Rated TFC issue for a leading school chain for the acquisition of two power projects of PKR 365 MW each. This marked a new chapter in both FBL and RBS Pakistan's history. with combined business assets of PKR 250 billion. Faysal Bank's footprint has now expanded to over 225 branches. controlling interests of RBS Pakistan were transferred from the RBS Group to FBL. FBL acted as Exclusive Advisor & Arranger to a PKR 1. FBL issued 7 Year Privately Placed. A number of milestone transactions were concluded including the largest ever private debt restructuring in Pakistan where FBL acted as restructuring advisor to a denim manufacturer & its fertilizer subsidiary. further strengthening its balance sheet and taking FBL amongst the top ten banks in Pakistan. the Corporate & Investment Banking Group (CIBG) continued its ongoing commitment to improve the quality of its assets. FBL acted as a Lead Advisor and Arranger for the country's only integrated Power Company to arrange PKR equivalent of USD 25 million Syndicated Term Facility to complete the commercial leg of a European ECA facility. The quantum of debt restructured was PKR 43.Milestones The Acquisition In June 2010.800 million for commissioning a BoPET manufacturing plant .11 . Other select milestones include: • FBL jointly arranged a Syndicated Dual Tranche Ship Financing Facility of PKR 10. • • • • Annual Report 2010 Faysal Bank 10 . respectively. The issue was well oversubscribed . FBL acted as Joint Lead Advisor & Arranger for a project finance transaction of PKR 1. with continued focus on improving customer experience. which gave FBL an even stronger presence in the country and supported our growth plans. while continuing to fulfil our corporate responsibilities. This expansion will result in positioning the bank as one of the key players in the financial sector which is undergoing . On October 2010. Rated.the first of its kind in Pakistan. to assuage employee concerns and queries and to keep customers and stakeholders informed about various developments. while of fering a wider range of products across all business segments. Faysal Bank Limited (FBL) entered into a share purchase agreement for RBS Pakistan. extensive lines of communication were developed for internal and external use. • Corporate & Investment Banking During 2010. FBL remains committed to all its stakeholders.000 million . 2011. FBL recognized the strength of the customer franchise which RBS had built and with the investment FBL can provide. enhance the contribution of trade and fee based income to augment and diversify the revenue base and to develop client focused solutions to bring about efficiencies in business. Unsecured & Subordinated TFC's of PKR 3. customers and employees. it shall be better able to realise its full potential.300 million for acquisition of dry cargo vessels by a large shipping company. Throughout the acquisition process.000 million Long Term Infra-structure Finance Facility to a subsidiary of one of the largest companies in the Ports & Logistics sector globally. Enhanced Branch Network and Rebranding Following the merger of RBS with and into Faysal Bank. This complex and unique transaction was achieved without recourse to sovereign guarantees. This acquisition is a significant milestone in FBL's strategy to expand its presence and commitment to Pakistan.

it has improved employee communication. Faysal Bank also secured the 'Second Runner Up Award' in South Asian Federation of Accountants (SAF A) Best Presented Accounts A wards 2009 in the categor y of 'Banking Sector Subject to Prudential Regulations'. with many more tournaments lined up in the future. Launch of the Intranet Portal The official Faysal Bank intranet portal. Corporate Social Responsibility Faysal Bank. organised by the Institute of Char tered Accountants Pakistan (ICAP) and the Institute of Cost and Management Accountants Pakistan. Commitment to Domestic Cricket Faysal Bank entered a 3 year contract with the Pakistan Cricket Board. IT also successfully har nessed 29 branch networks which helped reduce branch downtime resulting in improved service quality. Staying true to the banks vision of innovation.00% on an annual basis. where Faysal Bank matched all employee contributions. The Quaide-Azam Trophy and the Faysal Bank One-Day Cup also successfully concluded. 2010. . IT successfully completed all the merger related activities smoothly and within time. and the Children's Cancer Ward at Jinnah Hospital. Information Technology (IT) department had the most critical role in the merger. a Flood Relief Fund was set up by employees. as well as other useful tools. where employees visited the SOS Children's Villages in Karachi. with an emphasis on Faysal Bank heritage. IT also managed to reduce Operating Cost of the merged entity's IT services by 9. has been a regular contributor to the society and communities within which it operates. which drew in record viewership. FBL took a strategic decision to shift the Small Enterprises Asset Portfolio to Retail Banking. Fur thermore. being a socially responsible corporate entity. This solution was developed taking into account the diverse payment patter ns of clients across dif ferent industries. A country-wide exercise was conducted on 14th August. infor mation. policies & procedures. Solitaire Wealth Management Communications helped in the launch of Priority Banking. was launched. This allowed CB to prioritize services to the medium sized clientele and allowed Retail Banking to service small sized customers through their strong geographic network and further explore their associated deposit potential. Cash Management (CM) developed a new web-based payment solution enabling straight-through processing for corporate clients. Lahore and Islamabad. The Board of Directors have pledged PKR 50 million for the relief and rehabilitation of flood victims. Awards The Annual Repor t 2009 received great acclaim and recognition: Faysal Bank was awarded the 'Runner-Up Position in the Best Corporate Report Awards 2009 in the Banking Sector'. which resulted in a complete merger in the record time of 3 months only . Available to all employees across the countr y. Solitaire was designed to be seen as an extension of the Faysal Bank brand. Faysal Bank donated various electronic appliances as per the need of these institutions. becoming the official sponsors of domestic cricket in Pakistan. This union marks a critical role in the continued promotion and suppor t of domestic cricket. engagement and accessibility. 2010 was a year with challenging conditions with many medium sized businesses gradually coming out of the commodity/energy crisis and general economic slowdown.For Commercial Banking (CB). Information Technology (IT) With the goal of executing seamless integration. Karachi. under the brand name of Solitaire Wealth Management. The product initiatives will be carried for ward to 2011 where new features shall be added on to the platform creating a one-stop solution for our customers. for internal use by employees. This por tal will provide easy access to news. Faysal Bank's sponsorship kicked off with the Faysal Bank T-20 Cup.

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no matter how far it seems The will to go beyond .

Gen. Muhammad Maqbool (Retd) Director Graham Roderick Walker Director Syed Naseem Ahmad Chairman .Corporate Information Board of Directors Shahid Ahmad Director Lt.

Khan President & CEO Farooq Rahmatullah Director Mohamed A.Naved A. Hussain Director Hassan Mohammed Mahmood Hassan Director .R.

17 . Khan Member Syed Naseem Ahmad Member Shahid Ahmad Member Terms of Reference The Board Risk Management Committee (BRMC) assists the Board of Directors in fulfilling its responsibilities in relation to statutory. RNRC reviews HR policies and approves the same. credit repor ting.Hussain Chairman Naved A.Board of Directors Committees Audit Committee (AC) Graham Roderick Walker Chairman Shahid Ahmad Member Hassan Mohammed Mahmood Hassan Member Terms of Reference Formed in compliance with the code Corporate Gover nance. audit fees and other ser vices and similar initiatives. approving policies and procedures. the Audit Committee (AC) aims to enhance the Internal Control environment in Faysal Bank. RNRC meets atleast 2 times in a year for discussing HR related issues and policies. Board Risk Management Committee (BRMC) Mohamed A. Annual Report 2010 Faysal Bank 16 . assessment of regulatory compliance and any other matters that are specifically delegated to the BRMC by the board. risk limits in respect of credit. The AC recommends to Directors the appointment of external auditors and considers questions of resignation or removal of external auditors. Khan Member Shahid Ahmad Member Hassan Mohammed Mahmood Hassan Member Terms of Reference Formed in compliance with the code Corporate Governance to ensure that the HR policies are in line with market dynamics and the business objectives of the bank.R. BRMC performs the duties required by the State Bank of Pakistan such as monitoring the Bank's per formance and overall risk portfolio. Recruitment Nomination and Remuneration Committee (RNRC) Syed Naseem Ahmad Chairman Farooq Rahmatullah Member Naved A. fiduciary and regulatory responsibilities.

f 30/6/10 Resigned w. Walker Mohammed A.f 18/8/10 Leave of Absence Leave of Absence Leave of Absence Resigned w.e. R. Rahman Bucheerei Mohamed A.e.Board Meeting Attendance Attended by / Meeting Date Attended by Syed Naseem Ahmad Naved A. Hussain Shahid Ahmad Tariq Iqbal Khan Hassan Mohammed Mahmood Hassan Co-opted w.f 21/6/10 Leave of Absence 25/01/10 23/02/10 28/04/10 24/08/10 15/10/10 28/10/10 . Khan Farooq Rahmatullah Graham R.e.

IBP Director Karachi Shipyard . Naved Khan has international work experience with General Electric / RCA in USA in the company's Pacific Rim operations and holds an MBA from Butler University. both in local and foreign markets. Before joining Faysal Bank.State Bank of Pakistan. Bashir Shaikh. Suhail Khan. He brings with him over 14 years of diversified experience in financial services. He is currently Chairman of ECH Task Force . measuring and managing the overall credit and enterprise-wide risks of the Bank. Board Member at the Virtual University of Pakistan. He has also been associated in senior management positions with Bank of America. In 2002. Ahmed Kamran. He star ted his banking career with ABN AMRO Pakistan in 1996 as a Corporate Relationship Manager and then led a team in the Credit Por tfolio Management function of the Bank. Khan has over twenty-three years of work experience with twenty years of broad-based and varied Corporate and Investment banking experience. Pakistan as Chief Executive Of ficer with the primary responsibility of strategic management of the Bank's local franchise and its key businesses. Chairman Academic Board .M a n a g e m e n t Te a m NAVED A. Nasir Islam. Board Member on Export Processing Zones Authority. Mehreen Amin. Front row (left to right-): Naved A. Suhail was responsible for UK institutional Sales as an Executive Director with For tis Investments. Syed Majid Ali Back row (left to right): Aarij Ali. Usmani. Prior to joining Faysal Bank Limited. Salman A. Indianapolis. Naved Khan was associated with ABN AMRO Bank. Pakistan. SUHAIL KHAN Chief Risk Officer Suhail is currently the Chief Risk Of ficer / Head of Risk Management Group at Faysal Bank Limited. He is responsible for identifying. Zafar Baig. Khan. Nauman Ansari . Suhail is an MBA in Finance from IBA (Karachi) and a Char tered Financial Analyst (CFA). School of Business. and Engineering works and Board Member of Pakistan Stone Developing Company. Board Member of Rotary Club of Karachi Metropolitan. he moved to ABN AMRO UK where he served as the Global Business Manager for Investment Banking (Energy & Resources sector) and Asset Management franchises. KHAN President & CEO Naved A. USA.

USA. He retur ned to Pakistan in 2000 as Manager Audit and joined ABN Amro Bank as Audit Manager. Acquisitions and Strategic Alliances and International Operations. He has handled Regional Head Punjab positions at both Faysal Bank and at Al Faysal Investment Bank Limited. He is a seasoned banker and started his career at United Bank Ltd. MEHREEN AMIN Head Human Resources Mehreen Amin possesses over 26 years of work experience. Asset and Liability Management. D. Electronic Information & Energy Systems Limited. He has over 18 years of diversified experience. ABN Amro (in Pakistan. He holds an MBA Degree from IBA. NASIR ISLAM Head Compliance Nasir Islam is a qualified Chartered Accountant with over 18 years of multifaceted experience. Prior to joining Faysal Bank Limited. Australia as Manager Commercial Banking System (CBS) Project. American Express. . She is a Member of the Board of Gover nors of Pakistan Society for T raining & Development. SALMAN AHMED USMANI Head Treasury Salman Ahmed Usmani has extensive experience of over 22 years in both the multinational and local banking sector with expertise in Treasury and Risk Management. Searle. G.K..for the Africa Middle East region. She has been professionally associated in senior positions with leading multinationals i. progressively responsible in the accounts and finance disciplines of banking with exposure in IT and HR activities. Nauman Ansari holds a Bachelors of Science degree in business studies from USA. Lahore and has attended Executive Development Program at Johnson Graduate School of Management at Cornell University NY. Bank of AmericaKarachi. Duty Free Shops Limited and National Bank of Pakistan. Faisal Islamic Bank of Bahrain. Ahmed Kamran has a Masters in International Relations from Karachi University and has attended Advanced Management Course at McGill University held at KL. SYED MAJID ALI Chief Financial Officer Syed Majid Ali is a Fellow member of the Institute of Chartered Accountants. SHAIKH Head Special Asset Management Bashir Ahmed Sheikh possesses over 39 years of core banking experience. He brings with him over 15 years of experience in banking industry. France. Technology and Strategy Development. he was associated with MCB Bank Limited as Global T reasurer and Head Investment Banking Group. and in 2004. Strategic Negotiations. Mashreq Bank. Has held senior positions at BCCI (Overseas) Limited. He has a Graduate Degree (Economic and Political Science) from University of Punjab. Malaysia. and United Bank Limited. He has held various senior positions during his career at Faysal Bank. Corporate Restructuring. Taxation and Management Information with exposure in business planning. He has also handled business support projects related to HRD. he was associated with HSBC Pakistan. he was appointed as Countr y Head of Compliance. Prior to joining the bank in 1996. corporate and investment banking experience having been associated with Standard Chartered Bank-Karachi. Shell Pakistan and Reckitt Benckiser where she was the HR Regional Director . U. Aarij has been associated with ANZ Grindlays. His past experience has been with organizations like ANZ Grindlays. M&A and Integration activities. BASHIR A. Middle East and Asia Pacific regions). Corporate and Operations areas.NAUMAN ANSARI Head Corporate & Investment Banking Nauman Ansari has over 15 years of rich credit. Indus Bank Limited and Askari Commercial Bank Limited. AARIJ ALI Head Retail Banking Aarij Ali has over 25 years of banking experience in various capacities within Retail. ZAFAR BAIG Head Strategic Development Zafar Baig is the Head of Strategic Development and Planning for Faysal Bank. His first assignment was as Manager Finance in ANZ Grindlays in Karachi from where he was posted at the ANZ HO in Melbourne. In her last assignment at ABN AMRO/RBS Pakistan Limited she was Head of Human Resources. Prior to joining Faysal Bank. Al Faysal Investment Bank. AHMED KAMRAN Head Services Ahmed Kamran possesses over 30 years of multifaceted experience.e. He has also attended Advanced Management & International Marketing Course at INSEAD. He has been associated with Emirates Bank International as CFO. Bank of America. Strategic Planning. MCB Bank and Saudi Pak Commercial Bank. Karachi. He has been associated with ABN AMRO / RBS since 1996 holding a CFO position and has diversified experience in activities across all Finance functions including Asset & Liability Management. Consumer. Fortis Bank in Middle East and Crescent Commercial Bank in Pakistan. in the areas of IT and HR. KPMG as Par tner and Saudi Pak Commercial Bank as CFO.

Usmani Head Treasury Bashir Shaikh Head Special Asset Management Ahmed Kamran Head Services Suhail Khan Chief Risk Officer Syed Majid Ali Chief Financial Officer Mehreen Amin Head Human Resources Nasir Islam Head Compliance Zafar Baig Head Strategic Development Fouad Farrukh Head Islamic Banking Mian Ejaz Ahmed Company Secretary & Head Legal Shahid Salim Head Internal Audit Management Committee Naved A. Usmani Member Bashir Shaikh Member Ahmed Kamran Member Suhail Khan Member Mehreen Amin Member Nasir Islam Member Zafar Baig Member Asset & Liability Committee Naved A. Khan Chairman Salman A.21 . Khan President & CEO Nauman Ansari Head Corporate & Investment Banking Aarij Ali Head Retail Banking Salman A. Khan Chairman Nasir Islam Member & Secretary Ahmed Kamran Member Suhail Khan Member Syed Majid Ali Member Shahid Salim Member Annual Report 2010 Faysal Bank 20 . Khan Chairman Syed Majid Ali Member & Secretary Nauman Ansari Member Aarij Ali Member Salman A. Usmani Member & Secretary Nauman Ansari Member Aarij Ali Member Syed Majid Ali Member Zafar Baig Member Asad Kerai Member Suhail Khan Member Compliance Committee Naved A.Senior Management and Internal Committees Senior Management Naved A.

Khan Chairman Muhammad Afzal Member & Secretary Suhail Khan Member Ahmed Kamran Member Nasir Islam Member Syed Majid Ali Member Aarij Ali Member Nauman Ansari Member Investment Committee Naved A.IT Steering Committee Naved A. Khan Chairman Suhail Khan Member & Secretary Nauman Ansari Member Aarij Ali Member . Usmani Member Asad Kerai Member Enterprise Risk Management Committee Naved A. Khan Chairman Asad Kerai Member & Secretary Suhail Khan Member Ahmed Kamran Member Nasir Islam Member Aarij Ali Member Syed Majid Ali Member Nauman Ansari Member Salman Usmani Member Country Credit Committee Naved A. Khan Chairman Enamullah Khan Member & Secretary Syed Majid Ali Member Nauman Ansari Member Suhail Khan Member Salman A.

Organizational Structure Board of Directors Company Secretary & Legal President & CEO CEO Secretariat Equity Capital Markets Islamic Banking Product Development & Management Islamic Commercial Treasury Corporate & Investment Banking Retail Banking Branch Banking Consumer Finance Agri / Agri SME E-Banking & Wealth Products Operations Support Service Quality & Marketing Business Banking Corporate Banking Investment Banking Cash Management Shariah Advisor Trade Products Commercial Banking Financial Institution “Blue positions” are Country MT positions Annual Report 2010 Faysal Bank 22 .23 .

Commercial Risk Management Retail. SME & Agri Risk Management Enterprise Risk Management Credit Administration Strategic Development Policies & Procedures Corporate Service Center Risk Policy .Audit Committee Internal Audit Human Resources Services Risk Compliance Information Technology Retail Risk Management Corporate Risk Management Financial Control Unit Centralized Operations General Services Special Assets Mgmt.

to explore new horizons The will to go beyond .

03 63.94 90.02 38.25 4.41 36.431 3.49 3.337 7.64 4.937 12.78 37.593 2.110 70.87 10.15 89.419 267.050 3.56 20.35 39.74 3.839 10.136 636 102.659 1.132 4.069 35 30 2009 2008 2007 2006 2005 % % .19 21.41 52.80 7.816 4.69 1.51 19.345 5.085) (1.56 1.50 6.493 7.64 91.60 15.43 1.470 8.23 7.00 91.553 141.316 6.746 12.961 9.01 22.516 (71.882 2.59 20.53 6.981 2.53 20.058 2.157 (30.34 23.797 1.61 20.95 4.431 3.637) (10.326) 7.492 1. Rs.929 129 10.10 76.073 7.582 226 11.115 15 11.886 5.919 1.346 56.387 (5.60 3.79 58.85 32.643 (125) 195.469 22.93 7.783 (41.412 110.828 1.77 7.37 20.55 1.11 30. Rs.51 1.493 9.512 36.286 1.75 7.659 3.996 87.079 2.89 0.54 83.986 91.316 5.969 3.090 (310) 1.557 12.75 8.840) 10.958 11.70 3.385 5.336 1.260 8.759 105 11.55 30.296 62.277 9.51 0.47 70.338 3.24 35.384 16.34 11.728 6.862 (18. % % % Rs.772 (30.25 60.excluding surplus/ (deficit) on revaluation Book value per share .416 3.710 16.391 622 1.99 17.97 84.848 17.192 4.960) 18.605 2.51 89.400 36.321 11.710 13.81 9.480 12.90 12.149 16.70 0.970 3.161 1.70 11.77 22.53 18.50 93.low Earning Asset to Total Asset Ratio Dividend Yield Ratio (Cash Dividend) Dividend pay out ratio (Cash Dividend) Book value per share .459 1.006 10.112 6.665 34.69 56.281 19.20 29.171 52.net of provision Investments .965 74.463 75 13.385) 4.90 91.57 10.923 4.492 3.737 15.067 9.70 74.45 2.669) (1.882 (2.75 2.33 1.190 20 16.817 50 6.70 18.068 56 73.908 (1.30 0.936) 2.471 (9.747 2.63 9.67 29.549) 29.23 0.63 22.899 4.870 2.57 15.836 23.898 4.76 8.38 1.153 138.60 62.20 38.865 10.201) % % % Times % % % % Times % Times % Rs.525 115.116 44.346 31.32 4.18 0.55 32.42 39.S i x Ye a r s F i n a n c i a l S u m m a r y (Rupees in millions) 2010 OPERATIONAL RESULTS Mark-up / return / interest earned Mark-up / return / interest expensed Fee.51 77.89 17.301 1.173 38.27 19.004 17.873) 17.695 10.26 42.414 14.455 1.675 9.92 2.048 803 12.72 42.482 13.323 33.089 50.75 3. Rs.775 3.777 13.43 22. 9.00 11.047 3.505) (818) 12 2.538 10.777 2. brokerage & FX Income Dividend and Capital gains Total income Provisions / Write-off Operating expenses Operating profit/(loss) before tax and provision Profit/(loss) before taxation Profit/(loss) after taxation Dividends Bonus shares BALANCE SHEET Shareholders’ equity Revaluation Reserves Deposits Borrowings from financial institutions Advances .844 1.766 3.404 8.200 13.361 515 14.447 123.70 11.64 20.net of provision Total assets OTHERS Imports Exports FINANCIAL RATIOS Capital Adequacy ratio Profit before tax ratio Gross spread ratio (Net mark-up income / gross mark-up income) Income / Expense ratio Return on Capital Employed Return on Average Equity (ROE) Return on Average Assets (ROA) Weighted Average Cost of Deposit Current Ratio Advances / Deposit Ratio (Average) Total assets turnover ratio / Fixed assets turnover ratio (Total assets / Fixed assets) Price Earning ratio Earning per share (EPS) Net Assets per share Market value per share Market value per share .95 80.803 2.14 20.707 86.71 51.646 66.315 34.high Market value per share .029 827 1.042 133 10.346 8.43 32.428 11.301 6.813 7.40 3.596 6.00 0.56 1.56 60.65 91.311 3.67 2.324 24.931 14.20 54.17 21.22 3.27 23.62 47.027 83.22 64.438) (5) 1.03 0. commission.07 0.including surplus/ (deficit) on revaluation Number of employees Number of branches CASHFLOWS Operating activities Investing activities Financing activities MATURITY PROFILE Net assets maturity wise: Upto one month Over one month to three months Over three months to six months Over six months to one year Over one year to two years Over two years to three years Over three years to five years Over five years to ten years Over ten years Total net assets (77.262 (5.811 102.13 10. Rs.443 17.636 133.395 68.791) 10.580 6.804 2.70 1.53 30.28 8.188) 8.51 66.083 5.260 2.698 2.34 1.272 25 25 9.84 13.490 4.50 65.407 7.26 75.531 180.148 74. Rs.202 6.664 74.797 (41.727 22.968 1.235 5.499 5.312 677 1.815 43.241 10.089 725 1.762 7.611 7.99 2.370 3.65 86.

000 5.000 4.602 1.413 6.286 2005 2006 2007 2008 2009 2010 Fee.659 1.814 2.535 5.000 0 677 1.000 6.493 3.000 3.099 8.000 2.667 4.000 8. Commission.700 921 720 1.27 .323 2005 2006 2007 2008 2009 2010 Employee Cost Other Cost Annual Report 2010 Faysal Bank 26 .517 6.161 1. Brokage & FX Income Fund Based Income Expense Composition 3.Income and Expense Compositions Income Composition 10.000 9.051 1.075 Rupees in Million 2.260 711 978 1.058 725 1.000 1.000 6.145 Rupees in Million 7.

Ordinated Loans Other Liabilities Borrowing from Financial Institutions Shareholders Equity Revaluation Reserves 24% 44% 20% 12% Share Capital Reserve Arising on Amalgamation Statutory Reserve Unappropiated profit .Statement of Finacial Position Composition Assets 9% 9% 50% 32% Liabilities & Equity 6% 6% 2% 13% Advances Cash and Bank Balances Investments Other Assets 73% Shareholders’ Equity Deposits & Other Accounts Sub .

516 76.000 60.000 0 2005 2006 63.29 .000 120.000 140. Cash Credits & Running Finances Net Investment in Finance Lease Bills Discounted & Purchased Reverse Repo Transactions Local Currency Foreign Currency Annual Report 2010 Faysal Bank 28 .000 20.000 80.000 151.284 98.Advances Gross Advances 160.384 91.206 Rupees in Million 100.000 40.016 88.621 2007 2008 2009 2010 Advances Categorisation 1% 0% 6% Advances by Currency 3% 93% 97% Loans.

Segment Information Advances Chemical and Pharmaceuticals Sugar Construction Agriculture Financial Textile Cement Ready made garments Footwear and leather garments Oil Refining / Marketing Food and Allied Others Automobile and transportation equipment Distribution / Trading Synthetic and Rayon Production and transmission of energy Electronics and electrical appliances Iron and Steel Individuals Paper and Board Transportation. Road and Air Mining and Quarrying Deposit Chemical and Pharmaceuticals Sugar Construction Agriculture Financial Textile Cement Ready made garments Footwear and leather garments Oil Refining / Marketing Food and Allied Individuals Automobile and transportation equipment Distribution / Trading Synthetic and Rayon Telecommunication Others Production and transmission of energy Food Industries Electronics and electrical appliances Iron and Steel Paper and Board Transportation. Road and Air Mining and Quarrying .

000 180.000 120.777 123.000 20.000 60.067 102.655 2009 2010 Deposit Categorisation 32% 43% Deposit by Currency 3% 10% 22% 90% Terms Current & Margin Account Savings Financial Institutions Local Currency Foreign Currency Annual Report 2010 Faysal Bank 30 .000 195.000 100.31 .000 160.000 0 2005 2006 2007 2008 74.414 102.000 40.000 80.Deposits Deposits 200.737 74.315 Rupees in Million 140.

000 0 2005 2006 2007 2008 2009 2010 31.000 50.000 80.525 36.000 86.000 60.000 40.419 Rupees in Million 70.153 56.000 30.000 20000 10.412 22.553 24.531 Break up of Investments 8% 13% 79% Government Securities Shares / Other Units TFCs / Bonds .Investments Investments 90.

50 1.11 4.63 60 55 50 45 40 35 30 25 20 15 10 5 0 21 16 10 16 54 Maturity Profile Percentage 14 11 14 8 1 10 6 4 8 1 1 4 Assets Liabilites Annual Report 2010 Faysal Bank 32 .64 1.00 2.20 3.EPS and Maturity Profile Earnings Per Share 4.50 3.85 In Rupees 3.53 1.00 0.50 2.33 .00 3.00 1.50 0 2005 2006 2007 2008 2009 2010 1.50 4.

95 160.387 14.51 15.2009 ) 74.058 9.10 60.000 100.Stock Price FBL PRICE VS KSE INDEX ( 2005 .53 11.59 20 10 0 20.557 50 40 5.022 60 9.000 80.076 65.50 10.000 60.000 120.000 80 70 12.000 140.000 40.865 30 17.000 0 2005 2006 2007 2008 FBL Price 2009 2010 KESC Index FBL Share Price Movement 2010 vs 2009 20 18 16 Rupees 14 12 10 0 Year 2010 Year 2009 .

091 4.803 16.816 9.965 74.120 16.018 56.208 2.655 999 6.783 5.407 9.595 13.482 10.219 34.986 123.743 24.518 6.156 4.537 13.518 1.483 6.783 1.840 5.295 267.772 5.928 877 2.264 138.777 1.153 83.237 3.260 Annual Report 2010 Faysal Bank 34 .790 1.017 10.567 1.788 1.038 250.872 3.924 101.296 74.516 14.Horizontal Analysis Balance Sheet 2010 2009 2008 2007 2006 2005 Rupees in Million ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets .525 74.911 8.707 8.111 6.811 16.345 5.531 91.883 4.027 102.414 14 1.664 13.337 7.net Other liabilities 3.966 180.133 4.022 14.000 4 2.728 86.280 4.996 102.050 10.067 1.697 2.000 8 2.336 1.346 2.334 110.951 125.726 2.35 .647 3.260 REPRESENTED BY Share capital (including propsed shares to be issued) Reserves Unappropriated profit Surplus on revaluation of assets 7.136 636 10.276 7.643 (125) 16.608 22.512 2.469 2.080 1.538 115.951 16.204 141.553 87.427 509 15.977 168.030 1.708 7.282 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities .296 3.673 13.215 11.149 14.797 3.447 12.684 2.515 2.429 5.470 10.346 2.465 34.419 133.636 195.321 8.net Other assets 17.726 5.082 12.046 10.239 1.642 127.355 1.516 1.156 4.504 96.412 62.691 6.324 1.861 36.772 2.078 31.865 8.296 3.470 6.797 1.737 24 1.315 4.242 6.268 3.193 15.

Horizontal Analysis 2010 vs 2009 2009 vs 2008 2008 vs 2007 Variance % 2007 vs 2006 2006 vs 2005 2005 vs 2004 107 1.025 (100) 53 46 213 292 107 48 (6) (42) 425 56 9 5 100 52 31 30 (76) (60) 15 (4) 5 48 (2) (5) 29 54 40 17 12 43 22 8 41 (57) (8) 19 30 (34) 5 33 (43) 143 98 23 49 58 40 120 (1) 58 360 87 49 29 (5) 169 20 (0) (100) (100) 5 32 19 (36) 30 1 (50) (8) (4) 2 (33) (47) (33) 37 100 (43) 46 17 23 17 279 (2) (0) (42) 45 69 6 (3) 32 80 32 33 664 53 41 40 20 83 61 47 (109) 29 15 6 16 12 128 19 6 (29) (2) (89) (33) 25 16 (18) 13 25 17 15 22 (5) 13 (24) (3) 26 11 77 30 55 40 .

880) 100 1.817 3.Current .general Provision for diminution in the value of investments Bad debts written off directly Net mark-up / interest income after provisions Non mark-up / interest income Fee.589 1.221 314 1.799 1.728 6.969 689 (923) 1.429 2 1. commission and brokerage income Dividend income Income from dealing in foreign currencies Gain / (Loss) on sale of securities Unrealized (loss) on revaluation of investments classified as held for trading Other income Total non mark-up / interest income Non mark-up / interest expenses Administrative expenses Other provisions Other charges Total non mark-up / interest expenses Extraordinary / unusual items Profit before taxation Taxation .400 1.258 97 61 3.968 4.416 1.37 .20 Annual Report 2010 Faysal Bank 36 .816 2.958 11.644 62 68 6.796 156 100 426 682 1.202 3.919 5.797 75 207 2.64 (3) 79 2.698 2.Rupees 19.769 1.899 3.698 282 (48) 192 426 2.053 2.611 7.070 4.312 3.870 3.441 5.301 1.212 3.870 383 93 577 1.949 11.455 4.017 (19) 28 (319) (310) 3.338 3.966 (27) 252 2.net (Reversal)/ Provision for consumer loans .791 16.311 1.284 (6) 33 4.026 1.272 3.639 6.064 5.Prior years .431 3.114 1.514 2.073 517 105 622 3.990 13.301 1.710 13.310 5.249 121 330 582 777 95 609 68 609 4.63 (46) 81 2.796 1.141 335 519 1.11 448 2.047 2.336 1.823 (3.190 1.152 9.Horizontal Analysis Profit and Loss Account 2010 2009 2008 2007 2006 2005 Rupees in Million Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income (Reversal)/ Provision against nonperforming loans and advances .53 3 44 3.133 899 3.85 1 2.012 7.207 347 (134) 743 1.902 1.774 827 827 239 192 (794) (363) 1.Deferred Profit after taxation Basic/ Diluted earnings per share .157 2.601 6.544 (105) 608 2.969 3.079 2.191 2.340 885 668 400 825 814 1.089 3.800 6 10 2.201 1.752 5.813 5.116 604 1.612 4.906 (90) 287 99 2.404 8.866 33 1.459 4.

011) (85) 8 8 (200) 80 (33) (5) 16 1.433 3 22 8 31 (106) (46) 26 (28) (28) 642 2.Horizontal Analysis 2010 vs 2009 2009 vs 2008 2008 vs 2007 Variance % 2007 vs 2006 2006 vs 2005 2005 vs 2004 16 16 16 27 42 1 15 13 19 19 22 14 53 84 20 130 196 85 (3) 233 14 100 1 28 27 (74) (59) 7 (4) (14) (240) 194 (2) 40 248 (29) 100 234 (31) (2.550 33 (2) (2) (44) (110) (49) 17 (8) (8) (100) (80) 13 62 26 100 26 80 80 33 120 217 98 75 (30) .517 510 21 (33) (33) (45) (308) 122 60 (51) (51) (90) 25 (4) 50 100 (70) 48 (30) (30) (26) (152) (67) (60) (19) (19) 44.133) 106 57 (36) (36) (79) (93) (80) (463) (1) (1) 1.723 (1.700 33 7 31 1.821) 275 (100) (301) (10) (137) (61) 100 (352) 121 29 (50) 30 62 9 (45) 15 (716) 10 (1) 11 (112) 23 (2) 160 238 4 61 27 (46) 47 11 (41) 6 (248) 652 43 35 55 (1.

865 8.419 133.951 16.067 1.346 2.977 168.737 24 1.664 13.296 3.136 636 10.840 5.728 86.691 6.515 2.324 1.282 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities .655 999 6.777 1.726 2.296 3.412 62.050 10.268 3.net Other assets 17.111 6.Ve r t i c a l A n a l y s i s Balance Sheet 2010 2009 2008 2007 2006 2005 Rupees in Million ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets .022 14.414 14 1.708 7.797 1.046 10.215 11.673 13.038 250.772 2.783 1.280 4.697 2.504 96.525 74.951 125.643 (125) 16.726 5.986 123.120 16.239 1.608 22.net Other liabilities 3.027 102.427 509 15.337 7.000 4 2.429 5.512 2.204 141.260 Annual Report 2010 Faysal Bank 38 .000 8 2.336 1.469 2.017 10.470 10.538 115.788 1.783 5.816 9.803 16.39 .483 6.407 9.355 1.264 138.647 3.924 101.030 1.321 8.345 5.018 56.237 3.537 13.242 6.872 3.684 2.334 110.315 4.636 195.465 34.707 8.996 102.911 8.743 24.642 127.295 267.965 74.518 6.482 10.208 2.219 34.078 31.156 4.928 877 2.518 1.811 16.553 87.276 7.567 1.531 91.470 6.133 4.861 36.346 2.260 REPRESENTED BY Share capital (Including proposed share to be issued Reserves Unappropriated profit Surplus on revaluation of assets 7.772 5.080 1.149 14.193 15.296 74.153 83.156 4.516 14.966 180.082 12.091 4.595 13.797 3.447 12.516 1.883 4.790 1.

Ve r t i c a l A n a l y s i s 2010 vs 2009 2009 vs 2008 2008 vs 2007 2007 vs 2006 Composition % 2006 vs 2005 2005 vs 2004 7 2 32 50 3 2 4 100 5 0 8 31 51 2 1 3 100 6 1 2 26 60 2 2 100 5 3 5 22 62 2 2 100 6 2 4 20 64 2 1 100 6 2 10 22 57 2 2 100 1 13 73 2 5 94 6 1 19 68 1 4 93 7 1 9 74 1 0 2 5 92 8 2 7 72 1 0 2 5 89 11 4 13 64 0 2 5 88 12 1 14 68 0 1 3 87 13 3 3 1 6 (0) 6 3 2 1 6 1 7 4 3 1 7 0 8 4 3 1 7 4 11 4 3 2 8 4 12 3 2 2 7 6 13 .

906 (90) 287 99 2.544 (105) 608 2.644 62 68 6.899 3.601 6.774 827 827 239 192 (794) (363) 1.459 4.338 3.073 517 105 622 3.157 2.311 1.301 1.441 5.817 582 777 95 609 1 2.272 604 1.152 9.880) 100 1.639 6.797 75 207 2.990 13.866 33 1.116 3 44 3.698 282 (48) 192 426 2.949 11.612 4.589 1.455 4.958 11.799 1.079 2.207 347 (134) (3) 79 2.41 .400 1.212 3.791 16.201 814 1.431 3.902 1.752 5.249 121 330 448 2.141 335 519 1.966 (27) 252 2.general Provision for diminution in the value of investments Bad debts written off directly Net mark-up / interest income after provisions Non mark-up / interest income Fee.416 1.190 885 668 400 825 (46) 81 2.258 97 61 3.017 (19) 28 (319) (310) 3.796 156 100 426 682 1.698 2.816 2.312 3.769 1.191 2.047 2.710 13.514 2.823 (3.870 383 93 577 1.221 314 1.429 2 1.Prior years .404 8.611 7. commission and brokerage income Dividend income Income from dealing in foreign currencies Gain / (Loss) on sale of securities Unrealized (loss) on revaluation of investments classified as held for trading Other income Total non mark-up / interest income Non mark-up / interest expenses Administrative expenses Other provisions Other charges Total non mark-up / interest expenses Extraordinary / unusual items Profit before taxation Taxation .Ve r t i c a l A n a l y s i s Profit and Loss Account 2010 2009 2008 2007 2006 2005 Rupees in Million Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income (Reversal)/ Provision against non-performing loans and advances .919 5.301 1.064 5.202 3.Current .870 3.969 689 (923) 1.net (Reversal)/ Provision for consumer loans .968 4.089 3.133 899 3.070 Annual Report 2010 Faysal Bank 40 .336 1.053 2.114 743 1.728 6.026 1.310 5.340 68 609 4.284 (6) 33 4.800 6 10 2.969 3.Deferred Profit after taxation 19.813 5.796 1.012 7.

Ve r t i c a l A n a l y s i s 2010 vs 2009 2009 vs 2008 2008 vs 2007 2007 vs 2006 Composition % 2006 vs 2005 2005 vs 2004 100 71 29 100 71 29 100 63 37 100 64 36 100 63 37 100 52 48 10 (0) 1 1 11 18 12 (0) 1 13 17 12 (1) 5 15 22 15 1 2 18 18 5 1 6 31 (0) 0 (5) (5) 53 6 2 3 7 0 3 20 39 34 0 0 34 4 4 1 1 (4) (2) 6 5 4 2 5 (0) 0 17 33 25 (0) 0 25 8 8 7 17 (23) 1 7 6 9 3 (1) (0) 1 17 39 24 1 0 25 13 13 1 1 3 5 8 6 11 3 10 0 0 30 47 24 0 0 24 23 23 2 (0) 2 4 20 6 13 1 3 5 28 59 19 0 20 40 40 4 1 6 11 29 9 12 1 10 0 33 85 23 0 23 63 63 11 (15) 18 14 48 .

542 15.392 180.973.914.142 16.257.579.008.164 67.454 2.43 .579.182 (27.756 121.321.674.945.057 2.846.159 15.885 Income from dealing in foreign currencie 518.277.211 89.833 98.974 Administrative expenses Value Added Distributed as follows: To Employees As remuneration To Government As income tax To Depositors As profit on investments To Finanacial Institutions As profit on borrowings To Society As donations To Shareholders As dividends / bonus Retained in Business As reserves and retained profits 3.479 100.310.682.618 Gain on sale of investments etc.896. '000 14.625 13.546.967 23.278 7. Administrative expenses Dividend income To Employees To Shareholders To Govermment To Depositors To Finanacial Institutions To Society Retained in Business Annual Report 2010 Faysal Bank 42 .156.net of provisions Fee.257.107 15.853) 17.067 58.033 21.538 17.441 171.321.477 859.018.713 Income 2010 -20% Distribution 2010 7% 0% 0% -2% 17% 11% 3% 2% 6% 98% 18% 60% Mark-up / return / unterest eamed .200.525 9.245 20.342 9.420 23.470 57.218.636 Fee. commission and brokerage income 1.051. 2.928 42.414.334.275) 10.950 % 96 6 4 3 6 (15) 100 3.085 1.671. commission and brokerage income Income from dealing in foreign currencies Gain on sale of investments etc.236.414.384.953.150 23.463.802 Dividend income 334.440 151.273 % 98 6 2 3 11 (20) 100 2009 Rs.409 87.508.Statement of Value Added 2010 Rs.765.436 (363.823 262.182 17 (2) 60 18 0 7 (0) 100 2.304.992 885.181 9.520.206.431 2.009.net of provisions 17.392 90.321.197.646.742.124 667.140.182 Public Sector 2010 2009 Advances Investments Placements / Lendings 9.950 Private Sector 2010 2009 Rupees '000 13 1 61 17 0 8 100 2010 Total 2009 141.436 1.846.186.076.289 3.926 400.792 17. '000 Mark-up / return / interest earned .

even if there is no road The will to go beyond .

:“ Resolved that subject to all regulatory approvals. Muhammad Maqbool (Retd) 3. To receive and adopt Annual Audited Accounts (Stand-alone and Consolidated). Gen. A. To transact the following business: ORDINARY BUSINESS: 1. Hassan Mohammed Mahmood Hassan Lt. 6. at Jinnah Auditorium. Shahid Ahmad Mr. The Board of Directors has fixed the number of Directors to be e lected at this meeting to be Seven (07) in ter ms of Resolution by Circulation dated Februar y 10. Walker Mr. 5. Karachi. offer themselves for re-appointment. 1984 and Memorandum and Articles of Association. 2011 in accordance with the provisions of the Companies Ordinance. Farooq Rahmatullah Mr. Chartered Accountants. The names of retiring Directors are as under: 1. 6. 2. To consider and approve 20% interim Bonus shares approved by the Board of Directors for the third quarter ended September 30. Moulvi Tamizuddin Khan Road. 5. 3. To confirm the minutes of the Extra-Ordinary General Meeting held on November 10. 1) the President & CEO and/ or 2) the Company Secretary and Head of Legal and / or 3) Chief Financial Officer of the Bank be and are hereby singly or jointly authorized to take all necessar y actions and do all acts. Institute of Bankers of Pakistan. FURTHER RESOLVED that for the purpose of giving effect to this Special Resolution. Annual Report 2010 Faysal Bank 44 . R.N o t i c e o f t h e S i x t e e n th Annual General Meeting Notice is hereby given that the 16th Annual General Meeting of Faysal Bank Limited (“FBL”) will be held on April 28. 7. 2010 together with the Directors' and Auditors' Reports thereon. The retiring Directors shall be eligible to of fer themselves for re-election in accordance with applicable Regulations. 2011. be and is hereby approved”. 4. 2010.F.m.0 billion in funds of Faysal Asset Management Limited (FAML) and pass the following Special Resolution as required by Section 208 of the Companies Ordinance 1984 with or without modifications. 2011 at 9:00 a. 2. deeds and things in the matter . Syed Naseem Ahmad Mr. 2010 issued to the Shareholders on December 22.Hussain Mr. Graham. The present Auditors. 4. being eligible. Strategic Investment of FBL of up to PKR 1.. an associated company of FBL. Mohamed A. 2010 now placed for Post Facto approval by the Shareholders. To consider and approve FBL's strategic Investment of up to PKR 1.0 billion in the funds of Faysal Asset Management Limited. To appoint External Auditors for the ensuing financial year 2011 at a mutually agreed rate of remuneration.45 .R. Any other business with the permission of the Chair. SPECIAL BUSINESS: 7. Statement of Compliance with Code of Corporate Governance of FBL for the year ended December 31. To elect seven (07) Directors of FBL for a period of three years commencing from April 10. Ferguson & Co.

Non Executive and Independent Directors of the Bank for attending Board meetings and meetings of the Board committees for the year ended December 31. he/she must enclose an attested copy of his/her CNIC or passport. Transfer received at the Registrar and Share Transfer Agent of the Bank. 4. House of Habib Building (Siddiqsons Tower). In case of proxy. Karachi75350. 9. 3 Jinnah Co-operative Housing Society. To approve disposal of fractional shares created out of the issuance of 20% Interim Bonus shares by the Bank for the third quarter ended September 30. 2010 and to pass the following resolution as an ordinary Resolution: “Resolved that the remuneration paid to the Chair an. 2011 to April 28.8. This instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed or a notarially cer tified copy of the power or authority shall be deposited at the office of M/s.D. be donated to a Charitable Trust “W Faisal”.) Limited.the Registrar and Share Transfer Agent of the bank not later than 48 hours before the time of holding the meeting. House of Habib Building (Siddiqsons Tower). by the close of business on April 21. the Comp any Secretary be and is hereby authorized to consolidate each Fractional entitlement and sell it in the stock market and the proceeds of sale (less expenses) upon aqf realization. 2011 (both days inclusive). and must be duly stamped. Non Executive and Independent Directors of the Bank for attending m Board meetings and meetings of the Board Committees as disclosed in note 39 of the Audited Financial Statements of the Bank for the year ended December 31. To approve the remuneration paid to the Chair man. Noble Computer Services (Pvt. whose registration details are available in the Share Book Details Reports shall be required to produce their respective original Computerized National Identity Card (CNIC) or original passport at the time of attending the Annual General Meeting to facilitate identification. Representative(s) of corporate member(s) should bring usual documents required for such purpose. No. be and is hereby approved.” By the order of the Board Mian Ejaz Ahmad Company Secretary & Head of Legal Karachi dated: April 7. Mezzanine Floor. Noble Computer Services (Pvt. 3 Jinnah Co-operative Housing Society. signed and witnessed. . Members are required to timely notify any change in their address to Bank's Registrar/Share Transfer Agent M/s. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint another member as a proxy to attend and vote on his/her behalf. Main Shahrah-e-Faisal. save that a corporation being a member may appoint as it proxy of officer of such corporation whether a member of the company or not. 2011 Notes: 1. and the CDC Account No. 3. 2011 will be treated in time.) Limited. the Company Secretary of the Bank be and is hereby authorized to take all necessar y actions which may deem fit to realize the fractional sum in respective manner . For the purpose of giving effect of the foregoing. 2010 and fractional shares created as a result of merger/amalgamation of The Royal Bank of Scotland Limited with and into FBL on Post facto basis by passing the following resolutions as ordinary resolutions with or without amendments:- RESOLVED THAT :In the event of any member holding fraction of a share. The CDC Account Holders and Sub-account Holders. Mezzanine Floor. Such Account Holders and Sub-Account Holders should also bring/know their res pective participation I. Karachi-75350 2. The Share Transfer Books of the Bank shall remain closed from April 22. Main Shahrah-e-Faisal. 2010.

30. Earnings per share of Investee Company in last three years.47 . Name of investee company or associated undertaking: Faysal Asset Management Limited 2. I) To consider and approve FBL's strategic Investment of up to PKR 1.48 Source of funds from where shares will be purchased: Shares will be purchased form FBL's own sources.88 (31 December 2010) 5. Period for which investment will be made: Long term equity investment 9. Break-up value of shares intended to be purchased on the basis of last published financial statements: Break-up value of shares of Rs.0 billion is sought from shareholders. FBL from time to time makes investment in funds launched by its associate company FAML.Statement of Material Facts under Section 160(1)(b) of the Companies Ordinance 1984 relating to said Special Business: This statement sets out the material facts concerning the following Special Business to be transacted at the Annual General Meeting of Shareholders of FBL to be held on April 28.20 30-06-2010 1. 1. 2000 appears herein below: 1.0 Billion 3. The Statement of material facts as required under the SRO 865(I)/2000 dated December 6. amount and extent of investment: Strategic Investment of up to PKR 1. 30-06-2009 2. Annual Report 2010 Faysal Bank 46 .0 billion in funds of Faysal Asset Management Limited (FAML) with or without modifications. Average market price of the shares intended to be purchased during Preceding six months in case of listed companies: Non Listed Company 4. Nature. 2011. Purpose of investment: Strategic investment for launching of new fund(s) in the capital market. Price at which shares will be purchased: At Book value 6. For this purpose approval of Rs.06-2008 2. Such investments also include investments as seed money in the new funds launched by FAML. 17.35 7. 8.

The remuneration requires approval (which in permissible on post facto basis) of the shareholders in Annual General Meeti ng in ter ms of requirements of the Prudential Regulations issued by the State Bank of Pakistan. be donated to a Charitable trust “W Faisal. Benefits likely to accrue to FBL and the shareholders from the proposed investment: The proposed investment will potentially result in an increase in profits of the Investee Company. 2010 The remuneration paid to non executive/independent directors was approved by the Board of Directors in ter ms of Article 104 of the Articles of Association of the Bank. 11. it will result in the higher profit for FBL which ultimately benefits to the shareholders. .10. hence. 2010 and fractional shares created as a result of merger/amalgamation of The Royal Bank of Scotland Limited with and into FBL on Post facto basis Any member holding fraction of a share. The non-executive/independent directors are interested in the payment of remuneration and the remaining members of the Board have no interest in the matter. Interest of directors and their relatives in the investee company: There is no personal interest of the Directors. II) To approve disposal of fractional shares created out of the issuance of 20% Interim Bonus shares by the Bank for the third quarter ended September 30. the Company Secretary be and is hereby authorized to consolidated each Fractional entitlement and sale in the stock market and the proceeds of sale (less expenses) when realized. Non Executive and Independent Directors of the Bank for attending Board meetings and meetings of the Board committees for the year ended December 31. aqf III) To approve the remuneration paid to the Chair man.

Based on our review. Chartered Accountants Dated: April 6. 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. The responsibility for compliance with the Code of Corporate Governance is that of the board of directors of the Bank. 2010. Further. 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. Our responsibility is to review. whether the Statement of Compliance reflects the status of the Bank's compliance with the provisions of the Code of Corporate Gover nance and report if it does not. with the best practices contained in the Code of Corporate Gover nance as applicable to the Bank for the year ended December 31.Review Report to the Members on 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 Faysal Bank Limited ('the Bank') to comply with Regulation G-1 of the Prudential Regulations for Corporate / Commercial Banking issued by the State Bank of Pakistan. A review is limited primarily to inquiries of the Bank personnel and review of various documents prepared by the Bank to comply with the Code. 35 of Chapter XI contained in the Listing Regulations issued by the Karachi Stock Exchange. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length prices or not. 2011 Karachi Annual Report 2010 Faysal Bank 48 . in all material respects. As part of our audit of the financial statements. nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Bank's compliance. to the extent where such compliance can be objectively verified.49 . We are only required and have ensured compliance of the above requirement to the extent of approval of related party transactions by the board of directors and placement of such transactions before the audit committee. Sub-Regulation (xiii a) of Listing Regulation No. the Lahore Stock Exchange and the Islamabad Stock Exchange where the Bank is listed. related par ty transactions distinguishing between transactions carried out on terms equivalent to those that prevail in ar m's length transactions and transactions which are not executed at arms' length price recording proper justification for using such alternate pricing mechanism. all such transactions are also required to be separately placed before the audit committee. Regulation No. 35 as notified by all the three stock exchanges on which the Bank is listed requires the Bank to place before the board of directors for their consideration and approval.

The Bank has adopted a 'Statement of Ethics and Business Practices'. Faysal Bank Limited encourages representation of independent Directors and Directors representing minority interests on its Board of Directors as applicable under the Code. All resident Directors of the Bank are registered taxpayers and to the best of our knowledge none of them has defaulted in payment of any loan to a banking company . A complete record of particulars of significant policies alongwith the dates on which they were approved or amended has been maintained. 5. The Board has adopted a vision/mission statement.P . Casual vacancies occurring during the year were filled-in with approval of State Bank of Pakistan. 7. 9. The Meetings of the Board were presided over by the Chair man and. The Board of Directors of Faysal Bank Limited has adopted and applied the principles contained in the Code of Corporate Governance in the following manner: 1.) for the purpose of establishing a framework of good corporate governance with best practices for the listed companies.E. W ritten notice of the Board meetings. 2. 4. The Board approves appointment of CFO and Company Secretar y while Head of Internal Audit is appointed by Audit Committee including their remuneration and terms and conditions of employment. including appointment and determination of remuneration and terms and conditions of employment of President & CEO are approved by the Board and/ or its authorized committees. 3. which has been signed by the Directors and Employees of the Bank.C. 8. . overall corporate strategy and significant policies for the Bank. by a Director elected by the Board for this purpose. The Board held Six (06) Meetings in the year 2010. At present the Board includes 6 Independent/Non-Executive Directors and two Executive Directors (including President & CEO). along with agenda and working papers. The said Code has also been adopted by SBP and stock exchanges. in his absence. 6. The Directors of Faysal Bank Limited are professionally qualified and experienced persons and are well aware of their duties and responsibilities. All powers of the Board have been duly exercised and decisions on material transaction. were circulated before the Meetings. a Development Financial Institution or a Non Banking Financial Institution or being a member of a stock exchange has been declared as a defaulter by that stock exchange. The Minutes of the Meetings were recorded and circulated to all concerned. 11. including Faysal Bank Limited. The Directors have confirmed that none of them is serving as a Director in more than ten listed companies. The Directors' Report for this year has been prepared in compliance with the requirements of Code and fully describes the salient matters required to be disclosed. 10.S tat e m e n t o f C o m p l i a n c e w i t h t h e C o d e o f C o r p o r at e G o v e r n a n c e Name of Company: Faysal Bank Limited Year Ended: 31 December 2010 This statement is being presented to comply with the provisions of Code of Corporate Governance issued by Securities and Exchange Commission of Pakistan (S.

The Bank has complied with all applicable corporate and financia l repor ting requirements of the Code. The Board has for med an Audit Committee. All financial statements of the Bank were duly endorsed by the President & CEO and CFO before approval of the Board. The Audit Committee members also met with External Auditors of the Bank without CFO and Head of Internal Audit and with Head of Internal Audit and other members of the Internal Audit function as required under the provisions of Code of Corporate Governance. The statutory auditors of the Bank have confirmed that i) ii) iii) they have been given a satisfactor y rating under the quality control review programme of the Institute of Chartered Accountants of Pakistan. 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. 22. The Audit Committee held four meetings. 14. 2011 Naved A. It comprises of three members. 15. 18. Karachi Dated: March 29. Khan President & CEO Annual Report 2010 Faysal Bank 50 . 20. all of whom are Independent/nonExecutive directors excluding the Chairman of the Committee. 21. 17. The Directors. they or any of the par tners of the fir m.51 . one in every quarter prior to approval of quarterly and final results of the Bank as required by the Code. The related par ty transactions have been placed before the Audit Committee and approved by the Board of Directors. 19. The Internal Audit resources are being reviewed and enhanced regularly to meet continuous business growth. CEO and executives do not hold any interest in the shares of the Bank other than that disclosed in the pattern of shareholding. We confirm that all other material principles contained in the Code have been complied with. The ter ms of reference of Audit Committee have been framed and approved by the Board and have been advised to the committee for compliance. The staff of Internal Audit Department are suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the Bank and they are involved in the internal audit function on a full time basis. The Bank's Inter nal Audit Manual is approved by the Board of Directors. The Board has set up an Inter nal Audit function. 13. their spouses and minor children do not hold shares of Faysal Bank Limited or its associates.12. and the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Char tered Accountants of Pakistan. 16.

finding shelter in the shadows The will to go beyond .

.

Processes and Financial Perspective. This expectation is based on both cost push variables (fur ther likely increases in the price of energy due to withdrawal of subsidies. This is a significant milestone for the bank as it complements our growth plans.7%. People. This deterioration is attributable in part to the sharp increase in expenditure in the aftermath of the floods and partly due to considerable slippages witnessed on the revenue side especially in the third quarter of CY '10 (both in tax and non tax). Commercial and Islamic businesses spread across the country. Bank's Performance: During the year.75 billion in CY '10 vs USD 12. Hence it is imperative that we increase our tax to GDP ratio which at current level of 10% is unsustainable. upward adjustments in electricity tariffs and the monetization of the fiscal deficit. the bank has taken a huge stride in achieving the objectives set for th for the bank in the five year strategy developed in 2008.7% in FY '10. September and November '10 taking the policy rate to 14%. your bank acquired controlling interest of Pakistan operations of the Royal Bank of Scotland (RBS Pakistan). 2010. During FY '11 fiscal deficit is expected 6-7% of GDP against an earlier estimate of 4. Going for ward the SBP expects CPI in FY '11 to range between 15%-16% against 11. . we have successfully merged the two banks ef fective December 31. Subsequently the economic outlook deteriorated sharply and it is unlikely that the real Gross Domestic Product (GDP) growth would exceed 2-3 percent during Fiscal Year (FY) '11 against an earlier estimate of 4 1/2 percent. 2010. This was on the back of higher than expected export earnings (due to increased international commodity prices of cotton and rice) and stellar growth in remittances which in CY'10 were recorded at USD 9.063 billion during last year . We are pleased to inform you that within a shor t period of two and a half months from the date of acquisition. RBS Pakistan comprises of Retail. 2010 On behalf of the Board of Directors.85%) due to: supply shor tages of perishable food commodities (in the aftermath of the floods).425 billion for CY '09. 260 billion with a network of 226 branches. The bank has also accomplished other significant milestones during the year in the five pillars of strategy i. Consumer Price Index (CPI) inflation surged upward sharply during Calendar Year (CY) '10 (wherein it was recorded at 13. Risk Management. This disruption subsequently spread to a number of agro-based industries. The current account displayed significant improvement during CY '10 especially in the second half wherein it posted a surplus of USD 26 million which is a rarity in our economic histor y.667 billion up from USD 8. this exacerbates the fragility of our resource base with no real financial buffer to insulate the economy from shocks other than diver ting funds away from development spending (which in itself is counterproductive).D i r e c t o r s ’ R e p o rt for the year ended December 31.e. We will ensure that we optimize on the opportunities arising from this acquisition by providing necessary suppor t. This in turn prompted the State Bank of Pakistan (SBP) shift its monetary bias towards tightening and the discount rate was raised in three tranches of 50 bps each in July . pass through of rising international commodity prices. Potentially this could be a great opportunity for political forces to come together and reach a much needed consensus to undertake otherwise politically difficult reforms such as broadening the revenue base by adding under taxed or untaxed segments into the tax regime and rationalizing subsidies. imposition of Refor med General Sales Tax (RGST) and higher inter national commodity prices) and demand pull factors which emanate from the money creation in excess of economic activity. The fiscal position of the Government of Pakistan (GOP) subsequently worsened due to the sharp increase in expenditure. I am pleased to present the Sixteenth Annual Report of Faysal Bank Limited along with the audited financial statements and the Auditor's Report thereon for the year ended December 31. Furthermore partial monetization of fiscal deficit increased inflationary pressures. In the absence of ample alternate resources. compounding the spike in food prices. Higher resource mobilization is necessary for macroeconomic stability as it will give the GOP fiscal space for much needed development spending commensurate with needs of a growing economy . Economic Update Pakistan's economy encountered a natural disaster of massive proportions in the form of devastating floods which began in July 2010 and damaged one-fourth of the country's agricultural heartland destroying crops and live stock. Customer Franchise. investment and resources to the businesses. This enabled the GOP to maintain a relatively stable currency and accumulate foreign exchange reserves of USD 16. as part of our strategy of profitable growth. The combined entity has an asset base of over Rs. making FBL one of the top ten banks in Pakistan. Corporate. power plants and hampered manufacturing activity. RBS Pakistan provides a strong customer franchise and an excellent fit to Faysal Bank's existing businesses. With the acquisition of RBS Pakistan.

FBL acted as joint lead advisor & arranger for a PKR 1.2 billion privately placed rated TFC issue for a leading school chain for the acquisition of two power projects of 365 MW each. Cash Management (CM) developed a new web-based payment solution enabling straight-through processing for corporate clients.8 billion for commissioning a BoPET manufacturing plant . 2010 was a year with challenging conditions with many medium sized businesses gradually coming out of the commodity/energy crisis and general economic slowdown.55 . enhancing the contribution of trade and fee based income to augment and diversify the revenue base and developing client focused solutions to bring about efficiencies in business. Staying true to the banks vision of innovation.including both local & foreign currency exposures with over 70 creditor institutions involved. FBL acted as a co-arranger for a PKR 8 billion long term infra-structure finance facility to a subsidiar y of one of the largest companies in the Por ts & Logistics sector globally. A number of milestone transactions were concluded during 2010 some of which are noted below: • FBL acted as restructuring advisor to the largest ever debt restructuring in Pakistan. FBL acted as structuring advisor to reprofile a dual tier back to back SBLC of USD 70 million extended between the first rental power project & the national power producer. • For Commercial Banking (CB) . A strategic decision was taken to shift the Small Enterprises Asset Portfolio to Retail Banking. The Bancassurance initiative launched during the previous year has been a phenomenal success.3 billion for acquisition of dry cargo vessels by a large shipping company. they have been carried forward to 2011 where new features shall be added on to the platfor m creating a one-stop solution for our customers. Going forward the thrust of Commercial Banking's strategy will be to focus on capturing trade and float volumes through providing endto-end solutions to our commercial banking clients. FBL acted as joint lead advisor & arranger for a project finance transaction of PKR 1. • • • • Treasury 2010 was a land mark year for FBL Treasury in which we increased our market dominance and enhanced our customer franchise. This allowed CB to prioritize services to the medium sized clientele and allowed Retail Banking to ser vice small sized customers through their strong geographic network and further explore their associated deposit potential. On the branch banking side the focus was on mobilization of core individual deposits. During the year more than 22. FBL's own participation was PKR 2 billion in this complex and unique transaction accomplished without recourse to sovereign guarantees. The quantum of debt restructured was PKR 43 billion .the first of its kind in Pakistan. a small ticket. ATM network was expanded to 118 ATMs. the first of which was our successful application for the Primary Dealer license wherein we were the only new entrant during 2010 among a host of • Annual Report 2010 Faysal Bank 54 . underwriting & IPO.An agreement was signed in early 2010 with NJI Life for Family Assurance Plan. life insurance solution sold over the counter through our branch distribution network. FBL structured & arranged PKR 2.4 billion IPO of a Urea & SSP producer achieving financial close for the Pre IPO. • • Retail Banking During the year priority banking services were introduced under the name of Solitaire Wealth Management with the inauguration of Solitaire Wealth Management Priority Centre at Main Branch in April '10. FBL acted as a joint lead arranger for a syndicated dual tranche ship financing facility of PKR 10. Commodity and supply chain financing will be key new initiatives. The aim is to provide unique. tailored solutions for Priority clients while delivering excellence in ser vice and customer experience. FBL's strategy was to consolidate and focus on building a launching platfor m for 2011.Customer Franchise Corporate and Investment Banking During the year.2 billion syndicated financing facility under SBP's Microfinance Credit Guarantee facility to the largest rural support program in the country. The expansion included addition of 3 more Cash Deposit Machines. This solution was developed taking into account diverse payment patterns of clients across different industries. The product initiatives have not stopped in 2010. FBL acted as a lead advisor and arranger for the country's only integrated power company to arrange PKR equivalent of USD 25 million syndicated ter m facility. the Corporate & Investment Banking Group (CIBG) remained committed to improving the quality of its assets.000 deposit customers were added. FBL acted as exclusive advisor & arranger to a PKR 1. In ter ms of pre-set goals we achieved some major milestones.

utilizing the expanded branch network to increase the Barkat Islamic Banking franchise. A Vintage Recognition Programme was launched to acknowledge customers who have been maintaining a loyal relationship with Faysal Bank for ten years or longer. To reinforce good ser vice practices. This status was awarded to us by the SBP on the back of our secondary market trading capability and customer volume. corporates as well as high net worth individuals. This has gone a long way to establish us as price maker in the interbank market hence spurring trading activity and established our customer franchise in the fixed income market. and Alternate fixed income investments. As a joint lead arranger. This award recognises the best branch in the country every quarter. This will go a long way in our goal to achieve the Authorized Derivative Dealers license in order to further enhance our product suite and enable us to give balance sheet solutions to our ever growing customer base. on the basis of deliver y against ser vice standards. This is a comprehensive front and back end solution with electronic movement of transactions. External Mystery Shopping was conducted regularly to obtain a fair and unbiased view of customer experience in the branches. PKR 1. During 2011 the bank plans to aggressively engage in • People As a consequence of the acquisition of RBS. accomplished major planned initiatives during 2010 and the business in pursuit of realizing its potential expanded manifolds on all grounds. Subsequent to acquisition of RBS. Regular monitoring and reporting of these metrics led to improvement in turnaround times and other indicators of service quality. insurance companies. Barkat Kamil Business Account a hybrid of current & savings product was introduced for business community . to help focus on areas of improvement. The results of this exercise were used in feedback and training sessions. The resulting indices will serve as benchmarks to improve upon in the time ahead. Some of the major activities successfully completed to date are: • • • • • • Grade Harmonization Reorganization and structural change Development of a common remuneration structure Harmonisation of policies Training Culture . asset management companies. Both deals were done in synergy with Corporate Banking Group. This gesture of gratitude for maintaining longstanding relationships with the bank was much appreciated by the customers. the `Ser vice Branch of the Quar ter' award was introduced. Barkat Islamic Banking has enhanced its distribution channel by adding four new fullfledged Islamic banking branches. The total branch network post RBS acquisition reached 13 covering 6 cities nationwide. Treasury embarked upon a home grown automation process which was implemented in January '10 with the installation of Smart Treasury System (STS). FBL Treasury successfully created infrastructure and HR capability to manage their derivative portfolio and capture new transactions. The scope of STS during the year was fur ther enhanced to include modules for Equity. The HR functions contribution in ensuring a smooth carefully planned transition was imperative for the success of this project. • • • Islamic Banking Barkat Islamic Banking launched during the previous year. Our clients now include. real time position capturing and MIS generation. pension funds. Islamic Banking par ticipated in two major financing transactions.4 billion was taken in a Murabaha transaction for a provincial gover nment. In order to have the necessary infrastructure for sustainable growth commensurate with our vision. customer experience and process turnaround times. • Service Indicators for key customer service processes were put in place. It has led to keen competition among branches to outdo each other in customer service. Product development was a major focus throughout the year and specialized products were introduced. Service Quality Service Quality took several initiatives during the year to bring into focus the importance of excellence in Customer Service.contenders. besides a host of other benefits aimed at being able to chur n greater volumes more efficiently and prudently. we now have a broad based talent pool and our immediate challenge is to work on several people avenues such as change management and culture whilst ensuring business as usual. Measures of Customer Satisfaction and Loyalty were introduced and a comprehensive branch-wise customer survey was conducted to gauge these relationship indicators. FBL Barkat Islamic Banking participated with PKR 943 million contribution in Islamic finance facility for a government owned entity in the energy sector. Barkat Monthly Income Certificates for individuals targeting middle and old age clientele was launched during the year to supplement term deposit campaign. provident funds.

facilitates the risk takers via communicating the board and senior management's overarching views on what constitutes acceptable risk at all levels within the business. As such. operational and liquidity risks at an enterprise level. mitigate and approve risk on a portfolio level. the Credit Risk Management framework also evolved to address business segment specific risk through specialized Risk Management functions under the umbrella of Risk Management Group (RMG). In the wake of changing macroeconomic environment and expansion of Bank's risk exposure through the acquisition of RBS. resources and other control measures were aligned. Commercial Risk Management. exposures and structural framework etc. seeks to reduce volatility in operating performance under adverse market conditions. in line with the overall risk appetite of the Bank. Market Risk Management has been strengthened through implementation of advanced monitoring and measurement tools such as Early Warning Indicators (EWI) and Valueat-Risk (VaR) models. control and manage credit risk on an independent as well as integrated basis. Other initiatives such as job evaluation. The Framework is based on the key elements of inclusive (wide-ranging) risk governance concepts. policies. The Risk Policy Unit as par t of the Risk Management Group (RMG). Retail Risk Management operates on a program lending approach to manage. the merger is expected to bring new challenges for Risk Management arena. Risk & Control Self Assessment framework has been implemented bank-wide to measure and monitor operational risk levels and mitigate operational losses. relies on a body of corporate policies and effective processes and ensures that risk-taking activities are aligned with the client's needs. maintaining regulatory capital requirements of the Bank through an effective reporting mechanism. regulator y & other Control repor ts as well as deliberations of various management / board committees. audit. The Risk Management Group (RMG) and its sub units spearheaded the integration process and were instrumental in bringing about a smooth transition and streamlining of Risk Policies and Standard Operating Procedures (SOPs). The scope of the merger instituted an extended involvement of Risk Management in overall achievement of integration objectives. focus on Learning & Development and boost greater client interactions through HR Business Par tners. Credit Risk Management has been divided into Corporate Risk Management. credit underwriting. in consonance with the Board's strategic direction & risk appetite. All tasks related to RBS technology systems that were required to be disengaged and replaced with FBL systems Annual Report 2010 Faysal Bank 56 . succession planning etc are also in the pipeline. Capital Management monitors. liquidity contingency plans and close monitoring of market conditions. Accordingly . Support Services During the year under review focus of suppor t ser vices function was to integrate and streamline services function of the FBL and RBS to operate as one unit for the customers. and inter nal and exter nal benchmarks. vide clearcut policies & risk thresholds / limits. with policy . Bank's approach to liquidity management requires a surplus of liquid assets. the Risk Management structure. Capital Management area is responsible for the sufficient capitalization of the Bank and its subsidiaries at all times in order to manage the risk associated with business activities. Consequently . salar y sur vey. with the objective of reinforcing the Bank's risk culture through ongoing review of the risk MIS & redressing of compliance. MIS. synergized and structured to respond to these challenges in a proactive manner. plans and reports capital adequacy on a standalone and consolidated basis by taking into account the metrics and requirements of regulators. Risk Management Though a significant milestone for Faysal Bank Limited. While Credit Risk Management involve a customer-based risk assessment under a pre-defined credit approval process. a comprehensive Risk Management Framework has been developed and is gradually being adopted in line with the SBP Risk Management Guidelines. the Bank has implemented comprehensive policies and procedures and a controls framework designed to provide a sound and well-controlled operating environment. A separate Enterprise Risk Management (ERM) function is responsible for managing and controlling market. The Retail Risk Management model has also been revised in line with best market practices. shareholders' expectations and in confor mity with regulator y requirements. collections and recover y functions now par t of the risk framework. and developing advanced credit risk measurement techniques. it reviews & ensures implementation of all approved risk management policies & related procedures. external agency management and verification. to monitor. rating agencies. Limit breaches are reported to senior management on a timely basis and the business is required to take appropriate actions to reduce risk position.57 . A dynamic and well-defined limits structure. The Risk Policy unit has been set up in support of the CRO's holistic risk oversight responsibilities. processes. A comprehensive structure for day-to-day liquidity risk management has been introduced through a revised policy and procedural framework. On Operational Risk front.Moving forward HR further aims to increase use of technology via e-HRMS. to cope with the requirements of the merged entity . and Retail SME and Agri Risk Management. A detailed Contingency Funding Plan provides clear direction and guidelines for ef fective mitigation of liquidity risk. all repor ting into the Chief Risk Officer.

765 million as at December 31. The accounting records have been updated to adjust the difference. Lahore and Islamabad. SAFA is an apex body of South Asian Association for Regional Cooperation (SAARC) and its Best Presented Accounts Awards are held annually to recognize best annual reports from the region evaluated on the basis of excellence in financial reporting. becoming the official sponsors of domestic cricket in Pakistan. This union marks a critical role in the continued promotion and support of domestic cricket.65 million was collected. Faysal Bank's sponsorship kicked of f with the Faysal Bank T-20 Cup. area.on legal ownership transfer date and merger date were carried out smoothly and all for mer RBS branches are operating on new systems smoothly. Keeping in view the scale of the disaster and the reliance of the victims on outside assistance in the long run. Costs rationalization and recovery of NPLs will be other significant areas of focus for 2011. All the operational processes were reviewed and streamlined in common policies & procedures to achieve this objective. Faysal Bank entered a 3 year contract with the Pakistan Cricket Board. The professional quality of the same repor t was also acknowledged by the Joint Committee of the Institute of Chartered Accountants of Pakistan (ICAP) and the Institute of Cost and Management Accountants of Pakistan (ICMAP) which awarded it 2nd prize in the 'Best Corporate Reports Award' in the Financial Sector category. The contributions made by the employees were matched by the bank and an aggregate amount of Rs. The award represents the highest achievement by any Pakistani bank. 2010. The amount contributed todate under this arrangement stands at Rs. The bank provided an additional Rs. with many more tour naments lined up in the future. This MIS provides detailed analysis of deposits with products. Future Outlook The bank after completing its merger with RBS in 2010 has star ted 2011 as a bigger and stronger institution. More savings are expected to come in 2011 and onward. This module is used to identify hiring needs in branches. 50 million over a period of 3-5 years for sponsorship of one academic chair in IBA's Executive MBA program. the bank is better positioned to withstand potential market turbulence. In the General Services the focus was on optimizing cost synergies and as a result significant savings have already been achieved in the merged entity in areas of branch rents. Further a detailed capacity planning module for branch banking was also introduced during the year. and the Children's Cancer Ward at Jinnah Hospital. The results of the exercise highlighted that deferred tax liability was recorded in excess by Rs. which drew in record viewership. In 2011 the focus will be to capitalize on synergies resulting from the merger and increase business volumes through cross selling to the larger customer base of the merged entity . the Board of Directors have pledged PKR 50 million for the relief and rehabilitation of flood victims. Financial Perspective With an objective of providing timely and reliable MIS for decision making a new set of interactive deposit MIS at branch. periods. This has not only improved Turn Around Times (TATs) but has also provided ef fective control over authorization. 10 million to the Institute of Business Administration (IBA) Karachi in accordance with the partnership entered into previous year to provide Rs. region and countr y level was developed. Continuing with the philosophy of automating processes. This easy to use tool provides capability to the users to monitor and manage their performance. Karachi. Faysal Bank donated various electronic appliances as per the need of these institutions. A country-wide exercise was conducted on 14th August. utilization of surplus capacity in branches and regional offices. technology and premises maintenance cost etc. 1. Continuing with the tradition of following Best Practices in the area of financial repor ting Faysal Bank secured 2nd runner up award in South Asian Federation of Accountants (SAFA) Best Presented Accounts A wards 2009 in the category of 'Banking Sector Subject to Prudential Regulations'. Procure to Pay Cycle Module of Oracle Financials was introduced. volumes and rate buckets movements. In the wake of the worst natural disaster in the form of floods the bank and its employees stepped forward and established an account to help the flood af fected people. recording and monitoring of procurement and payment activities. 2009. The Quaid-e-Azam Trophy and the Faysal Bank One-Day Cup also successfully concluded. From the first day after merger uninterrupted customer ser vices is being provided to the customers of the merged entity from all the branches. customer segment. where employees visited the SOS Children's Villages in Karachi. Going for ward this will be used to analyse and control costs. 20 million. During the year the bank conducted an exercise to reconcile deferred tax liability on leased assets appearing in the books of accounts with the related tax payable in future Corporate Social Responsibility (CSR) Faysal Bank. has been a regular contributor to the society and communities within which it operates. being a socially responsible corporate entity. While the political and economic situation of the countr y is expected to remain volatile. .

