| Credit Agricole Indosuez |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
| The
Global French Bank |
|
| (Formerly:
Banque Indosuez) |
|
| (Incorporated
in France with limited liability) |
|
|
| AUDITORS
REPORT TO THE DIRECTORS |
|
|
| We
have audited the annexed balance sheet of the Pakistan branches of Credit
Agricole Indosuez - The Global French Bank - Pakistan Branches as at December
31, 1998 and the |
|
| related
profit and loss account and the cash flow statement, together with {he notes
forming part thereof for the year then ended, 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 our audit and, after due verification thereof, found them
satisfactory and, we report |
| that: |
|
|
|
|
|
|
| (a)
in our opinion, proper books of account have been kept by the branches as
required by the Companies Ordinance, 1984; |
|
|
| (b)
in our opinion: |
|
|
| (i)
the balance sheet and profit and loss account together with the notes thereon
have been drawn up in conformity with the Banking Companies Ordinance, 1962,
and the |
|
| Companies
Ordinance, 1984, and are in agreement with the books of account and are
further in accordance with accounting policies consistently applied except
for the matter |
|
| referred
in note 6.1; |
|
|
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the branches'
business; and
. |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year were in accordance with the objects of the branches and the
transactions of the |
|
| branches
which have come to our notice have been within the powers of the branches; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us the balance sheet, the profit and loss account and
the cash flow statement, together |
| with
the notes forming pert thereof give the information required by the Banking
Companies Ordinance, 1962 and the Companies Ordinance 1984 in the manner so
required and |
|
| except
for the matters referred to in notes 6.1 and 18, given a true and fair view
of the state of the branches' affairs as at December 31, 1998 and their true
balance of the profit and |
| loss
and cash flow for the year then ended; and |
|
|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980, was deducted by the branches and deposited in the Central Zakat Fund
established under |
|
| section
7 of that Ordinance. |
|
|
|
|
| Dated:
24 March, 1999 |
|
| Karachi |
|
|
A.F. FERGUSON & CO. |
|
|
|
|
Chartered Accountants |
|
|
|
|
|
|
|
|
|
|
|
| BALANCE
SHEET AS AT DECEMBER 31, 1998 |
|
|
|
|
|
|
Notes |
1998 |
1997 |
|
|
|
|
(Rupees in
thousands) |
|
| ASSETS |
|
|
|
|
| Cash |
|
|
4 |
701,338 |
517,967 |
|
| Balances
with other banks |
|
5 |
21,110 |
142,501 |
|
| Investments |
|
6 |
1,029,663 |
946,218 |
|
| Advances-
net of provision |
|
7 |
3,520,679 |
2,985,407 |
|
| Operating
fixed assets |
|
8 |
62,374 |
46,708 |
|
| Other
assets |
|
9 |
339,846 |
435,733 |
|
|
|
|
---------- |
---------- |
|
|
|
|
5,675,010 |
5,074,534 |
|
|
|
|
|
| LIABILITIES |
|
|
|
|
| Deposits
& other accounts |
|
10 |
4,159,831 |
3,579,441 |
|
| Borrowings
from other banks, agents etc. |
11 |
741,264 |
867,387 |
|
| Bills
payable |
|
|
|
39,971 |
43,293 |
|
| Other
liabilities |
|
12 |
622,494 |
474,290 |
|
|
|
|
---------- |
---------- |
|
|
|
|
5,563,560 |
4,964,411 |
|
|
|
|
---------- |
---------- |
|
| NET ASSETS |
|
|
|
111,450 |
110,123 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| REPRESENTED
BY |
|
|
|
|
|
| Capital |
|
|
13 |
- |
- |
|
| Unremitted
profits |
|
|
|
111,450 |
110,123 |
|
|
|
|
---------- |
---------- |
|
|
|
|
111,450 |
110,123 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| MEMORANDUM
ITEMS |
|
|
|
|
|
|
|
|
| Bills
for collection |
|
14 |
289,941 |
334,778 |
|
| Acceptances,
endorsements and other obligations |
|
812,321 |
2,850,636 |
|
| Contingent
liabilities and commitments |
15 |
|
|
|
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts |
|
|
|
|
|
J.P. Fontaine |
|
Zakir Mahmood |
|
|
Chief Operating Officer |
|
Senior Country Officer |
|
|
|
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 1998 |
|
|
|
|
|
|
|
Notes |
1998 |
1997 |
|
|
|
|
(Rupees in
thousands) |
|
|
|
|
|
| Mark
up/interest and discount and/or return earned |
762,814 |
989,982 |
|
| Less:
Cost/return on deposits, borrowings etc. |
|
676,705 |
868,664 |
|
|
|
|
---------- |
---------- |
|
|
|
|
86,109 |
121,318 |
|
|
|
|
|
|
| Fees,
commissions & brokerage |
|
|
59,574 |
