THE PUNJAB PROVINCIAL COOPERATIVE BANK LIMITED
BALANCE SHEET AS AT JUNE 30, 2007
Note
ASSETS
Cash and balances with treasury banks
Balances with other banks
Lending to financial institutions
Investments
Advances
Operating fixed assets
Deferred tax assets
Other assets
6
7
8
9
10
11
LIABILITIES
Bills payable
Borrowings
Deposits and other accounts
Sub-ordinated loans
Liabilities against assets subject to finance lease
Deferred tax liabilities
Other liabilities
12
13
14
15
NET ASSETS
REPRESENTED BY
Share capital
Reserves
Unappropriated profit
16
Surplus on revaluation of assets
17
CONTINGENCIES AND COMMITMENTS
18
2007
2006
Rupees in ‘000'
715,017
5,586,775
558,009
8,009,821
2,571,139
216,136
17,656,897
409,993
6,511,008
506,876
6,798,803
1,288,477
219,225
15,734,382
39,654
12,000,000
2,007,645
185,623
14,232,922
3,423,975
20,677
12,000,000
1,657,013
123,553
13,801,243
1,933,139
430,351
370,827
133,776
934,954
2,489,021
3,423,975
425,533
337,269
38,939
801,741
1,131,398
1,933,139
The annexed notes form an integral part of these accounts
CH.GHULAM MUSTAFA
A.SENIOR MANAGER,
ACCOUNTS/STAT
MUHAMMAD ASHRAF
A.CHIEF MANAGER,
FINANCE
RAJA ALLAH BUKHSH
GENERAL MANAGER
THE PUNJAB PROVINCIAL COOPERATIVE BANK LIMITED
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2007
Note
Mark-up/return/interest earned
Mark-up/return/interest expensed
Net mark-up/ interest income
Provision against non-performing loans and advances
Provision for diminution in the value of investments
Bad debts written off directly
19
20
2007
2006
Rupees in ‘000'
1,228,805
547,198
681,607
375,366
375,366
306,241
1,029,645
253,508
776,137
157,609
157,609
618,528
22,805
4,811
347,161
374,777
681,018
4,467
8,177
37,501
50,145
668,673
24
550,203
551
550,754
130,264
481
481
129,783
38,939
168,722
512,511
99
512,610
156,063
1,030
1,030
155,033
(103,114)
51,919
25
38.59
9.3
9.4
Net mark-up/ interest income after provisions
Non mark-up/interest income
Fee, commission and brokerage Income
Dividend Income
Income from dealing in foreign currencies
Gain / (loss) on sale of securities
Other income
Total non-mark-up/interest income
21
Non mark-up/ interest expenses
Administrative expenses
Other provisions/write offs
Other charges
Total non-interest/interest expenses
Extra ordinary/ unusual items
Profit before taxation
Taxation - Current
- Prior years
- Deferred
22
23
Profit after taxation
Unappropriated profit/(loss) brought forward
Profit available for appropriation
Basic and diluted earnings per share
The annexed notes form an integral part of these accounts
CH.GHULAM MUSTAFA
A.SENIOR MANAGER,
ACCOUNTS/STAT
MUHAMMAD ASHRAF
A.CHIEF MANAGER,
FINANCE
46.46
RAJA ALLAH BUKHSH
GENERAL MANAGER
THE PUNJAB PROVINCIAL COOPERATIVE BANK LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2007
Note
CASH FLOW FROM OPERATING ACTIVITIES
Profit before taxation
Less:Dividend income
Adjustments:
Depreciation
Amortization
Provision Against Non-performing Advances
(Gain) on sale of fixed assets
(Increase)/ Decrease in operating assets
Advances
Others assets (excluding advance taxation)
Increase/ (Decrease) in operating liabilities
Bills Payable
Borrowings from financial institutions
Deposits
Other liabilities (excluding current taxation)
Income tax paid
Net cash flow from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Dividend income
Investments in operating fixed assets
Capital work in progress
Sale proceeds of property and equipment disposed-off
Net cash flow from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Issue of share capital
Dividend paid
Medical aid to employees from Common Good Fund
Net cash flow from financing activities
Increase/(Decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
26
2007
2006
Rupees in ‘000'
130,264
(4,811)
125,453
156,063
(8,177)
147,886
8,327
159
375,366
(296,600)
87,252
212,705
7,896
157,609
(3,114)
162,391
310,277
(1,586,384)
13,450
(1,572,934)
37,546
(19,844)
17,702
18,977
350,632
62,070
431,679
(928,550)
(11,001)
(939,551)
2,443
2,472,000
(31,784)
(18,846)
2,423,813
2,751,792
(7,585)
2,744,207
4,811
(27,960)
(898)
340,959
316,912
8,177
(15,038)
3,114
(3,747)
4,818
(1,388)
3,430
6,579
(1,408)
5,171
(619,209)
6,921,001
6,301,792
2,745,631
4,175,370
6,921,001
The annexed notes form an integral part of these accounts
CH.GHULAM MUSTAFA
A.SENIOR MANAGER,
ACCOUNTS/STAT.
MUHAMMAD ASHRAF
A.CHIEF MANAGER,
FINANCE
RAJA ALLAH BUKHSH
GENERAL MANAGER
THE PUNJAB PROVINCIAL COOPERATIVE BANK LIMITED
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2007
Share
capital
Statutory
reserve
Common
Good
Fund
Reserve for Unappropriated/
Consumer
profit/(loss)
Finance
Total
Rupees in '000'
Balance as on June 30, 2005
418,954
318,748
5,469
1,480
(103,114)
641,537
155,033
155,033
Profit for the year
-
-
-
Transfer to statutory reserve
-
12,980
-
-
(12,980)
-
Transfer to reserve for Consumer
Finance
-
-
-
-
-
-
6,579
-
-
-
-
6,579
-
-
(1,408)
Issue of share capital
Medical aid to staff
Balance as on June 30, 2006
425,533
331,728
(1,408)
4,061
1,480
38,939
801,741
129,783
Profit for the year
-
-
-
-
129,783
Transfer to statutory reserve
-
32,446
-
-
(32,446)
-
Transfer to reserve for Common
Good Fund
-
-
2,500
(2,500)
-
Issue of share capital
4,818
4,818
Medical aid to staff
Balance as on June 30, 2007
(1,388)
(1,388)
430,351
364,174
5,173
1,480
133,776
934,954
The annexed notes form an integral part of these accounts
Note:
Common Good Fund is created for the welfare/medical aid to staff under Section 42 of Cooperative societies Act, 1925.
Under the Bylaw No.57 of the Bank not less than one quarter of the net profit shall be carried to the statutory reserve.
CH.GHULAM MUSTAFA
A.SENIOR MANAGER,
ACCOUNTS/STAT
MUHAMMAD ASHRAF
A.CHIEF MANAGER,
FINANCE
RAJA ALLAH BUKHSH
GENERAL MANAGER
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
5.6
Year Ended June 30, 2007
Taxation
Provision for taxation is based on the assessable income for the year after taking into account
tax credits available, if any, and any under/over provisions in respect of prior years.
