| Emirates Bank International |
|
|
|
|
|
|
|
|
|
|
|
| PAKISTAN
BRANCHES |
|
| [INCORPORATED
IN THE UNITED ARAB EMIRATES-LIABILITY OF THE MEMBERS IS LIMITED] |
|
| ACCOUNTS
FOR THE YEAR ENDED 31 DECEMBER 2000 |
|
|
|
| AUDITORS'
REPORT TO THE DIRECTORS |
|
|
| We
have audited the annexed balance sheet of the Pakistan Branches of Emirates
Bank International PJSC |
|
| (Incorporated
in the United Arab Emirates - liability of the members is 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 ended, in which are incorporated the unaudited certified returns from
the branches except for five |
|
| 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; |
|
|
| 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 changes indicated in note 3.5
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 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 except for the matter referred
in note |
|
| 18.1
give a true and fair view of the state of the bank's affairs as at 31
December 2000 and their true |
|
| balance
of the profit before incorporating head office administration expenses and
their 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 branches and deposited in the Central Zakat Fund established under
Section 7 of that Ordinance. |
|
|
|
Taseer Hadi Khalid & Co. |
|
| Karachi:
27 March, 2001 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT 31 DECEMBER 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
|
(Rupees in
'000) |
|
|
| ASSETS |
|
| Cash |
|
4 |
2,050,880 |
2,378,901 |
|
| Balances
with other banks |
|
5 |
1,474,355 |
1,258,239 |
|
| Money
at call and short notice |
|
|
220,000 |
725,000 |
|
| Investments |
|
6 |
1,896,053 |
1,567,058 |
|
| Advances
- net of provision |
|
7 |
8,065,992 |
7,271,936 |
|
| Operating
fixed assets |
|
8 |
181,655 |
222,912 |
|
| Capital
work in progress - civil works |
|
11,633 |
8,821 |
|
| Other assets |
|
9 |
1,570,338 |
1,531,131 |
|
|
|
------------------ |
------------------ |
|
|
15,470,906 |
14,963,998 |
|
|
| LIABILITIES |
|
|
|
| Deposits
and other accounts |
|
10 |
11,489,376 |
11,208,933 |
|
| Borrowings
from other banks, agents etc. |
11 |
1,853,659 |
1,676,616 |
|
| Bills payable |
|
|
131,200 |
206,824 |
|
| Other liabilities |
|
12 |
1,504,344 |
1,371,190 |
|
| Liability
against assets subject to finance lease |
13 |
66,400 |
99,350 |
|
|
|
------------------ |
------------------ |
|
|
15,044,979 |
14,562,913 |
|
|
------------------ |
------------------ |
|
| NET ASSETS |
|
425,927 |
401,085 |
|
|
========== |
========== |
|
|
|
|
| REPRESENTED
BY: |
|
|
|
| Head
Office Capital account |
|
14 |
-- |
-- |
|
| Unremitted
profit |
|
|
438,410 |
401,085 |
|
|
|
------------------ |
------------------ |
|
|
|
438,410 |
401,085 |
|
| Deficit
on revaluation of securities |
|
15 |
(12,483) |
-- |
|
|
|
------------------ |
------------------ |
|
|
425,927 |
401,085 |
|
|
========== |
========== |
|
|
|
|
| MEMORANDUM
ITEMS; |
|
|
|
| Bills
for collection |
|
16 |
1,688,371 |
1,511,834 |
|
|
|
========== |
========== |
|
| Acceptances,
endorsements and other obligations |
|
2,466,167 |
2,713,988 |
|
|
|
========== |
========== |
|
| Contingent
liabilities and commitments |
17 |
|
|
|
|
|
| Annexed
notes form an integral part of these accounts. |
|
|
|
Timothy P. Gibbs |
|
Syed Majid Ali |
|
|
General Manager - Pakistan |
|
Head of Finance - Pakistan |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
|
(Rupees in
'000) |
|
|
| Mark-up/interest
and discount and/or return earned |
|
1,467,155 |
1,735,959 |
|
| Less:
Cost/return on discount, borrowings etc. |
|
1,045,595 |
1,341,332 |
|
|
------------------ |
------------------ |
|
|
421,560 |
394,627 |
|
|
| Fees,
commissions and brokerage |
|
88,946 |
94,102 |
|
| Income
from dealing in foreign currencies |
|
116,569 |
122,266 |
|
| Recoveries
of non-performing advances (net of provisions) |
7.3 |
73,777 |
20,693 |
|
| Gain
