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ZARAI TARAQIATI BANK LIMITEDBALANCE SHEET AS AT 31 DECEMBER 2005

2005 2004ASSETS Notes (Rupees in thousand)

Cash and balances with treasury banks 6 1,585,421 1,593,898 Balances with other banks 7 7,813,844 14,791,268 Lending to financial institutions - - Investments 8 12,820,668 2,849,677 Advances 9 52,925,286 54,335,440 Other assets 10 8,010,698 9,381,766 Operating fixed assets 11 690,141 976,985 Deferred tax assets 12 1,829 1,222

83,847,887 83,930,256 LIABILITIESBills payable 13 235,741 197,434 Borrowings from financial institutions 14 51,257,213 51,257,213 Deposits and other accounts 15 2,644,647 3,122,206 Sub-ordinated loan 16 3,204,323 3,204,323 Liabilities against assets subject to finance lease - - Other liabilities 17 13,441,518 13,048,358 Deferred tax liabilities - - Deferred income 18 2,048 17,105

70,785,490 70,846,639 NET ASSETS 13,062,397 13,083,617

REPRESENTED BYShare capital 19 11,869,612 11,869,611 Advance against equity 20 - 1 Statutory reserve 21 215,387 215,387 Contingencies reserve 22 30,000 - Unappropriated profit 702,355 861,549

12,817,354 12,946,548 Surplus on revaluation of assets 23 245,043 137,069

13,062,397 13,083,617

CONTINGENCIES AND COMMITMENTS 24

The annexed notes 1 to 45 and annexure-1 form an integral part of these financial statements.

PRESIDENT DIRECTOR DIRECTOR DIRECTOR

ZARAI TARAQIATI BANK LIMITEDPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2005

2005 2004Notes (Rupees in thousand)

Mark-up/ return/ interest earned 25 6,822,719 8,105,383 Mark-up/ return/ interest expensed 26 391,738 3,135,736 Net mark-up/ interest income 6,430,981 4,969,647 Provision against non-performing loans and advances 4,731,992 3,406,277 (Reversal)/provision for impairment in the value of investments (585) 998 Reversal against Portfolio audit - (1,098,570) Provision against other assets 12,936 2,698 Bad debts written off directly - -

4,744,343 2,311,403 Net mark-up/ interest income after provisions 1,686,638 2,658,245

NON MARK-UP/INTEREST INCOME

Fee, commission and brokerage income 3,157 2,410 Dividend income 6,458 6,028 Deferred income 32,178 6,349 Income from dealing in foreign currencies - - Other income 27 796,341 939,990 Total non-markup/ interest income 838,134 954,777

2,524,772 3,613,021

NON MARK-UP/INTEREST EXPENSES Administrative expenses 28 2,580,159 2,437,251 Amortization of deferred income 32,178 6,349 Other provisions/write offs - - Other charges 29 3,802 2,196 Total non-markup/interest expenses 2,616,139 2,445,796

(91,367) 1,167,225 Extra ordinary/ unsual items - - PROFIT/(LOSS) BEFORE TAXATION (91,367) 1,167,225

Taxation – Current year 38,434 503,234 – Prior years - - – Deferred (607) 5

30 37,827 503,239 PROFIT/(LOSS) AFTER TAXATION (129,194) 663,986 Unappropriated profit brought forward 861,549 330,360 Profit available for appropriation 732,355 994,346

APPROPRIATIONS: Transfer to statutory reserve - 132,797 Transfer to contingencies reserves 30,000 - Unappropriated profit carried forward 702,355 861,549 Basic earnings per share 31 (0.11) 0.62



ZARAI TARAQIATI BANK LIMITEDCASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005

Notes 2005 2004 (Rupees in thousand)

CASH FLOW FROM OPERATING ACTIVITIESProfit before taxation (91,367) 1,167,225 Dividend income (6,458) (6,028)

(97,825) 1,161,197 Adjustments for non-cash charges

Depreciation 85,806 88,403 Amortization of deferred income (32,178) (6,349)Amortization of preliminary expenses 6,570 2,190 Provision against non-performing loans and advances 4,731,992 3,406,277 Reversal against portfolio audit - (1,098,570)Reversal for employees post retirement medical benefits (79,692) (151,537)Provision against other assets 12,936 2,698 (Gain)/ loss on sale of fixed assets (23,591) 14

4,701,843 2,243,126 4,604,018 3,404,323

(Increase)/ decrease in operating assetsAdvances (3,321,839) (2,470,762)Others assets (excluding advance taxation) 1,600,661 (624,688)

(1,721,178) (3,095,450)Increase/ (decrease) in operating liabilities

Bills payable 38,307 7,153 Deposits and other accounts (477,558) 844,877 Other liabilities (excluding current taxation) 592,889 3,304,495 Deferred income 2,040 17,105

155,678 4,173,630 Income tax paid (157,864) (151,274)Net cash flow from operating activities 2,880,654 4,331,229

CASH FLOW FROM INVESTING ACTIVITIESNet investments in held to maturity securities (9,863,017) (75,874)Dividend received 6,458 6,028 Investments in operating fixed assets (24,945) (23,027)Sale proceeds of property and equipment disposed off 14,949 2,894

Net cash flow used in investing activities (9,866,555) (89,979)

CASH FLOW FROM FINANCING ACTIVITIESAdvance against equity - - Dividend paid - - Reserves - -

Net cash flow from financing activities - -

Increase in cash and cash equivalents (6,985,901) 4,241,250 Cash and cash equivalents at beginning of the year 16,385,166 12,143,916 Cash and cash equivalents at end of the year 32 9,399,265 16,385,166



ZARAI TARAQIATI BANK LIMITEDSTATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2005

Share capital Total

( R u p e e s i n t h o u s a n d )

8,950,656 2,918,954 82,590 - 330,360 12,282,560

Adjustment during the year - 2 - - - 2

Transfer to share capital 2,918,955 (2,918,955) - - - -

Profit after taxation for the current year - - - - 663,986 663,986

Transfer to statutory reserve - - 132,797 - (132,797) -

Balance as at 31 December 2004 11,869,611 1 215,387 - 861,549 12,946,548

Transfer to share capital 1 (1) - - - -

Profit after taxation for the current year - - - - (129,194) (129,194)

Transfer to statutory reserve - - - - - -

Transfer to contingencies reserve - - - 30,000 (30,000) -

Balance as at 31 December 2005 11,869,612 - 215,387 30,000 702,355 12,817,354


Advance against equity

Statutory reserve

Contingencies reserve

Un-appropriated profit

Balance as at 31 December 2003 - as reported earlier


ZARAI TARAQIATI BANK LIMITEDNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005

1. STATUS AND NATURE OF BUSINESS

1.1 Reorganization and conversion

1.2 Status

1.3

2. BASIS OF PRESENTATION

3. STATEMENT OF COMPLIANCE

4. BASIS OF MEASUREMENT

The Federal Government in its cabinet meeting held on 28 August 2002 decided for the reorganization and conversion of Agricultural Development Bank of Pakistan into a public limited company for the purposes of ensuring good governance, autonomy, delivering high quality and viable financial services to a greater number of rural clientele and adequate returns to stake holders. Accordingly the Agricultural Development Bank of Pakistan (Reorganization and Conversion) Ordinance, 2002 was promulgated for taking over the entire undertaking of Agricultural Development Bank of Pakistan and for matters connected therewith or incidental thereto.

Thus as required under section 3 of the Agricultural Development Bank of Pakistan (Reorganization and Conversion) Ordinance, 2002, Zarai Taraqiati Bank Limited was incorporated as public limited company under the Companies Ordinance, 1984 on 23 October 2002. Consequently, under SRO 823 (1)/2002 dated 18 November 2002, all the assets, contracts, liabilities, proceedings and undertakings of Agricultural Development Bank of Pakistan were transferred to, and vested in Zarai Taraqiati Bank Limited on 14 December 2002.The Bank's principal office is situated at 1-Faisal Avenue (Zero Point), Islamabad.The Bank operates 345 (31 December 2004:345) branches in Pakistan as at close of the year.

The main purpose of the Bank is to provide sustainable rural finance and services particularly to small farmers and low income houses to strengthen the rural and agricultural sector, mitigate poverty, capital market and investment activities and other Banking business.

These financial statements have been presented in accordance with the revised form of Accounts and Balance Sheet under BSD Circular No. 36 dated 10 October 2001 issued by the Banking Supervision Department of Sate Bank of Pakistan.

These financial statements are prepared in accordance with the approved International Accounting Standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984 and the Banking Companies Ordinance,1962. Approved accounting standards comprise of such International Accounting Standards as notified under the provisions of the Companies Ordinance,1984. Wherever the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance,1962 or the directives issued by the Securities and Exchange Commision of Pakistan (SECP) and the State Bank of Pakistan differ with the requirements of these standards, the requirements of the Companies Ordinance,1984, Banking Companies Ordinance, 1962 or the requirements of the said directives take precedence.

The Securities and Exchange Commission of Pakistan (SECP) has approved and notified the adoption of International Accounting Standard 39, Financial Instruments; Recognition and Measurement and International Accounting Standard 40, Investment Property. The requirements of these standards have not been followed in preparation of these financial statements as the State Bank of Pakistan has deferred the implementation of these standards in Pakistan till further instructions. However, investments have been classified in accordance with the requirments of the format prescribed by the State Bank of Pakistan for the financial statements.

These financial statements have been prepared on the historical cost convention as modified for the revaluation of certain investments (note 8) and in conformity with the accepted accounting practices of the banking institutions in Pakistan.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5.1 Staff Retirement Benefits

Pension Scheme

Gratuity Scheme

Provident Fund Scheme

Benevolent Scheme

Post retirement medical benefits

Employees Compensated Absences

The Bank operates defined benefits funded pension scheme approved by income tax authorities, for its eligible employees who opted for the new employees benefits scheme, introduced in 1975 and 1977 for clerical/non-clerical staff and for executives/officers, respectively. The bank's costs are determined on the basis of actuarial valuation carried out by independent actuaries by using 'Projected Unit Credit Method'. Any surplus/deficit arising on actuarial valuation in excess of the higher of 10% of present value of defined benefits obligations or 10% of the fair value of plan assets is recognized as income or expense over the estimated working lives of the employees.

The Bank operates defined benefits funded gratuity scheme approved by income tax authorities, for its eligible employees who did not opt for the new employees benefits scheme, introduced in 1975 and 1977 for clerical/non-clerical staff and for executives/officers, respectively. Annual contributions are made on the basis of actuarial recommendations. Any surplus/deficit arising on actuarial valuation by independent actuaries in excess of the higher of 10% of present value of defined benefit obligation or 10% of the fair value of plan assets is recognized as income or expense over the estimated working lives of the employees.

The Bank operates a defined contribution funded provident fund scheme for its employees who did not opt for the new employees benefits scheme introduced in 1975 and 1977 for clerical/non clerical staff and for executives/officers respectively. Under this scheme, equal contributions at defined rates are made by the member employees and the bank. The bank also operates non-contributory provident fund for its employees who opted for the new employees benefits scheme, as mentioned above. Under this, non contributory provident fund, contributions at defined rates are made by its member employees only. Both of these provident funds are approved by the income tax authorities.

The Bank also has two funded defined benefits benevolent fund schemes for its employees, separately for officers and for clerical and non-clerical staff. Contribution to these schemes are made by employees and the bank. The employee's contribution is matched by an equal contribution by the bank which is also liable to meet any shortfall in the fund, determined on the basis of actuarial valuation. Transitional liability arising on first adoption of International Accounting Standard - 19 (revised 2000) "Employee Benefits" is recognized as an expense on straight line basis over five years from the date of its adoption.

The Bank operates an unfunded defined benefit post retirement medical benefit scheme for all of its employees . Provision is made in the accounts for the benefit based on actuarial valuation. Actuarial gains/losses are accounted for in the manner similar to pension scheme.

The Bank operates an unfunded defined benefit post retirement medical benefit scheme for all of its employees. Provision is made in the financial statements for the benefit based on actuarial valuation. Actuarial gains/losses are accounted for in the manner similar to pension scheme.

The Bank accounts for all accumulating compensated absences when the employees render service that increases their entitlement to future compensated absences. Provision is made in the financial statements for the benefit based on entitled un-availed leave balances carried forwarded to the next year.

5.2 Cash and cash equivalents

Cash and cash equivalents comprise of cash, balances with treasury banks and balances with other banks.

5.3 Revenue recognition

Commission is recognized when earned.

Profit/(loss) on sale of investments is credited/charged to profit and loss account currently.

Dividend income is recognized when the Bank's right to receive has been established.

5.4 Advances

5.5 Investments

Held for trading

These are investments acquired principally for the purpose of generating profits from short term fluctuations in price.

Held to maturity

Available for sale

These are investments which do not fall under the held for trading and held to maturity categories.

Investment in un quoted securities are carried at cost less impairment loss, if any.

Gains or losses on disposals of investments are dealt with through profit and loss account in the year in which they arise.

5.6 Impairment

Markup/interest on advances and returns on investments are recognized on an accrual basis except markup/interest on classified advances which is recognized on a receipt basis, in accordance with the Prudential Regulations issued by the State Bank of Pakistan.

Advances are stated at net of provision for non-performing advances. Provision for non-performing advances is determined on the basis of Prudential Regulations issued by the State Bank of Pakistan and charged to profit and loss account. Advances are written off when there is no realistic prospect of recovery. As a further prudence, value of mortgage land and buildings relating to non-performing loans and advances is treated as nil.

In accordance with BSD circular No. 10 and 14 dated 13 July 2004 and 24 September 2004 respectively, issued by the State Bank of Pakistan, the bank classifies its investment portfolio into 'Held for Trading', 'Held to Maturity' and 'Available for Sale Securities' as follows:

These are investments with fixed or determinable payments and fixed maturity and the Bank has the positive intent and ability to hold them till maturity.

Quoted securities where ready quotes are available on Reuters Page (PKRV) or Stock Exchange, other than investments classified as held to maturity, are valued at fair value. Investments classified as held to maturity are carried at amortised cost.

The difference between the face value and purchase price is amortised over the remaining life of the investment using effective yield method, in order to determine amortised cost.

The surplus/deficit arising as a result of revaluation at fair value on trading portfolio is taken to income and that relating to the available for sale portfolio is kept in a seperate account and shown below equity.

All purchases and sales of investments that requires delivery within the timeframe established by regulation or market convention are recognized using the trade date method of accounting.

The carrying amount of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment of any asset or group of assets. If such indication exists, the recoverable amount of the assets is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in profit and loss account.

5.7 Operating fixed assets and depreciation/amortization

Gains/losses, if any, on disposal of fixed assets are charged to profit and loss account during the year.

5.8 Taxation

Current

Deferred

5.9 Provisions

5.10 Foreign currencies

5.11 Related party transactions

5.12 Financial instruments

Operating fixed assets are stated at cost less accumulated depreciation except free hold land which is stated at cost. Depreciation is computed over the estimated useful lives of the related assets at the rates set out in note 11. Depreciation is charged on reducing balance method except for vehicles, computer equipment and lease hold land which are depreciated/amortized on straight line method. Depreciation on addition / deletion in fixed assets during the year is charged for the proportionate period for which the asset remained in use.

Maintenance and normal repairs are charged to profit and loss account as and when incurred whereas major renewals and improvements are capitalized.

International Accounting Standard (IAS) 16, "Property, Plant and Equipment (revised 2003)" is applicable to financial statements covering annual periods beginning on or after 01 January 2005 and requires a review of residual value of assets, useful lives and depreciation method at each financial year end. Accordingly, based on a review of the above, the management has revised the rate of depreciation on computer equipment from 20 percent to 33.3 percent.

The above revision have been accounted for as changed in accounting estimate in accordance with the requirements of International Accounting Standard (IAS) 8, "Accounting Policies, Changes in Accounting Estimates and Errors". Accordingly, the effect of these changes in accounting estimates has been recognised propectively in the profit and loss account of the current year. Had there been no change in these accounting estimates, the loss for the year would have been lower by Rupees 2.270 million.

Provision for current taxation is based on taxable income at the current rate after taking into account tax credits, exemptions and rebates as laid down in the applicable income tax law.

Deferred tax is provided using the balance sheet liability method, providing for all temporary differences between the carrying amounts of assets and liabilities for the financial reporting purposes and amount used for the taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using the tax rates enacted at the balance sheet date. A deferred tax asset is recognized only to the extent it is probable that future taxable profit will be available and the credits can be utilized. Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefits will be realized.

Provisions are recognized when the Bank has a legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and a realiable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and are adjusted to reflect current best estimate.

The Bank operates foreign currency transactions through State Bank of Pakistan in local currency by paying exchange fluctuation risk fee to the State Bank of Pakistan.

All transactions undertaken between the Bank and the related parties are measured at arms' length prices determined in accordance with the methods for determining arms' length prices as prescribed by the Securities and Exchange Commission of Pakistan (SECP).

Financial instruments carried on the balance sheet include certain receivables, cash and bank balances, investments, advances, borrowing from financial institutions, deposits and other payables. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

6. CASH AND BALANCES WITH TREASURY BANKS 2005 2004

Note (Rupees in thousand)

Local currencyIn hand 395,962 969,443In current accounts with:

State Bank of Pakistan 6.1 1,189,047 624,446National Bank of Pakistan 412 9

1,585,421 1,593,898

6.1 It represents deposits maintained with State Bank of Pakistan to comply with the regulations issued from time to time.

