Financial

Managemen
t

Institute of Business Administration

University of The Punjab,Lahore
Pakistan
 DEDICATION
We would like to dedicate this project to our mentor and respected
teacher
Prof. Muhammad Usman
Whose love and support give us
the strength to work…

Contents
Introduction..........................................................................................................................1
RATIO ANALYSIS............................................................................................................2
Average rate of lending:..................................................................................................2
Average rate of borrowings, deposits:.............................................................................2
Admin cost/ deposits:..................................................................................................2
Spread:.............................................................................................................................3
Expense/ income:.............................................................................................................3
 Return on assets:..............................................................................................................3
Return on equity:.............................................................................................................3
Infection ratio:.................................................................................................................4
Advance/ deposits:...........................................................................................................4
Other Ratios not forming Basic Banking Ratios.................................................................4
Price/Earning Ratio:.........................................................................................................4
PULSE FEELING ANALYSIS...........................................................................................5
Income Statemnt..................................................................................................................5
Markup/ Return/ Interest Earned:....................................................................................5
Vertical Analysis:............................................................................................................5
Change as compare to previous year:..............................................................................5
Markup/ Return/ Interest expensed:.................................................................................6
Vertical Analysis:........................................................................................................6
Change as compare to previous year:..........................................................................6
Net Markup/ Interest Income:..........................................................................................7
Provision against Non-Performing Loans:......................................................................7
Recovery of amounts written off in previous years:........................................................7
Provision against diminution in value of investment:.....................................................7
Bad debts written off directly:.........................................................................................7
Net markup/ Interest income after provisions:................................................................7
Non Markup/ Interest income:.........................................................................................8
Fee Commission and Brokerage Income:........................................................................8
Dividend Income:............................................................................................................8
Income from dealing in Foreign Currencies:...................................................................8
Gain on sale of securities:................................................................................................8
Vertical Analysis:............................................................................................................9
Change as compare to previous year:..............................................................................9
Unrealized gain/ (loss) on revaluation of investments classified as held for trading:.....9
Other Income:..................................................................................................................9
Total Non- Markup/ Interest Income:..............................................................................9
Non-Markup/ Interest Expensed:...................................................................................10
Administrative Expenses:..............................................................................................10
Vertical Analysis:......................................................................................................10
Change as compare to previous year:........................................................................10
 Other provisions/ assets write off:.................................................................................11
Other Charges:...............................................................................................................11
Profit before Taxation:...................................................................................................11
Taxation:........................................................................................................................11
Profit after Taxation:......................................................................................................11
Basic/Diluted earning per share:....................................................................................12
BALANCE SHEET...........................................................................................................12
ASSETS.........................................................................................................................12
Cash and balance with treasury banks...........................................................................12
Vertical Analysis:......................................................................................................12
Change as compare to previous year:........................................................................12
Balances with other banks:............................................................................................13
Vertical Analysis:......................................................................................................13
Change as compare to previous year:........................................................................13
Lending to Financial Institution:...................................................................................13
Vertical Analysis:......................................................................................................14
Change as compare to previous year:........................................................................14
Investments:...................................................................................................................14
Advances:......................................................................................................................14
Vertical Analysis:......................................................................................................14
Change as compare to previous year:........................................................................15
Operating Fixed Assets:.................................................................................................15
Vertical Analysis:......................................................................................................15
Change as compare to previous year:........................................................................15
Intangible Assets:...........................................................................................................15
Deferred Tax Assets:.....................................................................................................15
Vertical Analysis:......................................................................................................16
Change as compare to previous year:........................................................................16
LIABILITIES:...............................................................................................................17
Bills Payable:.................................................................................................................17
Borrowings:...................................................................................................................17
Vertical Analysis:......................................................................................................17
Change as compare to previous year:........................................................................17
Deposits & other A/C:...................................................................................................17
 Vertical Analysis:......................................................................................................17
Change as compare to previous year:........................................................................18
Subordinated Loans:......................................................................................................18
Other Liabilities:............................................................................................................18
Vertical Analysis:......................................................................................................18
Change as compare to previous year:........................................................................19
Share Capital:.................................................................................................................19
Reserves:........................................................................................................................19
Surplus on revaluation of assets:...................................................................................20
Vertical analysis Balance Sheet:................................................................................20
Introduction
Standard Chartered is the largest and fastest growing International Bank in Pakistan. The
Bank has been operating in Pakistan since 1863 when it first established its operations in
Karachi.

Standard Chartered now employees over 4,000 people and has a branch network of 162
branches across 41 cities in the country. Standard Chartered’s core businesses in Pakistan
are in Consumer Banking and Wholesale Banking.

