bank of tokyo mitshubhishi ltd 2009

7/30/2019 Bank of Tokyo Mitshubhishi Ltd 2009

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KPMG Taseer Hadi & Co.Chartered Accountants

The Bank of Tokyo - Mitsubishi UFJ,Limited - Karachi Branch

(incorporated in Japan with limited liability)

Financial StatementsFor the year ended31 December 2009


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KPMG Taseer Hadi & Co. Telephone + 92 (21) 3568 5847 .Chartered Accountants Fax + 92 (21) 35685095Sheikh Sultan Trust BUilding No.2 Internet www.kpmg.com.pkBeaumont RoadKarachi, 75530 Pakistan

Auditors' report to the directorsWe have audited the annexed balance sheet of the Karachi Branch of The Bank of Tokyo Mitsubishi UFJ, Limited [incorporated in Japan with limited liability] (''the Branch") as at 31December 2009 and the related profit and loss account, statement of comprehensive income,cash flow statement and statement of changes in equity together with the notes forming partthereof'(here-in-after referred to as the 'financial statements') for the year then ended, and westate that we have obtained all the information and explanations which, to the best of ourknowledge and belief, were necessary for the purposes of our audit.It is the responsibility of the Branch's management to establish and maintain a system of internalcontrol, and prepare and present the financial statements in conformity with the approvedaccounting standards and the requirements of the Banking Companies Ordinance, 1962 (LVII of1962), and the Companies Ordinance, 1984 (XLVII of 1984). Our responsibility is to express anopinion on these statements based on our audit.We conducted our audit in accordance with the International Standards on Auditing as applicablein Pakistan. These standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of any material misstatement. An auditincludes examining, on a test basis, evidence supporting amounts and disclosures in the financialstatements. An audit also includes assessing accounting policies and significant estimates madeby management, as well as, evaluating the overall presentation of the financial statements. Webelieve that our audit provides a reasonable basis for our opinion and after due verification,which in case ofloans and advances covered more than 60 percent ofthe total loans andadvances of the Branch, we report that:(a) . in our opinion, proper books of account have been kept by the Branch as required by theCompanies Ordinance, 1984 (XLVII of 1984);(b) in our opinion:

(i) the balance sheet and profit and loss account together with the notes thereon havebeen drawn up in conformity with the Banking Companies Ordinance, 1962 (LVIIof 1962), and the Companies Ordinance, 1984 (XLVII of 1984), and are inagreement with the books of account and are further in accordance with accountingpolicies consistently applied except for the changes resulted on initial application ofstandards, amendments or an interpretation to existing standards, as stated in note2.3 with which we concur;

(ii) the expenditure incurred during the year was for the purpose of the Branch'sbusiness; and(iii) the business conducted, investments made and the expenditure incurred during theyear were in accordance with the objects ofthe Branch and the transactions of the

Branch which have come to uur notice have been within the powers of the Branch;

KPMG Taseer Hadi & Co. a partnership firm registered in Pakistanand a member firm of the KPMG network of independent memberfirms affiliated with KPMG International, a Swiss cooperative


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KPMG Taseer Hadi & Co.

(c) in our opinion and to the best of our information and according to the explanations givento us, the balance sheet, profit and loss account, statement of comprehensive income, cashflow statement and statement of changes in equity together with the notes forming partthereof conform with approved accounting standards as applicable in Pakistan, and givethe information required by the Banking Companies Ordinance, 1962 (LVII of 1962), andthe Companies Ordinance, 1984 (XLVII of 1984), in the manner so required and give atrue and fair view of the state ofthe Branch's affairs as at 31 December 2009, and its truebalance of the profit, its comprehensive income, its cash flows and changes in equity forthe year then ended; and

(d) in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980(XVIII of 1980), was deducted by the Branch and deposited in the Central Zakat Fundestablished under section 7 of that Ordinance.

KPMG Taseer Hadi & Co.Date: Z0MAR 2010 Chartered AccountantsKarachi Mohammad Mahmood Hussain


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The Bank of Tokyo - Mitsubishi UFJ, Limited - Karachi Branch(Incorporated in Japan with limited liability)Balance SheetAs at 31 December 2009

NoteASSETSCash and balances with treasury banksBalances with other banksLendings to financial institutionsInvestmentsAdvancesOperating fixed assetsDeferred tax assetsOther assets

567

8910I I

LIABILITIESBills payableBorrowingsDeposits and other accountsSub-ordinated loansLiabilities against assets subject to finance leaseDeferred tax liabilitiesOther liabilities

121314

15

NET ASSETS

REPRESENTED BYHead office capital accountReservesUnremitted profit

16

Surplus I (deficit) on revaluation of assets

CONTINGENCIES AND COMMITMENTS 17

The annexed notes I to 35 form an integral part of these financial statements.K f J y 1 A ~ r-t

2009 2008(Rupees in '000)

4,237,35091,075

1,905,5512,198,843

27,3362,260

83,3018,545,716

216,9071,397,7252,740,049

103,4474,458,128

4,072,08036,983

1,597,6974,092,787

19,4221,926

242,34710,063,242

12,5594,258,3511,715,912

119,1786,106,000

4,087,588

4,041,32346,265

4,087,5884,087,588

3,957,242

3,878,69878,544

3,957,2423,957,242

Deputy General Manager


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The Bank of Tokyo - Mitsubishi UFJ, Limited - Karachi Branch(Incorporated in Japan with limited liability)Profit and Loss AccountFor the year ended 31 December 2009.

Mark-up / return / interest earnedMark-up / return / interest expensedNet mark-up / interest incomeProvision against non-performing loans and advances - netProvision for diminution in the value of investmentsBad debts written off directlyNet mark-up / interest income after provisions - netNON MARK-UP / INTEREST INCOME

Fee, commission and brokerage incomeDividend incomeIncome from dealing in foreign currenciesGain / (loss) on sale of securitiesUnrealised gain / (loss) on revalution of investmentsclassified as held for trading

Other incomeTotal non-markup / interest income

NON MARK-UP / INTEREST EXPENSESAdministrative expensesOther provisions / assets written-offOther chargesTotal non-markup / interest expensesExtra ordinary / unusual items

PROFIT BEFORE TAXATIONTaxation - Current

- Prior years- Deferred

PROFIT AFTER TAXATIONUnremitted profi t brought forwardProfit available for remittance

Note 2009 2008(Rupees in '000)

18 516,130 538,14519 (385,251) (391,186)

130,879 146,959

DO

20

2122

23

130,879 146,959 .

13,661 22,80735,384 57,248

261 43049,306 80,485

180,185 227,444

(112,088) (97,011)(2,485) (6,335)

(114,573) (103,346)65,612 124,098

(23,309)3,291

334(43,834)

(2,205)337(19,684) (45,702)

45,928 78,39678,544 79,379

124,472 157,775

The annexed notes 1 to 35 form an integral part of these financial statements.J : : t 1 ~

eputy General Manager


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The Bank ofTokyo - Mitsubishi UFJ, Limited - Karachi Branch(Incorporated in Japan with limited liability)Statement ofComprehensive IncomeFor the year ended 31 December 2009

2009 2008(Rupees '000)

Profit after taxation for the year 45,928 78,396

Other comprehensive incomeExchange adjustment on account of revaluation of capital 162,625 1,503,841Total comprehensive income for the year 208,553 1,582,237

The annexed notes I to 35 form an integral part of these financial statements.t : ~

General Manager Deputy General Manager


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The Bank of Tokyo - Mitsubishi UFJ, Limited - Karachi Branch.(Incorporated in Japan with limited liability)Cash Flow StatementFor the year ended 31 December 2009

Note 2009 2008(Rupees in '000)CASH FLOW FROM OPERATING ACTIVITIESProfit before taxation 65,612 124,098Adjustments for:Depreciation 7,544Amortization

7,719567

Provision for defined benefit plan882

1,272Gain on disposal of operating fixed assets

977(163) (56)9,415 9,327

(Increase) / decrease in operating assetsLendings to financial institutionsAdvancesOthers assets (excluding advance taxation)Increase / (decrease) in operating liabilitiesBills payableBorrowingsDeposits and other accountsOther liabilitiesContribution made to defined benefit planIncome tax paidNet cash flow from operating activitiesCASH FLOW FROM INVESTING ACTIVITIESNet investments in available-for-sale securitiesInvestments in operating fixed assetsProceeds from sale of operating fixed assetsNet cash used in investing activitiesCASH FLOW FROM FINANCING ACTIVITIES

75,027 133,425

(307,854)1,893,944146,556

1,732,646

(1,397,697)(1,471,686)(139,209)

(3,008,592)204,348

(2,860,626)1,024,137

(14,640)(1,646,781)

(2,080)(7,516)

(8,355)2,261,951

737,06686,939

3,077,601(82){I 0)151,296 202,342

(16,672)320

(16,352)(4,454)

239( 4 , ~ 1 5 )

Remittances made to head office (78,207) (79,231 )Remittances received from head officeExchange adjustment on revaluation of head office capital 162,625 1,503,841Net cash flow from financing activities 84,418 1,424,610Increase in cash and cash equivalents 219,362 1,622,737Cash and cash equivalents at beginning of the year 4,109,063 2,486,326Cash and cash equivalents at end of the year 24 4,328,425 4,109,063The annexed notes 1 to 35 form an integral part of these financial statements.r ~ t~ ~ e n e r a l Manager Deputy General Manager


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The Bank of Tokyo - Mitsubishi UFJ, Limited - Karachi Branch(Incorporated in Japan with limited liability)Statement of Changes in EquityFor the year ended 31 December 2009

Head Office Unremitted Totalcapital profitsaccount

------------------(Rupees in '000)-----------------Balance as at 1 January 2008 2,374,857 79,379 2,454,236Total comprehensive income for the yearProfit after tax for the year ended 3 1 December 2008 78,396 78,396

