| Bolan Bank Limited |
|
|
|
|
|
|
|
|
| Annual
Report 2000 |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Bolan Bank Limited as at 31
December 2000 and the related profit and |
|
| loss
account and cash flow statement together with the notes forming part thereof,
for the year then ended, in which are |
|
| incorporated
the un-audited certified returns from the branches except for fourteen
branches which have been audited by |
|
| us
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 Bank as
required by the Companies Ordinance, |
|
| 1984
and the returns referred to above received from the branches have been found
adequate for the purposes of |
|
| our audit; |
|
|
| (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 |
|
| expect
for the change referred to in note 3.6 with which we concur; |
|
|
| ii)
the expenditure incurred during the year was for the purpose of the Bank's
business; and |
|
|
| iii)
the business conducted, investments made and the expenditure incurred during
the year were in accordance |
|
| with
the objects of the Bank and transactions of the Bank which have come to our
notice have been within |
|
| the
powers of the Bank; |
|
|
| (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 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 Bank's affairs as
at 31 December 2000 and its true
balance |
|
| of
the profit and its cash flows 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 Bank |
|
| and
deposited in the Central Zakat Fund established under Section 7 of that
Ordinance. |
|
|
| (e)
Without qualifying our opinion we draw attention to the following: |
|
|
| In
accordance with BPRD circular number 09 dated 27 April 2000 we reviewed the
classified advances stating the forced |
|
| sale
values of mortgaged/pledged assets held as security against classified
portfolio of advances of Bolan Bank Limited as |
|
| at
31 December 2000. The forced sale values amounting to Rs. 660.447 million
were deducted from the principal outstanding |
|
| and
such forced sale values were determined by independent professional valuers.
The above forced sale valuations |
|
| were
carried out between 1 January 1999 and 30 September 2000. |
|
|
| The
BPRD circular number 09 as described above required that valuations shall be
carried out by an independent professional |
|
| valuer
who should be listed on the panel of valuers maintained by Pakistan Banks
Association (PBA) for this purpose. |
|
| The
PBA in accordance with the above requirement communicated the list of panel
of valuers on 14 October 2000, |
|
| which
was subsequently amended on 30 November 2000 and 17 January 2001. |
|
|
| The
forced sale valuations amounting to Rs. 523.88 million, and deducted from the
outstanding classified principal amount |
|
| for
determination of provisioning requirements, were carried out by professional
valuers who were not included in the |
|
| panel
of valuers maintained by PBA. The bank has written to State Bank of Pakistan
seeking one time exemption from |
|
| requirement
to have valuations done by valuers on the panel of valuers maintained by PBA
as all of the valuations were |
|
| carried
out before the communication by PBA of its panel of valuers on 14 October
2000. |
|
|
|
Taseer Hadi Khalid & Co. |
|
Taher Moochhala & Co. |
|
|
Chartered Accountants |
|
Chartered Accountants |
|
|
| Karachi:
08 March, 2001 |
|
|
|
| BALANCE
SHEET AS AT 31 DECEMBER 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
|
(Rs. in '000) |
(Rs. in '000) |
|
|
| ASSETS |
|
| Cash |
|
4 |
646,554 |
788,742 |
|
| Balances
with other Banks |
|
5 |
411,974 |
226,992 |
|
| Money
at call and short notice |
|
6 |
759,653 |
1,250,000 |
|
| Investments |
|
7 |
1,037,526 |
613,097 |
|
| Advances
net of provision |
|
8 |
2,813,386 |
1,863,239 |
|
| Operating
fixed assets |
|
9 |
623,015 |
550,314 |
|
| Capital
work in progress |
|
10 |
76,313 |
131,757 |
|
| Other assets |
|
11 |
326,416 |
472,743 |
|
|
----------------- |
----------------- |
|
|
6,694,837 |
5,896,884 |
|
|
| Liabilities |
|
