1. business and industrial
2. company
3. merger and acquisition

Contents
Company Information
Directors’ Review
Unconsolidated Condensed Interim Statement of Financial Position
Unconsolidated Condensed Interim Profit and Loss Account
Unconsolidated Condensed Interim Statement of Comprehensive Income
Unconsolidated Condensed Interim Statement of Changes in Equity
Unconsolidated Condensed Interim Cash Flow Statement
Notes to the Unconsolidated Condensed Interim Financial Information
Consolidated Condensed Interim Statement of Financial Position
Consolidated Condensed Interim Profit and Loss Account
Consolidated Condensed Interim Statement of Comprehensive Income
Consolidated Condensed Interim Statement of Changes in Equity
Consolidated Condensed Interim Cash Flow Statement
Notes to the Consolidated Condensed Interim Financial Information
1
QUARTERLY
REPORT
(UNAUDITED)
02
03
06
07
08
09
10
11
23
24
25
26
27
28
QUARTERLY
REPORT
(UNAUDITED)
Company Information
Board of Directors
Teo Cheng San, Roland
Tejpal Singh Hora
Chia Yew Hock, Wilson
Ong Kian Ngee
Asif Jooma
Najmus Saquib Hameed
Muhammad Abdullah Yusuf
Badar Kazmi
Chairman
Director
Director
Director
Director
Director
Director
Director & President /CEO
Board Audit Committee
Muhammad Abdullah Yusuf
Najmus Saquib Hameed
Chia Yew Hock, Wilson
Chairman
Member
Member
Board Risk Management Committee Tejpal Singh Hora
Asif Jooma
Ong Kian Ngee
Badar Kazmi
Chairman
Member
Member
Member
Board Human Resource Committee
Teo Cheng San, Roland
Asif Jooma
Ong Kian Ngee
Badar Kazmi
Chairman
Member
Member
Member
Company Secretary
Ather Ali Khan
Chief Financial Officer
Yameen Kerai
Registered Office
First Floor, Post Mall
F-7 Markaz, Islamabad
Head Office
PNSC Building
M.T. Khan Road
Karachi-74000
UAN: +9221 111 333 111
Email & URL
Email: [email protected]
URL: www.nibpk.com
Share Registrar Office
THK Associates (Pvt.) Limited
State Life Building No. 3
Dr. Ziauddin Ahmed Road
Karachi-75530
UAN: +9221 111 000 322
Auditors
M/s. KPMG Taseer Hadi & Co.
Chartered Accountants
Legal Advisor
M/s. Mandviwalla & Zafar
Advocates
Credit Rating
Long Term:
Short Term:
NIB TFC:
Rating Agency:
AAA1+
A+
PACRA
2
Directors’ Review
For the nine months ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
THE ECONOMY AND BANKING SECTOR
Political uncertainty, flash floods and financial assistance below projections during the third
calendar quarter of 2014 had a significant impact on the economy and business sentiment.
The delayed IMF tranche coupled with a wider trade deficit - partly mitigated by higher
remittances and service income due to the Coalition Support Fund (CSF) - kept pressure on
the overall balance of payments. The current account deficit increased to USD 1,372 mn in
July-Aug 2014 compared to USD 580 mn in the same period last year.
Despite severe flooding in agricultural areas and disruption of supplies, it is encouraging to
note that headline and core inflation in September 2014 has remained below 8%. However,
looking ahead, the likely upward revision in electricity tariffs coupled with the imposition of
cess on gas consumers are expected to increase inflation.
Increased government borrowing requirements together with attractive returns on government
securities soaked up a substantial portion of banking sector liquidity. Government borrowing
from commercial banks in the third calendar quarter (up to 26th September) increased by
Rs 102 bn, compared to net retirement of Rs 186 bn in the corresponding period last year.
Despite macro-economic challenges, the government remains committed to the IMF targets
with respect to privatization / divestment of government - owned shares in public sector
enterprises, as well as the issuance of debt instruments in the international market. These
events are expected to bring IMF disbursements back on track, thereby improving the foreign
exchange position as well as banking sector liquidity. Seasonal credit demand for cotton
procurement during the rest of the year is expected to increase private sector credit off-take,
boosting banking sector profitability.
OPERATING PERFORMANCE
NIB Bank continued to build its franchise by offering tailored products and services to its
selected target market in the Wholesale, Commercial and Consumer Banking segments. The
Bank continued to book new customers whilst also deepening existing relationships.
Intense competition coupled with high liquidity continued to shrink lending spreads, especially
for blue chip customers in the Wholesale segment. However, the Bank more than compensated
for this shortfall through higher commissions and foreign exchange income driven by record
trade volumes. Trade-related revenue combined with income from advisory and syndications
led to strong growth in non-funded income in the first nine months of 2014, significantly improving
the Bank's risk-adjusted returns from customers in the Corporate segment.
By effectively leveraging its dedicated branch network and continuing to hire experienced staff,
the Commercial segment continued to build on momentum generated earlier this year. Increased
customer orientation, service quality and effective support from Risk management and Operations
are enabling the Bank to establish a serious market presence in this highly competitive customer
segment. As a result month-on-month revenues from lending, trade and deposits are growing
impressively. Commercial trade volumes in the first nine months of 2014 were more than the
annual volume of 2013. Success in customer acquisition and development of trade volumes
provides the Bank with a solid base to grow a core deposit base through holding margins for
LCs, as well as maintaining primary operating accounts of customers in this segment.
3
Directors’ Review
For the nine months ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
In the Consumer segment the Bank is executing its strategy based on the needs of its customers
clustered by income profile and lifestyle. The organizational structure, branch network and
product offerings are fully aligned with this strategy. The prime focus is generating sustainable
revenue streams. Deposit growth is now seen across a much broader branch base, resulting
in more consistent growth than in the past. The Consumer Bank has also shown impressive
growth in non-funded sources of revenue such as sales of fixed income securities, foreign
exchange and bancassurance products to its more affluent customers. This stream of income
promises further growth prospects in the future. On the assets side, the Bank continues to grow
its secured and unsecured loans to achieve a healthy portfolio yield within established and
robust risk parameters. As long as the credit performance of the recently booked portfolio is
within acceptable limits and the economic outlook remains benign, consumer lending will
continue to be an important contributor to the Bank's bottom line. This will also ensure that a
full product offering is available to Consumer Banking customers.
On an unconsolidated basis the Bank's revenue of Rs 5,760 mn in the first nine months of 2014
grew by 20% over the same period last year, with the non-funded component increasing by
6% (excluding dividends from subsidiary and associates). Administrative expenses grew by
12%, resulting in an operating profit increase of 62% in the same period. Profit before tax of
Rs 1,056 mn in the nine months was lower than in the comparable period last year due to lower
reversals of credit provisions. Profit after tax of Rs 681 mn in the nine months of 2014 was
impacted by a higher minimum tax charge based on increased gross revenue. In addition, a
deferred tax charge was recorded in the current period to maintain the deferred tax asset at
a prudent level.
On a consolidated basis the Bank recorded profit after tax of Rs 242 mn in the first nine months
of 2014 compared to Rs 1,067 mn in the same period last year, primarily due to lower recoveries
from NPLs given the challenging external environment.
The management and the Board would like to thank our customers, shareholders, regulators,
employees and other stakeholders who believe, as we do, that we will meet commitments we
have made to position the Bank as a high performance institution admired for innovation,
customer service and inspired employees.
On behalf of the Board
Teo Cheng San, Roland
Chairman
Badar Kazmi
Director / President & CEO
4
Unconsolidated
Condensed Interim
Financial Statements
NIB Bank Limited
Unconsolidated Condensed Interim Statement of Financial Position
As at September 30, 2014
Note
Unaudited
September 30,
2014
QUARTERLY
REPORT
(UNAUDITED)
Audited
December 31,
2013
(Rupees '000')
ASSETS
Cash and balances with treasury banks
Balances with other banks
Lendings to financial institutions
Investments
Advances
Operating fixed assets
Intangible assets
Deferred tax assets - net
Other assets
7
8
9
10
11
8,404,688
759,723
4,191,037
48,644,699
97,379,039
2,953,215
1,256,487
11,129,223
8,240,009
8,006,105
692,177
2,127,516
61,058,886
82,000,586
2,836,105
1,438,252
11,249,886
7,415,548
182,958,120
176,825,061
2,571,091
46,531,762
111,373,346
4,198,035
–
–
3,289,302
2,862,663
51,506,673
104,896,065
–
–
–
3,083,466
167,963,536
162,348,867
14,994,584
14,476,194
103,028,512
610,269
(45,769,623)
(42,245,582)
103,028,512
474,123
(45,769,623)
(42,790,164)
15,623,576
(628,992)
14,942,848
(466,654)
14,994,584
14,476,194
LIABILITIES
Bills payable
Borrowings
Deposits and other accounts
Sub-ordinated loans
Liabilities against assets subject to finance lease
Deferred tax liabilities
Other liabilities
12
13
NET ASSETS
REPRESENTED BY:
Share capital
Reserves
Discount on issue of shares
Accumulated loss
14
Shareholders' equity
(Deficit) on revaluation of assets - net
CONTINGENCIES AND COMMITMENTS
15
The annexed notes from 1 to 18 form an integral part of these unconsolidated condensed interim
financial information.
Badar Kazmi
President / Chief Executive
Teo Cheng San, Roland
Chairman / Director
Chia Yew Hock, Wilson
Director
Asif Jooma
Director
6
NIB Bank Limited
Unconsolidated Condensed Interim Profit and Loss Account (Unaudited)
For the nine months and quarter ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
Nine months ended
Quarter ended
September 30, September 30, September 30, September 30,
2014
2013
2014
2013
(Rupees '000')
Mark-up / Return / Interest earned
Mark-up / Return / Interest expensed
11,118,424
8,400,673
9,793,324
7,337,117
3,686,801
2,741,506
2,955,634
2,158,117
Net Mark-up / Interest Income
Provision / (Reversal) against non-performing
loans and advances
(Reversal) / Provision for diminution in the value
of investments
Bad debts written off directly
2,717,751
2,456,207
945,295
797,517
314,392
(375,761)
423,848
118,323
(14,787)
1,564
(134,425)
2,813
(1,892)
–
31,528
159
301,169
(507,373)
421,956
150,010
Net Mark-up / Interest income after provisions
2,416,582
2,963,580
523,339
647,507
1,213,003
1,094,110
440,941
201,461
924,258
513,137
373,125
484,563
411,228
678,221
127,572
55,053
329,346
347,296
184,820
177,668
–
92,980
(608)
64,407
–
34,816
(608)
15,375
NON MARK-UP / INTEREST INCOME
Fee, commission and brokerage income
Dividend income
Income from dealing in foreign currencies
Gain on sale of securities
Unrealized gain / (loss) on revaluation of
investments classified as held-for-trading
Other income
Total Non Mark-up / Interest income
3,042,495
2,358,882
1,306,890
1,053,897
5,459,077
5,322,462
1,830,229
1,701,404
4,359,240
10,026
34,146
3,897,852
36,301
41,156
1,509,156
26
11,588
1,368,340
–
(9,701)
NON MARK-UP / INTEREST EXPENSES
Administrative expenses
Other provisions / write offs
Other charges
Total Non Mark-up / Interest expenses
4,403,412
3,975,309
1,520,770
1,358,639
Extraordinary / Unusual items
1,055,665
–
1,347,153
–
309,459
–
342,765
–
PROFIT BEFORE TAXATION
1,055,665
1,347,153
309,459
342,765
Taxation - Current
- Prior years
- Deferred
166,609
10,851
197,477
121,522
86,000
130,930
49,937
–
–
40,091
–
130,930
374,937
338,452
49,937
171,021
PROFIT AFTER TAXATION
680,728
1,008,701
259,522
171,744
0.07
0.10
0.03
0.02
Basic / diluted earnings per share (Rupees)
The annexed notes from 1 to 18 form an integral part of these unconsolidated condensed interim
financial information.
