| Bolan Bank Limited |
|
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Bolan Bank Limited as at 31
December 1999 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 infor- |
|
| mation
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 accor- |
|
| dance
with accounting policies consistently applied; |
|
|
|
|
|
| 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 |
|
| 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 1999 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. |
|
|
|
|
|
|
|
Sd/- |
|
|
Sd/- |
|
|
Taseer Hadi Khalid & Co. |
|
|
Taher Moochhala & Co. |
|
|
Chartered Accountants |
|
|
Chartered Accountants |
|
|
| Karachi: |
|
|
|
|
|
| Date:
Feb. 29, 2000 |
|
|
|
| BALANCE
SHEET AS AT 31 DECEMBER, 1999 |
|
|
|
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
|
(Rupees in
'000) |
|
| Assets |
|
|
|
| Cash |
|
4 |
788,742 |
668,505 |
|
| Balance
with other banks |
|
5 |
209,192 |
248,582 |
|
| Money
at call and short notice |
|
|
1,250,000 |
100,000 |
|
| Investments |
|
6 |
613,097 |
1,630,525 |
|
| Advances
net of provision |
|
7 |
1,863,239 |
2,033,504 |
|
| Operating
fixed assets |
|
8 |
550,314 |
571,891 |
|
| Capital
work in progress |
|
9 |
131,757 |
9,906 |
|
| Other assets |
|
10 |
472,743 |
416,487 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
5,879,084 |
5,679,400 |
|
|
|
|
| Liabilities |
|
|
|
| Deposits
and other accounts |
|
|
11 |
4,853,103 |
4,797,729 |
|
| Borrowings
from other banks, agents etc. |
|
12 |
169,653 |
116,189 |
|
| Bills payable |
|
|
|
|
175,955 |
103,737 |
|
| Other liabilities |
|
|
|
13 |
89,765 |
71,655 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
|
5,288,476 |
5,089,310 |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Net assets |
|
|
590,608 |
590,090 |
|
|
|
|
|
========== |
========== |
|
| Represented by |
|
|
|
| Share capital |
|
14 |
507,938 |
507,938 |
|
| Reserve
fund and other reserves |
|
15 |
81,705 |
81,600 |
|
| Unappropriated
Profit |
|
|
965 |
552 |
|
|
|
|
------------------ |
------------------ |
|
| Shareholders
equity |
|
|
590,608 |
590,090 |
|
|
|
|
========== |
========== |
|
| Memorandum
Items |
|
|
|
| Bills
for collection |
|
17 |
303,376 |
275,409 |
|
| Acceptances,
endorsements and others obligations |
|
593,551 |
575,850 |
|
| Contingent
liabilities and commitments |
|
18 |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
|
Syed Ijaz Hussain Shah |
|
Javed Yunus |
|
Mirza Ghulam Mustafa |
|
Pervez Yunus |
|
|
President & Chief Executive |
|
Chairman |
|
Vice Chairman |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED 31, DECEMBER, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
(Rupees in
'000) |
|
|
|
|
| Mark-up/Interest
and/or return earned |
|
|
467,859 |
623,403 |
|
| Cost/Return
on deposits, borrowings etc. |
|
|
(254,965) |
(406,737) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
|
212,894 |
216,666 |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Fee,
commissions and brokerage |
|
|
|
31,497 |
36,877 |
|
| Other
operating income |
|
|
19 |
17,614 |
30,753 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
49,111 |
67,630 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
262,005 |
284,296 |
|
|
|
|
|
|
| Operating
expenses |
|
|
|
|
|
| Administrative
expenses |
|
|
20 |
288,776 |
279,043 |
|
| (Reversal)/Provisions
against non-performing advances-net |
7.2 |
(10,300) |
6,222 |
|
| Bad
debts written-off directly |
|
|
|
-- |
1,397 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
278,476 |
286,662 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(16,471) |
(2,366) |
|
| Other income |
|
|
21 |
23489 |
3,113 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
|
7,018 |
747 |
|
|
|
|
|
|
|
| Taxation |
|
|
|
|
|
| - current |
|
|
22 |
(9,000) |
(18,000) |
|
| - prior |
|
|
|
-- |
(24,360) |
|
| -
deferred |
|
|
|
2,500 |
28,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(6,500) |
(14,360) |
|
|
|
|
------------------ |
------------------ |
|
| Profit/(loss)
after taxation |
|
|
|
518 |
(13,613) |
|
| Unappropriated
profit brought forward |
|
|
552 |
