Condensed Interim Financial Information (Unaudited) - First … · 2016-11-01 · Condensed Interim Financial Information (Unaudited) For the Nine Months Period ended ... Deposit

First Women Bank Limited


Condensed Interim Financial Information

(Unaudited)

For the Nine Months Period ended

30 September 2016


DIRECTORS’ REPORT FOR THE PERIOD ENDED 30 SEPTEMBER 2016

On behalf of the Board of Directors, I am pleased to present the Condensed Interim Financial

Statements of First Women Bank Limited (the Bank) for the period ended 30 September 2016.

Economic Review:

Pakistan has fared well so far owing to supporting macroeconomic environment and the record-high

foreign exchange reserves have supported stability in the foreign exchange market. However, the

current account deficit is at the risk of widening further owing to declining exports and rising imports. As

CPEC related projects are gathering momentum, the economy is projected to further expand at the back

of improving industrial activity, especially construction and power generation, and rising demand for

allied services. Relatively lower import prices of inputs, low interest rates, and better energy supplies

are expected to boost manufacturing sector. Improved security situation would help in attracting foreign

investment thus adding on to the sustainability of growth. During 2016, SBP adopted a relatively

cautious approach and based on foregoing policy rate of 5.75 per-cent has been maintained in the

current quarter.

Financial Highlights:


Financial Performance

Bank has closed the bottom line in positive at profit after tax of 38.85 million. However, gross markup

income decreased by around Rs. 300 million or 25%, mainly on account of decline in policy rate. Non-

markup income also decreased in comparison with the corresponding period last year due to one off

capital gain transaction on sale of government securities transferred from HTM to AFS portfolio last

year. Due to cost efficient measures of management, administrative expenses remained controlled and

within the budget.

Asset base of the bank has decreased from Rs. 21.35 billion to Rs. 19.88 billion mainly on account of

decrease in investments by 2.7 billion i.e. 24%. Deposit base has been maintained on the same level as

compared to the December 2015. To support the financial performance of the Bank the borrowing

activities have been managed to address the short term liquidity needs and in line with the asset base of

the Bank, borrowings have been curtailed by 2.08 billion. Advances portfolio has shown a little growth of

around 853 million mainly on account of commodity finance amounting to Rs. 611 million and significant

growth in consumer portfolio has been witnessed from 13.6 million to 74.3 million in comparison with

December 31, 2015. Non-performing loan portfolio (NPLs) has increased by Rs. 286 million i.e. by

15.11%, however, specific provision during the period ended 30 September 2016 decreased by Rs. 36.63

million i.e. 2.87% due to FSV benefit available.

Minimum Capital Requirements

Minimum Capital Requirements (MCR) has been reset for the Bank by SBP, upon recommendation from

Government of Pakistan (GoP), as disclosed in note 1.2 to the financial statements. Under the revised

requirements, the Bank is required to maintain paid-up capital (net of losses) of Rs. 3 billion and Capital

Adequacy Ratio (CAR) of 18% at all times.

The paid up capital (free of losses) of the Bank as at 30 September 2016 stood at Rs 3.02 billion. An

amount of Rs. 500 million is allocated in the Federal Budget 2016-17 for injection of equity in the Bank,

out of which no amount has been released yet. Management of the Bank is rigorously taking up the

matter with the ministry for release of funds on urgent basis. Extension granted to the Bank for meeting

the minimum capital requirement has been expired on 30 June 2016.

Government of Pakistan shareholding through Ministry of Finance now stands at 80.16%.

Credit Rating

The long term entity rating of the Bank has been upgraded to “A-” from “BBB+” while the short-term

entity rating is “A2”. Bank’s rating denotes that there is currently a low expectation of credit risk and

indicate a strong capacity for timely payment of financial commitments.

Gender Equity Program Grant

First Women Bank has been awarded a grant of Rs. 27.5 Million under the Gender Equity Program by

United States Agency for International Development (USAID) through Aurat Foundation.

The grant is purely for the purpose of supporting a specific piece of research & particular development

for the financial inclusion of women of Pakistan. The grant would be used for Market Research and

Product development, Soft skills training including leadership training and customer service training for

the Senior Management & front line staff, marketing and publications.

This grant will result in improving the quality of services and would help to design research based

products for the niche market and hence increasing the outreach.


National Financial Inclusion Strategy

FWBL aims to support women's financial inclusion by taking a holistic and integrated approach and

undertaking research and developing products & services based on needs of un-served women markets.

Further, it is also planned to participate in schemes of Government aimed to Economic Empowerment of

women at all three MACRO, MEZZO and MICRO levels. We aim to build tie ups with organization that

are providing financial assistance to low income groups to facilitate and promote SME sector by focusing

particularly on S of SME. Management is also planning to develop variety of affordable products for the

end users that enhance economic activity & financial inclusion and identify women target markets and

clusters which are financially excluded. Even if we aim to target 1% of the total Financial Inclusion target

for Pakistan, we would be undertaking a paradigm shift in our existing product mix structures and

services mix for the end user. We aim to utilize the GEP project as corner stone in the foundation to

achieve the National Financial Inclusion target.