Badar Kazmi
President / Chief Executive
7
Teo Cheng San, Roland
Chairman / Director
Chia Yew Hock, Wilson
Director
Asif Jooma
Director
NIB Bank Limited
Unconsolidated Condensed Interim
Statement of Comprehensive Income (Unaudited)
For the nine months and quarter ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
Nine months ended
Quarter ended
September 30, September 30, September 30, September 30,
2014
2013
2014
2013
(Rupees '000')
Profit after taxation for the period
680,728
1,008,701
259,522
171,744
Other comprehensive income
Items that will not be reclassified to profit or loss
Effect of change in accounting policy with
respect to accounting for actuarial
gains or losses
–
Items that are or may be reclassified
subsequently to profit or loss
Total comprehensive income for the period
–
680,728
3,380
–
–
–
–
–
1,012,081
259,522
171,744
Surplus / deficit on revaluation of ''Available-for-Sale'' securities is presented under a separate
head below equity as ''surplus / deficit on revaluation of assets'' in accordance with the requirements
specified by the Companies Ordinance, 1984, and the State Bank of Pakistan vide its BSD Circular
20 dated August 4, 2000 and BSD Circular 10 dated July 13, 2004.
The annexed notes from 1 to 18 form an integral part of these unconsolidated condensed interim
financial information.
Badar Kazmi
President / Chief Executive
Teo Cheng San, Roland
Chairman / Director
Chia Yew Hock, Wilson
Director
Asif Jooma
Director
8
NIB Bank Limited
Unconsolidated Condensed Interim
Statement of Changes in Equity (Unaudited)
For the nine months period ended September 30, 2014
Capital Reserve
Share
capital
Discount on Statutory
issue of shares reserve
QUARTERLY
REPORT
(UNAUDITED)
Revenue Reserves
General Accumulated
reserve
loss
Total
(Rupees '000')
Balance as at December 31, 2012
103,028,512 (45,769,623)
220,417
5,472
(43,847,814)
13,636,964
Total comprehensive income /
(loss) for the period
Accounting for actuarial gain and losses
–
–
–
–
3,380
3,380
Profit after taxation for the period
–
–
–
–
1,008,701
1,008,701
Transfer to statutory reserve
–
–
201,740
–
(201,740)
422,157
5,472
Balance as at September 30, 2013 103,028,512 (45,769,623)
–
(43,037,473)
14,649,045
Total comprehensive income /
(loss) for the period
Accounting for actuarial gains and losses
–
–
–
–
(227)
(227)
Profit after taxation for the period
–
–
–
–
232,470
232,470
Transfer to statutory reserve
–
–
–
(46,494)
–
–
–
61,560
61,560
(42,790,164)
14,942,848
–
680,728
680,728
136,146
–
(136,146)
604,797
5,472
46,494
–
Contributions by and distribution
to owners
Share based payment transaction
Balance as at December 31, 2013
103,028,512 (45,769,623)
–
468,651
5,472
Total comprehensive income /
(loss) for the period
Profit after taxation for the period
–
–
Transfer to statutory reserve
–
–
Balance as at September 30, 2014 103,028,512 (45,769,623)
–
(42,245,582)
–
15,623,576
The annexed notes from 1 to 18 form an integral part of these unconsolidated condensed interim financial information.
Badar Kazmi
President / Chief Executive
9
Teo Cheng San, Roland
Chairman / Director
Chia Yew Hock, Wilson
Director
Asif Jooma
Director
NIB Bank Limited
Unconsolidated Condensed Interim
Cash Flow Statement (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
September 30,
2014
September 30,
2013
(Rupees '000')
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation
Dividend income
1,055,665
(1,094,110)
(38,445)
1,347,153
(513,137)
834,016
218,063
256,156
314,392
1,564
(40,978)
(201,461)
210,662
251,380
(375,761)
2,813
(34,393)
(484,563)
–
16,000
(14,787)
10,026
558,975
520,530
608
–
(134,425)
36,301
(527,378)
306,638
(2,063,521)
–
(15,694,409)
(167,852)
(14,445,694)
(1,978,394)
(3,245,897)
(398,259)
(291,572)
(4,974,911)
6,477,282
189,854
(16,004,599)
(165,875)
(16,170,474)
2,729,635
(30,025,863)
6,443,911
222,413
(40,391,510)
(200,107)
(40,591,617)
10,594,299
1,718,234
78,750
415,889
(243,399)
(194,685)
69,499
12,438,587
44,380,445
1,821,751
–
185,641
(133,781)
(110,061)
66,954
46,210,949
CASH FLOWS FROM FINANCING ACTIVITIES
Receipt / (Redemption) of sub-ordinated loans
Dividend paid
Net cash from / (used in) financing activities
4,198,035
(19)
4,198,016
(3,992,800)
(92)
(3,992,892)
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
466,129
8,698,282
9,164,411
1,626,440
8,633,716
10,260,156
Adjustments for non-cash items
Depreciation
Amortization
Provision / (Reversal) against non-performing loans and advances
Bad debts written off directly
(Gain) on sale of operating fixed assets
(Gain) on sale of securities
Unrealized (gain) / loss on revaluation of investments classified
as held-for-trading
Workers welfare fund
(Reversal) for diminution in the value of investments
Other provisions / write offs
(Increase) / decrease in operating assets
Lendings to financial institutions
Held-for-trading securities
Advances
Other assets (excluding advance taxation)
Increase / (decrease) in operating liabilities
Bills payable
Borrowings
Deposits and other accounts
Other liabilities (excluding current taxation)
Income tax paid
Net cash (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Net Investments in available-for-sale securities
Net Investments in held-to-maturity securities
Net Investments in associates
Dividend received
Payments for capital work in progress
Acquisition of property and equipment
Sale proceeds of property and equipment disposed of
Net cash from investing activities
The annexed notes from 1 to 18 form an integral part of these unconsolidated condensed interim financial information.
Badar Kazmi
President / Chief Executive
Teo Cheng San, Roland
Chairman / Director
Chia Yew Hock, Wilson
Director
Asif Jooma
Director
10
NIB Bank Limited
Notes to the Unconsolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
1.
QUARTERLY
REPORT
(UNAUDITED)
STATUS AND NATURE OF BUSINESS
NIB Bank Limited "the Bank" is incorporated in Pakistan and its registered office is situated at
first floor, Post Mall, F-7 Markaz, Islamabad. The Bank is listed on all the stock exchanges in
Pakistan and has 171 branches (December 31, 2013: 179 branches). The Bank is a scheduled
commercial bank and is principally engaged in the business of banking as defined in the
Banking Companies Ordinance, 1962.
NIB Bank Limited is a subsidiary of Bugis Investments (Mauritius) Pte. Limited which is a wholly
owned subsidiary of Fullerton Financial Holdings Pte. Limited which in turn is a wholly owned
subsidiary of Temasek Holdings, an investment arm of the Government of Singapore.
2.
STATEMENT OF COMPLIANCE
2.1
These unconsolidated condensed interim financial statements of the Bank for the nine months
period ended on September 30, 2014 have been prepared in accordance with the requirements
of International Accounting Standard (IAS) 34 - Interim Financial Reporting and provisions of
and directives issued by the Companies Ordinance, 1984, the Banking Companies Ordinance,
1962 and directives issued by the Securities and Exchange Commission of Pakistan (SECP)
and the State Bank of Pakistan (SBP). In case requirements differ, the requirements of the
Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the said directives
have been followed.
2.2
The SBP has deferred the applicability of IAS 39, "Financial Instruments: Recognition and
Measurement" and IAS 40 "Investment Property" for Banking Companies through BSD Circular
letter No. 10, dated August 26, 2002. Further, according to the notification of SECP dated April
28, 2008, the IFRS 7 "Financial Instruments: Disclosures" has not been made applicable for banks.
Accordingly, the requirements of these standards have not been considered in the preparation
of these condensed interim financial information. However, investments have been classified and
valued in accordance with the requirements of various circulars issued by the SBP.
2.3
The disclosures made in these unconsolidated condensed interim financial information have
been limited based on the format prescribed by the SBP vide BSD circular letter No. 2 of May
12, 2004 and IAS 34 - "Interim Financial Reporting" and do not include all the information required
in annual financial statements. Accordingly, these unconsolidated condensed interim financial
information should be read in conjunction with the unconsolidated financial statements of the
Bank for the year ended December 31, 2013.
2.4
These unconsolidated condensed interim financial statements represent separate financial
statements of the Bank. The consolidated condensed interim financial statements of the Bank,
its subsidiaries and associates are presented separately.
3.
BASIS OF MEASUREMENT
These unconsolidated condensed interim financial information have been prepared under
the historical cost convention, except for the measurement of certain investments and
commitments in respect of forward foreign exchange contracts that are stated at revalued
amounts / fair values.
These unconsolidated condensed interim financial statements have been presented in Pakistan
Rupees, which is the Bank's functional and presentation currency. The amounts are rounded
off to the nearest thousand rupees.
4.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies and method of computation followed for the preparation of these
unconsolidated condensed interim financial statements are the same as those applied in the
preparation of the annual unconsolidated financial statements of the Bank for the year ended
December 31, 2013.
The new standards, amendments and interpretations that were mandatory for accounting
periods beginning on or after January 1, 2014 and are not considered to be relevant or have
any significant effect on the Bank’s operations, are not detailed in these unconsolidated
condensed interim financial statements.
