for the Period Ended September 30, 2011 · 2017-03-15 · Sahibzada Saeed Ahmad Muhammad Asif Muhammad Maqsood Khan f Financial Officer Rahat Gul Company Secretary Zahid Sahibzada

Condensed

Financial Information for the Period Ended September 30, 2011

Interim

Statement of Changes in Equity 7

Statement of Comprehensive Income 6

Corporate Information

Directors’ Review

1

2

Statement of Financial Position 4

Profit and Loss Account 5

Cash Flow Statement 8

Notes to the Financial Statements 9

for the Period Ended September 30, 2011

Statement of Changes in Equity 7

Statement of Comprehensive Income 6

Corporate Information

Directors’ Review

1

2

Statement of Financial Position 4

Profit and Loss Account 5

Cash Flow Statement 8

Notes to the Financial Statements 9


for the Period Ended September 30, 2011 for the Period Ended September 30, 2011

33

DIRECTORS’ REVIEW

On behalf of the Board of Directors, I am pleased to present the financial statements of the Bank for the period ended September 30, 2011. The results are inclusive of Islamic Banking Operations.

Financial HighlightsThe financial results of the Bank of Khyber for the period ended September 30, 2011 are as under:

(Rs. in million)

Operating Profit 1,158

Provision against non- performing advances – Net (8)

Provision against diminution in value of investments – Net (31)

Other Provision (19)

Profit before taxation 1,100

Taxation (357)

Profit after tax 743

Total Assets 71,848

Advances (Gross) 24,638

Investments (Net) 41,548

Deposits 40,111

Financial OverviewThe recent decrease in SBP Policy rate will definitely have its impact on the economy which subsequently plays its role not only to reduce inflation but to give relief to the masses by reduction in prices of food items. Although the security conditions coupled with post-flood scenario, limited agricultural output and price hike with high inflation rate have marred the first quarter (July – September) of the fiscal year 2011 – 2012 to a certain extent however, the Bank has shown remarkable increase in mark-up earned and managed to register a pre-tax profit of Rs.1,100 million, an increase of 56% as compared with the half yearly results. The after tax profit stood at Rs.743 million. The future profit of the Bank however, depends on markup earned and provision on NPLs, which might show variation due to reduced discount rate and additional provision on NPLs, if any.

It may also be noted that the State Bank of Pakistan through its BSD Circular No. 1 dated October 21, 2011 has issued revised instructions on provisioning against classified assets. The management is in the process of determining the impact of this Circular therefore, no effects have been taken in these Accounts.

The deposits as well as advances maintained their growth with minor changes whereas Investments have shown a significant rise from Rs.29,341 million as on June 30, 2011 to Rs.41,548 million for the period under review thus depicting an increase of 42%.

Future OutlookPakistan's economy faces considerable challenges, as the recent torrential rains with the effects of last year devastating floods has hit the agricultural output and damaged the infrastructure badly.

Board of Directors

Attaullah Khan ChairmanSahibzada Saeed AhmadMuhammad AsifMuhammad Maqsood KhanMaqsood Ismail Mir Javed HashmatAmjad Pervez

Managing Director / CEO

Bilal Mustafa

Audit Committee

Amjad Pervez ChairmanSahibzada Saeed AhmadMuhammad AsifMuhammad Maqsood Khan

Chief Financial Officer

Rahat Gul

Company Secretary

Zahid Sahibzada

Registered Office / Head Office

The Bank of Khyber, 24-The Mall, Peshawar Cantt.UAN# 00-92-91-111 95 95 95URL: www.bok.com.pk

Auditors

Deloitte M. Yousaf Adil Saleem & Co.Chartered Accountants

Legal Advisors

Mr. Nisar Ahmed Khan Advocate, Peshawar

M/s. Mohsin Tayebaly & Co., Karachi

Registrar and Share Registration Office

THK Associates (Pvt) LtdGround Floor, State Life Building No. 3Dr. Ziauddin Ahmed Road Karachi – 75530. Pakistan.

21

CORPORATE INFORMATION


33

DIRECTORS’ REVIEW

On behalf of the Board of Directors, I am pleased to present the financial statements of the Bank for the period ended September 30, 2011. The results are inclusive of Islamic Banking Operations.

Financial HighlightsThe financial results of the Bank of Khyber for the period ended September 30, 2011 are as under:

(Rs. in million)

Operating Profit 1,158

Provision against non- performing advances – Net (8)

Provision against diminution in value of investments – Net (31)

Other Provision (19)

Profit before taxation 1,100

Taxation (357)

Profit after tax 743

Total Assets 71,848

Advances (Gross) 24,638

Investments (Net) 41,548

Deposits 40,111

Financial OverviewThe recent decrease in SBP Policy rate will definitely have its impact on the economy which subsequently plays its role not only to reduce inflation but to give relief to the masses by reduction in prices of food items. Although the security conditions coupled with post-flood scenario, limited agricultural output and price hike with high inflation rate have marred the first quarter (July – September) of the fiscal year 2011 – 2012 to a certain extent however, the Bank has shown remarkable increase in mark-up earned and managed to register a pre-tax profit of Rs.1,100 million, an increase of 56% as compared with the half yearly results. The after tax profit stood at Rs.743 million. The future profit of the Bank however, depends on markup earned and provision on NPLs, which might show variation due to reduced discount rate and additional provision on NPLs, if any.

It may also be noted that the State Bank of Pakistan through its BSD Circular No. 1 dated October 21, 2011 has issued revised instructions on provisioning against classified assets. The management is in the process of determining the impact of this Circular therefore, no effects have been taken in these Accounts.

The deposits as well as advances maintained their growth with minor changes whereas Investments have shown a significant rise from Rs.29,341 million as on June 30, 2011 to Rs.41,548 million for the period under review thus depicting an increase of 42%.

Future OutlookPakistan's economy faces considerable challenges, as the recent torrential rains with the effects of last year devastating floods has hit the agricultural output and damaged the infrastructure badly.

Board of Directors

Attaullah Khan ChairmanSahibzada Saeed AhmadMuhammad AsifMuhammad Maqsood KhanMaqsood Ismail Mir Javed HashmatAmjad Pervez

Managing Director / CEO

Bilal Mustafa

Audit Committee

Amjad Pervez ChairmanSahibzada Saeed AhmadMuhammad AsifMuhammad Maqsood Khan

Chief Financial Officer

Rahat Gul

Company Secretary

Zahid Sahibzada

Registered Office / Head Office

The Bank of Khyber, 24-The Mall, Peshawar Cantt.UAN# 00-92-91-111 95 95 95URL: www.bok.com.pk

Auditors

Deloitte M. Yousaf Adil Saleem & Co.Chartered Accountants

Legal Advisors

Mr. Nisar Ahmed Khan Advocate, Peshawar

M/s. Mohsin Tayebaly & Co., Karachi

Registrar and Share Registration Office

THK Associates (Pvt) LtdGround Floor, State Life Building No. 3Dr. Ziauddin Ahmed Road Karachi – 75530. Pakistan.

21

CORPORATE INFORMATION


The surge in international oil prices has also played havoc with the economies of the majority of the under developed countries including Pakistan. However, due to the timely monetary measures taken by the State Bank of Pakistan, the inflation has come down to 10.5 percent from 13.3 percent in June, 2011. Stocks have also shown buoyancy which will definitely augment investors' confidence. During the quarter (July – September), the overseas Pakistani workers remitted an amount of $3,297 million showing an impressive growth of 24.60 % over the same period of last year.

At the end of the quarter under review, the Bank is operating with 53 branches, 4 sub-branches and 3 booths throughout the country out of which 21 branches are functioning as dedicated Islamic Banking Branches. In order to further strengthen its customer relationship and for maximum and effective outreach, the Bank after receiving permission of the central bank, is in the process of opening 12 new branches in the country (some of the branches have already been opened) which will take the total to 62 branches for the year ending 2011. The branch expansion is likely to translate into increase in profitability during the coming year.

As on September 30, 2011, the post Right Issue paid-up capital of the Bank stood at Rs.8 billion. The Government being the major shareholder has subscribed its entitlement of Right Shares and also taken up the unsubscribed portion of the Right Issue as per its commitment. The Bank stands fully compliant with the Minimum Capital Requirements of the State Bank of Pakistan upto year end 2011.

Credit RatingThe JCR-VIS Credit Rating Company Limited has maintained the long term and the short term ratings of the Bank to “A-“ (Single A Minus) and “A-2” (A-Two) respectively.

The Pakistan Credit Rating Agency Limited (PACRA) has also maintained long term entity rating of the Bank to “A-“ (Single A Minus) and short term entity rating at “A2” (A Two).

The ratings denote low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments. Rating Outlook by both the companies is “Positive”.

Acknowledgement The Board would like to thank the State Bank of Pakistan and other regulatory authorities for their guidance and support. We are also grateful to our valued customers for their patronage and continued confidence in the Bank.