Change in the Directors

During the period ended 30 September 2016, there have been following changes in the Board of

Directors;

• Mr. Gholam Kazim Hosein has joined the board as independent director on February 29, 2016.

• Ms Rukhsana Shah has joined the board as independent director on February 29, 2016.

• Ms Huma Baqai has joined the board as independent director on March 28, 2016.

• Mr. Malik Abdul Waheed (Nominee – MCB) has resigned from board on May 10, 2016. In his

place Mr. Muhtashim Ahmed Ashai has joined the board as Nominee Director – MCB on August

15, 2016.

• Mr. Asif Saeed Sindhu (Nominee – UBL) has resigned from board on May 17, 2016.

Looking Ahead

It is our objective to actively contribute to the development of the economy that is seeking its true

potential. Focus on women empowerment through alliances and linkages with different women

oriented forums is also the main pillar of the long term strategy of the Bank.

Appreciation and Acknowledgment

On behalf of the Board, I wish to place on record their sincere gratitude to the Government of Pakistan,

Ministry of Finance, State Bank of Pakistan and Securities & Exchange Commission of Pakistan for their

support and continued guidance. We also like to thank our outgoing Directors for the support and

insights they had shared to allow us to move ahead and improve the overall governance structure of the

bank.

For and on behalf of the Board of Directors

Tahira Raza

President and Chief Executive

Karachi

Date: 28 October 2016

First Women Bank LimitedCondensed Interim Statement of Financial PositionAs at 30 September 2016

Note 30 September

2016

31 December

2015

(Un-audited) (Audited)

(Rupees in '000)

Assets

Cash and balances with treasury banks 1,264,690 1,066,852

Balances with other banks 120,182 170,453

Lendings to financial institutions 6 200,000 -

Investments - net 7 8,370,255 11,067,137

Advances - net 8 8,823,655 7,970,275

Operating fixed assets 9 302,522 337,357

Deferred tax assets - net 10 346,165 263,579

Other assets - net 449,617 470,969

19,877,086 21,346,622 Liabilities

Bills payable 176,168 103,166

Borrowings 11 752,745 2,832,357

Deposits and other accounts 12 15,191,592 15,163,440

Sub-ordinated loan -

Liabilities against assets subject to finance lease -

Deferred tax liabilities - net -

Other liabilities 300,564 414,495

16,421,069 18,513,458

Net assets 3,456,017 2,833,164

Represented by

Share capital 3,494,113 2,894,113

Reserves 320,118 294,768

Accumulated loss (473,858) (489,622)

3,340,373 2,699,259

Surplus on revaluation of assets - net of tax 13 115,644 133,905

3,456,017 2,833,164

14

The annexed notes 1 to 19 form an integral part of this condensed interim financial information.

Faisal Jan Sarhindi Tahira Raza

Chief Financial Officer President and

Chief Executive

Tahira Raza Mudassir H. Khan Naheed Ishaq Gholam Kazim Hosein

President and Director Director Director

Chief Executive

Contingencies and commitments

First Women Bank LimitedCondensed Interim Profit and Loss Account (Un-audited)For the Nine Months period and quarter ended 30 September 2016

30 September

2016

30 September

2015

30 September

2016

30 September

2015

Mark-up / return / interest earned 887,685 1,187,645 273,993 354,711

Mark-up / return / interest expensed (435,722) (632,133) (133,816) (195,617)

Net mark-up / return / interest income 451,963 555,512 140,177 159,094

Reversal against/ (provision) for non-performing loans and advances - net 35,143 (193,351) 31,812 (227,613)

Reversal against diminution in the value of investments - 52 - -

Bad debts written off directly - - - -

35,143 (193,299) 31,812 (227,613)

Net mark-up / interest income after provisions 487,106 362,213 171,989 (68,519)

Non-mark-up / interest income

Fee, commission and brokerage income 39,879 28,827 14,447 11,096

Dividend income 8,530 15,222 4,290 -

Income / (loss) from dealing in foreign currencies 11,786 (4,103) 3,296 (2,679)

Gain on sale / redemption of securities - net 62,194 299,102 12,215 206

Unrealized (loss) / gain on revaluation of investments

classified as held for trading (1,560) - 126 -

Other income 25,598 19,746 8,884 6,432

Total non-mark-up / interest income 146,427 358,794 43,258 15,055

633,533 721,007 215,247 (53,464)

Non-mark-up / interest expenses

Administrative expenses (633,661) (612,732) (210,053) (206,457)

Other provisions / write off (3,937) (2,097) 74 (2,050)

Other charges (22,067) (7,490) (200) (133)

Total non-mark-up / interest expenses (659,665) (622,319) (210,179) (208,640)