11
Notes to the Unconsolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
5.
QUARTERLY
REPORT
(UNAUDITED)
ACCOUNTING ESTIMATES
The basis for the accounting estimates adopted in the preparation of these unconsolidated
condensed interim financial statements are the same as those applied in the preparation of the
annual unconsolidated financial statements of the Bank for the year ended December 31, 2013.
6.
FINANCIAL RISK MANAGEMENT
The financial risk management objectives and policies adopted by the Bank are consistent with
those disclosed in the annual unconsolidated financial statements of the Bank for the year
ended December 31, 2013.
Note
Unaudited
September 30, 2014
Held by
Given as
Total
Bank
collateral
Audited
December 31, 2013
Held by
Given as
Total
Bank
collateral
(Rupees '000')
7.
INVESTMENTS
Investments by types:
Available-for-sale securities
Market Treasury Bills
Pakistan Investment Bonds
GOP Ijara Sukuk Bonds
Defense Savings Certificates
Sukuk Bonds
Cumulative preference shares
Ordinary shares / certificates in
listed companies / modarabas
Ordinary shares of unlisted companies
Term Finance Certificates
4,903,519
14,378,069
1,003,548
–
443,134
55,178
6,709,713
15,131,606
–
2,730
–
–
11,613,232
29,509,675
1,003,548
2,730
443,134
55,178
12,268,930
9,698,609
–
–
461,976
55,178
11,139,181
18,213,372
–
2,730
–
–
23,408,111
27,911,981
–
2,730
461,976
55,178
31,723
65,901
980,322
–
–
279,514
31,723
65,901
1,259,836
59,614
66,279
2,269,443
–
–
138,493
59,614
66,279
2,407,936
21,861,394
22,123,563
43,984,957
24,880,029
29,493,776
54,373,805
–
10,152
1,717,358
11,028
–
–
Held-to-maturity securities
Pakistan Investment Bonds
Term Finance Certificates
Associates
Subsidiaries
7.1
8.
–
10,152
7.1
–
–
1,717,358
11,028
10,152
–
10,152
1,728,386
–
1,728,386
3,333,607
2,479,066
–
–
3,333,607
2,479,066
3,679,507
2,479,066
–
–
3,679,507
2,479,066
49,807,782
32,766,988
(189,039)
(466,987)
49,618,743
32,300,001
Investments at cost
Provision for diminution in the
value of investments
27,684,219
Investments - net of provisions
(Deficit) on revaluation of
available-for-sale securities
27,495,180
(658,257)
(315,787)
(974,044)
(305,001)
(429,890)
(734,891)
Net Investments
26,836,923
21,807,776
48,644,699
31,995,000
29,063,886
61,058,886
(189,039)
22,123,563
–
22,123,563
29,493,776
–
62,260,764
(466,987)
29,493,776
61,793,777
During the period, the Bank has divested its entire 30% holding in PICIC Insurance Limited.
ADVANCES
Loans, cash credits, running finance etc. - in Pakistan
Net investment in finance lease - in Pakistan
Bills discounted and purchased (excluding Treasury Bills)
Payable in Pakistan
Payable outside Pakistan
Advances - Gross
Provision against non performing advances - Specific
- General
Advances - Net of provisions
Unaudited
Audited
September 30, December 31,
2014
2013
(Rupees '000')
110,371,694
1,782,577
97,018,316
1,777,383
4,340,359
3,674,779
120,169,409
(22,715,819)
(74,551)
(22,790,370)
2,600,925
3,161,906
104,558,530
(22,488,805)
(69,139)
(22,557,944)
97,379,039
82,000,586
12
Notes to the Unconsolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
8.1
QUARTERLY
REPORT
(UNAUDITED)
Advances include Rs. 28,057.989 million (December 31, 2013: Rs. 29,904.747 million),
which have been placed under non-performing status as detailed below:
Domestic
Overseas
Total
Provision
required
Provision
held
(Rupees '000')
Category of Classification
OAEM
Substandard
Doubtful
Loss
39,144
2,064,213
566,002
25,388,630
–
–
–
–
39,144
2,064,213
566,002
25,388,630
4,935
1,008,181
165,295
21,537,408
4,935
1,008,181
165,295
21,537,408
28,057,989
–
28,057,989
22,715,819
22,715,819
8.2
Included in the provision required and held is an amount of Rs. 292.922 million (2013: Rs. 293.089
million) which represents provision in excess of the requirements of the State Bank of Pakistan.
8.3
In accordance with BSD Circular No. 1 dated October 21, 2011 issued by the State Bank of
Pakistan, the Bank has availed the benefit of Forced Sale Value (FSV) against the non-performing
advances. During the nine months period ended September 30, 2014, total FSV benefit erosion
resulted in decrease in profit before tax of Rs. 1,217.074 million. Had the benefit under the said
circular not been taken by the Bank, the specific provision against non-performing advances
would have been higher by Rs. 3,188.453 million (2013: Rs. 4,405.527 million). The FSV benefit
recognised will not be available for the distribution of cash and stock dividend to shareholders.
Unaudited
Unaudited
September 30, September 30,
2014
2013
(Rupees '000')
9.
OPERATING FIXED ASSETS
9.1
Additions to fixed assets
The following additions have been made to fixed assets during the period ended
September 30, 2014:
Furniture and fixtures
Electrical, office and computer equipment
Vehicles
Leasehold improvements
Capital work in progress
9.2
11,918
214,615
–
128,134
244,082
4,105
142,503
6,160
27,541
133,781
Disposal of fixed assets - cost
The following disposals have been made from fixed assets during the period ended
September 30, 2014:
Freehold land
Building on freehold land
Building on leasehold land
Furniture and fixtures
Electrical, office and computer equipment
Vehicles
Leasehold improvements
13
–
13,030
25,947
15,327
117,193
1,032
6,469
18,920
–
13,157
7,806
43,786
5,342
301
Notes to the Unconsolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
10.
QUARTERLY
REPORT
(UNAUDITED)
DEFERRED TAX ASSETS
The deferred tax asset recognised in the books has been restricted to Rs. 11,129.223 million
due to uncertainty of availability of future tax profits for utilization of the unrecognised deferred
tax assets. The deductible differences available to the Bank are Rs. 11,808.153 million. Had
the deferred tax asset been recognized on all deductible timing differences, the profit after
tax for the nine months period ended on September 30, 2014 would have been higher by
Rs. 678.930 million.
The management has recorded deferred tax asset based on financial projections indicating
absorption of deferred tax asset over a number of future years through reversals as a result
of recoveries from borrowers and absorption of remaining deferred tax asset against future
taxable profits. The financial projections involve certain key assumptions such as deposits
composition, interest rates, growth of deposits and advances, investment returns and potential
provision / reversals against assets. Any significant change in the key assumptions may have
an effect on the absorption of the deferred tax asset.
Unaudited
Audited
September 30, December 31,
2014
2013
(Rupees '000')
11.
OTHER ASSETS
8,240,009
7,415,548
11.1 Other assets include settlement of certain accounts through acquiring properties from the
borrowers amounting to Rs. 2,062.366 million (December 31, 2013: Rs. 1,991.280 million). The
settlement agreements signed with borrowers in certain cases entails a buy back option.
12.
DEPOSITS AND OTHER ACCOUNTS
Customers
Fixed deposits
Savings deposits
Current accounts - Non remunerative
Margin accounts
Financial Institutions
Remunerative deposits
Non-remunerative deposits
32,519,892
38,973,074
33,526,799
659,917
28,949,611
40,747,664
28,537,129
534,933
5,295,193
398,471
5,806,791
319,937
111,373,346
104,896,065
14
Notes to the Unconsolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
Unaudited
Audited
September 30, December 31,
2014
2013
(Rupees '000')
13.
4,198,035
SUB-ORDINATED LOANS
–
Term Finance Certificates - Quoted, Unsecured
Mark-up
Floating (no floor, no cap) rate of return at Base Rate +1.15% (The Base Rate
is defined as the average “Ask Side” rate of the six month Karachi Interbank
Offered Rate (“KIBOR”))
Security
The TFCs are unsecured and subordinated to all other indebtedness of the
Bank including deposits
Issue Date
June 19, 2014
Issue Amount
Rs. 4,198.035 million
Rating
A+ (A plus)
Tenor
8 years from the Issue Date
Redemption
Fifteen equal semi-annual installments of 0.02% of the Issue Amount for the
first ninety months followed by remaining 99.70% on maturity at the end of the
ninety sixth month.
Maturity
June 19, 2022
Call Option
The Bank may call the TFCs, in part or full, on any profit payment date from
the 60th month from the last day of public subscription and on all subsequent
profit payment dates, subject to the SBP approval and not less than forty five
days prior notice being given to the Trustee and the Investors.
Lock-in-Clause Neither profit nor principal can be paid (even at maturity) if such payments
will result in a shortfall in the Banks' Minimum Capital Requirements (MCR)
or Capital Adequacy Ratio (CAR) or increase any existing shortfall in MCR
and CAR. In case the lock-in clause goes into effect, the Bank will be required
to comply with the SBP instructions prevalent or issued at the time.
Loss
Absorbency
Clause
14.
The TFCs will be subject to loss absorbency clause as stipulated under the
"Instructions for Basel III Implementation in Pakistan".
SHARE CAPITAL
14.1 Authorized
Unaudited
September 30,
2014
Audited
December 31,
2013
Unaudited
September 30,
2014
(Number of shares)
12,000,000,000
15
12,000,000,000
Audited
December 31,
2013
(Rupees '000')
Ordinary shares of Rs. 10 each
120,000,000
120,000,000
Notes to the Unconsolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
Unaudited
September 30,
2014
Audited
December 31,
2013
QUARTERLY
REPORT
(UNAUDITED)
Unaudited
Audited
September 30, December 31,
2014
2013
(Number of shares)
(Rupees '000')
14.2 Issued, subscribed and paid up
Fully paid up ordinary shares of Rs. 10 each
3,278,902,659
3,278,902,659
764,824,417
764,824,417
6,259,124,088
6,259,124,088
10,302,851,164
10,302,851,164
Fully paid in cash
Issued for consideration
other than cash (under
schemes of amalgamation)
Issuance of shares on discount
32,789,027
32,789,027
7,648,244
7,648,244
62,591,241
62,591,241
103,028,512
103,028,512
14.3 The holding Company Bugis Investments (Mauritius) Pte. Limited holds 9,105,728,598 (December
31, 2013: 9,105,728,598) ordinary shares.
Unaudited
Audited
September 30, December 31,
2014
2013
(Rupees '000')
15.