Standard Chartered Pakistan is the first international bank to get an Islamic Banking
license and to open the first Islamic Banking branch in Pakistan and has been given credit
ratings of AAA/ A1+, the highest long-term rating assigned by PACRA to any private
sector commercial bank.

The Bank’s efforts have been recognized by independent and credible authorities; we
won "Best Foreign Commercial Bank in Pakistan" award by Finance Asia; "Best
International Trade Bank in Pakistan 2009" by Trade Finance Magazine, a publication of
Euromoney; "Best Foreign Exchange Provider" Award from the Global Finance
Magazine for 2010; Triple A awards for the 'Best Debt House in Pakistan' award by The
Asset; "Pakistan Deal of the Year – 2009" award by the Islamic Finance News; 'Awards
for Excellence', London 2009, by the Global Custodian; Consumer’s Choice Award for
being the "Best Credit Card Provider in Pakistan" by the Consumer Association of
Pakistan.
RATIO ANALYSIS
In the Banking Sector, there are basically following ratios because of nature of Business
being different from that of a manufacturing and trading concerns.

Average rate of lending:

=Interest Income/(Total Lendings+Advances)*100
Data 2009 =16,516,610/(20,568,064+129,460,154)*100
=11.65%
Year 2009 2008 2007
11.65% 12.49% 12.84%
A slightly down-ward trend is there in Average rate of Lending from 2007 to 2009. It
depicts that bank is unable to maintain its rate of lending and it is continuously
decreasing.

Average rate of borrowings, deposits:

=Interest Expense/(Total Borrowings+Deposits)*100
Data 2009 =10725651/(15,847,638+206,915,825)*100
=4.81%

Year 2009 2008 2007

4.81% 3.76% 3.56%

An increasing trend is there and it looks like that in order to attract the deposits, Bank had
to increase its rate of Borrowings that reduce the spread of the bank as Average rate of
lending of the Bank is decreasing.

Admin cost/ deposits:

= Admin cost/deposits
Data 2009 =(12244/206958)*100
=5.92%
Year 2009 2008 2007
5.92% 7.12% 6.82%

Admin cost/ Deposit ratio should not be more than 3%. But in the case of this Bank this
ratio is above the standard in all three years and but it is also evitable that the bank has
decreased its ratio by a good amount which was increasing in 2008 as compare to 2007.
Spread:
=Average rate of lending-Cost of Funds
Data 2009 =11.65-10.58%

Year 2009 2008 2007

1.07% 1.61% 2.46%

The spread of the bank is shows a decreasing trend. There is large decrease in it in 2008
as compare to 2009

Expense/ income:
=Net markup income/income
Data 2009 =(16284/23167)*100
=70%
Year 2009 2008 2007
70% 71% 72.48%

This ratio shows how much bank is earning from its core operations as compared to its
total earnings. The result is going down which is not a good sign.

Return on assets:
=Income after Tax/Average total Assets
Data 2009 =(669/262,673.50)*100
=0.25%
Year 2009 2008 2007
0.25% 0.27% 1.23%

ROA of the Bank is not up to the standard i.e., more than 1 time or 100%. So it is need of
hour that bank should take appropriate steps to make it at least it was in 2007.

Return on equity:
=Income after Tax/Average Toal Equity
Data 2009 =(669/19,156.50)*100
=3.49%
Year 2009 2008 2007
3.49% 3.75% 17.79%

Return on Equity is decreasing year by year which is not a good sign for the bank.
Infection ratio:
Infection ratio =(Classified Advances/Gross Advances)*100
Data 2009 =(21,388,480/141,230,362)*100
= 15.14%
Year 2009 2008 2007
15.14% 12.01% 8.00%

Infection Ratio of the Bank is showing an increasing trend which is not a good sign for
the bank. Another alarming thing is this that it has passed beyond the standard of 5%.
This increase shows the recovery process of the bank is not so good and volume of
classified loan is increasing each year.