Other comprehensive incomeExchange adjustment on account ofrevaluation of capital 1,503,841 1,503,841

Total comprehensive income for the year 1,503,841 78,396 1,582,237Remittance to Head Office during the year (79,231) (79,231)Balance as at 31 December 2008 3,878,698 78,544 3,957,242Total comprehensive income for the yearProfit after tax for the year ended 3 I December 2009 45,928 45,928Other comprehensive incomeExchange adjustment on account ofrevaluation of capital

Total comprehensive income for the year162,625162,625 45,928

162,625208,553

Remittance to Head Office during the year (78,207) (78,207)Balance as M 11 December 7.009 4,01 1 1 , 3 2 3 46,265 4,087,588The annexed notes 1 to 35 form an integral part of these financial stateme

Deputy General Manager


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The Bank of Tokyo - Mitsubishi UFJ, Limited - Karachi Branch(Incorporated in Japan with l imited liability)Notes to the Financial StatementsFor the year ended 31 December 2009

1. STATUS AND NATURE OF BUSINESSThe Bank of Tokyo - Mitsubishi UFJ, Limited is incorporated in Japan with limited liability. Itsoperations in Pakistan are carried out through a branch ("the Branch") located at ShaheenCommercial Complex, Karachi. It is engaged in commercial banking business as 'described in theBanking Companies Ordinance, 1962.The credit rating done by Standard & Poor in May 2009 for the Bank of Tokyo - Mitsubishi UFJ,Limited is A+ for the long term and A-I for the short term, rating done by Moody's in May 2009 isAa2 for the long term and P-l for the short term (representing deposits rating only) and rating doneby Fitch in May 2009 is A for the long term and F1 for the short term.

2. BASIS OF PRESENTATIONIn accordance with the directives of the Federal Government regarding the shifting of the bankingsystem to Islamic modes, the State Bank of Pakistan has issued various circulars from time to time.Permissible fOnTIS of trade-related modes of financing includes purchase of goods by banks fromtheir customers and immediate resale to them at appropriate mark-up in price on deferred paymentbasis. The purchase and resale arising under these arrangements are not reflected in these financialstatements as such, but are restricted to the amount of facility actually utilized and the appropriateportion of mark-up thereon.

2.1 Basis of measurementThese financial statements have been prepared under the historical cost convention, except thatcommitments in respect of forward foreign exchange contracts have been marked to market and arecarried at fair value.These financial statements are presented in Pak Rupees, which is the Branch's functional andpresentation currency. The amounts are rounded to nearest thousand.

2.2 Critical accounting estimates and judgmentsThe preparation of financial statements in conformity with the approved accounting standards requiresthe use of certain critical accounting estimates. It also requires the management to exercise itsjudgment in the process of applying the Branch's accounting policies. Estimates and judgments arecontinually evaluated and are based on historical experience, including expectations of future eventsthat are believed to be reasonable under the circumstances. Revisions to accounting estimates arerecognized in the period in which the estimate is revised and in any future periods affected.In particular, information about significant areas of estimation, uncertainty and critical judgment inapplying accounting policies that have the most significant effect on the amounts recognized in thefinancial statements are described below.Held to maturity investmentsThe Branch classifies certain investments as held to maturity. In this regard, judgment is involved inevaluating the intention and ability to hold these investments till their respective maturities.


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Impairment ofavailablefo r sale equity investmentsThe Branch determines that available for sale equity investments are impaired when there has been asignificant or prolonged decline in the fair values below their costs. This determination ofwhat issignificant or prolonged requires judgment. In making this judgment, the Branch evaluates amongother factors, the normal volatility in share price. In addition, impairment may be appropriate whenthere is an evidence of deterioration in the financial health of the investee, industry and sector.performance, changes in technology and operational and financing cash flows.Provision against non-performing loans and advancesThe Branch reviews its loan portfolio to assess the amount of non-performing loans and advances andprovision required there against on a quarterly basis. While assessing this requirement various factorsincluding the delinquency in the account, financial position of the borrower, the forced sale value ofthe securities and the requirement ofthc Prudential Regulations are considered.Operating fixed assets, depreciation and amortizationThe Branch carries its properties and equipment / intangibles at cost less accumulated depreciation /amortization and accumulated impairment losses, if any. In making estimates of the depreciation /amortization, management uses the method which reflects the pattern in which economic benefits areexpected to be consumed by the Branch. The residual values and the method applied is reviewed ateach financial year end and if there is a change in the expected pattern of consumption of the futureeconomic benefits embodied in the assets, the method would be changed to reflect the change inpattern. Such change is accounted for as change in accounting estimates in accordance withInternational Accounting Standard - 8, "Accounting Policies, Changes in Accounting Estimates andErrors".Income taxesIn making the estimate for income tax currently payable by the Branch, management considers thecurrent income tax laws and the decisions of appellate authorities on certain issues in the past. Inmaking the provision for deferred tax, estimate of the Branch's future taxable profit is taken intoaccount.The Seventh Schedule ofIncome Tax Ordinance, 2001 governs taxation of banks in Pakistan. Headoffice administrative expenses are allowed on the basis that these expenses are determined as perSeventh Schedule of the Income Tax Ordinance, 2001 and charged in books of accounts of theBranch and a certificate from external auditors has been received to the effect that the claim of suchexpenses has been made in accordance with the provision of rule four of Seventh Schedule ofIncome Tax Ordinance, 2001 and is reasonable in relation to operations of the Branch.Retirement benefi tsThe Branch contributes to the staff gratuity fund scheme on the basis of actuarial valuation whichtakes into account certain assumptions regarding interest rate, increase in salary and inflation rate etc.Any change in these estimates in future years might effect the Branch's liability with correspondingeffect on the charge for the retirement benefit plan.


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2.3 Changes in accounting policiesEffective from I January 2009 the Branch has changed its accounting policies in the following areas:Determination and Presentation ofOperating SegmentsAn operating segment is a component of the Branch that engages in business activities from which itmay earn revenues and incur expenses, including revenues and expenses that relate to transactionswith any of the Branch's other components. An operating segment's operating results are reviewedregularly by the General Manager (GM). Segment results that are reported to the GM include itemsdirectly attributable to a segment as well as those that can be allocated on a reasonable basis. Thereis no change in the operating segments being reported as a result of adoption of IFRS 8: 'OperatingSegments'.Presentation ofFinancial StatementsThe Branch applied revised lAS I Presentation of Financial Statements (2007), which becameeffective as ofJanuary 01,2009. As a result, the Branch presents in the statement of changes inequity all owner changes in equity, whereas all non-owner changes in equity are presented in thestatement of comprehensive income. Comparative information has been re-presented so that it also isin conformity with the revised standard. Since the change in accounting policy only impactspresentation aspects, there is no impact on earnings of the Branch.Other new standards, amendments and interpretations that were mandatory for accounting periodsbeginning on or after 1 January 2009 and are not considered to be relevant or have any significanteffect on the Branch's operations, are not detailed in these financial statements.

3. STATEMENT OF COMPLIANCE3.1 These financial statements have been prepared in accordance with the approved accounting

standards as applicable in Pakistan. Approved accounting standards comprise of such InternationalFinancial Reporting Standards issued by the International Accounting Standards Board, as are notifiedunder the Companies Ordinance, 1984, provisions of and directives issued under the CompaniesOrdinance, 1984 and the Bunking Companies Ordinance, 1962 and the directives issued by the StateBank of Pakistan. In case the requirements differ, the provisions of and directives issued under theCompanies Ordinance, 1984 and the Banking Companies Ordinance, 1962 and the directives issuedby the State Bank ofPakistan shall prevail.The State Bank of Pakistan, vide its BSD Circular No. 10 dated August 26,2002 has deferred theapplicability ofInternational Accounting Standard 39, 'Financial Instruments Recognition andMeasurement' and International Accounting Standard 40, 'Investment Property' for bankingcompanies till further instructions. Further, according to a notification of Securities and ExchangeCommission of Pakistan (SECP) dated 28 April 2008, IFRS 7, 'Financial Instruments: Disclosures' hasnot been made applicable for banks. Accordingly, the requirements of these standards and theirrelevant interpretations (issued by Standards Interpretation Committee - SICs and the InternationalFinancial Reporting Interpretation Committee - IFRICs) have not been considered in the preparationof these financial statements. However, investments are classified and valued in accordance with therequirements prescribed by the State Bank of Pakistan through various circulars.


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3.2 Standards, interpretations and amendments to published approved accountingstandards that are not yet effectiveThe following standards, amendments and interpretations of approved accounting standards, areeffective for accounting periods beginning from the dates specified below. These standards are eithernot relevant to the Branch's operations or are not expected to have significant impact on the Branch'sfinancial statements other than certain increased disclosures:Revised IFRS 3 Business Combinations (applicable for annual periods beginning on or after July 0 I,2009) broadens among other things the definition of business resulting in more acquisitions beingtreated as business combinations, contingent consideration to be measured at fair value, transactioncosts other than share and debt issue costs to be expensed, any pre-existing interest in an acquiree tobe measured at fair value, with the related gain or loss recognized in profit or loss and anynon-controlling (minority) interest to be measured at either fair value, or at its proportionate interest inthe identifiable assets and liabilities of an acquiree, on a transaction-by-transaction basis. Theapplication of this standard is not likely to have an effect on the Branch's financial statements.

