AlHabib First Quarter Report March 2012

7/31/2019 AlHabib First Quarter Report March 2012

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CONTENTS

Corporate Information 2

Directors' Review 3

Interim Condensed Statement of Financial Position 4

Interim Condensed Profit and Loss Account 5

Interim Condensed Statement of Comprehensive Income 6

Interim Condensed Statement of Changes in Equity 7

Interim Condensed Cash Flow Statement 8

Notes to the Interim Condensed Financial Statements 9

Consolidated Financial Statements 23

1


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2

CORPORATE INFORMATION

Board of Ali Raza D. Habib Chairman Directors Abbas D. Habib Chief Executive & Managing Director

Anwar Haji KarimHasnain A. HabibImtiaz Alam Hanfi

Murtaza H. HabibQumail R. Habib Executive Director Shameem AhmedSyed Mazhar AbbasWazir Ali Khoja

Audit Syed Mazhar Abbas Chairman Committee Ali Raza D. Habib Member

Anwar Haji Karim Member Shameem Ahmed Member Murtaza H. Habib Member

CompanySecretary A. Saeed Siddiqui

Statutory Ernst & Young Ford Rhodes Sidat HyderAuditors Chartered Accountants

Legal Liaquat Merchant AssociatesAdvisor Advocates and Corporate Legal Consultants

Registered 126-C, Old Bahawalpur Road,Office Multan

Principal 2nd Floor, Mackinnons Building,Office I.I. Chundrigar Road,

Karachi

Share M/s. Gangjees Registrar Services (Pvt) Ltd.Registrar 516, Clifton Centre, Khayaban-e-Roomi,

Block - 5, Clifton, Karachi-75600.

Website www.bankalhabib.com


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ALI RAZA D. HABIBChairman

DIRECTORS REVIEW

On behalf of the Board of Directors of the Bank, it is my pleasure to present the un-auditedfinancial statements of Bank AL Habib Limited along with the un-audited consolidatedfinancial statements of Bank AL Habib Limited and the Banks Subsidiary M/s. AL HabibCapital Markets (Private) Limited for the quarter ended March 31, 2012.

Alhamdolillah, during the period under review, the performance of the Bank continued tobe satisfactory. The deposits increased to Rs. 313.9 billion as compared to Rs. 302.1 billion

on December 31, 2011. In the same period, advances increased to Rs. 125.9 billion fromRs. 114.9 billion, while investments increased to Rs. 224.8 billion from Rs. 223.0 billion.The pre-tax profit of the Bank for the quarter ended March 31, 2012 was Rs. 2,017.0 millionas compared to Rs. 1,650.9 million during the corresponding period last year.

Your Bank now has a network of 360 offices, comprising 294 branches, 64 sub-branches,and two Representative Offices. Our network includes three overseas offices (a WholesaleBranch in the Kingdom of Bahrain and Representative Offices in Dubai and Istanbul) andeleven Islamic Banking Branches. Continuing with our branch expansion policy, the Bankintends to open more branches and sub-branches during the year 2012.

Pakistan Credit Rating Agency Limited (PACRA) has maintained the Banks long term andshort term entity ratings at AA+ (Double A plus) and A1+ (A One plus), respectively. Theratings of our unsecured, subordinated TFCs have also been maintained at AA (Double

A). These ratings denote a very low expectation of credit risk emanating from a very strongcapacity for timely payment of financial commitments.

We wish to thank our customers for their continued support and confidence, the State Bankof Pakistan for their guidance, and local and foreign correspondents for their cooperation.We also thank all our staff members for their sincere and dedicated services, which enabledthe Bank to achieve these satisfactory results.

3

Karachi: April 24, 2012

On behalf of the Board of Directors


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4

Note 31-March 31-December2012 2011

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

ASSETSCash and balances with treasury banks 23,040,988 22,957,986Balances with other banks 9,161,939 6,743,337

Lendings to financial institutions 00 000Investments 4 224,817,314 222,958,574Advances 5 125,903,730 114,872,252Operating fixed assets 6 10,715,978 10,743,753Deferred tax assets 00 000Other assets 5,211,474 6,006,559

398,851,423 384,282,461

LIABILITIESBills payable 4,859,053 4,979,720Borrowings 7 45,343,823 43,441,594Deposits and other accounts 8 313,864,799 302,098,594Sub-ordinated loans 9 6,940,826 7,390,358Liabilities against assets subject to finance lease 00 000Deferred tax liabilities 1,190,763 1,231,486Other liabilities 7,894,009 5,287,157

380,093,273 364,428,909

NET ASSETS 18,758,150 19,853,552

REPRESENTED BY :Share capital 10,103,868 8,785,972Reserves 5,572,235 5,324,689Unappropriated profit 1,189,610 3,726,098

16,865,713 17,836,759

Surplus on revaluation of assets - net of tax 10 1,892,437 2,016,793

18,758,150 19,853,552

CONTINGENCIES AND COMMITMENTS 11

The annexed notes 1 to 19 form an integral part of these interim condensed financial statements.

INTERIM CONDENSED STATEMENT OF FINANCIAL POSITIONAS AT 31 MARCH 2012

ABBAS D. HABIBChief Executive and Managing Director

SYED MAZHAR ABBASDirector

ANWAR HAJI KARIMDirector



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Note Three months period ended31-March 31-March

2012 2011(Rupees in '000)

Mark-up / return / interest earned 12 10,537,888 8,251,171Mark-up / return / interest expensed 13 (6,789,891) (4,942,038)

Net mark-up / return / interest income 3,747,997 3,309,133

Provision against non-performing loans and advances 5.3 (269,178) (484,189)Provision for diminution in the value of investments 00 00Bad debts written-off directly 00 00

(269,178) (484,189)Net mark-up / return / interest income after provisions 3,478,819 2,824,944

NON MARK-UP / INTEREST INCOMEFees, commission and brokerage income 370,674 326,885Dividend income 91,490 34,452Income from dealing in foreign currencies 14 121,922 160,410Gain / (loss) on sale / redemption of securities - net 3 (1,523)Unrealised gain / (loss) on revaluation of investments

classified as held for trading 00 00Other income 108,620 101,021

Total non mark-up / interest income 692,709 621,245

4,171,528 3,446,189NON MARK-UP / INTEREST EXPENSES

Administrative expenses (2,109,210) (1,756,483)Other provisions / write-offs 00 (5,063)Other charges (45,357) (33,764)

Total non mark-up / interest expenses (2,154,567) (1,795,310)2,016,961 1,650,879

Extra-ordinary / unusual items 00 00

PROFIT BEFORE TAXATION 2,016,961 1,650,879

Taxation - Current (784,821) (524,462)- Prior years 00 00- Deferred (21,460) (91,598)

(806,281) (616,060)PROFIT AFTER TAXATION 1,210,680 1,034,819

Restated

Basic and diluted earnings per share Rupees 1.20 1.02


INTERIM CONDENSED PROFIT AND LOSS ACCOUNT (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012

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Three months period ended31-March 31-March

2012 2011(Rupees in '000)

Net profit for the period 1,210,680 1,034,819

Other comprehensive income

Effect of foreign currency translation of netinvestment in foreign branch 5,410 (1,651)

Total comprehensive income for the period 1,216,090 1,033,168


INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012





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R e v e n u e R e s e r v e sS h a r e S t a t u t o r y S p e c ia l G e n e r a l F o r e ig n C u r r e n c y U n aC a p i t a l R e s e r v e R e s e r v e R e s e r v e T r a n s la t io n r o p r ia t e

R e s e r v e P r o f i t

(Rupees i n 000)

B a la nc e as at 0 1 Ja n u a ry 20 11 7 ,3 2 1 ,6 4 3 3 ,6 3 4 ,1 7 3 1 2 6 ,5 0 0 5 4 0 ,0 0 0 9 1 ,59 1 2 ,9 9To ta l c o m pre h e n s iv e in c o m e fo r th e p e rio d 0 0 0 0 0 0 0 0 (1 ,65 1 ) 1 ,0 34 ,8 19 1 ,0 3 3 ,1 6 8

Transfer f rom s urplus on reva luat ion of f ixeda s se ts - n e t o f ta x 0 0 0 0 0 0 0 0 0 0 7 ,6 78 7 ,6 7 8

Tran s fe r to s ta tu to ry re se rv e 0 0 2 0 6 ,9 6 4 0 0 0 0 0 0 (2 06 ,9 64 ) 0 0

C as h d iv id e nd (R s . 2 p e r s ha re ) 0 0 0 0 0 0 0 0 0 0 (1 ,4 6 4,3 2 9 ) ( 1,4 6 4,3 2 9 )

I s sue o f bonus sha re s i n t he r a t io o f 20s h a re s fo r e v e ry 1 0 0 s h a re s h e ld 1 ,4 6 4 ,3 2 9 0 0 0 0 0 0 0 0 (1 ,4 64 ,3 29 ) 0 0

B a la nc e a s a t 3 1 M a rc h 2 0 11 8 ,7 8 5 ,9 7 2 3 ,8 4 1 ,1 3 7 1 2 6 ,5 0 0 5 4 0 ,0 0 0 8 9 ,94 0 8 99