Extra ordinary / unusual item - - - -

Profit / (loss) before taxation (26,132) 98,688 5,068 (262,104)

Taxation - current year (10,237) (15,461) (3,136) (3,587)

- prior years - - -

- deferred 75,219 35,588 2,441 95,640

64,982 20,127 (695) 92,053

Profit / (loss) after taxation 38,850 118,815 4,373 (170,051)

Accumulated loss brought forward (489,622) (552,114) (471,216) (261,739)

Transferred to statutory reserve (25,350) - (7,770) -

Transfer from surplus on revaluation of operating fixed

assets - net of tax 2,264 2,264 755 755

(512,708) (549,850) (478,231) (260,984)

Accumulated loss carried forward (473,858) (431,035) (473,858) (431,035)

Basic and diluted earnings per share - after tax 0.11 0.48 0.01 0.68




Chief Executive

Tahira Raza Naheed Ishaq Gholam Kazim Hosein

President and Director Director

Chief Executive

Nine months period ended Quarter ended

--------------------(Rupees in '000) --------------------

Director

Mudassir H. Khan

First Women Bank LimitedCondensed Interim Statement of Comprehensive Income (Un-audited)For the Nine Months period and quarter ended 30 September 2016

30 September

2016

30 September

2015

30 September

2016

30 September

2015

Profit / (loss) after tax for the period 38,850 118,815 4,373 (170,051)

Other comprehensive income

Components of comprehensive income not reflected in equity

Net change in fair value of available-for-sale securities (21,045) 279,588 756 (7,437)

Related deferred tax 7,366 (100,597) (264) 2,477

(13,679) 178,991 492 (4,960)

Total comprehensive income for the period 25,171 297,806 4,865 (175,011)


Nine months period ended Quarter ended

--------------------(Rupees in '000) --------------------



Chief Executive



Chief Executive

First Women Bank LimitedCondensed Interim Cash Flow Statement (Un-audited)

For the Nine Months period ended 30 September 2016

30 September

2016

30 September

2015

(Rupees in '000)

CASH FLOWS FROM OPERATING ACTIVITIES

(Loss) / profit before taxation (26,132) 98,688

Dividend income (8,530) (15,222)

(34,662) 83,466

Adjustments for non-cash charges

Depreciation 49,819 49,732

Amortization of intangible assets 4,183 5,384

Provision against non-performing loans and advances - net 35,143 193,351

Reversal against diminution in the value of investments - (52)

Gain on sale / redemption of securities - net (62,194) (299,102)

Unrealized loss on revaluation of investments classified

as held for trading 1,560 -

Gain on sale of operating fixed assets - net (4,775) (557)

23,736 (51,244)

(10,926) 32,222

Decrease / (increase) in operating assets

Lendings to financial institutions (200,000) -

Advances - gross (888,523) (41,388)

Others assets (excluding advance taxation) 7,994 299,458

(1,080,529) 258,070

(Decrease) / increase in operating liabilities

Bills payable 73,002 9,430

Borrowings (2,079,612) (278,151)

Deposits and other accounts 28,152 2,298,794

Other liabilities (113,931) (221,490)

(2,092,389) 1,808,583

(3,183,844) 2,098,875

Income tax paid - (7,071)

Net cash (used in) / generated from operating activities (3,183,844) 2,091,804

CASH FLOWS FROM INVESTING ACTIVITIES

Net investments made 2,743,836 (2,488,246)

Dividend income received 4,285 15,222

Disposal proceeds of operating fixed assets 4,947 570

Purchase of operating fixed assets (21,657) (16,476)

Net cash generated from / (used in) investing activities 2,731,411 (2,488,930)

First Women Bank LimitedCondensed Interim Cash Flow Statement (Un-audited)


30 September

2016

30 September

2015

(Rupees in '000)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds against issue of shares 600,000 -

Net cash generated from financing activities 600,000 -

Increase in cash and cash equivalents 147,567 (397,126)

Cash and cash equivalents at beginning of the period 1,237,305 1,703,919

Cash and cash equivalents at end of the period 15 1,384,872 1,306,793




Chief Executive Officer



Chief Executive Officer

First Women Bank LimitedCondensed Interim Statement of Changes in Equity (Un-audited)For the Nine Months period ended 30 September 2016

Share Statutory Accumulated Total

capital reserve loss

Balance as at 1 January 2015 2,494,113 294,768 (552,114) 2,236,767

Changes in equity for the nine months period ended 30 September 2015

Transaction with owners

Issue of shares against cash - - - -

Total comprehensive income for the nine months period ended 30 September 2015

Profit after tax for the nine months period ended 30 September 2015 - - 118,815 118,815