Advance/ deposits:
=Advances/Deposits
Data 2009 =(124,447/206958)*100
= 60.13%
Year 2009 2008 2007
60.13% 71.96% 67.47%

Bank is slightly on shorter side in matter of advancing loan because its Advance/Deposit
ratio is not up to the mark but it may be because of different reasons & may be because of
bank policy or economic conditions of the country

Other Ratios not forming Basic Banking Ratios

Price/Earning Ratio:
=Price pr share/Earning per share
Data 2009 =(7.6/0.19)*100
=4000%

Data 2008 =(7.2/0.16)*100

=4500%
P/E ratio has declined over the period of two years.
PULSE FEELING ANALYSIS
Analysing each component separately to see the every pulse of the entity

Income Statemnt
Markup/ Return/ Interest Earned:
Year 2009 2008 2007
% Change 14.36% 3.45% 54.69%

The markup/return/interest earned is the amount bank earned by lending out money to
others which is a primary function of the bank. The interest earned directly connected
with the lending amount and rate of the bank the increase or decrease in both or anyone
has a direct effect over interest earned amount. In 2007 the increase in mark up earned is
mainly due to about 70% increase in mark up earned on loans and advances to customers.
In 2009 the amount shows an increase as compare to previous year due to increase in the
remunerative assets and advances to customers along with investments specially held for
trading.

Vertical Analysis:
Markup/ Return/ Interest Earned 2009 2008 2007
On loan & advance to
i) Customers 70.12 76.10 78.29
ii) Financial Institutions 0.53 1.53 2.41
On investments
Held for trading 0.13 - -
Available for sale 26.73 15.04 15.09
On deposits with Financial institutions - 0.28 0.80
On securities purchase under resale agreement 2.49 6.50 3.04
On call money lending 0.55 0.37
TOTAL 100 100 100

Change as compare to previous year:

Markup/ Return/ Interest Earned 2009 2008 2007
On loan & advance to
i) Customers 5.36 0.56 71.61
ii) Financial Institutions (60.61) (34.25) (23.75)
On investments
Held for trading 29088.24 100 (100)
Available for sale 103.43 3.06 81.76
On deposits with Financial institutions (99.95) (64.64) (4.23)
 On securities purchase under resale agreement (56.17) 121.49 (18.26)
On call money lending (99.75) 55.42 -

The most significant amount is the interest earned on advances to customers this
amount showed an increase as compare to previous years but it is comparatively low than
previous years, which is indicating that either bank losses its customer or it is offering
more competitive rates.

Markup/ Return/ Interest expensed:

Year 2009 2008 2007

% Change 50.52% 8.69% 49.91%

Markup/Return/ Interest Expensed is the expense of bank on taking deposits. This

amount shows an increase also which is more than the increase of interest earned but it is
due to lower base amount. It also increases in 2007 due to increase in mark up expensed
on deposits and the increase in it was less in 2008 while in 2009 it increased by a large
amount.
Vertical Analysis:
Markup/ Return/ Interest expensed 2009 2008 2007
On deposits 88.22 83.50 73.07
On securities sold under repurchase agreement 4.54 3.47 13.65
Call borrowings 0.24 4.90 4.28
Borrowings from State Bank of Pakistan under export re 4.83 3.66 4.69
finance (ERF) scheme
Term finance certificates (sub ordinated loans) 2.17 4.47 4.32
Total 100 100 100

The most significant is the expensed on deposits which is indicating that bank has enough
deposits and its dependence on other sources of fund is low which is a good sign for bank
as far as the weighting in total in the 2007 is showing that the bank expensed less in 2007
as compare to recent years because of increase in deposits or might be because of
increase in interest rates.
Change as compare to previous year:
Markup/ Return/ Interest expensed 2009 2008 2007
On deposits 59.03 24.23 64.34
On securities sold under repurchase agreement 96.89 (72.45) 11.18
Call borrowings 92.79 24.35 (36.68)
Borrowings from State Bank of Pakistan under export 98.77 (15.15) 156.03
re finance (ERF) scheme
Term Finance Certificates 26.98 12.41 211.36
The increase in deposits in 2009 is showing that the bank has paid more on deposits this
year while the amounts of expensed on securities sold under repurchase agreement, call
borrowings and borrowings from State Bank of Pakistan under export refinance (ERF)
scheme has also increased about equivalent to their value in 2008.

Net Markup/ Interest Income:

Year 2009 2008 2007
% Change 0.82% 1.40% 56.66%

The amount of net markup/ interest income showing an increase as compare to previous
years but this increase is low as compare to previous years which is indicating the same
thing that bank’s pace of growth is moving down.

Provision against Non-Performing Loans:

Year 2009 2008 2007
% Change (28.98%) 68.28% 322.27%

The amount of provisioning is very important to analyze as it shows the efficiency and
quality of bank’s lending to customer. The figures in 2007 are very high but the main
reason for it, is the SBP regulation. In 2007 SBP withdraw the benefit of FSV which
consequently forced banks to charge high provision amount. In 2008 bank reverse the
regulation and again allowed banks to charge provision so there is a decrease in amount
in the amount. In 2009 the benefit is available but the provisioning of bank increases
which is not a good sign for bank.