Amended lAS 27 Consolidated and Separate Financial Statements (effective for annual periodsbeginning on or af ter July 0 I, 2009) requires accounting for changes in ownership interest by thegroup in a subsidiary, while maintaining control, to be recognized as an equity transaction. When thegroup loses control of subsidiary, any interest retained in the former subsidiary will be measured atfair value with the gain or loss recognized in the profit or loss. The application of the standard is not'likely to have an effect on the Branch 's financial statements.IFRIC 15- Agreement for the Construction of Real Estate (effective for annual periods beginning onor after October 0 I, 2009) clarif ies the recognition of revenue by real estate developers for sale ofunits, such as apartments or houses, 'off-plan', that is, before construction is complete. Theamendment is not relevant to the Branch's operations.IFRIC - 17 Distributions of Non-cash Assets to Owners (effective for annual periods beginning on orafter July 01,2009) states that when an enti ty distributes non cash assets to its shareholders as dividend,the liability for the dividend is measured at fair value. If there are subsequent changes in the fair valuebefore the liability is discharged, this is recognized in equity. When the non cash asset is distributed,the difference between the carrying amount and fair value is recognized in the income statement. Asthe Branch does not distribute non-cash assets to its shareholders, this interpretation has no impact onthe Branch's financial statements.The International Accounting Standards Board made certain amendments to existing standards aspart of its Second annual improvements project. The effective dates for these amendments vary bystandard and most will be applicable to the Branch's 2010 financial statements. These amendmentsare unlikely to have an impact on the Branch's financial statements.Amendment to IFRS 2 - Share-based Payment - Group Cash-settled Share-based PaymentTransactions (effective for annual periods beginning on or after January 01, 2010). Currently effectiveIFRSs requires attribution of group share-based payment transactions only if they are equity-settled.The amendments resolve diversity in practice regarding attribution of cash-settled share-basedpayment transactions and require an entity receiving goods or services in either an equity-settled or acash-settled payment transaction to account for the transaction in its separate or individual financialstatements.This amendment is not l ikely to have an effect on the Branch's financial statements.


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Amendment to lAS 32 Financial Instruments: Presentation - Classification ofRights Issues (effectivefor annual periods beginning on or after February 0 I, 20 10). The IASB amended lAS 32 to allowrights, options or warrants to acquire a fixed number of the entity's own equity instruments for a fixedamount of any currency to be classified as equity instruments provided the entity offers the rights,options or warrants pro rata to all of its existing owners of the same class of its own non-derivativeequity instruments. This interpretation has no impact on the Branch's financial statements.IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (effective for annual periodsbeginning on or after July 01, 2010). This interpretation provides guidance on the accounting for debtfor equity swaps. This interpretation has no impact on the Branch's financial statements.lAS 24 Related Party Disclosures (revised 2009) - effective for annual periods beginning on or afterJanuary 01, 2011. The revision amends the definition of a related party and modifies certain relatedparty disclosure requirements for government-related entities. The amendment would result in certainchanges in disclosures.Amendments to IFRIC 14 lAS 19 - The Limit on a Defined Benefit Assets, Minimum FundingRequirements and their Interaction (effective for annual periods beginning 011 or after January 01,20 I I). These amendments remove unintended consequences arising from the treatment ofprepayments where there is a minimum funding requirement. These amendments result inprepayments of contributions in certain circumstances being recognized as an asset rather than anexpense. This amendment is not likely to have any impact on Branch's financial statements.Improvements to IFRSs 2008 - Amendments to IFRS 5 Non-current Assets Held for Sale andDiscontinued Operations - (effective for annual periods beginning on or after July 01, 2009). Theamendments specify that if an entity is committed to a plan to sell a subsidiary, then it would classifyall of that subsidiary's assets and liabilities as ~ e l d for sale when the held for sale criteria in IFRS 5are met. This applies regardless of the entity retaining an interest (other than control) in thesubsidiary; and disclosures for discontinued operations are required by the parent when a subsidiarymeets the definition of a discontinued operations. This amendment is not likely to have any impact onBranch's financial statements.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES4.1 Sale and repurchase agreements

The Branch enters into purchase / (sale) of investments under agreements to resell / (repurchase)investments at a certain date in the future aL a fixed price. Securities sold subject to a repurchaseagreement (repo) are retained in the financial statements as investments and the counter party liabilityis included in borrowings. Securities purchased under agreements to resell (reverse repo) are notrecognized in the financial statements as investments and the amount extended to the counter party isincluded in lendings to financial institutions. The receivables are shown as collateralized by theunderlying security.The difference between the purchase / (sale) and resale / (repurchase) consideration is recognizedon a time proportion basis over the period of the transaction and is included in mark-up / return /interest earned or expensed.


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4.2 InvestmentsThe Branch classifies its investment portfolio into the following categories:Held for trading

These investments are either acquired for generating a profit from short-term fluctuations in prices orare part of a portfolio for which there is an evidence of a recent actual pattern of short-term profittaking.These are measured at subsequent reporting dates at fair value. Net gain or loss on remeasurementis included in the profit and loss account for the year.Held to maturityThese are investments with fixed or determinable payments and fixed maturities that the Branch hasthe positive intent and ability to hold upto maturities.These are measured at amortized cost using effective interest rate method, less impairment losses, ifany to reflect recoverable amount.Availablefor saleThese are investments which do not fall under held for trading or held to maturity categories.Quoted securities classified as available for sale investments are measured at subsequent reportingdates at fair value. Any surplus / deficit arising thereon is taken directly to 'surplus/deficit onrevaluation of securities' in the balance sheet. The surplus / deficit arising on these securities is takento the profit and loss account for the year when actually realized upon disposal.Unquoted equity securities are valued at the lower of cost and break-up value. Break-up value ofequity securities is calculated with reference to the net assets of the investee company as per thelatest available audited financial statements. Investments in other unquoted securities are valued atcost less impairment losses, if any.Gain or loss on sale of investments is included in profit and loss account for the year.Investments are recognized on trade-date basis and are initially measured at fair value plustransaction cost directly attributable except for investments classified as held tor trading. In case ofheld for trading investments, transaction costs are expensed in the profit and loss account for the year.

4.3 AdvancesAdvances are stated net of provision for non-performing loans and advances. The provision fornon-performing loans and advances is made in accordance with the requirements of the PrudentialRegulations issued by the State Bank of Pakistan. Advances are written-off when they areconsidered irrecoverable.

4.4 Operating fixed assets, depreciation and amortizationProperties and equipmentProperties and equipment other than capital work in progress are stated at cost less accumulateddepreciation and accumulated impairment losses, if any. Capital work in progress is stated at cost.


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Depreciation is charged to profit and loss account applying the straight-line method over the estimateduseful lives while taking into account any residual values, at the rates given in Note 9.1 to thefinancial statements. In respect of additions and deletions to properties and equipment, full month'sdepreciation is charged on additions and no depreciation is charged in month of disposal.Residual values, useful lives and depreciation methods are reviewed and adjusted, if required, at eachbalance sheet date.Normal maintenance and repairs are charged to profit and loss account as and when incurred. Majorrepairs and improvements are capitalized.Gain or loss on disposal of fixed assets is taken to profit and loss account for the year.Intangihle assetsIntangible assets are stated at cost less accumulated amortization and accumulated impairment losses,if any. Amortization is charged on straight-line method, by taking into consideration the estimateduseful lives of intangible assets, at the rates given in note 9.2 to the financial statements. These areamortized on prorata basis i.e. full month's amortization is charged on additions and no amortization ischarged in the month of disposal.

4.5 ImpairmentAt each balance sheet date, the Branch reviews the carrying amounts of its assets to determinewhether there is any indication of impairment. If such indication exists, the recoverable amount ofthe relevant asset is estimated. Recoverable amount is the higher of fair value less costs to sell andvalue in use. An impairment loss is recognized whenever the carrying amount of an asset exceeds its,recoverable amount. Impairment losses are recognized in profit and loss account for the year.An impairment loss is reversed if the reversal can be objectively related to an event occurring afterthe impairment loss was recognized. In case of reversal the carrying amount of such asset isincreased to the revised estimate of its recoverable amount, so that the increasedcarrying amountdoes not exceed the carrying amount that would have been determined had no impairment loss beenrecognized for the asset in prior years. A reversal of impairment loss is recognized immediately inprofit and loss account for the year.

4.6 TaxationIncome tax comprises of current and deferred tax. Income tax is recognized in the profit and lossaccount, except to the extent that it relates to items recognized directly in equity or below equity, inwhich case it is recognized in equity or below equity, as the case may be.CurrentCurrent tax is the expected tax payable on the taxable income for the year using tax rates enacted orsubstantively enacted at the balance sheet date and, any adjustments to the tax payable relating toprior years.


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DeferredDeferred tax isrecognized using the balance sheet liability method on all material temporarydifferences between the carrying amounts of assets and liabilities for financial reporting purposes andtheir tax base. Deferred tax is recognized based on the expected manner of realisation or settlementof the carrying amounts of assets and liabilities using the tax rates enacted at the balance sheet date,expected to be applicable at the time of realization or settlement.Deferred tax asset is recognized only to the extent that it is probable that future taxable profits would beavailable against which the asset is utilised. Deferred tax assets are reviewed at each balance sheet dateand are reduced to the extent that it is no longer probable that the related tax benefits will be realised,

4.7 Staff retirement benefitsDefined benefitplanThe Branch operates an approved funded gratuity scheme, administered by the board of trustees, forall its permanent employees who have completed 5 years of service (2008: 8 years of service).Provision is made in accordance with the actuarial recommendations. Actuarial valuation is carriedout periodically using "Projected Unit Credit Method".Actuarial gain / loss is recognized using 10% corridor approach. The Branch recognizes portion of itsactuarial gains and losses as income or expense if the net cumulative unrecognized actuarial gains andlosses at the end ofprevious reporting period exceeds the greater of 10% of the present value ofdefined benefit obi igation and 10% of the fair value of plan assets at that date. The excess determinedis recognized as income or expense over the expected average remaining lives of the employees.Defined contribution planThe Branch also operates a recognized provident fund scheme, administered by the board of trustees,for all its permanent employees to which equal monthly contributions are made by both the Branchand the employees at the rate of 12.5% of the basic salary.Employees' compensated absencesEmployees' entitlement to annual leaves is recognized when they accrue to employees. A provisionis made for estimated liability for annual leaves as a result of service rendered by the employeeagainst un-availed leaves upto the balance sheet date.