Other Comprehensive income - - - -

- - 118,815 118,815

Transferred from surplus on revaluation of operating fixed assets

to accumulated loss - net of tax - - 2,264 2,264

Balance as at 30 September 2015 2,494,113 294,768 (431,035) 2,357,846

Changes in equity for the three months period ended 31 December 2015


Issue of shares against cash 400,000 - - 400,000

Total comprehensive income for the three months period ended ' 31 December 2015

Loss after tax for the three months period ended 31 December 2015 - - (65,388) (65,388)

Other Comprehensive income - - 6,046 6,046

(59,342) (59,342)


to accumulated loss - net of tax 755 755

Balance as at 31 December 2015 2,894,113 294,768 (489,622) 2,699,259

Changes in equity for the nine months period ended 30 September 2016


Issue of shares against cash 600,000 - - 600,000

Total comprehensive income for the nine months period ended 30 September 2016

Profit after tax for the nine months period ended 30 September 2016 - - 38,850 38,850

Other Comprehensive income - - - -

38,850 38,850


to accumulated loss - net of tax - - 2,264 2,264

Transferred to statutory reserve - 25,350 (25,350) -

Balance as at 30 September 2016 3,494,113 320,118 (473,858) 3,340,373



Chief Executive



Chief Executive

--------------------------(Rupees in '000) --------------------------

First Women Bank LimitedSelected Notes to the Condensed Interim Financial Information (Un-audited)


1. STATUS AND NATURE OF BUSINESS

1.1

1.2

2. BASIS OF PREPARATION

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

4. ESTIMATES

The accounting policies and methods of computation followed in the preparation of this condensed interim financial information

are the same as those applied in the preparation of the annual financial statements of 'the Bank as at and for the year ended 31

December 2015.

The basis for accounting estimates adopted in the preparation of this condensed interim financial information are the same as

those applied in the preparation of the annual financial statements of the Bank as at and for the year ended 31 December 2015.

First Women Bank Limited ("the Bank") was incorporated under the Companies Ordinance, 1984 on 21 November 1989 in

Pakistan as an unquoted public limited company and commenced operations on 02 December 1989. The Bank is engaged in

commercial banking and related services. The registered office of the Bank is situated at ground floor, S.T.S.M. Foundation

Building, Civil Lines, Karachi. The Bank operates a network of forty two branches as at 30 September 2016 (31 December

2015: forty two branches). The short term and long term credit ratings of the Bank rated by PACRA on 7 April 2016 are 'A2'

and 'A-' respectively.

In addition the Government of Pakistan (GoP) has made a budgetary allocation of Rs. 500 million for equity injection in the

Bank for the year 2016-17. The Bank has requested the GoP for the release of the above amount.

This condensed interim financial information of the Bank for the period ended 30 September 2016 has been prepared in

accordance with the requirements of International Accounting Standard (IAS) 34 - Interim Financial Reporting, provisions of the

Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and directives issued by the Securities and Exchange

Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP). In case requirements differ, the requirements of the

Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the said directives have been followed.

The SBP has deferred the applicability of IAS 39, "Financial Instruments: Recognition and Measurement" and IAS 40

"Investment Property" for Banking Companies through BSD Circular letter no. 10, dated 26 August 2002. Further, according to

the notification of SECP dated 28 April 2008, the IFRS 7 "Financial Instruments: Disclosures" has not been made applicable for

banks. Accordingly, the requirements of these standards have not been considered in the preparation of this condensed interim

financial information. However, investments have been classified and valued in accordance with the requirements of various

circulars issued by the SBP.

This condensed interim financial information is being submitted to the members in accordance with the requirement of section

245 of Companies Ordinance 1984.

Being a public sector Bank, and in terms of the State Bank of Pakistan prescribed minimum capital requirements vide its letter

reference BPRD/BA&CP/627/32/2014 dated 01 January 2014, the Bank is required to have a minimum paid up capital (net of

losses) (MCR) of Rs. 3 billion and capital adequacy ratio of 18% at all times, subject to the condition that MCR level shall

remain enforced until the Bank remains a public sector entity, the Bank will not be allowed to pay dividend until its paid up

capital and reserves reach Rs. 6 billion and the per party exposure limit of the Bank will be 50% of the prudential regulations

limits until the Bank's paid up capital and reserves reach Rs. 6 billion. However the SBP vide its letter dated 28 December 2015

had relaxed the MCR requirement of Rs. 3 billion till 30 June 2016.

As of 30 September 2016, the Bank's MCR (representing paid up capital net of accumulated losses) was Rs. 3.020 billion,

including due to the injection of Rs. 600 million by the Government of Pakistan.

The disclosures made in this condensed interim financial information has been limited based on the format prescribed by the

SBP vide BSD circular letter no. 2 of 12 May 2004 and IAS 34 - "Interim Financial Reporting" and do not include all the

information required in annual financial statements. Accordingly, this condensed interim financial information should be read in

conjunction with the financial statements of the Bank as at and for the year ended 31 December 2015.