Accordingly .215 2. 3.029 (1.190 1. the bank was able to maintain its profitability level.66 billion and negative goodwill of Rs.September '10 @ 20% Transfer to statutory reserve Issue of bonus shares .951 1. 1. Despite difficult economic environment. Provisions for non performing loans remained at the last year's level however 2010 provision figures include subjective provision of Rs.f. 1.050 2.December '08 @ 15% Un-appropriated Profit carried forward Earning per share .e.035) 1. 1.250 2.8 billion respectively.1 billion and Rs.Financial Highlights 2010 Operating profit Provision for non performing advances Provision for diminution in value of investments Profit before tax Reversal / (Charge) of Provision for taxation Profit after tax Un-appropriated profit brought forward Amounts recognized directly in equity: Reversal of deferred tax liability Appropriations: Transfer capital market reserve to un-appropriated profit Issue of bonus shares .7% mainly on account of gain on settlement of NIT LOC units. Profit after tax at Rs. 79.190 million was ver y close to the last year's figure of Rs.4 billion over last year. In addition to the above the following items were taken directly to equity : • • Rs. 2.492 (1. 8 million.200 million. Operating expenses increased by Rs.2 billion or 42. Gain on bargain purchase amounting to Rs. 1. Annual Report 2010 Faysal Bank 58 .219) 1. 2010. in million 2009 3.300 (100) 1.250 (240) (795) (1.940) (252) (2. 765 million being reversal of deferred tax liability relating to lease financing.915) (287) (2. 2010.200 1.59 .63 Rs. The remaining 50% increase was mainly in the areas of HR and branch operations.202) 827 363 1. 546 million. The share of net loss after tax included on a line by line basis amounts to Rs.64 billion. the balance sheet includes assets and liabilities transferred from RBS Pakistan amounting to Rs. 801 million or 16% whereas non markup income grew by Rs.218) (391) (1.192) 1.405 765 3.Rupees 3.3 billion which included intangibles of Rs. Net markup income showed a growth of Rs.170 390 (1. December 31.215 1.64 The operations of The Royal Bank of Scotland Limited (RBS Pakistan) were merged with Faysal Bank Limited w . 50% of which relates to FBL's post acquisition share of administrative expenses of RBS. Further profit and loss statement includes FBL's share of post acquisition profit and loss of RBS for two and a half months from October 16. 1. 88.

f. Subsequent to the year end. h. have been followed in preparation of financial statements. Statement of Internal Control: The Management of Faysal Bank Limited is fully responsible for establishing and maintaining adequate internal controls and procedures. Statement under clause xix of the code: The financial statement prepared by the management of the bank present fairly the state of af fairs and the results of its operations. ii. 2010. The value of investment of provident and gratuity funds are Rs.Developing' status has been removed and 'Stable' outlook is assigned to the ratings. A prescribed statement by the management along with the auditor's review report thereon forms part of this Annual Report. the 'Ratings Watch . 228 million respectively as per the unaudited financial statements. The management of the bank fully recognizes this responsibility and appreciates its value and significance.” d. The movement in the directors' shareholding if any is disclosed in the footnote to the pattern of shareholding. Accordingly. 2010: Long-Term Short-Term AA A1+ b. However. The details of Board Meetings held and attended by the directors' for m par t of this Annual Repor t. g.Developing' status and 'Rating Watch' by JCR and P ACRA respectively in view of the acquisition of The Royal Bank of Scotland Limited. e. Summarized key operating and financial data of the last six years is tabulated on the initial pages of this Annual Report. policies and procedures encompassing various functional and administrative areas have been developed and circulated across all pertinent levels of the organization. is outstanding and safety is just below risk free Gover nment of Pakistan shor t-term obligations. Risk . 539 million and Rs. This capacity is not significantly vulnerable to foreseeable events. a. These policies and procedures are approved by the senior management and ratified by the Board of Directors as and when developed.” Definitions of PACRA for the assigned rating are reproduced below: “AA: V high credit quality. It indicates ver y strong capacity for timely payment of financial commitments. “AA” rating denotes a very ery low expectation of credit risk. negative outlook previously assigned to the ratings was removed by both the agencies.Credit Rating: JCR-VIS Credit Rating Company Limited (JCR) and Pakistan Credit Rating Agency Limited (PACRA) have re-affirmed the following entity ratings as on June 30. Appropriate accounting policies have consistently been applied in preparation of the financial statements except for the change as mentioned in note 3. The Bank has implemented the requirements of the Code of Corporate Governance (the Code) relevant to the year ended December 31. k. A1+: High certainty of timely payment. During 2010. j. as applicable to banks in Pakistan. There has been no material depar ture from the best practices of corporate governance as detailed in the listing regulations. The prescribed patter n of shareholding is given as part of this Annual Repor t. Proper books of account of the bank have been maintained. c. The bank's Internal Audit function keeps Corporate Governance: i. the ratings were placed on 'Ratings Watch . is modest but may vary slightly from time to time because of economic conditions. There are no doubts about the bank continuing as a going concern. The system of internal control is sound in design and has been appropriately implemented and monitored. A1+: Obligations supported by the highest capacity for timely repayment.5 to the financial statements and accounting estimates are based on reasonable and prudent judgment. Measures are being considered to further strengthen it. Short term liquidity including inter nal operating factors and/or access to alternative sources of funds. . i. Approved accounting standards. in view of the successful acquisition and merger of the Royal Bank of Scotland. Definitions of JCR-VIS for the assigned ratings are reproduced below: “AA: High credit quality Protection factors are strong.

monitoring compliance with these policies and procedures and regularly apprises the management and also the Board on the same through the Board's Audit Committee. Similarly , financial performance is kept under regular review and the Board is kept updated on the same. Fur ther recognizing it to be an ongoing process, the bank is actively pursuing additional measures towards strengthening internal Controls through adoption of guidelines issued by the SBP on the subject and the COSO framework on a regular basis. For the evaluation of controls a formal mechanism is in place to ensure continuous review of processes and ef fective existence of required controls. The management feels confident that through adoption of these measures, the bank's internal control environment is maintained at a satisfactory level. The Board of Directors endorses the above stated management's evaluation of inter nal controls.

Establishing and maintaining Bank's policy on large credit exposures, ensuring that concentrations of exposure by counterparty, sector or geography do not become excessive in relation to the Bank's capital base and remain within internal and regulatory limits. Maintaining and developing the Bank's risk rating framework and systems, to classify exposures meaningfully and enable focused management of the risks involved, giving and directing credit risk management systems initiatives. Special focus to problem exposures, which are subject to more frequent and intensive review and reporting, in order to accelerate remedial action.

Holding Company:
Ithmaar Bank B.S.C., an Islamic Retail Bank listed in Bahrain and Kuwait is the holding company of Faysal Bank Limited. Dar Al-Maal Al-Islami T rust is the ultimate parent of the bank.

Risk Management Framework:
All activities of Faysal Bank involve the measurement, evaluation, acceptance and management of some degree of risk, or combination of risks. The most impor tant risk categories that the Bank is exposed to are credit, liquidity, market, operational risk in various forms and reputational risk. A well-established risk gover nance and ownership structure ensures oversight of, and accountability for, the effective management of risk at all levels under authority delegated by the Board of Directors. It is the responsibility of all officers of the bank to identify, assess, mitigate and manage risk within the scope of their assigned responsibilities. Personal accountability reinforced by the Bank's governance structure and instilled by training, helps to foster a disciplined and constructive culture of risk management and control. Within Head Office, the Chief Risk Officer's (CRO) function, interalia, provides high-level centralized oversight and management of credit risk. Its responsibilities include: • • Formulating credit policy. Guiding the Bank's business units on the Bank's appetite for, and attitude towards credit risk exposure to specified market sectors, activities and banking products. Management and oversight of exposures to cer tain higher-risk sectors and close monitoring of exposure to others. Undertaking independent review and assessment of risk. Monitoring performance and management of client group portfolios.

Subsidiary Company:
Faysal Bank has one subsidiar y Faysal Management Services (Pvt.) Limited (FMSL) with 60% holding. In 2010 FMSL earned profit before tax of Rs. 12.43 million (2009: Rs.19.9 million), whereas profit after tax amounted to Rs.9.41 million (2009: Rs. 12.9 million), FMSL declared dividends of Rs.13.1 million (2008: Rs. 13.9 million) during the year. During the year the board of directors of FMSL has decided to voluntary wind up the company and they have resolved to initiate proceedings under the Companies Ordinance, 1984 in this regard.

Board Meetings and Attendance:
Details about the number of Board meetings and attendance by directors during the year 2010 have been appended separately as part of corporate information.

Auditors:
The present auditors, Messrs A. F Ferguson & Co. Chartered . Accountants, retire. As per Code of Corporate Governance they are eligible for reappointment. Accordingly, the Board of Directors endorses the recommendation of the Audit Committee for the appointment of Messrs A. F. Ferguson & Co. Chartered Accountants, as the auditors of the bank for the financial year 2011.

• •

Acknowledgement:
I would like to take this oppor tunity to thank on behalf of the Board and Management of the bank the shareholders

Annual Report 2010 Faysal Bank 60 - 61

for the trust they have reposed in the Bank, I am also grateful to the State Bank of Pakistan and Securities and Exchange Commission of Pakistan for their continued support and guidance and the customers for their patronage. I would also like to express sincere appreciation for the employees of the Bank for their dedication and hard work. On behalf of the Board of Directors

President & CEO Naved A. Khan Karachi Dated: March 29, 2011

through twists and turns

The will to go beyond

A u d i t o r s ' R e p o rt t o t h e M e m b e r s
We have audited the annexed statement of financial position of Faysal Bank Limited (the bank) as at December 31, 2010 and the related profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes for ming part thereof (here-in-after referred to as the 'financial statements') for the year then ended, in which are incorporated the un-audited certified returns from the branches, except for twenty one branches, which have been audited by us and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. These financial statements incorporate the balances as at December 31, 2010 and results of operations for the period from October 15, 2010 (acquisition date) to December 31, 2010 of the Royal Bank of Scotland Limited (amalgamated with and into the bank with effect from close of business on December 31, 2010) which have been audited by another fir m of Char tered Accountants, whose report has been furnished to us and our opinion in so far as it relates to the amounts included for the Royal Bank of Scotland Limited is based solely on the report of such other auditors. It is the responsibility of the bank's management to establish a nd maintain a system of inter nal control, and prepare and present the financial statements in conformity with the approved accounting standards and the requirements of the Banking Companies Ordinance, 1962 (L VII of 1962), and the Companies Ordinance, 1984 (XL VII of 1984). Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Inter national Standards on Auditing as applicable in Pakistan. These standards require that we plan and per form the audit to obtain reasonable assurance about whether the financial statements are free of any material misstatement. An audit inclu des examining, on a test basis, evidence suppor ting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion and after due verification, which in the case of loans and advances covered more than sixty percent of the total loans and advances of the bank, we repor t that: (a) in our opinion, proper books of account have been kept by the bank as required by the Companies Ordinance, 1984 (XLVII of 1984), and the retur ns referred to above received from the branches have been found adequate for the purposes of our audit; (b) in our opinion: (i) the statement of financial position and profit and loss account together with the notes thereon have been drawn up in conformity with the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984), and are in agreement with the books of account and are fur ther in accordance with accounting policies consistently applied except for the change as stated in note 3.5 to the financial statements, with which we concur;

(ii) the expenditure incurred during the year was for the purpose of the bank's business; and (iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the bank and the transactions of the bank which have come to our notice have been within the powers of the bank; (c) in our opinion and to the best of our infor mation and according to the explanations given to us the statement of financial position, profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with the approved accounting standards as applicable in Pakistan, and give the infor mation required by the Banking Companies Ordinance, 1962 (L VII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984), in the manner so required and give a true and fair view of the state of the bank's affairs as at December 31, 2010, and its true balance of profit, its comprehensive loss, its cash flows and changes in equity for the year then ended; and

Annual Report 2010 Faysal Bank 64 - 65

Chartered Accountants Engagement Partner: Salman Hussain Dated: April 6. 2010. 1980 (XVIII of 1980) was deducted by the bank and deposited in the Central Zakat Fund established under section 7 of that Ordinance. 2009 were audited by another firm of Chartered Accountants who had expressed an unqualified opinion thereon vid e their repor t dated Februar y 23. Other matter The financial statements of the bank for the year ended December 31. 2011 Karachi .(d) in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance.

108) 16.218.164 267.056 1. President & Ceo Director Director Director Annual Report 2010 Faysal Bank 66 .67 .200 6. 2010 Note 2010 Rs ‘000 2009 Rs ‘000 ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Fixed assets Deferred tax assets .787.950.655.803.770 1.320.739 CONTINGENCIES AND COMMITMENTS 25 The annexed notes 1 to 49 and Annexures I to III form an integral part of these financial statements.782.843 16.727.465.911 4.253 7.188 999.865.279.204 4.Faysal Bank Limited Statement of Financial Position As at December 31.549 133.082.595.413 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities .593 12.094 28.153 16.739 22 23 24 7.336.069 168.826 56.770 6.859 34.017.795 15.918 4.766 123.726.688 1.315.202 508.037.017.985.517.451 34.923 8.418.635.346.446.909 86.295.net Other assets 9 10 11 12 13 14 15 16 17.531.395 13.977.878 (125.716 180.924 5.966.517.215.706.427.179 11.146 1.782.net Other liabilities NET ASSETS REPRESENTED BY Share capital Proposed shares to be issued on amalgamation Reserves Unappropriated profit (Deficit) / surplus on revaluation of assets 17 18 19 20 21 3.338 91.674 12.354.030.769 8.001 2.202 10.642.090.617 1.428.904 195.309.406 5.791 250.

012.159 1.329 885.342 1.966.813.63 The annexed notes 1 to 49 and Annexures I to III form an integral part of these financial statements.Current .802 334.Rupees 27 28 13.885 518.989.5 12.926 400.817 67.255 97.2 32 33 33 33 34 1. President & Ceo Director Director Director .300.906.net Reversal of provision for consumer loans .general Provision for diminution in the value of investments .589.4 13.339.492 (3.124 191. 2010 Note 2010 Rs ‘000 19.64 30 31 16.054 827.072 61.501 1.157. commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities Unrealized gain / (loss) on revaluation of investments classified as held for trading Other income Total non mark-up / interest income Non mark-up / interest expenses Administrative expenses Other provisions / (reversals) .601.054 239.204 1.644.591 2.249 4.190.736 (794.380 2009 Rs ‘000 16.723) 252.443 2.674) 80.920 2.275) 1.7 29 1.124 667.460 13.618 1.192 2.201.791.710.414 (26.300.664 827.Prior years .883 2.172 4.671 1.730) 287.338 7.885 4.593) 100.379 (89.815 6.777 68.798.3 13.Faysal Bank Limited Profit and Loss Account For the year ended December 31.net Other charges Total non mark-up / interest expenses Extraordinary / unusual Items Profit before taxation Taxation .823.957.477 824.774.501 1.967 610.718 6.086 (6.880.967.310.875 11.621 (45.990 1.net Bad debts written off directly Net mark-up / interest income after provisions Non mark-up / interest income Fee.611.284.029 4.919.191.135) (363.824 3.065 5.140.200.Deferred Profit after taxation Basic earnings per share .256 5.444) 33.107 Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against non-performing loans and advances .

159 The annexed notes 1 to 49 and Annexures I to III form an integral part of these financial statements.631 (1.701) (381.190.792 1.320) 810.Faysal Bank Limited S tat e m e n t o f C o m p r e h e n s i v e I n c o m e For the year ended December 31.472 2.200.372) (117.737.69 . 2010 2010 Rs ‘000 Profit for the year Components of comprehensive income not reflected in equity (Deficit) / surplus on revaluation of available for sale securities Deferred tax asset / (liability) on revaluation of available for sale securities Total comprehensive income for the year 166.571.176 (1.877) 927.010. President & Ceo Director Director Director Annual Report 2010 Faysal Bank 68 .329 2009 Rs ‘000 1.

Faysal Bank Limited C a s h F l o w S tat e m e n t For the year ended December 31.150.906.813 (3.709) 21.957) 4.723) 252.077 3.250.878.201 (782.024 3.023.054 (334.926) 632.926 9.865) (581.192 (6.425) (1.713.066) 21.447 CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Less: dividend income Adjustments for: Depreciation Amortisation Workers Welfare Fund Provision against non-performing loans and advances .266.414 (26.588.885.840 2.388 1.468.383 (4.371) 36.348) (24.087.447 35 23.903 (2.410.777.479) 9.979 9.444) 45.612) (400) (4.058 650.599 (11.187 11.856.004.998 311.050.631 157.255 61.373 701.201 21. President & Ceo Director Director Director .251 16.575 513.788) 22 2.302) 5.426 2009 Rs ‘000 1.001 (542.004 13.839 96.773.815) 17.126 20.730) 287.017 645.898 297. 2010 Note 2010 Rs ‘000 827.590) (9.218.841) (583.945.861.003.515.674 (5.746 42.795.438.838 1.net Reversal of provision for consumer loans .935.673.300.966.492.803 97.870) 175.967) (28.123) (7.359 645 3.787) 6.862.809 (2.030.169 660.987) (71.998 (23.214.743.658 16.885) 492.777 (67.general Provision for diminution in value of investments Provision / (reversal) for other assets Unrealised (gain) / loss on revaluation of investments classified as held for trading Net profit on sale of property and equipment Fixed assets written off Bad debts written off directly Finance charges on leased assets (Increase) / decrease in operating assets Lendings to financial institutions Held for trading securities Advances Other assets (excluding advance taxation) Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities (excluding current taxation) Income tax paid Net cash generated from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investment in available for sale securities Net investment in held to maturity securities Net cash inflow on acquisition Dividends received Investment in operating fixed assets Proceeds realised on disposal of operating fixed assets Net cash generated from / (used in) investing activities CASH FLOW FROM FINANCING ACTIVITIES Payments of sub-ordinated loan Payments of lease obligations Dividends paid Net cash generated from / (used in) financing 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 The annexed notes 1 to 49 and Annexures I to III form an integral part of these financial statements.879 1.721.395 132.843 (18.005) 8.214.920 3.517.624) (1.836.489 3.473 (935.881.365) 2.385.125) (340) (4.501 (667.639.379 (89.

354.218.183 - - 1.952 - - - 3.911 - - - - 240.056 1.183 (1.466) - 6.5.135.466 (794.309.299.843 16.033 3. 2010 5.076 4.033) 1.159 (240.400.296.642.190.(1.542 4. 2009 Transfer to reserve for issue of bonus shares Bonus shares issued Profit after tax for the year ended December 31.146 23.218.033 1.542 3. 2010 Transfer to statutory reserve (note 23.4) Profit after tax for the year ended December 31.542) (389.146 - - .542 4.052 389.688 1.183) 389.71 .980.952 - 23.198 1.218.466) 1.514 - 240.146 - 3.030.5) Gain on bargain purchase (notes 8.183) (389.076) - .031.7.183) - - - - .146 - - - - - - - - 1.952 - - 23.076 (391.590 - 391.542) (1.Faysal Bank Limited S tat e m e n t o f C h a n g e s i n E q u i t y For the year ended December 31.2 and 8.519 10.878 The annexed notes 1 to 49 and Annexures I to III form an integral part of these financial statements.640.952 391.1 Balance as at January 1.950.253 - 3.094 28.299.218.466 (794.299.640.231 12.2) Reserve arising on acquisition and amalgamation of non-controlling interest in the RBS (note 8.200.note 15.030.911 - - - - 3.514 - - 765. President & Ceo Director Director Director Annual Report 2010 Faysal Bank 70 .101.090.146 6.481 - 389.445 794.1. 2009 Reversal of deferred tax liability on leased assets relating to prior years .3.179 11.159 - 389.218.987 (794.023 794.299. 2010 Transfer to reserve for issue of bonus shares Bonus shares issued Transfer to unappropriated profit Proposed shares to be issued on amalgamation (note 8. 2010 Reserves Capital Share capital Proposed shares to be issued on amalgamation Reserve for issue of bonus shares NonReserve Distributable arising on Capital amalgamaReserve tion gain on bargain purchase Statutory reserve Revenue Capital market reserve Total Unappropriated profit Total Rupees ‘000 Balance as at January 1.329 1.215.466) - - 3.336.542 - - 28.056 1.200.183 .253 - - - - 23.329 7.1) Balance as at December 31.190.052 765.049.790. 2009 Transfer to statutory reserve Balance as at December 31.253 - - - - - - 28.218.090.466 - 794.

4 Based on the financial statements of the Bank for the year ended December 31. 1. the requirements of the Companies Ordinance. The detailed disclosure relating to this transaction is given in note 8 to these financial statements. 3. BASIS OF PRESENTATION In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes. 1. Inter branch transactions and balances have been eliminated. the Pakistan Credit Rating Agency Limited (PACRA) and JCR .3 In accordance with BSD Circular No. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance. and operates 2 sub-branches (2009: Nil).Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.. 2010 the CAR of the Bank was 9. 2011 has granted post facto exemption to the Bank in meeting the CAR till March 31. 1962 or the directives issued by the SECP and SBP differ with the requirements of IFRS. 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 mark-up thereon. Lahore and Islamabad Stock Exchanges. ST-02. 1984. 1962 or the requirements of the said directives issued by the SECP and SBP shall prevail. The Bank has a network of 226 branches (2009: 133).C. and Islamic Financial Accounting Standards (IFAS) issued by the Institute of Char tered Accountants of Pakistan and notified by the Securities and Exchange Commission of Pakistan (SECP). Dar Al-Maal Al-Islami Trust (DMI). 1994 as a public limited company under the Companies Ordinance. 1962. 1. 1984. 2010. Banking Companies Ordinance. In accordance with the directives issued by the SBP. as at December 31. Wherever the requirements of the Companies Ordinance. a Bahrain based retail bank. 1984. 30 dated November 25.94% of the shareholding of the Bank.05%. However. the statement of financial position and profit and loss account of islamic banking branches are disclosed in Annexure III to these financial statements.S. The DMI grou p owns and operates an inter national network of islamic banks and investment and insurance companies. the Banking Companies Ordinance. Ithmaar Bank B. Shahra-e-Faisal.S. The Bank is engaged in Corporate. 1984. BSD/BAI-3/615/4097/2010 dated April 5. . 2010. is the parent company of the Bank. 2011.95% and is therefore lower than the prescribed requirement by 0. holding. 2009. 2. including 13 Islamic banking branches (2009: 6).1 These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. the Bank is required to maintain a Capital Adequacy Ratio (CAR) of a tleast 10% at December 31.2 During the year the Bank had acquired the Pakistan operations of the Royal Bank of Scotland of Pakistan (RBS). the State Bank of Pakistan (SBP) has issued various circulars fr om time to time. The SBP vide its letter No. or the directives issued by the SECP and the State Bank of Pakistan (SBP). Karachi. The financial results of the Islamic banking branches have been consolidated in these financial statements for repor ting purposes only. Consequent to this acquisition and under the scheme of amalgamation approved by the shareholders and the State Bank of Pakistan.1 Faysal Bank Limited (the Bank) was incorporated in Pakistan on October 3. Permissible forms of trade related modes of financing include purchase of goods by banks from their customers and immediate resale to them at appropriate markup in price on deferred payment basis. Commercial and Consumer banking activities. The Registered Office of the Bank is located at Faysal House. the operations of the RBS have been amalgamated and vested into the Bank with ef fect from the close of business on December 31. (ultimate parent of the Bank) is the holding company of Ithmaar Bank B. STATEMENT OF COMPLIANCE 3. the requirements of the Companies Ordinance. STATUS AND NATURE OF BUSINESS 1.C. 1984. directly and indirectly through subsidiaries 66.VIS Credit Rating Company Limited have deter mined the Bank's long-term rating as 'AA' and the short term rating as 'A1+'. 2010 1. Its shares are listed on Karachi. the Banking Companies Ordinance. 2008 issued by the State Bank of Pakistan (SBP).

2006.5 Changes in accounting policies and disclosures . For example. 4 dated February 17. 2008. However. The management of the Bank believes that as the SBP has defined the segment categorisation in the above mentioned circular. separate 'Profit and Loss Account' and 'Statement of Comprehensive Income' shall be presented. Detailed disclosures in respect of the business combination are presented in note 8 to these financial statements. The revised standard was applied to the acquisition of the controlling interest in Royal Bank of Scotland (RBS) on October 15. which previously would have been included in the consideration for the business combination.2 The SBP has deferred the applicability of International Accounting Standard (IAS) 39. Acquisition-related costs of Rs 38.73 .957 million has been charged to the profit and loss account.4 SBP vide its BSD Circular No. 3. 'Financial Instruments: Recognition and Measurement' and International Accounting Standard (IAS) 40. 2010 3. it should continue to be shown seperately in the statement of financial position below equity Accordingly. 2010 has clarified that for the purpose of preparation of financial statements in accordance with International Accounting Standard . Accordingly.957 million have been recognised in the profit and loss account. 38.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. 'Investment Property' for Banking Companies through BSD Circular Letter No. 07 dated April 20. s s All acquisition-related costs are to be expensed as per the revised IFRS 3. ‘Interests in joint ventures’. the SECP has deferred the applicability of International Financial Reporting Standard (IFRS) 7. Annual Report 2010 Faysal Bank 72 . Accordingly. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’ proportionate share of the acquiree’ net assets. . the requirements of these standards have not been considered in the preparation of these financial statements.O. IAS 28. the SBP requirements prevail over the requirements specified in IFRS 8. 2002 till further instructions.R. 411(I)/2008 dated April 28. 2006. are ef fective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after July 1. the Surplus / (Deficit) on Revaluation of Available for sale (AFS) Securities only.Standards. two statement approach shall be adopted i. 'Operating Segments' is ef fective for the Bank's accounting period beginning on or after Januar y 1. However. However. and IAS 31. with contingent payments classified as debt subsequently remeasured through the statement of comprehensive income. 2009. 'Revised Forms of Annual Financial Statements'. and Balance Sheet shall be renamed as 'Statement of Financial Position'.3 IFRS 8. As required under IFRS 3 the acquisition cost amounting to Rs. and consequential amendments to IAS 27. segment information disclosed in these financial statements is based on the requirements laid down by SBP. investments have been classified and valued in accordance with the requirements prescribed by the SBP through various circulars.e. The revised standard continues to apply the acquisition method to business combinations but with some significant changes compared with IFRS 3. 2010. ' Financial Instruments: Disclosures' through its notification S. All banking companies in Pakistan are required to prepare their annual financial statements in line with the format prescribed under BSD Circular No. 'Presentation of Financial Statements'. The Bank has chosen to recognise the non-controlling interest at the prop ortionate share of net assets of RBS of Rs 52 million rather than at its fair value. 3. all payments to purchase a business are recorded at fair value at the acquisition date. ‘Investments in associates’. Further. the bargain purchase gain has been credited to equity. Furthermore. 2009. the above requirements have been adopted in the preparation of these financial statements. 3. consequent to the decision of the SBP . effective from the accounting year ended December 31. may be included in the 'Statement of Comprehensive Income'. The application of revised IFRS 3 would have had no impact on profit and loss account of the Bank if the bargain purchase gain would have also been recognised in the profit and loss account as required under IFRS 3. ‘Consolidated and separate financial statements’. 10 dated August 26. ‘Business combinations’.1 (Revised). interpretations and amendments to published approved accounting standards that are effective in the current year i That have an impact on the Bank's financial statements (a) IFRS 3 (revised).

and IFRIC 11. (c) IAS 27 (revised). (f) IFRS 5 (amendment). the amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time. The amendment requires that only expenditures that result in a recognised asset in the statement of financial position can be classified as investing activities. The management of the Bank believes that presently this standard does not have any impact on these financial statements. 2009 requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. (g) IFRIC 17. ‘IFRS 2 – Group and treasury share transactions’. particularly paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of estimation uncer tainty) of IAS 1. 2010 ii That do not have an impact on the Bank's financial statements The following new and amended standards and interpretations have been published and are mandatory for the first time for the financial year beginning January 1. as defined by paragraph 5 of IFRS 8. any remaining interest in the entity is re-measured to fair value. ‘ Operating segments’ (that is. 2010: (a) IAS 1 (amendment). the amendments expand on the guidance in IFRIC 11 to address the classification of group arrangements that were not covered by that interpretation. The standard also specifies the accounting when control is lost. By amending the definition of current liability. 'Statement of Cash Flows' (effective from January 1. before the aggregation of segments with similar economic characteristics). This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. The management of the Bank believes that presently this amendment does not have any impact on the Bank's financial statements. ‘Group cash-settled share-based payment tra nsactions’. The amendment clarifies that the largest cash-generating unit (or group of units) to which goodwill should be allocated for the purposes of impairment testing is an operating segment. and a gain or loss is recognised in the profit and loss account. The amendment clarifies that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non current. ‘Consolidated and Separate Financial Statements’ applicable for financial years beginning on or after July 1. 2010. (e) IFRS 2 (amendments). . The amendment provides clarification that IFRS 5 specifies the disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations. 2010). The standard also requires that the profit or loss and each component of other comprehensive income is attributable to the equity holders of the parent entity and to the minority interest (referred to as non-controlling interest) even if this results in the non-controlling interests having a deficit balance. The management of the Bank believes that presently this amendment does not have any impact on the Bank's financial statements. It also clarifies that the general requirements of IAS 1 still apply . ‘Presentation of financial statements’. (b) IAS 7 (amendment). ‘Distribution of non-cash assets to owners’ (effective on or after July 1. ‘Impair ment of assets’. In addition to incorporating IFRIC 8. ‘Measurement of non-current assets (or dispo sal groups) classified as held-for-sale’ (effective on or after January 1. The management of the Bank believes that presently this interpretation does not have any impact on the Bank's financial statements. The amendment is not expected to have any impact on the Bank's financial statements. 2009). The amendment is not expected to have any impact on the Bank's financial statements. effective form January 1. 2010. effective January 1. 2010). The resultant impacts of the revised standard have been considered and applied on the consolidated financial statements of the Bank and its subsidiary.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. ‘Scope of IFRS 2’. (d) IAS 36 (amendment). IFRS 5 has also been amended to require that assets are classified as held for distribution only when they are available for distribution in their present condition and the distribution is highly probable.

In some cases. 2011. not disclosed in these financial statements. During the current year the Bank has adopted the IF AS 1. (i) The Securities and Exchange Commission of Pakistan (SECP) has notified the Islamic Financial Accounting Standard (IFAS) 1 . - (j) 3. IAS 24 (revised) is mandatory for periods beginning on or after January 1. 2011). 2010 but are considered not to be relevant or to have any significant ef fect on the Bank's operations and are. gas or water).6 New and amended standards and interpretations that are not yet effective and have not been early adopted The following standards and amendments to existing standards and interpretations have been published and are mandatory for the Bank's accounting period beginning on or after January 1. The amendment clarifies that an entity will present an analysis of other comprehensive income for each component of equity. 2010 (h) IFRIC 18. It supersedes IAS 24. ‘Related par ty disclosures’. The Bank is currently in process of assessing the impact. the entity receives cash from a customer that must be used only to acquire or construct the item of property. 2009. There are other new and amended standards and interpretations that are mandatory for accounting periods beginning on or after Januar y 1. Annual Report 2010 Faysal Bank 74 . Inventories remaining unsold with the Bank on the reporting date shall constitute Bank’ inventory and shall be valued s in accordance with the IAS 2: ‘Inventories’ and shown under ‘Other Assets’. (a) IAS 1. ‘Presentation of financial statements' (effective from January 1. (b) IAS 24 (revised). the profit on that portion of sales revenue not due for payment should be deferred by accounting for by a debit to ‘Unear ned Murahaba Income’ account with the corresponding impact to ‘Deferred Murahaba Income’ account and is shown as a liability . plant and equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services (such as a supply of electricity. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for governmentrelated entities to disclose details of all transactions with th e government and other government-related entities. The amendment is not likely to have any impact on the Bank's financial statements. Purchases and sales under Murahaba and the resultant profit should be accounted for on the culmination of Murahaba transaction. IFAS 1 was effective for financial periods beginning on or after Januar y 1.75 . The management of the Bank believes that presently this interpretation does not have any impact on the Bank's financial statements. ‘Related par ty disclosures’. therefore. if any. 2011. effective for transfer of assets received on or after July 1. murahaba transactions entered into by the Bank are accounted as follows: Murahaba receivable shall be recorded at the invoiced amount. it shall be valued in accordance with the IAS 2.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. of the revised standard on the related party disclosures. However. plant. either in the statement of changes in equity or in the notes to the financial statements.Murabaha issued by the Institute of Char tered Accountants of Pakistan. ‘Transfers of assets from customers’. issued in 2003. and equipment in order to connect the customer to a network or provide the customer with ongoing access to a supply of goods or services (or to do both). 2006. In accordance with IF AS 1. issued in November 2009. In case the inventories were acquired by the Bank for a customer who has eventually defaulted on his promise to purchase the inventories. This interpretation clarifies the requirements of IFRSs for agreements in which an entity receives from a customer an item of property.

estimates and assumptions that affect the reported amounts of assets and liabilities and income and expenses. and the amendments correct this. which is the Bank's functional and presentation currency. 6. the gain on bargain purchase arising on acquisition made in the current period has been recognised directly in equity as per the directive of the SBP. Acquisition-related costs are expensed as incurred. Significant accounting estimates and areas where judgments were made by the management in the application of accounting policies that have a significant risk of material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed in note 41 to these financial statements. The excess of the consideration transferred over the fair value of the Bank's share of identifiable net assets acquired is recorded as goodwill. 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. 7.1 Business Combination Business combinations are accounted for by applying the acquisition method. the dif ference is recognised directly in the profit and loss account. It also requires management to exercise judgments in application of its accounting policies. These policies have been consistently applied to all the years presented unless otherwise specified.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. of the amendment on the financial statements. entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding contributions. The amendments are effective for annual periods beginning January 1. The financial statements are presented in Pakistani Rupees. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. ‘Prepayments of a minimum funding requirement’. 2010 (c) IFRIC 14 (amendment). The amendments correct an unintended consequence of IFRIC 14. If this is less than the fair value of the net assets acquired in the case of a bargain purchase. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of financial statements in conformity with approved accounting standards requires management to make judgments. BASIS OF MEASUREMENT These financial statements have been prepared under the historic al cost convention except that cer tain investments and derivative financial instruments have been marked to market and are carried at fair value. ‘IAS 19 – The limit on a defined benefit asset. The cost of acquisition is measured as the fair value of assets given. Without the amendments. . These estimates and assumptions are reviewed on an ongoing basis. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. However as more fully described in note 8. Earlier application is permitted. 5. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period. There are other new and amended standards and interpretations that are mandatory for accounting periods beginning on or after January 1. or in the period of revision and future periods if the revision affects both current and future periods. minimum funding requirements and their interaction’. if any. The Bank is currently in the process of assessing the impact. The amendments should be applied retrospectively to the earliest comparative period presented. 2011. 4. equity instruments issued and the liabilities incurred or assumed at the date of acquisition. if any.4 to these financial statements. 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. 7 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of these financial statements are set out below. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. This was not intended when IFRIC 14 was issued. . 2011.

if any. Acquisition of non-controlling interests (NCI) is measured at th e proportionate share of the NCI in the fair value of the net assets acquired by the Bank. cash and cash equivalents comprise of cash in hand. Impairment charge in respect of goodwill is recognised in the profit and loss account. 7. Goodwill acquired in a business combination is tested for impair ment annually or whenever there is an indication of impair ment as per the requirements of Inter national Accounting Standard (IAS) 36. 2010 Goodwill acquired in a business combination is measured. interest rate movements.77 . Annual Report 2010 Faysal Bank 76 .Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. 'Impairment of Assets'. These are recorded as under: (a) Sale of securities under repurchase agreements Securities sold subject to a repurchase agreement (repo) are retained in the financial statements as investments and the counter party liability is included in borrowings. which are either acquired for the purpose of generating profit from shor t-term fluctuations in market prices. if any. The difference between the sale and contracted repurchase price is accrued over the period of the contract and recorded as an expense. 7. balances with other banks in current and deposit accounts. in subsidiaries and associates. These transactions are accounted for on the settlement date. call money lendings and overdrawn nostro accounts. or dealer’ margin or are securities included in the portfolio in which a pattern s of short-term profit making exists. national prize bonds. (b) Purchase of securities under repurchase agreements Securities purchased under agreement to resell (reverse repo) are not recognised in the financial statements as investments and the amount extended to the counter party is included in lendings. subsequent to initial recognition. other than those. (b) Held to maturity These are securities with fixed or determinable payments and maturity that the Bank has a positive intent and ability to hold to maturity. that do not fall under either held for trading or held to maturity categories. (c) Available for sale These are investments. at its cost less accumulated impairment losses.4 Investments The Bank classifies its investments as follows: (a) Held for trading These are securities.3 Lendings to / borrowings from financial institutions The Bank enters into transactions of repos and reverse repos at contracted rates for a specified period of time.2 Cash and cash equivalents For the purpose of the cash flow statement. 7. The dif ference between the purchase and contracted resale price is accrued over the period of the contract and recorded as income. The excess of fair value of consideration transferred over the proportionate share of the NCI in the fair value of the net assets acquired is recognised in equity. balances with treasury banks.

Gain or loss on sale of investments is included in the profit and loss account currently. The Bank deter mines write-offs in accordance with the criteria prescribed by SBP vide BPRD Circular No. Trade date is the date on which the Bank commits to purchase or sell the investment. Surplus / deficit arising on revaluation of quoted securities classified as 'available for sale' is included in the statement of comprehensive income but is kept in a separate account shown in the statement of financial position below equity . less accumulated impairment losses. so as to produce a constant periodic return on the outstanding net investment in lease. Unearned finance income is recognised over the term of the lease. the Bank purchases the goods / assets subject of the Murabaha from a third party and takes the possession thereof. For investments classified as held to maturity. 2010 All purchases and sales of investments that require deliver y within the time frame established by regulations or market convention are recognised at the trade date. However. Premium or discount on acquisition of investments is amor tised through the profit and loss account over the remaining period till maturity using the effective interest method. Investments classified as held to maturity are carried at cost whereas investments in subsidiaries and associates are carried at cost. including guaranteed residual val ue. Investments other than those recognised as held for trading are initially recognised at fair value which includes transaction costs associated with the investments. Investments classified as 'held for trading' are initially recognised at fair value and transaction costs associated with the transactions are expensed in the profit and loss account. In accordance with the requirements of the State Bank of Pakistan (SBP). Murabaha Murabaha to the purchase orderer is a sale transaction wherein t he first party (the Bank) sell to the client / customer a shariah compliant asset / goods for cost plus a pre-agreed profi t. Impairment loss in respect of investments classified as available for sale (except ter m finance certificates) and held to maturity is recognised based on management's assessment of objective evidence of impairment as a result of one or more events that may have an impact on the estimated future cash flows of the investments. 2007. 06 of 2007 dated June 05. Net investment in finance lease Leases where the Bank transfers substantially all the risks and rewards incidental to the ownership of an asset are classified as finance leases. the impairment loss is recognised in the profit and loss account. A receivable is recognised on commencement of lease term at an amount equal to the present value of the minimum lease payments. Unquoted equity securities are valued at the lower of cost and break-up value. In case of impairment of available for sale securities. 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. it sells it to the client at cost plus the profit agreed upon in the promise. 7. other than those classified as held to maturity and investments in subsidiaries and associates. the Bank can appoint the client as its agent to purchase the goods / assets on its behalf. 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.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. Specific and general provisions for advances are made in accordance with the requirements of the Prudential Regulations and other directives issued by the SBP and charged to the profit and loss account. The surplus / deficit arising on revaluation of quoted securities which are classified as 'held for trading' is taken to the profit and loss account. if any. .5 Advances Loans and advances Advances are stated net of specific and general provisions. are subsequently stated at market values. Thereafter. quoted securities. A significant or prolonged decline in fair value of an equity investment below its cost is also considered an objective evidence of impairment. if any. Provision for diminution in the value of ter m finance certificates is made as per the Prudential Regulations issued by the SBP. Non-performing advances are written off only when all possible courses of action to achieve recovery have proved unsuccessful. In principle on the basis of an under taking (promise to purchase) from the client.

Faysal Bank Limited

N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s
For the year ended December 31, 2010
Murabaha transactions are accounted for at gross receivable net of specific and general provisions. Specific and general provisions are made in accordance with the requirements of the Prudential Regulations issued by the State Bank of Pakistan from time to time. 7.6 Fixed assets and depreciation (a) Tangible assets - owned Fixed assets are stated at cost less accumulated depreciation an d accumulated impair ment losses, if any, except for freehold and leasehold land which are stated at cost. Depreciation on operating fixed assets (excluding land which is not depreciated) is charged using the straight line method in accordance with the rates specified in note 14.2 to these financial statements after taking into account residual value, if significant. The asset's residual values and useful lives are reviewed and adjusted, if required, at each balance sheet date. Depreciation on additions is charged from the month the assets are available for use. No depreciation is charged in the month of disposal. Subsequent costs are included in the asset's carr ying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. All other repair and maintenance are charged to the profit and loss account as and when incurred. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains / losses on disposal of fixed assets, if any , are taken to the profit and loss account in the period in which they arise. (b) Tangible assets - leased Leases are classified as finance leases wherever the ter ms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Lease payments, if any, under operating leases are charged to income on a straight line basis over the lease term. Assets held under finance lease are stated at the lower of their fair value or present value of minimum lease payments at inception less accumulated depreciation and accumulated impairment losses, if any. The outstanding obligations under the lease agreements are shown as a liability net of finance charges allocable to the future periods. The finance charges are allocated to the accounting periods in a manner so as to provide a constant periodic rate of return on the outstanding liability. Depreciation on assets held under finance lease is charged in a manner consistent with that for depreciable assets which are owned by the Bank. (c) Capital work in progress Capital work-in-progress is stated at cost less accumulated impa irment losses, if any. All expenditure connected with specific assets incurred during installation and construction period are carried under this head. These are transferred to specific assets as and when assets become available for use. (d) Intangibles Intangible assets having definite lives are stated at cost less accumulated amortisation and accumulated impairment losses, if any. Amortisation is charged applying the straight-line method over the useful life of the assets. Amortisation is calculated so as to write-off the assets over their expected economic lives at rates specific in note 14.3 to these financial statements. Amortisation is charged from the month in which the asset is available for use. No amortisation is charged for the month in which the asset is disposed of f. The residual value, useful life and amor tisation method is reviewed and adjusted, if appropriate, at each balance sheet date.

Annual Report 2010 Faysal Bank 78 - 79

Faysal Bank Limited

N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s
For the year ended December 31, 2010
Subsequent costs are included in the asset's carr ying amounts or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. Intangible assets having an indefinite useful life are stated at acquisition cost less accumulated impairment losses, if any. Gains and losses on disposals, if any, are taken to the profit and loss account in the period in which they arise. 7.7 Impairment The carrying amount of assets is reviewed at each balance sheet date for impair ment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. If such indication exists, and where the carrying value exceeds the estimated recoverable amount, assets are written down to their recoverable amount. The resulting impairment loss is taken to the profit and loss account. An impairment loss is reversed if there has been a change in the estimate used to deter mine the recoverable amount. Such reversals are only made to the extent that the asset's carrying amount does not exceed the amount that would have been determined if no impairment loss had been recognised. 7.8 Taxation Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit and loss account, except to the extent that it relates to items recognised directly in equity or below equity / other comprehensive income, in which case it is recognised in equity or below equity / other comprehensive income. Current Provision for current taxation is based on taxable income for the year determined in accordance with the prevailing laws for taxation on income earned. The charge for the current tax is calculated using tax rates enacted or substantively enacted at the balance sheet date. The charge for current tax also includes adjustments relating to prior years, if necessary, arising from assessments finalised during the year. Deferred Deferred tax is recognised using the balance sheet liability met hod on all temporar y differences between the carr ying amounts of assets and liabilities used for financial reporting purposes and amounts used for taxation purposes. In addition, the Bank also records deferred tax asset on available tax losses. 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 balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefits will be realised. The carrying amount of the deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that suf ficient taxable profits will be available to allow all or par t of the deferred tax asset to be utilised. 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 req uirements of International Accounting Standard (IAS-12) dealing with income taxes. 7.9 Provisions Provisions are recognised when the Bank has a legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates.

Faysal Bank Limited

N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s
For the year ended December 31, 2010
7.10 Staff retirement benefits a) Defined contribution plan The Bank operates a contributory provident fund for all its permanent employees to which equal monthly contributions at the rate of 10 percent of basic salary are made by both the Bank and the employees. b) Defined benefit scheme The Bank operates an approved funded gratuity scheme for all its permanent employees and employees who are on contractual ser vice and are employed under non-management cadre who complete the prescribed eligibility period of service. Contributions to the fund are made on the basis of actuarial recommendations. Projected Unit Credit Method is used for the actuarial valuation. Cumulative net unrecognized actuarial gains and losses at the end of the last reporting year are recognised over the expected average remaining working lives of the employees. Staff retirement benefits are payable to staff on completion of prescribed qualifying period of service under these schemes. 7.11 Borrowings / deposits and their cost Borrowings / deposits are recorded at the proceeds received. Borrowing / deposit costs are recognised as an expense in the period in which these are incurred using the ef fective mark-up / interest rate method, to the extent that they are not directly attributable to the acquisition of or construction of qualifying assets. Borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) is capitalised as part of the cost of the asset. 7.12 Proposed dividend and transfer between reserves Dividends and appropriations to reser ves, except appropriations which are required by law, made subsequent to the balance sheet date are considered as non-adjusting events and are recorded in the financial statements in accordance with the requirements of International Accounting Standard (IAS) 10, 'Events after the Balance Sheet Date' in the year in which they are approved / transfers are made. 7.13 Revenue recognition Mark-up income / interest on advances and returns on investments are recognised on a time proportion basis except that mark-up income / interest / return on non-performing advances and investments is recognised on receipt basis in accordance with the requirements of the Prudential Regulations issued by the State Bank of Pakistan. Interest / return / mark-up on rescheduled / restructured advances and investments is recognised as per mitted by the State Bank of Pakistan, except where, in the opinion of the management, it would not be prudent to do so. Financing method is used in accounting for income from lease financing. Under this method, the unearned finance income (excess of the sum of total lease rentals and estimated residual value over the cost of leased assets) is taken to income over the ter m of the lease so as to produce a constant periodic rate of retur n on the outstanding net investment in lease. Unrealised finance income in respect of non-performing lease finance is held in suspense account, where necessary, in accordance with the requirements of the Prudential Regulations issued by the State Bank of Pakistan. Gains / losses on termination of lease contracts, documentation charges, front-end fee and other lease income is recognised as income when they are realised. Premium or discount on acquisition of debt investments is capita lised and amor tised through the profit and loss account over the remaining period till maturity. Dividend income from investments is recognised when the Bank's right to receive the dividend is established. Fee, brokerage and commission on letters of credit / guarantee and others is recognised on time proportion basis. Financial advisory fee is recognised when the right to receive the fee is established. Other income is recognised on accrual basis.

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Annual Report 2010 Faysal Bank 80 - 81

Faysal Bank Limited

N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s
For the year ended December 31, 2010
7.14 Foreign currencies (a) Foreign currency transactions Transactions in foreign currencies are translated into rupees at the foreign exchange rates prevailing at the transaction date. Monetary assets and liabilities in foreign currencies are expressed in rupee ter ms at the rates of exchange prevailing at the balance sheet date. Foreign bills purchased and forward foreign exchange contracts are valued at rates determined with reference to their respective maturities. For ward purchase contracts with the State Bank of Pakistan relating to foreign currency deposits are valued at the spot rate prevailing on the balance sheet date. The forward cover fee payable on contracts with the SBP is amortised over the term of the contract. (b) Translation gains and losses Translation gains and losses are included in the profit and loss account. 7.15 Commitments Commitments for outstanding forward foreign exchange contracts are disclosed in the financial statements at committed amounts. Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in rupee terms at the rates of exchange prevailing at the reporting date. 7.16 Acceptances Acceptances comprise undertakings by the Bank to pay bills of exchange drawn on customers. The Bank expects most acceptances to be simultaneously settled with the reimbursement from the customers. Acceptances are accounted for as off balance sheet transactions and are disclosed as contingent liabilities and commitments. 7.17 Financial instruments Financial assets and financial liabilities Financial instruments carried on the balance sheet include cash and balances with treasury banks, balances with other banks, lendings to financial institutions, investments, advances, other assets, bills payable, borrowings, deposits, liabilities against assets subject to finance lease and other liabilities. T he particular recognition methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with these assets and liabilities. Derivative financial instruments Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value. All derivative financial instruments are carried as assets when fair value is positive and liability when fair value is negative. Any change in the fair value of derivative financial instruments is taken to the profit and loss account. Offsetting Financial assets and financial liabilities are set off and the net amount is reported in the financial statements only when the Bank has a legally enforceable right to set of f and the Bank intends to either settle on a net basis, or to realise the assets and to settle the liabilities simultaneously. Income and expense items of such assets and liabilities are also of fset and the net amount is reported in the financial statements. 7.18 Earnings per share The Bank presents basic and diluted earnings per share (EPS) for its shareholders. 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. 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, if any.

Faysal Bank Limited

N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s
For the year ended December 31, 2010
7.19 Segment reporting Segment reporting is based on operating (business) segments of the Bank. An operating segment is a component of the Bank that engages in business activities from which it may e arn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Bank's other components. An operating segment's operating results are reviewed regularly by the President / Chief Executive Officer, which have been presented according to the functional basis and the guidance of SBP, to make decisions about resources to be allocated to the segment and assess its performance, and for which financial information is available. These have been presented as per the Bank's functional structure and guidance of SBP. The segments of the Bank are as follows: (a) Business Segments Corporate finance This includes investment banking activities such as mergers and acquisitions, underwriting, privatisation, securitisation, Initial Public Offers (IPOs) and secondary private placements. Trading and Sales It includes fixed income, equity, foreign exchanges, funding, own position securities, lending and repos. Retail banking Retail banking provides services to small borrowers i.e. consumers, small and medium enterprises (SMEs) and agriculture sector. It includes loans, deposits, other transactions and balances with retail customers. Commercial banking This includes strategic partnership with corporate and SME sector entities to provide working capital financing, trade financing and cash management services, project finance, export finance, leasing, lending, guarantees, bills of exchange and deposits. (b) Geographical segment The operations of the Bank are currently based only in Pakistan. 8. 8.1 BUSINESS COMBINATION During the year the Bank has acquired the Pakistan Operations of The Royal Bank of Scotland Limited [a listed commercial bank engaged in commercial, consumer and corporate banking activities] (the RBS). The Bank acquired the majority shareholding of 99.37% of the RBS for cash consideration of approximately Euro 41 million on the acquisition date of October 15, 2010 and the RBS became a subsidiary of the Bank as at the aforementioned date. The Bank has acquired the operations of the RBS to capture the returns skewed towards larger banks. The management believes that the acquisition of the RBS is a materialization of the Bank's strategy for larger customer base and profit growth (both organically and through acquisition). The managemen t further believes that the acquisition will translate synergies in the areas of customer franchise, cost saving, people and technology.

Annual Report 2010 Faysal Bank 82 - 83

290. liabilities assumed or incurred have been carried at the fair value as at the acquisition date. 2010 respectively . 2010 to the shareholders of the RBS for the acquisition of non-controlling interest.1 Rs ‘000 28.299. 2010 had also approved the scheme of amalgamation and granted sanction order for the amalgamation of the RBS with and into the Bank. The excess of the fair value of the Bank's share of the identifiable net assets acquired over the cost of acquisition has been recorded as gain on bargain purchase in the financial statements of the Bank.957 8. 2010 (closing of business).4 . Identified assets acquired. 2010 and November 10.315) 3. Details of the purchase consideration given.5. In consideration for the amalgamation and as per the scheme of amalgamation.022 99.343. the entire undertaking of the RBS including all the proper ties.2 Acquisition of controlling interest The acquisition has been accounted for by applying the purchase method in accordance with the requirements of IFRS 3 (revised) 'Business Combinations'.250 fully paid ordinar y shares subsequent to the year ended December 31. Accordingly the assets and liabilities included in the statement of financial position also include balances of the RBS.3 Rs ‘000 8. The proposal for the amalgamation and the scheme of amalgamation were approved by the Board of Directors and the shareholders of the Bank in their meetings held on October 15. The shares proposed to be issued by the Bank are as under: Note Proposed shares to be issued on amalgamation 8.253 8. assets and liabilities and the rights and obligations stand amalgamated with and vested into the Bank as at December 31. the Bank intends to allot 1. fair values of the net assets acquired and gain on bargain purchase are as follows: Note Fair value of identifiable net assets of RBS as on October 15. The cost of the acquisition has been measured at the fair value of the consideration given. the Pakistan operations of the RBS have been amalgamated and vested into the Bank with effect from the close of business on December 31. The State Bank of Pakistan through its letter BPRD (R&P02)/625-99/2010/10601 dated December 29.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. 2010 Less: Purchase consideration paid in cash Gain on bargain purchase Acquisition-related costs (included in administrative expenses in the profit and loss account for the year ended December 31.37% 8.991.461 (4. 2010 Subsequent to the above acquisition. 2010) 8.146 38. which will rank pari passu with the existing shares of the Bank.812. 2010. Pursuant to the aforementioned approvals and scheme of amalgamation duly approved by the State Bank of Pakistan. 2010 Percentage of identifiable net assets acquired Fair value of identifiable net assets of RBS acquired as on October 15.

499 29.448 2.882 1.873.167 2.372.025 4.025 4.034 596. The fair value of this identifiable intangible asset has been determined using an income approach.177.194.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.net Other assets . this intangible asset has been v alued using certain valuation techniques and is being amortised keeping in view the life expectancy of the core deposits. 2010. The income approach begins with an estimation of the annual cash flows. This benefit also considers the fact that the economic lifetime of these deposits is longer than their contractual life.673 36.459 1.3.897.673 38.103.85 . Based on this assumption.103.194.740 85.557.199 87.204.557.847.047 (2. the Bank has recognised the following intangible asset as at the acquisition date of October 15.415.510.022 Fair values as on October 15.987 598. which a market par ticipant acquirer would expect the asset to generate over a discrete projection period.520.167 (860. October 15.497.1 3.778 3.598 67. 2010 8.647. Annual Report 2010 Faysal Bank 84 .343.598 67.510.259.947 2.499 29.557.501 2. 2010 Rs '000 Customer relationship 2.221.728 1.195 79.463 2.897.043 Fair value adjustments / intangible recognised Rupees ‘000 (1.062.681.741 16.762 1.701) 143.167 This intangible asset comprises of core deposits of the RBS and represents the funding benefit that would be available to the Bank on account of availability of funding through deposit customers rather than from the wholesale or inter-bank markets. The estimated cash flows for each of the years in the discrete projection period are then converted to their present value equivalent using a rate of return appropriate for the risk of achieving the asset’ projected cash flows.685) 1.469 1.096 8.685 6.858.1 Intangibles acquired in business combination Consequent to the amalgamation of the RBS with and into the Bank.415.428 1.447 8.999.595 6.880 6.285) 13.661. by an independent valuer.825.695.net Total assets Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities Total liabilities 8.062.428 1.847. The present value of the estimated cash flows are then added s to the present value equivalent of the residual value of the asset (if any) at the end of the discrete projection period to arrive at an estimate of the fair value of the specific asset. 2010 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets (includes intangibles held in the books of RBS) Intangible assets recognised on acquisition Deferred tax assets .195 79.979 5.882 1.237. 2010 5.372.3 The fair values and carrying amounts of identifiable assets and liabilities of RBS at the date of acquisition are as follows: Note Acquiree's carrying amounts as on October 15.3.395 3.163.012.

s The valuations are based on information at the time of acquisition and the expectations and assumptions that have been deemed reasonable by the Bank’ management. However . Under IFRS 3 (revised) a bargain purchase represents an economic gain.5. The SBP letter also specifies that the requirement of creating statutor y reser ve under section 21 of the Banking Companies Ordinance.853 million.1 The fair value of the shares proposed to be issued to the shareholders of the RBS is based on the published quoted price of the shares of the Bank as at December 31.146 million. the acquisition of the RBS is a bargain purchase as the fair value of the net assets acquired exceeds the fair value of the consideration paid by the Bank as at the acquisition date. The management believes that out of the total gross contractual receivables.2 to these financial statements.500 million. may not be applicable on this amount. .6 The fair value of the gross contractual receivables representing advances. However. 2010 In applying the income approach. The total gain on bargain purchase arising on the acquisition of the RBS is Rs 3.5 Acquisition of non-controlling interest As at the date of acquisition the purchase of non-controlling interest (NCI) is measured at the proportionate share of the NCI in the fair value of net assets acquired by the Bank. instead of recognising it in the profit and loss account. IFRS 3 requires the acquirer to ensure that it really does have a gain on bargain purchase and it has used all of the available evidences at the date of acquisition and re-assessed the business combination accounting. if any. 2010. Gross contractual amounts for the aforementioned receivables due is Rs 77. The excess of the fair value of equity shares proposed to be issued and the adjusted balances of the NCI amounting to Rs. 8.896 million is expected to be uncollectable.952 million has been recognised as part of the equity (shown separately as 'Reserve arising on amalgamation'). a gross contractual amount of Rs 11.4 As more fully discussed in note 8. lendings and investments that include Market Treasury Bills. which should be immediately recognised by the acquirer in the profit and loss account. the Bank used the Multiple-peri od Excess Earnings Method ("MEEM") to deter mine the value of the above intangibles. 2011 has advised the Bank to recognise the amount of gain through the statement of changes in equity as 'NonDistributable Capital Reserve'. Under this method the value of a specific intangible asset is estimated from the residual earnings after fair returns on all other assets employed (including other intangible assets) have been deducted from the asset’ after-tax operating earnings. 8. The management. recommended by the Banking Inspection Division of the SBP in the acquired portfolio of the RBS (which will be adjusted against this reser ve) and with the prior approval of the SBP.23. at the date of amalgamation. as allowed under the requirements of IFRS 3. In this connection the management has reassessed the business combination accounting and believes that the gain on bargain purchase is primarily arising as a result of special circumstances under which RBS decided to sell international operations particularly Pakistan. has incorporated the share of NCI's post acquisition results of the RBS in the proportionate share of the NCI determined as at the acquisition of the RBS (the adjusted balance).299. 8.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. the amount of bargain purchase gain has not been taken to the profit and loss account as the SBP through its letter BPRD (R&P-02)/625-99/2011/3744 dated March 28. It has been assumed that the underlying assumptions or events associated s with such assets will occur as projected. 8. The SBP has fur ther advised the Bank that this gain may become available for distribution as stock dividend to shareholders of the Bank after incorporating the adjustment. Sukuks and Term Finance Certificates as at the acquisition date amounts to Rs 67. Pakistan Investment Bonds.

net Gain on sale of securities .480 million in the results of the Bank.028) 18. 2010 8.87 .725) (681) (27.920) (190. Annual Report 2010 Faysal Bank 86 .988 918 67.002.700) (8.207. the results of the RBS would have contributed mark up and non-mark up income of Rs 10.563.Current .044 (1. 2010 are as under: For the period from October 16.Deferred Loss after taxation 1.885 (111. Had the acquisition of the RBS occurred and been accounted for on January 1.678 (1. 2010. 2010 Rs ‘000 Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / return / interest income Provision against loans and advances .general Bad debts written off directly Net mark-up / return / interest after provisions NON MARK-UP / RETURN / INTEREST INCOME Fee.682 144.718) 708 (15.381) These amounts are included in the respective heads of income and expenses as included in the profit and loss account. 2010 to December 31.793) 700. 2010 to December 31.381 million during the period from October 16.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.794 112 482.165.net Reversal of provision for consumer loans .916) 20.715) (1.net Other income Total non mark-up / return / interest income NON MARK-UP / RETURN / INTEREST EXPENSES Administrative expenses Other provisions / write offs Other charges Total non mark-up / return / interest expenses Loss before taxation Taxation .203) 510.668 million and loss after taxation of Rs 2.909.207. 2010.362 1. commission and brokerage income Dividend income Income from dealing in foreign currencies .550 696. The details of the loss after taxation which pertains to the operations of the RBS for the period from October 16.866.7 The acquired operations of the RBS have contributed mark up and non-mark up income of Rs 2.040 million and loss after tax of Rs 8. 2010 to December 31.745 (97.192.216 (7.

9. 2010 Note 9 CASH AND BALANCES WITH TREASURY BANKS In hand .Deposit accounts 10. BALANCES WITH OTHER BANKS In Pakistan .427.2 9.367.25 deposits) as per BSD Circular No. 1956.084.924 1.1 This represents local currency current account maintained with the SBP as per the requirements of Section 36 of the State Bank of Pakistan Act. This section requires banking companies to maintain a local currency cash reserve in a current account with SBP at a sum not less than such percentage of the Bank's time and demand liabilities in Pakistan as may be prescribed.750 8.187 4.817 3. Note 10.foreign currency current account .492.292 2010 Rs ‘000 2009 Rs ‘000 .765 1.440 324. 9.local currency current account National Prize Bonds 3.2 This represents cash reserve of 5% maintained with State Bank of Pakistan in US dollars current account on deposits held under the New Foreign Currency Accounts Schedule (FE.909 388.foreign currencies With the State Bank of Pakistan in .938 365.041.local currency .145. Profit rates on these balances are fixed on monthly basis by SBP.894 2.local currency current account . 9 dated December 03.543 479.044.795 558.1 2.572.727. 14 of 2008 dated June 21.428.829 9.202 2010 Rs ‘000 2009 Rs ‘000 9.784.202.Current accounts Outside Pakistan .Current accounts . 2007.642 7.020 1. The SBP has not remunerated any return on these deposits during the current and the last year.028 5.987 120.3 This represents special cash reser ve maintained with SBP in US dollars under the requirements of BSD Circular No.3 8.160 17.505 4.503 508. 2008 and local USD clearing account maintained with SBP to facilitate USD clearing and 6% special cash reserve requirement on FE-25 deposits maintained by Islamic Banking branches.480 431.foreign currency deposit account With the National Bank of Pakistan in .Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.050 1.676.1 9.

It carries markup rate of 0. LENDINGS TO FINANCIAL INSTITUTIONS Call money lendings Repurchase agreement lendings (Reverse Repo) 11.1 million placed with The Royal Bank of Scotland.717. UK (RBS PLC) London as margin against interest rate and cross currency derivative contracts entered with RBS PLC.826 2009 Given as collateral Total 2010 Rs ‘000 2009 Rs ‘000 11.18% (2009 : Nil) per annum.826 Annual Report 2010 Faysal Bank 88 .826 - 15.1 Particulars of lendings to financial institutions In local currency 11. Note 11.89 .717.2 Securities held as collateral against lendings to financial institutions Held by Bank Market Treasury Bills 2010 Given as collateral Total Held by Bank Rupees ‘000 14.826 14.017.826 15.1 This represent deposit of USD 29.717.2 - 300.000 14.017.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. The deposit balance will vary according to the outstanding balance of contracts and will be released completely on maturity of last derivative contract in September 2014. 2010 10.

933 .589.000 100.724.223 1.748.483 10.865 718.634 (1.538.140.969 1.516.212.446 7.587.473.422 50.510 56.092.NIT Income Fund .Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.828.374 200.888 3.000 826 2.3 12.000 80.817 54.2 12.165.677 85.4 12.257.223 1.730.5 24 18.000 12.629.135 5.064 2.4 12.371 45.810.495.287 420.367) 86.263.3.072.671.327 17.707.000 88.287 420.3.000 100.374 200.994 (1.817 44.932 492.483 - 2. INVESTMENTS Investments by type and segment are given below while the detailed break down is contained in Annexure I to these financial statements 12.461.151 10.883 (230.828.707.Faysal Income Growth Fund .601) 75.888 3.411 1.Faysal Money Market Fund .000 2009 Given as collateral Total Held for trading securities Market Treasury Bills Fully paid up ordinary shares / certificates of closed end mutual funds Ijara Sukuk Bonds Available for sale securities Market Treasury Bills Pakistan Investment Bonds Ijara Sukuk Bonds Units of open ended mutual funds .6 108.127.1 Investments by type Note Held by Bank 2010 Given as collateral Total Held by Bank Rupees ‘000 618.296 39.411 1.084) 1.500) 75.327 (27.006 45.429.263.000 100.043 6.589.000 10.550 12.115 8.JS KSE 30 Index Fund Fully paid up ordinary shares / modaraba certificates / certificates of closed end mutual funds Fully paid up preference shares Sukuk Bonds Term finance certificates Held to maturity securities Term finance certificates Sukuk Bonds Associate Fully paid up ordinary shares of .932 492.3 12.153 415.549 108.000 1.410.153 415.273.National Investment (Unit) Trust .616 108.952 300.2.724.009 50.043 6.587.496 10.570 17.000 100.1 12.495.809.473.125.127.709 5.538.046 27.713 1.531.471 811.000 1.288 27.230 100.000 208.496 10.875 2.AKD Income Fund .694 31.963 7.000 207.3 12.000 17.535.757 97.000 207.846.295. 2010 12.537 63.786) 17.410.000 2.327 - 618.NIT Government Bond Fund .629.929 2.422 50.JS Large Capital Fund .483 10.429.667 (1.497.967 7.IGI Income Fund .374 200.PICIC Income Fund .2.601) 86.765.483 (36.First Habib Income Fund .000 80.3.797 17.009 50.Faysal Management Services (Private) Limited Investments at cost Less: Provision for diminution in the value of investments Investments (net of provisions) Surplus / (deficit) on revaluation of held for trading securities .709 5.997.507.338 12.000 3.485 462.033 18.724.2.Faysal Islamic Savings Growth Fund .000 2.084) 1.077 9.1 12.263.516.Faysal Balanced Growth Fund .082) 37.055 462.418.982.875 2.867) 10.724.677 85.082) 55.077 9.694 14.461.541 108.Faysal Savings Growth Fund .371 45.598 8.883 (193.192.2.3 (1.765.537 73.000 80.969 1.401.687.4 2.064 2.713 1.140.374 200.net Total investments 12.671.2.046 27.000 3.288 45.000 826 2.630.000 38.net (Deficit) / surplus on revaluation of available for sale securities .2.471 811.000 208.230 100.000 80.497.912 (49.810.952 300.828.905.949.585 (49.358.000 77.865 718.000 56.929 2.378 5.006 45.HBL Income Fund .235.294 7.Faysal Asset Management Limited Subsidiary Fully paid up ordinary shares of .

549 45.338 2010 Rs ‘000 2009 Rs ‘000 12.049 3.783 (509.427 226. The overall exposure limit for equity investments prescribed by the SBP does not apply to these investments. Note 12.981 80.140.2 Investments by segments Federal Government Securities .994 (1.634 (1.168 7.528.285) 1.287 5.207 2.531.418.91 .000 108.262 794.2 12.601) 86.033 18.495.969 100.077 56.Listed companies / modarabas / mutual funds .628.495.000 108.209.Listed companies .000 1.929 972.846.271 108.374 797.1 Strategic Investments Available for sale securities .065.328.3.630.904 (287.903) 982.055 462.013.176 315.122 8.088.883 (230.1.3.Pakistan Investment Bonds . Disposals of such investments can only be made subject to the fulfillment of the requirements prescribed by the SBP in the Prudential Regulations.912 (49.498 96.Unlisted Units of Open ended Mutual Funds Sukuk Bonds Total investments at cost Less: Provision for diminution in the value of investments Investments (net of provisions) Surplus / (deficit) on revaluation of investments classified as held for trading (Deficit) / surplus on revaluation of investments classified as available for sale Total investments 12.5 24 Annual Report 2010 Faysal Bank 90 .301.114 1.189 2.1 12.2. 2006.Ijara Sukuk Bonds Fully Paid up Ordinary Shares / Modaraba Certificates / Closed end Mutual Fund Units .3 12.072.250 45.000 1.290 1.606 5.337 266.125.496 88.Unlisted Fully paid up ordinary shares Associate Subsidiary Provision for diminution in the value of investments Surplus on revaluation of available for sale securities 2009 Rs ‘000 467. Fur ther. these can be sold before the stipulated period with the prior permission of the SBP.082) 55.4 12.Unlisted companies Fully Paid up Preference Shares .250 1.761.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.507.822.4 12.367) 86.Unlisted companies Term Finance Certificates .290.Listed Fully paid up ordinary shares / modaraba certificates / units of closed end mutual funds Units of open ended mutual funds Available for sale securities .084) 1.110.522. as per the SBP instructions in BPD Circular Letter No.3 57.Market Treasury Bills .976.Listed .818 952.115 Strategic investments are those which the Bank makes with the intention of holding them for a long term duration and are marked as such at the time of investment.873 1.2.3 12.707. However.510 56.2.3.463 8.000 1.713 1.000 1.549 31. 16 of 2006 dated August 01. investments marked as strategic have a minimum retention period of 5 years from the original purchase date.495.001 106.269.587.212. 2010 2010 Rs ‘000 12.371 238.

NIUTL is an open end mutual fund managed by the National Investm ent Trust Limited (NITL).2% to 13.61% of NIUTL's units (excluding Strategic Assets representing shares of PSO and SNGPL) by transferring investments in specie.607 million upon settlement of these assets which has been included in the profit and loss account of the current year. This represents the investment of the Bank in the units of National Investment (Unit) Trust LOC Holder's Fund (NIUTL). 2010 to discuss the matter of transfer ring the Strategic Assets to the NBP. guaranteeing a minimum redemption price of Rs.255 68. the Government y had communicated a methodology to settle this investment to all investors including the Bank.686) 287.264 1.1 1.530. all the underlying assets.082 2010 Rs ‘000 2009 Rs ‘000 This includes provision of Rs. 2009.70 per unit.890 528. The Ban k’ return on these investments ranges from 4. the aforementioned Strategic Assets have not been transferred to the NBP as these were frozen by the Government of Pakistan (Privatization Commission) for sale due to their proposed Privatization.4% to 13.5%) to the LOC Holder's according to their respective unit holding.3 12.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. The Bank had agreed the market value of “Strategic Assets” as of October 13. The LOC dated June 30.3% per annum (2009: 4.3.6% to 13. The negotiation over the rate at which these Strategic Assets are to be transferred by the Fund to the NBP and consequently to the Bank has been finalized. NITL settled 87.6% s to 14.2. during the year. However.2. the Bank and the NBP to facilitate the settlement.2.3% per annum (2009: 11. 2010 for redeeming its existing units.192 1. an agreement has been signed between NITL. 2010 as the Bank will receive this amount subsequent to the permission of the Privatization Commission of Pakistan. except for 'Strategic Assets' representing shares of Pakistan State Oil (PSO) and Sui Northern Gas Pipelines Limited (SNGPL).2. have been transferred in specie (after charging agreed premium of 2. It was also agreed that the Strategic Assets representing shares of PSO and SNGPL will be transferred to the NBP at a rate to be determined and agreed by the respective LOC holders' and the cash received from the NBP by the Fund will be paid to the LOC holders'.941 (244.1% per annum) with maturities from February 2011 to September 2019.3 Particulars of provision for diminution in the value of investments Opening balance Charge for the year Reversals Provision against investments transferred from amalgamated entity Closing balance 12. In prior years.082 531.4 Market Treasury Bills have tenures of three months to one year .336 million recognised on acc ount of difference in carrying value and breakup value of DHA Cogen Limited. Pakistan Investment Bonds have tenures of 3 to 10 years. Accordingly. The management is of the view that since the permission of transfer to NBP of the said “Strategic Assets” has not yet been granted by the Privatization Commission of Pakistan therefo re the value of the Bank’s investment representing the “Strategic Assets” should be classified as investments in the books of the Bank and should be marked to market on the basis of net assets value as on October 13. an investment marked as strategic.3. 13. the Government of Pakistan (the Government) had issued Letter of Comfort (LOC) to four of its unit holders (including the Bank). In this connection.1 12. The Bank’s yield on these instruments ranges from 12. In this connection. However.140.2 12. . Note 12. Subsequent to the expir .140. In accordance with the methodology.495.403 (276. 162.4% per annum) with maturities up to June 2011.1 12. The Bank had recognised a gain of Rs 1. the Privatization Commission has not provided final directions in this context to date. and was not extended.211) 252. the Privatization Commission had arranged a meeting on December 28. 2010 12. 2009 issued by the Government had expired on December 31.601 887. Ijara sukuk bonds have tenures of three years with maturities upto November 2013.