5.7
Staff retirement benefits
5.7.1 Defined benefit plan
The bank operates a funded pension scheme for all its permanent employees. Retirement
benefits are payable to the members of the scheme on completion of prescribed
qualifying period of service under the pension scheme. Contribution of 25% of the basic
salary are being made by the bank. The gratuity is also paid to the employees on the
basis of maximum period of service and last basic pay drawn subject to a maximum of
Rs. 125,000 at the end of service.
5.7.2 Defined contribution plan
The bank also operates a recognized provident fund scheme for all its regular employees,
which is administered by the board of trustees. Equal monthly contribution of 10% of the
basic salary is made in accordance with the terms of the scheme.
5.8
Impairment of assets
The carrying amount of Bank's assets except deferred tax assets are reviewed at each balance
sheet date to determine whether there is any indication of impairment loss. If such indication
exists, the assets recoverable amount is estimated in order to determine the extent of the
impairment loss, if any. Impairment losses are recognized as expense in profit and loss account.
5.9
Transactions with related parties
The transactions with related parties are entered into at arm's length prices using the
comparable uncontrolled price method except for advances to the employees which are
extended in accordance with the industry practice.
5.10 Offsetting
Financial assets and financial liabilities are only offset and the net amount reported in the
balance sheet when there is legally enforceable right to set off the recognized amounts and the
Bank intends to either settle on net basis or to realize the assets and settle the liability
simultaneously.
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
Year Ended June 30, 2007
Note
6. CASH AND BALANCES WITH TREASURY BANKS
In hand
Local currency
With State Bank of Pakistan in
Local currency current account
With National Bank of Pakistan in
Local currency current account
Local currency deposit account NIDA
6.1
2007
2006
Rupees in '000'
125,482
84,640
6.1
169,861
95,650
6.1
6.1
133,697
285,977
113,213
116,490
715,017
409,993
These accounts are maintained under the requirements of BSD Circular No.16 and 18 dated August 10, 2002 and March 31,
2001 respectively, issued by the SBP. The NIDA account bears profit @ 2.50% per annum (2006 : 1.40% per annum)
7. BALANCES WITH OTHER BANKS
In Pakistan
On current account
On deposit account
7.1
208,364
5,378,411
89,552
6,421,456
5,586,775
6,511,008
Deposit accounts maintained with the banks bear profit @ 3.00% to 10.50% per annum (2006 :1.40% to 10.00% per
annum)
2007
2006
8. INVESTMENTS
Note Held by
Total
Total
Given as
Held by
Given as
bank
collateral
bank
collateral
Rupees in '000'
8.1
INVESTMENTS BY TYPES:
7.1
Available-for-sale securities
Share of Listed Companies
Share of Cooperative Institutions
Held-to-maturity securities
Pakistan Investment Bonds
Provincial Government Securities
Investment at cost
Less: Provision for Diminution in value
of Investments
Investments (Net of Provisions)
Add: Surplus on revaluation
on Available-for-sale securities
Total investments at market value
8.2
8.4
8.5
7,023
3,551
-
7,023
3,551
7,023
3,551
-
7,023
3,551
8.6
8.7
300,000
12,051
322,625
-
300,000
12,051
322,625
300,000
12,051
322,625
-
300,000
12,051
322,625
322,625
-
322,625
322,625
-
322,625
235,384
558,009
-
235,384
558,009
184,251
506,876
17.2
INVESTMENTS BY SEGMENTS:
Federal Government Securities:
-Pakistan Investment Bonds
Provincial Government Securities
Fully Paid up Ordinary Shares:
-Listed Companies
-Cooperative Institutions
Total investment at cost
Less: Provision for diminution in value
of investment
Investments (Net of Provisions)
Add: Surplus on revaluation
on Available-for-sale securities
17.2
Total investments at market value
184,251
506,876
2006
2007
Rupees in '000'
300,000
12,051
300,000
12,051
7,023
3,551
322,625
7,023
3,551
322,625
322,625
322,625
235,384
558,009
184,251
506,876
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
Year Ended June 30, 2007
8.3 Quality of Available for Sale Securities
Securities (At market value)
Shares of listed companies
Security Papers Limited
PICIC
Dawood Lawrencepur Limited
PICIC Insurance Limited
Shares of Cooperative Institutions
Total
Amount
2007
233,784
5,636
2,871
116
3,551
245,958
Rating
AAA
AAUnrated
AUnrated
Amount
2006
186,226
2,602
2,446
3,551
194,825
Rating
AAA
AAUnrated
Unrated
8.4 Shares of Listed Companies
Name of Company
2007
2006
Number of Shares
Ordinary share of Rs. 10 each
2,051,641
68,644
35,007
2,314
1,578,186
62,404
31,825
-
Security Papers Limited
PICIC
Dawood Lawrencepur Limited
PICIC Insurance Limited
Note
8.4.1
8.4.1
2007
2006
At Cost
Rupees in '000'
6,708
315
-
6,708
315
-
7,023
7,023
8.4.1 The Bank has sold the investment in shares of PICIC during preceding years, the current share holding of PICIC represents
the entitlement of bonus shares received after disposal. During the year the Bank has received shares as specie dividend of
PICIC Insurance Limited from PICIC.
8.5 Share of Cooperative Institution
2007
2006
Number of shares
191,876
460
3,410
71
3,041
7,360
10
12
129
1
250
30
4
10
52
4
200
100
20
1,020
250
500
1
200
191,876
460
3,410
71
3,041
7,360
10
12
129
1
250
30
4
10
52
4
200
100
20
1,020
250
500
1
200
Face Value Name of Cooperative Institution
of Shares
Rupees
10
100
100
1000
100
100
100
1000
500
100
100
1000
500
100
500
100
50
100
50
100
100
100
10
50
Coop: Insurance Society of Pakistan
National Coop. Supply Corporation
Coop: Investment & Management Agency
Oberoi Coop: Society Sialkot
Shahdara Pioneer Coop: M.P. Society
Lahore Central Coop: Store
Jhelum Distt. Coop: Society
All Pakistan Coop: Multi Purpose Society
Punjab Prov. Coop: Cotton Corp.
Pakistan Product Coop: Marketing
Anjuman Imdad-e-Bahami M.P. Society
Pioneer Coop: Leather & Rubber Society
Punjab Prov. Coop: Marketing
West Pakistan Coop: Consumer Society
Sargodha Distt. Coop: Society
Sialkot Central Coop: Multi Purpose Society
Multan Distt. Coop: Multi Purpose Society
Lyalpur Distt. Coop: Multi Purpose Society
Lyalpur Distt. Coop: Store
Montgomery Coop: Society
Bahawalpur Coop: Society
Arifwala Mills Society
Jhang Coop: Supervising
Rawalpindi Multi Purpose Union
2007
2006
At Cost
Rupees in '000'
1,919
43
341
71
300
536
1
11
65
12
30
2
1
18
8
10
1
102
25
45
10
1,919
43
341
71
300
536
1
11
65
12
30
2
1
18
8
10
1
102
25
45
10
3,551
3,551
8.5.1 The comparative figures of number of shares of Cooperative Institutions have been restated due to an error made in the
presentation, however, this change has no effect on the value of shares.
