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OUR VISION
To be the most respected financial institution
based on trust, service and commitment
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CONTENTS

Corporate Information 03

Our Board of Directors 04

Our Management 08

Awards and Accolades 10

Financial Highlights 11

Chairman’s Review to the Shareholders 12

Directors’ Report to the Shareholders 14

Corporate Governance 26

Statement of Compliance with the Code of Corporate Governance 30

Independent Auditors’ Review Report to the Members on Statement of

Compliance with the Code of Corporate Governance 33

Statement of Internal Controls 34

Report of Shari’ah Board 35

Independent Auditors’ Report to the Members 37

Unconsolidated Statement of Financial Position 42

Unconsolidated Profit and Loss Account 43

Unconsolidated Statement of Comprehensive Income 44

Unconsolidated Statement of Changes in Equity 45

Unconsolidated Cash Flow Statement 47

Notes to the Unconsolidated Financial Statements 48

Pattern of Shareholdings 152

Consolidated Financial Statements 155

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283

Branch Network 284

Notice of Annual General Meeting 289

Proxy Form

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CORPORATE INFORMATION

BOARD OF DIRECTORS

CHAIRMAN
Mohamedali R. Habib

PRESIDENT & CHIEF EXECUTIVE OFFICER

Khurram Shahzad Khan

DIRECTORS
Ali Abbas Sikander
Hamza Habib
Mohomed Bashir
Mohsin A. Nathani
Muhammad H. Habib
Rashid Ahmed Jafer
Tahira Raza

BOARD COMMITTEES

AUDIT INFORMATION TECHNOLOGY

Mohsin A. Nathani Ali Abbas Sikander
Muhammad H. Habib Hamza Habib
Rashid Ahmed Jafer Khurram Shahzad Khan
Tahira Raza Mohamedali R. Habib

CREDIT RISK & COMPLIANCE

Hamza Habib Khurram Shahzad Khan
Khurram Shahzad Khan Mohsin A. Nathani
Mohamedali R. Habib Muhammad H. Habib
Mohsin A. Nathani Rashid Ahmed Jafer
Rashid Ahmed Jafer Tahira Raza

HUMAN RESOURCE & REMUNERATION

Mohamedali R. Habib
Mohomed Bashir
Mohsin A. Nathani
Tahira Raza

SHARIAH BOARD
Tan Sri Dr. Mohd. Daud Bakar - Chairman
Mufti Abdul Sattar Laghari - Member
Mufti Khawaja Noor ul Hassan - Resident Member

COMPANY SECRETARY SHARE REGISTRAR

Ather Ali Khan CDC Share Registrar Services Limited
CDC House, 99-B, Block-B,
REGISTERED OFFICE S.M.C.H.S., Main Shahra-e-Faisal,
Ground Floor, HABIBMETRO Head Office Karachi - 74400
I. I. Chundrigar Road,
Karachi - 74200, Pakistan
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OUR BOARD OF DIRECTORS

4
5
6
7
OUR MANAGEMENT

8
9
AWARDS AND ACCOLADES

10
Financial Highlights
(Rs. in Million)

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CHAIRMAN’S REVIEW

Dear Shareholders,

On behalf of the directors of Habib Metropolitan Bank, it gives me pleasure to present this report on overall performance of the Bank
and effectiveness of the role played by the Board of Directors in achieving objectives of the Bank, together with the financial statements
of the Bank for the year ended 31 December 2024. The operating financial results and appropriations on an unconsolidated basis,
as recommended by the Board of Directors, are summarized below:

Rupees in ‘000

Profit before credit loss allowances and tax 56,789,856

Credit loss allowances and write offs - net (4,129,875)
Profit before tax 52,659,981
Taxation (27,986,473)
Profit after tax 24,673,508
Un-appropriated profit brought forward 47,560,186
Impact of Adoption of IFRS-9 - net of tax 461,044
Transfer from surplus on revaluation of assets - net of tax 164,605
Gain on sale of equity investments - FVOCI - net of tax 445,658
Other comprehensive income - net of tax 118,513
Profit available for appropriation 73,423,514
Appropriations:
Transfer to Statutory Reserve (4,934,702)
Cash dividend (Rs. 5.50 per share) - 2023 (5,763,073)
Interim Cash dividend (Rs. 7.50 per share) - 2024 (7,858,737)
(18,556,512)
Un-appropriated profit carried forward 54,867,002

The Directors are pleased to propose a final cash dividend of Rs. 4.50 per share (45%) for the year under review. This is in addition to
the interim cash dividend of Rs. 7.50 per share (75%) already paid. As such, the total dividend for the year 2024 amounts to Rs. 12.0
per share (120%).

During the year under review, Pakistan economy witnessed recovery with key macroeconomic indicators moving in the right direction,
inflation and interest rates going down, current account balance achieved surplus in later part of the year, GDP rebounded to 2.5% in FY24.
While the economic indicators are promising, it is imperative to address structural challenges in key sectors operating in the country.

By the Grace of Allah, your Bank sustained the massive growth achieved last year. The total assets remained above Rs. 1.5 trillion, gross
advances increased to Rs. 503.8 billion at year-end with 14.9% growth. Investments and deposits closed at Rs. 810.9 billion and
Rs. 927.1 billion at year end respectively.

HabibMetro posted profit before tax of Rs. 52.7 billion for the year 2024. The performance translates into after tax earnings of Rs. 23.55
per share.

At year-end, HabibMetro's equity stands at Rs. 115.0 billion, with a capital adequacy level of 19.3% against the required 11.5%.

The primary role of the Board is to set the overall strategy for the Bank and enhance its long-term strategic value. The Board's focus
remains the overall governance structure to ensure effective oversight of the business, establishing a risk & control framework,

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determining Bank's level of risk tolerance through different policies and documents relating to operational, regulatory, compliance;
and financial performance of the Bank.

The composition of the Board has been established to ensure the availability of resources with relevant knowledge and experience
to manage the strategic objectives of the Bank. It comprises of three independent directors including one female director and five
non-executive directors.

The Board ensures that the business of the Bank is conducted in an efficient and effective manner within an established framework
of effective system of internal controls, robust risk management processes and compliance with regulatory requirements. In the
course of discharging its responsibilities, the Board acts in good faith, with due diligence and care, and in the best interests of the
Bank and its Shareholders.

An internal board performance evaluation process is in place to enhance the overall effectiveness of the Board, its sub-committees
and individual directors including the Chief Executive Officer. The evaluation is based on questionnaire on Board effectiveness which
includes areas covering various aspects like Board composition, its responsibilities & duties, strategic plan & performance review,
quality of information received & its timeliness, among others.

This review forms an integral part of the Directors' Report to the Shareholders.

I would like to take this opportunity to place on record my sincere gratitude to the Ministry of Finance, the State Bank of Pakistan
and the Securities and the Exchange Commission of Pakistan for their continued support and guidance. I also acknowledge our
valued customers for their trust and staff members for their devotion and diligence.

We bow our heads to Allah and pray for His blessings and continued guidance.

On behalf of the Board

MOHAMEDALI R. HABIB
Karachi: 19 February 2025 Chairman

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DIRECTORS’ REPORT TO THE SHAREHOLDERS

Dear Shareholders,

On behalf of the Board of Directors, we are pleased to present the audited annual financial statements of Habib Metropolitan Bank
Limited (HABIBMETRO) for the financial year ended 31 December, 2024.

ECONOMIC AND BANKING REVIEW

During the period under review, Pakistan's economic and financial trajectory has remained positively aligned with recovery, owing
to the resumption of funding from multilateral and bilateral partners alongside remedial policy measures including swift implementation
of austerity measures suggested by International Monetary Fund (IMF). The country witnessed a sharp decline in inflation throughout
the year, resulting in cooling off of interest rates from second half of the year, contributing to the consolidation of fiscal accounts.
However, economic growth is projected to be modest, primarily due to subdued agricultural sector performance.

The State Bank of Pakistan (SBP) has undertaken a significant monetary adjustment, reducing the policy rate by 900 basis points from
22.0 percent to 13.0 percent during 2024 and further reducing to 12.0 percent in January 2025, while inflation declined from 23.9
percent in FY24 to 6.6 percent in 7 months of current fiscal year, reaching to 2.4 percent year on year in January 2025 supported by
easing global prices, a stable exchange rate, and targeted government policies amidst favorable base effect.

Driven by strong workers' remittances and export earnings, the current account posted surplus in last three months of 2024 resulting
in USD 0.7 billion cumulative surplus in 7M-FY25 against USD 1.8 billion deficit in same period last year. Exports grew by 7.3 percent
to USD 23.9 billion during 7M-FY25 against 7M-FY24, while imports grew to USD 40.0 billion by 10.6 percent. This deficit is partly
offset by significant growth of 31.7 percent growth in workers' remittances to USD 20.8 billion in the 7M-FY25. For FY25, the SBP
expects the current account to remain in the range between a surplus and a deficit of 0.5 percent of GDP.

Augmenting by 8.8 percent on a year-on-year basis, the banking sector's deposit base amounted to Rs. 30.3 trillion at the end of
December 2024. Advances grew by 29.6 percent year-on-year and stood at Rs. 16.0 trillion. Investments during the period also
increased by 15.2 percent year-on-year to be recorded at Rs. 29.1 trillion.

The economic recovery achieved in FY24, with GDP growth rate of 2.5 percent against a contraction of 0.2 percent in FY23, has
sustained positive growth of 0.9 percent in the first quarter of FY25. However, growth has slowed compared to the 2.3 percent
recorded last year, reflecting moderation across key sectors, particularly in agriculture. The slower growth in agriculture is primarily
due to the high base effect in the crop sector of the last fiscal year and the decline in the crop production of cotton, rice, sugarcane,
and maize. However, the textile sector, wholesale, retail trade are gradually accelerating and impacting other related sectors positively.

These developments reflect the central bank's proactive approach in stabilizing the macroeconomic environment and fostering
conditions conducive to sustainable growth. The significant reduction in policy rates not only lowers borrowing costs for businesses
and consumers but also encourages investment and consumption activities. However, while the monetary indicators show promise,
it remains crucial to address underlying structural challenges particularly in the agricultural sector to bolster overall economic
performance and ensure that the benefits of these policy measures are fully realized across all segments of the economy.

BANK'S PERFORMANCE DURING THE YEAR

By the Grace of Allah, HABIBMETRO has posted the profit before tax of Rs. 52,660 million for year ended December 31, 2024, an
increase of 1.3 percent year-on-year. The earnings per share amounts to Rs. 23.55.

The Bank's net interest income amounted to Rs. 70,314 million while non-interest income substantially increased by 39.2 percent
and amounted to Rs. 21,287 million including Fee and commission income increased by 14.4 percent and amounted to Rs. 10,753
million compared to Rs. 9,396 million in 2023.

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Net advances increased by 15.1 percent to Rs. 474,301 million while investments decreased by 12.4 percent to Rs. 810,875 million. Deposits
stood at Rs. 927,133 million as of December 31, 2024 with current accounts mix of 43.7 percent, which increased by 6.7 percent over last year.

The Bank's Net Equity exhibited a growth of 23.3 percent and amounted to Rs. 115,032 million, with a capital adequacy level of 19.3
percent at the end of the year under review.

COMMITMENTS

No material changes in commitments affecting the financial position of the Bank have occurred between the end of financial year
of the Bank and the date of the report.

ESTABLISHMENT OF EXCHANGE COMPANY

HABIBMETRO Exchange Services Limited (HMES) is a wholly owned subsidiary of Habib Metropolitan Bank Limited, which was
incorporated on November 22, 2023 as a public limited company under the Companies Act 2017, licensed by the State Bank of
Pakistan on March 26, 2024 and has commenced its operations from May 27, 2024. The Company deals in Foreign Currency Services
under the Foreign Exchange Regulation Act, 1947 and Regulatory Framework for Exchange Companies issued by the State Bank of
Pakistan that includes different services & products. HMES aims to establish and continuously enhance its footprint enabling the
company to serve customers across Pakistan to cater to the legitimate foreign exchange needs of general public.

At present HMES has a network of 21 outlets across Pakistan.

CREDIT RATING

The Bank maintained its ratings of AA+ for long term and A1+ for short term assigned by Pakistan Credit Rating Agency Limited
(PACRA). These ratings denote a high credit quality with a low expectation of credit risk, and a strong capacity for timely payment
of financial commitments.

ENHANCED REACH TO OUR CUSTOMERS

HABIBMETRO enhanced its outreach by adding 26 new branches to its network in 2024 - in doing so, your Bank's outreach spread
to 14 new cities, with an increased footprint of 551 branches in 221 cities across Pakistan. The Bank's branch network includes 223
Islamic Banking Branches and 115 Islamic Banking Windows offering a broad range of services.

HABIBMETRO enjoys correspondent relationships with banks of repute in more than 100 countries, with large number of banks
having formal credit lines for the Bank. HABIBMETRO provides comprehensive banking services and products including specialized
trade finance products, and an array of products and services such as secured SMS and Internet & Mobile Banking services, globally
accepted Visa Debit Cards and a nationwide network of 600+ ATMs.

TRANSACTION BANKING

HABIBMETRO's Transaction Banking has successfully served over approx. 1,300 business customers in year 2024.

This year has been recognized as a landmark period for Transaction Banking at HABIBMETRO, highlighted by the introduction of
various innovative product offerings tailored to meet the evolving needs of our clients.

The bank has significantly revamped its corporate collections module, Net2Bank, providing state-of-the-art transaction banking
facilities designed to enhance client collection requirements and improve overall customer experiences. This module efficiently
addresses diverse daily collections for clients in both integrated and non-integrated modes.

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HABIBMETRO's dedication to excellence in transaction banking has been recognized with multiple prestigious awards in last two
consecutive years.

Also, in a recent survey by “Euromoney” with over 13,500 respondents, HABIBMETRO was recognized as one of the top providers for
Transaction Banking services in Pakistan, achieving notable rankings in several categories: it secured the #3 position overall, was rated
#2 for products, and also received a #2 ranking for client service, all within the national geographic scope.

DIGITAL CHANNELS

In 2024, HABIBMETRO reports a notable surge in digital banking adoption and engagement. A significant rise in the number of
customers actively utilizing digital banking platforms indicates the effective integration of these channels into their banking habits.
This expansion is a direct result of HABIBMETRO's focused efforts to upgrade its digital services, refine the user interface, and promote
the advantages of digital banking solutions.

The Insta Mobile App has undergone significant security enhancements. These improvements include device binding, biometric
enablement, cooling-off periods, and other measures to safeguard customers from potential compromises. These updates ensure
that customers can use the app with greater confidence and security.

Mobile App transactions have also hit a historic high, with 20.8 million transactions recorded. This represents a 60 percent growth
in the number of transactions, valued at Rs. 855 billion, which is a 50 percent increase compared to 2023. These figures highlight
the increasing popularity and usage of the mobile app for financial transactions.

A new foreign currency debit card has been launched to meet the growing needs of freelancers and exporters. This card is designed to
provide greater flexibility and convenience for those who work with international clients and need to manage multiple currencies efficiently.

Debit card POS usage has seen substantial growth, reaching Rs. 28.8 billion. This reflects a 22 percent increase from 2023, indicating
a growing reliance on debit cards for transactions.

In addition, several new self-service IVR services have been made available to customers. These services include mobile app blocking,
multi-lingual IVR, and ROBO call facilities. These enhancements aim to provide customers with more control and ease of use when
managing their accounts.

The ATM fleet has expanded to 613 machines, providing 24/7 service to customers. This expansion ensures that customers have greater
access to ATMs, making it more convenient to withdraw cash at any time. Furthermore, the cash withdrawal limit at ATMs has been increased
to Rs. 50,000 per transaction. This increase allows customers to access more funds when needed, providing greater financial flexibility.

Lastly, RAAST transactions now account for 89 percent of IBFTs, processing over Rs 592 billion in 2024. This demonstrates the growing
adoption of RAAST for interbank fund transfers, offering a reliable and efficient method for moving funds between accounts.

GREEN BANKING INITIATIVES

HABIBMETRO recognizes its responsibility towards environmental, social and governance practices. The Bank believes in playing its
part in the collective national and global efforts to mitigate the deteriorating environmental and social circumstances. Environmental,
Social and Governance (ESG) aspects are becoming a part of the strategic as well as operational considerations of the Bank. The Bank
also strives to align itself with the regulatory expectations and requirements in this regard, and has put in place a Green Banking
Policy & an Environmental and Social Risk Management Policy with focus in the following areas:

• Environmental & Social Risk Management

For improving financial stability through management and mitigation of environmental and social exposures of financing
portfolios, HABIBMETRO is in the process of integrating Environmental and Social Risk Management (ESRM) considerations into
the credit risk assessment process, for the purpose of enacting ESRM practices effectively.

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• Business Facilitation
For fostering development of 'green market' through actively tapping the emerging viable business opportunities of financing;
including clean energy and resource efficiency projects. The Bank is actively pursuing a green portfolio through soliciting clients
for Renewable Energy related financing through the SBP's Renewable Energy Refinance Scheme.

• Own Impact Reduction

The Bank has an increased focus on potential re-engineering of internal operations and procedures of the Bank. To reduce impact
on environment and society, the Bank is working on a scope emission reduction plan and has adopted various administrative
and engineering controls and measures to reduce its consumption of natural and other resources.

• Capacity Building
To increase the understanding and acceptability towards the initiative and eco-friendly practices, the Bank arranges learning
and training opportunities for its team through internal and external sources. This enables better understanding of the Green
Banking concepts and assists the team to perform better environmental due diligence in assessing credit proposals, adopting
own impact reduction measures and helps in business facilitation.

ENVIRONMENT, SOCIAL AND GOVERNANCE

Sustainability through implementation of ESG is philosophy of HABIBMETRO and the Group, which is naturally embedded in the
business functions of the Bank. HABIBMETRO shall Insha Allah continue to take focused initiatives to drive its sustainable journey.
The Bank is planning to adopt targeted measures to reduce emissions by adopting the following measures:

• Overall travel budget reduction by preferring meetings through online meeting platforms
• Installation of Solar Panels at the branches and offices, wherever possible, to shift to clean energy
• Take environmentally friendly measures for waste management and material consumption
• Create awareness through on reduction of energy and paper usage through communications
• Introduction and encouragement to use hybrid vehicles to staff
• Indoor and outdoor plantation
• To highlight other measures to reduction emissions

AWARDS AND ACCOLADES

HABIBMETRO is an award-winning Bank, having received the following awards and recognition recently:

• Top 25 Companies Award by Pakistan Stock Exchange Limited

• Best Mid-Size Bank (Runner-up) FY 2023 Award by CFA Society Pakistan
• Best Islamic Bank for Islamic Conversion Strategy in Pakistan 2024 by Islamic Retail Banking Awards
• Domestic Cash Management Bank of the Year – Pakistan 2024 by Asian Banking & Finance Awards
• Best Bank for Transaction Banking and Cash Management in 2024 by The Digital Banker
• Most Improved Debit Authorization in the Industry in 2024 by VISA
• DEI Structure and Implementation (Progressive), DEI Learning and Development (Progressive), Community, Government Relations
and Philanthropy (Best Practice) by Global Diversity, Equity & Inclusion Benchmarks Awards

HUMAN RESOURCES

HABIBMETRO has continued to drive growth and development within its workforce by prioritizing employee engagement, well-
being, learning and development, and diversity, equity, and inclusion (DEI). Through effective talent management, the organization
has fostered an innovative and efficient work environment.

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The Bank's branch expansion across the country has been bolstered by the strength of the Human Resources Division. A key
achievement in 2024 has been the milestone of reaching 1,500 female employees, resulting in a gender diversity ratio of over 23
percent, up from 19 percent last year. DEI initiatives included the recruitment of female GTO batch hires, female town halls, "Know
Your HR" sessions, sensitization activities, and employee engagement events aimed at fostering belonging and inclusion.

HABIBMETRO remains committed to recruiting persons with disabilities, offering internships, job opportunities, and continuous
learning to help them become independent professionals.

The Bank has also invested significantly in both in-house training and external learning programs tailored to specific roles. Consistently
responsive to staff needs, the Bank has addressed challenges and supported the ongoing development of employees, strengthening
relationships built on trust, respect, and dedication across the organization.

In addition, the Bank continued its financial support for staff, with the inflationary allowance, introduced in 2022, continuing into
its third year (2024). This initiative, along with the announcement of two additional ex-gratia payments, has provided much-needed
financial relief amidst a challenging economic environment.

HABIBMETRO remains an equal opportunity employer and is committed to being an Employer of Choice for both current and future
bankers in Pakistan.

GENDER PAY GAP STATEMENT

Gender Pay Gap reporting aims towards narrowing and eventually eliminating the pay differential between men and women. Gender
pay gap, at the financial year end, calculated at HABIBMETRO as under:

i) Mean Deviation 42.09 percent

ii) Median Deviation 34.59 percent

CORPORATE SOCIAL RESPONSIBILITY

HABIBMETRO has always upheld its commitment as a responsible corporate citizen, having made significant contributions to the
well-being of communities. Our efforts span various sectors, including education, healthcare, support for marginalized communities,
environmental sustainability, and inclusion of persons with disabilities (PWDs). These initiatives are strategically aligned with the
United Nations Sustainable Development Goals (SDGs) to drive meaningful impact.

During the year, the Bank partnered with renowned organizations to benefit the community, particularly the underprivileged segment.
The total contribution for the year amounted to PKR 520.0 million, with detailed information available in the notes to the accounts.

Throughout the year the Bank and its staff members have been involved in hundreds of social activities contributing towards health,
education, education development, vocational trainings, helping beach cleaning, tree plantations, etc.

The Bank also acknowledges its role in driving economic growth and contributing to the development of our nation. It continues
to be one of the leading corporate taxpayers with more than Rs. 33.7 billion paid as direct taxes to the Government of Pakistan during
the year 2024. Additionally, an amount of Rs. 45.0 billion indirect tax and withholding income tax deductions for the exchequer was
collected through the Bank's network.

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CUSTOMER GRIEVANCES HANDLING:

HABIBMETRO Bank is committed to provide an immaculate customer experience, which is considered as one of the most important
factors in driving growth. The Bank's consumer grievance handling mechanism serves as the first line of defense against the grievances
of the Bank's customers and therefore it is ensured that all the grievances received are handled fairly, transparently and efficiently
as per the regulatory framework.

In order to make the complaint lodging and handling process more visible and accessible, continuous customer awareness was
given through ATM screens, social media platforms, SMS notifications and In-App notifications regarding complaint lodgment process
and modes i.e.:

• Call at Contact Center (+92-21) 111-142-242

• Email at complaints@habibmetro.com
• Letter to Complaint Resolution Unit, Habib Metropolitan Bank Ltd, Al-Manzoor Building, 1st Floor, Dr. Ziauddin Ahmed Road,
Karachi-74200
• Mobile App / Website: www.habibmetro.com/customer-charter/complaint
• Branch: Complaint Form and Drop Box available at Branches / ATM vestibules

All complaints received are investigated and resolved / disposed at the earliest and the customer is kept up-to-date with respect
to the progress of the grievances through SMS, email and letters. Further, customers' feedback mechanism is also in-place for complaint
resolution and grievance handling for improvement in complaint handling process.

In the year 2024, total of 57,335 complaints were received at the Bank and the overall turnaround time of resolved complaints was
6.5 working days. The Bank also conducts detailed root cause analysis to identify gaps and improve processes, products and services
on a continuous basis to enhance customer satisfaction.

CORPORATE GOVERNANCE

BOARD MEETINGS

Details of the meetings of the Board of Directors and its Sub-Committees held during the year 2024 and the attendance by each
director/ committee member are given as under:

Human Resource Risk & Information &

Board of Audit Credit
Name of Directors & Remuneration Compliance Technology
Directors Committee Committee Committee Committee Committee
Mr. Mohamedali R. Habib 5/5 – 4/4 2/2 – 3/3
Mr. Ali Abbas Sikander 5/5 – – – – 3/3
Mr. Hamza Habib 5/5 – 4/4 – – 2/3
Mr. Mohomed Bashir 5/5 – – 1/2 – –
Mr. Muhammad H. Habib 5/5 4/4 1/2 – 4/4 –
Mr. Rashid Ahmed Jafer 5/5 4/4 4/4 – 4/4 –
Ms. Tahira Raza 5/5 4/4 – 2/2 4/4 –
Mr. Mohsin A. Nathani 5/5 4/4 4/4 2/2 4/4 –
Mr. Khurram Shahzad Khan 5/5 – 4/4 – 4/4 3/3
Meetings held 5 4 4 2 4 3

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BOARD REMUNERATION POLICY

The remuneration policy of non-executive directors, including independent directors, has been approved in line with the SBP's
guidelines dated 31 March 2020. Significant features of this policy are as under:

All Non-Executive directors shall be entitled for remuneration as determined by the Board, from time to time, for him/her attending
meetings of the Board, its sub-committees and shareholders including the holding of the office of Chairman of the Board or its
sub-committees.

The scale of remuneration under the policy shall be recommended by the Board for shareholders' approval on pre or post facto basis.

The level of remuneration so determined shall not, in any case, exceed the limits defined by the SBP.

All the Directors will be eligible for travelling, boarding and lodging expenses, including ancillary expenses, for the purpose of
attending meetings or engagements related to the Bank's business.

The information in respect of directors' remuneration is provided in note 40 of the financial statements.

COMPOSITIONS OF THE BOARD AND BOARD COMMITTEES

Current compositions of the Board and Board Committees are provided in the Statement of Compliance with the Listed Companies
(Code of Corporate Governance) Regulations, 2019.

PATTERN OF SHAREHOLDING

The pattern of shareholding as on 31 December 2024 is annexed to the report.

The Bank is a subsidiary of Habib Bank AG Zurich - Switzerland (the holding company with 51 percent shares in the Bank) which is
incorporated in Switzerland.

AUDITORS

The present auditors M/s. KPMG Taseer Hadi and Co., Chartered Accountants, retired and being eligible offered themselves for
reappointment.

As required under the Code of Corporate Governance, upon the recommendation of the Audit Committee, the Board has recommended
the appointment and remuneration of KPMG Taseer Hadi and Co., Chartered Accountants as auditors of the Bank for the year ending
31 December 2025.

CORPORATE AND FINANCIAL REPORTING FRAMEWORK

1. The financial statements prepared by the Bank, present fairly its state of affairs, the result of its operations, cash flows and changes
in equity.
2. Proper books of accounts have been maintained by the Bank.
3. Appropriate accounting policies and estimates have been consistently applied in preparation of financial statements.
4. International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and
departure therefrom, if any, has been adequately disclosed.
5. The system of internal control is sound in design and has been effectively implemented and monitored.

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6. There are no significant doubts upon the Bank's ability to continue as a going concern.
7. There has been no departure from the best practices of the code of corporate governance, as detailed in the Listed Companies
(Code of Corporate Governance) Regulations, 2019.
8. The key operating and financial data of last six years of the Bank is placed below:
Rs. in millions
2024 2023 2022 2021 2020 2019
Shareholders' Equity 115,032 93,275 74,507 62,975 57,648 44,238
Paid-up capital 10,478 10,478 10,478 10,478 10,478 10,478
Total assets 1,500,134 1,556,417 1,397,444 1,224,416 1,017,572 859,771
Deposits 927,133 1,012,303 880,697 772,286 680,956 611,869
Advances 474,301 412,049 433,503 398,382 312,167 263,948
Investments 810,875 925,412 723,579 667,996 584,532 448,910
Profit pre-tax 52,660 51,995 27,617 21,541 20,037 11,238
Profit post-tax 24,674 24,384 14,261 13,459 12,008 6,583
Earnings per share (Rs) 23.55 23.27 13.61 12.84 11.46 6.28
Cash dividend ( percent) - final 45 55 32.5 30 25 25
- interim 75 50 20 20 20 –
No. of staff 7,245 7,193 6,915 6,410 5,603 5,192
No. of branches/sub branches 551 525 500 459 406 392

Value of investments of Provident Fund and Gratuity Scheme are as under:

• Provident Fund Rs. 6,851 million as at 31 December 2024
• Gratuity Fund Rs. 2,662 million as at 31 December 2024

RISK MANAGEMENT

STATEMENT ON RISK MANAGEMENT FRAMEWORK

HABIBMETRO has a robust and rigorous risk management framework catering to its complexity, size, and target market. Risk
Management considerations are embedded into HABIBMETRO's philosophy, strategy, organizational practices, and structure. The
Bank has devised a cohesive risk management structure for credit, operations, information, continuity, liquidity and market risk, with
an integrated approach and strengthened internal controls.

The framework ensures comprehensive management of risk across all areas of the Bank. It has a role at all levels and tiers of the Bank
with risk management considerations at the strategic, tactical as well as the operational levels. It is equipped with the capacity and
flexibility to respond to evolving market, regulatory as well as internal risk requirements.

The Bank's entire branch network is on-line, and its state-of-the-art processing system is secure and has adequate capacity. Segregation
of duties as a control is built into the Bank's system and organization. The Internal Audit Division conducts independent, risk-based
reviews and verification of the Bank's branches and major functions throughout the year for evaluation of the control system.
Comprehensive internal reports and an effective Management Information System has been developed as an additional tool for the
management of risk control. The Risk Management Division is staffed with seasoned and experienced professionals, who have the
capacity and knowledge to cover all aspects of risks faced by the Bank.

The Bank's Board of Directors along with the Board Risk and Compliance Committee, Central Management Committee and Operational
Risk and Compliance Committee oversee the Bank's Strategy, efforts and processes related to risk management.

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CREDIT RISK

HABIBMETRO observes a strategy to control credit risk through product, geography, industry and customer diversification. The Bank
extends trade and working capital financing, keeping the major portion of its exposure on a short-term and self-liquidating basis. A
major portion of the Bank's credit portfolio is priced on a floating rate basis using KIBOR as a reference, which minimizes interest rate
risk. The risk inherent in extending credit is further mitigated by rigorous and robust credit approval procedures, which have been
structured to ensure proper evaluation, adequacy of security, and monitoring of exposures on an ongoing basis. All these risk-
mitigation measures are further facilitated by centralized trade processing and credit administration.

HABIBMETRO has implemented the IFRS-9 standards. IFRS 9 replaces the existing guidelines of the IAS 39 Financial Instruments:
Recognition and Measurement. This includes revised standards on the classification and measurement of financial instruments, a
new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements.

MARKET / LIQUIDITY RISK

The role of specialized Market & Liquidity Risk Unit is to systematically identify, assess, monitor, and report all related financial risk
exposures and limits in the form of interest rate, equity, currency or foreign exchange. The monitoring of all these risks is ensured in
line with Board approved Market and Liquidity Risk Management Policy. The Asset and Liability Management Committee periodically
reviews the economic & business environment and recommends levels of exposure along with limits for FX, Money Market & Equity.
The strategy is to balance risk, liquidity, and profitability. Furthermore, the Board approved investment policy focuses on, amongst
other aspects, asset allocation and operating guidelines.

STRESS TESTING

The Bank proactively uses stress testing techniques to assess risk exposures across the institution and to estimate the changes in the
value of the portfolio, when exposed to various risk factors. Risk factors used in stress testing models are Interest Rate, Credit, Equity
Price, Exchange Rate and Liquidity. The Bank's stress testing methodology ensures adherence to the SBP guidelines.

Capital Management
The Bank has maintained its Capital Adequacy Ratio (CAR) above the regulatory thresholds under the prescribed Basel regulations
and instructions issued by the regulator from time to time. It also has in place a Board approved Internal Capital Adequacy Assessment
Process and Risk Appetite Statement. The Internal Capital Adequacy Assessment Process (ICAAP) Framework is well defined and is
reviewed/updated regularly.

OPERATIONAL RISK

Operational risk is present in all aspects of bank activities and can expose the Bank to material financial and/or reputational losses.
Identification of threats prior to materialization of the risk and strengthening of controls for mitigation, have always been the Bank's
priority. The Bank has a dedicated Operational Risk Management (ORM) Unit that designs and implements the Operational Risk
framework across the organization. The ORM unit engages and regularly collaborates with the Bank's business / support units to
review and determine the inherent operational risks, applicable controls and mitigations and an assessment of residual risk. This leads
to improved quality of control infrastructure, strengthened processes and management information.

The Bank is committed to enhance Operational Risk coverage and integrating it with other risk classifications (Market, Credit Risk,
Compliance and legal risks) under a comprehensive approach to manage the dynamic environment and evolving risk landscape.
The Bank's operational risk management infrastructure remains strengthened by the oversight of the Operational Risk and Control
Committee (ORCC) which ensures the effective and efficient management of the Bank's significant operational risks.

FRAUD RISK

The Bank expends a dedicated effort towards reduction of fraud incidents and misconduct. A robust policy is in place to strengthen
the process of prevention, detection, investigation and reporting. The Bank has a dedicated Fraud Risk Management Unit which ensures
the effective management of the Bank's fraud risk with the support and oversight of the Board Risk & Compliance Committee (BR&CC).

22
With increased uptake of the Bank's alternate delivery banking channels, the FRM Unit works on a 24/7 basis to monitor digital
banking transactions, identifying trends and activities inconsistent with normal transactional behavior or with the propensity of fraud
risk. The Bank endeavors to safeguard its customers from fraudulent Activities by adopting best practices and collaborating with
industry partners.

BUSINESS CONTINUITY RISK

The Bank constantly works on improving its operational resilience through an effective Business Continuity Framework. The framework
consists of a policy and comprehensive plans with detailed roles, responsibilities, actions plans and recovery strategies, drawn from
a rigorous risk and impact analysis aims to respond to disastrous situations. It complies with the regulatory framework and best
industry practices, subject to regular reviews and audits. From an execution perspective, a Crisis Management Team consisting of
the Senior Management monitors situations and takes the necessary timely decisions in the event of any crisis situations.

As a part of a contingency arrangement, the Bank maintains multiple BCP Sites along with facilities for staff to work from home, if
required. Staff readiness to respond in such situations is ensured through training, awareness and testing efforts. The entire effort is
based on the purpose of building a resilient culture within an organization, whereby continuity of operations and continued provision
of service is always prioritized.

INFORMATION SECURITY RISK

The Information Security Department (ISD) is a part of the Risk Management Division of the Bank and works as a second line of
defense to protect the Bank's information and information system. With the increasing use of technology in the customer service
delivery, the objective of Information Security Department is to minimize the information security risks by ensuring confidentiality
and availability of customer's financial and personal information. ISD performs activities such as risk assessments, reviews, analysis,
reporting and monitoring of risks to achieve the Bank's goal of managing Information and Technology risk within its risk appetite.
The department also works to increase the level of understanding and awareness of the information security risks and their mitigations.

COMPLIANCE

Your Bank continued to strengthen compliance oversight across its network during the year that included enhancing stringent Know
Your Customer (KYC) & Anti Money Laundering (AML) / Combating Financing of Terrorism (CFT) / Combatting Proliferation Financing
(CPF) controls and regulatory compliance awareness. The Compliance function provides support and counsel to management and
staff on compliance and regulatory issues. All new policies and procedures, initiatives, products, services, business processes etc. are
reviewed from a Compliance, AML / CFT / CPF perspective along with maintaining relationship with regulatory authorities. An
automated Compliance Risk Management (CRM) system is in place wherein a regulatory library is maintained that includes circulars
issued by the SBP and other relevant regulatory authorities. Furthermore, facilitation and liaison with the SBP and its on-site Inspection
teams is a key role played by this unit to ensure smooth conduct of the SBP inspection. Inquiries from Law Enforcement Agencies
(LEAs) are also facilitated through Compliance Function.

With the highly challenging and demanding global AML/CFT/CPF environment, Bank's Financial Crimes & Compliance function is
fully committed towards implementation of highest standards of compliance within the Bank and ensures management and
employees adhere to these standards. The Bank also exercises oversight of its subsidiaries from an AML/CFT/CPF perspective

The Bank's Transaction Monitoring System (TMS) facilitates in monitoring activities that may be related to Money Laundering (ML) /
Terrorism Financing (TF) through the Bank's channels, products and services. The TMS monitors out-of-pattern transactions and
reviews different transactional activity through multiple AML / CFT scenarios embedded in the core banking system. Bank has acquired
renowned external third-party TMS software backed by Oracle, known as 'Financial Crime and Compliance Management' and is under
implementation phase. Furthermore, the Bank has a robust Customer Due Diligence (CDD) process that allows the Bank to document/update
each profile of customer and conduct comprehensive CDD as per regulatory requirements. Bank regularly reports Suspicious Transaction
Reports (STRs) and Currency Transaction Reports (CTRs) to the Financial Monitoring Unit (FMU) through goAML portal.

23
Being a trade-oriented bank, cross border transactions are screened and pre-approved by Compliance to ensure that transactions,
which includes sanctioned elements, are not conducted. Bank has taken additional steps to curb risks associated with Trade Based
Money Laundering. This includes performing due diligence of all trade transactions and updating trade KYCs / risk profiles of trade
customers, screening of counterparties and goods, vessels, banks etc. Bank has in place a renowned Technology-based solution for
mitigation of ML/TF risks associated with Trade Transactions. In addition to screening, the system supports in identification of dual
use goods and tracking of vessels to further strengthen existing controls.

In addition, a dedicated CFT Desk is in place which focuses on mitigation of TF risk in the Bank. In order to ensure compliance of
UNSC resolutions and that bank's services are not extended to proscribed or designated individuals and entities, systems processes
& controls are monitored and upgraded from time to time.

Training & Development of staff on ML / TF / PF risks and their mitigant has been a focus throughout the year. Various bi-lingual
eLearning modules have been completed by staff and numerous face-to face session were also conducted to keep staff members
abreast on latest threats, vulnerabilities, and developments in this area.

Your Bank also participates as a Foreign Financial Institution (FFI) and is fully compliant with the Foreign Account Tax Compliance
Act (FATCA) by collecting additional information and documentation from prospective clients, in order to determine whether they
have any US tax reporting responsibilities. FATCA is a US legislation aimed at preventing tax evasion by US Persons that came into
effect in Pakistan on July 01, 2014. To ensure compliance with the FATCA legislation, Compliance Division facilitates coordination,
training, development and monitoring of FATCA requirements.

Common Reporting Standards (CRS) is a global standard approved by the Organization for Economic Cooperation & Development
(OECD) Council and has been translated into domestic law by Government of Pakistan through Income Tax Ordinance 2001 vide
S.R.O 166 (I)/2017. The Bank is compliant with CRS rules and for this purpose, tax residency of customers is obtained for further
reporting to Federal Board of Revenue (FBR).

Whilst focusing on creativity and innovation, Compliance function will continue to increase its effectiveness through professional
development of its staff and strengthening of functional solutions.

CONTROLS

The Risk Management function contributes to the overall control culture of the organization specifically form the risk perspective.
The Internal Control Unit (ICU), as a part of the Risk Management team of the Bank, is responsible for implementing and maintaining
a sound system of operational internal controls that ensure efficiency and effectiveness. These efforts are a component of the overall
Internal Control ambit of operations, compliance with regulatory and legal requirements along with reliability of financial reporting
managed collectively by the Compliance, Finance and Risk Management Division. Adequate systems, processes and controls have
been put in place by the management to identify and mitigate the risk of failure to achieve the overall objectives of the Bank.

The Bank's organizational structure and lines of authority are well-defined and processes throughout the Bank are governed by
policies and procedures approved by the Board. Existing policies and procedures are reviewed at regular intervals and improved from
time to time. The Board has constituted sub-committees for oversight of the overall Risk Management Framework which meet at
regular intervals to ensure adequacy of governance.

The Bank's operating system contains controls embedded into all processes and functions which are governed through policies and
procedures and their compliance and effectiveness is verified by an independent Internal Audit Division which reports directly to
the Board Audit Committee.

The SBP Internal Control Guidelines require the Bank's management to evaluate the effectiveness of internal controls. The management
believes that the Bank's existing system of Internal Control is considered reasonable in design and is being effectively implemented
and monitored.

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INTERNAL AUDIT

HABIBMETRO has an active Board Audit Committee functioning under the Listed Companies (Code of Corporate Governance)
Regulations 2019 as stipulated by SECP and adopted by the SBP and Guidelines on Internal Audit Function issued by the SBP. The
Board Audit Committee is chaired by an independent director.

Reporting directly to the Board Audit Committee, Internal Audit pro-actively follows a risk-based approach for auditing branches, operational
areas and key activities of the Bank, highlighting control lapses, and tracking completion of remedial actions, wherever warranted.

Internal Audit, being the third line of defense, is an essential element of the Bank's overall control environment that provides
independent assurance to the Bank's Management and Board in assessing the Bank's internal control system. Internal Audit periodically
reviews the Bank's policies, processes, systems, and controls to provide reasonable assurance to the Board Audit Committee and
adds value towards the Bank's risk mitigation endeavors.

FUTURE OUTLOOK

Pakistan's economy shows promising growth despite global challenges like trade recovery and geopolitical uncertainties. With
inflation down, policy rates easing, and stable commodity prices, the environment is favorable for investment and private sector
expansion. However, issues like structural imbalances, fiscal rigidity, and high public debt need ongoing reforms.
The economic outlook is encouraging, with stabilizing macroeconomic fundamentals and gradual recovery of key sectors. Inflation
is expected to stabilize around long term average 7 percent in the coming quarters, promoting economic activity and likely leading
to further policy rate reductions resulting in lower borrowing costs which will further should boost investment and economic
momentum, especially in Large Scale Manufacturing and services, the key growth drivers this year.

Trade dynamics are forecasted to improve, with growth in exports and imports supporting broader economic activity. Remittance
inflows are expected to continue rising, contributing to a stable external account and boosting household consumption. Reduced
borrowing costs will enhance fiscal sustainability and strengthen public finances, paving the way for economic recovery initiatives.
These trends suggest potential reductions in unemployment as economic activity gains momentum. With sustained reforms and
resilience, Pakistan's economy is on a path towards greater stability and prosperity.

ACKNOWLEDGEMENTS

In conclusion, we extend our sincere thanks to the Ministry of Finance, the State Bank of Pakistan, and the Securities and Exchange
Commission of Pakistan for their continued support. We also thank our valued shareholders and customers for their trust, the Board
of Directors for their guidance and the staff of HABIBMETRO for their dedication, which enables us to grow from strength to strength.

On behalf of the Board

KHURRAM SHAHZAD KHAN MOHAMEDALI R. HABIB

President & Chief Executive Officer Chairman

Karachi: 19 February 2025

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CORPORATE GOVERNANCE

Composition of Board Committees and their Terms of Reference

Current compositions of the Board and Board Committees are provided in the Statement of Compliance with the Listed Companies
(Code of Corporate Governance) Regulations, 2019. Further, the number of meetings of the Board of Directors (BOD) and its Sub-
Committees held during the year 2024 and the attendance by each director / committee member are provided in the Directors' Report.

The key terms of reference of the Board Committees are as follows:

Board Audit Committee (BAC)

BAC ensures adequacy of internal control systems of the Bank including financial and operational controls, accounting systems, reporting
structures along with recommending the Bank's statement on internal controls for endorsement by the BOD.

Under SECP's Listed Companies (Code of Corporate Governance) Regulations, 2019, BAC is responsible to review & recommend to the
BOD, interim and annual financial statements of the Bank while focusing particularly on major judgmental areas, going concern
assumption, change in accounting policies & estimates, related party transactions and compliance with applicable accounting standards.

BAC also reviews & approves annual internal audit plan, scope and extent of internal audit function and its reporting framework and procedures.

BAC is updated regularly on significant issues raised by the external & internal auditors along with related corrective action progress. Further,
BAC ensures compliance of the corrective actions determined by Shari'ah Board on the reports of Internal and External Shari'ah Audit.

BAC also recommends to the BOD, appointment, removal and remuneration of external auditors as well as for the Head of Internal
Audit Function.

BAC also ensures independence of Internal Audit in its day-to-day activities with unrestricted access to people, information, records,
and systems so that it is able to perform audit activities with objectivity.

Finally, BAC reviews effectiveness of whistle blowing mechanism of the Bank and ensures that concerns raised are treated
confidentially.

Board Credit Committee (BCC)

The primary function of the BCC is to maintain an oversight over the Bank's credit portfolio management process, portfolio quality and
adherence to the credit policy and regulatory requirements. It reviews and provides guidance to the Management with respect to the
large exposures, credit portfolio strategy and related risks so as to ensure continued health of the portfolio and a sustainable growth. It
also provides credit approval for exposures which are beyond the delegation provided to the Bank's CCC.

Board Human Resource and Remuneration Committee (BHR&RC)

The BHR&RC is responsible for the reviewing the HR policies, HR initiatives including manpower planning, learning & development policy,
utilization of HR budgets and other HR activities. The BHR&RC also recommends to the BOD compensation & remuneration practices
and succession planning for CEO, CFO, Company Secretary, and Head of Internal Audit. It also reviews Chief Executive's recommendations
for direct reports including key executives. Further, the BHR&RC reviews and approves terminal benefits such as provident fund, gratuity
and other separation benefits schemes. In addition, it considers any HR related issue specifically delegated by the BOD.

Board Information Technology Committee (BITC)

The BITC establishes and maintains a system of governance and oversight of the bank's Core Technologies, Digital Channels, Information
/ Cyber security functions as well as ensuring that required measures are in place for Disaster recovery and business continuity. BITC is
further responsible for advising and reporting to the BOD on the IT strategies and initiatives being carried out and executed at the bank.
The BITC ensures that overall IT infrastructure and enterprise risk management is carried out according to approved policies. It also
provides an oversight on all major technology-related projects and procurements along with monitoring the human capital development
plans within the technology functions.

Board Risk and Compliance Committee (BR&RC)

The BR&CC establishes a governance structure and maintains a system of oversight over the Bank's Risk management, Compliance and
control activities on behalf of the Board of Directors (BOD). It provides a platform for inculcating and enhancing Risk Management and

26
Compliance culture within the organization along with continuously monitoring, assessing and managing the risk profile of the bank.
It ensures that all material risks are deliberated and mitigated in an integrated manner engaging all the relevant stakeholders. It is responsible
for establishing and maintaining a Compliance and Risk management process with an enterprise wide approach, built to identify and
prioritize risks including Compliance and AML / CFT related risks and to evaluate the alignment and effectiveness of activities including:

• Ensuring independence of Risk Management and Compliance Functions as well as adequacy of resources allocated given the
size, nature, and volume of business.
• Recommending Risk Management Policies and ensuring implementation of Compliance Program, Compliance Risk Strategy and
allied policies including CDD/AML /CFT/CPF.
• Ensuring that Management identifies, assesses and understands the ML / TF / PF risks and ensures proportionate AML / CFT / CPF
controls are in place.
• evaluate significant observations / issues raised in the SBP inspection reports and review the actions taken in this regard.
• reviewing and approving Risk Appetite including risk limits and triggers as well as ensuring independence of Risk and
Control Functions.

Reviewing and assessing the Bank's Capital Adequacy and Management, Market / Liquidity Profile, Credit Portfolio, Results of Stress Tests
and Frameworks of Operational, Continuity, Fraud, Conduct Risks and Risk Based Financial Reporting (IFRS).

Board's Oversight over Shariah Compliance Mechanism

The Board of Directors meet the SB members on half yearly basis to have a detailed briefing on the Shariah compliance environment,
the issues / weaknesses (if any), and recommendations to improve Shariah compliance environment and to ensure timely and effective
enforcement of the SB's decisions, fatawa, observations and recommendations. Further, every year, Shariah Board Report is also presented
by the SB in the meeting of the Board of Directors of the Bank which is also published in the annual report of the Bank.

Appointment of the Shariah Board Members

The appointment of the Shariah Board (SB) Members, including Resident Shariah Board Member & Chairman, is done by the Board of
Directors as per applicable rules and regulations, including clearance of Fit and Proper Criteria (FAPC) and prior written clearance of the SBP.
The SB members are appointed for a term of three years. They may be reappointed for another term by the BOD, subject to SBP FAPC.

Profile of Shariah Board Members

Tan Sri Dr. Mohd. Daud Bakar, Chairperson Shariah Board

Tan Sri Dr. Mohd. Daud Bakar is an internationally recognized Shariah Scholar from Malaysia. He is the Founder and Group Chairman of
Amanie Group. He is a Shariah Board Member of various financial institutions and hold the Chairperson position for HabibMetro Sirat.
Previously, he held Chairmanships for the Shariah Advisory Council (SAC) of Astana International Financial Centre (AIFC), Kazakhstan,
Central Bank of Malaysia, and the Securities Commission of Malaysia for more than 2 decades. He was also the former Chairman of Federal
Territory Islamic Religious Council (MAIWP), Malaysia.

He received his first degree in Shariah from the University of Kuwait in 1988, a Ph.D. from the University of St. Andrews, the United Kingdom
in 1993, and a Bachelor of Jurisprudence from the University of Malaya, in 2002. He has published more than 40 books and his well-known
book titled “Shariah Minds in Islamic Finance” has received the “Islamic Finance Book of the Year 2016” award by the Global Islamic Finance
Award (GIFA). He has also published several articles in various academic journals and has made many presentations at various conferences
across the globe. Tan Sri Dr. Mohd. Daud has been honored with “The Asset Triple A Industry Leadership Award” at The Asset Triple A Islamic
Finance Award 2014 by The Asset magazine and has been named as the “Most Outstanding Individual”, awarded by the King of Malaysia
in 2014. He was also awarded, “The Royal Award for Islamic Finance 2022” from the King of Malaysia for contributions in Islamic Banking.

Mufti Abdul Sattar Laghari, Member Shariah Board

Mufti Abdul Sattar Laghari is Member Shariah Board at HabibMetro Sirat. Mufti Laghari is among the senior Shariah Scholars in the field
of Islamic Banking & Finance. He has been associated with HMB as Resident Shariah Board Member (RSBM) & Head Shariah Compliance
since 2015 to June 2021. Mufti Laghari holds a Shahada-tul-Aalamiyah (Dars-e-Nizami) from Jamia Darul-Uloom, Korangi, Karachi. He

27
holds Specialization (Takhassus) in Islamic Fiqh and Fatwa from Darul Ifta wal Irshad Nazimabad 4 Karachi, an institution founded by
grand Mufti of Pakistan Mufti Rasheed Ahmad Ludhyanvi (late) with Masters in Islamic Studies from University of Karachi.

Mufti Laghari also holds a certificate of 1 year correspondence course in Islamic Law from Shariah Academy International Islamic University
Islamabad Pakistan along with certificates of various courses on Islamic Banking and Finance conducted by Prominent learning Centers
in Pakistan & Malaysia. He is NIBAF qualified and also holds a certificate by NIBAF for completing a comprehensive module base course
for Shariah Scholars. He has been providing Shariah Advisory services since 2005 starting his career with National Bank of Pakistan.

Mufti Laghari provided Shariah Advisory services to NBFIs from 2008 to 2015. Mufti Laghari has remained a member of sub committees
for review of some AAOIFI Shariah standards at State Bank of Pakistan. He is a master trainer in Islamic banking and Finance and has
conducted extensive courses throughout Pakistan. Mufti Laghari is also a visiting trainer at NIBAF. He is also a visiting faculty member
at Center for Islamic Economics (CIE) at Darul Uloom Korangi Karachi. During his career he has also issued numerous fatawa on general
as well as financial & Islamic Banking issues. He is also Imam & Khateeb at Jamiah Masjid Tauheed Nazimabad 2 Karachi since 2002.

Mufti Khawaja Noor ul Hassan, Resident Shariah Board Member

Mufti Khawaja Noor ul Hassan has extensive professional experience in Islamic banking including Shariah governance & compliance,
Islamic product development, and management, credit administration with prestigious institutions such as Saadiq, Standard Chartered
Bank (Pakistan), Faysal Bank, Meezan Bank & Albaraka Bank (formerly Emirates Global Islamic Bank). He also has over 03 years' experience,
working as corporate law consultant & Assistant company secretary.

Mufti Noor possesses both contemporary & religious qualifications. He holds the Shahadat-ul-Aalamia and Takhassus fil-Ifta (Specialization
in Islamic Jurisprudence and Fatwa) from Jamia Farooqia & Jamia Darul Uloom, Taleem ul Quran, Karachi. He also holds a Bachelor's
degree in Law (LLB), a Master's degree in Islamic Studies, and a Master's degree in Islamic History from the University of Karachi & Federal
Urdu University respectively.

Mufti Noor is the registered Shariah advisor at the Securities and Exchange Commission of Pakistan (SECP) and Certified Director as per
the code of corporate governance, SECP. He is also enrolled as an advocate, High Court and is a member of Sindh Bar Council and Karachi
Bar Association. He has vast teaching experience of religious and Islamic banking courses and is the visiting faculty member in different
institutions such as in Institute of Business Administration (IBA), Jamia Yousufia Binnoria, Jamia tur Rasheed, Karachi and Centre of Islamic
Economics (a division of Jamia Darul Uloom, Karachi), National Institute of Banking & Finance (NIBAF), Institute of Cost and Management
Accountants of Pakistan, Centre of Excellence (ICMA, COE).

Key Terms of Reference of Shariah Board

The Shariah Board (SB) shall be empowered to consider, decide and supervise all Shariah related matters, cause to develop a comprehensive
Shariah compliance framework for all areas of operations and shall review and approve all the procedure manuals, product programs
structures, process flows, related agreements, marketing advertisements, sales illustrations and brochures so that they are in conformity
with the rules and principles of Shariah. The SB shall have at all reasonable times unhindered access to all books of accounts, records,
documents and information from all sources including professional advisors and Bank's employees in the due discharge of its duties.
Considering the importance and binding nature of decisions, rulings and fatawa given by SB, it shall rigorously deliberate on the issue
placed before it for consideration before giving any decision / fatawa.

All complete reports of external Shariah audit, SBP Shariah compliance inspection and summaries/key findings of the reports of Internal
Shariah Audit and Shariah compliance reviews shall be submitted to the SB for consideration and prescribing appropriate
corrective/enforcement action. The SB shall also specify the process / procedures to be adopted for changing, modifying or revisiting
fatawa, rulings and guidelines already issued by it.

The SB shall not delegate any of its roles and responsibilities as prescribed in the Shariah governance framework to any other person
or any of its members and all decisions and rulings of the SB shall be in conformity with the directives, regulations, instructions and
guidelines issued by SBP in accordance with the rulings of Shariah Advisory Committee of the SBP.

Shariah Board meetings held during the year

During the year four meetings were held and were attended by all members.

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Remuneration Policy
In line with the regulatory guidelines, the Remuneration Policy is already in place wherein the criteria for identification and performance
evaluation of MRTs and MRCs is defined.

Scope, objective and governance of remuneration policy

The scope of remuneration policy covers all employees across the Bank who are materially responsible for risk taking or risk controlling
activities. The purpose of the policy is to develop a fair, objective, transparent and sound remuneration policy that is in alignment with
risks and responsibilities of the organization.

Following are the main objectives of Remuneration Framework:

I. To promote consistent, sound and effective risk management, to discourage risk-taking that exceeds the risk thresholds of
the Bank;
II. To ensure that the remuneration practice is in line with the Bank's objectives, taking into consideration all major risks that the
Bank may face.
III. To attract, retain and motivate employees who perform while managing the risks facing the Bank, and also those who ensure
long term value generation.

The Board is overall responsible for reviewing, approving and monitoring implementation of the Bank-wide remuneration framework,
based on the recommendations of Board's Human Resource & Remuneration Committee (BHR&RC), which shall be mainly responsible
for overseeing the Bank's remuneration programme.

The scope of remuneration policy covers all employees across the Bank who are materially responsible for risk taking or risk controlling
activities. The purpose of the policy is to develop a fair, objective, transparent and sound remuneration policy that is in alignment with
risks and responsibilities of the organization.

Material Risk Taker (MRT) / Material Risk Controller (MRC)

The MRTs and MRCs are identified through a detailed assessment of the Bank's employees using various qualitative and quantitative
criteria, as documented in the remuneration policy.

The Bank offers a compensation structure with a balanced mix of fixed and variable elements, with the objective to encourage behaviors
focused on achievement of long-term sustainable results. For MRTs / MRCs, the deferred variable component has been made part of
their compensation structure.

Performance measurement of MRTs and MRCs

The Bank's performance management mechanism provides a sound basis for assessing employee performance holistically. The Bank's
remuneration policy is aligned with the performance management mechanism and differentiates pay appropriately amongst its
employees based on degree of contribution, skill and availability of talent owing to competitive market forces by considering factors
such as role, skills, competencies, experience and grade / seniority.

Performance measurement of MRTs / MRCs is carried-out through the risk-adjusted balanced scorecards. The Bank has developed risk
adjusted balanced scorecards for all MRTs and MRCs for their performance measurement, which ensure establishing a correlation
between and alignment of risks and rewards. These scorecards are prepared at individual levels, incorporating various financial, non-
financial / qualitative and risk-adjusting factors.

The Bank has individual level accountability mechanism whereby a certain portion of variable compensation of the MRTs / MRCs is
deferred / withheld for a defined period, thus creating alignment between the employees' and stakeholders' interests and reinforcing
that compensation is appropriately linked to longer-term sustainable performance.

The deferred pay is subject to claw back clause that permits the Bank to cancel or reduce, all or part of the amount of an unvested
variable compensation award, due to malus triggers i.e. specific crystallized risk, behavior, conduct, or adverse performance outcome,
attributable to the MRT / MRC.

29
STATEMENT OF COMPLIANCE WITH LISTED COMPANIES (CODE OF
CORPORATE GOVERNANCE) REGULATIONS, 2019
FOR THE YEAR ENDED 31 DECEMBER 2024

The Bank has complied with the requirements of the Regulations in the following manner:

1. The total number of directors are 9 (nine) as per the following:

Gender Number
Male 8
Female 1

2. The composition of board is as follows:

Category Names
Independent Directors Mr. Ali Abbas Sikander
Mr. Rashid Ahmed Jafer
Female Independent Director Ms. Tahira Raza
Non-Executive Directors Mr. Hamza Habib
Mr. Mohamedali R. Habib
Mr. Mohomed Bashir
Mr. Mohsin Ali Nathani
Mr. Muhammad H. Habib
President & CEO Mr. Khurram Shahzad Khan

3. The directors have confirmed that none of them is serving as a director on more than seven listed companies, including this Bank.

4. The Bank has prepared a Code of Conduct and has ensured that appropriate steps have been taken to disseminate it throughout
the Bank along with its supporting policies and procedures.

5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Bank. The Board
has ensured that complete record of particulars of the significant policies along with their date of approval or updating is
maintained by the Bank.

6. All the powers of the Board have been duly exercised and decisions on relevant matters have been taken by the Board/shareholders
as empowered by the relevant provisions of the Act and these Regulations.

7. The meetings of the Board were presided over by the Chairman. The Board has complied with the requirements of Act and the
Regulations with respect to frequency, recording and circulating minutes of meeting of Board.

8. The Board and the shareholders have approved a formal policy and transparent procedures for remuneration of directors in
accordance with the instructions from the State Bank of Pakistan, Act and these Regulations.

9. The Bank is compliant with the requirement of directors training program provided in these Regulations.

10. During the current year, there was no new appointment of Chief Financial Officer (CFO), the Company Secretary and the Head
of Internal Audit.

30
11. Chief Financial Officer and Chief Executive Officer duly endorsed the financial statements before approval of the Board.

12. The board has formed committees comprising of members given below:

Committee Category of Director

Committees Names Designation
Audit Committee Mr. Rashid Ahmed Jafer Chairman Independent Director
Mr. Mohsin A. Nathani Member Non-Executive Director
Mr. Muhammad Hyder Habib Member Non-Executive Director
Ms. Tahira Habib Member Independent Director
Human Resources & Remuneration Ms. Tahira Raza Chairperson Independent Director
Committee Mr. Mohamedali R. Habib Member Non-Executive Directo
Mr. Mohomed Bashir Member Non-Executive Director
Mr. Mohsin A. Nathani Member Non-Executive Directo
Risk & Compliance Committee Mr. Muhammad Hyder Habib Chairman Non-Executive Director
Mr. Khurram Shahzad Khan Member President & Chief Executive
Mr. Mohsin A. Nathani Member Non-Executive Director
Ms. Tahira Raza Member Independent Director
Mr. Rashid Ahmed Jafer Member Independent Director
Credit Committee Mr. Mohamedali R. Habib Chairman Non-Executive Director
Mr. Hamza Habib Member Non-Executive Director
Mr. Khurram Shahzad Khan Member President & Chief Executive
Mr. Mohsin A. Nathani Member Non-Executive Director
Mr. Rashid Ahmed Jafer Member Independent Director
IT Committee Mr. Ali Abbas Sikander Chairman Independent Director
Mr. Hamza Habib Member Non-Executive Director
Mr. Khurram Shahzad Khan Member President & Chief Executive
Mr. Mohamedali R. Habib Member Non-Executive Director

13. The terms of reference of the aforesaid committees have been formed, documented and advised to the committees for compliance.
The Board has not constituted a separate Nomination Committee, as its functions are being performed by the Board.

14. The frequency of meetings of the committees were as per following:

Committees Frequency of Meetings

Audit Committee Four meetings were held during the financial year ended December 31, 2024
Human Resources & Remuneration Committee Two meetings were held during the financial year ended December 31, 2024
Risk & Compliance Committee Four meetings were held during the financial year ended December 31, 2024
Credit Committee Four meetings were held during the financial year ended December 31, 2024
IT Committee Three meeting was held during the financial year ended December 31, 2024

31
15. The board has set up an effective internal audit function.

16. The statutory auditors of the Bank have confirmed that they have been given a satisfactory rating under the Quality Control
Review program of the Institute of Chartered Accountants of Pakistan and registered with Audit Oversight Board of Pakistan,
that they and all their partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of
ethics as adopted by the Institute of Chartered Accountants of Pakistan and that they and the partners of the firm involved in
the audit are not a close relative (spouse, parent, dependent and non-dependent children) of the chief executive officer, chief
financial officer, head of internal audit, company secretary or director of the Bank.

17. The statutory auditors or the persons associated with them have not been appointed to provide other services except in
accordance with the Act, these Regulations or any other regulatory requirement and the auditors have confirmed that they have
observed IFAC guidelines in this regard.

18. We confirm that all requirements of regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the Regulations have been complied with.

19. Pursuant to SECP’s notification (SRO(1)/2024) dated June 12, 2024, introducing new regulation 10A and amendments to regulations
10 and 35, the Bank is in the process of formalizing its approach to environmental, social, and governance (ESG) matters. These
aspects have been reviewed by the Board through the BCC and BHR&RC. However, deliberations on establishing a dedicated
committee or assigning additional responsibilities to an existing committee will be considered in due course.

On behalf of the Board

KHURRAM SHAHZAD KHAN MOHAMEDALI R. HABIB

President & Chief Executive Officer Chairman
Karachi: 19 February 2025

32
INDEPENDENT AUDITOR’S REVIEW REPORT
To the members of Habib Metropolitan Bank Limited

Review Report on the Statement of Compliance contained in Listed Companies (Code of Corporate
Governance) Regulations, 2019

We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations,
2019 (the Regulations) prepared by the Board of Directors of Habib Metropolitan Bank Limited ('the Bank') for the year ended 31
December 2024 in accordance with the requirements of regulation 36 of the Regulations.

The responsibility for compliance with the Regulations is that of the Board of Directors of the Bank. Our responsibility is to review
whether the Statement of Compliance reflects the status of the Bank's compliance with the provisions of the Regulations and report
if it does not and to highlight any non-compliance with the requirements of the Regulations. A review is limited primarily to inquiries
of the Bank's personnel and review of various documents prepared by the Bank to comply with the Regulations.

As part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control
systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of
Directors' statement on internal control covers all risks and controls, or to form an opinion on the effectiveness of such internal
controls, the Bank's corporate governance procedures and risks.

The Regulations require the Bank to place before the Audit Committee, and upon recommendation of the Audit Committee, place
before the Board of Directors for their review and approval, its related party transactions. We are only required and have ensured
compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon
recommendation of the Audit Committee.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not
appropriately reflect the Bank's compliance, in all material respects, with the requirements contained in the Regulations as applicable
to the Bank for the year ended 31 December 2024.

KPMG Taseer Hadi & Co.

Karachi: 06 March 2025 Chartered Accountants
UDIN: CR202410188H87TnGwVF

33
STATEMENT OF INTERNAL CONTROLS

This statement is being issued in compliance with the Guidelines on Internal Controls, issued by the State Bank of Pakistan vide BSD
Circular No. 7 dated May 27, 2004.

MANAGEMENT EVALUATION OF INTERNAL CONTROL SYSTEM

An internal control system is a set of procedures and activities designed to identify, evaluate and mitigate the risk in processes and
operations in order to support the overall business objectives of the Bank. It is the responsibility of the Bank's management to establish
an internal control system to maintain an adequate and effective internal control environment on an ongoing basis.

The management of the Bank has formulated, implemented, and maintained a system of internal controls approved by the Board
of Directors, the goal of which is to achieve effectiveness and efficiency of operations while adhering to laws and regulations, resulting
in reliability of financial reporting. However, any system of internal controls can only be designed to manage, rather than eliminate
the risk of failure to achieve objectives. It can therefore only provide reasonable assurance and not absolute assurance against material
misstatement and loss. It also requires continuous improvement to align it with the changing environment and needs of the business.

The Bank monitors its processes and operations on an ongoing basis to ensure that an effective and efficient internal control system
remains active and implemented and strive for continuous strengthening of its control environment. The internal control structure
comprises of different levels of monitoring activities.

Line Management's role is to monitor day-to-day operations and ensure that the business risks are properly mitigated, control
breaches are identified on a timely basis and corrective actions are promptly implemented.

The Compliance Division of the Bank is entrusted with the responsibility to minimize compliance risk and strengthen compliance
environment across the organization and ensure a professional working relationship with the State Bank of Pakistan (SBP) and other
regulatory bodies. The Management has established a Management Compliance Committee to oversee compliance and controls
related matters of the bank. Compliance status of irregularities identified and other compliance related matters are reported to the
Bank's Management Compliance Committee, while significant compliance matters are also reported to Board Risk & Compliance
Committee. Further, compliance status of observations highlighted in regulatory inspection reports are also presented in Board Risk
& Compliance Committee. The Division also has a Financial Crimes and Compliance function to ensure compliance with the relevant
AML / CFT / CPF Laws & Regulations.

Internal Audit Division is an independent function and follows a risk-based approach to provide reasonable assurance to the governing
authorities on adequacy and effectiveness of the Bank's procedures, processes, controls and systems. All significant / material
observations made through internal audit activities are reported to the Board Audit Committee (BAC) on a regular basis, which
actively monitors and tracks resolution of these observations and provides guidance in improving the overall control environment
of the Bank.

Based upon the results achieved from reviews, ongoing testing of financial reporting controls and audits conducted during the
year 2024, management considers that, the existing system of internal controls is adequate and has been effectively implemented
and monitored.

NAJEEB GILANI SYED HASNAIN HAIDER RIZVI FUZAIL ABBAS KHURRAM SHAHZAD KHAN
Head of Internal Audit Chief Compliance Officer Chief Financial Officer President &
Chief Executive Officer
Karachi: 19 February 2025

34
REPORT OF SHARI'AH BOARD
FOR THE YEAR ENDED 31 DECEMBER 2024

In the name of Allah Subhanahu, the Beneficent, the Merciful

All Praise be to Allah Subhanahu, the Lord of all the Worlds and Blessings on our Master, Prophet Muhammad (Peace be upon Him),
and His Household and all His Companions.
By the Grace of Allah Almighty, Sirat, the Islamic Banking Division of Habib Metropolitan Bank Limited ("Bank") has completed its
twenty-one years of successful operations of Islamic Banking. The Bank is continuously expanding its Islamic Banking network and
at the end of the year 2024, the number of Islamic Banking Branches and Islamic Banking Windows were 223 and 190, respectively.
During the year, the Shariah Board held four (04) meetings and has reviewed, provided opinions, and approved different existing and new
products, policies, manuals, processes, transactions, process flows, Shariah compliance review reports and Shariah audit reports. Further,
the Shariah Board and the Board of Directors also met twice this year to have a briefing on Shariah compliance environment of the Bank.
The Shariah Board appreciates the vision of the Board of Directors and the management for the continuous growth and support for
Islamic Banking.
Following is an overview for the year 2024:
1. Islamic Business
During the year 2024, diversified Islamic financing products including but not limited to lstisna, Murabaha/Musawamah, Working
Capital Musharakah, Al-Bai, Currency Salam, Diminishing Musharakah and ljarah were utilized. Further the Bank has also participated
in Islamic syndicate transactions. In this regard, Shariah Board has reviewed and approved different structures for Corporate, SME
and Commercial customers. The breakup is as follows:

S. No. Islamic Financing Modes Number

1. Istisna 53
2. Murabaha/Musawamah 48
3. Working Capital Musharakah 30
4. Al-Bai 20
5. Currency Salam 06
6. Diminishing Musharakah 05
7. Ijarah 01
8. Participation in Islamic Syndicated transactions 03
Total 166

2. Islamic Branches/ Windows: Expansion & Conversion

During the year, the Bank has converted 91 conventional branches into Islamic branches, opened 15 new Islamic branches and
03 new Islamic banking windows.
3. Shariah Compliance and Shariah Audit
During the year, Shariah Compliance & Shariah Audit teams have conducted different regulatory and regular reviews, and audits
on sample basis. The Shariah reviews and audits include different segments and portfolios across different regions under Islamic
financing, deposits (profit and loss distribution), Islamic treasury, website, Shariah compliant deposit protection mechanism,
Islamic branches/windows and existing Islamic products. During the year, 17 reports were issued by Shariah Compliance &
Shariah Audit department which were reviewed, and corrective actions were provided by the Shariah Board, where required.
4. Charity Amounts
The opening balance of the charity account on January 01, 2024 was Rs. 402,247/-. During the year, Rs. 356,272/- has been
credited in the charity account which includes the amount received due to delayed payments by the customers, Shariah non-
compliance and other reasons. An amount of Rs. 301,009/- was utilized for different charitable organizations and the remaining
will also be distributed to approved charitable and social welfare institutions.
5. Training & Capacity Building
During the year, 5,549 staff have attended Islamic Banking trainings sessions through in-house, h-learning modules & external
programs. The participants include senior management, relationship managers, support functions, staff at Islamic Banking
Branches, Islamic Banking Windows, and others.

35
Shariah Board's Opinion
As per the Shariah Governance Framework, the Board of Directors and the executive management are solely responsible to ensure
that the operations of the Bank are conducted in a manner that comply with Shariah principles at all times, while we are required
to submit a report on the overall Shariah compliance environment of the Bank.
To establish our opinion as expressed in this report, we have reviewed the reports of Shariah Compliance Department, Internal Shariah
Audit and External Shariah Audit who had carried out their reviews and audits, on test check basis for each class of transactions with
the relevant documentation and process flows.
Based on the above, we are of the view that:
i. The Bank has complied with Shariah rules and principles in the light of fatawa, rulings and guidelines issued by its Shariah Board.
ii. The Bank has complied with directives, regulations, instructions and guidelines related to Shariah compliance issued by State
Bank of Pakistan (SBP) in accordance with the rulings of SBP's Shariah Advisory Committee.
iii. The Bank has a comprehensive mechanism in place to ensure Shariah compliance in their overall operations.
iv. The Bank has a well-defined system in place sound enough to ensure that any earnings realized from sources or by means
prohibited by Shariah have been credited to charity account and are being properly utilized for charitable purposes.
v. The Bank has complied with the SBP instructions on profit & loss distribution and pool management.
vi. The Learning Department and the management have arranged various Islamic Banking capacity building sessions and are in
continuous process to enhance Islamic Banking learning environment. In this regard, the level of awareness, capacity and
sensitization of the staff, management and the Board in appreciating the importance of Shariah compliance in the products
and processes of the Bank, is acceptable.
vii. The Shariah Board has been provided adequate resources enabling it to discharge its duties. However, considering the increase
in the business, network and volume of the work, it is suggested to further strengthen the Shariah compliance function in the Bank.
Recommendations
Based on the above, we recommend that, the Bank should:
1. Enhance monitoring mechanism at all levels to continue expanding its network through conversion of conventional branches
& portfolios and booking of new financings & opening of new Islamic banking branches ensuring conformity with the Constitution
of Pakistan and the State Bank of Pakistan's strategic directives.
2. Continue to make robust arrangements as per the SBP instructions for capacity building measures including intensive Islamic
banking trainings, refresher sessions, awareness programmes and change of mindset sessions for their senior management, all
staff, customers & others, considering the adherence of regulatory requirements, satisfaction of the stakeholders and foster
growth of the Bank.
3. Continue to promote Islamic Banking products and services at all available forums.
4. Promote sustainable development goals & green banking through Islamic banking products to align with national priorities and
global best practices.
And Allah Subhanahu knows the Best.
May Allah Subhanahu accept our endeavours and grant us devotion to accomplish His cherished tasks, forgive our mistakes and
make us successful herein this world and hereafter. We also pray, seek guidance and blessings from Allah Almighty for further progress
and prosperity of Islamic banking. Ameen

TAN SRI DR. MOHD. DAUD BAKAR

Chairman Shari’ah Board

MUFTI KHAWAJA NOOR UL HASSAN MUFTI ABDUL SATTAR LAGHARI

Resident Shari’ah Board Member Member Shari'ah Board

Karachi: 19 February 2025 | Shaban 20, 1446 A.H.

36
INDEPENDENT AUDITOR'S REPORT

To the members of Habib Metropolitan Bank Limited

Report on the Audit of the Unconsolidated Financial Statements

Opinion

We have audited the annexed unconsolidated financial statements of Habib Metropolitan Bank Limited (the Bank), which comprise
the unconsolidated statement of financial position as at 31 December 2024, and the unconsolidated profit and loss account, the
unconsolidated statement of comprehensive income, the unconsolidated statement of changes in equity and the unconsolidated
cash flow statement for the year then ended, along with unaudited certified returns received from the branches except for 30
branches which have been audited by us and notes to the unconsolidated financial statements, including a summary of material
accounting policy information and we state that we have obtained all the information and explanations which, to the best of our
knowledge and belief, were necessary for the purposes of the audit.

In our opinion and to the best of our information and according to the explanations given to us, the unconsolidated statement of
financial position, the unconsolidated profit and loss account, the unconsolidated statement of comprehensive income, the
unconsolidated statement of changes in equity and unconsolidated cash flow statement together with the notes forming part
thereof conform with the accounting and reporting standards as applicable in Pakistan, and, give the information required by the
Banking Companies Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively give a
true and fair view of the state of the Bank's affairs as at 31 December 2024 and of the profit, the comprehensive income, the changes
in equity and its cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities
under those standards are further described in the Auditor's Responsibilities for the Audit of the Unconsolidated Financial Statements
section of our report. We are independent of the Bank in accordance with the International Ethics Standards Board for Accountants'
Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have
fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.

Key Audit Matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the unconsolidated
financial statements of the current period. These matters were addressed in the context of our audit of the unconsolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Following is the Key Audit Matter:
S. No. Key Audit Matter How the matter was addressed in our audit
1 Credit loss allowance against advances and off-balance sheet items:
(Refer note 10.5 & 20.1 to the unconsolidated financial statements)

As at 31 December 2024, the Bank's Credit loss allowance Our audit procedures, amongst others, included the following:
against advances and off-balance sheet items amounted l Performing risk assessment procedures over the credit
to Rs. 29,502 million and Rs. 354 million, respectively. loss allowance against advances and off-balance sheet
As per the BPRD Circular No. 07 of 2023, the Bank adopted exposure within the Bank's unconsolidated financial
requirements of IFRS 9 along with the Application statements. As part of these risk assessment procedures,
Instructions issued by State Bank of Pakistan (SBP) identifying the elements associated with risk of material
(hereafter referred as “application instruction of IFRS 9”) misstatement on application including those arising
from 1 January 2024 which requires the Bank to recognise from judgements over the estimation of ECL either
Expected Credit Losses (ECL) on advances and off-balance due to, methods / models, assumptions or data.