To ta l c o m pre h e n s iv e in c o m e fo r th e p e rio d 0 0 0 0 0 0 0 0 2 7 ,38 0 3 ,4 98 ,6 61 3 ,5 2 6 ,0 4 1

Trans fer from surplus on rev aluat ion of fixeda s se ts - n e t o f ta x 0 0 0 0 0 0 0 0 0 0 27 ,8 19 2 7 ,8 1 9

T ran s fe r to s ta tu to ry re se rv e 0 0 6 9 9 ,7 3 2 0 0 0 0 0 0 (6 99 ,7 32 ) 0 0

B a la nc e as at 3 1 Dec e m b e r 2 0 11 8 ,7 8 5 ,9 7 2 4 ,5 4 0 ,8 6 9 1 2 6 ,5 0 0 5 4 0 ,0 0 0 11 7 ,32 0 3 ,7

To ta l c o m pre h e n s iv e in c o m e fo r th e p e rio d 0 0 0 0 0 0 0 0 5 ,41 0 1 ,2 10 ,6 80 1 ,2 1 6 ,0 9 0

Trans fer from surplus on rev aluat ion of fixeda s se ts - n e t o f ta x 0 0 0 0 0 0 0 0 0 0 9 ,3 57 9 ,3 5 7

T ran s fe r to s ta tu to ry re se rve 0 0 2 4 2 ,1 3 6 0 0 0 0 0 0 (2 42 ,1 36 ) 0 0

C as h d iv id en d (R s . 2 .5 p e r s h a re ) 0 0 0 0 0 0 0 0 0 0 (2 ,1 9 6,4 9 3 ) ( 2,1 9 6,4 9 3 )

I s sue o f bonu s sha re s i n t he r a ti o o f 15s h a re s fo r e v e ry 1 0 0 s h a re s h e ld 1 ,3 1 7 ,8 9 6 0 0 0 0 0 0 0 0 (1 ,3 17 ,8 96 ) 0 0

B a la nc e a s a t 3 1 M a rc h 2 0 1 2 1 0 ,1 0 3 ,8 6 8 4 ,7 8 3 ,0 0 5 1 2 6 ,5 0 0 5 4 0 ,0 0 0 12 2 ,73 0 1 ,1 8

The annexed no te s 1 t o 19 fo rm an in t eg ra l pa r t o f these i n t e r im condens ed f inanc ia l s t a tem en t s .

INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012

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Note 31-March 31-March2012 2011

CASH FLOW FROM OPE RATING ACTIVITIES (Rupees in '000)Profit before taxation 2,016,961 1,650,879Dividend income (91,490 ) (34,452)

1,925,471 1,616,427Adjustments for non-cash items:

Depreciation 197,192 180,904Amortisation 7,340 10,552Provision against non-performing loans and advances 269,178 484,189(Gain) / loss on sale / redemption of securities (3 ) 1,523Provision for defined benefit plan 30,000 25,950Provision for compensated absences 6,130 10,439Gain on sale of operating fixed assets (16,053 ) (17,527)Provision against off-balance sheet items 5,063

493,784 701,0932,419,255 2,317,520

(Increase) / decrease in operating assetsLendings to financial institutions (7,691,645)Advances (11,300,668 ) (4,491,523)Other assets 821,400 (783,846)

(10,479,268 ) (12,967,014)Increase / (dec rease) in operating liabilities

Bills payable (120,667 ) 463,443Borrowings (2,139,658 ) 10,305,930Deposits and other accounts 11,766,205 8,398,109Other liabilities (excluding provision for taxation) 256,043 477,221

9,761,923 19,644,703

1,701,910 8,995,209Income tax paid (458,276 ) (541,172)

Net cash flow from operating activities 1,243,634 8,454,037

CAS H FLO W FR O M INVE STING AC TIVITIESNet investments in available for sale securities (17,109,674 ) (14,268,789)Net investments in held to maturity securities 15,073,756 5,731,280Net investments in associates (51,656)Dividend received 63,272 32,535Investments in operating fixed assets (176,086 ) (195,557)Sale proceeds of operating fixed assets 17,286 19,612

Net cash used in investing activities (2,131,446 ) (8,732,575)

CAS H FLO W F RO M FINAN CING ACT IVITIESPayments of sub-ordinated loans (449,532 ) (970)Dividend paid (208,349 ) (1,007,558)

Net cash used in financing activities (657,881 ) (1,008,528)Exchange adjustment on translation of net investment in foreign branch 5,410 (1,651)Decrease in cash and cash equivalents (1,540,283 ) (1,288,717)Cash and cash equivalents at the beginning of the period 29,652,920 19,916,758Cash and cash equivalents at the end of the period 28,112,637 18,628,041

The ann exed notes 1 to 19 form an integral part of these interim conden sed financial statemen ts.

INTERIM CONDENSED CASH FLOW STATEMENT (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012





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1. STATUS AND NATURE OF BUSINESS

Bank AL Habib Limited (the Bank) was incorporated in Pakistan on 15 October 1991 as a publiclimited company under the Companies Ordinance, 1984 having its registered office at 126-C, OldBahawalpur Road, Multan with principal place of business in Karachi. Its shares are listed on allthe Stock Exchanges in Pakistan. It is a scheduled bank principally engaged in the business ofcommercial banking with a network of 294 branches (31 December 2011: 290 branches), 64 sub-

branches (31 December 2011: 61) and 02 representative offices (31 December 2011: 02).Thebranch network of the Bank includes a wholesale branch in the Kingdom of Bahrain (31 December2011:01), a branch in Karachi Export Processing Zone (31 December 2011:01) and 11 IslamicBanking branches (31 December 2011: 11).

2. STATEMENT OF COMPLIANCE

2.1 These interim condensed financial statements have been prepared, in accordance with therequirements of the International Accounting Standard (IAS) 34 - 'Interim Financial Reporting',provisions of the Companies Ordinance, 1984, the Banking Companies Ordinance,1962 andregulations / directives issued by the Securities and Exchange Commission of Pakistan (SECP)and the State Bank of Pakistan (SBP). In case where requirements differ, the provisions of theCompanies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the said directiveshave been followed.

2.2 SBP vide BSD Circular No. 10, dated 26 August 2002 has deferred the applicability of IAS 39,"Financial Instruments: Recognition and Measurement" and IAS 40, "Investment Property" forbanking companies till further instructions. Further, according to the notification of SECP dated28 April 2008, International Financial Reporting Standard (IFRS) - 7 "Financial Instruments:Disclosure" has not been made applicable for banks. Accordingly, the requirements of thesestandards have not been considered in the preparation of these financial statements. However,investments have been classified, accounted for and valued in accordance with the requirementof various circulars issued by SBP.

2.3 The disclosures made in these interim condensed financial statements have been limited basedon the format prescribed by SBP vide BSD Circular Letter No. 2, dated 12 May 2004 and IAS 34"Interim Financial Reporting" and do not include all the information required in the annual financialstatements. Accordingly, these interim condensed financial statements should be read in conjunctionwith the annual financial statements of the Bank for the year ended 31 December 2011.

2.4 These are separate interim condensed financial statements of the Bank in which investments in

subsidiary and associates are reported on the basis of direct equity interest and are not consolidatedor accounted for by using equity method of accounting.

3. ACCOUNTING POLICIES

The accounting policies adopted in the preparation of these interim condensed financial statementsare consistent with those applied in the preparation of the annual financial statements of the Bankfor the year ended 31 December 2011.

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012

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31-M arch 201 2 (U n-A udited) 31-December 2011 (Audi ted)Note H eld by G iven as To ta lH eld by G iven as To ta l

B a nk C o lla te ra l Bank C olla teral(Rupees in '000)

4 . I N V E S T M E N T S

Available for Sale Secu rities Market Treasury Bills 98 ,528 ,454 24 ,633 ,573 123,162 ,0277 8,7 15 ,6 41 27 ,5 88 ,8 55 1 06 ,30 4,4 96Pakistan Investment Bonds 14,638,279 00 14,638,27914 ,617 ,483 00 14,617,483Foreign Currency Bonds 1,273,782 00 1,273,782 979,474 00 979,474Sukuks 3,854,029 00 3,854,029 6 ,947 ,740 00 6,947,740Ordinary shares of listed companies75,871 00 75,871 70,918 00 70,918Ordinary shares of unlisted companies39,570 00 39,570 39,570 00 39,570Listed term finance c ertificates 560,261 00 560,261 584 ,461 00 584,461Unlisted term finance certificates249,920 00 249,920 249,920 00 249,920Open ended mutual funds 4,500,000 00 4,500,000 1,450,000 00 1,450,000

123,720 ,166 24 ,633 ,573 148 ,353 ,7391 03 ,6 5 5,2 07 2 7,5 8 8,8 5 5 1 31 ,2 44 ,0 62

Held to M aturity Securities 4.1Market Treasury Bills 61,035,605 00 61,035,60576 ,079,520 00 76,079,520Pakistan Investment Bonds 13,519,538 00 13,519,53813,482,722 00 13,482,722Sukuks 264,088 00 264,088 266,900 00 266,900Listed term finance c ertificates 321,503 00 321,503 343,681 00 343,681Unlisted term finance certificates83,333 00 83,333 125,000 00 125,000

