Profile

12 to 33
General information about the Bank
and its operations

Corporate Governance
34 to 97
Corporate Governance, Chairman’s
Review, CEO’s Review and the
Directors’ Reports

Organisational Overview
98 to 163
Executive Management Team, The
Bank’s Business Model and Financial
Performance Overview

Unconsolidated Financial Statements

164 to 277
Financial Statements of the Bank along
with Report of the Independent Auditors

Consolidated Financial Statements

278 to 399
Consolidated Financial Statements of
the Group along with Report of the
Independent Auditors

Others
400 to 404
Other Information for the Shareholders
IMAGINE
Integrity is the cornerstone of everything we do

IMAGINE
Market leadership is what we aim across all our target sectors

IMAGINE
Agility and strategic nimbleness will help us adapt to
changing market conditions

IMAGINE
Good governance and transparency

IMAGINE
Innovation to provide for the customer needs of tomorrow

IMAGINE
Nation building remains our priority

IMAGINE
Employee engagement through a merit-based culture
About the Report 12

Our Profile 14

2021 at A Glance 16

Our National Impact 17

7 Decades for the Nation 18

A Legacy of Recognition 20

Calender of Key Events 24

Corporate Information 30

Governance 31
About this Integrated Report
NBP Annual Report 2021
This 72nd Annual Report-2021 (this Report) of National Bank of ii. Directors‘ Report on behalf of Board of Directors.
Pakistan (“NBP”, “the Bank”), covers the financial and iii. Standalone Financial Statements of the parent entity; and
non-financial performance of the Bank for the year ended iv. Consolidated Financial Statements of the Bank, its subsidiary
December 31, 2021 and material subsequent events up to the companies, a joint venture and associate companies “Group”
issuance of this Report. as depicted in the Consolidated Financial Statements.
iv. Auditors’ Review Report on the Code of Corporate
The Board of Directors, in its meeting held on March 8th, 2022, Governance “CCG”
has approved the release of this Report. v. Statement of Compliance with CCG
vi. Shareholders’ Information
We wish you a pleasant read!
Operational and financial analyses and reviews are based on the
Our Strategic Orientation financial information from the Audited Financial Statements for the
This Annual Report is structured to provide the readers with an year ended December 31, 2021 with the comparative information,
integrated insight into the Bank’s business by providing where necessary.
information about the state of affairs, performance and external
environment influencing the Bank’s functioning & performance. Unless stated otherwise, operations of the parent entity account
Highlighting the links between business strategy, business model, for more than 99% of the consolidated revenue, assets,
integrated risk management and corporate governance, this borrowings and employees. In this Report, the terms ‘PKR’ and
Report fairly addresses the material matters pertaining to the ‘Rs.’ have been used interchangeably for Pakistan Rupee.
long-term sustainability of the Bank. This Report also comments
on linkage of the Bank’s sustainability initiatives and strategic Significant Changes During the Year
imperatives. There have not been any significant changes in the organisation
type, structure, ownership or reporting boundaries since
Report Boundary & Scope December 31, 2020. No changes in reporting or restatements
This Annual Report is prepared in accordance with the following: have been made in the comparative financial information.
However, in line with our strategy stated in the Annual Report
• The Banking Companies Ordinance, 1962 2020, the Bank has advanced further in the process for closing
• The Companies Act, 2017 certain overseas branches. Appropriate disclosures in this regard
• The Listed Companies (Code of Corporate Governance) have been given in this Report.
Regulations, 2019 issued by the Securities and Exchange
Commission of Pakistan Integrated Reporting Framework
• International Financial Reporting Standards and Interpretations NBP, being a domestic systemically important bank, has a greater
issued by the International Accounting Standards Board impact on socio-economic growth in the country. In its strategies,
• Islamic Financial Accounting Standards issued by the Institute of the Bank considers the interest of its diverse group stakeholders,
Chartered Accountants of Pakistan particularly the shareholders, regulators, customers, employees,
• Directives issued by the State Bank of Pakistan and the and the communities where it operates.
Securities and Exchange Commission of Pakistan.
In the course of its operations for value generation, the Bank
This Report encompasses both financial and non-financial receives inputs i.e. CAPITALS (Financial Capital, Infrastructure
information pertaining to the parent company, i.e. National Bank of Capital, Human Capital, Natural Capital and Social & Relationship
Pakistan “the Bank”, as well as consolidated information of the Capital), and processes these to achieve its Short, Medium and
Group that includes the Bank, its subsidiary companies, a Joint Long term goals. The Bank is following an integrated reporting
Venture bank, and its several associated companies. model that builds understanding and a holistic view about the
Key contents of this Report include: Bank, its business model, external influences, the value creation
process, business strategies, resource allocation for strategy
i. Strategic and Operational Review by the Chairman and the CEO
execution, opportunities & risks, and performance against the
defined strategic objectives. This integrated reporting will further
improve the quality of information about the inputs used by the
Bank in the process of value generation.This year, matters
important for disclosure include:

1. Governance: Responding to organisational challenges.

2. Response: Emergency response to the health and financial
crisis amidst the COVID-19.
3. Agility: Making the Bank stronger & resilient.
4. Service: Serving our customers and communities.
5. Performance: Delivering sustainable financial performance.

Responsibility & Basis of Preparation

The Bank’s management is responsible for the preparation and fair
presentation of the Financial Statements. The Financial
Statements, Chairman’s Review, Directors’ Report, Statement of
Compliance with the Listed Companies (Code of Corporate
Governance) Regulations, CSR and other information contained in
this Report, have been structured in compliance with the This year too we will
requirements of the International Financial Reporting Standards distribute 12,000+ copies
“IFRS” as applicable in Pakistan, the Banking Companies of this Annual Report
Ordinance, 1962, the Companies Act, 2017, and the related through portable CDs.
regulations of the State Bank of Pakistan “SBP”, the Security & This will save 1.5 million
Exchange Commission of Pakistan “SECP”, Pakistan Stock sheets of paper.
Exchange “PSX” and other local and international corporate
reporting practices as promoted by ICAP, ICMAP, SAFA, etc.

Information Quality
Every effort has been taken to provide credible & meaningful
information with the aid of visual elements such as figures, graphs Other Information:
and tables in a consistent manner facilitating clarity and comparabil- We also have a presence on:
ity. Qualitative criteria have been taken into account including Facebook: https://www.facebook.com/NBPTheNationsBank
materiality, comparability, accuracy & consistency, balanced view Instagram: https://www.instagram.com/nationalbankofpakistan/
and credibility and reliability of the information provided. YouTube: https://www.youtube.com/channel/UCcI-feuO5V4sCcIm0xigzVg
LinkedIn: https://www.linkedin.com/company/national-bank-of-pakistan/
The Medium Twitter: https://twitter.com/TheNBPak
1. This Annual Report is published within three months of the date
of the Financial Statements. The comprehensive end-to-end online
version is also published online on the same date as the date of Contact & Queries
issue of this Annual Report at https://www.nbp.com.pk/InvestorIn- We welcome our readers’ inquiries, comments and suggestions
forma tion/index.aspx on this Annual Report. Readers may please contact the office of
the Chief Financial Officer:
2. This Report is circulated among shareholders in a digital format
(on Compact Disk). The Chief Financial Officer
National Bank of Pakistan
3. A limited number of printed copies have been produced for the 2nd Floor, NBP Head Office Building, I.I. Chundrigar Road,
shareholders who have requested the same. Karachi.
Stakeholders may also contact our Investor Relations Office by
For reasons of environmental sustainability, we only produce a email at:
limited number of printed copies of this Report. investor.relations@nbp.com.pk
Our Profile
Where the Nation Banks
National Bank of Pakistan (the Bank) was established on November 7 Decades in Serving the Nation
09, 1949 under the National Bank of Pakistan Ordinance, 1949 and After independence in 1947, Pakistan was inherited with a very
is listed on the Pakistan Stock Exchange. The Bank’s Registered weak financial system architecture. There was an emergency need
and Head Office is situated at Karachi. The Bank is engaged in to have a commercial bank “truly national in character” and capable
providing commercial banking and related services in Pakistan and enough to navigate the country through the then uncertain times.
overseas. Ever since, the Bank’s purpose and mission has been to support
the financial wellbeing of the Nation, and to provide strength in
The Bank also handles treasury transactions for the Government of uncertain times, Then – Now – and Always!
Pakistan as an agent to the State Bank of Pakistan. The Bank
operates 1513 (2020:1514) domestic branches in Pakistan and The Bank’s 1500+ employees serve 9+ million customers through a
19(2020:21) overseas branches (including the Export Processing wide local and international network of branches, agency
Zone branch, Karachi). arrangements, business promotion offices in Europe, America,
Central Asia, Far & Middle Eastern countries and correspondent
The Bank has a wide local and international outreach through a banking relationships.
network of branches, ATMs, subsidiaries, representative offices,
agency tie-ups and correspondent banking relationships, etc. Strong Capitalisation and Risk Profile
With PKR 286.2 billion as Net Assets, NBP is the highest capital-
With a total asset base of PKR 3.85 trillion, (USD 17.04 billion) and ised Bank in Pakistan. The Bank has been designated as Domestic
accounting for ~13% of total industry assets, the Bank has been Systemically Important Bank by the State Bank of Pakistan.
designated a “Domestic Systemically Important Bank” by the State Therefore, the Bank is required to hold an additional 2.0% loss
Bank of Pakistan. absorbency surcharge over & above the minimum capital
adequacy requirement. However, as a measure to alleviate the
In pursuit of its vision of enabling sustainable growth and inclusive effects of COVID-19 and support the banking sector in extending
development, the Bank is well-diversified across its major business credit facilities to its customers, SBP reduced the capital
segments of retail, commercial, corporate & investment, Islamic, conservation buffer from 2.5% to 1.5%, for the time being. This
treasury and international operations. The Bank’s international resulted in minimum CAR requirement for the Bank being 13.5% at
operations exist in South & Central Asia, Middle East, Western end 2021.
Europe and North America. Demonstrating a strong franchise, 65%
of total assets of the Bank are funded by customer deposits. The With the Common Equity Tier 1 (CET-1) ratio of 15.42% (2020:
domestic current and savings account (CASA) ratio was 82.3% as 14.99%) and overall Capital Adequacy Ratio (CAR) at 20.39% end
at December 31, 2021. 2021 (2020: 19.78%), the Bank is compliant with the enhanced
regulatory requirements.

1. NBP Fund Management 2. NBP Exchange Company 3. Taurus Securities

Limited. Limited. Limited.
It is one of the leading Asset NBP Exchange is the first bank-owned It is an unlisted Public Limited Company
Management Company of Pakistan, company to start a currency exchange in operation since January, 1994. Its
managing over 175.0 billion of investors’ business in the country. activities encompass the following areas:
savings in various investment The Company is operating with a • Equity brokerage
solutions.The Company network of 20 branches to • Financial and economic
has been awarded the deal in foreign currency research
highest achievable exchange. In terms of market

54%
investment share, Taurus is
management rating ranked high among
of AM1 the top tier equity
brokers in Pakistan.
The Bank’s leverage ratio at end 2021 was 3.73% (2020:4.06%). a Securities Brokerage House. Operations by the parent entity i.e.
The Bank’s liquidity and net stable funding ratios stood at 164% the Bank; however, account for the largest share of Group assets
(2020:180%) and 278% (2020:256%), respectively against and profits.
regulatory requirements of 100% for each.
Shareholding in Associated
The Bank is rated AAA/A1+ with a stable outlook by both VIS Credit Companies
Rating Agency and PACRA Credit Rating Agency. This is the Besides the subsidiary companies
highest credit rating awarded to a Bank in Pakistan. Thus, the mentioned below, the Bank also has
Bank’s risk profile reflects a restrained risk appetite, a strong significant shareholding in several
funding base, a secure level of liquidity, a sound domestic franchise associated companies and a UK-based
and consistently stable performance. joint venture i.e. the United National
Bank Ltd. “UNBL”, which was
Diversified Coverage formed in 2001 through the merger
The Bank’s business is well-diversified across main business of the branches of UK National
segments. Besides geographical diversification, the Bank has Bank of Pakistan and United
accomplished a higher level of diversification in its operations Bank Limited. NBP holds
across many other parameters such as customer profile, products 45% shares in UNBL. The
and services portfolio, funding profile, maturity profile, economic principal business of
sectors and the sources of income. UNBL is to provide retail
banking products
Ownership Structure through its branch
There are 2,127,513,026 issued & outstanding ordinary shares of network in major cities
the Bank, of which the Federal Government through the State Bank in the UK; wholesale
of Pakistan holds 75.2%. Other major shareholders include Foreign banking, treasury and
Companies (6.3%), Public Sector Companies (0.4%), and the money transmission
general public (12.1%). services, and finance
facilities to businesses of all
Group Structure sizes. Further details of
The Bank has subsidiary companies operating in both the financial associated companies are
and non-financial sectors. The Bank’s subsidiaries include, inter provided in Note 10.2.2 to the
alia, an Asset Management Company, an Exchange Company and Financial Statements.

4. CJSC Subsidiary Bank of 5. CJSC Subsidiary Bank of 6. National Bank Modaraba

NBP in Kazakhstan NBP in Tajikistan (under closure) Management Company
(under closure) Limited.
The Company was formed in the year
The Company was formed in the year 2012. National Bank Modaraba Management
2001. It provides Commercial Banking Company Limited manages the First
It provides Commercial Services in Tajikistan. National Bank Modaraba which was
established in December
Banking Services in The Bank has decided
2003. It is a perpetual,
Kazakhstan. The to close this multi-purpose and
Bank has decided to subsidiary company. multi-dimensional
close this subsidiary Modaraba.
company.
7
Decades
for the
Nation
(PKR ’Mn)
ASSETS
ADVANCES
DEPOSITS
3,846,684
1,113,392
3,019,155
3,008,527
983,255
2,418,966
1,037,750
477,507
832,152

After independence in 1947, Pakistan was inherited with a very weak financial system
architecture. There was an emergency need to have a commercial bank "truly
National in character" and capable enough to navigate the country through then
uncertain times. This created your Bank; THE National Bank of Pakistan. Your Bank's
purpose and mission has been to support the financial wellbeing of the Nation, and to
provide strength in uncertain times, Then – Now – and Always

2010 Till Today… 2000 – 2009... The 1990s…

Still Focused & Driven Initiatives & Reforms
» PKR 52 Bn as Profit After tax in 2021. Highest Ever in » The decade witnessed a » The 1990s was a decade of
History of the Bank. Achieved PKR 3 Trillion Milestone in restructuring program, where new financial reforms and
Deposits un-profitable and loss making initiatives.
branches were closed or
» In 2020, the Bank recorded profit after-tax of PKR 30.6 merged. No. of Regions were » The Bank became a SWIFT
billion i.e., the highest ever profit in its history. reduced to 29. member in 1998. The facility
provides modern technology to
» In 2019, NBP became “PKR Three trillion” Bank by » National Bank of Pakistan Bank customers for prompt
closing its balance sheet at PKR 3,124 billion. went public with IPO of 23.2% and convenient cash transac-
shares and listing at all tions and remittances round the
» NBP is Awarded Agriculture Bank of the Year Award domestic stock exchanges clock.
2019 (2001).
» In 1999, the Bank celebrated
» In 2017, the Bank posted the highest ever after-tax » In 2002, the Bank signed an its Golden Jubilee. By the close
profit of PKR 23.03 billion. NBP became the ‘Two Trillion agreement with Western Union. of the decade, its market share
Rupee’ Bank and is still growing strong. had reached around 22% and it
» The Bank’s wholly-owned remained the largest financial
» Reaching the 71st year of this great institution, we Exchange Company institution in the country.
refreshed our Vision to become the Nation’s leading commenced operations in
Bank enabling Sustainable Growth and Inclusive February 2003.
Development.
» NBP gained market recogni-
» NBP made it to the Guinness Book of World Records tion and received over 30
by installing the World’s Highest ATM. international awards.

» Won Bank of the Year Award 2015

» Deployed Core Banking Application.

» In 2013, with the growing popularity of Islamic

Banking, NBP successfully launched its brand
‘Aitemaad’ to offer the true spirit of Islamic Finance.
The 1980s… The 1970s… The 1960s… The 1950s…
New Trends and Restructuring Dawn of The Beginning
Alliances & Growth Developments
for the implementation of an » During this period, there was savings habit. This scheme was » During the 1950s, the Bank
Islamic Economic System. growth in the branch network offered to industrial workers undertook the expansion of the
both at home and abroad. and school & college students. branch network.
» NBP introduced a separate
and comprehensive procedure » The 1970s witnessed the » Operative in 1,189 schools, » The first overseas branch was
for banking under this system nationalisation of Pakistani deposits raised to Rs. 2.9 established in Jeddah, Saudi
from branch level to the Head commercial banks operating in million. By 1969, NBP’s “worker Arabia (1950), a branch in
office. the country. scheme” raised the total London (1953) and another
deposits by factory workers branch in Baghdad (1957).
» Consolidation and reorganisa- » In 1972, the National Bank of into Rs. 2.84 million and the
tion resulted in closure of 286 Pakistan evolved the Super- number of accounts opened » The Bank took Government
branches; from 1,646 branches vised Agricultural Credit had touched 8,767. Treasury Operations and
(1979) to Program, and introduced a new established currency chests at
1,360 branches (1989). methodology of viable credit for various locations. It managed
small farmers available at their currency chests or sub-chests
» Overseas expansion contin- doorstep. at 57 of its offices. Deposits
ued with the opening of a which constituted
representative office in Beijing » On January 1,1974 National 3.1 percent of total deposits of
(1981) and in Seoul, South Bank of Pakistan, along with 13 all Pakistani banks in 1949 had
Korea (1985); the latter was other scheduled Pakistani risen to 38 percent by 1952.
converted into a branch in banks was nationalised.
1987.

» The Bank increased its

authorised and paid-up capital
twice during the 80s, gaining a
much broader and stronger
equity base.
A Legacy of
Recognition
2021 2020 2019 2018 2017

Corporate & Invest- Asia Pacific Award for Best Bank for Agricul- Asian Development Set a Guinness World
ment Bank of The Year Onshore Wind Deal - ture 2019 - Pakistan Bank Annual Trade Record for installing
2021 – Asian Banking by IJ Global Project Banking Awards Finance Award for the World’s Highest
& Finance Finance & Infrastruc- 2018 ATM
Debt Deal of the Year ture Journal IJ Global Asia Pacific
2021 – Asian Banking Award 2019 - Onshore Gold Medal from Pakistan Domestic
& Finance Corporate Client Wind Deal FPCCI for Best Project Finance Bank
Initiative of the Year - Performance in of the Year 2017 - by
Best Project Infrastruc- by Asian Banking & Banking & Finance Asian Banking &
ture Deal of the Year Finance Sector Finance Magazine
2021 – Asian Banking
& Finance
Best Bank for Agricul- Consumer Finance Trade Deal of the Year
Best Corporate Sukuk ture Award - by Product of the Year awarded by Trade
2021 - The Asset Triple Pakistan Banking awarded by Asian Finance Program (TFP)
A Islamic Finance Awards Banking & Finance
Best Trade Finance
Bank in Pakistan 2021 Innovative Deal of the Rural Bank of the Year
Year - by Asian awarded by Asian
The Asian Banker Banking & Finance Banking & Finance
Power Deal of the Year
2021 Best Corporate &
Investment Banking
The Assets Triple A
Infrastructure Awards Services - by The
FPCCI
Best Corporate &
Investment Bank in Best Trade Finance
Pakistan 2021 Provider in Pakistan -
by Global Finance
The Asiamoney
Best Bank 2021 Magazine
Global Finance
Magazine Best Presented Annual
Report Award
Transaction of the Year (Runners up) - by
2021-CFA Society South Asian Federa-
Pakistan
tion of Accountants
Best Bank for Agriculture
Institute of Bankers Best Corporate
Pakistan Finance House of the
Year (Runners up) - by
Best Presented Annual
Report Award - SAFA CFA Society Pakistan
 2015 2014 2013 2012 2011

Bank of the Year 2015 2nd FPCCI Achieve- Domestic Retail Bank Bank of the Year 2nd Global Human
awarded by The ment Award for 2014 – of the Year, Pakistan awarded by The Resource Excellence
Banker Banking & Financial 2013 awarded by Banker. Award 2011 adminis-
Services Asian Banking & tered by Global Media
1-Link Certificate of Finance Magazine, 3rd Global Human Links in collaboration
Achievement 2015 37th FPCCI Award owned by Charlton Resource Excellence with Better Pakistan
awarded by Top Three 2014 – Corporate Media Group, Award 2012 adminis-
Issuing Banks Social Responsibility Singapore tered by Global Media Pakistan: Transaction
Links in collaboration of the Year Award for
3rd FPCCI Achieve- Listed in top 1000 with Better Pakistan 2011 presented by
ment Award 2015 banks of the world for Islamic Finance News
presented by Banking the year 2013 by The Listed in Top 1000
& Financial Services Banker Banks of the World for Transaction of the Year
the Year 2012 by The 2011 awarded by CFA
FPCCI Gold Medal 1st Achievement Banker Society of Pakistan for
Award 2015 Award – Gold Medal the private placement
on Banking and and offer for sale of
Financial Services – Engro Foods Limited
presented by Federa-
tion of Pakistan Bank of the Year 2011
Chamber of awarded by The
Commerce and Banker

2010
Industries (FPCCI)
Top Corporate Finance
House (Fixed Income)
for 2011 awarded by
the CFA Association of
2009 2008 2007 Pakistan

The Best Earning

Markets Bank 2011
awarded by Global
Finance Magazine
Bank of the Year for
2010 awarded by The
Banker. Runner-up of
Corporate Finance
House (Fixed Income)
Award for the Year
The only Pakistani Bank of the Year Best Return on Capital 2006
Bank listed in the top awarded by The for 2007 amongst all
2010 presented by
500 banks of the world Banker World’s Best Banks in Asia by The
CFA
by The Banker. Set a Foreign Exchange Banker
Society Pakistan
Guinness World Bank 2008 awarded by
Record for planting Global Finance
President of Pakistan
532,887 mangrove
Trophy awarded by
saplings in a single
FPCCI in 2010
day
Prime Minister of Best Emerging Market
Pakistan Trophy Bank from Pakistan for
awarded by LCCI in 2006 named by Global
2010 Finance
AWARDS
2021
Calendar Of
Key Events 2021
Annual Financial Statements 2020 Approved by the BoD
February 24, 2021

Analyst Briefing on Annual Financial Statements 2020

February 24, 2021

Vaccination drives conducted at the Bank’s Head Office

February 26, 2021

72nd Annual General Meeting

March 29, 2021

1st Quarterly Financial Statements Approved by the BoD

April 28, 2021

Prime Minister Inaugurates NBP's Low Cost Housing Program

Mobile Unit, June 07, 2021

74th Independence Day Celebrated at the Bank’s Head Office

August 14, 2021

NBP Won ‘Corporate Client Initiative of the Year’

August 20, 2021

Half-Yearly Financial Statements Approved by the BoD

August 26, 2021

NBP Won ‘Best Trade Finance Bank in Pakistan’

September 03, 2021

3rd Quarterly Financial Statements Approved by the BoD

October 27, 2021

Analyst Briefing on 3rd Quarterly Financial Statements

November 01, 2021

NBP Won ‘Award for the Best Bank for Agriculture in Pakistan’
November 10, 2021

NBP approved by ICAP as Training Organization Outside

Practice December 17, 2021
 In order to contribute its share in the Islamic
Consumer Banking Business, NBP Aitemaad
Islamic Banking Group (AIBG) has re-launched its
auto finance product namely Aitemaad Hamsafar
Auto Finance based on Shariah compliant mode
of “Diminishing Musharakah (DM).

IDG Shifts to
National Inclusive
Development
Centre at FTC
Inauguration
of newly renovated
KPT Branch

TPL REIT Fund I receives its

first subscription
PKR 2 from Billion
National Bank of Pakistan
NBP joins hands
ICAP to offer
training CA students

14TH August is a good day to reflect on NBP’s endeavors

and role under this government. For a nation to
progress it must have a clear idea of its longer-term
aspirations.
Without this clarity it will neither be able to prepare a
coherent Roadmap for action nor adopt and implement
the policies that would lead towards the objectives.
PM Acknowledges NBP’s Efforts! Best Presented Corporate Report

National Bank of Pakistan has disbursed highest number of loans to National Bank of Pakistan has been awarded Certificate of Merit at the
deserving candidates under Kamyab Jawan Scheme. much anticipated “Best Corporate & Sustainability Report Awards
2020”. The recognition was announced on August 27, 2021 jointly by
NBP’s efforts were recognised during 2nd Convention of Kamyab the Institute of Chartered Accountants of Pakistan (ICAP) and Institute
Jawan at Convention Centre, Islamabad. of Cost and Management Accountants of Pakistan (ICMAP).

At this occasion, Prime Minister of Pakistan awarded the trophy to NBP FCG strive towards quality reporting finally got recognition thus winning
President Mr. Arif Usmani. a place on the list of winners for the 1st time in 2020 for the Annual
Accounts – 2019, and has maintained this status for 2021 for the
Annual Accounts 2020 too!

Best Partner Banks Award Best Agriculture Bank Award

National Bank of Pakistan won the Best Partner Banks Award in

Pakistan on the 10th Anniversary of Industrial and Commercial Bank of
China. NBP over the years has proved to be the best correspondent
partner Bank of ICBC; both banks have been successfully collaborating
with each other on different business avenues.
The Award was received by Amjad Imran Khan, SEVP/Group Chief,
International Institutions & Remittances Group who has recently joined
NBP.
Corporate Information
Name of the Company National Bank of Pakistan

Legal Form A listed Public Limited Company established in Pakistan on

November 9, 1949 under the National Bank of Pakistan Ordinance 1949.

Accounting Year End December 31

Board of Directors
Mr. Zubyr Soomro, Chairman Mr. Arif Usmani, President & CEO

Mr. Farid Malik, Director Mr. Tawfiq A. Hussain, Director

Mr. Imam Bakhsh Baloch, Director Ms. Sadaffe Abid, Director

Mr. Asif Jooma, Director Mr. Ahsan Ali Chughtai, Director

Board Committees
1. Board Audit Committee 5. Board Inclusive Development Committee

2. Board Risk & Compliance Committee 6. NY Governance Council

(Sub-Committee of BRCC)
3. Board HR & Remuneration Committee
7. Board International Franchises & Remittance
4. Board Technology & Digitalization Committee Committee (Dissolved on 24-02-2021).

Chief Financial Officer Company Secretary

Mr. Abdul Wahid Sethi Syed Muhammad Ali Zamin

Registered & Head Office Registrar & Share Registration Office

NBP Building I.I. Chundrigar Road Karachi, Pakistan CDC Share Registrar Services Limited, CDC House,
Phone: 92-21-99220100 (30 lines), 99-B, Block-B, S.M.C.H.S., Main Shahrah-e-Faisal,
92-21-99062000 (60 lines), Karachi, Pakistan UAN: 111-111- 500
Phone Banking: 111-627-627

Auditors for 2021 Legal Advisors

Yousuf Adil A.F. Ferguson & Co Mandviwalla & Zafar
Chartered Accountants Chartered Accountants Advocates & Legal Consultants

Website Stock Exchange Listing

www.nbp.com.pk Pakistan Stock Exchange Symbol “NBP”
Governance
 Directors’ Profile 34

Chairman’s Review 38

CEO’s Review 40

Corporate
Directors’ Report (English) 43

Directors’ Report (Urdu) 55

Governance Board Composition 56

Directors' Participation 57

Committees of the Board 58

Role of the Board of Directors 64

Performance Evaluation of the BoD 64

Directors’ Remuneration Policy 65

Statement of Compliance 71

Statement of Internal Control 75

Our Ethics & Code of Conduct 77

Risk Manegment Overview 80

Shariah Board Profile 82

Shariah Board Report 84

Notice of 73rd AGM 92

Board of Directors

Mr. Zubyr Soomro Mr. Arif Usmani

Chairman President & Chief Executive Officer

Mr. Zubyr Soomro has been a career international banker with 33 Mr. Arif Usmani was appointed President and Chief Executive
years at Citibank in senior assignments in the Middle East, Turkey, UK Officer of National Bank of Pakistan for a term of three years on
and Pakistan. In 1997, he was asked by the Government of Pakistan the 12th of February, 2019.
to take a leave of absence from Citibank and return to Pakistan to be
Chairman and President of United Bank and restructure it for privat- Mr. Usmani has over 40 years of experience across several
ization. For his work @ UBL he was awarded the Quaid-e-Azam
geographies and markets in various banking disciplines. He
Centenary Gold Medal by the State Bank of Pakistan in 2004. This
was also in recognition of his leading role in reforms in the banking started his career with Citi Pakistan in 1981 in the Corporate
sector as Chairman of the Pakistan Banks’ Association. Thereafter, he Banking Group and since then held a number of positions with the
was invited by the World Bank in Washington D.C., the IMF in Egypt company. From 1989 to 1994, he was on deputation from Citi in
and the IFC in Bangladesh to speak on the restructuring of public Saudi Arabia and then relocated to the Asia Pacific region, where
sector banks. for five years he held a number of positions in Singapore and
Hong Kong.
Over the last 20 years, Mr. Soomro, has also been actively involved in
financial inclusion and poverty alleviation and was the Chairman of the Later, he moved as CEO to Citi Slovakia and in 2001 moved to Citi
Pakistan Microfinance Investment Company, the apex entity for the Nigeria as CEO and Regional Head for Citi in West Africa. The
sector majority owned by UK and German Government related
latter role involved management of Citi’s Franchises in Nigeria,
entities. He has served on the boards of Pakistan Poverty Alleviation
Fund, LUMS, the National Education Management Foundation, LRBT, Cote d’Ivoire, Cameroon, Gabon, the Republic of Congo as well
Aitchison College, Acumen Pakistan and the US based, Grameen as Senegal. In 2003, Mr. Usmani moved back to Saudi Arabia as
Foundation and the Indus Valley School of Arts & Architecture. the Chief Risk Officer of the Samba Financial Group and in 2008
was appointed, CEO of Citi’s franchise in Pakistan.
He has twice served on the Government’s Economic Advisory Council
(1997 to 1999 and 2013 to 2018), been a member of the board of the In 2012, Mr. Usmani left Citi and was appointed as Group Head
State Bank of Pakistan, and on the policy board of the Securities & for Wholesale Banking at Abu Dhabi Islamic Bank in Abu Dhabi
Exchange Commission of Pakistan, the board of the National Invest- where he spent five years establishing the bank as a premier
ment Trust, Chairman of the Board of the Karachi Stock Exchange, player in the corporate finance space. In 2017, he joined Mashreq
President of the Overseas Chamber of Commerce & Industry and
Bank in Dubai as Chief Risk Officer which was his last assignment
President of the American Business Council.
before moving back to Pakistan to join NBP.
Mr. Zubyr Soomro has a BSc Hons from the London School of
Economics (LSE) and a Masters from the School of Oriental and Mr. Usmani holds a First Class BSc (Hons) degree from Imperial
African Studies (London University). He has also attended executive College, University of London and is also an Associate of the
programs at the Harvard Business School and the Harvard Kennedy Royal College of Science (ARCS).
School in 2015, 2017 and 2020. In addition he received extensive
formal training in key areas of commercial, investment and private
banking within Pakistan and globally while at Citibank.

Currently, aside from his being Chairman of the Board of NBP, he is

Chairman of United National Bank in the UK, and a board member of
EFG Hermes, Cairo, which is a leading international financial services
group involved in investment banking, brokerage, consumer financing
and microfinance.
Board of Directors

Asif Jooma Mr. Tawfiq Asghar Hussain

Director Director

Mr Asif Jooma started his career in the corporate sector with ICI Mr. Tawfiq Asghar Hussain brings with him 45 years of diverse &
Pakistan Limited in 1983 and has over 35 years of extensive rich international experience in Commercial & Central Banking. He
experience in senior commercial and leadership roles. Following started his career in 1976 with American Express Bank (AEB) in
his early years with ICI Pakistan Limited and subsequently Pakistan and was appointed its General Manager, Philippines, in
Pakistan PTA Limited, he was appointed Managing Director of 1994. In late 1995, he became the first Pakistani Country Manager
Abbott Laboratories Pakistan Limited in 2007. After serving there of AEB in Pakistan.
for nearly six years, he returned to ICI Pakistan Limited as Chief
Executive in February 2013. In September 2001, he was also the first person from private
sector to be appointed Deputy Governor, State Bank of Pakistan,
Mr Jooma has previously served as President of the American & served two terms in that position. During his tenure in SBP, he
Business Council, President of the Overseas Investors Chamber led its capacity building in critical areas like Risk Management,
of Commerce and Industry (OICCI) and Chairman of the Pharma Banking Supervision, Reserve Management etc., and participated
Bureau. He has also served as a Director on NIB Bank Limited, in the banking sector reforms, banks’ privatization program &
Engro Fertilisers Limited and Director and Member Executive market liberalization. As a nominee of SBP, he concurrently
Committee of the Board of Investment (BOI) – Government of served on the boards of Security & Exchange Commission of
Pakistan. Mr Jooma currently serves on the Board of NBP, Pakistan and Pakistan Security Printing Corporation.
Systems Limited, Pakistan Tobacco Company Limited and
International Industries Limited. Mr. Tawfiq Hussain returned to the private sector in 2008 and was
appointed President & CEO, Samba Bank Ltd., Pakistan. He
Mr Jooma graduated cum laude from Boston University with a stabilized it & turned it around into a liquid, strong & sustainably
Bachelor of Arts in Development Economics. He has attended profitable bank, practicing highest standards of corporate
Executive Development Programmes at INSEAD and Harvard governance & business ethics. Retired from the bank in
Business School. September 2013.

He is on the Board of Governors of the Lahore University of Currently he is CEO of Pakistan Banks’ Association (PBA). He has
Management Sciences (LUMS) and a Trustee of the Duke of also served as the non-executive Chairman of Pakistan Institute of
Edinburgh’s Awards Programme whilst previously also serving on Corporate Governance, Director of Pakistan Stock Exchange &
the Board of Indus Valley School of Art and Architecture (IVSAA). Chairman of its Regulatory Affairs Committee.

Mr. Hussain is MBA from Institute of Business Administration,

Karachi.
Board of Directors

Mr. Farid Malik, CFA Ms. Sadaffe Abid

Director Director

Mr. Farid Malik has over 25 years of diversified experience and Ms. Sadaffe Abid is a social entrepreneur bringing experience in start
has worked on a number of infrastructure development, project ups, women's empowerment, leadership development, digital and
finance, corporate finance, capital markets regulatory financial inclusion. She is the founder of CIRCLE Women Association,
a leading non profit working on women's economic empowerment
administrative and operational assignments both in Pakistan and
and inclusion through technology, digital literacy, leadership develop-
abroad. He is a CFA charter-holder and a graduate of the London
ment and entrepreneurship. CIRCLE's flagship initiative, Tech Karo
School of Economics. brings digital skills like coding to youth especially women from under
served communities to bridge the digital gender divide and empower
Mr. Malik has served as the Chief Executive Officer/ Managing women through technology. Graduates of Tech Karo have joined the
Director of LSE Financial Services Limited (formerly Lahore Stock tech sector as software engineers or becoming part of the gig econo-
Exchange Limited) and has also worked with Tomen Power my. The Digital Literacy Project designed under the pandemic with UN
(Singapore) Pte. Limited and The Securities and Exchange women support bring basic digital literacy, business and life skills to
Commission of Pakistan. During his various assignments, he has vulnerable women using smartphones. The goal is now to scale this
had extensive exposure to green-field project based equity innovation across the country.
investments, limited recourse debt financing facilities, cross
With only 26% women in the formal economy, Ms. Sadaffe designed
border project financing facilities including export credit agencies
Elevate to mobilize CEOs, business leaders, startups, academia and
and multilateral lending agencies financing facilities, risk allocation key stakeholders to commit to gender diversity, build diverse and
& management techniques including hedging through derivative inclusive work cultures and invest in women and girls. She provides
instruments, due diligence methodologies, portfolio advisory services to grow Elevate to the region. Furthermore, she
management, equity and fixed income valuations, financial brought “She Loves Tech” the worlds largest women and start up
analysis, asset securitization and capital market operations and competition to Pakistan in 2017 to showcase women tech start ups
regulations. with the winner going to a global platform in Beijing. Ms. Sadaffe was
a founding team member, COO and later CEO of Kashf Foundation, a
He is currently also on the Board of Fauji Akbar Portia Marine Forbes 50 global micro finance organization that she helped grow to
300,000 women clients in Pakistan delivering a menu of financial
Terminal Limited and has also served on the Board of Central
products to under served communities. She has also worked as a
Depository Company of Pakistan Limited and National Clearing
consultant for World Bank, International Finance Corporation (IFC),
Company of Pakistan Limited. He is a Certified Director from Japanese International Corporation Agency (JICA) amongst others
Pakistan Institute of Corporate Governance. advising on leadership development, women's empowerment, digital
and financial inclusion.
Mr. Malik has also previously served on the Boards of the
Privatization Commission, the Gujranwala Electric Power Ms. Sadaffe is INSEAD’s Social Entrepreneur-in-Residence. She
Company Limited and the Pakistan Credit Rating Agency Limited. chairs the Inclusive Development committee of National Bank of
He has also attended a large number of international and local Pakistan to promote agriculture, SMEs, women's empowerment and
management courses, seminars and workshops conducted by financial inclusion. She is also on the board of Pakistan Microfinance
Network. She has been advisor to the global Dell Women Entrepre-
world renowned providers.
neurship Network (DWEN). She completed her Masters at the Harvard
Kennedy School, Advanced Management Program at INSEAD and
her B.A. at Mount Holyoke College. She received the Mount Holyoke
Alumni Achievement award in recognition for her services.
Board of Directors

Mr. Imam Bakhsh Baloch Mr. Ahsan Ali Chughtai

Director Director

Mr. Imam Bakhsh Baloch started his banking career in 1974 with Senior Banker / Financial Sector / Public Policy and
United Bank Ltd., as Officer after graduation from University of Development / Investment and Planning/ PPP Specialist
Balochistan, Quetta. He served in UBL from April 20,
1974 to October 19, 1974. Then he joined National Bank of Key Skills: Financial sector, Infrastructure structuring,
Pakistan on October 23, 1974. He served NBP for 40 years in development, implementation
various capacities and remained posted in USA for 10 years. He
served in Senior Management positions for 24 years in NBP and Independent Director nominee on the Boards of Lahore Electric
received various awards during his service in NBP. His last Supply Company Limited (LESCO) and Islamabad Electric
posting was as SEVP / Group Chief, Audit and Inspection group in Supply Company Limited (IESCO).
NBP Head Office. He served as Chairman Audit Committee, First
Women Bank Ltd for 6 years. Mr. Imam was on the Board of Over 42 years of banking and consulting experience with
Security Leasing Corporation Ltd. for a year and half. He also international and domestic banks, Provincial Government and
served as Caretaker Finance Minister Government of Balochistan its agencies, MLAs and other foreign donor agencies
from June 12, 2018 to August 18, 2018. In addition, he also served
as member Board of Directors APNA Bank and Chairman of its
Board Audit Committee from August 18, 2017 to June 17, 2019.
Currently, he is serving as Member Selection Board, University of
Turbat.

Mr. Imam has also obtained degree in Law from University Law
College, Quetta in 1997. Passed Institute of Bankers of Pakistan
Exam in 1988. He has qualified Professional Banking Examination
of American Institute of Banker in 1985. Received various
certificates in attending various courses in banking.
Chairman's
Review
Dear Shareholders,
The tenure of your current Board, inclusive of the President and
Chairman, is nearing it’s end. In this context it is important that I highlight
that our focus has been on building a platform enabling accountability at
all levels, and developing a corporate culture based on performance and
merit that protects the bank going forward, and curtails misuse of the
Bank’s assets.

To this effect, substantial efforts were made in obtaining a repeal by the

government of outdated and wrongly used Staff Service Rules of 1973.
With strong support from the Ministry of Finance this repeal was
approved by the Federal Cabinet in April 2021, and your Board then
instituted fresh Rules to facilitate putting your institution at par with others
in the banking system in attracting, rewarding, and retaining the talent
necessary for the National Bank of Pakistan to compete.

To put in place a culture of performance management meant bringing in

and supporting a senior team of experienced and courageous profes-
sionals. They were charged with strict implementation of the bell curve
concept, the reintroduction of promotions, and taking steps to improve
staff compensation. All this was to be done entirely on a merit basis. This
team had to deal with and resist strong internal and external pressures
and now to sustain our reforms, the government will need to protect staff
against unwarranted and unjustified harassment by government institu-
tions and officials.

The systems and controls in your Bank were also outdated and weak,
and through both negligence and fraud, had resulted in significant losses
across the branch network. Major operating accounts of the Bank itself,
were unreconciled over many years and alerts raised had piled up
similarly. Revamped leadership in both retail and operations has
addressed these problems and also improved the quality and timeliness
of our financial information. The aim now has to be on fully centralizing
key areas like account opening and trade which will also help enhance
customer service. These major efforts have benefitted from the close
oversight of our Board Audit and Compliance Committees.

The continuing problem of software that was 13 upgrades behind and

internally supported, had kept your Bank ill equipped against today’s
competition and risks. There had been an understandable reluctance in
proceeding on substantial investments that would leave Bank officials
vulnerable to later harassment. Your Board faced this issue head on and
drew in qualified vendors who were engaged through structured
arrangements with guidance from an active Board Technology Commit-
tee. Our Core Banking Application upgrade is now underway and should
be completed by the end of next year and position the Bank well against
its competitors in today’s increasingly digital environment.
Our credit portfolio has had a poor history with uncontrolled Over and above this, it is the underserved segments of micro and
exposures and excessive concentrations including to marginal small businesses, the needs of small farmers to increase productivity,
names. The risk architecture of the Bank has thus been materially and the massive housing shortages at the lower income levels that
revamped and specific restrictions brought in to require the approvals merit our engagement and commitment. In these sectors we need to
of designated Senior Credit Officers alongside business heads so the do much more and our preoccupations with the demanding but
quality of assets is reinforced through assessments by skilled and problematic corporates has distracted us from our purpose. For our
independent seniors. This should help going forward, but the Bank’s governments too, encouraging commercial banks towards the
record of weak private and public sector credits will take years to requirements of lower income groups is unlikely to be as successful
remedy. The Government itself should set an example by paying as developing models to work through microfinance providers who
overdue interest on government guaranteed loans which presently know these types of clients well and who already deal with about 8
amounts to about PKR 42 Bn. While our problem recognition and million borrowers as against the 2 million borrowers of the commercial
provisioning has been good, our efforts at attracting quality senior banks. A wholesale leveraging of the microfinance network would
talent to manage the NPLs, has not been successful and needs to be deliver safer and more effective solutions in less time than the bigger
given greater priority. No doubt experienced and qualified bankers banks would take to work through their bureaucracies and systems.
have been hesitant to take on the responsibilities of dealing with Our Board Committee of Inclusive Development has worked hard in
substantial exposures involving both negligence and fraud but this direction but material progress commensurate to the opportunity
practical and workable solutions have to be found including breaking at hand has eluded us.
up the portfolio into smaller segments reflecting the nature of the
credits. Overall this year your Bank has performed well despite the substantial
hits due to overseas regulatory penalties and provisions necessary for
It was recognized that the institution was not equipped to oversee and one large and earlier booked exposure. Our ability to look after our
manage an international franchise spanning 18 countries where smaller shareholders has been restricted by the necessity of providing
staffing appointments may not have been on merit, compliance for the past but we are now getting out of that and the one large poten-
related skills and standards inadequate and clear strategies lacking tial charge relating to our pensions case is the main one that remains
and credits unwisely extended. A pull back was initiated and the but that should not prevent us from seeking to reward long standing
closure of ten franchises commenced in markets that had potential small investors in our institution.
but our ability to manage them was in question. Historical weakness-
es were, however, severe, and despite the Bank’s investment in both There is much to be proud of in our achievements of rebuilding this
talent as well as technology, the Bank was subjected to regulatory national institution and the incredibly hard work put in by the President
penalties for noncompliance relating to years before this Board and deserves mention as does those in the front line of the change effort
management took over. These have been duly provided for in the for their persistence, professionalism and courage. From our Board
accounts and the Bank’s above mentioned investments position it there has been great contribution through difficult Covid dominated
well to avoid non recurrence. The international franchise though, times with enormous attention to detail in dealing with our many
continues to need attention particularly in Bangladesh for recoveries, problems through committees and through Board meetings. Our
in Saudi Arabia to crystallise its strategic direction (branch growth vs thanks go out to our regulators, particularly at the State Bank, for their
its small equity in a Saudi bank) and in the other stay locations to guidance, vigilance and accessibility at all times. From our primary
establish streamlined businesses that avoid lending in distant markets shareholder, the Ministry of Finance, we received invaluable support
and instead address the needs of our expat communities and country in getting the 1973 Staff Service Rules repealed and this action
to country trade flows. facilitates the development of an accountable and performance
driven corporate culture. At the same time though I must express
NBP‘s vision should be refocused to minimize lending to large corpo- disappointment in our portfolio issues relating to the PSEs where
rates where the Bank only adds its balance sheet strength and usually further support is needed. This will be critical to enable us to weather
at inadequate spreads. Let the private banks deal with those opportu- any storms relating to any adverse court decisions in other areas. The
nities. Instead it’s the credit deprived medium sized companies whose government’s support in safeguarding our professionals from unwar-
needs the Bank should address with products that are tailored to ranted harassment by other government institutions and individuals is
transactions and shorter tenor risks. This segment that makes up the also essential to protect the reforms we have been fortunate enough
country’s manufacturing heartland has the potential for considerable to bring about.
growth especially in the supply chain sector but has lacked the credit
to reach for it. In closing let me thank all our stakeholders, including our staff who
have lived through many changes albeit ones designed to strengthen
While doing that NBP should also focus on delivering better service the institution they support and serve. Our opportunities are consider-
and products to the current and ex government employees who have able and to realise them we should proceed firmly and with resolve.
been our clients but not received the dedicated attention they should
from our branch network. A consumer franchise built around this Zubyr Soomro
proposition leverages our niche and should help retain customers Chairman
under threat from competitors. March 08, 2022 , Karachi
CEO’s
Review
To our shareholders, regulators and clients,
To my colleagues,

I hope this finds you safe and well.

It is my pleasure to share with you the 2021 NBP Annual Report. I

begin by thanking my 15,000+ colleagues for serving the Nation and
delivering strong results in these challenging times. I also thank our
Board of Directors for their leadership and guidance over this period.

Three years back, when I joined this Bank in Feb ’2019, we

embarked on a multi-year journey to become a ‘better’ bank. Over
the years, lack of attention to identified structural and operational
lapses, had weakened this franchise and resulted in both financial
and reputational losses.

A Refreshed Purpose
As we started, we didn’t want NBP to just be a larger version of other
Pakistani commercial banks. Our raison d'être is to deliver and
support the State’s priorities around Pakistan’s developmental goals
and “To be the Nation’s leading bank enabling sustainable growth
and inclusive development”.

Our first response to these challenges was to ensure that our

organizaton was structurally balanced and aligned with its vision and
goals were aligned with this vision. I believe, NBP has made steady
progress despite difficult external and internal challenges towards
fixing many of its chronic issues. Sustainable change is underway at
the Bank following reforms put in place covering governance,
accountability and culture. We are making progress by addressing
root causes of the chronic problems that the Bank faces and by
holding ourselves accountable by tracking our performance in areas
where we need to improve.

Right Business Model

The heart of our operations is our domestic network of 1,500+
branches which have been revamped by strengthening our control
and compliance environment, product innovation and increased use
of technology. Within the corporate bank, we focus on large
corporate and institutional customers to meet their evolving needs
for bank debt, cash management, trade, investments and equity &
debt capital markets. A strategic decision which has served us well
was to carve out our relations with the Governments into a separate
business line, instead of managing this within our retail banking
activity previously. Our service quality, however, particularly in the
personal customer segment, remains an issue requiring more
attention.
Our Inclusive Development Group has also recorded satisfactory gaps is immediate and prioritised on a risk differentiated basis by
results with focus on priority sectors including Agri., SME, amount and severity. This is proving to be an effective tool for
Women, CSR and G2P initiatives. Under the Government’s Low near real-time monitoring of branch-level activities for fraud
Cost Housing initiative, NBP stands at No.1 in terms of number of prevention and detection of any SoP violations. Our audit function
loans disbursed to 1,000+ families. realigned the audit strategies and methodology in key risk areas
to assist the Board Audit Committee in discharging its oversight
This year, our Islamic Banking franchise, achieved PKR 100 Bn responsibilities. An e-Audit software has been deployed to
milestone of total assets (2020: PKR 89 Bn) while diversifying its automate branch level audits in the challenging environment.
product suite by introducing e.g. PayPak Debit Card, Hamsafar
Auto Finance, SBP Micro Payment Gateway (Raast), etc. For better risk and capital management, we have redesigned our
Risk & Credit governance construct and upgraded risk
In line with instructions from the Prime Minister’s Office, we management frameworks, policies and procedures. A few include
conducted regular Khuli-Kachehri (telephonic open dialogue introduction of obligor concentration policies, industry specific
sessions) every month wherein the general public can call in and and generic risk appetite frameworks, expected credit loss model
discuss their issues regarding the Bank. under IFRS-9, stress testing for efficient capital management,
value-at-risk models for market and internal vulnerability
As the digital revolution continues to gather pace, NBP faces assessment tools, etc. We are continuously reviewing our
serious challenges as our competition across the board portfolio, to identify accounts and industries susceptible to higher
unleashes new digital offerings for clients. We have established a than usual risk.
Digital Banking Group to prioritise our efforts focused on assisting
the Government in managing their G2P and P2G transactions. Following an enquiry in the case of major loan default by an oil
marketing company with NBP and several other private and
Governance, Control & Compliance public sector banks, the Federal Investigation Agency has
In parallel with business growth initiatives, we continued to registered a case incriminating, inter alia, several current and
progress with the remediation of legacy issues in the area of Risk, ex-employees of the Bank. While the matter is under
Asset Quality, Operational Effectiveness, International Franchise investigation, we have further strengthened our credit policies
and HR. Despite our challenged starting point in 2019, we have including risk concentration guidelines and credit administration
made considerable progress on most of these issues via guidelines for post disbursement monitoring. As also discussed in
significant strengthening of key personnel in critical positions. the Directors’ Report, NBP, in consultation with its regulator (SBP)
continues to support the investigation to its rightful conclusion.
HR Governance
We continued to revamp our HR policies in line with global best Compliance & Risk Management at New York
practices. One example was the new Staff Service Rules-2021 Branch / International Franchise
which replaced the Staff Service Rules-1973. These new rules Consequent to deficiencies reported by our US regulators over
allow the Board and the management to issue fresh policies/rules last several years in their annual supervisory examination of our
to promote accountability and meritocracy in the Bank. New York branch, on February 24, 2022, the Bank agreed to
consent orders with the Federal Reserve Board, the Federal
Another significant achievement made was in the matter of Reserve Bank of New York (FRBNY), and the New York State
litigation in respect of disparity in remunerations paid to two Department of Financial Services (NYDFS), the US regulators of
different categories (MTO/NMTO) of employees. We have settled NBP's New York branch. The agreements include civil penalty
~75% of ~4,400 cases by entering into out-of-court settlement totalling USD 55.4 Mn (PKR 9.8 Bn) focused on historical
agreements involving a financial outlay of around PKR 11.0 Bn. weaknesses in the compliance program. This matter has also
Another uphill task yet to be considered is merging the two been covered in the Directors’ Report to the shareholders. There
classes of employees i.e. those appointed on three-year were no findings of improper transactions or wilful misconduct.
contracts (which usually gets rolled-over) and those who were Going forward, the Bank and the New York branch remain fully
hired decades ago. Resolving this is critical for the long-term committed to satisfying the regulators' expectations.
sustainability of the Bank.
Overall, given the sub-optimal performance of many of our
Audit, Risk & Compliance overseas operations, we have prudently consolidated and scaled
In early 2020, following a major fraud event at two of the Bank’s back our international footprint. We are pursuing a strategy of
branches, we embarked on an enhanced control journey and selective growth with focus on trade, remittances and FIs
strengthened the Bank’s critical operational risk, compliance and business. We have also rejuvenated our recovery efforts on the
audit efforts. A Centralised Operations Control Centre (COCC) overseas NPL portfolio.
was created at the Head Office where daily monitoring of key
operational risks is now undertaken on a T+1 basis under an Data & Technology
initiative which we call ‘Project HOW’ (Head Office Watch). Key One major challenge facing this institution was to upgrade the
activities of each branch are tracked and remediation of identified Bank’s technology / core banking system. On October 30th,
2021, a cyberattack was detected on the Bank's servers which Balance Sheet
impacted some of its services. Immediate steps were taken to Over the last three years, we took decisive actions to strengthen
isolate the affected systems from the core servers. While our capital position, in recognition of the external economic
continuity of business operations was ensured with minimal challenges and the significant HR related contingencies pending
possible disruption, no direct data breach or financial loss was at the courts. Endorsed by our regulator and many shareholders,
detected. The Board has also recently approved the upgradation our actions have enabled the Bank to manage through the
of the Core Baking Application. This will enable the Bank to better economic headwinds and produce long term sustainable results
serve its customers, introduce additional products especially in for its stakeholders. In challenging times, a strong balance sheet
the digital space and above all significantly enhance its is critical. Our efficient strategies have translated into an 11.2%
operational controls. compounded average balance sheet growth as it reached PKR
3.85 Trillion compared to PKR 2.80 Trillion at the start of 2019.
Strategy Translating into Impressive We achieved the PKR 3 Trillion milestone in deposits which

Numbers increased by PKR 600 Bn, of which 80% or PKR 477.4 Bn were
customer deposits. As we pursued a prudent and selective loan
Our financial results validate that our strategy is working well growth strategy, net advances and total RWA’s recorded a
despite the general stress the economy experienced over the last moderate growth of 13.2% and 12.5%, respectively.
two years. We have delivered strong performance in 2021, with
the highest ever PBT amounting to PKR 52.9 Bn showing a Funding & Liquidity
capacity for sustainable capital generation. Our operating income Throughout the year, the Bank maintained optimum levels of
remained under pressure on multiple grounds including the costs funding and liquidity through a sufficiently diversified (by type and
of addressing the pandemic, the loan loss provisions taken to maturity) funding portfolio. The Bank’s liquidity coverage ratio
strengthen our balance sheet, subdued quality loan growth and stood at 164% (2020:180%), and the Net Stable Funding Ratio
policy responses that led to much lower interest rate during most stood at 278% (2020:256%) well above the statutory minimum of
of the year. 100%.

Profitability Capital
Through our three years’ journey since 2019, the strong and Our CET-1 ratio and Total CAR as at December 31, 2021 stood at
impressive financial results, as discussed in detail elsewhere in 15.4% and 20.4%, respectively. These ratios are well above
this report, and summarized below, indicate our success. With regulatory minimums, and demonstrate a strong buffer. The
Net Interest Income of PKR 97.6 Bn and Non-Fund Income of stronger balance sheet and capital position mean the Bank can
PKR 36.9 Bn, total revenue for the year 2021 closed at PKR 134.6 make choices about our future from a position of strength and
Bn. Despite high inflationary pressures, total administrative stability. The AAA credit rating and Stable outlook assigned to
expenses for the year 2021 amounted to PKR 60.0 Bn, and NBP reflects its conservative capital structure and a strong
provision charge stood at PKR 11.9 Bn. Despite the PKR 9.8 Bn balance sheet.
of civil penalty in the US operations, profit before tax amounted to
PKR 52.9 Bn which is 14.4% higher as compared to PKR 46.2 Bn The Future
in 2020 and is also the highest ever in the history of the Bank. Net Overall, as I complete my three years tenure, I would like to thank
of taxes, profit after tax stood at PKR 28.0 Bn i.e. 8.3% down my colleagues, customers, the NBP Board, SBP and other
YoY. With PKR 74.4 Bn in after-tax profits in the last three years, stakeholders, for having given me the opportunity to serve this
shareholders’ net assets increased by 38.3% from PKR 206.9 Bn great institution. My stint here was a small step in the on-going
at the beginning of 2019 to PKR 286.2 Bn at the end of 2021. journey of NBP as it continues to transform itself into a modern
and efficient company well equipped to deliver against its Vision.
Moreover, after identifying and dimensioning the asset quality If one element would characterise our success it would be that
issues, we created provisions of PKR 48.8 Bn over the last three our customers ‘want’ to deal with us rather than to ‘have’ to deal
years. Thus, cumulatively, our balance sheet stands strengthened with us!
by PKR 119.3 Bn since the beginning of 2019. These results have
been delivered despite multiple challenges and headwinds I firmly believe that strong executive commitment to our refreshed
amidst the Covid-19 pandemic and a significant drag due to Vision is what will continue to create value and deliver reliable
non-payment of mark-up in certain legacy public-sector returns for all our stakeholders, In Sha Allah.
non-performing loans and the Covid-19 related flexibility and
repayment relief provided to customers in need. Despite the
higher inflationary trends, induction of additional talent, promotion Arif Usmani
of around 1,700 employees and significant pay increases, our President/CEO
effective cost controls have brought the cost-to-income ratio March 08, 2022
(excluding the impact of civil penalty of PKR 9.8 Bn) down by 13.1 Karachi
percentage points from 57.7% in 2018 to 44.6% in 2021.
Directors’ Report to the Shareholders
Standalone Financial Statements

Dear Shareholders, textiles) grew by 24.9% to $15.1 Bn, total imports in Jul-Dec
FY’22 increased to $40.6 Bn, posting almost 70% growth.
On behalf of the Board of Directors “the Board”, we have pleasure
in presenting to you the Annual Report of the National Bank of
However, this economic pick-up has triggered micro imbalances
Pakistan “NBP” “the Bank” together with the audited financial
as the current account deficit widened to $9.0 Bn (5.7% of GDP)
statements for the year ended December 31, 2021 and the
during Jul-Dec FY’22. Also, average headline inflation during
independent Auditors’ Report thereon. These financial
Jul-Dec FY’22 was 9.8% (8.6% during SPLY), somewhat higher
statements of the Bank fairly present its state of affairs, the result
than the SBP’s initially projected range of 7.0% - 9.0% for FY’22.
of its operations, cash flows and changes in equity.
SBP has recently revised expected inflation to linger in the
near-term at 9%–11% in FY’22 and to ease to 5%-7% in FY’23.
Macroeconomic Environment Faced with serious choices in balancing the short-term needs of
The V-shaped recovery initially observed in 2021, enters 2022 in a
weaker position as the Global growth is now expected to moder- fighting the pandemic and the long-term challenges to maintain
ate from 5.9% in FY21 to 4.4% in FY22. Driven by accommoda- sustainable growth, SBP has taken measures to lower the
tive monetary and fiscal policies, the Pakistani economy recorded inflation and correct the macro imbalances. These measures
robust growth in 2021 which has been revised upwards to 5.37% include a cumulative 275bps increase (from 7% kept since
from earlier 3.9% (due to change of base year for GDP at Jun’20) in the policy rate since Sep’21, higher bank cash reserve
constant basic prices from 2005-06 to 2015-16), while the size of requirements, regulatory tightening of consumer finance, and
the economy is reported up at $346.8 Bn from the provisional curtailment of non-essential imports. Subsequent to these
estimate of USD 296 Bn. measures, the current account deficit appears to have stopped
growing since Nov’21 and the non-oil current account balance is
During 1H’22, macro indicators maintained momentum growth in expected to achieve a small surplus for FY’22. Finally, and impor-
Jul-Dec. LSM growth, which was 14.9% in FY’21 (-10.2% during tantly, the enactment of the recent Finance (Supplementary) Act,
FY’20), posted 3.3% growth during Jul-Nov FY’22. As agriculture 2022 represents significant additional fiscal consolidation
credit disbursement recorded a 3.9% increase and reached PKR compared to the budget and has lowered the outlook for inflation
641 Bn (PKR 617 Bn SPLY), output situation is expected to elevated over the next few months, close to the upper end of the
remain smooth. Fiscal deficit during Jul-Nov FY’22 stood at PKR average inflation forecast of 9%-11% in FY’22.
951 Bn i.e. 15.7% up against PKR 822 Bn in SPLY. In terms of
GDP, it has been contained at 1.5% i.e. similar to that of SPLY. Pakistan stock market witnessed a challenging year in 2021
Whereas, the primary balance posted a deficit of PKR 36 Bn underperforming to regional markets as well asset classes amid
(0.15% of GDP) during Jul-Nov FY’22 against the surplus of PKR concerns on external accounts, currency depreciation, geopoliti-
216 Bn (0.45% of GDP) last year. The Ministry of Finance has cal uncertainty, delay in IMF program, and MSCI’s announcement
reported a 35% growth in tax collections during Jul-Dec FY’22, of Pakistan’s reclassification to Frontier Markets – which further
leading to a net 7% increase in federal revenues to PKR 1,482 Bn spurred foreign selling. Share prices of the top 100 companies
against PKR 1,391 Bn of SPLY. On the other hand, total expendi- listed at the PSX improved by a net 2% during 2021, pushing the
tures increased by 21% mainly due to sharp rise in subsidies and benchmark KSE-100 index to 44,596 points at the close of
grants. trading on the last day of the CY’21.

As worker’s remittances continued their unprecedented streak of Banking industry reported healthy profits made not only on
above USD 2.0 Bn for the 19th consecutive month in December investment in government debt securities but also on private
2021, Pakistan ended CY’21 with a strong 19.3% YoY growth in sector credit as net lending to the private sector got a boost on
remittance to achieve $31 Bn compared to USD 25.96 Bn in the back of extraordinary monetary easing and fiscal stimulus
CY’20. A healthy trend is also observed in DFI as the same package of the government. During the first half of FY22, private
increased by 20.1% during Jul-Dec FY’22 and reached $1,056.6 sector credit cumulatively grew by 13.4%, largely driven by
Mn ($879.7 Mn last year). Amid inflows into the Roshan Digital increased demand for working capital loans especially by rice,
Accounts (which have crossed $2 Bn in the one year since textile, petroleum and steel industries.
launch), Pakistan’s total liquid FX reserves stood at $22.1 Bn at
end Jan’21 and are expected to strengthen as talks between the
IMF and the Pakistan government on the review of the $6 Bn
Principal Activities
Principal activities of NBP during the year remained same as in
Extended Fund Facility are believed to be progressing in the right
prior year and included general banking services, credit, ATM and
direction. During this period, while exports (mainly driven by
debit cards facilities, investment banking advisory, treasury and
capital markets, housing and general finance, transaction been included in the financial statements for the year ended
banking, cash management, digital banking, international trade & December 31, 2021.
remittances, etc. The Bank’s subsidiaries offer banking services,

Material changes subsequent to

currency exchange, modarba, fund management and securities
brokerage services.

the Balance Sheet Date

The Board, Board Committees In February, 2022, the Bank and its New York Branch agreed to a
consent order with the Federal Reserve Bank of New York and
and Board Meetings the New York State Department of Financial Services. These
The Board continues to have oversight of management’s ongoing agreements include civil penalty totalling USD 55.4 Mn (PKR 9.8
efforts to improve outcomes for customers and colleagues and Bn) which have been recognised into the Financial Statements for
get the basics right, including a strong focus on the remediation the year ended December 31, 2021.
work required in financial crime risk management. It is the respon-
sibility of the Board to ensure that adequate policies and frame- No other material event has occurred subsequent to the date of
works are in place to recognize all significant/ material risks to the Balance Sheet that requires adjustments to the enclosed
which the Bank is / may be exposed and that the required human financial statements.
resource, culture, practices and systems are adequate to address

Financial Performance - 2021

such risks. The Board and its relevant committee, i.e. BRCC and
the executive management along with its relevant committees i.e.
Management Credit Committee, Enterprise Risk Committee, Despite the continued challenging environment, the Bank has
ALCO, etc. are responsible to ensure implementation of the risk delivered strong financial results for the year ended December 31,
management framework. A Statement in compliance with the 2021. This demonstrates resilience of the Bank’s business model
Listed Companies (Code of Corporate Governance) Regulations and the efforts of its staff during this period. For the year under
has been made separately. review, NBP has recorded after-tax profit of PKR 28.0 bn.

Explanation in regard to Emphasis KPI (PKR ‘Bn) 2021 2020 Better / (Worse)

of Matter Para in the Auditors’ NII

NFI
97.62
36.94
104.16
36.08
(6.5)
0.86
(6.3%)
2.4%
Report Total Income 134.56 140.23 (5.67) (4.0%)
The external Auditors have included Emphasis of Matter by Operating & Oth. Expenses 60.00 63.11 3.11 4.9%
drawing attention to Note 25.3.3.1 to the financial statements Profit Before Provisions 74.56 77.12 (2.57) (3.3%)
which explains the contingency in relation to litigation by retired Provisions and write offs – net 11.92 30.90 18.98 61.4%
employees of the Bank for pension benefits. Based on the advice Extraordinary Item 9.78 - (9.78) (100%)
of the legal counsels, the Bank has reasonably strong legal
Profit Before Tax 52.86 46.22 6.64 14.4%
grounds to convince the Honourable Supreme Court for review-
Profit After Tax 28.01 30.56 (2.55) (8.3%)
ing its earlier judgement. Therefore, pending the decision on the
Earnings Per Share (Rs.) 13.16 14.36 (1.20) (8.3%)
review petitions, the financial impact of the subject case has not
The Bank recorded profit before tax amounting to PKR 52.9 Bn i.e. the CASA ratio at 83%. Detailed coverage of the financial performance and
highest ever in history of the Bank. Whereas, due to a significant impact of other organizational development is also given elsewhere in this Annual
extraordinary item amounting to PKR 9.8 Bn, the after-tax profit closed at Report.
PKR 28.0 Bn which is 8.3% down YoY. For the year 2021, gross mark-up-
/interest income closed 10.1% lower YoY at PKR 231.9 Bn (2020:PKR
257.8 bn); whereas the interest/mark-up expense amounted to PKR 134.3
Appropriation of Profit
Profit for the year ended December 31, 2021 after carry forward of
bn, of which PKR 87.8 bn or 65.4% was paid to the depositors. Conse-
accumulated profit of 2020 is proposed to be appropriated as follows:
quently, net interest/mark-up income “NII” closed at PKR 97.62 bn which
is 6.3% lower, YoY. Despite a lacklustre trade & business activity during
the year, the Bank succeeded in maintaining its non-mark-up / interest
(PKR ‘Mn)
earning “NFI” stream that closed at PKR 36.9 bn (2020:PKR 36.1 bn).
Profit after tax for the year ended December 31, 2021 28,008.0
Accordingly, total revenue of the Bank closed 4.0% down YoY at PKR
134.6 bn (2020:PKR 140.2 bn).
Un-appropriated profit brought forward 116,021.3
Other comprehensive income - net of tax (1,362.8)
Operating & other expenses dropped by 4.9% down YoY to close at PKR
Transfer from surplus on revaluation of fixed assets 208.1
60.0 bn as against PKR 63.11 bn of prior year. This translates into a
114,866.6
cost-to-income ratio improving 40bps YoY, from 45.0% in 2020 to 44.6%
Profit available for appropriations 142,874.6
in 2021. Consequently, profit before provision stood at PKR 74.6 bn,
marginally 3.3% lower than PKR 77.1 bn of 2020. However, this drop in
Appropriation:
revenue was off-set by a favourable variance in provision charge that
Transfer to Statutory Reserve @10% of PAT (2,800.8)
dropped 61.4% to PKR 11.9 bn as compared to PKR 30.9 bn in the prior
Un-appropriated profit carried forward 140,073.8
year. This year, NPLs recorded an increase of 15.6% or PKR 26.6 bn,
totalling to PKR 197.9 bn (2020:PKR 171.3 bn). This was mainly triggered
by an industry wide default by a major oil marketing company.

Consequently, profit before tax closed 14.4% higher YoY at PKR 52.9 bn Principal Risks & Uncertainties
(2020: PKR 46.2 bn). As PKR 9.8 of civil penalty is imposed in US
operations, profit after tax closed at PKR 28.0 bn which is 8.3% lower
Facing the Bank
By the very nature of its business model, the Bank is exposed to certain
than PKR 30.6 bn of previous year. Pertinent to mention, the Bank’s
principal risks being (i) Credit Risk; (ii) Treasury & Capital Risk; (iii) Market
income is also subject to a PKR 4.0 bn drag on account of certain legacy
Risk; (iv) Operational Risk, and (v) Information Security Risk.
public-sector non-performing loans as well as the impact of additional tax
due to lower Advance to deposit ratio. The Federal Government, in the
The Bank has established a robust framework to effectively manage these
Federal Budget-2022, has imposed a 2.5% additional tax on banks if their
risks and keep the Bank resilient & sustainable. As part of its oversight, the
Advances to Deposit Ratio falls below 50%; and 5% if the ADR goes
Board ensures that adequate policies and frameworks are in place to
below 40%. While the banking industry is already subject to a super tax
recognize all significant/material risks to which the Bank is or may be
charge of 4%, this additional tax has adversely affected the after-tax
exposed to and that the required resources i.e. human capital, culture,
profitability of the banks.
practices, and systems are adequate enough to mitigate and address
such risks. The Board and its relevant committee i.e. Board Risk &
The Bank’s end of year total assets closed at PKR 3,846.7 bn which is a
Compliance Committee and the senior management along with its
massive 27.9% increase from PKR 3,008.5 bn at end of 2020. This was
committees i.e. Enterprise Risk Management Committee, Assets &
mainly driven by a growth of PKR 600.2 bn in the deposits and a growth
Liability Committee, etc. are responsible to ensure formulation and
of PKR 174.4 bn in the borrowings. Capital & reserve closed at PKR 286.2
implementation of a comprehensive risk management framework.
bn i.e. PKR 18.6 Bn or 7.0% up from PKR 267.6 billion on December 31,
2020.
The Bank is continuously reviewing its credit portfolio, to identify accounts
and industries susceptible to higher risk, in these challenging times.
The Bank’s financial soundness also improved significantly during the
Further, with respect to information security risk management arising as a
year 2021. While Common Equity Tier 1 (CET1) Capital ratio improved to
result of Covid-19 and recent incident of cyber-attack on NBP servers, the
15.42% (2020:14.99%), the Total Capital Ratio also improved at 20.39%
Bank took appropriate actions to respond & monitor the evolving cyberse-
(2020:19.78%). Similarly, the Bank’s Leverage ratio was 3.47% at the end
curity risks. A detailed indication of the principal risks and uncertainties as
of 2021(2020:4.06%).
well as the future prospects is discussed in the financial statements.
The Bank’s liquidity coverage and net stable funding ratios improved to
164% (2020:180%) and 278% (2020:256%), respectively against regula-
tory requirements of 100%. On a positive note, the Bank maintained its
Governance, Internal Controls this end, the Board has given strategic directions to invest, throughout the
Bank’s operations, in new technological platforms for effective
and Compliance AML/CFT/CPF controls, data accuracy and authenticity, internal controls
Progressing with the Board’s HR strategy, the Bank has continued to over the financial reporting, etc. Our Branch in New York, which is
induct talent at senior levels. Also, the outdated Staff Service Rules that licensed by the New York State Department of Financial Services, and is
enabled staff to file frivolous suits directly at the High Court levels, have subject to oversight and supervision by the Federal Reserve Bank of New
been repealed by the Staff Service Rules-2021 pursuant to the approval York, as in the case of all foreign banks. Initially, the 2014 examination
of the Federal Cabinet in April, 2021. This will also set the foundation for uncovered certain compliance & risk management deficiencies in the NY
promoting a culture of accountability & meritocracy in the Bank. This Branch. In 2016 the Bank and the Branch entered into a Written Agree-
Board acknowledges & appreciates the support of the government in this ment with FRBNY to acknowledge and remediate identified deficiencies
regard. relating to Anti-Money Laundering and the US Bank Secrecy Act require-
ments, as well as implementation of requisite systems, enhancement of
The Bank remains committed to ensure compliance with all the applicable controls and allocation of adequate resources to ensure full compliance
laws, rules, regulations, and codes in the spirit of good governance, and with such requirements.
recognises the need to improve its compliance & control capacity within
its domestic as well as overseas network. A major revamping of the As these issues persisted, we took serious steps in February 2020, by
network structure has been implemented in 2021 to strengthen the hiring entire new leadership including the Branch manager and the senior
control & compliance. Also, significant funds have been invested in compliance officer, and tripled the number of compliance staff, increasing
acquiring new technological platforms for effective AML/KYC, data from 7 in May’20 to 24 in Nov’21. We also implemented new policies and
accuracy & authenticity and generating quality MIS for efficient decision procedures, began enhancing the compliance, internal audit, and
making. managerial oversight functions to close open issues from the Written
Agreement and past examinations. We also hired outside counsel to help
To promote a culture of effective control & compliance, the Board has guide the Bank in remediating past problems. These enhancements were
remained frequently involved in addressing the issues related to account- completed recently and validated by an independent third party.
ability and meritocracy. As stated in our prior year’s report, priority focus
is being accorded to the major task of upgrading the Core Banking In 2020, while U.S. regulators recognized many positive changes resulting
Application. Necessary in-principle approvals have been granted by the from new management, it however concluded that the Bank had yet to
Board and the management will be moving soon to implement the fully address prior examination findings and the BSA/AML provisions of
project. the Written Agreement. Consequently, in February 2022, the Bank agreed
to consent orders with The Federal Reserve Bank of New York, and the

Compliance & Risk Matters in

New York State Department of Financial Services, the US regulators of
NBP's New York branch. The agreements include civil penalty totalling

the New York Branch USD 55.4 Mn (PKR 9.8 Bn) focused on historical weaknesses in the
compliance program as discussed above. There were
The Bank remains committed to ensure compliance with all the applicable
laws, rules, regulations, and codes in the spirit of good governance. To
no findings of improper transactions or wilful misconduct. Going forward, approved closure of two overseas Subsidiaries being in Almaty (Kazakh-
the Bank and the New York branch remain fully committed to satisfying stan) and Dushanbe (Tajikistan) along with three overseas branches
the regulators' expectations. located in Baku (Azerbaijan), Bishkek (Kyrgyzstan) and Ashgabat
(Turkmenistan) so their carrying amount will be recovered principally

Ongoing Investigation by the FIA through continuing use. Necessary approvals in this regard have been
sought from the Ministry of Finance and the State Bank of Pakistan.
The FIA is conducting an investigation in the matter of M/s Hascol
Further, it has been decided to restrict the country operations in Afghani-
Petroleum’s banking arrangements with the NBP as well as several
stan and Bangladesh only to one branch in each country located in Kabul
private and other public sector banks. NBP has been and continues to
and Dhaka respectively.
cooperate fully with the FIA on this investigation and has made available
all relevant records and transactional history, including arranging
As of December 31, 2021, Bank has closed down its operations in
meetings with its employees who have managed Hascol’s relationship
Tashkent (Uzbekistan), Jalalabad (Afghanistan) and Sylhet (Bangladesh).
with the Bank.

NBP’s own stance on this matter has been documented in a submission

made to the State Bank of Pakistan and also subsequently to the FIA. The
fundamental challenges identified by NBP stemmed from a material
negative re-statement of the company’s financial records with acknowl-
edgement of fraud by Hascol management at that time. At NBP, credit
decisions were based on a set of published audited financial statements
of Hascol, and were made as per the policies of the Bank and SBP regula-
tions then in vogue. As the fraud unfolded, two of the company’s auditors
resigned, citing financial irregularities within Hascol. However, it is
pertinent to mention that Hascol has acknowledged its indebtedness to
NBP for the entire outstanding loans of PKR 18.80 Bn and the same are
reflected in the books of accounts of the Bank. NBP, in consultation with
its primary regulator i.e. State Bank of Pakistan, continues to support the
FIA investigation to its rightful conclusion of the investigation.

IT Network & System Security

On October 29th, 2021, a cyberattack was detected on the Bank's servers
which impacted some of its services. While continuity of business
operations was ensured with minimal possible disruption, the Bank
decided to shut down IT Network to avoid damage to systems. Expert
cyber security consultants were engaged in various capacities to contain
the damage and formulate an incident response posture, based on which
projects procurements and implementations are underway. The cyber-in-
cident impacted the Bank’s Microsoft Virtualization Platform only, where-
as no financial loss or data loss was identified on the Core Banking front.
To-date, the systems are up and running and the Bank has normalized
operations.
The licenses of Ashgabat (Turkmenistan), Dushanbe (Tajikistan) and

Moreover, as a major technology initiative, the Board has also recently Almaty (Kazakhstan) have been cancelled and these locations are under

approved the upgradation of the Bank’s Core Baking Application. This will closure process. Further, as of January 17, 2022, the BoD has approved

enable the Bank to better serve its customers, introduce additional the closure of its operation of Paris branch.

products especially in the digital space and above all significantly

enhance its operational controls.
Contingency Regarding the Pen-
Progress on Closure of Foreign sion Case
Status of the case is the same as disclosed in Note 25.3.3.1 to the Annual

Subsidiaries/Branches Financial Statements for the year ended December 31, 2020. The Bank

In line with our revised strategy on international franchises, the Board has estimates overall increase in pension liability, based on the independent
actuarial firm report, amounted to PKR 74.4Bn, excluding any penal Accountants and M/s A. F. Ferguson & Co. Chartered Accountants both
interest / profit payment (if any) due to delayed payment. Further, the having offered and eligible for the same, as external auditors of the Bank
potential pension expense for the year 2021 onward will also increase by for the year ending December 31, 2022 on such remuneration as
PKR 8.4 Bn due to this decision. Based on the opinion of legal counsel, no approved by the shareholders in the 73rd Annual General Meeting to be
provision for any additional pension liability has been made in these held on March 30, 2022.
annual financial statements for the above mentioned amount as the Bank
is confident about a favourable outcome on the matter. External auditors
of the Bank have inserted an emphasis of matter para in their Audit report. Endorsement
The Board of Directors is pleased to endorse following statements includ-
ed in this Annual Report:
Changes in the Board of Directors - Statement of Internal Controls
In exercise of powers conferred under Section 11(3) (a) of the Banks -Pattern of holding of the Shareholding
(Nationalization) Act, 1947, the Federal Government appointed Mr. Ahsan - Corporate Sustainability initiatives as disclosed separately in the Annual
Ali Chughtai as an Independent Director on the Board of National Bank of Report
Pakistan. Whereas, Mr. Muhammad Suhail Rajput resigned from the NBP
Board. Further details are given in the Statement of Compliance with the
Listed Companies (Code of Corporate Governance) Regulation, 2019 Future Outlook
The continued rollout of the Covid-19 vaccination program, structural
reforms, and the expansion of social protection programs are all key to
Credit Ratings ensuring inclusive and sustainable growth towards achieving the forecast
NBP is rated as ‘AAA’ by both the recognised credit rating agencies in growth of ~5%. Fiscal incentives and policies to boost export competi-
Pakistan. In June 2021, M/s VIS Credit Rating Company re-affirmed the tiveness, bolster the performance of the manufacturing sector and
Bank’s standalone credit rating as “AAA”, the highest credit rating award- augment private investment will continue to play an instrumental role in
ed by the company for a bank in Pakistan. Similarly, M/s PACRA Credit strengthening the economic outlook. However, some volatility may be
Rating Company also assigned the Bank long-term entity rating as 'AAA' expected amidst the recent geo-political changes in the region. While
(Triple AAA) and short-term credit rating as 'A1+' (A-one Plus). policy responses are expected to remain accommodative and soften the
blow dealt to businesses by the pandemic outbreak, these may not fully
offset the effects.
Our Response to Covid-19
Covid-19 continues to pose health and financial risks to the Bank, its Your Bank will continue to play its National role towards supporting a
employees and its customers, with varied impacts across industries, robust economic recovery in the country, while also maintaining a strong
communities and states. NBP has remained open for business, and & resilient balance sheet to deliver performance for its shareholders. The
continues to work alongside governments, regulators and the broader Bank’s business strategy will remain focused on financing and supporting
industry to support customers and the community. During these challeng- underserved sectors including SME, Microfinance, Agriculture Finance
ing times, the Board stood with the Management in framing responses to and the PM’s Low-Cost Housing initiative as well as Islamic financing on
emerging risks related to e.g. (i) Employee Health & Safety; (ii) Customer a priority basis.
Relief; (iii) Operational Resilience; (iv) Financial Soundness of the Bank;
and (v) effective AML/CFT/KYC monitoring, etc. In these challenging
times, your Board and the Management are actively monitoring the Acknowledgement & Appreciation
situation and adapting responses required to build resilience of the Bank, We appreciate the continued efforts & dedication of our employees
while creating opportunities for the Bank’s customers and the communi- towards ensuring continuity of uninterrupted service to the Nation amidst
ties it serves. the pandemic. We pay special respect and tribute to all those NBP staff
members who lost their lives in the line of duty during the Covid-19. May

Impact of the Bank’s Business Allah grant them the highest place in Jannah.

on the Environment We would like to acknowledge the Government of Pakistan, the State
Bank of Pakistan, the SECP and other regulatory bodies for their contin-
The Bank is cognizant of the environmental consequences of its ued support in enabling the Bank to achieve its true potential and contrib-
operations and its obligation to safeguard against environmental vulnera- ute towards the socio-economic development of Pakistan.
bilities. While the Bank’s business operations do not have a direct impact
on the environment, the Bank has taken measures for implementation of We would also like to thank our present teammates and the retiring
the Green Banking initiatives under the SBP’s Green Banking Guidelines teammate, Mr. Muhammad Suhail Rajput for his contributions on the
to provide finance to transform the economy into a resource efficient and Board towards making the Bank resilient and capable of creating inclusive
climate resilient one. We are putting in place appropriate mechanisms to growth opportunities for the Nation.
identify, assess and mitigate environmental risks.
For and on behalf of the Board of Directors

Appointment of Auditors
The existing auditors of the Bank M/s Yousuf Adil Chartered Accountants
and M/s A. F. Ferguson & Co. Chartered Accountants will be retiring on Arif Usmani Zubyr Soomro
73rd AGM. The Board is pleased to endorse the recommendation of the President & CEO Chairman
Board Audit Committee for re-appointment of M/s Yousuf Adil Chartered Karachi
March 08, 2022
Corporate Governance
Our philosophy of Corporate Governance is to ensure balance While the Board of Directors is responsible for overall
and sustainable success & growth for each class of the Bank’s stewardship of the Bank with integrity and in compliance with all
stakeholders. applicable laws and regulations, the CEO and senior
management are responsible for efficient delivery of strategy and
Safeguarding and rebuilding national institutions is a challenging execution of business operations.
task. Your Board, appointed in 2019, has worked hard to achieve
this for NBP. Our efforts and strategy have been focused upon In this Covid-19 dominated period, your Board has worked on
strengthening the institution’s balance sheet, inducting a team of looking after the health and wellbeing of staff and customers
professionals with the required expertise, developing a while steadfastly continuing the process of reforms so that the
framework of policies and controls to protect the Bank, and past problems do not recur. Specifically, to lead the restructuring
building a corporate culture based on performance and process, a strong team of talented seniors have been inducted
accountability. Material progress has been made in each of to head critical functions in the Bank.
these key areas.

Board Composition
Directors' Participation
Directors' Attendance in Meetings held during 2021:

Key Board Activities

Approval of Interim and Annual Financial Statements. Conducted the 72nd Annual General Meeting virtually by using a
Recommendation of 10% i.e. Rs. 1.0 Dividend payout for the year digital platform in line with the guidelines issued by the regulators.
2021.

Reviewed the Composition of all Board Committees, respective Concluded the Consent Order Agreement with Regulators in
Committee Charters and Terms of Reference. United States of America.

Repeal of outdated Staff Service Rules of 1973 by the Federal Resolved, through Out-of-Court arrangements, ~75% of the
Cabinet in April 2021, and promulgation of Staff Service ~4,000 cases relating to pay scale disparity among MTO/NMTO
Rules-2021. cadre of the Bank’s employees.

Based on recommendations made by the Board HR & Based on recommendations made by the Board Technology &
Remunerations Committee, revived the process of promotion. Digitalization Committee, approved Core Banking Application
1,700+ staff promoted to next cadres during 2021. upgrade.

Materially revamped the risk architecture of the Bank so that the Rationalised the Bank’s overseas operations through closure /
quality of assets is reinforced through assessments by skilled and scale back of ten franchises.
independent seniors.

Recomposition of the Board Committees to align with the Annual strategy meeting with the Evecutive Management Team to
challenging environment. approve Annual Budget.
Committees of the Board
The Board has seven (07) committees, as follows:

1. Board Audit Committee (BAC)

2. Board HR & Remuneration Committee (BHRRC)

3. Board Risk & Compliance Committee (BRCC)

4. Board Inclusive Development Committee (BIDC)

5. Board Technology & Digitalization Committee (BTDC)

6. Board International Franchises & Remittance Committee (BIFRC)*

7. NBP – NY Governance Council (Sub-Committee of BRCC)

1. Board Audit Committee (BAC)

Chairman of the Committee: Mr. Tawfiq A. Hussain, Chairman BAC
Number of meetings held during the year 2021: 06

BAC Members and their attendance in 2021

Name Status # of Meetings Attended Non-Executive/ Independent

Mr. Tawfiq A. Hussain Chairman 06 out of 06 Independent Director
Mr. Asif Jooma Member 06 out of 06 Non-Executive Director
Mr. Imam Bakhsh Baloch Member 05 out of 05 Independent Director
Mr. Muhammad Sohail Rajput* Member 01 out of 02 Non-Executive Director
*(Resigned on May 27, 2021)

The Board Audit Committee ensured the existence of an resolution. The Committee reviewed and recommended the
independent internal audit function in the Bank with adequate preodic financial results to the Board of Directors for approval.
resources and staffing. The Committee reviewed the progress of
the approved annual internal audit plan 2021 on a quarterly basis, The Committee maintained an effective working relationship with
reviewed and approved the updated / revised internal audit the Board and the Bank’s management. The Committee
manual, AIG & BAC Charters and Audit Policy during the year reviewed, discussed and monitored the matters related to
2021. improvement in internal audit, compliance issues, financial
reporting and corporate governance. The Committee also
The Committee ensures effective coordination between internal reviewed the effectiveness of the internal controls of the Bank
and external auditors, recommends the appointment of external which need further improvement and recommended various
auditors, reviewed the external audit plan for 2021, discussed the steps for strengthening the internal controls and compliance
financial results with the external auditors, including significant culture within the Bank on an ongoing basis.
issues of the audit and giving direction to the management for its
2. Board HR & Remuneration Committee (BHRRC)
Chairman of the Committee: Mr. Zubyr Soomro
Number of meetings held during the year 2021: 06

BHRCC Members and their attendance in 2021

Name Status # of Meetings Attended Non-Executive/ Independent

Mr. Zubyr Soomro Chairman 06 out of 06 Independent Director
Mr. Arif Usmani Member 02 out of 02 President / CEO
Mr. Farid Malik Member 05 out of 06 Independent Director
Mr. Asif Jooma Member 06 out of 06 Non-Executive Director

ToRs of the Committee include the followings: vii) Review and recommend policy changes in Pension Benefits.
i) Review and recommend human resource policies for the viii) Review training policies and give guidelines for the overall
approval of the Board of Directors. improvement in training activities and suggest improvement in
ii) Review and recommend the Bank's Remuneration Policy and training methodology and identify areas of training relevant to
remuneration setting mechanism at least once every two years. needs of the organization.
iii) Recommend to the Board of Directors matters pertaining to ix) Review and recommend appointments to the Boards of NBP
recruitments, appointments, transfers, promotions, termination and subsidiaries, affiliates and other institutions where NBP’s
disciplinary issues of SEVPs & EVPs (President's Direct Reports), representation is required.
Audit Chief, Secretary (BoD) and the Chief Financial Officer (CFO). x) Review diversity & inclusion strategy.
iv) Recommend to the Board of Directors remuneration, xi) Review succession planning of key executives and KPIs.
compensation, increment, performance bonuses and perquisites xii) Seek independent external advice / expert opinion whenever
of the CEO/President, Secretary (BoD), CFO and all positions required.
reporting to the CEO/President. xiii) Perform any other function consistent with these ToRs,
v) Review and guide management on industrial relations issues. applicable laws including Code of Corporate Governance and the
vi) Review the appropriateness of and recommendations for Bank's bye-laws, as deemed necessary.
organizational restructuring as and when deemed necessary.

3. Board Risk & Compliance Committee (BRCC)

Chairman of the Committee: Mr. Tawfiq A. Hussain
Number of meetings held during the year 2021: 05

Name Status # of Meetings Attended Non-Executive/ Independent

Mr. Tawfiq A. Hussain Chairman 05 out of 05 Independent Director
Mr. Arif Usmani Member 05 out of 05 President / CEO
Mr. Imam Bakhsh Baloch Member 05 out of 05 Independent Director
Mr. Ahsan Ali Chughtai* Member - Independent Director

ToRs of the Committee include the followings: Appetite and associated limits / concentration in respect of
A. Role of the Committee with Respect to Risk Management and credit, market, liquidity and operational risks.
compliance: v) Periodically review Risk Management strategies developed
i) Recommend the Risk Management Policies for approval by the and recommended by RMG / ERMC and propose it to the
BoD. Board for approval.
ii) Review the Risk Management Policy on a periodic basis to vi) Monitor the impact of significant risk issues on the Bank's
ensure that it remains updated with regards to changes in the strategy and monitoring alignment of the strategy, appetite,
Risk Management activities of the Bank as and when they are business plans, budgets and policies etc. to address the
implemented. existing or potential risks.
iii) Oversee that the Bank has appropriate systems, tools, vii) Recommendation / ratification of tolerable deviations to the
techniques, methodologies and controls to measure (as far as portfolio risk limits and the risk management policies as
possible), to monitor and manage all significant risks recommended by ERMC / any other competent authorities.
embedded in the Bank's books. viii) Monitor the Bank's progress towards Basel-III related
iv) Review and recommend to the Board the Bank's overall Risk implementation.
as per SBP / regulatory guidelines / directives and review the acqui- observations in on-site examinations, regulatory enforcement
sition of Risk Management Systems duly recommended by the actions, internal assessments / feedback from internal audit,
management. compliance reviews, as well as interactions with the Group
Chief/Head of Compliance Group.
ix) Formulate an overall view of the adequacy of the Bank's capital vii) On the advice of the President, recommend approval to the BoD
with a prudent risk management perspective ensuring that for the appointment of Group Chief/Head of Compliance Group
overall risk exposure stays at adequate level and consistent with with sufficient experience, expertise, skills and qualifications to
available / planned capital. perform Group Chief/Head of Compliance Group's functions in
an effective manner.
x) Review the performance of the Risk Management Group.
viii) Recommend to the BoD for any disciplinary action or termina-
xi) Review various exception and MIS reports prepared by RMG. tion of the Group Chief/Head of Compliance Group.

xii) Review TORs for functions and committees responsible for ix) Ensure that the position of the Group Chief/Head of Compliance
credit, market, liquidity and operational Risk Management and Group does not remain vacant for more than 60 days.
establishing minimum risk reporting criteria.
x) Ensure that the Group Chief/Head of Compliance Group has the
xiii) Monitor that the resources allocated for risk management are appropriate stature, authority, resources (physical, financial and
adequate given the size, nature and volume of the business. human) and support to fulfill the duties, is sufficiently indepen-
dent of line departments, and has the capacity to offer objective
xiv) Ensure that the Committee members participate in the orienta- opinions and advice to Senior Management and the Board on
tion and training program to educate and enhance the knowl- matters of Compliance Risk.
edge of new / existing members on their areas of responsibilities
and ensure participation of members in continuing professional xi) Engage with Group Chief / Head of Compliance Group on a
development programs / workshops to enhance Committee half-yearly basis to provide him the opportunity to discuss
members' understanding of relevant areas. issues faced by the Compliance Framework in implementation
of Board-approved Compliance Program.
xv) Review FI Placements Limits on a regular basis.
xii) Review the minutes of the Compliance Committee of Manage-
B. Role of the Committee with respect to Compliance Risk ment (CCM) meetings to ascertain its effectiveness in managing
Management: Compliance Risk.

i) Review and recommend for approval to the BoD Compliance Risk xiii) Review the progress in implementing remedial actions taken
Strategy (as part of the Bank's overall risk strategy) and allied with respect to instances or non-compliance or control weak-
policies of the Compliance Group and oversee its implementa- ness, as identified by the Compliance Framework through its
tion across the entity in letter and spirit. regular compliance reviews and / or various other sources.

ii) Ensure the establishment of a robust Compliance Framework xiv) Satisfy itself of receiving accurate as well as comprehensive
compatible with the Bank's overall Risk Management Strategy, information required to perform compliance risk oversight
risk profile and complexity of operations, with the required responsibilities, including seeking assurances from Senior
authority, independence, financial resources and quality human Management that the Compliance Risk controls have been
resources. implemented and are working effectively.

iii) Review and recommend for approval to the BoD an end-to-end

Compliance Program that promotes and supports Compliance In addition to the above, the role of the Committee also includes:
Risk Management across the organization, at every hierarchy
level of NBP. i) Discussing the Compliance Risk faced by the overseas branches
iv) Maintain and promote a high compliance culture and values of and their mitigation plans and report to the BoD on a half-yearly
honesty and integrity in NBP. basis.

v) Discuss compliance issues regularly, ensuring that adequate ii) Reviewing and discussing any material incidents of Non-Compli-
time and priority is provided in the agenda to deliberate compli- ance.
ance issues and that such issues are resolved effectively and
expeditiously. iii) SBP / Regulatory Inspection Reports and Compliance status
thereon.
vi) Evaluate the effectiveness of NBP’s overall management of iv) Quarterly reviews of KYC/AML/Sanctions Compliance- related
compliance risk, at least annually; keeping in view the regulatory risk factors.
v) Reviewing the Currency Transaction Reports (CTR) submitted to ix) Monitoring of FATCA and CRS Implementation and Due
the Financial Monitoring Unit. Diligence Milestones.

vi) Reviewing the Suspicious Transactions Reports (STR) submitted x) Review Compliance status of the Regulatory Inspection Reports
to the Financial Monitoring Unit. of overseas branches (as and when received).

vii) Updating status on staff trainings on AML/CFT/CPF/Sanctions xi) Quarterly review of penalties imposed on the overseas branches.
Compliance.
xii) Discussing any other significant regulatory gap or development
viii) Quarterly review of status of Bank's Policies. related to the NBP overseas branch network, which is escalated
to the Committee.

4. Board Inclusive Development Committee (BIDC)

Chairperson of the Committee: Ms. Sadaffe Abid
Number of meetings held during the year 2021: 05

Name Status # of Meetings Attended Non-Executive/ Independent

Ms. Sadaffe Abid Chairperson 05 out of 05 Independent Director
Mr. Zubyr Soomro* Member - Independent Director
Mr. Arif Usmani** Member 01 out of 01 President / CEO
Mr. Imam Bakhsh Baloch** Member 01 out of 01 Independent Director
Mr. Asif Jooma Member 03 out of 03 Non-Executive Director
Mr. Ahsan Ali Chughtai Member 03 out of 03 Independent Director
Mr. Muhammad Sohail Rajput** Member 02 out of 02 Non-Executive Director
*w.e.f December 6, 2021, **Reconstitution in 317th board meeting held on February 24, 2021.

ToRs of the Committee include the followings: vii) Receive periodic updates from the Bank staff to monitor all
i) Advise and report to the NBP Board on the status of development Development Finance related projects approved by the NBP
finance activities and initiatives in the Bank. Board.

ii) Review and recommend Development Finance Strategy and viii) Review the Bank's CSR strategy and align it with the Financial
relevant policies for the Bank in the sectors related to low cost Inclusion and Development Finance mandate. Receive periodic
housing, SME, agriculture, livestock and fisheries, financial updates on the CSR activities.
inclusion and women's empowerment, education financing, etc.
before submission to the NBP Board. ix) Determine and advise on what research may be needed to direct
the Bank’s approaches most effectively and what means the
iii) For the SME Sector, evaluate and recommend policies to Bank should deploy to monitor progress thereof.
promote value chain financing leveraging existing and new
corporate relationships. x) Study Micro, Small and Medium Enterprise strategies that have
been successfully implemented by network banks in other
iv) For financial inclusion, plan how to equip NBP to understand and markets including through specialized vehicles such as leasing
grow lending to the microfinance banks and institutions, includ- and factoring.
ing tapping funding routed through the State Bank and multilat-
eral agencies. xi) Work with the Government of Pakistan and SBP to promote low
cost housing and reduce impediments.
v) Review and monitor progress on the above initiatives and recom-
mend policy changes needed to enable growth in underserved xii) Evaluate and review the existing agriculture financing structure
segments in alignment with the Bank's vision and strategic goals and "Farm-to-Fork" financing.
and the country's overall needs.
xiii) To explore financial intermediation in underserved areas includ-
vi) Review and ensure that necessary capacity and resources are ing healthcare.
available to deliver the Development Finance mandate of the
Bank, including organizational structuring necessary to promote xiv) If deemed necessary, the Committee may seek expert opinion
NBP as a leader in the relevant segments. from independent sources.
5. Board Technology & Digitalization Committee (BTDC)
Chairman of the Committee: Mr. Farid Malik
Number of meetings held during the year 2021: 06
Name Status # of Meetings Attended Non-Executive/ Independent
Mr. Farid Malik Chairman 06 out of 06 Independent Director
Mr. Arif Usmani Member 05 out of 06 President / CEO
Ms. Sadaffe Abid Member 06 out of 06 Independent Director

ToR of the Committee include the followings: Strategic Technology Implementation Plan, DR Plan, Cyber-Se-
curity Implementation Plan, etc.
i. Advise and respond to NBP Board on the status of technology
activities and digital initiatives in the Bank. vii. Receive periodic updates from IT steering Committee to
monitor all technology-related projects approved by NBP Board.
ii. Review overall need of businesses and the resources available to
meet these needs. viii. Review BCP arrangement; in particular, DR and Backup
arrangements in an on-going basis.
iii. Review and recommend IT and Digital strategies and relevant
policies before submission to the Board. ix. Ensure that technology procurement are aligned with the IT
strategy approved by the Board.
iv. Access technology resources including hardware. software,
security and networking are up-to date to meet the requirement x. approve terms of reference or any change in the constitution of
on an up-to-date basis. IT Steering Committee.

v. Ensure that risk management strategies are designed and imple- xi. Board ratification of the decisions taken by BTDC, to be subse-
mented to achieve resilience, such as the ability to effectively quently obtained, wherever applicable.
respond to wide scale disruptions including cyber-attacks and
attacks on multiple critical infrastructure sectors. xii. If deemed necessary, the Committee may seek expert opinion
from independent sources.
vi. Review and monitor technology policies and plans such as

6. Board International Franchises & Remittance

Committee (BIFRC)*
Chairman of the Committee: Mr. Arif Usmani
Number of meetings held during the year 2021: 01 (the Committee was dissolved on February 24, 2021)
Name Status # of Meetings Attended Non-Executive/ Independent
Mr. Arif Usmani Chairman 01 out of 01 President / CEO
Mr. Tawfiq A. Hussain Member 01 out of 01 Independent Director

ToRs of the Committee include the followings: iv. Providing strategic guidance on expansion or reduction of
i. Addressing concerns and ensuring compliance with all applicable operations in any jurisdiction and ensuring that such overseas
laws and regulatory instructions of the respective host jurisdic- operations are in line with the Bank’s overall business model &
tions of all international offices. strategic plan.

ii. Periodically reviewing, monitoring and placing to the BoD the v. Reviewing the detailed “Review Report” submitted by the Bank’s
jurisdiction-wise Board-approved strategic plan with well-de- Management on the financial and operational performance of
fined and measurable deliverables. the Bank’s overseas operations in each jurisdiction on a periodic
basis (preferably twice a year).
iii. Overseeing and regularly evaluating the financial and operational
performance of its overseas subsidiary, joint venture operations, vi. Reviewing the minutes to remain aware of the issues being faced
and that of overall overseas branch operations. Conducting a by overseas subsidiaries as well as evaluating the performance
thorough variance analysis for subsidiaries, JV and / or branches of the overseas subsidiaries’ board and taking necessary
/ jurisdictions. actions/decisions to address deficiencies.
vii. Ensuring that comprehensive policies, procedural manuals 2) host regulator inspection reports and resolution of outstanding
/SOPs, competent staff and proper system support are put in critical issues
place in all critical areas of Operations, Risk, Complaince, Audit, , 3) conflicts of interest (if any) in organizational structure of overseas
HR, etc. operations and their removal.

viii. Ensuring that a proper Human Resource Rotation Policy is xi. Reviewing the Bank’s performance on Home Remittances vs
developed and implemented in letter and spirit on employees Industry.
posted at overseas branches / jurisdictions at all hierarchal
levels. xii. Reviewing Technology Improvement for Home Remittances.

ix. Reviewing a cost benefit analysis of overseas Representative xiii. Reviewing strategic expansion plans which includes
Offices on a periodic basis and shall consider closing those deployment of resources in key target markets. Resources may
offices that do not provide any net financial benefit to the Bank. include human resources, physical as well as digital
In cases where the Bank wants to continue those offices despite infrastructure.
the fact that they do not provide any net financial benefit to
Bank, proper reasons & justifications will be recorded for such a xiv. Reviewing of plan for revamping, revisiting overseas branches
decision at Board level. and opening of new specialized branches wherever necessary.

x. Periodically reviewing;
1) major litigations of overseas operations,

7. NBP – NY Governance Council (Sub-Committee of BRCC)

Chairman of the Committee: Mr. Tawfiq A. Hussain
Number of meetings held during the year 2021: 05
Name Status # of Meetings Attended Non-Executive/ Independent
Mr. Tawfiq A. Hussain Chairman 05 out of 05 Independent Director
Mr. Arif Usmani Member 05 out of 05 President / CEO

ToRs of the Committee include the following:

i. Addressing concerns and ensuring compliance with all applica- iii. Overseeing and regularly evaluating the financial and opera-
ble laws and regulatory instructions of the respective host tional performance of overseas subsidiaries, joint venture opera-
jurisdictions of all international offices. tions, and that of overall overseas branch operations. Conducting
a thorough variance analysis for subsidiaries, JV and / or branch-
ii. Periodically reviewing, monitoring and placing for the BoD the es / jurisdictions.
jurisdiction-wise Board-approved strategic plan with well-defined
and measurable deliverables. iv. Providing strategic guidance on expansion or reduction of
operations in any jurisdiction and ensuring that such overseas
operations are in line with the bank’s overall business model &
strategic plan.
Role of the Board of Directors
Good governance is pivotal in helping the business deliver its across the Groups. The Chairman leads the Board and ensures
strategies whilst generating sustainable shareholder value and the effective engagement and contribution of all executive and
balancing competing demands of other stakeholders. It revolves non-executive Directors. The Chief Executive has a responsibility
around the basic principles of fairness, integrity, transparency and for all Groups’ businesses and acts in accordance with authority
accountability with a prime focus on the role and composition of delegated by the Board. The non-executive Directors combine
the Board of Directors. broad business and commercial experience with independent
and objective judgement.
The Board has an overall responsibility for formulating policies
towards the management of business and affairs of the Bank, the The Chairman is responsible for the leadership of the Board and
establishment of the Bank’s strategy, and is accountable to to ensure that the Board plays an effective role in fulfilling its
shareholders for financial and operational performance. The responsibilities. The Chairman also ensures that:
Board considers strategic issues and ensures that the Bank
manages risks effectively through approving and monitoring the • The Bank’s strategies and policies are aligned with its vision &
Bank’s risk appetite, considering the Bank’s stress scenarios and mission and steer the Bank in the right direction towards
agreed mitigant and identifying longer term strategic threats to the achieving its long-term strategic goals and objectives.
Bank’s business operations. The Board’s Terms of Reference
include key aspects of the Bank’s affairs reserved for the Board’s • The overall Board, its individual Members and its Committees,
decision and are reviewed at least annually. There are a number discharge their roles efficiently & effectively in line with regulato-
of areas where the Board has delegated specific responsibilities ry requirements.
to its Committees and management, including the Chief Execu-
tive Officer. These include the responsibility for the operational • Individual members of the Board participate in its meetings and
management of the Bank’s businesses as well as reviewing high have the opportunity to express their opinion.
level strategic issues and considering risk policies and risk
management strategies which are in advance being considered • Minutes of the meeting truly reflect what transpired during the
by the Board and/or its Committees. Specific delegated authori- meeting and dissent of Directors, if any, is properly recorded in
ties are also in place in relation to business commitments the minutes.

Performance Evaluation of the Board of Directors

The Board of Directors is keen to ensure the effectiveness of its a review of the minutes, agenda and terms of reference, percep-
performance which is evaluated periodically. In terms of the SBP tion surveys and structured interviews with the senior manage-
Guidelines on Performance Evaluation of the Board of Directors, ment and those charged with the Governance. Their report
the Board has put in place a formal mechanism for performance includes an assessment of the Board meeting and interviews
evaluation of the overall Board and its Committees. conducted with the Directors, the role of the Board, the composi-
tion of the Board and its Committees and skills and experience of
The consultants conduct an independent performance evaluation individual Directors.
of the Board and its Committees to encourage better efficacy of
the Board performance and compliance with statutory require-
ments. Their approach towards performance evaluation included

Responsibilities of the Management and the Board of

Directors for the Financial Statements
Management is responsible for the preparation and fair presenta- In preparing these financial statements, management is responsi-
tion of the financial statements in accordance with accounting ble for assessing the Bank's ability to continue as a going
and reporting standards as applicable in Pakistan, the require- concern, disclosing, as applicable, matters related to going
ments of the Banking Companies Ordinance, 1962 and the concern and using the going concern basis of accounting. The
Companies Act, 2017 (XIX of 2017) and for such internal control Board of Directors is responsible for overseeing the Bank's
as management determines is necessary to enable the prepara- financial reporting process.
tion of unconsolidated financial statements that are free from
material misstatement, whether due to fraud or error.
Directors’ Remuneration Policy
Remuneration policy “the policy” for the non-executive / indepen- including the guidelines and instructions of SBP issued from time
dent Directors of NBP for attending the Board and Board to time as well as the remuneration.
Committee meetings is approved by the shareholders in their
general meeting. It was last approved in a general meeting held In terms of the policy, the Board shall, from time to time,
on July 27, 2020. The policy remains, at all times, compliant with determine and approve such level of remuneration for the
NBP’s Bye-laws and subject to the provisions of the BPRD Circu- members of the Board, for attending meetings of the Board or
lar No. 03 of 2019 of the State Bank of Pakistan and any amend- meetings of the Committees thereof, as may be within the limits
ments thereof from time to time. The policy is intended to for such remuneration as prescribed by the SBP from time to time
prescribe the remuneration and methodology for determination of and determined to be an adequate measure of remuneration for
remuneration of the members of the Board of Directors and the the performance of relevant duties by such members. In terms of
Committees thereof. The policy also covers other expenses i.e. the policy, the Board shall also ensure that such remuneration is
logistics, traveling incurred by the Directors in relation to attending not determined in any manner that may undermine the indepen-
the Board meetings. dence of the Board or Committee members.

In terms of the policy, the Board shall ensure that such remunera- The details of compensation of directors in 2021 are disclosed in
tion is determined subject to applicable provisions of the Banks’ Note 41 to the unconsolidated financial statements.
Nationalisation Act 1974, NBP’s Bye-laws and related regulations

Matters Delegated to the Management

The Board of Directors approves the strategic plan/objectives Tactical and operational matters are delegated to the Manage-
and takes the overall responsibility of overseeing its implementa- ment. Further, under the direction and oversight of the President
tion. The Board performs its duties by giving timely guidelines to & CEO of the Bank, the Senior Management carries out and
the Management, setting performance targets and monitoring manages the Bank’s activities in a manner consistent with the
their achievements. The Management is primarily responsible for strategic plan, business goals, risk appetite and other policies
implementing the strategies as approved by the Board of approved by the Board of Directors.
Directors in effectively conducting the operations of the Bank.

Shares held by Directors, CEO, their Spouses and

Minor Children
Shares held by Directors, Chief Executive Officer, their Spouses and Minor Children have been disclosed in “Categories of Shareholders”
section of the Annual Report.
Leadership Structure of those charged with Governance
The Bank’s operations are governed under the Board of Direc- pro-les, describing their experience and education, have been
tors. The Board comprises of non-executive Directors and an disclosed at the start of this section.
executive Director. The Chairman leads the Board. The Directors’

Non-Executive Directors
At present, all Directors on the Board are non-executive except involved in managing the daily affairs of the Bank, nor are they
the President/CEO of the Bank. The non-executive Directors from the Executive Management Team of the Bank.
provide an outside viewpoint to the Board. They are neither

Independent Directors
The Board has 6 independent Directors who meet the criteria of play a crucial role in the independent functioning of the Board.
independence stipulated under the Companies Act, 2017 and the They bring in an external and broader perspective to
directives issued by the State Bank of Pakistan. These Directors decision-making by the Board.

Directors’ Orientation
Directors’ Orientation refers to the process of helping new Direc- • Develop an understanding of how their own background, knowl-
tors contribute fully, and as early as possible in their tenure, to the edge, experience and skills will contribute to the current work of
governing work of the Board. The objective of the orientation is to the Board, and the goals of the organisation.
enable the Directors to: • Appreciate the background, knowledge, experience and skills of
• Understand their roles, responsibilities and time commitment to other Directors.
governance work around the Board and Committees. • Gain knowledge of how the Board meetings are run, decisions
• Be aware of the current goals, opportunities and challenges are made, and what formal governing policies and practices exist;
facing the organization. and
• Be aware of who the organisation’s main stakeholders are, • Understand how the Board functions similarly or differently from
including clients, partners, public, as well as the staff. other boards they have served on, or are serving on.

Directors’ Training Programme

The Bank is fully compliant with the Directors’ Training require- training for the following Directors:
ments of the Listed Companies (Code of Corporate Governance) i. Mr. Farid Malik - Independent Director
Regulations, 2019. The other Directors, with a minimum of 14 ii. Mr. Imam Bakhsh Baloch - Independent Director
years of education and 15 years of experience on the Board of a iii. Ms. Sadaffe Abid - Independent Director
listed company, local and/or foreign, stand exempted from the iv. Mr. Asif Jooma - Non - Executive Director
Directors’ Training Programme as allowed under Code of Corpo- v. Mr. Ahsan Ali Chughtai - Independent Director
rate Governance (CCG), 2019. During 2021, the Bank arranged

Whistle Blowing / Speak-up Policy

Investor Grievances
The Bank has put into place comprehensive guidelines to • In addition, if Shareholders’ grievances are not resolved by the
address their grievances for the Investors and Shareholders in Shares Registrar of the Bank, they may escalate their complaints
compliance with the regulatory requirements as stipulated under to the Company Secretary of the Bank.
SECP SRO # 1196(I)/2019 and S.R.O. 303 (I)/2020.
• If a complaint still remains unaddressed, the same can be
• For all shares related matters, shareholders are requested to forwarded to Securities and Exchange Commission of Pakistan
contact the Bank’s Shares Registrar with contact details (SECP); using the link of SECP website which is available on the
available on the Bank’s corporate website. Bank’s corporate website.

• In order to facilitate the shareholders who, intend to register a • Furthermore, queries with respect to financial position &
complaint, the contact details of the focal person of Shares performance results of the Bank can be directed to ‘Investor
Department are given on the Bank’s corporate website for this Relations’ team, which is headed by Chief Financial Officer, at
purpose. the email address investor.relations@nbp.com.pk (which is also
available on corporate website as well).

Covid-19 Response Plan

The COVID-19 pandemic has created a crisis unprecedented in • Hill Park hospital, Karachi
terms of scale, socio-economic and environmental implications. • Hamdard University Hospital (Taj Medical Complex), Karachi
The consequences of this crisis are manifold and of exceptional • Habib medical Centre, Karachi.
severity for organizations. The pandemic has created a chaotic
situation of uncertainty and confusion about risks to employees, In addition to this, Portal was designed in order to facilitate
measures and best practices that organizations adopt, stake- employees to update their vaccination status by themselves.
holder pressures, government shutdown and recovery plans
(health facilities) and potential for new waves of contamination. In compliance of SBP directives for vaccination drive in Public
NBP’s initiatives in this pandemic are tremendous and being a Sector/ State Owned Enterprises, the same were conducted
socially responsible corporate entity, NBP always ensures health within NBP premises.
& safety of its employees and takes affirmative action towards Vaccination drives have been conducted at NBP Head Office
their well-being. premises under the auspices of our partner hospital:
Staff Loans & Welfare Wing (SL&WW), Compensation & Benefits
Division has taken eloquent steps to counter the effects of Vaccination Drive Total vaccination
Hospital/Lab Date 2021 administered
COVID-19 crisis since its beginning in early 2020. Now, we have
specialized arrangements with the following panel hospitals for Hashmani Group of Hospitals 29th July 203
the treatment against COVID-19 for NBP employees and their Hashmani Group of Hospitals 2nd August 191
families. Services Hospital, Sindh Government 3rd August 189
Hashmani Group of Hospitals 31st August 256
COVID-19 Hospitalization Advanced Laboratories Pvt. Ltd 13th September 248
• Quaid-e-Azam International hospital, Islamabad.
• University of Lahore Teaching Hospital, Lahore The above-mentioned steps taken by SL&WW, C&BD speak for
• Najam Hospital, Lahore the management’s commitment to ensure the well-being of our
• Liaquat National Hospital, Karachi. employees and provision of the best available medical services
• Ziauddin Hospital, Karachi and we assure our constant efforts for the betterment of our
• OMI hospital, Karachi. health facilities in future.
• Altamash Hospital, Karachi.
Forward Looking Statement
This Annual Report contains statements that are, or may be interest rates and geopolitical unrest may have some impact on
deemed to be, forward looking statements. These forward quality of earning assets. Considering the ongoing political
looking statements may be identified by the use of forward distractions and the twin deficit pressures, the socio-economic
looking terminology, e.g. "estimate", "plan", "project", "antici- and regulatory landscape will continue to transform rapidly;
pate", "expect", "may", "will", “could”, "should" etc., or by hence, further exacerbating the external challenges surrounding
discussions of strategy, plans, objectives, targets, goals, future our operating environment. Irrespective of such external depen-
events or intentions. dencies and pressures, the Bank is committed to delivering
strong results to its stakeholders for the year 2022.
An indications of, and guidance on, future earnings and financial
position and performance are also forward looking statements. The Bank’s strategic plan, centered on the key pillars of customer
Since there are uncertainties related to the occurrence of future centricity, digital expansion & transformation and people develop-
events, readers are cautioned not to place undue reliance on such ment, takes into consideration the evolving operating and
forward looking statements for decision making by the users of economic scenario and paves Bank’s future road map.
the Annual Report. Such forward looking statements are not
guarantees of future performance and involve known and Uncertainties that could affect the Bank’s Resource, Revenues
unknown risks, uncertainties and other factors, many of which are and Operations
beyond the control of the Bank, which may cause actual results to
differ materially from those expressed or implied in such Forward-looking statements made in the Annual Report are, by
statements. nature, subject to certain risks and uncertainties. Major factors
that can affect the Bank’s resource, revenues and operations are
Outlook given below:
For the year 2022, real sector growth is being projected in the
range of 4-5% with growth expected on all major sectors. • Adverse judgements in the HR related litigations as disclosed in
External environment continues to remain challenging and uncer- Note 25.3.3 of the Financial Statements.
tain amidst the emerging geopolitical flare-ups. The factors • Any sharp change in the Fiscal and Monetary policy;
behind in the Current Account deficit in recent months now • Impact of any flare-ups in the Covid-19;
appear to be alleviating to a degree as imports have started • Geopolitical unrests across the geographies that we operate in;
moderating; the country may return to a more sustainable deficit, • Political stability and Law & Order situation in the country;
albeit short-term pressures during 1H’22. • Tax laws and other regulations;
• Emergence of disruptive technologies;
Pakistan’s banking sector is expected to continue face some • Risk of cyber-security.
headwinds in the near term. The slower economic growth, rising

Capital expenditures
Capital expenditure during the year: Capital expenditures planned for next year:
The total capital expenditure during 2021 was PKR 2.5 Bn for The Bank has budgeted capital expenditure for the next year.
business expansion, renovation and improvement of IT This would primarily be invested in increasing our Core Banking
infrastructure, that mainly includes: Application and other Technology Platform upgrade, operational
outreach, safeguarding our existing infrastructure / relationships
• PKR 260 Mn for software implementation at Hong Kong branch. from growing threats on cyber security front along with normal
• PKR 97 Mn for branches development. replacements to ensure smooth operations.
• PKR 39 Mn for penetration testing solution.
Disclosures beyond BCR Criteria
Over the recent years, there have been significant developments understanding various aspects of the Bank’s operational and
in the corporate reporting domain, particularly in relation to the financial performance. Following is the list disclosures that have
amount of details included in the entities’ annual reports, as well been made in addition to the BCR criteria:
as the importance ascribed by users to the information beyond • President/CEO Review
the audited financial statements and the auditor’s report thereon. • Key interest bearing Assets and Liabilities
There has been an evolution in the manner in which entities • Quarterly Performance Analysis
disseminate and communicate information to their stakeholders • Six Years’ – Financial Performance 2016-2021
as users attach increasingly greater importance to supplementary • Four Years summary of operating expenses
information and look for better ways to inform their analysis and • Six Years summary of markup and non-markup income
confirm understanding of more complex areas in the financial • Statement on Internal Controls
statements. • Groups’ Performance Reviews
Considering this emerging necessity,the Bank strives to go • Detail of Management Committees & Other Senior Management
beyond the realm of essential reporting requirements in order to • Investor Awareness through Jama Punji Initiative by the Securi-
disclose all relevant information that facilitates the stakeholders in ties & Exchange Commission of Pakistan.

Performance of PMDU Cell

• The PMDU Cell NBP was established on 15-10-2018 by the PM media channels including Facebook and Instagram and also on
Office with a vision to promote citizen-centric and participatory Bank’s website. During 2021, eleven (11) Khuli Kachehris sessions
governance. The PMDU Cell NBP directly reports to President have been conducted as per the given SOPs of PM’s Office,
NBP and PM Office through live dashboards. wherein, 312 calls have been taken.

• PMDU handles two dashboards i.e. PCP & the product specific • PMDU Cell handles time limit cases as assigned by PM Office as
Kamyab Jawan. task. Have handled 4 major tasks in this respect within stipulated
time frame. This includes:
• As of 31-12-2021, 18,291 complaints were received on
President NBP Portal out of which 17,884 stand addressed. • Reopened complaints by PM Office / Finance Division
Besides, 20,018 complaints received on Kamyab Jawan Portal of
which 19,787 were addressed. • Task of Facilitation of overseas Pakistanis through establishment
of dedicated sections /desk and nomination of officers at minis-
• On PCP Portal, 58.53% complainants posted their feedback out tries/division/attached departments.
of which 47.24% have shown their satisfaction to the response
posted by PMDU Cell NBP. • Established minimum required standard of public facilitation at
main branches of major cities.
• In line with Prime Minister’s Office instructions, President NBP
conducts 2 hours’ Khuli Kachehri sessions every month wherein •Task on archiving of old files record, auction of condemn machin-
general public notifies their complaints regarding the Bank ery equipment vehicles furniture etc.
through telephone calls.