8.5.2 The shares of Cooperative Institutions showing nil value is due to amounts rounded off to the nearest thousand. These
shares have value less than a thousand rupee.
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
Year Ended June 30, 2007
8.6 Pakistan Investment Bonds are for the period of 10 years starting from December 14, 2000 with the yield 14% per annum
(2006: 14% per annum).
8.7 Provincial Government securities comprise of Punjab Loan issued by the Government of Punjab on December 07, 1998 for
the period of 10 years with the yield 17.5% per annum (2006: 17.5% per annum).
2007
2006
Rupees in '000'
9. ADVANCES
Loans, cash credits, running finances, etc.
In Pakistan
Bills discounted and purchased (excluding treasury bills)
Payable in Pakistan
Advances - gross
Provision for non-performing advances
9,453,551
7,867,167
184
9,453,735
1,443,914
184
7,867,351
1,068,548
8,009,821
6,798,803
9.1.1 In local currency
9,453,735
7,867,351
9.1.2 Short Term ( for upto one year)
Long Term ( for over one year)
4,961,136
4,492,599
3,889,903
3,977,448
9,453,735
7,867,351
Advances - net of provision
9.1 Particulars of advances (Gross)
9.2 Advances include Rs. 3,254,376 (thousand) (2006 : 3,085,018 thousand) which have been placed under non-performing
status as detailed below:2007
Provision
Classified Advances
Domestic
Overseas
Total
Required
Provision Held
Category of Classification
Rupees in '000'
Other Assets Especially Mentioned
Substandard
Doubtful
Loss
630,725
584,540
543,106
1,496,005
3,254,376
-
630,725
584,540
543,106
1,496,005
3,254,376
9.3 Particulars of provision against non-performing advances
2007
Specific
General
Total
Opening balance
Charge for the year
1,068,548
375,366
-
Specific
Rupees in '000'
1,068,548
910,939
375,366
157,609
Closing balance
1,443,914
-
1,443,914
1,068,548
9.3.1 Particulars of provisions against non-performing advances
2007
Specific
General
Total
Specific
Rupees in '000'
In local currency
1,443,914
1,443,914
1,068,548
117,446
271,553
1,496,005
1,885,004
2006
General
117,446
271,553
1,054,915
1,443,914
Total
-
910,939
157,609
-
1,068,548
2006
General
-
Total
1,068,548
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
9.4
Year Ended June 30, 2007
PARTICULARS OF WRITE OFFs:
2007
2006
Rupees in '000'
-
9.4.1 Against Provisions
Directly charged to Profit & Loss account
9.4.2 Write Offs of Rs. 500,000 and above
Write Offs of Below Rs. 500,000
9.5
-
-
DETAILS OF LOAN WRITE OFF OF Rs. 500,000/- AND ABOVE
In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the Statement in respect of written-off loans or any other financial
relief of five hundred thousand rupees or above allowed to a person(s) during the year ended June, 2007 is NIL.
10. OPERATING FIXED ASSETS
Note
Capital work-in-progress (Civil Works)
Property and equipment
10.1
2007
2006
Rupees in '000'
13,372
12,474
2,557,767
1,276,003
2,571,139
1,288,477
10.1 Property and equipment
COST
Opening Additions/ Closing
Balance (Deletions)/ Balance
As At
As At
01-07-06
30-06-07
Free hold land
Lease hold land
Building on free hold land
Building on lease hold land
Furniture and fixture
Electrical, office and
computer equipments
Vehicles
Telephone Exchange &
Conference system
Arms & Ammunitions
227,758
125,223
14,342
5,915
31,486
4,199
(42,635)
-
189,322
2,420
(281)
-
127,362
-
DEPRECIATION
Opening
Charge/
Closing
Balance (Deletion) Balance Revaluation
As At
As At
Surplus
01-07-06
30-06-07
Rupees in '000
2,253,637
Book
value
As At
30-06-07
2,442,959
Rate of
depreciation
%
-
-
-
-
-
-
41,058
2,187
43,245
-
84,117
-
-
-
-
-
-
-
1,194
(221)
1,090
(11)
15,315
11,039
870
11,909
-
3,406
20.00
6,994
3,018
774
3,792
-
3,202
20.00
19,023
(1,221)
49,288
21,115
4,421
(10)
25,526
-
23,762
20.00
585
-
302
20.00
76
-
18
-
854
33
887
510
93
1
94
76
1
389,263
76,816
389,263
405,672
Library
1
405,672
2007
405,672
27,960
(44,369)
(16,409)
2006
392,456
13,216
75
-
-
85,133
2,253,637
1
2,557,767
76,816
8,327
(10)
8,317
85,133
2,253,637
2,557,767
72,249
4,567
76,816
947,147
1,276,003
2.50-20
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
10.2
Year Ended June 30, 2007
The land of Bank were last revalued by independent proffessional valuers in January 2007. The revaluation was carried out by M/s Unit - 3 Consultants (A valuer on approved list of
the Pakistan Banks Association) on the basis of professional assesment of present market values and resulted in a surplus of Rs. 2.426 Billion. During the year revaluation surplus
amounting to Rs. 172.479 million has been reversed due to sale/adjustment of land. Had there been no revaluation, the carrying amount of the land would be Rs. 189.322 million.
10.3 DETAIL OF DISPOSAL OF FIXED ASSETS
Particular of Assets
FREEHOLD LAND
10 kanal 11 marala at Civil Line, Khanewal
100 kanal at Thokar Niaz Baid, Lahore
31 kanal 9 1/2 marala at Jampurpur road, D.G.Khan.
1 kanal at Galla Mandi, Depalpur District Okara
BUILDING ON FREE HOLD LAND
Bank building & Godown at Makhdoompur Pahoran
Cost
Accumulated
Depreciation
Book
Value
Sales
Price
Profit /
(Loss)
Mode of
Disposal
Particulars of
the purchasers
249
-
Rupees in '000
249
16,200
42,222
-
42,222
262,355
220,133
145
-
145
30,500
30,355
Auction
Mr. Azhar Mumtaz
19
-
19
3,200
3,181
Auction
Mr. Muhammad Ashraf
42,635
-
42,635
312,255
269,620
15,951
Auction
Mr. Muhammad Jhangir Partner Al-Faraz & Co.
Negotiation M/s Metro Cash & Carry (Pvt.) Ltd.
117
-
117
11,500
11,383
Auction
Malik Umer Hayat
Debris of bank building at Wazirabad
32
-
32
200
168
Auction
Mr. Muhammad Hafeez
Bank building at Ram Din road, Jhelum
33
-
33
14,000
13,967
Auction
Mr. Asif Jahangir
Auction
Mr. Muhammad Ashraf
Debris of bank building at Harrapa
52
-
52
270
218
234
-
234
25,970
25,736
VEHICLES.