5. FINANCIAL RISK MANAGEMENT

Note 30 September 31 December

2016 2015


6. LENDINGS TO FINANCIAL INSTITUTIONS

Secured - local currency

Repurchase agreement lendings 6.1 200,000 -

Term lendings 139,089 139,089

339,089 139,089

Provision against term lendings (139,089) (139,089)

200,000 -

6.1 This carries mark-up of 5.5% (31 December 2015: Nil) per annum. This lending shall mature on 3 October 2016.

7. INVESTMENTS - NET

Investments by types

Held by Given as Total Held by Given as Total

bank collateral bank collateral

Note

Held for trading

- Ordinary shares of listed companies 55,749 - 55,749 20,458 - 20,458

Available-for-sale

- Market Treasury Bills 7.1 7,263,560 597,507 7,861,067 6,746,008 2,775,736 9,521,744

- Pakistan Investment Bonds 223,478 - 223,478 1,405,487 - 1,405,487

- Term Finance Certificates 13,088 - 13,088 13,911 - 13,911

- Units of mutual funds - - - 20,000 - 20,000

- Preference shares of a listed company 10,000 - 10,000 10,000 - 10,000

- Ordinary shares of unlisted companies 954 - 954 954 - 954

- Ordinary shares of listed companies 212,894 - 212,894 59,217 - 59,217

7,723,974 597,507 8,321,481 8,255,577 2,775,736 11,031,313

Investments at cost 7,779,723 597,507 8,377,230 8,276,035 2,775,736 11,051,771

Provision for diminution in the

value of investments (17,781) - (17,781) (17,781) - (17,781)

Investments - net of provisions 7,761,942 597,507 8,359,449 8,258,254 2,775,736 11,033,990

Deficit on revaluation of held for trading

securities - net (1,560) - (1,560) (264) - (264)

Surplus on revaluation of available-

for-sale securities - net 13.2 12,371 (5) 12,366 29,007 4,404 33,411

Investments at revalued amount 7,772,753 597,502 8,370,255 8,286,997 2,780,140 11,067,137

7.1

The financial risk management objectives and policies adopted by the Bank are consistent with those disclosed in the financial

statements of the Bank for the year ended 31 December 2015.

(Rupees in '000)

30 September 2016 (Un-audited)

----------------------------------------(Rupees in '000)----------------------------------------

31 December 2015 (Audited)

Market value of securities given as collateral against investments amounted to Rs.597.502 million (December 2015: 2,780.140

million).

30 September 31 December

2016 2015

Note (Un-audited) (Audited)

(Rupees in '000)

8. ADVANCES - NET

Loans, cash credits, running finances, etc.

In Pakistan 10,071,603 9,249,996

Foreign bills discounted and purchased (excluding treasury bills)

payable in Pakistan - 3,385

10,071,603 9,253,381

Provision against non-performing loans and advances

Specific provision 8.2 & 8.3 (1,241,327) (1,277,954)

General provision 8.3 (6,621) (5,152)

(1,247,948) (1,283,106)

Advances - net of provision 8,823,655 7,970,275

8.1 Particulars of advances (gross)

In local currency 10,071,603 9,249,996

In foreign currencies - 3,385

10,071,603 9,253,381

8.2

Category of classification

Total Total

domestic Specific Specific domestic Specific Specific

classified provision provision classified provision provision

advances required held advances required held

--------------------------------------- (Rupees in '000) ------------------------------

Other Assets Especially Mentioned 5,655 545 545 - - -

Substandard 231,066 8,282 8,282 112,564 13,828 13,828

Doubtful 183,655 9,192 9,192 721,928 204,001 204,001

Loss 1,760,459 1,223,308 1,223,308 1,060,125 1,060,125 1,060,125

2,180,835 1,241,327 1,241,327 1,894,617 1,277,954 1,277,954

8.3 Particulars of provision against non-performing loans and advances

Specific General Total Specific General Total

Opening balance 1,277,954 5,152 1,283,106 1,050,605 5,536 1,056,141

Charge for the period / year 178,590 3,681 182,271 283,490 912 284,402

Reversals (215,202) (2,212) (217,414) (53,914) (1,296) (55,210)

(36,612) 1,469 (35,143) 229,576 (384) 229,192

Write offs against provision (15) - (15) (2,227) - (2,227)

Closing balance 1,241,327 6,621 1,247,948 1,277,954 5,152 1,283,106

Advances include Rs. 2,180.835 million (31 December 2015: Rs. 1,894.617 million) which have been placed under the non-

performing status as detailed below:

--------------------------------------- (Rupees in '000) ------------------------------

30 September 2016 (Un-audited) 31 December 2015 (Audited)

30 September 2016 (Un-audited) 31 December 2015 (Audited)

9. OPERATING FIXED ASSETS

Additions Cost Accumulated

depreciation

---------- (Rupees in '000) ----------

Building improvements 7,569 136 85

Furniture and fixtures 4,197 1,249 1,139

Office equipment and computer 3,442 7,607 7,596

Vehicles - 8,290 8,290

15,208 17,282 17,110


2016 2015


10. DEFERRED TAX ASSET - NET (Rupees in '000)

Taxable temporary differences on:

Surplus on revaluation of operating fixed assets (29,666) (30,884)

Surplus on revaluation of available for sale securities 13.2 (4,328) (11,694)

(33,993) (42,578)

Deductible temporary differences on:

Provision against non-performing loans and advances 239,669 250,817

Measurement of post retirement benefit obligations 28,669 28,669

Accelerated tax depreciation 34,562 26,671

Tax losses 77,258 -

380,158 306,157

346,165 263,579

11. BORROWINGS

Secured

Borrowings from State Bank of Pakistan under

- Export refinance scheme 11.1 155,339 52,700

Repurchase agreement borrowings 11.2 597,406 2,779,657

752,745 2,832,357

11.1 This carries mark-up of 2.5-3% (31 December 2015: 4.5%) per annum. These borrowings are repayable between

17 August 2016 to 30 September 2024.

11.2 This carries mark-up of 5.88% (31 December 2015: 6.5%) per annum. These borrowings are repayable on 7

October 2016.

During the period, additions and disposals (at cost) of operating fixed assets amounted to Rs.15.208 million (30

September 2015: Rs. 16.476 million) and Rs. 17.282 million (30 September 2015: Rs. 5.462 million)

Disposals


2016 2015


(Rupees in '000)

12. DEPOSITS AND OTHER ACCOUNTS

Customers

Fixed deposits 2,139,591 1,729,639

Savings deposits 5,472,166 5,409,318

Current (saving cum current) accounts - remunerative 4,007,179 4,230,991

Current accounts - non remunerative 3,198,277 3,368,498

Call deposits 120,675 288,397

Sundry deposits 12.1 252,014 134,961

15,189,902 15,161,804

Financial institutions

Remunerative deposits - 1,500

Non-remunerative deposits 1,690 136

1,690 1,636

15,191,592 15,163,440

12.1 Sundry deposits include margin account balances of Rs.252.009 million (31 December 2015: Rs 134.959 million).

12.2 Particulars of deposits

In local currency 14,721,209 14,457,889

In foreign currencies 470,383 705,551

15,191,592 15,163,440

13. SURPLUS / (DEFICIT) ON REVALUATION OF ASSETS - net of tax

Surplus / (deficit) arising on revaluation (net of tax) of:

- Operating fixed assets 13.1 107,606 112,188

- Available-for-sale securities 13.2 8,038 21,717

115,644 133,905

13.1 Surplus on revaluation of operating fixed assets - net of tax

Surplus on revaluation of operating fixed assets as at 01 January 143,072 147,716

Transferred to accumulated loss representing incremental

depreciation charged during the period / year - net of tax (2,264) (3,019)

Related deferred tax liability (1,218) (1,625)

Revaluation reversal during the period (2,318)

(5,800) (4,644)

137,272 143,072

Deferred tax liability on:

Revaluation surplus at 01 January 30,884 32,509

Incremental depreciation charged during the period / year (1,218) (1,625)

Revaluation surplus during the period / year - -

29,666 30,884

107,606 112,188


2016 2015


(Rupees in '000)

13.2 Surplus / (deficit) on revaluation of available-for-sale securities - net of tax

Federal Government securities 9,259 35,482

Units / certificates of mutual funds - net 3,107 (2,071)

12,366 33,411

Related deferred tax liability (4,328) (11,694)

8,038 21,717

14. CONTINGENCIES AND COMMITMENTS

14.1 Transaction-related contingent liabilities

Guarantees in favour of:

Government 1,979,349 577,873

Others 52 52

1,979,401 577,925

14.2 Trade-related contingent liabilities

Letter of credit and acceptances on behalf of:

Government - -

Others 453,027 446,833

453,027 446,833

14.3 Commitment for the acquisition of operating fixed assets

Capital commitment for tangible assets 24,236 3,091

14.4 Commitments in respect of forward foreign exchange contracts

Purchase - 110,638

Sale - 42,160

14.5 Commitments in respect of forward swaps

Purchase 593,818 643,316

Sale 254,948 69,816

14.6 Commitments in respect of lendings

14.7 Tax related contingencies

14.7.1

14.7.2

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.

Return for the tax year 2015 (financial year ended 31 December 2014) has been filed which is deemed to have been assessed

under Section 120 of the Income Tax Ordinance, 2001 (unless selected for audit).