4.8 ProvisionsProvisions are recognized when the Branch has a legal or constructive obligation as a result of pastevents and it is probable that an outflow of resources will be required to settle the obligation and areliable estimate of the amount can be made. Provisions are reviewed at each balance sheet dateand are adjusted to reflect the current best estimate.

4.9 Revenue recognitionMark-up / return on advances and investments is recognized on accrual basis except mark-up /interest on non-performing advances which is recognized on receipt basis, in accordance withPrudential Regulations issued by the State Bank of Pakistan.


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Fee, commission on letters of credit and guarantees and brokerage income is recognized on timeproportion basis and / or when the services are rendered, as the case may be.Dividend income is recorded when the right to receive dividend is established.

4.10 Foreign currenciesForeign currency transactions are translated into Pak Rupees at the exchange rates prevailing on thedate of transaction. Monetary assets and liabilities denominated in foreign currencies are translatedinto Pak Rupees at the exchange rates prevailing at the balance sheet date.Forward foreign exchange contracts, other than those relating to foreign currency deposits with theState Bank of Pakistan, are valued at forward rates applicable to their respective maturities.Exchange gain or loss is included in profit and loss account for the year.

4.11 Cash and cash equivalentsFor the purpose of cash flow s tatement , cash and cash equivalents comprise of:- Cash and balances with treasury banks- Balances with other banks

4.12 Off settingFinancial assets and financial liabilities are set-offand the net amount is reported in the financialstatements when there is a legally enforceable right to set off and the Branch intends either to settleon a net basis, or to realise the assets and settle the liabilities simultaneously.

4.13 Financial instrumentsAll financial assets and liabilities are recognized at the time when the Branch becomes a party to thecontractual provisions of the instrument. Financial assets are derecognized when the contractual rightto the cash flow from the financial assets expires or is transferred. Financial liabilities are derecognizedwhen they are extinguished i.e. when the obligation specified in the contract is discharged, cancelledor expired. Any loss on derecognition of the financial assets and financial liabilities is taken to profit:and loss accounl directly, Financial assets carried on the balance sheet include cash and bankbalances, lendings to financial institutions, advances and certain receivables; and financial liabilitiesinclude bills payable, borrowings, deposits and other payables. The particular recognition methodsadopted for significant financial assets and financial liabilities are disclosed in the individual policystatements associated with them.

4.14 Derivative financial instrumentsDerivative financial instruments are recognized at their fair value on the date at which a derivativecontract is entered into. These instruments are marked to market and changes in fair values aretaken to the profit and loss account for the year.

4.15 Acceptances and other contingent liabilitiesAcceptances comprise undertakings by the Branch to pay bills of exchange drawn on customers.The Branch expects most acceptances to be simultaneously settled with the reimbursement fromcustomers. Acceptances are accounted for as off-balance sheet transactions and are disclosed ascontingent liabilities and commitments.


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Other contingencies are recognized and disclosed unless the probability of an outflow of resourcesemboddying benefits are remote.

4.16 Head office administrative expensesThe administrative expenses allocated by the Head Office are charged to the profit and loss account.

4.17 Segment reportingAn operating segment is a component of an entity that engages in business activities, from which itmay earn revenues and incur expenses, whose operating results are regularly reviewed by the entity'schiefoperating decision maker to make decision about resources to be allocated to the segment andassesses its performance and for which discrete financial information is available.Business segmentsTrading and salesIt includes fixed income, foreign exchange transactions, fundings, own posit ion securities, lendings andborrowings.Retail bankingIt includes deposits and banking services.Commercial bankingCommercial banking includes export finance, trade finance, short term and long term lendings, billsdiscounting, letters of credit, acceptances and guarantees.Payments and settlementsIt includes payments and collections, funds transfer, clearings and settlements.Geographical segmentThese financial statements represent operations ofKarachi Branch only and all assets and liabilitiesrepresent transactions entered by Karachi Dranch.

5. CASH AND BALANCES WITHTREASURY BANKS

2009 2008(Rupees in '000)

In hand:Local currencyForeign currencies

With State Bank o fPakistan in:Local currency current accountForeign currency current accountForeign currency deposit accountHead office capital account

5.15.216

8,6687,377

121,40413,47945,099

4,041,3234,237,350

10,1064,334

124,86312,65641,423

3,878,6984,072,080


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5.1 This represents current account maintained with the State Bank of Pakistan under the requirementsof section 22 (Cash Reserve Requirement) of the Banking Companies Ordinance, 1962.

5.2 These include Special Cash Reserve maintained against foreign currency deposits mobilized under FE25 circular und thc US Do 1111 I' settlement uccouut OIK'lI


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8. ADVANCES 2009 2008(Rupees in '000)

Loans, cash credits, runningfinances, etc.In Pakistan 2 , 1 9 8 , ~ 4 3 1 4 , 0 9 2 , ~ 8 7 1 Outside Pakistan 2,198,843 4,092,787

Net investment infinance leaseIn PakistanOutside Pakistan _11-

Bills discounted and purchased (excluding treasury bills)Payable in PakistanPayable outside Pakistan _11 ________

Advances - gross 2,198,843 4,092,787Provision for non-performing advances 8.2Advances - net of provision 2,198,843 4,092,787

8.1 Particulars of advances8.1.1 In local currency 2,198,843 4,092,78,7

In foreign currencies 2,198,843 4,092,7878.1.2 Short tenn (for upto one year) 1,592,516 2,776,991

Long term (for over one year) 606,327 1,315,7962,198,843 4,092,7878.2 Since there was no non-performing loan, no provision has been made.8.3 Particulars of loans and advances to directors,

associated companies, etc.Debts due from directors, executives or officers of the Branch or anyone of them either severallyor jointly with any other person*Balance as at 0 I January 8,420 14,430Loans granted during the year 2,298 1,450Repayments during the year (3,408) (7,460)Balance as at 31 December 7,310 8,420* Represent loans given by the Branch to its executives and other employees as per the terms

of their employment.9. OPERATING FIXED ASSETS

Properties and equipment 9.1 23,173 17,294Intangible assets 9.2 3,353 2,128Capital work in progress 9.3 81027,336 19,422r::':


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9.1 Properties and equipment 2009Cost Accumulated depreciation Net book Rate of

As at Additions I As at As at Charge for As at value as at depreciationI January (disposals) 31 December I .Ianllary the year I 31 December 31 December ("In)

2009 2009 2009 (on disposal) 2009 2009(Rupees in '000)---------------------Alterations in 31,844 3,462 34,897 31,076 570 31,237 3,660 10%

leasehold premises (409) (409)Building on leasehold 819 SI 9 SI9 SI9 5%

premisesFurniture and fixtures 5,625 5,600 4,128 303 4,40S 1,192 10%

(25) (23)Computer equipment 35,365 1,273 2S,I 60 29,036 2,6S4 23,242 4,918 20%

(S;47S) (8,47S)Electrical equipment 15,696 2,006 16,884 12,276 1,207 12,820 4,064 20%

(SIS) (663)Vehicles 9,969 7,014 16,983 4,6S9 2,955 7,644 9,339 20%

99,31S 13,755 103,343 S2,024 7,719 SO,I70 23,173(9,730) (9,573)200S

Cost Accumulated depreciation Net book Rate ofAs at Additions I As at As at Charge for As at value as at depreci ation

I January (disposals) 3' December I January the year I 31 December 31 December %200S 200S 2008 (on disposal) 2008 2008

---------------------------------------------------------(Rupees in '000)-----------------------------------------------------------Alterations in 32,383 231 31,844 30,293 1,464 31,076 768 10%

leasehold premises (770) (681 )Building on leasehold 819 819 819 819 5%

premisesFurniture and fixtures 6,259 90 5,625 4,334 424 4,128 1,497 10%

(724) (630)Computer equipment 35,259 1,685 35,365 27,983 2,632 29,036 6,329 20%

(1,579) (1,579)Electrical equipment 15,729 1,408 15,696 12,687 1,030 12,276 3,420 20%

( 1,441) (1,441)Vehicles 9,969 9,969 2,695 1,994 4,689 5,280 20%

100,418 3,414 99,318 78,811 7,544 82,024 17,294(4,514) (4,33' )9.2 Intangible assets

Cost Amortization Net book Rate ofAs at Additions I Asat A. at Charge for As at value as at amortiza tion

I January (disposals) 31 December I January the year I 31 December 31 December "A.(on disposal)

---------------------(RlIpces n '000) ------Compute r softwares 2009 3,773 2,107 5,7S3 1,645 882 2,430 3,353 20%(97) (97)

Compute r softwares 2008 2,733 1 , 0 ~ 0 3,773 1,078 567 1,645 2,128 20%9.3 Capital work-in-progress 2009 2008

(Rupees in '000)Advance payment towards purchase ot hxcd assets 810

9.4 Details of disposal of assets whose original cost or the book value exceeds Rs. I million or Rs. 250 ,000 respec tively, whicheve r is less. There is no anyasset sold to the General Manag er or to othe r executives or to any related party. Particular of assets disposed I delet ed during the year are given below:

Cost Book Sale Mode of Particulars of purchasersvalue price disposal

------(Rupecs n '000)-----Computer equipment 4,950 Written-off Not applicableComputer equipment 1,675 Bid VariousOthers (having a book value of less than

Rs. 250,000 or cost of less than Rs.I,OOO,OOO) 3,202 157 320 Bid Various

10-


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9.5 The fair values of properties and equipments as per the manage-ment estimate are not materiallydifferent from the carrying amounts except for the building on leasehold premises in PECHS whosevalue as per management's estimate is Rs. 70 million.