37
 S. No. Key Audit Matters How the matter was addressed in our audit
sheet items. The estimation of ECL, involves judgement l Assessing the design, implementation and operating
and complexity. effectiveness of key controls established by the Bank over
measurement of ECL and provision calculated as per PR.
The key areas which are subject to complexity and
judgement in the estimation of ECL are: l We involved in-house specialist who assisted in the
following:
l Model estimations - judgmental modelling and
assumptions are used to estimate ECL which involves – Evaluating the Bank's ECL model methodologies for
determining Probability of Default (PD), Loss Given compliance with application instructions of IFRS 9;
Default (LGD), and Exposure at Default (EAD). – Assessing the reasonableness of the Bank's
Respective model's assumptions are key driver of methodology for determining the economic
uncertainty, and are required in the application of scenarios used and the probability weightings
these model for calculation of the ECL estimate. applied to them by independently validating and
challenging the assumption, methodologies and
l Economic scenarios - IFRS 9 requires the Bank to
outputs of the models;
measure ECL on an unbiased forward-looking basis
reflecting a range of future economic conditions. – Assessing the reasonableness of macro-economic
Complex Statistical methodology is applied in variables and economic forecasts by comparing
determining the forward-looking economic scenarios these to external sourced data extracted; and
used as an input to calculate ECL, the associated – Performing independent testing of the Expected
scenario probability weightings, and the key economic Credit Loss (ECL) allowance on a sample basis.
variables that drive the scenarios.
l Assessing the appropriateness of SICR criteria applied
l Qualitative criteria - the criteria selected to identify a by the Bank by ensuring that the SICR criteria and
SICR involves judgment and can lead to unreliable ECL staging methodology are consistent with the
recognised for certain portfolios. application instructions of IFRS 9.
In line with the application instructions of IFRS 9, the Bank l Ensuring relevance and completeness of the key inputs
must compare the ECL for Stage 3 with the provision into the ECL calculations with their respective sub-
determined under the Prudential Regulations (PR) issued ledgers and general ledgers.
by the SBP. The PR requires specific provisioning against l Performing testing on sample basis over key inputs
the advances on the basis of time-based criteria which into the ECL calculations with their respective source
should be supplemented by a Bank's subjective evaluation documents.
of credit worthiness of customers. The determination of
l Performing sensitivity analysis on the key assumption,
provision, therefore, involves use of management's
that is probability weighted economic scenarios, to
judgement, on a case-to-case basis, taking into account
assess reasonableness and the risk of biasness by
factors such as the economic and business conditions, changing weights assigned to each economic scenario.
borrowers' repayment behaviors and realizability of
collateral held by the Bank. l In accordance with the PR, we sampled at least sixty
percent of the total advances outstanding exposure
Because of the high degree of estimation uncertainty and and performed credit reviews through the following
complexity involved in the calculation of ECL we substantive procedures:
considered the area of ECL as a key audit matter.
– verifying repayments of advances / interest
installments and checked that non-performing
advances have been correctly classified and
categorised based on the number of days overdue;
– examining watch list accounts and, based on review
of the individual facts and circumstances, discussions
with management and our assessment of financial
conditions of the borrowers, formed a judgement
as to whether classification of these accounts as
performing was appropriate; and

38
 S. No. Key Audit Matters How the matter was addressed in our audit
– assessing the accuracy of specific provision made
against non-performing advances in accordance
with the criteria prescribed under the PRs by
performing recalculation.
l Assessing the appropriateness of ECL categorised as
Stage 3 by performing a comparison of ECL computed,
through the use of methodology and models with the
provision required to be computed as required under
the PR to ensure that an amount which is higher of
the ECL and PR requirements is appropriately
recognised for these stage 3 customers pursuant to
the requirement of application instructions of IFRS 9.
l Evaluating the adequacy of the financial statements
disclosures, including disclosures of key assumptions,
judgements and sensitivities.

Information other than the Unconsolidated Financial Statements and Auditor's Report Thereon

Management is responsible for the other information. The other information comprises the information included in the Bank's Annual
Report but does not include the consolidated and unconsolidated financial statements and our auditor's reports thereon.

Our opinion on the unconsolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.

In connection with our audit of the unconsolidated financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the unconsolidated financial statements, or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and the Board of Directors for the Unconsolidated Financial Statements

Management is responsible for the preparation and fair presentation of the unconsolidated financial statements in accordance with
accounting and reporting standards as applicable in Pakistan, the requirements of Banking Companies Ordinance, 1962 and the
Companies Act, 2017 (XIX of 2017) and for such internal control as management determines is necessary to enable the preparation
of unconsolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the unconsolidated financial statements, management is responsible for assessing the Bank's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
The Board of directors is responsible for overseeing the Bank's financial reporting process.

Auditor's Responsibilities for the Audit of the Unconsolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the unconsolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis
of these unconsolidated financial statements.

39
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:

l Identify and assess the risks of material misstatement of the unconsolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

l Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank's internal control.

l Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.

l Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank's ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's
report to the related disclosures in the unconsolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events
or conditions may cause the Bank to cease to continue as a going concern.

l Evaluate the overall presentation, structure and content of the unconsolidated financial statements, including the disclosures,
and whether the unconsolidated financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.

We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide to the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit
of the unconsolidated financial statements of the current period and are therefore the key audit matters. We describe these matters
in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. Based on our audit, we further report that in our opinion:

a) proper books of account have been kept by the Bank as required by the Companies Act, 2017 (XIX of 2017) and the returns
referred above from the branches have been found adequate for the purpose of our audit;

b) the unconsolidated statement of financial position, the unconsolidated profit and loss account, the unconsolidated statement
of comprehensive income, unconsolidated statement of changes in equity and unconsolidated cash flow statement together
with the notes thereon have been drawn up in conformity with the Banking Companies Ordinance, 1962 and the Companies
Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns;

c) investments made, expenditure incurred and guarantees extended during the year were in accordance with the objects

40
 and powers of the Bank and the transactions of the Bank which have come to our notice have been within the powers of
the Bank; and

d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Bank and
deposited in the Central Zakat Fund established under section 7 of that Ordinance.

2. We confirm that for the purpose of our audit we have covered more than sixty per cent of the total advances of the Bank.

The engagement partner on the audit resulting in this independent auditor's report is Zeeshan Rashid.

KPMG Taseer Hadi & Co.

Karachi: 06 March 2025 Chartered Accountants
UDIN: AR202410188ATNFU5btK

41
UNCONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024
Note 2024 2023
Rupees in ‘000
ASSETS
Cash and balances with treasury banks 6 86,815,817 91,466,596
Balances with other banks 7 6,434,551 21,123,950
Lendings to financial institutions 8 5,570,998 5,496,284
Investments 9 810,875,400 925,411,965
Advances 10 474,300,584 412,048,924
Property and equipment 11 17,046,127 15,715,033
Right-of-use assets 12 8,608,382 7,601,453
Intangible assets 13 496,214 323,254
Deferred tax assets 19 – 5,164,164
Other assets 14 89,985,707 72,065,464
Total Assets 1,500,133,780 1,556,417,087
LIABILITIES
Bills payable 15 28,478,822 28,352,699
Borrowings 16 330,010,768 323,269,590
Deposits and other accounts 17 927,132,777 1,012,302,844
Lease liabilities 18 10,463,713 9,051,378
Sub-ordinated debts – –
Deferred tax liabilities 19 3,077,177 –
Other liabilities 20 85,938,708 90,165,243
Total Liabilities 1,385,101,965 1,463,141,754
NET ASSETS 115,031,815 93,275,333

REPRESENTED BY
Share capital 21 10,478,315 10,478,315
Reserves 35,352,814 30,418,061
Surplus on revaluation of assets - net of tax 22 14,333,684 4,818,771
Unappropriated profit 54,867,002 47,560,186
115,031,815 93,275,333

CONTINGENCIES AND COMMITMENTS 23

The annexed notes 1 to 48 and annexures I and II form an integral part of these unconsolidated financial statements.

FUZAIL ABBAS KHURRAM SHAHZAD KHAN MOHOMED BASHIR RASHID AHMED JAFER MOHAMEDALI R. HABIB
Chief Financial Officer President & Director Director Chairman
Chief Executive Officer

42
UNCONSOLIDATED PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2024
Note 2024 2023
Rupees in ‘000
Mark-up / return / interest earned 25 234,238,668 205,612,424
Mark-up / return / interest expensed 26 (163,924,780) (134,194,789)
Net mark-up / interest income 70,313,888 71,417,635

NON MARK-UP / INTEREST INCOME

Fee and commission income 27 10,752,584 9,395,774
Dividend income 746,054 625,579
Foreign exchange income 7,085,082 5,203,162
Income / (loss) from derivatives – –
Gain / (loss) on securities - net 28 2,450,620 (5,272)
Net loss on derecognition of financial assets measured at amortised cost 29 (3,602) -
Other income 30 256,148 75,297
Total non mark-up / interest income 21,286,886 15,294,540
Total income 91,600,774 86,712,175

NON MARK-UP / INTEREST EXPENSES

Operating expenses 31 33,483,644 28,752,611
Workers' welfare fund 1,139,470 1,101,762
Other charges 32 187,804 123,489
Total non mark-up / interest expenses (34,810,918) (29,977,862)
Profit before credit loss allowance 56,789,856 56,734,313
Credit loss allowance and write offs - net 33 (4,129,875) (4,739,101)
PROFIT BEFORE TAXATION 52,659,981 51,995,212
Taxation 34 (27,986,473) (27,611,394)
PROFIT AFTER TAXATION 24,673,508 24,383,818
Rupees
Basic and diluted earnings per share 35 23.55 23.27

The annexed notes 1 to 48 and annexures I and II form an integral part of these unconsolidated financial statements.

FUZAIL ABBAS KHURRAM SHAHZAD KHAN MOHOMED BASHIR RASHID AHMED JAFER MOHAMEDALI R. HABIB
Chief Financial Officer President & Director Director Chairman
Chief Executive Officer

43
UNCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024

Note 2024 2023

Rupees in ‘000
Profit after taxation for the year 24,673,508 24,383,818

Other comprehensive income

Items that may be reclassified to profit and loss

account in subsequent periods:

Effect of translation of net investment in an offshore branch - net of tax 51 6,380

Movement in surplus on revaluation of debt
investments through FVOCI - net of tax 7,757,554 –
Movement in surplus on revaluation of available for sale
investments - net of tax – 3,239,522
7,757,605 3,245,902

Items that will not be reclassified to profit and loss

in subsequent periods:

Remeasurement gain on defined benefit obligations - net of tax 118,513 71,003

Movement in surplus on revaluation in equity investments
through FVOCI - net of tax 1,884,497 -
Movement in deficit on revaluation of property and
equipment - net of tax 22.1 (101,927) (193,816)
Movement in surplus / (deficit) on revaluation of
non-banking assets - net of tax 22.2 769,953 (94,289)
2,671,036 (217,102)
Total comprehensive income 35,102,149 27,412,618

The annexed notes 1 to 48 and annexures I and II form an integral part of these unconsolidated financial statements.

FUZAIL ABBAS KHURRAM SHAHZAD KHAN MOHOMED BASHIR RASHID AHMED JAFER MOHAMEDALI R. HABIB
Chief Financial Officer President & Director Director Chairman
Chief Executive Officer

44
UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024

Surplus / (deficit) on
Reserves revaluation
Exchange Property, Un-
Share Share Statutory Special Revenue Investments equipment
translation premium & appropriated Total
capital reserve reserve reserve
reserve Non-banking profit
assets

Rupees in ‘000

Opening balance as at
1 January 2023 10,478,315 4,929 2,550,985 21,238,642 240,361 1,500,000 (4,790,285) 6,820,054 36,464,323 74,507,324
Profit after taxation – – – – – – – – 24,383,818 24,383,818
Other comprehensive
income - net of tax
Effect of translation of net
investment in an offshore branch
- net of tax – 6,380 – – – – – – – 6,380
Movement in surplus on
revaluation of investments
- net of tax – – – – – – 3,239,522 – – 3,239,522
Remeasurement gain on defined
benefit obligations - net of tax – – – – – – – – 71,003 71,003
Movement in deficit on
revaluation of non-banking
assets - net of tax – – – – – – – (94,289) – (94,289)
Movement in deficit on revaluation
of property and equipment
- net of tax – – – – – – – (193,816) – (193,816)
Total comprehensive income – 6,380 – – – – 3,239,522 (288,105) 24,454,821 27,412,618
Transfer to statutory reserve – – – 4,876,764 – – – – (4,876,764) –
Transfer from surplus on revaluation
of assets to unappropriated profit
- net of tax – – – – – – – (162,415) 162,415 –
Transactions with owners,
recorded directly in equity
Final Cash dividend (Rs. 3.00 per
share) for the year ended
31 December 2022 – – – – – – – – (3,405,452) (3,405,452)
Interim cash dividend (Rs. 5.00 per
share) for the year 2023 – – – – – – – – (5,239,157) (5,239,157)
Balance as at
31 December 2023 10,478,315 11,309 2,550,985 26,115,406 240,361 1,500,000 (1,550,763) 6,369,534 47,560,186 93,275,333
Impact of adoption of IFRS 9 as at
1 January 2024 - net of tax – – – – – – (184,901) – 461,044 276,143
Balance as at 1 January 2024
on adoption of IFRS 9 10,478,315 11,309 2,550,985 26,115,406 240,361 1,500,000 (1,735,664) 6,369,534 48,021,230 93,551,476

45
 Surplus / (deficit) on
Reserves revaluation
Exchange Property, Un-
Share Share Statutory Special Revenue Investments equipment
translation premium & appropriated Total
capital reserve reserve reserve
reserve Non-banking profit
assets

Rupees in ‘000

Profit after taxation – – – – – – – – 24,673,508 24,673,508

Other comprehensive income
- net of tax
Effect of translation of net
investment in an offshore branch
- net of tax – 51 – – – – – – – 51
Movement in surplus on
revaluation of debt securities
measured at FVOCI - net of tax – – – – – – 7,757,554 – – 7,757,554
Movement in surplus on
revaluation of equity securities
measured at FVOCI - net of tax – – – – – – 1,884,497 – – 1,884,497
Remeasurement gain on defined
benefit obligations - net of tax – – – – – – – – 118,513 118,513
Movement in deficit on revaluation
of property and equipment
- net of tax – – – – – – – (101,927) – (101,927)
Movement in surplus on
revaluation of non-banking assets
- net of tax – – – – – – – 769,953 – 769,953
Total comprehensive income – 51 – – – – 9,642,051 668,026 24,792,021 35,102,149
Gain on sale of equity
investments - FVOCI – – – – – – (445,658) – 445,658 –
Transfer to statutory reserve – – – 4,934,702 – – – – (4,934,702) –
Transfer from surplus on revaluation
of assets to unappropriated profit
- net of tax – – – – – – – (164,605) 164,605 –
Transactions with owners,
recorded directly in equity
Final cash dividend (Rs. 5.50 per
share) for the year ended
31 December 2023 – – – – – – – – (5,763,073) (5,763,073)
Interim cash dividend (Rs. 2.50 per
share) for the quarter ended
31 March 2024 – – – – – – – – (2,619,579) (2,619,579)
Interim cash dividend (Rs. 2.50 per
share) for the quarter ended
30 June 2024 – – – – – – – – (2,619,579) (2,619,579)
Interim cash dividend (Rs. 2.50 per
share) for the quarter ended
30 September 2024 – – – – – – – – (2,619,579) (2,619,579)
Balance as at
31 December 2024 10,478,315 11,360 2,550,985 31,050,108 240,361 1,500,000 7,460,729 6,872,955 54,867,002 115,031,815
The annexed notes 1 to 48 and annexures I and II form an integral part of these unconsolidated financial statements.

FUZAIL ABBAS KHURRAM SHAHZAD KHAN MOHOMED BASHIR RASHID AHMED JAFER MOHAMEDALI R. HABIB
Chief Financial Officer President & Director Director Chairman
Chief Executive Officer

46
UNCONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
Note 2024 2023
Rupees in ‘000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 52,659,981 51,995,212
Less: Dividend income (746,054) (625,579)
51,913,927 51,369,633
Adjustments
Net mark-up / interest income (excluding mark up on lease
liability against right-of-use assets) (71,513,297) –
Depreciation on property and equipment 11.2 2,465,078 1,980,576
Depreciation on right-of-use assets 12 1,542,854 1,460,229
Amortisation 13 255,885 131,824
Markup on lease liability against right-of-use assets 26 1,199,409 963,868
Credit loss allowance against cash and balances with banks 33 (3,473) –
Credit loss allowance against lending to financial institutions 33 (85) –
Credit loss allowance for diminution in value of investments 33 337,945 –
Credit loss allowance against loans and advances 33 4,114,350 4,817,908
Credit loss allowance against other assets 33 (50,872) –
Credit loss allowance against off-balance sheet obligation 20.1 (197,990) –
Gain on sale of property and equipment - net 30 (41,338) (33,833)
Gain on sale of ijarah assets 30 (71,725) –
Gain on termination of right-of-use-assets - net 30 (20,980) –
Unrealised gain on FVTPL securities (1,176,593) –
Provision against workers welfare fund 1,139,470 1,101,762
Provision against defined benefit plan 31.1 310,200 –
Provision against compensated absences 31.1 149,026 164,748
(61,562,136) 10,587,082
(9,648,209) 61,956,715
(Increase) / decrease in operating assets
Lendings to financial institutions (74,631) 70,835,323
Securities classified as FVTPL (39,136,408) -
Advances (65,404,645) 16,696,513
Other assets (excluding dividend and non-banking assets) (8,735,060) (12,300,178)
(113,350,744) 75,231,658
Increase / (decrease) in operating liabilities
Bills payable 126,123 8,814,271
Borrowings from financial institutions 1,116,946 (20,247,945)
Deposits and other accounts (85,170,067) 131,606,061
Other liabilities (excluding current taxation) (15,922,085) 14,209,163
(99,849,083) 134,381,550
(222,848,036) 271,569,923
Payment against compensated absences (118,010) (108,216)
Contribution to the defined benefit plan (60,000) –
Mark-up / Interest received 242,410,706 –
Mark-up / Interest paid (166,333,202) –
Income tax paid (33,737,128) (24,909,910)
Net cash flow (used in) / generated from operating activities (180,685,670) 246,551,797
CASH FLOWS FROM INVESTING ACTIVITIES
Net investment in amortised cost securities 17,364,288 –
Net investment in securities classified as FVOCI 158,372,865 –
Net investment in available-for-sale securities – (317,539,667)
Net investment in held-to-maturity securities – 121,009,128
Investment in new subsidiary (1,000,000)
Dividend received 740,211 628,057
Investment in property and equipment (3,810,499) (2,778,725)
Investment in intangible assets (428,845) (357,110)
Proceeds from sale of property and equipment 55,665 45,246
Proceeds from sale of ijarah assets 265,937 –
Effect of translation of net investment in an offshore branch 51 2,661
Net cash flows generated from / (used in) investing activities 171,559,673 (198,990,410)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid (13,522,536) (9,678,226)
Payment of lease obligation against right-of-use assets (2,315,877) (2,041,743)
Net cash flows used in financing activities (15,838,413) (11,719,969)
(Decrease) / Increase in cash and cash equivalents (24,964,410) 35,841,418
Cash and cash equivalents at the beginning of the year 111,701,908 75,860,490
Cash and cash equivalents at the end of the year 36 86,737,498 111,701,908
The annexed notes 1 to 48 and annexures I and II form an integral part of these unconsolidated financial statements.

FUZAIL ABBAS KHURRAM SHAHZAD KHAN MOHOMED BASHIR RASHID AHMED JAFER MOHAMEDALI R. HABIB
Chief Financial Officer President & Director Director Chairman
Chief Executive Officer

47
NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

1. STATUS AND NATURE OF BUSINESS

Habib Metropolitan Bank Limited (the Bank) was incorporated in Pakistan on 3 August 1992, as a public limited company, under
the repealed Companies Ordinance, 1984 (now Companies Act, 2017) and is engaged in commercial banking and related
services. Its shares are listed on the Pakistan Stock Exchange. The Bank operates 551 (2023: 525) branches, including 223 (2023:
117) Islamic banking branches, an offshore branch (Karachi Export Processing Zone branch) and 1 (2023: 1) sub branch in
Pakistan. The Bank is a subsidiary of Habib Bank AG Zurich - Switzerland (the holding company with 51% shares in the Bank)
which is incorporated in Switzerland.

1.1 During the year, the Bank established a wholly owned subsidiary company, HabibMetro Exchange Services Limited (HMES).
The Company (HMES) is incorporated in Pakistan with the objective of dealing in foreign exchange and facilitating
remittances. The registered office is situated at ground floor Al Manzoor Building I.I. Chundrigar Road, Karachi.

1.2 The Pakistan Credit Rating Agency Limited (PACRA) has determined the Bank's long term rating as AA+ (31 December
2023: AA+) and short term rating as A1+ (31 December 2023: A1+) dated 31 December 2024.

The registered office of the Bank is situated at HabibMetro Head Office, I.I. Chundrigar Road, Karachi.

2. BASIS OF PRESENTATION

2.1 These unconsolidated financial statements represent separate financial statements of the Bank. The consolidated financial
statements of the Bank and its subsidiary companies are being separately issued.

In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic
mode, the State Bank of Pakistan (SBP) has issued various circulars from time to time. Permissible forms of trade related
modes of financing include purchase of goods by banks from their customers and immediate resale to them at appropriate
profit in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in
these financial statements as such, but are restricted to the amount of facility actually utilised and the appropriate portion
of profit thereon.

Key financial figures of the Islamic banking branches are disclosed in Annexure II to these unconsolidated financial
statements.

2.2 The Bank believes that there is no significant doubt on the Bank’s ability to continue as a going concern. Therefore, the
unconsolidated financial statements continue to be prepared on the going concern basis.

2.3 Statement of Compliance

These unconsolidated financial statements have been prepared in accordance with the accounting and reporting standards
as applicable in Pakistan. The accounting and reporting standards comprise of:

– International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as
are notified under the Companies Act, 2017;
– Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan (ICAP), as
are notified under the Companies Act, 2017;
– Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017; and
– Directives issued by the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP)
from time to time.

48
 Whenever the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 or the directives issued
by the SBP and the SECP differ with the requirements of the IFRS or IFAS, requirements of the Banking Companies Ordinance,
1962, the Companies Act, 2017 and the said directives shall prevail.

2.3.1 SBP has deferred the applicability of International Accounting Standard (IAS) 40, 'Investment Property' for Banking
Companies in Pakistan through BSD Circular Letter No. 10 dated 26 August 2002 till further instructions. Also, SECP
has deferred the applicability of IFRS 7, 'Financial Instruments: Disclosures' through its notification S.R.O. 411(I)/2008
dated 28 April 2008. Accordingly, the requirements of these standards have not been considered in the preparation
of these unconsolidated financial statements.

2.3.2 The disclosures requirements of IFAS 3, 'Profit and Loss Sharing on Deposits' for Islamic Banking Institutions (IBIs)
relating to annual and quarterly financial statements have been based on a format prescribed by SBP vide BPRD
Circular Letter No. 02 dated 09 February 2023.

2.3.3 IFRS 10, 'Consolidated Financial Statements' was made applicable from period beginning on or after 01 January 2015
vide S.R.O. 633(I)/2014 dated 10 July 2014 by SECP. However, SECP has directed through S.R.O. 56(I)/2016 dated 28
January 2016 that the requirement of consolidation under section 228 of the Companies Act, 2017 and IFRS 10,
'Consolidated Financial Statements' is not applicable in case of investment by companies in mutual funds established
under trust structure.

2.3.4 The State Bank of Pakistan (SBP) adopted IFRS 9 through BPRD Circular No. 07 of 2023, dated April 13, 2023, but
deferred certain requirements. Similarly, the requirement to carry unquoted securities at fair value has been deferred
until January 1, 2025. Furthermore, Islamic banking institutions may follow Islamic Financial Accounting Standards
(IFAS) 1 & 2 where applicable and continue existing accounting practices for other Islamic products until further
instructions. Moreover, Banks have received exemption of recording income and expense at Effective interest rate.
Consequently, these deferred requirements of IFRS 9 have not been considered in the preparation of these financial
statements. Furthermore, Banks are required to apply modification accounting retrospectively however it will be
applied only on the loans modified on or after 1st January 2020 as allowed by SBP.

2.4 Standards, interpretations of and amendments to published approved accounting standards that are
effective in the current year

As directed by SBP via BPRD Circular letter no. 7 of 2023 dated 13 April 2023 of IFRS 9, (Financial Instruments) is effective
in Pakistan for periods beginning on or after January 1, 2024. In addition, due to the application of IFRS 9, SBP vide BPRD
Circular No. 02 dated February 9, 2023, has also amended the format of the annual financial statements. Details regarding
the aforementioned adoption and amendment, including the impact thereof, are discussed in more detail in note 4.1 to
these unconsolidated financial statements.

Except for the above, there are certain other interpretations and amendments that are mandatory for the Bank’s accounting
periods beginning January 1, 2024. However, these are not considered to be relevant or do not have any significant effect
on the Bank's operations and therefore have not been detailed in these unconsolidated financial statements.

2.5 Standards, interpretations of and amendments to existing accounting and reporting standards that
are not yet effective

2.5.1 Certain requirements of IFRS 9 were deferred by SBP and they are disclosed in the statement of compliance.

2.5.2 Furthermore, following standards, interpretations of and amendments to approved accounting and reporting
standards will be effective from the dates (for the accounting periods) as stated below against the respective standards,
interpretations of and amendments to:

49
 Effective date (annual periods
Standards and amendments beginning on or after)
Lack of Exchangeability - Amendments to IAS 21 1 January 2025
IFRS S1 - General Requirements for Disclosure of Sustainability
- related Financial Information 1 January 2025
IFRS S2 - Climate - related Disclosures 1 January 2025
Amendments to the Classification and Measurement of Financial Instruments
- Amendments to IFRS 9 & IFRS 7 1 January 2025
Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture - Amendments to IFRS 10 and IAS 28 Not yet finalised
The amendments in IFRS 9 will have a significant impact on the Bank's financial statements while the management of
the Bank is assessing the impact of the changes in the other mentioned standards on the Bank's financial statements

2.6 Critical accounting estimates and judgments

The preparation of these unconsolidated financial statements in conformity with accounting and reporting standards as
applicable in Pakistan requires the use of certain accounting estimates. It also requires the management to exercise
judgement in the process of applying the Bank's accounting policies. Estimates and judgements are continually evaluated
and are based on historical experience, including expectations of future events that are believed to be reasonable under
the circumstances. These estimates affect the reported amounts of assets, liabilities, income, and expenses. The areas
where various assumptions and estimates are significant to the Bank's unconsolidated financial statements or where
judgement was exercised in the application of accounting policies are as follows:

i) Classification, valuations and impairment of investments (note 4.4)

ii) Provision against non-performing loans and advances (note 4.5.1)
iii) Depreciation (note 4.6.2 ) and Amortisation (note 4.7)
iv) Valuation of Property and equipment (4.6.2) and Non-banking assets acquired in satisfaction of claims (note 4.8)
v) Taxation (note 4.11)
vi) Defined benefit plan (note 4.13.1)
vii) Compensated absences (note 4.13.2)
viii) Right-of-use assets (note 4.6.3) and related lease liabilities (note 4.14)
ix) Impairment of non-financial assets (excluding deferred tax asset) (note 4.21)

Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only
that period, or in the period of revision and future periods, if the revision affects both current and future periods.

3. BASIS OF MEASUREMENT

Accounting convention

These unconsolidated financial statements have been prepared under the historical cost convention except for certain fixed
assets and non-banking assets acquired in satisfaction of claims which have been carried at revalued amounts, certain
investments and derivative contracts which have been marked to market and are carried at fair value, obligations in respect
of staff retirement benefits and lease liabilities which have been carried at present value and right-of-use assets which are
initially measured at an amount equal to the corresponding lease liabilities (adjusted for any lease payments and costs) and
depreciated over the respective lease terms.

50
4. MATERIAL ACCOUNTING POLICY INFORMATION

The material accounting policies adopted in the preparation of these unconsolidated financial statements are consistent with
those followed in the preparation of the financial statements for the year ended December 31, 2023, except as disclosed in
note 4.1 below.

4.1 Changes in accounting policies

4.1.1 Revised format of unconsolidated financial statements

SBP through its BPRD Circular No. 02 dated February 9, 2023, has amended the format of annual financial statements
of banks. All banks are required to prepare their annual financial statements on the revised format effective from
accounting year starting from January 1, 2024. Accordingly, the Bank has prepared these unconsolidated financial
statements on the new format prescribed by the SBP. The adoption of the new format contains additional disclosures
and certain changes in the financial statements’ presentation, primarily due to the implementation of IFRS 9 as
applicable in Pakistan. However, the corresponding figures continue to be classified and disclosed in accordance
with the previous financial accounting and reporting framework.

Adoption of revised financial statements format has also resulted in following material changes (due to which the
corresponding presentations have also been changed):

– Right-of-use-assets (note 12) amounting to Rs 8,608,382 thousands (December 31, 2023: Rs 7,601,453
thousands) which were previously shown as part of property and equipment (note 11) are now shown
separately on the unconsolidated statement of financial position.
– Lease liabilities (note 18) amounting to Rs 10,463,713 thousands (December 31, 2023: Rs 9,051,378 thousands)
which were previously shown as part of other liabilities (note 20) are now shown separately on the
unconsolidated statement of financial position.

4.1.2 IFRS 9 - Financial Instruments

During the year, as directed by the SBP vide its BPRD Circular No. 07 of 2023 dated April 13, 2023, IFRS 9: ‘Financial
Instruments' (the Standard) became applicable to the Bank.

BPRD Circular No. 03 of 2022 dated July 5, 2022, issued by the SBP provides detailed instructions on implementation
of IFRS 9 (the IFRS 9 Application Instructions) for ensuring smooth and consistent implementation of the standard
across banks. Furthermore, the SBP wide its BPRD Circular Letter No. 16 of 2024 and SBP wide BPRD Circular Letter
No. 01 of 2025 has made further amendments in the application instructions issued. All deferments made through
these amendments are disclosed in statement of compliance.

The standard addresses recognition, classification, measurement and derecognition of financial assets and financial
liabilities. The standard has also introduced a new impairment model for financial assets which requires recognition
of impairment charge based on ‘Expected Credit Losses' (ECL) approach rather than ‘incurred credit losses' approach
as previously followed. The ECL has impact on all the assets of the Bank which are exposed to credit risk.

The Bank has adopted IFRS 9 in accordance with the Application Instructions from January 1, 2024, using the modified
retrospective approach and has not restated comparatives for the 2023 reporting period and the differences in
carrying amount of financial assets and financial liabilities resulting from the adoption of IFRS 9 are recognised in
retained earnings and reserves as at January 1, 2024, as permitted under the specific transitional provisions in the
Standard. Accordingly, the information presented for 2023 does not reflect the requirements of IFRS 9 and therefore
is not comparable to the information presented for 2024 under IFRS 9.

51
4.1.2.1 Impact on the statement of financial position
The effect of this change in accounting policy is as follows:

Impact due to
Financial Asset / Liabilities Note Classification Balances as Change in Remeasurements Recognition of Reversal of Total Impact Taxation Total impact Balances as
under IFRS 9 of December classification expected credit Provision held - net of tax of January
31, 2023 loss (ECL) 01, 2024
Rupees in ‘000
Assets
Cash and balances with treasury banks Amortised cost 91,466,596 - - (2,486) - (2,486) - (2,486) 91,464,110
Balances with other banks Amortised cost 21,123,950 - - (2,826) - (2,826) - (2,826) 21,121,124
Due from financial institutions Amortised cost 5,496,284 - - (87) - (87) - (87) 5,496,197
Investments
– Classified as available for sale a FVTPL - 9,573,871 - - - 9,573,871 - 9,573,871 9,573,871
– Classified as available for sale b FVOCI 821,009,112 (9,573,871) (219,607) (87,683) 307,290 (9,573,871) - (9,573,871) 811,435,241
– Classified as Held to maturity c Amortised cost 103,572,853 - - (578) - (578) - (578) 103,572,275
– Subsidiary Outside the scope of IFRS 9 830,000 - - - - - - - 830,000
Advances - - - - - - - - -
– Temporary Export Refinance
Facility (TERF) d Amortised cost 28,959,380 - (6,121,783) (529,563) - (6,651,346) - (6,651,346) 22,308,034
Modified financial asset Amortised cost 381,017 (31,001) (188,695) - (219,696) - (219,696) 161,321
– Staff loans Amortised cost 8,441,104 - (3,681,409) (468) - (3,681,877) - (3,681,877) 4,759,227
– Advances other than
TERF and staff loans Cost 400,866,645 - - - - - - - 400,866,645
– Provision Amortised cost (26,599,222) - - (23,332,060) 25,237,364 1,905,304 - 1,905,304 (24,693,918)
Property and equipment Outside the scope of IFRS 9 15,715,033 - - - - - - - 15,715,033
Right of use assets Outside the scope of IFRS 9 7,601,453 - - - - - - - 7,601,453
Intangible assets Outside the scope of IFRS 9 323,254 - - - - - - - 323,254
Deferred tax assets Outside the scope of IFRS 9 5,164,164 - - - - - (265,313) (265,313) 4,898,851
Other assets
– Financial other assets Amortised cost 25,076,677 - - (88,854) - (88,854) - (88,854) 24,987,823
– Non-financial other assets Outside the scope of IFRS 9 44,100,027 - 3,681,409 - - 3,681,409 - 3,681,409 47,781,436
– Forward foreign exchange contracts FVTPL 2,888,760 - - - - - - - 2,888,760
Total assets 1,556,417,087 - (6,372,391) (24,233,300) 25,544,654 (5,061,037) (265,313) (5,326,350) 1,551,090,737

Liabilities
Bills payable Amortised cost 28,352,699 - - - - - - - 28,352,699
Due to financial institutions Amortised cost 323,269,590 - (6,328,485) - - (6,328,485) - (6,328,485) 316,941,105
Deposits and other accounts Amortised cost 1,012,302,844 - - - - - - - 1,012,302,844
Lease liabilities Amortised cost 9,051,378 - - - - - - - 9,051,378
Subordinated sukuk Amortised cost - - - - - - - - -
Other liabilities
– Financial other liabilities Amortised cost 72,116,069 - - 551,873 (32,583) 519,290 - 519,290 72,635,359
– Non-financial other liabilities Outside the scope of IFRS 9 13,845,473 - 206,702 - - 206,702 - 206,702 14,052,175
– Forward foreign exchange contracts FVTPL 4,203,701 - - - - - - - 4,203,701
Total liabilities 1,463,141,754 - (6,121,783) 551,873 (32,583) (5,602,493) - (5,602,493) 1,457,539,261
Net Assets 93,275,333 - (250,608) (24,785,173) 25,577,237 541,456 (265,313) 276,143 93,551,476

Represented By
Share capital 10,478,315 - - - - - - - 10,478,315
Reserves 30,418,061 - - - - - - - 30,418,061
Deficit on revaluation of investments 4,818,771 (362,551) - - - (362,551) 177,650 (184,901) 4,633,870
Unappropriated profit 47,560,186 362,551 (250,608) (24,785,173) 25,577,237 904,007 (442,963) 461,044 48,021,230
93,275,333 - (250,608) (24,785,173) 25,577,237 541,456 (265,313) 276,143 93,551,476
a) Certain non-trading debt securities are held by the Bank in separate portfolios and are managed with an objective of realising cash flows through sale. The
Bank primarily focuses on fair value information and uses that information to assess the securities’ performance and to make decisions. In addition, certain
asset-backed securities have contractual cash flows that are not SPPI. These assets are therefore measured at FVTPL under IFRS 9.
b) Certain debt securities are held by the Bank in separate portfolios to meet everyday liquidity needs. The Bank seeks to minimise the costs of managing these
liquidity needs and therefore actively manages the return on the portfolio. That return consists of collecting contractual payments as well as gains and losses
from the sale of financial assets. The investment strategy often results in sales activity that is significant in value. The Bank considers that under IFRS 9 these
securities are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets. Moreover, certain
equity investments held by the Bank for strategic purposes have been designated under IFRS 9 as at FVOCI.
c) Corporate debt securities that were previously classified as held-to-maturity are now classified at amortised cost. The Bank intends to hold the assets to maturity
to collect contractual cash flows and these cash flows consist solely of payments of principal and interest on the principal amount outstanding. (HTM to AC).
d) Advances except for Temporary Economic Refinance Facility (TERF), staff loans and modified loans are stated at cost, whereas TERF scheme and staff loans
are stated at amortised cost.

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4.1.2.2Impact on regulatory capital

The introduction of IFRS 9 has resulted in reduction in regulatory capital of the Banks, which has reduced
their lending capacity and ability to support their clients. In order to mitigate the impact of ECL models on
capital, SBP has determined that it may be appropriate for the banks to introduce a transitional arrangement
for the impact on regulatory capital from the application of ECL accounting. Annexure B of the 'Application
Instructions' issued by SBP has detailed the transitional arrangement.

The transitional arrangement applies only to provisions for stage 1 and stage 2 financial assets. The transitional
arrangement must adjust CET1 capital. Where there is a reduction in CET1 capital due to new provisions, net
of tax effect, upon adoption of an ECL accounting model, the decline in CET1 capital (the “transitional
adjustment amount”) must be partially included (i.e., added back) to CET1 capital over the “transition period”
of five years.

Moreover, the SBP has allowed to adjust the amount of Stage 1 and Stage 2 provisions in Tier 2 Capital that
have not been added back to CET 1 and vice versa as per Annexure-A of BPRD Circular no 16 of 2024 dated
July 29, 2024.

Had IFRS 9 not been applied then CAR would have been higher by 18 bps from 19.29% to 19.47%.

4.1.2.3Classification and measurement

Under the new standard, classification and measurement of financial assets depends on how these are
managed based on business model and their contractual cash flow characteristics. Financial assets that do
not meet the Solely Payment of Principal and Interest (SPPI) criteria are required to be measured at fair value
through profit and loss (FVTPL) regardless of the business model in which they are held.

Recognition and initial measurement

Debt securities issued are initially recorded when they are originated. All other financial assets and financial
liabilities are initially recognised when the Bank becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability
is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable
to its acquisition or issue. A trade receivable without a significant financing component is initially measured
at transaction price. The fair value of a financial asset on initial recognition is generally its transaction price.
If the Bank determines that the fair value on initial recognition differs from the transaction price then the
financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value
on initial recognition and the transaction price. Subsequently, that difference is recognised in unconsolidated
profit and loss account on an appropriate basis over the life of the asset but no later than when the valuation
is wholly supported by observable market data, or the transaction is closed out. Advances other than Temporary
Economic Refinance Facility (TERF), staff loans and modified loans are initially measured at transaction price,
i.e., the amount of loan disbursed at disbursement date.

Staff loans and Temporary Economic Refinance Facility (TERF) loans are recognised at fair value at the time
of disbursement. The fair value is determined by discounting the expected future cash flows using the
prevailing market rates for instruments. The difference between the disbursed amount and the fair value at
initial recognition is recorded as "Prepaid employment benefit" for Staff loans under other assets and "Deferred
grant income" for TERF loans under other liabilities.

53
 Classification

Financial Assets

On initial recognition, a financial asset is classified as either amortised cost, FVOCI, or FVPL where as Advances
except for staff financing, the Temporary Economic Refinance Facility (TERF), and modified financing, are
carried at cost.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
as at FVTPL:

- the asset is held within a business model whose objective is to hold assets to collect contractual cash
flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI.
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not
designated as at FVTPL:
- the asset is held within a business model whose objective is achieved by both collecting contractual
cashflows and selling financial assets; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI.

On initial recognition of an equity investment that is not held for trading, the Bank may irrevocably elect to
present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.

Advances are carried at cost, net of expected credit loss allowances, except for Temporary Economic Refinance
Facility (TERF), staff loans and modified loans which are measured at amortised cost.

Financial assets are not reclassified subsequent to their initial recognition unless the Bank changes its business
models for managing financial assets, in which cases all affected financial assets are reclassified on the first
day of the first reporting period following changes in the business model.

IFRS 9 allows entities to irrevocably designate, at initial recognition, a financial asset as measured at FVTPL if
doing so eliminates or significantly reduces any 'accounting mismatch' that would otherwise arise from
measuring assets or liabilities or recognising gains and losses on them on different basis. The SBP instructions
state that banks may apply the fair value option if, in addition to the IFRS 9 criterion, (a) it is consistent with
a documented risk management strategy, and (b) fair values are reliable at inception and throughout life of
the instrument. Nonetheless, banks should avoid this option for financial instruments that are categorised
as Level 3 in terms of the IFRS 13 hierarchy.

Under IFRS 9, derivatives embedded in contracts where the host is a financial asset in scope of the standard
are never bifurcated. Instead, the whole hybrid instrument is assessed for classification.

Financial Liabilities

Financial liabilities are either classified as fair value through profit and loss account (FVTPL), when they are
held for trading purposes, or at amortised cost. Financial liabilities classified as FVTPL are measured at fair
value and all the fair value changes are recognised in the unconsolidated profit and loss account. Financial
liabilities classified at amortised cost are initially recorded at their fair value and subsequently measured using
the effective interest rate method. Markup expense and foreign exchange gain and losses are recognised in
unconsolidated profit and loss account. Any gain or loss on derecognition is also recognised in unconsolidated
profit and loss account.

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4.1.2.4Business model assessment

A financial asset is classified as either Held to collect, Held to collect and sale and Others based on Business
model assessment. The Bank makes an assessment of the objective of a business model in which a financial
asset is held at a portfolio level because this best reflects the way the business is managed, and information
is provided to the management. The assessment requires judgement based on facts and circumstances on
the date of assessment. The assessment considers the policies and objectives for the portfolio of financial
assets, risk affecting, performance evaluation, business manager’s compensation and historical sales information.

Financial assets that are held for trading or managed and whose performance is evaluated on a fair value
basis are measured at FVTPL because they are neither held to collect contractual cash flows nor held both
to collect contractual cash flows and to sell financial assets.

4.1.2.5 Assessment of whether contractual cash flows are solely payments of principal and interest
(SPPI)

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial
recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated
with the principal amount outstanding during a particular period of time and for other basic lending risks
and costs (e.g., liquidity risk and administrative costs), as well as interest margin.

In assessing whether the contractual cash flows are SPPI, the Bank considers the contractual terms of the
instrument. This includes assessing whether the financial asset contains a contractual term that could change
the timing or amount of contractual cash flows such that it would not meet this condition. In making the
assessment, the Bank considers:

– contingent events that would change the amount and timing of cash flows;
– leverage features;
– prepayment and extension terms;
– terms that limit the Bank’s claim to cash flows from specified assets (e.g. non-recourse loans); and
– features that modify consideration of the time value of money (e.g. periodical reset of interest rates).

A prepayment feature aligns with SPPI if it mainly represents unpaid principal and profit, including reasonable
compensation for early termination.

4.1.2.6Subsequent measurement

The following accounting policies apply to the subsequent measurement of financial assets:

Financial assets at FVTPL These assets are subsequently measured at fair value. Net gains and losses,
including any markup or dividend income, are recognised in
unconsolidated profit and loss account.
Financial assets at amortised cost These assets are subsequently measured at amortised cost using the
effective interest method. The amortised cost is reduced by impairment
losses. Markup, foreign exchange gains and losses and impairment are
recognised in the unconsolidated profit and loss account.
Debt investments at FVOCI These assets are subsequently measured at fair value and is assessed for
impairment under the new ECL model. Markup income is calculated
using the effective interest method and includes Amortisation of premiums

55
 and accretion of discount, foreign exchange gains and losses and
impairment are recognised in the unconsolidated profit and loss account.
Other net gains and losses are recognised in OCI. On derecognition, gains
and losses accumulated in OCI are reclassified to the unconsolidated
profit and loss account.
Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends are
recognised as income in profit and loss account unless the dividend
clearly represents a recovery of part of the cost of the investment, in
which case they are adjusted from the carrying value of investment. Other
net gains and losses are recognised in OCI and are never reclassified to
profit and loss account.
Advances Advances are carried at cost, net of expected credit loss allowances,
except for Temporary Economic Refinance Facility (TERF) and staff financing,
modified financing which are carried at amortised cost, net of expected
credit loss allowances.

4.1.2.7Amortised cost and gross carrying amount

The ‘amortised cost’ of a financial asset or financial liability is the amount at which the financial asset or
financial liability is measured on initial recognition minus the principal repayments, plus or minus the
cumulative amortisation using the effective interest method of any difference between that initial amount
and the maturity amount and, for financial assets, adjusted for any expected credit loss allowance (or
impairment allowance before 1 January 2024).

The ‘gross carrying amount of a financial asset’ is the amortised cost of a financial asset before adjusting for
any expected credit loss allowance.

4.1.2.8Calculation of markup income and expense

Income on financial assets, comprising performing advances and debt securities and other financial assets,
of the domestic operations is recognised on a time proportion basis as per the terms of the contract. However,
where debt securities, classified as investments in the unconsolidated financial statements, are purchased
at premium or discount, such premium / discount including the transaction cost is amortised through the
unconsolidated Profit and Loss account over the remaining maturity of the debt security using the effective
interest rate method. Similarly, under the local regulatory requirement, income recoverable on classified
advances and investments (debt securities), is recognised on a receipt basis.

Income on rescheduled / restructured advances and investments is recognised as permitted by SBP regulations.

Markup expense on financial liabilities (comprising deposits, subordinated debts, and borrowings) is recognised
on an accrual basis in the period in which it is incurred, based on their contractual rates.

Islamic Banking Institutions (IBIs) are allowed to follow Islamic Financial Accounting Standards (IFAS) 1 & 2
where applicable and continue the existing accounting methodology on other Islamic products until issuance
of further instruction in this regard.

4.1.2.9Derecognition

The Bank derecognises a financial asset when:

- the contractual rights to the cash flows from the financial asset expire; or
- it transfers the rights to receive the contractual cash flows in a transaction in which either:

56
 - substantially all of the risks and rewards of ownership of the financial asset are transferred; or
- the Bank neither transfers nor retains substantially all of the risks and rewards of ownership and
it does not retain control of the financial asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount of the asset
(or the carrying amount allocated to the portion of the asset derecognised), and the consideration received
(including any new asset obtained less any new liability assumed) and any cumulative gain or loss that
had been recognised in OCI is recognised in the unconsolidated profit and loss account, except that in
case of the derecognition of equity securities held at FVOCI, cumulative gains or losses are transferred to
unappropriated profit.

The Bank derecognises a financial liability when its contractual obligations are discharged or cancelled, or
expired. The Bank also derecognises a financial liability when its terms are modified and the cash flows of the
modified liability are substantially different, in which case a new financial liability based on the modified terms
is recognised at fair value.

4.1.2.10Modification

Financial assets

The Bank sometimes renegotiates or otherwise modifies the contractual cash flows of to its customers. If the
cash flows are substantially different, then the contractual rights to cash flows from the original financial asset
are deemed to have expired. In this case, the original financial asset is derecognised and a new financial asset
is recognised at fair value plus any eligible transaction costs. Any fees received as part of the modification
are accounted for as follows:

- fees that are considered in determining the fair value of the new asset and fees that represent reimbursement
of eligible transaction costs are included in the initial measurement of the asset; and
- other fees are included in profit and loss account as part of the gain or loss on derecognition.

If cash flows are modified when the borrower is in financial difficulties, then the objective of the modification
is usually to maximise recovery of the original contractual terms rather than to originate a new asset with
substantially different terms. If the bank plans to modify a financial asset in a way that would result in
forgiveness of cash flows, then it first considers whether a portion of the asset should be written off before
the modification takes place. This approach impacts the result of the quantitative evaluation and means that
the derecognition criteria are not usually met in such cases.

Where derecognition of financial assets is appropriate, the newly recognised residual loans are assessed to
determine whether the assets should be classified as purchased or originated credit-impaired assets (POCI).

If the modification of a financial asset measured at amortised cost or FVOCI does not result in derecognition
of the financial asset, then the bank first recalculates the gross carrying amount of the financial asset using
the original effective interest rate of the asset and recognised the resulting adjustment as a modification gain
or loss in profit and loss account. Any costs or fees incurred, and fees received as part of the modification
adjust the gross carrying amount of the modified financial asset and are amortised over the remaining term
of the modified financial asset.

If such a modification is carried out because of financial difficulties of the borrower then the gain or loss is
presented together with impairment losses. In other cases, it is presented as markup income calculated using
the effective interest rate method.

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 Financial liabilities

The Bank derecognises a financial liability when its terms are modified and the cash flows of the modified
liability are substantially different. In this case, a new financial liability based on the modified terms is recognised
at fair value. The difference between the carrying amount of the financial liability recognised and consideration
paid is recognised in profit and loss account. Consideration paid includes non-financial assets transferred, if
any, and the assumption of liabilities, including the new modified financial liability.

If the modification of a financial liability is not accounted for as derecognition, then the amortised cost of
the liability is recalculated by discounting the modified cash flows at the original effective interest rate and
the resulting gain or loss is recognised in profit and loss account. For floating-rate financial liabilities, the
original effective interest rate used to calculate the modification gain or loss is adjusted to reflect current
market terms at the time of the modification. Any costs and fees incurred are recognised as an adjustment
to the carrying amount of the liability and amortised over the remaining term of the modified financial liability
by re-computing the effective interest rate on the instrument.

4.1.2.11Impairment

The impairment requirements apply to financial assets measured at amortised cost and FVOCI (other than
equity instruments), lease receivables, and certain loan commitments and financial guarantee contracts. At
initial recognition, an impairment allowance (or provision in the case of commitments and guarantees) is
required for expected credit losses (‘ECL’) resulting from default events that are possible within the next 12
months (’12-month ECL’). In the event of a significant increase in credit risk, a provision is required for ECL
resulting from all possible default events over the expected life of the financial instrument (‘lifetime ECL’).

Restructured financial assets

If the terms of a financial asset are renegotiated or modified or an existing financial asset is replaced with a
new one due to financial difficulties of the borrower, then an assessment is made of whether the financial
asset should be derecognised and ECL are measured as follows:

– If the expected restructuring will not result in derecognition of the existing asset, then the expected
cash flows arising from the modified financial asset are included in calculating the cash shortfalls from
the existing asset.
– If the expected restructuring will result in derecognition of the existing asset, then the expected fair
value of the new asset is treated as the final cash flow from the existing financial asset at the time of its
derecognition. This amount is included in calculating the cash shortfalls from the existing financial asset
that are discounted from the expected date of derecognition to the reporting date using the original
effective interest rate of the existing financial asset.

Financial assets where 12-month ECL is recognised are in ‘Stage 1’; financial assets that are considered to have
experienced a significant increase in credit risk are in ‘Stage 2’; and financial assets for which there is objective
evidence of impairment, so are considered to be in default or otherwise credit impaired, are in ‘Stage 3’.

Non-Performing financial assets

At each reporting date, the Bank assesses whether financial assets carried at amortised cost and debt financial
assets carried at FVOCI, and finance lease receivables are credit_impaired (referred to as ‘Stage 3 financial
assets’). A financial asset is ‘non-performing’ when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.

58
Evidence that a financial asset is credit-impaired includes the following observable data:

- significant financial difficulty of the borrower or issuer;

- a breach of contract such as a default or past due event;
- the restructuring of a loan by the Bank on terms that the Bank would not consider otherwise;
- it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
- the disappearance of an active market for a security because of financial difficulties.

A loan that has been renegotiated due to a deterioration in the borrower’s condition is usually considered
to be credit-impaired unless there is evidence that the risk of not receiving contractual cash flows has reduced
significantly and there are no other indicators of impairment. In addition, a retail loan that is overdue for 90
days or more is considered credit-impaired.

Under the IFRS 9 Application instructions, the Bank is not required to compute ECL on Government Securities
and on Government guaranteed credit exposure in local currency. The Bank is required to calculate ECL on
it’s non-performing financial assets as higher of provision under Prudential Regulations (PR) and ECL under
IFRS 9.

For Stage 3, The Bank calculates the ECL against corporate, commercial & SME loan portfolios as higher of
PR and ECL under IFRS 9 at borrower / facility level, whereas against the retail borrowers the Bank calculates
the ECL at higher of PR and ECL under IFRS 9 at segment/product basis as instructed under Annexure-A of
BPRD Circular no 16 of 2024.

ECL is the probability weighted estimate of expected cash shortfalls which is determined by multiplying the
probability of default (PD) with the loss given default (LGD) with the expected exposure at the time of default
(EAD). Based on the requirements of IFRS 9 and Application Instructions, the Bank has performed an ECL
assessment considering the following key elements:

– Probability of default (PD):

The Probability of Default represents the likelihood that a counterparty will default within a specific
timeframe, such as 12 months (12-month ECL for Stage 1) or the lifetime of the financial instrument
(lifetime ECL for Stage 2). The Bank calculates PD on Islamic financing and related assets which is further
bifurcated into retail and non retail portfolios. Following is the methodology through which non retail
and retail PD are calculated:

– Non-Retail PD:

The Bank utilises its internal risk rating system to assign Obligor Risk Ratings (ORR) to borrowers. The Bank
has used a statistical method called Markov Chain, also known as Transition Matrices / Migration matrices,
for the estimation of TTC PDs associated with each of its Obligor Risk Rating (ORR).

– Retail PD:

The Bank has used market benchmark PDs for retail segments. The Bank has recently started developing
its retail portfolio and does not have sufficient data to develop PD and LGD Models. In the absence of
required data and after discussing with consultants, management has decided to use the market
benchmark PDs and BASEL prescribed 45% LGD for retail segment. Moreover, the Bank has used its
internal data to develop the TTC- PD models using Pluto and Tasche technique for the calculation of

59
 Expected Credit Loss (ECL) on Investments, Balances with other banks (BWOB) and Lending to FIs. TTC-
PD were converted into PiT PDs by applying Macro Economic variable with Vasicek approach.

– Incorporation of forward-looking information:

Forward looking information is incorporated to convert TTC PD to Point in Time Probability of Default
(PiT) PD. The Bank has estimated the PiT PDs using the Vasicek framework in its PD Model. For this purpose,
the Bank incorporated 5-year forecasts obtained from the Macro Economic Variable (MEV) database of
the International Monetary Fund (IMF). The MEVs used in the Model are the Consumer Price Index (CPI)
and Gross Domestic Product (GDP) etc.

– Exposure at Default (EAD):

The Bank has defined EAD for financial assets carried at an amortised cost equal to principal plus accrued
markup at the default date. Each repayment date is assumed to be a default point in the model, and the
ECL is calculated on the EAD at each repayment date and discounted at the effective interest rate to
arrive at the discounted ECL under three scenarios, i.e., base, worst, and best-case scenarios. The unutilised
exposures are multiplied with Credit Conversion Factors (CCFs) to compute the EAD of revolving facilities.
For non-revolving facilities, CCF is only applied to unutilised exposures when the Bank doesn’t have
unconditional right to revoke the undrawn portion. Additionally, cash and cash equivalent collateral the
Bank holds against non-retail facilities are adjusted from the EAD, and ECL is calculated on the net amount.
The Bank has developed CCF models for its revolving and non revolving facilities based on the historical
utilisation of credit limits which are currently being applied to the revolving portfolio.

– Loss Given Default:

Loss Given Default (LGD) represents the forecasted economic loss in the event of default, calculated
independently of credit quality and applied consistently across all stages. LGD is determined as the
percentage of loss expected in case of borrower default, incorporating historical data, cash recovery
experience (including settlements), costs and time of recoveries, collateral realisations, and recovery
projections. For non-collateralised portfolios, the Bank estimates LGD based on actual recoveries from
defaulted accounts over a historical period of 8 years prior to the assessment date. Forward-looking
information is incorporated into the LGD calculation to reflect the impact of macroeconomic factors on
the expected recoveries. The Bank uses a statistical approach, specifically the Jacob Frye model, to estimate
Point-in-Time (PiT) LGD. This model accounts for forward-looking information, including macroeconomic
variables, to estimate LGD for all credit segments.

Purchase or Originated Credit Impaired Financial Assets

Purchase or Originated Credit Impaired (POCI) financial assets are assets that are credit-impaired on initial
recognition. Expected credit loss for these assets is not recognised in a separate loss provision on initial
recognition, as the lifetime expected credit loss is inherent within the gross carrying amount of the instruments.
Consequently, POCI assets do not carry an impairment allowance on initial recognition. The amount recognised
as a loss allowance after initial recognition is equal to the changes in lifetime ECL since the initial recognition
of the asset.

Presentation of allowance for Expected Credit Loss in the Statement of Financial Position

Loss allowances for ECL are presented in the Statement of Financial Position as follows:

– financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets.
– loan commitments and financial guarantee contracts: as a provision in Other Assets / Liabilities.

60
 – where a financial instrument includes both a drawn and an undrawn component, and the Bank does not
identify the ECL on the loan commitment component separately from those on the drawn component
and instead presents a combined loss allowance for both components. The combined amount is presented
as a deduction from the gross carrying amount of the drawn component. Any excess of the loss allowance
over the gross amount of the drawn component is presented as a provision; and
– debt instruments measured at FVOCI: no loss allowance is recognised in the statement of financial position
because the carrying amount of these assets is their fair value. However, the loss allowance is disclosed
and is recognised in retained earnings.

4.1.2.12Significant increase in credit risk (SICR)

A SICR is assessed in the context of an increase in the risk of a default occurring over the life of the financial
instrument when compared to that expected at the time of initial recognition. It is not assessed in the context
of an increase in the ECL. The Bank used several qualitative and quantitative measures in assessing SICR.
Quantitative measures relate to deterioration of Obligor Risk Ratings (ORR) or where principal and / or markup
payments are 60 & 120 days past due for advances and trade bills respectively. Qualitative factors include the
Watchlist and restructured/rescheduled.

As required by the Application Instructions, financial assets may be reclassified out of stage 3 if they meet
the requirements of PR issued by SBP. Financial assets in stage 2 may be reclassified to stage 1 if the conditions
that led to a SICR no longer apply. However, a minimum period of 06 months from the end of downgrade
reason is required before any facility is moved back to Stage 1 from Stage 2. For a facility to move back from
Stage 3 to Stage 2, it should meet the criteria defined under the respective Prudential Regulations for de-
classification of account / facility and after observing of 03 months cooling off period. An exposure cannot
be upgraded from Stage 3 to Stage 1 directly and should be upgraded to Stage 2 initially.

IFRS 9 includes a rebuttable presumption that a default does not occur later than 90 days past due and it
also presumes that there is SICR if credit exposure is more than 30 days past due. In order to bring consistency,
SBP has allowed the backstop to the rebuttable presumption of days past due of credit portfolio against a
specific credit facility and its stage allocation under IFRS 9 as mentioned in Annexure-C of BPRD Circular no
3 of 2022. However, banks are free to choose more stringent days past due criteria.

4.1.2.13Write-offs

Financial assets are written off (either partially or in full) when there is no reasonable expectation of recovering
a financial asset in its entirety or a portion thereof. This is generally the case when the Bank determines that
the borrower does not have assets or sources of income that could generate sufficient cash flows to repay
the amounts subject to the write-off. This assessment is carried out at the individual asset level.

Recoveries of amounts previously written off are included in ‘impairment losses on financial instruments’ in
the statement of profit and loss account and OCI.

Financial assets that are written off could still be subject to enforcement activities in order to comply with
the Bank’s procedures for recovery of amounts due.

4.1.2.14Off-setting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Bank currently has a legally enforceable right to set off the amounts and
it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

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 4.1.2.15Undrawn loan commitments and guarantees:

Financial guarantees’ are contracts that require the Bank to make specified payments to reimburse the holder
for a loss that it incurs because a specified debtor fails to make payment when it is due in accordance with
the terms of a debt instrument. ‘Loan commitments’ are firm commitments to provide credit under pre-specified
terms and conditions.

When estimating lifetime ECL for undrawn loan commitments, the Bank estimates the expected portion of
the loan commitment that will be drawn down over its expected life. The ECL is then based on the present
value of the expected cash flows if the loans are drawn down, based on a probability-weighting of the three
scenarios.

4.1.2.16Governance, ownership and responsibilities

The Bank has adopted a governance framework requiring the Risk, Finance, Operations, Internal Audit and IT
functions to effectively work together to ensure input from all business lines. IFRS 9 requires robust credit risk
models that can predict Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD).

The Bank’s Risk Management Division has developed Models/ methodologies for PD, LGD and Credit Conversion
Factors (CCF). These models are validated on annual basis considering the following aspects:

– Quantitative Validation: Expected credit loss (ECL) model design validation, data quality validation and
benchmarking with external best practices.
– Quantitative Validation: Calibration testing which ensures the accuracy of the observed PDs.

The Risk Department defines the staging criteria for the new impairment model and take ownership of all
models, methodologies and the ECL calculation approach. Additionally, the Risk department also take the
ownership of the impact of ECL on bank's capital.

Risk Management division of the Bank is responsible for the implementation of IFRS 9. Further the Bank has
engaged a consultant for the calculation of ECL on a quarterly basis. The same is provided to the Risk
Management Division which reviews and assesses the ECL and submits to the same to Finance Division for
financial reporting requirements.

Finance Division then uses the financial information for preparing the financial statements and related financial
ratios.

Risk Management Division prepares and submits the analysis to board risk committee on a quarterly basis.
Further financial statements prepared on the basis of IFRS-9 is then submitted to the Board Audit Committee
on a quarterly basis.

The IT Department provides support to all the stakeholders for preparing and extracting the data required
for the risk parameters modelling. IT department also provides support to project owners for system
development and upgrades.

4.2 Cash and cash equivalents

For the purpose of the unconsolidated cash flow statement, cash and cash equivalents include cash and balances with
treasury banks, balances with other banks and national prize bonds less overdrawn nostro balances.

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4.3 Lendings to / borrowings from financial institutions

The Bank enters into transactions of borrowing (repo) from and lending (reverse repo) to financial institutions, at contracted
rates for a specified period of time. These are recorded as under:

Purchase under resale agreement (reverse repo)

Securities purchased with a corresponding commitment to resell at a specified future date (reverse repos) are not
recognised in the unconsolidated statement of financial position and instead amounts paid under these arrangements
are included in lendings to financial institutions. The difference between purchase and resale price is accrued as markup
income on a pro-rata over the term of the agreement.

Sale under repurchase agreement (repo)

Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue to be recognised
in the unconsolidated statement of financial position and are measured in accordance with accounting policies for
investments and amount received under these agreements are recorded as repurchase agreement borrowings. The
difference between sale and repurchase price is accrued as markup expense on a pro-rata basis over the term of the repo
agreement.

Bai Muajjal

In Bai Muajjal, the Bank sells sukuk on credit to other financial institutions. The sale / purchase price is agreed at the time
of sale and such proceeds are received at the end of the credit agreed period. The sukuk sold under Bai Muajjal transaction
are derecognised on the date of disposal. Receivable against such sale is recognised at the agreed sale price. The difference
between the sale price and the carrying value on the date of disposal is taken to income on straight line basis.

Musharaka / Modaraba

In Musharaka / Modaraba, the Bank invests in the Shariah compliant business pools of the financial institutions at the
agreed profit sharing ratio. Loss, if any will be shared between the parties as per the investment.

Musharaka from the SBP under Islamic Export Refinance Scheme (IERS)

Under IERS, the Bank accepts funds from the SBP under Shirkat-ul-aqd to constitute a pool for investment in Islamic export
refinance portfolio of the Bank under the guidelines issued by the SBP. The profit of the pool is shared as per the agreed
weightages between the partners.

Modaraba investment from the SBP under various long term Islamic refinance schemes

Under various long term Islamic refinance schemes of the SBP, the Bank accepts funds from the SBP which are received
on modaraba basis for investment in the pool of the Bank. The profit of the pool is shared as per the agreed profit sharing
ratio of the pool and the weightages assigned to these investments.

4.4 Investments (Applicable before January 1, 2024)

4.4.1 Investments in subsidiaries are stated at cost less provision for impairment, if any.

4.4.2 Other investments are classified as follows:

Held-for-trading

These are securities, which are either acquired for generating profit from short-term fluctuation in market prices, interest
rate movements, dealers margin or are securities included in a portfolio in which a pattern of short-term trading exists.

63
 Held-to-maturity

These are securities with fixed or determinable payments and fixed maturities that are held with the positive intention
and ability to hold till maturity.

Bai Muajjal transactions undertaken with the Government of Pakistan are disclosed as investments.

Available-for-sale

These are investments except from those made in subsidiary companies and that do not fall under the held-for
trading or held-to-maturity categories.

4.4.3 Initial Measurement

Investments (other than held-for-trading) include transaction costs associated with the investments. In case of held-
for-trading transaction costs are charged to profit and loss account when incurred.

All “regular way” purchases and sales of investments are recognised on the trade date, i.e., the date that the Bank commits
the purchase or sell the asset. Regular way purchases or sales are purchases or sales of investments that require delivery
of assets within the time frame generally established by regulation or convention in the market place.

Subsequent Measurement

Held-for-trading

Investments classified as held-for-trading are subsequently measured at fair value. Any unrealised surplus / deficit
arising on the revaluation of the Bank’s held-for-trading investment portfolio is taken to the profit and loss account.

Held-to-maturity

Investments classified as held-to-maturity are carried at amortised cost.

Available-for-sale

Quoted securities classified as available-for-sale are subsequently measured at fair value. Any unrealised surplus /
deficit arising on revaluation of quoted securities classified as available for sale is kept in a separate account shown
in equity. Surplus / deficit arising on these securities is taken to the profit and loss account when actually realised
upon disposal or when the investment is considered to be impaired. Unquoted equity securities are valued at the
lower of cost and break-up value. Break-up value of these securities is calculated as per the latest available audited
financial statements. Investments in other unquoted securities are valued at cost less impairment losses, if any.

Impairment

Provision for diminution in the value of term finance certificates and sukuk certificates are made as prescribed under
Prudential Regulation issued by the SBP.

Provision for impairment in the value of available-for-sale and held-to-maturity securities (other than Federal
Government securities, term finance certificates and sukuk certificates) is made after considering objective
evidence of impairment, if any, in their value (as a result of one or more events that may have an impact on the
estimated future cash flows of the investments). A significant or prolonged decline in the fair value of an equity
investment below its cost is also considered an objective evidence of impairment. Impairment losses are taken to
profit and loss account.

64
4.5 Advances (Applicable before January 1, 2024)

4.5.1 Loans and advances

Loans and advances and net investments in finance lease are stated net of provision for loan losses against non-
performing advances. Provision for loan losses is made in accordance with the Prudential Regulations issued by
the SBP and is charged to profit and loss account. The Bank also maintains general provision in addition to the
requirements of the Prudential Regulations on the basis of management's assessment of credit risk characteristics
and general banking risk such as nature of credit, collateral type, industry sector and other relevant factors.
Advances are written-off in line with the Bank's policy when there are no realistic prospects of recovery.

4.5.2 Finance lease receivables

Leases where the Bank transfers substantially all the risks and rewards incidental to ownership of an asset to the
lessee are classified as finance lease. A receivable is recognised at an amount equal to the present value of the
minimum lease payments including guaranteed residual value, if any. Finance lease receivables are included in
advances to the customers.

4.5.3 Islamic finance and related assets

Ijarah

Ijarah assets are stated at cost less depreciation and are disclosed as part of 'Islamic financing and related assets.
Rental received / receivable on Ijarah are recorded as income / revenue. The Bank charges depreciation from the
date of recognition of Ijarah of respective assets to Lessee (mustajir). Ijarah assets are depreciated over the period
of Ijarah using the straight line method. Ijarah rentals outstanding are disclosed in 'other assets' on the Statement
of Financial Position at amortised cost.

Diminishing Musharaka

Under diminishing musharaka based financing, the Bank enters into a musharaka based on shirkat-ul-milk for
financing an agreed share of fixed asset (e.g. house, land, plant or machinery) with its customers and enters into
rental payment agreement for the utilisation of the Bank's musharaka share by the customer. The Bank receives
periodic payments from its customers partly for renting its portion of the assets and partly for gradual transfer /
sale of its ownership. The rental payments are recognised in profit and loss account whereas transfer / sale payments
are applied towards reducing the outstanding principal.

Running Musharaka

Under Running Musharaka, the Bank enters into financing with the customer based on Shirkat-ul-Aqd in the
customer's operating business. Under this mechanism the customer can withdraw and return funds to the Bank
subject to consumer's running musharakah financing limit during the Musharaka period. At the end of each
quarter / half year the customer pays the provisional profit as per the desired profit rate which is subject to final
settlement based on the relevant quarterly / half yearly / annual accounts of the customer.

Istisna

Under istisna financing, the Bank places an order to purchase some specific goods / commodities from its customers
to be manufactured / delivered to the Bank within an agreed time. The goods are then sold and the amount
financed along with profit is paid back to the Bank.

65
 Al-Bai

The product is based on the Islamic mode “musawamah”. Under this financing, the Bank purchases the goods
from its customers on cash payment basis and after taking the possession by the Bank, the customer on behalf
of the Bank sells them. Upon subsequent sale by the customer, the financed amount along with the profit is paid
by the customer to the Bank.
Murabaha

In Murabaha transactions, the Bank purchases the goods and after taking the possession, sells them to the customer
on cost plus profit basis either in a spot or credit transaction.

Salam

In Salam, the seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced
price fully paid at spot. The payment is at spot but the supply of purchased goods is deferred. The purchased
goods by the Bank are then sold by the customer on behalf of the Bank and the financed amount along with
profit is paid to the Bank.

4.6 Property and equipment

4.6.1 Capital work-in-progress

Capital work in progress is stated at cost less impairment loss, if any and consists of expenditures incurred and
advances made in the course of their construction and installation. Transfers are made to relevant asset category
as and when assets are available for intended use.

4.6.2 Property and equipment

Property and equipment are stated at cost, except for land and buildings which are carried at revalued amount, less
any applicable accumulated depreciation and accumulated impairment losses, if any. Land and buildings are stated
at revalued amount less accumulated depreciation (in case of buildings) and accumulated impairment losses, if any.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset at the rates specified in
note 11.2 to these unconsolidated financial statements. Depreciation on additions during the year is calculated from
the date of addition. In case of disposals during the year, the depreciation is charged till the date of disposal.

Subsequent cost are included in the asset's carrying amount only when it is probable that future economic benefits
associated with the item will flow to the Bank and the cost of the item can be measured reliably. All other repairs
and maintenance are charged to the unconsolidated profit and loss account.

An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising on derecognition of the asset is recognised in the profit and loss
account in the year the asset is derecognised.

The residual values, useful lives and depreciation methods are reviewed and changes, if any, are treated as change
in accounting estimates, at each statement of financial position date.

Land and buildings are revalued by independent professionally qualified valuers with sufficient regularity to ensure
that their net carrying amount does not differ materially from their fair value. If an asset’s carrying value increases
as a result of revaluation, such increase or surplus arising on revaluation is credited to the surplus on revaluation of
property and equipment account. If an asset’s carrying amount is decreased as a result of a revaluation, the decrease

66
 shall be recognised in the unconsolidated profit or loss account. However, if the increase reverses a deficit on the
same asset previously recognised in the unconsolidated profit and loss account, such an increase is also recognised
in the unconsolidated profit and loss account to the extent of the previous deficit and thereafter in the surplus on
the revaluation of property and equipment account.

In the case of revalued assets, any accumulated depreciation on the date of revaluation is eliminated against the
gross carrying amount of the net asset and the net amount restated at the revalued amount of the asset.

Surplus on revaluation of property and equipment (net of any associated deferred tax) to the extent of the incremental
depreciation charged on the related assets is transferred to unappropriated profit.

Surplus on revaluation (net of any deferred tax) realised on disposal of land and building is transferred directly to
unappropriated profit.

4.6.3 Right-of-use assets and their related lease liabilities

The Bank recognises a right-of-use asset and lease liability (note 4.14) at the lease commencement date. The right
of-use asset is initially measured at amount equal to present value of lease liability, and subsequently at cost less any
accumulated depreciation and impairment losses if any, and adjusted for certain remeasurements of the lease liability.
The right-of-use asset is depreciated using the straight line method from the commencement date to the earlier
of end of the useful life of right-of-use asset or end of the lease term.

4.7 Intangible assets

These are stated at cost less accumulated amortisation and impairment, if any. The cost of intangible assets are amortised
from the month when the assets are available for intended use, using the straight line method, whereby the cost of the
intangible asset is amortised over its estimated useful life over which economic benefits are expected to flow to the Bank.
The useful life and amortisation method is reviewed and adjusted, if appropriate, at each unconsolidated statement of
financial position date.

4.8 Non-banking assets acquired in satisfaction of claims

Non-banking assets acquired in satisfaction of claims are initially recorded at cost and subsequently carried at revalued
amounts less accumulated depreciation and impairment, if any. These assets are revalued by professionally qualified
valuators with sufficient regularity to ensure that their net carrying value does not differ materially from their fair value.
A surplus arising on revaluation of property is credited to the 'surplus on revaluation of non-banking assets' account and
any deficit arising on revaluation is taken to the unconsolidated profit and loss account directly. Legal fees, transfer costs
and direct costs of acquiring title to property is charged to the unconsolidated profit and loss account.

Depreciation on assets (other than land) acquired in satisfaction of claims is charged to the unconsolidated profit and
loss account on the same basis as depreciation charged on the Bank's property and equipment.

If the recognition of such assets results in a reduction in non-performing loans, such reductions and the corresponding
reductions in provisions held against non-performing loans are disclosed separately.

These assets are generally intended for sale. Gains and losses realised on the sale of such assets are disclosed separately
from gains and losses realised on the sale of property and equipment. Surplus on revaluation (net of deferred tax) realised
on disposal of these assets is transferred directly to unappropriated profit.

If such an asset is subsequently used by the Bank for its own operations, the asset is transferred to property and equipment
along with any related surplus.

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 4.9 Derivative financial instruments

Derivative financial instruments consist of Forward foreign exchange contracts, which are initially recognised at fair value
at the date on which the derivative contract is entered into and are subsequently remeasured at fair value. All derivative
financial instruments are carried as asset when fair value is positive and liabilities when fair value is negative. Any change
in the value of derivative financial instruments is taken to the unconsolidated profit and loss account.

4.10 Credit loss allowance / Provisions

Expected credit loss allowance against identified off-balance exposure is recognised when intimated and reasonable
certainty exists for the Bank to settle the obligation. The loss is charged to the unconsolidated profit and loss account net
of expected recovery and is classified under other liabilities.

Other provisions are recognised when the Bank has a legal or constructive obligation as a result of past events and it is
probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can
be made. Provisions are reviewed at each unconsolidated statement of financial position date and are adjusted to reflect
the current best estimate.

4.11 Taxation

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the unconsolidated profit
and loss account except to the extent that it relates to the items recognised directly in equity, in which case it is recognised
in equity.

4.11.1 Current

Provision for current taxation is based on taxable income for the year at the current rates of taxation after taking into
consideration available tax credits and rebates. The charge for the current tax also includes adjustments where
considered necessary, relating to prior years which arise from assessments framed / finalised during the year.

4.11.2 Deferred

Deferred tax is recognised using the balance sheet liability method on all major temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and amount used for taxation purposes.
Deferred tax is measured at the tax rate that are expected to be applied on the temporary differences when they
reverse, based on the tax rates that have been enacted or substantially enacted at the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that the future taxable profit will be available
against which the asset can be utilised. Deferred tax assets are reviewed at each unconsolidated statement of financial
position date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

The Bank also recognises deferred tax asset / liability on deficit / surplus on revaluation of assets and actuarial gain/
losses recognised in unconsolidated statement of other comprehensive income, which is adjusted against the related
deficit / surplus.

4.12 Deposits / Borrowings

Deposits / Borrowings are recorded at the amount of proceeds received. The cost of deposits is recognised as an expense
on an accrual basis in the period in which it is incurred.

68
4.13 Employees' benefits

4.13.1 Retirement benefits

Defined benefit plan

The Bank operates an approved funded gratuity scheme for all its permanent employees. Retirement benefits are
payable to the members of the scheme on the completion of prescribed qualifying period of service under the
scheme. Contribution is made in accordance with the actuarial recommendation. The actuarial valuation is carried
out annually as at the unconsolidated statement of financial position date using the "Projected Unit Credit Actuarial
Cost Method".

All actuarial gains and losses are recognised in other comprehensive income as they occur and are not reclassified
to the unconsolidated profit and loss account in subsequent periods.

Past service cost resulting from changes to defined benefit plan is recognised in the unconsolidated profit and loss
accounts in accordance with arterial's valuation and their assessment.

Defined contribution plan

The Bank operates a recognised provident fund scheme for all its regular employees, which is administered by the
Board of Trustees. Contributions are made by the Bank and its employees, to the fund at the rate of 10% of basic
salary in accordance with the terms of the scheme.

4.13.2 Compensated absences

A provision is made for estimated liability for annual leaves as a result of services rendered by the employees against
unavailed leaves, as per term of service contract, up to the unconsolidated statement of financial position date.

The actuarial valuation under the "Projected Unit Credit Actuarial Cost Method" has been carried out by the Bank for
the determination of the liability for compensated absences. Liability so determined is fully recognised by the Bank.

4.14 Lease liability against right-of-use assets

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement
date, discounted using the Bank’s incremental borrowing rate as the interest rate implicit in the lease cannot be readily
determined. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease
payments made.