CONTINGENCIES AND COMMITMENTS
15.1 Direct credit substitutes
Contingent liability in respect of guarantees given favouring:
Government
Financial Institutions
Others
–
–
14,749
–
–
–
14,749
–
15.2 Transaction-related contingent liabilities / commitments
Guarantees given in favour of:
Government
Financial Institutions
Others
15,961,628
–
2,370,976
19,100,740
–
793,108
18,332,604
19,893,848
30,112,712
3,262,746
23,287,063
5,237,186
33,375,458
28,524,249
266,133
266,133
1,445,000
708,000
15.3 Trade-related contingent liabilities
Letters of credit
Acceptances
15.4 Other contingencies
Claims against the Bank not acknowledged as debts
15.5 Commitments in respect of forward lending
Commitments to extend credit
The Bank makes commitments to extend credit in the normal course of its business but none
of these commitments are irrevocable and do not attract any significant penalty or expense if
the facility is ultimately withdrawn except commitments mentioned above.
16
Notes to the Unconsolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
Unaudited
Audited
September 30, December 31,
2014
2013
(Rupees '000')
15.6 Commitments in respect of forward exchange contracts
Purchase
Sale
15.7 Commitments for the acquisition of operating fixed assets
21,713,323
20,219,065
26,499,067
25,424,367
41,932,388
51,923,434
116,549
171,863
2,859,218
–
12,699,823
2,894,757
15.8 Commitments with respect to Government and
Other Securities
Purchase
Sale
15.9 Other Contingencies
A penalty of Rs. 700 million was imposed by the Competition Commission of Pakistan (“the
Commission”) on all the member banks utilizing the 1 link Switch on account of uncompetitive
behavior and imposing of uniform charges on cash withdrawal for off network ATM transactions.
The Bank’s share in this penalty is Rs. 50 million. The concerned banks filed a constitutional
petition before the High Court of Sindh, which has suspended the order of the Commission.
Consequently an appeal was filed with the Competition Appellate Tribunal (“Tribunal”) which
has set aside the order of the Commission. The Commission has preferred an appeal before
the Supreme Court, which has been admitted for hearing and will be fixed by the concerned
office of the Supreme Court.
The management in consultation with external legal counsel, representing the Bank, is confident
that they have strong grounds to contest this penalty and are optimistic that the outcome will
be decided in favour of the Bank.
15.10 Tax Contingencies
The income tax returns of NIB Bank Limited have been filed up to and including tax year 2013
relevant to the financial year ended December 31, 2012. The tax authorities have made certain
disallowances including additions on account of proration of expenses against dividends and
capital gains, disallowances of interest and administrative expenses and renovation expenses
incurred on rented premises (allowed historically) pertaining to tax years 2003 through 2008
for Ex-Pakistan Industrial Credit and Investment Corporation Limited (Ex-PICIC), from tax years
2004 through 2008 for Ex-PICIC Commercial Bank Limited (Ex-PCBL), tax years 2003 and 2004
for Ex-National Development Leasing Corporation Limited (Ex-NDLC) and from tax years 2004
through 2008 for NIB Bank Limited. During last year, a combined Appellate Order for Ex-PICIC
pertaining to tax years 2003 through 2007 was issued by Commissioner Inland Revenue
(Appeals) – CIR(A) in which the aforementioned expenses were allowed. However, the tax
authorities have filed appeal with Income Tax Appellate Tribunal (ITAT) against above combined
Appellate Order. These disallowances may result in additional tax aggregating to Rs. 1,370
million (2013: Rs. 1,370 million), which the management of the Bank in discussion with their
tax consultants believes to be unjustified and not in accordance with the true interpretation of
the law.
Appeals filed against orders are pending at various appellate forums. Management is confident
that the eventual outcome of the cases will be in favour of the Bank.
17
Notes to the Unconsolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
16.
QUARTERLY
REPORT
(UNAUDITED)
SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES
The Bank is organised into reportable segments as disclosed in note 6.22.1 of the annual
unconsolidated financial statements. These segments are managed by respective segment
heads and the results of these segments are regularly reviewed by the Bank's President /
Chief Executive, Executive Committee and the Board of Directors. Segment performance is
reviewed on the basis of various factors including profit before taxation.
Transactions between reportable segments are carried out on an arms length basis.
The segment analysis with respect to business activity is as follows:
Corporate and Small & Medium
Investment Enterprises and
Banking
Commercial
Retail
Treasury
(Rupees '000')
Head Office / *Adjustments
Other
For the nine months period ended September 30, 2014 (Unaudited)
Net Interest Income
Non Mark-up Income
308,450
925,749
47,942
284,857
1,976,204
541,321
387,111
205,426
(1,956)
1,085,142
–
–
1,234,199
332,799
2,517,525
592,537
1,083,186
–
526,004
(14,787)
1,169,317
–
2,848,057
–
175,990
–
Total expenses including provisions
Segment Net income / (loss) before tax
Segment Return on net assets (ROA) (%)
Segment Cost of funds (%)
511,217
722,982
0.70%
8.83%
1,169,317
(836,518)
(2.59%)
3.73%
2,848,057
(330,532)
(0.41%)
4.91%
175,990
416,547
1.14%
10.13%
Net Interest Income
Non Mark-up Income
168,354
612,901
(386,365)
231,450
2,239,538
402,934
311,791
589,519
122,889
522,078
–
–
Net Interest and non mark-up Income
Total expenses including provisions
(excluding Impairment)
Impairment against Investment
781,255
(154,915)
2,642,472
901,310
644,967
–
(378,609)
65,815
947,040
–
2,805,966
–
218,303
2,210
9,661
(202,450)
–
–
(312,794)
1,094,049
1.89%
8.20%
947,040
(1,101,955)
(7.19%)
4.31%
2,805,966
(163,494)
(0.18%)
4.48%
220,513
680,797
1.30%
9.32%
(192,789)
837,756
–
–
–
–
N/A
N/A
Net Interest and non mark-up Income
Total expenses including provisions
(excluding Impairment)
Impairment against Investment
–
–
–
–
–
1,083,186
–
–
–
–
N/A
N/A
For the nine months period ended September 30, 2013 (Unaudited)
Total expenses including provisions
Segment Net income / (loss) before tax
Segment Return on net assets (ROA) (%)
Segment Cost of funds (%)
As at September 30, 2014 (Unaudited)
Segment Assets (Gross of advances
provisions)
Segment Non Performing Loans
Segment Provision against advances
(including general provisions)
Segment Assets (Net)
Segment Liabilities
102,114,064
13,822,659
36,951,699
11,631,676
72,063,487
2,373,489
31,714,729
–
10,014,530
230,165
(47,110,019)
–
12,063,268
90,050,796
86,023,175
8,911,135
28,040,564
27,225,394
1,609,741
70,453,746
68,998,892
–
31,714,729
30,979,923
206,226
9,808,304
1,846,171
–
(47,110,019)
(47,110,019)
As at December 31, 2013 (Audited)
Segment Assets (Gross of advances
provisions)
Segment Non Performing Loans
Segment Provision against advances
(including general provisions)
Segment Assets (Net)
Segment Liabilities
91,875,166
14,649,539
28,710,911
12,349,392
80,315,365
2,676,677
33,983,306
–
10,580,413
229,139
(46,082,156)
–
12,307,058
79,568,108
73,864,682
8,585,588
20,125,323
19,021,285
1,460,137
78,855,228
76,996,299
–
33,983,306
33,290,055
205,161
10,375,252
5,258,702
–
(46,082,156)
(46,082,156)
* The respective segment assets and liabilities incorporate intersegment lending and borrowing, with an appropriate market based transfer
pricing. The adjustments column eliminates intersegment lending and borrowing.
18
19
At the end of the period / year
–
171
Payables
Receivables
At the end of the period / year
–
171
–
–
–
–
At the end of the period / year
–
–
19,897
16,791
–
–
32,823
175
758
(13,859)
–
–
19,897
–
(139)
(2,967)
–
–
–
–
–
–
At the beginning of the period / year
Investments made during the period / year
Investments sold / Share capital redeemed
during the period / year
Investment in shares / mutual funds-cost
At the end of the period / year
Deposits
At the beginning of the period / year
Deposits during the period / year
Exchange difference
Withdrawal during the period / year
At the end of the period / year
Advances
At the beginning of the period / year
Given / addition during the period / year
Repaid during the period / year
Holding company
Associates
Key management personnel
Other related parties
242
250,000
2,479,066
–
2,479,066
–
61,271
8,333
3,338,354
–
(3,285,416)
–
–
–
–
3,134
–
2,479,066
(2,105,675)
4,584,741
–
8,333
196,787
3,635,411
–
(3,823,865)
–
–
–
–
–
409,118
3,333,607
(345,900)
3,679,507
–
2,061,204
363,827
25,224,958
–
(23,527,581)
–
–
–
–
–
442
3,679,507
–
1,573,832
2,105,675
363,827
611,316
30,007,012
–
(30,254,501)
–
–
–
–
–
–
–
–
–
–
32,410
31,008
131,877
(414)
(130,061)
45,766
142,730
24,249
(121,213)
–
–
–
–
–
–
31,008
33,433
203,510
1,139
(207,074)
142,730
133,913
73,686
(64,869)
–
49,877
50,100
–
50,000
100
125,273
50,621
9,240,108
(1,273)
(9,164,183)
24,909
24,876
1,354
(1,321)
–
29,562
50,000
–
–
50,000
50,621
54,126
1,714,272
3,142
(1,720,919)
24,876
21,951
5,326
(2,401)
Unaudited
Audited
Unaudited
Audited
Unaudited
Audited
Unaudited
Audited
Unaudited
Audited
September 30, December 31, September 30, December 31, September 30, December 31, September 30, December 31, September 30, December 31,
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
(Rupees '000')
Subsidiaries
The Bank has related party transactions with its holding company, subsidiaries, associated undertakings, employee benefit plans and
its key management personnel. Transactions with related parties are executed on the same terms as those prevailing at the time for
comparable transactions with unrelated parties except for staff loans which are on discounted rates as per industry practice. The detail
of transactions with related parties is given below:
RELATED PARTY TRANSACTIONS
17.1 Balances outstanding as at period / year end
17.
Notes to the Unconsolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
18.
