Contents

Company Information 2

Board Committees 3

Notice of Annual General Meeting 4

Directors’ Report to the Shareholders 7

Statement of Compliance with Code of Corporate Governance 13

Statement on Internal Controls 15

Auditors’ Review Report on Statement of Compliance 18

Auditors’ Report to the Members on Financial Statements 19

Statement of Financial Position 21

Statement of Profit and Loss Account 22

Statement of Comprehensive Income 23

Statement of Changes in Equity 24

Cash Flow Statement 25

Notes to the Financial Statements 27

Financial and Management Services (Private) Limited 113

Auditors’ Report to the Members 114

Balance Sheet 115

Profit and Loss Account 116

Pattern of Shareholding 117

Director Report (Urdu) 124

Branch Network 125 Proxy Form

NIB Bank Limited Annual Report 2016 1 Company Information

Board of Directors Muhammad Abdullah Yusuf Chairman Teo Cheng San, Roland Director Tejpal Singh Hora Director Lee Boon Huat Director Lee Ah Boon Director Teo Meng Poh, Philip Director Asif Jooma Director Yameen Kerai President/CEO

Board Audit Committee Lee Ah Boon Chairman Teo Cheng San, Roland Member Teo Meng Poh, Philip Member

Board Risk Management Committee Tejpal Singh Hora Chairman Asif Jooma Member Lee Boon Huat Member Yameen Kerai Member

Board Nomination & Remuneration Committee Lee Boon Huat Chairman Asif Jooma Member Lee Ah Boon Member Muhammad Abdullah Yusuf Member Yameen Kerai Member

Company Secretary Ather Ali Khan

Chief Financial Officer Imran Butt

Registered Office First Floor, Post Mall F-7 Markaz, Islamabad

Head Office PNSC Building M.T. Khan Road Karachi-74000 UAN: +9221 111 333 111

Email & URL Email: [email protected] URL: www.nibpk.com

Share Registrar Office THK Associates (Pvt.) Limited 1st Floor, 40-C, Block-6, PECHS, Karachi-75400 UAN # +9221 111-000-322 Direct # +9221 34168270 Email: [email protected] Website: www.thk.com.pk

Auditors M/s. KPMG Taseer Hadi & Co. Chartered Accountants

Legal Advisor M/s. Mandviwalla & Zafar Advocates

Credit Rating Long Term : AA- Short Term : A1+ NIB TFC : A+ Rating Agency : PACRA

2 Annual Report 2016 NIB Bank Limited Board Committees

Board Audit Committee (“BAC”) Lee Ah Boon Chairman Teo Cheng San, Roland Member Teo Meng Poh, Philip Member

The main objective of BAC is to assist the Board in fulfilling its oversight responsibilities relating to the integrity of the Bank's financial reporting process, annual external audit of the Bank, system of internal controls, performance of internal audit function of the Bank, etc. Further, it also oversees the institution of special projects, as and when desired by the Board of Directors and / or the Management. BAC regularly reviews financial statements of the Bank prior to their approval by the Board of Directors. Beside other matters, it also recommends to the Board of Directors on appointment of external auditors, prior to their approval by the shareholders.

Board Risk Management Committee (“BRMC”) Tejpal Singh Hora Chairman Asif Jooma Member Lee Boon Huat Member Yameen Kerai Member

The Board keeps a high level oversight of the risk management activities with the assistance of its Board Risk Management Committee. Besides having close liaison with the management on key issues, wherever required, the BRMC conducts its activities through periodic meetings in accordance with the provisions of its terms of reference. These activities include, interalia, detailed review of the bank's risk asset portfolio across various business segments and risk types (credit, market, liquidity and operational) and offers guidance to the management in respect of business activities & additionally in areas like compliance legal & investigation. BRMC has three sub- committees - all run and managed by Bank executives, namely the Asset Liability Committee (“ALCO”), the Credit Risk Committee (“CRC”) and the Operational Risk Committee (“ORC”), to identify, manage and monitor risks on operational level. CRC oversees credit risk management, ORC oversees operational risks and ALCO is responsible for market and liquidity risks.

Board Nomination & Remuneration Committee (“BNRC”) Lee Boon Huat Chairman Asif Jooma Member Lee Ah Boon Member Muhammad Abdullah Yusuf Member Yameen Kerai Member

BNRC's core responsibilities are to ensure that HR policies are formulated and updated from time to time with the approval of the Board, recommend appointment, compensation package, retirement benefits, promotion / demotion and renewals of the employment contracts of the key executives, annually review compensation for NIB staff, review development and training need and ensure transparency & objectivity in performance evaluation system at NIB.

BNRC is also entrusted to recommend to the Board matters relating to appointment of directors (including CEO) as per criteria approved by BNRC and / or criteria defined under the law, constitution / reconstitution of Board sub- committees, review structure, size and composition of the Board, Sub-committees and make recommendation.

BNRC also apprises the Board on the proceedings and discussion held at the respective meeting, the Chairmen of all the Board Sub-committees regularly report to Board on its proceedings.

NIB Bank Limited Annual Report 2016 3 Notice of Annual General Meeting

Notice is hereby given that the Fourteenth Annual General Meeting (AGM) of NIB Bank Limited (“the Bank”) shall be held at 11:00 am on Wednesday, 29 March 2017, at Islamabad Serena Hotel, Khayaban-e-Suhrawardy, Islamabad, to transact the following business:

ORDINARY BUSINESS: 1. To confirm the minutes of the Annual General Meeting held on 28 March 2016. 2. To receive, consider and adopt the Audited Accounts of the Bank for the year ended 31 December 2016 together with Directors' and Auditors' Reports thereon. 3. To appoint auditors and fix their remuneration. M/s. KPMG Taseer Hadi & Co., Chartered Accountants, have offered themselves for re-appointment.

SPECIAL BUSINESS: 4. To consider and, if deemed fit, pass the following resolution as 'Special Resolution', with or without modification, for transmission of Annual Audited Accounts in electronic form: RESOLVED that as allowed under SRO 470(I)/2016 issued by the Securities and Exchange Commission of Pakistan, transmission of the annual balance sheet, profit and loss account, auditors’ report, directors' report and ancillary statements/ notes / documents (Annual Audited Accounts) along with the notice of general meeting of NIB Bank Limited in electronic form to the shareholders through CD / DVD / USB at their registered addresses instead of transmitting the Annual Audited Accounts in hard form, be and is hereby approved. 5. Any other business with the permission of the Chair.

Statements as required under Section 160(1)(b) of the Companies Ordinance, 1984 setting forth all material facts concerning the special business contained in the Notice to be considered at the meeting are annexed to the Notice of the meeting being sent to the members. By Order of the Board

Karachi Ather Ali Khan 8 March 2017 Company Secretary

Notes: 1. Closure of Share Transfer Books: Share Transfer Books of the Bank will remain closed from 20 March to 29 March 2017 (both days inclusive).

2. Proxies / Participation in the Annual General Meeting: A shareholder entitled to attend and vote at this meeting may appoint another shareholder as his / her proxy to attend and vote. In case of a corporate entity, the Board of Directors' resolution / power of attorney with specimen signature shall be submitted along with a proxy form to the Bank. Proxies of the shareholders through CDC shall be accompanied with attested copies of their Computerized National Identity Card (CNIC) or passport. In case of a corporate entity, the Board's Resolution / power of attorney with specimen signature shall be furnished, along with a proxy form, to the Company. The shareholders through CDC are requested to bring their original CNIC / passport, account number and participant account number at the time of attending the meeting. Detailed guidelines are available in Circular 1 of 26 January 2000 issued by SECP. In order to be effective, proxies must be received at the Head Office of the Bank situated at PNSC Building, M.T. Khan Road, Karachi, Pakistan, not later than 48 (forty eight) hours before the time of the meeting, and must be duly stamped, signed and witnessed.

4 Annual Report 2016 NIB Bank Limited Notice of Annual General Meeting

3. Change of Address: Shareholders are requested to notify the Bank or Share Registrar of any change in their addresses immediately. 4. Submission of Copy of CNIC (Mandatory): In accordance with SECP's directives, it is mandatory for all shareholders to have their valid CNIC number recorded with the company. Further, please note that in the absence of a shareholder's valid CNIC, the Company will be obligated to withhold dispatch of dividend warrants (if any) to such shareholders. Shareholders holding physical shares who have not yet submitted their valid CNICs are requested to provide attested, clear copies of their valid CNICs with their folio numbers to the Company's Share Registrar.

5. Dividend Mandate (Optional): Under Section 250 of the Companies Ordinance, 1984, a shareholder may, if he / she so desires, direct the Company to pay dividend through his / her / its bank account. In pursuance of the directives given by SECP vide Circular No. 18 of 2012 dated 5 June 2012, a shareholder may authorize the company to directly credit cash dividend to his/her/us account. If shareholders want to avail the direct credit facility for a dividend amount, can provide the necessary information to the Company's Share Registrar using the format available on the Bank's website. (Link: http://nibpk.com/about-us/wp- content/uploads/2014/03/Dividend-E-Mandate-Option.pdf). Please note that providing a bank mandate for dividend payments is optional. In case shareholders do not wish to avail this facility may ignore this notice.

Electronic Payment of Dividend / E-mandate (Optional): For the efficient cash dividend disbursement, SECP, through its Circular No. 8(4) SM/CDC 2008 of 5 April 2013, has announced an e-dividend mechanism where shareholders can have their dividend credited directly into their respective bank accounts electronically by authorizing the Company to electronically credit their dividend to their accounts. Accordingly, CDC shareholders are requested to send their bank account details to their respective participant / investor account services. In case you hold shares in physical form, please send your details to the Company's Share Registrar using the format mentioned above.

6. Deduction of Withholding Tax on Dividend Income: Pursuant to the provisions of Finance Act 2016, enhanced rate of withholding tax on dividend amount has been prescribed in the Income Tax Ordinance, 2001. As per this criteria, 'Filer' and 'Non-Filer' shareholders withholding tax will be deducted on dividend income at the rates of 12.5% and 20%. A 'filer' is taxpayer, whose name appears in the Active Taxpayer List (ATL) issued by FBR from time to time, whereas 'non-filer' is person other than a 'filer'. Shareholders are therefore requested to please check and ensure Filer status on the Active Tax Payer List (ATL) available on the FBR website (http://www.fbr.gov.pk/) as well as ensuring that their CNIC / passport number has been recorded by the participant / investor account services, in case your shareholding is in book entry form. Please inform the Company's Share Registrar in case your shareholding is in physical form. Corporate bodies (non-Individual shareholders) should ensure that their names and National Tax Numbers (NTNs) are included in the Active Tax Payer List on the FBR website and recorded by respective participant / investor account services, or in case of physical shareholding, by the Company's Share Registrar.

7. Transmission of Annual Financial Statements via Email: In pursuance of the directions given by SECP vide SRO 787 (I)/2014 dated 8 September 2014, shareholders who desire to receive Annual Financial Statements via email in future instead of by post are advised to provide formal consent along with a valid email address on a standard request form which is available on the Company's website (Link: http://nibpk.com/about- us/wp-content/uploads/2014/03/NIB-Bank-Annual-Financials-through-Emails.pdf). Shareholders must send a completed and signed copy of this form, along with a copy of their CNIC / PoA to the Company's Share Registrar. Please note that providing an email address for the purpose of receiving Annual Financial Statements via email is optional. In case shareholders do not wish to avail this facility, please ignore this notice. Annual Financial Statements will be sent to shareholder’s registered address by post as per normal practice.

8. Video Conference Facility In pursuance of SECP Circular 10 of 2014, if the Company receives consent from members holding in aggregate 10% or more shareholding residing at a geographical location, to participate in the meeting through video conference at least 10 days prior to date of meeting, the company will arrange a video conference facility in that city subject to availability of such facility in that city. The Company will intimate members regarding the video conference facility venue at least 5 days before

NIB Bank Limited Annual Report 2016 5 Notice of Annual General Meeting

the date of the AGM along with the complete information needed to access the facility. Therefore, members can avail video conference facilities at Karachi or Lahore. If shareholders would like to avail video conferencing facility, as per above, please send consent to the registered address of the Company 10 days before the AGM in the following format:

I/We, ______of ______, being a member of NIB Bank Limited, holder of ______Ordinary Share(s) as per Register Folio No./CDC No. ______, hereby opt for video conference facility at ______.

Signature of member

9. Financial Statements As required under SRO 634(I)/2014 dated 10 Jul 2014, Financial Statements and Reports of the Bank have been placed on its website.

10. Contact Addresses: Company: Company Secretary, NIB Bank Limited, PNSC Building, M.T. Khan Road, Karachi, Pakistan (UAN: +9221 111 333 111) Share Registrar: THK Associates (Pvt.) Limited, 1st Floor, 40-C, Block-6, PECHS, Karachi-75400, Pakistan (UAN: +9221 111 000 322)

Statement under Section 160(1) (b) of the Companies Ordinance, 1984

Item # 4 of the Notice - Circulation of Annual Audited Accounts in electronic form: The Securities and Exchange Commission of Pakistan, vide SRO 470(I)/2016 dated 31 May 2016, has allowed companies to circulate their annual balance sheet, profit and loss account, auditors' report, directors' report and ancillary statements / notes/ documents (Annual Audited Accounts) along with notice of general meeting to the shareholders in electronic form through CD/ DVD / USB at their registered addresses. This would result in timely delivery of Annual Audited Accounts to the shareholders.

For the convenience of NIB Bank shareholders, the Bank will place on its website a standard request form along with postal and e-mail address of Company Secretary / Share Registrar, so that shareholders may request a hard copy of the Audited Annual Accounts. The Bank, within one week of the request, will provide one hard copy free of cost to the requesting shareholders at their registered addresses.

The Bank is seeking shareholders' approval to circulate the Annual Audited Accounts along with notice of general meeting in electronic form as aforesaid and pass the resolution, with or without modification, noted at Agenda Item # 4 of this notice.

The directors of the Bank have no direct or indirect interest in the above said special business.

6 Annual Report 2016 NIB Bank Limited Directors’ Report to the Shareholders

ECONOMY Despite unexpected outcomes from the Brexit vote and the American elections in 2016, the global economy marked a growth of 2.6% over the previous year. Pakistan's economy with a GDP growth rate of 4.7% against 4.04% in the previous year did better than some of its emerging market peers. This growth was backed by activities related to the China Pakistan Economic Corridor (CPEC), controlling inflation (average inflation of 3.76% YoY in CY2016), foreign remittances reaching a new high of USD 19.9 bn for the year ended June 2016 and Foreign Exchange Reserves remaining at a comfortable level of USD 23bn at December 2016. Two other major milestones achieved during the year were the successful completion of the IMF Program and Pakistan's reclassification to the Emerging Markets from Frontier Markets by MSCI. However, sustainable economic success continues to be impacted by political uncertainty and external headwinds. In the second half of CY 2016, exports remained at the same level and imports increased by 6% compared to the same period in CY 2015 putting serious pressure on the current account deficit (USD 3.6 bn vs USD 1.9 bn). Spike in international oil prices would result in further worsening. With the Debt to GDP ratio of 69.8% at the end of September 2016, debt financing will remain a serious concern. Going forward regional ties, fiscal discipline and manageable trade deficits will help mitigate many of the challenges highlighted above.

BANKING SECTOR Banks' earnings in 2016 continued to be negatively impacted by low interest rates partly mitigated by realizing capital gains on sale of long term government bonds. Banks focused on balance sheet growth driven by deposits, expanding the branchless banking network and extending CPEC related project loans. Banking sector deposits grew by 20.4% in CY 2016 providing relief for banks from the impact of low balance sheet spreads. Banks lent out 17% more to the private sector in CY 2016 compared to CY 2015. Going forward, with opportunities unveiling under CPEC, banks will have to re-align their operational strategies and invest in areas like commodities, stocks and real estate markets in order to unlock new untapped avenues.

OPERATING PERFORMANCE The Bank's profitability was substantially boosted by the sale of its wholly-owned asset management subsidiary in March 2016. However, even after adjusting for the one off profit from the sale in the current year and gains from the sale of long-term bonds in the prior year, the Bank's pretax profitability in 2016 is substantially higher than last year. To maintain adequate net interest margins in a declining interest rate environment and fierce competition from other banks on deposit and loan rates, the Bank chose to reduce its high cost deposits and low yielding loans during the year, and as a result the advances and deposits volumes have been reduced towards the latter half of the year. However, average volumes of deposits and loans remained higher compared to last year contributing towards consistent revenues despite the squeezing of net interest margins. The Bank remains focused on its strategy of mobilizing low cost core deposits through training, service excellence, relationship management and targeted staff incentives. Any growth in advances during the year has been confined to blue chip names in the corporate segment, thereby reducing the overall risk profile of the Bank's lending portfolio. Syndications and other investment banking activities have generated substantially higher fee income compared to last year. Lending in the commercial segment is limited to larger names with a potential for cross-sell into trade and deposit products. The Bank was able to counter the impact of reduced spreads emanating from low interest rates by consistently maintaining a high loan to deposit ratio. Despite lower commodity prices, income from commissions and foreign exchange has held relatively steady between the two years. Moreover, the boost from Treasury activities substantially increased the overall non-funded income in 2016 (excluding the one-offs described above). Along with maintaining core revenues despite the interest rate decline, the Bank has continued to strive for cost optimization through strict control of operating expenses, higher staff productivity and simplification of management

NIB Bank Limited Annual Report 2016 7 Directors’ Report to the Shareholders structures across all businesses and functions. The efficiencies derived from these measures have helped counter inherent inflationary increases as well as funded new investments, resulting in administrative expenses remaining almost flat between the two years. Despite the difficulties in effecting recoveries from an ageing pool of non-performing and written off loans, the remedial team reversed Rs 1,877 mn of credit provisions during the year with a net provisioning credit of Rs 104 mn compared to a net charge of Rs 199 mn in 2015. Profit after tax for the year ended December 2016 of Rs 1,420 mn compares with Rs 2,617 mn last year. Consolidated financial statements are no longer required after the sale of the Bank's subsidiary.

AMALGAMATION On 7 December 2016, the respective Boards of NIB Bank Limited (“NIB”) and MCB Bank Limited (“MCB”) have approved a Scheme of Amalgamation (Scheme) whereby NIB will merge with and into MCB. The Scheme has been approved by the shareholders of MCB in their meeting on 23 January 2017. Due to litigation filed in the Sindh High Court (SHC), initiated by some minority shareholders of NIB, NIB has not yet been able to convene a shareholders meeting to approve the Scheme. NIB and the other defendants have taken the necessary legal steps to challenge the interim orders of the SHC. Currently therefore, the merger is subject to, amongst others (i) the approval of NIB shareholders (ii) receipt of all requisite regulatory approvals and (iii) the decision of the SHC.

CREDIT RATING In June 2016, the Pakistan Credit Rating Agency (PACRA) has maintained the long term rating and short term entity ratings of NIB Bank at “AA-” (Double A minus) and at “A1+” (A one plus) respectively. These ratings denote a very low expectation of credit risk. The rating of the listed, unsecured and subordinated TFC issue of PKR 4,198 mn has been maintained at “A+” (Single A plus). Subsequent to the approval of the merger agreement by the respective Boards of MCB Bank and NIB Bank, in December 2016, PACRA has placed the ratings of NIB on Rating Watch.

APPOINTMENT OF PRESIDENT & CEO On 7 December 2016, Mr. Yameen Kerai was appointed by the Board of Directors as President & CEO of NIB Bank, subject to the State Bank of Pakistan's (SBP) approval, which was received through SBP letter dated 10 January 2017. Accordingly, Mr. Kerai has taken the charge of President & CEO of NIB Bank effective from 10 January 2017 in place of Mr. Atif Riaz Bokhari who resigned w.e.f. 7 December 2016.

ELECTION OF DIRECTORS In accordance with the provisions of the Companies Ordinance, 1984 election of the directors of NIB Bank Limited was held on 28 March 2016 at the 13th Annual General Meeting (AGM) of the Bank. The Board of Directors of NIB Bank had fixed the number of directors as 8(eight) for the purpose of election. All the directors were eligible for the election, however, Mr. Najmus Saquib Hameed had not offered himself to contest the election, in his place Mr. Teo Meng Poh, Philip has offered himself for the election and hence Mr. Hameed stands retired then.

CASUAL VACANCY Mr. Atif Riaz Bokhari has also resigned from the directorship of the Bank with effect from 26 December 2016. This casual vacancy is expected to be filled in within regulatory timeline.

8 Annual Report 2016 NIB Bank Limited Directors’ Report to the Shareholders

EVALUATION OF THE BOARD OF DIRECTORS The Board is annually evaluating its performance internally. The evaluation is based upon the following criteria: a. Structure and Characteristics b. Roles and Responsibilities c. Board Meetings d. Board's performance of duties e. Relationship with Management f. Self-development of directors and executives The Board Sub-committees also self-evaluate their performances against their terms of reference. In October 2016, the Board of Directors have decided that the next year evaluation of the Board (including Directors and Sub-committees) be done by external evaluators.

DIVESTMENT FROM PICIC ASSET MANAGEMENT COMPANY LIMITED During 2016, the sale transactions of PICIC Asset Management Company Limited and PICIC Investment Fund (partial) have been executed which resulted in gain of Rs. 992.393 mn, net of tax (Gross gain being Rs. 1,526.759 mn) to the Bank. See details at Note # 15 of Financial Statements.

CORPORATE GOVERNANCE During the year under review, the Bank was compliant with the provisions of the Code of Corporate Governance. Being aware of their responsibilities under the Code of Corporate Governance, the Board of Directors state that: Consolidated Financial Statements are no longer required after the sale of Bank's subsidiary (PICIC Asset Management Company Limited) during 2016. The Financial Statements prepared by the management of the Bank, present fairly its state of affairs, the results of its operations, cash flows and changes in equity. Proper books of accounts of the Bank have been maintained. Appropriate accounting policies have been consistently applied in preparation of the financial statements. Accounting estimates are based on reasonable and prudent judgment. International Financial Reporting Standards, as applicable in Pakistan, have been followed in preparation of the financial statements and any departure therefrom has been adequately disclosed and explained. The system of internal control is sound in design and has been effectively implemented and monitored. There are no significant doubts upon the Bank's ability to continue as a going concern. In 2016, Pakistan Stock Exchange's regulation pertaining to Code of Corporate Governance has been changed to state that it shall be mandatory for all the listed companies to ensure that by 30 June 2018, at least half of the directors on their board have certification under any Directors' Training Program (DTP) offered by institutions (local or foreign) that meet the criteria specified by the SECP. At present two local directors (i.e. Mr. Muhammad Abdullah Yusuf and Mr. Asif Jooma) have certification from the Pakistan Institute of Corporate Governance, Mr. Lee Ah Boon has certification from Financial Institutions Directors' Education Program (FIDE Malaysia) and Mr. Lee Boon Huat has certification from FIDE Malaysia and he is also a member of Singapore Institute of Directors (SID). Orientation Programs could not be organized during 2016, however, the same has been arranged on 22 February 2017. There has been no material departure from the best practices of Corporate Governance, as detailed in the listing regulations of Stock Exchange. As of 31 December 2016, the purchase value and value of investments of the Provident Fund were Rs. 615,855,800/- and Rs. 678,125,892/- respectively (unaudited).

