Annual Report 2020

VISION STATEMENT
TO BE OUR CUSTOMERS’ MOST CONVENIENT

AND TRUSTED BANK
MISSION STATEMENT
TO MAKE BANKING SAFE, SIMPLE, AND PLEASANT

CORPORATE INFORMATION
Board of Abbas D. Habib Chairman

Directors Anwar Haji Karim
Farhana Mowjee Khan
Syed Mazhar Abbas
Qumail R. Habib Executive Director
Safar Ali Lakhani
Syed Hasan Ali Bukhari
Murtaza H. Habib
Arshad Nasar
Adnan Afridi
Mansoor Ali Khan Chief Executive
Audit Safar Ali Lakhani Chairman

Committee Syed Mazhar Abbas Member
Anwar Haji Karim Member
Syed Hasan Ali Bukhari Member
Arshad Nasar Member
Human Resource Syed Hasan Ali Bukhari Chairman

& Remuneration Syed Mazhar Abbas Member
Committee Abbas D. Habib Member
Farhana Mowjee Khan Member
Arshad Nasar Member
Credit Risk Syed Mazhar Abbas Chairman

Management Safar Ali Lakhani Member
Committee Qumail R. Habib Member
Syed Hasan Ali Bukhari Member
Murtaza H. Habib Member
Risk Management Adnan Afridi Chairman

Farhana Mowjee Khan Member
Anwar Haji Karim Member
Safar Ali Lakhani Member
IT Abbas D. Habib Chairman

Arshad Nasar Member
Syed Mazhar Abbas Member
Mansoor Ali Khan Member
IFRS 9 Syed Hasan Ali Bukhari Chairman
Committee Arshad Nasar Member
Qumail R. Habib Member
Company
Secretary Mohammad Taqi Lakhani
Chief Financial
Officer Ashar Husain
Statutory EY Ford Rhodes

Auditors Chartered Accountants
Legal LMA Ebrahim Hosain

Advisor Barristers, Advocates & Corporate Legal Consultants
Registered 126-C, Old Bahawalpur Road,

Office Multan
Principal 2nd Floor, Mackinnons Building,

Office I.I. Chundrigar Road,
Karachi
Share CDC Share Registrar Services Limited

Registrar CDC House 99-B, Block-B, S.M.C.H.S.
Main Shahrah-e-Faisal, Karachi-74400.
Website www.bankalhabib.com
CONTENTS
History 1
Review Report by the Chairman 6
Directors' Report 7
Corporate Governance 14
Statement of Compliance with Listed Companies (Code of Corporate Governance)

Regulations, 2019 27
Independent Auditors’ Review Report on the Statement of Compliance contained in

Listed Companies (Code of Corporate Governance) Regulations, 2019 30
Statement on Internal Controls 31
Independent Auditors’ Report to the Members 32
Unconsolidated Statement of Financial Position 36
Unconsolidated Profit and Loss Account 37
Unconsolidated Statement of Comprehensive Income 38
Unconsolidated Statement of Changes in Equity 39
Unconsolidated Cash Flow Statement 40
Notes to the Unconsolidated Financial Statements 41
Disclosure on Complaint Handling 127
Report of Shariah Board 128
Notice of Annual General Meeting 129
Pattern of Shareholding 133
Consolidated Financial Statements 136
238
248
249
Branch Network 250
E - Dividend Bank Mandate Form
Form of Proxy
1
HIGHLIGHTS YEAR 2020
Total
Assets Deposits
Rs
PKR 1.52 Tr PKR 1.10 Tr
Profit Awards
before tax Top 25 Companies Award
PKR 28.6 Bn (2019) by PSX
Total Domestic ATM

Network Network
850 1,000+
Branches & Sub-Branches
Total Cities Total Foreign Branches

Served and Representative Offices
334 7
in Pakistan Countries Across the Globe
2
PERFORMANCE 1992-2020
Deposits
1200
1099.7
1100
1000
903.7
900
796.9
800
700 692.6
600 584.2
516.2
500
446.4
400 386.2
340.4
Rs. in Billion
302.1
300
249.8
200 189.3
144.4
114.8
100 75.8 91.4
34.2 46.2 62.2
1.7 13.4 24.7
1992 1997 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Profit Before Tax 28.6

30
28
26
24
22
19.0
20
18
14.3
16 13.2
13.9
12.3
14
12 9.9
8.9
Rs. in Billion
10 7.2 7.5
8 5.7
4.5
6 3.6
2.7 3.1
4 1.5 2.0
0.6 0.6 1.0
0.05 0.4
2
1992 1997 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
3
PERFORMANCE 1992-2020
Shareholders' Equity excluding surplus on revaluation of assets
69.6
70
60
55.5
50
46.3
40.4
40
35.7
31.7
30 27.6
23.2
Rs. in Billion
21.1
20 17.7
14.7
12.3
10 10.0
8.0
6.2
4.7
1.8 2.7 3.3
0.3 0.9 1.5
1992 1997 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Branches / Sub - Branches 850

900
755
800 721
650
700
605
528
600
459
500 416
390
351
400
302
Number
255
300 225
152 175
200
100
70 74
41 57
100 27
6
1992 1997 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
4
Performance 1992-2020 (Rupees in Million)
Years Assets Deposits Advances Investments Shareholders’ Equity Profit Profit Cash Stock
excluding surplus on Before Tax After Tax Dividend Dividend
revaluation of assets
1992 2,727 1,679 607 1,060 325 51 25 –0 –0
1993 5,590 3,372 1,647 1,907 421 151 96 –0 –0
1994 8,346 5,200 3,067 1,932 528 224 107 –0 –0
1995 11,395 6,353 4,254 2,055 611 255 127 15.0% –0
1996 11,248 8,573 5,664 2,489 718 341 153 15.0% 10.0%
1997 16,515 13,445 7,372 7,440 851 442 199 20.0% 15.0%
1998 16,897 13,226 7,564 6,999 1,016 445 203 10.0% 32.0%
1999 19,870 14,113 10,925 4,601 1,169 373 153 –0 20.0%
2000 24,226 17,823 14,722 1,289 1,322 403 153 –0 20.0%
2001 29,025 24,697 15,902 5,664 1,532 551 246 5.0% 20.0%
2002 49,437 34,240 23,775 18,831 1,822 620 290 –0 25.0%
2003 58,066 46,178 35,232 14,109 2,726 1,513 1,012 10.0% 25.0%
2004 77,436 62,171 47,367 14,414 3,274 1,039 541 –0 35.0%
2005 91,502 75,796 55,304 19,758 4,746 2,022 1,464 15.0% 40.0%
2006 114,998 91,420 70,796 21,023 6,186 2,689 1,761 15.0% 40.0%
2007 141,234 114,819 79,224 35,287 8,014 3,052 2,211 15.0% 30.0%
2008 177,324 144,390 100,197 48,234 9,967 3,579 2,425 12.5% 27.5%
2009 249,807 189,280 105,985 111,018 12,287 4,512 2,856 20.0% 20.0%
2010 301,552 249,774 125,773 137,168 14,706 5,656 3,602 20.0% 20.0%
2011 384,282 302,099 114,872 222,959 17,723 7,155 4,533 25.0% 15.0%
2012 453,106 340,393 147,869 249,754 21,058 8,878 5,455 30.0% –0
2013 460,727 386,161 167,579 239,753 23,227 7,513 5,155 20.0% 10.0%
2014 579,394 446,409 181,737 331,423 27,555 9,917 6,349 30.0% –0
2015 639,973 516,213 207,289 356,649 31,698 12,332 7,405 35.0% –0
2016 768,018 584,172 261,440 405,028 35,673 13,164 8,119 35.0% –0
2017 944,134 692,576 339,833 476,125 40,409 13,890 8,501 30.0% –0
2018 1,048,239 796,901 478,215 414,605 46,283 14,264 8,418 25.0% –0
5
2019 1,298,682 903,703 488,669 586,141 55,489 19,011 11,169 35.0% –0
2020 1,522,091 1,099,686 510,252 764,944 69,570 28,581 17,812 45.0% –0
REVIEW REPORT BY THE CHAIRMAN
ON THE OVERALL PERFORMANCE OF THE BOARD
Alhamdolillah, I am pleased to present a report on the overall performance of the Board and effectiveness
of the role played by the Board in achieving the Bank’s objectives.
Powers for management and control of affairs of the Bank rest with the Board of Directors, except for powers
expressly required to be exercised by shareholders in general meeting. The Directors delegate day-to-day
operations of the Bank to the Management, but such delegation remains subject to the control and direction
of the Board, to the best of their knowledge. The Directors are required to carry out their fiduciary duties
and exercise their independent judgement to the best of their abilities in the interests of the Bank.
The Board has approved a formal process for its performance evaluation. The Bank has adopted In-House
Approach and Quantitative Technique with scored questionnaires for Board evaluation.
Overall objective of performance evaluation of the Board is to ensure sustainable growth and development
of the Bank, with focus on the following areas:
(a) Board Composition and Functioning

(b) Corporate Strategy and Business Plan
(c) Monitoring of Bank Performance
(d) Internal Audit and Internal Control
(e) Risk Management and Compliance
(f) Disclosure of Material Information
(g) Ideas for Improvement
Accordingly, performance evaluation of the Board was conducted in 2020 as per mechanism approved by
the Board. It was concluded that the overall performance of the Board, including effectiveness of the role
played by the Board in achieving the Bank’s objectives, was found to be generally satisfactory.
Abbas D. Habib
Chairman
Karachi: January 27, 2021 Board of Directors
6
DIRECTORS' REPORT
Alhamdolillah, the Directors of Bank AL Habib Limited are pleased to present the Thirtieth Annual Report
together with the audited financial statements of the Bank for the year ended December 31, 2020.
The operating results and appropriations, as recommended by the Board, are given below:
(Rupees in '000)
Profit for the year before tax 28,581,064
Taxation (10,769,528)
Profit for the year after tax 17,811,536
Unappropriated profit brought forward 27,907,758
Transfer from surplus on revaluation of fixed assets – net of tax 104,484
Other comprehensive income – net of tax (128,275)
27,883,967
Profit available for appropriations 45,695,503
Appropriations:
Transfer to Statutory Reserve (1,781,154)
Cash dividend – 2019 (3,889,988)
(5,671,142)
Unappropriated profit carried forward 40,024,361
Basic / Diluted earnings per share – after tax Rs. 16.03
For the year ended December 31, 2020, the Directors propose a cash dividend of 45%, i.e., Rs. 4.50 per
share.
Performance Review
Alhamdolillah, the performance of your Bank continued to be satisfactory during the year. Deposits rose to
Rs. 1,099.7 billion against Rs. 903.7 billion a year earlier, while advances increased to Rs. 510.3 billion from
Rs. 488.7 billion. Foreign Trade Business handled by the Bank during the year was Rs. 1,704.6 billion. Profit
before tax for the year was Rs. 28.6 billion as compared to Rs.19.0 billion last year, while profit after tax was
Rs. 17.8 billion against Rs. 11.2 billion last year.
During the year, the Bank opened 95 new branches and converted 5 sub-branches into full-fledged branches,
bringing our network to 854, which comprises 818 branches (including 106 Islamic Banking Branches and
3 Overseas Branches, one each in Bahrain, Malaysia, and Seychelles), 32 sub-branches, and 4 Representative
Offices, one each in Dubai, Istanbul, Beijing, and Nairobi. The Bank will continue to expand its network in
Pakistan and abroad.
Investment in AL Habib Asset Management Limited (AHAML)

(Formerly Habib Asset Management Limited)
We are pleased to inform you that during the year your Bank has acquired remaining 70% shares of AL
Habib Asset Management Limited (AHAML) in addition to 30% shares by us earlier. As a result of this
acquisition, AHAML has become a wholly owned subsidiary of the Bank. Further, the Bank has injected
additional equity of Rs. 450 million in AHAML.
7
AWARDS AND RECOGNITION
Top 25 Companies Award for the Year 2019
By the Grace of Allah, we are pleased to advise that your Bank has been selected for “Top 25 Companies
Award” for the year 2019 by the Pakistan Stock Exchange (PSX). Criteria for the award include capital
efficiency, profitability, free-float of shares, transparency, corporate governance & investors relation, and
compliance with listing of companies and securities regulations. Alhamdolillah, this is the eighth time that
the Bank has been selected for this award.
COMPOSITION OF BOARD OF DIRECTORS

Total number of Directors are as follows:
• Male 09
• Female 01
10
The composition of the Board is as follows:

Independent Directors Mr. Arshad Nasar
Mr. Safar Ali Lakhani
Mr. Abbas D. Habib
Mr. Anwar Haji Karim
Non-Executive Directors Syed Mazhar Abbas
Mr. Murtaza H. Habib
Mr. Adnan Afridi
Executive Director Mr. Qumail R. Habib
Female Director-Non Executive Ms. Farhana Mowjee Khan
Mr. Mansoor Ali Khan is the Chief Executive of the Bank. Being CEO of the Bank, he is deemed to be a
Director.
Board Meetings
During the year, four meetings of the Board were held and the attendance of each Director was as follows:
Name of Director Meetings Held Meetings Attended
Mr. Abbas D. Habib 4 4
Mr. Anwar Haji Karim 4 4
Ms. Farhana Mowjee Khan 4 4
Syed Mazhar Abbas 4 4
Mr. Qumail R. Habib 4 4
Mr. Safar Ali Lakhani 4 4
Syed Hasan Ali Bukhari 4 4
Mr. Murtaza H. Habib 4 4
Mr. Arshad Nasar 4 4
Mr. Adnan Afridi 4 4
Mr. Mansoor Ali Khan, Chief Executive 4 4
8
Committees Meetings
The Listed Companies (Code of Corporate Governance) Regulations, 2019 requires the Bank to disclose
the composition of all Committees of the Board, viz. Audit Committee, Human Resource & Remuneration
Committee, Credit Risk Management Committee, Risk Management Committee, IT Committee, and IFRS
9 Committee.
During the year, seven meetings of the Audit Committee, and three meetings of Human Resource &
Remuneration Committee, Credit Risk Management Committee, Risk Management Committee, and IT
Committee, and two meetings of IFRS 9 Committee were held, and the attendance of members was as
follows:
Audit Committee Human Resource & Remuneration Committee
Name of Director Meetings Meetings Name of Director Meetings Meetings
Held Attended Held Attended
Mr. Safar Ali Lakhani, Syed Hasan Ali Bukhari,
Chairman 7 7 Chairman 3 3
Syed Mazhar Abbas 7 6 Syed Mazhar Abbas 3 3
Mr. Anwar Haji Karim 7 7 Mr. Abbas D. Habib 3 3
Syed Hasan Ali Bukhari 7 7 Ms. Farhana Mowjee Khan 3 3
Mr. Arshad Nasar 7 7 Mr. Arshad Nasar 3 3
Credit Risk Management Committee Risk Management Committee

Syed Mazhar Abbas, Mr. Adnan Afridi,
Mr. Safar Ali Lakhani 3 2 Mr. Qumail R. Habib 3 3
Mr. Qumail R. Habib 3 3 Ms. Farhana Mowjee Khan 3 3
Syed Hasan Ali Bukhari 3 3 Mr. Anwar Haji Karim 3 2
Mr. Murtaza H. Habib 3 3 Mr. Safar Ali Lakhani 3 3
IT Committee IFRS 9 Committee

Mr. Abbas D. Habib, Syed Hasan Ali Bukhari,
Mr. Qumail R. Habib 3 3 Mr. Arshad Nasar 2 2
Mr. Arshad Nasar 3 3 Mr. Qumail R. Habib 2 2
Syed Mazhar Abbas 3 3
Mr. Mansoor Ali Khan 3 3
Directors Training Programme
Directors have either attended the required training in prior years or stand exempted, as per criteria mentioned
in the Code.
9
Directors’ Remuneration Policy
The shareholders of the Bank have approved a ‘Policy & Procedure for Fixing Remuneration of Directors’,
which states that:
• The remuneration of Non-Executive Directors for attending Board and Committee meetings shall be
decided by the Board within the maximum limit as specified by the State Bank of Pakistan from time to
time.
• The Chairman of the Board is also entitled to have 20% additional remuneration fee of the remuneration
set for him for attending Board and its Committee meeting considering the Chairman’s vast knowledge,
experience, insight, sense of judgement and market contacts. The Chairman of the Board shall also
monitor the performance of the Bank’s management and implementation of the Business Plan of the
Bank on behalf of the Board.
• A full time Director shall receive such remuneration as the members (shareholders) may fix.
• The Chairman of the Board (in case of individual Directors) and Independent Directors with the help of
other Directors (in case of Chairman of the Board) shall decide regarding reconsideration in remuneration
of underperforming Director/Chairman if the overall performance of the Director/Chairman consistently
remains in “Needs Improvement” category for the two consecutive years as per Annual Performance
Evaluation of the Board members.
Credit Rating
Alhamdollilah, Pakistan Credit Rating Agency Limited (PACRA) has maintained the Bank's long term and
short term entity ratings at AA+ (Double A plus) and A1+ (A One plus), respectively. The ratings of our
unsecured, subordinated Term Finance Certificates (TFCs) are AA (Double A) for TFC-2016 and TFC-2018,
and AA- (Double A minus) for TFC-2017 (perpetual). These ratings denote a very low expectation of credit
risk emanating from a very strong capacity for timely payment of financial commitments.
Future Outlook
At the beginning of the year 2020, the economy of Pakistan was moving progressively towards stabilization
as a result of prudent monetary and fiscal policies. However, just when this progress was under way, the
global spread of COVID-19 affect our country, causing health hazards for the general population, and
disrupting economic activities of the country. The GDP of the country contracted for the first time since 1952.
Alhamdolillah, timely and effective steps taken by the Government and the State Bank of Pakistan provided
significant relief to businesses and individuals, mitigated the effects of COVID-19 to a large extent in Pakistan
when compared with several other countries. Foreign investment and workers’ remittances have continued
to rise. Foreign reserves have been maintained at a level higher than before, inflation has remained under
control, and bank deposits have recorded the highest growth in five years. Major initiatives like the State
Bank’s Temporary Economic Refinance Facility, which provides subsidized financing for industrial investment,
the Government’s focus on housing and construction sectors, and availability of COVID-19 vaccine are
expected to help the economy recover. We are confident that, adhering to our usual prudent policies, the
Bank will InshaAllah continue to grow and progress.
Auditors
The present auditors EY Ford Rhodes, Chartered Accountants, retire and offer themselves for reappointment.
As suggested by the Audit Committee, the Board of Directors has recommended their reappointment as
auditors of the Bank for the year ending December 31, 2021, at a fee to be mutually agreed.
10
Risk Management Framework
The Bank always had a risk management framework commensurate with the size of the Bank and the nature
of its business. This framework has developed over the years and continues to be refined and improved. A
key guiding principle of the Bank is to treat the depositors’ money as a trust which must be protected.
Therefore, the Bank aims to take business risks in a prudent manner, guided by a conservative outlook.
Salient features of the Bank’s risk management framework are summarized below:
• Credit risk is managed through the credit policies approved by the Board; a well-defined credit approval
mechanism; use of internal risk ratings; prescribed documentation requirements; post-disbursement
administration, review, and monitoring of credit facilities; and continuous assessment of credit worthiness
of counterparties. The Bank has also established a mechanism for independent, post-disbursement
review of large credit risk exposures. Decisions regarding the credit portfolio are taken mainly by the
Central Credit Committee. Credit Risk Management Committee of the Board provides overall guidance
in managing the Bank’s credit risk.
• Market risk is managed through the market risk policy approved by the Board; approval of counterparty
limits and dealer limits; treasury & investment policy; and regular review and monitoring of the investment
portfolio by the Bank’s Asset Liability Management Committee (ALCO). In addition, the liquidity risk policy
provides guidance in managing the liquidity position of the Bank, which is monitored on daily basis by
the Treasury and the Middle Office. Decisions regarding the investment portfolio are taken mainly by
ALCO. Risk Management Committee of the Board provides overall guidance in managing the Bank’s
market and liquidity risks, capital adequacy, and integrated risk management (also known as enterprise
risk management).
• Operational risk is managed through the audit policy, the operational risk policy, the compliance policy
& programme, IT and IT security policies, human resource policy, consumer protection framework, and
outsourcing policy approved by the Board, along with the fraud prevention policy; consumer grievance
handling policy; operational manuals and procedures issued from time to time; a system of internal
controls and dual authorization for important transactions and safe-keeping; a Business Continuity Plan,
including a Disaster Recovery Plan for I.T.; and regular audit of the branches and divisions. Audit
Committee of the Board provides overall guidance in managing the Bank’s operational risk.
In addition, Risk Management Policy, Risk Tolerance Statement, and Country Risk Management Policy
provide further guidance on managing the potential risk exposures of the Bank.
In order to comply with SBP’s guidelines on risk management, the Bank has established a separate Risk
Management Division, including a Middle Office, that independently monitors and analyses the risks
inherent in Treasury operations. The steps taken by the Division include: sensitivity testing of Government
Securities portfolio; computation of portfolio duration and modified duration; analysis of maturity mismatch
and rate sensitive assets and liabilities, analysis of forward foreign exchange gap positions; more detailed
reporting of TFCs and equities portfolios; development of improved procedures for dealing in equities
and settlements; monitoring of off-market foreign exchange rates and foreign exchange earnings; collecting
operational loss data, developing Key Risk Indicators; identifying Top Ten Risks of the Bank; conducting
risk evaluation of products and processes; and establishment of a mechanism for independent,
post-disbursement review of large credit risk exposures. Assessment of enterprise-wide integrated risk
profile of the Bank is carried out, using the Basel Framework, Key Risk Indicators, Internal Capital
Adequacy Assessment Process, Stress Testing and Recovery Plan.
Corporate Social Responsibility (CSR)
Your Bank is fully committed to the concept of Corporate Social Responsibility and fulfills this responsibility
by engaging in a wide range of activities which include:
• corporate philanthropy amounting to Rs. 543.59 million by way of donations & charities during the year
for social and educational development and welfare of people;
11
• energy conservation, environmental protection, and occupational safety and health by restricting
unnecessary lighting, implementing tobacco control law and “No Smoking Zone”, and providing a safe
and healthy work environment;
• business ethics and anti-corruption measures, requiring all staff members to comply with the Bank’s
“Code of Conduct” and “Anti-Bribery And Corruption Policy”.
• consumer protection measures, requiring disclosure of the schedule of charges and terms and conditions
that apply to the Bank’s products and services;
• amicable staff relations, recognition of merit and performance, and on-going opportunities for learning
and growth of staff, both on-the-job and through formal training programmes;
• employment through a transparent procedure, without discrimination on the basis of religion, caste,
language, etc., including employment of special persons;
• expansion of the Bank’s branch network to rural areas, which helps in rural development;
• contribution to the national exchequer by the Bank by way of direct taxes of about Rs. 12.10 billion paid
to the Government of Pakistan during the year; furthermore, an additional amount of over Rs. 17.25
billion was deducted/collected by the Bank on account of withholding taxes, federal excise duties and
sales tax on services, and paid to the Government of Pakistan/Provincial Governments.
• During the last five years, the Bank has disbursed Rs. 46.31 million under the Prime Minister’s Youth
Business Loan programme.
Statement on Corporate and Financial Reporting
1. The financial statements, prepared by the Bank, present fairly its state of affairs, the result of its operations,
cash flows and changes in equity.
2. Proper books of account have been maintained by the Bank.
3. Appropriate accounting policies have been consistently applied in preparation of the financial statements;
changes, if any, have been adequately disclosed and accounting estimates are based on reasonable
and prudent judgment.
4. International Financial Reporting Standards and Islamic Financial Accounting Standards, as applicable
in Pakistan, have been followed in preparation of financial statements and departure therefrom, if any,
has been adequately disclosed.
5. The system of internal controls is sound in design and has been effectively implemented and monitored.
The Board’s endorsement of the management’s evaluation related to Internal Control over Financial
Reporting, along with endorsement of overall Internal Controls is given on page 31.
6. Going concern assumption is appropriate. There is no identifiable material uncertainty that raises doubt
about the ability of the Bank to continue as a going concern.
7. Key operating and financial data for last six years are summarized below:
(Rupees in million)
2020 2019 2018 2017 2016 2015
Total customer deposits 1,099,686 903,703 796,901 692,576 584,172 516,213

Total advances 510,252 488,669 478,215 339,833 261,440 207,289
Profit before tax 28,581 19,011 14,264 13,890 13,164 12,332
Profit after tax 17,812 11,169 8,418 8,501 8,119 7,405
Shareholders' Equity 69,570 55,489 46,283 40,409 35,673 31,698
Earnings per share (Rs.) 16.03 10.05 7.57 7.65 7.31 6.66
Cash Dividend (%) 45 35 25 30 35 35
12
8. Value of investments of Provident Fund and Gratuity Fund Schemes based on latest audited financial
statements as at December 31, 2019 was as follows:
(Rupees in '000)
Provident Fund 7,441,961
Gratuity Fund 2,701,041
9. The pattern of shareholding and additional information regarding pattern of shareholding is given on
pages 133, 134 & 135.
10. The Board has approved a formal process for its performance evaluation. The Bank has adopted In-House
Approach and Quantitative Technique with scored questionnaires for Board evaluation. Scope of Board
evaluation covers evaluation of the full Board, Individual Directors, Board Committees, the Chairman,
and the Chief Executive. Consolidated results/findings will be discussed with the relevant parties. Any
areas of improvement identified during the evaluation will be noted for appropriate action. Evaluation
process for each calendar year will be completed latest by March 31 of the next year. Additionally,
performance evaluation of the Board will be conducted by an external independent evaluator at least
every three years. We have appointed Pakistan Institute of Corporate Governance (PICG) for external
independent evaluation of the Board.
There is no conflict of interest between the experts hired by the Bank and any Board member or Key
Executive.
11. No trade in the shares of the Bank was carried out by the Directors, CEO, CFO, Head of Internal Audit,
Company Secretary, and Executives and their spouses and minor children, during the year, except the
following:
• 10,299 shares sold by three Executives.

• 9,299 shares purchased by three Executives.
For the purpose of this disclosure, the definition of “Executive” includes Assistant General Managers and
above, in addition to officials already mentioned in the Rule Book of the Pakistan Stock Exchange
regulations.
General
We wish to thank our customers, for their continued trust and support, local and foreign correspondents for
their confidence and cooperation, and the State Bank of Pakistan for their guidance. We also thank all our
AL Habib team members for their sincerity, dedication and hard work.
MANSOOR ALI KHAN ABBAS D. HABIB

Chief Executive Chairman
Board of Directors
Karachi: January 27, 2021
13
CORPORATE GOVERNANCE
Corporate Governance Culture
Habib Family has been engaged in the business of banking for over 70 years, and is well known for commitment
to its traditional values of integrity, prudence, and trust. We are committed to continue all our business
activities as per highest ethical and professional standards and practices. We ensure good corporate
governance culture by remaining true to our values and by following the Prudential Regulations issued by the
State Bank of Pakistan and the Code of Corporate Governance Regulations issued by the Securities &
Exchange Commission of Pakistan. Board of Directors of the Bank comprises reputable businessmen,
bankers, professional managers, and chartered accountants, representing a range of industries. They carry
out their fiduciary duties to protect the interests of shareholders, depositors, and creditors, and exercise their
independent judgement in the best interests of the Bank. We have clearly defined the responsibilities of the
Board, Chief Executive, and Senior Management.
Nomination and Selection of Board Members
There is a defined procedure for election of Directors in Companies Act, 2017 and the Bank’s Articles of
Association which has been strictly followed by the Bank. Accordingly, the Bank announces the schedule of
election of Directors in the year when the election is due. Any person desirous to become a Director can
submit his/her nomination papers as per the requirements of the Companies Act, 2017 and regulations of
State Bank of Pakistan. The person elected by the shareholders shall hold the office of Director, subject to
Fit and Proper Criteria and approval of the State Bank of Pakistan. Any casual vacancy on the Board is filled
up by the Directors, subject to applicable regulations.
Profile of Board Members
1. Mr. Abbas D. Habib – Chairman
Mr. Abbas D. Habib, Founder Member & Chairman of the Board, has over 50 years’ commercial, industrial
and banking experience in the domestic and international markets. He is a Fellow Member of the Institute
of Bankers, Pakistan. He has held senior management positions with various organizations of the Habib
Group and gained international banking experience while working with Habibsons Bank Limited, London,
as Regional Director and later as Executive Director. Upon the inception of Bank AL Habib Limited in 1991,
he became its Director and Joint Managing Director. He assumed responsibilities as Managing Director
and Chief Executive of the Bank on May 8, 1994 and served in that position till October 31, 2016. He has
been on the Board of Habib Insurance Company Limited since June 13, 2000. He became Chairman of
Bank AL Habib Limited on November 1, 2016. He is also the Chairman of the Board of AL Habib Asset
Management Limited (formerly Habib Asset Management Limited), a wholly owned subsidiary of the Bank
since August 11, 2020.
2. Mr. Anwar Haji Karim
Mr. Anwar Haji Karim holds a Bachelor’s degree in commerce and has over 40 years’ experience in
business and industry. He belongs to the Al Karam Group, a reputable business group of Pakistan, with
interests in textiles. He is Chief Executive of Al Karam Textile Mills (Private) Limited and Iqbal Textile
Mills (Private) Limited. He is a Founder Member of the Board of Directors of the Bank since its inception
in 1991.
3. Ms. Farhana Mowjee Khan
Ms. Farhana Mowjee Khan, Director of Razaque Steels (Private) Limited, has over 30 years’ experience
in the local and international environment. She has also served as Managing Director of Razaque Steels
(Private) Limited from 1994 to 2006. She graduated from University College London, UK and is a qualified
Chartered Accountant from Institute of Chartered Accountants in England and Wales, UK. Ms. Farhana
Mowjee Khan is also a director of Shabbir Tiles and Ceramics Limited. She joined the Board of Bank
AL Habib Limited in April 2019.
14
4. Syed Mazhar Abbas
Syed Mazhar Abbas studied at American University of Beirut. He has over 45 years’ experience in
commercial banking, including senior executive positions at Habib Bank Limited and Bank AL Habib
Limited. He has had extensive exposure to international banking in several countries including Bahrain,
Lebanon, France, UK, Egypt, and Hong Kong. He joined Bank AL Habib Limited in 1992 as a senior
executive and became its Director in 2000.
5. Mr. Qumail R. Habib – Executive Director
Mr. Qumail R. Habib is a graduate of the University of California in Business Economics and has over
25 years’ commercial, industrial, and banking experience. He is a Founder Member of the Board and
Executive Director of the Bank since its inception in 1991. Prior to that, he was Resident Director of Al
Ghazi Tractors Limited. He has been actively involved with the operations of the Bank since its inception.
He is responsible for enhanced oversight on Enterprise Risk and Corporate Strategy, and for monitoring
Fraud Investigation Unit. He has been on the Board of Habib Insurance Company Limited since October
03, 2017.
6. Mr. Safar Ali Lakhani
Mr. Safar A. Lakhani holds a Bachelor’s degree in Commerce and is also a Law graduate. He is a
Diplomaed Associate of the Institute of Bankers, Pakistan. He has extensive experience of working in
banks in senior positions. He served in Habib Bank Limited as Senior Executive Vice President & General
Manager for East & Pacific Region, based in Singapore. Also served as the founder President of Soneri
Bank from 1991 until his retirement in 2010. He has been associated with Bank AL Habib Limited as
advisor/consultant during the years 2011-2013 and was appointed as a Director in January 2014.
7. Syed Hasan Ali Bukhari
Syed Hasan Ali Bukhari is a Commerce graduate and a Fellow of the Institute of Chartered Accountant
of Pakistan (FCA). Mr. Bukhari has also attended General Management Course at Henley Management
College, England. He has vast experience in a professional accounting firm and the shipping industry.
His corporate experience span over 36 years in various positions with Mackinnon Mackenzie & Co. of
Pakistan, until his retirement as Chief Executive & Managing Director of the company in 2010. Mr. Bukhari
is Advisor to Chairman of Hilton Pharma (Private) Limited since 2011. Mr. Bukhari has served as a Board
member of Karachi Port Trust and Pakistan Institute of Corporate Governance, and he is currently a
Director of Pakistan Oxygen Limited, Quick Food Industries (Private) Limited, and Pakistan Gum &
Chemicals Limited. He was appointed as a Director of Bank AL Habib Limited in June 2014.
8. Mr. Murtaza H. Habib
Mr. Murtaza H. Habib holds a Bachelor’s degree in finance from Texas A&M University, USA, and has
over 25 years’ experience in business and industry. He is currently Executive Director of Habib Sugar
Mills, and also holds Directorships in several other companies of Habib Group. He is actively involved
with social welfare activities of the Group. He is a Founder Member of the Board of Directors of the Bank
since its inception in 1991, except for a gap of one year.
9. Mr. Arshad Nasar
Mr. Arshad Nasar served as Chairman and Chief Executive of Oil & Gas Development Company Ltd
(OGDCL) from 2005 - 2008. Under his watch, OGDCL successfully launched a Global Depository Receipt
(GDR) issue and was listed on London Stock Exchange. Mr. Nasar previously served as Country Chairman
and Managing Director of Caltex Oil (Chevron) Pakistan Ltd from 1998 – 2004, the first Pakistani to lead
Caltex Oil in Pakistan. He retired from the Company after 36 years of service. He holds a Master's Degree
in Economics and has extensive functional and Management experience in a wide ranging international
corporate career spanning more than 40 years. Mr. Nasar has served as Director on the Boards of: Oil
& Gas Development Company Limited (OGDCL), Caltex Oil (Chevron) Pakistan Ltd, Engro Corporation
Pakistan Ltd, Engro Fertilizer Ltd, Pakistan Industrial Development Corporation (PIDC), Pakistan Refinery
Limited (PRL), Mari Gas Company, The American Business Council of Pakistan, and Petroleum Institute
of Pakistan. Presently, he is also on the Board of FAST National University of Computer and Emerging
Sciences. He joined the Board of Bank AL Habib Limited in March 2016.
15
10. Mr. Adnan Afridi
Mr. Adnan Afridi holds a Bachelor’s degree in Economics and a Juris Doctor degree in Law from Harvard
University, USA. He assumed charge as Managing Director, National Investment Trust Limited (NITL)
in February 2019. He has 25 years’ international experience in change management, business
transformation, innovation and profitability enhancement in blue chip companies, public sector, and
start-up situations. He had a distinguished local career in financial services and capital markets, including
the position of Managing Director of the Karachi Stock Exchange, CEO of Overseas Chamber of Commerce
and Industry, Chairman of National Clearing Corporation of Pakistan, and a Director of Central Depository
Company. He is also a Member of the SECP Policy Board. He represents NITL as a Director on the
Boards of several well-known and multinational companies in Pakistan. He joined the Board of Bank AL
Habib Limited as a nominee of NITL in April 2019. Mr. Afridi also serves as Vice Chairman of the Board
of Governors of The Kidney Center Post Graduate Institute.
Details of Membership on the Bank’s & other Boards

Date of Status of
Joining Number of other
Director
Sr. /Leaving the (Independent, Member of Board Memberships
No. Name of Director Board Committees along with name of
Board Non-Executive,
Company(ies)
(dd/mm/yyyy) Executive)
1 Mr. Abbas D. Habib 15/10/1991 Non-Executive • Human Resource and 1. Habib Insurance Company
Remuneration Committee Limited
• IT Committee 2. Habib & Sons (Private)
Limited
3. AL Habib Asset
Management Limited
2 Mr. Anwar Haji Karim 15/10/1991 Non-Executive • Audit Committee 1. AL - Karam Textile Mills
• Risk Management (Private) Limited
Committee 2. Iqbal Textile Mills
(Private) Limited
3 Ms. Farhana Mowjee Khan 17/04/2019 Non-Executive • Human Resource and 1. Razaque Steels (Private)
Remuneration Committee Limited
• Risk Management 2. Shabbir Tiles and Ceramics
Committee Limited
4 Syed Mazhar Abbas 10/10/2000 Non-Executive • Audit Committee
• Human Resource and
Remuneration Committee -
• Credit Risk Management
Committee
• IT Committee
5 Mr. Qumail R. Habib 15/10/1991 Executive • Credit Risk Management Habib Insurance Company
Committee Limited
• Risk Management
Committee
• IT Committee
• IFRS 9 Committee
6 Mr. Safar Ali Lakhani 29/01/2014 Independent • Audit Committee
• Credit Risk Management
Committee -
• Risk Management
Committee
16
Details of Membership on the Bank’s & other Boards
Date of Status of
Joining Number of other
Director
Sr. /Leaving the (Independent, Member of Board Memberships
No. Name of Director Board Committees along with name of
Board Non-Executive,
Company(ies)
(dd/mm/yyyy) Executive)
7 Syed Hasan Ali Bukhari 02/06/2014 Independent • Audit Committee 1. Pakistan Gum & Chemicals
• Human Resource and Limited
Remuneration Committee 2. Pakistan Oxygen Limited
• Credit Risk Management 3. Quick Food Industries
Committee (Private) Limited
8 Mr. Murtaza H. Habib 15/10/1991 to Non-Executive • Credit Risk Management 1. Habib Sugar Mills Limited
22/12/1997 Committee 2. Habib & Sons (Private)
and Limited
24/11/1998 to 3. Investment Consultancy
date (Private) Limited
4. Habib Capital Management
(Private) Limited
5. Habib Leasing Corporation
(Private) Limited
6. Habib Management
Services (Private) Limited
7. Habib Energy (Private) Limited
8. HSM Energy Limited
9 Mr. Arshad Nasar 28/03/2016 Independent • Audit Committee

• Human Resource and –
Remuneration Committee
• IT Committee
10 Mr. Adnan Afridi 17/04/2019 Non-Executive • Risk Management 1. Habib Sugar Mills Limited
Committee 2. Dynea Pakistan Limited
3. International Industries
Limited
4. Mari Petroleum Company
Limited
5. Lotte Chemical Pakistan
Limited
Appointment of the Shariah Board (SB) Members

Shariah scholars who meet the Fit and Proper Criteria as laid down by State Bank of Pakistan are appointed
as SB members for a term of three years by the Board of Directors and are eligible for re-appointment. Their
appointment and re-appointment is subject to prior written clearance of SBP. The three years’ term of SB
commenced from the date of SBP’s clearance for appointment / re-appointment. Any SB member (including
Chairperson) may be re-appointed as a member of SB for another term by the Board of Directors, at least
two months prior to expiry of the term, subject to a fresh prior written clearance of SBP and pursuant to Fit
and Proper Criteria of SBP.
Casual vacancy
Board of Directors of the Bank fills the casual vacancy on the SB that may occur as a result of resignation,
removal, termination or death of a member, within three months from the date on which such vacancy arises.
However, the SB member appointed on casual vacancy shall hold the office till the expiry of the existing term
of the SB.
17
Profile of each of the Shariah Board member
Mufti Ismatullah Hamdullah
Mufti Ismatullah holds the degrees of “Shahadat-ul-Aalamiyah” and “Takhassus Fil Fiqh” from Jamia
Dar-ul-Uloom, Karachi. He is a PhD in Islamic Economics from University of Karachi. He has been associated
with Islamic Banking Division of Bank AL Habib Limited since 2006 as Shariah Advisor prior to his appointment
as the Chairman of Shariah Board.
He has been teaching Quran, Hadith, Fiqh, Philosophy and Arabic Grammar in Dar-ul-Uloom since 1993.
He has a vast experience in issuing Shariah rulings (Fatwa) and is currently serving Dar-ul-Ifta’ of Dar-ul-Uloom.
So far, he has issued about 20,000 Fatwas regarding various topics and Shariah issues.
His thesis – Zar (Money) in light of Shariah – is considered as one of the most useful research on Islamic
Economics and has already been published. He is a renowned research scholar; his research papers have
been published in Monthly “Al Balaagh”. He wrote a book “Guide to Takaful or Islamic Insurance” that has
also been published.
Mufti Mohib ul Haq
Mufti Mohib ul Haq Siddiqui graduated from Jamia Dar-ul-Uloom, Karachi. He obtained Shahadat-ul-Aalamia
(Master’s in Arabic and Islamic Studies) and Al-T’akhassus fi al-Iftaa’ (Specialization in Islamic Jurisprudence
and Fatwa) qualifications from Darul Uloom.
He joined the Shariah Board of Bank AL Habib Limited – Islamic Banking in November 2015 as a Member.
With substantial and diversified experience in the field of Islamic Finance, he has served several financial
institutions as a member of their Shariah Boards.
Mufti Mohib ul Haq is currently associated with Faysal Barkat Islamic Banking as the Chairman of Shariah
Board. He is also a member of the State Bank of Pakistan’s Forum for Shariah review, standardization of
Islamic products and processes, and formalization of Shariah Accounting standards for the Pakistan banking
industry.
He is a member of the Shariah Board of Bank Alfalah Islamic Banking Division and JS Islamic Fund. Formerly,
he was also member of the Shariah Board of Takaful Pakistan Limited and Royal Bank of Scotland Berhad,
Malaysia. He has over twelve years of teaching experience at renowned institutions and is also a Faculty
Member/ Visiting Faculty Member of various well-known institutions such as:
• Jamia Dar-ul-Uloom Karachi – Centre for Islamic Economics
• National Institute of Banking and Finance (NIBAF) – SBP
Hafiz Mufti Sarfraz Nihal - Resident Shariah Board Member (RSBM)
Mufti Muahammad Sarfraz Nihal is a well-known Shariah Scholar in Islamic Banking. He joined Bank AL
Habib Islamic Banking Division in 2015 as RSBM.
Mufti Nihal obtained Shahadat-ul-Aalamiyah (Master’s in Arabic and Islamic Studies) and Al-T’akhassus fi
al-Iftaa’ (Specialisation in Islamic Fiscal Jurisprudence and Fatwa) from Jamia Farooqia, Karachi.
Further, he holds the degree of Master of Philosophy (MPhil) in Economics, MSc in Economics, and BSc in
Mathematics, Statistics and Economics from University of Karachi and is currently pursuing PhD in Islamic
Finance at University of Karachi.
He is FAA Certified Training professional from Malaysia and also a frequent visiting faculty of leading Institutions
including NIBAF and IBA.
Prior joining BAHL, he has also served Al Baraka Bank Pakistan Limited as Shariah Auditor and Faysal Bank
(Barkat Islamic) as Product Manager.
18
Details of Membership on Bank’s and other Shariah Boards
Date of Joining Number of other
Sr. /Leaving the Status of Shariah Shariah Board
No. Name of Shariah Board Member Shariah Board Board Member Memberships
along with name of
(dd/mm/yyyy) Company(ies)
• Member, Shariah
Board - Askari Bank
Limited
• Member, Shariah
Board - Pak Qatar
1 Mufti Ismatullah Hamdullah 8/10/2015 Chairman Takaful Group
• Shariah Advisor -
IGI Life Takaful
• Shariah Advisor - AL
Habib Asset
Management Limited
• Chairman, Shariah
Board - Faysal Bank
2 Limited
Mufti Mohib ul Haq 8/10/2015 Member
• Member, Shariah
Board - Bank Alfalah
Limited
3 Mufti Muhammad Sarfaraz Nihal 8/10/2015 Resident Member –
Composition of Board Committees and their Terms of References (TORs)
The Listed Companies (Code of Corporate Governance) Regulations, 2019 requires the Bank to disclose
the composition of all Committees of the Board, viz. Audit Committee, Human Resource & Remuneration
Committee, Credit Risk Management Committee, Risk Management Committee, IT Committee and IFRS -
9 Committee.
Composition of Board’s Committees
Human Resource & Credit Risk
Risk Management
Audit Committee Remuneration Management IT Committee IFRS 9 Committee
Committee
Committee Committee
Mr. Safar Ali Lakhani, Syed Hasan Ali Bukhari, Syed Mazhar Abbas, Mr. Adnan Afridi, Mr. Abbas D. Habib, Syed Hasan Ali Bukhari,
Chairman Chairman Chairman Chairman Chairman Chairman
Syed Mazhar Abbas Syed Mazhar Abbas Mr. Safar Ali Lakhani Mr. Qumail R. Habib Mr. Qumail R. Habib Mr. Qumail R. Habib
Ms. Farhana Mowjee

Mr. Anwar Haji Karim Mr. Abbas D. Habib Mr. Qumail R. Habib Mr. Arshad Nasar Mr. Arshad Nasar
Khan
Syed Hasan Ali Ms. Farhana Mowjee Syed Hasan Ali
Mr. Anwar Haji Karim Syed Mazhar Abbas
Bukhari Khan Bukhari
Mr. Arshad Nasar Mr. Arshad Nasar Mr. Murtaza H. Habib Mr. Safar Ali Lakhani Mr. Mansoor Ali Khan
During the year, seven meetings of the Audit Committee and three meetings of Human Resource & Remuneration
Committee, Credit Risk Management Committee, Risk Management Committee, IT Committee and two meetings
of IFRS - 9 Committee were held, and the attendance of members was as follows:
19
Number of Board Committees Meetings Attended
No. of
Sr. Board Human
Name of Director Risk Credit Risk
No. Meetings Audit Resource & IT IFRS 9
Management Management
Attended Committee Remuneration Committee Committee
Committee Committee
Committee
1 Mr. Abbas D. Habib 4 - 3 - - 3 –
2 Mr. Anwar Haji Karim 4 7 - 2 - - -
3 Ms. Farhana Mowjee Khan 4 - 3 3 - - -
4 Syed Mazhar Abbas 4 6 3 - 3 3 -
5 Mr. Qumail R. Habib 4 - - 3 3 3 2
6 Mr. Safar Ali Lakhani 4 7 - 3 2 - -
7 Syed Hasan Ali Bukhari 4 7 3 - 3 - 2
8 Mr. Murtaza H. Habib 4 - - - 3 - -
9 Mr. Arshad Nasar 4 7 3 - - 3 2
10 Mr. Adnan Afridi 4 - - 3 - - -
11 Mr. Mansoor Ali Khan 4 - - - - 3 -
Total Meetings Held 4 7 3 3 3 3 2
TORs of Audit Committee of the Board
The key functions in the TORs include the following:
• Recommend to the Board the appointment / re-appointment of external auditors, their removal, audit
fees and provision by external auditors of any services to the Bank in addition to audit of its financial
statements for Pakistan Operations and Overseas Jurisdictions.
• Discuss with external auditors the major observations arising from interim and final audits and review
management letter issued by them and management's response thereto.
• Review quarterly, half-yearly and annual financial statements of the Bank before their publication.
• Approve the half-yearly audit planning schedule and the estimated timeframe for completion of various
audits.
• Ensure that policies and procedures of the Bank are in line with prevailing banking laws and regulations
of the State Bank of Pakistan and other relevant statutory requirements.
• Institute special projects, value for money studies or other investigations on any matter specified by the
Board, in consultation with the CEO, and to consider remittance of any matter to the external auditors
or to any other external body.
• Recommend the amendments in the Bank’s Internal Control Systems and Internal Audit Policy and Audit
Manual to the Board of Directors for approval.
• Review the periodical reporting made by the Audit Division on significant findings pointed out during the
testing of existing key controls relating to Internal Control over Financial Reporting (ICFR).
• Review the significant audit findings presented by Audit Division and examine the Executive Summary
of Internal Audit Reports (Branch Operations, Management Audits, Information System Audits, and
Islamic Banking Branches Audits) of domestic & overseas operations.
• Review the significant audit findings of Inspection Reports of the State Bank of Pakistan, regulators of
overseas branches and the status of compliance submitted by the Management.
20
• Ensure compliance of the corrective actions as required by the Shariah Board on the reports of “Internal
Shariah Audit” and “External Shariah Audit” as per Shariah Governance Framework for Islamic Banking
Institutions.
• Review the reports on internal control system presented by Audit Division on quarterly basis as required
under internal control guidelines issued by the State Bank of Pakistan.
• Review and approve the increments of internal auditors and recommend the performance appraisal and
increment / promotion of Head of Internal Audit.
• Approve annual budget of Audit Division for expenditure and staff requirements.
• To review all other matters as required in terms of Code of Corporate Governance and instructions issued
by the State Bank of Pakistan and the Policies of the Bank, as detailed in Internal Control System &
Internal Audit Policy of the Bank.
TORs of Human Resource & Remuneration Committee of the Board
• Review and recommend to the Board for approval of Human Resource Policy & Service Rules of the
Bank.
• Recommend to the Board the selection, evaluation, compensation (including retirement benefits) and
succession planning of the CEO.
• Recommend to the Board the selection, evaluation, compensation (including retirement benefits) of COO
(if any), CFO, Company Secretary, and Head of Internal Audit.
• Consider and approve recommendations of CEO on above matters for key management positions who
report directly to CEO or COO (if any).
• Review the manpower budget of the Bank, taking into consideration the expansion programme proposed
by the Management.
• Review training activities and management development programmes for employees of the Bank.
• Review total staff strength with cadre and location-wise break-up of employees.
• Review on quarterly basis name-wise details of employees of Senior Chief Manager level and above
who have joined on left service of the Bank during the period, along with reasons for their separation.
• Recommend the Remuneration Policy to the Board for approval, ensuring that the Remuneration Policy
is fair and competitive, and encourages performance and motivation.
• Recommend to the Board the “structure” of compensation package of Executive Directors, Chief Executive,
Key Executives, and other employees, as may be required by the Board.
TORs of Credit Risk Management Committee of the Board

• Review from time to time that the Management has put in place effective policies and information systems
to identify and mitigate credit risk.
• Review that the Management follows appropriate procedures to recognize adverse trends in the credit
portfolio of the Bank, identifies weaknesses in the loan portfolio, takes corrective/remedial actions and
maintains an adequate level of provisions for potential loan losses in the light of the requirements of the
Prudential Regulations.
• Review and recommend to the Board any changes in the Bank's policies related to credit.
• Review the quality of the Bank's credit portfolio on a quarterly basis through various comparisons /
benchmarking, including but not limited to:
Industry Benchmarks / Positioning.
Diversification of advances by industry, business segment, etc.
Concentration of advances in private and public sectors.
21
Movement / changes in advances by region / industry / business segments.
Details of large limits approved / enhanced during the quarter, as per the threshold prescribed by the
Committee.
Maturity profile of the loan portfolio.
Review of Non-Performing Loans (NPLs).
Review of Watch-List and NPL accounts, as per the threshold prescribed by the Committee.
Review / approval of any policy exceptions.
Review restructured / rescheduled accounts and written-off advances, as per the threshold prescribed
by the Committee.
Review any adverse findings of Credit Risk Review Department (CRRD).
• Consider Write Off/Waiver of NPLs up to Rs. 50 million.
• Recommend cases for Write Off/Waiver, exceeding Rs. 50 million, to the Board of Directors for consideration
and approval.
TORs of Risk Management Committee of the Board

• Review from time to time that the management has put in place effective policies and information systems
to identify and mitigate the following risks:
Market Risk, which includes Interest Rate Risk, Foreign Exchange Risk, and Equity Price Risk;
Liquidity Risk.
• Review summary of risk reports relating to the following risks:
Credit Risk,
Operational Risk,
Which are reviewed in detail by the Credit Risk Management Committee and the Audit Committee of
the Board, respectively.
• Review and provide guidance regarding integrated risk management (also known as enterprise risk
management), covering various significant risk exposures of the Bank.
• Review the Bank’s capital adequacy ratio and establish a process for Internal Capital Adequacy Assessment
Process (ICAAP) using integrated risk management.
• Review and recommend to the Board any changes in the Bank’s Treasury and Investment Policy, Market
Risk Policy, Liquidity Risk Policy, Risk Management Policy, and ICAAP.
• Review the credit rating report of the Bank, issued by the credit rating agency.
• Review any changes in laws and regulations relating to Market Risk, Liquidity Risk and Capital Adequacy.
• Review changes in prevailing economic and market conditions.
• Review the financial data of other comparable banks.
TORs of IT Committee of the Board
• Review and recommend the Bank's IT and Digital strategies, relevant policies, frameworks and changes
thereof, for the Board's approval.
• Review the role of IT as an enabler to provide competitive advantage and efficient services to customers.
• Review the level of expertise of IT personnel and assess their adequacy in number and skillset as well
as continuous professional development.
• Review major IT related risks and ensure that IT Risk Management strategies are designed and implemented
to address IT related risks including cyber-attacks and attacks on multiple critical infrastructure sectors
in order to achieve resilience.
• Receive periodic updates from IT Steering Committee to monitor all IT related projects, particularly those
which are approved by the Board.
22
• Ensure that IT related procurements are in line with the strategic directions provided by the Board.
• Review and recommend any IT related material outsourcing arrangement including obtaining IT experts'
opinion.
• Constitute/reconstitute IT Steering Committee and approve its TORs and any revisions thereof.
• Review the MIS on incidents, logs, breaches and significant incidents on a regular basis.
TORs of IFRS 9 Committee of the Board
• Constitution of IFRS - 9 Project Steering Committee of management to administer the Project;

• Review and approve Bank AL Habib Limited’s transition plan for IFRS - 9 implementation;
• Quarterly review of the progress made against the IFRS - 9 implementation challenges (resolution plan)
• Ensure smooth implementation of IFRS - 9 within the timelines stipulated by the State Bank of Pakistan.
Board’s Oversight over Shariah Compliance Functions and Shariah Board (SB)
The Shariah Board members meet the Board of Directors on half yearly basis and give detailed briefings on
the Shariah compliance environment, the issues/weaknesses (if any), and recommendations to improve
Shariah compliance environment and to ensure timely and effective enforcement of the SB’s decisions,
Fatwas, observations and recommendations.
Further, every year, Shariah Board Report is also presented by the Shariah Board in the meeting of the Board
of Directors of the Bank.
TORs of Shariah Board (SB) of the Bank

• The SB shall be empowered to consider, decide and supervise all Shariah related matters of Islamic
Banking Division. All decisions, rulings, Fatwas of the SB shall be binding on Islamic Banking Division
whereas SB shall be responsible and accountable for all its Shariah related decisions.
• The SB shall cause to develop a comprehensive Shariah compliance framework for all areas of operations
of the Islamic Banking Division and shall approve all products/services to be offered and/or launched by
the Islamic Banking Division.
• The SB shall review and approve all the Islamic Banking Division’s procedure manuals, product
programs/structures, process flows, related agreements, marketing advertisements, sales illustrations
and brochures so that they are in conformity with the rules and principles of Shariah.
• The SB shall have at all reasonable times unhindered access to all books of accounts, records, documents
and information from all sources including professional advisors and Bank’s employees in the due
discharge of its duties.
• Considering the importance of the SB decisions, rulings and Fatwas given by SB, it shall rigorously
deliberate on the issue placed before it for consideration before giving any decision / Fatwa. All such
deliberations and rationale for allowing or disallowing a particular product or service shall be duly recorded
and documented.
• All reports of internal Shariah audit, external Shariah audit, Shariah compliance reviews and SBP Shariah
compliance inspection shall be submitted to the SB for consideration and prescribing appropriate
enforcement action. The report of Internal Shariah shall be finalized by the Internal Shariah Audit Unit
(ISAU) and the final report shall be submitted to SB for prescribing appropriate enforcement/corrective
actions. The SB shall take up the unresolved issues with Management and shall include all significant
outstanding issues in its annual report on the Shariah compliance environment of Islamic Banking Division.
23
• Moreover, the Head-Shariah Compliance Department and RSBM shall discuss both the significant and
unresolved issues with SBP inspection team during their onsite inspection.
• The SB shall also specify the process/procedures for changing, modifying or revisiting
Fatwas/rulings/guidelines etc. already issued by SB.
• The SB shall not delegate any of its roles and responsibilities prescribed in Shariah Governance
Framework (updated time to time) to any other person or any of its members.
• All the decisions and rulings of the SB of the Bank shall be in conformity with the directives, regulations,
instructions and guidelines issued by SBP in accordance with the rulings of Shariah Advisory Committee
of SBP.
• The SB shall, in addition to its meetings with the BOD, meet at least on quarterly basis and each member
of SB shall attend at least two-thirds of the meetings during a calendar year. Further, in addition to the
mandatory quarterly meeting, the Chairperson of SB may convene SB meetings as and when he deems
it necessary.
• The quorum of the SB meetings, including that with BOD of the Bank, shall be at least two thirds of
Shariah Board members.
• The SB decisions should preferably be made through consensus of the Shariah Board members; however,
in case of difference of opinion, the decisions may be made by a majority vote of the Shariah Board
members. In the event of equality of votes, the Chairman shall have a second or casting vote.
• All meetings shall be chaired by the Chairman of SB and in his absence one of the Shariah Board
members, other than the RSBM, shall be elected as the acting Chairperson to preside over the meeting.
• The agenda of the SB meeting along with sufficient details and documents shall be sent to SB members
well in advance enabling them to come prepared to the meeting; the specific timelines for submission
of the agenda shall be set by the SB itself.
• The meetings of the SB shall be held by physical presence of the members. However, in appropriate
circumstances to be determined by the Chairman of the SB, meetings(s) may be held through video
conferencing subject to recording of proper minutes of the meeting.
• The SB shall ensure to cause that minutes of its meetings are properly recorded incorporating necessary
details of all deliberations, decisions, rulings and Fatwas issued along with the rationale and difference
of opinion or dissenting note, if any. Further, the minutes shall be signed by all the SB members who
attended the meeting and a copy thereof be provided to each member of the SB.
Shariah Board Meetings
During the year, four meetings of the Shariah Board were held and the attendance of each member was as
follows:
Name of Member Meetings Held Meetings Attended
Mufti Ismatullah Hamdullah, Chairman 4 4
Mufti Mohib ul Haq, Member 4 4
Mufti Muhammad Sarfaraz Nihal, Resident Member 4 4
The Bank had engaged KPMG Taseer Hadi & Co. to assist in developing the draft of remuneration policy,
keeping in view the culture and values of the Bank, and other related matters.
24
Additionally, performance evaluation of the Board is to be conducted by an external independent evaluator
at least every three years. The Bank has appointed Pakistan Institute of Corporate Governance (PICG) for
external independent evaluation of the full Board, Individual Directors, Board Committees, the Chairman,
and the Chief Executive.
There is no conflict of interest between the experts hired by the Bank and any Board member or Key Executive.
Disclosure relating to the Remuneration Policy:
Key objectives of Remuneration Policy are to:
• Attract, retain, and develop competent employees.

• Identify senior Risk Takers and Controllers.
• Offer remuneration that is fair and competitive.
• Encourage behaviour and practices, consistent with the Bank’s Strategy, Vision, Mission, Values,
and Guiding Principles.
• Discourage material risk taking.
• Avoid any conflict of interest between the employee and the Bank.
• Establish a management structure to administer and oversee implementation of this Policy.
Bank AL Habib has low tolerance for risk and is averse to taking material risks, i.e., risks that can have a
material adverse impact on its business and financial position. Therefore, the Bank does not have any defined
Bonus Policy (in any form like cash, stocks, stock options, or other types of incentive pay) to incentivise
achievement of performance targets, which may prompt material risk taking. Accordingly, a fundamental
principle of the Bank is that employee remuneration is paid in the form of Fixed Remuneration. This has
enabled the Bank to maintain sustainable growth and profitability over the years, with a low risk profile and
low staff turnover.
There are management committees/senior employees who are authorized to approve risk exposures involving
large amounts and deal with other institutionally important matters. They are designated as Senior Risk
Takers, who are responsible not only for taking risks, but also for mitigating, monitoring, and controlling the
risks taken by the Bank. The Bank encourages and emphasizes risk control, rather than risk taking, which
means that control responsibilities take precedence for employees at all levels. Therefore, in case of Senior
Risk Takers also, their control responsibilities are paramount and take precedence over their other
responsibilities.
Risk Controllers are employees whose professional activities include review, identification, mitigation, and
control of risks to which the Bank may be exposed, or providing assistance or assurance related to such
activities. Risk control is the responsibility of all functional units of the Bank, including various functions at
Principal Office who provide input to line functions on risk management and control, assist them in designing
and implementing adequate controls, and independently monitor that the prescribed controls and limits are
being complied with.
It is a key principle of employee appraisal that employees must not get penalized or suffer as a consequence
of carrying out control activities for which they are institutionally responsible and duly authorized. Any deviation
from this principle will be taken very seriously.
25
Key criteria for evaluation of performance are as follows:
• Compliance with applicable laws and regulations.

• Commitment to the Bank’s Vision, Mission, and Values.
• Compliance with the Bank’s risk and control policies, procedures, and limits.
• Behaviour with customers and colleagues.
• Knowledge and quality of work.
• New ideas and suggestions.
• Growth of business and profitability vs. business objectives (as applicable).
• Persistence and productivity.
• Job performance.
• Teamwork and People Development.
Fixed Remuneration is determined on the basis of role and responsibility of the individual, professional
expertise and experience, job performance, and potential for growth. In addition, all employees of the Bank
are required to carry out their duties with due care and in an ethical manner. They must act in accordance
with the Bank’s Strategy, Vision, Mission, Values, Guiding Principles, Code of Conduct, Policies and
Procedures, within the authorities and limits delegated to them. This means that protection of the Bank’s
reputation, trustworthiness, and safety is of paramount importance and takes precedence over profit
maximization.
Risk management policies, together with the Risk Tolerance Statement, authorities, and limits approved by
the Board, provide the necessary guidance on risk taking activities of the Bank. Actions taken and decisions
made by the employees are institutionally owned and protected by the Bank, as long as these are within the
ambit of the prescribed policies and procedures and there is no evidence of self-dealing.
Governance of remuneration is accomplished through a formal structure which includes: Board of Directors;
Human Resource & Remuneration Committee; Chief Executive; Human Resource Division; and Finance,
Audit, Compliance, and Risk Management Divisions.
26
STATEMENT OF COMPLIANCE WITH LISTED COMPANIES
(CODE OF CORPORATE GOVERNANCE) REGULATIONS, 2019
FOR THE YEAR ENDED DECEMBER 31, 2020

The Bank has complied with the requirements of the Regulations in the following manner:
1. The total number of Directors are ten as per the following:
• Male 09
• Female 01
2. The composition of the Board is as follows:

Independent Directors Mr. Arshad Nasar
Mr. Safar Ali Lakhani
Mr. Abbas D. Habib
Mr. Anwar Haji Karim
Non - Executive Directors Syed Mazhar Abbas
Mr. Murtaza H. Habib
Mr. Adnan Afridi
Executive Director Mr. Qumail R. Habib
Female Director - Non - Executive Ms. Farhana Mowjee Khan
Mr. Mansoor Ali Khan is the Chief Executive of the Bank. Being the CEO of the Bank, he is deemed
to be a Director.
3. The directors have confirmed that none of them is serving as a director on more than seven listed
companies, including the Bank.
4. The Bank has prepared a Code of Conduct and has ensured that appropriate steps have been taken
to disseminate it throughout the Bank along with its supporting policies and procedures.
5. The Board has developed a vision / mission statement, overall corporate strategy and significant policies
of the Bank. The Board has ensured that complete record of particulars of significant policies along
with their date of approval or updating is maintained by the Bank.
6. All the powers of the Board have been duly exercised and decisions on relevant matters have been
taken by Board / Shareholders as empowered by the relevant provisions of the Act and these regulations.
7. The meetings of the Board were presided over by the Chairman. The Board has complied with the
requirements of the Act and the Regulations with respect to frequency, recording and circulating minutes
of meeting of Board.
8. The Board have a formal policy and transparent procedures for remuneration of Directors in accordance
with the Act and these Regulations.
9. The Bank is compliant with the requirement of Directors’ Training Program provided in these Regulations.
Directors have either attended the required training in prior years or stand exempted, as per criteria
mentioned in the Code.
10. The Board has approved appointment of Chief Financial Officer, Company Secretary and Head of
Internal Audit, including their remuneration and terms and conditions of employment and complied with
relevant requirements of the Regulations.
11. Chief Financial Officer and Chief Executive Officer duly endorsed the financial statements before
approval of the Board.
27
12. The Board has formed six committees comprising of members given below:
A. Audit Committee Position

1 Mr. Safar Ali Lakhani Chairman
2 Syed Mazhar Abbas Member
3 Mr. Anwar Haji Karim Member
4 Syed Hasan Ali Bukhari Member
5 Mr. Arshad Nasar Member
B. Human Resource & Remuneration Committee Position

1 Syed Hasan Ali Bukhari Chairman
3 Mr. Abbas D. Habib Member
4 Ms. Farhana Mowjee Khan Member
C. Credit Risk Management Committee Position

1 Syed Mazhar Abbas Chairman
2 Mr. Safar Ali Lakhani Member
3 Mr. Qumail R. Habib Member
4 Syed Hasan Ali Bukhari Member
5 Mr. Murtaza H. Habib Member
D. Risk Management Committee Position

1 Mr. Adnan Afridi Chairman
3 Ms. Farhana Mowjee Khan Member
4 Mr. Anwar Haji Karim Member
5 Mr. Safar Ali Lakhani Member
E. IT Committee Position
1 Mr. Abbas D. Habib Chairman
5 Mr. Mansoor Ali Khan Member
28
F. IFRS 9 Committee Position
1 Syed Hasan Ali Bukhari Chairman
13. The terms of reference of the aforesaid committees have been formed, documented, and advised to
the committees for compliance.
14. The frequency of meetings of Board’s Committees were as per following:
Board’s Committees Frequency

Audit Committee Seven meetings held in the year
Human Resource & Remuneration Committee Three meetings held in the year
Credit Risk Management Committee Three meetings held in the year
Risk Management Committee Three meetings held in the year
IT Committee Three meetings held in the year
IFRS 9 Committee Two meetings held in the year
15. The Bank has an effective internal audit division that is manned by suitably qualified and experienced
personnel. The audit team is conversant with the policies and procedures of the Bank.
16. The statutory auditors of the Bank have confirmed that they have been given a satisfactory rating under
the Quality Control Review program of the Institute of Chartered Accountants of Pakistan and registered
with Audit Oversight Board of Pakistan, that they and all their partners are in compliance with International
Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered
Accountants of Pakistan and that they and the partners of the firm involved in the audit are not a close
relative (spouse, parent, dependent and non-dependent children) of the Chief Executive Officer, Chief
Financial Officer, Head of Internal Audit, Company Secretary or Director of the Bank.
17. The statutory auditors or the persons associated with them have not been appointed to provide other
services except in accordance with the Act, these regulations or any other regulatory requirement and
the auditors have confirmed that they have observed IFAC guidelines in this regard.
18. We confirm that all requirements of regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the Regulations have
been complied with.