7. BALANCES WITH OTHER BANKS

In Pakistan: On current accounts 21,673 38,308 On deposit accounts 7.1 7,792,171 14,752,960

Outside Pakistan: On current accounts - - On deposit accounts - -

7,813,844 14,791,268

7.1 These carry a markup ranging from 2% to 12.75%.

8. INVESTMENTS

8.1

2005 2004Investments by types Held by Given as Held by Given as

bank collateral bank collateral

Available for sale securities Listed companies 90,294 - 90,294 90,293 - 90,293

Unlisted companies 5,000 - 5,000 5,000 - 5,000

95,294 - 95,294 95,293 - 95,293

Held to maturity securitiesMarket treasury bills 5,940,943 - 5,940,943 595,331 - 595,331

Pakistan investment bonds 1,148,835 - 1,148,835 ######## - ########

Federal investment bonds 815,342 2,866 818,208 864,050 3,037 867,087

Certificates of investment 4,572,758 - 4,572,758 - - -

Federal Government securities - - - - - -

Provincial Government securities - - - - - -

######### 2,866 ######### ######## 3,037 ########

Total investments ######### 2,866 ######### ######## 3,037 ########

- (413) (998) - (998)

Surplus on revaluation of securities 245,043 - 245,043 137,069 - 137,069

Investments at revalued amounts - net of provisions ######### 2,866 ######### ######## 3,037 ########

Provision for impairment in value ofinvestments in listed shares (413)

Total Total


Note 2005 20048.2 Investments by segments (Rupees in thousand)

Federal Government Securities 8.3 Market treasury bills 5,940,943 595,331 Pakistan investment bonds 1,148,835 1,155,895 Federal investment bonds 818,208 867,087

7,907,986 2,618,313 Add/(less) : Surplus/(deficit) on revaluation of Government securities - -

7,907,986 2,618,313

Fully Paid up Ordinary Shares: Listed Companies 8.4 90,294 90,293 Unlisted Companies 8.5 5,000 5,000

95,294 95,293 Add: Surplus on revaluation of listed shares 245,043 137,069

340,337 232,362

Certificates of investments 8.6 4,572,758 - 12,821,081 2,850,675

Provision for impairment in value of investments in listed shares 8.7 (413) (998)

Investments at revalued amounts - net of provisions 12,820,668 2,849,677

8.3 Principal terms of investments in Federal Government securities

8.3.1

8.3.2

8.4 Particulars of investments held in listed companies

8.4.1

Market Treasury Bills, Federal Investment Bonds and Pakistan Investment Bonds are held by the Bank which also covers statutory liquid reserve requirements.

Federal Investment Bonds having amortised cost of Rupees 2.866 millions (Rupees 3.037 million: 31 December 2004) are pledged/lodged with State Bank of Pakistan as security for TT/DD discounting facility obtained for branches.

Dadabhoy Agricultural Leasing Limited is under suspension since November 2001. At the date of suspension, its market value per share was Rupees 2.50 against its face value of Rupees 10 per share.

No. of Ordinary Shares Paid up value/share

Name of companies 2005 2004

2005 2004 Rupees Note

280,090 280,090 10 Nestle Milkpak Limited 89,297 89,296

450,000 450,000 10 Uqab Breeding Farm Limited 585 585

150,000 150,000 10 Mubarik Dairies Limited 412 412

300,000 300,000 10 Dadabhoy Agricultural Leasing Limited 8.4.1 - -

90,294 90,293

(Rupees in thousand)

Name of investment Maturity Principal payment Rate Coupon payment %

Market Treasury Bills January 2006 to August 2006 On maturity 7.68 to 8.68 at maturity

Pakistan Investment Bonds August 2011 to December 2011 On maturity 12 to 13 semi-annually

Federal Investment Bonds March 2008 On maturity 15 semi-annually

8.5 Particulars of investments held in unlisted companies

8.5.1

8.5.2

8.5.3

8.5.4

8.6 Particulars of certificates of investments

2005 2004 (Rupees in thousand)

8.7 Particulars of provision for impairment in value of investments in listed shares Opening balance 998 - Charge for the year - 998 Reversal for the year (585) - Closing balance 413 998

9. ADVANCES Loans, cash credits, running finances, etc. In Pakistan 64,744,526 79,902,100 Outside Pakistan - -

9.1.3 64,744,526 79,902,100 Less: Provision for non-performing advances 9.2 (11,814,916) (25,562,137) Provision for long outstanding employee advances (4,324) (4,523)

9.4 (11,819,240) (25,566,660) 52,925,286 54,335,440

Saudi Pak Kala Bagh Livestock Limited has defaulted in the repayment of loan and the case has been referred to National Accountability Bureau.

Larkana Sugar Mills Limited is in the process of liquidation since February 2000 and there is no probability of any recovery of amount invested on final settlement.

Investment in Saudi Pak Kalabagh Livestock Limited and Larkana Sugar Mills Limited are stated at book value due to non-availability of required information for the calculation of breakup value. Moreover, these investments are fully provided for in these financial statements.

Market value of listed investment is Rupees 333.046 million and book value of unlisted investments is Rupees 5 million. Face value of investment in unlisted securities is Rupees 31.697 million.

Name of investee Maturity Principal payment Rate Coupon payment

%Saudi Pak Industrial and Agricultural Investment Co. (Pvt.) Ltd.

January 2006 On maturity 11 at maturity

Pakistan Industrial Credit and Investment Corporation Ltd.


Pakistan Kuwait Investment Company (Pvt.) Ltd. February 2006 to March 2006 On maturity 10.25 to 11.10 at maturity

Name of Investee Notes Percentage of holding

Number of shares held

Break up value

Based on audited

financial statements

as at

Name of Chief Executive/

Managing Director

Rupees

National Commodity Exchange Limited 12.50% 500,000 (2,123,845) 30 June 2005 Mr. Assim Jang

Saudi Pak Kala Bagh Livestock Limited8.5.1 33.33% 1,000,000 - - Mr. M. Asad Khan

Pakistan Agricultural Storage and Services Corporation Limited 8.33% 2,500 - - Maj.Gen.(R) F.A.Khan

Larkana Sugar Mills Limited 8.5.2 6.36% 141,970 - - Mr. Anwar Majeed


9.1 Particulars of advances 9.1.1 In local currency 52,925,286 54,335,440

In foreign currencies - - 52,925,286 54,335,440

9.1.2 Short Term - upto one year 32,744,545 20,990,460 Long Term - over one year 20,180,741 33,344,980

52,925,286 54,335,440

9.1.3

9.2

9.2.1

9.2.2

( R u p e e s i n t h o u s a n d ) - -

34,263 34,263

- -

Loans and advances have been shown in accordance with the BSD Circular No.9 dated 09 November 2003 issued by the State Bank of Pakistan.

Advances include Rupees 23,424 million (31 December 2004 : Rupees 40,465 million) which have been placed under non-performing status as detailed below:

Specific provision amounting to Rupees 1,031 million held under portfolio audit has been charged off as required under State Bank of Pakistan's Prudential Regulations for agricultural financing issued vide BPD circular No. 27 dated 22 October 2005.

Particulars of loans and advances to directors and associated companies etc.

Balance Outstanding as at 31 December 2005

*Maximum total amount of advances including temporary advances granted during the

year

Debts due by directors, executives or officers of the bank or any of them either severally or jointly with any other person

Debts due by companies or firms in which the directors of the bank are interested as directors, partners or in the case of private companies as members

Debts due by subsidiary companies, controlled firms, managed modarabas and other related parties

* The maximum amount has been calculated by reference to month-end balances.

Provision Provision required held

Other Assets Especially Mentioned 5,567,675 - 5,567,675 - - Substandard 9,121,312 - 9,121,312 1,824,262 1,824,262 Doubtful 3,489,465 - 3,489,465 1,744,732 1,744,732 Loss 5,245,922 - 5,245,922 5,245,922 5,245,922

23,424,374 - 23,424,374 8,814,916 8,814,916 Add: Provision under portfolio audit 9.3General - - - - 3,000,000 Specific 9.2.1 - - - - -

23,424,374 - 23,424,374 8,814,916 11,814,916

2005


Category of classification Note Domestic Overseas Total

9.3 The Federal Government has decided, in the meeting of the Federal Cabinet on 28 August 2002, to Corporatize / restructure the Agricultural Development Bank of Pakistan (ADBP). ADBP (Reorganization and Conversion) Ordinance, 2002 (LX of 2002) was promulgated by the Federal Government on 04 October 2002 to provide for necessary legal/statutory cover for reorganization and conversion of (ADBP) into a public limited company, incorporated under the Companies Ordinance, 1984. Consequently, under SRO 823(1)/2002 dated 18 November 2002, the Federal Government specified 14 December 2002 to be the effective date on which all the assets, contracts, liabilities, proceedings and undertakings of ADBP shall stand transferred to, and vest in Zarai Taraqiati Bank Limited (ZTBL).

9.4

9.4.1

2005 20049.5 Particulars of write offs Note (Rupees in thousand)

9.5.1 Against provisions 18,479,412 734,029 Directly charged to profit and loss account - -

18,479,412 734,029

9.5.2 Write offs of Rupees 500,000 and above 9.6 5,729,521 698,456

Accordingly State Bank of Pakistan appointed an independent firm of Chartered Accountants who carried out a portfolio audit and recommended a provision of Rupees 10 billion against its non-performing advances to meet the requirement of the Prudential Regulation No. VIII of State Bank of Pakistan. The Bank incorporated a general provision of Rupees 3 billion in the year ended 30 June 2002 on the basis of the provisional portfolio audit Report. Government of Pakistan approved cash support of Rupees 07 billion which will be provided to Zarai Taraqiati Bank Limited over a period of three years. In consequence to this the State Bank of Pakistan vide their revised letter No.BSD/SU-54/4033286/2004 dated 05 June 2004 has allowed that the provision of Rupees 7 billion is to be provided by Zarai Taraqiati Bank Limited in their account in three installments as follows:

1) Provision of Rupees 3 billion be created in the financial statements for the year ending 31 December 2003. 2) Provision of Rupees 3 billion be created in the financial statements for the year ending 31 December 2004. 3) The balance of provision of Rupees 1 billion in the financial statements for the year ending 31 December 2005. Subsequently the Ministry of Finance, Government of Pakistan has directed the Bank vide their letter No. (6)-3 IF-I/2005 dated 08 June 2005 to reverse the specific provision created on the basis of portfolio audit against loans and advances which have been subsequently recovered in the financial statements for the year ended 2004 and comply with the State Bank of Pakistan's Prudential Regulations for making the necessary time based provisions. In complying with Ministry of Finance, Government of Pakistan's directives, the Bank has reversed the specific provision to the extent of recoveries against the specific provision of Rupees 3,000.799 million made in the accounts for the year 2003 over and above the Prudential Regulations provisioning pursuant to portfolio audit carried out as a part of restructuring process of the Bank.

The State Bank of Pakistan has issued Prudential Regulations for Agriculture Financing during the current year vide BPD Circular No. 27 dated 22 October 2005. These regulations require agricultural advances overdue by 90 days, one year, one and a half years and two years to be classified as OAEM, substandard, doubtful and loss respectively. In addition, these regulations specify that provision should be made in the financial statements equal to 20 percent, 50 percent, and 100 percent, in respect of overdue agricultural advances classified as substandard, doubtful and loss respectively, of the outstanding balance of principal and value of mortgaged land and building as valued at the time of sanctioning of loan. No provision is required to be made against the outstanding balance of principal relating to overdue agricultural advances classified as OAEM. These regulations also require that in any case the loan account shall be fully charged off after three years from the date of default.

However, as a matter of prudence the Bank has not applied the adjustment factor of the value of mortgaged land and building in determining the provisioning requirement against the non-performing loans and advances portfolio. Had the value of mortgaged land and building been discounted strictly in accordance with the requirement of the Prudential Regulation, the specific provision against non-performing advances as at 31 December 2005 would have been lower and consequently the loss for the year and advances would have been lower and higher by Rupees 5,633 million respectively.

Previously, provision was determined in respect of non performing agricultural advances in accordance with the guidelines given in the Prudential Regulations for Corporate / Commercial banking. Had the provision against agricultural advances been determined on previous year basis, the specific provision against non-performing loans and advances would have been lower by Rupees 2,573 million.

2005 2004Particulars of provision against non-performing loans and advances

Note Specific General Total Specific General Total

Opening balance 22,566,660 3,000,000 25,566,660 20,992,982 3,000,000 23,992,982 Net charge for the year 4,731,992 - 4,731,992 3,406,277 - 3,406,277 Amounts written off 9.5 (18,479,412) - (18,479,412) (734,029) - (734,029) Reversals under portfolio audit - - - (1,098,570) - (1,098,570) Closing balance 8,819,240 3,000,000 11,819,240 22,566,660 3,000,000 25,566,660


Write offs of below Rupees 500,000 12,749,891 35,573 18,479,412 734,029

9.6

Note 2005 2004 (Rupees in thousand)

10. OTHER ASSETS

Income/mark-up accrued on loans and advances 10.1 2,085,487 3,537,383 Income/mark-up accrued on investments 178,026 152,168 Other advances, deposits, advance rent and other prepayments 63,902 73,396 Stationery and stamps on hand 10,970 10,114 Tax recoverable 10.2 308,053 308,053 Amount recoverable from Federal Government 10.3 - 3,849,290 Presidential relief package - 1,741,162 Relief Packages 939,468 - Preliminary expenses 10.4 - 6,570 Branch adjustment account 792,819 593,184 Receivable from defined benefit plans 10.5 1,936,411 1,564,267 Stock in hand 14,640 14,808 Assets relating to Bangladesh 10.6 1,343,235 1,313,865 Receivable from Federal Government against Golden Hand Shake Scheme 2,643 1,532,217 Receivable from Pension Trust Fund against Golden Hand Shake Scheme 10.7 117,901 237,901 Receivable from Benevolent Trust Fund against Golden Hand Shake Sche 10.7 17,250 41,092 Suspense account 3,848 12,784 Non-banking assets acquired in satisfaction of claims 10.8 209,574 - Others 10.9 15,208 8,789

8,039,435 14,997,043 10.10 (28,737) (5,615,277)

8,010,698 9,381,766

10.1

10.2

10.3

10.4

In terms of sub-section (3) of section 33 (A) of the Banking Companies Ordinance, 1962 the statement of amount in respect of written-off loans or any other financial relief of Rupees 500,000 or above allowed to a person(s) during the year ended 31 December 2005 is given at Annexure-1 in respect of project loans only. Further an additional amount of Rupees 13,705 million has been charged off as required under State Bank of Pakistan's prudential regulations for agricultural financing issued vide BPD Circular No.27 dated 22 October 2005 which has not been shown at annexure-1. However, this write off does not affect the Bank's right to recover these debts from the customers.

Less: Provision held against other assets

This includes an amount of Rupees 1,756 million in respect of agricultural loans and advances which has been arrived at after netting off interest suspense of Rupees 6,119 million ( 31 December 2004: 23,234 million). Further, the interest suspense account amounting to Rupees 11,550 million has been charged off as required under State Bank of Pakistan's Prudential Regulations for agricultural financing issued vide BPD circular No. 27 dated 22 October 2005.

This includes an amount of Rupees 297.149 million receivable on account of minimum income tax levied by the income tax authorities under Section 80-D of Income Tax Ordinance, 1979, for assessment years 1991-92 to 1998-99. The income of the Bank was exempt from tax upto income year ended 30 June 1999. The Bank paid, under protest, the disputed tax demand and also filed writ petition in this respect in Lahore High Court, Rawalpindi Bench, Rawalpindi. Later on, the bank withdrew the petition on directions of the Federal Government and the case was referred to the Law and Justice division of the Government of Pakistan which decided the reference in Bank’s favour. The Central Board of Revenue disagreed with the aforesaid decision and has further taken up the matter with Federal Cabinet for its review. Federal cabinet has referred the case to the Attorney General for final decision.The advice/decision of the Attorney General is still awaited. Since the Bank is very confident for a favourable decision from the Attorney General, no provision in this respect has been made by the Bank in its books of account.

Preliminary expenses are recognized as expense in compliance with the requirement of International Accounting Standard-38 "Intangible Assets".

The Bank has been allowing remissions, under the instructions of the Federal Government from time to time, which aggregates to Rupees 5,599.476 million (31 December 2004: Rupees 5,590.397 million) including Rupees 1,741.162 million allowed under the Presidential Relief Package 2002. The amount has now been off-setted against the provision held as desired by the Audit Committee of the Board of Directors.

2005 200410.5 Receivable from defined benefit plans Note (Rupees in thousand)

Pension scheme 34.3 778,701 552,942 Benevolent scheme - officers / executives 34.9 156,435 140,418 Benevolent scheme-clerical/non-clerical 34.14 (34,760) (43,643)Gratuity scheme 34.19 1,036,035 914,550

10.5.1 1,936,411 1,564,267

10.5.1

10.6

10.7

10.8


10.9 Others

Defence Saving Certificate 17 17 Advance for purchase of machinery/goods in transit 17 17 Legal charges recoverable on suits filed against loan defaulters 15,174 8,748 Others - 8

15,208 8,790

10.10 Provision against other assets

Opening balance 5,615,277 5,612,579 Charge for the year 12,936 2,698 Receivable from Federal Government written off against provisions (5,599,476) - Closing balance 28,737 5,615,277

11. OPERATING FIXED ASSETS

11.1

11.2

It represents assets recognized by the Bank as required by International Accounting Standard-19 "Employee Benefits " against its defined benefit schemes on the recommendation of independent actuaries.