–
–
Dividend income from
shares / mutual funds
Directors remuneration
–
Rent and utility charges
–
–
–
–
1,848
20
–
–
–
–
–
510,000
4,358
–
–
–
–
–
–
–
–
318,000
4,324
–
–
3,030
–
–
–
–
–
542,529
41,998
–
–
574
–
–
–
–
–
159,496
62,068
–
(Rupees '000')
–
–
–
–
251,692
–
–
–
285
1,392
Period ended
Other related parties
–
–
–
–
268,412
–
–
–
308
3,802
–
–
255
79,782
–
4,211
7,906
41,580
1,522
9,428
–
–
450
72,566
–
2,677
6,814
–
2,739
2,011
September 30, September 30, September 30,
2013
2014
2013
Period ended
Key management personnel
September 30, September 30, September 30,
2014
2013
2014
Period ended
Unaudited
Associates
Badar Kazmi
President / Chief Executive
Teo Cheng San, Roland
Chairman / Director
Chia Yew Hock, Wilson
Director
Asif Jooma
Director
These unconsolidated condensed interim financial statements were authorized for issue by the Board of Directors of the Bank on October
21, 2014.
–
–
–
–
–
2,390
DATE OF AUTHORIZATION FOR ISSUE
–
–
Fees and subscription
Contribution to provident fund
Commission income
–
–
Remuneration to
key management personnel
3,331
–
Mark-up / return / interest
expensed on deposits
Directors travelling expense
–
Mark-up / return / interest
earned on advances
Period ended
September 30, September 30,
2014
2013
Period ended
Subsidiaries
September 30, September 30,
2014
2013
Holding company
17.2 Income / Expense for the period
Notes to the Unconsolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
20
Consolidated
Condensed Interim
Financial Statements
NIB Bank Limited
Consolidated Condensed Interim Statement of Financial Position
As at September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
Unaudited
Audited
September 30, December 31,
Note
2014
2013
(Rupees '000')
ASSETS
Cash and balances with treasury banks
Balances with other banks
Lendings to financial institutions
Investments
Advances
Operating fixed assets
Intangible assets
Deferred tax assets - net
Other assets
8
9
10
11
12
8,404,716
775,536
4,191,037
48,279,756
97,402,753
2,991,176
2,983,828
11,009,266
8,099,710
8,006,108
690,098
2,127,516
60,791,885
82,025,967
2,879,281
3,166,781
11,089,644
7,516,607
184,137,778
178,293,887
2,571,091
46,531,762
111,312,073
4,198,035
–
–
3,527,407
2,862,663
51,506,673
104,887,731
–
–
–
3,337,359
168,140,368
162,594,426
15,997,410
15,699,461
103,028,512
610,269
(45,769,623)
(41,651,806)
103,028,512
474,123
(45,769,623)
(41,716,290)
16,217,352
(219,942)
15,997,410
16,016,722
(317,261)
15,699,461
LIABILITIES
Bills payable
Borrowings
Deposits and other accounts
Sub-ordinated loans
Liabilities against assets subject to finance lease
Deferred tax liabilities
Other liabilities
13
14
NET ASSETS
REPRESENTED BY:
Share capital
Reserves
Discount on issue of shares
Accumulated loss
15
Shareholders’ Equity
(Deficit) on revaluation of assets - net
CONTINGENCIES AND COMMITMENTS
16
The annexed notes from 1 to 19 form an integral part of these consolidated condensed interim
financial information.
Badar Kazmi
President / Chief Executive
23
Teo Cheng San, Roland
Chairman / Director
Chia Yew Hock, Wilson
Director
Asif Jooma
Director
NIB Bank Limited
Consolidated Condensed Interim Profit and Loss Account (Unaudited)
For the nine months and quarter ended September 30, 2014
Nine months ended
QUARTERLY
REPORT
(UNAUDITED)
Quarter ended
September 30, September 30, September 30, September 30,
2014
2013
2014
2013
(Rupees '000')
Mark-up / Return / Interest earned
Mark-up / Return / Interest expensed
Net Mark-up / Interest Income
Provision / (Reversal) against non-performing
loans and advances
(Reversal) / Provision for diminution in the value
of investments
Bad debts written off directly
Net Mark-up / Interest income after provisions
NON MARK-UP / INTEREST INCOME
Fee, commission and brokerage income
Dividend income
Income from dealing in foreign currencies
Gain on sale of securities
Unrealized gain / (loss) on revaluation of
investments classified as held-for-trading
Other income
Total Non Mark-up / Interest income
NON MARK-UP / INTEREST EXPENSES
Administrative expenses
Other provisions / write offs
Other charges
Total Non Mark-up / Interest expenses
Share of profit of associates
11,121,254
8,397,191
9,794,268
7,332,793
3,688,377
2,740,474
2,956,006
2,157,405
2,724,063
2,461,475
947,903
798,601
314,392
(375,761)
423,848
118,323
(14,787)
68,025
1,564
2,813
301,169
(304,923)
2,422,894 2,766,398
(1,892)
–
421,956
525,947
31,528
159
150,010
648,591
1,545,978
56,609
440,941
299,720
1,182,882
43,652
373,125
529,399
520,757
27,182
127,572
69,161
424,738
22,769
184,820
203,082
20,701
113,552
39
76,139
13,188
47,087
(15,633)
16,347
2,477,501
2,205,236
804,947
836,123
4,900,395
4,971,634
1,330,894
1,484,714
4,514,387
10,026
42,493
4,566,906
4,020,798
36,301
52,740
4,109,839
1,566,133
26
13,944
1,580,103
1,415,814
–
(2,789)
1,413,025
321,592
646,618
(69,639)
132,233
Extraordinary / Unusual items
–
–
–
–
PROFIT / (LOSS) BEFORE TAXATION
655,081
1,508,413
(318,848)
203,922
Taxation - Current
- Prior years
- Deferred
244,581
10,851
157,191
197,727
86,000
157,299
77,243
–
(46,325)
86,345
–
105,902
PROFIT / (LOSS) AFTER TAXATION
Profit / (Loss) attributable to:
Equity shareholders of the Bank
Minority unit holders of PICIC Stock Fund & PICIC
Islamic Stock Fund (Non controlling interest)
412,623
441,026
30,918
192,247
242,458
1,067,387
(349,766)
11,675
200,630
1,057,878
(378,704)
9,452
41,828
242,458
9,509
1,067,387
28,938
(349,766)
2,223
11,675
0.02
0.10
(0.04)
0.00
Basic / diluted earnings / (loss) per share (Rupees)
The annexed notes from 1 to 19 form an integral part of these consolidated condensed interim
financial information.
Badar Kazmi
President / Chief Executive
Teo Cheng San, Roland
Chairman / Director
Chia Yew Hock, Wilson
Director
Asif Jooma
Director
24
NIB Bank Limited
Consolidated Condensed Interim
Statement of Comprehensive Income (Unaudited)
For the nine months and quarter ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
Nine months ended
Quarter ended
September 30, September 30,
2014
2013
September 30, September 30,
2014
2013
(Rupees '000')
Profit after taxation for the period
attributable to:
Equity shareholders of the Bank
Minority unit holders of PICIC Stock Fund
& PICIC Islamic Stock Fund
(Non controlling interest)
200,630
1,057,878
(378,704)
9,452
41,828
9,509
28,938
2,223
Effect of change in accounting policy with
respect to accounting for actuarial
gains or losses
–
3,380
–
–
Items that are or may be reclassified
subsequently to profit or loss
–
–
–
–
Other comprehensive income
Items that will not be reclassified
to profit or loss
Total comprehensive income for the period
242,458
1,070,767
(349,766)
11,675
Surplus / Deficit on revaluation of ''Available-for-Sale'' securities is presented under a separate
head below equity as ''Surplus / Deficit on revaluation of assets'' in accordance with the requirements
specified by the Companies Ordinance, 1984, and the State Bank of Pakistan vide its BSD Circular
20 dated August 4, 2000 and BSD Circular 10 dated July 13, 2004.
The annexed notes from 1 to 19 form an integral part of these consolidated condensed interim
financial information.
Badar Kazmi
President / Chief Executive
25
Teo Cheng San, Roland
Chairman / Director
Chia Yew Hock, Wilson
Director
Asif Jooma
Director
NIB Bank Limited
Consolidated Condensed Interim
Statement of Changes in Equity (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
Attributable to ordinary shareholders of the Bank
Reserves
Share
capital
Balance as at December 31, 2012
103,028,512
Discount
on issue of
shares
(45,769,623)
Capital
Statutory
reserve
Revenue
General
Accumulated
reserve
loss
Total
(Rupees '000')
220,417
5,472
(43,069,410)
14,415,368
–
–
3,380
3,380
1,067,387
Total comprehensive income / (loss)
for the period
Accounting for actuarial gains and losses
–
–
Profit after taxation for the period
–
–
–
–
1,067,387
Transfer to statutory reserve
–
–
201,740
–
(201,740)
Minority unit holders share of PICIC Stock Fund
(Non controlling interest)
transferred to other liabilities
Balance as at September 30, 2013
–
103,028,512
–
(45,769,623)
–
–
422,157
5,472
–
(9,509)
(9,509)
(42,209,892)
15,476,626
Total comprehensive income / (loss)
for the period
Accounting for actuarial gains and losses
–
–
–
–
(227)
(227)
Profit after taxation for the period
–
–
–
–
512,691
512,691
Transfer to statutory reserve
–
–
46,494
–
(46,494)
–
Minority unit holders share of PICIC Stock Fund
(Non controlling interest)
transferred to other liabilities
–
–
–
–
(33,928)
(33,928)
–
–
–
–
61,560
61,560
468,651
5,472
(41,716,290)
16,016,722
Contributions by and distribution to owners
Share based payment transaction
Balance as at December 31, 2013
103,028,512
(45,769,623)
Total comprehensive income
/ (loss) for the period
Profit after taxation for the period
–
–
–
–
242,458
242,458
Transfer to statutory reserve
–
–
136,146
–
(136,146)
–
Minority unit holders share of PICIC Stock Fund
& PICIC Islamic Sock Fund
(Non controlling interest)
transferred to other liabilities
Balance as at September 30, 2014
–
103,028,512
–
(45,769,623)
–
–
604,797
5,472
(41,828)
(41,828)
(41,651,806)
16,217,352
The annexed notes from 1 to 19 form an integral part of these consolidated condensed interim
financial information.