For and on behalf of the Board of Directors

Bilal MustafaPeshawar: October 28, 2011 Managing Director

43

Managing Director Director Director Director

CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION AS AT SEPTEMBER 30, 2011

(Un-audited) (Audited)

September 30, December 31,

Note 2011 2010

ASSETS

Cash and balances with treasury banks 2,335,586 5,079,720

Balances with other banks 1,440,232

1,502,684

Lendings to financial institutions 5 1,260,427 2,562,093

Investments 6 41,547,838

19,852,730

Advances 7 21,659,807 18,238,333

Operating fixed assets 8 1,285,238 1,121,554

Deferred tax asset - net 9 237,622

443,320

Other assets 2,081,616

1,993,869

71,848,366

50,794,303

LIABILITIES

Bills payable 515,852

280,665

Borrowings 18,759,028

2,894,759

Deposits and other accounts 10 40,111,179

36,981,351

Sub-ordinated loans - -

Liabilities against assets subject to finance lease -

-

Deferred tax liabilities -

-

Other liabilities 2,191,293

1,237,155

61,577,352

41,393,930

NET ASSETS 10,271,014

9,400,373

REPRESENTED BY

Share capital 8,228,001

5,004,001

Reserves 696,677

548,039

Unappropriated profit 646,630

52,079

9,571,308 5,604,119

Advance against shares subscription 206 3,224,000

9,571,514 8,828,119

Surplus on revaluation of assets-net of tax 11 699,500 572,254

10,271,014 9,400,373

CONTINGENCIES AND COMMITMENTS 12

The annexed notes 1 to 16 form an integral part of these condensed interim financial information.

Rupees in '000'


The surge in international oil prices has also played havoc with the economies of the majority of the under developed countries including Pakistan. However, due to the timely monetary measures taken by the State Bank of Pakistan, the inflation has come down to 10.5 percent from 13.3 percent in June, 2011. Stocks have also shown buoyancy which will definitely augment investors' confidence. During the quarter (July – September), the overseas Pakistani workers remitted an amount of $3,297 million showing an impressive growth of 24.60 % over the same period of last year.

At the end of the quarter under review, the Bank is operating with 53 branches, 4 sub-branches and 3 booths throughout the country out of which 21 branches are functioning as dedicated Islamic Banking Branches. In order to further strengthen its customer relationship and for maximum and effective outreach, the Bank after receiving permission of the central bank, is in the process of opening 12 new branches in the country (some of the branches have already been opened) which will take the total to 62 branches for the year ending 2011. The branch expansion is likely to translate into increase in profitability during the coming year.

As on September 30, 2011, the post Right Issue paid-up capital of the Bank stood at Rs.8 billion. The Government being the major shareholder has subscribed its entitlement of Right Shares and also taken up the unsubscribed portion of the Right Issue as per its commitment. The Bank stands fully compliant with the Minimum Capital Requirements of the State Bank of Pakistan upto year end 2011.

Credit RatingThe JCR-VIS Credit Rating Company Limited has maintained the long term and the short term ratings of the Bank to “A-“ (Single A Minus) and “A-2” (A-Two) respectively.

The Pakistan Credit Rating Agency Limited (PACRA) has also maintained long term entity rating of the Bank to “A-“ (Single A Minus) and short term entity rating at “A2” (A Two).

The ratings denote low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments. Rating Outlook by both the companies is “Positive”.

Acknowledgement The Board would like to thank the State Bank of Pakistan and other regulatory authorities for their guidance and support. We are also grateful to our valued customers for their patronage and continued confidence in the Bank.

For and on behalf of the Board of Directors

Bilal MustafaPeshawar: October 28, 2011 Managing Director

43


CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION AS AT SEPTEMBER 30, 2011



Note 2011 2010

ASSETS

Cash and balances with treasury banks 2,335,586 5,079,720

Balances with other banks 1,440,232

1,502,684

Lendings to financial institutions 5 1,260,427 2,562,093

Investments 6 41,547,838

19,852,730

Advances 7 21,659,807 18,238,333

Operating fixed assets 8 1,285,238 1,121,554

Deferred tax asset - net 9 237,622

443,320

Other assets 2,081,616

1,993,869

71,848,366

50,794,303

LIABILITIES


280,665

Borrowings 18,759,028

2,894,759

Deposits and other accounts 10 40,111,179

36,981,351

Sub-ordinated loans - -

Liabilities against assets subject to finance lease -

-

Deferred tax liabilities -

-

Other liabilities 2,191,293

1,237,155

61,577,352

41,393,930


9,400,373

REPRESENTED BY

Share capital 8,228,001

5,004,001

Reserves 696,677

548,039

Unappropriated profit 646,630

52,079

9,571,308 5,604,119

Advance against shares subscription 206 3,224,000

9,571,514 8,828,119

Surplus on revaluation of assets-net of tax 11 699,500 572,254

10,271,014 9,400,373

CONTINGENCIES AND COMMITMENTS 12


Rupees in '000'


65


CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

Three months Nine months Three months Nine months

ended ended ended ended

September 30, September 30, September 30, September 30,

Note 2011 2011 2010 2010

Mark-up / return / interest earned 2,004,710 5,046,600 1,196,378 2,983,937Mark-up / return / interest expensed 1,358,247 3,291,866 839,311 2,121,237

Net mark-up / interest income 646,463 1,754,734 357,067 862,700

Provision against non-performing

loans and advances - net 7.2 61,383

7,770

221,916 70,221Provision for diminution in the value of investments - net 6.1 3,215

30,825

28,832 182,344

Bad debts written off directly -

-

- -

64,598

38,595

250,748 252,565

Net mark-up / interest income after provisions 581,865

1,716,139

106,319 610,135

NON MARK-UP / INTEREST INCOME

Fee, commission and brokerage income 43,729

150,613

31,431 106,434

Dividend income 62,332

145,608 20,823 61,990

Income from dealing in foreign currencies 13,737 36,425 13,040 23,878Gain on sale of securities - net 24,123

44,091

3,650 204,774

Unrealised gain on revaluation ofinvestments classified as held-for-trading 23,649

6,024

3,779 872

Other income 13,308

46,796

20,235 57,624

Total non mark-up / interest income 180,878

429,557

92,958 455,572

762,743

2,145,696

199,277 1,065,707

NON MARK-UP / INTEREST EXPENSES

Administrative expenses 360,031

1,004,027

233,404 679,200Other provisions / write offs -

19,409

(5,705) (5,705)

Other charges 8,246

22,354

(3,720) 9,360

Total non mark-up / interest expenses 368,277

1,045,790

223,979 682,855

394,466 1,099,906

(24,702) 382,852Extra ordinary / unusual item - - - -

PROFIT / (LOSS) BEFORE TAXATION 394,466 1,099,906 (24,702) 382,852

Taxation

Current (85,967) (232,649) (29,031) (92,249)Prior - - - -

Deferred (25,160) (124,068) 80,594 (11,958)

(111,127) (356,717) 51,563 (104,207)

PROFIT AFTER TAXATION 283,339 743,189 26,861 278,645

Earnings per share - Basic and Diluted (in Rupees) 0.47 1.38 0.05 0.56


------------------------------------Rupees in '000'------------------------------------


CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011




2011 2011 2010 2010

Profit for the period 283,339

743,189

26,861 278,645

Other comprehensive income -

-

- -

Total comprehensive income for the period 283,339 743,189 26,861 278,645


Surplus / (deficit) arising on revaluation of assets (refer note 11) has been reportedin accordance with the requirements

of the Companies Ordinance, 1984, and the directives of the SBP in separate account below equity.

-----------------------------Rupees in '000'------------------------------


65


CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011




Note 2011 2011 2010 2010

Mark-up / return / interest earned 2,004,710 5,046,600 1,196,378 2,983,937Mark-up / return / interest expensed 1,358,247 3,291,866 839,311 2,121,237

Net mark-up / interest income 646,463 1,754,734 357,067 862,700

Provision against non-performing

loans and advances - net 7.2 61,383

7,770

221,916 70,221Provision for diminution in the value of investments - net 6.1 3,215

30,825

28,832 182,344

Bad debts written off directly -

-

- -

64,598

38,595

250,748 252,565

Net mark-up / interest income after provisions 581,865

1,716,139

106,319 610,135

NON MARK-UP / INTEREST INCOME

Fee, commission and brokerage income 43,729

150,613

31,431 106,434

Dividend income 62,332

145,608 20,823 61,990

Income from dealing in foreign currencies 13,737 36,425 13,040 23,878Gain on sale of securities - net 24,123

44,091

3,650 204,774

Unrealised gain on revaluation ofinvestments classified as held-for-trading 23,649

6,024

3,779 872

Other income 13,308

46,796

20,235 57,624

Total non mark-up / interest income 180,878

429,557

92,958 455,572

762,743

2,145,696

199,277 1,065,707

NON MARK-UP / INTEREST EXPENSES

Administrative expenses 360,031

1,004,027

233,404 679,200Other provisions / write offs -

19,409

(5,705) (5,705)

Other charges 8,246

22,354

(3,720) 9,360

Total non mark-up / interest expenses 368,277

1,045,790

223,979 682,855

394,466 1,099,906

(24,702) 382,852Extra ordinary / unusual item - - - -

PROFIT / (LOSS) BEFORE TAXATION 394,466 1,099,906 (24,702) 382,852

Taxation

Current (85,967) (232,649) (29,031) (92,249)Prior - - - -

Deferred (25,160) (124,068) 80,594 (11,958)

(111,127) (356,717) 51,563 (104,207)

PROFIT AFTER TAXATION 283,339 743,189 26,861 278,645

Earnings per share - Basic and Diluted (in Rupees) 0.47 1.38 0.05 0.56


------------------------------------Rupees in '000'------------------------------------


CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011




2011 2011 2010 2010

Profit for the period 283,339

743,189

26,861 278,645

Other comprehensive income -

-

- -

Total comprehensive income for the period 283,339 743,189 26,861 278,645


Surplus / (deficit) arising on revaluation of assets (refer note 11) has been reportedin accordance with the requirements

of the Companies Ordinance, 1984, and the directives of the SBP in separate account below equity.