Recovery of amounts written off in previous years:

Year 2009 2008 2007
% Change (23.35%) 542.39% 54.62%

Provision against diminution in value of investment:

Year 2009 2008 2007
% Change 2120.41% 597.89% 953.33%

This amount related to the bank’s investments and it shows that bank’s investment is
going good as there is a decrease in amount significantly as compare to previous year.

Bad debts written off directly:

Year 2009 2008 2007
% Change 100% ---- (100%)

In 2009 the bank has written off its bad debts while in previous years there was no such
entry made by bank.
Net markup/ Interest income after provisions:
Year 2009 2008 2007
% Change (3.34%) (29.95%) 15.57%
This figures show the amount after subtracting provision amount from markup income. In
2007 net markup income after provisions shown growth in it while in 2009 the amount
decreased as compare to previous years which is indicating that bank is not moving good
on its primary functions.

Non Markup/ Interest income:

Fee Commission and Brokerage Income:

Year 2009 2008 2007
% Change 3.90% (4.66%) 57.87%

This amount is earned by bank by performing its secondary function or agency functions.
The amount is also showing a decrease in 2009 as compare to previous year which is
showing that this year bank’s earnings hit hard.

Dividend Income:
Year 2009 2008 2007
% Change (44.39%) (48.15%) (64.33%)

Bank made investment in the stocks of different company and earn dividend on them but
in 2009 the bank face again a decrease in this earning also. It is indicating two thing
whether the companies in which bank has made investments are not going good or bank
sale the stocks to earn profit and sacrifices the dividend income.

Income from dealing in Foreign Currencies:

Year 2009 2008 2007
% Change (4.85%) 88.35% 59.80%

Bank is also dealing in foreign currencies and the figures show an increase as compare to
previous year but the percentage is low then last years. But in 2009 there is decrease in it.

Gain on sale of securities:

Year 2009 2008 2007
% Change 234.49% (496.55%) (37.25%)
Now by analyzing this figure we can arrive at a better conclusion about dividend income.
The bank earning by selling investments increased with a significant figures which is
indicating that bank take the benefit of prevailing market situation and sale out its
investments.

Vertical Analysis:
Gain on sale of securities 2009 2008 2007
Federal government securities
Market Treasury bills 93.54 2.84 (2.54)
Pakistan Investment Bonds 7.10 (99.94) 12.51
Equity securities (0.64) (2.90) 90.03
Total 100 (100) 100

Change as compare to previous year:

Gain on sale of investments – net 2009 2008 2007
Federal government securities
Market Treasury bills 4722.22 543.1 (102.38)
Pakistan Investment Bonds 109.28 (3236.36) (31.35)
Equity Securities (70.35) (112.82) 163.00

Unrealized gain/ (loss) on revaluation of investments classified

as held for trading:
Year 2009 2008 2007
% Change 40958% 113.7% 100.15%

The amount is showing abrupt figures but the weight of amount in total is very nominal
so it has no impact over banks position.

Other Income:
Year 2009 2008 2007
% Change (70.46%) 14.88% 247.21%

Miscellaneous type of income group under this head and the amount is showing a
decrease in 2009 because of decrease in income on interest rate derivatives and others.

Total Non- Markup/ Interest Income:

Year 2009 2008 2007
% Change 4.11% 8.16% 65.80%

The increase in amount indicating that bank is earning more from its agency and
secondary functions. But the gradual increase in it is reducing as bank is moving on.
Non-Markup/ Interest Expensed:
Administrative Expenses:
Year 2009 2008 2007
% Change (1.47%) 2.85% 138.21%

This amount indicates the expense of bank to continue its operations. In 2008 the amount
shows an increase which is comparatively low than previous year and in 2009 it is
showing a decrease. This is the sign that bank is trying to control its extra expenses to
continue its operations.
Vertical Analysis:
Administrative Expenses: 2009 2008 2007
Salaries, Allowances etc. 32.00 30.63 30.20
(Income)/Charge for defined benefit plan (0.02) 2.33 0.23
Contribution to defined contribution plan 1.07 1.92 1.39
Rent, taxes, insurance, electricity etc. 7.10 6.88 5.75
Legal & professional charges 0.97 0.72 0.64
Communications 4.11 4.90 4.37
Repairs & maintenance 5.11 6.32 6.07
Rentals against hire/operating lease arrangements 0.29 0.23 0.19
Stationary & printing 1.39 1.10 1.91
Advertisement & Publicity 1.76 1.49 2.18
Donations 0.18 0.20 0.05
Finance charges on finance lease --- --- ---
Auditors remuneration 0.14 0.12 0.07
Depreciation 5.27 5.66 5.05
Amortization 4.16 5.59 7.46
Travelling, conveyance and vehicles running 0.75 1.16 1.74
Re imbursement of executive and general administrative 28.37 27.02 26.97
expenses
Others 7.35 3.73 5.73
Total 100 100 100

