| American Express Bank Limited |
|
|
|
|
|
|
|
| (INCORPORATED
IN THE U.S.A. WITH LIMITED LIABILITY) |
|
| PAKISTAN
BRANCHES |
|
| ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 2000 |
|
|
| AUDITORS'
REPORT TO THE DIRECTORS |
|
|
| We
have audited the annexed balance sheet of AMERICAN EXPRESS BANK LIMITED -
PAKISTAN |
|
| BRANCHES
as at December 31, 2000 and the related profit and loss account and the cash
flow statement, |
|
| together
with the 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 AMERICAN EXPRESS
BANK LIMITED |
|
| -
PAKISTAN 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 change in accounting
policies |
|
| as
stated in note 3.2 with which we concur; |
|
|
| (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 and the profit and loss account and the cash flow statement, together
with the notes |
|
| forming
part thereof give the information required by the Banking Companies
Ordinance, 1962, and |
|
| the
Companies Ordinance, 1984, in the manner so required and give a true and fair
view of the state |
|
| of
the Branches' affairs as at December 31, 2000 and their true balance of the
profit and the cash |
|
| flow
statement 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. |
|
|
| Karachi |
|
|
Ford, Rhodes, Robson, Morrow |
|
| March
28, 2001 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT DECEMBER 31, 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
|
|
Rupees in
'000 |
|
|
|
|
|
|
| ASSETS |
|
|
|
| CASH |
|
4 |
1,995,793 |
2,931,428 |
|
| BALANCES
WITH OTHER BANKS |
5 |
16,373 |
92,148 |
|
| MONEY
AT CALL AND SHORT NOTICE |
|
275,000 |
200,000 |
|
| INVESTMENTS |
|
6 |
2,161,076 |
377,239 |
|
| ADVANCES
- NET OF PROVISION |
7 |
5,880,029 |
4,966,523 |
|
| OPERATING
FIXED ASSETS |
|
8 |
99,115 |
111,613 |
|
| CAPITAL
WORK-IN-PROGRESS |
|
13,796 |
-- |
|
| OTHER
ASSETS |
|
9 |
1,577,995 |
1,719,648 |
|
|
|
------------------ |
------------------ |
|
|
|
|
12,019,177 |
10,398,599 |
|
|
|
|
| LIABILITIES |
|
|
|
| DEPOSITS
AND OTHER ACCOUNTS |
10 |
6,322,312 |
5,534,801 |
|
| BORROWINGS
FROM OTHER BANKS, AGENTS ETC. |
11 |
4,286,697 |
3,325,241 |
|
| BILLS
PAYABLE |
|
|
138,208 |
294,263 |
|
| OTHER
LIABILITIES |
|
12 |
1,397,577 |
1,405,722 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
12,144,794 |
10,560,027 |
|
|
|
|
------------------ |
------------------ |
|
| NET ASSETS |
|
|
(125,617) |
(161,428) |
|
|
|
|
========== |
========== |
|
|
|
|
| REPRESENTED
BY: |
|
| HEAD
OFFICE CAPITAL ACCOUNT |
13 |
|
|
| ACCUMULATED
LOSS |
|
|
(121,222) |
(161,428) |
|
| DEFICIT
ON REVALUATION OF SECURITIES |
|
(4,395) |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(125,617) |
(161,428) |
|
|
|
========== |
========== |
|
| MEMORANDUM
ITEMS: |
|
| BILLS
FOR COLLECTION |
|
14 |
799,731 |
590,429 |
|
| ACCEPTANCES,
ENDORSEMENTS AND OTHER |
|
| OBLIGATIONS |
|
|
392,559 |
556,132 |
|
| CONTINGENT
LIABILITIES AND COMMITMENTS |
15 |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
TAWFIQ A. HUSAIN |
|
ALTAF RAJABALLY |
|
|
SENIOR DIRECTOR AND |
|
DIRECTOR AND COUNTRY |
|
|
COUNTRY MANAGER |
|
CONTROLLER |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2000 |
|
|
|
|
|
Note |
2000 |
1999 |
|
|
|
|
|
Rupees in
'000 |
|
|
| Mark-up
/ interest and discount and/or return earned |
977,356 |
1,129,660 |
|
| Less:
Cost / Return on deposits, borrowings etc. |
|
876,112 |
966,933 |
|
|
------------------ |
------------------ |
|
|
|
162,727 |
101,244 |
|
|
| Fees,
commission and brokerage |
|
|
274,238 |
241,900 |
|
| Profit
from dealing securities |
|
|
1,703 |
-- |
|
| Profit
from investment securities |
|
|
141 |
587 |
|
| Other
operating income |
|
16 |
35,139 |
37,403 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
311,221 |
279,890 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