Board of Directors
29
INDEPENDENT AUDITORS’ REVIEW REPORT
To the members of Bank AL Habib Limited
Review Report on the Statement of Compliance contained in Listed Companies (Code of

Corporate Governance) Regulations, 2019
We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate
Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors of Bank AL Habib
Limited (the Bank) for the year ended 31 December 2020 in accordance with the requirements of regulation
36 of the Regulations.
The responsibility for compliance with the Regulations is that of the Board of Directors of the Bank. Our
responsibility is to review whether the Statement of Compliance reflects the status of the Bank’s compliance
with the provisions of the Regulations and report if it does not and to highlight any non-compliance with the
requirements of the Regulations. A review is limited primarily to inquiries of the Bank’s personnel and review
of various documents prepared by the Bank to comply with the Regulations.
As a part of our audit of the financial statements we are required to obtain an understanding of the accounting
and internal control systems sufficient to plan the audit and develop an effective audit approach. We are
not required to consider whether the Board of Directors’ statement on internal control covers all risks and
controls or to form an opinion on the effectiveness of such internal controls, the Bank’s corporate governance
procedures and risks.
The Regulations require the Bank to place before the Audit Committee, and upon recommendation of the
Audit Committee, place before the Board of Directors for their review and approval, its related party
transactions. We are only required and have ensured compliance of this requirement to the extent of the
approval of the related party transactions by the Board of Directors upon recommendation of the Audit
Committee. We have not carried out procedures to assess and determine the Bank’s process for identification
of related parties and that whether the related party transactions were undertaken at arm’s length price or
not.
Based on our review, nothing has come to our attention which causes us to believe that the Statement of
Compliance does not appropriately reflect the Bank’s compliance, in all material respects, with the requirements
contained in the Regulations as applicable to the Bank for the year ended 31 December 2020.
EY Ford Rhodes
Karachi: February 15, 2021 Chartered Accountants
30
STATEMENT ON INTERNAL CONTROLS
The Management of the Bank is responsible for establishing the Internal Control System with the main
objectives of ensuring effectiveness and efficiency of operations; reliability of financial reporting;
safeguarding of assets; and compliance with applicable laws and regulations. The Internal Control System
has evolved over the years, as it is an ongoing process and is included in the Bank’s policies, procedures,
financial limits, etc., as detailed in various manuals, circulars and instructions issued by the Bank. This
system continues to be reviewed, refined and improved from time to time and immediate corrective action
is taken to minimize risks which are inherent in banking business and operations.
The Internal Control System is reviewed by the Internal Auditors as well as External Auditors and their
findings and recommendations are reported to the management and to the Audit Committee of the Board,
and corrective action is taken to address control deficiencies and for improving procedures and systems as
they are identified. The Board, acting through the Audit Committee, provides supervision and overall
guidance in improving the effectiveness of the Internal Control System.
While the Internal Control System is effectively implemented and monitored, there are inherent limitations
in the effectiveness of any system, including the possibility of human error or system failure and
circumvention or overriding of controls. Accordingly, even an effective Internal Control System can only
provide reasonable but not absolute assurance that the system’s objectives will be achieved.
Internal Control over Financial Reporting (ICFR) aims to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with the applicable financial reporting standards. During the year, Internal Auditors tested the
Bank’s ICFR and reported their findings to the management and the Audit Committee of the Board. While
no material deficiencies were detected, indicating that ICFR is effectively implemented in the Bank, it may
be reiterated that any control system can provide reasonable but not absolute assurance that its objectives
will be achieved.
In accordance with the State Bank of Pakistan (SBP) directives, the Bank has completed all the stages of
ICFR. Upon satisfactory completion of ICFR roadmap, the Bank has been granted exemption by SBP from
the requirement of submission of Long Form Report by the External Auditors.
The Bank has endeavored to follow the guidelines issued by SBP on internal controls. Updation and review
of ICFR exercise for the year 2020 as per SBP Guidelines on Internal Controls has been successfully
completed. In accordance with SBP directives, the annual assessment report for the year 2020 will be
submitted by the Audit Committee of the Board to SBP within the stipulated time. Evaluation and
management of significant risks is an on-going process and we will make further efforts to improve our
Internal Control System during 2021.
ASHAR HUSAIN ARIF SAEED KHAN

Chief Financial Officer Head of Internal Audit

BOARD OF DIRECTORS’ REMARKS ON THE
MANAGEMENT’S EVALUATION OF INTERNAL CONTROLS
Keeping in view the feedback received by the Board of Directors from the Audit Committee and the
management, the Board of Directors endorse management’s evaluation of Internal Controls, including
Internal Control over Financial Reporting.
On behalf of the Board of Directors
ABBAS D. HABIB
Chairman
Karachi: January 27, 2021 Board of Directors
31
INDEPENDENT AUDITORS’ REPORT
To the members of Bank AL Habib Limited
Report on the Audit of the Financial Statements
Opinion
We have audited the annexed unconsolidated financial statements of Bank AL Habib Limited, which comprise
the unconsolidated statement of financial position as at 31 December 2020, and the unconsolidated profit
and loss account and the unconsolidated statement of comprehensive income, the unconsolidated statement
of changes in equity and the unconsolidated cash flows statement for the year then ended, along with
unaudited certified returns received from the branches except for twenty five branches which have been
audited by us and notes to the financial statements, including a summary of significant accounting policies
and other explanatory information and we state that we have obtained all the information and explanations
which, to the best of our knowledge and belief, were necessary for the purposes of the audit.
In our opinion and to the best of our information and according to the explanations given to us, the
unconsolidated statement of financial position, unconsolidated statement of profit and loss and the
unconsolidated statement of comprehensive income, unconsolidated statement of changes in equity and
unconsolidated cash flow statement together with the notes forming part thereof conform with the accounting
and reporting standards as applicable in Pakistan, and give the information required by the Banking Companies
Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively
give a true and fair view of the state of the Bank’s affairs as at 31 December 2020 and of the profit and other
comprehensive income, the changes in equity and its cash flows for the year then ended.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in
Pakistan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance
with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants
as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other
ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
32
Following are the key audit matters:
Key audit matters How the matter was addressed in our audit
1. Provision against non-performing loans and advances
The Bank’s advances portfolio represents 33.52% We applied a range of audit procedures including
of its total assets as of 31 December 2020. A the following:
substantial portion of the advances portfolio include
corporate finances to public sector entities and - We reviewed the Bank’s process for identification
large to small size businesses operating in diverse and classification of non-performing advances.
sectors of the economy. As part of such review we performed an analysis
Covid-19 pandemic which emerged during the year of the changes within the different categories of
impacted the global economy and caused disruption classified non-performing accounts from last
to economic activities and businesses operating year to the current reporting date. This analysis
across a variety of sectors in Pakistan. Such was used to gather audit evidence regarding
circumstances potentially require the Bank to downgrading of impaired advances and
evaluate its credit risk exposure which may have declassification of accounts from non-performing
been impacted due to the current economic to regular and vice versa, as the case may be.
conditions.
As per the Bank’s accounting policy (refer note 4.4 - We performed independent checks on test basis
to the unconsolidated financial statements), the for the computations of provisions to assess that
Bank determines provisions against non-performing the same is in line with the requirements of the
advances exposures in accordance with the applicable Prudential Regulations;
requirements of Prudential Regulations of State
Bank of Pakistan (SBP) and also maintains general - In addition, we selected a representative sample
provision in respect of potential credit losses in the of borrowers from the advances portfolios
portfolio. The Prudential Regulations require specific including individually significant credit facilities
provisioning for loan losses on the basis of an and performed tests and procedures such as
age-based criteria which should be supplemented review of credit documentation, repayment
by a subjective evaluation of Bank’s credit portfolio. history and past due status, financial condition
The determination of loan loss provision therefore, as depicted by the borrowers’ financial
involve use of management judgment, on a case statements, nature of collateral held by the Bank
to case basis, taking into account factors such as
and status of litigation, if any, with the borrower;
the economic and business conditions, borrowers
repayment behaviors and realizability of collateral
held by the Bank. - In respect of the level of general provision
maintained by the Bank, we discussed the
In view of the significance of this area in terms of approach and policy followed by the Bank with
its impact on the unconsolidated financial the management and the regulatory approvals
statements and the level of involvement of in place for such policy.
management’s judgment, we identified adequacy
and completeness of provision against advances - We also assessed adequacy of disclosures as
as a significant area of audit judgment and a key included in note 9 to the unconsolidated financial
audit matter.
statements regarding the non-performing
The accounting policy and disclosures relating to advances and provisions made for the same in
provisioning against non- performing advances are the unconsolidated financial statements in
included in note 4.4 and 9 respectively to the accordance with the requirements of the
unconsolidated financial statements. applicable financial reporting framework.
33
Information Other than the Financial Statements and Auditors’ Report Thereon
Management is responsible for the other information. The other information comprises the information
included in the Annual Report, but does not include the financial statements and our auditors’ report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and the Board of Directors for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with accounting and reporting standards as applicable in Pakistan, the requirements of Banking Companies
Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017) and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Bank’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has
no realistic alternative but to do so.
The Board of directors is responsible for overseeing the Bank’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Bank’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Bank to cease to continue as a going concern.
34
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide to the Board of Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Based on our audit, we further report that in our opinion:
a) proper books of account have been kept by the Bank as required by the Companies Act, 2017 (XIX of
2017) and the returns referred above from the branches have been found adequate for the purpose
of our audit;
b) the statement of financial position, the statement of profit or loss, the statement of comprehensive
income, statement of changes in equity and cash flow statement (together with the notes thereon have
been drawn up in conformity with the Banking Companies Ordinance, 1962 and the Companies Act,
2017 (XIX of 2017) and are in agreement with the books of account and returns;
c) investments made, expenditure incurred and guarantees extended during the year were in accordance
with the objects and powers of the Bank and the transactions of the Bank which have come to our
notice have been within the powers of the Bank; and
d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted
by the Bank and deposited in the Central Zakat Fund established under section 7 of that Ordinance.
2. We confirm that for the purpose of our audit we have covered more than sixty per cent of the total
loans and advances of the Bank.
The engagement partner on the audit resulting in this independent auditors’ report is Arslan Khalid.
EY Ford Rhodes
35
UNCONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
Note 2020 2019
(Rupees in '000)
ASSETS
Cash and balances with treasury banks 5 105,935,947 113,838,791

Balances with other banks 6 19,662,515 9,523,969
Lendings to financial institutions 7 2,175,301 1,857,575
Investments 8 764,943,506 586,140,504
Advances 9 510,251,632 488,669,447
Fixed assets 10 43,967,993 36,562,508
Intangible assets 11 211,111 365,428
Deferred tax assets –000 –000
Other assets 12 74,943,322 61,723,889
1,522,091,327 1,298,682,111
LIABILITIES
Bills payable 14 31,013,221 20,168,673

Borrowings 15 211,599,405 228,745,034
Deposits and other accounts 16 1,099,686,361 903,702,782
Liabilities against assets subject to finance lease –000 –000
Subordinated debt 17 14,989,600 14,992,800
Deferred tax liabilities 18 176,751 1,380,189
Other liabilities 19 84,769,613 68,189,523
1,442,234,951 1,237,179,001
NET ASSETS 79,856,376 61,503,110
REPRESENTED BY
Share capital 20 11,114,254 11,114,254

Reserves 18,431,277 16,467,282
Surplus on revaluation of assets 21 10,286,484 6,013,816
Unappropriated profit 40,024,361 27,907,758
79,856,376 61,503,110
CONTINGENCIES AND COMMITMENTS 22
The annexed notes 1 to 47 and annexures I and II form an integral part of these unconsolidated financial statements.
MANSOOR ALI KHAN ASHAR HUSAIN

Chief Executive Chief Financial Officer
SYED HASAN ALI BUKHARI ANWAR HAJI KARIM ABBAS D. HABIB

Director Director Chairman
36
UNCONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2020
Note 2020 2019

(Rupees in '000)
Mark - up / return / interest earned 24 125,272,587 105,601,725

Mark - up / return / interest expensed 25 (67,652,611) (64,415,666)
Net mark - up / interest income 57,619,976 41,186,059
NON MARK - UP / INTEREST INCOME
Fee and commission income 26 6,678,237 6,093,104
Dividend income 486,008 451,101
Foreign exchange income 2,142,728 2,305,204
Income / (loss) from derivatives –00 –00
Gain / (loss) on securities - net 27 185,622 (32,469)
Other income 28 780,255 663,931
Total non mark - up / interest income 10,272,850 9,480,871
Total income 67,892,826 50,666,930
NON MARK - UP / INTEREST EXPENSES

Operating expenses 29 (34,039,945) (27,719,281)
Workers welfare fund (671,716) (448,415)
Other charges 30 (56,672) (93,244)
Total non mark - up / interest expenses (34,768,333) (28,260,940)
Profit before provisions 33,124,493 22,405,990
Provisions and write offs - net 31 (4,543,429) (3,394,995)
Extra ordinary / unusual items –00 –00
PROFIT BEFORE TAXATION 28,581,064 19,010,995
Taxation 32 (10,769,528) (7,842,259)
PROFIT AFTER TAXATION 17,811,536 11,168,736
(Rupees)
Basic and diluted earnings per share 33 16.03 10.05


37
UNCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2020 2019
(Rupees in '000)
Profit after taxation for the year 17,811,536 11,168,736
Other comprehensive income
Items that may be reclassified to profit and loss account

in subsequent periods:
Effect of translation of net investment in foreign branches 182,841 592,878

Movement in surplus on revaluation of investments
- net of tax 1,222,568 2,818,383
1,405,409 3,411,261
Items that will not be reclassified to profit and loss account

Remeasurement (loss) / gain on defined benefit

obligations - net of tax (128,275 ) 149,997
Movement in surplus on revaluation of operating
fixed assets - net of tax 3,056,238 –00
Movement in surplus on revaluation of non banking
assets - net of tax 98,346 –00
3,026,309 149,997
Total comprehensive income 22,243,254 14,729,994


38
UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Revenue Reserves Surplus / (deficit) on revaluation of
Share Statutory Foreign Currency Special General Investments Fixed / Non Unappropriated Total
Capital Reserve Translation Reserve Reserve Banking Assets Profit
Reserve
(Rupees in '000)
Balance as at 01 January 2019 11,114,254 12,742,793 1,348,237 126,500 540,000 (1,279,509 ) 4,547,711 20,411,694 49,551,680
Profit after taxation –00 –00 –00 –00 –00 –00 –00 11,168,736 11,168,736
Other comprehensive income - net of tax –00 –00 592,878 –00 –00 2,818,383 –00 149,997 3,561,258
Total comprehensive income for the year –00 –00 592,878 –00 –00 2,818,383 –00 11,318,733 14,729,994
Transfer to statutory reserve –00 1,116,874 –00 –00 –00 –00 –00 (1,116,874 ) –00
Transfer from surplus on revaluation of

assets to unappropriated profit - net of tax –00 –00 –00 –00 –00 –00 (72,769 ) 72,769 –00
Transactions with owners, recorded directly in equity

Cash dividend (Rs. 2.5 per share) –00 –00 –00 –00 –00 –00 –00 (2,778,564 ) (2,778,564 )
Balance as at 31 December 2019 11,114,254 13,859,667 1,941,115 126,500 540,000 1,538,874 4,474,942 27,907,758 61,503,110
Profit after taxation –00 –00 –00 –00 –00 –00 –00 17,811,536 17,811,536
Other comprehensive income - net of tax –00 –00 182,841 –00 –00 1,222,568 3,154,584 (128,275 ) 4,431,718
Total comprehensive income for the year –00 –00 182,841 –00 –00 1,222,568 3,154,584 17,683,261 22,243,254
Transfer to statutory reserve –00 1,781,154 –00 –00 –00 –00 –00 (1,781,154 ) –00

assets to unappropriated profit - net of tax –00 –00 –00 –00 –00 –00 (104,484 ) 104,484 –00
Transaction with owners, recorded directly in equity

Cash dividend (Rs. 3.5 per share) –00 –00 –00 –00 –00 –00 –00 (3,889,988 ) (3,889,988 )
Balance as at 31 December 2020 11,114,254 15,640,821 2,123,956 126,500 540,000 2,761,442 7,525,042 40,024,361 79,856,376


39
UNCONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020 Note 2020 2019
(Rupees in '000)
CASH FLOW FROM OPERATING ACTIVITIES
Profit before taxation 28,581,064 19,010,995
Less: Dividend income (486,008) (451,101)
28,095,056 18,559,894
Adjustments:
Depreciation 2,787,181 2,472,253
Depreciation on right-of-use assets 1,661,393 1,395,355
Amortisation 287,387 225,556
Provisions and write - offs - net 31 4,543,429 3,394,995
Gain on sale of fixed assets - net (437,189) (377,002)
(Gain) / loss on sale / redemption of securities - net (185,622) 32,469
Charge for compensated absences 247,041 135,164
Mark-up expense on lease liability against right-of-use assets 956,906 734,780
9,860,526 8,013,570
37,955,582 26,573,464
(Increase) / decrease in operating assets
Lendings to financial institutions (317,726) (1,857,575)
Held - for - trading securities (85,792) 197,562
Advances (24,572,057) (12,196,267)
Other assets (excluding advance taxation) (13,843,443) (15,880,721)
(38,819,018) (29,737,001)
Increase / (decrease) in operating liabilities
Bills payable 10,844,548 (435,009)
Borrowings from financial institutions (16,439,509) 109,148,680
Deposits 195,983,579 106,802,257
Other liabilities (excluding current taxation) 13,405,228 14,155,942
203,793,846 229,671,870
202,930,410 226,508,333
Income tax paid (12,095,087) (8,634,998)
Net cash flow generated from operating activities 190,835,323 217,873,335
CASH FLOW FROM INVESTING ACTIVITIES
Net investments in available for sale securities (160,952,824) (71,023,527)
Net investments in held to maturity securities (15,538,169) (97,530,743)
Net investments in associates (890,390) (525,000)
Investment in subsidiary (683,250) –
Dividends received 471,651 464,001
Investments in operating fixed assets (5,262,480) (5,205,962)
Proceeds from sale of fixed assets 596,045 520,644
Exchange differences on translation of net investment in foreign branches 182,841 592,878
Net cash used in investing activities (182,076,576) (172,707,709)
CASH FLOW FROM FINANCING ACTIVITIES
Payments of subordinated debt (3,200) (3,200)
Dividend paid (3,841,582) (2,767,686)
Payment against lease liabilities (1,972,143) (2,012,087)
Net cash flow from financing activities (5,816,925) (4,782,973)
Increase in cash and cash equivalents 2,941,822 40,382,653
Cash and cash equivalents at beginning of the year 34 122,458,343 82,075,690
Cash and cash equivalents at end of the year 34 125,400,165 122,458,343

40
NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS
1. STATUS AND NATURE OF BUSINESS

Bank AL Habib Limited (the Bank) is a banking company incorporated in Pakistan on 15 October 1991 as
a public limited company under repealed Companies Ordinance, 1984 having its registered office at 126-C,
Old Bahawalpur Road, Multan with principal place of business in Karachi. Its shares are listed on Pakistan
Stock Exchange Limited. It is a scheduled bank principally engaged in the business of commercial banking
with a network of 818 branches (2019: 718 branches), 32 sub - branches (2019: 37 sub - branches), 04
representative offices (2019: 04 representative offices) and 02 booths (2019: 02 booths). The branch
network of the Bank includes 03 overseas branches (2019: 03 overseas branches) and 106 Islamic
Banking branches (2019: 83 Islamic Banking branches).
2. BASIS OF PRESENTATION
2.1 These unconsolidated financial statements have been prepared in conformity with the format of financial
statements prescribed by the State Bank of Pakistan (SBP) vide BPRD Circular No. 02, dated 25 January
2018.
2.2 In accordance with the directives of the Federal Government regarding the shifting of the banking system
to Islamic modes, SBP has issued various circulars from time to time. Permissible forms of trade - related
modes of financing includes purchase of goods by banks from customers and immediate resale to them at
appropriate mark - up in price on deferred payment basis. The purchase and resale arising under these
arrangements are not reflected in these unconsolidated financial statements as such, but are restricted to
the amount of facility actually utilised and the appropriate portion of mark - up thereon. However, the Islamic
Banking branches of the Bank have complied with the requirements set out under the Islamic Financial
Accounting Standards (IFAS), issued by the Institute of Chartered Accountants of Pakistan (ICAP) as are
notified under the provisions of the Companies Act, 2017.
2.3 Key financial information of the Islamic Banking branches is disclosed in annexure II to these
unconsolidated financial statements.
2.4 These are separate financial statements of the Bank in which investments in subsidiaries and associates
are reported on the basis of direct equity interest and are not consolidated or accounted for by using equity
method of accounting.
2.5 Statement of compliance
2.5.1 These unconsolidated financial statements have been prepared in accordance with the accounting and
reporting standards as applicable in Pakistan. The accounting and reporting standards comprise of:
- International Financial Reporting Standards (IFRS) issued by the International Accounting Standards
Board (IASB) as are notified under the Companies Act, 2017;
- Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of
Pakistan (ICAP), as are notified under the Companies Act, 2017;
- Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the
Companies Act, 2017; and
- Directives issued by the State Bank of Pakistan and the Securities and Exchange Commission of
Pakistan (SECP).
Whenever the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 or the
directives issued by SBP and SECP differ with the requirements of the IFRS or IFAS, requirements of the
Banking Companies Ordinance, 1962, the Companies Act, 2017 and the said directives shall prevail.
41
2.5.2 SBP has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments:
Recognition and Measurement' and IAS 40, 'Investment Property' for Banking Companies in Pakistan
through BSD Circular Letter No. 10 dated 26 August 2002 till further instructions. Further, SBP vide its
BPRD Circular No. 04 of 2019 dated 23 October 2019 directed the banks in Pakistan to implement IFRS 9
'Financial Instruments' with effect from 01 January 2021. SECP has deferred the applicability of IFRS 7
'Financial Instruments: Disclosures' through its notification S.R.O 411 (I) / 2008 dated 28 April 2008.
Accordingly, the requirements of these standards have not been considered in the preparation of these
unconsolidated financial statements. However, investments have been classified and valued in
accordance with the requirements prescribed by SBP through various circulars. In case of overseas
branches, IFRS 9 / respective foreign regulatory requirement are considered for recording, classification
and valuation of investment.
2.5.3 SECP has notified IFAS 3, 'Profit and Loss Sharing on Deposits' issued by ICAP. IFAS 3 shall be followed
with effect from the financial periods beginning on or after 01 January 2014 in respect of accounting for
transactions relating to 'Profit and Loss Sharing on Deposits' as defined by the said standard. The standard
has resulted in certain new disclosures in the financial statements of the Bank. SBP through BPRD Circular
Letter No. 04 dated 25 February 2015, has deferred the applicability of IFAS 3 till further instructions and
prescribed the Banks to prepare their annual and periodical financial statements as per existing prescribed
formats issued vide BPRD Circular No. 02 of 2018, as amended from time to time.
2.5.4 SECP vide its notification SRO 633 (I) / 2014 dated 10 July 2014, adopted IFRS 10 effective from the
periods starting from June 30, 2014. However, vide its notification SRO 56 (I) / 2016 dated January 28,
2016, it has been notified that the requirements of IFRS 10 and section 228 of the Companies Act, 2017
will not be applicable with respect to the investment in mutual funds established under trust structure.
2.6 Standards, interpretations of and amendments to published approved accounting standards that
are effective in the current year
The Bank has adopted the following accounting standards, interpretations and amendments of IFRSs and
the improvements to accounting standards which became effective for the current year:
- Amendments to IAS 1, ‘Presentation of Financial Statements’ and IAS 8, ‘Accounting Policies,
Changes in Accounting Estimates and Errors’. The amendments were intended to make the definition
of material in IAS 1 easier to understand and are not intended to alter the underlying concept of
materiality in IFRS Standards. In addition, the IASB has also issued guidance on how to make
materiality judgements when preparing their general purpose financial statements in accordance with
IFRS Standards.
- Amendment to IFRS 3, ‘Business Combinations’ – Definition of a Business. IASB has issued amendments
aiming to resolve the difficulties that arise when an entity determines whether it has acquired a business
or a group of assets. The amendments clarify that to be considered a business, an acquired set of
activities and assets must include, at a minimum, an input and a substantive process that together
significantly contribute to the ability to create outputs. The amendments include an election to use a
concentration test.
- IFRS 14, 'Regulatory Deferral Accounts' permits an entity to continue to account, with some limited
changes, for 'regulatory deferral account balances' in accordance with its previous reporting framework,
both on initial adoption of standard and in subsequent financial statements. Regulatory deferral account
balances, and movements in them, are presented separately in the statement of financial position and
profit and loss account and statement of other comprehensive income, and specific disclosures are
required.
42
- IASB has also issued the revised Conceptual Framework for Financial Reporting (the Conceptual
Framework) in March 2018 which became effective during the year for preparers of financial statements
who develop accounting policies based on the Conceptual Framework. The revised Conceptual
Framework is not a standard, and none of the concepts override those in any standard or any
requirements in a standard. The purpose of the Conceptual Framework is to assist IASB in developing
standards, to help preparers develop consistent accounting policies if there is no applicable standard
in place and to assist all parties to understand and interpret the standards.
The above mentioned accounting standards and amendments of IFRSs did not have any material impact
on the unconsolidated financial statements of the Bank.
are not yet effective
The following IFRS as notified under the Companies Act, 2017 and the amendments and interpretations
thereto will be effective for accounting periods beginning on or after 01 January 2021:
- IFRS 9, 'Financial Instruments' - SBP vide its BPRD Circular No. 04 of 2019 dated 23 October 2019
directed the banks in Pakistan to implement IFRS 9 with effect from 01 January 2021. IFRS 9 replaced
the existing guidance in IAS 39, ‘Financial Instruments: Recognition and Measurement’. IFRS 9 includes
revised guidance on the classification and measurement of financial instruments, a new expected credit
loss model for calculating impairment on financial assets, and new general hedge accounting requirements.
It also carries forward the guidance on recognition and derecognition of financial instruments from IAS
39. The Bank has been complying with the requirement of BPRD Circular Letter No. 15 of 2020 to have
parallel run of IFRS 9 from July 01, 2020.
- COVID-19 -Related Rent Concessions (Amendment to IFRS 16) – the International Accounting Standards
Board (the Board) has issued amendments to IFRS 16 (the amendments) to provide practical relief for
lessees in accounting for rent concessions. The amendments are effective for periods beginning on or
after 1 June 2020, with earlier application permitted. Under the standard’s previous requirements, lessees
assess whether rent concessions are lease modifications and, if so, apply the specific guidance on
accounting for lease modifications. This generally involves remeasuring the lease liability using the
revised lease payments and a revised discount rate. In light of the effects of the COVID-19 pandemic,
and the fact that many lessees are applying the standard for the first time in their financial statements,
the Board has provided an optional practical expedient for lessees. Under the practical expedient,
lessees are not required to assess whether eligible rent concessions are lease modifications, and instead
are permitted to account for them as if they were not lease modifications. Rent concessions are eligible
for the practical expedient if they occur as a direct consequence of the COVID-19 pandemic and if all
the following criteria are met:
- the change in lease payments results in revised consideration for the lease that is substantially the
same as, or less than, the consideration for the lease immediately preceding the change;
- any reduction in lease payments affects only payments originally due on or before 30 June
2021; and
- there is no substantive change to the other terms and conditions of the lease.
43
- Interest Rate Benchmark Reform – Phase 2 which amended IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS
16 is applicable for annual financial periods beginning on or after 1 January 2021, with earlier application
permitted. The amendments introduce a practical expedient to account for modifications of financial
assets or financial liabilities if a change results directly from IBOR reform and occurs on an ‘economically
equivalent’ basis. In these cases, changes will be accounted for by updating the effective interest rate.
A similar practical expedient will apply under IFRS 16 for lessees when accounting for lease modifications
required by IBOR reform. The amendments also allow a series of exemptions from the regular, strict
rules around hedge accounting for hedging relationships directly affected by the interest rate
benchmark reforms. The amendments apply retrospectively with earlier application permitted. Hedging
relationships previously discontinued solely because of changes resulting from the reform will be
reinstated if certain conditions are met.
- Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) effective for the annual period
beginning on or after 1 January 2022 amends IAS 1 by mainly adding paragraphs which clarifies what
comprise the cost of fulfilling a contract, Cost of fulfilling a contract is relevant when determining whether
a contract is onerous. An entity is required to apply the amendments to contracts for which it has not
yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the
amendments (the date of initial application). Restatement of comparative information is not required,
instead the amendments require an entity to recognize the cumulative effect of initially applying the
amendments as an adjustment to the opening balance of retained earnings or other component of
equity, as appropriate, at the date of initial application.
- Annual Improvements to IFRS standards 2018-2020:

The following annual improvements to IFRS standards 2018-2020 are effective for annual
reporting periods beginning on or after 1 January 2022.
- IFRS 9 – The amendment clarifies that an entity includes only fees paid or received between
the entity (the borrower) and the lender, including fees paid or received by either the entity
or the lender on the other’s behalf, when it applies the ‘10 per cent’ test in paragraph B3.3.6
of IFRS 9 in assessing whether to derecognise a financial liability.
- IFRS 16 – The amendment partially amends Illustrative Example 13 accompanying IFRS 16

by excluding the illustration of reimbursement of leasehold improvements by the lessor. The
objective of the amendment is to resolve any potential confusion that might arise in lease
incentives.
- IAS 41 – The amendment removes the requirement in paragraph 22 of IAS 41 for entities to
exclude taxation cash flows when measuring the fair value of a biological asset using a
present value technique.
- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
effective for the annual period beginning on or after 1 January 2022. Clarifies that sales
proceeds and cost of items produced while bringing an item of property, plant and equipment
to the location and condition necessary for it to be capable of operating in the manner intended
by management e.g. when testing etc., are recognized in profit or loss in accordance with
applicable Standards. The entity measures the cost of those items applying the measurement
requirements of IAS 2. The standard also removes the requirement of deducting the net sales
proceeds from cost of testing. An entity shall apply those amendments retrospectively, but only
to items of property, plant and equipment that are brought to the location and condition
necessary for them to be capable of operating in the manner intended by management on or
after the beginning of the earliest period presented in the financial statements in which the
entity first applies the amendments. The entity shall recognise the cumulative effect of initially
applying the amendments as an adjustment to the opening balance of retained earnings (or
other component of equity, as appropriate) at the beginning of that earliest period presented.
44
- Reference to the Conceptual Framework (Amendments to IFRS 3) - Reference to the Conceptual
Framework, issued in May 2020, amended paragraphs 11, 14, 21, 22 and 23 of and added
paragraphs 21A, 21B, 21C and 23A to IFRS 3. An entity shall apply those amendments to
business combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after 1 January 2022. Earlier application is permitted if at the
same time or earlier an entity also applies all the amendments made by Amendments to
References to the Conceptual Framework in IFRS Standards, issued in March 2018.
- Classification of liabilities as current or non-current (Amendments to IAS 1) effective for the annual
period beginning on or after 1 January 2022. These amendments in the standards have been
added to further clarify when a liability is classified as current. The standard also amends the
aspect of classification of liability as non-current by requiring the assessment of the entity’s right
at the end of the reporting period to defer the settlement of liability for at least twelve months after
the reporting period. An entity shall apply those amendments retrospectively in accordance with
IAS 8.
- Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(Amendments to IFRS 10 and IAS 28) – The amendment amends accounting treatment on loss of
control of business or assets. The amendments also introduce new accounting for less frequent
transaction that involves neither cost nor full step-up of certain retained interests in assets that are
not businesses. The effective date for these changes has been deferred indefinitely until the
completion of a broader review.
Further, following new standards have been issued by IASB which are yet to be notified by SECP for
the purpose of applicability in Pakistan.
Standard IASB effective date
(annual periods
beginning on or after)
IFRS 1 – First time adoption of IFRSs 01 January 2004

IFRS 17 – Insurance Contracts 01 January 2023
2.8 Critical accounting estimates, judgments and assumptions

The preparation of financial statements requires management to make estimates, judgments and
assumptions that affect the application of policies and reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the circumstances, the result of
which forms the basis of making judgment about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates. The estimates
and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in
period of revision and future periods if the revision affects both current and future periods. The
estimates and judgments that have a significant effect on the unconsolidated financial statements are
in respect of the following:
Note
Classification and provisioning against investments 4.3, 4.13 & 31
Classification and provisioning against loans and advances 4.4, 9 & 31
Useful lives of fixed, right of use assets and intangible assets,
depreciation, amortisation and revaluation 4.5, 10 & 11
Determination of lease term and borrowing rate 4.5, 10 & 19
Non - banking assets acquired in satisfaction of claims 4.6 & 12
Defined benefit plan related assumptions 4.9 & 36
Provisions against off - balance sheet obligations 4.14 & 19
Current and deferred taxation 4.12, 18 & 32
45
3. BASIS OF MEASUREMENT
These unconsolidated financial statements have been prepared under the historical cost convention
except for certain investments, certain land and buildings, certain non - banking assets acquired in
satisfaction of claims, employee benefits and derivative financial instruments which are revalued as
referred to in notes 4.3, 4.5, 4.6, 4.9 and 4.17.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies adopted in the preparation of these unconsolidated financial statements are
consistent with those of the previous financial year.
4.1 Cash and cash equivalents
Cash and cash equivalents as referred to in the unconsolidated cash flow statement comprise cash
and balances with treasury banks and balances with other banks less overdrawn nostros accounts.
4.2 Repurchase / resale agreements
The Bank enters into transactions of repos and reverse repos at contracted rates for a specified period
of time. These are recorded as under:
Sale under repurchase obligation
Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue
to be recognised in the statement of financial position and are measured in accordance with accounting
policies for investments. Amounts received under these agreements are recorded as repurchase
agreement borrowings. The difference between sale and repurchase price is amortised as expense
over the term of the repo agreement.
Purchase under resale obligation
Securities purchased with a corresponding commitment to resell at a specified future date (reverse
repos) are not recognised as investments in the statement of financial position. Amounts paid under
these arrangements are included in repurchase agreement lendings. The difference between purchase
and resale price is accrued as income over the term of the reverse repo agreement.
Bai Muajjal
In Bai Muajjal, the Bank sells sukuk on credit to other financial institutions. The credit price is agreed
at the time of sale and such proceeds are received at the end of the credit period.
4.3 Investments
Investments in subsidiaries and associates are stated at cost less provision for impairment, if any.
Other investments are classified as follows:
Held for trading
These are investments acquired principally for the purpose of generating profits from short - term
fluctuations in price or dealer’s margin or are securities included in a portfolio in which a pattern of short
- term trading exists.
Held to maturity
These are investments with fixed or determinable payments and fixed maturities which the Bank has
the intention and ability to hold till maturity.
In Bai Muajjal, the Bank sells sukuk on credit to Government of Pakistan. The credit price is agreed at
the time of sale and such proceeds are received at the end of the credit period.
Available for sale
These are investments which do not fall under held for trading and held to maturity categories.
All purchases and sales of investments that require delivery within the time frame established by
regulations or market convention are recognised at the trade date. Trade date is the date on which the
Bank commits to purchase or sell the investments.
Investments (other than held for trading) are initially measured at fair value plus transaction cost
associated with the investment. Investments classified as held for trading are initially measured at fair
value, and transaction costs are expensed in the profit and loss account.
46
After initial recognition, quoted securities (other than those classified as held to maturity) are carried
at market value. Unquoted securities are valued at cost less impairment in value, if any. Held to maturity
securities are carried at amortised cost.
Surplus / (deficit) arising on revaluation of quoted securities which are classified as 'available for sale',
is included in the statement of comprehensive income and is shown in the statement of financial position
as part of equity. The surplus / (deficit) arising on these securities is taken to the profit and loss account
when actually realised upon disposal or in case of impairment of securities. The unrealised surplus /
(deficit) arising on revaluation of quoted securities which are classified as held for trading is taken to
the profit and loss account.
Premium or discount on debt securities classified as available for sale and held to maturity is amortised
using effective interest method and taken to the profit and loss account.
4.4 Advances
Loans and advances
These are stated net of provisions for non - performing advances.
Receivables against lease finance where Bank is a lessor (other than Ijarah)
Leases where the Bank transfers substantially all the risks and rewards incidental to ownership of an
asset to the lessee are classified as finance leases. A receivable is recognised at an amount equal to
the present value of the lease payments including any guaranteed residual value.
Islamic Financing and Related Assets
Ijarah finance
Assets leased out under ijarah arrangements are stated at cost less accumulated depreciation and
impairment, if any. Such assets are depreciated over the terms of ijarah contracts.
Murabaha
Funds disbursed under murabaha arrangements for purchase of goods are recorded as advance for
murabaha. On culmination of murabaha i.e. sale of goods to customers, murabaha receivables are
recorded at the sale price net of deferred income. Goods purchased but remaining unsold at the
reporting date are recorded as inventories.
Inventory
The Bank values its inventories at the lower of cost and net realisable value. The net realisable value
is the estimated selling price in the ordinary course of business less the estimated cost necessary to
make the sale. Cost of inventories represents actual purchases made by the Bank / customers as an
agent of the Bank for subsequent sale.
Istisna
In Istisna financing, the Bank places an order to purchase some specific goods / commodities from its
customers to be delivered to the Bank within an agreed time. The goods are then sold and the amount
hence financed is paid back to the Bank.
Diminishing Musharaka
In Diminishing Musharaka financing, the Bank enters into Musharaka based on Shirkat-ul-milk for
financing an agreed share of fixed asset (e.g. house, land, plant or machinery) with its customers and
enters into periodic rental payment agreement for the utilisation of the Bank’s Musharaka share by the
customer. The customer purchases the Bank's share gradually as per his undertaking.
Running Musharaka
In Running Musharaka financing, the Bank enters into financing with the customer based on
Shirkat-ul-Aqd or Business Partnership in customers operating business. Under this mechanism the
customer can withdraw and return funds to the Bank subject to his Running Musharakah Financing
limit during the Musharakah period. At the end of each quarter / half year the customer pays the
provisional profit as per the desired profit rate which is subject to final settlement based on the relevant
quarterly / half-yearly / annual accounts of the customer.
Musawama
In Musawama financing, the Bank purchases specific goods / commodities on cash basis from its
customer for onward sale. Upon realisation of sale proceeds, the finance is adjusted.
47
Provision for non-performing advances
Provision for non - performing advances is determined in accordance with the requirements of the
Prudential Regulations for domestic branches, whereas, requirements of respective central banks is
followed in respect of overseas branches and is charged, to the profit and loss account. The Bank also
maintains general provision in addition to the requirements of the Prudential Regulations on the basis
of the management's risk assessment.
The Bank reviews its loan portfolio to assess amount of non-performing loans and determine provision
required there against. While assessing this requirement various factors including the past dues,
delinquency in the account, financial position and future business / financial plan of the borrower,
value of collateral held and requirements of Prudential Regulations are considered. The Bank is
allowed to consider the effect of Forced Sale Value (FSV) of collaterals in determining the amount of
provision, however, no benefit of FSV of collateral is taken in determining provisioning amount.
The amount of general provision against domestic consumer and SME advances is determined in
accordance with the relevant \ Prudential Regulations and SBP directives.
For overseas operations, the Bank records an allowance for Expected Credit Loss (ECL) for all loans
and other debt financial assets not held at Fair Value through Profit and Loss (all referred to as
‘financial instruments’). The ECL allowance is based on the credit losses expected to arise over the
life of the asset (the lifetime expected credit losses or LTECL), unless there has been no significant
increase in credit risk since origination, in which case, the allowance is based on the 12 months’
Expected Credit Losses (12mECL). The Bank has established a policy to perform an assessment, at
the end of each reporting period, of whether a financial instrument’s credit risk has increased
significantly since initial recognition, by considering the change in the risk of default occurring over the
remaining life of the financial instrument.
Advances are written-off when there are no realistic prospects of recovery.
4.5 Operating fixed assets and depreciation
Capital work in progress
Capital work in progress is stated at cost less impairment, if any.
Property and equipment - owned
Land is measured at cost at the time of initial recognition and is subsequently carried at revalued
amount less impairment, if any. Buildings are initially measured at cost and upon revaluation, are
carried at revalued amount less accumulated depreciation and impairment, if any. All other operating
fixed assets are stated at cost less accumulated depreciation and impairment, if any. Depreciation is
charged to profit and loss account on straight line basis so as to charge the assets over their expected
useful lives at the rates specified in note 10.2. The depreciation charge is calculated after taking into
account residual value, if any. The residual values, useful lives and depreciation method are reviewed
annually and adjusted, if appropriate. Depreciation is charged on prorata basis, i.e., full month charge
in the month of purchase and no charge in the month of disposal.
Land and buildings are revalued by independent professionally qualified valuers with sufficient
regularity to ensure that the net carrying amount does not differ materially from the fair value. The
valuations involve estimates / assumptions and various market factors and conditions. Any revaluation
surplus is credited to the surplus on revaluation of land and buildings, except to the extent that it
reversal of a deficit already charged to profit and loss account on the same asset. Any revaluation
deficit is recognised in profit and loss account, except for a deficit directly offsetting a previous surplus
on the same asset recognised in the asset revaluation surplus.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Bank and the cost of the item can be measured reliably. The carrying amount of the replaced part
is derecognised. All other repairs and maintenance are charged to the income statement during the
financial period in which they are incurred.
Gains and losses on disposal of fixed assets are included in income currently, except that the related
surplus on revaluation of land and buildings (net of deferred tax) is transferred directly to
unappropriated profit.
48
Leases
The Bank assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
Bank as a lessee
The Bank applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Bank recognises lease liabilities to make lease payments
and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Bank recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
and lease payments made at or before the commencement date less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis over the lease term.
The right-of-use assets are presented within note 10 fixed assets and are subject to impairment in line
with the Bank’s policy as described in note 4.13 Impairment of non-financial assets.
Lease liabilities
At the commencement date of the lease, the Bank recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments include fixed payments
(less any lease incentives receivable), variable lease payments that depend on an index or a rate, and
amounts expected to be paid under residual value guarantees. The lease payments also include the
exercise price of a purchase option reasonably certain to be exercised by the Bank and payments of
penalties for terminating the lease, if the lease term reflects exercising the option to terminate.
Variable lease payments that do not depend on an index or a rate are recognised as expenses in the
period in which the event or condition that triggers the payment occurs.
Determination of the lease term for lease contracts with renewal and termination options
The Bank determines the lease term as the non-cancellable term of the lease, together with any
periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any
periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Bank has several lease contracts that include extension and termination options. The Bank
applies judgment in evaluating whether it is reasonably certain whether or not to exercise the option
to renew or terminate the lease. That is, it considers all relevant factors that create an economic
incentive for it to exercise either the renewal or termination. After the commencement date, the Bank
reassesses the lease term if there is a significant event or change in circumstances that is within its
control that affects its ability to exercise or not to exercise the option to renew or to terminate (e.g.,
construction of significant leasehold improvements or significant customisation of the leased asset).
Estimating the incremental borrowing rate
The Bank cannot readily determine the interest rate implicit in the lease, therefore, it uses its
incremental borrowing rate (‘IBR’) to measure lease liabilities. The IBR is the rate of interest that the
Bank would have to pay to borrow over a similar term, and with a similar security, the funds necessary
to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.
Intangible assets
Intangible assets having a finite useful life are stated at cost less accumulated amortisation and
impairment, if any. Amortisation is based on straight line method by taking into consideration the
estimated useful life of assets at the rates specified in note 11. Intangible assets are amortised on
prorata basis i.e. full month amortisation in the month of purchase and no amortisation in the month of
disposal.
4.6 Non - banking assets acquired in satisfaction of claims
Non - banking assets acquired in satisfaction of claims are initially measured at settlement amount
and upon revaluation, are carried at revalued amounts less accumulated depreciation and
impairment, if any. The useful lives and depreciation method are reviewed annually and adjusted, if
appropriate. These assets are revalued as per SBP's requirement by independent professionally
49
qualified valuers to ensure that their net carrying value does not differ materially from their fair value.
A surplus arising on revaluation of assets is credited to the 'surplus on revaluation of Non-banking
assets acquired in satisfaction of claims' account and any deficit arising on revaluation is taken to
profit and loss account directly. Legal fees, transfer costs and direct costs of acquiring title of assets
is charged to profit and loss account and not capitalised.
4.7 Borrowings / deposits
Borrowings / deposits are recorded at the amount of proceeds received. The cost of borrowings /
deposits is recognised on an accrual basis as an expense in the period in which it is incurred.
Deposits mobilized under Islamic Banking operations are generated under two modes i.e. “Qard” and
“Modaraba”. Deposits taken on Qard basis are classified as ‘Current accounts’ and Deposits
generated on Modaraba basis are classified as ‘Saving deposits / Fixed deposits / Current
remunerative deposits’.
4.8 Subordinated debt
Subordinated debt is initially recorded at the amount of proceeds received. Mark - up accrued on
subordinated debt is recognised separately as part of other liabilities and is charged to the profit and
loss account over the period on an accrual basis.
4.9 Employees' benefits
Defined benefit plan
The Bank operates an approved gratuity fund for all its confirmed employees, which is administered
by the Trustees. The Bank's costs and contributions are determined based on actuarial valuation
carried out at each year end using Projected Unit Credit Actuarial Method. All actuarial gains and
losses are recognised in 'other comprehensive income' as they occur and are not reclassified to profit
and loss in subsequent periods. The liabilities for employees' benefits plans are determined using
actuarial valuations. The actuarial valuations involve assumptions about discount rates, expected
rates of return on assets and future salary increases as disclosed in note 36. Due to the long term
nature of these plans, such estimates are subject to significant uncertainty.
Defined contribution plan
The Bank operates an approved provident fund scheme for all its regular permanent employees,
administered by the Trustees. Equal monthly contributions are made both by the Bank and its
employees to the fund at the rate of 10% of the basic salary in accordance with the terms of the
scheme.
Compensated absences
The Bank accounts for all accumulating compensated absences when employees render service that
increases their entitlement to future compensated absences. The liability is determined based on
actuarial valuation carried out using the Projected Unit Credit Method.
4.10 Foreign currencies
Functional and presentation currency
These financial statements are presented in Pak Rupees which is the Bank's functional and
presentation currency.
Transactions and balances in foreign currencies
Foreign currency transactions are translated into Pak Rupees at the exchange rates prevailing on the
date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pak
Rupees at the exchange rates prevailing at the reporting date. Non - monetary items that are
measured in terms of historical cost in a foreign currency are translated using the exchange rates at
the dates of the initial transactions. Non - monetary items measured at fair value in a foreign currency
are translated using exchange rates at the date when the fair value was determined. Exchange gains
or losses are included in income currently.
Foreign operations
The assets and liabilities of foreign operations are translated to Pak Rupees at exchange rates
prevailing at the reporting date. The income and expense of foreign operations are translated at rate
of exchange prevailing during the year. Exchange gain or loss on such translation is taken to equity
through statement of other comprehensive income under "foreign currency translation reserve".
50
Commitments
Commitments for outstanding forward foreign exchange contracts are translated at forward rates
applicable to their respective maturities.
4.11 Revenue recognition
(a) Mark - up / return / interest on advances and investments is recognised on accrual basis, except
in case of advances classified under the Prudential Regulations on which mark - up is recognised
on receipt basis. Mark - up / return / interest on rescheduled / restructured loans and advances
and investments is recognised as permitted by the regulations of SBP.
(b) Financing method is used in accounting for income from lease financing. Under this method, the
unrealised lease income is deferred and taken to income over the term of the lease period so as
to produce a constant periodic rate of return on the outstanding net investment in lease. Gain /
loss on termination of lease contracts, front end fee and other lease income are recognised as
income on receipt basis.
(c) The rentals from ijarah are recognised as income over the term of the contract net of depreciation
expense relating to the ijarah assets.
(d) Income from murabaha is accounted for on a time proportionate basis over the period of
murabaha transaction.
(e) Dividend income is recognised when the right to receive is established.
(f) Gain or loss on sale of investments are recognised in profit and loss account in the year in which
they arise.
(g) The Bank earns fee and commission income from a diverse range of financial services it provides
to its customers. Fee and commission income is recognised at an amount that reflects the
consideration to which the Bank expects to be entitled in exchange for providing the services.
The Bank recognises fees earned on transaction-based arrangements at a point in time when the
Bank has provided the service to the customer. Where the contract requires services to be
provided over time, income is recognised on a systematic basis over the life of the agreement.
4.12 Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit
and loss account except to the extent that it relates to the items recognised directly in equity or surplus
on revaluation of assets, in which case it is recognised in equity or surplus on revaluation of assets.
Current
Provision for current tax is based on the taxable income for the year, using tax rates enacted or
substantively enacted at the statement of financial position date and any adjustments to the tax
payable in respect of previous years. Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to taxation authorities.
Deferred
Deferred tax is provided on all temporary differences at the statement of financial position date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, to
the extent that it is probable that taxable profits will be available against which the deductible
temporary differences and unused tax losses can be utilised.
Deferred tax liabilities are recognised for all taxable temporary differences, except in respect of
taxable temporary differences associated with investment in foreign operations, when the timing of the
reversal of the temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
The carrying amount of deferred income tax assets are reviewed at each statement of financial
position date and reduced to the extent that it is no longer probable that sufficient taxable profit or
taxable temporary differences will be available to allow all or part of the deferred income tax asset to
be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the statement of financial position date.
51
In making the estimates for current and deferred taxes, the management looks at the income tax law
and the decisions of appellate authorities on certain issues in the past. There are certain matters
where the Bank’s view differs with the view taken by the income tax department and such amounts are
shown as contingent liability.
4.13 Impairment
Available-for-sale equity securities
Provision for diminution in the values of securities (except for debt securities) is made after
considering impairment, if any, in their value and is taken to profit and loss account. Impairment is
booked when there is an objective evidence of significant or prolonged decline in the value of such
securities. This determination of what is significant or prolonged requires judgment.
Provision for impairment against debt securities is made in accordance with the requirements of the
Prudential Regulations of SBP. In case of unquoted equity securities, the breakup value of the security
is considered to determine impairment amount.
Associates
The carrying values of investments in associates are reviewed for impairment when events or
changes in circumstances indicate that the carrying values may not be recoverable. If any such
indication exists and where the carrying values exceed the estimated recoverable amounts, the
investments in associates are written down to their recoverable amounts and the resulting impairment
loss is taken to profit and loss account.
Non-financial assets
The carrying values of assets are reviewed for impairment when events or changes in circumstances
indicate that the carrying values may not be recoverable. If any such indication exists and where the
carrying values exceed the estimated recoverable amounts, the assets are written down to their
recoverable amounts and the resulting impairment loss is taken to profit and loss account except for
impairment loss on revalued assets which is adjusted against the related revaluation surplus to the
extent that the impairment loss does not exceed the relevant surplus.
4.14 Provisions against off - balance sheet obligations
The Bank, in the ordinary course of business, issues letters of credit, guarantees, bid bonds,
performance bonds etc. The commission against such contracts is recognised in the profit and loss
account under "fee and commission income" over the period of contracts. The Bank's liability under
such contracts is measured at the higher of the amount representing unearned commission income at
the reporting date and the best estimate of the amount expected to settle any financial obligation
arising under such contracts.
4.15 Off setting
Financial assets and financial liabilities are only off - set and the net amount is reported in the financial
statements when there is a legally enforceable right to set - off the recognised amount and the Bank
intends either to settle on a net basis, or to realise the assets and to settle the liabilities simultaneously.
Income and expense items of such assets and liabilities are also off - set and the net amount is
reported in the financial statements.
4.16 Financial assets and liabilities
Financial assets and financial liabilities are recognised at the time when the Bank becomes a party to
the contractual provision of the instrument. Financial assets are derecognised when the contractual
right to future cash flows from the asset expires or is transferred along with the risk and reward of
ownership of the asset. Financial liabilities are derecognised when obligation is discharged, cancelled
or expired. Any gain or loss on derecognition of the financial asset and liability is recognised in the
profit and loss account of the current period.
4.17 Derivative financial instruments
Derivative financial instruments are initially recognised at their fair value on the date on which the
derivative contract is entered into and are subsequently remeasured at fair value. All derivative
financial instruments are carried as asset when fair value is positive and liabilities when fair value is
negative. Any change in the value of derivative financial instruments is taken to the profit and loss
account.
4.18 Dividend distribution
Dividends and appropriations to reserves are recognised in the year in which these are approved, except
appropriations required by the law which are recorded in the period to which they pertain.
52
4.19 Earnings per share
The Bank presents basic and diluted earnings per share (EPS). Basic EPS is calculated by dividing the
profit or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary
shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable
to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects
of all dilutive potential ordinary shares, if any. There were no convertible dilutive potential ordinary shares
in issue at 31 December 2020.
4.20 Segment reporting
A segment is a distinguishable component of the Bank that is engaged in providing products and services
(business segment), or in providing products or services within a particular economic environment
(geographical segment), which is subject to risk and rewards that are different from those of other segments.
The Bank's primary format of reporting is based on business segments.
4.21 Business segments
Retail banking
It consists of retail lending, deposits and banking services to private individuals and small businesses.
The retail banking activities include provision of banking and other financial services, such as current
and savings accounts, credit cards, consumer banking products etc., to individual customers, small
merchants and small and medium enterprises.
Commercial banking
Commercial banking represents provision of banking services including treasury and international trade
related activities to large corporate customers, multinational companies, government and semi government
departments and institutions and small and medium enterprises treated as corporate under the Prudential
Regulations.
4.22 Geographical segments
The Bank operates in four geographic regions, being:
- Pakistan
- Middle East
- Asia Pacific
- Africa
4.23 Statutory reserve
Every Bank incorporated in Pakistan is required to transfer 20% of its profit to a statutory reserve until
the reserve equals share capital, thereafter 10% of the profit of the Bank is to be transferred to this
reserve.
4.24 Provisions against liabilities
These are recognised when the Bank has a legal or constructive obligation as a result of past events, it
is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of
the amount can be made. Provision against contingencies is determined based on the management
judgment regarding the probability of future out flows of resources embodying economic benefits to settle
an obligation arising from past events. Provisions are reviewed at each reporting date and are adjusted
to reflect the current best estimate.
4.25 Clients' assets
The Bank provides services that result in the holding of assets on behalf of its clients. Such assets are
not reported in the financial statements, as they are not the assets of the Bank.
4.26 Acceptances
Acceptances comprise undertakings by the Bank to pay bill of exchange drawn on customers. Acceptances
are recognised as financial liability in the statement of financial position with a contractual right of
reimbursement from the customer as a financial asset. Therefore, commitments in respect of acceptances
have been accounted for as financial assets and financial liabilities.
53
Note 2020 2019
(Rupees in '000)
5. CASH AND BALANCES WITH TREASURY BANKS

In hand:
Local currency 23,716,890 19,497,716
Foreign currencies 4,761,414 2,062,958
28,478,304 21,560,674
In transit:
Local currency 600,285 481,699
Foreign currencies 4,412 676,471
604,697 1,158,170
With State Bank of Pakistan in:
Local currency current accounts 5.1 44,211,071 59,153,555
Local currency current accounts - Islamic Banking 5.1 3,339,015 3,140,622
Foreign currency deposit accounts
Cash reserve account 5.1 3,508,365 3,236,315
Cash reserve / special cash reserve account
- Islamic Banking 299,769 256,350
Special cash reserve account 5.1 7,016,730 9,708,945
Local US Dollar collection account 5.2 99,696 303,328
58,474,646 75,799,115
With National Bank of Pakistan in:

Local currency current account 16,110,129 14,944,966
Prize bonds 2,268,171 375,866
105,935,947 113,838,791
5.1 These deposits and reserves are maintained by the Bank to comply with the statutory requirements. The
special cash reserve account carries interest rate ranging upto 0.76% (2019: 0.70% to 1.50%) per annum.
5.2 This represents US Dollar collection account maintained with SBP.
Note 2020 2019

(Rupees in '000)
6. BALANCES WITH OTHER BANKS

In Pakistan:
In current account 131,311 309,409
In deposit account 6.1 184,012 7,508,791
315,323 7,818,200
Outside Pakistan:
In current account 6.2 5,965,561 1,642,734
In deposit account 6.3 13,381,635 63,037
19,347,196 1,705,771
19,662,519 9,523,971
Less: impairment against IFRS 9 in overseas branches (4) (2)
19,662,515 9,523,969
54
6.1 These carry expected profit rates ranging from 2.32% to 11.28% (2019: 1.00% to 12.50%) per annum.
6.2 These carry interest rates ranging from 0.05% to 0.75% (2019: 0.05% to 1.00%) per annum.
6.3 These carry interest rates ranging upto 1.50% (2019: 1.25% to 4.50%) per annum.
2020 2019
(Rupees in '000)
7. LENDING TO FINANCIAL INSTITUTIONS

In local currency:
Bai Muajjal Receivable from the State Bank of Pakistan 2,175,301 1,857,575
7.1 Securities held as collateral against amounts due from financial institutions
2020 2019
Held by Further given Held by Further given
Bank as collateral Total Bank as collateral Total
(Rupees in '000)
GoP Ijarah Sukuks 2,175,301 –00 2,175,301 1,857,575 –00 1,857,575
7.1.1 The GoP Ijarah Sukuks carry rates ranging from 8.89% to 9.08% (2019: 10.39% to 10.49%).
8. INVESTMENTS
Note 2020 2019
Cost / Provision Cost / Provision
amortised for Surplus / Carrying amortised for Surplus / Carrying
cost diminution (deficit) value cost diminution (deficit) value
8.1 Investments by type:
(Rupees in '000)
Held-for-trading securities
Shares 95,778 –00 771 96,549 –00 –00 –00 –00
Available-for-sale securities 8.3 & 8.4

Federal Government Securities 581,157,905 (226,825 ) 4,702,367 585,633,447 419,402,570 (187,265 ) 1,895,941 421,111,246
Shares 4,376,102 (1,791,073 ) 580,654 3,165,683 4,326,102 (1,567,064 ) 428,546 3,187,584
Non Government Debt Securities 5,542,664 –00 (169,980 ) 5,372,684 5,586,804 –00 (141,759 ) 5,445,045
Foreign Securities 6,891,856 (909,432 ) (1,215,066 ) 4,767,358 6,524,223 (41,248 ) (48,396 ) 6,434,579
Units of mutual funds 2,125,000 (444,440 ) 350,397 2,030,957 3,125,000 (373,875 ) 233,167 2,984,292
600,093,527 (3,371,770 ) 4,248,372 600,970,129 438,964,699 (2,169,452 ) 2,367,499 439,162,746
Held-to-maturity securities 8.3 & 8.5
Federal Government Securities 159,496,264 (130,790 ) –00 159,365,474 145,152,375 (41,871 ) –00 145,110,504
Non Government Debt Securities –00 –00 –00 –00 46,632 –00 –00 46,632
Foreign Securities 1,708,659 (127,901 ) –00 1,580,758 467,747 (471 ) –00 467,276
Other 4,481 (4,481 ) –00 –00 –00 –00 –00 –00
161,209,404 (263,172 ) –00 160,946,232 145,666,754 (42,342 ) –00 145,624,412
Associates 8.6 2,047,346 –00 –00 2,047,346 1,153,346 –00 –00 1,153,346
Subsidiaries 8.7 883,250 –00 –00 883,250 200,000 –00 –00 200,000
Total Investments 764,329,305 (3,634,942 ) 4,249,143 764,943,506 585,984,799 (2,211,794 ) 2,367,499 586,140,504
55
2020 2019
8.2 Investments by segments:
(Rupees in '000)
Federal Government Securities
Market Treasury Bills 143,416,675 –00 490,699 143,907,374 295,433,821 –00 798,050 296,231,871
Pakistan Investment Bonds 515,252,493 –00 4,083,498 519,335,991 242,283,659 –00 894,877 243,178,536
Foreign Currency Bonds 10,724,047 (357,615 ) 198,212 10,564,644 6,932,009 (163,826 ) 208,400 6,976,583
Ijarah Sukuks 26,952,616 –00 (209,517 ) 26,743,099 14,865,277 (65,310 ) (5,386 ) 14,794,581
Sukuks 44,022,624 –00 139,475 44,162,099 4,468,750 –00 –00 4,468,750
Term Finance Certificates - Unlisted 285,714 –00 –00 285,714 571,429 –00 –00 571,429
740,654,169 (357,615 ) 4,702,367 744,998,921 564,554,945 (229,136 ) 1,895,941 566,221,750
Shares
Listed Companies 4,317,644 (1,785,373 ) 581,425 3,113,696 4,221,866 (1,561,364 ) 428,546 3,089,048
Unlisted Companies 154,236 (5,700 ) –00 148,536 104,236 (5,700 ) –00 98,536
4,471,880 (1,791,073 ) 581,425 3,262,232 4,326,102 (1,567,064 ) 428,546 3,187,584
Non Government Debt Securities

Term Finance Certificates and Sukuks
Listed
Term Finance Certificates 1,995,195 –00 (73,522 ) 1,921,673 1,947,922 –00 (46,982 ) 1,900,940
Sukuks 1,322,529 –00 (96,458 ) 1,226,071 1,504,215 –00 (94,777 ) 1,409,438
3,317,724 –00 (169,980 ) 3,147,744 3,452,137 –00 (141,759 ) 3,310,378
Unlisted
Term Finance Certificates 199,940 –00 –00 199,940 199,960 –00 –00 199,960
Sukuks 2,025,000 –00 –00 2,025,000 1,981,339 –00 –00 1,981,339
2,224,940 –00 –00 2,224,940 2,181,299 –00 –00 2,181,299
Others
Unlisted Company 4,481 (4,481 ) –00 –00 –00 –00 –00 –00
Foreign Securities
Government Securities 8,600,515 (1,037,333 ) (1,215,066 ) 6,348,116 6,991,970 (41,719 ) (48,396 ) 6,901,855
Associates
Habib Sugar Mills Limited 182,690 –00 –00 182,690 182,690 –00 –00 182,690
AL Habib Asset Management Limited
(formerly Habib Asset Management Limited) –00 –00 –00 –00 81,000 –00 –00 81,000
First Habib Income Fund 150,000 –00 –00 150,000 150,000 –00 –00 150,000
First Habib Stock Fund 10,000 –00 –00 10,000 10,000 –00 –00 10,000
First Habib Cash Fund 1,650,000 –00 –00 1,650,000 150,000 –00 –00 150,000
First Habib Islamic Stock Fund 10,000 –00 –00 10,000 10,000 –00 –00 10,000
First Habib Islamic Income Fund 24,656 –00 –00 24,656 549,656 –00 –00 549,656
First Habib Asset Allocation Fund 20,000 –00 –00 20,000 20,000 –00 –00 20,000
2,047,346 –00 –00 2,047,346 1,153,346 –00 –00 1,153,346
Subsidiaries
AL Habib Capital Markets (Private) Limited 200,000 –00 –00 200,000 200,000 –00 –00 200,000
AL Habib Asset Management Limited
(formerly Habib Asset Management Limited) 683,250 –00 –00 683,250 –00 –00 –00 –00
883,250 –00 –00 883,250 200,000 –00 –00 200,000
Units of Mutual Funds 2,125,000 (444,440 ) 350,397 2,030,957 3,125,000 (373,875 ) 233,167 2,984,292
56
2020 2019
(Rupees in '000)
8.2.1 Investments given as collateral
Market Treasury Bills
Carrying value 98,003,080 153,188,536
Surplus 424,285 276,366
98,427,365 153,464,902
8.3 Provision for diminution in value of investments
Opening balance 2,211,794 558,769
Exchange adjustments against IFRS 9 in overseas branches 3,978 2,909
Charge / reversals
Charge for the year 295,807 1,418,245
Charge of impairment as per IFRS 9 in overseas branches 1,120,117 231,871
Reversal on disposal (1,235) –00
1,414,689 1,650,116
Others 4,481 –00
Closing balance 3,634,942 2,211,794
8.4 Quality of Available for Sale Securities