on sale of investment securities |
|
-- |
4,207 |
|
|
------------------ |
------------------ |
|
|
279,292 |
241,268 |
|
|
------------------ |
------------------ |
|
|
700,852 |
635,895 |
|
|
|
|
| Operating
expenses |
|
| Administrative
expenses |
|
18 |
464,098 |
437,519 |
|
| Amortisation
of premium/discount on |
|
|
| purchase
of investments - net |
|
|
6,184 |
6,165 |
|
|
------------------ |
------------------ |
|
|
470,282 |
443,684 |
|
|
------------------ |
------------------ |
|
|
|
230,570 |
192,211 |
|
| Other income |
|
19 |
40,045 |
20,989 |
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
270,615 |
213,200 |
|
|
|
|
| Taxation
- current year |
|
20 |
64,000 |
60,000 |
|
| - deferred |
|
|
(23,000) |
(152,000) |
|
|
------------------ |
------------------ |
|
|
41,000 |
(92,000) |
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
229,615 |
305,200 |
|
| Unremitted
profit brought forward |
|
401,085 |
791,400 |
|
|
------------------ |
------------------ |
|
| Remitted
to head office |
|
630,700 |
1,096,600 |
|
| Unremitted
profit carried forward |
|
(192,290) |
(695,515) |
|
|
------------------ |
------------------ |
|
|
438,410 |
401,085 |
|
|
========== |
========== |
|
|
| Annexed
notes form an integral part of these accounts. |
|
|
|
Timothy P. Gibbs |
|
Syed Majid Ali |
|
|
General Manager - Pakistan |
|
Head of Finance - Pakistan |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2000 |
|
|
|
2000 |
1999 |
|
|
(Rupees in
'000) |
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Profit
before taxation |
|
270,615 |
213,200 |
|
| Adjustment
for non-cash charges: |
|
| Depreciation |
|
71,377 |
75,726 |
|
| Amortisation
of premium/discount on purchase of investments - net |
6,184 |
6,165 |
|
| Reversal
of provisions against non-performing advances |
|
| (net
of provisions and recoveries) |
|
(51,137) |
(39,584) |
|
| Gain
on disposal of fixed assets (net) |
|
(2,203) |
(1,766) |
|
| Gain
on sale of investments |
|
-- |
(4,207) |
|
| Amortisation
of deferred lease income |
|
(2,233) |
(1,588) |
|
| Provision
against contingencies written back |
|
(20,190) |
-- |
|
|
------------------ |
------------------ |
|
|
1,798 |
34,746 |
|
|
------------------ |
------------------ |
|
|
272,413 |
247,946 |
|
|
| (Increase)/decrease
in operating assets |
|
| Advances |
|
(742,919) |
(345,145) |
|
| Other
assets (excluding advance tax) |
|
(45,620) |
71,048 |
|
|
------------------ |
------------------ |
|
|
(788,539) |
(274,097) |
|
|
| Decreased/(increase)
in operating liabilities |
|
| Deposits
and other accounts |
|
280,443 |
(1,800,208) |
|
| Bills payable |
|
(75,624) |
(49,161) |
|
| Other
liabilities (excluding head office capital account) |
34,097 |
(44,133) |
|
| Income tax paid |
|
(34,587) |
(261,345) |
|
|
------------------ |
------------------ |
|
|
204,329 |
(2,154,847) |
|
|
------------------ |
------------------ |
|
| Net
cash flows from operating activities |
|
(311,797) |
(2,180,998) |
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
| Proceeds
from sale of investment securities - net |
|
(347,662) |
2,946,673 |
|
| Fixed
capital expenditure |
|
(27,943) |
(60,472) |
|
| Proceeds
from sale of fixed assets |
|
3,914 |
50,456 |
|
|
------------------ |
------------------ |
|
| Net
cash flows from investing activities |
|
(371,691) |
2,936,657 |
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
| Borrowings
from other banks, agents etc. |
|
177,043 |
796,656 |
|
| Payments
under lease obligations |
|
(39,650) |
(22,481) |
|
| Increase
in capital on account of revaluation |
|
121,480 |
117,997 |
|
| Remittance
to head office |
|
(192,290) |
(695,515) |
|
|
------------------ |
------------------ |
|
| Net
cash flows from financing activities |
|
66,583 |
196,657 |
|
|
------------------ |
------------------ |
|
| (Decrease)/Increase
in cash and cash equivalents during the year |