253 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation/Accumulated (loss0 |
|
1,070 |
(13,360) |
|
|
|
|
|
|
| Appropriations |
|
|
|
| Transfer
(to)/from |
|
|
|
|
|
| - Revenue reserve |
|
|
|
-- |
13,912 |
|
| - Statutory reserve |
|
|
|
(105) |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
|
(105) |
13,912 |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
|
965 |
552 |
|
|
|
|
========== |
========== |
|
|
|
|
Rupees |
Rupees |
|
| Earnings
per share |
|
|
31 |
0.01 |
(0.39) |
|
|
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
|
Syed Ijaz Hussain Shah |
|
Javed Yunus |
|
Mirza Ghulam Mustafa |
|
Pervez Yunus |
|
|
President & Chief Executive |
|
Chairman |
|
Vice Chairman |
|
Director |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
(Rupees in
'000) |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
before taxation |
|
|
|
7,018 |
747 |
|
| Less:
Profit on sale of fixed assets |
|
|
(20,169) |
(411) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(13,151) |
336 |
|
|
|
|
|
|
| Adjustments
for non-cash charges |
|
|
|
|
| Depreciation |
|
|
|
46,432 |
50,795 |
|
| Provision
for Gratuity |
|
|
|
5,335 |
8,014 |
|
| Amortization
of discount on Investments |
|
|
(379) |
(379) |
|
| Amortization
of Premium on Investments |
|
|
48 |
48 |
|
| Provision
for non-Performing advances-net |
|
|
(10,300) |
6,221 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
41,136 |
64,699 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
27,985 |
65,035 |
|
|
|
|
| (Increase)/Decrease
in Operating Assets |
|
|
| Advances |
|
|
|
180,565 |
1,099,530 |
|
| Other
assets (excluding advance tax) |
|
|
(8,334) |
58,129 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
172,231 |
1,157,659 |
|
|
|
|
|
|
| (Increase)/Decrease
in Operating Liabilities |
|
|
| Deposits
& Other Accounts |
|
|
|
55,374 |
(963,441) |
|
| Bills Payable |
|
|
|
72,218 |
(31,368) |
|
| Other
Liabilities (excluding provision for taxation) |
|
12,775 |
10,993 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
140,367 |
(983,816) |
|
|
|
|
------------------ |
------------------ |
|
| Cash
flow from operating activities before income |
|
340,583 |
238,878 |
|
| tax
and gratuity payment |
|
|
|
|
|
| Income tax paid |
|
|
|
(54,422) |
(112,100) |
|
| Gratuity paid |
|
|
|
-- |
(5,055) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from operating activities |
|
|
286,161 |
121,723 |
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Purchase/sale
of investments (Net) |
|
|
1,017,759 |
(189,352) |
|
| Capital
expenditure incurred |
|
|
|
(168,675) |
(115,955) |
|
| Proceeds
from sale of fixed assets |
|
|
42,138 |
1,573 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from investing activities |
|
|
891,222 |
(303,734) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
| Issue
of Right Shares |
|
|
|
-- |
161,250 |
|
| Borrowing
from other banking companies, agents etc. |
|
53,464 |
22,055 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from financing activities |
|
|
53,464 |
183,305 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash increase in cash and equivalents |
|
|
1,230,847 |
1,294 |
|
| Cash
and cash equivalents at the beginning of the year |
|
1,017,087 |
1,015,793 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
|
2,247,934 |
1,017,087 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| Cash
and cash equivalents |
|
|
|
| Cash |
|
|
|
788,742 |
668,505 |
|
| Balance
with other Banks |
|
|
|
209,192 |
248,582 |
|
| Money
at call and short notice |
|
|
|
1,250,000 |
100,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
2,247,934 |
1,017,087 |
|
|
|
|
========== |
========== |
|
|
|
|
|
Syed Ijaz Hussain Shah |
|
Javed Yunus |
|
Mirza Ghulam Mustafa |
|
Pervez Yunus |
|
|
President & Chief Executive |
|
Chairman |
|
Vice Chairman |
|
Director |
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 1999 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| Bolan
Bank Limited is incorporated in Pakistan as a Public Limited Company under
the Companies |
|
| Ordinance,
1984 and is engaged in commercial banking and related services. The Bank is.