-----------------------------Rupees in '000'------------------------------


87


CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

Nine months Nine months

ended ended

September 30, September 30,

2011 2010

CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation 1,099,906 382,852Less: Dividend income 145,608 61,990

954,298 320,862Adjustments for non-cash charges:

Depreciation 50,861 21,752Amortization 2,501 333Provision against non-performing advances-Net 7,770

70,221Provision for diminution in the value of investments-Net 30,825

182,344Provision against other assets 19,409

(5,705)Provision for Workers Welfare Fund 22,083

8,934Unrealized gain on revaluation of investments classified as held-for-trading (6,024)

(872)

Gain on sale of fixed assets - net (1,399)

(6,381)

126,026

270,626

1,080,324

591,488

(Increase) / decrease in operating assets:

Lendings to financial institutions 1,301,666

1,665,310

Net investments in held-for-trading securities (7,081,115)

279,708 Advances (3,429,244)

(7,875,580)

Others assets (excluding advance taxation) (361,385)

(477,072)

(9,570,078)

(6,407,634)

Increase / (decrease) in operating liabilities:


21,301

Borrowings 15,864,269 3,153,770 Deposits and other accounts 3,129,828 1,942,050

Other liabilities (excluding current taxation) 932,055

(20,407)

20,161,339

5,096,714

Cash generated from operations 11,671,585

(719,432)

Income tax refund / (paid) - net 21,580

(97,163)

Net cash generated from operating activities 11,693,165

(816,595)

CASH FLOW FROM INVESTING ACTIVITIES

Net investments in available-for-sale securities (14,470,746)

77,001

Net investments in held-to-maturity securities 40,828

539,466Dividend received 145,608

61,990Investments in operating fixed assets (220,242)

(95,144)

Sale proceeds of property and equipment disposed-off 4,595 16,527

Net cash used in investing activities (14,499,957) 599,840

CASH FLOW FROM FINANCING ACTIVITIES

Advance against shares subscription 206 -

Net cash flows from financing activities 206

(Decrease) / increase in cash and cash equivalents (2,806,586) (216,755)

Cash and cash equivalents at beginning of the period 6,582,404 3,945,800

Cash and cash equivalents at end of the period 3,775,818 3,729,045


Rupees in '000

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

Balance as at January 1, 2010 5,004,001 435,342 (398,710) 5,040,633

Comprehensive income

Profit after taxation for the nine months

ended September 30, 2010 -

-

278,645

278,645

Other comprehensive income - net of tax -

-

-

-

-

-

278,645

278,645

Transfer to statutory reserve -

55,729

(55,729)

-

Balance as at September 30, 2010 5,004,001

491,071

(175,794)

5,319,278


Profit after taxation for the three months

ended December 31, 2010 -

-

284,841

284,841


-

-

-

-

-

284,841

284,841

Transfer to statutory reserve - 56,968 (56,968) -

Balance as at December 31, 2010 5,004,001

548,039

52,079

5,604,119

Right issue of share capital 3,224,000

3,224,000


Profit after taxation for the Nine months

ended September 30, 2011 - - 743,189 743,189

Other comprehensive income - net of tax - - - -

- - 743,189 743,189


Balance as at September 30, 2011 8,228,001 696,677 646,630 9,571,308


--------------------------------Rupees in '000'----------------------------------

Share

capital

Statutory

reserve

(Accumulated

loss) /

Unappropriated

profit

Total



87


CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

Nine months Nine months

ended ended


2011 2010

CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation 1,099,906 382,852Less: Dividend income 145,608 61,990

954,298 320,862Adjustments for non-cash charges:

Depreciation 50,861 21,752Amortization 2,501 333Provision against non-performing advances-Net 7,770

70,221Provision for diminution in the value of investments-Net 30,825

182,344Provision against other assets 19,409

(5,705)Provision for Workers Welfare Fund 22,083

8,934Unrealized gain on revaluation of investments classified as held-for-trading (6,024)

(872)

Gain on sale of fixed assets - net (1,399)

(6,381)

126,026

270,626

1,080,324

591,488

(Increase) / decrease in operating assets:

Lendings to financial institutions 1,301,666

1,665,310

Net investments in held-for-trading securities (7,081,115)

279,708 Advances (3,429,244)

(7,875,580)

Others assets (excluding advance taxation) (361,385)

(477,072)

(9,570,078)

(6,407,634)

Increase / (decrease) in operating liabilities:


21,301

Borrowings 15,864,269 3,153,770 Deposits and other accounts 3,129,828 1,942,050

Other liabilities (excluding current taxation) 932,055

(20,407)

20,161,339

5,096,714

Cash generated from operations 11,671,585

(719,432)

Income tax refund / (paid) - net 21,580

(97,163)

Net cash generated from operating activities 11,693,165

(816,595)

CASH FLOW FROM INVESTING ACTIVITIES

Net investments in available-for-sale securities (14,470,746)

77,001

Net investments in held-to-maturity securities 40,828

539,466Dividend received 145,608

61,990Investments in operating fixed assets (220,242)

(95,144)

Sale proceeds of property and equipment disposed-off 4,595 16,527

Net cash used in investing activities (14,499,957) 599,840

CASH FLOW FROM FINANCING ACTIVITIES

Advance against shares subscription 206 -

Net cash flows from financing activities 206

(Decrease) / increase in cash and cash equivalents (2,806,586) (216,755)

Cash and cash equivalents at beginning of the period 6,582,404 3,945,800

Cash and cash equivalents at end of the period 3,775,818 3,729,045


Rupees in '000

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

Balance as at January 1, 2010 5,004,001 435,342 (398,710) 5,040,633


Profit after taxation for the nine months

ended September 30, 2010 -

-

278,645

278,645


-

-

-

-

-

278,645

278,645

Transfer to statutory reserve -

55,729

(55,729)

-

Balance as at September 30, 2010 5,004,001

491,071

(175,794)

5,319,278


Profit after taxation for the three months

ended December 31, 2010 -

-

284,841

284,841


-

-

-

-

-

284,841

284,841


Balance as at December 31, 2010 5,004,001

548,039

52,079

5,604,119

Right issue of share capital 3,224,000

3,224,000


Profit after taxation for the Nine months

ended September 30, 2011 - - 743,189 743,189

Other comprehensive income - net of tax - - - -

- - 743,189 743,189


Balance as at September 30, 2011 8,228,001 696,677 646,630 9,571,308


--------------------------------Rupees in '000'----------------------------------

Share

capital

Statutory

reserve

(Accumulated

loss) /

Unappropriated

profit

Total



109

1. STATUS AND NATURE OF BUSINESS1.1 The Bank of Khyber ("The Bank") was established under The Bank of Khyber Act, 1991 (N.W.F.P.

Act No. XIV of 1991) and is principally engaged in the business of commercial, investment and development banking. The Bank acquired the status of a scheduled bank in 1994. The Bank is listed on the Karachi Stock Exchange (KSE). The registered office and principal office of the Bank are situated at 24 The Mall, Peshawar Cantt, Peshawar. The Bank is operating 53 branches as at September 30, 2011 (December 31, 2010: 50 branches) including 21 (December 31, 2010: 21) Islamic Banking Branches.

1.2 The State Bank of Pakistan (SBP) through its BSD Circular No. 7 dated April 15, 2009 has prescribed that the minimum paid up capital (net of losses) for Banks shall be raised to Rs. 10 billion by the year ending December 31, 2013. This is to be achieved in a phased manner requiring Rs. 1 billion increase in paid up capital (free of losses) by the end of the each year. The paid-up capital (free of losses) of the Bank of Khyber as at December, 31 2010 was Rs. 5.004 billion.