75 ,224,067 00 75,224,06790,297,823 00 90,297,823Associates Habib Sugar M ills Limited 180,977 00 180,977 180,977 00 180,977Habib Asset Management Limited33,750 00 33,750 33,750 00 33,750First Habib Income F und 550,000 00 550,000 550,000 00 550,000First Habib Stock Fund 50,000 00 50,000 50,000 00 50,000First Habib Cash Fund 100,000 00 100,000 100,000 00 100,000

914,727 00 914,727 914,727 00 914,727Subsidiary AL H abib Capital Markets

(Private) Limited 200,000 00 200,000 200,000 00 200,000

In ve stm e nts a t c os t 20 0,0 58 ,9 60 2 4,6 33 ,5 73 22 4,6 92,5 331 95 ,0 67 ,7 5 7 2 7,5 8 8,8 5 5 2 22 ,6 5 6,6 12Provision for diminution in

the value of investments (5 ,700 ) 00 (5,700 ) (5 ,700 ) 00 (5,700)

Inves tm en ts (net o f p rovi sions ) 200,053 ,260 24 ,633 ,573 224,686,8331 95 ,0 62 ,0 57 2 7,5 8 8,8 5 5 2 22 ,6 5 0,9 12

Surplus on revaluation of availablefor sale investments - net 40,160 90,321 130,481161,803 145 ,859 307 ,662

Investm ents after revaluation of avai lab le fo r s a le i nves tm en ts 200,093 ,420 24 ,723 ,894 224,817 ,3141 95 ,2 23 ,8 6 0 2 7,7 34 ,7 14 2 22 ,9 58 ,5 7 4

4.1 The aggregate market value of held to maturity securities as on 31 M arch 2012 amounts to Rs. 75,674 (31 December 2011: 91,084

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5. ADVANCES

Loans, cash credits, running finances, etc.In Pakistan 112,977,075 101,971,343Outside Pakistan 4,512,980 4,325,819

117,490,055 106,297,162

Net investment in finance lease / ijarah financingIn Pakistan 455,955 426,351Outside Pakistan 00 00

455,955 426,351

Ijarah financing under IFAS 2 251,807 109,668

Murabaha 2,334,801 2,007,557Bills discounted and purchased

(excluding market treasury bills)Payable in Pakistan 1,730,147 1,928,992Payable outside Pakistan 9,040,668 9,233,700

10,770,815 11,162,692

Advances - gross 131,303,433 120,003,430Provision against non-performing loans and advancesSpecific provision 5.1 (2,917,372) (2,998,847)General provision against consumer advances

(as per SBP regulations) 5.2 (32,331) (32,331)General provision 5.3 (2,450,000) (2,100,000)

(5,399,703) (5,131,178)

Advances - net of provisions 125,903,730 114,872,252

5.1 Advances include Rs. 3,190.984 (31 December 2011: Rs. 3,203.630) million which have beenplaced under non-performing status as detailed below:

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31-March 2012 (Un-Aud i ted )

C las s i f ied advance s P rov i s ion r equ i r ed P rov i s ion he ldD om es tic O ve rs e as To ta l D om es tic O ve rs ea s To ta l D om es tic O ve rs ea s To ta l

(Rupees i n ' 000 )Category of classificationSubstandard 17 ,4 49 0 0 1 7 ,44 9 2 ,9 60 0 0 2 ,9 60 2 ,9 6 0 0 0 2 ,960Doubtful 1 45 ,5 45 0 0 1 4 5 ,54 5 7 1 ,0 62 0 0 7 1 ,0 62 71 ,0 6 2 0 0 71 ,062Loss 3 ,0 26 ,4 86 1 ,5 04 3 ,0 27 ,9 90 2 ,8 41 ,8 46 1 ,5 04 2 ,8 43 ,3 50 2 ,8 41 ,8 46 1 ,5 04 2 ,8 43 ,3

3 ,1 89 ,4 80 1 ,5 04 3 ,1 90 ,9 84 2 ,9 15 ,8 68 1 ,5 04 2 ,9 17 ,3 72 2 ,9 15 ,8 68 1 ,5 04 2 ,9 17 ,3


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31-Decemb er 2011 (Audi ted)Class i fied adva nces Provis ion requi red Provis ion he ld

D om estic O versea s To ta l D om estic O versea s To ta l D om estic O versea s T(Rupees in '000)

Category of classificationSubstandard 56,537 0 56,537 14 ,134 0 14,134 14 ,134 0 14,134Doubtful 100,467 0 100,467 48 ,520 0 48,520 48 ,520 0 48,520Loss 3 ,0 45 ,1 33 1 ,4 93 3 ,0 46 ,6 26 2 ,9 34 ,7 00 1 ,4 93 2 ,9 36 ,1 93 2 , 93 4,7 00 1 ,4 93 2 ,9

3 ,2 0 2,1 3 7 1 ,4 9 3 3 ,2 0 3, 63 0 2 ,9 9 7, 35 4 1 ,4 9 3 2 ,9 9 8, 84 7 2,9 9 7,3 5 4 1 ,4 9 3 2 ,9

5.2 The Bank has made general provision for consumer portfolio as required by SBP'sPrudential Regulations amounting to Rs. 32.331 (31 December 2011: Rs. 32.331)million.

5.3 In line with its prudent policies, the Bank has also made general provision of Rs. 350million during the period, bringing the total of such provision to Rs. 2,450 (31 December2011: Rs. 2,100) million against its loans and advances portfolio. This general provisionis in addition to the requirements of the Prudential Regulations.


2012 2011

(Un-Audited)(Rupees in 000)

6. OPERATING FIXED ASSETS

6.1 Additions during the period - at cost:

Leasehold land 391 12,133Buildings on leasehold land 30,941 21,393Improvements to leasehold buildings 21,425 13,588Furniture and fixtures 3,507 6,675Electrical, office and computer equipments 42,122 80,332Vehicles 2,171 22,163Intangible assets 2,321 340

102,878 156,624

6.2 Deletions during the period - at cost:

Furniture and fixtures 888 00Electrical, office and computer equipments 7,703 361Vehicles 18,733 17,198

27,324 17,559


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31-March 31-December2012 2011

(Un-Audited) (Audited)(Rupees in 000)

7. BORROWINGS

SecuredBorrowings from State Bank of Pakistan

Export refinance scheme 12,140,693 11,537,652Long term financing for export oriented projects 514,088 568,700Long term financing for imported and locally

manufactured plant and machinery 3,406,973 3,322,617Financing facility for storage of agricultural produce 59,628 71,554

16,121,382 15,500,523Repurchase agreement borrowings 24,678,843 27,712,777

40,800,225 43,213,300

UnsecuredOverdrawn nostros 4,090,290 48,403Borrowings from financial institutions 453,308 179,891

4,543,598 228,294

45,343,823 43,441,594

8. DEPOSITS AND OTHER ACCOUNTS

CustomersFixed deposits 114,035,089 120,176,785Savings deposits 80,795,119 70,196,707Current accounts - Remunerative 30,470,134 26,524,367Current accounts - Non-remunerative 83,142,764 78,697,621

308,443,106 295,595,480

Financial InstitutionsRemunerative deposits 5,122,202 6,267,220Non-remunerative deposits 299,491 235,894

5,421,693 6,503,114

313,864,799 302,098,594


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9. SUB-ORDINATED LOANS - unsecured

Term Finance Certificates (TFCs) - I (Quoted) 9.1 448,826 897,658Term Finance Certificates (TFCs) - II (Quoted) 9.2 1,497,000 1,497,300Term Finance Certificates (TFCs) - III (Unquoted) 9.3 1,995,600 1,996,000Term Finance Certificates (TFCs) - IV (Unquoted) 9.4 2,999,400 2,999,400

6,940,826 7,390,358

9.1 Term Finance Certificates - I (Quoted)

Total issue Rupees 1,350 millionRating AARate Payable six monthly at average six months KIBOR plus 150 bpsFloor 3.50% p.a.Ceiling 10.00% p.a.Redemption 6 - 78th month: 0.25%; 84th, 90th and 96th month: 33.25% eachTenor 8 years

Maturity July 2012

9.2 Term Finance Certificates - II (Quoted)

Total issue Rupees 1,500 millionRating AARate Payable six monthly at average six months KIBOR plus 1.95%

without any floor and capRedemption 6 - 84th month: 0.28%; 90th and 96th month: 49.86% eachTenor 8 yearsMaturity February 2015

9.3 Term Finance Certificates - III (Unquoted)

Total issue Rupees 2,000 millionRating AARate Payable three monthly at 15.50% p.a. for first 5 years and 16.00%

p.a. for next 3 yearsRedemption 3rd - 84th month: 0.56%; 87th, 90th, 93rd and 96th month: 24.86%

eachTenor 8 yearsMaturity June 2017

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10. SURPLUS ON REVALUATION OF ASS ETS- NET OF TAX

Operating fixed assets 10.1 1,793,921 1,803,278Available for sale investments 10.2 98,516 213,515