473,948 |
381,134 |
|
|
| Operating
expenses: |
|
| Administrative
expenses |
|
17 |
416,451 |
430,056 |
|
| Provisions
against non-performing advances |
7.2 |
17,290 |
331 |
|
|
------------------ |
------------------ |
|
|
|
|
(433,741) |
(430,357) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
40,207 |
(49,253) |
|
| Other income |
|
18 |
(1) |
2,781 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
/ (loss) before taxation |
|
|
40,206 |
(46,472) |
|
| Taxation |
|
19 |
-- |
(49,282) |
|
|
|
|
------------------ |
------------------ |
|
| Profit
/ (loss) after taxation |
|
|
40,206 |
(95,754) |
|
| Accumulated
loss / Unremitted profit brought forward |
(161,428) |
55,453 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(121,222) |
(40,301) |
|
| Remittance
to Head Office |
|
|
-- |
(121,127) |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
loss / Unremitted profit carried forward |
(121,222) |
(161,428) |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
TAWFIQ A. HUSAIN |
|
ALTAF RAJABALLY |
|
|
SENIOR DIRECTOR AND |
|
DIRECTOR AND COUNTRY |
|
|
COUNTRY MANAGER |
|
CONTROLLER |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2000 |
|
|
|
|
2000 |
1999 |
|
|
|
Rupees in
'000 |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
/ (loss) before taxation |
|
|
40,206 |
(46,472) |
|
|
| Adjustment
for non-cash charges: |
|
| Depreciation |
|
|
30,062 |
30,540 |
|
| Provision
against non-performing advances |
|
17,290 |
331 |
|
| Net
loss/(profit) on sale of fixed assets |
|
1 |
(2,725) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
47,353 |
28,146 |
|
|
------------------ |
------------------ |
|
|
|
|
87,559 |
(18,326) |
|
| (Increase)
/ Decrease in operating assets: |
|
| Government
securities, certificates of investment and TFCs |
(1,788,232) |
1,427,829 |
|
| Advances |
|
|
(930,796) |
345,268 |
|
| Other
assets (excluding advance tax) |
|
(49,365) |
(676,383) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(2,768,393) |
1,096,714 |
|
|
| Increase
/ (Decrease) in operating liabilities: |
|
| Deposits
and other accounts |
|
|
787,511 |
(2,478,450) |
|
| Bills payable |
|
|
(156,055) |
93,202 |
|
| Other liabilities |
|
|
(8,145) |
152,891 |
|
|
|
------------------ |
------------------ |
|
|
|
|
623,311 |
(2,232,357) |
|
|
------------------ |
------------------ |
|
| Cash
flow before tax |
|
|
(2,057,523) |
(1,153,969) |
|
| Income-tax
refund/(paid) |
|
|
191,018 |
(221,077) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash used in operating activities |
|
(1,866,505) |
(1,375,046) |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Fixed
capital expenditure |
|
(20,411) |
(31,915) |
|
| Capital
work-in-progress |
|
(13,796) |
-- |
|
| Sale
proceeds of fixed assets |
|
2,846 |
7,239 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(31,361) |
(24,676) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Borrowings
from other banks, agents etc. |
|
961,456 |
2,441,968 |
|
| Remittance
to Head Office |
|
|
-- |
(121,127) |
|
|
------------------ |
------------------ |
|
| Net
cash flow from financing activities |
|
961,455 |
2,320,809 |
|
|
|
------------------ |
------------------ |
|
| (Decrease)
/ increase in cash and cash equivalents for the Year |
(936,410) |
921,087 |
|
| Cash
and cash equivalents at the beginning of the year |
3,223,576 |
2,302,489 |
|
|
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
2,287,168 |
3,223,576 |
|
|
|
========== |
========== |
|
|
|
| Cash
and cash equivalents |
|
| Cash |
|
1,995,793 |
2,931,428 |
|
| Balances
with other banks |
|
16,373 |
92,148 |
|
| Money
at call and short notice |
|
275,000 |
200,000 |
|
|
|
------------------ |
------------------ |
|
|
|
2,287,166 |
3,223,576 |
|
|
|
|
========== |
========== |
|
|
|
TAWFIQ A. HUSAIN |
|
|