Honda Civic LOX-5670
731
705
26
345
319
Auction
Toyota Corolla LOU-3988
665
665
-
336
336
Auction
Daily Nawa-i-Waqat Lahore
Toyota Corolla LOV-9641
655
655
-
346
346
Auction
Daily Nawa-i-Waqat Lahore
820
820
-
405
405
Auction
Daily Nawa-i-Waqat Lahore
2,871
2,845
1,432
1,406
Toyota Corolla LOZ-2357
26
Daily Nawa-i-Waqat Lahore
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
Year Ended June 30, 2007
Note
2007
2006
Rupees in '000
11 OTHER ASSETS
Advances, deposits, advance rent and other prepayments
Advance taxation (payments less provisions)
Branch adjustment account
Suspense Account
Deferred Costs
Dissolved bank recoverable
Insurance recoverable
Profit recoverable from banks
Others
1,632
67,509
12,009
477
56,110
22,829
17,416
38,154
1,301
56,989
16,603
10,153
636
56,451
22,781
27,198
27,113
216,136
219,225
39,654
20,677
12,000,000
12,000,000
12,000,000
12,000,000
12,000,000
12,000,000
12 BILLS PAYABLE
In Pakistan
13 BORROWINGS
In Pakistan
13.1 Particulars of borrowings with respect to Currencies
In local currency from State Bank of Pakistan
13.3
13.2 Details of borrowings Secured / Unsecured
Secured
Borrowings from State Bank of Pakistan
Under agriculture credit portfolio (short term)
13.3 This loan has been sanctioned by the State Bank of Pakistan under Section 17 (6) of the State Bank of
Pakistan Act, 1956 for disbursement of agricultural credit. These are secured against the Guarantee of
Government of the Punjab. Mark up payable on this borrowing ranges from 7.9677% to 8.9017% per annum
(2006:ranges from 2.6164% to 8.2910% per annum).
14. DEPOSITS AND OTHER ACCOUNTS
Customers
Fixed deposits
Savings deposits
Current Accounts - Non-remunerative
Call Deposits
Term Deposits
Others
14.1
142,907
1,260,528
496,868
5,346
3,726
98,270
106,085
1,101,287
350,174
4,993
5,584
88,890
2,007,645
1,657,013
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
Year Ended June 30, 2007
Note
2007
2006
Rupees in '000'
14.1 Others include staff provident fund and staff security deposits.
14.2 Particulars of deposits
In local currency
15
1,657,013
13,889
1,083
34,194
89,952
35,544
10,961
13,545
1,580
66,421
35,544
6,463
185,623
123,553
OTHER LIABILITIES
Mark-up/ Return/ Interest payable in local currency
Accrued expenses
Branch adjustment account
Sundry creditors
Dissolved banks payable
Others
16
2,007,645
SHARE CAPITAL
16.1 Authorized Capital
2007
2006
(Number of shares)
Unlimited
Unlimited
Ordinary shares of Rs.100/- each
Unlimited
Unlimited
16.2 Issued, subscribed and paid up
17
3,927,780
375,730
3,879,600
375,730
4,303,510
4,255,330
Ordinary shares of Rs. 100/- each
Fully paid in cash
Issued as bonus shares
392,778
37,573
387,960
37,573
430,351
425,533
2,253,637
947,147
235,384
2,489,021
184,251
1,131,398
461
5,041
461
5,041
5,502
5,502
SURPLUS ON REVALUATION OF ASSETS
17.1 Surplus on revaluation of Fixed Assets
Land
17.2 Surplus on revaluation of Available-for-sale securities
Shares in Listed Companies
18 CONTINGENCIES AND COMMITMENTS
18.1 Guarantee Acceptances
Show cause notices by sales tax-under appeal
18.1.1
18.1.2
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
Year Ended June 30, 2007
18.1.1 Mr. Fazal-ur-Rehman deposited Rs.100,000/- & Rs.200,000/- (Total Rs.300,000/-) on 12.07.1990 &
14.07.1990 through DDs at Head Office as bid money in auction of land measuring 187(A) - 02(K)17(M) situated at Muza Nadha The & Distt. Gujranwala. Mr. Fazal-ur-Rehman did not fulfil the
conditions of Landed Committee, resultantly Bank confiscated Bid Money. He filed Civil Suit
No.156/1 in 1993 titled as Fazal-ur-Rehman v/s PPCBL at Gujranwala, which was decreed in favour
of plaintiff. Bank filed an appeal No.RFA 243/95 in Lahore High Court, which has also decided
against Bank and Lahore High Court directed Bank to furnish a guarantee No.2096/92 dated
15.09.1995 amounting to Rs.444,939/- through Main Branch and Rs.16,100/- through Head Office
(Total Rs.461,039/- from NBP for the satisfaction of the Court. Now the case is pending
adjudication in the Court of Civil Judge, Lahore.
18.1.2 The sales tax department has issued a show cause notice to the bank as to why the sales tax
amounting to Rs. 5.041 millions has not been paid to the Government in regard to sale of
machinery valuing Rs. 33,600 million of Rahwali Sugar Mills to Messers Ali Industrial and
Engineering Works, Karachi without charging and depositing sales tax leviable thereon. Further the
sales tax department reported that Messers Ali Industrial and Engineering Works filed written
statement before Deputy Collector Audit-I, that they had paid sales tax on purchase of such
machinery. The bank filed petition against the above show cause notice on the ground that bank
has sold debris, scrap and non-operative machinery which were not sales tax leviable items. The
case is still pending in Lahore High Court.
18.2
The Income Tax Returns for the tax years 2003, 2004, 2005 and 2006 have been filed under Self
Assessment scheme whereby the Income Tax Returns filed with the I.T. department become the " deemed
assessment order" unless selected for Audit. The assessment Order for Tax Year 2004 was amended by the
Tax Department and challenged by the assessee in appeal before CIT(A). The case was decided in favour of
the assessee by the Appellate Commissioner and the Department has preferred appeal against this order
before the Learned Income Tax Appellate Tribunal ( ITAT). However , before the outcome of the Appeal &
Under this present status the assessed losses for the tax year 2003 to 2006 ( after appeal effect of 2004)
are Rs. 72.029 million
Tax Consultant of the Bank has strong opinion that following the normal assessment procedure and history
of the case, the assessing officer I.e. Income Tax department may amend the orders for the years 2003 ,
2005 & 2006 and the assessments would be amended accordingly.
If it is done the brought forward losses from the years 2003 to 2006 would not be available and might even
be converted to Income for the years and subject to charge of income-tax. Likewise the business losses for
the year 2007 would be reduced accordingly or converted into Income for the year, which would be subject
to income-tax.
18.3
The appeals for the assessment year 1999-200 to 2002-2003 are pending with Income Tax appellate
Tribunal (ITAT), the outcome of which is not certain
2007
2006
Rupees in '000'
Commitment against construction and repair of building
24,696
1,564
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
Year Ended June 30, 2007
Note
19
Mark-up/Return/Interest earned
a)
b)
c)
20
On Loans and advances to Customers
On Investments in Held to Maturity Securities
On Deposits with financial institutions
578,008
44,109
407,528
1,228,805
1,029,645
31,623
515,575
36,055
217,453
547,198
253,508
9,765
296,600
1,571
16,191
23,034
8,793
3,114
902
11,063
13,629
347,161
37,501
409,398
21,677
155
31
25,864
2,162
10,301
21,548
2,878
3,082
853
820
8,327
159
10,787
17,825
14,336
396,588
21,752
234
2
22,865
2,076
9,529
12,023
2,305
1,535
659
42
7,896
159
8,868
15,809
10,169
550,203
512,511
OTHER INCOME
Rent on property
Gain on sale of fixed assets
Profit on sale of books
Bank & Service Charges.