While finalizing the assessments for tax years from 1997 to 2000 and from 2004 to 2008 (financial years ended from 31

December 1996 to 31 December 1998 and from 31 December 2003 to 31 December 2007 respectively), the tax authorities,

from time to time, made certain disallowances against nostro account balances, apportionment of expenses, interest

suspensed etc., against which appeals were filed by the Bank at the Appellate Tribunal Inland Revenue (ATIR). The ATIR

vide its order dated 31 May 2012 decided all the matters (except disallowance of nostro balances, interest suspensed and

apportionment of expenses) for tax years from 2004 to 2008 in favour of the Bank against which CIR had filed an appeal in

the Sindh High Court (SHC) which is pending for hearing. Further, the matter of nostro balances written off was remanded

back by 'ATIR to the CIR whereas the matter of apportionment of expenses have been disallowed against which the Bank

has filed an appeal in SHC, which is pending adjudication. In case of adverse decisions, additional charge to the Bank would

be Rs. 14.626 million. However, the management is confident that the decision in appeals would be in its favour and as such

no provision is required to be made against the above amount in these condensed interim financial information.

14.7.3

14.7.4

30 September 31 December

2016 2015


(Rupees in '000)

14.8 Other contingencies

Claims against the Bank not acknowledged as debt - -

15. CASH AND CASH EQUIVALENTS

Cash and balances with treasury banks 1,264,690 1,066,852

Balances with other banks 120,182 170,453

1,384,872 1,237,305

In 2015, the Deputy Commissioner Inland Revenue (DCIR) issued order under Sections 161 and 205 of the Income Tax

Ordinance, 2001 raising the demand of 7.071 million (inclusive of default surcharge) on account of the non-deduction of tax

on certain payments during the tax year 2014. The Bank has filed appeal before the Commissioner Inland Revenue

(Appeals) which is pending adjudication. Management is confident that this matter will ultimately be decided in the favour

of the Bank. Accordingly, no provision is required to be made in this regard in this condensed interim financial information.

Provision against the above claims have not been made as the Bank is confident of the decisions in its favour.

The Additional Commissioner Inland Revenue (ACIR), has amended the assessment orders for the tax years 2010, 2011 and

2012 and Deputy Commissioner Inland Revenue (ICIR) has amended the assessment order for tax year 2013 (financial years

ended 31 December 2009 to 31 December 2012) respectively from time to time under Sections 122 (4) and 122 (5A) of the

Income Tax Ordinance, 2001. Demands aggregated to Rs. 40.194 million on account of certain disallowances have been

made relating to these tax years. The Bank filed appeal before the Commissioner Inland Revenue (Appeals) who has

decided all matters in favour of the Bank except the matter of workers welfare fund against which the Bank has filed appeals

before higher forums. The management believes that the matter will ultimately be decided in the favour of the Bank.

Accordingly, no provision has been made against the said claims.

In 2012, the Deputy Commissioner Inland Revenue (DCIR) has raised demands aggregating to Rs. 13.477 million on

account of Federal Excise Duty (FED) on fee, commission and brokerage income of the Bank for the period from 01

January 2009 to 31 December 2011. The Bank has filed appeals against the said orders before Commissioner Inland

Revenue (Appeals), who has remanded the case back to the DCIR for proper scrutiny of the facts.

In 2014, the Deputy Commissioner Inland Revenue (DCIR) issued Order-In-Original for the recovery of short payment of

Rs. 12.304 million on account of FED on fee, commission and brokerage income, income from dealing in foreign currencies

and other income of the Bank for the year ended 31 December 2012. The Bank filed appeal against the said order before

Commissioner Inland Revenue (Appeals) who maintained the said demand of DCIR against which the bank has filed appeal

before the Appellate Tribunal Inland Revenue (ATIR) which is pending adjudication.

16. RELATED PARTY TRANSACTIONS AND BALANCES

The Bank has related party relationships with associated undertakings, employee benefits, directors and key management personnel and companies with common directors. Transactions with key management

personnel are in accordance with their terms of employment. Contributions to and accruals in respect of staff retirement benefit plans are made in accordance with the actuarial valuation / terms of

contribution plan. Other transactions are at agreed rates. The details of transactions and balances with related parties, except as disclosed elsewhere in this condensed interim financial information, are as

follows:

16.1. Balances

(Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited) (Unaudited) (Audited)

30 Sep 2016 31 Dec 2015 30 Sep 2016 31 Dec 2015 30 Sep 2016 31 Dec 2015 30 Sep 2016 31 Dec 2015

Deposits -----------------------------------------------------------------------------(Rupees in '000)-------------------------------------------------------------------------------

Balance at beginning of the period / year 6,607 9,061 - 100,022 2,679 9,592 9,518 14,027

Deposited during the period / year 30,937 101,844 - - 36,649 56,013 444,549 52,021

Withdrawn/adjustment during the period / year (31,818) (104,298) - (100,022) (37,137) (62,926) (448,170) (56,530)

Balance at end of the period / year 5,726 6,607 - - 2,191 2,679 5,897 9,518

Advances (secured)

Balance at beginning of the period / year - - - 140,000 31,869 16,134 - (204)

Loans granted during the period / year - - - - 1,948 16,014 - -

Repayments/adjustments received during the period / year - - - (140,000) (2,574) (279) - -

Balance at end of the period / year - - - - 31,243 31,869 - (204)

Mark-up payable in local currency 17 95 - - 9 78 71 356

Deposits carry mark-up rate ranging from 0% to 3.75% per annum (31 December 2015: 0.05% to 4.5% per annum).