listed on |
|
| Karachi
and Lahore Stock Exchanges. It 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 permis- |
|
| sible
form of trade related mode of financing comprises of purchase of goods by the
banks from their cus- |
|
| tomers
and 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 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
Statement of Compliance |
|
| These
accounts have been prepared in accordance with the accounting standards
issued by the |
|
| International
Accounting Standards Committee ("IASC") and interpretation issued
by Standing |
|
| Interpretation
Committee of the IASC, as applicable in Pakistan and the requirement of the
Banking |
|
| Companies
Ordinance, 1962 and the Companies Ordinance, 1984. |
|
|
| 3.2
Accounting convention |
|
| These
accounts have been prepared using the historical cost convention and are in
conformity with |
|
| the
accounting policies of banking institutions in Pakistan. |
|
|
| 3.3
Staff Retirement Benefits |
|
|
| 3.3.1 Gratuity |
|
| The
bank operates funded gratuity scheme and contributions are made annually to
cover obligations |
|
| under
the scheme. |
|
|
|
|
| 3.3.2
Provident Fund |
|
| The
Bank also operates an approved provident fund scheme for all its employees
and appropriate |
|
| contributions
are made by the employers and employees. |
|
|
|
| 3.4 Taxation |
|
| The
charge for taxation is based on taxable income at the current rates of
taxation after taking into |
|
| consideration
available tax credits, rebates and tax losses etc. |
|
|
|
|
| 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 realised. |
|
|
|
|
| 3.5
Investments |
|
| Securities
held with the intent and ability to hold them to maturity (investment
securities) are stated |
|
| at
amortized cost less provision for any permanent diminution in value. The
difference between the |
|
| face
value and purchase-price is amortized over the remaining life of security.
Securities held for |
|
| trading
purpose (dealing securities) if any, are stated at market value with
resultant gain or loss |
|
| being
recognised in the profit and loss account. |
|
|
| Where
the bank enters into transactions of repurchase (Repo) and resale (Reverse
Repo) of gov- |
|
| ernment
securities, these are recorded/deleted at contracted rates for specified
period of time. |
|
|
| 3.6 Advances |
|
| Advances
are stated net-off provisions for bad and doubtful debts. Specific and
general provisions |
|
| for
bad and doubtful debts are determined by the management keeping in view the
requirements |
|
| the
Prudential Regulations issued by the State Bank of Pakistan. Advances are
written off when |
|
| there
is no realistic prospect of recovery. |
|
|
|
|
| 3.7
Premises, furniture & fixtures, vehicles and other fixed assets |
|
|
| i)
The cost of premises, furniture, fixtures and other fixed assets are
depreciated over its esti- |
|
| mated
useful life on reducing balance method. Further, the cost of vehicles is
depreciated |
|
| over
its useful life on straight line basis. |
|
|
| ii)
A full year's depreciation is provided on assets acquired upto 30 September,
whereas, no |
|
| depreciation
is provided on assets disposed off before 30 September. Gains or losses on
dis- |
|
| posal
of fixed assets are included in income currently. |
|
|
| iii)
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 |
|
|
|
| iv)
Upto last year depreciation on certain fixed assets including furniture,