The significant weight is hold by the amount of salaries, allowances etc. the amount of
salary indicating the expense of bank over its employees. The other expenses have a
variety of heads.
Change as compare to previous year:
Administrative Expenses: 2009 2008 2007
 Salaries, Allowances etc. 2.94 4.30 64.56
(Income)/Charge for defined benefit plan (108.92) 3.57 81.77
Contribution to defined contribution plan (45.19) 42.26 73.20
Rent, taxes, insurance electricity etc. 1.64 23.17 46.01
Legal & professional charges 31.11 18.18 (16.30)
Communication (17.41) 15.53 137.84
Repairs & maintenance (31.13) 24.15 183.01
Rentals against hire/operating lease arrangements (15.47) 30.43 100.87
Stationary & printing (14.57) (13.85) (16.30)
Advertisement & Publicity 16.76 (29.81) 14.72
Donations (13.99) 372.27 40.09
Finance charges on finance lease - - (100)
Auditors remuneration 9.92 64.67 (12.32)
Depreciation (8.38) 15.41 142.06
Amortization (26.91) (22.86) 162.68
Travelling, conveyance and vehicles running (34.03) (31.43) 20.69
Re imbursement of executive and general 1.70 4.94 100
administrative expenses
Others 94.38 (32.95) 78.35

Other provisions/ assets write off:

Year 2009 2008 2007
% Change (170.00%) 100% (100%)

Other Charges:
Year 2009 2008 2007
% Change 16.93% 100% 15295.69%
Other charges include the amounts paid miscellaneously by bank for different purposes
the amount is small so need not to consider its impact over bank’s position.

Profit before Taxation:

Year 2009 2008 2007
% Change 15.93% (73.31%) (44.42%)

This is the amount of profit before the payment of tax and bank shows an improvement in
it 2009 as it was continuously decreasing in previous years. This shows an overall
improvement in the earning skills of the bank and decreasing and controlling of expanses.

Taxation:
Year 2009 2008 2007
% Change (43.61%) (68.72%) (19.62%)
The amount of taxation is showing a decrease but it is not by bank policy as it is directly
connected with the policies of government the bank contribution in this amount is limited
up to its revenue amount on which tax has charged.

Profit after Taxation:

Year 2009 2008 2007
% Change 6.36% (213.70%) 51.53%

After deducting the tax amount we get this amount and the amount shows similar
situation of decline as compare to previous year with the lower rate. It increases in 2009
due to increase in after tax profits and lesser tax liability.

Basic/Diluted earning per share:

Year 2009 2008 2007
% Change 6.25% (77.46%) (76.80%)

Bank earning per share has decreased also as the amount of profit decreases. By taking an
overall view of bank’s profit and loss account the position of bank’s current operations is
not looking good and it is looking that bank is suffering.

BALANCE SHEET
ASSETS
Cash and balance with treasury banks
Year 2009 2008 2007
% Change (5.36%) (13.52%) 15.34%

In 2009, it decreases due to decrease in balance of local currency in hand and local
currency current account with National Bank of Pakistan. In 2007 and 2008 the increase
and decrease in it was due to local currency current account balance with State Bank of
Pakistan.
Vertical Analysis:
Cash and balance with treasury banks 2009 2008 2007
In hand
Local Currency 10.05 14.85 16.50
Foreign Currency 3.66 4.93 6.42
With SBP
Local Currency current 45.68 36.48 58.58
Local currency current account-islamic banking 2.43 3.45 4.62
Foreign Currency deposit a/c
Cash reserve account (5% of FE 25) 8.67 7.22 5.18
Special cash reserve account (15% of FE 25) 25.91 21.49 5.99
 Local US Dollar collection 0.15 0.26 0.47
With NBP in Local Currency a/c 3.44 11.31 2.24
Total 100 100 100

Change as compare to previous year:

Cash and balance with treasury banks 2009 2008 2007
In hand
Local Currency (35.96) (22.17) 45.65
Foreign Currency (29.73) (33.69) 63.03
With SBP
Local Currency current 18.49 (46.13) 30.77
Local Currency current account-islamic banking (33.25) (35.34) 189.05
Foreign Currency deposit a/c
Cash reserve account (5% of FE 25) 13.71 20.40 (6.58)
Special cash reserve account (15% of FE 25) 14.12 210.29 (63.90)
Local US Dollar collection (47.03) (51.61) 635.25
With NBP in Local Currency a/c (71.20) 337.01 (99.96)

Balances with other banks:

Year 2009 2008 2007
% Change 77.48% (22.48)% (54.07)%

Balance with other banks is experiencing decline in 2007 and 2008 due to decrease in
current account and deposit account balance outside Pakistan. In 2009, it shows an
increase init due to increase in current account balance outside Pakistan.

Vertical Analysis:
Balances with other banks 2009 2008 2007
In Pakistan
On Current a/c 1.21 20.30 3.38
Outside Pakistan
On Current a/c 98.79 79.70 96.62
Total 100 100 100

Change as compare to previous year:

Balances with other banks 2009 2008 2007
In Pakistan
On Current a/c (89.45) 357.14 (78.28)
Outside Pakistan
On Deposits - - (100)
 On Current a/c 120 (36.11) (45.93)

Lending to Financial Institution:

Year 2009 2008 2007
% Change (34.63%) 106.67% 293.13%

Showing a decreasing trend because of placements and repurchase agreement lending

(Reverse Repo) decreased in value in 2009 which was increase in 2008 from 2007’s
value.

Vertical Analysis:
Lending to Financial Institution 2009 2008 2007
Repurchase agreement lendings (Reverse Repo) 16.75 39.65 53.40
Placements 83.24 60.35 46.60

Change as compare to previous year:

Lending to Financial Institution 2009 2008 2007
Repurchase agreement lendings (Reverse Repo) 72.38 53.44 798.45
Placements (9.85) 167.67 258.70

Investments:
Year 2009 2008 2007
% Change 183.19% (27.29%) 17.52%

Investment is showing rapid growth in because of increase in investment in available for

sale securities while it was decreased in 2008 because of decrease in available for sale
and held for trading.

Advances:
Year 2009 2008 2007
% Change (0.92%) 5.07% (7.34%)

The decrease in advances is mainly because of increase in provision for non performing
advances.
Vertical Analysis:
Advances 2009 2008 2007
Loans, cash, credit, running finance
In Pakistan 108.19 106.31 106.90
Outside Pakistan - - -
 Bills discounted and purchased
Payable in Pakistan 1.86 1.40 0.48
Payable outside Pakistan 3.43 1.93 2.28
Advances-gross 113.49 109.65 109.66
Provision for non-performing advances (13.49) (9.65) (9.66)
Total 100 100 100

Change as compare to previous year:

Advances 2009 2008 2007
Loans, cash, credit, running finance
In Pakistan 0.83 4.50 (3.41)
Outside Pakistan - - (100)
Bills discounted and purchased
Payable in Pakistan 32.00 208.80 (75.67)
Payable outside Pakistan 75.89 (11.05) (7.11)
Advances-gross 2.55 5.06 (5.32)
Provision for non-performing advances (38.54) 4.90 22.20

Operating Fixed Assets:

Year 2009 2008 2007
% Change 80.01% 4.07% 10.83%

Overall there is increasing trend in operating fixed assets. In 2009, there is heavy increase
in operating fixed assets of banks because of increase in property and equipment
Vertical Analysis:
Operating Fixed Assets 2009 2008 2007
Capital work in progress 0.97 2.50 6.91
Property & equipment 99.03 97.50 93.09
Total 100 100 100

Change as compare to previous year:

Operating Fixed Assets 2009 2008 2007
Capital work in progress (29.90) (62.40) 21.70
Property & equipment 82.77 9.03 10.10

Intangible Assets:
Year 2009 2008 2007
% Change (1.85%) (2.48%) (2.87%)
There is an overall decreasing trend in intangible assets.

Deferred Tax Assets:

Year 2009 2008 2007
% Change 26.11% 3.06% 3.13%
The figures show an overall increasing trend in deferred tax assets.