NIB Bank Limited Annual Report 2016 9 Directors’ Report to the Shareholders

Trading during the year, if any, in the shares of the Bank, carried out by Directors, Executives and their spouses and minor children, are disclosed in the pattern of shareholding. Dividend has not been declared for the year due to lack of earnings. Six years' financial data for NIB Bank on an unconsolidated basis is provided hereunder:

Rs mn 2016 2015 2014 2013 2012 2011 Advances 87,306 110,669 93,664 82,001 71,564 60,844 Deposits and other accounts 97,072 130,445 105,110 104,896 91,291 85,488 Total Assets 243,945 243,497 193,568 177,325 190,609 154,794 Net Assets 18,805 17,140 15,655 14,476 14,029 13,677 Share capital 103,029 103,029 103,029 103,029 103,029 103,029

Net Mark-up / Interest Income 4,401 4,642 3,817 3,286 2,856 2,079 Total Non Mark-up / Interest income 4,391 5,999 3,929 2,906 2,422 2,152 Total Non Mark-up / Interest expense 6,107 6,409 6,303 5,418 5,233 4,945 Profit / (Loss) before taxation 2,519 4,027 (84) 1,625 145 (3,480) Profit / (Loss) after taxation 1,420 2,617 (508) 1,241 38 (2,044) Basic / diluted earnings / (loss) per share (Rupees) 0.14 0.25 (0.05) 0.12 0.004 (0.34)

During 2016 the following Board and sub-committees meetings were held and were attended by the Directors as follows:

Board Audit Risk Management Nomination & Meetings Committee Meetings Committee Meetings Remuneration Name of Directors Committee Meetings Eligible Meetings Eligible Meetings Eligible Meetings Eligible Meetings to attend Attended to attend Attended to attend Attended to attend Attended Teo Cheng San, Roland 6 6 ------Tejpal Singh Hora 6 6 - - 4 4 - - Lee Boon Huat 6 5 - - 4 3 4 3 Lee Ah Boon 5 5 3 3 - - 1 1 Teo Meng Poh, Philip 4 4 2 2 - - - - Asif Jooma 6 5 - - 4 4 4 4 Muhammad Abdullah Yusuf 6 6 4 4 - - - - Atif R. Bokhari* 6 6 - - 4 4 4 4 Najmus Saquib Hameed ** 1 1 1 1 - - - -

* Mr. Atif R. Bokhari resigned as President & CEO with effect from 7 December 2016 and as Director from 26 December 2016. **Mr. Najmus Saquib Hameed retired at Annual General Meeting held on 28 March 2016. Leave of absence was granted in case the directors were not able to attend the meeting.

INTERNAL CONTROL AND RISK MANAGEMENT FRAMEWORK The Board is pleased to endorse the statements made by the management relating to internal control and the risk assessment framework to meet the requirement of the State Bank of Pakistan (SBP) BSD Circular No. 7 of 2004, BSD Circular letter No. 2 of 2005 and Code of Corporate Governance issued by the Securities & Exchange Commission of Pakistan (SECP). The management's statements are included in the annual report.

10 Annual Report 2016 NIB Bank Limited Directors’ Report to the Shareholders

CORPORATE SOCIAL RESPONSIBILITY The Bank, as a responsible corporate citizen, plays an active role in supporting different social causes in Pakistan, through its Donations, Contributions and Corporate Social Responsibility (CSR) efforts. The focus of our CSR activities is on the following areas: l Education l Community Health l Disaster Response (Earthquakes, Floods etc.) l Environmental projects and Initiatives directed at preserving l Promoting Pakistan Culture In 2016, there were two notable projects in this regard i.e. i) Sponsorship for Institute of Business Management sports festival 2016 and ii) Bank-wide staff competition to celebrate Independence Day on 14 August 2016.

FAIR TREATMENT OF CUSTOMER/CUSTOMER EXPERIENCE INITIATIVES After introducing the concept of Fair treatment of Customer (FTC) in 2015; 2016 has been a significant year in terms of embedding the customer experience framework across the board. It has also been a year which has seen noteworthy behavior change across the board regarding ownership of the service health of the business and a rejuvenated will to drive improvement. After achieving the milestone of setting up the base of customer experience structure in 2015, we expanded our ambit by extending the service monitoring to the areas of Operations, Corporate & Investment Banking (CIBG) / Commercial Banking and Consumer Finance Units in 2016. Various customer satisfaction surveys and awareness programs were conducted to gauge the on-boarding, retention and attrition experience.

COMPLAINT HANDLING The Bank has a separate function to deal with customer complaints, named as Problem Resolution Unit (PRU). The Bank clearly defines the complaint resolution process, roles and responsibilities of people involved right from the receipt of a complaint to its resolution or disposal. The Bank also has a centralized Complaint Management System that accommodates complaints received through any source of communication channel including regulators. Brief Description of complaint handling procedure and details of Key Contact points are available on all customer touch points. In year 2016, various measures were taken to align NIB with the newly issued Consumer Grievance Handling Mechanism (CGHM) guidelines of SBP. i.e. revision of complaint resolution turnaround times (TATs), mystery shopping, Voice of Customer (VoC) and Quality Assurance programs for complaint handling. Below are the key complaint statistics of NIB Bank for year 2016: Total complaint received: 5,748 Total complaint resolved: 5,653 Average Problem Incident ratio (PIR): 0.15% Average within TAT Resolution: 65% Average Problem Resolution Satisfaction ratio (PRS): 73%

NIB Bank Limited Annual Report 2016 11 Directors’ Report to the Shareholders

AUDITORS The present auditors M/s. KPMG Taseer Hadi & Co., Chartered Accountants retire and, being eligible have offered themselves for re-appointment in the forthcoming Annual General Meeting. The Board of Directors on the suggestion of the Audit Committee recommends their appointment for the next term.

PATTERN OF SHAREHOLDING The pattern of shareholding as at 31 December 2016 is included in the annual report.

ACKNOWLEDGMENT The Bank appreciates the support provided by its shareholders. The Bank is grateful to its customers who continue to demonstrate very strong loyalty. The SBP, SECP and other regulatory bodies have always guided the Bank well and have given their full support which is highly appreciated. The Bank's performance in the past year would not have been possible without the tireless efforts and dedication of its employees and for that they deserve a special thank you.

On behalf of the Board

Muhammad Abdullah Yusuf Yameen Kerai Chairman President & CEO

12 Annual Report 2016 NIB Bank Limited Statement of Compliance with Code of Corporate Governance For the year ended December 31, 2016

This statement is being presented to comply with Code of Corporate Governance (CCG) contained in Clause 5.19 under Rule Book of Pakistan Stock Exchange Limited for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance. The Bank has applied the principles contained in the Code of Corporate Governance in the following manner: 1. The Bank encourages representation of independent Non-executive Directors on its Board including those representing minority interests. At present the Board includes:

Category Name Independent Directors Teo Cheng San, Roland Asif Jooma Muhammad Abdullah Yusuf Lee Boon Huat Non-executive Directors Tejpal Singh Hora Lee Ah Boon Teo Meng Poh, Philip

At present, there is a casual vacancy on the Board (refer para 4 also). The independent directors meet the criteria of independence under clause 5.19.1(b) of the CCG. 2. The directors have confirmed that none of them is serving as a director in more than seven listed companies, including the Bank. 3. All the resident directors of the Bank are registered as taxpayers and none of them has defaulted in payment of any loan to a Banking Company, a Development Financial Institution or Non-Banking Finance Institutions. None of the directors of the Bank are members of any Stock Exchange. 4. During 2016, Mr. Yameen Kerai was appointed as the President & CEO of NIB Bank, subject to the State Bank of Pakistan's (SBP) approval, in place of Mr. Atif Riaz Bokhari. He has taken the charge of President & CEO of NIB Bank with effect from 10 January 2017. Mr. Atif Riaz Bokhari, the previous President and CEO of the Bank and also the elected director has resigned from the directorship of the Bank with effect from 26 December 2016. This casual vacancy is expected to be filled in within regulatory timeline. 5. The Bank has prepared a “Code of Conduct” and has ensured appropriate steps have been taken to disseminate it through the company along with its supporting policies and procedures. 6. The Bank has established a Strategic Intent, and agreed on Brand Values which are expected to be demonstrated by all NIB Bank employees. Both, the Strategic Intent and Values, are duly approved by the Board. A complete record of particulars of significant policies along with the dates on which these were approved is being maintained. 7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO and Non-executive Directors have been taken by the Board / Shareholders. 8. The meetings of the Board were presided over by the Chairman. The Board held six meetings during the year (including the required quarterly meetings). Written notices of Board meetings, along with agenda, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. The CFO and Company Secretary attended all the meetings of the Board of Directors during the year. 9. In 2016, Mr. Lee Boon Huat obtained certification of Financial Institutions Directors' Education Programme from the Iclif Leadership and Governance Centre, Malaysia. He is also a member of Singapore Institute of Directors. In 2016, Orientation Program could not be organized, however, the same has been arranged on 22 February 2017.

NIB Bank Limited Annual Report 2016 13 Statement of Compliance with Code of Corporate Governance For the year ended December 31, 2016

10. During 2016, the Board had approved the appointment (transfer within the Bank) of Head of Internal Audit and the terms and conditions of his employment, determined by the CEO, are duly authorized by the Board of Directors. No new appointments in respect of Chief Financial Officer and Company Secretary during 2016. 11. The Directors' Report has been prepared in compliance with the requirements of the CCG and fully describes the salient matters required to be disclosed. 12. The financial statements of the Bank were duly endorsed by the CEO and CFO before approval of the Board. 13. The directors, CEO and executives do not hold any interest in the shares of the Bank other than that disclosed in the pattern of shareholding (if any). 14. The Bank has complied with all the corporate and financial reporting requirements of the CCG. 15. The Audit Committee comprises of three members, all of whom are non-executive directors (1 is independent). 16. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and final results of the Bank as required by the CCG. The terms of reference of the Committee have been formed and advised to the Committee for compliance. 17. The Board has formed a Nomination & Remuneration Committee. It comprises 5 members (3 independent, 1 non- executive and 1 chief executive officer). 18. The Bank has an effective internal audit division that is manned by suitably qualified and experienced personnel. The audit team is conversant with the policies and procedures of the Bank. 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, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Bank and that the firm and all its 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. 20. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. 21. The 'closed period', prior to the announcement of interim / final results, and business decisions, which may materially affect the market price of company's securities, was determined and intimated to directors, employees and stock exchange. 22. Material / price sensitive information has been disseminated among all market participants at once through stock exchange. 23. The Bank has complied with the requirement relating to maintenance of register of persons having access to inside information by designated senior management officer in a timely manner and maintained proper record included basis for inclusion and exclusion of names of persons from the said list. 24. We confirm that all the material principles enshrined in the CCG, explained above, have been complied with except the Orientation Program which could not be organized during 2016. However, the same has been arranged on 22 February 2017.

Yameen Kerai President & CEO

14 Annual Report 2016 NIB Bank Limited Statement on Internal Controls For the year ended December 31, 2016

Internal Control System Management acknowledges its responsibility for establishing and maintaining a system of internal controls directly related to, and designed for, providing reasonable assurance to achieve following objectives:

• Efficiency and effectiveness of operations • Compliance with applicable laws, regulations and internal policies • Reliability of financial reporting

The Bank has strengthened its internal control system by regularly enhancing the quality of processes, staff and IT infrastructure and will continue to do so as it grows its business volumes and activities.

The Bank is pleased to make the following disclosures on components of its internal control system:

Control Environment 1. The Bank has written and implemented policies duly approved by the Board and, procedures, manuals & other documents approved by the management to cover areas of the Bank's business.

2. The Bank has established a Strategic Intent, and agreed on Values which are expected to be demonstrated by all NIB Bank employees. Both, the Strategic Intent and Values, are duly approved by the Board.

3. A governance structure exists that supports clear lines of command, communication and controls.

4. Roles and responsibilities of key management personnel have been defined.

5. The Board Audit Committee (BAC), which comprises of non-executive directors, works as per its terms of reference and reports to the Board. It reviews and approves the Annual Audit Plan and ensures its implementation by the Bank's Internal Audit Group (IAG). Further it also reviews the reports and observations of the external auditors of the Bank. BAC regularly receives summary of reports from the IAG as well as the external auditors on the system of internal controls and any material control weaknesses that have been identified. Chairman of the Audit Committee also presents highlights of Audit Committee discussions to the Board of Directors with emphasis on any areas of concern.

6. An effective internal audit process exists responsible for evaluation of the Bank's internal control system on a continuous basis. The head of internal audit reports directly to the Chairman of Audit Committee.

7. The Bank has adopted a code of conduct that is required to be signed by all employees. Furthermore, the Directors have also signed a code of conduct.

8. Management has set up an effective compliance function to ensure ongoing monitoring of the Bank's adherence with all laws and regulations. Head of compliance function directly reports to the CEO/President of the Bank as per regulatory requirements.

9. The Bank has also developed a Compliance Risk Management (CRM) tool whereby applicable regulations are tagged to relevant stakeholders entrusted with ownership of specific controls designed to mitigate regulatory risks. The underlying controls are periodically tested by means of a process of self-assessment.

Risk Assessment 10. The Bank is compliant with the risk management guidelines issued by the SBP.

Control Activities 11. The Bank has developed a Business Continuity Plan and tests the Plan at periodic intervals.

NIB Bank Limited Annual Report 2016 15 Statement on Internal Controls For the year ended December 31, 2016

12. The Bank has strict Know Your Customer (KYC)/Anti Money Laundering (AML) and Fraud Risk Management policies, and has an automated transaction monitoring system, anti-fraud training programs, and controls are in place. The Bank continues to use an e-KYC form and automated transaction monitoring to further strengthen its KYC/ AML regime.

13. The Bank has adopted Internal Controls over Financial Reporting (ICFR), and is fully compliant with SBP Roadmap and guidelines as it pertains to ICFR.

Information and Communication 14. The Bank has a functioning Management Information System and has developed Key Performance Indicators for its businesses enabling it to monitor budget versus actual performance.

Monitoring 15. Internal Audit periodically carries out audits for branches and Head Office functions to monitor compliance with the Bank's standards.

16. Management gives due consideration to recommendations made by internal & external auditors as well as those made by the regulators relating to improvements in the internal control system.

Based on the results of an evaluation of the internal control system and key features of the control framework enumerated above, management is of the view that the internal control system during the year was acceptable in design and has been effectively implemented throughout the year.

It is pertinent to state that development of an internal control system is an ongoing process through which management reviews and strengthens its internal controls, designed to manage and mitigate risks, and to also recognize and contain inherent risks. As such, it can only provide reasonable, but not absolute, assurance against material misstatement or loss.

Risk Management Framework The acceptance and management of financial risk is inherent to banking business activities. It involves the identification, measurement, monitoring and controlling of Risk.

In accordance with the Risk Management guidelines issued by the SBP, an Integrated Risk Management Group in the Bank formulates risk management Policies and Procedures in line with the Bank's defined strategies and to monitor the following areas: a) Credit Risk Management b) Market and Liquidity Risk Management c) Operational Risk Management d) Information Security Management

Credit Risk Management (CRM) CRM is viewed as an ongoing activity where credit risks under corporate, commercial, SME and consumer businesses are regularly identified, measured, monitored, assessed and controlled. Regular portfolio reviews determine the quality of the credit portfolio on an ongoing basis and assist in balancing risk and reward. To oversee and manage credit risks appropriately, the Credit Risk Committee exists and operates centrally from the Head Office, and comprises of members with credit, industry and business expertise.

In order to achieve earnings targets with a high degree of reliability and to avoid losses through a strong credit process, Credit Risk Policies were developed and implemented, which have served the Bank well over past five years. These Credit Policies are under constant review and updated as and when required, thereby establishing a robust credit control environment.

16 Annual Report 2016 NIB Bank Limited Statement on Internal Controls For the year ended December 31, 2016

Market Risk Management (MRM) MRM is a control function which allows management to closely supervise and monitor risks caused by movements in market rates or prices such as interest rates, foreign exchange rates, equity prices, credit spreads and/or commodity prices, resulting in a potential loss to earnings and capital.

The Market and Liquidity Risk Unit under the supervision of Integrated Risk Management Group, is responsible for ensuring that market and liquidity risk parameters are properly adhered to.

In order to ensure adequate controls for mismatch of maturity under liquidity risk, money market, foreign exchange and equity transactions, a comprehensive control mechanism has been implemented by restructuring the limit mechanism and introducing notional as well as stress and sensitivity based limits.

Operational Risk Management (ORM) Operational risk is the risk of loss resulting from inadequate or failed internal processes, errors or mistakes or frauds committed by people, inadequate systems, and from external events. The Bank has an Operational Risk Framework duly approved by the Board which is reviewed after every two years. The Bank has a well-developed Operational Risk System, and has implemented an Operational Risk Framework aligned to international best practices. The Bank is using Key Risk Indicators, Risk & Control Self-Assessment and capturing Operational Incidents as tools for identification, monitoring, measuring, and management of operational risk. The Bank has further strengthened this area by embedding Internal Control over Financial Reporting (ICFR) testing in Operational Risk System and emphasizing on training, adding experienced staff, focusing on building robust processes and introducing a strong monitoring system as part of the risk management process. The Bank is compliant with the Risk Management Guidelines issued by the SBP.

Information Security Management (ISM) The Bank has embarked on a program of automation of its internal process and work flows while also providing its customers an on-line banking channels. This program could only be implemented after improving and up scaling the Bank's Information Security Risk Management. To improve Bank's control, monitoring and security on Bank's information, the Bank has embarked upon an on-going augmentation of Information Security framework through IT management strategy, Information Security policies, procedures and required resources.

Yameen Kerai President & CEO

NIB Bank Limited Annual Report 2016 17 Review Report to the Members on the Statement of Compliance with the Code of Corporate Governance

We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of Corporate Governance (the Code) prepared by the Board of Directors of NIB Bank Limited (the Bank) for the year ended 31 December 2016 to comply with the requirements of rule 5.19 of the listing rulebook of the Pakistan Stock Exchange where the Bank is listed.

The responsibility for compliance with the Code is that of the Board of Directors of the Bank. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Bank's compliance with the provisions of the Code and report if it does not and to highlight any non-compliance with the requirements of the Code. 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 Code.

As part of our audit of 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 Code requires 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 of related party transactions distinguishing between transactions carried out on terms equivalent to those that prevailed in arm's length transactions and transactions which are not executed at arm's length price and recording proper justification for using such alternate pricing mechanism. We are only required and have ensured compliance of this requirement to the extent of approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not.

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 best practices contained in the Code as applicable to the Bank for the year ended 31 December 2016.

Further, we highlight below an instance of non-compliance with the requirements of the Code as reflected in the paragraph reference where this is stated in the Statement of Compliance:

As mentioned in paragraph 9 of the Statement of Compliance Orientation program was not organised during the year as per the requirement of clause 5.19.7 of the Code of Corporate Governance.

Date: 22 February 2017 KPMG Taseer Hadi & Co. Karachi Chartered Accountants

18 Annual Report 2016 NIB Bank Limited Auditors’ Report to the Members

We have audited the annexed statement of financial position of NIB Bank Limited (“the Bank”) as at 31 December 2016 and the related profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof (here-in-after referred to as the 'financial statements') for the year then ended, in which are incorporated the unaudited certified returns from the branches except for 25 branches which have been audited by us and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the Bank's Board of Directors to establish and maintain a system of internal control, and prepare and present the financial statements in conformity with the approved accounting standards and the requirements of the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984). Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the International Standards on Auditing as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, which in case of loans and advances covered more than sixty percent of the total loans and advances of the Bank, we report that: a) in our opinion, proper books of account have been kept by the Bank as required by the Companies Ordinance, 1984 (XLVII of 1984), and the returns referred to above received from the branches have been found adequate for the purposes of our audit; b) in our opinion:

i) the statement of financial position and the profit and loss account together with the notes thereon have been drawn up in conformity with the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984), and are in agreement with the books of accounts and are further in accordance with the accounting policies consistently applied except for the change in accounting policies as disclosed in note 6.1 to the accompanying financial statements, with which we concur;

ii) the expenditure incurred during the year was for the purpose of the Bank's business; and

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

NIB Bank Limited Annual Report 2016 19 Auditors’ Report to the Members c) in our opinion and to the best of our information and according to the explanations given to us, the statement of financial position, profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984), in the manner so required and give a true and fair view of the state of the Bank's affairs as at 31 December 2016 and its true balance of profit, its comprehensive income, its cash flows and its changes in equity for the year then ended; and d) in our opinion 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.

We draw attention to note 1.2 to the financial statements which more fully explains the status of the Bank's amalgamation with MCB Bank Limited. Our opinion in not qualified in respect of this matter.

Date: 22 February 2017 KPMG Taseer Hadi & Co. Karachi Chartered Accountants Amyn Pirani

20 Annual Report 2016 NIB Bank Limited Statement of Financial Position As at December 31, 2016

Note 2016 2015 (Rupees in ‘000)

ASSETS Cash and balances with treasury banks 7 8,766,811 10,052,543 Balances with other banks 8 777,302 1,645,086 Lendings to financial institutions 9 3,243,130 1,599,044 Investments 10 124,489,098 95,743,449 Advances 11 87,305,928 110,668,994 Operating fixed assets 12 2,796,052 3,086,446 Intangible assets 13 599,045 890,491 Deferred tax assets - net 14 8,625,041 9,539,749 Assets held for sale 15 – 3,112,731 Other assets 16 7,342,461 7,157,979 243,944,868 243,496,512

LIABILITIES Bills payable 17 2,634,398 2,576,216 Borrowings 18 117,174,817 85,676,741 Deposits and other accounts 19 97,072,367 130,444,894 Sub-ordinated loans 20 4,193,837 4,195,516 Liabilities against assets subject to finance lease – – Deferred tax liabilities – – Other liabilities 21 4,064,640 3,463,013 225,140,059 226,356,380

NET ASSETS 18,804,809 17,140,132

REPRESENTED BY : Share capital 22 103,028,512 103,028,512 Reserves 1,281,655 997,582 Discount on issue of shares (45,769,623) (45,769,623) Accumulated loss (40,057,798) (41,195,205) Shareholders' equity 18,482,746 17,061,266 Surplus on revaluation of assets - net 23 322,063 78,866 18,804,809 17,140,132

CONTINGENCIES AND COMMITMENTS 24

The annexed notes 1 to 43 and annexure - 1 form an integral part of these financial statements.

Yameen Kerai Muhammad Abdullah Yusuf Lee Boon Huat Lee Ah Boon President / Chief Executive Chairman / Director Director Director

NIB Bank Limited Annual Report 2016 21 Statement of Profit and Loss Account For the year ended December 31, 2016

Note 2016 2015 (Rupees in ‘000)

CONTINUING OPERATIONS Mark-up / return / interest earned 25 15,413,031 14,737,305 Mark-up / return / interest expensed 26 11,011,697 10,095,234 Net mark-up / interest income 4,401,334 4,642,071

(Reversal) / provision against non-performing loans and advances 11.5 (104,329) 199,229 (Reversal) / provision for diminution in the value of investments 10.13 270,317 3,668 Bad debts written off directly 49 2,248 166,037 205,145 Net mark-up / interest income after provisions 4,235,297 4,436,926

NON MARK-UP / INTEREST INCOME Fee, commission and brokerage income 1,314,814 1,420,931 Dividend income 156,939 152,041 Income from dealing in foreign currencies 425,074 357,056 Gain on sale of securities - net 27 569,089 4,021,669 Unrealized gain on revaluation of investments classified as held-for-trading 1,643 – Other income 28 396,838 46,890 Total non mark-up / interest income 2,864,397 5,998,587 7,099,694 10,435,513

NON MARK-UP / INTEREST EXPENSES Administrative expenses 29 6,176,449 6,172,262 Other (reversals) / provisions / write offs (133,494) 141,402 Other charges 30 64,206 95,241 Total Non-Mark-up / Interest expenses 6,107,161 6,408,905 Extraordinary / unusual items – – Profit before taxation from continuing operations 992,533 4,026,608

Taxation – Current 183,603 207,359 – Prior years 116,301 – – Deferred 264,658 1,201,956 31 564,562 1,409,315

Profit after taxation from continuing operations 427,971 2,617,293

DISCONTINUED OPERATIONS Profit from discontinued operations - net of tax 15 992,393 – PROFIT AFTER TAXATION 1,420,364 2,617,293 (Rupees) EARNINGS PER SHARE Basic and diluted - continuing operations 0.04 0.25 Basic and diluted - discontinued operations 0.10 – 32 0.14 0.25

The annexed notes 1 to 43 and annexure - 1 form an integral part of these financial statements.