As disclosed in note 1.2 to the annual financial statement for the year ended December 31, 2010, in accordance with the bank's plan to raise its paid up capital, a Right Issue was offered in July 2011 to the existing Shareholders in the ratio of 100:64. The Government of Khyber Pukhtunkhwa had provided firm commitment to take up any unsubcribed portion of the Right Issue . Since participation by the General Public was nominal, the Government of Khyber Pakhtunkhwa had to take up a major portion of the Issue under its guarantee. Resultantly, the Sharehlding of the Government increased to 70.20%. After the right Issue the paid up capital of the Bank has increased to Rs. 8.228 billion as on September 30, 2011.

2. BASIS OF PRESENTATION2.1 In accordance with the directives of the Federal Government regarding the shifting of the

banking system to Islamic modes, SBP has issued various circulars from time to time. Permissible forms of trade-related modes of financing include purchase of goods by the banks from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under the respective arrangements (except for murabaha financings accounted for under Islamic Financial Accounting Standard - 1 "Murabaha") are not reflected in these financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of markup thereon. Following the setting up of the Islamic Banking Group, the Bank also provides financing through Shariah compliant modes of financing.

2.2 The financial results of the Islamic Banking Group have been consolidated in these financial statements for reporting purpose, after eliminating the effects of intra-bank transactions and balances. The Bank is conducting Islamic Banking in 21 (December 31, 2010: 21) branches. Key financial figures of the Islamic Banking Group are disclosed in note 13 to these financial statements.

3. STATEMENT OF COMPLIANCE3.1 This condensed interim financial information for the Nine months ended September 30, 2011,

has been prepared in accordance with approved accounting standards as applicable in

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan (ICAP) as are notified under the Companies Ordinance, 1984, provisions and directives issued under the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the directives issued by the Securities and Exchange Commission of Pakistan (SECP) and the SBP. In case the requirements differ, the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the directives issued by SECP and SBP shall prevail.

3.2 The SBP vide BSD Circular No. 10, dated August 26, 2002 has deferred the applicability of International Accounting Standard (IAS) 39, "Financial Instruments: Recognition and Measurement" and International Accounting Standards (IAS) 40, "Investment Property" for banking companies till further instructions. Further, according to a notification of Securities and Exchange Commission of Pakistan dated April 28, 2008, IFRS 7 "Financial Instruments: Disclosure" has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of this condensed interim financial information. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP.

3.3 The disclosures made in this condensed interim financial information have been limited based on the format prescribed by the SBP vide BSD Circular Letter No. 2, dated May 12, 2004 and IAS 34 "Interim Financial Reporting" and do not include all the information required for the annual financial statements. Accordingly, this condensed interim financial information should be read in conjunction with the annual financial statements of the Bank for the year ended December 31, 2010. This condensed interim financial information is being submitted to the shareholders in accordance with section 245 of the Companies Ordinance, 1984. These are un-audited but subject to limited scope review by the auditors till June 30,2011.

4. "SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGEMENTS AND RISK MANAGEMENT POLICIES"The accounting policies, underlying estimates and judgments and methods of computation followed in the preparation of these condensed interim financial information are same as those applied in preparing the most recent annual financial statements of the Bank for the year ended December 31, 2010.

The financial risk management objectives and policies adopted by the Bank are consistent with that disclosed in the financial statements of the Bank for the year ended December 31, 2010.


September

30,

December

31,

2011 2010

5. LENDINGS TO FINANCIAL INSTITUTIONS

Call money lendings 1,000,000

175,000

Repurchase agreement lendings (Reverse Repo) -

2,095,317

Placements with financial institutions 385,061

416,410

1,385,061 2,686,727

Less: Provision for doubtful placements with financial institutions (124,634) (124,634)

1,260,427 2,562,093

Rupees in '000'


109

1. STATUS AND NATURE OF BUSINESS1.1 The Bank of Khyber ("The Bank") was established under The Bank of Khyber Act, 1991 (N.W.F.P.

Act No. XIV of 1991) and is principally engaged in the business of commercial, investment and development banking. The Bank acquired the status of a scheduled bank in 1994. The Bank is listed on the Karachi Stock Exchange (KSE). The registered office and principal office of the Bank are situated at 24 The Mall, Peshawar Cantt, Peshawar. The Bank is operating 53 branches as at September 30, 2011 (December 31, 2010: 50 branches) including 21 (December 31, 2010: 21) Islamic Banking Branches.

1.2 The State Bank of Pakistan (SBP) through its BSD Circular No. 7 dated April 15, 2009 has prescribed that the minimum paid up capital (net of losses) for Banks shall be raised to Rs. 10 billion by the year ending December 31, 2013. This is to be achieved in a phased manner requiring Rs. 1 billion increase in paid up capital (free of losses) by the end of the each year. The paid-up capital (free of losses) of the Bank of Khyber as at December, 31 2010 was Rs. 5.004 billion.

As disclosed in note 1.2 to the annual financial statement for the year ended December 31, 2010, in accordance with the bank's plan to raise its paid up capital, a Right Issue was offered in July 2011 to the existing Shareholders in the ratio of 100:64. The Government of Khyber Pukhtunkhwa had provided firm commitment to take up any unsubcribed portion of the Right Issue . Since participation by the General Public was nominal, the Government of Khyber Pakhtunkhwa had to take up a major portion of the Issue under its guarantee. Resultantly, the Sharehlding of the Government increased to 70.20%. After the right Issue the paid up capital of the Bank has increased to Rs. 8.228 billion as on September 30, 2011.

2. BASIS OF PRESENTATION2.1 In accordance with the directives of the Federal Government regarding the shifting of the

banking system to Islamic modes, SBP has issued various circulars from time to time. Permissible forms of trade-related modes of financing include purchase of goods by the banks from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under the respective arrangements (except for murabaha financings accounted for under Islamic Financial Accounting Standard - 1 "Murabaha") are not reflected in these financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of markup thereon. Following the setting up of the Islamic Banking Group, the Bank also provides financing through Shariah compliant modes of financing.

2.2 The financial results of the Islamic Banking Group have been consolidated in these financial statements for reporting purpose, after eliminating the effects of intra-bank transactions and balances. The Bank is conducting Islamic Banking in 21 (December 31, 2010: 21) branches. Key financial figures of the Islamic Banking Group are disclosed in note 13 to these financial statements.

3. STATEMENT OF COMPLIANCE3.1 This condensed interim financial information for the Nine months ended September 30, 2011,

has been prepared in accordance with approved accounting standards as applicable in

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED)FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011

Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan (ICAP) as are notified under the Companies Ordinance, 1984, provisions and directives issued under the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the directives issued by the Securities and Exchange Commission of Pakistan (SECP) and the SBP. In case the requirements differ, the requirements of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the directives issued by SECP and SBP shall prevail.

3.2 The SBP vide BSD Circular No. 10, dated August 26, 2002 has deferred the applicability of International Accounting Standard (IAS) 39, "Financial Instruments: Recognition and Measurement" and International Accounting Standards (IAS) 40, "Investment Property" for banking companies till further instructions. Further, according to a notification of Securities and Exchange Commission of Pakistan dated April 28, 2008, IFRS 7 "Financial Instruments: Disclosure" has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of this condensed interim financial information. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP.

3.3 The disclosures made in this condensed interim financial information have been limited based on the format prescribed by the SBP vide BSD Circular Letter No. 2, dated May 12, 2004 and IAS 34 "Interim Financial Reporting" and do not include all the information required for the annual financial statements. Accordingly, this condensed interim financial information should be read in conjunction with the annual financial statements of the Bank for the year ended December 31, 2010. This condensed interim financial information is being submitted to the shareholders in accordance with section 245 of the Companies Ordinance, 1984. These are un-audited but subject to limited scope review by the auditors till June 30,2011.

4. "SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGEMENTS AND RISK MANAGEMENT POLICIES"The accounting policies, underlying estimates and judgments and methods of computation followed in the preparation of these condensed interim financial information are same as those applied in preparing the most recent annual financial statements of the Bank for the year ended December 31, 2010.

The financial risk management objectives and policies adopted by the Bank are consistent with that disclosed in the financial statements of the Bank for the year ended December 31, 2010.