Other Assets:
Year 2009 2008 2007
% Change 15.04% 13.22% 0.38%

Other assets are depicting an overall increasing trend due to gradual increase in
income /markup accrued in local currency.
Vertical Analysis:
Other Assets 2009 2008 2007
Interest/ markup accrued in;
Local Currency 25.73% 26.89% 20.74%
Foreign Currency 1.54% 1.00% 2.14%
Advances, deposits, advanced rent and other prepayments 3.43% 5.69% 12.73%
Receivable from defined benefit plans 0.08% 0.19% 0.52%
Receivable from defined contribution plans 0.50% - 0.38%
Advance taxation (payments less provisions) 11.10% 1.78% -
Branch adjustment account 1.36% 0.49% -
Unrealized gain on forward foreign exchange contracts 1.08% 5.40% 3.16%
Interest rate derivatives and currency option-positive fair 12.96% 32.29% 17.60%
value
Receivable from SBP/Government of Pakistan 0.87% 2.13% 7.90%
Receivable from associated undertakings 0.22% 0.29% -
Receivable from Standard Chartered Bank, Sri Lanka 0.38% 0.84% 4.70%
operations
Non-banking assets acquired in satisfaction of claims 0.48% 0.56% 0.63%
Tax compensation under section 102 of the Income Tax 0.72% 0.83% 0.95%
Ordinance
Bank Acceptances 38.12% 19.09% 27.28%
Unsettled trades 0.18% 0.54% -
others 2.15% 0.25% 1.90%
Less: Provisions held against other assets (0.93%) (0.56%) (0.63%)
Total 100% 100% 100%

Change as compare to previous year:

Other Assets 2009 2008 2007
Interest/ markup accrued in;
Local Currency 10.05% 46.85% 21.90
Foreign Currency 76.17% (46.70%) 516.95
Advances, deposits, advanced rent payment (30.53%) (33.73%) 92.70
Receivable from defined benefit plans (52.78%) (58.43%) (58.80)
Receivable from defined contribution plans 100% (100%) -
Advance taxation (payments less provisions) 618.42% 100% -
 Branch adjustment account 217.89% 100% -
Unrealized gain on forward foreign exchange contracts (76.86%) 93.48% 426.47
Interest rate derivatives and currency option-positive (53.83%) 107.76% (34.05)
fair value
Receivable from SBP/Government of Pakistan (53.17%) (69.47%) 363.10
Receivable from associated undertakings (12.73%) 100% -
Receivable from Standard Chartered Bank, Sri Lanka (48.15%) (100%) -
operations
Non-banking assets acquired in satisfaction of claims - 100% -
Tax compensation under section 102 of the Income - - -
Tax Ordinance
Bank Acceptances 129.70% (20.73%) (34.34)
Unsettled trades (61.54%) 100% -
Others (1.45%) (63.78%) (4.72)
Less: Provisions held against other assets (91.58%) - -

LIABILITIES:
Bills Payable:
Year 2009 2008 2007
% Change 12.76% (35.27%) 55.80%

Executed overall increasing trend due to increase in inland bills.

Borrowings:
Year 2009 2008 2007
% Change 81.08% 31.42% (69.99%)

Borrowing faced severe decrease in 2007 due to the crash of stock market and adverse
law and order situation. It is showing an increase in 2008 and 2009 due to increase in
borrowing from financial institution within Pakistan.
Vertical Analysis:
Borrowings: 2009 2008 2007
In Pakistan 99.77% 99.67% 60.55%
Outside Pakistan 0.23% 0.33% 39.45%

Change as compare to previous year:

Borrowings: 2009 2008 2007
In Pakistan 81.27% 116.35% (81.34)
Outside Pakistan 24.14% (98.89%) 355.50

Deposits & other A/C:

Year 2009 2008 2007
 % Change 18.56% (1.47%) 12.93%
Deposit and other accounts showed overall increasing trend due to increase in savings
account balance with bank.
Vertical Analysis:
Deposits & other A/C 2009 2008 2007
Customer
Fixed deposits 28.22% 29.35% 26.46%
Savings deposits 38.32% 35.50% 38.95%
Current a/c non-remunerative 32.60% 34.09% 33.95%
Margin accounts 0.36% 0.66% 0.53%
Others 0.12% 0.09% 0.01%
Financial institutions
Remunerative deposits - - -
Non Remunerative deposits 0.38% 0.31% 0.10%
Total 100% 100% 100%

Change as compare to previous year:

Deposits & other A/C 2009 2008 2007
Customer
Fixed deposits 14.00% 9.30% 0.36
Savings deposits 27.99% (10.20%) 25.13
Current a/c non-remunerative 13.39% (1.07%) 12.75
Margin accounts (34.83%) 23.35% 68.71
Others 52.87% 655.63% (16.00)
Financial institutions
Remunerative deposits - - (100)
Non Remunerative deposits 45.47% 190.86% (60.43)

Subordinated Loans:
Year 2009 2008 2007
% Change (10.94%) (10.56%) (9.29%)

Subordinated loans experienced decrease in there value because of redemption of TFC’c.