It represents the amount relating to the activities of the Bank in Bangladesh (former East Pakistan) before its separation. In line with the decision contained in Finance Division letter No.F.5(12)PEC(op-FR)/78-236 dated 06 May 1979, the Bank is accruing interest at the rate of 8% on its loans and advances made in Bangladesh (former East Pakistan) with contra increase in its liabilities (note-17) relating to its activities in Bangladesh.

It represents the amount receivable from Pension Fund Trust and Benevolent Fund Trusts against Golden Hand Shake Scheme.Market value of non-banking assets acquired in satisfaction of claims is Rupees 358.680 million. Market value of non-banking assets acquired in satisfaction of claims for the year ended 31 December 2004, having book value of Rupees 217.472 million, was not available.

The detail of disposal of assets whose original cost or the book value exceed one million and two hundred fifty thousand Rupees respectively, whichever is lower is NIL.

Acquired Land and building having a book value of Rupees 217.341 million has been transferred to other assets being the assets acquired in satisfaction of claims.

01 January

2005Additions

(Disposals)/

(transfers)

31 December

2005

01 January

2005

Charge for

the year

Adjustment for the

year

31 December

2005%

Land - freehold 276,195 - (105,234) 170,961 - - - - 170,961 -

Land - leasehold 10,640 - - 10,640 796 398 - 1,194 9,446 -

Building on freehold land 137,511 375 - 137,886 13,719 6,208 - 19,927 117,959 5

Building on leasehold land 415,794 45 (112,107) 303,732 41,674 13,103 - 54,777 248,955 5

Furniture, fixture and office equipment 68,871 9,268 (4,321) 73,818 20,751 17,611 (1,302) 37,060 36,758 10/33

Vehicles 245,917 15,257 (18,744) 242,430 101,003 48,486 (13,121) 136,368 106,062 20- 2005 ######## 24,945 (240,406) 939,467 177,943 85,806 (14,423) 249,326 690,141

2004 ######## 21,802 (2,908) 1,154,928 90,765 88,403 1,225 177,943 976,985


Rate of

Depreciation

Book Value as at

31 December

2005

P a r t i c u l a r s

C O S T AS AT ACCUMULATED DEPRECIATION AS AT

11.3 Detail of disposals of operating fixed assets.

Cost Book Value Sale proceeds Gain/(loss) Particulars of buyers

700,001 490,000 210,000 1,250,000 1,040,000

700,001 490,000 210,000 1,400,000 1,190,000

700,001 490,000 210,000 1,160,000 950,000

700,001 490,000 210,000 1,110,000 900,000

700,001 490,000 210,000 1,250,000 1,040,000

700,001 490,000 210,000 1,450,000 1,240,000

700,001 490,000 210,000 1,190,000 980,000

700,001 490,000 210,000 1,420,000 1,210,000

700,001 490,000 210,000 1,120,000 910,000

700,001 490,000 210,000 1,430,000 1,220,000

700,001 490,000 210,000 1,210,000 1,000,000

700,001 490,000 210,000 1,300,000 1,090,000

700,001 490,000 210,000 1,400,000 1,190,000

700,001 490,000 210,000 1,300,000 1,090,000

600,001 420,000 180,000 780,786 600,786

600,001 420,000 180,000 720,000 540,000

600,001 420,000 180,000 856,000 676,000

600,001 420,000 180,000 866,666 686,666

600,001 420,000 180,000 707,707 527,707

600,001 420,000 180,000 916,786 736,786

600,001 420,000 180,000 786,786 606,786

600,001 420,000 180,000 731,313 551,313

600,001 420,000 180,000 706,707 526,707

600,001 420,000 180,000 722,000 542,000

Particulars of Assets

Accumulated Depreciation

TLC-5 Door IDF-1149

Mian Allah Ditta S/O Mian Nawab R/O Mati Sau The. K/Wala, Khanwal

TLC-5 Door IDE-8871

M.Aslam Tahir R/O. H.No.P-1566-2, Asghar Mall Scheme, RWP.

TLC-5 Door IDF-1306

Awais Ali Khan R/O H.No.B-150, St.No.4, Mohalla Lala Rukh, Wah Cantt.

TLC-5 Door IDF-1147

Raja M.Aftab Satti R/O H.No.B-6-150, Mohammadi Colony, Shakrial Rwp.

TLC-5 Door IDF-1499

Qamar Naseer Ahmed R/O H.No.67168, Army Colony, No.2 Rwalpindi

TLC-5 Door IDF-1320

M.Aurang Zeb Khan R/O H.No. P-1547-A/1, Naseern House Asghar Mall Scheme, Rawalpindi

TLC-5 Door IDF-1146

Moharam Khan Raja R/O H.No.Z 670-A, Dhoke Rata, Raja St. Babu Lal Hussain Road, Rawalpindi

TLC-5 Door RIU-1457

Zahid Akbar R/O H.No.987 St.No.96, I-10/1, Islamabad

TLC-5 Door RIU-1458

M.Yousaf Amjad S/O Abdul Ghafoor,R/O H.No. E-1/4, St.No.10,G/7-2, Islamabad

TLC-5 Door RIU-1414

Sarda Sajid Ahmed, R/OH.No.5-A, St.42 Moh. Quaid-e-Azam Colony Dhomial Road, Rawalpindi

TLC-5 Door RIU-1440

Tariq Mehmood R/O Near Mian Bazar Bara Kahu, Mohallad Rafiqabad, Islamabad.

TLC-5 Door IDF-1042

Masood Ahmed Arif R/O Garden Town Highway, H.No.Kh-1376 Khana Dak Islamabad.

TLC-5 Door IDF-1308

Rana M.Nawaz R/O Chak No.17 Vcc, The Ferozwala, Sheikhupura

T.Coastar IDE-5048

Imtiaz A.Warriach R/O Near Moon Light School, Shahzed, St. Mohalla Margazar Colony, Gujrat

TLC-3 Door MDAA-540

Mumtaz Mohammad Khan R/O Tibba Sultanpur, The. Mailsi, Distt. Vehari

TLC-3 Door GP-2043

Malik Sikandar Khan Awan R/O Club Road H.No.102 Bukhari St.Sargodha.

TLC-3 Door GP-2041

ABDUL Rashid Khan R/O H.No.9-A, Circular, Road Abbottabad Cantt.

TLC-3 Door MNQ-4406

Masood-ur-Rehman Khan R/O H.No.Nw-1012, Rehmanabad S/Town Rawalpindi

TLC-3 Door LSA-8801

Abid Ansar R/O H.No.80 Badar Block, Allama Iqbal Town, Lahore

TLC-3 Door A-2036

Raja M.Asif Khan R/O Hotel Lalazar, Shaheed Road GPO Murree

TLC-3 Door A-1884

Mumtaz Muhammad Khan R/O Tibba Sultanpura, The. Mailsi Distt. Vehari

TLC-3 Door FDP-6510

Shaukat Iqbal R/O H.No.80 Badar Block, Allama Iqbal Town, Lahore

TLC-3 Door MNQ-4238

Abid Ansar R/O H.No.80 Badar Block, Allama Iqbal Town, Lahore

TLC-3 Door LOR-5098

Raja M.Asif Khan R/O Hotel Lalazar, Shaheed Road GPO Murree

Cost Book Value Sale proceeds Gain/(loss) Particulars of buyersParticulars of Assets


100,001 70,000 30,000 160,260 130,260 S/Mehran IDF-4685

Liaquat Hussain Shah, Haji Camp Road, Nai Abadi Islamabad



100,001 70,000 30,000 185,766 155,766

100,001 70,000 30,000 192,000 162,000

80,001 56,000 24,000 151,000 127,000

400,001 280,000 120,000 555,556 435,556

250,001 175,000 75,000 472,999 397,999

95,001 66,500 28,500 176,787 148,287

300,001 210,000 90,000 490,000 400,000

400,001 280,000 120,000 195,325 75,325 Sahib Nawaz Khan, SED (Rtd.)

90,001 63,000 27,000 94,590 67,590 Sher Zaman Khan Director (Rtd.)

90,001 63,000 27,000 71,936 44,936 Anwar Shirani, Director (Rtd.)

90,001 63,000 27,000 72,330 45,330 RA Mazhar Director (Rtd)

90,001 63,000 27,000 89,044 62,044 Sultan Muhd Khan Director (Retired)

400,001 280,000 120,000 277,636 157,636

30,001 21,000 9,000 28,520 19,520

30,001 21,000 9,000 26,168 17,168

30,001 21,000 9,000 24,679 15,679

22,001 15,400 6,600 9,999 3,399

22,001 15,400 6,600 18,200 11,600

30,001 21,000 9,000 15,800 6,800

30,001 21,000 9,000 15,700 6,700

30,001 21,000 9,000 19,747 10,747

30,001 21,000 9,000 27,899 18,899

27,001 18,900 8,100 11,769 3,669

27,001 18,900 8,100 13,799 5,699 Noor Mohd, AD, RM Office Sheikhupura

S/Mehran IDF-4757

Farakh Saleem Khan R/O H.No.5, St. No.34, Korang Town, Islamabad

S/Mehran IDF-4785

Qazi Ahmed Haroon S/O Shamim Ahmed R/O, H.No.75-b Commercial Market S/Town Rawalpindi

Suzuki Van IDB-9376

Sheikh Muhammad Nazir, H.No.k-606, Sarfraz Road, Rawalpindi

Honda accord IDD-

991

Muhammad Pervez R/O H.No.599 St.No.14, G-10/1, Islamabad

T/Pick-up IDA-9788

Abdul Aziz Shah R/O Shah Street Behind superior, Science College, Mohallah Hafizabad Peshawar

N-Pick-up IDB-2185

Muhammad Shah R/O Quarter No.1-V-3 , Civil Colony Cantt. Road Peshawar

T Hiace IDF-6391

Muhammad Hasaq R/O Haju Ghabi Road, Shaldara Quetta

T.Corolla IDD-4070

S/Car IDD-6460

S/Mehran IDE-9707

S/Mehran LOM-24

S/Mehran PRP-2638

Toyota Corolla Car LSA-5507

Mr.M.Rafiq Saroya, ED (Retired) HO, Ibd.

Yamaha 100 CC MRF-1927

Mr.Iftikharullah PP.No 081123, EAD/ Credited Officer, ZTBL, Shergarh Br.

Yamaha 100 CC MRF-1930

Mr.Azam Khan, PP.No.061908, AD/, Accouts Officer ZTBL, Takht Bhai

Yamaha 100 CC SB-6501

Mr.Azam Khan, PP.No.061908, AD/, Accouts Officer ZTBL, Takht Bhai

SKE-763 Yamaha

Mr.Abdul Hakim Soomro, N/Qasid, Sheikhupura

SKE-772 Yamaha

Mr.Zulfiqar Ali Shaikh EAD/MCO Kandhkot Br.

Yamaha 100 CC BRF-8082

Mr.M.Ramazan, N/Qasid, RMO, Bahawalpur


Mr.Abdul Ghaffar,Driver, RMO, Bahawalpur


Mr.Shakil Ahmed, Driver,Bahawalpur Branch

Yamaha 100 CC FDU-7513

G.H. Shahzad/EAD/MCO, Chiniot Branch

SAD-1795 Yamaha

Shoukat Ali, Driver, RM Office Sheikhupura

SAD-2822 Yamaha



25,001 17,500 7,500 13,949 6,449

26,001 18,200 7,800 18,000 10,200

18,744,051 13,120,800 5,623,200 29,214,209 23,591,009

SAC-9842 Yamaha

Waqar Aslam, N/Qasid RM Offoce Sheikhupura

TSA-5972 yamaha

Mr.Abdul Waheed, Sr.Asstt., Rajana Town Br.

2005 2004Note (Rupees in thousand)

12. DEFERRED TAX ASSETS

Deferred tax arising in respect ofTax depreciation 1,829 1,222

1,829 1,222

13 BILLS PAYABLE

In Pakistan 235,741 197,434 Outside Pakistan - -

235,741 197,434

14 BORROWINGS FROM FINANCIAL INSTITUTIONS

In Pakistan 51,257,213 51,257,213 Outside Pakistan - -

51,257,213 51,257,213

14.1 Particulars of borrowings from financial institutions

In local currency 51,257,213 51,257,213 In foreign currencies - -

51,257,213 51,257,213

SecuredBorrowings from State Bank of Pakistan

Agricultural loans 14.2 50,174,089 50,174,089 Agri-Project loans 14.3 1,083,124 1,083,124

51,257,213 51,257,213

14.2

14.3

As per agreement with the State Bank of Pakistan, these loans were obtained for providing finance to customers for agriculture purposes. Three credit lines amounting to Rupees 1.577 billion carry interest rate of 4% per annum while remaining thirty two credit lines amounting to Rupees 49.680 billion are based on profit and loss sharing subject to maximum share of profit to State Bank of Pakistan ranging from 4% to 10% per annum. These loans are secured by way of guarantee of Government of Pakistan.The bank has submitted a proposals to State Bank of Pakistan for restructuring the debt according to which the State Bank of Pakistan's debt of Rupees 51.257 billion and State Bank of Pakistan's subordinated debt of Rupees 3.204 billion is repayable in 15 years in 30 bi-annual installment with a grace period of 3 years starting from July 2003 i.e. the period of 15 years for repayment of State Bank of Pakistan debts will start from July 2006.

State Bank of Pakistan vide its letter No. ACD/3104/Loans-15-A/2004 dated 16 December 2004 has approved the above said proposal except for the terms and conditions in respect of markup rate which is still under negotiation. In view of the critical importance of debt pricing for the future finacial viability and sustainability of Zarai Taraqiati Bank Limited the matter has been referred to Ministry of Finance for a considered Government decision. Keeping in view the above stated facts mark-up has been charged on these loans as per existing contractual rates in respective credit lines.

These loans were given by the State Bank of Pakistan for the purpose of providing finance to agro based industry. These are subject to profit and loss sharing with a maximum share of profit to State Bank of Pakistan ranging from 4% to 6 % per annum. These are secured by guarantee given by the Government of Pakistan. The bank has submitted a proposal to State Bank of Pakistan for restructuring of the debt as stated in note 14.2.


15 DEPOSITS AND OTHER ACCOUNTSCustomersFixed deposits 64,742 69,665 Saving deposits 111,724 160,886 Current accounts - remunerative 297,174 245,459 Current accounts - non-remunerative 2,136,334 2,622,759 Others - unclaimed deposits 34,673 23,437

15.1 2,644,647 3,122,206

15.1 Particulars of deposits

In local currency 2,644,647 3,122,206 In foreign currencies - -

2,644,647 3,122,206

16 SUB-ORDINATED LOAN


17 OTHER LIABILITIES

Mark-up/ return/ interest payable in local currency 6,624,360 6,301,937 Accrued expenses 37,512 37,370 Taxation 672,032 792,069 Payable to Ministry of Food Agriculture and Livestock 17.1 352,715 332,527 Profit payable on deposits and other accounts 19,282 19,207 Liabilities relating to Bangladesh 10.6 1,343,424 1,314,054 Provision for employees' post retirement medical benefits 3,649,671 3,586,925 Provision for employees' compensated absences 355,011 300,672 Payable to employees' against Golden handshake scheme 33,133 75,628 Security deposits 209,153 95,852 Sundry deposits 140,919 180,048 Others 4,306 12,069

13,441,518 13,048,358

As per restructuring plan of the Bank approved by the ECC of the cabinet, State Bank's Equity holding of Rupees 3.204 billions was converted into sub-ordinated loan on terms to be agreed with State Bank of Pakistan. Accordingly, the Bank has submitted a proposal to State Bank of Pakistan for repayment of the loan in 15 years in 30 bi-annual installments starting from July 2006 and rate of mark up to be pegged at weighted average yield of 12 months treasury bill rate at the rate of 2.3558% per annum as per treasury bill auction dated 12 June 2003 and capped at the aforesaid markup rate for an initial period of five years. State Bank of Pakistan vide its letter No. ACD/3104/Loans-15-A/2004 dated 16 December 2004 has agreed with proposed terms except the proposed capping of markup rate which has been fixed on last auction's weighted yield of Government Treasury bill of 12 months maturity on floating basis every year.

Since the capping of markup charges at 2.3558% has not been agreed by SBP which is of critical importance for the future financial viability and sustainability of Bank, the matter has been referred to Ministry of Finance for considered government decision. However the markup on sub-ordinated debt at the rate of 2.3558% (from 14 December 2002 to 30 June 2004), 2.1867% (from 01 July 2004 to 30 June 2005) and at the rate of 8.4009% (from 01 July 2005 to 31 December 2005) has been charged which is subject to adjustment on finalization of debt restructuring/repricing agreement with State Bank of Pakistan.