September

30,

December

31,

2011 2010

5. LENDINGS TO FINANCIAL INSTITUTIONS

Call money lendings 1,000,000

175,000

Repurchase agreement lendings (Reverse Repo) -

2,095,317

Placements with financial institutions 385,061

416,410

1,385,061 2,686,727

Less: Provision for doubtful placements with financial institutions (124,634) (124,634)

1,260,427 2,562,093

Rupees in '000'

11


6. INVESTMENTS

Note

Held

by bank

Given as

collateral Total

Held

by bank

Given as

collateral Total

Held-for-trading securities

Market Treasury Bills 2,420,097 4,364,834 6,784,931 - - -

Pakistan Investment Bonds 140,708 - 140,708

Sukuk certificates (GOP Ijarah) 75,825 - 75,825 - - -

Mutual Funds Units-open ended 340,157 - 340,157 - - -

Shares in listed companies 115,876

-

115,876

374,951

- 374,951

3,092,663 4,364,834 7,457,497 374,951 - 374,951

Available-for-sale securities

Market Treasury Bills 5,280,675 13,452,233

18,732,908

6,666,273

914,822 7,581,095

Pakistan Investment Bonds 3,736,139 -

3,736,139

2,480,311

635,082 3,115,393

National Investment Trust Units 6.2 54,246 - 54,246 54,246 - 54,246

Ordinary shares in listed companies 524,399

-

524,399

341,689

- 341,689

Ordinary shares in unlisted companies 80,487

-

80,487

80,487

- 80,487

Ordinary Shares of related parties

- Listed shares 59,961

-

59,961

59,961

- 59,961

- Unlisted shares 153,004

-

153,004

153,004

- 153,004

Preference shares 215,920

-

215,920

215,920

- 215,920

Listed Term Finance Certificates 925,030

-

925,030

972,366

- 972,366

Unlisted Term Finance Certificates 1,189,618

-

1,189,618

1,215,565

- 1,215,565

Mutual Funds Units-open ended 1,708,434

-

1,708,434

477,447

- 477,447

Mutual Funds Units-close ended 119,057 - 119,057 119,057 - 119,057

Sukuk certificates 5,631,799 - 5,631,799 4,274,026 -

4,274,026

19,678,769

13,452,233

33,131,002

17,110,352

1,549,904 18,660,256

Held-to-maturity securities

Pakistan Investment Bonds 908,204

-

908,204

923,677

- 923,677

Sukuk certificates 673,446

-

673,446

698,801

- 698,801

1,581,650 -

1,581,650

1,622,478

- 1,622,478

Investment at cost 24,353,082

17,817,067

42,170,149

19,107,781

1,549,904 20,657,685

Less: Provision for diminution in

value of investments 6.1 (500,317) - (500,317) (469,492) - (469,492)

Investments (net of provisions) 23,852,765 17,817,067 41,669,832 18,638,289 1,549,904 20,188,193

Unrealised gain on revaluation of

held for trading securities 6,024 - 6,024 1,431 - 1,431

(Deficit) on revaluation of available-

for-sale securities 11 (128,018) - (128,018) (277,635) (59,259) (336,894)

Total investments 23,730,771 17,817,067 41,547,838 18,362,085 1,490,645 19,852,730

-----------------------------------------------Rupees in '000'--------------------------------------------

September 30, 2011 (Un-audited) December 31, 2010 (Audited)


12



2011 2010

Note

6.1 Particulars of provision for diminution in value of investments

Opening balance 469,492 690,189

Charge for the period / year 6.1.1 30,880 215,341

Reversal on disposal of shares / mutual funds (55) (587,023)

30,825 (371,682)

Transferred from lending to financial institutions - 150,985

Closing balance 500,317 469,492

6.1.1

6.2 Investment in National Investment (Unit) Trust - NI(U)T



2011 2010

Note

7. ADVANCES

Loans, cash credits, running finances, etc

In Pakistan 23,461,776 20,404,151

Outside Pakistan - -

23,461,776 20,404,151

Net investment in ijarah:

In Pakistan 818,851 538,307


818,851 538,307

Bills discounted and purchased (excluding treasury bills)

Payable in Pakistan 226,833 219,408

Payable outside Pakistan 130,648 110,167

357,481 329,575

Advances - gross 24,638,108 21,272,033

Less: Provision for non-performing advances 7.2 (2,978,301) (3,033,700)

Advances - net of provision 21,659,807 18,238,333

Rupees in '000'

This includes impairment charge of Rs. nil (December 31, 2010: 157.291 million) in respect of 'available-for-sale'

listed equity securities / mutual funds.

As fully explained in note 10.5 of the annual financial statements for the year ended December 31, 2010, the

balance represents 2,703,723 units attributable to Strategic Assets. These units are continued to be recognized as

investment in NI(U)T – Unit holders Fund, as settlement of such units is yet to be finalized. The Bank has agreed

to the redemption price of Rs 25.80 per unit based on October 13, 2010 net assets position of the fund and as

such recorded the investment on the basis of such rate at period end.

Rupees in '000'

11


6. INVESTMENTS

Note

Held

by bank

Given as

collateral Total

Held

by bank

Given as

collateral Total

Held-for-trading securities

Market Treasury Bills 2,420,097 4,364,834 6,784,931 - - -

Pakistan Investment Bonds 140,708 - 140,708

Sukuk certificates (GOP Ijarah) 75,825 - 75,825 - - -

Mutual Funds Units-open ended 340,157 - 340,157 - - -

Shares in listed companies 115,876

-

115,876

374,951

- 374,951

3,092,663 4,364,834 7,457,497 374,951 - 374,951

Available-for-sale securities

Market Treasury Bills 5,280,675 13,452,233

18,732,908

6,666,273

914,822 7,581,095

Pakistan Investment Bonds 3,736,139 -

3,736,139

2,480,311

635,082 3,115,393

National Investment Trust Units 6.2 54,246 - 54,246 54,246 - 54,246

Ordinary shares in listed companies 524,399

-

524,399

341,689

- 341,689

Ordinary shares in unlisted companies 80,487

-

80,487

80,487

- 80,487

Ordinary Shares of related parties

- Listed shares 59,961

-

59,961

59,961

- 59,961

- Unlisted shares 153,004

-

153,004

153,004

- 153,004

Preference shares 215,920

-

215,920

215,920

- 215,920

Listed Term Finance Certificates 925,030

-

925,030

972,366

- 972,366

Unlisted Term Finance Certificates 1,189,618

-

1,189,618

1,215,565

- 1,215,565

Mutual Funds Units-open ended 1,708,434

-

1,708,434

477,447

- 477,447

Mutual Funds Units-close ended 119,057 - 119,057 119,057 - 119,057

Sukuk certificates 5,631,799 - 5,631,799 4,274,026 -

4,274,026

19,678,769

13,452,233

33,131,002

17,110,352

1,549,904 18,660,256

Held-to-maturity securities

Pakistan Investment Bonds 908,204

-

908,204

923,677

- 923,677

Sukuk certificates 673,446

-

673,446

698,801

- 698,801

1,581,650 -

1,581,650

1,622,478

- 1,622,478

Investment at cost 24,353,082

17,817,067

42,170,149

19,107,781

1,549,904 20,657,685

Less: Provision for diminution in

value of investments 6.1 (500,317) - (500,317) (469,492) - (469,492)

Investments (net of provisions) 23,852,765 17,817,067 41,669,832 18,638,289 1,549,904 20,188,193

Unrealised gain on revaluation of

held for trading securities 6,024 - 6,024 1,431 - 1,431

(Deficit) on revaluation of available-

for-sale securities 11 (128,018) - (128,018) (277,635) (59,259) (336,894)

Total investments 23,730,771 17,817,067 41,547,838 18,362,085 1,490,645 19,852,730

-----------------------------------------------Rupees in '000'--------------------------------------------



12



2011 2010

Note

6.1 Particulars of provision for diminution in value of investments

Opening balance 469,492 690,189

Charge for the period / year 6.1.1 30,880 215,341

Reversal on disposal of shares / mutual funds (55) (587,023)

30,825 (371,682)

Transferred from lending to financial institutions - 150,985

Closing balance 500,317 469,492

6.1.1

6.2 Investment in National Investment (Unit) Trust - NI(U)T



2011 2010

Note

7. ADVANCES

Loans, cash credits, running finances, etc

In Pakistan 23,461,776 20,404,151


23,461,776 20,404,151

Net investment in ijarah:

In Pakistan 818,851 538,307


818,851 538,307

Bills discounted and purchased (excluding treasury bills)

Payable in Pakistan 226,833 219,408

Payable outside Pakistan 130,648 110,167

357,481 329,575

Advances - gross 24,638,108 21,272,033

Less: Provision for non-performing advances 7.2 (2,978,301) (3,033,700)

Advances - net of provision 21,659,807 18,238,333

Rupees in '000'

This includes impairment charge of Rs. nil (December 31, 2010: 157.291 million) in respect of 'available-for-sale'

listed equity securities / mutual funds.

As fully explained in note 10.5 of the annual financial statements for the year ended December 31, 2010, the

balance represents 2,703,723 units attributable to Strategic Assets. These units are continued to be recognized as

investment in NI(U)T – Unit holders Fund, as settlement of such units is yet to be finalized. The Bank has agreed

to the redemption price of Rs 25.80 per unit based on October 13, 2010 net assets position of the fund and as

such recorded the investment on the basis of such rate at period end.

Rupees in '000'

13


14


7.1

Provision Provision

Required Held

Category of classification Domestic Overseas Total

Other assets especially mentioned* 8,168 - 8,168 - -

Substandard 294,204 - 294,204 64,068 64,068

Doubtful 432,504 - 432,504 93,901 93,901

Loss 3,276,615

-

3,276,615

2,812,366

2,812,366

4,011,491

-

4,011,491

2,970,335

2,970,335

Provision Provision

Required Held


Other assets especially mentioned* 5,416

-

5,416

-

-

Substandard 412,813

-

412,813

31,543

31,543

Doubtful 178,492

-

178,492

57,031

57,031

Loss 3,520,860

-

3,520,860

2,936,109

2,936,109

4,117,581

-

4,117,581

3,024,683

3,024,683

* Other assets especially mentioned category pertains to agricultural finance only.