4.15 Revenue recognition

Revenue is recognised to the extent that the economic benefits will flow to the Bank and the revenue can be reliably
measured. These are recognised as follows:

4.15.1 Advances and investments

– Mark-up / return / interest on regular loans / advances and debt securities investments is recognised on a time
proportion basis that take into account the effective yield on the asset. Where debt securities are purchased at
premium or discount, the same is amortised through the unconsolidated profit and loss account using the
effective interest rate method.

69
 – Mark-up / return / interest recoverable on classified loans and advances and investments is recognised on receipt
basis. Mark-up / return / interest on classified rescheduled / restructured loans and advances and investments
is recognised as permitted by the regulations of the SBP.
– Dividend income is recognised when the Bank’s right to receive the dividend is established.
– Gains and losses on sale of investments are recognised in the unconsolidated profit and loss account.
– Income on bills discounted are recognised over the period of the bill.

4.15.2 Lease financing / Ijarah contracts

Financing method is used in accounting for income from lease financing. Under this method, the unearned lease
income (excess of the sum of total lease rentals and estimated residual value over the cost of leased assets) is deferred
and taken to income over the term of the lease period so as to produce a constant periodic rate of return on the
outstanding net investment in lease. Unrealised income on classified leases is recognised on receipt basis.

Rental income on these ijarah is recognised in the Bank's unconsolidated profit and loss account on a time proportion
basis, while depreciation is calculated on Ijarah assets on a straight line basis over the period of ijarah.

Gains / losses on termination of lease contracts and other lease income are recognised when realised.

4.15.3 Fees, commission and brokerage

The Bank earns fee and commission income from the banking services to retail and corporate customers. Fee and
commission income is recognised at an amount that reflects the consideration to which the Bank expects to be
entitled in exchange for providing the services.

The Bank recognises fees earned on transaction-based arrangements at a point in time when the Bank has provided
the services to the customer. Unearned fee and commission are included under other liabilities.

The fee pertaining to banking services to retail and corporate customers are based on schedule of charges, reviewed
periodically by the Bank.

4.16 Off setting

Financial assets and financial liabilities are set off and the net amount is reported in the unconsolidated financial statements
when there is a legally enforceable right to set off and the Bank intends to either settle on a net basis, or to realise the
assets and to settle the liabilities simultaneously.

4.17 Foreign currencies

4.17.1 Foreign currency transactions and translations

Foreign currency transactions are translated into functional currency of the Bank at the exchange rates prevailing
on the date of transaction. Monetary assets and liabilities in foreign currencies are translated into rupees at the
exchange rates prevailing at the unconsolidated statement of financial position date. Forward exchange contracts
are revalued using forward exchange rates applicable to their respective remaining maturities. Gains or losses on
above translation are included in the unconsolidated profit and loss account.

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 4.17.2 Offshore branch operations

The assets and liabilities of an offshore branch operations are translated into rupees at the exchange rates prevailing
at the unconsolidated statement of financial position date. The income and expense are translated into rupees at
average rate of exchange prevailing during the year. Exchange gain or loss on such translation is taken to equity
through unconsolidated statement of 'other comprehensive income' under 'exchange translation reserve'.

4.17.3 Contingencies and commitments

Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies
are expressed in rupee terms at the rates of exchange ruling on the statement of financial position date. Commitments
for outstanding forward foreign exchange contracts disclosed in these unconsolidated financial statements are
translated at contracted rates.

4.18 Segment reporting

A segment is a distinguishable component of the Bank that is engaged in providing product or services (business segment),
or in providing products or services within a particular economic environment (geographical segment), which is subject
to risks and rewards that are different from those of other segments. The Bank's primary format of reporting is based on
the following business segments.

4.18.1 Business segments

a) Trading and sales

This segment undertakes the Bank’s treasury, money market and capital market activities.

b) Retail banking

Retail banking provides services to small borrowers i.e. consumers. It includes loans, deposits and other transactions
with retail customers.

c) Commercial banking

This includes loans, deposits and other transactions with corporate and SME customers.

d) Islamic banking

This represents Islamic banking operations of the Bank.

4.18.2 Geographical segments

The Bank conducts all its operations in Pakistan including an offshore branch in Karachi Export Processing Zone.

4.19 Dividend distribution and appropriations

Bonus and cash dividend and other appropriations (except for the appropriations required by law), declared / approved
subsequent to the unconsolidated statement of financial position date are considered as non-adjusting event and are

71
 not recorded in these unconsolidated financial statements of the current year. These are recognised in the period in which
these are declared / approved.

4.20 Earnings per share

The Bank presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares
outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
Diluted earnings per share is not calculated separately, as the Bank does not have any convertible instruments in issue.

4.21 Impairment of non-financial assets (excluding deferred tax asset)

At each unconsolidated statement of financial position date, the Bank reviews the carrying amount of its assets (other
than deferred tax asset) to determine whether there is an indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of relevant asset is estimated. Recoverable amount is the greater
of the net selling price and value in use. If the recoverable amount of an asset is estimated to be less than its carrying
amount, the carrying amount of the assets is reduced to its recoverable amount. The resulting impairment loss is recognised
as an expense immediately in the unconsolidated profit and loss account. An impairment loss is reversed if the reversal
can be objectively related to an event occurring after the impairment loss was recognised.

Details of the basis of determination of impairment against loans and advances and investments have been discussed
in their respective notes.

4.22 Acceptances

Acceptances comprises undertakings by the Bank to pay bill of exchange due on customers. These are recognised as
financial liability and the contractual right of reimbursement from the customer is recorded as a financial asset. Therefore,
commitments in respect of acceptances have been accounted for as financial assets and financial liabilities in these
unconsolidated financial statements.

5. FUNCTIONAL AND PRESENTATION CURRENCY

These unconsolidated financial statements are presented in Pakistani Rupees, which is the Bank's functional currency. Except
as indicated, financial information presented in Pakistani Rupees has been rounded to nearest thousand.

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 Note 2024 2023
Rupees in’000
6. CASH AND BALANCES WITH TREASURY BANKS
In hand
Local currency 15,321,375 11,629,146
Foreign currencies 1,393,358 4,164,225
16,714,733 15,793,371
With State Bank of Pakistan in
Local currency current accounts 6.1 46,256,955 48,615,441
Foreign currencies current account 6.2 2,321,162 1,991,420
Foreign currency deposit accounts
– cash reserve account 6.3 6,731,041 6,308,767
– deposit account - special cash reserve 6.4 12,058,642 11,497,335
67,367,800 68,412,963
With National Bank of Pakistan in
Local currency current accounts 2,670,896 7,125,824
Local currency deposit accounts 47,103 26,958

National Prize Bonds 16,080 107,480

Less: Credit loss allowance held against cash and
balances with treasury banks 6.5 (795) –
Cash and balances with treasury banks - net
of credit loss allowance 86,815,817 91,466,596

6.1 These accounts are maintained to comply with the statutory cash reserve requirement of the SBP.
6.2 These represent foreign currency collection / settlement accounts maintained with the SBP.
6.3 These represent accounts maintained with the SBP to comply with the cash reserve requirement against foreign
currency deposits.
6.4 This represents account maintained with the SBP to comply with the special cash reserve requirement against foreign
currency deposits. The return on this account is declared by the SBP on a monthly basis and, as at 31 December 2024,
carries mark-up at the rate of 3.53% (2023: 4.34%) per annum.
6.5 Credit loss allowance against Cash and balances with treasury banks are all classified as Stage 1.

7. BALANCES WITH OTHER BANKS

Note 2024 2023
Rupees in’000
In Pakistan
In current accounts 10,050 21,746
In deposit accounts 7.1 108 758
10,158 22,504
Outside Pakistan
In current accounts 7.2 6,425,438 21,101,446

Less: Credit loss allowance held against balances with other banks 7.3 (1,045) –

Balances with other banks - net of credit loss allowance 6,434,551 21,123,950

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 7.1 This carries mark-up at the rate of 11.50% (2023: 20.50%) per annum.
7.2 These include balances in current accounts amounting to Rs. 322,178 thousand (2023: Rs. 680,649 thousand) with branches
of the holding company.
7.3 Credit loss allowance against Balances with other banks are all classified as Stage 1.
Note 2024 2023
Rupees in’000
8. LENDINGS TO FINANCIAL INSTITUTIONS
Call / clean money lendings 8.2 5,571,000 5,496,284
Repurchase agreement lendings (reverse repo) – –
Bai Muajjal receivable
- with State Bank of Pakistan – –
- with other financial institutions – –
Modaraba placements – –
Musharakah placements – –
Less: Credit loss allowance held against lending to financial institutions 8.4 (2) –
Lendings to financial institutions - net of credit loss allowance 5,570,998 5,496,284

8.1 Particulars of lendings

In local currency - secured – –

In foreign currency - unsecured 8.2 5,570,998 5,496,284
5,570,998 5,496,284

8.2 These foreign currency lendings carry mark-up rate ranging from 7.00% to 7.85% (2023: 9.80% to 12.00%) per annum and
are due mature latest by 18 Feb 2025 (2023: 04 April 2024).

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8.3 Lending to FIs - Particulars of credit loss allowance
2024 2023
Lending Credit loss Lending Credit loss
allowance allowance
held held
Rupees in ‘000
Overseas
Performing Stage 1 5,571,000 2 5,496,284 –
Under performing Stage 2 – – – –
Non-performing Stage 3
Substandard – – – –
Doubtful – – – –
Loss – – – –
– – – –
Total 5,571,000 2 5,496,284 –

2024
Stage 1 Stage 2 Stage 3 Total
Rupees in ‘000
Balance at the start of the year – – – –
Impact of adoption of IFRS 9 87 – – 87
Transfer to stage 1 – – – –
Transfer to stage 2 – – – –
Transfer to stage 3 – – – –
Net remeasurement of credit loss allowance 87 – – 87

New financial assets originated or purchased – – – –

Financial assets that have been derecognised – – – –
Written off / charged off – – – –
Unwind of discount – – – –
Changes in risk parameters (85) – – (85)
Balance at the end of the year 2 – – 2

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9. INVESTMENTS
9.1 Investments by types
2024 2023
Cost / Credit loss Surplus / Carrying Cost / Provision Surplus / Carrying
amortised allowance (deficit) value amortised for (deficit) value
cost cost diminution
Rupees in ‘000
– Debt Instruments
Classified / Measured at
amortised cost
Federal Government securities 83,208,565 – – 83,208,565 – – – –
Non Government debt securities 3,000,000 (52) – 2,999,948 – – – –
86,208,565 (52) – 86,208,513 – – – –
Classified / Measured at FVOCI
Federal government securities 642,446,225 – 12,480,359 654,926,584 – – – –
Non Government debt securities 9,767,355 (426,154) (354,523) 8,986,678 – – – –
652,213,580 (426,154) 12,125,836 663,913,262 – – – –
Classified / Measured at FVTPL
Federal government securities 42,055,433 – (10,052) 42,045,381 – – – –
Non Government debt securities 1,997,589 – (9,249) 1,988,340 – – – –
44,053,022 – (19,301) 44,033,721 – – – –
Instruments mandatorily
classified / measured at FVTPL
Mutual funds 2,700,000 – 85,219 2,785,219 – – – –
Real estate investment trust 1,814,314 – 1,254,365 3,068,679 – – – –
4,514,314 – 1,339,584 5,853,898 – – – –
– Equity Instruments
Classified / Measured at FVTPL
Shares
Listed companies – – – – – – – –
Unlisted companies – – – – – – – –
– – – – – – – –
Classified / Measured at FVOCI
(Non-Reclassifiable)
Shares
Listed companies 5,157,310 – 3,827,127 8,984,437 – – – –
Unlisted companies 130,640 – (79,071) 51,569 – – – –
5,287,950 – 3,748,056 9,036,006 – – – –
Available-for-sale securities
Federal government securities – – – – 806,507,307 – (3,855,444) 802,651,863
Shares – – – – 4,047,185 (206,844) 839,682 4,680,023
Non-government debt securities – – – – 11,953,893 (87,683) (189,864) 11,676,346
Mutual funds – – – – 16,949 (12,763) 4,069 8,255
Real estate investment trust – – – – 1,831,780 – 160,845 1,992,625
– – – – 824,357,114 (307,290) (3,040,712) 821,009,112
Held-to-maturity securities
Federal government securities – – – – 98,872,853 – – 98,872,853
Non-government debt securities – – – – 4,700,000 – – 4,700,000
– – – – 103,572,853 – – 103,572,853

76
 2024 2023
Cost / Credit loss Surplus / Carrying Cost / Provision Surplus / Carrying
amortised allowance (deficit) value amortised for (deficit) value
cost cost diminution
Rupees in ‘000
– Subsidiaries
Habib Metropolitan Modaraba
Management Company (Private)
Limited 350,000 – – 350,000 350,000 – – 350,000
Habib Metropolitan Financial
Services Limited 300,000 – – 300,000 300,000 – – 300,000
HabibMetro Exchange Services
Limited 1,000,000 – – 1,000,000 – – – –
First Habib Modaraba (FHM) 180,000 – – 180,000 180,000 – – 180,000
1,830,000 – – 1,830,000 830,000 – – 830,000

Total investments 794,107,431 (426,206) 17,194,175 810,875,400 928,759,967 (307,290) (3,040,712) 925,411,965

9.2 Investment in subsidaries

- incorporated in Pakistan
Holding % Assets Liabilities Revenue Profit Total com-
after tax prehensive
income
Rupees in ‘000
2024
Habib Metropolitan Financial Services Limited 100% 600,488 265,997 99,516 (4,200) 24,774
Habib Metropolitan Modaraba Management Company (Private) Limited 100% 843,479 17,956 168,034 128,620 184,084
First Habib Modaraba (FHM) 5.43% 30,500,563 24,773,681 5,430,581 972,084 1,001,161
HabibMetro Exchange Services Limited 100.00% 1,054,315 35,038 166,594 19,277 19,277
2023
Habib Metropolitan Financial Services Limited 100% 356,760 46,836 53,857 (20,406) (16,869)
Habib Metropolitan Modaraba Management Company (Private) Limited 100% 723,378 13,465 105,652 105,968 98,208
First Habib Modaraba (FHM) 5.43% 22,878,502 17,913,536 4,425,279 811,792 816,442

9.2.1 During the year, the Bank invested Rs. 1,000,000 thousand (2023: Nil thousand) in its 100% owned subsidiary,
HabibMetro Exchange Services Limited.

77
9.3 Investments by segments
2024 2023
Cost / Credit loss Surplus / Carrying Cost / Provision Surplus / Carrying
amortised allowance (deficit) value amortised for (deficit) value
cost cost diminution
Rupees in ‘000

Federal government securities

Market treasury bills 130,988,178 – 842,314 131,830,492 335,775,414 – 878,703 336,654,117
Pakistan investment bonds 496,455,165 – 7,980,831 504,435,996 479,399,875 – (5,459,487) 473,940,388
Ijarah sukuk 137,785,245 – 3,647,162 141,432,407 84,720,427 – 725,340 85,445,767
Islamic Naya Pakistan certificate
modaraba investment pool:
– foreign currencies 1,709,911 – – 1,709,911 4,999,907 – – 4,999,907
– Pak rupees 771,724 – – 771,724 484,537 – – 484,537
767,710,223 – 12,470,307 780,180,530 905,380,160 – (3,855,444) 901,524,716
Shares
Listed companies 5,157,310 – 3,827,127 8,984,437 3,915,456 (127,773) 839,682 4,627,365
Unlisted companies 130,640 – (79,071) 51,569 131,729 (79,071) – 52,658
5,287,950 – 3,748,056 9,036,006 4,047,185 (206,844) 839,682 4,680,023
Non-government debt securities
Listed
Term finance certificates 957,621 (64,946) 2,478 895,153 1,387,701 (64,946) (5,274) 1,317,481
Sukuk certificates / bonds 6,683,993 (340,000) (235,423) 6,108,570 6,768,455 – (180,655) 6,587,800
Unlisted
Term finance certificates 3,724,914 (2,792) (125,549) 3,596,573 3,295,000 – – 3,295,000
Sukuk certificates / bonds 398,416 (18,416) (5,278) 374,722 502,737 (22,737) (3,935) 476,065
Certificates of investment 3,000,000 (52) – 2,999,948 4,700,000 – – 4,700,000
14,764,944 (426,206) (363,772) 13,974,966 16,653,893 (87,683) (189,864) 16,376,346
Mutual funds
Open end 2,700,000 – 85,219 2,785,219 – – – –
Close end – – – – 16,949 (12,763) 4,069 8,255
2,700,000 – 85,219 2,785,219 16,949 (12,763) 4,069 8,255
Real estate investment trust 1,814,314 – 1,254,365 3,068,679 1,831,780 – 160,845 1,992,625
Subsidiaries
Habib Metropolitan Financial
Services Limited 300,000 – – 300,000 300,000 – – 300,000
Habib Metropolitan Modaraba
Management Company
(Private) Limited 350,000 – – 350,000 350,000 – – 350,000
First Habib Modaraba 180,000 – – 180,000 180,000 – – 180,000
HabibMetro Exchange Services Limited 1,000,000 – – 1,000,000 – – – –
1,830,000 – – 1,830,000 830,000 – – 830,000
794,107,431 (426,206) 17,194,175 810,875,400 928,759,967 (307,290) (3,040,712) 925,411,965

78
 2024 2023
Rupees in ‘000
9.3.1 Investments given as collateral against repo borrowing
The market value of investments given as collateral against borrowings is as follows:
Federal government securities
Market treasury bills 34,402,365 129,183,999
Pakistan investment bonds 191,534,393 54,741,950
225,936,758 183,925,949

9.3.2 Investments include securities which are held by the Bank to comply with the statutory liquidity requirements
as set out under section 29 of the Banking Companies Ordinance, 1962.
9.3.3 Investments include Rs. 132,000 thousand (2023: Rs. 132,000 thousand) pledged with State Bank of Pakistan
against TT/DD discounting facilities and demand loan facilities.
2024 2023
Rupees in ‘000
9.4 Credit loss allowance for diminution in value of investments
Opening balance 307,290 577,533
Impact of remeasurement on adoption of IFRS 9 (219,607) –
Impact of ECL recognised on adoption of IFRS 9 578 –
Charge for the year 337,945 63,244
Reversal for the year – (2,813)
Net charge for the year 337,945 60,431
Reversal on disposal – (330,674)
Investment written off – –
Closing balance 426,206 307,290

9.5 Particulars of credit loss allowance / provision against debt securities

9.5.1 Investments - exposure
2024
Stage 1 Stage 2 Stage 3
Rupees in ‘000
Opening balance 7,700,000 – 427,683
Impact of adoption of IFRS 9 – – –

New investments – – –
Investments derecognised or repaid (1,700,000) – (4,321)
Transfer to stage 1 – – –
Transfer to stage 2 – – –
Transfer to stage 3 – – –

Amounts written off / charged Off – – –

Others – – –
Closing balance – – –
6,000,000 – 423,362

79
 2024
Outstanding Credit loss
amount allowance
held
Rupees in ‘000
9.5.2 Investments - Credit loss allowance
Performing Stage 1 6,000,000 2,843
Underperforming Stage 2 – –
Non-Performing Stage 3
Substandard – –
Doubtful – –
Loss 423,363 423,363
423,363 423,363

Total 6,423,363 426,206

2024 2023
Cost / amortised cost
Rupees in ‘000
9.6 Quality of securities
Details regarding quality of securities held under "Held to Collect and Sell" model
Federal Government Securities - Government guaranteed
Market treasury bills 110,428,094 335,775,414
Pakistan investment bonds 397,206,935 383,491,620
Ijarah sukuk 134,811,196 81,755,829
Islamic Naya Pakistan certificate Modaraba investment pool:
– foreign currencies – 4,999,907
– Pak rupees – 484,537
642,446,225 806,507,307
Shares
Listed companies
Technology and communication 400,250 –
Cement 269,754 6,965
Engineering 181,569 –
Commercial banks 1,510,340 1,318,152
Fertiliser 305,587 674,210
Investment banks / investment companies / securities companies 278,410 121,516
Cable and electrical goods 57,674 –
Insurance 245,665 –
Oil and gas exploration, power generation and distribution 1,210,195 1,552,500
Pharmaceuticals 118,605 40,376
Textile 408,304 121,398
Transport 170,957 80,339
5,157,310 3,915,456

80
 2024 2023
Cost Break-up Cost Break-up
value value
Rupees in ‘000
Unlisted companies
Pakistan Export Finance
Guarantee Limited 11,361 – 11,361 –
DHA Cogen Limited 50,000 – 50,000 –
Dawood Family Takaful Limited 35,000 25,387 35,000 25,387
Society for World Wide Inter Bank
Financial Telecommunication (Swift) 6,755 83,900 7,844 92,577
Pakistan Corporate Restructuring
Company Limited 27,524 25,817 27,524 25,817
130,640 135,104 131,729 143,781

2024 2023
Non-government debt securities Cost / amortised cost
Rupees in ‘000
Listed
AAA 199,840 629,920
AA+ 442,835 42,835
AA
A+ 340,000 340,000
AA- 200,000 600,000
A 50,000 50,000
A- – –
Unrated * 6,408,939 6,493,401
7,641,614 8,156,156

* This includes Investment in Pakistan Energy Sukuk-I issued by Power Holding Limited, wholly owned by the
Government of Pakistan. These sukuk is guaranteed by the Government of Pakistan and are eligible for Statutory
Liquidity Requirements amounting to Rs 6,343,993 thousands (2023: Rs 6,428,455 thousands).
2024 2023
Cost / amortised cost
Rupees in ‘000
Unlisted
AAA 3,974,914 3,250,000
AA+ 130,000 425,000
AA – –
A+ – –
AA- – –
A – 100,000
Unrated 18,416 22,737
4,123,330 3,797,737

Mutual funds
Unrated 2,700,000 16,949

Real estate investment trust

Listed
AAA (rfr) 831,780 831,780

Unlisted
RM 3+ 982,534 1,000,000

81
 Note 2024 2023
Cost / amortised cost
Rupees in ‘000
9.7 Particulars relating to securities classified Under
"Held to Collect" model

Federal government securities - Government guaranteed

Pakistan investment bonds 80,234,516 95,908,255
Ijarah sukuk 2,974,049 2,964,598
83,208,565 98,872,853

Non-government debt securities - unlisted

Certificates of investment - unrated 9.7.1 3,000,000 4,700,000

9.7.1 This represents certificates of investment (musharaka) carrying expected profit rates ranging from 11.37% to 13.25%
(2023: 22.10%) per annum with maturity upto 05 March 2025 (2023: 29 March 2024).
9.7.2 The market value of federal government securities classified as held-to-maturity is Rs. 85,407,793 thousand (2023: Rs.
91,477,864 thousand).

10. ADVANCES
Note Performing Non-Performing Total
2024 2023 2024 2023 2024 2023
Rupees in ‘000
Loans, cash credits, running finances, etc. 10.1 329,647,770 261,089,008 19,153,873 16,160,613 348,801,643 277,249,621
Islamic financing and related assets 92,867,464 114,143,049 3,139,699 554,851 96,007,163 114,697,900
Bills discounted and purchased 56,120,236 43,580,472 2,873,698 3,120,153 58,993,934 46,700,625
Advances - gross 478,635,470 418,812,529 25,167,270 19,835,617 503,802,740 438,648,146

Credit loss allowance against advances

- Stage 1 (853,418) – – – (853,418) –
- Stage 2 (4,527,310) – – – (4,527,310) –
- Stage 3 – – (24,121,428) – (24,121,428) –
- Specific provision – – – (19,273,580) – (19,273,580)
- General provision – (7,325,642) – – – (7,325,642)
(5,380,728) (7,325,642) (24,121,428) (19,273,580) (29,502,156) (26,599,222)
Advances - net of credit loss
allowance /provision 473,254,742 411,486,887 1,045,842 562,037 474,300,584 412,048,924

82
10.1 Includes net investment in finance lease as disclosed below:
2024 2023
Not later Later than Total Not later Later than Total
than one one and than one one and
year less than year less than
five years Rupees in ‘000 five years

Lease rentals receivable 44,324 17,111 61,435 63,051 24,341 87,392

Residual value 87,720 6,704 94,424 98,474 7,526 106,000
Minimum lease payments 132,044 23,815 155,859 161,525 31,867 193,392

Financial charges for

future periods (8,709) (1,163) (9,872) (14,319) (1,913) (16,232)
Present value of minimum
lease payments 123,335 22,652 145,987 147,206 29,954 177,160

2024 2023
Rupees in ‘000
10.2 Particulars of advances - gross
In local currency 386,583,391 371,132,659
In foreign currencies 117,219,349 67,515,487
503,802,740 438,648,146

10.2.1 Advances to Women, Women-owned and

Managed Enterprises
Women 1,817,641 1,549,528
Women Owned and Managed Enterprises 585,672 711,225
2,403,313 2,260,753

10.2.2 Gross loans disbursed to women, women-owned and managed enterprises during the current year is Rs. 1,693.483
thousands (2023: Rs 1,437.434 thousands).

10.3 Particularsof credit loss allowance

10.3.1 Advances - exposure 2024
Stage 1 Stage 2 Stage 3
Rupees in ‘000
Gross carrying amount - Current year 368,745,800 40,219,825 20,190,897

New advances 170,694,801 15,101,095 150,585

Advances derecognised or repaid (101,964,864) (10,933,556) (1,595,464)
Transfer to stage 1 7,577,960 (7,577,960) –
Transfer to stage 2 (30,818,928) 30,818,928 –
Transfer to stage 3 (492,732) (5,270,443) 5,763,175
44,996,237 22,138,064 4,318,296

Amounts written off / charged off – – (24,838)

Changes in risk parameters – 2,535,543 682,916
Closing balance - Current year 413,742,037 64,893,432 25,167,271

83
 10.3.2 Advances - Credit loss allowance
2024
Stage 1 Stage 2 Stage 3
Rupees in ‘000
Opening balance – – –
Impact of adoption of IFRS 9 2,227,772 2,054,740 19,768,274

New advances 236,843 3,037,877 271,322

Advances derecognised or repaid (1,292,683) (524,860) (1,413,187)
Transfer to stage 1 10,281 (10,281) –
Transfer to stage 2 (325,222) 351,186 (25,964)
Transfer to stage 3 (3,573) (384,947) 388,520
(1,374,354) 2,468,975 (779,309)

Amounts written off / charged off – – (24,838)

Changes in risk parameters – 3,595 5,157,301

Closing balance 853,418 4,527,310 24,121,428

10.3.3 Advances - Credit loss allowance details

Internal / External rating / stage classification

Outstanding gross exposure

Performing - Stage 1
ORR 1 to 9 384,717,046 – –
Others 29,024,991 – –
Under Performing - Stage 2
ORR 1 to 9 – 64,246,900 –
Others – 646,532 –
Non-performing - Stage 3
Substandard – – 475,602
Doubtful – – 1,901,249
Loss – – 22,790,419
– – 25,167,270
Total 413,742,037 64,893,432 25,167,270
Corresponding ECL
Stage 1 and 2 (853,418) (4,527,310) –
Stage 3 – – (24,121,428)
412,888,619 60,366,122 1,045,842

84
10.4 Advances include Rs. 25,167,270 thousand (31 December 2023: Rs. 19,835,617 thousand) which have been placed under
non-performing status as detailed below:

2024 2023
Non- Credit loss Non- Provision
Category of classification in Stage 3 performing allowance performing
loans loans
Rupees in ‘000
Domestic
Other asset especially mentioned – – 20,395 –
Substandard 475,602 270,348 243,168 58,876
Doubtful 1,901,249 1,190,825 485,917 242,959
Loss 22,790,419 22,660,255 19,086,137 18,971,745
Total 25,167,270 24,121,428 19,835,617 19,273,580

10.5 Particulars of credit loss allowance against advances

Note 2024 2023
Stage 3 Stage 1 & 2 Specific General Total Specific General Total
Rupees in ‘000
Opening balance – – 19,273,580 7,325,642 26,599,222 17,249,750 4,619,505 21,869,255
Impact of adoption of
IFRS 9 as of 1 January 2024 19,768,274 4,282,512 (19,273,580) (5,963,784) (1,186,578) – – –
Charge for the year 5,817,144 3,636,187 – – 9,453,331 6,295,438 2,706,137 9,001,575
Reversals for the year (1,439,152) (2,537,971) – (1,361,858) (5,338,981) (4,244,098) – (4,244,098)
Net charge / (reversal) 4,377,992 1,098,216 – (1,361,858) 4,114,350 2,051,340 2,706,137 4,757,477
Amount written off 10.6 (24,838) – – – (24,838) (27,510) – (27,510)
Closing balance 24,121,428 5,380,728 – – 29,502,156 19,273,580 7,325,642 26,599,222

10.5.1 Particulars of credit loss allowance against advances

2024 2023
Stage 3 Stage 1 & 2 Total Specific General Total
Rupees in ‘000

In local currency 23,366,736 5,051,168 28,417,904 17,991,864 7,325,642 25,317,506

In foreign currencies 754,692 329,560 1,084,252 1,281,716 – 1,281,716
24,121,428 5,380,728 29,502,156 19,273,580 7,325,642 26,599,222

85
 10.5.2 Consideration of forced sales value (FSV) for the purposes of provisioning against
non-performing loans
During the current year, the Bank decided to not to avail the benefit of Forced Sales Value (FSV) against
non-performing loans, as available under BSD Circular No. I of 21 October 2011 issued by the SBP.

Note 2024 2023

Rupees in ‘000
10.6 Particulars of write offs

10.6.1 Against credit loss allowance 10.5 24,838 27,510

Directly charged to profit and loss account – –
24,838 27,510

10.6.2 Write offs of Rs. 500,000/- and above

- Domestic 24,838 27,510
Write offs of below Rs. 500,000/ – –
24,838 27,510

10.7 Details of loan write off of Rs. 500,000/- and above

In terms of sub-section (3) of section 33A of the Banking Companies Ordinance, 1962, the statement in respect of written-off
loans or any other financial relief of rupees five hundred thousand or above allowed to the persons during the year ended
31 December 2024 is enclosed as Annexure I. However, this write off does not affect the Bank's right to recover the debts from
these customers.
Note 2024 2023
Rupees in ‘000
11. PROPERTY AND EQUIPMENT

Capital work-in-progress 11.1 646,639 293,119

Property and equipment 11.2 16,399,488 15,421,914
17,046,127 15,715,033
11.1 Capital work-in-progress
Civil works 11.1.1 265,241 79,056
Advance to suppliers 381,398 214,063
646,639 293,119

11.1.1 This represents advances against renovation being carried out at various locations and to the vendors.

86
11.2 Property and equipment
2024
Freehold Leasehold Buildings Buildings on Furniture Electrical, Vehicles Lease hold Total
land land on freehold leasehold and office and improvements
land land fixture computer
equipment
Rupees in ‘000
At 1 January 2024
Cost / Revalued amount 3,112,874 4,175,390 447,516 3,409,063 1,240,791 6,941,579 434,570 5,879,096 25,640,879
Accumulated depreciation – – (69,385) (472,342) (654,047) (4,781,436) (157,945) (4,083,810) (10,218,965)
Net book value 3,112,874 4,175,390 378,131 2,936,721 586,744 2,160,143 276,625 1,795,286 15,421,914
Year ended December 2024
Opening net book value 3,112,874 4,175,390 378,131 2,936,721 586,744 2,160,143 276,625 1,795,286 15,421,914
Additions 13,731 5,200 255,550 – 252,997 1,974,225 47,597 908,183 3,457,483
Disposals – – – – (526) (633) (13,168) – (14,327)
Depreciation charge – – (49,847) (315,009) (160,468) (1,184,086) (79,834) (675,834) (2,465,078)
Exchange rate adjustments – – – (489) (15) – – – (504)
Closing net book value 3,126,605 4,180,590 583,834 2,621,223 678,732 2,949,649 231,220 2,027,635 16,399,488
At 31 December 2024
Cost / Revalued amount 3,126,605 4,180,590 703,066 3,408,574 1,493,247 8,915,171 468,999 6,787,279 29,083,531
Accumulated depreciation – – (119,232) (787,351) (814,515) (5,965,522) (237,779) (4,759,644) (12,684,043)
Net book value 3,126,605 4,180,590 583,834 2,621,223 678,732 2,949,649 231,220 2,027,635 16,399,488
Rate of depreciation (%) – – 4 4 15 25 20 20

2023
Freehold Leasehold Buildings on Buildings on Furniture Electrical, Vehicles Lease hold Total
land land freehold land leasehold and office and improvements
land fixture computer
equipment
Rupees in ‘000
At 1 January 2023
Cost / Revalued amount 3,045,790 4,020,390 447,516 3,403,561 1,048,449 5,612,516 240,159 5,119,306 22,937,687
Accumulated depreciation – – (23,255) (158,055) (538,641) (4,013,017) (108,070) (3,509,319) (8,350,357)
Net book value 3,045,790 4,020,390 424,261 3,245,506 509,808 1,599,499 132,089 1,609,987 14,587,330
Year ended December 2023
Opening net book value 3,045,790 4,020,390 424,261 3,245,506 509,808 1,599,499 132,089 1,609,987 14,587,330
Additions 67,084 155,000 – – 211,211 1,408,299 218,509 759,790 2,819,893
Disposals – – – – (1,008) (914) (9,491) – (11,413)
Depreciation charge – – (46,130) (314,287) (133,600) (847,579) (64,489) (574,491) (1,980,576)
Exchange rate adjustments – – – 5,502 333 838 7 – 6,680
Closing net book value 3,112,874 4,175,390 378,131 2,936,721 586,744 2,160,143 276,625 1,795,286 15,421,914
At 31 December 2023
Cost / Revalued amount 3,112,874 4,175,390 447,516 3,409,063 1,240,791 6,941,579 434,570 5,879,096 25,640,879
Accumulated depreciation – – (69,385) (472,342) (654,047) (4,781,436) (157,945) (4,083,810) (10,218,965)
Net book value 3,112,874 4,175,390 378,131 2,936,721 586,744 2,160,143 276,625 1,795,286 15,421,914
Rate of depreciation (%) – – 4 4 15 25 20 20

87
 11.3 Revaluation of properties

The Bank's land and buildings were revalued by an independent professional valuer, M/S Iqbal A. Nanjee & Co. (Private) Limited as
at 30 June 2022. The valuation was performed by the valuer on the basis of an assessment of present market values. The revaluations
had resulted in a surplus of Rs. 6,795,965 thousand over the book value. In addition, a non-banking asset transferred to property
and equipment previously was revalued by M/S Akbani & Javed Associates on 31 December 2021. During the current year desktop
valuation non-banking assets has been carried out by Akbani & Javed Associates and no material difference in fair value has been
observed and hence not accounted for in the current year financial statements. Accordingly total revaluation surplus (before
incremental depreciation) amounted to Rs. 6,950,158 thousand. Details are as follows:

Revaluation surplus (gross amount without incremental depreciation): Rupees in ‘000

Freehold land 1,070,460

Leasehold land 2,488,939
Buildings on Freehold land 404,431
Buildings on Leasehold land 2,986,328
6,950,158

11.3.1 Surplus on revaluation of property and equipment (net of incremental depreciation) are as follows:

2024 2023
Rupees in ‘000
Freehold land 1,070,460 1,070,460
Leasehold land 2,488,939 2,488,939
Buildings on Freehold land 301,797 342,783
Buildings on Leasehold land 2,290,640 2,568,981
6,151,836 6,471,163

11.3.2 Had there been no revaluation the carrying amounts of revalued assets would have been as follows:

2024 2023
Rupees in ‘000

Freehold land 1,975,330 1,975,330

Leasehold land 1,531,451 1,531,451
Buildings on freehold land 26,487 35,348
Buildings on leasehold land 330,582 362,238
3,863,850 3,904,367

11.4 The cost of fully depreciated assets still in use includes:

Furniture and fixtures 606,427 500,731

Electrical, office and computer equipment 3,632,624 3,152,659
Vehicles 50,881 41,083
Lease hold improvements 2,860,239 2,661,925

88
 11.5 Details of property and equipment disposed off to employees / ex employees during the year ended 31
December 2024
Particulars Cost Book Sale Mode of disposal Particulars of purchaser
value proceeds
Rupees in ‘000
Vehicle 2,475 751 2,750 As per HR policy Mr. Shaffat A Hamdani (Ex-Employee)
Vehicle 2,619 1,533 3,173 As per HR policy Mr. Azeem Ahmed Alvi (Ex-Employee)
Vehicle 2,515 929 2,850 As per HR policy Mr. Khurram Rashid (Employee)
Vehicle 2,044 – 3,100 As per HR policy Mr. Muhammad Zeshan (Employee)
Vehicle 2,619 1,491 3,500 As per HR policy Mr. Samiullah Siddiqui (Employee)
Vehicle 2,515 1,073 3,210 As per HR policy Mr. Khurram Jaffar (Ex-Employee)
Vehicle 2,049 – 1,860 As per HR policy Mr. Muhammad Farooq Sheikh (Employee)
Vehicle 1,958 – 2,040 As per HR policy Mr. Syed Mityas Ali Abbas (Employee)
Vehicle 4,512 3,521 3,600 As per HR policy Mr. Majed Ali Khan (Ex-Employee)
Vehicle 5,012 3,871 4,200 As per HR policy Mr. Muhammad Zia Majid (Ex-Employee)
Computer
equipment 248 95 173 As per HR policy Mr. Tariq Ali Pasha (Ex-Employee)

12. RIGHT-OF-USE ASSETS

2024 2023
Rupees in ‘000
At January 1
Cost 12,452,599 10,126,510
Accumulated Depreciation (4,851,146) (3,390,917)
Net Carrying amount at January 1 7,601,453 6,735,593

Opening carrying amount as at the start of the year 7,601,453 6,735,593

Additions during the year 2,625,820 2,326,089
Termination / maturities during the year - Cost (1,658,807) (254,343)
Termination / maturities during the year - Accumulated Depreciation 1,582,770 254,343
Depreciation Charge for the year (1,542,854) (1,460,229)
Closing carrying amount as at the end of the year 8,608,382 7,601,453

At December 31
Cost 13,419,612 12,452,599
Accumulated Depreciation (4,811,230) (4,851,146)
Net Carrying amount at December 31 8,608,382 7,601,453

89
 Computer software
13. INTANGIBLE ASSETS
2024 2023
Rupees in ‘000
At 1 January
Cost 1,066,641 709,531
Accumulated amortization (743,387) (611,563)
Net Carrying amount at January 1 323,254 97,968

Year ended 31 December

Opening carrying amount as at the start of the year 323,254 97,968
Additions - directly purchased 428,845 357,110
Amortization charge (255,885) (131,824)
Closing carrying amount as at the end of the year 496,214 323,254

At 31 December
Cost 1,495,486 1,066,641
Accumulated Amortization (999,272) (743,387)
Net Carrying amount at December 31 496,214 323,254

Rate of Amortization (percentage) 33.3 33.3

Useful life in years 3 3

13.1 The cost of fully amortized intangible assets (computer software) still in use is Rs. 648,996 thousand (2023: Rs. 546,908 thousand).

Note 2024 2023

14. OTHER ASSETS Rupees in ‘000
Income / mark-up / profit accrued in local currency - net 29,923,592 38,188,932
Income / mark-up / profit accrued in foreign currencies - net 397,849 304,547
Advances, deposits, advance rent and other prepayments 846,260 575,609
Non-banking assets acquired in satisfaction of claim 14.1 2,204,729 2,204,729
Mark-to-market gain on forward foreign exchange contracts 3,974,963 2,888,760
Acceptances 42,480,848 25,076,677
Receivable from the SBP against encashment of government securities 23,182 43,509
Stationery and stamps on hand 339,127 244,084
Receivable from 1Link 2,183,238 –
Prepaid employment benefit 4,857,532 –
Receivable from defined benefit plan 38.4 – 60,450
Others 14.2 1,072,258 758,056
88,303,578 70,345,353
Credit loss allowance / provision held against other assets 14.3.1 (412,982) (375,000)
Other Assets (Net of credit loss allowance) 87,890,596 69,970,353

Surplus on revaluation of non-banking assets acquired in

satisfaction of claims 22.2 2,095,111 2,095,111
Other assets - Total 89,985,707 72,065,464

90
 Note 2024 2023
Rupees in ‘000

14.1 Market value of non-banking assets acquired in satisfaction of claims 14.1.2 4,299,840 4,299,840

Non-banking assets acquired in satisfaction of claims have been revalued by independent professional valuator as at 31
December 2024. The revaluation was carried out by M/s Akbani & Javed Associates on the basis of an assessment of present
market values.
2024 2023
Rupees in ‘000
14.1.1 Non-banking assets acquired in
satisfaction of claims
Opening balance 4,299,840 4,299,840
Transferred to property and equipment – –
Depreciation – –
Closing balance 4,299,840 4,299,840

14.1.2 Revaluation surplus of Rs. 2,095,111 thousand (2023: Rs. 2,095,111 thousand) is included in the above value.

14.2 This includes Rs. 51,793 thousand (2023: Rs. 143,243 thousand) receivable on the sale of equity securities. This also includes
fully provided balance of Rs. 394,816 thousand (2023: Rs. 375,000 thousand).

2024 2023
Rupees in ‘000
14.3 Credit loss allowance held against other assets
Claims receivable against fraud and forgeries 394,816 375,000
Acceptances 18,166 –
412,982 375,000

14.3.1 Movement in Credit loss allowance

held against other assets
Opening balance 375,000 375,000
Impact of adoption of IFRS 9 88,854 –

Charge for the year 19,816 –

Reversal for the year (70,688) –
Net charge for the year (50,872) –

Closing balance 412,982 375,000

91
 2024
Outstanding Credit loss
amount allowance
held
Rupees in ‘000
14.3.2 Particulars of credit loss allowance against other assets
Stage 1 36,245,581 12,518
Stage 2 6,235,267 5,648
Stage 3 / others 394,816 394,816
42,875,664 412,982

Note 2024 2023

Rupees in ‘000
15. BILLS PAYABLE
In Pakistan 28,378,790 28,254,056
Outside Pakistan 100,032 98,643
28,478,822 28,352,699
16. BORROWINGS
Secured
Borrowings from the State Bank of Pakistan under:
Export refinance scheme 16.2 59,242,166 85,990,034
Long term financing facility - renewable energy scheme 16.3 2,177,048 2,327,108
Long term financing facility 16.4 15,438,369 19,057,928
Temporary economic refinance facility 16.5 19,682,235 28,797,755
Long term financing facility - for storage of
agricultural produce scheme 16.6 750,064 621,700
Refinance facility for modernization of SME 16.7 219,918 105,858
Refinance facility for combating COVID-19 16.8 18,881 35,878
Refinance and credit guarantee scheme for women entrepreneurs 16.9 59,816 23,208
16.10 97,588,497 136,959,469

Repurchase agreement borrowings (Repo) - secured 16.11 225,809,401 184,947,267

Due against bills rediscounting - secured 16.12 – 474,216
Total secured 323,397,898 322,380,952

Unsecured
Call borrowing 16.13 100,000 –
Overdrawn nostro accounts 6,512,870 888,638
Total unsecured 6,612,870 888,638
Total Borrowings 330,010,768 323,269,590

16.1 Particulars of borrowings with respect to currencies

In local currency 323,497,898 321,906,736

In foreign currencies 6,512,870 1,362,854
330,010,768 323,269,590

92
 16.2 These borrowings have been obtained from the SBP for extending export finance to customers. These carry mark-up at rates
ranging from 8.00% to 16.50% per annum (2023: 17% to 18% per annum) and are due to mature latest by 30 June 2025.
16.3 These borrowings have been obtained from the SBP under a scheme for providing financing facilities to customers against
renewable energy plants. These carry mark-up at rates ranging from 2% to 3% per annum (2023: 2% to 3% per annum) and
are due to mature latest by 27 July 2035.
16.4 These borrowings have been obtained from the SBP under a scheme for providing concessionary financing facilities to the
industry for purchase of new locally manufactured plant and machinery. These carry mark-up at rates ranging from 2.00%
to 11.50% per annum (2023: 2.00% to 11.5% per annum per annum) and are due to mature latest by 24 December 2029.
16.5 These borrowings have been obtained from the SBP under a scheme to provide concessionary refinance for setting up of
new industrial units in the backdrop of challenges being faced by industries during the pandemic. These carry mark-up at
rate of 1% per annum (2023: 1.00% per annum) and are due to mature latest by 24 August 2030.
16.6 These borrowings have been obtained from the SBP under a scheme for financing the storage of agricultural produce to
encourage the private sector to establish silos, warehouses and cold storages. These carry mark-up at rate of 2% per annum
(2023: 2.00% per annum) and are due to mature latest by 11 November 2029.
16.7 These borrowings have been obtained from the SBP under a scheme to finance modernization of Small and Medium
Enterprises (SME). These carry mark-up at rates of 2.00% per annum (2023: 2.00% per annum) and are due to mature latest
by 18 September 2029.
16.8 These borrowings have been obtained from the SBP under a scheme to provide combat the emergency refinance facility
to hospitals & medical centre. These carry mark-up at rates of 0% per annum (2023: 0% per annum) and are due to mature
latest by 30 June 2026.
16.9 These borrowings have been obtained from the SBP under a scheme to provide finance for women entrepreneurs
across the country. These carry mark-up at rate of 0% per annum (2023: 0% per annum) and are due to mature latest by
09 December 2029.
16.10 As per the terms of the agreement, the Bank has granted the SBP the right to recover the outstanding amounts from the
Bank at the date of maturity of the finances by directly debiting the Bank's current account maintained with the SBP.
16.11 These carry mark-up rates ranging between 12.90% to 13.90% (2023: 21.75% to 23.00%) per annum having maturity upto
14 Jan 2025 (2023: 12 Jan 2024 ) and are secured against investments mentioned in note 9.3.1.
16.12 This represents the obligation to the corresponding Banks on the discounting of foreign documentary bills purchased
by the Bank on discount. The balance carries discount rate of Nil (2023: 6.91%) per annum having maturity upto Nil (2023:
23 Jan 2024).
16.13 These carry mark-up rate at rate of 0% per annum having maturity upto 10 Jan 2025.

17. DEPOSITS AND OTHER ACCOUNTS

2024 2023
In local In foreign Total In local In foreign Total
currency currencies currency currencies
Rupees in ‘000
Customers
Current accounts 335,607,455 64,648,144 400,255,599 310,810,460 59,724,307 370,534,767
Savings deposits 293,241,677 16,914,294 310,155,971 341,643,324 16,798,084 358,441,408
Term deposits 120,938,951 47,383,383 168,322,334 175,268,425 50,971,995 226,240,420
Others 29,656,415 240,192 29,896,607 41,503,257 72,458 41,575,715
779,444,498 129,186,013 908,630,511 869,225,466 127,566,844 996,792,310
Financial institutions
Current deposits 3,150,604 1,510,900 4,661,504 2,327,236 1,030,085 3,357,321
Savings deposits 12,587,401 – 12,587,401 11,868,434 – 11,868,434
Term deposits 1,230,888 22,473 1,253,361 260,684 22,739 283,423
Others – – – 1,356 – 1,356
16,968,893 1,533,373 18,502,266 14,457,710 1,052,824 15,510,534
796,413,391 130,719,386 927,132,777 883,683,176 128,619,668 1,012,302,844

93
 2024 2023
Rupees in ‘000
17.1 Composition of deposits
Individuals 482,699,275 463,434,699
Government (Federal and Provincial) 13,990,533 35,486,080
Public Sector Entities 20,261,531 23,681,503
Banking Companies 180,752 1,576,992
Non-Banking Financial Institutions 16,293,881 13,933,550
Private Sector 393,706,805 474,190,020
927,132,777 1,012,302,844

17.2 This includes eligible deposits of Rs. 661,697,591 thousand (2023: Rs. 620,878,246 thousand) which are covered under
deposit protection mechanism as required by the Deposit Protection Corporation circular no. 4 of 2018.
2024 2023
Rupees in ‘000
18. LEASE LIABILITIES
Opening balance 9,051,378 7,803,164
Addition during the year 2,625,820 2,326,089
Deletion during the year (97,017) –
Lease payments including interest (2,315,877) (2,041,743)
Interest expense 1,199,409 963,868
Closing balance 10,463,713 9,051,378

18.1 Contractual maturities of lease liabilities

Short-term lease liabilities - within one year 1,045,765 853,561
Long-term lease liabilities
- 1 to 5 years 5,172,701 4,278,203
- 5 to 10 years 3,909,899 3,919,614
- More than 10 years 335,348 –
9,417,948 8,197,817
Total lease liabilities 10,463,713 9,051,378

Aggregate 12.38% (31 December 2023: 11.95%) is used as discounting factor for the calculation of lease liability.

19. DEFERRED TAX LIABILITIES / (ASSETS) 2024

Balance as at Impact of Recognised in Recognised in Balance as at
January 01, Adoption of profit and loss OCI December 31,
2024 IFRS 9 account 2024
Rupees in ‘000
Deductable temporary differences on
- Credit loss allowance for
diminution in value of investments (150,572) 107,324 (182,641) – (225,889)
- Credit loss allowance against advances (5,419,310) 566,232 (775,985) – (5,629,063)
- Credit loss allowance - Others – (230,594) (188,725) – (419,319)
- Accelerated tax depreciation (315,883) – (88,800) – (404,683)
- Deferred liability on defined benefit plan 14,810 – – (45,834) (31,024)
- (Deficit) / surplus on revaluation
of investments (1,489,949) (177,649) – 10,080,761 8,413,163
(7,360,904) 265,313 (1,236,151) 10,034,927 1,703,185
Taxable temporary differences on
- Surplus on revaluation of:
- Property and equipment 1,426,787 – (154,722) 101,927 1,373,992
- Non-banking assets 769,953 – – (769,953) –
- Exchange translation reserve – – – – –
2,196,740 – (154,722) (668,026) 1,373,992
(5,164,164) 265,313 (1,390,873) 9,366,901 3,077,177

94
 2023
Balance as at Recognised in Recognised in Balance as at
January 01, profit and loss OCI December 31,
2023 account 2023
Rupees in ‘000
Deductable temporary differences on
- Provision for diminution in value of investments (248,338) 97,766 – (150,572)
- Provision against advances and off-balance sheet (2,924,963) (2,494,347) – (5,419,310)
- Accelerated tax depreciation (335,679) 19,796 – (315,883)
- Deferred liability on defined benefit plan (6,946) – 21,756 14,810
- Deficit on revaluation of investments (3,613,724) – 2,123,775 (1,489,949)
(7,129,650) (2,376,785) 2,145,531 (7,360,904)
Taxable temporary differences on
- Surplus on revaluation of:
- Non-banking assets 675,664 – 94,289 769,953
- Property and equipment 1,389,016 (156,045) 193,816 1,426,787
- Exchange translation reserve 3,719 – (3,719) –
2,068,399 (156,045) 284,386 2,196,740
(5,061,251) (2,532,830) 2,429,917 (5,164,164)

Note 2024 2023

Rupees in ‘000
20. OTHER LIABILITIES
Mark-up / return / interest payable in local currency 15,426,508 19,323,624
Mark-up / return / interest payable in foreign currencies 973,600 684,315
Unearned commission and income 1,016,338 721,371
Accrued expenses 2,743,998 4,349,843
Current taxation (provision less payments) 6,221,510 10,078,741
Acceptances 42,480,848 25,076,677
Unclaimed dividend 184,922 85,648
Branch adjustment account 8,944 3,719
Mark to market loss on forward foreign exchange contracts 3,275,493 4,203,701
Provision for compensated absences 39.2 356,893 325,877
Payable to defined benefit plan 38.4 117,071 –
Credit loss allowance against off-balance sheet obligations 20.1 353,883 32,583
Workers' welfare fund 20.2 4,895,001 3,712,446
Charity fund balance 458 402
Excise duty payable 2,920 2,263
Locker deposits 965,722 989,676
Advance against diminishing musharakah 7,693 –
Advance rental for ijarah 19,695 19,440
Security deposits against leases / ijarah 197,598 244,813
Sundry creditors 4,011,907 3,283,612
Deferred grant income 147,275 –
Withholding tax / duties 1,496,718 224,649
Others 20.3 1,033,713 16,801,843
85,938,708 90,165,243

20.1 Credit loss allowance against off-balance sheet obligations

Opening balance 32,583 32,583
Impact of adoption of IFRS 9 519,290 –
Charge for the year – –
Reversal for the year (197,990) –
Net reversal for the year (197,990) –
Closing balance 353,883 32,583

20.1.1 The above represents provision against certain letters of credit and guarantees.

95
 2024
Outstanding Credit loss
amount allowance
held
Rupees in ‘000
20.1.2 Particulars of credit loss allowance against off
balance sheet obligations
Stage 1 324,128,851 40,098
Stage 2 57,805,966 127,985
Stage 3 381,981 185,800
382,316,798 353,883

20.2 Under the Workers' Welfare Ordinance 1971, the Bank is liable to pay workers' welfare fund (WWF) @ 2% of accounting
profit before tax or taxable income, whichever is higher. The Bank has made full provision for WWF based on profit for
the respective years.

The Supreme Court of Pakistan vide its order dated November 10, 2016 has held that the amendments made in the law
introduced by the Federal Government for the levy of WWF were not lawful. The Federal Board of Revenue has filed review
petitions against this order which are currently pending.

Legal advice obtained on the matter indicates that consequent to filing of these review petitions the judgement may
not currently be treated as conclusive. Accordingly the Bank maintains its provision in respect of WWF.

20.3 This includes Rs.Nil (2023: Rs. 15,169,499) received by the Bank from a correspondent bank against standby letter of credit
claimed by the customer. The honorable High Court of Sindh has passed interim order restraining the Bank to transfer
amount pending arbitration.

21. SHARE CAPITAL

21.1 Authorised capital

2024 2023 2024 2023

(Number of shares) Rupees in ‘000

1,200,000,000 1,200,000,000 Ordinary shares of Rs. 10/- each 12,000,000 12,000,000

21.2 Issued, subscribed and paid-up capital

Ordinary shares of Rs. 10/- each
30,000,000 30,000,000 – Fully paid in cash 300,000 300,000
92,500,000 92,500,000 – Issued upon amalgamation 925,000 925,000
925,331,480 925,331,480 – Issued as bonus shares 9,253,315 9,253,315
1,047,831,480 1,047,831,480 10,478,315 10,478,315

21.3 As of the date of statement of financial position, the holding company held 534,394 thousand (2023: 534,394 thousand)
ordinary shares of Rs. 10/- each (51% holding) and Habib Insurance Company Limited (the associated company) held
4,000 thousand (2023: 6,706 thousand) ordinary shares of Rs. 10/- each.

96
 Note 2024 2023
22. SURPLUS / (DEFICIT) ON REVALUATION OF ASSETS Rupees in ‘000
Surplus / (deficit) on revaluation of
- Securities measured at FVOCI-Debt 9.1 12,125,836 –
- Securities measured at FVOCI-Equity 9.1 3,748,056 –
- Securities measured at Available for Sale securities 9.1 – (3,040,712)
- Property and Equipment 22.1 6,151,836 6,471,163
- Non-banking assets acquired in satisfaction of claims 22.2 2,095,111 2,095,111
24,120,839 5,525,562
Less: Deferred tax on surplus / (deficit) on revaluation of
- Securities measured at FVOCI-Debt 9.1 6,426,693 –
- Securities measured at FVOCI-Equity 9.1 1,986,470 –
- Securities measured at Available for Sale securities 9.1 – (1,489,949)
- Property and Equipment 22.1 1,373,992 1,426,787
- Non-banking assets acquired in satisfaction of claims 22.2 – 769,953
(9,787,155) (706,791)
14,333,684 4,818,7719
22.1 Surplus on revaluation of property and equipment
Surplus on revaluation as at 1 January 6,471,163 6,789,623
Revaluation of property and equipment during the year – –
Transferred from non banking asset – –
Transferred to unappropriated profit in respect incremental depreciation
during the year - net of deferred tax (164,605) (162,415)
Related deferred tax liability on incremental depreciation (154,722) (156,045)
(319,327) (318,460)
Surplus on revaluation as at 31 December 6,151,836 6,471,163

Less: Related deferred tax liability on:

Revaluation as at 1 January 1,426,787 1,389,016
Revaluation of property and equipment during the year – –
Transferred to property and equipments – –
Impact of change in tax rate 101,927 193,816
Incremental depreciation charged during the year (154,722) (156,045)
(52,795) 37,771
Related deferred tax liability 1,373,992 1,426,787
4,777,844 5,044,376
22.2 Surplus on revaluation of non-banking assets
acquired in satisfaction of claims
Surplus on revaluation as at 1 January 2,095,111 2,095,111
Transferred to property and equipment – –
Transferred to unappropriated profit in respect incremental
depreciation during the year - net of deferred tax – –
Related deferred tax liability on incremental depreciation – –
– –
Surplus on revaluation as at 31 December 2,095,111 2,095,111
Less: Related deferred tax liability on:
Revaluation as at 1 January 769,953 675,664
Transferred to property and equipment – –
Impact of change in tax rate (769,953) 94,289
Incremental depreciation during the year – –
(769,953) 94,289
Related deferred tax liability – 769,953
2,095,111 1,325,158

97
 Note 2024 2023
Rupees in ‘000
23. CONTINGENCIES AND COMMITMENTS

Guarantees 23.1 152,625,779 137,319,392

Commitments 23.2 778,364,854 499,761,681
Other contingent liabilities 23.3 2,986,394 3,024,648
933,977,027 640,105,721
23.1 Guarantees
Financial guarantees 33,303,405 29,705,918
Performance guarantees 55,070,186 55,811,913
Other guarantees 64,252,188 51,801,561
152,625,779 137,319,392

23.2 Commitments
Documentary credits and short-term trade-related transactions:
Letters of credit 229,691,020 132,975,536
Commitments in respect of:
Forward foreign exchange contracts 23.2.1 547,663,058 365,390,061
Forward lendings 23.2.2 388,000 1,093,000
Commitments for:
Acquisition of property and equipment 622,776 303,084
778,364,854 499,761,681

23.2.1 Commitments in respect of forward

foreign exchange contracts

Purchase 260,615,930 190,089,104

Sale 287,047,128 175,300,957
547,663,058 365,390,061
23.2.2 Commitments in respect of forward lendings

The Bank has made commitments to extend credit in the normal course of its business, but none of these
commitments are irrevocable and do not attract any penalty if the facility is unilaterally withdrawn, except for
the following:

Note 2024 2023

Rupees in ‘000

Commitments in respect of syndicate financing 388,000 1,093,000

23.3 Other contingent liabilities

Claims against bank not acknowledged as debt 23.3.1 2,880,338 2,918,592
Foreign Exchange repatriation case 23.3.2 106,056 106,056
2,986,394 3,024,648

98
 23.3.1 These mainly represent counter claims by borrowers for damages and other claims against the Bank. Management
is confident that the matters will be decided in the Bank’s favour. Accordingly, no provision has been made in
these unconsolidated financial statements.
23.3.2 Foreign exchange repatriation case
While adjudicating foreign exchange repatriation cases of exporters, the foreign exchange Adjudicating Court
of the State Bank of Pakistan has adjudicated a penalty of Rs. 106,056 thousand, arbitrarily on the Bank. The Bank
has filed appeals before the Appellate Board and Constitutional Petitions in the Honorable High Court of Sindh
against the said judgement. The Honorable High Court has granted relief to the Bank by way of interim orders.
Based on merits, management is confident that these appeals shall be decided in favor of the Bank and therefore
no provision has been made against the impugned penalty.
24. DERIVATIVE FINANCIAL INSTRUMENTS
The Bank deals in derivative financial instruments namely forward foreign exchange contracts and foreign currency swaps with
the principal view of hedging the risks arising from its trade business.
As per the Bank’s policy, these contracts are reported on their fair value at the statement of financial position date. The gains
and losses from revaluation of these contracts are included under “Foreign exchange income”. Mark to market gains and losses
on these contracts are recorded on the statement of financial position under “other assets / other liabilities”.
These products are offered to the Bank’s customers to protect from unfavorable movements in foreign currencies. The Bank
hedges such exposures in the inter-bank foreign exchange market.
These positions are reviewed on a regular basis by the Bank’s Asset and Liability Committee (ALCO).

24.1 Product Analysis

Forward foreign exchange contracts
2024 2023
Notional Mark to Notional Mark to
Principal Market Gain / Principal Market Gain /
(Loss) (Loss)
Rupees in ‘000
Banks
Hedging 435,802,474 2,193,620 290,708,779 (77,691)
Other Entities
Hedging 111,860,584 (1,494,150) 74,681,282 (1,237,250)
Total
Hedging 547,663,058 699,470 365,390,061 (1,314,941)

24.2 Maturity Analysis

2024
Number of Notional Mark to Market
Contracts Principal Gain Loss Net
Rupees in ‘000
Upto 1 month 773 293,149,627 2,245,700 (1,725,098) 520,602
1 to 3 months 403 165,046,042 1,282,015 (1,235,839) 46,176
3 to 6 months 182 88,144,692 444,192 (308,435) 135,757
6 months to 1 year 7 1,322,697 3,057 (6,122) (3,065)
1,365 547,663,058 3,974,964 (3,275,494) 699,470

99
 2023
Number of Notional Mark to Market
Contracts Principal Gain Loss Net
Rupees in ‘000
Upto 1 month 314 120,698,674 1,310,889 (1,374,720) (63,831)
1 to 3 months 134 62,023,064 598,255 (362,296) 235,959
3 to 6 months 10 2,310,013 1,161 (88,940) (87,779)
6 months to 1 year 630 180,358,310 978,454 (2,377,744) (1,399,290)
1,088 365,390,061 2,888,759 (4,203,700) (1,314,941)

Note 2024 2023

Rupees in ‘000
25. MARK-UP / RETURN / INTEREST EARNED
Loans and advances 69,050,079 65,332,100
Investments 25.1 161,266,854 134,432,964
Lending with financial institutions 3,427,965 5,376,253
Balance with banks 493,770 471,107
234,238,668 205,612,424

2024
Rupees in ‘000
25.1 Interest income recognised on:
Financial assets measured at amortised cost; 13,273,260
Financial assets measured at fair value through P&L 7,007,028
Financial assets measured at fair value through OCI 140,986,566
161,266,854

2024 2023
Rupees in ‘000
26. MARK-UP / RETURN / INTEREST EXPENSED

Deposits 111,590,768 93,264,764

Borrowings 43,713,739 34,172,324
Cost of foreign currency swaps against foreign
currency deposits / borrowings 7,420,864 5,793,833
Lease liability against right-of-use assets 1,199,409 963,868
163,924,780 134,194,789

27. FEE & COMMISSION INCOME

Branch banking customer fees 1,310,692 1,225,583

Credit related fees 40,840 37,216
Card related fees (debit and credit cards) 1,018,402 1,062,450
Commission on trade 6,588,189 5,630,911
Commission on guarantees 1,206,113 960,388
Commission on remittances including home remittances 87,524 49,872
Commission on bancassurance 171,804 177,489
Commission on cash management 191,647 155,293
Investment Banking Fee 100,627 61,505
Others 36,746 35,067
10,752,584 9,395,774

100
 Note 2024 2023
Rupees in ‘000
28. GAIN / (LOSS) ON SECURITIES - NET

Realised 28.1 1,274,027 (5,272)

Unrealised - Measured at FVTPL 1,176,593 –
2,450,620 (5,272)

28.1 Realised gain on:

Federal government securities - net 1,268,398 (820,402)
Shares - net – 815,130
Mutual funds - net (3,694) –
Real estate investment trust - net 9,323 –
1,274,027 (5,272)

28.2 Net gain / (loss) on financial assets / liabilities

measured at FVTPL:
Designated upon initial recognition – –
Mandatorily measured at FVTPL 2,359,793 –
2,359,793 –
Net gain / (loss) on financial assets / liabilities:
- measured at amortised cost – –
- measured at FVOCI 90,827 –

Net gain / (loss) on investments in equity instruments

designated at FVOCI – –
90,827 –
2,450,620 –

29. Net gain / (loss) on financial assets / liabilities

measured at amortised cost:
Loss on derecognition of financial assets (3,602) –

30. OTHER INCOME

Rent on properties 31,082 25,754
Recoveries against insurance claims 90,000 –
Gain on sale of property and equipment-net 41,338 33,833
Gain on sale of ijarah assets - net 71,725 15,034
Gain on sale of non-banking assets – –
Gain on termination of right-of-use-assets - net 20,980 –
Staff notice period and other recoveries 1,023 676
256,148 75,297

101
 Note 2024 2023
Rupees in ‘000
31. OPERATING EXPENSES
Total compensation expense 31.1 13,293,815 11,273,942

Property expense
Rent & taxes 75,031 182,503
Insurance 12,644 8,197
Utilities cost 1,578,235 1,351,707
Security (including guards) 1,136,795 836,191
Repair & maintenance (including janitorial charges) 1,080,356 919,926
Depreciation on property and equipment 1,040,687 934,908
Depreciation on right-of-use assets 1,542,854 1,460,229
6,466,602 5,693,661
Information technology expenses
Software maintenance 841,723 615,264
Hardware maintenance 456,524 444,648
Depreciation 545,513 341,649
Amortization 255,885 131,824
Network charges 401,312 448,869
2,500,957 1,982,254
Other operating expenses
Directors' fees and allowances 21,300 24,270
Fees and allowances to Shariah Board 40.3 27,246 24,352
Legal & professional charges 322,957 311,376
Outsourced services costs 37.1 372,313 367,003
Travelling & conveyance 856,772 691,804
NIFT clearing charges 123,534 96,897
Depreciation 878,878 704,019
Training & development 62,992 42,914
Postage & courier charges 203,627 174,723
Communication 757,628 493,219
Subscription 816,996 805,390
Repair & maintenance 408,081 296,044
Brokerage & commission 180,231 185,829
Stationery & printing 570,669 541,696
Marketing, advertisement & publicity 802,075 605,175
Management fee 1,479,989 1,864,538
Insurance 1,471,784 1,126,488
Donations 31.3 519,952 285,273
Auditor's Remuneration 31.4 28,080 22,528
Security 422,012 323,276
Others 895,154 815,940
31.2 11,222,270 9,802,754
33,483,644 28,752,611

102
 2024 2023
Rupees in ‘000
31.1 Total compensation expense
Managerial Remuneration
i) Fixed 10,714,499 8,871,511
ii) Variable - Cash Bonus / Awards etc. 995,704 906,397
Charge for defined benefit plan 310,200 279,679
Contribution to defined contribution plan 373,060 326,528
Charge for compensated absences 149,026 164,748
Rent & house maintenance 44,400 41,504
Conveyance 677,524 658,894
Employee Old Age Benefits Contribution 29,402 24,681
13,293,815 11,273,942

31.2 Total cost for the year included in other operating expenses (other than in outsourced services cost) relating
to outsourced activities is Rs. 192,765 thousand (2023: Rs. 117,452 thousand) pertaining to payments made
to companies incorporated in Pakistan.

31.3 Donations paid in excess of Rs. 500,000 to a single party during the year are as follows:

DONEE
2024 2023
Rupees in ‘000
Memon Health and Education Foundation (Memon Medical Institute) 150,500 88,500
Sindh Institute of Urology & Transplantation (SIUT) 58,693 3,000
The Indus Hospital 57,430 33,050
Safaid Posh Dastarkhwan 51,200 1,200
Khoja (Pirhai) Shia Isna Asheri Jamat (KPSIAJ) 36,200 2,000
Habib University Foundation 30,000 25,000
ChildLife Foundation 16,000 1,000
Dawat-e-Islami Trust 14,500 7,500
Institute of Business Administration 10,000 1,077
The Citizens Foundation 8,000 1,500
Saylani Welfare International 5,236 7,500
Family Educational Services Foundation 4,200 5,330
The Layton Rehmatulla Benevolent Trust 4,000 4,100
The Hunar Foundation 3,250 2,900
Lady Dufferin Hospital 3,000 500
Al-Sayyeda Benevolent Trust 2,500 960
Bait-ul-Sukoon 2,500 1,000
Karwan-e-Hayat (Institute For Mental Health) 2,500 2,500
The Health Foundation 2,000 –
The Patients Behbud Society for AKUH 2,000 1,500
Idara-i-Talim-o-Aagahi Public Trust 1,560 1,625
Karachi Down Syndrome Program 1,500 2,000
Zubaida Machiyara Trust 1,500 500
Orange Tree Foundation 1,475 –
Ida Rieu Welfare Association 1,300 –
Women Empowerment Group (Pink Ribbon) 1,200 600

103
 2024 2023
Rupees in ‘000
Abbas-e-Alamdar Hostel 1,050 1,050
Abdul Sattar Edhi Foundation 1,000 1,000
Alleviate Addiction Suffering Trust (AAS Trust) 1,000 1,000
Al-Umeed Rehabilitation Association 1,000 500
Anjuman Behbood-e-Samat-e-Atfal 1,000 1,000
Mohamedali Habib Welfare Trust 1,000 1,000
Panah Trust 1,000 500
Patients' Aid Foundation 1,000 35,500
NJ Welfare Trust 1,000 –
Pakistan Blind Cricket Council 1,000 –
Shaukat Khanum Memorial Trust 1,000 750
The Kidney Centre Post Graduate Training Institute 1,000 1,000
Zehra Homes 1,000 1,000
Al Madad Welfare Society 965 –
Habib Medical Trust 960 960
Jafaria Disaster Cell Welfare Organization 825 750
Pak Medical and Welfare Trust (Paknight Clinic) 750 750
Make-A-Wish Foundation Pakistan 750 600
World Wide Fund For Nature Pakistan 700 –
Developments in Literacy 660 –
Pakistan Memon Educational & Welfare Society 600 600
Depilex Smileagain Foundation 500 500
Habib Public School 500 500
Health Oriented Preventive Education 500 500
Healthcare and Social welfare Association 500 500
Memon Educational Board 500 500
Pakistan Memon Women Educational Society 500 500
Poor Patients Aid Society Civil Hospital Karachi 500 500
Ayesha Chundrigar Foundation 500 1,050
Transformation International Society 500 –
Vocational Welfare Society for Mentally Retarded Markaz-e-Umeed 500 500
Afzaal Memorial Thalassemia Foundation – 1,000
AL-Khidmat Foundation Pakistan – 1,000
AL-Mustafa Welfare Society Trust – 10,000
Embassy of Turkiye Administrative – 3,000
For the needy and hungry foundation (Trust) 1,000
GOREAD.PK – 580
Green Island Trust – 2,850
Habib Poor Fund – 960
Habib Girls School Trust – 3,000
Hunar Ghar Welfare Organization – 700
Nisar Fatima Amin Foundation – 10,000
Pakistan Hindu Council – 500
RahmatBai Habib Food & Clothing Trust – 960
RahmatBai Habib Widows & Orphan Trust – 960
Rehnuma Public School (Path Education Society) – 1,100

104
 2024 2023
Rupees in ‘000

Special Olympics Pakistan – 750

The Aga Khan Hospital and Medical College Foundation – 1,000
The Citizens Archive of Pakistan – 1,500
APWA Raana Liaquat Craftsman – 1,000
Karachi Relief Trust – 10,000
Marie Adelaide Leprosy Centre – 600
Network of Organizations Working with Persons with
Disabilities, Pakistan (NOWPDP) – 3,000
Thar Education Alliance (TEA) – 1,387

None of the directors, executives and their spouses had interest in the donations disbursed during the year 2024, except for
donations paid to:

Name of Donee Directors Interest in Donee as

Habib University Foundation Mr. Mohomed Bashir Member of the Board of Directors
Mr. Mohamedali R. Habib Member of the Board of Directors
Mr. Muhammad H. Habib Member of the Board of Directors

31.4 Auditors’ remuneration Note 2024 2023

Rupees in ‘000
Audit fee 5,000 4,000
Review of half yearly financial statements 2,500 1,500
Fee for other statutory reporting / other services 10,418 10,250
Special certifications 2,900 3,128
Sales tax and out-of-pocket expenses on above services 7,262 3,650
28,080 22,528

32. OTHER CHARGES

Penalties imposed by the SBP 187,804 123,489
33. CREDIT LOSS ALLOWANCE & WRITE OFFS - NET
Credit loss allowance:
- against cash and balances with banks (3,473) –
- against lending to financial institutions 8.4 (85) –
- for diminution in value of investments 9.4 337,945 60,431
- against loans & advances 10.5 4,114,350 4,757,477
- against other assets 14.3.1 (50,872) –
- against off balance sheet obligations 20.1 (197,990) –
Recovery of written off / charged off bad debts (70,000) (78,807)
4,129,875 4,739,101

105
 Note 2024 2023
Rupees in ‘000
34. TAXATION
Current
- current year 29,377,346 28,284,158
- prior year 34.2 – 1,860,066
29,377,346 30,144,224
Deferred
- prior year (Due to change in tax rate) (462,230) –
- current year (928,643) (2,532,830)
19 (1,390,873) (2,532,830)
27,986,473 27,611,394

34.1 Income tax assessments of the Bank have been finalised up to the tax year 2024 (corresponding to the accounting year
ended 31 December 2023). Certain appeals are pending with the Appellate Tribunal Inland Revenue (ATIR) and Sindh
High Court. However, adequate provisions are being held by the Bank.
34.2 This reflects provision made, on prudent basis, for additional tax imposed by the Federal Board of Revenue (FBR) through
its notification dated 21 November 2023 on the foreign exchange income of the banking sector at the rate of 40% for the
financial year ended 31 Dec 2021 and 31 Dec 2022. The Bank has challenged the imposition of additional tax before the
Sindh High Court which has granted stay against such demand. The matter is currently pending for final adjudication.

2024 2023
Rupees in ‘000
34.3 Relationship between tax expense and accounting profit
Profit before tax 52,659,981 51,995,212
Tax at the applicable tax rate of 54% (2023:49%) 28,436,390 25,477,654
Deferred tax impact of IFRS Adoption (106,915) –
Prior year tax charge – 1,860,066
Deferred tax - prior year (due to change in tax rate) (462,230) (489,625)
Permanent differences 131,455 763,299
Others (12,227) –
Tax charge for the year 27,986,473 27,611,394

35. BASIC AND DILUTED EARNINGS PER SHARE

Profit after taxation 24,673,508 24,383,818

Number in ‘000
Weighted average number of ordinary shares 1,047,831 1,047,831
Rupees
Basic and diluted earnings per share 23.55 23.27

Note 2024 2023

Rupees in ‘000
36. CASH AND CASH EQUIVALENTS

Cash and balances with treasury banks 6 86,815,817 91,466,596

Balances with other banks 7 6,434,551 21,123,950
Overdrawn nostro accounts 16 (6,512,870) (888,638)
86,737,498 111,701,908

106
36.1 Reconciliation of movement of liabilities to cash flow arising from financing activities
2024
Equity
Other Reserves Unappropriated
liabilities profit
Rupees in ‘000
Balance as at 1 January 90,165,243 30,418,061 47,560,186
Changes from financing cash flow
Dividend paid – – (13,522,536)
Other Changes:
Liability related
- Cash based (15,922,085) – –
- Non-cash based 11,596,276 – –
- Dividend payable 99,274 – (99,274)
Transfer of profit to statutory reserve – 4,934,702 (4,934,702)
Total liability related other changes (4,226,535) 4,934,702 (5,033,976)
Equity related – 51 25,863,328
Balance as at 31 December 85,938,708 35,352,814 54,867,002

2023
Equity
Other Reserves Unappropriated
liabilities profit
Rupees in ‘000
Balance as at 1 January 78,733,617 25,534,917 36,464,323
Changes from financing cash flow
Dividend paid – – (9,678,226)
Other Changes:
Liability related
- Cash based 14,209,163 – –
- Non-cash based 7,307,458 – –
- Dividend payable (1,033,617) – 1,033,617
Transfer of profit to statutory reserve – 4,876,764 (4,876,764)
Total liability related other changes 20,483,004 4,876,764 (3,843,147)
Equity related – 6,380 24,617,236
Balance as at 31 December 99,216,621 30,418,061 47,560,186

107
 2024 2023
Number
37. STAFF STRENGTH
Permanent 5,846 5,722
On bank contract 500 566
Bank's own staff strength at end of the year 6,346 6,288

37.1 In addition to the above, 899 (2023: 905) employees of outsourcing services companies were assigned to the Bank as at
31 December 2024 to perform services other than guarding and janitorial services.

38. DEFINED BENEFIT PLAN

38.1 General description
The benefits under the funded gratuity scheme are payable on retirement at the age of 60 or earlier cessation of service.
The benefit is equal to one month's last basic salary drawn for each year of eligible service. The minimum qualifying period
for eligibility under the plan is five years of continuous service.

