| Credit Agricole Indosuez |
|
|
|
|
|
|
|
|
| The
Global French Bank |
|
| (formerly:
Banque Indosuez) |
|
| (Incorporated
in France with limited liability) |
|
| Annual
Report 1999 |
|
|
| 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, 1999 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 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 matters referred to
in note |
|
| 3.8
with which we concur and 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 |
|
| 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 matters referred
to in |
|
| notes
6.1 and 18, give a true and fair view of the state of the branches' affairs
as at December 31, |
|
| 1999
and their true balance of the profit and 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. |
|
|
|
| Karachi |
|
|
A.F. FERGUSON & CO. |
|
| Dated:
March 22, 2000 |
|
Chartered Accountants |
|
|
|
|
|
|
|
|
|
|
|
| BALANCE
SHEET AS AT DECEMBER 31, 1999 |
|
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
Notes |
(Rupees in thousand) |
|
|
|
|
|
|
| ASSETS |
|
| Cash |
|
4 |
1,389,942 |
701,338 |
|
| Balances
with other banks |
5 |
15,733 |
2,708 |
|
| Money
at call and short notice |
|
550,000 |
-- |
|
| Investments |
|
6 |
791,527 |
1,029,663 |
|
| Advances
- net of provision |
7 |
3,683,448 |
3,520,679 |
|
| Operating
fixed assets |
8 |
57,201 |
62,374 |
|
| Other assets |
|
9 |
591,110 |
358,248 |
|
|
|
|
----------------------- |
----------------------- |
|
|
|
|
7,078,961 |
5,675,010 |
|
| LIABILITIES |
|
| Deposits
and other accounts |
10 |
3,549,305 |
4,159,831 |
|
| Borrowings
from other banks, agents etc. |
11 |
2,723,332 |
741,264 |
|
| Bills payable |
|
|
28,547 |
39,971 |
|
| Other liabilities |
|
12 |
589,344 |
622,494 |
|
|
|
|
----------------------- |
----------------------- |
|
|
|
|
6,890,528 |
5,563,560 |
|
|
|
|
----------------------- |
----------------------- |
|
| NET ASSETS |
|
|
188,433 |
111,450 |
|
|
|
|
============= |
============= |
|
| REPRESENTED
BY |
|
| Capital |
|
13 |
-- |
-- |
|
| Unremitted profits |
|
|
188,433 |
111,450 |
|
|
|
----------------------- |
----------------------- |
|
|
|
188,433 |
111,450 |
|
|
|
============= |
============= |
|
| MEMORANDUM
ITEMS |
|
| Bills for collection |
|
14 |
303,072 |
289,941 |
|
| endorsements
and other obligations |
|
1,068,723 |
812,321 |
|
| Contingent
liabilities and commitments |
15 |
|
|
| Notes
form an integral part of these accounts. |
|
|
| J.P. Fontaine |
|
J.P. Raynaud |
|
| Chief
Operating Officer |
Senior Country Officer |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE |
|
| YEAR
ENDED DECEMBER 31, 1999 |
|
|
|
|
|
|
1999 |
1998 |
|
|
Notes |
(Rupees in thousand) |
|
|
|
|
|
|
| Mark
up/interest and discount and/or return earned |
844,321 |
762,814 |
|
| Less:
Cost/return on deposits, borrowings etc. |
736,880 |
676,705 |
|
|
----------------------- |
----------------------- |
|
|
107,441 |
86,109 |
|
|
|
|
| Fees,
commissions and brokerage |
|
38,657 |
59,574 |
|
| Other
operating income - income from dealing |
|
| in
foreign currencies |
|
108,809 |
120,535 |
|
|
----------------------- |
----------------------- |
|
|
147,466 |
180,109 |
|
|
----------------------- |
----------------------- |
|
|
254,907 |
266,218 |
|
|
| Operating
expenses: |
|
|
| Administrative
expenses |
16 |
141,925 |
139,107 |
|
| (Net
reversal)/provision against non-performing
advances |
7.2 |
(31,700) |
436 |
|
|
|
|
----------------------- |
----------------------- |
|
|
|
110,225 |
139,543 |
|
|
----------------------- |
----------------------- |
|
|
144,682 |
126,675 |
|
| Profit/(loss)
on disposal of fixed assets |
75 |
(961) |
|
|
----------------------- |
----------------------- |
|
| Profit
before taxation |
|
144,757 |
125,714 |
|
|
|
|
| Taxation: |
|
| - Current |
|
25,400 |
96,000 |
|
| - Deferred |
|
15,177 |
(27,985) |
|
|
----------------------- |