• The Khuli Kachehri events were publicized on the Bank’s social

Complaint Handling
The Bank manages consumer grievances handling through a Bank 24/7, the Bank received a total of 130,090 complaints
centralized Complaints Management Wing. Complaint (2020: 72036), and managed to maintain a complaint resolution
management is meant to facilitate quick lodgment of customer rate of 98.7% (2020: 99.2%). In spite of an increased number of
grievances, SMS acknowledgement of lodged complaints and complaints processed, on a comparative node the average
its resolution on a fast-track basis. Now the complainants can complaint responding time has also reduced from 9.8 in 2020 to
track the status of their lodged complaint in a click at link 8 working days in 2021.
activated on Bank’s web site. The Bank’s Complaint Management Services is based on the
following principles:
As a result of making visible complaint handling to customers • Promote a culture that values customer experience with
and effective utilization of call center as a source to contact the Courtesy
 • Fair and efficient resolution of consumer grievances with to identify gaps and areas of improvement besides bringing
Impartiality & Transparency more operational efficiency and improving the quality of
• Every complaint must be resolved within the shortest possible customer services.
time as per customer satisfaction and prevailing rules. The Bank is committed to continue investment in people,
resources and technology to support consumer grievances
As a post resolution activity, complaints data is being examined handling functions.

Conflicts of Interest
The sole trigger of all our decisions and actions shall be to is placed in a position of actual or potential conflicts. In dealing
contribute towards success of the Bank. We manage our person- with conflicts of interest, the Bank pays close attention to the:
al, financial and business affairs in a manner that ensures avoid- - Provision of the Companies Act, 2017 and Listed Companies
ance, or even appearance, of any conflict of interest. The Bank (Code of Corporate Governance) Regulations, 2019;
has a meticulous system in place to avoid conflict of interest. At - SBP’s Corporate Governance Regulatory Framework; and
an individual level, members of the Board declare conflicts of - NBP bye-laws
interest situations and withdraw from taking part in deliberations
on/exercising influence over matters where conflict or the appear- Managing and monitoring conflicts of interest:
ance of conflict of interest arises. The actions are appropriately - The Directors are well-versed with their responsibilities to act in
minuted for future reference. In addition, the affiliations and the best interests of the Bank and investors, and to refrain from
transactions of Directors are regularly reviewed to ensure that any conduct that may be considered adverse or contrary to the
there are no conflicts or relationships that might impair Directors’ interests of the Bank and investors;
independence. - The Directors are required to disclose their (along with family
One of the key duties that Directors owe to the Bank is the duty to members’) interests to the Bank before entering into any such
avoid conflicts of interest. This includes not placing one’s self in a transaction as per the manner prescribed in the applicable laws
position where the Director’s personal interest could possibly and regulations;
conflict with their duty to the Bank. Conflicts may arise in several - The concerned Director, if any, does not participate in any
situations. Typical scenarios are: deliberation, decision-making, proceeding, or investigation action
- Where the Directors have a direct or indirect material interest in by the Board of Directors in case of a conflict of interest; and
a transaction that the Bank enters into; - Insider Trading is prohibited and the records of persons having
- Where the Directors hold positions or offi¬ces, or possess access to sensitive information are maintained in an insider
property that may result in conflicting duties; and register.
- Where the Directors stand to bene¬fit from information received The ultimate objective of procedures to deal with conflicts is the
by them, or opportunities made available to them in their capacity protection of the Bank’s interest and promotion of transparency
as Directors or of¬ficers. for the bene¬fit of the shareholders.
The Bank exercises particular care in monitoring whether or not it

Related Party Transactions

The Bank enters into transactions with its related parties in its - The Prudential Regulations of State Bank of Pakistan;
daily operations to meet its business objectives, while doing so - The Listed Companies (Code of Corporate Governance) Regu-
we recognizes the need to maintain transparency and to fulfill our lations 2019
obligations towards all our stakeholders, including the sharehold- - Pakistan Stock Exchange (PSX) Rule Book; and
ers, regulators, employees, etc. - Applicable International Financial Reporting Standards.
The Bank follows the philosophy that there must not be any
conflict of interest or non-disclosure of such transactions. In this Names of related parties, with whom the Bank had entered into
connection, the Bank has a Related Party Transactions Policy, transactions or had agreements and/or arrangements in place
approved by the Board of Directors. This policy aims to ensure during the financial year, have been disclosed as part of the
that the Bank meets its obligations under: Organizational Review section of this Annual Report and Note 45
- The Companies Act, 2017; of the Financial Statements.
- The Banking Companies Ordinance, 1962;
Statement of Compliance with Listed Companies
(Code of Corporate Governance) Regulations, 2019
Name of Company: National Bank of Pakistan (The Bank)
Year ending: December 31, 2021

The Bank has complied with the requirements of the regulations in the manner that in case of any conflict between Code of Corporate
Governance Regulations, 2019 (the Regulations) and the Banks (Nationalization) Act, 1974, the provisions of Banks (Nationalization) Act,
1974 have been followed.

1. The total number of directors are 08 as per the following:

a. Male: 07
b. Female: 01

2. The composition of Board is as follows:

The Board of Directors of the Bank are appointed as per the provisions of The Banks (Nationalization) Act, 1974. The President / CEO is
the only Executive Director. The remaining Board consists of one non-executive director and six independent directors, including one
independent director representing minority shareholders as required by the Code. At year-ended December 31, 2021, the Board
comprised of the following directors:

Names Category

Mr. Zubyr Soomro Chairman / Independent Director Chairman appointed by the Federal Government under
Section 11(3)(a) of The Banks (Nationalization) Act, 1974.

Mr. Tawfiq A. Hussain Independent Director Appointed by the Federal Government under Section
Mr. Imam Bakhsh Baloch Independent Director 11(3)(a) of The Banks (Nationalization) Act, 1974.
Ms. Sadaffe Abid Independent Director
Mr. Ahsan Ali Chughtai Independent Director
Mr. Asif Jooma Non - Executive Director

Mr. Farid Malik Independent Director Director representing Private Shareholders and Minority
Interest elected in terms of Section 11(b) of The Banks
(Nationalization) Act, 1974.

Mr. Arif Usmani President / CEO Appointed by the Federal Government under Section
11(3)(a) of The Banks (Nationalization) Act, 1974.

3. The Government of Pakistan, Finance Division, vide its Notification No.F.1(33) Bkg-III/2018-218 dated February 14, 2022 has extended
the term of Mr. Arif Usmani as President / Chief Executive Officer, National Bank of Pakistan, for a period of three months or till the
appointment of regular incumbent, whichever is earlier.

4. The Federal Government appointed Mr. Ahsan Ali Chughtai as Director on the Board of the Bank for a term of three (03) years with
immediate effect vide GOP, Finance Division, Notification No.F.1 (11) Bkg-Ill/2017-919 dated June 21, 2021;

5. Dr. Muhammad Sohail Rajput was appointed on the Board by the Federal Government of Pakistan under section 11(3)(a) of The Banks’
(Nationalization) Act 1974 when he was Additional Finance Secretary (AFS), Finance Division. However, he was subsequently transferred
to another Ministry (i.e., Special Secretary in Ministry of Commerce). Therefore, he resigned from the Bank’s Board;

6. The directors have confirmed that none of them is serving as a director on more than seven listed companies, including this Bank;

7. The Bank has prepared a Code of Conduct and has ensured that appropriate steps have been taken to disseminate it throughout the
Bank along with its supporting policies and procedures;

8. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Bank. The Board has
ensured that complete record of particulars of the significant policies along with their date of approval or updating is maintained by the
Bank;
9. All powers of the Board have been duly exercised and decisions on relevant matters have been taken by the Board/ sharehold-
ers as empowered by the relevant provisions of the Companies Act, 2017 as well as these regulations;

10. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this
purpose. The Board has complied with the requirements of Companies Act, 2017 and the regulations with respect to frequency, record-
ing and circulating minutes of meeting of the Board;

11. The Board of Directors have a formal policy and transparent procedures for remuneration of Directors in accordance with the
SBP BPRD Circular No. 3 dated August 17, 2019, Companies Act, 2017 and these Regulations;

12. The Board has arranged Directors’ Training programme for the following:

i) Mr. Farid Malik - Independent Director

ii) Mr. Imam Bakhsh Baloch - Independent Director
iii) Ms. Sadaffe Abid - Independent Director
iv) Mr. Asif Jooma - Non - Executive Director
v) Mr. Ahsan Ali Chughtai - Independent Director

13. The Board has approved appointment of Chief Financial Officer and Company Secretary including their remuneration and terms
& conditions of employment and complied with relevant requirements of the Regulations. Moreover, Head of Internal Audit was appointed
by Board Audit Committee as required in terms of State Bank of Pakistan’s BPRD Circular No. 02 of 2019 dated April 3, 2019;

14. Chief Financial Officer and Chief Executive Officer duly endorsed the financial statements before approval of the Board;

15. The Board has formed committees comprising of members given below:
16. The terms of reference of the aforesaid committees have been formed, documented and advised to the committees for compliance;

17. The frequency of meetings of the committees were as per following:

Name of Committee No. of Meetings held during the year

Board Audit Committee (BAC) 06

Board HR & Remuneration Committee (BHRRC) 06
Board Risk & Compliance Committee (BRCC) 05
Board Technology & Digitalization Committee (BTDC) 06
Board Inclusive Development Committee (BIDC) 05
Board International Franchises and Remittance Committee (BIFRC) 01
NBP – NY Governance Council (Sub-Committee of BIFRC) 05

18. The Board has set up an effective internal audit function for both local and overseas operations. With regards to NBP-USA, internal
audit function of the Bank is outsourced to an independent professional firm. In addition, audit function in Germany is also outsourced.
Both these audit firms are considered suitably qualified, experienced and conversant with the policies and procedures of the Bank and
all applicable laws and regulations;

19. The statutory auditors of the Bank have confirmed that they have been given a satisfactory rating under the Quality Control Review
program of the Institute of Chartered Accountants of Pakistan and registered with Audit Oversight Board of Pakistan, that they and all
their partners are in compliance with International Federation of Accountants (IFAC) guidelines on Code of Ethics as adopted by the
Institute of Chartered Accountants of Pakistan and that they and the partners of the firm involved in the audit are not a close relative
(spouse, parent, dependent and non-dependent children) of the chief executive officer, chief financial officer, head of internal audit,
company secretary or directors of the Bank;

20. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance
with the Companies Act, 2017, these regulations or any other regulatory requirement and the auditors have confirmed that they have
observed IFAC guidelines in this regard; and

21. We confirm that all requirements of regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the Regulations have been complied with except for
the following non-compliance:

(i) As per regulation 27(1)(iv), the secretary of the audit committee shall either be the company secretary or head of internal audit. The
secretarial role for the Board Audit Committee has been performed by a representative of the Company Secretary.
Yousuf Adil A.F Ferguson & Co
Chartered Accountants Chartered Accountants
Cavish Court, State Life Building No. 1-C
KCHSU Shahrah-e-Faisal I.I Chundrigar Road
Karachi 75350, Pakistan P.O. Box 4716
Karachi 74000, Pakistan

Independent Auditors’ Review Report

To the members of National Bank of Pakistan
Review report on the Statement of Compliance contained in Listed Companies (Code of Corporate
Governance) Regulations, 2019
We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations,
2019 (the Regulations) and Bank (Nationalization) Act,1974 prepared by the Board of Directors of National Bank of Pakistan (the Bank)
for the year ended December 31, 2021 in accordance with the requirements of Regulation 36 of the Regulations.

The responsibility for compliance with the Regulations is that of the Board of Directors of the Bank. Our responsibility is to review whether
the Statement of Compliance reflects the status of the Bank’s compliance with the provisions of the Regulations and report if it does not
and to highlight any non-compliance with the requirements of the Regulations. A review is limited primarily to inquiries of the Bank’s
personnel and review of various documents prepared by the Bank to comply with the Regulations.

As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control
systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board of
Directors’ statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls,
the Bank’s corporate governance procedures and risks.

The Regulations require the Bank to place before the Audit Committee, and upon recommendation of the Audit Committee, place before
the Board of Directors for their review and approval, its related party transactions. We are only required and have ensured compliance of
this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the
Audit Committee.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not
appropriately reflect the Bank’s compliance, in all material respects, with the requirements contained in the Regulations as applicable to
the Bank for the year ended December 31, 2021.

Further, we highlight below instance of non-compliance with the requirement of the Regulations as reflected in paragraph 21(i) to the
Statement of Compliance:

Reference Description

i. Paragraph 21(i) The secretarial role for the Board Audit Committee has been performed by a representative of the
Company Secretary.

Yousuf Adil A.F Ferguson & Co

Chartered Accountants Chartered Accountants

Place: Karachi
Date: February 25, 2021
Statement of Internal Control
Reporting of Internal Control System changing environment. There are inherent limitations in the
The Bank’s management has established and is managing effectiveness of any system, including the possibility of human
system of internal control which encompasses the policies, error or system failure, circumvention and overriding of control.
procedures, processes and tasks as approved by the Board of Accordingly, even an effective internal control system can only
Directors that facilitate effective and efficient operations. The provide reasonable assurance with respect to achievement of
internal control system comprises of various inter-related program objectives.
components to gauge overall control environment, including
availability of well-documented policies and procedures and their Evaluation of Internal Controls
compliance, Risk Assessment, identification of risks and Besides the monitoring of the implementation of internal control
mitigating controls, technology breaches, Information leakages, system at management level, the Bank has an independent
governance and management reporting. The management and Internal Audit function namely Audit & Inspection Group with three
the employees at all levels within the Bank are required to perform Area Audit & Inspection Offices that conduct audit of Branches,
their duties as per defined guidelines. The internal control system Regions and Groups at Head Office on an on-going basis to
also requires effectiveness and efficiency in external and internal evaluate the efficiency and effectiveness of internal control
reporting, maintenance of proper records and processes, system. In addition, an Internal Control function is established
operational loss data base, compliance with applicable laws and under Operation Group for testing & monitoring key controls
regulations and internal policies with respect to conduct of across operations. Monitoring & QA wing under Compliance
business. The Bank remains cognizant of its responsibility to group is responsible for testing of controls against “key regulatory
continuously improve and strengthen its system of internal control requirements” to identify the control weaknesses.
on an on-going basis. Recently, the Bank has reached
agreements with The Federal Reserve Board and Federal Reserve For the year 2021, the management continues its efforts to
Bank of New York, and the New York State Department of strengthen the internal control system of the Bank. The
Financial Services, the US regulators of NBP's New York branch. observations made by the external/ internal auditors and
The agreements include focused on historical compliance regulators in their respective audits/ inspections are reviewed and
program weaknesses and delays in making compliance related measures are being taken by the management (by respective
enhancements. There were no findings of improper transactions groups and tracking at Management Level Forums), Board
or willful misconduct. Sub-Committees and Board of Directors for rectification of such
observations and their non-recurrence.
In compliance with SBP directives issued vide OSED circular no.1
of 2014, the Bank has completed the implementation of roadmap Based on the results achieved from reviews and audits conducted
regarding Internal Control Over Financial Reporting (“ICFR”). The during the year, the management considers that the Bank’s
Long Form report on the assessment of Bank’s ICFR for the year existing internal control system needs further improvement. This is
2020 issued by the statutory auditor has been submitted to SBP in an ongoing process and management would continuously be
compliance with SBP directive. In the year 2021, the Bank evaluating efficacy of its in-built controls to enhance and further
engaged external consultants to assist in a scoping and strengthen the overall internal control system of the Bank.
diagnostic exercise for the ICFR program with view to its on-going
environment. Based on the above, the Board of Directors has endorsed the
management’s evaluation of internal controls including ICFR in the
The Bank’s internal control system has been designed to manage Director’s report.
rather than eliminate risk of failure to achieve objectives under a
Our Ethics & Code of Conduct
It is an obligation on us all to be responsible, honest, trustworthy, conscientious, and dedicated to the highest standards of ethical
business practices. Our Code of Conduct reflects our commitment to meet the expectations of our stakeholders and sets the fundamental
principles and rules relating to our ethics, conduct and compliance to ensure integrity. We are committed to conducting our business with
honesty and integrity, and expect all our employees to maintain high standards in accordance with this Code that forms an integral part
of the terms of employment of all employees.

Purpose of Code Application of Code agents, and service

The Code of Conduct (the “Code”) is to define It is an obligation on us all to be responsi- providers who are engaged / retained by
the commitment that the Bank expects of its ble, honest, trustworthy, conscientious, the Bank. A copy of the code is provided to
employees to know in clear terms what acts, and dedicated to the highest standards of all concerned so that they know the
conducts and practices are considered ethical business practices. Our internally applicable provisions and undertake to
ethical and clearly describe the appropriate developed Code of Conduct “Code” follow these in the course of their employ-
behaviour that all employees are required to provides guidance on expected behaviour ment and/or business relationship with the
adopt in order to safeguard the reputation and explains the effect of decisions that are Bank. The rules set out in this Code are to
enjoyed by the Bank and its subsidiaries, both taken and describes the principles that be applied at all times and in all places
in Pakistan and abroad. It also describes, must be followed. The Code applies to all when carrying out Bank duties, be they of a
where considered necessary, the omissions employees of the Bank and its subsidiaries. professional or social nature.
that would be against the Code. It applies equally to interns, consultants,
Compliance with this Code -Non-Discrimination
If an employee fails to comply with this NBP will not tolerate discrimination in any -Sincerity with NBP / Management and
Code or applicable laws, rules or regula- form, or any dishonest, unethical or Others
tions (including the rules and regulations of inappropriate behaviour. The Bank’s When we have knowledge of any
the SBP) he or she will be subject to policy is to ensure a harmonious environ- questionable or possible illegal act or
disciplinary measures, including (with ment with equal employment opportunity occurrence involving or affecting NBP, we
respect to employees) discharge from the for all, regardless of age, gender, race, have an obligation to report the act or
Bank. Violations of this Code may also religion, colour, national origin and marital occurrence using means made available
constitute violations of law and may result status and that client and prospective by the Bank for such purpose.
in civil or criminal penalties for such clients are not discriminated against on a
person, and such person's supervisors. prohibited basis. -Self-Dealing
The competent authority will determine, or We are not in any way to represent or
designate appropriate persons to deter- -Safeguard the Confidentiality of exercise any authority on NBP's behalf,
mine appropriate actions to be taken in the Information grant direct or indirect credit accommoda-
event of a violation of this Code. In deter- We shall continue to appreciate and honor tions or make credit recommendations, or
mining what action is appropriate in a the trust bestowed upon us by our act in the capacity of an account officer
particular case, the competent authority or customers and counterparts in regard to with respect to any type of transaction for
its designee will consider the following their personal and business information ourselves, or members of our immediate
aspect. If appropriate, the relevant that we possess. family.
external authority would be notified. -Limited Use of Confidential Information
While recognizing the need for a constant -Respect the Policies of the Organiza-
Basic Principles of our Code flow of information for the smooth opera- tion
tion of the Bank, we will not disclose We are required to be aware of all policies
-Act with Honesty and Integrity confidential information pertaining to our and processes which apply to us as
All our decisions and actions shall contin- clients' affairs to our fellow workers within employees of NBP. These policies and
ue to be, and seen to be, driven by the NBP unless they have a clear business processes are issued by the authorized
utmost level of honesty, integrity and need to know the information for the officials of NBP and modifications may be
fairness by executing right things in a right performance of their duties. enforced from time to time.
way.
-Avoid Conflicts of Interest -Demonstrate Discipline and Decency
-Comply with the Law As part of our employment responsibilities NBP expects us all to demonstrate
We shall continue to comply in the letter we act in a way that contributes to the discipline in terms of timeliness, punctuali-
and spirit with laws, rules and regulations financial success of the Bank, enhances ty and dress code. We should devote our
of Pakistan and the countries where we its reputation and fosters its client relation- full attention and energy to official duties
have established our business. ships. This requires us to look after our during working hours. Employees are
own private financial interests in such a required to attend at work as required and
-Treat all with Respect way that we do not profit improperly from not to be absent from duty without
We shall always extend maximum our position with NBP. authorisation.
respect, kindness and fairness to all our
customers, colleagues, applicants for -Use of NBP's Computer Systems -Acceptance of Gifts from Suppliers or
employment, vendors and counterparties. Utilization of NBP's computer systems Clients
provides an employee access to confiden- NBP employees are prohibited from
-Conflict of Interest tial client information based on the giving, seeking or accepting gifts for
The sole trigger of all our decisions and business / support function(s) being oneself or any other person anything of
actions shall be to contribute towards performed. Employees are granted value beyond PKR 5,000/- (including
success of the Bank. We manage our access to the various computer systems services, discounts or entertainment) from
personal, financial and business affairs in a to perform their job duties. Each employee clients, suppliers or anyone else in return
manner that ensures avoidance, or even is expected to protect the access granted for any business or service from, or
appearance of any conflict of interest. to him or her and to keep any associated confidential information about NBP.
passwords confidential at all times.
-Respect the Organisation -Borrowing Money from Vendors or
We respect our organisation through -External Communications Clients
adherence to its by-laws, rules, policies Only designated Senior Management We are not allowed to borrow money from,
and procedures; and by remaining Officials liaison through Corporate or lend money to any of NBP's vendors or
committed to safeguarding Assets, Repu- Communications Division are responsible clients. This is strictly prohibited.
tation and Relations of the Bank. for NBP's relationship and communication
with the press and the general public.
Risk Management Overview
RMG, as an integrated group, is comprised of Enterprise Risk risk-focused culture across the bank. Based on our approach to
Management Group (ERMG), Credit Risk Management Group risk management, the Board has approved various policy
(CRMG), Retail & Program Lending Group (R&PLG), and Informa- documents that set the parameters to achieve effective risk
tion Security Division (ISD) under the supervision of the Chief Risk management.
Officer (CRO). RMG functions as an independent group reporting

Our Approach towards Risk

directly to the President. Its efforts are to have a focused approach
to cater to all material risks that the Bank may be exposed to. These
risks are mainly categorized as Credit Risk, which is managed
through a well-defined Credit Risk Management Group, including
Management
The Bank applies the Basel framework as a cornerstone of the
but not limited to credit approvals based on risk appetite frame-
NBP’s risk management framework and capital strategy. The Bank
work, risk profiling, well-defined centralized credit approval mecha-
maintains a strong capital, funding, and liquidity position in line with
nism, tools/models development and assessment through frame-
its ongoing commitment to maintaining balance sheet strength. The
works and portfolio reviews. Asset Remedial process has also been
strength of risk profile management of the Bank stands on the
strengthened through restructuring and integrating with overall risk
following pillars:
management, so that, timely and coordinated recovery efforts are
taken to address the Non-Performing Loans. Market & Liquidity
• Identification and assessment of significant material risks to which
risk, which is managed through market risk management frame-
the Bank is, or, maybe exposed to
work and regular review and monitoring of the investment portfolio
• Overseeing and managing the risk profile of the Bank within the
by the Bank’s Asset Liability Management Committee (ALCO).
context of the risk appetite
Operational risk is managed through an Operational Risk Manage-
• Ensure the business profile and plans of the bank are consistent
ment Framework approved by the BoD. This framework includes
with the risk appetite
aspects related to Governance, OR Strategy, Risk & Control
• Optimize risk/return decisions by aligning them to the business
Self-Assessment (RCSA), Key Risk Indicators (KRIs), and Loss Data
objective of achieving sustainable optimum growth
Management. The information security risk is managed through a
• Manage the risk profile of the Bank to ensure that specific financial
well-established information security and cybersecurity framework.
deliverables remain achievable under a range of emergent business
Apart from the above-mentioned risks, the Pillar-II risks, and overall
conditions.
integration of risk management in the Bank come under the ambit
of Enterprise Risk which is being managed accordingly.
At a strategic level, the Bank’s risk management objectives are to:
• identify and assess significant risks to which the Bank may be
The Bank adopts different tools and techniques of risk manage-
exposed to.
ment to keep the Bank resilient and vibrant to minimize losses
• timely response to the identified risks through formulating Bank’s
within the defined risk appetite/ tolerance levels, and credit concen-
risk appetite.
tration limits. Strategic goals are embedded into risk management
• architecturally equip the Bank with tools & models for effective risk
to maintain a robust framework for identifying and escalating risks
management.
to support sustainable business growth. RMG acts as a second line
• assist Business Groups in optimizing risk/return decisions.
of defense in the risk management structure of the Bank, assuming
• analyze the overall risk profile of the Bank.
the role of establishing a risk management framework, develop-
• keep track of emerging risks and perform an active role in their
ment of risk tools & systems for effective risk management along
mitigation.
with review and reporting of deviations of activities from set
Strategic goals, embedded into our approach toward risk manage-
standards, to Senior Management and the Board.
ment, are to maintain a robust framework, identify and escalate
risks and support sustainable business growth through optimum
The mission of maximizing stakeholders' value through sustainable
risk-reward decisions.
growth is achieved through informed risk decision-making and
superior risk & capital management supported by a consistent
The aim of the risk management strategy is to enable the manage- measured, and mitigating controls have been put in place, progress
ment to identify & assess the risks, respond through formulating towards objectives is tracked continuously. At NBP, risk monitoring
effective mitigating tools and monitor the effectiveness of the is a proactive and ongoing process that may prompt a re-evalua-
response. tion of the risks and/or changes in mitigating responses. It includes
ensuring the risks are maintained within the overall risk appetite and
Identify & Assess: All business groups are responsible for risk checking that risk controls are functioning effectively without
recognition & assessment and development of controls in their jeopardizing the value creation objective of the Bank.
respective areas of operation. As part of the risk assessment

Risk Governance Structure

process, the groups ensure that not only the relevant risks are
identified but their implications are considered, and the basis
provided for managing and measuring (as far as possible) the risks. The Board is responsible to ensure active oversight over the imple-
mentation of policies and frameworks to prevent any significant
Respond: The Risk Management Group ensures that effective financial loss or reductions in shareholders' value that may be
controls are in place to mitigate each of the identified risks consid- suffered by the Bank. Therefore, it is the responsibility of the Board
ering its impact and likelihood and such controls are reviewed to ensure that policies and frameworks are in place to recognize all
regularly to appropriately address any new risk or risk not managed significant/material risks to which the Bank is / may be exposed and
well previously. The results of risk assessment are reviewed at that the required human resource, culture, practices, and systems
various levels within the Bank including Enterprise Risk Committee are adequate to address such risks. The Board and its relevant
(ERC) with summary assessments shared with the Board Risk & committee, i.e. BRCC and the senior management along with its
Compliance Committee. relevant committees i.e. Management Credit Committee, ERC,
ALCO, etc. are responsible to ensure formulation and implementa-
Monitor: Once the principal risks have been identified and tion of a comprehensive risk management framework through its
committees.

Board Risk & Compliance Enterprise Risk Committee Management Credit Committee
Committee (BRCC) (ERC) (MCC)
BRCC is an independent committee of ERC is a senior management body MCC is a senior management committee
the Board of Directors which plays a vital mainly covering risks from an overall that is responsible for the approval/
role in improving the risk culture in NBP perspective of strategy, policy/framework review of credit exposures, counterparty/
through active reviews of ICAAP, Risk development, assessment measurement borrower limits, as per the Credit Approv-
Appetite, Stress testing, Credit & Invest- tools, MIS framework, and Basel frame- al Authority Booklet (CAAB)/ delegated
ment portfolio, Risk Management Frame- work implementation, whereas routine by the Board.
works / Policies, Operational Risk events, aspects in relation to such risks shall be
and other risk management reports / managed by the RMG. ERC has
MIS. representation from various business and
support groups.

Risk Management Framework The Second Line of Defence: Risk Management and the Compli-
Implementation ance functions in the Bank oversee and independently challenge
the effectiveness of risk management actions taken by business
The Bank implements a risk management framework through a
'Three Lines of Defence' model which defines clear responsibilities groups. The recommendations are escalated to the Board Risk &
and accountabilities for various offices and ensures effective & Compliance Committee for deliberation and decision-making.
independent oversight and assurance that the activities take place
as intended under the risk management framework. The Third Line of Defence: Board Audit Committee and Audit &
Inspection Group provide independent, objective assurance and
The First Line of Defence: Business groups have primary respon- consulting activity designed to add value and improve risk manage-
sibility for identifying, measuring, and controlling the risks within ment functions of the Bank. A&IG helps the Bank accomplish its
their areas of accountability. They are required to implement objectives by bringing a systematic and disciplined approach to
effective procedures and controls to ensure compliance with the evaluate and improve the effectiveness of risk management,
related policy requirements, to maintain appropriate risk manage- control, and governance processes.
ment skills, and to act within defined parameters as a set and
approved by the Board.
Shariah Board
Mufti Ehsan Waquar Dr. Mufti Khalil Aazami
Chairman Shariah Board Shariah Board Member

Mufti Ehsan has a diversified cross-functional management Dr. Aazami graduated from Jamia Darul Uloom, Karachi. He
experience in Islamic Finance, Business Management and obtained Shaha dat-ul-Aalamia (Masters in Arabic and Islamic
Operation, Project Management and Administration for more Studies) and Al-T’akhassus fi al-Iftaa’ (Specialisation in Islamic
than two decades. He has hands-on experience of people and
Jurisprudence and Fatwa) from Jamia Darul Uloom, Karachi
projects management, with a rich experience of working with
board of directors and senior management of banks, and holds a Doctorate degree in ‘Islamic Jurisprudence’ from
regulators, auditors and legal counsels. Karachi University. He is also serving as an Advisor/Shari’ah
Board Member in different financial institutions including
Alhamdulillah, he has exclusively served Islamic Financial Bank-Alfalah, Faysal Bank, Takaful Pakistan Limited
Industry with institutions like World Bank-IFC, National Bank of (2005-2014) and Alfalah GHP Islamic Fund (2007-2014).
Pakistan, ABL, Soneri Bank, NAFA, Askari General Insurance
Company Takaful Window (AGICO), Emirates Global Islamic Dr. Aazami has more than 22 years of research experience
Bank now Al Baraka Bank Pakistan, UBL, Yasaar Ltd.-UAE & related to Islamic Finance and other Shari’ah related subjects.
UK, Minhaj Advisory-UAE, Arif Habib for more than a decade He is an author of numerous publications. He is also an experi-
now. He has structured several Sukuk including the largest enced lecturer and trainer in the field of Islamic Finance,
Sukuk in Pakistan; a hundred billion Sukuk for Neelum Jhelum
Economics, Fiqh, Islamic Financial Laws and General Islamic
Hydro Power, Fatima Fertilizer, Fauji Fertilizer, Sitara Energy,
Sitara Peroxide and IBL. Science. He is involved as Faculty member, – Jamia Darul
Uloom, Karachi since 1999 and has been associated with the
He also served as member of the Technical Committee for Centre For Islamic Economics, Karachi, National Institute of
Developing Accounting & Auditing Standard for Islamic Banking and Finance – SBP and Sheikh Zaid Islamic Research
Financial Institution at Institute of Chartered Accountants of Centre – University of Karachi.
Pakistan (ICAP). As member of SAF at State Bank of Pakistan
(SBP), he worked actively with SBP in matters pertaining to
Islamic Banks including drafting of Shariah Standard on
Shirkat-ul-Milk usually used for Housing Finance, Tawarruq,
Commodity Murabahah, Treasury, Trade Finance and
Agricultural Financing Products. Mufti Muhammad Imran
Resident Shariah Board Member
At ESAAC, he has the privilege to work on a project of World
Mufti Muhammad Imran, working with NBP since May 2016, is
Bank-IFC for developing Islamic Re-Mortgage Finance. He has
also worked with SECP team on Takaful Rules 2012 with its a qualified Shariah Scholar and experienced Islamic banker
insurance division. He possesses a unique combination of with knowledge of Islamic banking & finance. His educational
religious and contemporary education that is very relevant to qualification include Takhas-us-fil-Fiqh, Masters in Islamic
Islamic Banking. He has strong communication skills Banking & Finance, PGD (Islamic Banking & Finance) and M.A
combined with knowledge of several languages. He graduated (Islamic Studies) and he has been associated with different
and accomplished Masters in Business Administration (MBA) Research, Fatwa and Educational Institutions since 2003 and
with specialization in Finance and Masters in Economics (MA) has more than 11 years of banking, Islamic Banking Trainings,
from IoBM and Karachi University respectively. He also Shariah Compliance, review & product development
completed traditional Islamic studies and graduated as a Mufti, experience. His research includes:
achieving Masters in Islamic Studies (MA) and specializing in
Islamic Jurisprudence (PGD-Mufti) from a leading Islamic
School in Pakistan, Jamia-Tur-Rasheed. He has also • Qard & Dain me Farq
accomplished Bachelors in Law and Legislation (LLB). This • Al Taeyseer fee Hukm-e-Al Tasweer
unique blend of educational combination gives him an edge • Ahkam-ul-Zakah
upon many others to understand, correlate and align modern • Asshya-e-sittah
day banking practices with Shariah principles. • Shoroot-e-Ayemmah Khamsah
• Shoroot-e-Ayemmah Sittah
Beside this, he conducts courses and sessions on Islamic
Banking, Capital Markets, Derivatives, Takaful and Risk
Management in renowned Business schools like CBM, IBA
and KUBS.
Shariah Board
Mufti Sajjad Ashraf Usmani Mufti Muhammad Ahmad
Shariah Board Member Shariah Board Member
Mufti Sajjad Usmani is a qualified CSAA (Certified Shariah Mufti Muhammad Ahmad is a qualified CSAA (Certified Shariah
Advisor & Auditor) from AAOIFI (Accounting and Auditing Advisor & Auditor) from AAOIFI (Accounting and Auditing
Organization for Islamic Financial Institutions, Bahrain), Organization for Islamic Financial Institutions, Bahrain), Takhas-
Takhassus Fil Ifta (Specialization in Islamic Jurisprudence and sus fil Fiqh il Muamalat Almaliyyah (Specialization in Islamic
Fatwa) and Dars-e-Nizami/Shahadat-ul-Aalamia from Jamia Commercial Jurisprudence and Fatwa) from Jamia Tur
Dar-ul-Uloom, Karachi and a certified anatomist of Sukuk, Rasheed, Dars-e-Nizami/Shahadat-ul-Aalamia from Wifaq ul
Islamic Banking & Finance. He is a seasoned professional with Madaris Alarabia and Masters in Economics from University of
over 12 & 6 years of working experience from writing Fatawa to Karachi. Further he is currently pursuing his PhD degree from
serving as a Shariah Advisor of the leading financial institutions Karachi University.
of Pakistan respectively.
He has more than five years’ experience of working in Islamic
He has blend experience of providing Shariah consultancy to Banking Industry and has contributed extensively by actively
three (3) Takaful Companies as Shariah Advisor since 2015 participating Shariah deliberations on multiples issues. He has
and also served as Shariah Advisor of the Tier 2 Mudharabah about ten years’ experience of Teaching, research and giving
Sukuk issued by Meezan Bank Limited. Fatawa. He has written about three hundred fatwas regarding
ibadat, trade, banking, finance, inheritance, marriage, divorce
He also has 6 years’ working experience with leading Auditing etc.
firms like A.F.F (PWC) & Deloitte Pakistan, as a Shariah Consul- He has also conducted in depth research of several practical
tant & Head of Shariah Audit and has supervised various issues in Islamic Banking from Shariah aspect. He has a vast
Shariah Audits of renowned Islamic Banks, Takaful Companies experience of conducting Islamic Banking Trainings.
and Sukuks under the audit firm’s umbrella. He knows the
practical problems being faced by the Islamic Financial Institu- He also teaches AAOIFI Shariah Standards, Islamic Jurispru-
tion. dence, Islamic creed and Shariah inheritance law at Alburhan
Institute Islamabad.
He is a teacher of Hadith and Fiqh (Islamic Jurisprudence) at
Jamia Dar-ul-Uloom, Karachi besides teaching in various
leading Islamic educational institutions like IBA CEIF & Center
for Islamic Economic since 2011.
Shariah Board’s Annual Report NBP Aitemaad - 2021

The Board of Directors (BoD) of National Bank of Pakistan (NBP) have entrusted the Shariah Board (SB) with the task to assess the overall
Shariah compliance level and environment within NBP Aitemaad Islamic Banking. The objective of the report is to present a view about the
overall Shariah compliance level and environment within NBP Aitemaad Islamic Banking.
In the Capacity of Shariah Board, we have reviewed the overall Shariah compliance level and environment within the NBP Aitemaad Islamic
Banking as of December 31, 2021.

Shariah Board Opinion

While BoD and Executive Management are solely responsible to ensure that the operations of NBP –Aitemaad Islamic Banking are
conducted in a manner that comply with Shari’ah principles at all times, we are required to submit a report on the overall Shari’ah
compliance environment of NBP – Aitemaad Islamic Banking.
To form our opinion as expressed in this report, the Shari’ah Compliance Department (SCD) of the bank carried out reviews, on test check
basis, of each class of transactions, the relevant documentation and process flows. Further, we have also reviewed the reports of the
internal and external Shari’ah audit. Based on above, we are of the view that:

1. Compliance with Directives issued by Shariah Board

NBP Aitemaad’s overall environment, products, and agreements comply with the Shariah directives issued by Shariah Board.

2. Compliance with Shariah related regulatory directives issued by State Bank of Pakistan (SBP)
The management, ensures zero tolerance on Shariah noncompliance instances with regard to the SBP directives. In this context, NBP
Aitemaad has an exclusive Shariah Non-Compliance key performance indicating point in the staff appraisal system.

3.Shariah Compliance Mechanism

Alhamdulillah, NBP-Aitemaad Islamic Banking already had a comprehensive Shariah Compliance Policy. This year, SCD enhanced the
checklist based on their field functionaries’ experiences. Further, in order to assess staffs’ level of Islamic Banking & Finance understanding,
SCD has upgraded the assessment papers.

4. Mechanism ensuring prohibited Income to Charity Account

NBP-Aitemaad Islamic Banking has a well-defined Charity policy approved by NBP Shariah Board and BoD. Shariah Compliance review
and Internal Shariah Audit of financing transactions were conducted. In addition, other revenue generating sources including investments
and treasury transactions were also reviewed.
During the Shariah Review of financing portfolio, no Non-Shariah compliant transaction was discovered. Therefore, there was no income
was declared as charity this year. During this year, Rupees Ninety-Two Thousand (Rs.92,000/-) was collected on account of late payments
and deposited in the Charity account and charity amounting Rupees Six Hundred Fifty Thousand (Rs.650,000/-) was disbursed to
charitable institutions.

Charity Fund – 2021 Rupees in ‘000

Opening Balance 621
Received from customers on account of delayed payment
including profit on charity saving account 93
Payments / utilization during the period 650
Closing Balance 64

5. Profit and Loss Distribution and Pool Management

NBP Aitemaad Islamic Banking Pool Management Wing is staffed with adequate human resource ensuring compliance with the SBP and
Shariah Board guidelines. SCD on monthly basis has reviewed the profit distribution. Further, Internal Shariah audit wing also conducted
Shariah Audit of pool management on quarterly basis. All these layers of control have strengthened the profit & loss distribution and pool
management.

6. Staff and Customer understanding of Islamic Banking and Finance

The Bank has arranged 34 in house training sessions on different topics of Islamic Banking basic concepts, products and services, and
customer services where two hundred and twenty seven (227) staff were trained during the year.
Along with Islamic Banking staffs’ training, the bank arranged 08 session on basic Islamic Banking and Finance topic for the staff of Islamic
Banking Windows in conventional branches where 176 staff were trained during the year. The Bank in co-ordination with SCD, has
arranged 02 awareness sessions for the customers in different regions as part of its Islamic Banking promotion activities.
For addressing public queries related to Shariah and Islamic Banking, the Bank is managing an “ask Shariah” portal i.e.
askshariah@nbp.com.pk. The Portal serves as a platform for staffs’ on job training and guidance on their day-to-day operations and
awareness of customer in the field of Islamic Banking.

7. Provision of adequate resources to Shariah Compliance Department (SCD)

SCD, in order to operate with reasonable head counts, has initiated requisition request for replacement of the staff resigned. SCD shall
anticipate future requirement for the future windows operation and inform the management with the same, if any.

Other Developments
i. Shariah Compliance Review (SCR) of Islamic Banking Branches and Departments
The Shariah Compliance Department has conducted review of 149 deposit branches, treasury transactions and financing portfolio, on
sample basis, during the calendar year. SCD has also reviewed the different marketing campaigns to ensure strict adherence with Shariah
Board guidelines.

ii. Branch Network & Expansion

Alhamdulillah, the branch network of NBP Aitemaad Islamic Banking stands at 189 dedicated Islamic banking branches. NBP has initiated
the process to open Islamic Banking Windows in selected conventional branches targeting the greater reach of Islamic Banking.

iii. Product Development

Alhamdulillah, in 2021, NBP Aitemaad Islamic Banking has introduced following Products & Services;
PayPak Debit Card
Foree Remittance Account
Hamsafar Auto Finance
Dividend Payment with SBP Micro Payment Gateway (Raast)
Issuance of Debit Card & Cheque Book through Call Center
IBT and IBFT through ATM
Enhanced Key Fact Statement for Deposit Products

NBP Aitemaad has diversified range of products as it is offering fifteen (15) Deposit products and Seven (07) financing products for its
valued Customers.

iv. Asset Review

The overall earning assets of NBP Aitemaad have increased by 15.2% amounting PKR 91.8billion in comparison with PKR 79.7 billion of
previous year. Total Financing has reached at PKR 42.3 billion with an increase of 12.8% maintaining NBP Aitemaad’s Finance to Deposit
Ratio rounding to 51%. Total Investments including Bai Muajjal stood at PKR 49.6 billion in comparison with PKR 42.1 billion preceding year
with an increase of 17.8%.

v. Liability Review
Aitemaad total deposits have increased by 12.7% to PKR 84.8 billion in comparison with PKR 75.3 billion last year.

vi. Shariah Board Meetings

SB has conducted five (05) meetings during the year. Major SB approvals are summarized as below;

• Islamic Banking Window Policy, SOP & Training Plan • Islamic Export Refinance Scheme (IERS)–Policy & Manual
• Policy on Sale of Third-Party Products • Pay Pak Debit Card Manual
• Financing Products Policy • Musawamah Manual
• Shariah Non-Compliance Risk (SNCR) Policy / Framework • Salam Manual - Revised
• Islamic Treasury Policy – Revised • Istisna Manual - Revised
• Pool Management Policy - Revised • Tijarat Manual - Revised
• Financial Consumer Protection Framework (FCPF)/ Fair • Murabaha Manual - Revised
Treatment to Consumers (FTC) Policy - Revised • Ijarah Manual - Revised
• Islamic Scheme for Long Term Finance Facility (ILTFF)-Policy • DM Manual – Revised
& Manual Revised • Standard Procedure Manuals (SPMs) of Operations

Recommendations
We recommend the Bank on the following matters:
1. The Bank has automated the liability side of the Core Banking whereas the asset side is still pending, which needs to be automated.
2. The Board of Directors had approved the Shariah Compliant Staff Financing policy back in Oct 2020 while its implementation is still
pending.
3. Bank is required to introduce a comprehensive Islamic banking training policy that must include elementary and advance level
specialized training courses for all staff across the Bank.

We pray to Almighty ALLAH to provide us guidance to adhere to the Shariah principles in day-to-day operations, to absolve our mistakes
and for the success of Islamic banking in Pakistan.

Mufti Ehsan Waquar Mufti Sajjad Ashraf Usmani Dr. Mufti Khalil Aazami
Chairman Shariah Board Shariah Board Member Shariah Board Member
NBP – Aitemaad NBP – Aitemaad NBP – Aitemaad

Mufti Muhammad Ahmad Mufti Muhammad Imran

Shariah Board Member Resident Shariah Board Member
NBP – Aitemaad NBP – Aitemaad
Notice of 73RD Annual General Meeting
Notice is hereby given that 73rd Annual General Meeting (“AGM”) of National Bank of Pakistan (the “Bank”) will be held on
Wednesday, March 30, 2022 at 10:00 A.M. (PST) physically and through electronic means.

Physical gathering of the shareholders shall be held at Ballroom–C Mövenpick Hotel, Club Road, Karachi, by strictly following the
SOPs advised by the Government.

The following business will be transacted in the Meeting:

Ordinary Business:
1. To confirm minutes of the Annual General Meeting (AGM) of Shareholders held on March 29, 2021, through electronic means.

2. To receive, consider and adopt the annual audited financial statements of National Bank of Pakistan and consolidated accounts
of National Bank of Pakistan and its subsidiaries for the year ended December 31, 2021, together with the Directors’ Report,
Auditors’ Report and Chairman’s Review Report thereon.

3. To appoint auditors for the year ending December 31, 2022, and fix their remuneration. The Board of Directors has recommend-
ed re-appointment of Messrs PwC A.F. Ferguson & Co., Chartered Accountants and Messrs Yousaf Adil, Chartered Accountants,
to be the auditors of the Bank for the year ending December 31, 2022.

4. To consider and approve cash dividend at Rs.1.00 per share, i.e., 10% as recommended by the Board of Directors for the year
ended December 31, 2021 (subject to approvals of Government of Pakistan under Section-17 of The Banks’ Nationalization Act,
1974 and State Bank of Pakistan).

Special Business:
5. To consider and approve the remuneration of Mr. Arif Usmani, President/CEO of the Bank for a period of three months (Govern-
ment of Pakistan has extended the term of the President vide Notification No. F.1(33)Bkg-III/2018-218 dated February 14, 2022,
for three months or till the appointment of a regular incumbent, whichever is earlier), on existing pay package (approved by the
shareholders in 70th AGM held on March 28, 2019).

6. To transact any other business with permission of the Chairman.

By Order of the Board

Karachi Sd/-
Dated: March 09, 2022 S.M. Ali Zamin
Secretary (Board)

NOTES:
The Share Transfer Books of the Bank shall remain closed from March 24, 2022 to March 30, 2022 (both days inclusive). Transfers
received at Messrs. CDC Share Registrar Services Limited, CDC House 99-B, Block “B”, SMCHS, Main Shahra-e-Faisal, Karachi
– 74400, the Bank’s Share Registrar and Transfer Agent, at the close of business on March 22, 2022 will be treated in time for the
purpose of attending the meeting and any other entitlement.

1. PARTICIPATION IN ANNUAL GENERAL MEETING:

In the wake of prevalent Covid-19 pandemic situation and in the light of relevant guidelines issued by Securities and Exchange
Commission of Pakistan (“SECP”) vide Circular No. 04 of 2021 dated February 15, 2021, and Letter No. SMD/SE/2(20)/2021/117
dated December 15, 2021, the members are encouraged to participate in the AGM through an electronic facility organized by the
listed company.
a) Attending Meeting through Electronic Means
In order to attend the AGM through electronic facility, the members are requested to get themselves registered with CDC Share
Registrar Services Limited upto March 29, 2022 till 05:00 P.M. at cdcsr@cdcsrsl.com and they are requested to provide the
information as per below format:

Serial No. Folio Number / CDC Account # Name of the Shareholder CNIC # Cell # E-mail Address

The details of electronic facility will be sent to the members at the email address provided by them. The login facility will be
opened at 09:30 A.M. on March 30, 2022 enabling the participants to join the proceedings after identification and verification
process before joining the meeting, which will start at 10:00 A.M. sharp.

b) Attending Meeting Physically

Arrangements for physical gathering of shareholders have been made at Ballroom-C Mövenpick Hotel, Club Road, Karachi.

c) Attending Meeting through Proxies

I. All members, entitled to attend and vote at the Annual General Meeting, are entitled to appoint another member in writing as
their proxy to attend and vote on their behalf. A legal entity, being a member, may appoint any person, regardless of whether they
are a member or not, as proxy.

II. The proxy instrument must be complete in all respect and in order to be effective should be deposited at Office of the Registrar
or Office of the Secretary Board, 2nd floor, NBP Head Office, I.I. Chundrigar Road, Karachi not later than 48 hours before the time
of holding the meeting.

III. For attending the meeting through electronic means (Zoom), proxy form shall be submitted along with proxy holders’ email
address and mobile number.

IV. If any member appoints more than one proxy for any one meeting and more than one instrument of the proxy are deposited
with the Registrar, all such instruments of proxy shall be rendered invalid.

d) The shareholders will further have to follow the following guidelines for appointing proxies:

i) In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and
their registration details are uploaded as per the regulations shall submit the proxy form as per the requirements mentioned
below:
a) The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers must be mentioned on the
form.
b) Attested copy of CNIC or the Passport of the beneficial owner(s) and of the proxy shall be furnished with the proxy form.

ii) In case of a legal entity, the original or duly authenticated Board of Directors’ resolution or power of attorney with specimen
signature of the nominee shall be produced (unless it has been provided earlier) along with proxy form to Messrs. CDC Share
Registrar Services Limited or to the Office of Secretary Board, 2nd floor, NBP Head Office, I.I Chundrigar Road, Karachi.
(Proxy Form is available on NBP website www.nbp.com.pk)

• Members are requested to immediately notify any change in their address to the Bank’s Registrar/Shares Transfer Agent i.e.,
Messrs. CDC Share Registrar Services Limited.

2. REQUIREMENT OF VALID CNIC AND IBAN:

As per requirements of the Companies (Distribution of Dividends) Regulations, 2017 and SRO 275 (1)/2016 dated March 31, 2016
issued by the SECP, the payment of cash dividend shall only be made to the shareholders who have provided copies of their valid
CNIC/NICOP/Passport (in case of individuals) and NTN (in case of corporate entities) and valid details of designated International
Bank Account Number (“IBAN’).
3. DEDUCTION OF WITHHOLDING TAX:
Please note that the withholding tax will be deducted at the following rate based on “Active Taxpayer List” (ATL) available at FBR
website:
1. Persons appearing in Active Taxpayer List: 15%
2. Persons not appearing in Active Taxpayer List: 30%.

Further, in case of joint shareholders, tax will be deducted as per their ratio/share (if any) intimated by the same to the Bank’s
Share Registrar, otherwise, their shareholding will be treated as equal.

4. ELECTRONIC DIVIDEND MANDATE:

Under Section-242 of the Companies Act, 2017, it is mandatory for all listed companies to pay cash dividend to their shareholders
through electronic mode directly in the bank account designated by the entitled shareholders.

In order to receive dividend directly into their bank account, shareholders are requested (if not already provided) to fill in Bank
Mandate Form for Electronic Credit of Cash Dividend available on the Bank’s website and send it duly signed along with a copy
of valid CNIC to the Share Registrar, CDC Share Registrar Services Limited, CDC House 99-B, Block ‘B’, Sindhi Muslim Coopera-
tive Housing Society (S.M.C.H.S), Main Shahra-e-Faisal, Karachi - 74400, in case of physical shares.

In case of shares held in CDC, Electronic Dividend Mandate Form must be directly submitted to the shareholder’s broker/partici-
pant/CDC account services.

In case of non-receipt of information, the Bank will be constrained to withhold payment of dividend to shareholders.

5. DEDUCTION OF ZAKAT ON DIVIDEND ISSUE:

Zakat will be deducted from the dividends at source at the rate of 2.5% of the paid-up value of the shares (Rs. 10/- each) under
Zakat & Ushr Laws and will be deposited within the prescribed period with the relevant authority. Please submit your Zakat Decla-
ration Form (CZ-50) under Zakat & Ushr Ordinance 1980 and Zakat (Collection & Refund) Rules, 1981 to the Bank’s Share Regis-
trar. Shareholders who hold shares with participants / CDC are advised to provide the above Form through the concerned brokers
/ CDC.

6. UNCLAIMED DIVIDEND:
As per the provision of Section-244 of the Companies Act, 2017, any shares issued or dividend declared by the Bank which have
remained unclaimed / unpaid for a period of three (03) years from the date on which it was due and payable are required to be
deposited with SECP for the credit of Federal Government after issuance of notices to the shareholders to file their claim. Share-
holders are requested to lodge their claims for unclaimed cash dividends/ bonus shares kept with the Share Registrar and Transfer
Agent of the Bank, on the address given above.

7. TRANSMISSION OF ANNUAL FINANCIAL STATEMENTS THROUGH EMAIL:

In pursuance of the directions given by SECP vide SRO 787 (1)/2014 dated September 8, 2014, those shareholders who desire to
receive Annual Financial Statements through email instead of receiving the same by post in future are advised to give their formal
consent along with their valid email address on a standard request form which is available at the Bank's website i.e.,
www.nbp.com.pk and send the said form duly filled in and signed along with copy of his/her CNIC/Passport to the Bank's Share
Registrar. Please note that giving email address for receiving of Annual Financial Statements instead of receiving the same by post
is optional. In case you do not wish to avail this facility please ignore this Notice and, in such case, Annual Financial Statements
will continue to be sent at your registered address on CD as approved in 68th Annual General Meeting held on March 30, 2017.

8. DEPOSIT / CONVERSION OF PHYSICAL SHARES INTO BOOK-ENTRY FORM:

The SECP through its letter No. CSD/ED/Misc./2016-639-640 dated March 26, 2021 has advised listed companies to adhere to
the provision of Section-72 of the Companies Act, 2017 (the “Act”) requiring all the existing companies to replace shares issued
by them in physical form with shares into Book-Entry form in a manner as may be specified and from the date notified by the SECP
but not exceeding four (04) years from the date of promulgation of the Act. Considering the aforesaid directive, NBP has also
published a request on October 28, 2021 to ensure compliance with requirement of the Act and advised to open Investor Account
directly with the Central Depository Company of Pakistan Limited (“CDC”) or CDC-Sub-Account with any TREC Holder regis-
tered with Pakistan Stock Exchange Limited (PSX) to place their physical shares into Book-Entry form. It will not only ensure
the compliance of relevant rules and regulations but will also speed up the process of disbursement of entitlement to the
respective shareholders.

9. AVAILABILITY OF AUDITED FINANCIAL STATEMENTS ON BANK'S WEB-

SITE
The Bank has placed the Audited Annual Financial Statements for the year ended December 31, 2021 along with Auditors’
Report and Directors’ Report and Chairman’s Review Report thereon on its website: www.nbp.com.pk

STATEMENT OF MATERIAL FACTS

This Statement sets out material facts concerning the special business given in agenda item No. 05 of the Notice, to be trans-
acted in the 73rd AGM of NBP’s shareholders to be held on March 30, 2022.

Agenda Item No. 5:

To consider and approve the remuneration of Mr. Arif Usmani, President/CEO of the Bank for a period of three months (Govern-
ment of Pakistan has extended the term of the President vide Notification No. F.1(33)Bkg-III/2018-218 dated February 14, 2022,
for three months or till the appointment of a regular incumbent, whichever is earlier), on existing pay package (approved by
shareholders in 70th AGM held on March 28, 2019). The shareholders are requested to pass the following resolution:

“RESOLVED THAT the existing remuneration package of Mr. Arif Usmani, President/CEO of the Bank, be and is hereby extend-
ed in the light of Government of Pakistan Notification No. F.1(33)Bkg-III/2018-218 dated February 14, 2022, for a period of three
months or till the appointment of a regular incumbent, whichever is earlier.”

Disclosure: In terms of Section 134(3) of The Companies Act, 2017, no director/Chairman is directly or indirectly inter-
ested in the Special resolution except the President.
WE BELIEVE IN
INCLUSIVE GROWTH
for greater National impact
Organisational
Executive Management 98

Overview
Coverage Across the Nation 103

Operating Environment 104

Value Creation Model 106

Financial Performance Overview 116

Executive Management
Mr. Rehmat Ali Hasnie has been with
NBP since 2010 and has been the
Group Chief of the Inclusive
Development Group (IDG) since 2019.
IDG is NBP’s most recent and
ambitious initiative to position the Bank
as not only a commercial bank but also
as an institution focused on the priority
financing sectors of Pakistan’s
economy. In this regard, not only is the
focus of IDG on SME and Agriculture
Tauqeer Mazhar lending but also the relationship with
SEVP/Group Chief, microfinance lenders to enable the
Retail Banking Group Muhammad Ismail Usuf
promotion of financial inclusion and
SEVP/Group Chief,
access of finance to those segments of Treasury and Capital Market
Tauqeer Mazhar has more than 29
the Pakistan economy which have
years of banking experience at various
presently not mainstreamed into the Ismail brings in over 27 years of
senior level positions in Corporate,
financial sector. experience in Treasury & Capital
Retail and Consumer Banking. His
previous employer was UBL, where he Markets. In his current position, as
Mr. Hasnie is a financial markets Group Chief Treasury he manages the
was working as Group Head Branch
professional with a MA Degree in interest rate, foreign exchange and
Banking and was responsible for
Development Banking from The liquidity risks of the bank. Treasury
managing the entire Branch Banking
American University (USA) and function comprises of Assets and
Business including Small Enterprises,
represents NBP on the Boards of Liability Management, Financial
Rural and Consumer Business along
Pakistan Mortgage Refinance Markets Trading, Equity Markets
with Corporate Marketing and
Company and First National Bank Trading and Sales & Structuring.
Branding. Tauqeer is an MBA from
Modaraba as a nominee director. He Ismail is an IBA graduate and joined
LUMS and started his career with
has over 25 years of work experience NBP Treasury in 2004 and has a proven
Citibank in 1990 as Management
that includes economics research, track record of successfully managing
Associate and has worked in different
capital markets, investment banking, treasury functions. Prior to joining NBP
senior level roles at Citibank Pakistan,
treasury and credit markets at various he worked with Faysal bank Treasury
Saudi Arabia, USA and UAE. He then
institutions in Pakistan. as well. He is well experienced in setting
moved to ABN AMRO Bank,
Kazakhstan and later joined KazInvest Rehmat Ali Hasnie up and managing Treasury business
Bank, Kazakhstan as Head of Retail SEVP/Group Chief, and brings in-depth knowledge of
and Consumer Bank. He successfully Inclusive Development Group Money Market, Foreign Exchange,
launched Credit Card, Personal Loans, Capital Markets, Derivatives and
Phone Banking and Liability Products Structured Products.
in these organizations. His last
assignment prior to joining UBL was
Head of Branch Operations for HBL
where he was responsible for
managing the overall domestic branch
operations portfolio across the country.
Executive Management
Hamayun has over 20 years of experience
working for banks, telecoms, and
technology-related global organizations. His
last assignment was at UBL, where he worked
as Head of Digital Transformation and
Payments and was mainly responsible for
leading the bank's digital transformation and
crafting new digital banking opportunities.
Recognized as Asia's top 100 Fintech leaders,
Mr. Muhammad Hamayun Sajjad is a
results-driven technology leader with a passion
for innovation and a unique mix of strategic,
creative, commercial, and technical abilities. He
creatively solves complex business problems
with customer-centric solutions while building
repeatable, sustainable processes that support
future operational excellence. Muhammad has
a collaborative and transparent leadership
style, energized by aligning, developing,
Abdul Wahid Sethi
empowering, and inspiring high-performing, SEVP/CFO,
Amjad Imran Khan cross-functional teams to deliver against a Financial Control Group
SEVP/Group Chief, vision. He has a proven track record in creating
International Financial Institutions and optimizing frictionless digital experiences Abdul Wahid Sethi is a Chartered
for consumers of financial services across
& Remittances Group Accountant and holds MBA degree
banking, payments, and ecosystem product
suites. from Imperial College, Lahore with over
Amjad Imran Khan has rich banking
He has been a leader and member of the core 26 years of experience. Mr Sethi is
experience of over 30 years during team responsible for various digital financial currently serving as SEVP/Chief
which he has worked with leading services initiatives. Brands to which he
Financial Officer of National Bank of
banks in Pakistan, UAE, Hong Kong contributed include UBL, Wave Money
Myanmar, Easypaisa, Telenor Banka Serbia, Pakistan (NBP). He has also served as
and Bahrain. He joined NBP from
and Paysbuy Thailand. He has vast experience SEVP/Group Chief of Audit &
Emirates NBD, UAE, where he worked operating across the EMEA & APAC region Inspection Group at NBP. Mr. Sethi is a
as Global Head of Financial institutions countries, including Myanmar, Thailand,
Australia, Singapore, Serbia, Hungary, Saudi
fellow member of the Institute of
for the Bank.
Arabia, and UAE. Muhammad has established Chartered Accountants of Pakistan and
a strong network with worldwide top holds an MBA degree in Finance from
Prior to joining Emirates NBD, he was executives, leveraging which he catalyzes the Imperial College of Business Studies
associated with Standard Chartered transformation.
Muhammad is passionate about delivering (ICBS), Lahore. He has over 26 years of
Bank where he worked in different
culture change in large, complex organizations work experience at different key
geographies and held senior positions using Design Thinking and Agile positions.
such as Executive Director and methodologies, and his work focuses on
Managing Director. During his tenure at innovation, digitalization, and how technology
SCB, he worked on growing the is redefining people's expectations.
business in transactional banking,
Muhammad Hamayun Sajjad
financial institutions and capital SEVP/Group Chief
markets. He started his career in Chief Digital Officer, Digital Banking Group
1990with Deutsche Bank, Pakistan
after completing his MBA from Drexel
University, USA.
Executive Management

Karim joined National Bank of Pakistan

in 1996. Since then he has held a variety
of senior positions during a career
spanning over 25 years. In 1997, he
moved to Bank of America as Senior
Authorized Officer. He re-joined NBP as Fouad Farrukh
Asma Shaikh Vice President to head Business SEVP/Group Chief,
SEVP/Group Chief,
Monitoring & Financial Control of the Aitemaad Islamic Banking Group
HRM Group
Bank’s international franchise. In 2003, Twenty-four years experienced Banker
Asma is a seasoned HR professional with Retail, Corporate, Risk, and Islamic
he headed Corporate Credit Division for
with almost 28 years of multi industry & Banking in leadership roles. Experience is
multi-cultural experience in fast paced five years. Karim also served National
Accountability Bureau for three years as divided in eighteen years in Pakistan and
dynamic industries including Banking, six years in the Middle East. Recognized
Pharma, Petroleum, E-Com and Director - Financial Crimes
and rewarded for building market-leading
Logistics. Investigation. After repatriation to NBP, profitable, sustainable businesses. Prior
he worked in Assets Recovery as to joining National Bank, led Retail and
She has more than 20 years of Executive Vice President for a period of Islamic Banking expansion for Faysal
experience, as Head of HR, for Bank Limtied for over 8 years and Country
seven years, and subsequently led
organizations like Deutsche Bank, Head for HBL Bahrain, and Risk Head for
HSBC, Dubai Islamic Bank, Barclays Logistic Support Group as its Group
Head. He was elevated to SEVP & Gulf Region of HBL.
Bank, NIB Bank and TCS. She has been
an active partner in driving business Group Chief, Logistics,
transformations through building Talent Communications & Marketing in 2021.
Capability, Competency based Career He is currently responsible for leading
Development Programs, fostering multi-disciplined logistical functions by
CBA-Management relations, building a
leading a large team as a cohesive unit,
Performance Driven Culture and
developing Women Empowerment thus efficiently providing logistical &
Initiatives at workplaces. marketing support to internal
customers.
Asma was an essential founder member
of Dubai Islamic Bank by building the Karim Akram Khan
Bank’s people infrastructure from SEVP/Group Chief, Logistics,
scratch. She was also an instrumental
Communications & Marketing Group
player in the performance turnaround at
Barclays Bank Dubai and Africa through
robust Performance Management and Hassan Umair Wasti
launch of Career Path Programs. SEVP/Group Chief,
Internal Audit & Inspection Group
Asma is a certified Executive Coach by
Umair has 25 years of work experience in
International Coaching Federation (ICF)
Internal Audit and Risk Management
and also certified as Director of Board
functions in multi-national banks in UAE,
by PICG.
UK and Pakistan. He has in-depth skills
and knowledge to strategically lead
On a personal level, Asma aims to
functions in the second and third line of
alleviate gender equality in the Pakistani
defense across all banking businesses of
workforce while providing tools and tips
consumer, corporate, Small and
to young girls who want to build their
Medium enterprises (SME), private
careers.
banking and wealth management.
Executive Management
Riaz has more than 26 years of banking
experience at various senior level
positions in Compliance. He joined NBP
from Habib Bank Ltd. where he was
working as Global Chief Compliance
Officer and was responsible to manage
Compliance affairs for 1700 branches
across 13 countries for the Bank.
Nauman started his career with Citibank
after completing his MBA from IBA in
1993 and has spent major tenure of his
career at various senior level positions at
Nauman Muzaffar different geographical locations. His last Amin Manji
SEVP/Group Chief, assignment prior to joining HBL was SEVP/Group Chief,
Risk Management Group Director Operational Risk Management Information Technology

Nauman has over 25 years of for Citibank - UAE, where he developed Manji brings more than 30 years of
experience during which he has and managed risk and control experience across the IT and Financial
worked with reputed multinational self-assessment programs and was Services industries to NBP He is
organizations in various roles. Earlier he also responsible to provide oversight on currently serving as SEVP and Group
was in HBL, where he worked as GM & global operational risk management Chief for the Information Technology
policies. Earlier to this, he was the EMEA Group. He is responsible for the Bank’s
Head Enterprise Risk Management and
Regional AML Compliance Head and IT products, services and infrastructure
was spearheading the establishment of
Regional Core Compliance Head based domestic and international landscape.
the Bank’s ERM function while working
on strengthening the existing risk and out of Citibank UK, where he was
Prior to joining NBP, Amin has held a
control environment across the Bank. responsible to manage regional
variety of technology roles at Deutsche
Prior to joining HBL and moving back compliance activities and initiatives and
Bank, Standard Chartered, Citi, Credit
to Pakistan, Nauman was with JP also developed region-wide monitoring Suisse, Telecom Australia and Robert
Morgan Canada working as the Chief and testing guidelines. Before moving to Bosch across Australia, Singapore and
Risk Officer for JPMorgan’s Investment the UK, he was the Head of Operations Japan. His areas of expertise include IT
in New York within their Corporate for Citibank Algeria. Nauman has also Strategy & Execution, Technology
Finance Advisory team, senior rating headed various senior Operations Management, Digital Transformation, IT
positions for Citibank Pakistan at the Policies, Processes & Procedures and
agency analyst for the Oil & Gas vertical
start of his career. Disaster Recovery & Business
of DBRS, Canadian pioneer rating
Continuity. He has a track record of
agency, Executive Director Global developing high performance teams
Derivatives marketing team as a Nauman Riaz and strategically utilizing technology to
business manager. Prior to moving to SEVP/ Group Chief,
deliver complex IT solutions in a
North America, Nauman also worked Compliance Group
globally interconnected and culturally
briefly at the Pakistan Credit Rating diverse environment.
Agency (PACRA). Nauman has an
undergraduate degree in Finance from Amin serves on various leadership
the University of Utah, USA and an forums at NBP including the Executive
MBA from the Lahore University of Committee (ExCOM), Enterprise Risk
Committee, Compliance Committee of
Management Sciences (LUMS).
Management and the Technology and
Digitalization Steering Committee.

Amin holds a B.S. from Cornell

University in the USA and a Master’s in
Applied Finance from Macquarie
University, Australia.
Organisational Overview
NBP has a proud history of more than 7+ decades of serving the
Nation, with the scale and diversity to serve customers and clients
across a broad range of their financial needs.

Established on November 09, 1949 under the National Bank of

Pakistan Ordinance-1949, NBP is a leading Commercial Bank in the
country. Over the decades, the Bank has redefined its role into a
modern growth-oriented commercial bank by expanding its business
network across continents and capturing sizeable market share in the
banking sector. The Bank provides commercial banking services
including deposits, bancassurance, corporate loans, investment
banking advisory, forex, global remittances, underwriting, asset
management, agency services, brokerage, modaraba and other
banking and financial services. We strive in promoting financial
inclusion of the unbanked masses in the country, creating equal
employment opportunities and delivering our responsibilities as a
responsible corporate citizen.

The Bank also has an international foot print through branches and
subsidiaries in the Far East, Middle East, South Asia, Central Asia,
Europe and North America

Our Product Universe

Our diversified and comprehensive products and services provide
universal banking solutions for all credit and non-credit financial
requirements of the customers. Individual customers can benefit
from a large array of our products e.g. lockers, mobile banking, EMV
Debit Card, and deposit their savings. Government employees can
obtain financing against their salary; can obtain mortgage finance as
a first step towards building a home; and can benefit from our home
remittance service to receive cross-border funds from their family
members abroad.

For corporate, commercial and SME businesses, NBP is here to help

entrepreneurs launch a start-up, fund their business growth, manage
payments timely and securely, expand internationally, manage their
finances effectively and deal with business counterparts globally
through our branches and representative offices.

Details of our products may be found at:

https://www.nbp.com.pk
The Widest Coverage Across the Nation
The Bank runs an unparalleled, and one of the largest, branch network operating
all across the country, including the most remote rural areas where no other bank
operates.

Our business operations are based on a geographically diversified, composite

and integrated structure whereby the banking and non-banking financial and
related services are typically provided by the Bank through its domestic
and international branches, subsidiaries and associates.

The recent rise of urbanisation and the growing middle class younger
population, rapid technological advancement and increasing local
and global business connectivity are all driving further growth in
our conventional as well as Islamic banking network.
The Bank also has an international presence
through branches and subsidiaries in the Far
East, Middle East, South Asia, Central
Asia, Europe
and North
America.

Domestic Presence
Punjab 729
Sindh 278
Khyber Pakhtunkhwa 250
Balochistan 87
Federal Capital 37
Gilgit Baltistan 28
Kashmir 105

Geographical Presence
We are privileged to play an important role in the Global Presence
country’s economy. That brings with it a deep Far East
responsibility to the communities we serve across
the Nation. South Asia
Central Asia
Middle East
Europe
North America
Operating Environment
Rapidly Changing Environment
The Bank’s financial performance is significantly linked to
rapidly changing external environment i.e. the socio,
geo-political and economic trends both locally and
globally. In the past two years, the Covid-19 had global
ramifications on health, economies and the environment
in which the Bank operates. However, during 2021, the
global economy rebounded, mainly driven by large
economies, many countries are still below the
pre-pandemic levels.

The ongoing impact of Covid-19 economic environment

runs through all considerations for our strategic planning
as we pay particular attention to the horizon of the
external environment in which we operate.

During 2021, we responded well to the elevated credit

risks via active portfolio management, including
adjustment of risk appetite, heightened degree of internal
controls, effective cost management and scenario
analysis. Our participation in government lead initiatives
for inclusive socio-economic development included
offered certain financial services that solicited heightened
focus on conduct, reputational and fraud risks.

Since these factors have an impact on our financial and

operational performance and are expected to remain
relevant in the foreseeable future, the Bank has put in to
place effective strategies to address the key
considerations in both the short-term as well as the
long-term.

As the Covid-19 crisis have delivered an unprecedented

shock to our economic & operating environment in the
near term, we have adopted more prudent credit risk
management strategies. Stimulus package and the
government-backed financial moratorium schemes for
businesses introduced amidst the Covid-19 in 2021 have
mostly expired, and requisite heightened degree of
effective portfolio management strategies to reduce the
loan infection ratio.

In the short run, the Bank is making progress to promptly

address the internal challenges related to IT, Risk and
Controls. On the external front, significant risks still
prevail regarding the extent of the economic activity given
the increasing CAD pressure and Rupee devaluation,
elevated geopolitical risks and FATF issue. In the longer
term, technologic advancement, unorthodox competition
from new market players, mounting twin pressure,
geo-political disturbances could all have financial impact
on the Bank’s performance. As a result, we are closely
monitoring these factors with strategic plans adapted as
appropriate.
Considerations and Response
Short-Term Considerations

Economic and Political Landscape Technological Innovation & Cyber Security

We maintain a diversified and stable earning asset mix to Technological Innovation & Cyber Security Technology has
generate healthy profits. Our funding pool is stable with no opened up new markets, new products, new services and
single sector having a major control or impact on either the efficient delivery channels for the banking industry, and the
asset or liability side of our business. Our business strategy banking system is shifting from traditional banking towards
and policies are devised efficiently to safeguard the Bank’s IT-based relationship banking. As our response to this, we
interest against any abrupt political changes. aim to optimize the technology landscape to enable
innovation, promote operational excellence and meet
Customer and Client Behaviour business objectives while ensuring data safety and security
There is a growing trend towards online transactions and through a multi-layered approach to cyber security.
servicing, reducing customers’ use of our branch
infrastructure. Downloads of our mobile banking apps
continue to increase as more and more customers look for
We pay close attention to the
ways to self-serve. These trends present significant
opportunities for the Bank to transform and continue to
environment in which we
improve its services, finding further efficiencies through
technology and automation to which the Bank is
operate, scanning the horizon for
responding by adding more to its digital products. risks and opportunities, and
Contingencies and Litigation adapting our strategies
The Bank is currently managing litigation related to
pensionary benefits of retired employees. While we are accordingly. We also monitor
confident of a favorable outcome, on the contrary an
adverse judgement may have a material impact on the trends in the behaviour of our
financial performance and position of the Bank.
As our response to this, we remain focused on putting into customers and clients so we can
place and maintaining measures to create adequate buffers
to absorb any imminent impact of an adverse outcome. We effectively meet their evolving
are also taking measures to prevent such issues in the
future. needs.

Long-Term Considerations

Inclusion & Business Diversity Unorthodox Competition

Technology has opened up new markets and the Regulators are encouraging and becoming more open
banking system is swiftly shifting towards IT-based to allowing alternate financial services providers,
relationship banking. While this is an opportunity, it has particularly in Payment Services. In response to the
also increased the risk of cyberattacks, resulting in data growing unorthodox competitive pressures, the Bank
breaches and unanticipated developments. We are will continue improving its products and services in
launching new products, services and efficient delivery order to increase its market share.
channels with appropriate safety measures.
Value Creation Model
The Bank’s business model has evolved over 7 decades of unremitting commitment to the Nation and
resilience to a challenging operating environment. We seek to generate and deliver value for inclusive
development and growth of all our stakeholders through partnering for their prosperity while balancing our
economic, social and environmental priorities.

Our refreshed vision of becoming “the Nation‘s leading Bank enabling sustainable growth and inclusive
development” leads our focus on strategic planning to address emerging challenges and achieving balanced
growth. Our strategic planning processes continue to evolve every year, building on the learnings of each
planning cycle and the macro environment trends that shape our operating landscape. Financial Planning,
Corporate Governance and Risk Management provide a framework and broader boundaries within which we
conduct our business.

Our stakeholders’ engagement processes help us in establishing our stakeholders’ value propositions and
maintaining an equitable balance between stakeholders’ interests. Our strategy and KPIs are formulated
considering the key inputs and the capitals available to us. Over the period we have developed a
customer-focused business strategy to provide financial solutions to individuals, small and medium
enterprises, as well as large corporate and public sector entities. We have established a dedicated business
function for each category of our customers. Our business functions are primarily responsible for making their
respective business strategies and plans while ensuring coherence with the overall strategic goals of the
Bank.

Since planning and execution are two sides of the same coin, execution is equally important for achieving our
goals. Hence, at the beginning of the year, the strategic goals as approved by the Board of Directors are
communicated to all those who are responsible for the execution, defining their path into the future. For
Corporate, Commercial and SME businesses, NBP is there to help entrepreneurs launch a start-up, fund their
business growth, manage payments timely and securely, expand internationally, manage their finances
effectively and deal with business counterparts globally through our branches and representative offices.
Support functions at the Head Office manage adequate logistics and technological support for the business
functions in executing their business strategy. Our control functions at Head Office provide a supervisory and
governance role through policy making and monitoring. These control functions ensure regulatory
compliance as well as adherence to internal policy frameworks.

Creating Value for our Stakeholders

As the Nation’s Bank, we endeavor to bring more to the society in line with the objectives of the State than
just our financial target. Our long-term success is dependent on serving our customers well and generating
value for society through our products, services and facilities. At NBP, value is created through our business
model, where we transform various inputs or Capitals through business actives & interactions to produce
outputs and outcomes that create value over the short, medium or long-term. Our input is across various
capitals, i.e. Financial Capital, Manufactured Capital, Human Capital, Intellectual Capital, Customer Capital,
Social and Natural Capital. Compared to Corporates in other sectors, the financial institutions generate lower
Return on Assets which is below 2% in general, compared to 15% - 20% earned by corporates in other
sectors. To make the returns attractive for our shareholders, we resort to the process of a Gearing which
enables the Bank to expand its business volumes by generating higher funding through deposit mobilization and
borrowings and placing the same at premium in multiple streams of earning assets on the strength of a comparatively fixed and smaller amount of the
shareholders’ equity.

Thus, the Bank is currently operating at 13.5 times equity multiplier of net assets. Our business and value creation model is centered to the two basic functions
of (i) Financial Intermediation, and (ii) Maturity Transformation. Financial Intermediation entails that the Bank acts as an intermediary between its various
customers, e.g. depositors-to-borrowers, importers-to-exporters, remitters-to-beneficiaries by offering both fund based and non-fund based financial
solutions. Maturity transformation on the other hand, is an act of borrowing money for short-term and invest or lend out at risk premium. These two functions
are the key propellers of value creation and augmenting financial capital of the Bank through key income streams being (i) the fund based mark-up / interest
income, and (ii) non-fund fee & commission income. Fund based income being the net interest margin, i.e. delta between the lending rate and the borrowing
rate, compensates the Bank for the credit and interest rate risk it takes. Hence, the Bank’s net interest / mark-up income is the residue from the mark-up
income generated and the mark-up interest expensed on the deposits, borrowings and other debt obligations.

The Bank also earns non-fund based income by way of fee and commission for the services. This year, the Bank earned 72% of its total revenue by way of
mark-up / interest income. Rest of the 38% income was generated through capital gains, dividend income, income from dealing in foreign exchange, etc.
These two major categories of income directly lead to augmentng the financial capital of the Bank.
Strategic Objectives
Our objectives in the short-term, medium-term and long-term are reviewed and aligned every year under the Annual Budget and Strategic
Business Plan which is agreed by the Management and approved by the Bank’s Board of Directors. The Strategic Business Plan
encapsulates the business strategy and action plan of each Group along with the desired timelines.

Broadly, strategic objectives of the Bank are categorised as follows:

Short-Term Medium-Term Long-Term

- Increasing digital banking footprint, To enhance our market share by Building on its short-term and
- Rationalising the international franchise prudently expanding the core business medium-term achievements, the
- Improving service quality and customer and strengthening infrastructure by Bank’s long-term objective is to be the
experience investing into I.T. systems and human Nation’s leading bank enabling
- To accelerate deposit mobilization
capital. sustainable growth and inclusive
- Strengthening control and compliance
functions; and development.
- Achieving operational efficiencies

Pillars of our strategy are cohesive and complementary, with benefits from improvements in one reinforcing progress across the
others. For example, digitising operations and products leads to improved customer experience which in return creates diversified
income streams. This makes our Bank more resilient, risk efficient and cost effective.

Supporting Powered by Inclusive Bank Strengthen Our Prudent Resource

Customers Digitalising Culture Allocation
Diversify our
Putting our customers Making our business organisation by Improve our service To ensure efficient
at the core of the operations more business, geography quality and corporate resource allocation for
strategic decisions we efficient and and income type to be image of the Bank to generating sustainable
make in pursuit of our technologically more resilient to make it the best choice and long-term returns
vision to enable advanced to enable economic headwinds for our customers and for each class of our
sustainable growth our customers and and future trends colleagues. stakeholders.
and inclusive clients to engage with impacted by the development.
development. us in the way they Covid-19 and its
want to. aftershocks.

2022 Strategic Priorities

Overall, our strategic priorities for 2022 remain unchanged i.e. to be the Nation’s leading bank enabling sustainable growth and
inclusive development. This is what drives us! In pursuit of our goals, we set our business strategy in a challenging and
regulated environment with frequent developments relating to technology, stakeholder preferences, increasing unorthodox
competition, greater regulations, etc.

These influences solicit strategic responses for achieving our strategic goals. Strategic responses for emerging challenge areas
are identified in our yearly Strategic Business Plan.

Since 2019, the word DELIGHTED became an acronym for a vast majority of our institutional challenges which are: Data,
Enterprise Risk, Legal, International, Governance, Human Resources, Technology, Expense Management and Digitalisation
 The word DELIGHTED became an acronym for a vast majority of our institutional challenges which are: Data, Enterprise Risk, Legal,
International, Governance, Human Resources, Technology, Expense Management and Digitalisation
Strategies adopted to achieve desired results in the identified priority areas include:

Information Digital Banking Inclusive Operational Risk

Technology Development Efficiency and Management
New products to be Image Building and Controls
I.T. to remain high on launched and new Delivery on our
our agenda. Necessary variants and enablement National Agenda We will streamline the Revision in credit
measures are being to be synchronized with Focused approach Bank’s systems and policies, manuals and
adopted to ensure the existing channels to towards agriculture, processes to achieve processes to align the
seamless system move ahead. Effective and SME segment to operational efficiency. same with the Industry
upgradation, marketing of digital capitalize on the Also, improvement in and International Best
integration and products to arrest government initiated service quality through Practices. Introduce the
optimise technology counter traffic and lending programmes. automation and concept of industry
landscape to enable promote financial Further, increased introducing the experts across
innovation and achieve inclusion. availability of affordable concept of branch business segments and
operational excellence. housing finance to service ladder. Soon partner with academia
middle and lower we are launching a new for client advisory for
income groups in line theme of promotional enhanced risk
with the Government campaigns. customers management and
of Pakistan’s agenda and colleagues. prevent deterioration in
is also on the cards. asset quality.

Strategic Delivery-2021
Most of the year 2021 presented tough challenges for our customers, colleagues and the communities that we serve. We
provided exceptional levels of support to those who needed it, demonstrating that we truly put our customer at the heart of our
business which is fundamental to building sustainable value in our business. We are building on our strengths to meet our
customers’ financial needs throughout, enabling them to thrive financially.

During 2021, we made material progress towards achieving our goals as defined at the start of the year. Major achievements in
2021 include:

Organisational Excellence Value for Stakeholders

We further streamlined organisation into new Groups to manage This year the Bank generated a gross value of PKR 267 billion
improved service delivery, span of control, rationalise activities for its stakeholders.
and differentiate between first and second line of defence.

Digital Footprint Prudent Capital Allocation

We have launched the PayPak Debit Card and the Mobile While RWA increased by 12.3%, the CET-1 and Total Capital
Banking Application Facility. We spent PKR 1.35 billion on improved to 15.42% and 20.39%, respectively. This increases
improving our I.T. systems and peripherals. our capacity to exploit earning opportunities that have emerging
as the impact of Covid-19 has started fading away.

Customer Service
130,090 customer complaints handled with 98.7% resolution
rate. In spite of an increased number of complaint processed,
on a comparative node the average complaint responding time
has also reduced from 9.8 in 2020 to 8 working days in 2021.
Resource Allocation
In pursuit of our commitment to enhancing stakeholders’ value and serving the Nation, we have deployed adequate resources
to ensure e�cient strategy execution. Our resources fall under 6 major categories, each one is briefly discussed below:

Financial Capital
The Banks’ financial capital comprises of the funds injected by
the equity shareholders and it helps the Bank in acquiring, Key objectives of our Capital Management &
developing and maintaining other types of capitals to Adequacy Strategy include:
perpetuate its business. Financial capital also acts as a bu�er
to absorb unanticipated losses and serves as a regulatory Regulatory Compliance
restraint on imprudent asset growth. Therefore, the regulators
have prescribed minimum capital requirements, both in terms
Meeting internal capital targets which are
of quality and quantity.
more stringent than the regulatory requirements
The Bank's policy is to maintain a strong capital base so as to
maintain investors, creditors and market confidence and to Maintaining optimum Risk Weighted Assets
sustain development of the business. Adequacy of the Bank's for profit maximisation
financial capital is monitored using, inter alia, the rules and
ratios established by the SBP. The Bank has devised effective Achieving Corporate Sustainability
stress testing scenarios to assess the strength of its financial
capital under the Internal Capital Adequacy and Assessment Securing the highest credit rating for the Bank.
Process (ICAAP). Other tools deployed include prudent capital
allocation, balancing risk-weighted assets, efficient maturity
profiling interest bearing assets & liabilities, etc.

The Bank has devised effective stress testing scenarios to assess the impact on
the financial capital of the Bank under the Internal Capital Adequacy and
Assessment Process (ICAAP).

Other tools deployed include prudent capital allocation, balancing risk-weighted

assets, timely asset repricing, dividend policy and earning asset portfolio mix.

At end 2021, the total Risk Weighted Assets Credit Risk and
Market Risk amounted to PKR 984 bn (2020: PKR 858 bn) and
PKR 82 bn (2020: PKR 88 bn), respectively. Whereas, RWA under
Operation Risk amounted to PKR 229 bn (2020: PKR 207 bn).
Overall, the RWAs were increased by 12.3% YoY to PKR 1,295 bn.
Through efficient strategy execution, the Bank generated healthy operating
profit during 2021, further strengthening Capital Adequacy of the Bank. As
of December 31, 2021, the Bank’s total eligible Capital amounted to PKR
264.1 billion (2020: PKR 228.12 billion), of which Eligible Tier-I Capital
amounted to PKR 199.75 billion (2020: 172.90 billion). At end 2021, CET-1
ratio stood at 15.42% (2020:14.99%), whereas the Total Capital Adequacy
Ratio stood at 20.39% (2020:19.78%).

Moreover, NBP is the only Bank in Pakistan with credit rating of ‘AAA’ by
both the approved credit rating agencies in Pakistan. In June 2021, M/s
JCR-VIS Credit Rating Company again reaffirmed the Bank’s standalone
rating of “AAA”, one of the highest credit ratings accorded by the company
for any bank in Pakistan. PACRA has also assigned a long-term entity rating
of 'AAA' (Triple AAA) and short-term rating of 'A1+' (A-one Plus). This strong
credit rating capacitates the Bank to access additional capital in case a
requirement arises.

For further details, please refer to Note 46 to the Financial Statements.

Manufactured Capital
This refers to Capital goods, i.e. Buildings, I.T. infrastructure, ATMs,
Vehicles, Equipment, etc. built or acquired by the Bank. Given the extreme
importance of the manufactured capital in smooth execution of its
operations, value creation and to meet future challenges, the Bank focuses
on maintaining adequate manufactured capital. The Bank is, and will
continue to, invest in its I.T. infrastructure with the objective of digitising its
products and services. A major project initiated this year is the up gradating
of core Banking Application.

The Bank is maintaining an optimal balance between owned and rented

business premises. Further, the Bank is also mindful of the requirement to
maintain a healthy work environment within the Bank premises and is
continuously investing for modernisation of the business premises. We
have started a plan to standardise our workplace ambiance and quality.

Total value of our manufactured capital stood at PKR 54.2 billion (2020:
PKR 54.4 billion) at the end of 2021.

For further details, please refer to Note 12 to the Financial Statements.

Human Capital customers, suppliers and business partners, and the wider
We consider our human capital as the Bank’s most important community, are built on mutual trust, loyalty, and shared
asset. The Bank’s most important asset is its human capital. values. This Relationship Capital creates opportunities for the
At 31 December 2021 the Bank had 15,409 (2020 : 15,109) Bank in the process of value creation for our shareholders. To
people as its full time employees. In addition, the Bank also establish and develop our relationship capital, the Bank
engages 1,273 (2020 : 1,838) outsourced personnel of interacts with its customers and other stakeholders in a
services companies for delivering certain non-critical number of ways. We also invest into and contribute towards
functions. Our human capital pool functions to achieve the growth of our communities through various charity and
common goals with dignity, dedication, and mutual respect. support activities, particularly in the areas of Education,
Healthcare, Environment, Sports and Promotion of Culture.
This year too, we took effective measures to dampen the During the year 2021, the Bank invested considerable
effects of Covid-19 crisis through constant liaison with the amounts into CSR initiatives.
hospitals and staff in need of treatment for Covid-19.
Intellectual Capital
Our teams remained available 24/7 to execute the Intellectual Capital, being an intangible asset, has zero
hospitalisation claims and to arrange new panel hospitals with value on the Bank’s balance sheet but positively impacts the
Covid related hospitalisation/isolation facilities for staff and performance and success of the Bank. Our intellectual capital
their dependents. Entire costs for Covid-19 pathological tests, includes the brand synonymous values and conduct, human
injections/medications and antibodies test for staff (and their capital knowledge and skills, systems and processes,
dependent family members) are being fully covered by the software and corporate governance. Over the period, the
Bank. Further, the Bank is Bank has strengthened and enriched its Intellectual Capital
compensating with additional through continued measures including deployment of I.T.
Average Employees
systems, efficient policy and system development in the area
15,259
amount of PKR 1.5 million to the
families of those NBP team of Credit, Compliance, Investment, Human Resource
members who expired during Management and Risk Management, etc.
Investment in Training
Covid-19 pandemic.
213 million
Social & Relationship
Capital
We strongly believe the Bank’s viability greatly depends on its
sustainable relationship with each stakeholder group, e.g.
Corporate Social Responsibility
In the year 2021 the Banking sector was confronted with the dual challenges of providing uninterrupted banking services to its clients as well
as ensuring safety and health of its employees.

NBP remained cognizant of its responsibilities as a corporate citizen. Therefore, the Bank continued to play its role through its CSR Program
of providing support to households affected by lockdowns and its adverse economic consequences. In a nationwide effort, NBP provided
support to low income through NGOs and various microfinance organizations.

In addition to its demarcated and pre-defined areas of Education, Health, Special Persons, Women & Children, the Bank is always there for
the relief of affected people in case of natural disaster or calamity. We believe that looking after underprivileged communities is synonymous
to serving the Nation.

During the year, NBP spent around large amount on CSR activities. To ensure progress, quality of work and
transparency in utilisation of funds under CSR schemes, NBP regularly monitors project activities. The
Bank has initiated a wide range of projects, including provision of free primary healthcare, hospitals,
mobile dispensaries, scholarships for local students, infrastructure development and upgradation of
academic institutions.
 Health Care Financial
Inclusion
Throughout the year, the executive
management remained in contact with its Effective measures were taken to ensure
field staff and customers creating awareness the provision of uninterrupted banking
on how to prevent and fight against Covid-19. We services to the public during a very tough operating environment.
strictly adhered to the SOPs advised by the health authori- The Bank remained at the forefront for ensuring easy access of
ties for the safety of our frontline employees and customers credit to the business community, enabling them to continue their
visiting its branches and offices. During the year 2021, the business activities. As a step towards the financial inclusion
Bank became part of the Pink Ribbon Campaign for strategy. NBP is key partner to the Government of Pakistan in
creating awareness in society about breast cancer. disbursement of financial assistance to millions of needy persons.

Growth Education
Opportunities At NBP, we believe that
During these difficult times, the education plays a vital role in
Bank is playing its due role to economic development and
create employment opportunities for poverty alleviation
the youth by providing GoP / SBP in society. With this perspective in
incentivised finance facilities under the Prime mind, the Bank is performing its social
Minister’s Kamyab Jawan – Youth Entrepreneurship Scheme. duty of uplifting
The Bank is also participating in the Government of Pakistan educational standards in the country by financially
initiative directed towards the provision of low cost housing supporting various educational institutions on a yearly basis.
facility to the public. NBP also extends support through educational programmes
and other skills to financially constrained students.
At NBP, we believe that education plays a vital role in econom-
ic development and poverty alleviation in society. With this
perspective in mind, the Bank is performing its social duty of
uplifting educational standards in the country by financially
supporting various educational institutions on a yearly basis.
NBP also extends support through educational programmes
and other skills to financially constrained students.
Financial Performance
Overview

Our performance remained

strong as we continued to create
growth opportunities for the
Nation through uninterrupted
delivery of services to our
customers. Financial results for
the year 2021 reflect our
resilience to the impact of Covid
on the Bank, its customers and
the economy.

During 2021, the Bank earned gross PKR 103.4 Bn) was on account of
mark-up/interest income of PKR 231.9 profit to the depositors. During the
Bn (-10% YoY). Net interest-bearing year, the average policy rate remained
assets during the period averaged at 7.29% compared to 8.95% of last
PKR 2,756.2 Bn (+16.0% YoY). year. This translates into an average
Interest-bearing investment portfolio decline in the policy rate by 166bps.
averaged 25% up at PKR 1,697.2 Bn As a consequence, the Bank's cost of
(Dec '20: PKR 1357.4 Bn) and deposits dropped by 120bps to close
generated interest/mark-up income of at 4.0% for 2021 (2020: 5.2%). Overall,
PKR 139.1 Bn (-9.7% YoY), making the Bank's net mark-up/ interest
60% of the total mark-up income. income closed at PKR 97.6 Bn, which
Average loans and advances (net) is 6.3% lower against PKR 104.2 Bn
were up by 1.9% at PKR 988.4 Bn earned during the prior year.
(2020: PKR 970.1 Bn) and generated
mark-up/interest income of PKR 87.3
Bn, which compared to PKR 99.8 Bn
levels of 2020, is lower by 12.5%.
Average interest-bearing liabilities
increased by 12.4% to PKR 2,692.9
Bn. However, the Bank's cost of funds
decreased to PKR 134.3 Bn (-12.6%
YoY), of which PKR 87.8 Bn (Dec' 20:
Financial Performance

Despite a generally lower economic Bn (as companies resorted to retaining

activity during the year due to the the profits). Higher international trade
pandemic, the Bank succeeded to volumes, increasing the foreign exchange
achieve some growth in its income by 59.8% YoY to PKR 6.5 Bn
non-fund-based income stream by (Dec '20: PKR 4.1 Bn). These gains were
generating a non-mark-up income of however offset by the lower gains on
PKR 36.9 Bn (Dec '20: PKR 36.1 Bn), securities that amounted to PKR 6.2 Bn
constituting 27.5% of the total income (Dec '20: PKR 7.9 Bn). Accordingly, the
(Dec '20: 25.7%). Branch banking non-mark-up/interest income of the Bank
operations continued generating healthy totaled PKR 36.9 Bn, as against PKR
fees & commission income that closed at 36.1 Bn of the last year.
PKR 17.8 Bn (-2.5% YoY). Dividend
income increased by 141.7% to PKR 4.6

With a 4.9% decrease YoY,

operating expenses for the
year closed at PKR 60.0 Bn
against PKR 63.1 Bn for the
year 2020. HR
compensation that
accounts for 62.1% of the
total operating expenses
amounted to PKR 37.0 Bn
compared to PKR 40.5 Bn
for the year 2020, the
decrease is due to reversal
of provision. Resultantly,
the Bank's operating cost
to income ratio stood at
44.7%, against 45.0% for
the prior year.
Financial Performance

Operating Expenses

The Bank invests appropriate funds in the uplift and maintenance Technology is pivotal for the Bank to achieve its strategic goals,
of its business premises, providing a secure & healthy work we continued to invest in upgrading our IT infrastructure, systems,
environment to its workforce and customers. This year we spent a and applications architecture. In 2021, we spent PKR 1.4 Bn on
sum of PKR 0.9 Bn on repair and maintenance of our business software maintenance and PKR 612.2 Mn on Network
premises. Overall property-related expenses amounted to PKR enhancement.
8.4 Bn, which is 1.8% more than the prior year. Since Information

Profitability

Pre-tax profit for the year amounted to PKR 52.9 Bn i.e. 14.4% for prior year’s lower effective tax rate also included a PKR 2.3
higher YoY against PKR 46.2 Bn of 2020, which is Highest Ever Bn provision reversal that was booked due to appeal effect order
PBT in the History of the Bank. Tax charge amounted to PKR received on account of favorable ATIR decision. Consequently,
24.85 Bn, translating into an effective tax rate of 47.0% profit after-tax for the year 2021 closed at PKR 28.0 Bn i.e. 8.3%
(2020:34%). Tax charge mainly includes PKR 18.5 Bn at below the PKR 30.6 Bn in 2020. This translates into Earnings Per
statutory rate, PKR 2.1 Bn as super tax and PKR 3.3 Bn due to Share of Rs. 13.16 as compared to Rs. 14.36 in the
the inadmissibility of PKR 9.8 Bn civil penalty. Moreover, reasons corresponding year.

Significant growth is achieved in

profitability, partially off-set by
higher provisions charge.
Net assets increased by
PKR 18.6 Bn.
Financial Performance

Assets Quality and Provisions

Reflecting the economic environment triggered by the Covid-19 pandemic, during the prior year under review. Consequently, specific, and general
the asset quality of the Bank is still under pressure during the recent provisions increased to PKR 179.3 Bn and PKR 12.5 Bn. However, total
months. As of December 31, 2021, NPL’s totaled PKR 197.9 Bn, being provisions held translate into a coverage ratio of 96.9%. PKR 197.9 Bn of
PKR 26.6 Bn or 15.6% higher than Dec '20 level of PKR 171.3 Bn. The non-performing loans include OAEM (PKR 1.9 Bn), Sub-standard (PKR 5.3
Bank follows a prudent approach in the identification of loan impairments Bn) and Doubtful (PKR 17.3 Bn), while PKR 173.5 Bn are classified as loss.
to strengthen its balance sheet by maintaining a robust level of specific, as Specific provision coverage stood at 90.6%, whereas provision coverage
well as general provisions against NPL’s and underperforming portfolios. (including general provisions) stood at 96.9%.
Provision charges of PKR 11.9 Bn (Dec '20: PKR 30.9 Bn) was booked

Delivering to the Shareholders

Our aim is to deliver healthy Financial soundness indicators of the Bank have improved significantly and have resulted
and sustainable returns to in the Bank being in a much stronger position. Retaining the profit in recent years has
added to the Shareholders' wealth through higher book value per share, which has
shareholders. We achieve
increased 38.4% from PKR 97.2 per share at the end of 2018 to PKR 134.5 per share at
this by focusing on both the end of 2021. Key financial soundness indicators of your Bank are as follows.
operating performance and
balance sheet strength. We
understand the importance
of delivering shareholders'
return at strong and
sustainable levels

Return on Equity (RoE) measures the

Bank’s profitability. It represents the net
profit generated as a percentage of the
shareholders’ equity.
Financial Performance
Balance Sheet Strength
Balance sheet strength is critical to the Bank’s ability to serve our The strength of our balance sheet means the Bank is
customers, drive core business outcomes and deliver strong and well-positioned to support customers and the Pakistani economy
sustainable returns for our shareholders. Our key capital, liquidity through challenging and uncertain times.
and funding metrics strengthened further during FY'21.

Total Assets
As of December 31, 2021, the total assets
of the Bank amounted to PKR 3,846.7 Bn,
which is 27.9% more from PKR 3,008.5
Bn at the end of 2020. The Bank has
managed its overall asset-liability mix by
generating stable funds and deploying the
same into earning avenues offering
positive yield

Capital Strength and Adequacy

The Bank has been identified by the SBP PKR 199.75 Bn at the end of 2021.
as Domestic Systemically Important Bank Likewise, Eligible Tier 2 capital also
‘DSIB’. Therefore, the Bank is increased by PKR 9.12 Bn or 16.5% to
required to maintain minimum CET-1 at close at PKR 64.34 Bn at year end 2021.
9.5% and Total CAR at 13.5%. Pertinent Tier 2 capital eligible component
to mention that effective March 31, 2020, increased corresponding to increase in
NBP was to be subject to enhanced loss total Tier 1 capital. Whereas total RWAs
absorbency surcharge of 2.0% in the increased moderately by PKR 142.1 Bn or
form of additional Common Equity Tier-1 12.3% from PKR 1,153.10 Bn at YE’20 to
capital (CET-1). However, as a measure to PKR 1,295.11 Bn at end Dec’21.
dampen the effects of Covid-19, and to
support the banking sector in extending Accordingly, Total Capital Adequacy Ratio
credit facilities to its customers, SBP (CAR) improved to 20.39% with Tier-1
reduced the capital conservation buffer by capital adequacy ratio at 15.42% as
100bps from 2.5% to 1.5%, for the time compared to 19.78% and 14.99%,
being. This resulted in lowering the respectively at YE’20. Leverage ratio of
statutory minimum capital requirement for 3.0% was introduced in response to the
the Bank to 13.5%. Basel III accord as a regulatory minimum.
At the year-end 2021, the Bank’s leverage
During 2021, the Bank’s Eligible Tier 1 ratio was just satisfactory at 3.47%
capital increased by PKR 26.86 Bn or (2020:4.06%)
15.5% from PKR 172.90 Bn at YE’20 to
Financial Performance

Loans and Advances

At Dec-2021, gross loans & advances of the at end Dec’21. ADR has recently become more
Bank amounted to PKR 1,305.2 Bn depicting a important for banks as the Federal Government
12.5% increase from the year end 2020 levels. has imposed an additional 2.5% tax on the
The loan book is diversified over 30+ sectors. entire income from Federal Government
Two major classes i.e. private and public sector Securities for banks with ADR falls in between
constitute 67.8% (2020: 71%) and 32.2% 50% and 40%; and if it falls below 40%, then
(2020: 29%), respectively. With PKR 198.9 Bn, the additional tax rate would be 5%. Previously,
Individuals make 15.2% of the loan book. this tax was imposed only on the “incremental
Power remains the largest sector with 15.2% income”. The Bank’s ADR currently stands at
share and PKR 198.9 Bn in outstanding loans, 43% to attract 2.5% additional tax.
followed by 12.3% of the Textile sector where Business groups that contributed towards YoY
the exposure increased by 20.6% YoY to reach growth in advances include C&IBG (+PKR
PKR 160.0 Bn. Oil & Gas also recorded 25% 39.18 Bn), IDG (+PKR 37.50 Bn), IFRG (+PKR
growth to reach PKR 102.8 Bn from PKR 82.1 41.0 Bn), RBG (+PKR 17.2 Bn), and AIBG
Bn in 2020. In line with the Bank’s refreshed (+PKR 4.9 Bn), etc.
vision of inclusive development, healthy growth
was also achieved in Commodity and Agri &
Allied sectors. These 5 major sectors share
almost 50% of the total loan book with PKR
648.5 Bn outstanding. With PKR 198 Bn as
NPL at end of 2021, net loans & advances
amounted to PKR 1,113.4 Bn i.e. 13.2% up
from PKR 983.3 Bn level at end 2020. Given the
continued growth in deposits and a limited
growth in advances, the Bank’s
Advance-to-Deposit Ratio (gross) stood at 43%

Investments
At the end of 2021, the Bank’s investments (at
cost) amounted to PKR 1,924.2 Bn (YE’20: PKR
1,437.4 Bn), making just over one-half of the
Bank’s balance sheet. Given the limited quality
loan-growth opportunities, and a constant
growth in the customer deposits, excess
liquidity with the Bank is placed in shorter term
GoP securities to capitalize on price volatility in
the hiking policy rate environment.
The PKR 486.8 Bn or 33.9% increase in
investments (at cost) mostly came in T-Bills that
increased by PKR 186.8 Bn from PKR 625.6 Bn

Investment by Type at the YE’20 to PKR 812.4 Bn at end Dec’21.

PIBs increased by PKR 286.1 Bn from PKR
639.1 Bn at the YE’20 to PKR 925.2 Bn at end
Dec’21. As the market offered decent spread,
investments were funded through deposit
mobilization as well as leveraging keeping in
view the hiking increase in policy rate.
PKR 34.2 Bn of investment in listed companies
is a diversified portfolio in 30+ sectors with
highest concentration in Oil & Gas downstream
(18%), followed by commercial banks (10.7%),
Power (9%), Cement (8.6%) and Oil & Gas
upstream (8%).
Financial Performance

Deposits
The Bank has established an unparalleled
outreach to a wide range of core depositors
throughout the country. As the Bank enjoys
depositors' utmost trust, most of our
deposits are 'stable funds' through core
customers'. During the year under review,
the Bank's deposits increased by PKR 600.2
Bn and amounted to PKR 3,019.2 Bn, which
is 24.8% higher than PKR 2,419.0 Bn, at the
end of year 2020. The Bank follows an
aggressive strategy for deposit mobilization,
particularly the low-cost current and saving
(CASA) deposits. Customers' deposits as of
Dec'21 amounted to PKR 2,498.1 Bn,
representing 82.7% of the total deposits.
Total current deposits (including FI's) stood
at PKR 1,718.2 Bn, depicting a 30.5%
growth YoY. Also, the saving deposits
increased by 7.7% to PKR 765.9 Bn, as
compared to PKR 711.3 Bn a year back.
The bank's CASA deposits (including NIDA)
have decreased slightly from 83.8% in
December 2020 to 82.3% as of December
31, 2021.

Funding & Liquidity

Your Bank has the second-largest share of customer deposits in the Pakistan banking
sector and wide branch network to attract low cost CASA deposits. The Bank's
liquidity and funding profile are sound as the vast bulk of assets are funded by a large
and stable customer deposit base which continued to grow strongly in 2021.

The Bank maintains optimum levels of funding and liquidity. As of December 31, 2021,
deposits closed at PKR 3,019.2 Bn (+24.8% YoY). Average deposits grew by PKR
196.5 Bn or 9.9% to PKR 2,180.6 Bn.

The majority of the Bank's funding comes from core customer deposits that contribute
82.7% (PKR 2,498.1 Bn) of the Bank's total deposits. Compared to Dec 31, 2020 level,
customer deposits have increased by PKR 477.4 Bn or 23.6%.FI deposits, also
increased during the period under review by PKR 122.7 Bn and closed at PKR 521.1
Bn (Dec'20: PKR 398.3 Bn).

The Bank is pursuing a prudent deposit mobilization strategy, CASA ratio remained
high at 82.3% (2020: 83.8%). The Bank's liquidity coverage ratio stood at 164%, and
the Net Stable Funding Ratio stood at 278.1%, well above the statutory requirement of
100%.
Quarterly Financial Position & Performance

Financial Position Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Assets
Cash and balances with treasury and other banks 278,747 220,171 383,276 283,981 249,260 271,567 286,489 171,181
Balances with other banks 17,667 16,303 18,152 16,919 14,227 14,598 32,352 18,814
Lending to financial institutions 335,467 267,933 180,791 79,783 126,805 50,281 48,535 44,550
Investments - net 1,938,171 2,130,707 1,849,466 1,836,497 1,463,398 1,368,389 1,642,967 1,503,026
Advances - net 1,113,392 1,016,729 996,947 947,741 983,255 892,627 935,618 980,435
Operating Fixed assets 54,754 55,019 54,385 54,511 54,717 54,860 54,796 54,387
Right of use assets 6,605 6,933 6,992 6,668 6,670 6,904 7,115 7,309
Deferred tax assets - net 1,626 108 - - - - - -
Other assets 100,255 109,644 126,883 114,229 110,196 124,252 155,531 183,959
Total assets 3,846,684 3,823,545 3,616,891 3,340,330 3,008,527 2,783,478 3,163,403 2,963,661

Bills payable 21,848 20,754 22,265 19,843 16,795 41,481 27,407 16,044
Borrowings 312,925 780,886 442,257 603,265 138,539 142,596 348,753 560,155
Deposits and other accounts 3,019,155 2,551,602 2,679,739 2,280,375 2,418,966 2,174,926 2,339,263 1,953,160
Lease Liability against right-of-use assets 7,894 8,170 8,064 7,610 7,534 7,795 7,897 7,966
Deferred tax liabilities - - 2,915 1,274 2,978 6,823 10,779 10,272
Other liabilities 198,660 172,131 176,109 158,150 156,156 142,654 170,273 179,056
Total liabilities 3,560,482 3,533,544 3,331,348 3,070,516 2,740,968 2,516,275 2,904,372 2,726,653

Net assets (Represented by as below) 286,203 290,001 285,543 269,813 267,559 267,203 259,031 237,008
Share capital 21,275 21,275 21,275 21,275 21,275 21,275 21,275 21,275
Reserves 60,371 60,432 57,106 55,017 56,563 57,464 53,834 53,153
Surplus on revaluation of assets 64,482 70,741 75,521 70,378 73,699 76,456 82,009 70,163
Unappropriated Profit 140,074 137,553 131,641 123,143 116,021 112,008 101,913 92,417
Total 286,203 290,001 285,543 269,813 267,559 267,203 259,031 237,008

2020
Financial Performance Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

Financial Performance
Mark-up / return / interest earned 65,397 58,490 59,524 48,472 51,781 60,771 72,722 72,537
Mark-up / return / interest expensed 40,172 33,492 33,722 26,878 27,474 29,366 40,853 55,963
Net mark-up / Interest income 25,225 24,998 25,801 21,594 24,307 31,405 31,869 16,574
Non-interest income 9,832 9,067 9,551 8,492 8,354 9,382 10,045 8,296
Operating Expenses 12,978 16,378 16,311 14,337 18,114 15,455 15,734 13,809
Profit before provisions 22,079 17,687 19,041 15,749 14,547 25,332 26,180 11,061
Provisions and write offs - net (315) 5,458 3,661 3,112 7,588.9 7,668 11,581 4,058
Extra-Ordinary Item (9,779) - - - - - - -
Pre-tax profit 12,615 12,228 15,381 12,637 6,958 17,664 14,599 7,003
Taxation 8,751 5,049 6,123 4,929 2,533 6,720 3,528 2,884
After-tax profit 3,863 7,179 9,257 7,708 4,425 10,944 11,071 4,119
 Quarterly Financial Performance

Mark-up/Interest Earned Net Interest Income

Net interest income for Q1 '21 amounted to PKR 21.6 Bn lower by 11.2% against quarter 4 of '20 due to maturity of interest-bearing
assets. For the Q2 '21, NII amounted to PKR 25.8 Bn, i.e. 19.5% up as compared to the previous quarter and 19.0% down as compared
to quarter 2 of 2020.This was mainly due to the repricing impact on interest-bearing assets and liabilities on the back of the sharp cut in
the policy rate. NII for the Q3 '21 amounted to PKR 25.0 Bn remained the same with a slight decrease of 3.1% as compared to the
previous quarter and show a decrease of 20.4% as compared to the corresponding quarter last year. Net interest income for the Q4 '21
amounting to PKR 25.2 Bn, i.e., 0.9% more as compared to the previous quarter. However, this was 3.8% higher than the corresponding
quarter last year.

Non Interest / Mark-up Income

Non-interest income for the Q1 '21 amounted to PKR 8.5 Bn,

showing a 1.7% increase, as compared to the previous quarter.
The key reason was the higher dividend payout. Non-interest
income for the Q2 '21 amounted to PKR 9.6 Bn, i.e., 12.5% up
as compared to Q1 '21 and marginally lower by 4.9% than the
corresponding quarter last year. Non-interest income for the Q3
'21 amounted to PKR 9.1 Bn, i.e., 5.1% down as compared to
the previous quarter due to limited economic activity.
Non-interest income for the Q4 '21 amounted to PKR 9.8 Bn,
which is 8.4% up as compared to the previous quarter and
17.7% as compared to the corresponding quarter last year,
which is mainly due to an increase in dividend and foreign
exchange income.
 Quarterly Financial Performance

Operating Expenses

Despite inflationary pressures, the Bank succeeded in controlling the

increase in operating expenses that amounted to PKR 14.3 Bn for the
Q1 '21, which decreased by 20.8%, as compared to the previous
quarter. This was mainly due to the year end accruals of PKR 1.5 Bn,
on account of MTO. For the Q2 '21, operating expenses amounted to
PKR 16.3 Bn, which is 13.8% higher, as compared to first quarter of
'21 and 3.7% higher against the 2nd quarter of 2020. Operating
expenses for the Q3 '21 amounted to PKR 16.4 Bn, slightly higher by
0.4% as compared to the previous quarter. For the Q4 '21 operating
expenses amounting to PKR 13.0 Bn, showing a decrease of 20.8%
compared to quarter three '21 due to reversal of certain unutilized
provisions.

Pre-tax Profit After-tax Profit

Profit after tax for the Q1 '21 amounted to PKR 7.7 Bn as compared to a profit of PKR 4.4 Bn in quarter four '20. Despite a challenging
environment created by Covid-19, NBP succeeded in delivering an impressive growth of 20.1% in after-tax profit of Q2 '21 that closed at
PKR 9.3 Bn as against PKR 7.7 Bn in the previous quarter. Profit after-tax for the Q3 '21 amounted to PKR 7.2 Bn, 22.4% down as
compared to the previous quarter. The decrease was due to higher provision amount. For the Q4 '21 profit after-tax amounted to PKR 3.9
Bn, i.e., -46.2% low as compared to the previous quarter.
Key 6 Years’ Performance Ratios

A . SIZE FACTORS
1 . Total Assets Rs. Mn 3,846,684 3,008,527 3,124,389 2,798,566 2,505,321 2,008,855
2 . Capital & Reserves " 286,203 267,559 232,614 206,869 175,382 176,733
3 . Deposits " 3,019,155 2,418,966 2,198,049 2,011,385 1,727,102 1,657,312
4 . Profit after Tax " 28,008 30,559 15,810 20,015 23,028 22,752
5 . Profit before Tax " 52,860 46,224 28,003 29,683 35,599 37,141

B . ASSET QUALITY
6 . Assets to Equity Times 17.35 15.52 19.24 19.05 19.93 16.74
7 . Total Assets Growth Rate % 27.86 -3.71 11.64 11.70 24.71 17.73
8 . NPLs To Total Assets " 5.15 5.69 4.76 4.77 4.82 5.94
9 . Investment to Deposit Ratio " 64.20 60.50 65.95 63.85 75.02 54.13
10 . Investment to Total Assets " 50.39 48.64 46.39 45.89 51.72 44.66
11 . Infection Ratio - NPLs/ Gross Advances " 15.17 14.77 12.92 12.59 14.10 15.28
12 . Earning Assets to Total Assets Ratio " 95.76 85.54 92.73 92.06 89.76 92.60
13 . NPL Coverage - Total provision/ NPLs " 96.89 103.11 96.25 100.08 96.99 95.54
14 . NPL Coverage - (specific provision / NPLs) " 90.59 89.99 90.20 94.68 91.60 91.83

C . CAPITAL ADEQUACY
15 . Tier-I Capital Rs. Mn 199,752 172,896 142,716 124,818 101,303 95,540
16 . Total Eligible Capital " 264,095 228,120 182,532 168,658 138,885 133,167
17 . Risk Weighted Assets - RWA " 1,295,116 1,153,101 1,178,941 1,031,677 870,967 805,252
18 . RWA to total assets % 33.67 38.33 37.73 36.86 34.76 40.09
19 . Tier-I Ratio % 15.42 14.99 12.11 12.10 11.63 11.86
20 . Capital Adequacy Ratio % 20.39 19.78 15.48 16.35 15.95 16.54

D . INVESTMENT / MARKET RATIOS

21 . Earning per Share and Diluted EPS Rs. 13.16 14.36 7.43 9.41 10.82 10.69
22 . Price Earning Ratio Times 2.26 2.99 5.83 4.47 4.49 7.01
23 . Price to book value ratio Times 0.26 0.34 0.40 0.43 0.59 0.90
24 . Market Value per Share Rs. 34.52 42.96 43.30 42.03 48.56 74.89
25 . Breakup value per share
- without surplus on revaluation of fixed assets 114.89 105.79 89.55 77.63 72.31 72.89
- with surplus on revaluation of fixed assets & investments 134.52 125.76 109.34 97.23 82.44 83.07
26 . Dividend per Share Rs. - - - - - 7.50
27 . Dividend Yield ratio % - - - - - 0.10
28 . Dividend Payout ratio " - - - - - 0.01
29 . Cash Dividend " - - - - - 7.50

E . LIQUIDITY
30 . Gross Advances to Deposits Ratio % 43.23 47.95 52.38 52.67 49.62 47.15
31 Net Advances to Deposits Ratio " 36.88 40.65 45.87 46.04 42.83 40.27
32 . Net Loans To Total Assets " 28.94 32.68 32.27 33.09 29.53 33.22
33 . Net Loans To Total Deposits (Deposits & Borrowings) " 33.41 38.45 37.76 38.52 35.44 39.21
34 . Liquidity Coverage Ratio " 164.00 180.02 147.57 169.44 169.69 -
35 . Net Stable Funding Ratio " 278.11 256.27 233.19 320.82 365.29 -
36 . CASA " 82.28 83.83 81.80 81.49 77.13 73.51

F . PROFITABILITY
37 . Return on Average Assets - Pre Tax % 1.54 1.51 0.95 1.12 1.58 2.00
38 . Return on Average Equity - Pre Tax (Excl. Surplus on Rev.) " 25.44 25.95 18.11 21.78 28.98 31.47
39 . Operating Profit To Average Assets " 2.18 2.51 1.43 1.55 1.63 2.02
40 . Total Income To Average Assets " 3.93 4.57 3.65 3.65 3.78 4.56
41 . Non-Interest Income To Total Income " 27.45 25.73 33.48 37.40 36.41 35.34
42 . Operating Expenses To Average Assets " 1.75 2.06 2.22 2.11 2.15 2.54
43 . Loan Loss Provisioning Expense to Operating Profit " 15.98 40.06 33.73 27.57 3.24 1.06
44 . Profit before tax ratio " 22.80 17.93 11.69 19.79 28.93 32.47
45 . Gross Yield on Average Earning Assets " 10.26 10.57 7.42 6.78 7.60
46 . Cost to income ratio " 44.59 45.01 60.91 57.71 56.88 55.73

G . DuPont Analysis
47 . Net Operating Margin % 20.81 21.79 14.62 20.65 26.99 26.83
48 . Asset Utilization " 3.93 4.57 3.65 3.65 3.78 4.56
49 . Return on Assets - After Tax " 0.82 1.00 0.53 0.75 1.02 1.22
50 . Return on Equity - After Tax " 13.48 17.16 10.22 14.69 18.74 19.28

H . Per Branch
51 . Gross Advances Rs. Mn 863 756 752 695 564 532
52 . Deposits " 1,995 1,576 1,437 1,319 1,137 1,128

53 . Profit before Tax (PBT) " 34.94 30.11 18.30 19.46 23.44 25.28
54 . Profit after Tax (PAT) " 18.51 19.91 10.33 13.12 15.16 15.49
55 . No. of branches Number 1,513 1,535 1,530 1,525 1,519 1,469
56 . No. of employees " 15,409 15,109 15,188 15,738 15,616 15,793

I . RATES
. Exchange Rate US $ 176.5135 159.8344 154.8476 138.8619 110.4172 104.5985
6 Years’ Summary (Unconsolidated)
Financial Position
Assets
Cash and balances with treasury banks 278,747 249,260 292,513 247,518 160,090 160,173
Balances with other banks 17,667 14,227 13,221 12,202 26,404 13,828
Lending to financial institutions 335,467 126,805 134,780 106,392 26,916 121,709
Investments - net 1,938,171 1,463,398 1,449,555 1,284,319 1,295,720 897,131
Advances - net 1,113,392 983,255 1,008,139 926,007 739,772 667,389
Operating Fixed assets 54,754 54,717 54,679 54,106 32,752 32,901
Deferred tax assets - net 1,626 - - - 7,317 5,136
Right of use assets 6,605 6,670 7,221 - - -
Other assets 100,255 110,196 164,281 168,022 216,351 110,588
Total assets 3,846,684 3,008,527 3,124,389 2,798,566 2,505,321 2,008,855

Liabilites
Bills payable 21,848 16,795 19,867 9,944 13,195 10,187
Borrowings 312,925 138,539 471,757 392,739 360,106 44,864
Deposits and other accounts 3,019,155 2,418,966 2,198,049 2,011,385 1,727,102 1,657,312
Liabilities against assets subject to Finance Lease - - - - 15 26
Lease liability against right of use assets 7,894 7,534 7,640 - - -
Deferred tax liabilities - 2,978 10,916 6,985 - -
Other liabilities 198,660 156,156 183,545 170,644 229,522 119,733
Total liabilities 3,560,482 2,740,968 2,891,775 2,591,698 2,329,939 1,832,122
Net Assets (Represented by as below) 286,203 267,559 232,614 206,869 175,382 176,733

Share capital 21,275 21,275 21,275 21,275 21,275 21,275

Reserves 60,371 56,563 52,309 53,274 50,357 46,800
Surplus on revaluation of assets 64,482 73,699 70,244 59,986 49,689 56,718
Unappropriated Profit 140,074 116,021 88,786 72,333 54,061 51,939
Total 286,203 267,559 232,614 206,869 175,382 176,733

Financial Performance
Mark-up / return / interest earned 231,883 257,811 239,477 149,969 123,073 114,403
Markup / Return / Interest expensed 134,265 153,656 167,570 89,302 68,820 59,578
Non mark-up / interest income 97,618 104,155 71,907 60,666 54,253 54,824
Fee & commission income and Exchange Income 24,314 22,327 25,170 27,017 19,026 17,013
Capital gain & Dividend income 10,783 9,787 5,262 6,545 10,301 11,405
Other income 1,844 3,963 5,768 2,687 1,740 1,549
Total non-mark-up / interest income 36,942 36,077 36,199 36,249 31,066 29,967
Total income 134,559 140,232 108,107 96,915 85,319 84,791
Non-Markup / Interest Expenses 60,004 63,112 65,853 55,931 48,528 47,253
Profit before provisions 74,556 77,120 42,254 40,984 36,791 37,539
Provisions and write offs - net 11,916 30,896 14,250 11,300 1,192 397
Extra-Ordinary Item 9,779 - - - - -
Profit before taxation 52,860 46,224 28,003 29,683 35,599 37,141
Taxation 24,852 15,665 12,194 9,668 12,571 14,389
Profit after taxation 28,008 30,559 15,810 20,015 23,028 22,752
6 Years' Vertical & Horizontal Analysis
Horizontal Analysis (YoY growth)
PKR’ Mn YoY PKR’ Mn YoY PKR’ Mn YoY PKR’ Mn YoY PKR’ Mn YoY PKR’ Mn YoY
Assets
Cash and balances with treasury banks 278,747 12% 249,260 -15% 292,513 18% 247,518 55% 160,090 0% 160,173 6%
Balances with other banks 17,667 24% 14,227 8% 13,221 8% 12,202 -54% 26,404 91% 13,828 -31%
Lending to financial institutions 335,467 165% 126,805 -6% 134,780 27% 106,392 295% 26,916 -78% 121,709 1482%
Investments - net 1,938,171 32% 1,463,398 1% 1,449,555 13% 1,284,319 -1% 1,295,720 44% 897,131 8%
Advances - net 1,113,392 13% 983,255 -2% 1,008,139 9% 926,007 25% 739,772 11% 667,389 15%
Operating Fixed assets 54,754 0% 54,717 0% 54,679 1% 54,106 65% 32,752 0% 32,901 4%
Deferred tax assets - net 1,626 0% - 0% - 0% - -100% 7,317 42% 5,136 -47%
Right of use assets 6,605 -1% 6,670 -8% 7,221 100% - 0% - 0% - 0%
Other assets 100,255 -9% 110,196 -33% 164,281 -2% 168,022 -22% 216,351 96% 110,588 40%
Total assets 3,846,684 28% 3,008,527 -4% 3,124,389 12% 2,798,566 12% 2,505,321 25% 2,008,855 18%

Liabilites
Bills payable 21,848 30% 16,795 -15% 19,867 100% 9,944 -25% 13,195 30% 10,187 11%
Borrowings 312,925 126% 138,539 -71% 471,757 20% 392,739 9% 360,106 703% 44,864 105%
Deposits and other accounts 3,019,155 25% 2,418,966 10% 2,198,049 9% 2,011,385 16% 1,727,102 4% 1,657,312 16%
Liability against assets subject to Finance Lease - 0% - 0% - 0% - -100% 15 -43% 26 -28%
Lease liability against right of use assets 7,894 5% 7,534 0% 7,640 100% - 0% - 0% - 0%
Deferred tax liabilities - -100% 2,978 -73% 10,916 56% 6,985 100% - 0% - 0%
Other liabilities 198,660 27% 156,156 -15% 183,545 8% 170,644 -26% 229,522 92% 119,733 58%
Total liabilities 3,560,482 30% 2,740,968 -5% 2,891,775 12% 2,591,698 11% 2,329,939 27% 1,832,122 19%
Net assets 286,203 7% 267,559 15% 232,614 12% 206,869 18% 175,382 -1% 176,733 5%

Share capital 21,275 0% 21,275 0% 21,275 0% 21,275 0% 21,275 0% 21,275 0%

Reserves 60,371 7% 56,563 8% 52,309 -2% 53,274 6% 50,357 8% 46,800 3%
Surplus on revaluation of assets 64,482 -13% 73,699 5% 70,244 17% 59,986 21% 49,689 -12% 56,718 8%
Unappropriated profit 140,074 21% 116,021 31% 88,786 23% 72,333 34% 54,061 4% 51,939 6%
Total 286,203 7% 267,559 15% 232,614 12% 206,869 18% 175,382 -1% 176,733 5%

Total Assets
Over the past 6 years, the Bank's asset base has increased manifold depicting
13.9% CAGR. The PKR 3.8 Trillion of total assets represents approximately
12.0% of the total industry’ assets. In recent years, the Bank has achieved
cohesive growth in assets-mix efficiently managing its assets-liability maturity
profile. The highest 27.9% YoY increase in the asset base has been observed
in 2021.This significant increase in 2021 was achieved through aggressive
deposit mobilization under PKR 3 Trillion drive. Liquidity generated was
placed into investments that stood at PKR 1,938.2 Bn, which is PKR 474.78
Bn or 32.0% up from PKR 1,463.4 Bn at the end of 2020. This was in line with
the Bank's prudent strategy of liquidity & funding management.