| Deposits
and other accounts |
|
12 |
5,243,174 |
4,853,103 |
|
| Borrowings
from other banks, agent etc. |
13 |
554,469 |
187,453 |
|
| Bills payable |
|
|
186,533 |
175,955 |
|
| Other liabilities |
|
14 |
117,949 |
89,765 |
|
|
|
----------------- |
----------------- |
|
|
|
6,102,125 |
5,306,276 |
|
|
|
----------------- |
----------------- |
|
| Net assets |
|
|
592,712 |
590,608 |
|
|
|
========== |
========== |
|
|
|
|
| Represented by |
|
|
|
| Share capital |
|
15 |
507,938 |
507,938 |
|
| Reserve
funds and other reserves |
|
16 |
82,019 |
81,705 |
|
| Un-appropriated
profit |
|
2,223 |
965 |
|
|
----------------- |
----------------- |
|
| Shareholders
equity |
|
592,180 |
590,608 |
|
| Surplus/(Deficit)
on revaluation of securities |
|
532 |
-- |
|
|
----------------- |
----------------- |
|
|
592,712 |
590,608 |
|
|
========== |
========== |
|
|
| Memorandum
Items |
|
| Bills
for collection |
|
19 |
471,329 |
303,376 |
|
| Acceptances,
endorsement and others obligations |
|
1,010,213 |
593,551 |
|
| Contingent
liabilities and commitments |
20 |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
Syed Ijaz Hussain Shah |
|
Javed Yunus |
|
Pervez Yunus |
|
Mirza Ghulam Mujtaba |
|
|
President & Chief Executive |
|
Chairman |
|
Director |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
|
(Rs. in '000) |
(Rs. in '000) |
|
|
| Mark-up/interest
and/or return earned |
|
472,093 |
467,859 |
|
| Cost/return
on deposits, borrowings etc. |
|
(293,401) |
(254,965) |
|
|
----------------- |
----------------- |
|
|
178,692 |
212,894 |
|
|
| Fee,
commissions and brokerage |
|
34,704 |
31,497 |
|
| Other
operating income |
|
21 |
43,929 |
17,614 |
|
|
----------------- |
----------------- |
|
|
78,633 |
49,111 |
|
|
----------------- |
----------------- |
|
|
257,325 |
262,005 |
|
|
| Operating
expenses |
|
|
|
| Administrative
expenses |
|
22 |
322,086 |
288,776 |
|
| Reversal
of provisions against non-performing advances |
8.2 |
(5,463) |
(10,300) |
|
|
|
----------------- |
----------------- |
|
|
|
316,623 |
278,476 |
|
|
|
----------------- |
----------------- |
|
|
(59,298) |
(16,471) |
|
| Other income |
|
23 |
72,077 |
23,489 |
|
|
----------------- |
----------------- |
|
| Profit
before taxation |
|
12,779 |
7,018 |
|
|
| Taxation |
|
| - current |
|
24 |
(4,000) |
(9,000) |
|
| - prior |
|
(22,739) |
-- |
|
| -
deferred |
|
15,532 |
2,500 |
|
|
----------------- |
----------------- |
|
|
(11,207) |
(6,500) |
|
|
----------------- |
----------------- |
|
| Profit
after taxation |
|
1,572 |
518 |
|
| Unappropriated
profit brought forward |
|
965 |
552 |
|
|
----------------- |
----------------- |
|
| Unappropriated
profit |
|
2,537 |
1,070 |
|
|
| Appropriations |
|
| - Revenue reserve |
|
-- |
-- |
|
| - Statutory reserve |
|
(314) |
(105) |
|
|
----------------- |
----------------- |
|
|
(314) |
(105) |
|
|
----------------- |
----------------- |
|
| Unappropriated
profit carried forward |
|
2,223 |
965 |
|
|
========== |
========== |
|
|
|
(Rupees) |
|
|
| Earnings
per share |
|
27 |
0.03 |
0.01 |
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
Syed Ijaz Hussain Shah |
|
Javed Yunus |
|
Pervez Yunus |
|
Mirza Ghulam Mujtaba |
|
|
President & Chief Executive |
|
Chairman |
|
Director |
|
Director |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2000 |
|
|
|
2000 |
1999 |
|
|
(Rs. in '000) |
(Rs. in '000) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
before taxation |
|
12,779 |
7,018 |
|
| Add:
Loss on sale of fixed assets |
|
2,196 |
(20,169) |
|
|
----------------- |
----------------- |
|
|
14,975 |
(13,151) |
|
|
| Adjustment
for non-cash charges |
|
| Depreciation |
|
44,827 |
46,432 |
|
| Provision
for gratuity |
|
3,430 |
5,335 |
|
| Provision
for lease encashment |
|
2,545 |
-- |
|
| Provision
for non-performing advances-net |
|
(5,463) |
(10,300) |
|
|
----------------- |
----------------- |
|
|
45,339 |
41,467 |
|
|
----------------- |
----------------- |
|
|
60,314 |
28,316 |
|
|
| (Increase)/Decrease
in Operating Assets |
|
|
|
| Advances |