Others
22
741,527
44,108
443,170
Mark-up/Return/Interest expensed
Deposits
Other short term borrowings
21
2007
2006
Rupees in '000
ADMINISTRATIVE EXPENSES
Salaries, allowances, etc.
Charge for defined benefit plan
Contribution to defined contribution plan
Non-executive directors' fees, allowances and other expenses
Rent, taxes, insurance, electricity, etc.
Legal and professional charges
Communications
Repairs and maintenance
Stationery and printing
Advertisement and publicity
Subscription
22.1
Auditors' remuneration
Depreciation
10.1
Amortization
General Charges
Vehicles expenses
Others
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
Year Ended June 30, 2007
2007
2006
Rupees in '000
22.1 Auditors' remuneration
Audit fee
Out-of-pocket expenses
23
42
-
820
42
551
99
551
99
481
-
1,030
-
481
1,030
OTHER CHARGES
Penalties imposed by State Bank of Pakistan
24
820
-
TAXATION
For the year
Current
For the prior year(s)
24.1 In view of taxable loss incurred for the year ended 30 June 2007, provision has been made only
against dividend income.
25
EARNINGS PER SHARE - BASIC AND DILUTED
Profit for the year
Weighted average number of ordinary shares
Basic and diluted earnings per share
26
155,033
3,336,584
46.46
715,017
5,586,775
6,301,792
409,993
6,511,008
6,921,001
CASH AND CASH EQUIVALENTS
Cash and Balance with Treasury Banks
Balance with other banks
27
(Numbers)
(Rupees)
129,783
3,363,174
38.59
STAFF STRENGTH
Permanent
Temporary/ on contractual basis
Daily wages
Total Staff Strength
(Number)
1,513
151
375
2,039
1,552
139
235
1,926
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
28
Year Ended June 30, 2007
COMPENSATION OF DIRECTORS AND EXECUTIVES
President / Chief Executive
Directors
2007
2006
2007
2006
Fees
Managerial remuneration
Charge for defined benefit plan
Contribution to defined contribution plan
Rent and house maintenance
Utilities
Medical
Conveyance
Number of persons
-
Rupees in '000
-
1
Executives
2007
2006
1
-
-
-
-
-
-
28.1 At present, the Chairman, Planning and Development, government of the Punjab is the administrator of the bank, who has
full powers and duties that of a Board of Directors.
29 FAIR VALUE OF FINANCIAL INSTRUMENTS
29.1 On-balance sheet financial instruments
2007
Book value
Assets
Cash balances with treasury banks
Balances with other banks
Lending to financial institutions
Investments
Advances
Other assets
Liabilities
Bills payable
Borrowings
Deposits and other accounts
Sub-ordinated loans
Liabilities against assets subject to finance lease
Other liabilities
2006
Fair value
Book value
Rupees in '000
Fair value
715,017
5,586,775
558,009
8,009,821
92,040
715,017
5,586,775
558,009
8,009,821
92,040
409,993
6,511,008
506,876
6,798,803
105,597
409,993
6,511,008
506,876
6,798,803
105,597
14,961,662
14,961,662
14,332,277
14,332,277
39,654
12,000,000
2,007,645
185,623
14,232,922
39,654
12,000,000
2,007,645
185,623
14,232,922
20,677
12,000,000
1,657,013
123,553
13,801,243
20,677
12,000,000
1,657,013
123,553
13,801,243
29.2 The fair value of available for sale investments other than those classified as held to maturity is based on quoted market
price.
29.3 In the opinion of the management, the fair value of the remaining financial assets and liabilities are not significantly different
from their carrying values since assets and liabilities are either short term in nature or in the case of customer loans and
deposits are frequently repriced.
30
RELATED PARTY TRANSACTIONS
Balances outstanding
2007
2006
Rupees in '000'
Loans and Advances
Deposits
-
14,152
4,940
Transactions during the year
Loans and advances given
Loans and advances adjusted/ received
Mark up received on loans and advances
Mark up on deposits
-
11,634
11,064
1,218
32
30.1 The transactions and contracts with related parties, other than those under the terms of employment, are carried out on an
Arm's length basis determined in accordance with the " Comparable Uncontrolled Price Method
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
31
Year Ended June 30, 2007
CAPITAL ADEQUACY
The risk weighted assets to capital ratio, calculated in accordance with the State Bank's guidelines on capital adequacy was as
follows:2007
2006
Rupees in '000
Regulatory Capital Base
Tier I Capital
Shareholders Capital/Assigned Capital
430,351
425,533
Reserves
370,827
337,269
Unappropriated / unremitted profits (Net of Losses)
133,776
38,939
934,954
801,741
Less: Adjustments
Shortfall in provisions required against classified assets
(506,651)
(349,787)
Total Tier I Capital
428,303
451,954
Tier II Capital
Subordinated Debt (upto 50% of total Tier I Capital)
General Provisions subject to 1.25% of Total Risk Weighted Assets
Revaluation Reserve (upto 50%)
1,244,511
1,244,511
428,303
856,606
Total Tier II Capital (restricted upto the amount of total tier I capital)
Eligible Tier III Capital
Total Regulatory Capital
(a)
Risk-Weighted Exposures
2007
295,343
6,006,449
558,009
9,453,735
2,571,139
216,136
16,802,930
Off Balance Sheet items
Loan Repayment Guarantees
Purchase and Resale Agreements
Guarantee acceptance
Revolving underwriting Commitments
Stand By Letters of Credit
Outstanding Foreign Exchange Contracts
-Purchase
-Sale
461
461
Credit risk-weighted exposures
Market Risk
General market risk
Specific market Risk
Market risk-weighted exposures
Total Risk-Weighted exposures
Capital Adequacy Ratio [ (a) / (b) x 100)
(b)
1,201,290
245,958
6,045,209
2,571,139
148,627
10,212,223
461
461
10,212,684
565,699
565,699
451,954
903,908
2006
Rupees in '000
Book Value Risk Adjusted
Value
Credit Risk
Balance Sheet Items:Cash and balances with treasury banks
Balances with other banks
Investments
Advances
Operating fixed assets
Other Assets
-
Book Value
180,290
6,740,711
506,876
7,867,351
1,288,477
219,225
16,802,930
Risk Adjusted
Value
1,348,142
194,825
5,288,014
1,288,477
162,236
8,281,694
461
461
461
461
8,282,155
10,212,684
8,282,155
8.39
10.91
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
Year Ended June 30, 2007
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
Year Ended June 30, 2007
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
Year Ended June 30, 2007
32.1.1.3 Details of non-performing advances and specific provisions by class of business segment
Classified
Advances