----------------------- |
|
|
40,577 |
68,015 |
|
|
----------------------- |
----------------------- |
|
| Profit
after taxation |
|
104,180 |
57,699 |
|
| Unremitted
profit brought forward |
|
111,450 |
110,123 |
|
|
----------------------- |
----------------------- |
|
| Profit
available for remittance |
|
215,630 |
167,822 |
|
| Remittance
to Head Office |
|
27,197 |
56,372 |
|
|
----------------------- |
----------------------- |
|
|
188,433 |
111,450 |
|
|
============= |
============= |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| J.P. Fontaine |
|
J.P. Raynaud |
|
| Chief
Operating Officer |
|
Senior Country Officer |
|
|
|
|
| CASH
FLOW STATEMENTS FOR THE |
|
| YEAR
ENDED DECEMBER 31, 1999 |
|
|
|
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
(Rupees in thousand) |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Profit
before taxation |
|
144,757 |
125,714 |
|
| Adjustment
for non-cash charges |
|
| Depreciation |
|
11,968 |
9,858 |
|
| (Gain)/loss
on disposal of fixed assets |
|
(75) |
961 |
|
| (Net
reversal)/provision against non-performing advances |
(31,700) |
436 |
|
|
|
----------------------- |
----------------------- |
|
|
|
(19,807) |
11,255 |
|
|
|
----------------------- |
----------------------- |
|
|
|
124,950 |
136,969 |
|
| Decrease/(Increase)
in operating assets |
|
| Government
securities |
|
238,136 |
(83,445) |
|
| Advances |
|
( 131,069) |
(535,708) |
|
| Other
assets (excluding taxation and deferred tax) |
(179,394) |
55,274 |
|
|
|
----------------------- |
----------------------- |
|
|
|
(72,327) |
(563,879) |
|
| (Decrease)/Increase
in operating liabilities |
|
|
|
| Deposits
and other accounts |
|
(610,526)' |
580,390 |
|
| Bills payable |
|
|
(11,424) |
(3,322) |
|
| Other liabilities |
|
|
(33,150) |
148,204 |
|
|
|
----------------------- |
----------------------- |
|
|
|
(655,100) |
725,272 |
|
|
|
----------------------- |
----------------------- |
|
| Cash
flow before tax |
|
(602,477) |
298,362 |
|
| Income tax paid |
|
|
(94,045) |
(45,804) |
|
|
|
----------------------- |
----------------------- |
|
| Net
cash flow from operating activities |
|
(696,522) |
252,558 |
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Fixed
capital expenditure |
|
(6,984)' |
(27,019) ' |
|
| Sale
proceeds of fixed assets |
|
264 |
534 |
|
|
|
----------------------- |
----------------------- |
|
| Net
cash used in investing activities |
|
(6,720) |
(26,485) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
| Borrowings
from other banks, agents etc. |
1,982,068 |
(126,123) |
|
| Remittances
to Head Office |
|
(27,197) |
(56,372) |
|
|
----------------------- |
----------------------- |
|
| Net
cash flow from financing activities |
|
1,954,871 |
(182,495) |
|
|
|
----------------------- |
----------------------- |
|
| Increase/(Decrease)
in cash and cash equivalents for the year |
1,251,629 |
43,578 |
|
| Cash
and cash equivalents at the beginning of the year |
704,046 |
660,468 |
|
|
|
----------------------- |
----------------------- |
|
| Cash
and cash equivalents at end of the year |
1,955,675 |
704,046 |
|
|
|
============= |
============= |
|
| Cash
and cash equivalents |
|
| Cash |
|
|
1,389,942 |
701,338 |
|
| Balances
with other banks |
|
15,733 |
2,708 |
|
| Money
at call and short notice |
|
550,000 |
-- |
|
|
|
----------------------- |
----------------------- |
|
|
|
1,955,675 |
704,046 |
|
|
============= |
============= |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| J.P. Fontaine |
|
|
J.P. Raynaud |
|
| Chief
Operating Officer |
|
Senior Country Officer |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR |
|
| ENDED
DECEMBER 31, 1999 |
|
|
|
| 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
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 immediate resale to them at appropriate mark-up in price on
deferred payment |
|
| basis.