Yameen Kerai Muhammad Abdullah Yusuf Lee Boon Huat Lee Ah Boon President / Chief Executive Chairman / Director Director Director

22 Annual Report 2016 NIB Bank Limited Statement of Comprehensive Income For the year ended December 31, 2016

Note 2016 2015 (Rupees in ‘000)

Profit after taxation for the year 1,420,364 2,617,293

Other comprehensive income

Items that will not be reclassified to profit or loss in subsequent periods Actuarial (loss) / gain on remeasurement of defined benefit obligation 35.4 (820) 5,078

Comprehensive income - transferred to statement of changes in equity 1,419,544 2,622,371

Components of comprehensive income not reflected in equity

Items that may be reclassified to profit or loss in subsequent periods Movement in surplus on revaluation of available for sale securities - net of tax 23.1 64,719 (1,137,333)

Total comprehensive income for the year 1,484,263 1,485,038

Total comprehensive income for the period arising from: – Continuing Operations 491,870 1,485,038 – Discontinued Operations 992,393 –

1,484,263 1,485,038

The annexed notes 1 to 43 and annexure - 1 form an integral part of these financial statements.

Yameen Kerai Muhammad Abdullah Yusuf Lee Boon Huat Lee Ah Boon President / Chief Executive Chairman / Director Director Director

NIB Bank Limited Annual Report 2016 23 Statement of Changes in Equity For the year ended December 31, 2016

Reserves Capital Revenue

Share Discount on Statutory General Accumulated Total Note capital issue of reserve reserve loss shares (a)

(Rupees in ‘000)

Balance as at December 31, 2014 103,028,512 (45,769,623) 468,651 5,472 (43,294,117) 14,438,895

Total comprehensive income for the year Profit after taxation for the year – – – – 2,617,293 2,617,293

Other comprehensive income Actuarial gain on remeasurement of defined benefit obligation 35.4 – – – – 5,078 5,078 – – – – 2,622,371 2,622,371 Transfer to statutory reserve – – 523,459 – (523,459) –

Balance as at December 31, 2015 103,028,512 (45,769,623) 992,110 5,472 (41,195,205) 17,061,266

Total comprehensive income for the year Profit after taxation for the year – – – – 1,420,364 1,420,364

Other comprehensive income Actuarial loss on remeasurement of defined benefit obligation 35.4 – – – – (820) (820) – – – – 1,419,544 1,419,544 Transfer to statutory reserve – – 284,073 – (284,073) –

Transferred from surplus on revaluation of fixed assets - incremental depreciation (recognised directly in equity) – – – – 1,936 1,936

Balance as at December 31, 2016 103,028,512 (45,769,623) 1,276,183 5,472 (40,057,798) 18,482,746

(a) This represents reserve created under section 21(1)(a) of the Banking Companies Ordinance 1962.

The annexed notes 1 to 43 and annexure - 1 form an integral part of these financial statements.

Yameen Kerai Muhammad Abdullah Yusuf Lee Boon Huat Lee Ah Boon President / Chief Executive Chairman / Director Director Director

24 Annual Report 2016 NIB Bank Limited Cash Flow Statement For the year ended December 31, 2016

2016 2015 (Rupees in ‘000)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation (including discontinued operations) 2,519,292 4,026,608 Less: Dividend income (including discontinued operations) (156,939) (152,041) 2,362,353 3,874,567

Adjustments for non-cash items Depreciation 348,929 304,912 Amortization 327,963 323,917 Impairment charge on tangible fixed assets – 27,941 Gain on sale of securities - net (2,095,848) (4,021,669) Gain on sale of operating fixed assets - net (60,415) (5,395) Gain from insurance against loss of fixed assets - net (234) (64) (Reversal) / provision against non-performing loans and advances (104,329) 199,229 Bad debts written off directly 49 2,248 Fixed assets written off 6,097 8,621 Provision for diminution in the value of investments 270,317 3,668 Unrealized gain on options to sell closed end funds (293,180) – Unrealized gain on revaluation of held for trading investments (1,178) – Unrealized gain on revaluation of future contracts (465) – Other provisions / write offs (133,494) 141,402 (1,735,788) (3,015,190) 626,565 859,377

(Increase) / decrease in operating assets Lendings to financial institutions (1,644,086) 6,100,602 Held-for-trading securities (332,563) – Advances 23,467,344 (17,206,435) Other assets (excluding advance taxation) 438,989 2,025,606

Increase / (decrease) in operating liabilities Bills payable 58,182 (164,286) Borrowings 31,498,076 22,925,847 Deposits and other accounts (33,372,527) 25,334,914 Other liabilities 600,817 353,843 21,340,797 40,229,468 Income tax paid (253,043) (256,971)

Net cash generated from operating activities 21,087,754 39,972,497 CASH FLOWS FROM INVESTING ACTIVITIES Net investments in available-for-sale securities (28,041,151) (36,658,238) Net investments in held-to-maturity securities 27,582 24,504 Proceeds from sale of investment in associate and subsidiary 4,639,490 – Dividend received 156,939 152,041 Payments for capital work in progress (73,221) (272,192) Acquisition of property and equipment (56,713) (169,177) Acquisition of intangible assets (4,956) (8,934) Sale proceeds of property and equipment disposed off 111,809 7,568 Recovery from Insurance company against loss of assets 638 181 Net cash used in investing activities (23,239,583) (36,924,247)

NIB Bank Limited Annual Report 2016 25 Cash Flow Statement For the year ended December 31, 2016

Note 2016 2015 (Rupees in ‘000)

CASH FLOWS FROM FINANCING ACTIVITIES Redemption of sub-ordinated loans (1,679) (1,679)

Dividend paid (7) (45)

Net cash used in financing activities (1,686) (1,724) Net (decrease) / increase in cash and cash equivalents (2,153,516) 3,046,526

Cash and cash equivalents at beginning of the year 11,697,629 8,651,103

Cash and cash equivalents at end of the year 33 9,544,113 11,697,629

The annexed notes 1 to 43 and annexure - 1 form an integral part of these financial statements.

Yameen Kerai Muhammad Abdullah Yusuf Lee Boon Huat Lee Ah Boon President / Chief Executive Chairman / Director Director Director

26 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

1 STATUS AND NATURE OF BUSINESS 1.1 NIB Bank Limited "the Bank" is incorporated in Pakistan and its registered office is situated at first floor, Post Mall, F-7 Markaz, Islamabad. The Bank's ordinary shares are listed on Pakistan Stock Exchange and has 171 branches (December 31, 2015: 171 branches). The Bank is a scheduled commercial bank and is principally engaged in the business of banking as defined in the Banking Companies Ordinance, 1962. NIB Bank Limited is a subsidiary of Bugis Investments (Mauritius) Pte. Limited which is a wholly owned subsidiary of Fullerton Financial Holdings Pte. Limited which in turn is a wholly owned subsidiary of Temasek Holdings, an investment arm of the Government of Singapore.

1.2 On December 7, 2016, the respective Boards of NIB Bank Limited (“NIB”) and MCB Bank Limited (“MCB”) have approved a Scheme of Amalgamation (Scheme) whereby NIB will merge with and into MCB. The Scheme has been approved by the shareholders of MCB in their meeting on January 23, 2017. Due to litigation filed in the Sindh High Court (SHC), initiated by some minority shareholders of NIB, NIB has not yet been able to convene a shareholders meeting to approve the Scheme. NIB and the other defendants have taken the necessary legal steps to challenge the interim orders of the SHC. Currently therefore, the merger is subject to, amongst others (i) the approval of NIB shareholders (ii) receipt of all requisite regulatory approvals and (iii) the decision of the SHC. In the meanwhile, the Bank continues to operate and as such these financial statements have been prepared on a going concern basis.

2 BASIS OF PRESENTATION In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, the State Bank of Pakistan (SBP) has issued various circulars from time to time. Permissible forms of trade-related modes of financing include 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 financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. These financial statements have been presented in Pakistan Rupees, which is the Bank's functional and presentation currency. The amounts are rounded off to the nearest thousand rupees.

3 STATEMENT OF COMPLIANCE 3.1 These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Banking Companies Ordinance, 1962, the Companies Ordinance, 1984 and the directives issued by the SBP. In case the requirements differ, the provisions of and directives issued under the Banking Companies Ordinance, 1962, the Companies Ordinance, 1984 and the directives issued by the SBP shall prevail.

3.2 SBP vide BSD Circular No. 10, dated August 26, 2002 has deferred the applicability of International Accounting Standard 39, Financial Instruments: Recognition and Measurement (IAS 39) and International Accounting Standard 40, Investment Property for banking companies till further instructions. Further, according to a notification of the Securities and Exchange Commission of Pakistan (SECP) dated April 28, 2008, 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 financial statements. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP.

3.3 Standards, interpretations and amendments to published approved accounting standards that are not yet effective The following standards, amendments and interpretations of approved accounting standards will be effective for accounting periods beginning on or after 01 January 2017:

NIB Bank Limited Annual Report 2016 27 Notes to the Financial Statements For the year ended December 31, 2016

– Amendments to IAS 12 ‘Income Taxes’ are effective for annual periods beginning on or after 1 January 2017. The amendments clarify that the existence of a deductible temporary difference depends solely on a comparison of the carrying amount of an asset and its tax base at the end of the reporting period, and is not affected by possible future changes in the carrying amount or expected manner of recovery of the asset. The amendments further clarify that when calculating deferred tax asset in respect of insufficient taxable temporary differences, the future taxable profit excludes tax deductions resulting from the reversal of those deductible temporary differences. The amendments are not likely to have an impact on Bank’s financial statements. – Amendments to IAS 7 ‘Statement of Cash Flows’ are part of IASB’s broader disclosure initiative and are effective for annual periods beginning on or after 1 January 2017. The amendments require disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flow and non-cash changes. – Amendments to IFRS 2 - Share-based Payment clarify the accounting for certain types of arrangements and are effective for annual periods beginning on or after 1 January 2018. The amendments cover three accounting areas (a) measurement of cash-settled share-based payments; (b) classification of share-based payments settled net of tax withholdings; and (c) accounting for a modification of a share-based payment from cash- settled to equity-settled. The new requirements could affect the classification and / or measurement of these arrangements and potentially the timing and amount of expense recognised for new and outstanding awards. The amendments are not likely to have an impact on Bank’s financial statements. – Annual improvements to IFRS standards 2014-2016 cycle. The new cycle of improvements addresses improvements to following approved accounting standards: – Amendments to IFRS 12 ‘Disclosure of Interests in Other Entities’ (effective for annual periods beginning on or after 1 January 2017) clarify that the requirements of IFRS 12 apply to an entity’s interests that are classified as held for sale or discontinued operations in accordance with IFRS 5 – ‘Non-current Assets Held for Sale and Discontinued Operations’. The amendments are not likely to have an impact on Bank’s financial statements. – Amendments to IAS 28 ‘Investments in Associates and Joint Ventures’ (effective for annual periods beginning on or after 1 January 2018) clarifies that a venture capital organization and other similar entities may elect to measure investments in associates and joint ventures at fair value through profit or loss, for each associate or joint venture separately at the time of initial recognition of investment. Furthermore, similar election is available to non-investment entity that has an interest in an associate or joint venture that is an investment entity, when applying the equity method, to retain the fair value measurement applied by that investment entity associate or joint venture to the investment entity associate's or joint venture's interests in subsidiaries. This election is made separately for each investment entity associate or joint venture. The amendments are not likely to have an impact on Bank’s financial statements. – IFRIC 22 ‘Foreign Currency Transactions and Advance Consideration’ (effective for annual periods beginning on or after 1 January 2018) clarifies which date should be used for translation when a foreign currency transaction involves payment or receipt in advance of the item it relates to. The related item is translated using the exchange rate on the date the advance foreign currency is received or paid and the prepayment or deferred income is recognised. The date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) would remain the date on which receipt of payment from advance consideration was recognised. If there are multiple payments or receipts in advance, the entity shall determine a date of the transaction for each payment or receipt of advance consideration.

3.4 Standards, interpretations, amendments to published approved accounting standards that are effective in the current year There are certain new and amended standards, interpretations and amendments that are mandatory for the Bank's accounting periods beginning on or after January 1, 2016 but are considered not be relevant or do not have any significant effect on the Bank's operations and therefore not detailed in these financial statements.

28 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

4 BASIS OF MEASUREMENT These financial statements have been prepared under the historical cost convention except for the measurement of non-banking assets acquired in satisfaction of claims and certain investments and commitments in respect of forward foreign exchange contracts and certain derivative contracts that are stated at revalued amounts / fair values.

5 CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY The preparation of financial statements in conformity with approved accounting standards as applicable in Pakistan requires the use of certain critical accounting estimates that affect the reported amounts of assets, liabilities, income and expenses. It also requires the management to exercise its judgment in the process of applying the Bank's accounting policies. Estimates and judgments are evaluated and are based on historical experience, including expectations of future events that are believed to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods. The areas where various assumptions and estimates are significant to the Bank's financial statements or where judgment was exercised in application of accounting policies are as follows:

5.1 Classification of investments Held-to-maturity securities As described in note 6.3, held-to-maturity securities are investments where the management has positive intent and ability to hold to maturity. The classification of these securities involves management judgment as to whether the financial assets are held-to-maturity investments.

Held-for-trading securities Investments classified as held-for-trading are those which the Bank has acquired with an intention to trade by taking advantage of short term market / interest rate movements.

Available-for-sale securities Investments which are not classified as held-for-trading or held-to-maturity are classified as available-for-sale.

5.2 Impairment Valuation and impairment of available-for-sale investments The Bank determines that an available-for-sale equity investment and closed end mutual funds are impaired when there has been a significant or prolonged decline in the fair value below its cost. The determination of what is significant or prolonged requires judgment. In making this judgment, the Bank evaluates, among other factors, the normal volatility in share price. In addition, impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance, changes in technology and operational and financing cash flows. Provision for diminution in the value of Term Finance Certificates, Bonds and Sukuks is made as per the Prudential Regulations issued by the SBP. In case of impairment of available-for-sale securities, the cumulative loss that has been recognised directly in surplus / (deficit) on revaluation of securities on the Statement of Financial Position below equity is removed there- from and recognised in the profit and loss account.

Impairment of investments in associates and subsidiaries "The Bank considers that a significant or prolonged decline in the recoverable value of investments in associates and subsidiaries below their cost may be evidence of impairment. Recoverable value is calculated as the higher

NIB Bank Limited Annual Report 2016 29 Notes to the Financial Statements For the year ended December 31, 2016

of fair value less costs to sell and value in use. An impairment loss is recognised when the recoverable value falls below the carrying value and is charged to the profit and loss account. Subsequent reversal of impairment loss, upto the cost of investments in associates and subsidiaries, are credited to the profit and loss account.

Impairment of non financial assets (excluding deferred tax) Non financial assets are subject to impairment review if there are events or changes in circumstances that indicate that the carrying amount may not be recoverable. If any such indication exists, the Bank estimates the recoverable amount of the asset and the impairment loss, if any. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of future cash flows from the asset discounted at a rate that reflects market interest rates adjusted for risks specific to the asset. If the recoverable amount of an intangible or tangible asset is less than its carrying value, an impairment loss is recognised immediately in the profit and loss account and the carrying value of the asset reduced by the amount of the loss. A reversal of an impairment loss on intangible assets is recognised as it arises provided the increased carrying value does not exceed that which it would have been had no impairment loss been recognised.

5.3 Provision against non-performing advances Apart from the provision determined on the basis of time based criteria given in the Prudential Regulations of the SBP, management also applies subjective criteria of classification and accordingly the classification of an advance may be downgraded on the basis of evaluation of the credit worthiness of the borrower, its cash flows, operations in its account and adequacy of security in order to ensure accurate measurement of the provision.

5.4 Retirement benefits The key actuarial assumptions concerning the valuation of the defined benefit plan and the sources of estimation are disclosed in note 35.2 to these financial statements.

5.5 Operating fixed assets, depreciation and amortization In making estimates of depreciation / amortization, the management uses 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 expected pattern of consumption of the future economic benefits embodied in the assets, the method would be changed to reflect the change in pattern.

5.6 Income taxes In making the estimates for income taxes currently payable by the Bank, the management looks at the current income tax laws and the decisions of appellate authorities on certain issues in the past. In making the provision for deferred taxes, estimates of the Bank's future taxable profits are taken into account.

6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted in the preparation of these financial statements have been applied consistently and are the same as those applied in the preparation of the financial statements of the Bank for the year ended December 31, 2015, except for the change as explained in note 6.1 of these financial statements:

6.1 Change in Accounting Policy Effective January 1, 2016, the Bank has changed its accounting policy for recording of non-banking assets acquired in satisfaction of claims to comply 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. In line with the guidance provided in the Regulations, 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 of property is credited to the 'surplus on revaluation of fixed assets' account and any deficit arising on revaluation is taken to profit and loss account directly. Surplus on revaluation of non-banking

30 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

assets to the extent of incremental depreciation charged there on is transferred from surplus on revaluation of assets to accumulated losses, net of deferred tax. Legal fees, transfer costs and direct costs of acquiring title to property is charged to profit and loss account and not capitalized. Previously, non-banking assets acquired in satisfaction of claims were carried at cost less impairment, if any. Had the accounting policy not been changed, non-banking assets (included in Other Assets in the statement of financial position) would have been lower by Rs. 246.359 million while surplus on revaluation of assets would have been lower by Rs. 178.478 million, accumulated losses would have been lower by Rs. 18.345 million and deferred tax asset would have been higher by Rs. 85.548 million. Furthermore, profit before tax for the year ended December 31, 2016 would have been higher by Rs. 30.158 million.

6.2 Revenue recognition Mark-up / return on performing loans / advances and investments is recognised on time proportionate basis. Where debt securities are purchased at a premium or discount, such premium / discount is amortized through the profit and loss account over the remaining period of maturity using the effective interest rate method so as to produce a constant rate of return. Interest or mark-up recovered on non-performing advances is recognised on a receipt basis in accordance with the requirements of the Prudential Regulations issued by the SBP as amended from time to time. The financing method is used in accounting for income on finance leases and hire purchase transactions. Under this method, the unearned income, i.e. the excess of aggregate lease rentals and the estimated residual value over the net investment (cost of leased assets) is deferred and then amortized to income over the term of the lease on a pattern reflecting a constant periodic rate of return on the net investment in the lease. Unrealized lease income is suspended, where necessary, in accordance with the requirements of the Prudential Regulations issued by the SBP. Rental income from assets given on operating lease is recognised on time proportionate basis over the lease period. Gains / losses on termination of lease contracts, documentation charges and other lease income are recognised as income when they are realized. Fee, commission and brokerage income is recognised at the time of performance of the service. Dividend income is recorded when the right to receive the dividend is established.

6.3 Investments Investments of the Bank, other than investments in subsidiaries and associates are classified as held-to-maturity, held-for-trading and available-for-sale.

Held-to-maturity These are securities with fixed or determinable payments and fixed maturity for which the Bank has the positive intent and ability to hold upto maturity.

Held-for-trading These securities are either acquired for generating a profit from short-term fluctuations in market prices, interest rate movements, dealer's margin or are securities included in the portfolio for which there is evidence of a recent actual pattern of short-term profit taking.

Available-for-sale These are securities which do not fall under the classification of held-for-trading or held-to-maturity securities.

NIB Bank Limited Annual Report 2016 31 Notes to the Financial Statements For the year ended December 31, 2016

Initial measurement All “regular way” purchases and sales of investments are recognised on the trade date, i.e., the date that the Bank commits to purchase or sell the asset. Regular way purchases or sales of investments are those that require delivery of assets within the time frame generally established by regulation or convention in the market place. Investments are initially recognised at fair value which, in the case of investments other than held-for-trading, includes transaction costs associated with the investments. Transaction costs on investments classified as held- for-trading are expensed as incurred.

Subsequent measurement Held-to-maturity These are measured at amortized cost using the effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts.

Held-for-trading These are measured at subsequent reporting dates at fair value. Gains and losses on remeasurement are included in the profit and loss account.

Available-for-sale Quoted-securities classified as available-for-sale investments are measured at subsequent reporting dates at fair value (and any revaluation gain or loss is taken to other comprehensive income (OCI)). Any surplus / deficit arising thereon is kept in a separate account shown in the balance sheet below equity and taken to the profit and loss account when actually realized upon disposal or when the investment is considered to be impaired. Unquoted equity securities are valued at the lower of cost and break-up value. A decline in the carrying value is charged to the profit and loss account. A subsequent increase in the carrying value, up to the cost of investment, is credited to the profit and loss account. The break-up value of these equity securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements. Investments in other unquoted securities are valued at cost less impairment losses. Provision for diminution in the value of securities (except term finance certificates and sukuks) is made for impairment, if any. Provision for diminution in the value of term finance certificates and sukuks is made as per the criteria prescribed by the Prudential Regulations issued by the SBP.

Investment in subsidiaries and associates Investments in subsidiaries and associates are valued at cost less impairment, if any. A reversal of an impairment loss on associates and subsidiaries is recognised in the profit and loss account as it arises provided the increased carrying value does not exceed cost. Gain or loss on sale of investments in subsidiaries and associates is included in the profit and loss account for the year. Subsidiaries are considered to be the entities where the Bank has a holding of 50% or more in the equity / net assets thereof. Associates are considered to be the entities where the Bank has a holding of less than 50% and also have significant influence therein.

6.4 Lendings to / borrowings from financial institutions (including repurchase and resale agreements) Securities sold subject to a repurchase agreement (repo) are retained in the financial statements as investments and the counter party liability is included in borrowings. Securities purchased under agreement to resale (reverse repo) are not recognised in the financial statements as investments and the amount extended to the counter party

32 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

is included in lendings to financial institutions. In the case of the margin trading system, transactions are shown under advances. The difference between sale and repurchase price is treated as mark-up / return expensed whereas difference between purchase and resale price is treated as mark-up / return earned. Securities purchase with a corresponding commitment to resell at a specified future date are not recognised in the financial statements, unless these are sold to third parties, in which case the obligation to return them is recorded at fair value as a trading liability under borrowings from financial institutions.

6.5 Advances Advances including margin trading system and net investment in finance lease are stated net of provisions.

Provisions Specific and general provisions are made based on an appraisal of the loan portfolio that takes into account Prudential Regulations issued by the State Bank of Pakistan from time to time. Specific provisions are made where the repayment of identified loans is in doubt and reflect an estimate of the amount of loss expected. The general provision is for the inherent risk of losses which are known from experience to be present in any loan portfolio. Provision made / reversed during the year is charged to the profit and loss account and accumulated provision is netted off against advances. Advances are written off when there is no realistic prospect of recovery.

Net investment in finance lease Leases include hire purchase where the Bank transfers substantially all the risks and rewards incidental to the ownership of an asset and are classified as finance leases. Net investment in finance lease is recognised at an amount equal to the aggregate of minimum lease payments and any guaranteed residual value less unearned finance income, if any.

6.6 Operating fixed assets and depreciation Owned Property and equipment except freehold and leasehold land is stated at cost less accumulated depreciation and accumulated impairment loss, if any. Freehold and leasehold land is stated at cost. Depreciation is charged to income applying the straight line method over the estimated useful lives of the assets while taking into account any residual value, at the rates given in note 12.2 to these financial statements. In respect of additions and deletions to assets during the year, depreciation is charged from the month of acquisition while depreciation on disposals during the year is charged upto the month of disposal. Normal repairs and maintenance are charged to the profit and loss account for the year as and when incurred. Major repairs and improvements are capitalized and assets so replaced are retired. Gains and losses on disposal of property and equipment if any, are taken to the profit and loss account for the year.