Agriculture, Forestry, Hunting and Fishing
Mining and Quarrying
Textile
Chemical and Pharmaceuticals
Cement
Sugar
Footwear and Leather garments
Automobile and transportation equipment
Electronics and electrical appliances
Construction
Power (electricity), Gas, Water, Sanitary
Wholesale and Retail Trade
Exports/Imports
Transport, Storage and Communication
Financial
Insurance
Services
Individuals
Others
3,181,099
1,595
23,192
48,490
3,254,376
2007
Rupees in '000
Specific
Classified
Provisions
Advances
Held
3,034,588
1,972
24,261
24,197
3,085,018
2006
Specific
Provisions
Held
-
32.1.1.4 Details of non-performing advances and specific provisions by sector
Public/ Government
Private
32.1.1.5 GEOGRAPHICAL SEGMENT ANALYSIS
Pakistan
Asia Pacific (including South Asia)
Europe
United States of America and Canada
Middle East
Others
3,254,376
3,254,376
-
2007
Profit before Total assets
Net assets
taxation
employed
employed
Rupees in '000'
130,264
17,656,897
3,423,975
130,264
17,656,897
3,423,975
3,085,018
3,085,018
-
Contingencies and
commitments
30,198
30,198
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
32.2
Year Ended June 30, 2007
Market Risk
32.2.1 Foreign Exchange Risk
Assets
Pakistan rupee
United States dollar
Great Britain pound
Deutsche mark
Japanese yen
Euro
17,656,897
17,656,897
2007
Off-balance
Net foreign
sheet items currency exposure
Rupees in '000
14,232,922
14,232,922
-
Liabilities
32.2.2 Currency risk is the risk that the value of a financial instrument will fluctuate due to change in foreign exchange risk
32.2.3 Mismatch of Interest Rate Sensitive Assets and Liabilities
Effective
Total
Yield/
Interest
rate
Upto 1
Month
Over 1
to 3
Months
Over 3
to 6
Months
-
-
2007
Exposed to Yield/ Interest risk
Over 6
Over 1
Over 2
Months to 1
to 2
to 3
Year
Years
Years
Rupees in '000'
Over 3
to 5
Years
Over 5
to 10
Years
Above
10 Years
Non-interest
bearing financial
instruments
On-balance sheet financial instruments
Assets
Cash and balances with treasury banks
Balances with other banks
Lending to financial institutions
Investments
Advances
Other assets
Liabilities
Bills payable
Borrowings
Deposits and other accounts
Sub-ordinated loans
Liabilities against assets subject to finance lease
Other liabilities
On-balance sheet gap
1.40%
9.16%
10.50%
13.50%
8.82%
3.75%
715,017
5,586,775
558,009
9,453,735
92,040
16,405,576
287,992
5,430,552
245,958
805,840
6,770,342
307,258
307,258
341,965
341,965
3,111,817
3,111,817
12,051
1,024,671
1,036,722
1,069,510
1,069,510
300,000
1,822,767
2,122,767
39,654
12,000,000
2,007,645
185,623
14,232,922
1,459,434
3,000,000
277,584
9,738
5,000,000
26,533
4,000,000
16,172
6,547
77,512
1,459,434
3,277,584
9,738
5,026,533
4,016,172
6,547
77,512
2,172,654
5,310,908
(2,970,326)
(1,914,716)
(2,979,450)
1,062,963
2,045,255
332,227
-
-
-
-
816,205
816,205
-
427,025
156,223
153,403
153,403
299
92,040
675,587
-
86,973
39,654
47,152
-
86,973
185,546
272,352
66,430
403,235
816,205
Off-balance sheet financial instruments
Forward Lending
(including call lending, repurchase agreement lending,
commitments to extend credit, etc.)
-
-
-
-
-
-
-
-
-
-
-
Forward borrowings
(including call borrowing, repurchase agreement
borrowing, etc.)
Off-balance sheet gap
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total Yield/Interest Risk Sensitivity Gap
2,172,654
5,310,908
(2,970,326)
Cumulative Yield/Interest Risk Sensitivity Gap
2,172,654
7,483,562
4,513,236
332,227
4,845,463
Yield Risk is the risk of decline in earnings due to adverse movement of the yield curve.
Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market interest rates.
(1,914,716)
2,930,747
-
-
-
-
-
-
(2,979,450)
1,062,963
2,045,255
816,205
66,430
403,235
(48,703)
1,014,260
3,059,515
3,875,720
3,942,150
4,345,385
The Punjab Provincial Cooperative Bank Limited
Notes to the Accounts
Year Ended June 30, 2007
32.3 Liquidity Risk
Liquidity Risk is the potential for loss to an institution arising from either its inability to meet its obligations or to fund increase in assets as they fall due without incurring unacceptable cost or losses.
32.3.1 Maturities of Assets and Liabilities
Total
Assets
Cash and balances with treasury banks
Balances with other banks
Lending to financial institutions
Investments
Advances
Other assets
Operating fixed assets
Deferred tax assets
715,017
5,586,775
558,009
8,009,821
216,136
2,571,139
17,656,897
Liabilities
Bills payable
39,654
Borrowings
12,000,000
2,007,645
Deposits and other accounts
Sub-ordinated loans
Liabilities against assets subject to finance lease
Other liabilities
185,623
Deferred tax liabilities
14,232,922
Net assets
3,423,975
Share capital/ Head office capital account
Reserves
Unappropriated/ Unremitted profit
Surplus/(Deficit) on revaluation of assets
Upto 1
Month
715,017
5,586,775
Over 1
to 3
Months
2007
Over 6
Months to 1
Year
Over 3
to 6
Months
-
Over 1
Over 2
to 2
to 3
Years
Years
Rupees in '000
-
-
Over 3
to 5
Years
-
Over 5
to 10
Years
-
Above
10 Years
-
245,958
806,139
89,095
6,629
307,258
32,909
387
341,965
845
181
1,667,903
5,106
1,738
12,051
1,024,671
761
436
1,069,510
728
14,367
300,000
1,822,767
85,436
18,790
816,205
1,193
2,528,007
153,403
63
604
7,449,613
340,554
342,991
1,674,747
1,037,919
1,084,605
2,226,993
3,345,405
154,070
39,654
1,506,586
3,000,000
277,584
9,738
5,000,000
26,533
4,000,000
16,172
6,547
77,512
-
86,973
64,210
49,569
1
23,281
106
-
12,905
35,551
-
90,417
2,136,576
35,551
3,309,854
1,610,450
5,839,163
3,327,153
(2,986,599)
9,739
333,252
5,049,814
(3,375,067)
4,016,278
(2,978,359)
6,547
1,078,058
86,973
67,097
430,351
370,827
133,776
2,489,021
3,423,975
32.3.2 Some assets / liabilities of the bank do not have a contractual maturity date. The period in which these assets / liabilities are assumed to mature is taken as the expected date on which the assets /
liabilities be realised / settled. The above maturity analysis is based on the remaining period at the balance sheet date to the contractual maturity date.
32.4 Operational Risk
Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people and system or from external events.
33 Messer JCR-VIS Credit Rating Company Limited has assigned the medium to long term rating of the bank at BB+ (double B plus) while short term rating is revised to B on August 09, 2007 ( Previously: BB+ / B).