1,892,437 2,016,79310.1 Operating fixed assets

Surplus on revaluation of land and buildings 2,425,129 2,439,525Related deferred tax liability (631,208) (636,247)

1,793,921 1,803,278

10.2 Available for sale investments

Federal Government Securities 117,319 319,757Fully paid-up ordinary shares (13,052) (8,468)Term finance certificates, sukuks and bonds (5,091) (19,380)Open ended mutual funds 31,305 15,753

130,481 307,662

Related deferred tax liability (31,965) (94,147)

98,516 213,515

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9.4 Term Finance Certificates - IV (Unquoted)

Total issue Rupees 3,000 millionRating AARate Payable six monthly at 15.00% p.a. for first 5 years and 15.50%

p.a. for next 5 yearsRedemption 6th - 108th month: 0.36%; 114th and 120th month: 49.82% eachTenor 10 yearsMaturity June 2021


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11. CONTINGENCIES AND COMMITMENTS

11.1 Direct Credit Substitutes

Financial institutions 111,643 79,615Others 263,599 446,014

375,242 525,629

11.2 Transaction-related Contingent Liabilities

Government 8,741,135 8,008,832Financial institutions 127,625 115,461Others 4,311,888 4,544,785

13,180,648 12,669,078

11.3 Trade-related Contingent Liabilities

Letters of credit 35,046,234 32,838,848

Acceptances 6,324,548 7,104,54941,370,782 39,943,397

11.4 Other Contingencies

The income tax returns of the Bank have been submitted upto and including the Bank'sfinancial year 2010. The income tax assessments of the Bank have been made by thetax authorities upto and including the assessment / tax year 2008 and 2010. For thetax year 2009, proceedings u/s 122(5A) of the Income Tax Ordinance, 2001 wereinitiated against which the Bank has filed writ petition before Lahore High Court, MultanBench. The Honourable Court has stayed the proceedings.

For tax years, 2005 to 2008, the CIT Appeals has passed appellate orders by disallowingcertain expenses / deductions (including bad debts written-off directly, improvementin leasehold premises, provision against non-performing loans and advances) havingan aggregate tax impact of Rs. 44.256 million. The Bank has preferred an appealbefore ITAT against the above referred orders of the CIT Appeals.

The management, based on the opinion of its tax advisor, is confident about thefavourable outcome of the above matters and hence, no additional provision has beenconsidered necessary in these interim condensed financial statements.


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17


(Un-Audited) (Audited)

(Rupees in 000)11.5 Commitments in respect of forward lending

Commitments to extend credit 1,178,601 15,603

11.6 Commitments in respect of forward exchangecontracts

Purchase 22,829,717 28,032,085

Sale 15,123,718 25,331,776

11.7 Commitments for the acquisition of operatingfixed assets 256,322 124,899


2012 2011(Un-Audited)

(Rupees in 000)

12. MARK-UP / RETURN / INTEREST EARNED

On loans and advances to:Customers 3,375,328 3,718,151Financial institutions 25,353 63,070

3,400,681 3,781,221On investments:Available for sale securities 3,142,353 2,176,982Held to maturity securities 3,956,331 2,207,149

7,098,684 4,384,131

On deposits with financial institutions 14,602 12,738On securities purchased under resale agreements 23,534 71,768On call money lendings 387 1,313

10,537,888 8,251,171


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18

14. INCOME FROM DEALING IN FOREIGN CURRENCIES

Cost of local currency funds generated from FX transactions, amounting to Rs. 185.047(March 2011: Rs. 3.111) million, is included in mark-up / return / interest expensed -others. Comparative figures for corresponding period last year have accordingly beenre-classified.

15. BASIC AND DILUTED - EARNINGS PER SHARE

The weighted average number of shares for 2011 has been adjusted for the effect ofbonus shares issued during the period.

16. RELATED PARTY TRANSACTIONS

Related parties of the Bank comprise subsidiary, associates (including entities havingdirectors in common with the Bank), retirement benefit funds, major shareholders,directors and key management personnel and their close family members.

Transactions with related parties are carried out on an arm's length basis in terms ofthe policy as approved by the Board of Directors. The transactions with employees ofthe Bank are carried out in accordance with the terms of their employment.

Three months period endedNote 31-March 31-March


(Rupees in 000)

13. MARK-UP / RETURN / INTEREST EXPENSED

Deposits 4,881,173 4,232,191Sub-ordinated loans 256,023 166,121Repurchase agreement borrowings 1,079,626 113,861Borrowings from SBP 380,298 413,113Others 14 192,771 16,752

6,789,891 4,942,038


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19

31-M arch 201 2 (U n-A udited)Subsid iary A ssociates N on K ey R etirem en t Total

E x ec u tiv e M a n ag e m e n t B e n ef itD irectors P ers on nel F un ds

(Rupees in 000)Deposits

At the beginning of the period 1,494 1,438,356 86 ,815 275,992 118,882 1,921,539P lacem ents during the period 45,305 29,300,825 208 ,591 329,594 325,975 30,210,290W ithdraw als during the period (38,743 ) (29,917,868 ) (215 ,094 ) (316,755 ) (311,384 ) (30,799,844 )

At the end of the period 8,056 821,313 80,312 288,831 133,473 1,331,985

Advances

At the beginning of the period 9,380 1,404,261 426 30,252 00 1,444,319Given during the period 82,458 680,471 710 5,524 00 769,163Repaid during the period (91,838 ) (722,764 ) (1,109) (3,931) 00 (819,642)

At the end of the period 00 1,361,968 27 31,845 00 1,393,840

Contingencies and com mitm ents 00 761,404 00 00 00 761,404

Transactions with related parties during the period, are summarised as follows:

31-December 2011 (Audited)Subsidiary Associates Non K ey Retirement Total

E xecutive M anagem ent BenefitDirectors P ersonnel Funds


At the beginning of the year 20,009 1,687,940 13,638 126,804 310,525 2,158 ,916P lacem ents during the year 3,883,764 56 ,377,143 2,732,759 657,330 3,789,104 67,440,100W ithdraw als during the year (3,902,279 ) (56 ,626,727 ) (2,659,582) (508,142) (3,980,747 ) (67,677 ,477 )

At the end of the year 1,494 1,438,356 86 ,815 275,992 118 ,882 1,921,539

Advances

At the beginning of the year 00 369,808 214 17,525 00 387,547Given during the year 33,542 3,131,625 1,653 29,980 00 3,196,800Repaid during the year (24,162 ) (2,097,172) (1,441) (17,253) 00 (2,140,028)

At the end of the year 9,380 1,404,261 426 30,252 00 1,444,319

Contingencies and com mitm ents 00 518,781 00 00 00 518,781


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20

Three m onths period end ed 31-M arch 2012 (Un-Audited)

Subsidiary Associates Non Key Retirem ent TotalE xe cu tiv e M a na ge m e nt B en ef itD irectors Personnel Funds

(Rupees in 000)

P urchase of fixed assets 00 551 00 00 00 5 51S a le of securities 00 00 00 00 00 00M ark-u p earned 204 50,184 00 410 00 50,798M ark-up expensed 15 4 15 ,759 1 ,322 4 ,132 4 ,073 25 ,4 40Bank charges and com m ission 00 998 2 12 00 1,012

Loss on sale of securitie s 00 00 00 00 00 00S a laries and a llow ances 00 00 00 35 ,953 00 35,953Bonus 00 00 00 7 ,333 00 7,333Contribution to definedcontribution plan 00 00 00 1,474 00 1,474

Contribution to definedbenefit p lan 00 00 00 873 00 8 73

S taff p roviden t fund 00 00 00 00 33 ,6 19 33 ,6 19S taff g ratuity fund 00 00 00 00 30 ,000 30 ,000D irectors ' fee 00 00 6 00 00 00 6 00Insurance c la im received 00 3,326 00 00 00 3,326Insurance prem ium paid 00 34 ,435 00 00 00 34,435D ividend incom e 00 40,463 00 00 00 40,463R ental incom e 737 00 00 00 00 7 37C om m ission expensed 8 1 00 00 00 00 81

Three months period ended 31-March 2011 (Un-Audited)Subsidiary Associates Non Key Retirement Total

E xecutive M anagement BenefitDirectors Personnel Funds

(Rupees in 000)

Purchase of fixed assets 00 694 00 00 00 694Sale of securities 00 37 ,748 00 00 00 37,748M ark-up earned 00 7 ,303 00 264 00 7,567M ark-up expensed 309 22,519 374 1,851 20,060 45 ,113Bank charges and commission 13 1,479 00 11 00 1,503Loss on sale of securities 00 (1,523 ) 00 00 00 (1,523)Salaries and allow ances 00 00 00 24 ,978 00 24,978Bonus 00 00 00 4 ,943 00 4,943Contribution to definedcontribution plan 00 00 00 974 00 97 4

Contribution to definedbenefit plan 00 00 00 520 00 520

S taff provident fund 00 00 00 00 27 ,852 27 ,852S taff gratuity fund 00 00 00 00 25 ,950 25 ,950Directors ' fee 00 00 650 00 00 650Insurance claim received 00 3,115 00 00 00 3,115Insurance prem ium paid 00 24 ,639 00 00 00 24,639Dividend income 00 25 ,703 00 00 00 25,703Rental incom e 610 00 00 00 00 610Comm ission expensed 11 00 00 00 00 11