Assets held under finance lease Leasehold land is stated at cost. Assets held under finance lease are stated at cost less accumulated depreciation. The outstanding obligations under the lease agreements are shown as a liability net of finance charges allocable to future periods. Depreciation on assets held under finance lease is charged in a manner consistent with that for depreciable assets which are owned by the Bank.

NIB Bank Limited Annual Report 2016 33 Notes to the Financial Statements For the year ended December 31, 2016

Finance charges are allocated to accounting periods so as to provide a constant periodic rate of return on the outstanding liability.

Assets held under operating lease Operating lease assets are stated at cost less accumulated depreciation and impairment, if any. Repairs and maintenance are charged to the profit and loss account as and when incurred.

Capital work in progress These assets are stated at cost. These are transferred to specific assets as and when assets are available for use.

6.7 Intangible assets Intangible assets include the value of core deposit relationships, and core overdraft / working capital loan relationships and are stated at cost less accumulated amortization and accumulated impairment losses, if any. Amortization is charged to the profit and loss account on a straight line basis over the assets' useful lives which are determined using methods that best reflect the pattern of economic benefits. The estimated useful lives are as follows: Core deposit relationships 11 years Core overdraft / working capital loan relationships 11 years Computer software is stated at cost less accumulated amortization and accumulated impairment loss, if any. Amortization is carried out on the straight line method at the rates given in note 13 to these financial statements.

6.8 Sub-ordinated Loans Sub-ordinated loans are initially recorded at the amount of proceeds received. Mark-up accrued on these loans is recognised separately as part of other liabilities and is charged to the profit and loss account over the period at effective interest rate.

6.9 Staff retirement benefits Defined benefit plans The Bank operates an unfunded gratuity scheme covering all eligible employees who have attained the minimum qualifying period of five years. Eligible employees are those employees who have joined the service of the Bank on or before March 31, 2006. Provision is made in accordance with actuarial recommendations. Actuarial valuation is carried out periodically using the "Projected Unit Credit Method'. Actuarial gains and losses are recognised immediately in other comprehensive income with no subsequent recycling through profit and loss accounts. Past service costs are charged to the profit and loss account.

Defined contribution plan The Bank operates a defined contribution provident fund for all its permanent employees. Equal monthly contributions are made to the fund by both the Bank and the employees at the rate of 10% of basic salary.

6.10 Taxation Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity.

Current Provision for current taxation is based on taxable income at the current rates of taxation in accordance with the prevailing laws for taxation on income earned after taking into consideration tax credits and rebates available and any adjustments to tax payable in respect of previous years.

34 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

Deferred Deferred tax is recognised using the balance sheet liability method on all major temporary differences as at the statement of financial position date between the amounts attributed to assets and liabilities for financial reporting purposes and amounts used for taxation purposes. The Bank records deferred tax assets / liabilities using tax rates, enacted or substantially enacted at the statement of financial position date, that are expected to be applicable at the time of their reversal. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. The Bank recognizes a deferred tax asset / liability on deficit / surplus on revaluation of assets in accordance with the requirements of IAS 12 "Income Taxes". The related deferred tax asset / liability is adjusted against the related deficit / surplus. The Bank recognizes a deferred tax asset for the carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the unused tax losses and unused tax credits can be utilized in accordance with the requirements of IAS 12 "Income Taxes".

6.11 Provisions Provisions are recognised when the Bank has a present obligation (legal or constructive) as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provision against non-funded losses is recognised when intimated and reasonable certainty exists that the Bank will be required to settle the obligation. The provision is charged to the profit and loss account net of expected recovery and the obligation is classified under other liabilities. Provisions are reviewed quarterly and are adjusted to reflect the current best estimate.

6.12 Offsetting Financial assets and financial liabilities are offset and the net amount is reported in the financial statements when there is a legally enforceable right to set-off the recognised amount and the Bank intends either to settle on a net basis, or to realize the assets and to settle the liabilities simultaneously. Income and expense items relating to such assets and liabilities are also offset and the net amount is reported in the financial statements.

6.13 Dividend distribution Dividend is recognised as a liability in the period in which it is declared.

6.14 Distributions of bonus shares and other appropriations to reserves The Bank recognizes all appropriations, other than statutory appropriations, to reserves including those in respect of bonus shares made after the statement of financial position date, in the period in which such appropriations are approved. Appropriation to statutory reserves are recognised in the financial statements of the period to which these appropriations relate to.

6.15 Foreign currencies Transactions in foreign currencies are translated to rupees at the foreign exchange rates prevailing at the transaction date. Monetary assets and liabilities in foreign currencies are translated into Rupees at the rates of exchange prevailing at the statement of financial position date. Forward foreign exchange contracts are valued at forward rates applicable to their respective maturities. Commitments for outstanding forward foreign exchange contracts are disclosed in these 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 approximating those prevailing at the statement of financial position date.

NIB Bank Limited Annual Report 2016 35 Notes to the Financial Statements For the year ended December 31, 2016

Assets against which the constituents have exercised their option to transfer exchange risk to the Bank and liabilities for which the Bank has exercised its option to transfer exchange risk to the Government, are translated at the rates of exchange guaranteed by the Bank and the Government, respectively. Assets, liabilities, commitments and contingent liabilities in respect of Bangladesh are translated at foreign exchange rates approximating those prevailing prior to August 15, 1971. Non-monetary assets and liabilities in foreign currencies are expressed in Rupee terms at the exchange rates prevailing at the date of initial recognition of the non-monetary assets and liabilities. Exchange gains and losses are included in income currently except net unrealized exchange gain on long-term monetary items which, as a matter of prudence, is carried forward as unrealized gain in view of the uncertainty associated with its realization.

6.16 Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents include cash and balances with treasury banks and balances with other banks.

6.17 Financial instruments All financial assets and liabilities are recognised at the time when the Bank becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the Bank loses control of the contractual rights that comprise the financial assets. Financial liabilities are derecognised when they are extinguished i.e. when the obligation specified in the contract is discharged, cancelled or expired. Any gain or loss on derecognition of the financial assets and financial liabilities is taken to income directly. Financial assets carried on the statement of financial position include cash and bank balances, lendings to financial institutions, investments, advances and certain receivables. Financial liabilities include borrowings, deposits, bills payable and other payables. The particular recognition methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with them.

6.18 Derivative financial instruments Derivative financial instruments are recognised at their fair value on the date on which a derivative contract is entered into and subsequently these instruments are marked to market and changes in fair values are taken to the profit and loss account. Fair values are obtained from quoted market prices in active markets. All derivative financial instruments are carried as assets when their fair value is positive and liabilities when the fair value in negative.

6.19 Segment reporting A segment is a distinguishable component of the Bank that is engaged in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Bank’s primary format of reporting is based on business segments.

6.19.1 Business segments Corporate and Investment Banking It represents all funded and non funded credit facilities of working capital financing including seasonal finance, trade finance, cash finance, running finance, guarantees and bills of exchange relating to corporate customers, as well as for long term expansion, Balancing, Modernization and Replacement (BMR), Project financing, syndicated financing along with advisory, underwriting, transactional banking, and Initial Public Offerings (IPO) related activities.

36 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

Commercial It represents all funded and non funded credit facilities, deposit products & transaction services offered by the Bank to small & medium enterprises and commercial businesses operating in the manufacturing, trading, wholesale and service sectors.

Retail It represents banking services offered to individuals and small businesses through a retail branch banking and alternate distribution network. These banking services include lending, deposits and distribution of insurance products along with other financial products and services tailored for such customers.

Treasury Treasury manages the asset and liability mix of the Bank, and provides customers with products that meet their demands for management of liquidity, cash flow, interest rate fluctuations and foreign exchange risk.

6.19.2 Geographical segments The Bank operates in Pakistan only.

6.20 Deposits Deposits are initially recorded at the amount of proceeds received. Mark-up accrued on deposits is recognised separately as part of other liabilities and is charged to the profit and loss account on a time proportionate basis.

6.21 Earnings per share The Bank presents earnings per share (EPS) data for its ordinary shares. 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.

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

6.23 Assets held for sale and discontinued operations Non current assets are classified as held for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use. Immediately before classification as held for sale the assets are remeasured in accordance with the Bank's other accounting policies. Thereafter, the assets are measured at the lower of their carrying value or fair value less cost to sell. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss. A discontinued operation is a component of the entity that either has been disposed of, or is classified as held for sale, and which represents a separate major line of business or is part of a single co-ordinated plan to dispose of a separate major line of business. Classification as a discontinued operation occurs on disposal or when the operation meets the criteria to be classified as held for sale, if earlier.

NIB Bank Limited Annual Report 2016 37 Notes to the Financial Statements For the year ended December 31, 2016

Note 2016 2015 (Rupees in ‘000) 7. CASH AND BALANCES WITH TREASURY BANKS In hand Local currency 7.1 2,411,265 2,358,571 Foreign currencies 246,722 310,768 With State Bank of Pakistan in Local currency current accounts 7.2 4,333,416 5,276,404 Foreign currency current account 7.3 345,175 398,016 Foreign currency deposit accounts 7.4 1,070,221 1,259,094 With National Bank of Pakistan in local currency current accounts 360,012 449,690 8,766,811 10,052,543

7.1 This includes National Prize Bonds of Rs. 2.645 million (2015: Rs. 2.004 million). 7.2 The current account is maintained with the SBP under the cash reserve requirement of Section 22 of the Banking Companies Ordinance, 1962.

7.3 This represents a US Dollar settlement account maintained with the SBP and special cash reserve at Nil return (2015: Nil) required to be maintained with the SBP on deposits held under the new foreign currency accounts scheme.

7.4 This represents special cash reserve required to be maintained with the SBP on deposits held under the foreign currency accounts scheme at Nil return (2015: Nil).

Note 2016 2015 (Rupees in ‘000) 8. BALANCES WITH OTHER BANKS In Pakistan in current accounts 72,575 34,638 Outside Pakistan – in current accounts 698,816 1,573,777 – in deposit account 5,911 36,671 777,302 1,645,086

9. LENDINGS TO FINANCIAL INSTITUTIONS Call money lending – 300,000 Repurchase agreement lendings (Reverse Repo) 9.2 & 9.3 3,243,130 1,299,044 3,243,130 1,599,044

9.1 Particulars of lendings In local currency 3,243,130 1,599,044 In foreign currencies – – 3,243,130 1,599,044

9.2 These represent repurchase agreement lending to financial institutions carrying mark-up at the rate ranging from 5.70% to 6.10% (2015: 6.5%) per annum and having remaining maturity of three days (2015: four days).

38 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

9.3 Securities held as collateral against lendings to financial institutions

2016 2015 Held by Further Held by Further Bank given as Total Bank given as Total collateral collateral (Rupees in ‘000)

Market Treasury Bills 3,243,130 – 3,243,130 799,044 – 799,044 Pakistan Investment Bonds – – – 500,000 – 500,000

3,243,130 – 3,243,130 1,299,044 – 1,299,044

9.3.1 The market value of securities held as collateral against lendings to financial institution as at December 31, 2016 amounted to Rs. 3,243.858 million (2015: Rs. 1,317.733 million).

10. INVESTMENTS

10.1 (a) Investments by type: 2016 2015 Held by Given as Total Held by Given as Total Bank Collateral Bank Collateral Note (Rupees in ‘000)

Held-for-trading securities Ordinary shares of listed companies 10.2 & 10.6.1 256,371 – 256,371 – – – Pakistan Investment Bonds 10.3 76,192 – 76,192 – – – 332,563 – 332,563 – – – Available-for-sale securities

Market Treasury Bills 10.3 8,284,446 96,841,357 105,125,803 9,503,429 64,470,814 73,974,243 Pakistan Investment Bonds 10.3 7,276,457 – 7,276,457 10,214,316 336,127 10,550,443 Defense Savings Certificates 10.4 – 2,730 2,730 – 2,730 2,730 Sukuk Bonds 10.10 1,128,754 – 1,128,754 1,127,921 – 1,127,921 Cumulative Preference shares 10.5 55,178 – 55,178 55,178 – 55,178 Ordinary shares / Certificates of listed companies modarabas / units of mutual fund 10.6.2 3,199,265 – 3,199,265 21,180 – 21,180 Ordinary shares of unlisted companies 10.7 57,768 – 57,768 57,860 – 57,860 Term Finance Certificates 10.8 & 10.9 890,572 – 890,572 587,607 49,908 637,515 20,892,440 96,844,087 117,736,527 21,567,491 64,859,579 86,427,070 Held-to-maturity securities

Pakistan Investment Bonds 10.3 6,641,377 – 6,641,377 6,668,959 – 6,668,959 Term Finance Certificates 10.8 & 10.9 9,954 – 9,954 9,954 – 9,954 6,651,331 – 6,651,331 6,678,913 – 6,678,913

Associates 10.11 – – – 2,699,218 – 2,699,218

Subsidiaries 10.12 724 – 724 724 – 724

Investments at cost 27,877,058 96,844,087 124,721,145 30,946,346 64,859,579 95,805,925 Provision for diminution in value of investments 10.13 & 10.14 (454,125) – (454,125) (183,808) – (183,808) Investments - net of provisions 27,422,933 96,844,087 124,267,020 30,762,538 64,859,579 95,622,117

Surplus on revaluation of held-for-trading securities - net 1,178 – 1,178 – – – Surplus / (Deficit) on revaluation of available-for-sale securities - net 23.1 233,773 (12,873) 220,900 19,087 102,245 121,332 Net investments 27,657,884 96,831,214 124,489,098 30,781,625 64,961,824 95,743,449

NIB Bank Limited Annual Report 2016 39 Notes to the Financial Statements For the year ended December 31, 2016

Note 2016 2015 (Rupees in ‘000) 10.1 (b) Investments by segments:

Federal Government Securities Market Treasury Bills 10.3 105,125,803 73,974,243 Pakistan Investment Bonds 10.3 13,994,026 17,219,402 Defense Savings Certificates 10.4 2,730 2,730

Sukuk Bonds 10.10 1,128,754 1,127,921 Cumulative Preference Shares 10.5 55,178 55,178 Fully Paid-up Ordinary Shares , Units of Mutual Funds & Certificates Listed 10.6 3,455,636 21,180 Unlisted 10.7 57,768 57,860

Term Finance Certificates Listed 10.8 635,578 412,175 Unlisted 10.9 264,948 235,294

Associates 10.11 – 2,699,218

Subsidiaries 10.12 724 724 Total investments at cost 124,721,145 95,805,925 Provision for diminution in value of investments 10.13 & 10.14 (454,125) (183,808)

Investments - net of provisions 124,267,020 95,622,117 Surplus on revaluation of held-for-trading securities - net 1,178 – Surplus on revaluation of available-for-sale securities 23.1 220,900 121,332

Net investments 124,489,098 95,743,449

10.2 This represents investments in shares of listed companies. The Bank has entered into future contracts for the sale of these shares.

10.3 Market Treasury Bills and Pakistan Investment Bonds are eligible for rediscounting. Market Treasury Bills embody effective yields ranges from 5.87% to 6.21% (2015: 6.30% to 6.96%) with remaining maturities of 5 days to 257 days and Pakistan Investment Bonds carry mark-up ranges from 7.00 % to 12.50% (2015: 9.25% to 12.50% ) per annum on semi-annual basis with remaining maturities of two years to nine years. Certain government securities are required to be maintained with the SBP to meet statutory liquidity requirements calculated on the basis of demand and time liabilities. Market Treasury Bills having a face value of Rs 200 million have been pledged with National Clearing Company of Pakistan Limited as a guarantee against margin trading system. Market Treasury Bills having carrying value of Rs.96,828.484 million (2015: Rs. 64,573.208 million) are held by different institutions against the Bank's borrowings.

10.4 These DSCs of Rs. 2.730 million are pledged as a security and carry interest rate at 12.15% (2015: 12.15%) per annum.

40 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

10.5 Particulars of investment in Cumulative Preference Shares

Number of Shares held Total nominal value Investee Note 2016 2015 2016 2015 (Rupees in ‘000) Pak Elektron Limited (PEL) 10.5.1 2,500,000 2,500,000 25,000 25,000 Galaxy Textile Mills Limited 10.5.2 3,017,800 3,017,800 30,178 30,178 55,178 55,178

10.5.1 These preference shares are listed on Pakistan Stock Exchange and carry fixed dividend of 9.5% per annum on cumulative basis payable when and if declared by the Board of Directors.

10.5.2 These preference shares are non voting and convertible into ordinary shares after ten years from the date of issuance (i.e. July 30, 2011) . These preference shares are unlisted and carry a fixed dividend at the rate of 5% per annum that will be non cumulative for the first five years and thereafter will be cumulative from year to year.

10.6 Particulars of investment in Listed Ordinary Shares / Certificates and units of mutual funds Number of shares / certificates and units of mutual funds held Cost of Investment 2016 2015 2016 2015 (Rupees in ‘000) 10.6.1 Held-for-trading Adamjee Insurance Company Limited 6,000 – 355 – Askari Bank Limited 47,500 – 1,119 – Amreli Steels Limited 3,500 – 255 – The Bank of Punjab 1,405,000 – 26,218 – TRG Pakistan Limited 5,240,500 – 228,424 – 256,371 – 10.6.2 Available-for-sale Ordinary Shares Agritech Limited 605,138 605,138 21,180 21,180 Open End Mutual Funds NAFA Income Opportunity Fund - Open End 45,633,345 – 500,000 – PICIC Energy Fund - Open End 6,518,097 – 100,000 – PICIC Income Fund - Open End * 4,645,700 – 500,000 – PICIC Islamic Stock Fund - Open End * 763,230 – 100,000 – PICIC Stock Fund - Open End * 997,836 – 130,000 – Closed End Mutual Funds PICIC Growth Fund - Closed End 43,482,858 – 1,221,936 PICIC Investment Fund - Closed End 48,042,021 – 626,149 – Total Listed Shares / Certificates / Units 3,199,265 21,180

Unless otherwise stated, holdings in ordinary share, certificates and units of mutual funds are of Rs. 10 each. * Units of Face Value of Rs. 100 each In respect of the Bank's investment in closed end funds comprising of PICIC Growth Fund and PICIC Investment Fund, the Bank has option to sell the above funds to HBL Asset Management Limited (HBLAML) under the Share Purchase Agreement (SPA) dated 17 February 2016 with in the period of three years from the effective date.

NIB Bank Limited Annual Report 2016 41 Notes to the Financial Statements For the year ended December 31, 2016

Percentage Number of Cost of of holding Shares held Investment Note 2016 2015 2016 2015 (Rupees in ‘000) 10.7 Particulars of Unlisted Ordinary Shares Central Depository Company of Pakistan Limited Chief Executive: Mr. Aftab Ahmed Diwan 10.7.1 5.00% 5,000,000 3,250,000 5,000 5,000 Pakistan Textile City (Private) Limited Chief Executive: Mr. Muhammad Hanif Kasbati 10.7.2 4.00% 5,000,000 5,000,000 50,000 50,000 National Investment Trust Limited Chief Executive: Mr. Shahid Ghaffar 10.7.3 8.33% *79,200 *79,200 100 100 SWIFT Chief Executive: Mr. Gottfried Leibbrandt 10.7.4 0.01% **9 **9 2,668 2,760 ISE Towers REIT Management Company Limited Chief Executive: Mian Ayyaz Afzal 10.7.5 0.83% 3,034,603 3,034,603 – – 57,768 57,860

* Shares of Face Value of Rs. 100 each **Shares of Face Value of Euro 2,680 each

10.7.1 Value of investment, based on the net assets stated in the audited financial statements of investee company as at June 30, 2016 amounts to Rs. 217.986 million (June 30, 2015: Rs.130.320 million). These shares are blocked in CDC account to ensure compliance of Article 26 of CDC's Articles of Association which requires prior approval of SECP for transfer of shares.

10.7.2 Value of investment, based on the net assets stated in the audited financial statements of investee company as at June 30, 2015 amounts to Rs. 16.906 million (June 30, 2014: Rs. 22.763 million).

10.7.3 Value of investment, based on the net assets stated in the audited financial statements of investee company as at June 30, 2016 amounts to Rs. 952.558 million (June 30, 2015: Rs. 964.876 million). These shares are blocked in CDC account in compliance with rule 5 (6)(e) of NBFC Rules (Amended) 2003 which requires prior approval of SECP for transfer of shares.

10.7.4 Value of investment, based on the net assets stated in the audited financial statements of investee company as at December 31, 2015 amounts to Rs. 3.499 million (December 31, 2014: Rs. 3.040 million).

10.7.5 The Bank has recorded Investment in the Company at Nil Value due to conversion of the Islamabad Stock Exchange from limited by guarantee to public company limited by shares. Subsequent to the incorporation of Pakistan Stock Exchange, the Islamabad Stock Exchange has been converted into ISE Towers REIT Management Company Limited.

10.8 Particulars of investment in Listed Term Finance Certificates Name of Investee Company Note Issue Date Maturity Date Interest Rate Interest and Number of Amortized principal payment certificates held cost 2016 2015 2016 2015 (Rupees in ‘000) Investee Azgard Nine Limited 10.8.1 Sep 20, 2005 Sep 20, 2017 6 months KIBOR + 1.25% Semi - Annually 10,000 10,000 16,269 16,269 Bank Alfalah Limited - Fixed Dec 2, 2009 Dec 2, 2017 15% Semi - Annually 41,000 41,000 136,311 204,508 Bank Alfalah Limited - Floating Dec 2, 2009 Dec 2, 2017 6 months KIBOR + 2.5% Semi - Annually 5,000 5,000 16,623 24,940 Summit Bank Limited Oct 27, 2011 Oct 27, 2018 6 months KIBOR + 3.25% Semi - Annually 10,000 10,000 49,885 49,908 Telecard Limited 10.8.2 May 27, 2005 May 18, 2015 3 months KIBOR + 5.04% Quarterly 74,888 74,888 116,550 116,550 Habib Bank Limited Feb 19, 2016 Feb 19, 2026 6 months KIBOR + 0.5% Semi - Annually 3,000 – 299,940 – 635,578 412,175

42 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

10.8.1 The investment has been fully provided in these financial statements and includes an amount of Rs. 8.135 million (2015: Rs. 8.135 million) classified as Held-to-Maturity.

10.8.2 The investment has been fully provided in these financial statements and includes an amount of Rs. 1.819 million (2015: Rs. 1.819 million) classified as Held-to-Maturity.