The purchase and sales arising under 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. |
|
|
| 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 investment. |
|
|
| 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 recognized on an accrual basis. |
|
|
| Fees,
commissions and brokerage income is recognized when earned. |
|
|
| 3.8
Foreign currencies |
|
| Assets
and liabilities in foreign currencies are translated into Pak rupees at the
rates of exchange |
|
| approximating
those prevailing at the balance sheet date, except those foreign currency
deposits |
|
| against
which forward cover has been obtained from the State Bank of Pakistan, which
are stated at |
|
| contracted rates. |
|
|
|
|
|
| From
the current year, the bank translated outstanding forward exchange contracts
on a mark to market |
|
| basis.
Until last year, outstanding forward exchange contracts were translated into
Pak Rupees at the |
|
| contracted rates. |
|
|
|
|
|
| The
policy has been changed to comply with the requirements of State Bank of
Pakistan FE |
|
| Circular
No. 2 dated March 24, 1999. Had the policy for translating outstanding
forward exchange |
|
| contracts
remained unchanged, other operating income and profit before tax would have
been |
|
| lower
by Rs. 9.68 million. |
|
|
|
|
| Exchange
gains or losses are included in the profit and loss account. |
|
|
|
|
|
1999 |
1998 |
|
|
|
(Rupees in thousand) |
|
|
|
|
|
| 4. CASH |
|
| In hand |
|
|
| -
local currency |
|
55,281 |
20,618 |
|
| - foreign currencies |
|
9,991 |
11,399 |
|
|
|
--------------------- |
--------------------- |
|
|
|
65,272 |
32,017 |
|
| With
State Bank of Pakistan in |
|
| Special
deposit account |
|
| - head office capital account |
|
424,789 |
403,839 |
|
| -
deposit account |
|
674,560 |
-- |
|
| Current account |
|
225,321 |
265,482 |
|
|
|
--------------------- |
--------------------- |
|
|
|
1,389,942 |
701,338 |
|
|
|
============ |
============ |
|
|
|
|
|
| 5.
BALANCES WITH OTHER BANKS |
|
| Current Accounts |
|
|
| - In
Pakistan |
|
500 |
500 |
|
| -
Outside Pakistan |
|
15,233 |
2,208 |
|
|
|
--------------------- |
--------------------- |
|
|
|
15,733 |
2,708 |
|
|
|
============ |
============ |
|
|
|
|
|
| 6.
INVESTMENTS (at cost less provisions) |
|
| Investment
securities |
|
| - Federal and
Provincial Governments' Securities |
|
| Federal
Investment Bonds |
|
70,000 |
320,000 |
|
| (Market
value Rs 70 million; 1998: Rs 320 million) |
|
| - Long Term Bonds |
|
289,100 |
289,100 |
|
| - Treasury Bills |
|
432,360 |
352,430 |
|
| Others |
|
|
| Term
Finance Certificates -- listed |
|
| (Market
value Rs 41 thousand: 1998: Rs. 68.35 million) |
67 |
68,133 |
|
|
|
|
--------------------- |
--------------------- |
|
|
|
|
791,527 |
1,029,663 |
|
|
|
|
============ |
============ |
|
| Book
value of unquoted investments Rs. 721.46 million (1998: Rs. 641.53 million). |
|
|
|
|
|
|
| Treasury
bills having face value of Rs. 68 million (book value Rs. 68.028 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 amounting to Rs 64.5 million relating to 1998 has been
recognized in 1999 on a receipt |
|
| basis.