34 EVENT AFTER BALANCE SHEET DATE
M/s Prime Engineering Works has filed a petition in Lahore High Court against sale of 173 Kanal of land to National Logistic Cell (NLC) at Chung Panjgraeen Village, Lahore in which the petitioner has
said that bargain between the Bank and NLC has been finalised for an amount much lesser than the worth of the land on July 21, 2007. Moreover the petitioner claimed that his property stood
encroached upon by Bank which was the part of sold land. The petitioner has prayed to the court to direct the respondent to reverse the deal and vacate his property as soon as possible.
35 DATE OF AUTHORIZATION FOR ISSUE
These financial statements were authorized for issue on ________________ by the Administrator of the Bank.
,36 GENERAL
36.1 Figures of corresponding period have been restated where necessary for the purpose of comparison.
36.2 Figures in these statements have been rounded off to nearest thousand rupee.
CH.GHULAM MUSTAFA
A.SENIOR MANAGER,
ACCOUNTS/STAT.
MUHAMMAD ASHRAF
A.CHIEF MANAGER,
FINANCE
RAJA ALLAH BUKHSH
GENERAL MANAGER
46
46.1
46.2
46.3
46.4
GENERAL
The note numbers given are for reference purposes. Further details may be given, if considered necessary, by
way of additional note(s).
Except for the first financial statements laid before the shareholders of the bank financial statements shall
also give the corresponding figures for the immediately preceding financial year. This requirement shall, in case
of banks required to prepare half yearly financial statements, be applicable to the immediately preceding
corresponding period.
The figures in the financial statements may be rounded off to the nearest thousand.
The following shall be disclosed in the financial statements namely:
i) All material information necessary to make the financial statements clear and understandable;
ii) If a fundamental accounting assumption , namely, going concern, consistency and accrual is not followed
in preparation of financial statement, that fact together with the reason thereof:
iii) Particulars of any charge on the assets of the bank to secure the liabilities of any other person including,
where practicable, the amount so secured (particulars of beneficiary along with relationship to the bank or
directors).
iv) Change in an accounting policy that has material effect in the current year or may have a material effect in
the subsequent years together with reasons for the change and the financial effect of the change, if
material.
46.5
The surplus on revaluation of fixed assets shall be treated and shown as specified in section 235 of the
Companies Ordinance, 1984. Additions to, and deductions from, adjustments in or applications of the surplus on
revaluation, whether resulting from disposal of the revalued asset(s) or otherwise ( detail to be provided) shall
also be stated.
46.6 Where any material item shown in the financial statements or included in amounts shown therein cannot be
determined with substantial accuracy, an estimated amount described as such shall be included in respect of
that item together with the description of the item.
46.7 No liability shall be shown in the balance sheet or the notes thereto at a value less than the amount at which it is
repayable (unless the quantum of repayment is at the option of the bank) at the date of the balance sheet or if it
is not then repayable, at the amount at which it will first become so repayable thereafter, less, where appropriate,
reasonable deduction for discount until that date.
46.8 If in the opinion of the directors any of the current assets have, on realization in the ordinary course of the
bank's business, a value less than the amount at which they are stated in the financial statements, a disclosure of
the fact that the directors are of that opinion together with their estimates of the realizable value and the reasons
for assigning higher values in the balance sheet shall be required.
46.9 Terms and expressions not defined in the Banking Companies Ordinance, 1962 have the same meaning as in
the Companies Ordinance, 1984 unless there is anything repugnant in the subject or context.
46.10 Wherever the words " to be specified " have been used in the Notes, it connotes that only such amounts are
to be disclosed which are material.
46.11 Disclose, together with a commentary by management, the amount of significant cash and cash equivalent
balances held by the bank that are not available for use by the bank.
46.12 The amount at which any asset or liability is stated in the balance sheet should not be off-set by the
deduction of another liability or asset unless a legal right of set off exists and the off-setting represents the
expectation as to the realization or settlement of the asset or liability.
46.13 Income and expense items should not be off-set except for those relating to hedges and to assets and
liabilities which have been offset in accordance with note 46.12.
1
46.14 When income and expense items are presented on a net basis, even though the corresponding financial
assets and financial liabilities on the balance sheet have not been offset, disclose the reason for that
presentation if the effect is significant.
46.15 When the presentation or classification of items in the financial statements is amended and comparative
amounts are reclassified, disclose the nature, amount of, and reason for any reclassification. When the
presentation or classification of items in the financial statements is amended, but it is impracticable to
reclassify comparative amounts, disclose the reason for not reclassifying and the nature of the changes
that would have been made if amounts were reclassified.
46.16 Where any property and equipment or asset, acquired with the funds of the bank, is not held in the
name of the bank or is not in the possession and control of the bank, this fact shall be stated, and the
description and value of the property or asset, the person in whose name and possession or control it is
held shall be disclosed.
46.17 Where information is required about the extent and nature, including significant terms and conditions
that may affect the amount, timing and certainty of future cash flows, terms and conditions that may
warrant disclosure include:
a)
the principal, stated, face or other similar amount which, for some derivative instruments, may be
the amount (referred to as the notional amount) on which future payments are based;
b)
the date of maturity, expiry or execution;
c)
early settlement options held by either party to the instrument, including the period in which, of
date at which, the options may be exercised and the exercise price or range of prices;
d)
options held by either party to the instrument to convert the instrument into, or exchange it for,
another financial instrument or some other asset or liability, including the period in which, or date
at which, the options may be exercised and the conversion or exchange ratio(s);
e)
the amount and timing of scheduled future cash receipts or payments of the principal amount of
the instrument, including installment repayments and any sinking fund or similar requirements;
f)
stated rate or amount of interest/mark-up, dividend or other periodical return on principal and the
timing of payments;
g)
collateral held, in the case of a financial asset, or pledged, in the case of a financial liability;
h)
in the case of an instrument for which cash flows are denominated in a currency other than the
bank's reporting currency, the currency in which receipts or payments are required;
i)
in the case of an instrument that provides for an exchange, information described in items (a) to
(h) for the instrument to be acquired in the exchange; and
j)
any condition of the instrument or an associated covenant that, if contravened, would significantly
alter any of the other terms (for example, a maximum debt-to-equity ratio in a bond covenant that,
if contravened, would make the full principal amount of the bond due and payable immediately).
46.18 Any information required to be given in respect of any of the items in the financial statements shall, if it
cannot be included in such statements, be furnished in a separate note, schedule or statement to be
attached to, and which shall be deemed to form an integral part of the financial statements.
46.19 All banks operating in Pakistan (whether incorporated in Pakistan or outside Pakistan and whether listed
or not) shall prepare their accounts in accordance with the directives issued by the State Bank of
Pakistan from time to time, the Banking Companies Ordinance 1962, the International Accounting
Standards and International Financial Reporting Standards as notified in the official Gazette by the Securities
and Exchange Commission of Pakistan for listed companies under section 234(3)(i) of the Companies
Ordinance 1984.
1
46.20 Captions in respect of which no amounts exist may not be reproduced in the financial statements except
in case of Balance Sheet and Profit & Loss account.
46.21 Banks are encouraged to disclose financial highlights of recent periods. Banks will decide the periods for
disclosing the past financial highlights. They may also consider disclosing trends in key financial ratios
from investors perspective and transparency in disclosure.