9.6 The costs of fully depreciated and amortized 2009 2008assets that are still in use are as follows: (Rupees in '000)

Alteration in leasehold premisesBuilding on leasehold premisesFurniture, fixture and office equipmentComputer equipmentVehiclesIntangible assets

10. DEFERRED TA X ASSETS

Deferred debits arising in respect of:Differences between accounting and tax depreciation

]1 . OTHER ASSETSIncome / mark-up accrued in local currencyIncome / mark-up accrued in foreign currencyCurrent tax (payments less provision)Advances, deposits, advance rent and other prepaymentsIJnrealised gain on forward foreign exchange contractsStationery and stamps on handReceivable from defined benefit planOthers

12. BILLS PAYABLEIn PakistanOutside Pakistan

13. BORROWINGSIn PakistanOutside Pakistan

13.] Particulars of borrowings with respect to currenciesIn local currencyIn foreign currencies

30,879 27,503819 819

13,298 12,05614,998 23,0511,251

667 76561,912 64,194

2,260 1,926

72,307 207,38132

12,50210,455 11,035

11,082442 21726.4 1285 9883,30] 242,347

2] 6,907 12,559216,907 12,559

80,000 1,116,5591,317,725 3,141,7921,397,725 4,258,351

80,000 1,116,5591,317,725 3,141,7921,397,725 4,258,351


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13.2 Details of borrowings secured / unsecured 2009 2008(Rupees in '000)

SecuredRepurchase agreement borrowingsExport Refinance Scheme

13.2.113.2.2 8 0 , ~ 0 0 II 9 4 1 , ~ 5 9 1

80,000 941,559UnsecuredCall borrowings 13.2.3 175,000Overdrawn nostro accounts 3,977Inter office borrowings 13.2.4 1,313,748 3,141,792

1,317,725 3,316,7921,397,725 4,258,351

13.2.1 Repo transactions carried mark-up in the range of 12.6% to 12.9% per annum as at 31 December2008 and were payable at maturity.

13.2.2 The Branch has entered into agreements with the State Bank of Pakistan (SBP) for extending exportfinance to customers. As per the terms of the agreement, the Branch has granted SBP the right torecover the outstanding amount from the Branch at the date ofmaturity of finances by directlydebiting the current account maintained by the Branch with SBP. These borrowings are repayablelatest by March 2010. The rate of finance is 6.5% per annum (2008: Nil).

13.2.3 This represents inter-bank call borrowings from other banks as at 31 December 2008, they carriedmarkup of 14% and had maturity of upto one month.

13.2.4 These borrowings carry mark-up at the rates ranging from 0.5 I% to 1.07% per annum havingmaturity upto six months (2008: 2.65% to ~ . 2 5 % per annum having maturity upto five months).

14. DEPOSITS AND OTHER ACCOUNTSCustomersFixed deposits 1,360,100 500, I00Savings deposits 115,642 115,471Current accounts - remunerative 1,014,421 907,855Current accounts - non-remunerative 239,157 186,380Margin deposits 1,373

2,729,320 1,71I, 179Financial InstitutionsRemunerative deposits 6834, 1Non-remunerative deposits 10,;291 ! 50

10,729 4,7332,740,049 1,715,912

14.1 Particulars of depositsIn local currency 2,596,085 1,570,468In foreign currencies 143,964 145,444

2,740,049 1,715,91214.2 Deposits include deposits from related parties amounting to Rs, :B.071 million (200H: J { ~ . J1}.76 million)


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15. OTHER LIABILITIES 2009 2008(Rupees in '000)Mark-up / return / interest payable in local currency 24,908Mark-up / return / interest payable in foreign currency 3,293Unearned commission 769Accrued expenses 2,483Unremitted head office expenses 48,879Provision against off-balance sheet obligations 15.1Payable to defined benefit plan 26.4Unrealized loss on forward foreign exchange contracts 14,845Provision against collateral 3,632Provision for employees' compensated absences 1,385Provision for Workers' Welfare Fund 2,127Others 1,126

50,06234,364. 1,237

3,03721,3791,0913,6321,0402,481

855103,447 119,178

15.1 Provision against off-balance sheet obligationsBalance as at 0 I JanuaryCharge for the yearReversalBalance as at 3 I December

16. HEAD OFFICE CAPITAL ACCOUNTCapital held as:Interest free deposit in approved foreign exchange with the State Bank of Pakistan.Remitted from Head Office (Japanese Yen 4,419,160,968)Revaluation surplus aIlowed by the State Bank of

Pakistan - cumulative1,704,5152,336,8084,041,323

17. CONTINGENCIES AND COMMITMENTS17.1 Direct credit substitutes

Guarantees 54,27917.2 Transaction - related contingent liabilities

Includes performance bonds, bid bonds, warranties, advance payment guarantees, shippingguarantees and standby letters of credit related to particular transactions issued in favour of:Government 356,099Banking companies and other financial institutionsOthers 17,719

(101)

1,704,5152,174,1833,878,698

54,279

589,47574,150

373,IH8 663,625

[ ~

101


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17.3 Trade-related contingent liabilities 2009 2008(Rupees in '000)

Letters of creditAcceptances

17.4 Other contingenciesClaims against the Branch not acknowledged as debt

17.5 Commitments in respect of forward lendingForward agreement borrowings (inter office)Commitments to extend credit

17.6 Commitments in respect of forward exchange contractsPurchaseSale

The maturities of above contracts are spread over a period upto six months.18. MARK-UP / RETURN / INTEREST EARNED

On loans and advances to:- Customers- Financial institutionsOn investments in:- Held for trading securities- Available for sale securitiesOn deposits with treasury banks and financial institutionsOn securities purchased under resale agreementsOn call money lendings

17,849 47,06122,836 41,472

9,366 9,366

1,931,800 905,633

1,357,03114,363

1,371,3943,235,499

1,4483,236,947

349,00615,079

370,84124,137

1185,63666,398

516,130

1,724105,27536,168

538,145


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19. MARK-UP / RETURN / INTEREST EXPENSED 2009 2 0 0 ~ (Rupees in '000)

DepositsSecurities sold under repurchase agreementsExchange cost on funding arrangementsInter office borrowingsCall borrowingsBorrowings from State Bank of Pakistan under

Export Refinance Scheme

20. OTHER INCOMENet profit on sale of operating fixed assetsRecovery from sale of collateralOthers

21. ADMINISTRATIVE EXPENSESSalaries, allowances, etc.Charge for defined benefit planContribution to defined contribution planContribution to Employee Old Age Benefit SchemeProvision for employees' compensated absencesHead office expensesRent, taxes, insurance, electricity, etc.Legal and professional chargesCommunicationsRepairs and maintenanceStationery and printingAdvertisement and publicityAuditors' remunerationDepreciationAmortization of intangible assetsTravelling and entertainmentBrokerage and commissionOthers

26.7

21.19.19.2

164,261 66,59816,080 79,742

154,288 125,24937,771 99,081JO,645 20,516

2,206385,251 391,186

163 5698 374

261 430

40,314 35,144977 1,272

J,170 956149

1,385 1,04027,500 21,37916,934 15,912

891 9121,980 1,7852,420 2,1371,762 1,,599

284 320746 566

7,719 7,544882 567

2,230 2,4531,937 2,1202,808 1,305

112,088 97,011


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21.1 Auditors'remuneration 2009(Rupees in '00

20080)

Audit feeFee for interim review and other certificationsOut-of-pocket expenses

46125035

746

355160. 51566

22. OTHER CHARGESPenalties imposed by the State Bank of PakistanProvision against collateralWorkers' Welfare FundOthers

2002,283

22,485

2223,6322,4816,335

23. TAXATIONFo r the yearCurrentDeferred tax income:

Relating to origination and reversal of temporary differencesFo r the prior year(s)CurrentDeferred

2 ~ , 3 0 9

(334)22,975

( 3 , ~ 9 l ) 1 (3,291)

43,834(337)

43,497

2 , ~ 0 5 1 2,205

19,6N4 -45,70223.1 Relationship between t ~ I X expense and accounting profit

Profit before taxation 65,612 124,098Tax at the applicable tax rate of 35 percent (2008: 35 percent)Tax effect of computational adjustmentsTax effeet of prior year adjustmentsTax expense for the year

22,96411

(3,291)19,684

43,43463

2,20545,702

23.2 The income tax authorities have finalised the income tax assessment of the Branch upto tax year2003. In respect of tax year 2004, a notice for amendment of return was received proposing adisallowance of Rs. 3.896 million. Objection was filed by the Branch however, the tax departmenthas so far not amended the order. The Branch is confident that no additional liability will arise.The Income Tax Department has filed appeals in the High Court relating to assessment years199I-92, 1992-93, 1997-98 and 1998-99. The Branch has also filed reference application in HighCourt in respect of assessment years 2000-01, 2001-02 and 2002-03. Tax liability ofRs. 0.919million may arise on these. The Branch is confident of a favourable outcome and expects that noadditional liability would arise.

23.3 The Branch has filed returns under self assessment scheme as envisaged in the section 120 of theIncome Tax Ordinance 2001, for tax years 2005, 2006, 2007, 2008 and 2009, these returns aredeemed to have been assessed, unless selected for detailed audit.