2024 2023
Number
38.2 Number of employees under the scheme
Gratuity fund 5,814 5,713
38.3 Principal actuarial assumptions
The latest actuarial valuation was carried out on 31 December 2024 using "Projected Unit Credit Actuarial Cost Method".
The main assumptions used for the actuarial valuation were as follows:
2024 2023
Discount rate - percent per annum 12.00 16.00
Expected rate of return on plan assets - percent per annum 16.00 14.25
Expected long term rate of salary increase - percent per annum 11.50 15.50
Mortality rates (for death in service) Adjusted SLIC Adjusted SLIC
2001- 2005 2001- 2005

Note 2024 2023

Rupees in ‘000
38.4 Reconciliation of (payable) / receivable to
defined benefit plan
Fair value of plan assets 38.6 2,491,699 2,333,569
Present value of defined benefit obligation 38.5 (2,608,770) (2,273,119)
(Payable) / Receivable (117,071) 60,450

38.5 Movement in defined benefit plan

Obligations at the beginning of the year 2,273,119 2,021,227
Current service cost 319,872 275,132
Past service cost – –
Interest cost 344,948 271,786
Benefits due but not paid (payables) – (791)
Benefits paid by the Bank (234,391) (227,116)
Re-measurement gain (94,778) (67,119)
Obligations at the end of the year 2,608,770 2,273,119

108
 Note 2024 2023
Rupees in ‘000
38.6 Movement in fair value of plan assets
Fair value at the beginning of the year 2,333,569 1,988,918
Interest income on plan assets 354,620 267,239
Contribution by the Bank 60,000 279,679
Benefits paid (234,391) (227,116)
Benefits due but not paid – (791)
Re-measurements: net return on plan assets
over interest income loss 38.8.2 (22,099) 25,640
Fair value at the end of the year 2,491,699 2,333,569

38.7 Movement in (receivable) / payable under

defined benefit schemes
Opening balance (60,450) 32,309
Charge for the year 38.8.1 310,200 279,679
Contribution by the Bank (60,000) (279,679)
Re-measurement gain recognised in OCI
during the year 38.8.2 (72,679) (92,759)
Closing balance 117,071 (60,450)

38.8 Charge for defined benefit plans

38.8.1 Cost recognised in profit and loss
Current service cost 319,872 275,132
Net interest on defined benefit asset (9,672) 4,547
310,200 279,679
38.8.2 Re-measurements recognised in OCI during the year
(Gain) / loss on obligation
- Financial assumptions (19,089) 4,598
- Demographic assumptions 4,749 –
- Experience adjustment (80,438) (71,717)
(94,778) (67,119)

Return on plan assets over interest income 22,099 (25,640)

Total re-measurements recognised in OCI (72,679) (92,759)

38.9 Components of plan assets

PLS Saving Account 38.9.1 164,172 310,643
Term Deposit Certificates 38.9.1 238,485 86,250
Federal Government Securities
Defense Saving Certificates 1,369,700 1,229,800
Market treasury bills 406,312 456,301
Pakistan Investment Bonds 313,030 250,575
2,491,699 2,333,569

38.9.1 The amount represents balance which is deposited with the branches of the Bank. Further, the funds primarily
invested in Government securities which do not carry any credit risk, however, these are subject to interest rate
risk based on market movements and are regularly monitored by the Trustees of the employee funds.

109
 38.10 Sensitivity analysis
Sensitivity analysis has been performed by varying one assumption keeping all other assumptions constant and calculating
the impact on the present value of the defined benefit obligations under the various employee benefit schemes. The
increase / (decrease) in the present value of defined benefit obligations as a result of change in each assumption is
summarized below:
2024
Gratuity Fund
Rupees in ‘000
1 % increase in discount rate 2,424,077
1 % decrease in discount rate 2,818,458
1% increase in expected future increment in salary 2,821,616
1% decrease in expected future increment in salary 2,417,957
10% increase in expected withdrawal rate 2,608,244
10% decrease in expected withdrawal rate 2,609,137
1% increase in expected mortality rate 2,609,813
1% decrease in expected mortality rate 2,607,804

Although the analysis does not take account of the full distribution of expected cash flows, it does provide an approximation
of the sensitivity of the assumptions shown.
38.11 Expected contributions to be paid to the funds in the
next financial year 205,032
38.12 Expected charge for the next financial year 205,032
38.13 Maturity profile
The weighted average duration of the obligation is 9.6 years.
38.14 Funding Policy
The Bank has the policy to make annual contributions to the fund based on actuarial report.
38.15 Significant risk associated with the staff retirement benefit schemes include:

The risk of the investment underperforming and being not sufficient to

Asset volatility
meet the liabilities.

The duration of the liabilities is 9.6 Years. Based on the weighted average
Changes in bond yields duration of this plan and guidance from Pakistan Society of Actuaries (“PSOA”),
the discount rate used for the calculations is 16.00% per annum.

The risk that the final salary at the time of cessation of service is greater than
what we assumed. Since the benefit is calculated on the final salary (which
Inflation risk will closely reflect inflation and other macroeconomic factors), the benefit
amount increases as salary increases.

The risk that the actual mortality experience is different than the assumed
Mortality rate mortality. This effect is more pronounced in schemes where the age and
service distribution is on the higher side.

The risk of actual withdrawals experience is different from assumed withdrawal

Withdrawal rate probability. The significance of the withdrawal risk varies with the age, service
and the entitled benefits of the beneficiary.

110
39. DEFINED CONTRIBUTION PLAN AND COMPENSATED ABSENCES
39.1 Provident fund
The Bank operates a contributory provident fund scheme for permanent employees. The employer and employee each
contribute 10% of the basic salary to the funded scheme every month.
Number of the members participating in the fund at the end of the year 30 June 2024 as per accounts are 5,221 (30 June
2023: 5,080).
39.2 Compensated absences
The Bank maintains a non-funded scheme for compensated absences. These can be accumulated up to 60 days. Liability
as of the year-end was Rs. 356,536 thousand (2023: Rs. 325,877 thousand) and was determined through an actuarial valuation
carried out under the 'Projected Unit Credit Method'. Valuation was carried out by a qualified actuary. Charge for the year
amounting to Rs. 149,266 thousand (2023: Rs. 164,748 thousand) has been recognised to the profit and loss account.
40. COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
40.1 Total compensation expense
2024
Directors Members President & Key Other material
Chairman Non- Shari’ah Board Chief Executive management risk taker /
executives Officer personnel controller
Rupees in ‘000
Fees – 21,300 – – – –
Managerial remuneration
Fixed – – 26,540 85,433 420,658 972,638
Charge for defined benefit plan – – 321 2,400 14,961 41,434
Contribution to defined
contribution plan – – 385 2,880 15,641 34,149
Security charges and vehicle maintenance 7,155 – – – – –
Utilities 387 – – – – –
7,542 21,300 27,246 90,713 451,260 1,048,221
Number of persons 1 4 3 1 19 134

2023
Directors Members President & Key Other material
Chairman Non- Shari’ah Board Chief Executive management risk taker /
executives Officer personnel controller
Rupees in ‘000
Fees – 17,700 – – – –
Managerial remuneration
Fixed – – 23,690 142,556 369,719 788,210
Charge for defined benefit plan – – 301 6,750 12,738 28,408
Contribution to defined
contribution plan – – 361 5,069 13,556 26,982
Security charges and vehicle maintenance 6,205 – – – – –
Utilities 365 – – – – –
6,570 17,700 24,352 154,375 396,013 843,600
Number of persons 1 4 3 2* 19 119

40.1.1 The Chief Executive and certain executives are provided with free use of car and leave fare assistance in accordance
with their terms of employment.

111
 40.1.2 In addition to above, bonus paid to the chief executive, members of Shari'ah Board, key management personnel
and other material risk taker / controller of the Bank amounted to Rs. 22,400 thousand (2023: Rs. 51,091 thousand),
Rs. 1,821 thousand (2023: Rs. 1,887 thousand), Rs. 101,278 thousand (2023: Rs. 95,525 thousand) and Rs. 174,054
thousand (2023: Rs. 169,278 thousand) respectively.

40.1.3 The total amount of deferred bonus as at 31 December 2024 for the President / CEO, members of Shari'ah board,
key management personnel and other material risk takers / material risk controllers is Rs.128,894 thousand (31
December 2023: Rs. 104,133 thousand). The deferred bonus is held in a trust fund.

40.2 Remuneration paid to the Directors for participation in the Board and Committee Meetings

2024
Meeting fees and allowances paid
For Board committees
Sr. Name of director For Board Audit Information Human Risk & Credit Total
No. meetings technology resource & compliance amount
remuneration paid
Rupees in ‘000
1 Mohamedali R. Habib – – – – – – –
2 Mohsin A. Nathani – – – – – – –
3 Ali Abbas Sikandar 2,500 – 1,500 – – – 4,000
4 Hamza Habib – – – – – – –
5 Mohomed Bashir 2,500 – – 400 – – 2,900
6 Muhammed H. Habib – – – – – – –
7 Rashid Ahmad Jaffer 2,500 2,000 – – 1,600 1,600 7,700
8 Tahira Raza 2,500 1,600 – 1,000 1,600 – 6,700
10,000 3,600 1,500 1,400 3,200 1,600 21,300

2023
Meeting fees and allowances paid
For Board committees
Sr. Name of director For Board Audit Information Human Risk & Credit Total
No. meetings technology resource & compliance amount
remuneration paid
Rupees in ‘000
1 Mohamedali R. Habib – – – – – – –
2 Mohsin A. Nathani – – – – – – –
3 Ali Abbas Sikandar 1,500 – 500 – – – 2,000
4 Firasat Ali 200 – – 300 150 – 650
5 Hamza Habib – – – – – – –
6 Mohomed Bashir 2,700 – – 800 – – 3,500
7 Muhammed H. Habib – – – – – – –
8 Rashid Ahmad Jaffer 2,700 1,700 – – 900 550 5,850
9 Tahira Raza 2,700 800 – 1,400 800 – 5,700
9,800 2,500 500 2,500 1,850 550 17,700

112
 40.3 Remuneration paid to the Shariah Board Members

2024 2023
Items Chairman Resident Non-resident Chairman Resident Non-resident
member members member members
Rupees in ‘000
Managerial remuneration
Fixed 8,199 9,207 9,134 7,213 8,781 7,696
Variable – – – – – –
Charge for defined
benefit plan – – – – – –
Contribution to defined
contribution plan – 706 – – 662 –

8,199 9,913 9,134 7,213 9,443 7,696

Total number of person 1 1 1 1 1 1

41. FAIR VALUE MEASUREMENTS

The fair value of quoted securities other than investment in subsidiaries and those classified as held to maturity, is based on
quoted market price. Quoted securities classified as held to maturity are carried at cost. The fair value of unquoted equity
securities, other than investments in subsidiaries, is determined on the basis of the break-up value of these investments as per
their latest available audited financial statements.

The fair value of unquoted debt securities, fixed term loans, other assets, other liabilities, fixed term deposits and borrowings
cannot be calculated with sufficient reliability due to the absence of a current and active market for these assets and liabilities
and reliable data regarding market rates for similar instruments.

The fair value of the remaining financial assets and liabilities are not significantly different from their carrying values since they
are either short-term in nature or, in the case of customer advances, deposits and certain long term borrowings are frequently
repriced.

41.1 Fair value of financial assets

The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in
making the measurements:

Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for
the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Fair value measurements using input for the assets or liabilities that are not based on observable market data (i.e.
unobservable inputs).

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 The table below analyses financial instruments measured at the end of the reporting period by the level in the fair value
hierarchy into which the fair value measurement is categorized:
2024
On balance sheet financial instruments
Fair value
Level 1 Level 2 Level 3 Total
Rupees in ‘000
Financial assets measured at fair value
- Investments
Federal Government securities 74,378,500 622,593,465 – 696,971,965
Non Government debt securities – 10,975,018 – 10,975,018
Shares - Listed companies 8,984,437 – – 8,984,437
Mutual funds 2,785,219 – – 2,785,219
Real estate investment trust 3,068,679 – – 3,068,679

Financial assets - disclosed but not measured at fair value

- Investments
Federal Government securities – 85,407,793 – 85,407,793
Non Government debt securities – – 2,999,948 2,999,948
Shares - Unlisted companies – – 51,569 51,569
89,216,835 718,976,276 4,701,517 812,894,628

Off-balance sheet financial instruments

measured at fair value
- Forward purchase of foreign exchange contracts – 257,959,904 – 257,959,904
- Forward sale of foreign exchange contracts – 290,402,624 – 290,402,624

2023
On balance sheet financial instruments
Fair value
Level 1 Level 2 Level 3 Total
Rupees in ‘000
Financial assets measured at fair value
- Investments
Federal Government securities – 802,651,863 – 802,651,863
Non Government debt securities – 11,676,346 – 11,676,346
Shares - Listed companies 4,627,365 – – 4,627,365
Mutual funds 8,255 – – 8,255
Real estate investment trust 992,625 – 1,000,000 1,992,625

Financial assets - disclosed but not measured at fair value

- Investments
Federal Government securities – 91,477,864 – 91,477,864
Non Government debt securities – – 4,700,000 4,700,000
Shares - Unlisted companies – – 52,658 52,658
5,628,245 905,806,073 5,752,658 917,186,976

Off-balance sheet financial instruments

measured at fair value
- Forward purchase of foreign exchange contracts – 187,821,748 – 187,821,748
- Forward sale of foreign exchange contracts – 176,253,371 – 176,253,371

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41.2 Fair value of non-financial assets
2024
Fair value
Level 1 Level 2 Level 3 Total
Rupees in ‘000
Non-financial assets measured at fair value
- Property and equipment – 10,015,686 – 10,015,686
- Non-banking assets acquired in satisfaction of claim – 4,299,840 – 4,299,840
– 14,315,526 – 14,315,526

2023
Fair value
Level 1 Level 2 Level 3 Total
Rupees in ‘000
Non-financial assets measured at fair value
- Property and equipment – 10,375,530 – 10,375,530
- Non-banking assets acquired in satisfaction of claim – 4,299,840 – 4,299,840
– 14,675,370 – 14,675,370

41.3 Valuation techniques used in determination of fair valuation of financial instruments within level 2

Federal government debt securities The fair value of government securities are valued using PKRV, PKFRV, PKISRV and PSX rates.

Debt securities other than federal The fair value is determined using the prices / rates available on Mutual Funds Association
government securities of Pakistan (MUFAP) / Reuters website and PSX.
The fair values are derived using forward exchange rates applicable to their respective
Forward contracts
remaining maturities.
The fair value is determined based on the net asset values published at the close of each
Mutual funds
business day.

Valuation techniques used in determination of fair values of non-financial assets within level 2

Property and equipment and non-banking assets are valued by professionally qualified
valuators. The valuation is based on their assessment of the market value of the assets. In
determining the valuation for land and building the valuer refers to numerous independent
market inquiries from local estate agents / realtors in the vicinity to establish the present
Property and equipment and non- market value. The fair valuation of land and building are considered to represent a level 2
banking assets acquired in satisfaction valuation based on significant non-observable inputs being the location and condition of
of claim the assets.
The fair value is subject to change owing to changes in input. However, management does
not expect there to be a material sensitivity to the fair value arising from the non-observable
inputs.

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42. SEGMENT INFORMATION

42.1 Segment details with respect to business activities

31 December 2024
Trade & Retail Commercial Islamic Total
sales banking banking banking
Rupees in ‘000

Profit and Loss

Net mark-up / return / profit 116,234,114 (45,453,824) (16,413,089) 15,946,687 70,313,888
Inter segment revenue - net (119,877,870) 78,195,110 41,682,760 – –
Non mark-up / return / interest income 10,340,233 1,094,752 8,537,897 1,314,004 21,286,886
Total Income 6,696,477 33,836,038 33,807,568 17,260,691 91,600,774
Segment direct expenses (355,239) – – – (355,239)
Inter segment expense allocation – (9,385,105) (17,420,633) (7,649,941) (34,455,679)
Total expenses (355,239) (9,385,105) (17,420,633) (7,649,941) (34,810,918)

Credit loss allowance 2,055 (505,023) (264,626) (3,362,281) (4,129,875)

Profit before tax 6,343,293 23,945,910 16,112,309 6,248,469 52,659,981
Balance Sheet
Cash and bank balances 6,435,596 25,145,136 46,698,111 14,971,525 93,250,368
Investments 663,854,898 – – 147,020,502 810,875,400
Net inter segment lending – 379,807,962 27,488,264 – 407,296,226
Lendings to financial institutions 5,570,998 – – – 5,570,998
Advances - performing – 15,855,835 369,912,171 92,867,464 478,635,470
Advances - non-performing – 336,133 21,691,438 3,139,699 25,167,270
Credit loss allowance against advances – (603,370) (23,237,144) (5,661,642) (29,502,156)
Others 21,655,600 11,816,263 64,547,414 18,117,153 116,136,430
Total Assets 697,517,092 432,357,959 507,100,254 270,454,701 1,907,430,006

Borrowings 232,422,271 – 68,693,948 28,894,549 330,010,768

Deposits and other accounts – 374,480,521 347,257,208 205,395,048 927,132,777
Net inter segment borrowing 407,296,226 – – – 407,296,226
Others 3,687,896 18,151,910 87,224,985 18,893,629 127,958,420
Total liabilities 643,406,393 392,632,431 503,176,141 253,183,226 1,792,398,191
Net Assets 54,110,699 39,725,528 3,924,113 17,271,475 115,031,815
Equity 115,031,815
Contingencies and Commitments 547,663,058 – 341,670,958 44,643,011 933,977,027

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 31 December 2023 (Restated)
Trade & Retail Commercial Islamic Total
sales banking banking banking
Rupees in ‘000

Profit and Loss

Net mark-up / return / profit 104,157,827 (43,974,859) (2,363,917) 13,598,584 71,417,635
Inter segment revenue - net (116,634,183) 73,734,459 42,899,724 – –
Non mark-up / return / interest income 5,856,603 1,095,801 7,684,915 657,221 15,294,540
Total Income (6,619,753) 30,855,401 48,220,722 14,255,805 86,712,175
Segment direct expenses (345,746) – – – (345,746)
Inter segment expense allocation – (7,771,827) (17,108,838) (4,751,451) (29,632,116)
Total expenses (345,746) (7,771,827) (17,108,838) (4,751,451) (29,977,862)

Credit loss allowance (60,430) (120,898) (4,309,922) (247,851) (4,739,101)

Profit before tax (7,025,929) 22,962,676 26,801,962 9,256,503 51,995,212

31 December 2023 (Restated)

Trade & Retail Commercial Islamic Total
sales banking banking banking
Rupees in ‘000

Balance Sheet
Cash and bank balances 10,004,439 30,296,185 61,167,455 11,122,467 112,590,546
Investments - net 847,856,389 – – 77,555,576 925,411,965
Net inter segment lending – 453,622,274 285,526,668 – 739,148,942
Lendings to financial institutions 5,496,284 – – – 5,496,284
Advances - performing – 14,275,145 290,394,333 114,143,051 418,812,529
Advances - non-performing – 330,126 18,950,640 554,851 19,835,617
Credit loss allowance against advances – (201,087) (25,842,480) (555,655) (26,599,222)
Others 28,135,172 4,340,896 56,047,911 13,352,318 101,876,297
Total Assets 891,492,284 502,663,539 686,244,527 216,172,608 2,296,572,958
Borrowings 151,006,547 – 136,959,469 35,303,574 323,269,590
Deposits and other accounts – 399,834,547 464,562,595 147,905,702 1,012,302,844
Net inter segment borrowing 739,148,942 – – – 739,148,942
Others 5,000,244 11,632,453 94,110,340 17,833,212 128,576,249
Total liabilities 895,155,733 411,467,000 695,632,404 201,042,488 2,203,297,625
Net Assets (3,663,449) 91,196,539 (9,387,877) 15,130,120 93,275,333
Equity 93,275,333
Contingencies and Commitments 365,390,061 9,000 243,377,606 31,329,054 640,105,721

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43. TRUST ACTIVITIES
The Bank undertakes trustee and other fiduciary activities that result in the holding or placing of assets on behalf of individuals
and other organisations. These are not assets of the Bank and, therefore, are not included as such in these unconsolidated
financial statements. Assets held under trust are shown in table below:

2024
Securities held (Face value)
Category No. of IPS Pakistan GoP ijarah Market Total
accounts investment sukuks treasury bills
bonds
Rupees in ‘000
Assets management companies 81 57,953,000 2,025,000 197,487,625 257,465,625
Corporates 151 53,146,000 102,000 124,066,185 177,314,185
Individual 701 2,013,641 384,050 14,909,345 17,307,036
Insurance companies 5 120,000 – – 120,000
NGO / Charitable organisation 20 2,081,100 5,000 1,899,150 3,985,250
Employee funds 92 4,713,900 399,600 14,628,240 19,741,740
Others 3 12,700 275,000 – 287,700
120,040,341 3,190,650 352,990,545 476,221,536

2023
Securities held (Face value)
Category No. of IPS Pakistan GoP ijarah Market Total
accounts investment sukuks treasury bills
bonds
Rupees in ‘000
Assets management companies 18 27,993,900 5,561,500 52,041,150 85,596,550
Corporates 54 6,496,000 479,900 48,474,450 55,450,350
Individual 169 1,706,600 218,700 8,694,306 10,619,606
Insurance companies 1 120,000 – 120,000 240,000
NGO / Charitable organisation 7 175,000 5,000 475,800 655,800
Employee funds 47 4,070,700 696,100 6,912,500 11,679,300
Others 1 – 275,000 – 275,000
40,562,200 7,236,200 116,718,206 164,516,606

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44. TRANSACTIONS WITH RELATED PARTIES
The Bank has related party relationships with its holding company, subsidiaries, associates, companies with common directorship,
key management personnel, directors and employees' retirement benefit plans.
The Banks enters into transactions with related parties in the ordinary course of business. Contributions / charge for employees'
retirement benefits are made in accordance with actuarial valuation / terms of contribution plan. Salaries and allowances of
the key management personnel are in accordance with terms of their employment. Other transactions are at agreed terms.
Details of transactions and balances with related parties are as follows:

2024
Holding Directors Key Subsidiary Associates Retirement Total
company management companies benefit
personnel plans
Rupees in ‘000
Balances with other banks
In current accounts 322,178 – – – 277,533 – 599,711
Investments
Opening balance – – – 5,530,000 – – 5,530,000
Investment made during the year – – – 20,400,000 – – 20,400,000
Investment redeemed / disposed
off during the year – – – (21,100,000) – – (21,100,000)
Closing balance – – – 4,830,000 – – 4,830,000
Advances
Opening balance – – 283,415 – 5,709,339 – 5,992,754
Addition during the year – – 124,870 3,865,202 134,111,594 – 138,101,666
Repaid during the year – – (77,244) (3,808,513) (133,315,950) – (137,201,707)
Closing balance – – 331,041 56,689 6,504,983 – 6,892,713
Other Assets
Mark-up / return / interest receivable – – – 48,484 31,360 – 79,844
Prepayments / Advance deposits /
Other Receivable 468 – – – 67,006 – 67,474
468 – – 48,484 98,366 – 147,318
Deposits
Opening balance 242,044 822,094 319,529 1,522,026 25,278,888 1,421,701 29,606,282
Received during the year 19,784,319 3,140,332 1,534,947 234,317,102 2,786,954,112 6,790,530 3,052,521,342
Withdrawn during the year (19,795,007) (2,995,082) (1,629,774) (233,534,389) (2,806,665,349) (6,043,540) (3,070,663,141)
Closing balance 231,356 967,344 224,702 2,304,739 5,567,651 2,168,691 11,464,483
Other liabilities
Mark-up / return / interest payable – 8,566 10,616 14,866 105,119 217,415 356,582
Other payables – 995 – – 900 117,071 118,966
– 9,561 10,616 14,866 106,019 334,486 475,548
Contingencies and commitments
Transaction-related contingent
liabilities – – – – 13,955,479 – 13,955,479
Trade-related contingent liabilities – – – – 6,073,667 – 6,073,667
– – – – 20,029,146 – 20,029,146

* Management fee is as per the agreement with the holding company.

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 2023
Holding Directors Key Subsidiary Associates Retirement Total
company management companies benefit
personnel plans
Rupees in ‘000

Balances with other banks

In current accounts 680,649 – – – 186,957 – 867,606
Investments
Opening balance – – – 4,880,000 – – 4,880,000
Investment made during the year – – – 18,850,000 – – 18,850,000
Investment redeemed / disposed
off during the year – – – (18,200,000) – – (18,200,000)
Closing balance – – – 5,530,000 – – 5,530,000
Advances
Opening balance – – 232,413 – 4,923,312 – 5,155,725
Addition during the year – – 144,741 – 107,246,311 – 107,391,052
Repaid during the year – – (93,739) – (106,460,284) – (106,554,023)
Closing balance – – 283,415 – 5,709,339 – 5,992,754
Other Assets
Mark-up / return / interest receivable – – – 84,162 88,690 – 172,852
Dividend receivable – – – – – – –
Prepayments / Advance deposits /
Other Receivable 468 – – – 59,669 60,450 120,587
468 – – 84,162 148,359 60,450 293,439
Deposits
Opening balance 186,031 703,394 395,587 1,280,231 21,939,773 1,139,423 25,644,439
Received during the year 25,230,932 1,710,093 3,199,802 170,548,261 2,458,537,439 5,370,804 2,664,597,331
Withdrawn during the year (25,174,919) (1,591,393) (3,275,860) (170,306,466) (2,455,198,324) (5,088,526) (2,660,635,488)
Closing balance 242,044 822,094 319,529 1,522,026 25,278,888 1,421,701 29,606,282
Other liabilities
Mark-up / return / interest payable – 8,523 8,517 17,211 259,087 100,731 394,069
Management fee payable for
technical and consultancy
services * 1,850,085 – – – – – 1,850,085
Other payables – 995 – – 630 – 1,625
1,850,085 9,518 8,517 17,211 259,717 100,731 2,245,779
Contingencies and commitments
Transaction-related contingent
liabilities – – – – 10,950,031 – 10,950,031
Trade-related contingent liabilities – – – – 1,920,863 – 1,920,863
– – – – 12,870,894 – 12,870,894

* Management fee is as per the agreement with the holding company.

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Transactions during the period
2024
Holding Directors Key Subsidiary Associates Retirement Total
company management companies benefit
personnel plans
Rupees in ‘000
Income
Mark-up / return / interest
earned – – 15,602 1,090,433 90,295 – 1,196,330
Fee and commission income 142 377 – 1,794 941,211 16 943,540
Dividend income – – – 12,638 – – 12,638
Rent income 5,615 – – 12,533 10,340 – 28,488
Expense
Mark-up / return / interest
expensed – 88,785 43,919 258,070 2,062,238 302,094 2,755,106
Commission / brokerage /
bank charges expense 7,026 – – 3,194 11,196 – 21,416
Salaries and allowances – – 674,466 – – – 674,466
Directors' fees – 28,841 – – – – 28,841
Charge to defined benefit plan – – – – – 310,200 310,200
Contribution to defined
contribution plan – – – – – 373,060 373,060
Insurance premium expenses – – – – 48,548 – 48,548
Management fee expense for
technical and consultancy
services * 1,479,989 – – – – – 1,479,989
Donation – – – – 30,960 – 30,960

* Management fee is as per the agreement with the holding company.

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Transactions during the period
2023
Holding Directors Key Subsidiary Associates Retirement Total
company management companies benefit
personnel plans
Rupees in ‘000

Income
Mark-up / return / interest
earned – – 74,779 929,960 320,322 – 1,325,061
Fee and commission income 108 134 – 1,751 466,580 30 468,603
Dividend income – – – 12,037 – – 12,037
Rent income 5,615 – – 5,618 10,340 – 21,573
Expenses
Mark-up / return / interest
expensed – 67,421 53,576 159,078 2,220,887 316,753 2,817,715
Commission / Brokerage /
Bank charges expense 3,327 – – 1,779 18,854 – 23,960
Salaries and allowances – – 702,191 – – – 702,191
Directors' fees – 24,270 – – – – 24,270
Charge to defined benefit plan – – – – – 279,679 279,679
Contribution to defined
contribution plan – – – – – 326,528 326,528
Insurance premium expense – – – – 27,230 – 27,230
Management fee expense for
technical and consultancy
services * 1,864,538 – – – – – 1,864,538
Donation – – – – 26,920 – 26,920

* Management fee is as per the agreement with the holding company.

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45. CAPITAL ADEQUACY, LEVERAGE RATIO & LIQUIDITY REQUIREMENTS

2024 2023
Rupees in ‘000
Minimum Capital Requirement (MCR):
Paid-up capital (net of losses) 10,478,315 10,478,315
Capital Adequacy Ratio (CAR):
Eligible common equity tier 1 (CET 1) Capital 99,689,869 88,120,035
Eligible additional tier 1 (ADT 1) Capital – –
Total eligible tier 1 capital 99,689,869 88,120,035
Eligible tier 2 capital 17,619,301 8,686,109
Total eligible capital (Tier 1 + Tier 2) 117,309,170 96,806,144
Risk Weighted Assets (RWAs):
Credit risk 455,454,722 414,494,946
Market risk 8,395,647 2,228,918
Operational risk 144,429,169 113,309,274
Total 608,279,538 530,033,138

Common equity tier 1 capital adequacy ratio 16.39% 16.63%

Tier 1 capital adequacy ratio 16.39% 16.63%
Total capital adequacy ratio 19.29% 18.26%
Minimum capital requirements prescribed by SBP
Common equity tier 1 capital adequacy ratio 6.00% 6.00%
Tier 1 capital adequacy ratio 7.50% 7.50%
Total capital adequacy ratio 11.50% 11.50%

Banks uses simple, maturity method and basic indicator approach for credit risk, market risk and operational risk exposures
respectively in the capital adequacy calculation.
Leverage Ratio (LR):
Eligible tier-1 capital 99,689,869 88,120,035
Total exposures 1,943,057,316 1,843,597,631
Leverage ratio 5.13% 4.78%
Liquidity Coverage Ratio (LCR):
Total high quality liquid assets 719,857,270 582,822,433
Total net cash outflow 330,851,160 315,797,792
Liquidity coverage ratio 218% 185%
Net Stable Funding Ratio (NSFR):
Total available stable funding 955,276,822 987,276,461
Total required stable funding 538,749,940 504,533,465
Net stable funding ratio 177% 196%

45.1 The full disclosures on the capital adequacy, leverage ratio & liquidity requirements as per SBP instructions
issued from time to time are placed on the bank's website. The link to the full disclosures is available at
https://www.habibmetro.com/financials/#basel-statements.

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46. RISK MANAGEMENT

Risk management aspects are embedded in the Bank’s strategy, organization structure and processes. The Bank has adopted
a cohesive risk management structure for credit, market, liquidity and operational risk with an integrated approach to strengthen
the process and system as controls are more effective and valuable when built into the process. Effective risk management is
considered essential in the preservation of the assets and long-term profitability of the Bank. Clear guidelines and limits, which
are under regular review, are backed by a system of internal controls and independent audit inspections. Internal reporting /
MIS are additional tools for measuring and controlling risks. Separation of duties is also embedded in the Bank’s system and
organization.

46.1 Credit Risk

Credit risk arises from the possibility that the counterparty in a transaction may default. It arises principally in relation to
the lending and trade finance business carried out by the Bank.

As per Basel II methodology the gross credit risk weighted exposure incorporating relevant credit conversion factor is
Rs. 455,454,722 thousand (2023:Rs. 414,494,946 thousand) as depicted in note 44.

The Bank’s strategy is to minimize credit risk through a strong pre-disbursement credit analysis, approval and risk
measurement process added with product, geography and customer diversification. The Bank, as its strategic preference,
extends trade and working capital financing, so as to keep the major portion of exposure (funded and non-funded) on
a short-term, self-liquidating basis. Major portion of the Bank's credit portfolio is priced on flexible basis with pricing
reviewed on periodic basis.

With the expansion of the Consumer lending portfolio, the Credit Review & Administration efforts have been accordingly
enhanced by inducting specialized consumer credit risk analysts and processing specialists.

Centralized Credit and Trade processing centre staffed with experienced resource provide strength to post-disbursement
aspect of credit risk management.

The Bank’s credit policy / manual defines the credit extension criteria, the credit approval and monitoring process, the
loan classification system and provisioning policy.

The Bank continually assesses and monitors credit exposures. The Bank follows both objective and subjective criteria of
SBP regarding loans classification. The subjective assessment process is based on management's judgement with respect
to the borrower's character, activity, cash flow, capital structure, security, quality of management and delinquency.

The Bank uses the 'Standardised Approach' in calculation of credit risk and capital requirements.

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The Bank uses reputable and SBP approved rating agencies for deriving risk weight to specific credit exposures. These are
applied consistently across the Bank credit portfolio for both on-balance sheet and off-balance sheet exposures. The
methodology applied for using External Credit Assessment Institutions (ECAI's) inclusive of the alignment of alpha numeric
scale of each agency used with risk bucket is as per SBP guidelines as is given below:

Types of exposures and ECAI’s used

2024
Exposures JCR-VIS PACRA S&P Fitch Moody’s
Corporate P P – – –
Banks P P P P P
Sovereigns – – – – –
SME’s P P – – –

Credit exposures subject to Standardised Approach

2024 2023
Rating Amount Deduction Net Amount Deduction Net
Exposures
category outstanding CRM amount outstanding CRM amount
Rupees in ‘000
Corporate 1 202,144,398 68,569,368 133,575,030 113,050,499 15,630,380 97,420,119
2 136,934,620 3,893,584 133,041,036 138,210,055 2,217,085 135,992,970
3,4 20,005,906 – 20,005,906 17,170,109 – 17,170,109
5,6 110 – 110 – – –
Claims on banks with
original maturity of
3 months or less 5,671,094 – 5,671,094 11,643,124 – 11,643,124
Retail 23,960,764 5,895,875 18,064,889 18,969,701 4,600,092 14,369,609
Public sector entities 1 21,053,910 12,649,658 8,404,252 14,008,553 2,281,640 11,726,913
2,3 – – – 2,571,346 31,976 2,539,370
Others 938,236,048 6963750 931,272,298 1,151,683,418 34,000,000 1,117,683,418
Unrated 274,872,634 51,545,290 223,327,344 225,155,520 47,092,171 178,063,349

The forms of collateral that are deemed eligible under the ‘Simple Approach’ to credit risk mitigation as per SBP guidelines
are used by the Bank and primarily includes cash, government, equity investment in blue chip companies and rated debt
securities.

The Bank applies SBP specified haircut to collateral for credit risk mitigation. Collateral management is embedded in the
Bank’s risk taking and risk management policy and procedures. A standard credit granting procedure exists which has
been well-disseminated down the line, ensuring proper pre-sanction evaluation, adequacy of security, pre-examination
of charge / control documents and monitoring of each exposure on an ongoing basis.

Collateral information is recorded diligently in the Bank's main processing systems by type of collateral, amount of collateral
against relevant credit exposures. A cohesive accounting / risk management system facilitates effective collateral
management for Basel II reporting.

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 Particulars of bank's significant on-balance sheet and off-balance sheet credit risk in various sectors are analysed as follows:

46.1.1 Lendings to financial institutions

Gross Non-performing Credit loss
lendings lendings allowance held
Credit risk by public / private sector 2024 2023 2024 2023 2024 2023
Rupees in ‘000
Public / Government – 2,818,607 – – – –
Private 5,571,000 2,677,677 – – 2 –
5,571,000 5,496,284 – – 2 –

46.1.2 Investment in debt securities

Gross Non-performing Credit loss
investments investments allowance held
Credit risk by industry sector 2024 2023 2024 2023 2024 2023
Rupees in ‘000
Chemical and Pharmaceuticals 8,916 13,237 8,916 13,237 8,916 13,237
Engineering 340,000 340,000 340,000 – 340,000 –
Electronics and electrical appliances – – – – – –
Financial 7,869,240 9,788,547 – – – –
Power (electricity), gas, water, sanitary 6,108,570 6,247,800 – – 2,792 –
Textile 9,500 9,500 9,500 9,500 9,500 9,500
Transport, storage and communication 64,946 64,946 64,946 64,946 64,946 64,946
Others 780,180,530 901,524,716 – – 52 –
794,581,702 917,988,746 423,362 87,683 426,206 87,683

Credit risk by public / private sector

Public / Government 786,561,697 907,772,516 – – 2,792 –

Private 8,020,005 10,216,230 423,362 87,683 423,414 87,683
794,581,702 917,988,746 423,362 87,683 426,206 87,683

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46.1.3 Advances Gross Non-performing Credit loss
advances advances allowance held
Credit risk by industry sector 2024 2023 2024 2023 2024 2023
Rupees in ‘000

Agriculture, forestry, hunting and fishing 3,961,147 3,668,991 21,850 15,000 49,994 –
Automobile and transportation equipment 1,635,115 4,587,085 92,000 16,970 67,804 16,970
Basic metals & metal products 7,517,923 8,254,907 2,674,952 277,903 2,630,164 268,205
Cement 6,010,106 5,609,546 – – 2,544 –
Chemicals and pharmaceuticals 29,359,169 23,146,855 365,412 328,381 449,006 309,045
Commercial trade 15,680,763 14,573,647 829,158 905,948 909,557 700,353
Commodity finance – 34,000,000 – – 973 –
Construction and real estate 12,892,658 9,113,466 82,474 74,941 1,229,646 46,830
Edibles 45,445,820 40,067,210 2,200,983 1,830,919 2,942,120 1,821,923
Electronics and electrical appliances 16,935,452 17,262,507 213,489 213,706 410,844 110,607
Financial 80,024,493 19,029,920 – – 35,203 –
Footwear and leather garments 4,230,290 3,246,676 3,163 – 10,057 –
Individuals 19,495,040 17,522,462 507,863 330,126 602,776 140,478
Mining and quarrying 21,244 17,131 – – 3 –
Power (electricity), gas, water, sanitary 29,086,792 27,012,238 927,905 1,017,337 1,214,647 1,017,337
Services 23,344,985 20,144,710 484,671 498,148 727,903 593,148
Sugar 5,046,442 6,908,830 87,505 92,544 147,295 92,544
Textile 190,253,406 172,090,792 16,238,181 13,824,555 17,588,096 13,798,037
Transport, storage and communication 3,848,021 3,195,003 26,484 26,483 43,010 26,483
Others 9,013,874 9,196,170 411,180 382,656 440,514 331,620
503,802,740 438,648,146 25,167,270 19,835,617 29,502,156 19,273,580

Gross Non-performing Credit loss

advances advances allowance held
Credit risk by public / private sector 2024 2023 2024 2023 2024 2023
Rupees in ‘000
Public / Government 23,324,353 50,084,927 – – – –
Private 480,478,387 388,563,219 25,167,270 19,835,617 29,502,156 19,273,580
503,802,740 438,648,146 25,167,270 19,835,617 29,502,156 19,273,580

127
 2024 2023
Rupees in ‘000
46.1.4 Contingencies and commitments
Credit risk by industry sector
Agriculture, forestry, hunting and fishing 409,198 739,784
Automobile and transportation equipment 29,991,502 20,415,045
Basic metals & metal products 8,825,954 7,679,903
Cement 9,361,727 4,545,115
Chemicals and pharmaceuticals 64,950,855 47,167,911
Commercial trade 59,149,546 42,625,253
Construction & real estate 3,048,006 2,398,979
Edibles 56,316,536 28,699,440
Electronics and electrical appliances 12,071,950 9,229,267
Financial 439,604,970 292,014,882
Footwear and leather garments 1,057,512 1,738,461
Individual – 9,000
Mining and quarrying 649,575 290,820
Power (electricity), gas, water, sanitary 26,102,461 11,784,135
Services 18,608,639 17,576,051
Sugar 4,622,686 3,091,371
Textile 179,743,912 107,081,353
Transport, storage and communication 1,762,541 2,970,635
Others 17,699,457 40,048,316
933,977,027 640,105,721
Credit risk by public / private sector
Public / Government 133,340,243 53,435,366
Private 800,636,784 586,670,355
933,977,027 640,105,721

46.1.5 Concentration of advances

The bank top 10 exposures on the basis of total (funded and non-funded exposures) aggregated to Rs. 122,440,148
thousand (2023: Rs. 99,026,277 thousand) are as following:

Funded 94,207,487 72,132,663

Non-funded 28,232,661 26,893,614
Total exposure 122,440,148 99,026,277

The sanctioned limits against these top 10 exposures aggregated to Rs. 166,265,332 thousand (2023:
Rs. 194,884,498 thousand).

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46.1.6 Advances - province / region-wise disbursement & utilization
2024
Utilization
AJK including
Disburse- KPK including Balochistan
Punjab Sindh Islamabad Gligit-
Province / region ments FATA
Baltistan
Rupees in ‘000
Punjab 253,702,189 243,972,959 9,511,488 – – 217,742 –
Sindh 554,933,662 65,604,069 468,700,640 3,603,245 17,025,708 – –
KPK including FATA 4,636,221 – – 4,636,221 – – –
Balochistan 98,399 – – – 98,399 – –
Islamabad 23,137,174 – – – – 23,137,174 –
AJK including Gilgit-Baltistan 217,571 – – – – – 217,571
836,725,216 309,577,028 478,212,128 8,239,466 17,124,107 23,354,916 217,571

2023
Utilization
Disburse- KPK including Balochistan AJK including
Punjab Sindh Islamabad Gligit-
Province / region ments FATA
Baltistan
Rupees in ‘000
Punjab 240,846,664 227,494,987 12,662,567 – – 689,110 –
Sindh 393,336,348 33,824,739 340,194,392 1,594,747 17,722,470 – –
KPK including FATA 2,742,818 – – 2,742,818 – – –
Balochistan 37,217 – – – 37,217 – –
Islamabad 16,967,544 294 – – – 16,967,250 –
AJK including Gilgit-Baltistan 325,294 – – – – – 325,294
654,255,885 261,320,020 352,856,959 4,337,565 17,759,687 17,656,360 325,294

46.1.7 Incorporation of forward-looking information in ECL

The assessment of Expected Credit Loss (ECL) calculation incorporates forward looking information.
Forward-looking aspect introduces an extra dimension, which is often captured by relating expected losses to
the macro-economic variables. The incorporation of macroeconomic factors increases the accuracy of the results
produced and makes it more reliable to predict estimate future results more accurately.

The Bank uses historic and forecasted data to determine the impact of macroeconomic factors to estimate
Probability of Default (PD) and Loss Given Default (LGD) etc. Further, statistical models based on historical correlation
is performed to identify most significant macro-economic variable(s) that have been recognized as contributors
to the default performance of the portfolio. The macro-economic variables (including KSE 100 Index, Consumer
Price Index and Crude Oil Price) used in the ECL calculation are fetched from the World Bank, International Monetary
Fund (lMF) and State Bank of Pakistan (SBP) database and the relevant macro-economic variables are selected
based on sensitivity of each of the portfolios to specific macro-economic variables. Three macroeconomic scenarios
have been developed base, best, and worst with assigned scenario probability weightings of 70%, 15%, and 15%
respectively.

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 The Bank conducted a sensitivity analysis on macro-economic indicators which are utilized for forward-looking
calculations. As of December 31, 2024, when the macro-economic indicators in the base scenario was adjusted
upwards or downwards by 10%, the ECL showed the following variation:

Segment Upwards Downwards

Corporate -9.59% 15.34%
SME -5.69% 8.64%
Retail -30.93% 37.05%

46.1.8 Sensitivity of ECL to future economic conditions

The ECL are sensitive to judgements and assumption made regarding formulation of forward-looking scenarios
and how much such scenarios are incorporated into calculations. The Bank performs sensitivity analysis on the
ECL recognised on each of its segments.

The table below shows the loss allowance on each segment assuming each forward-looking scenario (e.g. Base,
worst and best) were weighted 100% instead of applying scenario probability across the three scenarios.

2024
Base Worst Best
Total ECL after Total ECL after Total ECL after
Total ECL sensitivity Increase / sensitivity Increase / sensitivity Increase /
Segment as per FS decrease in % decrease in % decrease in %
analysis analysis analysis
Rupees in ‘000
Corporate 5,021,760 4,937,809 -1.67% 6,985,029 39.10% 3,450,260 -31.29%
SME 203,915 191,877 -5.90% 357,367 75.25% 106,639 -47.70%
Agriculture 29,511 28,700 -2.75% 43,066 45.93% 19,737 -33.12%
5,255,185 5,158,387 -2.75% 7,385,461 45.93% 3,576,636 -33.12%

46.2 Market risk

Market Risk is the risk of loss in earnings and capital due to adverse changes in interest rates, foreign exchange rates, and
equity prices as well as their correlations and volatilities. Market Risk performs risk measurement, monitoring, and control
functions through the use of various risk procedures and tools.

The Bank has a comprehensive Board approved market risk management policy wherein the governance structure for
managing market risk, methods to control market risk, measurement tools used, the market risk exposure limits and the
tolerance levels have been addressed. The Bank’s strategy for managing market risk is to relate the level of risk exposures
to their risk appetite and the capital base. This structure is reviewed, adjusted and approved periodically.

The Board of Directors oversees the Bank's strategy for market risk exposures. The Bank’s Market Risk Management
governance structure consists of the Risk & Compliance Committee (BR&CC) of the Board, Investment Committee and
Asset & Liability Committee (ALCO) and is assisted by the independent Market Risk function with reporting line to the Risk
Management Division.

The asset and Liability Committee (ALCO) which comprises senior management oversees the financial position of the
Bank, assesses the impact of the interest rate change on the Bank's investment portfolio through sensitivity analysis,
duration and performs an oversight function to ensure sound asset quality, liquidity and pricing considering the current
interest rate environment. The investment policy amongst other aspects covers the Bank asset allocation guidelines.

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Market Risk function seeks to facilitate efficient risk/return management decisions, reduce volatility in operating performance
and provide transparency into the Bank’s market risk profile for senior management, the Board of Directors, and regulators.

In line with the regulatory requirements, Bank performs the impact of changes in the market factors on the Bank’s earnings
through regular stress testing and Internal Capital Adequacy Assessment Processes .

46.2.1 Balance sheet split by trading and banking books

2024 2023
Banking Trading Total Banking Trading Total
book book book book
Rupees in ‘000
Cash and balances with
treasury banks 86,815,817 – 86,815,817 91,466,596 – 91,466,596
Balances with other banks 6,434,551 – 6,434,551 21,123,950 – 21,123,950
Lendings to financial
institutions 5,570,998 – 5,570,998 5,496,284 – 5,496,284
Investments 762,976,121 47,899,279 810,875,400 925,411,965 – 925,411,965
Advances 474,300,584 – 474,300,584 412,048,924 – 412,048,924
Property and equipment 17,046,127 – 17,046,127 15,715,033 – 15,715,033
Right-of-use assets 8,608,382 – 8,608,382 7,601,453 – 7,601,453
Intangible assets 496,214 – 496,214 323,254 – 323,254
Deferred tax assets – – – 5,164,164 – 5,164,164
Other assets 89,985,707 – 89,985,707 72,065,464 – 72,065,464
1,452,234,501 47,899,279 1,500,133,780 1,556,417,087 – 1,556,417,087

46.2.2 Foreign exchange risk

Foreign exchange risk is the probability of loss resulting from adverse movement in exchange rates.
The Bank’s business model for foreign exchange risk is to serve trading activities of its clients in an efficient and cost
effective manner. The Bank is not in the business of actively trading and market making activities and all FX exposures
are backed by customers' trade transaction. A conservative risk approach backed by Bank’s business strategy to work
with export oriented clients gives the ability to meet its foreign exchange needs.
2024
Foreign Foreign Off-balance Net foreign
currency currency sheet currency
assets liabilities items exposure
Rupees in ‘000

United States Dollar 136,921,311 (122,609,572) (11,289,035) 3,022,704

Euro 12,020,766 (4,644,785) (7,351,225) 24,756
Great Britain Pound 1,922,115 (8,299,995) 6,376,288 (1,592)
Asian Currency unit 531,184 (1,437,247) – (906,063)
Japanese Yen 196,785 (255,145) 80,253 21,892
Arab Emirates Dirham 202,432 (50,186) 15,167 167,413
Canadian Dollar 12,676 – – 12,676
Australian Dollar 17,980 – (8,662) 9,317
Saudi Riyal 7,786 – – 7,786
Chinese Yuan 73,467 (125,013) 55,984 4,437
Other Currencies 176,760 – (154,092) 22,668
152,083,262 (137,421,945) (12,275,322) 2,385,994

131
 2023
Foreign Foreign Off-balance Net foreign
currency currency sheet currency
assets liabilities items exposure
Rupees in ‘000

United States Dollar 407,917,288 (483,845,450) 79,854,650 3,926,488

Euro 32,880,994 (11,912,630) (21,150,155) (181,791)
Great Britain Pound 5,056,372 (25,104,979) 20,051,785 3,178
Asian Currency Unit 2,051,016 (3,425,069) – (1,374,053)
Japanese Yen 2,582,249 (33,357,773) 35,000,000 4,224,476
Arab Emirates Dirham 2,847,411 (1,709,001) – 1,138,410
Canadian Dollar 161,373 – – 161,373
Australian Dollar 159,013 – – 159,013
Saudi Riyal 110,733 – – 110,733
Chinese Yuan 1,346,475 – – 1,346,475
Other Currencies 301,425 – – 301,425
455,414,349 (559,354,902) 113,756,280 9,815,727

2024 2023
Banking Trading Banking Trading
book book book book
Rupees in ‘000

Impact of 1% change in foreign exchange rates on

- Profit and loss account 12,169 – 50,060 –
- Other comprehensive income – – – –

46.2.3 Equity position risk

Equity position risk arises due to adverse movements in equity prices. The Bank’s policy is to take equity position in high
dividend yield scripts. The bank as a policy does not enter into any kind of proprietary equity trades. Equity position
risk of the Bank is mitigated through portfolio and scrip limits advised by the Board of Directors and are reviewed
by the ALCO. The investment in equities and mutual funds is also managed within the statutory limits as prescribed
by the State Bank of Pakistan.

2024 2023
Banking Trading Banking Trading
book book book book
Rupees in ‘000
Impact of 5% change in equity prices on:
- Profit and loss account (71,023) – (37,526) –
- Other comprehensive income (222,575) – (105,994) –

132
 46.2.4 Yield / interest rate risk in the banking book (IRRBB)-Basel II specific
Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market interest rates. Interest rate risk is also controlled
through flexible credit pricing mechanism and variable deposit rates. Duration analysis and stress testing are being carried out regularly to estimate the impact
of adverse changes in the interest rates on bank's fixed income portfolio. Optimization of yield is achieved through the Bank’s investment strategy which aims
on attaining a balance between yield and liquidity under the strategic guidance of the ALCO. The advances and deposits of the Bank are repriced on a periodic
basis based on interest rates scenario.
2024 2023
Banking book Trading book Banking book Trading book
Rupees in ‘000
Impact of 1% change in interest rates on
- Profit and loss account – – – –
- Other comprehensive income (2,935,475) – (3,232,974) –
46.2.5 Mismatch of interest rate sensitive assets and liabilities
2024
Exposed to yield / interest risk
Effective
yield / Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Non-interest
interest Upto 1 month to months to months year to years to years to years to Over bearing
rate Total month 3 months 6 months to 1 year 2 years 3 years 5 years 10 years 10 years financial
instruments
Rupees in ‘000
On-balance sheet financial instruments
Assets
Cash and balances with treasury banks 3.53% 86,815,817 12,058,642 – – – – – – – – 74,757,175
Balances with other banks 13.51% 6,434,551 108 – – – – – – – – 6,434,443
Lendings to financial institutions 7.43% 5,570,998 2,228,398 3,342,600 – – – – – – – –
Investments 14.50% 810,875,400 94,328,217 109,176,932 234,071,830 138,936,376 116,593,796 91,399,315 3,268,209 6,380,899 – 16,719,826
Advances 9.83% 474,300,584 37,790,736 296,654,069 93,977,716 851,312 2,321,212 2,869,380 9,120,952 22,432,891 8,282,316 –
Other assets 84,913,462 – – – – – – – – – 84,913,462
1,468,910,812 146,406,101 409,173,601 328,049,546 139,787,688 118,915,008 94,268,695 12,389,161 28,813,790 8,282,316 182,824,906

Liabilities
Bills payable 28,478,822 – – – – – – – – – 28,478,822
Borrowings 13.92% 330,010,768 245,643,040 15,481,593 23,283,638 468,065 1,590,271 1,906,565 8,004,951 27,032,802 – 6,599,843
Deposits and other accounts 12.56% 927,132,777 117,129,781 52,448,472 293,121,131 21,254,274 783,556 3,283,031 4,170,271 180,750 – 434,761,511
Lease Liabilities 10,463,713 – – 22,269 409,349 3,533,548 388,361 1,777,294 3,909,899 – 422,993
Other liabilities 74,860,647 – – – – – – – – – 74,860,647
1,370,946,727 362,772,821 67,930,065 316,427,038 22,131,688 5,907,375 5,577,957 13,952,516 31,123,451 – 545,123,816
On-balance sheet gap 97,964,085 (216,366,720) 341,243,536 11,622,508 117,656,000 113,007,633 88,690,738 (1,563,355) (2,309,661) 8,282,316 (362,298,910)

Off-balance sheet financial instruments

Commitments in respect of:
Forward foreign exchange contracts 547,663,058 – – – – – – – – – 547,663,058
Syndicate financing 388,000 – – – – – – – – – 388,000
Letters of credit 229,691,020 – – – – – – – – – 229,691,020
Acquisition of property and equipment 622,776 – – – – – – – – – 622,776
Off-balance sheet gap 778,364,854 – – – – – – – – – 778,364,854
Total Yield / Interest Risk Sensitivity Gap 876,328,939 (216,366,720) 341,243,536 11,622,508 117,656,000 113,007,633 88,690,738 (1,563,355) (2,309,661) 8,282,316 416,065,944
Cumulative Yield / Interest Risk Sensitivity Gap 876,328,939 (216,366,720) 124,876,816 136,499,324 254,155,324 367,162,957 455,853,695 454,290,340 451,980,679 460,262,995 416,065,944

133
 2023

134
Exposed to yield / interest risk
Effective
yield / Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Non-interest
interest Upto 1 month to months to months year to years to years to years to Over bearing
rate Total month 3 months 6 months to 1 year 2 years 3 years 5 years 10 years 10 years financial
instruments
Rupees in ‘000
On-balance sheet financial instruments

Assets
Cash and balances with treasury banks 4.34% 91,466,596 11,497,335 – – – – – – – – 79,969,261
Balances with other banks 17.50% 21,123,950 758 – – – – – – – – 21,123,192
Lendings to financial institutions 11.37% 5,496,284 1,409,304 3,382,328 704,652 – – – – – – –
Investments 19.35% 925,411,965 158,267,764 94,884,957 130,049,959 372,611,577 16,844,604 68,055,227 70,835,074 6,351,900 – 7,510,903
Advances 15.51% 412,048,924 28,694,872 309,737,952 19,367,142 506,056 1,623,698 3,084,478 5,961,900 40,930,094 2,142,732 –
Other assets 67,320,931 – – – – – – – – – 67,320,931
1,522,868,650 199,870,033 408,005,237 150,121,753 373,117,633 18,468,302 71,139,705 76,796,974 47,281,994 2,142,732 175,924,287

Liabilities
Bills payable 28,352,699 – – – – – – – – – 28,352,699
Borrowings 19.19% 323,269,590 204,565,958 50,562,670 15,313,870 430,063 1,235,540 2,805,002 5,417,852 42,038,438 11,559 888,638
Deposits and other accounts 11.04% 1,012,302,844 240,864,493 42,534,220 267,421,445 36,034,139 2,203,342 490,765 7,099,242 186,035 – 415,469,163
Other liabilities 89,742,501 – – – – – – – – – 89,742,501
1,453,667,634 445,430,451 93,096,890 282,735,315 36,464,202 3,438,882 3,295,767 12,517,094 42,224,473 11,559 534,453,001
On-balance sheet gap 69,201,016 (245,560,418) 314,908,347 (132,613,562) 336,653,431 15,029,420 67,843,938 64,279,880 5,057,521 2,131,173 (358,528,714)

Off-balance sheet financial instruments

Commitments in respect of:
Forward foreign exchange contracts 365,390,061 180,358,310 120,698,674 62,023,064 2,310,013 – – – – – –
Syndicate financing 1,093,000 – – – – – – – – 1,093,000 –
Letters of credit 132,975,536 63,739,372 55,615,616 10,865,484 2,407,913 332,675 14,476 – – – –
Acquisition of property and equipment 303,084 – – – – – – – – – 303,084
Off-balance sheet gap 499,761,681 244,097,682 176,314,290 72,888,548 4,717,926 332,675 14,476 – – 1,093,000 303,084
Total Yield / Interest Risk Sensitivity Gap 568,962,697 (1,462,736) 491,222,637 (59,725,014) 341,371,357 15,362,095 67,858,414 64,279,880 5,057,521 3,224,173 (358,225,630)
Cumulative Yield / Interest Risk Sensitivity Gap 568,962,697 (1,462,736) 489,759,901 430,034,887 771,406,244 786,768,339 854,626,753 918,906,633 923,964,154 927,188,327 (358,225,630)

Reconciliation of assets and liabilities exposed to yield / interest rate risk with total assets and liabilities
2024 2023 2024 2023
Reconciliation to total assets Rupees in '000 Reconciliation to total liabilities Rupees in '000

Total financial assets 1,468,910,812 1,522,868,650 Total financial liabilities 1,370,946,727 1,453,667,634
Add: Non financial assets Add: Non financial liabilities
Property and equipment 17,046,127 15,715,033 Other liabilities 11,078,061 9,474,120
Right-of-use assets 8,608,382 7,601,453
Deferred tax liabilities 3,077,177 –
Intangible assets 496,214 323,254
Deferred tax asset – 5,164,164
Other assets 5,072,245 4,744,533
31,222,968 33,548,437
Balance as per statement of Balance as per statement of
financial position 1,500,133,780 1,556,417,087 financial position 1,385,101,965 1,463,141,754
46.3 Operational Risk

The Bank operates in a controlled manner and operational risk is managed effectively. With the evolution of operational
risk management (ORM) into a separate distinct discipline, the Bank’s strategy is to further strengthen operational
risk management system along new industry standards.

The Bank’s ORM strategy takes guidance from Basel - II, the SBP guidelines and best industry practices.

The Bank’s ORM framework includes Risk Control Self-Assessment (RCSA), Key Risk Indicators (KRIs), Operational Risk
Events Management, Change Risk Assessment and Risk Assessment of Outsourcing arrangement. The ORM unit
engages with Bank’s business/support units and regularly collaborates in determining and reviewing the inherent
operational risks, and assessment of residual risk leading to improved quality of control infrastructure and further
strengthening of the processes & management information. Moreover, Bank wide policies, procedures, frameworks
and product programs are also being evaluated from operational risk perspective aiming to beef up control
environment.

The Bank’s business continuity plan includes risk management strategies to mitigate inherent risk and prevent
interruption of mission critical services caused by disaster event. The Business Continuity Management function with
the support of the senior management remained extremely active during the pandemic to ensure that stakeholders
remained safe, all critical services and processes of the bank remain operational and any contingency arising is dealt
appropriately. The Bank’s operational risk management governance has been further strengthened through the
establishment of a separate operational risk and control committee.

The Bank uses Basic Indicator Approach (BIA) for regulatory capital at risk calculation for operational risk. Under BIA
the capital charge for operational risk is a fixed percentage of average positive annual gross income of the Bank over
the past three years. Figures of capital charge of operation risk for the year is Rs. 11,554,334 thousand (2023:
Rs. 9,064,742 thousand).

46.4 Liquidity Risk

Liquidity risk is the risk that the Bank will not be able to raise funds to meet its commitments.

Governance of Liquidity risk management

The ALCO continuously monitors the liquidity position and the Bank is confident that the current liquidity buffer is
sufficient to cater to any adverse movement in the maturity profile.

Liquidity and related risks are managed through standardized processes established in the Bank. The management
of liquidity risk within the Bank is undertaken within limits and other parameters set by the BoD. The Bank's treasury
function has the primary responsibility for assessing, monitoring and managing the Bank's liquidity and funding
strategy while overall compliance is monitored and coordinated by the ALCO. Board and senior management are
apprised of the Bank’s liquidity profile to ensure proactive liquidity management. Treasury Middle Office being part
of the risk management division is responsible for the independent identification, monitoring and analysis of intrinsic
risks of treasury business. The Bank has in place duly approved Treasury investment policy and strategy along with
liquidity risk tolerance / appetite levels. These are communicated at various levels so as to ensure effective liquidity
management for the Bank.

135
 Habib Metro’s strong deposit base backed by continued customer confidence and holding of government securities
has enabled the bank to maintain a robust liquidity profile, also depicted through a strong LCR ratio.

Funding Strategy

The Bank’s liquidity model is based on “self-reliance” with an extensive branch network to diversify the Bank deposit
base. Further, the Bank can also generate liquidity from Interbank market against government securities to fund its
short term requirement, if any. The Bank as a policy invests significantly in highly liquid government securities that
can be readily converted into cash to meet unforeseen liquidity requirements, besides yielding attractive returns.

Liquidity Risk Mitigation techniques

Various tools and techniques are used to measure and evaluate the possible liquidity risk. These include regular
monitoring of different liquidity ratios against approved triggers and communication to senior management and
the ALCO. Further, Bank also prepares the maturity profile of assets and liabilities to keep track of liquidity gaps
over different time buckets. The Bank also ensures that statutory cash and liquidity requirements are maintained at
all times.

Liquidity Stress Testing

As per the SBP BSD Circular No. 1 of 2012, Liquidity stress testing is being conducted under well-defined stress
scenarios. Results of same are escalated at the senior level so as to enable the senior management to take proactive
actions to avoid liquidity crunch for the Bank.

Contingency Funding Plan

Contingency Funding Plan (CFP) is a part of liquidity management framework of the Bank which defines and identifies
the factors that can instigate a liquidity crisis and the actions to be taken to manage the crisis. The Bank has a
comprehensive liquidity contingency funding plan in place, which highlights liquidity management strategy to be
followed under stress conditions. Contingency Event Management parameters and responsibilities are also incorporated
in order to tackle the liquidity crisis. Moreover, CFP highlights possible funding sources focusing on self-reliance, in
case of a liquidity crisis.

136
 46.4.1 Maturities of assets and liabilities - based on contractual maturity of the assets and liabilities of the Bank
2024
Over 1 Over 7 Over 14 Over 1 Over 2 Over 3 Over 6 Over 9 Over 1 Over 2 Over 3
Upto 1 day to days to days to month to months to months to months to months year to years to years to Over
Total day 7 days 14 days 1 month 2 months 3 months 6 months 9 months to 1 year 2 years 3 years 5 years 5 years

Rupees in ‘000

Assets
Cash and balances
with treasury banks 86,815,817 86,815,817 – – – – – – – – – – – –
Balances with other banks 6,434,551 6,434,551 – – – – – – – – – – – –
Lendings to financial institutions 5,570,998 2,228,398 – – – 3,342,600 – – – – – – – –
Investments 810,875,400 70,964,671 – – 32,501,480 – 47,710,525 155,933,291 – 140,656,596 94,713,364 252,617,189 15,778,284
Advances 474,300,584 85,620,732 – – – 103,025,207 – 112,612,331 34,264,787 – 54,161,508 5,437,936 24,370,364 54,807,719
Property and equipment 17,046,127 – – – 1,048,081 802,609 – 1,187,032 2,375,761 – 2,404,069 500,144 286,820 8,441,611
Right-of-use assets 8,608,382 – – – – 275 2,365 17,294 32,891 23,684 130,474 327,077 1,241,068 6,833,254
Intangible assets 496,214 – – – 41,500 83,000 – 124,500 – 247,214 – – – –
Deferred tax assets – – – – – – – – – – – – – –
Other assets 89,985,707 2,497,512 14,985,072 17,482,584 42,457,703 1,204,632 1,204,632 1,277,888 2,384,939 2,384,939 88,438 45,486 32,772 3,939,110
1,500,133,780 254,561,681 14,985,072 17,482,584 43,547,284 140,959,803 1,206,997 162,929,570 194,991,669 2,655,837 197,441,085 101,024,007 278,548,213 89,799,978

Liabilities
Bills payable 28,478,822 28,478,822 – – – – – – – – – – –
Borrowings 330,010,768 8,136,867 48,821,203 56,958,070 138,326,739 7,740,797 7,740,797 23,283,638 234,033 234,033 1,590,271 1,906,565 8,004,951 27,032,804
Deposits and other accounts 927,132,777 824,198,634 8,565,759 2,346,126 4,207,891 6,399,859 10,589,788 31,911,110 14,870,683 3,834,973 4,020,090 6,745,016 7,452,880 1,989,972
Lease Liabilities 10,463,713 – – – – – – 22,269 43,782 29,501 182,916 388,361 1,777,294 8,019,590
Sub-ordinated debts – – – – – – – – – – – – – –
Deferred tax liabilities 3,077,177 (14,979) (89,874) (104,853) (254,641) (429,198) (429,198) (888,998) 469,397 469,397 945,980 960,257 2,382,754 61,133
Other liabilities 85,938,708 1,753,554 10,521,324 12,274,878 29,810,414 1,711,287 1,711,287 2,951,942 6,205,532 6,205,532 178,160 10,745,439 1,318,286 551,073
1,385,101,965 862,552,898 67,818,412 71,474,221 172,090,403 15,422,745 19,612,674 57,279,961 21,823,427 10,773,436 6,917,417 20,745,638 20,936,165 37,654,572
Net assets 115,031,815 (607,991,217) (52,833,340) (53,991,637) (128,543,119) 125,537,058 (18,405,677) 105,649,609 173,168,242 (8,117,599) 190,523,668 80,278,369 257,612,048 52,145,406

Share capital 10,478,315

Reserves 35,352,814
Surplus/(Deficit) on
revaluation of assets 14,333,684
Unappropriated profit 54,867,002
115,031,815

137
138
2023
Over 1 Over 7 Over 14 Over 1 Over 2 Over 3 Over 6 Over 9 Over 1 Over 2 Over 3
Upto 1 day to days to days to month to months to months to months to months year to years to years to Over
Total day 7 days 14 days 1 month 2 months 3 months 6 months 9 months to 1 year 2 years 3 years 5 years 5 years

Rupees in ‘000
Assets
Cash and balances
with treasury banks 91,466,596 91,466,596 – – – – – – – – – – – –
Balances with other banks 21,123,950 21,123,950 – – – – – – – – – – – –
Lendings to financial institutions 5,496,284 45,461 272,769 318,230 772,844 1,634,792 1,747,536 704,652 – – – – – –
Investments 925,411,965 2,321,510 13,929,062 16,250,572 39,465,676 18,062,741 19,308,448 26,963,554 219,244,608 219,244,607 78,816,772 128,940,428 128,563,576 14,300,411
Advances 412,048,924 3,982,115 23,892,691 27,874,806 67,695,957 58,239,231 58,671,643 50,463,637 17,691,211 18,191,211 5,234,669 5,184,125 8,215,203 66,712,425
Property and equipment 15,715,033 13,598 81,589 95,187 231,169 212,906 235,062 671,953 671,953 671,953 1,406,797 516,620 926,780 9,979,466
Right-of-use assets 7,601,453 6,578 39,465 46,043 111,817 108,343 108,343 325,028 325,028 325,028 680,476 249,892 448,289 4,827,123
Intangible assets 323,254 955 5,729 6,684 16,231 28,612 30,586 88,797 72,830 72,830 – – – –
Deferred tax assets 5,164,164 41,614 249,682 291,296 707,432 674,814 721,352 535,312 613,331 613,330 1,042 479,496 180,389 55,074
Other assets 72,065,464 2,095,175 12,571,053 14,666,228 36,017,307 640,594 684,773 654,178 2,374,517 2,316,654 30,842 9,972 4,171 –
1,556,417,087 121,097,552 51,042,040 59,549,046 145,018,433 79,602,033 81,507,743 80,407,111 240,993,478 241,435,613 86,170,598 135,380,533 138,338,408 95,874,499

Liabilities
Bills payable 28,352,699 28,352,699 – – – – – – – – – – – –
Borrowings 323,269,590 6,627,574 39,765,444 46,393,018 112,668,756 24,438,624 26,124,046 15,313,870 215,032 215,031 1,235,540 2,805,002 5,417,852 42,049,801
Deposits and other accounts 1,012,302,844 788,935,765 18,940,530 22,097,285 53,664,835 20,558,206 21,976,014 40,116,685 18,017,070 18,017,070 2,203,342 490,765 7,099,242 186,035
Lease Liabilities 9,051,378 207,508 1,245,048 1,452,556 3,527,635 108,777 108,777 118,586 660,770 660,770 12,236 775,579 142,386 30,750
Sub-ordinated debts – – – – – – – – – – – – – –
Deferred tax liabilities – – – – – – – – – – – – – –
Other liabilities 90,165,243 2,067,090 12,402,539 14,469,629 35,140,529 1,083,580 1,083,583 1,181,294 6,582,257 6,582,257 121,884 7,725,930 1,418,379 306,292
1,463,141,754 826,190,636 72,353,561 84,412,488 205,001,755 46,189,187 49,292,420 56,730,435 25,475,129 25,475,128 3,573,002 11,797,276 14,077,859 42,572,878
Net assets 93,275,333 (705,093,084) (21,311,521) (24,863,442) (59,983,322) 33,412,846 32,215,323 23,676,676 215,518,349 215,960,485 82,597,596 123,583,257 124,260,549 53,301,621

Share capital 10,478,315

Reserves 30,418,061
Surplus/(Deficit) on
revaluation of assets 4,818,771
Unappropriated profit 47,560,186
93,275,333
 46.4.2 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Bank
2024
Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5
Upto 1 month to months to months year to years to years to years to Over
Total month 3 months 6 months to 1 year 2 years 3 years 5 years 10 years 10 years
Rupees in ‘000

Assets
Cash and balances with treasury banks 86,815,817 86,815,817 – – – – – – – –
Balances with other banks 6,434,551 6,434,551 – – – – – – – –
Lendings to financial institutions 5,570,998 2,228,398 3,342,600 – – – – – – –
Investments 810,875,400 51,872,859 63,701,266 46,219,917 152,952,078 139,165,989 93,222,757 251,282,855 12,457,678 –
Advances 474,300,584 98,984,682 79,198,871 128,311,951 29,487,648 53,973,913 5,437,936 24,523,157 46,332,225 8,050,201
Property and equipment 17,046,127 1,048,081 800,244 1,187,032 2,352,077 2,404,069 500,144 286,820 6,036,757 2,430,903
Right-of-use assets 8,608,382 – 2,640 17,294 56,575 130,474 327,077 1,239,399 6,446,705 388,218
Intangible assets 496,214 41,500 83,000 124,500 247,214 – – – – –
Deferred tax assets – – – – – – – – – –
Other assets 89,985,707 77,422,872 2,409,263 1,277,888 4,769,878 88,438 45,486 32,772 3,939,110 –
1,500,133,780 324,848,760 149,537,884 177,138,582 189,865,470 195,762,883 99,533,400 277,365,003 75,212,475 10,869,322

Liabilities
Bills payable 28,478,822 28,478,822 – – – – – – – –
Borrowings 330,010,768 252,242,883 15,481,593 23,283,638 468,065 1,590,271 1,906,565 8,004,951 27,032,802 –
Deposits and other accounts 927,132,777 204,215,819 203,949,446 148,366,221 97,004,764 76,534,046 79,033,521 79,972,968 38,055,992 –
Lease Liabilities 10,463,713 – – 22,269 73,283 182,916 388,361 1,777,294 7,596,597 422,993
Sub-ordinated debts – – – – – – – – – –
Deferred tax liabilities 3,077,177 (464,347) (858,396) (888,998) 938,794 945,980 960,257 2,382,754 (125,882) 187,015
Other liabilities 85,938,708 54,360,172 3,422,573 2,951,942 12,411,063 178,160 10,745,439 1,318,286 551,073 –
1,385,101,965 538,833,349 221,995,216 173,735,072 110,895,969 79,431,373 93,034,143 93,456,253 73,110,582 610,008
Net assets 115,031,815 (213,984,589) (72,457,332) 3,403,510 78,969,501 116,331,510 6,499,257 183,908,750 2,101,893 10,259,314

Share capital 10,478,315

Reserves 35,352,814
Surplus/(Deficit) on revaluation of assets 14,333,684
Unappropriated profit 54,867,002
115,031,815

139
140
2023
Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5
Upto 1 month to months to months year to years to years to years to Over
Total month 3 months 6 months to 1 year 2 years 3 years 5 years 10 years 10 years
Rupees in ‘000

Assets
Cash and balances with treasury banks 91,466,596 91,466,596 – – – – – – – –
Balances with other banks 21,123,950 21,123,950 – – – – – – – –
Lendings to financial institutions 5,496,284 1,409,304 3,382,328 704,652 – – – – – –
Investments 925,411,965 71,966,820 37,371,189 26,963,554 438,489,215 78,816,772 128,940,428 128,563,576 13,470,411 830,000
Advances 412,048,924 123,445,569 116,910,874 50,463,637 35,882,422 5,234,669 5,184,125 8,215,203 59,311,172 7,401,253
Property and equipment 15,715,033 421,543 447,969 671,953 1,343,907 1,406,797 516,620 926,780 3,627,679 6,351,785
Right-of-use assets 7,601,453 203,903 216,685 325,028 650,055 680,476 249,892 448,289 1,754,729 3,072,396
Intangible assets 323,254 29,599 59,198 88,797 145,660 – – – – –
Deferred tax assets 5,164,164 1,290,024 1,396,166 535,312 1,226,661 1,042 479,496 180,389 18,965 36,109
Other assets 72,065,464 65,349,763 1,325,367 654,178 4,691,171 30,842 9,972 4,171 – –
1,556,417,087 376,707,071 161,109,776 80,407,111 482,429,091 86,170,598 135,380,533 138,338,408 78,182,956 17,691,543

Liabilities
Bills payable 28,352,699 28,352,699 – – – – – – – –
Borrowings 323,269,590 205,454,792 50,562,670 15,313,870 430,063 1,235,540 2,805,002 5,417,852 42,038,438 11,363
Deposits and other accounts 1,012,302,844 255,015,208 199,690,024 157,983,537 114,612,039 80,781,242 79,068,665 85,677,144 39,474,985 –
Lease Liabilities 9,051,378 6,432,749 217,554 118,586 1,321,540 12,236 775,579 142,386 30,748 –
Sub-ordinated debts – – – – – – – – – –
Deferred tax liabilities – – – – – – – – – –
Other liabilities 90,165,243 64,079,785 2,167,163 1,181,294 13,164,514 121,884 7,725,930 1,418,379 306,294 –
1,463,141,754 559,335,233 252,637,411 174,597,287 129,528,156 82,150,902 90,375,176 92,655,761 81,850,465 11,363
Net assets 93,275,333 (182,628,162) (91,527,635) (94,190,176) 352,900,935 4,019,696 45,005,357 45,682,647 (3,667,509) 17,680,180

Share capital 10,478,315

Reserves 30,418,061
Surplus / (Deficit) on revaluation of assets 4,818,771
Unappropriated profit 47,560,186
93,275,333
47. GENERAL

47.1 Captions, as prescribed by BPRD Circular No.2 of 2018 issued by the SBP, in respect of which there are no
amounts, have not been reproduced in these unconsolidated financial statements, except for captions of the
statement of financial position and profit and loss account.

47.2 Non adjusting event after statement of financial position date

The Board of Directors in its meeting held on 19 February 2025 has proposed a final cash dividend of Rs. 4.50
per share amounting to Rs. 4,715,242 thousand (2023: final cash dividend of Rs. 5.50 per share amounting to
Rs. 5,763,073 thousand) in addition to interim cash dividend of Rs. 7.50 per share amounting to Rs. 7,858,737
thousand (2023: interim cash dividend of Rs. 5.00 per share amounting to Rs. 5,239,157 thousand) for approval
by the members of the Bank in the forthcoming Annual General Meeting.

48. DATE OF AUTHORISATION FOR ISSUE

These unconsolidated financial statements were authorised for issue on 19 February 2025 by the Board of Directors of
the Bank.