140 4.3.689 million and Rs 500 million respectively made in the Agritech Limited and Azgard Nine Limited.779 469.4. Annual Report 2010 Faysal Bank 92 . The Bank as per the above recent directive has availed the relaxation and maintained a provision of Rs 330 million against this investment.Listed companies Units of Open ended Mutual Funds Term Finance Certificates .601 31.Listed companies / modarabas / mutual funds . 2010 would have been higher by Rs 170 million and the profit before taxation for the year ended December 31.425 5. 12.000 1.562 19.082 2009 Rs ‘000 324.3.3 This includes Pre IPO investment of Rs 500 million made in the u nlisted term finance cer tificates (TFCs) of Dewan Cement Limited.2 to these financial statements.Listed .588 132.436 242.204 342. The State Bank of Pakistan through its letter BPRD/BLRD-3/DMG/2011-1035 has advised the Bank to maintain provision at least at the level of 90% in five quarters (commencing from December 31. 2010) by December 31.094 180.140.4 Quality of available for sale securities The details regarding the quality of available for sale securiti es and their mark-up / interest and other ter ms are contained in Annexure I. 2010 would have been lower by Rs 170 million.000 1. 12.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. the Bank had maintained a provision of Rs 300 million as per the earlier relaxation provided by the SBP.4 The investment portfolio includes the term finance certificates and Sukuk Bonds of Rs 1.495 196.919 300.564 156.Unlisted Held to maturity securities Term Finance Certificates .117.150 75. Prior to the issuance of this directive.000 12. which forms an integral part of these financial statements. the provision for diminution in the value of investments for the year ended December 31.495. 2010 2010 Rs ‘000 12. Had the provision been made as per the time based criteria specified in the Prudential Regulations issued by the SBP. 2011.3.327 75.2 Particulars of provision for diminution in the value of investments by type and segment Available for sale securities Fully Paid up Ordinary Shares / Modaraba Certificates / Certificates of Closed end Mutual Funds . The impact of relaxation availed by the Bank for maintaining the provision against these investments is disclosed in note 13.Unlisted companies Fully Paid up Preference Shares .93 .Unlisted Sukuk Bonds 80.

2010. running finances.117 37.706. ADVANCES Loans.353 98.929.866 3.236.848.284.841.1 Particulars of advances (Gross) 146.470 61.394) (190.171.769 85.235 1. Note 2010 Rs ‘000 2009 Rs ‘000 13.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. they have resolved to initiate proceedings of winding up by the members of FMSL under the Companies Ordinance.4 13.169.5 13.148.470 (6.2 Short term (upto one year) Long term (over one year) .480 1.056.986 151.net of provision 13.409 82.917 94.346.409 (17.5 Surplus/ (deficit) on revaluation of investments classified as held for trading Market Treasury Bills Fully paid up ordinary shares / certificates of closed end mutual fund Ijara Sukuk Bonds (223) 18.075) 91.534 645.438.206.423 5.1 In local currency In foreign currencies 13.384.675 338.249.6 On October 1.176.384.952 338. the Board of Directors of Faysal Management Services (Private) Limited (FMSL) [a subsidiar y of the Bank in which the Bank has 60% shareholding] has decided to voluntarily wind up the company and accordingly.2 140.876.029.200 151.938.001 13.200 98.1.163.738 11.580 96.585.604 98.093 148.112.441 8. 1984.1. etc.096 68.067) (336.384.440 1.206.883 (92) (48. – in Pakistan Net investment in finance lease – in Pakistan Bills discounted and purchased (excluding government treasury bills) Payable in Pakistan Payable outside Pakistan Margin financing / reverse repo transactions Gross advances Provision against non-performing advances Provision against consumer loans .330.992) (49.573) 133.084) 2009 Rs ‘000 12.689.general Advances .472 1. 2010 2010 Rs ‘000 12.821 151. cash credits.470 13.318 438.356 750 18.798.

030 - 277.684.664.255) 1.490 15.490 15.614 9.841.230.058) - 58.756.618.290 673.336 - 334.000) (787.445.394 Annual Report 2010 Faysal Bank 94 .947.287 17. 2010 13.843.439) 4.058) (184.611.758 - 307.290 673.671 2.030 334.230.810 (820.705.168) 4.409.237 5.776 800.336 334.843.843.067 4.583 2.323 6.371 Lease rentals receivable Residual value Minimum lease payment Finance charge for future period Present value of minimum lease payment 4.95 . 10.776 800.321 19.163.793 938.099 2.150 2.775 183.664.437 (829) 8.163.952 7.891.382 1.671 million) which have been placed under non-performing status as detailed below: Classified Advances Overseas 2010 Provision required Overseas Rupees '000 Provision held Overseas Domestic Category of classification Other Assets Especially Mentioned (Agri financing) Substandard Doubtful Loss Total Domestic Total Domestic Total 307.935) 6.833.197.112.032 (9.163.323 6.707.902 10.321 19.776 800.664.893 5.625.758 646.017 5.192 2.343 2.323 6.902 10.618 988.1 Provision against advances transferred from amalgamated entity Closing balance 6.928.336 2.669 (58. 24.954 (1.983.737.7.058 (184.3 Advances includes Rs.067 Domestic Category of classification Other Assets Especially Mentioned (Agri financing) Substandard Doubtful Loss Classified Advances Overseas Total Domestic 2009 Provision required Overseas Rupees '000 Total Domestic Provision held Overseas Total 277.616 (1.795) 184.487.776 6.776 6.671 2.287 (729.721 4.290 673.090.note 13.note 13.730.144 (797.529.183 24.776 800.485.290 673.791 184.529.183 24.382 2.150 2.490 15.067 646.355) 3.093 4.795) 6.202 1.058 (600.490 15.336 2009 General (excluding consumer loan) Total Opening balance Charge for the year Transfer from / to general provision .186.285.067 - 646.939.384 1.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.969 12.112.507.4 Particulars of provision against non-performing advances Specific 2010 General (excluding consumer loan) Total Specific Rupees '000 6.529.374) 11.112.551.753.1 Reversals during the year Net charge Amounts written off .583 2.237 5.985 3.848.966.511 (481.485.412) 1.336 - 334.524.524.123 17.4.275.689.237 5.105 (567.707.255) 125.664.163.323 6.048.684.058 6.209 - 9.202 1.412) 2.002 2.067 - 646.163.756.287 17.337.287 17.664.287 17.414 (9.123 17.791 (600.409.394 2.848.676 4.529.523) 8.843.671.809.750 - 6.664.708 million (2009: Rs.580 13.2 Net investment in finance lease Not later than one year 2010 Later than Over five one and years less than five years Total Not later than one year 2009 Later than one and less than five years Over five years Total Rupees '000 4.237 5.906.379 (829) 8.506.067 184.163.671.570.454.506.336 13.

banks were allowed to avail the benefit of 40% of forced s ales value of pledged stocks and only mor tgaged residential and commercial properties held as collateral against all non-performing loans for 3 years from the date of classification for calculating provisioning requirement. Under the previous guidelines issued by the SBP which were effective from September 30. in addition to specific provision against loans and advances.394 6.4. residential and industrial proper ties held as collateral against all non-performing loans for 4 years from the date of classification for calculating provisioning requirement.4 Particulars of provision against non-performing advances: Specific In local currency In foreign currencies Total 17. 2011.067 17. Accordingly.163.3 Under the revised guidelines issued by the SBP. 13. The State Bank of Pakistan vide its letter no. 2011 has allowed extension for withholding provisioning against the exposure till March 31.4. 2009.067 6.194 million and the profit before taxation for the current year would have been lower by the same amount.394 . the additional impact on profitability arising from availing the benefit of forced sales value against pledged stocks and mortgaged residential.336 2009 General 184.1 Until last year.175 million (2009: 502.163.067 2010 General Total Specific Rupees '000 17. BSD/BRP-5/X/000197/2011 dated Ja nuary 6.058 Total 6. banks have been allowed to avail the benefit of 40% of forced sales value of pledged stocks and mor tgaged commercial.4. the balance of provision as at December 31. Had the provision against non-per forming loans and advances been deter mined in accordance with the previously laid down requirements of the SBP.net of tax at December 31. during the period the management has decided that the general provision is no longer required as all loan losses are timely identified and are subjected to provision as required under the Prudential Regulations issued by the State Bank of Pakistan.664.058 184.067 17. to all those banks who have agreed to reschedule / restructure their exposures against these companies. financing facility disbursed to Agritech Limited and Azgard Nine Limited has been restructured / agreed to be restructured as a result of financial difficulties / repayment problems faced by these companies.848.336 6.4.163. 13. the Bank was also maintaining general provision against potential losses on performing loans and finance lease based on management estimate. However. commercial and industrial properties would not be available for payment of cash or stock dividend.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. 2010 would have been lower by approximately Rs 227. the provision against loans and advances and investments would have been higher by Rs 570. However.2 During the year. as per the Circular.973 million.835 million).848. 2010 13.163. 2009 has been reversed and transferred to specific provision. The additional profit arising from availing the FSV benefit . 13.664.466. 2010 which is not available for either cash or stock dividend to shareholders amounted to approximately Rs 1. the specific provision against non-performing loans would have been higher and consequently profit before taxation and advances (net of provisions) as at December 31. Had the exemption not been provided by the State Bank of Pakistan.

723) 190.1 General provision against consumer loans represents provision maintained at an amount equal to 1. building and machinery. 500. However. the Bank still holds enforceable collateral against certain non-performing loans in the event of recovery through litigation.8 Details of loan write-offs of Rs 500. etc. however. stock in trade. These securities comprise of charge against various tangible assets of the borrower including land. 13.795 9. the write-off of loans does not affect the Bank's right to recover the outstanding loans from these customers.349 98.97 .7.730) 236.000 13.7 Particulars of write-offs 829 97.6 Although the Bank has made provision against its non-performing portfolio as per the category of classification of the loan.749 9.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.5.000 and above In terms of sub-section (3) of section 33A of the Banking Companies Ordinance. 2010 is given in Annexure .5 Particulars of provision against consumer loans .general Opening balance Reversals during the year General provision against consumer loans transferred from amalgamated entity Closing balance 190.1 Against provisions Directly charged to profit and loss account 13.795 9.400 85.5 percent of the fully secured regular portfolio of consumer loans and 5 percent of the unsecured regular por tfolio of consumer loans as per the requirements of the Prudential Regulations issued by the State Bank of Pakistan.II to th ese financial statements.228 336.7.000 and above Write-offs below Rs.749 13. the statement in respect of written off loans or any other financial relief of five hundred thousand rupees or above allowed to a person(s) during the year ended December 31.2 Write-offs of Rs. 2010 2010 Rs ‘000 13.795 9.075 (89. Annual Report 2010 Faysal Bank 96 .795 2009 Rs ‘000 13. 2010 Rs ‘000 13.573 216.075 2009 Rs ‘000 13.798 (26.920 98. 500. 1962.

735 (1.014. controlled firms.339.113) 802.457 619.671. 2010 2010 Rs ‘000 13.457 686.999.229 (406.198 (182.168 - 802. managed modarabas and other related parties 14.1 Maximum total amount of advances (including temporary advances) outstanding at the end of any month during the year 2010 2009 Rs ‘000 Rs ‘000 Debts due by directors. managed modarabas and other related parties Balance at beginning of the year Loans granted during the year Repayments during the year Balance at end of the year 2009 Rs ‘000 619.495.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.798 226. partners or in the case of private companies as members Balance at beginning of the year Loans granted during the year Repayments during the year Balance at end of year Loans transferred from amalgamated entity Debts due by subsidiary companies.564 72.033 2.195 802.044 3.867.558 .444 2.508 2.234 5. Debts due by directors. 13. executives or officers of the Bank or any of them either severally or jointly with any other persons Debts due by companies or firms in which the directors of the Bank are interested as directors.726.495 619.787.457 2.195 731.786 2. partners or in the case of private companies as members Debts due by subsidiaries. etc.168 802.9 Particulars of loans and advances to directors.495 504.374 (44.339.440.014.457 1. controlled firms.728 8.558 * These include loans given by the Bank to its employees as per the terms of their employment.451 2.406 65.9.235) 899. associated companies.750 (2.741) 802.660 59.667) 619. executives or officers of the Bank or any of them either severally or jointly with any other persons * Balance at beginning of the year Loans granted during the year Repayments during the year Balance at end of the year Loans transferred from amalgamated entity Debts due by companies or firms in which the directors of the bank are interested as directors. FIXED ASSETS Capital work-in-progress Tangible fixed assets Intangible assets 187.617 3.714) 1.558 1.954.926 297.

411.195.701. 2010 Rate of Depreciation (%) As at January 1.658 * (364.449.779) (375.764 1.896 60.1 Capital work-in-progress Civil works Equipments Advances to suppliers and contractors 75.874) (229.727 20 to 33.377 420.261 660.255 1. equipments and computers Vehicles 41.173 29.173 Charge on As at deletions / December 31.648 485.277 2.059 10.071 153.712 5 1.977.578 20.99 .232.409)** 35.776 * 443.320)** (202.917 * (57.833) (375.680.294 38.33 1.444 Annual Report 2010 Faysal Bank 98 .320 (24.769 44.493 5. writeoffs ** 2010 Book value at December 31.212.073 6.263.409)** 4.982 1.624 * 21.730 * 302.334 - Building on freehold land (note 14.867.750 65.873. 2010 Deletions / Writeoffs ** Leasehold land 467. fixtures.320)** 889.2) Leasehold property and improvement Office furniture.206 19.627 81.092 187.410 284.009 83.906 130.424 16.712 401.470.989 * 1. 2010 2010 Rs ‘000 14.937 1.184 848.918 * (364. 2010 1.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.963 5 to 20 889.824 1.819 2.851) - 405.414 1.2 Tangible fixed assets COST Additions / assets transferred from amalgamated entity * 2010 ACCUMULATED DEPRECIATION Charge / on assets As at December As at January transferred from 31.744.409 * 169.776 * 72.082. 2010 amalgamated entity * Rupees ‘000 Freehold land 40.059.206 1.286.904 * (72) (26.234 18.248 642.2.705 25.725) 1.466.414 * (72) 2.515 30.900 1.234 4.033 2009 Rs ‘000 14.661.009 * 397.535 20 Total Owned 4.648) 2.441 131.782.151 426.540 19.333.934.631 (82.278.

2010 1.421 (19.830 790.988) 1.889 (20.098 40.873.693 million (2009: Rs.798 14. Intangible assets COST Additions / assets transferred from amalgamated entity * 2010 ACCUMULATED AMORTISATION Charge / on assets transferred from amalgamated entity * Charge on As at deletions / December 31.083 20 to 33.756 144. 2009 Rate of Depreciation (%) As at January 1.407 (20.431 578 128. 2010 Rupees ‘000 Computer software 401.495.986) - - - 20 Total 3.1 ) 401.516.764 41.874 - 2. writeoffs ** 2010 Book value at December 31.269 113.775 (75.261 - 2.674 million).119) ** 700.184 448.139 52.135 (31.227) ** .119) ** 586.194) 131.409) 1.589) 1.826) 405.563.998 116. 2010 Deletions / Writeoffs ** As at December As at January 31. 2010 COST 2009 ACCUMULATED DEPRECIATION Charge on deletions / writeoffs As at December 31.2 14.328.071 678.648 19.258.998 40.009 40.374 420.33 Customer Relationship (note 8.995 5 to 20 1.414. equipments and computers Vehicles Rupees ‘000 40.821 481.830) - - 10.008 41.728 Note 8.2.151 (29.234 (52.596 2.311.410 882. 1.839 19.195.819 292.2.025 - (48.824 1.3 Included in cost of property and equipment are fully depreciated items still in use having cost of Rs.596 306.593 274.167 174.317.278.782.059 1.3.2) Leasehold property and improvement Office furniture.605 (90.648 50.518 2.3.098 - (14.671.385 545. 34 million on account of a claim by a local bank in settlement of its second charge.839 - (10.206 15.495.167 23.578.784 2. 1. 2009 Additions Charge Owned Freehold land Leasehold land Building on freehold land (note 14.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.558 25.784 23.079 20 to 33. 2010 Rate of amortisation % per annum As at January 1.733 274.206 16.798 14.385 - 40.639 5 1. 2009 Deletions / Writeoffs As at December 31.1 3.603) 1.984 107.2.227) ** 155. fixtures.557.450 332.339 20 Total Owned Assets held under finance lease Vehicles 3.814) 4.953 (22.184 467.261 - 2. One of these properties is encumbered to the extent of Rs.518 157.986 513.449.863.998 1.028.278.672 513.1 14.968 174.782.059 1.416.557.184 417.649 2.33 344. 2009 Book value at December 31.251 274.707 (31.252 790.644) 4. 2009 As at January 1.011 - (59.304.

Muhammad Abid Rasheed Abbasi . Burney . Zafar Bashir . Khalil Ghori .413 1. 2010 COST 2009 ACCUMULATED AMORTISATION Charge on deletions / writeoffs As at December 31. Syed Javed Akhtar .465 1.325 1.838 96. Ahmed Anwar Hemani . Shabbir Ahmed .208 1.518 1.450 1. Ali Waqar .467 1. Adnan Riaz . Ahmed Kamran .012 1.325 1. Faysal Azim Lehri .279 1. 2009 Additions Deletions / Writeoffs As at December 31. 2009 Book value at December 31.450 1.277 1. Muhammad Asghar Qureshi .439 1.493 401.291 168. Syed Nadeem Ahmed .450 1.511 1.560 1.550 1. Barney Sarfraz .Executive Mr.838 174.Executive Ms.Executive Mr. Sajjad M. Imran Siraj Khan . Syed Mehdi Haider .055 1. 2009 Rate of amortisation % per annum As at January 1.450 1. Haider Ali Jafri . Asad Kerai .Executive Mr.754 1.450 1.Executive Mr. Ahmad Kamal Uddin .686 1.160 78.570 1.669 1.389 1.754 1.325 1.Executive Mr.329 1. Amir Nasib .784 78.Executive Mr.258 1.254 1.Ex-executive Mr.322 1.450 1.450 1.550 1. 293.754 1. Omar Quraishi .288 1.Executive Mr.550 1.266 1.550 1. Irfan Merchant .448 1.Ex-executive Mr.Executive Mr. Muhammad Asim . Arif Hassan Khan .429 1.327 1.676 1.214 1.846 million (2009: Rs. Ladak .Executive Mr.Executive Mr. Amna Alam .Executive Mr.329 1. Shahid Salim . Tayyaba Rasheed .329 1.325 1.322 1.Executive Mr.Executive Mr.Executive Mr.208 Sale proceed 1.314 1.380 1.222 1.570 1.Executive Mr.518 1. Muhammad Tahir Bhatti .Executive Mr.235 1.744 1.258 1.160 96.Non-executive Mr.Executive Ms.325 1.329 1.276 1. Aneeq Malik .669 1.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.380 1.627 2. Syed M. Masoodul Islam Jaffri .427 1.325 1.752 1.250 1. Shamoon Rasheed . Muhammad Ozair Baig .319 1.380 1. Siraj Ali Mithani . Anjum Siddiqui .214 1.258 1.380 1.Non-executive Ms.314 As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy Mr.550 1.535 1.250 1.314 1.389 1.300 1.254 1.Executive Mr. Mukhtar Hussain .3.Executive Mr.000 or above are as follows: Description Owned .450 1.450 1.Executive Annual Report 2010 Faysal Bank 100 .306 933 1.196 1. Akber Amir Ali .1 14.651 1.250 1. 146.550 1.Executive Mr.291 233.Vehicles Mercedes Benz Toyota Parado Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda City Honda City Honda City Honda City Honda Civic VTEC Toyota Corolla Toyota Corolla Toyota Corolla Honda Civic VTEC Honda Civic VTEC Honda Civic VTI Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Honda City Honda City Honda City Honda City Honda City Toyota Corolla Honda City Honda City Honda City Honda City Cost Accumulated depreciation 2.012 994 1.329 1. Akbar A.325 1.Ex-executive Mr.754 1.591 1.535 1.429 1.389 1.Ex-executive Mr.296 1.Executive Mr.Executive Mr.4 Intangible assets include fully amortised items still in use having cost of Rs.329 1.269 1.Executive Mr.998 226.250 Mode of disposal Particulars of purchaser / addresses (Rupees ‘000) 3.186 1.238 1.Executive Ms.473 1.550 1.205 1.786 226.Executive Mr.427 1.Executive Mr.325 1. Mustafa Kamal . Raza Mohsin Qizilbash .784 401.296 1. Shakil Ahmed .222 1.693 281 304 327 327 304 279 209 233 279 90 134 134 132 132 322 335 356 356 374 173 153 133 152 358 148 167 167 368 368 386 53 71 71 71 124 88 71 71 88 53 123 105 105 105 Book value 1.Executive Mr.279 1. and other persons having cost of more than Rs.Ex-executive Mr.493 168.Executive Mr.327 1.241 1.380 1.33 14.466 1.744 1. Sarah Irfan . Imran Ali Malik . Sattar Qureshi .234 1. 2009 As at January 1.413 1.596 1. Shuja Haider .208 1.550 1. Uzma Hashim .535 1.744 1.277 1.322 1.Executive Mr.570 1.450 1.746 1.Executive Mr.Executive Mr.Executive Mr.827 million).Executive Mr.998 174.610 1.432 1. Mustapha Lotia .Ex-executive Mr. Details of disposal of fixed assets to executives. 2009 Charge Rupees ‘000 Computer software 233.1 million or net book value of Rs. 250.Executive Mr.200 1.380 1.101 .325 1.325 1.161 898 1.Ex-executive Mr.Executive Mr.786 20 to 33.550 1.266 1.651 1.

050 936 934 932 931 925 925 910 910 910 910 910 907 905 905 905 905 905 905 905 900 893 893 893 885 884 884 884 884 884 884 884 879 879 879 879 879 879 846 814 814 814 814 814 814 814 814 814 814 795 790 790 790 790 As per As per As per As per As per Bid As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per As per Bid Bank's Bank's Bank's Bank's Bank's policy policy policy policy policy Mr. Mirza Shauq Hussain . Manzar Nadeem (Individual) House No. Karachi.Executive Mr.300 1.Executive Mr. Muhammad Asim Brar . Car Advisor 608.Executive Mr.Executive Mr.Executive Mr. Khawaja M. Faisal Saleem . 2. Muhammad Saeed .Non-executive Mr. Mr. Asifullah Siddiqui .173 446 428 444 435 435 861 857 830 798 337 336 336 335 691 678 655 655 655 643 643 326 664 676 676 676 676 676 664 480 631 580 568 318 318 259 259 766 766 766 743 492 481 481 457 352 305 350 673 673 662 662 662 662 662 662 662 662 731 748 748 748 737 Sale proceed 659 1.Executive Mr. Jamil Irshad .Ex-executive Mr.Executive Mr.Executive Mr. Muhammad Akhtar .Executive Mr. Mateen Wahid . Qamar Uz Zaman .Executive Mr.071 1. Syed Khurram Shehzad Gillani . Abrar A. Rabia Salahuddin . Mr.Executive Mr. 2010 Description Cost Accumulated depreciation 641 66 792 807 789 773 773 215 214 225 252 599 598 597 596 234 247 255 255 255 267 267 580 241 229 229 229 229 229 241 420 262 312 324 566 566 625 625 118 118 118 141 387 398 398 422 527 574 496 141 141 152 152 152 152 152 152 152 152 64 42 42 42 53 Book value 659 1. Saddam Haider .Executive Mr. 2.Executive Ms.235 1.076 1.Executive Mr.Executive Ms. Jamil Ahmad .053 435 925 925 925 975 337 336 336 335 925 925 910 910 910 910 910 326 905 905 905 905 905 905 905 900 893 893 893 318 318 318 834 766 766 766 743 879 879 879 879 966 316 868 675 675 675 675 675 675 675 675 675 675 790 790 790 790 790 Mode of disposal Particulars of purchaser / addresses (Rupees ‘000) Honda Civic Toyota Corolla Honda Civic Honda Civic Honda Civic Honda Civic Honda Civic Honda City Honda City Honda City Toyota Corolla Honda City Honda City Honda City Honda City Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Honda City Honda City Honda City Honda City Honda City Honda City Honda City Honda City Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Honda City Honda City Honda City Honda City Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Honda Civic Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Honda City Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus 1. Syed Mohammad Ali Zaidi .Ex-executive Mr. Aamir Ahmed .Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. Muhammad Sabih Qazi . Ali Raza . Shahid Rizwan . Ahsan Noor . Shahzad Ahsan . Block No.208 1. Imran Ahmed . Najeeb Ahmed .Executive Mr. Rooh Ul Amin . Afzal Haq . Mohammad Younis Khan . Mohammad Saleem Shafi .Executive Mr.238 1.233 1.Executive Mr. Rafiq . Fatima Jinnah Road.Executive Mr. Asim Seth . Mr.Executive Mr. Sarwat Moiez .Ex-executive Mr.Executive Mr.Executive Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy As per Bank's policy Bid As As As As As As As As As As As As As As As per per per per per per per per per per per per per per per Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy . Khan .Executive Mr. Shakeel Raza Shah .Executive Mr. Saqib Imam Zaidi . M.Executive Mr.Ex-excutive Mr.Executive Mr.Executive Mr. Nadeem Shaukat Rathore . Azeem Ahmad .Executive Mr.Executive Mr. Irfan A.Executive Mr.Non-executive Mr.Executive Mr. Karachi. M. Bashir Ahmed Wasan . Rashid Saleem Choudhry . Zahid Hameed . Shahzad Anwer Mian .Executive Mr. Showroom No.Executive Ms. Cheema . Car Advisor 608.Executive Mr.Executive Mr. Khan . FB Area.Executive M/s. Hasan Jamal .Executive M/s. Syed Sohail Akhtar .Executive Mr.Executive Mr.Executive Mr.11.Ex-executive Mr.Executive Mr. Karachi. Muhammad Zafar Abbas .Executive Mr. M.Ex-executive Mr. Mohammad Javed . Muhammad Salman Zaffar . Showroom No. Faiz Ahmed Mirza . Yameen Ghani . Siddik .Executive Mr. Pervez I. B-88. Fahd Jafri .Non-executive Mr.Executive Mr. Adnan Rashid .Non-executive Mr. Sara Irfan .Executive Mr.208 1.239 1. Syed Fida Hussain Shah .Ex-executive Mr.055 1. Amjad Idris . M.Executive Mr.239 446 445 444 1.Executive Mr. Raja Imran Naseeb . Abid Ali . Naved Inayet . Fatima Jinnah Road.Executive Mr.Executive Mr. Syed Fuad Ali . Shoaib Siddiqui . Syed Mohsin Ali Shah . Zaheer .Ex-non-executive Mr. Adnan Aqeel .

Muhammad Khalid Israr .Non-Executive Mr.Executive Mr.Non-Executive Mr.Executive Mr. Muhammad Naeem Akhtar . Zahir Ali Quettawalla . Aamir Salehjee .Non-Executive Mr.Executive Mr. Muhammad Qasim Sorathia .Non-Executive Mr.Executive Mr.Non-executive Mr. Shoukat Mehboob Malik . Naveed M.Executive Mr.Executive Mr.Executive Mr.Non-Executive Mr.Executive Mr.Executive Ms.Ex-executive Mr. Khalid Ali Khan Afridi .103 .Ex-executive Mr. Muhammad Usman Bajwa . Syed Asim Imtiaz . Syed Imran Hassan . Syed Izzat Hussain . Wasim Khalid . Jamal Yousuf Khan .Executive Mr. Shafiq Ahmed Tahir . Hanfee .Executive Mr.Executive Mr. Faiz Hassan . Muhammad Moinuddin Khan .Executive Mr.Executive Mr.Executive Mr.Executive Mr. Rashid B. Ahsan Iqbal Sheikh . Mirza Kamran Baig .Non-executive Ms. Mubashir Mustafa . Amjad Ashraf . Asad .Non-Executive Mr.Executive Mr. Imran Ahmed Minai .Executive Mr.Non-Executive Mr. Javed Iqbal . Saleem Shoukat Ali .Executive Mr.Executive Mr. Ahmad Amin . Ahsan Jamal .Executive Mr. Mohammad Arif Usman . Saad Hassan Khan .Executive Mr.Executive Mr. Naveed Zia Tarar .Executive Mr.Executive Mr. Muhammad Yahya Hameed Wahla . Maqsood Ahmed .Ex-executive Mr.Executive Mr. Talha Aziz . Naveed Aziz .Ex-executive Mr. Amjad .Executive Mr. Zahid Bashir . 2010 Description Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cost 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 785 785 785 754 754 754 754 754 704 704 704 704 682 682 682 652 652 652 652 652 652 652 652 650 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 626 617 617 617 617 616 616 612 Accumulated Book depreciation value (Rupees ‘000) 53 53 53 53 53 53 53 53 63 63 63 63 63 63 63 63 52 52 52 151 151 151 151 161 150 160 169 169 164 164 164 165 165 165 174 174 174 174 183 199 177 185 185 185 185 185 185 185 185 185 185 185 185 185 185 185 185 185 185 184 197 236 263 296 181 197 220 737 737 737 737 737 737 737 737 727 727 727 727 727 727 727 727 733 733 733 603 603 603 603 593 554 544 535 535 518 518 518 487 487 487 478 478 478 478 469 450 455 446 446 446 446 446 446 446 446 446 446 446 446 446 446 446 446 446 446 443 419 380 354 321 435 419 391 Sale proceed 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 785 785 785 675 675 675 650 675 675 675 675 675 650 650 650 650 650 650 650 650 650 650 650 650 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 626 617 550 362 575 616 616 550 Mode of disposal As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As As per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per per Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's Bank's policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy policy Particulars of purchaser / addresses Mr. Haroon Saleem .Executive Mr. Nadeem Ghani .Executive Mr.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. Shafiq Ahmed Baig .Executive Mr. Nauman Aftab . Mian M. Rehan Aslam .Executive Mr.Executive Mr. Ghouri Shahzad . Muhammad Ishaq Mir .Executive Ms. Tariq Rasheed Siddiqui .Executive Mr.Executive Mr. Arooj Waheed . Naz Saleem . Abbas Ali Sahi . Omer Farouq Mukaty .Executive Ms.Ex-executive Mr.Non-Executive Mr. Faizan Shamsi . Faisal Shahzada .Non-Executive Mr.Executive Mr. Dharmendar Kumar .Non-Executive Mr.Executive Mr. Taimoor Malik . Muhammad Ahmed .Executive Mr.Executive Annual Report 2010 Faysal Bank 102 .Executive Mr.Executive Mr. Amer Rafique . Sunila Zaidi .Executive Mr. Nasir Mahmood .Executive Mr.Executive Mr. Abdul Khalil . Fatima Mustafa . Wajahat Naeem .Executive Mr.Executive Mr. Hassan Ashraf Cheema . Aamir Aftab . Muhammad Tausif Ul Haq . Junaid Ahmed Khan .Executive Mr. Ghulam Khalid Khan . Saima Adnan . Atif Asad Mirza . Behram Keki Irani .Executive Ms.Executive Mr.

1 16.Executive Mr. Sector 43/A. Karachi.202 1.019) (852.918 Reversal of deferred tax liability on leased assets relating to prior years During the year.Executive Mr.Executive Mr.216) (73.Office furniture.971 1. Changes in Accounting Estimates and Errors'. Dilawar & Brothers Sarfraz Town Korangi No. Ayesha Umer .279. S. In accordance with the requirements of International Accounting Standard . Muhammad Ashraf Nadeem .Executive Mr.457) (154. Street-6. Adnan Shakeel Khan (Individual) House No.664 20. Block-10-A. There is no impact on cash flows because of this adjustment. Tahir Malik . Hammad Sarwar .NET Deferred credits arising due to: Net investment in finance leases Accelerated tax depreciation Surplus on revaluation of securities Fair value adjustments relating to net assets acquired upon amalgamation 15. the excess deferred tax liability has been reversed by adjusting the opening balance of deferred tax liability and unappropriated profit as at Januar y 1. equipments and computers Generator As Bank's per policy 819 327 491 600 Bid M/s. Syed Abid .1 2010 Rs ‘000 2009 Rs ‘000 (236.Executive Suzuki Cultus Owned . Zafar Hussain Malik . M.887 195.Executive Ms. Abdul Rauf . 2009 and for periods prior to that has not been adjusted as it was not considered practical on account of lack of availability of reliable data which can allow determination of these effects. . 2010 being the earliest period for which restatement was practicable.Executive Mr.Executive Mr. Riaz Ahmed . Kalim Jaffery . Murtaza Arif Dar .395) (197.8 'Accounting Policies. Gulshan-e-Iqbal.017.596) (754.Non-Executive Mr. the management has carried out an exercise to reconcile the deferred tax liability on leased assets appearing in the books of accounts with the related tax records. 765. fixtures.888) - Deferred debits arising due to: 15.1 Net investment in finance leases Provision against non-performing advances Provision for diminution in the value of investments Provision against other assets Minimum tax Unused tax losses (including unabsorbed depreciation) Deficit on revaluation of government securities 15. Nasir Shabir .534 4. 2009. Note 15. Mr. 2010 Description Cost Accumulated depreciation 239 264 280 272 272 296 296 296 296 286 321 296 286 321 284 269 Book value 373 336 320 328 328 304 304 304 304 309 267 304 309 267 276 291 Sale proceed 383 525 525 525 328 312 312 312 304 309 267 304 309 267 632 202 Mode of disposal Particulars of purchaser / addresses (Rupees ‘000) Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Suzuki Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus Cultus 612 600 600 600 600 600 600 600 600 595 588 600 595 588 560 560 As per Bank's As per Bank's As per Bank's As per Bank's As per Bank's As per Bank's As per Bank's As per Bank's As per Bank's As per Bank's As per Bank's As Bank's per As Bank's per As Bank's per Bid policy policy policy policy policy policy policy policy policy policy policy policy policy policy Mr. Muddassir Mazhar Ahmed .Executive Mr.306 178. Amjad Khan .923. The comparative information for the year ended December 31. The results of the exercise highlighted that deferred tax liability in respect of leased assets was recorded in excess by Rs.278 5.014 561.Executive Mr. Moazzam .862 93.350 534.Executive Mr. Dilawar Khan .Non-Executive Mr.825 368. Karachi.672.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. 3-1/2.Executive Mr. DEFERRED TAX ASSETS . 402.Executive Mr.052 million as at December 31.

deposits.774 1.575 475. 2010 Annual Report 2010 Faysal Bank 104 .927) 10.290.253) 1.302.068.965 2010 Rs ‘000 (754.052 10.232. OTHER ASSETS Income / mark-up accrued in local currency Income / mark-up accrued in foreign currencies Advances.2 2010 Rs ‘000 1.551 5.578 28.369 1.534 2009 Rs ‘000 16.004 62.105 .877 16.192.091 (221.305 (101.517.400.1 Credit cards and other products fee receivable Suspense account Unrealised gain on revaluation of forward foreign exchange contracts Dividend receivable Receivable from brokers against sale of shares Prepaid employee benefits 16.determined by professional valuer The movement of prepaid staff benefits is as follows 16.164 2.966.2 Others Less: Provision held against other assets Other assets (net of provisions) 16.328.506 10.632 1. 2010 Employee benefits expensed during the period Prepaid employee benefits on December 31.657 5.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.153 131 86.258.719 254.577 2.879 180.3 4. 2010 2010 Rs ‘000 16.237 1.935 2.120 28.828 (40.243 142.589) 4.295. 2010 Reversal of excess deferred tax liability on net investment in finance leases relating to prior years Adjusted deferred tax asset on net investment in finance leases as at January 1.750 820. 2010 The impact of this reversal on the deferred tax liability relating to net investment in finance leases is as follows: Note Deferred tax liability on net investment in finance leases as at January 1.192.808.395) 765.938.226 294. advance rent and other prepayments Taxation (payments less provisions) Non-banking assets acquired in satisfaction of claims 16.716 1.019 10.1 Market value of non-banking assets acquired in satisfaction of claims .995 369. 2010 Deferred tax asset recognised in the profit and loss account during the current year Deferred tax asset on net investment in finance leases as at December 31.575 Prepaid employee benefits acquired on October 15.

602.904 34.033 12.076 34.under export refinance scheme .635.633.589 62.972.302 789.7 14.6 18.475 1.1 Particulars of borrowings with respect to currencies In local currency In foreign currencies 18.550 34.451 34.4 18.(LTF-EOP) . The mark-up rate on this facility ranges from 7.933 109.3 18.604 21.Part I and II .092) (6. As per the agreement.451.076 34.313. As per the terms of the agreement.454 7.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.322.648 (19.926 3.828 2.206.612 232.753. BORROWINGS In Pakistan Outside Pakistan 18.766 18.407 7.248.859 34.612 6.985.766 34.450 34.154 34.950.671.964.589 18.3 In accordance with the ERF scheme. the Bank has granted SBP the right to recover the outstanding amount from the Bank at the date of maturity of the finance by directly debiting the current account maintained by the Bank with the SBP.985.under scheme for long term financing for export oriented projects .904 8. Borrowing from the SBP under the expor t refinance scheme is secured by the Bank's cash and security balances held by the SBP.976 13.3 Provision against other assets Opening balance Charge for the year Reversals Provision against other assets transferred from amalgamated entity Closing balance 17.218.635.5 18.828 2. BILLS PAYABLE In Pakistan Outside Pakistan 18.766 Note 2010 Rs ‘000 101.560 1.968.927 2009 Rs ‘000 108.740 166. 18. 2011 from the date of borrowing.681.108.633.561 221. 2010 16.2 Details of borrowings secured / unsecured Secured Borrowings from the State Bank of Pakistan .4 .013.904 1.154 34. the Bank has granted SBP a right to recover the outstanding amount from the Bank at the respective date of maturity of finances by directly debiting the current account of the Bank maintained with SBP. the Bank has entered into agreements for financing with the State Bank of Pakistan (SBP) for extending export finance to customers.043 6.444) 101.635.5% to 9% per annum (2009: 7% per annum) payable on quarterly basis with maturities upto June 30.under long term financing facility (LTFF) Repurchase agreement borrowings Unsecured Call borrowings Overdrawn nostro accounts 3.581 17.912 1. These represent borrowings from SBP under scheme for Long Term Financing for Export Oriented Projects at rates ranging from 4% to 5% per annum (2009: 4% to 5%) and have varying long term maturities stipulated by SBP.621 (844) 61.307.733 10.550 6.379 28.465.216 21.777 58.859 27.985.

673 2.208.707.75% to 13.655.204 53.285 29.204 175.000 2009 Rs ‘000 999.40% per annum) maturing up to January 2011.50% to 13. 2010 Rs ‘000 2009 Rs ‘000 18.107 .6 18.200 1.733. SUB-ORDINATED LOANS This represents rated and un-secured Term Finance Certificates (TFCs). and have var ying long term maturities stipulated by SBP.789. DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Saving deposits Current accounts – Remunerative Current accounts – Non-remunerative Margin accounts Financial Institutions Remunerative deposits Non-remunerative deposits 86.315.242 317.096.525.328.595.7 19.284 1. the Bank has granted SBP a right to recover the outstanding amount from the Bank at the respective date of maturity of finances by directly debiting the current account of the Bank maintained with SBP.422 5.061 189.405. 2010 18.20% to 7. As per the terms of the agreement.223.233.471 39.746 116.25% per annum).677 123.80% per annum (2009: 7.5% to 8.153.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.800.050 61.000 Annual Report 2010 Faysal Bank 106 .75% per annum (2009: 11. These borrowings are from various institutions in the interbank market.25% to 12.147.655.526 40.989 123.664 195.421.326.188 116.315.318 195.511 7.443.670.1 Particulars of deposits In local currency In foreign currencies 20.540 5.188 19. made at rates ranging from 12.782 7.00% to 12.15% per annum) against market treasur y bills and Pakistan investment bonds maturing upto January 2011. The salient features of the issues are as follows: 2010 Rs ‘000 Outstanding amount Total issue amount 4.607. This represents collateralized borrowings against market treasur y bills at rates ranging from 12.955 21.000.531.895 9.395 4.886 19.199 7.5 These represent borrowings from SBP under scheme for Long Term Financing facility at rates ranging from 6.50% per annum (2009: 11.

998.595 million) Rs.1 2. 1.000 million “AA-” (Double A Minus) by JCR-VIS Unlisted Base Rate Plus 2.451 1.094 3. The TFCs are subordinated to all other indebtedness of the Bank including deposits.290 14. 0.324 23.25% The Base Rate is defined as the ask side of six months Karachi Inter bank Offered Rate (KIBOR) prevailing on the base rate setting date.20% of principal in first 60 months and remaining principal in four semi-annual installments of 24.406.640 664. February 2005 8 years from the date of issue.000 million Rs.129 918 321.626 56. Semi annually as follows.969 73.1 2010 Rs ‘000 2009 Rs ‘000 26 21.40% The Base Rate is defined as the ask side of six months Karachi Inter bank Offered Rate (KIBOR) prevailing on the base rate setting date. TFC .000 million “AA-” (Double A Minus) by JCR-VIS Listed Base Rate Plus 1.300 57.560 1.750 16. Note 21. The Base Rate is defined as the ask side of six months Karachi Inter bank Offered Rate (KIBOR) prevailing on the base rate setting date.928.876 24.610.788 139 48.977.II Rs.470 6.315 489.984 2.731 48.791 1. October 2010 7 years from the date of issue. 598.249 434.069 This represents interest free security deposits received from lessees against lease contracts and are adjustable against residual value of leased assets at the expiry of the respective lease terms.841 504. TFC-others-relating to amalgamated entity Rs. The TFCs are subordinated to all other indebtedness of the Bank including deposits.800 million (fair value Rs 596.95% starting from 66th month Profit is payable semi-annually in arrears.20% of principal in first 60 months and remaining principal in four semi-annual installments of 24.841 684.216 13. Semi annually as follows. 3.782 3. November 2007 7 years from the date of issue.553 26. In 4 equal annual installments starting from 60th month from the date of issue. 3.95% starting from 66th month Profit is payable semi-annually in arrears. 800 million ACRA “Rated A” (Single A) by P Listed Base Rate Plus 1.90%.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. Date of issue Tenure and maturity Principal Repayment Profit Payment Profit is payable semi-annually in arrears. 0.024 42.I Rs.688.037. OTHER LIABILITIES Mark-up / return payable in local currency Mark-up / return payable in foreign currencies Unearned commission / income Accrued expenses Taxation (provisions less payments) Unclaimed dividends Branch adjustment account Unrealised loss on revaluation of forward foreign exchange contracts Fair value of derivative contracts Withholding tax payable Federal Excise Duty payable Security deposits against finance leases Payable to brokers against purchase of shares Others 21.334.237. .275. Subordination The TFCs are subordinated to all other indebtedness of the Bank including deposits.8 million Rs. 2010 Particulars Outstanding amount Issue amount Rating Listing Rate TFC .

797. subscribed and paid-up capital during the year is as follows: Number of Shares Opening balance at January 1.1 Appropriations are made to statutory reserve as required by section 21 of the Banking Companies Ordinance.056 23.1 8.952 15.420 513.941 ordinary shares of Rs.722 15.909.000 22.2 Issued.000 730. The movement in the issued.091.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.5 8.230 730. 2010.911 1.094 2009 Rs ‘000 23.600 7.030.000. 22.142 121.090. 2010 Note 609.1 SHARE CAPITAL Authorised capital 2010 Number of Shares 2009 Number of Shares 2010 Rs ‘000 2009 Rs ‘000 1. RESERVES Statutory reserve Capital reserve Reserve arising on amalgamation Revenue reserve Non-Distributable Capital Reserve .000 609. at the rate 20% of profit after tax for the year.014.S.660. 10 each 12. 10 each (2009: 407.640.000.309.688 3.372 22.454 ordinary shares). Ithmaar Bank B.183 7. 2010 22.014.660.146 7.797 156.C.109 .590 23.600 6.031.2 4.000 1.980 156. 1962.514 3.200.000.3 22.542 4.4 23.742.218.818.094 2.420 391.909.090.000 Ordinary shares Fully paid in cash Issued as bonus shares Issued for consideration other than cash 2.091.451.142 Ordinary shares of Rs.979.514 389.451.000.299. 2010 Bonus shares issued during the year Closing balance at December 31.gain on bargain purchase Capital market reserve 23.290. subscribed and paid-up capital 2010 Number of Shares 201.372 2010 Rs ‘000 Rs ‘000 6. Annual Report 2010 Faysal Bank 108 .309.4 2009 Number of Shares 201. (the ultimate holding company of the Bank) through its subsidiaries and nominees held 489.200.911 As at December 31.952 3.919.000 12.514 5.137.354.

860 (230.2 In prior years.557) (218.950) (22. 2010 23.968 (8. Note 24.1 2010 Rs ‘000 2009 Rs ‘000 (86.Listed companies Term Finance Certificates . the Bank made appropriations to capital market reserve in order to meet unforeseen future contingencies in the capital market.048 (75.266) 221.NET OF TAX Available for sale securities Federal Government Securities .Ijara Sukuk Bonds Fully Paid up Ordinary Shares / Modaraba Certificates / Units of Closed end Mutual Funds .Sukuk Bonds Related deferred tax asset / (liability) 24.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.818.091) (48.934) (399.Pakistan Investment Bonds .Market Treasury Bills .446.859 (2.259 (125.Listed companies / modarabas / mutual funds Fully Paid up Preference Shares .510 (60.161) (2.593 24.507.Listed Units of Open ended Mutual Funds Other Investments . .954) (45.237 4.917) 1. SURPLUS / (DEFICIT) ON REVALUATION OF ASSETS . during the period the Bank has decided to transfer the balance appearing in the reserve to unappropriated profit and not to make additional appropriation on this account.147) 1. The decision has been taken as in the opinion of the management all capital market losses are accurately reflected in the determination of profit / equity through the mark to market process and a robust and timely mechanism for recognition of impairment losses.1 This represents deferred tax on surplus / (deficit) on revaluation of securities at applicable tax rates.656) 1.367) 105. However.113) 113.108) 28.

661 ii) Indemnity issued favouring the High Court in the above case iii) Claims against the Bank not acknowledged as debt The above includes an amount of Rs 25.850 7.153 3. The management of the Bank is confident that the decision in respect of these matters will be decided in the Bank's favour and accordingly no provision has been made in these financial statements in respect of this liability. These include disallowance on cer tain matters that include initial depreciation on leases. release of securities. The Bank and the department have filed appeals with the CIT (Appeals).217 2.111 .819 7.748.461.558 10. bad debts written off.996 2. The Bank’ legal advisors are s confident that the Bank has a strong case 3.872 14.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.543 1. bid bonds. Based on legal advice. 25.067.382 million.819 1.727 4.500. excess perquisites and certain other matters. shipping guarantees and standby letters of credit etc.299 million in respect of a suit filed against the Bank for declaration.774.695.910.275 833.000 457.938. rendition of account and damages. management is confident that the matter will be decided in Bank's favour. recovery of monies.770 837. The additional tax liability on these matters is Rs 1. taxability of dividend.961.850 1.641.261 2009 Rs ‘000 7.974.789 41.543 26.500.045 1.603 24.659.3 Trade-related contingent liabilities Letters of credit i) Government ii) Banking companies and other financial institutions iii) Others 25.659 13.279. 2010 2010 Rs ‘000 25.959. favouring: i) Government ii) Banking companies and other financial institutions iii) Others 25.471. iv) Income tax assessments of the Bank have been finalised upto the tax year 2010 (Accounting year 2009).659.471.343. provision for bad debts.465 11.734 2.2 Transaction-related contingent liabilities Contingent liability in respect of performance bonds.492 9.454.261 1. The department and the Bank have disagreements on various matters for tax years from 1994 to 2009.795 4.407. ITAT and the High Court in the aforementioned matters.731 7.893.1 CONTINGENCIES AND COMMITMENTS Direct credit substitutes Contingent liability in respect of guarantees favouring: i) Government ii) Banking companies and other financial institutions iii) Others Acceptances i) Government ii) Banking companies and other financial institutions iii) Others 25.4 Other Contingencies i) Suit filed by a customer for recovery of alleged losses suffered which is pending in the High Court of Sindh. Annual Report 2010 Faysal Bank 110 .000 457.003 9.

which need to be monitored and assessed.390.advances 210.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.000 2009 Rs ‘000 The Bank makes commitments to extend credit in the normal course of its business but these being revocable commitments do not attract any significant penalty or expense if the facility is unilaterally withdrawn.699.527.Banks Sale . Management of risks includes the following primary components: .327 5.7 25.582 15.9 Other Commitments Interest rate swaps and cross currency swaps (notional principal) 53. The Bank's risk management function is independent from the business line. The Bank currently deals in interest rate and cross currency derivatives with clients.043. Risk management reviews credit risks.648 6. monitoring and reporting risks.522.230 421.890 - 26.656 23.136.250.108 2009 Rs ‘000 1.Comprehensive risk measurement approach.051 4. .Banks 2010 Rs ‘000 1.5 Commitments in respect of forward lending / purchase Commitment to invest in securities Commitment to extend credit .088.320 17.327 82. 26.515 8. guidelines and other parameters used to govern risk taking.488 84.000.224.857 25.224.288. Adherence to these limits is ensured through independent monitoring and control functions.Strong management information system for controlling.000 2.Detailed structure of limits.880 24.745.231.8 Commitments for the acquisition of operating fixed assets Commitments in respect of repo transactions Repurchase Resale 10.840 6. DERIVATIVE INSTRUMENTS The purpose of the derivative business of the Bank is to provide risk solutions for the clients of the Bank and to hedge and manage the risks in its own books. 2010 2010 Rs ‘000 25.787 25. 25. market risks and other risks associated with a transaction or area of activity and assigns limits within which the transaction / area of activity can be carried out.536 6. .Customers .244.536 5.6 Commitments in respect of forward exchange contracts Purchase . and .1 Derivative Risk Management There are a number of risks undertaken by the Bank.Customers .

of Notional Contracts Principal Rs '000 36 77 36 77 113 20.746.827.548.927.890 2010 Negative (84.682) (30.543 76. Credit risk There are two types of credit risk (Settlement and Pre-Settlement risk) that are associated with derivatives transactions and monitored on a regular basis. These measures are calculated through the relevant systems.027) (3.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.259) (1.395. Liquidity risk Liquidity risk is managed as part of the overall liquidity risk of the Bank. such as FX rates. 26. Risk Management sets the policies and limits for counterparty risk based on internal ratings model.500) (334.419.406) Mark to Market Positive 6.892) (2.723.231. of Contracts Notional Principal 956.573 20.774 4.317 32.890 2009 Interest Rate and Cross Currency Swaps No.239) (1.957) (257.454) (363. of Notional Contracts Principal Rs '000 - Counterparties With Banks for Hedging Market Making With other entities for Hedging Market Making Total Hedging Market Making 26. equity prices.824) (434.162. implied volatility levels and combinations of the above.020.267) (1.682) (36.370 70. V alue at Risk and OCP.992 129.304.113 . These involve extreme shifts in a variety of parameters.626) Rupees '000 Upto 1 month 1 to 3 months 3 to 6 months 6 months to 1 Year 1 to 2 Years 2 to 3 Years 3 to 5 Years 5 to 10 years 3 2 25 23 43 17 113 Annual Report 2010 Faysal Bank 112 .249) (5.304.231.334. The most important measures used to manage market risks are Delta.904.222 1.889 3. The Bank uses internal models to measure and manage these risks.927. interest rates.608 207.653 1. Market risks The authority for approving policies and limits rests with Risk Management which also under takes periodic portfolio reviews.780 Net (84.317 32.179.687 12.890 53.544.3 Maturity Analysis Interest Rate Swaps and Cross Currency Swaps Remaining Maturity No.042 31.2 Product Analysis 2010 Interest Rate and Cross Currency Swaps No. 2010 Major risks associated with derivatives are market risk and cred it risk.573 53.

342 103.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. 2010 Rs ‘000 27.505 34.160.390 19. MARK-UP / RETURN / INTEREST EARNED a) On financing to: i) customers ii) financial institutions b) On investments in: i) held for trading securities ii) available for sale securities iii) held to maturity securities c) On deposits with treasury bank and financial institutions d) On securities purchased under resale agreements e) On call money lendings 13.141 84.460 2009 Rs ‘000 11.364 482 206. 2010 the fair value of derivative financial i nstruments has been deter mined using valuation techniques with significant inputs such as forecasted market interest rate and foreign exchange rate.339 1. 2010 Remaining Maturity No.957.689 4.665 1. The determination of the fair value of these instruments is most sensitive to these key assumptions.417 332. of Contracts Notional Principal 2009 Negative Mark to Market Positive - Net - Rupees '000 Upto 1 month 1 to 3 months 3 to 6 months 6 months to 1 Year 1 to 2 Years 2 to 3 Years 3 to 5 Years 5 to 10 years 26.754 16.771.140 64.028.710.019 52.259. Any significant change in these key assumptions may have an effect on the fair value of these derivative financial instruments.875 .240.4 As at December 31.128 35.521 4.439 1.293.

358 633.696 513. insurance.879 16.002 40.838 72.251 112.454 1.Pakistan Investment Bonds .817 76.198 71.982 610.Ijara Sukuk Bonds Fully Paid up Ordinary Shares / Modaraba Certificates / Units of Closed end Mutual Funds Units of Open end Mutual Funds 30.644.341 10.621 50.128 52.431 146.213 (223. conveyance and entertainment Vehicle running expenses Books.862 4.3 Annual Report 2010 Faysal Bank 114 .323 275.072 8.220 46.267 23.257 89.671 660.920.540. ADMINISTRATIVE EXPENSES Salaries.931. periodicals and subscription Brokerage and commission Others 9.995 148.211 106.249 2.004 11.854 61.263.591 1.859 4.228 6.933 814.983 274.182 168.415 449.794 262. OTHER INCOME Rent on property Maintenance charges on property rented Net profit on sale of property and equipment Recovery of amount written off previously invested in Certificate of Investments Income realised on un-winding of certain derivative contracts Others 31. GAIN / (LOSS) ON SALE OF SECURITIES Federal Government Securities .838 66.627 8. electricity. taxes.2 14.595 40.261 1.521 28.967.450 547.842 4.2 14.488 78.115 .231 824.631 157.969 1.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.885 2010 Rs ‘000 2009 Rs ‘000 31.256 9.412 13. etc.991 113.919.158 32.906 578.964 1.314 784. MARK-UP / RETURN / INTEREST EXPENSED Deposits Securities sold under repurchase agreements Other short term borrowings SBP borrowings Long term borrowings Sub-ordinated loans 29.284 11.849 86.737 80.436 8.289.849) 1.364 58.755 320. 2010 Note 28.095 5.788 12. allowances and other employee benefits Charge for defined benefit plan Contribution to defined contribution plan Non-executive directors' fees Rent.538 242.839 96.500 924 80.526 629.284.682.307 107.451 38.321.079 64.085 5.709 455.1 31.505 22 80. Legal and professional charges Communications Repairs and maintenance Finance charge on leased assets Stationery and printing Advertisement and publicity Donations Auditors' remuneration Depreciation Amortisation License and technical fee Travelling.Market Treasury Bills .339.463 101.289 890.854 2.086 10.

436 100 1.157.118) 100.736 (325.1 Donations made during the year were as follows: Donee The Aga Khan University SWAT Refugee Relief Fund The Helpcare Society The Citizens Foundation Karachi Relief Trust Prime Minister's Flood Relief Fund District Government Bahawalpur Institute of Business Administration (IBA) Waqf Faisal (Trust) .2 191.443 (439. 2010 Note 31.492 (3.460 2.500 400 46 3. OTHER CHARGES Penalties imposed by the State Bank of Pakistan Workers Welfare Fund Fixed assets written off Others 33.709) (363.275 275 5.653 25 10.983) 717.This is a charitable public welfare project (The President & CEO of the Bank is the managing trustee of the trust) 31.117 16.016 68.124 (468.085 2010 Rs ‘000 2009 Rs ‘000 .803 19.500 2. TAXATION For the year Current Deferred For prior years Current Deferred 239.2 Auditors’ remuneration Statutory audit fee Fee for quarterly and annual group reporting Fee for the review of the half yearly financial statements Fee for the provident and gratuity funds Tax services Special certifications and sundry advisory services Out-of-pocket expenses 32.823.342 1.029 33.300 475 350 8.671 11.029 40 1.815 1.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.250 350 46 1.566) 33.690) (229.610) (617.440.445) (133.000 11.718 23.696 33.879 21.600 2.036 480 469 2.275) 1.

915 (493.550) 9.427. In thousands Weighted average number of ordinary shares outstanding during the year 730.159 34. CASH AND CASH EQUIVALENTS Cash and balance with treasury banks Balances with other banks Call money lendings Overdrawn nostros 9 10 11 18.64 730.prior year reversal .428.275) 1. 2010 2010 Rs ‘000 33.214.1 Relationship between tax expense and accounting profit Profit before tax Tax calculated at the rate of 35% (2009: 35%) Effect of: . Any difference arising on assessment finalised during the year is adjusted in the profit and loss account in accordance with the Bank's accounting policy.795 300.426 8.1 Diluted earnings per share has not been presented as the Bank does not have any conver tible instruments in issue at December 31.909 34.permanent differences .054 289.501 455.175 84. 2009 which would have any ef fect on the earnings per share if the option to convert is exercised.981) (617.income chargeable to tax at reduced rate .469 10.531 (166. EARNINGS PER SHARE Profit after tax for the year 2010 Rs ‘000 1.190.727.003) (133.909 (6.basic 1.300. 2010 and December 31.2 17.447 Annual Report 2010 Faysal Bank 116 .Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.709) (36.117 .200.63 1.735 100.202 508.150.407) 23. Note 2010 Rs ‘000 2009 Rs ‘000 35.329 2009 Rs ‘000 1.342 2009 Rs ‘000 This represents reversals arising in respect of prior years on finalisation of assessments.118) 344.947) (363.000 (21.others Tax charge for the year 33.909 Rupees Earnings per share .924 5.2 827. Provision in respect of tax liability is made on management's best estimate which is adjusted based on assessment made by the tax authorities.

157 .826 (62. DEFINED BENEFIT PLAN General description The Bank operates an approved funded gratuity scheme for all its permanent employees and employees who are on contractual service in non-management cadre. The minimum qualifying eligible service for contractual employees not employed under the management cadre is 6 months.1 37.582 2.1 3.869 1.165) (339) 167.042 976 3.961 37.135) 61.2 Principal actuarial assumptions Discount factor used (% per annum) Expected long term rate of return on plan assets (% per annum) Expected rate of salary increase (% per annum) Normal retirement age (years) Note 2010 14.871 (32. The benefits under the gratuity scheme are payable on retirement at the age of 60 years or earlier cessation of ser vice in lump sum.5 277.760) 229.221) (350) 229.979 6.75 60 2009 Rs ‘000 229. 2010.50 60 2010 Rs ‘000 2009 12.287 5.3 Reconciliation of receivable from defined benefit plan Present value of defined benefit obligations Fair value of plan assets Net actuarial loss not recognized 37.50 14.124 (17. 2002.125 46. In the case of other members of the Fund the minimum qualifying eligible service is 5 years. STAFF STRENGTH Permanent Temporary / on contractual basis Bank's own staff strength at the end of the year Outsourced Total Staff Strength 36. The latest actuarial valuation of the Bank's defined benefit plan based on Projected Unit Credit Actuarial Cost Method was carried out as at December 31.157 (245. 37. 2010 Note 36.961 (168.1 Outsourced staff represent employees hired by an outside contractor / agency and posted in the Bank to per form various tasks / activities of the Bank.120 32. The benefit is equal to one month's last drawn basic salary for each year of eligible ser vice or part thereof.931 111 2. 37.75 12.523) (19.4 Movement in present value of defined benefit obligation Opening balance Current service cost Interest cost (Gain) / loss on defined benefit obligation Actual benefits paid during the year Closing balance 37. The minimum qualifying eligible ser vice for gratuity is 1 year for employees who became members of the Fund before November 12.961 59.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.018 2010 Rs ‘000 2009 Rs ‘000 36.630) 277.75 12.50 14.4 37.493 27.286) 31.229 (24.547 35 3.

135 24.296 245.626) 4.884) 4.5 Movement in fair value of plan assets Opening balance Expected return on plan assets Contribution made Benefits paid by the fund Gain / (loss) on plan assets Closing balance 37.119 .620) (350) 104.351 (59.253 (21.637 2006 37.1 Plan assets consist of the following: Balances with banks and financial institutions Units of open ended mutual funds Term finance certificates 37.739 (25.402) (2.286 107.125) 107.620 (19.229 (24.6 Movement in amount receivable from defined benefit plan Opening balance Charge for the year Contribution to fund made during the year Closing balance 37.286 (31.120 32.854) (339) 168.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.7 Charge for defined benefit plan Current service cost Interest cost Expected return on plan assets Amortization of loss 37.979 (19.854 (58.157) 245.141) 97.655 2007 46.008 58.626 58.630) 1.286 (339) 70.421 22.871) 24.7 155.854 15.493 27.974 168.760) 64 168.609 26.928) (5.8 37.9 Actual return on plan assets Historical information 2010 2009 2008 59.818) (2.5.135 2010 Rs ‘000 2009 Rs ‘000 Rupees '000 Defined benefit obligation Fair value of plan assets Deficit Experience adjustments on plan liabilities Experience adjustments on plan assets (277.562 7. 2010 Note 37.231) 888 Annual Report 2010 Faysal Bank 118 .277 245.477) (123.740 40.135 (61.135 (339) 58.277 (229.745) (118.774) (30.509) 97.256) (4.609 (70.884 70.144 70.523 1.854 (17.961) 168.351 19.826) (6.124) 64 (167.428 82.

531.226.956 1.332.859 34.224.904 195.534 250.459 1.837 1 99.857 24.088.250.080 57.924 5. The financial statements of the fund are separately prepared and audited and are not included as part of these financial statements. 2010 38.457 4.200 6.799 647.393.795 175.892.327 421.164 1 Directors 2010 Rupees '000 10.471 3.451 34.2 40.488 15. COMPENSATION OF DIRECTORS AND EXECUTIVES President / Chief Executive Officer 2010 2009 Managerial remuneration (including bonus) Fees Charge for defined benefit plan Contribution to defined contribution plan Rent and house maintenance Utilities Medical Leave fare assistance Others Number of persons 125.531.744 135.985.190 24.450 1.200 6.699.088.346.136.051 17.795 15.063.149 8.536 10.308. 39.795 175.188 999.848 44.327 421.737.534 250. In addition to the above.001 3.595.377 27.345 789 332.030.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.635.859 34.224. Executives mean employees.017.288.457 4.826 56.465.250.202 508.655.218.314 10.393.308.209 86.209 86.320 8.224.655.688 6.892.582 6.202 508.476.224.332.051 17.001 3.136.226.766 123.651.807 6.320 8.230 5.807 6.585 167.314 7 1.766 123.826 56. whose basic salar y exceeds five hundred thousand rupees in a financial year.904 195.645 736 189 1.699.737.568 17.924 5.428.091 22.795 15.488 15.875 800 2.188 999.338 91.889 26. the Chief Executive and Executives are provided with free use of the Bank’ maintained cars.549 135.982 250.985.711.338 91.957 1.827 124.019 267 2009 Executives 2010 2009 39.063.391 213.666 3.450 7 764. other than the chief executive and di rectors.635.451 34.262 28.029 50.322 48.585 167.527.427.215.957 133.554 800 2.346.145 163 278 2.264 40.957 1.427.582 6.215.017.651.395 12.465.149 2009 2010 Rupees '000 2009 8.735 49.215 112.527.190 17.857 .595. DEFINED CONTRIBUTION PLAN The Bank operates an approved funded contributor y provident fund for all its per manent employees to which equal monthly contributions are made both by the Bank and the employees at the rate of 10% of basic salary.423 211. s FAIR VALUE OF FINANCIAL INSTRUMENTS 2010 Book value Fair value On-balance sheet financial instruments Assets Cash balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Other assets Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities Off-balance sheet financial instruments Forward purchase of foreign exchange Forward agreements for borrowings Forward sale of foreign exchange Forward agreements for lending 17.395 12.412.536 10.230 5.428.288.218.1 39.982 250.265.

ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of financial statements in conformity with the approved accounting standards requires the use of cer tain critical accounting estimates. fair value of derivative financial instruments (notes 7. Estimates and judgements are continually evaluated and are based on historical experience. Fair value of fixed term advances. Fair value of unquoted equity investme nts is determined on the basis of break-up value of these investments as per the latest audited financial statements. 41.14 dated September 24.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.6 and 14). classification and provisioning against advances (notes 7. These securities are carried at amortised cost in order to comply with the requirements of BSD circular No. accounting for defined benefit plan (notes 7. It also requires the management to exercise its judgement in the process of applying the Bank's accounting policies.17 & 26) 42. 2004. The significant accounting areas where various assumptions and estimates are significant to the Bank's financial statements or where judgement was exercised in application of the accounting policies are as follows: i) ii) iii) iv) v) vi) vii) classification and provisioning against investments (notes 7. fair value of the net assets acquired in a business combination (note 8). income taxes (notes 7. except for marketable securities classified as 'held to maturity'.5 to these financial statements.7.121 .10 and 37).4 and 12). The fair value of the remaining financial assets and liabilities are not significantly different from their carrying values since assets and liabilities are either short term in nature or in the case of customer advances and deposits. including expectations of future events that are believed to be reasonable under the circumstances. 2010 The fair value of traded investments is based on quoted market price. The provision for impair ment of advances has been calculated in accordance with the Bank's accounting policy as stated in note 7.5 and 13). other liabilities and fixed term deposits cannot be calculated with sufficient reliability due to absence of current and active market for assets and liabilities and reliable data regarding market rates for similar instruments. are regularly repriced. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES Primary segment information For management purposes the Bank is organised into four major business segments: Corporate Finance Trading and Sales Retail Banking and Commercial Banking Annual Report 2010 Faysal Bank 120 .8. The repricing profile and effective rates and maturity are stated in note 46.6 and 46. other assets. depreciation / amortisation of operating fixed assets (notes 7. 15 and 33).1 respectively.

414 131. subsidiary company.042 (81.361. as those prevailing at the time of comparable transactions with unrelated parties and do not involve more than a nor mal risk.126) 12.306 (2. 2010 Total income .055 (6.803.812 10.880 (58.807 (3.622 6. Corporate Finance December 31.20% 4.220) 113. However.20% 719.283 (3.70% 2.355.726 (21.305.9 to these financial statements.693.661.572 51.038.000) 55.976.946.115 (796.014) 430.502. 43.442.584 3.441. partners or in case of private companies as members are given in note 13.235) 13. 37 and 38 to these financial statements for the details of the plans).856) 823.153) Commercial Banking Total Segment return on assets (ROA) (%) Segment cost of funds (%) December 31.819) (176.501 189.469) (168.030 (7.576) (43. off balance sheet items and items of income and expense are distributed in primary segments in accordance with the core functions performed by the business groups.375.net Total expenses Net income Segment Segment Segment Segment assets (Gross) non performing loans provision required against loans liabilities Segment return on assets (ROA) (%) * Segment cost of funds (%) * * These percentages have been computed based on closing assets / liability figure instead of average balances.531. Such remuneration is determined in accordance with the terms of their employment.053) 11.419) (1.038.270 (2.566 (6.268 (11.363.009.707.626) 745.90% 4.499.327) (95.115 (5.079.347 (48.604 13. 2010 All assets.109.671.70% 3.145.825.744 24.168. TRUST ACTIVITIES The Bank is not engaged in any significant trust activities.60% 6.554) 1.300.392 73.542 (8. associated undertaking.304) 63.893.586 (289. 2009 Total income .054 286.405.20% 4.138. Remuneration to executives (including key management personnel) of the Bank is disclosed in note 39 to these financial statements.20% 4.223 (3.566.161.015) 11.net Total expenses Net income (loss) Segment Segment Segment Segment assets (Gross) non performing loans provision required against loans liabilities Trading & Sales Retail Banking Rupees '000 208. Contributions to and accruals in respect of retirement benefit p lans are made in accordance with the actuarial valuations / ter ms of contribution plan (refer notes 7. group companies. directors. except transaction with directors and key management personnel that are as per their terms of employment.924 (48. Details of advances to the companies or fir ms in which the directors of the Bank are interested as directors.860.674) 9. 44.998.218 91.142) (24. .10.60% 6.90% 7.677. key management personnel and entities over which the directors or key management personnel are able to exercise significant influence.791.553 10.880 1.119. retirement benefit plans. Banking transactions with the related parties are executed substantially on the same terms. it acts as security agent for various Term Finance Certificates it arranges and distributes on behalf of its customers.758 (17.391.640) (250.316) 126.082.245) (30.328 670.803. liabilities.914) 68. Note: The above table is based on best estimates / assumptions. including mark-up rates and collateral.20% 7.803.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.063.977.488) 827.20% 7.897) 1.835. RELATED PARTY TRANSACTIONS The Bank has related par ty relationship with its holding company.657 64.533) 13.645) 12.523.

528 13.014.367 188.181.789 (569.735 (1.231) 33.905 802.753 6.085 731.779 (740.558 1.132) 479 515.421.576 148.888 184.230 226 - 39 - Annual Report 2010 Faysal Bank 122 .678 (83.295 (686. The same are accounted for through the movement presented above.485 662.939 42.598 3.367 2.979 2.357.768.242) (2.003 (1.969 77.417.168 27.251 254 2.448 (393.473 50.564 72.456 71.788 350.000 1.750 (2.727.384) 61.298.833 (597.859) (44.342 (70.113) 802.070 552.645.741) 802.807 (38.721 2.168 2.237) 399 1.528 399 249.238 1.322 49. Directors and key management Retirement Benefit Plans personnel 2010 Subsidiary Associate Group Companies Strategic Investments Rupees '000 Nostro balances with group companies Shares / Units purchased during the year Shares / Units sold during the year Profit paid / accrued Profit return / earned Dividend income from subsidiary Remuneration of key management personnel .160) 27.070 958 82.485 71.712 (236.Post-employment benefits Contribution to staff retirement benefits Guarantees issued favoring related parties or on their behalf 3.051 770.780 25.000 (148.414.540.632.081 411.698 2.558 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 closing balance.270) 2.174.357) 492 2009 Subsidiary Associate Group Companies Strategic Investments 2.576 6.412 610.478) 646.668 155.044) 39.448 188.Salaries and other short-term employee benefits .181.062 119.195 Directors and key management Retirement Benefit Plans personnel Rupees '000 Deposits Balance at the beginning of the year Placements during the year Withdrawals during the year Balance at end of the year Advances Balance at the beginning of the year Disbursement during the year Repayment during the year Balance at end of the year 21.631 11. 2010 Directors and key management Retirement Benefit Plans personnel 2010 Subsidiary Associate Group Companies Strategic Investments Rupees '000 Deposits Balance at the beginning of the year Placements during the year Withdrawals during the year Amalgamation Balance at end of the year Advances Balance at the beginning of the year Disbursement during the year Repayment during the year Amalgamation Balance at end of the year 39.085 227.365 33.556 1.261) 159.123 .Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.770) 350.583 (249.574 113.361.892) 17.014.839 257.