17.1

2005 2004(Rupees in thousand)

18 DEFERRED INCOMEOpening balance 17,105 - Receipt during the year against Senior Management Team Remuneration 17,121 23,454 Amortization during the year 32,178 6,349 Closing balance 2,048 17,105

19 SHARE CAPITAL

19.1 Authorized Capital

2,500,000,000 Ordinary Shares of Rupees 10 each (31 December 2004: 2,500,000,000 ordinary shares of Rupees 10 each) 25,000,000 25,000,000

19.2 Issued, subscribed and paid up

1,186,961,201 ordinary shares of Rupees 10 each fully paid 11,869,612 11,869,611

(31 December 2004: 1,186,961,100 shares of Rupees 10 each fully paid) 11,869,612 11,869,611

Shareholder

Rupees

Government of Pakistan 1,185,961,201 10 11,859,612 11,859,611 Government of Punjab 277,100 10 2,771 2,771 Government of Sindh 119,000 10 1,190 1,190 Government of NWFP 68,000 10 680 680 Government of Balochistan 35,900 10 359 359 Erstwhile East Pakistan 500,000 10 5,000 5,000

1,186,961,201 11,869,612 11,869,611

20 ADVANCE AGAINST EQUITY

21 STATUTORY RESERVE

This represent reserve maintained as per requirement of Section 21 of the Banking Companies Ordinance ,1962.

22 CONTINGENCIES RESERVEThe Bank has set aside contingencies reserve for insurance of cash, building and vehicles.

23 SURPLUS/(DEFICIT) ON REVALUATION OF ASSETS

Surplus on revaluation of fixed assetsLess: Surplus on disposal - - Incremental depreciation - -

- - Surplus on revaluation of securitiesi) Federal and Provincial Government securities - - ii) Quoted shares 242,543 134,569 iii) Other securities 2,500 2,500

245,043 137,069 245,043 137,069

24 CONTINGENCIES AND COMMITMENTS

It represents the amount of Rupees 9.715 million, Rupees 168.000 million and Rupees 175.000 million payable to Ministry of Food Agriculture and Livestock under Japanies KR-II grant-1996, Crop Maximization Project-Productivity enhancement on sustainable basis and incentive for Baluchistan respectively.

Number of ordinary shares

Paid-up valueper share

An amount of Rupees 2,918,955,000 was transferred by the Federal Government as cash equity against which the shares amounting to Rupees 2,918,953,990 have been issued during the year ended 31 December 2004 and the balance of Rupees 1,010 have been issued during the year ended 31 December 2005.

24.1

24.2

24.3

24.4

24.5

Note 2005 2004(Rupees in thousand)

25 MARK UP/RETURN/INTEREST EARNED

On loans and advances to i) Customers 5,479,450 7,911,216

On investments in: i) Held for trading securities - - ii) Available for sale securities - - iii) Held to maturity securities 290,496 599

On deposits with financial institutions 1,052,773 193,568 6,822,719 8,105,383

26 MARK UP/RETURN/INTEREST EXPENSED

Deposits 5,115 4,641 Short term borrowings - State Bank of Pakistan - - Long term borrowings - State Bank of Pakistan 385,502 3,129,062 Bank commission and other charges 1,121 2,033

391,738 3,135,736

27 OTHER INCOME

Rent on property 7,326 1,777 Net profit/ (loss) on sale of property and equipment 23,591 (14)Loan application fee 309,875 310,629 Excess provision relating to defined benefit plans 27.1 270,279 305,018 Others 27.2 185,269 322,580

796,341 939,990

27.1

Contingent liability in respect of 15 cases (31 December 2004: 14 cases) filed against the Bank by various parties is estimated at Rupees 11,307 million (31 December 2004: Rupees 10,600 million).

Contingent liability in respect of 05 cases (31 December 2004: 24 cases) filed against the Bank in various courts of law by the employees is estimated at Rupees 0.572 million (31 December 2004: Rupees 3.022 million).

Income tax of Rupees 929.632 million was levied by the income tax department for assessment year 2001-2002, against provision of Rupees 326.281million in the books of account of the Bank for that assessment year. The Bank has paid Rupees 785,103 million and also filed appeal before the Commissioner of Income Tax (Appeals) agaist the aforesaid order. The commissioner has setaside the aforesaid order. However, the tax department preferred an appeal against the order of CIT(A) before the ITAT which is pending for hearing.

Income tax of Rupees 1,928.362 million was levied by the income tax department for assessment year 2002-2003, against provision of Rupees 1,919.929 million in the books of account of the Bank for that assessment year. The Bank has paid Rupees 577.092 million against the said demand and also filed an appeal before the Commissioner of Income Tax (Appeals). The commissioner has setaside the aforsaid order and now tax department preferred an appeal against the order of CIT(A) before the ITAT.

The Government of Pakistan has reduced the markup rates on ZTBL advances from 14% to 9% vide Presidential Releif Package 2004 w.e.f. 01 July 2004. As per the directive of the bank's Board of Directors, the bank has requested the Ministry of Finance to compensate the loss of revenue due to this reduction in rate of markup. The total claim in this respect has provisionally been worked out at Rupees 3,640 millions for the period from 01 July 2004 to 31 December 2005. However, this amount has not been accounted for in the accounts as the formal approval from Ministry of Finance has not been received by the bank.

Excess provision in respect of defined benefit plans has been written back on the basis of actuarial valuation carried out by an independent actuarial valuer.

27.2 OTHERS

Recovery of loans transferred to proforma ledger 15,250 3,529 Sale proceeds of forms 3,771 3,975 Recovery charges 41,062 217,325 Postal charges received from loanees 44,226 45,755 Recovery of private use of vehicles 753 685 Miscellaneous income 80,207 51,311

185,269 322,580


28 ADMINISTRATIVE EXPENSES

Salaries, allowances etc. 2,062,107 1,945,280 Contribution to defined contribution plan - Provident Fund 240 389 Non-executive directors' fees, allowances and other expenses 649 134 Rent, taxes, insurance, electricity, etc. 75,231 72,011 Legal and professional charges 3,800 2,661 Communications 35,275 37,240 Repairs and maintenance 10,534 10,785 Motor vehicles expenses 162,920 143,594 Traveling expenses 72,579 77,588 Stationery and printing 21,968 22,699 Advertisement and publicity 14,142 13,194 Auditors' remuneration 28.1 3,386 2,814 Depreciation 85,806 88,403 Amortization of preliminary expenses 6,570 2,190 Others 24,952 18,269

2,580,159 2,437,251

28.1 Auditors' remuneration

Audit fee 1,200 924 Fee for audit of foreign branches - - TA/DA for auditors 1,333 Special certifications and sundry advisory services 400 240 Tax services 227 742 Out of pocket expenses 226 908

28.2 3,386 2,814 28.2 Particulars of auditors' remuneration

2005 2004

RIAZ AHMAD KMRSRIR* Total

RIAZ AHMAD KMRSRIR* Total& COMPANY & COMPANY

( R u p e e s i n t h o u s a n d ) Audit fee 600 600 1,200 462 462 924 Tax services - 227 227 - 742 742 Other certification 200 200 400 120 120 240 Out of pocket expenses 1,014 545 1,559 454 454 908

1,814 1,572 3,386 1,036 1,778 2,814

* Khalid Majid Rahman Sarfaraz Rahim Iqbal Rafiq

29 OTHER CHARGES

Penalties imposed by State Bank of Pakistan 3,802 2,196

3,802 2,196

30 TAXATION

For the yearCurrent 38,434 503,234 Deferred (607) 5

37,827 503,239 For the prior year(s)

Current - - Deferred - -

- 37,827 503,239


30.1 Relationship between tax expense and accounting profit

Accounting profit / (loss) for the current period (91,367) 1,167,225 Add: Deferred cost - -

Accounting depreciation 85,806 88,403 Less: Tax depreciation 23,129 22,936

(28,689) 1,232,692

Tax - excluding dividend income 38,111 502,932 Tax on dividend income 323 301

Tax for the current period 38,434 503,234 Applicable tax rate 0.5% 41%

31 BASIC EARNINGS PER SHARE

Profit / (loss) for the period Rupees in thousand (129,194) 663,986 Number of ordinary shares Numbers in thousand 1,186,961 1,065,338 Earnings per share Rupees (0.11) 0.62

32 CASH AND CASH EQUIVALENTS

Cash and balance with treasury banks 1,585,421 1,593,898 Balance with other banks 7,813,844 14,791,268

9,399,265 16,385,166

33 STAFF STRENGTH

Total number of employees at the end of the year Number of Employees 5,727 5,801

34 DEFINED BENEFIT PLANS34.1 Pension scheme

34.2 Principal actuarial assumption

Valuation discount rate - 9% per annum Expected rate of increase in salary - 8% per annum Expected rate of return on investments - 9% per annum

34.3 Reconciliation of payable/ (recoverable) to/ (from) pension fund

Present value of obligation 2,794,466 2,209,128 Fair value of assets (4,057,773) (3,885,766)Unrecognized actuarial gain/(loss) 484,606 1,123,696

(778,701) (552,942)

34.4 Movement in payable/ (recoverable) to/ (from) pension fundOpening liability (552,942) (415,267)Charge for the period 34.5 (138,553) (51,500)Contribution to fund made during the period (87,206) (86,175)Closing liability/(asset) (778,701) (552,942)

34.5 Charge for pension fundCurrent service cost 52,126 48,823 Interest cost 176,730 161,107 Expected return on plan assets (310,861) (241,153)

For new employees and for those who opted for the new scheme introduced in 1975 for clerical staff and in 1977 for officers, the Bank operates an approved funded pension scheme on which monthly contributions are made on the basis of actuarial recommendation.

The latest actuarial valuation is carried out as at 31 December 2005. The actuarial valuations were made using the Projected Unit Credit Actuarial Cost method based on the following significant assumption:

Adjusted for outgoing employees (56,548) (20,277) (138,553) (51,500)

Benevolent scheme - officers / executives

34.6 General Description


Expected rate of increase in salary - 8% per annum Expected rate of return on investments - 9% per annum


34.8 Reconciliation of payable/(receivable) to /(from) benevolent fundPresent value of obligation 187,332 193,799 Fair value of plan assets (386,738) (381,310)Unrecognized part of transitional liability - - Unrecognized actuarial gain/(loss) 42,971 47,093

(156,435) (140,418)

34.9 Movement in payable/(recoverable) to/ (from) benevolent fund

Opening liability (140,418) (117,386)Charge for the period 34.10 (11,346) (18,624)Contribution to fund made during the period (4,671) (4,408)Closing liability/(asset) (156,435) (140,418)

34.10 Charge for benevolent fund

Current service cost 9,015 8,168 Interest cost 15,504 13,952 Expected return on plan assets (30,505) (26,650)Acturial (gain)/losses recognized (689) (9,686)Transitional liability recognized - - Contributions from employees (4,671) (4,408)

(11,346) (18,624)Benevolent scheme-clerical/non-clerical

34.11 General Description



34.13 Reconciliation of payable/(receivable) to /(from) benevolent fundPresent value of obligation 49,297 54,794 Fair value of plan assets (171,473) (173,028)Unrecognized part of transitional liability (7,606) 184,661 Unrecognized actuarial gain/(loss) 164,542 (22,784)

For all officers/executives, the Bank operates an approved funded benevolent scheme to which contributions are made at the rate 2% of basic pay to a maximum of Rupees 100, by each officer/executive. Employee contributions are matched by an equal amount of contributions by the Bank which is also liable to meet any shortfall in the fund.

The latest actuarial valuation is carried out as at 31 December 2005. Actuarial valuation was made using the following significant assumption:

For all clerical/non-clerical staff, the Bank operates an approved funded benevolent scheme to which contributions are made at different rates but not exceeding Rupees 100 by each employee. Employee contributions are matched by an equal amount of contributions by the Bank which is also liable to meet any shortfall in the fund.

The latest actuarial valuation is carried out as at 31 December 2005. Actuarial valuation was made using the following significant assumption:

34,760 43,643


34.14 Movement in payable/(recoverable) to/ (from) benevolent fund

Opening liability 43,643 49,275 Charge for the period 34.15 (6,247) (3,146)Contribution to fund made during the period (2,636) (2,486)Closing liability/(asset) 34,760 43,643

34.15 Charge for benevolent fund

Current service cost 3,544 4,028 Interest cost 4,384 4,610 Expected return on plan assets (13,842) (12,399)Acturial (gain)/losses recognized (12,874) (12,078)Contributions from employees (2,637) (2,485)Transitional liability recognized 15,178 15,178

(6,247) (3,146)

Gratuity scheme

34.16 General description



34.18 Reconciliation of payable/(recoverable) to/ (from) gratuity fund

Present value of obligation 275 635 Fair value of plan assets (1,296,996) (1,237,421)Unrecognized actuarial gains/(loss) 260,686 322,236

(1,036,035) (914,550)

34.19 Movement in Payable /(recoverable) to/ (from) gratuity fund

Opening liability (914,550) (796,873)Charge for the year 34.20 (114,133) (109,954)Contribution to fund made during the period (7,352) (7,723)Closing liability/(asset) (1,036,035) (914,550)

34.20 Charge for gratuity fund

Current service cost 79 136 Interest cost 51 81 Expected return on plan assets (98,994) (92,684)Recognized actuarial (gains) / losses (15,269) (17,487)Adjusted for outgoing employees - -

(114,133) (109,954)

For all employees and for those who did not opt for the new scheme introduced in 1975 for clerical/non-clerical staff and in 1977 for officers, the Bank operates an approved funded gratuity scheme on which monthly contributions are made by the Bank on the basis of actuarial recommendation.

The latest actuarial valuation is carried out as at 31 December 2005. The Projected Unit Credit Actuarial Cost method with the following significant assumption was used for actuarial valuation purposes:

35 DEFINED CONTRIBUTION PLAN

36 REMUNERATION OF DIRECTORS AND EXECUTIVES

President Directors Executives2005 2004 2005 2004 2005 2004

( R u p e e s i n t h o u s a n d ) Fee - - 610 20 - - Managerial remuneration 3,600 1,516 - - 2,340 574 Charge for defined benefit plan - 107 - - - Contribution to defined contribution plan - 334 - - - 48 Rent and house maintenance 840 520 - - 960 230 Utilities - 207 - - 255 57 Medical - 221 - - 25 63 Conveyance 271 274 - - 361 102 Furnishing allowance 100 - - - - Education expenses 47 - - - - Leave fare assistance 406 - - - - Club facility 99 - - - - Others 300 145 113 195 -

5,011 3,976 610 133 4,136 1,074

Number of persons 1 1 7 7 2 1

2005

37 MATURITIES OF ASSETS AND LIABILITIES Total Upto three Over 3 months Over one year Over five

months to one year to five years years ( R u p e e s i n t h o u s a n d )

AssetsCash and balances with treasury banks 1,585,421 1,585,421 - - - Balances with other banks 7,813,844 7,813,844 - - - Investments 12,820,668 9,065,149 1,448,552 818,208 1,488,759 Advances 52,925,286 2,075 32,742,470 4,001,540 16,179,201 Other assets 8,010,698 8,256 4,955,954 3,050,688 - Operating fixed assets 690,141 - - 261,415 428,726 Deferred tax assets 1,829 - - 1,222 607

83,847,887 18,474,745 39,146,976 8,133,073 18,097,293 LiabilitiesBills payable 235,741 235,741 - - - Borrowings from financial institutions 51,257,213 - 1,818,385 14,523,076 34,915,752 Deposits and other accounts 2,644,647 2,580,662 3,149 58,433 2,404 Sub-ordinated loans 3,204,323 - - - 3,204,323 Liabilities against assets subject to finance lease - - - - - Other liabilities 13,441,518 51,313 6,904,007 4,273,860 2,212,338 Deferred income 2,048 2,048 - - -

70,785,490 2,869,764 8,725,541 18,855,369 40,334,817 13,062,397 15,604,981 30,421,435 (10,722,296) (22,237,524)

Net assets represented by

Share capital 11,869,612 Advance against equity -

For all the employees of the Bank who have opted new retirement benefits scheme announced in 1975 and 1977 for clerical/non-clerical staff and for executives/officers, respectively, the Bank operates an approved non-contributory provident fund through an independent trust. Contributions to the fund are made by the employees only at the rate of 8% of mean of pay scale per month. For employees who have not opted for aforesaid new retirement benefit scheme, the Bank operates an approved contributory provident fund where contributions are made by the Bank and employees at the rate of 8.33% of basic salary per month.

Executives mean employees, other than the chief executive and directors, whose basic salary exceeds five hundred thousand Rupees in a financial year. The Chief Executive / Executives are provided with Bank maintained cars.

Statutory reserve 215,387 Contingncies reserve 30,000

Accumulated profit 702,355

Surplus on revaluation of assets (investments) 245,043 13,062,397

38 Related party transactions

Loan made to the General Provident Trust - -

39 YIELD/INTEREST RATE RISK

Yield/Interest rate sensitivity position for on-balance sheet instruments is based on the earlier of contractual re-pricing or maturity date.