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24. CASH AND CASH EQUIVALENTS 2009 2008 '(Rupees in '000)

Cash and balances with treasury banks 4,237,350 4,072,080Balances with other banks 91,075 36,9834,328,425 4,109,063

25. STAFF STRENGTH (Number)PermanentOthersBranch's own staff strength at the end of the year

302

32211435

OutsourcedTotal staff strength 25.1 1042 64125.1 Outsourced represents employees hired by an outside contractor / agency and posted in the Branch

to perform various tasks / activities of the Branch.26. DEFINED BENEFIT PLAN26.1 General description

The Branch operates an approved gratuity fund scheme for all its permanent employees, which isadministered by the Trustees. The Branch's costs and contributions are determined based on actuarialvaluation carried out at each year end by using Projected Unit Credit Method. The benefits under thegratuity scheme are payable to employees on cessation of employment on the following grounds:

retirement upon attainment of the normal retirement age (58 years).his / her death in service of the Employer.on voluntary retirement before normal retirement age.

- termination of his / her service by the Employer other than for misconduct, negligence, orincompetence.

The benefits under the scheme are payable as under:Length of service BenefitsLess than 5 years (2008: 8 years) NilGreater than or equal to 5 years Last drawn basic salary for each completed year of service(2008: Greater than or equal to 8 years).

26.2 Principal actuarial assumptionsThe actuarial valuation is carried out periodically. The actuarial valuation was carried out for the yearended 31 December 2009 using the "Projected Unit Credit Method". The main assumptions used foractuarial valuation are as follows:

(Percent)

Discount rate 14.0% 15.0%Expected rate of increase in salaries 12.0% 15.0%Expected rate of return on plan assets 5.0% 5.0%

lJ---


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26.3 (Receivable from) / payable to defined benefit plan 2009 2008(Rupees in '000)

Present value of defined benefit obligationsFair value of plan assetsNet actuarial gains / (losses) not recognizedNet (receivable) / payable recognized as at the year-end

26.4 Movement in balance (receivable) / payableOpening balance of (receivable) / payableExpense recognizedContribution - BranchClosing balance of (receivable) / payable

26.5 Reconciliation of the present value of the definedbenefit obligations

Present value ofobligation as at 0 I JanuaryCurrent service costInterest costVested past service costBenefits paidActuarial (gain) / lossPresent value ofobligation as at 31 December

26.6 Changes in fair values of plan assetsFair value as at 0 I JanuaryExpected return on plan assetsContribution - BranchBenefits paidActuarial gain / (loss)Fair value as at 31 December

26.7 Charge fur defined benefit planCurrent service costJnterest costExpected return on plan assetsVested past service costNet actuarial loss recognized

4,858 5,836(5,431) (3,841)

561 (904)(12) 1,091

1,091 (99)977 1,272

(2,080) (82)(12) 1,091

5,836 6,430227 663875 27

(697) (1,743)(1,410) ( 157)4,858 5,836

3,841 5,454192 82

2,080 82(697) (1,743)

15 (34)5,431 3,841

227 663875 643

(192) (82)2740 48

977 1,272


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2009 2008. (Rupees in '000)

26.8 Actual return on plan assets 207 4826.9 Composition of fair value of plan assets

Cash and bank balances 5,431 3,84126.10 Movement in actuarial loss / (gain)

Unrecognized actuarial losses as at 0 I January. Amount recognized during the yearActuarial (gain) / loss during the yearNet unrecognized actuarial (gain) / losses as at 31 December

904(40)864

(1,425)(561)

1,075,(48)

1,027(123)904

26.11 Other relevant details of above fund are as follows:2009 2008 2007 2006 2005

------------------------------ (Rupees in '000) -----------------------------Present value of defined

benefit obligationFair value of plan assetsDeficit

4,858(5,431)(573)

5,836(3,841)1,995

6,430(5,454)

9764,880

(4,699)181

4,221(3,932)

289Actuarial gain / (loss)

on obligationExperience adjustments 1,410 157 (209) (147) (285)Assumptions loss (648)

1,410 157 (857) (147) (285)Actuarial gain / (loss)

on assetsExperience adjustmentsAssumptions gain / (loss)

1515

(34)(34)

(37)(37)

(14)(34)

(4)(4)

27. DEFINED CONTRIBUTION PLANThe Branch has established a recognized provident fund scheme for all permanent employees.Equal monthly contributions are made, both by the Branch and its employees, to the fund at the rateof 12.5 percent of the basic salary.


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28. COMPENSATION OF GENERALMANAGER AND EXECUTIVES

General Manager Executives2009 2008 2009 2008-----------------------(Rupees in '000)----------------------

Managerial remuneration 1,032 1,032 7,066 8,042Tax borne by the Branch 6,084 3,536 3,984 2,429Charge for defined benefit plan 568Contribution to defined contribution plan 466 416Rent and house maintenance 499 331 1,048 1,277Utilities 284 248Medical 37 37Conveyance 110 132 431 423Others 982 652 1,721 378,991 5,931 14,753 13,229

------------------------(Numbe rs)-----------------------Number ofpersons 1 5 5The General Manager and some executives have been provided with free use of the Branch maintainedcars and house hold equipments in accordance with their terms of employment.Executives mean employees, other then the General Manager, whose basic salary exceed five hundredthousand rupees in a financial year.

29. FAIR VALUE OF FINANCIAL INSTRUMENTSOn-balance sheet financial instruments

2009 2008Book value Fair value Book value Fair value-----------------------(Rupees in '000)----------------------

AssetsCash and balances with treasury banks 4,237,350 4,237,350 4,072,080 4,072,080Balances with other banks 91,075 91,075 36,983 36,983Lendings to financial institutions 1,905,551 1,905,551 1,597,697 1,597,697Advances 2,198,843 2,198,843 4,092,787 4,092,787Other assets 73,737 73,737 218,593 218,5938,506,556 H,506,556 10,018,140 10,018,140LiabilitiesBills payable 216,907 216,907 12,559 12,559Borrowings 1,397,725 1,397,725 4,258,351 4,258,351Deposits and other accounts 2,740,049 2,740,049 1,715,912 1,715,912Other liabilities 100,551 100,551 115,460 115,4604,455,232 4,455,232 6,102,282 6,102,282Off-balance sheet financial instrumentsForward purchase of foreign exchange 1,357,031 1,357,031 3,235,499' 3,235,499Forward sale of foreign exchange 14,363 14,363 1,448 1,448

, ~


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Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willingparties in an arm's length transaction.In the opinion of management, fair values of these assets and liabilities are not signif icantly different from their carryingvalues since assets and liabilities are either short term in nature or are frequently re-priced. In the opinion of management,the fair value of fixed term advances of over one year, staff loans and fixed term deposits of over one year cannot becalculated with sufficient reliability due to absence of relevant active market for simi lar assets and liabilities.

30. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIESThe segment analysis with respect to business activity is as follows:

2009Trading Retail Commercial Payment Others Total

an d banking banking andsales settlement

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

Interest incomeNon-funded Income 1 5 2 , ~ 3 4 1 364,08549,04511 Q 516,13049,306Interest and non mark-up

income 152,034 413,130 11 261 565,436Total expenses 64,402 164,261 288,360 2,485 519,508Net income / (loss) 87,632 (164,261) 124,770 11 (2,224) 45,928Segmen t assets (gross) 2,102,750 16,045 2,264,388 91,075 30,135 4,504,393Segment non-performing loansSegment provision requiredSegment liabilities 14,845 2,753,127 1,399,007 231,517 59,632 4,458,128Segment return on netassets (ROA) (%) 12.18% 15.48%Segment cost offunds (%) 11.67% 3.45% 11.26%

2008Trading Retail Commercial Payment Others Total

and banking banking andsales settlement

-----------------------------------------------(Rupees in '000 ) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~ - - - - - - - - - - - - - - - - . Interest income 143,591 393,279 275 538,145

II1, 1 Qon-funded Income 80,021 135 80,485Interest and non mark-upincome 143,591 473,300 1,410 329 618,630

Total expenses 133,953 66,598 334,447 5,236 540,234Net profit after tax 9,638 (66,598) 138,853 1,410 (4,907) 78,396Segment assets (gross) 1,828,096 14,440 4,259,825 36,983 45,200 6,184,544Segment non-performing loansSegment provision requiredSegment liabilities 1,[48,749 1,730,338 3,176,156 17,242 33,515 6,106,000Segment return on net

assets (ROA) (%) 7.85% 12.81% 7.14%Segment cost offunds (%) 8.75% 7.70% 7.06%


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31. RELATED PARTY TRANSACTIONSThe-Branch has related party transactions with its head office, other branches, employees' benefitplans and its executive officers.Transactions with related parties are executed substantially on the same terms, as those prevailingat the time for comparable transactions with unrelated parties.Details of transactions with related parties except those under the terms of employment are as follows:

2009 2008Deposits Overseas Branches Overseas Branches

Nost ro Vostro Nostro Vostroaccount account account account

--------------------------------(Rupees '000)------------------- -.---------Balance as at 01 January 36,983 (4,684) 10,550 (2,447)Deposits during the year 24,595,269 (182,043) 72,112,905 (2,206,020)Withdrawals during the year 176,09424,545,154) __ ~ ~ ~ (72,086,472) 2,203,783Balance as at 31 December 87,098 (10,633) 36,983 (4,684)

2009 2008Lendings to financial institutions (Rupees in '000)Balance as at 01 JanuaryGiven during the year 2,133,260 4,312,252Repaid during the year (2,133,260) (4,312,252)Balance as at 31 DecemberBorrowings from BranchesBalance as at 01 January . 3,141,792 1,996,400Funds borrowed during the year 2,679,294 16,181,471Repaid during the year (4,507,338) (15,036,079)Balance as at 31 December 1,313,748 3,141,792Deposit of provident fund as at 31 December 17,007 15,108Deposit of gratuity fund as at 31 December 5,431 3,841Markup earned 372 2,835Markup expensed 39,525 98,851Contributions to Provident Fund 1,170 956Contribution to Gratuity Fund 2,080 82Guarantees issued on behalf of related parties 286,294 418,954The remuneration of General Manager and Executives has been given in note 28 to the financial statement!