|
(944,684) |
180,565 |
|
| Other
assets (excluding advance tax) |
|
121,229 |
(8,334) |
|
|
----------------- |
----------------- |
|
|
(823,455) |
172,231 |
|
|
| Increase/(Decrease)
in Operating Liabilities |
|
| Deposits
& other accounts |
|
390,071 |
55,374 |
|
| Bills payable |
|
10,578 |
72,218 |
|
| Other
liabilities (excluding provision for taxation) |
|
24,255 |
12,775 |
|
|
----------------- |
----------------- |
|
|
424,904 |
140,367 |
|
|
----------------- |
----------------- |
|
| Cash
flow from operating activities before income |
|
| tax
and gratuity payment |
|
(338,237) |
340,914 |
|
| Income
tax received (net) |
|
13,891 |
(54,422) |
|
| Gratuity paid |
|
(2,044) |
-- |
|
|
----------------- |
----------------- |
|
| Net
cash (used in)/flow from operating activities |
|
(326,390) |
286,492 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Purchase/sale
of investments (Net) |
|
(423,897) |
1,017,428 |
|
| Capital
expenditure incurred |
|
(64,693) |
(168,675) |
|
| Proceeds
from sale of fixed assets |
|
412 |
42,138 |
|
|
----------------- |
----------------- |
|
| Net
cash (used in)/inflow from investing activities |
|
(488,178) |
890,891 |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Borrowings
from other banking companies and agents etc |
367,015 |
71,264 |
|
|
----------------- |
----------------- |
|
| Net
cash (used in)/flow from financing activities |
|
367,015 |
71,264 |
|
|
----------------- |
----------------- |
|
| Net
cash (decreased)/increase in cash and equivalents |
(447,553) |
1,248,647 |
|
| Cash
and cash equivalents at the beginning of the year |
2,265,734 |
1,017,087 |
|
|
----------------- |
----------------- |
|
| Cash
and cash equivalents at the end of the year |
|
1,818,181 |
2,265,734 |
|
|
========== |
========== |
|
|
|
Syed Ijaz Hussain Shah |
|
Javed Yunus |
|
Pervez Yunus |
|
Mirza Ghulam Mujtaba |
|
|
President & Chief Executive |
|
Chairman |
|
Director |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2000 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| Bolan
Bank Limited was incorporated in Pakistan on 07 October 1991 as a public
limited company under the |
|
| Companies
Ordinance, 1984. its shares are quoted on Karachi and Lahore stock exchange
of Pakistan. The |
|
| bank
is engaged in banking services as described in the Banking Companies
Ordinance, 1962 and operates fifty |
|
| branches
in Pakistan. |
|
|
| 2.
BASIS OF PRESENTATION |
|
| In
accordance with the directives of the Federal Government regarding the
shifting 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 include of purchase of goods by the banks from its
customers and immediate |
|
| resale
to them at appropriate mark-up in price on deferred payment basis. The
purchases and sales arising under |
|
| these
arrangements are not reflected in these financial statements as such but are
restricted to the amount of |
|
| facility
actually utilised and the appropriate portion of mark-up thereon. |
|
|
| 3.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 3.1
Statement of Compliance |
|
| These
accounts have been prepared in accordance with the accounting standards
issued by the |
|
| International
Accounting Standard Committee ("IASC") and interpretations issued
by Standing |
|
| Interpretations
Committee of the IASC, as applicable in Pakistan and the requirements of the
Banking |
|
| Companies
Ordinance, 1962 and the Companies Ordinance, 1984. |
|
|
| 3.2
Historical cost convention |
|
| These
financial statements have been prepared under the historical cost convention,
as modified for the |
|
| revaluation
of investments in market treasury bills and in conformity with the accepted
accounting practices |
|
| of
banking institutions in Pakistan. |
|
|
| 3.3
Cash and cash equivalents |
|
| Cash
and cash equivalents comprises cash, balances with other banks and money at
call and short notice. |
|
|
| 3.4
Staff retirement benefits |
|
|
| Defined
benefit plan |
|
| The
bank has an approved funded gratuity scheme for all its permanent employees.