7.1.1

7.2 Particulars of provision against non-performing advances

Specific General Total Specific General Total

Opening balance 3,024,683 9,017 3,033,700 2,972,778 12,006 2,984,784

Charge for the period / year 243,307 - 243,307 334,067 1,248 335,315

Reversals (234,486) (1,051) (235,537) (282,162) (4,237) (286,399)

8,821 (1,051) 7,770 51,905 (2,989) 48,916

Amounts written off (63,169) - (63,169) - - -

Closing balance 2,970,335 7,966 2,978,301 3,024,683 9,017 3,033,700

--------------------------------------Rupees in '000'--------------------------------------------

Classified Advances

December 31, 2010 (Audited)

The SBP through its BSD Circular No; 1 dated October 21, 2011 has issued revised instructions on provisioning

against classified assets, allowing benefit in various slabs, yearwise ranging from 75% to 10% of FSV of eligible

collaterals/securities held against Non Performing Loans (NPL's) from the date of classification. The management

is in the process of determining the impact of this Circular, therefore, no effects have been taken in these

accounts.

The SBP through various circulars amended Prudential Regulations in respect of provisioning against non-

performing advances. The revised regulations allow the benefit of 40 percent of Forced Sale Value (FSV) of

pledged stocks and mortgaged residential, commercial and industrial properties (land and building only) held as

collateral by the Bank in determining the amount of provision against non-performing advances. Had there been

no such relaxation from SBP, the provision on the balance sheet would have been higher by Rs. 572.142 million

(2010: 604.65 million). However, the impact on profit due to the benefit of FSV is not available for payment of cash

or stock dividend.


------------------------------------------Rupees in '000'----------------------------------------------------

-----------------------------------------Rupees in '000'-----------------------------------------

Classified Advances

Advances include amounts aggregating to Rs. 4,011.491 (December 31, 2010: Rs. 4,117.581) million which have

been placed under non-performing status as detailed below:-

September 30, 2011 (Un-audited)

8. OPERATING FIXED ASSETS - NET



Note 2011 2010

9. DEFERRED TAX ASSET - NET

Deferred tax asset arising in respect of:

Provision for balances with other banks 3,510 3,510

Deficit on revaluation of investments 72,869 153,605

Provision for diminution in the value of investments 61,237 62,845

Provision for non performing loans 51,490 180,681

Provision for other assets 3,448 3,448

Provision for Workers Welfare Fund 17,770 9,947

Capital loss carried forward 22,050 26,459

Stabilization reserve 35,016 32,528

267,390 473,023

Deferred tax liability arising in respect of:

Accelerated tax depreciation (18,677) (19,506)

Surplus on revaluation of investment (11,091) (10,197)

(29,768)

(29,703)

Deferred tax asset - net 237,622

443,320

10. DEPOSITS AND OTHER ACCOUNTS

Customers

Fixed deposits 20,299,148

15,973,975

Savings deposits 10,914,497

13,528,160

Current accounts - non-remunerative 10.1 6,952,515

5,610,251

Call deposits 690,520

443,888

Margin and sundry deposits 727,845

675,025

39,584,525 36,231,299

Financial Institutions

Remunerative deposits 526,389 750,025

Non-remunerative deposits 265 27

526,654 750,052

40,111,179 36,981,351

10.1 It includes current deposits of Rs.48.508 million under Bacha Khan Khapal Rozgar Scheme.

Rupees in '000'

During the period, additions to / disposals from operating fixed assets amounted to Rs. 220.242 million (September 30, 2010: Rs. 95.144 million) and Rs.3.196 million (september 30, 2010: 16.527 million), respectively.

13


14


7.1

Provision Provision

Required Held


Other assets especially mentioned* 8,168 - 8,168 - -

Substandard 294,204 - 294,204 64,068 64,068

Doubtful 432,504 - 432,504 93,901 93,901

Loss 3,276,615

-

3,276,615

2,812,366

2,812,366

4,011,491

-

4,011,491

2,970,335

2,970,335

Provision Provision

Required Held


Other assets especially mentioned* 5,416

-

5,416

-

-

Substandard 412,813

-

412,813

31,543

31,543

Doubtful 178,492

-

178,492

57,031

57,031

Loss 3,520,860

-

3,520,860

2,936,109

2,936,109

4,117,581

-

4,117,581

3,024,683

3,024,683

* Other assets especially mentioned category pertains to agricultural finance only.

7.1.1

7.2 Particulars of provision against non-performing advances

Specific General Total Specific General Total

Opening balance 3,024,683 9,017 3,033,700 2,972,778 12,006 2,984,784

Charge for the period / year 243,307 - 243,307 334,067 1,248 335,315

Reversals (234,486) (1,051) (235,537) (282,162) (4,237) (286,399)

8,821 (1,051) 7,770 51,905 (2,989) 48,916

Amounts written off (63,169) - (63,169) - - -

Closing balance 2,970,335 7,966 2,978,301 3,024,683 9,017 3,033,700

--------------------------------------Rupees in '000'--------------------------------------------

Classified Advances

December 31, 2010 (Audited)

The SBP through its BSD Circular No; 1 dated October 21, 2011 has issued revised instructions on provisioning

against classified assets, allowing benefit in various slabs, yearwise ranging from 75% to 10% of FSV of eligible

collaterals/securities held against Non Performing Loans (NPL's) from the date of classification. The management

is in the process of determining the impact of this Circular, therefore, no effects have been taken in these

accounts.

The SBP through various circulars amended Prudential Regulations in respect of provisioning against non-

performing advances. The revised regulations allow the benefit of 40 percent of Forced Sale Value (FSV) of

pledged stocks and mortgaged residential, commercial and industrial properties (land and building only) held as

collateral by the Bank in determining the amount of provision against non-performing advances. Had there been

no such relaxation from SBP, the provision on the balance sheet would have been higher by Rs. 572.142 million

(2010: 604.65 million). However, the impact on profit due to the benefit of FSV is not available for payment of cash

or stock dividend.


------------------------------------------Rupees in '000'----------------------------------------------------

-----------------------------------------Rupees in '000'-----------------------------------------

Classified Advances

Advances include amounts aggregating to Rs. 4,011.491 (December 31, 2010: Rs. 4,117.581) million which have

been placed under non-performing status as detailed below:-

September 30, 2011 (Un-audited)

8. OPERATING FIXED ASSETS - NET



Note 2011 2010

9. DEFERRED TAX ASSET - NET

Deferred tax asset arising in respect of:

Provision for balances with other banks 3,510 3,510

Deficit on revaluation of investments 72,869 153,605

Provision for diminution in the value of investments 61,237 62,845

Provision for non performing loans 51,490 180,681

Provision for other assets 3,448 3,448

Provision for Workers Welfare Fund 17,770 9,947

Capital loss carried forward 22,050 26,459

Stabilization reserve 35,016 32,528

267,390 473,023

Deferred tax liability arising in respect of:

Accelerated tax depreciation (18,677) (19,506)

Surplus on revaluation of investment (11,091) (10,197)

(29,768)

(29,703)

Deferred tax asset - net 237,622

443,320

10. DEPOSITS AND OTHER ACCOUNTS

Customers

Fixed deposits 20,299,148

15,973,975

Savings deposits 10,914,497

13,528,160

Current accounts - non-remunerative 10.1 6,952,515

5,610,251

Call deposits 690,520

443,888

Margin and sundry deposits 727,845

675,025

39,584,525 36,231,299

Financial Institutions

Remunerative deposits 526,389 750,025

Non-remunerative deposits 265 27

526,654 750,052

40,111,179 36,981,351

10.1 It includes current deposits of Rs.48.508 million under Bacha Khan Khapal Rozgar Scheme.

Rupees in '000'

During the period, additions to / disposals from operating fixed assets amounted to Rs. 220.242 million (September 30, 2010: Rs. 95.144 million) and Rs.3.196 million (september 30, 2010: 16.527 million), respectively.