ALTAF RAJABALLY |
|
|
SENIOR DIRECTOR AND |
|
|
DIRECTOR AND COUNTRY |
|
|
COUNTRY MANAGER |
|
|
CONTROLLER |
|
|
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 2000 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| American
Express Bank was incorporated in the U.S.A. Pakistan operations commenced in
1948 and |
|
| are
currently being conducted in Pakistan through branches in Karachi, Lahore and
Islamabad. It is |
|
| engaged
in banking business permitted under the Banking Companies Ordinance, 1962. |
|
|
| 2.
BASIS OF PRESENTATION |
|
|
|
| These
financial statements have been prepared in accordance with the requirements
of the State Bank |
|
| of
Pakistan (under the powers conferred upon it under the Banking Companies
Ordinance, 1962) to |
|
| conform
with the BPRD Circular No. 31 dated August 13, 1997. Consistent with the
prior years, expens- |
|
| es
of the Head Office allocable to the Pakistan branches are not incorporated in
the books of account. |
|
|
| 3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
| 3.1
Accounting convention |
|
|
|
| These
financial statements are prepared under the historical cost convention except
for certain investments |
|
| which
are stated on mark to market basis as described in notes 3.2 and 3.6 to these
accounts. |
|
|
| 3.2
Change in accounting policy |
|
| Commencing
from the current year, the bank marks to market its investment in securities,
excluding |
|
| securities
acquired under resale obligation in accordance with the guidelines contained
in State Bank of |
|
| Pakistan's
BSD Circular No. 20 dated August 4, 2000. Any difference between the carrying
value and |
|
| the
revalued amount is taken to surplus / deficit on revaluation account and
shown separately in the balance |
|
| sheet
below the Head Office Capital Account. |
|
|
| Previously
these investments were carded at cost less amortisation of premium or
discount, where |
|
| applicable.
Had this change not been made, the value of the bank's investments would have
been higher |
|
| by
Rs. 4.395 million as at December 31, 2000. However, there is no effect on the
profit and loss |
|
| account. |
|
|
| 3.3
Staff retirement benefits |
|
|
|
| 3.3.1
Defined contribution plan |
|
| The
bank operates an approved provident fund scheme for all its permanent
employees. Equal |
|
| monthly
contributions are made both by the bank and its employees to the fund at the
rate of 10 |
|
| percent
of basic salary. |
|
|
|
|
|
| 3.3.2
Defined benefit plan |
|
| The
bank operates an approved gratuity fund scheme for all its permanent
employees who have |
|
| completed
the minimum qualifying period of service with the bank. Contributions to the
fund are |
|
| made
based on actuarial recommendation. The most recent actuarial valuation was
carried out |
|
| as
at December 31, 1999 using the projected Unit Credit Cost method. The amount
available in |
|
| the
gratuity fund as of the year end is considered adequate to meet the current
liability in respect |
|
| of
obligations of the fund. |
|
|
|
|
| 3.4 Taxation |
|
|
| Provision
for current taxation is based on the taxable income after taking into account
tax credits available, |
|
| if
any. The bank accounts for deferred taxation on material temporary
differences using the liability |
|
| method.
Deferred tax debits are recognised only if there is a reasonable expectation
of realisation in the |
|
| foreseeable
future. There was no deferred tax liability at the year end as the deferred
tax computation |
|
| showed
a debit balance which has not been accounted for. |
|
|
| 3.5 Advances |
|
| Provision
for advances (and relevant mark-up) are made against specific non-performing
advances, |
|
| essentially
in compliance with the requirements of the Prudential Regulations of the
State Bank of |
|
| Pakistan.