Investments (net)
Investments continue to take the major share of the total asset base. 32%
YoY growth in 2021 is due to Bank has diversified investment portfolio and
earns a higher yield on investments. This translates into 16.7% CAGR over
the past six years
6 Years' Vertical & Horizontal Analysis
Vertical Analysis (composition)
PKR’ Mn YoY PKR’ Mn YoY PKR’ Mn YoY PKR’ Mn YoY PKR’ Mn YoY PKR’ Mn YoY
Assets
Cash and balances with treasury banks 278,747 7% 249,260 8% 292,513 9% 247,518 9% 160,090 6% 160,173 8%
Balances with other banks 17,667 0% 14,227 0% 13,221 0% 12,202 0% 26,404 1% 13,828 1%
Lending to financial institutions 335,467 9% 126,805 4% 134,780 5% 106,392 4% 26,916 1% 121,709 6%
Investments - net 1,938,171 50% 1,463,398 49% 1,449,555 46% 1,284,319 46% 1,295,720 52% 897,131 45%
Advances - net 1,113,392 29% 983,255 33% 1,008,139 32% 926,007 33% 739,772 30% 667,389 34%
Operating Fixed assets 54,754 1% 54,717 2% 54,679 2% 54,106 2% 32,752 1% 32,901 2%
Deferred tax assets - net 1,626 0% - 0% - 0% - 0% 7,317 0% 5,136 0%
Right of use assets 6,605 0% 6,670 0% 7,221 0% - 0% - 0% - 0%
Other assets 100,255 3% 110,196 4% 164,281 5% 168,022 6% 216,351 9% 110,588 4%
Total assets 3,846,684 100% 3,008,527 100% 3,124,389 100% 2,798,566 100% 2,505,321 100% 2,008,855 100%

Liabilites
Bills payable 21,848 1% 16,795 1% 19,867 1% 9,944 0% 13,195 1% 10,187 1%
Borrowings 312,925 8% 138,539 5% 471,757 15% 392,739 14% 360,106 14% 44,864 2%
Deposits and other accounts 3,019,155 78% 2,418,966 80% 2,198,049 70% 2,011,385 72% 1,727,102 69% 1,657,312 84%
Liabilities against assets subject to Finance Lease - 0% - 0% - 0% - 0% 15 0% 26 0%
Lease liability against right of use assets 7,894 0% 7,534 0% 7,640 0% - 0% - - 0%
Deferred tax liabilities - 0% 2,978 0% 10,916 0% 6,985 0% - 0% - 0%
Other liabilities 198,660 5% 156,156 5% 183,545 6% 170,644 6% 229,522 9% 119,733 4%
Total liabilities 3,560,482 93% 2,740,968 91% 2,891,775 93% 2,591,698 93% 2,329,939 93% 1,832,122 91%
Net assets 286,203 7% 267,559 9% 232,614 7% 206,869 7% 175,382 7% 176,733 9%

Share capital 21,275 1% 21,275 1% 21,275 1% 21,275 1% 21,275 1% 21,275 1%

Reserves 60,371 2% 56,563 2% 52,309 2% 53,274 2% 50,357 2% 46,800 2%
Surplus on revaluation of assets 64,482 2% 73,699 2% 70,244 2% 59,986 2% 49,689 2% 56,718 3%
Unappropriated profit 140,074 4% 116,021 4% 88,786 3% 72,333 3% 54,061 2% 51,939 3%
Equity 286,203 7% 267,559 9% 232,614 7% 206,869 7% 175,382 7% 176,733 9%

Advances (net)
Steady growth is achieved in net advances over the last six years increasing
from PKR 667.4 Bn in 2016 to PKR 1,113.4 Bn in 2021 with a CAGR of
10.8%. An increase of 13.3% YoY in 2021 is observed due to increasing
loan demand as the economy is recovering from the impact that Covid-19
had in recent years. Historically, advances of the Bank have posted a
modest growth since 2016 and have sharply increased in 2021.

Deposits
Deposits remain the primary source of funding for the Bank. Deposits of the
Bank have also increased significantly over the last six years' growing from
PKR 1,657.3 Bn in 2016 to PKR 3,019.2 Bn in 2021. This translates into a
massive 82% growth with a CAGR of 12.7%. Smooth growth was observed
throughout these years, with the highest YoY increase of 25% being reported
in 2021 as the Bank launched its PKR 3 Trillion deposits mobilization
initiative. Deposits accounted for 78% of the Bank’s total assets as of the end
of December 2021. Despite the short-term maturity profile. Deposit base, it
has historically proved to be sticky and a stable funding source.
6 Years' Horizontal Analysis

PKR’ Mn YoY PKR’ Mn YoY PKR’ Mn YoY PKR’ Mn YoY PKR’ Mn YoY PKR’ Mn YoY
Profitability
Markup / Return / Interest earned 231,883 -10% 257,811 8% 239,477 60% 149,969 22% 123,073 8% 114,403 1%
Markup / Return / Interest expense 134,265 -13% 153,656 -8% 167,570 88% 89,302 30% 68,820 16% 59,578 -1%
Net Markup / interest income 97,618 -6% 104,155 45% 71,907 19% 60,666 12% 54,253 -1% 54,824 2%
Fee commission and exchange income 24,314 9% 22,327 -11% 25,170 -7% 27,017 42% 19,026 12% 17,013 0%
Capital gains & dividend income 10,783 10% 9,787 86% 5,262 -20% 6,545 -36% 10,301 -10% 11,405 -28%
Other income 1,844 -53% 3,963 -31% 5,768 115% 2,687 54% 1,740 12% 1,549 -26%
Non-interest income 36,942 2% 36,077 0% 36,199 0% 36,249 17% 31,066 4% 29,967 -14%
Total income 134,559 -4% 140,232 30% 108,107 12% 96,915 14% 85,319 1% 84,791 -4%
Operating expenses 60,004 -5% 63,112 -4% 65,853 18% 55,931 15% 48,528 3% 47,253 12%
Profit before provisions 74,556 -3% 77,120 83% 42,254 3% 40,984 11% 36,791 -2% 37,539 -19%
Provisions 11,916 -61% 30,896 117% 14,250 26% 11,300 848% 1,192 200% 397 -97%
Extra-Ordinary Item 9,779 - - - - - - - - - - -
Pre-tax profit 52,860 14% 46,224 65% 28,003 -6% 29,683 -17% 35,599 -4% 37,141 12%
Taxation 24,852 59% 15,665 28% 12,194 26% 9,668 -23% 12,571 -13% 14,389 3%
After-tax profit 28,008 -8% 30,559 93% 15,810 -21% 20,015 -13% 23,028 1% 22,752 18%

Mark-up / Return / Interest Earned

On to Profit & Loss Account, gross mark-up / interest earned has posted
compounded average increase of 15.2% over the span of the last six years.
While growth was low during the initial two years, a sharp increase was
achieved in the year 2018 and 2019 on the back of sharply increasing discount
rate and volumetric growth in earning assets, particularly the advances and
investment. Corresponding to the shift in asset mix on the back of higher
liquidity placed into investments, contribution from income on investments has
increased constantly over the years.

Mark-up / Return / Interest Expensed

Given the growth in deposits base, total mark-up expense has increased by
125% over the six years period. The increase in mark-up expense on
deposits reflects both the impact of volumetric growth in deposits and
borrowings coupled with the impact of revision in profit rates in line with the
policy rate increase from time to time. Responding to the increasing
discount rate, the Bank has been particularly active in mobilizing low-cost
CASA deposits. Satisfactory results have been delivered in this regard by
both conventional as well as Islamic banking operations. During the year
2021, the average policy rate remained at 7.29% compared to 8.95% of
last year. This translates into an average decline in the policy rate by 160
bps. As a consequent of that, the Bank has achieved a decline in cost of
funds that dropped by 120bps to 4.0% for 2021 (2020: 5.2%).
6 Years' Vertical Analysis

PKR’ Mn % PKR’ Mn % PKR’ Mn % PKR’ Mn % PKR’ Mn % PKR’ Mn YoY

Markup / return / non interest Income earned

Markup / Return / Interest earned 231,883 86% 257,811 88% 239,477 87% 149,969 81% 123,073 80% 114,403 79%
Fee & commission income and Exchange Income 24,314 9% 22,327 8% 25,170 9% 27,017 15% 19,026 12% 17,013 12%
Capital gains & dividend income 10,783 4% 9,787 3% 5,262 2% 6,545 3% 10,301 7% 11,405 8%
Other income 1,844 1% 3,963 1% 5,768 2% 2,687 1% 1,740 1% 1,549 1%
Total income 268,824 100% 293,888 100% 275,677 100% 186,218 100% 154,138 100% 144,369 100%

Markup / return / non interest expense

Markup / Return / Interest expensed 134,265 50% 153,656 52% 167,570 61% 89,302 48% 68,820 45% 59,578 41%
Operating expenses and other charges 60,004 22% 63,112 21% 65,853 24% 55,931 30% 48,528 31% 47,253 33%
Provisions 11,916 4% 30,896 11% 14,250 5% 11,300 6% 1,192 1% 397 0.3%
Extra ordinary item 9,779 4% - - - - - - - - - -
Taxation 24,852 9% 15,665 5% 12,194 4% 9,668 5% 12,571 8% 14,389 10%
Total expense - as a % of total income 240,816 90% 263,329 90% 259,867 94% 166,203 89% 131,110 85% 121,617 84%

After-tax profit 28,008 10% 30,559 10% 15,810 6% 20,015 11% 23,028 15% 22,752 16%
Total 268,824 100% 293,888 100% 275,677 100% 186,218 100% 154,138 100% 144,369 100%

Capital
Reflecting our prudent capital management strategy, net assets of the Bank
have also posted healthy increase on the back of higher profitability and
profit retention in the recent years. Net assets, that amounted to PKR 176.7
Bn in 2016, have increased to PKR 286.2 Bn at the end of December 2021.
This translates into a 10.1% CAGR over the past six years.

Non Mark-up / Interest Income

With 23% growth over the past six years, the Bank's Non-mark-up /
interest income "NFI" has also recorded a satisfactory performance for
most of the years. During these years, NFI has maintained a trend of
contributing approximately one-third of the Bank’s total income. However,
due to a lackluster performance of the stock market, and depressed trade
business, NFI for 2021 remained almost similar to that of 2020.

Operating Expenses
Total operating expenses in 2021 amounted to PKR 60.0 Bn against PKR
63.1 Bn for the year 2020. The operating expenses decreased by 4.9%.
6 Years’ Summary (Consolidated)
Financial Position

Cash and balances with treasury banks 278,869 249,970 293,198 247,917 160,405 160,422
Balances with other banks 19,211 15,015 13,598 13,050 26,992 14,396
Lending to financial institutions 335,467 126,805 134,780 106,392 26,916 121,709
Investments - net 1,942,741 1,466,405 1,452,799 1,284,975 1,296,537 896,281
Advances - net 1,113,314 983,871 1,008,399 926,340 740,345 668,884
Operating fixed assets 56,005 56,109 55,990 55,196 33,822 34,058
Deferred tax assets - net 1,903 - - - 7,342 5,172
Right of use assets 7,091 7,017 7,447 - - -
Other assets 102,434 112,018 166,148 170,018 219,092 113,643
Total assets 3,857,035 3,017,210 3,132,360 2,803,886 2,511,452 2,014,566
Bills payable 21,848 16,795 19,867 9,944 13,195 10,187
Borrowings 312,925 138,539 471,757 392,739 360,106 44,864
Deposits and other accounts 3,018,148 2,418,928 2,197,985 2,011,313 1,727,059 1,657,132
Liabilities against assets subject to Finance Lease 134 197 194 121 57 83
Lease liability against right of use assets 8,361 7,869 7,831 - - -
Deferred tax liabilities - 2,933 10,869 6,946
Other liabilities 200,596 157,545 184,633 171,762 231,359 122,160
Total liabilities 3,562,012 2,742,808 2,893,138 2,592,825 2,331,776 1,834,427

Net assets (Represented by as below)

Share capital 21,275 21,275 21,275 21,275 21,275 21,275
Reserves 62,427 57,591 53,261 53,443 49,887 46,031
Surplus on revaluation of assets 64,995 73,988 70,359 59,262 49,632 56,299
Unappropriated profit 145,313 120,632 93,466 76,240 58,069 55,795
Sub Total 294,010 273,486 238,360 210,220 178,864 179,401
Non-controlling interest 1,013 916 863 842 811 738
Total 295,023 274,402 239,223 211,061 179,676 180,139

Financial Performance
Mark-up / return / interest earned 232,052 258,031 239,710 150,178 123,415 115,029
Mark-up / return / interest expensed 134,285 153,652 167,556 89,287 68,811 59,594
Net mark-up / Interest income 97,767 104,379 72,154 60,891 54,604 55,434
Fee & commission income and Exchange income 26,054 23,823 26,737 28,924 20,820 18,224
Capital gain & Dividend income 10,718 9,748 5,265 6,445 10,049 11,256
Share of profit from joint venture - net of tax 218 (219) (96) (334) 2 319
Share of loss from associates - net of tax 23 43 37 (35) (512) (333)
Other income 1,856 3,965 5,817 2,675 1,757 1,567
Total non-markup / interest income 38,869 37,360 37,760 37,674 32,115 31,032
Total income 136,636 141,739 109,914 98,566 86,720 86,467
Operating Expenses (Non Mark-Up/Interest Expense) 61406 64,443 67,379 57,480 50,041 48,742
Profit before provisions 75,230 77,297 42,535 41,085 36,678 37,725
Provisions 11,659 30,912 13,557 11,205 535 130
Extra-Ordinary Item 9,779
Pre-tax profit 53,792 46,385 28,978 29,880 36,144 37,595
Taxation 25,032 15,798 12,331 9,844 12,798 14,507
After-tax profit 28,760 30,586 16,647 20,035 23,346 23,087
Six Years’ - Maturities of Assets & Liabilities

At end 2021, the Bank's total liabilities stood at PKR 3,560.5 Bn, increasing at a CAGR of 14.2% over the past six-years. While 24.9% of
the Bank's liabilities are expected to mature within in a period of one month, another 9.4% are expected to mature over the next two
months i.e. a total of 34.3% to mature within a period of 3 months. The remaining 65.7% of the liabilities have a maturity period of beyond
3 months.At end 2021, the Bank's total liabilities stood at PKR 3,560.5 Bn, increasing at a CAGR of 14.2% over the past six-years. While
24.9% of the Bank's liabilities are expected to mature within in a period of one month, another 9.4% are expected to mature over the next
two months i.e. a total of 34.3% to mature within a period of 3 months. The remaining 65.7% of the liabilities have a maturity period of
beyond 3 months.Thus, efficiently managing the liquidity risk, the Bank maintains a positive maturity gap between the average maturity of
its assets and liabilities.

Maturity of Assets (PKR ‘Bn)

Maturity of Liabilities (PKR ‘Bn)

Sectoral Concentration

Sector

Power, Gas, Water, Sanitary 198,947 15.2% -1.1% 61,809 2.5% -26.1%
Individuals 198,139 15.2% 7.7% 77 0.0% -80.4%
Textile 160,048 12.3% 20.6% 25,421 1.0% 36.9%
Oil & Gas 102,762 7.9% 25.2% 104,645 4.2% 167.1%
Public Sector Commodity Operations 77,346 5.9% 23.9% 8,249 0.3% -34.4%
Agriculture, Forestry, Hunting & Fishing 71,243 5.5% 13.0% 101 0.0% -41.1%
Metal Products 71,008 5.4% 5.5% 15,961 0.6% 62.4%
Transport, Storage and Communication 55,055 4.2% -0.2% 47,722 1.9% 70.3%
Wholesale and Retail Trade 42,441 3.3% 16.1% 2,347 0.1% 44.5%
Services 38,097 2.9% 16.0% 1,355,080 54.4% 42.6%
Others 290,091 22.2% 19.6% 869,093 34.9% 28.5%
Total 1,305,177 100.0% 12.5% 2,490,504 100.0% 36.8%

Gross Advances
Gross advances of the Bank grew steadily
over the last six years at a CAGR of 10.8%,
closing at PKR 1,305.2 Bn at the end 2021
(2020: PKR 1,159.8 Bn). Whereas 23.1%,
15.9% and 12.3% of the Bank's gross
advances pertain to Power, Individuals and
Textile that primarily drive Pakistan's
economy, Over the past six years, and more
particularly in the recent months, significant
growth in advances to Textile, Financial and
Oil and Gas sectors is witnessed given an
increasing demand following the Government
Cs relief package for the construction and
other sector.

Contingencies & Commitments

Over the six-year period, the Bank's overall contingencies & loan commitments have risen to PKR 2,340.7 Bn at the end of 2021 (2020: PKR
1,675.2 Bn) at a CAGR of 52.9% driven by the significant rise in trade business volumes. At end 2021, the services and financial sectors
accounted for 52.3% and 30.3% of the Bank's overall loan commitments and contingent advances. Additionally, the rapid infrastructural
development in Pakistan and multiple economic stimulus packages announced by the Govt. and SBP including Refinance facility for
combating Covid-19 and Temporary Economic Refinance Facility promises further growth in trade volumes of the stated industry segments in
the future.
Sectoral Concentration

Sector

Power, Gas, Water, Sanitary 13,210 6.7% 69.6% 9,311 5.2% 38.0%
Individuals 6,150 3.1% 4.2% 4,300 2.4% 5.2%
Textile 36,877 18.6% -1.5% 36,828 20.5% 3.4%
Oil & Gas 20,217 10.2% 273.5% 20,075 11.2% 343.5%
Public Sector Commodity Operations 74 0.0% 0.0% 74 0.0% 0.0%
Agriculture, Forestry, Hunting & Fishing 7,208 3.6% 16.2% 5,192 2.9% 15.0%
Metal Products 25,680 13.0% 2.3% 25,511 14.2% 3.9%
Transport, Storage and Communication 12,774 6.5% 13.6% 10,353 5.8% 12.9%
Wholesale and Retail Trade 10,731 5.4% -20.2% 10,675 6.0% -11.1%
Services 4,228 2.1% -5.0% 2,541 1.4% -2.5%
Others 60,788 30.7% 12.1% 54,450 30.4% 8.4%
Total 197,938 100.0% 15.6% 179,312 100.0% 16.3%

Non-performing Loans
At the end of 2021, Bank's non-performing
loans stood at PKR 197.9 Bn, demonstrating a
15.6% YoY deterioration due to business
downturn caused by the Covid-19 and certain
measure loan default by corporate borrower.
NPL’s that grew at a CAGR of 10.6% over the
period under review, are more concentrated in
the Oil, Gas, Sugar, Textile and Metal
Products sectors. However, recently the NPL
ratio has shown slight improvement as it
declined from 15.3% in 2016 to 15.2% at the
end 2021.

Furthermore, the coverage ratio has improved

from 89.9% (2020) to 90.6% at the end of
2021.
Maturities of Assets and Liabilities
Financial Position Total

Assets

Cash and balances with treasury banks 278,747 178,036 94,581 6,130 - - -
Balances with other banks 17,667 16,172 1,495 - - - -
Lending to financial institutions 335,467 305,467 30,000 - - - -
Investments 1,938,171 707,242 295,728 415,356 142,328 134,189 243,327
Advances 1,113,392 492,549 183,928 56,918 90,681 127,063 162,254
Fixed assets 54,252 - 851 2,402 851 1,407 48,740
Intangible assets 503 - 168 168 168 - -
Right of use assets 6,605 18 238 589 458 1,418 3,885
Deferred tax assets 1,626 - - - - 1,626 -
Other assets 100,255 55,594 12,375 29,023 725 1,088 1,450
Total 3,846,684 1,755,078 619,364 510,586 235,210 266,791 459,656

Liabilities
Bills payable 21,848 12,313 7,064 2,472 - - -
Borrowings 312,925 162,990 111,376 13,099 3,634 6,463 15,363
Deposits and other accounts 3,019,155 948,947 759,753 413,860 486,685 408,595 1,316
Liabilities against assets subject to ROUA 7,894 21 432 643 505 1,765 4,528
Deferred tax liabilities - - - - - - -
Other liabilities 198,660 97,033 34,325 25,961 8,539 16,577 16,225
Total liabilities 3,560,482 1,221,303 912,949 456,036 499,363 433,400 37,431
Net assets 286,203 533,775 (293,585) 54,550 (264,153) (166,609) 422,225

Key Interest Bearing Assets and Liabilities

Financial Performance

Interest Earning Assets

Placements 70.5 7.7% 5.4 50.5 7.9% 4.0
Advances (net) 988.4 8.8% 87.3 970.1 10.6% 99.8
Investments 1,697.2 8.2% 139.1 1,357.4 11.3% 154.0

Interest Bearing Liabilities

Deposits 2,180.6 4.03% 87.8 1,984.2 5.2% 103.4
Borrowings 504.6 7.5% 37.6 405.3 10.0% 40.3
Mark-up & Non Mark-up Income

Financial Performance
Mark-up earned
Loans and advances 87,347 99,781 109,646 69,359 54,885 54,188
Investments 139,115 154,041 122,337 76,288 66,453 58,906
On securities purchased under resale agreements 3,957 2,374 5,367 3,593 1,068 676
Balances with other banks 1,464 1,616 2,128 729 666 632
Total 231,883 257,811 239,477 149,969 123,073 114,403

Mark-up expensed

Deposits 87,838 103,380 110,075 61,704 54,875 50,070

Borrowings 6,839 6,930 6,982 2,942 953 1,258
Cost of foreign currency swaps against foreign currency
deposits / borrowings 8,018 9,175 9,157 6,075 3,072 -
Finance charge on lease liability against right of use assets 775 754 719 - - -
Securities sold under repurchase agreements 30,795 33,417 40,637 18,581 9,919 8,250
Total 134,265 153,656 167,570 89,302 68,820 59,578

Non mark-up / interest income

Fee and commission income 17,804 18,254 19,125 17,526 16,774 14,833
Dividend income 4,595 1,901 3,150 2,613 3,821 2,999
Foreign exchange income 6,511 4,073 6,045 9,490 2,251 2,179
Gain on securities - net 6,188 7,886 2,112 3,932 6,480 8,406
Other income 1,844 3,963 5,768 2,687 1,740 1,549
Total 36,942 36,077 36,199 36,249 31,066 29,967

Contribution to Total Income Contribution to GII

DuPont Analysis

Indicator Formula Unit 2021 2020 2019 2018 2017 2016

Net Operating Margin PAT / Total Income A % 20.8 21.8 14.6 20.7 27.0 26.8
Asset Utilization Total Income / Avg Assets B % 3.9 4.6 3.7 3.7 3.8 4.6
Return on Assets PAT / Avg Assets C=AxB % 0.8 1.0 0.5 0.8 1.0 1.2
Leverage Ratio / Equity Multiplier Avg Assets / Avg Equity D Times 16.5 17.2 19.2 19.5 18.4 15.7
Return on Equity (Excl. Surplus on Rev.) PAT/Avg Equity E=CxD % 13.5 17.2 10.2 14.7 18.7 19.3

DuPont Analysis

-  Net operating margins of the Bank decreased from 21.8% to 20.8%. Decrease in the net operating margin is mainly pertains to
the SBP policy rate which decrease the total income.

- Asset Utilization in term of Total Income decreased to 3.9% in 2021 from 4.6% in 2020. This was mainly due to decrease in
policy rate by SBP which decreased the cost of deposits.

- Return on Equity during 2016 - 2019 remained in the range of 10.2% - 19.3%. The ROE for year 2021 remained at 13.5%.
Summary of Cash Flows

Classification

Cash Flow from Operating Activities 470,702 (51,870) 293,000 597,385 (232,541) 45,349
Cash Flow from Investing Activities (459,106) 52,401 (254,952) (536,224) 268,340 (53,305)
Cash Flow from Financing Activities (2,454) (2,042) (2,046) (40) (15,958) (15,977)
Cash & Cash equivalent at Beginning of the Year 262,243 263,754 227,753 166,631 146,790 170,723
Cash & cash equivalent at the end of the year 271,386 262,243 263,754 227,753 166,631 146,790

Summary of Cash Flows

Cash Flow from operating activities mainly represent the core activity of the Bank i.e. mobilization of deposits. Since 2016, deposits of the
Bank have shown a CAGR of 12.7%. During year 2021, there was net inflow of PKR 470.7 Bn from operating activities. The major outflow
under investing activities was on account of net investments in available-for-sale securities and investment made in held-to-maturity
securities. During the year 2021, outflows of PKR 2.45 Bn under financing activities were observed against payment of lease obligation.
Capital Adequacy

Total Eligible Tier-1 Capital 199,752 172,896 142,716 124,818 101,303 95,540
Eligible Tier-2 Capital 64,343 55,224 39,816 43,840 37,582 37,627
Total eligible capital (Tier-1 + Tier-2) 264,095 228,120 182,532 168,658 138,885 133,167

Risk Weighted Assets

Credit Risk 983,659 858,263 913,568 795,527 657,437 613,672
Market Risk 82,342 87,766 91,753 81,071 68,863 53,389
Operational Risk 229,114 207,072 173,620 155,079 144,667 138,192
Total risk weighted assets 1,295,116 1,153,101 1,178,941 1,031,677 870,967 805,252

Capital Adequacy Ratio

Total Eligible Capital 264,095 228,120 182,532 168,658 138,885 133,167
Total Risk Weighted Assets 1,295,116 1,153,101 1,178,941 1,031,677 870,967 805,252
Capital adequacy ratio 20.4% 19.8% 15.5% 16.3% 15.9% 16.5%

Capital Adequacy Ratio

Geographical Segment

Pakistan Asia Pacific (Including South Asia)

Europe USA

Middle East
Statement of Value Added

Economic Value Generated

Mark-up / Interest Income Earned 231,883 86.3% 257,811 87.7%
Non Mark-up / Interest Income Earned 36,942 13.7% 36,077 12.3%
Total value generated 268,825 100.0% 293,888 100.0%

Economic Value Distribution

Providers of Funds: Profit / Mark-up on Deposits, borrowings, etc. 134,265 49.9% 153,656 52.3%

Suppliers: Payments made for the provision of utilities, goods and services 17,853 6.6% 17,715 6.0%

Employees: Salaries, superannuation contributions and incentives 37,045 13.8% 40,750 13.9%

Society: Donations & CSR 8.2 0.0% 85 0.0%

Government: Income Tax 24,852 9.2% 15,665 5.3%

Expansion & Sustainability:

Provision against non-performing assets 11,916 4.4% 30,896 10.5%
Depreciation / Amortization 4,759 1.8% 4,562 1.6%
Value Retained 38,123 14.2% 30,559 10.4%
54,798 20.4% 66,017 22.5%

Total economic value distributed 268,825 100% 293,888 100%

Value Distribution - 2021 Our Economic Contribution

PKR 2.5 Billion disbursed under

Kamyab Jawan Youth Entrepreneurship
Scheme

PKR 40 Billion loan deferrals approved

for 13,000+ Borrowers during Covid-19

PKR 3.0 Trillion in deposits managed

for retail and business customers

PKR 1.3 Trillion in loans to retail and

business customers
Non-performing Loans

2021 2020
Category
NPL Spec. Prov. NPL Spec. Prov.

OAEM 1,941 95 1,618 45

Substandard 5,245 1,230 5,419 1,336
Doubtful 17,286 8,596 15,768 7,881
Loss 173,466 169,390 148,490 144,883
Total 197,938 179,312 171,294 154,145

The Bank has historically exhibited the high NPLs at 15.2% of gross
loans, partly due to its role in developmental mandate. Reflecting the of
asset quality deterioration trend observed across the industry, in 2021
the Bank experienced a 15.6% increase in the NPL’s which stood at
PKR 197.9 Bn at the end of 2021 (2020: PKR 171.3 Bn). Due to
increase in NPL’s, specific provision charge for the year 2021 amounted
to PKR 11.56 Bn and a reversal of PKR 0.44 Bn is recorded in general
provision. At end 2021, specific provision stood at PKR 179.3 Bn (2020:
PKR 154.2 Bn) translating into coverage at 90.6%.

Asset Quality
Share Price History

No. of Share Market

High Low Closing Shares Turnover Capitalization
PKR O/S Number PKR’ Mn
Quarter Ended
December 31, 2021 34.71 34.01 34.52 2,127,513,026 332,500 73,442
September 30, 2021 33.51 32.76 33.44 2,127,513,026 85,500 71,144
June 30, 2021 37.40 34.77 36.57 2,127,513,026 2,201,000 77,803
March 31, 2021 32.50 31.95 32.21 2,127,513,026 1,647,500 68,527

Share Price / Tread Volume - 2021

Corporate & Investment Banking
CIBG continued to maintain the most preferred Pakistan’s leading . Successfully facilitated financial close of the critical project
financial services provider to top tier corporates, governmental finance transactions in the power sector which will cumulatively
agencies / department, and several multinational clients across the add in excess of 2000 MWs to the National Grid.
country thereby serving them according to their financial needs.
. Other sectors serviced by Nations’ bank Investment banking
CIBG professionals possesses all the required expertise, have full includes: Automotive, Cement, Steel, Textile, Chemicals etc.
command over the economic and business understanding
specifically w.r.t to Pakistani corporate environment to effectively . GOPSA achieved Trade Volume of PKR 725 Billion and
serve its clients with the best possible financial solution to make contributed around 44% to overall Trade Volume generated by
them way ahead as compared to their competitors. CIBG. Also generated Non-Funded Income of PKR 2.5 Billion
which positively contributed around 45% to the overall CIBG’s
With our presence in the form of regional corporate centers in all NFI.
the major businesses hub of Pakistan namely Karachi, Lahore,
Islamabad, Faisalabad, Multan, Rawalpindi, CIBG is well equipped . Global Finance Magazine has acknowledged NBP’s role as
to serve their diverse client base with the help of well-trained “advisor at project initiation stage and Mandated Lead Arranger”
business professionals working tirelessly for providing best banking in arranging financing facilities for Punjab Thermal Power Private
services to our clients. Limited, a 1263 MW combined cycle power plant. The
transaction was awarded ‘power deal of the year’ in Asset Asian
By combining our expertise in three areas i.e. Corporate Banking, Awards (AAA). Financial close of syndicated Project finance
Investment Banking, Transaction Banking (Cash Management & facility of PKR 78.4 Billion was achieved in 2021 with NBP’s
Trade Finance), CIBG is well placed to cater to the growing banking participation of PKR 21 Billion.
and financial needs of all our diversified corporate clients based on
their risk profile and specific business needs. . Under TERF scheme introduced by SBP to support economic
growth, CIBG extended an amount of around PKR 28 billion to
Post Covid-19 and despite having significant challenges both on leading business houses in the 2021.
external and internal fronts, CIBG continued its trooping in upward
direction by delivering the following: . In continuation with the directives of SBP for increasing funding
for Housing & construction sector to support economic activity in
. The Investment Banking franchise of NBP has maintained its an structured manner, CIBG disbursed cumulative amounting to
significance in the capital markets, by undertaking various around PKR 17 billion under the said sector in the 2021.
transactions of critical importance for the economy and
resultantly won highest number of accolades from domestic and
international organizations. During the year Investment Banking
Division:

. Jointly lead advisory and arrangement mandates for the Telecom

Sector for cumulative facilities to the tune of PKR 75 billion

1. Asia Pacific’s Best Investment Bank - 2021- Corporate Treasurer.

2. Best Corporate Finance House- 2021 (Fixed Income)- CFA Society Pakistan
3. Transaction of the year – 2021 - CFA Society Pakistan.
4. Corporate & Investment Bank of the Year - 2021- Asian Banking & Finance
5. Debit Deal of the year - 2021- Asian Banking & Finance
6. Best Project Infrastructure deal of the year - 2021- Asian Banking & Finance.
7. Best Corporate Sukuk – 2021 – The Asset “AAA” Islamic Finance Awards
8. Best Trade Finance Bank in Pakistan – 2021 – The Asian Banker
9. Best Corporate & Investment Bank in Pakistan – 2021- The Asiamoney
10. Best Investment Bank in Pakistan – Global Finance Magazine.
Retail Banking
RBG during the year 2021 on boarded the trajectory of mark for the very first time. Contributing 85% share of the
“Change Management” that inter alia included restructuring, bank-wide deposit book, RBG deposit grew to record level of
technological advancement, product innovation, expansion of over PKR 2.5 Trillion, registering an unprecedented growth of
its product suite, improved risk management and inculcation of more than 25% compared to previous year and above the
sales culture. A number of steps were taken in each of the industry growth rate. RBG’s average total deposits posted a
aforementioned areas by the incumbent RBG leadership, double digit growth of 12% during this period which comprises
joining in the beginning of 2021 and carrying a very strong of 12% growth in CASA deposits and 8% in Term Deposits.
legacy of performance in domestic and foreign banks. CASA ratio also stood at a healthy 83%. This is a significant
achievement by the RBG team considering that the economy
Streamlining the RBG organogram and to inculcate a reward for was just recovering from the pandemic affects. On the ADC
performance culture topped group’s agenda for 2021. The front, active debit card portfolio registered a phenomenal
group satisfactorily delivered on these two fronts. RBG growth of more than 50% in 2021.
structure both at Head Office and field level was streamlined
and new positions were created for effectiveness, focused The Bancassurance business also flourished during 2021
approach, innovation and portfolio growth. A new layer of owing to strong engagement with insurance partners. The
General Managers (GMs) position has been created, under the business underwrote 8,688 policies of over PKR 740 Mn of
restructuring initiative, with the key role to increase branch premium and earned commission income of more than PKR.
productivity through “Inclusive Performance”. Besides, a 300 Mn. This translated into a growth of 11% in premium and
reward for performance culture was inculcated through 21% in commission relative to 2020. The Banca Business also
introduction of MPI (Monthly Performance Indicator) providing displayed a high level of customer satisfaction with complaints
a formulaic mechanism to gauge the performance of Regions / recorded at less than 0.5% of booked cases during the year
Branches. The progress is discussed at length with the and the business recording over 82% and 90% persistency
stakeholders on monthly basis to acknowledge achievements rates for 2nd and 3rd year premium respectively.
and / or take remedial measures. The aforementioned structural
changes and reward culture played a pivotal role in growth of Analogous to its deposit and bancasssurance business RBG
RBG deposits, advances and ancillary business. excelled on its advances portfolio, registering growth of more
than 10%. Formation of Consumer Assets Group (CAG), in the
RBG deposit business built a strong momentum in 2021, 2nd quarter of 2021, within RBG played a fundamental role to
resulting in bank-wide deposit to touch the PKR 3 (three) Trillion achieve this growth. Through focussed approach towards

Deposits
existing consumer assets, launch of new products/variants RBG will continue its performance trajectory in 2022 and years
institutional sales of consumer assets. This entails entering into ahead. The group future plan entails
arrangement with institutions to promote growth in consumer
assets products. RBG is leading the industry in the category of Establishing a full-fledged parallel sales structure to
personal loans with more than 50% market share. “NBP complement the existing Region / Branch workforce. This
Advance Salary” maintained the lion’s share among all will facilitate in implementing the group’s aggressive
consumer assets product. The product during 2021 registered growth strategy, thereby continuing to outgrow the
a growth of more than 6% despite change is Prudential industry growth rate and increase market share
regulations to keep growth under check. The revised PRs
reduced the DBR from 50% to 40% and financing tenor from Capitalizing on the Institutional Sales Initiative – Targeting
05 to 04 years. The regulatory measures resultantly reduced institutions to enter into bilateral arrangement with NBP for
the average ticket size for new loans and also impacted the liability and consumer assets products for their employees.
rollover cases. With the zeal to provide customer convenience
and strengthen risk management, the bank revamped and Revision in the product programs with the aim to expand
automated the “NBP Advance Salary” loan approval process, the target market and capitalize on institutional sales
thereby providing customers the ease to apply for loan from
the comfort of his / her home / office. The bank maintained its Pursue achieving the position as market leader under
insignia of being the only bank among peers to offer financing housing finance category
against gold ornaments. In 2021, RBG gold financing portfolio
registered a growth of 30%. Besides, a new running finance Engage with housing industry participants builders /
variant namely “NBP Sunehri Sahulat” was launched in 2021. developers / realtors to promote portfolio growth
NBP carried forward its legacy of being an active participant in
all government initiated lending programs and aligning its Launch of new products and services , with special focus
strategy with government initiatives. RBG, being the custodian on products catering to financial needs of women
of government low cost housing program “Mera Pakistan Mera
Ghar”, proudly maintains its position as a prominent player of Automation of Products - Loan origination, disbursement
the banking industry in provision of low cost housing. The and management
group geared its efforts to grow its housing finance portfolio
aiming to enable home ownership for low to middle income Acquire digital lending platform to facilitate on boarding of
market segment. This is evident from the fact that the bank prospective borrowers for personal loans
maintains the highest relative market share in terms of number
of loans and is the first bank providing shelter to 1,000 families. A fortified support system for business growth and
Cognizant of the true target market and the government customer outreach and satisfaction
motive, RBG developed the proxy income model catering the
informal segment interested in benefitting from the housing
program. The group took the novel initiatives of introducing
mobile van unit to promote low cost housing, wherein
dedicated and trained team attends the public queries to
create awareness and handholding for financial literacy.
Inclusive Development
IDG has made its top priority to develop new markets and products for
financial inclusion of underserved and unserved segments of the
economy needed to achieve the sustainable growth. To increase

Best Agriculture Bank

financial inclusion and footprint in the area of Agriculture, SME and
Product Development team has developed number of products and
initiatives to cater the underserved and unserved sectors in SME’s and
support small land holder farmer’s ability to increase food production, In Pakistan Banking Award 2021
the focus of the Group is to develop structured products to serve the
largely undocumented or thinly documented sector.

Product Development
IDG has taken various initiatives and collaborated with following educa-
tional institutions/Universities; University of Agriculture, Faisalabad,
PMAS Arid Agriculture University, Rawalpindi, MNS University of
Agriculture, Multan and Sindh Agriculture University, Tandojam. The
Product Program of ‘’Commercial Vehicle Financing” was approved in
2021. Developed collaborations with the Millat Tractors Limited, Al
Ghazi Tractors Limited, Fecto Belarus Tractors limited resulted an
increase in Tractors Financing by 104% and Farm Machinery/imple-
ments financing by in 40% in 2021. Further, developed collaborations
with Ministry of Tourism, Gilgit Baltistan to promote Tourism /Homestay
Financing, Pakistan Stone Development Company for financing to
underserve segments i.e. marble & granite sector, Pakistan Poverty
Alleviation Fund for livestock and horticulture sector value chain in
target districts of Sindh and Baluchistan and Directorate General
Agriculture, Water Management Punjab to promote financing for High
Efficiency Irrigation Systems (HEIS) and solar systems for efficient use
of water for improving crop productivity and farmer’s profitability which

Advances
increased HEIS portfolio by 226% in 2021, also collaborated with Minis-
try of Climate Change, Ministry of Science & Technology and National
Vocation & Technical Training Commission (NAVTTC) and providing
financing under / beyond Kamyab Jawan Program in order to promote
Apiculture/ Honey bee farming in the country.

Commercial & Sme Business

NBP has played a leading role in developing the SME spectrum. During
the year 2021, SME has outperformed by achieving portfolio growth of
31% as compared to 11% in the preceding year. During the year, more
focus was given to lending under general finance instead of seasonal
finance due to which concentration in general finance has increased to
47% in 2021 from 30% in 2020. In order to improve services to
customer and to ensure maximum financial inclusion, Hub branch
structure has been introduced in 2021.

Corporate & Social Responsibility

Corporate Social Responsibility (CSR) is about giving back to society.
NBP’s CSR activities also aligned with the UN Sustainable Develop-
ment Goals. NBP’s CSR activities as part of the Inclusive Development
Group (IDG) focuses on sectors that are classified as “priority sectors”.
The six main areas of focus are health, education, environment,
women’s empowerment, WASH and Differently Abled People. In a
move away from previous practices, the CSR division aims to build
sustainable relationships with organizations instead of making one time
donations. NBP, in recognition of its services also received 10th Annual
Corporate Social Responsibility Award 2021.
Inclusion, Innovation & Capacity Building Division (IICBD) During the year 2021, NBP was the best bank (customer-wise)
With the aim to build strong Non-Financial Advisory Services at under Kamyab Jawan Scheme and The Prime Minister himself
NBP, IDG established a new Division: Inclusion, Innovation & acknowledged the bank's performance and an "Appreciation
Capacity Building Division in March 2021. Key NFAS initiatives Award" was awarded in a grand ceremony in Islamabad. The
undertaken by IICBD in 2021 include engagement with Chambers President NBP received the prestigious award.
of Commerce Islamabad and Rawalpindi, WCCI Multan, Baha-
walpur, Peshawar, Faisalabad and Karachi, trade association (KATI), Agriculture Business
academia (Lahore University of Home Economics, GC Women “The Best Agriculture Bank in Pakistan” is again a feather in the cap
University, Faisalabad and TEVTA) and an NGO (AWARD Faisal- of National Bank of Pakistan at “Pakistan Banking Award 2021”.
abad) through awareness sessions, conferences, and webinars on
banking products for promoting women entrepreneurship and In 2021, NBP is holding the hand of 144,864 farmers with the
facilitating youth and startups. In this regard, IDG field teams also portfolio size of PKR 61,032Mn, which is the highest in banking
conducted different awareness sessions for rural women communi- industry of Pakistan.
ties at Abbottabad, DG Khan, Hyderabad, Muzaffarabad, Sialkot,
Gujrat and Faisalabad. During the year, NBP has extended financial assistance to 33,446
new customers. In addition to conventional fields of Agriculture
In the period under review, MOUs were also signed with SMEDA, financing, we have focused specially over the Farm Modernization.
PATTA and Food Panda for collaboration and partnership on NBP has broken all its previous records in this category by
creating financial inclusion opportunities. In terms of internal capac- sanctioning 815 new tractor financing cases during 2021. During
ity building, a series of capacity building workshops for Women the year, we have diversified our portfolio by extending Green
Champions and IDG Regional Executives on Financial Inclusion Financing (Solar Energy) to women under the financial inclusion
and Credit Processing & Presentation Skills were held at NBP Staff initiatives.
Colleges in Karachi, Lahore, Islamabad and Multan. Furthermore,
women champions staff were deployed in 32 Regional field offices NBP has increased its outreach by inducting 74 Relationship
for facilitation of female entrepreneurs. Managers / Officer pan Pakistan. The other initiatives like Execution
of Agreement with PLRA and MOU with Tractor Companies, Agri.
Kamyab Jawan Scheme Universities and other Govt. Of Punjab Water Management, to
National Bank of Pakistan is a major player in the Kamyab Jawan promote Agri. portfolio will also lead the Bank towards the victory
Scheme. The Bank has approved and disbursed more loans than stand once again.
any other participating bank. In line with the spirit of the scheme, the
Bank has focused on reaching out to the small businesses, under- Lending To Micro Finance Institutions
privileged youth of the country from far-flung areas, those that Wholesale lending to microfinance institutions is relatively new in
usually don’t have access to the banking services. NBP has this area. We have initiated it and during the last year NBP has
disabused loans to young generation of Baluchistan, south Punjab, consolidated its leadership position in the industry. The bank has
rural area of Sindh, Gilgit Baltistan and rural areas of KPK. Most of highest number of clients and largest portfolio as compared to all
these loans (more than 95%), have been given without any collater- the commercial banks in the country.
al or security.

NBP, as a policy, encourages the female population of the country

to apply for these loans and female borrowers have a significant
percentage in NBP’s portfolio.
Treasury & Capital Markets
Treasury & Capital Markets Group (TCMG) functions as the focal point for managing the bank’s liquidity, foreign exchange, and investment
portfolios for optimal utilization of funds which are consistent with Bank’s strategy vis-à-vis global and domestic market outlook by focusing
on exchange rate, equity and interest rate movements while also catering to a diverse clientele of FX and fixed income.

Treasury function at NBP comprises of four specialized segments, i.e., Financial Markets Trading – mainly focusing on investments, both
domestic & international, and trading in FI and FX; Equity Markets – investments and trading in domestic equities; Sales & Structuring -
catering to a diverse clientele base in FX and FI besides providing structured solutions; and Asset Liability Management – responsible for
liquidity and balance sheet management both domestic and international.

The year 2021 turned out to be a turbulent one for treasury markets of the country and presented its fair share of challenges for banks, both
in terms of a volatile FX market and rapidly changing interest rate environment. Major challenge emanated from balance of payment woes that
once again proved to be the game changer for entire economy and forced SBP and government to shift its policies from stabilization to
growth and then back to stabilization. Increase in current account deficit way beyond
anticipation due to a significant surge in domestic demand, global supply chain
disruptions, and high global commodity and energy prices shaped and reshaped
economic policies and hence market volatility. Despite the ensuing volatility that
engulfed FX, money and equity markets, National Bank’s Treasury with its
well-equipped systems, dedicated and experienced team and wide array of
network not only captured higher trading volumes, but also optimized liquidity
management and prudently managed various market risks arising out of trading
positions, converting challenges into opportunities that led to higher profits and
enhanced the value proposition of the Bank. Collectively, NBP treasury
maintained its status as being a top market-maker both in Foreign Exchange &
Fixed Income be it the interbank or on the client side and surpassed all our
budgetary goals with comfortable margins.

TCMG has made steady progress in further strengthening our controls and
compliance environment by focusing on people, culture, and systems. One of
the key aspects of our approach is the improved and enhanced coordination
with other business groups within the organization.

TCMG gives special emphasis on cultivating strong relationship with external

stakeholders as well. This two-pronged approach enables us to better synergize
our efforts in achieving overall goals and objectives.

Finally, the coordination and bonding among various divisions of the group
coupled with enhanced liaison with other groups enable TCMG to set the tone
and direction that synergizes divisional goals into departmental ones and further
into organizational goals.

Key achievements for 2021:

1.Despite increasing global commodity prices and hiking of the policy rate
TCMG capitalized by booking a substantial net interest income through dynamic
portfolio rebalancing.

2.NBP rated by SBP among top performing primary dealers of the market bears
testament to our expertise in meeting Primary Dealer targets, active market
making and dynamic contribution in price discovery of fixed income securities
93% of the bank’s investment
meeting the expectations of our diverse clientele.

3.Registered hefty capital gain of over PKR 6.0 Bn for the year 2021

4.NBP become market maker for government securities in PSX for the develop-
ment and growth of debt capital markets in Pakistan.

5.TCMG functioned in an uninterrupted manner despite cyber-attack in October

2021 and ensured continuity in business activities.

6.Initiated automation of functions: Sales Desk activities, Investor Portfolio

Securities Products, and automation of Fund Transfer Pricing. With the migration
from a pool-based FTP mechanism to Matched FTP, Treasury will be optimally
geared to manage interest rate risk of the entire banking book.
International, Financial Institution & Remittances
With presence in 17 countries, NBP has one of the largest international
franchise amongst Pakistani Banks. Our international operations is

19
spread over North America, Europe, Middle East, South Asia, Central
Asia and Far East. Our focus is on trade finance, bi-lateral and syndicat-
ed lending facilities, investments in sovereign debt investments and
remittances business.

Bank is following the strategy of consolidating its operations to reduce

compliance risk with the business model of selectively growing its
lending book and focusing on developing a local franchise coupled with
growth in trade, remittances and FI business. Another area is the focus
on recoveries mainly from Bangladesh.

While following its strategy on consolidation, Bank closed 2 branches,

Jalalabad (Afghanistan) and Sylhet (Bangladesh) and 2 Rep. Offices,
International Branches
Tashkent Rep. Office (Uzbekistan) and Toronto Rep. Office (Canada).
Despite all the financial challenges and global slowdown due to
Covid-19; International Branches have overcome these difficulties and
achieved core goals including improving business in these markets.
Following are some Key Achievements of IFRG in 2021.

A.Converted Bangladesh Operations in profit after 9 years and Export

Processing Zone branch after 6 years.
B.Implemented new CBS in 5 locations i.e. Hong Kong, Riyadh,
Bahrain, Bangladesh and EPZ
C.Successfully booked syndication transactions in favor of GoP
amounting to USD 198 Mn. (PKR 35.4 Billion)

Going forward, International operations will continue to explore new

avenues to ensure increase in deposit base and trade business to
reflect improvement in its funded and non-funded Income. We will
continue to focus on enhancing the control environment in our interna-
tional branches.

Remittance & NRP Division:

Home remittances continued to play a vital role in stabilizing country’s
economy during 2021 as overseas Pakistanis send record volume of
remittances during the year. GoP also took various key initiatives such
as introduction of Sohni Dharti Remittance Program for Non-Resident
Pakistanis to promote remittances through legal channels. NBP played
an active role in the development of this program in collaboration with
MoF, SBP and top five bank.

Despite challenging situation and high competition in the industry, NBP

maintained its position as one of the leading remittance processing
banks of the country. Utilizing its network of 1,500 plus online branches
and 500 post office locations for remittance payouts throughout the
country to an advantage, NBP remained the most preferred and first
choice bank of customers in respect of KSA transactions which is the
leading corridor in terms of remittance inflows to Pakistan.

IFRG continued to support GoP’s vision of promoting remittances

through legal channels by successfully launching various remittance
marketing campaigns with its valued international business partners
and conducting a local remittance marketing campaign during the year.
NBP Aitemaad Islamic Banking Group
Alhamdulillah, NBP Aitemaad Islamic Banking Group posted pretax profit of PKR 1.5
Bn for the year ended December 31, 2021 as compared to PKR 2.11 Bn during the
previous year. Decline in net spread PKR 520 Mn is in line with forecast with 625 bps

189
drop in SBP policy rate. Impact of rate cut is PKR 924 Mn, however, NBP Aitemaad
was able to recoup PKR 404 Mn by volume growth in earning assets and deposits.
NBP Aitemaad earned net spread above budget by PKR 257 Mn, even with a large
current account deposit of PKR 7.3 Bn converted to savings account in June-2021.
Despite the decline in policy rate and reduction in income on FBR collection by ADC Branches

13%
switch, NBP Aitemaad closed PKR 1.5 Bn pre-tax profit, 24% above budget.

NBP Aitemaad grew average CASA by 26% to close at PKR 67.4 Bn in Dec-21 from
PKR 53.7 Bn in Dec-20. Average deposit base increased by 15% reaching PKR 76.2
Bn in Dec 21 from 66.2 Bn in Dec-20. End of period deposit grew by 13% YOY and Deposit Growth
increased to PKR 84.8 Bn as of Dec-21 from PKR 75.3 Bn as of Dec 20. Home
Remittance transactions stood at 352,679 for the year ended December 31, 2021
despite an unfortunate tech incident in the last quarter. Total customers serviced
grew from 178,576 in December 2020 to 197,293 as of December 31, 2021. More
than 16,300 debit cards were activated in 2021, showing 60% growth over last year.
Over 4,600 digital banking were activated during the year, 270% up YOY.

In view of the upcoming maturity of Bai Muajjal with GOP of PKR 7.9 Bn in early next
year, NBP Aitemaad invested PKR 8 Billon in Government backed statutory liquidity
requirement (SLR) eligible GOP Ijarah sukuk and PKR 2.68 Bn Govt. Guaranteed
corporate sukuk during the year under review. Hence, investments increased from
PKR 42.1 Bn in December 2020 to PKR 49.5 Bn in December 2021 recording 18%
growth.

NBP Aitemaad recorded 13% YOY growth in financing which increased to PKR
43.02 Bn in Dec 21 from PKR 38.15 Bn in Dec 20. The financing portfolio comprises
corporate customers, located in Karachi, Lahore, Islamabad and Multan. Strategy is
to continue booking top tier corporate customers, albeit cautiously.

Alhamdulillah, in 2021, NBP Aitemaad Islamic Banking has introduced PayPak Debit
Card, Foree Remittance Account, Hamsafar Auto Finance, SBP Micro Payment
Gateway (Raast) for dividend payments and various services with regard to issuance
of Debit Card & Cheque Book through Call Center, cross inter branch transaction /
interbank fund transfer through ATM. Additionally, NBP Aitemaad has discontinued
Cash Cards, replaced with EMV compliant Cards and also amended the Key Fact
Statement (KFS) as well as marketing collaterals in order to increase customer
comprehension about banking product’s affordability and risks, leading to better
decision-making.

To strengthen controls, NBP Aitemaad has implemented Centralize Account

Processing Unit (CAPU) with Document Management System (DMS) for Aitemaad
Islamic Branches during June 21. The new concept of Centralized Account Opening
along with a system named DMS supports to overcome Regulatory shortcomings,
minimize audit irregularities and streamlining the Account Opening Process for
Aitemaad network. To ensure centralized monitoring of branch control parameters /
exceptions, Centralized Operations Control Center (COCC) Portal has also been
launched during the year.

Consequently, NBP Aitemaad Islamic Banking Group achieved a PKR 100 Bn

milestone of total assets which increased from PKR 88.9 Bn in December 2020 to
PKR 100.9 Bn in December 2021 recording significant growth of 13.5% during the
year under review.
HR Management
HRMG Key Initiatives & Achievements Grievance Redressal Interface Program (GRIP) and the formation of
At National Bank of Pakistan, Human Resource Management the Grievance Resolution Committee to facilitate swift and timely
Group continued its journey towards transformation and addressing of employee grievances and issues.
accomplishment of its vision to align HR Strategy with business, Automation in HR: The Compensation & Benefits division
through best practices for employee development and managed to automate several areas in their ambit, including
performance. Numerous initiatives and projects were initiated to Centralization of Staff Finance, Automation of Final Settlement (UAT
implement best market practices and embed performance driven, and parallel testing), Electronic distribution of Income Tax
merit based and transparent culture within the Bank. Certificates and Electronic distribution of APA letters

Encouraging Accountability & Reward Culture: With an aim to Update of HR Policies: Revision, development and improvement
develop a merit and performance based transparent culture at NBP, of various HR policies in line with the best market practices were
HR reintroduced the Bell Curve and launched Balanced Score Card completed, including Recruitment Policy, Promotion policy, Code of
for Vice President and above grades. For first time in the history of Conduct, Health benefits policy, Staff loans policy, End service
NBP, the three main deliverables of Rewards i.e. Increments, Bonus benefits policy as well as the development of grievance handling,
and Promotions were successfully conducted and completed in the remuneration and social media guidelines.
first quarter of 2021. Bank wide Promotion cycle was concluded
after a gap of 3 years, however, going forward HRMG Leadership HR Intranet Launched: HRMG launched an exclusive HR Intranet
and its team is committed to execute staff promotions on an annual page, the One-Stop shop for all HR updates and all matters
basis and to ensure that rewards are distributed well in time as per pertaining to the function. The HR Intranet page also gives NBPians
market practice, in order to keep our employees motivated to do the opportunity to hear from the HR management about latest
their job efficiently and effectively. HRMG team is geared up for the developments. HR Intranet tab provides immediate access to HR
upcoming promotion cycle. policies, employee forms, training calendar, internal job postings,
HR Circulars and what’s new. Employees are encouraged to
Recruitment of Top Talent at Senior Positions: HRBP’s explore the HRMG offerings and experience employee
dedication towards excellence ensured that the top talent across convenience at its best!
various industries is recruited in the Bank at senior roles that bring
years of experience, innovative mindset and the drive to scale Competency Framework Launch: HR Management Group
heights of success. conducted a series of first full day intensive and exciting sessions of
Competency Framework’s focus group series at NBP’s
Employee Wellness focus on COVID-19 Initiatives: NBP rolled state-of-the-art Training Centre. The President, Mr. Arif Usmani
out a comprehensive medical plan for employees and eligible attended all the sessions and emphasized the need and
dependants for all COVID related hospitalisation and related importance of a robust Competency Framework for growth and
Medical expenses, including pathological tests and injections, development of Bank employees. Group wise sessions were
medication and antibody tests. HRMG arranged four major conducted which are designed to identify Leadership (behavioral)
COVID-19 vaccination drives for employees and their family and Technical competencies across the board. Consultants have
members in collaboration with various hospitals at the Head Office been engaged to work with team HR to develop competencies in a
and Karachi. The NBP management’s initiatives in supporting its customized Competency Framework. The goal for HR’s
staff during this pandemic also included arranging free Antibody Competency Framework strategy is to communicate which
Test for all employees at Head Office which aided in uncovering the knowledge, skills and behaviors are required, valued and
spread of this infection. recognized with respect to specific job roles. Through such
initiatives employee skills gaps are addressed, strengths are further
Set Up of robust HR Legal Compliance Division: HR Legal developed and requirements for career progression are clarified.
Compliance division was set up in the HR department with the Once competency mapping is rolled out and completed, it will align
objectives to mitigate HR legal cases, manage compliance and with learning and development as well as recruitment and selection
control, and work on digital transformation of HR legal cases. So far processes.
the division has achieved review of HR policies as per current
applicable country laws, compliance of case orders within time EMPLOYER BRANDING
frame, and a reduction in Contempt Cases due to effective HRMG Knowledge Sharing Initiatives: NBP believes that
Management. HRMG succeeded in managing out of court knowledge sharing not only increases productivity, but it also
settlements in numerous cases. One major long pending case was empowers employees to do their jobs effectively and efficiently.
that of MTO vs. Non MTO personnel which was resolved. Imparting knowledge and inculcating a learning culture is a key aim
for the HRM Group. NBP’s management participates in various
Managing Employee Grievances: A meticulous grievance corporate and educational events as well. Ms. Asma Shaikh, Group
handling policy was designed and implemented via the online portal Chief, HRMG was invited as a guest speaker at National Institute of
Management to speak on ‘Human Resource Management in Public of Contact’s (POCs) were specifically trained to effectively deliver
Sector’. She has also shared her expertise at the HR Tech Summit according to the business requirements for Low-Cost Housing
& Conference Asia 2021, and at different forums including various Finance. In third phase, Prime Minister of Pakistan and President
webinars and workshops on a number of topics such as Mental NBP, inaugurated the mobile unit for processing LCHS applications
Health at the Workplace, embracing technology in HR, the on the go. L&D provided training for mobile unit staff.
pandemic and HR initiatives, global state of talent in 2021, and skills
development strategy. Audit & Risk Workshop:
3 Day Workshop on Risk Based Internal Auditing was conducted
Employee Engagement for relevant participants covering the topics below:
Regional HR Workshops: HRMG reorganized its first Regional HR • Risk Based Auditing
workshops in Karachi and Islamabad at the respective Staff • Audit of Risk Management Functions and Risk Management
Colleges in Q4. Regional HR teams from all over Pakistan were Valuation Models
invited to attend these extremely interactive sessions which were • Cost & Management Audit
planned to provide an overview of all HR functions, their day-to-day
operations, milestones achieved and future plans to the Regional Induction Program for Relationship Officer - Agri Finance:
HRBP teams. Overall, 160 team members country wide were 10 Days Induction Program for newly hired batch of Relationship
covered in the sessions. The session received encouraging Officers (Agri Finance) was executed nationwide by L&D in March
feedback from regional HR and Staff College team, who stated that 2021.
they look forward to welcoming many such sessions in their own
cities and regions as such workshops are a great way to build Diversity Initiatives:
cohesion amongst teams. Going forward, all Divisional / Wing HRMG aims to execute a 5-pronged strategy towards Gender
Heads are encouraged to conduct sessions and take responsibility Diversity and Inclusion Initiatives. This includes a holistic approach
of training Regional HR Teams. of inducting females in all areas of the Bank, providing logistics and
facilities in branches / offices, development and growth
Women’s Day Celebration 2021: This International Women’s Day, opportunities for female employees and sensitization trainings, in
National Bank celebrated women across the country with an order to ensure a conducive work environment for females.
exciting roadshow showcasing various women achievers including L&D has been playing pivotal role in bringing the culture of diversity
Board Member and social entrepreneur Ms. Sadaffe Abid, actress and inclusion in NBP. Following are the interventions that are
and activist Ms. Sarwat Gilani, Professor Dr. Yaamina Salman, deployed to eliminate Gender disparity and discrimination against
Director of Institute of Administrative Sciences, Punjab University differently abled staff members.
and seven female Special Olympics athletes. The inspiring guest
speaker sessions were held at the Head Office and various staff Achieving Excellence Programs for Women:
colleges in Lahore, Islamabad, Peshawar and Multan with proper Achieving Excellence is a training program that is focused on
SOPs. women empowerment and dealing with sexual harassment at
workplace. This is an ongoing program. 89% of women employees
In Her Own Words- Pinktober at NBP: On 28 Oct, 2021, a brave of the bank are trained online under this program.
breast cancer survivor Ms. Sadiya Siddiqui spoke about her
inspiring and extremely difficult journey at the NBP Head Office Training Program for Differently Abled Persons:
Auditorium. She is an active member of Begum Samina Alvi’s Online Training Sessions for differently abled persons were
taskforce working on spreading Breast Cancer Awareness across facilitated by L&D, where staff members with various disabilities
the country. A candid Q&A with audience followed where several were trained along with their supervisors. The purpose of the
insights were shared about myths involving risks for the disease. sessions was to motivate those staff members and educate those
The key message from the session was to be vigilant through around them to be mindful of the needs and limitations of people
monthly self-exams and doctor visits and getting mammograms with disabilities. These will be ongoing sessions for sensitizing all
done at once in case of any suspicion as well as after the age of 40. the staff members who deal with differently abled persons.
NBP HRM Group will continue to campaign for the health and
wellness of employees and families. National Financial Literacy Program:
NFLP is a program by ADB for financial inclusion of unbanked
Learning & Development segments of society with special emphasis on women financial
Renovation of NBP Learning Center, Karachi: inclusiveness. L&D with the help of Field Trainers from business
L&D, JNMDC and Karachi Staff College premises have been conducted NFLP sessions across Pakistan and achieved target of
renovated at FTC building. L&D with the assistance from LCMG women participation by 47% of total participants against the target
restored the premises and transformed it into state-of-the-art of 50% with 78% account conversion rate.
Learning Center.
Low-Cost Housing Scheme E-Learning: Managerial Excellence Session for Women Branch Managers:
To create awareness on SBP’s Low-cost Housing Scheme, L&D Managerial Excellence Program especially for women BMs was
launched an e-Learning module for all the concerned employees in held online in June 2021. More sessions like these are planned in
its first phase. Moreover, in second phase Branch Managers & Point the future.
Compliance As part of its commitment to the highest standards of AML-CFT
compliance, the Group implemented renowned systems for
First and foremost, NBP is committed to the best industry practices Transaction monitor- ing and name screening for its domestic and
for compliance with all regulatory frameworks including AML/CFT some overseas operations. The Group has continued to automate
practices, so that the interests of all stakeholders are protected. The these and other control systems in its overseas network, which
bank’s Code of Ethics and Conduct, which is annually agreed to by continues to be a work-in-progress.
all employees in letter and spirit, acts as a guide for them in
discharging their duties and sets out the standards of good 2021 was a watershed year for the Group. Based on the principal of
governance. constant learning and improving, there is always room to grow.
Compliance now has a significantly enhanced line of sight on the
The Compliance Group is an integral part of NBP, dedicated to bank’s global operations, supported by hard data, a strong team of
create value for both internal and external customers, whilst industry professionals. The group was gone through a sizable
meeting regulatory obligations in every country it operates in. Thus, re-structuring. With a very competent leadership, it stands in strong
the Group upholds a strong compliance culture representing the position to face the compliance and regulatory challenges in 2022.
bank’s core values through ongoing development of its personnel
and structure, as well as providing effective challenge of its actions.

In early 2021, the bank inducted a new Compliance Group Chief

Audit
The Bank has an independent internal audit function referred to as
who has 27 years of Compliance/AML/CFT/Sanctions experience
Audit & Inspection Group (A&IG). A&IG provides independent
in domestic and international banks as well as a clear vision of how
assessment of the risk management, control and governance
to streamline the Group. Supported by the Bank’s President and
process of NBP in line with the Institute of Internal Auditors (IIA) and
Board of Directors, the Compliance Group restructured its activities
SBP guidelines. A&IG assists the Board Audit Committee in
by inducting experienced industry profes- sional from Pakistan and
discharging its oversight responsibilities regarding internal controls
beyond at all levels, including at senior levels, with a view to
and internal audit of the Bank.
significantly enhance governance, bring rigor to the Program,
enhance relationships with global regulators, as well as to automate
During 2021, audit programs have been realigned as per the audit
to improve oversight, controls and overall efficiency. The Group has
strategy to cover major risk areas and issue effective audit reports
gone from strength to strength throughout the year and in doing so,
of each function for corrective action by management.
improved line of sight on its global operations, thus, enabling it to
make strategic changes. Amongst others, the Group focused on
Human Resources have been provided necessary training to
enhancing rationalization of its Divisions, enhancing documented
build-up their capacity for effective audits. In addition to this, a hiring
controls and awareness of teams through soft and hard training.
process has been initiated to fill up the resource gap.
The oversight provided by the Bank’s Board of Directors was
through a documented oversight process that included roles and
In order to automate the audit cycle, eAudit software deployment
responsibilities, which were adhered to strictly.
has been initiated. Changes required in the system to cater the
audit program under the revised audit methodology are being
Accordingly, NBP’s approach towards the management of
discussed with the vendor. The system has been implemented for
compliance risk continues to be strengthened through enhanced
the branch audits.
oversight by various management and Board level committees. In
line with its oversight strategy for the overseas network, the bank
With a commitment to support the Bank in its journey to be the
strengthened Head Office oversight by providing effective
Nation’s leading bank, A&IG will continue to strengthen its
challenge to the overseas units, thus raising their awareness,
resources, systems and framework in line with regulatory
leading to enhancements to their control environments.
requirements and to cope with the changing banking environment.
Risk Management Group
Risk Management Group (RMG) is proactive in identifying, assess- ing, monitoring, and controlling the risks associated with Banking
Business. RMG functions as an independent group reporting directly to the President with dotted line reporting to the Board Risk &
Compliance Committee (BRCC).

The Bank follows a prudent path to risk management through developing/using effective tools to keep the Bank resilient, achieve corpo-
rate sustainability and minimize losses within the defined risk tolerance levels. Strategic goals, embedded into our approach to risk
management are to maintain a robust framework, identify and escalate risks and support sustainable business growth. RMG acts as a
second line of defense in the overall risk management structure of the Bank, assuming the role of establishing overall risk manage- ment
framework, development of tools & systems for effective risk management, risk oversight along with review and reporting of deviations of
activities from set standards, to Senior Management / BoD. RMG has achieved many milestones during the year with the aim of continu-
ous improvement in risk management practices through the introduction of new methodologies based on sophisticated tools. Few key
achievements during the year include:

• Designing and Implementation of revised credit tools, such as, and will add controls, governance and risk culture around it.
Simplified Credit Packages, Introduction of BIR, Industry specific • Developed framework for the coverage of Shari’ah Non-Compli-
and generic Risk Appetite Frameworks, Generic RAFS for ance Risk (SNCR) Management through identification of SNCR
Commercial and Medium enterprise & Score Card for small events, maintenance of database, monitoring and internal/
enterprise, green light memo format, Check lists, cover office note external reporting along with relevant stakeholders.
for Retail Products, Revised assessment of Stock and receivable • Introduction of revised Credit Disbursement procedures for
reports etc. financ- ing to Sugar Mills under Shari’ah Compliant as well as
• Restructuring of the credit function at the Branches and Regions conventional mode of financing with an objective to ensure timely
in order to further strengthen and consolidate the Bank’s risk and complete direct payments to growers in their accounts to
function and ensure downstream implementation of the changes keep the pledged sugar unencumbered.
introduced to streamline processes, generate cost savings • Implementation of Financial Institutions Secured Transactions
through head count reduction, improve customer experience Act (STA), 2016, entailing necessary guidelines & mechanism for
through reduced TATs. registration of security interest with STR (SECP).
• Reactivation of the remedial team resulting in cash recovery of Rs • Issuance of DAC under Retail and Consumer lending at pre-dis-
1.5 - 1.6 Bn in past 5 to 6 months. bursement stage, instead of verification on post fact basis,
• Formulation of the Early Warning Policy for the Bank along with pertain- ing to Housing Finance Product, Advance Salary
roll out of the early warning process. This will enable the Bank to Product, and loans above PKR 10M under Cash n Gold product
eventually reduce the flow of problem loans to Bank’s portfolio on pilot basis.
• Pan Pakistan training workshops on Credit processing, presenta- • Implementation of SBP revised guidelines on Stress-Testing for
tion and negotiating skills for RE Credits & RE IDs. both conventional and Islamic portfolios and approval of its
• Over 775 credit requests were processed for CIBG and 750 frame- work.
processed for IDG/Agri/IFRG by the SCOs. • Facilitated Operations Group for implementation of 24x7 Fraud
• Conducted a quantitative impact assessment on IFRS 9 ECL Risk Management Solution for the monitoring and detection of
calculation as per regulatory parallel run guidelines. any suspicious activity on Bank’s alternative payment delivery
• Prepared Rapid Portfolio Review to highlight credit exposures channels passing through 1-Link switch.
with greater than normal credit risk, to evaluate overall portfolio • Facilitated/ enhancement in financial support extended by Bank
quality and to ensure that management takes prompt and to SMEs through revising seasonal policies and products.
rigorous action to protect the Bank’s interest. • Acquired the consultancy services for PCI DSS (Payment Card
• Presented to BoD and SBP a comprehensive NPL study encom- Industry Data Security Standard) Assessment and its Compliance
passing Analysis, Strategy and Way-forward. certification for Security of Digital Payments, which handles
• Implemented, updated and revised, “Credit Risk Concentration Debit/- Credit Cards from major Card Schemes.
Management Framework” that enforces single obligor / econom- • Development and approval of IS Incident & Forensics Manage-
ic group / sector limits for prudent credit underwriting / approval. ment and Card Security Frameworks to ensure compliance of
• Developed Mastersheet template – a compendium of financial SBP regulations.
and non-financial parameters related to obligors. Mastersheet • Timely resolution of Borrower’s complaints, provision of data to
template broadly assists obligor’s credit evaluation from an the Private Bureaus and submission of eCIB & eDAD to regulator
Expect- ed Credit Loss / Provisioning assessment point of view. without any interruption despite pandemic.
• Creation of dedicated setup for risk management of Retail financ- • Risk management policies, procedures, tools/ MISs, and frame-
ing & Program Lending under umbrella of Risk Management to works were revised to strengthen risk management for approval
focus on products that are managed on Program Lending basis of Board.
Financial Control
In recent years, the role of FCG has broadened throughout the Bank Chartered Accountants of Pakistan “ICAP”. Under this programme,
as a key partner in the process of strategy formulation as well as its NBP will be offering training (article) opportunities to the CA student
execution. FCG is now providing efficient decision support informa- in its key functional areas e.g. Finance, Risk, Treasury, Credit, Audit,
tion to the key business & control functions in the Bank. This strate- etc. This scheme will create professional learning & growth oppor-
gic role of FCG has emerged through its synergetic core functions tunities for the CA students across the Country.
i.e. accounting, financial information, policy review, ICFR, taxation,
financial planning & analysis, and SBP reporting. All these functions Going forward, FCG is all set to take efficient measures to strength-
relate to the gathering, analysis, interpretation and communication en the internal control & compliance environment within FCG as
of financial, as well as related, explanatory non-financial information well as at Bank level. This will be achieved through further improving
to both internal and external stakeholders. the quality of published financial reporting to secure a top position,
updating the relevant policy & procedure documents for efficient
FCG has been assisting the BoD and Executive Management in the financial reporting and also includes promoting a tax compliance
process of strategic decision making by keeping them abreast of culture by keeping the Head Office functions & branches abreast of
the Bank’s financial position & performance through actual and relevant changes in the applicable taxation laws.
forecast analysis, thus translating the financial data into meaningful
information. Furthering its business-partnering role, FCG has clear plans to
strengthen its role for efficient management decision making and
Efficiently managing the taxation affairs in 2021, FCG managed to strategic financial planning. Our strategic plan for 2022 is clearly
adjust over PKR 11 Bn refunds, leading to a better cash flow focused on moving towards a more automated environment for
management thereby contributing towards income stream of the data gathering, processing and producing quality information for all
Bank. To promote a tax compliance culture in the Bank, FCG our stakeholders.
arranged facilitation guidelines to assist the Bank’s employees in
filing their income tax returns in a timely manner which resulted in Last, but not the least, FCG will be enriching the Bank’s talent pool
significant improvement in employees’ number of taxpayers. by acquiring young finance professionals under the CA trainee
scheme ICAP and capacity building of existing resources
As a member of the cross-group team, FCG made effective contri-
butions towards balancing and reconciliation of GL. FCG has also On the regulatory side, FCG is managing statutory financial report-
contributed towards improvements in the control & compliance ing, external audit, taxation and other regulatory reporting to the
environment of the Bank through updating various procedures & SBP, SECP, etc. As the Bank’s extension towards external stake-
controls in the area of financial reporting, vendor payments, ICFR, holders, FCG endeavours to promote corporate governance image
etc. of the Bank through, inter alia, efficient financial reporting and
investors/analyst relations. This year too, FCG has achieved the
In 2021, FCG has took yet another strategic initiative to get the Bank following prestigious recognition for the Bank on quality financial
registered as a “Training Organisation” with the Institute of reporting:
Technology & Digitization
The year 2021 was a challenging year for ITG. Despite the Moreover, the Bank faced a cyber-attack at the end of October
disruption across society and to our daily lives as a result of the 2021. IT teams in coordination with other Business groups worked
continuing pandemic, IT Teams provided dedicated and untiring tirelessly to ensure that banking services and branches are
support ensuring the continuance of the Banks systems and operational with minimal possible disruption and no direct financial
technology infrastructure. Every Individual in ITG displayed and data loss. ITG with the support of ISD, RMG and Senior
exemplary dedication in managing IT operations and infrastructure Management of the Bank, has established an enhanced Cyber
24x7 and delivered services and solutions with limited resources Security posture implementing strict security controls across NBP
testament to our commitment and can-do approach. Specifically, IT IT assets and is continuing to do so with the acquisition of the latest
Operations and IT Infrastructure teams not only exhibited security solutions.
tremendous efforts to assure branch operations and ATMs uptime
but also ensured that all applications and connectivity landscape For ITG, 2021 was a year with many achievements along with
24x7. lessons learnt that will strengthen the Group to continue its
transformation to a more secure, vigilant and responsive posture
Major projects which will add great value to the NBP infrastructure and to be prepared to respond to unforeseen events with agility and
timeline: measure.

• CBA (Profile) Upgrade – approval and initiation "This message contains confidential and / or privileged material
• Data Center (3S Strategy) – approval and initiation intended solely for the addressee(s) and any file(s) transmitted with
• Trade Innovation Implementation it (attached &/or inserted within the main-body) are intended solely
• Endpoint Protection and upgrade for the use of the individual(s) or entity to which they are addressed.
• Infrastructure Upgrade – Links and Network
If you are not the intended recipient of this email then please delete
During the year 2021, ITG successfully implemented regulatory it without copying, distributing or disseminating the contents of the
directives and went live with multiple services for customers to same. If you are not an addressee, please inform the sender
provide ease of business through digital channels and through immediately and destroy this e-mail. Do not copy, use or disclose
facilities over the counter. Some of the major services include this e-mail or any information contained herein.

• Implementation of SBP Micro Payment Gateway for National Bank of Pakistan , takes reasonable
Conventional Banking precautions to ensure viruses or other
• Online Complaint Tracking on NBP Web Site computer threats are not present in
• NBP Hong Kong -Core Banking System this message, however, National
• MPG Islamic banking, Direct Credit System (DCS) – NBP Bank of Pakistan , accepts
Customer Pension System no liability forany damage
• NBP-KSA Core Banking System caused by any virus
transmitted by this
ITG also provided extended support to its internal customers (all email or other
NBP groups) through continuous improvements and computer threats
enhancements in its existing systems. Some of the major and it is the sole
achievements included responsibility of
the recipient to
• Implementation of ATM Switch IRIS Release Upgrade to ensure that the
5.4.18.x message or
• SAP upgrade to the latest version (EHP 8) attachment(s)
• SAPHCM – Staff Final Settlement module, Staff Finance House are free of the
Building Finance/Motor Car Finance, SAP Utility to upload mass same."
family dependents data, MIS for Medical System

• eAudit - Audit Management System

• Advance Salary Digitalization
• Kamyaab Jawaan Loan - GoP subsidized markup posting and
accrual mechanism
• Dormant Account biometric activation for Islamic banking
• Depositors’ Protection Corporation (DPC) Status report for
Islamic banking
• NBP Cash Cards migration to IRIS ATM Switch
• IVR – Urdu and English Script for Call Center
Centralized Operations & Administration
The Group continued its journey of transformation with restructur- The bank also increased efficiencies for trade customers by launch-
ing, process reengineering and better technology solutions for ing centralized trade processing centres leveraging the implemen-
increased effectiveness and efficiency, breaking silos, adopting tation of Trade Innovation System as platform.
industry best practices, deploy controls to mitigate operational risks
and ultimately to improve customer experience. The Group continued to provide back office support to its conven-
tional partners of Retail, Corporate, Inclusive Development and
The Group structure at Head Office was reorganized into functional Digital Banking, rather it partnered with HR partners to automate
verticals of Payment Services, Branch Operations, Internal Control, and centralize staff loans and employee pension disbursements.
Service Quality & Administration.
Bank revamped its ATM transaction posting model to allow efficient
The Operations teams at Regional Offices were also reorganized in reconciliation, settlement and customer service. Bank also joined
the same spirit with Regional Service Managers supporting the 1LINK Fraud Risk Management System (FRMS) Fractals which
Regional Executives. The Technology Support for branches was augmented the immunity of the payments ecosystem by enabling
strengthened by extending the reach to all 37 Regions. suspicious activity monitoring on all electronic transactions.

The internal control function was revamped with a new structure To continue to further improve bank’s service standards, foundation
and program adding operational and strategic controls in addition for Governance and Control framework was laid down with the
to usual financial reporting controls. establishment of a Service Council.

Islamic network was brought into Centralized Account Opening With the fundamentals set in 2021, the Operations Group is well
thereby improving the quality of account opening. The Islamic aligned with industry best practices and has multiple initiatives set
network of branches was also mapped to Centralized Operations in motion enabling it to support Business Growth and Customer
Control Center for Ops Risk control and monitoring. Services in long run.
Logistics, Communications & Marketing Group
In pursuit of excellence, Engineering Division had paved the way to and its customers by introducing latest technology and gadgets
augment the expectation bars of our customer’s preferences across the network i.e. Burglar Alarm (BAS), CCTV, walk through
enabling them to experience state of the art infrastructure. Despite gates & converted branches into digitally Guarded branches. BSD
socio economic challenges like COVID 19, Engineering Division in the year 2021 floated the 1st Security & Safety Policy of the Bank,
diligently and dexterously completed two iconic projects (NBP Staff covering all possible security aspects including Physical as well as
College & Inclusive Development Centre) to upscale their work ethic digital security. In furtherance, BSD efficiently provided Protocol
which sought huge laurels from the President, Leadership, staff and Services to the Bank`s Senior Management and dignitaries while
industry. ensuring proper services in travel arrangements, Hotel reservations,
AGM arrangements, upkeep of the Bank’s Committee / Board
Along with many developmental initiatives, 54 conventional & 14 Room and Annual Business Conference arrangement. Fleet
Islamic branches, 226 Minor renovation works, more than 1000 Management system has also been implemented, having complete
ramps, around 250 RFPs and a beautiful mosque are the hallmarks details of the Bank-wide vehicles provided to the different offices &
dedicated in 2021. ED is contented, committed to build synergy Branches, along with recording maintenance expense thereof.
within all Divisions & Groups to foster endeavors and lead by exam- While in 2021 various sporting events were arranged by NBP
ple in coming years. Sports Wing compliant with all Covid SOPs i.e. National Snooker
Championship, held at NBP Sports Club, National Championship
Procurement Division faced these tasks by successfully concluding lifted by NBP. In the field of hockey, NBP earmarked the title Azadi
many critical tenders thereby maintaining the smooth operations of Cup and completed Hat-trick of securing CNS Hockey champion-
the Bank. Effective procurement helped to streamline processes, ship.
costs and identify better sources of supply- thus improving organi-
zational efficiency. During this period Procurement Division was In 2021, Strategic Marketing Division maintained and protected
revamped Pan Pakistan to improve its efficiency and working. NBP’s image, and enhanced its brand identity to showcase positive
image of the bank, counter negative publicity and any damage
Banking Service Division (BSD) is striving to provide smart support control measures. The Internal Communications Department in
services to Bank`s internal as well as external customers with ease 2021 effectively updated the employees about happenings and
in many aspects comprising, adequate supply of stationery, securi- events taking place in NBP. Our internal newsletter “NBP Newsline”
ty, Travel & Fleet, Property Management, managing NBP Sports was revamped to make it more attractive and to give it a profession-
Club/ sporting events etc. In 2021, BSD played an effective al look. The newsletter creates awareness in employees about bank
supportive role in terms of maintaining adequate inventory of progress, current affairs and its achievements. Apart from in-house
Bank’s Printed and Table Stationery. It further ensured the in-time newsletter, Internal Communications is responsible for generating
procurement and dispatch of stationery items requisitioned by the regular emails to all employees on religious/social occasions,
Bank offices/branches and recovery of its cost. Furthermore, BSD highlighting awards and significant achievements and information
remained proactive in ensuring proper Security of the Bank’s assets which needs to be shared with employees instantly.
GROWING IN NUMBERS
Enriching services you can bank on
Unconsolidated Independant Auditors’ Report 166

Financial Statement of Financial Position 172

Statements Profit and Loss Account 173

Statement of Comprehensive Income 174

The Financial Statements
and the accompanying
notes, are in compliance Statement of Changes in Equity 175
with all applicable Account-
ing Standards and are free Cash Flow Statement 176
from material misstatement.
As opined in the Independ- Notes to the Financial Statements 177
ent Auditors’ Report, these
Financial Statements pro-
vide a true and fair view of
the Bank’s performance,
financial position, changes
in equity and cash flows.

Our Auditors have

expressed their unqualified
opinion on these Financial
Statements as indicated in
their “Independent Auditors’
Report” to the shareholders.
Yousuf Adil A.F. Ferguson & Co.
Chartered Accountants Chartered Accountants
Cavish Court, KCHSU State Life Building No. 1-C
Shahrah-e-Faisal I.I Chundrigar Road
Karachi, Pakistan P.O. Box 4716
Karachi - 74000

Independent Auditor’s Report

To the members of National Bank of Pakistan
Report on the Audit of the Unconsolidated Financial Statements

Opinion

We have audited the annexed unconsolidated financial statements of National Bank of Pakistan (the Bank), which comprise the
unconsolidated statement of financial position as at December 31, 2021, and the unconsolidated profit and loss account, the
unconsolidated statement of comprehensive income, the unconsolidated statement of changes in equity and the unconsolidated
cash flow statement for the year then ended, along with unaudited certified returns received from the branches except for 80
branches which have been audited by us and notes to the unconsolidated financial statements, including a summary of
significant accounting policies and other explanatory information 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 the audit.

In our opinion and to the best of our information and according to the explanations given to us, the unconsolidated statement of
financial position, unconsolidated profit and loss account, the unconsolidated statement of comprehensive income, the
unconsolidated statement of changes in equity and the unconsolidated cash flow statement together with the notes forming part
thereof conform with the accounting and reporting standards as applicable in Pakistan, and, give the information required by the
Banking Companies Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively give
a true and fair view of the state of the Bank’s affairs as at December 31, 2021 and of the profit and other comprehensive loss, the
changes in equity and its cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Unconsolidated
Financial Statements section of our report. We are independent of the Bank in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of
Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to note 25.3.3.1 to the unconsolidated financial statements which explains the contingency in relation to the
pension obligation of the Bank. The Bank, based on the opinion of its legal counsel, is confident about a favorable outcome on
this matter and hence, no provision has been made in these unconsolidated financial statements. Our opinion is not qualified in
respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
unconsolidated financial statements of the current period. These matters were addressed in the context of our audit of the
unconsolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.

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Following are the key audit matters:

S.No. Key Audit Matter How the matter was addressed in our audit

1 Provision against advances:

(Refer notes 5.6 and 11.4 to the unconsolidated

financial statements)

The Bank makes provision against advances Our audit procedures to verify provision against domestic
extended in Pakistan on a time-based criteria advances included, amongst others, the following:
that involves ensuring that all non-performing
advances are classified in accordance with the Ÿ Obtained an understanding of the management process to
ageing criteria specified in the Prudential record provision and ensure that it is consistent with the
Regulations (PRs) issued by the State Bank of requirement of PRs; and
Pakistan (SBP). Ÿ Evaluated the design and tested the operating effectiveness
of the relevant controls established by the Bank to identify
In addition to the above time-based criteria,
loss events and for determining the extent of provisioning
the PRs require a subjective evaluation of the
required against non-performing advances.
credit worthiness of borrowers to determine
the classification of advances. We selected a sample of loan accounts and performed the
following substantive procedures to evaluate the
The PRs also require the creation of general appropriateness of specific and general provision:
provision for certain categories of advances.
Ÿ Checked credit documentation, repayments of loan / mark-
Provision against advances of overseas up instalments, tested classification of non-performing
branches is made as per the requirements of advances based on the number of days overdue;
the respective regulatory regimes.
Ÿ Evaluated the management’s assessment for classification
The Bank has recognized a net provision of a customer’s loan facilities as performing or non-
against advances amounting to Rs. 11,119 performing based on review of repayment pattern,
million in the unconsolidated profit and loss inspection of credit documentation and thorough
account in the current year. As at December discussions with the management;
31, 2021, the Bank holds a provision of Rs.
Ÿ In case of restructured loans, we reviewed the detailed
191,784 million against advances. Moreover,
documentation of restructuring including approvals, legal
the Bank has recognised a general provision opinions, terms of restructuring, payment records and any
against the underperforming portfolio on a other relevant documents to ensure that restructuring was
prudent basis. made in accordance with the PRs;
The determination of provision against Ÿ We also reviewed minutes of the meeting of credit and audit
advances based on the above criteria remains committee to identify risky exposures; and
a significant area of judgement and estimation.
Because of the significance of the impact of Ÿ We had discussions with management to challenge
these judgements / estimations and the assumptions and judgements used in recording provisions.
materiality of advances relative to the overall
We issued instructions to auditors of those overseas branches
unconsolidated financial statements of the
which were selected for audit, highlighting ‘Provision against
Bank, we considered the area of provision
advances’ as a significant risk. The auditors of those branches
against advances as a key audit matter. performed audit procedures to check compliance with
regulatory requirements and reported the results thereof to us.
We, as auditors of the Bank, evaluated the work performed by
the component auditors and the results thereof.

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S.No. Key Audit Matter How the matter was addressed in our audit

2 Valuation of listed equity shares, units of

mutual funds and term finance certificates
classified as available-for-sale

(Refer notes 5.2 and 10.1 to the unconsolidated

financial statements)

The Bank has significant investments in equity On a sample basis, we have performed the following
shares, units of mutual funds and term finance procedures:
certificates (TFCs) classified as Available for
Sale (AFS). As per the Bank’s policy, listed Ÿ each investment’s cost was compared to its market value
equity shares and units of mutual funds are wherever available to determine decline / surplus in
required to be considered for impairment when valuation;
there is a significant or prolonged decline in the
fair value of investments. Further, TFCs are Ÿ checked whether, in case of listed equity shares and units
required to be assessed for impairment as per of mutual funds classified as available for sale, impact of
the SBP’s Prudential Regulations which significant or prolonged decline was recognized
involves subjective criteria. consistently as per the policy of the Bank as disclosed in
note 5.24(c); and
The significance of the investment amount,
subjectivity involved and assumptions used in Ÿ For TFCs, checked that listed TFCs were valued as per
impairment make it significant to the the quoted prices and for unlisted TFCs, we checked that
unconsolidated financial statements. Therefore, these were valued at cost less provision. Further, on
we have considered this as a key audit matter. sample basis, TFCs were also evaluated based on
evidence of deterioration in the financial health of the
investee and repayment pattern.

3 Regulatory Matters in respect of New York

Branch

(Refer note 25.5 to the unconsolidated financial

statements)

The Bank operates a branch in New York which Our audit procedures included the following:
is licensed by the New York State Department
of Financial Services (NYSDFS) and is also Ÿ Discussed with the senior management and the Board
subject to supervision by the Federal Reserve Audit Committee to obtain their views on the status of the
Bank of New York (FRBNY). regulatory matters;

In February 2022, the Bank has reached Ÿ Reviewed relevant regulatory correspondence with State
agreements with FRBNY and NYSDFS, the US Bank of Pakistan on the compliance matters raised with
Regulators of NBP’s New York Branch. The respect to New York Branch;
agreements include fines totaling US $ 55.4
million equivalent to Rs. 9,778 million and Ÿ Reviewed the orders issued by the US Regulators in
focused on historical compliance program which fines were imposed on the Bank;
weaknesses and delays in making compliance
related enhancements. Ÿ Reviewed the minutes of meetings of the Board of
Directors in which deliberations relevant to compliance
Under the agreements, the Bank is required to matters raised by the US Regulators with respect to New
submit status and progress reports at defined York Branch took place; and
frequencies to the Regulators with respect to
the remedial measures being taken.

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S.No. Key Audit Matter How the matter was addressed in our audit

The above action taken by the US Regulators, Ÿ Evaluated the adequacy of disclosure in accordance with
including the amount of penalties imposed is a the applicable financial reporting framework.
significant event and has been considered as a
key audit matter.

Information Other than the Unconsolidated and Consolidated Financial Statements and Auditor’s Reports
Thereon

Management is responsible for the other information. The other information comprises the information included in the Annual
Report, but does not include the unconsolidated and consolidated financial statements and our auditor’s reports thereon.

Our opinion on the unconsolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.

In connection with our audit of the unconsolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the unconsolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.

Responsibilities of Management and the Board of Directors for the Unconsolidated Financial Statements

Management is responsible for the preparation and fair presentation of the unconsolidated financial statements in accordance
with accounting and reporting standards as applicable in Pakistan, the requirements of Banking Companies Ordinance, 1962 and
the Companies Act, 2017 (XIX of 2017) and for such internal control as management determines is necessary to enable the
preparation of unconsolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the unconsolidated financial statements, management is responsible for assessing the Bank’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

The Board of directors is responsible for overseeing the Bank’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Unconsolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the unconsolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in
Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these unconsolidated financial statements.

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:

Ÿ Identify and assess the risks of material misstatement of the unconsolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.

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Ÿ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in t h e
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control.

Ÿ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.

Ÿ Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the unconsolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Bank to cease to continue as a going concern.

Ÿ Evaluate the overall presentation, structure and content of the unconsolidated financial statements, including the disclosures,
and whether the unconsolidated financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.

We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide to the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the
audit of the unconsolidated financial statements of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. Based on our audit, we further report that in our opinion:

a) proper books of account have been kept by the Bank as required by the Companies Act, 2017 (XIX of 2017) and
the returns referred above from the branches have been found adequate for the purpose of our audit;

b) the unconsolidated statement of financial position, the unconsolidated profit and loss account, the unconsolidated
statement of comprehensive income, the unconsolidated statement of changes in equity and the unconsolidated
cash flow statement together with the notes thereon have been drawn up in conformity with the Banking
Companies Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of
account and returns;

c) investments made, expenditure incurred and guarantees extended during the year were in accordance with the
objects and powers of the Bank and the transactions of the Bank which have come to our notice have been within
the powers of the Bank; and

d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Bank
and deposited in the Central Zakat Fund established under section 7 of that Ordinance.

2. We confirm that for the purpose of our audit we have covered more than sixty per cent of the total loans and advances of
the Bank.

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Chartered Accountants Chartered Accountants

Other Matter

The unconsolidated financial statements of the Bank as at and for the year ended December 31, 2020 were audited by
Yousuf Adil, Chartered Accountants and Grant Thornton Anjum Rahman, Chartered Accountants, who had expressed an
unmodified opinion on those statements vide their report dated February 25, 2021.

The engagement partners on the audit resulting in this independent auditors’ report are Nadeem Yousuf Adil and Shahbaz
Akbar on behalf of Yousuf Adil and A. F. Ferguson & Co. respectively.

Yousuf Adil A. F. Ferguson & Co.

Chartered Accountants Chartered Accountants
Karachi Karachi
Dated: March 8, 2022 Dated: March 8, 2022
UDIN: AR202110091sWhlozCFY UDIN: AR202110068ZqsLDfmR2

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Unconsolidated Statement of Financial Position
As at December 31, 2021

2020 2021 2021 2020

--------- (US Dollars in '000) -------- Note (Rupees in '000)

ASSETS

1,412,128 1,579,183 Cash and balances with treasury banks 7 278,747,059 249,259,590
80,602 100,089 Balances with other banks 8 17,667,067 14,227,355
718,385 1,900,516 Lendings to financial institutions 9 335,466,675 126,804,675
8,290,573 10,980,297 Investments 10 1,938,170,642 1,463,398,076
5,570,421 6,307,690 Advances 11 1,113,392,485 983,254,527
308,268 307,351 Fixed assets 12 54,251,555 54,413,493
1,721 2,848 Intangible assets 13 502,791 303,813
37,786 37,422 Right of use assets 14 6,605,400 6,669,684
- 9,210 Deferred tax assets 15 1,625,647 -
624,293 567,976 Other assets 16 100,255,148 110,195,768
17,044,177 21,792,582 3,846,684,469 3,008,526,981

LIABILITIES

95,150 123,777 Bills payable 17 21,848,270 16,795,186

784,864 1,772,811 Borrowings 18 312,925,106 138,539,005
13,704,144 17,104,386 Deposits and other accounts 19 3,019,155,045 2,418,966,479
42,681 44,722 Lease liability against right of use assets 20 7,893,960 7,533,691
16,873 - Deferred tax liabilities 15 - 2,978,364
884,666 1,125,464 Other liabilities 21 198,659,523 156,155,514
15,528,378 20,171,160 3,560,481,904 2,740,968,239

1,515,799 1,621,422 NET ASSETS 286,202,565 267,558,742

REPRESENTED BY

120,530 120,530 Share capital 22 21,275,131 21,275,131

320,445 342,022 Reserves 23 60,371,495 56,562,933
417,528 365,310 Surplus on revaluation of assets 24 64,482,122 73,699,344
657,296 793,560 Unappropriated profit 140,073,817 116,021,334
1,515,799 1,621,422 286,202,565 267,558,742

CONTINGENCIES AND COMMITMENTS 25

The annexed notes 1 to 51 and annexures I and II form an integral part of these unconsolidated financial statements.

Zubyr Soomro Arif Usmani Abdul Wahid Sethi Asif Jooma Ahsan Ali Chughtai
Chairman President & CEO Chief Financial Officer Director Director

172
Unconsolidated Profit and Loss Account
For the year ended December 31, 2021

2020 2021 2021 2020

--------- (US Dollars in '000) -------- Note (Rupees in '000)

1,460,574 1,313,683 Mark-up / return / interest earned 26 231,882,702 257,811,015

870,505 760,649 Mark-up / return / interest expensed 27 134,264,896 153,655,908
590,069 553,034 Net mark-up / interest income 97,617,806 104,155,107

NON MARK-UP / INTEREST INCOME

103,412 100,864 Fee and commission income 28 17,803,801 18,253,547

10,771 26,030 Dividend income 4,594,593 1,901,168
23,077 36,885 Foreign exchange income 6,510,668 4,073,396
44,674 35,059 Gain on securities - net 29 6,188,319 7,885,503
22,453 10,448 Other income 30 1,844,236 3,963,294
204,387 209,286 Total non-mark-up / interest income 36,941,617 36,076,908

794,456 762,320 Total income 134,559,423 140,232,015

NON MARK-UP / INTEREST EXPENSES

355,761 337,976 Operating expenses 31 59,657,321 62,796,623

1,786 1,963 Other charges 32 346,463 315,307
357,547 339,939 Total non-markup / interest expenses 60,003,784 63,111,930

436,909 422,381 Profit before provisions 74,555,639 77,120,085

175,034 67,510 Provisions and write offs - net 33 11,916,383 30,895,938
- 55,400 Extra ordinary item 25.5 9,778,848 -
261,875 299,471 PROFIT BEFORE TAXATION 52,860,408 46,224,147

88,748 140,796 Taxation 34 24,852,420 15,665,228

173,127 158,675 PROFIT AFTER TAXATION 28,007,988 30,558,919

------------- (US Dollars) ------------ -------------- (Rupees) --------------

0.08 0.07 Basic earnings per share 35 13.16 14.36

0.08 0.07 Diluted earnings per share 36 13.16 14.36

The annexed notes 1 to 51 and annexures I and II form an integral part of these unconsolidated financial statements.

Zubyr Soomro Arif Usmani Abdul Wahid Sethi Asif Jooma Ahsan Ali Chughtai
Chairman President & CEO Chief Financial Officer Director Director

173
Unconsolidated Statement of Comprehensive Income
For the year ended December 31, 2021

2020 2021 2021 2020

------ (US Dollars in '000) ----- (Rupees in '000)

173,127 158,675 Profit after taxation for the year 28,007,988 30,558,919

Other comprehensive income

Items that may be reclassified to profit and loss account

in subsequent periods:

6,789 5,709 Exchange gain on translation of net assets of foreign branches 1,007,763 1,198,299
16,101 (48,795) Movement in surplus on revaluation of investments - net of tax (8,613,053) 2,842,019
22,890 (43,086) (7,605,290) 4,040,318

Items that will not be reclassified to profit and loss account

in subsequent periods:

(2,821) (7,721) Remeasurement loss on defined benefit obligations - net of tax (1,362,794) (497,972)
3,566 (2,803) Movement in surplus on revaluation of operating fixed assets - net of tax (494,741) 629,407
1,214 559 Movement in surplus on revaluation of non-banking assets - net of tax 98,660 214,238
1,959 (9,965) (1,758,875) 345,673
197,976 105,624 Total comprehensive income 18,643,823 34,944,910

The annexed notes 1 to 51 and annexures I and II form an integral part of these unconsolidated financial statements.

Zubyr Soomro Arif Usmani Abdul Wahid Sethi Asif Jooma Ahsan Ali Chughtai
Chairman President & CEO Chief Financial Officer Director Director

174
 Reserves Surplus on revaluation of assets
Share General Revenue Fixed / non- Unappropriated
Exchange Statutory Merger Total
capital loan loss general Total Investments banking Total profit
translation reserve reserve
reserve reserve assets

Balances as at December 31, 2019 21,275,131 10,371,792 33,071,810 343,802 8,000,000 521,338 52,308,742 25,659,252 44,584,808 70,244,060 88,785,900 232,613,833

Profit after taxation for the year ended

December 31, 2020 - - - - - - - - - - 30,558,919 30,558,919
Other comprehensive income - net of tax - 1,198,299 - - - - 1,198,299 2,842,018 843,645 3,685,663 (497,972) 4,385,990
Transfer to statutory reserve - - 3,055,892 - - - 3,055,892 - - - (3,055,892) -
Transfer from loan loss reserve to
unappropriated profit - - - - - - - - - - - -
Transfer from surplus on revaluation of
assets to unappropriated profit - net of tax - - - - - - - - (230,379) (230,379) 230,379 -

Transactions with owners, recorded

directly in equity

Cash dividend paid (Rs. Nil per share) - - - - - - - - - - - -

For the year ended December 31, 2021

Balance as at December 31, 2020 21,275,131 11,570,091 36,127,702 343,802 8,000,000 521,338 56,562,933 28,501,270 45,198,074 73,699,344 116,021,334 267,558,742

Profit after taxation for the year ended

December 31, 2021 - - - - - - - - - - 28,007,988 28,007,988
Other comprehensive income - net of tax - 1,007,763 - - - - 1,007,763 (8,613,053) (396,081) (9,009,134) (1,362,794) (9,364,165)
Transfer to statutory reserve - - 2,800,799 - - - 2,800,799 - - - (2,800,799) -
Transfer from surplus on revaluation of
assets to unappropriated profit - net of tax - - - - - - - - (208,088) (208,088) 208,088 -

Transactions with owners, recorded

directly in equity

Cash dividend paid (Rs. Nil per share) - - - - - - - - - - - -

Unconsolidated Statement of Changes in Equity

Balance as at December 31, 2021 21,275,131 12,577,854 38,928,501 343,802 8,000,000 521,338 60,371,495 19,888,217 44,593,905 64,482,122 140,073,817 286,202,565

The annexed notes 1 to 51 and annexures I and II form an integral part of these unconsolidated financial statements.

Zubyr Soomro Arif Usmani Abdul Wahid Sethi Asif Jooma Ahsan Ali Chughtai

175
Chairman President & CEO Chief Financial Officer Director Director
Unconsolidated Cash Flow Statement
For the year ended December 31, 2021

2020 2021 2021 2020

---- (US Dollars in '000) ---- Note (Rupees in '000)

CASH FLOW FROM OPERATING ACTIVITIES

261,875 299,471 Profit before taxation 52,860,408 46,224,147

(10,771) (26,030) Less: Dividend income (4,594,593) (1,901,168)
251,104 273,441 48,265,815 44,322,979
Adjustments:

24,647 25,039 Depreciation 4,419,746 4,350,604

1,195 1,923 Amortization 339,382 210,961
175,034 67,510 Provision and write-offs 33 11,916,383 30,895,938
(61) (357) Gain on sale of fixed assets (62,945) (10,775)
4,447 4,606 Finance charges on leased assets 812,964 785,032
Unrealized loss / (gain) on revaluation of investments
(12) 684 classified as held-for-trading 120,675 (2,074)
41,880 41,960 Charge for defined benefit plans - net 7,406,457 7,392,388
247,130 141,365 24,952,662 43,622,074
498,234 414,806 73,218,477 87,945,053
(Increase) / decrease in operating assets

53,681 (1,074,666) Lendings to financial institutions (189,693,077) 9,475,335

(343,109) (130,763) Held-for-trading securities (23,081,441) (60,563,416)
(33,534) (824,782) Advances (145,585,209) (5,919,170)
281,309 38,629 Other assets (excluding advance taxation) 6,818,552 49,654,870
(41,653) (1,991,582) (351,541,175) (7,352,381)
Increase / (decrease) in operating liabilities

(17,405) 28,627 Bills payable 5,053,084 (3,072,238)

(1,665,491) 745,737 Borrowings 131,632,640 (293,981,639)
1,251,560 3,400,242 Deposits and other accounts 600,188,566 220,917,198
(184,199) 218,290 Other liabilities 38,531,195 (32,513,646)
(615,535) 4,392,896 775,405,485 (108,650,325)
(4,447) (4,606) Financial charges paid (812,964) (785,032)
(120,157) (127,669) Income tax adjusted / paid 16.6 (22,535,380) (21,209,420)
(10,297) (17,178) Benefits paid (3,032,126) (1,817,492)
(293,855) 2,666,667 Net cash flow generated from / (used in) operating activities 470,702,317 (51,869,597)

CASH FLOW FROM INVESTING ACTIVITIES

(449,983) (1,736,053) Net investments in available-for-sale securities (306,436,769) (79,428,088)

740,156 (890,368) Net investments in held-to-maturity securities (157,162,049) 130,647,453
10,771 26,030 Dividends received 4,594,593 1,901,168
(11,144) (10,698) Investments in operating fixed assets (1,888,345) (1,967,003)
276 562 Proceeds from sale of operating fixed assets 99,147 48,771
6,789 9,559 Effect of translation of net investment in foreign branches 1,687,352 1,198,299
296,865 (2,600,968) Net cash flow (used in) / generated from investing activities (459,106,071) 52,400,600

CASH FLOW FROM FINANCING ACTIVITIES

(11,559) (13,880) Payments of lease obligations 37.1 (2,450,084) (2,040,384)

(7) (20) Dividend paid (3,519) (1,152)
- -
(11,566) (13,900) Net cash flow used in financing activities (2,453,603) (2,041,536)
(8,556) 51,799 Increase / (decrease) in cash and cash equivalents 9,142,643 (1,510,533)
1,494,244 1,485,686 Cash and cash equivalents at beginning of the year 262,243,717 263,754,250
1,485,688 1,537,485 Cash and cash equivalents at end of the year 37 271,386,360 262,243,717

The annexed notes 1 to 51 and annexures I and II form an integral part of these unconsolidated financial statements.

Zubyr Soomro Arif Usmani Abdul Wahid Sethi Asif Jooma Ahsan Ali Chughtai
Chairman President & CEO Chief Financial Officer Director Director

176
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

1. STATUS AND NATURE OF BUSINESS

National Bank of Pakistan (the Bank) was incorporated in Pakistan under the National Bank of Pakistan Ordinance, 1949
and is listed on the Pakistan Stock Exchange (PSX). Its registered and head office is situated at I.I. Chundrigar Road,
Karachi. The Bank is engaged in providing commercial banking and related services in Pakistan and overseas. The Bank
also handles treasury transactions for the Government of Pakistan (GoP) as an agent to the State Bank of Pakistan (SBP).
The Bank operates 1,513 (2020: 1,514) branches in Pakistan including 189 (2020: 191) Islamic Banking branches and 19
(2020: 21) overseas branches (including the Export Processing Zone branch, Karachi). The Bank also provides services in
respect of Endowment Fund for students loan scheme.

2. BASIS OF PRESENTATION

2.1 In accordance with the directives of the Federal Government of Pakistan regarding shifting of banking system to Islamic
modes, the SBP has issued various circulars from time to time. Permissible form of trade related mode of financing
includes 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 purchases and sales arising under these arrangements are not reflected in these
unconsolidated financial statements as such but are restricted to the amount of facility actually utilized and the
appropriate portion of mark-up thereon.

Key financial figures of the Islamic banking branches of the Bank have been disclosed in annexure II of these
unconsolidated financial statements.

2.2 These are the unconsolidated financial statements of the Bank in which the investments in subsidiaries, associates and
joint ventures are stated at cost and have not been accounted for on the basis of reported results and net assets of the
investees which are done in the consolidated financial statements.

2.3 The US Dollar amounts shown on the statement of financial position, profit and loss account, statement of comprehensive
income and cash flow statement are stated as additional information solely for the convenience of readers. For the
purpose of conversion to US Dollars, the rate of Rs. 176.5135 to 1 US Dollar has been used for 2021 and 2020 as it was
the prevalent rate as on December 31, 2021.

3. STATEMENT OF COMPLIANCE

3.1 These unconsolidated financial statements have been prepared in accordance with the accounting and reporting
standards as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of:

- International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB)
as notified under the Companies Act, 2017;

- Islamic Financial Accounting Standards (IFAS), issued by the Institute of Chartered Accountants of Pakistan as
notified under the Companies Act, 2017;

- Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017;
and

- Directives issued by the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan
(SECP).

Where the requirements of the Banking Companies Ordinance, 1962, the Companies Acts, 2017, or the directives issued
by the SBP and the SECP differ with the requirements of IFRS or IFAS, the requirements of the Banking Companies
Ordinance, 1962, the Companies Act, 2017 and the said directives shall prevail.

3.2 SBP has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments: Recognition and
Measurement' and IAS 40, 'Investment Property' for Banking Companies through BSD Circular Letter No. 10 dated August
26, 2002. Further, according to the notification of SECP dated April 28, 2008, the IFRS - 7 "Financial Instruments:
Disclosures" has not been made applicable for banks. Accordingly, the requirements of these standards have not been
considered in the preparation of these unconsolidated financial statements. However, investments have been classified
and valued in accordance with the requirements of various circulars issued by the SBP.

3.3 The SECP vide SRO 56 (1) / 2016 dated January 28, 2016, has notified that the requirements of IFRS 10 (Consolidated

177
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

Financial Statements) and section 228 of the Companies Act, 2017 will not be applicable with respect to the investment in
mutual funds established under trust structure.

3.4 Application of new and revised International Financial Reporting Standards (IFRSs)

3.4.1 New accounting standards, amendments and IFRS interpretations that are effective for the year ended December 31,
2021

The following standards, amendments and interpretations are effective for the year ended December 31, 2021. These
standards, amendments and interpretations are either not relevant to the Bank's operations or are not expected to have
significant impact on the Bank's unconsolidated financial statements other than certain additional disclosures:

- Amendment to IFRS 16 'Leases' - Covid-19 related rent concessions. Effective from accounting period beginning
on or after June 01, 2020.

- Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16). Effective
from accounting period beginning on or after January 01, 2021.

Certain annual improvements have also been made to a number of IFRSs.

3.4.2 New accounting standards, amendments and IFRS interpretations that are not yet effective

The following standards, amendments and interpretations are only effective for accounting periods, beginning on or after
the date mentioned against each of them. These standards, interpretations and amendments are either not relevant to the
Bank's operations or are not expected to have significant impact on the Bank's unconsolidated financial statements other
than certain additional disclosures:
Effective from accounting period
beginning on or after

Amendments to IFRS 3 'Business Combinations' - Reference to the conceptual

January 01, 2022
framework

Amendments to IAS 16 'Property, Plant and Equipment' - Proceeds before intended

January 01, 2022
use

Amendments to IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' -

January 01, 2022
Onerous Contracts — cost of fulfilling a contract

International Financial Reporting Standard - 9 "Financial Instruments” January 01, 2022

Annual Improvements to IFRS Standards 2018-2020 Cycle (related to IFRS 9, IFRS 16

January 01, 2022
and IAS 41)

Amendments to IAS 1 'Presentation of Financial Statements' - Classification of

January 01, 2023
liabilities as current or non-current

Amendments to IAS 1 'Presentation of Financial Statements' - Disclosure of accounting

January 01, 2023
policies

Amendments to IAS 8 'Accounting Policies, Changes in Accounting Estimates and

January 01, 2023
Errors' - Definition of accounting estimates

Amendments to 'IAS 12 Income Taxes' - deferred tax related to assets and liabilities
January 01, 2023
arising from a single transaction.

Amendments to IFRS 10 and 28 - Sale or Contribution of Assets between an Investor

Deferred indefinitely
and its Associate or Joint Venture

178
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

There are certain new and amended standards and interpretations that are mandatory for the Bank's accounting periods
beginning on or after January 1, 2021 but are considered not to be relevant or do not have any significant effect on the
Bank's operations and are therefore not detailed in these unconsolidated financial statements.

3.4.3 As per SBP’s BPRD Circular Letter no. 24 of 2021, IFRS 9 ‘Financial Instruments’ is applicable to banks in Pakistan
effective January 1, 2022. The aforementioned circular letter required banks to submit IFRS 9 compatible pro forma
financial statements for the year ended December 31, 2021 and perform parallel run of IFRS 9 on quarterly basis. Further,
it was stated that final instructions will be issued subsequently based on the results of parallel reporting of banks.

The Banks in Pakistan through the Pakistan Banks Association (PBA) have submitted their comments on instructions
issued for parallel reporting and requested that those are addressed in the final instructions to be issued. The matters
raised include retaining some relaxations given presently in the Prudential Regulations, prescription of macro-economic
variables, retaining local regulatory requirements pertaining to IFRS 9 related areas on overseas branches, impact on
Capital Adequacy Ratio (CAR), guidance on Significant Increase in Credit Risk (SICR) criteria, future tax impacts of any
reversals, recording of Expected Credit Loss (ECL) on Government securities denominated in local currency, including
further clarifications required in certain areas.

Due to the fact that final instructions have not yet been issued and there are a large number of reservations on the draft
instructions, the banks are collectively of the opinion that impact on initial application of IFRS 9 cannot be determined as
at December 31, 2021.

3.4.4 Other than the aforesaid standards, interpretations and amendments, the International Accounting Standards Board (IASB)
has also issued the following standards which have not been adopted locally by the Securities and Exchange Commission
of Pakistan:

- IFRS 1 – First Time Adoption of International Financial Reporting Standards

- IFRS 17 – Insurance Contracts

3.4.5 The management anticipates that these new standards, interpretations and amendments will be adopted in the Bank’s
unconsolidated financial statements as and when they are applicable and adoption of these new standards, interpretations
and amendments, may have no material impact on these unconsolidated financial statements of the Bank in the period of
initial application.

4. BASIS OF MEASUREMENT

These unconsolidated financial statements have been prepared under the historical cost convention except for revaluation
of land and buildings and non-banking assets acquired in satisfaction of claims which are stated at revalued amount and
certain investments and derivative financial instruments that are carried at fair value. In addition, obligations in respect of
defined benefit plan are carried at present value.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policy adopted in preparation of these unconsolidated financial statements are consistent with those of
the previous financial year.

5.1 Cash and cash equivalents

Cash and cash equivalents include cash and balances with treasury banks, balances with other banks and call money
lendings, less call borrowings and overdrawn nostro accounts.

5.2 Investments

Investments other than those categorised as held-for-trading are initially recognised at fair value which includes
transaction costs associated with the investments. Investments classified as held-for-trading are initially recognised at fair
value, and transaction costs are expensed in the profit and loss account.

179
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

All regular way purchases / sales of investments are recognised on the trade date, i.e., the date the Bank commits to
purchase / sell the investments. Regular way purchases or sales of investments require delivery of securities within the
time frame generally established by regulation or convention in the market place.