2005Effective

Total

Exposed to Yield/ Interest risk Not exposed Yield/ Upto three Over 3 months Over one year Over five to Yield/

Interest months to one year to five years years Interest rate Risk

On-balance sheet financial instruments (% p.a) ( R u p e e s i n t h o u s a n d )

Assets

Cash and balances with treasury banks 1,585,421 - - - - 1,585,421 Balances with other banks 8.24 7,813,844 - - - - 7,813,844 Investments 5.52 12,820,668 - - - 339,714 12,480,954 Advances 8-9 52,925,286 2,075 32,742,470 4,001,540 16,179,201 - Other assets 8,010,698 - - - - 8,010,698

83,155,917 2,075 32,742,470 4,001,540 16,518,915 29,890,917 Liabilities

Bills payable 235,741 - - - - 235,741 Borrowings from financial institutions 6.09 51,257,213 - 1,818,385 14,523,076 34,915,752 - Deposits and other accounts 1-2.5 2,644,647 2,580,662 3,149 58,433 - 2,404 Other liabilities 13,441,518 136,699 3,534,825 4,273,860 5,542,038 - Deferred income 2,048 2,048 - - - -

67,581,167 2,719,409 5,356,359 18,855,369 40,457,790 238,145 15,574,750 (2,717,334) 27,386,111 (14,853,829) (23,938,875) 29,652,772

On-balance sheet gap Off-balance sheet financial instrumentsForward Lendings - - - - - - (Including call lending, repurchase agreement lending,commitments to extend credit, etc.)Forward borrowings - - - - - - (Including call borrowing, repurchase agreement borrowing,commitments to extend credit, etc.)Off-balance sheet gap - - - - - -

Total Yield/Interest Risk Sensitivity Gap 15,574,750 (2,717,334) 27,386,111 (14,853,829) (23,938,875) 29,652,772

Cumulative Yield/Interest Sensitivity Gap 15,574,750 12,857,416 40,243,527 25,389,698 1,450,823 31,103,595

40 CURRENCY RISK 2005

Assets LiabilitiesOff-Balance Net foreignsheet items exposure

( R u p e e s i n t h o u s a n d ) Pakistan rupee - - - - United States dollar - - - - Great Britain pound - - - - Deutsche mark - - - - Japanese yen - - - - Euro - - - - Other currencies - - - -

- - - -

41 FAIR VALUE OF FINANCIAL INSTRUMENTS

41.1 On-balance sheet financial Instruments 2005 2004 Book value Fair value Book value Fair value

( R u p e e s i n t h o u s a n d ) ASSETSCash and balances with treasury banks 1,585,421 1,585,421 1,593,898 1,593,898 Balances with other banks 7,813,844 7,813,844 14,791,268 14,791,268 Investments 12,820,668 12,820,668 2,849,677 2,849,677 Advances - net 52,925,286 52,925,286 54,335,440 54,335,440 Other assets 8,010,698 8,010,698 9,381,766 9,381,766

83,155,917 83,155,917 82,952,049 82,952,049

LIABILITIES

Bills payable 235,741 235,741 197,434 197,434 Borrowings from financial institutions 51,257,213 51,257,213 51,257,213 51,257,213 Deposits and other accounts 2,644,647 2,644,647 3,122,206 3,122,206 Sub-ordinated loan 3,204,323 3,204,323 3,204,323 3,204,323 Other liabilities 13,441,518 13,441,518 13,048,358 13,048,358

70,783,442 70,783,442 70,829,534 70,829,534 41.2 Off-balance sheet financial Instruments

Forward purchase of foreign exchange - - - - Forward agreements for borrowing - - - - Forward sale of foreign exchange - - - - Forward agreements for lending - - - -

The fair value of investment is based on quoted market prices and rates at Reuters Pages (PKRV) with the exception of un quoted securities.

42 CONCENTRATION OF CREDIT AND DEPOSITS

42.1 Credit Risk Management.

2005 42.2 Segment by class of business

Advances Deposits Contingencies and

Commitments Rupees Percent Rupees Percent Rupees Percent

'000' '000' '000'

Agribusiness 51,083,952 97 - - - - Individuals - - 2,644,647 100 11,307,720 95 Others (staff advances) 1,841,334 3 - - 572,000 5

52,925,286 100 2,644,647 100 11,879,720 100

42.3 Segment by sector 2005

Advances Deposits Contingencies and

commitments Rupees Percent Rupees Percent Rupees Percent

'000' '000' '000'

Public/ Government - - 35,191 - 572,000 5 Private 52,925,286 100 2,609,457 99 11,307,720 95

52,925,286 100 2,644,648 99 11,879,720 100

Out of total financial assets of Rupees 83,155.917 million the financial assets which were subject to credit risk amounted to Rupees 29,652.772 million. The Bank's major credit risk is concentrated in the agriculture sector. To manage credit risk, the Bank applies credit limits to its customers and obtains adequate collaterals.

Credit risk is the risk that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur financial loss. Credit risk in the Bank's portfolio is monitored, reviewed and analyzed by its credit department and the exposure is controlled through continuous review and conservative provisions for doubtful receivable, credit limits and prudent use of collaterals, as required by prudential regulation framed by the State Bank of Pakistan for banks.

43 GEOGRAPHICAL SEGMENT ANALYSIS

2005

Total assets employed


Pakistan (91,367) 83,847,887 13,062,397 11,879,720 Asia Pacific (including South Asia) - - - - Others - - - -

(91,367) 83,847,887 13,062,397 11,879,720

44 DATE OF AUTHORIZATION FOR ISSUE

These financial statements were authorized for issue on _________________ 2006 by the Board of Directors of the Bank.

45 GENERAL

45.1 Figures have been rounded off to the nearest thousand rupees.

45.2

45.3

PRESEIDENT DIRECTOR DIRECTOR DIRECTOR

Profit before taxation

Net assets employed

Contingencies and

commitments

These financial statements have been prepared in accordance with the revised format of financial statements for banks issued by the State Bank of Pakistan vide BSD Circular No. 36 dated 10 October 2001.

Captions as prescribed by BSD Circular No. 36 dated 10 October 2001 issued by the State Bank of Pakistan in respect of which there are no amounts have not been reproduced in these financial statements except for the balance sheet and profit and loss account.

47 of 94

Annexure-1ZARAI TARAQIATI BANK LIMITED

STATEMENT SHOWING WRITTEN OFF LOAN OR ANY OTHER FINANCIAL RELEIF OF FIVE HUNDRED THOUSANDOR ABOVE PROVIDED DURING THE PERIOD ENDED DECEMBER 31 2005

( Rs. in Million )

Name & Address of the borrower NIC Numbers Father's/Husband Name Outstanding Liabilities at beginning of the year Amount Written offPrincipal Interest others Total Principal Interest others Total

1 SIRANI INDUSTIRES CAP.SHEHREZ LATIF (LATE) 155-47-033125 CH. ABDUL LATIF 1.092 0.493 0.000 1.585 0.513 0.008 0.000 0.521MOUZA WEESLAN THE. & CH.MUHAMMAD ASHARF (LATE) 344-20-164554 CH. AHMED DINDISTT.BAHAWALPUR CH. MUHAMMAD AFZAL 344-35-164548 BAHAWAL BUX

MRS. SHAHNAZ SHAHREZ 155-53-033126 W/O CAP. SHEHREZ LATIFSURAYYA BEGUM (LATE) 344-32-164555 D/O BAHAWAL BUX

2 NOOR AGRI TECH. QAMAR ELLAHI 286-52-170467 MUHAMMAD NAWAZ KHAN 3.713 6.707 0.138 10.558 0.000 4.389 0.000 4.389VILL.TALWANDI MOOSA MEHBOOB ELLAHI 286-57-170468 MUHAMMAD NAWAZ KHANKHAN, THE. & DISTT. MANZOOR ELLAHI 286-47-170466 MUHAMMAD NAWAZ KHANGUJRANWALA

3 AGRI PROJECT AHMED SHAH SHAHZAD 517-28-118193 SHAHZAD SULTAN AZIZ 10.067 35.396 0.900 46.363 10.067 15.996 0.000 26.063VILLAGE RENALA KHURD ZAHIR SHAH SHAHZAD 517-57-271607 AHMAD SHAH SHAHZADAOKARA MRS. LAILA SHAH SHAHZADA 517-36-194508 W/O AHMED SHAH SHAHZADA

SYED SAJJAD HUSSAIN 270-22-046973 SYED ARSHAD HUSSAINSYED ASGHAR ABBAS ZAIDI 269-44-170728 S.M. ABBAS ZAIDI

4 AMSON DAIRIES MAJ. GEN. RETD. GHULAM UMER N.A. M.A.D. QURESHI 0.470 0.117 0.000 0.587 0.000 0.587 0.000 0.587PLOT NO.447,DEHTHANO TARIQ UMER N.A. MAJ.G. R. GHULAM UMERNEAR KHOKHARAPAR COLONY ASAD UMER N.A. MAJ.G. R. GHULAM UMERKARACHI WASEEM UD DIN SIDDIQUI N.A. FAHIMUDDIN SIDDIQUI

AHMED MUSA PAREKH N.A. MUSSA PARKEHABDUL SATTAR PARKEH N.A. MUSSA PARKEHSADIQ ABBAS (LATE) N.A. MAJ.G. R. GHULAM UMER

5 M.A FARM LAEEQ MEHMOOD MUSTAFA 502-53-253533 GHULAM MEHMOOD MUSTAFA 2.600 2.451 0.021 5.072 1.269 0.000 0.000 1.269DEH KONKAR,SUPER HIGHWAY ATEEQ MUSTAFA 502-55-253532 GHULAM MEHMOOD MUSTAFAKARACHI EAST.

6 AGRO TECH ASSOSIATES CH. UMER ASADULLAH BAJWA 271-28-072318 KHURSHID AHMED BAJWA 4.352 4.217 0.128 8.697 4.352 0.863 0.018 5.233VILL.MISSAN KALER THE. CH. ABDULLAH KHALID BAJWA 312-36-023289 CH. KHURSHID AHMED BAJWAFEROZWALA, DISTT IRFAN ASAD BAJWA 271-54-072320 UMER ASAD BAJWASHEIKHUPURA MRS. FARZANA IRFAN BAJWA 271-86-241311 W/O IRFAN ASAD BAJWA

MST. GHULAM FATIMA N.A. W/O CH. KHURSHID AHMEDMST. SAEED FATIMA N.A. W/O MUSHTAQ AHMEDMST. SHAFQAT BIBI N.A. W/O MUHAMMAD IJAZMST. PERVEEN FATIMA N.A. W/O IMTIAZ AHMED

7 AL QASIM AGRO SERVICES MUHAMMAD QASIM 295-89-383855 RIAZ AHMED 4.229 5.852 0.030 10.111 0.000 3.326 0.000 3.326KOT NAZIR THE.FEROZWALA

DISTT: SHEIKHUPURA

Sr. No.

Name of Individual/parteners/ Directors

48 of 94


Sr. No.


8 COMPACT PARTICLE BOARD CH. FAZAL MAHMOOD 270-61-312937 CH. SHAH MUHAMMAD 19.480 26.938 0.056 46.474 19.480 13.586 0.000 33.06627TH-KM OFF LAHORE, CH. GHULAM MOHIUDDIN 270-59-312934 CH. SHAH MUHAMMADSHEIKHUPURA ROAD, NEAR CH. MUNAWAR HUSSAIN 270-66-312939 CH. SHAH MUHAMMADWAPDA TOWN CH. MURID HUSSAIN 270-64-312938 CH. SHAH MUHAMMADLAHORE MST. SURRIYA BEGUM 270-40-312935 W/O CH. SHAH MUHAMMAD

MST. ANWAR SULTANA 270-56-312936 D/O CH. SHAH MUHAMMADMST. NOOR SULTANA 270-90-312940 D/O CH. SHAH MUHAMMADCH. SHAH MUHAMMAD 270-34-155417 QADAR BAKHSH

9 DIAMOND BREEDERS CH. MUHAMMAD ISHAQ 275-43-122518 ABDUL AZIZ 4.414 9.174 0.345 13.933 4.414 5.850 0.000 10.264MOUZA MANGA AUTTAR, ASMAT QADRI 272-35-145747 D/O ASGHAR ALI38-KM, MULTAN ROAD, THE & M. ANWAR KHAN LODHI 213-35-093316 M. SULTAN KHAN QADRIDISTT. LAHORE RIZWAN AHMED KHAN LODHI 213-63-093318 M. ANWAR KHAN LODGHI

10 KHILJEE INDUSTRIES MUHAMMAD RAFIQ KHILJEE 300-40-155567 MUHAMMAD AMIN 15.027 50.239 0.564 65.830 15.027 35.474 0.037 50.53847-KM MULTAN ROAD VILL. QASIR JAVED KHILJEE 300-50-995009 MUHAMMAD AMINNATHE JAGIR, THE.CHUNIAN FARUKH JAVAID KHILJEE 300-54-359978 MUHAMMAD AMINDISTT.KASUR. AHMED SARFRAZ KHILJEE 300-48-349702 MUHAMMAD AMIN

KHUSHNOOD MALIK 300-54-133899 AFZAL MALIKMRS. NUSRAT PERVAIZ 235-51-273558 W/O PERVAIZ RASHIDMRS. ROOHI WASIM 267-86-429884 W/O MIAN WASIMMUHAMMAD KAMRAN 286-56-046412 MUHAMMAD ASLAM

11 MONOO DAIRIES MIAN MUHAMMAD IRFAN MONNO 244-55-037446 MIAN MUHAMMAD RAFI MONNO 50.065 97.789 3.988 151.842 50.065 86.534 0.043 136.642MOUZA MEGINEE BHAWANA MRS. RUKHSANA SAIGAL 270-55-111978 W/O MIAN MOHD.IRFAN MONNOTHE.CHINIOT DISTT, JHANG

12 NEW SHADAB AGRO SERVICES MUHAMMAD YASIN 295-62-203190 MAQBOOL HUSSAIN 1.700 1.908 0.192 3.800 0.000 1.018 0.000 1.018VILL.NABIPUR SHEIKHUPURA

ROAD, DISTT.SHEIKHUPURA

13 QADRIA POULTRY FARM CH. MUHAMMAD ANWAR 272-42-270752 CH. GHULAM HAIDER 3.500 6.778 0.000 10.278 0.000 6.711 0.000 6.7111.(HATCHERY)VILL.KHARAK, DR. MUHAMMAD SAEED AHMED 272-40-112605 CH. FATEH DIN8TH KM, MULTAN ROAD LAHORE2.(FARM)VILL,SUNDAR MULTAN ROAD LAHORE

14 RAVI AGRI & DAIRY PROD. CH. MOHAMMAD AKRAM 275-85-043338 CH. FARZAND ALI 99.052 432.007 0.048 531.107 99.052 410.641 0.033 509.726CHAK NO.144 GB,THE.JARANWALA MST. MURAD BEGUM 409-38-080100 W/O AKBER ALI ALVIDISTT FAISALABAD SH. MUHAMMAD SALEEM 272-49-138925 SH. MUHAMMAD SAEED

MUZAMMIL KHAN LODHI 244-45-027675 GHULAM MOHD. KHAN LODHICH. AMJAD MUSTAFA 275-62-336241 CH. MUHAMMAD AKRAMSH.MUHAMMAD NASIM 273-56-128330 SH. MUHAMMAD SAEEDKALEEM HAIDER ZAIDI 270-86-425551 SHAMIM HAIDER ZAIDI

49 of 94


Sr. No.


15 SARGROH FARM AID ASIF SHARIF 337-52-008251 CH. MUHAMMAD SHARIF 1.738 3.069 0.046 4.853 1.738 0.495 0.000 2.233VILL.SUNDAR TEHSIL & MIAN TARIQ PERVAIZ 333-85-010774 MIAN SHAUKAT ALIDISTT. LAHORE HAROON KHALID 245-85-023552 CH. KHALID SHARIF

MIAN SAEED AKHTER 253-50-410615 CH. ABDUL WAHID

16 TANDLIANWALA SUGAR MILLS HAROON AKHTER 215-88-016631 AKHTER ABDUR REHMAN (LATE) 89.478 190.940 0.045 280.463 0.000 101.467 0.000 101.467KANJWANI, THE. TANDLIANWALA GHAZI AKHTER KHAN 215-59-096961 AKHTER ABDUR REHMAN (LATE)DISTT. FAISALABAD AKBAR AKHTER 215-54-096960 AKHTER ABDUR REHMAN (LATE)

BEG RASHEEDA AKHTAR REHMAN601-31-010709 W/O AKHTER A.REHMAN (LATE)MOBINA AKBER KHAN N.A AKBER AKHTER KHANSAEED ULLAH KHAN PARACHA 517-85-047765 HABIBULLAH KHAN PARACHAHAMEEDULLAH KHAN PARACHA 601-85-020036 HABIBULLAH KHAN PARACHAJEHANGIR KHAN TAREEN 322-54-035403 ALLAH NAWAZ KHAN TAREENSHAUKAT HAYAT 293-53-096402 INIAT ALISAIFULLAH KHAN PARACHA 601-31-010709 HABIBULLAH KHAN PARACHA

17 TECHNO AGRI IND. (PVT) LTD. ZAFAR SAEED QAZI 270-34-044167 DR. QAZI MUHAMMAD SAEED 8.997 33.892 0.173 43.062 8.997 25.172 0.025 34.194

VILLAGE RAKH PURA,DISTT. AIZAD HABIB 274-86-005678 HAJI HABIB UR REHMANLAHORE MRS. PARVEEN HABIB 272-88-044343 D/O MEHBOOB HAMEED

KHURAM HAMID 272-88-044344 MEHBOOB HAMEEDGOHER HAMEED 272-88-044345 MEHBOOB HAMEED

18 TRANSTECH PVT. LTD. MUHAMMAD ASGHAR 255-89-411154 RAYASAT ALI 106.070 327.734 6.971 440.775 106.070 297.314 0.065 403.44960-KM, LAHORE-MULTAN ROAD RANA ALLAH DITTA 249-56-071339 KHADIM HUSSAINBHAI PHERU, DR. MUHAMMAD TAYYAB 273-42-150143 HAJI GHULAM MUHAMMAD KHANDISTT.KASUR M. ATHER MAQBOOL 316-69-245529 MAQBOOL AHMED

ASLAM KHAN KHICHI 325-87-064303 SHER MUHAMMAD KHANRAB NAWAZ KHAN KHICHI 325-87-160301 MUHAMMAD KHAN KHICHI GUL HASSAN KHAN 325-87-064307 MUHAMMAD YAR KHAN

19 SYED AGRO SERVICES MUHAMMAD YOUNAS NA ABDUL AZIZ 0.165 3.114 0.000 3.279 0.000 2.336 0.000 2.336MOUZA MUSTAFABAD MUHAMMAD SAEED NA ABDUL AZIZSHERGARAH ROAD DEPALPUR,OKARA

20 GOLDEN CHICKS MST. SURRAYA BEGUM NA W/O ABDUL WADOOD KHAN 1.300 7.194 0.036 8.530 1.300 6.374 0.000 7.674MOUZA PHULGRAM, NEAR ABDUL MOEED KHAN NA ABDUL WADOOD KHANCHATTAR, MURREE ROAD NAVEED KHAN NA ABDUL WADOOD KHANTHE. & DISTT. RAWALPINDI ADIL WADOOD KHAN NA ABDUL WADOOD KHAN

HUMAIRA WADOOD NA D/O ABDUL WADOOD KHANSUMERA WADOOD NA D/O ABDUL WADOOD KHANSAIRA WADOOD NA D/O ABDUL WADOOD KHANSAIDA WADOOD NA D/O ABDUL WADOOD KHANUZAMA WADOOD NA D/O ABDUL WADOOD KHANABDUL WADOOD KHAN NA

21 ZAKIA DAIRIES SHAFIULLAH KHAN (LATE) 136-58-044385 HIDAYATULLAH KHAN (LATE) 7.800 70.993 0.024 78.817 7.800 62.785 0.000 70.585LEHTRAR ROAD, ALIPUR FARASH MRS. ZAKIA SHAFIULLAH KHAN 136-32-044384 W/O SHAFIFULLAH KHANISLAMABAD TAIMOOR KHAN NA SHAFIULLAH KHAN (LATE)

ARSHAD KHAN NA SHAFIULLAH KHAN (LATE)

50 of 94


Sr. No.