57,647 |
|
| Other
operating income - income from dealing |
|
|
| in
foreign currencies |
|
|
120,535 |
145,707 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
180,109 |
203,354 |
|
|
|
|
---------- |
---------- |
|
|
|
266,218 |
324,672 |
|
|
|
|
|
| Operating
expenses: |
|
|
|
|
| Administrative
expenses |
|
16 |
139,107 |
136,608 |
|
| Provisions
against non-performing advances - net |
7.2 |
436 |
1,280 |
|
| Provision
for diminution in value of investments |
|
- |
1,476 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
139,643 |
139,364 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
126,675 |
185,308 |
|
| Other
charges - loss on disposal of fixed assets |
|
961 |
3,977 |
|
|
|
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
|
125,714 |
181,331 |
|
|
|
|
|
|
| Taxation: |
|
|
|
|
| - Current |
|
17 |
96,000 |
84,000 |
|
| - Deferred |
|
|
(27,985) |
7,255 |
|
|
|
|
---------- |
---------- |
|
|
|
|
68,015 |
91,255 |
|
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
|
57,699 |
90,076 |
|
| Unremitted
profit brought forward |
|
|
110,123 |
20,047 |
|
|
|
|
---------- |
---------- |
|
| Profit
available for remittance |
|
|
167,822 |
110,123 |
|
|
|
|
|
| Remittance
to Head Office |
|
|
56,372 |
- |
|
|
|
|
---------- |
---------- |
|
| Unremitted
profit carried forward |
|
|
111,450 |
110,123 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts |
|
|
|
J.P. Fontaine |
|
Zakir Mahmood |
|
|
Chief Operating Officer |
|
Senior Country Officer |
|
|
|
|
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1998 |
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
(Rupees in
thousands) |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Profit
before taxation |
|
|
125,714 |
181,331 |
|
| Adjustment
for non-cash charges |
|
|
|
| Depreciation |
|
|
9,858 |
3.315 |
|
| Loss
on disposal of fixed assets |
|
|
961 |
3,977 |
|
| Provision
against non-performing advances |
|
436 |
1,280 |
|
|
|
---------- |
---------- |
|
|
|
|
|
11,255 |
8,572 |
|
|
|
---------- |
---------- |
|
|
|
|
136,969 |
189,903 |
|
|
|
|
| (Increase)/Decrease
in operating assets |
|
|
| Investment
securities |
|
|
(83,445) |
3,601,793 |
|
| Advances |
|
(535,708) |
(43,506) |
|
| Other
assets (excluding taxation & deferred tax) |
|
73,676 |
136,288 |
|
|
|
|
|
---------- |
---------- |
|
|
|
(545,477) |
3,694,575 |
|
|
|
|
| Increase/(Decrease)
in operating liabilities |
|
|
|
|
|
| Deposits
& other accounts |
|
|
580,390 |
(4,771,709) |
|
| Bills
payable |
|
|
(3,322) |
18,966 |
|
| Other
liabilities |
|
|
148,204 |
(76,586) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
725,272 |
(4,829,329) |
|
|
|
|
|
---------- |
---------- |
|
| Cash
flow before tax |
|
|
316,764 |
(944,851) |
|
| Income
tax paid |
|
|
(45,804) |
(83,807) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash flow from operating activities |
|
270,960 |
(1,028,658) |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
|
(27,019) |
(42,669) |
|
| Sale
proceeds of fixed assets |
|
|
534 |
211 |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(26,485) |
(42,458) |
|
|
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Borrowings
from other banks, agents etc. |
|
(126,123) |
718,018 |
|
| Remittance
to Head Office |
|
(56,372) |
- |
|
|
|
---------- |
---------- |
|
| Net
cash flow from financing activities |
|
(182,495) |
718,018 |
|
|
|
---------- |
---------- |
|
| Increase/(Decrease)
in cash and cash equivalents for the year |
61,980 |
(353,098) |
|
| Cash
and cash equivalents at January 1 |
|
660,468 |
1,013,566 |
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at December 31 |
|
722,448 |
660,468 |
|
|
|
========== |
========== |
|
| Cash
and cash equivalents |
|
|
|
| Cash |
|
|
|
701,338 |
517,967 |
|
| Balances
with other banks |
|
|
21,110 |
142,501 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
722,448 |
660,468 |
|
|
|
|
|
========== |
========== |
|
|
|
J.P. Fontaine |
|
Zakir Mahmood |
|
|
Chief Operating Officer |
|
Senior Country Officer |
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 1998 |
|
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| Credit
Agricole Indosuez The Global French Bank is incorporated in France with |
|
| limited
liability. It is operating in Pakistan as a Commercial Bank under Banking |
|
| Companies
Ordinance, 1962 through two branches located at Karachi and |
|
| Lahore. |
|
|
| 2.