(616,905) |
952,316 |
|
| Cash
and cash equivalents at 1 January |
|
4,362,140 |
3,409,824 |
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at 31 December |
|
3,745,235 |
4,362,140 |
|
|
========== |
========== |
|
|
| Cash
and cash equivalents |
|
| Cash |
|
2,050,880 |
2,378,901 |
|
| Balances
with other banks |
|
1,474,355 |
1,258,239 |
|
| Money
at call and short notice |
|
220,000 |
725,000 |
|
|
------------------ |
------------------ |
|
|
3,745,235 |
4,362,140 |
|
|
========== |
========== |
|
|
|
Timothy P. Gibbs |
|
Syed Majid Ali |
|
|
General Manager - Pakistan |
|
Head of Finance - Pakistan |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2000 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| Emirates
Bank International PJSC, a foreign banking company incorporated in Dubai
(UAE), commenced |
|
| its
operations in Pakistan in April 1978. The bank operates ten branches in
Pakistan viz, two branches in |
|
| Karachi,
two branches in Lahore, one branch each in Multan, Islamabad, Peshawar,
Faisalabad, |
|
| Rawalpindi
and Sialkot. |
|
|
| 2.
BASIC 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 comprises of purchase of goods by the bank
from their customers |
|
| and
resale to them at appropriate mark-up in price on the deferred payment basis.
The purchases and sales |
|
| arising
under these arrangements are not reflected in these accounts as such, but are
restricted to the |
|
| amount
of facility actually utilized and the appropriate portion of mark-up thereon. |
|
|
| 3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 3.1
Accounting convention |
|
| These
financial statements have been prepared under the historical cost convention,
as modified |
|
| for
the revaluation of certain investments in market treasury bills and in
conformity with the accepted |
|
| accounting
practices of the banking institutions in Pakistan. |
|
|
| 3.2
Staff retirement benefits |
|
|
| 3.2.1
Defined benefit plan |
|
| The
bank operates a funded gratuity scheme for all its employees which provides
for benefits |
|
| dependent
on the length of service of employees on terminal date subject to the
completion of minimum |
|
| qualifying
period of service. Obligations under the scheme are discharged annually. |
|
|
| 3.2.2
Defined contribution plan |
|
| The
bank also operates an approved contributory provident fund scheme for all its
employees. |
|
| Contributions
to the fund are made equally by the bank and the employees at the rate of 10%
of |
|
| basic
salary in accordance with the fund rules. |
|
|
| 3.3 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 adjustments to tax payable in respect of previous
years, if any. |
|
|
| Deferred |
|
| Deferred
tax assets and liabilities are recognised for full tax consequences
attributable to all temporary |
|
| differences
between the financial statement carrying amounts of existing assets and
liabilities |
|
| and
their respective tax bases. Deferred tax assets are however, restricted to
the extent that is |
|
| probable
that taxable profits will be available against which the deductible temporary
differences |
|
| can
be utilised. Deferred tax assets and liabilities are measured using enacted
tax rates that are |
|
| expected
to apply to the period when the asset is expected to realise or liability is
expected to settle. |
|
|
| 3.4 Advances |
|
| Advances
are stated at cost less any amounts written off and provision for
uncollectible advances. |
|
| Advances
are written off when there is no realistic prospect of recovery. Specific
provisions are |
|
| made
for non-performing loans to reduce book value of such advances to their
expected realisable |
|
| value. |
|
|
| 3.5 Investments |
|
| All
securities of the bank are classified as investment securities. Securities
held with the intent and |
|
| ability
to hold till maturity are stated at amortised cost less provision for