22 RANA AGRO SERVICES RANA M. MAHFOOZ HUSSAIN 334-50-027847 SAKHAWAT ALI 1.799 4.139 0.000 5.938 0.000 5.354 0.000 5.354CHAK NO.94/6-R THE, & DISTT SAKHAWAT ALI KHAN 334-26-025387 ABDUL WAHID KHANSAHIWAL MEHMOOD HUSSAIN 334-55-025394 SAKHAWAT ALI KHAN

RANA SOHAIL IQBAL 334-62-025390 SAKHAWAT ALI KHANFARRUKH ABBAS 334-87-025391 SAKHAWAT ALI KHAN MST. KALSOOM KHANUM 334-34-025388 W/O SAKHAWAT ALI KHAN

23 MODERN SARGODHA S. BOARD CH. MUHAMMAD ASHRAF 271-35-112405 CH. AMIR ALI 2.677 20.127 0.000 22.804 0.000 19.817 0.000 19.817CHAK NO.91 SB,THE. & DISTT MUHAMMAD HUSSAIN 294-20-343237 NAWAB DINSARGODHA MST. SHAHZADI IQBAL 278-44-414399 W/O SYED MUHAMMAD ZAHEER

TOTAL 439.785 1341.268 13.705 1794.758 330.144 1106.097 0.221 1436.462

2005 2004 Investments by types Held by Given as

Total Held by Given as

Total bank collateral bank collateral

Available for sale securities ( R u p e e s i n t h o u s a n d ) Listed companies 90,294 - 90,294 90,293 - 90,293

Unlisted companies 5,000 - 5,000 5,000 - 5,000

95,294 - 95,294 95,293 - 95,293

Held to maturity securities Market treasury bills 5,940,943 - 5,940,943 595,331 - 595,331

Pakistan investment bonds 1,148,835 - 1,148,835 1,155,895 - 1,155,895

Federal investment bonds 815,342 2,866 818,208 864,050 3,037 867,087

Certificates of investment 4,572,758 - 4,572,758 - - -

Federal Government securities - - - - - -

Provincial Government securities - - - - - -

12,477,878 2,866 12,480,744 2,615,276 3,037 2,618,313

Total investments 12,573,172 2,866 12,576,038 2,710,569 3,037 2,713,606

(413) - (413) (998) - (998)

Surplus on revaluation of securities 245,043 - 245,043 137,069 - 137,069

Investments at revalued amounts - net of provisions 12,817,802 2,866 12,820,668 2,846,640 3,037 2,849,677

Provision for impairment in value of investments in listed shares

### Principal terms of investments in Federal Government securities

Name of investment Maturity Principal payment Rate Coupon payment %

Market Treasury Bills January 2006 to August 2006 On maturity 7.68 to 8.68 at maturity

Pakistan Investment Bonds August 2011 to December 2011 On maturity 12 to 13 semi-annually

Federal Investment Bonds March 2008 On maturity 15 semi-annually

### Investments in listed shares

No. of Ordinary Shares Name of companies 2005 2004

2005 2004 Rupees Note (Rupees in thousand)

280,090 280,090 10 Nestle Milkpak Limited 89,297 89,296

450,000 450,000 10 Uqab Breeding Farm Limited 585 585

150,000 150,000 10 Mubarik Dairies Limited 412 412

300,000 300,000 10 Dadabhoy Agricultural Leasing Limited 8.4.1 - -

90,294 90,293

Paid up value/share

Particulars of investments held in unlisted companies

Name of Investee Notes

Rupees

National Commodity Exchange Limited 12.50% 500,000 (2,123,845) 30 June 2005 Mr. Assim Jang

Saudi Pak Kala Bagh Livestock Limited 8.5.1 33.33% 1,000,000 - - Mr. M. Asad Khan

8.33% 2,500 - - Maj.Gen.(R) F.A.Khan

Larkana Sugar Mills Limited 8.5.2 6.36% 141,970 - - Mr. Anwar Majeed

Percentage of holding


Break up value

Based on audited financial

statements as at

Name of Chief Executive/

Managing Director

Pakistan Agricultural Storage and Services Corporation Limited

###

Name of investee Maturity Principal payment Rate Coupon payment %



February 2006 to March 2006 On maturity 10.25 to 11.10 at maturity

Saudi Pak Industrial and Agricultural Investment Co. (Pvt.) Ltd.Pakistan Industrial Credit and Investment Corporation Ltd.

Pakistan Kuwait Investment Company (Pvt.) Ltd.

2005

Category of classification Note Domestic Overseas Total Provision Provision required held


Other Assets Especially Mentioned 5,567,675 - 5,567,675 - - Substandard 9,121,312 - 9,121,312 1,824,262 1,824,262 Doubtful 3,489,465 - 3,489,465 1,744,732 1,744,732 Loss 5,245,922 - 5,245,922 5,245,922 5,245,922

23,424,374 - 23,424,374 8,814,916 8,814,916 Add: Provision under portfolio audit 9.3General - - - - 3,000,000 Specific 9.2.1 - - - - -

23,424,374 - 23,424,374 8,814,916 11,814,916

2005 2004

Note Specific General Total Specific General Total


Opening balance 22,566,660 3,000,000 25,566,660 20,992,982 3,000,000 23,992,982 Net charge for the year 4,731,992 - 4,731,992 3,406,277 - 3,406,277 Amounts written off 9.5 (18,479,412) - (18,479,412) (734,029) - (734,029)Reversals under portfolio audit - - - (1,098,570) - (1,098,570)Closing balance 8,819,240 3,000,000 11,819,240 22,566,660 3,000,000 25,566,660

Particulars of provision against non-performing loans and advances

### Principal terms of investments in Federal Government securities

Name of investment Maturity Rate

Market Treasury Bills On maturity Pakistan Investment Bonds On maturity Federal Investment Bonds On maturity Government Bonds On maturity

### Investments in listed shares

2005 No. of Ordinary Shares Paid up Name of companies Note Rupees '000'

2005 2004 Value/share (Rs) 280,090 280,090 10 Nestle Milkpak Limited 89,296 450,000 450,000 10 Uqab Breeding Farm Limited 585 150,000 150,000 10 Mubarik Dairies Limited 412 300,000 300,000 10 Dadabhoy Agricultural Leasing Limite 8.4.1 -

### Particulars of investments held in unlisted companies

Investee Notes

Principal Payment

Percentatge of holding


Cost/Paid-up value share

Total Paid-up value

Break up value

Based on audited financial

statements as at

National Commodity Exchange Limited 500,000 10 5,000,000 30 June 2005 Saudi Pak Kala Bagh Livestock Limited 8.5.1 1,000,000 10 10,000,000 -

2,500 1,000 2,500,000 -

Larkana Sugar Mills Limited 8.5.2 141,970 100 14,197,000 -

31,697,000

###

31 December 2005

Category of classification Note Domestic Overseas Total Provision Required

Rupees '000

Other Assets Especially Mentioned 5,567,675 - 5,567,675 - Substandard 9,121,312 - 9,121,312 1,824,262 Doubtful 3,489,465 - 3,489,465 1,744,732 Loss 5,245,922 - 5,245,922 5,245,922

23,424,374 - 23,424,374 8,814,916 Add: Provision under portfolio audit 9.3GeneralSpecific

9.4 31 December 2005 31 December 2004Note Specific General Total Specific General

Rupees '000

Opening balance 22,566,660 3,000,000 25,566,660 20,992,982 3,000,000

Pakistan Agricultural Storage and Services Corporation Limited

Net Charge for the Period 4,731,992 3,406,277 - Amounts written off 9.5 (32,184,167) (734,029) - Provision/(Reversals) (Under portfolio audit) - (1,098,570) - Closing balance (4,885,514) 3,000,000 (1,885,514) 22,566,660 3,000,000

2004 Rupees '000'

89,296 585 412 -

Coupon Payment

Name of Chief

Executive/ Managing Director

Mr. Assim Jang Mr. Muhammad Asad Khan Maj. Gen. Muhammad Iqbal

Mr. Anwar Majeed

Provision Held

Rupees '000

- 1,824,262 1,744,732 5,245,922 8,814,916

3,000,000 - 11,814,916

31 December 2004 Total

Rupees '000

23,992,982

3,406,277 (734,029) (1,098,570) 25,566,660

P a r t i c u l a r s

C O S T AS AT ACCUMULATED DEPRECIATION AS AT

Additions

( R u p e e s i n t h o u s a n d ) %

Land - freehold 276,195 - (105,234) 170,961 - - - - 170,961 -

Land - leasehold 10,640 - - 10,640 796 398 - 1,194 9,446 -

Building on freehold land 137,511 375 - 137,886 13,719 6,208 - 19,927 117,959 5

Building on leasehold land 415,794 45 (112,107) 303,732 41,674 13,103 - 54,777 248,955 5

68,871 9,268 (4,321) 73,818 20,751 17,611 (1,302) 37,060 36,758 10/33

Vehicles 245,917 15,257 (18,744) 242,430 101,003 48,486 (13,121) 136,368 106,062 20 - 2005 1,154,928 24,945 (240,406) 939,467 177,943 85,806 (14,423) 249,326 690,141

2004 1,136,034 21,802 (2,908) 1,154,928 90,765 88,403 1,225 177,943 976,985

Book Value as at

31 December 2005

Rate of

Depreciation

01 January 2005

(Disposals)/ (transfers)

31 December

200501 January

2005Charge for

the yearAdjustment for the year

31 December 2005

Furniture, fixture and office equipment

9

10.3

Category of Classification Domestic Overseas Total Provision Provision Required Held

Rupees in '000 Other Assets Especially MentionedSubstandardDoubtfulLoss

Advances as of end current quarter include Rs._______thousand which have been placed under non-performing status as detailed below:-

14

16.2 Details of borrowings from financial institutions (Current Year) (Prior Year) Rupees in '000

SecuredBorrowings from financial institutionsBorrowings from subsidiary companies, managed modarabas and associated undertakingsBorrowings from directors (including chief executive) of the bankBorrowings from State Bank of Pakistan Under export refinance scheme Others (to be specified)Repurchase agreement borrowingsOthers (to be specified)

UnsecuredCall borrowingsOverdrawn nostro accountsOthers (to be specified)

17. DEPOSITS AND OTHER ACCOUNTS

CustomersFixed depositsSavings depositsCurrent Accounts - RemunerativeCurrent Accounts - Non-remunerativeOthers (to be specified)

Financial InstitutionsRemunerative depositsNon-remunerative deposits

Vostro accounts of branches outside Pakistan should be classified here.

17.1 Particulars of deposits

In local currencyIn foreign currencies

18. SUB-ORDINATED LOANS

Disclose information about the extent and nature, including significant terms and conditions that mayaffect the amount, timing and certainty of future cash flows. Further, disclose the nature and carryingamount of assets given (if any) as security and a description of sub-ordination to other creditors.

19

30. TAXATION

For the yearCurrentDeferred

For the prior year(s)CurrentDeferred

Distinguish, where applicable, between the provision for Pakistan taxation and the provisionfor taxation elsewhere.

22

38. MATURITIES OF ASSETS AND LIABILITIES

(Current Year)Total Upto three Over 3 months Over one year Over five

months to one year to five years yearsRupees in '000

AssetsCash and balances with treasury banksBalances with other banksLending to financial institutionsInvestmentsAdvancesOther assetsOperating fixed assetsDeferred tax assets

LiabilitiesBills payableBorrowings from financial institutionsDeposits and other accountsSub-ordinated loansLiabilities against assets subject to finance leaseOther liabilitiesDeferred tax liabilities

Net assets

Share capital/ Head office capital accountReservesUnappropriated/ Unremitted profitSurplus/(Deficit) on revaluation of assets

Some assets/ liabilities of a bank do not have a contractual maturity date. The period in which these assets/ liabilities areassumed to mature should be taken as the expected date on which the assets/ liabilities will be realized/ settled. The abovematurity analysis should be based on the remaining period at the balance sheet date to the contractual maturity date.Further, the analysis should be expressed in terms of contractual maturities even though the contractual repayment period isoften not the effective period because contractual dates reflect the liquidity risks attaching to the bank's assets andliabilities.

DETAIL OF CASH IN HAND AND WITH BANKS AS ON 31.12.2005

CASH IN HAND & WITH BANKSCash in hand 4001 395,351,408 Prize Bonds for denomination of Rs. 200/ 4901 55,800 Prize Bonds for denomination of Rs. 750/ 4902 138,750 Prize Bonds for denomination of Rs. 1500/ 4903 187,500 Prize Bonds for denomination of Rs. 7500/ 4904 37,500 Prize Bonds for denomination of Rs. 15000/ 4905 120,000 Stamps in Hand 4920 70,770

395,961,728 Cash with S.B.P. 4002 1,189,046,658 Cash with N.B.P. 4003 411,963 Current Accounts Cash with HBL 4004 21,602 Cash with UBL 4005 143,960 Cash with ABL 4006 - Cash with MCB 4007 21,507,906

21,673,468

SPECIAL NOTICE DEPOSIT A/C'sMoney at NBP 4203 299,981,811 Money at HBL 4204 408,973,224 Money at UBL 4205 955,944,084 Money at ABL 4206 965,885,418 Money at MCB 4207 453,928,633 Money at Bank Alfalah 4213 2,624,547,745 Money at Union Bank 4214 508,732,120 Money at Saudi Pak Comm Bank 4215 891,466 Cash with Bank Al Habib Limited 4216 482,050,229 Cash with Soneri Bank Limited 4217 1,091,223,306 Cash with CitiBank 4218 12,189 Cash with PICIC Commercial Bank 4219 - Cash with Saudi Pak Bank 4225 - Cash with Askari Bank 4226 276

7,792,170,501

Grand Total 9,399,264,318

GROUPING OF LIABILITIESPARTICULARS G.L.Head

SHARE CAPITAL

Issued, subscribed & paid up capital 1000 11,869,612,010

11,869,612,010

STATUTORY & OTHER RESERVES Statutory reservesStatutory reservesStatutory reserves 1502 215,387,000 General Reserves (Special) 1505 861,549,000

1,076,936,000

ADVANCE AGAINST EQUITY 1506 -

SURPLUS/(DEFICIT) ON REVAULATION OF ASSETS 1504 245,042,992 245,042,992

DEPOSITS AND OTHER ACCOUNTSFixed DepositsCall Deposit Money 2110PLS Term Deposit Account (Escrow) 2112 527,029 Matured Profit & Loss Term Deposit 2113 55,930,484 PLS Term Deposit Account for 03 months 2119 PLS Term Deposit Account for 06 months 2120 21,000 PLS Term Deposit Account for 12 months 2121 1,862,285 PLS Term Deposit Account for 24 months 2122 - PLS Term Deposit Account for 36 months 2123 81,120 PLS Term Deposit Account for 48 months 2124 30,680 PLS Term Deposit Account for 60 months 2125 4,831,712 PLS Term Deposit Account for borrowers 2126 1,458,097