The Bank has classified its investment portfolio, except for investments in subsidiaries, associates and joint ventures into
‘held-for-trading’, ‘held-to-maturity’ and ‘available-for-sale’ as follows:

- Held-for-trading – These are securities which are acquired with the intention to trade by taking advantage of short-
term market / interest rate movements and are to be sold within ninety (90) days. These are carried at market value,
with the related unrealised gain / (loss) on revaluation being taken to profit and loss account.

- Held-to-maturity – These are securities with fixed or determinable payments and fixed maturity that are held with
the intention and ability to hold to maturity. These are carried at amortised cost.

- Available-for-sale – These are investments that do not fall under the held-for-trading or held-to-maturity categories.
These are carried at market value except in case of unquoted securities where market value is not available, which
are carried at cost less provision for diminution in value, if any. Surplus / (deficit) on revaluation is taken to ‘surplus /
(deficit) on revaluation of assets’ account shown in equity. Provision for diminution in value of investments in
respect of unquoted shares is calculated with reference to break-up value of the same. On derecognition or
impairment in quoted available-for-sale investments, the cumulative gain or loss previously reported as 'surplus /
(deficit) on revaluation of assets' in equity is included in the profit and loss account for the year.

- Provision for diminution in value of investments in unquoted debt securities is calculated as per the SBP's
Prudential Regulations.

- Held-for-trading and quoted available-for-sale securities are marked to market with reference to ready quotes on
Reuters page or MUFAP (PKRV/ PKISRV) or the Stock Exchanges, as the case may be.

- Investments in subsidiaries, associates and joint venture companies are stated at cost. Provision is made for
impairment in value, if any.

5.3 Repurchase and resale agreements

Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue to be recognised
in the statement of financial position and are measured in accordance with accounting policies for investment securities.
The counterparty liability for amounts received under these agreements is included in borrowings. The difference between
sale and repurchase price is treated as mark-up / return / interest expense and accrued over the life of the repo agreement
using effective yield method.

Securities purchased with a corresponding commitment to resell at a specified future date (reverse repos) are not
recognised in the statement of financial position, as the Bank does not obtain control over the securities. Amounts paid
under these agreements are included in lendings to financial institutions. The difference between purchase and resale
price is treated as mark-up / return / interest income and accrued over the life of the reverse repo agreement using
effective yield method.

5.4 Derivative financial instruments

Derivative financial instruments are initially recognised at fair value on the dates on which the derivative contracts are
entered into and are subsequently re-measured at fair value using appropriate valuation techniques. All derivative financial
instruments are carried as assets when fair value is positive and liabilities when fair value is negative. Any change in the
fair value of derivative instruments during the year is taken to the profit and loss account.

180
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

5.5 Financial instruments

All financial assets and financial liabilities are recognised at the time when the Bank becomes a party to the contractual
provisions of the instrument. A financial asset is derecognised where (a) the rights to receive cash flows from the asset
have expired; or (b) the Bank has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and
either (i) the Bank has transferred substantially all the risks and rewards of the asset, or (ii) the Bank has neither transferred
nor retained substantially all the risk and rewards of the asset, but has transferred control of the asset. A financial liability is
derecognised when the obligation under the liability is discharged or cancelled or expires. Any gain or loss on
derecognition of the financial assets and financial liabilities is taken to profit and loss account.

5.6 Advances

Advances are stated net of specific and general provisions. Provisions are made in accordance with the requirements of
Prudential Regulations issued by the SBP and charged to the profit and loss account. These regulations prescribe a time
based criteria (as supplemented by subjective evaluation of advances by the banks) for classification of non-performing
loans and advances and computing provision there against. Such regulations also require the Bank to maintain general
provision against consumer and SME advances at specified percentage of such portfolio. General provision for loan losses
of overseas branches is made as per the requirements of the respective central banks. Advances are written off where
there are no realistic prospects of recovery. The amounts so written off is a book entry and does not necessarily prejudice
the Bank's right of recovery against the customers. The Bank determines write-offs in accordance with the criteria as
prescribed by SBP vide BPRD circular no. 06 dated June 05, 2007.

5.6.1 Islamic financing and related assets

Under Murabaha financing, funds disbursed for the purchase of goods are recorded as advance against Murabaha finance
and the financing is recorded at the deferred sale price. Goods purchased but remaining unsold at the statement of
financial position date are recorded as inventories.

Assets given on Ijarah are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Ijarah
assets are depreciated on a reducing balance basis over the term of the Ijarah after taking into account the estimated
residual value. Impairment of Ijarah assets is recognised in line with the Prudential Regulations or upon the occurrence of
an impairment event which indicates that the carrying value of the Ijarah asset may exceed its recoverable amount.

In Running Musharakah, the Bank and the customer enter into a Musharakah agreement where the Bank agrees to finance
the operating activities of the customer's business and share in the profit or loss in proportion to an agreed ratio at an
agreed frequency.

Under Diminishing Musharakah financing, the Bank creates joint ownership with the customer over the tangible assets to
fulfill capital expenditure / project requirements. The Bank receives periodic payments from the customer against the
gradual transfer of its share of ownership to the customer.

In Istisna transactions, the Bank finances the cost of goods manufactured by the customer. Once the goods are
manufactured, these are sold by the customer as an agent of the Bank to recover the cost plus the agreed profit.

Under Tijarah, the Bank purchases the finished goods from the customer against payment, takes possession and appoint
customer as an agent to sell these goods to ultimate buyer on deferred payment basis. Profit is recognized on accrual
basis over the period of transaction.

Wakalah is an agency contract in which Bank provides funds to the customer who invests it in a Shariah compliant
manner.

In Musawamah financing, the Bank purchases the goods and after taking the possession, sells them to the customer
either in spot or credit transaction, without disclosing the cost.

181
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

5.7 Fixed assets and depreciation

5.7.1 Property and equipment

5.7.1.1 Owned assets

Property and equipment, except land and buildings, are stated at cost less accumulated depreciation and accumulated
impairment losses, if any. Land is stated at revalued amount. Buildings are stated at revalued amount less accumulated
depreciation and impairment, if any. The cost and the accumulated depreciation of property and equipment of foreign
branches include exchange differences arising on currency translation at the year-end rates. Depreciation is charged to
profit and loss account applying the straight line method except buildings, which are depreciated on diminishing balance
method at the rates stated in note 12.2. Depreciation on addition is charged from the month in which the assets are
available for use and no depreciation is charged in the month the assets are disposed off.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item
can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are
charged to the profit and loss account during the period in which they are incurred.

Assets are derecognised when disposed off or when no future economic benefits are expected from its use or disposal.
Gains and losses on disposal of property and equipment are included in profit and loss account.

The assets' residual values and useful lives are reviewed annually, and adjusted if appropriate, at statement of financial
position date.

Land and buildings' valuations are carried out by professionally qualified valuers with sufficient regularity to ensure that
their carrying amounts do not differ materially from their fair value.

- Any revaluation increase arising on the revaluation of such assets is recognised in the statement of comprehensive
income and accumulated in equity, except to the extent that it reverses a revaluation decrease for the same asset
previously recognised in profit and loss account, in which case the increase is credited to profit and loss account to
the extent of the decrease previously expensed. A decrease in the carrying amount arising on the revaluation of
such assets is recognised in profit and loss account to the extent that it exceeds the balance, if any, held in
“Surplus on Revaluation of Fixed Assets” relating to a previous revaluation of that asset.

- Depreciation on assets which are revalued is determined with reference to the value assigned to such assets on
revaluation and depreciation charge for the year is taken to the profit and loss account.

- An amount equal to incremental depreciation for the year net of associated deferred tax is transferred from
“Surplus on Revaluation of Fixed Assets” to unappropriated profit through statement of changes in equity to record
realization of surplus to the extent of the incremental depreciation charge for the year.

- On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus remaining in the
revaluation reserve is transferred directly to unappropriated profit.

5.7.2 Capital work-in-progress

Capital work-in-progress is stated at cost less accumulated impairment losses, if any. These are transferred to specific
assets as and when assets are available for use.

5.7.3 Impairment

The carrying values of fixed assets are reviewed for impairment when events or changes in circumstances indicate that the
carrying values may not be recoverable. If any such indication exists and where the carrying values exceed the estimated
recoverable amounts, fixed assets are written down to their recoverable amounts.

182
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

The resulting impairment loss is taken to profit and loss account except for impairment loss on revalued assets which is
adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on
revaluation of assets. Where impairment loss subsequently reverses, the carrying amount of the asset is increased to the
revised recoverable amount but limited to the extent of the amount which would have been determined had there been no
impairment. Reversal of impairment loss is recognised as income in profit and loss account.

5.8 Lease liability and right-of-use assets

The lease liabilities are initially measured at the present value of lease payments that includes:

- fixed payments (including in-substance fixed payments), less any lease incentives receivable;

- variable lease payment that are based on an index or a rate as at the commencement date;

- amounts expected to be payable by the lessee under residual value guarantees, if any;

- the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

- payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are to be discounted using the incremental borrowing rate being the rate that the Bank would have to
pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms
and conditions.

On initial recognition, right-of-use assets are measured at cost comprising the following:

- the amount of the initial measurement of lease liability;

- any lease payments made at or before the commencement date less any lease incentives received;

- any initial direct costs incurred; and

- an estimate of restoration costs.

The Bank leases various offices / branches for the purpose of its operational activities. Rental contracts are typically made
for fixed periods of 3 to 10 years. Lease terms are negotiated on an individual basis and contain a wide range of different
terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security
for borrowing purposes.

5.9 Intangible assets

Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses, if any. The cost
and the accumulated amortisation of intangible assets of foreign branches include exchange differences arising on
currency translation at the year-end rates. Amortisation is charged to profit and loss account applying the straight-line
method at the rates stated in note 13. Amortisation on addition is charged from the month in which the assets are
available for use and no amortisation is charged in the month the intangible assets are disposed off. The estimated useful
life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis.

5.10 Non-banking assets acquired in satisfaction of claims

In accordance with the requirements of the 'Regulations for Debt Property Swap' (the regulations) issued by SBP vide its
BPRD Circular No. 1 of 2016, dated January 1, 2016, the non-banking assets acquired in satisfaction of claims are carried
at revalued amounts less accumulated depreciation. These assets are revalued by professionally qualified valuers with
sufficient regularity to ensure that their net carrying value does not differ materially from their fair value. A surplus arising
on revaluation is credited to the 'surplus on revaluation of assets' account and any deficit arising on revaluation is taken to

183
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

the profit and loss account directly. Legal fees, transfer costs and direct costs of acquiring title to property is charged to
profit and loss account and not capitalized. Depreciation on non-banking assets acquired in satisfaction of claims is
charged to the profit and loss account on the same basis as depreciation charged on the Bank's owned fixed assets.

5.11 Deposits and their cost

Deposits are recorded at the fair value of proceeds received.

Deposit costs are recognised as an expense in the period in which these are incurred using effective yield method.

5.12 Taxation

5.12.1 Current

Provision of current taxation is based on taxable income for the year determined in accordance with the prevailing laws of
taxation on income earned for local as well as foreign operations, as applicable to the respective jurisdictions. The charge
for the current tax also includes adjustments wherever considered necessary relating to prior years, arising from
assessments framed during the year.

5.12.2 Deferred

Deferred tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, to the extent that it is
probable that taxable profits will be available against which the deductible temporary differences and unused tax losses
can be utilized. Deferred tax is not recognised on differences relating to investment in subsidiaries and branches to the
extent the deductible temporary difference probably will not reverse in the foreseeable future.

The carrying amount of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit or deductible temporary differences will be available to allow all or part of the
deferred income tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date.

Deferred tax relating to gain / loss recognised on surplus on revaluation of assets is charged / credited to such account.

5.13 Employee benefits

5.13.1 Defined benefit plans

The Bank operates an approved funded pension scheme, an un-funded post retirement medical benefits scheme and an
un-funded benevolent scheme for its eligible employees. The Bank also operates an un-funded gratuity scheme for its
eligible contractual employees. An actuarial valuation of all defined benefit schemes is conducted every year. The
valuation uses the Projected Unit Credit method. Remeasurements of the net defined benefit liability / assets which
comprise actuarial gains and losses, return on plan assets (excluding interest) and the effect of asset ceiling (if any,
excluding interest) are recognised immediately in other comprehensive income. Past-service costs are recognised
immediately in profit and loss account when the plan amendment occurs.

5.13.2 Other employee benefits

Employees' compensated absences

The Bank also makes provision in the financial statements for its liability towards compensated absences. This liability is
estimated on the basis of actuarial advice under the Projected Unit Credit method.

184
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

5.14 Revenue recognition

Income on loans and advances and debt security investments are recognised on a time proportion basis that takes into
account effective yield on the asset. In case of advances and investments classified under the Prudential Regulations,
interest / mark-up is recognised on receipt basis.

Interest / mark-up on rescheduled / restructured advances and investments is recognized in accordance with the
Prudential Regulations issued by SBP.

Fee, brokerage and commission income other than commission on letter of credit and guarantees is recognised upon
performance of services.

Commission on letters of credit and guarantees is recognized on time proportion basis.

Dividend income on equity investments and mutual funds is recognised when right to receive is established.

Premium or discount on debt securities classified as held-for-trading, available-for-sale and held-to-maturity securities is
amortised using the effective interest method and taken to profit and loss account.

Gains and losses on disposal of investments and fixed assets are dealt with through the profit and loss account in the year
in which they arise.

Income from lease financing is accounted for using the financing method. Under this method, the unearned lease income
(defined as the sum of total lease rentals and estimated residual value less the cost of the leased assets) is deferred and
taken to income over the term of the lease so as to produce a constant periodic rate of return on the outstanding net
investment in the lease. Gains or losses on termination of lease contracts are recognised through the profit and loss
account when these are realised. Unrealised lease income and other fees on classified leases are recognised on a receipt
basis.

5.15 Net investment in finance lease

Leases where the bank transfers substantially all the risk and rewards incidental to ownership of the assets to the lessee
are classified as finance leases. Net investment in finance lease is recognised at an amount equal to the aggregate of
present value of minimum lease payment including any guaranteed residual value and excluding unearned finance income,
write-offs and provision for doubtful lease finances, if any.

5.16 Foreign currencies translation

The Bank's financial statements are presented in Pak Rupees (Rs.) which is the Bank's functional and presentation
currency.

Foreign currency transactions are converted into Rupees applying the exchange rate at the date of the respective
transactions. Monetary assets and liabilities in foreign currencies and assets / liabilities of foreign branches are translated
into Rupees at the rates of exchange prevailing at the statement of financial position date. Forward foreign exchange
contracts are valued at the rates applicable to their respective maturities. All gains or losses on dealing in foreign
currencies are taken to the profit and loss account.

Profit and loss account balances of foreign branches are translated at average exchange rate prevailing during the year.
Gains and losses on translation are included in the profit and loss account except gains / losses arising on translation of
net assets of foreign branches, which is credited to the statement of comprehensive income.

Statement of financial position balances of foreign branches are translated at exchange rate prevailing at balance sheet
date. Gains and losses on translation are included in the profit and loss account except gains / losses arising on
translation of net assets of foreign branches, which is credited to the statement of comprehensive income.

185
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

Commitments for outstanding forward foreign exchange contracts are disclosed in these unconsolidated financial
statements at committed amounts. Contingent liabilities / commitments for letters of credit and letters of guarantee
denominated in foreign currencies are expressed in Rupee terms at the rates of exchange prevailing at the statement of
financial position date.

5.17 Provision for off balance sheet obligations

Provision for guarantees, claims and other off balance sheet obligations is made when the Bank has legal or constructive
obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and
a reliable estimate of amount can be made. Charge to profit and loss account is stated net of expected recoveries.

5.18 Off setting

Financial assets and financial liabilities are only set off and the net amount is reported in the unconsolidated financial
statements when there is a legally enforceable right to set off and the Bank intends either to settle on a net basis, or to
realise the assets and to settle the liabilities simultaneously.

5.19 Fiduciary assets

Assets held in a fiduciary capacity are not treated as assets of the Bank in the statement of financial position.

5.20 Dividend and other appropriations

Dividend and other appropriation to reserves, except appropriations which are required by the law, are recognised in the
Bank's unconsolidated financial statements in the year in which these are approved.

5.21 Earnings per share

The Bank presents basic and diluted earnings per share (EPS) for its shareholders. Basic EPS is calculated by dividing the
profit or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares
outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, if
any. There were no dilutive potential ordinary shares in issue at December 31, 2021.

5.22 Bai Muajjal

Bai Muajjal transactions represent sales of Sukuks on a deferred payment basis and are shown in lendings to financial
institutions except for transactions undertaken directly with the Government of Pakistan which are disclosed as
investments.

The difference between the deferred payment amount receivable and the carrying value at the time of sale is accrued and
recorded as income over the life of the transaction.

5.23 Segment reporting

A segment is a distinguishable component of the Bank that is subject to risks and rewards that are different from those of
other segments. A business segment is one that is engaged either in providing certain products or services, where as a
geographical segment is one engaged in providing certain products or services within a particular economic environment.
Segment information is presented as per the Bank’s functional and management reporting structure.

During the year the Bank changes its organizational structure in a manner that causes the composition of its reportable
segments to change, and accordingly the prior year disclosure is restated to reflect the current reportable segments in
note 43.

186
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

Business segments

The Bank's primary segment reporting is based on following business segments:

I. Retail Banking Group includes retail lending and deposits, banking services, cards and branchless banking.

II. Inclusive Development Group consists of loans to individuals, agriculture, SME, commodity and commercial
customers.

III. Corporate and Investment Banking segment offers a wide range of financial services to medium and large sized
public and private sector entities. These services include, providing and arranging tenured financing, corporate
advisory, underwriting, cash management, trade products, corporate finance products and customer services.

IV. Treasury includes fixed income, equity, foreign exchange, credit, funding, own position securities, lendings and
borrowings and derivatives for hedging and market making.

V. International Financial Institution and Remittance segment includes the results of all international branches,
correspondent banking business and global remittances. This represents Bank’s operations in 14 countries
including Pakistan and 19 branches including one branch in export processing zone in Pakistan.

VI. Aitemaad and Islamic Banking provides shariah compliant services to customers including loans, deposits and
other transactions.

VII. Head Office / Others includes the head office related activities and other functions which cannot be classified in
any of the above segments.

Geographical segments

The Bank is operating following geographic lines for monitoring and reporting purpose:

I. Pakistan

II. Asia Pacific (including South Asia)

III. Europe

IV. United States of America

V. Middle East

5.24 Accounting estimates and judgments

The preparation of the unconsolidated financial statements in conformity with the approved accounting and reporting
standards as applicable in Pakistan requires the use of certain critical accounting estimates. It also requires management
to exercise its judgment in the process of applying the Bank’s accounting polices. The estimates, judgments and
associated assumptions used in the preparation of the unconsolidated financial statements are based on historical
experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The key areas of estimates and judgments in relation to these unconsolidated financial statements are as
follows:

a) Provision against non-performing loans and advances

The Bank reviews its loan portfolio to assess amount of non-performing loans and determine provision required
there against on a quarterly basis. While assessing this requirement, various factors including the past dues,

187
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

delinquency in the account, financial position and future business / financial plan of the borrower, value of collateral
held and requirements of Prudential Regulations are considered. The Bank also considers the effect of Forced Sale
Value (FSV) of collaterals in determining the amount of provision, however, no benefit of FSV of collateral has been
taken during the year in determining provisioning amount.

General provision for loan losses of overseas branches is made as per the requirements of the respective central
banks.

The amount of general provision against domestic consumer and SME advances is determined in accordance with
the relevant Prudential Regulations and SBP directives.

In addition, the Bank has also made general provision in respect of its corporate portfolio on prudent basis. This
general provision is in addition to the requirements of Prudential Regulations.

b) Fair value of derivatives

The fair values of derivatives which are not quoted in active markets are determined by using valuation techniques.
The valuation techniques take into account the relevant interest and exchange rates over the term of the contract.

c) Impairment of available-for-sale investments

The Bank considers that available-for-sale equity investments and mutual funds are impaired when there has been
a significant or prolonged decline in the fair value below its cost except for investments where relaxation has been
allowed by SBP. This determination of what is significant or prolonged requires judgment. In addition, impairment
may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and
sector performance.

Further the Bank has developed internal criteria according to which a decline of 30% in the market value of any
scrip below its cost shall constitute as a significant decline and where market value remains below the cost for a
period of one year shall constitute as a prolonged decline.

d) Held-to-maturity investments

The Bank follows the guidance provided in the SBP circulars on classifying non-derivative financial assets with
fixed or determinable payments and fixed maturity as held-to-maturity. In making this judgment, the Bank evaluates
its intention and ability to hold such investments till maturity.

e) Income taxes

In making the estimates for current and deferred taxes, the management looks at the income tax law and the
decisions of appellate authorities on certain issues in the past. There are certain matters where the Bank’s view
differs with the view taken by the income tax department and such amounts are shown as contingent liabilities.

f) Fixed assets and intangible assets, revaluation, depreciation and amortisation

In making estimates of the depreciation / amortisation method, the management uses the method which reflects
the pattern in which economic benefits are expected to be consumed by the Bank. The method applied is reviewed
at each financial year end and if there is a change in the expected pattern of consumption of the future economic
benefits embodied in the assets, the method is changed to reflect the change in pattern.

The Bank also revalues its properties on a periodic basis. Such revaluations are carried out by independent valuer
and involves estimates / assumptions and various market factors and conditions.

188
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

g) Employees' benefit plans

The liabilities for employees' benefits plans are determined using actuarial valuations. The actuarial valuations
involve assumptions about discount rates, expected rates of return on assets, future salary increases, future
inflation rates and future pension increases as disclosed in note 39. Due to the long term nature of these plans,
such estimates are subject to significant uncertainty.

h) Provision against contingencies

Provision against contingencies is determined based on the management judgement regarding the probability of
future outflows of resources embodying economic benefits to settle an obligation arising from past events.

6. CLOSURE OF FOREIGN SUBSIDIARIES AND OPERATIONS

The Board of Directors (BoD) of the Bank, in their meeting held on January 20 and 21, 2020, have decided for closure of
their two overseas Subsidiaries in Almaty (Kazakhstan) and Dushanbe (Tajikistan) along with three overseas branches in
Baku (Azerbaijan), Bishkek (Kyrgyzstan) and Ashgabat (Turkmenistan) so their carrying amount will be recovered principally
through continuing use. With regards to regulatory approval, the Bank applied to ministry of finance and State Bank of
Pakistan for their endorsements and accordingly received their approval, with respect to the BoD decision, on April 07,
2020 and April 24, 2020 respectively.

Further, it has been decided by BoD to restrict their country operations in Afghanistan (Jalalabad) and Bangladesh (Sylhet,
Chittagong and Gulshan) to one branch in each country located in Kabul and Dhaka respectively.

As of December 31, 2021, Bank has closed down its operations in Tashkent (Uzbekistan), Jalalabad (Afghanistan) and
Sylhet (Bangladesh). The licenses of Ashgabat (Turkmenistan), Dushanbe (Tajikistan) and Almaty (Kazakhstan) have been
cancelled and these locations are under closure process. Further, as of January 17, 2022, the BoD has approved the
closure of its operation of Paris branch.

As at December 31, 2021

CJSC CJSC
Subsidiary Subsidiary
Baku Bishkek Ashgabat Paris
Particulars Bank of NBP in Bank of NBP in Total
(Azerbaijan) (Kyrgyzstan) (Turkmenistan) (France)
Kazakhstan Tajikistan
(Almaty) (Dushanbe)

----------- (Subsidiaries) ----------- -------------------------- (Branches) ----------------------------------

(Rupees in '000)

Cost of investment - net of

impairment 1,003,778 453,632 - - - - 1,457,410
Total Assets - - 981,309 1,714,063 352,392 3,329,382 6,377,146

Total Liabilities - - 60,027 4,101 - 2,776,326 2,840,454

Profit / (loss) for the year - - (34,466) 12,527 (21,624) (408,935) (452,498)

189
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)
7. CASH AND BALANCES WITH TREASURY BANKS

In hand:

Local currency 55,956,579 48,290,809

Foreign currency 6,885,815 6,425,017
62,842,394 54,715,826

With State Bank of Pakistan in:

Local currency current accounts 7.1 133,688,664 125,017,240

Foreign currency current accounts 7.2 11,738,428 10,209,399
Foreign currency deposit accounts 7.2 24,098,591 21,022,297
Foreign currency collection accounts 1,226,824 1,618,084
170,752,507 157,867,020

With other central banks in:

Foreign currency current accounts 7.3 40,265,103 29,581,326

Foreign currency deposit accounts 7.3 2,920,706 4,789,170
43,185,809 34,370,496

Prize bonds 1,966,349 2,306,248

278,747,059 249,259,590

7.1 This includes statutory liquidity reserves maintained with the SBP under Section 22 of the Banking Companies Ordinance,
1962.

7.2 These represent mandatory reserves maintained in respect of foreign currency deposits under FE-25 scheme, as
prescribed by the SBP.

7.3 These balances pertain to the foreign branches and are held with central banks of respective countries. These include
balances to meet the statutory and regulatory requirements in respect of liquidity and capital requirements of respective
countries. The deposit accounts carry interest at the rate of 0% to 6.3% per annum (2020: 0% to 3.50% per annum).

2021 2020
8. BALANCES WITH OTHER BANKS Note (Rupees in '000)

In Pakistan:

In current account - -
In deposit accounts 8.1 12,531 11,948
12,531 11,948
Outside Pakistan:

In current accounts 12,008,146 8,336,597

In deposit accounts 8.2 5,646,390 5,878,810
17,654,536 14,215,407
17,667,067 14,227,355

190
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

8.1 These include various deposits with banks and carry interest at rates ranging from 2.5% to 8% per annum (2020: 2% to
8% per annum).

8.2 These include various deposits with correspondent banks outside Pakistan and carry interest at rates ranging from 0% to
1.5% per annum (2020: 0% to 2.5% per annum).
2021 2020
Note (Rupees in '000)

9. LENDINGS TO FINANCIAL INSTITUTIONS

Call / clean money lendings 9.1 21,009,723 2,040,800

Repurchase agreement lendings (reverse repo) 9.2 & 9.8 282,051,308 124,763,875
Musharaka Lending 9.3 30,000,000 -
Placements with State Bank of Pakistan 9.4 2,405,644 -
Letters of placement 9.5 174,150 176,150
9.6 335,640,825 126,980,825

Less: provision held against lendings to financial institutions 9.7 & 9.9 (174,150) (176,150)
Lendings to financial institutions - net of provision 335,466,675 126,804,675

9.1 This includes zero rate lending to a financial institution amounting to Rs. 9.7 million (2020: Rs. 40.8 million) which is
guaranteed by the SBP.

9.2 These carry mark-up at rates ranging from 8.75% to 10.7% per annum (2020: 6% to 7.29% per annum) with maturities
ranging from January 4, 2022 to January 14, 2022.

9.3 This represents Musharaka agreements entered into with Meezan Bank Limited and carrying profit at the rate of 10.65%
(2020: nil) per annum.

9.4 These represent placements made with the SBP as a result of shortfall in respect of time-based mandatory targets of
disbursements under Government's scheme "Mera Pakistan Mera Ghar". These placements are for a period of six months
to one year and carry no mark-up.

9.5 These are overdue placements and full provision has been made against these placements as at December 31, 2021.

2021 2020
(Rupees in '000)
9.6 Particulars of lending

In local currency 335,640,825 126,980,825

In foreign currencies - -
335,640,825 126,980,825

9.7 Movement in provision held against lendings is as follows:

Opening balance 176,150 176,150

Reversal for the year (2,000) -
Closing balance 174,150 176,150

191
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

9.8 Securities held as collateral against lendings to financial institutions

2021 2020

Held by Further given Held by Further given

Total Total
Bank as collateral Bank as collateral

(Rupees in '000)

Market Treasury Bills 163,594,180 - 163,594,180 91,230,121 - 91,230,121

Pakistan Investment Bonds 118,457,128 - 118,457,128 33,533,754 - 33,533,754

Total 282,051,308 - 282,051,308 124,763,875 - 124,763,875

9.8.1 Market value of the securities under repurchase agreement lendings amounts to Rs. 279,633 million (2020: Rs. 125,094
million).

9.9 Category of classification

2021 2020
Classified Provision Classified Provision
lending held lending held
Domestic (Rupees in '000)

Loss 174,150 174,150 176,150 176,150

Total 174,150 174,150 176,150 176,150

192
 10. INVESTMENTS

10.1 Investments by type:

2021 2020

Cost / Provision for Carrying Cost / Provision for Surplus / Carrying

Surplus / (deficit)
amortised cost diminution value amortised cost diminution (deficit) value

Note

Held-for-trading securities

Market treasury bills 90,744,281 - (55,659) 90,688,622 96,157,306 - 3,529 96,160,835

Pakistan investment bonds 29,114,020 - (65,016) 29,049,004 496,805 - (1,455) 495,350
119,858,301 - (120,675) 119,737,626 96,654,111 - 2,074 96,656,185

Available-for-sale securities

Pakistan investment bonds 571,528,321 - (8,147,316) 563,381,005 470,136,168 - 2,776,564 472,912,732

For the year ended December 31, 2021

Market treasury bills 721,635,763 - (430,492) 721,205,271 529,397,138 - 690,816 530,087,954

Ijarah sukuks 14,000,979 - (31,279) 13,969,700 6,000,000 - 15,600 6,015,600
Ordinary shares of listed companies 10.12/10.13/10.14 34,146,109 (6,110,939) 11,749,467 39,784,637 33,237,574 (5,568,236) 20,238,444 47,907,782
Ordinary shares of unlisted companies 1,882,198 (410,893) - 1,471,305 1,865,982 (410,893) - 1,455,089
Preference shares 1,706,823 (539,708) 98,614 1,265,729 1,445,308 (539,708) 194,250 1,099,850
Investments in mutual funds 619,646 (41,167) 1,289,705 1,868,184 619,646 (41,167) 1,421,691 2,000,170
Ordinary shares of a bank outside Pakistan 10.6 463,294 - 27,060,912 27,524,206 463,295 - 17,189,483 17,652,778
Term finance certificates / Musharika
and Sukuk bonds 55,463,127 (5,200,180) 961,220 51,224,167 60,199,753 (5,196,406) 856,659 55,860,007
GoP foreign currency bonds 20,778,528 - 26,435 20,804,963 10,429,632 - 411,243 10,840,875
Foreign Government securities 880,932 - 26,372 907,304 2,795,017 - 52,159 2,847,176
Foreign currency debt securities - - - - 79,438 - 1,202 80,640
1,423,105,720 (12,302,887) 32,603,638 1,443,406,471 1,116,668,951 (11,756,410) 43,848,111 1,148,760,653

Held-to-maturity securities 10.5.1

Pakistan investment bonds 324,556,862 - - 324,556,862 168,422,981 - - 168,422,981

Debentures, bonds, sukuks, participation term
certificates and term finance certificates 407,164 (407,134) - 30 414,972 (407,134) - 7,838
Bai muajjal with Government of Pakistan 10,914,185 - - 10,914,185 11,641,133 - - 11,641,133
Foreign Government securities 34,091,600 - - 34,091,600 32,328,738 - - 32,328,738
Foreign currency debt securities 680 - - 680 618 - - 618
212,808,442 (407,134) - 212,401,308

193
369,970,491 (407,134) - 369,563,357
Notes to and forming part of the Unconsolidated Financial Statements
 2021 2020

194
Cost / Provision for Carrying Cost / Provision for Surplus / Carrying
Surplus / (deficit)
amortised cost diminution value amortised cost diminution (deficit) value

Note

Associates 10.8/10.15 4,970,863 (3,938,595) - 1,032,268 4,970,863 (3,821,854) - 1,149,009

Joint Venture 10.11 2,362,433 - - 2,362,433 2,362,433 - - 2,362,433

Subsidiaries 10.2.4 3,906,750 (1,838,263) - 2,068,487 3,906,750 (1,838,263) - 2,068,487

Total investments 1,924,174,558 (18,486,879) 32,482,963 1,938,170,642 1,437,371,550 (17,823,660) 43,850,185 1,463,398,076

10.2 Investments by segments:

Federal Government Securities

Market Treasury Bills 812,380,044 - (486,151) 811,893,893 625,554,444 - 694,345 626,248,789

Pakistan Investment Bonds 925,199,203 - (8,212,332) 916,986,871 639,055,954 - 2,775,109 641,831,063
For the year ended December 31, 2021

Bai Muajjal with Government of Pakistan 10,914,185 - - 10,914,185 11,641,133 - - 11,641,133

Ijarah Sukuks 14,000,979 - (31,279) 13,969,700 6,000,000 - 15,600 6,015,600
1,762,494,411 - (8,729,762) 1,753,764,649 1,282,251,531 - 3,485,054 1,285,736,584
Shares

Listed Companies 10.12 / 10.13/10.14 34,146,109 (6,110,939) 11,749,467 39,784,637 33,237,574 (5,568,236) 20,238,444 47,907,782
Unlisted Companies 1,882,198 (410,893) - 1,471,305 1,865,982 (410,893) - 1,455,089
36,028,307 (6,521,832) 11,749,467 41,255,942 35,103,556 (5,979,129) 20,238,444 49,362,871

Non Government Debt Securities

Term Finance Certificates / Musharika / Bonds /
Debentures and Sukuk Bonds

Listed 17,190,767 (1,092,251) 961,220 17,059,736 20,663,236 (1,031,476) 279,518 19,911,278

Unlisted 38,679,524 (4,515,064) - 34,164,460 39,951,489 (4,572,064) 577,141 35,956,567
55,870,291 (5,607,314) 961,220 51,224,196 60,614,725 (5,603,540) 856,659 55,867,845
Foreign Securities

GoP Foreign Currency Bonds 20,778,528 - 26,435 20,804,963 10,429,632 - 411,243 10,840,875
Foreign Government Securities 34,972,532 - 26,372 34,998,904 35,123,755 - 52,159 35,175,914
Foreign Currency Debt Securities 680 - - 680 80,056 - 1,202 81,258
55,751,740 - 52,807 55,804,547 45,633,443 - 464,604 46,098,047
Notes to and forming part of the Unconsolidated Financial Statements

Preference shares 1,706,823 (539,708) 98,614 1,265,729 1,445,308 (539,708) 194,250 1,099,850
 2021 2020
Cost / Provision for Cost / Provision for Surplus /
Surplus / (deficit) Carrying value Carrying value
amortised cost diminution amortised cost diminution (deficit)

Note

Investments in mutual funds 619,646 (41,167) 1,289,705 1,868,184 619,646 (41,167) 1,421,691 2,000,170

Ordinary shares of a bank outside

Pakistan 10.6 463,294 - 27,060,912 27,524,206 463,295 - 17,189,483 17,652,778

Associates 10.9

- Listed

First Credit and Investment Bank Limited 10.15 157,429 (17,229) - 140,200 157,429 (28,829) - 128,600
Land Mark Spinning Mills Limited 39,710 (39,710) - - 39,710 (39,710) - -
S.G. Allied Business Limited 218,535 (218,535) - - 218,535 (218,535) - -
Nina Industries Limited 49,060 (49,060) - - 49,060 (49,060) - -
NBP Stock Fund 600,000 (109,728) - 490,272 600,000 (121,326) - 478,674
Agritech Limited 10.7 3,665,605 (3,263,810) - 401,795 3,665,605 (3,123,870) - 541,735
10.8 4,730,339 (3,698,072) - 1,032,267 4,730,339 (3,581,330) - 1,149,009
For the year ended December 31, 2021

- Unlisted

Pakistan Emerging Venture Limited 50,563 (50,563) - - 50,563 (50,563) - -

National Fructose Company Limited 6,500 (6,500) - - 6,500 (6,500) - -
National Assets Insurance Company Limited 44,817 (44,817) - - 44,817 (44,817) - -
Dadabhoy Energy Supply Company Limited 32,105 (32,105) - - 32,105 (32,105) - -
Pakistan Mercantile Exchange Limited 106,539 (106,539) - - 106,539 (106,539) - -
10.10 240,524 (240,524) - - 240,524 (240,524) - -
4,970,863 (3,938,596) - 1,032,267 4,970,863 (3,821,854) - 1,149,009
Joint Venture

United National Bank Limited 10.11 2,362,433 - - 2,362,433 2,362,433 - - 2,362,433

Subsidiaries

CJSC Subsidiary Bank of NBP in Kazakhstan 2,185,644 (1,181,866) - 1,003,778 2,185,644 (1,181,866) - 1,003,778
CJSC Subsidiary Bank of NBP in Tajikistan 953,783 (500,151) - 453,632 953,783 (500,151) - 453,632
NBP Exchange Company Limited 300,000 - - 300,000 300,000 - - 300,000
NBP Modaraba Management Company Limited 105,000 (105,000) - - 105,000 (105,000) - -
Taurus Securities Limited 24,725 - - 24,725 24,725 - - 24,725
Cast-N-Link Products Limited 1,245 (1,245) - - 1,245 (1,245) - -
NBP Funds Management Limited 336,353 (50,000) - 286,353 336,353 (50,000) - 286,353
3,906,750 (1,838,262) - 2,068,488 3,906,750 (1,838,262) - 2,068,488

195
Total investments 1,924,174,558 (18,486,879) 32,482,963 1,938,170,642 1,437,371,550 (17,823,660) 43,850,185 1,463,398,076
Notes to and forming part of the Unconsolidated Financial Statements

- - - - 0 1 - 1
 2021 2020

196
10.2.1 Investments given as collateral

Pakistan Investment Bonds 30,682,290 2,300,000

Market Treasury Bills 96,128,050 3,000,000
126,810,340 5,300,000
(0)

Based on the Total

Number of Percentage of Country of Profit / (loss)
financial Assets Liabilities Revenue comprehensive
shares holding incorporation after taxation
statements as at income

10.2.2 Associates

Listed

First Credit and Investment

Bank Limited 20,000,000 30.77 Pakistan June 30, 2021 2,272,038 1,522,087 145,063 20,535 11,620
National Fibres Limited 17,030,231 20.19 Pakistan - - - - - -
Land Mark Spinning Mills
For the year ended December 31, 2021

Limited 3,970,859 32.79 Pakistan June 30, 2020 174,448 252,160 - (16,925) (16,925)
SG Allied Businesses Limited 3,754,900 25.03 Pakistan June 30, 2021 1,166,565 475,775 16,903 (11,922) (11,907)
Nina Industries Limited 4,906,000 20.27 Pakistan - - - - - -
December 31,
Agritech Limited 106,014,565 27.01 Pakistan 67,176,554 60,735,890 5,699,723 (4,296,900) (4,295,428)
2020
NBP Stock Fund 31,347,444 2.69 Pakistan June 30, 2021 21,132,632 438,759 5,805,098 4,980,935 4,980,935

Unlisted

Pakistan Emerging Venture

Limited 12,500,000 33.33 Pakistan June 30, 2019 1,194 345 96 (175) (175)
National Fructose Company
Limited 1,300,000 39.50 Pakistan - - - - - -
Venture Capital Fund
Management 33,333 33.33 Pakistan - - - - - -
Kamal Enterprises Limited 11,000 20.37 Pakistan - - - - - -
Mehran Industries Limited 37,500 32.05 Pakistan - - - - - -
National Assets Insurance December 31,
Company Limited 4,481,500 8.96 Pakistan 2020 689,888 7,813 64,505 22,828 22,427
Tharparkar Sugar Mills Limited 2,500,000 21.52 Pakistan - - - - - -
Youth Investment Promotion
Society 644,508 25.00 Pakistan - - - - - -
Dadabhoy Energy Supply
Company Limited 9,900,000 23.11 Pakistan - - - - - -
K-Agricole Limited 5,000 20.00 Pakistan - - - - - -
Notes to and forming part of the Unconsolidated Financial Statements

New Pak Limited 200,000 20.00 Pakistan - - - - - -

 Based on the Total
Number of Percentage of Country of Profit / (loss)
financial Assets Liabilities Revenue comprehensive
shares holding incorporation after taxation
statements as at income

Pakistan Mercantile Exchange Limited 10,653,860 33.98 Pakistan June 30, 2021 2,663,957 2,614,291 301,213 8,674 8,674
Prudential Fund Management Limited 150,000 20.00 Pakistan - - - - - -

10.2.3 Joint Venture

United December 31,

United National Bank Limited 20,250,000 45.00 Kingdom 2020 132,418,446 115,791,392 2,564,653 (459,068) (351,298)
10.2.4 Subsidiaries
CJSC Subsidiary Bank of NBP in December 31,
Kazakhstan 8,650 100.00 Kazakhstan 2020 1,649,350 36,844 112,460 17,920 17,920
December 31,
CJSC Subsidiary Bank of NBP in Tajikistan 10,000 100.00 Tajikistan 2020 2,272,075 1,507,804 113,893 18,145 18,145
December 31,
NBP Exchange Company Limited 99,999,999 100.00 Pakistan 2021 1,176,712 89,792 293,383 104,339 104,339
NB Modaraba Management December 31,
Company Limited 10,500,000 100.00 Pakistan 2020 116,916 97,413 - 2,649 2,649
For the year ended December 31, 2021

December 31,
Taurus Securities Limited 7,875,002 58.32 Pakistan 2020 743,426 434,147 131,824 10,157 12,437
Cast-N-Link Products Limited 1,245,000 76.51 Pakistan N/A* - - - - -
NBP Fund Management Limited 13,499,996 54.00 Pakistan June 30, 2021 2,648,104 1,391,393 1,194,522 259,972 253,651
* Not available
2021 2020
10.3 Provision for diminution in value of investments

Opening balance 17,823,660 17,950,047

Charge / (reversals)
Charge for the year 1,382,192 1,164,846
Reversals for the year (718,973) (1,291,233)
663,219 (126,387)
Closing balance 18,486,879 17,823,660
-
10.3.1 Particulars of provision against debt securities
Category of classification 2021 2020
NPI Provision NPI Provision
Domestic
Doubtful - - 119,133 59,566
Loss 5,607,314 5,607,314 5,552,738 5,543,974

197
Notes to and forming part of the Unconsolidated Financial Statements

Total 5,607,314 5,607,314 5,671,871 5,603,540

Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

10.4 Quality of available for sale securities 2021 2020

(Rupees in '000)
Details regarding quality of available for sale securities are as follows:

Federal government securities - government guaranteed

Market treasury bills 721,635,763 529,397,138

Pakistan investment bonds 571,528,321 470,136,168
Ijarah sukuks 14,000,979 6,000,000

Cost 1,307,165,063 1,005,533,306

Shares

Listed companies sector - wise

Automobile Assembler 614,233 536,303

Automobile Parts and Accessories 1,113,967 843,923
Cable and Electrical Goods 269,669 211,166
Cement 2,919,974 1,882,741
Chemical 788,003 753,684
Commercial Banks 3,648,181 3,896,815
Engineering 1,096,335 855,646
Fertilizer 1,929,148 2,457,103
Food and Personal Care 1,218,036 1,393,503
Glass and Ceramics 72,522 203,855
Insurance 1,642,720 1,713,756
Investment Banks / Investment companies / Securities companies 508,688 508,688
Leasing Companies 13,738 21,890
Leather and Tanneries 297,568 189,470
Modarabas - 120
Oil and Gas Exploration Companies 2,702,776 2,408,733
Oil and Gas Marketing Companies 6,117,686 5,954,784
Paper and Board 675,319 402,039
Pharmaceuticals 995,798 512,974
Power Generation and Distribution 3,000,787 2,988,617
Real Estate Investment Trust 305,972 586,526
Refinery 447,422 900,998
Sugar and Allied Industries 260,476 288,528
Synthetic and Rayon 32,622 91,980
Technology and Communication 754,027 960,033
Textile Composite 1,552,549 1,890,534
Textile Spinning 655,364 638,440
Textile Weaving 25,854 25,854
Transport 32,068 32,385
Miscellaneous 454,607 86,486

Cost 34,146,109 33,237,574

0

198
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Unlisted companies Cost Breakup value Cost Breakup value
(Rupees in '000)

Digri Sugar Mills Limited 4,063 135,585 4,063 135,585

JDM Textile Mills Limited - - 4,784 324,651
Gelcaps Pakistan Limited 4,665 8,842 4,665 8,842
Pakistan Agriculture Storage Service Corporation 5,500 1,623 5,500 1,623
Al Ameen Textile 328 N/A * 327 N/A
Professional Management Modaraba (Formerly Al
Zamin Modarba Management (Private) Limited) 1,000 2,134 1,000 2,134
AMZ Venture Limited Class A 123 N/A 121 N/A
Arabian Sea Country Club 6,500 (6,810) 6,500 (6,640)
Atlas Power Limited 375,000 1,544,905 375,000 1,328,000
Attock Textile Mills Limited 200 N/A 200 N/A
Pakistan Mortgage Refinance Company Limited 600,000 1,006,700 600,000 770,195
F.T.C. Management Company Private Limited 250 40,094 250 46,998
Fauji Akbar Portia Marines Terminal Limited 321,076 570,681 321,076 570,680
Fauji Oil Terminals and Distribution Limited 10,886 119,741 10,886 99,059
First Women Bank Limited 21,100 79,733 21,100 71,946
Fortune Securities Limited 5,000 11,411 5,000 7,574
Frontier Textile Mills Limited 500 272 500 272
Gulistan Power Generation Limited 2,200 8,096 2,200 8,096
Hazara Woolen Mills Limited 200 N/A 200 N/A
Industrial Development Bank of Pakistan 107 N/A 107 N/A
Inter Asia Leasing Company Limited 500 N/A 500 N/A
ISE Towers REIT Management Company Limited 30,346 50,902 30,346 46,890
Junaid Cotton Mills Limited 327 N/A 327 N/A
Kaisar Arts and Krafts Limited 8,395 N/A 8,395 N/A
Kaytex Mills Limited 3,778 N/A 3,778 N/A
Mian Mohammad Sugar Mills Limited 15 N/A 15 N/A
Muslim Ghee Mills Limited 1,810 - 1,810 N/A
Myfip Video Industries Limited 5,373 - 5,373 N/A
National Asset Leasing Corporation Limited 14 N/A 14 N/A
National Construction Limited 250 597 250 597
National Institution of Facilitation Technology 1,526 35,899 1,526 74,484
(Private) Limited
National Investment Trust Limited 100 1,003,283 100 830,782
National Woolen Mills Limited 183 N/A 183 N/A
Natover Lease and Refinance 2,602 N/A 2,602 N/A
Nowshehra Engineering Works Limited 41 N/A 41 N/A
Pakistan Export Finance Guarantee Agency Limited 11,529 1,152 11,529 1,152
Pakistan Paper Corporation Limited 373 N/A 373 N/A
Pakistan Telephone Cables 143 N/A 143 N/A
Pakistan Textile City 100,000 12,410 100,000 12,410

199
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Unlisted companies Cost Breakup value Cost Breakup value
(Rupees in '000)

Pakistan Tourism Development Corporation 100 83 100 82

People Steel Mills Limited 3,276 N/A 3,276 N/A
Qadri Textile Mills Limited 500 N/A 500 N/A
Rehman Cotton Mills Limited 16,958 107,895 16,958 107,895
Refrigerator Manufacturing Company Limited 4,589 N/A 4,589 N/A
Rousch Power Pakistan Limited 132,888 1,503,561 132,888 1,322,458
Ruby Rice and General Mills Limited 750 N/A 750 N/A
Sahrish Textile Mills 21 N/A 21 N/A
Shoaib Capital 272 544 272 544
SME Bank Limited 26,950 (318) 26,950 (318)
South Asia Regional Fund 287 N/A 287 N/A
Star Salica Industries Limited 267 N/A 267 N/A
Syed Match Industries 2 N/A 2 N/A
Union Insurance Company of Pakistan 4 N/A 4 N/A
Unity Modaraba 28 N/A 28 N/A
Zafar Textiles Mills Limited 257 N/A 257 N/A
Zulsham Engineering Works Limited 330 N/A 330 N/A
Information System Associates Limited 1,719 N/A 1,719 N/A
1 Link (Guarantee) Limited 50,000 267,895 50,000 139,362
Pakistan Corporate Restructuring Company Limited 96,000 N/A 96,000 N/A
Pakvitae (Private) Limited 21,000 - - -
1,882,198 1,865,982
(0)
* Not available
2021 2020
(Rupees in '000)
Non Government Debt Securities
Listed

- AAA - 1,547,210
- AA+, AA, AA- 9,265,030 11,049,399
- A+, A, A- 833,334 966,667
- BBB+, BBB, BBB- - -
- Unrated 7,073,222 7,072,012
Cost 17,171,586 20,635,288

Unlisted

- AAA 22,132,940 19,792,681

- AA+, AA, AA- 4,010,113 5,212,557
- A+, A, A- 2,745,811 2,850,000
- BBB+, BBB, BBB- 299,760 299,820
- Unrated 9,102,917 11,409,407
Cost 38,291,541 39,564,465

200
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

Foreign Securities
2021 2020
Government Securities Cost Rating Cost Rating
(Rupees in '000) (Rupees in '000)

USA 880,932 AA+ 2,795,017 AA+

(0)
Non Government Debt Securities - Cost
2021 2020
(Rupees in '000)
Listed

- A+ - 79,438

10.5 Particulars relating to Held to Maturity securities are as follows:

Federal Government Securities - Government guaranteed

Pakistan Investment Bonds 324,556,862 168,422,981

Bai muajjal with Government of Pakistan 10,914,185 11,641,133
335,471,047 180,064,114

Non Government Debt Securities

Listed

- Unrated 19,181 27,948

19,181 27,948

Unlisted

- Unrated 387,983 387,025

387,983 387,025

Foreign Securities
2021 2020
Cost Rating Cost Rating
(Rupees in '000) (Rupees in '000)
Government Securities
Azerbaijan 204,494 BB+ 646,649 BB+
Bangladesh 29,672,064 Ba3 27,277,984 Ba3
Kyrgyzstan 841,944 B2 1,118,290 B2
Kingdom of Saudi Arabia 2,631,097 A 2,551,243 A
Korea 742,001 AA 734,572 AA
34,091,600 32,328,738
(0)
2021 2020
(Rupees in '000)

Non Government Debt Securities

Listed

- Unrated - Cost 680 618

10.5.1 The market value of securities classified as held-to-maturity as at December 31, 2021 amounted to Rs. 366,869 million
(2020: Rs. 218,678 million).

201
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

10.6 Investment in shares of a bank incorporated outside Pakistan - Bank Al-Jazeera

The Bank holds 30,333,333 (2020: 30,333,333) shares in Bank Al-Jazeera (BAJ) incorporated in the Kingdom of Saudi
Arabia, representing 3.7% (2020: 3.7%) holding in total equity of BAJ. The investment has been marked to market using
closing price as quoted on the Saudi Stock Exchange in accordance with SBP concurrence vide letter No. BSD/SU-
13/331/685/2006 dated February 17, 2006. BAJ’s Viability Rating is F2 with short term and long term IDR at BBB+ by Fitch
Rating Agency.

10.7 The 94,273,510 (2020: 94,273,510) shares of Agritech Limited were acquired from Azgard Nine Limited as part of multiple
agreements including the Master Restructuring Agreement (MRA). These shares were acquired at an agreed price of Rs.
35 per share. The market value of these shares at December 31, 2021 amounted to Rs. 3.79 per share resulting in an
impairment of Rs. 3,264 million (2020: Rs. 3,124 million) which has been fully recorded in these unconsolidated financial
statements.

There is a put option available to Azgard Nine Limited, under which Azgard Nine Limited has the right to sell 58.29 million
preference shares of Agritech Limited to the Bank at a price of Rs. 5.25 per share subject to the occurrence of certain
events under the agreement.

10.8 Aggregate market value of investment in associates (quoted) on the basis of quoted prices amounts to Rs. 1,880 million
(2020: Rs. 1,456 million).

10.9 Associates with zero carrying amount, represent the investments acquired from former National Development Finance
Corporation (NDFC) which have negative equity or whose operations were closed at the time of amalgamation.

10.10 The details of break-up value based on latest available financial statements of unlisted investments in associates are as
follows:

Year / Period Break-up

ended value
(Rupees in '000)

National Assets Insurance Limited December 31, 2020 61,114

Pakistan Emerging Venture Limited June 30, 2019 283
Mehran Industries Limited June 30, 2001 5,681
Tharparkar Sugar Mills Limited September 30, 2001 (83,140)
Prudential Fund Management June 30, 2007 (2,482)
Dadabhoy Energy Supply Company Limited June 30, 2007 103,952
Pakistan Mercantile Exchange Limited June 30, 2021 16,876

2021 2020
Note (Rupees in '000)
10.11 Investments in joint venture

United National Bank Limited (UNBL) 10.1 / 10.2 /

(Incorporated in United Kingdom) 10.11.1 2,362,433 2,362,433

10.11.1 Under a joint venture agreement, the Bank holds 20.25 million ordinary shares (45%) and United Bank Limited (UBL)
holds 23.25 million ordinary shares (55%) in UNBL. In addition to ordinary shares, four preference shares categories as
"A", "B", "C" and "D" have been issued and allotted. The "B" and "D" category shares are held by the Bank and
category "A" and "C" are held by UBL. Dividends payable on "A" and "B" shares are related to the ability of the venture
to utilize tax losses that have been surrendered to it on transfer of business from the Bank or UBL as appropriate.
Dividends payable on "C" and "D" shares are related to loans transferred to the venture by the Bank or UBL that have
been written-off or provided for at the point of transfer and the ability of the venture to realize in excess of such loan
value.

202
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

10.12 The investments in shares include shares of Pakistan State Oil Company Limited, Sui Northern Gas Pipeline Limited and
Pakistan Engineering Company with cost of Rs. 4,603 million (2020: Rs. 4,603 million) that have been frozen by the
Government of Pakistan for sale in the equity market due to their proposed privatization.

10.13 The investments also include shares acquired under tri-partite consent agreement dated June 29, 2011. These strategic
investments comprise of the shares of Pakistan State Oil (38,055,247 shares), shares of Sui Northern Gas Pipeline Limited
(18,805,318 shares) and Pakistan Engineering Company (135,242). The cost of these shares amounts to Rs. 4,603 million
and market value as at December 31, 2021 amounts to Rs. 7,606 million. These shares can not be sold without
concurrence of privatization commission.

10.14 The investments also include 10,555,000 shares of Pakistan Reinsurance. The cost of these shares amounts to Rs. 220
million and market value as at December 31, 2021 amounts to Rs. 236 million. These shares can not be sold without
concurrence of privatization commission.

10.15 The investment also include 20,000,000 shares of First Credit and Investment Bank. The cost of these shares amounts to
Rs. 157 million. These shares can not be disinvested without prior consultation with Ministry of Finance.

11. ADVANCES
Performing Non Performing Total
2021 2020 2021 2020 2021 2020

Note (Rupees in '000)

Loans, cash credits, running finances, etc. 1,045,675,022 931,976,385 183,077,586 160,045,212 1,228,752,608 1,092,021,597
Islamic financing and related assets 42,316,269 37,546,863 712,762 602,913 43,029,031 38,149,776
Net investment in finance lease 11.1 47,548 58,239 - - 47,548 58,239
Bills discounted and purchased 19,199,730 18,998,127 14,147,881 10,646,008 33,347,611 29,644,135
Advances - gross 11.2 1,107,238,569 988,579,614 197,938,229 171,294,133 1,305,176,798 1,159,873,747

Provision against advances

- Specific - - 179,311,722 154,145,472 179,311,722 154,145,472
- General 12,472,591 22,473,748 - - 12,472,591 22,473,748
11.4 12,472,591 22,473,748 179,311,722 154,145,472 191,784,313 176,619,220
Advances - net of provision 1,094,765,978 966,105,866 18,626,507 17,148,661 1,113,392,485 983,254,527

-
11.1 Net investment in finance lease 2021 2020
Later than one Later than one
Not later than Not later than
and upto five Over five years Total and upto five Over five years Total
one year one year
years years
(Rupees in '000)

Lease rentals receivable 955 64 - 1,019 10,911 556 - 11,467

Residual value 46,536 185 - 46,721 46,535 815 - 47,350
Minimum lease payments 47,491 249 - 47,740 57,446 1,371 - 58,817

Less: Financial charges for future periods 191 1 - 192 546 32 - 578
Present value of minimum
lease payments 47,300 248 - 47,548 56,900 1,339 - 58,239
-
The leases executed are for a term of 1 to 5 years. Security deposit is generally obtained upto 10% of the cost of leased
assets at the time of disbursement. The Bank requires the lessee to insure the leased assets in favor of the Bank.
Additional surcharge is charged on delayed rentals. The average return implicit ranges from 10.19% to 14.85% (2020:
10.19% to 17.30%) per annum.

203
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)
11.2 Particulars of advances (Gross)

In local currency 1,178,151,941 1,071,844,946

In foreign currencies 127,024,857 88,028,801
1,305,176,798 1,159,873,747

11.3 Advances include Rs. 197,938 million (2020: Rs.171,294 million) which have been placed under non-performing status as
detailed below.

2021 2020
Non Non
Category of Classification Performing Provision Performing Provision
Loans Loans
Domestic (Rupees in '000)

Other Assets Especially Mentioned 1,941,221 94,550 1,617,988 45,392

Substandard 5,245,094 1,230,458 5,418,693 1,336,002
Doubtful 16,998,929 8,453,057 15,767,573 7,881,223
Loss 127,459,837 124,795,990 106,144,785 103,816,435
151,645,081 134,574,055 128,949,039 113,079,052
Overseas
Not past due but impaired
Overdue by:
Upto 90 days - - - -
91 to 180 days - - - -
181 to 365 days 286,746 143,373 - -
>365 days 46,006,402 44,594,294 42,345,094 41,066,420
46,293,148 44,737,667 42,345,094 41,066,420

Total 197,938,229 179,311,722 171,294,133 154,145,472

11.4 Particulars of provision against advances

2021 2020
Specific General Total Specific General Total
Note (Rupees in '000)

Opening balance 154,145,472 22,473,748 176,619,220 134,170,016 9,005,950 143,175,966

Exchange adjustments 4,277,260 50,984 4,328,244 1,468,169 15,535 1,483,704
Charge for the year 15,655,578 513,602 16,169,180 18,982,569 13,707,207 32,689,776
Reversals (4,097,388) (952,785) (5,050,173) (3,047,958) (321,795) (3,369,753)
11,558,190 (439,183) 11,119,007 15,934,611 13,385,412 29,320,023
Amounts written off 11.5.1 (171,425) - (171,425) (89,494) - (89,494)
Amounts charged off-
agriculture financing 11.4.1.3 (110,733) - (110,733) (193,807) - (193,807)
Transfer from general
to specific provision 9,612,958 (9,612,958) - - - -
Transfer from other assets - - - 2,855,977 66,851 2,922,828
Closing balance 179,311,722 12,472,591 191,784,313 154,145,472 22,473,748 176,619,220

204
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

11.4.1 Particulars of provision against advances

2021 2020
Specific General Total Specific General Total
(Rupees in '000)
In local currency 134,574,055 12,220,748 146,794,803 113,079,052 22,274,089 135,353,141
In foreign currencies 44,737,667 251,843 44,989,510 41,066,420 199,659 41,266,079
179,311,722 12,472,591 191,784,313 154,145,472 22,473,748 176,619,220

11.4.1.1 General provision includes provision amounting to Rs. 5,618 million (2020: Rs. 5,196 million) against consumer & SME
finance portfolio as required by the Prudential Regulations issued by the SBP. General provision also includes Rs. 252
million (2020: Rs. 200 million) pertaining to overseas advances to meet the requirements of regulatory authorities of the
respective countries in which the Bank operates.

The Bank has also maintained general provision of Rs. 6,603 million (2020: Rs. 17,078 million) in respect of its
underperforming portfolio on prudent basis.

11.4.1.2 The SBP has allowed specific relaxation to the Bank for non-classification of overdue loans of certain Public Sector
Entities (PSEs) which are guaranteed by Government of Pakistan as non-performing loans up till December 31, 2021. No
provision is required against these loans; however, mark-up is being suspended as required by the Prudential
Regulations.

11.4.1.3 These represent non-performing advances for agriculture finance which have been classified as loss and fully provided
for more than 3 years. These non-performing advances have been charged off by extinguishing them against the
provision held in accordance with Prudential Regulations for Agriculture Financing issued by the SBP. This charge off
does not, in any way, prejudice the Bank's right of recovery from these customers.
2021 2020
11.5 Particulars of write-offs Note (Rupees in '000)

11.5.1 Against provisions 11.5.2 171,425 89,494

11.5.2 Write-offs of Rs. 500,000 and above

- Domestic 44,536 40,260
- Overseas 81,364 -
11.6 125,900 40,260
Write-offs of below Rs. 500,000 45,525 49,234
171,425 89,494

11.6 Details of loan write-off of Rs. 500,000/- and above

In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance,1962, the statement in respect of
written-off loans or any other financial relief of rupees five hundred thousand or above allowed to a person(s) during the
year ended December 31, 2021 is given in Annexure-I to the unconsolidated financial statements (except where such
disclosure is restricted by overseas regulatory authorities).

11.7 Information related to islamic financing and related assets is given in note 2 of Annexure II and is an integral part of these
unconsolidated financial statements.
2021 2020
Note (Rupees in '000)

12. FIXED ASSETS

Capital work-in-progress 12.1 1,550,340 2,154,184
Property and equipment 12.2 52,701,215 52,259,309
54,251,555 54,413,493

205
 2021 2020
12.1 Capital work-in-progress

206
Civil works 1,335,603 2,040,456
Equipment 10,825 10,825
Advances to suppliers and contractors 58,733 58,733
Software implementation in progress 145,179 44,170
1,550,340 2,154,184
12.2 Property and equipment

2021

Assets held
Building on Building on Computer and Electrical,
Freehold Leasehold Furniture under finance
freehold leasehold peripheral office Vehicles Total
land land and fixture lease -
land land equipment equipment
vehicles

At January 1, 2021

Cost / revalued amount 20,370,445 19,673,159 6,498,047 4,367,094 6,505,280 4,403,125 6,230,222 1,247,328 165,253 69,459,953
Accumulated depreciation - - (1,241,903) (902,703) (4,623,656) (4,213,981) (5,177,945) (875,204) (165,252) (17,200,644)
Net book value 20,370,445 19,673,159 5,256,144 3,464,391 1,881,624 189,144 1,052,277 372,124 1 52,259,309
For the year ended December 31, 2021

Year ended December 2021

Opening net book value 20,370,445 19,673,159 5,256,144 3,464,391 1,881,624 189,144 1,052,277 372,124 1 52,259,309
Additions - - 26,900 70,302 519,016 496,751 526,338 852,882 - 2,492,189
Cost - Adjustments - - - 712,882 42,560 - 841,822 - - 1,597,264
Accumulated Depreciation - Adjustments - - - (132,235) (34,048) - (685,393) - - (851,676)
Movement in surplus on assets revalued - (193,330) - - - - - - - (193,330)
Disposals - - - - (13,654) (15,197) (4,156) (138,728) - (171,735)
Depreciation charge - - (280,799) (195,152) (616,873) (332,792) (645,415) (329,074) - (2,400,105)
Depreciation adjustment - disposal - - - - 11,227 10,480 3,144 110,681 - 135,532
Exchange rate adjustments - - - (18,900) 46,337 26,726 2,726 1,977 - 58,866
Other adjustments / transfers - (14,086) - - (278,735) 67,722 - - - (225,099)
Closing net book value 20,370,445 19,465,743 5,002,245 3,901,288 1,557,454 442,834 1,091,343 869,862 1 52,701,215

At December 31, 2021

Cost / revalued amount 20,370,445 19,465,743 6,524,947 5,131,378 6,820,804 4,979,128 7,596,952 1,963,459 165,253 73,018,109
Accumulated depreciation - - (1,522,702) (1,230,090) (5,263,350) (4,536,294) (6,505,609) (1,093,597) (165,252) (20,316,894)
Net book value 20,370,445 19,465,743 5,002,245 3,901,288 1,557,454 442,834 1,091,343 869,862 1 52,701,215

5% on book 5% on book 20% on 33.33% on 20% - 50% 20% on 20% on

Rate of depreciation (percentage) Nil Nil
value value cost cost on cost cost cost
Notes to and forming part of the Unconsolidated Financial Statements
 2020
Assets held
Computer and Electrical,
Lease hold Building on Building on Furniture and under finance
Freehold land peripheral office Vehicles Total
land freehold land lease hold land fixture lease -
equipment equipment
vehicles
(Rupees in '000)
At January 1, 2020
Cost / Revalued amount 20,108,881 19,362,870 6,465,668 4,310,442 5,712,163 4,092,424 5,737,394 1,233,476 165,253 67,188,571
Accumulated depreciation - - (948,528) (729,730) (3,974,903) (3,967,926) (4,548,202) (664,637) (165,252) (14,999,178)
Net book value 20,108,881 19,362,870 5,517,140 3,580,712 1,737,260 124,498 1,189,192 568,839 1 52,189,393

Year ended December 2020

Opening net book value 20,108,881 19,362,870 5,517,140 3,580,712 1,737,260 124,498 1,189,192 568,839 1 52,189,393
Additions - - 3,622 45,369 798,720 272,507 516,285 195,700 - 1,832,203
Movement in surplus on assets revalued 261,564 310,289 28,757 59,671 - - - - - 660,281
Disposals - - - - (14,393) (1,354) (1,796) (185,097) - (202,640)
Depreciation charge - - (293,375) (172,973) (660,371) (247,409) (631,469) (360,513) - (2,366,110)
Depreciation adjustment - disposal - - - - 11,618 1,354 1,726 149,946 - 164,644
Exchange rate adjustments - - - (38,834) (764) 39,548 (21,661) 3,249 - (18,462)
Other adjustments / transfers - - - (9,554) 9,554 - - - - -
Closing net book value 20,370,445 19,673,159 5,256,144 3,464,391 1,881,624 189,144 1,052,277 372,124 1 52,259,309
- (1)
At December 31, 2020
Cost / Revalued amount 20,370,445 19,673,159 6,498,047 4,367,094 6,505,280 4,403,125 6,230,222 1,247,328 165,253 69,459,953
For the year ended December 31, 2021

Accumulated depreciation - - (1,241,903) (902,703) (4,623,656) (4,213,981) (5,177,945) (875,204) (165,252) (17,200,644)
Net book value 20,370,445 19,673,159 5,256,144 3,464,391 1,881,624 189,144 1,052,277 372,124 1 52,259,309

5% on book 5% on book 33.33% on 20% - 50% 20% on 20% on

Rate of depreciation (percentage) Nil Nil 20% on cost
value value cost on cost cost cost

12.2.1 Revaluation of Properties

Desktop revaluation of the Bank's properties was last carried out in a phase manner in 2019 and 2020. The revaluation was carried out by an
independent professional valuer, RBS Associates (Private) Limited (PBA registered valuer) on the basis of professional assessment of present market
values. The total surplus against revaluation of fixed assets as at December 31, 2021, amounts to Rs. 44,320 million. Had there been no revaluation, the
carrying amount of the revalued assets at December 31, 2021, would have been as follows :
(Rupees in '000)
Freehold land 1,132,637
Leasehold land 890,025
Building on freehold land 820,613
Building on leasehold land 1,575,994
4,419,269

12.2.2 Carrying amount of temporarily idle property of the Bank 4,795,454

12.2.3 The cost of fully depreciated assets still in use
Furniture and fixtures 251,231
Electrical and office equipment 642,704
Computer and peripheral equipment 971,294
Vehicles 1,076,918

207
Notes to and forming part of the Unconsolidated Financial Statements

2,942,147
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

12.3 Details of disposals of fixed assets to related parties

The particulars of disposal of fixed assets to related parties are given below:

Gain /
Particulars of property and Original Book Sale Particulars of
(loss) on Mode of disposal Buyers name
equipment cost Value Proceed purchaser
disposal
----------------------(Rupees in '000)-------------------

Vehicles 1,858 186 186 - As per Entitlement Ex-Employee Dr. Qadir Baksh
Vehicles 1,673 335 335 - As per Entitlement Employee Muhammad Zaheer Abbas
Vehicles 1,673 335 335 - As per Entitlement Employee Syed Khurram Hussain
Vehicles 1,893 379 379 - As per Entitlement Employee Syed Muhammad Ali Zamin
Vehicles 1,673 335 335 - As per Entitlement Ex-Employee Syed Shakeel Raza Abidi
Vehicles 1,673 335 335 - As per Entitlement Employee Wasimullah
Vehicles 5,257 964 1,051 87 As per Entitlement Employee Abdul Wahid Sethi
Vehicles 1,858 - 186 186 As per Entitlement Employee Sardar Azmat Babar Chohan
Vehicles 1,673 307 335 28 As per Entitlement Employee Umeed Ayaz Mahmood
Vehicles 1,858 186 186 - As per Entitlement Ex-Employee Tariq Latif Ansari
Vehicles 1,673 335 335 - As per Entitlement Employee Hammad Sarwar
Vehicles 1,673 307 335 28 As per Entitlement Employee Nazneen Zaka
Vehicles 1,673 307 335 28 As per Entitlement Employee Inaam Mallick
Vehicles 1,673 307 335 28 As per Entitlement Ex-Employee Sohail Ahmed
Vehicles 1,824 791 791 - As per Entitlement Ex-Employee Riffat Sultana Mughal
Vehicles 1,824 851 851 - As per Entitlement Employee Safdar Ali
Vehicles 5,106 - 511 511 As per Entitlement Ex-Employee Sultana Naheed
Vehicles 2,380 1,864 1,864 - As per Entitlement Ex-Employee Aziz Ur Rehman
Vehicles 1,664 333 333 - As per Entitlement Employee Rehman Nazir
Vehicles 1,664 333 333 - As per Entitlement Ex-Employee Haseeb Arshad
Vehicles 1,664 333 333 - As per Entitlement Employee Muhammad Faud Mohsin
Vehicles 1,664 305 333 28 As per Entitlement Employee Kaleemullah Shaikh
Vehicles 1,664 333 333 - As per Entitlement Employee Mujahid Abbas Khan
Vehicles 2,875 2,252 2,252 - As per Entitlement Ex-Employee Muhammad Atlas
Vehicles 1,664 388 388 - As per Entitlement Ex-Employee Nadir Khan
Vehicles 2,380 1,745 1,745 - As per Entitlement Ex-Employee Ahmed Sohail Warrich
Vehicles 1,664 361 361 - As per Entitlement Ex-Employee Abdul Hamid Asim
Vehicles 2,380 1,666 1,666 - As per Entitlement Ex-Employee Tahir Shahbaz Anjum
Vehicles 5,857 2,050 2,050 - As per Entitlement Ex-Employee Usman Shahid
Vehicles 2,875 2,156 2,156 - As per Entitlement Ex-Employee S H Irtiza Kazmi
Vehicles 1,864 404 404 - As per Entitlement Ex-Employee Muhammad Farooq
Vehicles 1,899 855 855 - As per Entitlement Ex-Employee Kazi Imtiaz Ahmed
Vehicles 1,864 342 342 - As per Entitlement Ex-Employee Khurram Saeed Naik
Vehicles 1,673 - 167 167 As per Entitlement Employee Shahla Ghulam Hussain
Vehicles 1,658 - 166 166 As per Entitlement Ex-Employee Saleem Ahmed
Vehicles 1,664 333 333 - As per Entitlement Employee Imtiaz Ahmed
Vehicles 1,664 333 333 - As per Entitlement Employee Manzoor Ahmed
Vehicles 1,734 347 347 - As per Entitlement Employee Dilbur Hussain Khan
Vehicles 1,664 333 333 - As per Entitlement Ex-Employee Syed Akhtar Ali Shah
Vehicles 1,664 333 333 - As per Entitlement Employee Aamer Manzoor
Vehicles 1,864 373 373 - As per Entitlement Employee Tahir Abbas
Vehicles 5,257 1,051 1,051 - As per Entitlement Employee Rehmat Ali Hasnie
Vehicles 1,664 333 333 - As per Entitlement Employee Syed Azhar Ali
Vehicles 1,664 333 333 - As per Entitlement Employee Sumaira Mazhar
Vehicles 1,764 353 353 - As per Entitlement Employee Muhammad Younas
Vehicles 1,664 333 333 - As per Entitlement Employee Javed Ashraf
Vehicles 1,708 342 342 - As per Entitlement Employee Shakeel Hayat Mir
Vehicles 1,673 251 335 84 As per Entitlement Employee Kashif Khan
Vehicles 1,824 699 699 - As per Entitlement Ex-Employee Mukhtar Ahmed
Vehicles 1,873 312 375 63 As per Entitlement Ex-Employee Adnan Adil

105,223 28,029 29,433 1,404

208
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

Gain /
Particulars of property and Original Book Sale Particulars of
(loss) on Mode of disposal Buyers name
equipment cost Value Proceed purchaser
disposal
----------------------(Rupees in '000)-------------------

Computer and peripheral equipment 99 - 10 10 As per Entitlement Employee Farhan Javaid Durrani
Computer and peripheral equipment 99 - 10 10 As per Entitlement Employee Nabeel Aslam
Computer and peripheral equipment 99 - 10 10 As per Entitlement Ex-Employee Sajjad Ahmed Rana
Computer and peripheral equipment 64 - 6 6 As per Entitlement Employee Muhammad Nasim
Computer and peripheral equipment 114 - 11 11 As per Entitlement Ex-Employee Abdul Qadir
Computer and peripheral equipment 114 - 11 11 As per Entitlement Ex-Employee Abdul Qadir
Computer and peripheral equipment 106 - 11 11 As per Entitlement Ex-Employee Abdul Qadir
Computer and peripheral equipment 106 - 11 11 As per Entitlement Ex-Employee Riffat Sultana Mughal
Computer and peripheral equipment 64 - 6 6 As per Entitlement Employee Waqar Ahmed
Computer and peripheral equipment 106 - 11 11 As per Entitlement Employee Fouad Farrukh
Computer and peripheral equipment 204 - 20 20 As per Entitlement Ex-Employee Usman Shahid
Computer and peripheral equipment 93 - 9 9 As per Entitlement Ex-Employee S H Irtiza Kazmi
Computer and peripheral equipment 99 - 10 10 As per Entitlement Employee Hisham Jan Kiani
Computer and peripheral equipment 99 - 10 10 As per Entitlement Employee Rashid Ata
Computer and peripheral equipment 123 - 12 12 As per Entitlement Employee Iqbal Ali
Computer and peripheral equipment 99 - 10 10 As per Entitlement Employee Abdul Rehman Shaikh
Computer and peripheral equipment 64 - 6 6 As per Entitlement Employee Nadia Ahmer
Computer and peripheral equipment 110 - 11 11 As per Entitlement Employee Moin Uddin Khan
Computer and peripheral equipment 135 - 14 13 As per Entitlement Employee Qaiser Alam
Computer and peripheral equipment 100 - 10 10 As per Entitlement Employee Aqib Malik
Computer and peripheral equipment 105 - 11 10 As per Entitlement Employee Muhammad Adil Usmani

2,202 - 220 220

Electrical, office equipment 50 - - - As per Entitlement Ex-Employee Abdul Qadir

Electrical, office equipment 148 - - - As per Entitlement Ex-Employee S H Irtiza Kazmi
Electrical, office equipment 115 - - - As per Entitlement Ex-Employee S H Irtiza Kazmi
Electrical, office equipment 114 - - - As per Entitlement Ex-Employee Dr. Qadir Baksh
Electrical, office equipment 71 - - - As per Entitlement Ex-Employee Dr. Qadir Baksh
Electrical, office equipment 115 - - - As per Entitlement Ex-Employee Dr. Qadir Baksh
Electrical, office equipment 167 - - - As per Entitlement Ex-Employee Usman Shahid
Electrical, office equipment 161 - - - As per Entitlement Ex-Employee Usman Shahid
Electrical, office equipment 34 - - - As per Entitlement Ex-Employee Adnan Adil
Electrical, office equipment 50 - - - As per Entitlement Ex-Employee Syed Shakeel Raza Abidi
Electrical, office equipment 35 9 9 - As per Entitlement Ex-Employee Muhammad Anwar
Electrical, office equipment 50 29 29 - As per Entitlement Ex-Employee Tahir Shahbaz Anjum
Electrical, office equipment 115 48 48 - As per Entitlement Ex-Employee Muhammad Farooq

1,225 86 86 -

Furniture and fixture 160 51 51 - As per Entitlement Ex-Employee Muhammad Hanif

Furniture and fixture 200 - - - As per Entitlement Ex-Employee Aziz Ur Rehman
Furniture and fixture 190 15 15 - As per Entitlement Ex-Employee Ejaz Muneer
Furniture and fixture 200 16 16 - As per Entitlement Ex-Employee Abdul Hamid Asim
Furniture and fixture 200 12 12 - As per Entitlement Ex-Employee Ghulam Hyder Channa
Furniture and fixture 160 11 11 - As per Entitlement Ex-Employee Muhammad Ismail
Furniture and fixture 200 41 41 - As per Entitlement Ex-Employee Ahmed Sohail Warrich
Furniture and fixture 190 62 62 - As per Entitlement Ex-Employee Waseem Zehra
Furniture and fixture 160 6 6 - As per Entitlement Ex-Employee Ghulam Nabi Bhatti
Furniture and fixture 200 72 72 - As per Entitlement Ex-Employee Tahir Shahbaz Anjum
Furniture and fixture 160 39 39 - As per Entitlement Ex-Employee Sees Raj
Furniture and fixture 190 62 62 - As per Entitlement Ex-Employee Muhammad Usman
Furniture and fixture 200 46 46 - As per Entitlement Ex-Employee Muhammad Yousuf
Furniture and fixture 200 82 82 - As per Entitlement Ex-Employee Manzur Ahmed

209
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

Gain /
Particulars of property and Original Book Sale Particulars of
(loss) on Mode of disposal Buyers name
equipment cost Value Proceed purchaser
disposal
----------------------(Rupees in '000)-------------------

Furniture and fixture 160 36 36 - As per Entitlement Ex-Employee Laiquat Ali Shaikh
Furniture and fixture 200 51 51 - As per Entitlement Ex-Employee Muhammad Shahbaz
Furniture and fixture 200 62 62 - As per Entitlement Ex-Employee Safdar Ali
Furniture and fixture 190 45 45 - As per Entitlement Ex-Employee Qaiser Sattar
Furniture and fixture 190 38 38 - As per Entitlement Ex-Employee Muhammad Sarwar
Furniture and fixture 190 71 71 - As per Entitlement Ex-Employee Gulzar Ahmed
Furniture and fixture 190 63 63 - As per Entitlement Ex-Employee Asif Mehmood Khan
Furniture and fixture 190 57 57 - As per Entitlement Ex-Employee Muhammad Razzaq
Furniture and fixture 190 18 18 - As per Entitlement Ex-Employee Huma Naz
Furniture and fixture 500 23 23 - As per Entitlement Ex-Employee Sultana Naheed
Furniture and fixture 190 59 59 - As per Entitlement Ex-Employee Samina Zia
Furniture and fixture 160 51 51 - As per Entitlement Ex-Employee Muhmmad Anwar Khan
Furniture and fixture 190 7 7 - As per Entitlement Ex-Employee Shahzad Ahmed
Furniture and fixture 160 18 18 - As per Entitlement Ex-Employee Irshad Ghani
Furniture and fixture 190 6 6 - As per Entitlement Ex-Employee Shahid Hussain
Furniture and fixture 190 - - - As per Entitlement Ex-Employee Manzoor Sultan
Furniture and fixture 300 101 101 - As per Entitlement Ex-Employee Muhammad Atlas
Furniture and fixture 160 64 64 - As per Entitlement Ex-Employee Muhammad Qasim
Furniture and fixture 160 45 45 - As per Entitlement Ex-Employee Muhammad Hussain Zar
Furniture and fixture 160 63 63 - As per Entitlement Ex-Employee Pervez Ahmed
Furniture and fixture 160 29 29 - As per Entitlement Ex-Employee Nayab Ahmed
Furniture and fixture 160 26 26 - As per Entitlement Ex-Employee Abduil Rasheed
Furniture and fixture 190 12 12 - As per Entitlement Ex-Employee Saleem Abbas Bangash
Furniture and fixture 160 39 39 - As per Entitlement Ex-Employee Jawaid Akhtar
Furniture and fixture 300 98 98 - As per Entitlement Ex-Employee Muhammad Farooq
Furniture and fixture 200 23 23 - As per Entitlement Ex-Employee Mr.muhammad Zulfiqar Ali
Furniture and fixture 200 26 26 - As per Entitlement Ex-Employee Mukhtar Ahmed
Furniture and fixture 160 39 39 - As per Entitlement Ex-Employee Ghulam Abbas Sangi
Furniture and fixture 160 40 40 - As per Entitlement Ex-Employee Muhammad Idrees
Furniture and fixture 160 70 70 - As per Entitlement Ex-Employee Abdul Ghafoor
Furniture and fixture 160 26 26 - As per Entitlement Ex-Employee Muhammad Akhtar Malik
Furniture and fixture 190 10 10 - As per Entitlement Ex-Employee Samina Parveen
Furniture and fixture 200 - - - As per Entitlement Ex-Employee Haseeb Arshad
Furniture and fixture 200 28 28 - As per Entitlement Ex-Employee Kazi Imtiaz Ahmed
Furniture and fixture 190 70 70 - As per Entitlement Ex-Employee Muhammad Anwar
Furniture and fixture 300 10 10 - As per Entitlement Ex-Employee Khurram Saeed Naik
Furniture and fixture 160 55 55 - As per Entitlement Ex-Employee Bashir Ahmed Qazi
Furniture and fixture 160 37 37 - As per Entitlement Ex-Employee Muhammad Bashir
Furniture and fixture 160 26 26 - As per Entitlement Ex-Employee Niaz Hussain
Furniture and fixture 200 85 85 - As per Entitlement Ex-Employee Hananeel Azhar Joseph

10,440 2,132 2,132 -

119,090 30,247 31,871 1,624

210
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

Core
Computer
Banking Total
software
Application
(Rupees in '000)
13. INTANGIBLE ASSETS

At January 1, 2021
Cost 2,913,952 1,140,555 4,054,507
Accumulated amortisation and impairment (2,913,952) (836,742) (3,750,694)
Net book value - 303,813 303,813

Year ended December 2021

Opening net book value - 303,813 303,813

Additions:
- through acquisitions / purchased - 304,412 304,412
Adjustments - addition - 223,556 223,556
Amortisation charge - (339,382) (339,382)
Exchange rate adjustments - 10,392 10,392
Closing net book value - 502,791 502,791

At December 31, 2021

Cost 2,913,952 1,678,915 4,592,867

Accumulated amortisation and impairment (2,913,952) (1,176,124) (4,090,076)
Net book value - 502,791 502,791
1
33.33 % on 33.33 % on
Rate of amortisation (percentage) cost cost
Useful life 3 years 3 years

At January 1, 2020

Cost 2,913,952 1,000,731 3,914,683

Accumulated amortisation and impairment (2,913,952) (625,781) (3,539,733)
Net book value - 374,950 374,950

Year ended December 2020

Opening net book value - 374,950 374,950
Additions:
- developed internally - 94,788 94,788
Amortisation charge - (210,961) (210,961)
Adjustments - additions - 45,756 45,756
Exchange rate adjustments - (720) (720)
Closing net book value - 303,813 303,813

At December 31, 2020

Cost 2,913,952 1,140,555 4,054,507
Accumulated amortisation and impairment (2,913,952) (836,742) (3,750,694)
Net book value - 303,813 303,813

33.33 % on 33.33 % on
Rate of amortisation (percentage) cost cost
Useful life 3 years 3 years

211
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

13.1 The cost of fully amortised intangible assets that are still in use (Rupees in '000)

Core Banking Application 2,913,952

Computer software 414,906
3,328,858

2021 2020
(Rupees in '000)
14. RIGHT OF USE ASSETS

Balance as at January 01, 6,669,684 7,221,266

Additions during the period 1,894,476 1,331,535
Derecognition during the period 27,387 -
Depreciation charged for the period 1,931,373 1,883,117
Balance as at December 31, 6,605,400 6,669,684

15. DEFERRED TAX

Recognised in
Recognised
At January other At December
in profit and
01, 2021 comprehensive 31, 2021
loss account
income
Deductible Temporary Differences on (Rupees in '000)

- Tax losses carried forward 10,705 - - 10,705

- Post retirement employee benefits 4,120,855 - 871,295 4,992,150
- Provision for diminution in the value of investments 236,751 - - 236,751
- Provision against loans and advances 9,084,601 1,373,337 - 10,457,938
- Provision against off-balance sheet obligations 115,222 - - 115,222
- Fixed assets 1,136,458 53,911 - 1,190,369
- Other provisions 105,416 - - 105,416
- Right of use assets - 502,538 - 502,538
14,810,008 1,929,786 871,295 17,611,089
Taxable Temporary Differences on

- Surplus on revaluation of fixed assets (2,396,819) 133,040 (273,922) (2,537,701)

- Surplus on revaluation of investments (15,346,840) - 2,631,420 (12,715,420)
- Surplus on revaluation of non-banking assets (44,713) - (8,019) (52,732)
- Exchange translation reserve - - (679,589) (679,589)
(17,788,372) 133,040 1,669,890 (15,985,442)
(2,978,364) 2,062,826 2,541,185 1,625,647

212
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

Recognised in
Recognised
At January other At December
in profit and
01, 2020 comprehensive 31, 2020
loss account
income
(Rupees in '000)
Deductible Temporary Differences on

- Tax losses carried forward 10,705 - - 10,705

- Post retirement employee benefits 3,852,716 - 268,139 4,120,855
- Provision for diminution in the value of investments 236,751 - - 236,751
- Provision against loan and advances 2,625,495 6,459,106 - 9,084,601
- Provision against off-balance sheet obligations 115,222 - - 115,222
- Fixed assets 800,678 335,780 - 1,136,458
- Other provisions 105,416 - - 105,416
7,746,983 6,794,886 268,139 14,810,008

Taxable Temporary Differences on

- Surplus on revaluation of fixed assets (2,489,995) 124,050 (30,874) (2,396,819)

- Surplus on revaluation of investments (13,816,519) - (1,530,321) (15,346,840)
- Surplus on revaluation of non-banking assets (41,439) - (3,274) (44,713)
- Others (2,314,832) 2,314,832 - -
(18,662,785) 2,438,882 (1,564,469) (17,788,372)
(10,915,802) 9,233,768 (1,296,330) (2,978,364)

2021 2020
Note (Rupees in '000)
16. OTHER ASSETS

Income / return / mark-up accrued in local currency - net of provision 41,779,183 39,642,348
Income / return / mark-up accrued in foreign currency - net of provision 2,842,699 2,274,912
Advances, deposits and other prepayments 16.1 3,870,355 2,918,231
Advance taxation (payments less provisions) and Income tax refunds receivable 16.6 12,824,850 27,183,199
Compensation for delayed tax refunds 19,221,431 17,556,551
Non-banking assets acquired in satisfaction of claims 16.4 1,195,660 1,211,122
Assets acquired from Corporate and Industrial Restructuring Corporation (CIRC) 208,423 208,423
Unrealized gain on forward foreign exchange contracts 3,058,205 -
Commission receivable on Government treasury transactions 5,006,019 4,612,174
Stationery and stamps on hand 470,402 499,511
Barter trade balances 195,399 195,399
Receivable on account of Government transactions 16.2 323,172 323,172
Receivable from Government under VHS scheme 16.3 418,834 418,834
Receivable against sale of shares 11,083 88,996
Acceptances 10,311,259 15,741,754
Others 7,355,244 6,437,628
109,092,218 119,312,254
Less: Provision held against other assets 16.5 11,700,956 11,873,693
Other assets (net of provision) 97,391,262 107,438,561

Surplus on revaluation of non-banking assets acquired in

satisfaction of claims 2,863,886 2,757,207
Other assets - total 100,255,148 110,195,768
5.4%

213
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

16.1 This includes Rs. 2,800 million (2020: Rs. 800 million) advance against Pre-IPO placement of Term Finance Certificates.

16.2 This represents amount receivable from GoP on account of encashment of various instruments handled by the Bank for
GoP as an agent of the SBP. Due to uncertainty about its recoverability, full amount has been provided for.

16.3 This represents payments made under the Voluntary Handshake Scheme (VHS), recoverable from GoP. Due to uncertainty
about its recoverability, full amount has been provided for.

2021 2020
(Rupees in '000)

16.4 Market value of Non-banking assets acquired in satisfaction of claims 4,059,546 3,968,329

An independent valuation of the Bank’s non-banking assets was performed by an independent professional valuer to
determine the fair value of the assets as at December 31, 2021. The valuation was carried out by Imtech (Private) Limited,
registered at SBP panel of valuers on the basis of an assessment of present market values.
2021 2020
(Rupees in '000)
16.4.1 Non-banking assets acquired in satisfaction of claims

Opening balance 3,968,329 3,762,068

Revaluation 106,679 217,404
Depreciation (15,462) (15,784)
Adjustment - 4,641
Closing balance 4,059,546 3,968,329

16.5 Provision held against other assets

Income / mark-up accrued in local currency 152,607 152,607

Advances, deposits, advance rent and other prepayments 837,949 837,949
Stationery and stamps on hand 96,542 96,542
Barter trade balances 195,399 195,399
Receivable on account of Government transactions 323,172 323,172
Receivable from Government under VHS scheme 418,834 418,834
Protested bills 4,164,485 4,092,280
Ex-MBL / NDFC 770,398 770,398
Assets acquired from corporate and industrial restructuring corporation asset (CIRC) 208,423 208,423
Others 4,533,147 4,778,089
11,700,956 11,873,693

16.5.1 Movement in provision held against other assets

Opening balance 11,873,693 10,853,587

Charge for the year 72,205 1,517,709
Transfer in / (out) - (484,393)
Adjustment against provision (244,942) (13,210)
Closing balance 11,700,956 11,873,693

16.6 During the year, the Bank has adjusted an amount of Rs. 11,322 million (2020: Rs. 20,950 million) its advance tax liability
and demand of previous tax year against income tax refunds receivables.

214
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)

17. BILLS PAYABLE

In Pakistan 21,775,348 16,718,064

Outside Pakistan 72,922 77,122
21,848,270 16,795,186

18. BORROWINGS

Secured

Borrowings from State Bank of Pakistan

Under Export Refinance Scheme 18.2 5,057,300 2,451,874
Under Export Refinance Scheme (New Scheme) 18.2 29,193,202 28,686,149
Financing Scheme for Renewable Energy 18.3 740,493 481,261
Refinance Facility for Modernization of SMEs 18.4 130,288 177,976
Financing Facility for storage of Agriculture Produce (FFSAP) 18.5 526,479 256,184
Under Long Term Financing Facility (LTFF) 18.6 19,465,068 16,380,117
Refinance Scheme for Payment of Wages and Salaries 18.7 566,315 1,167,527
Temporary Economic Refinance Facility 18.8 12,122,947 537,912
Refinance Facility for Combating Covid-19 18.9 79,976 61,448
67,882,068 50,200,448

Repurchase agreement borrowings 18.10 126,810,340 5,266,007

Bai Muajjal 72,195,209 79,788,522
Total secured 266,887,617 135,254,977

Unsecured

Call borrowings 18.10 46,011,009 2,047,588

Overdrawn nostro accounts 26,480 1,236,440
Total unsecured 46,037,489 3,284,028
312,925,106 138,539,005

18.1 Particulars of borrowings with respect to currencies

In local currency 275,739,772 136,491,430

In foreign currencies 37,185,334 2,047,575
312,925,106 138,539,005

18.2 The Bank has entered into an agreement with the SBP for extending export finance to customers. As per the terms of the
agreement, the Bank has granted the SBP the right to recover the outstanding amounts from the Bank at the date of
maturity of the finances by directly debiting the Bank's current account maintained with the SBP. These borrowings are
repayable within 180 days. These carry mark-up at rates ranging from 1.00% to 2.00% (2020: 3.00%) per annum.

215
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

18.3 These borrowings have been obtained from the SBP for providing financing facilities to address challenges of energy
shortage and climate change through promotion of renewable energy. These borrowings shall be repayable for a
maximum period of twelve (12) years. These carry mark-up at rates ranging from 2.00% to 3.00% per annum.

18.4 These borrowings have been obtained from the SBP under a scheme to finance modernization of Small and Medium
Enterprises by providing financing facilities for setting up of new units, purchase of new plant and machinery for
Balancing, Modernization and Replacement (BMR) of existing units and financing for import / local purchase of new
generators upto a maximum capacity of 500 KVA. These borrowings shall be repayable for a maximum period of ten
years and carry mark-up at rates upto 6.00% (2020: 6.00%) per annum.

18.5 These borrowings have been obtained from the SBP for providing financing facilities to develop the agricultural produce
marketing and enhance storage capacity, to encourage Private Sector to establish Silos, Warehouses and Cold Storages.
These borrowings shall be repayable for a maximum period of ten years. These carry mark-up at rates ranging from 2.5%
to 3.5% per annum.

18.6 These borrowings have been obtained from the SBP for providing financing facilities to exporters for adoption of new
technologies and modernization of their plant and machinery. These borrowings shall be repayable for a maximum period
of ten years. These carry mark-up at rates ranging from 1.5% to 3% per annum.

18.7 These borrowings have been obtained from the SBP with a view to support businesses to continue payment of wages
and salaries to their workers and employees in the aftermath corona virus (COVID-19) outbreak. These borrowings are
repayable for a maximum period of 2.5 years. These carry mark-up at rates ranging from 1.00% to 2.00% (2020: 1.00%
to 2.00%) per annum.

18.8 These borrowings have been obtained from the SBP under a scheme to provide concessionary refinance for setting up
new industrial units in the backdrop of challenges faced by the industries during the pandemic. These borrowings are
repayable for a maximum period of 10 years. These carry mark-up at rates ranging at 3.00% (2020: 3.00%) per annum.

18.9 These borrowings have been obtained from the SBP with a view to provide long term local currency finance for imported
and locally manufactured medical equipment to be used for combating COVID – 19. The facility will be available to all the
Hospitals and Medical Centres duly registered with respective provincial / federal agencies / commissions and engaged
in controlling & eradication of COVID – 19. These borrowings are repayable for a maximum period of 5 years. These carry
mark-up at rates at 0.00% (2020: 0.00%) per annum.

18.10 Mark-up / interest rates and other terms are as follows:

- Repurchase agreement borrowings carry mark-up ranging from 9.7% to 10.21% per annum (2020: 7% to 7.05%
per annum) having maturity on Jan 4, 2022 to Feb 18, 2022.

- Call borrowings carry interest ranging from 0.63% to 4.15% per annum (2020: 0% to 2% per annum).

18.11 Borrowings from the SBP under export oriented projects refinance schemes of the SBP are secured by the Bank's cash
and security balances held by the SBP.

18.12 Pakistan Investment Bond and Market Treasury Bill having maturity of 5 years and 6 months respectively, are pledged as
security under borrowing having carrying amount of Rs. 126,810 million (2020: Rs. 5,266 million).

216
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

19. DEPOSITS AND OTHER ACCOUNTS

2021 2020

In local In foreign In foreign

Total In local currency Total
currency currencies currencies

(Rupees in '000)
Customers

Current deposits -
remunerative 648,854,267 - 648,854,267 405,738,851 - 405,738,851
Current deposits - non-
remunerative 476,510,388 145,931,064 622,441,452 433,284,063 115,191,412 548,475,475
Savings deposits 675,591,525 79,434,496 755,026,021 637,694,450 66,126,336 703,820,786
Term deposits 400,905,240 70,853,064 471,758,304 276,454,916 81,153,488 357,608,404
Others - 6,463 6,463 4,683,735 316,040 4,999,775
2,201,861,420 296,225,087 2,498,086,507 1,757,856,015 262,787,276 2,020,643,291

Financial Institutions

Current deposits 445,782,844 1,155,463 446,938,307 360,581,882 1,634,466 362,216,348

Savings deposits 7,075,299 3,842,651 10,917,950 4,253,051 3,246,855 7,499,906
Term deposits 21,613,144 5,760,597 27,373,741 12,613,687 8,883,345 21,497,032
Others 35,838,540 - 35,838,540 7,109,902 - 7,109,902
510,309,827 10,758,711 521,068,538 384,558,522 13,764,666 398,323,188

2,712,171,247 306,983,798 3,019,155,045 2,142,414,537 276,551,942 2,418,966,479

2021 2020
(Rupees in '000)
19.1 Composition of deposits

Individuals 1,032,316,946 847,611,816

Government (Federal and Provincial) 931,199,067 674,985,259
Public Sector Entities 279,984,059 257,331,543
Banking companies 460,090,410 368,855,014
Non-Banking Financial Institutions 60,978,126 29,468,173
Private sector 254,586,437 240,714,674
3,019,155,045 2,418,966,479

19.2 Foreign currencies deposits includes deposit of foreign branches amounting to Rs. 75,485 million (2020: Rs. 73,145
million).

19.3 This includes deposits eligible to be covered under insurance arrangements amounting to Rs. 1,132,236 million (2020: Rs.
981,942 million) including islamic branches.

217
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
20. LEASE LIABILITY AGAINST RIGHT OF USE ASSETS (Rupees in '000)

Lease liabilities included in the statement of financial position

As at December 31 7,893,960 7,533,691

Of which are:
Current lease liability 1,524,809 1,367,840
Non-current lease liability 6,369,151 6,165,851
7,893,960 7,533,691

Maturity analysis - contractual undiscounted cash flows

Less than one year 2,199,012 2,315,989

One to five years 5,981,702 5,869,956
More than five years 6,500,876 5,839,515
Total undiscounted lease liabilities as at December 31 14,681,590 14,025,460

21. OTHER LIABILITIES

Mark-up / Return / Interest payable in local currency 48,801,768 37,808,884

Mark-up / Return / Interest payable in foreign currency 384,638 844,452
Unearned commission and income on bills discounted 428,443 1,574,563
Accrued expenses 21,027,250 18,183,815
Advance payments 370,807 362,466
Unclaimed dividends 181,997 185,516
Unrealised loss on forward foreign exchange contracts - 2,918,017
Unrealised loss on put option 306,339 306,339
Branch adjustment account 1,342,640 917,487
Employee benefits:
Pension fund 39.4 17,834,945 15,704,077
Post retirement medical benefits 39.4 24,516,717 22,282,747
Benevolent scheme 39.4 1,778,825 2,054,218
Gratuity scheme 39.4 3,168,258 2,711,914
Compensated absences 39.4 9,952,554 9,251,755
Staff welfare fund 371,257 371,257
Liabilities relating to barter trade agreements 3,006,122 2,142,033
Provision against off-balance sheet obligations 627,494 627,494
Provision against contingencies 21.1 3,805,376 4,180,071
Payable to brokers 155,001 65,137
PIBs shortselling 34,144,415 3,237,676
Acceptances 10,311,259 15,741,754
Others 16,143,418 14,683,842
198,659,523 156,155,514

218
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)
21.1 Provision against contingencies
Opening balance 4,180,071 4,629,645
Charge during the year 253,239 381,090
Transfer out - (830,664)
Adjustment (627,934) -
Closing balance 21.1.1 3,805,376 4,180,071

21.1.1 This represents provision made on account of regulatory violations and reported instances of financial improprieties for
which investigations are in progress.

22. SHARE CAPITAL

22.1 Authorized capital

2021 2020 2021 2020

------ (Number of shares) ------ (Rupees in '000)

2,500,000,000 2,500,000,000 Ordinary shares of Rs. 10 each 25,000,000 25,000,000

22.2 Issued, subscribed and paid up

2021 2020 2021 2020

------ (Number of shares) ------ (Rupees in '000)

140,388,000 140,388,000 Fully paid in cash 1,403,880 1,403,880

1,987,125,026 1,987,125,026 Issued as bonus shares 19,871,251 19,871,251
2,127,513,026 2,127,513,026 21,275,131 21,275,131

The Federal Government and the SBP hold 75.60% (2020: 75.60%) shares of the Bank.
2021 2020
(Number of shares)
22.3 Shares of the Bank held by subsidiary and associate

Following shares were held by the associate of the Bank as of year end:
First Credit & Investment Bank Limited 70,000 70,000
70,000 70,000

23. RESERVES

23.1 Exchange translation reserve

This comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

23.2 Statutory reserve

Every bank incorporated in Pakistan is required to transfer 20% of their profits to a statutory reserve until the reserve
equals share capital, thereafter 10% of the profits of the Bank are to be transferred to this reserve.

219
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

23.3 Merger reserve

As per the Scheme of Amalgamation, all the assets, liabilities and obligations of NBP Leasing Limited were merged with,
transferred to, vested in and assumed by the Bank as at the effective date July 31, 2017. The reserve represents the
excess of net assets transferred to the Bank over its investment in NBP Leasing Limited.

23.4 General loan loss reserve

The Bank is cognizant of the fact that a part of its credit or loan portfolio (funded and non-funded) which is not currently
impaired as per the applicable Prudential Regulations is underperforming and therefore the potential for risk of credit
losses on this part of portfolio is higher than the usual risk. Therefore, as a matter of abundant caution and in order to
protect the equity base of the Bank from future contingencies in respect of the credit portfolio, the Board of Directors in
their meeting held on April 29, 2015 decided to transfer an aggregate amount of Rs. 12 billion from the unappropriated
profits to a "General loan loss reserve". This appropriation was made on the basis of the management's best estimates
and judgement regarding the inherent portfolio risks. Subsequently, Board of Directors in their meeting held on 11 & 12
July, 2019 decided to transfer Rs. 4 billion from general loss reserve to unappropriated profit based on revised estimates.

2021 2020
Note (Rupees in '000)
24. SURPLUS ON REVALUATION OF ASSETS

Surplus on revaluation of:

- Available for sale securities 10.1 32,603,638 43,848,111
- Fixed assets 24.1 44,320,452 44,882,399
- Non-banking assets acquired in satisfaction of claims 24.2 2,863,886 2,757,207
79,787,976 91,487,717
Deferred tax on surplus on revaluation of:
- Available for sale securities (12,715,420) (15,346,840)
- Fixed assets 24.1 (2,537,701) (2,396,819)
- Non-banking assets acquired in satisfaction of claims 24.2 (52,732) (44,713)
(15,305,853) (17,788,373)
64,482,122 73,699,344

24.1 Surplus on revaluation of fixed assets

Surplus on revaluation of fixed assets as at January 1 44,882,399 44,576,547

Recognised during the year - 660,281
Realised on disposal during the year - net of deferred tax (220,819) -
Transferred to unappropriated profit in respect of incremental
depreciation charged during the year - net of deferred tax (208,088) (230,379)
Related deferred tax liability on incremental
depreciation charged during the year (133,040) (124,050)
Surplus on revaluation of fixed assets as at December 31 44,320,452 44,882,399

Less: related deferred tax liability on:

- revaluation as at January 1 (2,396,819) (2,489,995)
- revaluation recognised during the year - (30,874)
- Rate adjustment (273,922) -
- incremental depreciation charged during the year 133,040 124,050
(2,537,701) (2,396,819)
41,782,751 42,485,580

220
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)
24.2 Surplus on revaluation of non-banking assets acquired in satisfaction of claims

Surplus on revaluation as at January 1 2,757,207 2,539,695

Recognised during the year 106,679 217,512
Surplus on revaluation as at December 31 2,863,886 2,757,207

Less: related deferred tax liability on:

- revaluation as at January 1 (44,713) (41,439)
- revaluation recognised during the year (8,019) (3,274)
(52,732) (44,713)
2,811,154 2,712,494

25. CONTINGENCIES AND COMMITMENTS

Guarantees 25.1 261,356,068 242,030,415

Commitments 25.2 2,192,951,563 1,543,932,780
Other contingent liabilities 25.3 36,196,804 34,820,672
2,490,504,435 1,820,783,867

25.1 Guarantees

Financial guarantees 197,024,912 145,379,692

Performance guarantees 64,331,156 96,650,723
261,356,068 242,030,415

25.2 Commitments

Documentary credits and short-term trade-related transactions

- letters of credit 1,582,757,532 1,096,347,086

Commitments in respect of:

- forward foreign exchange contracts 25.2.1 571,111,340 419,327,735

- forward government securities transactions 25.2.2 38,255,954 27,625,340

Commitments for acquisition of:

- operating fixed assets 826,737 632,619

2,192,951,563 1,543,932,780

25.2.1 Commitments in respect of forward foreign exchange contracts

Purchase 337,970,120 272,245,550

Sale 233,141,220 147,082,185
571,111,340 419,327,735

Commitments for outstanding forward foreign exchange contracts are disclosed in these unconsolidated financial
statements at contracted rates. Commitments denominated in foreign currencies are expressed in rupee terms at the rates
of exchange prevailing at the statement of financial position date.

221
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)

25.2.2 Commitments in respect of forward government securities transactions

Purchase 30,218,032 496,331

Sale 8,037,922 27,129,009
38,255,954 27,625,340

Commitments for outstanding forward government securities transactions are disclosed in these unconsolidated financial
statements at contracted rates.

2021 2020
(Rupees in '000)
25.3 Other contingent liabilities

25.3.1 Claims against the Bank not acknowledged as debt 36,196,804 34,820,672

Claims against the Bank not acknowledged as debts includes claims relating to former Mehran Bank Limited amounting to
Rs.1,597 million (2020: Rs. 1,597 million).

25.3.2 Taxation

Tax returns of the Bank have been filed up to tax year 2021 and amended by tax authorities up to tax year 2020. For Azad
Kashmir and Gilgit Baltistan branches no amendment to returns filed under section 120 of the Ordinance has been made,
hence returns filed are deemed assessments for all the years till tax year 2021.

a) The Taxation Officer had issued show-cause notices under section 221 of the Income Tax Ordinance, 2001 to the
Bank last year to withdraw compensation on delayed refunds already given to the Bank, and questioned issuance
of refund orders already issued to the Bank in the past several years which had become past and closed
transactions and thus legally fall outside the scope of rectification. The amount involved is Rs. 14,874.98 million
and Rs. 26,406.58 million respectively. These notices being totally illegal were challenged by the Bank before the
Honorable Sindh High Court (SHC) which instructed the taxation officer not to take adverse action. The Honorable
SHC has stayed the recovery of tax demands. The Bank as a matter of abundant caution had also filed appeal
before Commissioner Inland Revenue (Appeals) (CIR(A)) which has remanded the matter to the taxation officer for
re-adjudication for failing to given opportunity of hearing to the Bank. Similar notices have been issued and orders
were passed for tax year 2013 during the year cancelling refund compensation aggregating to Rs. 535.91 million
which has been challenged before CIR(A) and appeal is pending for hearing.

b) Sindh High Court had quashed the show-cause notices issued in previous round in 2013 for passing orders for tax
years 2006 and 2007 under section 161 of the Ordinance on the grounds that these were time-barred in terms of
section 174(3) of the Ordinance. Supreme Court on Department’s appeal has subsequently allowed taxation officer
to initiate proceedings through fresh notices, subject to certain directions. Orders were passed by taxation officer
for tax years 2006 and 2007 last year, treating the Bank as taxpayer-in-default and raising tax demands of Rs.
1,032.18 million and Rs. 1,394.72 million respectively. Bank has filed appeals before CIR(A) primarily on the
grounds that Supreme Court’s instructions have been blatantly ignored as cogent reasons for late proceedings
were not given and neither amount of tax default nor names of parties were disclosed in the show-cause notices or
the orders. The orders are also assailed for being passed in quite arbitrary manner and various legal and factual
mistakes are made therein. The appeals have been heard by CIR(A) and decision is awaited.

c) Taxation officer has passed assessment order for tax year 2020 during the year. The Bank has filed appeal before
CIR(A) which is pending for hearing. Stay has been granted against tax demand arising out of the assessment
order. The Bank has shown the additional tax liability of Rs. 4,298.17 million arising out of the impugned order as
contingency based on the tax consultants' expectation that the issues would be decided in Bank's favour.

222
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

d) Taxation officer has passed assessment order for tax year 2019 during the year. The Bank has filed appeal before
CIR(A) which is pending for hearing. Stay has been granted against tax demand arising out of the assessment
order. The Bank has shown the additional tax effect of Rs. 1,772.79 million arising out of the impugned order as
contingency based on the tax consultants' expectation that the issues would be decided in Bank's favour.

e) The Additional Commissioner, PRA has passed an order creating the Punjab sales tax liability on the non-
withholding of Punjab Sales Tax on the insurance services received by the Bank for the tax periods January 2016-
December 2016 and January 2017-December 2017 amounting to Rs. 254.734 million and Rs. 281.774 million
respectively. The rectification application has been submitted under section 79 of the Punjab Sales Tax on Services
Act, 2012 for the apparent mistake of facts. After the rectification, the net principal exposure would be Rs. 56.621
million and Rs. 50.685 million. Based on the legal and factual position, the Tax Advisor is confident that the ultimate
outcome of the proceeding will be decided in the Bank’s favor.

f) The other matters under tax contingencies include allocation of common expenditure between taxable income and
exempt / low tax rate income, interest credited to suspense account, reversal of bad debts expense, reversal of
provisions of non-performing loans, provisions for diminution in value of investment. Surplus on revaluation of
Available for Sale securities disclosed in the Statement of Comprehensive Income in respect of tax year 2013.The
aggregate effect of these contingencies as on December 31, 2021, including amount of Rs. 1,982.32 million
(December 31, 2020: Rs. 645.97 million) in respect of indirect tax issues, amounts to Rs. 19,964.93 million
(December 31, 2020: Rs. 21,163 million). No provision has been made against these contingencies, based on the
opinion of tax consultants of the Bank, who expect favorable outcome upon decisions of pending appeals.

25.3.3 Contingencies in respect of employees benefits and related matters

The following are the details of the contingencies arising out of the various legal cases pending adjudication in respect of
employees’ benefits and related matters. The Bank considers that except for Pensionary benefits note 25.3.3.1, the
financial impact of other matters is impracticable to determine with sufficient reliability.

25.3.3.1 Pensionary benefits to retired employees

In 1977 the Federal Government vide letter No. 17 (9) 17 XI / 77 dated November 30, 1977, addressed to the Pakistan
Banking Council, directed that all executives / officers of all the nationalized banks would be paid pension as calculated
@ 70% of average emoluments upon completion of 30 years of qualifying service of employees and where qualifying
service was less than 30 years but not less than 10 years, proportionate reduction in percentage was to be made. This
pension scheme was made applicable with effect from May 01, 1977.

In the year 1997, the Banks Nationalization Act, 1974 (“BNA, 1974”) was substantially amended whereby the Pakistan
Banking Council was abolished and the Board of Directors of the nationalized banks were empowered / mandated
respectively to determine personnel policies with the President of the Bank deciding the remuneration and benefits of the
employees in accordance with policies determined by the Board. In the year 1999, by virtue of the said amendments in
BNA, the Board of Directors of the Bank approved the Revised Pay Structure for the officers / executives of the Bank
with effect from January 01, 1999 vide Circular No. 37/1999, whereby the basic salary was increased by 110 % to 140%
and besides giving multifarious benefits to its employees, formula for monthly gross pension was revised. However, the
amount of gross pension on the basis of existing Basic Pay and existing formula was protected.

A number of Bank's employees, after attaining the age of superannuation filed Writ Petitions before the Lahore High
Court and the Peshawar High Court, praying for re-calculation of their pensionary benefits and increases in accordance
with the Bank Circular No. 228 (C) dated December 26, 1977 and furthermore, for allowing the increases in their pension
as per the increases allowed by the Federal Government to its employees. This litigation started in the year 2010 and
2011.

The Peshawar High Court, in terms of judgment dated June 03, 2014, dismissed the petition while observing that the
petition was hit by laches and that the petitioners could not claim the benefits granted to the similarly placed employees
of other institutions who were governed through different Statutes and Service Rules.

223
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

The Lahore High Court vide its judgement dated January 15, 2016, allowed the Writ Petitions on the same matter and the
Bank was directed to release the pensionary benefits of the petitioners. The said order was assailed by the Bank by filing
Intra Court Appeals in January 2016 which were dismissed by the Lahore High Court, Lahore, through its judgement
dated January 16, 2017. The Bank assailed the said judgement by filing appeals in the Supreme Court of Pakistan.

The Honorable Supreme Court of Pakistan after hearing the arguments of both parties, vide its judgement dated
September 25, 2017 upheld the decision of the Division Bench of the Lahore High Court on the contention of increase in
Bank’s employees’ pension, thereby instructing the Bank to give pension benefits to its employees in the light of Head
Office Instruction Circular No. 228 (C) of 1977. Under this Circular, the pension of employees was to be calculated @
70% of average emoluments upon completion of minimum qualifying service requirement, besides requiring the Bank to
follow subsequent revisions in pension scheme and rates granted by the Federal Government to civil servants from time
to time as well.

The Bank as well as Federal Government filed review petitions against the aforesaid judgment of the Honorable Supreme
Court of Pakistan and also made an application for constitution of larger bench of the Supreme Court to hear the review
petition, which was reportedly accepted by the Chief Justice. However on March 18, 2019, the matter came up for
hearing before a three member Bench instead of a larger bench. As advised by our legal counsels, the Bank considers
that due to conflicting decision of the other bench of the Supreme Court in a case which, in all material facts and
circumstances, is identical to the Bank’s case and various other legal infirmities in the judgement as highlighted by the
Bank in its Review Petition, the Bank has a reasonably strong case on legal grounds to convince the Supreme Court for
review of its decision. The Review Petition is ongoing and is expected to be listed for hearing soon.

A related matter has also been appealed in the Supreme Court where the petitioners have asked for increases in pension
in accordance with government increases in Pension for Government employees which is pending adjudication and a
favorable outcome is expected.

In case the above matters are decided unfavorably, the Bank estimates based on the actuarial advice that the financial
impact arising from the additional liability would be approximately Rs. 74.4 billion excluding any penal interest / profit
payment (if any) due to delayed payment Pension expense for the current year and onward will also increase by Rs.8.4
billion due to this decision. Based on the opinion of legal counsel, no provision has been made in these unconsolidated
financial statements for the above-mentioned amount as the Bank is confident about the favorable outcome of the
matter.

25.3.3.2 Regularizing the temporary hires / workers deployed by service provider companies under outsourcing arrangements

The Bank outsourced certain non-core jobs to various service provider companies after entering into contracts with
them. The resources deployed by the service provider companies were their employees and the said companies have
had sole administrative control over these resources. Some of these resources filed writ petitions before the High Courts
and National Industrial Relations Commission (NIRC) seeking to be absorbed by the Bank in its regular service based on
grounds that they were in fact employees of the Bank. Presently, there are 6 cases on appeal pending at the Supreme
Court where these have been clubbed to be heard as one. The Chief Justice of Pakistan has constituted a larger bench
comprising of five Judges being headed by himself for adjudication. The case is ongoing and is presently adjourned for a
date to be fixed. A favorable outcome of this case is expected.

25.3.3.3 Litigation related to management trainee program

Treatment of Non-MTOs (regular employees) at Par with the MTOs (also appointed in regular cadres) - Litigation arising
out of order dated September 21, 2016 passed by the Supreme Court in our CA No.1644/2013 out of our CPLA No.
805/2013 filed against order dated March 13, 2013 of the Division Bench of Sindh High Court, Sukkur in CP No. D-
417/2010 (the “Decision”).

Mr. Ashfaq Ali and three (3) others filed a CP No. D-417/2010 before the Sindh High Court, Bench at Sukkur while
praying to treat them equally in respect of remunerations with other employees (MTOs) having same grade, nature of job
and qualification.

224
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

The Honorable Division Bench at Sukkur, vide order dated March 13, 2013, directed the Bank to ensure equal treatment
to the petitioners with similarly placed employees without any discrimination.

Certain employees filed petitions in the Honorable High Court of Peshawar who also gave its decision in favor of the
petitioners. Review petition filed in the Honorable Supreme Court of Pakistan by the Bank was also dismissed.

Last year, the Bank entered into out of court settlements which have successfully been executed with many Non-MTO
employees ('petitioners‘) and accordingly compromise agreements ('the agreement‘), offering waiver of loans, increase in
basic salaries and provision of other allowances, were signed with those petitioners who have withdrawn their cases
against the Bank. Simultaneously the Bank continues to make payments to claimants as per any court orders from time
to time.

25.4 Foreign exchange repatriation case

While adjudicating Foreign Exchange repatriation cases of exporter namely: M/S Fateh Textile Mills Limited, the Foreign
Exchange Adjudicating Court of the State Bank of Pakistan has also adjudicated penalty of Rs. 1,020 million, arbitrarily on
the Bank. The Bank has filed appeals before the Appellate Board and Constitutional Petitions in the Honorable High Court
of Sindh against the said judgments. The Honorable High Court has granted relief to the Bank by way of interim orders.

As advised by our counsel, NBP has also fled a Constitutional Petition challenging the constitution of the Appellate Board
by the Commission and has obtained restraining order on the ground that the Appellate Board constituted by the
Commission lacks legal merit in the light of Supreme Court ruling. Our counsel, Mr. Raashid Anwar, Advocate has
concluded his arguments in respect of the Foreign Exchange Regulation Appellate Board constitution. However, another
petition filed by another company whereby challenging the constitutionality of the Competition Act was also tagged with
the petitions filed by the banks.

Based on merits of the appeals management is confident that these appeals shall be decided in favor of the Bank and
therefore, no provision has been made against the impugned penalty.

25.5 Compliance and risk matters relating to anti-money laundering

The Bank operates a branch in New York which is licensed by the New York State Department of Financial Services
(NYSDFS) and is also subject to supervision by the Federal Reserve Bank of New York (FRBNY).

The Bank and its New York Branch had entered into a Written Agreement with the FRBNY and NYSDFS (US regulators) in
2016 which inter-alia required the Bank to address certain compliance and risk management matters relating to anti-
money laundering and the US bank secrecy law requirements and the implementation of the requisite systems and
controls and allocation of adequate resources to ensure full compliance with such requirements.

In February 2022, the Bank has reached agreements with the US Regulators. The agreements include fines totaling US $
55.4 million equivalent to Rs. 9,778 million focused on historical compliance program weaknesses and delays in making
compliance related enhancements.

Under the agreements, the Bank is required to submit status and progress reports at defined frequencies to the US
Regulators with respect to the remedial measures being taken in respect of non-compliances at the New York branch. The
New York branch has been under new management since May 2020 and has substantially enhanced its compliance
program. Management and the Board of Directors of the Bank are committed to ensure compliance with the conditions
agreed in the orders given by US Regulators. There were no findings of improper transactions or willful misconduct.