766 2.330 134. The Bank has implemented and is operating under Basel II capital adequacy framework that applies to all Banks and DFIs as prescribed under SBP BSD Circular No. 45. . Book value of goodwill. The Bank ensures that it: a) complies with the capital requirements set by the State Bank of Pakistan. brand value etc.201 1. 8 dated June 27. 2006 and amendments made by SBP through circulars. 2010 Directors and key management personnel 2009 Retirement Benefit Plans Subsidiary Associate Group Companies Strategic Investments Rupees '000 Nostro balances with group companies Shares / Units purchased during the year Shares / Units sold during the year Profit paid / accrued Profit return / earned Dividend income from subsidiary Remuneration of key management personnel . other intangible assets including software.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.010 9. as adopted by the State Bank o f Pakistan. and c) Tier 3 capital: the Bank has no eligible Tier 3 capital. employing techniques based on the guidelines developed by the Basel Committee.4 to these financial statements.406 23.954 2. The required information is submitted to the State Bank of Pakistan on a quarterly basis.686 120. 45.376. The Bank’ regulatory capital is divided into three tiers: s a) Tier 1 capital: share capital. are deducted from Tier 1 capital whereas Investments in associates and subsidiar y as disclosed in Note 12. b) Tier 2 capital: qualifying subordinated loan capital.215 2.628 56.754.156 11 16.ASSESSMENT AND ADEQUACY BASEL II SPECIFIC Capital Management The objective of Capital Management is to ensure the Bank's abil ity to operate as a going concer n by maintaining appropriate capital base in line with minimum regulator y requirements.1 CAPITAL . general provision and unrealized gains arising on the fair valuation of equity instruments held as available for sale. and c) maintains a strong capital base to support the development of its business.468 356 - Disposal of vehicles to key management personnel and other executives is disclosed in note 14. b) safeguards the Bank’ ability to continue as a going concern so that it can continue to provide returns for shareholders s and benefits for other stakeholders. The Bank has adopted Standardized Approach for Credit and Market Risk and Basic Indicator Approach for Operational Risk. retained earnings and reserves created by appropriations of retained earnings.444 156.1 are deducted from T ier 1 and T ier 2 capital to arrive at the regulatory capital. The State Bank of Pakistan requires each Bank or Banking group to: (a) hold the minimum level of the paid up capital and (b) maintain a ratio of total regulator y capital to the risk-weighted assets at or above the required minimum level of 10%. Capital adequacy is regularly monitored by the Bank’s management.Post-employment benefits Contribution to staff retirement benefits 2.115 20.Salaries and other short-term employee benefits .

786 200.640. The required minimum Capital Adequacy Ratio (CAR).125 .843 16. 2010.194 230.500 1.7 Shortfall / relaxation in provision Deficit on account of revaluation of investments held in AFS category Other deductions (represents 50% of the majority or significant minority interest in subsidiaries and associates) Total Tier I Capital Tier II Capital Subordinated debt (upto 50% of total Tier 1 Capital) General provisions subject to 1.174.309.075 650.360 190.837.500 503.991 17.907 6.962 13.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.179 11. A similar treatment is adopted for off balance sheet exposure.950.837.25% of total Risk Weighted Assets Revaluation reserve (upto 45%) Less: Other deductions (represents 50% of the majority or significant minority interest in subsidiaries and associates) Total Tier II Capital Eligible Tier III Capital Total Regulatory Capital Base 7.396. the State Bank of Pakistan has prescribed a minimum paid-up capital requirement (net of losses) of Rs 7 billion for all banks to be achieved by December 31.2 Capital Structure Tier I Capital Share Capital Proposed shares to be issued on amalgamation Reserves Unappropriated profits Less: Book value of intangible assets 45.878 1.911 4.901 740.902.056 1.902 12. 07 of 2009. Vide BSD Circular No. 2010 The risk-weighted assets are measured by means of a hierarchy of five risk weights classified according to the nature of and reflecting an estimate of credit.967 1.000 76.500 2.804.286 10.090.030.367 76. on consolidated as well as on standalone basis is 10%. The risk weighted assets to capital ratio.402 76.491 76. The Bank will continue to maintain the required regulator y capital either through its risk management strategies or by increasing the capital requirements in line with the business and capital needs. market and operational risks associated with each asset and counterparty.916 3.215.688 1.790.762 2010 Rs ‘000 2009 Rs ‘000 Annual Report 2010 Faysal Bank 124 .563.642. with some adjustments to reflect the more contingent nature of the potential losses.500 4.832.097.146 226.253 7. taking into account any eligible collateral or guarantees.918 336.860 799.336.573 4. calculated in accordance with the State Bank's guidelines on capital adequacy is as follows:Note 45.094 28.354.

12.156 749.762 103. 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.942 145.137 4. However.200 211.299. an amount of Rs 740.918.111.602 87.329 635.93% 27.95% and is therefore lower than the prescribed requirement by 0.768 8.149. 2009 in accordance with section 1.871 3.907 179.923. 2011 has granted post facto exemption to the Bank in meeting the CAR till March 31. 30 dated November 25. In accordance with BSD Circular No.194 million has been deducted from the bank's Tier I Capital.617 7.985.054.698 5. the Bank is required to maintain a Capital Adequacy Ratio (CAR) of a tleast 10% at December 31.936 1.885.95% 1.542 428. 2011.05%.3.387.814 2009 12.604 13.604 9.374 Capital Requirements Risk Weighted Assets 2010 2009 2010 2009 Rupees '000 45.544.577 1.594 14.869 8. BSD/BAI-3/615/4097/2010 dated April 5.422 4.829.408 957.816 30.1 of the SBP Basel II guidelines.890 2. as at December 31.460 8.550.282.440.849 2010 17.440.7 45.3.544. 2010.5 45.593 1. 2010 Note 45.396.524 18.369 54.485.737 5.2 to these financial statements.208 533. the SBP has given a relaxation to the Bank in maintaining provision against outstanding facilities extended to Dewan Mushtaq Group and Azgard Nine Group.938 2.250.6 45.820 11.902.4 As more fully disclosed in notes 12.041 95. The SBP vide its letter No. The benefit of FSV allowed by the SBP has not been deducted from Tier I capital of the bank based on clarification issued by the SBP through its letter BSD/BAI-1/220/452/2009 dated April 27.686 82.298.503.4 and 13.714 351.918.177 892.970.089 225.820 128. 2008 issued by the State Bank of Pakistan (SBP).030 283.6 .2 2.079 5.498.940 9.3 Capital Adequacy Credit Risk Public sector enterprise Financial institution Corporate Retail Past due loans Other Total Credit Risk Market Risk Capital requirement for portfolios subject to standardized approach Interest rate risk Equity position risk Foreign exchange risk Total Market Risk Operational Risk Capital requirement for operational risks Total Operational Risk Capital Adequacy Ratio Total eligible regulatory capital held Total risk weighted assets Capital adequacy ratio 45.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.336 2.161 306.897 6. In accordance with the Revised Regulatory Capital Framework under Basel II issued by the SBP.3.170 505.851.246 103.204.927.750.855.949.690 692.927.4. 45.995.051. Accordingly.927.577 179.928 12.282.712 16.281.356 22.046 17. 2010 the CAR of the Bank was 9.352 1.338.561 7.

Commercial Risk Management. The framework includes: .Clearly defined risk management policies. The Bank has a dynamic risk management framework defined by the Board of Directors (BOD) and implemented through Risk Management Group (RMG). 2010 45. in the form of a separate risk management department. 46. measurement. Wh ereas.e. regular evaluation and timely updation of the Risk Management framework. mitigate and approve risk on a portfolio level. Annual Report 2010 Faysal Bank 126 .Well constituted organizational structure. is appointed and authorized by the Board to assist the BOD in design. Operational and Liquidity Risks at an enterprise level and maintaining regulatory capital requirements of the Bank. Credit Administration and Risk Policy functions. Retail SME & Agri Risk Management and Retail Risk Management. which ensures that individuals responsible for risk approval are independent from risk taking units i. the portion of Deferred Tax Liabilities (DTL) created due to such intangible assets would not be netted against Deferred Tax Assets (DTA) for calculation of CAR. 46. BRMC has further authorized management committees such as Country Credit Committee (CCC). Enterprise Risk Management Committee (ERMC) and Assets & Liabilities Committee (ALCO) to supervise risk management activities within their respective scopes. Commercial and Retail SME & Agri Risk Management involve a customer-based risk assessment under a pre-defined credit approval process. In order to have an ef fective and efficient risk assessment. The Risk Management framework endeavours to be a comprehensive and evolving guideline to cater to changing business dynamics. and to closely align its functions with Business. The primary objective of this architecture is to inculcate risk management into the organization flows to ensure that risks are accurately identified & assessed. NPL status and monitoring of inter nal credit rating models including model documentation and the coordination of analytics within the Enterprise Risk Management functionalities. loan documentation.1 Credit Risk Credit risk is the identification of probability that a counterparty will cause a financial loss to the Bank due to its inability or unwillingness to meet its contractual obligation. Retail Risk Management operates on a program lending approach to manage. . Business Units. . would be limited to the extent of the amount of the intangible recognised as negative goodwill / intangible gain.127 . The Risk Management architecture is fur ther fostered by Enterprise Risk Management. RISK MANAGEMENT The variety of business activities under taken by the Bank requires ef fective identification. as appear under T ier-I capital.Mechanism for ongoing review of credit policies & procedures and risk exposures. s The Board Risk Management Committee (BRMC). This credit risk can arise from both direct lending activities as well as contingent liabilities. 2011 has advised the Bank that the deduction of intangible assets. approved.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. Commercial and Retail business segments. properly documented. comprising of 4 directors including the President & CEO. This also encompasses detailed review of macro risk fa ctors. RMG has separate Risk functions for Credit Risk Management: Corporate Risk Management. Credit Administration Depar tment looks after the security. Risk Policy unit ensures formulation of synchronized and adhesive polices in conjunction with the Bank's strategy and practices while adhering to the local and regulator y guidelines within Corporate. disbursement and post disbursement monitoring aspects of the credit portfolio. While Corporate. and adequately monitored & managed in order to enhance long term earnings and to protect the interests of the Bank’ depositors and shareholders. integration and management of different financial and non-financial risks that are constantly evolving as business activities change in response to concurrent inter nal and exter nal developments. monitoring. The Enterprise Risk Management function is responsible for managing and controlling Market.7 The SBP through its letter BPRD (R&P-02)/625-99/2011/3744 dated March 28.

The Bank has well-defined credit approval and review processes under which senior officers (with the inclusion of Risk Management’ consent) with the requisite credit background.95 0.430 6.62 0.65 13.02 0.407 205.03 45.36 3.148 1.803 65.214 334.962.70 0.93 0.016 4.884 788. priced (in line with market practices) and documented.206.39 3.77 0.824 2.315.678 59. monitored and assessed in the light of changing counterparty and market conditions.619 255.37 0.409 76.772 369.503 270.87 0.89 0.204 Percent 2.60 5.963 157.46 2. and contingencies and commitments is given below: Advances (Gross) Rupees '000 Chemical and Pharmaceuticals Agriculture Textile Cement Sugar Construction Ready made garments Footwear and leather garments Automobile and transportation equipment Financial Oil Refining / Marketing Distribution / Trading Electronics and electrical appliances Production and transmission of energy Iron and Steel Food and Allied Synthetic and Rayon Food Industries Paper and Board Individuals Telecommunication Transportation.10 100. the credit evaluation also includes risk rating system to evaluate risk rating of all customers which is then mo nitored on a portfolio basis to gauge the Bank’s credit portfolio quality.086 1.377. across other business segments.52 0.00 2010 Deposits Rupees '000 4.269.54 0.38 0.881.30 12.48 3.760 39.00 0.016.967.134 1.41 0.850.298 150. Risk concentration may arise where total exposure to a particular group or industry is high in relation to shareholders' equity.02 1.712 75.587 2.145 119. Besides financial.453.610 109.342 3.229 41.382 806.1. deposits.450 3.22 0. The Bank follows aggregation principles – summing of credit risk limits to the same customer.855 89.13 0.05 2. To avoid risk concentration.287 288.560.285.22 13.11 0.00 Contingencies and Commitments Rupees '000 Percent 1.13 0.61 1.50 0.59 31.01 0.80 0.195.06 1.41 0.48 2.993.591 29.985 195.878 19.413.674.032.18 0. 2010 The Bank’s credit risk philosophy is based on the Bank’s overall business strategy / direction as established by the Board.579.38 4.00 2.85 11.334 1. also ensuring that the credit commitment is appropriately structured.602 149.405.167 224.00 0.15 100.48 4. The Bank manages customer credit risk exposures within appropriate limits to ensure that it does not provide a disproportionate level of credit to a single customer or group of connected clients.64 0.22 2. counterparty limits.893 3.124 6. Segmental information in respect of the class of business and geographical distribution of advances.057.944 914.022 259.579 269. 46.378.508 12.29 0.143 854.745 1.265 595.005 3.749 244.569. where appropriate.032 5.924 429.1 Segment by class of business Portfolio management is an integral part of the Bank's credit process. in order to quantify risks of counterparty.244 89. The Bank has set up a portfolio strategy and planning function with an aim to monitor the overall risk and to avoid high exposure to a single group or industry.812 7.735 1.808.24 0.561.19 0.275 1.21 2.235.951. Road and Air Mining and Quarrying Others 10.438.183 119. The Bank is committed to the appropriate level of due diligence to ensure that credit risks have been properly analyzed.112 3.08 0.671 3.657.398 366.614.14 4.840 6.660.29 19.68 0.257 2.648 4.18 3.40 100. or group of connected clients – to identify and manage effectively all significant credit risk exposures to a single customer connection within an individual business and. The Bank deals with many different types of borrowers and borrowing structures across the wholesale and retail segments.39 0.50 0.882 544.288.00 .Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.056.44 3.65 0.121.08 26.889 364.073 1.083 28. counterparty group limits and industr y concentration limits are also established.493.411 6.35 3.455.17 0.032.409 Percent 7.86 0.30 0.768 151. s industry and transaction analysis.628 968.88 0.613. critically scrutinize and sanction financing.08 30. fully disclosed to the approving authorities and appropriately rated.47 0.971 1.536 1.22 3.736 800.798.649 5.032 16.01 0.643 1.32 8.787.477.

850.53 100.302 13.270 5.873 54.629 831.103 15.40 0.468 38.54 93.13 0.2 Segment by sector Advances (Gross) Rupees '000 Public / Government Private 9.470 Percent 9.778 1.946 3.450 7.03 100.321.04 100.00 Annual Report 2010 Faysal Bank 128 .493 30.07 3.27 6.377.906 2.218 491.01 10.971 104.810 2.188 Percent 7.470 Percent 8.30 1.52 0.914 20.558 516.972.542 98.18 0.06 7.369 4.164 442.91 0.26 2.571 36.206.41 92.38 0.339.77 0.827 98.980.62 0.18 4.98 17.885 220.92 0.655.347.03 3.134 5.111 164.132 895.22 0.840 14.159.231 213. Road and Air Mining and Quarrying Others 8.689.103 33.483 474.12 0.291.672 1.919 2.823 3.526 1.375 3.203 2.245 151.287.35 0.296.366.35 90.977.308.991 903.23 0.00 Advances (Gross) Rupees '000 Public / Government Private 9.548 4.42 12.14 0.123.013.507 605.50 100.188 Percent 4.00 46.55 34.896.83 0.474.08 0.67 0.04 31.250 38.318.95 3.42 100.41 1.436 2.18 2.447 2.00 Contingencies and Commitments Rupees '000 Percent 6.204 Percent 8.48 4.645.46 100.384.00 Contingencies and Commitments Rupees '000 Percent 3.95 9.035 2.152 46.223.31 91.197.09 2.27 0.407.69 1.318.655.41 2.091.49 1.403.48 0.928 89.09 1.42 3.344 195.787 12.84 11.200 41.404 905.081.364 26.076 107. 2010 Advances (Gross) Rupees '000 Chemical and Pharmaceuticals Agriculture Textile Cement Sugar Construction Ready made garments Footwear and leather garments Automobile and transportation equipment Financial Oil Refining / Marketing Distribution / Trading Electronics and electrical appliances Production and transmission of energy Iron and Steel Food and Allied Synthetic and Rayon Food Industries Paper and Board Individuals Telecommunication Transportation.03 30.315.501.860 179.876 785.89 17.096.302 37.00 Contingencies and Commitments Rupees '000 Percent 2.33 0.510 23.188.460.1.319 224.911 77.03 6.37 3.00 2009 Deposits Rupees '000 5.186.97 92.96 0.59 100.304.093 114.88 0.027 413.20 0.384.002 123.901 4.079 249.00 2009 Deposits Rupees '000 9.07 1.65 100.30 0.973.409 Percent 6.274.500 1.859 279.445.492.159.44 8.612.076.612 251.061.043.129 .91 0.02 0.045.06 1.496.164 141.805 1.925.00 2010 Deposits Rupees '000 16.310.940 113.118 2.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.50 15.661 33.882 329.81 0.96 76.344 1.158 389.510 7.778 4.095 123.69 100.00 4.533 8.596 26.121 1.36 0.

1.920 273.922 62.1.067 775.178 1.687 305.021 4.664.617 6.450 .320.163.699.745 1.563 131.445 24.505 62.982 150.770 Contingencies and commitments 41.1.602 1.621 18.061.577 420.000 372.265.893 2.165 995.947 145.4 Details of non-performing advances and specific provisions by sector Private Public / Government 24.796 56.843 3.452 561.749 105.014 200.299 1.758 17.671.030 Specific Provision Held 727.005.450 41.547 648.336 46.377.582 168.629.758 2009 Specific Provision Classified Held Advances Rupees '000 844.283 14.405.496 32.707.545 58.671.485.923 16.630 125.448 6.992 7.095.517.239 2.240 44.076.377 10.389 439.532 75.770 16.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.925 17.671.663 584.054 827.630 78.486 5.786 23.000 372.336 6.239 1.472 90.067 10.707.892 372.758 24.647 77. Road and Air Individuals Others (including manufacturing and real estate) 1.233 623.640 80.871 1.822 66. 2010 46.630 1.642 560.221 502.260 148.030 10.859.030 6.068.290 7.105 152.664.604 3.944.517.529 134.179.229 5.280.664.777 372.067 17.560 992 89.163.250 933.495 529.336 46.3 Details of non-performing advances and specific provisions by class of business segment 2010 Classified Advances Chemical and Pharmaceuticals Agriculture Textile Cement Sugar Construction Ready Made Garments Footwear and leather garments Automobile and Transport Equipment Financial Oil Refining / Marketing Distribution / Trading Electronics and electrical appliances Production and transmission of energy Iron and Steel Food and Allied Synthetic and Rayon Food and Industry Paper and Board Transportation.109 56.304.510 85.931.267 2.172 826.377.707.351 1.377.483 5.339 124.320.842 58.163.923 267.967 167.5 Geographical segment analysis Profit before taxation Pakistan Asia Pacific (including South Asia) Europe United States of America and Canada Middle East Others 827.380 236.054 2010 Total Net assets assets employed employed Rupees '000 267.918 82.490 36.630 2.220.

amount of Bank's/DFI's outstandings (rated & unrated ) in each risk bucket as well as those that are deducted are as follows.89% (2009: 1 0.and above A+ to ABBB+ to BBBBB+ to BBB+ to BCCC+ & Below JCR-VIS AA.501 2009 Total Net assets assets employed employed Rupees '000 180.510 46.782.69%) represents claims on PSEs and 7. Types of exposure for which each agency is used in the year ended December 31.1 Credit Risk: Disclosures for portfolio subject to Standardised Approach For domestic claims. Claims on corporate constitute 34.318.75%) exposure per tains to claims categorized as retail portfolio.300. claims on corporate (excluding equity exposure) and claims categorized as retail portfolio. to SBP rating grades.865. S&P's. According to the regulatory statement submitted under the Standardised Approach. 46.2.2 Credit Risk: General disclosures Basel II specific The Bank has adopted the Standardised Approach.6 7 PACRA AA. under Basel II.and above A+ to ABBB+ to BBBBB+ to BBB+ to BCCC+ & Below S&P AA. Annual Report 2010 Faysal Bank 130 .131 . Moody's. SBP Rating 1 2 3 4 5 6 ECA Scores 0.300. and numeric scores of ECAs.782.501 1. 2.and above A+ to ABBB+ to BBBBB+ to BBB+ to BCCC+ & Below Moody’s Aa3 and above A1 to A3 Baa1 to Baa3 Ba1 to Ba3 B1 to B3 Caa1 & Below Fitch AA. Fitch and Moody's are used.and above A+ to ABBB+ to BBBBB+ to BBB+ to BCCC+ & Below For exposure amounts after risk mitigation subject to the standardized approach. Fitch Ratings.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.37%) of the total exposure. Exposures Corporate Banks Sovereigns SMEs Securitizations PACRA 3 3 JCR-VIS 3 3 Standard and Poor's 3 Moody's 3 Fitch 3 - SBP indicative mapping process as instructed in SBP circular "Minimum Capital Requirements for Banks and DFIs" (indicated in table below) was used to map alphanumeric ratings of P ACRA.739 Contingencies and commitments 26. 2010 Profit before taxation Pakistan Asia Pacific (including South Asia) Europe United States of America and Canada Middle East Others 1.413 12.510 26. External Credit Assessment Institutions (ECAIs) recommended by the State Bank of Pakistan (SBP).318.865. the portfolio has been divided into claims on Public Sector Entities in Pakistan (PSEs).1 2 3 4 5. For claims on foreign entities. Foreign exposures not rated by any of the aforementioned rating agencies were categorized as unrated. ratings assigned by Standard and Poor's.53% (2009: 4. 2010 are as follows.413 180. JCR-VIS. namely Pakistan Credit Rating Agency Limited (PACRA) and JCR-VIS Credit Rating Company Limited (JCR-VIS) are used.04% (2009: 37.739 12.

248 1.678 12.442.668 5.496 579.842 1.358.628 4.234 254.076.682.730 142.997.071 7.809.025 181.372 8.025 181.628 4.054.054.156 .072.640 3.928 64. liabilities and trading activities.468.Public Sector Equities .814. 2010 Exposures .836.054.171 350.682.164.041 275.699 3.6 Unrated 1 2.343 1.209.678 12.391 647.693 14.Cash and Cash Equivalent . Government of Pakistan SBP Retail Residential Mortgage Past Dues Loans Past Dues against Residential Mortgage Unlisted Equity Investment Listed Equity Operating Fixed Assets Other Assets Total Collaterals used by the Bank for Credit Risk Mitigation (CRM) were as follows: Cash margin Government securities Guarantees of Government and Banks.817.464 Net Amount 3.997.743. open foreign currency positions.Corporate 1 2 3.347 24.159.763 77.743.3 Unrated 1.496 579.3 4.064. rate and spread movements of its earning assets. and other products.372 8.054.090.011 1. 46.347 20.028 7. Market risks arise generally from trading activities.Banks - Sovereigns etc.620 Deduction CRM 4.242 7.163 246.548 7. All such instruments and transactions are exposed to general and specific market movements. The market risk is further divided into various sub-categories.072.3 Market Risk It is the risk that the value of the On and Off-balance sheet positions of the Bank will be adversely affected by movements in market rates or prices such as interest rates.194. which are defined as follows: .763 77. holding common equity.083 4.530.488 8.917.028 8.984 253.4 5.358 4. Shares on KSE main index.425.952 6.633 7.230.952 6.230.289 7.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. Market Risk Management and Treasury Middle Office perform market risk management activities within the Bank.038.259 104. Treasury Front Office.5 Unrated Rating Category Amount Outstanding 3.064.984 248. The Bank has Enterprise Risk Management Committee which is responsible for reviewing and approving market risk policies and strategies. equity prices and/or commodity prices resulting in a loss to ear nings and capital.809.429 142.836.083 4.041 278.693 14.259.176 65.998 4.330 1.171 350.038.2. The Bank seeks to mitigate market risk by employing strategies that correlate price.

782.477 5. Foreign Exchange Risk exposures are managed by matching future maturities.674 (1.551) 2.865. The Bank's equity position is gover ned by SBP limits for overall investment and per scrip exposure.315 - 2009 Net currency exposure 12.359 16. Changes in currenc y rates af fect the value of assets and liabilities denominated in foreign currencies and may affect revenues from foreign exchange dealing.074 1.457.422 1.4. 46.440 1.582. The Bank undertakes currency risk mostly to support its trade services and maintains overall foreign exchange risk position to the extent of statutory Foreign Exchange Exposure Limit (FEEL) prescribed by SBP.787 2. gap.700 1.831 (2.967. 2010 46.789 5.507 1.175) 2010 Net currency exposure 16.136 15. Price risk associated with equities could be systematic or unsystematic.197 132. Systematic risk is due to sensitivity of por tfolio’ value to changes in overall level of equity prices.181.269 180.027 238 250. Annual Report 2010 Faysal Bank 132 .106) 1.356 14.705 31 471.5 Equity position risk Equity position risk is the risk arising from unfavourable fluctuations in prices of shares in which the Bank carries long and/or short positions.574 629. as well as stop loss limits.413 Off-balance Liabilities sheet items Rupees '000 160. It is risk to earnings or capital that results from adverse changes in the value of equity related portfolios of the Bank.469 8 168. net open position.261 12.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.115.215.170.874 1.770 Assets Pakistan rupee United States dollar Great Britain pound Japanese yen Euro Other currencies 252.860.825 158.759 8.4 Foreign Exchange Risk / Currency Risk Foreign exchange risk / currency risk is the current or prospect ive risk to ear nings and capital arising from adverse movements in currency exchange rates.210 13.802. in its trading book.082.956) 525.153 (5. while the unsystematic risk is s associated with price volatility that is determined by the specific characteristics of the investee company.320.275 1.453.517.571 6.803. In addition.766.659 18. dealer and product limits are also in place in accordance with the Bank’s approved Standard Operating Procedures to limit risk and concentration to the acceptable tolerance levels.806 (234) 282 268 1.436 729.236 2.116 897.1 Currency Risk Off-balance Liabilities sheet items Rupees '000 231.031. there are internal limits set for trading positions.127 (10. It refers to the impact of adverse movements in currency exchange rates on the value of open foreign currency positions.030.523 289.276.588.639 1.010.615 1.923 Assets Pakistan rupee United States dollar Great Britain pound Japanese yen Euro Other currencies 174.056.772 267.043.133 .407.729 2.739 46. Exposure limits such as counterparty.

986.726 13.778.633 1.345.) Off-balance sheet gap - (59.976 2.896 98.582.697 6.395 1.779.265.386 17.060.274 7.223.523 1.982 939.911 23.566 25.727.970.594 17.594.769 6.879 20.798 4.215 1.582.520.204 4.240 1.818 (9.944.133 3.838.800 4.506.726 175.145.131 184.863 1.807.595.329.802.094.460.746 3.164.191 49.635.520.279.283 3.768.547.971 4.970.06 14.654 - Liabilities Bills payable 9.203 - 1.544 (11.239 - Total Yield / Interest Risk Sensitivity Gap Cumulative Yield / Interest Risk Sensitivity Gap . repurchase agreement borrowing.265 3.386 32.395 Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities 12.904 195.00 12.312.217 19.591.6 Mismatch of Interest Rate Sensitive Assets and Liabilities / Yield / Interest Rate Risk Effective Yield / Interest rate Total Upto one month Over three months to six months Over six Over one months to year to one year two years Rupees in '000 Over two years to three years Over three years to five years Over five years to ten years Over one month to three months Non-interest bearing Over ten financial years instruments On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets 10.498 449.375 16.904.780.504.060 676.859 19.537.841.189 17.690 10.595.877.601.537.247 27.411 2.224.366 1.70 8.763) (59.921.501 484.) - - - - - - - - - - Forward borrowings (including call borrowing.364 2.698.706.920 35.334 2.890 - 15.340 939.968 30.899 3.683.974.713 61.657.330 2.859 158.780.597 939.198 73.59 34.428.568) 5.097. repurchase agreement lending.777.892.480 16.521 (1.582.924 5.381.279.899 (19.899 18.315.778.002) Off-balance sheet financial instruments Forward Lending (including call lending.708.018.649 933.06 17.833 2.649 8.448 4.508.730.811 47.013 2.576 485.735 5.749.859 2.595 3.215. etc.681 2.909 86.899 38.215. commitments to extend credit.008 57.520.955) 513.218.549 133.707.727.160 39.639.568) On-balance sheet gap 1.056.335 - 1.477.198.272 939.315.137) 27.594 12.020 2.694 3.794.534 214.955) 49.047.249 (11.730. 2010 46.236.955) (59.477.042.909 7.615 250.392.833.097 18.685.076 42.749.982 249.881 25.632 78.818 34.421.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s 2010 Exposed to Yield / Interest risk For the year ended December 31.690 860.587.009 25.417.863. etc.218.

464.479.135 12.87 8.393.001 20.709.795 391.019 218.264 473.) Forward borrowings (including call borrowing.767 (47.461 775.210.948.948.190 83.183 999.475) 9.017.132.711.583 560.892.938 4.795 175.650.698 200 472.769 1.741 91.548.02 34. etc.150 147.427.338 1.182 11.172 166.585 167.101.475) (44.) Off-balance sheet gap Total Yield / Interest Risk Sensitivity Gap Cumulative Yield / Interest Risk Sensitivity Gap .188 63.118 1.000 419.702 3.451 9.135.932.346.545.914 9.66 12.018 2.465.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s 2009 Exposed to Yield / Interest risk For the year ended December 31.583 10.757 149.941 1.747 1.342 16.386 1.531.242 8.332.564.112.757.800.566 2.178.938 6.571 37.990 89.432.576 10.214.000 (44.332 2.533.753 16.224.175.399.795 15.585 30.202 508.393.440.484 391.83 8.760 4.335.077 8.812.957 36.81 15.175.719.279 1.561.142.757.305.751 40.202 508.408.916 - Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities On-balance sheet gap 6.550 22.584 511.402.809 391.710 25.427.365 56.342 (6.131 4.956.330 2.070 49.709 1.683 7.177 6.531.502 391.425 999.801 123.210.465.164.768.346.467 1.242.306.795 8.376 30.292 1.932.491.699 1.451 21.468 9.784 4.580. repurchase agreement lending.871.342 23.151 Assets 8.000) 2.435 305.918.226.766 20.786.212 (2.176.226 7.597 4.964.387.577 10.398) 37.453.866.842 3.000 (2.136 21.561.210. commitments to extend credit.182 2.826 14.545 46.631.542.475) 31.655. repurchase agreement borrowing.985.673 5.533.29 13.305 11.650.157.000) 2.384) Off-balance sheet financial instruments Forward Lending (including call lending.443 1.305 147. 2010 Mismatch of Interest Rate Sensitive Assets and Liabilities / Yield / Interest Rate Risk Effective Yield / Interest rate Total Upto one month Over three months to six months Over six Over one months to year to one year two years Rupees in '000 Over two years to three years Over three years to five years Over one month to three months Over five years to ten years Non-interest bearing Over ten financial years instruments On-balance sheet financial instruments Annual Report 2010 Faysal Bank 134 .226.245.680.210.209 4.212 16.683 892.470 20.806.032.342 3.755.786.200 9.077 (35. etc.944 1.242 455.

provider. geography. product and term. Hence. includes: Day-to-day funding.6. Monitoring and reporting of treasury and capital market maturities is done through monitoring of daily maturities. managed by monitoring future cash flows to ensure that requirements can be met. and Managing the liabilities both on a contractual and behavioural basis primarily by matching the maturity profiles of assets and liabilities. available Internal liquidity. 2010 46. as carried out within the Bank and monitored by the management. i) differences between the timing of rate changes and the timing of cash flows (re-pricing risk). The Bank’ Asset and Liability Management Committee manages the liquidity position on a continuous basis.2 The Interest rate risk of the Bank arises when there is a mismatch between contractual maturities. ii) changing rate relationships among different yield curves effecting bank activities (basis risk). The Bank maintains an active presence in money markets to enable this to happen. The Bank’ s s liquidity risk management process. Monitoring balance sheet liquidity ratios against internal and regulatory requirements. which are subject to interest rate adjustment within a specified period or re-pricing of on. Sources of liquidity are regularly reviewed to maintain a wide diversification by currency. monitoring and reporting takes the form of regular and periodic cash flow measurement and projections. The component of interest rate risk arising from differences in the timing of asset and liability. - . This includes replenishment of funds as they mature or are borrowed by customers.and off-balance sheet assets and liabilities. liquidity excess / shortfall and estimated overall liquidity.3 Major sources of Interest rate risk are. 46.1 Yield curve risk is the risk that a financial instrument will suf fer either a decline in income or capital because future changes in prevailing interest rates impact assets more or less than they impact liabilities. Risk is addressed by Asset and Liability Management Committee that reviews the interest rate dynamics at regular intervals and decides re-pricing of assets and liabilities to ensure that the spread of the Bank remains at an acceptable level. Monitoring of next three months liquidity target. It is inherent primarily to the banking book mainly through advances and deposits portfolio.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. iii) changing rate relationships across the range of maturities (yield curve risk). 46.7 Liquidity Risk Liquidity risk is the risk that the Bank is unable to meet its payment obligations associated with its financial liabilities when they fall due. and to replace funds when they are withdrawn. and iv) interest-related options embedded in bank products (options risk). 46. Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption to cash flow.6.6. Managing the concentration and profile of debt maturities.

345.387.000 3.578.009 10.817.280 1.615.400 1.505 26.838.820 12.295 18.7.058.488 158.517.261.202 10.149.171 198.747.519 5.904 195.674.182 4.880.037.435.924 5.687) 485.909 86.082 48.216.593.783 7.288. Since such balances have no actual maturity the same are classified in the earliest maturity band of upto one month.162 20.324.651 2.258.610.642.950.406 5.633.418.292 699.423.501 201.635.153 16.810.203 501.923 3.986 676.708.094 28.549 133.082.791 250.340 3.354.595.847.847.915 18.968 30.270.315.510 28.492.278 10.528 1.427.720 1.808 16.471.329.498 7.909 16.351 16.547 Annual Report 2010 Faysal Bank 136 . the Bank expects that these deposits will be maintained over a longer period without withdrawal.232 34.net Other assets 4.984 15.041.001.770 (77.807.182 3.035 926.930 43.137 Upto one month Over one month to three months Over three months to six months Over six months to one year Over one year to two years Over two years to three years 484.575.212.585 2.116 2.945 989.175.128 503.476 4.703 540.799.885.714.401 754. On the basis of history.295.207.726.210.017.198. .131 184.591 582.320.724.056 291.709 109. the entire balance held in saving deposit accounts is classified under the maturity band of upto one month.708.820 35.141 16.204 4.727.243 276.160 22.711.907 1.946.848.033 135.723 97.170 776.843 16.608 25.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s 2010 For the year ended December 31.479 16.236 57.169.688 1.939 20.218.770 7.959.428.872 145.057 1.375 16.674 22.018.488 Over three Over five years to years to Over ten five years ten years years Assets Cash and balances with treasury banks * Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets .395 13.340 582.253 7.726.1 Maturities of Assets and Liabilities (based on contractual maturities) Total Rupees in '000 17.006.593) 17.196.265 17.278 Liabilities Bills payable Borrowings Deposits and other accounts ** Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities .111 21.377 42.218.890 2.859 19.353 3. 2010 46.872.994.920.149.846 17.987 5.169.706.108) 16.517.164 267.698 20.417.260 7.378 145.net Other liabilities Net assets Share capital Proposed shares to be issued on amalgamation Reserves Unappropriated profit Surplus on revaluation of assets *Included in cash and balances with treasury banks are the current and deposit accounts with the State Bank of Pakistan which are maintained to meet the Statutory Liquidity Reserve Requirements (SLR).428.302.316 4.452 238.940 3.881 30.190 21.209.803.753 10.863 1.859 34.924 5.017.234 (5.309. **As per SBP's requirement.102 6.221.483.727.084 10.730 34.460.769 8.638 3.389 1.611 8.087 22.576 960 2.878 (125.

253 1.323 9.179 11.202 508.851 775. .577 10.526 2.024 9.716 180.919 147.365 4.479.338 91.185.047 21.527.451 20.409.263.745.918 2.355.795 15.226.940.556.766 123.070 149.782.667 2.479.869 12.826 56.net Other assets 20.024.862 8.482.964.977.674 12.021 1.919 Liabilities Bills payable Borrowings Deposits and other accounts ** Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities .209 400 998.578 37.net Other liabilities 1.223.605 4.655.196 37.351 86.183 200 1.739 (71.427.029.224 Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of assets 6.931 14.755 31.642.806 10.595 1.263) 1.853.001 2.756 109.531.335.340 485.276 12.300 4.446.336.214.272 10.136 21.757 511.966.264 473.617.408.897 9.495 7.153 8.227 10.547.618.865.755.144 11.465.435 400 909.242.004 305.991 49.931.991.082.795 14.352 16.333 250.787.070.698 200 282.493.200 6.861.171 14.837.471 15. 2010 Maturities of Assets and Liabilities (based on contractual maturities) Total Rupees in '000 8.155.346.210 2.918 4.961 Upto one month Over one month to three months Over three months to six months Over six months to one year Over one year to two years Over two Over three Over five years to years to years to Over ten three years five years ten years years Assets Cash and balances with treasury banks * Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets .738 6.938 29.537.666 4.049 2.202 508.926 486.090.593 12.782.879.461 359.723 5.323.183.673 5.483 3.592 15.427.549.879.424.851 52.922.724 472.577.000 867.069 168.264.413 8.739 *Included in cash and balances with treasury banks are the current and deposit accounts with the State Bank of Pakistan which are maintained to meet the Statutor y Liquidity Reserve Requirements (SLR).046) (10.367.478 20.516.787.146 1.367 811.560.215.800 15.446.017.637.827 12.069.009 2.602 10.985.335 1.279.188 999. On the basis of history.911 4.445.938 147.030.056 1.262 13.617 1.429.982 8. the entire balance held in saving deposit accounts is classified under the maturity band of upto one month. **As per SBP's requirement.451 34.905 1.732 520.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s 2009 For the year ended December 31.465. Since such balances have no actual maturity the same are classified in the earliest maturity band of upto one month.104 419.572 6.803.866.575 1.839.636 89. the Bank expects that these deposits will be maintained over a longer period without withdrawal.339 1.279.

511.348.703 540.376.851 3.664.418.799.387.315.970.135 699.833.126 1.009 15.920.003.479.net Other assets 1.711.198.642.657) 10.875.708.402 201.362 1.872 145.946.199 1.340 3. 2010 Total Rupees in '000 17.924 5.460.035 623.881 23.395 13.870.277.820) 484.961 (12.196 (8.820 12.202 10.2 Maturities of Assets and Liabilities .133.340 582.872.923 3.102 6.057 1.401 754.843 16.253 7.516 30.968 38.859 19.850 (4.769 8.059 102.376 16.608 29.074 7.861.292 22.770 Over three Over five years to years to Over ten five years ten years years Assets Cash and balances with treasury banks * Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets .153 16.121.261.709 32.218.329.304 Annual Report 2010 Faysal Bank 138 .517.266.139 Upto one month Over one month to three months Over three months to six months Over six months to one year Over one year to two years Over two years to three years 485.020 198.671.354.375 22.633.803.136 158.744.909 86.017.net Other liabilities Net assets Share capital Proposed shares to be issued on amalgamation Reserves Unappropriated profit Surplus on revaluation of assets .549 133.915 18.559 652.945 989.273) 14.021 44.179) 7.544.950.808 16.342 4.595.037.210.204 4.620 2.001.189 3.735 20.376.493.505.309.720 1.667.890.000 25.878 (125.674.751 7.041.671 10.280 1.232 34.056 291.261.128 503.010 4.400 1.111. 2010 46.688.958 51.093.585 2.316 4.651 31.094 28.417.599 9.221.358.723 97.7.866 721.591 582.320.877 5.258.218.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31.046.923 1.538.047 17.610.360.592 238.904 195.698 20.863 29.859 34.084 10.730 42.479 20.295.161 22.131 14.509.251.635.026 28.139 7.131.726.088 1.Based on expected withdrawal pattern The following maturity analysis is presented as an additional disclosure to depict the maturities of assets and liabilities as d etermined by the Bank's Asset and Liabilities Management Committee (ALCO) keeping in view the historical withdrawal patter n of deposits.688 1.546 Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities .364.148.377 43.498 12.727.528 1.207.720 58.378 145.017.593.170 777.188.392 980.304.724.962 15.987 5.497 3.702 676.406 5.064 26.994.475 2.164 267.407.112 21.791 250.292.303 960 2.483.984 15.706.082 48.021 501.116 2.243 276.108) 16.871.727.517.074 2.615.428.539.182 4.555.351 16.939 20.909 16.597 22.216.950.270.770 (7.235 514.423.

223.792.847 473.227 10.560.787.452 4.446.530.678 228.469) Liabilities Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities .146 1.595 1.029.482.611 24.716 180.264 4.917 12.938) 1.060.953.net Other assets 511.922.526 2.608 14.926 486.739 (18.911 4.730 511.263.144 18.049 2.674 12.200 6.153 13.787.527.572 6.837.049 1.918 4.555.024.726 1.411 22.033 Upto one month Over one month to three months Over three months to six months Over six months to one year Over one year to two years Over two Over three Over five years to years to years to Over ten three years five years ten years years Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets .610.723 5.531.024 9.800 15.244.591.461 359.514.776 147.075 15.826 56.851 52.964.755 35.096.136 25.753 16.937 6.591.409.488.000 1.279. 2010 Maturities of Assets and Liabilities .367.800 472.Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s 2009 For the year ended December 31.732 520.451 20.644.401 487.982 8.367 811.437 419.Based on expected withdrawal pattern Total Rupees in '000 8.806 10.262 13.023 1.782.858.346.499 3.215.738 6.202 508.336.188 999.210 2.196 33.080 250.340 485.179 11.531 400 867.757 9.517.090.155.673 10.226.069 168.766 123.602 10.666 4.966.575 1.866.638.617.585 200 282.604 459.351 27.264.618.861.357.047.427.451 34.082.881) (13.279.795 14.208 998.413.451.865.253 1.052.030.843.183.985.578 38.782.906 (4.853.895.167.593 12.313.756 51.109 3.706 305.755.655.364 765.072 775.505.577 16.971 2.537.918 2.577.518 20.365 4.413 1.335 11.407.999 9.299 4.077 508.021 12.641 541.211 9.215.862 8.017.net Other liabilities Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of assets 6.185.445.009 2.188 200 1.607 9.870.617 1.635 89.338 91.465.592 15.001 2.056 1.811.782.968.906 9.478 22.757.465.977.905 5.795 15.818.070 9.495 7.739 .938 9.242.460.642 400 909.900.515 9.

GENERAL 49. 47. NON-ADJUSTING EVENTS AFTER THE BALANCE SHEET DATE There were no appropriations or distributions made after the balance sheet date. The Bank’s businesses are dependent on the ability to process a large number of transactions ef ficiently and accurately. 4 dated February 17.1 Comparative information has been re-classified. These include key controls and the provision of business continuity plans to protect against major disruptions. IT security failure. fraud. The Bank's ORM framework consists of tools such as Risk & Controls Self Assessment. Operational risks and losses originate from business / operational process failure. The Operational Risk Management Policy of the Bank is approved by the Board of Directors. President & Ceo Director Director Director Annual Report 2010 Faysal Bank 140 . DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on March 29.3 Captions as prescribed in BSD circular No. Regular updates on operational risk status is presented before Enterprise Risk Management Committee (ERMC) and Board of Directors through the Board Risk Management Committee (BRMC). natural disasters. re-arranged or additionally incorporated in these financial statements. service quality compromised. and social and environmental impacts. Each division has processes and systems in place to address operational risks within their area. 2011 by the Board of Directors of the Bank. 49. The Bank has implemented risk controls and loss mitigation actio ns for cur tailing operational risk. regulatory non-compliance. loss of key staff.141 .Faysal Bank Limited N o t e s t o a n d F o r m i n g Pa rt o f t h e F i n a n c i a l S tat e m e n t s For the year ended December 31. or from external events.2 Figures have been rounded off to the nearest thousand rupees unless other wise stated.8 Operational Risk Operational Risk is the risk of direct or indirect losses result ing from inadequate or failed internal processes or systems. Material Operational risks are identified in new activities and products through "Other Risk Assessment Procedures (ORAP)". Loss Database and Key Risk Indicators. 2006 issued by the State Bank of Pakistan in respect of which no amounts are outstanding have not been reproduced in these financial statements except in the statement of financial position and the profit and loss account. wherever necessary to facilitate comparison and to confor m with changes in presentation in the current year. 49. Earnings per share for the prior year has been restated consequent to the issue of bonus shares during the current year. dependence on key suppliers. human factors. 49. 2010 46. 48.

Faysal Bank Limited

Annexure I to the Financial Statements
For the year ended December 31, 2010
Statement showing details of investments in ordinary and preference shares / certificates of listed and unlisted companies / modarabas / mutual funds and Term Finance Certificates and bonds as referred to in note 12 to the financial statements. 1. Details of investments in listed companies / modarabas / closed end mutual funds are as follows:
Quality of Available for Sale Securities 2010 2009 Market Values Rupees ‘000 33,295 8,260 20,224 174 357 5 26,365 9,440 12,939 17,432 1 AA+ BBB 2010 2009 Medium to Long Term Rating Assigned (where available) A AM35-Star AA+

2010 2009 Ordinary shares / certificates of Rs 10 each 4,006,670 1,999,950 25,639 28,042 3,018,500 100,000 199,568 77,000 56,703 101 69,922 1,762,772 600,000 100,000 15,240 16,024 22,770 43,105 4,100 118,630 16,990 3,827,120 20,000 8,153,324 192,962 85,411 10,171,365 554,621 11,493,620 24 325 5,730 100,000 120,100 1,000,000 3,520,045 433,477 1,114,368 10,825,024 9,700 9,662 852,764 3,994,715 1,999,950 2,812,895 2,990,000 1,001 1,709,700 202,834 2,893,534 3,520,050 25,008,000 4,964,530 -

2010 Name of company/ modaraba/ mutual fund Equity Investment Instruments Al-Meezan Mutual Fund+ NAMCO Balanced Fund Dominion Stock Fund Limited*** Investec Mutual Fund Limited*** JS Large Capital Fund Modarabas First Habib Modaraba+ First Fidelity Leasing Modaraba I.B.L Modaraba 1st Tawakkal Modarba 1st*** Unicap Modarba First Prudential Modaraba Banks / Financial Services Atlas Bank Limited (Formerly Dawood Bank Limited) Prudential Investment Bank Limited */*** Arif Habib Corporation Arif Habib Investment Limited First Capital Securities Corporation Limited Investec Securities Limited*** Islamic Investment Bank Limited*** National Asset Leasing Corporation Limited*** National Over Limited*** Natover Lease & Refinance Limited Standard Chartered Leasing Limited Askari Commercial Bank Bank Alfalah Limited Bank Al Habib Limited Javed Omer Vohra & Company JS Bank Limited Habib Bank Limited The Bank of Punjab Bankers Equity Limited*** Habib Metropolitan Bank Limited Indus Bank Limited*** Industrial Development Bank Limited Innovative Investment Bank*** KASB Bank Limited Mehran Bank Limited*** Silk Bank Limited First Credit & Investment Bank Limited National Bank of Pakistan Limited NIB Bank Limited Soneri Bank Limited Construction and Materials Adamjee Floorings Limited*** Fauji Cement Limited Buxly Paints Limited Pioneer Cement Limited Balance carried forward

2009 At Cost Rupees ‘000 35,263 20,000 27,888 22,656 1

35,348 20,000 22,829 288 575 11 -

217 12,528 15,966 1,855 129 49 74,849 230 301,407 2,163 424 91,420 338,034 540 3,030 35,200 32,437 3,361 111,421 177 7,494 1,111,982

12,528 25,201 43,914 35,192 166,365 39,373 -

114 14,934 1,776 54 48 67,702 224 295,641 772 220 99,781 333,200 251 2,620 11,475 33,300 3,287 89,956 140 5,774

25,038 56,424 11,792 120,038 30,582 -

A

AAAA AA AA+ A AA+ AAAA+ AA+ AA-

AAAAAA AAAAAAA-

428,381 1,023,584 310,051

*The bank holds more than 10% of investees' capital in Prudential Investment Bank Limited – 17.10% (2009: 17.10%) **Shares / certificates of Rs 5 each ***Delisted companies + Includes 3,994,715 certificates of Al-Meezan Mutual Fund and 2,990,000 certificates of First Habib Modaraba classified as strategic investment

Faysal Bank Limited

Annexure I to the Financial Statements
For the year ended December 31, 2010
Quality of Available for Sale Securities 2010 2009 Ordinary shares / certificates of Rs 10 each 2010 Name of company/ modaraba/ mutual fund Balance brought forward 53,197 10,665 3,149 280,986 26,900 110,411 72,100 79,089 25,300 22,977 530,350 57,375 41,004 250,979 310,697 504,529 10,000 289,874 100,000 11,000,000 14 200,000 1,126,362 110,499 12,635,679 16,100 939,372 1,304,841 766,201 40,999 6,612,241 53,500 74,500 100 15,223 10,416 51,715 58,047 3,911 46,649 181,000 34,500 34,012 6,220,000 10,192 60,913 194,773 13,667 1,900 5,700 12,723 118,000 335,070 21,825 55,213 114,489 1,664,059 7,297,581 891,361 939,372 723,000 1,000,000 1,530 Cherat Cement Company Limited Dadabhoy Construction Technology Limited EMCO Industries Limited FECTO Cement Limited Gypsum Corporation Limited*** Mustehkam Cement Limited Punjab Building*** Zeal Pak Cement Factory Limited*** Karachi Pipes Limited*** Oil and Gas Pakistan State Oil Limited Shell Gas LPG Shell Pakistan Limited Attock Petroleum Limited Pakistan Petroleum Limited Pakistan Refinery Limited Pakistan Oilfields Limited National Refinery Limited Mari Gas Company Limited Sui Northern Gas Pipelines Limited Fixed Line Telecommunication Pakistan Telecommunication Company Limited Callmate Telips Limited*** Telecard Worldcall Telecom Electricity Altern Energy Hub Power Company Limited+ Hyderabad Electric Limited*** Ideal Energy Limited * Karachi Electric Supply Company** Kohinoor Energy Limited+ Kohinoor Power Company Limited Kot Addu Power Company Nishat Power Limited Personal Goods (Colony) Sarhad Textile Limited Accord Textile Limited Adamjee Industries Limited*** Adil Textile Mills Limited*** Afsar Textile Mills Limited*** Alif Textile Mills Limited*** Al-Qaim Textile Mills Limited Amazai Textile Mills Limited Apex Fabrics Limited*** Asim Textile Mills Limited Awan Textile Mills Limited*** Ayaz Textile Mills Limited*** Azgard Nine Limited Bahawalpur Textiles Limited Bannu Woollen Mills Limited Bata Pakistan Limited Bawany Textile Mills Limited*** Bleesed Textile Mills Limited Central Cotton Mills Limited*** Crescent Knitware Limited*** Crescent Spinning Mills Limited*** Crescent Textile Mills Limited Balance carried forward 2009 At Cost Rupees ‘000 2010 2009 Market Values Rupees ‘000 2010 2009 Medium to Long Term Rating Assigned (where available)

1,111,982 718 16 18 2,891 3,292 6,737 22,111 11,469 13,742 54,689 23,166 150,891 2,751 41,439 2,756 212,788 516 3,613 1,214 456,821 28,161 2,675 24,513 303 275,654 27 93 100 2 362 72,586 870 163,233 74 11,479 2,703,752

428,381 1,023,584 310,051 6,463 6,500 26,183 55,857 155,070 30,000 28,182 23,174 14,985 1,426 572 5 9 2,037 1,590 6,782 17,942 11,947 13,717 54,500 33,468 149,320 2,738 36,226 2,674 213,620 442 3,266 1,109 472,701 9,394 3,667 16,688 189 268,986 21 52 87 3 452 60,085 816 134,228 88 7,948 6,492 6,664 20,244 41,269 128,802 27,703 22,413 12,730 1,498 AA+ AA+

AAA AA

AAA AA

A-

AA+ -

AA+

AA-

AA

SD

776,221 2,550,953 577,866

*The bank holds more than 10% of investees' capital in Ideal Energy Limited – 11.74% (2009: 11.74%) **Shares / certificates of Rs 5 each ***Delisted companies + Includes 891,361 shares of Hub Power Company Limited and 723,000 shares of Kohinoor Energy Limited classified as strategic investment

Annual Report 2010 Faysal Bank 142 - 143

Faysal Bank Limited

Annexure I to the Financial Statements
For the year ended December 31, 2010
Quality of Available for Sale Securities 2010 2009 Ordinary shares / certificates of Rs 10 each 2010 Name of company/ modaraba/ mutual fund Balance brought forward 178,648 37,584 3,700 7,300 3,782 283 7,315 8,000 10,500 55,548 37,800 194,400 1,500 41,612 9,475 343,846 72,936 1 18,370 57,819 26,059 6,064 6,056 18,050 3,500 10,136 29,000 27,752 300,000 84,000 117,103 413,483 259,500 19,200 164,753 8,500 19,701 27,594 104,400 26,022 18,780 4,400 11,600 3,057,189 100,000 22,201 49,858 58,289 2,000,010 288,510 37,500 117,895 9,345 12,000 38,000 128,500 65,321 47,250 99,326 260,605 500 327,276 58,000 40,200 19,926 127,045 160,500 Crown Textile Mills Limited*** Dawood Lawrancepur Limited Fateh Industries Limited Fateh Sports Wear Limited Fateh Textile Mills Limited Fazal Textile Mills Ltd. Ghafoor Textile Mills Limited*** Ghulam Dadabhoy*** Globe Textile Mills Limited Gul Ahmed Textile Mills Gulistan Spinning Mills Limited Gulshan Spinning Mills Limited Hafiz Textile Mills Limited Hakkim Textile Mills Limited Harum Tex Limited*** Ibrahim Fibre Limited Indus Dyeing Manufacturing Company Limited Indus Polyester Company Limited*** International Knitwear Limited Ishaque Textile Mills Limited Itti Textile Mills Limited Junaid Cotton Mills Limited*** Kaiser Art And Kraft Mills Limited*** Karim Cotton Mills Limited*** Karim Silk Mills Limited*** Kohinoor Cotton Textile Limited*** Kohinoor Industries Limited Kohinoor Looms Limited*** Kohinoor Mills Limited Kohinoor Spinning Mills Limited Kohinoor Sugar Mills Limited Kohinoor Textile Mills Limited Maqbool Textile Mills Limited Marr Fabrics Limited*** Masood Textile Mills Limited Mehr Dastgir Textile Mills Limited Mehran Jute Mills Limited*** Mian Mohammed Sugar Mills Limited*** Mohd Farooq Textile Mills Limited Mohib Textile Mills Limited*** Moonlite (Pak) Limited National Match Industries Limited Naveed Textile Mills Limited*** Nishat (Chunian) Limited Nishat Mills Limited Norrie Textile Mills Limited*** Nusrat Textile Mills Limited*** Olympia Textile Mills Limited Pakistan Synthetic Limited Paramount Spining Mills Limited Pearl Fabrics Limited*** Premium Textile Mills Limited Punjab Cotton*** Qayyum Spinning Mills Limited Ravi Textile Mills Limited Redco Textiles Limited Reliance Cotton Spinning Mills Limited Reliance Weaving Mills Limited Ruby Textile Mills Limited Rupali Polyester Limited Sadoon Textile Mills Limited Saif Textile Mills Limited Saitex Spinning Mills Limited*** Sana Industries Limited Sapphire Fibers Limited Balance carried forward ***Delisted companies 2009 At Cost Rupees ‘000 2010 2009 Market Values Rupees ‘000 2010 2009 Medium to Long Term Rating Assigned (where available)

2,703,752 1,239 2,353 30 69 1,362 128 155 1,499 286 1,439 24 10 12,623 14,588 255 260 25 74 1,587 139 978 3,899 3,490 5,766 2 158 242 70,200 6,572 152 18,695 2,897 2,594 4 405 127 1,828 481 1,067 9,642 2,605 1,407 2,192 2,877,300

776,221 2,550,953 577,866 1,238 11,564 1,634 20 69 427 113 126 1,624 260 1,361 28 10 14,490 23,938 165 398 23 46 882 100 595 2,076 2,232 3,295 17 144 103 69,459 6,417 117 18,200 3,001 3,336 4 57 114 2,381 430 497 9,382 1,473 1,851 2,572 11,219 -

A+ A

A+

A+

BBB+

789,023 2,724,420 589,085

Faysal Bank Limited

Annexure I to the Financial Statements
For the year ended December 31, 2010
Quality of Available for Sale Securities 2010 2009 Ordinary shares / certificates of Rs 10 each 2010 Name of company/ modaraba/ mutual fund Balance brought forward 43,000 27,000 219,268 280,564 76,000 12,831 36,200 57,498 17,000 12,859 2,376 71,700 69,000 5,000 229,000 7,000 18,734 19,000 42,176 601 11,000 79,306 2,567,046 156,600 6,300 9,700 90,400 17,700 4 700,000 400,000 10,000 50 232,077 1,500 1,000 35,599 80,000 425,600 7,270 617,500 400 17,389 133,364 9,500 9,084 580 10,000 126,839 173,000 382,779 130,390 1,170,210 9,000 8,205 23,500 2,500,000 Schon Textiles Limited*** Service (Textile) Industries Limited Service Fabircs Limited Service Industries Shahtaj Textile Mills Limited Shahyar (O.E.) Textile*** Shahyar Textile*** Shams Textile Mills Limited Siftaq Internatioanal Limited Sind Fine Textile Mills Limited Sunrise Textile Limited*** Sunshine Cloth Limited Sunshine Cotton Mills Limited*** Suraj Cotton Mills Limited Taj Textile Mills Limited Tariq Cotton Mills Limited*** Tawakkal Garments Industries Limited*** Tawakkal Limited*** Treet Corporation Limited United Brands Limited Zafar Textile Mills Limited Zahoor Cotton Mills Limited Zahoor Textile Mills Limited*** Zil Limited Electronic and Electrical Equipment Aslo Electronic Limited*** Greaves Airconditions Limited*** Johnson And Phillips (Pakistan) Limited Punjab Lamps*** Refrigerator Manufacturing Limited Support Services TRG Pakistan Non Life Insurance Adamjee Insurance Company Limited EFU General Insurance Union Insurance Company of Pakistan Limited*** Food Producers Al- Abbas Sugar Mills Limited Charsada Sugar*** Chashma Sugar Mills Limited Colony Sugar Mills Crescent Sugar Mills and Distillery Limited Faran Sugar Mills Limited Fazal Vegetable Ghee Mills Limited Habib Sugar Mills Limited*** Ismail Industries Limited JDW Sugar Mirpurkhas Sugar Mills Limited Morafco Industries Limited Mubarik Dairies Limited Nestle Pakistan Pak Ghee Industries Limited Pangrio Sugar Mills Limited Sanghar Sugar Mills Limited Shahmurad Sugar Mills Limited Shahtaj Shugar Mills Limited Shakarganj Mills Limited Suraj Ghee Industries Limited Unilever Pakistan Limited Uqab Breeding Farms Limited*** Balance carried forward ***Delisted companies 2009 At Cost Rupees ‘000 2010 2009 Market Values Rupees ‘000 2010 2009 Medium to Long Term Rating Assigned (where available)

2,877,300 19 88 77,518 1,440 1,144 30 77 69 156 82 2,514 27 22 2,500 9,281 1,379 2,945 35,849 456 21,579 10 392 515 8,938 33 17,004 27 1,429 10,134 126 9 1,363 4 901 2,595 5,608 12,257 9,479 117 35,197 3,140,613

789,023 2,724,420 589,085 2,500 11 66 67,347 1,460 1,437 17 102 78 23 176 85 2,533 17 71 8,752 852 2,499 35,000 440 22,025 12 115 540 8,870 33 20,569 30 1,543 6,882 88 36 1,377 3 774 2,491 4,195 10,451 6,471 90 35,775 AA

AA-

-

A

A-

BBB+ D

791,523 2,967,756 589,085

Annual Report 2010 Faysal Bank 144 - 145

Faysal Bank Limited

Annexure I to the Financial Statements
For the year ended December 31, 2010
Quality of Available for Sale Securities 2010 2009 Ordinary shares / certificates of Rs 10 each 2010 Name of company/ modaraba/ mutual fund 2009 At Cost Rupees ‘000 2010 2009 Market Values Rupees ‘000 2010 2009 Medium to Long Term Rating Assigned (where available)

Balance brought forward 75,363 71,635 43,152 43,797 113,973 125,948 4,241 16,636 24,921 4,835 46,600 17,333 247,658 16,000 12,204 595,017 151,317 9,300 16,000 157,230 22,500 7,137,000 252,497 1,779,232 316,676 200,000 1,374,615 3,200,000 24 24,223 114,947 110,942 72,000 101,272 516,199 221,580 1,252,967 16,000 1,000 169,430 244,023 500 48,000 321,353 253,620 538,033 68,200 17,114 20,722 119,000 21,238 70,000 66,900 18,358 1,374,615 943,584 60,800 43,555 480,000 Industrial Engineering Al-Ghazi Tractors ** Millat Tractors Bela Engineering Limited*** Bolan Casting Limited Hinopak Motors Limited K.S.B. Pumps Company Limited Nowshera Engineering***

3,140,613 18,479 35,673 1,752 21,409 9,375 -

791,523 2,967,756 17,607 23,772 3,691 100,000 22,150 7,086 4,725 30,463 17,107 35,802 97 1,931 15,032 7,571 193 6,292 368 8,876 2,166 8,376 2,395 13,447 10,565 14,324 170,574 46,207 352,928 947 38,762 173,009 43,840 22 14,173 726 3,659 14,201 3,459 74,990 106 11 12,326 9,261 22 35,265 22,098 47,449 1,974 562 2,943 7,141 22,336

589,085 16,663 25,409 3,608 141,489 14,937 7,370 4,759 29,928 833,248

Automobiles and Parts Honda Atlas Cars Limited 323 Indus Motor Company Limited 6,358 Agri Auto Industries Limited** 356 Atlas Battery Limited 8,819 Atlas Honda Limited 2,542 Baluchistan Wheels Limited 7,417 Data Agro Limited*** Exide Pakistan Limited 2,481 General Tyre and Rubber Company of Pakistan Limited 15,192 Pak Suzuki Motor Company Limited 14,070 Rex Baren Battery*** Taga Pakistan Limited*** Chemicals BOC Pakistan Limited Adil Polyproplene Limited*** Agritech Limited Clariant Pakistan Limited Dawood Hercules Chemicals Limited+ Dewan Salman Fibre Limited Engro Corporation Fauji Fertilizer Company Limited+ Lotte Pakistan Limited Polyron Limited*** Sardar Chemical Industries Limited Sind Alkalis Limited Sitara Chemical Industries Limited United Distributors Pakistan Limited Wah-Nobel Chemicals Limited Sitara Peroxide Limited Industrial Metals and Mining Crescent Steel & Allied Products Limited Huffaz Seamless Pipe Industries Limited International Industries Limited Metropolitan Steel Corporation Limited Quality Steel Works Limited Industrial Transportation Pakistan International Container Terminal Limited Pakistan National Shipping Corporation Pan Islamic Steamship Company Limited*** Health Care Equipment and Services Medi Glass Limited Pharma and Bio Tech Abbot Laboatories (Pakistan) Limited Ferozsons Laboratories Limited Glaxosmithkline (Pakistan) Limited Highnoon Laboratories Limited Otsuka Pakistan Limited Sanofi-Aventis Pakistan Limited Searl Pakistan Limited Wyeth Pak Limited Balance carried forward 20,287 213,273 45,194 371,980 1,083 39,152 100,000 45,008 46 19,848 1,549 5,353 16,080 4,682 68,811 213 12 12,679 10,424 38 34,020 25,954 48,553 2,244 668 2,942 7,547 25,017

SD

AA

AA-

A+

A AA-

BBB+

BBB

4,407,516 1,001,017 4,211,289

**Shares / certificates of Rs 5 each ***Delisted companies + Includes 1,131,158 shares of Dawood Hercules Chemicals Limited and 1,374,615 shares of Fauji Fertilizer Company Limited classified as strategic investment

148 2.000 9.410 3 11.900 100.407.789 156 768 77.000 26.000 100.500 40.200 49.223 43.366 127 1.296 28. Hussain*** Hashmi Can Company Limited Kaytex Mills Limited*** Lafayat Industry Limited Merit Packaging Limited Packages Limited Siemens Pakistan Engineering Company Limited Syed Match Company Limited Tri-Pack Films Limited Turbo Tec Limited*** Pakistan Services Limited Noon Pakistan Limited 4.979 1.113 1.400 26.500 18.266 833.211.459 592.196 **Shares / certificates of Rs 5 each ***Delisted companies Annual Report 2010 Faysal Bank 146 .028 29 5.977 1.000 206.900 16.035 225 60.248 8.946 19.013 102.488 12.169 27.315 51.871 24.000 225 Forestry and Paper Adamjee Papers Limited*** Chilya Corr Board Limited*** Pakistan Paper Corporation Security Paper Limited Beverages Shezan International Limited Leisure Goods Grays of Combridge (Pakistan) Limited RCD Ball*** Media Southern Networks*** Household Goods Al-Abid Silk Mills Limited Pak Elektron Limited Regal Ceramics Limited*** Jute Thall Limited ** Tobacco Pakistan Tobacco Company General Industrials / Others VISA Incorporation .500 15.000 255.525 31 5.000 186.487 1.000 8.438 15.638 4.923 6.274 4 12.353 169.011.671 843.927 30.959 15.Class C Shares Dadabhoy Leasing Limited*** Al-Hussainy Industries Limited Arag Industries Limited*** Aswan Tantage Limited*** Baluchistan Foundry Baluchistan Particle Board Limited Casspak Industries Limited*** Dadabhoy Sack Limited*** Fatima Enterprise H.001.670 2.352 152 1.089.406 A AA A+ 4.384 3.034 4. 2010 Quality of Available for Sale Securities 2010 2009 Ordinary shares / certificates of Rs 10 each 2010 Name of company/ modaraba/ mutual fund 2009 At Cost Rupees ‘000 2010 2009 Market Values Rupees ‘000 2010 2009 Medium to Long Term Rating Assigned (where available) Balance brought forward 43.599.163 10.Faysal Bank Limited Annexure I to the Financial Statements For the year ended December 31.714 27.578 4.017 4.147 .183 212.120 29.809.486 21.289 4.Shaikh M.145 127.514 218.326 9.569 5.363 172 991 76.595 4.516 1.521 25 770.

2010 (un-audited) Al Hamra Hills (Private) Limited+ 12.47) Period of financial statements: June 30.13% (2009 : 14. 1.000 Not Applicable 750 750 Not Applicable Not Applicable AM4+ AM4+ 1.000 - Not Applicable 5. 2010 (audited) DHA Cogen Limited */+ 32.000 ) ordinary shares of Rs 10 each ECOTEC CNG 484.50% (2009: nil) of investee’ capital s Name of Chief Executive : Mr.22 (2009: Nil) Period of financial statements: December 31.M. 2004 (audited) Khushhali Bank Limited 1.000 (2009 : 24.000 (2009 : 810.17 (2009: Rs.375.22% (2009 : 15.39) Period of financial statements: June 30.22%) of investee’ capital. Muhammad Ghalib Nishtar Break up value of share: Rs.000 Not Applicable 325.Faysal Bank Limited Annexure I to the Financial Statements For the year ended December 31. Zaeem Break up value of share: Rs.452 - Not Applicable 15. s Chief Executive: Mr.88% (2009: Nil) of investee’ capital. 9.750 125.500.500. The bank holds 18.000 ) ordinary shares of Rs 10 each The bank holds 14. 3.15 (2009: Nil) Period of financial statements: December 31. 2010 Quality of Available for Sale Securities 2.500. s Chief Executive: Mr.000 (2009: Nil) ordinary shares of Taka 10 each.037 Not Applicable 100.000) ordinary shares of Rs 10 each Sukhchayn Gardens (Private) Limited+ 242.037 1.800 Not Applicable 2.52 (2009: Rs 9.54) Period of financial statements: June 30.000 325.562 (2009: Nil) ordinary shares of Rs 10 each First Capital Investment (Private) Limited * 150. Habib Ahmed Break up value per share: Rs.044 (2009: Nil) ordinary shares of Rs 10 each The bank holds 5. S.785 (2009 : 250.61 (2009: 171.500. Shujaat Azeem Break up value per share: Rs.500. 2007 (audited) *Fully provided investments +Strategic investments 243.337 . 8.375. 9. Details of investments in unlisted companies are as follows 2010 2009 At Cost Rupees ‘000 243.000 (2009 : 150.000 (2009 : 32. 2010 (un-audited) Credit Rating Information Services Limited (Bangladesh) * 260. 2009 (audited) Pakistan Export Finance Guarantee Agency Limited * 568.500 103.000 (2009: Nil) ordinary shares of Rs 10 each The bank holds 0.758) ordinary shares of Rs 100 each The bank holds 5.52% (2009: 5.000 125.687 - Not Applicable 819. 172. Habib Ahmed Break up value per share: Rs.13%) of investee’ capital.43 (2009: Nil) Period of financial statements: December 31.176 799.750 2010 2009 Market Values Rupees ‘000 Not Applicable 2010 2009 Medium to Long Term Rating Assigned (where available) Al Hamra Avenue (Private) Limited+ 24.000 (2009 : 12. Muzaffar Ahmed Break up value per share: Taka 6. s Chief Executive: Mr. s Chief Executive: Mr.27% (2009: Nil) of investee’ capital.70%) of investee’ capital.000 ) ordinary shares of Rs 10 each The bank holds 15.000) ordinary shares of Rs 10 each Himont Chemical (Private) Limited * 810. s Chief Executive: Mr.

969 Securities having no book value as at December 31.177 29 79.873.211 4.374 National Investment (Unit) Trust *** 420.000 - 126.003.911 4.089 2. Naseem Saigol Class B preference shares of 11% Cumulative investee's capital Convertible 25.000 200.000 * 4.800 1.249. 6 months KIBOR s Pak Elektron Limited Chief Executive: Mr.873.064 AKD Income Fund ** 826 + Faysal Balanced Growth Fund 80.790 50.13% (2009 : 14. Sheikh Naseem Ahmad The bank holds 10% (2009 : 2.299.998 20 4.000 24.900 1.490 244.887 2.Faysal Bank Limited Annexure I to the Financial Statements For the year ended December 31.000 Fazal Cloth Mills (Private) Limited Chief Executive: Mr.671.310.888 PICIC Income Fund 100.107.301.356 20.625.000 Faysal Income Growth Fund Faysal Savings Growth Fund Faysal Islamic Savings Growth Fund Faysal Money Market Fund JS KSE 30 Index Fund JS Large Capital Fund + 197.912 2010 2009 Medium to Long Term Rating Assigned (where available) SD BB A+ SD 2010 2009 Share of Rs 10 each 2.000 200.000 100.25% p.327 100.292 22.000 2.292 154. Naseem Saigol The bank holds 17.5% plus 10.000 3.000 75.000 24.394.000 2010 2009 Market Values Rupees ‘000 Not Applicable 2010 2009 Medium to Long Term Rating Assigned (where available) A- 2010 2009 Share of Rs 10 each 2.951 221.227 198.750 47. Details of investments in open ended mutual funds: 2010 2009 Name of fund 2010 2009 At Cost Rupees ‘000 2010 2009 Market Values Rupees ‘000 2010 2009 Medium to Long Term Rating Assigned (where available) Open ended Mutual funds 1.709 27.000.000.200 61.630 315.634 17. s Pak Elektron Limited Chief Executive: Mr.430.207 1.230 207.149 .872 137.50% Cumulative preference shares in Convertible investee’ capital.000 20.700.849 100.250 Not Applicable A 100.646 216.195 5.25%) of Class A 9.043 IGI Income Fund 2.680 126.189 3.75% Cumulative Convertible 6% per annum 15% Cumulative 5% Cumulative 9.000 1.302 7.111 - Azgard Nine Limited Maple Leaf Cement Factory Limited Charsada Sugar * Nishat (Chunian) 15% NVCCP Unilever Pakistan Limited * Chenab Limited 8.500.009 2.816 22. 22.887 2.923.496 5.000.040 103.758 281.155 2. 2010 Preference shares – Unlisted companies Quality of Available for Sale Securities Name of company Rate 2010 2009 At Cost Rupees ‘000 25.95% Cumulative 9.500. 2.00%) of investee’ capital.262 22.119 52.250 Quality of Available for Sale Securities 5.249.668 A(f) A+(f) AA+(f) 5-Star AA-(f) A(f) BBB(f) 3-Star A+(f) A(f) 3 Star 2-Star * Nature of fund has been changed to open ended fund from closed end fund.099 1.000 7.739 130.046 HBL Income Fund 6.000 First Habib Income Fund 2.100.037 6. 2010 3.000 75.000 National Investment Trust Government Bond Fund *** 50.198 851 99.894.310.040 115.490 243.422 National Investment Trust Income Fund *** 50.000 226.374 80.000 208.500.771. ** Units of Rs 50 each *** Units of Rs 10 each +Strategic investment 1.209.937 266. Preference shares – Listed companies Quality of Available for Sale Securities Name of company Rate 2010 2009 At Cost Rupees ‘000 22.a.096 1.111 105.503.499 1.411 100.427 2010 2009 Market Values Rupees ‘000 22.000 143.000 1.033 588.763.882 Annual Report 2010 Faysal Bank 148 .000 Not Applicable A A - 12.530 4.289 1.000.