15


16



September 30, December 31,2011 2010

Note

11. SURPLUS ON REVALUATION OF ASSETS

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

Federal government securities

- Market Treasury Bills 22,871 (32,887)

- Pakistan Investment Bonds (199,378) (382,592)

Fully paid up ordinary shares - quoted (43,021) 38,062

Term Finance Certificates - listed (19,399) (26,744)

Sukuk Certificates - 3,353 Units in open ended mutual funds 105,500 55,893

Units in close ended mutual funds 5,409 8,021

6 (128,018)

(336,894)

Surplus on revaluation of fixed assets

Freehold land 765,740

765,740

637,722

428,846

Deferred tax asset 61,778

143,408

699,500

572,254

12. CONTINGENCIES AND COMMITMENTS

12.1 Direct credit substitutes

(Un-audited) (Audited)September 30, December 31,

2011 2010

- Financial Institutions -

-

- Others 11,854

142,251

11,854

142,251

12.2 Transaction-related contingent liabilities



2011 2010Note

Guarantees favouring:

Government 2,991,450 3,133,843Others 3,432,854 2,106,312

12.2.1 6,424,304 5,240,155

Rupees in '000'

Rupees in '000'

Rupees in '000'

Includes general guarantee of indebtedness, bank acceptance guarantee and standby letters of credit

serving as financial guarantees for loans and securities issued in favour of:

Includes performancebonds, bid bonds, warranties, advance payment guarantees,shipping guaranteesand

standby letter of credits related to particular transactions issued in favour of:

12.2.1



2011 2010

12.3 Trade-related contingent liabilities

Letters of creditSight 1,446,166

1,471,027Usance 427,347 193,198

1,873,513

1,664,225Acceptances 117,754

101,176

1,991,267

1,765,401

12.4 Commitments in respect of forward exchange contracts

Purchase 232,117

79,792

Sale 261,446

80,717

12.4.1



2011 2010

12.5 Other commitments

Bills for collection

Inland bills 319,881

29,627

Foreign bills 300,259

222,358

620,140

251,985

12.6 Commitments to extend credit

12.7 Commitment for the acquisition of operating fixed assets

12.8

The Bank makes commitments to extend credit in the normal course of its business but these beingrevocable commitments do not attract any significant penalty if the facility is unilaterally withdrawn.

Therehas been no change in the status of other contingenciesas disclosed in notes 21.8, 21.9 and 21.10 tothe annualfinancial statementsof the Bank for the year ended December 31, 2010 except for that the DeputyCommissioner InlandRevenuePeshawar has decided certain matters against the Bank havingtax impact ofRs. 308 million related to the tax year 2009. The Bank has filed an appeal against the said order. Noprovision has been made in the condensed interim financial information as the managementand tax advisorof the Bank are of the view that the issues will be decided in Bank's favour.

All forward exchange contracts are backed by trade related transactions to meet the needs of the Bank'sclients to generate trading revenuesand, as part of its asset and liability management activity, to hedge itsown exposure to currencyrisk. At the period end, all foreign exchange contractshave a remaining maturityofless than one year.

Rupees in '000'

Commitments as on reporting date amounts to Rs. 60.071 million (2010: Rs. 15.068 million).

Rupees in '000'

The above amounts include expired letters of guarantee aggregating to Rs.1,471.000 million as atSeptember 30, 2011 (December 31, 2010: Rs. 318.180 million) for which the formalities relating to returnofthe original documents are in process.

15


16



September 30, December 31,2011 2010

Note

11. SURPLUS ON REVALUATION OF ASSETS

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

Federal government securities

- Market Treasury Bills 22,871 (32,887)

- Pakistan Investment Bonds (199,378) (382,592)

Fully paid up ordinary shares - quoted (43,021) 38,062

Term Finance Certificates - listed (19,399) (26,744)

Sukuk Certificates - 3,353 Units in open ended mutual funds 105,500 55,893

Units in close ended mutual funds 5,409 8,021

6 (128,018)

(336,894)

Surplus on revaluation of fixed assets

Freehold land 765,740

765,740

637,722

428,846

Deferred tax asset 61,778

143,408

699,500

572,254

12. CONTINGENCIES AND COMMITMENTS

12.1 Direct credit substitutes

(Un-audited) (Audited)September 30, December 31,

2011 2010

- Financial Institutions -

-

- Others 11,854

142,251

11,854

142,251

12.2 Transaction-related contingent liabilities



2011 2010Note

Guarantees favouring:

Government 2,991,450 3,133,843Others 3,432,854 2,106,312

12.2.1 6,424,304 5,240,155

Rupees in '000'

Rupees in '000'

Rupees in '000'

Includes general guarantee of indebtedness, bank acceptance guarantee and standby letters of credit

serving as financial guarantees for loans and securities issued in favour of:

Includes performancebonds, bid bonds, warranties, advance payment guarantees,shipping guaranteesand

standby letter of credits related to particular transactions issued in favour of:

12.2.1



2011 2010

12.3 Trade-related contingent liabilities

Letters of creditSight 1,446,166

1,471,027Usance 427,347 193,198

1,873,513

1,664,225Acceptances 117,754

101,176

1,991,267

1,765,401

12.4 Commitments in respect of forward exchange contracts

Purchase 232,117

79,792

Sale 261,446

80,717

12.4.1



2011 2010

12.5 Other commitments

Bills for collection

Inland bills 319,881

29,627

Foreign bills 300,259

222,358

620,140

251,985

12.6 Commitments to extend credit

12.7 Commitment for the acquisition of operating fixed assets

12.8

The Bank makes commitments to extend credit in the normal course of its business but these beingrevocable commitments do not attract any significant penalty if the facility is unilaterally withdrawn.

Therehas been no change in the status of other contingenciesas disclosed in notes 21.8, 21.9 and 21.10 tothe annualfinancial statementsof the Bank for the year ended December 31, 2010 except for that the DeputyCommissioner InlandRevenuePeshawar has decided certain matters against the Bank havingtax impact ofRs. 308 million related to the tax year 2009. The Bank has filed an appeal against the said order. Noprovision has been made in the condensed interim financial information as the managementand tax advisorof the Bank are of the view that the issues will be decided in Bank's favour.

All forward exchange contracts are backed by trade related transactions to meet the needs of the Bank'sclients to generate trading revenuesand, as part of its asset and liability management activity, to hedge itsown exposure to currencyrisk. At the period end, all foreign exchange contractshave a remaining maturityofless than one year.

Rupees in '000'

Commitments as on reporting date amounts to Rs. 60.071 million (2010: Rs. 15.068 million).

Rupees in '000'

The above amounts include expired letters of guarantee aggregating to Rs.1,471.000 million as atSeptember 30, 2011 (December 31, 2010: Rs. 318.180 million) for which the formalities relating to returnofthe original documents are in process.


17


18



2011 2010

13. KEY FINANCIAL FIGURES OF ISLAMIC BANKING GROUP

ASSETS

Cash and balances with treasury banks 713,763 740,522

Balances with and due from Financial Institutions 690,404 554,970

Lending to financial institutions 500,000

Investments 5,982,619

4,612,539

Financing and receivables

Murahaba 1,574,928 1,579,798

Ijarah 111,524

267,208

Ijarah under IFAS-2 707,327

271,100

Musharaka -

31,091

Diminishing musharaka 791,237

800,391

Others -

-

3,185,016

2,949,588

Less: Provision against non-performing facilities (40,711)

(37,444)

3,144,305

2,912,144

Operating fixed assets 146,867

86,453

Other assets 489,870

499,076

-

11,667,828

9,405,704

LIABILITIES


40,525

Deposits and other accounts

Current accounts 2,720,016

882,325

Saving accounts 4,733,940

4,181,593

Term deposits 1,408,375

2,218,634

Others 391,396

132,860

9,253,727

7,415,412

Deposits from Financial Institutions - Remunerative 127,426

281,416

Deposits from Financial Institutions - Non-Remunerative -

1

Other liabilities 430,421

310,020

9,950,611

8,047,374


1,358,330

REPRESENTED BY

Islamic Banking Fund 460,000 460,000

Reserves - -

Unappropriated profit 1,257,217 898,330

1,717,217 1,358,330

Deficit on revaluation of assets - -

1,717,217 1,358,330

Remuneration to Shariah Advisor during the period/ year 1,061 850

Rupees in '000' (Un-audited) (Un- audited)


2011 2010

Mark-up/return /interest earned 908,168 618,329

Mark-up/return /interest expensed 284,170 209,901

Net mark-up/interest income 623,998 408,428

Provision / (Reversal of provision) against non-performing facilities and financing-net 21,897 (27,351)

Provision for diminution in the value of investments - -

21,897 (27,351)

NON MARK-UP/INTEREST INCOME

Fee, commission and brokerage income 34,567 16,740

Dividend Income 949 -

Income from dealing in foreign currency 8,768 2,714

Gain on sale of securities - net 1,040

Other income 16,274 18,202

61,598 37,656

663,699 473,435

NON MARK-UP/INTEREST EXPENSES

Administrative expenses 304,812 176,029

Other charges - 27

304,812 176,056

Profit for the period 358,887 297,379

14. RELATED PARTY TRANSACTIONS

The profit and loss account of the Bank's Islamic Banking Branches for the nine months ended September 30, 2011 is as under;

Transactions with key management personnel are in accordance with the terms of their employment. Other transactions

are at agreed terms.

The Bank has related party relationships with Government of Khyber Pakhtunkhawa (majority shareholder),

associated company, directors, key management personnel and employee benefit plans.