BASIS OF PRESENTATION |
|
| In
accordance with the directives of the Federal Government regarding the shift- |
|
| ing
of the banking system to Islamic modes, the State Bank of Pakistan has |
|
| issued
various circulars from time to time. One permissible form of trade-related |
|
| mode
of financing comprises of purchase of goods by the bank from their cus- |
|
| tomers
and immediate resale to them at appropriate mark-up in price on deferred |
|
| payment
basis. The purchase and sales arising under these arrangements are |
|
| not
reflected in the accounts as such but are restricted to the amount of
facility |
|
| actually
utilised and the appropriate portion of mark-up thereon. |
|
|
| These
accounts are prepared in accordance will the requirements of the State |
|
| Bank
of Pakistan's BPRD Circular No. 31 dated August 13, 1997. This circular |
|
| has
amended the Second Schedule to the Banking Companies Ordinance, 1962. |
|
| The
corresponding figures are also rearranged and reclassified to facilitate com- |
|
| parison. |
|
|
|
|
| 3.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
|
|
| 3.1
Accounting convention |
|
|
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 3.2
Staff retirement benefits |
|
|
|
| The
branches operate an approved funded gratuity scheme for all its employees |
|
| who
have completed 5 years' service or more. Contributions allowable under |
|
| Income
Tax rules have been made to the fund. |
|
|
|
| 3.3
Taxation |
|
|
|
| Taxation
charge in the accounts is based on taxable income. The branches |
|
| account
for deferred taxation using the liability method, on the timing differences |
|
| arising
on account of provisions made for bad and doubtful advances and interest |
|
| in
suspense. |
|
|
|
|
|
|
| 3.4
Advances |
|
|
| Advances
are stated at cost less provision for bad and doubtful balances. The |
|
| provision
for bad and doubtful advances is made in accordance with the |
|
| Prudential
Regulations of the State Bank of Pakistan. |
|
|
|
|
| 3.5
Investments |
|
|
| Investments
are stated at the lower of cost and market value. The shortfall |
|
| between
cost and the market value is charged to profit and loss account. |
|
| Premium/discount
on purchase of investments are amortised over the term of the |
|
| investments. |
|
|
|
| 3.6
Operating fixed assets and depreciation |
|
| Fixed
assets are stated at cost less accumulated depreciation. Depreciation is |
|
| charged
to income applying the straight line method. A full month's depreciation is |
|
| charged
in the month of addition while no depreciation is charged for the month in |
|
| which
the disposal is made. |
|
|
| Gains
and losses on the disposal of fixed assets are included in income currently. |
|
|
| 3.7
Revenue recognition |
|
| Profit/return
on advances and investments are recognised on an accrual basis. |
|
| Fees,
commissions and brokerage income is recognised when earned. |
|
|
| 3.8
Foreign currencies |
|
| Assets
and liabilities in foreign currencies have been translated into rupees at the |
|
| rates
of exchange approximate to those prevalent at the balance sheet date |
|
| except
those covered by forward exchange contracts which are converted at con- |
|
| tracted
rates. Other outstanding forward contracts, letters of credit and accep- |
|
| tances
are translated at the rates of exchange approximate to those prevalent at |
|
| the
balance sheet date. Exchange gains and losses are included in the profit and |
|
| loss
account. |
|
|
|
|
|
1998 |
1997 |
|
|
|
(Rupees in
thousands) |
|
| 4. CASH |
|
|
|
|
| In hand |
|
|
|
|
| -
local currency |
|
|
20,618 |
2,301 |
|
| -
foreign currencies |
|
|
11,399 |
15,004 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
32,017 |
17,305 |
|
| With
State Bank of Pakistan in |
|
|
| Special
deposit account |
|
|
|
| head
office capital account |
|
403,839 |
275,910 |
|
| Current
account |
|
|
265,482 |
224,752 |
|
|
|
|
|
---------- |
---------- |
|
|
|
701,338 |
517,967 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 5.
BALANCES WITH OTHER BANKS |
|
|
|
|
| Current
Accounts |
|
|
|
| -
In Pakistan |
|
|
500 |
18 |
|
| Outside
Pakistan |
|
20,610 |
142,483 |
|
|
|
---------- |
---------- |
|
|
|
21,110 |
142,501 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 6.