32. CAPITAL - ASSESSMENT AND ADEQUACY BASEL II SPECIFIC

32.1 Capital managementThe Branch is subject to regulatory capital requirement promulgated by the State Bank of Pakistan.It is therefore required to maintain regulatory capital for credit risk, market risk awl operational risk.Failure to meet minimum requirement will initiate certain actions by regulatory authorities,


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Objectives and goals of managing capitalThe objectives and goals of managing capital of the Branch are as follows:- To be an appropriately capitalized institution, as defined by regulatory authorities- To maintain strong ratings and protect the Brunch against unexpected events- To ensure the availability of adequate capital so as to enable the Branch 10 finance its operationsStatutory minimum capital rcq uircmcut and management or capitalThe State Bank of Pakistan (SBP) through its I3SD circular No.19 dated 05 September 2008requires the minimum paid-up capital (net of losses) for Banks / Devclopmcntlinancial institutions tobe raised to Rs. 6 billion by the year ended 31 December 2009. Branches of foreign banks operatingin Pakistan arc also required to increase their assigned capital to Rs. 6 billion within the abovetimcl ines prescribed for the locaIly incorporated bunks / Df'Is. However, those branches of foreignbanks whose head offices hold a minimum paid up capital 01' US $ 300 million (net of losses) andhave a Capital Adequacy Ratio (CAR) of at least 8% or minimum prescribed by their homeregulators, whichever is higher, will be allowed with the prior approval of the State Bank of Pakistanto raise the assigned capital to Rs. 3 billion latest by 31 December 201 O. Presently, t.he Branch hasan approval from the State Bank of Pakistan 10maintain minimum capital of Rs. 2 billion. In addition,banking companies carrying business in Pakistan are required to maintain a CAR of 10% (2008:9%) of risk weighted exposures. The Branch's CAR, determined as per Basel-Il accord, as at 31December 2009 was 146.75% (2008: 84.05%) of its risk weighted assets.The required capital adequacy ratio (10% of the risk weighted assets) is achieved by the Branchthrough improvement in the assets quality at Ihe existing volume levcl, ensuring better recoverymanagcmcnt ancl maintaining composition 01'assets with low risk. Thc total risk-weighted exposurescomprise the credit risk, market risk and operational risk. The Branch has complied with allexternally imposed capital requirements throughout the year. Further, there has been no materialchange in the Branch's management of capital during the year.The risk-weighted assets are measured by means of a hierarchy of risk weights classi Iicd accordingto the nature of and reflecting an estimate of credit, market and operational risks associated witheach asset and counterpart)', taking into account any eligible collateral or guarantee. A similartrcatment is adopted lor off-balance sheet exposure, with some adjustments 10 : c ~ l c c l the morecontingent nature of potential future exposure, ' .The Branch will continue to maintain the required regulatory capital either through its riskmanagement strategies or by increasing the capital requirements in line with Ihe business andcapital needs,The e1igiblc regulatory capital cons ists of-Tier I capital, which includes capital deposited with theState Bank of Pakistan (SOP) and unremitted profit. Tier 2 and 3 arc also prescribed by SI3P butthe Branch has no such eligible capital. Thc Branch calculates capital requirement for credit, marketand operational risks using the methodology prescribed by SBP. Banking operations nrc categorizedas either trading book or banking book and risk weighted assets arc determined according tospecific requirements of the State Bunk of Pakistan that seek to reflect the varying levels of riskattached to assets and orr-balance sheet exposures.


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The Branch calculates capital requirement as per Basel II regulatory framework, using thefollowing approaches:Credit riskMarket riskOperational risk

32.2 Capital adequacy

Standardized approachStandardized approachBasic indicator approach

The risk-weighted assets to determine capital adequacy ratio, calculated in accordance with theSBP's guidelines on capital adequacy, are as follows:

32.2.1 Regulatory capital base

Tier I CapitalHead office capitalReservesUnremitted profitLess: Adjustment for

- Intangible AssetsTotal Tier I CapitalTier II CapitalSubordinated debt (upto 50% of total Tier 1Capital)General provisions subject to 1.25% of total risk-weighted assetsForeign exchange translat ion reservesRevaluation reserve (upto 50%)Total Tier 11 CapitalEligible Tier III CapitalTotal Regulatory Capital

32.2.2 Risk - weighted exposures Capital Requirements2009 2008

2009 2008(Rupees in 'OOU)

4,041,323 3,878,698- -46,265 78,5443,353 (2,128)

4,090,941 3,955,114

4,090,941 3,955,114Risk Weighted Assets

2009 2008-------------------------- (Rupees in '000) ------------------------

Credit riskSovereignPublic sector enterprisesFinancial institut ionsCorporatesRetailResidential mortgageOther assets

- - - -8,973 136 89,728 1,50869,746 41,278 697,464 458,643160,062 344,037 1,600,615 3,822,628

312 265 3,122 2,944110 142 1,104 1,576

4,142 3,826 41,424 42,509243,345 389,684 2,433,457 4,329,808.Market risk

Interest rate riskForeign exchange risk 1,;10 II 2 , ~ 2 5 , I 12,;00 II 3 2 , ; 0 ~ . 1

1,210 ? ~ 9 ? 5 12,100 12,500Operational risk 34,219 30,888 342,188 ' 343,196278,774 423,497 2,787,745 4,705,504


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Capital adequacy ratio 2009 2008(Rupees in '000)

Total eligible regulatory capital held (a) 32.2.1 4,090,941 3,955,114Total risk weighted assets (b) 2,787,745 4,705,504Capital adequacy ratio [(a) / (b) x 100] 146.75% 84.05%

33. RISK MANAGEMENTThe Branch is primarily subject to credit risk, market risk, liquidity risk and operational risk. Thepolicies and procedures for managing these risks are outlined below. The basic premise of riskcontrol and management is to comprehensively control and manage the risks of the Branch using auniform standard approach as much as possible. The objective of comprehensive risk control andmanagement is to provide the basis for the achievement of stable profit balanced with risk,achievement of an appropriate capital structure, appropriate allocation of resources, and other goals,by identifying / recognizing, evaluating / calculating, controlling and monitoring / reporting all risks.

33.1 Credit riskThe risk of sustaining a loss due to reduction or termination of the value of assets (includingoff-balance sheet assets), caused by an obligor's deteriorated credit standing or default ofagreement.The Branch's credit evaluation system comprises of well designed credit appraisal, sanctioning andconstant review procedures for the purpose of emphasizing prudence in its lending activities andensuring quality of assets portfolio. The objectives of credit evaluation system are to keep credit riskexposures within permissible level relevant to the Branch's risk capital, to maintain the soundness ofassets and to ensure returns commensurate with risk. Special attention is paid to the management ofnon-performing loans, which are closely monitored both at the Branch's level as well as its headoffice level. A "Close Watch" mechanism is in function which identifies early warning signals ofloans and advances becoming non-performing.The Branch has implemented its own internal risk rating system for the credit portfolio, as perguidelines of the State Bank of Pakistan, which are further approved by the Head Office. Creditratings by external rating agencies, if available, are also considered.

The Branch constantly examines its total credit exposures and considers analytical and systematicapproaches to its credit structure categorised by group and industry.33.1.1 Credit risk: General Disclosures - Basel II Specific

All credit risk exposures of the Branch are subject to the Standardized approach.


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33.1.2 Credit risk: Disclosures on Portfolio Subject to Standardized Approach - Basel II SpecificThe Branch uses the ratings issued by the Pakistan Credit Rating Agency Limited (PACRA) and JCR-VISCredit Rating Company Limited (JCR-VIS) for its local currency exposures and ratings issued by Moody's,S&P, and Fitch for its foreign currency exposures. These External Credit Assessments Institutions (ECAls)have been approved by the State Bank of Pakistan.Types of exposures and ECAIs Used - 2009Types of exposures JCR-VIS PACRA Moody's,(Local (Local S&P, and

Currency) Currency) Fitch(Foreign

Currency)Public sector enterprises xFinancial institutions x x xCorporates xAlphanumerical scale of each ECAI used has been aligned with risk buckets as determined by the State Bank ofPakistan.

33.1.3 Credit exposures subject to standardized approach31 December 2009 31 December 2008

------------------------------------ Rupees in '000 ----------------------------------Exposures Rating

CategoryAmount

OutstandingDeduction

CRMNet

amountAmount

OutstandingDeduction

CRMNet amount

Corporate AA+/AA/AA- - - - 498,046 498,046Al+ /AI 3,696 - 3,696 -A+ 519,301 - 519,301 500,000 500,000

Banks AA+I AI 376,018 - 376,018 1,718,769 1,718,769AA/AAA 1,235,242 - 1,235,242 - -

A2 . . - 229,487 229,487BBB 351,723 - 351,723 - -

FI (fitch mCA) 91,075 91,075 - -Sovereigns etc. - - - - -Unrated (Corporate) 1,234,763 - 1,234,763 3,473,018 3,473,018

(Banks) - - - 290 290Public Sector

Enterprise Al+ 448,641 - 448,641 7,540 7,540Others 7,317Total 4,267,776 - 4,267,776 6,427,150 6,427,150

..CRM= Credit RIskMitigation33.1.4 Segmental information

Segmental information is presented in respect of the class of business and geographical distribution of advances,deposits, contingencies and commitments.