Badar Kazmi
President / Chief Executive
Teo Cheng San, Roland
Chairman / Director
Chia Yew Hock, Wilson
Director
Asif Jooma
Director
26
NIB Bank Limited
Consolidated Condensed Interim Cash Flow Statement (Unaudited)
For the nine months period ended September 30, 2014
September 30, September 30,
2014
2013
(Rupees '000')
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation
Dividend income
Adjustments for non-cash items
Depreciation
Amortization
Workers welfare fund
Provision / (reversal) against non-performing loans and advances
Bad debts written off directly
Fixed assets written off
(Gain) on sale of operating fixed assets
(Gain) on sale of securities
Unrealized (gain) on revaluation of investments classified as held-for-trading
(Reversal) / Provision for diminution in the value of investments
Other provisions / write offs
Share of profit of associates
(Increase) / decrease in operating assets
Lendings to financial institutions
Net investments in held-for-trading securities
Advances
Other assets (excluding advance taxation)
Increase / (decrease) in operating liabilities
Bills payable
Borrowings
Deposits and other accounts
Other liabilities (excluding current taxation)
Income tax paid
Net cash (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Net investments in available-for-sale securities
Net investments in held-to-maturity securities
Net investments in associates
Dividend received
Payments for capital work in progress
Acquisition of property and equipment
Acquisition of intangible assets
Sale proceeds of property and equipment disposed-off
Net cash from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Receipt / (Redemption) of sub-ordinated loans
Dividend paid
(Payment) / receipt from minority unit holders of PICIC Stock
Fund & PICIC Islamic Stock Fund (Non controlling interest)
Net cash (used in) / from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
QUARTERLY
REPORT
(UNAUDITED)
655,081
(56,609)
598,472
1,508,413
(43,652)
1,464,761
224,854
257,382
24,347
314,392
1,564
–
(42,312)
(299,720)
(20,701)
(14,787)
10,026
(321,592)
133,453
731,925
217,509
252,335
11,584
(375,761)
2,813
10,932
(38,580)
(529,399)
(39)
68,025
36,301
(646,618)
(990,898)
473,863
(2,063,521)
(143,142)
(15,692,742)
(220,298)
(14,445,694)
(2,004,170)
(3,246,639)
(398,458)
(291,572)
(4,974,911)
6,424,342
214,352
(16,015,567)
(193,611)
(16,209,178)
2,729,635
(30,025,863)
6,635,435
210,560
(40,071,331)
(218,592)
(40,289,923)
10,594,299
1,718,234
611,620
30,378
(243,398)
(196,782)
(38)
71,352
12,585,665
44,380,445
1,821,751
(158,654)
41,566
(133,781)
(132,043)
(345)
76,490
45,895,429
4,198,035
(19)
(3,992,800)
(92)
(90,457)
4,107,559
16,056
(3,976,836)
484,046
8,696,206
9,180,252
1,628,670
8,629,675
10,258,345
The annexed notes from 1 to 19 form an integral part of these consolidated condensed interim
financial information.
Badar Kazmi
President / Chief Executive
27
Teo Cheng San, Roland
Chairman / Director
Chia Yew Hock, Wilson
Director
Asif Jooma
Director
NIB Bank Limited
Notes to the Consolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
1.
QUARTERLY
REPORT
(UNAUDITED)
STATUS AND NATURE OF BUSINESS
The "Group" consists of:
Holding Company: NIB Bank Limited (the Bank)
NIB Bank Limited "the Bank" is incorporated in Pakistan and its registered office is situated
at first floor, Post Mall, F-7 Markaz, Islamabad. The Bank is listed on all the stock exchanges
in Pakistan and has 171 branches (December 31, 2013: 179 branches). The Bank is a
scheduled commercial bank and is principally engaged in the business of banking as defined
in the Banking Companies Ordinance, 1962.
NIB Bank Limited is a subsidiary of Bugis Investments (Mauritius) Pte. Limited which is a
wholly owned subsidiary of Fullerton Financial Holdings Pte. Limited which in turn is a wholly
owned subsidiary of Temasek Holdings, an investment arm of the Government of Singapore.
Subsidiary Companies
PICIC Asset Management Company Limited (PICIC AMC)
PICIC AMC is a wholly owned subsidiary of the Bank and is an unquoted public limited
company with principal business to carry out investment advisory services and asset
management services. The Bank acquired interest in PICIC AMC by virtue of acquisition and
amalgamation of Pakistan Industrial Credit and Investment Corporation Limited (PICIC) as
of June 30, 2007.
PICIC Stock Fund (PSF)
The Group maintains 84.61% interest in the PSF. PSF is an open ended mutual fund approved
by the Securities and Exchange Commission of Pakistan (SECP) and is listed on the Islamabad
Stock Exchange (Guarantee) Limited. The units of the PSF are offered to the public for
subscription on a continuous basis and are transferable and redeemable by surrendering
them to the PSF. The investment objective of the Fund is to provide investors a diversified
equity portfolio with a primary objective of maximizing risk adjusted returns over longer
investment horizon through a combination of capital gains and dividend income.
PICIC Islamic Stock Fund (PISF)
The Group maintains 88.60% interest in the PISF. PISF is an open ended mutual fund approved
by the Securities and Exchange Commission of Pakistan (SECP) and is listed on the Islamabad
Stock Exchange (Guarantee) Limited. The units of the PISF are offered to the public for
subscription on a continuous basis and are transferable and redeemable by surrendering
them to the PISF. The objective of PISF is to provide the maximum total return to the unit
holders from investment in "Shariah Compliant" equity investments for the given level of risk.
This fund was floated in the current period.
Financial and Management Services (Private) Limited (FMSL)
The Group acquired 95.89% interest in Financial and Management Services (Private) Limited
by virtue of acquisition and amalgamation of PICIC.
2.
STATEMENT OF COMPLIANCE
2.1
These consolidated condensed interim financial statements of the Group for the nine months
period ended September 30, 2014 have been prepared in accordance with the requirements
of International Accounting Standard (IAS) 34 - Interim Financial Reporting, the provisions
of and directives issued under the Companies Ordinance, 1984, the Banking Companies
Ordinance, 1962 and directives issued by the Securities and Exchange Commission of
Pakistan (SECP) and the State Bank of Pakistan (SBP). In case requirements differ, the
provisions of and directives issued under the Companies Ordinance, 1984, the Banking
Companies Ordinance, 1962 and the said directives have been followed.
2.2
The SBP has deferred the applicability of IAS 39, "Financial Instruments: Recognition and
Measurement" and IAS 40 "Investment Property" for Banking Companies through BSD Circular
letter No. 10, dated August 26, 2002. Further, according to the notification of SECP dated
April 28, 2008, the IFRS 7 "Financial Instruments: Disclosures" has not been made applicable
for banks. Accordingly, the requirements of these standards have not been considered in
the preparation of these condensed interim financial information. However, investments have
28
Notes to the Consolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
been classified and valued in accordance with the requirements of various circulars issued
by the SBP.
2.3
The disclosures made in these consolidated condensed interim financial information have
been limited based on the format prescribed by SBP vide BSD circular letter No. 2 of May
12, 2004 and IAS 34 - "Interim Financial Reporting" and do not include all the information
required in annual financial statements. Accordingly, these consolidated condensed interim
financial information should be read in conjunction with the consolidated financial statements
of the Bank for the year ended December 31, 2013.
3.
BASIS OF MEASUREMENT
These consolidated condensed interim financial information have been prepared under the
historical cost convention, except for the measurement of certain investments and commitments
in respect of forward foreign exchange contracts that are stated at revalued amounts / fair
values.
These consolidated condensed interim financial statements have been presented in Pakistan
Rupees, which is the Group's functional and presentation currency. The amounts are rounded
off to the nearest thousand rupees.
4.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies and method of computation followed for the preparation of these
consolidated condensed interim financial statements are the same as those applied in the
preparation of the annual consolidated financial statements of the Group for the year ended
December 31, 2013.
The new standards, amendments and interpretations that were mandatory for accounting
periods beginning on or after January 1, 2014 and are not considered to be relevant or have
any significant effect on the Group’s operations, are not detailed in these consolidated
condensed interim financial statements.
5.
ACCOUNTING ESTIMATES
The basis for the accounting estimates adopted in the preparation of these consolidated
condensed interim financial statements are the same as those applied in the preparation of
the annual consolidated financial statements of the Group for the year ended December 31,
2013.
6.
FINANCIAL RISK MANAGEMENT
The financial risk management objectives and policies adopted by the Group are consistent
with those disclosed in the annual consolidated financial statements of the Group for the year
ended December 31, 2013.
7.
BASIS OF CONSOLIDATION
The assets and liabilities of subsidiary companies have been consolidated on a line by line
basis and the carrying value of investment in subsidiaries held by the holding company is
eliminated against the shareholders' equity in the consolidated financial statements.
Material intra-group balances and transactions have been eliminated.
These consolidated financial statements includes the financial statements of NIB Bank Limited
and its subsidiary companies - "the Group".
Subsidiary companies are fully consolidated from the date on which more than 50% of the
voting rights are transferred to the Group, or the power to control the Company is established
and are excluded from consolidation from the date of disposal or when the control is lost.
Non controlling interest represents that part of the net results of operations and of net assets
of the subsidiary companies that is not owned by the Group.
Financial and Management Services (Private) Limited has not been consolidated as it is not
material and this investment has been fully provided.
29
Notes to the Consolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
Unaudited
September 30, 2014
8.
8.1
INVESTMENTS
Note
Held by
Group
Given as
collateral
QUARTERLY
REPORT
(UNAUDITED)
Audited
December 31, 2013
Total
Held by
Group
(Rupees '000')
Given as
collateral
Total
Investments by types:
Held-for-trading securities
Ordinary Shares / Certificates in
Listed Companies / Modarabas
450,870
450,870
110,591
110,591
561,461
561,461
302,102
302,102
8,416
8,416
310,518
310,518
Available-for-sale securities
Market Treasury Bills
Pakistan Investment Bonds
GOP Ijara Sukuk Bonds
Defense Savings Certificates
Sukuk Bonds
Cumulative Preference Shares
Ordinary Shares / Certificates in
Listed Companies / Modarabas
Ordinary Shares of Unlisted Companies
Term Finance Certificates
4,903,519 6,709,713
14,378,069 15,131,606
1,003,548
–
–
2,730
443,134
–
55,178
–
31,723
65,901
980,322
–
–
279,514
21,861,394 22,123,563
11,613,232 12,268,930 11,139,181 23,408,111
29,509,675 9,698,609 18,213,372 27,911,981
1,003,548
–
–
–
2,730
–
2,730
2,730
443,134
461,976
–
461,976
55,178
55,178
–
55,178
31,723
65,901
1,259,836
59,614
66,279
2,269,443
–
–
138,493
59,614
66,279
2,407,936
43,984,957 24,880,029 29,493,776 54,373,805
Held-to-maturity securities
Pakistan Investment Bonds
Term Finance Certificates
Associates
–
10,152
8.2
Subsidiary
Total investments - Gross
Provision for diminution
in value of investments
Investments - net of provisions
Surplus on revaluation of
held-for-trading securities
(Deficit) on revaluation of
available-for-sale securities
Net Investments
8.2
–
–
–
10,152
1,717,358
11,028
–
–
1,717,358
11,028
10,152
–
10,152
1,728,386
–
1,728,386
4,864,844
–
4,864,844
5,294,462
–
5,294,462
724
–
724
724
–
724
27,187,984 22,234,154
(189,039)
–
26,998,945 22,234,154
12,585
8,116
(658,257)
(315,787)
26,353,273 21,926,483
49,422,138 32,205,703 29,502,192 61,707,895
(189,039)
(215,587)
–
(215,587)
49,233,099 31,990,116 29,502,192 61,492,308
20,701
31,220
3,248
34,468
(974,044)
(305,001)
(429,890)
(734,891)
48,279,756 31,716,335 29,075,550 60,791,885
During the period, the Group has divested its entire 30% holding in PICIC Insurance Limited.