225
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)
26. MARK-UP / RETURN / INTEREST EARNED

On:
a) Loans and advances 87,346,632 99,780,695
b) Investments 139,115,194 154,040,914
c) Securities purchased under resale agreements 3,956,776 2,373,880
d) Balances with banks 1,464,100 1,615,526
231,882,702 257,811,015

27. MARK-UP / RETURN / INTEREST EXPENSED

Deposits 87,838,223 103,380,273

Borrowings 6,838,985 6,929,625
Cost of foreign currency swaps against foreign currency deposits / borrowings 8,018,491 9,175,328
Finance charge on lease liability against right of use assets 774,664 754,180
Securities sold under repurchase agreements 30,794,533 33,416,502
134,264,896 153,655,908

28. FEE AND COMMISSION INCOME

Branch banking customer fees 1,211,530 1,264,985

Consumer finance related fees 764,985 771,759
Card related fees (debit cards) 1,751,172 1,051,111
Credit related fees 273,464 186,655
Investment banking fees 769,417 807,481
Commission on trade 1,947,282 1,830,680
Commission on guarantees 459,515 477,271
Commission on cash management 95,267 14,149
Commission on remittances including home remittances 1,724,239 1,763,544
Commission on bancassurance 332,743 278,406
Commission on government transactions 8,408,285 9,652,545
Others 65,902 154,960
17,803,801 18,253,547

29. GAIN / (LOSS) ON SECURITIES - NET

Realised 29.1 6,308,994 7,883,429

Unrealised - held for trading 10.1 (120,675) 2,074
6,188,319 7,885,503

29.1 Realised gain on

Federal Government securities 1,065,169 5,346,600

Shares 5,136,681 1,868,517
Ijarah sukuks 10,809 8
Foreign securities 96,335 668,304
6,308,994 7,883,429

226
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)

30. OTHER INCOME

Rent on property 63,480 36,919

Gain on sale of fixed assets - net 62,945 10,775
Postal, SWIFT and other charges recovered 23,450 48,071
Claim from insurance company 4,355 -
Compensation for delayed tax refunds 30.1 1,664,879 3,834,424
Gain on derecognition on right of use assets 12,378 -
Tender money 2,082 5,836
Others 10,667 27,269
1,844,236 3,963,294

30.1 1% 2001.
This represents compensation of delayed refunds determined under Section 171 of Income Tax Ordinance 0.7%

2021 2020
Note (Rupees in '000)

31. OPERATING EXPENSES

Total compensation expenses 31.1 37,044,928 40,549,691

Property expenses

Rent and taxes 800,290 778,645

Insurance 31.2 33,590 34,734
Utilities cost 1,363,539 1,345,619
Security (including guards) 2,846,980 2,726,215
Repair and maintenance (including janitorial charges) 909,994 965,093
Depreciation 475,951 466,348
Depreciation on non banking assets 15,462 15,784
Depreciation on Ijarah assets 72,807 85,593
Depreciation on ROUA 1,931,373 1,883,117
8,449,986 8,301,148

Information technology expenses

Software maintenance 1,353,962 1,366,196

Hardware maintenance 87,765 19,802
Depreciation 332,791 247,410
Amortisation 339,382 210,961
Network charges 612,209 559,235
IT Manage Services 359,054 164,897
3,085,163 2,568,501

227
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Other operating expenses Note (Rupees in '000)

Directors' fees and allowances 25,431 36,160

Fees and allowances to Shariah Board 12,564 9,407
Legal and professional charges 1,355,610 2,150,248
Outsourced services costs 31.3 640,760 829,229
Travelling and conveyance 816,183 653,230
NIFT clearing charges 177,432 189,866
Depreciation 1,591,362 1,652,352
Training and development 62,409 62,039
Postage and courier charges 212,943 213,403
Communication 339,605 322,654
Stationery and printing 1,334,676 1,128,834
Marketing, advertisement and publicity 368,095 317,000
Contributions for other corporate and social responsibility 31.4 8,197 85,447
Auditors' remuneration 31.5 183,610 198,063
Financial charges on leased assets 38,300 30,852
Entertainment 265,210 252,132
Clearing charges, verification and licence fee 293,146 342,554
Brokerage 140,233 121,092
Insurance general 461,301 369,473
Vehicle expenses 173,999 149,421
Deposit premium expense 1,571,107 1,388,248
Repairs and maintenance general 698,708 677,533
Others 306,363 198,046
11,077,244 11,377,283
Grand Total 59,657,321 62,796,623
(0)
31.1 Total compensation expense

Managerial Remuneration
i) Fixed 7,943,984 12,957,847
of which;
a) Cash Bonus / Awards etc. 4,481,382 4,413,504
Charge for defined benefit plan 7,406,457 7,392,388
Rent & house maintenance 5,305,594 4,591,965
Utilities 1,961,619 1,712,734
Medical 3,453,565 3,141,830
Conveyance 3,359,933 3,192,648
Club Membership & Subscription 197,461 80,796
Education Allowance 1,455,624 1,463,449
Insurance 337,287 440,776
Honorarium to Staff and Staff Welfare 251,752 206,662
Overtime 44,249 25,196
Special Duty Allowance 139 477
Washing Allowance 16,590 15,971
Key Allowance 72,813 72,208
Unattractive Area Allowance 56,898 57,929
Leave Encashment 9,775 9,246
Teaching Allowance 10,392 9,199
Incentive on CASA deposits mobilization 20,473 6,790
Meal Allowance 125,580 126,585
Liveries 1,265 1,086
Others 532,096 630,405
37,044,928 40,549,691
37,044,928 40,549,691

228
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

31.2 This includes Rs. 3.422 million (2020: Rs.3.550 million) insurance premium against directors' liability insurance.

31.3 Total cost for the year included in other operating expenses relating to outsourced activities is Rs. 640.8 million (2020: Rs.
829 million). Out of this cost, Rs. 631.7 million (2020: Rs. 821 million) pertains to the payment to companies incorporated
in Pakistan and Rs. 9.1 million (2020: Rs. 8 million) pertains to payment to companies incorporated outside Pakistan. Total
Cost of outsourced activities for the year given to related parties is Rs. nil (2020: Rs. nil). Outsourcing shall have the same
meaning as specified in Annexure-I of BPRD Circular No. 06 of 2017. The material outsourcing arrangements along with
their nature of services are as follows:

Name of Company Nature of Services 2021 2020

(Rupees in '000)

HTECH Solutions (Private) Limited Call center management 94,770 97,407

94,770 97,407

During the year, outsourcing services were hired in respect of sales, call centre services, IT support, data entry, protocol
services, collection services, janitorial & cleaning services and lift operator and engineering services.

31.4 Contributions for Corporate & Social Responsibilities include following amounts exceeding Rs. 500,000:
2021 2020
Description (Rupees in '000)

Karachi Relief Trust (KRT) - 20,000

Rural Community Development Program - 20,000
National Rural Support Program - 25,000
SAFCO Support Program - 5,000
Thardeep Mirco Finance Foundation - 5,000
Agha Khan Rural Support Program - 5,000
Namal Education Foundation 5,197 5,200
Pakistan Hindu Council 1,000 -
Tehzibul Akhlaq Trust 2,000 -
Total 8,197 85,200

-
31.4.1 None of the Directors, Sponsor shareholders and Key Management Personnel or their spouse have an interest in the
Donee.

A.F. Ferguson & Total Total

Yousuf Adil
Co. 2021 2020
31.5 Auditors' remuneration
(Rupees in '000)
Audit fee 6,226 6,226 12,452 12,452
Review of interim financial statements 2,178 2,178 4,356 4,356
Fee for audit of domestic branches 5,060 5,060 10,120 10,120
Special certifications and sundry advisory services 6,798 1,136 7,934 5,604
Tax services - - - 20,000
Sales Tax 1,900 1,608 3,508 4,203
Out-of-pocket expenses 4,500 4,500 9,000 9,000
26,662 20,708 47,370 65,735
Fee for audit of overseas branches including
advisory services and out-of-pocket expenses - - 136,240 132,328
26,662 20,708 183,610 198,063
(0)

229
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)
32. OTHER CHARGES

Penalties imposed by State Bank of Pakistan 343,698 310,588

Penalties imposed by other regulatory bodies
(Central bank of international branches) 2,765 4,719
346,463 315,307

33. PROVISIONS AND WRITE OFFS - NET

Provisions for diminution in value of investments 10.3 663,219 (126,387)

Provisions against loans and advances 11.4 11,119,007 29,320,023
Provision against other assets 134,157 1,702,302
11,916,383 30,895,938

34. TAXATION

Current 34.1 26,915,246 24,898,997

Prior years - -
Deferred (2,062,826) (9,233,769)
24,852,420 15,665,228

34.1 Current taxation includes Rs. Nil (2020: Rs. Nil million) of overseas branches.

34.2 Relationship between tax expense and accounting profit

Accounting profit before tax 52,860,408 46,224,147

Income tax at statutory rate @ 35% (2020: 35%) 18,501,143 16,178,451

Increase / (decrease) in taxes resulting from:
Super tax at statutory rate @ 4% (2020: 4%) 2,114,416 1,848,966
Inadmissible items 3,948,871 122,970
Enhanced rate on Govt. Securities 832,181 65,134
Reduced rate on SME / Housing (96,438) (27,636)
Impact of tax order - (2,314,832)
Others (447,753) (207,825)
Tax charge for current and prior years 24,852,420 15,665,228
- -
2021 2020
35. BASIC EARNINGS PER SHARE

Profit for the year (Rupees in 000's) 28,007,988 30,558,919

Weighted average number of ordinary shares (Number in 000's) 2,127,513 2,127,513
Basic earnings per share (Rupees) 13.16 14.36

36. DILUTED EARNINGS PER SHARE

Profit for the year (Rupees in 000's) 28,007,988 30,558,919

Weighted average number of ordinary shares (adjusted
for the effects of all dilutive potential ordinary shares) (Number in 000's) 2,127,513 2,127,513
Diluted earnings per share (Rupees) 13.16 14.36

230
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)
37. CASH AND CASH EQUIVALENTS

Cash and balances with treasury banks 7 278,747,059 249,259,590

Balances with other banks 8 17,667,067 14,227,355
Call / clean money lendings 9 21,009,723 2,040,800
Call borrowings 18 (46,011,009) (2,047,588)
Overdrawn nostro accounts 18 (26,480) (1,236,440)
271,386,360 262,243,717

37.1 Reconciliation of movements of liabilities to cash flows arising from financing activities
2021
Lease Unclaimed
Obligation Dividend
(Rupees in '000)

Balance as at January 1, 2021 7,533,691 185,516

Changes from financing cashflows
Payment of lease obligation / dividend (2,450,084) (3,519)
Total charges from financing activities (2,450,084) (3,519)

Other charges
Renewed lease during the year 1,894,476 -
Interest unwinding 774,664 -
Foreign exchange loss 141,213 -
Total other charges 2,810,353 -

Balance as at December 31, 2021 7,893,960 181,997

- -
2020
Lease Unclaimed
Obligation Dividend
(Rupees in '000)
Balance as at January 1, 2020 7,640,188 186,668
Changes from financing cashflows
Payment of lease obligation / dividend (2,040,384) (1,152)
Total charges from financing activities (2,040,384) (1,152)

Other charges
Renewed lease during the year 1,237,488 -
Interest unwinding 754,180 -
Foreign exchange gain (57,781) -
Total other charges 1,933,887 -

Balance as at December 31, 2020 7,533,691 185,516

231
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Numbers)

38. STAFF STRENGTH

Permanent 10,437 10,751

On Bank contract 4,972 4,358

Bank's own staff strength at the end of the year 15,409 15,109

38.1 In addition to the above, 1273 (2020: 1,838) employees of outsourcing services companies were assigned to the Bank as
at the end of the year to perform services other than guarding and janitorial services. Out of these, 1258 employees are
working domestically (2020: 1,825) and 15 (2020: 13) abroad respectively.

39. DEFINED BENEFIT PLAN

39.1 General description

General description of the type of defined benefit plan and accounting policy for remeasurements of the net defined
liability / asset is disclosed in note 5.13 to the unconsolidated financial statements.

39.2 Number of employees under the scheme

The number of employees covered under the following defined benefit schemes are:
2021 2020
(Numbers)

Pension fund 10,437 10,751

Post retirement medical scheme 10,437 10,751
Benevolent scheme 10,437 10,751
Gratuity scheme 4,685 3,985
Compensated absences 10,437 10,751

39.3 Principal actuarial assumptions

The actuarial valuations were carried out as at December 31, 2021 using the following significant assumptions:

2021 2020
------------------ (Per annum) ------------------
Discount rate 11.75% 9.75%
Expected rate of return on plan assets 11.75% 9.75%
Expected rate of salary increase 11.75% 9.75%
Expected rate of increase in pension 29% for next one year, 14.00%
7.25% onwards
Expected rate of increase in medical benefit 11.75% 9.75%

232
 39.4 Reconciliation of (receivable from) / payable to defined benefit plans

2021 2020

Post retirement Benevolent Compensated Post retirement Benevolent Compensated

Pension fund Gratuity scheme Total Pension fund Gratuity scheme Total
medical scheme scheme absences medical scheme scheme absences

Present value of obligations 79,608,695 24,516,717 1,778,825 3,168,258 9,952,554 119,025,049 72,742,130 22,282,747 2,054,218 2,711,914 9,251,755 109,042,764
Fair value of plan assets (61,773,750) - - - - (61,773,750) (57,038,053) - - - - (57,038,053)
Payable 17,834,945 24,516,717 1,778,825 3,168,258 9,952,554 57,251,299 15,704,077 22,282,747 2,054,218 2,711,914 9,251,755 52,004,711
- - - - -
39.5 Movement in defined benefit obligations

Obligations at the beginning of the year 72,742,130 22,282,747 2,054,218 2,711,914 9,251,755 109,042,764 66,473,466 18,333,947 1,749,006 2,206,599 8,344,182 97,107,200
Current service cost 1,036,822 794,194 72,381 379,017 16,194 2,298,608 1,517,934 554,295 61,059 311,438 133,178 2,577,904
Past Service due to early retirement gratuity 119,800 - - - - 119,800 - - - - - -
Adjustment against contingency Reserve 245,833 70,731 2,939 - 31,950 351,453 2,338,905 497,146 20,650 - 319,164 3,175,865
Interest cost 6,939,689 2,118,798 189,497 258,343 887,413 10,393,740 7,285,453 1,996,008 183,757 244,487 919,810 10,629,515
Benefits paid by the Bank (3,131,668) (1,102,980) (221,326) (124,479) (300,163) (4,880,616) (3,427,771) (1,183,316) (231,219) (66,763) (336,194) (5,245,263)
Re-measurement loss / (gain) - Profit and loss - - - - 65,405 65,405 - - - - (128,385) (128,385)
Re-measurement loss / (gain) - OCI 1,656,089 353,227 (318,884) (56,537) - 1,633,895 (1,445,857) 2,084,667 270,965 16,153 - 925,928
Obligations at the end of the year 79,608,695 24,516,717 1,778,825 3,168,258 9,952,554 119,025,049 72,742,130 22,282,747 2,054,218 2,711,914 9,251,755 109,042,764

39.6 Movement in fair value of plan assets

Fair value at the beginning of the year 57,038,053 - - - - 57,038,053 51,687,819 - - - - 51,687,819
Interest income on plan assets 5,471,096 - - - - 5,471,096 5,686,646 - - - - 5,686,646
For the year ended December 31, 2021

Contribution by the Bank - net 1,283,178 - - - - 1,283,178 1,148,063 - - - - 1,148,063

Benefits paid (3,131,668) - - - - (3,131,668) (3,427,771) - - - - (3,427,771)
Benefits paid on behalf of fund 1,713,284 - - - - 1,713,284 1,783,479 - - - - 1,783,479
Actuarial gain / (loss) on Assets (600,193) - - - - (600,193) 159,817 - - - - 159,817
Fair value at the end of the year 61,773,750 - - - - 61,773,750 57,038,053 - - - - 57,038,053

Movement in (receivable) / payable under defined

benefits scheme
opening balance 15,704,077 22,282,747 2,054,218 2,711,914 9,251,755 52,004,711 14,785,647 18,333,947 1,749,006 2,206,599 8,344,182 45,419,381
Charge / (reversal) for the year 2,505,415 2,912,992 261,878 637,360 969,012 7,286,657 3,116,741 2,550,303 244,816 555,925 924,603 7,392,388
Past Service due to early retirement gratuity 119,800 - - - - 119,800 - - - - - -
Adjustment against contingency Reserve 245,833 70,731 2,939 - 31,950 351,453 2,338,905 497,146 20,650 - 319,164 3,175,865
Contribution by the bank - net (1,283,178) - - - - (1,283,178) (1,148,063) - - - - (1,148,063)
Re-measurement loss / (gain) recognised in OCI during
2,256,282 353,227 (318,884) (56,537) - 2,234,088 (1,605,674) 2,084,667 270,965 16,153 -
the year 766,111
Benefits paid by the Bank (1,713,284) (1,102,980) (221,326) (124,479) (300,163) (3,462,232) (1,783,479) (1,183,316) (231,219) (66,763) (336,194) (3,600,971)
17,834,945 24,516,717 1,778,825 3,168,258 9,952,554 57,251,299 15,704,077 22,282,747 2,054,218 2,711,914 9,251,755 52,004,711
- - - - - -
39.7 Charge for defined benefit plans

39.7.1 Cost recognised in profit and loss

Current service cost 1,036,822 794,194 72,381 379,017 16,194 2,298,608 1,517,934 554,295 61,059 311,438 133,178 2,577,904
Past Service due to early retirement gratuity 119,800 - - - - 119,800 - - - - - -
Actuarial loss recognized - Profit and Loss - - - - 65,405 65,405 - - - - (128,385) (128,385)
Net interest on defined benefit asset / liability 1,468,593 2,118,798 189,497 258,343 887,413 4,922,644 1,598,807 1,996,008 183,757 244,487 919,810 4,942,869
2,625,215 2,912,992 261,878 637,360 969,012 7,406,457 3,116,741 2,550,303 244,816 555,925 924,603 7,392,388
-
39.7.2 Re-measurements recognised in OCI during the year

Loss / (gain) on obligation

- Experience adjustment 2,256,282 353,227 (318,884) (56,537) - 2,234,088 (1,605,674) 2,084,667 270,965 16,153 - 766,111

233
Notes to and forming part of the Unconsolidated Financial Statements

Total re-measurements recognised in OCI 2,256,282 353,227 (318,884) (56,537) - 2,234,088 (1,605,674) 2,084,667 270,965 16,153 - 766,111
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)
39.8 Components of plan assets - Pension fund

Pakistan investment bonds 19,320,490 22,127,729

Treasury bills 1,500,000 1,655,750
Term finance certificates 104,000 104,000
Mutual funds 6,697,543 6,427,374
Shares 6,969,297 7,179,354
Defence saving certificates 9,536,176 8,479,970
Special saving certificates 10,888,009 9,635,360
PLS - Term Deposit Receipts 6,625,201 -
Cash at bank 133,034 1,428,516
61,773,750 57,038,053

39.8.1 The Funds primarily invests in government securities which do not carry any significant credit risk. These are subject to
interest rate risk based on market movements. Investment in term finance certificates are subject to credit risk and interest
rate risks, while equity securities are subject to price risk. These risks are regularly monitored by Trustees of the Pension
fund.

39.9 Sensitivity analysis

The increase / (decrease) in the present value of defined benefit obligations as a result of change in each assumption is
summarised as below:

2021
Post retirement
Benevolent Gratuity Compensated
Pension fund medical Total
scheme scheme absences
scheme
(Rupees in '000)

1% increase in discount rate (7,801,671) (3,200,097) (111,278) (350,414) (723,780) (12,187,240)

1% decrease in discount rate 9,421,062 4,025,246 125,533 425,462 825,806 14,823,109
1 % increase in expected rate of salary increase 3,902,322 1,255,589 22,217 437,303 865,321 6,482,752
1 % decrease in expected rate of salary increase (3,524,818) (1,112,159) (21,297) (365,858) (770,514) (5,794,646)
1% increase in expected rate of pension increase 5,283,386 1,863,193 - - - 7,146,579
1% decrease in expected rate of pension increase (4,543,855) (1,602,549) - - - (6,146,404)
1% increase in expected rate of medical benefit increase - 882,076 - - - 882,076
1% decrease in expected rate of medical benefit increase - (721,887) - - - (721,887)

39.10 Expected contributions to be paid to the funds in the next financial year 1,589,502

39.11 Expected charge for the next financial year 8,622,697

234
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

39.12 Maturity profile

The weighted average duration of the obligation

Years
Pension fund 10.86
Post retirement medical scheme 14.82
Benevolent scheme 6.66
Gratuity scheme 12.33
Compensated absences 7.79

39.13 Funding Policy

Pension Fund - Bank's current assets and its percentage is given below;
Amount Percentage
Current Assets (Rupees in '000)

Cash and cash equivalents - net 133,034 0.2%

Government securities 41,244,675 66.8%
Shares 6,969,297 11.3%
Non-Government debt securities 104,000 0.2%
PLS - Term Deposit Receipts 6,625,201 10.7%
Mutual funds 6,697,543 10.8%
61,773,750 100.0%

Bank will continue to invest with the same percentage in the asset categories mentioned but increase the assets gradually
so that there is no deficit in the pension fund.

39.14 Significant risks associated with the staff retirement benefit schemes are as follows:

Asset volatility The risk arises when the future earnings are lower than expectation. This risk is
measured at a plan level over the obligation period of the current population. The
company assets are either invested in fixed securities or cash.

Changes in bond yields The risk arises when the actual return on plan assets is lower than expectation.

Inflation risk The most common type of retirement benefit is one where the benefit is linked with
last drawn salary. The risk arises when the actual increases are higher than
expectation and impacts the liability accordingly.

Life expectancy / Withdrawal rate The risk arises when the actual lifetime of retirees is longer than expectation. This risk
is measured at the plan level over the entire retiree population. The risk of actual
withdrawals varying with the actuarial assumptions can impose a risk to the benefit
obligation. The movement of the liability can go either way.

Investment Risk The risk arises when the actual performance of the investments is lower than
expectation and thus creating a shortfall in the funding objectives.

40. DEFINED CONTRIBUTION PLAN

A defined contribution (DC) plan is a type of retirement plan in which the employer, employee or both make contributions
on a regular basis. Individual accounts are set up for participants and benefits are based on the amounts credited to these
accounts (through employee contributions and, if applicable, employer contributions) plus any investment earnings on the
money in the account. In defined contribution plans, future benefits fluctuate on the basis of investment earnings.

Bank currently does not have any defined contribution plan.

235
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

41. COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL

41.1 Total Compensation Expense

2021
Directors Key Other Material
Members President /
Items Non- Management Risk Takers /
Chairman Shariah Board CEO
Executives Personnel Controllers
(Rupees in '000)

Fees and Allowances etc. 4,874 20,557 9,981 - - -

Managerial Remuneration
i) Fixed - - - 54,000 181,256 464,281
ii) Total Variable - - - - - -
of which
a) Cash Bonus / Awards - - 774 - 162,086 237,324
Charge for defined benefit plan - - 98 4,500 30,631 103,925
Rent & house maintenance - - 869 - 99,691 254,784
Utilities - - 269 - 48,007 86,030
Medical - - 198 - 23,964 78,027
Conveyance - - 375 - 19,536 73,588
Others - - - 3,970 9,463 102,454
Total 4,874 20,557 12,564 62,470 574,634 1,400,413

Number of Persons 1 8 5 1 32 138

The President and certain executives are also provided with free use of Bank's cars, household equipment, mobile phones
and free membership of clubs.

41.1.1 The total amount of deferred bonus as at December 31, 2021 for the Key Management Personnel and other Material Risk
Takers (MRT) / Material Risk Controllers (MRC) is Rs. 55 million. The deferred bonus is held in a trust fund.

Performance bonus is accounted for on payment basis.

2020
Directors Key Other Material
Members President /
Items Non- Management Risk Takers /
Chairman Shariah Board CEO
Executives Personnel Controllers
(Rupees in '000)
Fees and Allowances etc. 4,109 32,050 7,362 - - -
Managerial Remuneration
i) Fixed - - - 54,000 206,031 405,064
ii) Total Variable - - - - - -
of which
a) Cash Bonus / Awards - - 549 - 64,745 175,480
Charge for defined benefit plan - - 117 4,500 40,979 104,283
Rent & house maintenance - - 683 - 89,343 193,085
Utilities - - 211 - 27,615 60,211
Medical - - 155 - 24,633 63,510
Conveyance - - 330 - 17,234 50,435
Others - - - 3,511 13,709 61,611
Total 4,109 32,050 9,407 62,011 484,289 1,113,679

Number of Persons 1 8 3 1 34 99

236
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

41.2 Remuneration paid to Directors for participation in Board and Committee Meetings
2021
Meeting Fees and Allowances Paid
For Board Committees
Board
S.No. Name of Director For Board Board Board
Board Risk & Board HR & International
Meetings Board Audit Technology & Inclusive Total Amount
Compliance Remuneration Franchises & Allowances **
Committee Digitalization Development Paid
Committee Committee Remittance
Committee Committee
Committee *
(Rupees in '000)
1 Mr. Zubyr Soomro 1,650 - - 900 - - - 2,324 4,874
2 Mr. Farid Malik 1,650 - - 750 900 - - 301 3,601
3 Mr. Tawfiq Asghar Hussain 1,650 900 1,500 *** - - 150 - 4,200
4 Mr. Imam Bukhsh Baloch 1,650 750 750 - - 150 - - 3,300
5 Ms. Sadaffe Abid 1,500 - - - 900 750 - 368 3,518
6 Mr. Asif Jooma 1,350 900 - 900 - 450 - - 3,600
7 Mr. Ahsan Ali Chughtai 750 - - - - 450 - 238 1,438
8 Mr. Muhammad Sohail Rajput 450 150 - - - 300 - - 900

Total Amount Paid 10,650 2,700 2,250 2,550 1,800 2,100 150 3,231 25,431

* Dissolved in 317th Board Meeting held on February 24, 2021.

** Allowances include accommodation and travel expenses.
*** Amount includes NBP - NY Governance Council (Sub-Committee of BRCC).
2020
Meeting Fees and Allowances Paid
For Board Committees

Board
S.No. Name of Director For Board Board
Board Risk & Board HR & Board Inclusive International
Meetings Board Audit Technology & Total Amount
Compliance Remuneration Development Franchises & Allowances
Committee Digitalization Paid
Committee Committee Committee Remittance
Committee
Committee
(Rupees in '000)
1 Mr. Zubyr Soomro 2,100 - - 1,350 - - - 659 4,109
2 Mr. Farid Malik 1,950 - 1,050 1,350 1,350 - - 1,097 6,797
3 Mr. Tawfiq Asghar Hussain 2,100 1,200 1,050 - - - 1,200 - 5,550
4 Mr. Imam Bukhsh Baloch 2,100 - 1,050 - - 1,050 - - 4,200
5 Ms. Sadaffe Abid 1,650 - - - 1,350 1,050 - 71 4,121
6 Mr. Asif Jooma 1,650 900 - 1,050 - - - - 3,600
7 Mr. Muhammad Sohail Rajput 2,100 900 - - - 1,050 - 365 4,415
8 Mr. Zafar Masud 900 - - 600 450 - 300 - 2,250
9 Mr. Muhammad Naeem 450 300 150 - - - - 218 1,118
Total Amount Paid 15,000 3,300 3,300 4,350 3,150 3,150 1,500 2,410 36,160
(1,568,697)
(10,265)
41.3 Remuneration paid to Shariah Board Members
2021 2020

Items Resident Non-Resident Resident Non-Resident

Chairman Total Chairman Total
Member Member(s) Member Member(s)

(Rupees in '000)

Retainer Fee & Fixed Remuneration 3,462 4,163 4,939 12,563 3,240 3,287 2,880 9,407
Total Amount Paid 3,462 4,163 4,939 12,564 3,240 3,287 2,880 9,407
Total Number of Persons 1 1 3 5 1 1 1 3

42. FAIR VALUE MEASUREMENTS

The fair value of quoted securities other than those classified as held to maturity, is based on quoted market price. Quoted
instruments classified as held to maturity are carried at cost. The fair value of unquoted equity securities, other than
investments in associates and subsidiaries, is determined on the basis of the break-up value of these investments as per
their latest available audited financial statements.

The fair value of unquoted debt securities, fixed-term loans, other assets, other liabilities, fixed-term deposits and
borrowings cannot be calculated with sufficient reliability due to the absence of a current and active market for these
assets and liabilities and reliable data regarding market rates for similar instruments.

237
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

42.1 Fair value of financial assets

The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in
making the measurements:
Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for
the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Fair value measurements using input for the asset or liability that are not based on observable market data (i.e.
unobservable inputs).
The table below analyses financial instruments measured at the end of the reporting period by the level in the fair value
hierarchy into which the fair value measurement is categorised:

2021
Carrying Value Level 1 Level 2 Level 3 Total
(Rupees in '000)
On balance sheet financial instruments

Financial assets - measured at fair value

Investments
Market Treasury Bills 811,893,893 - 811,893,893 - 811,893,893
Pakistan Investment Bonds 592,430,009 - 592,430,009 - 592,430,009
Ijarah Sukuks 13,969,700 - 13,969,700 - 13,969,700
Ordinary shares of listed companies 39,784,637 39,784,637 - - 39,784,637
Preference shares 1,265,729 1,265,729 - - 1,265,729
Investments in mutual funds 1,868,184 - 1,868,184 - 1,868,184
Term Finance Certificates / Musharika
and Sukuk Bonds 51,224,167 17,059,736 34,164,431 - 51,224,167
GoP Foreign Currency Bonds 20,804,963 - 20,804,963 - 20,804,963
Foreign Government Securities 907,304 - 907,304 - 907,304
Foreign Currency Debt Securities - - - - -
Ordinary shares of a bank outside
Pakistan 27,524,206 27,524,206 - - 27,524,206

1,561,672,792 85,634,308 1,476,038,484 - 1,561,672,792

-
Financial assets - disclosed but not measured
at fair value

Cash and balances with treasury banks 278,747,059 - - - -

Balances with other banks 17,667,067 - - - -
Lending to financial institution 335,466,675 - - - -
Investments
Pakistan Investment Bonds 324,556,862 - - - -
GoP Foreign Currency Bonds - - - - -
Ordinary shares of unlisted companies 1,471,305 - - - -
Market Treasury Bills - - - - -
Foreign Government Securities 34,091,600 - - - -
Foreign Currency Debt Securities 680 - - - -
Debentures, Bonds, Sukuks, Participation Term
Certificates and Term Finance Certificates 30 - - - -
Bai muajjal with Government of Pakistan 10,914,185 - - - -
Advances 1,113,392,485 - - - -
Other assets 63,484,600 - - - -
2,179,792,548 - - - -

3,741,465,340 85,634,308 1,476,038,484 - 1,561,672,792

Off-balance sheet financial instruments -

measured at fair value

Foreign exchange contracts purchase and sale 571,111,340 - 3,058,205 - 3,058,205

Forward government securities transactions 38,255,954 - (308,328) - (308,328)

238
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2020
Carrying Value Level 1 Level 2 Level 3 Total
(Rupees in '000)
On balance sheet financial instruments

Financial assets - measured at fair value

Investments
Market Treasury Bills 626,248,789 - 626,248,789 - 626,248,789
Pakistan Investment Bonds 473,408,082 - 473,408,082 - 473,408,082
Ijarah Sukuks 6,015,600 - 6,015,600 - 6,015,600
Ordinary shares of listed companies 47,907,782 47,907,782 - - 47,907,782
Preference shares 1,099,850 1,099,850 - - 1,099,850
Investments in mutual funds 2,000,170 - 2,000,170 - 2,000,170
Term Finance Certificates / Musharika
and Sukuk Bonds 55,860,007 19,911,278 35,948,728 - 55,860,007
GoP Foreign Currency Bonds 10,840,875 - 10,840,875 - 10,840,875
Foreign Government Securities 2,847,176 - 2,847,176 - 2,847,176
Foreign Currency Debt Securities 80,640 - 80,640 - 80,640
Ordinary shares of a bank outside Pakistan 17,652,778 17,652,778 - - 17,652,778
1,243,961,749 86,571,688 1,157,390,061 - 1,243,961,749
Financial assets - disclosed but not measured
at fair value

Cash and balances with treasury banks 249,259,590 - - - -

Balances with other banks 14,227,355 - - - -
Lending to financial instruments 126,804,675 - - - -
Investments
Pakistan Investment Bonds 168,422,981 - - - -
GoP Foreign Currency Bonds - - - - -
Ordinary shares of unlisted companies 1,455,089 - - - -
Foreign Government Securities 32,328,738 - - - -
Foreign Currency Debt Securities 618 - - - -
Debentures, Bonds, Sukuks, Participation Term
Certificates and Term Finance Certificates 7,838 - - - -
Bai muajjal with Government of Pakistan 11,641,133 - - - -
Advances 983,254,527 - - - -
Other assets 63,745,385 - - - -
1,651,147,929 - - - -
2,895,109,678 86,571,688 1,157,390,061 - 1,243,961,749
Off-balance sheet financial instruments -
measured at fair value
Foreign exchange contracts purchase and sale 419,327,735 - (2,918,017) - (2,918,017)

Forward government securities transactions 27,625,340 - 52,885 - 52,885

Valuation techniques used in determination of fair valuation of financial instruments within level 1 and level 2
Item Valuation approach and input used

Market Treasury Bills PKRV (MUFAP)

Pakistan Investment Bonds PKRV (MUFAP)
Ijarah Sukuks MUFAP
Ordinary shares of unlisted companies Breakup value as per latest available audited financial statements
Term Finance Certificates / Musharika and Sukuk Bonds MUFAP
GoP Foreign Currency Bonds Reuter page
Foreign Government Securities Reuter page
Foreign Currency Debt Securities Reuter page
Investments in mutual funds MUFAP

239
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

42.2 Fair value of non-financial assets

Information about the fair value hierarchy of Bank‘s non-financial assets as at the end of the reporting period are as follows:

2021
Carrying Value Level 1 Level 2 Level 3 Total
(Rupees in '000)

Land & building (fixed assets) 48,739,721 - - 48,739,721 48,739,721

Non-banking assets acquired in satisfaction of claims 4,059,546 - - 4,059,546 4,059,546
52,799,267 - - 52,799,267 52,799,267

2020
Carrying Value Level 1 Level 2 Level 3 Total
(Rupees in '000)

Land & building (fixed assets) 48,764,139 - - 48,764,139 48,764,139

Non-banking assets acquired in satisfaction of claims 3,968,329 - - 3,968,329 3,968,329
52,732,468 - - 52,732,468 52,732,468

43. SEGMENT INFORMATION

43.1 Segment Details with respect to Business Activities

During the year the Bank changed its internal organisation structure in a manner that changed the composition of its
reportable segments, and accordingly the prior year disclosure is restated to reflect the current reportable segments.
Branch banking has been bifurcated in to Retail Banking Group and Inclusive Development Group.

240
 2021

International,
Inclusive Corporate and
Retail Banking Financial Aitemaad and Head Office /
Development Investment Treasury Sub total Eliminations Total
Group Institution and Islamic Banking Others
Group Banking
Remittance

Profit and loss account

Net mark-up / return / profit (58,755,894) 17,163,761 25,963,957 105,182,793 3,798,879 4,682,056 (417,747) 97,617,806 - 97,617,806
Inter segment revenue - net 111,902,235 (14,376,019) (22,474,486) (91,149,527) - (577,589) 16,675,387 - - -
Non mark-up / return / interest income 13,490,925 406,372 4,153,941 15,434,144 1,284,540 336,316 1,835,379 36,941,617 - 36,941,617
Total income 66,637,266 3,194,114 7,643,412 29,467,410 5,083,419 4,440,783 18,093,019 134,559,423 - 134,559,423

Segment direct expenses 30,900,118 3,031,845 1,121,182 387,232 6,363,529 2,816,952 416,581 45,037,440 - 45,037,440
Inter segment expense allocation - - - - - - 24,745,192 24,745,192 - 24,745,192
Total expenses 30,900,118 3,031,845 1,121,182 387,232 6,363,529 2,816,952 25,161,773 69,782,632 - 69,782,632
Provisions charge / (reversal) 731,529 1,721,582 9,235,188 542,703 (111,737) 121,444 (324,326) 11,916,383 - 11,916,383
Profit / (loss) before tax 35,005,619 (1,559,313) (2,712,958) 28,537,475 (1,168,373) 1,502,387 (6,744,428) 52,860,408 - 52,860,408
For the year ended December 31, 2021

Statement of financial position

Cash and Bank balances 91,792,092 8,185,926 248,408 131,293,182 58,290,758 6,603,670 90 296,414,126 - 296,414,126
Investments - - 26,543,698 1,803,150,092 55,804,559 49,548,759 3,123,533 1,938,170,642 - 1,938,170,642
Net inter segment lending 2,319,442,077 - - - - - 274,915,854 2,594,357,931 (2,594,357,931) -
Lendings to financial institutions 2,405,644 - - 333,061,031 - - - 335,466,675 - 335,466,675
Advances - performing 184,159,822 224,303,465 566,367,602 - 80,731,709 42,316,269 9,359,703 1,107,238,569 - 1,107,238,569
Advances - non-performing 4,180,477 21,115,711 61,624,712 - 46,293,148 712,762 64,011,419 197,938,229 - 197,938,229
Provision against advances (9,024,982) (18,226,471) (56,033,619) - (44,989,510) (712,762) (62,796,969) (191,784,313) - (191,784,313)
Advances - net 179,315,317 227,192,705 571,958,695 - 82,035,347 42,316,269 10,574,153 1,113,392,485 - 1,113,392,485
Others 25,276,052 2,297,783 18,315,585 3,581,004 4,964,806 2,302,955 106,502,357 163,240,541 - 163,240,541
Total assets 2,618,231,182 237,676,414 617,066,386 2,271,085,309 201,095,470 100,771,653 395,115,987 6,441,042,400 (2,594,357,931) 3,846,684,469

Borrowings - 4,148,727 63,733,341 207,857,704 37,185,334 - - 312,925,106 - 312,925,106

Deposits and other accounts 2,563,644,125 - 286,586,523 - 75,485,252 84,849,519 8,589,626 3,019,155,045 - 3,019,155,045
Net inter segment borrowing - 228,687,313 249,365,896 2,016,684,060 85,836,008 13,784,654 - 2,594,357,931 (2,594,357,931) -
Others 54,587,057 4,840,374 17,044,690 11,549,538 2,536,069 1,543,475 136,300,550 228,401,753 - 228,401,753
Total liabilities 2,618,231,182 237,676,414 616,730,450 2,236,091,302 201,042,663 100,177,648 144,890,176 6,154,839,835 (2,594,357,931) 3,560,481,904
Equity - - 335,936 34,994,007 52,807 594,005 250,225,811 286,202,565 - 286,202,565
Total equity and liabilities 2,618,231,182 237,676,414 617,066,386 2,271,085,309 201,095,470 100,771,653 395,115,987 6,441,042,400 (2,594,357,931) 3,846,684,469

241
Notes to and forming part of the Unconsolidated Financial Statements

Contingencies and commitments - 81,061,634 1,740,040,766 609,367,294 22,910,804 - 37,123,935 2,490,504,435 - 2,490,504,435
 2020 (Restated)
International,
Inclusive Corporate &

242
Retail Banking Financial Aitemaad & Head Office /
Development Investment Treasury Sub total Eliminations Total
Group Institution and Islamic Banking Others
Group Banking
Remittance
(Rupees in '000)
Profit and loss account

Net mark-up / return / profit (82,278,559) 19,374,543 45,786,341 113,674,589 2,944,549 5,033,803 (380,160) 104,155,107 - 104,155,107
Inter segment revenue - net 132,329,062 (15,264,205) (40,287,855) (86,111,719) - (409,849) 9,744,567 - - -
Non mark-up / return / interest income 13,606,432 1,333,608 2,934,104 11,968,002 1,933,019 425,941 3,875,801 36,076,908 - 36,076,908
Total income 63,656,935 5,443,946 8,432,590 39,530,872 4,877,568 5,049,895 13,240,209 140,232,015 - 140,232,015

Segment direct expenses 27,928,850 2,851,051 906,172 366,426 6,337,022 2,542,000 405,695 41,337,217 - 41,337,217
Inter segment expense allocation - - - - - - 21,774,714 21,774,714 - 21,774,714
Total expenses 27,928,850 2,851,051 906,172 366,426 6,337,022 2,542,000 22,180,409 63,111,930 - 63,111,930
Provisions charge / (reversal) 670,506 3,818,845 26,216,211 (202,726) (484,011) 398,979 478,134 30,895,938 - 30,895,938
Profit / (loss) before tax 35,057,580 (1,225,950) (18,689,793) 39,367,172 (975,444) 2,108,916 (9,418,335) 46,224,147 - 46,224,147
- -
Statement of financial position - -
For the year ended December 31, 2021

- -
Cash and Bank balances 146,249,864 13,560,025 281,210 49,710,033 47,960,766 5,724,957 89 263,486,945 - 263,486,945
Investments - - 31,393,587 1,340,556,530 46,098,046 42,109,641 3,240,273 1,463,398,076 - 1,463,398,076
Net inter segment lending 1,784,038,348 - - - - - 187,176,073 1,971,214,420 (1,971,214,420) -
Lendings to financial institutions - - - 126,802,025 - - 2,650 126,804,675 - 126,804,675
Advances - performing 167,205,416 185,345,489 541,263,835 - 43,633,881 37,546,863 13,584,130 988,579,614 - 988,579,614
Advances - non-performing 4,007,870 22,497,098 47,548,441 - 42,345,094 602,913 54,292,716 171,294,133 - 171,294,133
Provision against advances (8,383,514) (19,538,451) (52,114,538) - (41,266,079) (602,913) (54,713,725) (176,619,220) - (176,619,220)
Advances - net 162,829,772 188,304,136 536,697,739 - 44,712,896 37,546,863 13,163,121 983,254,527 - 983,254,527
Others 23,840,339 2,248,427 22,588,501 366,297 3,972,925 3,580,119 114,986,149 171,582,758 - 171,582,758
Total assets 2,116,958,323 204,112,588 590,961,037 1,517,434,885 142,744,633 88,961,580 318,568,356 4,979,741,401 (1,971,214,420) 3,008,526,981
-
Borrowings - 3,511,852 46,688,596 86,290,983 2,047,575 - - 138,539,005 - 138,539,005
Deposits and other accounts 2,070,445,603 - 200,011,969 - 73,225,543 75,268,262 15,102 2,418,966,479 - 2,418,966,479
Net inter segment borrowing - 196,293,623 326,190,341 1,375,268,749 63,868,561 9,593,146 - 1,971,214,420 (1,971,214,420) -
Others 46,512,720 4,307,113 17,857,441 12,387,953 3,138,352 3,440,604 95,818,572 183,462,755 - 183,462,755
Total liabilities 2,116,958,323 204,112,588 590,748,347 1,473,947,685 142,280,030 88,302,012 95,833,674 4,712,182,659 (1,971,214,420) 2,740,968,239
Equity - - 212,690 43,487,200 464,603 659,569 222,734,682 267,558,742 - 267,558,742
Total equity and liabilities 2,116,958,323 204,112,588 590,961,037 1,517,434,885 142,744,633 88,961,580 318,568,356 4,979,741,401 (1,971,214,420) 3,008,526,981
- - - - - (0) (0)
- 46,316,642 1,271,383,035 446,953,075 20,577,429 - 35,553,685 1,820,783,867 - 1,820,783,867
Notes to and forming part of the Unconsolidated Financial Statements

Contingencies and commitments

 43.2 Segment details with respect to geographical locations

2021
Asia Pacific
United States
Pakistan (including Europe Middle East Total
of America
South Asia)
(Rupees in '000)

Profit and loss account

Net mark-up / return / profit 93,818,927 1,740,068 (275) 198,227 1,860,859 97,617,806
Inter segment revenue - net - - - - - -
Non mark-up / return / interest income 35,657,077 396,975 305,048 340,207 242,310 36,941,617
Total income 129,476,004 2,137,043 304,773 538,434 2,103,169 134,559,423

Segment direct expenses 38,673,910 1,701,708 869,557 2,882,547 909,718 45,037,440

Inter segment expense allocation 24,745,192 - - - - 24,745,192
Total expenses 63,419,102 1,701,708 869,557 2,882,547 909,718 69,782,632
Provisions 12,028,120 (218,598) 66,636 4,585 35,639 11,916,383
Profit / (loss) before tax 54,028,782 653,933 (631,420) (2,348,698) 1,157,812 52,860,408
For the year ended December 31, 2021

Statement of financial position

Cash and Bank balances 238,123,368 16,079,536 12,409,372 28,845,835 956,015 296,414,126
Investments 1,882,366,083 38,444,313 - 2,834,242 14,526,004 1,938,170,642
Net inter segment lendings 85,836,007 - - - - 85,836,007
Lendings to financial institutions 335,466,675 - - - - 335,466,675
Advances - performing 1,026,506,860 20,282,504 494,294 5,025,734 54,929,177 1,107,238,569
Advances - non-performing 151,645,081 38,850,705 1,311,119 - 6,131,324 197,938,229
Provision against advances (146,794,803) (38,765,810) (1,311,119) (7,489) (4,905,092) (191,784,313)
Advances - net 1,031,357,138 20,367,399 494,294 5,018,245 56,155,410 1,113,392,485
Others 158,275,735 3,016,223 164,067 219,828 1,564,688 163,240,541
Total assets 3,731,425,006 77,907,472 13,067,733 36,918,149 73,202,117 3,932,520,476

Borrowings 275,739,772 1,971,822 - - 35,213,512 312,925,106

Deposits and other accounts 2,943,669,793 37,237,231 8,815,589 7,455,103 21,977,329 3,019,155,045
Net inter segment borrowing - 37,978,569 4,040,045 28,932,868 14,884,525 85,836,007
Others 225,865,684 831,551 212,099 548,076 944,344 228,401,753
Total liabilities 3,445,275,249 78,019,173 13,067,733 36,936,047 73,019,710 3,646,317,911
Equity 286,149,758 (111,701) - (17,897) 182,406 286,202,565
Total equity and liabilities 3,731,425,006 77,907,472 13,067,733 36,918,149 73,202,117 3,932,520,476

243
Notes to and forming part of the Unconsolidated Financial Statements

Contingencies and commitments 2,467,593,629 2,554,088 3,073,302 8,003,060 9,280,355 2,490,504,435

 2020 (Restated)
Asia Pacific
United States
Pakistan (including Europe Middle East Total

244
of America
South Asia)
(Rupees in '000)
Profit and loss account

Net mark-up / return / profit 101,210,557 535,456 59,526 421,629 1,927,939 104,155,107
Inter segment revenue - net - - - - - -
Non mark-up / return / interest income 34,143,889 509,898 316,191 747,936 358,994 36,076,908
Total Income 135,354,446 1,045,354 375,717 1,169,565 2,286,933 140,232,015

Segment direct expenses 35,000,194 1,598,976 793,919 3,173,426 770,701 41,337,216

Inter segment expense allocation 21,774,714 - - - - 21,774,714
Total expenses 56,774,908 1,598,976 793,919 3,173,426 770,701 63,111,930
Provisions 31,379,949 (308,070) (117,586) (32,798) (25,557) 30,895,938
Profit / (loss) before tax 47,199,589 (245,552) (300,616) (1,971,063) 1,541,789 46,224,147

Statement of financial position

Cash and bank balances 215,526,179 17,402,929 10,399,385 19,076,487 1,081,965 263,486,945
Investments 1,417,300,030 29,778,074 - 2,927,816 13,392,156 1,463,398,076
Net inter segment lendings 63,868,561 - - - - 63,868,561
Lendings to financial institutions 126,804,675 - - - - 126,804,675
Advances - performing 944,945,732 1,891,261 574,741 1,680,370 39,487,510 988,579,614
Advances - non-performing 128,949,039 35,574,078 1,205,975 - 5,565,041 171,294,133
Provision against Advances (135,353,141) (35,648,345) (1,205,975) (2,306) (4,409,453) (176,619,220)
For the year ended December 31, 2021

Advances - net 938,541,630 1,816,994 574,741 1,678,064 40,643,098 983,254,527

Others 167,609,833 2,773,901 139,572 183,851 875,601 171,582,758
Total assets 2,929,650,909 51,771,898 11,113,698 23,866,218 55,992,820 3,072,395,542

Borrowings 136,491,430 1,240,487 - - 807,088 138,539,005

Deposits and other accounts 2,345,740,936 35,384,936 7,278,305 9,204,947 21,357,355 2,418,966,479
Net inter segment borrowing - 14,344,870 3,643,594 13,051,137 32,828,959 63,868,561
Others 180,324,403 801,605 191,798 1,556,773 588,176 183,462,755
Total liabilities 2,662,556,770 51,771,898 11,113,698 23,812,857 55,581,578 2,804,836,799
Equity 267,094,139 - - 53,361 411,242 267,558,742
Total equity and liabilities 2,929,650,909 51,771,898 11,113,698 23,866,218 55,992,820 3,072,395,542
(1) 0 0 0 0 1
Contingencies and commitments 1,800,206,438 3,380,468 3,105,342 7,173,633 6,917,986 1,820,783,867

44. TRUST ACTIVITIES

44.1 Endowment Fund

Students Loan Scheme was launched by Government of Pakistan in collaboration with the major commercial banks with a view to extend financial help by way of
mark-up free loans to the meritorious students without sufficient resources for pursuing scientific, technical and professional education within Pakistan.

The Scheme is being administered by a high powered committee headed by the Deputy Governor, State Bank of Pakistan and the Presidents of NBP, HBL, UBL,
MCB, ABL and the Deputy Secretary, Ministry of Finance as member and Senior Director of IH&SME Finance Department (Infrastructure, Housing & SME Finance
Department) as a secretary of the Committee. The State Bank of Pakistan has assigned National Bank of Pakistan to operate the scheme.

The Committee in its meeting held on August 7, 2001 approved creation of Endowment Fund initially at an amount of Rs. 500 million, Rs. 396 million were transferred
from the old Qarz-e-Hasna (Defunct) Fund, Rs.50 million contributed by the Government of Pakistan and Rs. 54 million were contributed by participating banks (HBL,
NBP and UBL 25% each, MCB 17.5% and ABL 7.5%).
The amount of the Endowment Funds in investments stands at Rs. 835.770 million as at December 31, 2021 (2020: Rs. 785 million).
Notes to and forming part of the Unconsolidated Financial Statements
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

44.2 The Bank undertakes Trustee and other fiduciary activities that result in the holding or placing of assets on behalf of
individuals and other organisations. These are not assets of the Bank and, therefore, are not included as such in these
unconsolidated financial statements. Assets held under trust are shown in the table below:

As at December 31, 2021

Securities Held (Face Value)
No. of IPS Market Pakistan Government Ijarah
Category Treasury Bills Investment Bonds Total
Accounts Sukuks
(Rupees in '000)
Assets Management Companies 31 - - - -
Charitable institutions 5 205,320 854,000 - 1,059,320
Companies 31 41,314,365 128,980,600 27,417,400 197,712,365
Employee Funds 41 12,597,120 43,178,900 - 55,776,020
Individuals 944 203,025 79,700 - 282,725
Insurance Companies 8 23,821,000 172,528,500 - 196,349,500
Others 74 76,701,745 234,918,697 - 311,620,442
Total 1,134 154,842,575 580,540,397 27,417,400 762,800,372

As at December 31, 2020

Securities Held (Face Value)
No. of IPS Market Pakistan Government Ijarah
Category Treasury Bills Investment Bonds Total
Accounts Sukuks
(Rupees in '000)
Assets Management companies 23 - - - -
Charitable institutions 5 - - - -
Companies 17 34,121,235 92,187,200 - 126,308,435
Employee Funds 62 9,640,385 102,960,700 - 112,601,085
Individuals 853 148,315 70,900 - 219,215
Insurance Companies 7 11,211,270 145,209,700 - 156,420,970
Others 58 66,930,535 143,722,542 - 210,653,077
Total 1,025 122,051,740 484,151,042 - 606,202,782

45. RELATED PARTY TRANSACTIONS

The Bank has related party transactions with its subsidiaries, associates, joint ventures, employee benefit plans and its
directors and Key Management Personnel. The details of investment in subsidiaries, joint venture and associated
undertaking and their provisions are stated in note 10 of the unconsolidated financial statements of the Bank.

The Bank enters into transactions with related parties in the ordinary course of business and on substantially the same
terms as for comparable transactions with person of similar standing. Contributions to and accruals in respect of staff
retirement benefits and other benefit plans are made in accordance with the actuarial valuations / terms of the contribution
plan. Remuneration to the executives / officers is determined in accordance with the terms of their appointment.

Details of transactions with related parties during the year, other than those which have been disclosed elsewhere in these
unconsolidated financial statements are as follows:

245
 2021 2020
Key Pension fund Key

246
Pension fund Pension fund Provident Other related Pension fund Pension fund Pension fund Other related
Directors management Subsidiaries Associates Joint venture (fixed Directors management Subsidiaries Associates Joint venture Provident fund
(current) (N.I.D.A A/c) fund parties (current) (fixed deposit) (N.I.D.A A/c) parties
personnel deposit) personnel

(Rupees in '000)

Balances with other banks

In current accounts - - - - 295,951 - - - - - - - - - 232,033 - - - - -

- - - - 295,951 - - - - - - - - - 232,033 - - - - -
(116,741)
Advances

Opening balance - 233,267 359,565 2,981,029 - - - - - 305,117 - 228,805 414,565 3,046,662 - - - - - 23,386,325
Addition during the year - 254,860 100,000 - - - - - - 35,589,939 - 64,850 - - - - - - - 115,824,347
Repaid during the year - (36,216) (33,000) (46,867) - - - - - (35,253,573) - (31,840) (55,000) (65,633) - - - - - (115,673,058)
Transfer in / (out) - net - (104,319) - - - - - - - - - (28,548) - - - - - - - (23,232,497)
Closing balance
- 347,592 426,565 2,934,162 - - - - - 641,483 - 233,267 359,565 2,981,029 - - - - - 305,117
(1)
Provision held against advances - - 251,565 2,837,287 - - - - - - - - 284,565 2,837,287 - - - - - -

Other Assets

Interest / mark-up accrued - - 251,316 1,719,049 - - - - - - - - 233,641 1,720,157 - - - - - -

Other receivable - - 73,280 - - - - - - - - - 74,785 - - - - - - -
For the year ended December 31, 2021

- - 324,596 1,719,049 - - - - - - - - 308,426 1,720,157 - - - - - -

Provision against other assets - - 73,280 - - - - - - - - - 73,280 - - - - - - -

Borrowings

Opening balance - - - - 9,111 - - - - - - - - - 279,814 - - - - -

Borrowings during the year - - - - 26,630 - - - - - - - - - - - - - - -
Settled during the year - - - - - - - - - - - - - - (270,703) - - - - -
Closing balance
- - - - 35,741 - - - - - - - - - 9,111 - - - - -

Deposits and other accounts

Opening balance 1,320 177,236 1,553,709 - - 58,871 - 1,369,644 13,282,016 227,967 3,835 94,715 1,522,792 - - 73 - 1,235,120 13,296,883 40,416,083
Received during the year 9,334 777,224 693,981 - - 27,393 - - - 235,269,981 8,672 713,917 261,901 - - 47,037,983 - 3,054,527 1,941,908 708,790
Withdrawn during the year (8,984) (763,659) (1,240,353) - - - - (1,322,875) (427,261) (196,497,842) (11,228) (620,573) (230,984) - - (46,979,185) - (2,920,003) (1,956,775) (630,132)
* Transfer in / (out) - net 90 (59,347) - - - - - - - 4,336,036 41 (10,823) - - - - - - - (40,266,774)
Closing balance
1,760 131,454 1,007,337 - - 86,264 - 46,769 12,854,755 43,336,142 1,320 177,236 1,553,709 - - 58,871 - 1,369,644 13,282,016 227,967
0 (1)
Other Liabilities

Other payables to subsidiaries - - 4,041 - - - - - - - - - 4,308 - - - - - - -

- - 4,041 - - - - - - - - - 4,308 - - - - - - -

Contingencies and
- - - - - - - - - - - - - - - - - - - -
Commitments
Notes to and forming part of the Unconsolidated Financial Statements

* Transfer in / (out) - net due to retirement / appointment of directors and changes in key management executives.
 2021 2020

Key manage- Key manage-

Joint Pension Provident Funds / Pension Provident Funds /
Directors ment Subsidiaries Associates Directors ment Subsidiaries Associates Joint venture
venture fund fund others fund fund others
personnel personnel

(Rupees in '000)

Income

Mark-up / return / interest earned - - 2,731 9,857 - - - - - - 1,948 16,822 9 - - -

Debts due by Companies in which
Directors of the Bank is interested
as Directors - - - - - - - 8,137 - - - - - - - 15,755
Fee and commission income - - 297 - - - - - - - 683 - - - - -
Dividend income - - 82,895 7,009 - - - - - - 77,368 - - - - -
Rent income / Lighting & Power and
Bank charges - - 22,916 5,109 - - - - - - 29,379 4,637 - - - 19,447

Expense

Mark-up / return / interest paid 88 3,873 6,887 - 41 55,888 1,417,701 1,625,178 309 5,087 33,124 - 303 108,346 1,441,640 4,012
For the year ended December 31, 2021

Expenses paid to company in which

Director of the bank is interested as
CEO and director - - - - - - - 23,387 - - - - - - - 10,712
Commission paid to subsidiaries - - 5,323 - - - - - - - 4,661 - - - - -

Remuneration to key management

executives including charge for
defined benefit plan
- 637,103 - - - - - - - 546,300 - - - - - -

Directors fee & other allowances 25,431 - - - - - - - 36,160 - - - - - - -

Post Retirement Benefit paid to

Director cum Ex-employee - - - - - - - 2,087 - - - - - - - 2,087

45.1 Transactions with Government-related entities

The Federal Government through State Bank of Pakistan holds controlling interest (75.60% shareholding) in the Bank and therefore entities which are owned and /
or controlled by the Federal Government, or where the Federal Government may exercise significant influence, are related parties of the Bank.

The Bank in the ordinary course of business enters into transaction with Government–related entities. Such transactions include lending to, deposits from and
provision of other banking service to Government–related entities.

The Bank also earned commission on handling treasury transactions on behalf of the Government of Pakistan amounting to Rs. 8,408 million (2020: 9,653 million)
for the year ended December 31, 2021. As at the statement of financial position date the loans and advances, deposits and contingencies relating to
Government–related entities amounted to Rs. 405,294 million (2020: 337,572 million), Rs. 1,247,457 million (2020: 932,317 million) and Rs. 1,540,238 million (2020:
1,057,896 million) respectively and income earned on advances and investment and profit paid on deposits amounted to Rs. 31,846 million (2020: 40,908 million)

247
Notes to and forming part of the Unconsolidated Financial Statements

and Rs. 51,110 million (2020: 64,149 million) respectively.

Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

46. CAPITAL ADEQUACY, LEVERAGE RATIO & LIQUIDITY REQUIREMENTS

The Bank's objectives when managing capital, which is a broader concept than the 'equity' on the face of the statement of
financial position, are:

- to comply with the capital requirements set by the regulators of the banking markets where the Bank operates;

- to safeguard the Bank's ability to continue as a going concern so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and

- to maintain a strong capital base to support the development of its business.

Basel-III instructions comprise the following three capital standards:

i. Minimum Capital Requirement (MCR):

The MCR standard sets the nominal amount of capital banks / DFIs are required to hold. Currently, the MCR for
banks and DFIs is Rs. 10 billion as prescribed by SBP.

ii. Capital Adequacy Ratio (CAR):

The Capital Adequacy Ratio assesses the capital requirement based on the risks faced by the banks / DFIs. The
banks / DFIs are required to comply with the minimum requirements as specified by the SBP on standalone as well
as consolidated basis. Currently, the required CAR for banks is 11.50% (plus 2.0% for NBP as D-SIB requirement).

iii. Leverage Ratio:

Tier-1 Leverage Ratio of 3% is introduced in response to Basel III Accord as the third capital standard. Bank level
disclosure of the leverage ratio and its components has started from December 31, 2015. The Bank has a leverage
ratio of 3.47% in the year December 31, 2021 (2020: 4.06%) and Tier-1 capital of Rs. 199,752 million (2020: Rs.
172,896 million).

The SBP's regulatory capital as managed by the Bank is analysed into following tiers:

1. Tier 1 Capital (going-concern capital)

• Common Equity Tier 1

• Additional Tier 1

- Tier I capital, which comprises highest quality capital element and include fully paid up capital, balance in share
premium account, reserve for issue of bonus shares, general reserves and un-appropriate profits (net of
accumulated losses, if any).

2. Tier 2 Capital (gone-concern capital)

- Tier II capital, which includes general reserve for loan losses, revaluation reserve, exchange translation reserve and
subordinated debt.

Basel III capital rules requires bank to make certain deductions from the capital before arriving at the Capital Adequacy
Ratio (CAR).

Risk weighted assets are measured according to the nature and reflect an estimate of credit, market and other risks
associated with each asset and counterparty, taking into account any eligible collateral or guarantees. A similar treatment
is adopted for off-balance sheet exposures, with some adjustments to reflect more contingent nature of potential losses.

The Bank's policy is to maintain strong capital base so as to maintain, investor, creditor and market confidence, and to
sustain future development of the business. The adequacy of the Bank's capital is monitored using, among other
measures, the rules and ratios established by the SBP. The ratios compare the amount of eligible capital with the total of
risk-weighted assets. The Bank monitors and reports its capital ratio under the SBP rules, which ultimately determines the
regulatory capital, required to be maintained by Banks and DFIs.

248
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

The paid-up capital of the Bank for the year ended December 31, 2021 stood at Rs. 21,275 million (2020: Rs. 21,275 million)
and is in compliance with the SBP requirement for the said year. In addition the Bank has maintained minimum Capital
Adequacy Ratio (CAR) of 20.39% (2020: 19.78%).

There have been no material changes in the Bank's management of capital during the year.
2021 2020
Minimum Capital Requirement (MCR): (Rupees in '000)

Paid-up capital (net of losses) 21,275,131 21,275,131

Capital Adequacy Ratio (CAR):

Eligible Common Equity Tier 1 (CET 1) Capital 199,752,308 172,896,361

Eligible Additional Tier 1 (ADT 1) Capital - -
Total Eligible Tier 1 Capital 199,752,308 172,896,361
Eligible Tier 2 Capital 64,343,019 55,224,098
Total Eligible Capital (Tier 1 + Tier 2) 264,095,327 228,120,459

Risk Weighted Assets (RWAs):

Credit Risk 983,659,218 858,263,350
Market Risk 82,342,372 87,765,828
Operational Risk 229,114,480 207,071,580
Total 1,295,116,070 1,153,100,759

Common Equity Tier 1 Capital Adequacy ratio 15.42% 14.99%

Tier 1 Capital Adequacy Ratio 15.42% 14.99%

Total Capital Adequacy Ratio 20.39% 19.78%

Leverage Ratio (LR):

Eligible Tier-1 Capital 199,752,308 172,896,361

Total Exposures 5,758,095,315 4,256,253,296
Leverage Ratio 3.47% 4.06%

Liquidity Coverage Ratio (LCR):

Total High Quality Liquid Assets 1,362,545,096 1,200,257,790

Total Net Cash Outflow 828,459,514 666,722,922
Liquidity Coverage Ratio 164% 180%

Net Stable Funding Ratio (NSFR):

Total Available Stable Funding 2,753,443,506 2,309,310,465

Total Required Stable Funding 990,042,101 901,126,786
Net Stable Funding Ratio 278% 256%

46.1 The full disclosure on the Capital Adequacy, Leverage Ratio and Liquidity Requirements as per SBP instructions
issued from time to time, is available on NBP's website. The link to the full disclosure is available at
https://www.nbp.com.pk/blsd/

249
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

47. RISK MANAGEMENT

Risk management is about understanding and managing the potential for volatility of earnings, loss of access to reliable
deposits and funding and depletion of capital arising from the business activities, whilst pursuing its strategic objectives.
The Bank has in place a well-defined risk management strategy / policy with clear objectives and deliverables through
multi-pronged risk management processes.
The Bank applies the Basel framework as a cornerstone of the NBP’s risk management framework and capital strategy.
The Bank maintains a strong capital, funding and liquidity position in line with its on-going commitment to maintain
balance sheet strength. The strength of risk profile management of the Bank stands at the following pillars:
- Identification and assessment of significant material risks.
- Overseeing and managing the risk profile of the Bank within the context of the risk appetite.
- Optimize risk / return decisions by aligning them to business objective of achieving sustainable optimum growth.
Information Security Division (ISD) is also an integral part of Risk Management Group to oversee independently the
emerging information / cyber security risks.
In order to support Risk Management Group (RMG’s) activities, the strong data management mechanism is also in place to
collect and consolidate exposure wise information various risk related analysis and reviews. The mechanism also helps in
identification of e-CIB related information, performing periodic review, generates reports and highlights inconsistencies
and errors, and issuing instructions to the relevant data entry points for rectification.
47.1 Risk Governance Structure
Risk Management Group (RMG) operates as an independent group under the supervision of Chief Risk Officer (CRO).
RMG's scope and coverage has been enhanced to cater enterprise-wide risk management, credit approvals, and program
lending. CRO reports directly to the President with a dotted line reporting to the Board Risk & Compliance Committee
(BRCC). The group is responsible to perform the functions pertaining to development and oversight of the risk framework,
methodologies and other functions assigned from time to time in line with local / international best practices and under the
supervision of SBP’s regulations / guidelines.
The Bank’s Board is responsible to ensure active oversight over implementation of policies and frameworks so as to
prevent any significant financial loss or reductions in shareholders' value that may be suffered by the Bank. Therefore, it is
the responsibility of the Board to ensure that policies and frameworks are in place to recognise all significant / material
risks to which the Bank is / may be exposed and that the required human resource, culture, practices and systems are
adequate to address such risks. The Board and its relevant committee, i.e. Board Risk and Compliance Committee (BRCC)
and the senior management along with its relevant committees i.e. Management Credit Committee (MCC), Enterprise Risk
Committee (ERC), Asset and Liability Committee (ALCO) etc. are responsible to ensure implementation of risk
management framework.
47.2 Risk Management Framework
The Bank’s risk management policies are established to identify and analyze the risks faced by the Bank, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect the changes in market conditions, products and services offered.
The Bank implements risk management framework through a ‘Three Lines of Defence’ model which defines clear
responsibilities and accountabilities for various offices and ensures effective and independent oversight and also that the
activities take place as intended. RMG together with Compliance Group acts as second line of defence and performs
integrated function of oversight and independently challenges the effectiveness of risk management actions taken by
business groups, who are the first line of defence. The risk management is further strengthened by the third line of
defence, where Board Audit and Compliance Committee and Audit and Inspection Group add value through independent
and objective assurance in improving risk management functions of the Bank.

Following paragraphs introduce Bank’s exposures to material risks associated with its business activities and explain
overall strategies and processes to manage those risks:

47.2.1 Credit Risk

Credit Risk arises from the potential that a customer’s or counterparty’s willingness or ability to meet such an obligation is
impaired, resulting in an economic loss to the bank. NBP’s lending activities account for most of the Bank’s credit risk

250
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

which is continuously evolving in various financial activities including loans and advances, commitments to lend,
contingent liabilities such as letter of credit and guarantees, and other types of both on and off-balance sheet transactions.
The Bank has a dedicated setup led by Chief Risk Officer that ensures the effectiveness of the frameworks for assessment
/ measurement, review and reporting of credit risk under supervision of Board Risk and Compliance Committee.

The Bank has in place Risk Appetite Framework and Credit Risk Concentration Management Framework to ascertain the
levels of credit risk it undertakes by placing limits on exposures in relation to existing or potential obligors, economic
groups and to various industry segments. Persistent focus on maintaining a robust risk management framework
encompassing structured assessment models, effective pre-disbursement evaluation tools and an array of post
disbursement review systems has enabled NBP to effectively manage its credit risk.

The Risk Management function of the Bank is regularly conducting assessments, on perpetual basis, of the credit portfolio
to identify borrowers and sectors most likely to get affected due to changes in the business and economic environment
locally as well as globally. The Bank is cognizant of the fact that COVID-19 situation is posing challenges for the industry in
general, and for the risk management function in particular. Bank is proactively keeping an eye on the delinquency in the
accounts, financial position of the counterparty and other relevant information.

Credit review and approval process of the Bank is well-defined and is managed under strict supervision of senior
management. For analysis of counterparties within various asset classes / constitutions / economic group, the Bank has in
place a statistically validated rating model, which further enhances the credit risk analysis. This creates an integral
contribution in decision making by senior management of the Bank. Concentration of exposure / risk in any of
counterparty, economic group, or industry is assessed frequently and accordingly limit setting is tailored.

The Bank has also engaged itself towards implementation of IFRS 9 standard, which is currently in parallel-run phase. The
standard sets out new model for financial assets, which requires recognition of impairment charge based on an ‘Expected
Credit Loss’ approach rather than the ‘Incurred Credit Loss’ approach as currently followed.

Moreover, under the leadership of CEO & CRO, the credit approval process was brought in line with global best practices
by implementing the delegated approval authorities to Country Credit Officer (CCO) & Senior Credit Officer (SCO). This has
vastly improved the turnaround time (TAT) for credit approvals besides a focused approach to asset / loan monitoring. The
SCOs have been assigned loan portfolios per their expertise i.e. IDG, CIBG, IFRG & Special Assets (Remedial).
Furthermore, the risk team has also started making joint visits with the business teams to customers site which has proved
to be very helpful in understanding the ground realities and also supports in making an informed decision.

Retail & Program Lending Group has recently been established within Risk Management umbrella. This Group will
strengthen focus on products that are managed on program lending basis and will add controls, governance and risk
culture around it. Group has been organized on a Credit Cycle approach, with an end to end credit view. It is engaged in
areas of Policy & Portfolio Management, Credit Approvals, Collection & Recovery Oversight, Automation & Risk
Technology, MIS & Project Management, Quality & Compliance, etc. To ensure that the group plays a key role, its Group
Head has been added to Management Credit Committee as a voting member. Given the overall focus on this area, Retail &
Program Lending Risk will play a significant role within larger scheme of Risk Management Group in 2022.

Currently under Basel Framework, Standardized Approach is used to calculate capital charge for credit risk weighted
assets, with simple approach for credit risk mitigation. Additionally, stress testing for credit risk is completed on regular
basis to evaluate the conceivable effects of scenarios provided by the regulator.

Particulars of the bank's significant on-balance sheet and off-balance sheet credit risk in various sectors are analysed as
follows:

47.2.1.1Lendings to financial institutions

Credit risk by public / private sector

Gross lendings Non-performing lendings Provision held

2021 2020 2021 2020 2021 2020

(Rupees in '000)
Public / Government - - - - - -
Private 335,640,825 126,980,825 174,150 176,150 174,150 176,150
335,640,825 126,980,825 174,150 176,150 174,150 176,150

251
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

47.2.1.2 Investment in debt securities

Credit risk by industry sector

Gross investments Non-performing investments Provision held

2021 2020 2021 2020 2021 2020

(Rupees in '000)

Cement 470,168 470,168 20,168 20,168 20,168 20,168

Chemical 2,076,742 2,073,812 326,742 323,812 326,742 323,812
Construction 3,380,824 3,885,490 1,633,739 1,633,739 1,633,739 1,633,738
Engineering 4,842 4,842 4,842 4,842 4,842 4,842
Fertilizer 655,109 1,040,960 655,109 656,831 655,109 656,831
Sugar 709,719 766,719 709,719 766,719 709,719 766,719
Textile 1,079,625 1,151,054 651,053 651,054 651,053 651,054
Transport - - - - - -
Financial 9,734,656 9,658,543 201,252 210,020 201,252 141,691
Electronics and electrical appliances 1,308,738 1,308,738 1,308,738 1,308,738 1,308,738 1,308,738
Glass and Ceramics 11,361 11,361 11,361 11,361 11,361 11,361
Leather and Tenneries 5,288 5,288 5,288 5,288 5,288 5,288
Food and Personal Care Products 11,184 11,184 11,184 11,184 11,184 11,184
Pharmaceuticals 2,413 2,413 2,413 2,413 2,413 2,413
Technology and Communication 11,072 11,072 11,072 11,072 11,072 11,072
Vanaspati and Allied Industries 4,238 4,238 4,238 4,238 4,238 4,238
Oil and Gas Marketing 687 687 687 687 687 687
Cable and Electrical Goods 4,509 4,509 4,509 4,509 4,509 4,509
Automobile Parts and Accessories 1,185 1,185 1,185 1,185 1,185 1,185
Power (electricity), Gas, Water, Sanitary 34,545,470 37,903,094 - - - -
Tobacco 144 144 144 144 144 144
Paper and Board 10,794 10,794 10,794 10,794 10,794 10,794
Jute 7,081 7,081 7,081 7,081 7,081 7,081
Metal Products 500,000 500,000 - - - -
Services 867,239 890,258 - - - -
Miscelleneous 467,203 891,092 25,996 25,992 25,996 25,991
55,870,291 60,614,725 5,607,314 5,671,871 5,607,314 5,603,540
(0) (1) -
Credit risk by public / private sector
Gross investments Non-performing investments Provision held

2021 2020 2021 2020 2021 2020

(Rupees in '000)

Public / Government 29,853,090 31,810,714 7,620 7,620 7,620 7,620

Private 26,017,201 28,804,011 5,599,694 5,664,251 5,599,694 5,595,920
55,870,291 60,614,725 5,607,314 5,671,871 5,607,314 5,603,540

252
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

47.2.1.3 Advances

Credit risk by industry sector

Gross advances Non-performing advances Provision held

2021 2020 2021 2020 2021 2020

(Rupees in '000)

Agriculture, Forestry, Hunting & Fishing 71,243,087 63,054,331 7,208,158 6,204,022 5,192,290 4,514,299
Mining & Quarrying 88,334 282,368 11,336 117,449 11,336 117,449
Textile 160,048,253 132,701,566 36,876,601 37,427,234 36,828,216 35,611,823
Chemical & Pharmaceuticals 5,284,057 4,033,024 2,731,312 2,645,492 2,661,064 2,634,249
Cement 32,057,795 33,124,120 6,317,887 6,311,377 4,094,267 4,093,767
Sugar 36,639,278 35,237,473 15,354,821 15,335,077 15,354,821 14,335,087
Footwear and Leather garments 2,016,893 2,461,054 892,779 840,449 887,472 840,114
Automobile & Transportation Equipment 8,567,080 6,607,421 940,147 971,267 937,466 966,887
Electronics & Electrical Appliances 9,684,327 10,036,223 2,380,885 2,232,278 2,370,272 2,223,278
Construction 20,193,083 12,258,203 9,643,454 4,484,629 6,754,352 4,481,950
Oil & Gas 102,762,247 82,061,196 20,216,650 5,413,208 20,074,535 4,526,641
Power (electricity), Gas, Water, Sanitary 198,946,668 201,168,044 13,209,849 7,789,326 9,311,105 6,745,325
Wholesale and Retail Trade 42,441,006 36,564,735 10,731,332 13,444,060 10,675,368 12,012,696
Exports / Imports 1,501,450 1,687,703 - - - -
Transport, Storage and Communication 55,054,905 55,176,592 12,774,422 11,249,115 10,353,432 9,169,761
Financial 32,198,215 6,093,650 309,394 308,375 309,394 308,375
Services 38,096,872 32,839,062 4,228,462 4,452,760 2,540,822 2,606,881
Individuals 198,138,761 184,020,751 6,150,291 5,900,196 4,300,297 4,088,882
Fertilizer 11,602,568 15,733,123 2,988,462 2,947,639 2,947,541 2,888,738
Metal Products 71,007,705 67,313,392 25,680,256 25,111,134 25,511,029 24,557,341
Telecommunication 22,011,036 17,064,247 1,136,813 1,159,350 1,136,813 1,159,350
Public Sector Commodity Operations 77,346,473 62,413,440 74,198 74,198 74,198 74,198
Rice Trading & Processing 37,707,929 30,685,877 4,780,678 4,665,312 4,555,487 4,537,360
Food and Tobacco 16,080,605 13,995,035 6,959,780 5,224,085 6,338,654 5,200,684
Glass and Ceramics 8,070,726 6,859,290 389,447 396,911 389,447 396,911
Paper & Board 2,726,772 1,601,970 1,193,719 1,187,897 1,193,719 1,187,897
Engineering 32,121,933 33,444,437 1,422,820 1,416,959 1,415,349 1,410,274
Plastic Products 2,662,060 2,627,648 672,095 651,199 670,607 648,950
Media 1,529,488 2,189,495 381,881 718,124 208,971 293,124
Flour Mills 2,663,913 2,713,759 649,015 638,998 585,705 624,012
Sports Goods 1,280,713 978,994 93,818 93,818 93,818 93,818
Surgical equipments 824,409 827,764 12,151 64,674 8,558 64,674
Others 2,578,157 2,017,760 1,525,315 1,817,521 1,525,315 1,730,678
1,305,176,798 1,159,873,747 197,938,229 171,294,133 179,311,722 154,145,472
- - -
Credit risk by public / private sector
Gross advances Non-performing advances Provision held

2021 2020 2021 2020 2021 2020

(Rupees in '000)

Public / Government 420,736,532 337,572,330 - 2,672,432 - 2,522,432

Private 884,440,266 822,301,417 197,938,229 168,621,701 179,311,722 151,623,040
1,305,176,798 1,159,873,747 197,938,229 171,294,133 179,311,722 154,145,472
- (0) - - - -

253
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)
47.2.1.4 Contingencies and Commitments

Credit risk by industry sector

Agriculture, Forestry, Hunting and Fishing 100,504 170,777

Mining and Quarrying 1,418,487 2,605,392
Textile 25,421,310 18,571,105
Chemical and Pharmaceuticals 6,001,560 9,558,756
Cement 9,718,289 4,269,235
Sugar 592,840 303,184
Footwear and Leather garments 182 162
Automobile and Transportation Equipment 4,435,897 11,886,834
Electronics and Electrical Appliances 2,843,195 2,959,697
Construction 9,718,062 9,036,763
Oil & Gas 104,645,267 39,173,307
Power (electricity), Water, Sanitary 61,808,701 83,646,557
Wholesale and Retail Trade 2,346,916 1,624,388
Exports / Imports 272,733 317,066
Transport, Storage and Communication 47,721,546 28,020,866
Financial 719,655,625 544,516,361
Services 1,355,079,802 950,517,287
Individuals 77,114 394,092
Fertilizer 3,652,239 1,394,690
Metal Products 15,961,141 9,828,654
Telecommunication 25,141,952 14,070,734
Public Sector Commodity Operations 8,249,178 12,565,661
Rice processing and Trading 20,825 39,174
Food and Tobacco 448,128 376,730
Glass and Ceramics 1,484,463 1,007,344
Paper and Board 2,046,783 551,469
Engineering 77,952,489 43,596,296
Plastic Products 258,541 27,432,671
Surgical equipments 19,459 750
Others 3,411,207 2,347,864
2,490,504,435 1,820,783,867
-
* Contingent liabilities for the purpose of this note are presented at cost and includes direct credit substitutes, transaction
related contingent liabilities and trade related contingent liabilities.
2021 2020
(Rupees in '000)
Credit risk by public / private sector

Public / Government 1,402,649,361 948,334,918

Private 1,087,855,074 872,448,949
2,490,504,435 1,820,783,867

254
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

47.2.1.5 Concentration of Advances

The bank's top ten (10) exposures on the basis of total (funded and non-funded exposures) aggregated to Rs. 1,474,941
million (2020: Rs. 1,093,518 million) are as following:

2021 2020
(Rupees in '000)

Funded 244,605,208 250,314,704

Non Funded 1,230,335,750 843,203,477
Total Exposure 1,474,940,958 1,093,518,181

The sanctioned limits against these top 10 exposures aggregated to Rs. 1,563,667 million (2020: Rs. 1,280,786 million).

Total funded classified therein 2021 2020

Amount Provision held Amount Provision held
(Rupees in '000)

Loss - - 2,522,432 2,522,432

Total - - 2,522,432 2,522,432

For the purpose of this note, exposure means outstanding funded facilities and utilised non-funded facilities as at the reporting date.

47.2.1.6 Advances - Province / Region-wise Disbursement & Utilization

2021
Disbursements Utilization
AJK including
Province / Region Punjab Sindh Balochistan Islamabad
Gilgit-Baltistan
(Rupees in '000)

Punjab 227,503,496 221,078,413 1,855,596 3,944,464 - 11,120 613,903

Sindh 479,243,405 4,500,000 466,243,405 - - 8,500,000 -
KPK including FATA 11,698,517 - - 11,698,517 - - -
Balochistan 3,678,107 - - - 3,678,107 - -
Islamabad 62,861,679 12,830,357 9,892,187 3,099,940 - 37,039,195 -
AJK including Gilgit - Baltistan 7,310,487 - - - - - 7,310,487
Total 792,295,691 238,408,770 477,991,188 18,742,921 3,678,107 45,550,315 7,924,390

2020
Disbursements Utilization
Province / Region KPK including AJK including
Punjab Sindh FATA Balochistan Islamabad
Gilgit-Baltistan
(Rupees in '000)
Punjab 210,145,408 207,931,532 1,625,942 - - - 587,934
Sindh 390,658,220 4,704,206 377,454,014 - - 8,500,000 -
KPK including FATA 6,176,977 - - 6,176,977 - - -
Balochistan 3,855,924 - - - 3,332,924 - 523,000
Islamabad 49,991,187 8,853,922 12,271,029 1,712,540 - 27,153,696 -
AJK including Gilgit-Baltistan 2,798,820 - - - - - 2,798,820
Total 663,626,536 221,489,660 391,350,985 7,889,517 3,332,924 35,653,696 3,909,754

255
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

47.2.2 Market Risk

Market Risk is the value of on and off-balance sheet positions of a financial institution that will be adversely affected by
movements in market factors such as interest rates, foreign exchange rates, equity prices, credit spreads and / or
commodity prices resulting in a loss to earnings and capital.

The Bank’s market risk is managed through Market Risk Management (MRM) Framework approved by the Board which
is comprised of related policies / procedures with the objective to mitigate market risk. Bank has in-place scorecards /
criteria for various market risk limits. Under the developed Value-at-Risk (VaR) models and policy framework, VaR limits
are being monitored with an objective to be used for capital charge calculation under IMA approach in future.

Standardized Approach is used to calculate capital charge for market risk as per Basel framework. Whereas, stress
testing for interest rate, equity prices, and exchange rates risks activities is carried out regularly to estimate the impact
on the capital of the Bank.

In addition to the regulatory requirements, Bank has devised proprietary market risk stress testing scenarios which are
performed on periodic basis to assess the impact on capital of the Bank for Internal Capital Adequacy and Assessment
Process (ICAAP). Limits / zones and Management Action Triggers and Management Action Plans corresponding to
Liquidity Ratio, Balance Sheet Duration Gap, Government Securities PVBP and Duration have also been developed.

47.2.2.1 Statement of Financial position split by trading and banking books

2021 2020
Banking book Trading book Total Banking book Trading book Total
(Rupees in '000)

Cash and balances with treasury banks 278,747,059 - 278,747,059 249,259,590 - 249,259,590
Balances with other banks 17,667,067 - 17,667,067 14,227,355 - 14,227,355
Lendings to financial institutions 335,466,675 - 335,466,675 126,804,675 - 126,804,675
Investments 1,818,433,016 119,737,626 1,938,170,642 1,366,741,891 96,656,185 1,463,398,076
Advances 1,113,392,485 - 1,113,392,485 983,254,527 - 983,254,527
Fixed assets 54,251,555 - 54,251,555 54,413,493 - 54,413,493
Intangible assets 502,791 - 502,791 303,813 - 303,813
Right of use assets 6,605,400 - 6,605,400 6,669,684 - 6,669,684
Deferred tax asset 1,625,647 - 1,625,647 - - -
Other assets 100,255,148 - 100,255,148 110,195,768 - 110,195,768
3,726,946,843 119,737,626 3,846,684,469 2,911,870,796 96,656,185 3,008,526,981

47.2.2.2 Foreign Exchange Risk

Foreign exchange and translation risk arises from the impact of currency movements on the value of the Bank’s cash
flows, profits and losses, and assets and liabilities as a result of participation in global financial markets and international
operations.

In order to manage currency risk exposure the Bank enters into ready, spot, forward and swaps transactions with the
SBP and in the interbank market, financial institutions and corporates. The Bank’s foreign exchange exposure comprises
of forward contracts, purchases of foreign bills, foreign currencies cash in hand, balances with Banks abroad, foreign
placements with the SBP and foreign currencies assets and liabilities. Foreign Exchange exposure is managed within the
statutory limits, as fixed by the SBP. Appropriate segregation of duties exists between the front, middle and back office
functions.

256
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Foreign Foreign Off-balance Net foreign Foreign Foreign Off-balance Net foreign
currency currency sheet currency currency currency sheet currency
assets liabilities items exposure assets liabilities items exposure

(Rupees in '000)

United States Dollar 230,359,433 321,577,638 87,452,155 (3,766,050) 157,851,413 249,296,809 115,299,103 23,853,707
Great Britain Pound 5,010,104 5,950,831 4,303,047 3,362,320 4,236,309 5,613,790 3,235,840 1,858,360
Japanese Yen 3,938,966 3,283,911 2,315,294 2,970,349 4,077,289 1,123,760 168,624 3,122,153
Euro 13,402,801 19,043,837 7,628,249 1,987,213 8,364,855 10,043,967 3,462,911 1,783,798
Other currencies 72,736,519 18,379,635 3,130,155 57,487,039 65,494,170 20,499,909 2,996,887 47,991,148
325,447,823 368,235,852 104,828,900 62,040,871 240,024,036 286,578,235 125,163,365 78,609,166

2021 2020
Banking book Trading book Banking book Trading book
(Rupees in '000)
Impact of 1% change in foreign exchange rates

- Profit and loss account - - - -

- Other comprehensive income - 620,409 - 786,092

47.2.2.3 Equity position Risk

The trading activities also raise risk which occurs resulting in negative fluctuations of daily stock prices specifically in
those stocks which are held by the Bank, hence, deplete capital. The Bank’s equity position is managed through limits
imposed by regulator for both, overall investment and exposure in single scrip. Moreover, internal limits are set to
possibly manage overall earnings in the form of placing of stop loss limits and/ or through diversification within the
structure of overall equity position portfolio.

2021 2020
Banking book Trading book Banking book Trading book
(Rupees in '000)
Impact of 5% change in equity prices
- Profit and loss account - - - -
- Other comprehensive income 2,671,767 - 3,065,915 -

47.2.2.4 Yield / Interest Rate Risk in the Banking Book (IRRBB)-Basel II Specific

Interest rate risk specifically arises due to adverse movements in yield curve of underlying asset which is being
monitored by ALCO with an objective to possibly limiting the potential impact over the profitability of the Bank which
may result in instability of market based interest rates and mismatching or gaps in the amount of financial assets and
financial liabilities in different maturity time bands. Bank assumes that the sources of IRR are based on following sub-
risks.

- Re-pricing risk; arising from changes to the overall level of interest rates and inherent mismatches in the re-pricing
term of banking book items.

- Yield curve risk; arising from a change in the relative level of interest rates for different tenors and changes in the
slope or shape of the yield curve.

- Basis risk; arising from differences between the actual and expected interest margins on Banking book items over
the implied cost of funds of those items.

257
 2021 2020
Banking book Trading book Banking book Trading book

258
(Rupees in '000)
Impact of 1% change in interest rates
- Profit and loss account - 368,677 - 131,186
- Other comprehensive income 8,629,166 - 12,965,285 -

47.2.2.5 Mismatch of Interest Rate Sensitive Assets and Liabilities

2021
Exposed to Yield / Interest risk
Effective Non-interest
Yield / Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 bearing
Interest Upto 1 to 3 to 6 Months to 1 to 2 to 3 to 5 to 10 Above financial
rate Total Month Months Months Year Years Years Years Years 10 Years instruments
On-balance sheet financial instruments

Assets
Cash and balances with treasury banks 0.1% 278,747,059 25,788,429 - 1,230,868 - - - - - - 251,727,762
Balances with other banks 0.6% 17,667,067 3,649,152 514,671 728,951 766,147 - - - - - 12,008,146
Lendings to financial institutions 10.4% 335,466,675 305,466,675 - 30,000,000 - - - - - - -
Investments 8.2% 1,938,170,642 49,944,777 600,631,710 163,339,043 145,545,216 412,825,053 115,300,016 133,826,520 231,572,946 7,808,110 77,377,251
Advances 7.4% 1,113,392,485 233,082,018 347,474,887 221,335,325 87,266,493 15,422,466 18,353,878 96,696,071 52,224,236 21,686,992 19,850,120
Other assets 0.0% 60,619,899 - - - - - - - - - 60,619,899
For the year ended December 31, 2021

3,744,063,827 617,931,050 948,621,268 416,634,187 233,577,857 428,247,519 133,653,895 230,522,591 283,797,182 29,495,102 421,583,177
Liabilities
Bills payable 0.0% 21,848,270 - - - - - - - - - 21,848,270
Borrowings 10.1% 312,925,106 33,593,924 129,395,726 81,758,922 29,616,731 13,099,389 3,634,279 6,463,258 15,362,877 - -
Deposits and other accounts 4.0% 3,019,155,045 1,606,638,783 92,855,650 64,016,936 72,939,726 18,293,487 79,321,676 4,558,165 588,979 - 1,079,941,642
Lease liability against right of use assets 10.0% 7,893,960 - 20,960 69,732 361,900 643,301 505,176 1,765,289 3,046,610 1,480,992 -
Other liabilities 0.0% 196,114,706 - - - - - - - - - 196,114,706
3,557,937,087 1,640,232,707 222,272,335 145,845,591 102,918,356 32,036,178 83,461,131 12,786,712 18,998,466 1,480,992 1,297,904,618

On-balance sheet gap 186,126,739 (1,022,301,656) 726,348,932 270,788,597 130,659,500 396,211,341 50,192,764 217,735,879 264,798,716 28,014,110 (876,321,441)

Off-balance sheet financial instruments

Documentary credits and short-term trade-related transactions 1,582,757,532 - - - - - - - - - 1,582,757,532

Commitments in respect of:

- Forward foreign exchange contracts 104,828,900 18,483,677 9,917,130 74,965,217 1,462,876 - - - - - -
- Forward government securities transactions 22,180,109 - (171,626) - 22,793,079 - - (441,343) - - -
Commitments for acquisition of:
- fixed assets 826,737 344,837 314,748 50,916 116,236 - - - - - -
- other commitments - - - - - - - - - - -
Off-balance sheet gap 1,710,593,278 18,828,514 10,060,252 75,016,133 24,372,191 - - (441,343) - - 1,582,757,532

Total Yield / Interest Risk Sensitivity Gap (1,003,473,143) 736,409,184 345,804,730 155,031,691 396,211,341 50,192,764 217,294,536 264,798,716 28,014,110 706,436,091
Notes to and forming part of the Unconsolidated Financial Statements

Cumulative Yield / Interest Risk Sensitivity Gap (1,003,473,143) (267,063,958) 78,740,772 233,772,463 629,983,804 680,176,568 897,471,104 1,162,269,819 1,190,283,929 1,896,720,019
 2020

Exposed to Yield / Interest risk

Effective Non-interest
Yield / Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5
bearing
Interest Upto 1 to 3 to 6 Months to 1 to 2 to 3 to 5 to 10 Above
financial
rate Total Month Months Months Year Years Years Years Years 10 Years instruments
On-balance sheet financial instruments
(Rupees in '000)
Assets
Cash and balances with treasury banks 1.5% 249,259,590 23,854,603 - - 3,574,948 - - - - - 221,830,039
Balances with other banks 2.3% 14,227,355 4,379,959 364,979 455,390 690,430 - - - - - 8,336,597
Lendings to financial institutions 6.6% 126,804,675 126,804,675 - - - - - - - - -
Investments 11.3% 1,463,398,076 165,436,764 466,849,351 45,910,296 104,002,599 93,381,635 139,693,515 124,152,454 237,876,474 10,399,389 75,695,599
Advances 9.0% 983,254,527 228,581,952 354,851,351 140,299,770 66,105,848 16,909,414 48,488,652 72,419,084 28,992,849 25,391,405 1,214,202
Other assets 0.0% 59,030,243 - - - - - - - - - 59,030,243
2,895,974,466 549,057,953 822,065,682 186,665,456 174,373,825 110,291,049 188,182,166 196,571,537 266,869,322 35,790,794 366,106,680
Liabilities
Bills payable 0.0% 16,795,186 - - - - - - - - - 16,795,186
Borrowings 6.6% 138,539,005 10,688,517 10,993,747 56,908,784 42,516,430 2,392,766 3,509,557 6,420,414 5,108,790 - -
Deposits and other accounts 5.2% 2,418,966,479 1,295,641,079 88,051,369 32,233,664 52,812,308 12,050,442 3,913,846 13,040,142 652,508 - 920,571,121
Lease liability against right of use assets 10.0% 7,533,691 41 21,491 57,673 96,726 804,940 662,691 1,762,735 2,838,255 1,289,139 -
Other liabilities 0.0% 153,918,896 - - - - - - - - - 153,918,895
2,735,753,257 1,306,329,636 99,066,607 89,200,120 95,425,464 15,248,148 8,086,094 21,223,292 8,599,553 1,289,139 1,091,285,202
On-balance sheet gap 160,221,209 (757,271,683) 722,999,075 97,465,336 78,948,361 95,042,901 180,096,072 175,348,246 258,269,769 34,501,655 (725,178,521)

Off-balance sheet financial instruments

Documentary credits and short-term trade-
For the year ended December 31, 2021

related transactions 1,096,347,086 - - - - - - - - - 1,096,347,086

Commitments in respect of:
- forward foreign exchange contracts 125,163,364 30,923,782 86,543,418 6,097,820 1,598,344 - - - - - -
- forward government securities transactions (26,632,678) (26,632,678) - - - - - - - - -
Commitments for acquisition of:
- fixed assets 632,619 414,641 92,492 32,492 92,994 - - - - - -
- other commitments - - - - - - - - - - -
Off-balance sheet gap 1,195,510,391 4,705,745 86,635,910 6,130,312 1,691,338 - - - - - 1,096,347,086

Total Yield / Interest Risk Sensitivity Gap (752,565,938) 809,634,985 103,595,648 80,639,699 95,042,901 180,096,072 175,348,246 258,269,769 34,501,655 371,168,565
Cumulative Yield / Interest Risk Sensitivity Gap (752,565,938) 57,069,047 160,664,695 241,304,394 336,347,295 516,443,367 691,791,613 950,061,382 984,563,037 1,355,731,601

47.2.2.6 Reconciliation of Financial Assets & Liabilities with Total Assets & Liabilities 2021 2020
----------------- (Rupees in '000) ----------------

Total Financial Assets as per note 47.2.2.5 3,744,063,827 2,895,974,466

Add: Non-Financial Assets
Fixed Assets 54,251,555 54,413,493
Intangible Assets 502,791 303,813
Right of Use Assets 6,605,400 6,669,684
Deferred Tax Assets 1,625,647 -
Other Assets 39,635,249 51,165,525
102,620,642 112,552,515
Total assets as per statement of financial position 3,846,684,469 3,008,526,981

Total Financial Liabilities as per note 47.2.2.5 3,557,937,087 2,735,753,257

Add: Non-Financial Liabilities
Deferred Tax Liabilities - 2,978,364
Other Liabilities 2,544,817 2,236,620
2,544,817 5,214,984
2,740,968,239

259
Total liabilities as per statement of financial position 3,560,481,904
Notes to and forming part of the Unconsolidated Financial Statements
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

47.2.3 Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from
external events. This definition includes legal risk but excludes strategic and reputational risks. To mitigate, operational
risk a Operational Risk Management (ORM) Framework has been developed to align the Bank’s operations with sound
practices of operational risk by Basel framework. ORM Framework provides guidance for setting the operational risk
strategy of the Bank, selection and adoption of risk and loss measurement tools, reporting, and establishment of
operational risk management processes.

Operational risks are a core component of doing business arising from the day-to-day operational activities of the Bank
including launching of new products and services by the bank. Bank realises that operational risks cannot be fully
mitigated, it therefore determines an appropriate balance between accepting potential losses and incurring costs of
mitigation.

Further, the Bank has adopted a comprehensive Operational Risk Management Strategy and Operational Risk Tolerance
limits approved by the Board in-line with Basel framework. Furthermore, the Bank has rolled-out Operational Loss Data
Collection Mechanism whereby field functionaries and Groups/Divisions at head office are responsible to report
operational losses under their jurisdictions on a certain frequency. Operational loss events are reviewed and appropriate
corrective measures are taken on an ongoing basis. Risk Evaluation exercise is carried out for new products, processes
and systems as per the operational risk policy of the bank.

The Bank has also conducted analysis of major Operational Risk Incidents covering key control lapses and accordingly
suggested recommendations & mitigations. As per Basel regulatory framework, the Bank calculates capital charge for its
operational risk using Basic Indicator Approach. This approach is considered most suitable in view of the business model
of the bank which relies on an extensive network of branches to offer banking services to its customers.

Moreover, the Bank closely monitored the situation and undertaken required actions to ensure the safety and security of
Bank staff and maintenance of service to its customers. The Senior Management of the Bank including the Covid Crises
Management Team closely monitored the situation, and took timely decisions to resolve any concerns.

The Bank continued to take measures to ensure the maintenance of their service levels, resolved customer complaints to
meet the expectations of its stakeholders.

The Bank's operations stayed highly resilient and the Bank deployed all necessary measures for the health and safety of
its employees to prevent them from the pandemic situation.

47.2.4 Information Security Risk

Cyber Security is one of our top priority risks. Considering extensive customer base and increasing digital footprint,
mechanism has been devised for upscaling of technology infrastructure and related channels from information security
standpoint. Further, due to evolving cyber threat landscape, the Bank has taken appropriate actions to monitor and
respond to cybersecurity risks and adopted a heightened state of cybersecurity. We are living in the highly technology
dependent environment, where most of the business functions are performed with information technology for storing,
processing and sharing information; the information “assets” that are being used to store, process and transmit the
information, face various types of threats. If threats get materialized and are able to exploit the vulnerabilities (weaknesses)
present in these information assets, the confidentiality, integrity and availability of information get compromised. In order to
mitigate the risks, certain controls and counter-measures need to be assessed and implemented. The Bank has devised a
governance mechanism to manage related risks through development of Policies and Framework, and deployed security
tools to ensure adequate implementation of internal controls and monitoring of security threats within technology
infrastructure.

Our staff is first line of defence against any cyber attacks therefore the Bank regularly assesses the information security
controls and undertake employees’ awareness and trainings. The Bank works with its key technology partners to ensure
that potential vulnerable systems are identified and appropriate controls, updates and patches are implemented to secure
the systems. The Bank is actively communicating with its customers on interacting with the Bank in a secure manner
through its full suite of channels including online and digital banking.

260
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

In the late hours of October 29, 2021 and early morning of October 30, 2021, the Bank’s IT Infrastructure came under a
cyberattack. As a result, NBP’s business-critical servers along with several workstations went down which disrupted the
business operations. The services primarily running on the Windows operating system were impacted. A committee was
formed to keep track of the systems affected and their restorations. The status of the systems that were affected as a
result of cyberattack and their restorations was also reported to the State Bank of Pakistan. The management has also
taken on board various vendors to assist the Bank in carrying out analysis of the potential lapses that led to the attack and
also to take initiatives and develop processes for dealing with such events in future. The systems of the Bank are up and
running and as per management’s assessment, there is no impact on the Bank’s IT infrastructure as a result of
cyberattack. The management is cognizant of the fact that cyber security is a top priority risk and the Bank is taking
appropriate steps to monitor and respond to it.

47.2.5 Enterprise-wide Risk

In addition to the above mentioned risks, the Bank has a structure to identify residual material risks on periodic basis. The
source of these reports includes, but not limited to, the Board approved Internal Capital Adequacy and Assessment
Process (ICAAP), which commensurate risks over and above those which directly occurs as a result of daily business and
operations of the Bank. These risks include Concentration Risk, Interest Rate Risk in Banking Book (IRRBB), Increase in
NPL Categories, Reputational Risk, Strategic Risk, etc.

Moreover, all those brewing risks that are material and arise within the Bank or due to inherent behaviour of country’s
market and economic conditions, whether in isolation or in combinations are covered under the Bank-wide Recovery Plan.
These risks are monitored on certain frequency and corrective actions are taken as and when deemed necessary.

Bank's Stress-testing framework, comprises of tools, to deliver a timely assessment of the resilience of the Bank’s capital
under stressed conditions to the senior management. It encompasses simplest to sophisticated stress testing methods to
capture the abnormal movement of market and economy based indicators and to translate such scenarios into projections
of Bank’s profitability and capital planning.

This framework paves the way to a quantitative, forward-looking assessment of capital adequacy (movement/ level of
Capital Adequacy Ratio (CAR) of the Bank) to provide an indication of how much capital might be needed to absorb
losses. It helps in identifying potential vulnerabilities within the Bank and assessing solvency by applying plausible/ past
adverse scenarios under extreme conditions.

47.2.6 Liquidity Risk

Liquidity risk is the risk of loss to a bank arising from its inability to meet obligations as they fall due or to fund growth in
assets, without incurring unacceptable costs or losses. More simply, liquidity risk is the possibility that a bank will be
unable to meet its financial commitment to a customer, creditor, or investor when due, in a timely and cost-effective
manner.

To mitigate this risk, Bank has arranged diversified funding sources, manages specific assets with liquidity in mind and
monitors liquidity on daily basis. In addition, the Bank maintains statutory deposits with central Banks inside and outside
Pakistan. The purpose of liquidity management is to ensure that there are sufficient cash flows to meet all of the Bank's
liabilities when due, under both normal and stressed conditions without incurring unacceptable losses, as well as to
capitalize on opportunities for business expansion and profitability. This includes the Bank's ability to meet deposit
withdrawals either on demand or at contractual maturity, to repay borrowings as they mature and to make new loans and
investments, as opportunities arise.

Asset and Liability Committee (ALCO) is responsible for ensuring that the Bank has adequate liquidity and monitors
liquidity gaps, to execute this responsibility. Mandatory as well as advanced / optional stress testing and ratio based
liquidity assessments are performed to proactively identify and manage liquidity position, needs / requirements. Bank has
various limits / ratios, triggers and management actions in place to monitor and mitigate liquidity risk. The Bank calculates
and monitors, on regular basis, Basel-III Liquidity standards (includes LCR, NSFR and LMTs), liquidity ratios as per SBP
parameters besides other internal liquidity measures.

261
 47.2.6.1 Maturities of Assets and Liabilities - based on contractual maturity of the assets and liabilities of the Bank
2021

262
Over 1 to Over 7 to Over 14 days Over 1 to Over 2 to Over 3 to Over 6 to Over 9 months Over 1 to Over 2 to Over 3 to Over
Total Upto 1 Day
7 days 14 days to 1 Month 2 Months 3 Months 6 Months 9 Months to 1 year 2 years 3 years 5 Years 5 Years
(Rupees in '000)
Assets

Cash and balances with treasury banks 278,747,059 275,826,353 - - 1,689,838 - - 1,230,868 - - - - - -
Balances with other banks 17,667,067 13,841,633 717,364 564,725 533,576 322,264 192,407 728,951 766,147 - - - - -
Lending to financial institutions 335,466,675 2,405,644 274,914,137 28,146,895 - - - 30,000,000 - - - - - -
Investments 1,938,170,642 4,515,392 611,150 40,215,196 4,603,040 115,845,326 484,786,384 163,339,043 79,413,300 105,916,554 417,430,271 142,824,222 134,858,789 243,811,976
Advances 1,113,392,485 319,220,013 3,480,102 2,934,122 49,909,626 68,472,193 32,145,072 99,428,026 44,682,449 56,204,507 56,918,407 90,680,852 127,063,315 162,253,800
Fixed assets 54,251,555 - - - - - - - - 851,344 2,401,684 851,344 1,407,464 48,739,719
Intangible assets 502,791 - - - - - - - - 167,597 167,597 167,597 - -
Right of Use Assets 6,605,400 - - - - 17,682 464 53,920 72,810 111,487 588,608 457,559 1,417,863 3,885,007
Deferred tax assets 1,625,647 - - - - - - - - - - - 1,625,647 -
Other assets 100,255,148 18,172,590 225,894 269,736 316,477 16,646,615 16,984,106 12,596,172 1,388,113 1,369,446 29,022,877 725,138 1,087,707 1,450,276
3,846,684,469 633,981,626 279,948,646 72,130,673 57,052,557 201,304,080 534,108,434 307,376,980 126,322,820 164,620,935 506,529,444 235,706,713 267,460,788 460,140,779
Liabilities

Bills payable 21,848,270 21,848,270 - - - - - - - - - - - -

Borrowings 312,925,106 60,004 2,886,366 27,335,647 3,311,907 108,642,330 20,753,395 81,758,922 26,987,971 2,628,760 13,099,389 3,634,279 6,463,258 15,362,877
Deposits and other accounts 3,019,155,045 2,545,449,917 26,574,946 11,971,222 92,050,654 76,537,717 17,074,721 83,328,141 32,764,725 27,549,127 12,326,386 85,151,041 7,060,714 1,315,732
Liabilities against assets subject to right of use assets 7,893,960 20,497 463 69,732 92,367 269,533 643,301 505,176 1,765,289 4,527,602
Other liabilities 198,659,523 86,095,496 25,335 30,252 35,495 6,118,269 6,118,966 29,279,479 1,828,346 1,826,252 25,961,043 8,538,736 16,576,941 16,224,912
3,560,481,904 2,653,453,687 29,486,647 39,337,122 95,398,056 191,318,813 43,947,545 194,436,275 61,673,408 32,273,672 52,030,120 97,829,233 31,866,201 37,431,124
Net assets 286,202,565 (2,019,472,061) 250,461,998 32,793,551 (38,345,499) 9,985,267 490,160,889 112,940,705 64,649,412 132,347,263 454,499,324 137,877,480 235,594,587 422,709,655

Share capital 21,275,131

Reserves 60,371,495
For the year ended December 31, 2021

Unappropriated profit 140,073,817

Surplus on revaluation of assets 64,482,122
286,202,565
2020
Over 1 to Over 7 to Over 14 days Over 1 to Over 2 to Over 3 to Over 6 to Over 9 months Over 1 to Over 2 to Over 3 to Over
Total Upto 1 Day
7 days 14 days to 1 Month 2 Months 3 Months 6 Months 9 Months to 1 year 2 years 3 years 5 Years 5 Years
Assets (Rupees in '000)

Cash and balances with treasury banks 249,259,590 244,470,420 724,224 - 489,997 - - - - 3,574,949 - - - -
Balances with other banks 14,227,355 9,074,765 1,998,152 - 1,643,639 205,127 159,852 455,390 308,490 381,940 - - - -
Lending to financial institutions 126,804,675 - 122,804,675 2,300,000 1,700,000 - - - - - - - - -
Investments 1,463,398,076 6,348,903 602,861 128,305,403 30,179,598 230,232,181 236,617,171 45,910,297 113,118,951 39,082,357 97,645,814 157,346,293 125,301,464 252,706,784
Advances 983,254,527 334,192,443 1,929,530 3,454,238 32,300,740 59,593,625 16,337,194 60,035,942 30,309,223 30,130,411 41,668,685 78,281,159 157,289,258 137,732,079
Fixed assets 54,413,493 - - - - - - - - 724,254 2,878,438 724,254 1,322,411 48,764,136
Intangible assets 303,813 - - - - - - - - 101,271 101,271 101,271 - -
Right of Use Assets 6,669,684 - - - 201 14,649 5,276 50,071 29,405 66,557 625,524 583,369 1,528,327 3,766,303
Other assets 110,195,768 16,963,066 - - - 17,934,892 18,136,013 10,887,402 1,204,142 1,204,142 38,014,615 3,351,081 2,500,415 -
3,008,526,981 611,049,597 128,059,442 134,059,641 66,314,175 307,980,474 271,255,506 117,339,102 144,970,211 75,265,881 180,934,347 240,387,427 287,941,875 442,969,302
Liabilities

Bills payable 16,795,186 16,795,186 - - - - - - - - - - - -

Borrowings 138,539,005 1,966,540 - 5,266,007 3,455,970 4,727,114 6,266,632 56,908,784 41,474,224 1,042,206 2,392,766 3,509,557 6,420,414 5,108,791
Deposits and other accounts 2,418,966,479 2,068,191,047 23,189,505 11,128,935 103,011,653 51,070,288 13,467,529 66,056,859 20,877,326 18,483,104 12,454,175 8,477,921 21,086,963 1,471,174
Liabilities against assets subject to right of use assets 7,533,691 - - - 41 15,141 6,349 57,673 25,319 71,406 804,940 662,691 1,762,736 4,127,395
Deferred tax liabilities 2,978,364 - - - - - - - - - - - 2,978,364 -
Other liabilities 156,155,514 61,589,642 389,647 280,904 420,804 9,300,464 24,852,920 15,226,657 1,210,882 1,141,620 15,947,785 5,339,632 10,377,940 10,076,617
2,740,968,238 2,148,542,415 23,579,152 16,675,846 106,888,468 65,113,007 44,593,431 138,249,973 63,587,751 20,738,336 31,599,666 17,989,801 42,626,417 20,783,978
Net assets 267,558,742 (1,537,492,818) 104,480,290 117,383,795 (40,574,293) 242,867,467 226,662,076 (20,910,871) 81,382,460 54,527,545 149,334,681 222,397,626 245,315,458 422,185,325

Share capital 21,275,131

Reserves 56,562,933
Unappropriated profit 116,021,334
Surplus on revaluation of assets 73,699,344
267,558,742
Notes to and forming part of the Unconsolidated Financial Statements
 47.2.6.2 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Bank
2021
Over 1 to 3 Over 3 to 6 Over 6 Months Over 1 to 2 Over 2 to 3 Over 3 to 5 Over 5 to 10 Above 10
Total Upto 1 Month Months Months Years Years Years Years Years
to 1 Year
(Rupees in '000)
Assets
Cash and balances with treasury banks 278,747,059 173,681,591 4,354,189 47,906,066 46,675,198 6,130,015 - - - -
Balances with other banks 17,667,067 15,657,298 514,671 728,951 766,147 - - - - -
Lending to financial institutions 335,466,675 305,466,675 - 30,000,000 - - - - - -
Investments 1,938,170,642 62,525,799 644,716,403 139,330,956 156,396,678 415,356,424 142,327,662 134,189,408 231,088,253 12,239,061
Advances 1,113,392,485 308,315,926 184,233,364 91,285,138 92,642,485 56,918,407 90,680,852 127,062,513 89,148,053 73,105,747
Fixed assets 54,251,555 - - - 851,344 2,401,684 851,344 1,407,464 - 48,739,719
Intangible assets 502,791 - - - 167,597 167,597 167,597 - - -
Right of Use Assets 6,605,400 - 18,146 53,920 184,297 588,608 457,559 1,417,863 2,657,819 1,227,188
Deferred tax assets 1,625,647 - - - - - - 1,625,647 - -
Other assets 100,255,148 41,482,788 14,111,487 9,617,316 2,757,559 29,022,877 725,138 1,087,707 1,450,276 -
3,846,684,469 907,130,076 847,948,261 318,922,346 300,441,306 510,585,611 235,210,152 266,790,603 324,344,401 135,311,714
Liabilities
Bills payable 21,848,270 11,785,882 526,963 6,702,452 361,471 2,471,502 - - - -
Borrowings 312,925,106 33,593,924 129,395,726 81,758,922 29,616,731 13,099,389 3,634,279 6,463,258 15,362,877 -
Deposits and other accounts 3,019,155,045 763,868,028 185,078,506 296,787,793 462,965,150 413,860,284 486,684,939 408,594,611 1,315,732 -
Liabilities against assets subject to right of use assets 7,893,960 - 20,960 69,732 361,900 643,301 505,176 1,765,289 3,046,610 1,480,992
Other liabilities 198,659,523 78,524,701 18,508,262 30,670,330 3,654,598 25,961,043 8,538,736 16,576,941 8,112,456 8,112,456
3,560,481,904 887,772,535 333,530,416 415,989,230 496,959,849 456,035,520 499,363,131 433,400,099 27,837,675 9,593,448

Net assets 286,202,565 19,357,541 514,417,844 (97,066,883) (196,518,543) 54,550,091 (264,152,979) (166,609,496) 296,506,726 125,718,266

Share capital 21,275,131

Reserves 60,371,495
For the year ended December 31, 2021

Unappropriated profit 140,073,817

Surplus/(Deficit) on revaluation of assets 64,482,122
286,202,565

2020
Over 1 to 3 Over 3 to 6 Over 6 Months Over 1 to 2 Over 2 to 3 Over 3 to 5 Over 5 to 10 Above 10
Total Upto 1 Month Months Months Years Years Years Years Years
to 1 Year
Assets (Rupees in '000)
Cash and balances with treasury banks 249,259,590 149,866,293 1,763,659 45,629,218 49,204,166 2,796,254 - - - -
Balances with other banks 14,227,355 12,716,556 364,979 455,390 690,430 - - - - -
Lending to financial institutions 126,804,675 126,804,675 - - - - - - - -
Investments 1,463,398,076 165,436,765 466,849,352 45,910,297 152,201,308 97,645,814 157,346,293 125,301,464 237,876,475 14,830,309
Advances 983,254,527 303,934,725 149,304,778 55,843,636 59,201,007 41,668,685 78,281,159 157,288,456 86,006,957 51,725,124
Fixed assets 54,413,493 - - - 724,254 2,878,438 724,254 1,322,411 - 48,764,136
Intangible assets 303,813 - - - 101,271 101,271 101,271 - - -
Right of Use Assets 6,669,684 201 19,924 50,071 95,963 625,524 583,369 1,528,327 2,628,348 1,137,957
Other assets 110,195,768 37,069,234 17,542,509 9,309,630 2,408,285 38,014,615 3,351,081 2,500,414 - -
3,008,526,981 795,828,449 635,845,201 157,198,242 264,626,684 183,730,601 240,387,427 287,941,072 326,511,780 116,457,526
Liabilities
Bills payable 16,795,186 8,784,880 499,727 6,439,082 194,485 877,012 - - - -
Borrowings 138,539,005 10,688,517 10,993,746 56,908,784 42,516,430 2,392,767 3,509,557 6,420,414 5,108,790 -
Deposits and other accounts 2,418,966,479 691,675,247 118,540,644 338,032,867 336,495,938 309,364,692 305,388,438 317,997,480 1,471,173 -
Liabilities against assets subject to right of use assets 7,533,691 41 21,491 57,673 96,726 804,940 662,691 1,762,736 2,838,255 1,289,138
Deferred tax liabilities 2,978,364 - - - - - - 2,978,364 - -
Other liabilities 156,155,514 57,220,072 38,310,849 15,603,234 3,279,386 15,947,785 5,339,632 10,377,940 5,038,308 5,038,308
2,740,968,238 768,368,757 168,366,457 417,041,640 382,582,965 329,387,196 314,900,318 339,536,934 14,456,526 6,327,446
Net assets 267,558,742 27,459,692 467,478,744 (259,843,398) (117,956,281) (145,656,595) (74,512,891) (51,595,862) 312,055,253 110,130,080

Share capital 21,275,131

Reserves 56,562,933
Unappropriated profit 116,021,334
Surplus/(Deficit) on revaluation of assets 73,699,344

263
267,558,742
Notes to and forming part of the Unconsolidated Financial Statements
Notes to and forming part of the Unconsolidated Financial Statements
For the year ended December 31, 2021

47.2.7 Derivative Risk

A derivative is a contract that derives its value from the performance of an underlying asset which can be an index, interest
rate, commodity price, security price, FX rate etc. Derivatives include forwards, futures, foreign currency and interest rate
swaps, options etc. In Pakistan, futures and forwards are most commonly traded derivatives.

Currently, the Bank is not an active participant in the Pakistan derivatives market as it does not hold an Authorized
Derivative Dealer (ADD) licence to perform derivate contracts. Once acquired, the Bank will carry out the transactions
which are permitted under the Financial Derivatives Business Regulations issued by the SBP, which may include Interest
rate swaps, forward rate agreements, foreign currency options etc.

Moreover, the Bank may also offer other derivative products to satisfy customer requirements, specific approval of which
will be sought from the SBP on a transaction by transaction basis.

48. EVENTS AFTER THE REPORTING DATE

The Board of Directors has proposed a cash dividend of Rs. 1 per share (2020: Rs. Nil per share) amounting to Rs.
2,127.513 million (2020: Rs. Nil) at its meeting held on March 08, 2022 for approval of the members at the annual general
meeting to be held on March 30, 2022. These unconsolidated financial statements do not reflect this appropriation as
explained in note 5.20.

49. CORRESPONDING FIGURES

Certain corresponding figures have been reclassified wherever necessary to confirm to the presentation adopted in the
current year.

50. GENERAL

50.1 Figures have been rounded off to the nearest thousand rupees.

51. DATE OF AUTHORIZATION FOR ISSUE

The unconsolidated financial statements were authorized for issue on March 08, 2022 by the Board of Directors of the
Bank.