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21

17. ISLAMIC BANKING BUSINESS

The Bank is operating 11 (31 December 2011: 11) Islamic Banking branches in Pakistan.The statement of financial position of these branches as at 31 March 2012 is as follows:



ASSETS

Cash and balances with treasury banks 257,713 270,353Balances with and due from financial institutions 1,606 494,968Investments 1,229,665 1,362,945Financing and receivables

Murabaha 2,084,563 1,848,829 Ijarah 279,439 154,480 Diminishing musharika 1,884,637 2,099,681 Export refinance murabaha 250,238 158,727 Export refinance istisna 1,105,220 1,086,631 Istisna 659,341 11,102

Other assets 647,506 832,1758,399,928 8,319,891

LIABILITIES

Bills payable 43,007 29,886Due to financial institutions 1,342,886 1,192,491Deposits and other accounts Current accounts 1,219,488 986,652 Saving accounts 493,297 519,840 Term deposits 3,658,700 3,612,383 Others 9,225 12,832 Deposits from financial institutions-remunerative 317,774 315,594 Deposits from financial institutions-non-remunerative 423 562

Due to head office 154,125 195,478Other liabilities 178,481 180,097

7,417,406 7,045,815

NET ASSETS 982,522 1,274,076

REPRESENTED BY:

Islamic banking fund 900,000 900,000Unremitted profit 81,922 372,106

981,922 1,272,106Surplus on revaluation of assets 600 1,970

982,522 1,274,076


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22

18. GENERAL

Corresponding figures have been re-arranged / re-classified wherever necessary, forthe purpose of comparison.

19. DATE OF AUTHORISATION

These interim condensed financial statements were authorised for issue by the Boardof Directors in their meeting held on April 24, 2012.


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23

Bank AL Habib Limited

and

Subsidiary Company

Consolidated Financial Statements


24/42

24



ASSETSCash and balances with treasury banks 23,040,989 22,957,988Balances with other banks 9,163,730 6,744,643

Lendings to financial institutions 00 000Investments 4 224,930,659 223,105,101Advances 5 125,904,020 114,863,132Operating fixed assets 6 10,762,814 10,791,345Deferred tax assets 00 000Other assets 5,231,319 6,063,405

399,033,531 384,525,614

LIABILITIESBills payable 4,859,053 4,979,720Borrowings 7 45,343,823 43,441,594Deposits and other accounts 8 313,857,924 302,097,187Sub-ordinated loans 9 6,940,826 7,390,358Liabilities against assets subject to finance lease 00 28Deferred tax liabilities 1,191,464 1,232,433Other liabilities 7,892,815 5,373,006

380,085,905 364,514,326

NET ASSETS 18,947,626 20,011,288

REPRESENTED BY :Share capital 10,103,868 8,785,972Reserves 5,572,235 5,324,689Unappropriated profit 1,262,866 3,767,998

Equity attributable to the shareholders of theHolding company 16,938,969 17,878,659

Non-controlling interest 109,948 109,782Total equity 17,048,917 17,988,441

Surplus on revaluation of assets - net of tax 10 1,898,709 2,022,847

18,947,626 20,011,288

CONTINGENCIES AND COMMITMENTS 11

The annexed notes 1 to 19 form an integral part of these consolidated interim condensed financial statements.

CONSOLIDATED INTERIM CONDENSED STATEMENT OF FINANCIAL POSITIONAS AT 31 MARCH 2012






25/42

Note Three months period ended31-March 31-March

2012 2011(Rupees in '000)

Mark-up / return / interest earned 12 10,542,933 8,257,624Mark-up / return / interest expensed 13 (6,789,737) (4,941,729)

Net mark-up / return / interest income 3,753,196 3,315,895

Provision against non-performing loans and advances 5.3 (269,178) (484,189)Provision for diminution in the value of investments 14 5Bad debts written-off directly 00 00

(269,164) (484,184)Net mark-up / return / interest income after provisions 3,484,032 2,831,711

NON MARK-UP / INTEREST INCOMEFees, commission and brokerage income 374,577 330,082Dividend income 54,609 9,376Income from dealing in foreign currencies 14 121,922 160,410Gain on sale / redemption of securities - net 355 133Unrealised gain / (loss) on revaluation of investments

classified as held for trading 00 00Share of profit from associates 68,657 24,327Other income 107,988 100,426

Total non mark-up / interest income 728,108 624,754

4,212,140 3,456,465NON MARK-UP / INTEREST EXPENSES

Administrative expenses (2,118,357) (1,765,954)Other provisions / write-offs 00 (5,063)Other charges (45,357) (33,764)

Total non mark-up / interest expenses (2,163,714) (1,804,781)2,048,426 1,651,684

Extra-ordinary / unusual items 00 00PROFIT BEFORE TAXATION 2,048,426 1,651,684

Taxation - Current (785,010) (524,772)- Prior years 00 00- Deferred (21,214) (91,557)

(806,224) (616,329)PROFIT AFTER TAXATION 1,242,202 1,035,355

Attributable to:Shareholders of the Holding company 1,242,036 1,035,250Non-controlling interest 166 105

1,242,202 1,035,355

RestatedBasic and diluted earnings per share attributable to

shareholders of the Holding company Rupees 1.23 1.02


CONSOLIDATED INTERIM CONDENSED PROFIT AND LOSS ACCOUNT (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012

25






26/42


2012 2011(Rupees in '000)

Net profit for the period 1,242,202 1,035,355

Other comprehensive income

Effect of foreign currency translation of netinvestment in foreign branch 5,410 (1,651)

Total comprehensive income for the period 1,247,612 1,033,704

Attributable to:

Shareholders of the Holding Company 1,247,446 1,033,599Non-controlling interest 166 105

1,247,612 1,033,704


CONSOLIDATED INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME(UN-AUDITED) FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012





26


27/42

Att ribu tab le to the shareholders of the Hold ing Com panyRevenue Reserves

S h are S tatu to ry S p ec ia l G en era l F o re ig n C u rren cy U n ap p ro Tota l N o n- To ta lC ap ita l R eserve R eserve R eserve Tran s latio n -p ria ted co n tro llin g E q u ity

R eserve P ro fit in te res t(Rupees in 000)

B a la n ce a s a t 0 1 J a nu a ry 2 011 7 ,3 21 ,6 43 3 ,6 34 ,1 73 1 26 ,5 00 5 40 ,0 00 9 1,5 91 3 ,0 30 ,1 99 1 4,7 44 ,1 06 1 10 ,3 34

Tota l comprehens ive incomefo r th e perio d 00 00 00 00 (1 ,651 ) 1,035 ,250 1,033 ,599 105 1,033,704

Transfer from surplus on revaluation offixed a sse ts - ne t o f ta x 00 00 00 00 00 7,678 7,678 00 7,678

Tra nsfer to sta tu to ry reserve 00 206,964 00 00 00 (206 ,964) 00 00 00

C a sh d iv id end (R s. 2 per sha re) 00 00 00 00 00 (1,464 ,329) (1 ,464 ,329) 00 (1,464,329)Issue of bonus sh ares in the rat io of 20

sh a res fo r every 100 sh a res h e ld 1 ,464 ,329 00 00 00 00 (1 ,464 ,329) 00 00 00

B ala nc e a s a t 3 1 M a rc h 2 011 8 ,7 85 ,9 72 3 ,8 41 ,1 37 1 26 ,5 00 5 40 ,0 00 8 9,9 40 9 37 ,5 05 1 4,3 21 ,0 54 11 0,4 39

Tota l comprehens ive incomefo r th e perio d 00 00 00 00 27,380 3,502 ,406 3,529 ,786 (657 ) 3 ,529 ,129


Tra nsfer to sta tu to ry reserve 00 699,732 00 00 00 (699 ,732) 00 00 00B a la n ce a s a t 3 1 D e ce m b er 2 011 8 ,7 85 ,9 72 4 ,5 40 ,8 69 1 26 ,5 00 5 40 ,0 00 11 7,3 20 3 ,7 67 ,9 98 1 7,8 78 ,6 59 1 09 ,7

Tota l comprehens ive incomefo r th e perio d 00 00 00 00 5,410 1 ,242 ,036 1,247 ,446 166 1,247 ,612


Tra nsfer to sta tu to ry reserve 00 242,136 00 00 00 (242 ,136) 00 00 00

C a sh d iv id end (R s. 2 .5 per sh a re) 00 00 00 00 00 (2 ,196 ,493) (2 ,196 ,493) 00 (2,196,493)Issue of bonus sh ares in the rat io of 15

sh a res fo r every 100 sh a res h e ld 1 ,317 ,896 00 00 00 00 (1 ,317 ,896) 00 00 00

B ala nc e a s a t 3 1 M a rc h 2 01 2 1 0,1 03 ,8 68 4 ,7 83 ,0 05 1 26 ,5 00 5 40 ,0 00 1 22 ,7 30 1 ,2 62 ,8 66 1 6,9 38 ,9 69 1 09 ,9 4

The a nnexed notes 1 to 19 form a n in tegra l par t of these consol idated in terim conde nsed f inancia l s ta tements .