30
Notes to the Consolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
Unaudited
September 30,
2014
Audited
December 31,
2013
(Rupees '000')
9.
ADVANCES
Loans, cash credits, running finance, etc. - in Pakistan
110,395,408
97,043,697
Net investment in finance lease - in Pakistan
1,782,577
1,777,383
Bills discounted and purchased (excluding Treasury Bills)
Payable in Pakistan
Payable outside Pakistan
Advances - Gross
4,340,359
3,674,779
120,193,123
2,600,925
3,161,906
104,583,911
Provision against non-performing advances - Specific
- General
(22,715,819)
(74,551)
(22,488,805)
(69,139)
(22,790,370)
(22,557,944)
97,402,753
82,025,967
Advances - Net of provisions
9.1
Advances include Rs. 28,057.989 million (December 31, 2013: Rs. 29,904.747 million),
which have been placed under non-performing status as detailed below:
Domestic
Overseas
Total
Provision
required
Provision
held
(Rupees '000')
Category of Classification
OAEM
Substandard
Doubtful
Loss
39,144
2,064,213
566,002
25,388,630
–
–
–
–
39,144
2,064,213
566,002
25,388,630
4,935
1,008,181
165,295
21,537,408
4,935
1,008,181
165,295
21,537,408
28,057,989
–
28,057,989
22,715,819
22,715,819
9.2
Included in the provision required and held is an amount of Rs. 292.922 million (2013: Rs.
293.089 million) which represents provision in excess of the requirements of the State Bank
of Pakistan.
9.3
In accordance with BSD Circular No. 1 dated October 21, 2011 issued by the State Bank of
Pakistan, the Bank has availed the benefit of Forced Sale Value (FSV) against the nonperforming advances. During the nine months period ended September 30, 2014, total FSV
benefit erosion resulted in decrease in profit before tax of Rs. 1,217.074 million. Had the
benefit under the said circular not been taken by the Bank, the specific provision against nonperforming advances would have been higher by Rs. 3,188.453 million (2013: Rs. 4,405.527
million). The FSV benefit recognised will not be available for the distribution of cash and stock
dividend to shareholders.
31
Notes to the Consolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
Unaudited
September 30,
2014
Unaudited
September 30,
2013
(Rupees '000')
10.
OPERATING FIXED ASSETS
10.1 Additions to fixed assets
The following additions have been made to fixed assets during the period ended September 30, 2014:
Furniture and fixtures
Electrical, office and computer equipment
Vehicles
Leasehold improvements
Capital work in progress
12,455
216,173
–
128,134
244,082
5,771
145,992
6,160
57,995
133,781
10.2 Disposal of fixed assets - cost
The following disposals have been made from fixed assets during the period ended September 30, 2014:
Freehold land
Building on freehold land
Building on leasehold land
Furniture and fixtures
Electrical, office and computer equipment
Vehicles
Leasehold improvements
11.
–
13,030
25,947
15,327
117,193
3,341
6,469
18,920
–
13,157
23,133
50,535
13,710
301
DEFERRED TAX ASSETS
The deferred tax asset recognised in these consolidated financial statements have been
restricted to Rs. 11,009.266 million due to uncertainty of availability of future tax profits for
utilization of the unrecognised deferred tax assets. The deductible differences available to
the Group are Rs. 11,688.196 million. Had the deferred tax asset been recognized on all
deductible timing differences, the profit after tax for the nine months period ended on
September 30, 2014 would have been higher by Rs. 678.930 million.
The management of the Bank has recorded deferred tax asset based on financial projections
indicating absorption of deferred tax asset over a number of future years through reversals
as a result of recoveries from borrowers and absorption of remaining deferred tax asset
against future taxable profits. The financial projections involve certain key assumptions such
as deposits composition, interest rates, growth of deposits and advances, investment returns
and potential provision / reversals against assets. Any significant change in the key assumptions
may have an effect on the absorption of the deferred tax asset.
Unaudited
September 30,
2014
Audited
December 31,
2013
(Rupees '000')
12.
OTHER ASSETS
8,099,710
7,516,607
12.1 Other assets include settlement of certain accounts through acquiring properties from the borrowers
amounting to Rs. 2,062.366 million (December 31, 2013: Rs. 1,991.280 million). The settlement agreements
signed with borrowers in certain cases entails a buy back option.
32
Notes to the Consolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
Unaudited
September 30,
2014
13.
DEPOSITS AND OTHER ACCOUNTS
Audited
December 31,
2013
(Rupees '000')
Customers
Fixed deposits
Savings deposits
Current accounts - Non remunerative
Margin accounts
32,519,892
38,973,074
33,526,799
659,917
28,949,611
40,747,664
28,537,129
534,933
5,233,920
398,471
5,798,457
319,937
111,312,073
104,887,731
Financial Institutions
Remunerative deposits
Non-remunerative deposits
14.
SUB-ORDINATED LOANS
4,198,035
–
Term Finance Certificates - Quoted, Unsecured
33
Mark-up
Floating (no floor, no cap) rate of return at Base Rate +1.15% (The
Base Rate is defined as the average “Ask Side” rate of the six month
Karachi Interbank Offered Rate (“KIBOR”)).
Security
The TFCs are unsecured and subordinated to all other indebtedness
of the Bank including deposits.
Issue Date
June 19, 2014
Issue Amount
Rs. 4,198.035 million
Rating
A+ (A plus)
Tenor
8 years from the Issue Date
Redemption
Fifteen equal semi-annual installments of 0.02% of the Issue Amount
for the first ninety months followed by remaining 99.70% on maturity
at the end of the ninety sixth month.
Maturity
June 19, 2022
Call Option
The Bank may call the TFCs, in part or full, on any profit payment date
from the 60th month from the last day of public subscription and on
all subsequent profit payment dates, subject to the SBP approval and
not less than forty five days prior notice being given to the Trustee and
the Investors.
Notes to the Consolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
15.
QUARTERLY
REPORT
(UNAUDITED)
Lock-in- Clause
Neither profit nor Principal can be paid (even at maturity) if such
payments will result in a shortfall in the Banks' Minimum Capital
Requirements (MCR) or Capital Adequacy Ratio (CAR) or increase
any existing shortfall in MCR and CAR. In case the lock-in-clause goes
into effect, the Bank will be required to comply with the SBP instructions
prevalent or issued at the time.
Loss Absorbency
Clause
The TFCs will be subject to loss absorbency clause as stipulated under
the "Instructions for Basel III Implementation in Pakistan".
SHARE CAPITAL
Unaudited
September 30,
2014
Audited
December 31,
2013
Unaudited
September 30,
2014
(Number of shares)
Audited
December 31,
2013
(Rupees '000')
15.1 Authorized
12,000,000,000
12,000,000,000
Ordinary shares of Rs. 10 each
120,000,000
120,000,000
32,789,027
32,789,027
15.2 Issued, subscribed and paid up
Fully paid up ordinary shares of Rs. 10 each
3,278,902,659
3,278,902,659
Fully paid in cash
764,824,417
764,824,417
Issued for consideration
other than cash (under
schemes of amalgamation)
6,259,124,088
6,259,124,088
Issuance of shares on discount
10,302,851,164
10,302,851,164
7,648,244
7,648,244
62,591,241
62,591,241
103,028,512
103,028,512
15.3 The holding company Bugis Investments (Mauritius) Pte. Limited holds 9,105,728,598
(December 31, 2013: 9,105,728,598) ordinary shares.
34
Notes to the Consolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
Unaudited
September 30,
2014
16.
CONTINGENCIES AND COMMITMENTS
Audited
December 31,
2013
(Rupees '000')
16.1 Direct credit substitutes
Contingent liability in respect of guarantees given
favouring:
Government
Financial Institutions
Others
–
–
14,749
–
–
–
14,749
–
16.2 Transaction-related contingent liabilities / commitments
Guarantees given in favour of:
Government
Financial Institutions
Others
15,961,628
–
2,370,976
19,100,740
–
793,108
18,332,604
19,893,848
30,112,712
3,262,746
23,287,063
5,237,186
33,375,458
28,524,249
266,133
266,133
1,445,000
708,000
16.3 Trade-related contingent liabilities
Letters of credit
Acceptances
16.4 Other Contingencies
Claims against the Bank not acknowledged as debts
16.5 Commitments in respect of forward lending
Commitments to extend credit
The Bank makes commitments to extend credit in the normal course of its business but none
of these commitments are irrevocable and do not attract any significant penalty or expense
if the facility is ultimately withdrawn except commitments mentioned above.
16.6 Commitments in respect of forward exchange contracts
Purchase
Sale
16.7 Commitments for the acquisition of operating
fixed assets
21,713,323
20,219,065
26,499,067
25,424,367
41,932,388
51,923,434
116,549
171,863
2,859,218
–
12,699,823
2,894,757
16.8 Commitments with respect to Government and
Other Securities
Purchase
Sale
35
Notes to the Consolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
16.9 Other contingencies
A penalty of Rs. 700 million was imposed by the Competition Commission of Pakistan (“the
Commission”) on all the member banks utilizing the 1 link Switch on account of uncompetitive
behavior and imposing of uniform charges on cash withdrawal for off network ATM transactions.
The Bank’s share in this penalty is Rs. 50 million. The concerned banks filed a constitutional
petition before the High Court of Sindh, which has suspended the order of the Commission.
Consequently an appeal was filed with the Competition Appellate Tribunal (“Tribunal”) which
has set aside the order of the Commission. The Commission has preferred an appeal before
the Supreme Court, which has been admitted for hearing and will be fixed by the concerned
office of the Supreme Court.
The management in consultation with external legal counsel, representing the Bank, is
confident that they have strong grounds to contest this penalty and are optimistic that the
outcome will be decided in favour of the Bank.