Zubyr Soomro Arif Usmani Abdul Wahid Sethi Asif Jooma Ahsan Ali Chughtai
Chairman President & CEO Chief Financial Officer Director Director

264
 STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF OF FIVE HUNDRED THOUSAND RUPEES OR ABOVE PROVIDED DURING THE YEAR ENDED DECEMBER 31, 2021

Rs. In 000
Principal Interest/ Other Total
Name of Individuals/ Outstanding liabilities at beginning of year written-off Mark-up financial (9+10+11)
S. No. Name & Address of the borrower Partners/ Fathers/Husband's name written off relief /
Directors (with CNIC No.) Interest/ waiver
Principal Others Total provided
mark-up
1 2 3 4 5 6 7 8 9 10 11 12
1 M/S.Qureshi Brothers, Muhammad Ayyub Qureshi Abdul Shakoor 1,500 1,418 22 2,940 - - 500 500
Bahawalpur. 31202-2263837-3
5-A, Heavy Industrial Area, Model Town 'B", Bahawalpur
Abdul Samad Abdul Shakoor
31202-1515844-9
Financial Statements

Abdul Qayyum Abdul Shakoor

31202-7537115-9

Abdul Rauf Abdul Shakoor

34402-1710024-7

Mst.Sultana Begum Abdul Shakoor

31202-9609925-0

Mst Anjum Shakoor Abdul Shakoor

37405-3577028-0

Mst Shazia Erum Abdul Shakoor

34402-1635588-2

2 Khuda Bukhsh Khuda Bukhsh Faqir Bukhsh 634 - - 634 634 - - 634
H.No.70, Gali No.1, Chaudhry Town, Liaquatpur 31302-5411764-9

3 Syed Waqar Shafaq Syed Waqar Shafaq Syed Abdullah Ashfaq Ahmed 653 - - 653 653 - - 653
Mohallah Mahakma Zarat, Liaquatpur, Tehsil Rahimyar Khan 31302-8345377-9 Shafaq

4 Saifullah Khan Saifullah Khan Hasoor Bukhsh 587 - - 587 587 - - 587
Basti Badar Munir, Chehleen wali, Dakhana Khas, Tehsil 31201-5382470-9
Ahmedpur

5 Shah Zaman Khan Shah Zaman Khan Faqeer Muhammad 600 - - 600 600 - - 600
Ghan Chatter,Dakhana Muzaffarabad, Tehsil Muzaffarabad 82203-4459614-3

6 Safdar Hussain Safdar Hussain Muhammad Hussain 563 - - 563 563 - - 563
Nigder PO Karin Tehsil: Athmuqm, Distt, Neelum AK 82202-9207727-5

7 Muhammad Aslam(Late) Muhammad Aslam (Late) Muhammad Akbar 542 - - 542 541 - - 541
House No. 10-9/381 Mohala Kili Deba Arbab Ali Road Quetta 54400-0468311-7

8 Ameer Ali Magsi Ameer Ali Magsi Sher Muhammad 673 143 - 816 673 - - 673
Annexure ‘I’ as referred to in note 11.6 of the Bank’s Unconsolidated

Goth Bujarani Tehsil Jal Magsi. 53302-2093074-5

265
 Principal Interest/ Other Total
Name of Individuals/ Outstanding liabilities at beginning of year written-off Mark-up financial (9+10+11)

266
S. No. Name & Address of the borrower Partners/ Fathers/Husband's name written off relief /
Directors (with CNIC No.) Interest/ waiver
Principal Others Total provided
mark-up
9 Late Rab Rakhio S/o Dur Muhammad Mughari Late Rab Rakhio Dur Muhammad Mughari 511 - - 511 511 - - 511
Village Pandhi Khan Mughari Taluka Kamber 43202-7530861-9
District Kamber -Shahdadkot

10 Late Ashraf Ali S/o Wahid Behleem Late Ashraf Ali Wahid Behleem 795 - - 795 795 - - 795
Village Garhi Sutto P.O Jean Abro Taluka Kamber Ali Khan 43202-0732537-5
Distict Kamber - Shahdadkot

11 Late Ameer Ali S/o Muhammad Patoojo Late Ameer Ali Muhammad Patoojo 818 - - 818 818 - - 818
Village Mahi Makol P.O Mahi Makol Menhoon Taluka KamberAli 43202-6449204-5
Khan Distict Kamber - Shahdadkot
Financial Statements

12 Late Ghulam Mustafa S/o Mir Bakhshal Khan Late Ghulam Mustafa Mir Bakhshal Khan 973 - - 973 973 - - 973
Muhall Drib P.O Shahdadkot 43201-1458511-1
District Kamber - Shahdakot

13 Late Muhammad Younis S/o Ahmed Lashari Late Muhammad Younis Ahmed Lashari 862 - - 862 862 - - 862
Village Aitbar Khan Chandio P.O Shahdadkot 43206-6395654-1
District Kamber - Shahdakot

14 Late Rehmatullah S/o Bagh Ali Alias Biju Late Rehmatullah Bagh Ali Alias Biju 809 - - 809 809 - - 809
Residence of Khanpur road House No.394/41 Muhalla Sanjrani 43304-649922-7
Shikarpur

15 Late Ashique Ali S/o Muhammad Nawaz Juj Late Ashique Ali Muhammad Nawaz Juj 618 - - 618 618 - - 618
New Nazar Muhalla Larkana 43203-5561356-7

16 Late Wazir Ahmed S/o Rasool Bux Panhwar Late Wazir Ahmed Rasool Bux Panhwar 814 - - 814 814 - - 814
Village Pechoha Dist: Dadu 41201-3227942-5

17 Late Abdul Razaq S/o Abdul Qadir Thahem Late Abdul Razaq Abdul Qadir Thahem 588 - - 588 588 - - 588
First Famli Line Jacobabad 43102-2477711-3

18 Late Imdad Hussain S/o Datar Dino Abbasi Late Imdad Hussain Datar Dino Abbasi 710 - - 710 710 - - 710
Near Al Hussani Masjid Muhalla Kalhora Abad Dist Larkana 43203-9719026-1

19 Late Ali Akbar S/o Muhram Khan Sodhar Late Ali Akbar Muhram Khan Sodhar 835 - - 835 835 - - 835
Village Faiz Muhammad Sodhar P.O Warrah 43207-0172083-9

20 Late Zulifqar Ali S/o Roshan Buriro Late Zulifqar Ali Roshan Buriro 652 - - 652 652 - - 652
Village Khamiso Kalhoro Warrah Distt: Kamber Shahdadkot 43207-6721647-7

21 Late: Abdul Razaque S/o Muhammad Umar Leghari Late: Abdul Razaque Muhammad Umar Leghari 751 - - 751 751 - - 751
Muhalla Jaffarabad Jacobabad 43102-4891098-5

22 Late Shoukat Ali Late Shoukat Ali Ghous Bux 615 - - 615 615 - - 615
Village Rabanji Wandh, Dakhana Muhammadpur Odho, Tehsil 43101-6275684-3
Garhi Khairo, Distt: Jacobabad

23 Late Ghulam Hyder Late Ghulam Hyder Tagio Khan 523 - - 523 523 - - 523
Annexure ‘I’ as referred to in note 11.6 of the Bank’s Unconsolidated

Village Suleman Dool Taluka Thull 43105-4709049-7

 Principal Interest/ Other Total
Name of Individuals/ Outstanding liabilities at beginning of year written-off Mark-up financial (9+10+11)
S. No. Name & Address of the borrower Partners/ Fathers/Husband's name written off relief /
Directors (with CNIC No.) Interest/ waiver
Principal Others Total provided
mark-up
24 Late Assadullah Late Assadullah Ghous Bux Khushk 549 - - 549 549 - - 549
Muhalla Galib Nager Taluka & Distt Larkana 43203-7645041-1

25 Late Ghulam Rasool Late Ghulam Rasool Bakshal Kalhoro 752 - - 752 752 - - 752
Hamidullah Huzoori Mohala Miro Khan Taluka Miro Khan Dist 43204-1152340-1
Kamber Ali Khan

26 Late Aijaz Ali Late Aijaz Ali Muhammad Siddiqui Tunio 761 - - 761 761 - - 761
Village Thar Wadho Taluka Miro Khan Dist Kamber Shahdadkot 43204-3217325-5

27 Mazhar Ali Mazhar Ali Muhram Ali Mirbahar 697 - - 697 697 - - 697
Financial Statements

Village P.O Wagan Ghathar Dist Kamber Shahdadkot 43202-9470096-9

28 Peeral Peeral Ghulam Hyder Paryo 839 - - 839 839 - - 839

Village War Wara Mullan Kakar Taluka K.N Shah 41203-7987437-9

29 M. Ibrahim M. Ibrahim Kando Birahmani 623 - - 623 623 - - 623

Village Faqir Muhammad P.O kakar Taluka K.N Shah 41203-1643237-5

30 Ali Hassan Ali Hassan Rasool Bux Memon 576 - - 576 576 - - 576
Shahan Jo Padar Muhalla Lahori Larkana 43203-6939277-5

31 Abdul Rauf Abdul Rauf Haji Ahmed Abbasi 594 - - 594 594 - - 594
VIP Road House No.09 Stret No.04 Muhalla Police Head Quarter 43203-8203081-9
Larkana

32 Syed Raham Shah Syed Raham Shah Himat Ali Shah 562 - - 562 562 - - 562
Village Khairo Khan Jatoi P.O Wagan Dist Qamber Shahdadkot 43207-5448381-7

33 Ghulam Muhammad Ghulam Muhammad Darya Khan Khoso 545 - - 545 545 - - 545
Village Muhalla Ali Abad Larkana 43203-1357392-3

34 Gul Mohammad Gul Mohammad Ali Bux Panhwar 719 - - 719 719 - - 719
Village Dodani Panhwar Makhdoom Bilawal Dadu 41201-7161285-1

35 Riaz Ahmed Riaz Ahmed Sawan Khan Bhatti 526 - - 526 526 - - 526
Village Meer Karam Khan Brohi, P.O. Quboo Saeed Khan, Distt: 43406-0339589-1
Qambar Shahzadkot

36 Aijaz Ali Aijaz Ali Rahim Bux Malik 654 - - 654 654 - - 654
Nanik Wara Muhalla Malik City Kandhkot 43103-6689918-1

37 Ghulam Sarwar Ghulam Sarwar Abdul Latif Buriro 563 - - 563 563 - - 563
Bhittal Rice Mill Qadri Muhalla Thull 43105-4405674-5

38 Nadir Hussain Nadir Hussain Ghulam Muhammad Abro 870 - - 870 870 - - 870
Village Shangoo Rahoojo P.O Madeji Taluka Garhi Yasin Dist 43301-9495399-7
Shikarpur

39 Muhammad Sadique Muhammad Sadique Sohrab Khan Phulpoto 864 - - 864 864 - - 864
Annexure ‘I’ as referred to in note 11.6 of the Bank’s Unconsolidated

Muhalla Nazar Larkana 43102-6489792-9

267
 Principal Interest/ Other Total
Name of Individuals/ Outstanding liabilities at beginning of year written-off Mark-up financial (9+10+11)

268
S. No. Name & Address of the borrower Partners/ Fathers/Husband's name written off relief /
Directors (with CNIC No.) Interest/ waiver
Principal Others Total provided
mark-up
40 Ghulam Rasool Ghulam Rasool Muhammad Anwar Abro 771 - - 771 771 - - 771
Village Daro Napar Taluka Lakhi Ghulam Shah, Distt: Shikarpur 43105-4405674-5

41 Late Muhammad Murad Late Muhammad Murad Muhammad Umar Siyal 754 - - 754 754 - - 754
Village Deedar P.O Kamber 43202-9836503-7

42 Late Shabir Ali Shabir Ali Muhammad Panah Chandio 872 - - 872 872 - - 872
Village Wali Muhammad Gorar P.O. Thariri, 41205-3402887-1
Taluka Mehar Dadu

43 Late Qamaruddin Qamaruddin Lashari Ali Muhammad Lashari 883 - - 883 883 - - 883
Financial Statements

Village Lal Bux Noonari Taluka Thull Dist Jacobabad 43103-8210721-1

44 Late Riaz Ahmed Riaz Ahmed Allah Dino Soomro 534 - - 534 534 - - 534
Mohallah Gajan Pur Chowk, Near MCB Bank, Distt: Larkana 43203-2514340-9

45 Late Asadullah Late Asadullah Shah Bux Jatoi 653 - - 653 653 - - 653
Village Naou Sobho Khan Jatoi Johi Belo 43202-0732537-5
P.O Madeji Taluka Garhi Yasin Dist Shikarpur

46 Late Abdul Khalique Late Abdul Khalique Bakhshal khan Shaikh 581 - - 581 581 - - 581
Air Port Road Muhalla Allah Abad Larkana 43203-6543586-5

47 Late Ghulam Yaseen Late Ghulam Yaseen Azizullah Soomro 986 - - 986 986 - - 986
Mohallah Village Wakro, P.O. Taluka Dokri, Distt: Larkana 43201-4571317-9

48 Messrs New Mannan Medical & General Store Muhammad Rafi Muhammad Shafi 3,000 - 3,089 6,089 - - 1,018 1,018
H.No.334, Block-A, Settlite Town, Sargodha 38403-3360023-7

Business Address: Chowk settlite Town Fatima Jinnah Road, Muhammad Raees Muhammad Rafi
Sargodha 38403-5409957-1

49 Khalid Hussain Ansari, Khalid Hussain Ansari, Nisar Hussain 900 - - 900 900 - - 900
House No.A-1408/47, KRI Quarter Old 45504-9949954-1
Sukkur

50 Mushtaque Hyder S/O Muhammad Malook, Mushtaque Hyder Muhammad Malook 1,717 - - 1,717 1,717 - - 1,717
ward No. 04 Karim Shah Colony Kandiaro Taluka Kandiaro Distt: 45302-8368240-1
N. Feroze

51 Muhammad Kawish, Muhammad Kawish Ashiq Muhammad 2,900 1,603 10 4,513 - - 534 534
Mouza Arain Wahan, Tehsil Mailsi, Distt: Vehari 36302-1607593-9

52 Atta Ullah Atta Ullah Imam Bukhsh 638 - - 638 638 - - 638
H.No.439, Ward No.3, Near Chitti Kothi,Khanewal 36302-1607593-9

53 Qazi Naveed Akhtar Qazi Naveed Akhtar Qazi Walaiat Hussain 509 - - 509 509 - - 509
H # CD-148, Muhallah Ghaziabad, Dhoke Syedan, Rawalpindi 37405-6372365-3
Annexure ‘I’ as referred to in note 11.6 of the Bank’s Unconsolidated
 Principal Interest/ Other Total
Name of Individuals/ Outstanding liabilities at beginning of year written-off Mark-up financial (9+10+11)
S. No. Name & Address of the borrower Partners/ Fathers/Husband's name written off relief /
Directors (with CNIC No.) Interest/ waiver
Principal Others Total provided
mark-up
54 Ghulam Mustafa Nadeem Ghulam Mustafa Nadeem Aashiq Hussain 596 - - 596 596 - - 596
H.No.CB-316, Street # 9D, Aslam Market, 35303-2058532-7
Rawalpindi Cantt.

55 Muhammad Akram Leghari S/o Manzoor Ahmed Khan Leghari Muhammad Akram Leghari Manzooor Ahmed Khan 1,445 95 - 1,540 1,445 - - 1,445
House no 477-C,Street no 178,G-7/3-1,Islamabad 61101-7386959-3

56 Israr Hussain Shah S/o Sakbar Ali Shah Israr Hussain Shah Sakbar Ali Shah 535 - - 535 535 - - 535
PO Jahala,Lehtrar Bala,Tehsil Kahuta, District Rawalpindi 37402-2172503-5
Financial Statements

57 Sheikh Anwar Jamal Sheikh Anwar Jamal Sheikh Jamal ud din 602 23 - 625 602 - - 602
Houst No.72, Ward No8-M, Street No.02, MohallaChah Bohar 36302-0386241-9
Wala Multan

58 Ejaz Hussain Ejaz Hussain Muhammad Buksh 723 40 - 763 723 - - 723
P.O. Khas, Mauza Salar Wahan Nau, Kabirwala 36102-55882240-3

59 Riaz Hussain Riaz Hussain Syed Nisar Hussain 677 - - 677 677 - - 677
QTR # 3, Ratan Preedy Police, Karachi 42301-0421147-1

60 Raja Tariq Nawaz Raja Tariq Nawaz Raja Rabnawaz Khan 1,298 55 - 1,353 545 - - 545
House No.2675 Street #21 Sector I-9 Islamabad 61101-2000580-9

61 United Agro Engineers Mr. Mirza Yasir Muhammad Younis - 75 6 81 - - 603 603
Address: Opposite Telephone Exchange, Circular Road Daska 34601-1140979-3

Mr. Muhammad Nasir Muhammad Younis

34601-5833439-9

Mr. Muhammad Amir Muhammad Younis

34601-6478093-9

Mr. Muhammad Tayyab Ali Muhammad Younis

34601-5997769-1

62 Muhammad Nawaz S/o Muhammed Sharif Muhammad Nawaz Muhammed Sharif 878 18 - 896 878 - - 878
House # P-223, St - 1, Mohalla Eid gah Jaranwala 33104-2248318-5

63 Syed Sibat Ul Hassan Syed Sibat Ul Hassan Syed Akbar Shah 678 - - 678 678 - - 678
Botala Sharam Singh Tehsil & District Gujranwala 34101-1167496-3

64 Agha Dilshad Hussain Agha Dilshad Hussain Syed Asghar Ali Shah 564 - - 564 564 - - 564
Amin pur Syedan P/o Doburjee Baga Tehsil & District Gujranwala 34101-0984183-9

65 Sajjad Ahmed Sajjad Ahmed Muhammad Aslam 551 - - 551 551 - - 551
Moh. Khandaq, Kot Najeeb Ullah, Thesil & Distt: Haripur 13302-3230010-1

66 Saee Muhammad S/o Muttal Saee Muhammad Muttal 549 - - 549 549 - - 549
Mohallah Mashraqui, VPO, Mong Tehsil & Distt: M.B.Din 34402-4507559-3
Annexure ‘I’ as referred to in note 11.6 of the Bank’s Unconsolidated

269
 Principal Interest/ Other Total
Name of Individuals/ Outstanding liabilities at beginning of year written-off Mark-up financial (9+10+11)
written off relief /

270
S. No. Name & Address of the borrower Partners/ Fathers/Husband's name
Directors (with CNIC No.) Interest/ waiver
Principal Others Total provided
mark-up
67 Ghulam Rasool Khan S/o Abdul Qadir Khan Ghulam Rasool Khan Abdul Qadir Khan 576 - - 576 576 - - 576
H.No.805, MuhallahDamdama ,Eminabad Gujranwala 34101-2211426-9

68 Pace Corporation Mir Salauddin Mir Mozzamel Haque 119,468 26,295 253,348 399,112 81,364 - 253,348 334,712
House#69, Road#19, Rupnagar, Mirpur- 01 NID No: 3612676893391

69 Fortuna Fried Chicken Md Fazle Taher Md. Abu Taher 31,731 34,634 99,150 165,516 - - 99,150 99,150
95/A Road #7, SEC # 4 Uttara, Dhaka NID No: 258779982969

70 Propel International Ltd. Md.Shawquat Azim Late Najir Ahmed 93,885 20,114 11,343 125,342 - - 11,343 11,343
House-53,55 Road # 03, Block # B, Niketan,Gulshan-1, Dhaka NID No: 2650898233300
Financial Statements

297,774 84,513 366,969 749,257 125,900 - 366,497 492,397

Annexure ‘I’ as referred to in note 11.6 of the Bank’s Unconsolidated
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Unconsolidated Financial Statements

ISLAMIC BANKING BUSINESS

The bank is operating 189 (2020: 191) Islamic banking branches and no Islamic banking windows at the year ended December
31, 2021.
2021 2020
ASSETS Note (Rupees in '000)

Cash and balances with treasury banks 6,591,139 5,713,009

Balances with other banks 12,531 11,948
Investments 1 49,548,760 42,109,641
Islamic financing and related assets - net 2 42,316,209 37,546,704
Fixed assets 100,620 148,884
Right of use assets (ROUA) 641,973 755,116
Other assets 1,686,568 2,676,118
Total Assets 100,897,800 88,961,420

LIABILITIES

Bills payable 388,351 339,103

Deposits and other accounts 3 84,849,520 75,268,262
Due to Head Office 7,635,926 4,124,758
Lease liability against right of use assets 826,081 903,196
Other liabilities 455,249 2,198,144
94,155,127 82,833,463
NET ASSETS 6,742,673 6,127,957

REPRESENTED BY
Islamic Banking Fund 4,646,000 3,360,000
Surplus on revaluation of assets 594,005 659,569
Unappropriated / unremitted profit 5 1,502,668 2,108,388
6,742,673 6,127,957
- -
The profit and loss account of the Bank's Islamic banking branches for the year ended December 31, 2021 is as follows:
2021 2020
Note (Rupees in '000)

Profit / return earned 6 7,212,495 7,994,894

Profit / return expensed 7 (3,180,849) (3,456,533)
Net Profit / return 4,031,646 4,538,361

Other income
Fee and Commission Income 285,694 367,852
Foreign Exchange Income 37,404 56,745
Other Income 13,218 1,344
Total other income 336,316 425,941

Total Income 4,367,962 4,964,302

Other expenses
Operating expenses (2,742,428) (2,453,894)
Other charges (1,516) (2,512)
Total other expenses (2,743,944) (2,456,406)

Profit before provisions 1,624,018 2,507,896

Provisions and write offs - net (121,350) (399,508)
Profit before taxation 1,502,668 2,108,388
Taxation - -
Profit after taxation 1,502,668 2,108,388

271
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Unconsolidated Financial Statements

Cost/ Provision for Surplus / Cost / Provision for Surplus / Carrying

Carrying Value
Amortised cost diminution (Deficit) Amortised cost diminution (Deficit) Value
1 Investments by segments:
------------------------------------------------------------------------ (Rupees in '000) -----------------------------------------------------------------------
Federal Government Securities:
-Ijarah Sukuks 14,000,979 - (31,279) 13,969,700 6,000,000 - 15,600 6,015,600
-Others (Bai Muajjal with GOP @ 13.30%) 10,914,185 - - 10,914,185 11,641,133 - - 11,641,133
24,915,164 - (31,279) 24,883,885 17,641,133 - 15,600 17,656,733
Non Government Debt Securities
-Listed 8,200,000 - 340,000 8,540,000 8,400,000 - 311,741 8,711,741
-Unlisted 15,970,398 (130,807) 285,284 16,124,875 15,539,747 (130,807) 332,228 15,741,168
24,170,398 (130,807) 625,284 24,664,875 23,939,747 (130,807) 643,969 24,452,909

Total Investments 49,085,562 (130,807) 594,005 49,548,760 41,580,879 (130,807) 659,569 42,109,641

2021 2020
2 Islamic financing and related assets Note (Rupees in '000)

Ijarah 2.1 95,075 168,788

Murabaha 2.2 903,901 3,464,401
Diminishing Musharaka 21,834,074 17,614,309
Istisna - 50,000
Other Islamic Modes (Wakala tul Istismar) 8,500,000 8,500,000
Advances against Islamic assets (Murbaha, DM, Istisna) 11,226,981 8,076,678
Inventory related to Islamic financing (Istisna) 469,000 275,600
Gross Islamic financing and related assets 43,029,031 38,149,776

Less: Provision against Islamic financings

- Specific (712,763) (602,913)
- General (59) (159)
(712,822) (603,072)
Islamic financing and related assets - net of provision 42,316,209 37,546,704

2.1 Ijarah 2021

Cost Depreciation
Book Value as
As at Charge/ As at at December
At January 1, Additions / At January 1,
December 31, Adjustment for December 31, 31, 2021
2021 (deletions) 2021
2021 the year 2021
---------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------

Plant & Machinery 249,123 - 245,257 175,050 35,566 207,075 38,182

(3,866) (3,541)
Vehicles 239,219 - 209,727 144,504 37,241 152,834 56,893
(29,492) (28,911)
Total 488,342 - 454,984 319,554 72,807 359,909 95,075
(33,358) (32,452)

272
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Unconsolidated Financial Statements
2020
Cost Accumulated Depreciation
Book Value as
Charge/
As at January Additions / As at December As at January As at December at December
Adjustment for 31, 2020
01, 2020 (deletions) 31, 2020 01, 2020 31, 2020
the year
---------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------
Plant & Machinery 255,075 - 249,123 137,966 42,760 175,050 74,073
(5,952) (5,676)
Vehicles 277,812 - 239,219 139,282 42,832 144,504 94,715
(38,593) (37,610)
Total 532,887 - 488,342 277,248 85,592 319,554 168,788
(44,545) (43,286)

Future Ijarah payments receivable

2021 2020
Later than 1 Later than 1
Not later than Not later than 1
year & less Over five years Total year & less than Over five years Total
1 year year
than 5 years 5 years
---------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------

Ijarah rental receivables 71,589 54,398 - 125,987 85,318 91,290 - 176,608

2021 2020
Note (Rupees in '000)
2.2 Murabaha
Murabaha financing 2.2.1 903,901 3,464,401
Advances for Murabaha 1,285,000 1,199,500

2,188,901 4,663,901

2.2.1 Murabaha receivable - gross 2.2.2 982,249 3,629,825

Less: Deferred murabaha income 2.2.4 25,980 47,306
Less: Profit receivable shown in other assets 52,368 118,118

Murabaha financings 903,901 3,464,401

2.2.2 The movement in Murabaha financing during the year is as follows:

Opening balance 3,629,825 1,835,295
Sales during the year 7,905,588 10,600,101
Adjusted during the year 10,553,164 8,805,571

Closing balance 982,249 3,629,825

273
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Unconsolidated Financial Statements
2021 2020
(Rupees in '000)

2.2.3 Murabaha sale price 7,905,588 10,600,101

Murabaha purchase price 7,739,500 9,901,022

166,088 699,079
2.2.4 Deferred murabaha income
Opening balance 47,306 71,105
Arising during the year 184,383 287,727
Less: Recognised during the year (205,709) (311,526)

Closing balance 25,980 47,306

3 Deposits 2021 2020

In Local In Foreign In Local In Foreign
Total Total
Currency currencies Currency currencies
------------------------------------------------- (Rupees in '000) -----------------------------------------------------
Customers
Current deposits 21,520,192 264,535 21,784,727 26,363,269 111,710 26,474,979
Savings deposits 42,730,234 - 42,730,234 33,051,442 - 33,051,442
Term deposits 8,148,745 - 8,148,745 10,129,005 - 10,129,005
72,399,171 264,535 72,663,706 69,543,716 111,710 69,655,426
Financial Institutions
Current deposits 700,103 - 700,103 778,039 - 778,039
Savings deposits 6,064,983 - 6,064,983 3,633,797 - 3,633,797
Term deposits 5,420,728 - 5,420,728 1,201,000 - 1,201,000
12,185,814 - 12,185,814 5,612,836 - 5,612,836

84,584,985 264,535 84,849,520 75,156,552 111,710 75,268,262

2021 2020
(Rupees in '000)

3.1 Composition of deposits

- Individuals 41,007,219 36,485,509
- Government / Public Sector Entities 21,697,189 23,406,681
- Banking Companies 6,873,275 2,698,853
- Non-Banking Financial Institutions 5,312,539 2,913,983
- Private Sector 9,959,298 9,763,236

84,849,520 75,268,262

3.2 This includes deposits eligible to be covered under insurance arrangements amounting to Rs. 43,701 million (2020: Rs.
39,137 million).

274
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Unconsolidated Financial Statements
2021 2020
(Rupees in '000)
4 Charity Fund

Opening Balance 621 10,911

Additions during the period

Received from customers on account of delayed payment 79 710
Profit on charity saving account 14 -
714 11,621
Payments / utilization during the period
Education - 1,500
Health 650 9,500
Others 650 11,000
Closing Balance 64 621

Charity amount exceeding Rs. 0.5 million paid to the following organizations.
The Indus Hospital - 3,000
The Prime Minister‘s Covid-19 Pandemic Relief Fund -2020 - 5,000
Shaukat Khanum Memorial Trust - 1,000
Institute of Business Administration (IBA) - 1,500

- 10,500

5 Islamic Banking Business Unappropriated / Unremitted Profit

Opening Balance 2,108,388 2,039,140
Add: Islamic Banking profit for the year 1,502,668 2,108,388
Less: Transferred / Remitted to Head Office (2,108,388) (2,039,140)

Closing Balance 1,502,668 2,108,388

6 Profit / Return Earned of Financing, Investments and Placement

Profit earned on:

Financing 3,157,329 3,991,541
Investments 2,819,221 2,714,544
Placements 560 30,245
Others (Bai Muajjal) 1,235,385 1,258,564

7,212,495 7,994,894

275
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Unconsolidated Financial Statements
2021 2020
(Rupees in '000)
7 Profit on Deposits and other Dues Expensed

Deposits and other accounts 2,520,353 2,956,946

Amortisation of lease liability against - ROUA 82,908 89,738
Others (General Account) 577,588 409,849

3,180,849 3,456,533

8 Pool Management

NBP-AIBG has managed following pools for profit and loss distribution.

a) General depositor pool

The General pool consists of all other remunerative deposits. NBP Aitemaad (the Mudarib) accepts deposits on the
basis of Mudaraba from depositors (Rab ul Maal). The net return on the pool is arrived at after deduction of direct
costs from the gross return earned on the pool. The entire net return after paying equity share to Mudarib is
considered as distributable profit of the pool.

b) Special depositor pools (Total 78 during the year and 44 as at December 31, 2021)

Special pool(s) are created where the customers desire to invest in high yield assets. These pool(s) rates are higher
than the general pool depending on the assets. In case of loss in special pool, the loss will be borne by the special
pool members. The net return on the pool is arrived at after deduction of direct costs from the gross return earned
on the pool. From the net return, and after allocation of share of profit to commingled equity, profit is paid to the
Mudarib in the ratio of the Mudarib’s equity in the pool to the total pool. The balance represents the distributable
profit.

c) Equity pool

Equity pools include AIBG's fund and current account deposits. The equity pool may have constructive liquidation
every month and risk associated with assets of pool includes operational, market, equity, return and Shariah.

Key features and risk & reward characteristics

Deposits are accepted from customers on the basis of Qard (current accounts) and Mudarabah (Saving and term
deposits). No profit or loss is passed on to current account depositors.

For deposits accepted on Mudarabah basis from depositors (Rab-ul-Maal) the Bank acts as Manager (Mudarib) and
invests the funds in the Shariah Compliant modes of financings. Rab ul Maal share is distributed among depositors
according to weightages declared for a month before start of the period.

In case of loss in a pool during the profit calculation period, the loss is distributed among the depositors (remunerative)
according to their ratio of investment.

For all pools, the Mudarib’s share is deducted from the distributable profit to calculate the profit to be allocated to
depositors. The allocation of the profit to various deposit categories is determined by the amount invested in that category
relative to the total pool, as well as by the weightage assigned to the various deposit categories.

The assets, liabilities, equities, income and expenses are segregated for each of the pool. No pool investment is
intermingled with each other. The risk associated with each pool is thus equally distributed among the pools.

276
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Unconsolidated Financial Statements
Avenues /sectors of economy / business where Modaraba based deposits have been deployed.

2021 2020
Sector (Percentage)

Fertilizer 1.12% 1.54%

Textile 4.60% 3.21%
Fuel & energy 40.71% 48.01%
Leasing/Modarbas 0.34% 0.21%
Sugar 7.94% 6.51%
Cement 7.43% 9.00%
Gas 0.91% 1.58%
Financial 1.59% 2.00%
Federal Government 24.61% 19.68%
Real Estate 2.98% 2.20%
Agriculture 0.34% 0.00%
Others 7.43% 6.06%
Total 100.00% 100.00%

Parameters for profit allocation and charging expenses

Profit of the pools has been distributed between Mudarib and Rab-ul-Mall by using preagreed profit sharing ratios. The
share of Rab-ul-Mall's profit has been distributed among different customers using the various weightages assigned to the
different categories of the pool.

No provision against any non performing asset of the pool is passed on to the pool except on the actual loss / write off of
such non performing asset. Administrative expense are borne by mudarib and not charged to Mudaraba pool.

31-Dec-21
Mudarib Share (Rupees in '000)
Gross Distributable Income 4,749,885
Mudarib (Bank) share of profit before Hiba 1,899,055
Mudarib Share in percentage 40%

Hiba from Mudarib Share

Mudarib (Bank) share of profit before Hiba 1,899,055
Hiba from bank's share to depositors 230,892
Hiba from bank's share to depositors in percentage 12%

Profit rates

During the year ended December 31, 2021 the average profit rate earned by NBP Islamic Banking Group is 8.98% and the
profit rate distributed to the depositors is 4.93%.

277
Greater Good…
COLLECTIVE GROWTH
Consolidated
Directors’ Report (English) 280

Financial
Directors’ Report (Urdu) 281

Auditors’ Report 282

Statements Statement of Financial Position 287

Consolidated Profit and Loss Account 288

Finacial Statements
of the Group along Statement of Comprehensive Income 289

with Report of the Statement of Changes in Equity 290

Independent
Auditors Cash Flow Statement 291

Notes to the Financial Statements 292

Directors’ Report to the Shareholders
Consolidated Financial Statements

Dear Shareholders,

On behalf of the Board of Directors, we are pleased to present the Directors’ Review together with audited consolidated financial
statement of National Bank of Pakistan “the Bank” and its Group Companies for the year ended December 31, 2021.

Consolidated after-tax profit for the year ended December 31, 2021 amounted to PKR 28.76 Bn, being 6.0% lower than PKR
30.59 Bn earned for the corresponding year 2020. During the year, the Bank’s subsidiaries contributed a net profit of PKR 388.95
Mn (2020: PKR 328.06 Mn) towards the Group’s profitability, and the share of profits from associates was PKR 23.06 Mn (2020:
PKR 42.81 Mn). A share of profit of PKR 217.51 Mn (2020: loss of PKR 219.39 Mn) was however recorded on account of UNBL, a
UK based Joint Venture in which NBP has 45% shareholding. Accordingly, consolidated EPS for the year 2021 stood at PKR
13.44 as compared to PKR 14.33 for the corresponding year. As of December 31, 2021, consolidated assets of the Bank
amounted to PKR 3,857.03 Bn i.e. 27.8% higher than December 31, 2020 level of PKR 3,017.21 Bn.

Profit for the year ended December 31, 2021 after carry forward of accumulated profit of 2020 is proposed to be appropriated as
follows:

(PKR ‘Mn)

After-tax profit for the year ended December 31, 2021 28,760.38

Unappropriated profit brought forward 120,631.78)

Other comprehensive income - net of tax (1,326.99)
Non-controlling interest (159.92)
Transfer from surplus on revaluation of fixed assets 208.09)
119,352.96)
Profit available for appropriations 148,113.35)

Appropriation:
Transfer to statutory reserve (2,800.80)
Unappropriated profit carried forward 145,312.55)

For and on behalf of the Board of Directors

Arif Usmani Zubyr Soomro

President & CEO Chairman

Karachi
Date: March 08, 2022

280
 ‫ہ‬ ‫ز   ‬ ‫ڈا‬
‫ارے‬ ‫ ‬ ‫ ‬

‫ دا ران‬ ‫م ‬

‫ارے ‬ ‫ ‬ ‫ ‬ ‫ں   آڈٹ   ہ ‬ ‫'' اور اس    وپ  ‬ ‫ن ''دى  ‬ ‫ آف ‬ ‫ ‬ ‫ ‬ ‫  ل   ‬ ‫ وا‬ ‫ ‪     2021‬‬ ‫ز      ‪ 31   ،‬د‬ ‫رڈ  آف ڈا‬
‫   ر   ۔‬ ‫ز    ہ       ‬ ‫   ڈا‬

‫   ‪ 30.59‬ارب  رو    ‬ ‫ ‬ ‫  ل   ‬ ‫ وا‬ ‫ ‪    2020‬‬ ‫‪28.76‬ارب  رو  ر ‪ 31   ،‬د‬ ‫ ‬ ‫   ا  ز‬ ‫ ‬ ‫  ل   ‬ ‫ وا‬ ‫‪ 31‬د  ‪     2021‬‬
‫‪    6.0%‬۔ ‬

‫‪ 23.06‬‬ ‫ں    ف   ‬ ‫ ‬ ‫ ‬ ‫ رو ( ‪ ،‬‬ ‫)‪328.06 :2020‬‬ ‫ رو‬ ‫‪388.95‬‬ ‫ ‬ ‫اس  ت   دورا ن  رے  وپ    ذ   ں   ف    وپ    ‬
‫ رو )‪   42.81 :2020‬رو (ر ۔‬

‫ن(ر رڈ      اس ‬ ‫ )‪  219.39 :2020‬رو    ‬ ‫   ‪   ،‬و   ‪   217.51‬رو  ‬ ‫ ‪45%‬‬ ‫ ‬ ‫  ‪    UNBL ،‬‬ ‫ ‬ ‫   وا  ‬ ‫   ‬
‫   ۔ ‬ ‫  ‪13.44‬رو    ‬ ‫   ‬ ‫  )‪   (EPS‬ل  ‪14.33‬رو    ‬ ‫ آ‬ ‫   ‬ ‫ وا   ل     ‬ ‫‪     2021‬‬ ‫ح ‪31‬د‬

‫ رو    ‪27.8%‬ز د ہ ‬ ‫ ‪ 3,017.21‬‬ ‫ ا ں   ‬ ‫   ‬ ‫ ‪    2020‬‬ ‫ رو       ‪ ٣١‬د‬ ‫‪ 3,857.03‬‬ ‫ ا ں   ‬ ‫   ‬ ‫‪ 2021‬‬ ‫‪31‬د‬
‫۔‬

‫  ‪:‬‬ ‫   ‬ ‫ ‬ ‫   اس  ح ‬ ‫ ‬ ‫ وا‬ ‫ ‪     2021‬‬ ‫     ‪ 31‬د‬ ‫   آ  ‬ ‫‪      2020‬ہ ‬

‫ ‬ ‫   ا  ز‬ ‫  ل   ‬ ‫ وا‬ ‫ ‪     2021‬‬ ‫‪ 31‬د‬

‫ رو (‬ ‫)‬

‫‪28,760.38‬‬ ‫ ‬ ‫   ا  ز‬ ‫  ل   ‬ ‫ وا‬ ‫‪     2021‬‬ ‫‪ ٣١‬د‬

‫‪120,631.78‬‬ ‫ وا  ‬ ‫  ف  ہ آ    ‬
‫)‪(1,326.99‬‬ ‫ ۔   ا  ز‬ ‫ آ‬ ‫د  ‬
‫)‪(159.92‬‬ ‫ ا‬ ‫ن  و‬
‫‪208.09‬‬ ‫ ا ں        ہ  ر   و    ذ    ‬
‫‪119,352.96‬‬
‫‪148,113.35‬‬ ‫ د ب ‬ ‫ف   ‬
‫ف‪:‬‬

‫)‪(2,800.80‬‬ ‫ ذ    ‬
‫‪145,312.25‬‬ ‫‪:‬‬ ‫   ‬ ‫۔ آ  ‬ ‫  ف  ہ ‬

‫ ‬ ‫ اور ا  ‬ ‫ز   ‬ ‫رڈ  آف ڈا‬

‫و‬ ‫ ز  ‬ ‫رف  ‬

‫ر و   اى او ‬
‫ا‬
‫ر ‪  08:‬رچ‪2022 ،‬‬

‫‪281‬‬
Yousuf Adil A.F. Ferguson & Co.
Chartered Accountants Chartered Accountants
Cavish Court, KCHSU State Life Building No. 1-C
Shahrah-e-Faisal I.I Chundrigar Road
Karachi, Pakistan P.O. Box 4716
Karachi - 74000

Independent Auditor’s Report

To the members of National Bank of Pakistan
Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the annexed consolidated financial statements of National Bank of Pakistan and its subsidiaries (the Group),
which comprise the consolidated statement of financial position as at December 31, 2021, and the consolidated profit and loss
account, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the
consolidated cash flow statement for the year then ended, and notes to the consolidated financial statements, including a
summary of significant accounting policies and other explanatory information.

In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at
December 31, 2021 and of its consolidated financial performance and its consolidated cash flows for the year then ended in
accordance with the accounting and reporting standards as applicable in Pakistan.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards
Board for Accountants' Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of
Pakistan (the Code), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

We draw attention to note 26.3.3.1 to the consolidated financial statements which explains the contingency in relation to the
pension obligation of the Group. The Group, based on the opinion of its legal counsel, is confident about a favorable outcome on
this matter and hence, no provision has been made in these consolidated financial statements. Our opinion is not qualified in
respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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Yousuf Adil A.F. Ferguson & Co.
Chartered Accountants Chartered Accountants

Following are the key audit matters:

S.No. Key Audit Matter How the matter was addressed in our audit

1 Provision against advances:

(Refer notes 5.8 and 11.4 to the consolidated

financial statements)

The Group makes provision against advances Our audit procedures to verify provision against domestic
extended in Pakistan on a time-based criteria advances included, amongst others, the following:
that involves ensuring that all non-performing
advances are classified in accordance with the Ÿ Obtained an understanding of the management process to
ageing criteria specified in the Prudential record provision and ensure that it is consistent with the
Regulations (PRs) issued by the State Bank of requirement of PRs; and
Pakistan (SBP).
Ÿ Evaluated the design and tested the operating effectiveness
In addition to the above time-based criteria, the of the relevant controls established by the Group to identify
loss events and for determining the extent of provisioning
PRs require a subjective evaluation of the credit
required against non-performing advances.
worthiness of borrowers to determine the
classification of advances. We selected a sample of loan accounts and performed the
following substantive procedures to evaluate the
The PRs also require the creation of general appropriateness of specific and general provision:
provision for certain categories of advances.
Ÿ Checked credit documentation, repayments of loan / mark-
Provision against advances of overseas up instalments, tested classification of non-performing
branches is made as per the requirements of the advances based on the number of days overdue;
respective regulatory regimes.
Ÿ Evaluated the management’s assessment for classification of
The Group has recognised a net provision a customer’s loan facilities as performing or non-performing
against advances amounting to Rs. 11,003 based on review of repayment pattern, inspection of credit
million in the consolidated profit and loss documentation and thorough discussions with the
account in the current year. As at December 31, management;
2021, the Group holds a provision of Rs 192,127
million against advances. Moreover, the Group Ÿ In case of restructured loans, we reviewed the detailed
has recognised a general provision against the documentation of restructuring including approvals, legal
underperforming portfolio on a prudent basis. opinions, terms of restructuring, payment records and any
other relevant documents to ensure that restructuring was
The determination of provision against advances made in accordance with the PRs;
based on the above criteria remains a significant
Ÿ We also reviewed minutes of the meeting of credit and audit
area of judgement and estimation. Because of
committee to identify risky exposures; and
the significance of the impact of these
judgements / estimations and the materiality of Ÿ We had discussions with management to challenge
advances relative to the overall consolidated assumptions and judgements used in recording provisions.
financial statements of the Group, we
considered the area of provision against We issued instructions to auditors of those overseas branches
advances as a key audit matter. and a joint venture which were selected for audit, highlighting
‘Provision against advances’ as a significant risk. The auditors of
those branches and joint venture performed audit procedures to
check compliance with regulatory requirements and reported the
results thereof to us. We, as auditors of the Group, evaluated the
work performed by the component auditors and the results
thereof.

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S.No. Key Audit Matter How the matter was addressed in our audit

2 Valuation of listed equity shares, units of mutual

funds and term finance certificates classified as
available-for-sale

(Refer notes 5.4 and 10.1 to the consolidated

financial statements)

The Group has significant investments in equity On a sample basis, we have performed the following
shares, units of mutual funds and term finance procedures:
certificates (TFCs) classified as Available for Sale
(AFS). As per the Group’s policy, listed equity Ÿ each investment’s cost was compared to its market
shares and units of mutual funds are required to value wherever available to determine decline / surplus
be considered for impairment when there is a in valuation;
significant or prolonged decline in the fair value
of investments. Further, TFCs are required to be Ÿ checked whether, in case of listed equity shares and
assessed for impairment as per the SBP’s units of mutual funds classified as available for sale,
Prudential Regulations which involves subjective impact of significant or prolonged decline was
criteria. recognized consistently as per the policy of the Group
as disclosed in note 5.26(c); and
The significance of the investment amount,
subjectivity involved and assumptions used in Ÿ For TFCs, checked that listed TFCs were valued as per
impairment make it significant to the the quoted prices and for unlisted TFCs, we checked
consolidated financial statements. Therefore, we that these were valued at cost less provision. Further,
have considered this as a key audit matter. on sample basis, TFCs were also evaluated based on
evidence of deterioration in the financial health of the
investee and repayment pattern.

3 Regulatory Matters in respect of New York

Branch

(Refer note 26.5 to the consolidated financial

statements)

The Group operates a branch in New York which Our audit procedures included the following:
is licensed by the New York State Department of
Financial Services (NYSDFS) and is also subject Ÿ Discussed with the senior management and the Board
to supervision by the Federal Reserve Bank of Audit Committee to obtain their views on the status of
New York (FRBNY). the regulatory matters;

In February 2022, the Group has reached Ÿ Reviewed relevant regulatory correspondence with
agreements with FRBNY and NYSDFS, the US State Bank of Pakistan on the compliance matters
Regulators of NBP’s New York Branch. The raised with respect to New York Branch;
agreements include fines totaling US $ 55.4
million equivalent to Rs. 9,778 million and Ÿ Reviewed the orders issued by the US Regulators in
focused on historical compliance program which fines were imposed on the Group;
weaknesses and delays in making compliance
related enhancements.

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S.No. Key Audit Matter How the matter was addressed in our audit

Under the agreements, the Group is required to Ÿ Reviewed the minutes of meetings of the Board of Directors
submit status and progress reports at defined in which deliberations relevant to compliance matters raised
frequencies to the Regulators with respect to by the US Regulators with respect to New York Branch took
the remedial measures being taken. place; and

The above action taken by the US Regulators, Evaluated the adequacy of disclosure in accordance with the
including the amount of penalties imposed is a applicable financial reporting framework.
significant event and has been considered as a
key audit matter.

Information Other than the Consolidated and Unconsolidated Financial Statements and Auditor's Reports
Thereon
Management is responsible for the other information. The other information comprises the information included in the Annual
Report, but does not include the consolidated and unconsolidated financial statements and our auditors’ reports thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.

Responsibilities of Management and the Board of Directors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
accounting and reporting standards as applicable in Pakistan and Companies Act, 2017 and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Board of directors is responsible for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in
Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial statements.

As a part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:

Ÿ Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.

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Ÿ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

Ÿ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.

Ÿ Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's
report. However, future events or conditions may cause the Group to cease to continue as a going concern.

Ÿ Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.

Ÿ Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide to the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matter that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these
matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matter
The consolidated financial statements of the Group as at and for the year ended December 31, 2020 were audited by Yousuf Adil,
Chartered Accountants and Grant Thornton Anjum Rahman, Chartered Accountants, who had expressed an unmodified opinion
on those statements vide their report dated February 25, 2021.

The engagement partners on the audit resulting in this independent auditors’ report are Nadeem Yousuf Adil and Shahbaz Akbar
on behalf of Yousuf Adil and A. F. Ferguson & Co. respectively.

Yousuf Adil A. F. Ferguson & Co.

Chartered Accountants Chartered Accountants
Karachi Karachi
Dated: March 8, 2022 Dated: March 8, 2022
UDIN: AR202110091ts8EUqLVc UDIN: AR202110068odhSaWepV

Independent Correspondent Firm to Member firm of PwC network

Deloitte Touche Tohmatsu Limited

286
Consolidated Statement of Financial Position
As at December 31, 2021

2020 2021 2021 2020

--------- (US Dollars in '000) -------- Note (Rupees in '000)
ASSETS

1,416,150 1,579,872 Cash and balances with treasury banks 7 278,868,736 249,969,566
85,066 108,837 Balances with other banks 8 19,211,237 15,015,366
718,385 1,900,516 Lendings to financial institutions 9 335,466,675 126,804,675
8,307,610 11,006,190 Investments 10 1,942,741,191 1,466,405,373
5,573,916 6,307,246 Advances 11 1,113,314,128 983,871,421
312,083 310,649 Fixed assets 12 54,833,801 55,086,809
5,791 6,637 Intangible assets 13 1,171,446 1,022,143
39,753 40,172 Right of use assets 14 7,090,980 7,017,020
- 10,780 Deferred tax assets 15 1,902,811 -
634,612 580,318 Other assets 16 102,433,942 112,017,619
17,093,366 21,851,217 3,857,034,947 3,017,209,992

LIABILITIES

95,150 123,777 Bills payable 17 21,848,270 16,795,186

784,864 1,772,811 Borrowings 18 312,925,106 138,539,005
13,703,929 17,098,679 Deposits and other accounts 19 3,018,147,709 2,418,928,469
1,117 757 Liabilities against assets subject to finance lease 20 133,598 197,224
44,582 47,366 Lease liability against right of use assets 21 8,360,755 7,869,355
16,617 - Deferred tax liabilities 15 - 2,933,124
892,540 1,136,435 Other liabilities 22 200,596,128 157,545,347
15,538,799 20,179,825 3,562,011,566 2,742,807,710
1,554,567 1,671,392 NET ASSETS 295,023,381 274,402,282

REPRESENTED BY

120,530 120,530 Share capital 23 21,275,131 21,275,131

326,272 353,668 Reserves 24 62,427,269 57,591,417
419,162 368,215 Surplus on revaluation of assets 25 64,994,980 73,987,802
683,414 823,237 Unappropriated profit 145,312,547 120,631,784
Total Equity attributable to the equity holders of
1,549,378 1,665,650 the Bank 294,009,927 273,486,134
5,189 5,742 Non-controlling interest 1,013,454 916,148
1,554,567 1,671,392 295,023,381 274,402,282

CONTINGENCIES AND COMMITMENTS 26

The annexed notes 1 to 52 and annexures I and II form an integral part of these consolidated financial statements.

Zubyr Soomro Arif Usmani Abdul Wahid Sethi Asif Jooma Ahsan Ali Chughtai
Chairman President & CEO Chief Financial Officer Director Director

287
Consolidated Profit and Loss Account
For the year ended December 31, 2021

2020 2021 2021 2020

--------- (US Dollars in '000) -------- Note (Rupees in '000)

1,461,822 1,314,643 Mark-up / return / interest earned 27 232,052,245 258,031,378

870,483 760,761 Mark-up / return / interest expensed 28 134,284,644 153,651,948
591,339 553,882 Net mark-up / interest income 97,767,601 104,379,430

NON MARK-UP / INTEREST INCOME

110,362 108,776 Fee and commission income 29 19,200,385 19,480,452

10,397 25,582 Dividend income 4,515,634 1,835,129
24,600 38,827 Foreign exchange income 6,853,433 4,342,201
44,828 35,139 Gain on securities - net 30 6,202,525 7,912,766
(1,243) 1,232 Share of profit / (loss) from joint venture - net of tax 10.4 217,507 (219,389)
243 131 Share of profit from associates - net of tax 10.4 23,057 42,813
22,466 10,516 Other income 31 1,856,263 3,965,483
211,653 220,203 Total non-markup / interest income 38,868,804 37,359,455
802,992 774,085 Total income 136,636,405 141,738,885

NON MARK-UP / INTEREST EXPENSES

363,293 345,918 Operating expenses 32 61,059,172 64,126,064

1,793 1,966 Other charges 33 346,979 316,439
365,086 347,884 Total non-markup / interest expenses 61,406,151 64,442,503
437,906 426,201 Profit before provisions 75,230,254 77,296,382
175,125 66,053 Provisions and write offs - net 34 11,659,325 30,911,976
- 55,400 Extra ordinary item 26.5 9,778,848 -
262,781 304,748 PROFIT BEFORE TAXATION 53,792,081 46,384,406

89,503 141,812 Taxation 35 25,031,700 15,798,487

173,278 162,936 PROFIT AFTER TAXATION 28,760,381 30,585,919

Attributable to:
172,733 162,030 Equity holders of the Bank 28,600,461 30,489,753
545 906 Non-controlling interest 159,920 96,166
173,278 162,936 28,760,381 30,585,919

------------- (US Dollars) ------------ -------------- (Rupees) --------------

0.08 0.08 Basic earnings per share 36 13.44 14.33

0.08 0.08 Diluted earnings per share 37 13.44 14.33

The annexed notes 1 to 52 and annexures I and II form an integral part of these consolidated financial statements.

Zubyr Soomro Arif Usmani Abdul Wahid Sethi Asif Jooma Ahsan Ali Chughtai
Chairman President & CEO Chief Financial Officer Director Director

288
Consolidated Statement of Comprehensive Income
For the year ended December 31, 2021

2020 2021 2021 2020

--------- (US Dollars in '000) -------- (Rupees in '000)

173,278 162,936 Profit after taxation for the year 28,760,381 30,585,919

Other comprehensive income

Items that may be reclassified to profit and loss

account in subsequent periods:

Exchange gain on translation of net assets of foreign

7,222 11,529 branches, subsidiaries and joint venture 2,035,053 1,274,736
16,981 (49,278) Movement in surplus on revaluation of investments - net of tax (8,698,153) 2,997,432
24,203 (37,749) (6,663,100) 4,272,168

Items that will not be reclassified to profit and

loss account in subsequent periods:

(2,821) (7,721) Remeasurement loss on defined benefit obligations - net of tax (1,362,794) (497,972)
3,671 (1,049) Movement in surplus on revaluation of operating fixed assets - net of tax (185,241) 647,924
1,214 559 Movement in surplus on revaluation of non-banking assets - net of tax 98,660 214,238
Share of remeasurement gain on defined benefit obligations of
- 203 joint venture - net of tax 35,807 -
2,064 (8,008) (1,413,568) 364,190

199,545 117,179 Total comprehensive income 20,683,713 35,222,277

Total comprehensive income attributable to:

199,000 116,273 Equity holders of the Bank 20,523,793 35,126,111

545 906 Non-controlling interest 159,920 96,166
199,545 117,179 20,683,713 35,222,277

The annexed notes 1 to 52 and annexures I and II form an integral part of these consolidated financial statements.

Zubyr Soomro Arif Usmani Abdul Wahid Sethi Asif Jooma Ahsan Ali Chughtai
Chairman President & CEO Chief Financial Officer Director Director

289
 Reserves Surplus on revaluation of assets
Non-
Share Revenue Fixed / non- Unappropriated

290
Exchange Statutory General loan Sub Total Controlling Total
capital general Total Investments banking Total profit
translation reserve loss reserve Interest
reserve assets

(Rupees in '000)

Balances as at December 31, 2019 21,275,131 11,570,596 33,168,855 8,000,000 521,338 53,260,789 25,253,452 45,105,135 70,358,587 93,465,516 238,360,023 862,532 239,222,555

Profit after taxation for the year ended December 31, 2020 - - - - - - - - - 30,489,753 30,489,753 96,166 30,585,919
Other comprehensive income - net of tax - 1,274,736 - - - 1,274,736 2,997,432 862,162 3,859,594 (497,972) 4,636,358 - 4,636,358
Transfer to statutory reserve - - 3,055,892 - - 3,055,892 - - - (3,055,892) - - -
Transfer from surplus on revaluation of
assets to unappropriated profit - net of tax - - - - - - - (230,379) (230,379) 230,379 - - -

Transactions with owners, recorded

directly in equity
Cash dividend paid / profit distribution
by subsidiaries - - - - - - - - - - - (42,550) (42,550)
For the year ended December 31, 2021

Balance as at December 31, 2020 21,275,131 12,845,332 36,224,747 8,000,000 521,338 57,591,417 28,250,884 45,736,918 73,987,802 120,631,784 273,486,134 916,148 274,402,282

Profit after taxation for the year ended December 31, 2021 - - - - - - - - - 28,600,461 28,600,461 159,920 28,760,381
Other comprehensive income - net of tax - 2,035,053 - - - 2,035,053 (8,698,153) (86,581) (8,784,734) (1,326,987) (8,076,668) - (8,076,668)
Transfer to statutory reserve - - 2,800,799 - - 2,800,799 - - - (2,800,799) - - -
Transfer from surplus on revaluation of
assets to unappropriated profit - net of tax - - - - - - - (208,088) (208,088) 208,088 - - -

Transactions with owners, recorded

directly in equity
Consolidated Statement of Changes in Equity

Cash dividend paid / profit distribution

by subsidiaries - - - - - - - - - - - (62,614) (62,614)

Balance as at December 31, 2021 21,275,131 14,880,385 39,025,546 8,000,000 521,338 62,427,269 19,552,731 45,442,249 64,994,980 145,312,547 294,009,927 1,013,454 295,023,381

The annexed notes 1 to 52 and annexures I and II form an integral part of these consolidated financial statements.

Zubyr Soomro Arif Usmani Abdul Wahid Sethi Asif Jooma Ahsan Ali Chughtai
Chairman President & CEO Chief Financial Officer Director Director
Consolidated Cash Flow Statement
For the year ended December 31, 2021
2020 2021 2021 2020
---- (US Dollars in '000) ---- Note (Rupees in '000)
CASH FLOW FROM OPERATING ACTIVITIES

262,781 304,748 Profit before taxation 53,792,081 46,384,406

(10,397) (25,582) Less: Dividend income (4,515,634) (1,835,129)
252,384 279,166 49,276,447 44,549,277
Adjustments:
26,370 26,750 Depreciation 4,721,808 4,654,608
1,354 2,429 Amortization 428,807 238,932
175,125 66,053 Provision and write-offs 34 11,659,325 30,911,976
(131) (406) Gain on sale of fixed assets - net (71,702) (23,053)
4,644 4,791 Finance charges on leased assets 845,616 819,777
Unrealized loss / (gain) on revaluation of investments
(60) 690 classified as held-for-trading 121,834 (10,556)
42,191 42,274 Charge for defined benefit plans - net 7,461,902 7,447,274
1,243 (1,232) Share of (profit) / loss from joint venture - net of tax (217,507) 219,389
(243) (131) Share of profit from associates - net of tax (23,057) (42,813)
250,493 141,218 24,927,026 44,215,534
502,877 420,384 74,203,473 88,764,811
(Increase) / Decrease in operating assets
53,681 (1,074,655) Lendings to financial institutions (189,691,077) 9,475,335
(342,783) (133,088) Held-for-trading securities (23,491,840) (60,505,845)
(35,124) (820,280) Advances (144,790,548) (6,199,885)
279,356 35,534 Others assets (excluding advance taxation) 6,272,244 49,310,051
(44,870) (1,992,489) (351,701,221) (7,920,344)
Increase / (Decrease) in operating liabilities
(17,405) 28,627 Bills payable 5,053,084 (3,072,238)
(1,665,491) 745,737 Borrowings from financial institutions 131,632,640 (293,981,639)
1,251,711 3,394,750 Deposits 599,219,240 220,943,896
(182,491) 221,388 Other liabilities 39,077,967 (32,212,081)
(613,676) 4,390,502 774,982,931 (108,322,062)

(4,644) (4,791) Financial charges paid (845,616) (819,777)

(121,221) (126,878) Income tax adjusted / paid 16.6 (22,395,757) (21,397,144)
(10,297) (17,178) Benefits paid (3,032,126) (1,817,492)
(291,831) 2,669,550 Net cash flow generated from / (used in) operating activities 471,211,684 (51,512,008)

CASH FLOW FROM INVESTING ACTIVITIES

(449,783) (1,736,575) Net investments in available-for-sale securities (306,529,009) (79,392,691)

742,147 (889,382) Net investments in held-to-maturity securities (156,987,867) 130,999,035
10,397 25,582 Dividends received 4,515,634 1,835,129
(11,902) (13,121) Investments in operating fixed assets (2,316,063) (2,100,884)
546 781 Proceeds from sale of operating fixed assets 137,839 96,316
7,222 11,529 Effect of translation of net investment in foreign branches 2,035,053 1,274,736
298,627 (2,601,186) Net cash flow (used in) / generated from investing activities (459,144,413) 52,711,641

CASH FLOW FROM FINANCING ACTIVITIES

(493) (493) Payments of finance lease obligations (86,992) (86,992)

(12,386) (15,105) Payments of lease liability against right of use assets (2,666,257) (2,186,264)
(7) (20) Dividend paid (3,519) (1,152)
(12,886) (15,618) Net cash flow used in financing activities 38.1 (2,756,768) (2,274,408)

(6,090) 52,746 Increase / (Decrease) in cash and cash equivalents 9,310,503 (1,074,775)

1,500,262 1,494,173 Cash and cash equivalents at beginning of the year 263,741,704 264,816,479
1,494,172 1,546,919 Cash and cash equivalents at end of the year 38 273,052,207 263,741,704

The annexed notes 1 to 52 and annexures I and II form an integral part of these consolidated financial statements.

Zubyr Soomro Arif Usmani Abdul Wahid Sethi Asif Jooma Ahsan Ali Chughtai
Chairman President & CEO Chief Financial Officer Director Director

291
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

1. THE GROUP AND ITS OPERATIONS

1.1 The "Group" consists of:

Holding Company

- National Bank of Pakistan (the Bank)

Percentage Holding
2021 2020
Subsidiary Companies % %

- CJSC Subsidiary Bank of NBP in Kazakhstan 100.00 100.00

- CJSC Subsidiary Bank of NBP in Tajikistan 100.00 100.00
- NBP Exchange Company Limited, Pakistan 100.00 100.00
- National Bank Modaraba Management Company Limited, Pakistan 100.00 100.00
- First National Bank Modaraba, Pakistan 30.00 30.00
- Taurus Securities Limited, Pakistan 58.32 58.32
- NBP Fund Management Limited, Pakistan 54.00 54.00
- Cast-N-Link Products Limited (Note 10.17.1) 76.51 76.51

The subsidiary company of the Group, National Bank Modaraba Management Company Limited, Pakistan exercises
control over First National Bank Modaraba, Pakistan as its management company and also has a direct economic interest
in it. The Group has consolidated the financial statements of the modaraba as the ultimate holding company.

The Group is principally engaged in commercial banking, modaraba management, brokerage, leasing, foreign currency
remittances, asset management, exchange transactions and investment advisory asset. Brief profile of the Holding
Company and subsidiaries is as follows:

National Bank of Pakistan

National Bank of Pakistan (the Bank) was incorporated in Pakistan under the National Bank of Pakistan Ordinance, 1949
and is listed on Pakistan Stock Exchange (PSX). Its registered and head office is situated at I.I. Chundrigar Road, Karachi.
The Bank is engaged in providing commercial banking and related services in Pakistan and overseas. The Bank also
handles treasury transactions for the Government of Pakistan (GoP) as an agent to the State Bank of Pakistan (SBP). The
Bank operates 1,513 (2020: 1,514) branches in Pakistan including 189 (2020: 191) Islamic Banking branches and 19 (2020:
21) overseas branches (including the Export Processing Zone branch, Karachi). The Bank also provides services in respect
of Endowment Fund for students loan scheme.

CJSC Subsidiary Bank of NBP in Kazakhstan

CJSC Subsidiary Bank of NBP in Kazakhstan (JSCK) is a joint-stock bank, which was incorporated in the Republic of
Kazakhstan in 2001. CJSC conducts its business under license number 252 dated December 27, 2007 (initial license was
dated December 14, 2001) and is engaged in providing commercial banking services. The registered office of JSCK is
located at 105, Dostyk Ave, 050051, Almaty.

CJSC Subsidiary Bank of NBP in Tajikistan

CJSC Subsidiary Bank of NBP in Tajikistan (JSCT) is a joint-stock bank, which was incorporated in the Republic of
Tajikstan in 2012. JSCT obtained its license on March 20, 2012 and is engaged in providing commercial banking services.
The registered office of JSCT is located at 48 Ayni Street, Dushanbe, Republic of Tajikistan.

292
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

NBP Exchange Company Limited, Pakistan

NBP Exchange Company Limited (NBPECL) is a public unlisted company, incorporated in Pakistan on September 24,
2002 under the repealed Companies Ordinance, 1984 (now Companies Act, 2017). NBPECL obtained license for
commencement of operations from State Bank of Pakistan (SBP) on November 25, 2002 and commencement of business
certificate on December 26, 2003 from the Securities and Exchange Commission of Pakistan (SECP). The registered office
of NBPECL is situated at Shaheen Complex, M.R. Kiryani Road, Karachi. NBPECL is engaged in foreign currency
remittances and exchange transactions. NBPECL has 21 branches (2020: 21 branches) and 1 booth (2020: 1).

National Bank Modaraba Management Company Limited, Pakistan

National Bank Modaraba Management Company Limited (NBMMCL) is a public unlisted company, incorporated in
Pakistan on August 6, 1992 under the repealed Companies Ordinance, 1984 (now Companies Act, 2017). The purpose of
the NBMMCL is to float and manage modaraba funds. NBMMCL at present is managing First National Bank Modaraba. Its
registered office is situated at Ground Floor, National Bank of Pakistan, Regional Headquarters Building, 26-Mc Lagon
Road, Lahore.

First National Bank Modarba, Pakistan

First National Bank Modaraba (the Modaraba) is a multi-purpose, perpetual and multi-dimensional Modaraba formed
under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 and Rules framed thereunder.
The Modaraba is managed by National Bank Modaraba Management Company Limited (a wholly owned subsidiary of
National Bank of Pakistan), incorporated in Pakistan under the repealed Companies Ordinance, 1984 (now Companies
Act, 2017) and registered with the Registrar of Modaraba Companies. The registered office of the Modaraba is situated at
Ground Floor, National Bank of Pakistan, Regional Headquarters Building, 26-Mc Lagon Road, Lahore. The Modaraba is
listed at Pakistan Stock Exchange Limited. It commenced its operations on December 04, 2003 and is currently engaged
in various Islamic modes of financing and operations including ijarah, musharaka and murabaha arrangements.

Taurus Securities Limited, Pakistan

Taurus Securities Limited (TSL) is a public unquoted company, incorporated in Pakistan on June 27, 1993 under the
repealed Companies Ordinance, 1984 (now Companies Act, 2017). The registered office of TSL is situated at 6th Floor,
Progressive Plaza, Beaumont Road, Civil Lines, Karachi. It is engaged in the business of stock brokerage, investment
counselling, and fund placements. TSL holds a Trading Right Entitlement (TRE) Certificate from Pakistan Stock Exchange
Limited.

NBP Fund Management Limited, Pakistan

NBP Fund Management Limited, Pakistan - NBP Funds, was incorporated in Pakistan as public limited company on
August 24, 2005 under the repealed Companies Ordinance, 1984 (now Companies Act, 2017) and obtained certificate for
commencement of business on December 19, 2005. The main sponsors of NBP Funds are National Bank of Pakistan and
Baltoro Growth Fund. Baltoro Growth Fund has acquired shareholding of NBP Funds which was previously held by
Alexandra Fund Management Private Limited on October 08, 2018. NBP Funds is mainly involved in the business of asset
management and investment advisory services. NBP Funds has been issued license by the Securities and Exchange
Commission of Pakistan (SECP) to carry out business of asset management services and investment advisory services as
a Non-Banking Finance Company (NBFC) under section 282C of the repealed Companies Ordinance, 1984 (now
Companies Act, 2017) and under the Non-Banking Finance Companies and Notified Entities Regulations, 2008. The
principal / registered office of the company is situated at 7th Floor, Clifton Diamond Building, Block No. 4, Scheme No. 5,
Clifton, Karachi.

As at December 31, 2021 NBP Funds is managing the following funds and discretionary portfolio:

293
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

Type of Fund

- NBP Income Opportunity Fund Open end Fund

- NBP Savings Fund Open end Fund
- NBP Islamic Savings Fund Open end Fund
- NBP Islamic Sarmaya Izafa Fund Open end Fund
- NBP Balanced Fund Open end Fund
- NBP Stock Fund Open end Fund
- NBP Financial Sector Income Fund Open end Fund
- NBP Government Securities Liquid Fund Open end Fund
- NBP Sarmaya Izafa Fund Open end Fund
- NBP Mahana Amdani Fund Open end Fund
- NBP Riba Free Savings Fund Open end Fund
- NBP Money Market Fund Open end Fund
- NBP Government Securities Savings Fund Open end Fund
- NBP Islamic Stock Fund Open end Fund
- NBP Islamic Active Allocation Equity Fund Open end Fund
- NBP Islamic Energy Fund Open end Fund
- NBP Islamic Money Market Fund Open end Fund
- NBP Financial Sector Fund Open end Fund
- NBP Islamic Mahana Amdani Fund Open end Fund
- NBP Islamic Regular Income Fund Open end Fund
- NAFA Islamic Active Allocation Fund-I Open end Fund
- NAFA Islamic Active Allocation Fund-II Open end Fund
- NAFA Islamic Active Allocation Fund-III Open end Fund
- NAFA Pension Fund Open end Fund
- NAFA Islamic Pension Fund Open end Fund
- NBP Islamic Daily Dividend Fund Open end Fund
- NBP Islamic Income Fund Open end Fund
- NBP Pakistan Growth Exchange Traded Fund Open end Fund

1.2 Basis of consolidation

- The consolidated financial statements include the financial statements of the Bank (Holding Company) and its
subsidiary companies together - "the Group".

- Subsidiary companies are fully consolidated from the date on which more than 50% of voting rights are transferred
to the Group or power to control the company is established and excluded from consolidation from the date of
disposal or when the control is lost.

- The assets, liabilities, income and expenses of subsidiary companies have been consolidated on a line by line
basis.

- Income and expenses of subsidiaries acquired during the year are included in the consolidated statement of the
comprehensive income from the effective date of acquisition.

- Non-Controlling interest / (minority interest) in equity of the subsidiary companies are measured at fair value for all
the subsidiaries acquired from period beginning on or after January 1, 2010 whereas minority interest of previously
acquired subsidiaries are measured at the proportionate net assets of subsidiary companies attributable to interest
which is not owned by holding company.

- Material intra-group balances and transactions have been eliminated.

294
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2. BASIS OF PRESENTATION

2.1 In accordance with the directives of the Federal Government of Pakistan regarding shifting of banking system to Islamic
modes, the SBP has issued various circulars from time to time. Permissible form of trade related mode of financing
includes purchase of goods by banks from their 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
consolidated financial statements as such but are restricted to the amount of facility actually utilized and the appropriate
portion of mark-up thereon.

Key financial figures of the Islamic banking branches have been disclosed in note annexure-II of these consolidated
financial statements.

2.2 The US Dollar amounts shown on the statement of financial position, profit and loss account, statement of comprehensive
income and cash flow statement are stated as additional information solely for the convenience of readers. For the
purpose of conversion to US Dollars, the rate of Rs. 176.5135 to 1 US Dollar has been used for 2021 and 2020 as it was
the prevalent rate as on December 31, 2021.

3. STATEMENT OF COMPLIANCE

3.1 These consolidated financial statements have been prepared in accordance with the accounting and reporting standards
as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of:

- International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB)
as notified under the Companies Act, 2017;

- Islamic Financial Accounting Standards (IFAS), issued by the Institute of Chartered Accountants of Pakistan as
notified under the Companies Act, 2017;

- Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017;
and

- Directive issued by the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan
(SECP);

Where the requirements of the Banking Companies Ordinance, 1962, the Companies Acts, 2017, or the directives issued
by the SBP and the SECP differ with the requirements of IFRS or IFAS, the requirements of the Banking Companies
Ordinance, 1962, the Companies Act, 2017 and the said directives shall prevail.

3.2 SBP has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments: Recognition and
Measurement' and IAS 40, 'Investment Property' for Banking Companies through BSD Circular Letter No. 10 dated August
26, 2002. Further, according to the notification of SECP dated April 28, 2008, the IFRS - 7 "Financial Instruments:
Disclosures" has not been made applicable for banks. Accordingly, the requirements of these standards have not been
considered in the preparation of these consolidated financial statements. However, investments have been classified and
valued in accordance with the requirements of various circulars issued by the SBP.

3.3 The SECP vide SRO 56 (1) / 2016 dated January 28, 2016, has notified that the requirements of IFRS 10 (Consolidated
Financial Statements) and section 228 of the Companies Act, 2017 will not be applicable with respect to the investment in
mutual funds established under trust structure.

295
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

3.4 Application of new and revised International Financial Reporting Standards (IFRSs)

3.4.1 New accounting standards, amendments and IFRS interpretations that are effective for the year ended December 31,
2021

The following standards, amendments and interpretations are effective for the year ended December 31, 2021. These
standards, amendments and interpretations are either not relevant to the Bank's operations or are not expected to have
significant impact on the Bank's consolidated financial statements other than certain additional disclosures:

- Amendment to IFRS 16 'Leases' - Covid-19 related rent concessions. Effective from accounting period beginning
on or after June 01, 2020.

- Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16). Effective
from accounting period beginning on or after January 01, 2021.

Certain annual improvements have also been made to a number of IFRSs

3.4.2 New accounting standards, amendments and IFRS interpretations that are not yet effective

The following standards, amendments and interpretations are only effective for accounting periods, beginning on or after
the date mentioned against each of them. These standards, interpretations and amendments are either not relevant to the
Group's operations or are not expected to have significant impact on the Group's consolidated financial statements other
than certain additional disclosures:
Effective from accounting
period beginning on or after

Amendments to IFRS 3 'Business Combinations' - Reference to the conceptual

framework January 01, 2022

Amendments to IAS 16 'Property, Plant and Equipment' - Proceeds before intended

January 01, 2022
use

Amendments to IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' -

January 01, 2022
Onerous Contracts — cost of fulfilling a contract

International Financial Reporting Standard - 9 "Financial Instruments”

January 01, 2022
Annual Improvements to IFRS Standards 2018-2020 Cycle (related to IFRS 9, IFRS 16
January 01, 2022
and IAS 41)

Amendments to IAS 1 'Presentation of Financial Statements' - Classification of

January 01, 2023
liabilities as current or non-current

Amendments to IAS 1 'Presentation of Financial Statements' - Disclosure of accounting

January 01, 2023
policies

Amendments to IAS 8 'Accounting Policies, Changes in Accounting Estimates and

January 01, 2023
Errors' - Definition of accounting estimates

Amendments to 'IAS 12 Income Taxes' - deferred tax related to assets and liabilities
January 01, 2023
arising from a single transaction

Amendments to IFRS 10 and 28 - Sale or Contribution of Assets between an Investor

Deferred indefinitely
and its Associate or Joint Venture

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Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

There are certain new and amended standards and interpretations that are mandatory for the Group's accounting periods
beginning on or after January 1, 2022 but are considered not to be relevant or do not have any significant effect on the
Group's operations and are therefore not detailed in these consolidated financial statements.

3.4.3 As per SBP’s BPRD Circular Letter no. 24 of 2021, IFRS 9 ‘Financial Instruments’ is applicable to banks in Pakistan
effective January 1, 2022. The aforementioned circular letter required banks to submit IFRS 9 compatible pro forma
financial statements for the year ended December 31, 2021 and perform parallel run of IFRS 9 on quarterly basis. Further,
it was stated that final instructions will be issued subsequently based on the results of parallel reporting of banks.

The Banks in Pakistan through the Pakistan Banks Association (PBA) have submitted their comments on instructions
issued for parallel reporting and requested that those are addressed in the final instructions to be issued. The matters
raised include retaining some relaxations given presently in the Prudential Regulations, prescription of macro-economic
variables, retaining local regulatory requirements pertaining to IFRS 9 related areas on overseas branches, impact on
Capital Adequacy Ratio (CAR), guidance on Significant Increase in Credit Risk (SICR) criteria, future tax impacts of any
reversals, recording of Expected Credit Loss (ECL) on Government securities denominated in local currency, including
further clarifications required in certain areas.

Due to the fact that final instructions have not yet been issued and there are a large number of reservations on the draft
instructions, the banks are collectively of the opinion that impact on initial application of IFRS 9 cannot be determined as
at December 31, 2021.

3.4.4 Other than the aforesaid standards, interpretations and amendments, the International Accounting Standards Board (IASB)
has also issued the following standards which have not been adopted locally by the Securities and Exchange Commission
of Pakistan:

- IFRS 1 – First Time Adoption of International Financial Reporting Standards

- IFRS 17 – Insurance Contracts

3.4.5 The management anticipates that these new standards, interpretations and amendments will be adopted in the Group’s
consolidated financial statements as and when they are applicable and adoption of these new standards, interpretations
and amendments, may have no material impact on these consolidated financial statements of the Bank in the period of
initial application.

4. BASIS OF MEASUREMENT

These consolidated financial statements have been prepared under the historical cost convention except for revaluation
of land and buildings and non-banking assets acquired in satisfaction of claims which are stated at revalued amount and
certain investments and derivative financial instruments that are carried at fair value. In addition, obligations in respect of
defined benefit plan are carried at present value.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policy adopted in preparation of these consolidated financial statements are consistent with those of the
previous financial year.

5.1 Business Combination

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets
transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests
issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit and loss
account as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value.

297
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment,
net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the
consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's
previously held interest in the acquiree (if any), the excess is recognised immediately in profit and loss account as a
bargain purchase gain.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the
Group's net assets in the event of liquidation is measured at fair value at the date of the acquisition.

When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or
loss, if any, is recognised in profit and loss account.

5.2 Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the subsidiary
company.

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or entities of
cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when
there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its
carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit
and then to the other assets of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Any
impairment loss for goodwill is recognised directly in profit and loss account. An impairment loss recognised for goodwill
is not reversed in subsequent periods.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the
profit or loss on disposal.

5.3 Cash and cash equivalents

Cash and cash equivalents include cash and balances with treasury banks, balances with other banks and call money
lendings, less call borrowings and overdrawn nostro accounts.

5.4 Investments

Investments other than those categorised as held-for-trading are initially recognised at fair value which includes
transactions costs associated with the investments. Investments classified as held-for-trading are initially recognised at
fair value, and transaction costs are expensed in the profit and loss account.

All regular way purchases / sales of investments are recognised on the trade date, i.e., the date the Group commits to
purchase / sell the investments. Regular way purchases or sales of investments require delivery of securities within the
time frame generally established by regulation or convention in the market place.

The Group has classified its investment portfolio, except for investments in subsidiaries, associates and joint ventures into
‘held-for-trading’, ‘held-to-maturity’ and ‘available-for-sale’ as follows:

- Held-for-trading – These are securities which are acquired with the intention to trade by taking advantage of short-
term market / interest rate movements and are to be sold within ninety (90) days. These are carried at market value,
with the related unrealized gain / (loss) on revaluation being taken to profit and loss account.

298
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

- Held-to-maturity – These are securities with fixed or determinable payments and fixed maturity that are held with
the intention and ability to hold to maturity. These are carried at amortised cost.

- Available-for-sale – These are investments that do not fall under the held-for-trading or held-to-maturity categories.
These are carried at market value except in case of unquoted securities where market value is not available, which
are carried at cost less provision for diminution in value, if any. Surplus / (deficit) on revaluation is taken to ‘surplus /
(deficit) on revaluation of assets’ account shown in equity. Provision for diminution in value of investments in
respect of unquoted shares is calculated with reference to break-up value of the same. On derecognition or
impairment in quoted available-for-sale investments, the cumulative gain or loss previously reported as 'surplus /
(deficit) on revaluation of assets' in equity is included in the profit and loss account for the year.

- Provision for diminution in value of investments in unquoted debt securities is calculated as per the SBP's
Prudential Regulations.

Held-for-trading and quoted available-for-sale securities are marked to market with reference to ready quotes on Reuters
page or MUFAP (PKRV / PKISRV) or the Stock Exchanges, as the case may be.

Associates – Associates are all entities over which the Group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for
under the equity method of accounting. However, in case where associates are considered as fully impaired and financial
statements are not available, these investments are stated at cost less provision.

Under the equity method, the Group’s share of its associates’ post-acquisition profits or losses is recognized in the
consolidated profit and loss account, its share of post-acquisition movements in reserves is recognized in reserves. The
cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s
share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables,
the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the
associate.

Joint venture - The Group has interests in joint venture which is jointly controlled entity. A joint venture is contractual
arrangement whereby two or more parties undertake in economic activity that is subject to a joint control and includes a
jointly controlled entity that involves the establishment of separate entity in which each venturer has an interest. The Group
accounts for its interest in joint venture using the equity method of accounting.

The carrying values of investments are reviewed for impairment when indications exist that the carrying value may exceed
the estimated recoverable amount. Provision is made for impairment in value, if any.

5.5 Repurchase and resale agreements

Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue to be recognised
in the statement of financial position and are measured in accordance with accounting policies for investment securities.
The counterparty liability for amounts received under these agreements is included in borrowings. The difference between
sale and repurchase price is treated as mark-up / return / interest expense and accrued over the life of the repo agreement
using effective yield method.

Securities purchased with a corresponding commitment to resell at a specified future date (reverse repos) are not
recognised in the statement of financial position, as the Group does not obtain control over the securities. Amounts paid
under these agreements are included in lendings to financial institutions. The difference between purchase and resale
price is treated as mark-up / return / interest income and accrued over the life of the reverse repo agreement using
effective yield method.

5.6 Derivative financial instruments

Derivative financial instruments are initially recognised at fair value on the dates on which the derivative contracts are
entered into and are subsequently re-measured at fair value using appropriate valuation techniques. All derivative financial

299
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

instruments are carried as assets when fair value is positive and liabilities when fair value is negative. Any change in the
fair value of derivative instruments during the year is taken to the profit and loss account.

5.7 Financial instruments

All financial assets and financial liabilities are recognized at the time when the Group becomes a party to the contractual
provisions of the instrument. A financial asset is derecognised where (a) the rights to receive cash flows from the asset
have expired; or (b) the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and
either (i) the Group has transferred substantially all the risks and rewards of the asset, or (ii) the Group has neither
transferred nor retained substantially all the risk and rewards of the asset, but has transferred control of the asset. A
financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Any gain or
loss on derecognition of the financial assets and financial liabilities is taken to profit and loss account.

5.8 Advances

Advances are stated net of specific and general provisions. Provisions are made in accordance with the requirements of
Prudential Regulations issued by the SBP and charged to the profit and loss account. These regulations prescribe a time
based criteria (as supplemented by subjective evaluation of advances by the Group) for classification of non-performing
loans and advances and computing provision there against. Such regulations also require the Group to maintain general
provision against consumer and SME advances at specified percentage of such portfolio. General provision for loan
losses of overseas branches is made as per the requirements of the respective central banks. Advances are written off
where there are no realistic prospects of recovery.The amounts so written off is a book entry and does not neccesarily
prejudice the Group's right of recovery against the customers. The Group determines write-offs in accordance with the
criteria as prescribed by SBP vide BPRD circular no. 06 dated June 05, 2007.

5.8.1 Islamic financing and related assets

Under Murabaha financing, funds disbursed for the purchase of goods are recorded as advance against Murabaha finance
and the financing is recorded at the deferred sale price. Goods purchased but remaining unsold at the statement of
financial position date are recorded as inventories.

Assets given on Ijarah are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Ijarah
assets are depreciated on a reducing balance basis over the term of the Ijarah after taking into account the estimated
residual value. Impairment of Ijarah assets is recognized in line with the Prudential Regulations or upon the occurrence of
an impairment event which indicates that the carrying value of the Ijarah asset may exceed its recoverable amount.

In Running Musharakah, the Group and the customer enter a Musharakah agreement where the Group agrees to finance
the operating activities of the customer's business and share in the profit or loss in proportion to an agreed ratio at an
agreed frequency.

Under Diminishing Musharakah financing, the Group creates joint ownership with the customer over the tangible assets to
fulfill capital expenditure / project requirements. The Group receives periodic payments from the customer against the
gradual transfer of its share of ownership to the customer.

In Istisna transactions, the Group finances the cost of goods manufactured by the customer. Once the goods are
manufactured, these are sold by the customer as an agent of the Group to recover the cost plus the agreed profit.

Under Tijarah, the Group purchases the finished goods from the customer against payment, takes possession and appoint
customer as an agent to sell these goods to ultimate buyer on deferred payment basis. Profit is recognized on accrual
basis over the period of transaction.

Wakalah is an agency contract in which Group provides funds to the customer who invests it in a Shariah compliant
manner.

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Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

In Musawamah financing, the Group purchases the goods and after taking the possession, sells them to the customer
either in spot or credit transaction, without disclosing the cost.

5.9 Fixed assets and depreciation

5.9.1 Property and equipment

5.9.1.1 Owned assets

Property and equipment except land and buildings are stated at cost less accumulated depreciation and accumulated
impairment losses, if any. Land is stated at revalued amount. Buildings are stated at revalued amount less accumulated
depreciation and impairment, if any. The cost and the accumulated depreciation of property and equipment of foreign
branches include exchange differences arising on currency translation at the year-end rates. Depreciation is charged to
profit and loss account applying the straight line method except buildings, which are depreciated on diminishing balance
method at the rates stated in note 12.2. Depreciation on additions is charged from the month in which the assets are
available for use and no depreciation is charged for the month the assets are disposed off.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are
charged to the profit and loss account during the period in which they are incurred.

Assets are derecognised when disposed off or when no future economic benefits are expected from its use or disposal.
Gains and losses on disposal of property and equipment are included in profit and loss account.

The assets' residual values and useful lives are reviewed annually, and adjusted if appropriate, at statement of financial
position date.

Land and buildings' valuations are carried out by professionally qualified valuers with sufficient regularity to ensure that
their carrying amounts do not differ materially from their fair value.

- Any revaluation increase arising on the revaluation of such assets is recognised in the statement of comprehensive
income and accumulated in equity, except to the extent that it reverses a revaluation decrease for the same asset
previously recognised in profit and loss account, in which case the increase is credited to profit and loss account to
the extent of the decrease previously expensed. A decrease in the carrying amount arising on the revaluation of
such assets is recognised in profit and loss account to the extent that it exceeds the balance, if any, held in
“Surplus on Revaluation of Fixed Assets” relating to a previous revaluation of that asset.

- Depreciation on assets which are revalued is determined with reference to the value assigned to such assets on
revaluation and depreciation charge for the year is taken to the profit and loss account.

- An amount equal to incremental depreciation for the year net of associated deferred tax is transferred from
“Surplus on Revaluation of Fixed Assets account” to unappropriated profit through statement of changes in equity
to record realization of surplus to the extent of the incremental depreciation charge for the year.

- On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus remaining in the
revaluation reserve is transferred directly to unappropriated profit.

5.9.1.2 Leased assets (as lessee)

Assets subject to finance lease are accounted for by recording the asset and the related liability. These are recorded at
lower of fair value and the present value of minimum lease payments at the inception of lease and subsequently stated net
of accumulated depreciation. Depreciation is charged on straight line basis at rates disclosed in note 12.2. Financial
charges are allocated over the period of lease term so as to provide a constant periodic rate of financial charge on the
outstanding liability.

301
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

5.9.1.3 Ijarah (as lessor)

Assets leased out under 'Ijarah' are stated at cost less accumulated depreciation and accumulated impairment losses, if
any. Assets under Ijarah are depreciated over the period of lease term. However, in the event the asset is expected to be
available for re-Ijarah, depreciation is charged over the economic life of the asset using straight line basis.

Ijarah income is recognised on a straight line basis over the period of Ijarah contract.

5.9.2 Capital work-in-progress

Capital work-in-progress is stated at cost less accumulated impairment losses, if any. These are transferred to specific
assets as and when assets are available for use.

5.9.3 Impairment

The carrying values of fixed assets are reviewed for impairment when events or changes in circumstances indicate that the
carrying values may not be recoverable. If any such indication exists and where the carrying values exceed the estimated
recoverable amounts, fixed assets are written down to their recoverable amounts.

The resulting impairment loss is taken to profit and loss account except for impairment loss on revalued assets which is
adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on
revaluation of assets. Where impairment loss subsequently reverses, the carrying amount of the asset is increased to the
revised recoverable amount but limited to the extent of the amount which would have been determined had there been no
impairment. Reversal of impairment loss is recognized as income in profit and loss account.

5.10 Lease liability and right-of-use assets

The lease liabilities are initially measured at the present value of lease payments that includes:

- fixed payments (including in-substance fixed payments), less any lease incentives receivable;

- variable lease payment that are based on an index or a rate as at the commencement date;

- amounts expected to be payable by the lessee under residual value guarantees, if any;

- the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

- payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are to be discounted using the incremental borrowing rate being the rate that the Group would have
to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar
terms and conditions.

On initial recognition Right-of-use assets are measured at cost comprising the following:

- the amount of the initial measurement of lease liability;

- any lease payments made at or before the commencement date less any lease incentives received;

- any initial direct costs incurred; and

- an estimate of restoration costs.

The Group leases various offices / branches for the purpose of its operational activities. Rental contracts are typically
made for fixed periods of 3 to 10 years. Lease terms are negotiated on an individual basis and contain a wide range of
different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as
security for borrowing purposes.

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Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

5.11 Intangible assets

Intangible assets are stated at cost less accumulated amortisation and accumulated impairment losses, if any. The cost
and the accumulated amortisation of intangible assets of foreign branches include exchange differences arising on
currency translation at the year-end rates. Amortisation is charged to profit and loss account applying the straight-line
method at the rates stated in note 13. Amortisation on addition is charged from the month in which the assets are
available for use and no amortisation is charged in the month the intangible assets are disposed off. The estimated useful
life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis.

Intangible assets with indefinite useful life are carried at cost less impairment losses, if any.

5.12 Non-banking assets acquired in satisfaction of claims

In accordance with the requirements of the 'Regulations for Debt Property Swap' (the regulations) issued by SBP vide its
BPRD Circular No. 1 of 2016, dated January 1, 2016, the non-banking assets acquired in satisfaction of claims are carried
at revalued amounts less accumulated depreciation. These assets are revalued by professionally qualified valuers with
sufficient regularity to ensure that their net carrying value does not differ materially from their fair value. A surplus arising
on revaluation is credited to the 'surplus on revaluation of assets' account and any deficit arising on revaluation is taken to
the profit and loss account directly. Legal fees, transfer costs and direct costs of acquiring title to property is charged to
profit and loss account and not capitalized. Depreciation on non-banking assets acquired in satisfaction of claims is
charged to the profit and loss account on the same basis as depreciation charged on the Group's owned fixed assets.

5.13 Deposits and their cost

Deposits are recorded at the fair value of proceeds received.

Deposit costs are recognised as an expense in the period in which these are incurred using effective yield method.

5.14 Taxation

5.14.1 Current

Provision of current taxation is based on taxable income for the year determined in accordance with the prevailing laws of
taxation on income earned for local as well as foreign operations, as applicable to the respective jurisdictions. The charge
for the current tax also includes adjustments wherever considered necessary relating to prior years, arising from
assessments framed during the year.

5.14.2 Deferred

Deferred tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, to the extent that it is
probable that taxable profits will be available against which the deductible temporary differences and unused tax losses
can be utilised. Deferred tax is not recognised on differences relating to investment in subsidiaries, branches and
associates and interest in joint arrangments to the extent the deductible temporary difference probably will not reverse in
the foreseeable future.

The carrying amount of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit or deductable temporary differences will be available to allow all or part of the
deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date.

303
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

Deferred tax relating to gain / loss recognized on surplus on revaluation of assets is charged / credited to such account.

5.15 Employee benefits

5.15.1 Defined benefit plans

The Group operates an approved funded pension scheme, an un-funded post retirement medical benefits scheme and an
un-funded benevolent scheme for its eligible employees. The Group also operates an un-funded gratuity scheme for its
eligible contractual employees. An actuarial valuation of all defined benefit schemes is conducted every year. The
valuation uses the Projected Unit Credit method. Remeasurements of the net defined benefit liability / assets which
comprise actuarial gains and losses, return on plan assets (excluding interest) and the effect of asset ceiling (if any,
excluding interest) are recognized immediately in other comprehensive income. Past-service costs are recognized
immediately in profit and loss account when the plan amendment occurs.

5.15.2 Other employee benefits

Employees' compensated absences

The Group also makes provision in the financial statements for its liability towards compensated absences. This liability is
estimated on the basis of actuarial advice under the Projected Unit Credit method.

5.15.3 Retirement and other benefit obligations

In respect of CJSC Subsidiary Bank of NBP in Kazakhstan (CJSC)

The CJSC withholds amounts of pension contributions from employee salaries and pays them to state pension fund. The
requirements of the Kazakhstan’s legislation state pension system provides for the calculation of current payments by the
employer as a percentage of current total payments to staff. This expense is charged in the period the related salaries are
earned. Upon retirement all retirement benefit payments are made by pension funds selected by employees.

5.16 Revenue recognition

Income on loans and advances and debt security investments are recognized on a time proportion basis that takes into
account effective yield on the asset. In case of advances and investments classified under the Prudential Regulations,
interest / mark-up is recognized on receipt basis.

Interest / mark-up on rescheduled / restructured advances and investments is recognized in accordance with the
Prudential Regulations of SBP.

Fee, brokerage and commission income other than commission on letter of credit and guarantees and remuneration for
trustee services are recognized upon performance of services.

Commission on letters of credit and guarantees is recognized on time proportion basis.

Dividend income on equity investments and mutual funds is recognized when right to receive is established.

Premium or discount on debt securities classified as held-for-trading, available-for-sale and held-to-maturity securities is
amortised using the effective interest method and taken to profit and loss account.

Gains and losses on disposal of investments and fixed assets are dealt with through the profit and loss account in the year
in which they arise.

Income from lease financing is accounted for using the financing method. Under this method, the unearned lease income
(defined as the sum of total lease rentals and estimated residual value less the cost of the leased assets) is deferred and
taken to income over the term of the lease so as to produce a constant periodic rate of return on the outstanding net
investment in the lease. Gains or losses on termination of lease contracts are recognized through the profit and loss
account when these are realized. Unrealized lease income and other fees on classified leases are recognized on a receipt
basis.

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Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

5.17 Net investment in finance lease

Leases where the group transfers substantially all the risk and rewards incidental to ownership of the assets to the lessee
are classified as finance leases. Net investment in finance lease is recognised at an amount equal to the aggregate of
present value of minimum lease payment including any guaranteed residual value and excluding unearned finance income,
write-offs and provision for doubtful lease finances, if any.

5.18 Foreign currencies translation

The Group's financial statements are presented in Pak Rupees (Rs.) which is the Group's functional and presentation
currency.

Foreign currency transactions are converted into Rupees applying the exchange rate at the date of the respective
transactions. Monetary assets and liabilities in foreign currencies and assets / liabilities of foreign branches are translated
into Rupees at the rates of exchange prevailing at the statement of financial position date. Forward foreign exchange
contracts are valued at the rates applicable to their respective maturities. All gains or losses on dealing in foreign
currencies are taken to the profit and loss account.

Profit and loss account balances of foreign branches and subsidiaries are translated at average exchange rate prevailing
during the year. Gains and losses on translation are included in the profit and loss account except gains / losses arising on
translation of net assets of foreign branches and subsidiaries, which are credited to the statement of comprehensive
income.

Statement of financial position balances of foreign branches and subsidiaries are translated at exchange rate prevailing at
statement of financial position date. Gains and losses on translation are included in the profit and loss account except
gains / losses arising on translation of net assets of foreign branches and subsidiaries, which is credited to the statement
of comprehensive income.

Commitments for outstanding forward foreign exchange contracts are disclosed in these consolidated financial
statements at committed amounts. Contingent liabilities / commitments for letters of credit and letters of guarantee
denominated in foreign currencies are expressed in Rupee terms at the rates of exchange prevailing at the statement of
financial position date.

5.19 Provision for off balance sheet obligations

Provision for guarantees, claims and other off balance sheet obligations is made when the Group has legal or constructive
obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and
a reliable estimate of amount can be made. Charge to profit and loss account is stated net of expected recoveries.

5.20 Off setting

Financial assets and financial liabilities are only set off and the net amount is reported in the consolidated financial
statements when there is a legally enforceable right to set off and the Group intends either to settle on a net basis, or to
realize the assets and to settle the liabilities simultaneously.

5.21 Fiduciary assets

Assets held in a fiduciary capacity are not treated as assets of the Group in the statement of financial position.

5.22 Dividend and other appropriations

Dividend and other appropriation to reserves, except appropriations which are required by the law, are recognised in the
Group's financial statements in the year in which these are approved.

305
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

5.23 Earnings per share

The Group presents basic and diluted earnings per share (EPS) for its shareholders. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares
outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, if
any. There were no dilutive potential ordinary shares in issue at December 31, 2021.

5.24 Bai Muajjal

Bai Muajjal transactions represent sales of Sukuks on a deferred payment basis and are shown in lendings to financial
institutions except for transactions undertaken directly with the Government of Pakistan which are disclosed as
investments.

The difference between the deferred payment amount receivable and the carrying value at the time of sale is accrued and
recorded as income over the life of the transaction.

5.25 Segment reporting

A segment is a distinguishable component of the Group that is subject to risks and rewards that are different from those of
other segments. A business segment is one that is engaged either in providing certain products or services, where as a
geographical segment is one engaged in providing certain products or services within a particular economic environment.
Segment information is presented as per the Group’s functional and management reporting structure.

During the year the Group changes its organizational structure in a manner that causes the composition of its reportable
segments to change, and accordingly the prior year disclosure is restated to reflect the current reportable segments in
note 44.

Business segments

The Group's primary segment reporting is based on following business segments:

I. Retail Banking Group includes retail lending and deposits, banking services, cards and branchless banking.

II. Inclusive Development Group consists of loans to individuals, agriculture, SME, commodity and commercial
customers.

III. Corporate and Investment Banking segment offers a wide range of financial services to medium and large sized
public and private sector entities. These services include, providing and arranging tenured financing, corporate
advisory, underwriting, cash management, trade products, corporate finance products and customer services.

IV. Treasury includes fixed income, equity, foreign exchange, credit, funding, own position securities, lendings and
borrowings and derivatives for hedging and market making.

V. International Financial Institution and Remittance segment includes the results of all international branches,
correspondent banking business and global remittances. This represents Group’s operations in 14 countries
including Pakistan and 19 branches including one branch in export processing zone in Pakistan.

VI. Aitemaad and Islamic Banking provides shariah compliant services to customers including loans, deposits and
other transactions

VII. Head Office / Others includes the head office related activities and other functions which cannot be classified in
any of the above segments.

306
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

Geographical segments

The Group is operating following geographic lines for monitoring and reporting purpose:

I. Pakistan

II. Asia Pacific (including South Asia)

III. Europe

IV. United States of America

V. Middle East

5.26 Accounting estimates and judgments

The preparation of the consolidated financial statements in conformity with Approved Accounting Standards requires the
use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of
applying the Group’s accounting polices. The estimates, judgments and associated assumptions used in the preparation
of these consolidated financial statements are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances. The key areas of estimates and judgments in
relation to these consolidated financial statements are as follows:

a) Provision against non-performing loans and advances

The Group reviews its loan portfolio to assess amount of non-performing loans and determine provision required
there against on a quarterly basis. While assessing this requirement, various factors including the past dues,
delinquency in the account, financial position and future business / financial plan of the borrower, value of collateral
held and requirements of Prudential Regulations are considered. The Group also considers the effect of Forced
Sale Value (FSV) of collaterals in determining the amount of provision, however, no benefit of FSV of collateral has
been taken during the year in determining provisioning amount.

General provision for loan losses of overseas branches is made as per the requirements of the respective central
banks.

The amount of general provision against domestic consumer and SME advances is determined in accordance with
the relevant Prudential Regulations and SBP directives.

In addition, the Group has also made general provision in respect of its corporate portfolio on prudent basis. This
general provision is in addition to the requirements of Prudential Regulations.

b) Fair value of derivatives

The fair values of derivatives which are not quoted in active markets are determined by using valuation techniques.
The valuation techniques take into account the relevant interest and exchange rates over the term of the contract.

c) Impairment of available-for-sale investments

The Group considers that available-for-sale equity investments and mutual funds are impaired when there has been
a significant or prolonged decline in the fair value below its cost except for investments where relaxation has been
allowed by SBP. This determination of what is significant or prolonged requires judgment. In addition, impairment
may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and
sector performance.

Further the Group has developed internal criteria according to which a decline of 30% in the market value of any
scrip below its cost shall constitute as a significant decline and where market value remains below the cost for a
period of one year shall constitute as a prolonged decline.

307
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

d) Held-to-maturity investments

The Group follows the guidance provided in the SBP circulars on classifying non-derivative financial assets with
fixed or determinable payments and fixed maturity as held-to-maturity. In making this judgment, the Group
evaluates its intention and ability to hold such investments till maturity.

e) Income taxes

In making the estimates for current and deferred taxes, the management looks at the income tax law and the
decisions of appellate authorities on certain issues in the past. There are certain matters where the Group’s view
differs with the view taken by the income tax department and such amounts are shown as contingent liability.

f) Fixed asset and intangible assets, revaluation, depreciation and amortization

In making estimates of the depreciation / amortization method, the management uses method which reflects the
pattern in which economic benefits are expected to be consumed by the Group. The method applied is reviewed at
each financial year end and if there is a change in the expected pattern of consumption of the future economic
benefits embodied in the assets, the method is changed to reflect the change in pattern.

The Group also revalues its properties on a periodic basis. Such revaluations are carried out by independent valuer
and involves estimates / assumptions and various market factors and conditions.

g) Employees' benefit plans

The liabilities for employees' benefits plans are determined using actuarial valuations. The actuarial valuations
involve assumptions about discount rates, expected rates of return on assets, future salary increases, future
inflation rates and future pension increases as disclosed in note 40. Due to the long term nature of these plans,
such estimates are subject to significant uncertainty.

h) Provision against contingencies

Provision against contingencies is determined based on the management judgement regarding the probability of
future outflows of resources embodying economic benefits to settle an obligation arising from past events.

i) Determination of control over investees

The Group's management applies its judgement to determine whether the control exists over the investee entities.

6. CLOSURE OF FOREIGN SUBSIDIARIES AND OPERATIONS

The Board of Directors (BoD) of the Bank, in their meeting held on January 20 and 21, 2020, have decided for closure of
their two overseas Subsidiaries in Almaty (Kazakhstan) and Dushanbe (Tajikistan) along with three overseas branches in
Baku (Azerbaijan), Bishkek (Kyrgyzstan) and Asghabat (Turkmenistan) so their carrying amount will be recovered principally
through continuing use. With regards to regulatory approval, the Bank applied to ministry of finance and State Bank of
Pakistan for their endorsements and accordingly received their approval, with respect to the BoD decision, on April 07,
2020 and April 24, 2020 respectively.

Further, it has been decided by BoD to restrict their country operations in Afghanistan (Jalalabad) and Bangladesh (Sylhet,
Chittagong and Gulshan) to one branch in each country located in Kabul and Dhaka respectively.

As of December 31, 2021, Bank has closed down its operations in Tashkent (Uzbekistan), Jalalabad (Afghanistan) and
Sylhet (Bangladesh). The licenses of Ashgabat (Turkmenistan), Dushanbe (Tajikistan) and Almaty (Kazakhstan) have been
cancelled and these locations are under closure process. Further, as of January 17, 2022, the BoD has approved the
closure of its operation of Paris branch.

308
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

As at December 31, 2021

CJSC CJSC
Subsidiary Subsidiary
Baku Bishkek Ashgabat Paris
Particulars Bank of NBP in Bank of NBP in Total
(Azerbaijan) (Kyrgyzstan) (Turkmenistan) (France)
Kazakhstan Tajikistan
(Almaty) (Dushanbe)

----------- (Subsidiaries) ----------- --------------------------- (Branches) ---------------------------------

(Rupees in '000)

Total Assets 1,700,218 796,668 981,309 1,714,063 352,392 3,329,382 8,874,032

Total Liabilities 1,566 908 60,027 4,101 - 2,776,326 2,842,928
Profit / (loss) for the year (57,131) (30,082) (34,466) 12,527 (21,624) (408,935) (539,711)

2021 2020
Note (Rupees in '000)
7. CASH AND BALANCES WITH TREASURY BANKS

In hand:
Local currency 56,039,638 48,499,942
Foreign currency 6,924,389 6,925,688
62,964,027 55,425,630

With State Bank of Pakistan in:

Local currency current accounts 7.1 133,688,708 125,017,412
Foreign currency current accounts 7.2 11,738,428 10,209,399
Foreign currency deposit accounts 7.2 24,098,591 21,022,297
Foreign currency collection accounts 1,226,824 1,618,084
170,752,551 157,867,192

With other central banks in:

Foreign currency current accounts 7.3 40,265,103 29,581,326
Foreign currency deposit accounts 7.3 2,920,706 4,789,170
43,185,809 34,370,496
Prize bonds 1,966,349 2,306,248
278,868,736 249,969,566

7.1 This includes statutory liquidity reserves maintained with the SBP under Section 22 of the Banking Companies Ordinance,
1962.

7.2 These represent mandatory reserves maintained in respect of foreign currency deposits under FE-25 scheme, as
prescribed by the SBP.

7.3 These balances pertain to the foreign branches and are held with central banks of respective countries. These include
balances to meet the statutory and regulatory requirements in respect of liquidity and capital requirements of respective
countries. The deposit accounts carry interest at the rate of 0% to 6.30% per annum (2020: 0% to 3.50% per annum).

309
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
8. BALANCES WITH OTHER BANKS Note (Rupees in '000)

In Pakistan:
In current accounts 171,930 33,502
In deposit accounts 8.1 595,236 394,071
767,166 427,573
Outside Pakistan:
In current accounts 12,797,681 8,708,983
In deposit accounts 8.2 5,646,390 5,878,810
18,444,071 14,587,793

19,211,237 15,015,366

8.1 These include various deposits with banks and carry interest at rates ranging from 2.5% to 8% per annum (2020: 2% to
8% per annum).

8.2 These include various deposits with correspondent banks outside Pakistan and carry interest at rates ranging from 0% to
1.5% per annum (2020: 0% to 2.5% per annum).
2021 2020
Note (Rupees in '000)
9. LENDINGS TO FINANCIAL INSTITUTIONS

Call / clean money lendings 9.1 21,009,723 2,040,800

Repurchase agreement lendings (Reverse Repo) 9.2 & 9.8 282,051,308 124,763,875
Musharaka Lending 9.3 30,000,000 -
Placements with State Bank of Pakistan 9.4 2,405,644 -
Letters of placement 9.5 174,150 176,150
9.6 335,640,825 126,980,825
Less: provision held against lendings to financial institutions 9.7 & 9.9 (174,150) (176,150)
Lendings to financial institutions - net of provision 335,466,675 126,804,675

9.1 This includes zero rate lendings to a financial institution Rs. 9.7 million (2020: Rs. 40.8 million) which is guaranteed by the
SBP.

9.2 These carry mark-up at rates ranging from 8.75% to 10.7% per annum (2020: 6% to 7.29% per annum) with maturities
ranging from January 4, 2022 to January 14, 2022.

9.3 This represents Musharaka agreements entered into with Meezan Bank Limited and carrying profit at the rate of 10.65%
(2020: nil) per annum.

9.4 These represent placements made with the SBP as a result of shortfall in respect of time-based mandatory targets of
disbursements under Government's scheme "Mera Pakistan Mera Ghar". These placements are for a period of six months
to one year and carry no mark-up.

9.5 These are overdue placements and full provision has been made against these placements as at December 31, 2021.

310
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
9.6 Particulars of lending (Rupees in '000)

In local currency 335,640,825 126,980,825

In foreign currencies - -
335,640,825 126,980,825

9.7 Movement in provision held against lendings is as follows:

Opening balance 176,150 176,150

Reversal for the year (2,000) -
Closing balance 174,150 176,150

9.8 Securities held as collateral against lendings to financial institutions

2021 2020
Held by Further given Held by Further given
Total Total
Group as collateral Group as collateral

(Rupees in '000)

Market Treasury Bills 163,594,180 - 163,594,180 91,230,121 - 91,230,121

Pakistan Investment Bonds 118,457,128 - 118,457,128 33,533,754 - 33,533,754

Total 282,051,308 - 282,051,308 124,763,875 - 124,763,875

9.8.1 Market value of the securities under repurchase agreement lendings amounts to Rs. 279,633 million (2020: Rs. 125,094
million).

9.9 Category of classification 2021 2020

Classified Provision Classified Provision

Lending held Lending held
(Rupees in '000)
Domestic

Loss 174,150 174,150 176,150 176,150

Total 174,150 174,150 176,150 176,150

311
 10. INVESTMENTS

312
10.1 Investments by type:
2021 2020

Cost / Provision for Carrying Cost / Provision for Surplus / Carrying

Surplus / (deficit)
amortised cost diminution value amortised cost diminution (deficit) value

Held-for-trading securities Note

Market Treasury Bills 90,744,281 - (55,659) 90,688,622 96,157,306 - 3,529 96,160,835

Pakistan Investment Bonds 29,114,020 - (65,016) 29,049,004 496,805 - (1,455) 495,350
Ordinary shares of listed companies 139,329 - - 139,329 157,217 - - 157,217
Investment in mutual funds 451,492 - (1,160) 450,332 282,361 - 8,482 290,843
Foreign Government Securities 1,374,638 - - 1,374,638 1,105,840 - - 1,105,840
121,823,760 - (121,834) 121,701,925 98,199,529 - 10,556 98,210,085
Available-for-sale securities

Market Treasury Bills 721,736,763 - (430,492) 721,306,271 529,397,138 - 690,817 530,087,955

Pakistan Investment Bonds 571,528,321 - (8,147,316) 563,381,005 470,136,168 - 2,776,564 472,912,732
Ijarah Sukuks 14,000,979 - (31,279) 13,969,700 6,000,000 - 15,600 6,015,600
Ordinary shares of listed companies 10.13/10.14/10.15 34,150,987 (6,110,939) 11,765,469 39,805,517 33,242,726 (5,568,236) 20,257,485 47,931,975
Ordinary shares of unlisted companies 1,882,198 (410,893) - 1,471,305 1,865,982 (410,893) - 1,455,089
For the year ended December 31, 2021

Preference shares 1,706,823 (539,708) 98,614 1,265,729 1,445,308 (539,708) 194,250 1,099,850
Term Finance Certificates / Musharika
and Sukuk Bonds 55,505,182 (5,200,180) 959,516 51,264,518 60,250,294 (5,196,406) 856,659 55,910,547
GoP Foreign Currency Bonds 20,778,528 - 26,435 20,804,963 10,429,632 - 411,243 10,840,875
Foreign Government Securities 880,932 - 26,372 907,304 2,795,017 - 52,159 2,847,176
Foreign Currency Debt Securities - - - - 79,438 - 1,202 80,640
Investments in mutual funds 619,646 (41,167) 1,289,705 1,868,184 619,646 (41,167) 1,421,691 2,000,170
Ordinary shares of a bank outside Pakistan 10.7 463,294 - 27,060,912 27,524,206 463,295 - 17,189,483 17,652,778
1,423,253,653 (12,302,887) 32,617,936 1,443,568,702 1,116,724,644 (11,756,410) 43,867,153 1,148,835,387
Held-to-maturity securities 10.6.1

Market Treasury Bills - - - - - - - -

Pakistan Investment Bonds 324,726,185 - - 324,726,185 168,676,415 - - 168,676,415
Debentures, Bonds, Sukuks, Participation Term - - -
Certificates and Term Finance Certificates 407,164 (407,134) - 30 414,972 (407,134) - 7,838
Bai Muajjal with Government of Pakistan 10,914,185 - - 10,914,185 11,641,133 - - 11,641,133
Foreign Government Securities 34,091,600 - - 34,091,600 32,418,809 - - 32,418,809
Foreign Currency Debt Securities 680 - - 680 618 - - 618
370,139,814 (407,134) - 369,732,680 213,151,947 (407,134) - 212,744,813

Associates 10.9/10.10/10.16 1,271,766 (674,785) - 596,981 1,259,067 (697,984) - 561,083

Joint Venture 10.12 7,140,903 - - 7,140,903 6,054,005 - - 6,054,005
Subsidiaries 10.17 1,245 (1,245) - - 1,245 (1,245) - -

Total Investments 1,923,631,141 (13,386,051) 32,496,101 1,942,741,191 1,435,390,437 (12,862,773) 43,877,709 1,466,405,373
Notes to and forming part of the Consolidated Financial Statements
 2021 2020
Cost / Provision for Carrying Cost / Provision for Surplus / Carrying
Surplus / (deficit)
amortised cost diminution value amortised cost diminution (deficit) value
10.2 Investments by segments:
Note
Federal Government Securities:

Market Treasury Bills 812,481,044 - (486,151) 811,994,893 625,554,444 - 694,346 626,248,790

Pakistan Investment Bonds 925,368,526 - (8,212,332) 917,156,194 639,309,388 - 2,775,109 642,084,497
Bai Muajjal Government of Pakistan 10,914,185 - - 10,914,185 11,641,133 - - 11,641,133
Ijarah Sukuks 14,000,979 - (31,279) 13,969,700 6,000,000 - 15,600 6,015,600
1,762,764,734 - (8,729,762) 1,754,034,972 1,282,504,965 - 3,485,055 1,285,990,020

Shares

Listed Companies 10.13/10.14/0.15 34,290,316 (6,110,939) 11,765,469 39,944,846 33,399,943 (5,568,236) 20,257,485 48,089,192
Unlisted Companies 1,882,198 (410,893) - 1,471,305 1,865,982 (410,893) - 1,455,089
36,172,514 (6,521,832) 11,765,469 41,416,151 35,265,925 (5,979,129) 20,257,485 49,544,281
Non Government Debt Securities
Term Finance Certificates/Musharka/Bonds/
Debentures and Sukuk Bonds
Listed 17,232,822 (1,092,251) 405,860 16,546,431 20,713,777 (1,031,475) 405,860 20,088,162
For the year ended December 31, 2021

Unlisted 38,679,524 (4,515,063) 553,656 34,718,117 39,951,489 (4,572,065) 450,799 35,830,223

55,912,346 (5,607,314) 959,516 51,264,548 60,665,266 (5,603,540) 856,659 55,918,385
Foreign Securities

GoP Foreign Currency Bonds 20,778,528 - 26,435 20,804,963 10,429,632 - 411,243 10,840,875
Foreign Government Securities 36,347,170 - 26,372 36,373,542 36,319,666 - 52,159 36,371,825
Foreign Currency Debt Securities 680 - - 680 80,056 - 1,202 81,258
57,126,378 - 52,807 57,179,185 46,829,354 - 464,604 47,293,958

Preference shares 1,706,823 (539,708) 98,614 1,265,729 1,445,308 (539,708) 194,250 1,099,850

Investments in mutual funds 1,071,138 (41,167) 1,288,545 2,318,516 902,007 (41,167) 1,430,173 2,291,013

Ordinary shares of a bank outside Pakistan 10.7 463,294 - 27,060,912 27,524,206 463,295 - 17,189,483 17,652,778

Associates 10.10

- Listed

First Credit and Investment Bank Limited 10.16 211,537 (17,229) - 194,308 210,505 (28,830) - 181,675
Land Mark Spinning Mills Limited 39,710 (39,710) - - 39,710 (39,710) - -
SG Allied Businesses Limited 218,534 (218,534) - - 218,534 (218,534) - -
Nina Industries Limited 49,060 (49,060) - - 49,060 (49,060) - -
Agritech Limited 10.8 - - - - - - - -
NBP Stock Fund 512,401 (109,728) - 402,673 500,734 (121,326) - 379,408

313
Notes to and forming part of the Consolidated Financial Statements

10.9 1,031,242 (434,261) - 596,981 1,018,543 (457,460) - 561,083

 2021 2020
Cost / Provision for Surplus /

314
Cost / Provision for
Surplus / (deficit) Carrying value Carrying value
amortised cost diminution amortised cost diminution (deficit)
- Unlisted Note

Pakistan Emerging Venture Limited 50,565 (50,565) - - 50,565 (50,565) - -

National Fructose Company Limited 6,500 (6,500) - - 6,500 (6,500) - -
National Assets Insurance Company Limited 44,815 (44,815) - - 44,815 (44,815) - -
Dadabhoy Energy Supply Company Limited 32,105 (32,105) - - 32,105 (32,105) - -
Pakistan Mercantile Exchange Limited 106,539 (106,539) - - 106,539 (106,539) - -
10.11 240,524 (240,524) - - 240,524 (240,524) - -

1,271,766 (674,785) - 596,981 1,259,067 (697,984) - 561,083

Joint Venture

United National Bank Limited 10.12 7,140,903 - - 7,140,903 6,054,005 - - 6,054,005

Subsidiaries

Cast-N-Link Products Limited 10.17 1,245 (1,245) - - 1,245 (1,245) - -

For the year ended December 31, 2021

Total Investments 1,923,631,141 (13,386,051) 32,496,101 1,942,741,191 1,435,390,437 (12,862,773) 43,877,709 1,466,405,373

2021 2020
10.2.1 Investments given as collateral

Pakistan Investment Bonds 30,682,290 2,300,000

Market Treasury Bills 96,128,050 3,000,000
126,810,340 5,300,000
Notes to and forming part of the Consolidated Financial Statements
 Based on the
Total
Number of Percentage Country of financial Profit / (loss)
Assets Liabilities Revenue comprehensive
shares of holding Incorporation statements after taxation
income
as at

10.2.2 Associates

Listed

First Credit and Investment Bank Limited 20,000,000 30.77 Pakistan June 30, 2021 2,272,038 1,522,087 145,063 20,535 11,620
National Fibres Limited 17,030,231 20.19 Pakistan - - - - - -
Land Mark Spining Mills Limited 3,970,859 32.79 Pakistan June 30, 2020 174,448 252,160 - (16,925) (16,925)
SG Allied Businesses Limited 3,754,900 25.03 Pakistan June 30, 2021 1,166,565 475,775 16,903 (11,922) (11,907)
Nina Industries Limited 4,906,000 20.27 Pakistan - - - - - -
Agritech Limited 106,014,565 27.01 Pakistan December 31, 67,176,554 60,735,890 5,699,723 (4,296,900) (4,295,428)
2020
NBP Stock Fund 31,347,444 2.69 Pakistan June 30, 2021 21,132,632 438,759 5,805,098 4,980,935 4,980,935

Unlisted

Pakistan Emerging Venture Limited 12,500,000 33.33 Pakistan June 30, 2019 1,194 345 96 (175) (175)
For the year ended December 31, 2021

National Fructose Company Limited 1,300,000 39.50 Pakistan - - - - - -

Venture Capital Fund Management 33,333 33.33 Pakistan - - - - - -
Kamal Enterprises Limited 11,000 20.37 Pakistan - - - - - -
Mehran Industries Limited 37,500 32.05 Pakistan - - - - - -
National Assets Insurance Company Limited 4,481,500 8.96 Pakistan December 31, 689,888 7,813 64,505 22,828 22,427
2020
Tharparkar Sugar Mills Limited 2,500,000 21.52 Pakistan - - - - - -
Youth Investment Promotion Society 644,508 25.00 Pakistan - - - - - -
Dadabhoy Energy Supply Company Limited 9,900,000 23.11 Pakistan - - - - - -
K-Agricole Limited 5,000 20.00 Pakistan - - - - - -
New Pak Limited 200,000 20.00 Pakistan - - - - - -
Pakistan Mercantile Exchange Limited 10,653,860 33.98 Pakistan June 30, 2021 2,663,957 2,614,291 301,213 8,674 8,674
Prudential Fund Management Limited 150,000 20.00 Pakistan - - - - - -

10.2.3 Joint Venture

December 31,
United National Bank Limited 20,250,000 45.00 United Kingdom 2020 132,418,446 115,791,392 2,564,653 (459,068) (351,298)

10.2.4 Subsidiaries

Cast-N-Link Products Limited 1,245,000 76.51 Pakistan N/A* - - - - -

315
Notes to and forming part of the Consolidated Financial Statements

* Not available
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)
10.3 Provision for diminution in value of investments

Opening balance 12,862,773 12,895,866

Charge / (reversals)
Charge for the year 1,242,251 1,258,140
Reversals for the year (718,973) (1,291,233)
523,278 (33,093)
Closing Balance 13,386,051 12,862,773

10.3.1 Particulars of provision against debt securities 2021 2020

Category of classification NPI Provision NPI Provision
(Rupees in '000)
Domestic
Doubtful - - 119,133 59,567
Loss 5,607,314 5,607,314 5,552,738 5,543,973
Total 5,607,314 5,607,314 5,671,871 5,603,540

10.4 Movement Schedule for Associates and Joint Venture

2021
Share of Share of
Surplus / Surplus /
profit / Exchange other
Opening Dividend (deficit) on (deficit) on Closing
Addition Disposal (loss) for transalation comprehen-
balance paid revaluation revaluation balance
the year - reserve sive
properties securities
net of tax income

Joint Venture (Rupees in '000)

United National Bank Limited 6,054,005 - - - 217,507 601,092 309,500 (77,008) 35,807 7,140,903

6,054,005 - - - 217,507 601,092 309,500 (77,008) 35,807 7,140,903

Associates

Unlisted

Pakistan Emerging Venture Limited 50,565 - - - - - - - - 50,565

National Fructose Company Limited 6,500 - - - - - - - - 6,500
National Assets Insurance Company Limited 44,815 - - - - - - - - 44,815
Dadabhoy Energy Supply Company Limited 32,105 - - - - - - - - 32,105
Pakistan Mercantile Exchange Limited 106,539 - - - - - - - - 106,539

Listed

First Credit and Investment Bank Limited 210,505 - - - 4,381 - - (3,349) - 211,537
Land Mark Spining Mills Limited 39,710 - - - - - - 39,710
SG Allied Business Limited 218,534 - - - - - - - - 218,534
Nina Industries Limited 49,060 - - - - - - - - 49,060
Agritech Limited - - - - - - - - -
NBP Stock Fund 500,734 - (7,009) 18,676 - - - 512,401

1,259,067 - - (7,009) 23,057 - - (3,349) - 1,271,766

316
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2020

Share of Surplus / Surplus / Share of

Exchange
Opening Dividend profit / (loss) (deficit) on (deficit) on other Closing
Addition Disposal transalation
Balance paid for the year - Revaluation Revaluation comprehen- Balance
reserve
net of tax Properties Securities sive income

(Rupees in '000)
Joint Venture

United National Bank Limited 5,827,985 - - - (219,389) 303,896 18,516 122,997 - 6,054,005

5,827,985 - - - (219,389) 303,896 18,516 122,997 - 6,054,005

Associates

Unlisted

Pakistan Emerging Venture Limited 50,565 - - - - - - - - 50,565

National Fructose Company Limited 6,500 - - - - - - - - 6,500
National Assets Insurance Company Limited 44,815 - - - - - - - - 44,815
Dadabhoy Energy Supply Company Limited 32,105 - - - - - - - - 32,105
Pakistan Mercantile Exchange Limited 106,539 - - - - - - - - 106,539

Listed

First Credit and Investment Bank Limited 208,089 - - - 9,242 - - (6,826) - 210,505
Land Mark Spining Mills Limited 39,710 - - - - - - 39,710
SG Allied Business Limited 218,534 - - - - - - - - 218,534
Nina Industries Limited 49,060 - - - - - - - - 49,060
Agritech Limited - - - - - - - - - -
NBP Stock Fund 467,163 - - - 33,571 - - - - 500,734

1,223,080 - - - 42,813 - - (6,826) - 1,259,067

317
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)
10.5 Quality of available for sale securities
Details regarding quality of available for sale securities are as follows:
Federal government securities - government guaranteed
Market Treasury Bills 721,736,763 529,397,138
Pakistan Investment Bonds 571,528,321 470,136,168
Ijarah Sukuks 14,000,979 6,000,000

Cost 1,307,266,063 1,005,533,306

Shares

Listed companies sector-wise

Automobile Assembler 614,233 536,303

Automobile Parts and Accessories 1,113,967 843,923
Cable and Electrical Goods 269,669 211,166
Cement 2,919,974 1,882,741
Chemical 788,003 753,684
Commercial Banks 3,648,181 3,896,815
Engineering 1,096,335 855,646
Fertilizer 1,929,148 2,457,103
Food and Personal Care 1,218,036 1,393,503
Glass and Ceramics 72,522 203,855
Insurance 1,642,720 1,713,756
Investment Banks / Investment companies / Securities companies 513,566 513,840
Leasing Companies 13,738 21,890
Leather and Tanneries 297,568 189,470
Modarabas - 120
Oil and Gas Exploration Companies 2,702,776 2,408,733
Oil and Gas Marketing Companies 6,117,686 5,954,784
Paper and Board 675,319 402,039
Pharmaceuticals 995,798 512,974
Power Generation and Distribution 3,000,787 2,988,617
Real Estate Investment Trust 305,972 586,526
Refinery 447,422 900,998
Sugar and Allied Industries 260,476 288,528
Synthetic and Rayon 32,622 91,980
Technology and Communication 754,027 960,033
Textile Composite 1,552,549 1,890,534
Textile Spinning 655,364 638,440
Textile Weaving 25,854 25,854
Transport 32,068 32,385
Miscellaneous 454,607 86,486
Cost 34,150,987 33,242,726

2021 2020
Unlisted companies Cost Breakup value Cost Breakup value
(Rupees in '000)

Digri Sugar Mills Limited 4,063 135,585 4,063 135,585

JDM Textile Mills Limited - - 4,784 324,651
Gelcaps Pakistan Limited 4,665 8,842 4,665 8,842
Pakistan Agriculture Storage Service Corporation 5,500 1,623 5,500 1,623

318
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Unlisted companies Cost Breakup value Cost Breakup value
(Rupees in '000)

Al Ameen Textile 327 N/A* 327 N/A*

Professional Management Modaraba (Formerly Al Zamin
Modarba Management (Private) Limited) 1,000 2,134 1,000 2,134
AMZ Venture Limited Class A 121 N/A 121 N/A
Arabian Sea Country Club 6,500 (6,810) 6,500 (6,640)
Atlas Power Limited 375,000 1,544,905 375,000 1,328,000
Attock Textile Mills Limited 200 N/A 200 N/A
Pakistan Mortgage Refinance Company Limited 600,000 1,006,700 600,000 770,195
F.T.C. Management Company Private Limited 250 40,094 250 46,998
Fauji Akbar Portia Marines Terminal Limited 321,076 570,681 321,076 570,680
Fauji Oil Terminals and Distribution Limited 10,886 119,741 10,886 99,059
First Women Bank Limited 21,100 79,733 21,100 71,946
Fortune Securities Limited 5,000 11,411 5,000 7,574
Frontier Textile Mills Limited 500 272 500 272
Gulistan Power Generation Limited 2,200 8,096 2,200 8,096
Hazara Woolen Mills Limited 200 N/A 200 N/A
Industrial Development Bank of Pakistan 107 N/A 107 N/A
Inter Asia Leasing Company Limited 500 N/A 500 N/A
ISE Towers REIT Management Company Limited 30,346 50,902 30,346 46,890
Junaid Cotton Mills Limited 327 N/A 327 N/A
Kaisar Arts and Krafts Limited 8,395 N/A 8,395 N/A
Kaytex Mills Limited 3,778 N/A 3,778 N/A
Mian Mohammad Sugar Mills Limited 15 N/A 15 N/A
Muslim Ghee Mills Limited 1,810 N/A 1,810 N/A
Myfip Video Industries Limited 5,373 N/A 5,373 N/A
National Asset Leasing Corporation Limited 14 N/A 14 N/A
National Construction Limited 250 597 250 597
National Institution of Facilitation Technology (Private) Limited 1,526 35,899 1,526 74,484
National Investment Trust Limited 100 1,003,283 100 830,782
National Woolen Mills Limited 183 N/A 183 N/A
Natover Lease and Refinance 2,602 N/A 2,602 N/A
Nowshehra Engineering Works Limited 41 N/A 41 N/A
Pakistan Export Finance Guarantee Agency Limited 11,529 1,152 11,529 1,152
Pakistan Paper Corporation Limited 373 N/A 373 N/A
Pakistan Telephone Cables 143 N/A 143 N/A
Pakistan Textile City 100,000 12,410 100,000 12,410
Pakistan Tourism Development Corporation 100 82 100 82
People Steel Mills Limited 3,276 N/A 3,276 N/A
Qadri Textile Mills Limited 500 N/A 500 N/A
Rehman Cotton Mills Limited 16,958 107,895 16,958 107,895
Refrigerator Manufacturing Company Limited 4,589 N/A 4,589 N/A
Rousch Power Pakistan Limited 132,888 1,503,561 132,888 1,322,458
Ruby Rice and General Mills Limited 750 N/A 750 N/A
Sahrish Textile Mills 21 N/A 21 N/A
Shoaib Capital 272 544 272 544
SME Bank Limited 26,950 (318) 26,950 (318)
South Asia Regional Fund 287 N/A 287 N/A
Star Salica Industries Limited 267 N/A 267 N/A
Syed Match Industries 2 N/A 2 N/A
Union Insurance Company of Pakistan 4 N/A 4 N/A
Unity Modaraba 28 N/A 28 N/A
Zafar Textiles Mills Limited 257 N/A 257 N/A

* Not available

319
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Unlisted companies Cost Breakup value Cost Breakup value
(Rupees in '000)

Zulsham Engineering Works Limited 330 N/A* 330 N/A*

Information System Associates Limited 1,719 N/A 1,719 N/A
1 Link (Guarantee) Limited 50,000 267,895 50,000 139,362
Pakistan Corporate Restructuring Company Limited 96,000 N/A 96,000 N/A
Pakvitae (Private) Limited 21,000 N/A - -
1,882,198 1,865,982
* Not available
2021 2020
Non Government Debt Securities (Rupees in '000)

Listed

- AAA 42,055 1,597,751

- AA+, AA, AA- 9,265,030 11,049,399
- A+, A, A- 833,334 966,667
- Unrated 7,073,222 7,072,012
Cost 17,213,641 20,685,829

Unlisted

- AAA 22,132,940 19,792,681

- AA+, AA, AA- 4,010,113 5,212,557
- A+, A, A- 2,745,811 2,850,000
- BBB+, BBB, BBB- 299,760 299,820
- Unrated 9,102,917 11,409,407
Cost 38,291,541 39,564,465

Foreign Securities
2021 2020
Government Securities Cost Rating Cost Rating
(Rupees in '000) (Rupees in '000)

USA 880,932 AA+ 2,795,017 AA+

2021 2020
(Rupees in '000)

Non Government Debt Securities - Cost

Listed

- A+ - 79,438

320
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
10.6 Particulars relating to Held to Maturity securities are as follows: (Rupees in '000)

Federal Government Securities - Government guaranteed

Pakistan Investment Bonds 324,726,185 168,676,415

Bai Muajjal with Government of Pakistan 10,914,185 11,641,133

335,640,370 180,317,548

Non Government Debt securities

Listed
- Unrated 19,181 27,948
19,181 27,948

Unlisted
- Unrated 387,983 387,025
387,983 387,025

Foreign Securities
2021 2020
Cost Rating Cost Rating
(Rupees in '000) (Rupees in '000)
Government Securities
Azerbaijan 204,494 BB+ 646,649 BB+
Bangladesh 29,672,064 Ba3 27,277,984 BB-
Kyrgyzstan 841,944 B2 1,118,290 B2
Kingdom of Saudi Arabia 2,631,097 A 2,551,243 A+
Korea 742,001 AA 734,572 AA
34,091,600 32,418,809

2021 2020
(Rupees in '000)
Non Government Debt Securities
Listed
- Unrated - Cost 680 618

10.6.1 The market value of securities classified as held-to-maturity as at December 31, 2021 amounted to Rs. 366,869 million
(2020: Rs. 218,678 million).