Advances and mark-up are stated net of provision for possible losses and
reserved mark-up |
|
| respectively. |
|
|
| 3.6 Investments |
|
| Investments
in securities, except for investments acquired under resale obligation, are
marked to market |
|
| in
accordance with State Bank of Pakistan's BSD Circular No. 20 dated August 4,
2000. The difference |
|
| between
the carrying value, representing cost adjusted for amortisation of discount
or premium |
|
| and
the revalued amount, is recognised in the surplus / deficit on revaluation
account until realised. |
|
|
| Investments
in unquoted term finance certificates, certificates of investment and
Pakistan Investment |
|
| Bonds
are recorded at cost, adjusted for amortisation of premium or discount where
applicable. |
|
|
| Provision
for permanent diminution in value, if any, is taken to income currently. |
|
|
| The
bank also enters into transactions of repurchase / reverse repurchase of
securities at contracted |
|
| rates
for specific periods of time. These are recorded as follows: |
|
|
| (a)
In the case of sale under repurchase obligations the securities are deleted
from the books and the |
|
| charges
arising from the differential in sale and repurchase values are accrued on a
pro-rata basis |
|
| and
recorded as expense. Upon repurchase the securities are reinstated. |
|
|
| In
the case of purchase under resale obligations the securities are booked at
the contracted purchase |
|
| price
and the differential of the contracted purchase and resale price is amortised
over the |
|
| period
of their contract and recorded as income. |
|
|
|
|
| 3.7
Operating fixed assets and depreciation |
|
|
| Fixed
assets are stated at cost less accumulated depreciation. Cost represents
their purchase cost, |
|
| together
with any incidental costs of acquisition. Depreciation is calculated so as to
write off the assets |
|
| over
their estimated useful lives using the straight line method. |
|
|
|
|
| 3.8
Revenue recognition |
|
| Interest/mark-up
income is recognised on an accrual basis, except if the recovery is
considered doubtful, |
|
| recognition
is deferred until it is received. Commission and fees are generally
recognised as income |
|
| at
the time of affecting the transaction to which they relate, except on
guarantees on which the commission |
|
| is
recorded as income over the period of the guarantee. |
|
|
| 3.9
Foreign currencies |
|
|
|
| Assets
and liabilities in foreign currencies have been translated into rupees at the
rates of exchange |
|
| approximating
those ruling at the balance sheet date except deposits in respect of which
forward |
|
| exchange
cover is taken from the State Bank of Pakistan, which are translated at the
contracted rates. |
|
| Foreign
exchange contracts are revalued using the forward rates applicable to their
respective remaining |
|
| maturities
except for forward contracts on deposits surrendered to State Bank of
Pakistan, which are |
|
| not
revalued. Exchange gains and losses are taken to income currently. |
|
|
|
|
|
|
|
2000 |
1999 |
|
|
Rupees in
'000 |
|
|
| 4. CASH |
|
|
| In hand: |
|
|
|
99,204 |
113,293 |
|
| Local currency |
|
|
39,374 |
45,814 |
|
| Foreign
currencies |
|
------------------ |
------------------ |
|
|
|
138,578 |
159,107 |
|
|
| With
State Bank of Pakistan: |
|
| Capital
deposited in foreign currency |
|
1,095,659 |
1,136,470 |
|
| Placement
account - foreign currency deposits |
|
724,402 |
669,448 |
|
| Special
deposit account |
|
916 |
622,763 |
|
| Current account |
|
36,238 |
343,640 |
|
|
------------------ |
------------------ |
|
|
1,857,215 |
2,772,321 |
|
|
------------------ |
------------------ |
|
|
1,995,793 |
2,931,428 |
|
|
========== |
========== |
|
|
| 5.
BALANCES WITH OTHER BANKS |
|
| In Pakistan: |
|
| - current accounts |
|
16,080 |
89,695 |
|
| Outside
Pakistan: |
|
|
|
| - current accounts |
|
293 |
2,453 |
|
|
------------------ |
------------------ |
|
|
16,373 |
92,148 |
|
|
========== |
========== |
|
|
| 6.