diminution other than temporary, |
|
| in
the value of the investment, if any, with the exception of treasury bills
whose ready quotes are |
|
| available
on Reuters Page (PKRV). The difference between the face value and the
purchase price |
|
| is
amortised over the remaining life of the security. Upto the previous year
treasury bills (investment |
|
| securities)
were valued at cost. From this year, in accordance with the requirements of
BSD circular No. 20 |
|
| dated
4 August 2000, treasury bills for which ready quotes are available on Reuters
Page (PKRV) are |
|
| valued
at market value and the resulting surplus/deficit is kept in a separate
account and is shown |
|
| below
the share holder's equity in the balance sheet. |
|
|
| Where
the bank enters into transactions of purchases (repo) and resale (reverse
repo) of government |
|
| securities,
these are recorded/deleted at contracted rates for specified period of time. |
|
|
| 3.6
Tangible fixed assets and depreciation |
|
|
| Owned |
|
| The
cost of premises, furniture, fixtures and vehicles is depreciated over their
estimated useful life |
|
| under
straight line method commencing from the month of purchase. For rates of
depreciation |
|
| please
refer note 8. |
|
|
| Normal
repairs and maintenance are charged to income as and when incurred. |
|
|
| Gains
and losses on disposal of fixed assets are taken to income currently. |
|
|
| Leased |
|
| The
bank accounts for the operating assets obtained under finance lease by
recording the assets |
|
| and
related liability. The amounts are determined on the basis of discounted
value of minimum |
|
| lease
payments. Financial charges are allocated to accounting periods in a manner
so as to provide |
|
| a
constant periodic rate of charge on the outstanding liability. |
|
|
| 3.7
Revenue recognition |
|
| Mark-up/return
on advances and investments is recognised on accrual basis, except income
which |
|
| warrants
carry forward in compliance with Prudential Regulations of the State Bank of
Pakistan. |
|
| Commission
on short term letters of credit and guarantees is recognised on a receipt
basis. |
|
|
| 3.8
Foreign currencies |
|
| Foreign
currency transactions are translated in rupees at exchange rates prevailing
on the date of |
|
| transaction.
Assets and liabilities in foreign currency are translated into rupees at the
rates of |
|
| exchange
prevailing at the balance sheet date. Outstanding forward foreign exchange
contracts |
|
| and
foreign bills purchased are valued at market rates applicable to their
respective maturities. |
|
|
| Exchange
gains and losses arising on translation are taken to income currently. |
|
|
|
2000 |
1999 |
|
|
(Rupees in
'000) |
|
|
| 4. CASH |
|
| In Hand: |
|
| -
Local current |
|
4.1 |
225,321 |
238,922 |
|
| - Foreign currencies |
|
|
50,747 |
53,263 |
|
| With
State Bank of Pakistan in: |
|
|
|
| - Deposit account |
|
4.2 |
1,477,565 |
1,152,293 |
|
| - Current account |
|
|
297,247 |
934,423 |
|
|
------------------ |
------------------ |
|
|
2,050,880 |
2,378,901 |
|
|
========== |
========== |
|
|
| 4.1
This includes National Prize Bonds of Rs. 0.274 million (1999: Rs. 6.26
million) |
|
|
| 4.2
Deposit account |
|
| Special
swap dollar deposit |
|
55 |
115,000 |
|
| Placements
with State Bank of Pakistan |
|
318,737 |
-- |
|
| Deposit
on account of capital |
|
1,158,773 |
1,037,293 |
|
|
------------------ |
------------------ |
|
|
1,477,565 |
1,152,293 |
|
|
========== |
========== |
|
|
| 5.
BALANCES WITH OTHER BANKS |
|
| On
deposit account: |
|
| - In
Pakistan |
|
25,120 |
75,911 |
|
| - Outside Pakistan |
|
1,204,021 |
1,153,668 |
|
|
------------------ |
------------------ |
|
|
1,229,141 |
1,229,579 |
|
|
| On
current account: |
|
| - Outside Pakistan |
|
245,214 |
28,660 |
|
|
------------------ |
------------------ |
|
|
1,474,355 |
1,258,239 |
|
|
========== |
========== |
|
|
| 6.