10.7 Investment in shares of a bank incorporated outside Pakistan - Bank Al-Jazira

The Bank holds 30,333,333 (2020: 30,333,333) shares in Bank Al-Jazira (BAJ) incorporated in the Kingdom of Saudi
Arabia, representing 3.7% (2020: 3.7%) holding in total equity of BAJ. The investment has been marked to market using
closing price as quoted on the Saudi Stock Exchange in accordance with SBP concurrence vide letter No. BSD/SU-
13/331/685/2006 dated February 17, 2006. BAJ’s Viability Rating is F2 with short term and long term IDR at BBB+ by Fitch
Rating Agency.

10.8 The 94,273,510 (2020: 94,273,510) shares of Agritech Limited were acquired from Azgard Nine Limited as part of multiple
agreements including the Master Restructuring Agreement (MRA). These shares were acquired at an agreed price of Rs.
35 per share. The market value of these shares at December 31, 2021 amounted to Rs. 3.79 per share resulting in an
impairment of Rs. 3,264 million (2020: Rs. 3,124 million) which has been fully recorded in these consolidated financial
statements.

321
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

There is a put option available to Azgard Nine Limited, under which Azgard Nine Limited has the right to sell 58.29 million
preference shares of Agritech Limited to the Bank at a price of Rs. 5.25 per share subject to the occurrence of certain
events under the agreement.

10.9 Aggregate market value of investment in associates (quoted) on the basis of quoted prices amounts to Rs. 1,880 million
(2020: Rs. 1,456 million).

10.10 Associates with zero carrying amount, represent the investments acquired from former National Development Finance
Corporation (NDFC) which have negative equity or whose operations were closed at the time of amalgamation.

10.11 The details of break-up value based on latest available financial statements of unlisted investments in associates are as
follows:
Year / Period Break-up
ended value
(Rupees in '000)

National Assets Insurance Limited December 31, 2020 61,114

Pakistan Emerging Venture Limited June 30, 2019 283
Mehran Industries Limited June 30, 2001 5,681
Tharparkar Sugar Mills Limited September 30, 2001 (83,140)
Prudential Fund Management June 30, 2007 (2,482)
Dadabhoy Energy Supply Company Limited June 30, 2007 103,952
Pakistan Mercantile Exchange Limited June 30, 2021 16,876

2021 2020
Note (Rupees in '000)
10.12 Investment in joint venture
United National Bank Limited (UNBL)
(Incorporated in United Kingdom) 10.1 / 10.2 / 7,140,903 6,054,005
10.12.1

10.12.1 Under a joint venture agreement, the Bank holds 20.25 million ordinary shares (45%) and United Bank Limited (UBL)
holds 23.25 million ordinary shares (55%) in UNBL. In addition to ordinary shares, four preference shares categories as
"A", "B", "C" and "D" have been issued and allotted. The "B" and "D" category shares are held by the Bank and
category "A" and "C" are held by UBL. Dividends payable on "A" and "B" shares are related to the ability of the venture
to utilize tax losses that have been surrendered to it on transfer of business from the Bank or UBL as appropriate.
Dividends payable on "C" and "D" shares are related to loans transferred to the venture by the Bank or UBL that have
been written-off or provided for at the point of transfer and the ability of the venture to realize in excess of such loan
value.

10.13 The investments in shares include shares of Pakistan State Oil Company Limited, Sui Northern Gas Pipeline Limited and
Pakistan Engineering Company with cost of Rs. 4,603 million (2020: Rs. 4,603 million) that have been frozen by the
Government of Pakistan for sale in the equity market due to their proposed privatization.

10.14 The investments also include shares acquired under tri-partite consent agreement dated June 29, 2011. These strategic
investments comprise of the shares of Pakistan State Oil (38,055,247 shares), shares of Sui Northern Gas Pipeline
Limited (18,805,318 shares) and Pakistan Engineering Company (135,242). The cost of these shares amounts to Rs.
4,603 million and market value as at December 31, 2021 amounts to Rs. 7,606 million. These shares can not be sold
without concurrence of privatization commission.

10.15 The investments also include 10,555,000 shares of Pakistan Reinsurance. The cost of these shares amounts to Rs. 220
million and market value as at December 31, 2021 amounts to Rs. 236 million. These shares can not be sold without
concurrence of privatization commission.

10.16 The investment also include 20,000,000 shares of First Credit and Investment Bank. The cost of these shares amounts to
Rs. 157 million. These shares can not be disinvested without prior consultation with Ministry of Finance.

322
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)
10.17 Investments in subsidiaries

Cast-N-Link Products Limited 1,245 1,245

Less: provision for diminution in value of investments (1,245) (1,245)
- -

10.17.1 The financial statements of Cast-N-Link Products Limited (CNL) are not available since the year 1997. Accordingly, the
management of the Group had applied to the Securities and Exchange Commission of Pakistan (SECP) for the
exemption from the requirements of section 228 of the Companies Act, 2017 (the Act) in respect of consolidating its
subsidiary CNL. The SECP, vide its letter EMD/233/627/2002-103 dated November 18, 2019, has not acceded the
Bank's request from the exemption from consolidation of CNL in its consolidated financial statements for the year ended
December 31, 2019 and further directed to comply with the requirement of section 228 of the Act. However the Bank,
based on the fact that investment of the Group in CNL is not material and comprise of 0.000032% of the total assets of
the Bank and the investment have been fully provided for, has not consolidated the financial statements of CNL.

Performing Non Performing Total

11. ADVANCES
2021 2020 2021 2020 2021 2020

Note (Rupees in '000)

Loans, cash credits, running finances, etc. 1,045,532,093 932,517,097 183,456,102 160,534,747 1,228,988,195 1,093,051,844
Islamic financing and related assets 42,316,269 37,546,863 712,762 602,913 43,029,031 38,149,776
Net Investment in finance lease 11.1 47,548 58,239 28,944 28,944 76,492 87,183
Bills discounted and purchased 19,199,730 18,998,127 14,147,881 10,646,008 33,347,611 29,644,135
Advances - gross 11.2 1,107,095,640 989,120,326 198,345,689 171,812,612 1,305,441,329 1,160,932,938

Provision against advances

- Specific - - 179,654,610 154,587,769 179,654,610 154,587,769
- General 12,472,591 22,473,748 - - 12,472,591 22,473,748
11.4 12,472,591 22,473,748 179,654,610 154,587,769 192,127,201 177,061,517
Advances - net of provision 1,094,623,049 966,646,578 18,691,079 17,224,843 1,113,314,128 983,871,421

11.1 Net Investment in Finance Lease 2021 2020

Later than one Later than one
Not later than Not later than
and upto five Over five years Total and upto five Over five years Total
one year one year
years years
(Rupees in '000)

Lease rentals receivable 51,796 64 - 51,860 61,751 556 - 62,307

Residual value 48,804 185 - 48,989 48,804 815 - 49,619
Minimum lease payments 100,600 249 - 100,849 110,555 1,371 - 111,926
Less: Financial charges for future periods 24,356 1 - 24,357 24,710 32 - 24,742
Present value of minimum lease payments 76,244 248 - 76,492 85,845 1,339 - 87,183

The leases executed are for a term of 1 to 5 years. Security deposit is generally obtained upto 10% of the cost of leased
assets at the time of disbursement. The Group requires the lessee to insure the leased assets in favour of the Group.
Additional surcharge is charged on delayed rentals. The average return implicit ranges from 10.19% to 14.85% (2020:
10.19% to 17.30%) per annum.

323
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)

11.2 Particulars of advances (Gross)

In local currency 1,178,144,911 1,071,981,593

In foreign currencies 127,296,418 88,951,345
1,305,441,329 1,160,932,938

11.3 Advances include Rs. 198,346 million (2020: Rs. 171,813 million) which have been placed under non-performing status as
detailed below:

Category of Classification
2021 2020
Non Non
Performing Provision Performing Provision
Domestic Loans Loans
(Rupees in '000)
Other Assets Especially Mentioned 1,950,183 94,550 1,626,950 45,392
Substandard 5,245,094 1,230,458 5,418,693 1,336,002
Doubtful 17,048,217 8,455,999 15,816,861 7,881,223
Loss 127,537,486 124,864,376 106,261,071 103,917,273
151,780,980 134,645,383 129,123,575 113,179,889
Overseas

Not past due but impaired - - - -

Overdue by:
Upto 90 days - - 11,666 9,183
91 to 180 days - - - -
181 to 365 days 286,746 143,373 - -
>365 days 46,277,963 44,865,854 42,677,371 41,398,697
46,564,709 45,009,227 42,689,037 41,407,880
Total 198,345,689 179,654,610 171,812,612 154,587,769

11.4 Particulars of provision against advances

2021 2020
Specific General Total Specific General Total
Note (Rupees in '000)

Opening balance 154,587,769 22,473,748 177,061,517 134,688,966 9,005,951 143,694,917

Exchange adjustments 4,293,544 50,984 4,344,528 1,462,567 15,535 1,478,102
Charge for the year 15,680,535 513,602 16,194,137 19,001,917 13,707,207 32,709,124
Reversals (4,238,039) (952,785) (5,190,824) (3,138,355) (321,795) (3,460,150)
11,442,496 (439,183) 11,003,313 15,863,562 13,385,412 29,248,974
Amounts written off 11.5.1 (171,425) - (171,425) (89,494) - (89,494)
Amounts charged off-
agriculture financing 11.4.1.3 (110,733) - (110,733) (193,807) - (193,807)
Transfer from general
to specific provision 9,612,958 (9,612,958) - - - -
Transfer from other assets - - - 2,855,975 66,850 2,922,825
Closing balance 179,654,610 12,472,591 192,127,201 154,587,769 22,473,748 177,061,517

324
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

11.4.1 Particulars of provision against advances

2021 2020
Specific General Total Specific General Total
(Rupees in '000)

In local currency 134,645,382 12,220,748 146,866,131 113,179,889 22,274,089 135,453,978

In foreign currencies 45,009,228 251,843 45,261,071 41,407,880 199,659 41,607,539
179,654,610 12,472,591 192,127,201 154,587,769 22,473,748 177,061,517

11.4.1.1 General provision includes provision amounting to Rs. 5,618 million (2020: Rs. 5,196 million) against consumer & SME
finance portfolio as required by the Prudential Regulations issued by the SBP. General provision also includes Rs. 252
million (2020: Rs. 200 million) pertaining to overseas advances to meet the requirements of regulatory authorities of the
respective countries in which the Group operates.

The Group has also maintained general provision of Rs. 6,603 million (2020: Rs. 17,078 million) in respect of its
underperforming portfolio on prudent basis.

11.4.1.2 The SBP has allowed specific relaxation to the Bank for non-classification of overdue loans of certain Public Sector
Entities (PSEs) which are guaranteed by Government of Pakistan as non-performing loans up till December 31, 2021. No
provision is required against these loans; however, mark-up is being suspended as required by the Prudential
Regulations.

11.4.1.3 These represent non-performing advances for agriculture finance which have been classified as loss and fully provided
for more than 3 years. These non-performing advances have been charged off by extinguishing them against the
provision held in accordance with Prudential Regulations for Agriculture Financing issued by the SBP. This charge off
does not, in any way, prejudice the Group's right of recovery from these customers.
2021 2020
11.5 Particulars of write-offs Note (Rupees in '000)

11.5.1 Against provisions 11.5.2 171,425 89,494

11.5.2 Write-offs of Rs. 500,000 and above

- Domestic 44,536 40,260

- Overseas 81,364 -
11.6 125,900 40,260
Write-offs of below Rs. 500,000 45,525 49,234
171,425 89,494

11.6 Details of loan write-off of Rs. 500,000/- and above

In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the Statement in respect of
written-off loans or any other financial relief of rupees five hundred thousand or above allowed to a person(s) during the
year ended December 31, 2021 is given in Annexure-I to the consolidated financial statements. (except where such
disclosure is restricted by overseas regulatory authorities).

11.7 Information related to islamic financing and related assets is given in note 2 of Annexure II and is an integral part of
these consolidated financial statements.
2021 2020
Note (Rupees in '000)
12. FIXED ASSETS

Capital work-in-progress 12.1 1,628,810 2,232,001

Property and equipment 12.2 53,204,991 52,854,808
54,833,801 55,086,809

325
 2021 2020
12.1 Capital work-in-progress

326
Civil works 1,335,603 2,040,456
Equipment 10,825 10,825
Advances to suppliers and contractors 58,985 59,000
Software implementation in progress 223,397 121,720
1,628,810 2,232,001
12.2 Property and equipment
2021
Computer Assets held Assets held
Building on Electrical, Assets held Assets held
Leasehold Building on Furniture and under under finance
Freehold land Leasehold office Vehicles under Ijarah - under Ijarah - Total
land Freehold land and fixture peripheral finance lease lease - Office
land equipment Machinery Vehicle
equipment - Vehicles Equipment

At January 1, 2021
Cost / revalued amount 20,370,446 19,673,159 6,499,638 4,381,195 6,793,647 4,587,414 6,320,774 1,316,025 450,232 9,627 96,571 299,418 70,798,146
Accumulated depreciation - - (1,242,781) (911,172) (4,734,748) (4,343,448) (5,220,437) (923,581) (244,651) (2,415) (42,808) (277,297) (17,943,338)
Net book value 20,370,446 19,673,159 5,256,857 3,470,023 2,058,899 243,966 1,100,337 392,444 205,581 7,212 53,763 22,121 52,854,808

Year ended December 2021

Opening net book value 20,370,446 19,673,159 5,256,857 3,470,023 2,058,899 243,966 1,100,337 392,444 205,581 7,212 53,763 22,121 52,854,808
Additions - - 26,900 71,046 545,315 527,110 532,614 865,250 46,007 - - - 2,614,242
For the year ended December 31, 2021

Cost -Adjustments - - - 712,882 42,560 - 841,822 - - - - - 1,597,264

Accmulated Depreciation - Adjustments - - - (132,235) (34,048) - (685,393) - - - - - (851,677)
Movement in surplus on assets revalued - (193,330) - - - - - - - - - - (193,330)
Disposals - - - - (25,841) (24,670) (10,397) (167,874) (41,286) - (988) (6,612) (277,668)
Depreciation charge - - (280,879) (196,061) (643,298) (366,707) (653,369) (338,800) (63,393) (962) (233) (13) (2,543,715)
Depreciation adjustment - disposal - - - - 19,883 19,154 7,848 134,976 23,300 - 988 5,383 211,532
Exchange rate adjustments - - - (18,900) 46,337 26,726 2,726 1,977 - - - - 58,866
Other adjustments / transfers - cost - (14,086) - - (278,791) 67,695 (34) (47) - - 96,511 (278,439) (407,191)
Other adjustments / transfers - depreciation - - 2 12 6 733 786 (157) - - (130,289) 270,768 141,861
Closing net book value 20,370,446 19,465,743 5,002,880 3,906,767 1,731,022 494,006 1,136,939 887,769 170,209 6,250 19,752 13,208 53,204,991

At December 31, 2021

Cost / revalued amount 20,370,446 19,465,743 6,526,538 5,146,223 7,123,227 5,184,275 7,687,505 2,015,331 454,953 9,627 192,094 14,367 74,190,329
Accumulated depreciation - - (1,523,658) (1,239,456) (5,392,205) (4,690,268) (6,550,565) (1,127,562) (284,744) (3,377) (172,342) (1,159) (20,985,337)
Net book value 20,370,446 19,465,743 5,002,880 3,906,767 1,731,022 494,006 1,136,939 887,769 170,209 6,250 19,752 13,208 53,204,991

5% on 5% on 20% on 33.33% on 20%-50% on 20% on 20% on 10% on 25% to 33% 20% on

Rate of depreciation (percentage) Nil Nil
book value book value cost cost cost cost cost cost on cost book value
Notes to and forming part of the Consolidated Financial Statements
 2020
Computer Assets held Assets held
Building on Electrical, Assets held Assets held
Lease hold Building on Furniture and and under finance under finance
Free hold land Lease hold office Vehicles under Ijarah - under Ijarah - Total
land Free hold land fixture peripheral lease - lease - Office
land equipment Machinery Vehicle
equipment Vehicles Equipment
(Rupees in '000)
At January 1, 2020
Cost / revalued amount 20,108,882 19,362,870 6,467,259 4,325,158 5,959,314 4,246,166 5,821,542 1,315,119 390,175 9,628 97,261 301,379 68,404,753
Accumulated depreciation - - (949,326) (738,900) (4,069,050) (4,073,149) (4,588,702) (710,448) (200,334) (1,522) (41,220) (275,523) (15,648,174)
Net book value 20,108,882 19,362,870 5,517,933 3,586,258 1,890,264 173,017 1,232,840 604,671 189,841 8,106 56,041 25,856 52,756,579

Year ended December 2020

Opening net book value 20,108,882 19,362,870 5,517,933 3,586,258 1,890,264 173,017 1,232,840 604,671 189,841 8,106 56,041 25,856 52,756,579
Additions - - 3,622 46,509 862,190 314,363 531,086 196,439 76,083 - - - 2,030,292
Movement in surplus on assets revalued 261,564 310,289 28,757 59,670 - - - - - - - - 660,280
Disposals - - - (1,753) (35,996) (12,072) (9,320) (199,509) (14,928) - (690) (1,961) (276,229)
Depreciation charge - - (293,455) (173,990) (683,657) (278,073) (638,313) (374,030) (51,851) (963) (2,274) (3,727) (2,500,333)
Depreciation adjustment - disposal - - - 1,713 17,337 7,133 5,873 161,764 6,506 - 686 1,953 202,965
Exchange rate adjustments - - - (38,834) (763) 39,551 (21,661) 3,249 - - - - (18,458)
Other adjustments / transfers - cost - - - (9,555) 8,902 (594) (873) 727 (1,098) (1) - - (2,492)
Other adjustments / transfers - depreciation - - - 5 622 641 705 (867) 1,028 70 - - 2,204
Closing net book value 20,370,446 19,673,159 5,256,857 3,470,023 2,058,899 243,966 1,100,337 392,444 205,581 7,212 53,763 22,121 52,854,808

At December 31, 2020

Cost / revalued amount 20,370,446 19,673,159 6,499,638 4,381,195 6,793,647 4,587,414 6,320,774 1,316,025 450,232 9,627 96,571 299,418 70,798,146
For the year ended December 31, 2021

Accumulated depreciation - - (1,242,781) (911,172) (4,734,748) (4,343,448) (5,220,437) (923,581) (244,651) (2,415) (42,808) (277,297) (17,943,338)
Net book value 20,370,446 19,673,159 5,256,857 3,470,023 2,058,899 243,966 1,100,337 392,444 205,581 7,212 53,763 22,121 52,854,808

5% on book 5% on book 20% on 33.33% on 20% to 50% 20% on 20% on 10% on 25% to 33% 20% on
Rate of depreciation (percentage) Nil Nil
value value cost cost on cost cost cost cost on cost book value

12.2.1 Revaluation of Properties

Desktop revaluation of the Group's properties was last carried out in a phase manner in 2019 and 2020. The revaluation was carried out by an independent
professional valuer, RBS Associates Private Limited (PBA registered valuer) on the basis of professional assessment of present market values. The total surplus
against revaluation of fixed assets as at December 31, 2021, amounts to Rs. 44,320 million. Had there been no revaluation, the carrying amount of the revalued
assets at December 31, 2021, would have been follows :
(Rupees in '000)

Freehold land 1,132,637

Leasehold land 890,025
Building on freehold land 820,613
Building on leasehold land 1,575,994
4,419,269

12.2.2 Carrying amount of temporarily idle property of the Group 4,795,454

12.2.3 The cost of fully depreciated assets still in use

Furniture and fixtures 280,030

Computer and peripheral equipment 1,067,019
Electrical and office equipment 662,467
Vehicles 1,093,896

327
Notes to and forming part of the Consolidated Financial Statements

3,103,412
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

12.3 Details of disposals of fixed assets to related parties

The particulars of disposal of fixed assets to related parties are given below:

Gain /
Particulars of property and Original Book Sale Particulars of
(loss) on Mode of disposal Buyers name
equipment cost Value Proceed purchaser
disposal
----------------------(Rupees in '000)-------------------

Vehicles 1,858 186 186 - As per Entitlement Ex-Employee Dr. Qadir Baksh
Vehicles 1,673 335 335 - As per Entitlement Employee Muhammad Zaheer Abbas
Vehicles 1,673 335 335 - As per Entitlement Employee Syed Khurram Hussain
Vehicles 1,893 379 379 - As per Entitlement Employee Syed Muhammad Ali Zamin
Vehicles 1,673 335 335 - As per Entitlement Ex-Employee Syed Shakeel Raza Abidi
Vehicles 1,673 335 335 - As per Entitlement Employee Wasimullah
Vehicles 5,257 964 1,051 87 As per Entitlement Employee Abdul Wahid Sethi
Vehicles 1,858 - 186 186 As per Entitlement Employee Sardar Azmat Babar Chohan
Vehicles 1,673 307 335 28 As per Entitlement Employee Umeed Ayaz Mahmood
Vehicles 1,858 186 186 - As per Entitlement Ex-Employee Tariq Latif Ansari
Vehicles 1,673 335 335 - As per Entitlement Employee Hammad Sarwar
Vehicles 1,673 307 335 28 As per Entitlement Employee Nazneen Zaka
Vehicles 1,673 307 335 28 As per Entitlement Employee Inaam Mallick
Vehicles 1,673 307 335 28 As per Entitlement Ex-Employee Sohail Ahmed
Vehicles 1,824 791 791 - As per Entitlement Ex-Employee Riffat Sultana Mughal
Vehicles 1,824 851 851 - As per Entitlement Employee Safdar Ali
Vehicles 5,106 - 511 511 As per Entitlement Ex-Employee Sultana Naheed
Vehicles 2,380 1,864 1,864 - As per Entitlement Ex-Employee Aziz Ur Rehman
Vehicles 1,664 333 333 - As per Entitlement Employee Rehman Nazir
Vehicles 1,664 333 333 - As per Entitlement Ex-Employee Haseeb Arshad
Vehicles 1,664 333 333 - As per Entitlement Employee Muhammad Faud Mohsin
Vehicles 1,664 305 333 28 As per Entitlement Employee Kaleemullah Shaikh
Vehicles 1,664 333 333 - As per Entitlement Employee Mujahid Abbas Khan
Vehicles 2,875 2,252 2,252 - As per Entitlement Ex-Employee Muhammad Atlas
Vehicles 1,664 388 388 - As per Entitlement Ex-Employee Nadir Khan
Vehicles 2,380 1,745 1,745 - As per Entitlement Ex-Employee Ahmed Sohail Warrich
Vehicles 1,664 361 361 - As per Entitlement Ex-Employee Abdul Hamid Asim
Vehicles 2,380 1,666 1,666 - As per Entitlement Ex-Employee Tahir Shahbaz Anjum
Vehicles 5,857 2,050 2,050 - As per Entitlement Ex-Employee Usman Shahid
Vehicles 2,875 2,156 2,156 - As per Entitlement Ex-Employee S H Irtiza Kazmi
Vehicles 1,864 404 404 - As per Entitlement Ex-Employee Muhammad Farooq
Vehicles 1,899 855 855 - As per Entitlement Ex-Employee Kazi Imtiaz Ahmed
Vehicles 1,864 342 342 - As per Entitlement Ex-Employee Khurram Saeed Naik
Vehicles 1,673 - 167 167 As per Entitlement Employee Shahla Ghulam Hussain
Vehicles 1,658 - 166 166 As per Entitlement Ex-Employee Saleem Ahmed
Vehicles 1,664 333 333 - As per Entitlement Employee Imtiaz Ahmed
Vehicles 1,664 333 333 - As per Entitlement Employee Manzoor Ahmed
Vehicles 1,734 347 347 - As per Entitlement Employee Dilbur Hussain Khan
Vehicles 1,664 333 333 - As per Entitlement Ex-Employee Syed Akhtar Ali Shah
Vehicles 1,664 333 333 - As per Entitlement Employee Aamer Manzoor
Vehicles 1,864 373 373 - As per Entitlement Employee Tahir Abbas
Vehicles 5,257 1,051 1,051 - As per Entitlement Employee Rehmat Ali Hasnie
Vehicles 1,664 333 333 - As per Entitlement Employee Syed Azhar Ali
Vehicles 1,664 333 333 - As per Entitlement Employee Sumaira Mazhar
Vehicles 1,764 353 353 - As per Entitlement Employee Muhammad Younas
Vehicles 1,664 333 333 - As per Entitlement Employee Javed Ashraf
Vehicles 1,708 342 342 - As per Entitlement Employee Shakeel Hayat Mir
Vehicles 1,673 251 335 84 As per Entitlement Employee Kashif Khan
Vehicles 1,824 699 699 - As per Entitlement Ex-Employee Mukhtar Ahmed
Vehicles 1,873 312 375 63 As per Entitlement Ex-Employee Adnan Adil

105,223 28,029 29,433 1,404

328
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

Gain /
Particulars of property and Original Book Sale Particulars of
(loss) on Mode of disposal Buyers name
equipment cost Value Proceed purchaser
disposal
----------------------(Rupees in '000)-------------------

Computer and peripheral equipment 99 - 10 10 As per Entitlement Employee Farhan Javaid Durrani
Computer and peripheral equipment 99 - 10 10 As per Entitlement Employee Nabeel Aslam
Computer and peripheral equipment 99 - 10 10 As per Entitlement Ex-Employee Sajjad Ahmed Rana
Computer and peripheral equipment 64 - 6 6 As per Entitlement Employee Muhammad Nasim
Computer and peripheral equipment 114 - 11 11 As per Entitlement Ex-Employee Abdul Qadir
Computer and peripheral equipment 114 - 11 11 As per Entitlement Ex-Employee Abdul Qadir
Computer and peripheral equipment 106 - 11 11 As per Entitlement Ex-Employee Abdul Qadir
Computer and peripheral equipment 106 - 11 11 As per Entitlement Ex-Employee Riffat Sultana Mughal
Computer and peripheral equipment 64 - 6 6 As per Entitlement Employee Waqar Ahmed
Computer and peripheral equipment 106 - 11 11 As per Entitlement Employee Fouad Farrukh
Computer and peripheral equipment 204 - 20 20 As per Entitlement Ex-Employee Usman Shahid
Computer and peripheral equipment 93 - 9 9 As per Entitlement Ex-Employee S H Irtiza Kazmi
Computer and peripheral equipment 99 - 10 10 As per Entitlement Employee Hisham Jan Kiani
Computer and peripheral equipment 99 - 10 10 As per Entitlement Employee Rashid Ata
Computer and peripheral equipment 123 - 12 12 As per Entitlement Employee Iqbal Ali
Computer and peripheral equipment 99 - 10 10 As per Entitlement Employee Abdul Rehman Shaikh
Computer and peripheral equipment 64 - 6 6 As per Entitlement Employee Nadia Ahmer
Computer and peripheral equipment 110 - 11 11 As per Entitlement Employee Moin Uddin Khan
Computer and peripheral equipment 135 - 14 13 As per Entitlement Employee Qaiser Alam
Computer and peripheral equipment 100 - 10 10 As per Entitlement Employee Aqib Malik
Computer and peripheral equipment 105 - 11 10 As per Entitlement Employee Muhammad Adil Usmani

2,202 - 220 220

Electrical, office equipment 50 - - - As per Entitlement Ex-Employee Abdul Qadir

Electrical, office equipment 148 - - - As per Entitlement Ex-Employee S H Irtiza Kazmi
Electrical, office equipment 115 - - - As per Entitlement Ex-Employee S H Irtiza Kazmi
Electrical, office equipment 114 - - - As per Entitlement Ex-Employee Dr. Qadir Baksh
Electrical, office equipment 71 - - - As per Entitlement Ex-Employee Dr. Qadir Baksh
Electrical, office equipment 115 - - - As per Entitlement Ex-Employee Dr. Qadir Baksh
Electrical, office equipment 167 - - - As per Entitlement Ex-Employee Usman Shahid
Electrical, office equipment 161 - - - As per Entitlement Ex-Employee Usman Shahid
Electrical, office equipment 34 - - - As per Entitlement Ex-Employee Adnan Adil
Electrical, office equipment 50 - - - As per Entitlement Ex-Employee Syed Shakeel Raza Abidi
Electrical, office equipment 35 9 9 - As per Entitlement Ex-Employee Muhammad Anwar
Electrical, office equipment 50 29 29 - As per Entitlement Ex-Employee Tahir Shahbaz Anjum
Electrical, office equipment 115 48 48 - As per Entitlement Ex-Employee Muhammad Farooq

1,225 86 86 -

Furniture and fixture 160 51 51 - As per Entitlement Ex-Employee Muhammad Hanif

Furniture and fixture 200 - - - As per Entitlement Ex-Employee Aziz Ur Rehman
Furniture and fixture 190 15 15 - As per Entitlement Ex-Employee Ejaz Muneer
Furniture and fixture 200 16 16 - As per Entitlement Ex-Employee Abdul Hamid Asim
Furniture and fixture 200 12 12 - As per Entitlement Ex-Employee Ghulam Hyder Channa
Furniture and fixture 160 11 11 - As per Entitlement Ex-Employee Muhammad Ismail
Furniture and fixture 200 41 41 - As per Entitlement Ex-Employee Ahmed Sohail Warrich
Furniture and fixture 190 62 62 - As per Entitlement Ex-Employee Waseem Zehra
Furniture and fixture 160 6 6 - As per Entitlement Ex-Employee Ghulam Nabi Bhatti
Furniture and fixture 200 72 72 - As per Entitlement Ex-Employee Tahir Shahbaz Anjum
Furniture and fixture 160 39 39 - As per Entitlement Ex-Employee Sees Raj
Furniture and fixture 190 62 62 - As per Entitlement Ex-Employee Muhammad Usman
Furniture and fixture 200 46 46 - As per Entitlement Ex-Employee Muhammad Yousuf
Furniture and fixture 200 82 82 - As per Entitlement Ex-Employee Manzur Ahmed

329
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

Gain /
Particulars of property and Original Book Sale Particulars of
(loss) on Mode of disposal Buyers name
equipment cost Value Proceed purchaser
disposal
----------------------(Rupees in '000)-------------------

Furniture and fixture 160 36 36 - As per Entitlement Ex-Employee Laiquat Ali Shaikh
Furniture and fixture 200 51 51 - As per Entitlement Ex-Employee Muhammad Shahbaz
Furniture and fixture 200 62 62 - As per Entitlement Ex-Employee Safdar Ali
Furniture and fixture 190 45 45 - As per Entitlement Ex-Employee Qaiser Sattar
Furniture and fixture 190 38 38 - As per Entitlement Ex-Employee Muhammad Sarwar
Furniture and fixture 190 71 71 - As per Entitlement Ex-Employee Gulzar Ahmed
Furniture and fixture 190 63 63 - As per Entitlement Ex-Employee Asif Mehmood Khan
Furniture and fixture 190 57 57 - As per Entitlement Ex-Employee Muhammad Razzaq
Furniture and fixture 190 18 18 - As per Entitlement Ex-Employee Huma Naz
Furniture and fixture 500 23 23 - As per Entitlement Ex-Employee Sultana Naheed
Furniture and fixture 190 59 59 - As per Entitlement Ex-Employee Samina Zia
Furniture and fixture 160 51 51 - As per Entitlement Ex-Employee Muhmmad Anwar Khan
Furniture and fixture 190 7 7 - As per Entitlement Ex-Employee Shahzad Ahmed
Furniture and fixture 160 18 18 - As per Entitlement Ex-Employee Irshad Ghani
Furniture and fixture 190 6 6 - As per Entitlement Ex-Employee Shahid Hussain
Furniture and fixture 190 - - - As per Entitlement Ex-Employee Manzoor Sultan
Furniture and fixture 300 101 101 - As per Entitlement Ex-Employee Muhammad Atlas
Furniture and fixture 160 64 64 - As per Entitlement Ex-Employee Muhammad Qasim
Furniture and fixture 160 45 45 - As per Entitlement Ex-Employee Muhammad Hussain Zar
Furniture and fixture 160 63 63 - As per Entitlement Ex-Employee Pervez Ahmed
Furniture and fixture 160 29 29 - As per Entitlement Ex-Employee Nayab Ahmed
Furniture and fixture 160 26 26 - As per Entitlement Ex-Employee Abduil Rasheed
Furniture and fixture 190 12 12 - As per Entitlement Ex-Employee Saleem Abbas Bangash
Furniture and fixture 160 39 39 - As per Entitlement Ex-Employee Jawaid Akhtar
Furniture and fixture 300 98 98 - As per Entitlement Ex-Employee Muhammad Farooq
Furniture and fixture 200 23 23 - As per Entitlement Ex-Employee Mr.muhammad Zulfiqar Ali
Furniture and fixture 200 26 26 - As per Entitlement Ex-Employee Mukhtar Ahmed
Furniture and fixture 160 39 39 - As per Entitlement Ex-Employee Ghulam Abbas Sangi
Furniture and fixture 160 40 40 - As per Entitlement Ex-Employee Muhammad Idrees
Furniture and fixture 160 70 70 - As per Entitlement Ex-Employee Abdul Ghafoor
Furniture and fixture 160 26 26 - As per Entitlement Ex-Employee Muhammad Akhtar Malik
Furniture and fixture 190 10 10 - As per Entitlement Ex-Employee Samina Parveen
Furniture and fixture 200 - - - As per Entitlement Ex-Employee Haseeb Arshad
Furniture and fixture 200 28 28 - As per Entitlement Ex-Employee Kazi Imtiaz Ahmed
Furniture and fixture 190 70 70 - As per Entitlement Ex-Employee Muhammad Anwar
Furniture and fixture 300 10 10 - As per Entitlement Ex-Employee Khurram Saeed Naik
Furniture and fixture 160 55 55 - As per Entitlement Ex-Employee Bashir Ahmed Qazi
Furniture and fixture 160 37 37 - As per Entitlement Ex-Employee Muhammad Bashir
Furniture and fixture 160 26 26 - As per Entitlement Ex-Employee Niaz Hussain
Furniture and fixture 200 85 85 - As per Entitlement Ex-Employee Hananeel Azhar Joseph

10,440 2,132 2,132 -

119,090 30,247 31,871 1,624

330
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021
Core Goodwill on
Computer
13. INTANGIBLE ASSETS Banking Website NBP Fund Others Total
software
Application Acquisition
(Rupees in '000)
At January 1, 2021
Cost 2,913,953 1,499,470 1,041 655,146 4,774 5,074,384
Accumulated amortisation and impairment (2,913,953) (1,041,912) (1,041) (92,593) (2,742) (4,052,241)
Net book value - 457,558 - 562,553 2,032 1,022,143

Year ended December 2021

Opening net book value - 457,558 - 562,553 2,032 1,022,143
Additions:
- developed internally - 39,043 - - - 39,043
- through acquisitions / purchased - 305,012 - - - 305,012
Adjustments - addition - 223,556 - - - 223,556
Disposals - (69,040) - - - (69,040)
Amortisation charge - (428,807) - - - (428,807)
Amortisation adjustment - disposal - 68,406 - - - 68,406
Other adjustments - cost - (127,418) - - (4,774) (132,192)
Other adjustments - amortisation - 140,583 - - 2,742 143,325
Closing net book value - 608,893 - 562,553 - 1,171,446

At December 31, 2021

Cost 2,913,953 1,870,623 1,041 655,146 - 5,440,763
Accumulated amortisation and impairment (2,913,953) (1,261,730) (1,041) (92,593) - (4,269,317)
Net book value - 608,893 - 562,553 - 1,171,446
Rate of amortisation (percentage) 33.33 % on 33.33 % on 33.33 % on
cost cost cost Nil Nil

Useful life 3 years 3 years 3 years

2020
Core Goodwill on
Computer
Banking Website NBP Fund Others Total
software
Application Acquisition
(Rupees in '000)
At January 1, 2020
Cost 2,913,953 1,310,345 1,041 655,146 4,774 4,885,259
Accumulated amortisation and impairment (2,913,953) (804,164) (1,041) (92,593) (2,742) (3,814,493)
Net book value - 506,181 - 562,553 2,032 1,070,766

Year ended December 2020

Opening net book value - 506,181 - 562,553 2,032 1,070,766
Additions:
- developed internally - 146,646 - - - 146,646
- directly purchased - 1,576 - - - 1,576
Adjustments - addition - 45,756 - - - 45,756
Disposals - - - - - -
Amortisation charge - (238,932) - - - (238,932)
Other adjustments - cost - (4,853) - - - (4,853)
Other adjustments - amortization - 1,184 - - - 1,184
Closing net book value - 457,558 - 562,553 2,032 1,022,143

At December 31, 2020

Cost 2,913,953 1,499,470 1,041 655,146 4,774 5,074,384
Accumulated amortisation and impairment (2,913,953) (1,041,912) (1,041) (92,593) (2,742) (4,052,241)
Net book value - 457,558 - 562,553 2,032 1,022,143

33.33 % on 33.33 % on 33.33 % on

Rate of amortisation (percentage) Nil Nil
cost cost cost

Useful life 3 years 3 years 3 years

331
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

13.1 For the purpose of impairment testing of goodwill, management has considered discounted cash flow method using cost
of equity of 16.3% and terminal growth of 4.0% considering five years cash flows. Further, discount for lack of
marketability is also considered at the rate of 20%. Other key assumption used in the method are management fees,
growth rates on asset under management keeping in view of industry growth, expenses based on the historic growth
trends, short term investment with the assumption of reinvestment and discount rate which is based on risk free rate,
sector beta and market equity risk premium.

For the past 5 years, the company has provided sustainable profitability. As a result, the recoverable amount exceeds the
carrying value as at December 31, 2021, therefore, management did not identify any impairment.

13.2 The cost of fully amortised intangible assets that are still in use.
(Rupees in '000)
Core Banking Application 2,913,952
Computer software 430,570
Website 1,041
3,345,563

14. RIGHT OF USE ASSETS 2021 2020

(Rupees in '000)
Balance as at January 01, 7,017,020 7,447,414
Additions during the period 2,201,551 1,622,504
Derecognition during the period (37,767) -
Depreciation charged for the period (2,089,824) (2,052,898)
Balance as at December 31, 7,090,980 7,017,020

2021
Recognised in
15. DEFERRED TAX Recognised in
At January 1, other At December
profit and loss
2021 comprehensive 31, 2021
account
income
(Rupees in '000)

Deductible Temporary Differences on

- Tax losses carried forward 10,705 - - 10,705

- Post retirement employee benefits 4,188,201 13,272 871,295 5,072,768
- Provision for diminution in the value of investments 236,751 - - 236,751
- Provision against loans and advances 9,084,601 1,373,337 - 10,457,938
- Provision against off-balance sheet obligations 115,222 - - 115,222
- Fixed assets 1,025,894 53,911 - 1,079,805
- Other provisions 105,416 2,425 - 107,841
- Right of use assets - 502,538 - 502,538
- Others 3,058 (3,058) - -
14,769,848 1,942,425 871,295 17,583,568

Taxable Temporary Differences on

- Surplus on revaluation of fixed assets (2,298,739) 123,756 (271,341) (2,446,324)

- Excess of accounting book value of leased assets
over lease liabilities (12,680) 11,581 1,895 796
- Surplus on revaluation of investments (15,346,840) (82) 2,631,421 (12,715,501)
- Surplus on revaluation of non-banking assets (44,713) - (8,019) (52,732)
- Exchange translation reserve - - (466,996) (466,996)
(17,702,972) 135,255 1,886,960 (15,680,757)
(2,933,124) 2,077,680 2,758,255 1,902,811

332
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2020
Recognized in
Recognised in
At January 1, other At December
profit and loss
2020 comprehensive 31, 2020
account
income
Deductible Temporary Differences on (Rupees in '000)

- Tax losses carried forward 10,705 - - 10,705

- Post retirement employee benefits 3,905,148 14,914 268,139 4,188,201
- Provision for diminution in the value of investments 236,751 - - 236,751
- Provision against loans and advances 2,625,495 6,459,106 - 9,084,601
- Provision against off-balance sheet obligations 115,222 - - 115,222
- Fixed assets 690,114 335,780 - 1,025,894
- Other provision 105,416 - - 105,416
- Others 3,827 (329) (441) 3,058
7,692,678 6,809,471 267,698 14,769,848
Taxable Temporary Differences on

- Surplus on revaluation of fixed assets (2,385,521) 116,559 (29,777) (2,298,739)

- Excess of accounting book value of leased assets over lease liabilities (3,720) (6,682) (2,278) (12,680)
- Surplus on revaluation of investments (13,816,519) - (1,530,321) (15,346,840)
- Surplus on revaluation of non-banking assets (41,439) - (3,274) (44,713)
- Others (2,314,832) 2,314,832 - -
(18,562,031) 2,424,709 (1,565,650) (17,702,972)
(10,869,353) 9,234,180 (1,297,952) (2,933,124)

2021 2020
16. OTHER ASSETS Note (Rupees in '000)
Income / return / mark-up accrued in local currency - net of provision 41,787,103 39,649,974
Income / return / mark-up accrued in foreign currency - net of provision 2,842,699 2,353,317
Advances, deposits and other prepayments 16.1 4,047,973 3,069,977
Advance taxation (payments less provisions) and Income tax refunds receivable 16.6 12,983,211 27,392,273
Compensation for delayed tax refunds 19,221,431 17,556,551
Non-banking assets acquired in satisfaction of claims 16.4 1,195,660 1,211,122
Assets acquired from Corporate and Industrial Restructuring Corporation (CIRC) 208,423 208,423
Unrealized gain on forward foreign exchange contracts 3,058,205 -
Commission receivable on Government treasury transactions 5,006,019 4,612,174
Stationery and stamps on hand 470,402 499,511
Barter trade balances 195,399 195,399
Receivable on account of Government transactions 16.2 323,172 323,172
Receivable from Government under VHS scheme 16.3 418,834 418,834
Receivable against sale / purchase of shares 435,422 128,290
Receivable from Pakistan Stock Exchange 159,949 128,743
Receivable from mutual funds 896,162 892,552
Acceptances 10,311,259 15,741,754
Others 7,718,051 6,760,465
111,279,374 121,142,531
Less: Provision held against other assets 16.5 11,709,318 11,882,119

Other assets (net of provision) 99,570,056 109,260,412

Surplus on revaluation of non-banking assets acquired in

satisfaction of claims 2,863,886 2,757,207
Other assets - total 102,433,942 112,017,619

333
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

16.1 This includes Rs. 2,800 million (2020: Rs. 800 million) advance against Pre-IPO placement of Term Finance Certificates.

16.2 This represents amount receivable from GoP on account of encashment of various instruments handled by the Group for
GoP as an agent of the SBP. Due to uncertainty about its recoverability, full amount has been provided for.

16.3 This represents payments made under the Voluntary Handshake Scheme (VHS), recoverable from GoP. Due to uncertainty
about its recoverability, full amount has been provided for.
2021 2020
(Rupees in '000)

16.4 Market value of Non-banking assets acquired in satisfaction of claims 4,059,546 3,968,329

An independent valuation of the Bank’s non-banking assets was performed by an independent professional valuer to
determine the fair value of the assets as at December 31, 2021. The valuation was carried out by Imtech (Private) Limited,
registered at SBP panel of valuers on the basis of an assessment of present market values.

2021 2020
(Rupees in '000)
16.4.1 Non-banking assets acquired in satisfaction of claims

Opening balance 3,968,329 3,762,068

Revaluation 106,679 217,404
Depreciation (15,462) (15,784)
Adjustment - 4,641
Closing Balance 4,059,546 3,968,329

16.5 Provision held against other assets

Income / mark-up accrued in local currency 152,607 152,607

Advances, deposits, advance rent and other prepayments 837,949 837,949
Stationery and stamps on hand 96,542 96,542
Barter trade balances 195,399 195,399
Receivable on account of Government transactions 323,172 323,172
Receivable from Government under VHS scheme 418,834 418,834
Protested bills 4,164,485 4,092,280
Ex-MBL / NDFC 770,398 770,398
Assets acquired from Corporate and Industrial Restructuring Corporation asset (CIRC) 208,423 208,423
Others 4,541,509 4,786,515
11,709,318 11,882,119

16.5.1 Movement in provision held against other assets

Opening balance 11,882,119 10,853,588

Charge for the year 70,781 1,511,502
Transfer in / (out) - (484,393)
Adjustment against provision (243,582) 1,422
Closing balance 11,709,318 11,882,119

16.6 During the year, the Group has adjusted an amount of Rs. 11,322 million (2020: Rs. 20,950 million) its advance tax liability
and demand of previous tax year against income tax refunds receivables.

334
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)

17. BILLS PAYABLE

In Pakistan 21,775,348 16,718,064

Outside Pakistan 72,922 77,122
21,848,270 16,795,186

18. BORROWINGS

Secured

Borrowings from State Bank of Pakistan

Under Export Refinance Scheme 18.2 5,057,300 2,451,874
Under Export Refinance Scheme (New Scheme) 18.2 29,193,202 28,686,149
Financing Scheme for Renewable Energy 18.3 740,493 481,261
Refinance Facility for Modernization of SMEs 18.4 130,288 177,976
Financing Facility for storage of Agriculture Produce (FFSAP) 18.5 526,479 256,184
Under Long Term Financing Facility (LTFF) 18.6 19,465,068 16,380,117
Refinance Scheme for Payment of Wages and Salaries 18.7 566,315 1,167,527
Temporary Economic Refinance Facility 18.8 12,122,947 537,912
Refinance Facility for Combating Covid-19 18.9 79,976 61,448
67,882,068 50,200,448

Repurchase agreement borrowings 18.10 126,810,340 5,266,007

Bai Muajjal 72,195,209 79,788,522

Total secured 266,887,617 135,254,977

Unsecured

Call borrowings 18.10 46,011,009 2,047,588

Overdrawn nostro accounts 26,480 1,236,440
Total unsecured 46,037,489 3,284,028

312,925,106 138,539,005

18.1 Particulars of borrowings with respect to currencies

In local currency 275,739,772 136,491,430

In foreign currencies 37,185,334 2,047,575
312,925,106 138,539,005

335
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

18.2 The Bank has entered into an agreement with the SBP for extending export finance to customers. As per the terms of the
agreement, the Bank has granted the SBP the right to recover the outstanding amounts from the Bank at the date of
maturity of the finances by directly debiting the Bank's current account maintained with the SBP. These borrowings are
repayable within 180 days. These carry mark-up at rates ranging from 1.00% to 2.00% (2020: 3.00%) per annum.

18.3 These borrowings have been obtained from the SBP for providing financing facilities to address challenges of energy
shortage and climate change through promotion of renewable energy. These borrowings shall be repayable for a maximum
period of twelve (12) years. These carry mark-up at rates ranging from 2.00% to 3.00% per annum.

18.4 These borrowings have been obtained from the SBP under a scheme to finance modernization of Small and Medium
Enterprises by providing financing facilities for setting up of new units, purchase of new plant and machinery for Balancing,
Modernization and Replacement (BMR) of existing units and financing for import / local purchase of new generators upto a
maximum capacity of 500 KVA. These borrowings shall be repayable for a maximum period of ten years and carry mark-up
at rates upto 6.00% (2020: 6.00%) per annum.

18.5 These borrowings have been obtained from the SBP for providing financing facilities to develop the agricultural produce
marketing and enhance storage capacity, to encourage Private Sector to establish Silos, Warehouses and Cold Storages.
These borrowings shall be repayable for a maximum period of ten years. These carry mark-up at rates ranging from 2.5%
to 3.5% per annum.

18.6 These borrowings have been obtained from the SBP for providing financing facilities to exporters for adoption of new
technologies and modernization of their plant and machinery. These borrowings shall be repayable for a maximum period
of ten years. These carry mark-up at rates ranging from 1.5% to 3% per annum.

18.7 These borrowings have been obtained from the SBP with a view to support businesses to continue payment of wages and
salaries to their workers and employees in the aftermath corona virus (COVID-19) outbreak. These borrowings are
repayable for a maximum period of 2.5 years. These carry mark-up at rates ranging from 1.00% to 2.00% (2020: 1.00% to
2.00%) per annum.

18.8 These borrowings have been obtained from the SBP under a scheme to provide concessionary refinance for setting up
new industrial units in the backdrop of challenges faced by the industries during the pandemic. These borrowings are
repayable for a maximum period of 10 years. These carry mark-up at rates ranging at 3.00% (2020: 3.00%) per annum.

18.9 These borrowings have been obtained from the SBP with a view to provide long term local currency finance for imported
and locally manufactured medical equipment to be used for combating COVID – 19. The facility will be available to all the
Hospitals and Medical Centres duly registered with respective provincial / federal agencies / commissions and engaged in
controlling & eradication of COVID – 19. These borrowings are repayable for a maximum period of 5 years. These carry
mark-up at rates at 0.00% (2020: 0.00%) per annum.

18.10 Mark-up / interest rates and other terms are as follows:

- Repurchase agreement borrowings carry mark-up ranging from 9.7% to 10.21% per annum (2020: 7% to 7.05%
per annum) having maturity on Jan 4, 2022 to Feb 18, 2022.

- Call borrowings carry interest ranging from 0.63% to 4.15% per annum (2020: 0% to 2% per annum).

18.11 Borrowings from the SBP under export oriented projects refinance schemes of the SBP are secured by the Bank's cash
and security balances held by the SBP.

18.12 Pakistan Investment Bond and Market Treasury Bill having maturity of 5 years and 6 months respectively, are pledged as
security under borrowing having carrying amount of Rs. 126,810 million (2020: Rs. 5,266 million).

336
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

19. DEPOSITS AND OTHER ACCOUNTS

2021 2020
In Local In Foreign In Local In Foreign
Total Total
Currency currencies Currency currencies
(Rupees in '000)
Customers
Current deposits - remunerative 648,854,267 - 648,854,267 405,738,851 - 405,738,851
Current deposits - non-
remunerative 476,510,388 145,931,064 622,441,452 433,284,063 116,597,781 549,881,844
Savings deposits 675,591,525 79,434,496 755,026,021 637,694,450 66,235,665 703,930,115
Term deposits 400,905,240 70,853,064 471,758,304 276,454,916 81,153,488 357,608,404
Others - 6,463 6,463 4,683,735 316,040 4,999,775
2,201,861,420 296,225,087 2,498,086,507 1,757,856,015 264,302,974 2,022,158,989
Financial Institutions
Current deposits 444,904,430 1,169,235 446,073,665 360,373,331 654,758 361,028,089
Savings deposits 7,075,299 3,842,651 10,917,950 4,253,051 3,246,855 7,499,906
Term deposits 21,470,450 5,760,597 27,231,047 12,392,089 8,739,494 21,131,583
Others 35,838,540 - 35,838,540 7,109,902 - 7,109,902
509,288,719 10,772,483 520,061,202 384,128,373 12,641,107 396,769,480
2,711,150,139 306,997,570 3,018,147,709 2,141,984,388 276,944,081 2,418,928,469

2021 2020
(Rupees in '000)

19.1 Composition of deposits

Individuals 1,032,316,946 847,730,521

Government (Federal and Provincial) 931,199,067 674,985,259
Public Sector Entities 279,984,059 257,336,852
Banking Companies 460,090,410 368,302,117
Non-Banking Financial Institutions 59,970,790 29,051,796
Private Sector 254,586,435 241,521,924
3,018,147,709 2,418,928,469

19.2 Foreign currencies deposits include deposit of foreign branches amounting to Rs. 75,485 million (2020: Rs. 73,145 million).

19.3 This includes deposits eligible to be covered under insurance arrangements amounting to Rs. 1,132,236 million (2020: Rs.
981,942 million) including islamic branches.

20. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE

2021 2020
Minimum Financial Principal Minimum Financial Principal
lease charges for outstanding lease charges for outstanding
payments future periods payments future periods
(Rupees in '000)

Not later than one year 83,418 5,302 78,116 83,677 10,197 73,480
Later than one year and upto five years 57,804 2,322 55,482 129,092 5,348 123,744
Over five years - - - - - -
141,222 7,624 133,598 212,769 15,545 197,224

337
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

The Group has entered into lease agreements with various financial institutions for lease of vehicles. Lease rentals are
payable in monthly installments. Financial charges included in lease rentals are determined on the basis of discount
factors applied at the rate of 6M KIBOR + 1.5% per annum (2020: 6M KIBOR + 1.75% per annum). At the end of lease
term, the Group has option to acquire the assets, subject to adjustment of security deposits.

2021 2020
21. LEASE LIABILITIES AGAINST RIGHT-OF-USE ASSETS Note (Rupees in '000)

Lease liabilities included in the statement of financial position

As at December 31 8,360,755 7,869,355

Of which are:
Current lease liability 1,646,939 1,517,181
Non-current lease liability 6,713,816 6,352,174
8,360,755 7,869,355

Maturity analysis - contractual undiscounted cashflows

Less than one year 2,379,333 2,473,379
One to five years 6,387,263 6,130,245
More than five years 6,504,031 5,843,702
Total undiscounted lease liabilities as at December 31, 15,270,627 14,447,326

22. OTHER LIABILITIES

Mark-up / Return / Interest payable in local currency 48,801,768 37,808,884

Mark-up / Return / Interest payable in foreign currency 384,638 844,452
Unearned commission and income on bills discounted 440,231 1,593,730
Accrued expenses 21,168,039 18,315,863
Advance payments 387,576 398,682
Acceptances 10,311,259 15,741,754
Unclaimed dividends 181,997 185,516
Unrealised loss on forward foreign exchange contracts - 2,918,017
Unrealised loss on put option 306,339 306,339
Branch adjustment account 1,342,640 917,487
Employee benefits:
Pension fund 40.4 17,834,945 15,704,077
Post retirement medical benefits 40.4 24,516,717 22,282,747
Benevolent scheme 40.4 1,778,825 2,054,218
Gratuity scheme 40.4 3,467,939 2,956,827
Compensated absences 40.4 9,952,554 9,251,755
Staff welfare fund 371,257 371,257
Liabilities relating to barter trade agreements 3,006,122 2,142,033
Provision against off-balance sheet obligations 627,494 627,494
Provision against contingencies 22.1 3,805,376 4,180,071
Payable to brokers 155,001 65,137
Payable to customers 781,522 301,585
PIBs shortselling 34,144,415 3,237,676
Others 16,829,474 15,339,746
200,596,128 157,545,347

338
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)

22.1 Provision against contingencies

Opening balance 4,180,071 4,629,645

Charge during the year 253,239 381,090
Transfer out - (830,664)
Adjustment (627,934) -
Closing balance 22.1.1 3,805,376 4,180,071

22.1.1 This represents provision made on account of regulatory violations and reported instances of financial improprieties for
which investigations are in progress.

23. SHARE CAPITAL

23.1 Authorized Capital

2021 2020 2021 2020

--------- (Number of shares) ---------- (Rupees in '000)

2,500,000,000 2,500,000,000 Ordinary shares of Rs. 10 each 25,000,000 25,000,000

23.2 Issued, subscribed and paid up

2021 2020 2021 2020

--------- (Number of shares) ---------- (Rupees in '000)
140,388,000 140,388,000 Fully paid in cash 1,403,880 1,403,880
1,987,125,026 1,987,125,026 Issued as bonus shares 19,871,251 19,871,251
2,127,513,026 2,127,513,026 21,275,131 21,275,131

The Federal Government and the SBP hold 75.60% (2020: 75.60%) shares of the Bank.

23.3 Shares of the Bank held by subsidiary and associate 2021 2020
--------- (Number of shares) ----------
Following shares were held by the associate of the Bank as of year end:

First Credit & Investment Bank Limited 70,000 70,000

70,000 70,000

24. RESERVES

24.1 Exchange translation reserve

This comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

24.2 Statutory reserve

Every bank incorporated in Pakistan is required to transfer 20% of their profits to a statutory reserve until the reserve
equals share capital, thereafter 10% of the profits of the Bank are to be transferred to this reserve.

339
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

24.3 General loan loss reserve

The Group is cognizant of the fact that a part of its credit or loan portfolio (funded and non-funded) which is not currently
impaired as per the applicable Prudential Regulations is underperforming and therefore the potential for risk of credit
losses on this part of portfolio is higher than the usual risk. Therefore, as a matter of abundant caution and in order to
protect the equity base of the Bank from future contingencies in respect of the credit portfolio, the Board of Directors in
their meeting held on April 29, 2015 decided to transfer an aggregate amount of Rs. 12 billion from the unappropriated
profits to a "General loan loss reserve". This appropriation was made on the basis of the management's best estimates
and judgement regarding the inherent portfolio risks. Subsequently, Board of Directors in their meeting held on 11 & 12
July, 2019 decided to transfer Rs. 4 billion from general loss reserve to unappropriated profit based on revised estimates.

2021 2020
25. SURPLUS ON REVALUATION OF ASSETS Note (Rupees in '000)

Net surplus on revaluation of :

- Available for sale securities 10.1 32,617,936 43,867,153

- Fixed Assets 25.1 45,168,797 45,421,244
- Non-banking assets accquired in satisfaction of claims 25.2 2,863,886 2,757,207
- On securities of associates and joint venture (349,787) (269,430)
80,300,833 91,776,174
Deferred tax on surplus on revaluation of:

- Available for sale securities (12,715,419) (15,346,840)

- Fixed Assets 25.1 (2,537,701) (2,396,819)
- Non-banking assets accquired in satisfaction of claims 25.2 (52,732) (44,713)
(15,305,852) (17,788,372)
64,994,980 73,987,802

25.1 Surplus on revaluation of fixed assets

Surplus on revaluation of fixed assets as at January 1 44,882,399 44,576,547

Recognised during the year - 660,281

Realised on disposal during the year - net of deferred tax (220,819) -

Transferred to unappropriated profit in respect of incremental
depreciation charged during the year - net of deferred tax (208,088) (230,379)
Related deferred tax liability on incremental
depreciation charged during the year (133,040) (124,050)
Surplus on revaluation of fixed assets as at December 31 44,320,452 44,882,399

Less: related deferred tax liability on:

- revaluation as at January 1 (2,396,819) (2,489,995)

- revaluation recognised during the year - (30,874)
- rate adjustment (273,922) -
- incremental depreciation charged during the year 133,040 124,050
(2,537,701) (2,396,819)
Share of surplus on revaluation of fixed assets of associates and joint venture 848,345 538,845
42,631,096 43,024,425

340
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)
25.2 Surplus on revaluation of non-banking assets acquired in satisfaction of
claims

Surplus on revaluation as at January 1 2,757,207 2,539,695

Recognised during the year 106,679 217,512
Surplus on revaluation as at December 31 2,863,886 2,757,207

Less: related deferred tax liability on:

- revaluation as at January 1 (44,713) (41,439)

- revaluation recognised during the year (8,019) (3,274)
(52,732) (44,713)
2,811,154 2,712,494

26. CONTINGENCIES AND COMMITMENTS

Guarantees 26.1 261,356,068 242,030,415

Commitments 26.2 2,192,951,563 1,543,932,780
Other contingent liabilities 26.3 36,196,804 34,820,672
2,490,504,435 1,820,783,867

26.1 Guarantees:

Financial guarantees 197,024,912 145,379,692

Performance guarantees 64,331,156 96,650,723
261,356,068 242,030,415

26.2 Commitments:

Documentary credits and short-term trade-related transactions

- letters of credit 1,582,757,532 1,096,347,086

Commitments in respect of:

- forward foreign exchange contracts 26.2.1 571,111,340 419,327,735

- forward government securities transactions 26.2.2 38,255,954 27,625,340

Commitments for acquisition of:

- operating fixed assets 826,737 632,619

2,192,951,563 1,543,932,780

26.2.1 Commitments in respect of forward foreign exchange contracts

Purchase 337,970,120 272,245,550

Sale 233,141,220 147,082,185
571,111,340 419,327,735

Commitments for outstanding forward foreign exchange contracts are disclosed in these consolidated financial statements
at contracted rates. Commitments denominated in foreign currencies are expressed in rupee terms at the rates of
exchange prevailing at the statement of financial position date.

341
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)
26.2.2 Commitments in respect of forward government securities transactions

Purchase 30,218,032 496,331

Sale 8,037,922 27,129,009
38,255,954 27,625,340

Commitments for outstanding forward government securities transactions are disclosed in these consolidated financial
statements at contracted rates.
2021 2020
26.3 Other contingent liabilities (Rupees in '000)

26.3.1 Claim against the Group not acknowledged as debt 36,196,804 34,820,672

Claims against the Group not acknowledged as debts including claims relating to former Mehran Bank Limited amounting
to Rs. 1,597 million (2020: Rs. 1,597 million).

26.3.2 Taxation

Tax returns of the Bank have been filed up to tax year 2021 and amended by tax authorities up to tax year 2020. For Azad
Kashmir and Gilgit Baltistan branches no amendment to returns filed under section 120 of the Ordinance has been made,
hence returns filed are deemed assessments for all the years till tax year 2021.

a) The Taxation Officer had issued show-cause notices under section 221 of the Income Tax Ordinance, 2001 to the
Bank last year to withdraw compensation on delayed refunds already given to the Bank, and questioned issuance
of refund orders already issued to the Bank in the past several years which had become past and closed
transactions and thus legally fall outside the scope of rectification. The amount involved is Rs. 14,874.98 million
and Rs. 26,406.58 million respectively. These notices being totally illegal were challenged by the Bank before the
Honorable Sindh High Court (SHC) which instructed the taxation officer not to take adverse action. The Honorable
SHC has stayed the recovery of tax demands. The Bank as a matter of abundant caution had also filed appeal
before Commissioner Inland Revenue (Appeals) (CIR(A)) which has remanded the matter to the taxation officer for
re-adjudication for failing to given opportunity of hearing to the Bank. Similar notices have been issued and orders
were passed for tax year 2013 during the year cancelling refund compensation aggregating to Rs. 535.91 million
which has been challenged before CIR(A) and appeal is pending for hearing.

b) Sindh High Court had quashed the show-cause notices issued in previous round in 2013 for passing orders for tax
years 2006 and 2007 under section 161 of the Ordinance on the grounds that these were time-barred in terms of
section 174(3) of the Ordinance. Supreme Court on Department’s appeal has subsequently allowed taxation officer
to initiate proceedings through fresh notices, subject to certain directions. Orders were passed by taxation officer
for tax years 2006 and 2007 last year, treating the Bank as taxpayer-in-default and raising tax demands of Rs.
1,032.18 million and Rs. 1,394.72 million respectively. Bank has filed appeals before CIR(A) primarily on the
grounds that Supreme Court’s instructions have been blatantly ignored as cogent reasons for late proceedings
were not given and neither amount of tax default nor names of parties were disclosed in the show-cause notices or
the orders. The orders are also assailed for being passed in quite arbitrary manner and various legal and factual
mistakes are made therein. The appeals have been heard by CIR(A) and decision is awaited.

c) Taxation officer has passed assessment order for tax year 2020 during the year. The Bank has filed appeal before
CIR(A) which is pending for hearing. Stay has been granted against tax demand arising out of the assessment
order. The Bank has shown the additional tax liability of Rs. 4,298.17 million arising out of the impugned order as
contingency based on the tax consultants' expectation that the issues would be decided in Bank's favour.

342
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

d) Taxation officer has passed assessment order for tax year 2019 during the year. The Bank has filed appeal before
CIR(A) which is pending for hearing. Stay has been granted against tax demand arising out of the assessment
order. The Bank has shown the additional tax effect of Rs. 1,772.79 million arising out of the impugned order as
contingency based on the tax consultants' expectation that the issues would be decided in Bank's favour.

e) The Additional Commissioner, PRA has passed an order creating the Punjab sales tax liability on the non-
withholding of Punjab Sales Tax on the insurance services received by the Bank for the tax periods January 2016-
December 2016 and January 2017-December 2017 amounting to Rs. 254.734 million and Rs. 281.774 million
respectively. The rectification application has been submitted under section 79 of the Punjab Sales Tax on Services
Act, 2012 for the apparent mistake of facts. After the rectification, the net principal exposure would be Rs. 56.621
million and Rs. 50.685 million. Based on the legal and factual position, the Tax Advisor is confident that the ultimate
outcome of the proceeding will be decided in the Bank’s favor.

f) The other matters under tax contingencies include allocation of common expenditure between taxable income and
exempt / low tax rate income, interest credited to suspense account, reversal of bad debts expense, reversal of
provisions of non-performing loans, provisions for diminution in value of investment. Surplus on revaluation of
Available for Sale Securities disclosed in the Statement of Comprehensive Income in respect of tax year 2013. The
aggregate effect of these contingencies as on December 31, 2021, including amount of Rs. 1,982.32 million
(December 31, 2020: Rs. 645.97 million) in respect of indirect tax issues, amounts to Rs. 19,964.93 million
(December 31, 2020: Rs. 21,163 million). No provision has been made against these contingencies, based on the
opinion of tax consultants of the Bank, who expect favorable outcome upon decisions of pending appeals.

26.3.3 Contingencies in respect of employees benefits and related matters

The following are the details of the contingencies arising out of the various legal cases pending adjudication in respect of
employees’ benefits and related matters. The Group considers that except for Pensionary benefits note 26.3.3.1, the
financial impact of other matters is impracticable to determine with sufficient reliability.

26.3.3.1 Pensionary benefits to retired employees

In 1977 the Federal Govt. vide letter No. 17 (9) 17 XI / 77 dated November 30, 1977, addressed to the Pakistan Banking
Council, directed that all executives / officers of all the nationalized banks would be paid pension as calculated @ 70%
of average emoluments upon completion of 30 years of qualifying service of employees and where qualifying service was
less than 30 years but not less than 10 years, proportionate reduction in percentage was to be made. This pension
scheme was made applicable with effect from May 01, 1977.

In the year 1997, the Banks Nationalization Act, 1974 (“BNA, 1974”) was substantially amended whereby the Pakistan
Banking Council was abolished and the Board of Directors of the nationalized banks were empowered / mandated
respectively to determine personnel policies with the President of the Bank deciding the remuneration and benefits of the
employees in accordance with policies determined by the Board. In the year 1999, by virtue of the said amendments in
BNA, the Board of Directors of the Bank approved the Revised Pay Structure for the officers / executives of the Bank
with effect from January 01, 1999 vide Circular No.37/1999, whereby the basic salary was increased by 110 % to 140%
and besides giving multifarious benefits to its employees, formula for monthly gross pension was revised. However, the
amount of gross pension on the basis of existing Basic Pay and existing formula was protected.

A number of Bank's employees, after attaining the age of superannuation filed Writ Petitions before the Lahore High
Court and the Peshawar High Court, praying for re-calculation of their pensionary benefits and increases in accordance
with the Bank Circular No. 228 (C) dated December 26, 1977 and furthermore, for allowing the increases in their pension
as per the increases allowed by the Federal Government to its employees. This litigation started in the year 2010 and
2011.

The Peshawar High Court, in terms of judgment dated June 03, 2014, dismissed the petition while observing that the
petition was hit by laches and that the Petitioners could not claim the benefits granted to the similarly placed employees
of other institutions who were governed through different Statutes and Service Rules.

343
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

The Lahore High Court, Lahore, vide its judgement dated January 15, 2016, allowed the Writ Petitions on the same
matter and the Bank was directed to release the pensionary benefits of the Petitioners. The said order was assailed by
the Bank by filing Intra Court Appeals in January 2016 which were dismissed by the Lahore High Court, Lahore, through
its judgement dated January 16, 2017. The Bank assailed the said judgement by filing appeals in the Supreme Court of
Pakistan.

The Honorable Supreme Court of Pakistan after hearing the arguments of both Parties, vide its judgement dated
September 25, 2017 upheld the decision of the Division Bench of the Lahore High Court on the contention of increase
in Bank’s employees’ pension, thereby instructing the Bank to give pension benefits to its employees in the light of
Head Office Instruction Circular No. 228 (C) of 1977. Under this Circular, the pension of employees was to be calculated
@ 70% of average emoluments upon completion of minimum qualifying service requirement, besides requiring the Bank
to follow subsequent revisions in pension scheme and rates granted by the Federal Government to civil servants from
time to time as well.

The Bank as well as Federal Government filed Review petitions against the aforesaid judgment of the Honorable
Supreme Court of Pakistan and also made an application for constitution of larger bench of the Supreme Court to hear
the Review petition, which was reportedly accepted by the Chief Justice. However on March 18, 2019, the matter came
up for hearing before a three member Bench instead of a larger bench. As advised by our legal counsels, the Bank
considers that due to conflicting decision of the other bench of the Supreme Court in a case which, in all material facts
and circumstances, is identical to the Bank’s case and various other legal infirmities in the judgement as highlighted by
the Bank in its Review Petition, the Bank has a reasonably strong case on legal grounds to convince the Supreme Court
for review of its decision. The Review Petition is ongoing and is expected to be listed for hearing soon.

A related matter has also been appealed in the Supreme Court where the petitioners have asked for increases in
pension in accordance with government increases in Pension for Government employees which is pending adjudication
and a favorable outcome is expected.

In case the above matters are decided unfavorably, the Bank estimates based on the actuarial advice that the financial
impact arising from the additional liability would be approximately Rs. 74.4 billion excluding any penal interest / profit
payment (if any) due to delayed payment Pension expense for the current year and onward will also increase by Rs.8.4
billion due to this decision. Based on the opinion of legal counsel, no provision has been made in these consolidated
financial statements for the above-mentioned amount as the Bank is confident about the favorable outcome of the
matter.

26.3.3.2 Regularizing the temporary hires / workers deployed by Service provider companies under outsourcing
arrangements

The Bank outsourced certain non-core jobs to various service provider companies after entering into contracts with
them. The resources deployed by the service provider companies were their employees and the said companies have
had sole administrative control over these resources. Some of these resources filed writ petitions before the High
Courts and National Industrial Relations Commission (NIRC) seeking to be absorbed by the Bank in its regular service
based on grounds that they were in fact employees of the Bank. Presently, there are 6 cases on appeal pending at the
Supreme Court where these have been clubbed to be heard as one. The Chief Justice of Pakistan has constituted a
larger bench comprising of five Judges being headed by himself for adjudication. The case is ongoing and is presently
adjourned for a date to be fixed. A favorable outcome of this case is expected.

26.3.3.3 Litigation related to management trainee program

Treatment of Non-MTOs (regular employees) at Par with the MTOs (also appointed in regular cadres) - Litigation arising
out of order dated September 21, 2016 passed by the Supreme Court in our CA No.1644/2013 out of our CPLA No.
805/2013 filed against order dated March 13, 2013 of the Division Bench of Sindh High Court, Sukkur in CP No. D-
417/2010 (the “Decision”).

Mr. Ashfaq Ali and three (3) others filed a CP No. D-417/2010 before the Sindh High Court, Bench at Sukkur while
praying to treat them equally in respect of remunerations with other employees (MTOs) having same grade, nature of
job and qualification.

344
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

The Honorable Division Bench at Sukkur, vide order dated March 13, 2013, directed the Bank to ensure equal treatment
to the petitioners with similarly placed employees without any discrimination.

Certain employees filed petitions in the Honorable High Court of Peshawar who also gave its decision in favor of the
petitioners. Review petition filed in the Honorable Supreme Court of Pakistan by the Bank was also dismissed.

Last year, the Bank entered into out of court settlements which have successfully been executed with many Non-MTO
employees ('petitioners‘) and accordingly compromise agreements ('the agreement‘), offering waiver of loans, increase in
basic salaries and provision of other allowances, were signed with those petitioners who have withdrawn their cases
against the Bank. Simultaneously the Bank continues to make payments to claimants as per any court orders from time
to time.

26.4 Foreign Exchange repatriation case

While adjudicating Foreign Exchange repatriation cases of exporter namely: M/S Fateh Textile Mills Limited, the Foreign
Exchange Adjudicating Court of the State Bank of Pakistan has also adjudicated penalty of Rs. 1,020 million, arbitrarily
on the Bank. The Bank has fled appeals before the Appellate Board and Constitutional Petitions in the Honorable High
Court of Sindh against the said judgments. The Honorable High Court has granted relief to the Bank by way of interim
orders.

As advised by our counsel, NBP has also fled a Constitutional Petition challenging the constitution of the Appellate Board
by the Commission and has obtained restraining order on the ground that the Appellate Board constituted by the
Commission lacks legal merit in the light of Supreme Court ruling. Our counsel, Mr. Raashid Anwar, Advocate has
concluded his arguments in respect of the Foreign Exchange Regulation Appellate Board constitution. However, another
petition filed by another company whereby challenging the constitutionality of the Competition Act was also tagged with
the Petitions filed by the banks.

Based on merits of the appeals management is confdent that these appeals shall be decided in favor of the Bank and
therefore, no provision has been made against the impugned penalty.

26.5 Compliance and risk matters relating to anti-money laundering

The Bank operates a branch in New York which is licensed by the New York State Department of Financial Services
(NYSDFS) and is also subject to supervision by the Federal Reserve Bank of New York (FRBNY).

The Bank and its New York Branch had entered into a Written Agreement with the FRBNY and NYSDFS (US regulators) in
2016 which inter-alia required the Bank to address certain compliance and risk management matters relating to anti-
money laundering and the US bank secrecy law requirements and the implementation of the requisite systems and
controls and allocation of adequate resources to ensure full compliance with such requirements.

In February 2022, the Bank has reached agreements with the US Regulators. The agreements include fines totaling US $
55.4 million equivalent to Rs. 9,778 million focused on historical compliance program weaknesses and delays in making
compliance related enhancements.

Under the agreements, the Bank is required to submit status and progress reports at defined frequencies to the US
Regulators with respect to the remedial measures being taken in respect of non-compliances at the New York branch.
The New York branch has been under new management since May 2020 and has substantially enhanced its compliance
program. Management and the Board of Directors of the Bank are committed to ensure compliance with the conditions
agreed in the orders given by US Regulators. There were no findings of improper transactions or willful misconduct.

345
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)
27. MARK-UP / RETURN / INTEREST EARNED
On:
a) Loans and advances 87,349,028 99,797,877
b) Investments 139,163,731 154,128,269
c) Securities purchased under resale agreements 4,057,559 2,474,560
d) Balances with banks 1,481,927 1,630,672
232,052,245 258,031,378

28. MARK-UP / RETURN / INTEREST EXPENSED

Deposits 87,831,336 103,348,851

Borrowings 6,838,985 6,929,625
Cost of foreign currency swaps against foreign currency deposits / borrowings 8,018,491 9,175,328
Finance charge on lease liability against right of use assets 801,299 781,642
Securities sold under repurchase agreements 30,794,533 33,416,502
134,284,644 153,651,948

29. FEE AND COMMISSION INCOME

Branch banking customer fees 1,211,530 1,264,985

Consumer finance related fees 764,985 771,759
Card related fees (debit cards) 1,751,172 1,051,111
Credit related fees 273,464 186,655
Investment banking fees 769,417 807,481
Commission on trade 1,947,306 1,830,680
Commission on guarantees 459,515 477,465
Commission on cash management 95,276 14,855
Commission on remittances including home remittances 1,756,353 1,801,639
Commission on bancassurance 332,743 278,406
Commission on government transactions 8,408,285 9,652,545
Management Fee & Sale Load 1,239,014 1,071,266
Brokerage Income 123,673 113,828
Others 67,652 157,777
19,200,385 19,480,452

30. GAIN ON SECURITIES - NET

Realised 30.1 6,324,359 7,902,210

Unrealised - held for trading 10.1 (121,834) 10,556
6,202,525 7,912,766

30.1 Realised gain on:

Federal Government Securities 1,065,169 5,346,600

Shares and mutual funds 5,152,046 1,887,298
Ijarah Sukuks 10,809 8
Foreign Securities 96,335 668,304
6,324,359 7,902,210

346
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)

31. OTHER INCOME

Rent on property 55,550 20,234

Gain on sale of fixed assets - net 71,702 23,053
Postal, SWIFT and other charges recovered 23,450 48,071
Compensation for delayed tax refunds 31.1 1,664,879 3,834,424
Claim from insurance company 4,355 -
Gain on derecognition on right of use assets 12,378 -
Tender money 2,082 5,836
Others 21,867 33,865
1,856,263 3,965,483

31.1 This represents compensation of delayed refunds determined under Section 171 of Income Tax Ordinance 2001.

2021 2020
Note (Rupees in '000)
32. OPERATING EXPENSES

Total compensation expenses 32.1 37,750,321 41,266,568

Property expense

Rent and taxes 820,046 792,913

Insurance 32.2 36,172 41,267
Utilities cost 1,383,562 1,365,253
Security (including guards) 2,914,689 2,770,744
Repair and maintenance (including janitorial charges) 913,269 981,075
Depreciation 476,940 467,444
Depreciation on non banking assets 15,462 15,784
Depreciation on Ijarah assets 72,807 85,593
Depreciation on ROUA 2,089,824 2,052,898
8,722,771 8,572,971

Information technology expenses

Software maintenance 1,357,334 1,368,934

Hardware maintenance 90,654 24,421
Depreciation 366,707 278,073
Amortisation 428,807 238,932
Network charges 612,209 559,235
IT Manage Services 359,054 164,897
3,214,765 2,634,492

347
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Note (Rupees in '000)
Other operating expenses
Directors' fees and allowances 25,431 36,160
Directors' fees and allowances - subsidaries 14,242 12,690
Fees and allowances to Shariah Board 12,563 9,407
Legal and professional charges 1,376,323 2,172,228
Outsourced services costs 32.3 641,428 829,229
Travelling and conveyance 826,568 667,989
NIFT clearing charges 177,432 189,866
Depreciation 1,700,068 1,754,815
Training and development 63,052 70,637
Postage and courier charges 222,069 222,231
Communication 372,283 363,475
Stationery and printing 1,344,782 1,138,854
Marketing, advertisement and publicity 371,405 319,675
Donations 32.4 1,000 100
Contributions for other Corporate and Social Responsibility 32.5 8,197 85,447
Auditors' remuneration 32.6 188,304 205,858
Fixed Assets / Non-banking asset deficit 18,833 -
Financial charges on leased assets 44,317 38,135
Entertainment 270,757 257,223
Clearing charges, verification and licence fee 306,104 353,324
Subscription 1,278 1,269
Brokerage 134,916 117,381
Insurance general 467,891 373,834
Vehicle expenses 173,999 149,421
Deposit premium expense 1,571,107 1,388,248
Repairs and maintenance general 710,695 677,533
Others 326,271 217,004
11,371,315 11,652,033
Grand Total 61,059,172 64,126,064
32.1 Total compensation expense
Managerial Remuneration
i) Fixed 8,340,084 13,385,588
ii) Variable
of which;
a) Cash Bonus / Awards etc. 4,513,291 4,448,698
Charge for defined benefit plan 7,406,457 7,392,388
Charge for defined benefit plan - Subsidiaries 55,445 54,886
Rent & house maintenance 5,415,505 4,699,328
Utilities 1,988,327 1,740,373
Medical 3,466,641 3,153,828
Conveyance 3,366,477 3,199,086
Club Membership & Subscription 197,923 81,204
Education Allowance 1,455,624 1,463,449
Insurance 350,235 452,455
Honorarium to Staff and Staff Welfare 251,752 206,662
Overtime 44,249 25,196
Special Duty Allowance 139 477
Washing Allowance 16,590 15,971
Key Allowance 72,813 72,208
Unattractive Area Allowance 56,898 57,929
Leave Encashment 9,775 9,246
Teaching Allowance 10,392 9,199
Incentive on CASA deposits mobilization 20,473 6,790
Meal Allowance 125,580 126,585
Liveries 1,265 1,086
Leave Fare Assistance 17,983 18,053
EOBI 9,289 9,915
Others 557,114 635,968
37,750,321 41,266,568
37,750,321 41,266,568

348
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

32.2 This includes Rs. 3.422 million (2020: Rs. 3.550 million) insurance premium against directors' liability insurance.

32.3 Total cost for the year included in other operating expenses relating to outsourced activities is Rs. 640.8 million (2020: Rs.
829 million). Out of this cost, Rs. 631.7 million (2020: Rs. 821 million) pertains to the payment to companies incorporated
in Pakistan and Rs. 9.1 million (2020: Rs. 8 million) pertains to payment to companies incorporated outside Pakistan.
Total Cost of outsourced activities for the year given to related parties is Rs. nil (2020: Rs. nil). Outsourcing shall have the
same meaning as specified in Annexure-I of BPRD Circular No. 06 of 2017. The material outsourcing arrangements along
with their nature of services are as follows:

Name of Company Nature of Services 2021 2020

(Rupees in '000)

HTECH Solutions (Private) Limited Call center management 94,770 97,407

94,770 97,407

During the year, outsourcing services were hired in respect of sales, call centre services, IT support, data entry, protocol
services, collection services, janitorial & cleaning services and lift operator and engineering services.

2021 2020
(Rupees in '000)
32.4 Donations include following amounts exceeding Rs. 500,000:

Description

The Patients‘ Behbud Society for AKUH 1,000 -

1,000 -

32.5 Contributions for Corporate & Social Responsibilities include following amounts exceeding Rs. 500,000:

2021 2020
(Rupees in '000)
Description

Karachi Relief Trust (KRT) - 20,000

Rural Community Development Program - 20,000
National Rural Support Program - 25,000
SAFCO Support Program - 5,000
Thardeep Mirco Finance Foundation - 5,000
Agha Khan Rural Support Program - 5,000
Namal Education Foundation 5,197 5,200
Pakistan Hindu Council 1,000 -
Tehzibul Akhlaq Trust 2,000 -
Total 8,197 85,200

32.5.1 None of the Directors, Sponsor shareholders and Key Management Personnel or their spouse have an interest in the
Donee.

349
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

A.F.
Total Total
Yousuf Adil Ferguson &
2021 2020
Co.

(Rupees in '000)
32.6 Auditors' remuneration

Audit fee 6,226 6,226 12,452 12,452

Review of interim financial statements 2,178 2,178 4,356 4,356
Fee for audit of domestic branches 5,060 5,060 10,120 10,120
Special certifications and sundry advisory services 6,798 1,136 7,934 5,604
Tax services - - - 20,000
Sales Tax 1,900 1,608 3,508 4,203
Out-of-pocket expenses 4,500 4,500 9,000 9,000
26,662 20,708 47,370 65,735
Fee for audit of overseas branches including advisory
services and out-of-pocket expenses - - 136,240 132,328
Fee for audit of subsidiaries including out-of-pocket expenses - - 4,694 7,795
26,662 20,708 188,304 205,857

2021 2020
Note (Rupees in '000)
33. OTHER CHARGES

Penalties imposed by State Bank of Pakistan 343,698 310,588

Penalties imposed by other regulatory bodies (Central Bank of international branches) 2,765 4,719
Penalties imposed by other regulatory bodies (Regulators of subsidiaries) 516 1,132
346,979 316,439

34. PROVISIONS & WRITE OFFS - NET

Provisions for diminution in value of investments 10.3 523,278 (33,093)

Provisions against loans and advances 11.4 11,003,313 29,248,974
Provision against other assets 132,734 1,696,095
11,659,325 30,911,976

35. TAXATION

Current 35.1 27,109,380 25,032,667

Prior years - -
Deferred (2,077,680) (9,234,180)
25,031,700 15,798,487

35.1 Current taxation includes Rs. Nil (2020: Nil) of overseas branches.

350
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

35.2 Relationship between tax expense and accounting profit

2021 2020
(Rupees in '000)

Accounting profit before tax 53,792,081 46,384,406

Income tax at statutory rate @ 35% (2020: 35%) 18,827,229 16,234,542

Increase / (decrease) in taxes resulting from:
Super tax at statutory rate @ 4% (2020: 4%) 2,114,416 1,848,966
Inadmissible items 3,948,871 122,970
Enhanced rate on Govt. Securities 832,181 65,134
Reduced rate on SME / Housing (96,438) (27,636)
Impact of tax order - (2,314,832)
Others (594,558) (130,657)
Tax charge for current and prior years 25,031,700 15,798,487

2021 2020
36. BASIC EARNINGS PER SHARE

Profit for the year (Rupees in 000's) 28,600,461 30,489,753

Weighted average number of ordinary shares (Number in 000's) 2,127,513 2,127,513

Basic earnings per share (Rupees) 13.44 14.33

37. DILUTED EARNINGS PER SHARE

Profit for the year (Rupees in 000's) 28,600,461 30,489,753

Weighted average number of ordinary shares (adjusted

for the effects of all dilutive potential ordinary shares) (Number in 000's) 2,127,513 2,127,513

Diluted earnings per share (Rupees) 13.44 14.33

2021 2020
Note (Rupees in '000)
38. CASH AND CASH EQUIVALENTS

Cash and balance with treasury banks 7 278,868,736 249,969,566

Balance with other banks 8 19,211,237 15,015,366
Call / clean money lendings 9 21,009,723 2,040,800
Call borrowings 18 (46,011,009) (2,047,588)
Overdrawn nostro accounts 18 (26,480) (1,236,440)
273,052,207 263,741,704

351
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

38.1 Reconciliation of movements of liabilities to cash flows arising from financing activities

2021
Lease Unclaimed
Obligations Dividend
(Rupees in '000)

Balance as at January 1, 2021 8,066,579 185,516

Changes from financing cashflows
Payment of lease obligation / dividend (2,753,249) (3,519)
Total charges from financing activities (2,753,249) (3,519)

Other charges

Renewed lease during the year 2,241,526 -

Interest unwinding 798,284 -
Foreign exchange loss 141,213 -
Total other charges 3,181,023 -

Balance as at December 31, 2021 8,494,353 181,997

2020
Lease Unclaimed
Obligations Dividend
(Rupees in '000)

Balance as at January 1, 2020 8,025,753 186,668

Changes from financing cashflows
Payment of lease obligation / dividend (2,273,256) (1,152)
Total charges from financing activities (2,273,256) (1,152)

Other charges

Renewed lease during the year 1,671,961 -

Increase in unclaimed dividend 701,144 -
Foreign exchange gain (59,023) -
Total other charges 2,314,082 -

Balance as at December 31, 2020 8,066,579 185,516

2021 2020
39. STAFF STRENGTH (Numbers)

Permanent 11,005 11,278

On contract 5,355 5,162
Staff strength at the end of the year 16,360 16,440

352
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

39.1 In addition to the above, 1,273 (2020: 1,838) employees of outsourcing services companies were assigned to the Bank as
at the end of the year to perform services other than guarding and janitorial services. Out of these, 1,258 employees are
working domestically (2020: 1,825) and 15 (2020: 13) abroad respectively.

40. DEFINED BENEFIT PLAN

40.1 General description

General description of the type of defined benefit plan and accounting policy for remeasurements of the net defined
liability / asset is disclosed in note 5.15 to the consolidated financial statements.

40.2 Number of Employees under the scheme

The number of employees covered under the following defined benefit schemes are:

2021 2020
(Numbers)

Pension fund 10,437 10,751

Post retirement medical scheme 10,437 10,751
Benevolent scheme 10,437 10,751
Gratuity scheme 4,685 3,985
Compensated absences 10,437 10,751

40.3 Principal actuarial assumptions

The actuarial valuations were carried out as at December 31, 2021 using the following significant assumptions:

2021 2020
------------------ (Per annum) ------------------

Discount rate 11.75% 9.75%

Expected rate of return on plan assets 11.75% 9.75%
Expected rate of salary increase 11.75% 9.75%
Expected rate of increase in pension 29% for next one year, 14.00%
7.25% onwards
Expected rate of increase in medical benefit 11.75% 9.75%

353
 40.4 Reconciliation of (receivable from) / payable to defined benefit plans

2021 2020

354
Post Post
Pension retirement Benevolent Gratuity Compensated retirement Benevolent Gratuity Compensate
Total Pension fund Total
fund medical scheme scheme absences medical scheme scheme d absences
scheme scheme

Present value of obligations 79,608,695 24,516,717 1,778,825 3,168,258 9,952,554 119,025,049 72,742,130 22,282,747 2,054,218 2,711,914 9,251,755 109,042,764
Fair value of plan assets (61,773,750) - - - - (61,773,750) (57,038,053) - - - - (57,038,053)
Holding Company 17,834,945 24,516,717 1,778,825 3,168,258 9,952,554 57,251,299 15,704,077 22,282,747 2,054,218 2,711,914 9,251,755 52,004,711
Subsidaries - - - 299,681 - 299,681 - - - 244,913 - 244,913
Payable / (Receivable) 17,834,945 24,516,717 1,778,825 3,467,939 9,952,554 57,550,980 15,704,077 22,282,747 2,054,218 2,956,827 9,251,755 52,249,624

40.5 Movement in defined benefit obligations

Obligations at the beginning of the year 72,742,130 22,282,747 2,054,218 2,711,914 9,251,755 109,042,764 66,473,466 18,333,947 1,749,006 2,206,599 8,344,182 97,107,200
Current service cost 1,036,822 794,194 72,381 379,017 16,194 2,298,608 1,517,934 554,295 61,059 311,438 133,178 2,577,904
Past Service due to early retirement gratuity 119,800 - - - - 119,800 - - - - - -
Adjustment against contigency reserve 245,833 70,731 2,939 - 31,950 351,453 2,338,905 497,146 20,650 319,164 3,175,865
Interest cost 6,939,689 2,118,798 189,497 258,343 887,413 10,393,740 7,285,453 1,996,008 183,757 244,487 919,810 10,629,515
Benefits paid by the Bank (3,131,668) (1,102,980) (221,326) (124,479) (300,163) (4,880,616) (3,427,771) (1,183,316) (231,219) (66,763) (336,194) (5,245,263)
Re-measurement loss / (gain) - Profit and Loss - - - - 65,405 65,405 - - - - (128,385) (128,385)
Re-measurement loss / (gain) - OCI 1,656,089 353,227 (318,884) (56,537) - 1,633,895 (1,445,857) 2,084,667 270,965 16,153 - 925,928
Obligations at the end of the year 79,608,695 24,516,717 1,778,825 3,168,258 9,952,554 119,025,049 72,742,130 22,282,747 2,054,218 2,711,914 9,251,755 109,042,764

40.6 Movement in fair value of plan assets

Fair value at the beginning of the year 57,038,053 - - - - 57,038,053 51,687,819 - - - - 51,687,819
For the year ended December 31, 2021

Interest income on plan assets 5,471,096 - - - - 5,471,096 5,686,646 - - - - 5,686,646

Contribution by the Bank - net 1,283,178 - - - - 1,283,178 1,148,063 - - - - 1,148,063
Benefits paid (3,131,668) - - - - (3,131,668) (3,427,771) - - - - (3,427,771)
Benefits paid on behalf of fund 1,713,284 - - - - 1,713,284 1,783,479 - - - - 1,783,479
Actuarial gain / (loss) on assets (600,193) - - - - (600,193) 159,817 - - - - 159,817
Fair value at the end of the year 61,773,750 - - - - 61,773,750 57,038,053 - - - - 57,038,053

Movement in (receivable) / payable under defined

benefits scheme of Holding Company

Opening balance 15,704,077 22,282,747 2,054,218 2,711,914 9,251,755 52,004,711 14,785,647 18,333,947 1,749,006 2,206,599 8,344,182 45,419,381
Charge / (reversal) for the year 2,505,415 2,912,992 261,878 637,360 969,012 7,286,657 3,116,741 2,550,303 244,816 555,925 924,603 7,392,388
Past Service due to early retirement gratuity 119,800 - - - - 119,800 - - - - - -
Adjustment against contigency Reserve 245,833 70,731 2,939 - 31,950 351,453 2,338,905 497,146 20,650 - 319,164 3,175,865
Contribution by the bank - net (1,283,178) - - - - (1,283,178) (1,148,063) - - - - (1,148,063)
Re-measurement loss / (gain) recognized in OCI during the year 2,256,282 353,227 (318,884) (56,537) - 2,234,088 (1,605,674) 2,084,667 270,965 16,153 - 766,111
Benefits paid on behalf of fund (1,713,284) (1,102,980) (221,326) (124,479) (300,163) (3,462,232) (1,783,479) (1,183,316) (231,219) (66,763) (336,194) (3,600,971)
17,834,945 24,516,717 1,778,825 3,168,258 9,952,554 57,251,299 15,704,077 22,282,747 2,054,218 2,711,914 9,251,755 52,004,711

40.7 Charge for defined benefit plans

40.7.1 Cost recognised in profit and loss

Current service cost 1,036,822 794,194 72,381 379,017 16,194 2,298,608 1,517,934 554,295 61,059 311,438 133,178 2,577,904
Past Service due to early retirement gratuity 119,800 - - - - 119,800 - - - - - -
Actuarial loss recognized - Profit and Loss - - - - 65,405 65,405 - - - - (128,385) (128,385)
Net interest on defined benefit asset / liability 1,468,593 2,118,798 189,497 258,343 887,413 4,922,644 1,598,807 1,996,008 183,757 244,487 919,810 4,942,869
2,625,215 2,912,992 261,878 637,360 969,012 7,406,457 3,116,741 2,550,303 244,816 555,925 924,603 7,392,388

40.7.2 Re-measurements recognised in OCI during the year

Loss / (gain) on obligation

- Experience adjustment 2,256,282 353,227 (318,884) (56,537) - 2,234,088 (1,605,674) 2,084,667 270,965 16,153 - 766,111
Notes to and forming part of the Consolidated Financial Statements

Total re-measurements recognised in OCI 2,256,282 353,227 (318,884) (56,537) - 2,234,088 (1,605,674) 2,084,667 270,965 16,153 - 766,111
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)
40.8 Components of plan assets - Pension fund

Pakistan Investment Bonds 19,320,490 22,127,729

Treasury Bills 1,500,000 1,655,750
Term Finance Certificates 104,000 104,000
Mutual Funds 6,697,543 6,427,374
Shares 6,969,297 7,179,354
Defence Saving Certificates 9,536,176 8,479,970
Special Saving Certificates 10,888,009 9,635,360
PLS - Term Deposit Receipts 6,625,201 -
Cash at Bank 133,034 1,428,516
61,773,750 57,038,053

40.8.1 The Funds primarily invests in government securities which do not carry any significant credit risk. These are subject to
interest rate risk based on market movements. Investment in term finance certificates are subject to credit risk and interest
rate risks, while equity securities are subject to price risk. These risks are regularly monitored by Trustees of the Pension
fund.

40.9 Sensitivity analysis

The increase / (decrease) in the present value of defined benefit obligations as a result of change in each assumption is
summarised as below:

2021
Post retirement
Benevolent Gratuity Compensated
Pension fund medical Total
scheme scheme absences
scheme
(Rupees in '000)

1% increase in discount rate (7,801,671) (3,200,097) (111,278) (350,414) (723,780) (12,187,240)

1% decrease in discount rate 9,421,062 4,025,246 125,533 425,462 825,806 14,823,109
1 % increase in expected rate of salary increase 3,902,322 1,255,589 22,217 437,303 865,321 6,482,752
1 % decrease in expected rate of salary increase (3,524,818) (1,112,159) (21,297) (365,858) (770,514) (5,794,646)
1% increase in expected rate of pension increase 5,283,386 1,863,193 - - - 7,146,579
1% decrease in expected rate of pension increase (4,543,855) (1,602,549) - - - (6,146,404)
1% increase in expected rate of medical benefit increase - 882,076 - - - 882,076
1% decrease in expected rate of medical benefit increase - (721,887) - - - (721,887)

40.10 Expected contributions to be paid to the funds in the next financial year 1,589,502

40.11 Expected charge for the next financial year 8,622,697

355
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

40.12 Maturity profile

The weighted average duration of the obligation
Years

Pension fund 10.86

Post retirement medical scheme 14.82
Benevolent scheme 6.66
Gratuity scheme 12.33
Compensated absences 7.79

40.13 Funding Policy

Pension Fund - Bank's current assets and its percentage is given below.

Current Assets Amount Percentage

(Rupees in '000)

Cash and cash equivalents - net 133,034 0.2%

Government Securities 41,244,675 66.8%
Shares 6,969,297 11.3%
Non-Government Debt Securities 104,000 0.2%
PLS - Term Deposit Receipts 6,625,201 10.7%
Mutual Funds 6,697,543 10.8%
61,773,750 100.0%

Bank will continue to invest with the same percentage in the asset categories mentioned but increase the assets gradually
so that there is no deficit in the pension fund.

40.14 The significant risks associated with the staff retirement benefit schemes are as follows:

Asset volatility The risk arises when the future earnings are lower than expectation. This risk is
measured at a plan level over the obligation period of the current population. The
company assets are either invested in fixed securities or cash

Changes in bond yields The risk arises when the actual return on plan assets is lower than expectation.

Inflation risk The most common type of retirement benefit is one where the benefit is linked with
last drawn salary. The risk arises when the actual increases are higher than
expectation and impacts the liability accordingly.

Life expectancy / Withdrawal rate The risk arises when the actual lifetime of retirees is longer than expectation. This risk
is measured at the plan level over the entire retiree population. The risk of actual
withdrawals varying with the actuarial assumptions can impose a risk to the benefit
obligation. The movement of the liability can go either way.

Investment Risk The risk arises when the actual performance of the investments is lower than
expectation and thus creating a shortfall in the funding objectives.

41. DEFINED CONTRIBUTION PLAN

A defined contribution (DC) plan is a type of retirement plan in which the employer, employee or both make contributions
on a regular basis. Individual accounts are set up for participants and benefits are based on the amounts credited to these
accounts (through employee contributions and, if applicable, employer contributions) plus any investment earnings on the
money in the account. In defined contribution plans, future benefits fluctuate on the basis of investment earnings.

Group currently does not have any defined contribution plan.

356
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

42. COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL

42.1 Total Compensation Expense

2021
Directors
Other
Members Key
President / Material
Items Non- Shariah Management
Chairman CEO Risk Takers
Executives Board Personnel
/ Controllers

(Rupees in '000)
Fees and Allowances etc. 4,874 20,557 9,981 - - -
Managerial Remuneration
i) Fixed - - - 54,000 181,256 550,870
ii) Total Variable - - - - - -
of which
a) Cash Bonus / Awards - - 774 - 162,086 256,035
Charge for defined benefit plan - - 98 4,500 30,631 105,691
Rent & house maintenance - - 869 - 99,691 266,605
Utilities - - 269 - 48,007 87,545
Medical - - 198 - 23,964 79,310
Conveyance - - 375 - 19,536 74,492
Others - - - 3,970 9,463 104,668
Total 4,874 20,557 12,564 62,470 574,634 1,525,216

Number of Persons 1 8 5 1 32 144

The President and certain executives are also provided with free use of Bank's cars, household equipment, mobile phones
and free membership of clubs.

42.1.1 The total amount of deferred bonus as at December 31, 2021 for the Key Management Personnel and other Material Risk
Takers (MRT) / Material Risk Controllers (MRC) is Rs. 55 million. The deferred bonus is held in a trust fund.

Performance bonus is accounted for on payment basis.

2020
Directors
Other
Members Key
President / Material
Items Non- Shariah Management
Chairman CEO Risk Takers
Executives Board Personnel
/ Controllers

(Rupees in '000)

Fees and Allowances etc. 4,109 32,050 7,362 - - -

Managerial Remuneration
i) Fixed - - - 54,000 206,031 478,085
ii) Total Variable - - - - - -
of which
a) Cash Bonus / Awards - - 549 - 64,745 191,239
Charge for defined benefit plan - - 117 4,500 40,979 105,861
Rent & house maintenance - - 683 - 89,343 201,327
Utilities - - 211 - 27,615 61,761
Medical - - 155 - 24,633 64,570
Conveyance - - 330 - 17,234 51,324
Others - - - 3,511 13,709 61,640
Total 4,109 32,050 9,407 62,011 484,289 1,215,807

Number of Persons 1 8 3 1 34 105

357
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

42.2 Remuneration paid to Directors for participation in Board and Committee Meetings
2021
Meeting Fees and Allowances Paid
For Board Committees
Board
S.No. Name of Director For Board Board Risk Board Board
Board Board HR & International
Meetings & Technology & Inclusive Total Amount
Audit Remuneration Franchises & Allowances**
Compliance Digitalization Development Paid
Committee Committee Remittance
Committee Committee Committee
Committee*
(Rupees in '000)
1 Mr. Zubyr Soomro 1,650 - - 900 - - - 2,324 4,874
2 Mr. Muhammad Sohail Rajput 450 150 - - - 300 - - 900
3 Ms. Sadaffe Abid 1,500 - - - 900 750 - 368 3,518
4 Mr. Tawfiq Asghar Hussain 1,650 900 1,500 *** - - - 150 - 4,200
5 Mr. Farid Malik 1,650 - - 750 900 - - 301 3,601
6 Mr. Imam Bukhsh Baloch 1,650 750 750 - - 150 - - 3,300
7 Mr. Ahsan Ali Chughtai 750 - - - - 450 - 238 1,438
8 Mr. Asif Jooma 1,350 900 - 900 - 450 - - 3,600
Total Amount Paid 10,650 2,700 2,250 2,550 1,800 2,100 150 3,231 25,431

* Dissolved in 317th Board Meeting held on February 24, 2021.

** Allowances include accommodation and travel expenses.
*** Amount includes NBP - NY Governance Council (Sub-Committee of BRCC).
2020
Meeting Fees and Allowances Paid
For Board Committees
Board
S.No. Name of Director For Board Board Risk Board Board
Board HR & International
Meetings Board Audit & Technology & Inclusive Total Amount
Remuneration Franchises & Allowances
Committee Compliance Digitalization Development Paid
Committee Remittance
Committee Committee Committee
Committee

(Rupees in '000)
1 Mr. Zubyr Soomro 2,100 - - 1,350 - - - 659 4,109
2 Mr. Muhammad Naeem 450 300 150 - - - - 218 1,118
3 Mr. Muhammad Sohail Rajput 2,100 900 - - - 1,050 - 365 4,415
4 Ms. Sadaffe Abid 1,650 - - - 1,350 1,050 - 71 4,121
5 Mr. Tawfiq Asghar Hussain 2,100 1,200 1,050 - - - 1,200 - 5,550
6 Mr. Zafar Masud 900 - - 600 450 - 300 - 2,250
7 Mr. Farid Malik 1,950 - 1,050 1,350 1,350 - - 1,097 6,797
8 Mr. Imam Bukhsh Baloch 2,100 - 1,050 - - 1,050 - - 4,200
9 Mr. Asif Jooma 1,650 900 - 1,050 - - - - 3,600
Total Amount Paid 14,999 3,300 3,300 4,350 3,150 3,150 1,500 2,410 36,160

42.3 Remuneration paid to Shariah Board Members

2021 2020

Resident Non-Resident Resident Non-Resident

Items Chairman Total Chairman Total
Member Member(s) Member Member(s)

(Rupees in '000)

Retainer Fee & Fixed Remuneration 3,462 4,163 4,938 12,563 3,240 3,287 2,880 9,407
Total Amount Paid 3,462 4,163 4,938 12,563 3,240 3,287 2,880 9,407
Total Number of Persons 1 1 3 5 1 1 1 3
The above information does not include particulars of subsidiaries.

43. FAIR VALUE MEASUREMENTS

The fair value of quoted securities other than those classified as held to maturity, is based on quoted market price. Quoted
instruments classified as held to maturity are carried at cost.The fair value of unquoted equity securities, other than
investments in associates and subsidiaries, is determined on the basis of the break-up value of these investments as per
their latest available audited financial statements.

The fair value of unquoted debt securities, fixed term loans, other assets, other liabilities, fixed term deposits and
borrowings cannot be calculated with sufficient reliability due to the absence of a current and active market for these
assets and liabilities and reliable data regarding market rates for similar instruments.

358
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

43.1 Fair value of financial assets

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in
making the measurements:
Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable
for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Fair value measurements using input for the asset or liability that are not based on observable market data
(i.e. unobservable inputs).
The table below analyses financial instruments measured at the end of the reporting period by the level in the fair value
hierarchy into which the fair value measurement is categorised:

On balance sheet financial instruments 2021

Carrying Value Level 1 Level 2 Level 3 Total
Financial assets - measured at fair value
(Rupees in '000)

Investments

Market Treasury Bills 811,994,893 - 811,994,893 - 811,994,893

Pakistan Investment Bonds 592,430,009 - 592,430,009 - 592,430,009
Ijarah Sukuks 13,969,700 - 13,969,700 - 13,969,700
Ordinary shares of listed companies 39,944,846 39,944,846 - - 39,944,846
Investment in mutual funds 2,318,516 - 2,318,516 - 2,318,516
Preference shares 1,265,729 1,265,729 - - 1,265,729
Term Finance Certificates / Musharika
and Sukuk Bonds 51,264,518 16,546,431 34,718,087 - 51,264,518
GoP Foreign Currency Bonds 20,804,963 - 20,804,963 - 20,804,963
Foreign Government Securities 2,281,942 - 2,281,942 - 2,281,942
Ordinary shares of a bank outside Pakistan 27,524,206 27,524,206 - - 27,524,206

1,563,799,322 85,281,212 1,478,518,110 - 1,563,799,322

Financial assets - disclosed but not measured

at fair value

Cash and balances with treasury banks 278,868,736 - - - -

Balances with other banks 19,211,237 - - - -
Lendings to financial institutions 335,466,675 - - - -
Investments
Pakistan Investment Bonds 324,726,185 - - - -
Ordinary shares of unlisted companies 1,471,305 - - - -
Debentures, Bonds, Sukuks, Participation Term
Certificates and Term Finance Certificates 30 - - - -
Bai Muajjal with Government of Pakistan 10,914,185
Foreign Government Securities 34,091,600 - - - -
Foreign Currency Debt Securities 680 - - - -
Advances 1,113,314,128 - - - -
Other Assets 65,505,033 - - - -

2,183,569,794 - - - -

3,747,369,116 85,281,212 1,478,518,110 - 1,563,799,322

Off-balance sheet financial instruments - measured

at fair value

Foreign exchange contracts purchase and sale 571,111,340 - 3,058,205 - 3,058,205

Forward government securities transactions 38,255,954 - (308,328) - (308,328)

359
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2020
On balance sheet financial instruments Carrying Value Level 1 Level 2 Level 3 Total
(Rupees in '000)
Financial assets - measured at fair value

Investments

Market Treasury Bills 626,248,790 - 626,248,790 - 626,248,790

Pakistan Investment Bonds 473,408,082 - 473,408,082 - 473,408,082
Ijarah Sukuks 6,015,600 - 6,015,600 - 6,015,600
Ordinary shares of listed companies 48,089,192 48,089,192 - - 48,089,192
Investments in mutual funds 2,291,013 - 2,291,013 - 2,291,013
Preference shares 1,099,850 1,099,850 - - 1,099,850
Term Finance Certificates / Musharika and Sukuk Bonds 55,910,547 20,088,162 35,822,385 - 55,910,547
GoP Foreign Currency Bonds 10,840,875 - 10,840,875 - 10,840,875
Foreign Government Securities 3,953,016 - 3,953,016 - 3,953,016
Foreign Currency Debt Securities 80,640 - 80,640 - 80,640
Ordinary shares of a bank outside Pakistan 17,652,778 17,652,778 - - 17,652,778

1,245,590,383 86,929,982 1,158,660,401 - 1,245,590,383

Financial assets - disclosed but not measured

at fair value

Cash and balances with treasury banks 249,969,566 - - - -

Balances with other banks 15,015,366 - - - -
Lending to financial instruments 126,804,675 - - - -
Investments
Pakistan Investment Bonds 168,676,415 - - - -
Ordinary shares of unlisted companies 1,455,089 - - - -
Debentures, Bonds, Sukuks, Participation Term
Certificates and Term Finance Certificates 7,838 - - - -
Bai Muajjal with Government of Pakistan 11,641,133
Foreign Government Securities 32,418,809 - - - -
Foreign Currency Debt Securities 618 - - - -
Advances 983,871,421 - - - -
Other assets 60,745,988 - - - -
1,650,606,918 - - - -

2,896,197,301 86,929,982 1,158,660,401 - 1,245,590,383

Off-balance sheet financial instruments - measured

at fair value

Foreign exchange contracts purchase and sale 419,327,735 - (2,918,017) - (2,918,017)

Forward government securities transactions 27,625,340 - 52,885 - 52,885

360
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

Valuation techniques used in determination of fair valuation of financial instruments within level 1 and level 2

Item Valuation approach and input used

Market Treasury Bills PKRV (MUFAP)

Pakistan Investment Bonds PKRV (MUFAP)
Ijarah Sukuks MUFAP
Ordinary shares of unlisted companies Breakup value as per latest available audited financial statements
Term Finance Certificates / Musharika and Sukuk Bonds MUFAP
GoP Foreign Currency Bonds Reuter page
Foreign Government Securities Reuter page
Foreign Currency Debt Securities Reuter page
Investment in mutual funds MUFAP

43.2 Fair value of non-financial assets

Information about the fair value hierarchy of Group's non-financial assets as at the end of the reporting period are as follows:

2021
Carrying Value Level 1 Level 2 Level 3 Total
(Rupees in '000)

Land & building (fixed assets) 48,745,835 - - 48,745,835 48,745,835

Non-banking assets acquired in satisfaction of claims 4,059,546 - - 4,059,546 4,059,546
52,805,381 - - 52,805,381 52,805,381

2020
Carrying Value Level 1 Level 2 Level 3 Total
(Rupees in '000)

Land & building (fixed assets) 48,770,485 - - 48,770,485 48,770,485

Non-banking assets acquired in satisfaction of claims 3,968,329 - - 3,968,329 3,968,329
52,738,814 - - 52,738,814 52,738,814

44. SEGMENT INFORMATION

44.1 Segment Details with respect to Business Activities

During the year the Group changed its internal organisation structure in a manner that changed the composition of its
reportable segments, and accordingly the prior year disclosure is restated to reflect the current reportable segments.
Branch banking has been bifurcated in to Retail Banking Group and Inclusive Development Group.