Details regarding quality of available for securities are as follows:
Cost
2020 2019
(Rupees in '000)
8.4.1 Federal Government Securities - Government guaranteed
Market Treasury Bills 143,416,675 295,433,821
Pakistan Investment Bonds 360,611,418 109,035,246
Foreign Currency Bonds 6,510,541 5,784,962
Ijarah Sukuks 26,952,616 4,108,362
Sukuks 43,380,941 4,468,750
Term Finance Certificates - Unlisted 285,714 571,429
581,157,905 419,402,570
8.4.2 Shares
8.4.2.1 Listed Companies
Automobile Assembler 199,842 199,842
Cement 292,921 292,921
Commercial Banks 150,024 150,024
Fertiliser 923,380 923,380
Food and Personal Care Products 23,211 23,211
Insurance 29,975 29,975
Securities Companies 92,509 92,509
Oil and Gas Marketing Companies 788,541 788,541
Paper and Board 38,264 38,264
Pharmaceuticals 21,775 21,775
Power Generation and Distribution 1,607,640 1,607,640
Technology and Communication 13,140 13,140
Textile Composite 40,644 40,644
4,221,866 4,221,866
57
2020 2019
8.4.2.2 Unlisted Companies Break up Cost Breakup Cost Breakup
value as at value value
(Rupees in '000)
Khushhali Bank Limited December 31, 2019 30,000 165,372 30,000 144,255
Pakistan Export Finance Guarantee
Agency Limited – 5,700 –00 5,700 –00
Society for Worldwide Interbank Financial
Telecommunication (S.W.I.F.T) – 18,536 –00 18,536 –00
Pakistan Mortgage Refinance
Company Limited December 31, 2019 50,000 64,183 50,000 50,746
1LINK (Guarantee) Limited December 31, 2019 50,000 202,032 –00 –00
154,236 431,587 104,236 195,001
Cost
2020 2019
(Rupees in '000)
8.4.3 Non Government Debt Securities
8.4.3.1 Listed
AA+ 1,267,724 1,449,410
AA 200,000 152,727
AA- 500,000 500,000
A 1,300,000 1,300,000
A- 50,000 –00
3,317,724 3,402,137
8.4.3.2 Unlisted
AA 1,200,000 900,000
AA- 750,000 750,000
A+ 75,000 284,707
A 100,000 100,000
A- –00 149,960
BBB+ 99,940 –00
2,224,940 2,184,667
8.4.4 Mutual funds

AAA(f) 50,000 50,000
AA(f) 550,000 1,650,000
AA-(f) 200,000 200,000
A+(f) 100,000 –00
Unrated 1,225,000 1,225,000
2,125,000 3,125,000
58
2020 2019
8.4.5 Foreign Securities Cost Rating Cost Rating
(Rupees in '000)
Government Securities
Bahrain 319,668 B+ 309,695 BB-
Srilanka 3,723,756 CCC 4,247,753 B
Egypt 2,097,411 B+ 1,246,574 B+
Turkey 751,021 BB- 720,201 BB-
6,891,856 6,524,223
Cost
2020 2019
(Rupees in '000)
8.5 Particulars relating to Held to Maturity securities are as follows:
Federal Government Securities - Government guaranteed

Ijarah Sukuks –00 10,756,915
Sukuks 641,683 –00
159,496,264 145,152,375
Non Government Debt Securities - Unlisted

- A+ –00 46,632
Others
Pakistan Corporate Restructuring Company Limited (PCRCL) 4,481 –00
2020 2019
Foreign Securities Cost Rating Cost Rating
(Rupees in '000)
Egypt 482,0900 B+ 467,747 B+

Srilanka 1,226,5690 CCC –00 –
1,708,6590 467,747
8.5.1 The market value of securities classified as held to maturity at 31 December 2020 amounted to
Rs. 168,809 million (2019: Rs. 148,608 million).
59
8.6 Associates
2020 2019 Name of companies / funds Note 2020 2019
No. of ordinary shares / units (Rupees in '000)
9,415,312 9,415,312 Habib Sugar Mills Limited 8.6.2 182,690 182,690
% of holding: 6.28% (2019: 6.28%)
Par value per share: Rs. 5
Market value: Rs. 319.273 million (2019: Rs. 360.136 million)
Chief Executive: Mr. Raeesul Hasan
–00 9,000,000 AL Habib Asset Management Limited 8.6.3 –00 81,000
(formerly Habib Asset Management Limited)
1,363,808 1,363,808 First Habib Income Fund 150,000 150,000
% of holding: 17.86% (2019: 21.91%)
Average cost per unit: Rs. 109.99 (2019: Rs. 109.99)
Net asset value: Rs. 103.48 (2019: Rs. 106.01)
Management Company: AL Habib Asset Management Limited
Chief Executive of the Management Company: Mr. Kashif Rafi
100,000 100,000 First Habib Stock Fund 10,000 10,000
% of holding: 7.09% (2019: 6.67%)
Average cost per unit: Rs. 100 (2019: Rs. 100)
16,288,303 1,392,189 First Habib Cash Fund 1,650,000 150,000
% of holding: 12.47% (2019: 6.61%)
100,929 100,929 First Habib Islamic Stock Fund 10,000 10,000
% of holding: 8.23% (2019: 7.16%)
250,421 5,493,453 First Habib Islamic Income Fund 24,656 549,656
% of holding: 0.22% (2019: 14.32%)
200,149 200,149 First Habib Asset Allocation Fund 20,000 20,000
% of holding: 19.75% (2019: 17.87%)
Net Asset Value: Rs. 101.98 (2019: Rs. 90.70)
2,047,346 1,153,346
8.6.1 The place of business and incorporation of associates is Pakistan.
60
Associates - Key Information First Habib First Habib
(Based on latest audited financial statements) First Habib First Habib First Habib First Habib Islamic Asset
Habib Sugar Income Stock Cash Islamic Income Allocation
Mills Limited Fund Fund Fund Stock Fund Fund Fund
(Rupees in '000)
Assets 11,106,205 1,507,587 111,069 4,540,353 119,489 9,050,920 107,688
Liabilities 2,483,243 384,865 6,227 903,419 16,084 20,828 1,136
Total income 10,138,211 100,485 3,020 280,375 3,806 470,279 3,792
Profit / (loss) before taxation 804,295 85,788 (1,564) 254,764 (355) 425,663 (314)
Profit / (loss) after taxation 694,295 85,788 (1,564) 254,764 (355) 425,663 (314)
Other comprehensive income 265,474 –00 –00 –00 –00 –00 –00
8.6.2 Due to common directorship in Habib Sugar Mills Limited, the Bank considers the investee company as an associate.
8.6.3 During the year, the Bank has acquired 21,000,000 shares of AL Habib Asset Management Limited and increased its shareholding to 100%. Accordingly,
the investment is reclassified as investment in subsidiary. Subsequent to acquisition, the Bank has also made additional investment of Rs. 450 million.
8.7 Subsidiaries
2020 2019 Name of companies Note 2020 2019
No. of ordinary shares (Rupees in '000)
20,000,000 20,000,000 AL Habib Capital Markets (Private) Limited 200,000 200,000
% of holding: 66.67% (2019: 66.67%)
Break up value per share: Rs. 10.63
Chief Executive: Mr. Aftab Q. Munshi
Principal place of business: Pakistan
75,000,000 –00 AL Habib Asset Management Limited 8.6.3 683,250 –00
% of holding: 100% (2019: Nil)
Break up value per share: Rs. 9.08
Chief Executive: Mr. Kashif Rafi
Principal place of business: Pakistan
883,250 200,000
9. ADVANCES
Note Performing Non Performing Total
2020 2019 2020 2019 2020 2019
(Rupees in '000)
Loans, cash credits, running finances, etc. 9.1 429,521,092 407,463,485 6,970,943 6,989,020 436,492,035 414,452,505
Islamic financing and related assets 58,248,930 50,662,682 218,174 82,542 58,467,104 50,745,224
Bills discounted and purchased 27,742,924 32,876,085 192,356 186,354 27,935,280 33,062,439
Advances - gross 515,512,946 491,002,252 7,381,473 7,257,916 522,894,419 498,260,168
Provision against advances

- Specific –00 –00 6,497,479 6,201,412 6,497,479 6,201,412
- General as per regulations 267,290 263,290 –00 –00 267,290 263,290
- General 5,750,000 3,000,000 –00 –00 5,750,000 3,000,000
- As per IFRS 9 in overseas branches 128,018 126,019 –00 –00 128,018 126,019
6,145,308 3,389,309 6,497,479 6,201,412 12,642,787 9,590,721
Advances - net of provision 509,367,638 487,612,943 883,994 1,056,504 510,251,632 488,669,447
61
9.1 Includes net investment in finance lease as disclosed below:
2020 2019
Later than Later than
Not later one and Not later one and
than one less than than one less than
year five years Total year five years Total
(Rupees in '000)
Lease rentals receivable 7,448,062 12,376,700 19,824,762 8,477,197 9,784,780 18,261,977

Residual value 1,707,629 2,978,287 4,685,916 1,426,512 4,826,361 6,252,873
Minimum lease payments 9,155,691 15,354,987 24,510,678 9,903,709 14,611,141 24,514,850
Financial charges for future periods (1,059,738) (1,702,182) (2,761,920) (1,884,098) (1,717,790) (3,601,888)
Present value of minimum lease payments 8,095,953 13,652,805 21,748,758 8,019,611 12,893,351 20,912,962
9.2 Particulars of advances (Gross) 2020 2019

(Rupees in '000)
In local currency 453,533,720 409,294,620

In foreign currencies 69,360,699 88,965,548
522,894,419 498,260,168
9.3 Advances include Rs. 7,381.473 million (2019: Rs. 7,257.916 million) which have been placed under
non-performing status as detailed below:
2020 2019
Category of classification Non Non
Performing Provision Performing Provision
Loans Loans
(Rupees in '000)
Domestic
Other assets especially mentioned 62,671 292 82,730 456
Substandard 165,014 33,385 377,335 84,250
Doubtful 1,118,292 499,908 1,014,818 503,459
Loss 3,987,501 3,965,101 3,696,404 3,681,349
5,333,478 4,498,686 5,171,287 4,269,514
Overseas
Overdue by:
181 to 365 days 136,600 87,398 913,445 758,714
> 365 days 1,911,395 1,911,395 1,173,184 1,173,184
2,047,995 1,998,793 2,086,629 1,931,898
Total 7,381,473 6,497,479 7,257,916 6,201,412
62
9.4 Particulars of provision against advances
Note 2020 2019

Specific General Total Specific General Total
(Rupees in '000)
Opening balance 6,201,412 3,389,309 9,590,721 4,351,895 3,378,284 7,730,179
Exchange adjustments 68,496 5,158 73,654 104,015 16,608 120,623
Charge for the year
- Specific provision 887,878 –00 887,878 2,092,790 –00 2,092,790

- General provision
as per regulations –00 4,000 4,000 –00 25,191 25,191
- As per IFRS 9 in
overseas branches –00 (3,159) (3,159) –00 (30,774) (30,774)
- General provision for
loans and advances 9.4.2 –00 2,750,000 2,750,000 –00 –00 –00
Reversals (648,847) –00 (648,847) (345,809) –00 (345,809)
239,031 2,750,841 2,989,872 1,746,981 (5,583) 1,741,398
Amounts written off 9.5 (6,979) –00 (6,979) (1,479 ) –00 (1,479 )
Others 9.6 (4,481) –00 (4,481) –00 –00 –00
Closing balance 6,497,479 6,145,308 12,642,787 6,201,412 3,389,309 9,590,721
9.4.1 Particulars of provision against advances

2020 2019
(Rupees in '000)
In local currency 4,498,686 6,017,290 10,515,976 4,269,514 3,263,290 7,532,804

In foreign currencies 1,998,793 128,018 2,126,811 1,931,898 126,019 2,057,917
6,497,479 6,145,308 12,642,787 6,201,412 3,389,309 9,590,721
9.4.2 In line with its prudent policies, the Bank has also made general provision of Rs. 2,750 million (2019: Nil), bringing
the total of such provision to Rs. 5,750 million (2019: Rs. 3,000 million). This general provision is in addition to the
requirements of the Prudential Regulations.
9.4.3 For the purposes of determining provision against non - performing advances, the Bank has not taken into account
the Forced Sales Value of pledged stock and mortgaged properties held as collateral against non - performing
advances.
9.5 PARTICULARS OF WRITE OFFs Note 2020 2019

(Rupees in '000)
9.5.1 Against Provisions 9.4 6,979 1,479
Directly charged to Profit and Loss account –00 –00
6,979 1,479
9.5.2 Write Offs of Rs. 500,000 and above
- Domestic 9.7 4,360 815
Write Offs of below Rs. 500,000 2,619 664
6,979 1,479
63
9.6 This represents Rs. 4.481 million of non-performing loan was transferred to Pakistan Corporate
Restructuring Company Limited (PCRCL) during the year.
9.7 DETAILS OF LOAN WRITE OFF OF Rs. 500,000/- AND ABOVE
In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the Statement in
respect of written-off loans or any other financial relief of rupees five hundred thousand or above allowed
to a person(s) during the year ended is given in Annexure I.
Note 2020 2019

(Rupees in '000)
10. FIXED ASSETS

Capital work - in - progress 10.1 2,279,324 1,597,551
Property and equipment 10.2 41,688,669 34,964,957
43,967,993 36,562,508
10.1 Capital work - in - progress

Civil works 454,808 652,132
Advance payment for purchase of equipments 51,867 68,212
Advance payment towards suppliers, contractors and property 1,740,546 854,366
Consultants’ fee and other charges 32,103 22,841
2,279,324 1,597,551
10.2 Property and Equipment

2020
Right of use
Leasehold Building on Furniture Electrical, office Improvements assets -
land Leasehold and and computer Vehicles to leasehold building on Total
land fixture equipment building leasehold land
(Rupees in '000)
At 01 January 2020
Cost / Revalued amount 10,724,438 10,083,880 1,420,179 8,831,843 3,390,210 2,766,206 9,594,046 46,810,802
Accumulated depreciation –00 (779,371 ) (576,463 ) (5,761,312) (1,601,324) (1,732,020 ) (1,395,355 ) (11,845,845 )
Net book value 10,724,438 9,304,509 843,716 3,070,531 1,788,886 1,034,186 8,198,691 34,964,957
Year ended 31 December 2020

Opening net book value 10,724,438 9,304,509 843,716 3,070,531 1,788,886 1,034,186 8,198,691 34,964,957
Additions 291,338 1,100,546 274,354 1,439,840 947,251 394,308 –00 4,447,637
Additions to ROUs –00 –00 –00 –00 –00 –00 3,224,658 3,224,658
Movement in surplus on assets
revalued during the year 1,703,806 1,914,291 –00 –00 –00 –00 –00 3,618,097
Disposals –00 (14,051 ) (2,207 ) (3,680) (137,195) (1,723 ) –00 (158,856 )
Depreciation charge –00 (434,007 ) (128,696 ) (1,075,530) (623,281) (518,608 ) (1,661,393 ) (4,441,515 )
Other adjustments / transfers 130,450 (72,826 ) –00 –00 –00 (2,720 ) (21,213 ) 33,691
Closing net book value 12,850,032 11,798,462 987,167 3,431,161 1,975,661 905,443 9,740,743 41,688,669
At 31 December 2020
Net book value 12,850,032 11,798,462 987,167 3,431,161 1,975,661 905,443 9,740,743 41,688,669
Rate of depreciation (percentage) –00 2.22% - 20% 10% 20% 20% 20% –00
64
2019
Right of use
(Rupees in '000)
At 01 January 2019
Accumulated depreciation –00 (460,141 ) (496,056 ) (4,942,336) (1,562,803) (1,273,423 ) –00 (8,734,759 )
Net book value 9,005,011 9,035,318 737,999 3,203,942 1,552,088 1,214,916 8,139,524 32,888,798
Additions 1,706,068 601,780 220,951 874,149 921,505 301,388 –00 4,625,841
Disposals –00 –00 (3,587 ) (5,747) (130,093) (4,235 ) –00 (143,662 )
Other adjustments / transfers 13,359 (13,359 ) –00 –00 –00 –00 –00 –00
Closing net book value 10,724,438 9,304,509 843,716 3,070,531 1,788,886 1,034,186 8,198,691 34,964,957
At 31 December 2019
Net book value 10,724,438 9,304,509 843,716 3,070,531 1,788,886 1,034,186 8,198,691 34,964,957
Rate of depreciation (percentage) –00 2.22% - 12.50% 10% 20% 20% 20% –00
10.3 In accordance with the Bank's accounting policy, the Bank's leasehold land and buildings on leasehold
land were revalued at 01 June 2020. The revaluation was carried out by an independent valuer, M/s. Iqbal
A. Nanjee & Co. on the basis of present physical condition and location of leasehold land and buildings
on leasehold land. Fair values were ascertained by the independent valuer through various enquiries
conducted by them at site from real estate agents and brokers. The revaluation resulted in surplus of
Rs. 3,618.097 million over the book value of the respective properties and also net deficit of Rs. 122.190
million on certain properties. Had the leasehold land and buildings on leasehold land not been revalued,
the total carrying amounts of revalued properties as at 31 December 2020 would have been as follows:
2020 2019
(Rupees in '000)
Leasehold land 8,730,369 4,788,144
Buildings on leasehold land 6,932,544 4,670,487
10.4 The gross carrying amount of fully depreciated assets
still in use is as follows:
Furniture and fixture 225,879 200,124
Electrical, office and computer equipment 4,099,451 3,144,841
Vehicles 514,711 450,511
4,840,041 3,795,476
10.5 Details of disposal of fixed assets during the year:

2020
Particulars Cost Book Insurance
value claim
Habib Insurance Company Limited - (Rupees in '000)
(Related Party - Karachi)
Furniture and fixture 1,396 371 833
Electrical, office and computer equipment 12,754 1,034 11,153
Vehicles 7,480 2,321 6,681
65
11. INTANGIBLE ASSETS 2020 2019
(Rupees in '000)
Computer software
At 01 January,
Cost 1,279,007 862,562
Accumulated amortisation (913,579) (695,632 )
Net book value 365,428 166,930
Year ended 31 December,
Opening net book value 365,428 166,930
Additions directly purchased 133,070 416,445
Amortisation charge (287,387) (217,947 )
Closing net book value 211,111 365,428
At 31 December,
Cost 1,412,077 1,279,007
Accumulated amortisation (1,200,966) (913,579 )
Net book value 211,111 365,428
Rate of amortisation (percentage) 50% 50%
Useful life 2 years 2 years
11.1 As at 31 December 2020, the gross carrying amount of fully amortised intangible assets still in use
amounted to Rs. 867.542 million (2019: Rs. 632.194 million).
12. OTHER ASSETS Note 2020 2019

(Rupees in '000)
Income / mark - up accrued in local currency - net of provision 16,941,538 19,895,629

Income / mark - up accrued in foreign currencies - net of provision 691,713 600,408
Advances, deposits, advance rent and other prepayments 672,169 581,084
Advance taxation (payments less provisions) –00 682,237
Non - banking assets acquired in satisfaction of claims 12.1 814,912 874,900
Mark to market gain on forward foreign exchange contracts 931,153 1,032,137
Acceptances 52,522,498 36,264,680
Stationery and stamps on hand 393,693 240,307
Receivable from SBP on encashment of Government Securities 33,013 41,680
Non - refundable deposits –00 35,845
ATM settlement account 943,062 239,233
Others 867,290 1,208,650
74,811,041 61,696,790
Less: Provision held against other assets 12.2 (6,884 ) (7,383 )
Other Assets (net of provision) 74,804,157 61,689,407
Surplus on revaluation of non - banking assets acquired in
satisfaction of claims 12.1 139,165 34,482
Other Assets - total 74,943,322 61,723,889
12.1 Market value of non - banking assets acquired in satisfaction of claims 957,093 1,013,291
66
Market value of the non-banking assets acquired in satisfaction of claims has been carried out by an independent
valuers, M/s. K.G.Traders (Pvt.) Ltd. and MYK Associates (Pvt.) Ltd. based on present physical condition and
location of non - banking assets. Fair values were ascertained by the independent valuers through various enquiries
conducted by them at site from real estate agents and brokers.
2020 2019
(Rupees in '000)
12.1.1 Non - banking assets acquired in satisfaction of claims
Opening balance 909,382 836,448
Additions –00 80,000
Revaluations 106,658 –00
Transferred to fixed assets (54,904) –00
Depreciation (7,059) (7,066)
Closing balance 954,077 909,382
12.2 Provision held against other assets

Receivable against consumer loans 6,884 7,383
12.2.1 Movement in provision held against other assets
Charge for the year 6,080 2,108
Reversals (5,255) (1,658)
825 450
Amount written off (1,324) (346)
13. CONTINGENT ASSETS

There were no contingent assets of the Bank as at 31 December 2020 (2019: Nil).
Note 2020 2019
(Rupees in '000)
14. BILLS PAYABLE
In Pakistan 31,013,221 20,168,673
15. BORROWINGS
Secured
Borrowings from the State Bank of Pakistan
Under export refinance scheme 15.1 58,086,099 42,657,650
Under renewable energy 15.2 8,958,686 3,946,903
Under long term financing for imported and locally
manufactured plant and machinery 15.3 25,128,756 19,796,175
Under modernisation of small and medium enterprises 15.4 331,848 310,422
Under women entrepreneurship 15.5 26,957 19,159
Under financing facility for storage of agricultural produce 15.6 416,073 2,869
Under refinance scheme for payment of wages and salaries 15.7 15,720,186 –00
Under temporary economic refinance facility 15.8 4,387,473 –00
113,056,078 66,733,178
Repurchase agreement borrowings 15.9 98,345,030 153,365,059
Borrowings from financial institutions –00 7,742,380
Total secured 211,401,108 227,840,617
Unsecured
Overdrawn nostro accounts 198,297 904,417
211,599,405 228,745,034
67
15.1 These carry mark - up rates ranging from 1% to 2% (2019: 1% to 2%) per annum, payable quarterly at
the time of partial payment or upon maturity of loan, whichever is earlier.
15.2 These carry mark - up rates of 2% to 3% (2019: 2% to 3%) per annum having maturity periods over
ten years.
15.3 These carry mark - up rates ranging from 2% to 6% (2019: 2% to 6%) per annum having maturity periods
over ten years.
15.4 These carry mark - up rates of 2% (2019: 2%) per annum having maturity periods upto seven years.
15.5 These carry mark - up rate of Nil (2019: Nil) per annum having maturity periods upto five years.
15.6 These carry mark - up rates from 2.5% to 3.5% (2019: 2.00%) per annum having maturity periods upto
seven years.
15.7 These carry mark - up rates upto 1% (2019: Nil) per annum having maturity periods upto three years.
15.8 These carry mark - up rates of 1% (2019: Nil) per annum having maturity periods upto ten years.
15.9 These repurchase agreement borrowings are secured against market treasury bills. These carry effective
mark - up rates of 7.05% (2019: 13.10% to 13.45%) per annum, having maturity periods upto one week.
15.10 Particulars of borrowings with respect to currencies 2020 2019

(Rupees in '000)

In foreign currencies 198,297 8,646,797
211,599,405 228,745,034
16. DEPOSITS AND OTHER ACCOUNTS

2020 2019
In local In foreign In local In foreign
currency currencies Total currency currencies Total
(Rupees in '000)
Customers
Current deposits 351,389,228 40,963,348 392,352,576 280,838,981 34,758,774 315,597,755
Savings deposits 283,179,499 43,773,628 326,953,127 222,230,042 38,657,119 260,887,161
Term deposits 177,719,569 40,377,454 218,097,023 162,116,200 33,990,552 196,106,752
Current deposits
- remunerative 120,360,146 2,247,064 122,607,210 96,456,401 771,529 97,227,930
Others 15,419,195 7,337,309 22,756,504 11,695,770 8,186,073 19,881,843
948,067,637 134,698,803 1,082,766,440 773,337,394 116,364,047 889,701,441
Financial institutions
Current deposits 3,568,698 203,742 3,772,440 1,717,725 1,234,067 2,951,792
Savings deposits 576,096 18 576,114 4,407,712 16 4,407,728
Term deposits 1,335,500 135,060 1,470,560 1,750,000 114,123 1,864,123
Current deposits
- remunerative 10,381,784 697,737 11,079,521 4,578,433 192,643 4,771,076
Others 21,286 –00 21,286 6,622 –00 6,622
15,883,364 1,036,557 16,919,921 12,460,492 1,540,849 14,001,341
963,951,001 135,735,360 1,099,686,361 785,797,886 117,904,896 903,702,782
68
2020 2019
(Rupees in '000)
16.1 Composition of deposits

- Individuals 694,690,728 582,949,390
- Government (Federal and Provincial) 43,377,359 29,894,596
- Public Sector Entities 52,701,961 36,377,166
- Banking Companies 341,145 3,888,753
- Non-Banking Financial Institutions 16,578,776 10,112,588
- Private Sector 291,996,392 240,480,289
1,099,686,361 903,702,782
16.2 Deposits includes eligible deposits covered under deposit protection mechanism as required by the
Deposit Protection Act, 2016 amounting to Rs. 787,834.683 million (2019: Rs. 623,000.257 million).
Note 2020 2019

(Rupees in '000)
17. SUBORDINATED DEBT - Unsecured

Term Finance Certificates (TFCs) - V - (Unquoted) 17.1 3,992,800 3,994,400
Term Finance Certificates (TFCs) - VI - (Unquoted) 17.2 7,000,000 7,000,000
Term Finance Certificates (TFCs) - VII - (Unquoted) 17.3 3,996,800 3,998,400
14,989,600 14,992,800
17.1 Term Finance Certificates - V (Unquoted)
Issue amount Rupees 4,000 million

Issue date March 2016
Maturity date March 2026
Rating AA
Profit payment frequency semi - annually
Redemption 6th - 108th month: 0.36%; 114th and 120th month: 49.82% each
Mark - up Payable six monthly at six months' KIBOR plus 0.75% without any
floor and cap.
Call option On or after five years with prior SBP approval.
Lock - in - clause Neither profit nor principal may be paid if such payments will result
in shortfall in the Bank’s Minimum Capital Requirement (“MCR”)
or Capital Adequacy Ratio (“CAR”).
Loss absorbency clause The instrument will be subject to loss absorption and / or any other
requirements under SBP’s Basel III Capital Rules. Upon the
occurrence of a Point of Non - Viability event as defined by SBP's
Basel III Capital Rule, SBP may at its option, fully and permanently
convert the TFCs into common shares of the Bank (subject to a cap)
and / or have them immediately written off (either partially or in full).
69
17.2 Term Finance Certificates - VI (Unquoted)

Issue date December 2017
Maturity date Perpetual
Rating AA-
Redemption No fixed or final redemption date
Mark - up Payable six monthly at six months' KIBOR plus 1.5% without any
floor and cap.
The issuer will have full discretion over the amount and timing of profit
distribution, and waiver of any profit distribution or other payment will
not constitute an event of default.
Call option On or after five years. As per SBP's requirement, the Bank shall not
exercise call option unless the called instrument is replaced with
capital of same or better quality.
Lock - in - clause No profit may be paid if such payments will result in shortfall in the
Bank’s Minimum Capital Requirement (“MCR”) or Capital Adequacy
Ratio (“CAR”).
and /or have them immediately written off (either partially or in full).
17.3 Term Finance Certificates - VII (Unquoted)

Maturity date December 2028
Rating AA
Redemption 6th - 108th month: 0.02% per each semi-annual period; 114th and
120th month: 49.82% each.
Mark - up 6-Months KIBOR (ask side) + 1.00% per annum.
Lock - in - clause Neither profit nor principal may be paid if such payments will result
in shortfall in the Bank’s Minimum Capital Requirement (“MCR”),
Leverage Ratio ("LR") or Capital Adequacy Ratio (“CAR”).
and / or have them immediately written off (either partially or in full).
70
18. DEFERRED TAX LIABILITIES
2020
Recognised Recognised
At 01 in profit in other At 31
January and loss comprehensive December
2020 account income 2020
(Rupees in '000)
Taxable Temporary Differences on
Accelerated tax depreciation 960,038 (32,608) –00 927,430
Surplus on revaluation of fixed assets / non - banking assets 984,461 (56,261) 678,314 1,606,514
Remeasurement of defined benefit plan 165,629 (165,629 ) –00 –00
Surplus on revaluation of available for sale investments 828,625 –00 658,305 1,486,930
Surplus on revaluation of held for trading securities –00 270 –00 270
2,938,753 (254,228 ) 1,336,619 4,021,144
Deductible Temporary Differences on

Provision against diminution in the value of investments (772,704) (498,101) –00 (1,270,805 )
Provision against loans and advances, off balance sheet, etc. (785,860) (939,576) –00 (1,725,436 )
Workers’ welfare fund –00 (848,152 ) –00 (848,152 )
(1,558,564) (2,285,829 ) –00 (3,844,393 )
1,380,189 (2,540,057 ) 1,336,619 176,751
2019
At 01 in profit in other At 31
January and loss comprehensive December
2019 account income 2019
(Rupees in '000)
Accelerated tax depreciation 1,042,090 (82,052) –00 960,038
Surplus on revaluation of fixed assets / non - banking assets 1,023,644 (39,183) –00 984,461
Remeasurement of defined benefit plan 246,397 (80,768 ) –00 165,629
Surplus on revaluation of available for sale investments (688,967) –00 1,517,592 828,625
1,623,164 (202,003 ) 1,517,592 2,938,753

Provision against diminution in the value of investments (194,145) (578,559 ) –00 (772,704 )
Provision against loans and advances, off balance sheet, etc. (71,145) (714,715 ) –00 (785,860 )
Surplus on revaluation of held for trading investments (7,671) 7,671 –00 –00
(272,961) (1,285,603 ) –00 (1,558,564 )
1,350,203 (1,487,606 ) 1,517,592 1,380,189
71
Note 2020 2019
(Rupees in '000)
19. OTHER LIABILITIES
Mark - up / return / interest payable in local currency 1,683,612 4,945,307

Mark - up / return / interest payable in foreign currencies 196,066 253,120
Unearned commission income 304,009 241,742
Accrued expenses 2,532,647 1,281,288
Acceptances 52,522,498 36,264,680
Unclaimed dividends 474,931 426,525
Mark to market loss on forward foreign exchange contracts 490,822 1,767,178
Branch adjustment account 2,639,104 2,336,825
Payable to defined benefit plan 683,514 473,227
Charity payable 41,298 43,474
Provision against off - balance sheet items 19.1 146,692 129,369
Security deposits against leases / ijarah 5,690,619 6,532,535
Provision for compensated absences 19.2 969,754 722,300
Special exporters’ accounts in foreign currencies 43,518 194,604
Other security deposits 647,203 592,271
Workers’ welfare fund 2,423,293 1,751,577
Payable to SBP / NBP 455,014 210,373
Payable to supplier against murabaha 166,017 186,648
Insurance payable 470,883 455,266
Lease liability against right-of-use assets 10,526,139 8,316,718
Current taxation (payments less provisions) 450,248 –00
Others 1,211,732 1,064,496
84,769,613 68,189,523
19.1 Provision against off - balance sheet obligations
Exchange adjustment against IFRS 9 in overseas branches 1,470 9,738

Reversals (3,895 ) (27,866 )
15,853 3,031
19.1.1 The provision against off-balance sheet obligations includes provision in respect of letter of guarantees
and shipping guarantee.
19.2 Provision for compensated absences has been determined on the basis of independent actuarial
valuation. The significant assumptions used for actuarial valuation were as follows:
2020 2019
(% per annum)
Discount rate 10.25% 12.25%
Expected rate of increase in salary in future years 9.25% 11.25%
72
20. SHARE CAPITAL
20.1 Authorised Capital
2020 2019 2020 2019
Number of shares (Rupees in '000)
1,500,000,000 1,500,000,000 Ordinary shares of Rs. 10 each 15,000,000 15,000,000
20.2 Issued, subscribed and paid up capital

2020 2019
Number of shares
30,000,000 30,000,000 Fully paid in cash 300,000 300,000

1,081,425,416 1,081,425,416 Issued as bonus shares 10,814,254 10,814,254
1,111,425,416 1,111,425,416 11,114,254 11,114,254
20.3 As of statement of financial position date 162,818,503 (2019: 180,881,503) ordinary shares of
Rs. 10/- each were held by the related parties.
Note 2020 2019
(Rupees in '000)
21. SURPLUS ON REVALUATION OF ASSETS
Surplus on revaluation of:
- Available for sale securities 8.1 4,248,372 2,367,499

- Fixed Assets 21.1 9,062,739 5,495,269
- Non - banking assets acquired in satisfaction of claims 21.2 139,165 34,482
13,450,276 7,897,250
Deferred tax on surplus on revaluation of:
- Available for sale securities 1,486,930 828,625

- Fixed Assets 21.1 1,663,701 1,049,269
3,163,792 1,883,434
10,286,484 6,013,816
21.1 Surplus on revaluation of fixed assets

Surplus on revaluation of fixed assets as at 01 January 5,495,269 5,605,295
Surplus on revaluation of the Bank’s fixed assets during the year 3,726,240 –00
Transferred to unappropriated profit in respect of incremental
depreciation charged during the year - net of deferred tax (103,200 ) (71,517 )
Related deferred tax liability on incremental depreciation
charged during the year (55,570 ) (38,509 )
Surplus on revaluation of fixed assets as at 31 December 9,062,739 5,495,269
Less: related deferred tax liability on:
- revaluation as at 01 January 1,049,269 1,087,778

- revaluation recognised during the year 670,002 –00
- incremental depreciation charged during the year (55,570 ) (38,509 )
1,663,701 1,049,269
7,399,038 4,446,000
73
Note 2020 2019
(Rupees in '000)
21.2 Surplus on revaluation of non - banking assets acquired
in satisfaction of claims
Surplus on revaluation of non-banking assets as at 01 January 34,482 36,408
Surplus on revaluation of non-banking assets during the year 106,658 –00
charged during the year (691 ) (674 )
Surplus on revaluation of non-banking assets as at 31 December 139,165 34,482
- revaluation as at 01 January 5,540 6,214
- incremental depreciation charged during the year (691 ) (674 )
13,161 5,540
126,004 28,942
22. CONTINGENCIES AND COMMITMENTS
- Guarantees 22.1 92,814,672 81,086,627
- Commitments 22.2 351,718,547 346,877,061
- Other contingent liabilities 22.3 1,537,827 4,673,685
446,071,046 432,637,373
22.1 Guarantees:
Financial guarantees 20,716,906 16,237,352
Performance guarantees 72,097,766 64,849,275
92,814,672 81,086,627
22.2 Commitments:
Documentary credits and short term trade - related transactions
- letters of credit 207,740,057 145,745,358
Commitments in respect of:
- forward foreign exchange contracts 22.2.1 128,823,137 197,844,773
- forward lending 22.2.2 7,124,914 2,214,998
Commitments for acquisition of:
- operating fixed assets 8,030,439 1,071,932
351,718,547 346,877,061
22.2.1 Commitments in respect of forward foreign exchange contracts

Purchase 75,472,905 106,704,798
Sale 53,350,232 91,139,975
128,823,137 197,844,773
The maturities of above contracts are spread over the periods upto one year.
22.2.2 Commitments in respect of forward lending 7,124,914 2,214,998
22.2.2.1 These represent commitments that are irrevocable because they cannot be withdrawn at the discretion
of the Bank without the risk of incurring significant penalty or expense.
74
2020 2019
(Rupees in '000)
22.3 Claims against the Bank not acknowledged as debts 1,537,827 4,673,685
22.4 Other contingent liabilities
Income tax returns of the Bank have been submitted upto and including the Bank’s financial year 2019
(Tax Year 2020). The income tax assessments of the Bank are complete upto tax year 2018.
For tax year 2012 and 2013, the Additional Commissioner Inland Revenue (ACIR) passed an amended
order u/s. 122(5A) of the Income Tax Ordinance, 2001 resulting in an impact of Rs. 482.233 million.
Subsequently, Commissioner Inland Revenue (Appeals) has passed order by allowing Rs. 134.616
million resulting in an aggregate net tax impact of Rs. 347.617 million. The Bank has filed an appeal
before Income Tax Appellate Tribunal (ITAT) against the above mentioned orders.
Commissioner Inland Revenue (Appeals) passed an appellate order against Deputy Commissioner
Inland Revenue (DCIR) order for Tax Year 2014 (Accounting Year 2013) by allowing certain expenses
resulting in an impact of Rs. 25.300 million and remanded back certain expenses to DCIR. The resulted
aggregate net tax impact stands at Rs. 125.469 million. The Bank has filed an appeal before Income
Tax Appellate Tribunal (ITAT) against the above mentioned order.
Commissioner Inland Revenue (Appeals) passed an appellate order against Additional Commissioner
Inland Revenue (ACIR) order for Tax Year 2015 (Accounting Year 2014) by allowing certain expenses
resulting in an impact of Rs. 75.256 million and remanded back certain expenses to ACIR. The resulted
aggregate net tax impact stands at Rs. 69.261 million. The Bank has filed an appeal before Income Tax
Appellate Tribunal (ITAT) against the above mentioned order.
Additional Commissioner Inland Revenue (ACIR) has finalized order u/s. 122(5A) of Tax Year 2018 (Accounting
Year 2017) by disallowing certain expenses resulting in an impact of Rs. 260.098 million. The Bank has
filed an appeal before Commissioner Inland Revenue (Appeals) against the order.
Commissioner Inland Revenue (Appeals) has remanded back the order of Deputy Commissioner Inland
Revenue (DCIR) against Federal Excise Duty levy on certain items for the period January 2013 to
December 2015. The resulted aggregate net tax impact stands at Rs. 80.766 million.
Commissioner (HQ), Punjab Revenue Authority has passed order for the period from January to
December 2016 levying Punjab Sales Tax on services on certain items resulting in an impact of
Rs. 112.641 million. The Bank has filed an appeal before Appellate Tribunal (Punjab Revenue Authority).
Commissioner Inland Revenue (Appeals) has passed orders for tax years 2009 and 2011 confirming
disallowance of provision for non-performing loans, other provisions and amortization of intangible
assets having an aggregate tax impact of Rs. 15.372 million. The Bank has filed an appeal before ITAT
against the above referred orders.
Commissioner Inland Revenue (Appeals), Mirpur AJ&K has annulled the amendments made by Assistant
Commissioner Inland Revenue, Mirpur AJ&K for Tax Year 2014 to 2018. This resulted in a favorable
aggregate net tax impact of Rs. 93.443 million.
Assistant Commissioner Inland Revenue, Mirpur AJ&K has finalized audit of the Bank’s Azad Kashmir
operations for Tax Year 2019 by disallowing certain expenses resulting in an impact of Rs. 92.311 million.
The Bank has filed an appeal before Commissioner Inland Revenue (Appeals), Mirpur AJ&K.
The management, based on the opinion of its tax advisor, is confident about the favorable outcome of
the above matters.
75
23. DERIVATIVE INSTRUMENTS
The Bank deals in derivative financial instruments namely forward foreign exchange contracts and
foreign currency swaps with the principal view of hedging the risks arising from its trade business. As
per the Bank’s policy, these contracts are reported on their fair value at the statement of financial position
date. The gains and losses from revaluation of these contracts are included under “income from dealing
in foreign currencies”. Unrealised gains and losses on these contracts are recorded in the statement
of financial position under “other assets / other liabilities”. These products are offered to the Bank’s
customers to protect from unfavourable movements in foreign currencies. The Bank hedges such
exposures in the inter - bank foreign exchange market.
23.1 Product Analysis
2020
CONTRACT SWAP TOTAL
Counter Parties Notional Mark to Notional Mark to Notional Mark to
Principal Market Principal Market Principal Market
gain / (loss) gain / (loss) gain / (loss)
(Rupees in '000)
Banks
Hedging 9,107,115 (27,012) 68,172,458 372,325 77,279,573 345,313
Other Entities
Hedging 51,543,564 95,018 –000 –000 51,543,564 95,018
Total
Hedging 60,650,679 68,006 68,172,458 372,325 128,823,137 440,331
2019
(Rupees in '000)
Banks
Hedging 6,661,765 26,468 129,746,798 (917,715 ) 136,408,563 (891,247)
Other Entities
Hedging 61,436,210 156,206 –000 –000 61,436,210 156,206
Total
Hedging 68,097,975 182,674 129,746,798 (917,715 ) 197,844,773 (735,041)
23.2 Maturity Analysis 2020

Number of Notional Mark to Market
Contracts Principal
Negative Positive Net
(Rupees in '000)
Upto 1 month 297 51,974,821 (112,849) 296,381 183,532
1 to 3 months 412 46,596,575 (218,736) 340,228 121,492
3 to 6 months 352 19,991,703 (128,829) 161,815 32,986
6 months to 1 year 177 10,260,038 (30,408) 132,729 102,321
1,238 128,823,137 (490,822) 931,153 440,331
2019
(Rupees in '000)
Upto 1 month 233 72,985,102 (770,198) 272,735 (497,463)
1 to 3 months 445 73,198,078 (840,319) 238,992 (601,327)
3 to 6 months 396 37,979,403 (132,541) 260,852 128,311
6 months to 1 year 258 13,682,190 (24,120) 259,558 235,438
1,332 197,844,773 (1,767,178) 1,032,137 (735,041)
76
Note 2020 2019
(Rupees in '000)
24. MARK - UP / RETURN / INTEREST EARNED
On loans and advances 43,412,475 50,320,400
On investments 81,094,310 53,033,167
On deposits with financial institutions 350,731 671,641
On securities purchased under resale agreements 198,514 1,291,640
On call money lendings 216,557 284,877
125,272,587 105,601,725
25. MARK - UP / RETURN / INTEREST EXPENSED

Deposits 48,041,028 49,250,286
Borrowings from SBP 1,616,923 1,166,339
Subordinated debt 1,753,337 1,944,179
Cost of foreign currency swaps 1,165,922 1,637,026
Repurchase agreement borrowings 13,923,326 9,404,347
Other borrowings 195,169 278,709
67,652,611 64,415,666
26. FEE AND COMMISSION INCOME

Branch banking customer fees 1,052,854 1,086,265
Investment banking fees 127,450 70,380
Consumer finance related fees 54,645 44,287
Card related fees (debit and credit cards) 533,648 626,717
Credit related fees 147,185 121,788
Commission on trade 4,046,591 3,454,118
Commission on guarantees 406,053 411,148
Commission on cash management 176,337 196,473
Commission on home remittances 118,958 54,728
Others 14,516 27,200
6,678,237 6,093,104
27. GAIN / (LOSS) ON SECURITIES

Realised 27.1 184,851 (32,469 )
Unrealised - held for trading 771 –00
185,622 (32,469 )
27.1 Realised gain / (loss) on:

Federal Government Securities 5,494 100
Shares 10,960 (33,325 )
Mutual funds 168,397 756
184,851 (32,469 )
28. OTHER INCOME

Rent on property 5,990 2,100
Gain on sale of fixed assets - net 437,189 377,002
Recovery of expenses from customers 28.1 322,776 271,455
Lockers rent 13,176 10,085
Others 1,124 3,289
780,255 663,931
28.1 Includes courier, SWIFT, postage and other charges recovered from customers.
77
Note 2020 2019
(Rupees in '000)
29. OPERATING EXPENSES
Total compensation expenses 29.1 15,442,454 12,232,953
Property expenses
Rent and taxes 310,778 364,045
Insurance 19,265 16,710
Utilities cost 1,094,841 1,047,320
Security (including guards) 1,029,806 871,860
Repair and maintenance (including janitorial charges) 326,252 240,392
Depreciation 2,621,067 2,199,534
Amortisation –00 7,609
5,402,009 4,747,470
Information technology expenses

Software maintenance 4,667 4,417
Hardware maintenance 1,194,369 465,967
Depreciation 223,401 251,689
Network charges 430,124 390,911
2,139,948 1,330,931
Other operating expenses

Directors’ fees and allowances 35,037 45,650
Fees and allowances to Shariah Board 12,679 9,819
Insurance 494,678 357,902
Legal and professional charges 171,636 180,822
Outsourced services costs 29.2 1,639,293 1,435,776
Travelling and conveyance 188,097 243,601
NIFT and other clearing charges 136,532 126,269
Depreciation 1,604,106 1,416,385
Repair and maintenance 1,453,085 1,203,134
Training and development 27,116 45,691
Postage and courier charges 231,505 216,537
Communication 344,705 280,696
Stationery and printing 782,915 898,758
Marketing, advertisement and publicity 628,577 264,463
Donations 29.3 157,132 110,700
Auditors remuneration 29.4 8,117 6,600
Commission and brokerage 408,345 614,359
Entertainment and staff refreshment 285,541 307,372
Vehicle running expenses 1,097,251 863,258
Subscriptions and publications 209,754 167,579
CNIC verification charges 92,171 131,145
Security charges 311,961 278,742
Others 735,301 202,669
11,055,534 9,407,927
34,039,945 27,719,281
78
2020 2019
(Rupees in '000)
29.1 Total compensation expense
Fees and allowances etc. 663,964 438,579
Managerial remuneration 9,748,008 7,519,463
Charge for defined benefit plan 424,170 403,923
Contribution to defined contribution plan 600,454 527,940
Rent and house maintenance 2,592,508 2,239,780
Utilities 648,628 560,065
Medical 505,450 394,481
Charge for employees compensated absences 247,041 135,164
Social security 1,477 1,681
Staff indemnity 10,754 11,877
15,442,454 12,232,953
The compensation provided by the Bank to employees is composed of fixed pay structures and do not
include any variable element that varies based on performance benchmarks or targets.
29.2 Total cost for the year included in other operating expenses relating to material outsourced activities is
Rs. 35.885 million (2019: Rs. 30.693 million) paid to a company incorporated outside Pakistan. Material
outsourcing arrangements are as follows:
S.No. Name of material outsourced activity Name of Service Provider Nature of Service
1. Merchant On - Boarding and Terminal M/s. Wemsol (Private) Limited Point of Sale (POS) acquiring
Management Services
2. Credit Card system M/s. Arab Financial Services (AFS) Credit Card
2020 2019
(Rupees in '000)
29.3 The detail of donations is given below:
Al-Sayyeda Benevolent Trust 3,000 3,000
Childlife Foundation 10,000 –00
Habib Education Trust* 3,000 3,000
Habib Medical Trust 3,000 3,000
Habib Poor Fund** 3,000 3,000
Jinnah Foundation (Memorial) Trust –00 2,000
Panah Trust –00 500
Patients’ Aid Foundation 50,000 85,000
Rahmatbai Habib Food and Clothing Trust 3,000 3,000
Rahmatbai Habib Widows and Orphans Trust 3,000 3,000
The Citizens Foundation 5,600 5,200
Masoomeen Hospital 13,000 –00
The Indus Hospital 10,000 –00
The Kidney Centre 25,000 –00
Prime Minister‘s Corona Philanthropy Drive 25,532 –00
157,132 110,700
* Mr. Qumail R. Habib, Executive Director, is Managing Trustee of Habib Education Trust.
** Mr. Murtaza H. Habib, Director, is Trustee of Habib Poor Fund.
29.4 Auditors’ remuneration
Audit fee 3,135 2,613
Half yearly review 990 825
Special certifications 2,759 2,301
Gratuity fund 109 91
Out of pocket expenses 1,124 770
8,117 6,600
30. OTHER CHARGES
Penalties imposed by the State Bank of Pakistan 56,672 93,244
79
2020 2019
Note (Rupees in '000)
31. PROVISIONS AND WRITE OFFS - NET
Provisions for diminution in value of investments 8.3 1,414,689 1,650,116
Provision against loans and advances - net 9.4 2,989,872 1,741,398
Provision against other assets 12.2.1 825 450
Deficit on revaluation of fixed asset - net 10.3 122,190 –00
4,543,429 3,394,995
32. TAXATION
Current 13,300,165 8,757,958
Prior years 9,420 571,907
Deferred (2,540,057 ) (1,487,606 )
10,769,528 7,842,259
32.1 Relationship between tax expense and accounting profit

Tax at the applicable rate of 35% (2019: 35%) 10,003,372 6,653,848

Tax effects of:
Expenses that are not deductible in determining
taxable income 215,073 115,977
Tax effect of super tax 1,351,810 1,468,844
Others 32.1.1 (800,727 ) (396,410 )
10,769,528 7,842,259
32.1.1 This includes adjustments to temporary differences pertaining to the prior years.
2020 2019
(Rupees in '000)
33. BASIC AND DILUTED EARNINGS PER SHARE
Profit for the year 17,811,536 11,168,736
(Number)
Weighted average number of ordinary shares 1,111,425,416 1,111,425,416
(Rupees)
Basic and diluted earnings per share 16.03 10.05
2020 2019
34. CASH AND CASH EQUIVALENTS

Overdrawn nostro accounts 15 (198,297) (904,417)
125,400,165 122,458,343
80
34.1 Reconciliation of movement of liabilities to cash flows arising from financing activities
2020
Subordinated Lease Dividend
debt liability
(Rupees in '000)
Balance as at 01 January 2020 14,992,800 8,316,718 426,525
Changes from financing cash flows

Payments against subordinated debt (3,200 ) –00 –00
Payment against lease liability –00 (1,972,143) –00
Dividend paid –00 –00 (3,841,582 )
Total changes from financing cash flows (3,200 ) (1,972,143) (3,841,582 )
Other changes
Addition to right-of-use-assets –00 3,224,658 –00
Mark-up expense on lease liability against
right-of-use assets –00 956,906 –00
Cash dividend (Rs. 3.50 per share) –00 –00 3,889,988
–00 4,181,564 3,889,988
Balance as at 31 December 2020 14,989,600 10,526,139 474,931
2019
debt liability
(Rupees in '000)
Balance as at 01 January 2019 14,996,000 –00 415,647

Dividend paid –00 –00 (2,767,686 )
Other changes
Addition to right-of-use-assets - net –00 9,594,025 –00
–00 10,328,805 2,778,564
81
2020 2019
(Number)
35. STAFF STRENGTH
Permanent 12,485 11,315

Temporary / on contractual basis 243 220
Bank’s own staff at end of the year 12,728 11,535
Outsourced 2,768 2,594
Total staff strength 15,496 14,129
35.1 Domestic 15,443 14,080

Offshore 53 49
15,496 14,129
36. DEFINED BENEFIT PLAN

36.1 General description
The Bank operates an approved gratuity fund for all its confirmed employees, which is administered by
the Trustees. The benefits under the gratuity scheme are payable on retirement at the age of 60 years
or on earlier cessation of service as under:
Number of years of eligible service completed: Amount of gratuity payable:
Less than 5 years Nil
5 years or more but less than 10 years 1/3rd of basic salary for each year served
15 years or more Full basic salary for each year served
The Bank’s costs and contributions are determined based on actuarial valuation carried out at each
year end using Projected Unit Credit Actuarial Method. All actuarial gains and losses are recognised in
‘other comprehensive income’ as they occur and are not reclassified to profit and loss account in
subsequent periods.
36.2 Number of employees under the scheme
The number of employees covered under the defined benefit scheme are 12,459 (2019: 11,073).
36.3 Principal actuarial assumptions
The latest actuarial valuation of the scheme was carried out on 31 December 2020 and the significant
assumptions used for actuarial valuation were as follows:
2020 2019
Discount Rate 10.25% 12.25%

Expected rate of return on plan assets 14.83% 23.73%
Expected rate of salary increase : Year 1 9.25% 11.25%
Year 2 9.25% 11.25%
Mortality rates (for death in service) SLIC(2001-05)-1 SLIC(2001-05)-1
Rates of employee turnover Moderate Moderate
82
36.4 Reconciliation of payable to defined benefit plan Note 2020 2019
(Rupees in '000)
Present value of obligations 4,323,932 3,590,184

Fair value of plan assets (3,640,418 ) (3,116,957 )
Payable 683,514 473,227
36.5 Movement in defined benefit obligations
Obligation at the beginning of the year 3,590,184 2,993,002

Current service cost 369,454 319,391
Interest cost 450,696 389,264
Benefits paid during the year (72,206 ) (120,225 )
Remeasurement (gain) / loss (14,196 ) 8,752
Obligation at the end of the year 4,323,932 3,590,184
36.6 Movement in fair value of plan assets
Fair value at the beginning of the year 3,116,957 2,289,010

Interest income on plan assets 395,980 304,732
Contribution by the Bank - net 424,170 403,923
Actual benefits paid during the year (72,206 ) (120,225 )
Remeasurement (loss) / gain on plan assets 36.8.2 (224,483 ) 239,517
Fair value at the end of the year 3,640,418 3,116,957
36.7 Movement in payable under defined benefit scheme

Contribution by the Bank (424,170 ) (403,923 )
Remeasurement loss / (gain) recognised in
Other Comprehensive Income during the year 36.8.2 210,287 (230,765 )
Closing Balance 683,514 473,227
36.8 Charge for defined benefit plan
36.8.1 Cost recognised in profit and loss

Net interest on defined benefit liability 54,716 84,532
424,170 403,923
83
2020 2019
(Rupees in '000)
36.8.2 Re-measurements recognised in OCI during the year
(Gain) / loss on obligation
- Financial assumptions (47,418 ) (9,703 )
- Experience assumptions 33,222 18,455
(14,196 ) 8,752
Actuarial loss / (gain) on plan assets 224,483 (239,517 )
Total Remeasurement loss / (gain) recognised in OCI 210,287 (230,765 )
36.9 Components of plan assets

Cash and cash equivalents - net 30,183 265,219
Unquoted investments
Government securities 3,610,235 2,851,738
Total fair value of plan assets 3,640,418 3,116,957
36.10 Sensitivity analysis 2020

(Rupees in '000)
1% increase in discount rate 3,915,527

1% decrease in discount rate 4,802,959
1% increase in expected rate of salary increase 4,824,891
1% decrease in expected rate of salary increase 3,890,634
2021
(Rupees in '000)
36.11 Expected contributions to be paid to the funds in the next financial year 491,345
36.12 Expected charge for the next financial year 491,345
2020
(Rupees in '000)
36.13 Maturity profile
The weighted average duration of the obligation is 10.20 years.
Distribution of timing of benefit payments

within the next 12 months (next annual reporting period) 248,812
between 2 and 5 years 1,558,487
5,370,466
84
36.14 Funding Policy
The Bank will fund the yearly contribution to the defined benefit plan each year, as per the amount
calculated by the valuer.
36.15 Significant Risk
Asset Volatility
The Defined Benefit Gratuity Fund is almost entirely invested in Government Bonds with mostly fixed
income bonds. Almost 47.55% of the total Investments (Rs. 1.731 billion) is invested in PIB's. This gives
rise to significant reinvestment risk.
The remaining fund is invested in Treasury Bills. The T-Bills exposure is almost 51.61% (Rs. 1.879 billion).
The asset class is volatile with reference to the yield on this class. This risk should be viewed together
with change in the bond yield risk.
Changes in Bond Yields
There are two dimensions to the changes in Bond yields: first, as described above; second, the valuation
of the gratuity liability is discounted with reference to these bond yields. So any increase in Bond yields
will lower the gratuity liability and vice versa, but, it will also lower the asset values.
Inflation Risk
The salary inflation is the major risk that the gratuity fund liability carries. In a general economic sense
and in a longer view, there is a case that if bond yields increase, the change in salary inflation generally
offsets the gains from the decrease in discounted gratuity liability. But viewed with the fact that asset
values will also decrease, the salary inflation does, as an overall affect, increases the net liability of the
Bank.
Life Expectancy / Withdrawal Rate
The gratuity is paid off at the maximum of age 60. The life expectancy is in almost minimal range and
is quite predictable in the ages when the employee is in the accredited employment of the Bank for the
purpose of the gratuity. Thus, the risk of life expectancy is almost negligible. However, had a post
retirement benefit been given by the Bank like monthly pension, post retirement medical etc., this would
have been a significant risk which would have been quite difficult to value even by using advance mortality
improvement models.
The withdrawal risk is dependent upon the: benefit structure; age and retention profile of the staff; the
valuation methodology; and long-term valuation assumptions. In this case, it is not a significant risk.
Other Risks
Though, not imminent and observable, over long term there are some risks that may crystallize. This
includes:
85
Model Risk
The defined benefit gratuity liability is usually actuarially valued each year. Further, the assets in the
gratuity fund are also marked to market. This two-tier valuation gives rise to the model risk.
Retention Risk
The risk that employee will not be motivated to continue the service or start working with the Bank if no
market comparable retirement benefit is provided.
Final Salary Risk
The risk, for defined benefit gratuity, that any disproportionate salary merit increases in later service
years will give rise to multiplicative increase in the gratuity liability as such increase is applicable to all
the past years of service.
Operational Risk related to a Separate Entity
Retirement benefits are funded through a separate trust fund which is a different legal entity than the Bank.
Generally, the protocols, processes and conventions used throughout the Bank are not applicable or
are not actively applied to the retirement benefit funds. This gives rise to some specific operational risks.
Compliance Risk
The risk that retirement benefits offered by the Bank does not comply with minimum statutory requirements.
Legal / Political Risk
The risk that the legal / political environment changes and the Bank is required to offer additional or
different retirement benefits than what the Bank projected.
37. DEFINED CONTRIBUTION PLAN
The general description of the plan is included in note 4.9.
2020
Contributions made during the year : (Rupees in '000)
Employer’s contribution 600,454

Employees’ contribution 600,454
The number of employees covered under the defined contribution plan are 11,110 (2019: 10,262).
86
38. COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
38.1 Total Compensation Expense

2020
Directors
Chairman Executives Non- Members Chief Key Other Risk
(other than Executives Shariah Executive Management Takers /
CE) Board Personnel Controllers
(Rupees in '000)
Fees and allowances etc. 6,720 –00 24,400 –00 –00 –00 –00
Managerial remuneration –00 33,550 –00 8,316 66,333 396,585 1,401,108
Charge for defined benefit plan –00 –00 –00 255 29,839 98,138 270,256
Contribution to defined
contribution plan –00 –00 –00 212 4,600 22,850 94,759
Rent and house maintenance –00 9,460 –00 3,030 18,400 112,795 402,379
Utilities –00 2,374 –00 758 5,480 28,199 100,595
Medical –00 22 –00 108 –00 1,299 30,896
Others 3,917 –00 –00 –00 –00 5,074 25,653
Total 10,637 45,406 24,400 12,679 124,652 664,940 2,325,646
Number of persons 1 1 8 3 1 40 879
2019
(Rupees in '000)
Charge for defined benefit plan –00 6,353 –00 –00 19,793 38,648 106,639
contribution plan –00 2,150 –00 103 3,733 18,579 84,896
Utilities –00 2,162 –00 618 4,482 22,147 88,433
Medical –00 –00 –00 108 –00 1,080 29,016
Others –00 500 –00 –00 417 4,655 20,708
Total 27,500 46,765 18,150 9,819 90,358 446,976 1,776,464
87
Chief Executive, Executive Director, Members Shariah Board, Key Management Personal and Other Risk Takers / Controllers are entitled
to Bank's maintained cars with fuel in accordance with the terms of their employment and are entitled to medical and life insurance
benefits in accordance with the policy of the Bank. In addition, the Chief Executive and Executive Director are also provided with drivers,
security arrangements and payment of travel bills in accordance with their terms of employment.
Chairman of the Board is also entitled to Bank’s maintained cars with fuel, security guard services, payment of utility bills, club and
entertainment bills, travelling bills, appropriate office, staff, and administrative support.
38.2 Remuneration paid to Directors for participation in Board and Committee Meetings
2020
Meeting Fees and Allowances Paid
For Board Committees
Human
Resource & Risk Credit Risk Total
S.No. Name of Director For Board Audit Remuneration Management Management IFRS 9 IT Amount
Meetings Committee Committee Committee Committee Committee Committee Paid
(Rupees in '000)
1. Mr. Abbas D. Habib 2,880 –00 1,920 –00 –00 –00 1,920 6,720
2. Mr. Anwar Haji Karim 900 1,550 –00 400 –00 –00 –00 2,850
3. Ms. Farhana Mowjee Khan 900 –00 650 650 –00 –00 –00 2,200
4. Syed Mazhar Abbas 900 1,400 650 –00 650 –00 650 4,250
5. Mr. Safar Ali Lakhani 900 1,550 –00 650 400 –00 –00 3,500
6. Syed Hasan Ali Bukhari 900 1,550 650 –00 650 500 –00 4,250
7. Mr. Murtaza H. Habib 900 –00 –00 –00 650 –00 –00 1,550
8. Mr. Arshad Nasar 900 1,550 650 –00 –00 500 650 4,250
9. Mr. Adnan Afridi 900 –00 –00 650 –00 –00 –00 1,550
10,080 7,600 4,520 2,350 2,350 1,000 3,220 31,120
88
2019
Human
(Rupees in '000)
1. Mr. Ali Raza D. Habib 150 –00 –00 –00 –00 –00 –00 150
5. Mr. Safar Ali Lakhani 600 1,200 300 600 600 –00 –00 3,300
6. Syed Hasan Ali Bukhari 600 1,200 600 –00 600 –00 –00 3,000
8. Mr. Arshad Nasar 600 1,200 600 –00 –00 –00 600 3,000
9. Mr. Adnan Afridi 450 –00 –00 300 –00 –00 –00 750
10. Mr. Manzoor Ahmed 150 –00 –00 150 –00 –00 –00 300
4,800 5,850 2,250 1,950 2,250 –00 1,050 18,150
38.3 Remuneration paid to Shariah Board Members

2020 2019
Resident Non-Resident Resident Non-Resident
Items Chairman Member Member Chairman Member Member
(Rupees in '000)
Managerial remuneration 3,400 2,516 2,400 2,800 1,720 2,000

Charge for defined benefit plan –00 255 –00 –00 –00 –00
Contribution to defined contribution plan –00 212 –00 –00 103 –00
Rent and house maintenance 1,360 710 960 1,120 550 800
Utilities 340 178 240 280 138 200
Medical 36 36 36 36 36 36
Total 5,136 3,907 3,636 4,236 2,547 3,036
Number of persons 1 1 1 1 1 1
88
39. FAIR VALUE MEASUREMENTS
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable willing parties in an arm's length transaction. Fair value of financial instruments is based
on:
Federal Government Securities PKRV rates (Reuters page)

Foreign Securities Market prices / Mashreqbank PSC
Listed securities Prices quoted at Pakistan Stock Exchange Limited
Mutual funds Net asset values declared by respective funds
Unlisted equity investments Break - up value as per latest available audited financial
statements
Fair value of fixed term advances of over one year, staff loans and fixed term deposits of over one year
cannot be calculated with sufficient reliability due to non - availability of relevant active market for similar
assets and liabilities. The provision for impairment of debt securities and loans and advances has been
calculated in accordance with the Bank's accounting policies as stated in notes 4.13 and 4.4.
39.1 Fair value of financial assets
The Bank measures fair values using the following fair value hierarchy that reflects the significance of
the inputs used in making the measurements:
Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets
or liabilities.
Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are
observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Fair value measurements using input for the asset or liability that are not based on observable
market data (i.e. unobservable inputs).
90
The table below analyses financial instruments measured at the end of the reporting period by the
level in the fair value hierarchy into which the fair value measurement is categorised:
2020
Level 1 Level 2 Level 3 Total
On balance sheet financial instruments (Rupees in '000)
Financial assets - measured at fair value
Investments
Federal Government Securities 21,226,600 564,406,847 –00 585,633,447
Shares 3,017,147 –00 –00 3,017,147
Non-Government Debt Securities 3,147,744 2,224,940 –00 5,372,684
Foreign Securities –00 4,767,358 –00 4,767,358
Mutual funds –00 2,030,957 –00 2,030,957
Financial assets - disclosed but not
measured at fair value
Investments
Federal Government Securities –00 166,892,984 –00 166,892,984
Non-Government Debt Securities –00 1,657,161 –00 1,657,161
Associates 00
Listed shares 319,273 –00 –00 319,273
Mutual funds –00 1,848,641 –00 1,848,641
Off-balance sheet financial instruments -

Forward purchase of foreign exchange contracts –00 75,583,778 –00 75,583,778
Forward sale of foreign exchange contracts –00 (53,020,774) –00 (53,020,774 )
2019
Investments
Shares 3,089,046 –00 –00 3,089,046
Mutual funds –00 2,984,292 –00 2,984,292
Investments
Non-Government Debt Securities –00 407,752 –00 407,752
Associates 00
Listed shares 360,136 –00 –00 360,136
Mutual funds –00 894,766 –00 894,766

Forward sale of foreign exchange contracts –00 (92,907,153) –00 (92,907,153 )
39.2 Certain fixed assets and non banking assets acquired in satisfaction of claims have been carried at revalued amounts
determined by professional valuer (level 3 measurement) based on their assessment of the market value.
39.3 Foreign exchange contracts are valued using exchange rates declared by the State Bank of Pakistan.
91
40. TRUST ACTIVITIES
The Bank is not engaged in any trust activities other than holding investments of individuals and entities
in its IPS account maintained with the State Bank of Pakistan.
41. SEGMENT INFORMATION
41.1 Segment Details with respect to Business Activities
The segment analysis with respect to business activity is as follows:
2020
Commercial Retail Total
banking banking
(Rupees in '000)
Profit and loss account
Mark - up / return / profit 107,083,569 18,189,018 125,272,587
Inter segment revenue - net –00 29,560,092 29,560,092
Non mark - up / return / interest income 2,967,246 7,305,604 10,272,850
Total income 110,050,815 55,054,714 165,105,529
Segment direct expenses (68,281,137) (34,139,807) (102,420,944 )