746 2010 2009 Medium to Long Term Rating Assigned (where available) A 118.073 AA AA - 226. 5.113 A AA- 99. balance in 3 semi annual installments of 33. Suleman Kanjiyani Balance carried forward 2009 At Cost Rupees ‘000 16.489 118.35% above six months KIBOR rate with no floor and cap. with no floor and no cap Redemption: Ten semi – annual installments commencing 6 months from date of issue Maturity: November 2010 Chief Executive Officer: Mr.000 each Mark-up: 8. Basheer Ahmed Chowdry Azgard Nine Limited 31. 2010 Quality of Available for Sale Securities 2010 6.Unsecured 20. Bokhari Financial Receivables Securitization Company Limited 20. 5.49% per annum Redemption: At maturity Maturity: March 2013 Chief Executive Officer: Mr.18% of principal in the first 54 months.000 (2009: 20.149 51.5% above six months KIBOR.000) certificates of Rs. 5.Floor 11%) Redemption: Three annual installments commencing May 2008 Maturity: May 2010 Modaraba Management Company: Al Zamin Modaraba Management (Private) Limited Chief Executive Officer of Management Company : Mr. 0.Faysal Bank Limited Annexure I to the Financial Statements For the year ended December 31.50% & cap-10% Redemption: 0.25% each starting from 84th month. remaining 99.419 AA AA 99.000 each Mark-up: Different spread over six months KIBOR rate in different years with no floor and cap Redemption: 12 unequal semi annual installments. Term Finance Certificates .940 50. floor-8%.000 each Mark-up: For 1 . 5. 5.433 BBB 252.450 - 23.Second Tranche Nil (2009: 24.489 111.760 99.45% per annum Redemption: 0. balance in 3 semi annual installments of 33. Atif R. 5.591 66.000 each Mark-up: 9. 5.10 years.204 903.640 (2009: 31.000 each Mark-up: 2% above six months KIBOR rate. Atif R.Second Issue 20.615 87.589 - 220.00% above six months KIBOR rate. Abbas D.613 A+ A+ 687. Humayun Nabi Jan United Bank Limited .000 (2009: 20.First Issue 50.000 each Mark-up: 2.450) certificates of Rs.000 (2009: 10.608 .000 each Mark-up: Minimum 9.000) certificates of Rs.000) certificates of Rs. Atif R. Maturity: February 2018 Chief Executive Officer: Mr. Maturity: July 2012 Chief Executive Officer: Mr.379 118.000) certificates of Rs. 20122015: 47% and 2016-2017: 53% of the outstanding amount Maturity: September 2017 Chief Executive Officer: Mr.Second Tranche Nil (2009: 9. 5.441 968.982 87.990 221.with floor-3. Habib Jahangir Siddiqui & Company Limited .000 (2009: 20.535 (2009: 50.942) certificates of Rs. 1.920 49.Fourth Issue Nil (2009: 50. Secured Al Zamin Leasing Modaraba Limited .093 249.25% per annum in first 78 months.000) certificates of Rs. For 6 . cap-16% Redemption: Equal Semi annual installment with a grace period of 1 year Maturity: January 2014 Chief Executive Officer: Mr.640) certificates of Rs.82% in equal installments in 60th & 66th month Maturity: May 2012 Chief Executive Officer: Mr. Bokhari United Bank Limited .5 years. Munaf Ibrahim Trust Leasing & Investment Bank Limited . 5.5% above six months KIBOR floor-6 % per annum.978 99.262 639.800 90.760 AA AA 49. cap-16% per annum Redemption: 0.201 82. Bokhari United Bank Limited .520 232.000 each Mark-up: 1. Maturity: July 2012 Chief Executive Officer: Mr.901 2010 2009 Market Values Rupees ‘000 14. Redemption: At maturity or at the exercise of call option or partial call option.Fourth Tranche 10.25% each starting from 84th month.000) certificates of Rs.147 AA AA+ - 24.85% above six months KIBOR rate with no floor and cap.000 each Mark-up: 2.5% on PLS Basis (4% above six months KIBOR .25% per annum in first 78 months. Ahmad Shaikh Bank Al-Habib Limited .603 86.468 80.304 AA 67.Listed.

151 . Dewan M.000 each Mark-up: 3.000 199.480 - 12. Maturity: September 2017 Chief Executive Officer: Mr.150 - AA 29.50% above six months KIBOR rate. 102.000) ordinary shares of Rs 10 each The bank holds 30% (2009: 30%) of investee’ capital.000 108.000 - - Annual Report 2010 Faysal Bank 150 .000 Not Applicable 108.36) Period of financial statements: December 31.25% each starting from 84th month. s Chief Executive: Mr.262 160.000 (2009: Nil) certificates of Rs.Faysal Bank Limited Annexure I to the Financial Statements For the year ended December 31. 2010 9.77) Period of financial statements: December 31.50% above six months KIBOR rate.500. Shams ul Afreen Pakistan Mobile Communication Limited 3. Maturity: February 2013 Chief Executive Officer: Fawad Ahmed Mukhtar Bank Alfalah Limited .000 each Mark-up: 1.Fourth Issue 40. 5.000 each Mark-up: 1.608 143.000 201.919 500.75% above six months KIBOR rate. Term Finance Certificates .000 Not Applicable AM2- AM3+ 45.000) certificates of Rs. 5.50% above six months KIBOR rate.000 - - 108.000 201. Salman Haider Shaikh Break up value of share: Rs. with no floor and no cap Redemption: 0. Nauman Ansari Break up value of share: Rs 104.Second Issue 6000 (2009: Nil) certificates of Rs. 5.50% above six months KIBOR rate with no floor and cap Redemption: 0.288 822. Maturity: November 2012 Chief Executive Officer: Mr.080.000 45.000 (2009: Nil) certificates of Rs. Rashid Khan Askari Bank Limited .665 - AA- 3. 2010 +Strategic investments 687. Dewan M. Yousuf Farooqui Bank Alfalah Limited .223 500.584 - AA- 877.25% semi annually in first 78 months.584 1.000 (2009: Nil) certificates of Rs.000 45.000) ordinary shares of Rs 100 each The bank holds 60% (2009: 60%) of investee’ capital.233) certificates of Rs.Second Issue 3. Details of investment in an Associate: Faysal Asset Management Limited+ 4. Yousuf Farooqui 8.615 BBB BBB 2010 2009 Medium to Long Term Rating Assigned (where available Balance brought forward Telecard Limited 70.495 - Not applicable 712.000 200. 5.080.25% each starting from 84th month. 17.000 (2009 : 4.441 129.000 108. balance of 33. Chief Executive Officer: Mr.85 (2009: Rs 17.123 1.000 each Mark-up: SBP discount rate less 2% p.26% semi annually in first 78 months.500. Sirajuddin Aziz Dewan Sugar Mills Limited 10.026 2010 2009 Market Values Rupees ‘000 639.Unlisted Dewan Cement Limited (formerly Pakland Cement Limited) The TFC has not currently been issued. Maturity: November 2013 Chief Executive Officer: Mr.503 903. with no floor and no cap Redemption: 6% semi annually in first 30 months.931 - 29.000 each Mark-up: 1.053 12.989 - 45. balance in five stepped-up semi annual installments commencing from the 36th month from the issuance date.55 (2009: Rs. s Chief Executive: Mr.85% above six months KIBOR rate.989 Not applicable - D AA AA- 12.000 (2009: 40.3% of the principal amount in the first 90 months and remaining in the 96th month of issue date Maturity: October 2013 Chief Executive Officer: Mr. Maturity: May 2013 Chief Executive Officer: Mr. Details of investment in a Subsidiary: Faysal Management Services (Private) Limited+ 1. 2010 Quality of Available for Sale Securities 2010 2009 At Cost Rupees ‘000 968. with no floor and no cap Redemption: Six equal semi-annual installments commencing 54th months from the date of issuance.233 (2009 : 70.204 123. 5. with 6% floor and 12% cap Maturity: June 2008 Chief Executive Officer: Mr. 5. balance of 33.a. Sirajuddin Aziz 7.000 (2009 : 1.047. with no floor and no cap Redemption: Ten unequal semi-annual installments commencing 18 months from the last date of public subscription.000 each Mark-up: 2.248 - 3.414 700.478 - A+ 14. Muhammad Rafiquddin Mehkari Pak Arab Fertilizers Limited 691 (2009: Nil) certificates of Rs. with no floor and no cap Redemption: 0. 5.128.970 - 14.000 each Mark-up: 2.

Lahore 18 Mirza Muhammad Iqbal H. S. 1 Rupees '000 Sumaira Khalid Qadri 42301-7207614-2 Khalid Mahmood Qadri Muhammad Fausal Anwar Hakeem Muhammad Azam Khokhar Nemat Naeem Rao Mujahid Hussain Rehmat Ali Syed Ali Ahmed Shah Khushi Muhammad Niaz Ahmed Akhtar Khan Kamal Waris Chaudary Nizam-Uddin Chaudhary Ghulam Nabi Shah Muhammad Saqib Arshad Jamal Haji Mohammed Razaq Nawab Khan Sheikh Ferozdin Mirza Nawab Baig Muhammad Kamran Saeed Khan Syed Anayat Hussain Mian Muhammad Arshad Fayaz Ullah Shaikh Sheikh Muhammad Ashraf Chohdry Ejaz Hussain 3310056441931 3310045387223 3310010163239 3740504936055 3310044343817 Muhammad Shafi Rasheed Ahmad Toor Muhammad Sadiq Sheikh Muhammad Ashraf 264 467 465 450 404 241 8. 2010 as referred to in note 13.A Bazar Near F.634 388 2 4 2 16 10 43 46 28 37 2 9 477 58 138 15 21 30 18 79 5 162 525 19 544 162 174 565 356 176 189 264 500 475 464 419 247 11.8 to these financial statements.10/4 Islamabad P-02Tupu Street Khayaban # 02Madina Town Faisalabad H#194/Xxist#12-B Hasan Abad Townnear Gol Masjid Multan 14 Zeeshan Arshad H #33 St #21 Bilal Park Samanabad Lahore 15 16 Tariq Mehmood H# 97 St# 12 F-11/1 Islamabad Altaf Khan H# 12 St#21 Swami Nagir Nr Shazo Liberty G.472 16 7 9 25 6 36 10 13 7 12.627 2 Sabina Ahmed House No 523-Amohallah Ghulam Muhdabad Faisalabad 3 Muhammad Iqbal Khokh H B 14/614 Moh Bakhshu Pura Gujrat 4 5 Nasreen Naeem Muhammad Azeem Mujah House# 291-A-7 Batala Colony Faisalabad House #5 St# 1 Main Bazar Qilaluckhman Singh Ravi Rd54000 6 Mohammad Aslam Butt House # 147 Askari Colony # 1 Sialkot Cantt Sialkot 7 8 Muhammad Husnain Sha Wali Muhammad 128 E 1 Main Boulevard Gulberg Iii Lahore H # 2/6 Sharif Park Begum Pur Noble Grammar School Near Gt Road Uet Lahore 9 Khurram Niaz 10 Azeem Waris Khan H # 33 G Eme Housing Society Multan Road Lahore H No 67 Q Blk 06 P E C H S Nr Ambala Sweets Karachi 11 12 Chaudhry Ghulam Qama Muhd Islam Munawar 13 Muhd Shahzad Khalid House # 731 Street #74 G.T Rd Lahore 17 Sheikh Mushtaq Ahmed H.Faysal Bank Limited A n n e x ur e I I t o t h e Fi n a n c ial St at e me n t s Address Name of Individuals/ Principal Mark-up (6+7+8) Partners / Directors / CNIC Interest / Others Total written-off Mark-up written-off Father’ / Husband’ Name s s Outstanding Liabilities at beginning of the year Principal Interest / Others Financial Reliefs provided Total (10+11+12) For the year ended December 31.403 578 966 316 321 172 444 14 527 507 513 495 46.178 9.487 6110189010168 3420103194269 3310057595952 3520014152981 3460328244885 3520284684593 3520236142037 3520222600365 4220186335575 6110132165955 3310048980793 3630202777615 3520014228753 3740197275891 3520225491731 3520212652289 3520225608603 3630272749200 3520226395039 3520223849459 4220140665711 3310044343817 2 3 4 5 6 7 8 9 10 11 12 13 1 De-Lucchi 16-B/1 'Sunset Boulevard Phase-2 Dha Karachi 9.340 589 1. 12-Q.841 39 38 42 82 73 110 84 102 81 106 90 90 96 98 79 49 90 84 67 77 99 97 87 103 103 99 12. Gulberg Ii.006 28 45 28 32 58 64 69 69 36 41 64 14 18 25 24 31 39 80 110 59 25 27 96 18 18 16 1.No # 1 St # 2 Peer Rd New Mozang Lahore 19 Nargis Zahara H # 68-A Shafat Colony Gujjar Khuda Multan Cantt Multan 20 Syed Muhammad Rizwan 21 Muhammad Junaid Arsh 102-C Rehman Pura Colony Nr Residence Of Member Of Ppp Rana Aesh Bahadur Nr Wahdat Rd Rehman Pur Chowk 387 D Johar Town Near Shukat Kahnam Cancer Hospital Lahore 22 23 Ikram Sheikh Muhammad Shoaib Ahma 24 House#32 Bahadurabad#2 Blk 7/8 Karachi P # 440 St# 2 Gobind Pura Opp Shaukat Khanam Laboratory Gulberg Road Faisalabad Hafiz Aftab Hussain 25 Muhammad Tariq 26 Muhd Naeem Akhter House # P-132 St # 4-5 Sohailabad Batala Colony Faisalabad P-21 St # 6 Gulbahar Colony Satiana Road Near Umar Masjid Faisalabad House # 6-B-Z 103 Road Khawaja Chowk Madina Town Faisalabad 27 Faraz Sadiq 28 Muhammad Shoaib Ahma H #301-A-1 R.340 509 925 364 414 450 450 491 409 499 488 499 13.054 528 591 586 574 615 592 620 609 614 26. Name of borrower No.G Boys High School Rawalpindi P-440 St # 2 Gobind Pura Opp Shaukat Khanam Laboratory Gulberg Rd Faisalabad .019 448 421 468 418 433 443 450 459 387 475 421 490 450 480 406 1.931 546 956 266 266 119 444 8 454 497 498 488 33.820 474 5 479 506 13 12 531 15.134 9.798 170 77 327 11 20 14 24 10 12 11 4 2.No. 2010 Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December 31.841 25.841 515 504 538 532 564 617 603 630 504 622 575 594 564 603 509 1.

766 496.313 1.827 7.000 (225.108 125.057 (2.534 47.919 6.614.809.205 1.492. 2010 The Bank is Operating 13 Islamic banking branches (2009: 6).623 1.remunerative .696 2009 Rs ‘000 27.035.Others .080.003) 654.500 24.Ijara .699 659.153 .205 880.575 5.Saving Accounts .000 (943) 499.491 659.Current Accounts .482 81.Diminishing Musharaka .Term Deposits .665 621.750 Remuneration to shariah advisor CHARITY FUND Opening balance Charity fund transferred from amalgamated entity Additions during the period Payments / utilization during the period Closing balance (304) 371 67 - Annual Report 2010 Faysal Bank 152 .997 4.601 32.159 535.non-remunerative Due to head office Other liabilities NET ASSETS REPRESENTED BY Islamic Banking Fund Reserves Unappropriated profit / (loss) Surplus / (Deficit) on revaluation of assets .Islamic Banking As at December 31.Deposits from financial institutions .Murabaha .971 6.187 9.Musharaka .852) 496.666.091 1.270 20.588 2.063 1.527 1.375.Faysal Bank Limited Annexure III to the Financial Statements Statement of Financial Position .067 1. ASSETS Cash and balances with treasury banks Balances with and due from financial Institutions Investments Financing and receivables .011.net of tax 2010 Rs ‘000 404.Salam .877 38.413.258 12.237 21.Other Islamic Modes Other assets LIABILITIES Bills payable Due to financial institutions Deposits and other accounts .Deposits from financial institutions .696 3.331.288 1.503 500.843 471.

686 16. 2010 2010 Rs ‘000 2009 Rs ‘000 Profit / return earned on financing and investments Profit / return expensed Net spread earned Provision against non-performing financings Provision against consumer financings Provision for diminution in the value of investments Bad debts written off directly Income after provisions Other Income Fee.629 16.385 189.Faysal Bank Limited Annexure III to the Financial Statements Profit and Loss Account .492 187.546 225.527 (224.574 6.646 3.836 273.467 139. commission and brokerage income Dividend income Income from dealing in foreign currencies Capital gain on sale of securities Unrealized gain / (loss) on revaluation of investments classified as held for trading Other income Total other income Other expenses Administrative expenses Other provision / write-offs Other charges* Total other expenses Extraordinary items / unusual items Profit / (Loss) for the year * Includes loss amounting to Rs 266.493 (1) 6.011 60 563 (1.060) 40 40 15.082 16.646 15.Islamic Banking For the year ended December 31.862 million arising on amalgamation.249) 2.691 413.629 (943) (943) . 419.060) (224.972 193.423 777 15.

special care has been taken to ensu re that the affairs of IBBs of FBL are managed separately from the conventional Bank and have been carried out in accordance with rules and principles of Shariah SBP regulations and guidelines related to Shariah compliance and other rules as well as specific fatawas and rulings issued by me. profits and charging of losses (if any) relating to PLS accounts confor m to the basis vetted by me in accordance with Shariah rules and principles. the allocation of funds. SBP regulations and guidelines related to Shariah compliance. Further during last quar ter three more branches along with eight windows were added with amalgamation of Royal Bank of Scotland (RBS) with Faysal Bank Limited (FBL). for Ex RBS branches & windows Mufti Mohib ul Haq Siddiqui Ex RBS Shariah Advisor had Issued a clean report without any concerns stating that all affairs of the Islamic Banking Division of Ex RBS were in accordance of Shariah principles. 2011 Annual Report 2010 Faysal Bank 154 . 3. 2010. After examining on test check basis. (Amen) Mufti Abu Baker Siddiq Shariah Advisor Karachi: March 29.155 . profit sharing ratios. there were no earnings that have been realized from any source prohibited in Shariah and therefore there is no amount to be spent in charity.S h a r i a h A d v i s o r ' s R e p o rt 2 0 1 0 Alhamdulillah Faysal Bank Ltd operated with ten Stand-Alone Islamic Banking Branches (IBBs) during the year 2010. each class of transaction. 4. as per Shariah requirements. weightages. I opine that: 1. the relevant documentation and procedures adopted by Islamic Banking Branches/Division of Faysal Bank Ltd. (IBB-FBL) for the year ended December 31. May Allah bless and guide us to practice in Islamic Banking in t he right ear nest and pardon our mistakes. 2.

bridging all the gaps in between The will to go beyond .

4 billion mainly in the areas of HR and branch operations. 15. Financial highlights of the Group for the year under review are given below:- The operations of The Royal Bank of Scotland Limited (RBS Pakistan) were merged with Faysal Bank Limited w .Rupees 3. I am pleased to present audited consolidated Annual Financial Statements of Faysal Bank Limited for the year ended December 31.195 1.2 billion or 42.213 1. 79.286 (240) (794) (1. December 31.e. to December 31.213 6 1. 2010. 3. whereas non markup income grew by Rs. the bank was able to maintain its profitability level.4 billion last year. 546 million on subjective basis. 8 million.8 billion respectively .September '10 @ 20% Transfer to statutory reserve Issue of bonus shares .64 Rs. 2010.8%. 2.7%. Net markup income showed a growth of Rs. 1984. During the year the board of directors of FMSL has resolved to initiate voluntary winding up proceedings under the Companies Ordinance. Operational expenses showed a growth of Rs.1 billion and Rs.207 1.218) (391) (1.032 (1.252 1. The Group consists of Faysal Bank Limited as the holding company and its subsidiary Faysal Management Services Financial Highlights 2010 Operating profit Provision for non performing advances Provision for diminution in value of investments Profit before tax Reversal / (Charge) of Provision for taxation Profit after tax Net profit after tax from discontinued operation Minority Interest Profit after tax attributable to equity holders Un-appropriated profit brought forward Amounts recognized directly in equity: Reversal of deferred tax liability Appropriations: Transfer of capital market reserve to un-appropriated profit Issue of bonus shares . Despite difficult economic environment. 11.3 billion.f. The increase in mainly attributable to recognition of bargain purchase gain on acquisition of RBS Pakistan amounting to Rs.286 2.202) 830 363 1.193 6 1.66 (Private) Limited (FMSL).199 4 1. 16.993 1.6 billion as compared to Rs.Consolidated Directors' Report for the year ended December 31. 88. 1.212 390 (1.940) (252) (2.219) 1. 784 million i.079 2. Annual Report 2010 Faysal Bank 156 .513 (1.252 2.034) 1. in million 2009 3. Equity of the merged entity at year end was Rs. Further profit and loss statement includes FBL's share of post acquisition loss of RBS from October 16.December '08 @ 15% Un-appropriated Profit carried forward Earning per share .447 765 3.321 (108) 1.e.192) 1. 2010 On behalf of the Board of Directors.157 . As such the balance sheet figures include assets and liabilities transferred from RBS Pakistan amounting to Rs.915) (287) (2. 2010 amounting to Rs. Provisions for non performing loans remained at the last year's level however 2010 provision figures include provision of Rs.

g.212 million. In addition to the above the following items were taken directly to equity: • Rs. 1. It indicates ver y strong capacity for timely payment of financial commitments. . 2010: Long-Term Short-Term AA A1+ Corporate Governance: i. i. in view of the successful acquisition and merger of the Royal Bank of Scotland. 2010. the 'Ratings Watch . 1. is modest but may vary slightly from time to time because of economic conditions. Summarized key operating and financial data of the last six years is tabulated on the initial pages of this Annual Report. Approved accounting standards. h. Details of Board Meetings held and attended by the directors' for m par t of this Annual Repor t. Movement in the directors' shareholding. b. e.Developing' status has been removed and 'Stable' outlook is assigned to the ratings. Subsequent to the year end. a.64 billion. Statement under clause xix of the code: The financial statements prepared by the management of the Group present fairly the state of affairs and the results of its operations. There has been no material depar ture from the best practices of corporate governance as detailed in the listing regulations. The system of internal control is sound in design and has been appropriately implemented and monitored. j. This capacity is not significantly vulnerable to foreseeable events. 539 million and Rs. The prescribed patter n of shareholding is given as part of this Annual Report. as applicable to banks in Pakistan. Risk . The Group has implemented the requirements of the Code of Corporate Governance (the Code) relevant to the year ended December 31. Proper books of account of the Group have been maintained. A prescribed statement by the management along with the auditor's review report thereon forms part of this Annual Report.Developing' status and 'Rating Watch' by JCR and P ACRA respectively in view of the acquisition of The Royal Bank of Scotland Limited.” d. During 2010. A1+: Obligations supported by the highest capacity for timely repayment. 3. if any. Measures are being considered to further strengthen it. There are no doubts about the holding company continuing as a going concern. Definitions of JCR-VIS for the assigned ratings are reproduced below: “AA: High credit quality Protection factors are strong. 1.198 million was ver y close to the last year's figure of Rs. c. f. “AA” rating denotes a very ery low expectation of credit risk. 765 million being reversal of deferred tax liability relating to lease financing • Gain on bargain purchase amounting to Rs.Profit after tax at Rs. is disclosed in the footnote to the pattern of shareholding. 1.” Definitions of PACRA for the assigned rating are reproduced below: “AA: V high credit quality. negative outlook previously assigned to the ratings was removed by both the agencies. have been followed in preparation of financial statements. ii.3 billion which included intangibles of Rs. k. Short term liquidity including inter nal operating factors and/or access to alternative sources of funds. 228 million respectively as per the unaudited financial statements.5 to the financial statements and accounting estimates are based on reasonable and prudent judgment. Credit Rating of the Holding Company: JCR-VIS Credit Rating Company Limited (JCR) and Pakistan Credit Rating Agency Limited (PACRA) have re-affirmed the following entity ratings as on June 30. the ratings were placed on 'Ratings Watch .66 billion and negative goodwill of Rs. However. A1+: High certainty of timely payment. Appropriate accounting policies have consistently been applied in preparation of the financial statements except for the change as mentioned in note 3. The value of investment of provident and gratuity funds are Rs. is outstanding and safety is just below risk free Gover nment of Pakistan shor t-term obligations.

I would also like to express sincere appreciation for the employees of the Group for their dedication and hard work.159 . Khan Karachi Dated: March 29. On behalf of the Board of Directors President & CEO Naved A. I am also grateful to the State Bank of Pakistan and Securities and Exchange Commission of Pakistan for their continued support and guidance and the customers for their patronage. 2011 Annual Report 2010 Faysal Bank 158 .Acknowledgement: I would like to take this opportunity to thank on behalf of the Board and Management of the bank the shareholders for the trust they have reposed in the Group.

The details of modification in the audit repor t on the financial statements of Faysal Management Services (Private) Limited is disclosed in note 48 to the financial statements. W have also expressed a separate opinion e on the separate financial statements of the Holding Company which incorporate the balances as at December 31. 2009 were audited by another firm of Chartered Accountants who had expressed an unqualified opinion thereon vide their report dated February 23. 2010. 2010 and the results of their operations. consolidated statement of comprehensive income. 2010) which have been audited by another fir m of Chartered Accountants. is based solely on the repor t of such auditors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. Chartered Accountants Engagement Partner: Salman Hussain Dated: April 6. as well as. their comprehensive loss. their cash flows and changes in equity for the year then ended in accordance with the approved accounting standards as applicable in Pakistan. which have been audited by us. the consolidated financial statements present fairly the financial position of Faysal Bank Limited and its subsidiary company as at December 31. These consolidated financial statements include un-audite d certified returns from the branches of the Holding Company. An audit includes examining. These consolidated financial statements are the responsibility of the Holding Company's management. except for twenty one branches. evaluating the overall presentation of the financial statements. whose report has been furnished to us and our opinion in so far as it relates to the amounts included for the Royal Bank of Scotland Limited is based solely on the repor t of such other auditors. 2010 and results of operations for the period from October 15. We believe that our audit provides a reasonable basis for our opinion. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. 2010 of the Royal Bank of Scotland Limited (amalgamated with and into the bank with effect from close of business on December 31. 2011 Karachi . Faysal Management Ser vices (Private) Limited. 2010 and the related consolidated profit and loss account. Other matter The consolidated financial statements of Faysal Bank Limited and its subsidiary company for the year ended December 31. In our opinion. on a test basis. The financial statements of Faysal Management Ser vices (Private) Limited were audited by another fir m of Chartered Accountants and our opinion in so far as it relates to the amounts included for such company. 2010 (acquisition date) to December 31. 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'). An audit also includes assessing the accounting policies and significant estimates made by the management. evidence supporting the amounts and disclosures in the financial statements. as at December 31. 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. for the year then ended.A u d i t o r s ' R e p o rt t o t h e M e m b e r s We have audited the annexed consolidated financial statements comprising consolidated statement of financial position of Faysal Bank Limited (the Holding Company) and its subsidiar y company.

706.309 11.346.826 56.108) 16.569 250.465.456 1.635.595.904 195.218.766 123.716 180.719 16.992.893.204 4.373.273 16. President & Ceo Director Director Director Annual Report 2010 Faysal Bank 160 .960 thousand classified as held for distribution to owners) 9 10 11 12 13 14 15 16 17.893.617 1.453 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities .634.304 167.459.593 12.056 1.427.027 (125.090.726.801 133.354.792.919 6.924 5.039.787.030.849 4.147 73.931 16.754 75.909 86.979.180 11.404 12.406 5.278.634.911 4.net Other assets .253 7.net (including assets amounting to Rs 189.439.778 thousand classified as held for distribution to owners) NET ASSETS REPRESENTED BY Share capital Proposed shares to be issued on amalgamation Reserves Unappropriated profit Non-controlling interest (Deficit) / surplus on revaluation of assets CONTINGENCIES AND COMMITMENTS 17 18 19 20 21 3.795 15.395 13.985.447 91.017.760.net Other liabilities (including liabilities amounting to Rs 1.161 .345.688 1.Faysal Bank Limited and its Subsidiary Company As at December 31.727.315.049 22 23 24 25 7.850 8.804.684.839 267.451 34.428.309.966.859 34.202 10.017.001 2.200 6.049 The annexed notes 1 to 51 and Annexures I to III form an integral part of these consolidated financial statements.469.094 28. 2010 Consolidated Statement of Financial Position Note 2010 Rs ‘000 2009 Rs ‘000 ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Fixed assets Deferred tax assets .252.486.202 508.769 8.683 999.919 1.899.446.446.

029 4.312.124 659.63 0.804.579 5.192 2.044 1.605.409 13.007.552 239.906.046 61.204 3. President & Ceo Director Director Director .783.621 (45.591 2.891 519.296 1.420 2.141.312.207.212.721 325.255 97.064 7.4 13.527 1.824 3.730) 287.226) 1.198.642 821.182 1.414 (26.823.7 19.778 6.net Other charges Total non mark-up / interest expenses Share of profit of associate Extraordinary / unusual items Profit before taxation from continuing operations Taxation .201.Deferred Profit after taxation from continuing operations Net profit after taxation from discontinued operations Profit after taxation attributable to: Equity holders of the parent Non-controlling interest 28 29 13.66 30 31 32 16.Faysal Bank Limited and its Subsidiary Company For the year ended December 31.880.3 33 12.192.300 191.Prior years .2 Earnings per share from continuing operations Earnings per share from discontinued operations Earnings per share for the year 35 35 35 1.298 1.287 5.722.262) (363.819.477 824.Current .413 885.198.818 67.3 13.923.339.459 (6.net Reversal of provision for consumer loans .920 2.966.624.527 Rupees 1.516 1.043 1.492 (3.799.527 1.409 8.444) 33.7 34 34 34 26.835 1.653.946. commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities Unrealised gain / (loss) on revaluation of investments classified as held for trading Other income Total non mark-up / interest income Non mark-up / interest expenses Administrative expenses Other provisions / (reversals) .345 5.212.net Bad debts written off directly Net mark-up / interest income after provisions Non mark-up / interest income Fee.164.631 1.777 68.195.597.396) 107.5 12.819 6.308 4.723) 252.01 1.66 1.285.051 6.695 5.191.957.379 (89.875 11.212.556 400.048 1.011.736 (794.057 1.general Provision for diminution in the value of investments .967 613.753 7.883 2.835 Rupees 16.674) 80.979 1.108 4.64 The annexed notes 1 to 51 and Annexures I to III form an integral part of these consolidated financial statements.320.122 1.143 829. 2010 Consolidated Profit and Loss Account Note 2010 Rs ‘000 2009 Rs ‘000 CONTINUING OPERATIONS Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against non-performing loans and advances .

999 The annexed notes 1 to 51 and Annexures I to III form an integral part of these consolidated financial statements. 2010 2010 Rs ‘000 Profit for the year Components of comprehensive income not reflected in equity (Deficit) / Surplus on revaluation of available for sale securities Deferred tax asset / (liability) on revaluation of available for sale securities 1.792 (117.022.176 (1.737.835 2009 Rs ‘000 1.182 2.472 2. President & Ceo Director Director Director Annual Report 2010 Faysal Bank 162 .320) 810.817 5.701) (372.481 (372.527 (1.877) 166.866) 927.017.198.571.022.347) 3.Faysal Bank Limited and its Subsidiary Company Consolidated Statement of Comprehensive Income For the year ended December 31.999 Total comprehensive income for the year Comprehensive income attributable to: Equity holders of the parent Non-controlling interest (376.163 .866) 2.212.

596.961) (400) (4.089 (542.841 2.371) 36.609 (325.390 (4.966.125) (5.917 13.net Reversal of provision for consumer loans .248 (2.891) 509.307) 9.454.425) (1.320.838 1.017 636.897.998.281) 5.496.170 (3.713.237.150.Faysal Bank Limited and its Subsidiary Company For the year ended December 31.710) 21.783.043 (659.836.958.379 (89.902 42.475.general Provision for diminution in value of investments Other provisions / (reversals) .411 665.843 (18.579) (340) (10.803 97.487 513.098 (23.979 9.723) 252.511 (11.730) 287.410.046) (24.012 939.686 (935.444) 45.600 (683) 2.782.680.379 2.954) 6.206 16.413 10.344 21.210 132.444) (568.567.999.447 36 The annexed notes 1 to 51 and Annexures I to III form an integral part of these consolidated financial statements.743.123) (6.935.631 157.195) (764.533.906.590) (9.400) 4.298 20.087.255 61.565) 8.710.226.198.920 3.856.967) (28.447 23.214.948.414 (26.629 643.250.839 96.365) 2.877.556) 660. 2010 Consolidated Cash Flow Statement Note 2010 Rs ‘000 835.023.685) (71.773.777 (67.net Unrealised (gain) / loss on revaluation of investments classified as held for trading Net profit on sale of property and equipment Fixed assets written off Bad debts written off directly Finance charges on leased assets (Increase) / decrease in operating assets Lendings to financial institutions Held for trading securities Advances Other assets (excluding advance taxation) Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities (excluding current taxation) Income tax paid Net cash generated from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investment in available for sale securities Net investment in held to maturity securities Net cash inflow on acquisition Dividends received Investment in operating fixed assets Proceeds realised on disposal of operating fixed assets Net cash generated from / (used in) investing activities CASH FLOW FROM FINANCING ACTIVITIES Payments of sub-ordinated loan Payments of lease obligations Dividend paid to non-controlling interest Dividends paid Net cash generated from / (used in) financing 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 1.673.624) (1.998 301.754 9.879 1.251 16.897.831 (782.901 (2.683 483.192 (6.718 660.072) 17.488 3.788) 22 2.024 3.237.426 2009 Rs ‘000 CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Less: dividend income Adjustments for: Depreciation Amortisation Workers Welfare Fund Provision against non-performing loans and advances .870) 175.674 (5. President & Ceo Director Director Director .910.066) 21.214.

299.180 73.052 12.446.090. 2010 Gain on bargain purchase notes 8.183) 389.076 389.056 1.controlling interest Dividend attributable to non controlling interest Balance as at December 31.030.309 10.076) - 73.952 391.198.466 (794.466) 1.579) 73.354.561 3. President & Ceo Director Director Director Annual Report 2010 Faysal Bank 164 .052 2.076 - 765.033) 1.056 1.146 23.211.note 15.542 3. 2009 Transfer to reserve for issue of bonus shares Bonus shares issued Profit after tax for the year ended December 31.033 3.5) Transfer to statutory reserve (note 23.542) - 4.309. 2009 Reversal of deferred tax liability on leased assets relating to prior years .2 and 8.182 (5.4 Share of deficit of revaluation of assets of non-controlling interest Acquisition of non-controlling interest on amalgamation (note 8.688 1. 2010 5. 2010 Transfer to reserve for issue of bonus shares Bonus shares issued Transfer to unappropriated profit Non-controlling interest acquired on acquisition of RBS ( note 8) Profit after tax for the year ended December 31.183 (1.030.031.542 389.640.146 (220) 70 - - 7.590 - 7.090.1 Balance as at January 1.232 (1.299.296.445 794.253 - 3.542) 3.514 391.218.165 .207.205) 70 765.528 (5.873) 75.333 (794.252.719 (1.195.507 1.273 (1.299.706 5.514 389.183) (389.466 (794.992.239.1) Surplus on securities transferred to non .183 28.212.218.542 (389.204 (391. 2009 Transfer to statutory reserve Dividend paid Balance as at December 31.253 - 1.911 1.873) 16.309 52.183) - 3.027 The annexed notes 1 to 51 and Annexures I to III form an integral part of these consolidated financial statements.218.952 4.218.481 240.033 4.466) 240.400.579) 11.911 794.508 52.146 - 23.346 (240.640.218.299.023 794.542 1.017.561 1.466 6.456 6.146 23.079.790.835 3. 2010 Consolidated Statement of Changes In Equity Reserves Share capital Proposed shares to be issued on amalgamation Capital Reserve for issue of bonus shares NonReserve Distributable arising on Capital amalgamaReserve tion gain on bargain purchase Statutory reserve Revenue Capital market reserve Total Unappropriated profit Noncontrolling interest Total Rupees '000 Balance as at January 1.183 (1.760.952 3.094 28.Faysal Bank Limited and its Subsidiary Company For the year ended December 31.631 (220) (52.218.466) 3.

Lahore and Islamabad Stock Exchanges. Its shares are listed on Karachi. Therefore the assets and liabilities of FMSL have been classified as non-current assets held for distribution to owners as per the requirements of IFRS 5 as more fully explained in note 26 to these consolidated financial statements. 1. The Holding Company has a network of 226 branches (2009: 133).00%) Faysal Management Services (Private) Limited (FMSL) is a company formed under the Companies Ordinance. The DMI group owns and operates an international network of islamic banks and investment and insurance companies. directly and indirectly through subsidiaries 66.C. During the year. including 13 Islamic banking branches (2009: 6). BASIS OF PRESENTATION In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes.1 .S. holding. Consequent to this acquisition and under the scheme of amalgamation approved by the shareholders and the State Bank of Pakistan. (ultimate parent of the Holding Company) is the holding company of Ithmaar Bank B. Permissible forms of trade related modes of financing include purchase of goods by banks from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. 1984. ST-02. they have resolved to initiate proceedings of voluntary wind up by the members of FMSL under the Companies Ordinance 1984 (the Ordinance). is the parent company of the Group. Shahra-e-Faisal. The detailed disclosure relating to this transaction is given in note 8 to these consolidated financial statements. Dar Al-Maal Al-Islami Trust (DMI). 1994 as a public limited company under the Companies Ordinance.2 During the year the Holding Company had acquired the Pakistan operations of The Royal Bank of Scotland Limited.1 STATUS AND NATURE OF BUSINESS The Group consists of following entities: Holding Company Faysal Bank Limited (FBL. 2009. Karachi. a Bahrain based retail bank. 2010 1. Ithmaar Bank B. The Holding Company is engaged in Corporate. 1984 as a private limited company to float and manage modarabas under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance 1980.3 2 2. and operates 2 sub-branches (2009: Nil). the Holding Company) The Holding Company was incorporated in Pakistan on October 3. Based on the financial statements of the Holding Company for the year ended December 31. the State Bank of Pakistan (SBP) has issued various circulars from time to time. Subsidiary Faysal Management Services (Private) Limited (shareholding . 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 mark-up thereon.C.60.VIS Credit Rating Company Limited have determined the Holding Company's long-term rating as 'AA' and the short term rating as 'A1+'.S. the Board of Directors of FMSL have decided to voluntary wind up the company and accordingly. The Registered Office of the Holding Company is located at Faysal House. the operations have been amalgamated and vested into the Holding Company with effect from the close of business on December 31.94% of the shareholding of the Holding Company. the Pakistan Credit Rating Agency Limited (PACRA) and JCR . 2010. Commercial and Consumer banking activities.. 1.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. 1.

the Banking Companies Ordinance. Banking Companies Ordinance. the statement of financial position and profit and loss account of islamic banking branches are disclosed in Annexure III to these consolidated financial statements. ' Financial Instruments: Disclosures' through its notification S. 3 3. 10 dated August 26. All banking companies in Pakistan are required to prepare their annual financial statements in line with the format prescribed under BSD Circular No. Inter branch transactions and balances have been eliminated.2 Basis of consolidation The consolidated financial statements include the financial statements of Faysal Bank Limited .the Holding Company and its subsidiary company .3 Annual Report 2010 Faysal Bank 166 . effective from the accounting year ended December 31. 411(I)/2008 dated April 28. In accordance with the directives issued by the SBP. the requirements of the Companies Ordinance.1 STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. 2.167 . Non-controlling interests are that part of the net results of operations and of net assets of subsidiary companies attributable to interests which are not owned by the Holding Company. 2008. investments have been classified and valued in accordance with the requirements prescribed by the SBP through various circulars. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance. 'Investment Property' for Banking Companies through BSD Circular Letter No. Material intra-group balances and transactions have been eliminated. IFRS 8. The assets and liabilities of subsidiary companies have been consolidated on a line by line basis and the carrying value of investments held by the Bank is eliminated against the subsidiaries' share capital and pre-acquisition reserves in the consolidated financial statements. Accordingly. 1984. 2009. 2006.O. the requirements of the Companies Ordinance. 1984. 1984. the requirements of these standards have not been considered in the preparation of these consolidated financial statements. 2006.R. Accordingly. 1962 or the directives issued by the SECP and SBP differ with the requirements of IFRS.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. 3. or the directives issued by the SECP and the State Bank of Pakistan (SBP). The SBP has deferred the applicability of International Accounting Standard (IAS) 39. and Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan and notified by the Securities and Exchange Commission of Pakistan (SECP). the SECP has deferred the applicability of International Financial Reporting Standard (IFRS) 7. 'Revised Forms of Annual Financial Statements'. 1984.2 3. 'Operating Segments' is effective for the Group's accounting period beginning on or after January 1. However. segment information disclosed in these consolidated financial statements is based on the requirements laid down by SBP. the SBP requirements prevail over the requirements specified in IFRS 8. Wherever the requirements of the Companies Ordinance. 1962 or the requirements of the said directives issued by the SECP and SBP shall prevail. 4 dated February 17. 2002 till further instructions. Further."the Group". 1962. The management of the Group believes that as the SBP has defined the segment categorisation in the above mentioned circular. 2010 The financial results of the Islamic banking branches have been consolidated in these financial statements for reporting purposes only. 'Financial Instruments: Recognition and Measurement' and International Accounting Standard (IAS) 40. the Banking Companies Ordinance. Subsidiary companies are consolidated from the date on which more than 50% of voting rights are transferred to the Group or power to control the company is established and are excluded from consolidation from the date of disposal.

2009.957 million have been recognised in the profit and loss account. ‘Investments in associates’. 3. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.1 (Revised). By amending the definition of current liability.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. may be included in the 'Statement of Comprehensive Income'. and Balance Sheet shall be renamed as 'Statement of Financial Position'. and IAS 31. Furthermore. ‘Presentation of financial statements’. the Surplus / (Deficit) on Revaluation of Available for sale (AFS) Securities only. The management of the Group believes that presently this amendment does not have any impact on the Group's consolidated financial statements. Changes in accounting policies and disclosures . interpretations and amendments to published approved accounting standards that are effective in the current year i That have an impact on the Group's consolidated financial statements (a) IFRS 3 (revised). 2010 3. 38. IAS 28. separate 'Profit and Loss Account' and 'Statement of Comprehensive Income' shall be presented. The revised standard continues to apply the acquisition method to business combinations but with some significant changes compared with IFRS 3. the amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time.4 SBP vide its BSD Circular No. The Group has chosen to recognise the non-controlling interest at the proportionate share of net assets of RBS of Rs 52 million rather than at its fair value.e.5 . However it should continue to be shown separately in the Statement of Financial Position below equity.Standards. 07 dated April 20. As required under IFRS 3 the acquisition cost amounting to Rs. and consequential amendments to IAS 27. all payments to purchase a business are recorded at fair value at the acquisition date. The amendment clarifies that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non current. 2010. The revised standard was applied to the acquisition of the controlling interest in Royal Bank of Scotland (RBS) on October 15. However. ii That do not have an impact on the Group's consolidated financial statements The following new and amended standards and interpretations have been published and are mandatory for the first time for the financial year beginning January 1. are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after July 1. 2010). consequent to the decision of the SBP. The amendment requires that only expenditures that result in a recognised asset in the statement of financial position can be classified as investing activities. ‘Business combinations’. Acquisition-related costs of Rs 38. which previously would have been included in the consideration for the business combination. For example. two statement approach shall be adopted i. Accordingly.957 million has been charged to the profit and loss account. 2010 has clarified that for the purpose of preparation of financial statements in accordance with International Accounting Standard . 'Presentation of Financial Statements'. 2010: (a) IAS 1 (amendment). All acquisition-related costs are to be expensed as per the requirements of the revised IFRS 3 . ‘Consolidated and separate financial statements’. (b) IAS 7 (amendment). Detailed disclosures in respect of the business combination are presented in note 8 to these consolidated financial statements. the above requirements have been adopted in the preparation of these consolidated financial statements. 'Statement of Cash Flows' (effective from January 1. ‘Interests in joint ventures’. with contingent payments classified as debt subsequently remeasured through the statement of comprehensive income. The application of revised IFRS 3 would have had no impact on profit and loss account of the Group if the bargain purchase gain would have also been recognised in the profit and loss account as required under IFRS 3. The management of the Group believes that presently this amendment does not have any impact on the Group's consolidated financial statements. the bargain purchase gain has been credited to equity.

‘Group cash-settled share-based payment transactions’. In addition to incorporating IFRIC 8. as defined by paragraph 5 of IFRS 8. before the aggregation of segments with similar economic characteristics). IFRS 5 has also been amended to require that assets are classified as held for distribution only when they are available for distribution in their present condition and the distribution is highly probable. ‘Transfers of assets from customers’. ‘Impairment of assets’. The management of the Group believes that presently this interpretation does not have any impact on the Group's consolidated financial statements. particularly paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of estimation uncertainty) of IAS 1. and IFRIC 11. (d) IAS 36 (amendment). any remaining interest in the entity is re-measured to fair value. This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends.169 . ‘IFRS 2 – Group and treasury share transactions’. This interpretation clarifies the requirements of IFRSs for agreements in which an entity receives from a customer an item of property. The amendment provides clarification that IFRS 5 specifies the disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations. The management of the Group believes that presently this amendment does not have any impact on the Group's consolidated financial statements. (f) IFRS 5 (amendment). IFAS 1 was effective for financial periods beginning on or after January 1. ‘Scope of IFRS 2’. The standard also specifies the accounting when control is lost. and a gain or loss is recognised in the profit and loss account. It also clarifies that the general requirements of IAS 1 still apply. murahaba transactions entered into by the Bank are accounted as follows: Annual Report 2010 Faysal Bank 168 . The management of the Group believes that presently this amendment does not have any impact on the Group's consolidated financial statements. ‘Distribution of non-cash assets to owners’ (effective on or after July 1. (i) The Securities and Exchange Commission of Pakistan (SECP) has notified the Islamic Financial Accounting Standard (IFAS) 1 . The standard also requires that the profit or loss and each component of other comprehensive income is attributable to the equity holders of the parent entity and to the minority interest (referred to as non-controlling interest) even if this results in the non-controlling interests having a deficit balance. effective form January 1. In accordance with IFAS 1. effective January 1. 2009 requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. 2006. At present. 2010. 2010. plant and equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services (such as a supply of electricity. the amendments expand on the guidance in IFRIC 11 to address the classification of group arrangements that were not covered by that interpretation.Murabaha issued by the Institute of Chartered Accountants of Pakistan. 2010 (c) IAS 27 (revised). (h) IFRIC 18. and equipment in order to connect the customer to a network or provide the customer with ongoing access to a supply of goods or services (or to do both). (e) IFRS 2 (amendments). the management believes that the aforementioned revision does not have any impact on the Group's consolidated financial statements. 2010). The amendment clarifies that the largest cash-generating unit (or group of units) to which goodwill should be allocated for the purposes of impairment testing is an operating segment. the entity receives cash from a customer that must be used only to acquire or construct the item of property. 2009). effective for transfer of assets received on or after July 1. In some cases. During the current year the Bank has adopted the IFAS 1. 2009. gas or water). ‘Consolidated and Separate Financial Statements’ applicable for financial years beginning on or after July 1. plant. ‘ Operating segments’ (that is. ‘Measurement of non-current assets (or disposal groups) classified as held-for-sale’ (effective on or after January 1.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. (g) IFRIC 17. The management of the Group believes that presently this standard does not have any impact on the Group's consolidated financial statements. The management of the Group believes that presently this interpretation does not have any impact on the Group's consolidated financial statements.

This was not intended when IFRIC 14 was issued. It supersedes IAS 24. The amendments should be applied retrospectively to the earliest comparative period presented. The amendment clarifies that an entity will present an analysis of other comprehensive income for each component of equity.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. 2011. issued in November 2009. ‘Prepayments of a minimum funding requirement’. of the revised standard on the related party disclosures. Earlier application is permitted. The amendments are effective for annual periods beginning January 1. The amendments correct an unintended consequence of IFRIC 14. (b) IAS 24 (revised). There are other new and amended standards and interpretations that are mandatory for accounting periods beginning on or after January 1. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. 2010 Murahaba receivable shall be recorded at the invoiced amount. The management of the Group is currently in the process of assessing the impact. and the amendments correct this. therefore. ‘IAS 19 – The limit on a defined benefit asset. ‘Related party disclosures’. The amendment is not likely to have any impact on the Group's consolidated financial statements. In case the inventories were acquired by the Bank for a customer who has eventually defaulted on his promise to purchase the inventories. ‘Related party disclosures’. 2011). Without the amendments. the profit on that portion of sales revenue not due for payment should be deferred by accounting for by a debit to ‘Unearned Murahaba Income’ account with the corresponding impact to ‘Deferred Murahaba Income’ account and is shown as a liability. it shall be valued in accordance with the IAS 2. IAS 24 (revised) is mandatory for periods beginning on or after January 1. (a) IAS 1. issued in 2003. 3. 2011 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. of the amendment on the financial statements. (c) IFRIC 14 (amendment). not disclosed in these consolidated financial statements. ‘Presentation of financial statements' (effective from January 1.6 New and amended standards and interpretations that are not yet effective and have not been early adopted The following standards and amendments to existing standards and interpretations have been published and are mandatory for the Group's accounting period beginning on or after January 1. if any. 4 BASIS OF MEASUREMENT These consolidated financial statements have been prepared under the historical cost convention except that certain investments and derivative financial instruments have been marked to market and are carried at fair value. The Group is currently in process of assessing the impact. if any. Inventories remaining unsold with the Bank on the reporting date shall constitute Bank’s inventory and shall be valued in accordance with the IAS 2: ‘Inventories’ and shown under ‘Other Assets’. However. Purchases and sales under Murahaba and the resultant profit should be accounted for on the culmination of Murahaba transaction. (j) There are other new and amended standards and interpretations that are mandatory for accounting periods beginning on or after January 1. entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding contributions. . 2011. minimum funding requirements and their interaction’. 2011. either in the statement of changes in equity or in the notes to the financial statements. 2010 but are considered not to be relevant or to have any significant effect on the Group's operations and are.

at its cost less accumulated impairment losses. Goodwill acquired in a business combination is tested for impairment annually or whenever there is an indication of impairment as per the requirements of International Accounting Standard (IAS) 36.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. These estimates and assumptions are reviewed on an ongoing basis. if any. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period. estimates and assumptions that affect the reported amounts of assets and liabilities and income and expenses. 'Impairment of Assets'. 7. The cost of acquisition is measured as the fair value of assets given. Goodwill acquired in a business combination is measured. cash and cash equivalents comprise of cash in hand. if any. subsequent to initial recognition. 2010 5 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of financial statements in conformity with approved accounting standards requires management to make judgments. 6 FUNCTIONAL AND PRESENTATION CURRENCY Items included in these consolidated financial statements are measured using the currency of the primary economic environment in which the Group operates. These policies have been consistently applied to all the years presented unless otherwise specified.171 . balances with treasury banks. national prize bonds. the difference is recognised directly in the profit and loss account. The consolidated financial statements are presented in Pakistani Rupees. which is the Group's functional and presentation currency. or in the period of revision and future periods if the revision affects both current and future periods. Acquisition of non-controlling interests (NCI) is measured at the proportionate share of the NCI in the fair value of the net assets acquired by the Group. The excess of fair value of consideration transferred over the proportionate share of the NCI in the fair value of the net assets acquired is recognised in equity. However. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement.2 Cash and cash equivalents For the purpose of the cash flow statement. equity instruments issued and the liabilities incurred or assumed at the date of acquisition. Impairment charge in respect of goodwill is recognised in the profit and loss account. Acquisition-related costs are expensed as incurred. if any. 7 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of these consolidated financial statements are set out below. Significant accounting estimates and areas where judgments were made by the management in the application of accounting policies that have a significant risk of material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed in note 42 to these consolidated financial statements.4 to these consolidated financial statements. as more fully described in note 8. balances with other banks in current and deposit accounts.1 Business Combination Business combinations are accounted for by applying the acquisition method. 7. The excess of the consideration transferred over the fair value of the Group's share of identifiable net assets acquired is recorded as goodwill. Annual Report 2010 Faysal Bank 170 . The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. It also requires management to exercise judgments in application of its accounting policies. call money lendings and overdrawn nostro accounts. If this is less than the fair value of the net assets acquired in the case of a bargain purchase. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. the gain on bargain purchase arising on acquisition made in the current period has been recognised directly in equity as per the directive of the SBP.

that do not fall under either held for trading or held to maturity categories. Under the equity method of accounting. These are recorded as under: (a) Sale of securities under repurchase agreements Securities sold subject to a repurchase agreement (repo) are retained in the consolidated financial statements as investments and the counter party liability is included in borrowings. Investments classified as 'held for trading' are initially recognised at fair value and transaction costs associated with the transactions are expensed in the profit and loss account. or dealer’s margin or are securities included in the portfolio in which a pattern of shortterm profit making exists. The difference between the purchase and contracted resale price is accrued over the period of the contract and recorded as income. The difference between the sale and contracted repurchase price is accrued over the period of the contract and recorded as an expense.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. (b) Held to maturity These are securities with fixed or determinable payments and maturity that the Group has a positive intent and ability to hold to maturity. . Investments in associates where the Group has significant influence are accounted for using the equity method of accounting. Increase / decrease in share of profits and losses of associates is accounted for in the consolidated profit and loss account. 7. other than those. (c) Available for sale These are investments. 2010 7. the investment in associates are initially recognised at cost and the carrying amount of investment is increased or decreased to recognise the investor's share of the post acquisition profits or losses in income and its share of the post acquisition movement in reserves is recognised in reserves.3 Lendings to / borrowings from financial institutions The Group enters into transactions of repos and reverse repos at contracted rates for a specified period of time. Investments other than those recognised as held for trading are initially recognised at fair value which includes transaction costs associated with the investments. (b) Purchase of securities under repurchase agreements Securities purchased under agreement to resell (reverse repo) are not recognised in the consolidated financial statements as investments and the amount extended to the counter party is included in lendings. which are either acquired for the purpose of generating profit from short-term fluctuations in market prices. Trade date is the date on which the Group commits to purchase or sell the investment. (d) Associates Associates are all entities over which the Group has a significant influence but not control. interest rate movements. in subsidiaries and associates. These transactions are accounted for on the settlement date.4 Investments The Group classifies its investments as follows: (a) Held for trading These are securities. All purchases and sales of investments that require delivery within the time frame established by regulations or market convention are recognised at the trade date.

Thereafter.5 Advances Loans and advances Advances are stated net of specific and general provisions. Provision for diminution in the value of term finance certificates is made as per the Prudential Regulations issued by the SBP. the impairment loss is recognised in the profit and loss account. The Group determines write-offs in accordance with the criteria prescribed by SBP vide BPRD Circular No. other than those classified as held to maturity and investments in subsidiaries and associates. if any. 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. 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. the Group can appoint the client as its agent to purchase the goods / assets on its behalf. However. including guaranteed residual value. less accumulated impairment losses. quoted securities. The surplus / deficit arising on revaluation of quoted securities which are classified as 'held for trading' is taken to the profit and loss account. In principle on the basis of an undertaking (promise to purchase) from the client. 7. For investments classified as held to maturity. so as to produce a constant periodic return on the outstanding net investment in lease.173 . Unquoted equity securities are valued at the lower of cost and break-up value. if any. it sells it to the client at cost plus the profit agreed upon in the promise.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. Unearned finance income is recognised over the term of the lease. Investments classified as held to maturity are carried at cost whereas investments in subsidiaries and associates are carried at cost. 2007. Annual Report 2010 Faysal Bank 172 . A significant or prolonged decline in fair value of an equity investment below its cost is also considered an objective evidence of impairment. Non-performing advances are written off only when all possible courses of action to achieve recovery have proved unsuccessful. Net investment in finance lease Leases where the Group transfers substantially all the risks and rewards incidental to the ownership of an asset are classified as finance leases. Gain or loss on sale of investments is included in the profit and loss account currently. Specific and general provisions for advances are made in accordance with the requirements of the Prudential Regulations and other directives issued by the SBP and charged to the profit and loss account. Premium or discount on acquisition of investments is amortised through the profit and loss account over the remaining period till maturity using the effective interest method. Murabaha Murabaha to the purchase orderer is a sale transaction wherein the first party (the Group) sell to the client / customer a shariah compliant asset / goods for cost plus a pre-agreed profit. the Group purchases the goods / assets subject of the Murabaha from a third party and takes the possession thereof. Surplus / deficit arising on revaluation of quoted securities classified as 'available for sale' is included in the Statement of Comprehensive Income but is kept in a separate account shown in the statement of financial position below equity. 2010 In accordance with the requirements of the State Bank of Pakistan (SBP). In case of impairment of available for sale securities. A receivable is recognised on commencement of lease term at an amount equal to the present value of the minimum lease payments. are subsequently stated at market values. Impairment loss in respect of investments classified as available for sale (except term finance certificates) and held to maturity is recognised based on management's assessment of objective evidence of impairment as a result of one or more events that may have an impact on the estimated future cash flows of the investments. 06 of 2007 dated June 05.

Gains / losses on disposal of fixed assets. are taken to the profit and loss account in the period in which they arise. (c) Capital work in progress Capital work-in-progress is stated at cost less accumulated impairment losses. 2010 Murabaha transactions are accounted for at gross receivable net of specific and general provisions. Depreciation on assets held under finance lease is charged in a manner consistent with that for depreciable assets which are owned by the Group. These are transferred to specific assets as and when assets become available for use. except for freehold and leasehold land which are stated at cost. 7. (b) Tangible assets . Assets held under finance lease are stated at the lower of their fair value or present value of minimum lease payments at inception less accumulated depreciation and accumulated impairment losses.6 Fixed assets and depreciation (a) Tangible assets . if any. All other leases are classified as operating leases. All other repair and maintenance are charged to the profit and loss account as and when incurred. as appropriate. if any. under operating leases are charged to income on a straight line basis over the lease term. The outstanding obligations under the lease agreements are shown as a liability net of finance charges allocable to the future periods. if required. Specific and general provisions are made in accordance with the requirements of the Prudential Regulations issued by the State Bank of Pakistan from time to time. at each balance sheet date. All expenditure connected with specific assets incurred during installation and construction period are carried under this head. if any. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset. if any. The finance charges are allocated to the accounting periods in a manner so as to provide a constant periodic rate of return on the outstanding liability. if any. No depreciation is charged in the month of disposal.owned Fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses. The asset's residual values and useful lives are reviewed and adjusted. . An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. if significant.2 to these consolidated financial statements after taking into account residual value. 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. Lease payments.leased Leases are classified as finance leases wherever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. Depreciation on additions is charged from the month the assets are available for use. Depreciation on operating fixed assets (excluding land which is not depreciated) is charged using the straight line method in accordance with the rates specified in note 14.

No amortisation is charged for the month in which the asset is disposed off. 7. in which case it is recognised in equity or below equity / other comprehensive income. Amortisation is charged from the month in which the asset is available for use. 7. if appropriate. The charge for current tax also includes adjustments relating to prior years. if necessary.9 Taxation Income tax expense comprises current and deferred tax.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.3 to these consolidated financial statements. Gains and losses on disposals. and where the carrying value exceeds the estimated recoverable amount. as appropriate. are taken to the profit and loss account in the period in which they arise. 2010 (d) Intangibles Intangible assets having definite lives are stated at cost less accumulated amortisation and accumulated impairment losses. 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. arising from assessments finalised during the year. The charge for the current tax is calculated using tax rates enacted or substantively enacted at the balance sheet date. Such reversals are only made to the extent that the asset's amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised. if any. Intangible assets having an indefinite useful life are stated at acquisition cost less accumulated impairment losses. 7. Income tax expense is recognised in the profit and loss account. useful life and amortisation method is reviewed and adjusted. at each balance sheet date.7 Impairment The carrying amount of assets is reviewed at each balance sheet date for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. Amortisation is calculated so as to write-off the assets over their expected economic lives at rates specific in note 14.8 Non-current assets held for sale The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. except to the extent that it relates to items recognised directly in equity or below equity / other comprehensive income. An impairment loss is reversed if there has been a change in the estimate used to determine the recoverable amount. Subsequent costs are included in the asset's carrying amounts or recognised as a separate asset. Impairment losses are recognized through the profit and loss account for any initial or subsequent write down of the non-current asset (or disposal group) to fair value less costs to sell. A non-current asset is not depreciated while classified as held for sale or while part of a disposal group classified as held-for-sale. Current Provision for current taxation is based on taxable income for the year determined in accordance with the prevailing laws for taxation on income earned. If such indication exists. Subsequent gains in fair value less costs to sell are recognized to the extent they do not exceed the cumulative impairment losses previously recorded. The residual value. Amortisation is charged applying the straight-line method over the useful life of the assets. A non-current asset (or disposal group) held for sale is carried at the lower of its carrying amount and the fair value less costs to sell. assets are written down to their recoverable amount. if any. if any. The resulting impairment loss is taken to the profit and loss account. Annual Report 2010 Faysal Bank 174 .175 .

Staff retirement benefits are payable to staff on completion of prescribed qualifying period of service under these schemes. . 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 (IAS12) dealing with income taxes. Projected Unit Credit Method is used for the actuarial valuation.12 Borrowings / deposits and their cost Borrowings / deposits are recorded at the proceeds received.10 Provisions Provisions are recognised when the Group has a legal or constructive obligation as a result of past events. 7. the Group also records deferred tax asset on available tax losses.11 Staff retirement benefits a) Defined contribution plan The Group operates a contributory provident fund for all its permanent employees to which equal monthly contributions at the rate of 10 percent of basic salary are made by both the Group and the employees. In addition. The carrying amount of the deferred tax asset is reviewed at each balance sheet 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.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. 2010 Deferred Deferred tax is recognised using the balance sheet liability method on all temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and amounts used for taxation purposes. Borrowing cost that are directly attributable to the acquisition. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimates. Borrowing / deposit costs are recognised as an expense in the period in which these are incurred using the effective mark-up / interest rate method. 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 balance sheet date. Contributions to the fund are made on the basis of actuarial recommendations. 7. Cumulative net unrecognized actuarial gains and losses at the end of the last reporting year are recognised over the expected average remaining working lives of the employees. Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefits will be realised. b) Defined benefit scheme The Group operates an approved funded gratuity scheme for all its permanent employees and employees who are on contractual service and are employed under non-management cadre who complete the prescribed eligibility period of service. it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. to the extent that they are not directly attributable to the acquisition of or construction of qualifying assets. 7. construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) is capitalised as part of the cost of the asset. 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.

Fee. Monetary assets and liabilities in foreign currencies are expressed in rupee terms at the rates of exchange prevailing at the balance sheet date. Premium or discount on acquisition of debt investments is capitalised and amortised through the profit and loss account over the remaining period till maturity. front-end fees and other lease income is recognised as income when they are realised. Annual Report 2010 Faysal Bank 176 . the unearned finance income (excess of the sum of total lease rentals and estimated residual value over the cost of leased assets) is taken to income over the term of the lease so as to produce a constant periodic rate of return on the outstanding net investment in lease. brokerage and commission on letters of credit / guarantee and others is recognised on time proportion basis.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.15 Foreign currencies (a) Foreign currency transactions Transactions in foreign currencies are translated into rupees at the foreign exchange rates prevailing at the transaction date. Gains / losses on termination of lease contracts. in the opinion of the management. Unrealised finance income in respect of non-performing lease finance is held in suspense account. Financial advisory fee is recognised when the right to receive the fee is established.14 Revenue recognition Mark-up income / interest on advances and returns on investments are recognised on a time proportion basis. - - 7. (b) Translation gains and losses Translation gains and losses are included in the profit and loss account. The forward cover fee payable on contracts with the SBP is amortised over the term of the contract. Other income is recognised on accrual basis.13 Proposed dividend and transfer between reserves Dividends and appropriations to reserves. except appropriations which are required by law. Financing method is used in accounting for income from lease financing. except that mark-up income / interest / return on non-performing advances and investments is recognised on receipt basis in accordance with the requirements of the Prudential Regulations issued by the State Bank of Pakistan. Forward purchase contracts with the State Bank of Pakistan relating to foreign currency deposits are valued at the spot rate prevailing on the balance sheet date. 'Events after the Balance Sheet Date' in the year in which they are approved / transfers are made. Interest / return / mark-up on rescheduled / restructured advances and investments is recognised as permitted by the State Bank of Pakistan. Under this method. except where. documentation charges. 7. Foreign bills purchased and forward foreign exchange contracts are valued at rates determined with reference to their respective maturities. it would not be prudent to do so. made subsequent to the balance sheet date are considered as non-adjusting events and are recorded in the consolidated financial statements in accordance with the requirements of International Accounting Standard (IAS) 10. Dividend income from investments is recognised when the Group's right to receive the dividend is established. in accordance with the requirements of the Prudential Regulations issued by the State Bank of Pakistan. where necessary.177 . 2010 7.

Derivative financial instruments Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value. These have been presented as per the Group's functional structure and guidance of SBP. to make decisions about resources to be allocated to the segment and assess its performance. other assets. The segments of the Group are as follows: . 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. investments. and for which financial information is available. including revenues and expenses that relate to transactions with any of the Group's other components. balances with other banks. 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.17 Acceptances Acceptances comprise undertakings by the Group to pay bills of exchange drawn on customers.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. bills payable. deposits. if any. lendings to financial institutions.16 Commitments Commitments for outstanding forward foreign exchange contracts are disclosed in the consolidated financial statements at committed amounts. The particular recognition methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with these assets and liabilities.18 Financial instruments Financial assets and financial liabilities Financial instruments carried on the balance sheet include cash and balances with treasury banks.19 Earnings per share The Group presents basic and diluted earnings per share (EPS) for its shareholders. All derivative financial instruments are carried as assets when fair value is positive and liability when fair value is negative. 7. which have been presented according to the functional basis and the guidance of SBP. Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in rupee terms at the rates of exchange prevailing at the reporting date. 2010 7. Offsetting Financial assets and financial liabilities are set off and the net amount is reported in the consolidated financial statements only when the Group has a legally enforceable right to set off and the Group intends to either settle on a net basis. Income and expense items of such assets and liabilities are also offset and the net amount is reported in the consolidated financial statements. advances. 7. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses. borrowings. Any change in the fair value of derivative financial instruments is taken to the profit and loss account. Acceptances are accounted for as off balance sheet transactions and are disclosed as contingent liabilities and commitments. An operating segment's operating results are reviewed regularly by the President / Chief Executive Officer. liabilities against assets subject to finance lease and other liabilities. or to realise the assets and to settle the liabilities simultaneously. The Group expects most acceptances to be simultaneously settled with the reimbursement from the customers. 7. 7.20 Segment reporting Segment reporting is based on operating (business) segments of the Group.

lending and repos. Pursuant to the aforementioned approvals and scheme of amalgamation duly approved by the State Bank of Pakistan. the Holding Company intends to allot 1. assets and liabilities and the rights and obligations stand amalgamated with and vested into the Holding Company as at December 31. the entire undertaking of the RBS including all the properties.5.1 Rupees '000 28. guarantees.37% of the RBS for cash consideration of approximately Euro 41 million on the acquisition date of October 15. Trading and Sales It includes fixed income.250 fully paid ordinary shares subsequent to the year ended December 31. 2010 and November 10. small and medium enterprises (SMEs) and agriculture sector. consumer and corporate banking activities] (the RBS). The Holding Company had acquired the majority shareholding of 99. project finance. own position securities. bills of exchange and deposits. securitisation. Initial Public Offers (IPOs) and secondary private placements. export finance. The shares proposed to be issued by the Holding Company are as under: Proposed shares to be issued on amalgamation Note 8. underwriting. which will rank pari passu with the existing shares of the Holding Company. cost saving. other transactions and balances with retail customers. leasing. In consideration for the amalgamation and as per the scheme of amalgamation. The management believes that the acquisition of the RBS is a materialization of the Holding Company's strategy for larger customer base and profit growth (both organically and through acquisition).e. funding. people and technology.812. 2010 respectively. trade financing and cash management services. 2010 (a) Business Segments Corporate finance This includes investment banking activities such as mergers and acquisitions. Accordingly the assets and liabilities included in the statement of financial position also include balances of the RBS. The Holding Company has acquired the operations of the RBS to capture the returns skewed towards larger banks. the Pakistan operations of the RBS have been amalgamated and vested into the Holding Company with effect from the close of business on December 31. Commercial banking This includes strategic partnership with corporate and SME sector entities to provide working capital financing. Subsequent to the above acquisition. 2010. The proposal for the amalgamation and the scheme of amalgamation has been approved by the Board of Directors and the shareholders of the Holding Company in their meetings held on October 15. privatisation. 2010 had also approved the scheme of amalgamation and granted sanction order for the amalgamation of the RBS with and into the Holding Company. 2010 to the shareholders of the RBS for the acquisition of non-controlling interest. 8 8.179 . 2010 and the RBS became a subsidiary of the Holding Company as at the aforementioned date. The management further believes that the acquisition will translate synergies in the areas of customer franchise. Retail banking Retail banking provides services to small borrowers i. equity. deposits. lending.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.253 Annual Report 2010 Faysal Bank 178 . foreign exchanges. consumers. 2010 (closing of business). It includes loans. (b) Geographical segment The operations of the Group are currently based only in Pakistan.1 BUSINESS COMBINATION During the year the Holding Company has acquired the Pakistan Operations of The Royal Bank of Scotland Limited [a listed commercial Bank engaged in commercial. The State Bank of Pakistan through its letter BPRD (R&P-02)/625-99/2010/10601 dated December 29.

510.762 1.510.741 Fair values as on October 15.315) 3.882 1.557. The excess of the fair value of the Group's share of the identifiable net assets acquired over the cost of acquisition has been recorded as gain on bargain purchase in the consolidated financial statements of the Group.221.022 .285) 13.428 1.415.163.673 36.034 596. 2010 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets (includes intangibles held in the books of RBS) Intangible assets recognised on acquisition Deferred tax assets .897.447 8.647.025 4.062.3.259.685 6.194. Details of the purchase consideration given.1 Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities Total liabilities 1.195 79.372. 2010 Percentage of identifiable net assets acquired Fair value of identifiable net assets of RBS acquired as on October 15. Identified assets acquired.873.897.299. fair values of the net assets acquired and gain on bargain purchase are as follows: Note Fair value of identifiable net assets of RBS as on October 15.463 2.146 38.3 Rupees '000 8.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.428 1.701) 143. 2010 Rupees '000 5.499 29.395 3.957 8.237.103.598 67.501 2.204.999.858.979 1.167 (860. 2010 8.557.847.520. The cost of the acquisition has been measured at the fair value of the consideration given.37% 8.695.415.991.825.499 29.880 6.661.987 598.025 4.167 2.4 8.195 79.3 The fair values and carrying amounts of identifiable assets and liabilities of RBS at the date of acquisition are as follows: Note Acquiree's Fair value carrying adjustments / amounts as on intangible acquired October 15.096 3.012.022 99. 2010) 8.343. liabilities assumed or incurred have been carried at the fair value as at the acquisition date.461 (4.372.290.685) 1.net Other assets .595 6.497.673 38. 2010 Less: purchase consideration paid in cash Gain on bargain purchase Acquisition-related costs (included in administrative expenses in the profit and loss account for the year ended December 31.net Total assets 5.947 2.459 1.740 85.047 (2.043 16.062.598 67.847.778 3.469 8.448 2.103.199 87.194.177.728 (1.343.681.2 Acquisition of controlling interest The acquisition has been accounted for by applying the purchase method in accordance with the requirements of IFRS 3 (Revised) 'Business Combinations'.882 1.

557. IFRS 3 requires the acquirer to ensure that it really does have a gain on bargain purchase and it has used all of the available evidences at the date of acquisition and re-assessed the business combination accounting. In applying the income approach.181 . However. Based on this assumption. Under this method the value of a specific intangible asset is estimated from the residual earnings after fair returns on all other assets employed (including other intangible assets) have been deducted from the asset’s after-tax operating earnings. the amount of bargain purchase gain has not been taken to the profit and loss account as the SBP through its letter BPRD (R&P-02)/625-99/2011/3744 dated March 28. This benefit also considers the fact that the economic lifetime of these deposits is longer than their contractual life. In this connection the management has reassessed the business combination accounting and believes that the gain on bargain purchase is primarily arising as a result of special circumstances under which RBS decided to sell international operations particularly Pakistan. It has been assumed that the underlying assumptions or events associated with such assets will occur as projected.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. The valuations are based on information at the time of acquisition and the expectations and assumptions that have been deemed reasonable by the Group’s management. the acquisition of the RBS is a bargain purchase as the fair value of the net assets acquired exceeds the fair value of the consideration paid by the Group as at the acquisition date.299. 2010. recommended by the BID of the SBP in the acquired portfolio of the RBS (which will be adjusted against this reserve) and with the prior approval of the SBP. 8. which a market participant acquirer would expect the asset to generate over a discrete projection period. The fair value of this identifiable intangible asset has been determined using an income approach. The SBP has further advised the Holding Company that this gain may become available for distribution as stock dividend to shareholders of the Group after incorporating the adjustment. 2010 Rupees '000 Customer relationship 2.1 Intangibles acquired in business combination Consequent to the amalgamation of the RBS with and into the Holding Company. The present value of the estimated cash flows are then added to the present value equivalent of the residual value of the asset (if any) at the end of the discrete projection period to arrive at an estimate of the fair value of the specific asset. this intangible asset has been valued using certain valuation techniques and is being amortised keeping in view the life expectancy of the core deposits.146 million.4 As more fully discussed in note 8. However. Annual Report 2010 Faysal Bank 180 . The total gain on bargain purchase arising on the acquisition of the RBS is Rs 3. 2011 has advised the Holding Company to recognise the amount of gain through the statement of changes in equity as 'Non-Distributable Capital Reserve'. may not be applicable on this amount.167 This intangible asset comprises of core deposits of the RBS and represents the funding benefit that would be available to the Group on account of availability of funding through deposit customers rather than from the wholesale or interbank markets. if any. October 15. Under IFRS 3 (revised) a bargain purchase represents an economic gain. The income approach begins with an estimation of the annual cash flows. which should be immediately recognised by the acquirer in the profit and loss account. 2010 8. by an independent valuer.3.2 to these consolidated financial statements. the Group has recognised the following intangible asset as at the acquisition date of October 15. The SBP letter also specifies that the requirement of creating statutory under section 21 of the Banking Companies Ordinance. The estimated cash flows for each of the years in the discrete projection period are then converted to their present value equivalent using a rate of return appropriate for the risk of achieving the asset’s projected cash flows. instead of recognising it in the profit and loss account. the Group used the Multiple-period Excess Earnings Method ("MEEM") to determine the value of the above intangibles.