64,742,407 PLS Saving Account 2102 111,724,281 111,724,281 Current Account Remunerative Business Deposits Provincial Governemnt 2108 4,775,406 Business Deposits 2115 292,398,477

297,173,883

Current Account Non RemunerativeCurrent Account 2101 2,134,604,455 Current Deposit Federal Government 2103 - Current Deposit Provincial Government 2104 1,729,972

2,136,334,427 Others Un-Claimed Deposit 2116 34,672,745 34,672,745

2,644,647,743 Borrowing from financial institutionsIn PakistanBorrowing from SBP 2501 1,576,795,700 Borrowing from SBP (Return free) 2502 738,536,350 Borrowing from SBP (PLS) 2503 48,941,881,270

51,257,213,320

Subardinated debt 2505 3,204,323,000 3,204,323,000

Borrowing under GHSS 2504 - -

Bills PayableIn PakistanDrafts Payable 3001 232,789,349

DSC Payable 3012 12,580

Payment Order IssuedPayment Order IssuedPayment Order Issued 3002 2,938,673 235,740,602 Sub Total

Other LiabilitiesMark/Return/Interest payable in local currency:Profit payable on SBP borrowings 3011 6,274,355,048 Interest payable on SBP borrowing 3017 350,004,650

6,624,359,698 Accrued Expenses:Provision for revenue expenses 3524 37,511,971 16,100,000 37,511,971 Current taxation (Provision less payments):Provision for taxation 1717 3,216,804,808 179,910 Withholding tax on government securities 6403 (562,866,849)Quarterly Advance Tax 6404 (1,981,906,167)

672,031,792 Payable to Minfal:Payable under JP KR-II 2580 9,715,423 MINFAL 2582 168,000,000

177,715,423 Profit payable on Deposits & Other AccountsReturn accrued on PLS sharing term deposits 2114 16,299,589 Return accrued on PLS saving accounts 2127 831,498 Return payable on business deposit accounts 2128 1,764,762 Interest payable on fixed deposits 3064 328,605 19,224,454

Interest on overdue account 1712 57,374 57,374

Liabilities relating to BangladeshLiability in former East Pakistan 3501 1,343,174,075 Un claimed Dividened 3010 250,000

1,343,424,075 Subsidy Payable:Subsidy for tractors in Baluchistan 3014 175,000,000 175,000,000

Contingencies ReservesProvision for Building Insurance 1719 1,488,118 Provision for Cash Insurance 1721 14,469,238 Provision for Vehicles Insurance 1722 14,042,644 30,000,000

Provision for employees post retirement medical benefits 3521 3,649,671,306 3,649,671,306

Provision for employees compensated absence 3520 355,011,075 355,011,075

Amount payable to Employees under GHSS 3018 33,132,611 33,132,611

Sundry DepositDown payment under SBP releif package 3051 272,199 Hose Building adv (Deposit) 3053 53

3056 1,355,698 Staff IT payable 3058 2,218,990

3059 96 Staff undisbursed emoluments 3060 2,549,987 Unpaid matured fixed deposits 3063Interest on federal govt emergency loans 3067 80,000 Interest on cases under litigation 3068 138,069 Misc. 3072 129,120,252 Inspection premium on awami tractors 3074 156,440

3075Local cost payable to suppliers 3076 2,482,194 Punjab provincial tax on cheques 3086 51,746

3085 155 Financial aid to Sind/Baluchistan 3090 2,493,227

140,919,106

Security Deposit Security Deposit of staff 2140 26,005 Compulsary contribution for tractor loans 3069 201,848,179 Compulsary contribution for tube well loans 3070 612,084 Compulsary contribution for other loans 3071 1,784,120 Compulsary contribution for awami tractor scheme 3073 4,882,486

209,152,874 OthersExcise duty payable account 3013 9,975 CZF Collection account (Others) 3005CZF Collection account Voluntary) 3006 - CZF Collection account (Quarterly) 3007CZF Collection account (Savings) 3009 21 Return on loans under CMP 3016 (54,479)PRF for earthquake victims 3088 26,465 RFSD 2nd generation imprest account 3525 66,500 Item in Transit 3519 4,257,555

4,306,037 Deffered Income 13,471,517,796 Received against SMT 3526 2,047,756 From government 3522 2,047,756

-

GROUPING OF EXPENSE ACCOUNT PARTICULARS G.L.Head 31.12.2005 Adjustments

Dr. Cr.Mark Up/Return/Interest ExpensedDepositsInterest paid on saving bank account 8003 487 Return on PLS Term Deposit (IBS) 8092 1,806,165 Return on PLS Saving Account (IBS) 8095 949,572 Return paid on Business Deposits 8096 2,358,746

5,114,970

Long Term BorrowingsInterest on SBP Borrowings 8010 385,502,296 Return on PLS Borrowings(SBP) IBS 8057 - 385,502,296

OthersInterest on Security Deposits staff 8005 183 Commission and other Charges paid 8040 1,114,665 Prov for comm/int 8099 6,515

1,121,363

Provision against Non Performing Loans 08995 4,731,992,259 8,727,541,560 - Under portfolio audit

Salary & AllowncesRegulatory Member Advisory Committee fee 8101 11,963 Pay of Officers 8102 755,690,421 Pay of Clerical Staff 8103 74,776,748 Pay of Non-Clerical Staff 8104 71,425,021 Pay of Maintenance Staff 8105 1,074,677 Dearness Allowance (Officers) 8120 1,027,106 Dearness Allowance (Clerical) 08121 121,970 Dearness Allowance (Non Clerical) 8122 273,205 Rent for residential accommodation 8402 69,248,271 House Rent Allowance Officers 8123 242,634,006 House Rent Allowance Clerical 8124 20,589,920 House Rent Allowance Officers Non Clerical 8125 23,082,721 Conveyance Allowance (Officers) 8126 29,599,329 Conveyance Allowance (Clerical) 8127 5,899,018 Conveyance Allowance (Non Clerical) 8128 7,623,429 Transport Maintenance Allowance (Officers) 8129 1,468,530 Transport Maintenance Allowance (Clerical) 8130 238,609 Transport Maintenance Allowance (Non Clerical) 8131 188,550 House Rent Allowance ceiling retired employees 8132 4,855,613 Petrol Ceiling to Executives 8133 15,328,364 Entitled Drivers Executives cost 8134 1,391,618 Washing Allowance (Non Clerical) 8135 21,888 Un-Attractive Area Allowance (Officers 8136 15,737,883 Un-Attractive Area Allowance (Clerical) 8137 1,430,898 Un-Attractive Area Allowance (Non Clerical) 8138 1,694,102 Special Duty Allowance 8139 3,015,151 Medical Charges (Officers) 8143 64,431,757 Medical Charges (Clerical) 8144 8,202,214 Medical Charges (Non Clerical) 8145 9,090,029 Medical Charges (Retired employees) 8146 79,692,000 Rest & Recreation allownce (Clerical) 8147 529 Entertainment Charges 8148 69,340 Other Allowances (Officers 8149 13,757,182 Other Allowances (Clerical) 8150 1,795,539 Other Allowances (Non Clerical) 8151 1,520,975 Over time Allowance (Clerical Excluding drivers) 8152 1,951,860 Education Allowance 8153 17,451,534

Over time Allowance (Non Clerical Excluding drivers) 8154 1,316,663 Over time Allowance drivers 8155 867,595 Secretariat Allownce 08157 3,300 Leave Salary deputationist 8161 64,552 Adhoc Relief to E.D, J.D's 8165 10,062,118 Adhoc Relief to E.A.D, A.D, D.D's 8166 82,254,906 Adhoc Relief to scale 4 to 7 8167 9,879,380 Adhoc Relief to scale 1 to 3 8168 8,878,493 Awards to Staff (honourarium & Awards) 8170 1,196,514 Consultation/Path officers 8171 29,273,333 Consultation/Path Clerical 8172 4,047,625 Consultation/Path Non Clerical 8173 4,786,406 Hospitalization Officers 8174 18,196,231 Hospitalization Clerical 8175 2,964,078 Hospitalization Non Clerical 8176 4,711,970 Leave encashment 08183 54,339,000 Liveries 8190 5,905,479 Allied Charges officers 8191 73,221,202 Allied Charges Clerical 8192 6,660,481 Allied Charges Non Clerical 8193 6,484,971 Allied Charges Retired employees 8194 26,075 Wages to Work Charge\Contract 08195 10,718,439 Provisional for personnel expenses 8199 10,703 Bonus to Officers 8301 106,928,313 Bonus to Staff 8302 33,538,237 Services provider Drivers 08909 13,696,505 Services provider Naib Qasid 08910 1,019,162 Services provider Sweepers 08911 1,199,655 Services provider Janitorial Services 08912 945,878 Services provider Security Gaurds 08913 22,497,627

2,062,106,860.70

Charges for defined Benefit plansBank Contribution to Employees Pension Fund 8162 (138,553,227)Bank Contribution to Employees Gratutity Fund 8163 (114,132,992)Bank Contribution to Employees Benevolent Fund 8164 (17,593,061)

(270,279,280)Charges for defined Contribution plansBank Contribution to Employees Prov Fund 8160 240,042

240,042 Non Executive Directors Fees, Allownces & OtherDirectors Fees & Travelling Expenses 8320 649,076 649,076

Motor Vehicles & Other ExpensesHiring of Transport 8901 253,922 Reg. Token & Insurance of vehicles 8902 2,891,635 POL Expense of vehicles 8963 129,533,377 Expense on repairing of vehicles 8964 29,849,931 POL/Repair of vehicles Ex Employees 8965 391,168

162,920,033 Travelling Expenses Inland travelling expense on tour 08201 66,925,567 Inland travelling expense on transfer 08202 1,783,187 Inland travelling expense on Training 08203 3,806,001 Foreign Travelling expense 08204 64,660

72,579,415 Rent, Taxes, Insurance Electricity etcRent for Office Building 8401 27,331,001 Heating & Electricity charges 08403 44,696,056 Insurance other then vehicles 8404 9,507 Rates & Taxes 08405 3,194,159 Insurance premium 75,230,723 Insurance Premium Buildings 08406 1,488,118 Insurance Premium Cash 08407 14,469,238

Insurance Premium Vehicles 08408 14042644 30,000,000

Legal & Professional ChargesLaw Charges 8500 3,799,603 961,000

3,799,603 CommunicationsPostage and Telegrams 8601 14,338,747 Office Telephones 8602 20,087,495 Telex 8603 453,390 Expense on residential telephone 8604 181,055 Telephone charges for retired employees 8605 2,596 Expense on ZTBL Web Site 8606 211,227

35,274,510

Repairs & MaintenanceRepair and Renovation Buildings 8801 5,280,475 Repair of dead stock articles 8802 2,188,172 Depriciation on Mech.Eqpt under Italian State 8803 1,000 Maintenance Charges Hardware 8804 3,064,015 Maintenance Charges Software 8805Rental Charges software 08806

10,533,662 Stationery & PrintingsStationery Printed 8701 10,439,737 Expense on Printing Press 8704 7,430 Expense on Table Stationery 8705 5,451,760 Expense on Computer tapes 8706 5,515,844 Expense on security documents 8707 553,514

21,968,285 Advertisement & PublicityPublicity & Advertisement 8702 12,926,563 Publication 8703 1,215,492

14,142,055 Auditor's RemunerationAudit fee 08330 3,385,597 226,625 961,000

SBP Penality 3,385,597 08989 3,802,061 3,802,061

3,802,061

DepriciationMotor Car & Other Vehicles 8808 48,487,613 17,576,000 Depriciation on security equipment 8807 246,239 Furniture & Fixtures 8809 1,383,363 Office Equipment 8810 595,330 Office Machinery 8811 727,149 Electric Installations 8812 935,450 Gas appliances 8813 44,718 Clinical Equipment 8814 70,177 Computer Equipment 8815 11,595,662 2,270,032 Farm Machinery & Equipment 8816 51,301 Air Conditioning Plant 8817 273,865 Elevator (Lift) 8818 127,274 Telephone Exchange 8819 172,657 Others 8820 144,298 Machinery & Equipment Afforestation 8821 4,557 Item purchased furnishing 8822 1,238,236 Building on free hold land 08823 6,208,000 Building on lease hold land 08824 13,500,456 Land Lease Hold

85,806,345

Amoritization of Preliminary Expenses 8996 6,570,000 4,380,000 6,570,000

Prov for diminuation in value of investments 8825 (585,000) (585,000)

Prov/(Reversal) against other assets 8998 12,935,586

Expense on SMTPre joining medical expense 8915 7,605 Remuneration 8916 31,569,766 Domestic travel 8919 263,558 Relocation Cost 8922 337,211

32,178,140 Other ExpendituresInterest paid under US Aid loans 08014 2,412 Technical Assistance & Training 8044 3,121 Overseas Training 08045 - Rebate & other charges 08052 375

08090 - 08607 4,620

Education Cess 8903 153,092 Losses on capital items 8904 1,032,798 Losses on cash items 08905 19,794 Books for Library 8906 165,060 Newspapers & Periodicals 8907 170,878 Written off against Ex employees 8908 20,127 Awards & Donations 8950 16,900 TA Expense of players 8951 3,000,620 Tax on investments 08952 2,351 Entertaintment Charges 8953 466,459 Donation to Family of Deceased Equi. 8954 1,800,000

08955 39,473 Consultant Expenses 8956 1,272,750 16,326,625 Clearin charges to NIFT 8958 196,865 Payment of Fee to Training institutions 8959 1,461,850 Miscellaneous 8960 7,722,813 Conversion Account 8961 4,962 Stamp Duty 8962 2,834,057 Expenses on Research Farm 8966 230,433 Accidental repair of vehicles 08967 372,367 Branches lecense renewal fee 08969 400,000 Dispensery, Medical & Consumeable Items 08976 126,536 Payment to PBa & FSC 08978 2,813,747 Membership fee to foreign agencies 08979 208,585 Lecture Fee paid to Bank's Guest 8980 136,857 Refreshment Charges to offciers 8981 155,160 MMD Unit 8982 - Viewer if int. up to 50000 8983 7,760 Viewer if int. over 50000 8984 2,150 Discount of Awami Tractor Scheme 8986 - Gift to Regd.Emp/Lucky Draw/Eid Milan 8987 70,760 entertainment retired employee/eid millan 08988 36,366

Current taxation 8994 -

Deffered Tax Expenses 08997 (607,000) 24,952,098

GROUPING OF INCOME ACCOUNTPARTICULARS GL Head 31.12.2005 Adjustments

Dr. Cr.

Mark-up/Return/Interest EarnedInterest received on loans 7001 373,431,008 Service Charges 7102 20 Mark-up 7103 5,091,416,438 7,696,519,716 Leasing 7104 - Hire-Purchase 7105 - Mark up on loans under CMP 7106 2,690,187

5,467,537,653 7063 1,233,486

Interest on other Advances 7064 350 Return on Advances to staff 7113 39,374,787 Return on other Advances 7114 597,918

41,206,541 Rebate paid on prompt repayments 8985 11,906,249 Prov for general expenses 8999 17,387,694

29,293,943 (29,293,943)

Net Mark-up/Return/Interest Earned on loans & Advances 5,479,450,251

Interest/Return on InvestmentsInterest on investments 7030 346,435,232 Less amortization cost 8062 55,939,721

290,495,511 290,495,511

Interest/Return on on deposits with financial institutionsInterest on Current Accounts 7060 33,808 Interest on deposits at call 7061 1,052,708,605 Interest on fixed deposits 7062 30,899

1,052,773,312 CommissionOn Remittances 7040 121,613 On Bills for Collection 7041 11,679 On Demand Drafts 7119 3,023,918

3,157,210

Dividend Income 7077 6,458,265 6,458,265

Deffered Income 7078 32,178,140 32,178,140 GHS

OTHER INCOMERent on property 7065 7,325,759 7,325,759 Net profit on sale of property and equipmentGain on Sales of Vehicles 7073 23,454,480 Gain on Sales of M/Cycles 7075 136,529

23,591,009 Loan application feesLoan application fees 7010 299,670,172 Loan application fees 7110 10,205,312

309,875,484

Recovery from proforma Ledger 7020 15,249,832 15,249,832 Recovery Charges2% Recovery Charges 7050 41,162,889 Less Commission & other charges paid 8041 (100,618)

41,062,271 41,062,271

Postal charges received from loaneesPostal charges received from loanees 7066 41,148,947 Postal charges received from loanees under IBS 7116 3,076,794

44,225,741 Sale proceed of formsSale proceed of forms 7012 3,574,733 Sale proceed of forms under IBS 7111 196,510

3,771,243 Recovery of private use of vehicle 7076 753,125 753,125

OthersIncome from Agri.Demonstration 7071 298,770 Investigation charges 7011 8,480 Technical Assistance Fee 7013 - Technical Assistance 7112 14,171 Miscellaneous 7070 75,858,928 Commission on agency operation 7044 100 Service charges for reg of tractors 7081 2,282,195 Stationery charges on Letter of Credit 7056 14,359 Income from Dutch/Italian state grant 7072 20 Interest on funds lend to HO/Br 7080 500 Misc 7117 1,729,421

80,206,944

Sharing of Profit/(Loss) with SBP

Capital 11,869,612,000 Statutory Reserves 215,387,000 Reserves 861,549,000 ZTBL Equity 12,946,548,000 ZTBL Share %age 20.67

SBP Debt on P & L Sharing 49,680,417,620 SBP Share %age 79.33

Total (SBP Debt +ZTBL Equity) 62,626,965,620 Total %age 100.00

Loss before tax for the year ended 31.12.2005 3,148,962,804 Profit/(Loss)available f - Less Provisional mark up on SBP Debt 3,057,596,251 Current Taxation 37,826,998 Profit/(Loss) before tax (129,193,551) ZTBL ShareCharged to reserves 861,549,000 SBP ShareProfit/(Loss) available for appropriation as on 31.12.05 732,355,449

Deferred taxation as on 31.12.2005W.D.V.