FUZAIL ABBAS KHURRAM SHAHZAD KHAN MOHOMED BASHIR RASHID AHMED JAFER MOHAMEDALI R. HABIB
Chief Financial Officer President & Director Director Chairman
Chief Executive Officer

141
 ANNEXURE "I" AS REFERRED TO IN NOTE 10.6 OF THE UNCONSOLIDATED FINANCIAL STATEMENTS

142
STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF OF RS. 500,000/- OR ABOVE
PROVIDED DURING THE YEAR ENDED 31 DECEMBER 2024.
Outstanding liabilities Other
Name of individuals /
S. Name and address of the Father’s / Husband’s at beginning of the year Principal Interest / financial
partners / directors mark-up Total
No. borrower Name / relief
(with CNIC / NIC Number) Principal Interest Total
written-off wavied
mark-up Others provided
1 2 3 4 5 6 7 8 9 10 11 12
Rupees in ‘000

1 Sun Star Pesticides Asrar Ali Intizar Ali 6,375 - - 2,695 - - 1,143 955
13-KM, Jampur Road, 32102-1313822-3
Dera Ghazi Khan. Abdul Rehman Naseer Ahmed
32102-9101322-7

2 Gulshan Spinning Mills Ltd. Naseer Ahmad Abdul Shakoor 28,700 11,706 - 24,838 11,706 -
2nd Floor, Garden Heights, 8 Aibak Block, 42201-0632509-5
New Garden Town, Lahore. Tanveer Ahmad Abdul Shakoor
42201-0350138-5

3 Hassan Steel Industry Muhammad Hassan Jehangir M. Rafiq 41,654 2,846 - 11,605 - - 42,930 1,053
42, Street No.14, 35401-1823258-1
Cavalry Ground, Lahore. Shabana Farooq Farooq Ahmed Sheikh
35201-8751140-2

4 Three Star Iron Store Muhammad Ahmed Muhammad Farooq 1,999 368 - 3,000 - - 512 510
Near Shamma Cinema, 31202-7213837-9
Multan Road, Bahawalpur.

5 Mashaal Metals Muhammad Fahad Noor Noor Ahmad Khan 16,000 - - 14,104 - - 3,279 14,260
17-KM, Missan Kalar Suwa, Old Pindi 35201-1518199-5
Das Road, Sheikhupura Road, Lahore.

6 Q&A International Mr. Qaiser Ali Nazakat Ali 39,499 303 - 35,214 - - 4,316 18,091
72-A, Block-A, Street 5, 42501-1478648-3
Sindhi Muslim Society, Karachi. Mr. M.S. Rahimtoola S.H. Rahimtoola
42301-1101759-1
 Outstanding liabilities Other
Name of individuals /
S. Name and address of the Father’s / Husband’s at beginning of the year Principal Interest / financial
partners / directors mark-up Total
No. borrower Name / relief
(with CNIC / NIC Number) Principal Interest Total
written-off wavied
mark-up Others provided
1 2 3 4 5 6 7 8 9 10 11 12
Rupees in ‘000

7 Haji Khursheed Ahmed & Co. Shakeel Ahmad Haji Khursheed Ahmad 1,860 1,590 - 45,016 - - 865 13,872
Shop No. 159, New Grain Market, 36302-9633686-1
Vehari Road, Multan.

8 Moon Trading Commission Agent Muhammad Saeed Alam Abdul Aziz 14,998 2,248 - 22,284 - - 3,181 9,984
Grain Market, Hasilpur, 31203-1709562-3
District Bahawalpur.

9 Saeed Oil Mills Muhammad Saeed Alam Abdul Aziz 15,000 2,217 - 8,338 - - 3,152 2,835
Chak No. 17/FW, Jalandhar Colony, 31203-1709562-3
Hasilpur, District Bahawalpur. Muhammad Miqdam Saeed Muhammad Saeed Alam
31203-0911832-7

10 Aman & Sons Mr.Muhammad Luqman Aman Ullah 2,156 - - 823 - - 4,418 823
D-23/B, S.I.T.E., Karachi. 42301-9010172-5
Mr.Muhammad Salman Aman Ullah
90406-0161144-5

11 Madni Battery Services Mr. Khizar Hayat Allah Ditta 1,699 326 - 10,711 - - 735 3,010
198/B, Near PSO Pump, 36302-5599522-5
General Bus Stand, Multan. Mrs. Rukhsana Khizar Hayat
36302-0394214-8

12 Mohsin Tabani / Anisa Tabani Mr. Mohsin Tabani Muhammad Ashraf 6,190 - - 9,378 - - 9,637 9,011
38/1A, 26th Street, 42301-6137858-3
Phase-V, DHA, Karachi. Mrs. Anisa Tabani Muhammad Tabani
42301-4905643-4
176,130 21,604 - 163,168 24,838 11,706 74,168 74,404

143
 Annexure - II

ISLAMIC BANKING BUSINESS

The bank is operating 223 (2023: 117) Islamic banking branches and 190 (2023: 233) Islamic banking windows at the end of the year.

Note 2024 2023

Rupees in ‘000

ASSETS
Cash and balances with treasury banks 14,936,606 11,119,511
Balances with other banks 34,919 2,956
Due from financial institutions – –
Investments 1 147,020,502 77,555,576
Islamic financing and related assets - net 2 90,345,521 114,142,247
Property and equipment 800,502 318,450
Right-of-use assets 3,055,711 2,026,102
Intangible assets – –
Due from Head Office 3 5,167,862 –
Other assets 9,093,078 11,007,766
Total Assets 270,454,701 216,172,608

LIABILITIES
Bills payable 6,374,863 1,707,901
Due to financial institutions 28,894,549 35,303,574
Deposits and other accounts 4 205,395,048 147,905,702
Due to Head Office – 4,644,318
Lease liabilities 3,696,838 2,143,764
Subordinated debt – –
Other liabilities 5 8,821,928 9,337,229
253,183,226 201,042,488
NET ASSETS 17,271,475 15,130,120

REPRESENTED BY
Islamic Banking Fund 11,006,964 10,007,047
Reserves – –
Deficit on revaluation of assets 3,390,215 402,256
Unappropriated profit 6 2,874,296 4,720,817
17,271,475 15,130,120

CONTINGENCIES AND COMMITMENTS 7

144
 The profit and loss account of the Bank's Islamic banking branches for the year ended 31 December 2024 is as follows:
Note 2024 2023
Rupees in ‘000
Profit / return earned 8 35,533,890 29,447,686
Profit / return expensed 9 (19,587,203) (15,849,102)
Net Profit / return 15,946,687 13,598,584

Other income
Fee and Commission Income 1,164,766 658,729
Dividend Income – –
Foreign Exchange Income 155,610 120,994
Income / (loss) from derivatives – –
(Loss) / gain on securities (82,943) (140,308)
Other Income 76,571 17,806
Total other income 1,314,004 657,221
Total Income 17,260,691 14,255,805

Other expenses
Operating expenses 7,649,652 4,750,271
Other charges 289 1,180
Total other expenses 7,649,941 4,751,451
Profit before provisions 9,610,750 9,504,354
Credit loss allowance and write offs - net (3,362,281) (247,851)
Profit before taxation 6,248,469 9,256,503
Taxation (3,374,173) (4,535,686)
Profit after taxation 2,874,296 4,720,817

1. INVESTMENTS BY SEGMENTS: 2024

Cost / Credit loss Surplus / Carrying
amortised allowance (deficit) value
cost
Rupees in ‘000
Debt Instruments
Measured at amortised cost
Federal government securities
- Ijarah Sukuk 2,974,050 – – 2,974,050
- Certificate of investment 3,000,000 (52) – 2,999,948
5,974,050 (52) – 5,973,998
Measured at FVOCI
Federal government securities
- Ijarah Sukuk 125,750,660 – 3,545,698 129,296,358
Non Government Debt Securities 6,683,993 (340,000) (235,423) 6,108,570
132,434,653 (340,000) 3,310,275 135,404,928
Instruments mandatory classified /
measured at FVTPL 5,561,635 – 79,941 5,641,576
Total Investments 143,970,338 (340,052) 3,390,216 147,020,502

145
 2023
Cost / Provision Surplus / Carrying
amortised for (deficit) value
cost diminution
Rupees in ‘000
Federal government securities
- Ijarah Sukuk 59,720,420 – 586,847 60,307,267
- Bai-muajjal – – – –
- Islamic naya Pakistan certificate
modaraba investment pool 5,484,444 – – 5,484,444
65,204,864 – 586,847 65,791,711
Non Government Debt Securities
- Listed 6,768,455 – (180,655) 6,587,800
- Unlisted 5,180,000 – (3,935) 5,176,065
11,948,455 – (184,590) 11,763,865
Total Investments 77,153,319 – 402,257 77,555,576

2. ISLAMIC FINANCING AND RELATED ASSETS - NET

2024 2023
Financing Advances Inventory Total Financing Advances Inventory Total
Rupees in ‘000
Ijarah 540,947 17,607 – 558,554 753,507 29,589 – 783,096
Ijarah - islamic long term
financing facility 12,306 – – 12,306 19,727 – – 19,727
Murabaha 5,111,120 674,294 – 5,785,414 4,061,236 58,969 – 4,120,205
Working capital musharaka 13,745,539 – – 13,745,539 41,790,198 – – 41,790,198
Diminishing musharaka 20,926,138 2,060,716 – 22,986,854 18,051,336 493,346 – 18,544,682
Istisna 2,962,798 10,917,577 587,823 14,468,198 4,702,421 3,617,508 720,628 9,040,557
Al-bai 1,639,352 – 1,684,955 3,324,307 2,796,402 – 1,800,750 4,597,152
Diminishing musharaka:
Islamic long term financing facility 3,293,757 – – 3,293,757 3,895,893 – – 3,895,893
Islamic refinance scheme for
payment of wages and salaries – 93,534 – 93,534 – 93,534 – 93,534
Islamic financing facility for storage
of agricultural produce 522,889 – – 522,889 614,449 – – 614,449
Islamic temporary economic
refinance facility 8,306,821 – – 8,306,821 12,564,438 – – 12,564,438
Islamic financing facility for
renewable energy 506,756 – – 506,756 565,892 – – 565,892
Islamic export refinance
Working capital musharaka 18,146,877 – – 18,146,877 10,344,359 – – 10,344,359
Istisna 498,545 1,798,242 153,100 2,449,887 (175,888) 5,971,218 87,824 5,883,154
Al-bai 1,129,747 – 675,723 1,805,470 – – 1,840,566 1,840,566
Gross islamic financing and
related assets 77,343,592 15,561,970 3,101,601 96,007,163 99,983,970 10,264,164 4,449,768 114,697,902
Provision against non-performing
islamic financings
-Stage 1 (103,977) (18,873) (6,466) (129,316) – – – –
-Stage 2 (2,314,517) (63,235) (49,959) (2,427,711) – – – –
-Stage 3 (3,104,615) – – (3,104,615) – – – –
- Specific – – – – (542,991) – – (542,991)
- General – – – – (12,664) – – (12,664)
(5,523,109) (82,108) (56,425) (5,661,642) (555,655) – – (555,655)
Islamic financing and related
assets - net of provision 71,820,483 15,479,862 3,045,176 90,345,521 99,428,315 10,264,164 4,449,768 114,142,247

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2.1 Ijarah
2024
Cost Depreciation Book value
As at 1 Additions / As at 31 As at 1 Charge for As at 31 as at 31 Dec
Jan 2024 (deletions) Dec 2024 Jan 2024 the year Dec 2024 2024
Rupees in ‘000

Plant & Machinery 292,539 – 105,501 155,055 9,371 84,003 21,498

(187,038) (80,423)
Vehicles 788,548 98,343 776,014 152,798 82,690 212,208 563,806
(110,877) (23,280)
Total 1,081,087 (199,572) 881,515 307,853 (11,642) 296,211 585,304

2023
Cost Accumulated Depreciation Book value
As at 1 Additions / As at 31 As at 1 Charge for As at 31 as at 31 Dec
Jan 2023 (deletions) Dec 2023 Jan 2023 the year Dec 2023 2023

Rupees in ‘000
Plant & Machinery 336,502 – 292,539 121,846 79,272 155,055 137,484
(43,963) (46,063)
Vehicles 809,128 75,170 788,548 110,332 65,219 152,798 635,750
(95,750) (22,753)
Total 1,145,630 (64,543) 1,081,087 232,178 75,675 307,853 773,234

Future ijarah payments receivable

2024 2023
Not later Later than 1 Over 5 Total Not later Later than 1 Over 5 Total
than 1 year year & less years than 1 year year & less years
than 5 years than 5 years
Rupees in ‘000

Ijarah rental receivables 68,006 153,666 6,982 228,654 239,681 335,847 17,457 592,985

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 Note 2024 2023
Rupees in ‘000
2.2 Murabaha
Murabaha financing 3.2.1 5,111,120 4,061,236
Advances for Murabaha 674,294 58,969
5,785,414 4,120,205

2.2.1 Murabaha receivable - gross 3.2.2 5,436,765 4,472,147

Less: Deferred murabaha income 3.2.4 (117,493) (149,821)
Profit receivable shown in other assets (208,152) (261,090)
Murabaha financings 5,111,120 4,061,236

2.2.2 The movement in murabaha financing

during the year is as follows:
Opening balance 4,472,147 6,206,469
Sales during the year 13,415,198 13,444,533
Adjusted during the year (12,450,580) (15,178,855)
Closing balance 5,436,765 4,472,147

2.2.3 Murabaha sale price 13,415,198 13,444,533

Murabaha purchase price (12,509,752) (12,469,470)
905,446 975,063

2.2.4 Deferred murabaha income

Opening balance 149,821 222,346
Arising during the year 905,446 975,063
Less: recognised during the year (937,774) (1,047,588)
Closing balance 117,493 149,821

3. DUE FROM HEAD OFFICE

Inter-branch transactions are made on Qard basis.

4. DEPOSITS
2024 2023
In local In foreign Total In local In foreign Total
currency currencies currency currencies
Rupees in ‘000
Customers
Current deposits 91,654,193 11,668,758 103,322,951 50,023,527 8,088,995 58,112,522
Savings deposits 56,772,727 789,356 57,562,083 51,846,017 839,208 52,685,225
Term deposits 30,371,707 6,228,168 36,599,875 26,267,238 5,723,385 31,990,623
Others 3,108,749 – 3,108,749 3,204,413 – 3,204,413
181,907,376 18,686,282 200,593,658 131,341,195 14,651,588 145,992,783
Financial Institutions
Current deposits 337,087 222 337,309 61,371 – 61,371
Savings deposits 4,329,081 – 4,329,081 1,716,548 – 1,716,548
Term deposits 135,000 – 135,000 135,000 – 135,000
4,801,168 222 4,801,390 1,912,919 – 1,912,919
186,708,544 18,686,504 205,395,048 133,254,114 14,651,588 147,905,702

148
 2024 2023
Rupees in ‘000
4.1 Composition of deposits
- Individuals 80,291,166 67,672,393
- Government / Public Sector Entities 6,544,454 6,157,392
- Banking Companies 1,922 3,377
- Non-Banking Financial Institutions 4,799,468 2,087,163
- Private Sector 113,758,038 71,985,377
205,395,048 147,905,702

4.2 Particulars of deposits and other accounts

- In local currency 186,708,544 133,254,114
- In foreign currencies 18,686,504 14,651,588
205,395,048 147,905,702

4.3 This includes eligible deposits of Rs. 129,798,417 thousand which are covered under sharia compliant deposit protection
mechanism as required by the Deposit Protection Corporation circular no 5 of 2018.

5. OTHER LIABILITIES 2024 2023

These include charity fund, details of which are given below: Rupees in ‘000

Charity fund
Opening balance 402 254
Received from customers on account of delayed payment 356 448
Payments / utilization during the period - Health (301) (300)
Closing balance 457 402

Charity paid to any single entity does not exceeds Rs 500,000.

6. ISLAMIC BANKING BUSINESS UNAPPROPRIATED PROFIT

Opening balance 4,720,817 2,604,686
Add: Islamic banking profit for the period 6,248,469 9,256,503
Less: Taxation (3,374,173) (4,535,686)
Less: Reserves – –
Less: Transferred to head office (4,720,817) (2,604,686)
Closing balance 2,874,296 4,720,817

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 2024 2023
Rupees in ‘000
7. Contingencies and commitments
Guarantees 18,073,842 13,819,209
Commitments 26,569,169 17,509,845
44,643,011 31,329,054
8. Profit / return earned
Profit earned on:
Financing 18,133,033 17,172,992
Investments 15,659,083 11,917,010
Placements 1,741,774 357,684
35,533,890 29,447,686
9. Profit / return expensed

Deposits and other accounts 16,267,819 12,935,059

Due to financial institutions 2,892,956 2,801,810
Lease liability against right-of-use assets 426,428 112,233
19,587,203 15,849,102
10. Pool management

Pools maintained by the Bank's Islamic Banking Division (IBD), their key features and risk and reward
characteristics

The Bank operates general and special pools for deposits and inter-bank funds accepted / acquired under Modaraba and Musharakah
modes. Under the general deposits pools, the Bank accepts funds on Modaraba basis from depositors (Rabb-ul-Maal) where the Bank
acts as Manager (Mudarib) and invests the funds in Shariah Compliant modes of financing, investments and placements. IERS and
other pools (special pools) are operated for funds acquired / accepted from the State Bank of Pakistan and other banks for Islamic
Export Refinance to the Bank's customers and liquidity management respectively under the Musharakah / Modaraba modes. Further,
the Bank also contributes its equity and becomes the capital provider, wherein required.

Following pools are being managed by IBD:

- General pool for local and foreign currencies for depositors

- Islamic export refinance scheme musharaka pool
- Special pool

All the Modaraba based remunerative deposits shall be considered as an investment from Rabbul Maal in the pool, along with IBD's
own share of equity, which is also commingled in the pool. The applications of these funds are on islamic financing and related assets,
Investments, and Placements for generating profits to be shared among the depositors as per the Weightage system.

The IERS Pool caters the 'Islamic Export Refinance' requirements based on the guidelines issued by the SBP.

Profits are calculated on the basis of weightages assigned to different tiers and tenors. These weightages are announced at the
beginning of the period, while considering weightages emphasis shall be given to the quantum, type and the period of risk assessed
by applying following factors:

- Contracted period, nature and type of deposit / fund.

- Payment cycle of profit on such deposit / fund, i.e. monthly, quarterly or on maturity
- Magnitude of risk

Any change in profit sharing weightages of any category of deposit / fund providers shall be applicable from the next month (where
applicable).

150
Avenues/sectors of economy/business where modaraba based deposits have been deployed.

- Agriculture, forestry, hunting and fishing

- Automobile and transportation equipment
- Chemicals and pharmaceuticals
- Electronic and electrical appliances
- Financial
- Production and transmission of energy
- Footwear and leather garments
- Textile
- Cement
- Others

Parameters used for allocation of profit, charging expenses and provisions etc.

The direct expenditure shall be charged to respective pool, while indirect expenses including the establishment cost shall be borne
by Habib Metro IBD as Mudarib. The direct expenses to be charged to the pool may include depreciation of ijarah assets, insurance /
takaful expenses of pool assets, stamp fee or documentation charges, brokerage fee for purchase of securities, impairment / losses
due to physical damages to specific assets in pools etc. Provisions for non-performing accounts are borne by the mudarib. However,
write-off of non-performing accounts is charged to the respective pool. However, this is not an exhaustive list; Habib Metro IBD pool
management framework and the respective pool creation memorandum may identify and specify these and other similar expenses
to be charged to the pool.

The Bank managed the following general and specific pools during the year:

Profit rate and Profit rate return Percentage of Amount of

weightage Profit sharing Profit sharing distributed to Mudarib share Mudarib Share
General Remunerative / announcement Profit rate return ratio Mudarib ratio Rabbul Maal remunerative transferred transferred
Specific Depositor's Pools period earned Share / Fee Share Mudarib share deposits (savings) through Hiba through Hiba

General pool
Islamic Export Refinance
(IERS) Pool
PKR Pool Monthly 17.59% 50.00% 50.00% 5,184,471 9.35% 15.15% 785,653
USD Pool Monthly 12.49% 80.00% 20.00% 6,613 0.18% 13.08% 1,061

Specific pools
Islamic Export Refinance
(IERS) Pool Quarterly 20.00% 72.67% 27.33% 2,428,985 12.87% 0.00% –
Special Pool (Saving) Monthly 20.07% 34.58% 65.42% 185,677 16.23% 42.09% 43,207
Special Pool (TDR) Monthly 20.59% 7.22% 92.78% 394,869 18.73% 0.00% –
Treasury F.I. Pool PSR Deal Basis 19.66% 4.33% 95.67% 26,125 18.88% 0.00% –

151
PATTERN OF SHAREHOLDINGS
AS ON 31 DECEMBER 2024

Number of Size of shareholding Total

shareholders Rs. 10 each shares held

471 1 to 100 11,546

337 101 to 500 111,455

246 501 to 1000 209,348

635 1001 to 5000 1,681,984

245 5001 to 10000 1,884,081

298 10001 to 15000 3,642,638

75 15001 to 20000 1,365,121

63 20001 to 25000 1,484,381

35 25001 to 30000 977,373

29 30001 to 35000 948,955

22 35001 to 40000 815,523

13 40001 to 45000 561,390

42 45001 to 50000 2,048,605

29 50001 to 60000 1,603,552

35 60001 to 80000 2,479,401

37 80001 to 100000 3,485,817

49 100001 to 150000 6,248,598

24 150001 to 200000 4,239,255

17 200001 to 250000 3,940,506

54 250001 to 500000 19,291,873

46 500001 to 1000000 33,462,468

13 1000001 to 1500000 15,135,753

10 1500001 to 2000000 16,441,118

29 2000001 to 3000000 70,349,696

3 3000000 to 4000000 10,527,042

19 4000001 to 10000000 118,457,014

7 10000001 to 52050000 192,032,933

1 534390001 to 534395000 534,394,054

2,884 1,047,831,480

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COMBINED PATTERN OF SHAREHOLDINGS
AS ON 31 DECEMBER 2024

Number of Number of
Categories of Shareholders (%)
Shareholders Shares held

Directors and their spouse(s) and minor children

Mohamedali R. Habib 1 1,612,524 0.15
Ali Abbas Sikander 1 500 0.00
Hamza Habib 1 1,000 0.00
Mohomed Bashir 1 16,340,985 1.56
Muhammad H. Habib 1 2,069,454 0.20
Rashid Ahmed Jafar 1 500 0.00
Tahira Raza 1 500 0.00
Mohsin Ali Nathani 1 4,026,000 0.38
Sayeda Mohamedali Habib 1 805,065 0.08
Farah Fatima Habib 1 1,037,136 0.10

Associated Companies, undertakings and related parties

Habib Bank AG Zurich 1 534,394,054 51.00
Habib Insurance Company Limited 1 4,000,000 0.38
Trustee Gul Ahmed Textile Mills Ltd Emp P.F 1 40,000 0.00
Trustees of UBL Fund Mngrs Ltd and Associated Coys E.G.Fund 1 17,906 0.00
Askari Bank Limited 1 2,798,000 0.27
CDC - Trustee UBL Stock Advantage Fund 1 2,055,721 0.20
Trustee- Gul Ahmed Textile Mills Ltd. Emp. Provident Fund 1 30,000 0.00
CDC - Trustee UBL Retirement Savings Fund - Equity Sub Fund 1 402,738 0.04
CDC - Trustee UBL Asset Allocation Fund 1 49,800 0.00
CDC - Trustee UBL Financial Sector Fund 1 1,680,848 0.16

Executives 4 376,750 0.04

CDC - Trustee National Investment (Unit) Trust 1 31,985,146 3.05

Banks Development Financial Institutions,

Non Banking Financial Institutions. 5 15,885,612 1.52

Insurance Companies 10 31,908,482 3.05

Modarabas and Mutual Funds

First Al-noor Modaraba 1 125 0.00
CDC - Trustee MCB Pakistan Stock Market Fund 1 4,665,570 0.45
CDC - Trustee Pakistan Capital Market Fund 1 200,000 0.02
CDC - Trustee JS Large Cap. Fund 1 300,000 0.03

153
 Number of Number of
Categories of Shareholders (%)
Shareholders Shares held

CDC - Trustee Atlas Stock Market Fund 1 5,155,045 0.49

CDC - Trustee Faysal Stock Fund 1 3,096 0.00
CDC - Trustee Alfalah Ghp Value Fund 1 37,000 0.00
CDC - Trustee Unit Trust of Pakistan 1 261,000 0.02
CDC - Trustee AKD Index Tracker Fund 1 155,108 0.01
CDC - Trustee NBP Stock Fund 1 684,899 0.07
CDC - Trustee APF-Equity Sub Fund 1 267,500 0.03
Mc Fsl - Trustee JS Growth Fund 1 540,000 0.05
CDC - Trustee HBL Multi - Asset Fund 1 8,500 0.00
CDC - Trustee MCB Pakistan Asset Allocation Fund 1 117,408 0.01
CDC - Trustee Alfalah Ghp Stock Fund 1 322,000 0.03
CDC - Trustee Alfalah Ghp Alpha Fund 1 305,371 0.03
CDC - Trustee NIT-Equity Market Opportunity Fund 1 556,000 0.05
CDC - Trustee HBL Pf Equity Sub Fund 1 8,800 0.00
CDC - Trustee AL Habib Asset Allocation Fund 1 43,000 0.00
CDC - Trustee NBP Financial Sector Fund 1 41,900 0.00
Novartis Pharma Pakistan Limited Senior Provident Fund 1 24,000 0.00
Roche Pakistan Limited Management Staff Pension Fund 1 34,000 0.00
Roche Pakistan Limited Employees Provident Fund 1 18,000 0.00
Roche Pakistan Limited Management Staff Gratuity Fund 1 31,000 0.00
CDC - Trustee Alfalah Ghp Dedicated Equity Fund 1 57,400 0.01
CDC - Trustee MCB Pakistan Dividend Yield Plan 1 437,500 0.04

General Public
a. Local 2,445 185,330,455 17.69
b. Foreign 256 3,911,814 0.37

Foreign Companies 16 101,946,160 9.73

Others 101 90,850,108 8.67

Totals 2,884 1,047,831,480 100.00

Share holders holding 10% or more Shares Held Percentage

HABIB BANK AG ZURICH 534,394,054 51.00

TRADE IN THE SHARES BY DIRECTORS & EXECUTIVES * (INCLUDING THEIR SPOUSE &MINOR CHILDREN)

Name of Executive Designation Purchase Sale

NIL – – –

* The Expression "Executive" means as key management and includes all executives in direct reporting to CEO

154
 Subsidiary of Habib Bank AG Zurich

CONSOLIDATED FINANCIAL STATEMENTS

INDEPENDENT AUDITOR'S REPORT

To the Members of Habib Metropolitan Bank Limited

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the annexed consolidated financial statements of Habib Metropolitan Bank Limited and its subsidiaries (the Group),
which comprise the consolidated statement of financial position as at 31 December 2024, and the consolidated profit and loss
account and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the
consolidated cash flow statement for the year then ended, and notes to the consolidated financial statements, including a summary
of material accounting policy information.

In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at
31 December 2024 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance
with the accounting and reporting standards as applicable in Pakistan.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities
under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants'
Code of Ethics for Professional Accountants as adopted by the Institute of the Chartered Accountants of Pakistan (the Code), and
we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Following are the Key audit matter:

S. No. Key Audit Matter How the matter was addressed in our audit
1 Credit loss allowance against advances and off-balance sheet items:
(Refer note 10.6 & 20.1 to the consolidated financial statements)

As at 31 December 2024, the Bank's Credit loss allowance Our audit procedures, amongst others, included the following:
against advances and off-balance sheet items amounted l Performing risk assessment procedures over the credit
to Rs. 30,475 million and Rs. 354 million, respectively. loss allowance against advances and off-balance sheet
As per the BPRD Circular No. 07 of 2023, the Bank adopted exposure within the Bank's consolidated financial
requirements of IFRS 9 along with the Application statement. As part of these risk assessment procedures,
Instructions issued by State Bank of Pakistan (SBP) identifying the elements associated with risk of material
(hereafter referred as “application instruction of IFRS 9”) misstatement on application including those arising
from 1 January 2024 which requires the Bank to recognise from judgements over the estimation of ECL either
Expected Credit Losses (ECL) on advances and off-balance due to, methods / models, assumptions or data.
sheet items. The estimation of ECL, involves judgement l Assessing the design, implementation and operating
and complexity. effectiveness of key controls established by the Bank over
measurement of ECL and provision calculated as per PR.

156
S. No. Key Audit Matter How the matter was addressed in our audit
The key areas which are subject to complexity and l We involved in-house specialist who assisted in the following:
judgement in the estimation of ECL are:
– Evaluating the Bank's ECL model methodologies for
l Model estimations - judgmental modelling and compliance with application instructions of IFRS 9
assumptions are used to estimate ECL which involves
– Assessing the reasonableness of the Bank's
determining Probability of Default (PD), Loss Given
Default (LGD), and Exposure at Default (EAD). methodology for determining the economic
Respective model's assumptions are key driver of scenarios used and the probability weightings
uncertainty, and are required in the application of applied to them by independently validating and
these model for calculation of the ECL estimate. challenging the assumption, methodologies, and
outputs of the models;
l Economic scenarios - IFRS 9 requires the Bank to
measure ECL on an unbiased forward-looking basis – Assessing the reasonableness of macro-economic
reflecting a range of future economic conditions. variables and economic forecasts by comparing
Complex Statistical methodology is applied in these to external sourced data extracted; and
determining the forward-looking economic scenarios – Performing independent testing of the Expected
used as an input to calculate ECL, the associated
Credit Loss (ECL) allowance on a sample basis.
scenario probability weightings, and the key economic
variables that drive the scenarios. l Assessing the appropriateness of SICR criteria applied
by the Bank by ensuring that the SICR criteria and
l Qualitative criteria - the criteria selected to identify a
staging methodology are consistent with the
SICR involves judgment and can lead to unreliable ECL
recognised for certain portfolios. application instructions of IFRS 9.

In line with the application instructions of IFRS 9, the Bank

l Ensuring relevance and completeness of the key inputs
must compare the ECL for Stage 3 with the provision into the ECL calculations with their respective sub-
determined under the Prudential Regulations (PR) issued ledgers and general ledgers.
by the SBP. The PR requires specific provisioning against l Performing testing on sample basis over key inputs
the advances on the basis of time-based criteria which into the ECL calculations with their respective source
should be supplemented by a Bank's subjective evaluation documents.
of credit worthiness of customers. The determination of
l Performing sensitivity analysis on the key assumption,
provision, therefore, involves use of management's
that is probability weighted economic scenarios, to
judgement, on a case-to-case basis, taking into account
assess reasonableness and the risk of biasness by
factors such as the economic and business conditions,
changing weights assigned to each economic scenario.
borrowers' repayment behaviors and realizability of
collateral held by the Bank. l In accordance with the PR, we sampled at least sixty
percent of the total advances outstanding exposure
Because of the high degree of estimation uncertainty and
and performed credit reviews through the following
complexity involved in the calculation of ECL we
substantive procedures:
considered the area of ECL as a key audit matter.
– verifying repayments of advances / interest
installments and checked that non-performing
advances have been correctly classified and
categorised based on the number of days overdue;
– examining watch list accounts and, based on review
of the individual facts and circumstances, discussions
with management and our assessment of financial
conditions of the borrowers, formed a judgement
as to whether classification of these accounts as
performing was appropriate; and

157
 S. No. Key Audit Matter How the matter was addressed in our audit
– assessing the accuracy of specific provision made
against non-performing advances in accordance
with the criteria prescribed under the PRs by
performing recalculation.
l Assessing the appropriateness of ECL categorised as
Stage 3 by performing a comparison of ECL computed,
through the use of methodology and models with the
provision required to be computed as required under
the PR to ensure that an amount which is higher of
the ECL and PR requirements is appropriately
recognized for these stage 3 customers pursuant to
the requirement of application instructions of IFRS 9.
l Evaluating the adequacy of the financial statement
disclosures, including disclosures of key assumptions,
judgements and sensitivities.

Information Other than the Unconsolidated and Consolidated Financial Statements and Auditor's
Reports Thereon

Management is responsible for the other information. The other information comprises the information included in the Annual
Report, but does not include the consolidated and unconsolidated financial statements and our auditor's reports thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.

Responsibilities of Management and the Board of Directors for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
accounting and reporting standards as applicable in Pakistan and the Companies Act, 2017 and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is responsible for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,

158
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis
of these consolidated financial statements.

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:

l Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.

l Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

l Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.

l Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's
report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions
may cause the Group to cease to continue as a going concern.

l Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and
whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
l Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit
of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters
in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
_
The engagement partner on the audit resulting in this independent auditor's report is Zeeshan Rashid.

KPMG Taseer Hadi & Co.

Karachi: 06 March 2025 Chartered Accountants
UDIN: AR202410188gQK0UsvXN

159
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024
Note 2024 2023
Rupees in ‘000
ASSETS
Cash and balances with treasury banks 6 86,903,001 91,467,062
Balances with other banks 7 6,462,022 21,269,948
Lendings to financial institutions 8 5,570,998 5,496,284
Investments 9 807,496,585 920,634,761
Advances 10 502,468,656 433,632,602
Property and equipment 11 17,196,906 15,782,163
Right-of-use assets 12 8,654,445 7,625,010
Intangible assets 13 552,076 368,333
Deferred tax assets 19 – 5,265,313
Other assets 14 90,279,655 72,121,302
Total Assets 1,525,584,344 1,573,662,778
LIABILITIES
Bills payable 15 28,478,822 28,352,699
Borrowings 16 350,224,431 335,270,858
Deposits and other accounts 17 925,227,989 1,011,485,773
Lease liabilities 18 10,519,685 9,086,176
Sub-ordinated debts
Deferred tax liabilities 19 2,722,825 –
Other liabilities 20 87,517,942 91,278,065
Total Liabilities 1,404,691,694 1,475,473,571
NET ASSETS 120,892,650 98,189,207

REPRESENTED BY
Share capital 21 10,478,315 10,478,315
Reserves 36,857,521 31,432,768
Surplus on revaluation of assets - net of tax 22 14,371,296 4,829,814
Unappropriated profit 54,342,480 47,254,919
116,049,612 93,995,816
Non-controlling interest 21.4 4,843,038 4,193,391
120,892,650 98,189,207

CONTINGENCIES AND COMMITMENTS 23

The annexed notes 1 to 48 and annexures I and II form an integral part of these consolidated financial statements.

FUZAIL ABBAS KHURRAM SHAHZAD KHAN MOHOMED BASHIR RASHID AHMED JAFER MOHAMEDALI R. HABIB
Chief Financial Officer President & Director Director Chairman
Chief Executive Officer

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CONSOLIDATED PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2024
Note 2024 2023
Rupees in ‘000
Mark-up / return / interest earned 25 241,204,136 209,337,058
Mark-up / return / interest expensed 26 (168,758,424) (136,139,478)
Net mark-up / interest income 72,445,712 73,197,580

NON MARK-UP / INTEREST INCOME

Fee and commission income 27 10,841,239 9,463,214
Dividend income 775,461 657,866
Foreign exchange income 7,094,104 5,203,162
Income / (loss) from derivatives – –
Gain / (loss) on securities - net 28 2,481,080 (5,269)
Net loss on derecognition of financial assets
measured at amortised cost 29 (3,602) –
Other income 30 242,265 102,620
Total non mark-up / interest income 21,430,547 15,421,593
Total Income 93,876,259 88,619,173

NON MARK-UP / INTEREST EXPENSES

Operating expenses 31 34,062,659 29,146,657
Workers' welfare fund 1,178,818 1,122,976
Other charges 32 187,804 123,489
Total non-mark-up / interest expenses (35,429,281) (30,393,122)
Profit before credit loss allowance 58,446,978 58,226,051
Credit loss allowance and write offs - net 33 (4,343,224) (5,101,851)
PROFIT BEFORE TAXATION 54,103,754 53,124,200
Taxation 34 (28,338,503) (27,888,307)
PROFIT AFTER TAXATION 25,765,251 25,235,893
PROFIT ATTRIBUTABLE TO:
Equity shareholders of the holding company 24,943,158 24,556,502
Non-controlling interest 21.4 822,093 679,391
25,765,251 25,235,893

Rupees
Basic and diluted earnings per share 35 23.80 23.44

The annexed notes 1 to 48 and annexures I and II form an integral part of these consolidated financial statements.

FUZAIL ABBAS KHURRAM SHAHZAD KHAN MOHOMED BASHIR RASHID AHMED JAFER MOHAMEDALI R. HABIB
Chief Financial Officer President & Director Director Chairman
Chief Executive Officer

161
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024

Note 2024 2023

Rupees in ‘000
Profit after taxation for the year 25,765,251 25,235,893

Other comprehensive income

Items that may be reclassified to profit and loss

in subsequent periods:

Effect of translation of net investment in an offshore branch - net of tax 51 6,380

Movement in surplus on revaluation of debt
investments through FVOCI - net of tax 7,746,181 –
Net gain on derecognition of financial available for sale
investments - net of tax – 3,260,977
7,746,232 3,267,357

Items that will not be reclassified to profit and loss

in subsequent periods:

Remeasurement gain on defined benefit obligations - net of tax 122,305 78,324

Movement in surplus on revaluation in equity investments
through FVOCI - net of tax 1,944,127 –
Movement in deficit on revaluation of property and
equipment - net of tax 22.1 (101,926) (193,816)
Movement in surplus / (deficit) on revaluation of
non-banking assets - net of tax 22.2 769,953 (94,289)
2,734,459 (209,781)
Total comprehensive income 36,245,942 28,293,469

Equity share holders of the holding company 35,399,463 27,604,018

Non-controlling interest 21.4 846,479 689,451
36,245,942 28,293,469

The annexed notes 1 to 48 and annexures I and II form an integral part of these consolidated financial statements.

FUZAIL ABBAS KHURRAM SHAHZAD KHAN MOHOMED BASHIR RASHID AHMED JAFER MOHAMEDALI R. HABIB
Chief Financial Officer President & Director Director Chairman
Chief Executive Officer

162
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024

Surplus / (deficit)
Reserves on revaluation
Exchange Share Statutory Property, Un- Non-
Share Merger Special Revenue Investments equipment & Sub Total
capital translation premium reserve reserve reserve reserve appropriated total controlling
reserve non-banking profit interest
assets
Rupees in ‘000

Opening balance as at
1 January 2023 10,478,315 4,929 2,550,985 21,522,347 31,002 340,361 1,500,000 (4,790,637) 6,820,054 36,584,942 75,042,298 3,685,208 78,727,506
Profit after taxation – – – – – – – – – 24,556,502 24,556,502 679,391 25,235,893
Other comprehensive income
- net of tax
Effect of translation of net
investment in an offshore branch
- net of tax – 6,380 – – – – – – – – 6,380 – 6,380
Movement in surplus on revaluation
of investments - net of tax – – – – – – – 3,250,917 – – 3,250,917 10,060 3,260,977
Remeasurement gain on defined
benefit obligations - net of tax – – – – – – – – – 72,433 72,433 6,191 78,624
Movement in surplus / (deficit)
on revaluation of non-banking
assets - net of tax – – – – – – – – (94,289) – (94,289) – (94,289)
Movement in surplus / (deficit) on
revaluation of property and
equipment - net of tax – – – – – – – – (193,816) – (193,816) – (193,816)
Total comprehensive income – 6,380 – – – – – 3,250,917 (288,105) 24,628,935 27,598,127 695,642 28,293,769
Transfer to statutory reserve – – – 5,476,764 – – – – – (5,476,764) – – –
Transfer from surplus on revaluation
of assets to unappropriated profit
- net of tax – – – – – – – – (162,415) 162,415 – – –
Transactions with owners,
recorded directly in equity
Cash dividend by Habib Metropolitan
Bank (Rs.3.25 per share) for the
year ended 31 December 2022 – – – – – – – – – (3,405,452) (3,405,452) – (3,405,452)
Interim dividend by Habib Metropolitan
Bank (Rs. 5.00 per share) for the
year ended 31 December 2023 – – – – – – – – – (5,239,157) (5,239,157) – (5,239,157)
Profit distribution by First Habib
Modaraba (Rs. 1.00 per certificate)
for the period ended 30 June 2023 – – – – – – – – – – – (187,459) (187,459)
Balance as at 31 December 2023 10,478,315 11,309 2,550,985 26,999,111 31,002 340,361 1,500,000 (1,539,720) 6,369,534 47,254,919 93,995,816 4,193,391 98,189,207
Impact of adoption of IFRS 9 as at
1 January 2024 - net of tax – – – – – – – (184,901) – 461,044 276,143 – 276,143
Balance as at 1 January 2024
on adoption of IFRS 9 10,478,315 11,309 2,550,985 26,999,111 31,002 340,361 1,500,000 (1,724,621) 6,369,534 47,715,963 94,271,959 4,193,391 98,465,350

163
 Surplus / (deficit)
Reserves on revaluation
Exchange Share Statutory Property, Un- Non-
Share Merger Special Revenue equipment & Sub
capital translation premium reserve reserve reserve reserve Investments non-banking appropriated total controlling Total
reserve profit interest
assets
Rupees in ‘000

Profit after taxation – – – – – – – – – 24,943,158 24,943,158 822,093 25,765,251

Other comprehensive income
- net of tax
Effect of translation of net
investment in an offshore branch
- net of tax – 51 – – – – – – – – 51 – 51
Movement in surplus on revaluation
of debt securities measured at
FVOCI - net of tax – – – – – – – 7,746,181 – – 7,746,181 – 7,746,181
Movement in surplus on revaluation
of equity securities measured at
FVOCI - net of tax – – – – – – – 1,922,438 – – 1,922,438 21,689 1,944,127
Remeasurement gain on defined
benefit obligations - net of tax – – – – – – – – – 119,608 119,608 2,697 122,305
Movement in surplus on revaluation
of non-banking assets - net of tax – – – – – – – – 769,953 – 769,953 – 769,953
Movement in deficit on revaluation
of property and equipment
- net of tax – – – – – – – – (101,926) – (101,926) – (101,926)
Total comprehensive income – 51 – – – – – 9,668,619 668,027 25,062,766 35,399,463 846,479 36,245,942
Gain on sale of equity shares
- FVOCI - net of tax – – – – – – – (445,658) – 445,658 – – –
Transfer to statutory reserve – – – 5,424,702 – – – – – (5,424,702) – – –
Transfer from surplus on revaluation
of assets to unappropriated profit
- net of tax – – – – – – – – (164,605) 164,605 – – –
Transactions with owners,
recorded directly in equity
Final cash dividend (Rs. 5.50 per
share) for the year ended
31 December 2023 – – – – – – – – – (5,763,073) (5,763,073) – (5,763,073)
Interim cash dividend (Rs. 2.50 per
share) for the quarter ended
31 March 2024 – – – – – – – – – (2,619,579) (2,619,579) – (2,619,579)
Interim cash dividend (Rs. 2.50 per
share) for the quarter ended
30 June 2024 – – – – – – – – – (2,619,579) (2,619,579) – (2,619,579)
Interim cash dividend (Rs. 2.50 per
share) for the quarter ended
30 September 2024 – – – – – – – – – (2,619,579) (2,619,579) – (2,619,579)
Profit distribution by First Habib
Modaraba (Rs. 2.10 per certificate)
for the period ended 30 June 2024 – – – – – – – – – – – (196,832) (196,832)
Balance as at 31 December 2024 10,478,315 11,360 2,550,985 32,423,813 31,002 340,361 1,500,000 7,498,340 6,872,956 54,342,480 116,049,612 4,843,038 120,892,650

FUZAIL ABBAS KHURRAM SHAHZAD KHAN MOHOMED BASHIR RASHID AHMED JAFER MOHAMEDALI R. HABIB
Chief Financial Officer President & Director Director Chairman
Chief Executive Officer

164
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
Note 2024 2023
Rupees in ‘000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 54,103,754 53,124,200
Less: Dividend income (775,461) (657,866)
53,328,293 52,466,334
Adjustments
Net mark-up / interest income (73,656,690) –
Depreciation on property and equipment 11.2 2,492,901 1,997,066
Depreciation on right-of-use assets 12 1,549,356 1,467,649
Amortisation 13 260,625 132,832
Mark-up on lease liability against right-of-use assets 26 1,210,978 969,124
Credit loss allowance against cash and balances with banks 33 (3,473) –
Credit loss allowance against lending to financial institutions 33 (85) –
Credit loss allowance for diminution in value of investments 33 337,945 60,431
Credit loss allowance against loans and advances 33 4,327,243 5,120,187
Credit loss allowance against other assets 33 (50,416) 40
Credit loss allowance against off-balance sheet obligation 20.1 (197,990) –
Gain on sale of property and equipment - net 30 (42,339) (36,346)
Gain on sale of ijarah assets 30 (71,725) –
Gain on sale of right-of-use assets 30 (20,980) –
Unrealized gain on FVTPL securities (1,207,053) –
Provision against workers' welfare fund 1,178,818 1,122,976
Provision against defined benefit plan 31.1 316,995 284,511
Provision against compensated absences 31.1 149,026 164,748
(63,426,864) 11,283,218
(10,098,571) 63,749,552
(Increase) / decrease in operating assets
Lendings to financial institutions (74,716) 70,835,323
Securities classified as FVTPL (39,218,228) –
Advances (72,170,916) 12,718,486
Other assets (excluding dividend and non-banking assets) (8,988,146) (12,189,083)
(120,452,006) 71,364,726
Increase / (decrease) in operating liabilities
Bills payable 126,123 8,814,271
Borrowings from financial institutions 9,329,341 (18,297,316)
Deposits and other accounts (86,257,784) 131,833,448
Other liabilities (excluding current taxation) (15,210,846) 14,117,732
(92,013,166) 136,468,135
(222,563,743) 271,582,413
Payment against workers' welfare fund – (8,722)
Payment against compensated absences (118,010) (108,216)
Contribution paid to defined benefit plan (70,406) (283,342)
Mark-up / Interest received 249,350,491 –
Mark-up / Interest paid (171,058,271) –
Income tax paid (34,742,728) (25,222,166)
Net cash flows from operating activities (179,202,667) 245,959,967
CASH FLOWS FROM INVESTING ACTIVITIES
Net investment in securities classified as FVOCI 158,371,398 –
Net investment in amortised cost securities 15,158,209 –
Net investment in available-for-sale securities – (317,666,640)
Net investment in held-to-maturity securities – 121,659,128
Dividend received 769,618 660,344
Investment in property and equipment (3,924,236) (2,836,378)
Investment in intangible assets (444,368) (360,757)
Proceeds from sale of property and equipment 58,929 60,851
Proceeds from sale of ijarah assets 265,937 –
Effect of translation of net investment in an offshore branch 51 2,661
Net cash flows from investing activities 170,255,538 (198,480,791)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid (13,717,342) (9,863,999)
Payment of lease against right-of-use assets 18 (2,331,748) (2,042,859)
Net cash flows from financing activities (16,049,090) (11,906,858)
(Decrease) / increase in cash and cash equivalents (24,996,219) 35,572,318
Cash and cash equivalents at beginning of the year 111,848,372 76,276,054
Cash and cash equivalents at end of the year 36 86,852,153 111,848,372
The annexed notes 1 to 48 and annexures I and II form an integral part of these consolidated financial statements.
FUZAIL ABBAS KHURRAM SHAHZAD KHAN MOHOMED BASHIR RASHID AHMED JAFER MOHAMEDALI R. HABIB
Chief Financial Officer President & Director Director Chairman
Chief Executive Officer

165
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024

1. STATUS AND NATURE OF BUSINESS

The Group comprises of Habib Metropolitan Bank Limited (the holding company), Habib Metropolitan Financial Services Limited
and Habib Metropolitan Modaraba Management Company (Private) Limited (wholly owned subsidiary companies) and First
Habib Modaraba (managed by Habib Metropolitan Modaraba Management Company (Private) Limited) and HABIBMETRO
Exchange Services (Private) Limited.

1.1 Holding Company

Habib Metropolitan Bank Limited (the Bank) was incorporated in Pakistan on 3 August 1992, as a public limited company,
under the repealed Companies Ordinance, 1984 (now Companies Act, 2017) and is engaged in commercial banking and
related services. Its shares are listed on the Pakistan Stock Exchange. The Bank operates 551 (2023:525) branches, including
223 (2023: 117) Islamic banking branches, an offshore branch (Karachi Export Processing Zone branch) and 1 (2023:1)
sub branch in Pakistan. The Bank is a subsidiary of Habib Bank AG Zurich - Switzerland (the holding company with 51%
shares in the Bank) which is incorporated in Switzerland.

1.2 Subsidiary Companies

1.2.1 Habib Metropolitan Financial Services Limited - 100% holding

Habib Metropolitan Financial Services Limited was incorporated in Pakistan on 28 September 2007 as a public
limited company under the repealed Companies Ordinance, 1984 (now Companies Act, 2017). The registered
office of the subsidiary company is located at 1st Floor, GPC 2, Block 5, Khekashan Clifton, Karachi. The subsidiary
company is a corporate member of the Pakistan Stock Exchange Limited and engaged in equity brokerage services.

1.2.2 Habib Metropolitan Modaraba Management Company (Private) Limited - 100% holding

Habib Metropolitan Modaraba Management Company (Private) Limited (Modaraba management company) was
incorporated in Pakistan on 01 June 2015 as a private limited under the Companies Ordinance, 1984 (now
Companies Act, 2017) and Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980. The
registered office of the subsidiary company is located at 6th Floor, HBZ Plaza, I.I. Chundrigar Road, Karachi. The
Company is the Modaraba Management Company of First Habib Modaraba.

1.2.3 First Habib Modaraba - 15.43% holding

First Habib Modaraba (FHM) is a perpetual, multi-purpose modaraba having its registered office at 6th Floor, HBZ
Plaza, I.I. Chundrigar Road, Karachi. It is listed on the Pakistan Stock Exchange and engaged in the business of
leasing (Ijarah), Musharaka, Murabaha financing and other related business.

1.2.4 HABIBMETRO Exchange Services Limited - 100% holding

HABIBMETRO Exchange Services Limited, a wholly owned subsidiary of Habib Metropolitan Bank Limited, is
incorporated in Pakistan with the objective of dealing in foreign exchange and facilitating remittances. The
Company has its registered office at Ground Floor Al Manzoor Building, I.I. Chundrigar Road, Karachi.

2. BASIS OF PRESENTATION

2.1 These consolidated financial statements represent separate financial statements of the Group. The consolidated financial
statements of the Bank and its subsidiary companies are being separately issued.

166
 In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic
mode, the State Bank of Pakistan (SBP) has issued various circulars from time to time. Permissible forms of trade related
modes of financing include purchase of goods by banks from their customers and immediate resale to them at appropriate
profit in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in
these financial statements as such, but are restricted to the amount of facility actually utilized and the appropriate portion
of profit thereon.

Key financial figures of the Islamic banking branches are disclosed in Annexure II to these consolidated financial statements.

2.2 The Group believes that there is no significant doubt on the Group’s ability to continue as a going concern. Therefore,
the consolidated financial statements continue to be prepared on the going concern basis.

2.3 Statement of Compliance

These consolidated financial statements have been prepared in accordance with the accounting and reporting standards
as applicable in Pakistan. The accounting and reporting standards comprise of:

– International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as
are notified under the Companies Act, 2017;
– Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan (ICAP), as
are notified under the Companies Act, 2017;
– Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017; and
– Directives issued by the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP)
from time to time.
Whenever the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 or the directives issued
by the SBP and the SECP differ with the requirements of the IFRS or IFAS, requirements of the Banking Companies Ordinance,
1962, the Companies Act, 2017 and the said directives shall prevail.

2.3.1 SBP has deferred the applicability of International Accounting Standard (IAS) 40, 'Investment Property' for Banking
Companies in Pakistan through BSD Circular Letter No. 10 dated 26 August 2002 till further instructions. Also, SECP
has deferred the applicability of IFRS 7, 'Financial Instruments: Disclosures' through its notification S.R.O 411 (I) /
2008 dated 28 April 2008. Accordingly, the requirements of these standards have not been considered in the
preparation of these consolidated financial statements.

2.3.2 The disclosures requirements of IFAS 3, 'Profit and Loss Sharing on Deposits' for Islamic Banking Institutions (IBIs)
relating to annual and quarterly financial statements have been based on a format prescribed by SBP vide BPRD
Circular Letter No. 02 dated 09 February 2023.

2.3.3 The disclosures made in these consolidated financial statements have been based on a format prescribed by SBP
vide BPRD Circular No. 02 dated 09 February 2023 with further addition made vide BPRD Circular Letter No. 13
of 2024, dated 01 July 2024 and accounting and financial reporting standards as applicable in Pakistan.

2.3.4 IFRS 10, 'Consolidated Financial Statements' was made applicable from period beginning on or after 01 January
2015 vide S.R.O 633 (I) / 2014 dated 10 July 2014 by SECP. However, SECP has directed through S.R.O 56 (I) / 2016
dated 28 January 2016 that the requirement of consolidation under section 228 of the Companies Act, 2017 and
IFRS 10, 'Consolidated Financial Statements' is not applicable in case of investment by companies in mutual funds
established under trust structure.

167
 2.3.5 The State Bank of Pakistan (SBP) adopted IFRS 9 through BPRD Circular No. 07 of 2023, dated April 13, 2023, but
deferred certain requirements. Similarly, the requirement to carry unquoted securities at fair value has been
deferred until January 1, 2025. Furthermore, Islamic banking institutions may follow IFAS 1 & 2 where applicable
and continue existing accounting practices for other Islamic products until further instructions. Moreover, Banks
have received exemption of recording income at Effective interest rate. Consequently, these deferred requirements
of IFRS 9 have not been considered in the preparation of these financial statements. Furthermore, Banks are
required to apply modification accounting retrospectively however it will be applied only on the loans modified
on or after 1st January 2020 as allowed by SBP.

2.4 Standards, interpretations of and amendments to published approved accounting standards that are
effective in the current year

As directed by SBP via BPRD Circular letter no. 7 of 2023 dated 13 April 2023 of IFRS 9, (Financial Instruments) is effective
in Pakistan for periods beginning on or after January 1, 2024. In addition, due to the application of IFRS 9, SBP vide BPRD
Circular No. 02 dated February 9, 2023, has also amended the format of the annual financial statements. Details regarding
the aforementioned adoption and amendment, including the impact thereof, are discussed in more detail in note 4.1 to
these consolidated financial statements.

Except for the above, there are certain other interpretations and amendments that are mandatory for the Group’s accounting
periods beginning January 1, 2024. However, these are not considered to be relevant or do not have any significant effect
on the Group's operations and therefore have not been detailed in these consolidated financial statements.

2.5 Standards, interpretations of and amendments to existing accounting and reporting standards that
are not yet effective

2.5.1 Certain requirements of IFRS 9 were deferred by SBP and they are disclosed in the statement of compliance.

2.5.2 Furthermore, following standards, interpretations of and amendments to approved accounting and reporting
standards will be effective from the dates (for the accounting periods) as stated below against the respective
standards, interpretations of and amendments to:

Effective date (annual periods

Standards and amendments beginning on or after)
Lack of Exchangeabilitry - Amendments to IAS 21 1 January 2025
IFRS S1 - General Requirements for Disclosure of Sustainability
- related Financial Information 1 January 2025
IFRS S2 - Climate - related Disclosures 1 January 2025
Amendments to the Classification and Measurement of Financial Instruments
- Amendments to IFRS 9 & IFRS 7 1 January 2025
Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture - Amendments to IFRS 10 and IAS 28 Not yet finalized
The amendments in IFRS 9 will have a significant impact on the Group's financial statements while the management
of the Group is assessing the impact of the changes in the other mentioned standards on the Group's financial
statements.

168
 2.6 Critical Accounting Estimates and Judgments

The preparation of these consolidated financial statements in conformity with accounting and reporting standards as
applicable in Pakistan requires the use of certain accounting estimates. It also requires the management to exercise
judgement in the process of applying the Group's accounting policies. Estimates and judgements are continually evaluated
and are based on historical experience, including expectations of future events that are believed to be reasonable under
the circumstances. These estimates affect the reported amounts of assets, liabilities, income, and expenses. The areas
where various assumptions and estimates are significant to the Group's consolidated financial statements or where
judgement was exercised in the application of accounting policies are as follows:

i) Classification, Valuations and impairment of investments (note 4.4)

ii) Provision against non-performing loans and advances (note 4.5.1)
iii) Depreciation (note 4.6.2 ) and Amortisation (note 4.7)
iv) Valuation of Property and equipment (4.6.2) and Non-banking assets acquired in satisfaction of claims (note 4.8)
v) Taxation (note 4.11)
vi) Defined benefit plan (note 4.13.1)
vii) Compensated Absences (note 4.13.2)
viii) Right-of-use assets (note 4.6.3) and related lease liability (note 4.14)
ix) Impairment of non-financial assets (excluding deferred tax asset) (note 4.21)

Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only
that period, or in the period of revision and future periods, if the revision affects both current and future periods.

3. BASIS OF MEASUREMENT

Accounting convention

These consolidated financial statements have been prepared under the historical cost convention except for certain fixed assets
and non-banking assets acquired in satisfaction of claims which have been carried at evalued amounts, certain investments
and derivative contracts which have been marked to market and are carried at fair value, obligations in respect of staff retirement
benefits and lease liabilities which have been carried at present value and right-of-use assets which are initially measured at
an amount equal to the corresponding lease liabilities (adjusted for any lease payments and costs) and depreciated over the
respective lease terms.

4. MATERIAL ACCOUNTING POLICY INFORMATION

The material accounting policies adopted in the preparation of these consolidated financial statements are consistent with
those followed in the preparation of the consolidated financial statements for the year ended December 31, 2023, except as
disclosed in note 4.1 below.

4.1 Changes in accounting policies

4.1.1 Revised format of consolidated financial statements

SBP through its BPRD Circular No. 02 dated February 9, 2023, has amended the format of annual financial statements
of banks. All banks are required to prepare their annual financial statements on the revised format effective from
accounting year starting from January 1, 2024. Accordingly, the Group has prepared these annual financial
statements on the new format prescribed by the SBP. The adoption of the new format contains additional

169
 disclosures and certain changes in the financial statements’ presentation, primarily due to the implementation
of IFRS 9 as applicable in Pakistan. However, the corresponding figures continue to be classified and disclosed in
accordance with the previous financial accounting and reporting framework.

Adoption of revised financial statements format has also resulted in following material changes (due to which the
corresponding presentations have also been changed):

– Right-of-use-assets (note 12) amounting to Rs 8,654,445 thousands (December 31, 2023: Rs 7,625,010 thousands)
which were previously shown as part of property and equipment (note 11) are now shown separately on the
Consolidated Statement of Financial Position.
– Lease liabilities (note 18) amounting to Rs 10,519,685 thousands (December 31, 2023: Rs 9,086,176 thousands)
which were previously shown as part of other liabilities (note 20) are now shown separately on the Consolidated
Statement of Financial Position.

4.1.2 IFRS 9 - Financial Instruments

During the period, as directed by the SBP vide its BPRD Circular No. 07 of 2023 dated April 13, 2023, IFRS 9: ‘Financial
Instruments' (the Standard) became applicable to the Group.

BPRD Circular No. 03 of 2022 issued by SBP provides detailed instructions on implementation of IFRS 9 (the
Application Instructions) for ensuring smooth and consistent implementation of the standard across banks.
Furthermore, SBP wide its BPRD Circular Letter No. 16 of 2024 and SBP wide BPRD Circular Letter No. 01 of 2025
has made further amendments in the application instructions issued. All deferments made through these
amendments are disclosed in statement of compliance.

The standard addresses recognition, classification, measurement and derecognition of financial assets and financial
liabilities. The standard has also introduced a new impairment model for financial assets which requires recognition
of impairment charge based on ‘expected credit losses' (ECL) approach rather than ‘incurred credit losses' approach
as previously followed. The ECL has impact on all the assets of the Group which are exposed to credit risk.

The Group has adopted IFRS 9 in accordance with the Application Instructions from January 1, 2024, using the
modified retrospective approach and has not restated comparatives for the 2023 reporting period and the
differences in carrying amount of financial assets and financial liabilities resulting from the adoption of IFRS 9 are
recognised in retained earnings and reserves as at 1 January 2024, as permitted under the specific transitional
provisions in the Standard. Accordingly, the information presented for 2023 does not reflect the requirements of
IFRS 9 and therefore is not comparable to the information presented for 2024 under IFRS 9.

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4.1.2.1 Impact on the statement of financial position
The effect of this change in accounting policy is as follows:

Impact due to
Financial Asset / Liabilities Note Classification Balances as Change in Remeasurements Recognition of Reversal of Total Impact Taxation Total impact Balances as
under IFRS 9 of December classification expected credit Provision held - net of tax of January
31, 2023 (e) loss (ECL) 01, 2024
Rupees in ‘000
Assets
Cash and balances with treasury banks Amortised cost 91,467,062 – – (2,486) – (2,486) – (2,486) 91,464,576
Balances with other banks Amortised cost 21,269,948 – – (2,826) – (2,826) – (2,826) 21,267,122
Due from financial institutions Amortised cost 5,496,284 – – (87) – (87) – (87) 5,496,197
Investments
– Classified as available for sale a FVTPL – 9,573,871 – – – 9,573,871 – 9,573,871 9,573,871
– Classified as available for sale b FVOCI 821,488,128 (9,573,871) (219,607) (87,683) 307,290 (9,573,871) – (9,573,871) 811,914,257
– Classified as Held to maturity c Amortised cost 99,146,633 – – (578) – (578) – (578) 99,146,055
Advances
– Temporary Export Refinance
Facility (TERF) d Amortised cost 28,959,380 – (6,121,783) (529,563) – (6,651,346) – (6,651,346) 22,308,034
– Modified financial asset Amortised cost 381,017 – (31,001) (188,695) – (219,696) – (219,696) 161,321
– Staff loans Amortised cost 8,441,104 – (3,681,409) (468) – (3,681,877) – (3,681,877) 4,759,227
– Advances other than
TERF and staff loans Cost 423,209,878 – – – – – – – 423,209,878
– Provision Amortised cost (27,358,777) – – (23,332,060) 25,237,364 1,905,304 – 1,905,304 (25,453,473)
Property and equipment Outside the scope of IFRS 9 15,782,163 – – – – – – – 15,782,163
Right of use assets Outside the scope of IFRS 9 7,625,010 – – – – – – – 7,625,010
Intangible assets Outside the scope of IFRS 9 368,333 – – – – – – – 368,333
Deferred tax assets Outside the scope of IFRS 9 5,265,313 – – – – – (265,313) (265,313) 5,000,000
Other assets
– Financial other assets Amortised cost 25,132,515 – – (88,854) – (88,854) – (88,854) 25,043,661
– Non-financial other assets Outside the scope of IFRS 9 44,100,027 – 3,681,409 – – 3,681,409 – 3,681,409 47,781,436
– Forward foreign exchange contracts FVTPL 2,888,760 – – – – – – – 2,888,760
Total assets 1,573,662,778 – (6,372,391) (24,233,300) 25,544,654 (5,061,037) (265,313) (5,326,350) 1,568,336,428

Liabilities
Bills payable Amortised cost 28,352,699 – – – – – – – 28,352,699
Due to financial institutions Amortised cost 335,270,858 – (6,328,485) – – (6,328,485) – (6,328,485) 328,942,373
Deposits and other accounts Amortised cost 1,011,485,773 – – – – – – – 1,011,485,773
Lease liabilities Amortised cost 9,086,176 – – – – – – – 9,086,176
Subordinated sukuk Amortised cost – – – – – – – – –
Other liabilities
– Financial other liabilities Amortised cost 73,228,891 – – 551,873 (32,583) 519,290 – 519,290 73,748,181
– Non-financial other liabilities Outside the scope of IFRS 9 13,845,473 – 206,702 – – 206,702 – 206,702 14,052,175
– Forward foreign exchange contracts FVTPL 4,203,701 – – – – – – 4,203,701
Total liabilities 1,475,473,571 – (6,121,783) 551,873 (32,583) (5,602,493) – (5,602,493) 1,469,871,078
Net Assets 98,189,207 – (250,608) (24,785,173) 25,577,237 541,456 (265,313) 276,143 98,465,350
Represented By
Share capital 10,478,315 – – – – – – – 10,478,315
Reserves 31,432,768 – – – – – – – 31,432,768
Deficit on revaluation of investments 4,829,814 (362,551) – – – (362,551) 177,650 (184,901) 4,644,913
Unappropriated profit 47,254,919 362,551 (250,608) (24,785,173) 25,577,237 904,007 (442,963) 461,044 47,715,963
93,995,816 – (250,608) (24,785,173) 25,577,237 541,456 (265,313) 276,143 94,271,959
Non– controlling interest 4,193,391 – – – – – – – 4,193,391
98,189,207 – (250,608) (24,785,173) 25,577,237 541,456 (265,313) 276,143 98,465,350
a) Certain non-trading debt securities are held by the Bank in separate portfolios and are managed with an objective of realising cash flows through sale. The
Bank primarily focuses on fair value information and uses that information to assess the securities’ performance and to make decisions. In addition, certain
asset-backed securities have contractual cash flows that are not SPPI. These assets are therefore measured at FVTPL under IFRS 9.
b) Certain debt securities are held by the Bank in separate portfolios to meet everyday liquidity needs. The Bank seeks to minimise the costs of managing these
liquidity needs and therefore actively manages the return on the portfolio. That return consists of collecting contractual payments as well as gains and losses
from the sale of financial assets. The investment strategy often results in sales activity that is significant in value. The Bank considers that under IFRS 9 these
securities are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets. Moreover, certain
equity investments held by the Bank for strategic purposes have been designated under IFRS 9 as at FVOCI.
c) Corporate debt securities that were previously classified as held-to-maturity are now classified at amortised cost. The Bank intends to hold the assets to maturity
to collect contractual cash flows and these cash flows consist solely of payments of principal and interest on the principal amount outstanding. (HTM to AC).
d) Advances except for Temporary Economic Refinance Facility (TERF), staff loans and modified loans are stated at cost, whereas TERF scheme and staff loans
are stated at amortised cost.
e) The above balances includes the balance of subsidiaries on which IFRS 9 became applicable in prior years. Accordingly, the above impact only includes the
impact on the Bank balances only.

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 4.1.2.2Impact on regulatory capital

The introduction of IFRS 9 has resulted in reduction in regulatory capital of The Groups, which has reduced
their lending capacity and ability to support their clients. In order to mitigate the impact of ECL models on
capital, SBP has determined that it may be appropriate for The Groups to introduce a transitional arrangement
for the impact on regulatory capital from the application of ECL accounting. Annexure B of the 'Application
Instructions' issued by SBP has detailed the transitional arrangement.

The transitional arrangement applies only to provisions for stage 1 and stage 2 financial assets. The transitional
arrangement must adjust CET1 capital. Where there is a reduction in CET1 capital due to new provisions, net
of tax effect, upon adoption of an ECL accounting model, the decline in CET1 capital (the “transitional
adjustment amount”) must be partially included (i.e., added back) to CET1 capital over the “transition period”
of five years.

Moreover, the SBP has allowed to adjust the amount of Stage 1 and Stage 2 provisions in Tier 2 Capital that
have not been added back to CET 1 and vice versa as per Annexure-A of BPRD Circular no 16 of 2024 dated
July 29, 2024.

Had IFRS 9 not been applied then CAR would have been higher by 18 bps from 18.88% to 19.06%.

4.1.2.3Classification and measurement

Under the new standard, classification and measurement of financial assets depends on how these are
managed based on business model and their contractual cash flow characteristics. Financial assets that do
not meet the Solely Payment of Principal and Interest (SPPI) criteria are required to be measured at fair value
through profit and loss (FVTPL) regardless of the business model in which they are held.

Recognition and initial measurement

Debt securities issued are initially recorded when they are originated. All other financial assets and financial
liabilities are initially recognised when the Group becomes a party to the contractual provisions of the
instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability
is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable
to its acquisition or issue. A trade receivable without a significant financing component is initially measured
at transaction price. The fair value of a financial asset on initial recognition is generally its transaction price.
If The Group determines that the fair value on initial recognition differs from the transaction price then the
financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value
on initial recognition and the transaction price. Subsequently, that difference is recognised in consolidated
profit and loss account on an appropriate basis over the life of the asset but no later than when the valuation
is wholly supported by observable market data, or the transaction is closed out. Advances other than Temporary
Economic Refinance Facility (TERF), staff loans and modified loans are initially measured at transaction price,
i.e., the amount of loan disbursed at disbursement date.

Staff loans and Temporary Economic Refinance Facility (TERF) loans are recognised at fair value at the time
of disbursement. The fair value is determined by discounting the expected future cash flows using the
prevailing market rates for instruments. The difference between the disbursed amount and the fair value at
initial recognition is recorded as "Deferred staff loan impact" for Staff loans under other assets and "Deferred
grant income - TERF" for TERF loans under other liabilities.

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Classification

Financial Assets

On initial recognition, a financial asset is classified as either amortised cost, FVOCI, or FVTPL where as Advances
except for staff financing, the Temporary Economic Refinance Facility (TERF), and modified financing, are
carried at cost.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
as at FVTPL:

– the asset is held within a business model whose objective is to hold assets to collect contractual cash
flows; and
– the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI.
A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not
designated as at FVTPL:
– the asset is held within a business model whose objective is achieved by both collecting contractual
cashflows and selling financial assets; and
– the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI.

On initial recognition of an equity investment that is not held for trading, The Group may irrevocably elect to
present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.

Advances are carried at cost, net of expected credit loss allowances, except for Temporary Economic Refinance
Facility (TERF), staff loans and modified loans which are measured at amortised cost.

Financial assets are not reclassified subsequent to their initial recognition unless The Group changes its
business models for managing financial assets, in which cases all affected financial assets are reclassified on
the first day of the first reporting period following changes in the business model.

IFRS 9 allows entities to irrevocably designate, at initial recognition, a financial asset as measured at FVTPL if
doing so eliminates or significantly reduces any 'accounting mismatch' that would otherwise arise from
measuring assets or liabilities or recognizing gains and losses on them on different basis. The SBP instructions
state that banks may apply the fair value option if, in addition to the IFRS 9 criterion, (a) it is consistent with
a documented risk management strategy, and (b) fair values are reliable at inception and throughout life of
the instrument.

Under IFRS 9, derivatives embedded in contracts where the host is a financial asset in scope of the standard
are never bifurcated. Instead, the whole hybrid instrument is assessed for classification.

Financial Liabilities

Financial liabilities are either classified as fair value through profit and loss account (FVTPL), when they are
held for trading purposes, or at amortised cost. Financial liabilities classified as FVTPL are measured at fair
value and all the fair value changes are recognised in the consolidated profit and loss account. Financial
liabilities classified at amortised cost are initially recorded at their fair value and subsequently measured using
the effective interest rate method. Markup expense and foreign exchange gain and losses are recognised in
consolidated profit and loss account. Any gain or loss on derecognition is also recognised in consolidated
profit and loss account.

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 4.1.2.4Business model assessment

A financial asset is classified as either Held to collect, Held to collect and sale and Others based on Business
model assessment. The Group makes an assessment of the objective of a business model in which a financial
asset is held at a portfolio level because this best reflects the way the business is managed, and information
is provided to the management. The assessment requires judgement based on facts and circumstances on
the date of assessment. The assessment considers the policies and objectives for the portfolio of financial
assets, risk affecting, performance evaluation, business manager’s compensation and historical sales information.

Financial assets that are held for trading or managed and whose performance is evaluated on a fair value
basis are measured at FVTPL because they are neither held to collect contractual cash flows nor held both
to collect contractual cash flows and to sell financial assets.

4.1.2.5Assessment of whether contractual cash flows are solely payments of principal and interest
(SPPI)

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial
recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated
with the principal amount outstanding during a particular period of time and for other basic lending risks
and costs (e.g., liquidity risk and administrative costs), as well as interest margin.

In assessing whether the contractual cash flows are SPPI, The Group considers the contractual terms of the
instrument. This includes assessing whether the financial asset contains a contractual term that could change
the timing or amount of contractual cash flows such that it would not meet this condition. In making the
assessment, The Group considers:

- contingent events that would change the amount and timing of cash flows;
- leverage features;
- prepayment and extension terms;
- terms that limit The Group’s claim to cash flows from specified assets (e.g. non-recourse loans); and
- features that modify consideration of the time value of money (e.g. periodical reset of interest rates).

A prepayment feature aligns with SPPI if it mainly represents unpaid principal and profit, including reasonable
compensation for early termination.

4.1.2.6Subsequent measurement

The following accounting policies apply to the subsequent measurement of financial assets:

Financial assets at FVTPL These assets are subsequently measured at fair value. Net gains and losses,
including any markup or dividend income, are recognised in consolidated
profit and loss account.
Financial assets at amortised cost These assets are subsequently measured at amortised cost using the
effective interest method. The amortised cost is reduced by impairment
losses. Markup, foreign exchange gains and losses and impairment are
recognised in the consolidated profit and loss account.
Debt investments at FVOCI These assets are subsequently measured at fair value and is assessed for
impairment under the new ECL model. Markup income is calculated
using the effective interest method and includes amortisation of premiums
and accretion of discount, foreign exchange gains and losses and

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 impairment are recognised in the consolidated profit and loss account.
Other net gains and losses are recognised in OCI. On derecognition, gains
and losses accumulated in OCI are reclassified to the consolidated profit
and loss account.
Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends are
recognised as income in profit and loss account unless the dividend
clearly represents a recovery of part of the cost of the investment, in
which case they are adjusted from the carrying value of investment. Other
net gains and losses are recognised in OCI and are never reclassified to
profit and loss account.
Advances Advances are carried at cost, net of expected credit loss allowances,
except for Temporary Economic Refinance Facility (TERF) and staff financing,
modified financing which are carried at amortised cost, net of expected
credit loss allowances.

4.1.2.7Amortised cost and gross carrying amount

The ‘amortised cost’ of a financial asset or financial liability is the amount at which the financial asset or
financial liability is measured on initial recognition minus the principal repayments, plus or minus the
cumulative amortisation using the effective interest method of any difference between that initial amount
and the maturity amount and, for financial assets, adjusted for any expected credit loss allowance (or
impairment allowance before 1 January 2024).

The ‘gross carrying amount of a financial asset’ is the amortised cost of a financial asset before adjusting for
any expected credit loss allowance.

4.1.2.8Calculation of markup income and expense

Income on financial assets, comprising performing advances and debt securities and other financial assets,
of the domestic operations is recognised on a time proportion basis as per the terms of the contract. However,
where debt securities, classified as investments in the financial statements, are purchased at premium or
discount, such premium / discount including the transaction cost is amortised through the consolidated
Profit and Loss account over the remaining maturity of the debt security using the effective interest rate
method. Similarly, under the local regulatory requirement, income recoverable on classified advances and
investments (debt securities), is recognised on a receipt basis.

Income on rescheduled / restructured advances and investments is recognised as permitted by SBP regulations.

Markup expense on financial liabilities (comprising deposits, subordinated debts, and borrowings) is recognised
on an accrual basis in the period in which it is incurred, based on their contractual rates.

Islamic Banking Institutions (IBIs) are allowed to follow Islamic Financial Accounting Standards (IFAS) 1 & 2
where applicable and continue the existing accounting methodology on other Islamic products until issuance
of further instruction in this regard.

4.1.2.9Derecognition

The Group derecognises a financial asset when:

- the contractual rights to the cash flows from the financial asset expire; or

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 - it transfers the rights to receive the contractual cash flows in a transaction in which either:
- substantially all of the risks and rewards of ownership of the financial asset are transferred; or
- The Group neither transfers nor retains substantially all of the risks and rewards of ownership and
it does not retain control of the financial asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount of the
asset (or the carrying amount allocated to the portion of the asset derecognised), and the consideration
received (including any new asset obtained less any new liability assumed) and any cumulative gain or
loss that had been recognised in OCI is recognised in the consolidated profit and loss account, except that
in case of the derecognition of equity securities held at FVOCI, cumulative gains or losses are transferred
to unappropriated profit.

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or
expired. The Group also derecognises a financial liability when its terms are modified and the cash flows of
the modified liability are substantially different, in which case a new financial liability based on the modified
terms is recognised at fair value.

4.1.2.10Modification

Financial assets

The Group sometimes renegotiates or otherwise modifies the contractual cash flows of to its customers. If
the cash flows are substantially different, then the contractual rights to cash flows from the original financial
asset are deemed to have expired. In this case, the original financial asset is derecognised and a new financial
asset is recognised at fair value plus any eligible transaction costs. Any fees received as part of the modification
are accounted for as follows:

– fees that are considered in determining the fair value of the new asset and fees that represent
reimbursement of eligible transaction costs are included in the initial measurement of the asset; and
– other fees are included in profit and loss account as part of the gain or loss on derecognition.