Inter segment expense allocation (29,560,092) –00 (29,560,092 )
Total expenses (97,841,229) (34,139,807) (131,981,036 )
Provisions (4,511,744) (31,685) (4,543,429 )
Profit before tax 7,697,842 20,883,222 28,581,064
Statement of financial position

Cash and bank balances 108,376,778 17,221,684 125,598,462
Investments 764,943,506 –00 764,943,506
Net inter segment lending –00 663,583,850 663,583,850
Lendings to financial institutions 2,175,301 –00 2,175,301
Advances - performing 439,491,420 69,876,218 509,367,638
- non-performing 796,039 87,955 883,994
Others 102,788,717 16,333,709 119,122,426
Total assets 1,418,571,761 767,103,416 2,185,675,177
Borrowings 211,599,405 –00 211,599,405

Subordinated debt 14,989,600 –00 14,989,600
Deposits and other accounts 412,837,148 686,849,213 1,099,686,361
Net inter segment borrowing 663,583,850 –00 663,583,850
Others 43,715,576 72,244,009 115,959,585
Total liabilities 1,346,725,579 759,093,222 2,105,818,801
Equity 71,846,182 8,010,194 79,856,376
Total equity and liabilities 1,418,571,761 767,103,416 2,185,675,177
Contingencies and commitments 300,377,484 177,245 300,554,729
92
2019
Commercial Retail Total
banking banking
(Rupees in '000)
Mark - up / return / profit 96,226,769 9,374,956 105,601,725
Inter segment revenue - net –00 31,667,850 31,667,850
Non mark - up / return / interest income 3,234,924 6,245,947 9,480,871
Total income 99,461,693 47,288,753 146,750,446
Segment direct expenses (58,040,232) (34,636,374) (92,676,606 )

Inter segment expense allocation (31,667,850) –00 (31,667,850 )
Total expenses (89,708,082) (34,636,374) (124,344,456 )
Provisions (3,386,417) (8,578) (3,394,995 )
Profit before tax 6,367,194 12,643,801 19,010,995

Cash and bank balances 113,906,872 9,455,888 123,362,760
Investments 586,140,504 –00 586,140,504
Net inter segment lending –00 581,041,519 581,041,519
Lending to financial institutions 1,857,575 –00 1,857,575
Advances - performing 450,257,279 37,355,664 487,612,943
- non-performing 955,129 101,375 1,056,504
Others 91,090,056 7,561,769 98,651,825
Total assets 1,244,207,415 635,516,215 1,879,723,630
Borrowings 228,745,034 –00 228,745,034

Subordinated debt 14,992,800 –00 14,992,800
Deposits and other accounts 328,083,837 575,618,945 903,702,782
Net inter segment borrowing 581,041,519 –00 581,041,519
Others 33,349,056 56,389,329 89,738,385
Total liabilities 1,186,212,246 632,008,274 1,818,220,520
Equity 57,995,169 3,507,941 61,503,110
Total equity and liabilities 1,244,207,415 635,516,215 1,879,723,630
Contingencies and commitments 226,672,893 159,092 226,831,985
93
41.2 Segment details with respect to geographical locations
GEOGRAPHICAL SEGMENT ANALYSIS

2020
Pakistan Middle East Asia Pacific Africa Total
(Rupees in '000)
Mark - up / return / profit 122,501,000 1,268,780 1,372,606 130,201 125,272,587
Non mark - up / return / interest income 9,703,780 388,209 181,411 (550) 10,272,850
Total income 132,204,780 1,656,989 1,554,017 129,651 135,545,437
Segment direct expenses (100,633,170) (794,621) (887,256) (105,897) (102,420,944)

Provisions (3,422,585) (576,013) (528,892) (15,939) (4,543,429)
Profit before tax 28,149,025 286,355 137,869 7,815 28,581,064

Cash and bank balances 125,387,063 160,218 47,955 3,226 125,598,462
Investments 745,208,314 10,132,651 7,503,288 2,099,253 764,943,506
Net inter segment lendings 4,489,540 7,006,181 829,541 2,552 12,327,814
Lending to financial institutions 2,175,301 –00 –00 –00 2,175,301
Advances - performing 474,619,293 18,747,396 15,967,837 33,112 509,367,638
- non-performing 834,792 49,202 –00 –00 883,994
Others 98,626,780 2,462,635 17,992,718 40,293 119,122,426
Total assets 1,451,341,083 38,558,283 42,341,339 2,178,436 1,534,419,141
Borrowings 211,599,405 –00 –00 –00 211,599,405

Subordinated debt 14,989,600 –00 –00 –00 14,989,600
Deposits and other accounts 1,049,290,270 27,167,746 23,137,597 90,748 1,099,686,361
Net inter segment borrowings 5,143,103 5,307,456 394,791 1,482,464 12,327,814
Others 95,778,810 2,363,473 17,805,707 11,595 115,959,585
Total liabilities 1,376,801,188 34,838,675 41,338,095 1,584,807 1,454,562,765
Equity 74,539,895 3,719,608 1,003,244 593,629 79,856,376
Total equity and liabilities 1,451,341,083 38,558,283 42,341,339 2,178,436 1,534,419,141
Contingencies and commitments 294,581,495 5,157,900 815,334 –00 300,554,729
94
2019
(Rupees in '000)
Non mark - up / return / interest income 9,144,967 194,062 141,368 474 9,480,871
Total income 112,416,214 1,397,824 1,172,344 96,214 115,082,596

Provisions (2,447,667) (808,646) (102,920) (35,762) (3,394,995)
Profit before tax 18,942,036 (142,043) 256,739 (45,737) 19,010,995

Investments 569,580,848 8,398,048 6,547,783 1,613,825 586,140,504
Advances - performing 453,318,827 19,780,937 14,513,179 –00 487,612,943
- non-performing 901,773 154,731 –00 –00 1,056,504
Others 83,308,445 556,284 14,756,839 30,257 98,651,825
Total assets 1,233,828,747 37,636,067 36,293,317 1,649,259 1,309,407,390
Borrowings 221,002,654 7,742,380 –00 –00 228,745,034

Deposits and other accounts 861,667,642 23,867,406 18,010,982 156,752 903,702,782
Net inter segment borrowings 6,037,213 1,605,050 2,169,415 913,601 10,725,279
Others 74,623,306 494,784 14,608,357 11,938 89,738,385
Equity 55,505,132 3,926,447 1,504,563 566,968 61,503,110
42. RELATED PARTY TRANSACTIONS

Related parties of the Bank comprise subsidiaries, associates (including entities having directors in
common with the Bank), retirement benefit funds, major shareholders, directors and key management
personnel and their close family members.
Transactions with related parties of the Bank are carried out on arm’s length basis in terms of the policy
as approved by the Board of Directors. The transactions with employees of the Bank are carried out in
accordance with the terms of their employment.
95
Transactions with related parties, other than those disclosed in note 10.5, 20.3 and 38 are summarised as follows:
2020 2019
Directors Key management Subsidiaries Associates Other related Directors Key Management Subsidiaries Associates Other related
personnel parties personnel parties
(Rupees in '000)
Investments
Opening balance –00 –00 200,000 1,153,346 –00 –00 –00 200,000 628,346 –00
Investment made during the year –00 –00 683,250 1,500,000 –00 –00 –00 –00 525,000 –00
Investments adjusted / redeemed / disposed off during the year –00 –00 –00 (606,000 ) –00 –00 –00 –00 –00 –00
Closing balance –00 –00 883,250 2,047,346 –00 –00 –00 200,000 1,153,346 –00
Advances
Opening balance 1,487 76,626 15,622 3,015,256 –00 1,313 53,257 –00 1,359,059 –00
Addition during the year 35,349 333,923 16,369,273 56,387,053 –00 55,443 363,717 7,585,878 33,451,951 –00
Repaid during the year (36,504 ) (239,005 ) (16,183,722 ) (57,184,560 ) –00 (55,269 ) (340,348 ) (7,570,256 ) (31,795,754 ) –00
Closing balance 332 11171,544 201,173 2,217,749 –00 1,487 76,626 15,622 3,015,256 –00
Operating fixed assets
Right of use –00 –00 –00 3,931 –00 –00 –00 –00 7,076 –00
Other assets
Interest / mark-up accrued –00 118 –00 1,289 –00 –00 55 –00 10,667 –00
L/C acceptance –00 –00 –00 1,090,910 –00 –00 –00 –00 350,867 –00
Other receivable –00 –00 3,890 –00 –00 –00 –00 –00 1,525 –00
Subordinated debt
Opening balance –00 –00 –00 44,000 –00 –00 –00 –00 –00 –00
Issued / purchased during the year –00 –00 –00 –00 –00 –00 –00 –00 44,000 –00
Closing balance –00 –00 –00 44,000 –00 –00 –00 –00 44,000 –00
Deposits and other accounts
Opening balance 955,078 624,163 111,826 3,536,956 513,730 587,452 816,406 47,744 4,876,833 536,801
Received during the year 6,891,056 3,205,958 20,436,016 189,014,948 8,825,958 11,221,419 2,996,758 8,414,981 150,071,628 29,846,047
Withdrawn during the year (6,773,450) (3,109,203) (20,071,258) (188,770,664 ) (8,761,856) (10,853,793 ) (3,189,001 ) (8,350,899) (151,411,505) (29,869,118)
Closing balance 1,072,684 720,918 476,584 3,781,240 577,832 955,078 624,163 111,826 3,536,956 513,730
Other liabilities
Interest / mark-up payable 305 508 –00 16,925 –00 3,799 4,118 8 15,309 2,216
Payable to staff retirement fund –00 –00 –00 –00 683,514 –00 –00 –00 –00 473,226
L/C acceptance –00 –00 –00 1,090,910 –00 –00 –00 –00 350,867 –00
Unrealised loss on forward exchange contracts –00 –00 –00 922 –00 –00 –00 –00 16,187 –00
Other liabilities –00 4 1,353 –00 –00 –00 19 542 –00 –00
Contingencies and commitments –00 –00 –00 2,022,871 –00 –00 –00 –00 3,385,253 –00
Other transactions - Investor Portfolio Securities
Opening balance –00 –00 85,000 749,840 4,237,000 –00 –00 85,000 201,000 8,132,000
Increased during the year –00 –00 –00 330,000 3,232,000 30,000 –00 85,000 1,534,940 8,487,000
Decreased during the year –00 –00 –00 (570,000) (1,858,000) (30,000 ) –00 (85,000 ) (986,100 ) (12,382,000)
Closing balance –00 –00 85,000 509,840 5,611,000 –00 –00 85,000 749,840 4,237,000
96
42.1 RELATED PARTY TRANSACTIONS
2020 2019
Directors Key Subsidiaries Associates Other related Directors Key Subsidiaries Associates Other related
management parties Management parties
personnel personnel
(Rupees in '000)
Income
Mark - up / return / interest earned 5 6,479 4,555 203,818 –00 –00 5,160 932 267,442 –00
Fee and commission income 21 65 16 14,619 1 23 758 32 17,227 –00
Dividend income –00 –00 –00 56,400 –00 –00 –00 –00 56,530 –00
Net gain / (loss) on sale / redemption of
securities and units of mutual funds –00 –00 –00 –00 5,442 –00 –00 –00 –00 –00
Rental Income –00 –00 5,990 –00 –00 –00 –00 2,100 –00 –00
Other income –00 –00 782 292 130 1 –00 785 287 169
Expense
Mark - up / return / interest expensed 79,997 58,180 12,578 455,811 51,334 80,855 42,642 6,902 421,247 77,219
Operating expenses –00 –00 –00 5,491 –00 –00 –00 –00 6,466 –00
Brokerage commission –00 –00 8,230 –00 –00 –00 –00 2,553 –00 –00
Salaries and allowances –00 541,938 –00 –00 –00 –00 502,016 –00 –00 –00
Bonus –00 154,824 –00 –00 –00 –00 77,547 –00 –00 –00
Contribution to defined contribution plan –00 24,211 –00 –00 –00 –00 25,462 –00 –00 –00
Contribution to defined benefit plan –00 76,250 –00 –00 –00 –00 70,610 –00 –00 –00
Staff provident fund –00 –00 –00 –00 600,454 –00 –00 –00 –00 527,940
Staff gratuity fund –00 –00 –00 –00 424,170 –00 –00 –00 –00 403,923
Directors’ fees 33,487 –00 –00 –00 –00 44,600 –00 –00 –00 –00
Donation –00 –00 –00 6,000 –00 –00 –00 –00 6,000 –00
Insurance premium paid –00 –00 –00 133,244 –00 –00 –00 –00 130,949 –00
Insurance claims settled –00 –00 –00 41,925 –00 –00 –00 –00 34,375 –00
97
43. CAPITAL ADEQUACY, LEVERAGE RATIO AND LIQUIDITY REQUIREMENTS
2020 2019
(Rupees in '000)
Minimum Capital Requirement (MCR):
Paid-up capital 11,114,254 11,114,254
Capital Adequacy Ratio (CAR):

Eligible Common Equity Tier 1 (CET 1) Capital 67,035,260 52,961,015
Eligible Additional Tier 1 (ADT 1) Capital 6,676,269 6,690,557
Total Eligible Tier 1 Capital 73,711,529 59,651,572
Eligible Tier 2 Capital 23,890,019 16,537,708
Total Eligible Capital (Tier 1 + Tier 2) 97,601,548 76,189,280
Risk Weighted Assets (RWAs):

Credit Risk 539,058,015 443,548,469
Market Risk 9,834,577 12,343,837
Operational Risk 97,721,745 74,928,286
Total 646,614,337 530,820,592
Common Equity Tier 1 Capital Adequacy Ratio 10.367% 9.977%

Tier 1 Capital Adequacy Ratio 11.400% 11.238%
Total Capital Adequacy Ratio 15.094% 14.353%
Minimum Capital Requirement (MCR)

The MCR standard sets the paid-up capital that the Bank is required to hold at all times. As of the
statement of financial position date, the Bank's paid - up capital stands at Rs. 11.114 billion as against
the required MCR of Rs. 10 billion.
Minimum Capital Adequacy Ratio (CAR)
The CAR on the basis of above framework works out to be as follows:
2020 2019
Required CAR 11.500% 12.500%
CAR on stand - alone basis 15.094% 14.353%
The Bank calculates capital requirement as per Basel III regulatory framework, using the following
approaches:
Credit Risk Standardised Approach

Market Risk Standardised Approach
Operational Risk Basic Indicator Approach
98
2020 2019
(Rupees in '000)
Leverage Ratio (LR):
Total Exposures 1,852,877,396 1,497,222,424
Leverage Ratio 3.978% 3.984%
Liquidity Coverage Ratio (LCR):

Total High Quality Liquid Assets 490,128,291 363,806,793
Total Net Cash Outflow 187,207,371 132,953,270
Liquidity Coverage Ratio 261.810% 273.635%
Net Stable Funding Ratio (NSFR):

Total Available Stable Funding 999,714,329 808,044,723
Total Required Stable Funding 702,593,516 606,312,286
Net Stable Funding Ratio 142.289% 133.272%
43.1 The full disclosures on the CAPITAL ADEQUACY, LEVERAGE RATIO AND LIQUIDITY REQUIREMENTS
as per SBP instructions issued from time to time have been placed on the Bank’s website. The link to the full
disclosure is available at http://www.bankalhabib.com/capitaladequacy/leverage/liquidityratio-banklevel2020.
44. RISK MANAGEMENT
The Bank has a risk management framework commensurate with its size and the nature of its business. The
Board of Directors has approved risk management policies covering key areas of activities for the guidance
of management and committees of the Board, management committees, and Divisions / Departments of the
Bank.
This section presents information about the Bank’s exposure to and its management and control of risks, in
particular the primary risks associated with its use of financial instruments.
44.1 Credit Risk
Credit risk is the risk of loss arising from failure by a client or counterparty to meet its contractual obligation.
It emanates from loans and advances, commitments to lend, contingent liabilities such as letters of credit and
guarantees, and other similar transactions both on and off balance sheet. These exclude investments and
treasury - related exposures, which are covered under market risk.
It is the Bank’s policy that all credit exposures shall be adequately collateralised, except when specially
exempted by SBP as in case of personal loans and credit cards, and those at overseas branches where the
accepted local banking practice is followed.
The objective of credit risk management is to keep credit risk exposure within permissible level, relevant to
the Bank’s risk capital, to maintain the soundness of assets and to ensure returns commensurate with risk.
Credit risk of the Bank is managed through the credit policy approved by the Board, a well defined credit
approval mechanism, prescribed documentation requirement, post disbursement administration, review and
monitoring of all credit facilities; and continuous assessment of credit worthiness of counterparties. Decisions
regarding the credit portfolio are taken mainly by the Central Credit Committee. Credit Risk Management
Committee of the Board provides overall guidance in managing the Bank's credit risk.
99
Counterparty exposure limits are approved in line with the Prudential Regulations and the Bank's own policies,
by taking into account both qualitative and quantitative criteria. There is an established system for continuous
monitoring of credit exposures and follow - up of any past due loans with the respective business units. All
past due loans, including trade bills, are reviewed on fortnightly basis and pursued for recovery. Any non -
performing loans are classified and provided for as per Prudential Regulations. The Bank has also established
a mechanism for independent post - disbursement review of large credit risk exposures.
Credit facilities, both fund based and non - fund based, extended to large customer groups and industrial
sectors are regularly monitored. The Bank has concentration of credit in textile which is the largest sector of
Pakistan's economy. Concentration risk is managed by diversification within sub - sectors like spinning, weaving
and composites, credit worthiness of counterparties, and adequate collateralisation of exposures.
Credit administration function has been placed under a centralised set - up. Its main focus is on compliance
with terms of sanction of credit facilities and the Bank’s internal policies and procedures, scrutiny of documentation,
monitoring of collateral, and maintenance of borrowers’ limits, mark - up rates, and security details.
The Bank has implemented its own internal risk rating system for the credit portfolio, as per guidelines of SBP.
Credit ratings by external rating agencies, if available, are also considered.
The Bank lends primarily against the cash flow of the business with recourse to the assets being financed as
primary security. Collaterals in the form of liquid securities, tangible securities, and other acceptable securities
are obtained to hedge the risk, as deemed appropriate. Main types of collaterals taken by the Bank include
charge on stock - in - trade, receivables, machinery, mortgage of properties, pledge of goods, shares and
other marketable securities, government securities, government guarantees, bank guarantees and cash
margins and bank deposits.
Specific provisions on credit portfolio are determined in accordance with the Prudential Regulations. General
provision on the consumer and SEs portfolios is also determined as per Prudential Regulations. The Bank
maintains additional general provision in line with its prudent policies and as per IFRS 9 for overseas branches.
Particulars of provisions against advances are given in note 9.4.
The Bank uses the Standardised Approach to calculate capital charge for credit risk as per Basel regulatory
framework, with comprehensive approach for credit risk mitigation.
Stress testing for credit risk is carried out regularly to estimate the impact of increase in non - performing loans
and downward shift in these categories.
44.1.1 Investment in debt securities
Gross investments Non - performing investments Provision held

Credit risk by industry sector 2020 2019 2020 2019 2020 2019
(Rupees in '000)
Power (electricity), gas, water, sanitary 25,442,218 5,750,733 –00 –00 –00 –00
Financial 728,355,130 570,429,618 –00 –00 1,394,948 270,855
Iron and steel 1,000,000 1,000,000 –00 –00 –00 –00
754,797,348 577,180,351 –00 –00 1,394,948 270,855
Credit risk by public / private sector

Public / Government 740,654,169 564,554,945 –00 –00 357,615 225,505
Private 14,143,179 12,625,406 –00 –00 1,037,333 45,350
754,797,348 577,180,351 –00 –00 1,394,948 270,855
100
44.1.2 Advances
Gross Non-performing Provision

advances advances held
(Rupees in '000)
Agriculture, forestry, hunting and fishing 11,982,018 11,203,672 300,284 196,750 149,088 114,416
Mining and quarrying 86,946 110,030 –00 –00 –00 –00
Textile 163,702,549 141,981,518 1,824,246 1,926,502 1,753,709 1,702,741
Chemical and pharmaceuticals 16,796,308 19,178,166 5,891 3,933 4,423 3,933
Cement 8,847,702 4,504,098 –00 –00 –00 –00
Sugar 6,952,458 9,733,115 –00 –00 –00 –00
Footwear and leather garments 3,608,526 2,457,991 –00 –00 –00 –00
Automobile and transportation equipment 3,726,079 4,548,316 –00 20,000 –00 20,000
Electronics and electrical appliances 5,323,013 5,076,193 –00 –00 –00 –00
Construction 7,802,038 7,305,727 194,339 240,170 192,103 146,758
Power (electricity), gas, water, sanitary 48,335,823 51,903,018 155,883 –00 100,810 –00
Wholesale and retail trade 79,543,240 72,659,722 1,494,236 1,442,519 1,361,415 1,255,335
Transport, storage and communication 10,543,770 12,131,252 70,175 52,611 27,853 15,835
Financial 10,603,805 12,034,302 101,949 101,949 86,587 87,808
Insurance 475,167 567,307 128,426 –00 31,108 –00
Services (other than financial services) 14,524,500 12,232,116 112,896 70,900 33,502 35,450
Individuals 23,863,779 21,013,245 90,956 89,824 63,427 58,834
Food and allied 62,311,964 60,942,702 –00 –00 –00 –00
Iron and steel 23,895,854 27,083,285 –00 –00 –00 –00
Oil refinery / marketing 2,005,943 5,308,267 –00 –00 –00 –00
Paper and board 2,662,909 2,687,071 –00 –00 –00 –00
Plastic products 6,388,435 5,908,391 –00 –00 –00 –00
Others 8,911,593 7,690,664 2,902,192 3,112,758 2,693,454 2,760,302
522,894,419 498,260,168 7,381,473 7,257,916 6,497,479 6,201,412
Public / Government 55,368,812 64,482,124 –00 –00 –00 –00

Private 467,525,607 433,778,044 7,381,473 7,257,916 6,497,479 6,201,412
522,894,419 498,260,168 7,381,473 7,257,916 6,497,479 6,201,412
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44.1.3 Contingencies and Commitments
Credit risk by industry sector
2020 2019
(Rupees in '000)
Agriculture, forestry, hunting and fishing 1,201,754 776,904
Mining and quarrying -00 1,274
Textile 60,886,061 40,895,042
Chemical and pharmaceuticals 10,560,544 6,468,137
Cement 1,681,965 2,282,578
Sugar 445,917 209,010
Footwear and leather garments 2,400,625 1,359,686
Automobile and transportation equipment 18,054,588 7,199,853
Electronics and electrical appliances 5,306,142 4,188,959
Construction 8,396,568 8,137,417
Power (electricity), gas, water, sanitary 8,008,957 3,611,333
Wholesale and retail trade 52,552,907 44,790,286
Transport, storage and communication 415,645 926,449
Financial 12,384,053 9,487,746
Insurance 26,841 14,321
Services (other than financial services) 41,166,805 38,066,278
Individuals 177,245 159,092
Food and allied 36,490,464 22,135,184
Iron and steel 16,689,629 14,736,453
Oil refinery / marketing 3,016,513 3,133,887
Paper and board 2,129,946 1,391,654
Plastic products 11,584,210 6,832,281
Others 6,977,350 10,028,161
300,554,729 226,831,985
Public / Government 41,435,912 35,815,701
Private 259,118,817 191,016,284
300,554,729 226,831,985
44.1.4 Concentration of Advances

The Bank’s top 10 exposures on the basis of total (funded and non-funded exposures) aggregated to
Rs. 150,619 million (2019: Rs. 139,796 million) are as following:
2020 2019
(Rupees in '000)
Funded 87,140,927 93,419,738
Non Funded 63,477,948 46,376,271
Total Exposure 150,618,875 139,796,009
The sanctioned limits against these top 10 exposures aggregated to Rs. 179,596 million (2019:
Rs. 146,750 million). Provision against top 10 exposures amounts to be Nil (2019: Nil).
102
44.1.5 Advances - Province / Region - wise Disbursement and Utilization
2020
Disbursements Utilization
AJK including
Province / Region KPK including Gilgit-
Punjab Sindh FATA Balochistan Islamabad Baltistan
(Rupees in '000)
Punjab 201,150,395 199,695,718 202,288 222,110 33,345 980,461 16,473

Sindh 210,692,996 2,259,607 206,820,742 1,066,542 543,154 2,830 121
KPK including FATA 4,547,764 6,476 10,079 4,232,515 5,053 293,641 –0
Balochistan 828,144 –0 106,412 –0 721,732 –0 –0
Islamabad 35,398,979 34,931 16,888 15,497 –0 35,331,663 –0
AJK including Gilgit - Baltistan 639,146 392 –0 2,692 –0 25,064 610,998
Total 453,257,424 201,997,124 207,156,409 5,539,356 1,303,284 36,633,659 627,592
2019
AJK including
(Rupees in '000)
Punjab 195,104,300 192,857,427 12,264 1,185,522 62,647 983,896 2,544

Sindh 188,567,708 481,735 180,055,998 2,103,571 5,920,715 3,750 1,939
KPK including FATA 3,862,092 3,500 2,931 3,743,439 –0 112,222 –0
Balochistan 559,379 –0 111,193 1,583 446,603 –0 –0
Islamabad 35,436,568 341 –0 514,838 –0 34,921,389 –0
AJK including Gilgit - Baltistan 581,097 –0 –0 3,588 –0 3,576 573,933
Total 424,111,144 193,343,003 180,182,386 7,552,541 6,429,965 36,024,833 578,416
44.2 Market Risk

Market risk is the risk of loss arising from movements in market rates or prices, such as interest rates,
foreign exchange rates, and equity prices.
The Bank takes positions in securities for the purpose of investment and not to run a trading book, except
to a very limited extent (maximum of Rs. 300 million) for trading in equities. As regards foreign exchange
positions, the purpose is to serve the needs of clients. Except as aforesaid, the Bank does not engage
in trading or market making activities.
Market risk is managed through the market risk policy approved by the Board, approval of counterparty
and dealer limits, specific senior management approval for each investment and regular review and
monitoring of the investment portfolio by the Asset Liability Management Committee (ALCO). A key
element of the Bank’s market risk management is to balance safety, liquidity, and income in that order
of priority. Another key element is separation of functions and reporting lines for the Treasury Division
which undertakes dealing activities within the limits and parameters set by ALCO, Settlements Department
which confirms and settles the aforesaid deals, and Middle Office which independently monitors and
analyses the risks inherent in treasury operations. Risk Management Committee of the Board provides
overall guidance in managing the Bank’s market risk.
Dealing activities of the Bank include investment in government securities, term finance certificates,
sukuks / bonds, shares and mutual funds, money market transactions and foreign exchange transactions
catering to the needs of its customers. All such activities are carried out within the prescribed limits. Any
excess over limits noted by the Settlements Department and / or the Middle Office is reported to senior
management and ALCO. Stress testing is performed as per guidelines of SBP as well as Bank's internal
policy. Portfolio risks arising in banking book is also measured through Value at Risk (VAR).
103
44.2.1 Balance sheet split by trading and banking books
2020 2019
Banking Trading Banking Trading
book book Total book book Total
(Rupees in '000)
Cash and balances with treasury banks 105,935,947 –00 105,935,947 113,838,791 –00 113,838,791
Balances with other banks 19,662,515 –00 19,662,515 9,523,969 –00 9,523,969
Lendings to financial institutions 2,175,301 –00 2,175,301 1,857,575 –00 1,857,575
Investments 764,846,957 96,549 764,943,506 586,140,504 –00 586,140,504
Advances 510,251,632 –00 510,251,632 488,669,447 –00 488,669,447
Fixed assets 43,967,993 –00 43,967,993 36,562,508 –00 36,562,508
Intangible assets 211,111 –00 211,111 365,428 –00 365,428
Deferred tax assets –00 –00 –00 –00 –00 –00
Other assets 74,943,322 –00 74,943,322 61,723,889 –00 61,723,889
1,521,994,778 96,549 1,522,091,327 1,298,682,111 –00 1,298,682,111
44.2.2 Foreign Exchange Risk
Foreign exchange risk is the risk of loss from adverse changes in currency exchange rates. The Bank’s
foreign exchange exposure comprises forward contracts, purchase of foreign bills, foreign currency
loans and investments, foreign currency cash in hand, balances with banks abroad, foreign currency
deposits and foreign currency placements with SBP and other banks. Focus of the Bank’s foreign
exchange activities is on catering to the needs of its customers, both in spot and forward markets.
Foreign exchange risk exposures of the Bank are controlled through dealer limits, open foreign exchange
position limits, counterparty exposure limits, and country limits. The Bank manages its foreign exchange
exposure by matching foreign currency assets and liabilities within strict limits. The net open position in
any single currency and the overall foreign exchange exposure are both managed within the statutory
limits as prescribed by SBP as well as the internal limits set by the Bank itself. Stress testing for foreign
exchange risk is carried out regularly to estimate the impact of adverse changes in foreign exchange
rates.
2020
Foreign Foreign Net foreign
currency currency Off-balance currency
assets liabilities sheet items exposure
(Rupees in '000)
United States Dollar 135,869,498 141,123,136 10,832,719 5,579,081

Great Britain Pound 1,660,711 11,828,815 10,088,312 (79,792)
Japanese Yen 44,539 15,462 (20,792) 8,285
Euro 4,389,562 6,272,656 1,898,410 15,316
Other currencies 858,737 481,319 (675,976) (298,558)
142,823,047 159,721,388 22,122,673 5,224,332
104
2019
(Rupees in '000)

Great Britain Pound 1,836,022 11,037,651 9,284,201 82,572
Japanese Yen 15,247 953 (15,868) (1,574)
Euro 4,139,554 5,349,188 1,205,940 (3,694)
Other currencies 754,274 625,752 (74,502) 54,020
136,913,036 144,490,573 15,564,826 7,987,289
2020 2019
book book book book
(Rupees in ‘000)
Impact of 1% change in foreign exchange rates on
– Profit and loss account –0 –0 –0 –0
– Other comprehensive income 9,729 –0 1,038 –0
44.2.3 Equity Position Risk

Equity position risk is the risk of loss from adverse movements in equity prices. The Bank’s policy is to
take equity positions for investment purposes and not to run a trading book, except to a very limited
extent (maximum of Rs. 300 million) for trading in equities.
Equity position risk of the Bank is controlled through equity portfolio limits, sector limits, scrip limits, and
future contracts limits. Direct investment in equities and mutual funds is managed within the statutory
limits as prescribed by SBP as well as the internal limits set by the Bank itself. Stress testing for equity
price risk is carried out regularly to estimate the impact of decline in stock prices. The Bank invests
mainly in blue chip securities.
2020 2019
book book book book
(Rupees in ‘000)
Impact of 5% change in equity prices on
– Profit and loss account –0 4,827 –0 –0
44.2.4 Yield / Interest Rate Risk in the Banking Book (IRRBB) - Basel II Specific
Interest rate risk is the risk of loss from adverse movements in interest rates. ALCO monitors and
manages the interest rate risk with the objective of limiting the potential adverse effects on the
profitability of the Bank arising from fluctuation in the market interest rates and mismatching or gaps in
the amount of financial assets and financial liabilities in different maturity time bands.
105
The Bank's interest rate exposure is calculated by categorising its interest sensitive assets and
liabilities into various time bands based on the earlier of their contractual repricing or maturity dates.
Interest rate risk exposures of the Bank are controlled through dealer limits, counter - party exposure
limits and (when necessary) type - of - instrument limits. Outright purchase and sale of securities are
also approved by ALCO. Duration and modified duration of various types of debt securities as well as
their entire portfolio are also calculated, and the impact of adverse change in interest rates on the
market value of the securities is estimated. Stress testing for interest rate risk is carried out regularly
to estimate the impact of adverse changes in the interest rates.
Interest rate / yield risk in the banking book – Basel Specific
The Bank holds financial assets and financial liabilities with different maturities or repricing dates and
linked to different benchmark rates, thus creating exposure to unexpected changes in the level of
interest rates. Interest rate risk in the banking book refers to the risk associated with interest - bearing
financial instruments that are not held in the trading book of the Bank.
Repricing gap analysis presents the Bank’s interest sensitive assets (ISA) and interest sensitive
liabilities (ISL), categorised into various time bands based on the earlier of their contractual repricing or
maturity dates (or settlement dates for off - balance sheet instruments). Deposits with no fixed maturity
dates (for example, saving deposits and treasurer’s call deposits) are included in the lowest, one -
month time band, but these are not expected to be payable within a one - month period. The difference
between ISA and ISL for each time band signifies the gap in that time band, and provides a workable
framework for determining the impact on net interest income.
The Bank reviews the repricing gap analysis periodically to monitor and manage interest rate risk in the
banking book.
2020 2019
book book book book
(Rupees in ‘000)
Impact of 1% change in interest rates on
– Other comprehensive income 6,113,382 –0 6,742,749 –0
106
44.2.5 Mismatch of Interest Rate Sensitive Assets and Liabilities
2020
Effective Total Exposed to Yield / Interest risk Non interest
Yield / Upto 1 Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Above bearing
Interest month to 3 to 6 months to 1 to 2 to 3 to 5 to 10 10 years financial
Rate months months year years years years years instruments
(Rupees in '000)
On - balance sheet financial instruments
Assets
Cash and balances with treasury banks –00 105,935,947 7,279,936 –00 –00 –00 –00 –00 –00 –00 –00 98,656,011
Balances with other banks 0.05% 19,662,515 17,659,275 –00 –00 –00 –00 –00 –00 –00 –00 2,003,240
Lendings to financial institutions 8.98% 2,175,301 2,175,301 –00 –00 –00 –00 –00 –00 –00 –00 –00
Investments 9.30% 764,943,506 72,567,717 75,117,948 300,591,571 125,011,937 990,533,012 29,215,595 44,087,033 19,599,391 –00 8,219,302
Advances 6.60% 510,251,632 275,925,509 100,524,346 54,004,723 23,795,801 14,468,084 10,164,684 12,231,329 12,759,516 6,371,366 6,274
Other assets –00 72,923,383 –00 –00 –00 –00 –00 –00 –00 00–00 –00 72,923,383
1,475,892,284 375,607,738 175,642,294 354,596,294 148,807,738 105,001,096 39,380,279 56,318,362 32,358,907 6,371,366 181,808,210
Liabilities
Bills payable –00 31,013,221 –00 –00 –00 –00 –00 –00 –00 –00 –00 31,013,221
Borrowings 4.21% 211,599,405 145,735,236 4,863,416 10,624,222 6,040,892 12,927,163 5,891,219 10,195,980 14,808,462 512,815 –00
Deposits and other accounts 5.66% 1,099,686,361 549,241,575 35,539,084 24,076,408 48,951,961 6,657,497 2,446,852 13,835,518 22,127 12,532 418,902,807
Subordinated debt 8.50% 14,989,600 –00 3,992,800 10,996,800 –00 –00 –00 –00 –00 –00 –00
Other liabilities –00 67,310,374 –00 –00 –00 –00 –00 –00 –00 –00 –00 67,310,374
1,424,598,961 694,976,811 44,395,300 45,697,430 54,992,853 19,584,660 8,338,071 24,031,498 14,830,589 525,347 517,226,402
On - balance sheet gap 51,293,323 (319,369,073 ) 131,246,994 308,898,864 93,814,885 85,416,436 31,042,208 32,286,864 17,528,318 5,846,019 (335,418,192 )
Off - balance sheet financial instruments
Documentary credits and short term trade
related transactions 207,740,057 133,608,804 51,510,174 11,122,373 11,498,706 –00 –00 –00 –00 –00 –00
Forward purchase of foreign exchange contracts 75,472,905 19,581,701 29,570,273 17,076,813 9,244,118 –00 –00 –00 –00 –00 –00
Forward sale of foreign exchange contracts (53,350,232) (32,391,396) (17,028,027) (2,914,889) (1,015,920) –00 –00 –00 –00 –00 –00
Forward commitments to extend credit 7,124,914 483,281 4,729,763 242,759 1,669,111 –00 –00 –00 –00 –00 –00
Off - balance sheet gap 29,247,587 (12,326,414) 17,272,009 14,404,683 9,897,309 –00 –00 –00 –00 –00 –00
Total Yield / Interest Risk Sensitivity Gap (198,086,683 ) 200,029,177 334,425,920 115,210,900 85,416,436 31,042,208 32,286,864 17,528,318 5,846,019 (335,418,192 )
Cumulative Yield / Interest Risk Sensitivity Gap (198,086,683 ) 1,942,494 336,368,414 451,579,314 536,995,750 568,037,958 600,324,822 617,853,140 623,699,159 288,280,967
107
2019
(Rupees in '000)
On - balance sheet financial instruments
Assets
Cash and balances with treasury banks 0.68% 113,838,791 10,152,100 –00 –00 –00 –00 –00 –00 –00 –00 103,686,691
Lendings to financial institutions 10.43% 1,857,575 (15,051 ) 1,872,626 –00 –00 –00 –00 –00 –00 –00 –00
Investments 12.84% 586,140,504 9,579,116 41,315,249 (1,222,040 ) 319,369,135 83,804,607 47,705,813 55,219,925 22,843,478 –00 7,525,221
Advances 10.80% 488,669,447 278,563,270 101,685,423 54,936,699 13,138,908 10,333,141 7,723,868 9,572,013 8,000,584 4,709,616 5,925
Other assets –00 59,275,034 –00 –00 –00 –00 –00 –00 –00 00–00 –00 59,275,034
1,259,305,320 306,292,653 144,873,298 53,714,659 332,508,043 94,137,748 55,429,681 64,791,938 30,844,062 4,709,616 172,003,622
Liabilities
Bills payable –00 20,168,673 –00 –00 –00 –00 –00 –00 –00 –00 –00 20,168,673
Borrowings 9.68% 228,745,034 187,985,960 10,403,899 6,043,994 1,470,712 3,395,138 3,594,897 6,842,894 8,997,966 9,574 –00
Deposits and other accounts 10.38% 903,702,782 450,473,851 21,948,126 19,137,128 49,697,169 5,291,864 4,915,071 13,769,205 18,361 13,995 338,438,012
1,222,300,281 638,459,811 36,346,425 36,179,522 51,167,881 8,687,002 8,509,968 20,612,099 9,016,327 23,569 413,297,677
related transactions 145,745,358 39,075,909 59,634,787 12,898,478 15,932,547 14,580,990 3,490,782 131,865 –00 –00 –00
Forward sale of foreign exchange contracts (91,139,975) (42,027,617) (37,025,513) (12,086,845) –00 –00 –00 –00 –00 –00 –00
Forward commitments to extend credit 2,214,998 487,000 810,000 500,000 417,998 –00 –00 –00 –00 –00 –00
Off - balance sheet gap 17,779,821 (8,177,682 ) (1,743,609 ) 14,082,122 13,618,990 –00 –00 –00 –00 –00 –00
Cumulative Yield / Interest Risk Sensitivity Gap (301,268,931 ) (134,850,880 ) (90,335,143 ) 220,556,556 320,588,292 370,998,787 415,310,491 437,138,226 441,824,273 200,530,218
108
44.2.5.1 Reconciliation of Financial Assets and Liabilities
2020 2019
(Rupees in '000)
Assets as per statement of financial position 1,522,091,327 1,298,682,111
Less:
Fixed assets 43,967,993 36,562,508
Intangible assets 211,111 365,428

Non-banking assets acquired against claims 954,077 909,382
2,019,939 2,448,855
Interest Rate Sensitive Assets 1,475,892,284 1,259,305,320
Liabilities as per statement of financial position 1,442,234,951 1,237,179,001
Less:
Deferred tax liabilities 176,751 1,380,189

Provision against off - balance sheet items 146,692 129,369
Provision for compensated absences 969,754 722,300
Current taxation (payments less provisions) 450,248 –
17,459,239 13,498,531
Interest Rate Sensitive Liabilities 1,424,598,961 1,222,300,281
44.3 Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, and
systems or from external events. This definition includes legal risk but excludes strategic and reputational
risks. Bank classifies operational loss / near miss incidents into seven loss incidents types, which are
Internal Fraud, External Fraud, Employment Practice & Workplace Safety, Client, Product & Business
Practice, Damage to Physical Assets, Business Disruption & System Failure, and Execution, Delivery
& Process Management.
Operational risk is managed through the Operational Risk Policy, Audit Policy, Compliance Policy &
Programme, Information Technology (I.T.) Policy, I.T. Governance Framework, I.T. Security Policy,
Human Resource Policy, Consumer Protection Framework, KYC / CDD Policy, AML / CFT Policy, Fraud
Prevention Policy, Consumer Grievance Handling Policy and Outsourcing Policy approved by the Board,
along with the operational manuals and procedures issued from time to time; system of internal controls;
Business Continuity Plan, Disaster Recovery Plan for I.T.; and regular audit of the branches and divisions.
Operational risk related matters are discussed in the operations committee, compliance committee of
management and I.T. steering committee. Audit Committee of the Board provides overall guidance in
managing the Bank’s operational risk.
The Bank’s operational risk management framework, as laid down in the operational risk policy, permits
the overall risk management approach to evolve in the light of organisational learning and the future
needs of the Bank.
The Bank places a high priority on conducting all business dealings with integrity and fairness, as laid
down in the Code of Conduct, which is required to be complied with by all employees.
109
Internal controls are an essential feature of risk reduction in operational risk management and the Bank
continues to improve its internal controls.
Business Continuity Plan of the Bank pays special attention to identification of potential threats and
associated risks in critical business processes by carrying out Business Impact Analysis and Risk Assessment
including those which are dependent on external vendors or third parties, identification of alternative
mechanisms for timely resumption of services, with special focus on critical business processes, location
of off-site backup & regular review and testing of the plan.
Bank has devised and implemented IT Project Management and IT Risk Management Frameworks. Bank
is also CMMI Maturity (Level - 3) certified. Bank AL Habib’s website for Conventional and Islamic banking
has been revamped with dynamic features. Furthermore, OBDX (Oracle Banking Digital Experience) web
and mobile application have been commercially launched.
Bank has taken various measures to strengthen I.T. Security, which includes implementation of Cyber
Security Strategy and Action Plan, Vulnerability Management Program, virtual patching and database
activity monitoring solution on critical systems, 24/7 Security Operation center (SOC), regular Internal and
external penetration testing of applications, anti malware and antivirus security solution, subscription to
I.T. security threat intelligence service and recertification of controls as per SWIFT customer Security
Program.
COVID 19
During the year, the global economic environment including Pakistan has been severely affected by the
COVID - 19 outbreak. To reduce the impact on businesses and economy in general, SBP has provided
relief through reduction in SBP Policy Rate by 625 basis points. Other relief measures include the
deferment of the repayment of principal amount of financing facility by one year, on case to case basis;
reduction in the capital conservation buffer by 100 basis points to 1.5%; Refinancing schemes for
payment of wages and salaries; etc.
To control and effectively deal with the COVID-19 pandemic, guidelines issued by Government and
State Bank of Pakistan were meticulously followed by the Bank and various measures were taken.
These measures included creation of senior level Emergency Risk Focus Group; risk assessment; risk
management through (a) provision of uninterrupted services to customers - ensuring round the clock
availability of IT services via ATMs, online banking & mobile banking; providing surplus cash at branches
& ATMs and branch services through alternate operational branches in cases of branch closure, etc.;
(b) development of staff SOPs and (c) creation of safe environment for staff & customers through
walkthrough gates, mandatory temperature checking at entry points, availability of hand sanitizers, etc.
and (d) HR management measures - split team arrangement, forced leaves for senior and female staff,
secured ‘work from home’ environment, virtual meetings, etc.
COVID - 19 has impacted banks in Pakistan through increase in overall credit risk, overall slowdown in
the economic activity, challenges to continuity of business operations and managing cybersecurity threat.
The Bank’s management and Board is fully cognisant of the business challenges posed by the COVID
- 19 outbreak and lock down imposed by the Government of Pakistan. The Bank continues its operations
to serve customers through its branch network across Pakistan and the digital channels by observing
the Government instructions and adopting all possible precautionary measures.
The Bank is also monitoring its credit risk exposure through its risk management function and assessment
of the credit portfolio to identify customers or portfolios that may require additional risk management
considerations. Subsequent to the emergence of the COVID - 19 situation and in line with SBP's
directives, the Bank has restructured / rescheduled a number of financing facilities after review of the
restructured / rescheduled proposals as per the established policies of the Bank. The impact of such
restructuring / rescheduling has also been assessed on credit risk and liquidity / maturity profile of the
Bank and the Bank considers that the liquidity buffer and capital adequacy is sufficiently maintained at
this stage.
44.3.1 Operational Risk-Disclosures Basel II Specific
The Bank uses Basic Indicator Approach to calculate capital charge for operational risk as per Basel
regulatory framework. This approach is considered to be most suitable in view of the business model
of the Bank which relies on an extensive network of branches to offer one - stop, full – service banking
to its clients. The Bank has developed and implemented an Operational Loss Database. Operational
loss and "near miss" events are reviewed and appropriate corrective actions taken on an ongoing basis,
including measures to improve security and control procedures. Key Risk Indicators have also been
developed along with thresholds which are being closely monitored for breaches. Risk Evaluation
exercise is carried out for new products, processes and systems or any significant change in the existing
product, processes and systems as per the operational risk policy of the Bank.
110
44.4 Liquidity Risk
Liquidity risk is the risk of loss to a bank arising from its inability to meet obligations as they fall due or
to fund growth in assets, without incurring unacceptable cost or losses.
Key elements of the Bank’s liquidity risk management are as follows:
- To maintain a comfortable margin of excess liquidity in the form of cash and readily marketable
assets to meet the Bank’s funding requirements at any time.
- To keep a strong focus on mobilization of low-cost core deposits from customers.
- To maintain a realistic balance between the behavioral maturity profiles of assets and liabilities.
- To maintain excellent credit rating (as borrowing cost and ability to raise funds are directly affected
by credit rating).
- To have a written contingency funding plan to address any hypothetical situations when access to
normal sources of funding is constrained.
44.4.1 Liquidity Coverage Ratio
SBP issued BPRD Circular No. 08 dated June 23, 2016 advising implementation of Basel III liquidity
standards that constitute two ratios, i.e., Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio
(NSFR), and five monitoring tools.
LCR is the measure of conversion capability of the Bank’s High Quality Liquid Assets (HQLAs) into cash
to meet immediate liquidity requirements over a 30 days horizon.
The Bank calculates Liquidity Coverage Ratio (LCR) on monthly basis as per the guidelines given in
the above mentioned circular. The objective of LCR is to ensure the short-term resilience of the liquidity
risk profile which requires the Bank to maintain sufficient High Quality Liquid Assets (HQLAs) to meet
stressed cash outflows over a prospective 30 calendar - days period. As of 31 December 2020, the
Bank’s LCR stood at 273% against the SBP’s minimum requirement of 100% .
44.4.2 Governance of Liquidity Risk Management
Liquidity risk is managed through the liquidity risk policy approved by the Board. The Bank has “zero
tolerance” for liquidity risk and will continue to maintain a comfortable margin of excess liquidity in the
form of cash and readily marketable assets to meet its funding requirements at any time.
Management of liquidity risk is accomplished through a formal structure which includes:
- Board of Directors (BOD)
- Risk Management Committee
- Asset Liability Management Committee (ALCO)
- Treasury Division
- Risk Management Division and Middle Office
- Finance Division
- Information Technology Division
The Board of Directors approves the liquidity risk policy and ensures, through quarterly reviews by the
Risk Management Committee of the Board, that the Bank’s liquidity risk is being managed prudently. Risk
Management Committee of the Board provides overall guidance in managing the Bank’s liquidity risk.
Liquidity position is monitored daily by the Treasury Division and the Middle Office and reviewed regularly
by ALCO.
44.4.3 Funding Strategy
The Bank’s prime source of liquidity is the customers' deposit base. Within deposits, the Bank strives
to maintain core deposit base in form of current and saving deposits and avoids concentration in particular
products, tenors and dependence on large fund providers. As a general rule, the Bank will not depend
on borrowings in the inter-bank market, including repos, to be a part of its permanent pool of funds for
financing of loans, but will use these as a source for obtaining moderate amounts of additional funds to
meet temporary liquidity needs in the normal course of business or for money market operations.
44.4.4 Liquidity Risk Mitigation Techniques
Various tools and techniques are used to measure and monitor the possible liquidity risk. These include
monitoring of different liquidity ratios like core deposits to total deposits, advances to deposits, liquid assets
to total deposits, Interbank borrowing to total deposits, which are monitored on regular basis against
limits. Further, the Bank also prepares the maturity profile of assets and liabilities to monitor the liquidity
gaps over different time bands. For maturity analysis, behavioral study is carried out to determine the
behavior of non - contractual assets and liabilities. The Bank also ensures that statutory cash and liquidity
requirements are maintained at all times.
111
In addition, LCR, NSFR and Monitoring Tools of Basel III framework further strengthen liquidity risk
management of the Bank.
44.4.5 Liquidity Stress Testing
As per SBP FSD Circular No. 01 of 2020, Liquidity stress testing is being conducted under various stress
scenarios. Shocks include the withdrawals of deposits, withdrawals of wholesale / large deposits &
interbank borrowing, withdrawal of top deposits, etc. Results of stress testing are presented to ALCO and
Risk Management Committee. The Bank’s liquidity risk management addresses the goal of protecting
solvency and the ability to withstand stressful events in the market place. Stress testing for liquidity as
prescribed in the liquidity risk policy is carried out regularly to estimate the impact of decline in liquidity
on the ratio of liquid assets to deposits plus borrowings.
44.4.6 Contingency Funding Plan
Contingency Funding Plan (CFP) is a part of liquidity risk policy of the Bank which identifies the trigger
events that could cause a liquidity contingency and describes the actions to be taken to manage it. The
contingency funding plan highlights liquidity management actions that needs to be taken to deal with
the contingency. Responsibilities and response levels are also incorporated in order to tackle the
contingency. Moreover, CFP highlights possible funding sources, in case of a liquidity contingency.
44.4.7 Main Components of LCR
Main components of LCR are High Quality Liquid Assets and Net Cash Outflows. Outflows are mainly
deposit outflows net of cash inflows which consist of inflows from financing and money market placements
up to 1 month. The inputs for calculation of LCR are based on SBP BPRD Circular No. 08 dated 23
June 2016.
44.4.8 Composition of HQLAs
High Quality Liquid Assets consist of Level 1 Assets which are included in the stock of liquid assets at
100% weightage of their market value i.e., Cash & Treasury balances, Conventional Government
Securities, GOP Ijarah Sukuks, Foreign Currency Sukuks & Bonds issued by sovereigns. While Level
2 Assets comprise all equity shares (excluding shares of Financial Institutions) listed on PSX 100.
44.4.9 Concentration of Funding Sources
The Bank relies on customers' deposits as its key source of funding, specially current and saving deposits
and time deposits of small / medium denominations, and avoids concentration of large deposits. Share
of core deposits in total deposits and of large deposits in total deposits are regularly monitored. In
particular the Bank does not depend on large depositors or borrowings from SBP and financial institutions
to meet its funding requirements.
44.4.10 Currency Mismatch in the LCR
About 90% of the Bank's assets and liabilities are in local currency. Currency mismatch in other currencies
is regularly monitored.
44.4.11Centralisation of Liquidity Management
Overall liquidity management of the Bank is centralised in Treasury Division at Principal Office. The
Bank mobilises deposits through its branch network. It also uses the branch network to grant loans to
customers. Branches that have more deposits than loans, transfer (“lend”) their excess deposits to the
Principal Office. Branches that do not have enough deposits to fund their loans, acquire (“borrow”)
additional funds from the Principal Office.
44.4.12 Other Inflows and Outflows
Benefit of pledged deposits (deposits under lien) are not accounted for in calculation of LCR.
44.4.13 Net Stable Funding Ratio (NSFR)
NSFR is the ratio of the amount of Available Stable Funding (ASF) - source of funds, capital and liabilities
relative to the amount of Required Stable Funding (RSF) - use of funds, assets and off - balance sheet
exposures.
The objective of NSFR is to ensure the availability of stable funds that a bank must hold to enable it to
build and maintain its assets, investments and off balance sheet portfolio on an ongoing basis for longer
term, i.e., over a one year horizon. NSFR reduces maturity mismatches between the asset and liability
items on the balance sheet and thereby reduces funding and roll - over risk. The Bank’s NSFR stood
at 142% as on 31 December 2020.
112
44.5 Maturities of Assets and Liabilities - based on contractual maturity of the assets and liabilities of the Bank
The following maturity profile is based on contractual maturities for assets and liabilities that have a contractual maturity. Assets and liabilities that
do not have a contractual maturity have been categorised in the shortest maturity band.
Total 2020
Over 1 Over 7 Over 14 Over 1 Over 2 Over 3 Over 6 Over 9 Over 1 Over 2 Over 3
Upto 1 to 7 to 14 days to to 2 to 3 to 6 to 9 months to to 2 to 3 to 5 Over 5
day days days 1 month months months months months 1 year years years years years
(Rupees in '000)
Assets
Cash and balances with treasury banks 105,935,947 105,935,947 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Balances with other banks 19,662,515 19,662,515 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Lendings to financial institutions 2,175,301 (494 ) (2,966 ) (3,461) 2,182,222 –00 –00 –00 –00 –00 –00 –00 –00 –00
Investments 764,943,506 11,484,141 (341,794 ) (398,760) (648,823 ) 48,629,312 13,809,722 42,481,419 105,260,936 19,857,075 90,042,620 108,105,472 170,789,915 155,872,271
Advances 510,251,632 53,335,773 7,371,280 9,070,048 33,016,839 59,638,378 82,793,789 79,781,992 23,793,801 22,992,880 44,412,146 30,614,506 31,490,891 31,939,309
Fixed assets 43,967,993 19,674,219 –00 –00 382,876 376,200 506,268 936,966 1,021,036 00996,376 3,601,624 3,054,538 4,120,142 9,297,748
Intangible assets 211,111 –00 –00 –00 22,627 22,627 22,622 62,059 23,260 0017,007 40,909 –00 –00 –00
Deferred tax assets –00 –00 –00 –00 –00 –00 –00 –00 –00 00–00 –00 –00 –00 –00
Other assets 74,943,322 10,902,949 2,013,296 7,406,967 9,134,405 11,636,343 11,676,859 12,270,539 7,663,578 00587,341 1,617,298 7,776 25,971 –00
1,522,091,327 220,995,050 9,039,816 16,074,794 44,090,146 120,302,860 108,809,260 135,532,975 137,762,611 44,450,679 139,714,597 141,782,292 206,426,919 197,109,328
Liabilities
Bills payable 31,013,221 31,013,221 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 211,599,405 320,328 98,718,568 545,085 2,144,448 18,910,564 22,939,478 17,644,403 2,944,525 3,096,367 12,927,163 5,891,219 10,195,980 15,321,277
Deposits and other accounts 1,099,686,361 892,095,621 25,825,810 9,876,099 40,346,851 12,476,736 23,062,348 24,076,408 25,029,560 23,922,401 6,657,497 2,446,852 13,835,519 34,659
Liabilities against assets subject
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Subordinated debt 14,989,600 –00 –00 –00 –00 –00 800 800 800 800 3,200 3,200 6,400 14,973,600
Deferred tax liabilities 176,751 (261,424) –00 –00 37,094 34,482 34,482 97,114 72,985 65,683 204,367 182,160 (216,962 ) (73,230)
Other liabilities 84,769,613 20,763,276 1,979,114 3,200,147 6,856,769 11,263,412 9,148,184 11,052,652 8,215,432 792,640 2,754,422 1,259,471 2,154,287 5,329,807
1,442,234,951 943,931,022 126,523,492 13,621,331 49,385,162 42,685,194 55,185,292 52,871,377 36,263,302 27,877,891 22,546,649 9,782,902 25,975,224 35,586,113
Net assets 79,856,376 (722,935,972 ) (117,483,676 ) 2,453,463 (5,295,016 ) 77,617,666 53,623,968 82,661,598 101,499,309 16,572,788 117,167,948 131,999,390 180,451,695 161,523,215
Share capital 11,114,254

Reserves 18,431,277
Surplus on revaluation of assets 10,286,484
Unappropriated profit 40,024,361
79,856,376
113
Total 2019
(Rupees in '000)
Assets
Balances with other banks 9,523,969 2,523,969 –00 2,000,000 5,000,000 –00 –00 –00 –00 –00 –00 –00 –00 –00
Lendings to financial institutions 1,857,575 (485) (2,913) (3,399) (8,254 ) 1,872,626 –00 –00 –00 –00 –00 –00 –00 –00
Investments 586,140,504 9,111,355 (567,932 ) (537,587) (2,034,140 ) (3,693,400 ) 32,486,728 (9,475,557 ) 175,227,737 144,043,685 85,540,852 48,406,326 56,497,033 51,135,404
Advances 488,669,447 62,610,174 10,135,948 12,181,250 23,916,330 64,885,943 71,316,745 85,592,125 20,899,895 12,435,127 38,611,034 32,280,480 30,610,066 23,194,330
Fixed assets 36,562,508 15,111,331 –00 –00 344,271 338,598 335,374 991,593 967,338 00913,566 3,187,976 2,668,769 3,635,547 8,068,145
Intangible assets 365,428 –00 –00 –00 26,950 26,856 25,187 66,104 55,136 0052,177 113,018 –00 –00 –00
Other assets 61,723,889 14,773,349 2,935,711 6,300,087 6,928,835 7,537,061 7,631,313 9,879,817 5,516,389 00130,651 26,835 16,464 29,222 18,155
1,298,682,111 217,968,484 12,500,814 19,940,351 34,173,992 70,967,684 111,795,347 87,054,082 202,666,495 157,575,206 127,479,715 83,372,039 90,771,868 82,416,034
Liabilities
Bills payable 20,168,673 20,168,673 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 228,745,034 908,853 153,421,371 75,452 825,020 12,860,661 23,518,085 12,824,411 657,941 812,771 3,395,138 3,594,897 6,842,894 9,007,540
Deposits and other accounts 903,702,782 716,929,028 18,256,147 15,008,415 38,718,273 11,392,152 10,555,974 19,137,128 24,264,133 25,433,036 5,291,864 4,915,071 13,769,205 32,356
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Deferred tax liabilities 1,380,189 507,823 –00 –00 35,771 34,277 34,277 102,366 90,884 89,499 211,187 152,884 26,655 94,566
Other liabilities 68,189,523 23,099,268 2,905,133 2,056,776 4,825,818 6,967,404 5,383,357 9,820,091 5,008,867 291,837 985,826 1,120,752 1,916,645 3,807,749
1,237,179,001 761,613,645 174,582,651 17,140,643 44,404,882 31,254,494 39,492,493 41,884,796 30,022,625 26,627,943 9,887,215 9,786,804 22,561,799 27,919,011
Net assets 61,503,110 (543,645,161 ) (162,081,837 ) 2,799,708 (10,230,890 ) 39,713,190 72,302,854 45,169,286 172,643,870 130,947,263 117,592,500 73,585,235 68,210,069 54,497,023

Reserves 16,467,282
61,503,110
114
44.6 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Bank
For assets and liabilities that have a contractual maturity, the expected maturity is considered to be the same as contractual maturity.
Assets and Liabilities that do not have a contractual maturity have been categorised on the basis of expected maturities as determined
by ALCO. In case of saving and current accounts, their historical net withdrawal pattern over the next one year was reviewed, based on
year - end balances for the last three years. Thereafter, taking a conservative view, ALCO categorised these deposits in various
maturity bands. Other assets and liabilities have been categorised on the basis of assumptions / judgments that are believed to be
reasonable.
Total 2020
Upto 1 Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Above
month to 3 to 6 months to 2 to 3 to 5 to 10 10 years
months months to 1 year years years years years
(Rupees in '000)
Assets
Cash and balances with treasury banks 105,935,947 105,935,947 –00 –00 –00 –00 –00 –00 –00 –00
Balances with other banks 19,662,515 19,662,515 –00 –00 –00 –00 –00 –00 –00 –00
Lendings to financial institutions 2,175,301 2,175,301 –00 –00 –00 –00 –00 –00 –00 –00
Investments 764,943,506 (1,350,589 ) 62,899,171 42,492,324 132,508,160 91,579,088 108,936,020 171,274,822 153,093,362 3,511,148
Advances 510,251,632 102,793,940 142,432,167 79,781,992 46,786,681 44,412,146 30,614,505 31,490,892 24,104,075 7,835,234
Fixed assets 43,967,993 428,001 1,945,378 1,601,060 2,563,364 3,950,045 11,153,810 4,120,142 4,408,160 13,798,033
Intangible assets 211,111 22,627 45,249 62,059 40,267 40,909 –00 –00 –00 –00
Deferred tax assets –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Other assets 74,943,322 28,082,038 23,379,236 12,369,589 8,449,019 1,753,753 7,776 25,971 –00 875,940
1,522,091,327 257,749,780 230,701,201 136,307,024 190,347,491 141,735,941 150,712,111 206,911,827 181,605,597 26,020,355
Liabilities
Bills payable 31,013,221 31,013,221 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 211,599,405 101,728,429 41,850,042 17,644,403 6,040,892 12,927,163 5,891,219 10,195,980 14,808,462 512,815
Deposits and other accounts 1,099,686,361 176,037,480 123,550,962 112,088,286 136,963,839 165,078,877 160,868,233 181,058,087 44,028,065 12,532
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Subordinated debt 14,989,600 –00 800 800 1,600 3,200 3,200 6,400 7,973,600 7,000,000
Deferred tax liabilities 176,751 (2,533,473 ) 236,066 110,015 (130,643) 780,634 1,991,335 (47,244) (679,113) 449,174
Other liabilities 84,769,613 25,844,637 20,411,596 11,052,652 9,008,071 2,754,422 1,259,471 7,400,106 4,267,763 2,770,895
1,442,234,951 332,090,294 186,049,466 140,896,156 151,883,759 181,544,296 170,013,458 198,613,329 70,398,777 10,745,416
Net assets 79,856,376 (74,340,514) 44,651,735 (4,589,132 ) 38,463,732 (39,808,355) (19,301,347) 8,298,498 111,206,820 15,274,939

Reserves 18,431,277
79,856,376
115
Total 2019
(Rupees in '000)
Assets
Lendings to financial institutions 1,857,575 (15,051) 1,872,626 –00 –00 –00 –00 –00 –00 –00
Investments 586,140,504 (3,259,311) 28,501,889 (9,495,557) 327,037,276 85,430,770 48,739,400 56,994,965 49,755,633 2,435,439
Advances 488,669,447 108,843,702 136,202,688 85,592,125 33,335,022 38,611,034 32,280,480 30,610,066 17,252,868 5,941,462
Fixed assets 36,562,508 637,491 1,060,086 6,582,904 2,146,365 3,276,542 2,668,769 3,635,547 3,463,282 13,091,522
Intangible assets 365,428 26,950 52,043 66,104 107,313 113,018 –00 –00 –00 –00
Other assets 61,723,889 29,756,404 15,237,052 9,940,073 5,767,552 31,790 16,464 29,222 18,154 927,178
1,298,682,111 259,352,945 182,926,384 92,685,649 368,393,528 127,463,154 83,705,113 91,269,800 70,489,937 22,395,601
Liabilities
Bills payable 20,168,673 20,168,673 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 228,745,034 155,230,696 36,378,746 12,824,411 1,470,712 3,395,138 3,594,897 6,842,894 8,997,966 9,574
Deposits and other accounts 903,702,782 153,753,144 92,521,317 89,710,319 120,270,360 132,323,608 131,946,814 147,858,268 35,304,957 13,995
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Deferred tax liabilities 1,380,189 (582,676 ) (29,884) 1,067,350 15,649 172,658 269,460 200,932 (248,539) 515,239
Other liabilities 68,189,523 25,337,777 12,350,761 9,820,091 5,300,703 985,826 1,120,752 8,047,228 2,946,918 2,279,467
1,237,179,001 353,907,614 141,221,740 113,422,971 127,059,024 136,880,430 136,935,123 162,955,722 54,978,102 9,818,275
Net assets 61,503,110 (94,554,669) 41,704,644 (20,737,322 ) 241,334,504 (9,417,276 ) (53,230,010) (71,685,922 ) 15,511,835 12,577,326

Reserves 16,467,282
61,503,110
117
45. EVENTS AFTER THE REPORTING DATE
Subsequent to the year end, the Board of Directors proposed a final cash dividend of Rs. 4.5 (2019:
Rs. 3.5) per share.
46. GENERAL
46.1 Captions, as prescribed by BPRD Circular No. 02 of 2018 issued by SBP, in respect of which there are
no amounts, have not been reproduced in these unconsolidated financial statements, except for captions
of the statement of financial position and profit and loss account.
46.2 Figures have been rounded off to the nearest thousand rupees, unless otherwise stated.
46.3 Comparative information has been re-classified, re-arranged or additionally incorporated in these
unconsolidated financial statements wherever necessary to facilitate comparison and better presentation.
47. DATE OF AUTHORISATION
These unconsolidated financial statements were authorised for issue in the Board of Directors' meeting
held on 27 January 2021.