Additions DeletionDepreciation W.D.V.

31.12.2004 Total Rate

As per TaxBuilding 88,730 420 - 89,150 5% 4,457 84,692 Furniture & fixture 42,201 7,431 (707) 48,925 10% 4,893 44,033 Computers 8,805 1,836 (2,312) 8,329 30% 2,499 5,830 Vehicle 39,212 15,257 54,469 20% 10,894 43,575

178,948 24,944 (3,019) 200,873 22,743 178,131 As per Accounts Building 92,556 420 92,976 5% 4,649 88,327 Furniture ,fixtures & others 48,690 9,267 (3,019) 54,938 10/20% 9,577 45,361 Vehicle 34,721 15,257 49,978 20% 9,996 39,983

175,967 24,944 (3,019) 197,892 24,221 173,671 Difference 2,981 - - 2,981 (1,479) 4,460

DEFERRED TAX ASSET AS ON 31.12.2005 @ 38% 1,829 DEFERRED TAX ASSET AS ON 31.12.2004 1,222 REVERSAL /ADDITION DURING THE PERIOD 607

Depreciation Charge for the period

As on 31.12.2005

ZARAI TARAQIATI BANK LIMITEDCAPITAL ADEQUACY RETURN

As on 31.12.2005

A -Summary /Overall Capital Adequacy Ratio(Rupees in thousands)

S.No. ITEMS AMOUNT

1 Equity 1.1 11,869,612 1.2 - 1.3 - 1.4 215,387 1.5 702,355 1.6 Advance against equity - 1.7 12,787,354

Less:1.8 Good WILL - 1.9

- 1.10 Shortfall in Provisions required against Classified assets - 1.11 Deficit on account of Revaluation of AFS Investments - 1.12 - 1.13 12,787,354

2 Supplementary Capital 2.1

822,714 2.2 Revaluation reserves eligible upto 50% (see para 5 of part-I of Instructions) 122,521 2.3 Contingencies reserves 30,000 2.4 Foreign exchange translation reserves - 2.5 Undisclosed reserves (see para 5 (d) of part-I of Instructions) - 2.6

3,204,323 2.7 Total tier 2 Supplementary Capital (2.1 to 2.5) 4,179,558 2.8 Eligible tier 3 (As worked out in 3.9 below)

2.9 Total Supplementary Capital eligible for MCR 4,179,558

16,966,913

3 Risk Assets and Off-Balance Sheet Items 3.1 65,817,107

(To tally with total of Schedule B of part-IV)3.2 Adjusted value of non-funded risk exposure i.e. Off-Balance Sheet Items -

(To tally with total of Schedule C1 and C2 of part-IV) - 3.3 TOTAL CREDIT RISK-WEIGHTED ASSETS (3.1+3.2) 65,817,107 3.4 TOTAL MARKET RISK WEIGHTED ASSETS. To tally with total of

part-IV(D). - 3.5 MINIMUM CAPITAL REQUIRED (For credit risk)

(8% of Credit Risk-Weighted Assets – Item 3.3) 5,265,369 3.6 Tier 1 and Tier 2 Capital held (1.13 + 2.6) 16,966,913 3.7 Tier 3 Capital limit (See para 5 of part I of instructions)3.8 Actual Tier 3 Capital - 3.9 Eligible Tier 3 Capital (See para 5 of part I of instructions) -

CAPITAL ADEQUACY RATIO CREDIT RISK 25.78TOTAL CAPITAL ADEQUACY RATIO (2.9/3.3+3.4) 25.78

Fully Paid-up capital/Capital deposited with SBP Balance in Share Premium Account Reserve for Bonus Shares General Reserves as disclosed on the Balance Sheet Un-appropriated/ unremitted profits (net of accumulated losses, if any)

Sub-Total (1.1 to 1.6)

Investments in equity of subsidiary companies engaged in banking and financial activities (including insurance) not consolidated in the balance sheet

Sub-Total (1.8 to 1.11) TOTAL EQUITY (1.7- 1.12)

Freely available General Provisions or Reserves for loan losses-upto maximum of 1.25% of Risk Weighted assets (see para 5(b) of part-I of Instructions)

Subordinated debt –upto maximum of 50% of Total Equity –Item 1.12 (see para 5 of part-I of the Instructions)

(Maximum upto 100% of Total Equity-see para 5 of part-I of the Instructions)

TOTAL CAPITAL (1.13 + 2.8)

Adjusted value of funded risk assets i.e., On-Balance Sheet Items

B-RISK-WEIGHTED ASSETS-ON-BALANCE SHEET ITEMS

(Rupees in thousands)S.NO ITEMS BOOK VALUE RISK WEIGHTS % ADJUSTED VALUE

1 Cash (including approved Foreign Currencies and Gold bullions 395,962 0% - 2 Balances with Central Banks :

2.1 With State Bank of Pakistan 1,189,047 0% -

- 0% -

3

3.1 With Scheduled Banks in Pakistan 22,085 20% 4,417

3.2 With Banks outside Pakistan - 20% -

4 4.1 With Scheduled Banks 7,792,171 20% 1,558,434 4.2 Others - 100% -

5 Investments in :5.1 Federal Govt. Securities 7,907,986 0% - 5.2 Provincial Govt. Securities - 0% - 5.3 Shares of : a) Enterprises owned or controlled by Fed. Govt. - 0% - 50%* b) Private Sector Enterprises - 100%

a) Enterprises owned or controlled by Fed. Govt., -

i) Guaranteed by Federal Govt./ SBP - 0%

ii) Enterprises other then those having corporate status or being run on commercial basis. - 20%

iii) Enterprises having corporate status or being run on commercial basis. -

b) Private Sector Enterprises 339,924 100%

5.5 Other Investments (Certificates of Investment) 4,572,758 100% 4,572,758

6

6.1 Federal Government - 0%

6.2 Provincial Government - 0%

6.3 Loans guaranteed by Federal Govt./SBP - 0%

6.4 Enterprises Owned or Controlled by Federal Govt. -

i) Guaranteed by Federal Govt./ SBP - 0%

ii) Enterprises other then those having corporate status or being run on commercial basis. - 20% iii) Enterprises having corporate status or being run on commercial basis. -

6.5 Claims on or guaranteed by banks of international repute incorporated in G-10 countries - 20%

6.6 Private Sector Enterprises 100%

6.7 Loans fully secured by mortgage of residential or commercial property (Excluding industrial property) - 50%

6.8 Staff loans (Annexure-II) 1,841,334 0% - 6.9 Others (Annexure-II) 51,083,952 100% 51,083,952

7 Fixed Assets (Net of Accumulated Depreciation) 690,141 100% 690,141

8 Assets deducted from Capital : 8.1 Good will - 0%

- 0%

9 Other Assets 9.1 Taxation ( Net of Provisions) 1,355 0%9.2 Accrued Interest/Profit on Govt. Securities 103,768 0% - 9.3 Others (Annexure-III) 7,907,404 100% 7,907,404

Total 83,847,887 65,817,107

* 0%, 10%, 20% or 50% as may be prudently determined by the bank/DFI.

2.2 With Other Central Banks

Balances with other Banks (including Term Deposits /Certificates of Deposit):

Money at Call & Short notice in Pakistan

5.4 Debentures, Bonds, PTCs, TFCs, etc, of:

50% to 100% To be determined by

institution

Loans & Advances including Bills Purchased / Discounted (Less Cash Margin and Govt. Securities held) to :

50% to 100% To be determined by

institution

8.2 Unconsolidated Investment in subsidiary companies engaged in banking and financial activities (including insurance)

C(1)-WEIGHTED NON-FUNDED EXPOSURES/OFF-BALANCE SHEET ITEMS (Non-Market Related)

(Rupees in thousands)S.NO ITEMS

1 Loans Repayment Guarantees & Acceptances (Less Cash Margin) issued on behalf of :

100% 0%

1.2 Enterprises owned or controlled by the Federal Govt.. 100% 0-50%*100% 20%

1.4 Private Sector Enterprises 100% 100%1.5 Others ( to be specified) 100% 100%

2 100% 0%

3

issued on behalf of

50% 0%

3.2 Enterprises owned or controlled by the Federal Govt. 50% 0-50%*

50% 20%

3.4 Private Sector Enterprises 50% 100%3.5 Others (to be specified ) 50% 100%

4 Revolving Underwriting Commitments 50% 100%

5

Issued on behalf of :

50% 0%

5.2 Enterprises owned or controlled by the Federal Govt. 50% 0-50%*5.3 Banks of international repute incorporated in G-10 countries 50% 20%5.4 Private Sector Enterprises 50% 100%5.5 Others (to be specified) 50% 100%

6 Outstanding Foreign Exchange Contracts

6.1 With SBP 3% 0%6.2 With other banks 3% 20%

TOTAL

* 0%, 10%, 20% or 50% as may be prudently determined by the bank/DFI.

BOOK VALUE

Conversion Factor %

Equivalent Value

RISK WEIGHTS %

ADJUSTED VALUE

1.1 Federal / Provincial Govts. and SBP or guaranteed by the Federal Govt. / SBP

1.3. Banks of international repute incorporated in G-10 countries and domestic banks having at least rating of "A"

Purchase & Resale Agreements (Reverse Repo) other than those effected through SGL of SBP

Performance Bonds, Bid Bonds, Warranties & similar instruments (less Cash Margin & Govt. Securities held)

3.1 Federal / Provincial Govts. and SBP or guaranteed by the Federal Govt. / SBP.

3.3. Banks of international repute incorporated in G-10 countries and domestic banks having at least rating of "A"

Standby L/Cs & other Standby facilities with an original maturity of over one year and other L/Cs (less cash Margin & Govt. Securities held)

5.1 Federal / Provincial Govts., and SBP or guaranteed by the Federal Govt. / SBP.

C(2)-WEIGHTED NON-FUNDED EXPOSURES/OFF-BALANCE SHEET ITEMS (Market Related)

(Rupees in thousands)S.NO ITEMS

1 Outstanding foreign Exchange Contracts with SBP 0%

2 Outstanding foreign Exchange Contracts with other banks.

3 Cross currency Swaps

4 Forward Rate Agreement

5 Single Currency Interest Rate Swaps

Total

BOOK VALUE

Conversion Factor %

Equivalent Value

RISK WEIGH

TS %

ADJUSTED VALUE

SUMMARYD-CAPITAL CHARGE FOR MARKET RISK

(Amount in Thousands)

1. Capital Charge for Interest Rate Risk i. Specific Risk D1 (a) ii. General Market Risk D1 (b)

2. Capital Charge for Equity Exposure i. Specific Risk D2 (a) ii. General Market Risk D2 (b)

3. Capital Charge for Foreign Exchange Risk D3

4. Capital Charge for Position in options D4

5. Total Capital Charge for Market Risk

Market Risk weighted Assets (5 above*12.5)

Sum of D1 to D4

D1(a) : INTEREST RATE EXPOSURES (TRADING BOOK)

(Rs. in Thousands)DEBT SECURITIES AND OTHER DEBT RELATED DERIVATIVES-SPECIFIC RISK

Nature of items

Residual MaturityPositions 6 months Over 6 months Over 24 Total Total Specific Risk

or less to 24 months months Exposure Capital Charge

Long

Central Banks Short

Long

Short

3. Other Debt Securities. LongShort

Total (Items 2 & 3 above) LongShort

Risk Weight 0.25% 1.00% 1.60% 8.00%

SPECIFIC RISK CAPITAL CHARGE FOR DEBT

POSITION-LONG PLUS SHORT)

1. Debt Securities issued by Central Governments or

2. Debt Securities eligible for "Qualifying" category.

SECURITIES AND DEBT DERIVATIVES (ON GROSS

D 1(b).DEBT SECURITIES,DEBT DERIVATIVES AND OTHER INTEREST RATE DERIVATIVES-GENERAL MARKET RISK*.

(Rs in Thousands) Time Band Individual position Risk Weightaged

Zone Coupon 3% or more Coupon less than 3% Debt Securities & debt dervaties Interest rate dervaties Total Weight positionLong Short Long Short Long Short

1 1 month or less 1 month or less 0.00%1 to 3 months 1 to 3 months 0.20%3 to 6 months 3 to 6 months 0.40%6 to 12 months 6 to 12 months 0.70%

2 1 to 2 years 1.0 to 1.9 years 1.25%2 to 3 years 1.9 to 2.8 years 1.75%3 to 4 years 2.8 to 3.6 years 2.25%

3 4 to 5 years 3.6 to 4.3 years 2.75%5 to 7 years 4.3 to 5.7 years 3.25%7 to 10 years 5.7 to 7.3 years 4.50%10 to 15 years 7.3 to 9.3 years 5.25%15 to 20 years 9.3 to 10.6 years 6.00%Over 20 years 10.6 to 12 years 8.00%

12 to 20 years 12.50%Over 20 years

Total OVERALL NET OPEN POSITION

TotalCalculation Vertical Disallowance Horizonatal Disallowances in Horizontal Disallowances between Overall net General

open postion MarketRisk charge

Zone-1 Zone-2 Zone-3 Zone-1&2 Zone-2&3 Zone-1&3General Market Risk

Capital ChargeTotal Capital Charge for Interest Rate Risk (a+b)* Separate Forms to be used fro differenet currencies

D2-EQUITY EXPOSURES (Trading Book)(Rs in Thousands)

Inside Pakistan Outside Pakistan* TotalGross (Long plus Short) PositionsRisk Weight 8% 8%a. Specific Risk ChargeNet Long/Short PositionRisk Weight 8% 8%b. General Market Risk Capital ChargeTotal Capital Charge for Equity Exposures (a+b)

* Report position on a market-by Market basis i.e. separate column for each national market to be used

(Rs in Thousands)Currency Position in F/C PKR Rate Position in PKR

Overall Long/Short PositionCapital Charge (8% X Net Open Position)

D-3 FOREIGN EXCHANGE RISK

D4-MARKET RISK CAPITAL CHARGE FOR OPTIONS

LONG OPTIONS WITH RELATED CHASH POSITION.Underlying of the Option Specific Risk Charge General Market Risk Charge Long Cash & Long PutShort Cash & Long Call Total

Foreign Exchange 8%

LONG CALL or LONG PUT OPTIONSUnderlying of the Option Specific Risk Charge General Market Risk Charge Long Put Long Call Total

Foreign Exchange 8%

ANNEXURE-I

ZARAI TARAQIATI BANK LIMITED

DETAIL OF INVESTMENT IN PRIVATE SECTOR ENTERPRISES AS AT 31 DECEMBER 2005

(Rupees'000)S.NO ITEMS AMOUNT

1 QUOTED INVESTMENTS

Nestle Milk Pak Limited 89,297 Uqab Breeding Farms Limited 585 Mubarik Dairies Limited 412

90,294 UN QUOTED INVESTMENTSNational Commodity Exchange Limited 5,000

95,294 Add: Surplus on revaluation of securities 245,043 Less Provision for Diminution in value of Investments (413)Total Investment in Quoted/Un Quoted Securities 339,924

ANNEXURE-II


DETAIL OF LOAN AND ADVANCES AS AT 31 DECEMBER 2005


1 LOANS

Loan under Pre-Islamic banking System(PIBS) 1,222,429 Loan under Islamic banking System(IBS) 61,676,439 62,898,868 Less: Provision for bad and doubtful debts 11,814,916 Unrealized Mark-up - Total Loans 51,083,952

2 ADVANCES

Advances under Pre-Islamic banking System(PIBS) 1,018 Advance under Islamic banking System(IBS) 1,844,640 1,845,658 Less:Provision against Advance to Ex-Employees 4,324 Total Advances 1,841,334 Total Loans and advances 52,925,286

ANNEXURE-III


DETAIL OF OTHER ASSETS AS AT 31 DECEMBER 2005


Income/ Mark-up accrued on loans and advances 2,085,487 Income/ Mark-up accrued on investments 178,026 Advances, deposits, advance rent and other prepayments 63,902 Stationery and stamps on hand 10,970 Tax recoverable 308,053 Releif Packages 939,468 Preliminary Expenses - Branch adjustment account 792,819 Receivable from defined benefit plans 1,936,411 Stock in hand 14,640 Assets relating to Bangladesh 1,343,235 Receivable from Federal Government against Golden Handshake Scheme 2,643 Receivable from Trust Funds against Golden Handshake Scheme 117,901 Receivable from benevolent trust fund against GHSS 17,250 Suspense Account 3,848 Assets acquired in satisfaction of bank dues 209,574 Deferred tax assets 1,829 Others 15,208

8,041,264 Less:Provsion held against other assets (28,737)

8,012,527

25

42.2 Segment by sector (Current Year)Contingencies and

Advances Deposits Commitments Rupees Percent Rupees Percent Rupees Percent in '000 in '000 in '000

Public/ GovernmentPrivate

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