If cash flows are modified when the borrower is in financial difficulties, then the objective of the modification
is usually to maximise recovery of the original contractual terms rather than to originate a new asset with
substantially different terms. If The Group plans to modify a financial asset in a way that would result in
forgiveness of cash flows, then it first considers whether a portion of the asset should be written off before
the modification takes place. This approach impacts the result of the quantitative evaluation and means that
the derecognition criteria are not usually met in such cases.

Where derecognition of financial assets is appropriate, the newly recognised residual loans are assessed to
determine whether the assets should be classified as purchased or originated credit-impaired assets (POCI).

If the modification of a financial asset measured at amortised cost or FVOCI does not result in derecognition
of the financial asset, then The Group first recalculates the gross carrying amount of the financial asset using
the original effective interest rate of the asset and recognised the resulting adjustment as a modification gain
or loss in profit and loss account. Any costs or fees incurred, and fees received as part of the modification
adjust the gross carrying amount of the modified financial asset and are amortised over the remaining term
of the modified financial asset.

If such a modification is carried out because of financial difficulties of the borrower then the gain or loss is
presented together with impairment losses. In other cases, it is presented as markup income calculated using
the effective interest rate method.

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 Financial liabilities

The Group derecognises a financial liability when its terms are modified and the cash flows of the modified
liability are substantially different. In this case, a new financial liability based on the modified terms is recognised
at fair value. The difference between the carrying amount of the financial liability recognised and consideration
paid is recognised in profit and loss account. Consideration paid includes non-financial assets transferred, if
any, and the assumption of liabilities, including the new modified financial liability.

If the modification of a financial liability is not accounted for as derecognition, then the amortised cost of
the liability is recalculated by discounting the modified cash flows at the original effective interest rate and
the resulting gain or loss is recognised in profit and loss account. For floating-rate financial liabilities, the
original effective interest rate used to calculate the modification gain or loss is adjusted to reflect current
market terms at the time of the modification. Any costs and fees incurred are recognised as an adjustment
to the carrying amount of the liability and amortised over the remaining term of the modified financial liability
by re-computing the effective interest rate on the instrument.

4.1.2.11Impairment

The impairment requirements apply to financial assets measured at amortised cost and FVOCI (other than
equity instruments), lease receivables, and certain loan commitments and financial guarantee contracts. At
initial recognition, an impairment allowance (or provision in the case of commitments and guarantees) is
required for expected credit losses (‘ECL’) resulting from default events that are possible within the next 12
months (’12-month ECL’). In the event of a significant increase in credit risk, a provision is required for ECL
resulting from all possible default events over the expected life of the financial instrument (‘lifetime ECL’).

Restructured financial assets

If the terms of a financial asset are renegotiated or modified or an existing financial asset is replaced with a
new one due to financial difficulties of the borrower, then an assessment is made of whether the financial
asset should be derecognised and ECL are measured as follows:

– If the expected restructuring will not result in derecognition of the existing asset, then the expected
cash flows arising from the modified financial asset are included in calculating the cash shortfalls from
the existing asset.
– If the expected restructuring will result in derecognition of the existing asset, then the expected fair
value of the new asset is treated as the final cash flow from the existing financial asset at the time of
its derecognition. This amount is included in calculating the cash shortfalls from the existing financial
asset that are discounted from the expected date of derecognition to the reporting date using the
original effective interest rate of the existing financial asset.

Financial assets where 12-month ECL is recognised are in ‘Stage 1’; financial assets that are considered to have
experienced a significant increase in credit risk are in ‘Stage 2’; and financial assets for which there is objective
evidence of impairment, so are considered to be in default or otherwise credit impaired, are in ‘Stage 3’.

Non-Performing financial assets

At each reporting date, The Group assesses whether financial assets carried at amortised cost and debt
financial assets carried at FVOCI, and finance lease receivables are credit_impaired (referred to as ‘Stage 3
financial assets’). A financial asset is ‘non-performing’ when one or more events that have a detrimental impact
on the estimated future cash flows of the financial asset have occurred.

177
 Evidence that a financial asset is credit-impaired includes the following observable data:

- significant financial difficulty of the borrower or issuer;

- a breach of contract such as a default or past due event;
- the restructuring of a loan by The Group on terms that The Group would not consider otherwise;
- it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
- the disappearance of an active market for a security because of financial difficulties.

A loan that has been renegotiated due to a deterioration in the borrower’s condition is usually considered
to be credit-impaired unless there is evidence that the risk of not receiving contractual cash flows has reduced
significantly and there are no other indicators of impairment. In addition, a retail loan that is overdue for 90
days or more is considered credit-impaired.

Under the IFRS 9 Application instructions, The Group is not required to compute ECL on Government Securities
and on Government guaranteed credit exposure in local currency. The Group is required to calculate ECL on
it’s non-performing financial assets as higher of provision under Prudential Regulations (PR) and ECL under
IFRS 9.

For Stage 3, The Group calculates the ECL against corporate, commercial & SME loan portfolios as higher of
PR and ECL under IFRS 9 at borrower / facility level, whereas against the retail borrowers The Group calculates
the ECL at higher of PR and ECL under IFRS 9 at segment/product basis as instructed under Annexure-A of
BPRD Circular no 16 of 2024.

ECL is the probability weighted estimate of expected cash shortfalls which is determined by multiplying the
probability of default (PD) with the loss given default (LGD) with the expected exposure at the time of default
(EAD). Based on the requirements of IFRS 9 and Application Instructions, The Group has performed an ECL
assessment considering the following key elements:

– Probability of default (PD):

The Probability of Default represents the likelihood that a counterparty will default within a specific timeframe,
such as 12 months (12-month ECL for Stage 1) or the lifetime of the financial instrument (lifetime ECL for
Stage 2). The Group calculates PD on advances which is further bifurcated into retail and non retail portfolios.
Following is the methodology through which non retail and retail PD are calculated:

– Non-Retail PD:

The Group utilizes its internal risk rating system to assign Obligor Risk Ratings (ORR) to borrowers. The
Group has used a statistical method called Markov Chain, also known as Transition Matrices/Migration
matrices, for the estimation of TTC PDs associated with each of its Obligor Risk Rating (ORR).

– Retail PD:

The Group has used market benchmark PDs for retail segments. The Group has recently started developing
its retail portfolio and does not have sufficient data to develop PD and LGD Models. In the absence of
required data and after discussing with consultants, management has decided to use the market
benchmark PDs and BASEL prescribed 45% LGD for retail segment. Moreover, the Group has used its
internal data to develop the TTC- PD models using Pluto and Tasche technique for the calculation of
Expected Credit Loss (ECL) on Investments, Balances with other banks (BWOB) and Lending to FIs. TTC-
PD were converted into PiT PDs by applying Macro Economic variable with Vasicek approach.

178
– Incorporation of forward-looking information:

Forward looking information is incorporated to convert TTC PD to Point in Time Probability of Default
(PiT) PD. The Group has estimated the PiT PDs using the Vasicek framework in its PD Model. For this
purpose, The Group incorporated 5-year forecasts obtained from the Macro Economic Variable (MEV)
database of the International Monetary Fund (IMF). The MEVs used in the Model are the Consumer Price
Index (CPI) and Gross Domestic Product (GDP) etc.

– Exposure at Default (EAD):

The Group has defined EAD for financial assets carried at an amortised cost equal to principal plus accrued
markup at the default date. Each repayment date is assumed to be a default point in the model, and the
ECL is calculated on the EAD at each repayment date and discounted at the effective interest rate to
arrive at the discounted ECL under three scenarios, i.e, base, worst, and best-case scenarios. The unutilized
exposures are multiplied with Credit Conversion Factors (CCFs) to compute the EAD of revolving facilities.
For non revolving facilities, CCF is only applied to unutilized exposures when The Group doesn’t have
unconditional right to revoke the undrawn portion. Additionally, cash and cash equivalent collateral The
Group holds against non-retail facilities are adjusted from the EAD, and ECL is calculated on the net
amount. The Group has developed CCF models for its revolving and non revolving facilities based on the
historical utilization of credit limits which are currently being applied to the revolving portfolio.

– Loss Given Default:

Loss Given Default (LGD) represents the forecasted economic loss in the event of default, calculated
independently of credit quality and applied consistently across all stages. LGD is determined as the
percentage of loss expected in case of borrower default, incorporating historical data, cash recovery
experience (including settlements), costs and time of recoveries, collateral realizations, and recovery
projections. For non-collateralized portfolios, The Group estimates LGD based on actual recoveries from
defaulted accounts over a historical period of 8 years prior to the assessment date. Forward-looking
information is incorporated into the LGD calculation to reflect the impact of macroeconomic factors on
the expected recoveries. The Group uses a statistical approach, specifically the Jacob Frye model, to
estimate Point-in-Time (PiT) LGD. This model accounts for forward-looking information, including
macroeconomic variables, to estimate LGD for all credit segments.

Purchase or Originated Credit Impaired Financial Assets

Purchase or Originated Credit Impaired (POCI) financial assets are assets that are credit-impaired on initial
recognition. Expected credit loss for these assets is not recognised in a separate loss provision on initial
recognition, as the lifetime expected credit loss is inherent within the gross carrying amount of the instruments.
Consequently, POCI assets do not carry an impairment allowance on initial recognition. The amount recognised
as a loss allowance after initial recognition is equal to the changes in lifetime ECL since the initial recognition
of the asset.

Presentation of allowance for Expected Credit Loss in the Statement of Financial Position

Loss allowances for ECL are presented in the Consolidated Statement of Financial Position as follows:

- financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets.
- loan commitments and financial guarantee contracts: as a provision in Other Assets / Liabilities.

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 - where a financial instrument includes both a drawn and an undrawn component, and The Group does
not identify the ECL on the loan commitment component separately from those on the drawn component
and instead presents a combined loss allowance for both components. The combined amount is presented
as a deduction from the gross carrying amount of the drawn component. Any excess of the loss allowance
over the gross amount of the drawn component is presented as a provision; and
- debt instruments measured at FVOCI: no loss allowance is recognised in the statement of financial
position because the carrying amount of these assets is their fair value. However, the loss allowance is
disclosed and is recognised in retained earnings.

4.1.2.12Significant increase in credit risk (SICR)

A SICR is assessed in the context of an increase in the risk of a default occurring over the life of the financial
instrument when compared to that expected at the time of initial recognition. It is not assessed in the context
of an increase in the ECL. The Group used several qualitative and quantitative measures in assessing SICR.
Quantitative measures relate to deterioration of Obligor Risk Ratings (ORR) or where principal and / or markup
payments are 60 & 120 days past due for advances and trade bills respectively. Qualitative factors include the
Watchlist and restructured/rescheduled.

As required by the Application Instructions, financial assets may be reclassified out of stage 3 if they meet
the requirements of PR issued by SBP. Financial assets in stage 2 may be reclassified to stage 1 if the conditions
that led to a SICR no longer apply. However, a minimum period of 06 months from the end of downgrade
reason is required before any facility is moved back to Stage 1 from Stage 2. For a facility to move back from
Stage 3 to Stage 2, it should meet the criteria defined under the respective Prudential Regulations for de-
classification of account / facility and after observing of 03 months cooling off period. An exposure cannot
be upgraded from Stage 3 to Stage 1 directly and should be upgraded to Stage 2 initially.

IFRS 9 includes a rebuttable presumption that a default does not occur later than 90 days past due and it
also presumes that there is SICR if credit exposure is more than 30 days past due. In order to bring consistency,
SBP has allowed the backstop to the rebuttable presumption of days past due of credit portfolio against a
specific credit facility and its stage allocation under IFRS 9 as mentioned in Annexure-C of BPRD Circular no
3 of 2022. However, banks are free to choose more stringent days past due criteria.

4.1.2.13Write-offs

Financial assets are written off (either partially or in full) when there is no reasonable expectation of recovering
a financial asset in its entirety or a portion thereof. This is generally the case when The Group determines that
the borrower does not have assets or sources of income that could generate sufficient cash flows to repay
the amounts subject to the write-off. This assessment is carried out at the individual asset level.

Recoveries of amounts previously written off are included in ‘impairment losses on financial instruments’ in
the statement of profit and loss account and OCI.

Financial assets that are written off could still be subject to enforcement activities in order to comply with
The Group’s procedures for recovery of amounts due.

4.1.2.14Off-setting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, The Group currently has a legally enforceable right to set off the amounts
and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

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 4.1.2.15Undrawn loan commitments and guarantees

Financial guarantees’ are contracts that require The Group to make specified payments to reimburse the
holder for a loss that it incurs because a specified debtor fails to make payment when it is due in accordance
with the terms of a debt instrument. ‘Loan commitments’ are firm commitments to provide credit under pre-
specified terms and conditions.

When estimating lifetime ECL for undrawn loan commitments, The Group estimates the expected portion
of the loan commitment that will be drawn down over its expected life. The ECL is then based on the present
value of the expected cash flows if the loans are drawn down, based on a probability-weighting of the three
scenarios.

4.1.2.16Governance, ownership and responsibilities

The Group has adopted a governance framework requiring the Risk, Finance, Operations, Internal Audit and IT
functions to effectively work together to ensure input from all business lines. IFRS 9 requires robust credit risk
models that can predict Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD).

The Group’s Risk Management Division has developed Models/ methodologies for PD, LGD and Credit
Conversion Factors (CCF). These models are validated on annual basis considering the following aspects:

– Quantitative Validation: Expected credit loss (ECL) model design validation, data quality validation and
benchmarking with external best practices.
– Quantitative Validation: Calibration testing which ensures the accuracy of the observed PDs.

The Risk Department defines the staging criteria for the new impairment model and take ownership of all
models, methodologies and the ECL calculation approach. Additionally, the Risk department also take the
ownership of the impact of ECL on bank's capital.

Risk Management division of the Group is responsible for the implementation of IFRS 9. Further the Group
has engaged a consultant for the calculation of ECL on a quarterly basis. The same is provided to the Risk
Management Division which reviews and assesses the ECL and submits to the same to Finance Division for
financial reporting requirements.

Finance Division then uses the financial information for preparing the financial statements and related
financial ratios.

Risk Management Division prepares and submits the analysis to board risk committee on a quarterly basis.
Further financial statements prepared on the basis of IFRS-9 is then submitted to the Board Audit Committee
on a quarterly basis.

The IT Department provides support to all the stakeholders for preparing and extracting the data required
for the risk parameters modelling. IT department also provides support to project owners for system
development and upgrades.

4.2 Cash and cash equivalents

For the purpose of the consolidated cash flow statement, cash and cash equivalents include cash and balances with
treasury banks, balances with other banks and national prize bonds less overdrawn nostro balances.

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 4.3 Lendings to / borrowings from financial institutions

The Group enters into transactions of borrowing (repo) from and lending (reverse repo) to financial institutions, at contracted
rates for a specified period of time. These are recorded as under:

Purchase under resale agreement (reverse repo)

Securities purchased with a corresponding commitment to resell at a specified future date (reverse repos) are not recognised
in these consolidated statement of financial position and instead amounts paid under these arrangements are included
in lendings to financial institutions. The difference between purchase and resale price is accrued as markup income on a
pro-rata over the term of the agreement.

Sale under repurchase agreement (repo)

Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue to be recognised
in these consolidated statement of financial position and are measured in accordance with accounting policies for
investments and amount received under these agreements are recorded as repurchase agreement borrowings. The
difference between sale and repurchase price is accrued as markup expense on a pro-rata basis over the term of the repo
agreement.

Bai muajjal

In Bai Muajjal, The Group sells sukuk on credit to other financial institutions. The sale / purchase price is agreed at the time
of sale and such proceeds are received at the end of the credit agreed period. The sukuk sold under bai muajjal transaction
are derecognised on the date of disposal. Receivable against such sale is recognised at the agreed sale price. The difference
between the sale price and the carrying value on the date of disposal is taken to income on straight line basis.

Musharaka / Modaraba

In Musharaka / Modaraba, The Group invests in the Shariah compliant business pools of the financial institutions at the
agreed profit sharing ratio. Loss, if any will be shared between the parties as per the investment.

Musharaka from the SBP under Islamic Export Refinance Scheme (IERS)

Under IERS, The Group accepts funds from the SBP under Shirkat-ul-aqd to constitute a pool for investment in islamic
export refinance portfolio of The Group under the guidelines issued by the SBP. The profit of the pool is shared as per the
agreed weightages between the partners.

Modaraba investment from the SBP under various long term Islamic refinance schemes

Under various long term Islamic refinance schemes of the SBP, The Group accepts funds from the SBP which are received
on Modaraba basis for investment in the pool of The Group. The profit of the pool is shared as per the agreed profit sharing
ratio of the pool and the weightages assigned to these investments.

Certificates of Investment (Musharakah)

Certificates of Investment (COI's) are carried at principal amount in these consolidated financial statements. FHM and
HMM invest the amount received from COI holders on the basis of full participation in the profit and loss. The profit is
allocated between COI holders and certificate holders as per agreed ratio. Certificate holder's share of profit is recognised
as financial expense in the period of its occurrence. On the basis of projected rate of profit, profit on musharakah finance

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 is determined. After determination of the actual rate, the effect of any difference between actual and projected rate of
profit is accounted for, at the end of each quarter.

4.4 Investments (Applicable before 01 January 2024)

4.4.1 Investments in subsidiaries are stated at cost less provision for impairment, if any.

4.4.2 Other investments are classified as follows:

Held-for-trading

These are securities, which are either acquired for generating profit from short-term fluctuation in market prices,
interest rate movements, dealers margin or are securities included in a portfolio in which a pattern of short-term
trading exists.

Held-to-maturity

These are securities with fixed or determinable payments and fixed maturities that are held with the positive
intention and ability to hold till maturity.

Bai Muajjal transactions undertaken with the Government of Pakistan are disclosed as investments.

Available-for-sale

These are investments that do not fall under the held-for-trading or held-to-maturity categories.

4.4.3 Initial Measurement

Investments (other than held-for-trading) include transaction costs associated with the investments. In case of
held-for-trading transaction costs are charged to profit and loss account when incurred.

All “regular way” purchases and sales of investments are recognised on the trade date, i.e., the date that the
Group commits the purchase or sell the asset. Regular way purchases or sales are purchases or sales of
investments that require delivery of assets within the time frame generally established by regulation or
convention in the market place.

Subsequent Measurement

Held-for-trading

Investments classified as held-for-trading are subsequently measured at fair value. Any unrealised surplus / deficit
arising on the revaluation of the Group’s held-for-trading investment portfolio is taken to the profit and loss account.

Held-to-maturity

Investment securities carried till their maturity are carried at amortised cost.

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 Available-for-sale

Quoted securities classified as available-for-sale are subsequently measured at fair value. Any unrealised surplus
/ deficit arising on revaluation of quoted securities classified as available for sale is kept in a separate account
shown in equity. Surplus / deficit arising on these securities is taken to the profit and loss account when actually
realised upon disposal or when the investment is considered to be impaired. Unquoted equity securities are
valued at the lower of cost and break-up value. Break-up value of these securities is calculated as per the latest
available audited financial statements. Investments in other unquoted securities are valued at cost less impairment
losses, if any.

Impairment

Provision for diminution in the value of term finance certificates and sukuk certificates are made as prescribed
under Prudential Regulation issued by the SBP.

Provision for impairment in the value of available-for-sale and held-to-maturity securities (other than Federal
Government securities, term finance certificates and sukuk certificates) is made after considering objective evidence
of impairment, if any, in their value (as a result of one or more events that may have an impact on the estimated
future cash flows of the investments). A significant or prolonged decline in the fair value of an equity investment
below its cost is also considered an objective evidence of impairment. Impairment losses are taken to profit and
loss account.

4.5 Advances including net investment in finance lease and ijarah arrangements (Applicable before 01
January 2024)

4.5.1 Loans and advances

Loans and advances and net investments in finance lease are stated net of provision for loan losses against non-
performing advances. Provision for loan losses is made in accordance with the Prudential Regulations issued by
the SBP and the SECP and is charged to profit and loss account. The Group also maintains general provision in
addition to the requirements of the Prudential Regulations on the basis of management's assessment of credit
risk characteristics and general banking risk such as nature of credit, collateral type, industry sector and other
relevant factors. Advances are written-off in line with the Group's policy when there are no realistic prospects of
recovery.

4.5.2 Finance lease receivables

Leases where the holding company transfers substantially all the risks and rewards incidental to ownership of an
asset to the lessee are classified as finance lease. A receivable is recognised at an amount equal to the present
value of the minimum lease payments including guaranteed residual value, if any. Finance lease receivables are
included in advances to the customer.

4.5.3 Islamic finance and related assets

Ijarah

Ijarah assets are stated at cost less depreciation and are disclosed as part of 'Islamic financing and related assets.
Rental received / receivable on Ijarah are recorded as income / revenue. The Group charges depreciation from
the date of recognition of Ijarah of respective assets to Lessee (mustajir). Ijarah assets are depreciated over the

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period of Ijarah using the straight line method. Ijarah rentals outstanding are disclosed in 'other assets' on these
consolidated statement of financial position at amortised cost.

Diminishing Musharaka

Under diminishing musharaka based financing, the Group enters into a musharaka based on shirkat-ul-milk for
financing an agreed share of fixed asset (e.g. house, land, plant or machinery) with its customers and enters into
rental payment agreement for the utilization of the Group's musharaka share by the customer. The Group receives
periodic payments from its customers partly for renting its portion of the assets and partly for gradual transfer /
sale of its ownership. The rental payments are recognised in profit and loss account whereas transfer / sale payments
are applied towards reducing the outstanding principal.

Running Musharaka

Under Running musharaka, the Group enters into financing with the customer based on Shirkatul Aqd in the
customer's operating business. Under this mechanism the customer can withdraw and return funds to the Group
subject to his Running musharaka Financing limit during the Musharaka period. At the end of each quarter / half
year the customer pays the provisional profit as per the desired profit rate which is subject to final settlement
based on the relevant quarterly / half yearly / annual accounts of the customer.

Istisna

Under istisna financing, the holding company places an order to purchase some specific goods / commodities
from its customers to be manufactured / delivered to the holding company within an agreed time. The goods
are then sold and the amount financed along with profit is paid back to the holding company.

Al-Bai

The product is based on the Islamic mode “musawamah”. Under this financing, the holding company purchases
the goods from its customers on cash payment basis and after taking the possession by the holding company,
the customer on behalf of the holding company sells them. Upon subsequent sale by the customer, the financed
amount along with the profit is paid by the customer to the holding company.

Murabaha

Under Murabaha based financing, The Group purchases the goods and after taking the possession, sells them to
the customer on cost plus profit basis either in a spot or credit transaction.

Salam

In Salam, the seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced
price fully paid at spot. The payment is at spot but the supply of purchased goods is deferred. The purchased
goods by the holding company are then sold by the customer on behalf of the holding company and the financed
amount along with profit is paid to the holding company.

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 4.6 Property and equipment

4.6.1 Capital work-in-progress

Capital work in progress is stated at cost less impairment loss, if any and consists of expenditures incurred and
advances made in the course of their construction and installation. Transfers are made to relevant asset category
as and when assets are available for intended use.

4.6.2 Property and equipment

Property and equipment are stated at cost, except for land and buildings which are carried at revalued amount,
less any applicable accumulated depreciation and accumulated impairment losses, if any. Land and buildings are
stated at revalued amount less accumulated depreciation (in case of buildings) and accumulated impairment
losses, if any.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset at the rates specified
in note 11.2 to these consolidated financial statements. Depreciation on additions during the year is calculated
from the date of addition. In case of disposals during the year, the depreciation is charged till the date of disposal.

Subsequent cost are included in the asset's carrying amount only when it is probable that future economic
benefits associated with the item will flow to The Group and the cost of the item can be measured reliably. All
other repairs and maintenance are charged to the consolidated profit and loss account.

An item of property and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognised in the profit
and loss account in the year the asset is derecognised.

The residual values, useful lives and depreciation methods are reviewed and changes, if any, are treated as change
in accounting estimates, at each statement of financial position date.

Land and buildings are revalued by independent professionally qualified valuers with sufficient regularity to ensure
that their net carrying amount does not differ materially from their fair value. If an asset’s carrying value increases
as a result of revaluation, such increase or surplus arising on revaluation is credited to the surplus on revaluation
of property and equipment account. If an asset’s carrying amount is decreased as a result of a revaluation, the
decrease shall be recognised in the consolidated profit or loss account. However, if the increase reverses a deficit
on the same asset previously recognised in the consolidated profit and loss account, such an increase is also
recognised in the consolidated profit and loss account to the extent of the previous deficit and thereafter in the
surplus on the revaluation of property and equipment account.

In the case of revalued assets, any accumulated depreciation on the date of revaluation is eliminated against the
gross carrying amount of the net asset and the net amount restated at the revalued amount of the asset.

Surplus on revaluation of property and equipment (net of any associated deferred tax) to the extent of the
incremental depreciation charged on the related assets is transferred to unappropriated profit.

Surplus on revaluation (net of any deferred tax) realized on disposal of land and building is transferred directly
to unappropriated profit.

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 4.6.3 Right-of-use assets and their related lease liabilities

The Group recognises a right-of-use asset and lease liability (note 4.14) at the lease commencement date. The
right-of-use asset is initially measured at amount equal to present value of lease liability, and subsequently at cost
less any accumulated depreciation and impairment losses if any, and adjusted for certain remeasurements of the
lease liability. The right-of-use asset is depreciated using the straight line method from the commencement date
to the earlier of end of the useful life of right-of-use asset or end of the lease term.

4.7 Intangible assets

These are stated at cost less accumulated amortisation and impairment, if any. The cost of intangible assets are amortised
from the month when the assets are available for intended use, using the straight line method, whereby the cost of the
intangible asset is amortised over its estimated useful life over which economic benefits are expected to flow to The Group.
The useful life and amortisation method is reviewed and adjusted, if appropriate, at each consolidated statement of
financial position date.

4.8 Non-banking assets acquired in satisfaction of claims

Non-banking assets acquired in satisfaction of claims are initially recorded at cost and subsequently carried at revalued
amounts less accumulated depreciation and impairment, if any. These assets are revalued by professionally qualified
valuators with sufficient regularity to ensure that their net carrying value does not differ materially from their fair value.
A surplus arising on revaluation of property is credited to the 'surplus on revaluation of non-banking assets' account and
any deficit arising on revaluation is taken to the consolidated profit and loss account directly. Legal fees, transfer costs and
direct costs of acquiring title to property is charged to the consolidated profit and loss account.

Depreciation on assets (other than land) acquired in satisfaction of claims is charged to the consolidated profit and loss
account on the same basis as depreciation charged on The Group's property and equipment.

If the recognition of such assets results in a reduction in non-performing loans, such reductions and the corresponding
reductions in provisions held against non-performing loans are disclosed separately.

These assets are generally intended for sale. Gains and losses realised on the sale of such assets are disclosed separately
from gains and losses realised on the sale of property and equipment. Surplus on revaluation (net of deferred tax) realised
on disposal of these assets is transferred directly to unappropriated profit.

If such an asset is subsequently used by The Group for its own operations, the asset is transferred to property and equipment
along with any related surplus.

4.9 Derivative financial instruments

Derivative financial instruments consist of Forward foreign exchange contracts, which are initially recognised at fair value
at the date on which the derivative contract is entered into and are subsequently remeasured at fair value. All derivative
financial instruments are carried as asset when fair value is positive and liabilities when fair value is negative. Any change
in the value of derivative financial instruments is taken to the consolidated profit and loss account.

4.10 Credit loss allowance / Provisions

Expected credit loss allowance against identified off-balance exposure is recognised when intimated and reasonable
certainty exists for The Group to settle the obligation. The loss is charged to the consolidated profit and loss account net
of expected recovery and is classified under other liabilities.

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 Other provisions are recognised when The Group has a legal or constructive obligation as a result of past events and it is probable
that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions
are reviewed at each consolidated statement of financial position date and are adjusted to reflect the current best estimate.

4.11 Taxation

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the consolidated profit and loss
account except to the extent that it relates to the items recognised directly in equity, in which case it is recognised in equity.

4.11.1 Current

Provision for current taxation is based on taxable income for the year at the current rates of taxation after taking
into consideration available tax credits and rebates. The charge for the current tax also includes adjustments where
considered necessary, relating to prior years which arise from assessments framed / finalised during the year.

4.11.2 Deferred

Deferred tax is recognised using the balance sheet liability method on all major temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and amount used for taxation
purposes. Deferred tax is measured at the tax rate that are expected to be applied on the temporary differences
when they reverse, based on the tax rates that have been enacted or substantially enacted at the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that the future taxable profit will be available
against which the asset can be utilised. Deferred tax assets are reviewed at each consolidated statement of financial
position date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

The Group also recognises deferred tax asset / liability on deficit / surplus on revaluation of assets and actuarial
gain / losses recognised in consolidated statement of other comprehensive income, which is adjusted against
the related deficit / surplus.

4.12 Deposits / Borrowings

Deposits / Borrowings are recorded at the amount of proceeds received. The cost of deposits is recognised as an expense
on an accrual basis in the period in which it is incurred.

4.13 Employees' benefits

4.13.1 Retirement benefits

Defined benefit plan

The Group operates an approved funded gratuity scheme for all its permanent employees. Retirement benefits
are payable to the members of the scheme on the completion of prescribed qualifying period of service under
the scheme. Contribution is made in accordance with the actuarial recommendation. The actuarial valuation is
carried out annually as at these consolidated statement of financial position date using the "Projected Unit Credit
Actuarial Cost Method".

All actuarial gains and losses are recognised in other comprehensive income as they occur and are not reclassified
to the consolidated profit and loss account in subsequent periods.

Past service cost resulting from changes to defined benefit plan is recognised in the consolidated profit and loss
accounts in accordance with acturial's valuation and their assessment.

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 Defined contribution plan

The Group operates a recognised provident fund scheme for all its regular employees, which is administered by
the Board of Trustees. Contributions are made by The Group and its employees, to the fund at the rate of 10% of
basic salary in accordance with the terms of the scheme.

4.13.2 Compensated absences

A provision is made for estimated liability for annual leaves as a result of services rendered by the employees against
unavailed leaves, as per term of service contract, up to these consolidated statement of financial position date.

The actuarial valuation under the "Projected Unit Credit Actuarial Cost Method" has been carried out by The Group
for the determination of the liability for compensated absences. Liability so determined is fully recognised by The
Group.

4.14 Lease liability against right-of-use assets

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement
date, discounted using The Group’s incremental borrowing rate as the interest rate implicit in the lease cannot be readily
determined. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease
payments made.

4.15 Revenue recognition

Revenue is recognised to the extent that the economic benefits will flow to The Group and the revenue can be reliably
measured. These are recognised as follows:

4.15.1 Advances and investments

– Mark-up / return / interest on regular loans / advances and debt securities investments is recognised on a
time proportion basis that take into account the effective yield on the asset. Where debt securities are
purchased at premium or discount, the same is amortised through the consolidated profit and loss account
using the effective interest rate method.
- Mark-up / return / interest recoverable on classified loans and advances and investments is recognised on
receipt basis. Mark-up / return / interest on classified rescheduled / restructured loans and advances and
investments is recognised as permitted by the regulations of the SBP.
- Dividend income is recognised when The Group’s right to receive the dividend is established.
- Gains and losses on sale of investments are recognised in the consolidated profit and loss account.
- Income on bills discounted are recognised over the period of the bill.

4.15.2 Lease financing / Ijarah contracts

Financing method is used in accounting for income from lease financing. Under this method, the unearned lease
income (excess of the sum of total lease rentals and estimated residual value over the cost of leased assets) is
deferred and taken to income over the term of the lease period so as to produce a constant periodic rate of return
on the outstanding net investment in lease. Unrealised income on classified leases is recognised on receipt basis.

Rental income on these ijarah is recognised in The Group's consolidated profit and loss account on a time
proportion basis, while depreciation is calculated on Ijarah assets on a straight line basis over the period of ijarah.

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 Gains / losses on termination of lease contracts and other lease income are recognised when realised.

4.15.3 Fees, commission and brokerage

The Group earns fee and commission income from the banking services to retail and corporate customers. Fee
and commission income is recognised at an amount that reflects the consideration to which The Group expects
to be entitled in exchange for providing the services.

The Group recognises fees earned on transaction-based arrangements at a point in time when The Group has
provided the services to the customer. Unearned fee and commission are included under other liabilities.

The fee pertaining to banking services to retail and corporate customers are based on schedule of charges,
reviewed periodically by The Group.

4.16 Off setting

Financial assets and financial liabilities are set off and the net amount is reported in these consolidated financial statements
when there is a legally enforceable right to set off and The Group intends to either settle on a net basis, or to realise the
assets and to settle the liabilities simultaneously.

4.17 Foreign currencies

4.17.1 Foreign currency transactions and translations

Foreign currency transactions are translated into functional currency of The Group at the exchange rates prevailing
on the date of transaction. Monetary assets and liabilities in foreign currencies are translated into rupees at the
exchange rates prevailing at these consolidated statement of financial position date. Forward exchange contracts
are revalued using forward exchange rates applicable to their respective remaining maturities. Gains or losses on
above translation are included in the consolidated profit and loss account.

4.17.2 Offshore branch operations

The assets and liabilities of an offshore branch operations are translated into rupees at the exchange rates prevailing
at these consolidated statement of financial position date. The income and expense are translated into rupees
at average rate of exchange prevailing during the year. Exchange gain or loss on such translation is taken to equity
through consolidated statement of 'other comprehensive income' under 'exchange translation reserve'.

4.17.3 Contingencies and commitments

Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies
are expressed in rupee terms at the rates of exchange ruling on the statement of financial position date.
Commitments for outstanding forward foreign exchange contracts disclosed in these consolidated financial
statements are translated at contracted rates.

4.18 Segment reporting

A segment is a distinguishable component of The Group that is engaged in providing product or services (business
segment), or in providing products or services within a particular economic environment (geographical segment), which
is subject to risks and rewards that are different from those of other segments. The Group's primary format of reporting
is based on the following business segments.

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 4.18.1 Business segments

a) Trading and sales

This segment undertakes The Group’s treasury, money market and capital market activities.

b) Retail banking

Retail banking provides services to small borrowers i.e. consumers. It includes loans, deposits and other
transactions with retail customers.

c) Commercial banking

This includes loans, deposits and other transactions with corporate and SME customers.

d) Islamic banking

This represents islamic banking operations of The Group.

4.18.2 Geographical segments

The Group conducts all its operations in Pakistan including an offshore branch in Karachi Export Processing Zone.

4.19 Dividend distribution and appropriations

Bonus and cash dividend and other appropriations (except for the appropriations required by law), declared / approved
subsequent to these consolidated statement of financial position date are considered as non-adjusting event and are not
recorded in these consolidated financial statements of the current year. These are recognised in the period in which these
are declared / approved.

4.20 Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to ordinary shareholders of The Group by the weighted average number of ordinary
shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary
shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential
ordinary shares. Diluted earnings per share is not calculated separately, as The Group does not have any convertible
instruments in issue.

4.21 Impairment of non-financial assets (excluding deferred tax asset)

At each consolidated statement of financial position date, The Group reviews the carrying amount of its assets (other than
deferred tax asset) to determine whether there is an indication that those assets have suffered an impairment loss. If any
such indication exists, the recoverable amount of relevant asset is estimated. Recoverable amount is the greater of the
net selling price and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount,
the carrying amount of the assets is reduced to its recoverable amount. The resulting impairment loss is recognised as
an expense immediately in the consolidated profit and loss account. An impairment loss is reversed if the reversal can
be objectively related to an event occurring after the impairment loss was recognised.

Details of the basis of determination of impairment against loans and advances and investments have been discussed
in their respective notes.

191
 4.22 Acceptances

Acceptances comprises undertakings by The Group to pay bill of exchange due on customers. These are recognised as
financial liability and the contractual right of reimbursement from the customer is recorded as a financial asset. Therefore,
commitments in respect of acceptances have been accounted for as financial assets and financial liabilities in these
consolidated financial statements.

4.23 Business Combination under Common Control

Business combination under common control is carried out under the Predecessor method, under which assets acquired
and liabilities assumed is recognised by the surviving entity at the carrying amounts as reported by the transferred entity
and the difference between the consideration paid and the carrying amounts of net assets acquired is recognised in
equity. No new goodwill recognised (nor any adjustment is required for different accounting policies for similar nature
of transactions).

5. FUNCTIONAL AND PRESENTATION CURRENCY

These consolidated financial statements are presented in Pakistani Rupees, which is The Group's functional currency. Except
as indicated, financial information presented in Pakistani Rupees has been rounded to nearest thousand.

Note 2024 2023

Rupees in’000
6. CASH AND BALANCES WITH TREASURY BANKS
In hand
Local currency 15,338,554 11,629,171
Foreign currencies 1,462,722 4,164,225
16,801,276 15,793,396
With State Bank of Pakistan in
Local currency current accounts 6.1 46,257,596 48,615,882
Foreign currencies current account 6.2 2,321,162 1,991,420
Foreign currency deposit accounts
– cash reserve account 6.3 6,731,041 6,308,767
– deposit account- special cash reserve 6.4 12,058,642 11,497,335
67,368,441 68,413,404
With National Bank of Pakistan in
Local currency current accounts 2,670,896 7,152,782
Local currency deposit accounts 47,103 –
Less: Credit loss allowance held against cash and 16,080 107,480
balances with treasury banks 6.5 (795) –
Cash and balances with treasury banks - net
of credit loss allowance 86,903,001 91,467,062

192
 6.1 These accounts are maintained to comply with the statutory cash reserve requirements of the SBP.
6.2 These represent foreign currencies collection / settlement accounts maintained with the SBP.
6.3 These represent accounts maintained with the SBP to comply with the cash reserve requirement against foreign currency
deposits.
6.4 This represents account maintained with the SBP to comply with the special cash reserve requirement against foreign
currency deposits. The return on this account is declared by the SBP on a monthly basis and, as at 31 December 2024,
carries mark-up at the rate of 3.53% (2023: 4.34%) per annum.
6.5 Credit loss allowance against Cash and balances with treasury banks are all classified as Stage 1.

7. BALANCES WITH OTHER BANKS

Note 2024 2023
Rupees in’000
In Pakistan
In current accounts 33,688 163,751
In deposit accounts 7.1 3,941 4,751
37,629 168,502
Outside Pakistan
In current accounts 7.2 6,425,438 21,101,446
Less: Credit loss allowance held against balances with other banks 7.3 (1,045) –
Balances with other banks - net of credit loss allowance 6,462,022 21,269,948

7.1 This carries mark-up rate ranging from 10.00% to 20.00% (2023: 14.50% to 20.50%) per annum.
7.2 These include balances in current accounts amounting to Rs. 322,178 thousand (2023: Rs. 680,649 thousand) with branches
of the holding company.
7.3 Credit loss allowance against Balances with other banks are all classified as Stage 1.

Note 2024 2023

Rupees in’000
8. LENDINGS TO FINANCIAL INSTITUTIONS

Call / clean money lendings 8.2 5,571,000 5,496,284

Repurchase agreement lendings (reverse repo) – –
Bai muajjal receivable
- with the State Bank of Pakistan – –
- with other financial institutions – –
Modaraba placements – –
Musharakah placements – –
Less: Credit loss allowance held against lending to financial institutions – –
Lendings to financial institutions - net of credit loss allowance 8.4 (2) –
5,570,998 5,496,284
8.1 Particulars of lendings
In local currency - secured – –
In foreign currency - unsecured 8.2 5,570,998 5,496,284
5,570,998 5,496,284

193
 8.2 These foreign currency lendings carry mark-up rate ranging from 7.00% to 7.85% (2023: 9.80% to 12.00%) per annum and
are due mature latest by 18 Feb 2025 (2023: 04 April 2024).

8.3 Lending to Fis - Particulars of credit loss allowance

2024 2023
Credit loss Credit loss
allowance allowance
Lending held Lending held
Rupees in ‘000

Performing Stage 1 5,571,000 2 5,496,284

Under performing Stage 2 – – – –
Non–performing Stage 3
Substandard – – – –
Doubtful – – – –
Loss – – – –
– – – –
Total 5,571,000 2 5,496,284 –

2024
Stage 1 Stage 2 Stage 3 Total
Rupees in ‘000
Balance at the start of the year – – – –
Impact of adoption of IFRS 9 387 – – 387
Transfer to stage 1 – – – –
Transfer to stage 2 – – – –
Transfer to stage 3 – – – –
Net remeasurement of credit loss allowance 387 – – 387
New financial assets originated or purchased – – – –
Financial assets that have been derecognised – – – –
Write off / charged off – – – –
Unwind of discount – – – –
Changes in risk parameters (385) – – (385)
Balance at the end of the year 2 – – 2

194
9. INVESTMENTS
9.1 Investments by types
2024 2023
Cost / Credit loss Surplus / Carrying Cost / Provision Surplus / Carrying
amortised allownce (deficit) value amortised for (deficit) value
cost cost diminution
Rupees in ‘000
– Debt Instruments
Classified / Measured at
amortised cost
Federal Government securities 83,988,424 – – 83,988,424 – – – –
Classified / Measured at FVOCI
Federal government securities 642,543,228 – 12,481,301 655,024,529 – – – –
Non Government debt securities 9,847,355 (426,154) (354,523) 9,066,678 – – – –
652,390,583 (426,154) 12,126,778 664,091,207 – – – –
Classified / Measured at FVTPL
Federal government securities 42,055,433 – (10,052) 42,045,381 – – – –
Non Government debt securities 1,997,589 – (9,249) 1,988,340 – – – –
44,053,022 – (19,301) 44,033,721 – – – –
Instruments mandatorily
classified/measured at FVTPL
Mutual funds 3,012,532 – 119,439 3,131,971 – – – –
Real estate investment trust 1,814,314 – 1,254,365 3,068,679 – – – –
4,826,846 – 1,373,804 6,200,650 – – – –
– Equity Instruments
Classified / Measured at FVTPL
Shares
Listed companies – – – – – – – –
Unlisted companies – – – – – – – –
– – – – – – – –
Classified / Measured at FVOCI
(Non-Reclassifiable)
Shares
Listed companies 5,205,714 – 3,925,300 9,131,014 – – – –
Unlisted companies 130,640 – (79,071) 51,569 – – – –
5,336,354 – 3,846,229 9,182,583 – – – –
Available-for-sale securities
Federal government securities – – – – 806,602,843 – (3,854,965) 802,747,878
Shares – – – – 4,095,589 (206,844) 863,567 4,752,312
Non-government debt securities – – – – 12,033,893 (87,683) (189,864) 11,756,346
Mutual funds – – – – 247,661 (12,763) 4,069 238,967
Real estate investment trust – – – – 1,831,780 – 160,845 1,992,625
– – – – 824,811,766 (307,290) (3,016,348) 821,488,128
Held-to-maturity securities
Federal government securities – – – – 99,146,633 – – 99,146,633
Nongovernment debt securities – – – – – – – –
– – – – 99,146,633 – – 99,146,633
Total investments 790,595,229 (426,154) 17,327,510 807,496,585 923,958,399 (307,290) (3,016,348) 920,634,761

195
9.2 Investments by segments
2024 2023
Cost / Credit loss Surplus / Carrying Cost / Provision Surplus / Carrying
amortised allownce (deficit) value amortised for (deficit) value
cost cost diminution
Rupees in ‘000
Federal government
securities
Market treasury bills 131,185,208 – 843,256 132,028,464 335,870,950 – 879,182 336,750,132
Pakistan investment bonds 496,809,003 – 7,980,831 504,789,834 479,399,875 – (5,459,487) 473,940,388
Ijarah sukuk 137,785,245 – 3,647,162 141,432,407 84,994,207 – 725,340 85,719,547
Islamic Naya Pakistan certificate
modaraba investment pool:
- foreign currencies 1,709,911 – – 1,709,911 4,999,907 – – 4,999,907
- Pak rupees 771,724 – – 771,724 484,537 – – 484,537
768,261,091 – 12,471,249 780,732,340 905,749,476 – (3,854,965) 901,894,511
Shares
Listed companies 5,205,714 – 3,925,300 9,131,014 3,963,860 (127,773) 863,567 4,699,654
Unlisted companies 130,640 – (79,071) 51,569 131,729 (79,071) – 52,658
5,336,354 – 3,846,229 9,182,583 4,095,589 (206,844) 863,567 4,752,312
Non-government debt
securities
Listed
Term finance certificates 957,621 (64,946) 2,478 895,153 1,387,701 (64,946) (5,274) 1,317,481
Sukuk certificates / bonds 7,089,987 (340,000) (235,423) 6,514,564 6,768,455 – (180,655) 6,587,800
Unlisted
Term finance certificates 3,724,914 (2,792) (125,549) 3,596,573 3,295,000 – – 3,295,000
Sukuk certificates / bonds 398,416 (18,416) (5,278) 374,722 582,737 (22,737) (3,935) 556,065
12,170,938 (426,154) (363,772) 11,381,012 12,033,893 (87,683) (189,864) 11,756,346
Mutual funds
Open end 3,012,532 – 119,439 3,131,971 230,712 – – 230,712
Close end – – – – 16,949 (12,763) 4,069 8,255
3,012,532 – 119,439 3,131,971 247,661 (12,763) 4,069 238,967
Real estate investment
trust 1,814,314 – 1,254,365 3,068,679 1,831,780 – 160,845 1,992,625
Total investments 790,595,229 (426,154) 17,327,510 807,496,585 923,958,399 (307,290) (3,016,348) 920,634,761

9.2.1 Investments given as collateral against repo borrowing

The market value of investments given as collateral against borrowings is as follows:
2024 2023
Rupees in ‘000
Federal government securities
Market treasury bills 34,402,365 129,183,999
Pakistan investment bonds 191,534,393 54,741,950
225,936,758 183,925,949

196
 9.2.2 Investments include securities which are held by the holding company to comply with the statutory liquidity
requirements as set out under section 29 of the Banking Companies Ordinance, 1962.
9.2.3 Investments include Rs. 132,000 thousand (2023: Rs. 132,000 thousand) pledged with State Bank of Pakistan
against TT/DD discounting facilities and demand loan facilities.
2024 2023
9.3 Credit loss allowance for diminution in value of investments Rupees in ‘000

Opening balance 307,290 577,533

Impact of remeasurement on adoption of IFRS 9 (219,607) –
Impact of ECL recognised on adoption of IFRS 9 578 –
Charge for the year 337,893 63,244
Reversal for the year – (2,813)
Net charge for the year 337,893 60,431
Reversal on disposal – (330,674)
Investment written off – –
Closing balance 426,154 307,290

9.4 Particulars of credit loss allowance / provision against debt securities

2024
Stage 1 Stage 2 Stage 3
Rupees in ‘000
9.4.1 Investments - exposure
Opening balance 7,700,000 – 427,683
Impact of adoption of IFRS 9 – – –
New investments – – –
Investments derecognised or repaid (1,700,000) – (4,321)
Transfer to stage 1 – – –
Transfer to stage 2 – – –
Transfer to stage 3 – – –
Amounts written off / charged Off – – –
Others – – –
Closing balance – – –
6,000,000 – 423,362

197
 2024
Outstanding Credit loss
amount allowance
held
Rupees in ‘000
9.4.2 Investments - Credit loss allowance
Performing Stage 1 6,000,000 2,792
Underperforming Stage 2 – –
Non-Performing Stage 3
Substandard – –
Doubtful – –
Loss 423,362 423,362
423,362 423,362

Total 6,423,362 426,154

2024 2023
Cost / amortised cost
Rupees in ‘000
9.5 Quality of securities
Details regarding quality of securities held under "Held to Collect and Sell" model
Federal Government Securities - Government guaranteed
Market treasury bills 110,525,097 335,870,950
Pakistan investment bonds 397,206,935 383,491,620
Ijarah sukuk 134,811,196 81,755,829
Islamic Naya Pakistan certificate Modaraba investment pool:
– foreign currencies – 4,999,907
– Pak rupees – 484,537
642,543,228 806,602,843
Shares
Listed companies
Technology and communication 400,250 –
Cement 269,754 6,965
Engineering 181,569 –
Commercial banks 1,510,340 1,318,152
Fertiliser 305,587 708,714
Investment banks / investment companies / securities companies 326,814 135,416
Cable and electrical goods 57,674 –
Insurance 245,665 –
Oil and gas exploration, power generation and distribution 1,210,195 1,552,500
Pharmaceuticals 118,605 40,376
Textile 408,304 121,398
Transport 170,957 80,339
5,205,714 3,963,860

198
 2024 2023
Cost Break-up Cost Break-up
value value
Rupees in ‘000
Unlisted companies
Pakistan Export Finance
Guarantee Limited 11,361 – 11,361 –
DHA Cogen Limited 50,000 – 50,000 –
Dawood Family Takaful Limited 35,000 25,387 35,000 25,387
Society for World Wide Inter Bank
Financial Telecommunication (Swift) 6,755 83,900 7,844 92,577
Pakistan Corporate Restructuring
Company Limited 27,524 25,817 27,524 25,817
130,640 135,104 131,729 143,781
Non-government debt securities 2024 2023
Cost / amortised cost
Rupees in ‘000
Listed
AAA 274,840 629,920
AA+ 442,835 42,835
A+ 340,000 340,000
AA- 205,000 600,000
A 50,000 50,000
Unrated * 6,408,939 6,493,401
7,721,614 8,156,156

* This includes Investment in Pakistan Energy Sukuk-I issued by Power Holding Limited, wholly owned by the
Government of Pakistan. These sukuk is guaranteed by the Government of Pakistan and are eligible for Statutory
Liquidity Requirements amounting to Rs 6,343,993 thousands (2023: Rs 6,428,455 thousands).

2024 2023
Cost / amortised cost
Rupees in ‘000
Unlisted
AAA 3,974,914 3,250,000
AA+ 130,000 500,000
A- – 5,000
A – 100,000
Unrated 344,410 22,737
4,449,324 3,877,737
Mutual funds
Listed
AM1 – 171,891
Unlisted
AA+ (f ) 164,676 58,821
AA- (f ) 28,364 –
Unrated 2,819,492 16,949
3,012,532 75,770
Real estate investment trust
Listed
AAA (rfr) 831,780 831,780
Unlisted
RM 3+ 982,534 1,000,000

199
 Note 2024 2023
Cost / amortised cost
Rupees in ‘000
9.6 Particulars relating to securities classified Under
"Held to Collect" model

Federal government securities - Government guaranteed

Market treasury bills 100,027 –
Pakistan investment bonds 80,588,354 95,908,255
Ijarah sukuk 3,300,043 3,238,378
83,988,424 99,146,633

9.6.1 The market value of federal government securities classified as held-to-maturity is Rs. 86,187,652 thousand (2023: Rs.
91,756,989 thousand).

10. ADVANCES
Note Performing Non-Performing Total
2024 2023 2024 2023 2024 2023
Rupees in ‘000
Loans, cash credits, running finances, etc. 10.1 330,110,580 261,089,008 18,633,899 16,160,613 348,744,479 277,249,621
Islamic financing and related assets 10.2 121,251,615 135,548,542 3,953,216 1,492,591 125,204,831 137,041,133
Bills discounted and purchased 56,120,237 43,580,472 2,873,698 3,120,153 58,993,935 46,700,625
Advances - gross 507,482,432 440,218,022 25,460,813 20,773,357 532,943,245 460,991,379

Credit loss allowance against advances

-Stage 1 (1,450,792) – – – (1,450,792) –
-Stage 2 (4,615,450) – – – (4,615,450) –
-Stage 3 – – (24,408,347) – (24,408,347) –
-Specific provision – – – (20,033,135) – (20,033,135)
-General provision – (7,325,642) – – – (7,325,642)
(6,066,242) (7,325,642) (24,408,347) (20,033,135) (30,474,589) (27,358,777)
Advances - net of credit loss
allowance / provision 501,416,190 432,892,380 1,052,466 740,222 502,468,656 433,632,602

200
10.1 Includes net investment in finance lease as disclosed below:
2024 2023
Not later Later than Total Not later Later than Total
than one one and than one one and
year less than year less than
five years five years
Rupees in ‘000
Lease rentals receivable 44,324 17,111 61,435 63,051 24,341 87,392
Residual value 87,720 6,704 94,424 98,474 7,526 106,000
Minimum lease payments 132,044 23,815 155,859 161,525 31,867 193,392

Financial charges for

future periods (8,709) (1,163) (9,872) (14,319) (1,913) (16,232)
Present value of minimum
lease payments 123,335 22,652 145,987 147,206 29,954 177,160

10.2 It includes loans and advances of First Habib Modaraba amounting to Rs. 29,197,668 thousand (2023: Rs. 22,343,233 thousand).
Furthermore, it also includes the islamic banking operations of the holding company amounting to Rs. 99,347,522 thousand
(2023: Rs. 114,697,900 thousand) as disclosed in appendix 2 to these consolidated financial statements.

2024 2023
Rupees in ‘000
10.3 Particulars of advances - gross
In local currency 415,723,896 393,475,892
In foreign currencies 117,219,349 67,515,487
532,943,245 460,991,379
10.3.1 Advances to Women, Women-owned and
Managed Enterprises
Women 2,007,876 1,665,518
Women Owned and Managed Enterprises 630,853 731,882
2,638,729 2,397,400

10.3.2 Gross loans disbursed to women, women-owned and managed enterprises during the current year is Rs. 1,693.483
thousands (2023: Rs 1,437.434 thousands).

10.4 Particularsof credit loss allowance Note 2024

10.4.1 Advances - exposure Stage 1 Stage 2 Stage 3
Rupees in ‘000
Gross carrying amount 389,896,909 41,058,001 20,464,736

New advances 178,144,175 15,101,095 150,585

Advances derecognised or repaid (101,964,864) (11,525,252) (1,575,760)
Transfer to stage 1 7,577,960 (7,577,960) –
Transfer to stage 2 (30,818,928) 30,818,928 –
Transfer to stage 3 (492,732) (5,270,443) 5,763,175
52,445,611 21,546,368 4,338,000

Amounts written off / charged off 10.7 – – (24,854)

Changes in risk parameters – 2,535,543 682,932
Closing balance - Current year 442,342,520 65,139,912 25,460,814

201
 10.4.2 Advances - Credit loss allowance
Note 2024
Stage 1 Stage 2 Stage 3
Rupees in ‘000
Opening balance – – –
Impact of adoption of IFRS 9 2,240,046 2,553,980 20,016,316

New Advances 225,618 2,848,014 309,278

Advances derecognised or repaid (656,019) (753,998) (1,444,704)
Transfer to stage 1 10,281 (10,281) –
Transfer to stage 2 (365,348) 392,759 (27,411)
Transfer to stage 3 (3,786) (418,619) 422,405
(789,254) 2,057,875 (740,432)

Amounts written off / charged off 10.7 – – (24,854)

Changes in risk parameters (PDs/LGDs/EADs) – 3,595 5,157,317
Other changes (to be specific) – – –

Closing balance 1,450,792 4,615,450 24,408,347

10.4.3 Advances - Credit loss allowance details

Internal / External rating / stage classification

Outstanding gross exposure

Performing - Stage 1
ORR 1 to 9 413,317,529 – –
Others 29,024,991 – –
Under Performing - Stage 2
ORR 1 to 9 – 64,493,380 –
Others – 646,532 –
Non-performing - Stage 3
OAEM – – 230,478
Substandard – – 481,869
Doubtful – – 1,901,249
Loss – – 22,847,217
– – 25,460,813
Total 442,342,520 65,139,912 25,460,813
Corresponding ECL
Stage 1 and 2 (1,450,792) (4,615,450) –
Stage 3 – – (24,408,347)
440,891,728 60,524,462 1,052,466

202
10.5 Advances include Rs. 25,460,813 thousand (31 December 2023: Rs.20,773,357 thousand) which have been placed under
non-performing / Stage 3 status as detailed below:
2024 2023
Non- Credit loss Non- Provision
Category of classification performing allowance performing
loans loans
Rupees in ‘000
Domestic
Other asset especially mentioned 230,478 223,854 32,575 –
Substandard 481,869 276,615 243,168 61,969
Doubtful 1,901,249 1,190,825 970,898 546,569
Loss 22,847,217 22,717,053 19,526,716 19,424,597
Total 25,460,813 24,408,347 20,773,357 20,033,135

10.6 Particulars of credit loss allowance against advances

Note 2024 2023
Stage 3 Stage 1 & 2 Specific General Total Specific General Total
Rupees in ‘000
Opening balance – – 20,033,135 7,325,642 27,358,777 17,650,138 4,619,505 22,269,643
Impact of adoption of
IFRS 9 as of 1 January 2024 20,016,316 4,794,026 (20,033,135) (5,963,784) (1,186,577) – – –
Charge for the year 5,877,489 4,194,437 – – 10,071,926 7,040,617 2,706,137 9,746,754
Reversals for the year (1,460,604) (2,922,221) – (1,361,858) (5,744,683) (4,626,567) – (4,626,567)
Net charge / (reversal) 4,416,885 1,272,216 – (1,361,858) 4,327,243 2,414,050 2,706,137 5,120,187
Amount written off 10.7 (24,854) – – – (24,854) (31,053) – (31,053)
Closing balance 24,408,347 6,066,242 – – 30,474,589 20,033,135 7,325,642 27,358,777

10.6.1 Particulars of credit loss allowance against advances

2024 2023
Stage 3 Stage 1 & 2 Total Specific General Total
Rupees in ‘000

In local currency 23,653,655 5,736,682 29,390,337 18,751,419 7,325,642 26,077,061

In foreign currencies 754,692 329,560 1,084,252 1,281,716 – 1,281,716
24,408,347 6,066,242 30,474,589 20,033,135 7,325,642 27,358,777

203
 10.6.2 Consideration of forced sales value (FSV) for the purposes of provisioning against non-performing
loans

During the current year, the Group decided to not to avail the benefit of Forced Sales Value (FSV) against
non-performing loans, as available under BSD Circular No. I of 21 October 2011 issued by the SBP.

Note 2024 2023

Rupees in ‘000
10.7 Particulars of write offs

10.7.1 Against credit loss allowance 10.6 24,838 31,053

Directly charged to profit and loss account 16 –
24,854 31,053

10.7.2 Write offs of Rs. 500,000/- and above

- Domestic 24,838 31,035
Write offs of below Rs. 500,000/ 16 18
24,854 31,053

10.8 Details of loan write off of Rs. 500,000/- and above

In terms of sub-section (3) of section 33A of the Banking Companies Ordinance, 1962, the statement in respect of
written-off loans or any other financial relief of Rs. 500,000 or above allowed to the persons during the year ended 31
December 2024 is enclosed as Annexure I. However, this write off does not affect the holding company's right to recover
the debts from these customers.
Note 2024 2023
Rupees in ‘000
11. PROPERTY AND EQUIPMENT

Capital work-in-progress 11.1 646,639 293,119

Property and equipment 11.2 16,550,267 15,489,044
17,196,906 15,782,163
11.1 Capital work-in-progress
Civil works 11.1.1 265,241 79,056
Advances to suppliers 381,398 214,063
646,639 293,119

11.1.1 This represent advances against renovation being carried out at various locations and to the vendors.

204
11.2 Property and equipment
2024
Freehold Leasehold Buildings Buildings on Furniture Electrical, Vehicles Lease hold Total
land land on freehold leasehold and office and improvements
land land fixture computer
equipment
Rupees in ‘000
At 1 January 2024
Cost 3,112,874 4,175,390 447,516 3,409,063 1,292,288 7,177,346 527,453 5,903,849 26,045,779
Accumulated depreciation – – (69,385) (472,342) (696,033) (5,005,016) (208,019) (4,105,940) (10,556,735)
Net book value 3,112,874 4,175,390 378,131 2,936,721 596,255 2,172,330 319,434 1,797,909 15,489,044

Year ended 31 December 2024

Opening net book value 3,112,874 4,175,390 378,131 2,936,721 596,255 2,172,330 319,434 1,797,909 15,489,044
Additions 13,731 5,200 255,550 – 265,947 2,030,132 75,626 925,034 3,571,220
Disposals – – – – (556) (803) (15,231) – (16,590)
Depreciation charge – – (49,847) (315,009) (163,223) (1,195,194) (89,800) (679,830) (2,492,903)
Exchange rate adjustments – – – (489) (15) – – – (504)
Closing net book value 3,126,605 4,180,590 583,834 2,621,223 698,408 3,006,465 290,029 2,043,113 16,550,267

At 31 December 2024
Cost 3,126,605 4,180,590 703,066 3,408,574 1,557,664 9,206,675 587,848 6,828,883 29,599,905
Accumulated depreciation – – (119,232) (787,351) (859,256) (6,200,210) (297,819) (4,785,770) (13,049,638)
Net book value 3,126,605 4,180,590 583,834 2,621,223 698,408 3,006,465 290,029 2,043,113 16,550,267

Rate of depreciation (%) – – 4 4 15 - 25 15 - 33.33 16.67- 20 20

2023
Freehold Leasehold Buildings on Buildings on Furniture Electrical, Vehicles Lease hold Total
land land freehold land leasehold and office and improvements
land fixture computer
equipment
Rupees in ‘000
At 1 January 2023
Cost 3,045,790 4,020,390 447,516 3,403,561 1,076,903 5,757,298 290,272 5,142,828 23,184,558
Accumulated depreciation – – (23,255) (158,055) (560,958) (4,152,899) (135,552) (3,528,949) (8,559,668)
Net book value 3,045,790 4,020,390 424,261 3,245,506 515,945 1,604,399 154,720 1,613,879 14,624,890
Year ended 31 December 2023
Opening net book value 3,045,790 4,020,390 424,261 3,245,506 515,945 1,604,399 154,720 1,613,879 14,624,890
Additions 67,084 155,000 – – 216,142 1,420,145 259,654 761,021 2,879,046
Disposals – – – – (1,090) (935) (22,480) – (24,505)
Depreciation charge – – (46,130) (314,287) (135,075) (852,117) (72,467) (576,991) (1,997,067)
Exchange rate adjustment – – – 5,502 333 838 7 – 6,680
Closing net book value 3,112,874 4,175,390 378,131 2,936,721 596,255 2,172,330 319,434 1,797,909 15,489,044
At 31 December 2023
Cost 3,112,874 4,175,390 447,516 3,409,063 1,292,288 7,177,346 527,453 5,903,849 26,045,779
Accumulated depreciation – – (69,385) (472,342) (696,033) (5,005,016) (208,019) (4,105,940) (10,556,735)
Net book value 3,112,874 4,175,390 378,131 2,936,721 596,255 2,172,330 319,434 1,797,909 15,489,044
Rate of depreciation (%) – – 4 4 15 - 25 15 - 33.33 16.67- 20 20

205
 11.3 Revaluation of properties

The Holding Company's land and buildings were revalued by an independent professional valuer, M/S Iqbal A. Nanjee &
Co. (Private) Limited as at 30 June 2022. The valuation was performed by the valuer on the basis of an assessment of
present market values. The revaluations had resulted in a surplus of Rs. 6,795,965 thousand over the book value. In addition,
a non-banking asset transferred to property and equipment in the year 2022 was revalued by M/S Akbani & Javed
Associates on 31 December 2021. Cumulated surplus on that asset amounted to Rs. 154,193 thousand and was also
revalued on the basis of present market value. Accordingly total revaluation surplus (before incremental depreciation)
amounted to Rs. 6,950,158 thousand. Details are as follows:

Revaluation surplus (gross amount without incremental depreciation): Rupees in ‘000

Freehold land 1,070,460

Leasehold land 2,488,939
Buildings on Freehold land 404,431
Buildings on Leasehold land 2,986,328
6,950,158

11.3.1 Surplus on revaluation of property and equipment (net of incremental depreciation) are as follows:

2024 2023
Rupees in ‘000
Freehold land 1,070,460 1,070,460
Leasehold land 2,488,939 2,488,939
Buildings on Freehold land 301,797 342,783
Buildings on Leasehold land 2,290,640 2,568,981
6,151,836 6,471,163

11.3.2 Had there been no revaluation the carrying amounts of revalued assets would have been as follows:

2024 2023
Rupees in ‘000

Freehold land 1,975,330 1,975,330

Leasehold land 1,531,451 1,531,451
Buildings on freehold land 26,487 35,348
Buildings on leasehold land 330,582 362,238
3,863,850 3,904,367

11.4 The cost of fully depreciated assets still in use includes:

Furniture and fixtures 616,198 507,359

Electrical, office and computer equipment 3,654,602 3,177,133
Vehicles 50,928 41,128
Lease hold improvements 2,880,520 2,666,778

206
 11.5 Details of fixed assets disposed off to employees/ex employees during the year ended 31 December 2024

Particulars Cost Book Sale Mode of disposal Particulars of purchaser

value proceeds
Rupees in ‘000

Vehicle 2,475 751 2,750 As per HR policy Mr. Shaffat A Hamdani (Ex-Employee)
Vehicle 2,619 1,533 3,173 As per HR policy Mr. Azeem Ahmed Alvi (Ex-Employee)
Vehicle 2,515 929 2,850 As per HR policy Mr. Khurram Rashid (Employee)
Vehicle 2,044 – 3,100 As per HR policy Mr. Muhammad Zeshan (Employee)
Vehicle 2,619 1,491 3,500 As per HR policy Mr. Samiullah Siddiqui (Employee)
Vehicle 2,515 1,073 3,210 As per HR policy Mr. Khurram Jaffar (Ex-Employee)
Vehicle 2,049 – 1,860 As per HR policy Mr. Muhammad Farooq Sheikh (Employee)
Vehicle 1,958 – 2,040 As per HR policy Mr. Syed Mityas Ali Abbas (Employee)
Vehicle 4,512 3,521 3,600 As per HR policy Mr. Majed Ali Khan (Ex-Employee)
Vehicle 5,012 3,871 4,200 As per HR policy Mr. Muhammad Zia Majid (Ex-Employee)
Computer
equipment 248 95 173 As per HR policy Mr. Tariq Ali Pasha (Ex-Employee)

12. RIGHT-OF-USE ASSETS

2024 2023
Rupees in ‘000
At January 1
Cost 12,479,390 10,130,149
Accumulated Depreciation (4,854,380) (3,386,731)
Net Carrying amount at January 1 7,625,010 6,743,418

Opening carrying amount as at the start of the year 7,625,010 6,743,418

Additions during the year 2,654,828 2,349,241
Termination / maturities during the year - Cost (1,658,577) –
Termination / maturities during the year - Accumulated Depreciation 1,582,540 –
Deletions during the year
Depreciation Charge for the year (1,549,356) (1,467,649)
Opening carrying amount as at the start of the year 8,654,445 7,625,010

At December 31
Cost 15,058,181 12,479,390
Accumulated Depreciation (6,403,736) (4,854,380)
Net Carrying amount at December 31 8,654,445 7,625,010

207
13. INTANGIBLE ASSETS
2024 2023
Computer Management Total Computer Management Total
software rights software rights
Rupees in ‘000
At 1 January
Cost 1,077,530 41,600 1,119,130 716,773 41,600 758,373
Accumulated amortisation
and impairment (750,797) – (750,797) (617,966) – (617,966)
Net book value 326,733 41,600 368,333 98,807 41,600 140,407

Year ended 31 December

Opening net book value 326,733 41,600 368,333 98,807 41,600 140,407
Additions directly purchased 444,368 – 444,368 360,757 – 360,757
Amortisation charge (260,625) – (260,625) (132,831) – (132,831)
Closing net book value 510,476 41,600 552,076 326,733 41,600 368,333

At 31 December
Cost 1,521,898 41,600 1,563,498 1,077,530 41,600 1,119,130
Accumulated amortisation and impairment (1,011,422) – (1,011,422) (750,797) – (750,797)
Net book value 510,476 41,600 552,076 326,733 41,600 368,333

Rate of amortisation (percentage) 30 - 33.3 30 - 33.3

Useful life in years 3 - 3.33 3 - 3.33

13.1 The cost of fully amortised intangible assets (computer software) still in use is Rs. 653,330 thousand (2023: Rs. 548,698 thousand).

Note 2024 2023

Rupees in ‘000
14. OTHER ASSETS
Income / mark-up / profit accrued in local
currency - net of provision 29,893,936 38,133,593
Income / mark-up / profit accrued in foreign currencies - net of provision 397,849 304,547
Advances, deposits, advance rent and other prepayments 996,202 670,226
Non-banking assets acquired in satisfaction of claims 14.1 2,204,729 2,204,729
Branch adjustment account – –
Mark-to-market gain on forward foreign exchange contracts 3,974,963 2,888,760
Acceptances 42,480,848 25,076,677
Receivable from the SBP against encashment of government securities 23,182 43,509
Stationery and stamps on hand 339,127 245,121
Receivable from 1Link 2,183,238 –
Prepaid employment benefit 4,857,532 –
Receivable from defined benefit plan 38.4 – 55,014
Others 14.2 1,249,218 781,857
88,600,824 70,404,033
Credit loss allowance / provision held against other assets 14.3.1 (416,280) (377,842)
Other Assets (Net of credit loss allowance) 88,184,544 70,026,191

Surplus on revaluation of non-banking assets acquired in

satisfaction of claims 22.2 2,095,111 2,095,111
Other assets - Total 90,279,655 72,121,302

208
 Note 2024 2023
Rupees in ‘000

14.1 Market value of non-banking assets acquired in satisfaction of claims 14.1.2 4,299,840 4,299,840

Non-banking assets acquired in satisfaction of claims have been revalued by independent professional valuator as at 31
December 2021. The revaluation was carried out by M/s Akbani & Javed Associates on the basis of an assessment of present
market values.
2024 2023
Rupees in ‘000
14.1.1 Non-banking assets acquired in
satisfaction of claims
Opening balance 4,299,840 4,299,840
Transferred to property and equipment – –
Depreciation – –
Closing balance 4,299,840 4,299,840

14.1.2 Revaluation surplus Rs. 2,095,111 thousand (2023: Rs. 2,095,111 thousand) is included in the above value.

14.2 This also includes Rs. 51,793 thousand (2023: 143,243 thousand) receivable on the sale of equity securities. This also includes
fully provided balance of Rs. 398,114 thousand (2023: 377,842).

2024 2023
Rupees in ‘000
14.3 Credit loss allowance held against other assets
Claims receivable against fraud and forgeries 398,114 377,842
Acceptances 18,166 –
416,280 377,842

14.3.1 Movement in Credit loss allowance

held against other assets
Opening balance 377,842 377,802
Impact of adoption of IFRS 9 88,854 –

Charge for the year 20,272 40

Reversal for the year (70,688) –
Net (reversal) / charge for the year (50,416) 40
Closing balance 416,280 377,842

209
 2024
Outstanding Credit loss
amount allowance
held
Rupees in ‘000
14.3.2 Particulars of credit loss allowance against other assets
Stage 1 36,245,581 12,518
Stage 2 6,235,267 5,648
Stage 3 / others 394,816 398,114
42,875,664 416,280

Note 2024 2023

Rupees in ‘000
15. BILLS PAYABLE
In Pakistan 28,378,790 28,254,056
Outside Pakistan 100,032 98,643
28,478,822 28,352,699
16. BORROWINGS

Secured
Borrowings from the State Bank of Pakistan under:
Export refinance scheme 16.2 59,242,166 85,990,034
Long term financing facility - renewable energy scheme 16.3 2,177,048 2,327,108
Long term financing facility 16.4 15,438,369 19,057,928
Temporary economic refinance facility 16.5 19,682,235 28,797,755
Long term financing facility - for storage of
agricultural produce scheme 16.6 750,064 621,700
Refinance facility for modernization of SME 16.7 219,918 105,858
Refinance facility for combating COVID-19 16.8 18,881 35,878
Refinance and credit guarantee scheme for women entrepreneurs 16.9 59,816 23,208
16.10 97,588,497 136,959,469

Repurchase agreement borrowings (Repo) - secured 16.11 225,809,401 184,947,267

Due against bills rediscounting - secured 16.12 – 474,216
323,397,898 322,380,952
Unsecured
Certificates of investment 16.13 13,922,552 9,505,606
Call borrowing 16.14 100,000 –
Musharaka borrowing 16.15 6,291,111 2,495,662
Overdrawn nostro accounts 6,512,870 888,638
Overdrawn local bank accounts – –
Total unsecured 26,826,533 12,889,906
Total Borrowings 350,224,431 335,270,858

16.1 Particulars of borrowings with respect to currencies

In local currency 343,711,561 333,908,004

In foreign currencies 6,512,870 1,362,854
350,224,431 335,270,858

210
 16.2 These borrowings have been obtained from the SBP for extending export finance to customers. These carry mark-up at rates
ranging from 8.00% to 16.50% per annum (2023: 17% to 18% per annum) and are due to mature latest by 30 June 2025.
16.3 These borrowings have been obtained from the SBP under a scheme for providing financing facilities to customers against
renewable energy plants. These carry mark-up at rates ranging from 2% to 3% per annum (2023: 2% to 3% per annum) and
are due to mature latest by 27 July 2035.
16.4 These borrowings have been obtained from the SBP under a scheme for providing concessionary financing facilities to the
industry for purchase of new locally manufactured plant and machinery. These carry mark-up at rates ranging from 2.00%
to 11.50% per annum (2023: 2.00% to 11.5% per annum per annum) and are due to mature latest by 24 December 2029.
16.5 These borrowings have been obtained from the SBP under a scheme to provide concessionary refinance for setting up of
new industrial units in the backdrop of challenges being faced by industries during the pandemic. These carry mark-up at
rate of 1% per annum (2023: 1.00% per annum) and are due to mature latest by 24 August 2030.
16.6 These borrowings have been obtained from the SBP under a scheme for financing the storage of agricultural produce to
encourage the private sector to establish silos, warehouses and cold storages. These carry mark-up at rate of 2% per annum
(2023: 2.00% per annum) and are due to mature latest by 11 November 2029.
16.7 These borrowings have been obtained from the SBP under a scheme to finance modernisation of Small and Medium
Enterprises (SME). These carry mark-up at rates of 2.00% per annum (2023: 2.00% per annum) and are due to mature latest
by 18 September 2029.
16.8 These borrowings have been obtained from the SBP under a scheme to provide combat the emergency refinance facility
to hospitals & medical centre. These carry mark-up at rates of 0% per annum (2023: 0% per annum) and are due to mature
latest by 30 June 2026.
16.9 These borrowings have been obtained from the SBP under a scheme to provide finance for women entrepreneurs across the
country. These carry mark-up at rate of 0% per annum (2023: 0% per annum) and are due to mature latest by 09 December 2029.
16.10 As per the terms of the agreement, the Bank has granted the SBP the right to recover the outstanding amounts from the
Bank at the date of maturity of the finances by directly debiting the Bank's current account maintained with the SBP.
16.11 These carry mark-up rates ranging between 12.90% to 13.90% (2023: 21.75% to 23.00%) per annum having maturity upto
14 Jan 2025 (2023: 12 Jan 2024 ) and are secured against investments mentioned in note 9.3.1.
16.12 This represents the obligation to the corresponding Banks on the discounting of foreign documentary bills purchased by the
Bank on discount. The balance carries discount rate of Nil (2023: 6.91%) per annum having maturity upto Nil (2023: 23 Jan 2024).
16.13 These carry markup rate ranging between 10.10% to 22.00% (2023: 14.55% to 22.23%) per anum having maturity upto 30
December 2024 (2023: 26 December 2024).
16.14 These carry mark-up rate at rate of 0% per annum having maturity upto 10 Jan 2025.
16.15 These carry markup at rates ranging from 12.39% to 14.14% (2023: 21.71% to 22.71%) per annum.

17. DEPOSITS AND OTHER ACCOUNTS

2024 2023
In local In foreign Total In local In foreign Total
currency currencies currency currencies
Rupees in ‘000
Customers
Current deposits 335,112,480 64,648,144 399,760,624 310,637,089 59,724,307 370,361,396
Savings deposits 291,966,864 16,914,294 308,881,158 341,134,624 16,798,084 357,932,708
Term deposits 120,803,951 47,383,383 168,187,334 175,133,425 50,971,995 226,105,420
Others 29,656,415 240,192 29,896,607 41,503,257 72,458 41,575,715
777,539,710 129,186,013 906,725,723 868,408,395 127,566,844 995,975,239
Financial institutions
Current deposits 3,150,604 1,510,900 4,661,504 2,327,236 1,030,085 3,357,321
Savings deposits 12,587,401 – 12,587,401 11,868,434 – 11,868,434
Term deposits 1,230,888 22,473 1,253,361 260,684 22,739 283,423
Others – – – 1,356 – 1,356
16,968,893 1,533,373 18,502,266 14,457,710 1,052,824 15,510,534
794,508,603 130,719,386 925,227,989 882,866,105 128,619,668 1,011,485,773

211
 2024 2023
17.1 Composition of deposits Rupees in ‘000

Individuals 482,699,275 463,434,699

Government (Federal and Provincial) 13,990,533 35,486,080
Public Sector Entities 20,261,531 23,681,503
Banking Companies 180,752 1,576,992
Non-Banking Financial Institutions 15,259,609 13,116,479
Private Sector 392,836,289 474,190,020
925,227,989 1,011,485,773
17.2 This includes eligible deposits of Rs. 661,697,591 thousand (2023: Rs. 620,878,246 thousand) which are covered under
deposit protection mechanism as required by the Deposit Protection Corporation circular no. 4 of 2018.