117
Annexure I
STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF

OF RUPEES FIVE HUNDRED THOUSAND OR ABOVE PROVIDED
DURING THE YEAR ENDED 31 DECEMBER 2020
(Rupees in '000)
Name of Outstanding liabilities

Name and at beginning of the year Interest / Other
individuals / Father's / Principal
S. address Mark-up financial Total
partners / Husband's Other Written
No. of the Interest / Written relief (9+10+11)
directors (with Name Principal than Total off
borrower(s) Mark-up Interest / off provided
CNIC Nos.)
Mark-up
1 2 3 4 5 6 7 8 9 10 11 12
1. Muhammad Zahid Saddique Muhammad Zahid Saddique Muhammad Saddique 528 205 85 818 518 205 85 808
H # P-19, Rapid Garden (CNIC: 33100-0449298-5)
Green Town, Faisalabad.
2. Muhammad Ali Muhammad Ali Abdul Karim 707 291 143 1,141 707 293 143 1,143
H # 5 / 5-47 Shah Faisal Colony (CNIC: 42201-9209306-7)
Water Pump Stop, Karachi.
3. Khalid Mehmood Khalid Mehmood Fazal Din 405 166 54 625 405 166 54 625
H # 20-E, E-Market Block-6, (CNIC: 42301-0974870-7)
P.E.C.H.S., Karachi.
4. Naheed Rehman Naheed Rehman Atta Ur Rehman 467 77 120 664 467 77 120 664
Phase V, Off Kh E Majahid (CNIC: 42301 - 5043520-4)
44/1, 14 St. DHA, Karachi.
5. Muhammad Ahson Hayat Muhammad Ahson Hayat Qazi Muhammad Hayat 896 297 187 1,380 896 297 187 1,380
Block-7, Near Bismillah Taqi (CNIC: 42201-0969890-5)
Hopistal A-281, Admin Society,
Karachi.
6. Ghulam Hyder Memon Ghulam Hyder Memon Muhammad Ishaque 505 212 82 799 505 212 82 799
Flat # M-3, Plot # BC-08 Block-4, (CNIC: 41408-6248354-9)
Clifton Tower, Clifton, Karachi.
7. Millat Agencies Muhammad Yousuf Tayyab Tayyab 1,733 460 – 2,193 1,733 460 – 2,193
Plot # S/104, S.I.T.E., Karachi. (CNIC: 42201-1325572-5)
8. Muhammad Yousuf Tayyab Muhammad Yousuf Tayyab Tayyab 481 68 – 549 481 68 – 549
House # D-82, Navy Housing (CNIC: 42201-1325572-5)
Scheme, Gizri, Chaudhry
Khaliq-u-Zaman Road, Clifton
Karachi.
Total 5,722 1,776 67100 8,169 5,712 1,778 67100 8,161
118
Annexure II
ISLAMIC BANKING BUSINESS
The Bank is operating 106 (2019: 83) Islamic banking branches and 143 (2019: 142) Islamic banking windows
at the end of the year.
Note 2020 2019

(Rupees in '000)
ASSETS
Cash and balances with treasury banks 5,727,007 4,553,339

Balances with other banks 6,557 7,297,026
Due from financial institutions 1 2,175,301 1,857,575
Investments 2 71,453,157 21,669,565
Islamic financing and related assets - net 3 58,304,712 50,689,875
Fixed assets 479,006 402,062
Intangible assets –000 –000
Due from Head Office –000 –000
Other assets 1,197,756 7,595,621
Total Assets 139,343,496 94,065,063
LIABILITIES
Bills payable 137,796 45,838

Due to financial institutions 18,962,087 9,718,686
Deposits and other accounts 4 93,238,405 67,981,321
Due to Head Office 14,457,740 3,282,835
Subordinated debt –000 –000
(129,141,276 ) (84,802,632)
NET ASSETS 10,202,220 9,262,431
REPRESENTED BY
Islamic Banking Fund 7,600,000 6,800,000

Reserves –000 –000
Deficit on revaluation of assets (142,701) (88,942)
Unremitted profit 6 2,744,921 2,551,373
10,202,220 9,262,431
119
The profit and loss account of the Bank's Islamic banking branches for the year ended 31 December 2020 is as
follows:
Note 2020 2019
(Rupees in '000)
Profit / return earned 8 8,493,424 8,056,283

Profit / return expensed 9 (4,047,777) (4,055,827)
Net Profit / return 4,445,647 4,000,456
Other income
Fee and commission income 310,209 229,655
Foreign exchange income 97,171 67,924
Gain / (loss) on securities 169,484 –00
Other income 95,723 93,109
Total other income 767,035 395,041
Total income 5,212,682 4,395,497
Other expenses
Operating expenses (2,349,393) (1,786,510)
Other charges (44) –00
Total other expenses (2,349,437) (1,786,510)
Provisions and write offs - net (118,324) (57,614)
1. Due from Financial Institutions

2020 2019
(Rupees in '000)
In local currency
2020 2019
Held by Bank Further given Held by Bank Further given
as collateral Total as collateral Total
(Rupees in '000)
The GoP Ijarah Sukuks carry rates ranging from 8.89% to 9.08% (31 December 2019: 10.39% to 10.49%).
120
2020 2019
amortised for (Deficit) / Carrying amortised for (Deficit) / Carrying
cost diminution surplus value cost diminution surplus value
2. Investments by segments
(Rupees in '000)
- Ijarah Sukuks 31,954,335 –00 (208,246 ) 31,746,089 2,000,000 –00 (20,000 ) 1,980,000
- Neelum Jhelum Hydropower Co Ltd. Sukuk 3,781,250 –00 –00 3,781,250 4,468,750 –00 –00 4,468,750
- Bai Muajjal with Government of Pakistan 11,328,818 –00 –00 11,328,818 10,133,361 –00 –00 10,133,361
- Pakistan Energy Sukuk II (Power Holding Ltd.) 21,102,725 –00 123,875 21,226,600 –00 –00 –00 –00
68,167,128 –00 (84,371 ) 68,082,757 16,602,111 –00 (20,000 ) 16,582,111
Shares
- Listed Companies 97,442 (63,384 ) 15,861 49,919 97,442 (57,567 ) 9,399 49,274

- Listed 1,322,529 –00 (96,457 ) 1,226,072 1,454,215 –00 (94,777 ) 1,359,438
- Unlisted 2,025,000 –00 –00 2,025,000 1,984,707 –00 –00 1,984,707
3,347,529 –00 (96,457 ) 3,251,072 3,438,922 –00 (94,777 ) 3,344,145
Units of Mutual Funds 100,000 (52,856 ) 22,265 69,409 1,200,000 (47,401 ) 16,436 1,169,035
Associate
- First Habib Islamic Income Fund –00 –00 –00 –00 525,000 –00 –00 525,000
Total Investments 71,712,099 (116,240 ) (142,702 ) 71,453,157 21,863,475 (104,968 ) (88,942 ) 21,669,565
Note 2020 2019

(Rupees in '000)
3. Islamic financing and related assets
Ijarah 3.1 1,656,565 2,365,239
Murabaha 3.2 9,148,387 8,255,703
Diminishing Musharaka 11,404,565 13,499,915
Islamic Long Term Financing Facility (ILTFF) 1,737,762 1,449,640
Istisna 2,364,376 3,929,818
Islamic Refinance for Renewable Energy (IFRE) 14,035 –00
Islamic Export Refinance - Istisna 1,083,650 1,685,500
Musawamah 3,710,693 3,979,048
Islamic Export Refinance - Musawamah 826,500 200,000
Running Musharaka 84,799 2,845,780
Islamic Export Refinance - Running Musharaka 6,270,000 2,318,300
Staff Financing 594,202 431,960
Advance against Musawamah 1,700,257 920,594
Advance against Istisna 5,702,233 4,168,944
Advance against Istisna - IERF 4,829,300 3,694,450
Advance against Ijarah 735,441 52,940
Advance against Diminishing Musharaka 1,083,563 815,069
Advance against IRF Wages and Salaries 2,355,044 –00
Advance against ILTFF 1,082,706 121,424
Advance against IFRE 875,000 –00
Advance against ITERF 914,221 –00
Financing against Bills - Musawamah 293,805 10,900
Gross Islamic financing and related assets 58,467,104 50,745,224
Less: provision against Islamic financings
- Specific 135,936 32,893
- General 26,456 22,456
(162,392) (55,349)
Islamic financing and related assets - net of provision 58,304,712 50,689,875
121
3.1 Ijarah
2020
Cost Accumulated depreciation Book value
As at 01 Additions / As at 31 As at 01 Charge for As at 31 as at 31
January (deletions) December January the year / December December
2020 2020 2020 (deletions) 2020 2020
(Rupees in '000)
Plant and Machinery 934,345 169,556 404,078 358,906 218,211 179,121 224,957
(699,823) (397,996)
Vehicles 2,406,744 546,978 2,227,410 890,722 467,430 891,153 1,336,257
(726,312 ) (466,999 )
Equipment 607,883 –00 286,147 334,105 123,163 190,796 95,351
(321,736 ) (266,472 )
Total 3,948,972 716,534 2,917,635 1,583,733 808,804 1,261,070 1,656,565
(1,747,871 ) (1,131,467 )
2019
2019 2019 2019 (deletions) 2019 2019
(Rupees in '000)
Plant and Machinery 1,252,766 132,311 934,345 477,305 280,914 358,906 575,439
(450,732) (399,313)
Vehicles 2,543,137 704,429 2,406,744 809,693 509,992 890,722 1,516,022
(840,822 ) (428,963 )
Equipment 604,287 65,427 607,883 258,651 129,438 334,105 273,778
(61,831 ) (53,984 )
Total 4,400,190 902,167 3,948,972 1,545,649 920,344 1,583,733 2,365,239
(1,353,385 ) (882,260 )
3.1.1 Future ijarah payments receivable

2020 2019
Not later Later than Not later Later than
than 1 1 year and less than 1 1 year and less
year than 5 years Total year than 5 years Total
(Rupees in '000)
Ijarah rental receivables 685,438 871,283 1,556,721 1,056,088 1,435,753 2,491,841
Note 2020 2019

(Rupees in '000)
3.2 Murabaha
Murabaha financing 3.2.1 7,020,386 6,907,752
Advances for Murabaha 2,128,001 1,347,951
9,148,387 8,255,703
3.2.1 Murabaha receivable - gross
Less: Deferred murabaha income 3.2.2 7,202,836 7,212,743
Profit receivable shown in other assets 3.2.4 (75,641) (125,034 )
Murabaha financings (106,809) (179,957 )
7,020,386 6,907,752
122
2020 2019
(Rupees in '000)
3.2.2 The movement in Murabaha financing during the year is as follows:
Opening balance 7,212,743 9,042,474
Sales during the year 26,037,743 31,056,039
Adjusted during the year (26,047,650) (32,885,770)
3.2.3 Murabaha sale price 25,990,650 32,129,388

Murabaha purchase price (25,303,306) (31,122,793)
687,344 1,006,595
3.2.4 Deferred murabaha income

Opening balance (125,034) (114,816)
Arising during the year (694,160) (1,048,539)
Less: Recognised during the year 743,553 1,038,321
Closing balance (75,641) (125,034)
4. Deposits and other accounts

2020 2019
(Rupees in '000)
Customers
Savings deposits 33,690,149 1,458,082 35,148,231 21,917,057 811,234 22,728,291
Term deposits 21,354,917 –00 21,354,917 17,144,488 –00 17,144,488
89,825,137 2,934,480 92,759,617 60,488,665 2,025,219 62,513,884
Current deposits 62,908 –00 62,908 4,306 –00 4,306
Savings deposits 415,880 –00 415,880 4,263,131 –00 4,263,131
Term deposits –00 –00 –00 1,200,000 –00 1,200,000
478,788 –00 478,788 5,467,437 –00 5,467,437
90,303,925 2,934,480 93,238,405 65,956,102 2,025,219 67,981,321
2020 2019
(Rupees in '000)
- Individuals 58,871,300 41,348,006
- Government / Public Sector Entities 2,096,892 1,001,499
- Banking Companies 46 3,872,049
- Non-Banking Financial Institutions 478,742 1,595,388
- Private Sector 31,791,425 20,164,379
93,238,405 67,981,321
4.1.1 This includes eligible deposits covered under deposit protection mechanism as required by the Deposit
Protection Act 2016, amounting to Rs. 75,124.486 million (2019: Rs. 53,841.170 million).
123
2020 2019
(Rupees in '000)
5. Charity Fund
Additions during the year
Received from customers on account of delayed payment 26,975 33,795
Charity accrued but not yet received 5,072 3,424
Dividend purification amount 205 212
Other Non - Shariah compliant income 2,330 3,230
Profit on charity saving account 2,314 1,835
36,896 42,496
Payments / utilization during the year
Health (26,144) (6,227)
Social Welfare (10,428) (7,013)
Education (2,500) –00
(39,072) (13,240)
5.1 Detail of charity in excess of Rs.0.5 million in as follows:

Friends of Cardiology Hospital, Multan –00 1,431
Green Crescent Trust 1,607 1,431
Edhi Foundation 3,607 1,431
Karachi Down Syndrome Program –00 1,431
Indus Hospital 3,615 1,431
Child Aid Association 3,607 1,075
IDA RIEU Welfare Association 1,607 859
Bait-ul-Sukoon 1,607 –00
Dar-ul-Sukun 3,607 1,431
SIUT 3,607 1,431
Gawadar Development Authority Hospital 5,494 –00
Osmania Hospital 1,607 –00
Al Mustafa Trust 1,607 –00
Jinnah Foundation 2,000 –00
National Institute of Child Health 3,000 –00
Pakistan Children’s Heart Foundation 1,000 –00
38,572 11,951
6. Islamic Banking Business Unappropriated Profit

Add: Islamic Banking profit for the year 2,744,921 2,551,373
Less: Remitted to Head Office (2,551,373) (928,748)
7. Contingencies and Commitments

Guarantees 4,415,658 2,719,414
Commitments 17,468,898 7,710,226
21,884,556 10,429,640
8. Profit / Return Earned on Financing, Investments and Placement

Profit earned on:
Financing 4,389,705 5,205,830
Investments 3,712,628 2,252,959
Placements 391,091 597,494
8,493,424 8,056,283
124
2020 2019
(Rupees in '000)
9. Profit on Deposits and Other Dues Expensed

Deposits and other accounts 3,594,464 3,845,832
Due to Financial Institutions 259,532 154,464
Due to Head Office 193,781 55,531
4,047,777 4,055,827
10. Profit and Loss Distribution and Pool Management

10.1 The number and nature of pools maintained by the Islamic Banking Branches along with their key
features and risk and reward characteristics:
General Pool PKR (Mudaraba)
The deposits parked in general pool are based on normal weightages. The risk of loss is minimal due
to a long range of diversified assets parked in the general pool.
Special Pool(s) PKR (Mudaraba)
Special pool(s) are created where the customers desire to invest in high yield assets. These pool(s)
rates are higher than the general pool depending on the special class of assets. In case of loss in a
special pool the loss will be borne by the special pool members.
General Pool FCY (Mudaraba)
In FCY pool, all FCY deposits and investments are parked to share the return among the FCY deposit
holders. The weightages are also declared separately.
Islamic Export Refinance Scheme (IERS) Pool PKR (Musharaka)
IERS pool is required by SBP to facilitate the exporters under Islamic Export Refinance Scheme.
Parameters associated with risk and rewards:
Following are the key considerations attached with risk and reward of the pool:
- Period, return, safety, security and liquidity of investment.
- Maturities of funds obtained from Principal Office, Islamic Banking Institutions and Shariah compliant
organisations as regulated in Pakistan.
- Element of risk attached to various types of investments.
- SBP rules and Shariah clearance.
10.2 Avenues / sectors of economy / business where Mudaraba based deposits have been deployed:
The Mudaraba based funds have been deployed in the following avenues / sectors / business:
- Chemical and pharmaceuticals
- Agribusiness
- Textile
- Sugar
- Shoes and leather garments
- Investment in sukuk, shares and mutual funds
- Production and transmission of energy
- Food and allied except sugar
- Cement
- Financial
- Wheat
- Individuals
- Others (domestic whole sale, engineering goods, plastic product, etc.)
125
10.3 Parameters used for allocation of profit, charging expenses and provisions etc. along with a
brief description of their major components:
The Bank’s Islamic Banking Division (IBD) is currently accepting Pak Rupees Term Deposits and Saving
Deposits under Mudaraba arrangements, wherein the Bank is Mudarib and depositors are Rab-Ul-Maal.
The Bank also commingles its funds with those of depositors.
The funds so generated are invested by the Bank in Shariah compliant modes of financing and investments
such as Murabaha, Ijarah, Istisna, Diminishing Musharakah, Running Musharakah, Musawama, Shares,
Mutual Funds and Sukuks etc.
The Bank calculates the profit of the pool after every month. Profit is distributed at the Net Income level.
Net Income is calculated after deducting direct costs such as cost of Murabaha, cost of Takaful,
depreciation on Ijarah Assets, amortization of premium on sukuks and loss of investments directly
incurred in deriving that income.
The net income / loss is being allocated between the Bank’s equity and the depositors’ fund in proportion
to their respective share in pool.
The Bank’s profit sharing ratio during the year was 50% (2019: 50%) of net income and the depositors’
profit sharing ratio was 50% (2019: 50%) of net income.
After the allocation of Income between the equity holder and depositors the profit is distributed among
the account holders on the basis of predetermined weightages, announced by the Bank at the beginning
of the month based on their respective category / tiers. In case of loss, Rab-ul-Maal has to bear the
loss in the ratio of its investment.
In case of provisioning, the general and specific provisions created against non-performing financing
and diminution in the value of investments as under prudential regulations and other SBP directives
shall be borne by the IBIs as Mudarib. However, write-offs of financings and loss on sale of investments
shall be charged to the pool along with other direct expenses.
10.4 Mudarib share and HIBA distributed to depositor’s pool and specific pool
2020
Distributable Mudarib Mudarib HIBA HIBA
Income Share Share Amount
(Rupees in ‘000) (Percentage) (Rupees in ‘000) (Percentage)
LCY Pool 6,354,802 2,118,598 33.34% 413,276 19.51%
FCY Pool 96,447 61,600 63.87% 8,754 14.21%
2019
LCY Pool 5,332,255 2,057,735 38.59% 572,480 27.82%

FCY Pool 31,725 29,854 94.10% 3,790 12.70%
2020 2019
(Percentage)
10.5 Profit rate earned vs. profit rate distributed to the depositors
during the year
Profit rate earned 9.99% 10.56%
Profit rate distributed 4.69% 6.66%
126
Disclosure on Complaint Handling
The Bank has a comprehensive Customer Grievances Handling Policy, which is based on the principles of
fairness, promptness, and customer’s right to approach alternate remedial avenues in case of need.
Customers may register their complaints through Call Center, Bank’s Website, direct emails and letters
through drop-boxes or directly to Customer Services Division / CEO’s Office, which are promptly logged and
acknowledged. The complaints are tracked for end-to-end resolution within regulatory timelines and escalated
to Senior Management, as required. In case a complainant is not satisfied with the resolution provided by the
Bank, he may escalate his complaint to Banking Mohtasib Pakistan. This process is communicated to
customers through notices in Branches and the Website.
During 2020, Bank’s Customer Complaint Unit has been further strengthened to ensure quick resolution of
customers’ complaints. Further, training on complaints handling guidelines has also been completed by a large
number of staff.
In 2020, the Bank received 109,951 complaints, about 42% higher than the previous year. The complaints
were investigated and closed within an average turnaround time of 6 working days.
127
Report of Shariah Board for the year ended December 31, 2020
In the name of Allah, the Beneficent, the Merciful
While the Board of Directors and Executive Management are solely responsible to ensure that the operations of
Bank AL Habib – Islamic Banking Division (BAHL-IBD) are conducted in a manner that comply with Shari’ah
principles and guidelines issued by the Shari’ah Board of the BAHL-IBD at all times. The Shari’ah Governance
Framework issued by the State Bank of Pakistan, required from the Shari’ah Board (SB) to submit a report on the
overall Shari’ah compliance environment of BAHL-IBD.
To form the opinion as expressed in this report, the Shari’ah Compliance Department carried out Shari’ah Reviews,
on test check basis, of each class of transactions, the relevant documentation and process flows. Further, during
the last year, Shari’ah Board reviewed the Internal Shari’ah Audit and External Shari’ah Audit Reports. Based on
above, we are of the view that:
I. BAHL-IBD has complied with Shari’ah rules and principles in the light of fatawa, rulings and guidelines
issued by its Shari’ah Board.
II. BAHL-IBD has complied with directives, regulations, instructions and guidelines i.e. related to Shari’ah
compliance issued by SBP in accordance with the rulings of SBP’s Shari’ah Board.
III. BAHL-IBD has complied with the SBP instructions on profit and loss distribution and Pool Management.
IV. BAHL-IBD has the basic mechanism to ensure Shari’ah Compliance in its overall operations.
V. The BOD appreciates the importance of Shari’ah Compliance in the products, processes and operations
of the BAHL-IBD. Improvement is required in level of awareness of Islamic Banking staff as well Executive
Management in order to improve their understanding on the importance of Shari’ah Compliance in their
respective areas, particularly improvement is required in Foreign Trade Department.
VI. The Management has provided adequate resources to Shari’ah Compliance Department and also
committed to provide further staff enabling them to discharge their duties effectively and ensuring the
Shari’ah Compliance environment in BAHL-IBD.
VII. The Bank has a well-defined mechanism in place which is sound enough to ensure that any earnings
realized from sources or by means prohibited by Shari’ah have been credited to charity account and
are being properly utilized. In year 2020, charity amount of Rs. 31.823 Million has been realized, out of
which an income of Rs. 2.330 Million was credited to charity due to Shari’ah non-compliance as per
instructions of Shari’ah Board. An amount of Rs. 39.072 Million has been granted to various charitable
institutions against previous year’s balances.
Mufti Muhammad Sarfaraz Nihal Mufti Ismatullah Hamdullah Mufti Mohib ul Haq Siddiqui
Resident Shariah Board Member Chairman Shariah Board Shariah Board Member
128
Notice of Annual General Meeting
Notice is hereby given that the Thirtieth Annual General Meeting of Bank AL Habib Limited will be held at the
Registered Office of the Bank located at 126-C, Old Bahawalpur Road, Multan, on Thursday, March 25, 2021
at 10:30 a.m. to transact the following business. Further, due to current COVID-19 pandemic situation,
shareholders may also attend the meeting through electronic means as advised by Securities and Exchange
Commission of Pakistan (SECP).
1. To receive and adopt the Audited Annual Accounts and Consolidated Accounts of the Bank for the year
ended December 31, 2020 together with the Reports of Chairman, Directors and Auditors.
2. To consider and approve payment of cash dividend @ 45%, i.e., Rs. 4.50 per share of Rs. 10/- each for
the year ended December 31, 2020 as recommended by the Board of Directors.
3. To appoint auditors for the year 2021 and to fix their remuneration. EY Ford Rhodes, Chartered Accountants,
being eligible, offer themselves for re-appointment.
4. To consider any other business of the Bank with the permission of the Chair.
Special Business
5. To consider and approve remuneration payable to Executive Director of the Bank.
For Item No. 5, a statement under Section 134(3) of the Companies Act, 2017 is annexed.
By order of the Board
MOHAMMAD TAQI LAKHANI

Karachi: March 4, 2021 Company Secretary
Notes:
1. Participation in the Annual General Meeting through Video Link Facility:
In view of the current COVID-19 (Corona Virus) pandemic situation in the Country and in pursuance of
Circular No. 4 dated February 15, 2021 of SECP pertaining to attending the AGM through video link
facility, the entitled shareholders whose names appeared in the Books of the Bank by the close of
business on March 12, 2021 and who are interested to attend AGM through online platform are hereby
requested to get themselves registered with the Company Secretary Office by providing the following
details at the earliest but not later than 48 hours before the time of AGM (i.e. before 10:30 A.M. on March
23, 2021) at [email protected]
Name of CNIC No. Folio Number Cell Number Email

Shareholder /CDC No. Address
Upon receipt of the above information from interested shareholders, the Bank will send the login details
at their email addresses. On the AGM day, shareholders will be able to login and participate in the AGM
proceedings through their smartphones or computer devices from any convenient location.
The login facility will be opened 30 minutes before the meeting time to enable the participants to join the
meeting after identification and verification process.
129
The entitled shareholders (whose names appeared in the Books of the Bank by the close of business on
March 12, 2021) along with the details mentioned above may send their comments/suggestions for the
proposed Agenda items at the above email address at least 48 hours before the time of AGM.
2. The share transfer book of the Bank will remain closed from March 15, 2021 to March 25, 2021 (both
days inclusive). Transfers received in order at the office of our Share Registrar, CDC Share Registrar
Services Limited, located at CDC House, 99-B, Block B, S.M.C.H.S., Main Shahra-e-Faisal, Karachi –
74400, by the close of business on March 12, 2021 will be treated in time for payment of cash dividend
(subject to approval of the members). Members are requested to promptly communicate any change in
their addresses to our above-mentioned Share Registrar.
3. A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend, speak and
vote on his/her behalf. A proxy (except for a corporation) must be a member of the Bank. Proxy form, in
order to be effective, must be received at the Registered Office of the Bank located at 126-C, Old
Bahawalpur Road, Multan, duly stamped and signed not less than 48 hours before the time of the
meeting.
4. The entitled shareholders are requested to keep with them their original Computerized National Identity
Cards (CNICs) / Passport along with their folio numbers / participant(s) ID numbers and CDC account
numbers at the time of attending the Annual General Meeting in order to facilitate identification of the
respective shareholders. The proxy shall also produce his/her original CNIC or Passport at the time of
the meeting. In case of a corporate entity, the Board of Directors’ Resolution/Power of Attorney with
specimen signatures shall be submitted along with Proxy Form in the Bank.
5. Payment of Cash Dividend through Electronic Mode
Under the provision of Section 242 of Companies Act, 2017 and Companies (Distribution of Dividends)
Regulations, 2017, it is mandatory for a listed company to pay cash dividend to their shareholders only
through electronic mode directly into the bank account designated by the entitled shareholders instead
of issuing physical dividend warrants.
In order to receive cash dividend directly into the designated bank account, members who have not yet provided
the bank account details are requested to fill and sign the “E-Dividend Bank Mandate Form” available on the
Bank’s website link, https://www.bankalhabib.com/download-forms, and send to the relevant
Participants/Investor Account Services of the CDC/Share Registrar of the Bank (as the case may be)
latest by March 12, 2021 along with a copy of their valid CNICs. The aforesaid form is also available in
the Annual Report of the Bank.
In case of non-receipt or incorrect International Bank Account Number (IBAN) with other related details
or non-availability of valid CNICs, the Bank will withhold cash dividend of such members.
6. The Government of Pakistan through Finance Act, 2020 has made certain amendments in Section 150
of the Income Tax Ordinance, 2001 whereby different rates are prescribed for deduction of withholding
tax on the amount of cash dividend paid by the companies/banks. These tax rates are as follows:
(a) For filers of income tax returns 15%
(b) For non-filers of income tax returns 30%
To enable the Bank to make tax deduction on the amount of cash dividend @ 15% instead of 30% all
the shareholders whose names are not entered into the Active Tax-payers List (ATL) provided on the
website of Federal Board of Revenue (FBR), despite the fact that they are filers, are advised to make
sure that their names are entered into ATL before the date of payment of cash dividend i.e., March 25,
2021; otherwise tax on their cash dividend will be deducted @ 30% instead of 15%.
According to FBR, withholding tax will be determined separately on ‘Filer/Non-Filer’ status of principal
shareholder as well as joint-shareholder(s) based on their shareholding proportions, in case of joint
accounts. Members that hold shares with joint-shareholder(s) are requested to provide shareholding
proportions of principal shareholder and joint-shareholder(s) in respect of shares held by them to the
Bank’s Share Registrar in writing in the following format.
130
Principal Shareholder Joint-Shareholder(s)
Bank Folio/CDC Total Name Shareholding Name Shareholding

Name Account Shares and Proportion and Proportion
No. CNIC (No. of Shares) CNIC (No. of Shares)
In case the required information is not provided to our Share Registrar latest by March 12, 2021, it will
be assumed that the shares are equally held by them.
In case of corporate entity, withholding tax exemption from dividend income shall only be allowed if copy
of valid tax exemption certificate is made available to our Share Registrar latest by March 12, 2021.
As per instructions of SECP and Central Depository Company of Pakistan (CDC) circular No. 6 of 2018,
the shareholders are hereby informed that the CDC has developed Centralized Cash Dividend Register
(CCDR) on eServices Web Portal which contains details of cash dividend such as either paid or unpaid,
withheld by the Bank, total amount of cash dividend, tax and zakat deductions and net amount credited
into designated bank account of shareholders. The shareholders are requested to register themselves
to CDC's eServices Portal link, https://eservices.cdcaccess.com.pk to obtain the aforesaid information.
7. Audited Financial Statements through e-mail
SECP through its Notification SRO 787(I)/2014 dated September 8, 2014 has allowed the circulation of
Audited Financial Statements along with Notice of Annual General Meeting to the members through e-mail.
Soft copies of Annual Report 2020 including Audited Financial Statements and Notice of Annual General
Meeting are being e-mailed to the members who have provided their e-mail addresses for the said
purpose. Other members of the Bank who wish to receive soft copy of Annual Report are requested to send
their e-mail addresses to our Share Registrar through consent form. The said consent form for electronic
transmission can be downloaded from the Bank’s website link, https://www.bankalhabib.com/reports
Audited Financial Statements and reports are being placed on the aforesaid link.
Members are also requested to intimate change (if any) in their registered e-mail addresses to our Share
Registrar for the above-mentioned purpose.
131
Statement under Section 134(3) of the Companies Act, 2017
The statement is annexed to the Notice of the Thirtieth (30th) Annual General Meeting of Bank AL Habib
Limited at which a special business is to be transacted. The purpose of this statement is to set forth the
material fact concerning such special business.
Item No. 5 of the Agenda
As recommended by the Board of Directors in their meeting held on January 27, 2021, it is intended to propose
the following resolution to be passed as an Ordinary Resolution:
“RESOLVED that the remuneration of Mr. Qumail R. Habib, Executive Director shall not exceed
Rs. 3,327,500/- per month exclusive of perquisites, benefits and other allowances to which he is entitled under
the terms of his employment.”
132
Pattern of Shareholding as at December 31, 2020
Number of Total Shares

Size of Shareholding
Shareholders Held
432 From 1 To 100 15,448
690 From 101 To 500 218,023
546 From 501 To 1,000 438,729
1,885 From 1,001 To 5,000 5,154,944
564 From 5,001 To 10,000 4,245,376
332 From 10,001 To 15,000 4,160,200
1,163 From 15,001 To 20,000 21,292,237
88 From 20,001 To 25,000 1,986,247
68 From 25,001 To 30,000 1,895,380
66 From 30,001 To 35,000 2,164,342
98 From 35,001 To 40,000 3,668,204
83 From 40,001 To 50,000 3,816,153
52 From 50,001 To 60,000 2,844,612
76 From 60,001 To 80,000 5,331,462
66 From 80,001 To 100,000 6,068,760
77 From 100,001 To 150,000 9,078,357
77 From 150,001 To 200,000 13,395,837
34 From 200,001 To 250,000 7,638,388
32 From 250,001 To 300,000 8,732,536
17 From 300,001 To 350,000 5,588,749
95 From 350,001 To 600,000 44,220,989
42 From 600,001 To 1,000,000 32,150,246
148 From 1,000,001 To 100,000,000 927,320,197
6,731 1,111,425,416
Categories of Number of Number of

Shareholders Shareholders Shares Held Percentage
Individuals 6,373 598,045,705 53.81

Investment & Insurance
Companies 15 136,853,560 12.31
Joint Stock Companies 122 161,477,478 14.53
Financial Institutions 15 14,560,716 1.31
Modaraba & Mutual Funds 40 91,460,709 8.23
Foreign Companies 14 29,835,320 2.68
Pension Funds 32 13,673,093 1.23
Others 120 65,518,835 5.90
TOTAL 6,731 1,111,425,416 100.00
133
Pattern of Shareholding as at December 31, 2020
Additional Information
Shareholders' Category Number of Number of
Shareholders Shares Held
Associated Companies
Habib Insurance Co. Ltd. 1 2,000,000
Habib Sugar Mills Limited 1 24,136,691
Mutual Funds
CDC - TRUSTEE FAYSAL STOCK FUND 1 33

CDC - TRUSTEE PICIC GROWTH FUND 1 233
CDC - TRUSTEE HBL - STOCK FUND 1 604
CDC - TRUSTEE PICIC INVESTMENT FUND 1 967
TRI-STAR MUTUAL FUND LIMITED 1 1,904
SAFEWAY FUND (PVT) LTD. 1 5,001
CDC - TRUSTEE FIRST CAPITAL MUTUAL FUND 1 10,000
CDC - TRUSTEE NBP MAHANA AMDANI FUND - MT 1 11,927
CDC - TRUSTEE NITPF EQUITY SUB-FUND 1 20,000
CDC - TRUSTEE UBL DEDICATED EQUITY FUND 1 23,000
CDC - TRUSTEE NBP PAKISTAN GROWTH EXCHANGE TRADED FUND 1 27,146
CDC - TRUSTEE FIRST HABIB ASSET ALLOCATION FUND 1 36,500
CDC - TRUSTEE NBP FINANCIAL SECTOR INCOME FUND - MT 1 39,793
CDC - TRUSTEE NIT PAKISTAN GATEWAY EXCHANGE TRADED FUND 1 41,040
CDC - TRUSTEE FIRST HABIB STOCK FUND 1 45,500
CDC - TRUSTEE HBL MULTI - ASSET FUND 1 49,000
CDC - TRUSTEE PAKISTAN CAPITAL MARKET FUND 1 140,131
CDC - TRUSTEE LAKSON TACTICAL FUND 1 151,032
CDC - TRUSTEE ALFALAH GHP VALUE FUND 1 152,500
CDC - TRUSTEE AKD INDEX TRACKER FUND 1 172,232
CDC - TRUSTEE NIT ASSET ALLOCATION FUND 1 215,000
CDC - TRUSTEE ALLIED FINERGY FUND 1 245,000
CDC - TRUSTEE APF-EQUITY SUB FUND 1 250,500
CDC - TRUSTEE ALFALAH GHP ALPHA FUND 1 251,898
CDC - TRUSTEE UBL ASSET ALLOCATION FUND 1 253,800
CDC - TRUSTEE NBP SARMAYA IZAFA FUND 1 416,650
CDC - TRUSTEE NBP BALANCED FUND 1 460,400
CDC - TRUSTEE ALFALAH GHP STOCK FUND 1 596,991
CDC - TRUSTEE MCB PAKISTAN ASSET ALLOCATION FUND 1 672,409
CDC - TRUSTEE NIT-EQUITY MARKET OPPORTUNITY FUND 1 684,489
CDC - TRUSTEE NBP FINANCIAL SECTOR FUND 1 1,119,000
CDC - TRUSTEE LAKSON EQUITY FUND 1 1,305,623
CDC - TRUSTEE ABL STOCK FUND 1 2,361,877
CDC - TRUSTEE UBL FINANCIAL SECTOR FUND 1 2,374,098
CDC - TRUSTEE ATLAS STOCK MARKET FUND 1 2,960,117
CDC - TRUSTEE UBL STOCK ADVANTAGE FUND 1 4,438,950
CDC - TRUSTEE MCB PAKISTAN STOCK MARKET FUND 1 5,427,485
CDC - TRUSTEE NBP STOCK FUND 1 8,803,538
CDC - TRUSTEE NATIONAL INVESTMENT (UNIT) TRUST 1 57,694,329
National Bank of Pakistan, Trustee Dept.
134
Shareholders' Category Number of Number of
Shareholders Shares Held
Directors
Abbas D. Habib 1 42,450,257

Qumail R. Habib 1 17,522,296
Anwar Haji Karim 1 6,349,159
Murtaza H. Habib 1 13,698,691
Syed Mazhar Abbas 1 18,474
Syed Hasan Ali Bukhari 1 15,092
Arshad Nasar 1 500
Safar Ali Lakhani 1 116,840
Farhana Mowjee Khan 1 25,180
Chief Executive Officer

Mansoor Ali Khan – NIL
Directors' Spouses
Mrs. Niamet Fatima 1 4,818,197
W/o. Mr. Abbas D. Habib
Mrs. Shirin Lakhani 1 77,042
W/o Mr. Safar Ali Lakhani
Executives 44 9,054,756
Joint Stock Companies and Corporations 121 137,340,787
Banks, Development Financial Institutions, Non - Banking

Finance Companies, Insurance Companies, Takaful,
Modarabas and Pension Funds 61 89,652,227
Shareholders holding five percent or more voting rights

State Life Insurance Corporation of Pakistan 1 73,435,154
National Investment (Unit) Trust (included in the list above under
Mutual Funds)
Individuals 6,318 503,899,221
Others (including foreign companies) 134 95,354,155
TOTAL 6,731 1,111,425,416
135
Consolidated Financial Statements
Bank AL Habib Limited
and
Subsidiary Companies
136
Bank AL Habib Limited and its Subsidiary Companies
Directors’ Report on Audited Consolidated Financial Statements
The Directors are pleased to present the Audited Consolidated Financial Statements of Bank AL Habib
Limited and the Bank’s Subsidiaries AL Habib Capital Markets (Private) Limited and AL Habib Asset
Management Limited (formerly Habib Asset Management Limited) for the year ended December 31, 2020.
(Rupees in '000)
Profit for the year before tax 28,709,420
Taxation (10,751,960 )
Profit for the year after tax 17,957,460
Share of profit attributable to non - controlling interest (9,728 )
Profit attributable to shareholders of Holding Company 17,947,732
Un-appropriated profit brought forward 28,163,914
Transfer from surplus on revaluation of fixed assets - net of tax 104,484
Other comprehensive income - net of tax (128,275 )
28,140,123
Profit available for appropriation 46,087,855
Appropriations:
Transfer to Statutory Reserve (1,781,154 )
Cash dividend – 2019 (3,889,988 )
(5,671,142 )
Un - appropriated profit carried forward 40,416,713
Earnings per share (after tax) – Holding Company Rs. 16.15
Pattern of Shareholding
The pattern of shareholding as at December 31, 2020 is annexed with the financial statements of Bank AL
Habib Limited.

Board of Directors

137
To the members of Bank Al Habib Limited
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the annexed consolidated financial statements of Bank Al Habib Limited (the Bank), and
its subsidiary companies, (the Group) which comprise the consolidated statement of financial position as at
31 December 2020, and the consolidated profit and loss account and the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated cash flows
statement for the year then ended, notes to the consolidated financial statements, including a summary of
significant accounting policies and other explanatory information.
In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position
of the Group as at 31 December 2020, and its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with the accounting and reporting standards as applicable in
Pakistan.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in
Pakistan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance
with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants
as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other
ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
138
Following is the key audit matter:
Key audit matters How the matter was addressed in our audit
1. Provision against non-performing loans and advances
The Group’s advances portfolio represents 33.49% We applied a range of audit procedures including
of its total assets as of 31 December 2020. A the following:
substantial portion of the advances portfolio include
corporate finances to public sector entities and large - We reviewed the Group’s process for identification
to small size businesses operating in diverse sectors and classification of non-performing advances.
of the economy. As part of such review we performed an analysis
of the changes within the different categories of
Covid-19 pandemic which emerged during the year classified non-performing accounts from last year
impacted the global economy and caused disruption to the current reporting date. This analysis was
to economic activities and businesses operating used to gather audit evidence regarding
across a variety of sectors in Pakistan. Such downgrading of impaired advances and
circumstances potentially require the Group to declassification of accounts from non-performing
evaluate its credit risk exposure which may have to regular and vice versa, as the case may be.
been impacted due to the current economic
conditions. - We performed independent checks on test basis
As per the Group’s accounting policy (refer note 4.5 for the computations of provisions to assess that
to the consolidated financial statements), the Group the same is in line with the requirements of the
determines provisions against non-performing applicable Prudential Regulations;
advances exposures in accordance with the
requirements of Prudential Regulations of State - In addition, we selected a representative sample
Bank of Pakistan (SBP) and also maintains general of borrowers from the advances portfolios
provision in respect of potential credit losses in the including individually significant credit facilities
portfolio. The Prudential Regulations require specific and performed tests and procedures such as
provisioning for loan losses on the basis of an review of credit documentation, repayment history
age-based criteria which should be supplemented and past due status, financial condition as
by a subjective evaluation of Group’s credit portfolio. depicted by the borrowers’ financial statements,
The determination of loan loss provision therefore, nature of collateral held by the Group and status
involve use of management judgment, on a case to of litigation, if any, with the borrower;
case basis, taking into account factors such as the
economic and business conditions, borrowers - In respect of the level of general provision
repayment behaviors and realizability of collateral maintained by the Group, we discussed the
held by the Group. approach and policy followed by the Group with
the management and the regulatory approvals in
In view of the significance of this area in terms of its place for such policy.
impact on the consolidated financial statements and
the level of involvement of management’s judgment, - We also assessed adequacy of disclosures as
we identified adequacy and completeness of included in note 10 to the consolidated financial
provision against advances as a significant area of statements regarding the non-performing
audit judgment and a key audit matter. advances and provisions made for the same in
The accounting policy and disclosures relating to the consolidated financial statements in
provisioning against non- performing advances are accordance with the requirements of the
included in note 4.5 and 10 respectively to the applicable financial reporting framework.
consolidated financial statements.
139
Information Other than the Consolidated Financial Statements and Auditors’ Report Thereon
Management is responsible for the other information. The other information comprises the information included
in the Annual Report, but does not include the financial statements and our auditors’ report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Responsibilities of Management and the Board of Directors for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with accounting and reporting standards as applicable in Pakistan, the requirements of Banking Companies
Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017) and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
The Board of directors is responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a
140
material significant doubt on the Group’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide to the Board of Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditors’ report is Arslan Khalid.
EY Ford Rhodes
141
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
Note 2020 2019
(Rupees in '000)
ASSETS
Lendings to financial institutions 8 2,175,301 1,857,575
Investments 9 765,318,984 586,510,554
Advances 10 510,050,394 488,652,848
Fixed assets 11 43,976,664 36,571,645
Intangible assets 12 294,862 368,840
Deferred tax assets –000 –000
Other assets 13 75,345,810 61,812,360
1,522,779,386 1,299,138,956
LIABILITIES
Bills payable 15 31,013,221 20,168,673
Borrowings 16 211,627,267 228,745,034
Deposits and other accounts 17 1,099,223,458 903,592,980
Liabilities against assets subject to finance lease –000 –000
Subordinated debt 18 14,989,600 14,992,800
Deferred tax liabilities 19 139,836 1,377,707
1,442,335,671 1,237,206,265
NET ASSETS 80,443,715 61,932,691
REPRESENTED BY
Share capital 21 11,114,254 11,114,254
Reserves 18,431,277 16,467,282
Surplus on revaluation of assets 22 10,366,693 6,081,731
Unappropriated profit 40,416,713 28,163,914
Equity attributable to the shareholders of the

Holding Company 80,328,937 61,827,181
Non-controlling interest 23 114,778 105,510
Total equity 80,443,715 61,932,691

The annexed notes 1 to 49 and annexures I and II form an integral part of these consolidated financial statements.

142
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Note 2020 2019
(Rupees in '000)
Mark - up / return / interest earned 26 125,292,340 105,617,207

Mark - up / return / interest expensed 27 (67,649,002) (64,412,998)
Net mark - up / interest income 57,643,338 41,204,209
NON MARK - UP / INTEREST INCOME
Fee and commission income 28 6,819,687 6,135,310
Foreign exchange income 2,142,728 2,305,204
Gain / (loss) on securities - net 29 182,013 (32,469)
Share of profit from associates 114,337 94,992
Other income 30 819,337 662,966
Total non mark - up / interest income 10,510,462 9,563,561
Total income 68,153,800 50,767,770
NON MARK - UP / INTEREST EXPENSES

Operating expenses 31 (34,167,718) (27,786,291)
Workers welfare fund (673,046) (448,415)
Other charges 32 (56,672) (93,244)
Total non mark - up / interest expenses (34,897,436) (28,327,950)
Provisions and write offs - net 33 (4,546,944) (3,399,357)
Extra ordinary / unusual items –00 –00
PROFIT BEFORE TAXATION 28,709,420 19,040,463
Taxation 34 (10,751,960) (7,848,833)
PROFIT AFTER TAXATION 17,957,460 11,191,630
Attributable to:
Shareholders of the Holding Company 17,947,732 11,195,366
Non - controlling interest 9,728 (3,736)
17,957,460 11,191,630
(Rupees)
Basic and diluted earnings per share attributable to
equity holders of the Holding Company 35 16.15 10.07


143
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2020 2019
(Rupees in '000)
Profit after taxation for the year 17,957,460 11,191,630
Other comprehensive income
Items that may be reclassified to profit and loss account

Effect of translation of net investment in foreign branches 182,841 592,878

Movement in surplus on revaluation of investments
- net of tax 1,234,402 2,781,700
1,417,243 3,374,578
Items that will not be reclassified to profit and loss account

Remeasurement (loss) / gain on defined benefit

obligations - net of tax (128,275 ) 149,997
Movement in surplus on revaluation of operating
fixed assets - net of tax 3,056,238 –00
Movement in surplus on revaluation of non banking
assets - net of tax 98,346 –00
3,026,309 149,997
Total comprehensive income 22,401,012 14,716,205
Attributable to:
Shareholders of the Holding Company 22,391,744 14,717,373
Non - controlling interest 9,268 (1,168)
22,401,012 14,716,205


144
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to shareholders of the Holding Company
Revenue Reserves Surplus / (deficit) on revaluation of
Foreign Currency Fixed / Non
Share Statutory Translation Special General Investments Banking Unappropriated Sub Total Non-controlling Total
Capital Reserve Reserve Reserve Reserve Assets Profit Interest
(Rupees in '000)
Balance as at 01 January 2019 11,114,254 12,742,793 1,348,237 126,500 540,000 (1,172,343 ) 4,547,711 20,641,220 49,888,372 106,678 49,995,050
Profit after taxation –00 –00 –00 –00 –00 –00 –00 11,195,366 11,195,366 (3,736 ) 11,191,630
Other comprehensive income - net of tax –00 –00 592,878 –00 –00 2,779,132 –00 149,997 3,522,007 2,568 3,524,575
Total comprehensive income for the year –00 –00 592,878 –00 –00 2,779,132 –00 11,345,363 14,717,373 (1,168 ) 14,716,205
Transfer to statutory reserve –00 1,116,874 –00 –00 –00 –00 –00 (1,116,874) –00 –00 –00

assets to unappropriated profit - net of tax –00 –00 –00 –00 –00 –00 (72,769 ) 72,769 –00 –00 –00
Cash dividend (Rs. 2.5 per share) –00 –00 –00 –00 –00 –00 –00 (2,778,564) (2,778,564 ) –00 (2,778,564)
Balance as at 31 December 2019 11,114,254 13,859,667 1,941,115 126,500 540,000 1,606,789 4,474,942 28,163,914 61,827,181 105,510 61,932,691
Profit after taxation –00 –00 –00 –00 –00 –00 –00 17,947,732 17,947,732 9,728 17,957,460
Other comprehensive income - net of tax –00 –00 182,841 –00 –00 1,234,862 3,154,584 (128,275) 4,444,012 (460 ) 4,443,552
Total comprehensive income for the year –00 –00 182,841 –00 –00 1,234,862 3,154,584 17,819,457 22,391,744 9,268 22,401,012
Transfer to statutory reserve –00 1,781,154 –00 –00 –00 –00 –00 (1,781,154) –00 –00 –00

assets to unappropriated profit - net of tax –00 –00 –00 –00 –00 –00 (104,484 ) 104,484 –00 –00 –00
Cash dividend (Rs. 3.5 per share) –00 –00 –00 –00 –00 –00 –00 (3,889,988) (3,889,988 ) –00 (3,889,988)
Balance as at 31 December 2020 11,114,254 15,640,821 2,123,956 126,500 540,000 2,841,651 7,525,042 40,416,713 80,328,937 114,778 80,443,715


145
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2020 Note 2020 2019
(Rupees in '000)
CASH FLOW FROM OPERATING ACTIVITIES
Less: Dividend income (432,360) (397,558)
28,277,060 18,642,905
Adjustments:
Depreciation 2,789,676 2,474,524
Depreciation on right-of-use assets 1,661,393 1,395,355
Provisions and write - offs - net 4,546,944 3,399,357
Gain on sale of fixed assets - net (440,311) (377,019)
Share of profit from associates (114,337) (94,992)
(Gain) / loss on sale / redemption of securities - net (182,013) 32,469
Charge for compensated absences 248,264 135,164
9,754,901 7,925,965
38,031,961 26,568,870
(Increase) / decrease in operating assets
Lendings to financial institutions (317,726) (1,857,575)
Held - for - trading securities (85,792) 197,562
Advances (24,387,418) (12,179,593)
Other assets (excluding advance taxation) (14,183,514) (15,893,345)
(38,974,450) (29,732,951)
Increase / (decrease) in operating liabilities
Bills payable 10,844,548 (435,009)
Borrowings from financial institutions (16,411,647) 109,148,680
Deposits 195,630,478 106,741,113
Other liabilities (excluding current taxation) 13,863,126 14,197,263
203,926,505 229,652,047
202,984,016 226,487,966
Income tax paid (12,198,036) (8,639,712)
Net cash flow generated from operating activities 190,785,980 217,848,254
CASH FLOW FROM INVESTING ACTIVITIES
Net investments in available for sale securities (160,929,584) (71,017,537)
Net investments in held to maturity securities (15,538,169) (97,530,743)
Net investments in associates (1,478,845) (469,232)
Dividends received 417,919 410,458
Investments in operating fixed assets (5,264,293) (5,207,819)
Proceeds from sale of fixed assets 599,433 520,727
Exchange differences on translation of net investment in foreign branches 182,841 592,878
Net cash used in investing activities (182,010,698) (172,701,268)
CASH FLOW FROM FINANCING ACTIVITIES
Payments of subordinated debt (3,200) (3,200)
Dividend paid (3,841,582) (2,767,686)
Payment against lease liabilities (1,972,143) (2,012,087)
Net cash flow from financing activities (5,816,925) (4,782,973)
Increase in cash and cash equivalents 2,958,357 40,364,013
Cash and cash equivalents at beginning of the year 36 122,460,717 82,096,704
Cash and cash equivalents at end of the year 36 125,419,074 122,460,717


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. STATUS AND NATURE OF BUSINESS
1.1 The Group comprises of:
Holding Company
- Bank AL Habib Limited
Subsidiaries
- AL Habib Capital Markets (Private) Limited
- AL Habib Asset Management Limited (Formerly known as Habib Asset Management Limited)
1.2 Bank AL Habib Limited (the Bank) is a banking company incorporated in Pakistan on 15 October 1991
as a public limited company under repealed Companies Ordinance, 1984 having its registered office
at 126-C, Old Bahawalpur Road, Multan with principal place of business in Karachi. Its shares are
listed on Pakistan Stock Exchange Limited. It is a scheduled bank principally engaged in the business
of commercial banking with a network of 818 branches (2019: 718 branches), 32 sub-branches (2019:
37 sub-branches), 04 representative offices (2019: 04 representative offices) and 02 booths (2019: 02
booths). The branch network of the Bank includes 03 overseas branches (2019: 03 overseas
branches) and 106 Islamic Banking branches (2019: 83 Islamic Banking branches).
1.3 The Bank has invested in 66.67% shares of AL Habib Capital Markets (Private) Limited. The
Company was incorporated in Pakistan on 23 August 2005 as a private limited company under
repealed Companies Ordinance, 1984. The company is a corporate member of the Pakistan Stock
Exchange Limited and is engaged in equity, money market and foreign exchange brokerage services,
equity research, corporate financial advisory and consultancy services.
1.4 The Bank has invested in 100% shares of AL Habib Asset Management Limited (formerly Habib Asset
Management Limited). The Company was incorporated in Pakistan on 30 September 2005 as an
unquoted public limited company under repealed Companies Ordinance, 1984. The Company has
been issued a license by the Securities and Exchange Commission of Pakistan (SECP) to undertake
asset management services as a Non-Banking Finance Company. The principal business of the
Company is to provide Investment Advisory Services and Asset Management Services.
The Company is managing following funds:
- First Habib Income Fund
- First Habib Stock Fund
- First Habib Cash Fund
- First Habib Islamic Stock Fund
- First Habib Islamic Income Fund
- First Habib Asset Allocation Fund
2. BASIS OF PRESENTATION
2.1 These consolidated financial statements have been prepared in conformity with the format of financial
statements prescribed by the State Bank of Pakistan (SBP) vide BPRD Circular No. 02, dated 25
January 2018.
2.2 In accordance with the directives of the Federal Government regarding the shifting of the banking
system to Islamic modes, SBP has issued various circulars from time to time. Permissible forms of
trade - related modes of financing includes purchase of goods by banks from customers and
immediate resale to them at appropriate mark - up in price on deferred payment basis. The purchase
and resale arising under these arrangements are not reflected in these consolidated financial
statements as such, but are restricted to the amount of facility actually utilised and the appropriate
portion of mark - up thereon. However, the Islamic Banking branches of the Bank have complied with
the requirements set out under the Islamic Financial Accounting Standards (IFAS), issued by the
Institute of Chartered Accountants of Pakistan (ICAP) as are notified under the provisions of the
Companies Act, 2017.
2.3 Key financial information of the Islamic Banking branches is disclosed in annexure II to these
consolidated financial statements.
2.4 Statement of compliance
2.4.1 These consolidated financial statements have been prepared in accordance with the accounting and
reporting standards as applicable in Pakistan. The accounting and reporting standards comprise of:
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- International Financial Reporting Standards (IFRS) issued by the International Accounting Standards
Board (IASB) as are notified under the Companies Act, 2017;
- Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of
Pakistan (ICAP), as are notified under the Companies Act, 2017;
- Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the
Companies Act, 2017; and
- Directives issued by the State Bank of Pakistan and the Securities and Exchange Commission of
Pakistan (SECP).
Whenever the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 or the
directives issued by SBP and SECP differ with the requirements of the IFRS or IFAS, requirements of the
Banking Companies Ordinance, 1962, the Companies Act, 2017 and the said directives shall prevail.
2.4.2 SBP has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments:
Recognition and Measurement' and IAS 40, 'Investment Property' for Banking Companies in Pakistan
through BSD Circular Letter No. 10 dated 26 August 2002 till further instructions. Further, SBP vide its
BPRD Circular No. 04 of 2019 dated 23 October 2019 directed the banks in Pakistan to implement IFRS 9
'Financial Instruments' with effect from 01 January 2021. SECP has deferred the applicability of IFRS 7
'Financial Instruments: Disclosures' through its notification S.R.O 411 (I) / 2008 dated 28 April 2008.
Accordingly, the requirements of these standards have not been considered in the preparation of these
consolidated financial statements. However, investments have been classified and valued in accordance
with the requirements prescribed by SBP through various circulars. In case of overseas branches, IFRS 9
/ respective foreign regulatory requirements are considered for recording, classification and valuation of
investment.
2.4.3 SECP has notified IFAS 3, 'Profit and Loss Sharing on Deposits' issued by ICAP. IFAS 3 shall be followed
with effect from the financial periods beginning on or after 01 January 2014 in respect of accounting for
transactions relating to 'Profit and Loss Sharing on Deposits' as defined by the said standard. The standard
has resulted in certain new disclosures in the financial statements of the Bank. SBP through BPRD Circular
Letter No. 04 dated 25 February 2015, has deferred the applicability of IFAS 3 till further instructions and
prescribed the Banks to prepare their annual and periodical financial statements as per existing prescribed
formats issued vide BPRD Circular No. 02 of 2018, as amended from time to time.
2.4.4 SECP vide its notification SRO 633 (I) / 2014 dated 10 July 2014, adopted IFRS 10 effective from the
periods starting from June 30, 2014. However, vide its notification SRO 56 (I) / 2016 dated January 28,
2016, it has been notified that the requirements of IFRS 10 and section 228 of the Companies Act, 2017
will not be applicable with respect to the investment in mutual funds established under trust structure.
are effective in the current year
The Group has adopted the following accounting standards and amendments of IFRSs and the
improvements to accounting standards which became effective for the current year:
- Amendments to IAS 1, 'Presentation of Financial Statements' and IAS 8, 'Accounting Policies,
Changes in Accounting Estimates and Errors'. The amendments were intended to make the definition
of material in IAS 1 easier to understand and are not intended to alter the underlying concept of
materiality in IFRS Standards. In addition, the IASB has also issued guidance on how to make
materiality judgments when preparing their general purpose financial statements in accordance with
IFRS Standards.
- Amendment to IFRS 3, ‘Business Combinations’ – Definition of a Business. IASB has issued
amendments aiming to resolve the difficulties that arise when an entity determines whether it has
acquired a business or a group of assets. The amendments clarify that to be considered a business,
an acquired set of activities and assets must include, at a minimum, an input and a substantive process
that together significantly contribute to the ability to create outputs. The amendments include an
election to use a concentration test.
148
- IFRS 14, 'Regulatory Deferral Accounts' permits an entity to continue to account, with some limited
changes, for 'regulatory deferral account balances' in accordance with its previous reporting framework,
both on initial adoption of standard and in subsequent financial statements. Regulatory deferral account
balances, and movements in them, are presented separately in the statement of financial position and
profit and loss account and statement of other comprehensive income, and specific disclosures are
required.
- IASB has also issued the revised Conceptual Framework for Financial Reporting (the Conceptual
Framework) in March 2018 which became effective during the year for preparers of financial statements
who develop accounting policies based on the Conceptual Framework. The revised Conceptual
Framework is not a standard, and none of the concepts override those in any standard or any requirements
in a standard. The purpose of the Conceptual Framework is to assist IASB in developing standards, to
help preparers develop consistent accounting policies if there is no applicable standard in place and to
assist all parties to understand and interpret the standards.
The above mentioned accounting standards and amendments of IFRSs did not have any material impact
on the consolidated financial statements of the Group.
are not yet effective
The following IFRS as notified under the Companies Act, 2017 and the amendments and interpretations
thereto will be effective for accounting periods beginning on or after 01 January 2021:
- IFRS 9, 'Financial Instruments' - SBP vide its BPRD Circular No. 04 of 2019 dated 23 October 2019
directed the banks in Pakistan to implement IFRS 9 with effect from 01 January 2021, IFRS 9 replaced
the existing guidance in IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 includes
revised guidance on the classification and measurement of financial instruments, a new expected credit
loss model for calculating impairment on financial assets, and new general hedge accounting requirements.
It also carries forward the guidance on recognition and derecognition of financial instruments from IAS
39. The Bank has been complying with the requirement of BPRD Circular Letter No. 15 of 2020 to have
parallel run of IFRS 9 from July 01, 2020.
- COVID-19 - Related Rent Concessions (Amendment to IFRS 16) - the International Accounting
Standards Board (the Board) has issued amendments to IFRS 16 (the amendments) to provide
practical relief for lessees in accounting for rent concessions. The amendments are effective for periods
beginning on or after 1 June 2020, with earlier application permitted. Under the standard’s previous
requirements, lessees assess whether rent concessions are lease modifications and, if so, apply the
specific guidance on accounting for lease modifications. This generally involves remeasuring the lease
liability using the revised lease payments and a revised discount rate. In light of the effects of the
COVID-19 pandemic, and the fact that many lessees are applying the standard for the first time in their
financial statements, the Board has provided an optional practical expedient for lessees. Under the
practical expedient, lessees are not required to assess whether eligible rent concessions are lease
modifications, and instead are permitted to account for them as if they were not lease modifications.
Rent concessions are eligible for the practical expedient if they occur as a direct consequence of the
COVID-19 pandemic and if all the following criteria are met:
- the change in lease payments results in revised consideration for the lease that is substantially the
same as, or less than, the consideration for the lease immediately preceding the change;
- any reduction in lease payments affects only payments originally due on or before 30 June 2021; and
- there is no substantive change to the other terms and conditions of the lease.
- Interest Rate Benchmark Reform - Phase 2 which amended IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS
16 is applicable for annual financial periods beginning on or after 1 January 2021, with earlier application
permitted. The amendments introduce a practical expedient to account for modifications of financial
149
assets or financial liabilities if a change results directly from IBOR reform and occurs on an ‘economically
equivalent’ basis. In these cases, changes will be accounted for by updating the effective interest rate.
A similar practical expedient will apply under IFRS 16 for lessees when accounting for lease modifications
required by IBOR reform. The amendments also allow a series of exemptions from the regular, strict
rules around hedge accounting for hedging relationships directly affected by the interest rate benchmark
reforms. The amendments apply retrospectively with earlier application permitted. Hedging relationships
previously discontinued solely because of changes resulting from the reform will be reinstated if certain
conditions are met.
- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37) effective for the annual period
beginning on or after 1 January 2022 amends IAS 1 by mainly adding paragraphs which clarifies what
comprise the cost of fulfilling a contract, cost of fulfilling a contract is relevant when determining whether
a contract is onerous. An entity is required to apply the amendments to contracts for which it has not
yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the
amendments (the date of initial application). Restatement of comparative information is not required,
instead the amendments require an entity to recognize the cumulative effect of initially applying the
amendments as an adjustment to the opening balance of retained earnings or other component of
equity, as appropriate, at the date of initial application.
- Annual Improvements to IFRS standards 2018 - 2020:
The following annual improvements to IFRS standards 2018-2020 are effective for annual reporting
periods beginning on or after 1 January 2022.
- IFRS 9 - The amendment clarifies that an entity includes only fees paid or received between the
entity (the borrower) and the lender, including fees paid or received by either the entity or the lender
on the other’s behalf, when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing
whether to derecognise a financial liability.
- IFRS 16 - The amendment partially amends Illustrative Example 13 accompanying IFRS 16 by
excluding the illustration of reimbursement of leasehold improvements by the lessor. The objective
of the amendment is to resolve any potential confusion that might arise in lease incentives.
- IAS 41 - The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude
taxation cash flows when measuring the fair value of a biological asset using a present value
technique.
- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) effective for
the annual period beginning on or after 1 January 2022. Clarifies that sales proceeds and cost of items
produced while bringing an item of property, plant and equipment to the location and condition necessary
for it to be capable of operating in the manner intended by management e.g. when testing etc., are
recognised in profit or loss in accordance with applicable Standards. The entity measures the cost of
those items applying the measurement requirements of IAS 2. The standard also removes the requirement
of deducting the net sales proceeds from cost of testing. An entity shall apply those amendments
retrospectively, but only to items of property, plant and equipment that are brought to the location and
condition necessary for them to be capable of operating in the manner intended by management on or
after the beginning of the earliest period presented in the financial statements in which the entity first
applies the amendments. The entity shall recognize the cumulative effect of initially applying the
amendments as an adjustment to the opening balance of retained earnings (or other component of
equity, as appropriate) at the beginning of that earliest period presented.
- Reference to the Conceptual Framework (Amendments to IFRS 3) - Reference to the Conceptual
Framework, issued in May 2020, amended paragraphs 11, 14, 21, 22 and 23 of and added paragraphs
21A, 21B, 21C and 23A to IFRS 3 . An entity shall apply those amendments to business combinations
for which the acquisition date is on or after the beginning of the first annual reporting period beginning
on or after 1 January 2022. Earlier application is permitted if at the same time or earlier an entity also
applies all the amendments made by Amendments to References to the Conceptual Framework in
IFRS Standards, issued in March 2018.
150
- Classification of liabilities as current or non-current (Amendments to IAS 1) effective for the annual
period beginning on or after 1 January 2022. These amendments in the standards have been added
to further clarify when a liability is classified as current. The standard also amends the aspect of
classification of liability as non-current by requiring the assessment of the entity’s right at the end of the
reporting period to defer the settlement of liability for at least twelve months after the reporting period.
An entity shall apply those amendments retrospectively in accordance with IAS 8.
- Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to
IFRS 10 and IAS 28) – The amendment amends accounting treatment on loss of control of business
or assets. The amendments also introduce new accounting for less frequent transaction that involves
neither cost nor full step-up of certain retained interests in assets that are not businesses. The effective
date for these changes has been deferred indefinitely until the completion of a broader review.
Further, following new standards have been issued by IASB which are yet to be notified by SECP for the
purpose of applicability in Pakistan.
Standard IASB effective date
(annual periods
beginning on or after)
IFRS 1 – First time adoption of IFRSs 01 January 2004
IFRS 17 – Insurance Contracts 01 January 2023
2.7 Critical accounting estimates, judgments and assumptions
The preparation of financial statements requires management to make estimates, judgments and assumptions
that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the result of which forms the basis of making
judgment about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on
an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimate is
revised if the revision affects only that period, or in period of revision and future periods if the revision affects
both current and future periods. The estimates and judgments that have a significant effect on the consolidated
financial statements are in respect of the following:
Note
Classification and provisioning against investments 4.4, 4.14 & 33
Classification and provisioning against loans and advances 4.5, 10 & 33
Useful lives of fixed, right of use assets and intangible assets,
depreciation, amortisation and revaluation 4.6, 11 & 12
Determination of lease term and borrowing rate 4.6, 11 & 20
Non - banking assets acquired in satisfaction of claims 4.7 & 13
Defined benefit plan related assumptions 4.10 & 38
Provisions against off - balance sheet obligations 4.15 & 20
Current and deferred taxation 4.13, 19 & 34
3. BASIS OF MEASUREMENT
These consolidated financial statements have been prepared under the historical cost convention except
for certain investments, certain land and buildings, certain non - banking assets acquired in satisfaction of
claims, employee benefits and derivative financial instruments which are revalued as referred to in notes
4.4, 4.6, 4.7, 4.10 and 4.18.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies adopted in the preparation of these consolidated financial statements are consistent
with those of the previous financial year.
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4.1 Basis of consolidation
These consolidated financial statements include the financial statements of the Holding Company and its
subsidiaries.
The financial statements of the subsidiaries are included in the consolidated financial statements from the
date the control commences until the date, the control ceases. In preparing consolidated financial statements,
the financial statements of the Holding Company and subsidiaries are consolidated on a line by line basis
by adding together like items of assets, liabilities, income and expenses. Significant inter - company
transactions have been eliminated.
Non - controlling interest are part of results of operations and net assets of the subsidiary company attributable
to interests which are not owned by the Group. Interest in the equity of the subsidiary not attributable to the
Holding Company is reported in the consolidated statement of changes in equity as non - controlling interest.
Profit or loss attributable to non - controlling interest is reported in the consolidated profit and loss account
as profit or loss attributable to non - controlling interest.
4.2 Cash and cash equivalents
Cash and cash equivalents as referred to in the consolidated cash flow statement comprise cash and
balances with treasury banks and balances with other banks less overdrawn nostros accounts.
4.3 Repurchase / resale agreements
The Bank enters into transactions of repos and reverse repos at contracted rates for a specified period of
time. These are recorded as under:
Sale under repurchase obligation
Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue
to be recognised in the statement of financial position and are measured in accordance with accounting
policies for investments. Amounts received under these agreements are recorded as repurchase agreement
borrowings. The difference between sale and repurchase price is amortised as expense over the term of
the repo agreement.
Purchase under resale obligation
Securities purchased with a corresponding commitment to resell at a specified future date (reverse repos)
are not recognised as investments in the statement of financial position. Amounts paid under these
arrangements are included in repurchase agreement lendings. The difference between purchase and resale
price is accrued as income over the term of the reverse repo agreement.
Bai Muajjal
In Bai Muajjal, the Bank sells sukuk on credit to other financial institutions. The credit price is agreed at the
time of sale and such proceeds are received at the end of the credit period.
4.4 Investments
Investments (other than associates) are classified as follows:
Held for trading
These are investments acquired principally for the purpose of generating profits from short - term fluctuations
in price or dealer’s margin or are securities included in a portfolio in which a pattern of short - term trading
exists.
Held to maturity
These are investments with fixed or determinable payments and fixed maturities which the Group has the
intention and ability to hold till maturity.
In Bai Muajjal, the Bank sells sukuk on credit to Government of Pakistan. The credit price is agreed at the
time of sale and such proceeds are received at the end of the credit period.
152
Available for sale
These are investments which do not fall under held for trading and held to maturity categories.
All purchases and sales of investments that require delivery within the time frame established by regulations
or market convention are recognised at the trade date. Trade date is the date on which the Group commits
to purchase or sell the investments.
Investments (other than held for trading) are initially measured at fair value plus transaction cost associated
with the investment. Investments classified as held for trading are initially measured at fair value, and
transaction costs are expensed in the profit and loss account.
After initial recognition, quoted securities (other than those classified as held to maturity) are carried at market
value. Unquoted securities are valued at cost less impairment in value, if any. Held to maturity securities
are carried at amortised cost.
Surplus / (deficit) arising on revaluation of quoted securities which are classified as 'available for sale', is
included in the statement of comprehensive income and is shown in the statement of financial position as
part of equity. The surplus / (deficit) arising on these securities is taken to the profit and loss account when
actually realised upon disposal or in case of impairment of securities. The unrealised surplus / (deficit) arising
on revaluation of quoted securities which are classified as held for trading is taken to the profit and loss
account.
Premium or discount on debt securities classified as available for sale and held to maturity is amortised
using effective interest method and taken to the profit and loss account.
Investments in associates
Under the equity method, the investment in an associate is initially recognised at cost. The carrying amount
of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate since
the acquisition date. The profit and loss account reflects the Group’s share of the results of operations of
the associate. Any change in OCI of associates is presented as part of the Group’s OCI. In addition, when
there has been a change recognised directly in the equity of the associate, the Group recognises its share
of any changes, when applicable, in the statement of changes in equity.
4.5 Advances
Loans and advances
These are stated net of provisions for non - performing advances.
Receivables against lease finance where Bank is a lessor (other than Ijarah)
Leases where the Bank transfers substantially all the risks and rewards incidental to ownership of an asset
to the lessee are classified as finance leases. A receivable is recognised at an amount equal to the present
value of the lease payments including any guaranteed residual value.
Islamic Financing and Related Assets
Ijarah finance
Assets leased out under ijarah arrangements are stated at cost less accumulated depreciation and impairment,
if any. Such assets are depreciated over the terms of ijarah contracts.
Murabaha
Funds disbursed under murabaha arrangements for purchase of goods are recorded as advance for
murabaha. On culmination of murabaha i.e. sale of goods to customers, murabaha receivables are recorded
at the sale price net of deferred income. Goods purchased but remaining unsold at the reporting date are
recorded as inventories.
Inventory
The Bank values its inventories at the lower of cost and net realisable value. The net realisable value is the
estimated selling price in the ordinary course of business less the estimated cost necessary to make the
sale. Cost of inventories represents actual purchases made by the Bank / customers as an agent of the
Bank for subsequent sale.
Istisna
In Istisna financing, the Bank places an order to purchase some specific goods / commodities from its
customers to be delivered to the Bank within an agreed time. The goods are then sold and the amount
hence financed is paid back to the Bank.
153
Diminishing Musharaka
In Diminishing Musharaka financing, the Bank enters into Musharaka based on Shirkat - ul - milk for financing
an agreed share of fixed asset (e.g. house, land, plant or machinery) with its customers and enters into
periodic rental payment agreement for the utilisation of the Bank’s Musharaka share by the customer. The
customer purchases the Bank's share gradually as per his undertaking.
Running Musharaka
In Running Musharaka financing, the Bank enters into financing with the customer based on Shirkat-ul-Aqd
or Business Partnership in customers operating business. Under this mechanism the customer can withdraw
and return funds to the Bank subject to his Running Musharakah Financing limit during the Musharakah
period. At the end of each quarter / half year the customer pays the provisional profit as per the desired
profit rate which is subject to final settlement based on the relevant quarterly / half-yearly / annual accounts
of the customer.
Musawama
In Musawama financing, the Bank purchases specific goods / commodities on cash basis from its customer
for onward sale. Upon realisation of sale proceeds, the finance is adjusted.
Provision for non-performing advances
Provision for non - performing advances is determined in accordance with the requirements of the Prudential
Regulations for domestic branches, whereas requirements of respective central banks is followed in respect
of overseas branches and is charged to the profit and loss account. The Bank also maintains general
provision in addition to the requirements of the Prudential Regulations on the basis of the management's
risk assessment.
The Bank reviews its loan portfolio to assess amount of non-performing loans and determine provision
required there against. While assessing this requirement various factors including the past dues, delinquency
in the account, financial position and future business / financial plan of the borrower, value of collateral held
and requirements of Prudential Regulations are considered. The Bank is allowed to consider the effect of
Forced Sale Value of collaterals in determining the amount of provision, however, no benefit of FSV of
collateral is taken in determining provisioning amount.
The amount of general provision against domestic consumer and SME advances is determined in accordance
with the relevant \ Prudential Regulations and SBP directives.
For overseas operations, the Bank records an allowance for Expected Credit Loss for all loans and other
debt financial assets not held at Fair Value through Profit and Loss (all referred to as ‘financial instruments’).
The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime
expected credit losses or LTECL), unless there has been no significant increase in credit risk since origination,
in which case, the allowance is based on the 12 months’ expected credit losses (12mECL). The Bank has
established a policy to perform an assessment, at the end of each reporting period, of whether a financial
instrument’s credit risk has increased significantly since initial recognition, by considering the change in the
risk of default occurring over the remaining life of the financial instrument.
Advances are written-off when there are no realistic prospects of recovery.
4.6 Operating fixed assets and depreciation