10.9 Particulars of investment in Unlisted Term Finance Certificates Name of Investee Company Note Issue Date Maturity Date Interest Rate Interest and Number of Amortized principal payment Certificates held Cost 2016 2015 2016 2015 (Rupees in ‘000) Azgard Nine Limited 10.9.1 – – – – 11,864 11,864 – – Pakistan Mobile Communications Limited Oct 13, 2011 Oct 13, 2016 3 months KIBOR + 2% Quarterly – 200,000 – 235,294 Bank Al-Habib Limited Mar 17, 2016 Mar 17, 2026 6 months KIBOR + 0.75% Semi - Annually 53,000 – 264,948 – 264,948 235,294

10.9.1 In the year 2012, the Bank received 11,864 Term Finance Certificates of Rs. 5,000 each, having total value of Rs. 59.32 million in respect of overdue mark-up of Azgard Nine Limited. These certificates have been recognised at nil value in the Bank's books as per the requirement of Prudential Regulations, whereby overdue interest on classified advance accounts can only be recognized once this is received in cash. All Term Finance Certificates are of original face value of Rs. 5,000 each

10.10 Particulars of investment in Sukuk Bonds Name of Investee Company Issue Date Maturity Date Interest Rate Interest and Number of Amortized principal payment Certificates held Cost 2016 2015 2016 2015 (Rupees in ‘000) Investee Liberty Power Tech Limited Jan 1, 2011 Jan 1, 2021 3 months KIBOR + 3% Quarterly 5,464,807 5,464,807 324,754 377,921 Sui Southern Gas Company Limited May 28, 2013 May 28, 2018 3 months KIBOR + 0.7% Quarterly 180,000 180,000 450,000 750,000 Meezan Bank Limited Sep 22, 2016 Sep 22, 2026 6 months KIBOR + 0.5% Semi - Annually 354 – 354,000 – 1,128,754 1,127,921

10.11 Particulars of investment in Associates Number of units / Cost of certificates investment 2016 2015 2016 2015 (Rupees in ‘000) PICIC Energy Fund - Open End – 31,825,782 – 336,710 PICIC Income Fund - Open End * – 5,117,650 – 514,263 PICIC Investment Fund - Closed End – 48,042,021 – 626,310 PICIC Growth Fund - Closed End – 43,482,858 – 1,221,935 – 2,699,218

These investments have been reclassified to available for sale investments (refer note 10.6.2) as the Bank doesn't have significant influence over these entities after the disposal of its subsidiary company (PICIC Asset Management Company Limited).

Unless otherwise stated, holdings in ordinary shares, preference shares and units of mutual funds are of Rs. 10 each * Units of Face Value of Rs. 100 each

NIB Bank Limited Annual Report 2016 43 Notes to the Financial Statements For the year ended December 31, 2016

Cost of Number of shares investment 2016 2015 2016 2015 (Rupees in ‘000) 10.12 Particulars of investment in Subsidiaries Financial and Management Services (Private) Limited (Unlisted)** 88,850 88,850 724 724 724 724

The above balance has been fully provided as the company is dormant and has no asset or liability. ** Shares of Face Value of Rs. 100 each

2016 2015 (Rupees in ‘000) 10.13 Particulars of provision for diminution in value of investments Opening balance 183,808 192,265 Charge for the year 270,317 6,008 Reversal for the year – (2,340) 270,317 3,668

Write off / reversal due to sale / transfer to other assets – (12,125) Closing balance 454,125 183,808

10.14 Particulars of provision in respect of type and segment Available-for-sale securities - Listed shares / certificates / units of mutual funds 286,958 16,641 - Unlisted shares 33,623 33,623 - Term Finance Certificates 132,820 132,820 453,401 183,084 Subsidiary - Unlisted shares (FMSL) 724 724 454,125 183,808

44 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

2016 2015 (Rupees in ‘000) Rating (Rupees in ‘000) Rating 10.15 Quality of Available-for-Sale Securities - at Market Value Federal Government Securities Defense Savings Certificates * 2,730 Unrated 2,730 Unrated Market Treasury Bills 105,111,057 Unrated 74,078,985 Unrated Pakistan Investment Bonds 7,073,999 Unrated 10,544,788 Unrated

Sukuk Bonds Liberty Power Tech Limited * 324,754 A+ 377,921 A+ Sui Southern Gas Company Limited * 450,000 A+ 750,000 A+ Meezan Bank Limited 368,691 AA- – –

Cumulative Preference shares Galaxy Textile Mills Limited * 30,178 ** 30,178 ** Pak Elektron Limited (PEL) 25,000 A+ 25,000 A1 / A

Ordinary shares of Listed Companies / units and certificates of mutual funds Agritech Limited 7,673 ** 5,658 ** NAFA Income Opportunity Fund - Open End 504,636 A(f) – – PICIC Energy Fund - Open End 102,128 ** – – PICIC Income Fund - Open End 500,261 A(f) – – PICIC Islamic Stock Fund - Open End 101,495 ** – – PICIC Stock Fund - Open End 133,028 ** – – PICIC Growth Fund - Closed End 1,324,488 ** – AA PICIC Investment Fund - Closed End 667,784 ** – **

Ordinary shares of Unlisted Companies Central Depository Company of Pakistan Limited * 5,000 ** 5,000 ** ISE Towers REIT Management Company Limited – ** – ** National Investment Trust Limited * 100 AM2+ 100 AM2 Pakistan Textile City (Private) Limited * 16,906 ** 16,906 ** SWIFT * 2,139 ** 2,231 **

Term Finance Certificates Azgard Nine Limited – ** – ** Bank Alfalah Limited 160,628 AA- 249,284 AA- Habib Bank Limited 300,690 AAA – Bank Al Habib Limited 268,105 AA – Pakistan Mobile Communication Limited * – – 235,294 AA- Summit Bank Limited 50,358 A- (SO) 51,197 A Telecard Limited – – – ** 117,531,828 86,375,272

* At cost / breakup value since market value is not available. ** Rating not available

NIB Bank Limited Annual Report 2016 45 Notes to the Financial Statements For the year ended December 31, 2016

Note 2016 2015 (Rupees in ‘000) 11. ADVANCES Loans, cash credits, running finance, etc. - in Pakistan 11.1 106,704,074 128,635,379

Net investment in finance lease - in Pakistan 11.3 1,624,291 1,749,904

Bills discounted and purchased (excluding Treasury Bills) Payable in Pakistan 134,785 1,174,736 Payable outside Pakistan 2,649,723 3,468,005 Advances - Gross 111,112,873 135,028,024 Provision against non-performing advances Specific 11.4 (23,643,896) (24,204,658) General (163,049) (154,372) 11.5 (23,806,945) (24,359,030) Advances - net of provision 87,305,928 110,668,994

11.1 This includes a sum of Rs. 72.337 million (2015: Rs. 72.337 million) representing unrealized exchange gain, which has not been recognised as income and deferred in these financial statements, in accordance with the policy of the Bank, as stated in note 6.15.

2016 2015 (Rupees in ‘000) 11.2 Particulars of advances 11.2.1 In local currency 106,133,551 127,599,316 In foreign currencies 4,979,322 7,428,708 111,112,873 135,028,024

11.2.2 Short term (for upto one year) 79,992,728 105,466,540 Long term (for over one year) 31,120,145 29,561,484 111,112,873 135,028,024

11.3 Net investment in finance lease 2016 Not later Later than Over five than one one and less years Total year than five years (Rupees in ‘000) Lease rentals receivable 1,468,127 65,875 – 1,534,002 Residual value 386,644 34,637 – 421,281 Minimum lease payments 1,854,771 100,512 – 1,955,283 Financial charges for future periods (including income suspended) (323,829) (7,163) – (330,992) Present value of minimum lease payments 1,530,942 93,349 – 1,624,291

46 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

2015 Not later Later than Over five than one one and less years Total year than five years (Rupees in ‘000) Lease rentals receivable 1,521,972 134,234 – 1,656,206 Residual value 397,880 43,367 – 441,247 Minimum lease payments 1,919,852 177,601 – 2,097,453 Financial charges for future periods (including income suspended) (331,588) (15,961) – (347,549) Present value of minimum lease payments 1,588,264 161,640 – 1,749,904

11.3.1 Leases includes non performing loans of Rs. 1,513.550 million (2015: Rs.1,528.487 million) against which provision of Rs. 1,092.806 million (2015: Rs. 1,095.947 million) has been held.

11.4 Advances include Rs. 28,969.862 million (2015: Rs. 28,173.224 million) which have been placed under non-performing status as detailed below:

2016

Classified Advances Provision Required Provision Held

Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total (Rupees in ‘000) Category of classification OAEM* 35,698 – 35,698 2,297 – 2,297 2,297 – 2,297 Substandard 3,461,013 – 3,461,013 446,490 – 446,490 446,490 – 446,490 Doubtful 312,363 – 312,363 106,274 – 106,274 106,274 – 106,274 Loss 25,160,788 – 25,160,788 23,088,835 – 23,088,835 23,088,835 – 23,088,835 28,969,862 – 28,969,862 23,643,896 – 23,643,896 23,643,896 – 23,643,896

2015

Classified Advances Provision Required Provision Held

Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total (Rupees in ‘000) Category of classification OAEM* 37,162 – 37,162 2,353 – 2,353 2,353 – 2,353 Substandard 1,270,650 – 1,270,650 228,956 – 228,956 228,956 – 228,956 Doubtful 1,104,628 – 1,104,628 442,429 – 442,429 442,429 – 442,429 Loss 25,760,784 – 25,760,784 23,530,920 – 23,530,920 23,530,920 – 23,530,920 28,173,224 – 28,173,224 24,204,658 – 24,204,658 24,204,658 – 24,204,658

* OAEM pertains to small enterprises.

NIB Bank Limited Annual Report 2016 47 Notes to the Financial Statements For the year ended December 31, 2016

11.4.1 In accordance with BSD Circular No. 1 dated October 21, 2011 issued by the State Bank of Pakistan, the Bank has availed the benefit of Forced Sale Value (FSV) against the non-performing advances. During the year ended December 31, 2016, total FSV benefit net of erosion resulted in increase in profit before tax of Rs. 84.498 million. Had the benefit under the said circular not been taken by the Bank, the specific provision against non - performing advances would have been higher by Rs. 1,585.737 million (December 31, 2015: Rs. 1,501.239 million). The FSV benefit recognised will not be available for the distribution of cash and stock dividend to shareholders.

11.4.2 As per the revised Prudential Regulations issued for the Corporate / Commercial Banking vide BPRD Circular No. 06 of 2014 dated June 26, 2014, the cumulative FSV benefit recognised in respect of customers under Corporate / Commercial Banking is Rs. 972.92 million (December 31, 2015: Rs. 728.584 million) and is not available for distribution of cash or stock dividend / bonus to employees.

11.5 Particulars of provision against non-performing advances 2016 2015 Note Specific General Total Specific General Total (Rupees in ‘000) Opening balance 24,204,658 154,372 24,359,030 23,885,813 94,318 23,980,131

Charge for the year 1,764,297 8,677 1,772,974 2,273,943 60,054 2,333,997 Reversals (1,877,303) – (1,877,303) (2,134,768) – (2,134,768) (113,006) 8,677 (104,329) 139,175 60,054 199,229 Amounts written off - net (includes recovery of earlier written-off retail loans) 11.6 (447,756) – (447,756) 179,670 – 179,670 Amounts transferred from / (to) other assets / other liabilities – – – – – – Closing balance 23,643,896 163,049 23,806,945 24,204,658 154,372 24,359,030

11.5.1 Particulars of provision against non-performing advances - currency wise

2016 2015 Specific General Total Specific General Total (Rupees in ‘000) In local currency 23,326,752 163,049 23,489,801 23,734,433 154,372 23,888,805 In foreign currencies 317,144 – 317,144 470,225 – 470,225 23,643,896 163,049 23,806,945 24,204,658 154,372 24,359,030

General provision represents provision amounting to Rs.151.412 million (2015: Rs. 142.118 million) against consumer finance portfolio and Rs. 11.637 million (2015: Rs.12.254 million) against advances to small enterprises as required by the Prudential Regulations issued by the SBP.

11.5.2 This includes reversal of provisions amounting to Rs. 55 million and non-performing loans reduction of Rs. 107.796 million as a result of settlement to debt asset swap arrangement with customers.

48 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

Note 2016 2015 (Rupees in ‘000) 11.6 Particulars of (write backs) / write offs:

11.6.1 Against provisions (includes recovery of earlier written-off retail loans) 447,756 (179,670) Directly charged to profit and loss account 49 2,248 447,805 (177,422)

11.6.2 Write offs of Rs. 500,000 and above 11.7 722,975 151,455 Write offs of below Rs. 500,000 (includes recovery of earlier written-off retail loans) 11.7 (275,170) (328,877) 447,805 (177,422)

11.7 Details of loan write offs 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 financial relief of five hundred thousand rupees or above allowed to person(s) during the year ended December 31, 2016 is given in Annexure 1. However, this includes amounts charged off without prejudice to the Bank’s right to recovery.

11.8 Particulars of loans and advances to directors, associated companies, etc. Debts due by directors, executives or officers of the Bank or any of them either severally or jointly with any other persons: 2016 2015 (Rupees in ‘000) Balance at the beginning of the year 1,487,309 1,683,542 Additions / granted during the year 1,162,073 669,474 Repayments / transferred during the year (835,369) (865,707) Balance at the end of the year 1,814,013 1,487,309

Debts due by subsidiary companies, controlled firms, managed modarabas and other related parties:

Note 2016 2015 (Rupees in ‘000) Balance at the beginning of the year 39,905 24,696 Loan granted during the year 3,856,898 4,543,510 Repayments / adjustments during the year (3,888,689) (4,528,301) Balance at the end of the year 8,114 39,905

12. OPERATING FIXED ASSETS Capital work in progress 12.1 112,425 90,874 Property and equipment 12.2 2,683,627 2,995,572 2,796,052 3,086,446 12.1 Capital work in progress Civil works 49,467 20,222 Electrical, office and computer equipment 27,396 18,130 Advances to suppliers and contractors 18,366 4,398 Advance for computer software 17,196 48,124 112,425 90,874

NIB Bank Limited Annual Report 2016 49 Notes to the Financial Statements For the year ended December 31, 2016 – – % 5% 5% 10% 20% 10% Rate of per annum Depreciation 10% to 33% 1,869 66,172 86,192 317,697 246,008 438,055 478,812 31, 2016 Net Book December 1,048,822 2,683,627 value as at – 15,634 65,954 226,141 11,526 171,464 31, 2016 656,345 Accumulated 1,323,282 2,470,346 as at December – – – – – – – write offs (27,941) (27,941) Adjustments / – – (806) (201) 6,390 8,459 24,096 (2,174) 16,938 80,156 (36,222) (64,135) (12,365) 182,731 318,770 (115,903) DEPRECIATION / IMPAIRMENT DEPRECIATION (on deletion) For the year / 2016 – 15,634 60,370 15,432 266,208 156,700 576,390 01, 2016 1,204,686 2,295,420 Accumulated as at January (Rupees in ‘000) As at 31, 2016 13,395 December 317,697 472,149 132,126 257,656 1,064,456 1,761,337 1,135,157 5,153,973 – – – – – – – – – write offs Adjustments / COST – – – – – (243) 3,570 3,396 51,655 (4,500) (2,514) 58,621 Additions / (Deletions) (85,994) (65,684) (36,705) (195,640) 2016 As at 50,100 317,697 558,143 136,626 256,774 January 01, 1,775,366 1,064,456 1,131,830 5,290,992 Note 12.2.3 Property and Equipment PICIC) in April 1983 pursuant to an allotment order by Karachi Development Authority (KDA). All the legal dues respect of Plot including non-utilization fees have been paid. In 2000, KDA cancelled the allotment unilaterall y based on certain building and construction restrictions. The Bank filed a Civil Suit against before the High Court of Sindh in respect said unilateral cancellation allotment. Meanwhile, also 2000, a dispute arose with KPT construction of a boundary wall on the Plot by KPT as claime d that ownership land had been reverted to KPT. The said claim was also challenged by way of Civil Suit before the High Court Sindh. The Sindh initially issued restraining orders against KDA and KPT in respective suits in respect of cancellation the allotment Plot. S ubsequently, both were decided favor Bank. In suit filed against KDA, High Court of Sindh held that the action cancellation allot ment by KDA was improper and void, whereas, in suit against KPT, High that since allotment in favor of the Bank was valid therefore, KPT had no standing to claim ownership land been reverted back KPT. Both the decisions of High Court Sindh were challenged in two separate Appeals by KDA and KPT. Furthermore, November 2008, KPT filed a civil suit seeking a declaration from the High Court of Sindh to effect that ownership plot had been validly reverted KPT. the appeal filed by KPT against Bank is still pending before High Court of Sindh, Karachi. Presently one (276/2004) and a suit KPT (1075/2008 Vs CDGK and NIB Bank) are pending on the subj ect plot before Sindh High Court. These two cases being handled by a senior lawyer, i.e. Mushtaq A. Memon, Advocate on behalf of the Bank. At prese nt, Bank is actively defending cases. Also as per legal opinion provided by dealing counsel, the appeal filed by KPT is likely to be decided Honorable Court in favour of Bank. claiming for the possession as tenant of an insignificant area only 18 square feet plot measuring 3,120.46 yards, however there is no issue over the title of subject property. Both Constitutional Petit ions filed by Bank have been dismissed Sindh High Court on 28 January 2016 against Bank. The Bank has filed an appeal before the Supreme Court of Pakistan. Market value property based on revaluation carried at year end amounts to Rs. 936.138 million. Included in cost of property and equipment are fully depreciated items still use having Rs. 1,274.882 million (2015: 1,062.949 million). Carrying amount of temporarily idle property is Rs. 733.103 million (2015: 755.423 million). This includes a plot of land costing Rs. 361 million in Block-6, KDA Scheme-5, Clifton, Karachi (the “Plot”), possession which was taken by the Bank (formerly Appeal filed by KDA was disposed off in favour of the Bank vide order dated March 06, 2014 passed Honourable High Court Sindh, Karachi. However, This also includes a plot of land having book value Rs.372.103 million situated in Railway Quarters, I.I. Chundrigar Road, Karachi, (the “Plot”), where tenant is Particulars Freehold land Leasehold land Buildings on freehold land Buildings on leasehold land Furniture and fixtures Electrical, office and computer equipment Vehicles Leasehold Improvements 12.2 12.2.1 12.2.2 12.2.3

50 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016 – – % 5% 5% 10% 20% 10% Rate of per annum Depreciation 10% to 33% 76,256 34,668 317,697 291,935 100,074 570,680 555,440 31, 2015 Net Book December value as at 1,048,822 2,995,572 – 15,634 60,370 15,432 266,208 156,700 576,390 31, 2015 1,204,686 2,295,420 Accumulated as at December – – – – (692) (230) 27,941 (53,171) (26,152) write offs Adjustments / – – (153) 6,577 7,589 (5,273) (1,034) 26,735 18,003 75,412 170,596 304,912 (118,247) (124,707) DEPRECIATION / IMPAIRMENT DEPRECIATION (on deletion) For the year / 2015 – 7,996 15,634 53,793 211,532 144,662 555,183 01, 2015 1,152,567 2,141,367 Accumulated as at January (Rupees in ‘000) Mr Tahir Razzaq 61101-3184510-5 House # 61,Street # 46, Sector F-10/4, Islamabad Razzaq 61101-3184510-5 House # 61,Street Mr Tahir Imran Aslam -Karat Jewellers Mr Atif Riaz Bokhari (Ex President & CEO). Mr Atif Riaz Bokhari (Ex President Particulars of buyer As at 31, 2015 50,100 December 317,697 558,143 136,626 256,774 1,064,456 1,775,366 1,131,830 5,290,992 Offer Offer Mode of disposal – – – – – Approved by BOD Approved (877) (230) write offs (61,562) (62,669) Adjustments / 433 205 638 COST Sale 3,762 1,206 4,968 7,74 9 44,500 38,000 24,341 proceeds 106,841 112,447 – – – – (153) (5,924) (1,518) 38,739 36,891 Additions / (Deletions) 257,260 214,726 547,616 (119,402) (126,997) 42 340 362 404 Book value 3,694 1,187 1,527 2,290 21,831 24,339 49,864 51,795 2015 As at 13,362 806 500 201 701 317,697 558,143 136,626 224,836 980,184 January 01, 2,174 (Rupees in ‘000) 1,064,456 1,637,738 4,933,042 64,163 12,366 77,335 63,635 65,809 143,845 124,707 depreciation Accumulated Note 12.2.3 862 243 Cost 4,500 2,514 1,105 85,994 36,705 64,822 67,336 127,199 195,640 126,997 Detail of disposal property and equipment during the year Items individually having cost more than Rs. 1 million or net book value exceeding 0.25 Description Property and Equipment Particulars land Freehold Leasehold land Buildings on freehold land Buildings on freehold Buildings on leasehold land Furniture and fixtures Electrical, office and computer Electrical, office equipment Vehicles Leasehold Improvements Buildings on freehold land Buildings on freehold Buildings on leasehold land Vehicles Items individually having cost less than Rs. 1 million or net book value not exceeding 0.25 equipment Electrical and office Furniture and fixtures Sub Total Items retired from the books and claimed Insurance companies equipments Electrical and office Leasehold Improvements Sub Total 2016 2015 12.2.4

NIB Bank Limited Annual Report 2016 51 Notes to the Financial Statements For the year ended December 31, 2016 % % 5.39% 9.09 % 9.09 % 5.39 % Rate of Rate of per annum per annum 10% to 50% 10% to 50% Amortization Amortization 10,038 16,731 339,471 565,785 307,975 249,536 599,045 890,491 31, 2016 31, 2015 Net Book Net Book December December value as at value as at 114,111 107,418 713,014 777,424 31, 2016 31, 2015 2,149,982 1,923,668 3,041,517 2,744,100 Accumulated Accumulated as at December as at December – – – – (342) (342) (30,547) (30,547) write offs write offs Adjustments / Adjustments / 6,693 6,693 90,910 94,957 226,314 226,314 323,917 327,964 For the year For the year AMORTIZATION / IMPAIRMENT AMORTIZATION / IMPAIRMENT AMORTIZATION 2016 2015 107,418 100,725 622,446 713,014 01, 2016 01, 2015 1,923,668 1,697,354 2,420,525 2,744,100 Accumulated Accumulated as at January as at January (Rupees in ‘000) (Rupees in ‘000) As at As at 31, 2016 31, 2015 December December 124,149 124,149 2,489,453 2,489,453 1,020,989 1,026,960 3,634,591 3,640,562 – – – – (387) (387) write offs write offs (42,623) (42,623) Adjustments / Adjustments / COST COST – – – – 16,668 48,594 16,668 48,594 Additions / Additions / (Deletions) (Deletions) 2016 2015 As at As at 124,149 124,149 January 01, January 01, 2,489,453 2,489,453 1,004,708 1,020,989 3,618,310 3,634,591 Loan Relationships Loan Relationships Intangibles and determined deposit relationships that no impairment amount of core loss exists. the Bank assessed recoverable year, In the current Included in cost of computer software are fully amortized are items still in use having cost of Rs 304.860 million (2015: 302.084 million). Included in cost of computer software Particulars Deposit Relationships Core Particulars Deposit Relationships Core Core Overdraft / Working Capital / Working Overdraft Core Capital / Working Overdraft Core Computer Softwares Computer Softwares 13. INTANGIBLE ASSETS 13. INTANGIBLE 13.1 Annual test for impairment 13.2

52 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

Note 2016 2015 (Rupees in ‘000) 14. DEFERRED TAX ASSETS Deferred debits arising due to: Provision against loans and advances 7,029,106 6,753,098 Provision against other receivable 289,712 289,712 Provision against off balance sheet Items 13,101 13,101 Unused tax losses 2,616,424 3,822,940 Fair valuation of subsidiaries and associates 253 (306,257) Excess of tax base of investments over accounting base 158,690 64,079 Minimum turnover tax* 838,167 640,171 10,945,453 11,276,844

Deferred credits arising due to: Excess of accounting base of leased asset over tax base (133,408) (185,725) Accelerated tax depreciation on owned assets (704,746) (760,326) Accelerated tax amortization on intangible assets (30,852) (20,928) Unrealised exchange gains 14.1 (2,377) (2,377) Unrealised exchange losses 14.2 (33,604) (33,604) Unrealized gain on option to sell closed end funds (102,613) – Surplus on debt asset swap (96,103) – Surplus on revaluation of securities (77,315) (42,466) (1,181,018) (1,045,426) Deferred tax assets 9,764,435 10,231,418

Unrecognised deferred tax assets (1,139,394) (691,669)

Recognised deferred tax assets 8,625,041 9,539,749

*Included in the unrecognised deferred tax assets (assets not recorded on prudence being Rs. 301.227 million).