2024 2023
Rupees in ‘000
18. LEASE LIABILITIES
Opening Balance 9,086,176 7,810,670
Addition during the year 2,654,829 2,349,241
Deletion during the year (100,550) –
Lease payments including interest (2,331,748) (2,042,859)
Interest expense 1,210,978 969,124
Closing balance 10,519,685 9,086,176
18.1 Liabilities Outstanding
Short-term lease liabilities - within one year 1,058,867 887,259
Long-term lease liabilities
- 1 to 5 years 5,191,907 4,279,303
- 5 to 10 years 3,933,563 3,919,614
- More than 10 years 335,348 –
9,460,818 8,198,917
Total lease liabilities 10,519,685 9,086,176
Aggregate 12.38% (31 December 2023: 11.95%) is used as discounting factor for the calculation of lease liability.

19. DEFERRED TAX LIABILITIES / (ASSETS)

2024
Balance as at Impact of Recognised in Recognised in Balance as at
January 01, Adoption of profit and loss OCI December 31,
2024 IFRS 9 account 2024
Rupees in ‘000
Deductable temporary differences on
- Credit loss allowance for
diminution in value of investments (150,572) 107,324 (182,641) – (225,889)
- Credit loss allowance against advances (5,523,386) 566,232 (1,059,288) – (6,016,442)
- Credit loss allowance - Others – (230,594) (188,725) 3,937 (415,382)
- Accelerated tax depreciation (317,308) – (79,042) – (396,350)
- Deferred liability on defined benefit plan 14,780 – – (46,067) (31,287)
- Deferred liability on compensated absences – – – – –
- (Deficit) / surplus on revaluation of investments (1,479,744) (177,649) – 10,097,189 8,439,796
- Others (5,814) – 201 – (5,613)
(7,462,044) 265,313 (1,509,495) 10,055,059 1,348,833
Taxable temporary differences on
- Surplus on revaluation of non-banking assets
- non-banking assets 769,944 – – (769,944) –
- property and equipment 1,426,787 – (154,722) 101,927 1,373,992
- Exchange translation reserve – – – – –
2,196,731 – (154,722) (668,017) 1,373,992
(5,265,313) 265,313 (1,664,217) 9,387,042 2,722,825

212
 2023
Balance as at Recognised in Recognised in Balance as at
January 01, profit and loss OCI December 31,
2023 account 2023
Rupees in ‘000
Deductible temporary differences on
- Provision for diminution in value of investments (248,338) 97,766 – (150,572)
- Provision against advances and off - balance sheet (2,990,927) (2,532,459) – (5,523,386)
- Accelerated tax depreciation (336,703) 19,395 – (317,308)
- Deferred liability on defined benefit plan (5,829) – 20,609 14,780
- Deferred liability on compensated absences – – – –
- Deficit on revaluation of investments (3,613,222) – 2,133,478 (1,479,744)
- Others (4,435) (1,379) – (5,814)
(7,199,454) (2,416,677) 2,154,087 (7,462,044)
Taxable temporary differences on
- Surplus on revaluation of non-banking assets
- non-banking assets 675,664 – 94,280 769,944
- property and equipment 1,389,016 (156,045) 193,816 1,426,787
- Exchange translation reserve 3,719 – (3,719) –
2,068,399 (156,045) 284,377 2,196,731
(5,131,055) (2,572,722) 2,438,464 (5,265,313)

Note 2024 2023

20. OTHER LIABILITIES Rupees in ‘000
Mark-up / return / interest payable in local currency 15,857,346 19,657,456
Mark-up / return / interest payable in foreign currencies 973,600 684,315
Unearned commission and income 1,016,338 721,371
Accrued expenses 2,782,577 4,461,216
Current taxation (provision less payments) 6,307,392 10,045,748
Acceptances 42,480,848 25,076,677
Unclaimed dividend 225,552 85,648
Dividend payable 15,504 54,108
Branch adjustment account 8,944 3,719
Mark to market loss on forward foreign exchange contracts 3,275,493 4,203,701
Provision for compensated absences 39.2 356,893 325,877
Deferred liability on defined benefit plan 38.4 121,020 –
Credit loss allowance against off-balance sheet obligations 20.1 353,883 32,583
Workers' welfare fund 20.2 4,959,413 3,764,458
Charity fund balance 458 402
Excise duty payable 2,920 2,263
Locker deposits 965,722 989,676
Advance against diminishing musharakah 7,693 58,716
Advance rental for ijarah 19,695 19,440
Security deposits against leases / ijarah 197,598 244,813
Sundry creditors 4,861,212 3,674,016
Deferred grant income 147,275 –
Withholding tax / duties 1,496,718 315,255
Others 20.3 1,083,848 16,856,607
87,517,942 91,278,065
20.1 Credit loss allowance against off-balance sheet obligations
Opening balance 32,583 32,583
Impact of adoption of IFRS 9 519,290 –
Charge for the year – –
Reversal for the year (197,990) –
Net reversal for the year (197,990) –
Closing balance 353,883 32,583

20.1.1 The above represents provision against certain letters of credit and guarantees.

213
 2024
Outstanding Credit loss
amount allowance
held
Rupees in ‘000
20.1.2 Particulars of credit loss allowance against off
balance sheet obligations
Stage 1 324,128,851 40,098
Stage 2 57,805,966 127,985
Stage 3 381,981 185,800
382,316,798 353,883

20.2 Under the Workers' Welfare Ordinance 1971, the holding company is liable to pay workers' welfare fund (WWF) @ 2% of
accounting profit before tax or taxable income, whichever is higher. The holding company has made full provision for
WWF based on profit for the respective years.

The Supreme Court of Pakistan vide its order dated November 10, 2016 has held that the amendments made in the law
introduced by the Federal Government for the levy of WWF were not lawful. The Federal Board of Revenue has filed review
petitions against this order which are currently pending.

Legal advice obtained on the matter indicates that consequent to filing of these review petitions the judgement may
not currently be treated as conclusive. Accordingly the holding company maintains its provision in respect of WWF.

20.3 This includes Rs.Nil (2023: Rs. 15,169,499) received by the Bank from a correspondent bank against standby letter of credit
claimed by the customer. The honorable High Court of Sindh has passed interim order restraining the Bank to transfer
amount pending arbitration.

21. SHARE CAPITAL

21.1 Authorised capital

2024 2023 2024 2023

(Number of shares) Rupees in ‘000

1,200,000,000 1,200,000,000 Ordinary shares of Rs. 10/- each 12,000,000 12,000,000

21.2 Issued, subscribed and paid-up capital

Ordinary shares of Rs. 10/- each
30,000,000 30,000,000 – Fully paid in cash 300,000 300,000
92,500,000 92,500,000 – Issued upon amalgamation 925,000 925,000
925,331,480 925,331,480 – Issued as bonus shares 9,253,315 9,253,315
1,047,831,480 1,047,831,480 10,478,315 10,478,315

21.3 As of the date of statement of financial position, the holding company held 534,394 thousand (2023: 534,394 thousand)
ordinary shares of Rs. 10/- each (51% holding) and Habib Insurance Company Limited (the associated company) held
4,000 thousand (2023: 6,706 thousand) ordinary shares of Rs. 10/- each.

214
 2024 2023
First Habib Modaraba
21.4 Non-Controlling Interest (NCI)
NCI Percentage 84.57% 84.57%

Note 2024 2023

Rupees in ‘000
Assets 30,153,521 22,900,568
Liabilities (24,426,859) (17,942,083)
Net assets 5,726,662 4,958,485

Net assets attributable to NCI 4,843,038 4,193,391

Profit for the year 972,086 803,347

Other Comprehensive Income 28,835 11,895
Total comprehensive income 1,000,921 815,242

Total comprehensive income allocated to NCI 846,479 689,451

Dividend paid to NCI (196,832) (187,459)

22. SURPLUS / (DEFICIT) ON REVALUATION OF ASSETS

Surplus / (deficit) on revaluation of
- Securities measured at FVOCI-Debt 9.1 12,126,778 –
- Securities measured at FVOCI-Equity 3,846,229 –
- Securities measured at Available for Sale securities – (3,016,348)
- Property and equipment 22.1 6,151,836 6,471,163
- Non-banking assets acquired in satisfaction of claims 22.2 2,095,111 2,095,111
24,219,954 5,549,926
Less: Deferred tax on surplus / (deficit) on revaluation of
- Securities measured at FVOCI-Debt 6,426,965 –
- Securities measured at FVOCI-Equity 2,012,831 –
- Securities measured at Available for Sale securities – (1,489,809)
- Property and equipment 22.1 1,373,992 1,426,787
- Non-banking assets acquired in satisfaction of claims 22.2 – 769,953
(9,813,788) (706,931)
14,406,166 4,842,995

Less: Surplus pertaining to non-controlling interest (34,870) (13,181)

Deficit pertaining to equity holder's share 14,371,296 4,829,814

215
 Note 2024 2023
Rupees in ‘000
22.1 Surplus on revaluation of property and equipment
Surplus on revaluation as at 1 January 6,471,163 6,789,623
Revaluation of property and equipment during the year – –
Transferred from non banking asset – –
Transferred to unappropriated profit in respect of incremental
depreciation during the year - net of deferred tax (164,605) (162,415)
Related deferred tax liability on incremental depreciation (154,722) (156,045)
(319,327) (318,460)
Surplus on revaluation as at 31 December 6,151,836 6,471,163
Less: Related deferred tax liability on:
Revaluation as at 1 January 1,426,787 1,389,016
Revaluation of property and equipment during the year – –
Transferred to property and equipment – –
Impact of change in tax rate 101,927 193,816
Incremental depreciation during the year (154,722) (156,045)
(52,795) 37,771
Related deferred tax liability 1,373,992 1,426,787
4,777,844 5,044,376

22.2 Surplus on revaluation of non-banking assets

acquired in satisfaction of claims
Surplus on revaluation as at 1 January 2,095,111 2,095,111
Transferred to property and equipment – –
Transferred to unappropriated profit in respect of incremental
depreciation during the year - net of deferred tax – –
Related deferred tax liability on incremental depreciation – –
– –
Surplus on revaluation as at 31 December 2,095,111 2,095,111

Less: Related deferred tax liability on:

Revaluation as at 1 January 769,953 675,664
Transferred to property and equipment – –
Impact of change in tax rate (769,953) 94,289
Incremental depreciation during the year – –
(769,953) 94,289
Related deferred tax liability – 769,953
2,095,111 1,325,158

216
 Note 2024 2023
Rupees in ‘000
23. CONTINGENCIES AND COMMITMENTS

Guarantees 23.1 152,625,779 137,319,392

Commitments 23.2 779,919,854 500,787,681
Other contingent liabilities 23.3 2,986,394 3,941,041
935,532,027 642,048,114
23.1 Guarantees
Financial Guarantees 33,303,405 29,705,918
Performance Guarantees 55,070,186 55,811,913
Other guarantees 64,252,188 51,801,561
152,625,779 137,319,392

23.2 Commitments
Documentary credits and short-term trade-related transactions:
Letters of credit 229,691,020 132,975,536
Commitments in respect of:
Forward foreign exchange contracts 23.2.1 547,663,058 365,390,061
Forward lendings 23.2.2 1,943,000 2,119,000
Commitments in respect of;
Acquisition of property and equipment 622,776 303,084
550,228,834 367,812,145
779,919,854 500,787,681

23.2.1 Commitments in respect of forward

foreign exchange contracts

Purchase 260,615,930 190,089,104

Sale 287,047,128 175,300,957
547,663,058 365,390,061
23.2.2 Commitments in respect of forward lendings

The Group has made commitments to extend credit in the normal course of its business, but none of these
commitments are irrevocable and do not attract any penalty if the facility is unilaterally withdrawn, except for:

Note 2024 2023

Rupees in ‘000
Commitments in respect of syndicate financing 388,000 1,093,000
Commitments in respect of other financing 1,555,000 1,026,000
1,943,000 2,119,000

23.3 Other contingent liabilities

Claims against holding company not acknowledged as debt 23.3.1 2,880,338 3,834,985
Foreign Exchange repatriation case 23.3.2 106,056 106,056
2,986,394 3,941,041

217
 23.3.1 Commitments in respect of forward lendings
These mainly represent counter claims by borrowers for damages and other claims against the Group. Management
is confident that the matters will be decided in the holding company’s favour. Accordingly, no provision has been
made in these consolidated financial statements.
23.3.2 Foreign exchange repatriation case
While adjudicating foreign exchange repatriation cases of exporters, the foreign exchange Adjudicating Court
of the State Bank of Pakistan has adjudicated a penalty of Rs. 106,056 thousand, arbitrarily on the holding company.
The holding company has filed appeals before the Appellate Board and Constitutional Petitions in the Honorable
High Court of Sindh against the said judgement. The Honorable High Court has granted relief to the holding
company by way of interim orders. Based on merits, management is confident that these appeals shall be decided
in favor of the holding company and therefore no provision has been made against the impugned penalty.
23.4 Income tax related contingencies are disclosed in note 34.2 to these consolidated financial statements.
24. DERIVATIVE FINANCIAL INSTRUMENTS
The holding company deals in derivative financial instruments namely forward foreign exchange contracts and foreign currency
swaps with the principal view of hedging the risks arising from its trade business.
As per the holding company’s policy, these contracts are reported on their fair value at the statement of financial position date.
The gains and losses from revaluation of these contracts are included under “Foreign exchange income”. Mark to market gains
and losses on these contracts are recorded on the statement of financial position under “other assets / other liabilities”.
These products are offered to the holding company’s customers to protect from unfavorable movements in foreign currencies.
The holding company hedges such exposures in the inter-bank foreign exchange market.
These positions are reviewed on a regular basis by the holding company’s Asset and Liability Committee (ALCO).

24.1 Product Analysis

Forward foreign exchange contracts
2024 2023
Counter Parties Notional Mark to Notional Mark to
Principal Market Gain / Principal Market Gain /
(Loss) (Loss)
Rupees in ‘000
Banks
Hedging 435,802,474 2,193,620 290,708,779 (77,691)
Other Entities
Hedging 111,860,584 (1,494,150) 74,681,282 (1,237,250)
Total
Hedging 547,663,058 699,470 365,390,061 (1,314,941)

24.2 Maturity Analysis 2024

Number of Notional Mark to Market
Contracts Principal Gain Loss Net
Rupees in ‘000
Upto 1 month 773 293,149,627 2,245,700 (1,725,098) 520,602
1 to 3 months 403 165,046,042 1,282,015 (1,235,839) 46,176
3 to 6 months 182 88,144,692 444,192 (308,435) 135,757
6 months to 1 year 7 1,322,697 3,057 (6,122) (3,065)
1,365 547,663,058 3,974,964 (3,275,494) 699,470

218
 2023
Number of Notional Mark to Market
Contracts Principal Gain Loss Net
Rupees in ‘000
Upto 1 month 314 120,698,674 1,310,889 (1,374,720) (63,831)
1 to 3 months 134 62,023,064 598,255 (362,296) 235,959
3 to 6 months 10 2,310,013 1,161 (88,940) (87,779)
6 months to 1 year 630 180,358,310 978,454 (2,377,744) (1,399,290)
1,088 365,390,061 2,888,759 (4,203,700) (1,314,941)

Note 2024 2023

Rupees in ‘000
25. MARK-UP / RETURN / INTEREST EARNED
Loans and advances 74,481,619 69,757,379
Investments 25.1 162,607,254 133,596,741
Lending with financial institutions 3,427,965 5,390,073
Balance with other banks 687,298 592,865
241,204,136 209,337,058

2024
Rupees in ‘000
25.1 Interest income recognised on:
Financial assets measured at amortised cost 14,467,777
Financial assets measured at fair value through P&L 6,785,985
Financial assets measured at fair value through OCI 141,353,492
162,607,254

2024 2023
Rupees in ‘000
26. MARK-UP / RETURN / INTEREST EXPENSED

Deposits 111,594,366 93,220,898

Borrowings 48,532,216 36,155,623
Cost of foreign currency swaps against foreign
currency deposits 7,420,864 5,793,833
Lease liability against right-of-use assets 1,210,978 969,124
168,758,424 136,139,478

27. FEE & COMMISSION INCOME

Branch banking customer fees 1,308,820 1,225,583

Credit related fees 40,840 37,216
Card related fees (debit and credit cards) 1,018,402 1,062,450
Commission on trade 6,588,189 5,630,911
Commission on guarantees 1,206,113 960,388
Commission on remittances including home remittances 87,524 49,872
Commission on bancassurance 171,804 177,489
Commission on cash management 191,647 155,293
Investment Banking Fee 100,627 61,505
Others 127,273 102,507
10,841,239 9,463,214

219
 Note 2024 2023
Rupees in ‘000
28. GAIN / (LOSS) ON SECURITIES

Realised 28.1 1,274,027 (5,269)

Unrealised - Measured at FVTPL 1,207,053 –
2,481,080 (5,269)

28.1 Realised gain / (loss) on:

Federal government securities - net 1,268,398 (820,402)
Shares - net – 815,133
Mutual funds - net (3,694) –
Real estate investment trust - net 9,323 –
1,274,027 (5,269)

28.2 Net gain / (loss) on financial assets / liabilities

measured at FVTPL:
Designated upon initial recognition – –
Mandatorily measured at FVTPL 2,390,253 –
2,390,253 –
Net gain / (loss) on financial assets / liabilities measured
at amortised cost – –
Net gain / (loss) on financial assets measured at FVOCI 90,827 –
Net gain / (loss) on investments in equity instruments
designated at FVOCI – –
90,827 –
2,481,080 –

29. NET GAIN / (LOSS) ON FINANCIAL ASSETS / LIABILITIES

MEASURED AT AMORTISED COST
Gain on derecognition of financial assets measured at amortised cost – –
loss on derecognition of financial assets measured at amortised cost (3,602) –
(3,602) –

30. OTHER INCOME

Rent on properties 106,198 25,521
Gain on sale of property and equipment - net 42,339 36,346
Gain on sale of ijarah assets - net 71,725 38,652
Gain on sale of right-of-use assets - net 20,980 –
Staff notice period and other recoveries 1,023 2,101
242,265 102,620

220
 Note 2024 2023
Rupees in ‘000
31. OPERATING EXPENSES
Total compensation expense 31.1 13,627,096 11,493,591

Property expense
Rent & taxes 72,061 184,032
Insurance 12,644 8,197
Utilities cost 1,591,176 1,361,781
Security (including guards) 1,136,990 836,191
Repair & maintenance (including janitorial charges) 1,094,648 926,311
Depreciation on owned property and equipment 1,040,687 934,908
Depreciation on right-of-use assets 1,549,356 1,467,649
6,497,562 5,719,069
Information technology expenses
Software maintenance 853,581 615,264
Hardware maintenance 456,524 444,648
Depreciation 545,513 342,561
Amortisation 260,625 132,832
Network charges 401,312 786,420
2,517,555 2,321,725
Other operating expenses
Directors' fees and allowances 21,300 24,270
Fees and allowances to Shariah Board 27,246 24,838
Legal & professional charges 369,375 328,618
Outsourced services costs 37.1 374,586 367,003
Travelling & conveyance 870,583 705,823
NIFT clearing charges 123,534 96,897
Depreciation 906,701 719,597
Training & development 63,654 43,382
Postage & courier charges 204,540 175,688
Communication 767,316 169,646
Subscription 829,727 817,583
Repair & maintenance 416,857 296,044
Brokerage & commission 177,739 187,053
Stationery & printing 577,512 548,803
Marketing, advertisement & publicity 808,020 603,589
Management fee 1,501,924 1,894,017
Insurance 1,482,322 1,134,259
Donations 31.3 519,952 285,273
Auditors' Remuneration 31.4 35,933 30,728
Security 422,012 323,707
Others 919,613 835,454
31.2 11,420,446 9,612,272

34,062,659 29,146,657

221
 2024 2023
Rupees in ‘000
31.1 Total compensation expense
Managerial Remuneration
i) Fixed 11,003,274 9,081,983
ii) Variable - Cash Bonus / Awards etc. 1,021,782 906,397
Charge for defined benefit plan 316,995 284,511
Contribution to defined contribution plan 381,811 330,891
Charge for compensated absences 149,026 164,748
Rent & house maintenance 44,400 41,504
Conveyance 677,921 658,876
Employee Old Age Benefit Contribution 31,887 24,681
13,627,096 11,493,591

31.2 Total cost for the year included in other operating expenses (other than in outsourced services cost) relating
to outsourced activities is Rs. 192,765 thousand (2023: 117,452 thousand) pertaining to payments made to
companies incorporated in Pakistan.

31.3 Donations paid in excess of Rs. 500,000 to a single party during the year are as follows:

DONEE
2024 2023
Rupees in ‘000
Memon Health and Education Foundation (Memon Medical Institute) 150,500 88,500
Sindh Institute of Urology & Transplantation (SIUT) 58,693 3,000
The Indus Hospital 57,430 33,050
Safaid Posh Dastarkhwan 51,200 1,200
Khoja (Pirhai) Shia Isna Asheri Jamat (KPSIAJ) 36,200 2,000
Habib University Foundation 30,000 25,000
ChildLife Foundation 16,000 1,000
Dawat-e-Islami Trust 14,500 7,500
Institute of Business Administration 10,000 1,077
The Citizens Foundation 8,000 1,500
Saylani Welfare International 5,236 7,500
Family Educational Services Foundation 4,200 5,330
The Layton Rehmatulla Benevolent Trust 4,000 4,100
The Hunar Foundation 3,250 2,900
Lady Dufferin Hospital 3,000 500
Al-Sayyeda Benevolent Trust 2,500 960
Bait-ul-Sukoon 2,500 1,000
Karwan-e-Hayat (Institute For Mental Health) 2,500 2,500
The Health Foundation 2,000 –
The Patients Behbud Society for AKUH 2,000 1,500
Idara-i-Talim-o-Aagahi Public Trust 1,560 1,625
Karachi Down Syndrome Program 1,500 2,000
Zubaida Machiyara Trust 1,500 500
Orange Tree Foundation 1,475 –

222
 2024 2023
Rupees in ‘000
Ida Rieu Welfare Association 1,300 –
Women Empowerment Group (Pink Ribbon) 1,200 600
Abbas-e-Alamdar Hostel 1,050 1,050
Abdul Sattar Edhi Foundation 1,000 1,000
Alleviate Addiction Suffering Trust (AAS Trust) 1,000 1,000
Al-Umeed Rehabilitation Association 1,000 500
Anjuman Behbood-e-Samat-e-Atfal 1,000 1,000
Mohamedali Habib Welfare Trust 1,000 1,000
Panah Trust 1,000 500
Patients' Aid Foundation 1,000 35,500
NJ Welfare Trust 1,000 –
Pakistan Blind Cricket Council 1,000 –
Shaukat Khanum Memorial Trust 1,000 750
The Kidney Centre Post Graduate Training Institute 1,000 1,000
Zehra Homes 1,000 1,000
Al Madad Welfare Society 965 –
Habib Medical Trust 960 960
Jafaria Disaster Cell Welfare Organization 825 750
Pak Medical and Welfare Trust (Paknight Clinic) 750 750
Make-A-Wish Foundation Pakistan 750 600
World Wide Fund For Nature Pakistan 700 –
Developments in Literacy 660 –
Pakistan Memon Educational & Welfare Society 600 600
Depilex Smileagain Foundation 500 500
Habib Public School 500 500
Health Oriented Preventive Education 500 500
Healthcare and Social welfare Association 500 500
Memon Educational Board 500 500
Pakistan Memon Women Educational Society 500 500
Poor Patients Aid Society Civil Hospital Karachi 500 500
Ayesha Chundrigar Foundation 500 1,050
Transformation International Society 500 –
Vocational Welfare Society for Mentally Retarded Markaz-e-Umeed 500 500
Afzaal Memorial Thalassemia Foundation – 1,000
AL-Khidmat Foundation Pakistan – 1,000
AL-Mustafa Welfare Society Trust – 10,000
Embassy of Turkiye Administrative – 3,000
For the needy and hungry foundation (Trust) – 1,000
GOREAD.PK – 580
Green Island Trust – 2,850
Habib Poor Fund – 960
Habib Girls School Trust – 3,000
Hunar Ghar Welfare Organization – 700
Nisar Fatima Amin Foundation – 10,000

223
 2024 2023
Rupees in ‘000
Pakistan Hindu Council – 500
RahmatBai Habib Food & Clothing Trust – 960
RahmatBai Habib Widows & Orphan Trust – 960
Rehnuma Public School (Path Education Society) – 1,100
Special Olympics Pakistan – 750
The Aga Khan Hospital and Medical College Foundation – 1,000
The Citizens Archive of Pakistan – 1,500
APWA Raana Liaquat Craftsman – 1,000
Karachi Relief Trust – 10,000
Marie Adelaide Leprosy Centre – 600
Network of Organizations Working with Persons with
Disabilities, Pakistan (NOWPDP) – 3,000
Thar Education Alliance (TEA) – 1,387

None of the directors, executives and their spouses had interest in the donations disbursed during the year 2024, except for
donations paid to:

Name of Donee Directors Interest in Donee as

Habib University Foundation Mr. Mohomed Bashir Member of the Board of Directors
Mr. Mohamedali R. Habib Member of the Board of Directors
Mr. Muhammad H. Habib Member of the Board of Directors

Note 2024 2023

Rupees in ‘000
31.4 Auditors’ remuneration

Audit fee 9,447 6,710

Review of half yearly financial statements 2,850 2,407
Fee for other statutory reporting / other services 11,458 11,755
Special certifications 3,605 4,853
Sales tax and out-of-pocket expenses on above services 8,573 5,003
35,933 30,728

32. OTHER CHARGES

Penalties imposed by the SBP 187,804 123,489

33. CREDIT LOSS ALLOWANCE & WRITE OFFS - NET

Credit loss allowance against Cash and balances with other banks (3,473) –
Credit loss allowance against lending to financial institutions (85) –
Credit loss allowance for diminution in value of investments 9.3 337,945 60,431
Credit loss allowance against loan & advances 10.6 4,327,243 5,120,187
Credit loss allowance against other assets 14.3.1 (50,416) 40
Credit loss allowance against off balance sheet obligations (197,990) –
Recovery of written-off / charged off bad debts (70,000) (78,807)
4,343,224 5,101,851

224
 Note 2024 2023
Rupees in ‘000
34. TAXATION
Current
- current year 30,501,821 28,600,963
- prior year – –
30,501,821 28,600,963
Deferred
- current year 34.2 (499,631) 1,860,066
- prior year (Due to change in tax rate) 19 (1,663,687) (2,572,722)
(2,163,318) (712,656)
28,338,503 27,888,307

34.1 Income tax assessments of the Group have been finalised up to the tax year 2024 (corresponding to the accounting year
ended 31 December 2023). Certain appeals are pending with the Commissioner of Inland Revenue (Appeal) and Appellate
Tribunal Inland Revenue (ATIR). However, adequate provisions are being held by the Group.
34.2 This reflects provision made, on prudent basis, for additional tax imposed by the Federal Board of Revenue (FBR) through
its notification dated 21 November 2023 on the foreign exchange income of the banking sector at the rate of 40% for
the financial year ended 31 Dec 2021 and 31 Dec 2022. The Group has challenged the imposition of additional tax before
the Sindh High Court which has granted stay against such demand. The matter is currently pending for final adjudication.

2024 2023
Rupees in ‘000
34.3 Relationship between tax expense and accounting profit
Profit before tax 54,103,754 53,124,200
Tax at the applicable tax rate of 54% (2023:49%) 28,863,074 25,820,559
Deferred tax impact of IFRS Adoption (133,234) –
Prior year tax charge (642) 1,860,066
Deferred tax - prior year (due to change in tax rate) (499,631) (489,625)
Income taxed at lower rate (90,419) (85,485)
Permanent differences 207,968 782,792
Others (8,613) –
Tax charge for the year 28,338,503 27,888,307

35. BASIC AND DILUTED EARNINGS PER SHARE

Profit attributable to equity shareholders of the holding company 24,943,158 24,556,502

Number in ‘000
Weighted average number of ordinary shares 1,047,831 1,047,831
Rupees
Basic and diluted earnings per share 23.80 23.44

Note 2024 2023

Rupees in ‘000
36. CASH AND CASH EQUIVALENTS

Cash and balances with treasury banks 6 86,903,001 91,467,062

Balances with other banks 7 6,462,022 21,269,948
Overdrawn nostro accounts 16 (6,512,870) (888,638)
86,852,153 111,848,372

225
 36.1 Reconciliation of movement of liabilities to cash flow arising from financing activities

2024
Equity Non-
Other Reserves Unappropriated Controllng
liabilities profit interest

Rupees in ‘000

Balance as at 1 January 91,278,065 31,432,768 47,254,919 4,193,391

Impact of adoption of IFRS 9 – – 461,044 –
Changes from financing cash flow
Dividend paid – – (13,520,510) (196,832)
Other Changes;
Liability related
- Cash based (15,210,846) – – –
- Non-cash based 11,349,423 – – –
- Dividend payable 101,300 – (101,300) –
Transfer of profit to statutory reserve – 5,424,702 (5,424,702) –
Total liability related other charges (3,760,123) 5,424,702 (5,526,002) –
Equity related – 51 25,673,029 846,479
Balance as at 31 December 87,517,942 36,857,521 54,342,480 4,843,038

2023
Equity Non-
Other Reserves Unappropriated Controllng
liabilities profit interest

Rupees in ‘000

Balance as at 1 January 79,947,447 25,949,624 36,584,942 3,685,208

Changes from financing cash flows
Dividend paid – – (9,676,540) (187,459)
Other Changes;
Liability related
- Cash based 14,117,732 – – –
- Non-cash based 7,330,993 – – –
- Dividend payable (1,031,931) – 1,031,931 –
Transfer of profit to statutory reserve – 5,476,764 (5,476,764) –
Total liability related other charges 20,416,794 5,476,764 (4,444,833) –
Equity related – 6,380 24,791,350 695,642
Balance as at 31 December 100,364,241 31,432,768 47,254,919 4,193,391

226
 2024 2023
Number
37. STAFF STRENGTH
Permanent 6,013 5,834
On bank contract 500 566
Group's own staff strength at end of the year 6,513 6,400

37.1 In addition to the above, 899 (2023: 905) employees of outsourcing services companies were assigned to the holding
company as at 31 December 2023 to perform services other than guarding and janitorial services.

38. DEFINED BENEFIT PLAN

38.1 General description
The benefits under the funded gratuity schemes are payable on retirement at the age of 60 or earlier cessation of service.
The benefit is equal to one month's last basic salary drawn for each year of eligible service subject to a maximum of 24
last drawn basic salary. The minimum qualifying period for eligibility under the plan is five years of continuous service.

This benefit is being operated by the Bank and two subsidiaries.

2024 2023
Number
38.2 Number of employees under the scheme
Gratuity funds 5,899 5,797

38.3 Principal actuarial assumptions

The latest actuarial valuation was carried out on 31 December 2022 using "Projected Unit Credit Actuarial Cost Method".
The main assumptions used for the actuarial valuation were as follows:
2024 2023
Discount rate - percent per annum 12.00 16.00
Expected rate of return on plan assets - percent per annum 16.00 14.25
Expected long term rate of salary increase - percent per annum 11.50 15.50
Mortality rates (for death in service) Adjusted SLIC Adjusted SLIC
2001- 2005 2001- 2005

Note 2024 2023

Rupees in ‘000
38.4 Reconciliation of (payable) / receivable to
defined benefit plan
Fair value of plan assets 38.6 2,553,027 2,381,816
Present value of defined benefit obligation 38.5 (2,674,048) (2,326,802)
(Payable) / Receivable (121,021) 55,014
38.5 Movement in defined benefit plan
Obligations at the beginning of the year 2,326,802 2,062,510
Current service cost 325,721 279,585
Past service cost – –
Interest cost 353,585 277,888
Benefits due but not paid (payables) – (790)
Benefits paid by the Group (239,463) (231,790)
Re-measurement gain (92,597) (60,601)
Obligations at the end of the year 2,674,048 2,326,802

227
 Note 2024 2023
38.6 Movement in fair value of plan assets Rupees in ‘000

Fair value at the beginning of the year 2,381,816 2,027,436

Interest income on plan assets 362,433 272,962
Contribution by the Group - net 70,406 283,342
Benefits paid (239,463) (231,790)
Benefits due but not paid – (790)
Re-measurements: Net return on plan assets
over interest income loss 38.8.2 (22,165) 30,656
Fair value at the end of the year 2,553,027 2,381,816

38.7 Movement in payable under defined benefit schemes

Opening balance (55,014) 35,074
Charge for the year 316,872 284,511
Contribution by the Group - net (70,406) (283,342)
Re-measurement gain recognised in OCI
during the year 38.8.2 (70,432) (91,257)
Closing balance 121,020 (55,014)

38.8 Charge for defined benefit plans

38.8.1 Cost recognised in profit and loss
Past service cost – –
Current service cost 325,721 279,585
Net interest on defined benefit asset (8,848) 4,926
316,873 284,511
38.8.2 Re-measurements recognised in OCI during the year
Loss / (gain) on obligation
- Financial assumptions (17,257) 11,116
- Demographic assumptions 4,749 –
- Experience adjustment (80,089) (71,717)
(92,597) (60,601)
Return on plan assets over interest income 22,165 (30,656)
Total re-measurements recognised in OCI (70,432) (91,257)

38.9 Components of plan assets

Bank balance in profit and loss sharing account 38.9.1 202,499 336,319
Term deposit certificate 238,485 86,250
Federal Government securities
Defence Saving Certificates 1,369,700 1,229,800
Market Treasury Bills 406,312 456,301
Pakistan Investment Bonds 313,030 250,575
Special saving Certificates – –
Non government debt securities 23,002 22,571
2,553,028 2,381,816

38.9.1 The above amount represents balance which is deposited or placed with the branches of the holding company. Further,
the funds primarily invest in Government securities which do not carry any credit risk. These are subject to interest rate
risk based on market movements. These risks are regularly monitored by the Trustees of the employee funds.

228
38.10 Sensitivity analysis
Sensitivity analysis has been performed by varying one assumption keeping all other assumptions constant and calculating
the impact on the present value of the defined benefit obligations under the various employee benefit schemes. The
increase / (decrease) in the present value of defined benefit obligations as a result of change in each assumption is
summarized below:
2024
Rupees in ‘000
1 % increase in discount rate 2,475,531
1 % decrease in discount rate 2,879,359
1% increase in expected future increment in salary 2,882,419
1% decrease in expected future increment in salary 2,469,415
10% increase in expected withdrawal rate 2,608,244
10% decrease in expected withdrawal rate 2,609,137
1% increase in expected mortality rate 2,609,813
1% decrease in expected mortality rate 2,607,804

Although the analysis does not take account of the full distribution of expected cash flows, it does provide an approximation
of the sensitivity of the assumptions shown.
38.11 Expected contributions to be paid to the funds in the
next financial year 205,032
38.12 Expected charge for the next financial year 205,032
38.13 Maturity profile
The weighted average duration of the obligation is 9.6 years.
38.14 Funding Policy
The Group has the policy to make annual contributions to the fund based on actuarial report.
38.15 Significant risk associated with the staff retirement benefit schemes include:

The risk of the investment underperforming and being not sufficient to

Asset volatility
meet the liabilities.

The duration of the liabilities is 9.6 Years. Based on the weighted average
Changes in bond yields duration of this plan and guidance from Pakistan Society of Actuaries (“PSOA”),
the discount rate used for the calculations is 16.00% per annum.

The risk that the final salary at the time of cessation of service is greater than
what we assumed. Since the benefit is calculated on the final salary (which
Inflation risk will closely reflect inflation and other macroeconomic factors), the benefit
amount increases as salary increases.

The risk that the actual mortality experience is different than the assumed
Mortality rate mortality. This effect is more pronounced in schemes where the age and
service distribution is on the higher side.

The risk of actual withdrawals experience is different from assumed withdrawal

Withdrawal rate probability. The significance of the withdrawal risk varies with the age, service
and the entitled benefits of the beneficiary.

229
39. DEFINED CONTRIBUTION PLAN AND COMPENSATED ABSENCES
39.1 Provident fund
The Group (the Bank and two subsidiaries) operates contributory provident fund schemes for permanent employees. The
employer and employee each contribute 10% of the basic salary to the funded schemes every month.
Number of the members participating in the funds at the end of the year 31 December 2024 as per audited accounts
are 5,305 (2023: 5,614).
39.2 Compensated absences
The holding company maintains a non-funded scheme for compensated absences. These can be accumulated up to 60
days. Liability as of the year-end was Rs. 356,536 thousand (2023: Rs. 325,877 thousand) and was determined through an
actuarial valuation carried out under the 'Projected Unit Credit Method'. Valuation was carried out by a qualified actuary.
Charge for the year amounting to Rs. 149,266 thousand (2023: Rs. 164,748 thousand) has been recognised to the profit
and loss account.
40. COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
40.1 Total compensation expense
2024
Directors Members President & Key Other material
Chairman Non- Shari’ah Board Chief Executive management risk taker /
executives Officer personnel controller
Rupees in ‘000
Fees – 21,300 – – – –
Managerial remuneration
Fixed – – 26,540 85,433 583,721 972,638
Charge for defined benefit plan – – 321 2,400 18,783 41,434
Contribution to defined
contribution plan – – 385 2,880 20,809 34,149
Security charges and vehicle maintenance 7,155 – – – – –
Utilities 387 – – – – –
Others – – – – 27,628 –
7,542 21,300 27,246 90,713 650,941 1,048,221
Number of persons 1 4 3 1 48 134

2023
Directors Members President & Key Other material
Chairman Non- Shari’ah Board Chief Executive management risk taker /
executives Officer personnel controller
Rupees in ‘000
Fees – 17,700 – – – –
Managerial remuneration
fixed – – 23,176 127,972 458,021 780,357
Charge for defined benefit plan – – 301 6,750 11,678 22,136
Contribution to defined
contribution plan – – 361 5,068 16,104 26,982
Security charges and vehicle maintenance 6,205 – – – – –
Utilities 365 – – – 1,150 –
Others – – – 1,717 1,560 –
6,570 17,700 23,838 141,507 488,513 829,475
Number of persons 1 4 3 2 31 119

230
 40.1.1 The Chief Executive and certain executives are provided with free use of car and leave fare assistance in accordance
with their terms of employment. The Chief executive is also provided with accommodation.
40.1.2 In addition to above, bonus paid to the chief executive, members of Shari'ah Board, key management personnel
and other material risk taker / controller of the Bank amounted to Rs. 22,400 thousand (2023: Rs. 51,091 thousand),
Rs. 1,821 thousand (2023: Rs. 1,887 thousand), Rs. 138,478 thousand (2023: Rs. 103,095 thousand) and Rs. 174,054
thousand (2023: Rs. 169,278 thousand) respectively.
40.1.3 The total amount of deferred bonus as at 31 December 2024 for the President / CEO, key management personnel
and other material risk takers / material risk controllers is Rs. 128,894 thousand (31 December 2023: Rs. 134,960
thousand ). The deferred bonus is held in a trust fund.
40.1.4 Key management personnel includes remuneration of Chief Executive Officers of subsidiary companies.

40.2 Remuneration paid to Directors for participation in Board and Committee Meetings
2024
Meeting fees and allowances paid
For Board committees
Sr. Name of director For Board Audit Information Human Risk & Credit Total
No. meetings technology resource & compliance amount
remuneration paid
Rupees in ‘000
1 Mohamedali R. Habib – – – – – – –
2 Mohsin A. Nathani – – – – – – –
3 Ali Abbas Sikandar 2,500 – 1,500 – – – 4,000
4 Hamza Habib – – – – – – –
5 Mohomed Bashir 2,500 – – 400 – – 2,900
6 Muhammed H. Habib – – – – – – –
7 Rashid Ahmad Jaffer 2,500 2,000 – – 1,600 1,600 7,700
8 Tahira Raza 2,500 1,600 – 1,000 1,600 – 6,700
10,000 3,600 1,500 1,400 3,200 1,600 21,300

2023
Meeting fees and allowances paid
For Board committees
Sr. Name of director For Board Audit Information Human Risk & Credit Total
No. meetings technology resource & compliance amount
remuneration paid
Rupees in ‘000
1 Mohamedali R. Habib – – – – – – –
2 Mohsin A. Nathani – – – – – – –
3 Ali Abbas Sikandar 1,500 – 500 – – – 2,000
4 Firasat Ali 200 – – 300 150 – 650
5 Hamza Habib – – – – – – –
6 Mohomed Bashir 2,700 – – 800 – – 3,500
7 Muhammed H. Habib – – – – – – –
8 Rashid Ahmad Jaffer 2,700 1,700 – – 900 550 5,850
9 Tahira Raza 2,700 800 – 1,400 800 – 5,700
9,800 2,500 500 2,500 1,850 550 17,700

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 40.3 Remuneration paid to the Shariah Board Members

2024 2023
Items Chairman Resident Non-resident Chairman Resident Non-resident
member members member members
Rupees in ‘000
Managerial remuneration
Fixed 8,199 9,207 9,134 7,213 8,267 7,696

Charge for defined

benefit plan – – – – 301 –
Contribution to defined
contribution plan – – – – 361 –
Total amount paid 8,199 9,207 9,134 7,213 8,929 7,696

Total number of person 1 1 1 1 1 1

41. FAIR VALUE MEASUREMENTS

The fair value of quoted securities other than investment those classified as held to maturity, is based on quoted market price.
Quoted securities classified as held to maturity are carried at cost. The fair value of unquoted equity securities is determined
on the basis of the break-up value of these investments as per their latest available audited financial statements.

The fair value of unquoted debt securities, fixed term loans, other assets, other liabilities, fixed term deposits and borrowings
cannot be calculated with sufficient reliability due to the absence of a current and active market for these assets and liabilities
and reliable data regarding market rates for similar instruments.

The fair value of the remaining financial assets and liabilities are not significantly different from their carrying values since
they are either short-term in nature or, in the case of customer advances, deposits and certain long term borrowings are
frequently repriced.

41.1 Fair value of financial assets

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used
in making the measurements:

Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for
the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Fair value measurements using input for the assets or liabilities that are not based on observable market data (i.e.
unobservable inputs).

232
The table below analyses financial instruments measured at the end of the reporting period by the level in the fair value
hierarchy into which the fair value measurement is categorised:
2024
On balance sheet financial instruments
Fair value
Level 1 Level 2 Level 3 Total
Rupees in ‘000
Financial assets measured at fair value
Investments
Federal Government securities 74,378,500 622,691,410 – 697,069,910
Non Government debt securities – 11,055,018 – 11,055,018
Shares - Listed companies 9,131,014 – – 9,131,014
Mutual funds 3,131,971 – – 3,131,971
Real estate investment trust 3,068,679 – – 3,068,679

Financial assets - disclosed but not measured at fair value

Investments
Federal Government securities – 86,187,652 – 86,187,652
Shares - Unlisted companies – – 51,569 51,569
89,710,164 719,934,080 51,569 809,695,813

Off-balance sheet financial instruments

measured at fair value
Forward purchase of foreign exchange contracts – 257,959,904 – 257,959,904
Forward sale of foreign exchange contracts – 290,402,624 – 290,402,624

2023
On balance sheet financial instruments
Fair value
Level 1 Level 2 Level 3 Total
Rupees in ‘000
Financial assets measured at fair value
Investments
Federal Government securities – 802,747,878 – 802,747,878
Non Government debt securities – 11,756,346 – 11,756,346
Shares - Listed companies 4,699,654 – – 4,699,654
Mutual funds 8,255 230,712 – 238,967
Real estate investment trust 1,992,625 – – 1,992,625

Financial assets - disclosed but not measured at fair value

Investments
Federal Government securities – 91,756,989 – 91,756,989
Shares - Unlisted companies – – 52,658 52,658
6,700,534 906,491,925 52,658 913,245,117

Off-balance sheet financial instruments

measured at fair value
Forward purchase of foreign exchange contracts – 187,821,748 – 187,821,748
Forward sale of foreign exchange contracts – 176,253,371 – 176,253,371

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41.2 Fair value of non-financial assets
2024
Fair value
Level 1 Level 2 Level 3 Total
Rupees in ‘000
Non-financial assets measured at fair value
- Property and equipment – 10,015,686 – 10,015,686
- Non-banking assets acquired in satisfaction of claim – 4,299,840 – 4,299,840
– 14,315,526 – 14,315,526

2023
Fair value
Level 1 Level 2 Level 3 Total
Rupees in ‘000
Non-financial assets measured at fair value
- Property and equipment – 10,375,530 – 10,375,530
- Non-banking assets acquired in satisfaction of claim – 4,299,840 – 4,299,840
– 14,675,370 – 14,675,370

41.3 Valuation techniques used in determination of fair valuation of financial instruments within level 2

Federal government debt securities The fair value of government securities are valued using PKRV, PKFRV, PKISRV and PSX rates.

Debt securities other than federal The fair value is determined using the prices / rates available on Mutual Funds Association
government securities of Pakistan (MUFAP) / Reuters website and PSX.
The fair values are derived using forward exchange rates applicable to their respective
Forward contracts
remaining maturities.
The fair value is determined based on the net asset values published at the close of each
Mutual funds
business day.

Valuation techniques used in determination of fair values of non-financial assets within level 2

Property and equipment and non-banking assets are valued by professionally qualified
valuators. The valuation is based on their assessment of the market value of the assets. In
determining the valuation for land and building the valuer refers to numerous independent
market inquiries from local estate agents / realtors in the vicinity to establish the present
Property and equipment and non- market value. The fair valuation of land and building are considered to represent a level 2
banking assets acquired in satisfaction valuation based on significant non-observable inputs being the location and condition of
of claim the assets.
The fair value is subject to change owing to changes in input. However, management does
not expect there to be a material sensitivity to the fair value arising from the non-observable
inputs.

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42. SEGMENT INFORMATION

42.1 Segment details with respect to business activities

31 December 2024
Trade & Retail Commercial Islamic Total
sales banking banking banking
Rupees in ‘000

Profit and Loss

Net mark-up / return / profit 116,409,545 (45,453,789) (14,456,731) 15,946,687 72,445,712
Inter segment revenue - net (119,877,870) 78,195,110 41,682,760 – –
Non mark-up / return / interest income 10,433,693 1,094,752 8,588,098 1,314,004 21,430,547
Total Income 6,965,368 33,836,073 35,814,127 17,260,691 93,876,259
Segment direct expenses (593,800) – – – (593,800)
Inter segment expense allocation – (9,385,105) (17,800,435) (7,649,941) (34,835,481)
Total expenses (593,800) (9,385,105) (17,800,435) (7,649,941) (35,429,281)

Credit loss allowance 2,055 (505,023) (477,975) (3,362,281) (4,343,224)

Profit before tax 6,373,623 23,945,945 17,535,717 6,248,469 54,103,754
Balance Sheet
Cash and bank balances 6,522,567 25,145,136 46,725,795 14,971,525 93,365,023
Investments - net 660,476,083 – – 147,020,502 807,496,585
Net inter segment lending – 379,807,962 27,488,264 – 407,296,226
Lendings to financial institutions 5,570,998 – – – 5,570,998
Advances - performing – 15,855,835 398,759,133 92,867,464 507,482,432
Advances - non-performing – 336,133 21,984,981 3,139,699 25,460,813
Credit loss allowance against advances – (603,370) (24,209,577) (5,661,642) (30,474,589)
Others 21,655,600 12,192,814 64,717,515 18,117,153 116,683,082
Total Assets 694,225,248 432,734,510 535,466,111 270,454,701 1,932,880,570

Borrowings 232,483,335 – 88,846,547 28,894,549 350,224,431

Deposits and other accounts – 374,480,521 345,352,420 205,395,048 925,227,989
Net inter segment borrowing 407,296,226 – – – 407,296,226
Others 3,687,896 18,151,910 88,505,839 18,893,629 129,239,274
Total liabilities 643,467,457 392,632,431 522,704,806 253,183,226 1,811,987,920
Net Assets 50,757,791 40,102,079 12,761,305 17,271,475 120,892,650
Equity 120,892,650

Contingencies and Commitments 547,663,058 – 343,225,958 44,643,011 935,532,027

235
 31 December 2023
Trade & Retail Commercial Islamic Total
sales banking banking banking
Rupees in ‘000
Profit and Loss
Net mark-up / return / profit 104,201,971 (43,974,859) (628,116) 13,598,584 73,197,580
Inter segment revenue - net (116,634,183) 73,734,459 42,899,724 – –
Non mark-up / return / interest income 5,856,603 1,124,085 7,783,684 657,221 15,421,593
Total Income (6,575,609) 30,883,685 50,055,292 14,255,805 88,619,173
Segment direct expenses (438,865) – – – (438,865)
Inter segment expense allocation – (7,771,827) (17,430,979) (4,751,451) (29,954,257)
Total expenses (438,865) (7,771,827) (17,430,979) (4,751,451) (30,393,122)

Provisions (60,430) (120,898) (4,672,672) (247,851) (5,101,851)

Profit before tax (7,074,904) 22,990,960 27,951,641 9,256,503 53,124,200

Balance Sheet
Cash and bank balances 10,038,515 30,296,185 61,279,843 11,122,467 112,737,010
Investments - net 843,079,185 – – 77,555,576 920,634,761
Net inter segment lending – 453,626,174 285,526,668 – 739,152,842
Lendings to financial institutions 5,496,284 – – – 5,496,284
Advances - performing – 14,275,145 311,799,826 114,143,051 440,218,022
Advances - non-performing – 330,126 19,888,380 554,851 20,773,357
Provision against advances – (201,087) (26,602,035) (555,655) (27,358,777)
Others 28,135,172 4,340,896 55,333,735 13,352,318 101,162,121
Total Assets 886,749,156 502,667,439 707,226,417 216,172,608 2,312,815,620
Borrowings 151,006,547 – 148,960,737 35,303,574 335,270,858
Deposits and other accounts – 399,834,547 463,745,524 147,905,702 1,011,485,773
Net inter segment borrowing 739,152,842 – – – 739,152,842
Others 4,951,619 11,632,453 94,299,656 17,833,212 128,716,940
Total liabilities 895,111,008 411,467,000 707,005,917 201,042,488 2,214,626,413
Net Assets (8,361,852) 91,200,439 220,500 15,130,120 98,189,207
Equity 98,189,207
Contingencies and Commitments 365,390,061 9,000 245,319,999 31,329,054 642,048,114

236
43. TRUST ACTIVITIES
The holding company undertakes trustee and other fiduciary activities that result in the holding or placing of assets on behalf
of individuals and other organisations. These are not assets of the Group and, therefore, are not included as such in these
consolidated financial statements. Assets held under trust are shown in table below:

2024
Securities held (Face value)
Category No. of IPS Pakistan GoP ijarah Market Total
accounts investment sukuks treasury bills
bonds
Rupees in ‘000
Assets management companies 81 57,953,000 2,025,000 197,487,625 257,465,625
Corporates 151 53,146,000 102,000 124,066,185 177,314,185
Individual 701 2,013,641 384,050 14,909,345 17,307,036
Insurance companies 5 120,000 – – 120,000
NGO / Charitable organisation 20 2,081,100 5,000 1,899,150 3,985,250
Employee funds 92 4,713,900 399,600 14,628,240 19,741,740
Others 3 12,700 275,000 – 287,700
120,040,341 3,190,650 352,990,545 476,221,536

2023
Securities held (Face value)
Category No. of IPS Pakistan GoP ijarah Market Total
accounts investment sukuks treasury bills
bonds
Rupees in ‘000
Assets management companies 18 27,993,900 5,561,500 52,041,150 85,596,550
Corporates 54 6,496,000 479,900 48,474,450 55,450,350
Individual 169 1,706,600 218,700 8,694,306 10,619,606
Insurance companies 1 120,000 – 120,000 240,000
NGO / Charitable organisation 7 175,000 5,000 475,800 655,800
Employee funds 47 4,070,700 696,100 6,912,500 11,679,300
Others 1 – 275,000 – 275,000
40,562,200 7,236,200 116,718,206 164,516,606

237
44. TRANSACTIONS WITH RELATED PARTIES

The Group has related party transaction with its ultimate parent company, associates, companies with common directorship,
key management personnel, directors and employees' retirement benefit plans.

The Group enters into transactions with related parties in the ordinary course of business. Contributions / charges in respect
of employees' retirement benefits are made in accordance with actuarial valuation / terms of contribution plan. Salaries and
allowances of the key management personnel are in accordance with the terms of their employment. Other transactions are
at agreed terms.

Details of transactions with related parties are as follows:

2024
Ultimate Associates Key Directors Retirement Total
parent management benefit
company personnel plans
Rupees in ‘000
Balances with other banks
In current accounts 322,178 277,533 – – – 599,711

Advances
Opening balance – 5,709,339 290,151 – – 5,999,490
Addition during the year – 134,111,594 124,870 – – 134,236,464
Repaid during the year – (133,315,950) (83,980) – – (133,399,930)
Closing balance – 6,504,983 331,041 – – 6,836,024

Other Assets
Mark-up / return / interest receivable – 31,360 – – – 31,360
Prepayments / advance deposits / other receivable 468 67,006 – – – 67,474
468 98,366 – – – 98,834

Deposits and other accounts

Opening balance 242,044 25,121,296 319,529 822,094 1,579,294 28,084,257
Received during the year 19,784,319 2,786,807,658 1,534,947 3,140,332 6,936,984 2,818,204,240
Withdrawn during the year (19,795,007) (2,806,532,836) (1,629,774) (2,995,082) (6,176,053) (2,837,128,752)
Closing balance 231,356 5,396,118 224,702 967,344 2,340,225 9,159,745

Other Liabilities
Mark-up / return / interest payable – 102,296 10,616 8,566 220,238 341,716
Management fee payable for technical and
consultancy services * – – – – – –
Other payables – 900 – 995 117,071 118,966
– 103,196 10,616 9,561 337,309 460,682

Contingencies and commitments

Transaction related contingent liabilities – 13,955,479 – – – 13,955,479
Trade-related contingent liabilities – 6,073,667 – – – 6,073,667
– 20,029,146 – – – 20,029,146

* Management fee is as per the agreement with the ultimate parent company.

238
 2023
Ultimate Associates Key Directors Retirement Total
parent management benefit
company personnel plans
Rupees in ‘000
Balances with other banks
In current accounts 680,649 186,957 – – – 867,606

Advances
Opening balance – 4,923,312 247,128 – – 5,170,440
Addition during the year – 107,246,311 144,741 – – 107,391,052
Repaid during the year – (106,460,284) (101,718) – – (106,562,002)
Closing balance – 5,709,339 290,151 – – 5,999,490

Other Assets
Mark-up / return / interest accrued – 88,690 – – – 88,690
Prepayments / advance deposits / other receivable 468 59,669 – – 60,450 120,587
468 148,359 – – 60,450 209,277

Deposits and other accounts

Opening balance 186,031 21,811,626 395,587 703,394 1,267,570 24,364,208
Received during the year 25,230,932 2,458,473,253 3,199,802 1,710,093 5,434,990 2,494,049,070
Withdrawn during the year (25,174,919) (2,455,163,584) (3,275,860) (1,591,393) (5,123,266) (2,490,329,022)
Closing balance 242,044 25,121,296 319,529 822,094 1,579,294 28,084,257

Other Liabilities
Mark-up / return / interest payable – 254,878 8,517 8,523 104,940 376,858
Management fee payable for technical and
consultancy services * 1,850,085 – – – – 1,850,085
Insurance & Other Payables – 630 – 995 – 1,625
1,850,085 255,508 8,517 9,518 104,940 2,228,568

Contingencies and commitments

Transaction related contingent liabilities – 10,950,031 – – – 10,950,031
Trade-related contingent liabilities – 1,920,863 – – – 1,920,863
– 12,870,894 – – – 12,870,894

* Management fee is as per the agreement with the ultimate parent company.

239
 Transactions during the period
2024
Ultimate Associates Key Directors Retirement Total
parent management benefit
company personnel plans
Income Rupees in ‘000

Mark-up / return / interest earned – 90,295 15,602 – – 105,897

Fee and commission income 142 941,211 – 377 16 941,746
Rent income 5,615 10,340 – – – 15,955
Expense
Mark-up / return / interest expensed – 2,037,449 43,919 88,785 326,883 2,497,036
Commission / Brokerage / Bank charges paid 7,026 11,196 – – – 18,222
Salaries and allowances – – 720,747 – – 720,747
Directors' fees and allowances – – – 28,841 – 28,841
Charge to defined benefit plan – – – – 317,657 317,657
Contribution to defined contribution plan – – – – 379,787 379,787
Insurance premium expenses – 48,548 – – – 48,548
Management fee expense for technical
and consultancy services * 1,479,989 – – – – 1,479,989
Donation – 30,960 – – – 30,960

Transactions during the period

2023
Ultimate Associates Key Directors Retirement Total
parent management benefit
company personnel plans
Income Rupees in ‘000

Mark-up / return / interest earned – 320,322 74,779 – – 395,101

Fee and commission income 108 466,580 – 134 30 466,852
Rent income 5,615 10,340 – – – 15,955
Expenses
Mark-up / return / interest expensed – 2,197,981 53,576 67,421 339,659 2,658,637
Commission / Brokerage / Bank charges paid 3,327 18,854 – – – 22,181
Salaries and allowances – – 743,948 – – 743,948
Directors' fees and allowances – – – 24,270 – 24,270
Charge to defined benefit plan – – – – 286,753 286,753
Contribution to defined contribution plan – – – – 330,890 330,890
Insurance premium expenses – 27,230 – – – 27,230
Management fee expense for technical
and consultancy services * 1,864,538 – – – – 1,864,538
Donation – 26,920 – – – 26,920

* Management fee is as per the agreement with the ultimate parent company.

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45. CAPITAL ADEQUACY, LEVERAGE RATIO & LIQUIDITY REQUIREMENTS

2024 2023
Rupees in ‘000
Minimum Capital Requirement (MCR)
Paid-up capital (net of losses) 10,478,315 10,478,315
Capital Adequacy Ratio (CAR):
Eligible common equity tier 1 (CET 1) capital 100,906,644 89,001,463
Eligible additional tier 1 (ADT 1) capital 51,609 38,306
Total eligible tier 1 capital 100,958,253 89,039,769
Eligible tier 2 capital 18,293,582 8,940,628
Total eligible capital (Tier 1 + Tier 2) 119,251,835 97,980,397
Risk Weighted Assets (RWAs)
Credit risk 474,510,547 428,865,561
Market risk 9,158,527 2,408,671
Operational risk 147,822,438 115,752,388
Total 631,491,512 547,026,620

CET 1 capital adequacy ratio 15.98% 16.27%

Tier 1 capital adequacy ratio 15.99% 16.28%
Total capital adequacy ratio 18.88% 17.91%

Minimum capital requirements prescribed by SBP

CET 1 capital adequacy ratio 6.00% 6.00%
Tier 1 capital adequacy ratio 7.50% 7.50%
Total capital adequacy ratio 11.50% 11.50%

The Group uses simple, maturity method and basic indicator approach for credit risk, market risk and operational risk exposures
respectively in the capital adequacy calculation.

Leverage Ratio (LR):

Eligible Tier-1 capital 100,958,253 89,039,769
Total exposures 1,974,617,349 1,860,804,377
Leverage ratio 5.11% 4.79%

241
 45.1 The full disclosures on the capital adequacy, leverage ratio & liquidity requirements as per the SBP instructions
issued from time to time are placed on the website. The link to the full disclosures is available at
https://www.habibmetro.com/financials/#basel-statements.

46. RISK MANAGEMENT

Risk management aspects are embedded in the holding company’s strategy, organization structure and processes. The holding
company has adopted a cohesive risk management structure for credit, market, liquidity and operational risk with an integrated
approach to strengthen the process and system as controls are more effective and valuable when built into the process. Effective
risk management is considered essential in the preservation of the assets and long-term profitability of the holding company.
Clear guidelines and limits, which are under regular review, are backed by a system of internal controls and independent audit
inspections. Internal reporting / MIS are additional tools for measuring and controlling risks. Separation of duties is also embedded
in the holding company’s system and organization.

46.1 Credit Risk

Credit risk arises from the possibility that the counterparty in a transaction may default. It arises principally in relation to
the lending and trade finance business carried out by the holding company.

As per Basel II methodology the gross credit risk weighted exposure incorporating relevant credit conversion factor is Rs.
474,510,547 thousand (2023: Rs. 428,865,561 thousand) as depicted in note 42.

The Group’s strategy is to minimize credit risk through a strong pre-disbursement credit analysis, approval and risk
measurement process added with product, geography and customer diversification. The holding company, as its strategic
preference, extends trade and working capital financing, so as to keep the major portion of exposure (funded and non-
funded) on a short-term, self-liquidating basis. Major portion of the holding company's credit portfolio is priced on flexible
basis with pricing reviewed on periodic basis.

With the expansion of the Consumer lending portfolio, the Credit Review & Administration efforts have been accordingly
enhanced by inducting specialized consumer credit risk analysts and processing specialists.

Centralized Credit and Trade processing centres staffed with experienced resource provide strength to post-disbursement
aspect of credit risk management.

The Group’s credit policy / manual defines the credit extension criteria, the credit approval and monitoring process, the
loan classification system and provisioning policy.

The Group continually assesses and monitors credit exposures. The group follows both objective and subjective criteria
of SBP regarding loans classification. The subjective assessment process is based on management's judgement with
respect to the borrower's character, activity, cash flow, capital structure, security, quality of management and delinquency.

The Group uses the 'Standardised Approach' in calculation of credit risk and capital requirements.

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The Group uses reputable and the SBP approved rating agencies for deriving risk weight to specific credit exposures.
These are applied consistently across the Group credit portfolio for both on-balance sheet and off-balance sheet exposures.
The methodology applied for using External Credit Assessment Institutions (ECAI's) inclusive of the alignment of alpha
numeric scale of each agency used with risk bucket is as per the SBP guidelines as is given below:

Types of exposures and ECAI’s used

2024
Exposures JCR-VIS PACRA S&P Fitch Moody’s
Corporate P P – – –
Banks P P P P P
Sovereigns – – – – –
SME’s P P – – –

Credit exposures subject to Standardised Approach

2024 2023
Rating Amount Deduction Net Amount Deduction Net
Exposures
category outstanding CRM amount outstanding CRM amount
Rupees in ‘000
Corporate 1 201,089,585 68,569,368 132,520,217 109,953,222 15,630,380 94,322,842
2 142,905,465 3,893,584 139,011,881 143,340,258 2,217,085 141,123,173
3,4 20,005,906 – 20,005,906 17,170,109 – 17,170,109
5,6 110 – 110 – – –
Claims on banks with
original maturity of
3 months or less 5,671,094 – 5,671,094 11,643,124 – 11,643,124
Retail 35,092,591 5,895,875 29,196,716 27,732,916 4,600,092 23,132,824
Public sector entities 1 21,053,910 12,649,658 8,404,252 14,008,553 2,281,640 11,726,913
2,3 – – – 2,571,346 31,976 2,539,370
Others 938,171,033 6,963,750 931,207,283 1,152,033,532 34,000,000 1,118,033,532
Unrated 286,178,289 51,545,290 234,632,999 231,893,034 47,092,171 184,800,863

The forms of collateral that are deemed eligible under the ‘Simple Approach’ to credit risk mitigation as per the SBP
guidelines are used by the Group and primarily includes cash, government, equity investment in blue chip companies
and rated debt securities.

The Group applies the SBP specified haircut to collateral for credit risk mitigation. Collateral management is embedded
in the Group’s risk taking and risk management policy and procedures. A standard credit granting procedure exists which
has been well-disseminated down the line, ensuring proper pre-sanction evaluation, adequacy of security, pre-examination
of charge / control documents and monitoring of each exposure on an ongoing basis.

Collateral information is recorded diligently in the Group's main processing systems by type of collateral, amount of
collateral against relevant credit exposures. A cohesive accounting / risk management system facilitates effective collateral
management for Basel II reporting.

243
 Particulars of group's significant on-balance sheet and off-balance sheet credit risk in various sectors are analysed as follows:

46.1.1 Lendings to financial institutions

Gross Non-performing Credit loss
lendings lendings allowance held
Credit risk by public / private sector 2024 2023 2024 2023 2024 2023
Rupees in ‘000
Public / Government – 2,818,607 – – – –
Private 5,571,000 2,677,677 – – 2 –
5,571,000 5,496,284 – – 2 –

46.1.2 Investment in debt securities

Gross Non-performing Credit loss
investments investments allowance held
Credit risk by industry sector 2024 2023 2024 2023 2024 2023
Rupees in ‘000
Chemical and Pharmaceuticals 8,916 13,237 8,916 13,237 8,916 13,237
Engineering 340,000 340,000 340,000 – 340,000 –
Electronics and electrical appliances – – – – – –
Financial 5,275,234 5,362,327 – – – –
Power (electricity), Gas, Water, Sanitary 6,108,570 6,247,800 – – 2,792 –
Textile 9,500 9,500 9,500 9,500 9,500 9,500
Transport, Storage and Communication 64,946 64,946 64,946 64,946 64,946 64,946
Others 780,732,340 901,700,730 – – – –
792,539,506 913,738,540 423,362 87,683 426,154 87,683

Gross Non-performing Credit loss

lendings lendings allowance held
Credit risk by public / private sector 2024 2023 2024 2023 2024 2023
Rupees in ‘000
Public / Government 785,212,774 903,522,310 – – 2,792 –
Private 7,326,732 10,216,230 423,362 87,683 423,362 87,683
792,539,506 913,738,540 423,362 87,683 426,154 87,683

244
46.1.3 Advances Gross Non-performing Credit loss
advances advances allowance held
Credit risk by industry sector 2024 2023 2024 2023 2024 2023
Rupees in ‘000

Agriculture, forestry, hunting and fishing 3,961,147 6,298,547 21,850 371,956 49,994 260,877
Automobile and transportation equipment 1,635,115 4,587,590 92,000 134,033 67,804 107,704
Basic metals & metal products 7,517,923 15,032,051 2,674,952 278,276 2,630,164 268,205
Cement 6,208,262 5,768,477 2,287 159 4,831 –
Chemicals and pharmaceuticals 37,060,195 29,132,247 535,592 534,216 619,186 486,816
Commercial trade 15,680,763 16,042,845 829,158 905,948 909,557 522,415
Commodity finance – 34,000,000 – – 973 –
Construction and real estate 12,892,658 9,495,346 82,474 113,276 1,229,646 78,594
Edibles 49,681,139 40,127,527 2,488,489 1,830,919 3,229,626 1,821,923
Electronics and electrical appliances 18,797,448 17,943,789 269,857 214,387 467,212 110,607
Financial 80,159,401 2,760,066 – 113 35,203 –
Footwear and leather garments 4,230,290 3,523,347 3,163 26 10,057 –
Individuals 22,138,291 19,713,201 641,922 387,754 736,835 174,886
Mining and quarrying 1,162,380 17,131 – – 3 –
Power (electricity), gas, water, sanitary 29,344,455 27,341,558 939,172 1,017,666 1,225,914 1,017,337
Services 27,834,782 25,379,599 688,484 652,173 931,716 620,561
Sugar 5,046,442 7,810,931 87,505 93,446 147,295 92,544
Textile 193,060,782 188,136,511 15,613,996 13,846,813 17,642,802 14,108,272
Transport, storage and communication 3,848,021 3,195,003 26,484 26,483 43,010 26,483
Others 12,683,751 4,685,614 463,428 365,713 492,761 335,911
532,943,245 460,991,379 25,460,813 20,773,357 30,474,589 20,033,135

Gross Non-performing Credit loss

advances advances allowance held
Credit risk by public / private sector 2024 2023 2024 2023 2024 2023
Rupees in ‘000
Public/ Government 16,360,603 50,084,927 220,708 – 788,586 –
Private 516,582,642 410,906,452 25,240,105 20,773,357 29,686,003 20,033,135
532,943,245 460,991,379 25,460,813 20,773,357 30,474,589 20,033,135

245
 2024 2023
Rupees in ‘000
46.1.4 Contingencies and commitments
Credit risk by industry sector
Agriculture, forestry, hunting and fishing 409,198 739,784
Automobile and transportation equipment 29,991,502 20,415,045
Basic metals & metal products 8,825,954 7,679,903
Cement 9,361,727 4,545,115
Chemicals and pharmaceuticals 64,950,855 47,680,911
Commercial trade 59,149,546 42,625,253
Construction & real estate 3,048,006 2,398,979
Edibles 56,316,536 28,699,440
Electronics and electrical appliances 12,071,950 9,229,267
Financial 441,159,970 292,931,275
Footwear and leather garments 1,057,512 1,738,461
Individual – 9,000
Mining and quarrying 649,575 290,820
Power (electricity), gas, water, sanitary 26,102,461 11,784,135
Services 18,608,639 17,576,051
Sugar 4,622,686 3,604,371
Textile 179,743,912 107,081,353
Transport, storage and communication 1,762,541 2,970,635
Others 17,699,457 40,048,316
935,532,027 642,048,114
Credit risk by public / private sector
Public / Government 133,340,243 54,461,366
Private 802,191,784 587,586,748
935,532,027 642,048,114

46.1.5 Concentration of advances

The Group top 10 exposures on the basis of total (funded and non-funded exposures) aggregated to
Rs. 122,440,148 thousand (2023: Rs. 99,026,277 thousand) are as following:

Funded 94,207,487 72,132,663

Non Funded 28,232,661 26,893,614
Total Exposure 122,440,148 99,026,277

The sanctioned limits against these top 10 exposures aggregated to Rs. 166,265,332 thousand (2023:
Rs. 194,884,498 thousand).

246
46.1.6 Advances - Province / region-wise disbursement & utilisation

2024
Utilization
AJK including
Disburse- KPK including Balochistan
Punjab Sindh Islamabad Gligit-
Province / region ments FATA
Baltistan
Rupees in ‘000
Punjab 253,702,189 249,758,514 9,511,488 – – 217,742 –
Sindh 554,933,662 65,604,069 478,386,327 3,603,245 17,025,708 – –
KPK including FATA 4,636,221 – – 4,636,221 – – –
Balochistan 98,399 – – – 98,399 – –
Islamabad 23,137,174 – – – – 24,975,689 –
AJK including Gilgit-Baltistan 217,571 – – – – – 217,571
Total 836,725,216 315,362,583 487,897,815 8,239,466 17,124,107 25,193,431 217,571

2023
Utilization
Disburse- KPK including Balochistan AJK including
Punjab Sindh Islamabad Gligit-
Province / region ments FATA
Baltistan
Rupees in ‘000
Punjab 248,216,769 234,865,092 12,662,567 – – 689,110 –
Sindh 405,851,955 33,824,739 352,709,999 1,594,747 17,722,470 – –
KPK including FATA 2,742,818 – – 2,742,818 – – –
Balochistan 37,217 – – – 37,217 – –
Islamabad 19,344,956 294 – – – 19,344,662 –
AJK including Gilgit-Baltistan 325,294 – – – – – 325,294
Total 676,519,009 268,690,125 365,372,566 4,337,565 17,759,687 20,033,772 325,294

46.1.7 Incorporation of forward-looking information in ECL

The assessment of Expected Credit Loss (ECL) calculation incorporates forward looking information. Forward-
looking aspect introduces an extra dimension, which is often captured by relating expected losses to the macro-
economic variables. The incorporation of macroeconomic factors increases the accuracy of the results produced
and makes it more reliable to predict estimate future results more accurately.

The Group uses historic and forecasted data to determine the impact of macroeconomic factors to estimate
Probability of Default (PD) and Loss Given Default (LGD) etc. Further, statistical models based on historical correlation
is performed to identify most significant macro-economic variable(s) that have been recognised as contributors
to the default performance of the portfolio. The macro-economic variables (including KSE 100 Index, Consumer
Price Index and Crude Oil Price) used in the ECL calculation are fetched from the World Bank, International Monetary
Fund (lMF) and State Bank of Pakistan (SBP) database and the relevant macro-economic variables are selected
based on sensitivity of each of the portfolios to specific macro-economic variables. Three macroeconomic
scenarios have been developed base, best, and worst with assigned scenario probability weightings of 70%, 15%,
and 15% respectively.

247
 The Group conducted a sensitivity analysis on macro-economic indicators which are utilized for forward-looking
calculations. As of December 31, 2024, when the macro-economic indicators in the base scenario was adjusted
upwards or downwards by 10%, the ECL showed the following variation:

Segment Upwards Downwards

Corporate -9.59% 15.34%
SME -5.69% 8.64%
Agriculture -30.93% 37.05%

46.1.8 Sensitivity of ECL to future economic conditions

The ECL are sensitive to judgements and assumption made regarding formulation of forward-looking scenarios
and how much such scenarios are incorporated into calculations. The Group performs sensitivity analysis on the
ECL recognised on each of its segments.

The table below shows the loss allowance on each segment assuming each forward-looking scenario (e.g. Base,
worst and best) were weighted 100% instead of applying scenario probability across the three scenarios.
2024
Base Worst Best
Total ECL after Total ECL after Total ECL after
Total ECL sensitivity Increase / sensitivity Increase / sensitivity Increase /
Segment as per FS decrease in % decrease in % decrease in %
analysis analysis analysis
Rupees in ‘000
Corporate 5,021,760 4,937,809 -1.67% 6,985,029 39.10% 3,450,260 -31.29%
SME 203,915 191,877 -5.90% 357,367 75.25% 106,639 -47.70%
Agriculture 29,511 28,700 -2.75% 43,066 45.93% 19,737 -33.12%
5,255,185 5,158,387 -2.75% 7,385,461 45.93% 3,576,636 -33.12%

46.2 Market risk

Market Risk is the risk of loss in earnings and capital due to adverse changes in interest rates, foreign exchange rates, and
equity prices as well as their correlations and volatilities. Market Risk performs risk measurement, monitoring, and control
functions through the use of various risk procedures and tools.

The Holding Company has a comprehensive Board approved market risk management policy wherein the governance
structure for managing market risk, methods to control market risk, measurement tools used, the market risk exposure
limits and the tolerance levels have been addressed. The holding company's strategy for managing market risk is
to relate the level of risk exposures to their risk appetite and the capital base. This structure is reviewed, adjusted and
approved periodically.

The Board of Directors oversees the holding company's strategy for market risk exposures. The Bank’s Market Risk
Management governance structure consists of the Risk & Compliance Committee (BR&CC) of the Board, Investment
Committee and Asset & Liability Committee (ALCO) and is assisted by the independent Market Risk function with reporting
line to the Risk Management Division.

The asset and Liability Committee (ALCO) which comprises senior management oversees the financial position of the
holding company, assesses the impact of the interest rate change on the holding company's investment portfolio through
sensitivity analysis, duration and performs an oversight function to ensure sound asset quality, liquidity and pricing
considering the current interest rate environment. The investment policy amongst other aspects covers the holding
company asset allocation guidelines.

248
Market Risk function seeks to facilitate efficient risk/return management decisions, reduce volatility in operating performance
and provide transparency into the Bank’s market risk profile for senior management, the Board of Directors, and regulators.

In line with the regulatory requirements, the holding company performs the impact of changes in the market factors on
the holding company’s earnings through regular stress testing and Internal Capital Adequacy Assessment Processes .