CO NSO LIDATED INTE RIM C O NDE NS ED S TATEM EN T O F CH ANG ES IN E QUITY (UN-AUDITED)FO R T HE THRE E M O NTHS PER IO D EN DED 31 M ARCH 2012

27






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N o t e 31-M arch 31-March2012 2011

CAS H FLO W F RO M O PER ATING A CTIVITIES (Rupees in '000)Profit before taxation 2,048,426 1,651,684Dividend income (54,609 ) (9,376)

1,993,817 1,642,308Adjustments for non-cash items:

Depreciation 198,061 181,887Amortisation 7,340 10,570Provision against non-performing loans and advances 269,178 484,189Reversal for diminution in the value of investments (14 ) (5 )Gain on sale / redemption of securities (355 ) (133)Provision for defined benefit plan 30,000 25,950Provision for compensated absences 6,130 10,439Gain on sale of operating fixed assets (16,066 ) (17,527)Share of profit form associates (68,657 ) (24,327)Provision against off-balance sheet items 5,063Financial charges on leased assets 1 13

425,618 676,1192,419,435 2,318,427

(Increase) / decrease in operating assetsLendings to financial institutions (7,691,645)Advances (11,310,078 ) (4,491,248)Other assets 858,401 (689,320)

(10,451,677 ) (12,872,213)Increase / (dec rease) in operating liabilities

Bills payable (120,667 ) 463,443Borrowings (2,139,658 ) 10,305,930Deposits and other accounts 11,760,737 8,408,324Other liabilities (excluding provision for taxation) 169,092 380,664

9,669,504 19,558,3611,637,262 9,004,575

Income tax paid (458,575 ) (541,463)Net cash flow from operating activities 1,178,687 8,463,112

CAS H FLO W FR O M INVE STING AC TIVITIESNet investments in available for sale securities (17,039,719 ) (14,263,229)Net investments in held to maturity securities 15,068,537 5,724,832Net investments in associates 37,702 (32,714)Dividend received 26,391 7,459Investments in operating fixed assets (176,196 ) (195,641)Sale proceeds of operating fixed assets 17,299 19,612

Net cash used in investing activities (2,065,986 ) (8,739,681)

CAS H FLO W F RO M FINAN CING ACT IVITIES

Payments of sub-ordinated loans (449,532 ) (970)Payments of lease obligations (29 ) (203)Dividend paid (208,349 ) (1,007,558)

Net cash used in financing activities (657,910 ) (1,008,731)Exchange adjustment on translation of net investment in foreign branch 5,410 (1,651)Decrease in cash and cash equivalents (1,539,799 ) (1,286,951)Cash and cash equivalents at the beginning of the period 29,654,228 19,917,173Cash and cash equivalents at the end of the period 28,114,429 18,630,222


CONSOLIDATED INTERIM CONDENSED CASH FLOW STATEMENT (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012





28


29/42

NOTES TO THE CONSOLIDATED INTERIM CONDENSED FINANCIAL STATEMENTS(UN-AUDITED) FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012

29

1. STATUS AND NATURE OF BUSINESS

The Group consists of :

- Bank AL Habib Limited (Holding Company)- AL Habib Capital Markets (Private) Limited (Subsidiary Company)

Bank AL Habib Limited (the Bank) was incorporated in Pakistan on 15 October 1991 as a publiclimited company under the Companies Ordinance, 1984 having its registered office at 126-C, OldBahawalpur Road, Multan with principal place of business in Karachi. Its shares are listed on allthe Stock Exchanges in Pakistan. It is a scheduled bank principally engaged in the business ofcommercial banking with a network of 294 branches (31 December 2011: 290 branches), 64 sub-branches (31 December 2011: 61) and 02 representative offices (31 December 2011: 02).Thebranch network of the Bank includes a wholesale branch in the Kingdom of Bahrain (31 December2011:01), a branch in Karachi Export Processing Zone (31 December 2011:01) and 11 IslamicBanking branches (31 December 2011: 11). The Bank has invested in 66.67% shares of AL HabibCapital Markets (Private) Limited. The principal objective of the company is to engage in thebusiness of equity, money market and foreign exchange, brokerage, equity research and corporatefinancial advisory and consultancy services. AL Habib Capital Markets (Private) Limited (theCompany) was incorporated in Pakistan as a (Private) Limited Company on 23 August 2005 underthe Companies Ordinance, 1984 and started operations from 14 December 2005.

2. STATEMENT OF COMPLIANCE

2.1 These consolidated interim condensed financial statements have been prepared, in accordancewith the requirements of the International Accounting Standard (IAS) 34 - 'Interim FinancialReporting', provisions of the Companies Ordinance, 1984, the Banking Companies Ordinance,1962and regulations / directives issued by the Securities and Exchange Commission of Pakistan (SECP)and the State Bank of Pakistan (SBP). In case where requirements differ, the provisions of theCompanies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the said directiveshave been followed.

2.2 SBP vide BSD Circular No. 10, dated 26 August 2002 has deferred the applicability of IAS 39,"Financial Instruments: Recognition and Measurement" and IAS 40, "Investment Property" forbanking companies till further instructions. Further, according to the notification of SECP dated28 April 2008, International Financial Reporting Standard (IFRS) - 7 "Financial Instruments:Disclosure" has not been made applicable for banks. Accordingly, the requirements of thesestandards have not been considered in the preparation of these financial statements. However,investments have been classified, accounted for and valued in accordance with the requirementof various circulars issued by SBP.

2.3 The disclosures made in these consolidated interim condensed financial statements have beenlimited based on the format prescribed by SBP vide BSD Circular Letter No. 2, dated 12 May 2004

and IAS 34 "Interim Financial Reporting" and do not include all the information required in theannual financial statements. Accordingly, these consolidated interim condensed financial statementsshould be read in conjunction with the annual financial statements of the Group for the year ended31 December 2011.

3. ACCOUNTING POLICIES

3.1 The accounting policies adopted in the preparation of these consolidated interim condensedfinancial statements are consistent with those applied in the preparation of the annual financialstatements of the Group for the year ended 31 December 2011.

3.2 The basis of consolidation of the financial statements of subsidiary is same as that applied in thepreparation of the consolidated financial statements of the Group for the year ended 31 December2011.


30/42

31-M arch 201 2 (U n-A udited) 31-December 2011 (Audi ted)Note H eld by G iven as To ta lH eld by G iven as To ta l

B a nk C o lla te ra l Bank C olla teral(Rupees in '000)

4 . I N V E S T M E N T S

Available for Sale Secu rities Market Treasury Bills 98 ,528 ,454 24 ,633 ,573 123,162 ,0277 8,7 15 ,6 41 27 ,5 88 ,8 55 1 06 ,30 4,4 96Pakistan Investment Bonds 14,638,279 00 14,638,27914 ,617 ,483 00 14,617,483Foreign Currency Bonds 1,273,782 00 1,273,782 979,474 00 979,474Sukuks 3,854,029 00 3,854,029 6 ,947 ,740 00 6,947,740Ordinary shares of listed companies86,474 00 86,474 151,110 00 151,110Ordinary shares of unlisted companies39,570 00 39,570 39,570 00 39,570Listed term finance c ertificates 560,261 00 560,261 584 ,461 00 584,461Unlisted term finance certificates249,920 00 249,920 249,920 00 249,920Open ended mutual funds 4,528,000 00 4,528,000 1,478 ,000 00 1,478,000

123,758,769 24 ,633 ,573 148 ,392 ,3421 03 ,7 6 3,3 99 2 7,5 8 8,8 5 5 1 31 ,3 52 ,2 54

Held to M aturity Securities 4.1Market Treasury Bills 61,221,436 00 61,221,436 76 ,260,132 00 76,260,132Pakistan Investment Bonds 13,519,538 00 13,519,53813,482,722 00 13,482,722Sukuks 264,088 00 264,088 266,900 00 266,900Listed term finance c ertificates 321,503 00 321,503 343,681 00 343,681Unlisted term finance certificates83,333 00 83,333 125,000 00 125,000

75 ,409,898 00 75,409,89890,478,435 00 90,478,435Associates Habib Sugar M ills Limited 271,789 00 271,789 248,315 00 248,315Habib Asset Management Limited36,280 00 36,280 35,254 00 35,254First Habib Income F und 538,888 00 538,888 541,283 00 541,283First Habib Stock Fund 51,620 00 51,620 44,149 00 44,149First Habib Cash Fund 103,783 00 103,783 104,094 00 104,094

1,002,360 00 1,002,360 973,095 00 973,095

In ve stm e nts a t c os t 20 0,1 71,0 27 2 4,6 33 ,5 73 22 4,8 04,6 001 95 ,2 14 ,9 29 2 7,5 8 8,8 5 5 2 22 ,8 03 ,7 8 4Provision for diminution in

the value of investments (6 ,586 ) 00 (6,586 ) (6 ,600 ) 00 (6,600)

Inves tm en ts (net o f p rovi sions ) 200,164 ,441 24 ,633 ,573 224,798,0141 95 ,2 08 ,3 29 2 7,5 8 8,8 5 5 2 22 ,7 97 ,1 84