The net deferred tax asset recognized in the books has been restricted to Rs. 8,625.041 million due to uncertainty of availability of future tax profits for utilization of the unrecognized deferred tax assets. The net deferred tax asset on temporary differences available to the Bank are Rs. 8,926.268 million. Had the deferred tax asset been recognized on all deductible temporary differences, the profit after tax for the period ended December 31, 2016 would have been higher by Rs. 301.227 million (on temporary differences of Rs. 860.649 million). The management has recorded deferred tax asset based on financial projections indicating realisibility of deferred tax asset over a number of future years through reversals as a result of recoveries from borrowers and realisibility of remaining deferred tax asset against future taxable profits. The financial projections involve certain key assumptions such as deposits composition, interest rates, growth of deposits and advances, investment returns and potential provision / reversals against assets. Any significant change in the key assumptions may have an effect on the realisibility of the deferred tax asset.

14.1 In 1987 and 1989, the Bank (formerly PICIC) exercised its option to avail the exchange risk coverage offered by the Government of Pakistan, Ministry of Finance and Economic Affairs (Economic Affairs Division), through Office Memo 1(16)/50/DM/86 dated July 8, 1987 and 1(12)/50/DM/89 dated June 1, 1989 respectively and, in turn the Bank (formerly PICIC) offered the risk coverage to its Borrowers.

14.2 The unrealised exchange losses of the Bank (formerly PICIC) as on April 21, 1987, the effective date of exercise of both the options arising on related borrowings as reduced by gains arising on related advances was claimed as loss for tax purposes.

NIB Bank Limited Annual Report 2016 53 Notes to the Financial Statements For the year ended December 31, 2016

14.3 Movement in temporary differences during the year 2016 Balance as at Recognized in Recognized in Balance as at January profit and loss equity December 01, 2016 account 31, 2016 (Rupees in ‘000) Deferred debits arising due to: Provision against loans and advances 6,753,098 276,008 – 7,029,106 Provision against other receivables 289,712 – – 289,712 Provision against off balance sheet Items 13,101 – – 13,101 Unused tax losses 3,822,940 (1,206,516) – 2,616,424 Fair valuation of subsidiaries and associates (306,257) 306,510 – 253 Excess of tax base of investments over accounting base 64,079 94,611 – 158,690 Minimum turnover tax* 640,171 197,996 – 838,167

Deferred credits arising due to: Excess of accounting base of leased asset over tax base (185,725) 52,317 – (133,408) Accelerated tax depreciation on owned assets (760,326) 55,580 – (704,746) Accelerated tax amortization on intangible assets (20,928) (9,924) – (30,852) Unrealised exchange gains (2,377) – – (2,377) Unrealised exchange losses (33,604) – – (33,604) Unrealized gain on option to sell closed end funds – (102,613) – (102,613) Surplus on revaluation of debt swap properties – – (96,103) (96,103) Surplus on revaluation of securities (42,466) – (34,849) (77,315) Deferred tax assets 10,231,418 (336,031) (130,952) 9,764,435

Unrecognised deferred tax assets (691,669) (447,725) – (1,139,394) Recognised deferred tax assets 9,539,749 (783,756) (130,952) 8,625,041

2015 Balance as at Recognized in Recognized in Balance as at January profit and loss equity December 01, 2015 account 31, 2015 (Rupees in ‘000) Deferred debits arising due to: Provision against loans and advances 7,416,342 (663,244) – 6,753,098 Provision against other receivables 291,184 (1,472) – 289,712 Provision against balances with other banks 2,251 (2,251) – – Provision against off balance sheet Items 13,101 – – 13,101 Unused tax losses 4,991,269 (1,168,329) – 3,822,940 Excess of tax base of investments over accounting base 62,329 1,750 – 64,079 Minimum turnover tax* 432,812 207,359 – 640,171

Deferred credits arising due to: Excess of accounting base of leased asset over tax base (174,338) (11,387) – (185,725) Accelerated tax depreciation on owned assets (767,393) 7,067 – (760,326) Fair valuation of subsidiaries and associates (301,992) (4,265) – (306,257) Accelerated tax amortization on intangible assets (11,005) (9,923) – (20,928) Unrealised exchange gains (2,377) – – (2,377) Unrealised exchange losses (33,604) – – (33,604) (Surplus) / Deficit on revaluation of securities (644,795) – 602,329 (42,466) Deferred tax assets 11,273,784 (1,644,695) 602,329 10,231,418

Unrecognised deferred tax assets (1,134,408) 442,739 – (691,669) Recognised deferred tax assets 10,139,376 (1,201,956) 602,329 9,539,749 * Included in the unrecognised deferred tax assets.

54 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

15. DISPOSAL OF PICIC ASSET MANAGEMENT COMPANY LIMITED AND PICIC INVESTMENT FUND During the year, the sale transactions of PICIC Asset Management Company Limited (total) and PICIC Investment Fund (partial) have been executed which were classified under "Assets held for sale" in last year annual financial statements of the Bank. The sale transaction resulted in gain of Rs.992.393 million, net of tax (Gross gain being Rs.1,526.759 million). Note 2016 2015 (Rupees in ‘000) PICIC Asset Management Company Limited (PICIC AMC) - subsidiary – 2,478,342 PICIC Investment Fund - Closed end - associated undertaking – 634,389 – 3,112,731 Cash flows from discontinuing operations: Operating cash flows (1,526,759) – Investing cash flows-net of transaction cost 4,639,490 – 3,112,731 –

16. OTHER ASSETS Income / mark-up accrued Local currency 16.1 & 16.7 2,114,031 2,744,979 Foreign currencies 147,702 130,664 Advances, deposits, advance rent and other prepayments 16.2 476,653 476,086 Advance taxation - net 1,157,078 1,219,207 Non - banking assets acquired in satisfaction of claims 16.3 1,009,263 951,341 Non - banking assets acquired in satisfaction of claims with buy back option with customer 16.3 2,407,465 2,261,399 Unrealized gain on forward foreign exchange contracts 175,613 135,276 Stationery and stamps on hand 2,879 2,575 Advance for purchase of term finance certificates and sukuk bonds 435,000 285,000 Assets in respect of Bangladesh 16.4 425,409 425,409 Insurance claim 104,935 148,287 Others 16.5 & 16.5.1 607,505 224,891 9,063,533 9,005,114 Liabilities in respect of Bangladesh 16.4 (342,416) (342,416) Rupee Borrowings from Government of Pakistan in respect of Bangladesh (82,993) (82,993) Depreciation against non-banking asset (30,158) – Provisions held against other assets 16.6 (1,265,505) (1,421,726) Other assets - net of provisions 7,342,461 7,157,979

16.1 This includes Rs. 0.320 million (2015: Rs. 5.801 million) in respect of related parties.

16.2 Advances, deposits, advance rent and other prepayments Advances 41,360 41,522 Deposits 31,762 31,760 Advance rent 267,139 257,480 Other prepayments 136,392 145,324 476,653 476,086

NIB Bank Limited Annual Report 2016 55 Notes to the Financial Statements For the year ended December 31, 2016

16.3 Other assets include settlement of certain accounts through acquiring non-banking assets from the borrowers amounting to Rs. 3,370.750 million net of impairment of Rs. 45.978 million which have been remeasured at fair value in accordance with the BPRD Circular No 1 of 2016 . The settlement agreements signed with borrowers in certain cases entails a buy back option. In cases, where the agreement for sale have been executed (but the title has not been transferred by the Bank), the fair values have been restricted to the agreed sale prices. Surplus on revaluation of the above assets as at December 31, 2016 amounts to Rs. 178.478 million net of tax and have been included in surplus on revaluation of assets.

16.4 All the assets and liabilities as of November 30, 1971 clearly identifiable as being in or in respect of the areas now under Bangladesh and referred to above were segregated as of that date and in such segregation, for purposes of conversion of foreign currency amounts, generally speaking, the parity rates ruling prior to August 15, 1971 were used, and all income accrued or due in 1971 but not received in that year and interest accrued but not due on borrowings in 1971 was eliminated. Subsequently, consequent to the assuming by Bangladesh of certain foreign currency loan obligations as of July 1, 1974, including amounts previously identified by the Bank (formerly PICIC) as its foreign currency liabilities in respect of Bangladesh, such amounts were eliminated from the books of the Bank (formerly PICIC) by reducing an equivalent sum from its related foreign assets in that area.

Arising from advices received from the lenders and as a result of diversion of shipments and of the meeting of certain contingent liabilities, there have been certain modifications to the foreign currency advances relating to Bangladesh. Furthermore, the difference between the actual amount of rupees required to remit maturities of foreign currency borrowings in respect of Bangladesh and the figures at which they appeared in the books and the interest paid to foreign lenders has been treated as increasing the rupee assets in that area.

The Government of Pakistan, while initially agreeing to provide the rupee finance required for discharging current maturities of foreign currency borrowings and interest related to Bangladesh, did not accept any responsibility for PICIC’s assets in that area. However, following an agreement reached between PICIC and the Government of Pakistan during 1976, the Government has agreed that it would continue to provide the funds for servicing PICIC’s foreign currency liabilities relating to Bangladesh and has further agreed that an amount equivalent to the rupee assets in Bangladesh financed from PICIC’s own funds not exceeding Rs. 82 million would be deemed to have been allocated out of the rupee loans by the Government and that such allocated amount together with the rupee finance being provided by the Government including any interest thereon would not be recovered from PICIC until such time as PICIC recovers the related assets from Bangladesh and only to the extent of such recovery.

Accordingly, such allocated amounts, together with the rupee finance being provided by the Government for discharging the current maturities of foreign currency borrowings (including the interest and charges thereon and any exchange difference between the final rupee payment and the amount at which the liability, commitment or contingent liability as appearing in the books relating to Bangladesh) have been treated as liabilities in respect of Bangladesh. Further, in view of the aforesaid agreement no interest is being accrued on the allocated amount of rupee loans or in respect of the rupee finance provided by the Government related to PICIC’s assets in Bangladesh nor it is considered necessary to provide for any loss that may arise in respect of PICIC’s assets in Bangladesh.

16.5 Other assets also includes unrealized gain of Rs. 293.180 million against options to sell the holding of closed end mutual funds under the share purchase agreement dated 17 February 2016 within three year period effective from February 17, 2016 (refer note 10.6.2).

16.5.1 This includes balance of Rs.127.911 million which has been fully provided.

56 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

2016 2015 (Rupees in ‘000) 16.6 Particulars of provision against other assets Opening balance 1,421,726 1,300,684 Charge for the year 15,016 141,394 Reversals (156,193) – Reversal on disposal of non-banking assets (4,625) (16,147) Write offs (10,419) (4,205) Closing balance 1,265,505 1,421,726

16.7 This includes a sum of Rs. 30.466 million (2015: Rs. 30.466 million) representing unrealised exchange gain, which has not been recognised as income and deferred in these financial statements, in accordance with the policy of the Bank, as stated in note 6.15.

Note 2016 2015 (Rupees in ‘000) 17. BILLS PAYABLE In Pakistan 2,534,637 2,469,877 Outside Pakistan 99,761 106,339 2,634,398 2,576,216

18. BORROWINGS In Pakistan 117,174,817 85,650,073 Outside Pakistan – 26,668 117,174,817 85,676,741

18.1 Particulars of borrowings with respect to currencies In local currency 117,174,817 85,650,073 In foreign currencies – 26,668 117,174,817 85,676,741

18.2 Details of borrowings - secured / unsecured Secured Borrowings from SBP under Export Refinance Scheme 18.3 11,356,257 10,754,092 Long Term Financing Facility 18.4 2,604,557 3,381,677 Long Term Finance for Export Oriented Projects 18.5 57,539 982 Repurchase agreement borrowings 18.6 86,992,514 64,732,895 Call borrowings 9,548,044 –

Unsecured Call borrowings 18.7 6,453,620 6,618,141 Overdrawn nostro accounts – 26,668 Foreign borrowings payable in local currency 18.8 162,286 162,286 Other borrowings – – 117,174,817 85,676,741

NIB Bank Limited Annual Report 2016 57 Notes to the Financial Statements For the year ended December 31, 2016

18.3 Borrowings from SBP under Export Refinance Scheme are subject to mark-up rates ranging from 1.00% to 2.00% (2015: 1.5% to 3.5%) per annum maturing within six months.

18.4 Borrowings from SBP under Long Term Financing Facility (LTFF) are subject to mark up rates ranging from 2.0% to 8.6% (2015: 2.5% to 8.6%) per annum with remaining maturity upto ten years.

18.5 Borrowings from SBP under Long Term Finance for Export Oriented Projects are subject to mark up rate of 3.25% (2015: 5.00%) per annum with remaining maturity upto four months.

18.6 These borrowings are subject to mark-up rates ranging from 5.84% to 5.88% (2015: 6.10% to 6.50%) per annum with remaining maturity upto 5 days. Government securities have been given as collateral against these borrowings.

18.7 These borrowings are subject to mark-up at rates ranging from 5.6% to 5.9% (2015: 6.00% to 6.70%) per annum with remaining maturity upto 253 days.

18.8 The Government of Pakistan (GoP) has claimed an amount of Rs. 162.286 million in respect of liabilities against German credit representing principal amount of loan and Rs. 45.444 million as interest thereon till June 30, 2006. The principal amount has been accounted for and shown as payable to the GoP whereas interest has been accounted for in Other Liabilities (Note 21). However, the Bank is contending that any amount of principal and interest is payable to the GoP only when recovered from the related sub-borrowers, who have availed the German credit. This also includes unrealized exchange loss of Rs. 96.011 million (2015: Rs. 96.011 million) which has been netted off against unrealized exchange gain (Note 16) as it is payable when recovered from sub-borrowers, who have availed the related German credit.

2016 2015 (Rupees in ‘000) 19. DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits 22,701,315 33,151,386 Savings deposits 37,933,437 41,684,463 Current accounts - non remunerative 31,757,050 35,081,719 Margin accounts 614,103 669,020

Financial Institutions Remunerative deposits 3,553,503 19,347,906 Non-remunerative deposits 512,959 510,400 97,072,367 130,444,894

19.1 Particulars of deposits

In local currency 90,510,589 122,626,509 In foreign currencies 6,561,778 7,818,385 97,072,367 130,444,894

20. SUB-ORDINATED LOANS Term Finance Certificates - Listed, Unsecured 4,193,837 4,195,516

58 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

Mark-up Floating (no floor, no cap) rate of return at Base Rate +1.15% (The Base Rate is defined as the average “Ask Side” rate of the six month Karachi Interbank Offered Rate (“KIBOR”)).

Security The TFCs are unsecured and subordinated to all other indebtedness of the Bank including deposits.

Issue Date June 19, 2014 Issue Amount Rs. 4,198.035 million Rating A+ (A plus) Tenor 8 years from the Issue Date Redemption Fifteen equal semi-annual installments of 0.02% of the Issue Amount for the first ninety months followed by remaining 99.70% on maturity at the end of the ninety sixth month.

Maturity June 19, 2022 Call Option The Bank may call the TFCs, in part or full, on any profit payment date from the 60th month from the last day of public subscription and on all subsequent profit payment dates, subject to the SBP approval and not less than forty five days prior notice being given to the Trustee and the Investors.

Lock-in-Clause Neither profit nor principal can be paid (even at maturity) if such payments will result in a shortfall in the Banks' Minimum Capital Requirements (MCR) or Capital Adequacy Ratio (CAR) or increase any existing shortfall in MCR and CAR. In case the lock-in clause goes into effect, the Bank will be required to comply with the SBP instructions prevalent or issued at the time.

Loss Absorbency The TFCs will be subject to loss absorbency clause as stipulated under the "Instructions for Clause Basel III Implementation in Pakistan". Note 2016 2015 (Rupees in ‘000) 21. OTHER LIABILITIES Mark-up / return / interest payable in: Local currency 667,421 667,277 Foreign currencies 6,435 15,591 Unearned income on inland bills 632 10,611 Accrued expenses 886,202 598,231 Payable to Worker's Welfare Fund 21.1 165,341 114,005 Withholding tax / duties payable 108,442 95,539 Insurance premium payable 84,539 71,436 Advance from borrowers for the settlement of loans 381,988 391,694 Unclaimed dividend 43,103 43,110 Borrowing from Government of Pakistan 2,095 2,095 Branch adjustment account 17,038 92,426 Unrealized loss on forward foreign exchange contracts 173,769 61,293 Security and other deposits 5,711 5,771 Payable to IBRD - Managed Fund 68,220 68,220 Payable to defined benefit plan 35.5 46,786 57,910 Payable against third party contracts 19,928 – Security deposits against lease 418,935 438,708 Provision against off balance sheet items 37,430 37,430 Advance against sale of debt swap properties 599,387 229,500 Advance arrangement fee against syndicated loans – 78,534 Others 331,238 383,632 4,064,640 3,463,013

NIB Bank Limited Annual Report 2016 59 Notes to the Financial Statements For the year ended December 31, 2016

21.1 During the current year, the Supreme Court of Pakistan vide its order dated November 10, 2016 has held that the amendments made in the law introduced by the Federal Government for the levy of Workers Welfare Fund were not lawful. The Federal Board of Revenue has filed review petitions against this order which are currently pending. Legal advice obtained on the matter indicates that consequent to filing of these review petitions the judgment may not currently be treated as conclusive. Accordingly, the Bank maintains its provision in respect of WWF.

22. SHARE CAPITAL

22.1 Authorized

2016 2015 2016 2015 (Number of Shares) (Rupees in ‘000) 12,000,000,000 12,000,000,000 Ordinary shares of Rs. 10 each 120,000,000 120,000,000

22.2 Issued, subscribed and paid up Fully paid up ordinary shares of Rs. 10 each

2016 2015 (Number of Shares) 3,278,902,659 3,278,902,659 Fully paid in cash 32,789,027 32,789,027 Issued for consideration other than cash 764,824,417 764,824,417 (under schemes of amalgamation) 7,648,244 7,648,244 6,259,124,088 6,259,124,088 Issuance of shares on discount 62,591,241 62,591,241 10,302,851,164 10,302,851,164 103,028,512 103,028,512

22.2.1 The holding company Bugis Investments (Mauritius) Pte. Limited holds 9,105,728,598 (2015: 9,105,728,598) ordinary shares. Note 2016 2015 (Rupees in ‘000) 23. SURPLUS / (DEFICIT) ON REVALUATION OF ASSETS - NET OF DEFERRED TAX Surplus on revaluation of assets - net of tax Available-for-sale securities 23.1 143,585 78,866 Non-banking assets 23.2 178,478 – 322,063 78,866

23.1 Surplus / (deficit) on revaluation of securities Market treasury bills (14,746) 104,743 Pakistan investment bonds (202,458) (5,655) Term finance certificates 8,916 21,125 Investment in shares of listed companies 429,188 1,119 220,900 121,332 Related deferred tax liability (77,315) (42,466) 143,585 78,866

60 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

2016 2015 (Rupees in ‘000) 23.2 Surplus on revaluation of non-banking assets Surplus on non - banking assets acquired in satisfaction of claims 276,517 – Reversal of surplus on incremental depreciation against non - banking assets acquired in satisfaction of claims (1,936) – 274,581 – Related deferred tax liability (96,103) – 178,478 –

24. CONTINGENCIES AND COMMITMENTS 24.1 Direct credit substitutes Contingent liability in respect of guarantees given favouring: Government 610,000 610,000 Financial Institutions – – Others 135,191 14,749 745,191 624,749 24.2 Transaction-related contingent liabilities / commitments Guarantees given in favour of: Government 32,582,376 24,109,556 Financial Institutions – – Others 1,265,645 2,250,930 33,848,021 26,360,486

24.3 Trade-related contingent liabilities Letters of credit 16,173,248 22,019,530 Acceptances 2,046,850 2,860,568 18,220,098 24,880,098

24.4 Other Contingencies Claims against the Bank not acknowledged as debts – –

24.5 Commitments in respect of forward lending Commitments to extend credit 6,280,440 2,618,370 The Bank makes commitments to extend credit in the normal course of its business but none of these commitments are irrevocable and do not attract any significant penalty or expense if the facility is ultimately withdrawn except commitments mentioned above. 2016 2015 (Rupees in ‘000) 24.6 Commitments in respect of forward exchange contracts Purchase 23,291,730 8,951,943 Sale 23,942,169 11,809,528 47,233,899 20,761,471

24.7 Commitments for the acquisition of operating fixed assets 62,820 15,255

24.8 Commitments in respect of equity future contracts Purchase 20,828 – Sale 279,574 – 300,402 –

NIB Bank Limited Annual Report 2016 61 Notes to the Financial Statements For the year ended December 31, 2016

24.9 Other Contingencies A penalty of Rs. 700 million was imposed by the Competition Commission of Pakistan (“the Commission”) on all the member banks utilizing the 1 link Switch on account of uncompetitive behavior and imposing of uniform charges on cash withdrawal for off network ATM transactions. The Bank’s share in this penalty is Rs. 50 million. The concerned banks filed a constitutional petition before the High Court of Sindh, which has suspended the order of the Commission. Consequently an appeal was filed with the Competition Appellate Tribunal (“Tribunal”) which has set aside the order of the Commission. The Commission has preferred an appeal before the Supreme Court, which has been admitted for hearing and will be fixed by the concerned office of the Supreme Court. The management in consultation with external legal counsel, representing the Bank, is confident that they have strong grounds to contest this penalty and are optimistic that the outcome will be decided in favour of the Bank.

24.10 Tax Contingency The income tax returns of NIB Bank Limited have been filed up to and including tax year 2016 relevant to the financial year ended December 31, 2015. The tax authorities have made certain disallowances including additions on account of proration of expenses against dividends and capital gains, disallowances of interest and administrative expenses and renovation expenses incurred on rented premises (allowed historically) pertaining to tax years 2003 through 2008 for Ex-Pakistan Industrial Credit and Investment Corporation Limited (Ex-PICIC), from tax years 2004 through 2008 for Ex-PICIC Commercial Bank Limited (Ex-PCBL), tax years 2003 and 2004 for Ex-National Development Leasing Corporation Limited (Ex-NDLC) and from tax years 2004 through 2008 for NIB Bank Limited. During the year ended 2013, a combined Appellate Order for Ex-PICIC pertaining to tax years 2003 through 2007 was issued by Commissioner Inland Revenue (Appeals) – CIR(A) in which the aforementioned expenses were allowed. However, the tax authorities have filed appeal with Income Tax Appellate Tribunal (ITAT) against above combined Appellate Order. These disallowances may result in additional tax aggregating to Rs. 1,370 million (2015: Rs. 1,370 million), which the management of the Bank in discussion with their tax consultants believes to be unjustified and not in accordance with the true interpretation of the law. Furthermore, tax authorities have also made certain disallowances in respect of tax years 2009, 2010, 2011 which are pending at various appellate forums. Management is confident that the eventual outcome of the cases will be in favour of the Bank. As per indemnity clause of sale agreement with HBL Asset Management Company Limited , the bank has agreed to reimburse any Tax liability that becomes due and payable in respect of the existing appeals pending before the Appellate Tribunal, Inland Revenue for the tax years 2005, 2006, 2007, 2008 and 2009 and for the impact of the same items up until the tax year 2015, which pertains to the amortization of management rights claimed by PICIC Asset Management Limited (the Company) in its tax returns. These disallowances may result in additional tax aggregating to Rs 339.5 million. However the management of the Bank in discussion with the tax consultant considers to be allowable under section 24 of Income Tax Ordinance, 2001 and such claim would ultimately be decided in the company's favour.