16.10 Tax contingencies
The income tax returns of NIB Bank Limited have been filed up to and including tax year
2013 relevant to the financial year ended December 31, 2012. The tax authorities have made
certain disallowances including additions on account of proration of expenses against
dividends and capital gains, disallowances of interest and administrative expenses and
renovation expenses incurred on rented premises (allowed historically) pertaining to tax years
2003 through 2008 for Ex-Pakistan Industrial Credit and Investment Corporation Limited (ExPICIC), from tax years 2004 through 2008 for Ex-PICIC Commercial Bank Limited (Ex-PCBL),
tax years 2003 and 2004 for Ex-National Development Leasing Corporation Limited (ExNDLC) and from tax years 2004 through 2008 for NIB Bank Limited. During last year, a
combined Appellate Order for Ex-PICIC pertaining to tax years 2003 through 2007 was issued
by Commissioner Inland Revenue (Appeals) – CIR(A) in which the aforementioned expenses
were allowed. However, the tax authorities have filed appeal with Income Tax Appellate
Tribunal (ITAT) against above combined Appellate Order. These disallowances may result
in additional tax aggregating to Rs. 1,370 million (2013: Rs. 1,370 million), which the
management of the Bank in discussion with their tax consultants believes to be unjustified
and not in accordance with the true interpretation of the law.
Appeals filed against orders are pending at various appellate forums. Management is confident
that the eventual outcome of the cases will be in favour of the Bank.
16.11 The income tax returns of PICIC AMC have been filed up to and including the tax year 2013
relevant to the financial year ended June 30, 2013. While finalizing the assessments for tax
year 2005, 2006, 2007, 2008 and 2009, the tax authorities have made certain disallowances
which resulted in additional tax aggregating to Rs. 71.136 million. As a matter of prudence
the management has made provision in these financial statements in respect of above
disallowances except for matter relating to dividend income claimed as exempt under clause
103 of Second Schedule of Income tax Ordinance, 2001 amounting to Rs. 36.005 million.
The Company's appeals in respect of above tax years are pending before Commissioner
Inland Revenue Appeals (CIR) and Appellate Tribunal Inland Revenue (ATIR).
The management based on the advice from tax advisor is confident that the eventual outcome
of the above appeals will be in favour of PICIC AMC.
36
Notes to the Consolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
17.
QUARTERLY
REPORT
(UNAUDITED)
SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES
The Group comprises the Bank, Asset Management Company, PICIC Stock Fund and PICIC Islamic
Stock Fund. The Bank is organised into reportable segments as disclosed in note 6.22.1 of the
annual consolidated financial statements. These segments are managed by respective segment
heads and the results of these segments are regularly reviewed by the Group's President / Chief
Executive, Executive Committee and the Board of Directors. Segment performance is reviewed on
the basis of various factors including profit before taxation. The performance of the Asset Management
Company, PICIC Stock Fund and PICIC Islamic Stock Fund is included in Head Office / Others.
Transactions between reportable segments are carried out on an arms length basis.
The segment analysis with respect to business activity is as follows:
Corporate and Small & Medium
Investment Enterprises and
Banking
Commercial
Retail
Treasury
(Rupees '000')
Head Office / *Adjustments
Other
For the nine months period ended September 30, 2014 (Unaudited)
Net Interest Income
Non Mark-up Income including share of
income of associates
Net Interest and non mark-up Income
308,450
47,942
1,976,204
387,111
4,356
–
925,749
1,234,199
284,857
332,799
541,321
2,517,525
205,426
592,537
841,738
846,094
–
–
Total expenses including provisions
(excluding Impairment)
Impairment against Investment
Total expenses including provisions
526,004
(14,787)
511,217
1,169,317
–
1,169,317
2,848,057
–
2,848,057
175,990
–
175,990
163,492
–
163,492
–
–
–
Segment Net income / (loss) before tax
Segment Return on net assets (ROA) (%)
Segment Cost of funds (%)
722,982
0.70%
8.83%
(836,518)
(2.59%)
3.73%
(330,532)
(0.41%)
4.91%
416,547
1.14%
10.13%
682,602
–
–
–
N/A
N/A
For the nine months period ended September 30, 2013 (Unaudited)
Net Interest Income
Non Mark-up Income including share of
income of associates
Net Interest and non mark-up Income
Total expenses including provisions
(excluding Impairment)
Impairment against Investment
Total expenses including provisions
Segment Net income / (loss) before tax
Segment Return on net assets (ROA) (%)
Segment Cost of funds (%)
168,354
(386,365)
2,239,538
311,791
128,157
–
612,901
781,255
231,450
(154,915)
402,934
2,642,472
589,519
901,310
1,015,050
1,143,207
–
–
(378,609)
65,815
(312,794)
947,040
–
947,040
2,805,966
–
2,805,966
218,303
2,210
220,513
144,191
–
144,191
–
–
–
1,094,049
1.89%
8.20%
(1,101,955)
(7.19%)
4.31%
(163,494)
(0.18%)
4.48%
680,797
1.30%
9.32%
999,016
–
–
–
N/A
N/A
As at September 30, 2014 (Unaudited)
Segment Assets (Gross of advances
provisions)
Segment Non Performing Loans
Segment Provision against advances
(including general provisions)
Segment Assets (Net)
Segment Liabilities
102,114,064
13,822,659
36,951,699
11,631,676
72,063,487
2,373,489
31,714,729
–
11,194,188
230,165
(47,110,019)
–
12,063,268
90,050,796
86,023,175
8,911,135
28,040,564
27,225,394
1,609,741
70,453,746
68,998,892
–
31,714,729
30,979,923
206,226
10,987,962
2,023,003
–
(47,110,019)
(47,110,019)
As at December 31, 2013 (Audited)
Segment Assets (Gross of advances
provisions)
Segment Non Performing Loans
Segment Provision against advances
(including general provisions)
Segment Assets (Net)
Segment Liabilities
91,875,166
14,649,539
28,710,911
12,349,392
80,315,365
2,676,677
33,983,306
–
12,049,239
229,139
(46,082,156)
–
12,307,058
79,568,108
73,864,682
8,585,588
20,125,323
19,021,285
1,460,137
78,855,228
76,966,299
–
33,983,306
33,290,055
205,161
11,844,078
5,504,261
–
(46,082,156)
(46,082,156)
* The respective segment assets and liabilities incorporate intersegment lending and borrowing, with appropriate
transfer pricing. The adjustments column eliminates intersegment lending and borrowing.
37
18.
At the end of the period / year
Payables
At the end of the period / year
Receivables
At the end of the period / year
Investment in Term Finance Certificates - cost
At the end of the period / year
At the beginning of the period / year
Investments made during the period / year
Investments sold during the period / year
Equity accounting method adjustments
Investment in shares / mutual funds
At the end of the period / year
Deposits
At the beginning of the period / year
Deposits during the period / year
Exchange difference
Withdrawal during the period / year
At the end of the period / year
Advances
At the beginning of the period / year
Given / addition during the period / year
Repaid during the period / year
–
171
–
171
–
–
–
–
–
–
–
–
19,897
16,791
–
–
–
–
32,823
175
758
(13,859)
–
–
19,897
–
(139)
(2,967)
–
–
–
–
–
–
–
–
–
724
724
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
724
724
–
–
–
–
–
–
–
–
–
–
–
–
–
451,676
–
4,864,844
5,294,462
1,077,025
(1,545,363)
38,720
2,061,204
363,827
25,224,958
–
(23,527,581)
–
–
–
–
–
37,911
–
5,294,462
3,969,457
4,084,080
(3,827,427)
1,068,352
363,827
611,316
30,007,012
–
(30,254,501)
–
–
–
–
–
–
–
–
–
–
–
–
35,460
33,426
175,447
(414)
(172,999)
69,480
168,110
29,029
(127,659)
–
–
–
–
–
–
–
–
33,426
35,727
244,964
1,139
(248,404)
168,110
155,572
85,521
(72,983)
236
49,877
–
50,100
50,000
8,013
(7,913)
–
154,534
72,033
9,275,257
(1,273)
(9,191,483)
24,909
24,876
1,354
(1,321)
918
29,562
49,954
50,000
18,987
50,000
(18,987)
–
72,033
71,366
1,742,212
3,142
(1,744,687)
24,876
21,951
5,326
(2,401)
Holding company
Unconsolidated subsidiary
Associates
Key management personnel
Other related parties
Unaudited
Audited
Unaudited
Audited
Unaudited
Audited
Unaudited
Audited
Unaudited
Audited
September 30, December 31, September 30, December 31, September 30, December 31, September 30, December 31, September 30, December 31,
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
(Rupees '000')
18.1 Balances outstanding as at the year end
The detail of transactions with related parties is given below:
Transactions with related parties are executed on the same terms as those prevailing at the time for comparable transactions with unrelated parties
except for staff loans which are on discounted rates as per industry practice.
The Group has related party transactions with its holding company, unconsolidated subsidiary, associated undertakings, employee benefit plans,
its key management personnel and other related parties.
RELATED PARTY TRANSACTIONS
Notes to the Consolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)
38
39
19.
–
Commission income
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,030
–
332,199
–
–
–
–
–
542,529
41,998
–
574
–
258,589
–
–
2,031
–
–
408,421
62,068
–
(Rupees '000')
–
–
–
–
312,694
–
–
–
–
317
2,792
September
30, 2014
–
–
–
–
310,583
–
–
–
–
329
4,743
September
30, 2013
Period ended
Key management personnel
September September
30, 2014
30, 2013
Period ended
Unaudited
Associates
–
255
–
82,159
–
–
4,469
9,196
41,580
3,107
9,428
September
30, 2014
Badar Kazmi
President / Chief Executive
Teo Cheng San, Roland
Chairman / Director
Chia Yew Hock, Wilson
Director
Asif Jooma
Director
–
450
–
74,646
–
–
3,044
8,764
–
3,802
2,011
September
30, 2013
Period ended
Other related parties
These consolidated condensed interim financial statements were authorized for issue by the Board of Directors of the Bank on
October 21, 2014.
DATE OF AUTHORIZATION FOR ISSUE
–
–
Management fee earned
Fees and subscription
–
–
–
Directors travelling expense
Insurance premium expense
Contribution to Provident Fund
2,390
3,331
Directors remuneration
Remuneration to
key management personnel
–
–
–
Dividend income from
shares / mutual funds
–
–
Mark-up / return / interest
expensed on deposits
–
–
Mark-up / return / interest
earned on advances
18.2 Income / Expense for the period
Period ended
September September
30, 2014
30, 2013
Period ended
Unconsolidated subsidiary
September September
30, 2014
30, 2013
Holding company
Notes to the Consolidated Condensed
Interim Financial Information (Unaudited)
For the nine months period ended September 30, 2014
QUARTERLY
REPORT
(UNAUDITED)