361
 2021
International,

362
Retail Inclusive Corporate and
Financial Aitemaad and Head Office /
Banking Development Investment Treasury Sub total Eliminations Total
Institution and Islamic Banking Others
Group Group Banking
Remittance

Profit and loss account

Net mark-up / return / profit (58,755,894) 17,163,761 25,963,957 105,182,793 3,798,879 4,682,056 (267,953) 97,767,601 - 97,767,601
Inter segment revenue - net 111,902,235 (14,376,019) (22,474,486) (91,149,527) - (577,589) 16,675,387 - - -
Non mark-up / return / interest income 13,490,925 406,372 4,153,941 15,344,239 1,284,540 336,316 3,852,473 38,868,803 - 38,868,804
Total Income 66,637,266 3,194,114 7,643,412 29,377,505 5,083,419 4,440,783 20,259,907 136,636,405 - 136,636,405

Segment direct expenses 30,900,118 3,031,845 1,121,182 387,232 6,363,529 2,816,952 1,818,948 46,439,807 - 46,439,807
Inter segment expense allocation - - - - - - 24,745,192 24,745,192 - 24,745,192
Total expenses 30,900,118 3,031,845 1,121,182 387,232 6,363,529 2,816,952 26,564,140 71,184,999 - 71,184,999
Provisions charge / (reversal) 731,529 1,721,582 9,235,188 542,703 (111,737) 121,444 (581,383) 11,659,325 - 11,659,325
Profit / (loss) before tax 35,005,619 (1,559,313) (2,712,958) 28,447,570 (1,168,373) 1,502,387 (5,722,850) 53,792,081 - 53,792,081
For the year ended December 31, 2021

Statement of financial position

Cash and bank balances 90,784,756 8,185,926 248,408 131,293,182 58,290,758 6,603,670 2,673,273 298,079,973 - 298,079,973
Investments - - 26,543,698 1,803,150,092 55,804,559 49,548,759 7,694,080 1,942,741,191 - 1,942,741,191
Net inter segment lending 2,319,442,077 - - - - - 274,915,854 2,594,357,931 (2,594,357,931) -
Lendings to financial institutions 2,405,644 - - 333,061,031 - - - 335,466,675 - 335,466,675
Advances - performing 183,984,822 224,303,465 566,367,602 - 80,731,709 42,316,269 9,391,774 1,107,095,640 - 1,107,095,640
Advances - non-performing 3,963,414 21,115,711 61,624,712 - 46,293,148 712,762 64,635,942 198,345,689 - 198,345,689
Provision against advances (9,024,982) (18,226,471) (56,033,619) - (44,989,510) (712,762) (63,139,858) (192,127,201) - (192,127,201)
Advances - net 178,923,254 227,192,704 571,958,695 - 82,035,347 42,316,269 10,887,859 1,113,314,128 - 1,113,314,128
Others 25,276,052 2,297,783 18,315,585 3,581,004 4,964,806 2,302,955 110,694,804 167,432,980 - 167,432,980
Total Assets 2,616,831,783 237,676,413 617,066,386 2,271,085,310 201,095,470 100,771,653 406,865,869 6,451,392,878 (2,594,357,931) 3,857,034,947

Borrowings (392,063) 4,148,727 63,733,341 207,857,704 37,185,334 - 392,062 312,925,106 - 312,925,106

Deposits & other accounts 2,562,636,790 - 286,586,523 - 75,485,252 84,849,519 8,589,626 3,018,147,709 - 3,018,147,709
Net inter segment borrowing - 228,687,313 249,365,896 2,016,684,060 85,836,008 13,784,654 - 2,594,357,931 (2,594,357,931) -
Others 54,587,057 4,840,373 17,044,690 11,549,539 2,536,069 1,543,475 138,837,548 230,938,751 - 230,938,751
Total liabilities 2,616,831,784 237,676,413 616,730,450 2,236,091,302 201,042,663 100,177,648 147,819,236 6,156,369,497 (2,594,357,931) 3,562,011,566
Equity - - 335,936 34,994,008 52,807 594,005 259,046,633 295,023,381 - 295,023,381
Total Equity & liabilities 2,616,831,783 237,676,413 617,066,386 2,271,085,310 201,095,470 100,771,653 406,865,869 6,451,392,878 (2,594,357,931) 3,857,034,947

Contingencies & Commitments - 81,061,634 1,740,040,766 609,367,294 22,910,804 - 37,123,935 2,490,504,435 - 2,490,504,435
Notes to and forming part of the Consolidated Financial Statements
 2020 (Restated)
International,
Inclusive Corporate and
Retail Banking Financial Aitemaad and Head Office /
Development Investment Treasury Sub total Eliminations Total
Group Institution and Islamic Banking Others
Group Banking
Remittance
(Rupees in '000)

Profit and loss account

Net mark-up / return / profit (82,278,559) 19,374,543 45,786,341 113,674,589 2,944,549 5,033,803 (155,835) 104,379,430 - 104,379,430
Inter segment revenue - net 132,329,062 (15,264,205) (40,287,855) (86,111,719) - (409,849) 9,744,567 - - -
Non mark-up / return / interest income 13,606,432 1,333,608 2,934,104 11,890,634 1,933,019 425,941 5,235,716 37,359,455 - 37,359,455
Total Income 63,656,935 5,443,946 8,432,590 39,453,504 4,877,568 5,049,895 14,824,448 141,738,885 - 141,738,885

Segment direct expenses 27,928,850 2,851,051 906,172 366,426 6,337,022 2,542,000 1,736,268 42,667,790 - 42,667,790
Inter segment expense allocation - - - - - - 21,774,714 21,774,713 - 21,774,713
Total expenses 27,928,850 2,851,051 906,172 366,426 6,337,022 2,542,000 23,510,983 64,442,503 - 64,442,503
Provisions charge / (reversal) 670,506 3,818,845 26,216,211 (202,726) (484,011) 398,979 494,170 30,911,976 30,911,976
Profit / (loss) before tax 35,057,580 (1,225,950) (18,689,793) 39,289,803 (975,444) 2,108,916 (9,180,705) 46,384,406 - 46,384,406
For the year ended December 31, 2021

Statement of financial position

Cash and bank balances 144,696,156 13,560,025 281,210 49,710,033 47,960,766 5,724,957 3,051,784 264,984,932 - 264,984,932
Investments - - 31,393,587 1,340,556,530 46,098,046 42,109,641 6,247,569 1,466,405,373 - 1,466,405,373
Net inter segment lending 1,784,038,348 - - - - - 187,176,073 1,971,214,420 (1,971,214,420) -
Lendings to financial institutions - - - 126,802,025 - - 2,650 126,804,675 - 126,804,675
Advances - performing 167,205,416 185,345,489 541,263,835 - 43,633,881 37,546,863 14,124,842 989,120,326 - 989,120,326
Advances - non-performing 4,007,870 22,497,098 47,548,441 - 42,345,094 602,913 54,811,195 171,812,612 - 171,812,612
Provision against advances (8,383,514) (19,538,451) (52,114,538) - (41,266,079) (602,913) (55,156,024) (177,061,517) - (177,061,517)
Advances - net 162,829,772 188,304,136 536,697,739 - 44,712,896 37,546,863 13,780,013 983,871,421 - 983,871,421
Others 23,840,339 2,248,427 22,588,501 366,297 3,972,925 3,580,119 118,546,998 175,143,591 - 175,143,591
Total Assets 2,115,404,615 204,112,588 590,961,037 1,517,434,885 142,744,633 88,961,580 328,805,086 4,988,424,412 (1,971,214,420) 3,017,209,992

Borrowings 3,511,852 46,688,596 86,290,983 2,047,575 - - 138,539,005 - 138,539,005

Deposits & other accounts 2,068,891,896 - 200,011,969 - 73,225,543 75,268,262 1,530,800 2,418,928,469 - 2,418,928,469
Net inter segment borrowing - 196,293,623 326,190,341 1,375,268,749 63,868,561 9,593,146 - 1,971,214,420 (1,971,214,420) -
Others 46,512,720 4,307,113 17,857,441 12,387,953 3,138,352 3,440,604 97,696,056 185,340,236 - 185,340,236
Total liabilities 2,115,404,615 204,112,588 590,748,347 1,473,947,685 142,280,030 88,302,012 99,226,857 4,714,022,130 (1,971,214,420) 2,742,807,710
Equity - - 212,690 43,487,200 464,603 659,569 229,578,231 274,402,282 - 274,402,282
Total Equity & liabilities 2,115,404,615 204,112,588 590,961,037 1,517,434,885 142,744,633 88,961,580 328,805,087 4,988,424,412 (1,971,214,420) 3,017,209,992

363
Contingencies & Commitments - 46,316,642 1,271,383,035 446,953,075 20,577,429 - 35,553,685 1,820,783,867 - 1,820,783,867
Notes to and forming part of the Consolidated Financial Statements
 44.2 Segment details with respect to geographical locations

364
2021
Asia Pacific
United States
Pakistan (including South Europe Middle East Total
of America
Asia)

Profit and loss account

Net mark-up / return/profit 93,828,309 1,880,481 (275) 198,227 1,860,859 97,767,601

Inter segment revenue - net - - - - - -
Non mark-up / return / interest income 37,573,302 407,936 305,047 340,208 242,310 38,868,804
Total Income 131,401,611 2,288,417 304,772 538,435 2,103,169 136,636,405

Segment direct expenses 39,835,857 1,942,128 869,557 2,882,547 909,718 46,439,807

Inter segment expense allocation 24,745,192 - - - - 24,745,192
Total expenses 64,581,050 1,942,128 869,557 2,882,547 909,718 71,184,999
Provisions 11,775,953 (223,488) 66,636 4,585 35,639 11,659,325
Profit / (loss) before tax 55,044,608 569,777 (631,421) (2,348,696) 1,157,810 53,792,081
For the year ended December 31, 2021

Statement of financial position

Cash and bank balances 238,998,368 16,870,383 12,409,372 28,845,835 956,015 298,079,973
Investments 1,885,561,995 39,818,951 - 2,834,242 14,526,004 1,942,741,191
Net inter segment lendings 85,836,007 - - - - 85,836,007
Lendings to financial institutions 335,466,675 - - - - 335,466,675
Advances - performing 1,026,363,931 20,282,504 494,294 5,025,734 54,929,177 1,107,095,640
Advances - non-performing 151,780,980 39,122,266 1,311,119 - 6,131,324 198,345,689
Provision against advances (147,056,269) (38,847,232) (1,311,119) (7,489) (4,905,092) (192,127,201)
Advances - net 1,031,088,642 20,557,538 494,294 5,018,245 56,155,410 1,113,314,128
Others 162,326,911 3,157,485 164,067 219,828 1,564,688 167,432,980
Total Assets 3,739,278,598 80,404,357 13,067,733 36,918,149 73,202,117 3,942,870,954

Borrowings 275,739,772 1,971,822 - - 35,213,512 312,925,106

Deposits & other accounts 2,942,662,457 37,237,231 8,815,589 7,455,103 21,977,329 3,018,147,709
Net inter segment borrowing - 37,978,569 4,040,045 28,932,868 14,884,525 85,836,007
Others 228,400,207 834,027 212,099 548,076 944,344 230,938,751
Total liabilities 3,446,802,437 78,021,648 13,067,733 36,936,047 73,019,710 3,647,847,573
Equity 292,476,163 2,382,709 - (17,897) 182,406 295,023,381
Total Equity & liabilities 3,739,278,598 80,404,357 13,067,733 36,918,149 73,202,117 3,942,870,954

Contingencies & Commitments 2,467,593,629 2,554,088 3,073,302 8,003,059 9,280,354 2,490,504,435

Notes to and forming part of the Consolidated Financial Statements
 2020
Asia Pacific
United States
Pakistan (including South Europe Middle East Total
of America
Asia)

(Rupees in '000)

Profit and loss account

Net mark-up/return/profit 101,234,782 735,554 59,526 421,629 1,927,939 104,379,430

Inter segment revenue - net - - - - - -
Non mark-up / return / interest income 35,400,181 536,152 316,191 747,936 358,994 37,359,455
Total Income 136,634,963 1,271,706 375,718 1,169,565 2,286,933 141,738,885

Segment direct expenses 36,123,105 1,806,638 793,919 3,173,426 770,701 42,667,788

Inter segment expense allocation 21,774,714 - - - - 21,774,714
Total expenses 57,897,819 1,806,638 793,919 3,173,426 770,701 64,442,503
Provisions 31,413,690 (325,772) (117,586) (32,798) (25,557) 30,911,976
Profit / (loss) before tax 47,323,455 (209,159) (300,616) (1,971,063) 1,541,789 46,384,406
For the year ended December 31, 2021

Statement of financial position

Cash and bank balances 215,386,431 19,040,664 10,399,385 19,076,487 1,081,965 264,984,932
Investments 1,419,111,415 30,973,985 - 2,927,816 13,392,157 1,466,405,373
Net inter segment lendings 63,868,561 - - - - 63,868,561
Lendings to financial institutions 126,804,675 - - - - 126,804,675
Advances - performing 944,902,218 2,475,488 574,741 1,680,370 39,487,510 989,120,326
Advances - non-performing 129,129,200 35,912,396 1,205,975 - 5,565,041 171,812,612
Provision against advances (135,717,854) (35,725,929) (1,205,975) (2,306) (4,409,453) (177,061,517)
Advances - net 938,313,564 2,661,954 574,741 1,678,064 40,643,098 983,871,421
Others 170,927,847 3,016,719 139,572 183,851 875,601 175,143,591
Total Assets 2,934,412,493 55,693,323 11,113,698 23,866,218 55,992,821 3,081,078,553

Borrowings 136,491,431 1,240,487 - - 807,088 138,539,005

Deposits & other accounts 2,344,187,228 36,900,634 7,278,305 9,204,947 21,357,355 2,418,928,469
Net inter segment borrowing - 14,344,870 3,643,594 13,051,137 32,828,959 63,868,561
Others 182,172,934 830,555 191,798 1,556,773 588,176 185,340,236
Total liabilities 2,662,851,593 53,316,546 11,113,698 23,812,857 55,581,578 2,806,676,271
Equity 271,560,901 2,376,778 - 53,361 411,243 274,402,282
Total Equity & liabilities 2,934,412,493 55,693,323 11,113,698 23,866,218 55,992,821 3,081,078,553

1,800,206,438 3,380,468 3,105,342 7,173,633 6,917,986 1,820,783,867

365
Contingencies & Commitments
Notes to and forming part of the Consolidated Financial Statements
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

45. TRUST ACTIVITIES

45.1 Endowment Fund
Students Loan Scheme was launched by Government of Pakistan in collaboration with the major commercial banks with a
view to extend financial help by way of mark-up free loan to the meritorious students without sufficient resources for
pursuing scientific, technical and professional education within Pakistan.
The Scheme is being administered by a high powered committee headed by the Deputy Governor, State Bank of Pakistan
and the Presidents of NBP, HBL, UBL, MCB, ABL and the Deputy Secretary, Ministry of Finance as member and Senior
Director of IH&SME Finance Department (Infrastructure, Housing & SME Finance Department) as a secretary of the
Committee. The State Bank of Pakistan has assigned National Bank of Pakistan to operate the scheme.
The Committee in its meeting held on August 7, 2001 approved creation of Endowment Fund initially at an amount of Rs.
500 million, Rs. 396 million were transferred from the old Qarz-e-Hasna (Defunct) Fund, Rs.50 million contributed by the
Government of Pakistan and Rs. 54 million were contributed by participating banks (HBL, NBP and UBL 25% each, MCB
17.5% and ABL 7.5%).
The amount of the Endowment Funds in investments stands at Rs. 835.770 million as at December 31, 2021 (2020: Rs.
785 million).
45.2 The Bank undertakes Trustee and other fiduciary activities that result in the holding or placing of assets on behalf of
individuals and other organisations. These are not assets of the Bank and , therefore, are not included as such in these
consolidated financial statements. Assets held under trust are shown in the table below:
As at December 31, 2021
Securities Held (Face Value)
No. of IPS Market Treasury Pakistan Investment Government Ijarah
Category Bills Sukuks Total
Accounts Bonds
(Rupees in '000)
Assets Management companies 31 - - - -
Charitable institutions 5 205,320 854,000 - 1,059,320
Companies 31 41,314,365 128,980,600 27,417,400 197,712,365
Employee Funds 41 12,597,120 43,178,900 - 55,776,020
Individuals 944 203,025 79,700 - 282,725
Insurance Companies 8 23,821,000 172,528,500 - 196,349,500
Others 74 76,701,745 234,918,697 - 311,620,442
Total 1,134 154,842,575 580,540,397 27,417,400 762,800,372
As at December 31, 2020
Securities Held (Face Value)

Category No. of IPS Market Treasury Pakistan Investment Government Ijarah Total
Accounts Bills Bonds Sukuks
(Rupees in '000)
Assets Management companies 23 - - - -
Charitable institutions 5 - - - -
Companies 17 34,121,000 92,187,000 - 126,308,000
Employee Funds 62 9,640,000 102,961,000 - 112,601,000
Individuals 853 148,000 71,000 - 219,000
Insurance Companies 7 11,211,000 145,210,000 - 156,421,000
Others 58 66,931,000 143,723,000 - 210,654,000
Total 1,025 122,051,000 484,152,000 - 606,203,000

46. RELATED PARTY TRANSACTIONS

The Group has related party transactions with its associates, joint ventures, employee benefit plans and its directors and
Key Management Personnel. The details of investment in joint venture and associated undertaking and their provisions are
stated in note 10 of the financial statement of the Group.
The Group enters into transactions with related parties in the ordinary course of business and on substantially the same
terms as for comparable transactions with person of similar standing. Contributions to and accruals in respect of staff
retirement benefits and other benefit plans are made in accordance with the actuarial valuations / terms of the contribution
plan. Remuneration to the executives / officers is determined in accordance with the terms of their appointment.
Details of transactions with related parties during the year, other than those which have been disclosed elsewhere in these
consolidated financial statements are as follows:

366
 2021 2020

Key manage- Key manage-

Joint Pension Fund Pension Fund Pension Fund Provident Other related Pension Fund Pension Fund Pension Fund Other related
Directors ment Associates Directors ment Associates Joint venture Provident Fund
venture (Current) (Fixed Deposit) (N.I.D.A A/c) Fund parties (Current) (Fixed Deposit) (N.I.D.A A/c) parties
personnel personnel

(Rupees in '000)

Balances with other banks

In current accounts - - - 295,951 - - - - - - - - 232,033 - - - - -

- - - 295,951 - - - - - - - - 232,033 - - - - -

Advances

Opening balance - 233,267 2,981,029 - - - - - 305,117 - 228,805 3,046,662 - - - - - 23,386,325

Addition during the year - 254,860 - - - - - - 35,589,939 64,850 - - - - - 115,824,347
Repaid during the year - (36,216) (46,867) - - - - - (35,253,573) (31,840) (65,633) - - - - - (115,673,058)
*Transfer in / (out) - net (104,319) - - (28,548) - (23,232,497)
Closing balance - 347,592 2,934,162 - - - - - 641,483 - 233,267 2,981,029 - - - - - 305,117

Provision held against advances - - 2,837,287 - - - - - - - - 2,837,287 - - - - - -

For the year ended December 31, 2021

Other Assets

Interest / mark-up accrued - - 1,719,049 - - - - - - - - 1,720,157 - - - - - -

Borrowings

Opening balance - - - 9,111 - - - - - - - - 279,814 - - - - -

Borrowings during the year - - - 26,630 - - - - - - - - - - - - - -
Settled during the year - - - - - - - - - - - - (270,703) - - - - -

Closing balance - - - 35,741 - - - - - - - - 9,111 - - - - -

Deposits and other accounts

Opening balance 1,320 177,236 - - 58,871 - 1,369,644 13,282,016 227,967 3,835 94,715 - - 73 - 1,235,120 13,296,883 40,416,083
Received during the year 9,334 777,224 - - 27,393 - - - 235,269,981 8,672 713,917 - - 47,037,983 - 3,054,527 1,941,908 708,790
Withdrawn during the year (8,984) (763,659) - - - - (1,322,875) (427,261) (196,497,842) (11,228) (620,573) - - (46,979,185) - (2,920,003) (1,956,775) (630,132)
* Transfer in (out) - net 90 (59,347) - - - - - - 4,336,036 41 (10,823) - - - - - - (40,266,774)
Closing balance 1,760 131,454 - - 86,264 - 46,769 12,854,755 43,336,143 1,320 177,236 - - 58,871 - 1,369,644 13,282,016 227,967

Contingencis & Commitments

- - - - - - - - - - - - - - - - - -

367
Notes to and forming part of the Consolidated Financial Statements

* Transfer in (out) - net due to retirement / appointment of directors and changes in key management executives.
368
2021 2020
Key
Key manage-
Joint Pension Provident Funds / manage- Joint Pension Provident Funds /
Directors ment Associates Directors Associates
venture Fund Fund Others ment venture Fund Fund Others
personnel
personnel
(Rupees in '000)

Income
Mark-up / return / interest
earned - - 9,857 - - - - - - 16,822 9 - - -
Debts due by Companies in
which Directors of the Bank is
interested as Directors - - - - - - 8,137 - - - - - 15,755
Dividend income - - 7,009 - - - - - - - - - - -
Rent income / Lighting & Power
and Bank charges - - 5,109 - - - - - - 4,637 - - - 19,447

Expense
For the year ended December 31, 2021

Mark-up / return / interest paid 88 3,873 - 41 55,888 1,417,701 1,625,178 309 5,086 - 303 108,346 1,441,640 4,012
Expenses paid to company in
which Director of the bank is
interested as CEO - - - - - 23,387 - - - - - 10,712
Remuneration to key
management executives
including charge for defined
benefit plan - 637,103 - - - - - - 546,300 - - - - -
Directors fee & other allowances 25,431 - - - - - - 36,160 - - - - - -
Post Retirement Benefit paid to
Director cum ex-employee - - - - - - 2,087 - - - - - - 2,087

46.1 Transactions with Government-related entities

The Federal Government through State Bank of Pakistan holds controlling interest (75.60% shareholding) in the Bank and therefore entities which are owned and / or
controlled by the Federal Government, or where the Federal Government may exercise significant influence, are related parties of the group.

The Group in the ordinary course of business enters into transaction with Government–related entities. Such transactions include lending to, deposits from and
provision of other banking service to Government–related entities.

The Group also earned commission on handling treasury transactions on behalf of the Government of Pakistan amounting to Rs. 8,408 million (2020: 9,653 million)
for the year ended December 31, 2021. As at the statement of financial position date the loans and advances, deposits and contingencies relating to
Government–related entities amounted to Rs. 405,294 million (2020: 337,572 million), Rs. 1,247,457 million (2020: 932,317 million) and Rs. 1,540,238 million (2020:
1,057,896 million) respectively and income earned on advances and investment and profit paid on deposits amounted to Rs. 31,846 million (2020: 40,908 million)
and Rs. 51,110 million (2020: 64,149 million) respectively.
Notes to and forming part of the Consolidated Financial Statements
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

47. CAPITAL ADEQUACY, LEVERAGE RATIO & LIQUIDITY REQUIREMENTS

The Group's objectives when managing capital, which is a broader concept than the 'equity' on the face of the statement
of financial position, are:

- to comply with the capital requirements set by the regulators of the banking markets where the Group operates;

- to safeguard the Group's ability to continue as a going concern so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and

- to maintain a strong capital base to support the development of its business.

Basel-III instructions comprises of the following three capital standards:

i. Minimum Capital Requirement (MCR):

The MCR standard sets the nominal amount of capital banks/ DFIs are required to hold. Currently the MCR for
banks and DFIs is Rs. 10 billion as prescribed by SBP.

ii. Capital Adequacy Ratio (CAR):

The Capital Adequacy Ratio assesses the capital requirement based on the risks faced by the banks/ DFIs. The
banks/ DFIs are required to comply with the minimum requirements as specified by the SBP on standalone as well
as consolidated basis. Currently the required CAR for banks is 11.50% (plus 2.0% for NBP as D-SIB requirement).

iii. Leverage Ratio:

Tier-1 Leverage Ratio of 3% is introduced in response to Basel III Accord as the third capital standard. Group level
disclosure of the leverage ratio and its components has started from December 31, 2015. The Group has a leverage
ratio of 3.54% in the year December 31, 2021 (2020: 4.16%) and Tier-1 capital of Rs. 204,320 million (2020: Rs
176,735 million).

The SBP's regulatory capital as managed by the Group is analysed into following tiers:

1. Tier 1 Capital (going-concern capital)

• Common Equity Tier 1

• Additional Tier 1

- Tier I capital, which comprises highest quality capital element and include fully paid up capital, balance in share
premium account, reserve for issue of bonus shares, general reserves and un-appropriate profits (net of
accumulated losses, if any).

2. Tier 2 Capital (gone-concern capital)

- Tier II capital, which includes general reserve for loan losses, revaluation reserve, exchange translation reserve and
subordinated debt.

Basel III capital rules requires bank to make certain deductions from the capital before arriving at the Capital Adequacy
Ratio (CAR).

Risk weighted assets are measured according to the nature and reflect an estimate of credit, market and other risks
associated with each asset and counterparty, taking into account any eligible collateral or guarantees. A similar treatment
is adopted for off-balance sheet exposures, with some adjustments to reflect more contingent nature of potential losses.

369
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

The Group's policy is to maintain strong capital base so as to maintain, investor, creditor and market confidence and to
sustain future development of the business. The adequacy of the Group's capital is monitored using, among other
measures, the rules and ratios established by the SBP. The ratios compare the amount of eligible capital with the total of
risk-weighted assets. The Group monitors and reports its capital ratio under the SBP rules, which ultimately determines
the regulatory capital, required to be maintained by Banks and DFIs.

The paid-up capital of the Group for the year ended December 31, 2021 stood at Rs. 21,275 million (2020: Rs. 21,275
million) and is in compliance with the SBP requirement for the said year. In addition the Group for the year 2021 has
maintained minimum Capital Adequacy Ratio (CAR) of 20.76% (2020: 20.10%).

There have been no material changes in the Group's management of capital during the year.

2021 2020
(Rupees in '000)
Minimum Capital Requirement (MCR):

Paid-up capital (net of losses) 21,275,131 21,275,131

Capital Adequacy Ratio (CAR):

Eligible Common Equity Tier 1 (CET 1) Capital 204,320,445 176,735,007

Eligible Additional Tier 1 (ADT 1) Capital - -
Total Eligible Tier 1 Capital 204,320,445 176,735,007
Eligible Tier 2 Capital 66,135,418 56,705,915
Total Eligible Capital (Tier 1 + Tier 2) 270,455,863 233,440,922

Risk Weighted Assets (RWAs):

Credit Risk 987,646,626 862,944,817
Market Risk 82,621,030 88,080,262
Operational Risk 232,459,233 210,140,934
Total 1,302,726,889 1,161,166,013

Common Equity Tier 1 Capital Adequacy ratio 15.68% 15.22%

Tier 1 Capital Adequacy Ratio 15.68% 15.22%

Total Capital Adequacy Ratio 20.76% 20.10%

Leverage Ratio (LR):

Tier-1 Capital 204,320,445 176,735,007

Total Exposures 5,768,455,790 4,249,194,554
Leverage Ratio 3.54% 4.16%

370
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)

Liquidity Coverage Ratio (LCR):

Total High Quality Liquid Assets 1,362,545,096 1,200,257,790

Total Net Cash Outflow 828,459,514 666,722,922
Liquidity Coverage Ratio 164% 180%

Net Stable Funding Ratio (NSFR):

Total Available Stable Funding 2,753,443,506 2,309,310,465

Total Required Stable Funding 990,042,101 901,126,786
Net Stable Funding Ratio 278% 256%

47.1 The full disclosures on the Capital Adequacy, Leverage Ratio and Liquidity requirements as per SBP instructions
issued from time to time, is available on NBP's website. The link to the full disclosure is available at
https://www.nbp.com.pk/blsd/

48. RISK MANAGEMENT

Risk management is about understanding and managing the potential for volatility of earnings, loss of access to reliable
deposits and funding and depletion of capital arising from the business activities, whilst pursuing its strategic objectives.
The Group has in place a well-defined risk management strategy / policy with clear objectives and deliverables through
multi-pronged risk management processes.

The Group applies the Basel framework as a cornerstone of the NBP’s risk management framework and capital strategy.
The Group maintains a strong capital, funding and liquidity position in line with its on-going commitment to maintain
balance sheet strength. The strength of risk profile management of the Group stands at the following pillars:

- Identification and assessment of significant material risks.

- Overseeing and managing the risk profile of the Group within the context of the risk appetite.

- Optimize risk/return decisions by aligning them to business objective of achieving sustainable optimum growth.

Information Security Division (ISD) is also an integral part of Risk Management Group to oversee independently the
emerging information/ cyber security risks.

In order to support Risk Management Group (RMG’s) activities, the strong data management mechanism is also in place to
collect and consolidate exposure wise information various risk related analysis and reviews. The mechanism also helps in
identification of e-CIB related information, performing periodic review, generates reports and highlights inconsistencies
and errors, and issuing instructions to the relevant data entry points for rectification.

48.1 Risk Governance Structure

Risk Management Group (RMG) operates as an independent group under the supervision of Chief Risk Officer. RMG's
scope and coverage has been enhanced to cater enterprise-wide risk management, credit approvals, and program
lending. CRO reports directly to the President with a dotted line reporting to the Board Risk & Compliance Committee
(BRCC). The Group is responsible to perform the functions pertaining to development and oversight of the risk framework,
methodologies and other functions assigned from time to time in line with local / international best practices and under the
supervision of SBP’s regulations/ guidelines.

371
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

The Group’s Board is responsible to ensure active oversight over implementation of policies and frameworks so as to
prevent any significant financial loss or reductions in shareholders' value that may be suffered by the Group. Therefore, it is
the responsibility of the Board to ensure that policies and frameworks are in place to recognize all significant/ material risks
to which the Group is / may be exposed and that the required human resource, culture, practices and systems are
adequate to address such risks. The Board and its relevant committee, i.e. Board Risk and Compliance Committee (BRCC)
and the senior management along with its relevant committees i.e. Management Credit Committee (MCC), Enterprise
Risk Committee (ERC), Asset and Liability Committee (ALCO) etc. are responsible to ensure implementation of risk
management framework.

48.2 Risk Management Framework

The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect the changes in market conditions, products and services offered.

The Group implements risk management framework through a ‘Three Lines of Defence’ model which defines clear
responsibilities and accountabilities for various offices and ensures effective and independent oversight and also that the
activities take place as intended. RMG together with Compliance Group acts as second line of defence and performs
integrated function of oversight and independently challenges the effectiveness of risk management actions taken by
business groups, who are the first line of defence. The risk management is further strengthened by the third line of
defence, where Board Audit and Compliance Committee and Audit and Inspection Group add value through independent
and objective assurance in improving risk management functions of the Group.

Following paragraphs introduce Group’s exposures to material risks associated with its business activities and explain
overall strategies and processes to manage those risks:

48.2.1 Credit Risk

Credit Risk arises from the potential that a customer’s or counterparty’s willingness or ability to meet such an obligation is
impaired, resulting in an economic loss to the Group. NBP’s lending activities account for most of the Group’s credit risk
which is continuously evolving in various financial activities including loans and advances, commitments to lend,
contingent liabilities such as letter of credit and guarantees, and other types of both on and off-balance sheet transactions.
The Group has a dedicated setup led by Chief Risk Officer that ensures the effectiveness of the frameworks for
assessment / measurement, review and reporting of credit risk under supervision of Board Risk and Compliance
Committee.

The Group has in place Risk Appetite Framework and Credit Risk Concentration Management Framework to ascertain the
levels of credit risk it undertakes by placing limits on exposures in relation to existing or potential obligors, economic
groups and to various industry segments. Persistent focus on maintaining a robust risk management framework
encompassing structured assessment models, effective pre-disbursement evaluation tools and an array of post
disbursement review systems has enabled NBP to effectively manage its credit risk.

The Risk Management function of the Group is regularly conducting assessments, on perpetual basis, of the credit
portfolio to identify borrowers and sectors most likely to get affected due to changes in the business and economic
environment locally as well as globally. The Group is cognizant of the fact that COVID-19 situation is posing challenges for
the industry in general, and for the risk management function in particular. Group is proactively keeping an eye on the
delinquency in the accounts, financial position of the counterparty and other relevant information.

Credit review and approval process of the Group is well-defined and is managed under strict supervision of senior
management. For analysis of counterparties within various asset classes / constitutions / economic group, the Group has
in place a statistically validated rating model, which further enhances the credit risk analysis. This creates an integral
contribution in decision making by senior management of the Group. Concentration of exposure / risk in any of
counterparty, economic group, or industry is assessed frequently and accordingly limit setting is tailored.

372
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

The Group has also engaged itself towards implementation of IFRS 9 standard, which is currently in parallel-run phase.
The standard sets out new model for financial assets, which requires recognition of impairment charge based on an
‘Expected Credit Loss’ approach rather than the ‘Incurred Credit Loss’ approach as currently followed."

Moreover, under the leadership of CEO & CRO, the credit approval process was brought in line with global best practices
by implementing the delegated approval authorities to Country Credit Officer (CCO) & Senior Credit Officer (SCO). This has
vastly improved the turnaround time (TAT) for credit approvals besides a focused approach to asset/loan monitoring. The
SCO’s have been assigned loan portfolios per their expertise i.e. IDG, CIBG, IFRG & Special Assets (Remedial).
Furthermore, the risk team has also started making joint visits with the business teams to customers site which has proved
to be very helpful in understanding the ground realities and also supports in making an informed decision.

Retail & Program Lending Group has recently been established within Risk Management umbrella. This Group will
strengthen focus on products that are managed on program lending basis and will add controls, governance and risk
culture around it. Group has been organized on a Credit Cycle approach, with an end to end credit view. It is engaged in
areas of Policy & Portfolio Management, Credit Approvals, Collection & Recovery Oversight, Automation & Risk
Technology, MIS & Project Management, Quality & Compliance, etc. To ensure that the group plays a key role, its Group
Head has been added to Management Credit Committee as a voting member. Given the overall focus on this area, Retail &
Program Lending Risk will play a significant role within larger scheme of Risk Management Group in 2022.

Currently under Basel Framework, Standardized Approach is used to calculate capital charge for credit risk weighted
assets, with simple approach for credit risk mitigation. Additionally, stress testing for credit risk is completed on regular
basis to evaluate the conceivable effects of scenarios provided by the regulator.

Particulars of the Group's significant on-balance sheet and off-balance sheet credit risk in various sectors are analysed as
follows:

48.2.1.1Lendings to financial institutions

Credit risk by public / private sector

Gross lendings Non-performing lendings Provision held

2021 2020 2021 2020 2021 2020
(Rupees in '000)

Public/ Government - - - - - -
Private 335,640,825 126,980,825 174,150 176,150 174,150 176,150
335,640,825 126,980,825 174,150 176,150 174,150 176,150

373
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

48.2.1.2 Investment in debt securities

Credit risk by industry sector

Gross investments Non-performing investments Provision held

2021 2020 2021 2020 2021 2020

(Rupees in '000)

Cement 470,168 470,168 20,168 20,168 20,168 20,168

Chemical 2,076,742 2,073,812 326,742 323,812 326,742 323,812
Construction 3,380,824 3,885,490 1,633,739 1,633,739 1,633,739 1,633,738
Engineering 4,842 4,842 4,842 4,842 4,842 4,842
Fertilizer 655,109 1,040,960 655,109 656,831 655,109 656,831
Sugar 709,719 766,719 709,719 766,719 709,719 766,719
Textile 1,079,625 1,151,054 651,053 651,054 651,055 651,054
Transport - - - - - -
Financial 9,734,656 9,658,543 201,252 210,020 201,252 141,691
Electronics and electrical appliances 1,308,738 1,308,738 1,308,738 1,308,738 1,308,738 1,308,738
Glass and Ceramics 11,361 11,361 11,361 11,361 11,361 11,361
Miscelleneous 467,203 891,092 25,996 25,992 25,996 25,991
Leather and Tenneries 5,288 5,288 5,288 5,288 5,288 5,288
Food and Personal Care Products 11,184 11,184 11,184 11,184 11,184 11,184
Pharmaceuticals 2,413 2,413 2,413 2,413 2,413 2,413
Technology and Communication 11,072 11,072 11,072 11,072 11,072 11,072
Vanaspati and Allied Industries 4,238 4,238 4,238 4,238 4,238 4,238
Oil and Gas Marketing 9,049 12,382 687 687 687 687
Cable and Electrical Goods 4,509 4,509 4,509 4,509 4,509 4,509
Automobile Parts and Accessories 1,185 1,185 1,185 1,185 1,185 1,185
Power (electricity), Gas, Water, Sanitary 34,579,163 37,941,940 - - - -
Tobacco 144 144 144 144 144 144
Paper and Board 10,794 10,794 10,794 10,794 10,794 10,794
Jute 7,081 7,081 7,081 7,081 7,081 7,081
Metal Products 500,000 500,000 - - - -
Services 867,239 890,258 - - - -

55,912,346 60,665,266 5,607,314 5,671,871 5,607,314 5,603,540

Credit risk by public / private sector

Gross investments Non-performing investments Provision held

2021 2020 2021 2020 2021 2020

(Rupees in '000)

Public / Government 29,886,783 31,849,560 7,620 7,620 7,620 7,620

Private 26,025,563 28,815,706 5,599,694 5,664,251 5,599,694 5,595,920
55,912,346 60,665,266 5,607,314 5,671,871 5,607,314 5,603,540

374
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

48.2.1.3 Advances
Credit risk by industry sector

Gross advances Non-performing advances Provision held

2021 2020 2021 2020 2021 2020

(Rupees in '000)

Agriculture, Forestry, Hunting & Fishing 71,243,087 63,054,332 7,208,158 6,204,022 5,192,290 4,514,299
Mining & Quarrying 88,334 282,368 11,336 117,449 11,336 117,449
Textile 160,297,014 132,990,923 37,125,362 37,711,391 37,067,714 35,889,959
Chemical & Pharmaceuticals 5,284,057 4,033,024 2,731,312 2,645,492 2,661,064 2,634,249
Cement 32,057,795 33,124,120 6,317,887 6,311,377 4,094,267 4,093,767
Sugar 36,671,049 35,278,586 15,386,592 15,374,152 15,354,821 14,335,087
Footwear and Leather garments 2,016,893 2,461,054 892,779 840,449 887,472 840,114
Automobile & Transportation Equipment 8,567,080 6,607,421 940,147 971,267 937,466 966,887
Electronics & Electrical Appliances 9,684,327 10,036,223 2,380,885 2,232,278 2,370,272 2,223,278
Construction 20,193,083 12,266,442 9,643,454 4,484,629 6,754,352 4,481,950
Oil & Gas 102,762,247 82,061,196 20,216,650 5,413,208 20,074,535 4,526,641
Power (electricity), Gas, Water, Sanitary 198,946,668 201,168,044 13,209,849 7,789,326 9,311,105 6,745,325
Wholesale and Retail Trade 42,510,970 36,642,933 10,801,296 13,514,848 10,745,332 12,083,484
Exports / Imports 1,501,450 1,687,703 - - - -
Transport, Storage and Communication 55,070,251 55,190,848 12,789,768 11,263,369 10,368,778 9,184,015
Financial 31,806,152 6,358,191 92,331 91,312 92,331 91,312
Services 38,110,525 32,929,861 4,242,115 4,543,558 2,554,475 2,697,680
Individuals 198,236,486 184,106,685 6,215,945 5,962,662 4,342,413 4,123,937
Flour Mills 2,767,236 2,809,954 752,338 735,193 689,028 720,207
Rice Trading & Processing 37,707,929 30,685,877 4,780,678 4,665,312 4,555,487 4,537,360
Food and Tobacco 16,109,497 14,023,712 6,988,672 5,251,343 6,367,546 5,226,208
Fertilizer 11,602,568 15,733,123 2,988,462 2,947,639 2,947,541 2,888,738
Metal Products 71,007,705 67,320,902 25,680,256 25,111,134 25,511,029 24,557,341
Telecommunication 22,011,036 17,064,247 1,136,813 1,159,350 1,136,813 1,159,350
Public Sector Commodity Operations 77,346,473 62,413,440 74,198 74,198 74,198 74,198
General traders - - - 2,993 - 2,244
Engineering 32,121,933 33,444,437 1,422,820 1,416,959 1,415,349 1,410,274
Glass and Ceramics 8,070,726 6,859,290 389,447 396,911 389,447 396,911
Media 1,529,488 2,189,495 381,881 718,124 208,971 293,124
Paper & Board 2,726,772 1,601,970 1,193,719 1,187,897 1,193,719 1,187,897
Plastic products 2,662,060 2,627,648 672,095 651,199 670,607 648,950
Sports goods 1,280,713 978,994 93,818 93,818 93,818 93,818
Surgical equipments 824,409 827,764 12,151 64,674 8,558 64,674
Others 2,625,314 2,072,130 1,572,474 1,865,079 1,572,474 1,777,042
1,305,441,329 1,160,932,938 198,345,689 171,812,612 179,654,609 154,587,769

Credit risk by public / private sector

Gross advances Non-performing advances Provision held

2021 2020 2021 2020 2021 2020

(Rupees in '000)

Public / Government 420,736,532 337,572,330 - 2,672,432 - 2,522,432

Private 884,704,797 823,360,608 198,345,689 169,140,180 179,654,608 152,065,337
1,305,441,329 1,160,932,938 198,345,689 171,812,612 179,654,608 154,587,769

375
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
(Rupees in '000)

48.2.1.4 Contingencies and Commitments

Credit risk by industry sector

Agriculture, Forestry, Hunting & Fishing 100,504 170,777
Mining & Quarrying 1,418,487 2,605,392
Textile 25,421,310 18,571,105
Chemical & Pharmaceuticals 6,001,560 9,558,756
Cement 9,718,289 4,269,235
Sugar 592,840 303,184
Footwear and Leather garments 182 162
Automobile & Transportation Equipment 4,435,897 11,886,834
Electronics & Electrical Appliances 2,843,195 2,959,697
Construction 9,718,062 9,036,763
Oil & Gas 104,645,267 39,173,307
Power (electricity), Water, Sanitary 61,808,701 83,646,557
Wholesale and Retail Trade 2,346,916 1,624,388
Exports / Imports 272,733 317,066
Transport, Storage and Communication 47,721,546 28,020,866
Financial 719,655,625 544,516,361
Services 1,355,079,802 950,517,287
Individuals 77,114 394,092
Fertilizer 3,652,239 1,394,690
Metal Products 15,961,141 9,828,654
Telecommunication 25,141,952 14,070,734
Public Sector Commodity Operations 8,249,178 12,565,661
Rice processing & Trading 20,825 39,174
Food and Tobacco 448,128 376,730
Glass and Ceramics 1,484,463 1,007,344
Paper & Board 2,046,783 551,469
Engineering 77,952,489 43,596,296
Plastic Products 258,541 27,432,671
Surgical equipments 19,459 750
Others 3,411,207 2,347,864
2,490,504,435 1,820,783,867

* Contingent liabilities for the purpose of this note are presented at cost and includes direct credit substitutes, transaction
related contingent liabilities and trade related contingent liabilities.

2021 2020
(Rupees in '000)
Credit risk by public / private sector

Public / Government 1,402,649,361 948,334,918

Private 1,087,855,075 872,448,949
2,490,504,436 1,820,783,867

376
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

48.2.1.5 Concentration of Advances

The bank top ten (10) exposures on the basis of total (funded and non-funded expsoures) aggregated to Rs. 1,474,941
million (2020: Rs. 1,093,518 million) are as follows:
2021 2020
(Rupees in '000)

Funded 244,605,208 250,314,704

Non Funded 1,230,335,750 843,203,477
Total Exposure 1,474,940,958 1,093,518,181

The sanctioned limits against these top 10 exposures aggregated to Rs. 1,563,667 million (2020: Rs. 1,280,786 million)

Total funded classified therein 2021 2020

Amount Provision held Amount Provision held
(Rupees in '000)

Loss - - 2,522,432 2,522,432

Total - - 2,522,432 2,522,432

For the purpose of this note, exposure means outstanding funded facilities and utilised non-funded facilities as at the
reporting date.
48.2.1.6 Advances - Province / Region-wise Disbursement and Utilization
2021
Disbursements Utilization
KPK including AJK including
Province/Region Punjab Sindh Balochistan Islamabad
FATA Gilgit-Baltistan
(Rupees in '000)

Punjab 227,503,496 221,078,413 1,855,596 3,944,464 - 11,120 613,903

Sindh 479,243,405 4,500,000 466,243,405 - - 8,500,000 -
KPK including FATA 11,698,517 - - 11,698,517 - - -
Balochistan 3,678,107 - - - 3,678,107 - -
Islamabad 62,861,679 12,830,357 9,892,187 3,099,940 - 37,039,195 -
AJK including Gilgit-Baltistan 7,310,487 - - - - - 7,310,487
Total 792,295,691 238,408,770 477,991,188 18,742,921 3,678,107 45,550,315 7,924,390

2020
Disbursements Utilization
KPK including AJK including
Province/Region Punjab Sindh Balochistan Islamabad
FATA Gilgit-Baltistan
(Rupees in '000)

Punjab 210,145,408 207,931,532 1,625,942 - - - 587,934

Sindh 390,658,220 4,704,206 377,454,014 - - 8,500,000 -
KPK including FATA 6,176,977 - - 6,176,977 - - -
Balochistan 3,855,924 - - - 3,332,924 - 523,000
Islamabad 49,991,187 8,853,922 12,271,029 1,712,540 - 27,153,696 -
AJK including Gilgit-Baltistan 2,798,820 - - - - - 2,798,820
Total 663,626,536 221,489,660 391,350,985 7,889,517 3,332,924 35,653,696 3,909,754

377
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

48.2.2 Market Risk

Market Risk is the value of on and off-balance sheet positions of a financial institution that will be adversely affected by
movements in market factors such as interest rates, foreign exchange rates, equity prices, credit spreads and/or
commodity prices resulting in a loss to earnings and capital.

The Group’s market risk is managed through Market Risk Management (MRM) Framework approved by the Board which
is comprised of related policies / procedures with the objective to mitigate market risk. Group has in-place scorecards/
criteria for various market risk limits. Under the developed Value-at-Risk (VaR) models and policy framework, VaR limits
are being monitored with an objective to be used for capital charge calculation under IMA approach in future.

Standardized Approach is used to calculate capital charge for market risk as per Basel framework. Whereas, stress
testing for interest rate, equity prices, and exchange rates risks activities is carried out regularly to estimate the impact
on the capital of the Group.

In addition to the regulatory requirements, Group has devised proprietary market risk stress testing scenarios which are
performed on periodic basis to assess the impact on capital of the Bank for Internal Capital Adequacy and Assessment
Process (ICAAP). Limits / zones and Management Action Triggers and Management Action Plans corresponding to
Liquidity Ratio, Balance Sheet Duration Gap, Government Securities PVBP and Duration have also been developed.

48.2.2.1 Statement of Financial position split by trading and banking books

2021 2020
Banking book Trading book Total Banking book Trading book Total
(Rupees in '000)

Cash and balances with treasury banks 278,868,736 - 278,868,736 249,969,566 - 249,969,566
Balances with other banks 19,211,237 - 19,211,237 15,015,366 - 15,015,366
Lendings to financial institutions 335,466,675 - 335,466,675 126,804,675 - 126,804,675
Investments 1,821,039,266 121,701,925 1,942,741,191 1,368,195,288 98,210,085 1,466,405,373
Advances 1,113,314,128 - 1,113,314,128 983,871,421 - 983,871,421
Fixed assets 54,833,801 - 54,833,801 55,086,809 - 55,086,809
Intangible assets 1,171,446 - 1,171,446 1,022,143 - 1,022,143
Right of use assets 7,090,980 - 7,090,980 7,017,020 - 7,017,020
Deferred tax asset 1,902,811 - 1,902,811 - - -
Other assets 102,433,942 - 102,433,942 112,017,619 - 112,017,619
3,735,333,022 121,701,925 3,857,034,947 2,918,999,907 98,210,085 3,017,209,992

48.2.2.2 Foreign Exchange Risk

Foreign exchange and translation risk arises from the impact of currency movements on the value of the Group’s cash
flows, profits and losses, and assets and liabilities as a result of participation in global financial markets and international
operations.

In order to manage currency risk exposure the Group enters into ready, spot, forward and swap transactions with the
SBP and in the inter Bank market, financial institutions and corporate. The Group’s foreign exchange exposure
comprises forward contracts, purchases of foreign bills, foreign currencies cash in hand, balances with Banks abroad,
foreign placements with the SBP and foreign currencies assets and liabilities. Foreign Exchange exposure is managed
within the statutory limits, as fixed by the SBP. Appropriate segregation of duties exists between the front, middle and
back office functions.

378
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

2021 2020
Foreign Foreign Net foreign Foreign Foreign Net foreign
Off-balance Off-balance
Currency Currency currency Currency Currency currency
sheet items sheet items
Assets Liabilities exposure Assets Liabilities exposure
(Rupees in '000)

United States Dollar 230,696,801 321,594,407 87,452,155 (3,445,451) 158,975,693 250,386,427 115,299,103 23,888,369
Great Britain Pound 5,012,811 5,950,831 4,303,047 3,365,027 4,253,451 5,613,790 3,235,840 1,875,502
Japanese Yen 3,939,522 3,283,911 2,315,294 2,970,904 4,080,732 1,123,760 168,624 3,125,596
Euro 13,413,044 19,043,837 7,628,249 1,997,456 8,625,157 10,298,009 3,462,911 1,790,059
Other currencies 75,261,167 18,382,109 3,130,155 60,009,213 68,372,930 20,716,084 2,996,887 50,653,733

328,323,345 368,255,095 104,828,900 64,897,149 244,307,963 288,138,070 125,163,365 81,333,259

2021 2020
Banking book Trading book Banking book Trading book
(Rupees in '000)
Impact of 1% change in foreign exchange rates

- Profit and loss account - - - -

- Other comprehensive income - 648,971 - 813,333

48.2.2.3 Equity position Risk

The trading activities also raise risk which occurs resulting in negative fluctuations of daily stock prices specifically in
those stocks which are held by the Group, hence, deplete capital. The Group’s equity position is managed through limits
imposed by regulator for both, overall investment and exposure in single scrip. Moreover, internal limits are set to
possibly manage overall earnings in the form of placing of stop loss limits and/ or through diversification within the
structure of overall equity position portfolio.
2021 2020
Banking book Trading book Banking book Trading book
(Rupees in '000)
Impact of 5% change in equity prices

- Profit and loss account - - - -

- Other comprehensive income 2,671,767 - 3,065,915 -

48.2.2.4 Yield / Interest Rate Risk in the Banking Book (IRRBB)-Basel II Specific

Interest rate risk specifically arises due to adverse movements in yield curve of underlying asset which is being
monitored by ALCO with an objective to possibly limiting the potential impact over the profitability of the Group which
may result in instability of market based interest rates and mismatching or gaps in the amount of financial assets and
financial liabilities in different maturity time bands. Bank assumes that the sources of IRR are based on following sub-
risks.

- Re-pricing risk; arising from changes to the overall level of interest rates and inherent mismatches in the re-pricing
term of banking book items.

- Yield curve risk; arising from a change in the relative level of interest rates for different tenors and changes in the
slope or shape of the yield curve.

- Basis risk; arising from differences between the actual and expected interest margins on Banking book items over
the implied cost of funds of those items.

379
 2021 2020
Banking book Trading book Banking book Trading book

380
-------------------------- (Rupees in '000) ----------------------------
Impact of 1% change in interest rates on

- Profit and loss account - 368,677 - 131,186

- Other comprehensive income 8,629,166 - 12,965,285 -

48.2.2.5 Mismatch of Interest Rate Sensitive Assets and Liabilities

2021
Effective Total Exposed to Yield/ Interest risk Non-interest
Yield/ Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 bearing
Interest Upto 1 to 3 to 6 Months to 1 to 2 to 3 to 5 to 10 Above financial
rate Month Months Months Year Years Years Years Years 10 Years instruments
On-balance sheet financial instruments

Assets

Cash and balances with treasury banks 0.1% 278,868,736 25,910,106 - 1,230,868 - - - - - - 251,727,762
Balances with other banks 0.6% 19,211,237 5,193,321 514,671 728,951 766,148 - - - - - 12,008,146
Lending to financial institutions 10.4% 335,466,675 305,466,675 - 30,000,000 - - - - - - -
Investments 8.2% 1,942,741,191 52,071,307 600,631,710 163,339,043 147,989,238 412,825,053 115,300,016 133,826,520 231,572,946 7,808,110 77,377,251
Advances 7.4% 1,113,314,128 232,790,642 347,491,341 221,525,465 87,272,918 15,422,466 18,353,878 96,696,071 52,224,236 21,686,992 19,850,120
Other assets 0.0% 61,505,255 642,580 - 127,892 114,884 - - - - - 60,619,899
For the year ended December 31, 2021

3,751,107,222 622,074,631 948,637,721 416,952,219 236,143,188 428,247,519 133,653,894 230,522,591 283,797,182 29,495,102 421,583,178
Liabilities

Bills payable 0.0% 21,848,270 - - - - - - - - - 21,848,270

Borrowings 10.1% 312,925,106 33,593,924 129,395,726 81,758,922 29,616,731 13,099,389 3,634,279 6,463,258 15,362,877 - -
Deposits and other accounts 4.0% 3,018,147,709 1,605,631,447 92,855,650 64,016,936 72,939,727 18,293,487 79,321,676 4,558,165 588,979 - 1,079,941,642
Liabilities against assets subject to finance lease 9.9% 133,598 78,116 - - - - 55,482 - - - -
Lease liability against right of use assets 10.0% 8,360,755 - 20,960 69,732 461,203 643,301 788,395 1,849,562 3,046,610 1,480,992 -
Other liabilities 0.0% 196,962,495 847,788 - - - - - - - - 196,114,706
3,558,377,933 1,640,151,275 222,272,336 145,845,590 103,017,659 32,036,178 83,799,832 12,870,985 18,998,466 1,480,992 1,297,904,618
On-balance sheet gap 192,729,288 (1,018,076,643) 726,365,384 271,106,630 133,125,529 396,211,341 49,854,062 217,651,606 264,798,716 28,014,110 (876,321,440)

Off-balance sheet financial instruments

Documentary credits and short-term trade-related transactions 1,582,757,532 - - - - - - - - - 1,582,757,532

Commitments in respect of:

- forward foreign exchange contracts 104,828,900 18,483,677 9,917,130 74,965,217 1,462,876 - - - - - -
- forward government securities transactions 22,180,109 - (171,626) - 22,793,079 - - (441,343) - - -
Commitments for acquisition of:
- operating fixed assets 826,737 344,837 314,748 50,916 116,236 -
Other commitments - - - - - - - - - - -
Off-balance sheet gap 1,710,593,278 18,828,514 10,060,252 75,016,133 24,372,191 - - (441,343) - - 1,582,757,532

Total Yield/Interest Risk Sensitivity Gap (999,248,130) 736,425,636 346,122,763 157,497,720 396,211,341 49,854,062 217,210,263 264,798,716 28,014,110 706,436,092
Notes to and forming part of the Consolidated Financial Statements

Cumulative Yield/Interest Risk Sensitivity Gap (999,248,130) (262,822,493) 83,300,269 240,797,989 637,009,330 686,863,392 904,073,655 1,168,872,370 1,196,886,480 1,903,322,572
 2020
Effective Total Exposed to Yield/ Interest risk Non-interest
Yield/ Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 bearing
Interest Upto 1 to 3 to 6 Months to 1 to 2 to 3 to 5 to 10 Above financial
rate Month Months Months Year Years Years Years Years 10 Years instruments
-------------------------------------------------------------------------------------------------------- (Rupees in '000) --------------------------------------------------------------------------------------------------------
On-balance sheet financial instruments

Assets

Cash and balances with treasury banks 1.5% 249,969,566 24,564,578 - - 3,574,948 - - - - - 221,830,039
Balances with other banks 2.3% 15,015,366 5,167,970 364,979 455,390 690,430 - - - - - 8,336,597
Lending to financial institutions 6.6% 126,804,675 126,804,675 - - - - - - - - -
Investments 11.3% 1,466,405,373 167,155,470 466,849,352 45,910,297 105,037,751 93,635,069 139,693,515 124,152,455 237,876,476 10,399,389 75,695,600
Advances 9.0% 983,871,421 228,603,203 354,991,745 140,752,581 66,108,285 16,909,414 48,488,652 72,419,084 28,992,848 25,391,406 1,214,202
Other assets 0.0% 59,589,279 411,322 - 5,775 133,351 - 246 8,341 - - 59,030,243
2,901,655,680 552,707,218 822,206,076 187,124,043 175,544,765 110,544,483 188,182,413 196,579,880 266,869,324 35,790,795 366,106,681
Liabilities

Bills payable 0.0% 16,795,186 - - - - - - - - - 16,795,186

Borrowings 6.6% 138,539,005 10,688,517 10,993,746 56,908,784 42,516,430 2,392,766 3,509,557 6,420,414 5,108,790 - -
Deposits and other accounts 5.2% 2,418,928,469 1,295,603,069 88,051,369 32,233,664 52,812,308 12,050,442 3,913,846 13,040,142 652,508 - 920,571,121
Liabilities against assets subject to finance lease 9.1% 197,224 - - - 73,481 - 123,743 - - - -
Lease liability against right of use assets 10.0% 7,869,355 41 21,491 58,035 212,985 812,047 816,618 1,820,743 2,838,255 1,289,140 -
Other liabilities 0.0% 154,209,188 280,806 - 9,487 - - - - - - 153,918,895
2,736,538,427 1,306,572,433 99,066,606 89,209,970 95,615,204 15,255,255 8,363,764 21,281,299 8,599,553 1,289,140 1,091,285,202
On-balance sheet gap 165,117,253 (753,865,215) 723,139,470 97,914,073 79,929,561 95,289,228 179,818,649 175,298,581 258,269,771 34,501,655 (725,178,521)

Off-balance sheet financial instruments

Documentary credits and short-term trade-related transactions 1,096,347,086 - - - - - - - - - 1,096,347,086

For the year ended December 31, 2021

Commitments in respect of:

- forward foreign exchange contracts 125,163,364 30,923,782 86,543,418 6,097,820 1,598,344 - - - - - -
- forward government securities transactions (26,632,678) (26,632,678) - - - - - - - - -
Commitments for acquisition of:
- operating fixed assets 632,619 414,641 92,492 32,492 92,994 - - - - - -
Other commitments - - - - - - - - - - -
Off-balance sheet gap 1,195,510,391 4,705,745 86,635,910 6,130,312 1,691,338 - - - - - 1,096,347,086

Total Yield / Interest Risk Sensitivity Gap (749,159,470) 809,775,380 104,044,385 81,620,899 95,289,228 179,818,649 175,298,581 258,269,771 34,501,655 371,168,565

Cumulative Yield / Interest Risk Sensitivity Gap (749,159,470) 60,615,910 164,660,295 246,281,195 341,570,423 521,389,072 696,687,653 954,957,425 989,459,079 1,360,627,644

2021 2020

48.2.2.6 Reconciliation of Financial Assets and Liabilities with Total Assets and Liabilities ----------------- (Rupees in '000) ----------------

Total Financial Assets as per note 48.2.2.5 3,751,107,222 2,901,655,680

Add: Non-Financial Assets

Fixed assets 54,833,801 55,086,809

Intangible assets 1,171,446 1,022,143
Right of Use Assets 7,090,980 7,017,020
Deferred tax assets 1,902,811 -
Other assets 40,928,687 52,428,340
105,927,725 115,554,312
Total assets as per statement of financial position 3,857,034,947 3,017,209,992

Total Financial Liabilities as per note 48.2.2.5 3,558,377,933 2,736,538,427

Add: Non-Financial Liabilities

Deferred tax liabilities - 2,933,124

Other liabilities 3,633,633 3,336,159
3,633,633 6,269,283

381
Notes to and forming part of the Consolidated Financial Statements

Total liabilities as per statement of financial position 3,562,011,566 2,742,807,710

Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

48.2.3 Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from
external events. This definition includes legal risk but excludes strategic and reputational risks. To mitigate, an Operational
Risk Management (ORM) Framework has been developed to align the Group’s operations with sound practices of
operational risk by Basel framework. ORM Framework provides guidance for setting the operational risk strategy of the
Group, selection and adoption of risk and loss measurement tools, reporting, and establishment of operational risk
management processes.

Operational risks are a core component of doing business arising from the day-to-day operational activities of the Group
including launching of new products and services by the Group. Group realizes that operational risks cannot be fully
mitigated, it therefore determines an appropriate balance between accepting potential losses and incurring costs of
mitigation.

Further, the Group has adopted a comprehensive Operational Risk Management Strategy and Operational Risk Tolerance
limits approved by the Board in-line with Basel framework. Furthermore, the Group has rolled-out Operational Loss Data
Collection Mechanism whereby field functionaries and Groups/Divisions at head office are responsible to report
operational losses under their jurisdictions on a certain frequency. Operational loss events are reviewed and appropriate
corrective measures are taken on an ongoing basis. Risk Evaluation exercise is carried out for new products, processes
and systems as per the operational risk policy of the group.

The Group has also conducted analysis of major Operational Risk Incidents covering key control lapses and accordingly
suggested recommendations & mitigations. As per Basel regulatory framework, the Group calculates capital charge for its
operational risk using Basic Indicator Approach. This approach is considered most suitable in view of the business model
of the Group which relies on an extensive network of branches to offer Grouping services to its customers.

Moreover, the Group closely monitored the situation and undertaken required actions to ensure the safety and security of
Group staff and maintenance of service to its customers. The Senior Management of the Group including the Covid Crises
Management Team closely monitored the situation, and took timely decisions to resolve any concerns.

The Group continued to take measures to ensure the maintenance of their service levels, resolved customer complaints to
meet the expectations of its stakeholders.

The Group's operations stayed highly resilient and the Group deployed all necessary measures for the health and safety of
its employees to prevent them from the pandemic situation.

48.2.4 Information Security Risk

Cyber Security is one of our top priority risks. Considering extensive customer base and increasing digital footprint,
mechanism has been devised for upscaling of technology infrastructure and related channels from information security
standpoint. Further, due to evolving cyber threat landscape, the Group has taken appropriate actions to monitor and
respond to cybersecurity risks and adopted a heightened state of cybersecurity. We are living in the highly technology
dependent environment, where most of the business functions are performed with information technology for storing,
processing and sharing information; the information “assets” that are being used to store, process and transmit the
information, face various types of threats. If threats get materialized and are able to exploit the vulnerabilities (weaknesses)
present in these information assets, the confidentiality, integrity and availability of information get compromised. In order to
mitigate the risks, certain controls and counter-measures need to be assessed and implemented. The Group has devised a
governance mechanism to manage related risks through development of Policies and Framework, and deployed security
tools to ensure adequate implementation of internal controls and monitoring of security threats within technology
infrastructure.

Our staff is first line of defence against any cyber attacks therefore the Group regularly assesses the information security
controls and undertake employees’ awareness and trainings. The Group works with its key technology partners to ensure
that potential vulnerable systems are identified and appropriate controls, updates and patches are implemented to secure
the systems. The Group is actively communicating with its customers on interacting with the Group in a secure manner
through its full suite of channels including online and digital Grouping.

382
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

In the late hours of October 29, 2021 and early morning of October 30, 2021, the Bank’s IT Infrastructure came under a
cyberattack. As a result, NBP’s business-critical servers along with several workstations went down which disrupted the
business operations. The services primarily running on the Windows operating system were impacted. A committee was
formed to keep track of the systems affected and their restorations. The status of the systems that were affected as a
result of cyberattack and their restorations was also reported to the State Bank of Pakistan. The management has also
taken on board various vendors to assist the Bank in carrying out analysis of the potential lapses that led to the attack and
also to take initiatives and develop processes for dealing with such events in future. The systems of the Bank are up and
running and as per management’s assessment, there is no impact on the Bank’s IT infrastructure as a result of
cyberattack. The management is cognizant of the fact that cyber security is a top priority risk and the Bank is taking
appropriate steps to monitor and respond to it.

48.2.5 Enterprise-wide Risk

In addition to the above mentioned risks, the Group has a structure to identify residual material risks on periodic basis. The
source of these reports includes, but not limited to, the Board approved Internal Capital Adequacy and Assessment
Process (ICAAP), which commensurate risks over and above those which directly occurs as a result of daily business and
operations of the Group. These risks include Concentration Risk, Interest Rate Risk in Grouping Book (IRRBB), Increase in
NPL Categories, Reputational Risk, Strategic Risk, etc.

Moreover, all those brewing risks that are material and arise within the Group or due to inherent behaviour of country’s
market and economic conditions, whether in isolation or in combinations are covered under the Group-wide Recovery
Plan. These risks are monitored on certain frequency and corrective actions are taken as and when deemed necessary.

Group's Stress-testing framework, comprises of tools, to deliver a timely assessment of the resilience of the Group’s
capital under stressed conditions to the senior management. It encompasses simplest to sophisticated stress testing
methods to capture the abnormal movement of market and economy based indicators and to translate such scenarios into
projections of Group’s profitability and capital planning.

This framework paves the way to a quantitative, forward-looking assessment of capital adequacy (movement/ level of
Capital Adequacy Ratio (CAR) of the Group) to provide an indication of how much capital might be needed to absorb
losses. It helps in identifying potential vulnerabilities within the Group and assessing solvency by applying plausible/ past
adverse scenarios under extreme conditions.

48.2.6 Liquidity Risk

Liquidity risk is the risk of loss to a Group arising from its inability to meet obligations as they fall due or to fund growth in
assets, without incurring unacceptable costs or losses. More simply, liquidity risk is the possibility that a Group will be
unable to meet its financial commitment to a customer, creditor, or investor when due, in a timely and cost-effective
manner.

To mitigate this risk, Group has arranged diversified funding sources, manages specific assets with liquidity in mind and
monitors liquidity on daily basis. In addition, the Group maintains statutory deposits with central Groups inside and outside
Pakistan. The purpose of liquidity management is to ensure that there are sufficient cash flows to meet all of the Group's
liabilities when due, under both normal and stressed conditions without incurring unacceptable losses, as well as to
capitalize on opportunities for business expansion and profitability. This includes the Group's ability to meet deposit
withdrawals either on demand or at contractual maturity, to repay borrowings as they mature and to make new loans and
investments, as opportunities arise.

Asset and Liability Committee (ALCO) is responsible for ensuring that the Group has adequate liquidity and monitors
liquidity gaps, to execute this responsibility. Mandatory as well as advanced/ optional stress testing and ratio based
liquidity assessments are performed to proactively identify and manage liquidity position, needs /requirements. Group has
various limits / ratios, triggers and management actions in place to monitor and mitigate liquidity risk. The Group
calculates and monitors, on regular basis, Basel-III Liquidity standards (includes LCR, NSFR and LMTs), liquidity ratios as
per SBP parameters besides other internal liquidity measures.

383
 48.2.6.1 Maturities of Assets and Liabilities - based on contractual maturity of the assets and liabilities of the Group

2021

384
Total Upto 1 Day Over 1 to 7 days Over 7 to 14 Over 14 days Over 1 to 2 Over 2 to 3 Over 3 to 6 Over 6 to 9 Over 9 Over 1 to 2 Over 2 to 3 Over 3 to 5 Over 5 years
days to 1 month months months months months months to 1 years years years
year

Assets
Cash and balances with treasury banks 278,868,736 275,944,884 44 - 1,689,838 1,790 1,312 1,230,868 - - - - - -
Balances with other banks 19,211,237 14,058,290 1,179,175 564,725 533,617 401,660 978,671 728,951 766,148 - - - - -
Lendings to financial institutions 335,466,675 2,405,644 274,914,137 28,146,895 - - - 30,000,000 - - - - - -
Investments 1,942,741,191 5,930,381 611,150 40,375,405 4,704,040 116,295,658 484,786,384 163,339,043 79,413,300 106,995,926 417,599,594 142,824,222 134,858,789 245,007,299
Advances 1,113,314,128 319,029,873 3,305,102 2,934,122 49,957,744 68,514,293 32,145,072 99,618,166 44,682,449 56,210,932 56,918,407 90,680,852 127,063,315 162,253,800
Fixed assets 54,833,801 215 - - 23,071 9,888 30,445 - - 1,013,603 2,401,684 851,344 1,708,546 48,795,006
Intangible assets 1,171,446 - - - - - 926 1,853 2,779 170,478 168,337 168,147 96,372 562,553
Right of use assets 7,090,980 343 2,058 2,401 5,488 27,972 10,754 84,790 103,680 142,356 777,268 592,581 1,456,282 3,885,007
Deferred tax assets 1,902,811 - - - - - - - 212,593 62,366 2,203 - 1,625,647 -
Other assets 102,433,942 18,303,153 867,181 269,736 240,256 17,500,804 16,992,000 12,596,172 1,388,113 1,369,429 29,274,348 725,138 1,087,707 1,819,904
3,857,034,947 635,672,783 280,878,847 72,293,284 57,154,054 202,752,065 534,945,564 307,599,843 126,569,064 165,965,090 507,141,841 235,842,284 267,896,660 462,323,569
Liabilities
Bills payable 21,848,270 21,848,270 - - - - - - - - - - - -
Borrowings 312,925,106 60,004 2,886,366 27,335,647 3,311,907 108,642,330 20,753,395 81,758,922 26,987,971 2,628,760 13,099,389 3,634,279 6,463,258 15,362,877
Deposits and other accounts 3,018,147,709 2,544,464,772 26,553,859 11,971,222 92,050,351 76,536,916 17,074,721 83,328,141 32,764,725 27,549,128 12,326,386 85,151,041 7,060,714 1,315,732
Liabilities against assets subject to
finance lease 133,598 - - - - - - - - 78,113 - 55,485 - -
Lease liability against right of use assets 8,360,755 - - - - 20,497 463 69,732 92,367 358,411 721,743 804,651 1,765,289 4,527,602
Other liabilities 200,596,128 86,093,504 838,824 30,252 714,543 6,177,726 6,119,874 29,277,808 1,828,346 1,843,990 25,961,044 8,538,736 16,576,941 16,594,540
3,562,011,566 2,652,466,550 30,279,049 39,337,122 96,076,801 191,377,469 43,948,453 194,434,603 61,673,409 32,458,402 52,108,562 98,184,192 31,866,202 37,800,751
Net assets 295,023,381 (2,016,793,767) 250,599,798 32,956,162 (38,922,746) 11,374,596 490,997,111 113,165,240 64,895,655 133,506,688 455,033,279 137,658,091 236,030,458 424,522,819

Share capital 21,275,131

Reserves 62,427,269
Unappropriated profit 145,312,547
Surplus on revaluation of assets 64,994,980
For the year ended December 31, 2021

Non-controlling interest 1,013,454

295,023,381

2020
Total Upto 1 Day Over 1 to 7 days Over 7 to 14 Over 14 days Over 1 to 2 Over 2 to 3 Over 3 to 6 Over 6 to 9 Over 9 Over 1 to 2 Over 2 to 3 Over 3 to 5 Over 5 years
days to 1 month months months months months months to 1 years years years
year
(Rupees in '000)

Assets
Cash and balances with treasury banks 249,969,566 245,059,070 845,550 - 489,997 - - - - 3,574,948 - - - -
Balances with other banks 15,015,366 9,199,199 2,659,756 - 1,645,612 205,127 159,852 455,390 308,490 381,940 - - - -
Lendings to financial institutions 126,804,675 - 122,804,675 2,300,000 1,700,000 - - - - - - - - -
Investments 1,466,405,373 7,505,285 983,775 128,486,813 30,179,598 230,232,181 236,617,171 45,910,297 113,118,951 39,062,131 97,899,248 157,346,293 125,301,464 253,762,168
Advances 983,871,421 334,403,880 1,854,530 3,454,238 32,164,790 59,734,019 16,613,801 60,217,771 30,309,223 30,140,836 41,668,685 78,281,159 157,296,409 137,732,080
Fixed assets 55,086,809 - - - 53,118 22,765 40,105 2,135 - 893,464 2,879,531 734,166 1,617,909 48,843,616
Intangible assets 1,022,143 91 546 637 1,455 2,728 2,728 8,877 8,184 109,455 131,741 127,175 65,974 562,553
Right of use assets 7,017,020 - - - 201 14,649 5,276 51,391 29,405 201,414 683,219 736,833 1,528,327 3,766,306
Other assets 112,017,619 17,062,228 255,641 - 941,238 17,934,892 18,136,013 10,892,766 1,206,337 1,204,129 38,266,979 3,351,081 2,762,030 4,284
3,017,209,992 613,229,753 129,404,473 134,241,688 67,176,009 308,146,361 271,574,946 117,538,627 144,980,590 75,568,317 181,529,403 240,576,707 288,572,113 444,671,007
Liabilities
Bills payable 16,795,186 16,795,186 - - - - - - - - - - - -
Borrowings 138,539,005 1,966,540 - 5,266,007 3,455,970 4,727,114 6,266,632 56,908,784 41,474,224 1,042,206 2,392,766 3,509,557 6,420,414 5,108,790
Deposits and other accounts 2,418,928,469 2,067,874,191 23,713,202 11,128,935 102,766,802 51,070,288 13,467,529 66,056,859 20,877,326 18,483,105 12,454,175 8,477,921 21,086,963 1,471,175
Liabilities against assets subject to
finance lease 197,224 - - - - - - - - 73,480 - - 123,744 -
Lease liability against right of use assets 7,869,355 - - - 41 15,141 6,349 58,035 25,319 194,773 870,055 674,695 1,897,552 4,127,395
Deferred tax liabilities 2,933,124 - - - - - - - - 2,275 - - 2,930,849 -
Other liabilities 157,545,347 61,524,307 731,652 280,904 1,092,932 9,347,200 24,852,920 15,236,144 1,210,882 1,141,620 15,947,785 5,339,632 10,747,569 10,091,800
2,742,807,710 2,148,160,224 24,444,854 16,675,846 107,315,745 65,159,743 44,593,430 138,259,822 63,587,751 20,937,459 31,664,781 18,001,805 43,207,091 20,799,160
Net assets 274,402,282 (1,534,930,471) 104,959,619 117,565,842 (40,139,734) 242,986,618 226,981,516 (20,721,195) 81,392,839 54,630,858 149,864,622 222,574,902 245,365,022 423,871,847

Share capital 21,275,131

Reserves 57,591,417
Unappropriated profit 120,631,784
Surplus/(Deficit) on revaluation of assets 73,987,802
Non-controlling interest 916,148
Notes to and forming part of the Consolidated Financial Statements

274,402,282
 48.2.6.2 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Group

2021
Total Upto 1 Month Over 1 to 3 Over 3 to 6 Over 6 months Over 1 to 2 Over 2 to 3 Over 3 to 5 Over 5 to 10 Above 10
months months to 1 year years years years years years
------------------------------------------------------------------------------------------------------------------ (Rupees in '000) -----------------------------------------------------------------------------------------------------------------
Assets
Cash and balances with treasury banks 278,868,736 173,801,956 4,355,501 47,906,066 46,675,198 6,130,015 - - - -
Balances with other banks 19,211,237 16,415,203 1,300,935 728,951 766,148 - - - - -
Lendings to financial institutions 335,466,675 305,466,675 - 30,000,000 - - - - - -
Investments 1,942,741,191 64,652,329 644,716,403 139,330,956 158,840,696 415,356,424 142,327,662 134,189,408 231,088,253 12,239,061
Advances 1,113,314,128 308,024,550 184,249,818 91,475,278 92,648,910 56,918,407 90,680,852 127,062,513 89,148,053 73,105,747
Fixed assets 54,833,801 23,286 40,333 - 1,013,603 2,401,684 876,223 1,683,667 55,286 48,739,719
Intangible assets 1,171,446 3,240 6,480 9,720 177,315 206,477 205,660 - 562,553 -
Right of use assets 7,090,980 4,802 38,726 84,790 215,166 777,268 592,581 1,456,282 2,694,177 1,227,188
Deferred tax assets 1,902,811 - - - 274,957 2,203 - 1,625,649 - -
Other assets 102,433,942 43,031,146 14,119,381 9,617,316 2,757,559 29,274,331 725,138 1,458,795 1,450,276 -
3,857,034,947 911,423,187 848,827,577 319,153,077 303,369,552 511,066,809 235,408,116 267,476,314 324,998,598 135,311,715
Liabilities
Bills payable 21,848,270 11,785,882 526,963 6,702,452 361,471 2,471,502 - - - -
Borrowings 312,925,106 33,593,924 129,395,726 81,758,922 29,616,731 13,099,389 3,634,279 6,463,258 15,362,877 -
Deposits and other accounts 3,018,147,709 762,860,692 185,078,506 296,787,793 462,965,151 413,860,284 486,684,939 408,594,611 1,315,732 -
Liabilities against assets subject to finance lease 133,598 78,116 - - - - 55,482 - - -
Lease liability against right of use assets 8,360,755 20,960 69,732 361,900 810,621 804,651 1,765,289 3,046,610 1,480,992
Other liabilities 200,596,128 80,078,936 18,522,674 30,668,659 3,654,598 25,961,044 8,538,736 16,946,569 8,112,456 8,112,456
3,562,011,566 888,397,550 333,544,829 415,987,558 496,959,851 456,202,840 499,718,087 433,769,727 27,837,675 9,593,448
Net assets 295,023,381 23,025,637 515,282,747 (96,834,480) (193,590,299) 54,863,970 (264,309,971) (166,293,413) 297,160,922 125,718,266

Share capital 21,275,131

Reserves 62,427,269
Unappropriated profit 145,312,547
For the year ended December 31, 2021

Surplus/(Deficit) on revaluation of assets 64,994,980

Non-controlling interest 1,013,454
295,023,381

2020
Total Upto 1 Month Over 1 to 3 Over 3 to 6 Over 6 months Over 1 to 2 Over 2 to 3 Over 3 to 5 Over 5 to 10 Above 10
months months to 1 year years years years years years
------------------------------------------------------------------------------------------------------------------ (Rupees in '000) -----------------------------------------------------------------------------------------------------------------
Assets
Cash and balances with treasury banks 249,969,566 150,576,268 1,763,659 45,629,218 49,204,166 2,796,253 - - - -
Balances with other banks 15,015,366 13,504,566 364,979 455,390 690,430 - - - - -
Lendings to financial institutions 126,804,675 126,804,675 - - - - - - - -
Investments 1,466,405,373 167,155,470 466,849,352 45,910,297 153,236,466 97,899,248 157,346,293 125,301,464 237,876,475 14,830,308
Advances 983,871,421 303,935,213 149,736,917 56,019,840 59,209,071 41,668,685 78,281,159 157,288,456 86,006,957 51,725,124
Fixed assets 55,086,809 53,118 62,870 2,135 893,464 2,879,531 734,166 1,617,909 69,073 48,774,543
Intangible assets 1,022,143 91 - 1,239 133,371 131,741 127,175 65,974 562,553 -
Right of use assets 7,017,020 201 19,924 51,391 230,818 683,219 736,834 1,528,327 2,628,348 1,137,958
Other assets 112,017,619 38,346,832 17,560,952 9,314,994 2,410,468 38,266,979 3,351,081 2,766,313 - -
3,017,209,992 800,376,434 636,358,654 157,384,504 266,008,254 184,325,655 240,576,708 288,568,443 327,143,406 116,467,933
Liabilities
Bills payable 16,795,186 8,784,880 499,727 6,439,082 194,485 877,012 - - - -
Borrowings 138,539,005 10,688,517 10,993,746 56,908,784 42,516,430 2,392,766 3,509,557 6,420,414 5,108,790 -
Deposits and other accounts 2,418,928,469 691,637,237 118,540,644 338,032,867 336,495,938 309,364,692 305,388,438 317,997,480 1,471,174 -
Liabilities against assets subject to finance lease 197,224 - - - 73,480 - - 123,744 - -
Lease liability against right of use assets 7,869,355 14,255 21,491 58,035 233,248 848,036 669,345 1,897,552 2,838,255 1,289,138
Deferred tax liabilities 2,933,124 - - - 2,278 - - 2,930,846 - -
Other liabilities 157,545,347 58,181,892 38,344,563 15,612,721 3,279,386 15,947,785 5,339,632 10,747,569 5,053,492 5,038,308
2,742,807,710 769,306,781 168,400,171 417,051,488 382,795,245 329,430,291 314,906,972 340,117,605 14,471,711 6,327,446
Net assets 274,402,282 31,069,653 467,958,484 (259,666,984) (116,786,991) (145,104,636) (74,330,264) (51,549,162) 312,671,696 110,140,487
Share capital 21,275,131
Reserves 57,591,417
Unappropriated profit 120,631,784
Surplus/(Deficit) on revaluation of assets 73,987,802
Non-controlling interest 916,148

385
Notes to and forming part of the Consolidated Financial Statements

274,402,282
Notes to and forming part of the Consolidated Financial Statements
For the year ended December 31, 2021

48.2.7 Derivative Risk

A derivative is a contract that derives its value from the performance of an underlying asset which can be an index, interest
rate, commodity price, security price, FX rate etc. Derivatives include forwards, futures, foreign currency and interest rate
swaps, options etc. In Pakistan, futures and forwards are most commonly traded derivatives.

Currently, the Group is not an active participant in the Pakistan derivatives market as it does not hold an Authorized
Derivative Dealer (ADD) licence to perform derivate contracts. Once acquired, the Group will carry out the transactions
which are permitted under the Financial Derivatives Business Regulations issued by the SBP, which may include Interest
rate swaps, forward rate agreements, foreign currency options etc.

Moreover, the Group may also offer other derivative products to satisfy customer requirements, specific approval of which
will be sought from the SBP on a transaction by transaction basis.

49. EVENTS AFTER THE REPORTING DATE

The Board of Directors has proposed a cash dividend of Rs. 1 per share (2020: Rs. Nil per share) amounting to Rs.
2,127.513 million (2020: Rs. Nil) at its meeting held on March 08, 2022 for approval of the members at the annual general
meeting to be held on March 30, 2022. These consolidated financial statements do not reflect this appropriation as
explained in note 5.22.

50. CORRESPONDING FIGURES

Certain corresponding figures have been reclassified wherever necessary to confirm to the presentation adopted in the
current year.

51. GENERAL

51.1 Figures have been rounded off to the nearest thousand rupees.

52. DATE OF AUTHORIZATION FOR ISSUE

These consolidated financial statements were authorized for issue on March 08, 2022 by the Board of Directors of the
Bank.

Zubyr Soomro Arif Usmani Abdul Wahid Sethi Asif Jooma Ahsan Ali Chughtai
Chairman President & CEO Chief Financial Officer Director Director

386
 STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF OF FIVE HUNDRED THOUSAND RUPEES OR ABOVE PROVIDED DURING THE YEAR ENDED DECEMBER 31, 2021

Rs. In 000
Principal Interest/ Other Total
Name of Individuals/ Outstanding liabilities at beginning of year written-off Mark-up financial (9+10+11)
S. No. Name & Address of the borrower Partners/ Fathers/Husband's name written off relief /
Directors (with CNIC No.) Interest/ waiver
Principal Others Total provided
mark-up
1 2 3 4 5 6 7 8 9 10 11 12
1 M/S.Qureshi Brothers, Muhammad Ayyub Qureshi Abdul Shakoor 1,500 1,418 22 2,940 - - 500 500
Bahawalpur. 31202-2263837-3
5-A, Heavy Industrial Area, Model Town 'B", Bahawalpur
Abdul Samad Abdul Shakoor
31202-1515844-9
Financial Statements

Abdul Qayyum Abdul Shakoor

31202-7537115-9

Abdul Rauf Abdul Shakoor

34402-1710024-7

Mst.Sultana Begum Abdul Shakoor

31202-9609925-0

Mst Anjum Shakoor Abdul Shakoor

37405-3577028-0

Mst Shazia Erum Abdul Shakoor

34402-1635588-2

2 Khuda Bukhsh Khuda Bukhsh Faqir Bukhsh 634 - - 634 634 - - 634
H.No.70, Gali No.1, Chaudhry Town, Liaquatpur 31302-5411764-9

3 Syed Waqar Shafaq Syed Waqar Shafaq Syed Abdullah Ashfaq Ahmed 653 - - 653 653 - - 653
Mohallah Mahakma Zarat, Liaquatpur, Tehsil Rahimyar Khan 31302-8345377-9 Shafaq

4 Saifullah Khan Saifullah Khan Hasoor Bukhsh 587 - - 587 587 - - 587
Basti Badar Munir, Chehleen wali, Dakhana Khas, Tehsil 31201-5382470-9
Ahmedpur

5 Shah Zaman Khan Shah Zaman Khan Faqeer Muhammad 600 - - 600 600 - - 600
Ghan Chatter,Dakhana Muzaffarabad, Tehsil Muzaffarabad 82203-4459614-3

6 Safdar Hussain Safdar Hussain Muhammad Hussain 563 - - 563 563 - - 563
Nigder PO Karin Tehsil: Athmuqm, Distt, Neelum AK 82202-9207727-5

7 Muhammad Aslam(Late) Muhammad Aslam (Late) Muhammad Akbar 542 - - 542 541 - - 541
House No. 10-9/381 Mohala Kili Deba Arbab Ali Road Quetta 54400-0468311-7
Annexure ‘I’ as referred to in note 11.6 of the Bank’s Consolidated

8 Ameer Ali Magsi Ameer Ali Magsi Sher Muhammad 673 143 - 816 673 - - 673
Goth Bujarani Tehsil Jal Magsi. 53302-2093074-5

387
 Principal Interest/ Other Total
Name of Individuals/ Outstanding liabilities at beginning of year written-off Mark-up financial (9+10+11)

388
S. No. Name & Address of the borrower Partners/ Fathers/Husband's name written off relief /
Directors (with CNIC No.) Interest/ waiver
Principal Others Total provided
mark-up
9 Late Rab Rakhio S/o Dur Muhammad Mughari Late Rab Rakhio Dur Muhammad Mughari 511 - - 511 511 - - 511
Village Pandhi Khan Mughari Taluka Kamber 43202-7530861-9
District Kamber -Shahdadkot

10 Late Ashraf Ali S/o Wahid Behleem Late Ashraf Ali Wahid Behleem 795 - - 795 795 - - 795
Village Garhi Sutto P.O Jean Abro Taluka Kamber Ali Khan 43202-0732537-5
Distict Kamber - Shahdadkot

11 Late Ameer Ali S/o Muhammad Patoojo Late Ameer Ali Muhammad Patoojo 818 - - 818 818 - - 818
Village Mahi Makol P.O Mahi Makol Menhoon Taluka KamberAli 43202-6449204-5
Khan Distict Kamber - Shahdadkot
Financial Statements

12 Late Ghulam Mustafa S/o Mir Bakhshal Khan Late Ghulam Mustafa Mir Bakhshal Khan 973 - - 973 973 - - 973
Muhall Drib P.O Shahdadkot 43201-1458511-1
District Kamber - Shahdakot

13 Late Muhammad Younis S/o Ahmed Lashari Late Muhammad Younis Ahmed Lashari 862 - - 862 862 - - 862
Village Aitbar Khan Chandio P.O Shahdadkot 43206-6395654-1
District Kamber - Shahdakot

14 Late Rehmatullah S/o Bagh Ali Alias Biju Late Rehmatullah Bagh Ali Alias Biju 809 - - 809 809 - - 809
Residence of Khanpur road House No.394/41 Muhalla Sanjrani 43304-649922-7
Shikarpur

15 Late Ashique Ali S/o Muhammad Nawaz Juj Late Ashique Ali Muhammad Nawaz Juj 618 - - 618 618 - - 618
New Nazar Muhalla Larkana 43203-5561356-7

16 Late Wazir Ahmed S/o Rasool Bux Panhwar Late Wazir Ahmed Rasool Bux Panhwar 814 - - 814 814 - - 814
Village Pechoha Dist: Dadu 41201-3227942-5

17 Late Abdul Razaq S/o Abdul Qadir Thahem Late Abdul Razaq Abdul Qadir Thahem 588 - - 588 588 - - 588
First Famli Line Jacobabad 43102-2477711-3

18 Late Imdad Hussain S/o Datar Dino Abbasi Late Imdad Hussain Datar Dino Abbasi 710 - - 710 710 - - 710
Near Al Hussani Masjid Muhalla Kalhora Abad Dist Larkana 43203-9719026-1

19 Late Ali Akbar S/o Muhram Khan Sodhar Late Ali Akbar Muhram Khan Sodhar 835 - - 835 835 - - 835
Village Faiz Muhammad Sodhar P.O Warrah 43207-0172083-9

20 Late Zulifqar Ali S/o Roshan Buriro Late Zulifqar Ali Roshan Buriro 652 - - 652 652 - - 652
Village Khamiso Kalhoro Warrah Distt: Kamber Shahdadkot 43207-6721647-7

21 Late: Abdul Razaque S/o Muhammad Umar Leghari Late: Abdul Razaque Muhammad Umar Leghari 751 - - 751 751 - - 751
Muhalla Jaffarabad Jacobabad 43102-4891098-5

22 Late Shoukat Ali Late Shoukat Ali Ghous Bux 615 - - 615 615 - - 615
Village Rabanji Wandh, Dakhana Muhammadpur Odho, Tehsil 43101-6275684-3
Garhi Khairo, Distt: Jacobabad
Annexure ‘I’ as referred to in note 11.6 of the Bank’s Consolidated

23 Late Ghulam Hyder Late Ghulam Hyder Tagio Khan 523 - - 523 523 - - 523
Village Suleman Dool Taluka Thull 43105-4709049-7
 Principal Interest/ Other Total
Name of Individuals/ Outstanding liabilities at beginning of year written-off Mark-up financial (9+10+11)
S. No. Name & Address of the borrower Partners/ Fathers/Husband's name written off relief /
Directors (with CNIC No.) Interest/ waiver
Principal Others Total provided
mark-up
24 Late Assadullah Late Assadullah Ghous Bux Khushk 549 - - 549 549 - - 549
Muhalla Galib Nager Taluka & Distt Larkana 43203-7645041-1

25 Late Ghulam Rasool Late Ghulam Rasool Bakshal Kalhoro 752 - - 752 752 - - 752
Hamidullah Huzoori Mohala Miro Khan Taluka Miro Khan Dist 43204-1152340-1
Kamber Ali Khan

26 Late Aijaz Ali Late Aijaz Ali Muhammad Siddiqui Tunio 761 - - 761 761 - - 761
Village Thar Wadho Taluka Miro Khan Dist Kamber Shahdadkot 43204-3217325-5

27 Mazhar Ali Mazhar Ali Muhram Ali Mirbahar 697 - - 697 697 - - 697
Financial Statements

Village P.O Wagan Ghathar Dist Kamber Shahdadkot 43202-9470096-9

28 Peeral Peeral Ghulam Hyder Paryo 839 - - 839 839 - - 839

Village War Wara Mullan Kakar Taluka K.N Shah 41203-7987437-9

29 M. Ibrahim M. Ibrahim Kando Birahmani 623 - - 623 623 - - 623

Village Faqir Muhammad P.O kakar Taluka K.N Shah 41203-1643237-5

30 Ali Hassan Ali Hassan Rasool Bux Memon 576 - - 576 576 - - 576
Shahan Jo Padar Muhalla Lahori Larkana 43203-6939277-5

31 Abdul Rauf Abdul Rauf Haji Ahmed Abbasi 594 - - 594 594 - - 594
VIP Road House No.09 Stret No.04 Muhalla Police Head Quarter 43203-8203081-9
Larkana

32 Syed Raham Shah Syed Raham Shah Himat Ali Shah 562 - - 562 562 - - 562
Village Khairo Khan Jatoi P.O Wagan Dist Qamber Shahdadkot 43207-5448381-7

33 Ghulam Muhammad Ghulam Muhammad Darya Khan Khoso 545 - - 545 545 - - 545
Village Muhalla Ali Abad Larkana 43203-1357392-3

34 Gul Mohammad Gul Mohammad Ali Bux Panhwar 719 - - 719 719 - - 719
Village Dodani Panhwar Makhdoom Bilawal Dadu 41201-7161285-1

35 Riaz Ahmed Riaz Ahmed Sawan Khan Bhatti 526 - - 526 526 - - 526
Village Meer Karam Khan Brohi, P.O. Quboo Saeed Khan, Distt: 43406-0339589-1
Qambar Shahzadkot

36 Aijaz Ali Aijaz Ali Rahim Bux Malik 654 - - 654 654 - - 654
Nanik Wara Muhalla Malik City Kandhkot 43103-6689918-1

37 Ghulam Sarwar Ghulam Sarwar Abdul Latif Buriro 563 - - 563 563 - - 563
Bhittal Rice Mill Qadri Muhalla Thull 43105-4405674-5

38 Nadir Hussain Nadir Hussain Ghulam Muhammad Abro 870 - - 870 870 - - 870
Village Shangoo Rahoojo P.O Madeji Taluka Garhi Yasin Dist 43301-9495399-7
Shikarpur
Annexure ‘I’ as referred to in note 11.6 of the Bank’s Consolidated

39 Muhammad Sadique Muhammad Sadique Sohrab Khan Phulpoto 864 - - 864 864 - - 864
Muhalla Nazar Larkana 43102-6489792-9

389
 Principal Interest/ Other Total
Name of Individuals/ Outstanding liabilities at beginning of year written-off Mark-up financial (9+10+11)

390
S. No. Name & Address of the borrower Partners/ Fathers/Husband's name written off relief /
Directors (with CNIC No.) Interest/ waiver
Principal Others Total provided
mark-up
40 Ghulam Rasool Ghulam Rasool Muhammad Anwar Abro 771 - - 771 771 - - 771
Village Daro Napar Taluka Lakhi Ghulam Shah, Distt: Shikarpur 43105-4405674-5

41 Late Muhammad Murad Late Muhammad Murad Muhammad Umar Siyal 754 - - 754 754 - - 754
Village Deedar P.O Kamber 43202-9836503-7

42 Late Shabir Ali Shabir Ali Muhammad Panah Chandio 872 - - 872 872 - - 872
Village Wali Muhammad Gorar P.O. Thariri, 41205-3402887-1
Taluka Mehar Dadu

43 Late Qamaruddin Qamaruddin Lashari Ali Muhammad Lashari 883 - - 883 883 - - 883
Financial Statements

Village Lal Bux Noonari Taluka Thull Dist Jacobabad 43103-8210721-1

44 Late Riaz Ahmed Riaz Ahmed Allah Dino Soomro 534 - - 534 534 - - 534
Mohallah Gajan Pur Chowk, Near MCB Bank, Distt: Larkana 43203-2514340-9

45 Late Asadullah Late Asadullah Shah Bux Jatoi 653 - - 653 653 - - 653
Village Naou Sobho Khan Jatoi Johi Belo 43202-0732537-5
P.O Madeji Taluka Garhi Yasin Dist Shikarpur

46 Late Abdul Khalique Late Abdul Khalique Bakhshal khan Shaikh 581 - - 581 581 - - 581
Air Port Road Muhalla Allah Abad Larkana 43203-6543586-5

47 Late Ghulam Yaseen Late Ghulam Yaseen Azizullah Soomro 986 - - 986 986 - - 986
Mohallah Village Wakro, P.O. Taluka Dokri, Distt: Larkana 43201-4571317-9

48 Messrs New Mannan Medical & General Store Muhammad Rafi Muhammad Shafi 3,000 - 3,089 6,089 - - 1,018 1,018
H.No.334, Block-A, Settlite Town, Sargodha 38403-3360023-7

Business Address: Chowk settlite Town Fatima Jinnah Road, Muhammad Raees Muhammad Rafi
Sargodha 38403-5409957-1

49 Khalid Hussain Ansari, Khalid Hussain Ansari, Nisar Hussain 900 - - 900 900 - - 900
House No.A-1408/47, KRI Quarter Old 45504-9949954-1
Sukkur

50 Mushtaque Hyder S/O Muhammad Malook, Mushtaque Hyder Muhammad Malook 1,717 - - 1,717 1,717 - - 1,717
ward No. 04 Karim Shah Colony Kandiaro Taluka Kandiaro Distt: 45302-8368240-1
N. Feroze

51 Muhammad Kawish, Muhammad Kawish Ashiq Muhammad 2,900 1,603 10 4,513 - - 534 534
Mouza Arain Wahan, Tehsil Mailsi, Distt: Vehari 36302-1607593-9

52 Atta Ullah Atta Ullah Imam Bukhsh 638 - - 638 638 - - 638
H.No.439, Ward No.3, Near Chitti Kothi,Khanewal 36302-1607593-9
Annexure ‘I’ as referred to in note 11.6 of the Bank’s Consolidated

53 Qazi Naveed Akhtar Qazi Naveed Akhtar Qazi Walaiat Hussain 509 - - 509 509 - - 509
H # CD-148, Muhallah Ghaziabad, Dhoke Syedan, Rawalpindi 37405-6372365-3
 Principal Interest/ Other Total
Name of Individuals/ Outstanding liabilities at beginning of year written-off Mark-up financial (9+10+11)
S. No. Name & Address of the borrower Partners/ Fathers/Husband's name written off relief /
Directors (with CNIC No.) Interest/ waiver
Principal Others Total provided
mark-up
54 Ghulam Mustafa Nadeem Ghulam Mustafa Nadeem Aashiq Hussain 596 - - 596 596 - - 596
H.No.CB-316, Street # 9D, Aslam Market, 35303-2058532-7
Rawalpindi Cantt.

55 Muhammad Akram Leghari S/o Manzoor Ahmed Khan Leghari Muhammad Akram Leghari Manzooor Ahmed Khan 1,445 95 - 1,540 1,445 - - 1,445
House no 477-C,Street no 178,G-7/3-1,Islamabad 61101-7386959-3

56 Israr Hussain Shah S/o Sakbar Ali Shah Israr Hussain Shah Sakbar Ali Shah 535 - - 535 535 - - 535
PO Jahala,Lehtrar Bala,Tehsil Kahuta, District Rawalpindi 37402-2172503-5
Financial Statements

57 Sheikh Anwar Jamal Sheikh Anwar Jamal Sheikh Jamal ud din 602 23 - 625 602 - - 602
Houst No.72, Ward No8-M, Street No.02, MohallaChah Bohar 36302-0386241-9
Wala Multan

58 Ejaz Hussain Ejaz Hussain Muhammad Buksh 723 40 - 763 723 - - 723
P.O. Khas, Mauza Salar Wahan Nau, Kabirwala 36102-55882240-3

59 Riaz Hussain Riaz Hussain Syed Nisar Hussain 677 - - 677 677 - - 677
QTR # 3, Ratan Preedy Police, Karachi 42301-0421147-1

60 Raja Tariq Nawaz Raja Tariq Nawaz Raja Rabnawaz Khan 1,298 55 - 1,353 545 - - 545
House No.2675 Street #21 Sector I-9 Islamabad 61101-2000580-9

61 United Agro Engineers Mr. Mirza Yasir Muhammad Younis - 75 6 81 - - 603 603
Address: Opposite Telephone Exchange, Circular Road Daska 34601-1140979-3

Mr. Muhammad Nasir Muhammad Younis

34601-5833439-9

Mr. Muhammad Amir Muhammad Younis

34601-6478093-9

Mr. Muhammad Tayyab Ali Muhammad Younis

34601-5997769-1

62 Muhammad Nawaz S/o Muhammed Sharif Muhammad Nawaz Muhammed Sharif 878 18 - 896 878 - - 878
House # P-223, St - 1, Mohalla Eid gah Jaranwala 33104-2248318-5

63 Syed Sibat Ul Hassan Syed Sibat Ul Hassan Syed Akbar Shah 678 - - 678 678 - - 678
Botala Sharam Singh Tehsil & District Gujranwala 34101-1167496-3

64 Agha Dilshad Hussain Agha Dilshad Hussain Syed Asghar Ali Shah 564 - - 564 564 - - 564
Amin pur Syedan P/o Doburjee Baga Tehsil & District Gujranwala 34101-0984183-9

65 Sajjad Ahmed Sajjad Ahmed Muhammad Aslam 551 - - 551 551 - - 551
Moh. Khandaq, Kot Najeeb Ullah, Thesil & Distt: Haripur 13302-3230010-1
Annexure ‘I’ as referred to in note 11.6 of the Bank’s Consolidated

66 Saee Muhammad S/o Muttal Saee Muhammad Muttal 549 - - 549 549 - - 549
Mohallah Mashraqui, VPO, Mong Tehsil & Distt: M.B.Din 34402-4507559-3

391
 Principal Interest/ Other Total
Name of Individuals/ Outstanding liabilities at beginning of year written-off Mark-up financial (9+10+11)
written off relief /

392
S. No. Name & Address of the borrower Partners/ Fathers/Husband's name
Directors (with CNIC No.) Interest/ waiver
Principal Others Total provided
mark-up
67 Ghulam Rasool Khan S/o Abdul Qadir Khan Ghulam Rasool Khan Abdul Qadir Khan 576 - - 576 576 - - 576
H.No.805, MuhallahDamdama ,Eminabad Gujranwala 34101-2211426-9

68 Pace Corporation Mir Salauddin Mir Mozzamel Haque 119,468 26,295 253,348 399,112 81,364 - 253,348 334,712
House#69, Road#19, Rupnagar, Mirpur- 01 NID No: 3612676893391

69 Fortuna Fried Chicken Md Fazle Taher Md. Abu Taher 31,731 34,634 99,150 165,516 - - 99,150 99,150
95/A Road #7, SEC # 4 Uttara, Dhaka NID No: 258779982969

70 Propel International Ltd. Md.Shawquat Azim Late Najir Ahmed 93,885 20,114 11,343 125,342 - - 11,343 11,343
House-53,55 Road # 03, Block # B, Niketan,Gulshan-1, Dhaka NID No: 2650898233300
Financial Statements

297,774 84,513 366,969 749,257 125,900 - 366,497 492,397

Annexure ‘I’ as referred to in note 11.6 of the Bank’s Consolidated
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Consolidated Financial Statements

ISLAMIC BANKING BUSINESS

The bank is operating 189 (2020: 191) Islamic banking branches and no Islamic banking windows at the year ended December
31, 2021.
2021 2020
ASSETS Note (Rupees in '000)

Cash and balances with treasury banks 6,591,139 5,713,009

Balances with other banks 12,531 11,948
Investments 1 49,548,760 42,109,641
Islamic financing and related assets - net 2 42,316,209 37,546,704
Fixed assets 100,620 148,884
Right of use assets (ROUA) 641,973 755,116
Other assets 1,686,568 2,676,118
Total Assets 100,897,800 88,961,420

LIABILITIES

Bills payable 388,351 339,103

Deposits and other accounts 3 84,849,520 75,268,262
Due to Head Office 7,635,926 4,124,758
Lease liability against right of use assets 826,081 903,196
Other liabilities 455,249 2,198,144
94,155,127 82,833,463
NET ASSETS 6,742,673 6,127,957

REPRESENTED BY
Islamic Banking Fund 4,646,000 3,360,000
Surplus on revaluation of assets 594,005 659,569
Unappropriated / unremitted profit 5 1,502,668 2,108,388
6,742,673 6,127,957
- -
The profit and loss account of the Bank's Islamic banking branches for the year ended December 31, 2021 is as follows:
2021 2020
Note (Rupees in '000)

Profit / return earned 6 7,212,495 7,994,894

Profit / return expensed 7 (3,180,849) (3,456,533)
Net Profit / return 4,031,646 4,538,361

Other income
Fee and Commission Income 285,694 367,852
Foreign Exchange Income 37,404 56,745
Other Income 13,218 1,344
Total other income 336,316 425,941

Total Income 4,367,962 4,964,302

Other expenses
Operating expenses (2,742,428) (2,453,894)
Other charges (1,516) (2,512)
Total other expenses (2,743,944) (2,456,406)

Profit before provisions 1,624,018 2,507,896

Provisions and write offs - net (121,350) (399,508)
Profit before taxation 1,502,668 2,108,388
Taxation - -
Profit after taxation 1,502,668 2,108,388

393
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Consolidated Financial Statements

Cost/ Provision for Surplus / Cost / Provision for Surplus / Carrying

Carrying Value
Amortised cost diminution (Deficit) Amortised cost diminution (Deficit) Value
1 Investments by segments:
------------------------------------------------------------------------ (Rupees in '000) -----------------------------------------------------------------------
Federal Government Securities:
-Ijarah Sukuks 14,000,979 - (31,279) 13,969,700 6,000,000 - 15,600 6,015,600
-Others (Bai Muajjal with GOP @ 13.30%) 10,914,185 - - 10,914,185 11,641,133 - - 11,641,133
24,915,164 - (31,279) 24,883,885 17,641,133 - 15,600 17,656,733
Non Government Debt Securities
-Listed 8,200,000 - 340,000 8,540,000 8,400,000 - 311,741 8,711,741
-Unlisted 15,970,398 (130,807) 285,284 16,124,875 15,539,747 (130,807) 332,228 15,741,168
24,170,398 (130,807) 625,284 24,664,875 23,939,747 (130,807) 643,969 24,452,909

Total Investments 49,085,562 (130,807) 594,005 49,548,760 41,580,879 (130,807) 659,569 42,109,641

2021 2020
2 Islamic financing and related assets Note (Rupees in '000)

Ijarah 2.1 95,075 168,788

Murabaha 2.2 903,901 3,464,401
Diminishing Musharaka 21,834,074 17,614,309
Istisna - 50,000
Other Islamic Modes (Wakala tul Istismar) 8,500,000 8,500,000
Advances against Islamic assets (Murbaha, DM, Istisna) 11,226,981 8,076,678
Inventory related to Islamic financing (Istisna) 469,000 275,600
Gross Islamic financing and related assets 43,029,031 38,149,776

Less: Provision against Islamic financings

- Specific (712,763) (602,913)
- General (59) (159)
(712,822) (603,072)
Islamic financing and related assets - net of provision 42,316,209 37,546,704

2.1 Ijarah 2021

Cost Depreciation
Book Value as
As at Charge/ As at at December
At January 1, Additions / At January 1,
December 31, Adjustment for December 31, 31, 2021
2021 (deletions) 2021
2021 the year 2021
---------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------

Plant & Machinery 249,123 - 245,257 175,050 35,566 207,075 38,182

(3,866) (3,541)
Vehicles 239,219 - 209,727 144,504 37,241 152,834 56,893
(29,492) (28,911)
Total 488,342 - 454,984 319,554 72,807 359,909 95,075
(33,358) (32,452)

394
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Consolidated Financial Statements
2020
Cost Accumulated Depreciation
Book Value as
Charge/
As at January Additions / As at December As at January As at December at December
Adjustment for 31, 2020
01, 2020 (deletions) 31, 2020 01, 2020 31, 2020
the year
---------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------
Plant & Machinery 255,075 - 249,123 137,966 42,760 175,050 74,073
(5,952) (5,676)
Vehicles 277,812 - 239,219 139,282 42,832 144,504 94,715
(38,593) (37,610)
Total 532,887 - 488,342 277,248 85,592 319,554 168,788
(44,545) (43,286)

Future Ijarah payments receivable

2021 2020
Later than 1 Later than 1
Not later than Not later than 1
year & less Over five years Total year & less than Over five years Total
1 year year
than 5 years 5 years
---------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------

Ijarah rental receivables 71,589 54,398 - 125,987 85,318 91,290 - 176,608

2021 2020
Note (Rupees in '000)
2.2 Murabaha
Murabaha financing 2.2.1 903,901 3,464,401
Advances for Murabaha 1,285,000 1,199,500

2,188,901 4,663,901

2.2.1 Murabaha receivable - gross 2.2.2 982,249 3,629,825

Less: Deferred murabaha income 2.2.4 25,980 47,306
Less: Profit receivable shown in other assets 52,368 118,118

Murabaha financings 903,901 3,464,401

2.2.2 The movement in Murabaha financing during the year is as follows:

Opening balance 3,629,825 1,835,295
Sales during the year 7,905,588 10,600,101
Adjusted during the year 10,553,164 8,805,571

Closing balance 982,249 3,629,825

395
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Consolidated Financial Statements
2021 2020
(Rupees in '000)

2.2.3 Murabaha sale price 7,905,588 10,600,101

Murabaha purchase price 7,739,500 9,901,022

166,088 699,079
2.2.4 Deferred murabaha income
Opening balance 47,306 71,105
Arising during the year 184,383 287,727
Less: Recognised during the year (205,709) (311,526)

Closing balance 25,980 47,306

3 Deposits 2021 2020

In Local In Foreign In Local In Foreign
Total Total
Currency currencies Currency currencies
------------------------------------------------- (Rupees in '000) -----------------------------------------------------
Customers
Current deposits 21,520,192 264,535 21,784,727 26,363,269 111,710 26,474,979
Savings deposits 42,730,234 - 42,730,234 33,051,442 - 33,051,442
Term deposits 8,148,745 - 8,148,745 10,129,005 - 10,129,005
72,399,171 264,535 72,663,706 69,543,716 111,710 69,655,426
Financial Institutions
Current deposits 700,103 - 700,103 778,039 - 778,039
Savings deposits 6,064,983 - 6,064,983 3,633,797 - 3,633,797
Term deposits 5,420,728 - 5,420,728 1,201,000 - 1,201,000
12,185,814 - 12,185,814 5,612,836 - 5,612,836

84,584,985 264,535 84,849,520 75,156,552 111,710 75,268,262

2021 2020
(Rupees in '000)

3.1 Composition of deposits

- Individuals 41,007,219 36,485,509
- Government / Public Sector Entities 21,697,189 23,406,681
- Banking Companies 6,873,275 2,698,853
- Non-Banking Financial Institutions 5,312,539 2,913,983
- Private Sector 9,959,298 9,763,236

84,849,520 75,268,262

3.2 This includes deposits eligible to be covered under insurance arrangements amounting to Rs. 43,701 million (2020: Rs.
39,137 million).

396
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Consolidated Financial Statements
2021 2020
(Rupees in '000)
4 Charity Fund

Opening Balance 621 10,911

Additions during the period

Received from customers on account of delayed payment 79 710
Profit on charity saving account 14 -
714 11,621
Payments / utilization during the period
Education - 1,500
Health 650 9,500
Others 650 11,000
Closing Balance 64 621

Charity amount exceeding Rs. 0.5 million paid to the following organizations.
The Indus Hospital - 3,000
The Prime Minister‘s Covid-19 Pandemic Relief Fund -2020 - 5,000
Shaukat Khanum Memorial Trust - 1,000
Institute of Business Administration (IBA) - 1,500

- 10,500

5 Islamic Banking Business Unappropriated / Unremitted Profit

Opening Balance 2,108,388 2,039,140
Add: Islamic Banking profit for the year 1,502,668 2,108,388
Less: Transferred / Remitted to Head Office (2,108,388) (2,039,140)

Closing Balance 1,502,668 2,108,388

6 Profit / Return Earned of Financing, Investments and Placement

Profit earned on:

Financing 3,157,329 3,991,541
Investments 2,819,221 2,714,544
Placements 560 30,245
Others (Bai Muajjal) 1,235,385 1,258,564

7,212,495 7,994,894

397
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Consolidated Financial Statements
2021 2020
(Rupees in '000)
7 Profit on Deposits and other Dues Expensed

Deposits and other accounts 2,520,353 2,956,946

Amortisation of lease liability against - ROUA 82,908 89,738
Others (General Account) 577,588 409,849

3,180,849 3,456,533

8 Pool Management

NBP-AIBG has managed following pools for profit and loss distribution.

a) General depositor pool

The General pool consists of all other remunerative deposits. NBP Aitemaad (the Mudarib) accepts deposits on the
basis of Mudaraba from depositors (Rab ul Maal). The net return on the pool is arrived at after deduction of direct
costs from the gross return earned on the pool. The entire net return after paying equity share to Mudarib is
considered as distributable profit of the pool.

b) Special depositor pools (Total 78 during the year and 44 as at December 31, 2021)

Special pool(s) are created where the customers desire to invest in high yield assets. These pool(s) rates are higher
than the general pool depending on the assets. In case of loss in special pool, the loss will be borne by the special
pool members. The net return on the pool is arrived at after deduction of direct costs from the gross return earned
on the pool. From the net return, and after allocation of share of profit to commingled equity, profit is paid to the
Mudarib in the ratio of the Mudarib’s equity in the pool to the total pool. The balance represents the distributable
profit.

c) Equity pool

Equity pools include AIBG's fund and current account deposits. The equity pool may have constructive liquidation
every month and risk associated with assets of pool includes operational, market, equity, return and Shariah.

Key features and risk & reward characteristics

Deposits are accepted from customers on the basis of Qard (current accounts) and Mudarabah (Saving and term
deposits). No profit or loss is passed on to current account depositors.

For deposits accepted on Mudarabah basis from depositors (Rab-ul-Maal) the Bank acts as Manager (Mudarib) and
invests the funds in the Shariah Compliant modes of financings. Rab ul Maal share is distributed among depositors
according to weightages declared for a month before start of the period.

In case of loss in a pool during the profit calculation period, the loss is distributed among the depositors (remunerative)
according to their ratio of investment.

For all pools, the Mudarib’s share is deducted from the distributable profit to calculate the profit to be allocated to
depositors. The allocation of the profit to various deposit categories is determined by the amount invested in that category
relative to the total pool, as well as by the weightage assigned to the various deposit categories.

The assets, liabilities, equities, income and expenses are segregated for each of the pool. No pool investment is
intermingled with each other. The risk associated with each pool is thus equally distributed among the pools.

398
Annexure ‘II’ as referred to in notes 2.1 and 11.7 of the Bank’s
Consolidated Financial Statements
Avenues /sectors of economy / business where Modaraba based deposits have been deployed.

2021 2020
Sector (Percentage)

Fertilizer 1.12% 1.54%

Textile 4.60% 3.21%
Fuel & energy 40.71% 48.01%
Leasing/Modarbas 0.34% 0.21%
Sugar 7.94% 6.51%
Cement 7.43% 9.00%
Gas 0.91% 1.58%
Financial 1.59% 2.00%
Federal Government 24.61% 19.68%
Real Estate 2.98% 2.20%
Agriculture 0.34% 0.00%
Others 7.43% 6.06%
Total 100.00% 100.00%

Parameters for profit allocation and charging expenses

Profit of the pools has been distributed between Mudarib and Rab-ul-Mall by using preagreed profit sharing ratios. The
share of Rab-ul-Mall's profit has been distributed among different customers using the various weightages assigned to the
different categories of the pool.

No provision against any non performing asset of the pool is passed on to the pool except on the actual loss / write off of
such non performing asset. Administrative expense are borne by mudarib and not charged to Mudaraba pool.

31-Dec-21
Mudarib Share (Rupees in '000)
Gross Distributable Income 4,749,885
Mudarib (Bank) share of profit before Hiba 1,899,055
Mudarib Share in percentage 40%

Hiba from Mudarib Share

Mudarib (Bank) share of profit before Hiba 1,899,055
Hiba from bank's share to depositors 230,892
Hiba from bank's share to depositors in percentage 12%

Profit rates

During the year ended December 31, 2021 the average profit rate earned by NBP Islamic Banking Group is 8.98% and the
profit rate distributed to the depositors is 4.93%.

399
LEARN. GROW. LEAD
Others
Pattern of Shareholding 402

Proxy Form 403

Other Information
for the Shareholders
Pattern of Shareholding
as at December 31, 2021

Categories of Shareholders Shareholders Shares Held Percentage

Government Holding
M/S. FEDERAL GOVERNMENT OF PAKISTAN 1 6,238,919 0.29
M/S. PAKISTAN ATOMIC ENERGY COMMISSION 1 679,424 0.03
FINANCE DIVISION, MINISTRY OF FINANCE, GOVT. OF PAKISTAN 1 1,656,788 0.08

State Bank of Pakistan

M/S. STATE BANK OF PAKISTAN 1 1,599,845,728 75.20

Directors and their spouse(s) and minor children

FARID MALIK 1 1,000 0.00

Associated Companies, undertakings and related parties 2 70,949 0.00

NIT and ICP 1 463,078 0.02

Banks Development Financial Institutions, Non-Banking Financial Institutions 11 30,703,644 1.44

Insurance Companies 7 85,293,641 4.01

Modarabas and Mutual Funds 8 12,178,942 0.57

General Public
a. Local 10,543 149,859,370 7.04
b. Foreign 75 4,607,990 0.22
Foreign Companies 30 133,719,267 6.29
Others 166 102,194,286 4.80

Totals 10,848 2,127,513,026 100.00

Share holders holding 10% or more Shares Held Percentage

M/S. STATE BANK OF PAKISTAN 1,599,845,728 75.20

 NATIONAL BANK OF PAKISTAN
Annual General Meeting
Form of Proxy
Folio No.______________________ or CDC participant identity no. ____________________________________________________________
CDC A/C No.__________________________________________________________________________________________________________
I/We_________________________________________________________________________________________________________________
_of___________________________________________________________________________________________________________________
being a member(s) of the National Bank of Pakistan, holding shares no._______________________________________________________
hereby appoint______________________________of________________________________________________________________________
also a member of the National Bank of Pakistan (Folio No.__________) or failing him/her ________________________________________
of __________ also a member of National Bank of Pakistan (Folio No.___________) as my/our Proxy to attend the 73rd Annual General
Meeting of National Bank of Pakistan, to be held at 10:00 a.m. (PST) on Wednesday, March 30, 2022, at Mövenpick Hotel, Club Road,
Karachi or through electronic means and at any adjournment thereof.

Proxy’s email address (for attending meeting through electronic means):______________________________________________________

and mobile number ___________________.

Signed this ________________________day of March, 2022

Attending Meeting through Proxies:

1. All members, entitled to attend and vote at the Annual General Meeting, are entitled to appoint another member in writing as their proxy to attend and vote on their
behalf. A legal entity, being a member, may appoint any person, regardless of whether they are a member or not, as a proxy.

2. The proxy instrument must be complete in all respects and in order to be effective should be deposited at Office of the Registrar or Office of the Secretary Board, 2nd
floor, NBP Head Office, I. I. Chundrigar Road, Karachi, not later than 48 hours before the time of holding the meeting.

3. For attending the meeting through electronic means (Zoom), a proxy form shall be submitted along with the proxy holders’ email address and mobile number.

4. If any member appoints more than one proxy for any meeting and more than one instrument, of the proxy, is deposited with the Registrar or the Bank, all such
instruments of proxy shall be rendered invalid.

The shareholders will further have to follow the following guidelines for appointing proxies:

i. In the case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded
as per the regulations shall submit the proxy form as per the requirements mentioned below:

a) The proxy form shall be witnessed by two persons whose names, addresses, and CNIC numbers shall be mentioned on the form.

b) An attested copy of CNIC or the Passport of the beneficial owners and the proxy shall be furnished with the proxy form.

ii. In case of Government of Pakistan/State Bank of Pakistan/ corporate entity, the original or duly authenticated Board of Directors’ resolution or power of attorney with
specimen signatures of the nominee shall be submitted along with proxy form to Messrs. CDC Share Registrar Services Limited or to the Office of the Secretary Board,
2nd floor, NBP head Office, I. I. Chundrigar Road, Karachi.