fixture and other office |
|
| equipments
were being charged at 15%, however from current year the management has |
|
| revised
the estimated useful life of such items of fixed assets and depreciation from
current |
|
| year
is being provided at the rate of 10% on such items of fixed assets. As a
result of this |
|
| change
in estimate the depreciation charge for the year has been reduced by Rs
10.301 mil- |
|
| lion
with consequent effect on the results for the year. |
|
|
|
| 3.8
Capital work-in-progress |
|
|
|
| This
is stated at cost. |
|
|
|
|
| 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 rupee 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 for- |
|
| eign
exchange contracts 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 advances and investments is recognised on accrual basis, except income
which |
|
| warrant
carry, forward in compliance with the Prudential Regulations of the State
Bank of Pakistan. |
|
| Commissions
on letters of credit and guarantees are recognised on receipt basis. |
|
|
|
|
1999 |
1998 |
|
|
|
|
|
(Rupees in
'000) |
|
| 4. CASH |
|
|
|
| In hand |
|
|
|
|
| - local currency |
|
4.1 |
407,693 |
285,484 |
|
| - foreign currencies |
|
|
16,193 |
9,718 |
|
| With
State Bank of Pakistan: |
|
|
|
|
|
|
| - Local currency current account |
|
|
|
248,989 |
297,957 |
|
| - Foreign currency deposit
accounts |
|
|
41,365 |
-- |
|
| With
National Bank of Pakistan |
|
|
|
|
|
|
| - Current accounts |
|
|
|
74,502 |
75,346 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
788,742 |
668,505 |
|
|
|
|
========== |
========== |
|
|
|
|
| This
includes National Prize Bonds amounting to Rs 47.598 million (1998 Rs 1.021
million). |
|
|
| 5.
BALANCES WITH OTHER BANKS |
|
| On
Current Account |
|
| - In
Pakistan |
|
|
|
58,498 |
58,910 |
|
| -
Outside Pakistan |
|
|
150,694 |
189,664 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
209,192 |
248,574 |
|
| On
Deposit Account |
|
|
|
|
| - In Pakistan |
|
|
|
-- |
8 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
209,192 |
248,582 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| 6.
INVESTMENTS |
|
|
|
| Investment
Securities |
|
|
|
| Federal
and Provincial Government Securities: |
|
|
| -
Federal Investment Bonds |
|
|
526,688 |
910,688 |
|
| -
Government Market Treasury Bills |
|
86,409 |
719,837 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
613,097 |
1,630,525 |
|
|
|
========== |
========== |
|
|
|
|
| 6.1
Investments securities include securities deposited as security with State
Bank of Pakistan and |
|
| National
Bank of Pakistan as follows: |
|
|
|
|
|
|
|
| With
State Bank of Pakistan |
|
|
| For
discounting facilities |
|
25,000 |
25,000 |
|
| For
surrender of foreign currency deposits |
|
15,000 |
15,000 |
|
|
|
------------------ |
------------------ |
|
|
|
40,000 |
40,000 |
|
|
|
========== |
========== |
|
| With
National Bank of Pakistan |
|
|
| For
discounting facilities |
|
15,000 |
15,000 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| 7.
ADVANCES -- NET OF PROVISION |
|
|
| Loans,
cash credits, overdrafts etc. |
|
|
| - In Pakistan |
|
|
|
1,822,956 |
2,053,335 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
1,822,956 |
2,053,335 |
|
| Bills
discounted and purchased (excluding |
|
|
|
| Government
Treasury Bills) |
|
|
|
|
| -
Payable in Pakistan |
|
|
4,535 |
7,713 |
|
| -
Payable outside Pakistan |
|
|
57,213 |
4,221 |
|
|
|
|
|
------------------ |
------------------ |
|
|