INVESTMENTS |
|
| Investment
securities - unquoted |
|
| Federal
and provincial government securities: |
|
| Treasury bills |
|
667,924 |
1,542 |
|
| Government
loans |
|
345,809 |
370,363 |
|
| Certificates
of investment |
|
280,000 |
-- |
|
| Term
finance certificates |
|
75,000 |
-- |
|
| Investment
securities - quoted |
|
|
|
|
| Term
finance certificates |
|
2,725 |
5,334 |
|
| Dealing
securities - unquoted |
|
|
|
|
| Pakistan
Investment Bonds |
|
789,618 |
-- |
|
|
|
------------------ |
------------------ |
|
|
|
2,161,076 |
377,239 |
|
|
|
========== |
========== |
|
|
|
|
| Book
value of unquoted investments Rs 2,158.351 million (1999: Rs. 371.905
million) |
|
|
|
|
| Market
value of quoted investment Rs. 2.725 million (1999: Rs. 5.451 million). |
|
|
| 7. ADVANCES |
|
|
| Loans,
cash credits, overdrafts etc. |
|
| In Pakistan |
|
5,894,292 |
4,766,607 |
|
| Bills
discounted and purchased: |
|
|
| Payable
in Pakistan |
|
85,610 |
284,859 |
|
| Payable
outside Pakistan |
|
34,119 |
31,759 |
|
|
|
------------------ |
------------------ |
|
|
|
119,729 |
316,618 |
|
|
|
------------------ |
------------------ |
|
|
|
*6,014,021 |
5,083,225 |
|
| Provision
for non-performing advances - note 7.2 |
|
(133,992) |
(116,702) |
|
|
|
------------------ |
------------------ |
|
|
|
5,880,029 |
4,966,523 |
|
|
|
========== |
========== |
|
|
| *
Advances include Rs. 183.392 million (1999: Rs. 116.702 million) which have
been placed on non- |
|
| performing
status, according to the Prudential Regulations of the State Bank of
Pakistan. |
|
|
| 7.1
Particulars of Advances |
|
| In
local currency |
|
5,845,910 |
4,934,764 |
|
| In
foreign currencies |
|
34,119 |
31,759 |
|
|
|
------------------ |
------------------ |
|
|
|
5,880,029 |
4,966,523 |
|
|
|
========== |
========== |
|
|
| Debts
considered good in respect of which the bank is fully |
|
| secured. |
|
5,664,258 |
4,916,523 |
|
| Debts
considered good for which the bank holds no other |
|
| security
than the debtors' personal security. |
|
9,086 |
9,662 |
|
| Debts
considered good secured by the personal liabilities of |
|
| one
or more parties in addition to the personal security of the |
|
|
|
------------------ |
------------------ |
|
|
|
5,880,029 |
4,966,523 |
|
|
========== |
========== |
|
|
|
Balance |
Maximum total |
|
|
Outstanding |
amount of |
|
|
at December |
advances |
|
|
31, 2000 |
including |
|
|
|
temporary |
|
|
|
advances granted |
|
|
|
during the year |
|
|
|
Rupees in
'000 |
|
|
|
|
|
| Debts
due by the executives of the bank or any |
|
| of
them either severally or jointly with any other |
|
| persons |
|
63,739 |
72,827 |
|
|
|
2000 |
1999 |
|
|
Rupees in
'000 |
|
|
| 7.2
Particulars of provision against non-performing advances |
|
| Specific: |
|
| Opening
balance |
|
116,702 |
122,287 |
|
| Charge
for the year |
|
17,290 |
331 |
|
| Amounts
written off - note 7.3 |
|
-- |
(5,916) |
|
|
|
|
------------------ |
------------------ |
|
| Closing balance |
|
|
133,992 |
116,702 |
|
|
|
|
========== |
========== |
|
|
|
|
| Provision
against: |
|
| Advances
to banks |
|
|
-- |
-- |
|
| Advances
to others |
|
|
133,992 |
116,702 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