Mark-up receivable in local currency - - - - 524 315 - -

Advances carry profit rates ranging from 0% to 5% per annum ( 31 December 2015: 0% to 5% per annum)

Cash and balance with treasury bank - - 62,757 65,553 - - - -

Balances with other banks - - 118,913 168,972 - - - -

Investment in listed shares of related parties - AFS 43,188 3,135

Investment in listed shares of related parties - HFT 5,770 1,733

Investment in National Institutional Facilitation Technologies (Private)

Limited - - 954 954 - - - -

Lendings to financial institution - - 200,000 198,442 - - - -

Net (payable) / receivable from defined benefit plan (4,686) (3,280) - - - - 12,201 33,244

16.2. Transactions during the period (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

30 Sep 2016 30 Sep 2015 30 Sep 2016 30 Sep 2015 30 Sep 2016 30 Sep 2015 30 Sep 2016 30 Sep 2015

Mark-up / return / interest expensed 56 167 - 4,862 40 111 235 403

Mark-up / return / interest earned - - - 9,492 641 845 - -

Lendings to financial institutions - During the period - - 11,233,301 14,536,829 - - -

Borrowing from financial institutions - During the period - - 6,752,607 4,867,701 - - -

Interest income on lendings to financial institutions - - 2,397 3,131 - - -

Interest expense on repurchase agreement borrowings - - 668 1,063 - - -

Dividend income - - 994 14,909 - - - -

Contribution to defined benefit plans 1,406 2,811 - - - - 21,042 22,366

Issue of shares to Federal Government of Pakistan through

Ministry of Finance - - - - - - 600,000 -

Remuneration 19,707 21,652 - - 40,378 32,467 - -

Related parties by virtue of common directorship and GoP holdings

The Bank has availed the exemption available to it under its reporting framework, and therefore has not provided detailed disclosure of its transactions with government related entities.

President and directors Associated Undertaking Key management personnel Other related parties

The Government of Pakistan directly 80.16% of the Bank's issued share capital and is entitled to appoint members of the Board. The Bank, therefore, considers that the GoP is in a position to exercise

control over it and therefore regards the GoP and its various bodies as related parties for the purpose of the disclosures in respect of related parties.

17. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES

The segment analysis with respect to business activity is as follows:

Corporate Trading and Retail & Commercial Inter-segment Total

Finance Sales Consumer Banking elimination

Banking

Total income 284,668 498,086 178,194 347,818 (274,654) 1,034,112

Total expenses 164,321 696,697 421,413 52,467 (274,654) 1,060,244

Income tax - - - - - 64,982

Net income 120,347 (198,611) (243,219) 295,351 - 38,850

Segment assets - gross 6,397,506 9,560,229 4,016,059 9,339,201 (8,686,808) 20,626,187

Advance tax - - - - - 146,062

Deferred tax asset - - - - - 346,165

Total assets 6,397,506 9,560,229 4,016,059 9,339,201 (8,686,808) 21,118,414

Segment non performing loans 1,418,846 - 761,989 - - 2,180,835

Segment specific provision required 808,515 - 432,812 - - 1,241,327

Segment liabilities 233,756 9,294,026 15,105,186 474,910 (8,686,808) 16,421,070

Corporate Trading and Retail & Commercial Inter-segment Total

Finance Sales Consumer Banking elimination

Banking

Total income 380,520 921,105 546,786 55,805 (357,777) 1,546,439

Total expenses 473,098 858,560 449,336 24,534 (357,777) 1,447,751

Income tax - - - - - 20,127

Net income (92,578) 62,545 97,450 31,271 - 118,815

Segment assets - gross 6,575,520 11,419,029 11,709,532 627,590 (8,443,476) 21,888,195

Advance tax - - - - - 157,938

Deferred tax asset - - - - - 256,766

Total assets 6,575,520 11,419,029 11,709,532 627,590 (8,443,476) 22,302,899

Segment non performing loans 1,342,313 - 534,882 - - 1,877,195

Segment specific provision required 875,011 - 367,723 - - 1,242,734

Segment liabilities 4,011,199 19,059,943 11,906,924 292,616 (8,443,476) 26,827,206

For the nine months period ended and as of 30 September 2016 (Un-audited)

--------------------------------------------------(Rupees in '000)---------------------------------------------------------

For the nine months period ended and as of 30 September 2015 (Un-audited)

--------------------------------------------------(Rupees in '000)---------------------------------------------------------

18. DATE OF AUTHORISATION FOR ISSUE

19. GENERAL

Figures have been rounded off to the nearest thousand rupees.



Chief Executive



Chief Executive

This condensed interim financial information was authorised for issue by the Board of Directors of the Bank in their meeting

held on 28 October 2016.

Documents

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