The fund is approved |
|
| by
the Deputy Commissioner of Income Tax, however the fund is not operational
yet. |
|
|
| 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 |
|
| salaries
of the employees. In addition to this the employees are given an option to
contribute at 15 percent. |
|
|
| Leave
encashment |
|
| The
bank has a policy of encashment of leave irrespective of period of service in
cases of retirement, death |
|
| or
disability during the service and resignation from service. The amount of
leave encashment admissible |
|
| is
actual leave balance upto a maximum of 90 days. The benefit is based on basic
salary, house rent, cost |
|
| of
living allowance and medical allowance. |
|
|
| 3.5 Taxation |
|
|
| Current |
|
| Current
tax is the expected tax payable on the taxable income for the year using tax
rates enacted at the |
|
| balance
sheet date and any adjustment to tax payable in respect of previous years.
The charge for taxation |
|
| is
based on taxable income at the current rate of taxation after taking into
consideration available tax credits, |
|
| rebates
and tax losses, or 0.5 percent of turnover whichever is higher. |
|
|
| Deferred |
|
| deferred
tax is provided using the balance sheet liability method providing for
temporary differences |
|
| between
the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used |
|
| for
taxation purposes. The amount of deferred tax provided is based on the
expected manner of realisation |
|
| or
settlement of the carrying amount of assets and liabilities using tax rates
enacted at the balance sheet date. |
|
|
| A
deferred tax asset is recognised only to the extent that it is probable that
future taxable profit will be available |
|
| and
the credits can be utilised. Deferred tax assets are reduced to the extent
that it is no longer probable that |
|
| the
related tax benefit will be realized. |
|
|
| 3.6 Investments |
|
| All
securities held by the Bank are classified as investment securities.
Securities held with the intent and |
|
| ability
to hold are stated at amortised cost less provision for permanent diminution
in value, if any, with the |
|
| exception
of securities where ready quotes are available on Reuters Page (PKRV) or
Stock Exchanges. |
|
|
| The
difference between face value and purchase price is amortized over the
remaining life of security. |
|
|
| From
this year, in accordance with requirements of BSD Circular No. 20 dated 04
August 2000, securities |
|
| for
which ready quotes are available on Reuters Page (PKRV) or Stock Exchanges
are valued at market |
|
| value
except for investments acquired under reverse repurchase transactions,
Pakistan Investment Bonds |
|
| and
Other Investments and the resulting surplus/deficit is kept in a separate
account and is shown below |
|
| the
share holders' equity in the balance sheet. |
|
|
| 3.7 Advances |
|
| Advances
are stated net of specific and general provisions. Specific provision is made
for non-performing |
|
| advances
as considered necessary to comply with the Prudential Regulations issued by
the State Bank of |
|
| Pakistan.
Advances are written-off when there is no realistic prospect of recovery. |
|
|
| 3.8
Capital work-in progress, operating fixed assets and depreciation |
|
| Capital
work in progress are stated at cost. |
|
|
|
|
|
| The
cost of promises, furniture, fixtures and other fixed assets are depreciated
over its estimated useful life |
|
| on
reducing balance method. Further, the cost of vehicles is depreciated over
ifs useful life on straight line |
|
| basis. |
|
|
|
|
|
|
| A
full years' depreciation is provided on assets acquired upto 30 September
except for premises where |
|
| depreciation
is charged for the proportionate period in the year of acquisition/disposal,
whereas, no depre- |
|
| ciation
is provided on assets disposed off before 30 September. Gains or losses on
disposal of fixed assets |
|
| are
included in income currently. |
|
|
|
|
|
| The
rates of depreciation are as follows: |
|
|
| Premises |
|
5% per annum |
|
|
| Furniture
and fixtures and |
10% to |
|
|
| other
fixed assets |
33.33% per annum |
|
| Motor vehicles |
|
20% per annum. |
|
|
|
|
|
| 3.9
Foreign currencies |
|
|
| Foreign
currency transactions are translated into rupee at exchange rates prevailing
on the date of transaction. |
|
| Assets
and liabilities in foreign currencies are translated into rupees at the
exchange rates prevailing at the |
|
| balance
sheet date, except foreign currency deposits for which forward cover is taken
from State Bank of |
|
| Pakistan.