Capital work in progress
Capital work in progress is stated at cost less impairment, if any.
Property and equipment - owned
Land is measured at cost at the time of initial recognition and is subsequently carried at revalued amount
less impairment, if any. Buildings are initially measured at cost and upon revaluation, are carried at revalued
amount less accumulated depreciation and impairment, if any. All other operating fixed assets are stated
at cost less accumulated depreciation and impairment, if any. Depreciation is charged to profit and loss
account on straight line basis so as to charge the assets over their expected useful lives at the rates specified
in note 11.2. The depreciation charge is calculated after taking into account residual value, if any. The
residual values, useful lives and depreciation method are reviewed annually and adjusted, if appropriate.
Depreciation is charged on prorata basis, i.e., full month charge in the month of purchase and no charge in
the month of disposal.
154
Land and buildings are revalued by independent professionally qualified valuers with sufficient regularity to
ensure that the net carrying amount does not differ materially from the fair value. The valuations involve
estimates / assumptions and various market factors and conditions. Any revaluation surplus is credited to
the surplus on revaluation of land and buildings, except to the extent that it reversal of a deficit already
charged to profit and loss account on the same asset. Any revaluation deficit is recognised in profit and loss
account, except for a deficit directly offsetting a previous surplus on the same asset recognised in the asset
revaluation surplus.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Bank and the cost of the item can be measured reliably. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged to the income statement during the financial
period in which they are incurred.
Gains and losses on disposal of fixed assets are included in income currently, except that the related surplus
on revaluation of land and buildings (net of deferred tax) is transferred directly to unappropriated profit.
Leases
The Bank assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Bank as a lessee
The Bank applies a single recognition and measurement approach for all leases, except for short-term leases
and leases of low-value assets. The Bank recognises lease liabilities to make lease payments and right-of-use
assets representing the right to use the underlying assets.
Right-of-use assets
The Bank recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation
and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments
made at or before the commencement date less any lease incentives received. Right-of-use assets are
depreciated on a straight-line basis over the lease term.
The right-of-use assets are presented within note 11 fixed assets and are subject to impairment in line with
the Bank’s policy as described in note 4.14 impairment of non-financial assets.
Lease liabilities
At the commencement date of the lease, the Bank recognises lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments include fixed payments (less any
lease incentives receivable), variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The lease payments also include the exercise price
of a purchase option reasonably certain to be exercised by the Bank and payments of penalties for terminating
the lease, if the lease term reflects exercising the option to terminate. Variable lease payments that do not
depend on an index or a rate are recognised as expenses in the period in which the event or condition that
triggers the payment occurs.
Determination of the lease term for lease contracts with renewal and termination options
The Bank determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered
by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Bank has several lease contracts that include extension and termination options. The Bank applies
judgment in evaluating whether it is reasonably certain whether or not to exercise the option to renew or
terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise
either the renewal or termination. After the commencement date, the Bank reassesses the lease term if
there is a significant event or change in circumstances that is within its control that affects its ability to exercise
or not to exercise the option to renew or to terminate (e.g., construction of significant leasehold improvements
or significant customisation of the leased asset).
155
Estimating the incremental borrowing rate
The Bank cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental
borrowing rate (‘IBR’) to measure lease liabilities. The IBR is the rate of interest that the Bank would have
to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of
a similar value to the right-of-use asset in a similar economic environment.
Intangible assets
Intangible assets having a finite useful life are stated at cost less accumulated amortisation and impairment,
if any. Amortisation is based on straight line method by taking into consideration the estimated useful life of
assets at the rates specified in note 12. Intangible assets are amortised on prorata basis i.e. full month
amortisation in the month of purchase and no amortisation in the month of disposal.
4.7 Non - banking assets acquired in satisfaction of claims
Non - banking assets acquired in satisfaction of claims are initially measured at settlement amount and upon
revaluation, are carried at revalued amounts less accumulated depreciation and impairment, if any. The
useful lives and depreciation method are reviewed annually and adjusted, if appropriate. These assets are
revalued as per SBP's requirement by independent professionally qualified valuers to ensure that their net
carrying value does not differ materially from their fair value. A surplus arising on revaluation of assets is
credited to the 'surplus on revaluation of Non-banking assets acquired in satisfaction of claims' account and
any deficit arising on revaluation is taken to profit and loss account directly. Legal fees, transfer costs and
direct costs of acquiring title of assets is charged to profit and loss account and not capitalised.
4.8 Borrowings / deposits
Borrowings / deposits are recorded at the amount of proceeds received. The cost of borrowings / deposits
is recognised on an accrual basis as an expense in the period in which it is incurred.
Deposits mobilized under Islamic Banking operations are generated under two modes i.e. “Qard” and
“Modaraba”. Deposits taken on Qard basis are classified as ‘Current accounts’ and Deposits generated on
Modaraba basis are classified as ‘Saving deposits / Fixed deposits / Current remunerative deposits’.
4.9 Subordinated debt
Subordinated debt are initially recorded at the amount of proceeds received. Mark - up accrued on subordinated
debt is recognised separately as part of other liabilities and is charged to the profit and loss account over
the period on an accrual basis.
4.10 Employees’ benefits
Defined benefit plan
The Bank operates an approved gratuity fund for all its confirmed employees, which is administered by the
Trustees. The Bank's costs and contributions are determined based on actuarial valuation carried out at
each year end using Projected Unit Credit Actuarial Method. All actuarial gains and losses are recognised
in 'other comprehensive income' as they occur and are not reclassified to profit and loss in subsequent
periods. The liabilities for employees' benefits plans are determined using actuarial valuations. The actuarial
valuations involve assumptions about discount rates, expected rates of return on assets and future salary
increases as disclosed in note 38. Due to the long term nature of these plans, such estimates are subject
to significant uncertainty.
Defined contribution plan
The Bank operates an approved provident fund scheme for all its regular permanent employees, administered
by the Trustees. Equal monthly contributions are made both by the Bank and its employees to the fund at
the rate of 10% of the basic salary in accordance with the terms of the scheme.
AL Habib Capital Markets (Private) Limited provides provident fund benefits to all its permanent employees.
Contributions are made by the companies and the employees at the rate of 10% of the basic salary in
accordance with the terms of scheme.
AL Habib Asset Management Limited operates approved funded contributory provident fund for all its
permanent employees. Equal monthly contributions are made both by the Company and the employees
which is equivalent to one basic salary of employees.
Compensated absences
The Bank accounts for all accumulating compensated absences when employees render service that
increases their entitlement to future compensated absences. The liability is determined based on actuarial
valuation carried out using the Projected Unit Credit Method.
156
4.11 Foreign currencies
Functional and presentation currency
These financial statements are presented in Pak Rupees which is the Group's functional and presentation
currency.
Transactions and balances in foreign currencies
Foreign currency transactions are translated into Pak Rupees at the exchange rates prevailing on the date
of transaction. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the
exchange rates prevailing at the reporting date. Non - monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
Non - monetary items measured at fair value in a foreign currency are translated using exchange rates at
the date when the fair value was determined. Exchange gains or losses are included in income currently.
Foreign operations
The assets and liabilities of foreign operations are translated to Pak Rupees at exchange rates prevailing
at the reporting date. The income and expense of foreign operations are translated at rate of exchange
prevailing during the year. Exchange gain or loss on such translation is taken to equity through statement
of other comprehensive income under "foreign currency translation reserve".
Commitments
Commitments for outstanding forward foreign exchange contracts are translated at forward rates applicable
to their respective maturities.
4.12 Revenue recognition
(a) Mark - up / return / interest on advances and investments is recognised on accrual basis, except in
case of advances classified under the Prudential Regulations on which mark - up is recognised on
receipt basis. Mark - up / return / interest on rescheduled / restructured loans and advances and
investments is recognised as permitted by the regulations of SBP.
(b) Financing method is used in accounting for income from lease financing. Under this method, the
unrealised lease income is deferred and taken to income over the term of the lease period so as to
produce a constant periodic rate of return on the outstanding net investment in lease. Gain / loss on
termination of lease contracts, front end fee and other lease income are recognised as income on
receipt basis.
(c) The rentals from ijarah are recognised as income over the term of the contract net of depreciation
expense relating to the ijarah assets.
(d) Income from murabaha is accounted for on a time proportionate basis over the period of murabaha
transaction.
(e) Dividend income is recognised when the right to receive is established.
(f) Gain or loss on sale of investments are recognised in profit and loss account in the year in which they
arise.
(g) The Bank earns fee and commission income from a diverse range of financial services it provides to
its customers. Fee and commission income is recognised at an amount that reflects the consideration
to which the Bank expects to be entitled in exchange for providing the services.
The Bank recognises fees earned on transaction-based arrangements at a point in time when the
Bank has provided the service to the customer. Where the contract requires services to be provided
over time, income is recognised on a systematic basis over the life of the agreement.
4.13 Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit and
loss account except to the extent that it relates to the items recognised directly in equity or surplus on
revaluation of assets, in which case it is recognised in equity or surplus on revaluation of assets.
Current
Provision for current tax is based on the taxable income for the year, using tax rates enacted or substantively
enacted at the statement of financial position date and any adjustments to the tax payable in respect of
previous years. Current tax assets and liabilities are measured at the amount expected to be recovered
from or paid to taxation authorities.
Deferred
Deferred tax is provided on all temporary differences at the statement of financial position date between the
tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
157
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, to the
extent that it is probable that taxable profits will be available against which the deductible temporary differences
and unused tax losses can be utilised.
Deferred tax liabilities are recognised for all taxable temporary differences, except in respect of taxable
temporary differences associated with investment in foreign operations, when the timing of the reversal of
the temporary differences can be controlled and it is probable that the temporary differences will not reverse
in the foreseeable future.
The carrying amount of deferred income tax assets are reviewed at each statement of financial position
date and reduced to the extent that it is no longer probable that sufficient taxable profit or taxable temporary
differences will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the statement of financial position date.
In making the estimates for current and deferred taxes, the management looks at the income tax law and
the decisions of appellate authorities on certain issues in the past. There are certain matters where the
Bank’s view differs with the view taken by the income tax department and such amounts are shown as
contingent liability.
4.14 Impairment
Available-for-sale equity securities
Provision for diminution in the values of securities (except for debt securities) is made after considering
impairment, if any, in their value and is taken to profit and loss account. Impairment is booked when there
is an objective evidence of significant or prolonged decline in the value of such securities. This determination
of what is significant or prolonged requires judgment.
Provision for impairment against debt securities is made in accordance with the requirements of the Prudential
Regulations of SBP. In case of unquoted equity securities, the breakup value of the security is considered
to determine impairment amount.
Associates
The carrying values of investments in associates are reviewed for impairment when events or changes in
circumstances indicate that the carrying values may not be recoverable. If any such indication exists and
where the carrying values exceed the estimated recoverable amounts, the investments in associates are
written down to their recoverable amounts and the resulting impairment loss is taken to profit and loss
account.
Non-financial assets
The carrying values of assets are reviewed for impairment when events or changes in circumstances indicate
that the carrying values may not be recoverable. If any such indication exists and where the carrying values
exceed the estimated recoverable amounts, the assets are written down to their recoverable amounts and
the resulting impairment loss is taken to profit and loss account except for impairment loss on revalued
assets which is adjusted against the related revaluation surplus to the extent that the impairment loss does
not exceed the relevant surplus.
4.15 Provisions against off - balance sheet obligations
The Bank, in the ordinary course of business, issues letters of credit, guarantees, bid bonds, performance
bonds etc. The commission against such contracts is recognised in the profit and loss account under "fee
and commission income" over the period of contracts. The Bank's liability under such contracts is measured
at the higher of the amount representing unearned commission income at the reporting date and the best
estimate of the amount expected to settle any financial obligation arising under such contracts.
4.16 Off setting
Financial assets and financial liabilities are only off - set and the net amount is reported in the financial
statements when there is a legally enforceable right to set - off the recognised amount and the Group intends
either to settle on a net basis, or to realise the assets and to settle the liabilities simultaneously. Income and
expense items of such assets and liabilities are also off - set and the net amount is reported in the financial
statements.
4.17 Financial assets and liabilities
Financial assets and financial liabilities are recognised at the time when the Group becomes a party to the
contractual provision of the instrument. Financial assets are de - recognised when the contractual right to
future cash flows from the asset expires or is transferred along with the risk and reward of ownership of the
asset. Financial liabilities are de - recognised when obligation is discharged, cancelled or expired. Any gain
or loss on de - recognition of the financial asset and liability is recognised in the profit and loss account of
the current period.
158
4.18 Derivative financial instruments
Derivative financial instruments are initially recognised at their fair value on the date on which the derivative
contract is entered into and are subsequently remeasured at fair value. All derivative financial instruments
are carried as asset when fair value is positive and liabilities when fair value is negative. Any change in the
value of derivative financial instruments is taken to the profit and loss account.
4.19 Dividend distribution
Dividends and appropriations to reserves are recognised in the year in which these are approved, except
appropriations required by the law which are recorded in the period to which they pertain.
4.20 Earnings per share
The Group presents basic and diluted earnings per share (EPS). Basic EPS is calculated by dividing the
profit or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary
shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to
ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of
all dilutive potential ordinary shares, if any. There were no convertible dilutive potential ordinary shares in
issue at 31 December 2020.
4.21 Segment reporting
A segment is a distinguishable component of the Group that is engaged in providing products and services
(business segment), or in providing products or services within a particular economic environment (geographical
segment), which is subject to risk and rewards that are different from those of other segments. The Group's
primary format of reporting is based on business segments.
4.22 Business segments
Retail banking
It consists of retail lending, deposits and banking services to private individuals and small businesses. The
retail banking activities include provision of banking and other financial services, such as current and savings
accounts, credit cards, consumer banking products etc., to individual customers, small merchants and small
and medium enterprises.
Commercial banking
Commercial banking represents provision of banking services including treasury and international trade
related activities to large corporate customers, multinational companies, government and semi government
departments and institutions and small and medium enterprises treated as corporate under the Prudential
Regulations.
Retail brokerage
Retail brokerage activities include the business of equity, money market and foreign exchange brokerage,
equity research and corporate financial advisory and consultancy services.
Asset management
It includes asset management activities through the subsidiary AL Habib Asset Management Limited.
4.23 Geographical segments
The Group operates in four geographic regions, being:
- Pakistan
- Middle East
- Asia Pacific
- Africa
159
4.24 Statutory reserve
Every Bank incorporated in Pakistan is required to transfer 20% of its profit to a statutory reserve until the
reserve equals share capital, thereafter 10% of the profit of the Bank is to be transferred to this reserve.
4.25 Provisions against liabilities
These are recognised when the Group has a legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the
amount can be made. Provision against contingencies is determined based on the management judgement
regarding the probability of future out flows of resources embodying economic benefits to settle an obligation
arising from past events. Provisions are reviewed at each reporting date and are adjusted to reflect the
current best estimate.
4.26 Clients' assets

The Group provides services that result in the holding of assets on behalf of its clients. Such assets are not
reported in the financial statements, as they are not the assets of the Group.
4.27 Acceptances
Acceptances comprise undertakings by the Bank to pay bill of exchange drawn on customers. Acceptances
are recognised as financial liability in the statement of financial position with a contractual right of reimbursement
from the customer as a financial asset. Therefore, commitments in respect of acceptances have been
accounted for as financial assets and financial liabilities.
5. BUSINESS COMBINATION
5.1 During the year, the Bank acquired 21,000,000 shares of AL Habib Asset Management Limited (AHAML)
(formerly Habib Asset Management Limited). As a result, the Bank now has 100% controlling interest in
AHAML and it is reclassified as subsidiary of the Bank. Prior to the acquisition, the Bank had 30% shareholding
and AHAML was classified as an associate in the consolidated financial statements of the Group.
The Group has applied the acquisition method for accounting of business combination. The cost of the
acquisition comprised of cash payment made by the Bank against the acquisition of shares. Net assets
acquired have been carried at the book value at the acquisition date, which is approximately equal to the
fair value. The excess of the fair value of the identifiable net assets acquired over the consideration paid
has been recorded as gain on bargain purchase in the consolidated financial statements.
Fair value of existing shareholding of the Holding Company

at the date of acquisition 65,250
Consideration paid 152,250
Total purchase consideration 217,500
Fair value of identifiable net assets acquired from AHAML 5.2 255,234
Gain on bargain purchase 37,734
Gain on remeasurement of previously held equity interest
of associate 4,614
Fair value of existing shareholding of the Holding Company

at the date of acquistion 65,250
Carrying value of investment in associate before acquisition (60,636)
4,614
160
5.2 The assets and liabilities acquired as part of business combinations are as follows:
Particulars As at May 31, 2020

Assets
Non-current assets
Intangible assets
Management rights 5.3 80,670
Computer software 348
Fixed assets 795
Long term deposits 253
Deferred tax asset - net 1,689
83,755
Current assets
Investments - at fair value 155,065
Taxation - net 8,646
Receivable from funds under management 7,172
Advances, prepayments and other receivables 2,084
Cash and bank balances 6,963
179,930
Total assets 263,685
Current liabilities
Accrued expenses and other liabilities 8,451
Net assets acquired as part of business combination 255,234
5.3 Intangibles acquired on business combination

As part of the management exercise to determine fair value of the acquired assets, liabilities and
intangible assets, the Group has recognised the following intangible asset at the acquisition date:
As at May 31, 2020

Particulars Note (Rupees in '000)
Management Rights 12 80,670
The fair value of this identifiable intangible asset acquired through business combination has been
determined using the income approach methodology. This measure the value of an asset based on the
expected net earnings or cash flows attributable to the asset over its remaining economic life. The net
cash flows attributable to an asset over its economic life are estimated, discounted to present value at
an appropriate rate of return, and to arrive at an indication of value of the subject asset.
The DCF methodology (an income method) is the most appropriate methodology as it reflects the present
value of the operating cash flows generated by the management rights over their term. The major
component considered as contributing towards the management rights intangible is the management
fee earned by AHAML. Management fee income was derived by multiplying the existing management
fee rates with the average net assets of the respective fund. Management fee charges were assumed
to be stable across the projected period.
The income tax expense was estimated at maximum of corporate tax applicable in Pakistan during the
projected period and minimum tax (8% of Revenue).
161
As income from management rights was partly generated due to certain assets, contributory asset
charges were deducted. Contributory asset charges represent the required return on certain tangible
and intangible assets used to generate future income streams associated with the acquired intangible
asset. For the purpose of management rights, contributory assets included fixed assets and workforce
in place.
Note 2020 2019
(Rupees in '000)
6. CASH AND BALANCES WITH TREASURY BANKS
In hand:
Local currency 23,716,952 19,497,781
Foreign currencies 4,761,414 2,062,958
28,478,366 21,560,739
In transit:
Local currency 600,285 481,699
Foreign currencies 4,412 676,471
604,697 1,158,170
With State Bank of Pakistan in:
Local currency current account 6.1 44,211,071 59,153,555
Local currency current account - Islamic Banking 6.1 3,339,015 3,140,622
Foreign currency deposit account
Cash reserve account 6.1 3,508,365 3,236,315
Cash reserve / special cash reserve account
- Islamic Banking 299,769 256,350
Special cash reserve account 6.1 7,016,730 9,708,945
Local US Dollar collection account 6.2 99,696 303,328
58,474,646 75,799,115
With National Bank of Pakistan in:
Local currency current account 16,110,129 14,944,966
Prize bonds 2,268,171 375,866
105,936,009 113,838,856
6.1 These deposits and reserves are maintained by the Bank to comply with the statutory requirements. The
special cash reserve account carries interest rate ranging upto 0.76% (2019: 0.70% to 1.50%) per annum.
6.2 This represents US Dollar collection account maintained with SBP.
Note 2020 2019
(Rupees in '000)
7. BALANCES WITH OTHER BANKS
In Pakistan:
In current account 132,466 309,758
In deposit account 7.1 201,704 7,510,751
334,170 7,820,509
Outside Pakistan:
In current account 7.2 5,965,561 1,642,734
In deposit account 7.3 13,381,635 63,037
19,347,196 1,705,771
19,681,366 9,526,280
Less: impairment against IFRS 9 in overseas branches (4) (2)
19,681,362 9,526,278
162
7.1 These carry expected profit rates ranging from 2.32% to 11.28% (2019: 1.00% to 12.50%) per annum.
7.2 These carry interest rates ranging from 0.05% to 0.75% (2019: 0.05% to 1.00%) per annum.
7.3 These carry interest rates ranging upto 1.50% (2019: 1.25% to 4.50%) per annum.
2020 2019
(Rupees in '000)
8. LENDINGS TO FINANCIAL INSTITUTIONS

In local currency:
2020 2019
Held by Further given Held by Further given
Bank as collateral Total Bank as collateral Total
(Rupees in '000)
8.1.1 The GoP Ijarah Sukuks carry rates ranging from 8.89% to 9.08% (2019: 10.39% to 10.49%).
9. INVESTMENTS
Note 2020 2019
9.1 Investments by type:
(Rupees in '000)
Held-for-trading securities
Shares 95,778 –00 771 96,549 –00 –00 –00 –00
Available-for-sale securities 9.3 & 9.4

Federal Government Securities 581,306,864 (226,825 ) 4,713,084 585,793,123 419,545,132 (187,265 ) 1,899,966 421,257,833
Shares 4,473,575 (1,794,587 ) 575,088 3,254,076 4,431,809 (1,571,426 ) 431,845 3,292,228
Non Government Debt Securities 5,542,664 –00 (169,980 ) 5,372,684 5,586,804 –00 (141,759 ) 5,445,045
Foreign Securities 6,891,856 (909,432 ) (1,215,066 ) 4,767,358 6,524,223 (41,248 ) (48,396 ) 6,434,579
Units of mutual funds 2,125,000 (444,440 ) 350,397 2,030,957 3,125,000 (373,875 ) 233,167 2,984,292
600,339,959 (3,375,284 ) 4,253,523 601,218,198 439,212,968 (2,173,814 ) 2,374,823 439,413,977
Held-to-maturity securities 9.3 & 9.5
Federal Government Securities 159,496,264 (130,790 ) –00 159,365,474 145,152,375 (41,871 ) –00 145,110,504
Non Government Debt Securities –00 –00 –00 –00 46,632 –00 –00 46,632
Foreign Securities 1,708,659 (127,901 ) –00 1,580,758 467,747 (471 ) –00 467,276
Others 4,481 (4,481 ) –00 –00 –00 –00 –00 –00
161,209,404 (263,172 ) –00 160,946,232 145,666,754 (42,342 ) –00 145,624,412
Associates 9.6 3,058,005 –00 –00 3,058,005 1,472,165 –00 –00 1,472,165
163
2020 2019
9.2 Investments by segments:
(Rupees in '000)
Market Treasury Bills 143,416,675 –00 490,699 143,907,374 295,433,821 –00 798,050 296,231,871
Pakistan Investment Bonds 515,401,452 –00 4,094,215 519,495,667 242,426,221 –00 898,902 243,325,123
Foreign Currency Bonds 10,724,047 (357,615 ) 198,212 10,564,644 6,932,009 (163,826 ) 208,400 6,976,583
Ijarah Sukuks 26,952,616 –00 (209,517 ) 26,743,099 4,108,362 (65,310 ) (5,386 ) 4,037,666
Sukuks 44,022,624 –00 139,475 44,162,099 15,225,665 –00 –00 15,225,665
Term Finance Certificates - Unlisted 285,714 –00 –00 285,714 571,429 –00 –00 571,429
740,803,128 (357,615 ) 4,713,084 745,158,597 564,697,507 (229,136 ) 1,899,966 566,368,337
Shares
Listed Companies 4,415,117 (1,788,887 ) 575,859 3,202,089 4,327,573 (1,565,726 ) 431,845 3,193,692
Unlisted Companies 154,236 (5,700 ) –00 148,536 104,236 (5,700 ) –00 98,536
4,569,353 (1,794,587 ) 575,859 3,350,625 4,431,809 (1,571,426 ) 431,845 3,292,228

Term Finance Certificates and Sukuks
Listed
Term Finance Certificates 1,995,195 –00 (73,522 ) 1,921,673 1,947,922 –00 (46,982 ) 1,900,940
Sukuks 1,322,529 –00 (96,458 ) 1,226,071 1,504,215 –00 (94,777 ) 1,409,438
3,317,724 –00 (169,980 ) 3,147,744 3,452,137 –00 (141,759 ) 3,310,378
Unlisted
Term Finance Certificates 199,940 –00 –00 199,940 199,960 –00 –00 199,960
Sukuks 2,025,000 –00 –00 2,025,000 1,981,339 –00 –00 1,981,339
2,224,940 –00 –00 2,224,940 2,181,299 –00 –00 2,181,299
Others
Unlisted Company 4,481 (4,481 ) –00 –00 –00 –00 –00 –00
Foreign Securities
Government Securities 8,600,515 (1,037,333 ) (1,215,066 ) 6,348,116 6,991,970 (41,719 ) (48,396 ) 6,901,855
Associates
Habib Sugar Mills Limited 570,080 –00 –00 570,080 538,332 –00 –00 538,332
Habib Asset Management Limited
(formerly Habib Asset Management Limited) –00 –00 –00 –00 64,532 –00 –00 64,532
First Habib Income Fund 141,131 –00 –00 141,131 144,578 –00 –00 144,578
First Habib Stock Fund 8,608 –00 –00 8,608 8,468 –00 –00 8,468
First Habib Cash Fund 2,194,250 –00 –00 2,194,250 139,539 –00 –00 139,539
First Habib Islamic Stock Fund 48,910 –00 –00 48,910 8,285 –00 –00 8,285
First Habib Islamic Income Fund 25,186 –00 –00 25,186 550,278 –00 –00 550,278
First Habib Asset Allocation Fund 69,840 –00 –00 69,840 18,153 –00 –00 18,153
3,058,005 –00 –00 3,058,005 1,472,165 –00 –00 1,472,165
Units of Mutual Funds 2,125,000 (444,440 ) 350,397 2,030,957 3,125,000 (373,875 ) 233,167 2,984,292
164
2020 2019
(Rupees in '000)
9.2.1 Investments given as collateral
Market Treasury Bills
Carrying value 98,003,080 153,188,536
Surplus 424,285 276,366
98,427,365 153,464,902
9.3 Provision for diminution in value of investments
Exchange adjustments against IFRS 9 in overseas branches 3,978 2,909
Charge / reversals
Charge for the year 294,959 1,420,053
Charge of impairment as per IFRS 9 in overseas branches 1,120,117 231,871
Reversal on disposal (1,235) –00
1,413,841 1,651,924
Others 4,481 –00
9.4 Quality of Available for Sale Securities

Details regarding quality of available for securities are as follows:
Cost
2020 2019
(Rupees in '000)
9.4.1 Federal Government Securities - Government guaranteed
Market Treasury Bills 143,416,675 295,433,821
Ijarah Sukuks 26,952,616 4,108,362
Sukuks 43,380,941 4,468,750
Term Finance Certificates - Unlisted 285,714 571,429
581,306,864 419,545,132
9.4.2 Shares
9.4.2.1 Listed Companies
Automobile Assembler 199,842 199,842
Cement 292,921 297,906
Commercial Banks 164,773 164,773
Fertiliser 933,455 939,647
Food and Personal Care Products 23,211 23,211
Insurance 29,975 29,975
Securities Companies 106,222 106,275
Oil and Gas Exploration Companies 27,696 24,701
Oil and Gas Marketing Companies 793,159 793,159
Paper and Board 38,264 38,264
Pharmaceuticals 21,775 21,775
Power Generation and Distribution 1,634,091 1,634,090
Technology and Communication 13,140 13,140
Textile Composite 40,815 40,815
4,319,339 4,327,573
165
2020 2019
9.4.2.2 Unlisted Companies Break up Cost Breakup Cost Breakup
value as at value value
(Rupees in '000)
Khushhali Bank Limited December 31, 2019 30,000 165,372 30,000 144,255
Pakistan Export Finance Guarantee
Agency Limited – 5,700 –00 5,700 –00
Society for Worldwide Interbank Financial
Telecommunication (S.W.I.F.T) – 18,536 –00 18,536 –00
Pakistan Mortgage Refinance
Company Limited December 31, 2019 50,000 64,183 50,000 50,746
1LINK (Guarantee) Limited December 31, 2019 50,000 202,032 –00 –00
154,236 431,587 104,236 195,001
Cost
2020 2019
(Rupees in '000)
9.4.3 Non Government Debt Securities
9.4.3.1 Listed
AA+ 1,267,724 1,449,410
AA 200,000 152,727
AA- 500,000 500,000
A 1,300,000 1,300,000
A- 50,000 –00
3,317,724 3,402,137
9.4.3.2 Unlisted
AA 1,200,000 900,000
AA- 750,000 750,000
A+ 75,000 284,707
A 100,000 100,000
A- –00 149,960
BBB+ 99,940 –00
2,224,940 2,184,667
9.4.4 Mutual funds

AAA(f) 50,000 50,000
AA(f) 550,000 1,650,000
AA-(f) 200,000 200,000
A+(f) 100,000 –00
Unrated 1,225,000 1,225,000
2,125,000 3,125,000
166
2020 2019
9.4.5 Foreign Securities Cost Rating Cost Rating
(Rupees in '000)
Bahrain 319,668 B+ 309,695 BB-
Srilanka 3,723,756 CCC 4,247,753 B
Egypt 2,097,411 B+ 1,246,574 B+
Turkey 751,021 BB- 720,201 BB-
6,891,856 6,524,223
Cost
2020 2019
(Rupees in '000)
9.5 Particulars relating to Held to Maturity securities are as follows:
Federal Government Securities - Government guaranteed

Ijarah Sukuks –00 10,756,915
Sukuks 641,683 –00
159,496,264 145,152,375
Non Government Debt Securities - Unlisted

- A+ –00 46,632
Others
Pakistan Corporate Restructuring Company Limited (PCRCL) 4,481 –00
2020 2019
Foreign Securities Cost Rating Cost Rating
(Rupees in '000)
Egypt 482,0900 B+ 467,747 B+

Srilanka 1,226,5690 CCC –00 –
1,708,6590 467,747
9.5.1 The market value of securities classified as held to maturity at 31 December 2020 amounted to
Rs. 168,809 million (2019: Rs. 148,608 million).
167
9.6 Associates
2020 2019 Name of companies / funds Note 2020 2019
No. of ordinary shares / units (Rupees in '000)
9,415,312 9,415,312 Habib Sugar Mills Limited 9.6.2 570,080 538,332
% of holding: 6.28% (2019: 6.28%)
Market value: Rs. 319.273 million (2019: Rs. 360.136 million)
Chief Executive: Mr. Raeesul Hasan
-00 9,000,000 AL Habib Asset Management Limited -00 64,532
1,363,808 1,363,808 First Habib Income Fund 141,131 144,578
% of holding: 17.86% (2019: 21.91%)
100,000 100,000 First Habib Stock Fund 8,608 8,468
% of holding: 7.09% (2019: 6.67%)
Average cost per unit: Rs. 100 (2019: Rs. 100)
16,288,303 1,392,189 First Habib Cash Fund 2,194,250 139,539
% of holding: 12.47% (2019: 6.61%)
100,929 100,929 First Habib Islamic Stock Fund 48,910 8,284
% of holding: 8.23% (2019: 7.16%)
250,421 5,493,453 First Habib Islamic Income Fund 25,186 550,279
% of holding: 0.22% (2019: 14.32%)
200,149 200,149 First Habib Asset Allocation Fund 69,840 18,153
% of holding: 19.75% (2019: 17.87%)
Net Asset Value: Rs. 101.98 (2019: Rs. 90.70)
3,058,005 1,472,165
9.6.1 The place of business and incorporation of associates is Pakistan.
168
9.6.2 Due to common directorship in Habib Sugar Mills Limited, the Bank considers the investee company as an
associate. 2020 2019
9.6.3 Movement of investments in associates
Share of profit 110,441 94,991
Investment - net 1,609,946 525,000
Dividend received (66,569) (56,530 )
Capital gain (21,402) -00
Adjustment on acquisition of associate 5.1 (60,636) -00
Unrealised gain / (loss) routed to OCI 14,060 (48,745 )
9.6.4 Summary of audited financial information of associates

2020
Name of associates Assets Liabilities Equity Revenue Profit / OCI
(loss)
(Rupees in '000)
Habib Sugar Mills Limited 11,106,205 2,483,243 8,622,962 10,138,211 694,295 265,474
First Habib Cash Fund 4,540,353 903,419 3,636,934 280,375 254,764 –00
First Habib Income Fund 1,507,587 384,865 1,122,722 100,485 85,788 –00
First Habib Stock Fund 111,069 6,227 104,842 3,020 (1,564) –00
First Habib Islamic Stock Fund 119,489 16,084 103,405 3,806 (355) –00
First Habib Islamic Income Fund 9,050,920 20,828 9,030,092 470,279 425,663 –00
First Habib Asset Allocation Fund 107,688 1,136 106,552 3,792 (314) –00
2019
Habib Sugar Mills Limited 10,749,005 2,673,312 8,075,693 10,268,047 1,202,276 (776,581)
AL Habib Asset Management Limited 194,758 7,607 187,151 45,206 (60,173) –00
First Habib Cash Fund 2,235,159 29,178 2,264,337 243,659 211,032 –00
First Habib Income Fund 762,120 29,305 732,815 87,745 60,343 –00
First Habib Stock Fund 107,918 3,898 104,020 (22,040) (27,453) –00
First Habib Islamic Stock Fund 103,921 3,065 100,856 (17,365) (22,191) –00
First Habib Islamic Income Fund 111,378 1,231 110,147 10,632 7,805 –00
First Habib Asset Allocation Fund 101,824 976 100,848 (4,598) (9,998) –00
10. ADVANCES
Note Performing Non Performing Total
2020 2019 2020 2019 2020 2019
(Rupees in '000)
Loans, cash credits, running finances, etc. 10.1 429,319,854 407,446,886 6,970,943 6,989,020 436,290,797 414,435,906
Islamic financing and related assets 58,248,930 50,662,682 218,174 82,542 58,467,104 50,745,224
Bills discounted and purchased 27,742,924 32,876,085 192,356 186,354 27,935,280 33,062,439
Advances - gross 515,311,708 490,985,653 7,381,473 7,257,916 522,693,181 498,243,569
Provision against advances

- Specific –00 –00 6,497,479 6,201,412 6,497,479 6,201,412
- General as per regulations 267,290 263,290 –00 –00 267,290 263,290
- General 5,750,000 3,000,000 –00 –00 5,750,000 3,000,000
- As per IFRS 9 in overseas branches 128,018 126,019 –00 –00 128,018 126,019
6,145,308 3,389,309 6,497,479 6,201,412 12,642,787 9,590,721
Advances - net of provision 509,166,400 487,596,344 883,994 1,056,504 510,050,394 488,652,848
169
10.1 Includes net investment in finance lease as disclosed below:
2020 2019
Later than Later than
Not later one and Not later one and
than one less than than one less than
year five years Total year five years Total
(Rupees in '000)
Lease rentals receivable 7,448,062 12,376,700 19,824,762 8,477,197 9,784,780 18,261,977

Residual value 1,707,629 2,978,287 4,685,916 1,426,512 4,826,361 6,252,873
Minimum lease payments 9,155,691 15,354,987 24,510,678 9,903,709 14,611,141 24,514,850
Financial charges for future periods (1,059,738) (1,702,182) (2,761,920) (1,884,098) (1,717,790) (3,601,888)
Present value of minimum lease payments 8,095,953 13,652,805 21,748,758 8,019,611 12,893,351 20,912,962
10.2 Particulars of advances (Gross) 2020 2019

(Rupees in '000)

In foreign currencies 69,360,699 88,965,548
522,693,181 498,243,569
10.3 Advances include Rs. 7,381.473 million (2019: Rs. 7,257.916 million) which have been placed under
non-performing status as detailed below:
2020 2019
Category of classification Non Non
Performing Provision Performing Provision
Loans Loans
(Rupees in '000)
Domestic
Other assets especially mentioned 62,671 292 82,730 456
Substandard 165,014 33,385 377,335 84,250
Doubtful 1,118,292 499,908 1,014,818 503,459
Loss 3,987,501 3,965,101 3,696,404 3,681,349
5,333,478 4,498,686 5,171,287 4,269,514
Overseas
Overdue by:
181 to 365 days 136,600 87,398 913,445 758,714
> 365 days 1,911,395 1,911,395 1,173,184 1,173,184
2,047,995 1,998,793 2,086,629 1,931,898
Total 7,381,473 6,497,479 7,257,916 6,201,412
170
10.4 Particulars of provision against advances
Note 2020 2019

(Rupees in '000)
Opening balance 6,201,412 3,389,309 9,590,721 4,351,895 3,378,284 7,730,179
Exchange adjustments 68,496 5,158 73,654 104,015 16,608 120,623
Charge for the year
- Specific provision 887,878 –00 887,878 2,092,790 –00 2,092,790

- General provision
as per regulations –00 4,000 4,000 –00 25,191 25,191
- As per IFRS 9 in
overseas branches –00 (3,159) (3,159) –00 (30,774) (30,774)
- General provision for
loans and advances 10.4.2 –00 2,750,000 2,750,000 –00 –00 –00
Reversals (648,847) –00 (648,847) (345,809) –00 (345,809)
239,031 2,750,841 2,989,872 1,746,981 (5,583) 1,741,398
Amounts written off 10.5 (6,979) –00 (6,979) (1,479 ) –00 (1,479 )
Others 10.6 (4,481) –00 (4,481) –00 –00 –00
Closing balance 6,497,479 6,145,308 12,642,787 6,201,412 3,389,309 9,590,721
10.4.1 Particulars of provision against advances

2020 2019
(Rupees in '000)
In local currency 4,498,686 6,017,290 10,515,976 4,269,514 3,263,290 7,532,804

In foreign currencies 1,998,793 128,018 2,126,811 1,931,898 126,019 2,057,917
6,497,479 6,145,308 12,642,787 6,201,412 3,389,309 9,590,721
10.4.2 In line with its prudent policies, the Bank has also made general provision of Rs. 2,750 million (2019: Nil), bringing
the total of such provision to Rs. 5,750 million (2019: Rs. 3,000 million). This general provision is in addition to the
requirements of the Prudential Regulations.
10.4.3 For the purposes of determining provision against non - performing advances, the Bank has not taken into account
the Forced Sales Value of pledged stock and mortgaged properties held as collateral against non - performing
advances.
10.5 PARTICULARS OF WRITE OFFs Note 2020 2019
(Rupees in '000)
10.5.1 Against Provisions 10.4 6,979 1,479
Directly charged to Profit and Loss account –00 –00
6,979 1,479
10.5.2 Write Offs of Rs. 500,000 and above
- Domestic 10.7 4,360 815
Write Offs of below Rs. 500,000 2,619 664
6,979 1,479
171
10.6 This represents Rs. 4.481 million of non-performing loan was transferred to Pakistan Corporate
Restructuring Company Limited (PCRCL) during the year.
10.7 DETAILS OF LOAN WRITE OFF OF Rs. 500,000/- AND ABOVE
In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the Statement
in respect of written-off loans or any other financial relief of rupees five hundred thousand or above
allowed to a person(s) during the year ended is given in Annexure I.
Note 2020 2019

(Rupees in '000)
11. FIXED ASSETS

Capital work - in - progress 11.1 2,279,324 1,597,551
Property and equipment 11.2 41,697,340 34,974,094
43,976,664 36,571,645
11.1 Capital work - in - progress

Civil works 454,808 652,132
Advance payment for purchase of equipments 51,867 68,212
Advance payment towards suppliers, contractors and property 1,740,546 854,366
Consultants’ fee and other charges 32,103 22,841
2,279,324 1,597,551
11.2 Property and Equipment

2020
Right of use
(Rupees in '000)
At 01 January 2020
Net book value 10,724,438 9,308,858 844,245 3,071,654 1,792,022 1,034,186 8,198,691 34,974,094

Additions 291,338 1,100,546 274,407 1,441,233 947,305 394,308 –00 4,449,137
Acquisition through business combination –00 –00 –00 751 44 –00 –00 795
Movement in surplus on assets
revalued during the year 1,703,806 1,914,291 –00 –00 –00 –00 –00 3,618,097
Disposals –00 (14,051 ) (2,207 ) (3,857) (137,284) (1,723 ) –00 (159,122 )
Other adjustments / transfers 130,450 (72,826 ) –00 –00 –00 (2,720 ) (21,213 ) 33,691
Closing net book value 12,850,032 11,802,086 987,676 3,433,493 1,977,867 905,443 9,740,743 41,697,340
At 31 December 2020
Net book value 12,850,032 11,802,086 987,676 3,433,493 1,977,867 905,443 9,740,743 41,697,340
Rate of depreciation (percentage) –00 2.22% - 20% 10% 20% 20% 20% –00
172
2019
Right of use
(Rupees in '000)
At 01 January 2019
Accumulated depreciation –00 (469,567 ) (497,787 ) (4,953,648) (1,563,616) (1,273,423 ) –00 (8,758,041 )
Net book value 9,005,011 9,040,392 738,576 3,205,461 1,554,766 1,214,916 8,139,524 32,898,646
Additions 1,706,068 601,780 221,025 874,251 922,935 301,388 –00 4,627,447
Acquisition through business combination –00 –00 –00 –00 –00 –00 –00 –00
Disposals –00 –00 (3,587 ) (5,747) (130,139) (4,235 ) –00 (143,708 )
Other adjustments / transfers 13,359 (13,359 ) –00 –00 –00 –00 –00 –00
Closing net book value 10,724,438 9,308,858 844,245 3,071,654 1,792,022 1,034,186 8,198,691 34,974,094
At 31 December 2019
Net book value 10,724,438 9,308,858 844,245 3,071,654 1,792,022 1,034,186 8,198,691 34,974,094
Rate of depreciation (percentage) –00 2.22% - 12.50% 10% 20% 20% 20% –00
11.3 In accordance with the Bank's accounting policy, the Bank's leasehold land and buildings on leasehold
land were revalued at 01 June 2020. The revaluation was carried out by an independent valuer, M/s. Iqbal
A. Nanjee & Co. on the basis of present physical condition and location of leasehold land and buildings
on leasehold land. Fair values were ascertained by the independent valuer through various enquiries
conducted by them at site from real estate agents and brokers. The revaluation resulted in surplus of Rs.
3,618.097 million over the book value of the respective properties and also net deficit of Rs. 122.190
million on certain properties. Had the leasehold land and buildings on leasehold land not been revalued,
the total carrying amounts of revalued properties as at 31 December 2020 would have been as follows:
2020 2019
(Rupees in '000)
Leasehold land 8,730,369 4,788,144
Buildings on leasehold land 6,932,544 4,670,487
11.4 The gross carrying amount of fully depreciated assets
still in use is as follows:
Furniture and fixture 227,579 201,789
Electrical, office and computer equipment 4,110,076 3,154,857
Vehicles 517,461 450,511
4,855,116 3,807,157
11.5 Details of disposal of fixed assets during the year:
2020
Particulars Cost Book Insurance
value claim
Habib Insurance Company Limited - (Rupees in '000)
(Related Party - Karachi)
Furniture and fixture 1,396 371 833
Electrical, office and computer equipment 12,754 1,034 11,153
Vehicles 7,480 2,321 6,681
173
2020
Computer TRE Management Total
software Certificates rights
(Rupees in '000)
12. INTANGIBLE ASSETS
At 01 January 2020
Cost 1,287,061 34,750 –00 1,321,811
Accumulated amortisation and impairment (920,721) (32,250) –00 (952,971)
Net book value 366,340 2,500 –00 368,840

Opening net book value 366,340 2,500 –00 368,840
Additions directly purchased 133,383 –00 –00 133,383
Business combination 348 –00 80,670 81,018
Amortisation charge (288,379) –00 –00 (288,379)
Closing net book value 211,692 2,500 80,670 294,862
At 31 December 2020
Cost 1,420,792 34,750 80,670 1,536,212
Accumulated amortisation and impairment (1,209,100) (32,250) –00 (1,241,350)
Net book value 211,692 2,500 80,670 294,862
Rate of amortisation (percentage) 50% –00 –00
Useful life 2 years –00 –00
2019
At 01 January 2019
Cost 870,366 34,750 –00 905,116
Net book value 168,363 2,500 –00 170,863

Opening net book value 168,363 2,500 –00 170,863
Additions directly purchased 416,695 –00 –00 416,695
Amortisation charge (218,718) –00 –00 (218,718)
Closing net book value 366,340 2,500 –00 368,840
At 31 December 2019
Cost 1,287,061 34,750 –00 1,321,811
Net book value 366,340 2,500 –00 368,840
Rate of amortisation (percentage) 50% –00 –00
Useful life 2 years –00 –00
12.1 As at 31 December 2020, the cost of fully amortised intangible assets still in use amounted to
Rs. 878.525 million (2019: Rs. 635.519 million).
174
13. OTHER ASSETS Note 2020 2019
(Rupees in '000)
Income / mark - up accrued in local currency - net of provision 16,945,436 19,900,665

Income / mark - up accrued in foreign currencies - net of provision 691,713 600,408
Non - banking assets acquired in satisfaction of claims 13.1 814,912 874,900
Mark to market gain on forward foreign exchange contracts 931,153 1,032,137
Acceptances 52,522,498 36,264,680
Receivable from SBP on encashment of Government Securities 33,013 41,680
ATM settlement account 943,062 239,233
Receivable against securities 218,199 54,247
Others 943,369 1,209,460
75,213,529 61,785,261
Less: Provision held against other assets 13.2 (6,884 ) (7,383 )
Other Assets (net of provision) 75,206,645 61,777,878
Surplus on revaluation of non - banking assets acquired in
satisfaction of claims 139,165 34,482
Other Assets - total 75,345,810 61,812,360
13.1 Market value of non - banking assets acquired in satisfaction of claims 957,093 1,013,291
Market value of the non-banking assets acquired in satisfaction of claims has been carried out by an independent
valuers, M/s. K.G.Traders (Pvt.) Ltd. and MYK Associates (Pvt.) Ltd. based on present physical condition and
location of non - banking assets. Fair values were ascertained by the independent valuers through various enquiries
conducted by them at site from real estate agents and brokers.
2020 2019
(Rupees in '000)
13.1.1 Non - banking assets acquired in satisfaction of claims
Additions –00 80,000
Revaluations 106,658 –00
Transferred to fixed assets (54,904) –00
Accumulated depreciation (7,059) (7,066)
13.2 Provision held against other assets

Receivable against consumer loans 6,884 7,383
13.2.1 Movement in provision held against other assets
Reversals (5,255) (1,658)
825 450
Amount written off (1,324) (346)
14. CONTINGENT ASSETS
There were no contingent assets of the Group as at 31 December 2020 (2019: Nil).
175
Note 2020 2019
(Rupees in '000)
15. BILLS PAYABLE

In Pakistan 31,013,221 20,168,673
16. BORROWINGS
Secured
Borrowings from the State Bank of Pakistan
Under export refinance scheme 16.1 58,086,099 42,657,650
Under renewable energy 16.2 8,958,686 3,946,903
Under long term financing for imported and locally
manufactured plant and machinery 16.3 25,128,756 19,796,175
Under modernisation of small and medium enterprises 16.4 331,848 310,422
Under women entrepreneurship 16.5 26,957 19,159
Under financing facility for storage of agricultural produce 16.6 416,073 2,869
Under refinance scheme for payment of wages and salaries 16.7 15,720,186 –00
Under temporary economic refinance facility 16.8 4,387,473 –00
113,056,078 66,733,178
Repurchase agreement borrowings 16.9 98,345,030 153,365,059
Borrowings from financial institutions –00 7,742,380
Others 16.10 27,862 –00
Total secured 211,428,970 227,840,617
Unsecured
Overdrawn nostro accounts 198,297 904,417
211,627,267 228,745,034
16.1 These carry mark - up rates ranging from 1% to 2% (2019: 1% to 2%) per annum, payable quarterly at
the time of partial payment or upon maturity of loan, whichever is earlier.
16.2 These carry mark - up rates of 2% to 3% (2019: 2% to 3%) per annum having maturity periods over ten
years.
16.3 These carry mark - up rates ranging from 2% to 6% (2019: 2% to 6%) per annum having maturity periods
over ten years.
16.4 These carry mark - up rates of 2% (2019: 2%) per annum having maturity periods upto seven years.
16.5 These carry mark - up rates of Nil (2019: Nil) per annum having maturity periods upto five years.
16.6 These carry mark - up rates from 2.5% to 3.5% (2019: 2.0%) per annum having maturity periods upto
seven years.
16.7 These carry mark - up rates upto 1% (2019: Nil) per annum having maturity periods upto three years.
16.8 These carry mark - up rates of 1% (2019: Nil) per annum having maturity periods upto ten years.
16.9 These repurchase agreement borrowings are secured against market treasury bills. These carry effective
mark - up rates of 7.05% (2019: 13.10% to 13.45%) per annum, having maturity periods upto one week.
16.10 This carries mark - up rate of 3 months' KIBOR plus 1.5% per annum.
176
16.11 Particulars of borrowings with respect to currencies 2020 2019
(Rupees in '000)

In foreign currencies 198,297 8,646,797
211,627,267 228,745,034
17. DEPOSITS AND OTHER ACCOUNTS

2020 2019
In local In foreign Total In local In foreign Total
currency currencies currency currencies
(Rupees in '000)
Customers
Savings deposits 283,179,499 43,773,628 326,953,127 222,230,042 38,657,119 260,887,161
Term deposits 177,719,569 40,377,454 218,097,023 162,116,200 33,990,552 196,106,752
Current deposits
- remunerative 120,360,146 2,247,064 122,607,210 96,456,401 771,529 97,227,930
Others 15,419,195 7,337,309 22,756,504 11,695,770 8,186,073 19,881,843
948,067,637 134,698,803 1,082,766,440 773,337,394 116,364,047 889,701,441
Current deposits 3,568,698 203,742 3,772,440 1,717,620 1,234,067 2,951,687
Savings deposits 113,638 18 113,656 4,298,015 16 4,298,031
Term deposits 1,335,500 135,060 1,470,560 1,750,000 114,123 1,864,123
Current deposits
- remunerative 10,381,339 697,737 11,079,076 4,578,433 192,643 4,771,076
Others 21,286 –00 21,286 6,622 –00 6,622
15,420,461 1,036,557 16,457,018 12,350,690 1,540,849 13,891,539
963,488,098 135,735,360 1,099,223,458 785,688,084 117,904,896 903,592,980
2020 2019
(Rupees in '000)
- Individuals 694,690,728 582,949,390

- Government (Federal and Provincial) 43,377,359 29,894,596
- Public Sector Entities 52,701,961 36,377,166
- Banking Companies 341,145 3,888,753
- Non - Banking Financial Institutions 16,115,873 10,002,786
- Private Sector 291,996,392 240,480,289
1,099,223,458 903,592,980
17.2 Deposits includes eligible deposits covered under deposit protection mechanism as required by the
Deposit Protection Act, 2016 amounting to Rs. 787,834.683 million (2019: 623,000.257 million).
177
Note 2020 2019
(Rupees in '000)
18. SUBORDINATED DEBT - Unsecured

Term Finance Certificates (TFCs) - V - (Unquoted) 18.1 3,992,800 3,994,400
Term Finance Certificates (TFCs) - VI - (Unquoted) 18.2 7,000,000 7,000,000
Term Finance Certificates (TFCs) - VII - (Unquoted) 18.3 3,996,800 3,998,400
14,989,600 14,992,800
18.1 Term Finance Certificates - V (Unquoted)

Issue date March 2016
Maturity date March 2026
Rating AA
Redemption 6th - 108th month: 0.36%; 114th and 120th month: 49.82% each
Mark - up Payable six monthly at six months' KIBOR plus 0.75% without any floor
and cap.
Lock - in - clause Neither profit nor principal may be paid if such payments will result in
shortfall in the Bank’s Minimum Capital Requirement (“MCR”) or Capital
Adequacy Ratio (“CAR”).
requirements under SBP’s Basel III Capital Rules. Upon the occurrence
of a Point of Non - Viability event as defined by SBP's Basel III Capital
Rule, SBP may at its option, fully and permanently convert the TFCs
into common shares of the Bank (subject to a cap) and /or have them
immediately written off (either partially or in full).
18.2 Term Finance Certificates - VI (Unquoted)

Maturity date Perpetual
Rating AA-
Redemption No fixed or final redemption date.
Mark - up Payable six monthly at six months' KIBOR plus 1.5% without any floor
and cap.
The issuer will have full discretion over the amount and timing of profit
distribution, and waiver of any profit distribution or other payment will not
constitute an event of default.
Call option On or after five years. As per SBP's requirement, the Bank shall not
exercise call option unless the called instrument is replaced with capital
of same or better quality.
Lock - in - clause No profit may be paid if such payments will result in shortfall in the Bank’s
Minimum Capital Requirement (“MCR”) or Capital Adequacy Ratio (“CAR”).
into common shares of the Bank (subject to a cap) and / or have them
178
18.3 Term Finance Certificates - VII (Unquoted)

Maturity date December 2028
Rating AA
Redemption 6th - 108th month: 0.02%; per each semi-annual period; 114th and
120th month: 49.82% each.
Mark - up 6-Months KIBOR (ask side) + 1.00% per annum.
Lock - in - clause Neither profit nor principal may be paid if such payments will result in
shortfall in the Bank’s Minimum Capital Requirement (“MCR”), Leverage
Ratio ("LR") or Capital Adequacy Ratio (“CAR”).
into common shares of the Bank (subject to a cap) and / or have them
19. DEFERRED TAX LIABILITIES

2020
At 01 On in profit in other At 31
January business and loss comprehensive December
2020 combination account income 2020
(Rupees in '000)
Accelerated tax depreciation 960,906 (132) (32,883) –00 927,891
Surplus on revaluation of fixed assets / non - banking assets 984,461 –00 (56,261) 678,314 1,606,514
Remeasurement of defined benefit plan 165,629 –00 (165,629) –00 –00
Surplus on revaluation of available for sale investments 829,057 –00 –00 658,131 1,487,188
Surplus on revaluation of held for trading securities –00 706 270 –00 976
2,940,053 574 (254,503) 1,336,445 4,022,569

Provision against diminution in the value of investments (772,704) –00 (498,101) –00 (1,270,805)
Provision against loans and advances, off balance sheet, etc. (785,860) –00 (939,576) –00 (1,725,436)
Workers’ welfare fund –00 –00 (848,152) –00 (848,152)
Provision for compensated absences (292) (230) (1,220) –00 (1,742)
Recognised tax losses (2,863) –00 (30,961) –00 (33,824)
Others (627) (2,032) (115) –00 (2,774)
(1,562,346 ) (2,262) (2,318,125) –00 (3,882,733)
1,377,707 (1,688) (2,572,628) 1,336,445 139,836
179
2019
At 01 On in profit in other At 31
January business and loss comprehensive December
2019 combination account income 2019
(Rupees in '000)
Accelerated tax depreciation 1,042,970 –00 (82,064) –00 960,906
Surplus on revaluation of fixed assets / non - banking assets 1,023,644 –00 (39,183) –00 984,461
Remeasurement of defined benefit plan 246,397 –00 (80,768) –00 165,629
Surplus on revaluation of available for sale investments (690,676) –00 –00 1,519,733 829,057
1,622,335 –00 (202,015) 1,519,733 2,940,053

Provision against diminution in the value of investments (194,145) –00 (578,559) –00 (772,704)
Provision against loans and advances, off balance sheet, etc. (71,145) –00 (714,715) –00 (785,860)
Provision for compensated absences (278) –00 (14) –00 (292)
Recognised tax losses (4,035) –00 1,172 –00 (2,863)
Surplus on revaluation of held for trading investments (7,671) –00 7,671 –00 –00
Others (440) –00 (187) –00 (627)
(277,714) –00 (1,284,632) –00 (1,562,346)
1,344,621 –00 (1,486,647) 1,519,733 1,377,707
Note 2020 2019

(Rupees in '000)
20. OTHER LIABILITIES
Mark - up / return / interest payable in local currency 1,684,024 4,945,307
Mark - up / return / interest payable in foreign currencies 196,066 253,120
Accrued expenses 2,541,572 1,283,934
Acceptances 52,522,498 36,264,680
Unclaimed dividends 474,931 426,525
Mark to market loss on forward foreign exchange contracts 490,822 1,767,178
Payable to defined benefit plan 683,514 473,227
Charity payable 41,298 43,474
Security deposits against leases / ijarah 5,690,619 6,532,535
Provision for compensated absences 20.2 974,095 722,300
Special exporters’ accounts in foreign currencies 43,518 194,604
Other security deposits 647,203 592,271
Payable to SBP / NBP 455,014 210,373
Payable to supplier against murabaha 166,017 186,648
Insurance payable 470,883 455,266
Payable against sale of marketable securities on behalf of customers 567,235 131,368
Current taxation (payments less provisions) 418,177 –00
Others 1,233,727 1,069,521
85,342,289 68,329,071
180
2020 2019
(Rupees in '000)
20.1 Provision against off - balance sheet obligations
Exchange adjustment against IFRS 9 in overseas branches 1,470 9,738
Reversals (3,895 ) (27,866 )
15,853 3,031
20.1.1 The provision against off-balance sheet obligations includes provision in respect of letter of guarantees
and shipping guarantees.
20.2 Provision for compensated absences has been determined on the basis of independent actuarial
valuation. The significant assumptions used for actuarial valuation were as follows:
2020 2019
(% per annum)
Discount rate 10.25% 12.25%