Surplus on revaluation of availablefor sale investments - net 42,324 90,321 132,645162,058 145 ,859 307 ,917

Investm ents after revaluation of avai lab le fo r s a le i nves tm en ts 200,206 ,765 24 ,723 ,894 224,930 ,6591 95 ,3 70 ,3 87 2 7,7 34 ,7 14 2 23 ,1 05 ,1 01

4.1 The aggregate market value of held to maturity securities as on 31 M arch 2012 amounts to Rs. 75,860 (31 December 2011: 91,265

30


31/42



5. ADVANCES

Loans, cash credits, running finances, etc.In Pakistan 112,977,365 101,962,223Outside Pakistan 4,512,980 4,325,819

117,490,345 106,288,042

Net investment in finance lease / ijarah financingIn Pakistan 455,955 426,351Outside Pakistan 00 00

455,955 426,351

Ijarah financing under IFAS 2 251,807 109,668

Murabaha 2,334,801 2,007,557Bills discounted and purchased

(excluding market treasury bills)Payable in Pakistan 1,730,147 1,928,992Payable outside Pakistan 9,040,668 9,233,700

10,770,815 11,162,692

Advances - gross 131,303,723 119,994,310Provision against non-performing loans and advancesSpecific provision 5.1 (2,917,372) (2,998,847)General provision against consumer advances

(as per SBP regulations) 5.2 (32,331) (32,331)General provision 5.3 (2,450,000) (2,100,000)

(5,399,703) (5,131,178)

Advances - net of provisions 125,904,020 114,863,132

5.1 Advances include Rs. 3,190.984 (31 December 2011: Rs. 3,203.630) million which have beenplaced under non-performing status as detailed below:

31

31-March 2012 (Un-Aud i t ed )

C las s i f ied advance s P rov i s ion r equ i r ed P rov i s ion he ldD om es tic O vers e as To ta l D om es tic O ve rs e as To ta l D om es tic O ve rs e as To ta l

(Rupees in '000)Category of classificationSubstandard 17 ,4 4 9 00 1 7 ,44 9 2 ,9 6 0 00 2 ,9 6 0 2 ,96 0 00 2 ,960Doubtful 1 45 ,5 4 5 00 1 4 5 ,54 5 71 ,0 6 2 00 71 ,0 6 2 7 1 ,06 2 00 71 ,062Loss 3 ,0 26 ,4 86 1 ,5 04 3 ,0 27 ,9 90 2 ,8 41 ,8 46 1 ,5 04 2 ,8 43 ,3 50 2 ,8 41 ,8 46 1 ,5 04 2 ,8 4

3 ,1 89 ,4 80 1 ,5 04 3 ,1 90 ,9 84 2 ,9 15 ,8 68 1 ,5 04 2 ,9 17 ,3 72 2 ,9 15 ,8 68 1 ,5 04 2 ,9 1


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31-December 2011 (Aud i t ed )C las s i f ied adva nces P rov i s ion r equ i r ed P rov i s ion he ld

D o m es tic O v ers ea s To ta l D o m es tic O v ers ea s To ta l D o m es tic O v ers ea s To t(Rupees i n ' 000 )

Category of classificationSubstandard 5 6 ,53 7 0 56 ,5 3 7 1 4 ,13 4 0 14 ,1 3 4 1 4 ,13 4 0 14 ,134Doubtful 1 0 0 ,46 7 0 1 00 ,4 6 7 4 8 ,52 0 0 48 ,5 20 4 8 ,52 0 0 48 ,520Loss 3 ,0 4 5 ,1 3 3 1 ,4 9 3 3 ,0 4 6 ,6 2 6 2 ,9 3 4 ,7 0 0 1 ,4 9 3 2 , 9 3 6,1 9 3 2 ,9 3 4 ,7 0 0 1 ,4 9 3 2 ,9 3

3 , 2 0 2, 1 3 7 1 , 49 3 3 , 2 03 , 6 3 0 2 , 9 97 , 3 5 4 1 , 49 3 2 , 9 9 8 ,8 4 7 2, 9 9 7 ,3 5 4 1 , 49 3 2 , 9 98

5.2 The Bank has made general provision for consumer portfolio as required by SBP'sPrudential Regulations amounting to Rs. 32.331 (31 December 2011: Rs. 32.331)million.

5.3 In line with its prudent policies, the Bank has also made general provision of Rs. 350million during the period, bringing the total of such provision to Rs. 2,450 (31 December2011: Rs. 2,100) million against its loans and advances portfolio. This general provisionis in addition to the requirements of the Prudential Regulations.


2012 2011

(Un-Audited)(Rupees in 000)

6. OPERATING FIXED ASSETS

6.1 Additions during the period - at cost:

Leasehold land 391 12,133Buildings on leasehold land 30,941 21,393Improvements to leasehold buildings 21,425 13,588Furniture and fixtures 3,507 6,675Electrical, office and computer equipments 42,232 80,416Vehicles 2,171 22,163Intangible assets 2,321 340

102,988 156,708

6.2 Deletions during the period - at cost:

Furniture and fixtures 888 00Electrical, office and computer equipments 7,703 361Vehicles 18,776 17,198

27,367 17,559


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7. BORROWINGS

SecuredBorrowings from State Bank of Pakistan

Export refinance scheme 12,140,693 11,537,652Long term financing for export oriented projects 514,088 568,700Long term financing for imported and locally

manufactured plant and machinery 3,406,973 3,322,617Financing facility for storage of agricultural produce 59,628 71,554

16,121,382 15,500,523Repurchase agreement borrowings 24,678,843 27,712,777

40,800,225 43,213,300

UnsecuredOverdrawn nostros 4,090,290 48,403Borrowings from financial institutions 453,308 179,891

4,543,598 228,294

45,343,823 43,441,594

8. DEPOSITS AND OTHER ACCOUNTS

CustomersFixed deposits 114,035,089 120,176,785Savings deposits 80,795,119 70,196,707Current accounts - Remunerative 30,470,134 26,524,367Current accounts - Non-remunerative 83,142,764 78,697,621

308,443,106 295,595,480

Financial Institutions

Remunerative deposits 5,116,704 6,267,159Non-remunerative deposits 298,114 234,548

5,414,818 6,501,707

313,857,924 302,097,187


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9. SUB-ORDINATED LOANS - unsecured

Term Finance Certificates (TFCs) - I (Quoted) 9.1 448,826 897,658Term Finance Certificates (TFCs) - II (Quoted) 9.2 1,497,000 1,497,300Term Finance Certificates (TFCs) - III (Unquoted) 9.3 1,995,600 1,996,000Term Finance Certificates (TFCs) - IV (Unquoted) 9.4 2,999,400 2,999,400

6,940,826 7,390,358

9.1 Term Finance Certificates - I (Quoted)

Total issue Rupees 1,350 millionRating AARate Payable six monthly at average six months KIBOR plus 150 bpsFloor 3.50% p.a.Ceiling 10.00% p.a.Redemption 6 - 78th month: 0.25%; 84th, 90th and 96th month: 33.25% eachTenor 8 years

Maturity July 2012

9.2 Term Finance Certificates - II (Quoted)

Total issue Rupees 1,500 millionRating AARate Payable six monthly at average six months KIBOR plus 1.95%

without any floor and capRedemption 6 - 84th month: 0.28%; 90th and 96th month: 49.86% eachTenor 8 yearsMaturity February 2015

9.3 Term Finance Certificates - III (Unquoted)

Total issue Rupees 2,000 millionRating AARate Payable three monthly at 15.50% p.a. for first 5 years and 16.00%

p.a. for next 3 yearsRedemption 3rd - 84th month: 0.56%; 87th, 90th, 93rd and 96th month: 24.86%

eachTenor 8 yearsMaturity June 2017

34


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10. SURPLUS ON REVALUATION OF ASS ETS- NET OF TAX

Operating fixed assets 10.1 1,793,921 1,803,278Available for sale investments 10.2 104,788 219,569

1,898,709 2,022,84710.1 Operating fixed assets

Surplus on revaluation of land and buildings 2,425,129 2,439,525Related deferred tax liability (631,208) (636,247)

1,793,921 1,803,278

10.2 Available for sale investments

Federal Government Securities 117,319 319,757Fully paid-up ordinary shares (11,806) (2,610)Term finance certificates, sukuks, bonds and others (983) (19,380)Open ended mutual funds 32,223 15,949

136,753 313,716

Related deferred tax liability (31,965) (94,147)

104,788 219,569

35



9.4 Term Finance Certificates - IV (Unquoted)

Total issue Rupees 3,000 millionRating AARate Payable six monthly at 15.00% p.a. for first 5 years and 15.50%

p.a. for next 5 yearsRedemption 6th - 108th month: 0.36%; 114th and 120th month: 49.82% eachTenor 10 yearsMaturity June 2021


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11. CONTINGENCIES AND COMMITMENTS

11.1 Direct Credit Substitutes

Financial institutions 111,643 79,615Others 263,599 446,014

375,242 525,629

11.2 Transaction-related Contingent Liabilities

Government 8,741,135 8,008,832Financial institutions 127,625 115,461Others 4,311,888 4,544,785

13,180,648 12,669,078

11.3 Trade-related Contingent Liabilities

Letters of credit 35,046,234 32,838,848

Acceptances 6,324,548 7,104,54941,370,782 39,943,397

11.4 Other Contingencies

The income tax returns of the Bank have been submitted upto and including the Bank'sfinancial year 2010. The income tax assessments of the Bank have been made by thetax authorities upto and including the assessment / tax year 2008 and 2010. For thetax year 2009, proceedings u/s 122(5A) of the Income Tax Ordinance, 2001 wereinitiated against which the Bank has filed writ petition before Lahore High Court, MultanBench. The Honourable Court has stayed the proceedings.