924 1. 2007.foreign currency current account .367.6 The fair value of the gross contractual receivables representing advances. a gross contractual amount of Rs 11.202 2010 Rs ‘000 2009 Rs ‘000 This represents local currency current account maintained with the SBP as per the requirements of Section 36 of the State Bank of Pakistan Act.187 4.938 365. has incorporated the share of NCI's post acquisition results of the RBS in the proportionate share of the NCI determined as at the acquisition of the RBS (the adjusted balance). 1956.765 1. 23.3 3.750 8. at the date of amalgamation.480 431.440 324.572.1 9. 2008 and local USD clearing account maintained with SBP to facilitate USD clearing and 6% special cash reserve requirement on FE 25 deposits maintained by Islamic Banking branches. 2010. The excess of the fair value of equity shares proposed to be issued and the adjusted balances of the NCI amounting to Rs. This represents special cash reserve maintained with SBP in US dollars under the requirements of BSD Circular No.500 million. 14 of 2008 dated June 21.829 8.foreign currencies With the State Bank of Pakistan in .5.044. The management. 9 dated December 03.853 million. The SBP has not remunerated any return on these deposits during the current and the last year. This represents cash reserve of 5% maintained with State Bank of Pakistan in US dollars current account on deposits held under the New Foreign Currency Accounts Schedule (FE.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.2 9.642 7. Gross contractual amounts for the aforementioned receivables due is Rs 77.050 1.3 .1 9. This section requires banking companies to maintain a local currency cash reserve in a current account with SBP at a sum not less than such percentage of the Group's time and demand liabilities in Pakistan as may be prescribed. as allowed under the requirements of IFRS 3.896 million is expected to be uncollectable.160 17.202.local currency current account National Prize Bonds 9. 8.5 Acquisition of non-controlling interest As at the date of acquisition the purchase of non-controlling interest (NCI) is measured at the proportionate share of the NCI in the fair value of net assets acquired by the Group.427.020 1. Pakistan Investment Bonds.505 4.foreign currency deposit account With the National Bank of Pakistan in . 2010 8.817 3.local currency . Note 9 CASH AND BALANCES WITH TREASURY BANKS In hand . lendings and investments that include Market Treasury Bills.145.952 million has been recognised as part of equity (shown separately as 'Reserve arising on amalgamation').084. Profit rates on these balances are fixed on monthly basis by SBP.1 The fair value of the shares proposed to be issued to the shareholders of the RBS is based on the published quoted price of the shares of the Holding Company as at December 31. 9. Sukuks and Term Finance Certificates as at the acquisition date amounts to Rs 67.25 deposits) as per BSD Circular No.local currency current account .543 479. The management believes that out of the total gross contractual receivables. 8.428.041.784.2 9.

826 11.826 14. It carries markup rate of 0.Current accounts Outside Pakistan .676.1 This represents deposit of USD 29.1 million placed with The Royal Bank of Scotland.18% (2009 : Nil) per annum.2 2010 Rs ‘000 2009 Rs ‘000 300. Note 11 LENDINGS TO FINANCIAL INSTITUTIONS Call money lendings Repurchase agreement lendings (Reverse Repo) 11.292 388.2 Securities held as collateral against lendings to financial institutions 2010 Held by the Group Given as collateral Total Held by the Group 2009 Given as collateral Total 15.717.503 508.717.795 10.717.028 5.727.Current accounts .000 14.017.Deposit accounts 2010 Rs ‘000 2009 Rs ‘000 558.) London as margin against interest rate and cross currency derivative contracts entered with RBS PLC.1 Particulars of lendings to financial institutions In local currency 11.826 Rupees '000 Market Treasury Bills 12 INVESTMENTS Investments by type and segment are given below while the detailed break down is contained in Annexure I to these financial statements. The deposit balance will vary according to the outstanding balance of contracts and will be released completely on maturity of last derivative contract in September 2014.826 15.987 2.894 2.183 . 2010 Note 10 BALANCES WITH OTHER BANKS In Pakistan .017.492.826 Annual Report 2010 Faysal Bank 182 .909 120.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. 14. UK (RBS PLC.1 10.

932 492.411 1.Faysal Islamic Savings Growth Fund .865 718.000 1.252 77.483 (36.765.538.327 618.109 56.001.000 826 2.223 1.888 3.495.724.000 80.000 207.000 80.709 5.327 (27.629.713 1.461.570 17.374 200.046 27.140.263.724.109 38.429.832.064 2.446 7.077 9.471 811.077 9.000 100.677 85.929 2.296 39.828.net Total investments 24 12.000 1.589.000 208.687.084) 1.616 80.IGI Income Fund .658.000 80.3 Available for sale securities Market Treasury Bills 12.906 17.932 492.000 208.724.828.888 3.055 462.2.288 27.483 10.287 420.817 54.327 17.952 300.367) 86.371 10.802 18.223 1.153 415.345.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.411 1.483 2. 2010 12.629.5 (Deficit) / surplus on revaluation of available for sale securities .043 6.589.828.374 200.1 Investments by type Note 2010 Held by the Group Given as collateral Total Held by the Group 2009 Given as collateral Total Rupees '000 Held for trading securities Market Treasury Bills Fully paid up ordinary shares / certificates of closed end mutual funds Ijara Sukuk Bonds 12.2.410.JS KSE 30 Index Fund Fully paid up ordinary shares / modaraba certificates /certificates of closed end mutual funds Fully paid up preference shares Sukuk Bonds Term finance certificates 12.410.496 10.National Investment (Unit) Trust 12.000 2.541 81.153 415.252 88.713 1.000 100.328.082) 37.497.009 50.473.982.3 12.NIT Income Fund .1 Pakistan Investment Bonds 12.230 100.471 811.422 50.724.507.694 31.2.103 (1.2.3.671.092.801 81.046 27.403 (1.006 12.952 300.601) 86.496 10.537 73.461.776 (1.929 2.748.516.587.064 2.257.192.535.500) 75.846.997.NIT Government Bond Fund .Faysal Money Market Fund .810.967 7.006 17.4 .483 10.000 100.PICIC Income Fund .273.963 7.371 618.3.677 85.886 (1.223.810.707.495.538.000 100.4 12.447 .497.000 207.141.707.000 826 2.765.127.235.2.230 100.021 (49.288 45.877.358.757 97.Faysal Balanced Growth Fund .009 50.127.598 8.net 12.883 (193.043 6.185 10.AKD Income Fund .6 80.3 Units of open ended mutual funds .084) 1.000 3.374 200.587.115 8.422 50.709 5.969 1.165.374 200.2.263.557.883 (230.786) 17.285 18.601) 75.473.694 14.000 3.294 7.082) 55.510 56.287 420.1 2.485 462.Faysal Asset Management Limited Investments at cost Less: Provision for diminution in the value of investments Investments (net of provisions) Surplus / (deficit) on revaluation of held for trading securities .3.4 12.052.000 80.First Habib Income Fund .867) 10.537 63.969 1.378 5.459.Faysal Savings Growth Fund .429.694 (49.140.JS Large Capital Fund .875 2.671.865 718.HBL Income Fund .135 5.875 2.000 2.Faysal Income Growth Fund .3 Held to maturity securities Term finance certificates Sukuk Bonds Associate Fully paid up ordinary shares of .817 44.263.737.516.2 Ijara Sukuk Bonds 12.

2006.463 8.000 5.168 7.528.055 462.507.446 266.846.Unlisted companies Term Finance Certificates .510 56.2 Investments by segments Federal Government Securities .883 (230.2.427 226.3.5 24 Annual Report 2010 Faysal Bank 184 .495.549 81.Unlisted companies Fully Paid up Preference Shares . Further.185 .818 880.447 12.037.140.587.290 1.Ijara Sukuk Bonds Fully Paid up Ordinary Shares / Modaraba Certificates / Closed end Mutual Fund Units .122 8.1.271 108.450.013 (287.601) 86.1 12.2.886 (1.459.198.110 106.114 1.3.801 1.750 96.496 88. 12.Listed Fully paid up ordinary shares / modarba certificates / units of closed end mutual funds Units of open ended mutual funds Available for sale securities .207 2.Listed .250 80.035 (509.3 & 12.969 100.252 1.3.929 899. 2010 12.2 12.049 3.301.4 12. as per the SBP instructions in BPD Circular Letter No. Disposals of such investments can only be made subject to the fulfillment of the requirements prescribed by the SBP in the Prudential Regulations.345.495.109 1.976.287 2009 Rs ‘000 31.4 Note 12.209.Listed companies .001.557.141.3.Listed companies / modarabas / mutual funds .623 2009 Rs ‘000 238.Unlisted Fully paid up ordinary shares Associate Provision for diminution in the value of investments Surplus on revaluation of available for sale securities 2010 Rs ‘000 467.4 12.082) 55.052.1Strategic Investments Available for sale securities .021 (49.328.428 315.103 (1. investments marked as strategic have a minimum retention period of 5 years from the original purchase date.077 56.016. However.713 1.981 80.707.Market Treasury Bills .Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.250 1.873 1.3 2010 Rs ‘000 57.374 797.822.903) 910.495.000 1.285 18. these can be sold before the stipulated period with the prior permission of the SBP.3 12.224 Strategic investments are those which the Group makes with the intention of holding them for a long term duration and are marked as such at the time of investment.367) 86.189 2.065.761.606 5.084) 1.628. 16 of 2006 dated August 01.Pakistan Investment Bonds .290.2.Unlisted Units of Open ended Mutual Funds Sukuk Bonds Total investments at cost Less: Provision for diminution in the value of investments Investments (net of provisions) Surplus / (deficit) on revaluation of investments classified as held for trading (Deficit) / surplus on revaluation of investments classified as available for sale Total investments 12.285) 940.262 794.

336 million recognised on account of difference in carrying value and breakup value of DHA Cogen Limited.530.3. Subsequent to the expiry. except for 'Strategic Assets' representing shares of Pakistan State Oil (PSO) and Sui Northern Gas Pipelines Limited (SNGPL). The negotiation over the rate at which these Strategic Assets are to be transferred by the Fund to the NBP and consequently to the Group has been finalized. guaranteeing a minimum redemption price of Rs.941 (244.2. The management is of the view that since the permission of transfer to NBP of the said “Strategic Assets” has not yet been granted by the Privatization Commission of Pakistan therefore the value of the Group’s investment representing the “Strategic Assets” should be classified as investments in the books of the Group and should be marked to market on the basis of net assets value as on October 13. all the underlying assets. . 2009 issued by the Government had expired on December 31.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.2% to 13. The Group had agreed the market value of “Strategic Assets” as of October 13. In this connection.140. Accordingly. The LOC dated June 30. In this connection.264 1.2.61% of NIUTL's units (excluding Strategic Assets representing shares of PSO and SNGPL) by transferring investments in specie. NITL settled 87. 2009 and was not extended. However. The Group’s return on these investments ranges from 4. 13. In accordance with the methodology. It was also agreed that the Strategic Assets representing shares of PSO and SNGPL will be transferred to the NBP at a rate to be determined and agreed by the respective LOC holders' and the cash received from the NBP by the Fund will be paid to the LOC holders'.3 Market Treasury Bills have tenures of three months to one year. 2010 as the Group will receive this amount subsequent to the permission of the Privatization Commission of Pakistan. Pakistan Investment Bonds have tenures of 3 to 10 years.1 2010 Rs ‘000 1.2 12. the Government had communicated a methodology to settle this investment to all investors including the Group.6% to 13. 162.211) 252.607 million upon settlement of these assets which has been included in the profit and loss account of the current year. the Group and the NBP to facilitate the settlement. during the year.5%) to the LOC Holder's according to their respective unit holding.1% per annum) with maturities from February 2011 to September 2019.2.3 Particulars of provision for diminution in the value of investments Opening balance Charge for the year Reversals Provision against investments transferred from amalgamated entity Closing balance 12.192 1. In prior years.601 2009 Rs ‘000 887. the Privatization Commission has not provided final directions in this context to date. 2010 to discuss the matter of transferring the Strategic Assets to the NBP.890 528. The Group’s yield on these instruments ranges from 12. an agreement has been signed between NITL. NIUTL is an open end mutual fund managed by the National Investment Trust Limited (NITL).082 This includes provision of Rs. the aforementioned Strategic Assets have not been transferred to the NBP as these were frozen by the Government of Pakistan (Privatization Commission) for sale due to their proposed Privatization.082 531. an investment marked as strategic.4% to 13.1 12. the Government of Pakistan (the Government) had issued Letter of Comfort (LOC) to four of its unit holders (including the Holding Company).4% per annum) with maturities up to June 2011. 2010 for redeeming its existing units. The Group had recognised a gain of Rs 1. 12.3% per annum (2009: 11.4 This represents the investment of the Group in the units of National Investment (Unit) Trust LOC Holder's Fund (NIUTL).1 12.255 68. Note 12.6% to 14. the Privatization Commission had arranged a meeting on December 28.70 per unit.403 (276.495.3% per annum (2009: 4.2. have been transferred in specie (after charging agreed premium of 2.140.3.686) 287. Ijara sukuk bonds have tenures of three years with maturities upto November 2013. However. 2010 12.

The Group as per the above recent directive has availed the relaxation and maintained a provision of Rs 330 million against this investment. the provision for diminution in the value of investments for the year ended December 31.564 156.2 Particulars of provision for diminution in the value of investments by type and segment Available for sale securities Fully Paid up Ordinary Shares / Modaraba Certificates / Certificates of Closed end Mutual Funds .Unlisted Held to maturity securities Term Finance Certificates .3.919 300. the Group had maintained a provision of Rs 300 million as per the earlier relaxation provided by the SBP.327 75.150 75. 2011.082 2010 Rs ‘000 2009 Rs ‘000 324.204 342. The State Bank of Pakistan through its letter BPRD/BLRD-3/DMG/2011-1035 has advised the Group to maintain provision at least at the level of 90% in five quarters (commencing from December 31.4.588 132.436 242.4 Annual Report 2010 Faysal Bank 186 .187 .495.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.601 31. which forms an integral part of these financial statements.3. The investment portfolio includes the term finance certificates and Sukuk Bonds of Rs 1.495 196.425 5. 2010) by December 31.140.689 million and Rs 500 million respectively made in the Agritech Limited and Azgard Nine Limited.140 4.Listed companies Units of Open ended Mutual Funds Term Finance Certificates . Had the provision been made as per the time based criteria specified in the Prudential Regulations issued by the SBP. 2010 12.Unlisted companies Fully Paid up Preference Shares .000 This includes Pre IPO investment of Rs 500 million made in the unlisted term finance certificates (TFCs) of Dewan Cement Limited. 2010 would have been higher by Rs 170 million and the profit before taxation for the year ended December 31. Quality of available for sale securities The details regarding the quality of available for sale securities and their mark-up / interest and other terms are contained in Annexure I.562 19.3.779 469.3 80.2 to these financial statements.Listed .Unlisted Sukuk Bonds 12.094 180.000 1.4 12.000 1. The impact of relaxation availed by the Group for maintaining the provision against these investments is disclosed in note 13.Listed companies / modarabas / mutual funds . 12.117. 2010 would have been lower by Rs 170 million. Prior to the issuance of this directive.

084) Key financial information of subsidiary and associate company as at December 31.960 334.944 Liabilities Revenues Rupees '000 2.813 136.417 26.5 Surplus/ (deficit) on revaluation of investments classified as held for trading Market Treasury Bills Fully paid up ordinary shares / certificates of closed end mutual fund Ijara Sukuk Bonds 12.356 750 18.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.130 7.883 2009 Rs ‘000 (92) (48.143 (9.778 67.072 158. The Group's share of the profit and loss of the entity and its carrying amount as at December 31.506 28.7 Investment in associate Investment in Faysal Asset Management Limited (FAML) is accounted for using equity method of accounting.834 Profit/ Loss 12.776 301.109 .252 2009 Rs ‘000 73.925 12.559 Holding % 60% 30% Profit/ Loss Holding % 60% 30% 189.6 Note 2010 Rs ‘000 (223) 18.979 81.892 9. 2010 is as follows : 2010 Assets Subsidiary Faysal Management Services (Private) Limited Associate Faysal Asset Management Limited Liabilities Revenues Rupees '000 1.109 8. 2010 is as follows: 2010 Rs ‘000 Balance at the beginning of the year Investment made during the year Share of profit Dividends paid Exchange differences 81. 2010 12.958 2009 Assets Subsidiary Faysal Management Services (Private) Limited Associate Faysal Asset Management Limited 185.992) (49.000) 80.957 26.

200 151.001 13.952 338.616 5.1 Particulars of advances (Gross) In local currency In foreign currencies Short term (upto one year) Long term (over one year) 146.952 9.440 1.105 Finance charge for future period (481.809.163.002 4.848.384.507.206.738 11.534 645.169.604 98.511 4.409 (17.409 94.793 4.423 5.866 3.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.093 148.200 98.573) 133.353 98. etc.197.general Advances .580 Annual Report 2010 Faysal Bank 188 .675 338.048.986 151.4 13.689.364.189 .337.394) (190.523) (820.112.176.928.585.689.284.841.206.938. – in Pakistan Net investment in finance lease – in Pakistan Bills discounted and purchased (excluding government treasury bills) Payable in Pakistan Payable outside Pakistan Margin financing / reverse repo transactions Gross advances Provision against non-performing advances Provision against consumer loans .947.285.876.206.2 13.117 37.168) (567.441 8.067) (336.721 Minimum lease payment 5.029.705.2 Net investment in finance lease Not later than one year 2010 Later than Over five one and years less than five years Total Not later than one year 2009 Later than Over five one and years less than five years Total Rupees '000 Lease rentals receivable 4.249.192 2.737.209 - 9.588 68.438.112.371 6.148.445.750 - 6.935) 8.318 438.384 Residual value 988.409 82.798.614 938.985 3.056.470 13.893 1.346.618.384.730.144 (1.611.821 151.236.480 1.1.017 2.551.810 7.235 1.929.472 1.343 3.618 2.1 13.983.1. cash credits.470 (6.075) 91.580 96.5 13. running finances.706.374) 11.625.454.487.384.186.954 (1.275.2 2010 Rs ‘000 140.439) (797.net of provision 13.355) Present value of minimum lease payment 4.969 12. 2010 13 ADVANCES Loans.470 61.093 4.939.769 2009 Rs ‘000 85.

669 (58.321 673.123 17.409.529.058 6.756.202 1.795) 184.287 17.255) 1.506.671.394 2. Had the exemption not been provided by the State Bank of Pakistan.902 10.671 2.671.843.776 800.4.382 2.202 1.336 334.753.336 4.323 6.891.336 6.000) (787.414 (9.848. 10.795) 6. the provision against loans and advances and investments would have been higher by Rs 570.529.776 6.524.833. However.067 646. During the year.671 2.791 (600.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. 2011 has allowed extension for withholding provisioning against the exposure till March 31.966.287 17.290 2.323 6.409.163.030 - 277.287 (729. in addition to specific provision against loans and advances.058) (184.150 2.1 (829) Provision against advances transferred from amalgamated entity 8. BSD/BRP-5/X/000197/2011 dated January 6.4 Particulars of provision against non-performing advances Specific 2010 General (excluding consumer loan) 184.323 6.848. 13.379 (829) 8. Accordingly.664.437 Amounts written off .776 800.067 Classified Advances Domestic Overseas Total Category of classification Other Assets Especially Mentioned (Agri financing) Substandard Doubtful Loss 2009 Provision required Domestic Overseas Total Rupees '000 Domestic Provision held Overseas Total 277.030 334.791 Transfer from / to general provision 184.4. 2010 13.336 - 334.090.707.067 183.note 13.067 17.067 4.758 17.758 - 307. 2009 has been reversed and transferred to specific provision.230.570.058 Reversals during the year (600.336 - 334.490 673. The State Bank of Pakistan vide its letter no.123 Closing balance 17.708 billion (2009: Rs.412) 1.323 6.684.664.7.490 15.841.529. 24. financing facility disbursed to Agritech Limited and Azgard Nine Limited has been restructured / agreed to be restructured as a result of financial difficulties / repayment problems faced by these companies.485.290 646. during the period the management has decided that the general provision is no longer required as all loan losses are timely identified and are subjected to provision as required under the Prudential Regulations issued by the State Bank of Pakistan.237 5.163.775 Charge for the year 2.237 5.032 (9.163. the Group was also maintaining general provision against potential losses on performing loans and finance lease based on management estimate.776 800.112.524.183 24.163.583 2.684.067 - 646.230.394 13.287 15.671 billion) which have been placed under non-performing status as detailed below: 2010 Classified Advances Domestic Overseas Total Category of classification Other Assets Especially Mentioned (Agri financing) Substandard Doubtful Loss Provision required Domestic Overseas Total Rupees '000 Domestic Provision held Overseas Total 307.676 Total Rupees '000 Opening balance 6.485.058) Total Specific 2009 General (excluding consumer loan) 58.321 19.3 Advances includes Rs.776 6.382 1.287 24.776 800.756.664.664.336 13.490 15.490 19.583 646.843. to all those banks who have agreed to reschedule / restructure their exposures against these companies.529.2 .163.843.099 2.290 673.412) Net charge 2.290 673.150 2.183 15.163.906.843.1 Until last year.664.112.506. 2011.707.255) 125.058 (184.902 10.237 5.664.194 million and the profit before taxation for the current year would have been lower by the same amount.237 5. the balance of provision as at December 31.

Faysal Bank Limited and its Subsidiary Company

Notes to and Forming Part of the Consolidated Financial Statements
For the year ended December 31, 2010
13.4.3 Under the revised guidelines issued by the SBP, banks have been allowed to avail the benefit of 40% of forced sales value of pledged stocks and mortgaged commercial, residential and industrial properties held as collateral against all non-performing loans for 4 years from the date of classification for calculating provisioning requirement. However, as per the Circular, the additional impact on profitability arising from availing the benefit of forced sales value against pledged stocks and mortgaged residential, commercial and industrial properties would not be available for payment of cash or stock dividend. Under the previous guidelines issued by the SBP which were effective from September 30, 2009, banks were allowed to avail the benefit of 40% of forced sales value of pledged stocks and only mortgaged residential and commercial properties held as collateral against all non-performing loans for 3 years from the date of classification for calculating provisioning requirement. Had the provision against non-performing loans and advances been determined in accordance with the previously laid down requirements of the SBP, the specific provision against non-performing loans would have been higher and consequently profit before taxation and advances (net of provisions) as at December 31, 2010 would have been lower by approximately Rs 227.973 million. The additional profit arising from availing the FSV benefit - net of tax at December 31, 2010 which is not available for either cash or stock dividend to shareholders amounted to approximately Rs 1,466.175 million (2009: 502.835 million). 13.4.4 Particulars of provision against non-performing advances: Specific 2010 General Total Specific 2009 General Total

Rupees '000 In local currency In foreign currencies Total 17,163,067 17,163,067 17,163,067 17,163,067 6,664,336 6,664,336 184,058 184,058 6,848,394 6,848,394 2009 Rs ‘000 216,798 (26,723) 190,075

13.5

Particulars of provision against consumer loans - general Opening balance Charge for the year Reversals during the year General provision against consumer loans transferred from amalgamated entity Closing balance

2010 Rs ‘000 190,075 (89,730) 236,228 336,573

13.5.1

General provision against consumer loans represents provision maintained at an amount equal to 1.5 percent of the fully secured regular portfolio of consumer loans and 5 percent of the unsecured regular portfolio of consumer loans as per the requirements of the Prudential Regulations issued by the State Bank of Pakistan. Although the Group has made provision against its non-performing portfolio as per the category of classification of the loan, however, the Group still holds enforceable collateral against certain non-performing loans. These securities comprise of charge against various tangible assets of the borrower including land, building and machinery, stock in trade, etc.

13.6

Annual Report 2010 Faysal Bank 190 - 191

Faysal Bank Limited and its Subsidiary Company

Notes to and Forming Part of the Consolidated Financial Statements
For the year ended December 31, 2010
13.7 13.7.1 Particulars of write-offs Against provisions Directly charged to profit and loss account Write-offs of Rs. 500,000 and above Write-offs below Rs. 500,000 Details of loan write-offs of Rs 500,000 and above In terms of sub-section (3) of section 33A of the Banking Companies Ordinance, 1962, the statement in respect of written off loans or any other financial relief of five hundred thousand rupees or above allowed to a person(s) during the year ended December 31, 2010 is given in Annexure - II to these consolidated financial statements. However, the write-off of loans does not affect the Group's right to recover the outstanding loans from these customers. 13.9 Particulars of loans and advances to directors, associated companies, etc. Debts due by directors, executives or officers of the Group or any of them either severally or jointly with any other persons * Balance at beginning of the year Loans granted during the year Repayments during the year Balance at end of the year Loans transferred from amalgamated entity Debts due by companies or firms in which the directors of the Group are interested as directors, partners or in the case of private companies as members Balance at beginning of the year Loans granted during the year Repayments during the year Balance at end of year Loans transferred from amalgamated entity Debts due by controlled firms, managed modarabas and other related parties Balance at beginning of the year Loans granted during the year Repayments during the year Balance at end of the year 802,558 1,750 (2,113) 802,195 731,564 72,735 (1,741) 802,558 1,761,372 1,761,372 252,796 2,014,168 2010 Rs ‘000 829 97,920 98,749 13,400 85,349 98,749 2009 Rs ‘000 9,795 9,795 9,795 9,795

13.7.2

13.8

2010 Rs ‘000 619,457 640,251 (248,354) 1,011,354 2,328,141 3,339,495

2009 Rs ‘000 504,926 297,198 (182,667) 619,457 619,457

* These include loans given by the Group to its employees as per the terms of their employment.

Faysal Bank Limited and its Subsidiary Company

Notes to and Forming Part of the Consolidated Financial Statements
For the year ended December 31, 2010
13.9.1 Maximum total amount of advances (including temporary advances) outstanding at the end of any month during the year Note 2010 2009 Rs ‘000 Rs ‘000 Debts due by directors, executives or officers of the Group or any of them either severally or jointly with any other persons Debts due by companies or firms in which the directors of the Group are interested as directors, partners or in the case of private companies as members Debts due by subsidiaries, controlled firms, managed modarabas and other related parties 14 FIXED ASSETS Capital work-in-progress Tangible fixed assets Intangible assets 14.1 14.2 14.3 187,234 5,867,444 2,671,728 8,726,406 65,033 2,495,798 226,786 2,787,617 3,339,495 619,457

2,014,168

-

802,195

802,558

14.1

Capital work-in-progress Civil works Equipments Advances to suppliers and contractors 75,627 81,515 30,092 187,234 18,578 20,705 25,750 65,033

Annual Report 2010 Faysal Bank 192 - 193

Faysal Bank Limited and its Subsidiary Company

Notes to and Forming Part of the Consolidated Financial Statements
For the year ended December 31, 2010
14.2 Tangible fixed assets
2010 COST As at January 1, 2010 Additions / assets transferred from amalgamat ed entity * Deletions / Writeoffs ** As at December 31, 2010 As at January 1, 2010 ACCUMULATED DEPRECIATION Charge / on assets transferred from amalgamat ed entity * Charge on deletions / writeoffs ** As at December 31, 2010 Book value Rate of at December Depreciation 31, 2010 (%)

(Rupees ‘000) Freehold land Leasehold land Building on freehold land Leasehold property and improvement Office furniture, fixtures, equipments and computers Vehicles Total Owned 40,184 467,764 41,648 1,449,819 1,873,234 848,989* 1,212,776* 443,776* 72,900 1,411,730* (72) 889,173 1,680,540 485,424 2,934,377 19,206 16,009 420,824 1,195,151 29,294 38,409* 169,248 642,414* (72) 19,206 83,712 1,232,414 889,173 1,661,334 401,712 1,701,963 5 5 to 20

302,277 (26,833) 4,059,982 2,286,624* (375,320)** 21,896 (202,874) 60,009* 397,073 284,441

426,320 (24,725) 2,977,255 1,744,918* (364,409)** 35,769 44,917* 660,631 (57,851) (82,648) 153,906 4,466,493

1,082,727 20 to 33.33

405,410 4,278,059

131,071 1,782,261

130,535 5,867,444

20

(229,779) 10,333,937

6,263,904* (375,320)**

2,470,658* (364,409)** 2009

COST As at January 1, 2009 Deletions / Writeoffs As at December 31, 2009 As at January 1, 2009

ACCUMULATED DEPRECIATION Charge on deletions / writeoffs As at December 31, 2009 Book value Rate of at December Depreciation 31, 2009 (%)

Additions

Charge

(Rupees ‘000) Freehold land Leasehold land Building on freehold land Leasehold property and improvement Office furniture, fixtures, equipments and computers Vehicles Total Owned 40,184 417,008 41,648 1,304,998 1,414,953 50,756 144,821 481,269 113,252 790,098 40,184 467,764 41,648 1,449,819 19,206 15,431 292,374 882,421 578 128,450 332,139 52,672 513,839 19,206 16,009 420,824 40,184 448,558 25,639 1,028,995 5 5 to 20

(22,988) 1,873,234 (52,826) 405,410

(19,409) 1,195,151 (29,194) 131,071

678,083 20 to 33.33

344,984 3,563,775

107,593 1,317,025

274,339 2,495,798

20

(75,814) 4,278,059

(48,603) 1,782,261

Assets held under finance lease Vehicles Total 14,830 3,578,605 790,098 (14,830) 10,986 1,328,011 513,839 (10,986) 2,495,798 20

(90,644) 4,278,059 -

(59,589) 1,782,261 -

14.2.1 14.2.2

Included in cost of property and equipment are fully depreciated items still in use having cost of Rs. 1,416.693 million (2009: Rs. 683.744 million). One of these properties is encumbered to the extent of Rs. 34 million on account of a claim by a local bank in settlement of its second charge.

Faysal Bank Limited and its Subsidiary Company

Notes to and Forming Part of the Consolidated Financial Statements
For the year ended December 31, 2010
14.3 Intangible assets
2010 COST As at January 1, 2010 Additions / assets transferred from amalgamat ed entity * Deletions / Writeoffs ** As at December 31, 2010 ACCUMULATED AMORTISATION As at January 1, 2010 Charge / on assets transferred from amalgamat ed entity * Charge on deletions / writeoffs ** As at December 31, 2010 Book value Rate of at December amortisation 31, 2010 % per annum

(Rupees ‘000) Computer software Customer Relationship (note 8.3.1 ) 401,784 23,596 306,707 (31,119)** 2,557,167 23,596 700,968 174,998 116,733 274,385 40,518 157,251 274,385 2009 COST As at January 1, 2009 Deletions / Writeoffs As at December 31, 2009 ACCUMULATED AMORTISATION As at January 1, 2009 Charge on deletions As at December 31, 2009 Book value Rate of at December amortisation 31, 2009 % per annum (20,227)** (20,227)** 545,889 155,079 20 to 33.33

401,784

2,557,167 3,258,135

174,998

40,518 586,407

2,516,649 2,671,728

Note 8.3.1

2,863,874 (31,119)**

Additions

Charge

(Rupees ‘000) Computer software 233,291 233,291 168,493 168,493 401,784 401,784 78,160 78,160 96,838 96,838 174,998 174,998 226,786 20 to 33.33 226,786

14.3.1 14.4

Intangible assets include fully amortised items still in use having cost of Rs. 293.846 million (2009: Rs. 10.336 million). Details of disposal of fixed assets to executives, and other persons having cost of more than Rs.1 million or net book value of Rs. 250,000 or above are as follows:
Description
Owned - Vehicles Mercedes Benz Toyota Parado Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda Civic VTEC Honda City Honda City Honda City Honda City Honda Civic VTEC Toyota Corolla Toyota Corolla Toyota Corolla Honda Civic VTEC 3,627 2,591 1,754 1,754 1,754 1,754 1,752 1,746 1,744 1,744 1,744 1,686 1,669 1,669 1,651 1,651 1,610 1,570 1,570 1,570 1,560 1,439 1,432 1,429 1,429 1,413 1,389 1,389 1,389 1,380 2,466 1,693 281 304 327 327 304 279 209 233 279 90 134 134 132 132 322 335 356 356 374 173 153 133 152 358 148 167 167 368 1,161 898 1,473 1,450 1,427 1,427 1,448 1,467 1,535 1,511 1,465 1,596 1,535 1,535 1,518 1,518 1,288 1,235 1,214 1,214 1,186 1,266 1,279 1,296 1,277 1,055 1,241 1,222 1,222 1,012 1,306 933 1,550 1,450 1,450 1,450 1,450 1,550 1,550 1,550 1,550 1,676 1,550 1,550 1,550 1,550 1,450 1,450 1,450 1,450 1,450 1,266 1,279 1,296 1,277 1,413 1,325 1,325 1,325 1,380 As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy Mr. Ahmed Kamran - Executive Mr. Arif Hassan Khan - Ex-executive Mr. Muhammad Asghar Qureshi - Executive Mr. Raza Mohsin Qizilbash - Ex-executive Mr. Amir Nasib - Executive Mr. Syed Nadeem Ahmed - Executive Mr. Ali Waqar - Executive Mr. Zafar Bashir - Executive Mr. Shuja Haider - Executive Mr. Ahmad Kamal Uddin - Executive Mr. Asad Kerai - Executive Mr. Ahmed Anwar Hemani - Executive Mr. Shabbir Ahmed - Executive Mr. Muhammad Asim - Non-executive Mr. Syed M. Haider Ali Jafri - Ex-executive Mr. Khalil Ghori - Executive Mr. Siraj Ali Mithani - Executive Mr. Akbar A. Ladak - Executive Mr. Omar Quraishi - Ex-executive Mr. Shahid Salim - Executive Mr. Syed Mehdi Haider - Executive Ms. Uzma Hashim - Executive Mr. Mukhtar Hussain - Ex-executive Mr. Akber Amir Ali - Executive Mr. Mustapha Lotia - Executive Mr. Adnan Riaz - Executive Mr. Muhammad Tahir Bhatti - Executive Ms. Sarah Irfan - Non-executive Ms. Amna Alam - Executive Mr. Masoodul Islam Jaffri - Executive

Cost

Accumulated depreciation

Book value

Sale proceeds

Mode of disposal

Particulars of purchaser / addresses

(Rupees ‘000)

Annual Report 2010 Faysal Bank 194 - 195

Executive Mr. Najeeb Ahmed . Nadeem Shaukat Rathore .Executive Mr.Non-executive Mr. Bashir Ahmed Wasan .239 1.Executive Mr.Executive Ms. Hasan Jamal . Syed Sohail Akhtar . Shahzad Ahsan . Fahd Jafri .Executive Mr. Faysal Azim Lehri . Muhammad Saeed .250 1.173 446 428 444 435 435 861 857 830 798 337 336 336 335 691 678 655 655 655 643 643 326 664 676 676 676 676 676 664 480 631 580 568 318 318 259 259 766 766 766 743 492 481 481 457 352 305 350 673 673 662 662 662 662 662 662 662 Sale proceeds 1. Zaheer .Ex-executive Mr. Barney Sarfraz . Imran Ahmed . Manzar Nadeem (Individual) House No.Executive Mr. Shamoon Rasheed . FB Area.Executive Mr.254 1.Executive Mr. Imran Ali Malik . Irfan Merchant . Mustafa Kamal .Ex-executive Mr. Sajjad M. Irfan A.319 1. Sara Irfan . Mr. Rabia Salahuddin . Car Advisor.Executive Mr.Executive Mr.322 1.Executive Mr.327 1. Saqib Imam Zaidi .208 1.238 1.250 1.Executive Mr.Ex-executive Mr. Pervez I.329 1. Aneeq Malik .314 1.Executive Mr. Muhammad Sabih Qazi .Executive Mr.329 1.Executive Mr.314 1. Tayyaba Rasheed .Executive Mr.Executive Mr.Executive Mr.Executive Mr.Executive Mr.Ex-executive Mr. Khan .Non-executive Mr.Executive Mr.269 1. Abrar A.Executive Mr.239 446 445 444 1. Anjum Siddiqui .Executive Mr. Khawaja M.Non-executive Mr. Muhammad Akhtar .Ex-executive Mr.250 659 1.380 1.325 1.380 1.Executive Mr. Rooh Ul Amin . Ahsan Noor .Executive Mr.300 1. Showroom No. Shakeel Raza Shah .Executive Mr.Executive Mr. Zahid Hameed .11. Afzal Haq . Saddam Haider .325 1.Ex-executive Mr.329 1. Qamar Uz Zaman .250 1. Jamil Ahmad .050 936 934 932 931 925 925 910 910 910 910 910 907 905 905 905 905 905 905 905 900 893 893 893 885 884 884 884 884 884 884 884 879 879 879 879 879 879 846 814 814 814 814 814 814 814 814 814 As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy Bid As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy Bid As per Holding Company's policy Bid As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy . Karachi. M. Yameen Ghani . 2010 Description Cost Accumulated depreciation 368 386 53 71 71 71 124 88 71 71 88 53 123 105 105 105 641 66 792 807 789 773 773 215 214 225 252 599 598 597 596 234 247 255 255 255 267 267 580 241 229 229 229 229 229 241 420 262 312 324 566 566 625 625 118 118 118 141 387 398 398 422 527 574 496 141 141 152 152 152 152 152 152 152 Book value 1.258 1.276 1. Shahid Rizwan .Executive Mr.Executive Mr. Muhammad Abid Rasheed Abbasi .Ex-executive Mr. Faisal Saleem . Muhammad Ozair Baig .205 1.Executive Mr. Abid Ali .Executive Mr.300 1. Asim Seth .325 1. Adnan Aqeel . 2. Shahzad Anwer Mian .Executive Mr. Siddik .258 1. Fatima Jinnah Road.322 1.380 1.Executive Mr.233 1. Adnan Rashid .208 1. Jamil Irshad .Executive Mr. Syed Fuad Ali .Executive Mr.325 1. Naved Inayet . Syed Fida Hussain Shah . Mirza Shauq Hussain .325 1.258 1.Executive Mr. Mr.322 1. Ali Raza .Executive Mr. 608. Mohammad Younis Khan . Fatima Jinnah Road.329 1. M. Faiz Ahmed Mirza .Executive Mr.Non-executive Mr.Executive Mr. Karachi.196 1. Shakil Ahmed . Aamir Ahmed .Executive Mr.Executive Mr. Muhammad Zafar Abbas . Syed Khurram Shehzad Gillani . Raja Imran Naseeb .208 1. Car Advisor.Executive Mr.Executive Mr.Executive Mr. Asifullah Siddiqui .Executive M/s. Khan .314 1. Muhammad Asim Brar .Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. Burney .325 1.Executive Mr.Ex-excutive (Rupees ‘000) Honda Civic VTEC Honda Civic VTI Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Honda City Honda City Honda City Honda City Honda City Toyota Corolla Honda City Honda City Honda City Honda City Honda Civic Toyota Corolla Honda Civic Honda Civic Honda Civic Honda Civic Honda Civic Honda City Honda City Honda City Toyota Corolla Honda City Honda City Honda City Honda City Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Honda City Honda City Honda City Honda City Honda City Honda City Honda City Honda City Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Honda City Honda City Honda City Honda City Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Honda Civic Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Toyota Corolla Honda City Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus 1.200 1.Executive Mr.Executive Ms. 608. Rafiq . Showroom No. Sattar Qureshi .Executive Mr. Amjad Idris .380 1.Executive Mr. M. Karachi.053 435 925 925 925 975 337 336 336 335 925 925 910 910 910 910 910 326 905 905 905 905 905 905 905 900 893 893 893 318 318 318 834 766 766 766 743 879 879 879 879 966 316 868 675 675 675 675 675 675 675 675 675 Mode of disposal Particulars of purchaser / addresses Mr.055 1.012 994 1. B-88. Mohammad Saleem Shafi . Block No.235 1.208 659 1.Executive Mr.329 1.Executive M/s.208 1.Executive Mr.Executive Mr.238 1. Mr. Syed Javed Akhtar .327 1.076 1.325 1. M.Executive Mr. Mateen Wahid .254 1. 2. Imran Siraj Khan .Executive Mr. Cheema .329 1.071 1.Executive Ms.Executive Mr. Muhammad Salman Zaffar . Azeem Ahmad .Ex-executive Mr.234 1.

Executive Mr.Ex-executive Mr.Executive Mr. Mirza Kamran Baig . Naz Saleem . Rashid B. Aamir Aftab . Abbas Ali Sahi . Nasir Mahmood .Non-executive Mr. Mubashir Mustafa .Ex-executive Mr.Non-Executive Mr.Executive Mr. Shafiq Ahmed Tahir . Tariq Rasheed Siddiqui .Executive Mr.Executive Mr. Muhammad Naeem Akhtar . Haroon Saleem .Executive Mr.Executive Mr. Faiz Hassan . Nadeem Ghani . Muhammad Yahya Hameed Wahla Executive Mr.Executive Mr.Executive Mr. Muhammad Usman Bajwa . Taimoor Malik . Muhammad Ashraf Nadeem .Executive Ms. Fatima Mustafa . Ahsan Iqbal Sheikh .Non-Executive Mr.Executive Mr.Executive Mr. Imran Ahmed Minai .Non-Executive (Rupees ‘000) Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus 814 795 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 785 785 785 754 754 754 754 754 704 704 704 704 682 682 682 652 652 652 652 652 652 652 652 650 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 626 617 617 617 617 616 616 612 612 600 600 600 600 As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy Annual Report 2010 Faysal Bank 196 .Executive Mr. Shafiq Ahmed Baig . Atif Asad Mirza .Ex-executive Mr.Executive Mr. Talha Aziz . Amjad Khan . Saad Hassan Khan . Arooj Waheed .Executive Mr. Naveed Aziz .Executive Mr.Non-Executive Mr.Executive Mr. Omer Farouq Mukaty .Executive Mr. Syed Imran Hassan . Syed Izzat Hussain . Sunila Zaidi . Amjad Ashraf . 2010 Description Cost Accumulated depreciation 152 64 42 42 42 53 53 53 53 53 53 53 53 53 63 63 63 63 63 63 63 63 52 52 52 151 151 151 151 161 150 160 169 169 164 164 164 165 165 165 174 174 174 174 183 199 177 185 185 185 185 185 185 185 185 185 185 185 185 185 185 185 185 185 185 184 197 236 263 296 181 197 220 239 264 280 272 272 Book value 662 731 748 748 748 737 737 737 737 737 737 737 737 737 727 727 727 727 727 727 727 727 733 733 733 603 603 603 603 593 554 544 535 535 518 518 518 487 487 487 478 478 478 478 469 450 455 446 446 446 446 446 446 446 446 446 446 446 446 446 446 446 446 446 446 443 419 380 354 321 435 419 391 373 336 320 328 328 Sale proceeds 675 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 790 785 785 785 675 675 675 650 675 675 675 675 675 650 650 650 650 650 650 650 650 650 650 650 650 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 631 626 617 550 362 575 616 616 550 383 525 525 525 328 Mode of disposal Particulars of purchaser / addresses Mr. Ahmad Amin . Hassan Ashraf Cheema . Muhammad Qasim Sorathia . Naveed Zia Tarar .Executive Ms. Rehan Aslam .Non-Executive Mr.Executive Ms. Naveed M. Mohammad Arif Usman . Syed Mohsin Ali Shah .Executive Mr.Executive Mr.Executive Mr.Executive Mr. M. Behram Keki Irani .Executive Mr.Executive Mr.Ex-executive Mr. Mian M. Saleem Shoukat Ali . Faisal Shahzada .Executive Mr.Executive Mr. Wasim Khalid .Non-Executive Mr.Executive Ms. Syed Asim Imtiaz .Executive Mr.Executive Mr. Jamal Yousuf Khan . Muhammad Ishaq Mir . Sarwat Moiez . Zahid Bashir .197 .Executive Mr.Non-executive Ms.Executive Mr. Muhammad Khalid Israr . Amjad . Nauman Aftab .Non-Executive Mr.Executive Mr.Executive Mr.Non-Executive Mr.Executive Mr. Dharmendar Kumar .Executive Ms. S. Syed Mohammad Ali Zaidi . Junaid Ahmed Khan . Ahsan Jamal . Shahzad Ghouri .Executive Mr.Executive Mr. Kalim Jaffery .Executive Mr. Javed Iqbal .Executive Mr.Ex-executive Mr. Shoaib Siddiqui . Faizan Shamsi .Executive Mr. Rashid Saleem Choudhry .Non-Executive Mr.Executive Mr.Executive Mr.Non-Executive Mr. Saima Adnan .Executive Mr.Executive Mr. Ghulam Khalid Khan . Aamir Salehjee .Executive Mr.Executive Mr. Muddassir Mazhar Ahmed .Non-Executive Mr.Executive Mr. Amer Rafique . Nasir Shabir .Executive Mr. Maqsood Ahmed .Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.Executive Mr.Executive Mr. Abdul Khalil .Executive Mr. Khalid Ali Khan Afridi . Zahir Ali Quettawalla . Hanfee . Asad . Wajahat Naeem . Muhammad Moinuddin Khan . Muhammad Ahmed . Muhammad Tausif Ul Haq . Mohammad Javed .Ex-non-executive Mr.Executive Mr.Executive Mr.Executive Mr. Shoukat Mehboob Malik .Executive Mr.Executive Mr.

the management of the Holding Company has carried out an exercise to reconcile the deferred tax liability on leased assets appearing in the books of accounts with the related tax records.278. Hammad Sarwar .Executive Mr.Executive Mr.019) (852. .Executive Ms.672. Gulshan-e-Iqbal.923.8 'Accounting Policies. 402.Executive Mr. Zafar Hussain Malik . Riaz Ahmed . the excess deferred tax liability has been reversed by adjusting the opening balance of deferred tax liability and unappropriated profit as at January 1.1 (236. Street-6. The results of the exercise highlighted that deferred tax liability in respect of leased assets was recorded in excess by Rs. fixtures.Executive Mr. There is no impact on cash flows because of this adjustment.202 1.825 368.017. Murtaza Arif Dar . Tahir Malik .014 561. Syed Abid .887 195.862 93. Moazzam .1 Net investment in finance leases Provision against non-performing advances Provision for diminution in the value of investments Provision against other assets Minimum tax Unused tax losses (including unabsorbed depreciation) Deficit on revaluation of government securities 15.Executive (Rupees ‘000) Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Suzuki Cultus Owned . Dilawar Khan . 3-1/2.457) (154. 765.Executive Mr. The comparative information for the year ended December 31.1 16.534 4. Karachi. 2009. 2010 being the earliest period for which restatement was practicable.Executive Mr. Dilawar & Brothers Sarfraz Town Korangi No. In accordance with the requirements of International Accounting Standard .350 534.395) (1.971 1.596) (754. Adnan Shakeel Khan (Individual) House No. equipments and computers Generator 819 327 491 600 Bid M/s.Executive Mr.888) - Deferred debits arising due to: 15.306 178. Ayesha Umer .NET Deferred credits arising due to: Net investment in finance leases Undistributed income of subsidiaries Accelerated tax depreciation Surplus on revaluation of securities Fair value adjustments relating to net assets acquired upon amalgamation Note 2010 Rs ‘000 2009 Rs ‘000 15.Office furniture. Abdul Rauf . 2009 and for periods prior to that has not been adjusted as it was not considered practical on account of lack of availability of reliable data which can allow determination of these effects.052 million as at December 31. 600 600 600 600 595 588 600 595 588 560 560 As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy As per Holding Company's policy Bid As per Holding Company's policy 15 DEFERRED TAX ASSETS .278 5.069) (197. Karachi.Non-Executive Mr.849 Reversal of deferred tax liability on leased assets relating to prior years During the year. Sector 43/A.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. 2010 Description Cost Accumulated depreciation 296 296 296 296 286 321 296 286 321 284 269 Book value 304 304 304 304 309 267 304 309 267 276 291 Sale proceeds 312 312 312 304 309 267 304 309 267 632 202 Mode of disposal Particulars of purchaser / addresses Mr.664 20. Changes in Accounting Estimates and Errors'.216) (73. Mr. Block-10-A.

774 1.719 254.534 2009 Rs ‘000 2.305 (101. 2010 Reversal of excess deferred tax liability on net investment in finance leases relating to prior years Adjusted deferred tax asset on net investment in finance leases as at January 1.226 294. 2010 Deferred tax asset recognised in the profit and loss account during the current year Deferred tax asset on net investment in finance leases as at December 31.734 10.1 16.589) 4.068.828 (40.879 180.2 26 16.determined by professional valuer The movement of prepaid staff benefits is as follows Prepaid employee benefits acquired on October 15.2 Market value of non-banking assets acquired in satisfaction of claims .708.232.632 1.716 1. 2010 Employee benefits expensed during the period Prepaid employee benefits on December 31.237 1.400. deposits.995 369.052 10. 2010 The impact of this reversal on the deferred tax liability relating to net investment in finance leases is as follows: Note Deferred tax liability on net investment in finance leases as at January 1.938.839 2.766 (221.960 476.657 5.578 28.966.258.328.486.506 10.369 1.1 16.965 2010 Rs '000 1.551 5.3 Annual Report 2010 Faysal Bank 198 .259.575 189.253) 1.615 2010 Rs '000 (754.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.877 16.199 .243 142.935 2.004 62.192.153 131 86. 2010 2010 Rs ‘000 4.302. 2010 16 OTHER ASSETS Income / mark-up accrued in local currency Income / mark-up accrued in foreign currencies Advances.120 28.927) 10. advance rent and other prepayments Taxation (payments less provisions) Non-banking assets acquired in satisfaction of claims Credit cards and other products fee receivable Suspense account Unrealised gain on revaluation of forward foreign exchange contracts Dividend receivable Receivable from brokers against sale of shares Prepaid employee benefits Assets held for distribution Others Less: Provision held against other assets Other assets (net of provisions) 16.192.750 820.575 16.395) 765.808.

859 27.968.013.976 13.043 6.859 34.904 8.248.under export refinance scheme .766 2010 Rs ‘000 101.985. 2010 Note 16.904 1.753.under long term financing facility (LTFF) Repurchase agreement borrowings Unsecured Call borrowings Overdrawn nostro accounts 3. Borrowing from the SBP under the export refinance scheme is secured by the Group's cash and security balances held by the SBP. the Group has granted SBP the right to recover the outstanding amount from the Group at the date of maturity of the finance by directly debiting the current account maintained by the Group with the SBP.475 1.under scheme for long term financing for export oriented projects .Part I and II .4 18. .206.621 (844) 61.604 21.612 6.766 34.092) (6.828 2.648 (19. As per the agreement.407 7.(LTF-EOP) .451.307.926 3.985.218.451 34.379 28.2 Details of borrowings secured / unsecured Secured Borrowings from the State Bank of Pakistan .5% to 9% per annum (2009: 7% per annum) payable on quarterly basis with maturities upto June 30.633.3 In accordance with the ERF scheme.681.777 58.076 34. 2011 from the date of borrowing.950.740 166.1 Particulars of borrowings with respect to currencies In local currency In foreign currencies 18. the Group has entered into agreements for financing with the State Bank of Pakistan (SBP) for extending export finance to customers.550 34.5 18.450 34.322.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.635.581 17.216 21.633.561 221.589 62.927 2009 Rs ‘000 108.766 18.033 12.444) 101.7 14.912 1.302 789.465.313.933 109.972.076 34.602.6 18.560 1.154 34.550 6.454 7.612 232.733 10.985.154 34. The mark-up rate on this facility ranges from 7.828 2.904 34.589 18.3 Provision against other assets Opening balance Charge for the year Reversals Provision against other assets transferred from amalgamated entity Closing balance 17 BILLS PAYABLE In Pakistan Outside Pakistan 18 BORROWINGS In Pakistan Outside Pakistan 18.671.635.3 18.964.108.635.

677 123.315.469.000 2010 Rs ‘000 86. As per the terms of the agreement.989 123. the Group has granted SBP a right to recover the outstanding amount from the Group at the respective date of maturity of finances by directly debiting the current account of the Group maintained with SBP.405.80% per annum (2009: 7.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.201 .50% to 13.5 18.318 195.208.531.233.683 116.40% per annum) maturing up to January 2011.746 116.670. These represent borrowings from SBP under scheme for Long Term Financing facility at rates ranging from 6.955 21.683 18.25% per annum).75% per annum (2009: 11.20% to 7.707.540 5.895 9.673 2.223.328.789.471 39.75% to 13.000 2009 Rs ‘000 999.782 7. DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Saving deposits Current accounts – Remunerative Current accounts – Non-remunerative Margin accounts Financial Institutions Remunerative deposits Non-remunerative deposits 19.140.607.00% to 12.595.469.525. The salient features of the issues are as follows: 2010 Rs ‘000 Outstanding amount Total issue amount 4.006 7.024 40.25% to 12.800. made at rates ranging from 12.50% per annum (2009: 11.141.315. These borrowings are from various institutions in the interbank market.886 19. and have varying long term maturities stipulated by SBP.1 Particulars of deposits In local currency In foreign currencies 20 SUB-ORDINATED LOANS This represents rated and un-secured Term Finance Certificates (TFCs).664 195.050 61.733.204 175.443. This represents collateralized borrowings against market treasury bills at rates ranging from 12.285 29.236.15% per annum) against market treasury bills and Pakistan investment bonds maturing upto January 2011.694 7.153.061 189.395 4.7 19 Annual Report 2010 Faysal Bank 200 .422 5.6 18. As per the terms of the agreement.917.242 317. 2010 18.281 1.000.5% to 8.200 1.204 2009 Rs ‘000 52.4 These represent borrowings from SBP under scheme for Long Term Financing for Export Oriented Projects at rates ranging from 4% to 5% per annum (2009: 4% to 5%) and have varying long term maturities stipulated by SBP. the Group has granted SBP a right to recover the outstanding amount from the Group at the respective date of maturity of finances by directly debiting the current account of the Group maintained with SBP.

1 26 21. In 4 equal annual installments starting Semi annually as follows.841 504. November 2007 7 years from the date of issue.969 73.626 56.788 139 48.40% The Base Rate is defined as the ask side of six months Karachi Inter bank Offered Rate (KIBOR) prevailing on the base rate setting date. 21 OTHER LIABILITIES Mark-up / return payable in local currency Mark-up / return payable in foreign currencies Unearned commission / income Accrued expenses Taxation (provisions less payments) Unclaimed dividends Branch adjustment account Unrealised loss on revaluation of forward foreign exchange contracts Fair value of the derivative contracts Withholding tax payable Federal Excise Duty payable Security deposits against finance leases Payable to brokers against purchase of shares Liabilities held for distribution Others Note 2010 Rs ‘000 2.20% of principal in first 60 months and remaining principal in four semiannual installments of 24.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.216 13.406.324 23.451 1.731 48.841 684.750 16.876 24.95% starting from 66th month Profit Payment Profit is payable semi-annually in arrears.I TFC .470 6. 0.000 million “AA-” (Double A Minus) by JCR-VIS “Rated A” (Single A) by PACRA Unlisted Base Rate Plus 2.000 million “AA-” (Double A Minus) by JCR-VIS Listed Base Rate Plus 1.039.688. including deposits.II TFC-others-relating to amalgamated entity Rs.1 This represents interest free security deposits received from lessees against lease contracts and are adjustable against residual value of leased assets at the expiry of the respective lease terms.129 918 321. 3.984 2.237.90%.000 million Rs. annual installments of 24. 800 million Outstanding amount Rs. 998. 2010 Particulars TFC .95% starting from 66th month Profit is payable semi-annually in arrears.423 665.275.094 3. 598.315 489.281 26.20% of principal in first 60 months from 60th month from the date of and remaining principal in four semi.748 42.595 million) Rs. The TFCs are subordinated to all other The TFCs are subordinated to all The TFCs are subordinated to all indebtedness of the Holding Company other indebtedness of the Holding other indebtedness of the Holding Company including deposits.560 1. Profit is payable semi-annually in arrears. Date of issue Tenure and maturity Principal Repayment Semi annually as follows.782 3. 1.610.778 1. The Base Rate is defined as the ask side of six months Karachi Inter bank Offered Rate (KIBOR) prevailing on the base rate setting date. 3. . 0.979. Listed Base Rate Plus 1.issue. Company including deposits.249 435. October 2010 7 years from the date of issue. February 2005 8 years from the date of issue.8 million Issue amount Rating Listing Rate Rs.569 2009 Rs ‘000 1.290 14.300 57. Subordination Rs.25% The Base Rate is defined as the ask side of six months Karachi Inter bank Offered Rate (KIBOR) prevailing on the base rate setting date.334.304 27 21.800 million (fair value Rs 596.928.

230 730.000 201.000.1 SHARE CAPITAL Authorised capital 2010 Number of Shares 2009 Number of Shares 2010 Rs ‘000 2009 Rs ‘000 1.420 513.299.309.gain on bargain purchase Capital market reserve 23.2 Issued.980 156.S.137.909.090.952 3.183 7.600 7.3 22.660.000. 10 each (2009: 407.203 .600 6.091.372 22.742.372 2010 Rs ‘000 4.030.014.094 2.514 389. the Group made appropriations to capital market reserve in order to meet unforeseen future contingencies in the capital market.640.911 As at December 31. The decision has been taken as in the opinion of the management all capital market losses are accurately reflected in the determination of profit / equity through the mark to market process and a robust and timely mechanism for recognition of impairment losses.722 Issued as bonus shares 15.454 ordinary shares). 2010 22 22.1 23.797 156.818. The movement in the issued.000 730.142 121. In prior years.146 7.218.000.000 Ordinary shares of Rs. 2010 Note 609.091.056 23 RESERVES Statutory reserve Capital reserve Reserve arising on amalgamation Revenue reserve Non-Distributable Capital Reserve .590 23.000 1.420 Fully paid in cash 391.354.142 2.1 8.919.000 12.000 Issued for consideration other than cash 609. subscribed and paid-up capital 2010 Number of Shares 201.514 3.797. 2010 Bonus shares issued during the year Closing balance at December 31. However.909.309.2 Appropriations are made to statutory reserve as required by section 21 of the Banking Companies Ordinance.031.000.979. Ithmaar Bank B.200.C.451.2 23.5 8.660. 2010.200.514 5.542 4. at the rate 20% of profit after tax for the year.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.451. subscribed and paid-up capital during the year is as follows: Number of shares Opening balance at January 1.911 1.094 2009 Rs ‘000 3.014. 1962.688 Rs '000 6. during the period the Group has decided to transfer the balance appearing in the reserve to unappropriated profit and not to make additional appropriation on this account.952 15.941 ordinary shares of Rs. (the ultimate holding company of the Group) through its subsidiaries and nominees held 489. Annual Report 2010 Faysal Bank 202 . 10 each 22.090.290.4 2009 Number of Shares Ordinary shares 12.4 23.

872 14.492 9.266) 221.770 837.275 833.446.968 (8.557) (218.910.237 4.659.850 7.Listed Units of Open ended Mutual Funds Other Investments .818.774. favouring: i) Government ii) Banking companies and other financial institutions iii) Others 7.1 24.659.Ijara Sukuk Bonds Fully Paid up Ordinary Shares / Modaraba Certificates / Units of Closed end Mutual Funds .860 (230. shipping guarantees and standby letters of credit etc.748.938.819 1.Listed companies / modarabas / mutual funds Fully Paid up Preference Shares .261 1.Pakistan Investment Bonds .850 1.819 7.407.1 (86.1 25 25.465 11.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.471.Sukuk Bonds Related deferred tax asset / (liability) 24.593 This represents deferred tax on surplus / (deficit) on revaluation of securities at applicable tax rates.161) (2.461.954) (45.Listed companies Term Finance Certificates .367) 105.507.NET OF TAX Available for sale securities Federal Government Securities .Market Treasury Bills .2 Transaction-related contingent liabilities Contingent liability in respect of performance bonds. 2010 24 Note (DEFICIT) / SURPLUS ON REVALUATION OF ASSETS .113) 2010 Rs ‘000 2009 Rs ‘000 113.859 (2.510 (60.727 4.454.108) 28. CONTINGENCIES AND COMMITMENTS Direct credit substitutes Contingent liability in respect of guarantees favouring: i) Government ii) Banking companies and other financial institutions iii) Others Acceptances i) Government ii) Banking companies and other financial institutions iii) Others 2010 Rs ‘000 2009 Rs ‘000 3.091) (48.934) (399.259 (125.048 (75.795 4.789 41.471.950) (22.917) 1. bid bonds.147) 1.603 24.045 1.153 .261 25.656) 1.

543 26. bad debts written off.543 1.488 Annual Report 2010 Faysal Bank 204 . rendition of account and damages.136.279.382 million.067.000 457. These include disallowance on certain matters that include initial depreciation on leases.996 2.000. The additional tax liability on these matters is Rs 1.659 13.043. management is confident that the matter will be decided in Holding Company's favour.327 5.205 . provision for bad debts. taxability of dividend.515 8.500. 2010 Rs ‘000 2009 Rs ‘000 25.731 7.4 Other Contingencies i) Suit filed by a customer for recovery of alleged losses suffered which is pending in the High Court of Sindh.648 6. recovery of monies.Banks 1.745. The Group’s legal advisors are confident that the Group has a strong case ii) Indemnity issued favouring the High Court in the above case iii) Claims against the Group not acknowledged as debt 2010 Rs ‘000 3.959. ITAT and the High Court in the aforementioned matters.522.327 1. Based on legal advice.961.641.536 5.000 457.advances 2010 Rs ‘000 2009 Rs ‘000 210.880 24. The department and the Group have disagreements on various matters for tax years from 1994 to 2009.6 Commitments in respect of forward exchange contracts Purchase .734 2.288.224. excess perquisites and certain other matters.3 Trade-related contingent liabilities Letters of credit i) Government ii) Banking companies and other financial institutions iii) Others 25.695. iv) Income tax assessments of the Group have been finalised upto the tax year 2010 (Accounting year 2009).Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.500.000 The Group makes commitments to extend credit in the normal course of its business but these being revocable commitments do not attract any significant penalty or expense if the facility is unilaterally withdrawn.Customers .224.5 Commitments in respect of forward lending / purchase Commitment to invest in securities Commitment to extend credit .656 23. 25.000 2.217 2009 Rs ‘000 2. release of securities.536 6.558 10.299 million in respect of a suit filed against the Holding Company for declaration.244. The management of the Group is confident that the decision in respect of these matters will be decided in the Group's favour and accordingly no provision has been made in these consolidated financial statements in respect of this liability.Customers .893.Banks Sale . 2010 25.974. The Group and the department have filed appeals with the CIT (Appeals).840 6.343.661 The above includes an amount of Rs 25.051 4.527.390.003 9.

1 Analysis of assets and liabilities of FMSL An analysis of assets and liabilities of FMSL is given below: Assets Investment available for sale . 2010.413 (5.088.356) 6.778 188.183 26.108 2009 Rs ‘000 84. accordingly. In view of the above.9 Other Commitments Interest rate swaps and cross currency swaps (notional principal) 26 53.at fair value Advance income tax .057 26. they have resolved to initiate proceedings of winding up by the members of FMSL under the Companies Ordinance. the board of directors of Faysal Management Services Limited (FMSL) decided to voluntarily wind up the company and.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.778 1. 26.227) (4.699.582 15.176 535 9.961 1.320 17.250 189.7 25.3 Analysis of the cash flows: Operating cash flows Investing cash flows Financing cash flows (6.857 82. 1984.348) (165.2 Analysis of the results: The analysis of the results of discontinued operations is as follows: Revenue Expenses Profit / (loss) after tax of discontinued operations 11.230 421.231.net 2010 Rs ‘000 180.890 10. 2010 2010 Rs ‘000 25.680) .787 ASSETS AND LIABILITIES OF FMSL CLASSIFIED AS HELD FOR DISTRIBUTION TO OWNERS On October 1. the net assets of FMSL have been classified as "held for distribution to owners" in the consolidated financial statements and valued at lower of cost and fair value less cost to sell.8 Commitments for the acquisition of operating fixed assets Commitments in respect of repo transactions Repurchase Resale 25.250.net Bank balances Liabilities Accrued and other liabilities Taxation .

Risk management reviews credit risks.207 . equity prices. Value at Risk and OCP. monitoring and reporting risks. such as FX rates. These involve extreme shifts in a variety of parameters. The Group currently deals in interest rate and cross currency derivatives with clients. 2010 27 DERIVATIVE INSTRUMENTS The purpose of the derivative business of the Group is to provide risk solutions for the clients of the Group and to hedge and manage the risks in its own books. Risk Management sets the policies and limits for counterparty risk based on internal ratings model. Adherence to these limits is ensured through independent monitoring and control functions. Annual Report 2010 Faysal Bank 206 . Credit risk There are two types of credit risk (Settlement and Pre-Settlement risk) that are associated with derivatives transactions and monitored on a regular basis.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. The Group's risk management function is independent from the business line. These measures are calculated through the relevant systems. 27. Detailed structure of limits. Major risks associated with derivatives are market risk and credit risk. interest rates. The Group uses internal models to measure and manage these risks.1 Derivative Risk Management There are a number of risks undertaken by the Group. market risks and other risks associated with a transaction or area of activity and assigns limits within which the transaction / area of activity can be carried out. which need to be monitored and assessed. and Strong management information system for controlling. Liquidity risk Liquidity risk is managed as part of the overall liquidity risk of the Group. implied volatility levels and combinations of the above. Market risks The authority for approving policies and limits rests with Risk Management which also undertakes periodic portfolio reviews. The most important measures used to manage market risks are Delta. guidelines and other parameters used to govern risk taking. Management of risks includes the following primary components: Comprehensive risk measurement approach.

239) (1.Rupees '000 ------------------------------------------------------------------------------ .317 32.317 32.890 Notional Principal Negative (84.179.889 3.042 31.231.780 Net (84.162.259) (1.927. of Contracts Counterparties With Banks for Hedging Market Making With other entities for Hedging Market Making Total Hedging Market Making 27.334.608 207.626) 36 77 36 77 113 Notional Principal Rs '000 20.653 1.992 129.892) (2.231.222 1.304.827.682) (30.774 4.723.027) (3.406) 2009 Negative Rupees '000 Mark to Market Positive Net Mark to Market Positive 6.454) (363.500) (334. of Contracts Remaining Maturity Upto 1 month 1 to 3 months 3 to 6 months 6 months to 1 Year 1 to 2 Years 2 to 3 Years 3 to 5 Years 5 to 10 years Notional Principal 956.2 Product Analysis 2010 Interest Rate and Cross Currency Swaps No.370 70.687 12.927.304.548. 2010 27. of Contracts Notional Principal Rs '000 .904.746.020.957) (257.3 Maturity Analysis Interest Rate Swaps and Cross Currency Swaps 2010 No.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. of Contracts Remaining Maturity Upto 1 month 1 to 3 months 3 to 6 months 6 months to 1 Year 1 to 2 Years 2 to 3 Years 3 to 5 Years 5 to 10 years 3 2 25 23 43 17 113 No.890 2009 Interest Rate and Cross Currency Swaps No.824) (434.419.543 76.682) (36.573 20.267) (1.249) (5. - - - - ----------------------------------------------------------------------------------.395.890 53.544.573 53.

220 46.409 10.875 9.289.591 2010 Rs ‘000 13.923.Pakistan Investment Bonds .342 103.683. The determination of the fair value of these instruments is most sensitive to these key assumptions.528 13.140 16.526 629.849) 1.521 28.722.308 8.167 36.044 33.862 4.Ijara Sukuk Bonds Fully Paid up Ordinary Shares / Modaraba Certificates / Units of Closed end Mutual Funds Units of Open end Mutual Funds 31 OTHER INCOME Rent on property Maintenance charges on property rented Gain on disposal of fixed assets .500 924 80.300.004 11.689 4.339.364 65.142 84.160.834 1.284 11. 2010 27.788 12.818 76.995 148.095 5.439 1.015 332.4 As at December 31.236 206.540.339 814.775.505 33.266.824 262.579 28 Annual Report 2010 Faysal Bank 208 .247.231 824.859 4.028.213 (223.964 1.229 52.628 8.148 1.906 578. 2010 the fair value of derivative financial instruments has been determined using valuation techniques with significant inputs such as forecasted market interest rate and foreign exchange rate.293.154 613.net Recovery of amount written off previously invested in Certificate of Investments Income realised on un-winding of certain derivative contracts Others 9.879 16.710 458.621 50.209 . Any significant change in these key assumptions may have an effect on the fair value of these derivative financial instruments.520 4.755 320. MARK-UP / RETURN / INTEREST EARNED a) On financing to: i) customers ii) financial institutions b) On investments in: i) held for trading securities ii) available for sale securities iii) held to maturity securities c) On deposits with treasury bank and financial institutions d) On securities purchased under resale agreements e) On call money lendings 29 MARK-UP / RETURN / INTEREST EXPENSED Deposits Securities sold under repurchase agreements Other short term borrowings SBP borrowings Long term borrowings Sub-ordinated loans 30 GAIN / (LOSS) ON SALE OF SECURITIES Federal Government Securities .Market Treasury Bills .415 449.946.052 1.287 2009 Rs ‘000 11.997 19.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.957.259.685 891.665 1.

431 146.251 112.631 157.128 52.500 2.459 32.2 14.854 61.182 168.215 4.250 350 46 1.869 86.036 480 469 2.300 475 350 8.634 242.451 38.This is a charitable public welfare project (The President & CEO of the Holding Company is the managing trustee of the trust) 32.285.969 106.085 2010 Rs ‘000 2.500 400 46 3.046 2009 Rs ‘000 1.448 10. electricity.696 513.2 14.505 22 80.854 2.838 72.983 276.931.595 40.198 71. periodicals and subscription Brokerage and commission Others 32.550 101.3 .582 113. insurance.079 64.275 275 5.307 107.364 58. conveyance and entertainment Vehicle running expenses Books.325 784.000 11.653.671 1. etc.737 80.436 100 1. allowances and other employee benefits Charge for defined benefit plan Contribution to defined contribution plan Non-executive directors' fee Rent.287 23.600 2.085 5.839 96.261 1.671 660.229 89. Legal and professional charges Communications Repairs and maintenance Finance charge on leased assets Stationery and printing Advertisement and publicity Donations Auditors' remuneration Depreciation Amortisation License and technical fee Travelling.924. taxes.1 32.002 40.094 6.488 78. 2010 Note 32 ADMINISTRATIVE EXPENSES Salaries.696 40 1.540 276.718 23.1 Donations made during the year were as follows: Donee The Aga Khan University SWAT Refugee Relief Fund The Helpcare Society The Citizens Foundation Karachi Relief Trust Prime Minister's Flood Relief Fund District Government Bahawalpur Institute of Business Administration (IBA) Waqf Faisal (Trust) .061 66.2 Auditors’ remuneration Statutory audit fee Fee for quarterly and annual group reporting Fee for the review of the half yearly financial statements Fee for the provident and gratuity funds Tax services Special certifications and sundry advisory services Out-of-pocket expenses 1.436 8.450 547.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.364 637.653 25 10.

Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.015 84.517) 34.343 10.819 2009 Rs ‘000 33.64 730.981) (617.income chargeable to tax at reduced rate .531 (166. Any difference arising on assessment finalised during the year is adjusted in the profit and loss account in accordance with the Group's accounting policy. 2010 Note 33 OTHER CHARGES Penalties imposed by the State Bank of Pakistan Workers Welfare Fund Fixed assets written off Others 34 TAXATION For the year Current Deferred For prior years Current Deferred 239.226) 1.552 290.198.909 Rupees 1. Annual Report 2010 Faysal Bank 210 .66 730.440.420 (439.1 Relationship between tax expense and accounting profit Profit before tax Tax calculated at the rate of 35% (2009: 35%) Effect of: .817) (229.basic 1.527 ------------------------------------------------------------------------.042 462.192. 2009 which would have any effect on the earnings per share if the option to convert is exercised.66 35.057 Total Continuing operations Rupees '000 1.069 107.736 (325.029 34.948) (363.211 .118) 107.300.778 2010 Discontinued operations 6.01 730.003) (133.909 1.226) 1.63 730.610) (617.527 2009 Discontinued operations Total 35 1.445) (133.212.909 1.909 1.029 33.634 2.212.516 34.823.164.091 (493.Number In thousands --------------------------------------------------------------------730.835 1.2 191.492 (3.786) 724.permanent differences .2 This represents reversals arising in respect of prior years on finalisation of assessments.016 68.709) (363.709) (36.prior year reversal .121 16.516 2010 Rs ‘000 11.879 21.others Tax charge for the year 829.118) 345. Provision in respect of tax liability is made on management's best estimate which is adjusted based on assessment made by the tax authorities. 2010 and December 31.909 0.1 Diluted earnings per share has not been presented as the Group does not have any convertible instruments in issue at December 31.803 19. EARNINGS PER SHARE Continuing operations Profit for the year after taxation Weighted average number of ordinary shares outstanding during the year Earnings per share .300 (468.