46.21 Following notes will be applicable when Basel II is implemented
Note
Title
44.1
Capital Assessment and Adequacy Basel II Specific (will replace Note 44)
45.1.2 Credit Risk-General Disclosures Basel II Specific
45.2
Equity Position risk in the banking book Basel II Specific
45.3.4 Yield/Interest Rate Risk in the Banking Book (IRRBB)-Basel II Specific
45.5.1 Operational Risk-Disclosures Basel II Specific
1
Annexure - 1
STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF
OF FIVE HUNDRED THOUSAND RUPEES OR ABOVE PROVIDED
DURING THE YEAR ENDED __________________
S.
Name and Name of individuals/ Father's/ Outstanding Liabilities at beginning of year Principal Interest/ Other finTotal
written-off Mark-up ancial relief
No. address of the partners/ directors Husband's Principal Interest/ Others
borrower
(with NIC No.)
name
Mark-up
written-off provided
1
2
3
4
TOTAL:
Please disclose reconciliation
5
6
7
8
9
Rupees in '000
10
11
Total
(9+10+11)
12
Annexure - 2
ISLAMIC BANKING BUSINESS
The bank is operating ___ Islamic banking branches at the end of current year as compared to ___ Islamic banking
branches at the end of Prior year.
2006
2007
Rupees in '000
ASSETS
Cash and balances with treasury banks
Balances with and Due from Financial Institutions
Investments
Financing and Receivables
-Murahaba
-Ijara
-Musharaka
-Diminishing Musharaka
-Salam
-Other Islamic Modes (Please specify)
Other assets
Total Assets
LIABILITIES
Bills payable
Due to Financial Institutions
Deposits and other accounts
-Current Accounts
-Saving Accounts
-Term Deposits
-Others
-Deposit from Financial Institutions -Remunerative
-Deposits from Financial Institutions-Non-Remunerative
Due to Head Office
Other liabilities
NET ASSETS
REPRESENTED BY
Islamic Banking Fund
Reserves
Unappropriated/ Unremitted profit
Surplus/ (Deficit) on revaluation of assets
Remuneration to Shariah Advisor/Board
CHARITY FUND
Opening Balance
Additions during the period
Payments/Utilization during the period
Closing Balance
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
(xxxxxx)
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
(xxxxxx)
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
xxxxxx
(xxxxxx)
xxxxxx
xxxxxx
xxxxxx
(xxxxxx)
xxxxxx
Annexure - 3
Guidelines for mapping of Business Lines
Level 1
Corporate
Finance
Trading & Sales
Level 2
Corporate Finance
Municipal/Government
Finance
Merchant Banking
Advisory Services
Sales
Market Making
Proprietary Positions
Treasury
Retail Banking
Retail Banking
Private Banking
Card Services
Commercial
Banking
Payment and
Settlement1
Agency
Services
Asset
Management
Retail
Brokerage
Commercial Banking
External Clients
Custody
Corporate Agency
Corporate Trust
Discretionary Fund
Management
Non-Discretionary
Fund Management
Retail Brokerage
Activity Groups
Mergers and acquisitions, underwriting, privatisations,
securitisation, research, debt (government, high yield),
equity, syndications, IPO, secondary private placements
Fixed income, equity, foreign exchanges, commodities,
credit, funding, own position securities, lending and repos,
brokerage debt, prime brokerage
Retail lending and deposits, banking services, trust and
estates
Private lending and deposits, banking services, trust and
estates, investment advice
Merchant/commercial/corporate cards, private labels and
retail
Project finance, real estate, export finance, trade finance,
factoring, leasing, lending, guarantees, bills of exchange
Payments and collections, funds transfer, clearing and
settlement
Escrow, depository receipts, securities lending (customers)
corporate actions
Issuer and paying agents
Pooled, segregated, retail, institutional, closed, open, private
equity
Pooled, segregated, retail, institutional, closed, open
Execution and full service
1
Payment and settlement losses related to a bank’s own activities would be incorporated in the loss
experience of the affected business line
41
Principles for business line mapping1
(a) All activities must be mapped into the eight level 1 business lines in a mutually exclusive and jointly
exhaustive manner.
(b) Any banking or non-banking activity which cannot be readily mapped into the business line
framework, but which represents an ancillary function to an activity included in the framework, must
be allocated to the business line it supports. If more than one business line is supported through the
ancillary activity, an objective mapping criteria must be used.
(c) When mapping gross income, if an activity cannot be mapped into a particular business line then the
business line yielding the highest charge must be used. The same business line equally applies to any
associated ancillary activity.
(d) Banks may use internal pricing methods to allocate gross income between business lines provided that
total gross income for the bank (as would be recorded under the Basic Indicator Approach) still equals
the sum of gross income for the eight business lines.
(e) The mapping of activities into business lines for operational risk capital purposes must be consistent
with the definitions of business lines used for regulatory capital calculations in other risk categories, i.e.
credit and market risk. Any deviations from this principle must be clearly motivated and documented.
(f) The mapping process used must be clearly documented. In particular, written business line definitions
must be clear and detailed enough to allow third parties to replicate the business line mapping.
Documentation must, among other things, clearly motivate any exceptions or overrides and be kept on
record.
1
Supplementary business line mapping guidance
There are a variety of valid approaches that banks can use to map their activities to the eight business lines, provided
the approach used meets the business line mapping principles. Following is an example of one possible approach that
could be used by a bank to map its gross income:
Gross income for retail banking consists of net interest income on loans and advances to retail customers and SMEs
treated as retail, plus fees related to traditional retail activities, net income from swaps and derivatives held to hedge
the retail banking book, and income on purchased retail receivables. To calculate net interest income for retail banking,
a bank takes the interest earned on its loans and advances to retail customers less the weighted average cost of
funding of the loans (from whatever source - retail or other deposits).
Similarly, gross income for commercial banking consists of the net interest income on loans and advances to corporate
(plus SMEs treated as corporate), interbank and sovereign customers and income on purchased corporate receivables,
plus fees related to traditional commercial banking activities including commitments, guarantees, bills of exchange, net
income (e.g. from coupons and dividends) on securities held in the banking book, and profits/losses on swaps and
derivatives held to hedge the commercial banking book. Again, the calculation of net interest income is based on
interest earned on loans and advances to corporate, interbank and sovereign customers less the weighted average
cost of funding for these loans (from whatever source).
For trading and sales, gross income consists of profits/losses on instruments held for trading purposes (i.e. in the markto-market book), net of funding cost, plus fees from wholesale broking.
For the other five business lines, gross income consists primarily of the net fees/commissions earned in each of these
businesses. Payment and settlement consists of fees to cover provision of payment/settlement facilities for wholesale
counterparties. Asset management is management of assets on behalf of others.
42
(g) Processes must be in place to define the mapping of any new activities or products replicate the
business line mapping. Documentation must, among other things, clearly motivate any exceptions
or overrides and be kept on record.
(h) Processes must be in place to define the mapping of any new activities or products.
(i) Senior management is responsible for the mapping policy (which is subject to the approval by the
board of directors).
(j) The mapping process to business lines must be subject to independent review.
43