However, interest income amounting to Rs. 32.3 million relating to 1999 has
not been accrued on |
|
| long
term bonds. This will be recognized on a receipt basis. |
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
(Rupees in thousand) |
|
|
|
|
| 7. ADVANCES |
|
|
|
|
| Loans,
cash credits, overdrafts etc. |
|
|
| In Pakistan |
|
|
3,142,843 |
2,941,188 |
|
|
| Bills
discounted and purchased |
|
|
| Payable
in Pakistan |
|
393,771 |
235,766 |
|
|
| Payable
outside Pakistan |
|
268,639 |
497,469 |
|
|
|
--------------------- |
--------------------- |
|
|
|
662,410 |
733,235 |
|
|
|
|
--------------------- |
--------------------- |
|
|
|
|
3,805,253 |
3,674,423 |
|
|
|
|
|
|
|
| General
and specific provision for non-performing |
|
| advances
-- note 7.2 |
|
(121,805) |
(153,744) |
|
|
|
|
--------------------- |
--------------------- |
|
|
|
|
3,683,448 |
3,520,679 |
|
|
|
|
============ |
============ |
|
|
|
| Advances
before provision for doubtful debts include Rs. 122.9 million which have been
placed on non- |
|
| performing status. |
|
|
|
|
|
|
| 7.1
Particulars of advances |
|
|
| -
in local currency |
|
3,683,448 |
3,520,679 |
|
| - in foreign currencies |
|
-- |
-- |
|
|
|
--------------------- |
--------------------- |
|
|
|
3,683,448 |
3,520,679 |
|
|
============ |
============ |
|
|
|
|
|
|
| Debts
considered good in respect of which the bank is |
|
| fully secured |
|
|
3,678,744 |
3,519,180 |
|
|
|
|
|
|
|
| Debts
considered good for which the bank holds no other |
|
| security
than the debtors' personal security |
4,704 |
1,499 |
|
|
| 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 |
-- |
-- |
|
|
|
|
--------------------- |
--------------------- |
|
|
|
3,683,448 |
3,520,679 |
|
|
|
============ |
============ |
|
|
|
|
Balance |
Maximum total |
|
|
|
outstanding at |
amount of financing |
|
|
|
December 31, |
including temporary |
|
|
|
1999 |
financing granted |
|
|
|
|
during the year 1999 |
|
|
|
|
(Rupees in thousand) |
|
|
| Debts
due by directors or executives of the bank or any of |
|
| them
either severally or jointly with any other persons |
32,097 |
32,097 |
|
|
|
|
| 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 |
-- |
64,443 |
|
|
|
|
|
1999 |
1998 |
|
|
|
(Rupees in thousand) |
|
|
| 7.2
Particulars of provision against non-performing advances |
|
| Specific |
|
|
|
| Opening balance |
|
|
153,744 |
156,241 |
|
|
| Provision
for the year |
|
10,000 |
23,714 |
|
| Reversals |
|
|
(41,700) |
(23,278) |
|
|
---------------------- |
---------------------- |
|
|
(31,700) |
436 |
|
| Amounts
written off |
|
(239) |
(2,933) |
|
|
|
|
---------------------- |
---------------------- |
|
| Closing balance |
|
|
121,805 |
153,744 |
|
|
============= |
============= |
|
| Provision against |
|
|
| -
advances to banks |
|
-- |
-- |
|
| -
advances to others |
|
121,805 |
153,744 |
|
|
---------------------- |
---------------------- |
|
|
121,805 |
153,744 |
|
|
============= |
============= |
|
|
|
|
| 7.3
During the year ended December 31, 1999, there were no write offs or
financial relief provided which |
|
| were
Rs. 500,000 or more. |
|
|
|
|
| 8.
OPERATING FIXED ASSETS - TANGIBLE |
|
|
|
|
| Description |
Cost as at |
Additions/ |
Cost as at |
Accumulated |
Depreciation |
Accumulated |
|
|
|
January 1, |
(Disposals) |
December |
depreciation as |
Charge |
Depreciation as |
Net book |
Rate of |
|
|
1999 |
|
31, 1999 |
at January 1, 1999 |
for the year/ |
at December |
value at |
depreciation |
|
|
|
(Accumulated |
31, 1999 |
December |
% |
|
|
|
|
|
Depreciation on |
|
31, 1999 |
per annum |
|
|
|
on disposals) |
|
|
|
| Furniture and |
|
| fixtures |
39,280 |
460 |
39,740 |
3,531 |
3,953 |
7,484 |
32,256 |
10 |
|
| Office equipments |
38,821 |
6,524 |
45,032 |
12,196 |
8,015 |
20,087 |
24,945 |
20 |
|
|
(313) |
|
(124) |
|
|
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
-------------------- |
|
| 1999 |
78,101 |
6,984 |
84,772 |
15,727 |
11,968 |
27,571 |
57,201 |
|
|
|
(313) |
|
|
============= |
============= |
============= |
============= |
============= |
============= |
============= |
|
| 1998 |
57,312 |
27,019 |
78,101 |