2016 2015 (Rupees in ‘000) 25. MARK-UP / RETURN / INTEREST EARNED On loans and advances to customers and financial institutions 7,894,971 8,451,239 On investments in: Held-for-trading securities 5,012 10,681 Available-for-sale securities 6,389,619 5,007,126 Held-to-maturity securities 790,429 763,793 On deposits with financial institutions 529 320 On securities purchased under resale agreements 302,255 471,420 On call money lending 30,216 32,726 15,413,031 14,737,305

26. MARK-UP / RETURN / INTEREST EXPENSED Deposits and other accounts 4,851,994 5,233,198 Securities sold under repurchase agreements 4,797,471 3,139,138 Other short term borrowings 911,056 1,148,245 Long term borrowings 451,176 574,653 11,011,697 10,095,234

62 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

Note 2016 2015 (Rupees in ‘000) 27. GAIN ON SALE OF SECURITIES - NET Market treasury bills 28,910 73,006 Pakistan investment bonds 361,085 3,899,067 Ordinary shares of listed and unlisted companies 17,409 41,988 Units of mutual funds 154,431 – Sukuks 7,254 7,608 569,089 4,021,669

28. OTHER INCOME Gain on disposal of property and equipment 60,418 5,395 Rent 8,373 8,308 Gain on trading liabilities – 1,512 Recovery against written off assets 2,786 26,611 Liabilities no longer payable written back 6,300 – Gain from insurance against loss of fixed assets - net 6,731 64 Gain on sale of non - banking asset acquired in satisfaction of claims 28.1 19,050 5,000 Unrealised gain on option to sell closed end funds 16.5 293,180 – 396,838 46,890

28.1 The Bank earned an income of Rs.19.050 million against sale of following non-banking assets. 2016 (Rupees in ‘000) Property at Mouza Rasool Nagar, Chak 192 RB, Tehsil Sadar, Faisalabad 7,523 Property at Dhanola Road Chak 119, Faisalabad 10,367 Property at Chak 102, RB Tehsil Jaranwala Faisalabad 1,160 19,050

Note 2016 2015 (Rupees in ‘000) 29. ADMINISTRATIVE EXPENSES Salaries, allowances, etc. 2,908,500 2,971,880 Charge for defined benefit plan 35.4 10,065 12,818 Contribution to defined contribution plan 102,931 105,083 Non-executive directors' fees, allowances and other expenses 15,705 14,387 Brokerage and commission 34,585 40,892 Rent, taxes, insurance, electricity, etc. 957,200 1,006,847 Legal and professional charges 264,506 209,634 Communication 170,041 177,505 Repairs and maintenance 468,566 455,403 Stationery and printing 101,663 94,657 Advertisement and publicity 2,667 21,863 Fees and subscriptions 140,757 132,436 Auditors' remuneration 29.1 7,453 7,428 Depreciation 12.2 318,771 304,912 Depreciation on properties under debt swap arrangement 30,158 – Amortization 13 327,963 323,917 Travelling, conveyance and vehicles running 41,596 46,370 Security services 210,318 176,919 Fixed assets written off 6,097 8,621 Others 56,907 60,690 6,176,449 6,172,262

NIB Bank Limited Annual Report 2016 63 Notes to the Financial Statements For the year ended December 31, 2016

2016 2015 (Rupees in ‘000) 29.1 Auditor’s remuneration Audit fee including fee for branch audit 4,730 4,730 Audit fee of consolidated financial statements – 825 Review fee 1,210 1,210 Special certifications and sundry advisory services 1,000 300 Out-of-pocket expenses 513 363 7,453 7,428 29.2 No donation was paid during the year.

30. OTHER CHARGES Penalties of the State Bank of Pakistan 6,440 17,272 Operational loss 16,430 5,628 Worker's Welfare Fund 41,336 44,400 Impairment charge on tangible fixed assets – 27,941 64,206 95,241

31. TAXATION Continued Operations Current 183,603 207,359 Prior 116,301 – Deferred 264,658 1,201,956 564,562 1,409,315

Discontinued Operations Current 15,268 – Deferred 519,098 – 534,366 – 1,098,928 1,409,315

31.1 This includes charge for minimum tax payable under the Income Tax Ordinance, 2001, and for this reason, reconciliation of tax charge to the accounting profit has not been presented.

2016 2015 (Rupees in ‘000) 32. BASIC / DILUTED EARNINGS / (LOSS) PER SHARE Profit after taxation from continuing operations 427,971 2,617,293 Profit after taxation from discontinued operations 992,393 –

(Numbers in '000) Weighted average number of ordinary shares outstanding during the year 10,302,851 10,302,851

(Rupees) Earnings per share - basic / diluted - Continuing Operations 0.04 0.25 Earnings per share - basic / diluted - Discontinued Operations 0.10 –

64 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

Note 2016 2015 (Rupees in '000) 33. CASH AND CASH EQUIVALENTS Cash and balances with treasury banks 7 8,766,811 10,052,543 Balances with other banks 8 777,302 1,645,086 9,544,113 11,697,629

34. STAFF STRENGTH (Numbers) Permanent 2,153 2,177 Temporary / on contractual basis 12 19 Bank's own staff strength at end of the year 2,165 2,196 Outsourced 524 482 Total staff strength 2,689 2,678

35. DEFINED BENEFIT PLAN 35.1 The Bank operates an unfunded gratuity scheme covering all eligible employees who have attained the minimum qualifying period of five years. Eligible employees are those employees who have joined the service of the Bank on or before March 31, 2006. The benefits under the gratuity scheme are payable in lump sum on retirement at the age of 60 years or earlier cessation of services. The benefit is equal to one month's last drawn basic salary for each year of confirmed service, subject to a minimum of five years of service.

35.2 Principal actuarial assumptions The actuarial valuation is carried out periodically. The actuarial valuation was carried out for the year ended December 31, 2016 using the "Projected Unit Credit Method". The main assumptions used for actuarial valuation are as follows:

Gratuity 2016 2015 - Valuation discount rate 8.00% 9.25% - Salary increase rate 7.00% 8.25% - Mortality rate Based on State Life Insurance Based on State Life Insurance Corporation of Pakistan SLIC Corporation of Pakistan SLIC (2001-2005) Ultimate Mortality table (2001-2005) Ultimate Mortality table - Rates of employee turnover Heavy Heavy

Note 2016 2015 (Rupees in ‘000) 35.3 Reconciliation of payable to defined benefit plan Present value of defined benefit obligations 35.6 46,786 57,910

35.4 Charge for defined benefit plan Current service cost 5,072 6,349 Interest cost 4,993 6,469 Cost recognised in the profit and loss account 10,065 12,818 Actuarial loss / (gain) on remeasurement of obligation (recognised in OCI) 820 (5,078) Total defined benefit cost for the year 10,885 7,740

NIB Bank Limited Annual Report 2016 65 Notes to the Financial Statements For the year ended December 31, 2016

Note 2016 2015 (Rupees in ‘000) 35.5 Movement in balance payable Opening balance 57,910 60,718 Expense recognized 10,065 12,818 Benefits paid to outgoing members (22,009) (10,548) Actuarial loss / (gain) on remeasurement of obligation (recognised in OCI) 820 (5,078) Closing balance 46,786 57,910

35.6 Reconciliation of present value of defined benefit obligation Opening balance 57,910 60,718 Current service cost 5,072 6,349 Interest cost 4,993 6,469 Benefits paid (22,009) (10,548) Actuarial loss / (gain) on remeasurement of obligation (recognised in OCI) 820 (5,078) Closing balance 46,786 57,910

35.7 Sensitivity Analysis on significant actuarial assumptions: Actuarial Liability 1 Discount Rate + 0.5% 45,052 56,043 2 Discount Rate - 0.5% 48,633 59,897 3 Long term salary increases by 0.5% 48,756 60,045 4 Long term salary decreases by 0.5% 44,923 55,888

35.8 Analysis of Present value of defined benefit obligations 1 Vested / Non-vested Vested benefits 46,786 57,910 Non-vested benefits – – Total 46,786 57,910 2 Type of benefits earned to date Accumulated benefit obligation 27,883 34,796 Amounts attributed to future salary increases 18,903 23,114 Total 46,786 57,910

35.9 Remeasurements recognised in Other Comprehensive Expense / (Income) during the year 1. Re-measurements : Actuarial (gain) / loss on obligation (i) (Gain) / Loss due to change in financial assumptions (314) (377) (ii) (Gain) / Loss due to change in demographic assumptions – – (iii) (Gain) / Loss due to change in experience adjustments 1,134 (4,701) (iv) Total actuarial loss / (gain) on obligation = (i) + (ii) + (iii) 820 (5,078) 2. Total Re-measurements in OCI (Gain) / Loss = (1.iv) + (2.i) 820 (5,078)

66 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

2016 2015 35.10 Maturity profile of the defined benefit obligation 1. Weighted average duration of the PBO 7.64 6.65 2. Distribution of timings of benefit payments (time in years) (Rupees in ‘000) 1 4,393 13,117 2 4,615 5,489 3 3,753 4,702 4 3,766 4,511 5 8,891 4,627 6 to 10 45,376 56,871

35.11 Expected contribution for the next one year The Bank provides for gratuity as per the actuary's expected charge for the next one year. Based on actuarial advice, management estimates that the charge in respect of the defined benefit plan for the year ending December 31, 2017 would be Rs. 7.532 million.

36. DEFINED CONTRIBUTION PLAN The Bank has established a provident fund scheme administered by the Board of Trustees for all permanent employees. Equal monthly contributions are made to the fund by both the Bank and the employees at the rate of 10% of basic salary.

37. COMPENSATION OF DIRECTORS AND EXECUTIVES

President / Chief Executive Directors Executives 2016 2015 2016 2015 2016 2015 (Rupees in ‘000) Fees – – 15,705 14,387 – – Managerial remuneration 30,418 30,921 – – 691,027 718,936 Charge for defined benefit plan – – – – 3,299 4,652 Contribution to defined contribution plan 3,042 3,092 – – 61,680 61,714 Rent and house maintenance 10,646 10,908 – – 241,859 251,628 Utilities 3,042 3,092 – – 69,103 71,894 Incentive payments, allowances, final settlement and etc 187,393 3,409 – – 606,975 483,406 234,541 51,422 15,705 14,387 1,673,943 1,592,230

Number of persons 1 2 7 6 701 772

The President / Chief Executive was provided with Bank maintained cars, medical insurance and security arrangements, as per terms of the employment. The President / Chief Executive had resigned with effect from December 07, 2016. For the remaining part of the year, the responsibilities were overseen by the Acting President. Directors' fees represent fees paid to certain non-executive directors of the Bank. No further benefits are paid to non-executive directors.

NIB Bank Limited Annual Report 2016 67 Notes to the Financial Statements For the year ended December 31, 2016 – – – – – – – – – – – – – – – – – 20,922 Total 279,109 511,677 368,691 268,105 Fair Value 7,149,041 3,600,193 7,643,767 23,133,917 23,778,097 105,111,056 124,652,530 124,652,530 – – – – – – – – – – – – – – – – – – – – – – – – – – Level 3 20,828 279,574 23,291,730 23,942,169 Book Value – – – – – – – – – – – – – – – – 511,677 368,691 268,105 Level 2 7,149,041 7,643,767 105,111,056 121,052,337 121,052,337 Fair value – – – – – – – – – – – – – – – – – – – – – Level 1 3,600,193 3,600,193 3,600,193 – 2,730 55,178 24,145 511,677 264,948 777,302 Total 7,149,041 3,600,193 6,641,376 1,128,754 8,766,811 3,243,130 3,092,112 4,193,837 4,122,647 2,634,398 2,476,315 87,305,928 97,072,367 105,111,056 227,674,381 117,174,817 223,551,734 – – – – – – – – – – – – – – – – – 2016 2,634,398 4,193,837 2,476,315 liabilities Financial 97,072,367 117,174,817 223,551,734 (223,551,734) (Rupees in ‘000) – – – – – – – – – – – – – – – – – 777,302 8,766,811 3,243,130 3,092,112 Loans and 87,305,928 receivables 103,185,283 103,185,283 – – – – – – – – – – – – – – – – – – – – – Held to maturity 6,641,376 6,641,376 6,641,376 – – – – – – – – – – – – – – – – – – – – 75,042 Trading Held for 258,699 333,741 333,741 – – – – – – – – – – – – – 2,730 55,178 24,145 511,677 264,948 for sale 7,073,999 3,341,494 1,128,754 Available 105,111,056 117,513,981 117,513,981 Market Treasury Bills Market Treasury Pakistan Investment Bonds Ordinary shares of listed companies / mutual funds Ordinary shares Debt securities (listed TFCs) Pakistan Investment Bonds Sukuk Bonds Defense Saving Certificates Cumulative Preference Shares Cumulative Preference Ordinary shares of unlisted companies Ordinary shares Debt securities (un-listed TFCs) Financial assets measured at fair value Financial assets measured - Investments Off-balance sheet financial instruments exchange of foreign purchase Forward Forward sale of foreign exchange sale of foreign Forward Forward purchase of Government purchase Securities Forward Forward sale of Government Forward Securities Purchase of equity future contracts of equity future Purchase Sale of equity future contracts Sale of equity future Financial assets not measured at fair value Financial assets not measured - Investments - Cash and balances with treasury banks - Balances with other banks - Lending to financial instruments - Advances - Assets held for sale On balance sheet financial instruments - Other assets FAIR VALUE MEASUREMENT VALUE FAIR The table below analyses financial and non instruments measured at the end of reporting period by level in fair value hierarchy into which the fair value measurement is categorised: Financial liabilities not measured at fair value Financial liabilities not measured - Bills payable - Borrowings - Deposits and other accounts - Sub-ordinated loans - Sub-ordinated - Other liabilities 38.

68 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016 – – – – – – – – – – – – – – – – – – – – – 5,658 Total 300,481 Fair Value 8,951,844 7,501,780 74,078,985 10,544,788 11,731,029 92,431,692 92,431,692 – – – – – – – – – – – – – – – – – – – – – – – – – – – – Level 3 8,951,943 11,809,528 – – – – – – – – – – – – – – – – – – Book Value 300,481 Level 2 7,501,780 74,078,985 10,544,788 92,426,034 92,426,034 Fair value – – – – – – – – – – – – – – – – – – – – – 5,658 5,658 5,658 Level 1 5,658 2,730 55,178 24,237 300,481 235,294 Total 6,668,959 1,127,921 1,645,086 1,599,044 3,112,731 2,924,870 2,576,216 4,195,516 1,898,034 (1,743,902) 74,078,985 10,544,788 10,052,543 85,676,741 110,668,994 223,047,499 130,444,894 224,791,401 – – – – – – – – – – – – – – – – – 2015 2,576,216 4,195,516 1,898,034 liabilities Financial 85,676,741 130,444,894 224,791,401 (224,791,401) (Rupees in ‘000) – – – – – – – – – – – – – – – – 1,645,086 1,599,044 3,112,731 2,924,870 Loans and 10,052,543 receivables 110,668,994 130,003,268 130,003,268 – – – – – – – – – – – – – – – – – – – – – Held to maturity 6,668,959 6,668,959 6,668,959 – – – – – – – – – – – – – – – – – – – – – – – – Trading Held for – – – – – – – – – – – – – 5,658 2,730 55,178 24,237 300,481 235,294 for sale 1,127,921 Available 74,078,985 10,544,788 86,375,272 86,375,272 Market Treasury Bills Market Treasury Pakistan Investment Bonds Ordinary shares of listed companies Ordinary shares Debt securities (listed TFCs) Pakistan Investment Bonds Sukuk Bonds Defense Saving Certificates Cumulative Preference Shares Cumulative Preference Ordinary shares of unlisted companies Ordinary shares Debt securities (un-listed TFCs) The Bank measures fair values using the following fair value hierarchy that reflects the significance of inputs used in making measurements: that reflects fair values using the following value hierarchy The Bank measures using quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 1: Fair value measurements (i.e. derived (i.e. as prices) or indirectly either directly observable for the assets or liability, using inputs other than quoted prices included within Level 1 that are Level 2: Fair value measurements prices). from not based on observable market data (i.e. unobservable inputs). using input for the asset or liability that are Level 3: Fair value measurements determinedvaluers based on their assessment of the market values amounts (level 3 measurement) by professional carried at revalued in satisfactions of claims are Non-banking assets acquired as disclosed in note 16 respectively. techniques used in determination of fair values within level 3 Valuation Financial assets measured at fair value Financial assets measured - Investments Financial assets not measured at fair value Financial assets not measured - Investments Off-balance sheet financial instruments Forward purchase of foreign exchange of foreign purchase Forward exchange sale of foreign Forward Forward purchase of Government purchase Securities Forward Forward sale of Government Forward Securities Purchase of equity future contracts of equity future Purchase Sale of equity future contracts Sale of equity future - Cash and bank balances with treasury banks - Balances with other banks - Lending to financial instruments - Advances - Assets held for sale - Other assets Financial liabilities not measured at fair value Financial liabilities not measured - Bills payable - Borrowings - Deposits and other accounts - Sub-ordinated loans - Sub-ordinated - Other liabilities On balance sheet financial instruments

NIB Bank Limited Annual Report 2016 69 Notes to the Financial Statements For the year ended December 31, 2016

Non-banking assets acquired in satisfaction of claims Non-banking assets acquired in satisfaction of claims are revalued on a periodic basis using professional valuers. The valuation is based on their assessment of the market value of the assets. The effect of changes in the unobservable inputs used in the valuations cannot be determined with certainty, accordingly a qualitative disclosure of sensitivity has not been presented in these financial statements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair values of quoted held-to-maturity securities and sub-ordinated loans are stated at market values. Fair value of unquoted equity securities have been stated at the lower of cost and Net Assets Value as per the latest available audited financial statements. Except for the above investment in unquoted equity securities and debt securities of which fair values are not available, fixed term advances of over one year, staff loans and fixed term deposits of over one year, the fair values of other on balance sheet financial assets and liabilities are not significantly different from their book value as these assets and liabilities are either short term in nature or are frequently re-priced. The fair values of investment in unquoted debt securities of which fair values are not available, fixed term advances, staff loans, fixed term deposits, other assets and other liabilities cannot be calculated with sufficient reliability due to non-availability of relevant active markets for similar assets and liabilities.

39. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES The Bank is organised into reportable segments as disclosed in note 6.19.1. These segments are managed by respective segment heads and the results of these segments are regularly reviewed by the Bank's President / Chief Executive, Executive Committee and the Board of Directors. Segment performance is reviewed on the basis of various factors including profit before taxation. Transactions between reportable segments are carried out on an arms length basis. The segment analysis with respect to business activity is as follows:

For the Year ended December 31, 2016 Corporate and Investment Commercial Retail Treasury Head Office / Adjustments* Banking Other (Rupees in ‘000) Net interest income 946,165 183,247 1,868,203 1,021,092 382,627 – Non mark-up income 961,818 302,714 469,103 671,429 1,986,092 – Net interest and non mark-up Income 1,907,983 485,961 2,337,306 1,692,521 2,368,719 – Total expenses including provisions (excluding Impairment) 534,169 1,460,439 3,762,183 239,985 6,105 – (Reversal) / impairment against investment – – – – 270,317 – Total expenses including provisions 534,169 1,460,439 3,762,183 239,985 276,422 – Segment net income/ (loss) before tax 1,373,814 (974,478) (1,424,877) 1,452,536 2,092,297 – Segment return on net assets (ROA) (%) 1.10% (3.56%) (1.28%) 0.81% – – Segment cost of funds (%) 5.30% 2.97% 3.83% 6.05% – –

For the Year ended December 31, 2015

Net interest income 769,925 364,386 2,162,971 1,128,182 216,607 – Non mark-up income 981,398 407,797 618,472 3,920,531 70,389 – Net interest and non mark-up income 1,751,323 772,183 2,781,443 5,048,713 286,996 – Total expenses including provisions (excluding Impairment) 1,011,039 1,355,756 4,011,621 231,966 – – Impairment against investment (2,190) – – 5,858 – – Total expenses including provisions 1,008,849 1,355,756 4,011,621 237,824 – – Segment net income / (loss) before tax 742,474 (583,573) (1,230,178) 4,810,889 286,996 – Segment return on net assets (ROA) (%) 0.46% (1.64%) (0.95%) 4.00% – – Segment cost of funds (%) 6.72% 2.69% 4.14% 7.47% – –

70 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

As at December 31, 2016 Corporate and Investment Commercial Retail Treasury Head Office / Adjustments* Banking Other (Rupees in ‘000)

Segment assets (gross) 94,077,558 26,982,320 74,183,746 116,057,140 14,626,978 (58,175,927) Segment non-performing loans 14,366,111 12,426,104 1,955,354 – 222,293 – Segment provision (including general provisions) 12,676,403 9,216,029 1,702,352 – 212,161 – Segment assets (net) 81,401,155 17,766,291 72,481,394 116,057,140 14,414,817 (58,175,929) Segment liabilities 78,151,625 17,239,190 71,534,062 115,346,947 1,044,165 (58,175,930)

As at December 31, 2015 Segment assets (gross) 118,852,170 32,518,122 85,931,625 79,888,059 9,687,060 (59,021,494) Segment non-performing loans 14,631,583 11,231,249 2,087,841 – 222,551 – Segment provision (including general provisions) 13,050,351 9,380,117 1,730,765 – 197,797 – Segment assets (net) 105,801,819 23,138,005 84,200,860 79,888,059 9,489,263 (59,021,494) Segment liabilities 100,580,107 22,201,904 82,968,618 79,339,895 287,350 (59,021,494)

*The respective segment assets and liabilities incorporate intersegment lending and borrowing, with appropriate transfer pricing. The adjustments column eliminates intersegment lending and borrowing.