INVESTMENTS - at cost less provision |
|
| Investment
securities |
|
| Federal
and Provincial Government Securities: |
|
| - Federal Investment Bonds |
|
623,705 |
258,356 |
|
| -
Treasury Bills |
|
904,405 |
924,575 |
|
| - Federal and Provincial
Government Loans |
|
450,910 |
450,910 |
|
|
------------------ |
------------------ |
|
|
6.1 |
1,979,020 |
1,633,841 |
|
| Term
finance certificates |
|
-- |
10,000 |
|
|
------------------ |
------------------ |
|
|
1,979,020 |
1,643,841 |
|
| Less:
Amortisation of premium/discount on |
|
| purchase
of investments |
|
(82,967) |
(76,783) |
|
|
------------------ |
------------------ |
|
|
1,896,053 |
1,567,058 |
|
|
========== |
========== |
|
|
| 6.1
This includes investment securities deposited with State Bank of Pakistan as
follows: |
|
|
| -
Federal Government loans of Rs. 3.221 million (1999: Rs. 3.221 million) on
account of capital u/s |
|
| 13(3)
of the Banking Companies Ordinance, 1962. |
|
|
| -
Government loans having a book value of Rs. 35.1 million (1999: Rs. 35.1
million) deposited as security |
|
| for
demand loans and discounting facilities. |
|
|
| -
Federal Investment Bonds of Rs. 15 million (1999: Rs. 100 million) deposited
as security to facilitate |
|
| same
day credit against remittances from up country branches. |
|
|
| 6.2
As at 31 December 2000, securities held under resale commitments with book
value of Rs. 2,490.174 |
|
| million
(1999: Rs. Nil) were included in investments, while securities sold under
repurchase commitments |
|
| with
book value of Rs. 3,672.894 million (1999: Rs. 2,523.779 million) were
excluded from investments. |
|
|
|
| 6.3
At 31 December 2000, market value of quoted securities (treasury bills) was
Rs. 904.405 million (1999: |
|
| Rs.
924.575 million). |
|
|
| 6.4
At 31 December 2000, book value of unquoted investments was Rs. 991.648
million (1999: Rs. |
|
| 642.483 million). |
|
|
| 7. ADVANCES |
|
| Loans,
Cash Credits, Overdrafts etc. |
|
| - In
Pakistan |
|
7,171,112 |
6,327,299 |
|
| - Outside Pakistan |
|
-- |
-- |
|
|
------------------ |
------------------ |
|
|
7,171,112 |
6,327,299 |
|
|
| Bills
Discounted and Purchased |
|
| (excluding
Government Treasury Bills) |
|
| - Payable in Pakistan |
|
742,460 |
818,818 |
|
| - Payable outside Pakistan |
|
270,162 |
294,698 |
|
|
------------------ |
------------------ |
|
|
|
1,012,622 |
1,113,516 |
|
|
|
------------------ |
------------------ |
|
|
|
8,183,734 |
7,440,815 |
|
| Provision
against non-performing advances |
7.2 |
(117,742) |
(168,879) |
|
|
|
------------------ |
------------------ |
|
|
|
8,065,992 |
7,271,936 |
|
|
========== |
========== |
|
|
| Advances
include Rs. 207 million (1999: Rs. 280 million) which have been placed on
non-performing status. |
|
|
| 7.1
Particulars of Advances |
|
| In local currency |
|
7,795,830 |
6,977,238 |
|
| In
foreign currencies |
|
270,162 |
294,698 |
|
|
------------------ |
------------------ |
|
|
8,065,992 |
7,271,936 |
|
|
========== |
========== |
|
| Debts
considered good in respect of which the |
|
|
|
| bank
is fully secured |
|
8,064,089 |
7,270,026 |
|
| Debts
considered good for which the bank holds |
|
|
|
| no
other security than the debtors personal security |
|
1,903 |
1,910 |
|
| Debts
considered good secured by the personal |
|
|
|
| liabilities
of one or more parties in addition to the |