727.75 12.000 (21.3 Reconciliation of receivable from defined benefit plan Present value of defined benefit obligations Fair value of plan assets Net actuarial loss not recognised 38.826 (62.547 35 3.1 Outsourced staff represent employees hired by an outside contractor / agency and posted in the Group to perform various tasks / activities of the Group. The benefit is equal to one month's last drawn basic salary for each year of eligible service or part thereof.50 14.869 2009 Rs ‘000 8.428. 2010. The latest actuarial valuation of the Holding Company's defined benefit plan based on Projected Unit Credit Actuarial Cost Method was carried out as at December 31.427.135) 61. The minimum qualifying eligible service for gratuity is 1 year for employees who became members of the Fund before November 12.909 (6. In the case of other members of the Fund the minimum qualifying eligible service is 5 years.961 (168.426 3.4 38.931 111 2. 2002.042 976 3. The benefits under the gratuity scheme are payable on retirement at the age of 60 years or earlier cessation of service in lump sum.75 12. 38.550) 9.50 14. 2010 36 CASH AND CASH EQUIVALENTS Cash and balance with treasury banks Balances with other banks Call money lendings Overdrawn nostros 37 STAFF STRENGTH Permanent Temporary / on contractual basis Group's own staff strength at the end of the year Outsourced Total Staff Strength 37.1 38 38.214.286) 31.5 277.2 Note 2010 Rs ‘000 17.582 2.287 5.221) (350) .75 60 2009 Rs ‘000 229.795 300.2 Principal actuarial assumptions Discount factor used (% per annum) Expected long term rate of return on plan assets (% per annum) Expected rate of salary increase (% per annum) Normal retirement age (years) Note 2010 14.165) (339) 38.202 508.150. DEFINED BENEFIT PLAN General description The Holding Company operates an approved funded gratuity scheme for all its permanent employees and employees who are on contractual service in non-management cadre.1 9 10 11 18.157 (245.447 1.871 (32.018 37. The minimum qualifying eligible service for contractual employees not employed under the management cadre is 6 months.924 5.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.50 60 2010 Rs ‘000 2009 12.407) 23.

Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.884) 4.509) 97.144 70.421 22.637 2006 (118.609 26.135 38.286 107.351 19.125 46.523) (19.5 Movement in fair value of plan assets Opening balance Expected return on plan assets Contribution made Benefits paid by the fund Gain / (loss) on plan assets Closing balance 38.493 27.213 .854) (339) 59.135 24.7 Charge for defined benefit plan Current service cost Interest cost Expected return on plan assets Amortization of loss 38.6 Movement in amount receivable from defined benefit plan Opening balance Charge for the year Contribution to fund made during the year Closing balance 38.286 104.1 Plan assets consist of the following: Balances with banks and financial institutions Units of open ended mutual funds Term finance certificates 38.231) 888 Actual return on plan assets Historical information Defined benefit obligation Fair value of plan assets Deficit Experience adjustments on plan liabilities Experience adjustments on plan assets Annual Report 2010 Faysal Bank 212 .124 (17.740 40.974 168.826) (6.157 2009 Rs ‘000 167.008 58.9 2010 Rs ‘000 229.739 (25.562 7.135 (61.286 (31.120 32.256) (4.253 (21.774) (30.125) 107.745) 46.961 168.655 2010 (277.141) 97.854 (17.609 (70.854 (58.493 27.477) 2007 (123.428 82.4 Movement in present value of defined benefit obligation Opening balance Current service cost Interest cost (Gain) / loss on defined benefit obligation Actual benefits paid during the year Closing balance 38.229 (24.760) 64 168.979 (19.928) (5.5.402) (2.620 (19.157) 245.124) 64 2008 Rupees '000 (167.630) 277.630) 1.620) (350) (339) 58.277 245.626) 4.979 6.884 70.818) (2. 2010 Note 38.277 2009 (229.229 (24.296 245.7 (339) 70.626 58.523 1.8 38.351 (59.854 15.961) 168.135 155.871) 24.961 59.120 32.760) 229.

447 91.164 1 2010 Directors 2009 Rupees '000 10.110.204 123.051 15. other than the chief executive and directors.228.683 4.066 1.136.896 167.227.227.202 508.377 27.314 1.816.657.320 17.957 133.889 26.196 17.088.688 6.250.030.857 10.595.204 4.428.459.451 34.196 23.735 49.956 1.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.857 6.904 195.450 7 7 Executives 2010 764.699.744 56.766 195.322 48.228.346.096 250.795 175.230 5.837 1 2009 99.697 421.582 .447 133.657.088.320 8.488 17.582 421.534 6.769 91.527.423 211.346.391 213.919 3.114 175.262 28.019 267 40.904 34.136.595. In addition to the above.816.635.892.091 22.427.699. The financial statements of the fund are separately prepared and audited and are not included as part of these financial statements.826 56.215.153.924 8.200 6.766 123.315.527.314 1.909 508.706.875 800 2.768 249.459 1.264 40.007 10.683 999.051 23. 2010 39 DEFINED CONTRIBUTION PLAN The Holding Company operates an approved funded contributory provident fund for all its permanent employees to which equal monthly contributions are made both by the Holding Company and the employees at the rate of 10% of basic salary. whose basic salary exceeds five hundred thousand rupees in a financial year.1 40.428.795 249.795 15.859 34.029 50.459.215 112.568 17.469.799 647.909 86.534 250.001 3.985.017. 40 COMPENSATION OF DIRECTORS AND EXECUTIVES President / Chief Executive Officer 2010 Managerial remuneration (including bonus) Fees Charge for defined benefit plan Contribution to defined contribution plan Rent and house maintenance Utilities Medical Leave fare assistance Others Number of persons 125.017.769 6.395 999.549 133.795 15.848 44.007 8.096 167.147.153.768 3.727.706.200 12.892.066 3.412. FAIR VALUE OF FINANCIAL INSTRUMENTS On-balance sheet financial instruments Assets Cash balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Other assets Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities Off-balance sheet financial instruments Forward purchase of foreign exchange Forward agreements for borrowings Forward sale of foreign exchange Forward agreements for lending Book value Fair value 2010 2009 2010 2009 Rupees '000 17.488 5.465. the Chief Executive and Executives are provided with free use of the Group’s maintained cars.218.218.2 41 Executives mean employees.465.147.080 57.393.315.001 6.202 5.230 15.145 163 278 2.985.826 86.645 736 189 1.635.469.344.697 6.451 34.727.554 800 2.924 5.427.250.345 789 2009 332.827 124.393.896 8.395 12.215.859 1.265.450 10.

6 and 47.4 and 12). These securities are carried at amortised cost in order to comply with the requirements of BSD circular No. viii) fair value of derivative financial instruments (notes 7.5 to these consolidated financial statements. 2010 The fair value of traded investments is based on quoted market price.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. Fair value of unquoted equity investments is determined on the basis of break-up value of these investments as per the latest audited financial statements. are regularly repriced.7.1 respectively. 42 ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. The repricing profile and effective rates and maturity are stated in note 47. Fair value of fixed term advances. vii) accounting for assets and liabilities classified as held for sale (note 16.6 and 14). The significant accounting areas where various assumptions and estimates are significant to the Group's financial statements or where judgment was exercised in application of the accounting policies are as follows: i) classification and provisioning against investments (notes 7. iii) classification and provisioning against advances (notes 7. It also requires the management to exercise its judgment in the process of applying the Group's accounting policies.11 and 38).18 & 27) 43 SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES Primary segment information For management purposes the Group is organised into four major business segments: Corporate Finance Trading and Sales Retail Banking and Commercial Banking Annual Report 2010 Faysal Bank 214 . 21 and 26). except for marketable securities classified as 'held to maturity'. The provision for impairment of advances has been calculated in accordance with the Group's accounting policy as stated in note 7. iv) depreciation / amortisation of operating fixed assets (notes 7. other assets.5 and 13). 15 and 34).215 . ii) income taxes (notes 7. vi) accounting for defined benefit plan (notes 7.9. other liabilities and fixed term deposits cannot be calculated with sufficient reliability due to absence of current and active market for assets and liabilities and reliable data regarding market rates for similar instruments. including expectations of future events that are believed to be reasonable under the circumstances. 2004. v) fair value of the net assets acquired in a business combination (note 8). The fair value of the remaining financial assets and liabilities are not significantly different from their carrying values since assets and liabilities are either short term in nature or in the case of customer advances and deposits.14 dated September 24. Estimates and judgments are continually evaluated and are based on historical experience.

320.467.448) 743. Continuing operations Corporate Finance December 31.566.268 24.825.499.305.119.223 (3. 2010 Total income .306 (2.640) (43.net Total expenses Net income (loss) 208. retirement benefit plans directors.320.826.746 (2. 2010 All assets.441.325.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.361.161.140.513. Banking transactions with the related parties are executed substantially on the same terms.net Total expenses Net income (21.375.20% 72.153) 13. as those prevailing at the time of comparable transactions with unrelated parties and do not involve more than a normal risk.927) 1.20% 11.404) 13.347 2. 2009 Total income .503.503.413 (5.772 (3.931) 3.60% 6.576) (17.419) (1.661. it acts as security agent for various Term Finance Certificates it arranges and distributes on behalf of its customers.263) (167.927) 1.018 24.499.413 4.018 (8.70% 65.897) 1.141) (8.778.985.977.038. 45 RELATED PARTY TRANSACTIONS The Group has related party relationship with group companies. Note: The above table is based on best estimates / assumptions.835.640) (1.20% 7.22% - 113.758 (17.916) (95.807 13. partners or in case of private companies as members are given in note 13.765 (296.082) (48.523.122.693.057 9.893) 71.707.20% 7.235) (250.115 (5.778) (250.803.019 (3.405.513.758 (11.742 (1.872 6.359.772 (8.391.139) (167.220) - 91.970 (6.031 7.747) 431.726 1. including mark-up rates and collateral.072.893.90% 189.139) (23.280.566 (48.657.316) 126. Details of advances to the companies or firms in which the directors of the Group are interested as directors.404) * These percentages have been computed based on closing assets / liability figure instead of average balances.823.707.298 9.804.592 13.015) 11.623.990.592 3.018 2.812 670.280.60% 6.90% - 189.842.822) 835. off balance sheet items and items of income and expense are distributed in primary segments in accordance with the core functions performed by the business groups.126) 12.431 (8. However.860.899.609 Total Discontinued operations Asset Management Total Segment assets (Gross) Segment non performing loans Segment provision required against loans Segment liabilities Segment return on assets (ROA) (%) Segment cost of funds (%) December 31.20% 4.053) 12.068 63.218 4.823.373 189.960 286.043 - 7.069.063. key management personnel and entities over which the directors or key management personnel are able to exercise significant influence.70% 132.466) 829.899.627.563 286.645) (176.366.924 10.072.988) 762.245) (6.815.20% 4.356) 6.058 13.304) Trading & Sales Retail Banking Commercial Banking Rupees '00 3.009.880 (58. . liabilities. 44 TRUST ACTIVITIES The Group is not engaged in any significant trust activities.043 Segment assets (Gross) Segment non performing loans Segment provision required against loans Segment liabilities Segment return on assets (ROA) (%) * Segment cost of funds (%) * - 51.299) 55.8 to these consolidated financial statements.042 (81.115 (796.009.788. except transaction with directors and key management personnel that are as per their terms of employment.819) (30.581 727.552 11.970 (6.985.

160) 27.181.168 2.528 42.448 399 249.113) 802. 2010 Contributions to and accruals in respect of retirement benefit plans are made in accordance with the actuarial valuations / terms of contribution plan (refer notes 7.217 .11.478) 646. Remuneration to executives (including key management personnel) of the Group is disclosed in note 40 to these consolidated financial statements. including salaries and other short-term employee benefits and postemployment benefits is given below.833 (597.295 (686.576 6.768.969 77.421.905 33.417.448 (393.645.384) 61.132) 515.261) 159. Such remuneration is determined in accordance with the terms of their employment.750 (2.741) 802.000 (148.979 27.242) 350.412 610.085 227.414.168 802.298.174.576 - - - 731.231) 33.365 350.367 958 82.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.712 (236.456 71.485 662.367 2.081 411. 2010 Directors and key management personnel Deposits Balance at the beginning of the year Placements during the year Withdrawals during the year Amalgamation Balance at end of the year Advances Balance at the beginning of the year Disbursement during the year Repayment during the year Amalgamation Balance at end of the year Retirement Benefit Plans Associate Rupees '000 Group Companies Strategic Investments 39.270) 2.735 (1.859) 479 2.342 (70.564 72.237) 399 1.892) 17.939 (249.721 (569.181.558 Annual Report 2010 Faysal Bank 216 .558 1.014.473 50.556 1.195 Directors and key management personnel Deposits Balance at the beginning of the year Placements during the year Withdrawals during the year Balance at end of the year Advances Balance at the beginning of the year Disbursement during the year Repayment during the year Balance at end of the year Retirement Benefit Plans Associate Rupees '000 Group Companies Strategic Investments 21.678 (83.528 13.888 770.485 148.583 (44.788 2009 - 2. Remuneration of key management personnel.632.807 (38.014.044) 39.085 71.003 (1. 38 and 39 to these financial statements for the details of the plans).

598 2009 Directors and key management personnel Nostro balances with group companies Shares / Units purchased during the year Shares / Units sold during the year Profit paid / accrued Profit return / earned Dividend income from subsidiary Remuneration of key management personnel .Salaries and other short-term employee benefits .954 2. 8 dated June 27. .540.754.780 25. The Group has adopted Standardised Approach for Credit and Market Risk and Basic Indicator Approach for Operational Risk. 2010 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 closing balance.1 CAPITAL .ASSESSMENT AND ADEQUACY BASEL II SPECIFIC Capital Management The objective of Capital Management is to ensure the Group's ability to operate as a going concern by maintaining appropriate capital base in line with minimum regulatory requirements. 46 46.215 2.444 156.010 9.766 2.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.322 Retirement Benefit Plans 49.230 226 - Group Companies Strategic Investments 23.062 119.574 113.Salaries and other short-term employee benefits .238 1. 2010 Directors and key management personnel Nostro balances with group companies Shares / Units purchased during the year Shares / Units sold during the year Profit paid / accrued Profit return / earned Dividend income from subsidiary Remuneration of key management personnel .406 Retirement Benefit Plans Associate Rupees '000 Associate Rupees '000 Group Companies Strategic Investments 39 - 254 2. The same are accounted for through the movement presented above.628 - 56.668 155.727.468 356 - - Disposal of vehicles to key management personnel and other executives is disclosed in note 14.Post-employment benefits Contribution to staff retirement benefits Guarantees issued favoring related parties or on their behalf 3.330 134. The Group has implemented and is operating under Basel II capital adequacy framework that applies to all Banks and DFIs as prescribed under SBP BSD Circular No.115 11 - 16.Post-employment benefits Contribution to staff retirement benefits 2.4 to these financial statements.376.000 1.753 6. 2006 and amendments made by SBP through circulars.698 2.686 120.201 1.839 257.

Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. Vide BSD Circular No. market and operational risks associated with each asset and counterparty. Tier 2 capital: qualifying subordinated loan capital. The required minimum Capital Adequacy Ratio (CAR). Book value of goodwill. calculated in accordance with the State Bank's guidelines on capital adequacy is as follows:- Annual Report 2010 Faysal Bank 218 .1 are deducted from Tier 1 and Tier 2 capital to arrive at the regulatory capital. The State Bank of Pakistan requires each Bank or Banking group to: (a) hold the minimum level of the paid up capital and (b) maintain a ratio of total regulatory capital to the risk-weighted assets at or above the required minimum level of 10%. as adopted by the State Bank of Pakistan. with some adjustments to reflect the more contingent nature of the potential losses. taking into account any eligible collateral or guarantees. other intangible assets including software. general provisions and unrealized gains arising on the fair valuation of equity instruments held as available for sale. retained earnings and reserves created by appropriations of retained earnings. The risk weighted assets to capital ratio. The required information is submitted to the State Bank of Pakistan on a quarterly basis. safeguards the Goup’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders.219 . are deducted from Tier 1 capital whereas Investments in associates and subsidiary as disclosed in Note 12. employing techniques based on the guidelines developed by the Basel Committee. the State Bank of Pakistan has prescribed a minimum paid-up capital requirement (net of losses) of Rs 7 billion for all banks to be achieved by December 31. and Tier 3 capital: the Group has no eligible Tier 3 capital. 07 of 2009. The Group’s regulatory capital is divided into three tiers: a) b) c) Tier 1 capital: share capital. The Group will continue to maintain the required regulatory capital either through its risk management strategies or by increasing the capital requirements in line with the business and capital needs. The risk-weighted assets are measured by means of a hierarchy of five risk weights classified according to the nature of and reflecting an estimate of credit. brand value etc. 2010 The Group ensures that it: a) b) c) complies with the capital requirements set by the State Bank of Pakistan. and maintains a strong capital base to support the development of its business. on consolidated as well as on standalone basis is 10%. A similar treatment is adopted for off balance sheet exposure. Capital adequacy is regularly monitored by the Group's management. 2010.

094 28.960 12.439 6.130 .194 230.588 13.500 1.500 249.911 4.354.6 Shortfall / relaxation in provision Deficit on account of revaluation of investments held in AFS category Other deductions (represents 50% of the majority or significant minority interest in subsidiaries and associates) Total Tier I Capital Tier II Capital Subordinated debt (upto 50% of total Tier 1 Capital) General provisions subject to 1.786 22.992.174.126 4.901 740.573 4.309.030.837.804 799.25% of total Risk Weighted Assets Revaluation reserve (upto 45%) Less Other deductions (represents 50% of the majority or significant minority interest in subsidiaries and associates) Total Tier II Capital Eligible Tier III Capital Total Regulatory Capital Base 3.824.170 Less: Book value of intangible assets 46.309 11.967 1.801.460 22.790.918 336.134.491 40.286 11.446.180 73.367 40.133 650. 2010 Note 46.999.252.958.090.365 18.273 16.027 1.760.456 226.801.126 2.253 7.360 374.056 1.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.719 75.092.197.2 Capital Structure Tier I Capital Share Capital Proposed shares to be issued on amalgamation Reserves Unappropriated profits Non controlling interest 2010 Rs ‘000 2009 Rs ‘000 7.688 1.

387.683.871 3.300 83.4 and 13.920 1.346 Risk Weighted Assets 2009 2.440 1.460.477 145.56% As more fully disclosed in notes 12.4.617 7. the portion of Deferred Tax Liabilities (DTL) created due to such intangible assets would not be netted against Deferred Tax Assets (DTA) for calculation of CAR.111.304.996.542 433.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. Whereas.370 1.542 54.690 692.6 Capital Adequacy Ratio Total eligible regulatory capital held Total risk weighted assets Capital adequacy ratio 46.221 .204.04% 12. as appear under Tier-I capital.633 2010 1. an amount of Rs 740.700 18.3.396 12.2 18.999.336 2.5 46.927.562. The benefit of FSV allowed by the SBP has not been deducted from Tier I capital of the Group based on clarification issued by the SBP through its letter BSD/BAI-1/220/452/2009 dated April 27.816 30.161 306.120.623.023 128.137 4.897 6.603 2009 27.3.205.430 8. would be limited to the extent of the amount of the intangible recognised as negative goodwill / intangible gain.846 2. The SBP through its letter BPRD (R&P-02)/625-99/2011/3744 dated March 28.587 8.698 5.471 1. In accordance with the Revised Regulatory Capital Framework under Basel II issued by the SBP.768 8.245.923.023 10.208 782.235.299. the Group is required to deduct from Tier I Capital any shortfall in provisions required against classified assets irrespective of any relaxation allowed by the SBP.194 million has been deducted from the Group's Tier I Capital.544.451 46. 2011 has advised the Holding company that the deduction of intangible assets.712 16.254 5.298.837 10.450.170 505.282.338.885.804 12.662 794.452 87. 46.504.120.2 to these financial statements.368 103.851.3.648 14.048.422 4.6 Annual Report 2010 Faysal Bank 220 .4 46.645 8.787 354.521 78.1 of the SBP Basel II guidelines.345.356 22.177 892.714 438. Accordingly.985.056.456.3 Capital Adequacy Note Capital Requirements 2010 Credit Risk Public sector enterprise Financial institution Corporate Retail Past due loans Other Total Credit Risk Market Risk Capital requirement for portfolios subject to standardized approach Interest rate risk Equity position risk Foreign exchange risk Total Market Risk Operational Risk Capital requirement for operational risks Total Operational Risk 2.208 533.949.768.130 180.573 17.251 12.456.569.336. the SBP has given a relaxation to the Group in maintaining provision against outstanding facilities extended to Dewan Mushtaq Group and Azgard Nine Group. 12.092.251 103. 2010 46.455 2009 2010 Rupees in '000 223.659 820. 2009 in accordance with section 1.200 211.663 180.079 5.458.

is appointed and authorized by the Board to assist the BOD in design. comprising of 4 directors including the President & CEO. The Board Risk Management Committee (BRMC). While Corporate. The Group has a dynamic risk management framework defined by the Board of Directors (BOD) and implemented through Risk Management Group (RMG). Commercial Risk Management. The framework includes: Clearly defined risk management policies. NPL status and monitoring of internal credit rating models including model documentation and the coordination of analytics within the Enterprise Risk Management functionalities. regular evaluation and timely updation of the Risk Management framework. measurement. Commercial and Retail business segments. Mechanism for ongoing review of credit policies & procedures and risk exposures. properly documented. monitoring. disbursement and post disbursement monitoring aspects of the credit portfolio. The Risk Management framework endeavours to be a comprehensive and evolving guideline to cater to changing business dynamics. Commercial and Retail SME & Agri Risk Management involve a customer-based risk assessment under a pre-defined credit approval process. The Risk Management architecture is further fostered by Enterprise Risk Management. RMG has separate Risk functions for Credit Risk Management: Corporate Risk Management. mitigate and approve risk on a portfolio level. Enterprise Risk Management Committee (ERMC) and Assets & Liabilities Committee (ALCO) to supervise risk management activities within their respective scopes. and to closely align its functions with Business. - The primary objective of this architecture is to inculcate risk management into the organization flows to ensure that risks are accurately identified & assessed. integration and management of different financial and non-financial risks that are constantly evolving as business activities change in response to concurrent internal and external developments. Business Units. Retail Risk Management operates on a program lending approach to manage. which ensures that individuals responsible for risk approval are independent from risk taking units i. Credit Administration Department looks after the security. Credit Administration and Risk Policy functions. In order to have an effective and efficient risk assessment. BRMC has further authorized management committees such as Country Credit Committee (CCC). 2010 47 RISK MANAGEMENT The variety of business activities undertaken by the Group requires effective identification. approved. and adequately monitored & managed in order to enhance long term earnings and to protect the interests of the Group’s depositors and shareholders.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. Risk Policy unit ensures formulation of synchronized and adhesive polices in conjunction with the Group's strategy and practices while adhering to the local and regulatory guidelines within Corporate. This also encompasses detailed review of macro risk factors. The Enterprise Risk Management function is responsible for managing and controlling Market. Operational and Liquidity Risks at an enterprise level and maintaining regulatory capital requirements of the Group.e. in the form of a separate risk management department. . Retail SME & Agri Risk Management and Retail Risk Management. Well constituted organizational structure. loan documentation.

priced (in line with market practices) and documented. Risk concentration may arise where total exposure to a particular group or industry is high in relation to shareholders' equity. The Group’s credit risk philosophy is based on the Group’s overall business strategy / direction as established by the Board. The Group deals with many different types of borrowers and borrowing structures across the wholesale and retail segments. counterparty group limits and industry concentration limits are also established. where appropriate. also ensuring that the credit commitment is appropriately structured.223 .Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. or group of connected clients – to identify and manage effectively all significant credit risk exposures to a single customer connection within an individual business and. fully disclosed to the approving authorities and appropriately rated. counterparty limits. Annual Report 2010 Faysal Bank 222 .1 Segment by class of business Portfolio management is an integral part of the Group's credit process. the credit evaluation also includes risk rating system to evaluate risk rating of all customers which is then monitored on a portfolio basis to gauge the Group’s credit portfolio quality. The Group has set up a portfolio strategy and planning function with an aim to monitor the overall risk and to avoid high exposure to a single group or industry.1. industry and transaction analysis. monitored and assessed in the light of changing counterparty and market conditions. critically scrutinize and sanction financing. The Group is committed to the appropriate level of due diligence to ensure that credit risks have been properly analyzed. The Group has well-defined credit approval and review processes under which senior officers (with the inclusion of Risk Management’s consent) with the requisite credit background. across other business segments. in order to quantify risks of counterparty. 2010 47. Besides financial. 47. This credit risk can arise from both direct lending activities as well as contingent liabilities.1 Credit Risk Credit risk is the identification of probability that a counterparty will cause a financial loss to the Group due to its inability or unwillingness to meet its contractual obligation. To avoid risk concentration. The Group manages customer credit risk exposures within appropriate limits to ensure that it does not provide a disproportionate level of credit to a single customer or group of connected clients. The Group follows aggregation principles – summing of credit risk limits to the same customer.

deposits.65 13.438.919 2.03 3.48 2.628 968.993.660.112 3.056.18 4.60 5.04 31.77 0.500 1.06 1.01 0.30 0.536 1.14 0.878 19.11 0.27 0.188.885 220.134 5.148 1.29 0.55 34.032.610 109.98 17.85 11.07 1.22 0.19 0.940 113.749 244.159.08 30.285.778 4.30 1.760 39.925.840 14.84 11.460.850.257 2.882 329.972.901 4.89 0.61 1.288.678 59.26 2.619 255.22 2.195.124 6.469.411 6.447 2.808.29 19.167 224.492.44 3.70 0.65 0.95 9.218 491.35 3.824 2.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.483 474.657.407.971 1.06 1.33 0.315.398 366.87 0.980.24 0.787.612 251.44 8.318.164 442.145 119.032 5.48 4.00 Contingencies and Commitments Rupees '000 Percent 2.497 123.229 41. Road and Air Mining and Quarrying Others 8.812 7.032.840 6.95 3.977.579.54 0.270 5.40 0.50 0.787 12.308.382 806.827 98.00 Advances (Gross) Rupees '000 Chemical and Pharmaceuticals Agriculture Textile Cement Sugar Construction Ready made garments Footwear and leather garments Automobile and transportation equipment Financial Oil Refining / Marketing Distribution / Trading Electronics and electrical appliances Production and transmission of energy Iron and Steel Food and Allied Synthetic and Rayon Food Industries Paper and Board Individuals Telecommunication Transportation.27 6.503 270.772 369.95 0.468 38.81 0.08 26.53 100.41 0.339.057.613.016.508 12.470 Percent 8.40 100.661 33.893 3.510 7.59 31.80 0.924 429. and contingencies and commitments is given below: Advances (Gross) Rupees '000 Chemical and Pharmaceuticals Agriculture Textile Cement Sugar Construction Ready made garments Footwear and leather garments Automobile and transportation equipment Financial Oil Refining / Marketing Distribution / Trading Electronics and electrical appliances Production and transmission of energy Iron and Steel Food and Allied Synthetic and Rayon Food Industries Paper and Board Individuals Telecommunication Transportation.02 1.134 1.00 2010 Deposits Contingencies and Commitments Rupees '000 Percent 1.587 2.561.274.123.076.548 4.36 3.671 3.09 2.079 249.944 914.022 259.884 788.798.445.334 1.05 2.00 Percent 4.68 0.39 0.629 831.06 7.453.291.48 0.045.22 13.876 785.35 0.712 75.158 389.52 0.214 334.00 .526 1.850.426.03 45.49 1.231 213.946 3.450 3.89 17.244 89.745 1.043.645.83 0.407 205.23 0.265 595.963 157.92 0.204 2009 Deposits Rupees '000 5.121. 2010 Segmental information in respect of the class of business and geographical distribution of advances.889 364.083 28.38 4.18 3.377.287.366.30 0. Road and Air Mining and Quarrying Others 10.086 1.22 3.369 4.579 269.823 3.36 0.061.649 5.21 2.235.364 26.493.430 6.111 164.32 8.319 224.37 3.035 2.736 800.321.005 3.404 905.507 605.30 12.569.287 288.38 0.02 0.103 33.62 0.15 100.768 151.643 1.203 2.14 4.13 0.01 0.20 0.882 544.42 100.91 0.906 2.01 10.405.38 0.076 107.02 0.384.18 0.591 29.103 15.46 2.18 2.803 65.571 36.93 0.455.873 54.39 3.302 37.810 2.342 3.88 0.859 279.533 8.683 Percent 2.07 3.77 0.42 3.22 2.50 15.08 0.672 1.302 13.409 Percent 7.985 195.50 100.648 4.42 12.206.48 4.973.13 0.016 4.96 0.143 854.881.967.03 30.08 0.805 1.474.298 150.962.91 0.13 0.86 0.558 516.032 16.37 0.118 2.378.344 1.41 1.778 1.48 3.403.375 3.911 77.275 1.52 0.03 6.614.10 100.269.41 0.69 1.436 2.855 89.971 104.073 1.735 1.183 119.991 903.64 0.00 4.50 0.41 2.00 Rupees '000 4.347.18 0.027 413.47 0.674.17 0.501.88 0.67 0.132 895.602 149.951.62 0.413.12 0.689.409 76.152 46.09 1.493 30.477.121 1.560.096.

563 131.683 Percent 7.992 7.490 36.532 75.081.452 561.2 Segment by sector Advances (Gross) Rupees '000 Public / Government Private 9.496 32.163.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.560 992 89.967 167.871 1.105 152.304.405.091.450 7.892 372.914 20.310.197.093 114.630 125.699.590 123.179.00 Contingencies and Commitments Rupees '000 Percent 3.377.472 90.663 584.339 124.483 5.982 150.54 93.97 92.265.178 1.172 826.630 78.96 76.31 91.233 623.067 775.621 18.409 Percent 6.296.758 Annual Report 2010 Faysal Bank 224 .604 3.59 100.486 5.223.200 41.947 145.469.109 56.925 17.206.577 420.922 62.245 151.35 90.918 82.859.596 26.299 1.318.005.267 2.893 2.290 7.076.336 Chemical and Pharmaceuticals Agriculture Textile Cement Sugar Construction Ready Made Garments Footwear and leather garments Automobile and Transport Equipment Financial Oil Refining / Marketing Distribution / Trading Electronics and electrical appliances Production and transmission of energy Iron and Steel Food and Allied Synthetic and Rayon Food and Industry Paper and Board Transportation.640 80.00 2010 Deposits Rupees '000 16.445 24.240 44.843 3.796 56.687 305.310.630 1.00 Advances (Gross) Rupees '000 Public / Government Private 9.629.250 38.470 Percent 9.745 1.944.384.377.186.617 6.095.46 100.344 195.647 77.777 372.448 6.69 100.582 168.204 2009 Deposits Rupees '000 9.3 Details of non-performing advances and specific provisions by class of business segment 2010 Classified Advances Specific Classified Provision Advances Held Rupees '000 844.495 529.068.221 502.250 933.03 100.380 236.671.304.896.931.928 89.749 105.822 66.41 92.786 23.00 Contingencies and Commitments Rupees '000 Percent 6.510 85.260 148. 2010 47.280.159.283 14.529 134.630 2.165 995.021 4.229 5.485.030 2009 Specific Provision Held 727.842 58.351 1.220.664.04 100.00 Percent 8.1.239 1.505 62.642 560.000 372.602 1.707.377 10.389 439.00 47.1.542 98.225 .547 648.65 100.510 23.014 200.013.920 273.061.860 179.164 141.000 372. Road and Air Individuals Others (including manufacturing and real estate) 1.545 58.315.239 2.

377.067 10.049 Contingencies and commitments 26.1. .664.4 Details of non-performing advances and specific provisions by sector Classified Advances Public / Government Private 24.671. 2.919 Contingencies and commitments 41. Claims on corporate constitute 34.75%) exposure pertains to claims categorized as retail portfolio.792. 2010 47.89% (2009: 10. claims on corporate (excluding equity exposure) and claims categorized as retail portfolio.318. under Basel II.049 12. the portfolio has been divided into claims on Public Sector Entities in Pakistan (PSEs).893.043 Total Net assets assets employed employed Rupees '000 180.53% (2009: 4.552 829.04% (2009: 37.69%) represents claims on PSEs and 7.37%) of the total exposure.758 2010 Specific Classified Provision Advances Held Rupees '000 17.320.707.510 16.163.030 17.634.067 10.453 180.664.336 6.453 12.030 2009 Specific Provision Held 6. According to the regulatory statement submitted under the Standardised Approach.919 16.439.850 267.1.336 47.634.318.850 2009 Profit before taxation Pakistan Asia Pacific (including South Asia) Europe United States of America and Canada Middle East Others 1.450 41.2 Credit Risk: General disclosures Basel II specific The Group has adopted the Standardised Approach.758 24.439.043 1.893.163.552 Total Net assets assets employed employed Rupees '000 267.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.5 Geographical segment analysis 2010 Profit before taxation Pakistan Asia Pacific (including South Asia) Europe United States of America and Canada Middle East Others 829.707.320.510 26.450 47.377.671.792.

Standard and Poor's 3 - Exposures Corporate Banks Sovereigns SMEs Securitizations PACRA 3 3 - JCR-VIS 3 3 - Moody's 3 - Fitch 3 - SBP indicative mapping process as instructed in SBP circular "Minimum Capital Requirements for Banks and DFIs" (indicated in table below) was used to map alphanumeric ratings of PACRA. Fitch and Moody's are used. External Credit Assessment Institutions (ECAIs) recommended by the State Bank of Pakistan (SBP).Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.and above A+ to ABBB+ to BBBBB+ to BBB+ to BCCC+ & Below S&P AA. 2010 are as follows.6 7 PACRA AA.1 Credit Risk: Disclosures for portfolio subject to Standardised Approach For domestic claims. Foreign exposures not rated by any of the aforementioned rating agencies were categorized as unrated. namely Pakistan Credit Rating Agency Limited (PACRA) and JCR-VIS Credit Rating Company Limited (JCR-VIS) are used.227 . JCR-VIS. Fitch Ratings.and above A+ to ABBB+ to BBBBB+ to BBB+ to BCCC+ & Below Moody’s Aa3 and above A1 to A3 Baa1 to Baa3 Ba1 to Ba3 B1 to B3 Caa1 & Below Fitch AA. ratings assigned by Standard and Poor's. SBP Rating 1 2 3 4 5 6 ECA Scores 0. Types of exposure for which each agency is used in the year ended December 31.1 2 3 4 5.2. For claims on foreign entities. to SBP rating grades. Moody's. S&P's. and numeric scores of ECAs. 2010 47.and above A+ to ABBB+ to BBBBB+ to BBB+ to BCCC+ & Below JCR-VIS AA.and above A+ to ABBB+ to BBBBB+ to BBB+ to BCCC+ & Below Annual Report 2010 Faysal Bank 226 .

3 Unrated 1.842 1.488 8.894 Total Collaterals used by the Group for Credit Risk Mitigation (CRM) were as follows: .743.442.682.997.358 Deduction CRM 4. .952 6.159.038.184 4.814. .041 278.419. amount of Bank's/DFI's outstandings (rated & unrated ) in each risk bucket as well as those that are deducted are as follows.391 647.817.076.763 77.330 1.054.6 Unrated 1 2.678 12.064.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.Corporate 3.693 14.425.347 20.997.419.678 12.244.504.Government securities .176 65.743.041 275.2.496 579.3 Market Risk It is the risk that the value of the On and Off-balance sheet positions of the Group will be adversely affected by movements in market rates or prices such as interest rates.536 248.917.4 5. 47.633 7.Public Sector Equities .3 4.028 7.682.809.464 Net Amount .289 7.248 1. Government of Pakistan SBP Retail Residential Mortgage Past Dues Loans Past Dues against Residential Mortgage Unlisted Equity Investment Listed Equity Operating Fixed Assets Other Assets 77.809.Cash and Cash Equivalent .025 181.640 3.699 3.928 64.Cash margin .372 8.5 Unrated 8.259 104.011 1.064.194.372 1 2 3.429 142.163 246.259.387.171 350.071 7. Market risks arise generally from trading activities.347 24. equity prices and/or commodity prices resulting in a loss to earnings and capital.072.836.054.668 5.025 181.090.496 579.763 .628 4.544 4.171 350.028 8.693 14.628 4.072.952 6.234 254.730 142.Shares on KSE main index.038.Banks - Sovereigns etc.536 253.836.054. All such instruments and transactions are exposed to general and specific market movements.083 4.530. open foreign currency positions.548 7. Exposures Rating Category Amount Outstanding 3.582.242 7.054.343 1.083 4. and other products. holding common equity.Guarantees of Government and Banks. 2010 For exposure amounts after risk mitigation subject to the standardized approach.

It refers to the impact of adverse movements in currency exchange rates on the value of open foreign currency positions.031. 47. gap.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. Changes in currency rates affect the value of assets and liabilities denominated in foreign currencies and may affect revenues from foreign exchange dealing.030. Price risk associated with equities could be systematic or unsystematic.181.049 Pakistan rupee United States dollar Great Britain pound Japanese yen Euro Other currencies 174. while the unsystematic risk is associated with price volatility that is determined by the specific characteristics of the investee company. in its trading book. which are defined as follows: 47.893.526. dealer and product limits are also in place in accordance with the Group’s approved Standard Operating Procedures to limit risk and concentration to the acceptable tolerance levels.207 5.825 158.804.582.792.729 2. there are internal limits set for trading positions. liabilities and trading activities.639 1.551) 2.359 16. Treasury Front Office.011. Market Risk Management and Treasury Middle Office perform market risk management activities within the Group.829 5.269 180.440 1.700 1.236 2. The Group undertakes currency risk mostly to support its trade services and maintains overall foreign exchange risk position to the extent of statutory Foreign Exchange Exposure Limit (FEEL) prescribed by SBP.4. 2010 The Group seeks to mitigate market risk by employing strategies that correlate price.4 Foreign Exchange Risk / Currency Risk Foreign exchange risk / currency risk is the current or prospective risk to earnings and capital arising from adverse movements in currency exchange rates.115.439.175) Net currency exposure 16.261 12.043.5 Equity position risk Equity position risk is the risk arising from unfavourable fluctuations in prices of shares in which the Group carries long and/or short positions.588. as well as stop loss limits.1 Currency Risk Assets Liabilities 2010 Off-balance sheet items Rupees '000 (5.404 47.672 289.315 - Net currency exposure 12. The Group has Enterprise Risk Management Committee which is responsible for reviewing and approving market risk policies and strategies.967.197 132.229 .956) 525.787 2.634.571 6.170. The market risk is further divided into various sub-categories.806 (234) 282 268 1. rate and spread movements of its earning assets.127 (10.137 13. Annual Report 2010 Faysal Bank 228 .116 897.457.453 160.659 18.615 1.850 231.574 629. Foreign Exchange Risk exposures are managed by matching future maturities.275 1.106) 1. Exposure limits such as counterparty. In addition.914 15.422 1.270.919 Pakistan rupee United States dollar Great Britain pound Japanese yen Euro Other currencies 252.469 8 167. Systematic risk is due to sensitivity of portfolio’s value to changes in overall level of equity prices.056.436 729.027 238 250.874 1.074 1.507 1. net open position.666 14.276.899. It is risk to earnings or capital that results from adverse changes in the value of equity related portfolios of the Group.931 2009 Assets Liabilities Off-balance sheet items Rupees '000 (1.759 8.831 (2.332.860.772 267.729.876.705 31 471. The Group's equity position is governed by SBP limits for overall investment and per scrip exposure.

730.685.568) 5.060.582.145.544 (11.690 860.203 - 1.859 2.955) 513.097 18.726 13.708.892.06 14.366 1.215.198 73.042.094.802.) Off-balance sheet gap - (59.625.375 16.582.859 158.727.018.164.239 - Total Yield / Interest Risk Sensitivity Gap Cumulative Yield / Interest Risk Sensitivity Gap .955) (59.768 249.) - - - - - - - - - - Forward borrowings (including call borrowing.283 3. etc.863.508.215.549 133.126.70 8.713 61.841.324.576 485.899 - 15.506.877.881 25.364 2.223.694 3.131 184.818 34.547.726 175.204 4.794.807.697 6.587.386 On-balance sheet gap 32.924 5.218.126.911 23.06 17.247 27.899 18.639.386 17.249 (11.706.344.441.460. 2010 47.568) 1.137) 27.056.777.904 195.521 (59.097.863 1.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements 2010 Exposed to Yield / Interest risk Effective Yield / Interest rate Total Upto one month Rupees in '000 Over one month to three months Over three months to six months Over six months to one year Over one year to two years Over two years to three years Over three years to five years Over five years to ten years Over ten years Non-interest bearing financial instruments For the year ended December 31.833 2.537.649 8.811 47.746 3.899 939.727.060 676.395 19.047.970.779.566 25.919 3.749.970. repurchase agreement borrowing.635.520.480 16.594 939.632 78.681 2.920 35.240 1.381 3.312.009 25.818 (9.335 1.768 38.215 1.315.890 - 939.381.59 34.265.217 19.683.899 12.265 3.411 2.421.859 9.00 12.236.160 39.340 939.780.921.800 4.921.577.218.477.707.498 449.904.076 42.274 7.597 (19. commitments to extend credit. etc. repurchase agreement lending.504.633 2.591.968 30.534 250.329.798 4.657.224.448 4.520.198.330 2.523 1.690 10.654 - Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities 12.976 2.020 2.594 17.780.595.838.649 933.735 5.537.189 17.6 Mismatch of Interest Rate Sensitive Assets and Liabilities / Yield / Interest Rate Risk On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets 10.986.625.909 7.977) 214.501 484.191 49.417.315.013 2.392.008 57.582.615 98.334 2.879 20.749.601.909 86.216) Off-balance sheet financial instruments Forward Lending (including call lending.272 3.896 (1.698.944.955) 49.595.833.395 1.127.769 6.428.971 4.520.

153 On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets 8.294 1.342 (2.740.564.498.000) 2.432.427.464.683 999.871.461 1.566 2.915 20.468 9.83 8.440.536.599 12.752 775.944 1.698 200 472.631.330 1.096 30.753 10.545.342 391.684 2.451 9.712.305 147.533.226 (47.938 391.757.227.135.202 508.210.078 (39.712 1.459.395.948.577 10.157.719.650.346.491.136 21.786.886.703 16.451. 2010 Mismatch of Interest Rate Sensitive Assets and Liabilities / Yield / Interest Rate Risk Annual Report 2010 Faysal Bank 230 .245.681.811 391.650.425 9.210.583 5.178.507 (6.755.786.427.172 2.680.766 123.87 8.546 20.352.242.175.342 6.164. repurchase agreement borrowing.826 56.196 8.335.182 (1.227.576 25.209 4.214) 4.02 34.283) Off-balance sheet financial instruments Forward Lending (including call lending.305 4.550 22. commitments to extend credit.470 1.342 12.795 15.000) 2.561.474) (49.210.150 147.000 419. repurchase agreement lending.465.) Off-balance sheet gap - Total Yield / Interest Risk Sensitivity Gap Cumulative Yield / Interest Risk Sensitivity Gap .444 89.005.410 - Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities On-balance sheet gap 6.) Forward borrowings (including call borrowing.101.153.453.242 455.941 166.001 3.352.112.346.800.985.760 4.176.231 12.212 391. etc.451 21.29 13.396) 37.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements 2009 Exposed to Yield / Interest risk Effective Yield / Interest rate Total Upto one month Over one month to three months Rupees in '000 Over three months to six months Over six months to one year Over one year to two years Over two years to three years Over three years to five years Over five years to ten years Over ten years Non-interest bearing financial instruments For the year ended December 31.182 11.684 892.212 7.202 508.447 91.699 1.948.142.474) 31.795 23.393.242 4.264 473.214.81 15.655.365 9.870 83.571 37.801 63.332 2.386 1.175.757.019 218.066 1.059.147.279 1.465.795 175.177 46.806.376 36.66 12.183 999.591 3.531.741 6.561.032.393.757 149.795 8.584 511. etc.224 1.964.070 49.533.582 560.233.200 20.991 14.710 40.819.673 5.435 305.387.018 1.709.408.769 2.474) 9.938 4.711.210.096 167.402.078 8.471 30.841 3.469.542.131 4.000 (49.748 1.000 (2.017.

2 47. Maintaining a portfolio of highly marketable assets that can easily be liquidated as protection against any unforeseen interruption to cash flow. geography.1 Yield curve risk is the risk that a financial instrument will suffer either a decline in income or capital because future changes in prevailing interest rates impact assets more or less than they impact liabilities. and Managing the liabilities both on a contractual and behavioural basis primarily by matching the maturity profiles of assets and liabilities.7 differences between the timing of rate changes and the timing of cash flows (re-pricing risk). The component of interest rate risk arising from differences in the timing of asset and liability. It is inherent primarily to the banking book mainly through advances and deposits portfolio. Major sources of Interest rate risk are. and to replace funds when they are withdrawn. The Group’s liquidity risk management process. The Interest rate risk of the Group arises when there is a mismatch between contractual maturities. 2010 47. 47. includes: Day-to-day funding. Monitoring of next three months liquidity target. Managing the concentration and profile of debt maturities. Hence. and interest-related options embedded in Group's products (options risk). which are subject to interest rate adjustment within a specified period or re-pricing of on.6. The Group maintains an active presence in money markets to enable this to happen. Monitoring balance sheet liquidity ratios against internal and regulatory requirements. as carried out within the Group and monitored by the management. managed by monitoring future cash flows to ensure that requirements can be met. Risk is addressed by the Asset and Liability Management Committee that reviews the interest rate dynamics at regular intervals and decides re-pricing of assets and liabilities to ensure that the spread of the Group remains at an acceptable level. provider.6. changing rate relationships among different yield curves effecting bank activities (basis risk). . i) ii) iii) iv) 47. Sources of liquidity are regularly reviewed to maintain a wide diversification by currency. available Internal liquidity. The Group’s Asset and Liability Management Committee manages the liquidity position on a continuous basis.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. This includes replenishment of funds as they mature or are borrowed by customers.6.and off-balance sheet assets and liabilities. changing rate relationships across the range of maturities (yield curve risk). liquidity excess / shortfall and estimated overall liquidity. - Monitoring and reporting of treasury and capital market maturities is done through monitoring of daily maturities. product and term.3 Liquidity Risk Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they fall due. monitoring and reporting takes the form of regular and periodic cash flow measurement and projections.

528 1.651 2.919 Over three Over five years to years to Over ten five years ten years years Assets Cash and balances with treasury banks * Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets .924 5.498 7.674 3.761 Liabilities Bills payable Borrowings Deposits and other accounts ** Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities .881 30.909 86.585 3.687) 485.684.207.378 145.270 10.169.946.210.920.212.859 34.216.324.270.726.634.265 22.727.005 7.714.300.340 3.872 145.131 158.074 582.289.754 (125.295 18.564 8.018.204 4.501 201.817.598 35. .234 (5.087 22.578.253 7.443.997.302.116 2.406 5.904 195.984 15.708.992.160 22.141 16.460.638 1.340 582.057 1.128 503.839 267.329.001.711.428.510 28.024.167 18.124 198.1 Maturities of Assets and Liabilities (based on contractual maturities) Total Rupees in '000 17.885.315.940 3.723 97.747.730 34.329.218.688 1.102 6.280 1.890 501.859 19.033 135.182 4.850.417.258.633.576 960 2.834 3.375 184.504 5.820 12.838.108) 75.890 43.232 34.610.595.924 5.198.635.435.727.608 25.698 20.439. ** As per SBP's requirement.876.709 109.041.017.035 928.017.505 26.575.351 16.959.706.519 5.056 291.243 276.847.196.190 21.826 21.877 20.919 (77.769 8.472 7.351.net Other liabilities 10.436 1.170 776.855.345.939 20.994.202 10.615.354.593) 17.518.719 16. the Group expects that these deposits will be maintained over a longer period without withdrawal. the entire balance held in saving deposit accounts is classified under the maturity band of upto one month.039.523 4.203 16.569 250. On the basis of history.400 2.000 1.708.221.487.863 1.292 699.483.547 Annual Report 2010 Faysal Bank 232 .182 3.316 4.000.428.801 133.807.218.452 238.479 16.931 16.395 13.986 676.808 16.638 3.945 838.720 1.082 48.968 30.909 16.233 Upto one month Over one month to three months Over three months to six months Over six months to one year Over one year to two years Over two years to three years 3.059.084 10.674.094 28.850 17.872.209.273 16.847.804.236 57.726.486.846 484.703 540. 2010 47.009 10.799.761 Net assets Share capital Proposed shares to be issued on amalgamation Reserves Unappropriated profit Surplus on revaluation of assets Non Controlling Interest * Included in cash and balances with treasury banks are the current and deposit accounts with the State Bank of Pakistan which are maintained to meet the Statutory Liquidity Reserve Requirements (SLR).082. Since such balances have no actual maturity the same are classified in the earliest maturity band of upto one month.401 754.261.593.net Other assets 4.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements 2010 For the year ended December 31.783 7.634.478.203 16.300.309.377 42.153.7.

479.427.104 9.673 5.803.595 1.102 14.214.445.642.147 1.459.451 34.322 1.838.667 4.964.447 91.226.309 12. the entire balance held in saving deposit accounts is classified under the maturity band of upto one month.806 10.404 12.482.716 180.537.732 520.837.991 109.723 5.300 147.627 9.683 999.323.757 149.893.483 10.938 Liabilities Bills payable Borrowings Deposits and other accounts ** Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities .136 21.183.424.365 4.755.263.000 1.net Other liabilities 1.070.210 2.911 4.834 1.021 3.351 85.223.991.024 9.926 486.354.333.593 73.549.373.493.849 1.920 Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of assets Non Controlling Interest 6.153 8.017.196 37.278.560.224 2.net Other assets 6.619.242.090. On the basis of history.180 11.461 287.453 8.556.429.333 250.577 10.602 10.982 4.807.755 31.263) 29.618.745.866.527.893.335.698 200 282.335 1.479.787.030.853.738 15.046 21.451 20.849 4.961 20.966.278.049 * Included in cash and balances with treasury banks are the current and deposit accounts with the State Bank of Pakistan which are maintained to meet the Statutory Liquidity Reserve Requirements (SLR).495 7.264.547.202 508.276 12.004 12.352 16.795 15.029.367 811.938 147.940.827 419.572 6.304 167.592 15.049 (71.469.905 1.340 485.666 89. .979.922.667) (10.826 56.960 775.069.435 400 909.183 200 1.931 Upto one month Over one month to three months Over three months to six months Over six months to one year Over one year to two years Over two years to three years Over three Over five years to years to Over ten five years ten years years Assets Cash and balances with treasury banks * Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets .636 2.578 14.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements 2009 For the year ended December 31.800 8.795 14. Since such balances have no actual maturity the same are classified in the earliest maturity band of upto one month.478 20.869 12.070 49.056 1.254 1.202 508.525.402 15.766 123.346.272 305.427.409.371 13. the Group expects that these deposits will be maintained over a longer period without withdrawal.617 1.862 8.009 2. 2010 Maturities of Assets and Liabilities (based on contractual maturities) Total Rupees in '000 8.408.001 2.465.861.465.577.155.724 472.185.930.227 10.575 37.899.252.367.526 2.850 52.991 400 867.839.787.200 6.049 2.920 511.605 4.144 11.792.209 998.446.985.264 473.879. ** As per SBP's requirement.446.

711.056 291.702 676.377 43.799.497 3.818. 2010 47.085.634.406 5.634.769 8.392 980.592 238.820) 484.103 Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities .204 4.376 16.218.387.719 (125.027.688 1.924 5.657) 485.909 86.803 28.093.516 30.859 34.919 (7.084 10.261.057 1.909 16.593.340 582.892.511.595.585 2.904 195.188 10.688.720 1.400 2.866 721.102 6.273 16.721 58.221.149.727.479.010 4.041.003.528 1.140 7.017.978.538.871.939 20.608 29.931 16.635.403.362 1.401 754.493.000 1.035 624.196 (8.610.280 1.992. 2010 Total Rupees in '000 17.958 51.870.218.074 8.395 13.450 20.428.709 32.303 960 2.021 22.074 2.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.202 10.561 1.744.509.270.820 12.300 1.198.376.739 16.984 15.121.258.694.378 145.633.569 250.131 158.615.872 145.351.7.net Other liabilities 2.994.968 38.651 31.706.029 Net assets Share capital Proposed shares to be issued on amalgamation Reserves Unappropriated profit Surplus on revaluation of assets Non Controlling Interest .266.946.082 48.597 22.017.557.039.253 7.919 7.274) 14.851 (4.161 22.945 838.708.751 7.128 503.216.292.726.315.671.599 25.232 34.674.923 1.354.135 699.009 15.047 17.358.486.046.920.170 777.304 Annual Report 2010 Faysal Bank 234 .961 (12.833.850 9.340 3.304.342 4.007 22.261.808 16.402 201.375 14.111.950.001.804.074 582.730 42.498 12.112 21.559 652.479 20.417.439.723 97.316 4.2 Maturities of Assets and Liabilities .703 540.309.721.376.116 2.360.131.863 29.Based on expected withdrawal pattern The following maturity analysis is presented as an additional disclosure to depict the maturities of assets and liabilities as determined by the Group's Asset and Liabilities Management Committee (ALCO) keeping in view the historical withdrawal pattern of deposits.348.539.277.064 26.210.364.859 19.850 10.698 20.188.235 Upto one month Over one month to three months Over three months to six months Over six months to one year Over one year to two years Over two years to three years 3.199 1.664.981 44.851 3.108) 75.662) Over three Over five years to years to Over ten five years ten years years Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets .881 23.094 28.876.460.167 18.135.351 16.182 4.329.243 276.235 514.207.877 5.504 5.483.020 198.727.net Other assets 1.544.475 501.801 133.189 3.407.059 102.839 267.345.

299 4.911 4.049 (18.278.893.866.153 13.409.527.795 14.858.505.964.023 1.826 56.782.401 487.202 508.047.208 998.938 9.478 22.304 167.371 13.673 10.806 10.340 485.591.835 1.575 1.862 8.853.482.577.413.196 33.595 1.560.365 4.136 25.109 3.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31.030.515 9.707 147.666 4.792.572 6.757.610.638.172.795 15.985.049 2.465.577 16.407.800 472.861.608 14.792.893.183.Based on expected withdrawal pattern 2009 Total Rupees in '000 8.465.818.263.842.753 16.723 5.451 34.278.227 10.453 3.495 7.517.029.678 228.309 12.641 541.367.367 811.917 12.252.411 22.518 20.851 52.468) Net assets Share capital Reserves Unappropriated profit Surplus on revaluation of assets Non Controlling Interest .870.591.899.104.644.188 200 1.155.966.578 38.926 486.757 9.585 200 282.488.469.242.072 775.185.971 2.096.593 73.730 511.052.706 305.991 51.017.009 2.953.net Other assets 511.001 2.446.180 1.514.642 400 909.223.738 6.906 9.530.461 287.811.254 1.635 89.451 20.024.544 1.619.357.979.849 2.755.346.445.059.499 419.090.537.531 400 867.800 15.447 91.364 765.211 9.438 Liabilities Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities .604 459.592 15.906 (4.021 12.277.716 180.618.787.938) 1.077 508.782.264 4.766 123.049 6.732 520.144 18.900.056 1.404 12.033 Upto one month Over one month to three months Over three months to six months Over six months to one year Over one year to two years Over two years to three years Over three Over five years to years to Over ten five years ten years years Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets .337 9.847 473. 2010 Maturities of Assets and Liabilities .000 1.937 6.617 1.167.602 10.351 27.895.982 8.837.070 9.335 11.024 9.451.999 9.611 24.427.200 6.755 35.264.555.210 2.net Other liabilities 1.006 15.922.452 4.526 2.459.849 4.502) (13.787.313.905 5.080 250.683 999.226.

service quality compromised. or from external events. IT security failure. Annual Report 2010 Faysal Bank 236 . Regular updates on operational risk status is presented before Enterprise Risk Management Committee (ERMC) and Board of Directors through the Board Risk Management Committee (BRMC).8 Operational Risk Operational Risk is the risk of direct or indirect losses resulting from inadequate or failed internal processes or systems. and social and environmental impacts. The Group’s businesses are dependent on the ability to process a large number of transactions efficiently and accurately. Each division has processes and systems in place to address operational risks within their area. Loss Database and Key Risk Indicators.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. fraud. The Group has implemented risk controls and loss mitigation actions for curtailing operational risk. human factors. Therefore the assets and liabilities of FMSL have been classified as Non-Current Assets Held for Distribution as per the requirements of IFRS 5 as more fully explained in note 26 to these consolidated financial statements. These include key controls and the provision of business continuity plans to protect against major disruptions. dependence on key suppliers. natural disasters. 2011 by the Board of Directors of the Holding Company. Material Operational risks are identified in new activities and products through "Other Risk Assessment Procedures (ORAP)". regulatory non-compliance. 49 DATE OF AUTHORISATION FOR ISSUE These consolidated financial statements were authorised for issue on March 29. 50 NON-ADJUSTING EVENTS AFTER THE BALANCE SHEET DATE There were no appropriations or distributions made after the balance sheet date. loss of key staff. The Group's ORM framework consists of tools such as Risk & Controls Self Assessment.237 . 2010 47. Operational risks and losses originate from business / operational process failure. The Operational Risk Management Policy of the Bank is approved by the Board of Directors. 48 DETAILS OF MODIFIED REPORT OF THE SUBSIDIARY The external auditors of Faysal Management Services (Private) Limited (FMSL) have added an emphasis of matter paragraph in their audit report on the financial statements drawing attention to the fact that the management has initiated winding-up process of FMSL.

to facilitate comparison and to conform with changes in presentation in the current year.3 President & Ceo Director Director Director . 2006 issued by the State Bank of Pakistan in respect of which no amounts are outstanding have not been reproduced in these consolidated financial statements except in the statement of financial position and the profit and loss account. Figures have been rounded off to the nearest thousand rupees unless otherwise stated. 4 dated February 17. 2010 51 51.2 51.Faysal Bank Limited and its Subsidiary Company Notes to and Forming Part of the Consolidated Financial Statements For the year ended December 31. Captions as prescribed in BSD circular No. Earnings per share for the prior year has been restated consequent to the issue of bonus shares during the current year. wherever necessary. 51.1 GENERAL Comparative information has been re-classified. re-arranged or additionally incorporated in these consolidated financial statements.

300 3.171.008.348 20.263 20.534 3.620 11.224 174 357 5 26.630 16.421 177 7.520.730 100.153.038 30.10%) **Shares / certificates of Rs 5 each ***Delisted companies + Includes 3.424 11.000 1.000 56.407 2.990.982 12.934 1.114.812.420 338.829 288 575 11 - 217 12.000 199.670 1.493.018.B.024 9.200 251 2.621 11.568 77.792 120.260 20.000 4.528 15.287 89.922 1.030 35.855 129 49 74.582 - A AAAA AA AA+ A AA+ AAAA+ AA+ AA- AAAAAA AAAAAAA- 428. Details of investments in listed companies / modarabas / closed end mutual funds are as follows: Quality of Available for Sale Securities 2010 2009 Market Values Rupees ‘000 33.990.770 43.500 100.051 *The bank holds more than 10% of investees' capital in Prudential Investment Bank Limited – 17.656 1 35.437 3.700 202.639 28.324 192.034 540 3.Faysal Bank Limited Annexure I to the Consolidated Financial Statements For the year ended December 31.239 .999.105 4.702 224 295. 1.432 1 AA+ BBB 2010 2009 Medium to Long Term Rating Assigned (where available) A AM35-Star AA+ 2010 2009 Ordinary shares / certificates of Rs 10 each 4.006.662 852.042 3.295 8.L Modaraba 1st Tawakkal Modarba 1st*** Unicap Modarba First Prudential Modaraba Banks / Financial Services Atlas Bank Limited (Formerly Dawood Bank Limited) Prudential Investment Bank Limited */*** Arif Habib Corporation Arif Habib Investment Limited First Capital Securities Corporation Limited Investec Securities Limited*** Islamic Investment Bank Limited*** National Asset Leasing Corporation Limited*** National Over Limited*** Natover Lease & Refinance Limited Standard Chartered Leasing Limited Askari Commercial Bank Bank Alfalah Limited Bank Al Habib Limited Javed Omer Vohra & Company JS Bank Limited Habib Bank Limited The Bank of Punjab Bankers Equity Limited*** Habib Metropolitan Bank Limited Indus Bank Limited*** Industrial Development Bank Limited Innovative Investment Bank*** KASB Bank Limited Mehran Bank Limited*** Silk Bank Limited First Credit & Investment Bank Limited National Bank of Pakistan Limited NIB Bank Limited Soneri Bank Limited Construction and Materials Adamjee Floorings Limited*** Fauji Cement Limited Buxly Paints Limited Pioneer Cement Limited Balance carried forward 2009 At Cost Rupees ‘000 35.000 22.709.827.001 1.994.774 25. 2010 Statement showing details of investments in ordinary and preference shares / certificates of listed and unlisted companies / modarabas / mutual funds and Term Finance Certificates and bonds as referred to in note 12 to the financial statements.494 1.023.999.440 12.888 22.950 25.120 20.100 1.584 310.966 1.781 333.201 43.000 100.024 22.477 1.956 140 5.000 3.776 54 48 67.10% (2009: 17.365 554.700 9.772 600.100 118.895 2.950 2.764 3.368 10.475 33.000 27.365 9.620 24 325 5.520.373 - 114 14.240 16.000 15.000 8.528 25.361 111.365 39.163 424 91.703 101 69.939 17.050 25.381 1.641 772 220 99.045 433.000.964.000 120.038 56.962 85.000 certificates of First Habib Modaraba classified as strategic investment Annual Report 2010 Faysal Bank 238 .990 3.762.825.411 10.715 certificates of Al-Meezan Mutual Fund and 2.849 230 301.530 - 2010 Name of company/ modaraba/ mutual fund Equity Investment Instruments Al-Meezan Mutual Fund+ NAMCO Balanced Fund Dominion Stock Fund Limited*** Investec Mutual Fund Limited*** JS Large Capital Fund Modarabas First Habib Modaraba+ First Fidelity Leasing Modaraba I.200 32.994.914 35.192 166.111.715 1.834 2.893.

715 58.037 1.233 74 11.529 10.426 572 5 9 2.375 41.717 54.891 2.489 1.361 939.004 250.730 1.788 516 3.241 53.000 1.977 530.802 27.183 55.111 11.947 13.070 30.700 12.085 816 134.697 504.911 46.109 472.590 6.214 456.269 128.089 25.000 14 200.499 12.197 10.703.530 Cherat Cement Company Limited Dadabhoy Construction Technology Limited EMCO Industries Limited FECTO Cement Limited Gypsum Corporation Limited*** Mustehkam Cement Limited Punjab Building*** Zeal Pak Cement Factory Limited*** Karachi Pipes Limited*** Oil and Gas Pakistan State Oil Limited Shell Gas LPG Shell Pakistan Limited Attock Petroleum Limited Pakistan Petroleum Limited Pakistan Refinery Limited Pakistan Oilfields Limited National Refinery Limited Mari Gas Company Limited Sui Northern Gas Pipelines Limited Fixed Line Telecommunication Pakistan Telecommunication Company Limited Callmate Telips Limited*** Telecard Worldcall Telecom Electricity Altern Energy Hub Power Company Limited+ Hyderabad Electric Limited*** Ideal Energy Limited * Karachi Electric Supply Company** Kohinoor Energy Limited+ Kohinoor Power Company Limited Kot Addu Power Company Nishat Power Limited Personal Goods (Colony) Sarhad Textile Limited Accord Textile Limited Adamjee Industries Limited*** Adil Textile Mills Limited*** Afsar Textile Mills Limited*** Alif Textile Mills Limited*** Al-Qaim Textile Mills Limited Amazai Textile Mills Limited Apex Fabrics Limited*** Asim Textile Mills Limited Awan Textile Mills Limited*** Ayaz Textile Mills Limited*** Azgard Nine Limited Bahawalpur Textiles Limited Bannu Woollen Mills Limited Bata Pakistan Limited Bawany Textile Mills Limited*** Bleesed Textile Mills Limited Central Cotton Mills Limited*** Crescent Knitware Limited*** Crescent Spinning Mills Limited*** Crescent Textile Mills Limited Balance carried forward 2009 At Cost Rupees ‘000 2010 2009 Market Values Rupees ‘000 2010 2009 Medium to Long Term Rating Assigned (where available) 1.372 723.000.667 1.665 3.228 88 7.350 57.689 23.000 28.74% (2009: 11.244 41.986 26.667 16.620 442 3.213 114.000 1.74%) **Shares / certificates of Rs 5 each ***Delisted companies + Includes 891.500 33.000 shares of Kohinoor Energy Limited classified as strategic investment .586 870 163.751 41.174 14.381 1.000.500 26.953 577.773 13.841 766.100 939.468 149.498 AA+ AA+ AAA AA AAA AA A- AA+ - AA+ AA- AA SD 776.612.000 1.226 2.982 718 16 18 2.479 2.149 280.857 155.874 100.664.192 60.891 3.051 6.126.070 21.362 110.300 22.059 7.413 12.297.469 13.500 100 15.782 17.361 shares of Hub Power Company Limited and 723.292 6.900 5.948 6.000 11.737 22.223 10.111.394 3.550.701 9.182 23.942 11.900 110.320 2.584 310.100 79.492 6.372 1.000 289.635.866 *The bank holds more than 10% of investees' capital in Ideal Energy Limited – 11.756 212.986 21 52 87 3 452 60.581 891.221 2.679 16.439 2.000 34.825 55.513 303 275.703 22.023.500 74.738 36.500 34.654 27 93 100 2 362 72.979 310.752 428.220.688 189 268.913 194.649 181.742 54.723 118.201 40.304.000 10.012 6.411 72.266 1. 2010 Quality of Available for Sale Securities 2010 2009 Ordinary shares / certificates of Rs 10 each 2010 Name of company/ modaraba/ mutual fund Balance brought forward 53.613 1.161 2.821 28.999 6.047 3.416 51.Faysal Bank Limited Annexure I to the Consolidated Financial Statements For the year ended December 31.664 20.166 150.675 24.674 213.985 1.463 6.000 335.

819 26.300 3.800 194.192 2.828 481 1.000 117.001 3.701 27.642 2.846 72.200 19.605 1.895 9.499 286 1.938 165 398 23 46 882 100 595 2.076 2.500 19.510 37.897 2.381 430 497 9.200 3.624 260 1.353 30 69 1.439 24 10 12.336 4 57 114 2.550.382 1.239 2.201 49. 2010 Quality of Available for Sale Securities 2010 2009 Ordinary shares / certificates of Rs 10 each 2010 Name of company/ modaraba/ mutual fund Balance brought forward 178.623 14.780 4.064 6.321 47.407 2.500 55.587 139 978 3.200 164.400 26.000.361 28 10 14.400 11.136 29.000 128.594 4 405 127 1.362 128 155 1.588 255 260 25 74 1.600 3.067 9.400 1.459 6.572 152 18.752 300.584 3.490 23.103 413.490 5.000 27.010 288.045 160.858 58.022 18.475 343.200 6. Ghafoor Textile Mills Limited*** Ghulam Dadabhoy*** Globe Textile Mills Limited Gul Ahmed Textile Mills Gulistan Spinning Mills Limited Gulshan Spinning Mills Limited Hafiz Textile Mills Limited Hakkim Textile Mills Limited Harum Tex Limited*** Ibrahim Fibre Limited Indus Dyeing Manufacturing Company Limited Indus Polyester Company Limited*** International Knitwear Limited Ishaque Textile Mills Limited Itti Textile Mills Limited Junaid Cotton Mills Limited*** Kaiser Art And Kraft Mills Limited*** Karim Cotton Mills Limited*** Karim Silk Mills Limited*** Kohinoor Cotton Textile Limited*** Kohinoor Industries Limited Kohinoor Looms Limited*** Kohinoor Mills Limited Kohinoor Spinning Mills Limited Kohinoor Sugar Mills Limited Kohinoor Textile Mills Limited Maqbool Textile Mills Limited Marr Fabrics Limited*** Masood Textile Mills Limited Mehr Dastgir Textile Mills Limited Mehran Jute Mills Limited*** Mian Mohammed Sugar Mills Limited*** Mohd Farooq Textile Mills Limited Mohib Textile Mills Limited*** Moonlite (Pak) Limited National Match Industries Limited Naveed Textile Mills Limited*** Nishat (Chunian) Limited Nishat Mills Limited Norrie Textile Mills Limited*** Nusrat Textile Mills Limited*** Olympia Textile Mills Limited Pakistan Synthetic Limited Paramount Spining Mills Limited Pearl Fabrics Limited*** Premium Textile Mills Limited Punjab Cotton*** Qayyum Spinning Mills Limited Ravi Textile Mills Limited Redco Textiles Limited Reliance Cotton Spinning Mills Limited Reliance Weaving Mills Limited Ruby Textile Mills Limited Rupali Polyester Limited Sadoon Textile Mills Limited Saif Textile Mills Limited Saitex Spinning Mills Limited*** Sana Industries Limited Sapphire Fibers Limited Balance carried forward ***Delisted companies 2009 At Cost Rupees ‘000 2010 2009 Market Values Rupees ‘000 2010 2009 Medium to Long Term Rating Assigned (where available) 2.700 7.189 100.238 11.695 2.085 Annual Report 2010 Faysal Bank 240 .370 57.594 104.219 - A+ A A+ A+ BBB+ 789.500 117.953 577.326 260.050 3.Faysal Bank Limited Annexure I to the Consolidated Financial Statements For the year ended December 31.000 40.605 500 327.753 8.345 12.276 58.000 84.059 6.221 2.899 3.877.000 10.866 1.703.724.926 127.548 37.000 22.417 117 18.572 11.420 589.500 Crown Textile Mills Limited*** Dawood Lawrancepur Limited Fateh Industries Limited Fateh Sports Wear Limited Fateh Textile Mills Limited Fazal Textile Mills Ltd.241 .500 41.500 65.289 2.295 17 144 103 69.564 1.648 37.473 1.023 2.500 19.315 8.936 1 18.851 2.232 3.056 18.782 283 7.766 2 158 242 70.483 259.752 1.057.500 10.250 99.612 9.634 20 69 427 113 126 1.300 776.000 38.

600 7.363 4 901 2.000 382.967.205 23.613 789.E.197 3.085 2.734 19.859 2.500 2.144 30 77 69 156 82 2.608 12.600 6.775 AA AA- - A A- BBB+ D 791.377 3 774 2.579 10 392 515 8.569 30 1.306 2.364 9.000 126.400 17.500 1.023 2.533 17 71 8.379 2.281 1.498 17.376 71.300 9.390 1.945 35.000 440 22.849 456 21.000 229.779 130.499 35.176 601 11.500 11 66 67.599 80.000 27.000 8.451 6.257 9.564 76.518 1.440 1.000 425.877.471 90 35.300 19 88 77.000 5.025 12 115 540 8.000 Schon Textiles Limited*** Service (Textile) Industries Limited Service Fabircs Limited Service Industries Shahtaj Textile Mills Limited Shahyar (O.270 617.000 7.938 33 17.000 12.200 57.756 589.831 36.000 18.000 219.460 1.870 33 20.389 133.268 280.839 173.752 852 2.085 .700 4 700.046 156.724.700 69.500 9.500.000 10.491 4.000 42.523 2.543 6.140.429 10.700 90.195 10.) Textile*** Shahyar Textile*** Shams Textile Mills Limited Siftaq Internatioanal Limited Sind Fine Textile Mills Limited Sunrise Textile Limited*** Sunshine Cloth Limited Sunshine Cotton Mills Limited*** Suraj Cotton Mills Limited Taj Textile Mills Limited Tariq Cotton Mills Limited*** Tawakkal Garments Industries Limited*** Tawakkal Limited*** Treet Corporation Limited United Brands Limited Zafar Textile Mills Limited Zahoor Cotton Mills Limited Zahoor Textile Mills Limited*** Zil Limited Electronic and Electrical Equipment Aslo Electronic Limited*** Greaves Airconditions Limited*** Johnson And Phillips (Pakistan) Limited Punjab Lamps*** Refrigerator Manufacturing Limited Support Services TRG Pakistan Non Life Insurance Adamjee Insurance Company Limited EFU General Insurance Union Insurance Company of Pakistan Limited*** Food Producers Al.595 5.000 35.437 17 102 78 23 176 85 2. 2010 Quality of Available for Sale Securities 2010 2009 Ordinary shares / certificates of Rs 10 each 2010 Name of company/ modaraba/ mutual fund Balance brought forward 43.170.882 88 36 1.420 589.000 400.Abbas Sugar Mills Limited Charsada Sugar*** Chashma Sugar Mills Limited Colony Sugar Mills Crescent Sugar Mills and Distillery Limited Faran Sugar Mills Limited Fazal Vegetable Ghee Mills Limited Habib Sugar Mills Limited*** Ismail Industries Limited JDW Sugar Mirpurkhas Sugar Mills Limited Morafco Industries Limited Mubarik Dairies Limited Nestle Pakistan Pak Ghee Industries Limited Pangrio Sugar Mills Limited Sanghar Sugar Mills Limited Shahmurad Sugar Mills Limited Shahtaj Shugar Mills Limited Shakarganj Mills Limited Suraj Ghee Industries Limited Unilever Pakistan Limited Uqab Breeding Farms Limited*** Balance carried forward ***Delisted companies 2009 At Cost Rupees ‘000 2010 2009 Market Values Rupees ‘000 2010 2009 Medium to Long Term Rating Assigned (where available) 2.500 9.077 1.000 79.Faysal Bank Limited Annexure I to the Consolidated Financial Statements For the year ended December 31.084 580 10.004 27 1.567.134 126 9 1.514 27 22 2.347 1.000 50 232.479 117 35.210 9.000 12.500 400 17.