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33.1.4.1 Segments by class of business2009

Advances (gross) Deposits Contingencies andCommitments

(Rupees Percent (Rupees Percent (Rupees Percentin '000) in '000) in '000)

Fuel 22 0.00TextileChemicals and 452,894 16.53pharmaceuticals 147,041 6.69 43,758 9.34

CementAutomobile and

transportation equipment 1,045,889 47.57 814,130 29.72 138,112 29.46Electronics and electricalappliances 2,318 0.08Construction 80,069 2.92Power (electricity), gas,water and sanitary 448,156 20.38 908,234 33.15

Exports / importsFinancial 50,000 2.27 95 0.00 286,912 61.20Insurance 1,159 0.04Individuals 7,310 0.33 165,693 6.05CommunicationOthers 500,447 22.76 315,435 11.51

2,198,843 100.00 2,740,049 100.00 468,782 100.002008

Advances (gross) Deposits Contingencies andCommitments

(Rupees Percent (Rupees Percent (Rupees Percentin '000) in '000) in '000)

Fuel 1,500,000 36.65 222 0.01TextileChemicals and

pharmaceuticals 171,719 4.20 53,821 3.14 47,974 5.95CementAutomobile andInlllsJ.lt.l1 hll inn t:lJlIi/lllltml 1 4 ~ ~ , O ~ I 1555 453,437 26.4J 311,ISS 38.58Electronics and electricalappliances 10,473 0.26 3,274 0.19

Construction 36,631 2.13Power (electricity), gas,water and sanitaryExports / importsFinancial 249,982 6.10 49 0.00 419,535 52.02Insurance 429 0.03Individuals 8,420 0.21 176,530 10.29CommunicationOthers 697,142 17.03 991,519 57.78 27,773 3.454,092,787 100.00 1,715,912 100.00 806,437 100.00


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33.1.4.2 Segment by sector

Advances(Rupees Percentin '000)

2009Deposits

(Rupees Percentin '000)

Contingencies andcommitments


Public / GovernmentPrivate448,1571,750,6862,198,843

20.3879.62100.00 2,740,0492,740,049 100.00100.00468,782468,782

100.00100.00

Public / GovernmentPrivate

Advances(Rupees Percentin '000)

4,092,787 1004,092,787 100.00

2008Deposits

(Rupees Percentin '000)6,366 0.37

1,709,546 99.631,715,912 100.00

Contingencies andcommitments


806,437 100.00. 806,437 100.0033.1.4.3 Geographical segment analysis

2009Profit Total Net assets Contingenciesbefore assets employed and

taxation employed commitments--------------------------(Rupees in '000)-------------------------PakistanAsia Pacific (including South Asia)EuropeUnited States of America and CanadaMiddle EastOthers

65,612

65,612

8,545,716

8,545,716

4,087,588

4,087,588

468,782

468,7822008

Profit Total Net assets Contingenciesbefore assets employed and

taxation employed commitments--.--' ..{R II pr,,,,... in '000)---.-- -__._.___-_._

Pakistan 124,098 10,063,242 3,957,242 806,437Asia Pacific (including South Asia)EuropeUnited States of America and CanadaMiddle EastOthers

124,098 10,063,242 3,957,242 806,437


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33.2 Market riskMarket risk is the risk of sustaining a loss due to a change in the price of assets or liabilities held(including off-balance sheet assets and liabilities) resulting from changes of risk factors like interestrates, exchange rates, equity prices, commodity prices and others. Market liquidity risk is that ofsustaining a loss due to inability to trade required quantities at a reasonable level, due to marketturm oil or a lack of trade volume in the market.With the full understand ing that market risk is unavoidable in the Branch's business activities and thatrapid handling of it is required, the Branch has a very effective system to manage and control marketrisks. In managing and controlling market liquidity risks, each product's market scale and marketliquidity has always been sufficiently considered, to prevent any inability to cancel or reduce positionswhen necessary.The Branch uses the Standardized Approach to calculate capital charge for market risk as perBasel II regulatory framework. Details of capital charge for market risk arc given in note 32.2.2.

33.2.1 Foreign exchange riskForeign exchange risk represents exposures to changes in the values of current holdings and futurecash flows denominated in foreign currencies. The potential for loss arises from the process ofrevaluing foreign currency positions in rupee terms. The Branch's foreign exchange risk is limited tofuture cash flows in foreign currencies arising from foreign exchange transactions and trans lation ofnet open position in foreign currencies. Forward contracts are used to mitigate foreign exchangerisks, the Branch however remains exposed to such risk to the extent of net open position.

2009Assets Liabilities Off-balance Net foreign

and head sheet currencyoffice capital items exposure

account----------------------(Ru pees in '000)---------------------

Pakistan rupee ,1,3 t17,363 3,038,642 (1,342,668) (33,947)United States dollar 155,989 1,452,998 1,33 I ,431 34,422Great Britain pound 96 96Singapore dolla r 14 14Japanese yen 4,042,217 4,054,076 11,237 (622)Euro 34 34Other currencies 3 38,545,716 8,545,716


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2008Assets Liabil ities Off-balance Net foreign

and head sheet currencyoffice capital items exposure

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

Pakistan rupee 6,089,024 2,862,944 (3,234,051) (7,971 )United States dollar 85,639 3,313,659 3,235,499 7,479Great Britain pound 83 83Singapore dollar 13 13Japanese yen 3,888,194 3,886,639 (1,448) 107Euro 287 287Other currencies 2 2

10,063,242 10,063,24233.2.2 Yield / interest rate risk

Interest rate risk is the risk of loss from adverse movements in interest rates. The Asset LiabilityManagement Committee (ALM) monitors and manages the interest rate risk with the objective oflimiting the potential adverse effects on the profitability of the Branch arising from fluctuation in themarket interest rates and mismatching or gaps in the amount of financial assets and financial liabilitiesin different maturity time bands.The Branch's interest rate exposure is calculated by categorizing its interest sensitive assets andliabilities into various time bands based on the earlier of their contractual repricing or maturity dates.Yield / Interest Rate Risk in the Banking Book - Basel II SpecificThe Branch holds financial assets and financial liabilities with different maturities or repricing datesand linked to different benchmark rates, thus creating exposure to unexpected changes in the level ofinterest rates. Interest rate risk in the banking book refers to the risk associated with interest-bearingfinancial instruments that are not held in the trading book of the Branch.Repricing gap analysis presents the Branch's interest sensitive assets (ISA) and interest sensitiveliabilities (ISL), categorized into various time bands based on the earlier of their contractual repricingor maturity dates. Deposits with no fixed maturity dates are included in the lowest, one-month timeband, but these are not expected to be payable within a one-month period. The difference betweenISA and ISL for each time band signifies the gap in that time band, and provides a workableframework for determining the impact on net interest income.The Branch reviews the repricing gap analysis periodically to monitor and manage interest rate riskin the banking book.


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L ....". __ ,,.' ',- .. - ...

33.2.3 Mismatch of interest rate sensitive assets and liabilities

On-balance sheet financial instruments

Effectiveyield I

interestrate

TotalUpto Imonth

Over 1to 3

months

2009Exposed to yield I interest risk

Over 3 Over 6 Over 1 Over 2 Over J OverS Abovemonths to months to to 2 to 3 to 5 to 10 10 years6 months 1 year years years years years

-------(Rupees n '000)------------------- , ------ ,

Not exposedto yield Iinterestrate

AssetsCash and balances withtreasury banks O.OO'Yo

Balances with other banks 0.10%.-0.8 1%Lendings to financial institutions 11.50"1.. 12.45%InvestmentsAdvances 31X, _ 13.58YoOther assets

-4 , 2 3 7 . 3 ~ )

91,0";1,905,551-2,198,8.0

73.i3'

45,09991,075

1,905,551-886,615-

---80,164-

.---550,246-

---.75,491-

----225,972-

---

125,935-

----251,507-

---1,240

---1,673-

4,192,251--73,7378,506.5;;0 2,928,340 80,164 550,246 75,491 225,972 125,935 251,507 1,240 1,673 4,265,988

LiabilitiesBills payableBorrowings 0.51% - 6.5%Deposits and other accounts 5% - 12.5%Liabilitiesagainst assets subjectto finance lease

Other liabilities4,455.l3! 2,731, 765 1,025,999 130,124 567,344

2 1 6 . 9 ( t ~ 1,397.i:..52 , 7 4 0 . 0 ~ --

100.551

256,74>22,475,0li3..-

1,010,89915,100---

130,124-.--

------

---

--.---

----.-

---

----

216,907-249,886-100,551

On-balance sheet gap 4.0513:4 196.575 (945.835) 420,122 75,491 225,972 125,935 251,507 1,240 1,673 3.698,644Off-balance sheet financial instruments

Forward lending 1,931.8(.) 1,931,800Off-balance sheet gap 1,931,8((J 1,931,800

Total yield I interest risk sensitivity gap 2,128.3;5 (945.835) 420.122 75,491 225.972 125,935 251,507 1,240 1,673Cumulative yield I interest risk sensitivity gap 2,128.3;5 1.182.540 1.602.662 1.678.153 1.904.125 2.030.060 2,281,567 2.282,807 2.284,480

~


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- -

2008

On-balancesheet financial instruments

Effectiveyieldinterest

rate

TotalUplO I Over Imonth to 3

months----.---- - - . - . - . - . - - - .--- .--

Exposed to yieldI interestriskOver 3 Over6 Over I Over2

months to monthsto to 2 to 36 months I year years years

-. -- ._---(Rupees in 000).--.__.--

Over3t05

yearsOver 51010years

Above10years

Not exposedto yieldIinterest

rate

AssetsCash and balanceswith

treasurybanks 0.9%- 3.6%Balanceswithotter banks 0.41%Lendingto financial institutions 12.5%18.5%InvestmentsAdvances 14.47%-17.95%Other assets

4,072,08036,983

1,597,697.

4,092,787218,593

41,42336,983

568,774.

2,442,779-

-

1,028,923

200,160

III

-..-

25,239-

.

108,812-

.

.709,262-

-

225,9)7- 251,557- 126,435

2,636

4,030,657--.

218,59310,018,140 3,089,959 1,229,083 25,239 108,812 709,262 225,9)7 251,557 126,435 2,636 4,249,

bank of tokyo mitshubhishi ltd 2009

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