Other Liabilities:
Year 2009 2008 2007
% Change 10.58% 61.81% (1.61%)
Executed increasing trend due to increase in due to holding company and bank’s
acceptances.
Vertical Analysis:
Other Liabilities 2009 2008 2007
Markup/ Interest payable in local currency 8.80% 8.34% 7.61%
 Markup/ Interest payable in foreign currency 0.03% 0.18% 0.53%
Accrued expenses 4.42% 4.33% 7.75%
Provision for taxation - - 3.34%
Advance payments 0.24% 0.41% 6.95%
Sundry creditors 1.45% 1.67% 6.23%
Unrealized loss on forward foreign exchange contracts 0.90% 3.38% 2.37%
Unrealized loss on interest rate derivatives and currency 28.22% 37.68% 10.42%
options
Provision against cross currency swaps - 0.91% -
Payable to defined contribution plans - 0.03% 0.16%
Liabilities held for sale - - 3.23%
Due to Holding Company 29.44% 21.06% 18.98%
Unclaimed balances 0.05% 0.05% 0.11%
Provision against off Balance Sheet obligations 0.24% 0.24% 8.04%
Worker Welfare Fund (WWF) payable 0.36% 0.08% 0.96%
Short sell – Pakistan Investment Bonds 0.24% - -
Bank Acceptances 23.40% 11.27% 23.00%
Unsettled trades - 8.38% -
Others 2.21% 1.99% 0.32%
Total 100% 100% 100%

Change as compare to previous year:

Other Liabilities 2009 2008 2007
Markup/ Interest payable in local currency 16.66% 77.43% 47.40
Markup/ Interest payable in foreign currency (80.00%) (43.40%) 0.95
Accrued expenses 12.83% (9.67%) 21.94
Provision for taxation - (100%) (27.40)
Advance payments (37.03%) (89.66%) 481.74
Sundry creditors (4.21%) (35.11%) 11.25
Unrealized loss on forward foreign exchange contracts (70.42%) 131.24% 601.47
Unrealized loss on interest rate derivatives and (17.20%) 485.42% (51.97)
currency options
Provision against cross currency swaps (100%) 100% -
Payable to defined contribution plans (100%) 67.79% (80.20)
Liabilities held for sale - (100%) 100
Due to Holding Company 54.62% 80.00% 414.11
Unclaimed balances 3.34% 25.25% (23.28)
Provision against off Balance Sheet obligations 12.71% (82.59%) 164.38
Worker Welfare Fund (WWF) payable 420.00% (60.10%) -
Short sell – Pakistan Investment Bonds 100% 100% -
Bank Acceptances 129.70% (20.73%) 34.34
Unsettled trades (100%) 100% (100)
Others 23.30% 27.43% (79.84)
Share Capital:
Year 2009 2008 2007
% Change --- --- ---
The share capital of the bank has remained the same and bank has not raised its share
capital during previous years.

Reserves:
Year 2009 2008 2007
% Change 7.40% 9.62% 48.52%

The reserves of the bank are increasing because of statutory reserves.

Surplus on revaluation of assets:

Year 2009 2008 2007
% Change 346.01% 356.93% (16.52%)
Similar growth rate as compare to last year.
Vertical analysis Balance Sheet:
2009 2008 2007
ASSETS
Cash and balance with treasury banks 6.88% 8.59% 10.29%
Balances with other banks 0.72% 0.48% 0.64%
Lending to financial institutions 6.57% 11.89% 5.96%
Investments 26.78% 11.18% 15.92%
Advances 39.78% 47.47% 46.78%
Operating fixed assets 2.24% 1.47% 1.46%
Intangible Assets 8.64% 10.41% 1.05%
Deferred tax assets 1.33% 1.25% 1.25%
Other assets 7.07% 7.27% 6.65%
100.00 100.00 100.00

LIABILITIES
Bills Payable 1.83% 1.94% 3.12%
Borrowings 5.94% 3.92% 3.11%
Deposits and other a/c 78.06% 78.68% 83.38%
Sub-ordinated Loans 0.57% 0.77% 0.90%
Other liabilities 13.60% 14.69% 9.49%
100.00 100.00 100.00

REPRESENTED BY
Share Capital 81.09% 90.55% 89.90%
Reserves 4.08% 4.24% 3.83%
Unappropriated Profits 8.38% 8.14% 6.90%
Surplus on revaluation of assets- net of tax 6.45% (2.93%) (0.63%)
100.00 100.00 100.00