Notes to and forming part of the Unconsolidated Financial Statements

For the year ended December 31, 2018

3.3 The SECP vide its notification SRO 633 (I)/2014 dated 10 July 2014, adopted IFRS 10 effective from the periods starting
from June 30, 2014. However, vide its notification SRO 56 (I)/2016 dated January 28, 2016, it has been notified that the
requirements of IFRS 10 and section 228 of the Companies Act, 2017 will not be applicable with respect to the investment
in mutual funds established under trust structure.

3.4 These unconsolidated financial statements represent the separate financial statements of the Bank. The consolidated
financial statements of the Bank and its subsidiaries are presented separately.

3.5 Standards, interpretations and amendments to accounting and reporting standards that are not yet effective

The following new standards and interpretations of and amendments to existing accounting standards will be effective from
the dates mentioned below against the respective standard, interpretation or amendment:
Effective date (annual periods
Standard, Interpretation or Amendment beginning on or after)
- IFRS 15 - Revenue from contracts with customers July 1, 2018
- IFRS 11 - Joint Venture - (Amendments) January 1, 2019
- IFRS 16 - Leases January 1, 2019
- IAS 19 - Employee Benefits - (Amendments) January 1, 2019
- IAS 28 - Investments in Associates and Joint Ventures - (Amendments) January 1, 2019
- IFRIC 23 - Uncertainty over Income Tax Treatments January 1, 2019
- IFRS 3 - Business Combinations - (Amendments) January 1, 2020

Effective date (periods

ending on or after)
- IFRS 9 - Financial Instruments: Classification and Measurement June 30, 2019

IFRS 16 replaces existing guidance on accounting for leases, including IAS 17 'Leases', IFRIC 4 'Determining whether an
arrangement contains a Lease', SIC-15 'Operating Leases - Incentive' and SIC-27 'Evaluating the Substance of
Transactions Involving the Legal Form of a Lease'. IFRS 16 introduces a single, on balance sheet lease accounting model
for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability
representing its obligations to make lease payments. There are recognition exemptions for short-term leases and leases of
low-value items. Lessor accounting remains similar to the current standard i.e. lessors continue to classify leases as
finance or operating leases.

On adoption of IFRS 16, the Bank shall recognize a 'right of use asset' with a corresponding liability for lease payments.
The Bank is in the process of assessing the full impact of this standard.

IFRS 9: 'Financial Instruments' addresses recognition, classification, measurement and derecognition of financial assets
and financial liabilities. The standard has also introduced a new impairment model for financial assets which requires
recognition of impairment charge based on an 'Expected Credit Losses' (ECL) approach rather than the 'incurred credit
losses' approach as currently followed. The ECL has impact on all assets of the Bank which are exposed to credit risk. As
detailed in note 5.1.2, the Bank has already adopted IFRS 9 in respect of certain overseas branches.

The Bank is in the process of assessing the full impact of this standard.

The Bank expects that adoption of the remaining interpretations and amendments will not affect its financial statements in
the period of initial application.

3.6 Standards, interpretations and amendments to accounting and reporting standards that are effective in the current
year

The State Bank of Pakistan (SBP) through its BPRD Circular No. 02 of 2018 dated January 25, 2018 has amended the
format of annual financial statements of banks. All banks are directed to prepare their annual financial statements on the
revised format effective from the accounting year ending December 31, 2018. Accordingly, the Bank has prepared these
financial statements on the new format prescribed by the State Bank of Pakistan. The adoption of new format required
certain recognition requirements, reclassification of comparative information and also introduced additional disclosure
requirements. Accordingly a third statement of financial position has been presented at the beginning of the preceding
period (i.e. December 31, 2016) in accordance with the requirement of International Accounting Standard 1 – Presentation
of Financial Statements.

Annual Report 2018 79