Expected rate of increase in salary in future years 9.25% 11.25%
21. SHARE CAPITAL

21.1 Authorised Capital
2020 2019 2020 2019
Number of shares (Rupees in '000)
1,500,000,000 1,500,000,000 Ordinary shares of Rs. 10 each 15,000,000 15,000,000
21.2 Issued, subscribed and paid up capital

2020 2019
Number of shares
30,000,000 30,000,000 Fully paid in cash 300,000 300,000
1,081,425,416 1,081,425,416 Issued as bonus shares 10,814,254 10,814,254
1,111,425,416 1,111,425,416 11,114,254 11,114,254
21.3 As of statement of financial position date 162,818,503 (2019: 180,881,503) ordinary shares of
Rs. 10/- each were held by the related parties.
2020 2019
22. SURPLUS ON REVALUATION OF ASSETS
Surplus on revaluation of:
- Investments 22.1 4,329,994 2,436,773
- Fixed Assets 22.2 9,062,739 5,495,269
13,531,898 7,966,524
Deferred tax on surplus on revaluation of:
- Available for sale securities 22.1 1,488,343 829,984
- Fixed Assets 22.2 1,663,701 1,049,269
3,165,205 1,884,793
10,366,693 6,081,731
181
Note 2020 2019
(Rupees in '000)
22.1 Investments
Available for sale securities 9.1 4,253,523 2,374,823
Unrealised surplus on equity accounting 76,546 62,485
Non - controlling interest (75) (535)
4,329,994 2,436,773
Less: related deferred tax 1,488,343 829,984
2,841,651 1,606,789
22.2 Surplus on revaluation of fixed assets

Surplus on revaluation of fixed assets as at 01 January 5,495,269 5,605,295
Surplus on revaluation of the Bank’s fixed assets during the year 3,726,240 –00
charged during the year (55,570 ) (38,509 )
Surplus on revaluation of fixed assets as at 31 December 9,062,739 5,495,269
- revaluation as at 01 January 1,049,269 1,087,778

- incremental depreciation charged during the year (55,570 ) (38,509 )
1,663,701 1,049,269
7,399,038 4,446,000
22.3 Surplus on revaluation of non-banking assets acquired

in satisfaction of claims
Surplus on revaluation of non-banking assets as at 01 January 34,482 36,408
Surplus on revaluation of non-banking assets during the year 106,658 –00
charged during the year (691 ) (674 )
Surplus on revaluation of non-banking assets as at 31 December 139,165 34,482
- revaluation as at 01 January 5,540 6,214

- incremental depreciation charged during the year (691 ) (674 )
13,161 5,540
126,004 28,942
182
Note 2020 2019
(Rupees in '000)
23. NON - CONTROLLING INTEREST
Loss attributable to non - controlling interest 9,728 (3,736)
Loss on equity attributable to non - controlling interest (460) 2,568
24. CONTINGENCIES AND COMMITMENTS

- Guarantees 24.1 92,814,672 81,086,627
- Commitments 24.2 351,718,547 346,877,061
- Other contingent liabilities 24.3 1,537,827 4,673,685
446,071,046 432,637,373
24.1 Guarantees:
Financial guarantees 20,716,906 16,237,352
Performance guarantees 72,097,766 64,849,275
92,814,672 81,086,627
24.2 Commitments:
Documentary credits and short term trade - related transactions
- letters of credit 207,740,057 145,745,358
- forward foreign exchange contracts 24.2.1 128,823,137 197,844,773
- forward lending 24.2.2 7,124,914 2,214,998
Commitments for acquisition of:
- operating fixed assets 8,030,439 1,071,932
351,718,547 346,877,061
24.2.1 Commitments in respect of forward foreign exchange contracts

Purchase 75,472,905 106,704,798
Sale 53,350,232 91,139,975
128,823,137 197,844,773
The maturities of above contracts are spread over the periods upto one year.
24.2.2 Commitments in respect of forward lending 7,124,914 2,214,998
24.2.2.1 These represent commitments that are irrevocable because they cannot be withdrawn at the discretion
of the Bank without the risk of incurring significant penalty or expense.
2020 2019
(Rupees in '000)
24.3 Claims against the Bank not acknowledged as debts 1,537,827 4,673,685
183
24.4 Other contingent liabilities
Income tax returns of the Bank have been submitted upto and including the Bank’s financial year 2019
(Tax Year 2020). The income tax assessments of the Bank are complete upto tax year 2018.
For tax year 2012 and 2013, the Additional Commissioner Inland Revenue (ACIR) passed an amended
order u/s. 122(5A) of the Income Tax Ordinance, 2001 resulting in an impact of Rs. 482.233 million.
Subsequently, Commissioner Inland Revenue (Appeals) has passed order by allowing Rs. 134.616 million
resulting in an aggregate net tax impact of Rs. 347.617 million. The Bank has filed an appeal before
Income Tax Appellate Tribunal (ITAT) against the above mentioned orders.
Commissioner Inland Revenue (Appeals) passed an appellate order against Deputy Commissioner
Inland Revenue (DCIR) order for Tax Year 2014 (Accounting Year 2013) by allowing certain expenses
resulting in an impact of Rs. 25.300 million and remanded back certain expenses to DCIR. The resulted
aggregate net tax impact stands at Rs. 69.261 million. The Bank has filed an appeal before Income Tax
Appellate Tribunal (ITAT) against the above mentioned order.
Additional Commissioner Inland Revenue (ACIR) has finalized order u/s. 122(5A) of Tax Year 2018
(Accounting Year 2017) by disallowing certain expenses resulting in an impact of Rs. 260.098 million.
The Bank has filed an appeal before Commissioner Inland Revenue (Appeals) against the order.
Commissioner Inland Revenue (Appeals) has remanded back the order of Deputy Commissioner Inland
Revenue (DCIR) against Federal Excise Duty levy on certain items for the period January 2013 to
December 2015. The resulted aggregate net tax impact stands at Rs. 80.766 million.
Commissioner (HQ), Punjab Revenue Authority has passed order for the period from January to December
2016 levying Punjab Sales Tax on services on certain items resulting in an impact of Rs. 112.641 million.
The Bank has filed an appeal before Appellate Tribunal (Punjab Revenue Authority).
Commissioner Inland Revenue (Appeals) has passed orders for tax years 2009 and 2011 confirming
disallowance of provision for non-performing loans, other provisions and amortization of intangible assets
having an aggregate tax impact of Rs. 15.372 million. The Bank has filed an appeal before ITAT against
the above referred orders.
Commissioner Inland Revenue (Appeals), Mirpur AJ&K has annulled the amendments made by Assistant
Commissioner Inland Revenue, Mirpur AJ&K for Tax Year 2014 to 2018. This resulted in a favorable
aggregate net tax impact of Rs. 93.443 million.
184
Assistant Commissioner Inland Revenue, Mirpur AJ&K has finalized audit of the Bank’s Azad Kashmir
operations for Tax Year 2019 by disallowing certain expenses resulting in an impact of Rs. 92.311 million.
The Bank has filed an appeal before Commissioner Inland Revenue (Appeals), Mirpur AJ&K.
The management, based on the opinion of its tax advisor, is confident about the favorable outcome of
the above matters.
25. DERIVATIVE INSTRUMENTS
The Bank deals in derivative financial instruments namely forward foreign exchange contracts and foreign
currency swaps with the principal view of hedging the risks arising from its trade business. As per the
Bank’s policy, these contracts are reported on their fair value at the statement of financial position date.
The gains and losses from revaluation of these contracts are included under “income from dealing in
foreign currencies”. Unrealised gains and losses on these contracts are recorded in the statement of
financial position under “other assets / other liabilities”. These products are offered to the Bank’s customers
to protect from unfavourable movements in foreign currencies. The Bank hedges such exposures in
the inter - bank foreign exchange market.
25.1 Product Analysis
2020
CONTRACT SWAP TOTAL
Counter Parties Notional Mark to Notional Mark to Notional Mark to
Principal Market Principal Market Principal Market
gain / (loss) gain / (loss) gain / (loss)
(Rupees in '000)
Banks
Hedging 9,107,115 (27,012) 68,172,458 372,325 77,279,573 345,313
Other Entities
Hedging 51,543,564 95,018 –000 –000 51,543,564 95,018
Total
Hedging 60,650,679 68,006 68,172,458 372,325 128,823,137 440,331
2019
(Rupees in '000)
Banks
Hedging 6,661,765 26,468 129,746,798 (917,715 ) 136,408,563 (891,247)
Other Entities
Hedging 61,436,210 156,206 –000 –000 61,436,210 156,206
Total
Hedging 68,097,975 182,674 129,746,798 (917,715 ) 197,844,773 (735,041)
185
2020
25.2 Maturity Analysis Number of Notional Mark to Market
Contracts Principal
Negative Positive Net
(Rupees in '000)
Upto 1 month 297 51,974,821 (112,849) 296,381 183,532
1 to 3 months 412 46,596,575 (218,736) 340,228 121,492
3 to 6 months 352 19,991,703 (128,829) 161,815 32,986
6 months to 1 year 177 10,260,038 (30,408) 132,729 102,321
1,238 128,823,137 (490,822) 931,153 440,331
2019
(Rupees in '000)
Upto 1 month 233 72,985,102 (770,198) 272,735 (497,463)
1 to 3 months 445 73,198,078 (840,319) 238,992 (601,327)
3 to 6 months 396 37,979,403 (132,541) 260,852 128,311
6 months to 1 year 258 13,682,190 (24,120) 259,558 235,438
1,332 197,844,773 (1,767,178) 1,032,137 (735,041)
2020 2019
(Rupees in '000)
26. MARK - UP / RETURN / INTEREST EARNED
On loans and advances 43,408,133 50,319,475
On investments 81,113,900 53,049,254
On deposits with financial institutions 355,236 671,961
On securities purchased under resale agreements 198,514 1,291,640
On call money lendings 216,557 284,877
125,292,340 105,617,207
27. MARK - UP / RETURN / INTEREST EXPENSED

Deposits 48,036,958 49,247,608
Borrowings from SBP 1,616,923 1,166,339
Subordinated debt 1,753,337 1,944,179
Cost of foreign currency swaps 1,165,922 1,637,026
Repurchase agreement borrowings 13,923,326 9,404,347
Other borrowings 195,630 278,719
67,649,002 64,412,998
28. FEE AND COMMISSION INCOME

Branch banking customer fees 1,052,854 1,086,265
Investment banking fees 127,450 70,380
Consumer finance related fees 54,645 44,287
Card related fees (debit and credit cards) 533,648 626,717
Credit related fees 147,185 121,788
Commission on trade 4,046,591 3,454,118
Commission on guarantees 406,053 411,148
Commission on cash management 176,337 196,473
Commission on home remittances 118,958 54,728
Others 155,966 69,406
6,819,687 6,135,310
186
Note 2020 2019
(Rupees in '000)
29. GAIN / (LOSS) ON SECURITIES

Realised 29.1 181,242 (32,469 )
Unrealised - held for trading 771 –00
182,013 (32,469 )
29.1 Realised gain / (loss) on:

Federal Government Securities 5,494 100
Shares 10,960 (33,325 )
Mutual funds 164,788 756
181,242 (32,469 )
30. OTHER INCOME

Gain on sale of fixed assets - net 440,311 377,019
Recovery of expenses from customers 30.1 322,776 271,455
Lockers rent 13,176 10,085
Gain on remeasurement of investment
in associate at the date of acquisition 5.1 4,614 –00
Gain on bargain purchase 5.1 37,734 –00
Others 726 4,407
819,337 662,966
30.1 Includes courier, SWIFT, postage and other charges recovered from customers.
Note 2020 2019
(Rupees in '000)
31. OPERATING EXPENSES
Total compensation expenses 31.1 15,533,126 12,274,480
Property expenses
Rent and taxes 312,348 364,198
Insurance 19,265 16,710
Utilities cost 1,096,909 1,047,549
Security (including guards) 1,030,702 872,477
Repair and maintenance (including janitorial charges) 327,167 240,711
Depreciation 2,621,792 2,200,259
Amortisation –00 7,609
5,408,183 4,749,513
Information technology expenses
Software maintenance 4,667 4,417
Hardware maintenance 1,196,384 466,988
Depreciation 223,815 251,689
Network charges 431,212 390,911
2,144,457 1,332,723
187
Note 2020 2019
(Rupees in '000)
Other operating expenses
Directors’ fees and allowances 35,217 45,650
Fees and allowances to Shariah Board 12,679 9,819
Insurance 496,088 359,245
Legal and professional charges 174,099 182,329
Outsourced services costs 31.2 1,639,793 1,435,776
Travelling and conveyance 188,468 243,983
NIFT and other clearing charges 144,846 130,658
Depreciation 1,605,462 1,417,931
Repair and maintenance 1,453,539 1,203,325
Training and development 27,116 45,691
Postage and courier charges 231,596 216,585
Communication 346,653 281,620
Stationery and printing 783,365 898,969
Marketing, advertisement and publicity 629,188 264,693
Donations 31.3 157,132 110,700
Auditors remuneration 31.4 9,103 7,100
Commission and brokerage 408,118 613,649
Entertainment and staff refreshment 285,755 307,465
Vehicle running expenses 1,100,461 866,462
Subscriptions and publications 217,551 174,822
CNIC verification charges 92,171 131,145
Security charges 311,961 278,742
Others 731,591 203,216
11,081,952 9,429,575
34,167,718 27,786,291
31.1 Total compensation expense

Fees and allowances etc. 663,964 438,741
Managerial remuneration 9,805,388 7,545,602
Charge for defined benefit plan 424,170 403,923
Contribution to defined contribution plan 604,552 530,179
Rent and house maintenance 2,611,202 2,249,588
Utilities 653,301 562,517
Medical 510,054 395,208
Charge for employees compensated absences 248,264 135,164
Social security 1,477 1,681
Staff indemnity 10,754 11,877
15,533,126 12,274,480
The compensation provided by the Bank to employees is composed of fixed pay structures and do not
include any variable element that varies based on performance benchmarks or targets.
31.2 Total cost for the year included in other operating expenses relating to outsourced activities is Rs. 35.885
million (2019: Rs. 30.693 million) paid to a company incorporated outside Pakistan. Material outsourcing
arrangements are as follows:
S.No. Name of material outsourced activity Name of Service Provider Nature of Service
1. Merchant On - Boarding and Terminal M/s. Wemsol (Private) Limited Point of Sale (POS) acquiring
Management Services
2. Credit Card system M/s. Arab Financial Services (AFS) Credit Card
188
2020 2019
(Rupees in '000)
31.3 The detail of donations is given below:

Al-Sayyeda Benevolent Trust 3,000 3,000
Childlife Foundation 10,000 –00
Habib Education Trust* 3,000 3,000
Habib Medical Trust 3,000 3,000
Habib Poor Fund** 3,000 3,000
Jinnah Foundation (Memorial) Trust –00 2,000
Panah Trust –00 500
Patients’ Aid Foundation 50,000 85,000
Rahmatbai Habib Food and Clothing Trust 3,000 3,000
Rahmatbai Habib Widows and Orphans Trust 3,000 3,000
The Citizens Foundation 5,600 5,200
Masoomeen Hospital 13,000 –00
The Indus Hospital 10,000 –00
Prime Minister‘s Corona Philanthropy Drive 25,532 –00
157,132 110,700
* Mr. Qumail R. Habib, Executive Director, is Managing Trustee of Habib Education Trust.
** Mr. Murtaza H. Habib, Director, is Trustee of Habib Poor Fund.
Note 2020 2019

(Rupees in '000)
31.4 Auditors’ remuneration

Audit fee 3,711 2,813
Half yearly review 990 825
Special certifications 3,115 2,501
Gratuity fund 109 91
Out of pocket expenses 1,178 870
9,103 7,100
32. OTHER CHARGES

Penalties imposed by the State Bank of Pakistan 56,672 93,244
33. PROVISIONS AND WRITE OFFS - NET

Provisions for diminution in value of investments 1,418,204 1,654,478
Provision against loans and advances - net 10.4 2,989,872 1,741,398
Provision against other assets 13.2.1 825 450
Loss on revaluation of fixed asset - net 11.3 122,190 –00
4,546,944 3,399,357
34. TAXATION
Current 13,319,509 8,763,573
Prior years 5,079 571,907
Deferred (2,572,628 ) (1,486,647 )
10,751,960 7,848,833
189
Note 2020 2019
(Rupees in '000)
34.1 Relationship between tax expense and accounting profit
Tax at the applicable rate of 35% (2019: 35%) 10,048,297 6,664,162

Tax effects of:
Expenses that are not deductible in determining
taxable income 215,073 115,977
Tax effect of super tax 1,351,810 1,468,844
Others 34.1.1 (863,220 ) (400,150 )
10,751,960 7,848,833
34.1.1 This includes adjustments to temporary differences pertaining to the prior years.
2020 2019
(Rupees in '000)
35. BASIC AND DILUTED EARNINGS PER SHARE ATTRIBUTABLE

TO EQUITY HOLDERS OF THE HOLDING COMPANY
Profit for the year - attributable to equity holders of

the Holding Company 17,947,732 11,195,366
(Number)
Weighted average number of ordinary shares 1,111,425,416 1,111,425,416
(Rupees)
Basic and diluted earnings per share 16.15 10.07
Note 2020 2019

(Rupees in '000)
36. CASH AND CASH EQUIVALENTS

Overdrawn nostro accounts 16 (198,297) (904,417)
125,419,074 122,460,717
190
36.1 Reconciliation of movement of liabilities to cash flows arising from financing activities
2020
debt liability
(Rupees in '000)
Balance as at 01 January 2020 14,992,800 8,316,718 426,525

Dividend paid –00 –00 (3,841,582 )
Other changes
Addition to right-of-use-assets –00 3,224,658 –00
–00 4,181,564 3,889,988
2019
debt liability
(Rupees in '000)
Balance as at 01 January 2019 14,996,000 –00 415,647

Dividend paid –00 –00 (2,767,686 )
Other changes
Addition to right-of-use-assets - net –00 9,594,025 –00
–00 10,328,805 2,778,564
191
2020 2019
(Number)
37. STAFF STRENGTH
Permanent 12,540 11,343

Temporary / on contractual basis 244 222
Group’s own staff at end of the year 12,784 11,565
Outsourced 2,771 2,596
Total staff strength 15,555 14,161
37.1 Domestic 15,502 14,112

Offshore 53 49
15,555 14,161
38. DEFINED BENEFIT PLAN

38.1 General description
The Bank operates an approved gratuity fund for all its confirmed employees, which is administered by
the Trustees. The benefits under the gratuity scheme are payable on retirement at the age of 60 years
or on earlier cessation of service as under:
Number of years of eligible service completed: Amount of gratuity payable:
Less than 5 years Nil
15 years or more Full basic salary for each year served
The Bank’s costs and contributions are determined based on actuarial valuation carried out at each
year end using Projected Unit Credit Actuarial Method. All actuarial gains and losses are recognised in
‘other comprehensive income’ as they occur and are not reclassified to profit and loss account in
subsequent periods.
38.2 Number of employees under the scheme
The number of employees covered under the defined benefit scheme are 12,459 (2019: 11,073).
38.3 Principal actuarial assumptions
The latest actuarial valuation of the scheme was carried out on 31 December 2020 and the significant
assumptions used for actuarial valuation were as follows:
2020 2019
Discount Rate 10.25% 12.25%

Expected rate of return on plan assets 14.83% 23.73%
Expected rate of salary increase : Year 1 9.25% 11.25%
Year 2 9.25% 11.25%
Mortality rates (for death in service) SLIC(2001-05)-1 SLIC(2001-05)-1
Rates of employee turnover Moderate Moderate
192
38.4 Reconciliation of payable to defined benefit plan Note 2020 2019
(Rupees in '000)
Present value of obligations 4,323,932 3,590,184

Fair value of plan assets (3,640,418 ) (3,116,957 )
Payable 683,514 473,227
38.5 Movement in defined benefit obligations
Obligation at the beginning of the year 3,590,184 2,993,002

Interest cost 450,696 389,264
Benefits paid during the year (72,206 ) (120,225 )
Remeasurement (gain) / loss (14,196 ) 8,752
Obligation at the end of the year 4,323,932 3,590,184
38.6 Movement in fair value of plan assets
Fair value at the beginning of the year 3,116,957 2,289,010

Interest income on plan assets 395,980 304,732
Contribution by the Bank - net 424,170 403,923
Actual benefits paid during the year (72,206 ) (120,225 )
Remeasurement (loss) / gain on plan assets 38.8.2 (224,483 ) 239,517
Fair value at the end of the year 3,640,418 3,116,957
38.7 Movement in payable under defined benefit scheme

Contribution by the Bank (424,170 ) (403,923 )
Remeasurement loss / (gain) recognised in
Other Comprehensive Income during the year 38.8.2 210,287 (230,765 )
Closing Balance 683,514 473,227
38.8 Charge for defined benefit plan
38.8.1 Cost recognised in profit and loss

Net interest on defined benefit liability 54,716 84,532
424,170 403,923
193
2020 2019
(Rupees in '000)
38.8.2 Re-measurements recognised in OCI during the year
(Gain) / loss on obligation
- Financial assumptions (47,418 ) (9,703 )
- Experience assumptions 33,222 18,455
(14,196 ) 8,752
Actuarial gain on plan assets 224,483 (239,517 )
Total Remeasurement loss / (gain) recognised in OCI 210,287 (230,765 )
38.9 Components of plan assets

Cash and cash equivalents - net 30,183 265,219
Unquoted investments
Government securities 3,610,235 2,851,738
Total fair value of plan assets 3,640,418 3,116,957
38.10 Sensitivity analysis 2020

(Rupees in '000)
1% increase in discount rate 3,915,527

1% decrease in discount rate 4,802,959
1% increase in expected rate of salary increase 4,824,891
1% decrease in expected rate of salary increase 3,890,634
2021
(Rupees in '000)
38.11 Expected contributions to be paid to the funds in the next financial year 491,345
38.12 Expected charge for the next financial year 491,345
2020
(Rupees in '000)
38.13 Maturity profile
The weighted average duration of the obligation is 10.20 years.
Distribution of timing of benefit payments

within the next 12 months (next annual reporting period) 248,812
5,370,466
194
38.14 Funding Policy
The Bank will fund the yearly contribution to the defined benefit plan each year, as per the amount
calculated by the valuer.
38.15 Significant Risk
Asset Volatility
The Defined Benefit Gratuity Fund is almost entirely invested in Government Bonds with mostly fixed
income bonds. Almost 47.55% of the total Investments (Rs. 1.731 billion) is invested in PIB's. This gives
rise to significant reinvestment risk.
The remaining fund is invested in Treasury Bills. The T-Bills exposure is almost 51.61% (Rs. 1.879 billion).
The asset class is volatile with reference to the yield on this class. This risk should be viewed together
with change in the bond yield risk.
Changes in Bond Yields
There are two dimensions to the changes in Bond yields: first, as described above; second, the valuation
of the gratuity liability is discounted with reference to these bond yields. So any increase in Bond yields
will lower the gratuity liability and vice versa, but, it will also lower the asset values.
Inflation Risk
The salary inflation is the major risk that the gratuity fund liability carries. In a general economic sense
and in a longer view, there is a case that if bond yields increase, the change in salary inflation generally
offsets the gains from the decrease in discounted gratuity liability. But viewed with the fact that asset
values will also decrease, the salary inflation does, as an overall affect, increases the net liability of the
Bank.
Life Expectancy / Withdrawal Rate
The gratuity is paid off at the maximum of age 60. The life expectancy is in almost minimal range and
is quite predictable in the ages when the employee is in the accredited employment of the Bank for the
purpose of the gratuity. Thus, the risk of life expectancy is almost negligible. However, had a post
retirement benefit been given by the Bank like monthly pension, post retirement medical etc., this would
have been a significant risk which would have been quite difficult to value even by using advance mortality
improvement models.
The withdrawal risk is dependent upon the: benefit structure; age and retention profile of the staff; the
valuation methodology; and long-term valuation assumptions. In this case, it is not a significant risk.
Other Risks
Though, not imminent and observable, over long term there are some risks that may crystallise. This
includes:
195
Model Risk
The defined benefit gratuity liability is usually actuarially valued each year. Further, the assets in the
gratuity fund are also marked to market. This two-tier valuation gives rise to the model risk.
Retention Risk
The risk that employee will not be motivated to continue the service or start working with the Bank if no
market comparable retirement benefit is provided.
Final Salary Risk
The risk, for defined benefit gratuity, that any disproportionate salary merit increases in later service
years will give rise to multiplicative increase in the gratuity liability as such increase is applicable to all
the past years of service.
Operational Risk related to a separate entity
Retirement benefits are funded through a separate trust fund which is a different legal entity than the Bank.
Generally, the protocols, processes and conventions used throughout the Bank are not applicable or
are not actively applied to the retirement benefit funds. This gives rise to some specific operational risks.
Compliance Risk
The risk that retirement benefits offered by the Bank does not comply with minimum statutory requirements.
Legal / Political Risk
The risk that the legal / political environment changes and the Bank is required to offer additional or
different retirement benefits than what the Bank projected.
39. DEFINED CONTRIBUTION PLAN
The general description of the plan is included in note 4.10.
2020
Contributions made during the year : (Rupees in '000)
Employer’s contribution 604,424
Employees’ contribution 604,424
The number of employees covered under the defined contribution plan are 11,165 (2019: 10,290).
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40. COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
40.1 Total Compensation Expense
2020
Directors
Chairman Executives Non- Members Chief Key Other Risk
(other than Executives Shariah Executive Management Takers /
CE) Board Personnel Controllers
(Rupees in '000)
Fees and allowances etc. 6,740 –00 24,400 –00 40 –00 –00
Charge for defined benefit plan –00 –00 –00 255 29,839 98,138 270,256
contribution plan –00 –00 –00 212 4,600 24,236 94,759
Utilities –00 2,374 –00 758 5,480 29,673 100,595
Medical –00 22 –00 108 –00 1,770 30,896
Others 3,917 –00 –00 –00 –00 7,065 25,653
Total 10,657 45,406 24,400 12,679 124,692 690,902 2,325,646
2019
(Rupees in '000)
Charge for defined benefit plan –00 6,353 –00 –00 19,793 38,648 106,639
contribution plan –00 2,150 –00 103 3,733 19,399 84,896
Utilities –00 2,162 –00 618 4,482 22,147 88,433
Medical –00 –00 –00 108 –00 1,105 29,016
Others –00 500 –00 –00 417 4,655 20,708
Total 27,500 46,765 18,150 9,819 90,358 460,121 1,776,464
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Chief Executive, Executive Director, Members Shariah Board, Key Management Personal and Other Risk Takers / Controllers are entitled
to Group's maintained cars with fuel in accordance with the terms of their employment and are entitled to medical and life insurance
benefits in accordance with the policy of the Group. In addition, the Chief Executive and Executive Director are also provided with drivers,
security arrangements and payment of travel bills in accordance with their terms of employment.
Chairman of the Board is also entitled to Bank’s maintained cars with fuel, security guard services, payment of utility bills, club and
entertainment bills, travelling bills, appropriate office, staff, and administrative support.
40.2 Remuneration paid to Directors for participation in Board and Committee Meetings
2020
Human
(Rupees in '000)
1. Mr. Abbas D. Habib 2,900 –00 1,920 –00 –00 –00 1,920 6,740
5. Mr. Safar Ali Lakhani 900 1,550 –00 650 400 –00 –00 3,500
6. Syed Hasan Ali Bukhari 900 1,550 650 –00 650 500 –00 4,250
8. Mr. Arshad Nasar 900 1,550 650 –00 –00 500 650 4,250
9. Mr. Adnan Afridi 900 –0 –00 650 –00 –00 –00 1,550
11. Mr. Aun Mohammad Habib 10 –0 –00 –00 –00 –00 –00 10
12. Mr. Saeed Allahawala 40 –0 –00 –00 –00 –00 –00 40
13. Mr. Imran Azim 40 –0 –00 –00 –00 –00 –00 40
14. Ms. Zarine Aziz 10 –0 –00 –00 –00 –00 –00 10
10,220 7,600 4,520 2,350 2,350 1,000 3,220 31,260
198
2019
Human
(Rupees in '000)
5. Mr. Safar Ali Lakhani 600 1,200 300 600 600 –00 –00 3,300
6. Syed Hasan Ali Bukhari 600 1,200 600 –00 600 –00 –00 3,000
8. Mr. Arshad Nasar 600 1,200 600 –00 –00 –00 600 3,000
9. Mr. Adnan Afridi 450 –00 –00 300 –00 –00 –00 750
10. Mr. Manzoor Ahmed 150 –00 –00 150 –00 –00 –00 300
4,800 5,850 2,250 1,950 2,250 –00 1,050 18,150
40.3 Remuneration paid to Shariah Board Members

2020 2019
Resident Non-Resident Resident Non-Resident
Items Chairman Member Member Chairman Member Member
(Rupees in '000)
Managerial remuneration 3,400 2,516 2,400 2,800 1,720 2,000

Charge for defined benefit plan –00 255 –00 –00 –00 –00
Contribution to defined contribution plan –00 212 –00 –00 103 –00
Rent and house maintenance 1,360 710 960 1,120 550 800
Utilities 340 178 240 280 138 200
Medical 36 36 36 36 36 36
Total 5,136 3,907 3,636 4,236 2,547 3,036
Number of persons 1 1 1 1 1 1
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41. FAIR VALUE MEASUREMENTS
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable willing parties in an arm's length transaction. Fair value of financial instruments is
based on:
Federal Government Securities PKRV rates (Reuters page)

Foreign Securities Market prices / Mashreqbank PSC
Listed securities Prices quoted at Pakistan Stock Exchange Limited
Mutual funds Net asset values declared by respective funds
Unlisted equity investments Break - up value as per latest available audited financial
statements
Fair value of fixed term advances of over one year, staff loans and fixed term deposits of over one
year cannot be calculated with sufficient reliability due to non - availability of relevant active market
for similar assets and liabilities. The provision for impairment of debt securities and loans and advances
has been calculated in accordance with the Group's accounting policies as stated in notes 4.14 and
4.5.
41.1 Fair value of financial assets
The Group measures fair values using the following fair value hierarchy that reflects the significance
of the inputs used in making the measurements:
Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical
assets or liabilities.
Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that
are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices).
Level 3: Fair value measurements using input for the asset or liability that are not based on observable
market data (i.e. unobservable inputs).
200
The table below analyses financial instruments measured at the end of the reporting period by the
level in the fair value hierarchy into which the fair value measurement is categorised:
2020
Investments
Federal Government Securities 21,226,600 564,566,523 –00 585,793,123
Shares 3,105,540 –00 –00 3,105,540
Mutual funds –00 2,030,957 –00 2,030,957
Investments
Non-Government Debt Securities –00 1,785,063 –00 1,785,063
Associates 00
Listed shares 570,080 –00 –00 570,080
Mutual funds –00 2,485,926 –00 2,485,926

Forward sale of foreign exchange contracts –00 (53,020,774 ) –00 (53,020,774 )
2019
Investments
Shares 3,193,692 –00 –00 3,193,692
Mutual funds –00 2,984,292 –00 2,984,292
Investments
Non-Government Debt Securities –00 407,752 –00 407,752
Associates 00
Listed shares 538,332 –00 –00 538,332
Mutual funds –00 869,301 –00 869,301

Forward sale of foreign exchange contracts –00 (92,907,153 ) –00 (92,907,153 )
41.2 Certain fixed assets and non banking assets acquired in satisfaction of claims have been carried at revalued amounts
determined by professional valuer (level 3 measurement) based on their assessment of the market value.
41.3 Foreign exchange contracts are valued using exchange rates declared by the State Bank of Pakistan.
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42. TRUST ACTIVITIES
The Bank is not engaged in any trust activities other than holding investments of individuals and entities
in its IPS account maintained with the State Bank of Pakistan.
43. SEGMENT INFORMATION
43.1 Segment Details with respect to Business Activities
The segment analysis with respect to business activity is as follows:
2020
Commercial Retail Retail Asset Total
banking banking brokerage management
(Rupees in '000)
Mark - up / return / profit 107,075,153 18,189,018 27,341 828 125,292,340
Inter segment revenue - net 41,661 29,560,092 –00 –00 29,601,753
Non mark - up / return / interest income 3,023,551 7,305,604 100,609 80,698 10,510,462
Total income 110,140,365 55,054,714 127,950 81,526 165,404,555
Segment direct expenses (68,264,456) (34,139,807) (92,950) (49,225) (102,546,438)

Inter segment expense allocation (29,560,092) –00 (8,251) (33,410) (29,601,753)
Total expenses (97,824,548) (34,139,807) (101,201) (82,635) (132,148,191)
Provisions (4,511,744) (31,685) (3,515) –00 (4,546,944)
Profit / (loss) before tax 7,804,073 20,883,222 23,234 (1,109) 28,709,420

Cash and bank balances 107,913,875 17,221,684 481,329 483 125,617,371
Investments 764,423,410 –00 256,289 639,285 765,318,984
Net inter segment lending 935,223 663,583,850 –00 –00 664,519,073
Advances - performing 439,290,050 69,876,218 132 –00 509,166,400
- non - performing 796,039 87,955 –00 –00 883,994
Others 102,863,677 16,333,709 404,651 15,299 119,617,336
Total assets 1,418,397,575 767,103,416 1,142,401 655,067 2,187,298,459
Borrowings 211,398,036 –00 229,231 –00 211,627,267

Deposits and other accounts 412,374,245 686,849,213 –00 –00 1,099,223,458
Net inter segment borrowing 663,583,850 –00 185,223 750,000 664,519,073
Others 43,710,174 72,244,009 566,352 (25,189) 116,495,346
Total liabilities 1,346,055,905 759,093,222 980,806 724,811 2,106,854,744
Equity 72,341,670 8,010,194 161,595 (69,744) 80,443,715
Total equity and liabilities 1,418,397,575 767,103,416 1,142,401 655,067 2,187,298,459
Contingencies and commitments 300,377,484 177,245 –00 –00 300,554,729
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2019
Commercial Retail Retail Asset Total
banking banking brokerage management
(Rupees in '000)
Mark - up / return / profit 96,225,098 9,374,956 17,153 –00 105,617,207
Inter segment revenue - net 12,160 31,667,850 –00 –00 31,680,010
Non mark - up / return / interest income 3,267,748 6,245,947 49,866 –00 9,563,561
Total income 99,505,006 47,288,753 67,019 –00 146,860,778
Segment direct expenses (58,032,921) (34,636,374) (71,653) –00 (92,740,948 )

Inter segment expense allocation (31,667,850) –00 (12,160) –00 (31,680,010 )
Total expenses (89,700,771) (34,636,374) (83,813) –00 (124,420,958 )
Provisions (3,390,779) (8,578) –00 –00 (3,399,357 )
Profit / (loss) before tax 6,413,456 12,643,801 (16,794) –00 19,040,463

Cash and bank balances 113,797,069 9,455,888 112,177 –00 123,365,134
Investments 586,246,738 –00 263,816 –00 586,510,554
Net inter segment lending 223,111 581,041,519 –00 –00 581,264,630
Lendings to financial institutions 1,857,575 –00 –00 –00 1,857,575
Advances - performing 450,240,662 37,355,664 18 –00 487,596,344
- non - performing 955,129 101,375 –00 –00 1,056,504
Others 91,089,423 7,561,769 101,653 –00 98,752,845
Total assets 1,244,409,707 635,516,215 477,664 –00 1,880,403,586
Borrowings 228,728,417 –00 16,617 –00 228,745,034

Deposits and other accounts 327,974,035 575,618,945 –00 –00 903,592,980
Net inter segment borrowing 581,041,519 –00 223,111 –00 581,264,630
Others 33,348,455 56,389,329 137,667 –00 89,875,451
Total liabilities 1,186,085,226 632,008,274 377,395 –00 1,818,470,895
Equity 58,324,481 3,507,941 100,269 –00 61,932,691
Total equity and liabilities 1,244,409,707 635,516,215 477,664 –00 1,880,403,586
Contingencies and commitments 226,672,893 159,092 –00 –00 226,831,985
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43.2 Segment details with respect to geographical locations
Geographical Segment Analysis

2020
(Rupees in '000)
Non mark - up / return / interest income 9,941,392 388,209 181,411 (550) 10,510,462
Total income 132,462,145 1,656,989 1,554,017 129,651 135,802,802

Provisions (3,426,100) (576,013) (528,892) (15,939) (4,546,944)
Profit before tax 28,277,381 286,355 137,869 7,815 28,709,420

Investments 745,583,792 10,132,651 7,503,288 2,099,253 765,318,984
Advances - performing 474,418,055 18,747,396 15,967,837 33,112 509,166,400
- non - performing 834,792 49,202 –00 –00 883,994
Others 99,121,690 2,462,635 17,992,718 40,293 119,617,336
Total assets 1,452,029,142 38,558,283 42,341,339 2,178,436 1,535,107,200
Borrowings 211,627,267 –00 –00 –00 211,627,267

Deposits and other accounts 1,048,827,367 27,167,746 23,137,597 90,748 1,099,223,458
Net inter segment borrowing 5,143,103 5,307,456 394,791 1,482,464 12,327,814
Others 96,314,571 2,363,473 17,805,707 11,595 116,495,346
Equity 75,127,234 3,719,608 1,003,244 593,629 80,443,715
204
2019
(Rupees in '000)
Non mark - up / return / interest income 9,227,657 194,062 141,368 474 9,563,561
Total income 112,514,386 1,397,824 1,172,344 96,214 115,180,768

Provisions (2,452,029) (808,646) (102,920) (35,762) (3,399,357)
Profit before tax 18,971,504 (142,043) 256,739 (45,737) 19,040,463

Investments 569,950,898 8,398,048 6,547,783 1,613,825 586,510,554
Advances - performing 453,302,228 19,780,937 14,513,179 –00 487,596,344
- non - performing 901,773 154,731 –00 –00 1,056,504
Others 83,409,465 556,284 14,756,839 30,257 98,752,845
Total assets 1,234,285,592 37,636,067 36,293,317 1,649,259 1,309,864,235
Borrowings 221,002,654 7,742,380 –00 –00 228,745,034

Deposits and other accounts 861,557,840 23,867,406 18,010,982 156,752 903,592,980
Net inter segment borrowing 6,037,213 1,605,050 2,169,415 913,601 10,725,279
Others 74,760,372 494,784 14,608,357 11,938 89,875,451
Equity 55,934,713 3,926,447 1,504,563 566,968 61,932,691
44. RELATED PARTY TRANSACTIONS

Related parties of the Group comprise associates (including entities having directors in common with
the Group), retirement benefit funds, major shareholders, directors and key management personnel
and their close family members.
Transactions with related parties of the Group are carried out on arm’s length basis in terms of the
policy as approved by the Board of Directors. The transactions with employees of the Group are
carried out in accordance with the terms of their employment.
205
Transactions with related parties, other than those disclosed in note 11.5, 21.3 and 40 are summarised as follows:
2020 2019
Directors Key management Associates Other related Directors Key Management Associates Other related
personnel parties personnel parties
(Rupees in '000)
Investments
Opening balance –00 –00 1,472,165 –00 –00 –00 957,449 –00
Investment made during the year –00 –00 1,609,946 –00 –00 –00 525,000 –00
Investment adjusted / redeemed / disposed off during the year –00 –00 (24,106 ) –00 –00 –00 (10,284) –00
Closing balance –00 –00 3,058,005 –00 –00 –00 1,472,165 –00
Advances
Opening balance 1,487 76,626 3,015,256 –00 1,313 53,257 1,359,059 –00
Addition during the year 35,349 333,923 56,387,053 –00 55,443 363,717 33,451,951 –00
Repaid during the year (36,504) (239,005) (57,184,560 ) –00 (55,269 ) (340,348) (31,795,754) –00
Closing balance 332 171,544 2,217,749 –00 1,487 76,626 3,015,256 –00
Operating fixed assets
Right of use –00 –00 3,931 –00 –00 –00 7,076 –00
Other assets
Interest / mark - up accrued –00 118 1,289 –00 –00 55 10,667 –00
L/C acceptances –00 –00 1,090,910 –00 –00 –00 350,867 –00
Other receivable –00 –00 –00 –00 –00 –00 1,575 –00
Subordinated debt
Opening balance –00 –00 44,000 –00 –00 –00 –00 –00
Received during the year –00 –00 –00 –00 –00 –00 44,000 –00
Closing balance –00 –00 44,000 –00 –00 –00 44,000 –00
Deposits and other accounts
Opening balance 955,078 624,163 3,536,956 513,730 587,452 816,406 4,876,833 536,801
Received during the year 6,891,056 3,205,958 189,014,948 8,825,958 11,221,419 2,996,758 150,071,628 29,846,047
Withdrawn during the year (6,773,450) (3,109,203) (188,770,664 ) (8,761,856 ) (10,853,793 ) (3,189,001) (151,411,505) (29,869,118)
Closing balance 1,072,684 720,918 3,781,240 577,832 955,078 624,163 3,536,956 513,730
Other liabilities
Interest / mark - up payable 305 508 16,925 –00 3,799 4,118 15,309 2,216
Payable to staff retirement fund –00 –00 –00 683,514 –00 –00 –00 473,226
L/C acceptances –00 –00 1,090,910 –00 –00 –00 350,867 –00
Unrealised loss on forward exchange contracts –00 –00 922 –00 –00 –00 16,187 –00
Other liabilities –00 4 –00 –00 –00 19 19,093 –00
Contingencies and commitments –00 –00 2,022,871 –00 –00 –00 3,385,253 –00
Other transactions - Investor Portfolio Securities
Opening balance –00 –00 749,840 4,237,000 –00 –00 201,000 8,132,000
Increased during the year –00 –00 330,000 3,232,000 30,000 –00 1,534,940 8,487,000
Decreased during the year –00 –00 (570,000 ) (1,858,000 ) (30,000 ) –00 (986,100) (12,382,000)
Closing balance –00 –00 509,840 5,611,000 –00 –00 749,840 4,237,000
206
44.1 RELATED PARTY TRANSACTIONS
2020 2019
Directors Key Associates Other related Directors Key Associates Other related
management parties Management parties
personnel personnel
(Rupees in '000)
Income
Mark - up / return / interest earned 5 6,479 203,818 –00 –00 5,160 267,442 –00
Fee and commission income 21 65 64,512 1 23 758 17,227 –00
Dividend income –00 –00 56,400 –00 –00 –00 56,530 –00
Net gain / (loss) on sale / redemption of
securities and units of mutual funds –00 –00 –00 5,442 –00 –00 –00 –00
Bank charges –00 –00 –00 –00 –00 –00 –00 –00
Other income –00 –00 292 130 1 –00 3,896 169
Expense
Mark - up / return / interest expensed 79,997 58,180 455,811 51,334 80,855 42,642 421,247 77,219
Operating expenses –00 –00 5,491 –00 –00 –00 6,466 –00
Salaries and allowances –00 563,507 –00 –00 –00 514,341 –00 –00
Bonus –00 154,824 –00 –00 –00 77,547 –00 –00
Contribution to defined contribution plan –00 25,533 –00 –00 –00 26,282 –00 –00
Contribution to defined benefit plan –00 76,250 –00 –00 –00 70,610 –00 –00
Staff provident fund –00 –00 –00 604,551 –00 –00 –00 530,179
Staff gratuity fund –00 –00 –00 424,170 –00 –00 –00 403,923
Directors’ fees 33,667 –00 –00 –00 44,600 –00 –00 –00
Donation –00 –00 6,000 –00 –00 –00 6,000 –00
Insurance premium paid –00 –00 133,786 –00 –00 –00 130,949 –00
Insurance claims settled –00 –00 41,925 –00 –00 –00 34,375 –00
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45. CAPITAL ADEQUACY, LEVERAGE RATIO AND LIQUIDITY REQUIREMENTS
2020 2019
(Rupees in '000)
Minimum Capital Requirement (MCR):
Paid-up capital 11,114,254 11,114,254
Capital Adequacy Ratio (CAR):

Eligible Common Equity Tier 1 (CET 1) Capital 67,350,151 53,214,684
Eligible Additional Tier 1 (ADT 1) Capital 6,658,103 6,690,557
Total Eligible Tier 1 Capital 74,008,254 59,905,241
Total Eligible Capital (Tier 1 + Tier 2) 98,034,307 76,548,304
Risk Weighted Assets (RWAs):

Credit Risk 537,583,556 443,518,148
Market Risk 10,243,551 12,343,837
Operational Risk 98,014,443 74,991,311
Total 645,841,550 530,853,296
Common Equity Tier 1 Capital Adequacy Ratio 10.428% 10.024%

Tier 1 Capital Adequacy Ratio 11.459% 11.285%
Total Capital Adequacy Ratio 15.179% 14.420%
Minimum Capital Requirement (MCR)

The MCR standard sets the paid-up capital that the Bank is required to hold at all times. As of the
statement of financial position date, the Bank's paid - up capital stands at Rs. 11.114 billion as against
the required MCR of Rs. 10 billion.
Minimum Capital Adequacy Ratio (CAR)
The CAR on the basis of above framework works out to be as follows:
2020 2019
Required CAR 11.500% 12.500%
CAR on stand - alone basis 15.094% 14.353%
CAR on consolidated basis 15.179% 14.420%
The Bank calculates capital requirement as per Basel III regulatory framework, using the following
approaches:
Credit Risk Standardised Approach

Market Risk Standardised Approach
Operational Risk Basic Indicator Approach
208
2020 2019
(Rupees in '000)
Leverage Ratio (LR):
Total Exposures 1,853,426,344 1,498,187,417
Leverage Ratio 3.993% 3.999%
Liquidity Coverage Ratio (LCR):

Total High Quality Liquid Assets 490,289,815 363,806,793
Total Net Cash Outflow 187,165,770 132,953,270
Liquidity Coverage Ratio 261.955% 273.635%
Net Stable Funding Ratio (NSFR):

Total Available Stable Funding 999,664,575 808,044,723
Total Required Stable Funding 703,064,108 606,312,286
Net Stable Funding Ratio 142.187% 133.272%
45.1 The full disclosures on the CAPITAL ADEQUACY, LEVERAGE RATIO AND LIQUIDITY REQUIREMENTS
as per SBP instructions issued from time to time have been placed on the website. The link to the full
disclosure is available at http://www.bankalhabib.com/capitaladequacy/leverage/liquidityratio-grouplevel2020.
46. RISK MANAGEMENT
The Bank has a risk management framework commensurate with its size and the nature of its business. The
Board of Directors has approved risk management policies covering key areas of activities for the guidance
of management and committees of the Board, management committees, and Divisions / Departments of the
Bank.
This section presents information about the Bank’s exposure to and its management and control of risks, in
particular the primary risks associated with its use of financial instruments.
46.1 Credit Risk
Credit risk is the risk of loss arising from failure by a client or counterparty to meet its contractual obligation.
It emanates from loans and advances, commitments to lend, contingent liabilities such as letters of credit and
guarantees, and other similar transactions both on and off balance sheet. These exclude investments and
treasury - related exposures, which are covered under market risk.
It is the Bank’s policy that all credit exposures shall be adequately collateralised, except when specially
exempted by SBP as in case of personal loans and credit cards, and those at overseas branches where the
accepted local banking practice is followed.
The objective of credit risk management is to keep credit risk exposure within permissible level, relevant to
the Bank’s risk capital, to maintain the soundness of assets and to ensure returns commensurate with risk.
Credit risk of the Bank is managed through the credit policy approved by the Board, a well defined credit
approval mechanism, prescribed documentation requirement, post disbursement administration, review and
monitoring of all credit facilities; and continuous assessment of credit worthiness of counterparties. Decisions
regarding the credit portfolio are taken mainly by the Central Credit Committee. Credit Risk Management
Committee of the Board provides overall guidance in managing the Bank's credit risk.
209
Counterparty exposure limits are approved in line with the Prudential Regulations and the Bank's own policies,
by taking into account both qualitative and quantitative criteria. There is an established system for continuous
monitoring of credit exposures and follow - up of any past due loans with the respective business units. All
past due loans, including trade bills, are reviewed on fortnightly basis and pursued for recovery. Any non -
performing loans are classified and provided for as per Prudential Regulations. The Bank has also established
a mechanism for independent post - disbursement review of large credit risk exposures.
Credit facilities, both fund based and non - fund based, extended to large customer groups and industrial
sectors are regularly monitored. The Bank has concentration of credit in textile which is the largest sector of
Pakistan's economy. Concentration risk is managed by diversification within sub - sectors like spinning, weaving
and composites, credit worthiness of counterparties, and adequate collateralisation of exposures.
Credit administration function has been placed under a centralised set - up. Its main focus is on compliance
with terms of sanction of credit facilities and the Bank’s internal policies and procedures, scrutiny of documentation,
monitoring of collateral, and maintenance of borrowers’ limits, mark - up rates, and security details.
The Bank has implemented its own internal risk rating system for the credit portfolio, as per guidelines of SBP.
Credit ratings by external rating agencies, if available, are also considered.
The Bank lends primarily against the cash flow of the business with recourse to the assets being financed as
primary security. Collaterals in the form of liquid securities, tangible securities, and other acceptable securities
are obtained to hedge the risk, as deemed appropriate. Main types of collaterals taken by the Bank include
charge on stock - in - trade, receivables, machinery, mortgage of properties, pledge of goods, shares and
other marketable securities, government securities, government guarantees, bank guarantees and cash
margins and bank deposits.
Specific provisions on credit portfolio are determined in accordance with the Prudential Regulations. General
provision on the consumer and SEs portfolios is also determined as per Prudential Regulations. The Bank
maintains additional general provision in line with its prudent policies. Particulars of provisions against advances
are given in note 10.4.
The Bank uses the Standardised Approach to calculate capital charge for credit risk as per Basel regulatory
framework, with comprehensive approach for credit risk mitigation.
Stress testing for credit risk is carried out regularly to estimate the impact of increase in non - performing loans
and downward shift in these categories.
46.1.1 Investment in debt securities
Gross investments Non - performing investments Provision held

(Rupees in '000)
Power (electricity), gas, water, sanitary 25,442,218 5,750,733 –00 –00 –00 –00
Financial 728,504,089 570,572,181 –00 –00 1,394,948 270,855
Iron and steel 1,000,000 1,000,000 –00 –00 –00 –00
754,946,307 577,322,914 –00 –00 1,394,948 270,855

Public / Government 740,803,128 564,697,508 –00 –00 357,615 225,505
Private 14,143,179 12,625,406 –00 –00 1,037,333 45,350
754,946,307 577,322,914 –00 –00 1,394,948 270,855
210
46.1.2 Advances
Gross Non-performing Provision

advances advances held
(Rupees in '000)
Agriculture, forestry, hunting and fishing 11,982,018 11,203,672 300,284 196,750 149,088 114,416
Mining and quarrying 86,946 110,030 –00 –00 –00 –00
Textile 163,702,549 141,981,518 1,824,246 1,926,502 1,753,709 1,702,741
Chemical and pharmaceuticals 16,796,308 19,178,166 5,891 3,933 4,423 3,933
Cement 8,847,702 4,504,098 –00 –00 –00 –00
Sugar 6,952,458 9,733,115 –00 –00 –00 –00
Footwear and leather garments 3,608,526 2,457,991 –00 –00 –00 –00
Automobile and transportation equipment 3,726,079 4,548,316 –00 20,000 –00 20,000
Electronics and electrical appliances 5,323,013 5,076,193 –00 –00 –00 –00
Construction 7,802,038 7,305,727 194,339 240,170 192,103 146,758
Power (electricity), gas, water, sanitary 48,335,823 51,903,018 155,883 –00 100,810 –00
Wholesale and retail trade 79,543,240 72,659,722 1,494,236 1,442,519 1,361,415 1,255,335
Transport, storage and communication 10,543,770 12,131,252 70,175 52,611 27,853 15,835
Financial 10,402,567 12,017,703 101,949 101,949 86,587 87,808
Insurance 475,167 567,307 128,426 –00 31,108 –00
Services (other than financial services) 14,524,500 12,232,116 112,896 70,900 33,502 35,450
Individuals 23,863,779 21,013,245 90,956 89,824 63,427 58,834
Food and allied 62,311,964 60,942,702 –00 –00 –00 –00
Iron and steel 23,895,854 27,083,285 –00 –00 –00 –00
Oil refinery / marketing 2,005,943 5,308,267 –00 –00 –00 –00
Paper and board 2,662,909 2,687,071 –00 –00 –00 –00
Plastic products 6,388,435 5,908,391 –00 –00 –00 –00
Others 8,911,593 7,690,664 2,902,192 3,112,758 2,693,454 2,760,302
522,693,181 498,243,569 7,381,473 7,257,916 6,497,479 6,201,412
Public / Government 55,368,812 64,482,124 –00 –00 –00 –00

Private 467,324,369 433,761,445 7,381,473 7,257,916 6,497,479 6,201,412
522,693,181 498,243,569 7,381,473 7,257,916 6,497,479 6,201,412
211
46.1.3 Contingencies and Commitments
Credit risk by industry sector
2020 2019
(Rupees in '000)
Agriculture, forestry, hunting and fishing 1,201,754 776,904
Mining and quarrying -00 1,274
Textile 60,886,061 40,895,042
Chemical and pharmaceuticals 10,560,544 6,468,137
Cement 1,681,965 2,282,578
Sugar 445,917 209,010
Footwear and leather garments 2,400,625 1,359,686
Automobile and transportation equipment 18,054,588 7,199,853
Electronics and electrical appliances 5,306,142 4,188,959
Construction 8,396,568 8,137,417
Power (electricity), gas, water, sanitary 8,008,957 3,611,333
Wholesale and retail trade 52,552,907 44,790,286
Transport, storage and communication 415,645 926,449
Financial 12,384,053 9,487,746
Insurance 26,841 14,321
Services (other than financial services) 41,166,805 38,066,278
Individuals 177,245 159,092
Food and allied 36,490,464 22,135,184
Iron and steel 16,689,629 14,736,453
Oil refinery / marketing 3,016,513 3,133,887
Paper and board 2,129,946 1,391,654
Plastic products 11,584,210 6,832,281
Others 6,977,350 10,028,161
300,554,729 226,831,985
Public / Government 41,435,912 35,815,701
Private 259,118,817 191,016,284
300,554,729 226,831,985
46.1.4 Concentration of Advances

The Bank’s top 10 exposures on the basis of total (funded and non-funded exposures) aggregated to
Rs. 150,619 million (2019: Rs. 139,796 million) are as following:
2020 2019
(Rupees in '000)
Funded 87,140,927 93,419,738
Non Funded 63,477,948 46,376,271
Total Exposure 150,618,875 139,796,009
The sanctioned limits against these top 10 exposures aggregated to Rs. 179,596 million (2019:
Rs. 146,750 million). Provision against top 10 exposures amounts to be Nil (2019: Nil).
212
46.1.5 Advances - Province / Region - wise Disbursement and Utilization
2020
AJK including
(Rupees in '000)
Punjab 201,150,395 199,695,718 202,288 222,110 33,345 980,461 16,473

Sindh 210,692,996 2,259,607 206,820,742 1,066,542 543,154 2,830 121
KPK including FATA 4,547,764 6,476 10,079 4,232,515 5,053 293,641 –0
Balochistan 828,144 –0 106,412 –0 721,732 –0 –0
Islamabad 35,398,979 34,931 16,888 15,497 –0 35,331,663 –0
AJK including Gilgit - Baltistan 639,146 392 –0 2,692 –0 25,064 610,998
Total 453,257,424 201,997,124 207,156,409 5,539,356 1,303,284 36,633,659 627,592
2019
AJK including
(Rupees in '000)
Punjab 195,104,300 192,857,427 12,264 1,185,522 62,647 983,896 2,544

Sindh 188,567,708 481,735 180,055,998 2,103,571 5,920,715 3,750 1,939
KPK including FATA 3,862,092 3,500 2,931 3,743,439 –0 112,222 –0
Balochistan 559,379 –0 111,193 1,583 446,603 –0 –0
Islamabad 35,436,568 341 –0 514,838 –0 34,921,389 –0
AJK including Gilgit - Baltistan 581,097 –0 –0 3,588 –0 3,576 573,933
Total 424,111,144 193,343,003 180,182,386 7,552,541 6,429,965 36,024,833 578,416
46.2 Market Risk

Market risk is the risk of loss arising from movements in market rates or prices, such as interest rates,
foreign exchange rates, and equity prices.
The Bank takes positions in securities for the purpose of investment and not to run a trading book, except
to a very limited extent (maximum of Rs. 300 million) for trading in equities. As regards foreign exchange
positions, the purpose is to serve the needs of clients. Except as aforesaid, the Bank does not engage
in trading or market making activities.
Market risk is managed through the market risk policy approved by the Board, approval of counterparty
and dealer limits, specific senior management approval for each investment and regular review and
monitoring of the investment portfolio by the Asset Liability Management Committee (ALCO). A key
element of the Bank’s market risk management is to balance safety, liquidity, and income in that order
of priority. Another key element is separation of functions and reporting lines for the Treasury Division
which undertakes dealing activities within the limits and parameters set by ALCO, Settlements Department
which confirms and settles the aforesaid deals, and Middle Office which independently monitors and
analyses the risks inherent in treasury operations. Risk Management Committee of the Board provides
overall guidance in managing the Bank’s market risk.
Dealing activities of the Bank include investment in government securities, term finance certificates,
sukuks / bonds, shares and mutual funds, money market transactions and foreign exchange transactions
catering to the needs of its customers. All such activities are carried out within the prescribed limits. Any
excess over limits noted by the Settlements Department and / or the Middle Office is reported to senior
management and ALCO. Stress testing is performed as per guidelines of SBP as well as Bank's internal
policy. Portfolio risks arising in banking book is also measured through Value at Risk (VAR).
213
46.2.1 Balance sheet split by trading and banking books
2020 2019
book book Total book book Total
(Rupees in '000)
Cash and balances with treasury banks 105,936,009 –00 105,936,009 113,838,856 –00 113,838,856
Balances with other banks 19,681,362 –00 19,681,362 9,526,278 –00 9,526,278
Lendings to financial institutions 2,175,301 –00 2,175,301 1,857,575 –00 1,857,575
Investments 765,222,435 96,549 765,318,984 586,510,554 –00 586,510,554
Advances 510,050,394 –00 510,050,394 488,652,848 –00 488,652,848
Fixed assets 43,976,664 –00 43,976,664 36,571,645 –00 36,571,645
Intangible assets 294,862 –00 294,862 368,840 –00 368,840
Deferred tax assets –00 –00 –00 –00 –00 –00
Other assets 75,345,810 –00 75,345,810 61,812,360 –00 61,812,360
1,522,682,837 96,549 1,522,779,386 1,299,138,956 –00 1,299,138,956
46.2.2 Foreign Exchange Risk
Foreign exchange risk is the risk of loss from adverse changes in currency exchange rates. The Bank’s
foreign exchange exposure comprises forward contracts, purchase of foreign bills, foreign currency
loans and investments, foreign currency cash in hand, balances with banks abroad, foreign currency
deposits and foreign currency placements with SBP and other banks. Focus of the Bank’s foreign
exchange activities is on catering to the needs of its customers, both in spot and forward markets.
Foreign exchange risk exposures of the Bank are controlled through dealer limits, open foreign exchange
position limits, counterparty exposure limits, and country limits. The Bank manages its foreign exchange
exposure by matching foreign currency assets and liabilities within strict limits. The net open position in
any single currency and the overall foreign exchange exposure are both managed within the statutory
limits as prescribed by SBP as well as the internal limits set by the Bank itself. Stress testing for foreign
exchange risk is carried out regularly to estimate the impact of adverse changes in foreign exchange
rates.
2020
(Rupees in '000)
Great Britain Pound 1,660,711 11,828,815 10,088,312 (79,792)
Japanese Yen 44,539 15,462 (20,792) 8,285
Euro 4,389,562 6,272,656 1,898,410 15,316
Other currencies 858,737 481,319 (675,976) (298,558)
142,823,047 159,721,388 22,122,673 5,224,332
2019
(Rupees in '000)
Great Britain Pound 1,836,022 11,037,651 9,284,201 82,572
Japanese Yen 15,247 953 (15,868) (1,574)
Euro 4,139,554 5,349,188 1,205,940 (3,694)
Other currencies 754,274 625,752 (74,502) 54,020
136,913,036 144,490,573 15,564,826 7,987,289
2020 2019
book book book book
(Rupees in ‘000)
Impact of 1% change in foreign exchange rates on
214
46.2.3 Equity Position Risk
Equity position risk is the risk of loss from adverse movements in equity prices. The Bank’s policy is to
take equity positions for investment purposes and not to run a trading book, except to a very limited
extent (maximum of Rs. 300 million) for trading in equities.
Equity position risk of the Bank is controlled through equity portfolio limits, sector limits, scrip limits, and
future contracts limits. Direct investment in equities and mutual funds is managed within the statutory
limits as prescribed by SBP as well as the internal limits set by the Bank itself. Stress testing for equity
price risk is carried out regularly to estimate the impact of decline in stock prices. The Bank invests
mainly in blue chip securities.
2020 2019
book book book book
(Rupees in ‘000)
Impact of 5% change in equity prices on
– Profit and loss account –0 4,827 –0 –0
46.2.4 Yield / Interest Rate Risk in the Banking Book (IRRBB) - Basel II Specific
Interest rate risk is the risk of loss from adverse movements in interest rates. ALCO monitors and
manages the interest rate risk with the objective of limiting the potential adverse effects on the
profitability of the Group arising from fluctuation in the market interest rates and mismatching or gaps in
the amount of financial assets and financial liabilities in different maturity time bands.
The Group's interest rate exposure is calculated by categorising its interest sensitive assets and
liabilities into various time bands based on the earlier of their contractual repricing or maturity dates.
Interest rate risk exposures of the Group are controlled through dealer limits, counter - party exposure
limits and (when necessary) type - of - instrument limits. Outright purchase and sale of securities are
also approved by ALCO. Duration and modified duration of various types of debt securities as well as
their entire portfolio are also calculated, and the impact of adverse change in interest rates on the
market value of the securities is estimated. Stress testing for interest rate risk is carried out regularly to
estimate the impact of adverse changes in the interest rates.
Interest rate / yield risk in the banking book – Basel Specific
The Group holds financial assets and financial liabilities with different maturities or repricing dates and
linked to different benchmark rates, thus creating exposure to unexpected changes in the level of
interest rates. Interest rate risk in the banking book refers to the risk associated with interest - bearing
financial instruments that are not held in the trading book of the Group.
Repricing gap analysis presents the Group’s interest sensitive assets (ISA) and interest sensitive
liabilities (ISL), categorised into various time bands based on the earlier of their contractual repricing or
maturity dates (or settlement dates for off - balance sheet instruments). Deposits with no fixed maturity
dates (for example, saving deposits and treasurer’s call deposits) are included in the lowest, one -
month time band, but these are not expected to be payable within a one - month period. The difference
between ISA and ISL for each time band signifies the gap in that time band, and provides a workable
framework for determining the impact on net interest income.
The Group reviews the repricing gap analysis periodically to monitor and manage interest rate risk in
the banking book.
2020 2019
book book book book
(Rupees in ‘000)
Impact of 1% change in interest rates on
– Other comprehensive income 6,113,382 –0 6,742,749 –0
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46.2.5 Mismatch of Interest Rate Sensitive Assets and Liabilities
2020
On - balance sheet financial instruments (Rupees in '000)

Assets
Cash and balances with treasury banks –00 105,936,009 7,279,936 –00 –00 –00 –00 –00 –00 –00 –00 98,656,073
Lendings to financial institutions 8.98% 2,175,301 2,175,301 –00 –00 –00 –00 –00 –00 –00 –00 –00
Investments 9.30% 765,318,984 72,567,393 75,117,948 300,591,571 125,011,937 90,618,012 29,215,595 44,162,033 19,599,391 –00 8,435,104
Advances 6.60% 510,050,394 275,724,271 100,524,346 54,004,723 23,795,801 14,468,084 10,164,684 12,231,329 12,759,516 6,371,366 6,274
Other assets –00 73,221,559 –00 –00 –00 –00 –00 –00 –00 00–00 –00 73,221,559
1,476,383,609 375,423,868 175,642,294 354,596,294 148,807,738 105,086,096 39,380,279 56,393,362 32,358,907 6,371,366 182,323,405
Liabilities
Bills payable –00 31,013,221 –00 –00 –00 –00 –00 –00 –00 –00 –00 31,013,221
Borrowings 4.21% 211,627,267 145,763,098 4,863,416 10,624,222 6,040,892 12,927,163 5,891,219 10,195,980 14,808,462 512,815 –00
Deposits and other accounts 5.66% 1,099,223,458 548,778,671 35,539,084 24,076,408 48,951,961 6,657,497 2,446,852 13,835,518 22,127 12,532 418,902,808
1,424,762,487 694,541,769 44,395,300 45,697,430 54,992,853 19,584,660 8,338,071 24,031,498 14,830,589 525,347 517,824,970
related transactions 207,740,057 133,608,804 51,510,174 11,122,373 11,498,706 –00 –00 –00 –00 –00 –00
Forward sale of foreign exchange contracts (53,350,232) (32,391,396) (17,028,027) (2,914,889) (1,015,920) –00 –00 –00 –00 –00 –00
Forward commitments to extend credit 7,124,914 483,281 4,729,763 242,759 1,669,111 –00 –00 –00 –00 –00 –00
Off - balance sheet gap 29,247,587 (12,326,414 ) 17,272,009 14,404,683 9,897,309 –00 –00 –00 –00 –00 –00
Cumulative Yield / Interest Risk Sensitivity Gap (197,835,511 ) 2,193,666 336,619,586 451,830,486 537,331,922 568,374,130 600,735,994 618,264,312 624,110,331 288,608,766
216
2019
On - balance sheet financial instruments (Rupees in '000)