For tax years, 2005 to 2008, the CIT Appeals has passed appellate orders by disallowingcertain expenses / deductions (including bad debts written-off directly, improvementin leasehold premises, provision against non-performing loans and advances) havingan aggregate tax impact of Rs. 44.256 million. The Bank has preferred an appealbefore ITAT against the above referred orders of the CIT Appeals.

The management, based on the opinion of its tax advisor, is confident about thefavourable outcome of the above matters and hence, no additional provision has beenconsidered necessary in these consolidated interim condensed financial statements.


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(Un-Audited) (Audited)

(Rupees in 000)11.5 Commitments in respect of forward lending

Commitments to extend credit 1,178,601 15,603

11.6 Commitments in respect of forward exchangecontracts

Purchase 22,829,717 28,032,085

Sale 15,123,718 25,331,776

11.7 Commitments for the acquisition of operatingfixed assets 256,322 124,899



(Rupees in 000)

12. MARK-UP / RETURN / INTEREST EARNED

On loans and advances to:Customers 3,375,136 3,718,151Financial institutions 25,353 63,070

3,400,489 3,781,221On investments:Available for sale securities 3,142,353 2,176,982Held to maturity securities 3,961,550 2,213,596

7,103,903 4,390,578

On deposits with financial institutions 14,620 12,744

On securities purchased under resale agreements 23,534 71,768On call money lendings 387 1,313

10,542,933 8,257,624


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14. INCOME FROM DEALING IN FOREIGN CURRENCIES

Cost of local currency funds generated from FX transactions, amounting to Rs. 185.047(March 2011: Rs. 3.111) million, is included in mark-up / return / interest expensed -others. Comparative figures for corresponding period last year have accordingly beenre-classified.

15. BASIC AND DILUTED - EARNINGS PER SHARE

The weighted average number of shares for 2011 has been adjusted for the effect ofbonus shares issued during the period.

16. RELATED PARTY TRANSACTIONS

Related parties of the Group comprise associates (including entities having directorsin common with the Group), retirement benefit funds, major shareholders, directorsand key management personnel and their close family members.

Transactions with related parties are carried out on an arm's length basis in terms ofthe policy as approved by the Board of Directors. The transactions with employees ofthe Group are carried out in accordance with the terms of their employment.

Three months period endedNote 31-March 31-March


(Rupees in 000)13. MARK-UP / RETURN / INTEREST EXPENSED

Deposits 4,881,019 4,231,882Sub-ordinated loans 256,023 166,121Repurchase agreement borrowings 1,079,626 113,861Borrowings from SBP 380,298 413,113Others 14 192,771 16,752

6,789,737 4,941,729


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31-M arch 2012 (Un-Audited)A ssociates N on Key R etirem ent Total

E x ec u tiv e M a na g em e nt B e ne fi tD irec to rs P ers on nel F un ds


At the beginning of the period 1,438,356 86,815 275,992 118,882 1,920,045

Placements during the period 29,300,825 208,591 329,594 325,975 30,164,985Withdrawals during the period (29,917,868 ) (215,094 ) (316,755 ) (311,384 ) (30,761,101)

At the end of the period 821,313 80,312 288,831 133,473 1,323,929

Advances

At the beginning of the period 1,404,261 426 30,252 00 1,434,939Given during the period 680,471 710 5,524 00 686,705Repaid during the period (722,764 ) (1,109 ) (3,931 ) 00 (727,804)

At the end of the period 1,361,968 27 31,845 00 1,393,840

Contingencies and commitments 761,404 00 00 00 761,404

31-December 2011 (Audited)Associates Non Key R etirement Total

Executive Management BenefitDirectors Personnel Funds


At the beginning of the year 1,687,940 13,638 126,804 310,525 2,138,907Placements during the year 56,377,143 2,732,759 657,330 3,789,104 63,556,336W ithdrawals during the year (56,626,727 ) (2,659,582 ) (508,142 ) (3,980,747 ) (63,775,198)

At the end of the year 1,438,356 86,815 275,992 118,882 1,920,045

Advances

At the beginning of the year 369,808 214 17,525 00 387,547Given during the year 3,131,625 1,653 29,980 00 3,163,258Repaid during the year (2,097,172 ) (1,441 ) (17,253 ) 00 (2,115,866)

At the end of the year 1,404,261 426 30,252 00 1,434,939

Contingencies and commitments 518,781 00 00 00 518,781

Transactions with related parties during the period, are summarised as follows:


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Three m onths period ended 31-M arch 2012 (Un-Audited)A ssociates N on Key R etirement Total

E x ec ut iv e M a na ge m en t B e ne fitD ire cto rs P ers on ne l F un ds

(Rupees in 000)

Purchase of fixed assets 551 00 00 00 55 1Sale of securities 00 00 00 00 00Redemption of mutual funds units 59 00 00 00 59Mark-up earned 50,184 00 410 00 50,594Mark-up expensed 15,759 1,322 4,132 4,073 25,286

Bank charges and commission 998 2 12 00 1,012Gain / (loss) on sale of securities 9 00 00 00 9Salaries and allowances 00 00 39,533 00 39,533Bonus 00 00 7,333 00 7,333Contribution to definedcontribution plan 00 00 1,711 00 1,711

Contribution to definedbenefit plan 00 00 873 00 87 3

Staff provident fund 00 00 00 33,961 33,961Staff gratuity fund 00 00 00 30,000 30,000Directors' fee 00 600 00 00 60 0Insurance claim received 3,326 00 00 00 3,326Insurance premium paid 34,871 00 00 00 34,871Dividend income 40,463 00 00 00 40,463Brokerage and advisory income 326 00 00 00 32 6

Three months period ended 31-March 2011 (Un-Audited)Associates Non Key Retirement Total

Executive Management BenefitDirectors Personnel Funds

(Rupees in 000)

Purchase of fixed assets 694 00 00 00 69 4Sale of securities 37,748 00 00 00 37,748Redemption of mutual funds units 00 00 00 00 00Mark-up earned 7,303 00 264 00 7,567Mark-up expensed 22,519 374 1,851 20,060 44,804Bank charges and commission 1,479 00 11 00 1,490Gain / (loss) on sale of securities (1,523) 00 00 00 (1,523)Salaries and allowances 00 00 28,558 00 28,558Bonus 00 00 4,943 00 4,943Contribution to defined

contribution plan 00 00 1,211 00 1,211Contribution to definedbenefit plan 00 00 520 00 52 0

Staff provident fund 00 00 27,971 27,971Staff gratuity fund 00 00 00 25,950 25,950Directors' fee 00 650 00 00 65 0Insurance claim received 3,115 00 00 00 3,115Insurance premium paid 25,026 00 00 00 25,026Dividend income 25,703 00 00 00 25,703Brokerage and advisory income 221 00 00 00 22 1


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17. ISLAMIC BANKING BUSINESS

The Bank is operating 11 (31 December 2011: 11) Islamic Banking branches in Pakistan.The statement of financial position of these branches as at 31 March 2012 is as follows:



ASSETS

Cash and balances with treasury banks 257,713 270,353Balances with and due from financial institutions 1,606 494,968Investments 1,229,665 1,362,945Financing and receivables

Murabaha 2,084,563 1,848,829 Ijarah 279,439 154,480 Diminishing musharika 1,884,637 2,099,681 Export refinance murabaha 250,238 158,727 Export refinance istisna 1,105,220 1,086,631 Istisna 659,341 11,102

Other assets 647,506 832,1758,399,928 8,319,891

LIABILITIES

Bills payable 43,007 29,886Due to financial institutions 1,342,886 1,192,491Deposits and other accounts Current accounts 1,219,488 986,652 Saving accounts 493,297 519,840 Term deposits 3,658,700 3,612,383 Others 9,225 12,832 Deposits from financial institutions-remunerative 317,774 315,594 Deposits from financial institutions-non-remunerative 423 562

Due to head office 154,125 195,478Other liabilities 178,481 180,097

7,417,406 7,045,815

NET ASSETS 982,522 1,274,076

REPRESENTED BY:

Islamic banking fund 900,000 900,000Unremitted profit 81,922 372,106

981,922 1,272,106Surplus on revaluation of assets 600 1,970

982,522 1,274,076


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18. GENERAL

Corresponding figures have been re-arranged / re-classified wherever necessary, forthe purpose of comparison.

19. DATE OF AUTHORISATION

These consolidated interim condensed financial statements were authorised for issueby the Board of Directors in their meeting held on April 24, 2012.

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AlHabib First Quarter Report March 2012

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