Rupees in '000'

Contributions to and accruals in respect of staff retirement benefit plan are made in accordance with actuarial valuation.


17


18



2011 2010

13. KEY FINANCIAL FIGURES OF ISLAMIC BANKING GROUP

ASSETS

Cash and balances with treasury banks 713,763 740,522

Balances with and due from Financial Institutions 690,404 554,970

Lending to financial institutions 500,000

Investments 5,982,619

4,612,539

Financing and receivables

Murahaba 1,574,928 1,579,798

Ijarah 111,524

267,208

Ijarah under IFAS-2 707,327

271,100

Musharaka -

31,091

Diminishing musharaka 791,237

800,391

Others -

-

3,185,016

2,949,588

Less: Provision against non-performing facilities (40,711)

(37,444)

3,144,305

2,912,144

Operating fixed assets 146,867

86,453

Other assets 489,870

499,076

-

11,667,828

9,405,704

LIABILITIES


40,525

Deposits and other accounts

Current accounts 2,720,016

882,325

Saving accounts 4,733,940

4,181,593

Term deposits 1,408,375

2,218,634

Others 391,396

132,860

9,253,727

7,415,412

Deposits from Financial Institutions - Remunerative 127,426

281,416

Deposits from Financial Institutions - Non-Remunerative -

1

Other liabilities 430,421

310,020

9,950,611

8,047,374


1,358,330

REPRESENTED BY

Islamic Banking Fund 460,000 460,000

Reserves - -

Unappropriated profit 1,257,217 898,330

1,717,217 1,358,330

Deficit on revaluation of assets - -

1,717,217 1,358,330

Remuneration to Shariah Advisor during the period/ year 1,061 850

Rupees in '000' (Un-audited) (Un- audited)


2011 2010

Mark-up/return /interest earned 908,168 618,329

Mark-up/return /interest expensed 284,170 209,901

Net mark-up/interest income 623,998 408,428

Provision / (Reversal of provision) against non-performing facilities and financing-net 21,897 (27,351)

Provision for diminution in the value of investments - -

21,897 (27,351)

NON MARK-UP/INTEREST INCOME

Fee, commission and brokerage income 34,567 16,740

Dividend Income 949 -

Income from dealing in foreign currency 8,768 2,714

Gain on sale of securities - net 1,040

Other income 16,274 18,202

61,598 37,656

663,699 473,435

NON MARK-UP/INTEREST EXPENSES

Administrative expenses 304,812 176,029

Other charges - 27

304,812 176,056

Profit for the period 358,887 297,379

14. RELATED PARTY TRANSACTIONS

The profit and loss account of the Bank's Islamic Banking Branches for the nine months ended September 30, 2011 is as under;

Transactions with key management personnel are in accordance with the terms of their employment. Other transactions

are at agreed terms.

The Bank has related party relationships with Government of Khyber Pakhtunkhawa (majority shareholder),

associated company, directors, key management personnel and employee benefit plans.

Rupees in '000'

Contributions to and accruals in respect of staff retirement benefit plan are made in accordance with actuarial valuation.

19


20

Details of transactions with related parties as at the period/year end are as follows:

Advances:

At January 1, 122,786 - - 122,786 91,395 - - 91,395

Disbursed during the period/ year 48,904 - - 48,904 36,855 - - 36,855

Repaid during the period/ year (33,022) - - (33,022) (5,464) - - (5,464)

Balance as at September 30/December 31 138,668 - - 138,668 122,786 - - 122,786

Deposits:

At January 1, 7,033

-

22,148

29,181

4,532

-

110,940 115,472

Deposited during the period/ year (Adjusted) 159,566

-

591,494

751,060

121,761

-

250,419 372,180

Repaid during the period/ year (156,088)

-

(155,062)

(311,150)

(119,260)

-

(339,211) (458,471)

Balance as at September 30/December 31 10,511

-

458,580

469,091

7,033

-

22,148 29,181

Transactions, income and expenditure

Profit earned on Financings 2,460

-

-

2,460

863

-

- 863

Return on deposits expensed 449

-

27,425

27,874

201

-

2,890 3,091

Fee/remuneration 3,870

-

-

3,870

2,689

-

- 2,689

15. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES

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

Commercial Total

Banking

Total Income 1,998,605 5,476,157

Total Expenses (1,204,247) (4,732,968)

Profit / (loss) after tax 743,189

Commercial Total

Banking

Total Income 2,444,471 3,439,509

Total Expenses (1,720,459) (3,160,864)

Profit / (loss) after tax 724,012 278,645

(316,429)

24,367

596,602

(1,043,280)

(446,678)

Finance

Trading &

Sales

(877,103)

1,935,397

57,640

(80,696)

(23,056)

340,796

Banking

For the nine eonths ended September 30, 2010 (Un-audited)

(680,939)

Corporate

--------------------------------------------------------- Rupees in '000' ------------------------------------------------

Sales

1,432,217

(2,113,156)

794,358

Retail

Banking

--------------------------------------------------------- Rupees in '000' ------------------------------------------------

(428,524)

Trading &

109,938

(538,462)

1,058,294

Directors

and key

management

personnel

Associated

company

Other

related

parties


Total

Directors

and key

management

personnel

Associated

company

Other

related

parties

Total

Corporate

Finance

Retail

For the nine months ended September 30, 2011 (Un-audited)

------------------------------------------------------------------------- 'Rupees in '000' -------------------------------------------------------------------------

------------------------------------------------------------------------- 'Rupees in '000' -------------------------------------------------------------------------

For the nine months ended September 30, 2011 (Un-audited) For the nine months ended September 30, 2010 (Un-audited)

Directors

and key

management

personnel

Associated

company

Other

related

parties

Total

Directors

and key

management

personnel

Associated

company

Other

related

parties

Total

16. DATE OF AUTHORIZATION FOR ISSUE

This condensed interim financial information was authorized for issue on October 28, 2011

by the Board of Directors of the Bank.


19


20

Details of transactions with related parties as at the period/year end are as follows:

Advances:

At January 1, 122,786 - - 122,786 91,395 - - 91,395

Disbursed during the period/ year 48,904 - - 48,904 36,855 - - 36,855

Repaid during the period/ year (33,022) - - (33,022) (5,464) - - (5,464)

Balance as at September 30/December 31 138,668 - - 138,668 122,786 - - 122,786

Deposits:

At January 1, 7,033

-

22,148

29,181

4,532

-

110,940 115,472

Deposited during the period/ year (Adjusted) 159,566

-

591,494

751,060

121,761

-

250,419 372,180

Repaid during the period/ year (156,088)

-

(155,062)

(311,150)

(119,260)

-

(339,211) (458,471)

Balance as at September 30/December 31 10,511

-

458,580

469,091

7,033

-

22,148 29,181

Transactions, income and expenditure

Profit earned on Financings 2,460

-

-

2,460

863

-

- 863

Return on deposits expensed 449

-

27,425

27,874

201

-

2,890 3,091

Fee/remuneration 3,870

-

-

3,870

2,689

-

- 2,689

15. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES

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

Commercial Total

Banking

Total Income 1,998,605 5,476,157

Total Expenses (1,204,247) (4,732,968)

Profit / (loss) after tax 743,189

Commercial Total

Banking

Total Income 2,444,471 3,439,509

Total Expenses (1,720,459) (3,160,864)

Profit / (loss) after tax 724,012 278,645

(316,429)

24,367

596,602

(1,043,280)

(446,678)

Finance

Trading &

Sales

(877,103)

1,935,397

57,640

(80,696)

(23,056)

340,796

Banking

For the nine eonths ended September 30, 2010 (Un-audited)

(680,939)

Corporate

--------------------------------------------------------- Rupees in '000' ------------------------------------------------

Sales

1,432,217

(2,113,156)

794,358

Retail

Banking

--------------------------------------------------------- Rupees in '000' ------------------------------------------------

(428,524)

Trading &

109,938

(538,462)

1,058,294

Directors

and key

management

personnel

Associated

company

Other

related

parties


Total

Directors

and key

management

personnel

Associated

company

Other

related

parties

Total

Corporate

Finance

Retail

For the nine months ended September 30, 2011 (Un-audited)

------------------------------------------------------------------------- 'Rupees in '000' -------------------------------------------------------------------------

------------------------------------------------------------------------- 'Rupees in '000' -------------------------------------------------------------------------

For the nine months ended September 30, 2011 (Un-audited) For the nine months ended September 30, 2010 (Un-audited)

Directors

and key

management

personnel

Associated

company

Other

related

parties

Total

Directors

and key

management

personnel

Associated

company

Other

related

parties

Total

16. DATE OF AUTHORIZATION FOR ISSUE

This condensed interim financial information was authorized for issue on October 28, 2011

by the Board of Directors of the Bank.


Documents

for the Period Ended September 30, 2011 · 2017-03-15 · Sahibzada Saeed Ahmad Muhammad Asif Muhammad Maqsood Khan f Financial Officer Rahat Gul Company Secretary Zahid Sahibzada