INVESTMENTS (at cost less provisions) |
|
|
| Investment
securities |
|
|
|
| Government |
|
|
|
|
| Federal
and Provincial Governments Securities |
|
|
| - Federal Investment Bonds |
|
320,000 |
94,485 |
|
| (Market
value Rs. 320 million 1997: Rs. 94.485 million) |
|
|
| - Short Term Federal Bonds |
|
- |
846,000 |
|
| - Long Term Bonds |
|
|
289,100 |
- |
|
| - Treasury Bills |
|
|
352,430 |
- |
|
|
|
|
|
|
|
| Others |
|
|
|
| Term
Finance Certificates- listed |
|
|
|
| (Market
value Rs. 68.135 million 1997: Rs. 5.810 million) |
68,133 |
5,733 |
|
|
|
---------- |
---------- |
|
|
|
1,029,663 |
946,218 |
|
|
|
|
========== |
========== |
|
|
| Book
value of unquoted investments Rs. 641.53 million (1997: Rs. 846 million) |
|
| Federal
Investment Bonds having face value of Rs. 68 million (book value Rs. |
|
| 68.038
million) have been deposited with the State Bank of Pakistan pursuant to |
|
| section
13(2) of the Banking Companies Ordinance, 1962. |
|
|
| 6.1
Interest income on long term bonds amounting to Rs. 66 million has not been |
|
| accounted.
Management of the bank will recognise this on a receipt basis. |
|
|
|
|
|
|
1998 |
1997 |
|
|
|
(Rupees in
thousands) |
|
|
|
|
| 7. ADVANCES |
|
|
|
| Loans,
cash credits, overdrafts etc. |
|
|
| In Pakistan |
|
|
2,941,188 |
2,580,214 |
|
| Bills
discounted and purchased |
|
|
|
|
| Payable
in Pakistan |
|
|
235,766 |
192,180 |
|
| Payable
outside Pakistan |
|
|
497,469 |
369,254 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
733,235 |
561,434 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
3,674,423 |
3,141,648 |
|
|
|
|
|
|
|
| General
and specific provision for non-performing |
|
|
| advances-note
7.2 |
|
|
(153,744) |
(156,241) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
3,520,679 |
2,985,407 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| Advances
before provision for doubtful debts include Rs. 153.843 million which have |
|
| been
placed on non-performing status. |
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
(Rupees in
thousands) |
|
|
|
|
| 7.1 |
|
|
|
|
|
|
|
|
| - in local currency |
|
|
|
3,520,679 |
2,985,407 |
|
| - in foreign currencies |
|
|
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
3,520,679 |
2,985,407 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
| Debts
considered good in respect of which |
|
|
| the
bank is fully secured |
|
|
3,519,180 |
2,984,393 |
|
|
|
|
|
|
|
| Debts
considered good for which the bank holds no |
|
|
| Other
security than the debtors' personal security |
1,499 |
1,014 |
|
|
|
|
|
|
|
|
|
|
|
| Debts
considered good secured by the personal |
|
|
| liabilities
of one or more parties in addition to |
|
|
| the
personal security of the debtors |
|
- |
- |
|
|
| Debts
considered doubtful or bad not provided for |
- |
- |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
3,520,679 |
2,985,407 |
|
|
|
|
|
|
|
Balance |
Maximum total amount |
|
|
|
|
outstanding |
of financing Including |
|
|
|
|
at December |
temporary financing |
|
|
|
|
31, 1998 |
granted during the year |
|
|
|
|
|
|
1998 |
|
|
|
|
|
|
(Rupees in thousand) |
|
| Debts
due by directors or executives of the bank or any |
|
| of
them either severally or jointly with any other persons |
28,895 |
29,884 |
|
|
|
|
|
|
|
|
|
|
|
| Debts
due by companies or firms in which the directors |
|
|
|
|
| of
the bank are interested as directors, partners or in case |
|
|
|
| of
private companies, as members |
|
|
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Debts
due by the subsidiary companies, controlled firms, |
|
| Managed
modarabas and other associated undertakings |
- |
15,179 |
|
|
|
|
|
|
|
| 7.2
Particulars of provision against non-performing |
|
|
|
| advances |
|
|
|
|
|
|
|
|
|
| Specific |
|
|
|
|
|
|
|
| Opening
balance |
|
156,241 |
160,667 |
|
| Provision
for the year |
|
23,714 |
31,343 |
|
| Reversals |
|
|
(23,278) |
(30,063) |
|
|
|
---------- |
---------- |
|
|
|
436 |
1,280 |
|