46.2.1 Balance sheet split by trading and banking books

2024 2023
Banking Trading Total Banking Trading Total
book book book book
Rupees in ‘000
Cash and balances with
treasury banks 86,903,001 – 86,903,001 91,467,062 – 91,467,062
Balances with other banks 6,462,022 – 6,462,022 21,269,948 – 21,269,948
Lendings to financial
institutions 5,570,998 – 5,570,998 5,496,284 – 5,496,284
Investments 759,250,554 48,246,031 807,496,585 920,634,761 – 920,634,761
Advances 502,468,656 – 502,468,656 433,632,602 – 433,632,602
Property and equipment 17,196,906 – 17,196,906 15,782,163 – 15,782,163
Right-of-use assets 8,654,445 – 8,654,445 7,625,010 – 7,625,010
Intangible assets 552,076 – 552,076 368,333 – 368,333
Deferred tax assets – – – 5,265,313 – 5,265,313
Other assets 90,279,655 – 90,279,655 72,121,302 – 72,121,302
1,477,338,313 48,246,031 1,525,584,344 1,573,662,778 – 1,573,662,778

46.2.2 Foreign exchange risk

Foreign exchange risk is the probability of loss resulting from adverse movement in exchange rates.
The holding company’s business model for foreign exchange risk is to serve trading activities of its clients in an
efficient and cost effective manner. The holding company is not in the business of actively trading and market
making activities and all FX exposures are backed by customer's trade transaction. A conservative risk approach
backed by holding company’s business strategy to work with export oriented clients gives the ability to meet its
foreign exchange needs.
2024
Foreign Foreign Off-balance Net foreign
currency currency sheet currency
assets liabilities items exposure
Rupees in ‘000
United States Dollar 136,921,311 (122,609,572) (11,289,035) 3,022,704
Euro 12,020,766 (4,644,785) (7,351,225) 24,756
Great Britain Pound 1,922,115 (8,299,995) 6,376,288 (1,592)
Asian Currency unit 531,184 (1,437,247) – (906,063)
Japanese Yen 196,785 (255,145) 80,253 21,892
Arab Emirates Dirham 202,432 (50,186) 15,167 167,413
Canadian Dollar 12,676 – – 12,676
Australian Dollar 17,980 – (8,662) 9,317
Saudi Riyal 7,786 – – 7,786
Chinese Yuan 73,467 (125,013) 55,984 4,437
Other Currencies 176,760 – (154,092) 22,668
152,083,262 (137,421,943) (12,275,322) 2,385,994

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 2023
Foreign Foreign Off-balance Net foreign
currency currency sheet currency
assets liabilities items exposure
Rupees in ‘000

United States Dollar 407,917,288 (483,845,450) 79,854,650 3,926,488

Euro 32,880,994 (11,912,630) (21,150,155) (181,791)
Great Britain Pound 5,056,372 (25,104,979) 20,051,785 3,178
Asian Currency unit 2,051,016 (3,425,069) – (1,374,053)
Japanese Yen 2,582,249 (33,357,773) 35,000,000 4,224,476
Arab Emirates Dirham 2,847,411 (1,709,001) – 1,138,410
Canadian Dollar 161,373 – – 161,373
Australian Dollar 159,013 – – 159,013
Saudi Riyal 110,733 – – 110,733
Chinese Yuan 1,346,475 – – 1,346,475
Other Currencies 301,425 – – 301,425
455,414,349 (559,354,902) 113,756,280 9,815,727

2024 2023
Banking Trading Banking Trading
book book book book
Rupees in ‘000

Impact of 1% change in foreign exchange rates on

- Profit and loss account 12,169 – 50,060 –
- Other comprehensive income – – – –

46.2.3 Equity position risk

Equity position risk arises due to adverse movements in equity prices. The Group's policy is to take equity position in
high dividend yield scripts. The Group as a policy does not enter into any kind of proprietary equity trades. Equity
position risk of the Group’s is mitigated through portfolio and script limits advised by the BoD and are reviewed by
the ALCO. The investment in equities and mutual funds is also managed within the statutory limits as prescribed
by the SBP.

2024 2023
Banking Trading Banking Trading
book book book book
Rupees in ‘000
Impact of 5% change in equity prices on:
- Profit and loss account (71,023) – (37,526) –
- Other comprehensive income (222,575) – (120,342) –

250
 46.2.4 Yield / interest rate risk in the holding company's book (IRRBB) - Basel II Specific
Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in the market interest rates. Interest rate risk is also controlled
through flexible credit pricing mechanism and variable deposit rates. Duration analysis and stress testing are being carried out regularly to estimate the
impact of adverse changes in the interest rates on bank's fixed income portfolio. Optimization of yield is achieved through the Group’s investment strategy
which aims on attaining a balance between yield and liquidity under the strategic guidance of the ALCO. The advances and deposits of the Group are
repriced on a periodic basis based on interest rates scenario.
2024 2023
Banking book Trading book Banking book Trading book
Rupees in ‘000
Impact of 1% change in interest rates on
- Profit and loss account – – – –
- Other comprehensive income (2,935,475) – (3,349,317) –
46.2.5 Mismatch of interest rate sensitive assets and liabilities
2024
Exposed to yield / interest risk
Effective
yield / Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Non-interest
interest Upto 1 month to months to months year to years to years to years to Over bearing
rate Total month 3 months 6 months to 1 year 2 years 3 years 5 years 10 years 10 years financial
instruments
Rupees in ‘000
On-balance sheet financial instruments
Assets
Cash and balances with treasury banks 3.53% 86,903,001 12,058,642 – – – – – – – – 74,844,359
Balances with other banks 13.51% 6,462,022 3,941 – – – – – – – – 6,458,081
Lendings to financial institutions 7.43% 5,570,998 2,228,398 3,342,600 – – – – – – – –
Investments 14.50% 807,496,585 94,484,491 109,176,932 234,071,830 138,936,376 116,593,796 91,399,315 3,268,209 3,716,597 – 15,849,039
Advances 9.83% 502,468,656 37,790,736 313,904,343 93,977,716 851,312 2,321,212 2,869,380 9,120,952 33,350,689 8,282,316 –
Other assets 85,060,766 – – – – – – – – – 85,060,766
1,493,962,028 146,566,208 426,423,875 328,049,546 139,787,688 118,915,008 94,268,695 12,389,161 37,067,286 8,282,316 182,212,245

Liabilities
Bills payable 28,478,822 – – – – – – – – – 28,478,822
Borrowings 13.92% 350,224,431 265,856,703 15,481,593 23,283,638 468,065 1,590,271 1,906,565 8,004,951 27,032,802 – 6,599,843
Deposits and other accounts 12.56% 925,227,989 117,129,781 52,448,472 291,216,343 21,254,274 783,556 3,283,031 4,170,271 180,750 – 434,761,511
Lease Liabilities 10,519,685 – – 22,269 409,349 3,533,548 388,361 1,777,294 3,909,899 – 478,965
Other liabilities 76,296,260 – – – – – – – – – 76,296,260
1,390,747,187 382,986,484 67,930,065 314,522,250 22,131,688 5,907,375 5,577,957 13,952,516 31,123,451 – 546,615,401
On-balance sheet gap 103,214,841 (236,420,276) 358,493,810 13,527,296 117,656,000 113,007,633 88,690,738 (1,563,355) 5,943,835 8,282,316 (364,403,156)

Off-balance sheet financial instruments

Commitments in respect of:
Forward foreign exchange contracts 547,663,058 – – – – – – – – – 547,663,058
Syndicate financing 1,943,000 – – – – – – – – – 1,943,000
Letters of credit 229,691,020 – – – – – – – – – 229,691,020
Acquisition of property and equipment 622,776 – – – – – – – – – 622,776
Off-balance sheet gap 779,919,854 – – – – – – – – – 779,919,854
Total Yield / Interest Risk Sensitivity Gap 883,134,695 (236,420,276) 358,493,810 13,527,296 117,656,000 113,007,633 88,690,738 (1,563,355) 5,943,835 8,282,316 415,516,698
Cumulative Yield / Interest Risk Sensitivity Gap 883,134,695 (236,420,276) 122,073,534 135,600,830 253,256,830 366,264,463 454,955,201 453,391,846 459,335,681 467,617,997 415,516,698

251
 2023

252
Exposed to yield / interest risk
Effective
yield / Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Non-interest
interest Upto 1 month to months to months year to years to years to years to Over bearing
rate Total month 3 months 6 months to 1 year 2 years 3 years 5 years 10 years 10 years financial
instruments
Rupees in ‘000
On-balance sheet financial instruments

Assets
Cash and balances with treasury banks 4.34% 91,467,062 11,497,335 – – – – – – – – 79,969,727
Balances with other banks 17.50% 21,269,948 4,869 – – – – – – – – 21,265,079
Lendings to financial institutions 11.37% 5,496,284 1,409,304 3,382,328 704,652 – – – – –
Investments 19.35% 920,634,761 157,467,763 90,984,957 130,225,975 372,611,577 16,844,604 68,329,008 70,835,074 6,351,900 – 6,983,903
Advances 15.51% 433,632,602 26,012,878 329,356,094 20,220,717 538,038 1,726,314 3,279,413 6,338,685 43,516,828 2,643,635 –
Other assets 67,283,957 – – – – – – – – – 67,283,957
1,539,784,614 196,392,149 423,723,379 151,151,344 373,149,615 18,570,918 71,608,421 77,173,759 49,868,728 2,643,635 175,502,666

Liabilities
Bills payable 28,352,699 – – – – – – – – – 28,352,699
Borrowings 19.19% 335,270,858 208,766,386 55,311,673 17,098,879 1,696,695 1,235,540 2,805,002 5,417,852 42,038,438 11,559 888,834
Deposits and other accounts 11.04% 1,011,485,773 240,729,493 42,534,220 266,855,784 36,034,139 2,203,342 490,765 7,099,242 186,035 – 415,352,753
Other liabilities 90,577,414 – – – – – – – – – 90,577,414
1,465,686,744 449,495,879 97,845,893 283,954,663 37,730,834 3,438,882 3,295,767 12,517,094 42,224,473 11,559 535,171,700
On-balance sheet gap 74,097,870 (253,103,730) 325,877,486 (132,803,319) 335,418,781 15,132,036 68,312,654 64,656,665 7,644,255 2,632,076 (359,669,034)

Off-balance sheet financial instruments

Commitments in respect of:
Forward foreign exchange contracts 365,390,061 180,358,310 120,698,674 62,023,064 2,310,013 – – – – – –
Commitments against forward lendings 2,119,000 – – – – – – – – – 2,119,000
Commitments in respect of letter of credits 132,975,536 63,739,372 55,615,616 10,865,484 2,407,913 332,675 14,476 – – – –
Commitments against acquisition of property
and equipment 303,084 – – – – – – – – – 303,084
Off-balance sheet gap 500,787,681 244,097,682 176,314,290 72,888,548 4,717,926 332,675 14,476 – – 2,119,000 303,084
Total yield / interest risk sensitivity gap 574,885,551 (9,006,048) 502,191,776 (59,914,771) 340,136,707 15,464,711 68,327,130 64,656,665 7,644,255 4,751,076 (359,365,950)
Cumulative yield / interest risk sensitivity gap 574,885,551 (9,006,048) 493,185,728 433,270,957 773,407,664 788,872,375 857,199,505 921,856,170 929,500,425 934,251,501 (359,365,950)

Reconciliation of assets and liabilities exposed to yield / interest rate risk with total assets and liabilities
2024 2023 2024 2023
Reconciliation to total assets Rupees in '000 Reconciliation to total liabilities Rupees in '000

Total financial assets 1,493,962,028 1,539,784,614 Total financial liabilities 1,390,747,187 1,465,686,744
Add: Non financial assets Add: Non financial liabilities
Property and equipment 17,196,906 15,782,163 Other liabilities 11,221,682 9,786,827
Right-of-use assets 8,654,445 7,625,010 Deferred tax liabilities 2,722,825 –
Intangible assets 552,076 368,333
Deferred tax asset – 5,265,313
Other assets 5,218,889 4,837,345
31,622,316 33,878,164
Balance as per statement of Balance as per statement of
financial position 1,525,584,344 1,573,662,778 financial position 1,404,691,694 1,475,473,571
46.3 Operational Risk

The Group operates in a controlled manner and operational risk is managed effectively. With the evolution of
operational risk management (ORM) into a separate distinct discipline, the Group’s strategy is to further strengthen
operational risk management system along new industry standards.

The holding company’s ORM strategy takes guidance from Basel - II, the SBP guidelines and best industry practices.

The holding company’s ORM framework includes Risk Control Self-Assessment (RCSA), Key Risk Indicators (KRIs),
Operational Risk Events Management, Change Risk Assessment and Risk Assessment of Outsourcing arrangement.
The ORM unit engages with the holding company’s business/support units and regularly collaborates in determining
and reviewing the inherent operational risks, and assessment of residual risk leading to improved quality of control
infrastructure and further strengthening of the processes & management information. Moreover, group wide
policies, procedures , frameworks and product programs are also being evaluated from operational risk perspective
aiming to beef up control environment.

The Group’s business continuity plan includes risk management strategies to mitigate inherent risk and prevent
interruption of mission critical services caused by disaster event. The Business Continuity Management function
with the support of the senior management remained extremely active during the pandemic to ensure that
stakeholders remained safe, all critical services and processes of the Group remain operational and any contingency
arising is dealt appropriately. The Group’s operational risk management governance has been further strengthened
through the establishment of a separate Operational Risk and Control Committee.

The Group uses Basic Indicator Approach (BIA) for regulatory capital at risk calculation for operational risk. Under
BIA the capital charge for operational risk is a fixed percentage of average positive annual gross income of the Bank
over the past three years. Figures of capital charge of operation risk for the year is Rs. 11,825,795 thousand (2023:
Rs. 9,260,191 thousand).

46.4 Liquidity Risk

Liquidity risk is the risk that the Group will not be able to raise funds to meet its commitments.

Governance of Liquidity risk management

The ALCO continuously monitors the liquidity position and the Group is confident that the current liquidity buffer
is sufficient to cater to any adverse movement in the maturity profile.

Liquidity and related risks are managed through standardized processes established in the Group. The management
of liquidity risk within the Group is undertaken within limits and other parameters set by the BoD. The holding
company's treasury function has the primary responsibility for assessing, monitoring and managing the holding
company's liquidity and funding strategy while overall compliance is monitored and coordinated by the ALCO.
Board and senior management are apprised of the Group’s liquidity profile to ensure proactive liquidity
management. Treasury Middle Office being part of the risk management division is responsible for the independent
identification, monitoring and analysis of intrinsic risks of treasury business. The Group has in place duly approved
Treasury investment policy and strategy along with liquidity risk tolerance/appetite levels. These are communicated
at various levels so as to ensure effective liquidity management for the Group.

253
 Liquidity position of the Group remained strong in spite of approving deferment requests of principal & restructured
loan, in line with the SBP directives. The holding company’s strong deposit base backed by continued customer
confidence and holding of government securities has enabled the Group to maintain a robust liquidity profile,
also depicted through a strong LCR ratio.

Funding Strategy

The Group’s liquidity model is based on “self-reliance” with an extensive branch network to diversify the holding
company deposit base. Further, the holding company can also generate liquidity from Interbank market against
government securities to fund its short term requirement, if any. The holding company as a policy invests
significantly in highly liquid government securities that can be readily converted into cash to meet unforeseen
liquidity requirements, besides yielding attractive returns.

Liquidity Risk Mitigation techniques

Various tools and techniques are used to measure and evaluate the possible liquidity risk. These include regular
monitoring of different liquidity ratios against approved triggers and communication to senior management
and the ALCO. Further, the Group also prepares the maturity profile of assets and liabilities to keep track of liquidity
gaps over different time buckets. The holding company also ensures that statutory cash and liquidity requirements
are maintained at all times.

Liquidity Stress Testing

As per the SBP BSD Circular No. 1 of 2012, Liquidity stress testing is being conducted under well-defined stress
scenarios. Results of same are escalated at the senior level so as to enable the senior management to take
proactive actions to avoid liquidity crunch.

Contingency Funding Plan

Contingency Funding Plan (CFP) is a part of liquidity management framework of the Group which defines and
identifies the factors that can instigate a liquidity crisis and the actions to be taken to manage the crisis. The
Group has a comprehensive liquidity contingency funding plan in place, which highlights liquidity management
strategy to be followed under stress conditions. Contingency Event Management parameters and responsibilities
are also incorporated in order to tackle the liquidity crisis. Moreover, CFP highlights possible funding sources
focusing on self-reliance, in case of a liquidity crisis.

254
 46.4.1 Maturities of assets and liabilities - based on contractual maturity of the assets and liabilities of the Bank
2024
Total Upto 1 Over 1 Over 7 Over 14 Over 1to 2 Over 2 to Over 3 to Over 6to Over 9 Over 1 to Over 2 to Over 3 to Over
day day to days to days to months 3 months 6 months 9 months months 2 years 3 years 5 years 5 years
7 days 14 days 1 month to 1 year
Rupees in ‘000
Assets
Cash and balances
withtreasury banks 86,903,001 86,903,001 – – – – – – – – – – – –
Balances with other banks 6,462,022 6,462,022 – – – – – – – – – – – –
Lendings to financial institutions 5,570,998 2,228,398 – – – – 3,342,600 – – – – – – –
Investments 807,496,585 66,918,551 – – – 32,501,480 47,710,525 155,933,291 880,886 141,157,528 94,713,364 252,617,189 15,063,771
Advances 502,468,656 87,286,624 35,363 229,785 501,561 103,789,478 785,908 114,897,439 36,556,184 2,204,191 60,981,460 11,108,516 29,317,597 54,774,550
Property and equipment 17,196,906 – – – 1,106,124 806,058 9,836 1,193,801 2,385,374 – 2,410,155 507,382 319,662 8,458,514
Right–of–use assets 8,654,445 – – – – 275 2,365 17,294 32,891 23,684 130,474 327,077 1,241,068 6,879,317
Intangible assets 552,076 – – – 41,500 83,000 – 180,362 – 247,214 – – – –
Deferred tax assets – – – – – – – – – – – – – –
Other assets 90,279,655 2,497,512 14,985,072 17,482,584 42,457,703 1,204,632 1,204,632 1,277,888 2,384,939 2,384,939 88,438 45,486 32,772 4,233,058
1,525,584,344 252,296,108 15,020,435 17,712,369 44,106,888 141,727,523 2,002,741 165,277,309 197,292,679 5,740,914 204,768,055 106,701,825 283,528,288 89,409,210

Liabilities
Bills payable 28,478,822 28,478,822 – – – – – – – – – – – –
Borrowings 350,224,431 8,350,275 50,101,649 58,451,924 141,954,674 11,459,974 11,459,974 23,435,250 3,238,061 3,238,061 1,590,271 1,906,565 8,004,951 27,032,802
Deposits and other accounts 925,227,989 824,198,634 8,565,759 2,346,126 4,207,891 6,399,859 10,589,788 30,006,322 14,870,683 3,834,973 4,020,090 6,745,016 7,452,880 1,989,972
Lease liabilities 10,519,685 – – – – – – 22,269 43,782 29,501 182,916 388,361 1,777,294 8,075,562
Sub–ordinated debts – – – – – – – – – – – – – –
Deferred tax liabilities 2,722,825 (14,979) (89,874) (104,853) (254,641) (429,198) (429,198) (888,998) 469,397 469,397 945,980 960,257 2,381,707 (292,172)
Other liabilities 87,517,942 1,754,859 10,529,154 12,284,013 29,832,604 1,711,287 1,711,287 2,951,942 6,205,532 6,205,532 178,160 10,745,439 1,318,286 2,089,849
1,404,691,694 862,767,611 69,106,688 72,977,210 175,740,528 19,141,921 23,331,850 55,526,785 24,827,454 13,777,463 6,917,417 20,745,638 20,935,118 38,896,013
Net assets 120,892,650 (610,471,503) (54,086,253) (55,264,841) (131,633,640) 122,585,602 (21,329,109) 109,750,524 172,465,225 (8,036,549) 197,850,638 85,956,187 262,593,170 50,513,197

Share capital 10,478,315

Reserves 36,857,521
Deficit on revaluation of assets 14,371,296
Unappropriated profit 54,342,480
Non–controlling interest 4,843,038
120,892,650

255
256
2023
Total Upto 1 Over 1 Over 7 Over 14 Over 1to 2 Over 2 to Over 3 to Over 6to Over 9 Over 1 to Over 2 to Over 3 to Over
day day to days to days to months 3 months 6 months 9 months months 2 years 3 years 5 years 5 years
7 days 14 days 1 month to 1 year
Rupees in ‘000

Assets
Cash and balances with
treasury banks 91,467,062 91,467,062 – – – – – – – – – – – –
Balances with other banks 21,269,948 21,269,948 – – – – – – – – – – – –
Lending to financial institutions 5,496,284 45,461 272,769 318,230 772,844 1,634,792 1,747,536 704,652 – – – – – –
Investments 920,634,761 2,305,478 13,832,868 16,138,346 39,193,127 16,177,741 17,293,448 27,059,570 219,268,438 219,220,777 78,896,772 129,214,208 128,563,576 13,470,411
Advances 433,632,602 3,895,599 23,373,595 27,269,194 66,225,186 65,989,024 70,539,992 51,317,212 18,209,181 18,205,223 5,337,285 5,379,060 8,591,988 69,300,062
Property and equipment 15,782,163 13,597 81,586 95,184 231,162 212,893 235,047 671,911 672,019 671,803 1,384,005 499,688 878,748 10,134,520
Right–of–use assets 7,625,010 6,578 39,465 46,043 111,817 108,343 108,343 325,028 325,028 325,028 680,476 249,892 448,289 4,850,680
Intangible assets 368,333 955 5,729 6,684 16,232 28,612 30,586 88,797 72,838 117,901 – – – –
Deferred tax assets 5,265,313 57,126 342,754 399,879 971,135 834,488 892,039 597,364 175,898 175,860 4,861 207,218 193,980 412,711
Other assets 72,121,302 2,111,749 12,670,495 14,782,244 35,899,736 640,594 684,773 654,178 2,314,318 2,313,814 30,842 9,972 8,586 –
1,573,662,778 121,173,554 50,619,261 59,055,805 143,421,240 85,626,488 91,531,763 81,418,712 241,037,720 241,030,406 86,334,241 135,560,038 138,685,167 98,168,384

Liabilities

Bills payable 28,352,699 28,352,699 – – – – – – – – – – – –

Borrowings 335,270,858 6,763,072 40,578,430 47,341,501 114,972,217 26,733,975 28,577,698 17,098,879 848,440 848,255 1,235,540 2,805,002 5,417,852 42,049,997
Deposits and other accounts 1,011,485,773 788,249,458 18,914,401 22,066,801 53,590,803 20,558,206 21,976,014 40,116,685 18,019,028 18,015,111 2,203,342 490,765 7,099,242 185,916
Lease liabilities 9,086,176 207,508 1,245,048 1,452,556 3,527,635 108,777 108,777 118,586 660,770 660,770 12,236 775,579 142,386 65,548
Sub–ordinated debts – – – – – – – – – – – – – –
Deferred tax liabilities – – – – – – – – – – – – – –
Other liabilities 91,278,065 2,083,787 12,502,720 14,586,506 35,424,374 1,068,844 1,150,059 1,263,796 6,783,516 6,781,898 62,373 8,297,842 1,080,107 192,243
1,475,473,571 825,656,523 73,240,599 85,447,365 207,515,030 48,469,803 51,812,548 58,597,946 26,311,754 26,306,034 3,513,491 12,369,188 13,739,587 42,493,704
Net assets 98,189,207 (704,482,970) (22,621,338) (26,391,561) (64,093,790) 37,156,685 39,719,216 22,820,766 214,725,966 214,724,372 82,820,750 123,190,850 124,945,580 55,674,680

Share capital 10,478,315

Reserves 31,432,768
Surplus on revaluation of assets 4,829,814
Unappropriated profit 47,254,919
Non–controlling interest 4,193,391
98,189,207
 46.4.2 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Bank
2024
Total Upto 1 Over 1 to Over 3 to Over 6 Over 1 to Over 2 to Over 3 to Over 5 to Above
month 3 months 6 months months 2 years 3 years 5 years 10 years 10 years
to 1 year
Rupees in ‘000

Assets
Cash and balances with treasury banks 86,903,001 86,903,001 – – – – – – – –
Balances with other banks 6,462,022 6,462,022 – – – – – – – –
Lendings to financial institutions 5,570,998 2,228,398 3,342,600 – – – – – – –
Investments 807,496,585 51,872,859 63,701,266 46,219,917 149,573,263 139,165,989 93,222,757 251,282,855 12,457,678 –
Advances 502,468,656 99,757,485 80,749,050 130,597,059 33,983,236 60,793,865 11,108,516 29,474,137 46,335,973 9,669,335
Property and equipment 17,196,906 1,048,081 800,244 1,187,032 2,352,077 2,404,069 500,144 286,820 6,036,757 2,581,682
Right–of–use assets 8,654,445 – 2,640 17,294 56,575 130,474 327,077 1,239,399 6,446,705 434,281
Intangible assets 552,076 41,500 83,000 124,500 303,076 – – – – –
Deferred tax assets – – – – – – – – – –
Other assets 90,279,655 77,422,872 2,409,263 1,277,888 4,769,878 88,438 45,486 32,772 4,233,058 –
1,525,584,344 325,736,218 151,088,063 179,423,690 191,038,105 202,582,835 105,203,980 282,315,983 75,510,171 12,685,298

Liabilities
Bills payable 28,478,822 28,478,822 – – – – – – – –
Borrowings 350,224,431 258,858,522 22,919,948 23,435,250 6,476,122 1,590,271 1,906,565 8,004,951 27,032,802 –
Deposits and other accounts 925,227,989 204,215,819 203,949,446 148,366,221 97,004,764 76,534,046 79,033,521 79,972,968 36,151,204 –
Lease Liabilities 10,519,685 – – 22,269 73,283 182,916 388,361 1,777,294 7,596,597 478,965
Sub–ordinated debts – – – – – – – – – –
Deferred tax liabilities 2,722,825 (464,347) (858,396) (888,998) 938,794 945,980 960,257 2,381,707 (165,389) (126,783)
Other liabilities 87,517,942 54,400,631 3,422,573 2,951,942 12,411,063 178,160 10,745,439 1,318,286 551,073 1,538,775
1,404,691,694 545,489,447 229,433,571 173,886,684 116,904,026 79,431,373 93,034,143 93,455,206 71,166,287 1,890,957
Net assets 120,892,650 (219,753,229) (78,345,508) 5,537,006 74,134,079 123,151,462 12,169,837 188,860,777 4,343,884 10,794,341

Share capital 10,478,315

Reserves 36,857,521
Unappropriated profit 54,342,480
Deficit on revaluation of assets 14,371,296
Non–controlling interest 4,843,038
120,892,650

257
258
2023
Total Upto 1 Over 1 to Over 3 to Over 6 Over 1 to Over 2 to Over 3 to Over 5 to Above
month 3 months 6 months months 2 years 3 years 5 years 10 years 10 years
to 1 year
Rupees in ‘000
Assets
Cash and balances with
treasury banks 91,467,062 91,467,062 – – – – – – – –
Balances with other banks 21,269,948 21,269,948 – – – – – – – –
Lendings to financial institutions 5,496,284 1,409,304 3,382,328 704,652 – – – – – –
Investments 920,634,761 71,469,820 33,471,189 27,059,570 438,489,215 78,896,772 129,214,208 128,563,576 13,470,411 –
Advances 433,632,602 120,763,575 136,529,016 51,317,212 36,414,404 5,337,285 5,379,060 8,591,988 61,897,906 7,402,156
Property and equipment 15,782,163 421,529 447,941 671,911 1,343,823 1,384,005 499,688 878,748 3,420,391 6,714,127
Right-of-use assets 7,625,010 203,903 216,685 325,028 650,055 680,476 249,892 448,289 1,754,729 3,095,953
Intangible assets 368,333 29,599 59,198 88,797 190,739 – – – – –
Deferred tax assets 5,265,313 1,770,894 1,726,527 597,364 351,758 4,861 207,218 193,980 319,339 93,372
Other assets 72,121,302 65,464,225 1,325,367 654,178 4,632,546 30,842 9,972 4,172 – –
1,573,662,778 374,269,859 177,158,251 81,418,712 482,072,540 86,334,241 135,560,038 138,680,753 80,862,776 17,305,608

Liabilities
Bills payable 28,352,699 28,352,699 – – – – – – – –
Borrowings 335,270,858 209,655,220 55,311,673 17,098,879 1,696,695 1,235,540 2,805,002 5,417,852 42,038,438 11,559
Deposits and other accounts 1,011,485,773 254,743,817 199,553,633 157,881,244 114,543,844 80,713,047 79,000,470 85,608,948 39,440,770 –
Lease Liabilities 9,086,176 6,432,749 217,554 118,586 1,321,540 12,236 775,579 142,386 65,546 –
Sub-ordinated debts – – – – – – – – – –
Deferred tax liabilities – – – – – – – – – –
Other liabilities 91,278,065 64,597,385 2,218,903 1,263,796 13,565,414 62,373 8,297,842 1,080,107 192,245 –
1,475,473,571 563,781,870 257,301,763 176,362,505 131,127,493 82,023,196 90,878,893 92,249,293 81,736,999 11,559
Net assets 98,189,207 (189,512,011) (80,143,512) (94,943,793) 350,945,047 4,311,045 44,681,145 46,431,460 (874,223) 17,294,049

Share capital 10,478,315

Reserves 31,432,768
Unappropriated profit 47,254,919
Surplus on revaluation of assets 4,829,814
Non- controlling interest 4,193,391
98,189,207
47. GENERAL

47.1 Captions, as prescribed by BPRD Circular No.2 of 2018 issued by the SBP, in respect of which there are no
amounts, have not been reproduced in these consolidated financial statements, except for captions of the
statement of financial position and profit and loss account.

47.2 Non adjusting event after statement of financial position date

The Board of Directors in its meeting held on 19 February 2025 has proposed a final cash dividend of
Rs. 4.50 per share amounting to Rs. 4,715,242 thousand (2023: final cash dividend of Rs. 5.50 per share
amounting to Rs. 5,763,073 thousand) in addition to interim cash dividend of Rs. 7.50 per share amounting
to Rs. 7,858,737 thousand (2023: interim cash dividend of Rs. 5.00 per share amounting to Rs. 5,239,157
thousand) for approval by the members of the Bank in the forthcoming Annual General Meeting.

48. DATE OF AUTHORISATION FOR ISSUE

These consolidated financial statements were authorised for issue on 19 February 2025 by the Board of Directors
of the holding company. holding company.

FUZAIL ABBAS KHURRAM SHAHZAD KHAN MOHOMED BASHIR RASHID AHMED JAFER MOHAMEDALI R. HABIB
Chief Financial Officer President & Director Director Chairman
Chief Executive Officer

259
 ANNEXURE "I" AS REFERRED TO IN NOTE 10.6 OF THE UNCONSOLIDATED FINANCIAL STATEMENTS

260
STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF OF RS. 500,000/- OR ABOVE
PROVIDED DURING THE YEAR ENDED 31 DECEMBER 2024.
Outstanding liabilities Other
Name of individuals /
S. Name and address of the Father’s / Husband’s at beginning of the year Principal Interest / financial
partners / directors mark-up Total
No. borrower Name / relief
(with CNIC / NIC Number) Principal Interest Total
written-off wavied
mark-up Others provided
1 2 3 4 5 6 7 8 9 10 11 12
Rupees in ‘000

1 Sun Star Pesticides Asrar Ali Intizar Ali 6,375 - - 2,695 - - 1,143 955
13-KM, Jampur Road, 32102-1313822-3
Dera Ghazi Khan. Abdul Rehman Naseer Ahmed
32102-9101322-7

2 Gulshan Spinning Mills Ltd. Naseer Ahmad Abdul Shakoor 28,700 11,706 - 24,838 11,706 -
2nd Floor, Garden Heights, 8 Aibak Block, 42201-0632509-5
New Garden Town, Lahore. Tanveer Ahmad Abdul Shakoor
42201-0350138-5

3 Hassan Steel Industry Muhammad Hassan Jehangir M. Rafiq 41,654 2,846 - 11,605 - - 42,930 1,053
42, Street No.14, 35401-1823258-1
Cavalry Ground, Lahore. Shabana Farooq Farooq Ahmed Sheikh
35201-8751140-2

4 Three Star Iron Store Muhammad Ahmed Muhammad Farooq 1,999 368 - 3,000 - - 512 510
Near Shamma Cinema, 31202-7213837-9
Multan Road, Bahawalpur.

5 Mashaal Metals Muhammad Fahad Noor Noor Ahmad Khan 16,000 - - 14,104 - - 3,279 14,260
17-KM, Missan Kalar Suwa, Old Pindi 35201-1518199-5
Das Road, Sheikhupura Road, Lahore.

6 Q&A International Mr. Qaiser Ali Nazakat Ali 39,499 303 - 35,214 - - 4,316 18,091
72-A, Block-A, Street 5, 42501-1478648-3
Sindhi Muslim Society, Karachi. Mr. M.S. Rahimtoola S.H. Rahimtoola
42301-1101759-1
 Outstanding liabilities Other
Name of individuals /
S. Name and address of the Father’s / Husband’s at beginning of the year Principal Interest / financial
partners / directors Total
No. borrower Name / written-off mark-up relief
(with CNIC / NIC Number) Principal Interest Total wavied provided
mark-up Others
1 2 3 4 5 6 7 8 9 10 11 12
Rupees in ‘000

7 Haji Khursheed Ahmed & Co. Shakeel Ahmad Haji Khursheed Ahmad 1,860 1,590 - 45,016 - - 865 13,872
Shop No. 159, New Grain Market, 36302-9633686-1
Vehari Road, Multan.

8 Moon Trading Commission Agent Muhammad Saeed Alam Abdul Aziz 14,998 2,248 - 22,284 - - 3,181 9,984
Grain Market, Hasilpur, 31203-1709562-3
District Bahawalpur.

9 Saeed Oil Mills Muhammad Saeed Alam Abdul Aziz 15,000 2,217 - 8,338 - - 3,152 2,835
Chak No. 17/FW, Jalandhar Colony, 31203-1709562-3
Hasilpur, District Bahawalpur. Muhammad Miqdam Saeed Muhammad Saeed Alam
31203-0911832-7

10 Aman & Sons Mr.Muhammad Luqman Aman Ullah 2,156 - - 823 - - 4,418 823
D-23/B, S.I.T.E., Karachi. 42301-9010172-5
Mr.Muhammad Salman Aman Ullah
90406-0161144-5

11 Madni Battery Services Mr. Khizar Hayat Allah Ditta 1,699 326 - 10,711 - - 735 3,010
198/B, Near PSO Pump, 36302-5599522-5
General Bus Stand, Multan. Mrs. Rukhsana Khizar Hayat
36302-0394214-8

12 Mohsin Tabani / Anisa Tabani Mr. Mohsin Tabani Muhammad Ashraf 6,190 - - 9,378 - - 9,637 9,011
38/1A, 26th Street, 42301-6137858-3
Phase-V, DHA, Karachi. Mrs. Anisa Tabani Muhammad Tabani
42301-4905643-4
13 Qiblatain Travel Services Mahmood Ul Hassan Bacha Khan 12,180 146 - 12,326 - 136 - 136
Address: Office no.5 A, 1st Floor, 16202-1986274-1
Mehmood Plaza, Blue Area, Islamabad

14 AKAS FOODS (PRIVATE) LIMITED Muhammad Akas Muhammad Akhtar 21,973 64 - 22,037 16 328 - 345
Address: Office No-105 1st Floor 5102-0606152-5
142 Ahbab Colony Hanjarwal, Multan Amara

261
35201-0365701-4 Muhammad Akas
210,283 21,814 - 197,531 24,854 12,170 74,168 74,885
 Annexure - II

ISLAMIC BANKING BUSINESS

The bank is operating 223 (2023: 117) Islamic banking branches and 190 (2023: 233) Islamic banking windows at the end of the year.

Note 2024 2023

Rupees in ‘000

ASSETS
Cash and balances with treasury banks 14,936,606 11,119,511
Balances with other banks 34,919 2,956
Due from financial institutions – –
Investments 1 147,020,502 77,555,576
Islamic financing and related assets - net 2 90,345,521 114,142,247
Property and equipment 800,502 318,450
Right-of-use assets 3,055,711 2,026,102
Intangible assets – –
Due from Head Office 3 5,167,862 –
Other assets 9,093,078 11,007,766
Total Assets 270,454,701 216,172,608

LIABILITIES
Bills payable 6,374,863 1,707,901
Due to financial institutions 28,894,549 35,303,574
Deposits and other accounts 4 205,395,048 147,905,702
Due to Head Office – 4,644,318
Lease liabilities 3,696,838 2,143,764
Subordinated debt – –
Other liabilities 5 8,821,928 9,337,229
253,183,226 201,042,488
NET ASSETS 17,271,475 15,130,120

REPRESENTED BY
Islamic Banking Fund 11,006,964 10,007,047
Reserves – –
Deficit on revaluation of assets 3,390,215 402,256
Unappropriated profit 6 2,874,296 4,720,817
17,271,475 15,130,120

CONTINGENCIES AND COMMITMENTS 7

262
 The profit and loss account of the Bank's Islamic banking branches for the year ended 31 December 2024 is as follows:
Note 2024 2023
Rupees in ‘000
Profit / return earned 8 35,533,890 29,447,686
Profit / return expensed 9 (19,587,203) (15,849,102)
Net Profit / return 15,946,687 13,598,584

Other income
Fee and Commission Income 1,164,766 658,729
Dividend Income – –
Foreign Exchange Income 155,610 120,994
Income / (loss) from derivatives – –
(Loss) / gain on securities (82,943) (140,308)
Other Income 76,571 17,806
Total other income 1,314,004 657,221
Total Income 17,260,691 14,255,805

Other expenses
Operating expenses 7,649,652 4,750,271
Other charges 289 1,180
Total other expenses 7,649,941 4,751,451
Profit before provisions 9,610,750 9,504,354
Credit loss allowance and write offs - net (3,362,281) (247,851)
Profit before taxation 6,248,469 9,256,503
Taxation (3,374,173) (4,535,686)
Profit after taxation 2,874,296 4,720,817

1. INVESTMENTS BY SEGMENTS: 2024

Cost / Credit loss Surplus / Carrying
amortised allowance (deficit) value
cost
Rupees in ‘000
Debt Instruments
Measured at amortised cost
Federal government securities
- Ijarah Sukuk 2,974,050 – – 2,974,050
- Certificate of investment 3,000,000 (52) – 2,999,948
5,974,050 (52) – 5,973,998
Measured at FVOCI
Federal government securities
- Ijarah Sukuk 125,750,660 – 3,545,698 129,296,358
Non Government Debt Securities 6,683,993 (340,000) (235,423) 6,108,570
132,434,653 (340,000) 3,310,275 135,404,928
Instruments mandatory classified /
measured at FVTPL 5,561,635 – 79,941 5,641,576
Total Investments 143,970,338 (340,052) 3,390,216 147,020,502

263
 2023
Cost / Provision Surplus / Carrying
amortised for (deficit) value
cost diminution
Rupees in ‘000
Federal government securities
- Ijarah Sukuk 59,720,420 – 586,847 60,307,267
- Bai-muajjal – – – –
- Islamic naya Pakistan certificate
modaraba investment pool 5,484,444 – – 5,484,444
65,204,864 – 586,847 65,791,711
Non Government Debt Securities
- Listed 6,768,455 – (180,655) 6,587,800
- Unlisted 5,180,000 – (3,935) 5,176,065
11,948,455 – (184,590) 11,763,865
Total Investments 77,153,319 – 402,257 77,555,576

2. ISLAMIC FINANCING AND RELATED ASSETS - NET

2024 2023
Financing Advances Inventory Total Financing Advances Inventory Total
Rupees in ‘000
Ijarah 540,947 17,607 – 558,554 753,507 29,589 – 783,096
Ijarah - islamic long term
financing facility 12,306 – – 12,306 19,727 – – 19,727
Murabaha 5,111,120 674,294 – 5,785,414 4,061,236 58,969 – 4,120,205
Working capital musharaka 13,745,539 – – 13,745,539 41,790,198 – – 41,790,198
Diminishing musharaka 20,926,138 2,060,716 – 22,986,854 18,051,336 493,346 – 18,544,682
Istisna 2,962,798 10,917,577 587,823 14,468,198 4,702,421 3,617,508 720,628 9,040,557
Al-bai 1,639,352 – 1,684,955 3,324,307 2,796,402 – 1,800,750 4,597,152
Diminishing musharaka:
Islamic long term financing facility 3,293,757 – – 3,293,757 3,895,893 – – 3,895,893
Islamic refinance scheme for
payment of wages and salaries – 93,534 – 93,534 – 93,534 – 93,534
Islamic financing facility for storage
of agricultural produce 522,889 – – 522,889 614,449 – – 614,449
Islamic temporary economic
refinance facility 8,306,821 – – 8,306,821 12,564,438 – – 12,564,438
Islamic financing facility for
renewable energy 506,756 – – 506,756 565,892 – – 565,892
Islamic export refinance
Working capital musharaka 18,146,877 – – 18,146,877 10,344,359 – – 10,344,359
Istisna 498,545 1,798,242 153,100 2,449,887 (175,888) 5,971,218 87,824 5,883,154
Al-bai 1,129,747 – 675,723 1,805,470 – – 1,840,566 1,840,566
Gross islamic financing and
related assets 77,343,592 15,561,970 3,101,601 96,007,163 99,983,970 10,264,164 4,449,768 114,697,902
Provision against non-performing
islamic financings
-Stage 1 (103,977) (18,873) (6,466) (129,316) – – – –
-Stage 2 (2,314,517) (63,235) (49,959) (2,427,711) – – – –
-Stage 3 (3,104,615) – – (3,104,615) – – – –
- Specific – – – – (542,991) – – (542,991)
- General – – – – (12,664) – – (12,664)
(5,523,109) (82,108) (56,425) (5,661,642) (555,655) – – (555,655)
Islamic financing and related
assets - net of provision 71,820,483 15,479,862 3,045,176 90,345,521 99,428,315 10,264,164 4,449,768 114,142,247

264
2.1 Ijarah
2024
Cost Depreciation Book value
As at 1 Additions / As at 31 As at 1 Charge for As at 31 as at 31 Dec
Jan 2024 (deletions) Dec 2024 Jan 2024 the year Dec 2024 2024
Rupees in ‘000

Plant & Machinery 292,539 – 105,501 155,055 9,371 84,003 21,498

(187,038) (80,423)
Vehicles 788,548 98,343 776,014 152,798 82,690 212,208 563,806
(110,877) (23,280)
Total 1,081,087 (199,572) 881,515 307,853 (11,642) 296,211 585,304

2023
Cost Accumulated Depreciation Book value
As at 1 Additions / As at 31 As at 1 Charge for As at 31 as at 31 Dec
Jan 2023 (deletions) Dec 2023 Jan 2023 the year Dec 2023 2023

Rupees in ‘000
Plant & Machinery 336,502 – 292,539 121,846 79,272 155,055 137,484
(43,963) (46,063)
Vehicles 809,128 75,170 788,548 110,332 65,219 152,798 635,750
(95,750) (22,753)
Total 1,145,630 (64,543) 1,081,087 232,178 75,675 307,853 773,234

Future ijarah payments receivable

2024 2023
Not later Later than 1 Over 5 Total Not later Later than 1 Over 5 Total
than 1 year year & less years than 1 year year & less years
than 5 years than 5 years
Rupees in ‘000

Ijarah rental receivables 68,006 153,666 6,982 228,654 239,681 335,847 17,457 592,985

265
 Note 2024 2023
Rupees in ‘000
2.2 Murabaha
Murabaha financing 3.2.1 5,111,120 4,061,236
Advances for Murabaha 674,294 58,969
5,785,414 4,120,205

2.2.1 Murabaha receivable - gross 3.2.2 5,436,765 4,472,147

Less: Deferred murabaha income 3.2.4 (117,493) (149,821)
Profit receivable shown in other assets (208,152) (261,090)
Murabaha financings 5,111,120 4,061,236

2.2.2 The movement in murabaha financing

during the year is as follows:
Opening balance 4,472,147 6,206,469
Sales during the year 13,415,198 13,444,533
Adjusted during the year (12,450,580) (15,178,855)
Closing balance 5,436,765 4,472,147

2.2.3 Murabaha sale price 13,415,198 13,444,533

Murabaha purchase price (12,509,752) (12,469,470)
905,446 975,063

2.2.4 Deferred murabaha income

Opening balance 149,821 222,346
Arising during the year 905,446 975,063
Less: recognised during the year (937,774) (1,047,588)
Closing balance 117,493 149,821

3. DUE FROM HEAD OFFICE

Inter-branch transactions are made on Qard basis.

4. DEPOSITS
2024 2023
In local In foreign Total In local In foreign Total
currency currencies currency currencies
Rupees in ‘000
Customers
Current deposits 91,654,193 11,668,758 103,322,951 50,023,527 8,088,995 58,112,522
Savings deposits 56,772,727 789,356 57,562,083 51,846,017 839,208 52,685,225
Term deposits 30,371,707 6,228,168 36,599,875 26,267,238 5,723,385 31,990,623
Others 3,108,749 – 3,108,749 3,204,413 – 3,204,413
181,907,376 18,686,282 200,593,658 131,341,195 14,651,588 145,992,783
Financial Institutions
Current deposits 337,087 222 337,309 61,371 – 61,371
Savings deposits 4,329,081 – 4,329,081 1,716,548 – 1,716,548
Term deposits 135,000 – 135,000 135,000 – 135,000
4,801,168 222 4,801,390 1,912,919 – 1,912,919
186,708,544 18,686,504 205,395,048 133,254,114 14,651,588 147,905,702

266
 2024 2023
Rupees in ‘000
4.1 Composition of deposits
- Individuals 80,291,166 67,672,393
- Government / Public Sector Entities 6,544,454 6,157,392
- Banking Companies 1,922 3,377
- Non-Banking Financial Institutions 4,799,468 2,087,163
- Private Sector 113,758,038 71,985,377
205,395,048 147,905,702

4.2 Particulars of deposits and other accounts

- In local currency 186,708,544 133,254,114
- In foreign currencies 18,686,504 14,651,588
205,395,048 147,905,702

4.3 This includes eligible deposits of Rs. 129,798,417 thousand which are covered under sharia compliant deposit protection
mechanism as required by the Deposit Protection Corporation circular no 5 of 2018.

5. OTHER LIABILITIES 2024 2023

These include charity fund, details of which are given below: Rupees in ‘000

Charity fund
Opening balance 402 254
Received from customers on account of delayed payment 356 448
Payments / utilization during the period - Health (301) (300)
Closing balance 457 402

Charity paid to any single entity does not exceeds Rs 500,000.

6. ISLAMIC BANKING BUSINESS UNAPPROPRIATED PROFIT

Opening balance 4,720,817 2,604,686
Add: Islamic banking profit for the period 6,248,469 9,256,503
Less: Taxation (3,374,173) (4,535,686)
Less: Reserves – –
Less: Transferred to head office (4,720,817) (2,604,686)
Closing balance 2,874,296 4,720,817

267
 2024 2023
Rupees in ‘000
7. Contingencies and commitments
Guarantees 18,073,842 13,819,209
Commitments 26,569,169 17,509,845
44,643,011 31,329,054
8. Profit / return earned
Profit earned on:
Financing 18,133,033 17,172,992
Investments 15,659,083 11,917,010
Placements 1,741,774 357,684
35,533,890 29,447,686
9. Profit / return expensed

Deposits and other accounts 16,267,819 12,935,059

Due to financial institutions 2,892,956 2,801,810
Lease liability against right-of-use assets 426,428 112,233
19,587,203 15,849,102
10. Pool management

Pools maintained by the Bank's Islamic Banking Division (IBD), their key features and risk and reward
characteristics

The Bank operates general and special pools for deposits and inter-bank funds accepted / acquired under Modaraba and Musharakah
modes. Under the general deposits pools, the Bank accepts funds on Modaraba basis from depositors (Rabb-ul-Maal) where the Bank
acts as Manager (Mudarib) and invests the funds in Shariah Compliant modes of financing, investments and placements. IERS and
other pools (special pools) are operated for funds acquired / accepted from the State Bank of Pakistan and other banks for Islamic
Export Refinance to the Bank's customers and liquidity management respectively under the Musharakah / Modaraba modes. Further,
the Bank also contributes its equity and becomes the capital provider, wherein required.

Following pools are being managed by IBD:

- General pool for local and foreign currencies for depositors

- Islamic export refinance scheme musharaka pool
- Special pool

All the Modaraba based remunerative deposits shall be considered as an investment from Rabbul Maal in the pool, along with IBD's
own share of equity, which is also commingled in the pool. The applications of these funds are on islamic financing and related assets,
Investments, and Placements for generating profits to be shared among the depositors as per the Weightage system.

The IERS Pool caters the 'Islamic Export Refinance' requirements based on the guidelines issued by the SBP.

Profits are calculated on the basis of weightages assigned to different tiers and tenors. These weightages are announced at the
beginning of the period, while considering weightages emphasis shall be given to the quantum, type and the period of risk assessed
by applying following factors:

- Contracted period, nature and type of deposit / fund.

- Payment cycle of profit on such deposit / fund, i.e. monthly, quarterly or on maturity
- Magnitude of risk

Any change in profit sharing weightages of any category of deposit / fund providers shall be applicable from the next month (where
applicable).

268
Avenues/sectors of economy/business where modaraba based deposits have been deployed.

- Agriculture, forestry, hunting and fishing

- Automobile and transportation equipment
- Chemicals and pharmaceuticals
- Electronic and electrical appliances
- Financial
- Production and transmission of energy
- Footwear and leather garments
- Textile
- Cement
- Others

Parameters used for allocation of profit, charging expenses and provisions etc.

The direct expenditure shall be charged to respective pool, while indirect expenses including the establishment cost shall be borne
by Habib Metro IBD as Mudarib. The direct expenses to be charged to the pool may include depreciation of ijarah assets, insurance /
takaful expenses of pool assets, stamp fee or documentation charges, brokerage fee for purchase of securities, impairment / losses
due to physical damages to specific assets in pools etc. Provisions for non-performing accounts are borne by the mudarib. However,
write-off of non-performing accounts is charged to the respective pool. However, this is not an exhaustive list; Habib Metro IBD pool
management framework and the respective pool creation memorandum may identify and specify these and other similar expenses
to be charged to the pool.

The Bank managed the following general and specific pools during the year:

Profit rate and Profit rate return Percentage of Amount of

weightage Profit sharing Profit sharing distributed to Mudarib share Mudarib Share
General Remunerative / announcement Profit rate return ratio Mudarib ratio Rabbul Maal remunerative transferred transferred
Specific Depositor's Pools period earned Share / Fee Share Mudarib share deposits (savings) through Hiba through Hiba

General pool
Islamic Export Refinance
(IERS) Pool
PKR Pool Monthly 17.59% 50.00% 50.00% 5,184,471 9.35% 15.15% 785,653
USD Pool Monthly 12.49% 80.00% 20.00% 6,613 0.18% 13.08% 1,061

Specific pools
Islamic Export Refinance
(IERS) Pool Quarterly 20.00% 72.67% 27.33% 2,428,985 12.87% 0.00% –
Special Pool (Saving) Monthly 20.07% 34.58% 65.42% 185,677 16.23% 42.09% 43,207
Special Pool (TDR) Monthly 20.59% 7.22% 92.78% 394,869 18.73% 0.00% –
Treasury F.I. Pool PSR Deal Basis 19.66% 4.33% 95.67% 26,125 18.88% 0.00% –

269
BRANCH NETWORK

Registered Office and Head Office

Ground Floor, HABIBMETRO Head Office,
I.I. Chundrigar Road, Karachi-74200, Pakistan
U.A.N.: (92-21) 111-14-14-14 Fax: (92-21) 32630404-05

HMB Connect: 111-1(HABIB)42242

For information / query: info@habibmetro.com
website: http://www.habibmetro.com/atm-branch-locator/

SOUTHERN REGION Eidgah Branch Malir Cantt. Branch

Falcon Complex Branch Malir City Branch
KARACHI Garden East Branch Karachi Manghopir Road SITE
Aisha Manzil Karachi Gizri Branch Marriot Road Branch
Alamgir Road Branch Gulistan-e-Johar Branch Mereweather Branch
Allama Iqbal Road Branch Gulshan Chowrangi Branch Mithadar Branch - Karachi
Askari - IV Branch - Karachi Gulshan-e-Ali Karachi NHS Branch, Karachi
Askari V Malir Cantt. Br. KHI Gulshan-e-Iqbal 13-C Karachi NHS Complex Karsaz
Bahadurabad Branch Gulshan-e-Iqbal Branch North Karachi Industrial Area
Bahria Town Branch - Karachi Gulshan-e-Maymar Branch North Napier Road Branch
Bilal Chowrangi KIA Karachi Hasrat Mohani Road Branch North Nazimabad Branch
Block L, N.Nazimabad Br, KHI Hassan Square Branch Nursery Branch
Block M N.Nazimabad Karachi HBZ Plaza Branch Paper Market Branch
Boat Basin Branch Hyderi Branch Philips Chowrangi Branch
Bukhari Commercial Branch Industrial Area Korangi Branch Plaza Square Branch
Business Avenue Branch Ittehad Branch Port Qasim Branch
Ceasers Tower Branch Jodia Bazar Branch Progressive Plaza Branch
Ch. Khaliq-uz-Zaman Road Br. Karachi Export Processing Zone S.I.T.E. Branch
Chartered Accountant Avenue Karimabad Branch Saadi Town Branch Karachi
City Court Branch Khalid Bin Walid Road Branch Saba Avenue Branch
Clifton Block-2 Branch Khayaban-e-Bokhari Branch Saddar Branch
Clifton Branch Khayaban-e-Ittehad PhVI Br KHI Safoora Goth Branch
Cloth Market Branch Khayaban-e-Sehar Branch Samanabad Gulberg Branch
D.H.A Khayaban-e-Shahbaz Branch Shahbaz Priority Branch
D.H.A Phase VIII Branch Khayaban-e-Tanzeem Branch Shahrah-e-Faisal Branch
Dalmia Road Branch - Karachi Khyaban-e-Nishat Branch Shahrah-e-Faisal Building Br.
Dastagir F.B Area Karachi Korangi Branch Shahrah-e-Liaquat Branch
Denso Hall Branch-Karachi Korangi Creek Branch - KHI Shahrah-e-Quaideen Branch
DHA Phase I Branch Kutchi Gali Jodia Bazar Branch Sindhi Muslim Society Karachi
DHA Phase II Branch Landhi Industrial Area Branch SITE - II Branch
DHA Phase VI Karachi M.A. Jinnah Road Branch SITE Police Station Branch-KHI
Dhoraji Colony Branch Main Branch Karachi Star Gate Branch

284
Stock Exchange Branch NORTHERN REGION FAISALABAD
Tariq Road Branch Faisalabad Branch
Textile Plaza Branch Ghulam Muhammadabad Br.
LAHORE
Timber Market Branch Gulberg Branch Faisalabad
Badami Bagh Branch
Tipu Sultan Road Branch Jhang Road Br.-Faisalabad
Baghbanpura Branch
University Road Branch Millat Chowk Branch
Bank Square Market MT
UP More Branch Peoples Colony Branch
Brandreth Road Branch
Water Pump Branch Sargodha Road Branch
Cantt. Branch
ZAMZAMA Branch Karachi Satiana Road Br.-Faisalabad
Cavalry Ground Branch Lahore
Circular Road Branch Susan Road Branch
HYDERABAD Daroghawala Branch
Autobhan Road Br.-Hyderabad Davis Road Branch MULTAN
DHA Branch - Hyderabad DHA Branch Lahore Chungi No.14 Branch-Multan
HyderAbad Branch DHA Phase IV Branch Gulgasht Colony Branch
Latifabad Branch Hyderabad DHA Phase V Hussain Agahi Branch
Market Road Branch-Hyderabad DHA Phase VI Branch - Lahore Model Town Branch - Multan
Qasimabad Branch Ferozepur Road Branch Multan Branch
SITE Hyderabad Branch Fruit & Sabzi Market Shahrukn-e-Alam Br.-Multan
Garhi Shahu Branch - Lahore
OTHER SOUTHERN Gulberg Branch SIALKOT
REGION CITIES Gulshan-e-Ravi Branch Lahore Bhagowal Branch - Sialkot
Daharki Branch Hall Road Lahore City Housing Branch-Daska
Dhoro Naro Branch Iqbal Town Branch Gohadpur Branch - Sialkot
Ghotki Branch Islampura Branch Gulbahar Branch
Hub Chowki Branch Johar Town Branch Kotli Loharan Branch
Jacobabad Branch Kahna Noh Branch Ladhar Branch
Kandhkot Branch Lahore Branch Pasrur Branch - Sialkot
Khairpur Branch Lalik Chowk Branch Pasrur Road Branch
Larkana Branch Main Boulevard Branch Sambrial Branch Sialkot
M. A. Jinnah Road Quetta Misri Shah Lahore Sialkot Branch
Military Road Branch Sukkur Model Town Link Road Branch Sialkot Cantt. Branch
Nawabshah Branch Muslim Town Branch Lahore Small Industrial Estates Branc
Pano Aqil Branch Raiwind Road Branch
Sakrand Branch-Sindh Ravi Road Branch ISLAMABAD
Sanghar Branch Shahalam Market Br. Lahore BB-17 Branch-Islamabad
Shikarpur Branch Shahrah-e-Quaid-e-Azam Br. Bahria Town Branch
Sukkur Branch Township Branch Civic Center Bahria Town - ISD
Tando Adam Branch Urdu Bazar Branch D - 12. Markaz Br. Islamabad
Tando Allah Yar Branch Valencia Town Lahore DHA Phase II Branch, Islamabad
Tando Muhammad Khan Branch Wahadat Road Branch Lahore Diplomatic Enclave Branch-ISB
Thatta Branch Walton Road Branch F - 6 Markaz Branch
Umerkot Branch Wapda Town Branch F-10 Markaz Branch

285
G - 8 Markaz Branch AZAD KASHMIR Depalpur Branch
G-11 Markaz Branch Arra Jattan Branch -Dadyal -AK Dinga Branch - Gujrat
Gulberg Green Br. - Islamabad Bagh Branch Azad Kashmir Do-Burji Malhiyan Branch
Humak Industrial Area Branch Bhimbar Branch Azad Kashmir Farid Town Branch Sahiwal
I - 8 Markaz Branch Mirpur (A.K) Branch Fateh Jhang Branch Attock
I-10 Markaz Branch Pang Peeran Branch Fazilpur Branch
Islamabad Branch Ghalla Mandi Br. Chishtian
Kuri Road Branch - Islamabad Gojra Br. Distt.Mandibahauddin
GILGIT BALTISTAN
Markaz F-7 Branch - Islamabad Gujar Khan Branch
Alamdar Chowk Branch
Mumtaz City Branch Islamabad Gujrat Branch
Ali Abad Branch
Gulyana Branch - Gujrat
Astore Branch-Gilgit Baltistan
Hafizabad Branch
RAWALPINDI Chalt Nagar (Sub Br. Sikandra)
Hangu Branch
Chaklala Scheme III Br. RWP Danyore Branch
Jamkey Cheema Branch-Sialkot
Dhamial Camp Branch Gilgit Branch
Jaranwala Branch Faisalabad
Iqbal Road Branch Jutial Branch
Jauharabad Branch
Khanna Branch Khaplu Branch
Jhelum Branch
Peshawar Road Branch - RWP Sikandrabad Branch Naggar
Kamalia Branch
Rawalpindi Branch Skardu Branch
Kasur Branch
Saidpur Road Branch Rawalpindi Sost Branch-Gilgit Baltistan
Khalabut Haripur Branch
Shamsabad Branch Rawalpindi
Khurrianwala Branch-Faisalabad
Sihal Chakri Branch-Rawalpindi FATA / PATA Kohat Branch
Waris Khan Br. Muree Rd. RWP. Dassu Branch
Kotla Arab Ali Khan Branch
Mingora Branch
Kutchery Chowk Branch-Gujrat
GUJRANWALA Miran Shah Branch
Mailsi Branch
GT Road Aimanabad Morr Branch Parachinar Branch
Mandi Bahauddin Branch
Gujranwala Branch Sadda Branch
Mangowal Branch
Hafizabad Road Br. Gujranwala
Mansehra Branch
Jinnah Road Dhullay Branch OTHER NORTHERN Mardan Branch
Kangniwala Rd. Br.- Gujranwala
REGION CITIES Mian Channu Branch
Mandiala Tegha Branch Muridwala Branch
Alipur Chatha Branch
Muhafiz Town Branch Nankana Sahib Branch
Arifwala Branch - Pakpatan
Qila Deedar Singh Branch New City Branch-Wah
Bahawalpur Branch
Sheikhupura Road Branch Okara Branch
Bannu Branch
Bhikhi Sharif Branch Panyala Branch
PESHAWAR Burewala Branch Pattoki Branch
Chamkani Branch-Peshawar Chak Jhumra Branch PEZU Branch
Khyber Bazar Branch Charsadda Branch Phalia Branch
Patang Chowk Branch - Peshawar Chenab Nagar - Rabwah Pir Mahal, Branch
Peshawar Branch Chichawatni Branch Quaidabad Branch-Sargodha
Ring Road Branch - Hayatabad Circular Road Branch Narowal Rahim Yar Khan Branch
University Road - Peshawar D. I. Khan Branch Renala Khurd Branch

286
Sahiwal Branch PaposhNagar Garden Town
Samundri Branch Faisalabad PECHS Block 6 Gulberg Branch
Sarai Alamgir Branch PIB Colony Jail Road
Sargodha Branch Preedy Street Mcleod Road Lahore
Shahkot Branch Safoora Chowrangi Br.Khi Punjab C.H.S. - Lahore
Shakargarh Branch - Narowal Saudabad - Karachi Raiwind City
Sheikhupura Branch Shahbaz Commercial Br. Samanabad - Lahore
Shewa Branch - Swabi Shershah - Khi Shadbagh Lahore
Sohawa Branch Sohrab Goth - Karachi Shadman Lahore
Swabi Branch Soldier Bazar - Karachi Shahdara Lahore
Topi Branch - Swabi South Park Avenue KhI Tajpura - Lahore
Ugoki Branch Stadium Road - KhI Quaid-e-Azam Ind. Est LHR
Wah Cantt. Branch West Wharf - Khi Badian Road Lahore Cantt.
Wazirabad Branch Gujranwala Writers Chamber - Khi DHA PhaseVIII Lahore Cantt
Shah Faisal Colony - KHI Thokar Niaz Baig - Lahore
Baitul Mukkaram - Karachi Islamic Bkg.-Sundar Industrial Est.
ISLAMIC BANKING
Block N N.Nazimabad - KHI Islamic Bkg.-Badamibagh
BRANCHES
Gulistan-e-Johar BL-1. KHI Islamic Bkg.-Circular Road
Hill Park Branch-Karachi
KARACHI New Sabzi Mandi Branch-KHI OTHER CITIES
Abul Hassan Isphani Khi Saeedabad Baldia - Karachi Abbotabad Cantt
Baara Market - Karachi Sehba Akhtar Road-Karachi Abbottabad
Bohri Bazar - Karachi Shireen Jinnah Colony-KHI Abdul Hakeem
Bombay Karachi Islamic Bkg. Alfalah Court Khi Ahmedpur East
Ceramic Market Islamic Bkg.-Clifton Airport Road, Quetta
Chandni Chowk Islamic Bkg.-Dhorajee Colony Attock Branch
Civil Lines - Karachi Islamic Bkg.-Gulzar-e-Hijri Bahawalnagar
DHA Phase IV - Karachi Islamic Bkg.-Jodia Bazar Bajour
DMCHS-Karachi Islamic Bkg.-Khayaban-e-Jami Barnala AJK
Gulshan-e-Hadeed Islamic Bkg.-Korangi Battagram
Gulshan-e-Jamal - KHI Islamic Bkg.-North Karachi Besham
Hussainabad Islamic Bkg.-Shaheed-E-Millat Bhakar
Juna Market Islamic Bkg.-Shahrah-e-Faisal Bhalwal
Korangi Township - KHI Islamic Bkg.-SITE Bhara Kahu - Islamabad
Liaquatabad - Karachi Rashid Minhas Road Branch Canal Road -Faisalabad
Mission Road - Khi CHAK # 50 NB
Naval Colony Karachi LAHORE Chakdara Lower Dir
Naya Nazimabad - Karachi Bahria Town Lahore Chakwal
Nazimabad No.1-Karachi D.H.A Phase I Lahore Chaman
Nazimabad No.3 - Karachi DHA RAYA - Lahore Channan, Gujrat
Nishtar Road - Karachi EME Society Lahore Chillas
Orangi Town Branch - KHI Faisal Town - Lahore Chiniot

287
Chitral Lalamusa Tank
D. I. Khan Lalazar - Rawalpindi Tarnol - Islamabad
D.G. Khan Layyah Taunsa Sharif
Dara Adam Khel Loralai Taxila-Rawalpindi
Dargai Malakand Machka Toba Tek Singh
DC Colony - Gujranwala Mansehra Totakan
Dharanwala-Bahawalnag Marrot Turbat Baluchistan
Dheri Allahdhand Mateela University Faisalabad
Dhillam Ballagan Mazai Adda Usta Muhammad
E-11 -Islamabad Mianwali Wazir Dhand Shakas
F-11 Markaz -Islamabad Mirpur Khas Yazman Mandi
F-8 Markaz Islamabad Mishti Mela Zahir Pir
Faizpur Sheikhupura Mouza Kachi Jamal Zhob - Baluchistan
Faqir Wali Muridke Ganjianwali Khurd-Sialkot
G.T.Road Gujranwala Murree Road RWP I11 Grain Market Islamabad
G-6 Markaz - Islamabad Muslim Bagh Khadim Ali Road - Sialkot
Ghakhar Mandi Muslim Bazar - Sargodha Kotwali Road-Faisalabad
Ghalla Mandi - Multan Nasir Bagh - Peshawar Malakwal - Mandibahauddin
Gojra Oghi Muzaffarabad-Azad Kashmir
GT Road Peshawar Pakpattan Satellite Town Gujranwala
Gujrat Pallandri Satellite Town-Bahawalpur
Gwadar Pattan - Lower Kohistan Islamic Banking Dir Upper Br.
Hala Naka Hyderabad Peshawar Cantt. Islamic Bkg.- Qazi Ahmed Br.
Haripur PWD Commercial Area RWP Islamic Bkg.-Batkhela
Haroonabad Qilla Abdullah Islamic Bkg.-Gujranwala

Hasilpur Quetta Islamic Bkg.-Hayatabad Br.

Havelian Islamic Bkg.-Hyderabad

Rahim Yar Khan
Islamic Bkg.-Mingora
Hazro Branch Raja Bazar - Rawalpindi
Islamic Bkg.-Multan
Islamabad Rajanpur
Islamic Bkg.-Muzaffargarh Br.
Jampur Rawalakot - Azad Kashmir
Islamic Bkg.-Nowshera
Jhang Sadiqabad
Islamic Bkg.-Peshawar
Kallar Syedan Saidu Sharif - Swat
Islamic Bkg.-Rawalpindi
Kamoke Sakhakot
Islamic Bkg.-Sahiwal Branch
Kanju Salar Wahen - Kabirwala
Islamic Bkg.-Saleh Khana
Karkhana Bazar - FSD Samanabad - FSD
Islamic Bkg.-Sialkot
Kashmir Road RWP Sambat - Swat
Islamic Bkg.-Timergarah
Khanewal Satellite Town Sargodha
Kharian City Shabqadar - Charsadda
Khawazakhela Shujaabad
Khudian Khas - Kasur Sirki Road - Quetta
Khushab Swari Bazar
Kot Abdul Malik Talagang

288
NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Thirty-Third Annual General Meeting of the shareholders of Habib Metropolitan Bank Ltd. will be held
at the ICAP Auditorium, Institute of Chartered Accountants of Pakistan, G-31/8, Chartered Accountants Avenue, Clifton, Karachi on
Friday, March 28, 2025 at 9.00 a.m. to transact the following business:

ORDINARY BUSINESS
1. To receive, consider and adopt the Audited Accounts, standalone as well as consolidated, of the Bank for the year ended
December 31, 2024 together with the Directors' and Auditors' reports thereon.

https://www.habibmetro.com/information-center/financials/

2. To approve, as recommended by the Board of Directors, final dividend @ 45% (Rs. 4.50 per share) in the form of cash for the year
ended December 31, 2024, in addition to already paid interim dividend @ 75% (Rs. 7.50 per share) in the form of cash for the
year ended December 31, 2024.

3. To appoint Auditors for the financial year ending December 31, 2025 and fix their remuneration. The present Auditors, Messrs.
KPMG Taseer Hadi & Co., Chartered Accountants, being eligible, offer themselves for re-appointment.

ANY OTHER BUSINESS

4. To consider any other business with the permission of the Chair.

By Order of the Board

ATHER ALI KHAN

Company Secretary
Karachi: March 7, 2025

NOTES:

1. Online Facility for attending Annual General Meeting

The Bank has made necessary arrangements for shareholders to attend the AGM physically and virtually, therefore, those
shareholders that wish to attend the AGM proceedings virtually are requested to get their particulars registered with the Company
Secretary by providing the following information through email at agm@habibmetro.com and/or WhatsApp # +92-301-1177809
by 5.00 pm on March 25, 2025 (Tuesday):

S.No. Name of the Shareholder CNIC / Passport # Folio / CDC # Cell Number Email Address

Link to electronic connectivity will only be sent to the registered shareholders. The login facility will be opened at 8.45 a.m. on
March 28, 2025 enabling the shareholders to join the proceedings.

289
2. A shareholder entitled to attend and vote at this meeting may appoint another shareholder as his/her proxy to attend the
meeting and vote for him/her. Proxy form is enclosed with the Annual Report. A proxy must be a shareholder of the Bank. In
order to be effective, proxies must be received at the Registered Office of the Bank, duly stamped, signed and witnessed, not
less than 48 (forty-eight) hours before the meeting.

3. CDC account holders and sub-account holders are required to bring with them their original National Identity Card or Passport
along with the participants ID numbers and their account numbers in order to facilitate identification. In case of corporate entity,
the Board of Directors' resolution / power of attorney with specimen signature of the nominee is also required.

4. Shareholders are requested to notify the change of addresses to the Share Registrar, at the below address:

CDC Share Registrar Services Limited

CDC House, 99-B, Block-B, S.M.C.H.S., Main Shahrah-e-Faisal, Karachi-74400 (Pakistan)
Tel: 0800-23275, Fax No. (92-21) 34326053, Email: info@cdcsrsl.com, URL: www.cdcsrsl.com

5. The share transfer book of the Bank will remain closed from March 21, 2025 to March 28, 2025 (both days inclusive).

6. Bank Account Details for Payment of Cash Dividend

In accordance with the Section 242 of the Companies Act, 2017, any cash dividend shall only be paid through electronic mode
directly into the bank account designated by the entitled shareholder. Therefore, please provide the following information to
the Bank's Share Registrar (in case of physical shareholders); or CDC Participant (in case of shareholding in book-entry form)
along with a copy of your valid CNIC:

Details of Shareholder
Name of Shareholder
Folio / CDS Account No.
CNIC No.
Cell number of shareholder
Landline number of shareholder, if any
Email Address (Mandatory)
Details of Bank Account
Title of Bank Account
International Bank Account Number PK ______________________________________________________ (24 digits)
(IBAN) “Mandatory”

Bank's Name
Branch Name
Branch Address

It is stated that the above-mentioned information is correct and in case of any change therein, I / we will immediately intimate
Participant / Share Registrar accordingly.

____________________
Signature of Shareholder

290
7. Mandatory Submission of CNIC

Pursuant to the directives of the Securities & Exchange Commission of Pakistan (SECP), shareholders having shares in physical
form are requested to submit a copy of their valid CNIC (if not already provided) to the Bank's Share Registrar without any delay.

8. Deduction of Withholding Tax from Dividend

The Government of Pakistan through Finance Act, 2020 has made certain amendments in section 150 of the Income Tax
Ordinance, 2001 whereby different rates prescribed for deduction of withholding tax on the amount of dividend paid by the
companies. These tax rates are as under:

(a) For filers of income tax returns: 15%

(b) For non-filers of income tax returns: 30%

To enable the Bank to make tax deduction on the amount of cash dividend @ 15% instead of 30%, all shareholders whose names
are not entered in the Active Tax-Payers List (ATL) provided on the website of Federal Board of Revenue (FBR), despite the fact
that they are filers, are advised to make sure that their names are entered into ATL at the earliest possible otherwise tax on their
cash dividend (as and when declared) will be deducted @ 30%.

For shareholders holding their shares jointly as per the clarification issued by the FBR withholding tax will be determined
separately on 'Filer/Non-Filer' status of Principal Shareholder as well as joint-holder(s) based on their shareholding proportions.
Therefore, all shareholders who hold shares jointly are required to provide shareholding proportions of Principal Shareholder
and Joint-holder(s) in respect of shares held by them follows:

Folio / CDC Total Principal Shareholder Joint Shareholder(s)

Account No. Shares
Name and CNIC No. Shareholding Name and CNIC No. Shareholding
Proportion Proportion
(No. of Shares) (No. of Shares)

In case of non-receipt of above information, the shareholding will be divided among the joint-holders equally.

9. Unclaimed Shares and Dividends

As per the provisions of Section 244 of the Companies Act, 2017, any shares issued or dividends declared by the Bank, which
remain unclaimed or unpaid for a period of three years from the date they became due and payable shall vest with the Federal
Government after compliance of procedures prescribed under the Act. In compliance of the above, the Bank has already sent
individual letters to the concerned shareholders requesting them to claim their outstanding cash dividends and/or bonus shares.
In this respect and for facilitation of the shareholders, the details of unclaimed shares and dividends can also be accessed from
the Bank's website.

Therefore, in view of the above, those shareholders who have not yet collected their pending entitlements are once again
advised to lodge their claims with the Bank's Share Registrar at the address given above.

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10. Availability of Annual Audited Accounts on Website

The audited accounts of the Bank for the year ended December 31, 2024 have been made available on the Company's website
www.habibmetro.com. Additionally, the annual and quarterly accounts for the prior years and periods are also available.

Further, in accordance with SRO # 389(I)/2023 dated March 21, 2023, the shareholders of Habib Metropolitan Bank Limited in
its AGM held on March 30, 2023 had accorded their consent for transmission of annual reports including annual audited accounts
and other information contained therein of the Bank through QR enabled code and weblink instead of transmitting the same
through CD/DVD/USB. Audited financial statements shall also be provided to those shareholders, who have provided their valid
email IDs to our Share Registrar. The shareholders who wish to receive hard copies of the aforesaid documents may send the
standard request form available on the Bank's website to the Company Secretary / Share Registrar, and the Bank will provide
the aforesaid documents to the shareholders on demand, free of cost, within one week of such demand.

11. Video Conference Facility

In terms of the Companies Act, 2017, shareholders residing in a city other than Karachi holding at least 10% of the total paid
up share capital may demand the facility of video-link for participating in the annual general meeting. The request for video-
link facility shall be received by the Share Registrar at the address given hereinabove at least 7 days prior to the date of the
meeting on the standard form available on the Bank's website.

12. Conversion of Physical Shares into Book-entry Form

As per Section 72 of the Companies Act, 2017, every existing company shall be required to replace its physical shares with book
entry form in a manner as may be specified and from the date notified by the Commission, within a period not exceeding four
years from the commencement of this Act. In this respect, the Securities & Exchange Commission of Pakistan (SECP) vide its
Letter No. CSD/ED/Misc/2016-639-640, dated March 26, 2021 has advised all listed companies to pursue such shareholders still
holding shares in physical form, requiring conversion of their shares into book-entry form.

Accordingly, the shareholders having physical shareholding are once again advised to open CDC sub-account with any of the
CDC Participants to place their physical shares into book-entry form at their earliest. This will facilitate them in number of ways
including safe custody and easy sale of shares at the time of need, as the trading of physical shares is not permitted under
existing regulations of the Pakistan Stock Exchange Limited.

292
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PROXY FORM

I/We

of

being member(s) of Habib Metropolitan Bank Limited and holding

ordinary shares, as per Folio No. / CDC participant ID - A/C No.

hereby appoint Folio No. / CDC participant ID - A/C No.

of

or failing him Folio No. / CDC participant ID - A/C No.

of

another member of the Bank to vote for my / our behalf at the 33rd Annual General Meeting of the Bank to be held on
March 28, 2025 and at any adjournment thereof.

As Witness my / our hand this day of March 2025.

Witness

1. Signature
Name
REVENUE
Address STAMP
CNIC # Rs. 5/-

2. Signature
Name
Address Signature of Member(s)
CNIC #

A member entitled to attend General Meeting is entitled to appoint a person as his / her proxy to attend and vote instead
of him / her. A proxy should be a member of the Bank. No person shall act as proxy (except for a corporation) unless he / she
is entitled to be present and vote in his / her own right.
CDC account holder or sub-account holder appointing a proxy should furnish attested copies of his / her own as well as the
proxy's CNIC / Passport with the proxy form. In case of corporate entity, the Board of Directors' resolution / power of attorney
with specimen signature shall be submitted along with proxy form.
The instrument appointing a proxy should be signed by the member or by his / her attorney duly authorized in writing. If the
member is a corporation, its common seal (if any) should be affixed to the instrument.
The proxies, in order to be valid, must be deposited at the Registered Office of the Bank not less than 48 hours before the time
of meeting.
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