Foreign currency deposits for which forward cover is taken from State Bank of
Pakistan are |
|
| translated
at their respective cover rates. |
|
|
| Outstanding
forward foreign exchange contracts and foreign bills purchases are valued at
the rates applicable |
|
| to
their respective maturities. Exchange gains and losses are included in income
currently. |
|
|
| 3.10
Revenue recognition |
|
| Mark-up
/return on investments and advances, excluding bills purchased, is recognized
on accrual basis |
|
| except
income which warrant carry forward in compliance with the Prudential
Regulations issued by the |
|
| State
Bank of Pakistan. |
|
|
| 3.11
Provision for contingencies |
|
|
|
| Provision
for contingencies is recognized when the bank has a present obligation (legal
or constructive) as |
|
| a
result of a past event, it is probable that an outflow of resources embodying
economic benefits will be |
|
| required
to settle the obligation and a reliable estimate can be made of the amount of
the obligation. |
|
|
| 3.12 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 recognized amount and the
bank intends |
|
| either
to settle on a net basis, or to realize the assets and to settle the
liabilities simultaneously. |
|
|
|
|
|
2000 |
1999 |
|
|
(Rupees in
'000) |
|
| 4. CASH |
|
|
|
| In hand |
|
|
|
| - Local currency |
|
4.1 |
347,009 |
407,693 |
|
| -
Foreign currencies |
|
|
67,034 |
16,193 |
|
| With
State Bank of Pakistan in: |
|
|
72,159 |
248,989 |
|
| - Local currency current account |
|
|
|
| -
Foreign currency deposit accounts |
4.2 |
58,100 |
41,365 |
|
| With
National Bank of Pakistan in local currency |
|
| current
accounts |
|
|
102,252 |
74,502 |
|
|
|
----------------- |
----------------- |
|
|
|
646,554 |
788,742 |
|
|
========== |
========== |
|
|
| 4.1
This includes National Prize Bonds amounting to Rs. 4.993 million (1999: Rs.
47.598 million). |
|
|
| 4.2
Represents placement of deposit held under Foreign Exchange Circular No. 13
with State Bank of |
|
| Pakistan
yielding markup at the rate of 4.25 percent per annum payable quarterly. |
|
|
| 5.
BALANCES WITH OTHER BANKS |
|
| -
On current account |
|
|
119,533 |
58,498 |
|
| - On savings deposit account |
|
5.1 |
26,305 |
-- |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
145,838 |
58,498 |
|
| Outside
Pakistan |
|
| -
On current account |
|
5.2 |
266,136 |
168,494 |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
411,974 |
226,992 |
|
|
|
|
========== |
========== |
|
|
| 5.1
Represents deposits held with industrial Development Bank of Pakistan (IDBP)
yielding mark-up at the |
|
| rate
of 10 percent per annum payable quarterly. |
|
|
| 5.2
Represents balances held outside Pakistan in foreign currency accounts. |
|
|
|
|
| 6.
MONEY AT CALL AND SHORT NOTICE |
|
| Represents
term lending with various banks with a maturity ranging from three days to
six months and carries |
|
| mark-up
ranging from 9.60% to 50% per annum. |
|
|
|
| 7.
INVESTMENTS |
|
| Investment
Securities |
|
| Federal
Investment Bonds (FIB's) |
|
|
705,949 |
526,688 |
|
| Pakistan
Investment Bonds |
|
|
100,000 |
-- |
|
| Market
Treasury Bills |
|
|
81,577 |
86,409 |
|
| Term
Finance Certificates |
|
|
140,000 |
-- |
|
| Contribution
towards equity of Micro Finance Bank |
|
10,000 |
-- |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
1,037,526 |
613,097 |
|
|
|
|
========== |
========== |
|
| Market
value of Treasury Bills |
|
|
81,577 |
86,409 |
|
|
|
|
========== |
========== |
|
| Book
value of other securities |
|
|
955,949 |
526,688 |
|
|
|
|
========== |
========== |
|
|
| 7.1
Investments include securities having book value of Rs. 25 million (1999: 25
million) and Rs. 15 million |
|
| (1999:
Rs. 15 million) pledged with State Bank of Pakistan and National Bank of
Pakistan respectively |
|
| as
security to facilitate T.T. discounting facility to Pakistan branches of the
bank. |
|
|
| 7.2
Investments include securities having book value of Rs 15 million (1999: 15
million) pledged with State |
|
| Bank
of Pakistan for same day rupee credit facility against surrender of foreign
currency deposits. |
|
|
| 7.3
At 31 December 2000, securities held under resale commitments (reverse repo)
with book value of Rs. |