358 Agri Auto Industries Limited** 356 Atlas Battery Limited 8.722 119.549 5.292 368 8.835 46.615 3.759 29.083 39.001.547 25. Pumps Company Limited Nowshera Engineering*** 3.033 68.000 101.017 SD AA AA- A+ A AA- BBB+ BBB 4.553 2.942 72.000 12.928 947 38.000 1.287 213.B.848 1.204 595.659 14.954 48.516 1.150 7.017 4.673 1.424 38 34.141 22.449 1.017 151.000 21.131.407.571 193 6.333 247.967 16.756 17.682 68.265 22.261 22 35.974 562 2.252.417 Data Agro Limited*** Exide Pakistan Limited 2.000 66.943 7.615 shares of Fauji Fertilizer Company Limited classified as strategic investment Annual Report 2010 Faysal Bank 242 .374.921 4.000 321.230 22.565 14.620 538.600 17.S. 2010 Quality of Available for Sale Securities 2010 2009 Ordinary shares / certificates of Rs 10 each 2010 Name of company/ modaraba/ mutual fund 2009 At Cost Rupees ‘000 2010 2009 Market Values Rupees ‘000 2010 2009 Medium to Long Term Rating Assigned (where available) Balance brought forward 75.584 60.248 Automobiles and Parts Honda Atlas Cars Limited 323 Indus Motor Company Limited 6.725 30.811 213 12 12.000 24 24.166 8.797 113.336 589.008 46 19.779.374.353 253.802 97 1.009 43.500 7.273 45.207 352.613 18.967.409 3.447 10.223 114.085 16.244 668 2.107 35.931 15.772 3.080 4.158 shares of Dawood Hercules Chemicals Limited and 1.324 170.928 833.762 173.173 726 3.800 43.574 46.Faysal Bank Limited Annexure I to the Consolidated Financial Statements For the year ended December 31.243 .481 General Tyre and Rubber Company of Pakistan Limited 15.374.201 3.542 Baluchistan Wheels Limited 7.947 110.199 221.000 252.020 25.032 7.194 371.000 Industrial Engineering Al-Ghazi Tractors ** Millat Tractors Bela Engineering Limited*** Bolan Casting Limited Hinopak Motors Limited K.636 24.023 500 48.409 9.555 480.152 100.973 125.000 1.479 35.663 25.463 17.000 22.819 Atlas Honda Limited 2.137.000 157.152 43.497 1.489 14.942 7.200 17.376 2.752 21.238 70.358 1.937 7.086 4.353 16.980 1.900 18.375 - 791.580 1.326 9.948 4.232 316.098 47.876 2.289 **Shares / certificates of Rs 5 each ***Delisted companies + Includes 1.840 22 14.635 43.241 16.363 71.070 Rex Baren Battery*** Taga Pakistan Limited*** Chemicals BOC Pakistan Limited Adil Polyproplene Limited*** Agritech Limited Clariant Pakistan Limited Dawood Hercules Chemicals Limited+ Dewan Salman Fibre Limited Engro Corporation Fauji Fertilizer Company Limited+ Lotte Pakistan Limited Polyron Limited*** Sardar Chemical Industries Limited Sind Alkalis Limited Sitara Chemical Industries Limited United Distributors Pakistan Limited Wah-Nobel Chemicals Limited Sitara Peroxide Limited Industrial Metals and Mining Crescent Steel & Allied Products Limited Huffaz Seamless Pipe Industries Limited International Industries Limited Metropolitan Steel Corporation Limited Quality Steel Works Limited Industrial Transportation Pakistan International Container Terminal Limited Pakistan National Shipping Corporation Pan Islamic Steamship Company Limited*** Health Care Equipment and Services Medi Glass Limited Pharma and Bio Tech Abbot Laboatories (Pakistan) Limited Ferozsons Laboratories Limited Glaxosmithkline (Pakistan) Limited Highnoon Laboratories Limited Otsuka Pakistan Limited Sanofi-Aventis Pakistan Limited Searl Pakistan Limited Wyeth Pak Limited Balance carried forward 20.000 169.459 74.370 4.676 200.615 943.211.679 10.990 106 11 12.317 9.608 141.607 23.395 13.523 2.430 244.140.200.272 516.114 20.300 16.691 100.192 Pak Suzuki Motor Company Limited 14.000 45.658 16.

500 40.789 156 768 77.599.516 1.035 225 60.326 9.017 4.487 1.352 152 1.977 1.353 169.089.120 29.028 29 5.001.384 3.407.211.183 212.410 3 11.578 4.514 218.148 2.000 26.289 4.923 6.406 A AA A+ 4.000 255.315 51.946 19.979 1.488 12.809.296 28.959 15.163 10.000 225 Forestry and Paper Adamjee Papers Limited*** Chilya Corr Board Limited*** Pakistan Paper Corporation Security Paper Limited Beverages Shezan International Limited Leisure Goods Grays of Combridge (Pakistan) Limited RCD Ball*** Media Southern Networks*** Household Goods Al-Abid Silk Mills Limited Pak Elektron Limited Regal Ceramics Limited*** Jute Thall Limited ** Tobacco Pakistan Tobacco Company General Industrials / Others VISA Incorporation .145 127.671 843.Class C Shares Dadabhoy Leasing Limited*** Al-Hussainy Industries Limited Arag Industries Limited*** Aswan Tantage Limited*** Baluchistan Foundry Baluchistan Particle Board Limited Casspak Industries Limited*** Dadabhoy Sack Limited*** Fatima Enterprise H.638 4.000 186.200 49.927 30.500 18.900 16.525 31 5.274 4 12.000 206.714 27.900 100.013 102.569 5.196 **Shares / certificates of Rs 5 each ***Delisted companies .Faysal Bank Limited Annexure I to the Consolidated Financial Statements For the year ended December 31.Shaikh M. 2010 Quality of Available for Sale Securities 2010 2009 Ordinary shares / certificates of Rs 10 each 2010 Name of company/ modaraba/ mutual fund 2009 At Cost Rupees ‘000 2010 2009 Market Values Rupees ‘000 2010 2009 Medium to Long Term Rating Assigned (where available) Balance brought forward 43.169 27.000 8.363 172 991 76. Hussain*** Hashmi Can Company Limited Kaytex Mills Limited*** Lafayat Industry Limited Merit Packaging Limited Packages Limited Siemens Pakistan Engineering Company Limited Syed Match Company Limited Tri-Pack Films Limited Turbo Tec Limited*** Pakistan Services Limited Noon Pakistan Limited 4.438 15.034 4.366 127 1.113 1.459 592.248 8.500 15.486 21.521 25 770.670 2.223 43.011.000 100.000 9.871 24.266 833.595 4.400 26.

000) ordinary shares of Rs 10 each Sukhchayn Gardens (Private) Limited+ 242.000 (2009: Nil) ordinary shares of Taka 10 each. 2010 (un-audited) Al Hamra Hills (Private) Limited+ 12. 3. Muzaffar Ahmed Break up value per share: Taka 6.000 (2009 : 810. 2004 (audited) Khushhali Bank Limited 1.037 Not Applicable 100.000 - Not Applicable 5. Shujaat Azeem Break up value per share: Rs.43 (2009: Nil) Period of financial statements: December 31.13%) of investee’ capital.044 (2009: Nil) ordinary shares of Rs 10 each The bank holds 5.337 Annual Report 2010 Faysal Bank 244 .500.000 ) ordinary shares of Rs 10 each The bank holds 14.13% (2009 : 14. Details of investments in unlisted companies are as follows: Quality of Available for Sale Securities 2010 2009 At Cost Rupees ‘000 243. s Chief Executive: Mr.000 ) ordinary shares of Rs 10 each The bank holds 15.22%) of investee’ capital. The bank holds 18. 2010 2.70%) of investee’ capital.687 - Not Applicable 819.39) Period of financial statements: June 30.000) ordinary shares of Rs 10 each Himont Chemical (Private) Limited * 810.500.M.500 103.500. Muhammad Ghalib Nishtar Break up value of share: Rs.785 (2009 : 250.50% (2009: nil) of investee’ capital s Name of Chief Executive : Mr. 2007 (audited) *Fully provided investments +Strategic investments 243.758) ordinary shares of Rs 100 each The bank holds 5.22% (2009 : 15. 172.562 (2009: Nil) ordinary shares of Rs 10 each First Capital Investment (Private) Limited * 150.22 (2009: Nil) Period of financial statements: December 31.500. s Chief Executive: Mr.52% (2009: 5.452 - Not Applicable 15.47) Period of financial statements: June 30.176 799.375. 9.54) Period of financial statements: June 30.000 Not Applicable 750 750 Not Applicable Not Applicable AM4+ AM4+ 1. 2010 (audited) DHA Cogen Limited */+ 32.750 2010 2009 Market Values Rupees ‘000 Not Applicable 2010 2009 Medium to Long Term Rating Assigned (where available) Al Hamra Avenue (Private) Limited+ 24.000 (2009 : 12.000 (2009 : 150. 8.27% (2009: Nil) of investee’ capital.750 125. 2010 (un-audited) Credit Rating Information Services Limited (Bangladesh) * 260. 1. Habib Ahmed Break up value per share: Rs.000 (2009 : 24. s Chief Executive: Mr.88% (2009: Nil) of investee’ capital. 2009 (audited) Pakistan Export Finance Guarantee Agency Limited * 568.245 .000 Not Applicable 325.800 Not Applicable 2. Zaeem Break up value of share: Rs.17 (2009: Rs. 9.15 (2009: Nil) Period of financial statements: December 31.000 325.037 1. s Chief Executive: Mr.61 (2009: 171. Habib Ahmed Break up value per share: Rs.000 (2009: Nil) ordinary shares of Rs 10 each The bank holds 0.52 (2009: Rs 9. S.375. s Chief Executive: Mr.000 (2009 : 32.000 ) ordinary shares of Rs 10 each ECOTEC CNG 484.500.000 125.Faysal Bank Limited Annexure I to the Consolidated Financial Statements For the year ended December 31.

00%) of investee’ capital.207 1.000 24.107.327 100.000 75.000 200.951 221.646 216.75% Cumulative Convertible 6% per annum 15% Cumulative 5% Cumulative 9.95% Cumulative 9.499 1.000.000 24.50% Cumulative preference shares in Convertible investee’ capital.000 143.668 A(f) A+(f) AA+(f) 5-Star AA-(f) A(f) BBB(f) 3-Star A+(f) A(f) 3 Star 2-Star * Nature of fund has been changed to open ended fund from closed end fund.177 29 79.911 4.998 20 4.496 5.503.969 Securities having no book value as at December 31.119 52.634 17.043 IGI Income Fund 2.a.250 Quality of Available for Sale Securities 5.003. 2010 Preference shares – Unlisted companies Quality of Available for Sale Securities Name of company Rate 2010 2009 At Cost Rupees ‘000 25.671.249.763.887 2.289 1.033 588.100.000 First Habib Income Fund 2.000.000 Fazal Cloth Mills (Private) Limited Chief Executive: Mr.490 243.422 National Investment Trust Income Fund *** 50.200 61.888 PICIC Income Fund 100.301.292 22.262 22.040 115.13% (2009 : 14.310.000 National Investment Trust Government Bond Fund *** 50.Faysal Bank Limited Annexure I to the Consolidated Financial Statements For the year ended December 31.000 200.000.882 .750 47.096 1.310.894.5% plus 10.490 244.771.000 2010 2009 Market Values Rupees ‘000 Not Applicable 2010 2009 Medium to Long Term Rating Assigned (where available) A- 2010 2009 Share of Rs 10 each 2.937 266.249. ** Units of Rs 50 each *** Units of Rs 10 each +Strategic investment 1.064 AKD Income Fund ** 826 + Faysal Balanced Growth Fund 80.009 2.250 Not Applicable A 100.198 851 99.758 281.739 130.530 4.923.873.625.000 100.427 2010 2009 Market Values Rupees ‘000 22.900 1. 22.816 22.195 5.356 20.099 1.000 75.230 207. Details of investments in open ended mutual funds: 2010 2009 Name of fund 2010 2009 At Cost Rupees ‘000 2010 2009 Market Values Rupees ‘000 2010 2009 Medium to Long Term Rating Assigned (where available) Open ended Mutual funds 1.872 137.374 National Investment (Unit) Trust *** 420. 2010 3.849 100.000 7.630 315.912 2010 2009 Medium to Long Term Rating Assigned (where available) SD BB A+ SD 2010 2009 Share of Rs 10 each 2. s Pak Elektron Limited Chief Executive: Mr.25% p.430.046 HBL Income Fund 6.394.111 - Azgard Nine Limited Maple Leaf Cement Factory Limited Charsada Sugar * Nishat (Chunian) 15% NVCCP Unilever Pakistan Limited * Chenab Limited 8.500. Preference shares – Listed companies Quality of Available for Sale Securities Name of company Rate 2010 2009 At Cost Rupees ‘000 22.709 27.25%) of Class A 9. 6 months KIBOR s Pak Elektron Limited Chief Executive: Mr.000 208.111 105.000 3.800 1.211 4.680 126.500.873.000 * 4.000.209.299.000 Not Applicable A A - 12.374 80.292 154.000 1.500.700.000 - 126.790 50.040 103.189 3.037 6. 2.000 2.000 226.411 100.227 198.000 Faysal Income Growth Fund Faysal Savings Growth Fund Faysal Islamic Savings Growth Fund Faysal Money Market Fund JS KSE 30 Index Fund JS Large Capital Fund + 197. Sheikh Naseem Ahmad The bank holds 10% (2009 : 2. Naseem Saigol The bank holds 17.302 7.000 1.000 20.887 2. Naseem Saigol Class B preference shares of 11% Cumulative investee's capital Convertible 25.155 2.089 2.

Basheer Ahmed Chowdry Azgard Nine Limited 31.920 49. Munaf Ibrahim Trust Leasing & Investment Bank Limited .000 each Mark-up: Different spread over six months KIBOR rate in different years with no floor and cap Redemption: 12 unequal semi annual installments.901 2010 2009 Market Values Rupees ‘000 14.608 Annual Report 2010 Faysal Bank 246 .990 221.450) certificates of Rs.Fourth Tranche 10. Maturity: July 2012 Chief Executive Officer: Mr.Fourth Issue Nil (2009: 50.982 87.940 50.149 51.00% above six months KIBOR rate.113 A AA- 99.201 82.Listed.800 90.000 each Mark-up: 1.441 968.5% on PLS Basis (4% above six months KIBOR .000 each Mark-up: Minimum 9. 5. 1. 20122015: 47% and 2016-2017: 53% of the outstanding amount Maturity: September 2017 Chief Executive Officer: Mr.603 86.535 (2009: 50.5% above six months KIBOR.147 AA AA+ - 24. balance in 3 semi annual installments of 33.Second Tranche Nil (2009: 9.613 A+ A+ 687.25% each starting from 84th month.379 118.000) certificates of Rs.489 111.468 80.000 each Mark-up: For 1 .000 each Mark-up: 8. 5.304 AA 67. 5. cap-16% per annum Redemption: 0. Humayun Nabi Jan United Bank Limited . Bokhari United Bank Limited . Secured Al Zamin Leasing Modaraba Limited . balance in 3 semi annual installments of 33.5 years.000 (2009: 20.942) certificates of Rs. 2010 Quality of Available for Sale Securities 2010 6. 5.000) certificates of Rs.000 each Mark-up: 2% above six months KIBOR rate. Suleman Kanjiyani Balance carried forward 2009 At Cost Rupees ‘000 16. 5.000 each Mark-up: 2. Habib Jahangir Siddiqui & Company Limited .591 66. floor-8%.247 .640) certificates of Rs. Bokhari Financial Receivables Securitization Company Limited 20. Maturity: July 2012 Chief Executive Officer: Mr. Abbas D. Atif R.82% in equal installments in 60th & 66th month Maturity: May 2012 Chief Executive Officer: Mr.85% above six months KIBOR rate with no floor and cap.Second Issue 20.978 99.49% per annum Redemption: At maturity Maturity: March 2013 Chief Executive Officer: Mr.000) certificates of Rs.000 (2009: 20. Term Finance Certificates . 0. Redemption: At maturity or at the exercise of call option or partial call option. For 6 . remaining 99.35% above six months KIBOR rate with no floor and cap.093 249. 5.760 AA AA 49.000 (2009: 10. with no floor and no cap Redemption: Ten semi – annual installments commencing 6 months from date of issue Maturity: November 2010 Chief Executive Officer: Mr. 5.25% per annum in first 78 months. Ahmad Shaikh Bank Al-Habib Limited .000) certificates of Rs.000 each Mark-up: 2.204 903.45% per annum Redemption: 0.520 232.262 639.450 - 23.489 118.25% per annum in first 78 months.589 - 220.615 87.000 each Mark-up: 9. 5. Atif R.18% of principal in the first 54 months.000) certificates of Rs.640 (2009: 31.Unsecured 20. cap-16% Redemption: Equal Semi annual installment with a grace period of 1 year Maturity: January 2014 Chief Executive Officer: Mr.Second Tranche Nil (2009: 24.000 (2009: 20.First Issue 50.433 BBB 252. Atif R.10 years.760 99.419 AA AA 99.5% above six months KIBOR floor-6 % per annum.073 AA AA - 226.000) certificates of Rs. Maturity: February 2018 Chief Executive Officer: Mr. 5.746 2010 2009 Medium to Long Term Rating Assigned (where available) A 118.50% & cap-10% Redemption: 0.25% each starting from 84th month. Bokhari United Bank Limited .with floor-3.Floor 11%) Redemption: Three annual installments commencing May 2008 Maturity: May 2010 Modaraba Management Company: Al Zamin Modaraba Management (Private) Limited Chief Executive Officer of Management Company : Mr.Faysal Bank Limited Annexure I to the Consolidated Financial Statements For the year ended December 31.

Maturity: November 2012 Chief Executive Officer: Mr.000 199.480 - 12. Muhammad Rafiquddin Mehkari Pak Arab Fertilizers Limited 691 (2009: Nil) certificates of Rs. with no floor and no cap Redemption: Ten unequal semi-annual installments commencing 18 months from the last date of public subscription.000 each Mark-up: SBP discount rate less 2% p.608 143.288 822. with no floor and no cap Redemption: 6% semi annually in first 30 months.Fourth Issue 40.000 each Mark-up: 3.25% semi annually in first 78 months. Yousuf Farooqui Bank Alfalah Limited . balance of 33.233 (2009 : 70.441 129. with no floor and no cap Redemption: Six equal semi-annual installments commencing 54th months from the date of issuance.50% above six months KIBOR rate.Unlisted Dewan Cement Limited (formerly Pakland Cement Limited) The TFC has not currently been issued. 5. balance in five stepped-up semi annual installments commencing from the 36th month from the issuance date.000 each Mark-up: 1. 5. 5.26% semi annually in first 78 months. Rashid Khan Askari Bank Limited .223 500.123 1.75% above six months KIBOR rate. Dewan M. Shams ul Afreen Pakistan Mobile Communication Limited 3. 5. Sirajuddin Aziz 7. Maturity: February 2013 Chief Executive Officer: Fawad Ahmed Mukhtar Bank Alfalah Limited .503 903. Maturity: November 2013 Chief Executive Officer: Mr.000 (2009: Nil) certificates of Rs.000 (2009: Nil) certificates of Rs.495 - Not applicable 712. with no floor and no cap Redemption: 0.000 (2009: 40.50% above six months KIBOR rate.931 - 29.50% above six months KIBOR rate.989 - .204 123.Second Issue 3. Yousuf Farooqui 687.25% each starting from 84th month.262 160.50% above six months KIBOR rate with no floor and cap Redemption: 0. with 6% floor and 12% cap Maturity: June 2008 Chief Executive Officer: Mr.Faysal Bank Limited Annexure I to the Consolidated Financial Statements For the year ended December 31. 5. Chief Executive Officer: Mr.970 - 14.128.053 12.000) certificates of Rs.989 Not applicable - D AA AA- 12. 5.414 700.85% above six months KIBOR rate.026 2010 2009 Market Values Rupees ‘000 639.Second Issue 6000 (2009: Nil) certificates of Rs. Term Finance Certificates .000 each Mark-up: 2. with no floor and no cap Redemption: 0. Sirajuddin Aziz Dewan Sugar Mills Limited 10.665 - AA- 3.a. balance of 33.248 - 3.000 200. Maturity: May 2013 Chief Executive Officer: Mr.584 - AA- 877.000 each Mark-up: 1.000 (2009: Nil) certificates of Rs.000 each Mark-up: 2. Maturity: September 2017 Chief Executive Officer: Mr.000 201. 5.000 201.3% of the principal amount in the first 90 months and remaining in the 96th month of issue date Maturity: October 2013 Chief Executive Officer: Mr.047.615 BBB BBB 2010 2009 Medium to Long Term Rating Assigned (where available Balance brought forward Telecard Limited 70.25% each starting from 84th month. Dewan M.150 - AA 29.478 - A+ 14.919 500.233) certificates of Rs.584 1. 2010 Quality of Available for Sale Securities 2010 2009 At Cost Rupees ‘000 968.000 each Mark-up: 1.

841 515 504 538 532 564 617 603 630 504 622 575 594 564 603 509 1. 2010 as referred to in note 13.10/4 Islamabad P-02Tupu Street Khayaban # 02Madina Town Faisalabad H#194/Xxist#12-B Hasan Abad Townnear Gol Masjid Multan 14 Zeeshan Arshad H #33 St #21 Bilal Park Samanabad Lahore 15 16 Tariq Mehmood H# 97 St# 12 F-11/1 Islamabad Altaf Khan H# 12 St#21 Swami Nagir Nr Shazo Liberty G.841 25.487 15.820 474 5 479 506 13 12 531 448 421 468 418 433 443 450 459 387 475 421 490 450 480 406 1.627 2 Sabina Ahmed House No 523-Amohallah Ghulam Muhdabad Faisalabad 3 Muhammad Iqbal Khokh H B 14/614 Moh Bakhshu Pura Gujrat Annual Report 2010 Faysal Bank 248 . 12-Q.G Boys High School Rawalpindi P-440 St # 2 Gobind Pura Opp Shaukat Khanam Laboratory Gulberg Rd Faisalabad .134 9.No # 1 St # 2 Peer Rd New Mozang Lahore 18 19 Nargis Zahara H # 68-A Shafat Colony Gujjar Khuda Multan Cantt Multan 20 Syed Muhammad Rizwan 21 Muhammad Junaid Arsh 102-C Rehman Pura Colony Nr Residence Of Member Of Ppp Rana Aesh Bahadur Nr Wahdat Rd Rehman Pur Chowk 387 D Johar Town Near Shukat Kahnam Cancer Hospital Lahore 22 23 Ikram Sheikh Muhammad Shoaib Ahma 24 Hafiz Aftab Hussain 25 Muhammad Tariq 26 Muhd Naeem Akhter 27 Faraz Sadiq 28 Muhammad Shoaib Ahma House#32 Bahadurabad#2 Blk 7/8 Karachi P # 440 St# 2 Gobind Pura Opp Shaukat Khanam Laboratory Gulberg Road Faisalabad House # P-132 St # 4-5 Sohailabad Batala Colony Faisalabad P-21 St # 6 Gulbahar Colony Satiana Road Near Umar Masjid Faisalabad House # 6-B-Z 103 Road Khawaja Chowk Madina Town Faisalabad H #301-A-1 R.403 578 966 316 321 172 444 14 527 507 513 495 46.8 to these consolidated financial statements.340 509 925 364 414 450 450 491 409 499 488 499 13.472 16 7 9 25 6 36 10 13 7 12.249 4 5 Nasreen Naeem Muhammad Azeem Mujah House# 291-A-7 Batala Colony Faisalabad House #5 St# 1 Main Bazar Qilaluckhman Singh Ravi Rd54000 6 Mohammad Aslam Butt House # 147 Askari Colony # 1 Sialkot Cantt Sialkot 7 8 Muhammad Husnain Sha Wali Muhammad 128 E 1 Main Boulevard Gulberg Iii Lahore H # 2/6 Sharif Park Begum Pur Noble Grammar School Near Gt Road Uet Lahore 9 Khurram Niaz 10 Azeem Waris Khan H # 33 G Eme Housing Society Multan Road Lahore H No 67 Q Blk 06 P E C H S Nr Ambala Sweets Karachi 11 12 Chaudhry Ghulam Qama Muhd Islam Munawar 13 Muhd Shahzad Khalid House # 731 Street #74 G. Gulberg Ii. Name of borrower No.340 589 1. 2010 Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December 31.634 388 2 4 2 16 10 43 46 28 37 2 9 327 11 477 58 30 18 79 5 138 15 21 162 525 19 544 162 174 565 356 176 189 264 500 475 464 419 247 11. S.798 264 170 77 20 14 24 10 12 11 4 2. 1 Rupees '000 Sumaira Khalid Qadri 42301-7207614-2 Khalid Mahmood Qadri Muhammad Fausal Anwar Hakeem Muhammad Azam Khokhar Nemat Naeem Rao Mujahid Hussain Rehmat Ali Syed Ali Ahmed Shah Khushi Muhammad Niaz Ahmed Akhtar Khan Kamal Waris Chaudary Nizam-Uddin Chaudhary Ghulam Nabi Shah Muhammad Saqib Arshad Jamal Haji Mohammed Razaq Nawab Khan Sheikh Ferozdin Mirza Nawab Baig Muhammad Kamran Saeed Khan Syed Anayat Hussain Mian Muhammad Arshad Fayaz Ullah Shaikh Sheikh Muhammad Ashraf Chohdry Ejaz Hussain Muhammad Shafi Rasheed Ahmad Toor Muhammad Sadiq 3740504936055 3310044343817 Sheikh Muhammad Ashraf 467 465 450 404 241 8.019 6110189010168 3420103194269 3310057595952 3520014152981 3460328244885 3520284684593 3520236142037 3520222600365 4220186335575 6110132165955 3310048980793 3630202777615 3520014228753 3740197275891 3520225491731 3520212652289 3520225608603 3630272749200 3520226395039 3520223849459 4220140665711 3310044343817 3310056441931 3310045387223 3310010163239 2 3 4 5 6 7 8 9 10 11 12 13 1 De-Lucchi 16-B/1 'Sunset Boulevard Phase-2 Dha Karachi 9. Lahore Mirza Muhammad Iqbal H.006 28 45 28 32 58 64 69 69 36 41 64 14 18 25 24 31 39 80 110 59 25 27 96 18 18 16 1.No.A Bazar Near F.Faysal Bank Limited Annexure II to the Consolidated Financial Statements Address Name of Individuals/ Principal Mark-up (6+7+8) Partners / Directors / CNIC Interest / Others Total written-off Mark-up written-off Father’ / Husband’ Name s s Outstanding Liabilities at beginning of the year Principal Interest / Others Financial Reliefs provided Total (10+11+12) For the year ended December 31.T Rd Lahore 17 Sheikh Mushtaq Ahmed H.178 9.931 546 956 266 266 119 444 8 454 497 498 488 33.054 528 591 586 574 615 592 620 609 614 26.841 39 38 42 82 73 110 84 102 81 106 90 90 96 98 79 49 90 84 67 77 99 97 87 103 103 99 12.

575 5.482 81.527 1.588 2.766 496.000 (943) 499.843 471.Deposits from financial institutions .492.net of tax 2010 Rs ‘000 404.503 500.313 1.500 24. ASSETS Cash and balances with treasury banks Balances with and due from financial Institutions Investments Financing and receivables .288 1.non-remunerative Due to head office Other liabilities NET ASSETS REPRESENTED BY Islamic Banking Fund Reserves Unappropriated profit / (loss) Surplus / (Deficit) on revaluation of assets .623 1.534 47.666. 2010 The Bank is Operating 13 Islamic banking branches (2009: 6).205 880.Murabaha .375.063 1.Diminishing Musharaka .Saving Accounts .809.Salam .Term Deposits .413.750 Remuneration to shariah advisor CHARITY FUND Opening balance Charity fund transferred from amalgamated entity Additions during the period Payments / utilization during the period Closing balance (304) 371 67 - .258 12.Current Accounts .614.Faysal Bank Limited An n exur e III to the Co ns ol idat e d Fin a n c ial St at e me n t s Statement of Financial Position .997 4.696 3.Other Islamic Modes Other assets LIABILITIES Bills payable Due to financial institutions Deposits and other accounts .Musharaka .270 20.852) 496.237 21.108 125.331.Others .Islamic Banking As at December 31.remunerative .000 (225.205 1.057 (2.080.827 7.035.491 659.067 1.601 32.187 9.665 621.091 1.Ijara .Deposits from financial institutions .971 6.877 38.011.696 2009 Rs ‘000 27.003) 654.699 659.159 535.919 6.

011 60 563 (1.Faysal Bank Limited A n n exure III to the Co n sol idat e d Fin a n c ial St at e me nt s Profit and Loss Account .691 413.646 15.251 .972 193.Islamic Banking For the year ended December 31.467 139.060) (224.527 (224.836 273.546 225.249) 2.423 777 15. 2010 2010 Rs ‘000 2009 Rs ‘000 Profit / return earned on financing and investments Profit / return expensed Net spread earned Provision against non-performing financings Provision against consumer financings Provision for diminution in the value of investments Bad debts written off directly Income after provisions Other Income Fee.082 16.492 187.574 6.493 (1) 6.060) 40 40 15.686 16.862 million arising on amalgamation.646 3.385 189. 419.629 (943) (943) Annual Report 2010 Faysal Bank 250 . commission and brokerage income Dividend income Income from dealing in foreign currencies Capital gain on sale of securities Unrealized gain / (loss) on revaluation of investments classified as held for trading Other income Total other income Other expenses Administrative expenses Other provision / write-offs Other charges* Total other expenses Extraordinary items / unusual items Profit / (Loss) for the year * Includes loss amounting to Rs 266.629 16.

HUSSAIN (A/C .372 SHARES 73. HASSAN MOHAMMED MAHMOOD HASSAN LT.76 48.) MR. PUBLIC SECTOR COMPANIES AND CORPORATIONS BANKS.136 62.136 86.016 31. INVESTMENT CORPORATION OF PAKISTAN ASSOCIATED COMPANIES.S.S. 2010 CATEGORY NO.130 43.586 2. OF SHARES HELD 328.909.GEN.S. KHAN (A/C .Shamil Bank of Bahrain. holds the shares of Faysal Bank Limited in =02= different CDC accounts and also hoding in Physical form under =01= Folio.991. (SPONSOR COMPANY) FAISAL FINANCE (LUXEMBOURG) S.181 66.499.90 NOTE : Shamil Bank of Bahrain B. SHAHID AHMAD MR.04 17. INSURANCE COMPANIES.984.090.122 PERCENTAGE % 44.742 PERCENTAGE % 1 2 3 4 INDIVIDUALS INVESTMENT COMPANIES JOINT STOCK COMPANIES DIRECTORS . OF SHARES HELD SHARE HOLDERS 12.) MR.02 1. MUHAMMAD MAQBOOL (RETD.626.840.702 7 116 7 690 690 690 690 690 27.) MR.142. UNDERTAKINGS AND RELATED PARTIES SHAMIL BANK OF BAHRAIN B.Shamil Bank of Bahrain B. B.64 0.372 7.866. FAROOQ RAHMATULLAH MR.00 5 6 7 12. DMI (JERSEY) LIMITED FAISAL PRIVATE BANK (SWITZERLAND) S.02 100. NBFIs. MOHAMED A.947 51.C.C.072 124.804 0.064 23.S.94 8 9 10 11 12 13 14 34 39 1 7 11 12.659 182.CHIEF EXECUTIVE OFFICER AND THEIR SPOUSE AND MINOR CHILDREN SYED NASEEM AHMAD MR.) MR.S.288. MFAI (JERSEY) LTD.R.A.S. CATEGORIES OF SHARE HOLDERS NUMBER OF SHARES HELD CATEGORY WISE CATEGORY WISE NO.602 690 8 6 134.00 0.611 730.94 11.C. MOHAMMAD A. .02 0.680.35 0.104 180.937 SHARES DESCRIPTION FALLS IN CATEGORY # 8 FALLS IN CATEGORY # 11 NO.C.Shamil Bank of Bahrain B. NAVED A. (SPONSOR COMPANY) JPMORGAN CHASE BANK 730.456.A.RAHMAN BUCHEEREI (Ex-Director) (A/C .Shamil Bank of Bahrain B.S.545. MODARABAS & MUTUAL FUNDS FOREIGN INVESTORS CO-OPERATIVE SOCIETIES CHARITABLE TRUSTS OTHERS 6.09 0. DFIs.163 9 328.253 31.499.10 0.C.567. GRAHAM RODERICK WALKER (A/C .835 489.C.00 SHARE-HOLDERS HOLDING TEN PERCENT OR MORE VOTING INTEREST IN THE LISTED COMPANY TOTAL PAID-UP CAPITAL OF THE COMPANY 10% OF THE PAID-UP CAPITAL OF THE COMPANY NAME(S) OF SHARE-HOLDER(S) SHAMIL BANK OF BAHRAIN B.909.Faysal Bank Limited Combined Pattern of CDC and Physical Share Holdings As at December 31.) COMPANY SECRETARY EXECUTIVES NIT / ICP NATIONAL BANK OF PAKISTAN .641 26.701 861 670. TRUSTEE DEPTT.340.C.798 12.

701 861 670.2 9.372 7.586 2.Faysal Bank Limited Combined Pattern of CDC and Physical Share Holdings As at December 31.104 180.04 1.798 12.611 730.5 FINANCIAL INSTITUTIONS LEASING COMPANIES INSURANCE COMPANIES MODARABAS MUTUAL FUNDS 12702 7 116 48.35 7 8 6 31.213 325.4 9.909.09 0. 2010 CATEGORY NO.573. CATEGORIES OF SHARE HOLDERS NO. INSURANCE COMPANIES MODARABAS AND MUTUAL FUNDS 9.02 1.00 5. CHEIF EXECUTIVES OFFICER AND THEIR SPOUSE AND MINOR CHILDREN EXECUTIVES NIT / ICP ASSOCIATED COMPANIES . NBFIs.00 0.00 10 11 12 13 FOREIGN INVESTORS CO-OPERATIVE SOCIETIES CHARITABLE TRUSTS OTHERS Annual Report 2010 Faysal Bank 252 .1 9.3 9.456.00 8 9 34 11 2 10 5 6 39 1 7 11 12947 51.94 0.64 0. DFIs. UNDERTAKINGS AND RELATED PARTIES PUBLIC SECTOR COMPANIES AND CORPORATIONS BANKS.76 5 6 7 9 0 489.253 6.854 13.00 0.288.742 134.253 .567.543.866.659 182.072 7. OF SHARE HOLDERS SHARES HELD PERCENTAGE % 1 2 3 4 INDIVIDUALS INVESTMENT COMPANIES JOINT STOCK COMPANIES DIRECTORS.004 367 43.634 124.984.02 0.545.804 0.181 0 66.10 0.96 0.03 0.02 100.04 17.00 0.

000 .001265.00135.000 55.001120.960 262.270 338.001170.571 294.000 25.001190.840 413.067 952.001280.815 970.001150.000 5.510 1.291 1.00160.085 1.000 130.000 250.00125.000 115.000 80.000 40.001100.760 855.604 785.00180.494 246.001210.000 213.320 395.00120.000 Total Shares Held 76.001240.000 175.000 285.000 180.316 3.001180.000 35.590 878.213 1.000 50.073 745.305 162.001165.232 4.248 804.598 681.001145.001175.000 15.00155.000 170.001160.000 30.00195.001110.000 120.000 160.351 382.196.892 182.000 140.000 90.753.000 85. 2010 Number of Share Holders 2.001115.001245.110 237.504 194.00190.Faysal Bank Limited Pattern of CDC and Physical Share Holdings As at December 31.001230.000 110.000 150.893 284.419 276.001195.371.001235.000 10.00185.00130.00175.606 4.000 225.567 235.521 7.001130.900 220.827.000 20.001135.00115.000 245.000 210.537 322.000 165.001155.127 150.000 125.001205.000 60.001105.000 215.204 232.000 240.530.101.217 536.000 75.000 70.763 864.00170.000 105.033 2.00145.000 200.038 242.715 574.618 207.001125.00150.967 622 226 102 61 55 34 23 23 18 6 15 11 8 10 10 7 5 3 3 1 3 3 2 2 3 2 3 6 1 2 1 2 1 2 1 1 2 1 1 1 1 1 1 3 2 1 11015011001500110.000 100.056 726.715 353.001220.000 155.00165.000 185.481 1.772 439.000 235.000 195.049 532.288 868.000 95.000 45.952 338.838 317.691 100.388 170.00140.000 135.000 270.001Share Holding 100 500 1.000 65.908.420 314.

050.325.001355.00118.710.742 15.255 .000 575.476 2.930 818.000 38.826.000 295.182.332 36.000 565.000 572.850.00114.000 1.566 31.0017.000 2.315.Faysal Bank Limited Pattern of CDC and Physical Share Holdings As at December 31.000 790.030 18.800.950.000 300.350.000 340.484 2.001570.112 1.649 396.001725.000 15.000.000 370.911.505.000 3.825.733 3.372 Annual Report 2010 Faysal Bank 254 .000 313.064 36.000 1.000 1.321.955.0012.00124. 2010 Number of Share Holders 1 1 2 1 2 1 1 2 1 1 1 2 1 1 1 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 12.947 285.0011.454.750 937.465.080.000 14.260.175.845.320.846.00115.000 2.00138.741 14.450 24.000.340.620.001313.00162.669 720.824 38.615.117 1.0011.827 372.670.001325.366.945.001600.535.950.045.420.490.001785.838 290.347.001345.670.130 313.000 1.561 325.000 375.000 365.800.685.106 2.001395.945.249 1.499 1.000 3.000 470.001Share Holding 290.0013.315.000 12.000 12.740.181 597.001560.417.510.00136.001370.000 1.0011.000 685.950.345.000 2.000 36.715.805.0011.530.000 Total Shares Held 289.750.031 1.104 342.000 62.001365.000 350.415.960.000 15.000 345.0012.284 349.000 1.570.185.000 605.493.000 31.000 820.001295.226 3.001815.480.463.995.000 1.000 730.000 2.000 18.574.485.994 564.000 7.063 789.0013.000 360.000 400.000 1.745.001335.109 1.083.00111.741.0012.001340.830.713.575.482.00112.00114.179.966 14.001290.495.260.085.00131.0012.802 601.0013.000 1.345.460.000 36.955.000 3.000 24.505.947 62.764 3.680.047.750.675.180.255.0011.500 1.0011.032 1.973 12.567 730.534.404 677.001680.909.320.642 1.710 2.340.00136.745.0011.000 14.000 330.680.0011.000 12.001465.180.619.

C.C. Trade Centre 92-21-32638011-16 92-21-32635845 Khayaban-e-Mujahid Branch 43-C.A Scheme #2 92-21-36670050 92-21-36625518 Shahrah-e-Faisal Branch Business Avenue Centre Block # 6.1/1. Ground Floor Plot # 36-C Badar Commercial Street St # 6. Chundrigar Road Branch 11/13. 1 / 16) Nazimabad 92-21-36707420 92-21-36707424 Saba Avenue Branch Shop # 2 & 3. Rufi Lake Drive Block18. Sector 15 Main Korangi Road 92-21-35114400 92-21-35114399 Timber Market Branch Plot # 6/2 Old Haji Camp Siddique Wahab Road. Bander Quarters New Neham Road Kharadar 92-21-3243992-21-22 92-21-32438150 92-21-32432408 SITE Branch Plot # B-17. P.M.D.A Phase V 92-21-35877845 92-21-35877847 Gulistan-e-Jauhar Branch Shop # 29 & 30.A Scheme # 5 Clifton 92-21-35838959 92-21-35863774 Gulshan-e-Iqbal Branch B -35.S 92-21-34302250 92-21-34302252 Madina Centre Saddar Branch Shop # 10 & 11 Ground Floor Madina Centre Plot Survey # 31/2 Survey Sheet # SB-5 92-21-35621505-7 92-21-35621509 .D.E.A Phase IV 92-21-35802426 92-21-35802425 Dhoraji Branch Shop # 4. Lubna Plaza Plot # 448 C. I. Sunset Commercial Street # 2 D.A Scheme # 36 92-21-34026856 92-213402 6858 Phase IV DHA Branch 14-C. Sub Block A Block III (IIIA.E 92-21-32585925 92-21-32585337 MACHS Branch Plot # 2-F (Commercial) M.H. Plot # FLI Block II.H.H.6/9 Shahra-e-Liaqat 92-21-32214903-904 92-21-32214907 North Karachi Industrial Area Branch SA -2 (ST1/1) Sector 12-B 92-21-36957155-3695 92-21-36951207 Gulshan Chowrangi Branch Shop # 1-4.P Berar Co-Operative Housing Society 92-21-34860851 92-21-34860856 Nazimabad Branch Plot #16 Row #1.H.C Society 92-21-34384364 92-21-34385547 North Nazimabad Branch Plot # D-6.I.H. 129 / I & II Main Korangi Road DHA Phase I 92-21-35390542 92-21-35391345 New Challi Branch Abid Chamber. Plot# ZC-6 Block # 7.H.H. Phase VI Khayaban e Shahbaz D. Estate Avenue S. K.3/7 D. Plot 3 SR. Stadium Lane II Khayaban e Mujahid D. Plot # MR-6/52/1 Ismail Trade Centre Ram Bharti Street 92-21-32471443 92-21-32443795 92-21-32444107 DHA Shahbaz Branch 23-C.S 92-21-34390514 92-21-34390513 Korangi Road Branch Speedy Towers.E. Block-2 P. Block-D K. Ground floor Sana Arcade. K. Lee Quarters 92-21-32734508 92-21-32734490 92-21-32745901 Clifton Block II Branch B-3 & B-4.A.A Scheme 24 92-21-34815319 92-21-34815308 Korangi Industrial Area Branch Plot # 51 / 9.Phase V 92-21-35349113 92-21-35349114 Khayaban-e-Tanzeem Branch 14-C.A. Clifton 92-21-35877923 92-21-35877925 I.A 92-21-35845771 92-21-35845490 Shaheed-e-Millat Branch Iqbal Arcade Plot # 6. Main Shahra e Faisal 92-21-111-747-747 92-21-32795234 Quality Height Clifton Branch K.C.D. Khayaban e Tanzeem Tauheed Commercial D.D.Branch Network South Region Karachi Karachi Main Branch Faysal House ST-02.S 92-21-34326661 92-21-34315638 Cloth Market Branch BR-2. Phase V 92-21-35243985 92-21-35348929 Khalid Bin Waleed Road Branch Plot # 89-B. Block 13-A Main University Road 92-21-34994261 92-21-34994260 Jodia Bazar Branch G-2.T.

Liaquat.A Phase VIII 92-21-35246014 92-21-35246016 APWA Complex Garden Branch Shop # SOA. Chudrigar Branch Nadir House I. Branch Plot # B/9-B/2 Estate Avenue 92-21-32569934-39 92-21-32569771 North Nazimabad Branch Almas Square. 7th Zamzama Commercial Lane Clifton 92-21-35875454 92-21-35875404 DHA Korangi Branch World Business Center Main Korangi Road 92-21-35805179 92-21-35805180 S.2 Branch Q-14.A. Khyaban e Shahbaz D.H. Sector 12-A Industrial Area 92-21-36920621-25 92-21-36956237 Khayaban-e-Shahbaz Branch 43-C. I. 35/244 C. KDA Scheme 33 Pakistan Employee Cooperative Housing Society Limited (PECHS) 92-21-3465 2159 92-21-3464 5055 Electronic Market Branch Shop # 3. G6 & G7 Plot Sheet No MR-1 92-21-32412803-07 92-21-32414095 Annual Report 2010 Faysal Bank 256 .I. Plot No.257 .P. Block 3 Metroville SITE 92-21-36661300 92-21-36662034 92-21-36662774 Marriott Road Branch G5. M.H. Paper Market 92-21-32213945-48 92-21-32213941 Dhoraji Branch Sana Pride. Block 7/8.A Scheme -24 Gulshan e Iqbal karachi 92-21-34972202 92-21-34972416 DHA Phase VIII Branch 43-C. Block-2. 5. Block D North Nazimabad 92-21-36721635 92-21-36721614 Abdullah Haroon Branch State Life Building11 Abdullah Haroon Road 92-21-35682639 92-21-35683975 Jodia Bazar Branch NP 12/74 Mohammad Shah Street 92-21-32522225 . Jinnah Road 92-21-32472616-8 92-21-32472595 Shahrah-e-Faisal Branch Progressive Centre 92-21-34535119 92-21-34535170 North Karachi Branch ST-3. Korangi # 2 92-21-35071757 92-21-35071128 Gulshan Block-2 Branch A-287.D. Chundrigar Road 92-21-32418300-3 92-21-32418485 Karachi Clifton Branch 13-C. K.& 6 Plot # LS -12 (ST -7) Sector 11K North Karachi Town Ship 92-21-36914034-36 92-21-36961038 Buffer Zone Branch Plot # R-2. SD-5 92-21-36676028 92-21 36648440 Cloth Market Branch Cloth Market. Ground Floor Sector 33-A. Lane-2 Shahbaz Commercial 92-21-35347266 92-21-35855131 North Nazimabad Branch D-4.8 92-21-32524770 I.E. Survey # 2 Shahra e Liaquat Burns Road 92-21-2211077-23 92-21-2211022 Gulzar-e-Hijri Branch Plot # A-747/C Block 13-A. Hashmi Electronics Centre Abdullah Haroon Road Saddar 92-21-32751585-86 92-21-32751565 Shah Faisal Colony Branch B-09 Main Electronics Market Shah Faisal Colony No.& Berar Coop 92-21-34136551 92-21-34136550 Metroville Branch Street # 15.I.Korangi No. 5 Ground Floor APWA Complex Plot # 67-AC Garden Road 92-21-32294778 92-21-32294776 Power House UP More Branch Shop # 4.T. Al.Riaz 92-21-34311950 92-21-34310749 Gulshan Branch SB-25 Block 13/C 92-21-111335335 92-21-34972270 Defence Branch 22/C.e.A. 1 92-21-34686215 92-21-34686216 Gulbahar Branch Plot number 476-477-478 Ghousia Colony 92-21-36729801 92-21-36729803 Abdullah Haroon Road Branch 16-Abdullah Haroon Road 92-21-35838959 92-21-35218026 Shaheed-e-Millat Branch 72-A/Z. Sector 15-A/ 2 Buffer Zone North Karachi 92-21-36950081-87 92-21-36950083 Burns Road Branch Shop # 4 & 5 Ground Floor Lokhat Mansion. Al-Murtaza Commercial Lane # 4 D. Phase VI 92-21-35342388 92-21-35342387 Paper Market Branch Shahrah . New Naham Road Off.

Main Road Allama Iqbal Town 92-42-35437004-8 92-42-35296662 Upper Mall Branch 309-A Upper Mall 92-42-35715393-95 92-42-35714844-5 92-42-35710187 Main Boulevard Gulberg Branch 59-A. Shadman 1 Jail Road 92-42-37599316 92-42-37599242 92-42-37599452 92-42-37599363 Sukkur Sukkur Branch City Survey No. Area 92-21-36800693 92-21-36800344 Gulshan-e-Iqbal Branch FL-2/4.H. Ittehad Commercial Lane No 9 92-21-35346706 92-21-35350275 Tipu Sultan Road Branch Plot No. Alam Road Branch 95. Commercial Area Phase-I. Unit No 8 Latifabad 92-22-3820526-7 92-22-3820530 Hyderabad Branch CB 474. 110 Zonal Commercial Area 92-21-34301188 92-21-34301187 Sub Branch Schon Circle. Street no.16-A 16-B.DC-1. Main Boulevard. Block 6 KDA Scheme 92-21-34819572 92-21-34819744 Gulistan-e-Johar Branch Billy's Heights 92-21-34026830 92-21-3402 6832 Khayaban-e-Ittehad Branch 8-C. Opposite Cantt Police Station Saddar 92-22-2781077-78 92-22-2780879 Quetta Shahrah-e-Adalat Branch Shahrah e Adalat 92-81-2838449 92-81-2836453 . Block 17 Federal B. M. 10.489. Plot No.A H-Block Branch 136/1. Phase III Lahore Cantt 92-42-35743741-43 92-42-35749178 Allama Iqbal Town Branch 18-Hunza Block. Alam Road Gulberg-III 92-42-35755190-94 92-42-35712748 92-42-35755196 D. DHA Lahore Cantt 92-42-35897712-17 92-42-35897720 Garden Town Branch 4-Aibak Block. D1596 /1-D Race Course Road Sukha Talab 92-71-5617195-97 92-71-5617185 Sukkur Branch Shaheed Gunj. Block-H. Garden Town 92-42-35889810-4 92-42-35889675 Circular Road Branch Babar Center.Federal B Area Branch C-25. 51 Circular Road 92-42-37673001-6 92-42-37673007 Hyderabad Saddar Branch Plot # 339 Main Bohra Bazar Saddar 92-22-2728356-59 92-22-2728360 Latifabad Branch C . M.M. Block 5 Clifton Centre Kehkashan 92-21-35871891 92-21-35871892 Fatima Jinnah Road Branch Yousuf Centre Fatima Jinnah Road 92-81-2837234 92-81-2834724 Quetta Branch 1-25/14-15 Qandhari Bazar 92-81-2837890 92-81-2820915 Shalimar Garden Branch Chowk Shalimar Bagh Baghbanpura 92-42-36844714-17 92-42-36844744 DHA Z-Block Branch Z-10.A. Main Boulevard. Sukkur 92-71-5628417-967 92-71-5628968 Turbat Turbat Branch Main Bazar 92-852-411074 92-852-412673 Central Region Lahore The Mall Branch 43. Badami Bagh 92-42-37705536-41 92-42-37705551 Faisal Town Branch 25-D. B-II.Shahrah e Quaid e Azam 92-42-37314051-54 92-42-111747747 92-42-37314447 M. Gulberg 92-42-35787823-9 92-42-35787830 Model Town Branch 13-Bank Square Market Model Town 92-42-35884505-07 92-42-35854816 Badami Bagh Branch 1-Taj Chambers. Faisal Town 92-42-35201991-3 92-42-35201998 Thokar Niaz Baig Branch Jamal Market. Ali Town Opposite Lahore University Thokar Niaz Baig Raiwand Road 92-42-35314020-23 92-42-35314016 Shadman Branch 11 .

Bohbatian Chowk Raiwind Road 92-42-35320164. Day Building CMH Chowk. Road 92-42-36840310-5 92-42-36840318 92-42-36840316 PIA Town Branch 188 Block F. Urdu Bazar 92-42-37314617-18 92-42-37314629 Bedian Road Branch Bedian Road Near DHA Phase VI Lahore Cantt 92-42-35720254 92-42-35745868 92-42-35740237 Johar Town Branch 435-G-I.T. Lal Pul. DHA 92-42-35707667-9 92-42-35707747 92-42-35707666 Shahdarah Branch 110-A Lytton Road Qurtaba Chowk 92-42-37210500-4 92-42-37900268 92-42-37210505 Faisal Town Branch 594-A. Awaisia Cooperative Housing Society Ghazi Chowk. Phase III Commercial Area.259 . Sarwar Road Lahore Cantt 92-42-36602327-29 92-42-36601740 Lahore Main Branch 310-Upper Mall Shahrah e Quaid e Azam 92-42-111112233 92-42-35751020 Cavalry Ground Branch 4 /5 Haroon Plaza Cavalry Ground 92-42-111-321-321 92-42-36655590 92-42-36655591 Egerton Road Branch Ground Floor. T Block. Aiwan e Iqbal Complex 92-42-36371111 92-42-36278782 92-42-36368500 Gulshan-e-Ravi Branch 2/B. PECO Road 92-42-35176051-9 92-42-35176002 92-42-35176041 Lahore Gulberg Industrial Area Branch 25-B-2. Civic Center Gulshan e Ravi 92-42-37404511-6 92-4236301107 92-42-37404517 T-Block Branch CCA-22. T. R-205-A. Near AFC 92-42-363524863-4 92-42-36524785 Qartaba Chowk Branch 3 Ferozpur Road. Shahdara 92-42-37902501-506 92-42-37902508 Liberty Market Branch 37-E. Johar Town 92-42-35302017 92-42-35315735 92-42-35315736 92-42-35301393 Shahdara Branch G. Phase 1 92-42-35189011-6 92-42-35189020 92-42-35189010 DHA Y Block Branch 77-Y. Cantt 92-42-35910014-15 92-42-35730877 Ghazi Chowk Branch 8-A. Opposite Lahore Hotel 92-42-36370024-45-67 92-42-36370041 Mughalpura Branch 3/15 Jahangir Road. Faisal Town. 35320406 92-42-35320706 Valancia Branch A-6 H Block Commercial Zone Valancia Society 92-42-35188604-5 92-42-35188604 92-42-35188606 Baghbanpura Branch Chowk Shalamar Bagh G. Gulberg III 92-42-35752108-9 92-42-35750366 Ichra Branch 172. Link College Road 92-42-35212250-54 92-42-35212257 Nila Gumbud Branch 78 Brandreth. Muzang Chungi 92-42-37574680-82 92-42-37574662 Chouburji Branch 50. Nishter Road 92-42-37360032-34-38 92-42-37360035 Brandreth Road Branch The Mall Road.Shah Alam Market Branch 41 Alamgir Market Main Shah Alam Market 92-42-37675619 92-42-37651968 92-42-37671363 Urdu Bazar Branch S-38. Gulberg III 92-42-35717141-5 92-42-35717141 92-42-35718050 Raiwind Road Branch 131/178. Main Boulevard Defence Link Road 92-42-36604309-12 92-42-36604313 Mcleod Road Branch Usman Plaza. III Saeed Alam Tower Liberty Market. DHA 92-42-35728282 92-42-35726601 92-42-35725767 Annual Report 2010 Faysal Bank 258 . Bank Square Lahore 92-42-37367224-225 92-42-37367233 CMH Chowk Branch 1482/14-15. Ferozpur Road Ichra 92-42-37569934-35 92-42-37580488 Walton Cantt Branch 36-Jinnah Plaza. Choburji Branch 92-42-37568229 92-42-37568223 92-42-37568226 New Airport Road Branch Adjoining Divine Mega-II Plaza New Airport Road. Phase II.Road. Faisal Town 92-42-35203881-4 92-42-35203892 92-42-35203880 Township Branch 894-D. Cattle Street Circular Road.

Khewat#1822 Khatooni 2930 To 2940 Gillani Heights Madina Chowk 92-444-540771 92-444-540770 92-444-540768-69 92-444-540772 Dera Ghazi Khan Dera Ghazi Khan Branch Usman Plaza Opposite Lahore Hotel 92-642-468785 92-642-468773 92-642-468769. Circular Road 92-62-2731113 92-62-2731112 92-62-2731115-6 92-62-2874503 Khanewal Khanewal Branch Plot No.T Road Chichawatni 92-40-5482315 92-40-5482314 92-40-5482305-06 92-40-5482310 Depalpur Depalpur Branch Shop#1& 2.1 Nusrat Road Opposite District Court Multan Cantt 92-61-4781054 92-61-4781697 92-21-111112233 92-61-4780126-27 Multan Branch 80-Abdali Road 92-61-4571768 92-61-4570768 92-61-4581905-06 92-61-4581904 Chichawatni Chichawatni Branch G.Gulberg Branch Branch 61. Block 12 Sir Syed Road 92-65-2553606 92-65-2553607 92-65-2553608-11 92-65-2553612 Burewala Burewala Branch 95-C. Officers Colony Bosan Road 92-61-6214901 92-61-6214902 92-61-6214905-09 92-61-6214900 Old Bahawalpur Road Branch 129/1. Multan 92-45-7835421 92-45-7835422 92-45-7835423 92-45-7835420 Mian Channu Mian Channu Branch Khalid Plaza Main Bazar Chak Sawari Mirpur AJK 92-65-2664260-62 92-65-2664264 92-65-2664263 Bahawalpur Bahawalpur Branch 2 .72 92-642-468775 Dera Ghazi Khan Branch Block 18.Main Gulberg 92-42-35757666 92-42-35757666 92-42-35753111 New Garden Town Branch Ground Floor. Multan Road 92-6733-59333 92-6733-59332 92-6733-73011-17 92-6733-59331 Multan Bosan Road Branch I/A-2. 75.Circular Road Badami Bagh 92-42-37708160 92-42-37708171 92-42-37708170 Qurtuba Chowk Branch 110-A Lytton Road Qurtaba Chowk 92-42-37210500-4 92-42-37900268 92-42-37210505 Bilal Gunj Branch 16-Shahjehan Road Bilal Gunj 92-42-37214084-8 92-42-37214074 Bahawalpur Branch V/912. Pakistan Plaza 92-642-474182 92-642-474181 92-642-474175-77 92-642-474180 Arifwala Arifwala Branch 173-D Thana Bazar Arifwala. Ghalla Mandi 92-632-250770-71 92-632-25119-32 92-632-250773 .Rehman Society Noor Mahal Road 92-62-2730591 92-62-2730594 92-62-2730691-95 92-62-2730696 Haroonabad Haroonabad Branch 25/C Grain Market Haroonabad Distt Bahawalnager.Gulshan Block Allama Iqbal Town 92-42-35415588 92-42-35417262 92-42-35419394 Circular Road Branch Outside Shah Alam Gate Main Circular Road 92-42-37670600 92-42-37670501 92-42-37670666 Badami Bagh Branch 343. Old Bahawalpur Road 92-61-4783390 92-61-4783391 92-61-4784492-93 92-61-4785203-04 92-61-4784490 Qadaffi Chowk Branch 709-Qaddafi Chowk Khanewal Road Near Daewoo Terminal 92-61-6784272 92-61-6784273 92-61-6784276-79 92-61-6784284 Multan Main Branch No. Block No 2 92-42-35861111 92-42-35940191 92-42-35869181 Allama Iqbal Town Branch 20 .

Capital Business Center F-10 Markaz 92-51-2104456-8 92-51-2104459 F-7 Markaz Branch Shop 1. F-7/2 92-51-111112233 92-51-2610714-7 92-51-2651331 & 336 F-10 Markaz Branch 7-L. Quaid e Azam Stadium Azad Kashmir 92-5827-445103 92-5287-443601 Mirpur Branch Sector B/2 Allama Iqbal Road 92-5827-437272 92-5827-437260 Chaksawari Branch Khalid Plaza.Okara Okara Branch Mandi Road 92-442-551771 92-442-551770 92-442-551773 92-442-551774 North Region Islamabad Blue Area Branch 15-West Jinnah Avenue Blue Area 92-51-2275096-9 92-51. 4 & 5 Muslim Market Gujranwala 92-52-6614623-3 92-52-6614099 Annual Report 2010 Faysal Bank 260 .3. Main Bazar 92-5827--454800-2 92-5827-454806 Pakpattan Pakpattan Branch College Road 92-45-7352305 92-45-7352306 92-45-7352307-09 92-45-7371591 Rahim Yar Khan Rahim Yar Khan Branch 27. Shair Jaffar Plaza Saddiqui Road 92-57-2602061-62 92-57-2602064 Bhalwal Bhawal Branch 131-A.2275252 92-51-2275254 Abbottabad Abbottabad Branch Main Mansehra Road 92-992-385919-28 92-992-385921 Mirpur Azad Kashmir Mirpur Branch Mian Muhammad Road Opp. Monawwar Plaza C10 Markaz I-10 92-51-4102105-8 92-51-4102117 F-11 Markaz Branch Plot 14.2275095 F-10 Markaz Branch 2-G.Town Hall Opposite City Park 92-68-5889418 92-68-5889417 92-68-5889411-15 92-68-5889420 Sadiqabad Sadiqabad Branch Allama Iqbal Road Sadiqabad District 92-68-5702434 92-68-5702435 92-68-5702440 92-68-5702139 Attock Attock Branch Plot # 169. Markaz Branch G-10 Markaz 92-51--2101272-73 92-51 . Iqbal Road Behind Grain Market 92-6733-66481 92-6733-66482 92-6733-66582 92-6733-66480 Vehari Branch 47-A. Opposite FG College for Women. F-11 Markaz 92-51-2228143-4 92-51-2228145 F-8 Markaz Branch Rawal Arcade Markaz F-8 92-51-2817256 92-51-2817263 G-10. Karkhana Bazar 92-6733-63190 92-6733-60794 92-6733-66401 92-6733-60797 92-6733-66402 Daska Daska Branch Plot No. Plot 12 D Jinnah Supermarket F-7 Markaz 92-51-2652676 92-51-2654689 92-51-2652665 I-10 Markaz Branch 3-G.261 . Markaz F-7. Roshin Center Jinnah Avenue Blue Area 92-51. F-10 Markaz 92-51-2293386 92-51-2291487 92-51-2296962 Blue Area Branch 78-W. Liaqat Shaheed Road 92-48-6642405-08 92-48-6643545 Sahiwal Sahiwal Branch Sarwar Shaheed Road 92-404-224077 92-404-224076 92-404-224060-64 92-404-224015 Chakwal Chakwal Branch Talha Gang Road Opposite Alliance Travel 92-543-553923-4 92-543-553914 Vehari Vehari Branch 94 -B.2101276 Islamabad Main Branch 15.

T. G.T. Road 92-51-3517018 92-51-3514613 Gujar Khan Branch Plot No 204/A. Main Gate 92-51-3516425 92-51-3516324 92-51-3516325 Jhelum Jhelum Branch Kohinoor Bank Square Old G. 215-D WARD 5. G.Road 92-55-3735531-5 92-55-3735536 Faisalabad Faisalabad Branch Civil Line.T. G. University Road 92-91-5711401-8 92-91-5711409 Khyber Bazar Branch 417-D. Peoples Colony 92-41-8730443 92-41-8732196 Madina Town Branch Madina Town 92-41-8723432 92-41-8723451 Faisalabad Main Branch Bilal Road. Civil Lines 92-41-111112233 92-41-2606001 Faisalabad Branch P-III. Katcheryi Road Near Session Chowk Saddar 92-47-7650650-90 92-47-7629545 Gujar Khan Gujar Khan Branch B-111. G. Sadar Bazar Ghulam Muhammad Abad 92-41-2691375 92-41-2691262 92-41-2692814 D-Ground Branch 447-D. Road 92-544-621122 92-544-625648 . Khyber Bazar 92-91-2220471 92-91-2219860 Jhang Jhang Branch P-10/1/A. Omer Plaza Jahangirabad. Dina 92-544-636824 92-544-636036 Gujar Khan Sub Branch Railway Road 92-51-3512403-404 92-51-3512409 Kharian Kharian Branch Rizwan Plaza.T. New Rampura Gate Ashrafi Road 92-91-2593827-8 92-91-2591817 University Road Branch 4652-4670. Road. Akbar Khan Plaza Shahrah e Hazara 92-995-616426-9 92-995-616432 Mardan Mardan Branch Main Bazar. Liaqat Road 92-41-2636341-3 92-41-2612064 Lalamusa Lalamusa Branch Shayan Plaza Kaira G. Bilal Road Civil Lines 92-41-2644481-5 92-41-2640545 92-41-2644486 Liaquat Road Branch 3-Liaquat Road 92-41-2617403-8 92-41-2627809 Ghulam Muhammadabad Branch 39-B. T. Road 92-53-3533143 92-53-3535931 92-53-3533145 Mandi Bahuddin Mandi Bahuddin Branch Furniture Point Railway Road 92-546-600721-23 92-546-00371 Haripur Haripur Branch Akbar Arcade. Jhelum Cantt 92-544-626001 92-544-623875 Jehlum Branch Old G.T Road 92-53-7519581 92-53-7519580 Gujrat Gujrat Branch Sub Gujar Khan Railway Road. Usman Plaza. Near City Hospital 92-53-7536064 92-53-7536066 Kharian Branch Rizwan Plaza G. First Floor GT Road. Outside Bajori Gate Shoba Chowk. Road 92-55-3730301-3 92-55-3730304 Gujranwala Branch Al-Majeed Center.T.T. Bank Road 92-937-871761 92-937-871546 Peshawar Peshawar Cantt Branch Super Market Saddar Road 92-91-5270176-8 92-91-5270631 Peshawar City Branch Tariq Market. Gujar Khan 92-533-236781-3 92-533-524185 Gujrat Branch 2-Prince Fan Colony.Dina Dina Branch 1880-Al-Bilal Plaza GT Road. Road 92-53-7536249 92-53-7534058 Gujranwala Gujranwala Branch Zia Plaza.

New Campus Branch. City Shopping Centre Commercial Market. G-1. University of Peshawar 92-91-5846547-50 92-91-5846545 Peshawar Main Branch Cantt. 4A and 4B Leeds Center Main Boulevard 92-42-35783955-57-59 92-42-35783956 Annual Report 2010 Faysal Bank 262 .II. 130. Bolton Market 92-21-32463265-68 92-21-32463261 DHA Islamic Branch KM Center. Peshawar 92-91-5260488 92-91-5275503 Peshawar Ashraf Road Branch Shops No 471-472/203-204 92-91-2593364-5 92-91-2593165 Rawalpindi Main Branch CL/55 .B1-16S-98B.5468737 Sadiqabad Road Branch 72-C. Commercial Area KCHS Union Ltd Union Area Shaheed-e-Millat Road 92-21-34311657 92-21-34398361 92-21-34311658 Rabwah Rabwah Branch Plot # 09.A.T Road Mian Chunno. Raja Bazar 92-51-5539115 92-51-5533315 92-51-5537844 Islamic Branches: Karachi Sharafabad Branch Alharam 1 BMCHS Alamgir Road Sharfabad 92-21-34923770-4 92-21-34923775 Nazimabad Branch Plot #16 Row #1 Sub Block A.1/16) Nazimabad 021-36613053-55 021-36613011 Jodia Bazar Branch Shop No.263 .5468734-36 92-51. Satellite Town 92-51-4424969-72 92-51-4424962 Raja Bazar Branch U-I. 6-The Mall 92-51-5701054-6 92-51-5567016 Rawalpindi Gunj Mandi Branch Gunj Mandi. Gol Bazar Darul Saddar Chenab Nagar Rabwah 92-47-6215072-4 92-47-6215075 Sargodha Sargodha Branch University Road. Multan 92-46-25178001-5 92-46-2517808 Lahore Gulberg Lahore Branch Shop # 4. Fawara Chowk Raja Bazar 92-51-5530661 92-51-5775625-23-27 92-51-5530671 Westridge Branch Peshawar Road Westridge RV arcade 92-51. 17-Paras Road Opposite CC & I Sialkot 92-52-4292501-3 92-52-4292444 Sialkot Branch Paris Road. Daska Road 92-52-3240203-4 92-52-3240205 Quetta Zarghoon Road Branch Near Bukhari Petroleum New Zarghoon Road Quetta 92-81-2443177 92-81-2443265 92-81-2443231 Toba Tek Singh Toba Tek Singh Branch Near T Chowk. Sialkot Chamber of Commerce & Industry Building 92-52-4264099 92-52-4264030 92-52-4267030 Sialkot Daska Road Branch Pul Aik.Peshawar University Camp Branch Ground Floor. Sargodha 92-48-3726033-36 92-48-3726032 Sargodha Branch Khayyam Chowk. Ground. Block III (IIIA. Iqbal Road. Civil Lines Meo Road 92-51-111321321 92-51-5795105 92-51-5567955 Rawalpindi The Mall Branch Century Tower. Satellite Town Sadiqabad Road 92-51-4257745 92-51-4573741-2 92-51-4425744 Kalma Chowk Branch Kamalabad. Dhok Syedan Road 92-51-5791452-4 92-51-5791457 Sialkot Sialkot Branch Plot No. 3/18/II-B-143 Market Quarters. Academic Block . Railway Road 92-48-3726647-8 92-48-3726649 Rawalpindi Haider Road Branch 32 Haider Road Rawalpindi Cantt 92-51-5701018-22 92-51-5525879 Satellite Town Branch 5th Road. 130/1 Main Korangi Road 92-21-35311473 92-21-35311482 92-21-35311651 SM Islamic Branch SNPA/9-A/1. G. M.R. Plot No. Basement & First Floor.

Rawalpindi Cantt 92-51-5701008 & 12 92-51-5701169 Swat Mangora Branch Lower Ground & First Floor Abasin Towers. Peshawar 92-91-5811395 92-91-5810638 92-91-5811488 Rawalpindi Haider Road Branch 1st Floor.Commercial Area Cavalry Ground 92-42-36603417 92-42-36603418 92-42-36603411 Faisalabad D-Ground Branch 447. 1566 & 1567 Akbar Block. Plot 32. Faisalabad 92-41-8555643 92-41-8555646 92-41-8555647 Hayatabad Hayatabad Branch Industrial State Karkhano Market Shop Number 1-7. F-1469. Haider Road Saddar.D. Rahim Centre Azam Cloth Market 92-42-37671351-54 92-42-37671347 Cavalry Branch 97. Green Chowk Madyan Road 92-946-722011-13 92-946-722014 . Royal Plaza Jamrud Road. Peoples Colony 1 D-Ground.Azam Cloth Branch Shop No.

No.Form of Proxy I/We a member (s) of FAYSAL BANK LIMITED and holding Folio No. This instrument appointing a proxy and the power of attor ney or other authority (if any) under which it is signed or a notarially cer tified copy of the power or authority shall be deposited at the office of M/s. 3. House of Habib Building (Siddiqsons Tower) 3-Jinnah Co-operative Housing Society. 2011 and at any adjournment thereof. A member entitled to attend and vote at the above Annual General Meeting is entitled to appoint another member as a proxy to attend and vote on his/her behalf. / Participant's ID/CDC sub Account No of as my / our proxy to vote and act for me / us on my / our behalf Signed Witness: day of . Mezzanine Floor. The Share Transfer Books of the Bank shell remain closed from April 22. Noble Computer Services (Pvt. Main Shahrah-e-Faisal. 2011 will be treated in time. Notes: 1. In case of proxy. Representative(s) of corporate member(s) should bring usual documents required for such purpose. 2011 (both days inclusive) Transfer received at the Registrar and Share Transfer Agent of the Bank by the close of business on April 21. as per Register hereby appoint Folio No. the Registrar and Share Transfer Agent of the bank not later than 48 hours before the time of holding the meeting and must be duly stamped. 4. Karachi -75350. Revenue Stamp Rs.D. 2. Mezzanine Floor.Such Account Holders and Sub-Account Holders should also bring/know their respective participation I. 2011 1. Karachi -75350. Main Shahrah-e-Faisal. save that a corporation being a member may appoint as it proxy or officer of such corporation whether a member of the company or not. / Participant's ID/CDC sub Account No. of ordinary shares. whose registration details are available in the Share Book Details Reports shall be required to produce their respective original Computerized National Identity Card (CNIC) or original passport at the time of attending the Annual General Meeting to facilitate identification. House of Habib Building (Siddiqsons Tower) 3-Jinnah Co-operative Housing Society. he/she must enclose an attested copy of his/her CNIC or passport. signed and witnessed. 2011 to April 28. . Noble Computer Services (Pvt.) Limited.and the CDC Account No. The CDC Account Holders and Sub-account Holders.) Limited. or failing him/her at the Annual General Meeting of the Bank to be held on April 28. 5/Signature of Member(s) 2. Members are required to timely notify any change in their addres s to Bank's Registrar/Share Transfer Agent M/s.

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