Assets
Cash and balances with treasury banks 0.68% 113,838,856 10,152,165 –00 –00 –00 –00 –00 –00 –00 –00 103,686,691
Lendings to financial institutions 10.43% 1,857,575 (15,051 ) 1,872,626 –00 –00 –00 –00 –00 –00 –00 –00
Investments 12.84% 586,510,554 9,579,116 41,315,249 (1,222,040 ) 319,369,135 83,883,472 47,705,813 55,287,646 22,843,478 –00 7,748,685
Advances 10.80% 488,652,848 278,546,671 101,685,423 54,936,699 13,138,908 10,333,141 7,723,868 9,572,013 8,000,584 4,709,616 5,925
Other assets –00 59,335,127 –00 –00 –00 –00 –00 –00 –00 00–00 –00 59,335,127
1,259,721,238 306,278,428 144,873,298 53,714,659 332,508,043 94,216,613 55,429,681 64,859,659 30,844,062 4,709,616 172,287,179
Liabilities
Bills payable –00 20,168,673 –00 –00 –00 –00 –00 –00 –00 –00 –00 20,168,673
Borrowings 9.68% 228,745,034 187,985,960 10,403,899 6,043,994 1,470,712 3,395,138 3,594,897 6,842,894 8,997,966 9,574 –00
Deposits and other accounts 10.38% 903,592,980 450,364,049 21,948,126 19,137,128 49,697,169 5,291,864 4,915,071 13,769,205 18,361 13,995 338,438,012
1,222,329,518 638,350,009 36,346,425 36,179,522 51,167,881 8,687,002 8,509,968 20,612,099 9,016,327 23,569 413,436,716
related transactions 145,745,358 39,075,909 59,634,787 12,898,478 15,932,547 14,580,990 3,490,782 131,865 –00 –00 –00
Forward sale of foreign exchange contracts (91,139,975) (42,027,617) (37,025,513) (12,086,845) –00 –00 –00 –00 –00 –00 –00
Forward commitments to extend credit 2,214,998 487,000 810,000 500,000 417,998 –00 –00 –00 –00 –00 –00
Off - balance sheet gap 17,779,821 (8,177,682 ) (1,743,609 ) 14,082,122 13,618,990 –00 –00 –00 –00 –00 –00
Cumulative Yield / Interest Risk Sensitivity Gap (301,173,354 ) (134,755,303 ) (90,239,566 ) 220,652,133 320,762,734 371,173,229 415,552,654 437,380,389 442,066,436 200,916,899
217
46.2.5.1 Reconciliation of Financial Assets and Liabilities
2020 2019
(Rupees in '000)
Assets as per statement of financial position 1,522,779,386 1,299,138,956
Less:
Fixed assets 43,976,664 36,571,645
Intangible assets 294,862 368,840

Non banking assets acquired against claims 954,077 909,382
2,124,251 2,477,233
Interest Rate Sensitive Assets 1,476,383,609 1,259,721,238
Liabilities as per statement of financial position 1,442,335,671 1,237,206,265
Less:
Deferred tax liabilities 139,836 1,377,707
Provision for compensated absences 974,095 722,300

Provision against off - balance sheet items 146,692 129,369
Current taxation (payments less provisions) 418,177 –
17,433,348 13,499,040
Interest Rate Sensitive Liabilities 1,424,762,487 1,222,329,518
46.3 Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, and
systems or from external events. This definition includes legal risk but excludes strategic and reputational
risks. Bank classifies operational loss / near miss incidents into seven loss incidents types, which are
Internal Fraud, External Fraud, Employment Practice & Workplace Safety, Client, Product & Business
Practice, Damage to Physical Assets, Business Disruption & System Failure, and Execution, Delivery
& Process Management.
Operational risk is managed through the Operational Risk Policy, Audit Policy, Compliance Policy &
Programme, Information Technology (I.T.) Policy, I.T. Governance Framework, I.T. Security Policy,
Human Resource Policy, Consumer Protection Framework, KYC / CDD Policy, AML / CFT Policy, Fraud
Prevention Policy, Consumer Grievance Handling Policy and Outsourcing Policy approved by the Board,
along with the operational manuals and procedures issued from time to time; system of internal controls;
Business Continuity Plan, Disaster Recovery Plan for I.T.; and regular audit of the branches and divisions.
Operational risk related matters are discussed in the operations committee, compliance committee of
management and I.T. steering committee. Audit Committee of the Board provides overall guidance in
managing the Bank’s operational risk.
The Bank’s operational risk management framework, as laid down in the operational risk policy, permits
the overall risk management approach to evolve in the light of organisational learning and the future
needs of the Bank.
The Bank places a high priority on conducting all business dealings with integrity and fairness, as laid
down in the Code of Conduct, which is required to be complied with by all employees.
218
Internal controls are an essential feature of risk reduction in operational risk management and the Bank
continues to improve its internal controls.
Business Continuity Plan of the Bank pays special attention to identification of potential threats and
associated risks in critical business processes by carrying out Business Impact Analysis and Risk Assessment
including those which are dependent on external vendors or third parties, identification of alternative
mechanisms for timely resumption of services, with special focus on critical business processes, location
of off-site backup & regular review and testing of the plan.
Bank has devised and implemented IT Project Management and IT Risk Management Frameworks. Bank
is also CMMI Maturity (Level - 3) certified. Bank AL Habib’s website for Conventional and Islamic banking
has been revamped with dynamic features. Furthermore, OBDX (Oracle Banking Digital Experience) web
and mobile application have been commercially launched.
Bank has taken various measures to strengthen I.T. Security, which includes implementation of Cyber
Security Strategy and Action Plan, Vulnerability Management Program, virtual patching and database
activity monitoring solution on critical systems, 24/7 Security Operation center (SOC), regular Internal and
external penetration testing of applications, anti malware and antivirus security solution, subscription to
I.T. security threat intelligence service and recertification of controls as per SWIFT customer Security
Program.
COVID 19
During the year, the global economic environment including Pakistan has been severely affected by the
COVID - 19 outbreak. To reduce the impact on businesses and economy in general, SBP has provided
relief through reduction in SBP Policy Rate by 625 basis points. Other relief measures include the
deferment of the repayment of principal amount of financing facility by one year, on case to case basis;
reduction in the capital conservation buffer by 100 basis points to 1.5%; Refinancing schemes for
payment of wages and salaries; etc.
To control and effectively deal with the COVID-19 pandemic, guidelines issued by Government and
State Bank of Pakistan were meticulously followed by the Bank and various measures were taken.
These measures included creation of senior level Emergency Risk Focus Group; risk assessment; risk
management through (a) provision of uninterrupted services to customers - ensuring round the clock
availability of IT services via ATMs, online banking & mobile banking; providing surplus cash at branches
& ATMs and branch services through alternate operational branches in cases of branch closure, etc.;
(b) development of staff SOPs and (c) creation of safe environment for staff & customers through
walkthrough gates, mandatory temperature checking at entry points, availability of hand sanitizers, etc.
and (d) HR management measures - split team arrangement, forced leaves for senior and female staff,
secured ‘work from home’ environment, virtual meetings, etc.
COVID - 19 has impacted banks in Pakistan through increase in overall credit risk, overall slowdown in
the economic activity, challenges to continuity of business operations and managing cybersecurity threat.
The Bank’s management and Board is fully cognisant of the business challenges posed by the COVID
- 19 outbreak and lock down imposed by the Government of Pakistan. The Bank continues its operations
to serve customers through its branch network across Pakistan and the digital channels by observing
the Government instructions and adopting all possible precautionary measures.
The Bank is also monitoring its credit risk exposure through its risk management function and assessment
of the credit portfolio to identify customers or portfolios that may require additional risk management
considerations. Subsequent to the emergence of the COVID - 19 situation and in line with SBP's
directives, the Bank has restructured / rescheduled a number of financing facilities after review of the
restructured / rescheduled proposals as per the established policies of the Bank. The impact of such
restructuring / rescheduling has also been assessed on credit risk and liquidity / maturity profile of the
Bank and the Bank considers that the liquidity buffer and capital adequacy is sufficiently maintained at
this stage.
46.3.1 Operational Risk-Disclosures Basel II Specific
The Bank uses Basic Indicator Approach to calculate capital charge for operational risk as per Basel
regulatory framework. This approach is considered to be most suitable in view of the business model
of the Bank which relies on an extensive network of branches to offer one - stop, full – service banking
to its clients. The Bank has developed and implemented an Operational Loss Database. Operational
loss and ""near miss"" events are reviewed and appropriate corrective actions taken on an ongoing
basis, including measures to improve security and control procedures. Key Risk Indicators have also
been developed along with thresholds which are being closely monitored for breaches. Risk Evaluation
exercise is carried out for new products, processes and systems or any significant change in the existing
product, processes and systems as per the operational risk policy of the Bank.
219
46.4 Liquidity Risk
Liquidity risk is the risk of loss to a bank arising from its inability to meet obligations as they fall due or
to fund growth in assets, without incurring unacceptable cost or losses.
Key elements of the Bank’s liquidity risk management are as follows:
- To maintain a comfortable margin of excess liquidity in the form of cash and readily marketable assets
to meet the Bank’s funding requirements at any time.
- To keep a strong focus on mobilization of low-cost core deposits from customers.
- To maintain a realistic balance between the behavioral maturity profiles of assets and liabilities.
- To maintain excellent credit rating (as borrowing cost and ability to raise funds are directly affected
by credit rating).
- To have a written contingency funding plan to address any hypothetical situations when access to
normal sources of funding is constrained.
46.4.1 Liquidity Coverage Ratio
SBP issued BPRD Circular No. 08 dated 23 June 2016 advising implementation of Basel III liquidity
standards that constitute two ratios, i.e., Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio
(NSFR), and five monitoring tools.
LCR is the measure of conversion capability of the Bank’s High Quality Liquid Assets (HQLAs) into cash
to meet immediate liquidity requirements over a 30 days horizon.
The Bank calculates Liquidity Coverage Ratio (LCR) on monthly basis as per the guidelines given in
the above mentioned circular. The objective of LCR is to ensure the short-term resilience of the liquidity
risk profile which requires the Bank to maintain sufficient High Quality Liquid Assets (HQLAs) to meet
stressed cash outflows over a prospective 30 calendar - days period. As of 31 December 2020, the
Bank’s LCR stood at 273% against the SBP’s minimum requirement of 100%.
46.4.2 Governance of Liquidity Risk Management
Liquidity risk is managed through the liquidity risk policy approved by the Board. The Bank has “zero
tolerance” for liquidity risk and will continue to maintain a comfortable margin of excess liquidity in the
form of cash and readily marketable assets to meet its funding requirements at any time.
Management of liquidity risk is accomplished through a formal structure which includes:
- Board of Directors (BOD)
- Risk Management Committee
- Asset Liability Management Committee (ALCO)
- Treasury Division
- Risk Management Division and Middle Office
- Finance Division
- Information Technology Division
The Board of Directors approves the liquidity risk policy and ensures, through quarterly reviews by the
Risk Management Committee of the Board, that the Bank’s liquidity risk is being managed prudently.
Risk Management Committee of the Board provides overall guidance in managing the Bank’s liquidity
risk. Liquidity position is monitored daily by the Treasury Division and the Middle Office and reviewed
regularly by ALCO.
46.4.3 Funding Strategy
The Bank’s prime source of liquidity is the customers' deposit base. Within deposits, the Bank strives
to maintain core deposit base in form of current and saving deposits and avoids concentration in particular
products, tenors and dependence on large fund providers. As a general rule, the Bank will not depend
on borrowings in the inter-bank market, including repos, to be a part of its permanent pool of funds for
financing of loans, but will use these as a source for obtaining moderate amounts of additional funds to
meet temporary liquidity needs in the normal course of business or for money market operations.
46.4.4 Liquidity Risk Mitigation Techniques
Various tools and techniques are used to measure and monitor the possible liquidity risk. These include
monitoring of different liquidity ratios like core deposits to total deposits, advances to deposits, liquid
assets to total deposits, Interbank borrowing to total deposits, which are monitored on regular basis
against limits. Further, the Bank also prepares the maturity profile of assets and liabilities to monitor the
liquidity gaps over different time bands. For maturity analysis, behavioral study is carried out to determine
the behavior of non - contractual assets and liabilities. The Bank also ensures that statutory cash and
liquidity requirements are maintained at all times.
220
In addition, LCR, NSFR & Monitoring Tools of Basel III framework further strengthen liquidity risk
management of the Bank.
46.4.5 Liquidity Stress Testing
As per SBP FSD Circular No. 01 of 2020, Liquidity stress testing is being conducted under various stress
scenarios. Shocks include the withdrawals of deposits, withdrawals of wholesale / large deposits & interbank
borrowing, withdrawal of top deposits, etc. Results of stress testing are presented to ALCO and Risk Management
Committee. The Bank’s liquidity risk management addresses the goal of protecting solvency and the ability to
withstand stressful events in the market place. Stress testing for liquidity as prescribed in the liquidity risk policy
is carried out regularly to estimate the impact of decline in liquidity on the ratio of liquid assets to deposits plus
borrowings.
46.4.6 Contingency Funding Plan
Contingency Funding Plan (CFP) is a part of liquidity risk policy of the Bank which identifies the trigger events
that could cause a liquidity contingency and describes the actions to be taken to manage it. The contingency
funding plan highlights liquidity management actions that needs to be taken to deal with the contingency.
Responsibilities and response levels are also incorporated in order to tackle the contingency. Moreover, CFP
highlights possible funding sources, in case of a liquidity contingency.
46.4.7 Main Components of LCR
Main components of LCR are High Quality Liquid Assets and Net Cash Outflows. Outflows are mainly deposit
outflows net of cash inflows which consist of inflows from financing and money market placements up to 1 month.
The inputs for calculation of LCR are based on SBP BPRD Circular No. 08 dated 23 June 2016.
46.4.8 Composition of HQLAs
High Quality Liquid Assets consist of Level 1 Assets which are included in the stock of liquid assets at 100%
weightage of their market value i.e., Cash & Treasury balances, Conventional Government Securities, GOP
Ijarah Sukuks, Foreign Currency Sukuks & Bonds issued by sovereigns. While Level 2 Assets comprise all
equity shares (excluding shares of Financial Institutions) listed on PSX 100.
46.4.9 Concentration of Funding Sources
The Bank relies on customers' deposits as its key source of funding, specially current and saving deposits and
time deposits of small / medium denominations, and avoids concentration of large deposits. Share of core
deposits in total deposits and of large deposits in total deposits are regularly monitored. In particular the Bank
does not depend on large depositors or borrowings from SBP and financial institutions to meet its funding
requirements.
46.4.10 Currency Mismatch in the LCR
About 90% of the Bank's assets and liabilities are in local currency. Currency mismatch in other currencies is
regularly monitored.
46.4.11 Centralisation of Liquidity Management
Overall liquidity management of the Bank is centralised in Treasury Division at Principal Office. The Bank
mobilises deposits through its branch network. It also uses the branch network to grant loans to customers.
Branches that have more deposits than loans, transfer (“lend”) their excess deposits to the Principal Office.
Branches that do not have enough deposits to fund their loans, acquire (“borrow”) additional funds from the
Principal Office.
46.4.12 Other Inflows and Outflows
Benefit of pledged deposits (deposits under lien) are not accounted for in calculation of LCR.
46.4.13 Net Stable Funding Ratio (NSFR)
NSFR is the ratio of the amount of Available Stable Funding (ASF) - source of funds, capital and liabilities relative
to the amount of Required Stable Funding (RSF) - use of funds, assets and off - balance sheet exposures.
The objective of NSFR is to ensure the availability of stable funds that a bank must hold to enable it to build and
maintain its assets, investments and off balance sheet portfolio on an ongoing basis for longer term, i.e., over
a one year horizon. NSFR reduces maturity mismatches between the asset and liability items on the balance
sheet and thereby reduces funding and roll - over risk. The Bank’s NSFR stood at 142% as on 31 December
2020.
221
46.5 Maturities of Assets and Liabilities - based on contractual maturity of the assets and liabilities of the Group
The following maturity profile is based on contractual maturities for assets and liabilities that have a contractual maturity. Assets and
liabilities that do not have a contractual maturity have been categorised in the shortest maturity band.
Total 2020
(Rupees in '000)
Assets
Balances with other banks 19,681,362 19,681,362 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Lendings to financial institutions 2,175,301 (494 ) (2,966 ) (3,461) 2,182,222 –00 –00 –00 –00 –00 –00 –00 –00 –00
Investments 765,318,984 12,582,868 (341,794 ) (398,760) (648,823 ) 48,629,312 13,809,722 42,481,419 105,260,936 19,857,075 90,127,620 108,105,472 170,864,915 154,989,022
Advances 510,050,394 53,134,403 7,371,280 9,070,048 33,016,839 59,638,378 82,793,789 79,781,992 23,793,933 22,992,880 44,412,146 30,614,506 31,490,891 31,939,309
Fixed assets 43,976,664 19,674,219 –00 –00 382,971 376,295 506,363 937,251 1,021,321 996,661 3,602,764 3,055,678 4,121,980 9,301,161
Intangible assets 294,862 –00 –00 –00 22,651 22,652 22,647 62,132 23,332 0017,079 41,199 –00 –00 83,170
Other assets 75,345,810 11,302,990 2,013,296 7,406,967 9,135,331 11,636,343 11,676,859 12,270,539 7,663,578 00588,862 1,617,298 7,776 25,971 –00
1,522,779,386 222,311,357 9,039,816 16,074,794 44,091,191 120,302,980 108,809,380 135,533,333 137,763,100 44,452,557 139,801,027 141,783,432 206,503,757 196,312,662
Liabilities
Bills payable 31,013,221 31,013,221 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 211,627,267 348,190 98,718,568 545,085 2,144,448 18,910,564 22,939,478 17,644,403 2,944,525 3,096,367 12,927,163 5,891,219 10,195,980 15,321,277
Deposits and other accounts 1,099,223,458 891,632,718 25,825,810 9,876,099 40,346,851 12,476,736 23,062,348 24,076,408 25,029,560 23,922,401 6,657,497 2,446,852 13,835,519 34,659
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Deferred tax liabilities 139,836 (261,424 ) –00 –00 37,094 34,482 34,482 97,114 36,070 65,683 204,367 182,160 (216,962 ) (73,230 )
Other liabilities 85,342,289 20,800,376 2,546,349 3,200,147 6,857,181 11,263,412 9,148,184 11,052,652 8,183,361 792,640 2,754,422 1,259,471 2,154,287 5,329,807
1,442,335,671 943,533,081 127,090,727 13,621,331 49,385,574 42,685,194 55,185,292 52,871,377 36,194,316 27,877,891 22,546,649 9,782,902 25,975,224 35,586,113
Net assets 80,443,715 (721,221,724 ) (118,050,911 ) 2,453,463 (5,294,383 ) 77,617,786 53,624,088 82,661,956 101,568,784 16,574,666 117,254,378 132,000,530 180,528,533 160,726,549

Reserves 18,431,277
Non - controlling interest 114,778
80,443,715
222
Total 2019
(Rupees in '000)
Assets
Balances with other banks 9,526,278 2,526,278 –00 2,000,000 5,000,000 –00 –00 –00 –00 –00 –00 –00 –00 –00
Lendings to financial institutions 1,857,575 (485 ) (2,913 ) (3,399) (8,254 ) 1,872,626 –00 –00 –00 –00 –00 –00 –00 –00
Investments 586,510,554 9,321,405 (567,932 ) (537,587) (2,034,140 ) (3,693,400 ) 32,486,728 (9,475,557 ) 175,227,737 144,043,685 85,625,852 48,406,326 56,572,033 51,135,404
Advances 488,652,848 62,593,575 10,135,948 12,181,250 23,916,330 64,885,943 71,316,745 85,592,125 20,899,895 12,435,127 38,611,034 32,280,480 30,610,066 23,194,330
Fixed assets 36,571,645 15,111,331 –00 –00 344,364 338,691 335,467 991,873 967,618 00913,846 3,189,098 2,669,891 3,637,163 8,072,303
Intangible assets 368,840 –00 –00 –00 26,988 26,894 25,225 66,218 55,250 0052,291 113,474 –00 –00 2,500
Other assets 61,812,360 14,829,345 2,935,711 6,300,087 6,935,173 7,537,061 7,631,313 9,879,817 5,542,526 00130,651 26,835 16,464 29,222 18,155
1,299,138,956 218,220,305 12,500,814 19,940,351 34,180,461 70,967,815 111,795,478 87,054,476 202,693,026 157,575,600 127,566,293 83,373,161 90,848,484 82,422,692
Liabilities
Bills payable 20,168,673 20,168,673 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 228,745,034 908,853 153,421,371 75,452 825,020 12,860,661 23,518,085 12,824,411 657,941 812,771 3,395,138 3,594,897 6,842,894 9,007,540
Deposits and other accounts 903,592,980 716,819,226 18,256,147 15,008,415 38,718,273 11,392,152 10,555,974 19,137,128 24,264,133 25,433,036 5,291,864 4,915,071 13,769,205 32,356
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Deferred tax liabilities 1,377,707 507,823 –00 –00 35,771 34,277 34,277 102,366 88,402 89,499 211,187 152,884 26,655 94,566
Other liabilities 68,329,071 23,238,417 2,905,133 2,056,776 4,825,818 6,967,803 5,383,357 9,820,091 5,008,867 291,837 985,826 1,120,752 1,916,645 3,807,749
1,237,206,265 761,642,992 174,582,651 17,140,643 44,404,882 31,254,893 39,492,493 41,884,796 30,020,143 26,627,943 9,887,215 9,786,804 22,561,799 27,919,011
Net assets 61,932,691 (543,422,687 ) (162,081,837 ) 2,799,708 (10,224,421 ) 39,712,922 72,302,985 45,169,680 172,672,883 130,947,657 117,679,078 73,586,357 68,286,685 54,503,681

Reserves 16,467,282
61,932,691
223
46.6 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Group
For assets and liabilities that have a contractual maturity, the expected maturity is considered to be the same as contractual maturity.
Assets and Liabilities that do not have a contractual maturity have been categorised on the basis of expected maturities as determined
by ALCO. In case of saving and current accounts, their historical net withdrawal pattern over the next one year was reviewed, based on
year - end balances for the last three years. Thereafter, taking a conservative view, ALCO categorised these deposits in various maturity
bands. Other assets and liabilities have been categorised on the basis of assumptions / judgments that are believed to be reasonable.
Total 2020
(Rupees in '000)
Assets
Lendings to financial institutions 2,175,301 2,175,301 –00 –00 –00 –00 –00 –00 –00 –00
Investments 765,318,984 (1,350,589 ) 62,899,171 42,492,324 133,255,216 91,579,088 109,010,681 171,274,822 153,093,362 3,064,909
Advances 510,050,394 102,592,570 142,432,167 79,781,992 46,786,813 44,412,146 30,614,505 31,490,892 24,104,075 7,835,234
Fixed assets 43,976,664 428,096 1,945,568 1,601,345 2,563,934 3,951,185 11,154,950 4,121,980 4,409,762 13,799,844
Intangible assets 294,862 22,627 45,249 62,059 40,267 41,490 –00 –00 –00 83,170
Other assets 75,345,810 28,382,864 23,379,236 12,369,589 8,449,019 1,753,753 7,776 25,971 –00 977,602
1,522,779,386 257,868,240 230,701,391 136,307,309 191,095,249 141,737,662 150,787,912 206,913,665 181,607,199 25,760,759
Liabilities
Bills payable 31,013,221 31,013,221 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 211,627,267 101,756,291 41,850,042 17,644,403 6,040,892 12,927,163 5,891,219 10,195,980 14,808,462 512,815
Deposits and other accounts 1,099,223,458 175,991,190 123,504,672 112,041,996 136,917,549 164,995,554 160,784,910 180,970,135 44,004,920 12,532
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Deferred tax liabilities 139,836 (2,533,473 ) 236,066 109,641 (167,184) 780,634 1,991,335 (47,244 ) (679,113) 449,174
Other liabilities 85,342,289 26,445,043 20,411,596 11,052,652 8,976,000 2,754,422 1,259,471 7,400,106 4,267,763 2,775,236
1,442,335,671 332,672,272 186,003,176 140,849,492 151,768,857 181,460,973 169,930,135 198,525,377 70,375,632 10,749,757
Net assets 80,443,715 (74,804,032 ) 44,698,215 (4,542,183 ) 39,326,392 (39,723,311 ) (19,142,223) 8,388,288 111,231,567 15,011,002
Reserves 18,431,277
80,443,715
224
Total 2019
(Rupees in '000)
Assets
Lendings to financial institutions 1,857,575 (15,051) 1,872,626 –00 –00 –00 –00 –00 –00 –00
Investments 586,510,554 (3,259,311) 28,501,889 (9,495,557 ) 327,185,814 85,430,770 48,739,400 57,062,681 49,755,633 2,589,235
Advances 488,652,848 108,827,103 136,202,688 85,592,125 33,335,022 38,611,034 32,280,480 30,610,066 17,252,868 5,941,462
Fixed assets 36,571,645 637,584 1,060,272 6,583,184 2,146,926 3,277,664 2,669,891 3,637,163 3,465,261 13,093,700
Intangible assets 368,840 26,950 52,043 66,104 107,313 113,018 –00 –00 –00 3,412
Other assets 61,812,360 29,811,664 15,237,052 9,969,220 5,767,552 31,790 19,120 29,222 18,154 928,586
1,299,138,956 259,394,073 182,926,570 92,715,076 368,542,627 127,464,276 83,708,891 91,339,132 70,491,916 22,556,395
Liabilities
Bills payable 20,168,673 20,168,673 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 228,745,034 155,230,696 36,378,746 12,824,411 1,470,712 3,395,138 3,594,897 6,842,894 8,997,966 9,574
Deposits and other accounts 903,592,980 153,708,736 92,514,051 89,703,053 120,263,094 132,310,530 131,933,736 147,844,463 35,301,322 13,995
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Deferred tax liabilities 1,377,707 (585,158 ) (29,884 ) 1,067,350 15,649 172,658 269,460 200,932 (248,539) 515,239
Other liabilities 68,329,071 25,476,926 12,351,160 9,820,091 5,300,703 985,826 1,120,752 8,047,228 2,946,918 2,279,467
1,237,206,265 353,999,873 141,214,873 113,415,705 127,051,758 136,867,352 136,922,045 162,941,917 54,974,467 9,818,275
Net assets 61,932,691 (94,605,800 ) 41,711,697 (20,700,629 ) 241,490,869 (9,403,076 ) (53,213,154) (71,602,785 ) 15,517,449 12,738,120
Reserves 16,467,282
61,932,691
225
47. EVENTS AFTER THE REPORTING DATE
Subsequent to the year end, the Board of Directors proposed a final cash dividend of Rs. 4.5 (2019:
Rs. 3.5) per share.
48. GENERAL
48.1 Captions, as prescribed by BPRD Circular No. 02 of 2018 issued by SBP, in respect of which there
are no amounts, have not been reproduced in these consolidated financial statements, except for
captions of the statement of financial position and profit and loss account.
48.2 Figures have been rounded off to the nearest thousand rupees, unless otherwise stated.
48.3 Comparative information has been re-classified, re-arranged or additionally incorporated in these
consolidated financial statements wherever necessary to facilitate comparison and better presentation.
49. DATE OF AUTHORISATION
These consolidated financial statements were authorised for issue in the Board of Directors' meeting
held on 27 January 2021.


226
Annexure I
STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF

OF RUPEES FIVE HUNDRED THOUSAND OR ABOVE PROVIDED
DURING THE YEAR ENDED 31 DECEMBER 2020
(Rupees in '000)
Name of Outstanding liabilities

Name and at beginning of the year Interest / Other
individuals / Father's / Principal
S. address Mark-up financial Total
partners / Husband's Other Written
No. of the Interest / Written relief (9+10+11)
directors (with Name Principal than Total off
borrower(s) Mark-up Interest / off provided
CNIC Nos.)
Mark-up
1 2 3 4 5 6 7 8 9 10 11 12
1. Muhammad Zahid Saddique Muhammad Zahid Saddique Muhammad Saddique 528 205 85 818 518 205 85 808
H # P-19, Rapid Garden (CNIC: 33100-0449298-5)
Green Town, Faisalabad.
2. Muhammad Ali Muhammad Ali Abdul Karim 707 291 143 1,141 707 293 143 1,143
H # 5 / 5-47 Shah Faisal Colony (CNIC: 42201-9209306-7)
Water Pump Stop, Karachi.
3. Khalid Mehmood Khalid Mehmood Fazal Din 405 166 54 625 405 166 54 625
H # 20-E, E-Market Block-6, (CNIC: 42301-0974870-7)
P.E.C.H.S., Karachi.
4. Naheed Rehman Naheed Rehman Atta Ur Rehman 467 77 120 664 467 77 120 664
Phase V, Off Kh E Majahid (CNIC: 42301 - 5043520-4)
44/1, 14 St. DHA, Karachi.
5. Muhammad Ahson Hayat Muhammad Ahson Hayat Qazi Muhammad Hayat 896 297 187 1,380 896 297 187 1,380
Block-7, Near Bismillah Taqi (CNIC: 42201-0969890-5)
Hopistal A-281, Admin Society,
Karachi.
6. Ghulam Hyder Memon Ghulam Hyder Memon Muhammad Ishaque 505 212 82 799 505 212 82 799
Flat # M-3, Plot # BC-08 Block-4, (CNIC: 41408-6248354-9)
Clifton Tower, Clifton, Karachi.
7. Millat Agencies Muhammad Yousuf Tayyab Tayyab 1,733 460 – 2,193 1,733 460 – 2,193
Plot # S/104, S.I.T.E., Karachi. (CNIC: 42201-1325572-5)
8. Muhammad Yousuf Tayyab Muhammad Yousuf Tayyab Tayyab 481 68 – 549 481 68 – 549
House # D-82, Navy Housing (CNIC: 42201-1325572-5)
Scheme, Gizri, Chaudhry
Khaliq-u-Zaman Road, Clifton
Karachi.
Total 5,722 1,776 67100 8,169 5,712 1,778 67100 8,161
227
Annexure II
ISLAMIC BANKING BUSINESS
The Bank is operating 106 (2019: 83) Islamic banking branches and 143 (2019: 142) Islamic banking windows
at the end of the year.
Note 2020 2019

(Rupees in '000)
ASSETS
Cash and balances with treasury banks 5,727,007 4,553,339

Balances with other banks 6,557 7,297,026
Due from financial institutions 1 2,175,301 1,857,575
Investments 2 71,453,157 21,669,565
Islamic financing and related assets - net 3 58,304,712 50,689,875
Fixed assets 479,006 402,062
Intangible assets –000 –000
Due from Head Office –000 –000
Other assets 1,197,756 7,595,621
Total Assets 139,343,496 94,065,063
LIABILITIES
Bills payable 137,796 45,838

Due to financial institutions 18,962,087 9,718,686
Deposits and other accounts 4 93,238,405 67,981,321
Due to Head Office 14,457,740 3,282,835
Subordinated debt –000 –000
(129,141,276 ) (84,802,632)
NET ASSETS 10,202,220 9,262,431
REPRESENTED BY
Islamic Banking Fund 7,600,000 6,800,000

Reserves –000 –000
Deficit on revaluation of assets (142,701) (88,942)
Unremitted profit 6 2,744,921 2,551,373
10,202,220 9,262,431
228
The profit and loss account of the Bank's Islamic banking branches for the year ended 31 December 2020 is as
follows:
Note 2020 2019
(Rupees in '000)
Profit / return earned 8 8,493,424 8,056,283

Profit / return expensed 9 (4,047,777) (4,055,827)
Net Profit / return 4,445,647 4,000,456
Other income
Fee and commission income 310,209 229,655
Foreign exchange income 97,171 67,924
Gain / (loss) on securities 169,484 –00
Other income 95,723 93,109
Total other income 767,035 395,041
Total income 5,212,682 4,395,497
Other expenses
Operating expenses (2,349,393) (1,786,510)
Other charges (44) –00
Total other expenses (2,349,437) (1,786,510)
Provisions and write offs - net (118,324) (57,614)
1. Due from Financial Institutions

2020 2019
(Rupees in '000)
In local currency
2020 2019
Held by Bank Further given Held by Bank Further given
as collateral Total as collateral Total
(Rupees in '000)
The GoP Ijarah Sukuks carry rates ranging from 8.89% to 9.08% (2019: 10.39% to 10.49%).
229
2020 2019
amortised for (Deficit) / Carrying amortised for (Deficit) / Carrying
cost diminution surplus value cost diminution surplus value
2. Investments by segments
(Rupees in '000)
- Ijarah Sukuks 31,954,335 –00 (208,246 ) 31,746,089 2,000,000 –00 (20,000 ) 1,980,000
- Neelum Jhelum Hydropower Co. Ltd. Sukuk 3,781,250 –00 –00 3,781,250 4,468,750 –00 –00 4,468,750
- Bai Muajjal with Government of Pakistan 11,328,818 –00 –00 11,328,818 10,133,361 –00 –00 10,133,361
- Pakistan Energy Sukuk II (Power Holding Ltd.) 21,102,725 –00 123,875 21,226,600 –00 –00 –00 –00
68,167,128 –00 (84,371 ) 68,082,757 16,602,111 –00 (20,000 ) 16,582,111
Shares
- Listed Companies 97,442 (63,384 ) 15,861 49,919 97,442 (57,567 ) 9,399 49,274

- Listed 1,322,529 –00 (96,457 ) 1,226,072 1,454,215 –00 (94,777 ) 1,359,438
- Unlisted 2,025,000 –00 –00 2,025,000 1,984,707 –00 –00 1,984,707
3,347,529 –00 (96,457 ) 3,251,072 3,438,922 –00 (94,777 ) 3,344,145
Units of Mutual Funds 100,000 (52,856 ) 22,265 69,409 1,200,000 (47,401 ) 16,436 1,169,035
Associate
- First Habib Islamic Income Fund –00 –00 –00 –00 525,000 –00 –00 525,000
Total Investments 71,712,099 (116,240 ) (142,702 ) 71,453,157 21,863,475 (104,968 ) (88,942 ) 21,669,565
Note 2020 2019

(Rupees in '000)
3. Islamic financing and related assets
Ijarah 3.1 1,656,565 2,365,239
Murabaha 3.2 9,148,387 8,255,703
Diminishing Musharaka 11,404,565 13,499,915
Islamic Long Term Financing Facility (ILTFF) 1,737,762 1,449,640
Istisna 2,364,376 3,929,818
Islamic Refinance for Renewable Energy (IFRE) 14,035 –00
Islamic Export Refinance - Istisna 1,083,650 1,685,500
Musawamah 3,710,693 3,979,048
Islamic Export Refinance - Musawamah 826,500 200,000
Running Musharaka 84,799 2,845,780
Islamic Export Refinance - Running Musharaka 6,270,000 2,318,300
Staff Financing 594,202 431,960
Advance against Musawamah 1,700,257 920,594
Advance against Istisna 5,702,233 4,168,944
Advance against Istisna - IERF 4,829,300 3,694,450
Advance against Ijarah 735,441 52,940
Advance against Diminishing Musharaka 1,083,563 815,069
Advance against IRF Wages and Salaries 2,355,044 –00
Advance against ILTFF 1,082,706 121,424
Advance against IFRE 875,000 –00
Advance against ITERF 914,221 –00
Financing against Bills - Musawamah 293,805 10,900
Gross Islamic financing and related assets 58,467,104 50,745,224
Less: provision against Islamic financings
- Specific 135,936 32,893
- General 26,456 22,456
(162,392) (55,349)
Islamic financing and related assets - net of provision 58,304,712 50,689,875
230
3.1 Ijarah
2020
2020 2020 2020 (deletions) 2020 2020
(Rupees in '000)
Plant and Machinery 934,345 169,556 404,078 358,906 218,211 179,121 224,957
(699,823) (397,996)
Vehicles 2,406,744 546,978 2,227,410 890,722 467,430 891,153 1,336,257
(726,312 ) (466,999 )
Equipment 607,883 –00 286,147 334,105 123,163 190,796 95,351
(321,736 ) (266,472 )
Total 3,948,972 716,534 2,917,635 1,583,733 808,804 1,261,070 1,656,565
(1,747,871 ) (1,131,467 )
2019
2019 2019 2019 (deletions) 2019 2019
(Rupees in '000)
Plant and Machinery 1,252,766 132,311 934,345 477,305 280,914 358,906 575,439
(450,732) (399,313)
Vehicles 2,543,137 704,429 2,406,744 809,693 509,992 890,722 1,516,022
(840,822 ) (428,963 )
Equipment 604,287 65,427 607,883 258,651 129,438 334,105 273,778
(61,831 ) (53,984 )
Total 4,400,190 902,167 3,948,972 1,545,649 920,344 1,583,733 2,365,239
(1,353,385 ) (882,260 )
3.1.1 Future ijarah payments receivable

2020 2019
Not later Later than Not later Later than
than 1 1 year and less than 1 1 year and less
year than 5 years Total year than 5 years Total
(Rupees in '000)
Ijarah rental receivables 685,438 871,283 1,556,721 1,056,088 1,435,753 2,491,841
Note 2020 2019

(Rupees in '000)
3.2 Murabaha
Murabaha financing 3.2.1 7,020,386 6,907,752
Advances for Murabaha 2,128,001 1,347,951
9,148,387 8,255,703
3.2.1 Murabaha receivable - gross
Less: Deferred murabaha income 3.2.2 7,202,836 7,212,743
Profit receivable shown in other assets 3.2.4 (75,641) (125,034 )
Murabaha financings (106,809) (179,957 )
7,020,386 6,907,752
231
2020 2019
(Rupees in '000)
3.2.2 The movement in Murabaha financing during the year is as follows:
Opening balance 7,212,743 9,042,474
Sales during the year 26,037,743 31,056,039
Adjusted during the year (26,047,650) (32,885,770)
3.2.3 Murabaha sale price 25,990,650 32,129,388

Murabaha purchase price (25,303,306) (31,122,793)
687,344 1,006,595
3.2.4 Deferred murabaha income

Opening balance (125,034) (114,816)
Arising during the year (694,160) (1,048,539)
Less: Recognised during the year 743,553 1,038,321
Closing balance (75,641) (125,034)
4. Deposits and other accounts

2020 2019
(Rupees in '000)
Customers
Savings deposits 33,690,149 1,458,082 35,148,231 21,917,057 811,234 22,728,291
Term deposits 21,354,917 –00 21,354,917 17,144,488 –00 17,144,488
89,825,137 2,934,480 92,759,617 60,488,665 2,025,219 62,513,884
Current deposits 62,908 –00 62,908 4,306 –00 4,306
Savings deposits 415,880 –00 415,880 4,263,131 –00 4,263,131
Term deposits –00 –00 –00 1,200,000 –00 1,200,000
478,788 –00 478,788 5,467,437 –00 5,467,437
90,303,925 2,934,480 93,238,405 65,956,102 2,025,219 67,981,321
2020 2019
(Rupees in '000)
- Individuals 58,871,300 41,348,006
- Government / Public Sector Entities 2,096,892 1,001,499
- Banking Companies 46 3,872,049
- Non-Banking Financial Institutions 478,742 1,595,388
- Private Sector 31,791,425 20,164,379
93,238,405 67,981,321
4.1.1 Deposits includes eligible deposits covered under deposit protection mechanism as required by the Deposit
Protection Act 2016, amounting to Rs. 75,124.486 million (2019: Rs. 53,841.170 million)
232
2020 2019
(Rupees in '000)
5. Charity Fund
Additions during the year
Received from customers on account of delayed payment 26,975 33,795
Charity accrued but not yet received 5,072 3,424
Dividend purification amount 205 212
Other Non - Shariah compliant income 2,330 3,230
Profit on charity saving account 2,314 1,835
36,896 42,496
Payments / utilization during the year
Health (26,144) (6,227)
Social Welfare (10,428) (7,013)
Education (2,500) –00
(39,072) (13,240)
5.1 Detail of charity in excess of Rs.0.5 million in as follows:

Friends of Cardiology Hospital, Multan –00 1,431
Green Crescent Trust 1,607 1,431
Edhi Foundation 3,607 1,431
Karachi Down Syndrome Program –00 1,431
Indus Hospital 3,615 1,431
Child Aid Association 3,607 1,075
IDA RIEU Welfare Association 1,607 859
Bait-ul-Sukoon 1,607 –00
Dar-ul-Sukun 3,607 1,431
SIUT 3,607 1,431
Gawadar Development Authority Hospital 5,494 –00
Osmania Hospital 1,607 –00
Al Mustafa Trust 1,607 –00
Jinnah Foundation 2,000 –00
National Institute of Child Health 3,000 –00
Pakistan Children’s Heart Foundation 1,000 –00
38,572 11,951
6. Islamic Banking Business Unappropriated Profit

Add: Islamic Banking profit for the year 2,744,921 2,551,373
Less: Remitted to Head Office (2,551,373) (928,748)
7. Contingencies and Commitments

Guarantees 4,415,658 2,719,414
Commitments 17,468,898 7,710,226
21,884,556 10,429,640
8. Profit / Return Earned on Financing, Investments and Placement

Profit earned on:
Financing 4,389,705 5,205,830
Investments 3,712,628 2,252,959
Placements 391,091 597,494
8,493,424 8,056,283
233
2020 2019
(Rupees in '000)
9. Profit on Deposits and Other Dues Expensed

Deposits and other accounts 3,594,464 3,845,832
Due to Financial Institutions 259,532 154,464
Due to Head Office 193,781 55,531
4,047,777 4,055,827
10. Profit and Loss Distribution and Pool Management

10.1 The number and nature of pools maintained by the Islamic Banking Branches along with their key
features and risk and reward characteristics:
General Pool PKR (Mudaraba)
The deposits parked in general pool are based on normal weightages. The risk of loss is minimal due
to a long range of diversified assets parked in the general pool.
Special Pool(s) PKR (Mudaraba)
Special pool(s) are created where the customers desire to invest in high yield assets. These pool(s)
rates are higher than the general pool depending on the special class of assets. In case of loss in a
special pool the loss will be borne by the special pool members.
General Pool FCY (Mudaraba)
In FCY pool, all FCY deposits and investments are parked to share the return among the FCY deposit
holders. The weightages are also declared separately.
Islamic Export Refinance Scheme (IERS) Pool PKR (Musharaka)
IERS pool is required by SBP to facilitate the exporters under Islamic Export Refinance Scheme.
Parameters associated with risk and rewards:
Following are the key considerations attached with risk and reward of the pool:
- Period, return, safety, security and liquidity of investment.
- Maturities of funds obtained from Principal Office, Islamic Banking Institutions and Shariah compliant
organisations as regulated in Pakistan.
- Element of risk attached to various types of investments.
- SBP rules and Shariah clearance.
10.2 Avenues / sectors of economy / business where Mudaraba based deposits have been deployed:
The Mudaraba based funds have been deployed in the following avenues / sectors / business:
- Chemical and pharmaceuticals
- Agribusiness
- Textile
- Sugar
- Shoes and leather garments
- Investment in sukuk, shares and mutual funds
- Production and transmission of energy
- Food and allied except sugar
- Cement
- Financial
- Wheat
- Individuals
- Others (domestic whole sale, engineering goods, plastic product, etc.)
234
10.3 Parameters used for allocation of profit, charging expenses and provisions etc. along with a
brief description of their major components:
The Bank’s Islamic Banking Division (IBD) is currently accepting Pak Rupees Term Deposits and Saving
Deposits under Mudaraba arrangements, wherein the Bank is Mudarib and depositors are Rab-Ul-Maal.
The Bank also commingles its funds with those of depositors.
The funds so generated are invested by the Bank in Shariah compliant modes of financing and investments
such as Murabaha, Ijarah, Istisna, Diminishing Musharakah, Running Musharakah, Musawama, shares,
mutual funds and sukuks etc.
The Bank calculates the profit of the pool after every month. Profit is distributed at the net income level.
Net Income is calculated after deducting direct costs such as cost of Murabaha, cost of Takaful,
depreciation on Ijarah Assets, amortization of premium on sukuks and loss of investments directly
incurred in deriving that income.
The net income / loss is being allocated between the Bank’s equity and the depositors’ fund in proportion
to their respective share in pool.
The Bank’s profit sharing ratio during the year was 50% (2019: 50%) of net income and the depositors’
profit sharing ratio was 50% (2019: 50%) of net income.
After the allocation of Income between the equity holder and depositors the profit is distributed among
the account holders on the basis of predetermined weightages, announced by the Bank at the beginning
of the month based on their respective category / tiers. In case of loss, Rab-ul-Maal has to bear the
loss in the ratio of its investment.
In case of provisioning, the general and specific provisions created against non-performing financing
and diminution in the value of investments as under prudential regulations and other SBP directives
shall be borne by the IBIs as Mudarib. However, write-offs of financings and loss on sale of investments
shall be charged to the pool along with other direct expenses.
10.4 Mudarib share and HIBA distributed to depositor’s pool and specific pool
2020
Distributable Mudarib Mudarib HIBA HIBA
Income Share Share Amount
(Rupees in ‘000) (Percentage) (Rupees in ‘000) (Percentage)
LCY Pool 6,354,802 2,118,598 33.34% 413,276 19.51%
FCY Pool 96,447 61,600 63.87% 8,754 14.21%
2019
LCY Pool 5,332,255 2,057,735 38.59% 572,480 27.82%

FCY Pool 31,725 29,854 94.10% 3,790 12.70%
2020 2019
(Percentage)
10.5 Profit rate earned vs. profit rate distributed to the depositors
during the year
Profit rate earned 9.99% 10.56%
Profit rate distributed 4.69% 6.66%
235
Disclosure on Complaint Handling
The Bank has a comprehensive Customer Grievances Handling Policy, which is based on the principles of
fairness, promptness, and customer’s right to approach alternate remedial avenues in case of need.
Customers may register their complaints through Call Center, Bank’s Website, direct emails and letters
through drop-boxes or directly to Customer Services Division / CEO’s Office, which are promptly logged and
acknowledged. The complaints are tracked for end-to-end resolution within regulatory timelines and escalated
to Senior Management, as required. In case a complainant is not satisfied with the resolution provided by the
Bank, he may escalate his complaint to Banking Mohtasib Pakistan. This process is communicated to
customers through notices in Branches and the Website.
During 2020, Bank’s Customer Complaint Unit has been further strengthened to ensure quick resolution of
customers’ complaints. Further, training on complaints handling guidelines has also been completed by a large
number of staff.
In 2020, the Bank received 109,951 complaints, about 42% higher than the previous year. The complaints
were investigated and closed within an average turnaround time of 6 working days.
236
Report of Shariah Board for the year ended December 31, 2020
In the name of Allah, the Beneficent, the Merciful
While the Board of Directors and Executive Management are solely responsible to ensure that the operations of
Bank AL Habib – Islamic Banking Division (BAHL-IBD) are conducted in a manner that comply with Shari’ah
principles and guidelines issued by the Shari’ah Board of the BAHL-IBD at all times. The Shari’ah Governance
Framework issued by the State Bank of Pakistan, required from the Shari’ah Board (SB) to submit a report on the
overall Shari’ah compliance environment of BAHL-IBD.
To form the opinion as expressed in this report, the Shari’ah Compliance Department carried out Shari’ah Reviews,
on test check basis, of each class of transactions, the relevant documentation and process flows. Further, during
the last year, Shari’ah Board reviewed the Internal Shari’ah Audit and External Shari’ah Audit Reports. Based on
above, we are of the view that:
I. BAHL-IBD has complied with Shari’ah rules and principles in the light of fatawa, rulings and guidelines
issued by its Shari’ah Board.
II. BAHL-IBD has complied with directives, regulations, instructions and guidelines i.e. related to Shari’ah
compliance issued by SBP in accordance with the rulings of SBP’s Shari’ah Board.
III. BAHL-IBD has complied with the SBP instructions on profit and loss distribution and Pool Management.
IV. BAHL-IBD has the basic mechanism to ensure Shari’ah Compliance in its overall operations.
V. The BOD appreciates the importance of Shari’ah Compliance in the products, processes and operations
of the BAHL-IBD. Improvement is required in level of awareness of Islamic Banking staff as well Executive
Management in order to improve their understanding on the importance of Shari’ah Compliance in their
respective areas, particularly improvement is required in Foreign Trade Department.
VI. The Management has provided adequate resources to Shari’ah Compliance Department and also
committed to provide further staff enabling them to discharge their duties effectively and ensuring the
Shari’ah Compliance environment in BAHL-IBD.
VII. The Bank has a well-defined mechanism in place which is sound enough to ensure that any earnings
realized from sources or by means prohibited by Shari’ah have been credited to charity account and
are being properly utilized. In year 2020, charity amount of Rs. 31.823 Million has been realized, out of
which an income of Rs. 2.330 Million was credited to charity due to Shari’ah non-compliance as per
instructions of Shari’ah Board. An amount of Rs. 39.072 Million has been granted to various charitable
institutions against previous year’s balances.
Mufti Muhammad Sarfaraz Nihal Mufti Ismatullah Hamdullah Mufti Mohib ul Haq Siddiqui
Resident Shariah Board Member Chairman Shariah Board Shariah Board Member
237
238
28,709,420
(10,751,960)
17,957,460
(9,728)
17,947,732
28,163,914
104,484
(128,275)
28,140,123
46,087,855
(1,781,154)
(3,889,988)
(5,671,142)
40,416,713
16.15
239
240
135 134 133
241
31
242
243
244
245
246
247
248
249
Branch Network
The Bank has a network of 850 branches including 32 sub-branches, 03 overseas branches and 106 Islamic
Banking branches. The Bank also has 04 representative offices and 02 booths. The Bank has branches /
sub-branches / representative offices in the following cities:
• Aadha • Dureji • Kassowal • Nankhana Sahib • Shaher Sultan
• Abbotabad • Ellahabad • Kasur • Narowal • Shahi Wala
• Adda Mirza Tahir • Faisalabad • Khairpur • Naseerabad • Shahkas
• Ahmed Pur East • Faqirwali • Khairpur Nathanshah • Nassarpur • Shahkot
• Ajnala • Fateh Jang • Khanbela • Naukot • Shahpur Chakar
• Akbarpura • Fatehpur • Khanewal • Naushero Feroze • Shakargarh
• Ali Pur Chatta • Fazil Pur • Khanpur • Nawabshah • Sharaqpur
• Ali Pur, Islamabad • Feroza • Khar, Bajaur Agency • Noonawali • Sheikh Wahan
• Alipur • Ferozewatoan • Kharan • Nooriabad • Sheikhupura
• Amin Pur Bangla • Fort Abbas • Kharian • Noushki • Shikarpur
• Arif Wala • Gaggo Mandi • Khichiwala • Nowshera • Shorkot
• Attock • Gambat • Khipro • Nowshera Virkan • Shujabad
• Badin • Garha Mor • Khoi Ratta (A.K.) • Okara • Sialkot
• Bagh (A.K.) • Gawadar • Khudian Khas • Pabbi • Sibi
• Bagh-o-Bahar • Khurrianwala • Painsera • Skardu
• Ghakhar
• Bahawalnagar • Khushab • Pakpattan • Sorab
• Gharo
• Bahawalpur • Khuzdar • Panjgur • Sowari
• Ghotki
• Bampokha • Killa Saifullah • Panu Aqil • Sujawal
• Gilgit
• Bannu • Kohat • Parachinar • Sukkur
• Gojra • Kot Abdul Malik
• Basti Malook • Golarchi • Pasni • Sultan Colony
• Batkhela • Kot Addu • Pasrur • Sumandari
• Gujar Khan • Kot Chutta
• Battagram • Gujranwala • Pattoki • Takhtbhai
• Bhakkar • Kot Ghulam Muhammad • Peshawar • Talagang
• Gujrat • Kot Radha Kishan
• Bhalwal • Gulyana • Phalia • Talbani
• Bhan Saeedabad • Kot Samaba • Phool Nagar • Tanda
• Hafizabad • Kotla Arab Ali Khan
• Bhera • Pindi Bhattian • Tandlianwala
• Hala • Kotli (A.K.)
• Bhiria Road • Pindi Bohri • Tando Adam
• Hangu • Kotri
• Burewala • Pindi Gheb • Tando Allahyar
• Harapa • Kunjah
• Chaksawari (A.K.) • Pir Mahal • Tando Bagho
• Haripur • Kunri
• Chakwal • Pishin • Tando Jam
• Haroonabad • Lahore
• Chaman • Pull Kharan • Tando Muhammad Khan
• Hasan Abdal • Lala Musa
• Charsadda • Pull Manda (A.K.) • Tank
• Hasilpur • Larkana
• Chenab Nagar • Pull sunny • Taranada Muhammad Pannah
• Hattar • Layyah
• Chichawatni • Qambar Ali Khan • Tarnol
• Havellian • Liaqatpur
• Chillas • Qambar Bypass • Taxila
• Hazro • Liaquatabad Thal
• Chiniot • Qasba Gujrat • Thari Mirwah
• Head Bakaini • Lodhran
• Chishtian • Qazi Ahmed • Tharu Shah
• Head Rajkan • Loralai
• Chitral • Qila Didar Singh • Thatta
• Hingorja • Mailsi
• Chiwanda • Quaidabad • Thull
• Hub • Malakwal
• Choa Saiden Shah • Quetta • Tibba Sultanpur
• Hyderabad • Mandi Bahauddin
• Chowk Sarwar Shaheed • Rahim Yar Khan • Timergara
• Islamabad • Mandra
• Chunian • Rahwali • Toba Tek Singh
• Jacobabad • Mangowal
• Dadu • • Raiwand • Tootkay
• Jalalpur Jattan Mansehra
• Dadyal (A.K.) • Mardan • Raja Ram • Turbat
• Daharki • Jalalpur Pirwala • Rajanpur • Ubauro
• Jampur • Maroot
• Dalbandin • Mastung • Rajoya Sadat • Uch Sharif
• Danyour • Jaranwala • Rakhni • Ugoki
• Jehlum • Mathanichangan Swabi
• Daragai Malakand • Matiari • Rangpur Adda • Umerkot
• Dari Dholay Wali • Jhang • Rawalakot (A.K.) • Usman Shah Huri
• Joharabad • Matli
• Darya Khan Mari • Mehar • Rawalpindi • Usta Muhammad
• Daska • Kabirwala • Renala Khurd • Wah Cantt
• Mehrabpur
• Daulat Nagar • Kacha Pakka • Rohaillan Wali • Warri
• Mian Channu
• Deh 75 Nusrat • Kahror Pacca • Rohri • Wazirabad
• Mianwali
• Deh Gad • Kahuta • Sadda • Winder, Lasbela
• Mingora
• Deh Noonari • Kalakot • • Sadiqabad • Yazman
Mirpur (A.K.)
• Deh taib • Kalat • Mirpur Mathelo • Sahib Nagar • Zafarwal
• Dehlra • Kallar Syedan • Mirpurkhas • Sahiwal • Zahir Pir
• Depalpur • Kallur Kot • Mithi • Sakhakot • Zhob
• Dera Ghazi Khan • Kamalia • More Eminabad • Sakrand
• Dera Ismail Khan • Kamar Mushani • Moro • Saleh Khana Overseas Branches
• Dera Murad Jamali • Kamoke • Multan • Samar Bagh • Manama (Bahrain)
• Derianwala • Kamra • Multan, Khurd • Sambrial • Labuan (Malaysia)
• Dhamtal • Kandhkot • Muradabad • Sanghar • Victoria (Seychelles)
• Dhudhial • Kandiaro • Muridke • Sara e Alamgir
• Digri • Kankowai • Muslim bagh • Sargodha Representative Offices
• Dina • Karachi • Mustafabad • Sawabi • Bejing, China
• Dinga • Karianwala • Muzaffarabad (A.K.) • Shabqadar • Dubai, U.A.E.
• Domala • Karkhana Bazar Vehari • Muzaffargarh • Shahdadkot • Istanbul, Turkey
• Dunyapur • Kashmore • Naar (A.K.) • Shahdadpur • Nairobi, Kenya
Principal Office Registered Office

Mackinnons Building, I. I. Chundrigar Road, Karachi. 126-C, Old Bahawalpur Road, Multan.
Phones: (92-21) 32412421, 32446916 & 111-786-110 Phones: (92-61) 4580314-16, & 111-786-110
Fax: (92-21) 32419752 Fax: (92-61) 4582471
SWIFT CODE : BAHLPKKA website : www.bankalhabib.com
250
E - DIVIDEND BANK MANDATE FORM
Mandatory Requirements of Bank Account Details with International Bank Account Number (IBAN)
for Electronic Credit of Cash Dividend Payment as per Companies Act 2017
I, Mr. / Ms. / Mrs. ____________________________ S/o, D/o, W/o, _____________________________________
hereby authorize Bank AL Habib Limited (the Bank) to send / directly credit cash dividends declared by the Bank, in
my bank account as detailed below:
Details of Shareholder of Bank AL Habib Limited
Name of the Shareholder
Father /Husband Name
Folio No. /CDC Account and Participant’s I.D
CNIC No. / NICOP No.
Passport No. (in case of foreign shareholder)
NTN (in case of corporate shareholder)
Cell number of shareholder
Landline number of shareholder (if any)
E-mail address of shareholder
Shareholder’s Bank Account Details:
Title of Bank Account
(the bank account title must be in the name of the
title holder/principal holder of the shares)
International Bank Account Number
(IBAN) –24 digits “ Mandatory” P K
(Kindly provide your accurate IBAN number after consulting with your respective bank branch since in case of any error or omission in given
IBAN, the Bank AL Habib Limited and Central Depository Company of Pakistan Limited (CDC) will not be held responsible, in any manner,
for any loss or delay in your cash dividend payment)
Bank’s name
Branch name
Branch address
It is stated that the above-mentioned information is valid and correct and in case of any change therein, I/we will
immediately intimate the Bank’s Share Registrar accordingly.
Signature of Shareholder
(For individual shareholder, signature must be as per specimen signature registered with Bank AL Habib Limited, please also enclose legible copy of
CNIC/NICOP as applicable. In case of corporate entity, signature of authorized person with company stamp is required)
Please note that:
The shareholders who hold shares in Physical Form are requested to fill the above mentioned E-Dividend Bank Mandate Form and send it to the Bank’s Share
Registrar address; i.e.; CDC Share Registrar Services Limited, CDC House, 99-B, Block B, Main Shahrah-e-Faisal, Karachi-74400, Pakistan.
Tel: 0800-23275
The shareholders who hold shares in Book-Entry Form are requested to fill the above mentioned E-Dividend Bank Mandate Form and send it to the relevant
Broker/Participants/Investor Account Services of the Central Depository Company of Pakistan Limited where the shareholders’ CDC account is being dealt.
Bank AL Habib Limited and CDC shall not be responsible for any loss, damage, liability or claim arising, directly or indirectly, from any error, or failure in
performance of any of its obligations whatsoever, caused due to incorrect payment instructions provided by the shareholder and/or due to any event beyond the
control of the Bank.
In case of non-receipt of IBAN with bank details, as requested above, future cash dividend, if any, could be withheld according to the directives of Securities and
Exchange Commission of Pakistan.
Form of Proxy
The Company Secretary
Bank AL Habib Limited
126-C, Old Bahawalpur Road,
MULTAN.
I/We___________________________________________________of ___________________________
being a member(s) of Bank AL Habib Limited and holding ______________________________________
ordinary shares, as per Register Folio No./CDC Account and Participant's I.D. No.___________________
do hereby appoint ________________________________ Folio No./CDC Account and Participant's I.D.
No. ___________________of ____________________________________________________________
or failing him/her __________________________________ Folio No./CDC Account and Participant's I.D.
No. ___________________of ____________________________________________________________
another member of the Bank as my/our proxy to vote for me/us and on my/our behalf at the Thirtieth Annual General
Meeting of the Bank to be held on Thursday, March 25, 2021 and at any adjournment thereof.
As witness my/our hand this__________________day of_________________2021.
REVENUE
STAMP
RS. 5
SIGNATURE OF MEMBER (S)

(The signature of the shareholder should agree with the specimen signature registered with the Bank or as
per CNIC / Passport in case the share(s) is / are registered in CDC account).
Witnesses:
1. Signature _____________________ 2. Signature _____________________
Name _____________________ Name _____________________
Address _____________________ Address _____________________
CNIC/Passport No. _____________________ CNIC/Passport No._____________________
A member entitled to attend the Annual General Meeting is entitled to appoint a proxy to attend, speak and
vote instead of him/her. No person shall act as proxy (except for a corporation) unless he/she is entitled to
be present and vote in his/her own right.
CDC account holder or sub-account holder appointing a proxy should furnish attested copies of his / her
own as well as the proxy’s CNIC / Passport with the proxy form. The proxy shall also produce his / her
original CNIC / Passport at the time of the meeting. In case of corporate entity, the Board of Directors
resolution / power of attorney with specimen signature shall be submitted along with proxy form.
The instrument appointing a proxy should be signed by the member or by his/her attorney duly authorised
in writing. If the member is a corporation, its common seal (if any) should be affixed to the instrument.
The proxy forms, together with the power of attorney (if any), under which it is signed or a notarially certified
copy thereof, shall be deposited at the Registered Office of the Bank not less than 48 hours before the time
of the meeting.

Annual Report 2020

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Annual Report 2020

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VISION STATEMENT

TO BE OUR CUSTOMERS’ MOST CONVENIENT

TO MAKE BANKING SAFE, SIMPLE, AND PLEASANT

Board of Abbas D. Habib Chairman

Mansoor Ali Khan Chief Executive

Audit Safar Ali Lakhani Chairman

Human Resource Syed Hasan Ali Bukhari Chairman

Credit Risk Syed Mazhar Abbas Chairman

Risk Management Adnan Afridi Chairman

IT Abbas D. Habib Chairman

Statutory EY Ford Rhodes

Legal LMA Ebrahim Hosain

Registered 126-C, Old Bahawalpur Road,

Principal 2nd Floor, Mackinnons Building,

Share CDC Share Registrar Services Limited

Review Report by the Chairman 6

Statement of Compliance with Listed Companies (Code of Corporate Governance)

Independent Auditors’ Review Report on the Statement of Compliance contained in

Statement on Internal Controls 31

Independent Auditors’ Report to the Members 32

Unconsolidated Statement of Financial Position 36

Unconsolidated Profit and Loss Account 37

Unconsolidated Statement of Comprehensive Income 38

Unconsolidated Statement of Changes in Equity 39

Unconsolidated Cash Flow Statement 40

Notes to the Unconsolidated Financial Statements 41

Disclosure on Complaint Handling 127

Report of Shariah Board 128

Notice of Annual General Meeting 129

Pattern of Shareholding 133

Consolidated Financial Statements 136

Branch Network 250

E - Dividend Bank Mandate Form

Total Domestic ATM

Total Cities Total Foreign Branches

Profit Before Tax 28.6

Branches / Sub - Branches 850

(a) Board Composition and Functioning

Basic / Diluted earnings per share – after tax Rs. 16.03

Investment in AL Habib Asset Management Limited (AHAML)

Top 25 Companies Award for the Year 2019

COMPOSITION OF BOARD OF DIRECTORS

Syed Hasan Ali Bukhari

Credit Risk Management Committee Risk Management Committee

IT Committee IFRS 9 Committee

Directors Training Programme

2020 2019 2018 2017 2016 2015

Total customer deposits 1,099,686 903,703 796,901 692,576 584,172 516,213

• 10,299 shares sold by three Executives.

MANSOOR ALI KHAN ABBAS D. HABIB

Karachi: January 27, 2021

Details of Membership on the Bank’s & other Boards

9 Mr. Arshad Nasar 28/03/2016 Independent • Audit Committee

Appointment of the Shariah Board (SB) Members

3 Mufti Muhammad Sarfaraz Nihal 8/10/2015 Resident Member –

Composition of Board Committees and their Terms of References (TORs)

Ms. Farhana Mowjee

TORs of Audit Committee of the Board

The key functions in the TORs include the following:

TORs of Human Resource & Remuneration Committee of the Board

The key functions in the TORs include the following:

TORs of Credit Risk Management Committee of the Board

TORs of Risk Management Committee of the Board