40. RELATED PARTY TRANSACTIONS The Bank has related party transactions with its holding company (refer note 1), subsidiary (refer note 10.12), employee benefit plans (refer note 35) and its key management personnel. Transactions with related parties are executed on the same terms as those prevailing at the time for comparable transactions with unrelated parties except for staff loans which are on discounted rates as per industry practice. Salaries and allowances of the key management personnel are in accordance with the terms of their employment. Contributions to defined contribution plan are made in accordance with the terms of the contribution plan. The details of transactions with related parties is given below:

NIB Bank Limited Annual Report 2016 71 Notes to the Financial Statements For the year ended December 31, 2016 – – – – – – 536 (5,680) 24,696 39,905 60,780 55,100 55,987 2015 289,976 235,741 4,543,510 12,401,565 (4,528,301) (12,456,336) – 8,114 1,155 2016 39,905 55,100 44,503 Other related parties (18,027) (38,056) 235,741 962,989 950,233 3,856,898 2,699,218 1,660,000 2,733,344 (3,870,662) (1,680,974) 27,591,226 (27,801,667) – – – – – – – – – – 19 2015 (4,575) 43,898 72,906 24,565 35,728 33,583 502,558 (491,414) – – – – – – – – – 2016 (1,260) (1,895) 72,906 94,752 35,728 31,634 55,092 (33,246) 397,014 (397,953) Key Management Personnel – – – – – – – – – – – – 83 2015 912,440 962,989 3,333,607 3,333,607 23,766,262 (23,715,713) Associates – – – – – – – – – – – – – – (Rupees in ‘000) 2016 962,989 (962,989) (634,389) 3,333,607 (2,699,218) – – – – – – – – – – – – 644 2015 6,980 2,203 536,775 (541,552) 2,479,066 2,479,066 – – Subsidiaries – – – – – – – – – – – – 724 2,203 2016 (2,203) 2,479,066 (2,478,342) – – – – – – – – – – – – – – 136 171 2015 (1,820) 16,656 14,972 (3) – – – – – – – – – – – – – – Holding company 2016 171 (2,895) 12,074 14,972 Entities related to a retiring director during the year. During the year, bank has sold its 100% shareholding in PICIC AMC, therefore investment Mutual Funds ceased to be associates of bank. Balances outstanding as at the year end Advances At the beginning of year Addition during the year Adjustment (refer note 40.1.1) Repaid during the year At the end of year Deposits At the beginning of year Transfer from Associates Deposits during the year Exchange difference Adjustment (refer note 40.1.1 and 40.1.2) Withdrawal during the year At the end of year Investment in shares / mutual funds - cost At the beginning of year Transfer from Associate (refer note 40.1.2) Investments made during the year Investments sold / written off during the year At the end of year Receivables At the end of year Payables At the end of year 40.1 40.1.1 40.1.2

72 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016 – – 90 2015 9,654 21,391 30,341 14,387 105,603 105,083 – – 336 2016 3,866 12,764 84,549 15, 7 05 Other related parties 155,008 102,931 – – – – – – 2015 3,512 3,502 235,513 – – – – – – 2016 3,640 1,392 475,679 Key Management Personnel – – – – – – 991 2015 67,109 46,059 Associates – – – – – – – – – (Rupees in ‘000) 2016 – – – – – – – 2015 1,948 1,240 – – – – – – – – – Subsidiaries 2016 – – – – – – – – – 2015 – – – – – – – – – Holding company 2016

Capital Management The purpose of capital management at the Bank is to ensure efficient utilization in relation business requirements, growth, risk appetite, shareholders' returns and expectations. The Bank manages its capital structure and makes adjustments to it in the light of changes economic conditions, regulatory requirements and the risk profile of its activities. In order to maintain or adjust capital structure, Bank may issue / Tier 2 capital. The Bank ensures adherence to SBP's requirements by monitoring its capital adequacy on a regular basis. also closely monitors the capital adequacy requirements by applying stressed conditions. Banking operations are categorised as either Trading book or book, and Risk-Weighted Assets determined according to SBP requirements that seek to reflect the varying levels of risk attached Bank's On and Off-balance sheet exposures. Collateral, if any, is used as an outflow adjustment and applicable risk weights are applied to Net Adjusted Exposure. CAPITAL ASSESSMENT AND ADEQUACY AND ASSESSMENT CAPITAL Application Scope of The Basel III Framework is applicable to the Bank on a stand alone basis. Capital Adequacy Ratio (CAR) has been calculated in accordance with the guidelines as stipulated by State Bank of Pakistan vide BPRD Circular No. 06 August 15, 2013. The said circular has revised Basel II Framework with III Capital reforms to further strengthen the capital related rules. These instructions were effective from December 31, 2013 in a phased manner with full implementation intended by December 2019. Income / Expense for the year Mark - up / return interest earned on advances Mark - up / return interest expensed on deposits Dividend income from shares / mutual funds Directors remuneration Directors travelling expense Remuneration to key management personnel Contribution to Provident Fund Rent expense Commission income 41.1.1 40.2 41 41.1

NIB Bank Limited Annual Report 2016 73 Notes to the Financial Statements For the year ended December 31, 2016

Cash and near Cash collateral includes Government of Pakistan Securities, Shares listed on the stock exchanges, Cash and Cash equivalents (deposits / margins, lien on deposits). The Bank has complied with all regulatory capital requirements as at the reporting date.

41.1.2 Capital Structure The Bank's regulatory capital base comprise of:

(a) Tier 1 capital which includes fully issued, subscribed and paid up capital, balance in share premium account, reserves and accumulated profits/ losses. (b) Tier 2 capital consists of general provision for loan losses (subject to 1.25% of Risk Weighted Asset), sub- ordinated loans and surplus on revaluation of securities. The issued, subscribed and paid up capital of the Bank is Rs. 103,028,512 thousands as at December 31, 2016, comprising of 10,302,851,164 shares of Rs. 10 each. Quoted, unsecured and eligible for Tier 2 Term Finance Certificates (TFCs) of Rs. 4,198,035 thousands were issued on June 19, 2014 having the tenure of 8 years. The said TFCs have been issued as per Basel-III guidelines.

2016 2015 (Rupees in ‘000) 41.2Common Equity Tier 1 capital (CET1): Instruments and reserves 1 Fully Paid-up Capital/ Capital deposited with SBP 103,028,512 103,028,512 2 Balance in Share Premium Account – – 3 Reserve for issue of Bonus Shares – – 4 Discount on Issue of shares (45,769,623) (45,769,623) 5 General/ Statutory Reserves 1,281,655 997,582 6 Gain/(Losses) on derivatives held as Cash Flow Hedge – – 7 Unappropriated/unremitted profits/ (losses) (40,057,798) (41,195,205) 8 Minority Interests arising from CET1 capital instruments issued to third parties by consolidated bank subsidiaries (amount allowed in CET1 capital of the consolidation group) – –

9 CET 1 before Regulatory Adjustments 18,482,746 17,061,266 10 Total regulatory adjustments applied to CET1 (Note 41.2.1) (4,858,857) (5,527,950) 11 Common Equity Tier 1 13,623,889 11,533,316 Additional Tier 1 (AT 1) Capital 12 Qualifying Additional Tier 1 capital instruments plus any related share premium – – 13 of which: Classified as equity – – 14 of which: Classified as liabilities – – 15 Additional Tier-1 capital instruments issued to third parties by consolidated subsidiaries (amount allowed in group AT1 ) – – 16 of which: instrument issued by subsidiaries subject to phase out – – 17 AT1 before regulatory adjustments – – 18 Total regulatory adjustment applied to AT1 capital (Note 41.2.2) – (743,502) 19 Additional Tier 1 capital after regulatory adjustments – – 20 Additional Tier 1 capital recognized for capital adequacy Ð Ð

74 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

2016 2015 (Rupees in ‘000)

21 Tier 1 Capital (CET1 + admissible AT1) (11+20) 13,623,889 11,533,316

Tier 2 Capital 22 Qualifying Tier 2 capital instruments under Basel III plus any related share premium 4,193,837 4,195,516 23 Tier 2 capital instruments subject to phaseout arrangement issued under pre-Basel III rules – – 24 Tier 2 capital instruments issued to third parties by consolidated subsidiaries (amount allowed in group tier 2) – – 25 of which: instruments issued by subsidiaries subject to phase out – – 26 General provisions or general reserves for loan losses-up to maximum of of 1.25% of Credit Risk Weighted Assets 163,049 154,372 27 Revaluation Reserves (net of taxes) 111,015 52,840 28 of which: Revaluation reserves on fixed assets – – 29 of which: Unrealized gains/losses on AFS 111,015 52,840 30 Foreign Exchange Translation Reserves – – 31 Undisclosed/Other Reserves (if any) – –

32 T2 before regulatory adjustments 4,467,901 4,402,728 33 Total regulatory adjustment applied to T2 capital (Note 41.2.3) (99,960) (938,988) 34 Tier 2 capital (T2) after regulatory adjustments 4,367,941 3,463,740 35 Tier 2 capital recognized for capital adequacy 4,367,941 3,463,740 36 Portion of Additional Tier 1 capital recognized in Tier 2 capital – – 37 Total Tier 2 capital admissible for capital adequacy 4,367,941 3,463,740 38 TOTAL CAPITAL (T1 + admissible T2) (21+37) 17,991,830 14,997,056

39 Total Risk Weighted Assets (RWA) {for details refer Note 41.5} 145,354,381 126,438,309

Capital Ratios and buffers (in percentage of risk weighted assets) 40 CET1 to total RWA 9.37% 9.12% 41 Tier-1 capital to total RWA 9.37% 9.12% 42 Total capital to total RWA 12.38% 11.86% 43 Bank specific buffer requirement (minimum CET1 requirement plus capital conservation buffer plus any other buffer requirement) 6.65% 6.25% 44 of which: capital conservation buffer requirement 0.65% 0.25% 45 of which: countercyclical buffer requirement – – 46 of which: D-SIB or G-SIB buffer requirement – – 47 CET1 available to meet buffers (as a percentage of risk weighted assets) 2.72% 2.87%

National minimum capital requirements prescribed by SBP 48 CET1 minimum ratio 6.00% 6.00% 49 Tier 1 minimum ratio 7.50% 7.50% 50 Total capital minimum ratio 10.00% 10.00%

NIB Bank Limited Annual Report 2016 75 Notes to the Financial Statements For the year ended December 31, 2016

2016 2015 Amounts subject to Pre-Basel III treatment (Rupees in ‘000)

Regulatory Adjustments and Additional Information

41.2.1Common Equity Tier 1 capital: Regulatory adjustments

1 Goodwill (net of related deferred tax liability) – – 2 All other intangibles (net of any associated deferred tax liability) (616,873) (938,615) 3 Shortfall in provisions against classified assets – – 4 Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related tax liability) (1,389,118) (926,079) (1,508,751) 5 Defined-benefit pension fund net assets – – 6 Reciprocal cross holdings in CET1 capital instruments of banking, financial and insurance entities – – 7 Cash flow hedge reserve – – 8 Investment in own shares/ CET1 instruments – – 9 Securitization gain on sale – – 10 Capital shortfall of regulated subsidiaries – – 11 Deficit on account of revaluation from bank's holdings of fixed assets/ AFS – – 12 Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) – – 13 Significant investments in the common stocks of banking, financial and insurance entities that are outside the scope of regulatory consolidation (amount above 10% threshold) – – 14 Deferred Tax Assets arising from temporary differences (amount above 10% threshold, net of related tax liability) (2,852,866) (1,901,911) (1,813,118) 15 Amount exceeding 15% threshold – (523,964) 16 of which: significant investments in the common stocks of financial entities – (233,301) 17 of which: deferred tax assets arising from temporary differences – (290,663) 18 National specific regulatory adjustments applied to CET1 capital – – 19 Investments in TFCs of other banks exceeding the prescribed limit – – 20 Any other deduction specified by SBP (mention details) – – 21 Adjustment to CET1 due to insufficient AT1 and Tier 2 to cover deductions – (743,502)

22 Total regulatory adjustments applied to CET1 (sum of 1 to 21) (4,858,857) (5,527,950)

76 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

2016 2015 Amounts subject to Pre-Basel III treatment (Rupees in ‘000)

Regulatory Adjustments and Additional Information

41.2.2 Additional Tier 1 & Tier 1 Capital: regulatory adjustments 23 Investment in mutual funds exceeding the prescribed limit [SBP specific adjustment] – – – 24 Investment in own AT1 capital instruments – – – 25 Reciprocal cross holdings in Additional Tier 1 capital instruments of banking, financial and insurance entities – – – 26 Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) – – – 27 Significant investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation – – – 28 Portion of deduction applied 50:50 to Tier 1 and Tier 2 capital based on pre-Basel III treatment which, during transitional period, remain subject to deduction from additional Tier 1 capital – – (743,502) 29 Adjustments to Additional Tier 1 due to insufficient Tier 2 to cover deductions – – – 30 Total regulatory adjustment applied to AT1 capital (sum of 23 to 29) Ð Ð (743,502)

41.2.3 Tier 2 Capital: regulatory adjustments

31 Portion of deduction applied 50:50 to Tier 1 and Tier 2 capital based on pre-Basel III treatment which, during transitional period, remain subject to deduction from Tier 2 capital – – (743,502) 32 Reciprocal cross holdings in Tier 2 instruments of banking, financial and insurance entities (99,960) – (195,486) 33 Investment in own Tier 2 capital instrument – – – 34 Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) – – – 35 Significant investments in the capital instruments issued by banking, financial and insurance entities that are outside the scope of regulatory consolidation – – – 36 Total regulatory adjustment applied to T2 capital (sum of 31 to 35) (99,960) Ð (938,988)

NIB Bank Limited Annual Report 2016 77 Notes to the Financial Statements For the year ended December 31, 2016

2016 2015 (Rupees in ‘000)

41.2.4 Additional Information Risk Weighted Assets subject to pre-Basel III treatment 37 Risk weighted assets in respect of deduction items (which during the transitional period will be risk weighted subject to Pre-Basel III Treatment) 2,827,989 4,982,803 (i) of which: deferred tax assets 2,827,989 4,982,803 (ii) of which: Defined-benefit pension fund net assets – – (iii) of which: Recognized portion of investment in capital of banking, financial and insurance entities where holding is less than 10% of the issued common share capital of the entity – – (iv) of which: Recognized portion of investment in capital of banking, financial and insurance entities where holding is more than 10% of the issued common share capital of the entity – –

Amounts below the thresholds for deduction (before risk weighting) 38 Non-significant investments in the capital of other financial entities – – 39 Significant investments in the common stock of financial entities – 991,336 40 Deferred tax assets arising from temporary differences (net of related tax liability) 1,555,068 1,235,077

Applicable caps on the inclusion of provisions in Tier 2 41 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to standardized approach (prior to application of cap) 163,049 154,372 42 Cap on inclusion of provisions in Tier 2 under standardized approach 163,049 154,372 43 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to internal ratings-based approach (prior to application of cap) – – 44 Cap for inclusion of provisions in Tier 2 under internal ratings-based approach – –

41.3 Capital Structure Reconciliation

41.3.1 As per published Under regulatory financial scope of statements consolidation 2016 2016 (Rupees in ‘000) Assets Cash and balances with treasury banks 8,766,811 8,766,811 Balances with other banks 777,302 777,302 Lending to financial institutions 3,243,130 3,243,130 Investments (including assets held for sale) 124,489,098 124,489,098 Advances 87,305,928 87,305,928 Operating fixed assets 2,796,052 2,796,052 Intangible assets 599,045 599,045 Deferred tax assets 8,625,041 8,625,041 Other assets 7,342,461 7,342,461

Total assets 243,944,868 243,944,868

78 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

As per published Under regulatory financial statements scope of consolidation 2016 2016 (Rupees in ‘000) Liabilities & Equity Bills payable 2,634,398 2,634,398 Borrowings 117,174,817 117,174,817 Deposits and other accounts 97,072,367 97,072,367 Sub-ordinated loans 4,193,837 4,193,837 Liabilities against assets subject to finance lease – – Deferred tax liabilities – – Other liabilities 4,064,640 4,064,640

Total liabilities 225,140,059 225,140,059 Share capital / Head office capital account 57,258,889 57,258,889 Reserves 1,281,655 1,281,655 Unappropriated/Unremitted profit/(losses) (40,057,798) (40,057,798) Minority Interest – – Surplus on revaluation of assets 322,063 322,063

Total equity 18,804,809 18,804,809 Total liabilities & equity 243,944,868 243,944,868

41.3.2 As per published Under regulatory financial statements scope of consolidation Reference 2016 2016 (Rupees in ‘000)

Assets Cash and balances with treasury banks 8,766,811 8,766,811 Balances with other banks 777,302 777,302 Lending to financial institutions 3,243,130 3,243,130 Investments 124,489,098 124,489,098 of which: Non-significant capital investments in the capital instruments of banking, financial and insurance entities exceeding 10% threshold – – a of which: significant capital investments in the capital instruments issued by banking, financial and insurance entities exceeding regulatory threshold – – b of which: Mutual Funds exceeding regulatory threshold – – c of which: reciprocal crossholding of capital instrument (separate for CET1, AT1, T2) – – d of which: others (mention details) – – e Advances 87,305,928 87,305,928 shortfall in provisions/excess of total EL amount over eligible provisions under IRB – – f general provisions reflected in Tier 2 capital 163,049 163,049 g Operating Fixed Assets 2,796,052 2,796,052 of which: Intangibles 17,827 17,827 k

NIB Bank Limited Annual Report 2016 79 Notes to the Financial Statements For the year ended December 31, 2016

As per published Under regulatory financial statements scope of consolidation Reference 2016 2016 (Rupees in ‘000) Intangible assets 599,045 599,045 of which: Intangibles 599,046 599,046 k Deferred Tax Assets 8,625,041 8,625,041 of which: DTAs that rely on future profitability excluding those arising from temporary differences 2,315,197 2,315,197 h of which: DTAs arising from temporary differences exceeding regulatory threshold 6,309,844 6,309,844 i Other assets 7,342,461 7,342,461 of which: Goodwill – – j of which: Intangibles – – k of which: Defined-benefit pension fund net assets – – l Total assets 243,944,868 243,944,868

As per published Under regulatory financial statements scope of consolidation Reference 2016 2016 Liabilities & Equity (Rupees in ‘000) Bills payable 2,634,398 2,634,398 Borrowings 117,174,817 117,174,817 Deposits and other accounts 97,072,367 97,072,367 Sub-ordinated loans 4,193,837 4,193,837 of which: eligible for inclusion in AT1 - - m of which: eligible for inclusion in Tier 2 4,193,837 4,193,837 n Liabilities against assets subject to finance lease - - Deferred tax liabilities - - of which: DTLs related to goodwill - - o of which: DTLs related to intangible assets - - p of which: DTLs related to defined pension fund net assets - - q of which: other deferred tax liabilities - - r Other liabilities 4,064,640 4,064,640

Total liabilities 225,140,059 225,140,059 Share capital 57,258,889 57,258,889 of which: amount eligible for CET1 57,258,889 57,258,889 s of which: amount eligible for AT1 - - t Reserves 1,281,655 1,281,655 of which: portion eligible for inclusion in CET1(provide breakup) 1,281,655 1,281,655 u of which: portion eligible for inclusion in Tier 2 - - v Unappropriated profit/ (losses) (40,057,798) (40,057,798) w Minority Interest - - of which: portion eligible for inclusion in CET1 - - x of which: portion eligible for inclusion in AT1 - - y of which: portion eligible for inclusion in Tier 2 - - z Surplus on revaluation of assets 322,063 322,063 of which: Revaluation reserves on Property - aa of which: Unrealized Gains/Losses on AFS 111,015 111,015 In case of Deficit on revaluation (deduction from CET1) - - ab

Total liabilities & Equity 243,944,868 243,944,868

80 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

Component of Source based regulatory capital on reference number reported by bank from step 2 (Rupees in ‘000)

Common Equity Tier 1 capital (CET1): Instruments and reserves 1 Fully Paid-up Capital/ Capital deposited with SBP 103,028,512 2 Balance in Share Premium Account (45,769,623) (s) 3 Reserve for issue of Bonus Shares – 4 General/ Statutory Reserves 1,281,655 (u) 5 Gain/(Losses) on derivatives held as Cash Flow Hedge – 6 Unappropriated/unremitted profits/ (losses) (40,057,798) (w) 7 Minority Interests arising from CET1 capital instruments issued to third party by consolidated bank subsidiaries (amount allowed in CET1 capital of the consolidation group) – (x) 8 CET 1 before Regulatory Adjustments 18,482,746 Common Equity Tier 1 capital: Regulatory adjustments 9 Goodwill (net of related deferred tax liability) – (j) - (o) 10 All other intangibles (net of any associated deferred tax liability) (616,873) (k) - (p) 11 Shortfall of provisions against classified assets – (f) 12 Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related tax liability) (1,389,118) {(h) - (r} * x% 13 Defined-benefit pension fund net assets – {(l) - (q)} * x% 14 Reciprocal cross holdings in CET1 capital instruments – (d) 15 Cash flow hedge reserve – 16 Investment in own shares/CET1 instruments – 17 Securitization gain on sale – 18 Capital shortfall of regulated subsidiaries – 19 Deficit on account of revaluation from bank's holdings of fixed assets/AFS – (ab) 20 Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) – (a) - (ac) - (ae) 21 Significant investments in the capital instruments issued by banking, financial and insurance entities that are outside the scope of regulatory consolidation (amount above 10% threshold) – (b) - (ad) - (af) 22 Deferred Tax Assets arising from temporary differences (amount above 10% threshold, net of related tax liability) (2,852,866) (i) 23 Amount exceeding 15% threshold – 24 of which: significant investments in the common stocks of financial entities – 25 of which: deferred tax assets arising from temporary differences – 26 National specific regulatory adjustments applied to CET1 capital – 27 of which: Investment in TFCs of other banks exceeding the prescribed limit – 28 of which: Any other deduction specified by SBP (mention details) – 29 Regulatory adjustment applied to CET1 due to insufficient AT1 and Tier 2 to cover deductions – 30 Total regulatory adjustments applied to CET1 (sum of 9 to 29) (4,858,857) 31 Common Equity Tier 1 13,623,889

NIB Bank Limited Annual Report 2016 81 Notes to the Financial Statements For the year ended December 31, 2016

Component of Source based regulatory capital on reference number reported by bank from step 2 (Rupees in ‘000) Additional Tier 1 (AT 1) Capital 32 Qualifying Additional Tier-1 instruments plus any related share premium – 33 of which: Classified as equity – (t) 34 of which: Classified as liabilities – (m) 35 Additional Tier-1 capital instruments issued by consolidated subsidiaries and held by third parties (amount allowed in group AT 1) – (y) 36 of which: instrument issued by subsidiaries subject to phase out – 37 AT1 before regulatory adjustments –

Additional Tier 1 Capital: regulatory adjustments 38 Investment in mutual funds exceeding the prescribed limit (SBP specific adjustment) – 39 Investment in own AT1 capital instruments – 40 Reciprocal cross holdings in Additional Tier 1 capital instruments – 41 Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) – (ac) 42 Significant investments in the capital instruments issued by banking, financial and insurance entities that are outside the scope of regulatory consolidation – (ad) 43 Portion of deduction applied 50:50 to core capital and supplementary capital based on pre-Basel III treatment which, during transitional period, remain subject to deduction from Tier-1 capital – 44 Regulatory adjustments applied to Additional Tier 1 due to insufficient Tier 2 to cover deductions – 45 Total of Regulatory Adjustment applied to AT1 capital Ð 46 Additional Tier 1 capital – 47 Additional Tier 1 capital recognized for capital adequacy – 48 Tier 1 Capital (CET1 + admissible AT1) (31+47) 13,623,889

Tier 2 Capital 49 Qualifying Tier 2 capital instruments under Basel III plus any related share premium 4,193,837 (n) 50 Capital instruments subject to phase out arrangement from tier 2 (Pre-Basel III instruments) – 51 Tier 2 capital instruments issued to third party by consolidated subsidiaries (amount allowed in group tier 2) – (z) 52 of which: instruments issued by subsidiaries subject to phase out – 53 General Provisions or general reserves for loan losses-up to maximum of 1.25% of Credit Risk Weighted Assets 163,049 54 Revaluation Reserves 111,015 55 of which: Revaluation reserves on Property – portion of (aa)

82 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

Component of Source based regulatory capital on reference number reported by bank from step 2 (Rupees in ‘000)

56 of which: Unrealized Gains/Losses on AFS 111,015 57 Foreign Exchange Translation Reserves - (v) 58 Undisclosed/Other Reserves (if any) -

59 T2 before regulatory adjustments 4,467,901

Tier 2 Capital: regulatory adjustments 60 Portion of deduction applied 50:50 to core capital and supplementary capital based on pre-Basel III treatment which, during transitional period, remain subject to deduction from Tier 2 capital - 61 Reciprocal cross holdings in Tier 2 instruments (99,960) 62 Investment in own Tier 2 capital instrument - 63 Investments in the capital instruments of banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) - (ae) 64 Significant investments in the capital instruments issued by banking, financial and insurance entities that are outside the scope of regulatory consolidation - (af) 65 Amount of Regulatory Adjustment applied to T2 capital (99,960) 66 Tier 2 capital (T2) 4,367,941 67 Tier 2 capital recognized for capital adequacy 4,367,941 68 Excess Additional Tier 1 capital recognized in Tier 2 capital - 69 Total Tier 2 capital admissible for capital adequacy 4,367,941

70 TOTAL CAPITAL (T1 + admissible T2) (48+69) 17,991,830

NIB Bank Limited Annual Report 2016 83 Notes to the Financial Statements For the year ended December 31, 2016

41.4 Main Features Template of Regulatory Capital Instruments

Sr. No. Main Features Common Shares Instrument - 2 1 Issuer NIB Bank Limited NIB Bank Limited 2 Unique identifier (KSE Symbol) NIB NIBTFC2 3 Governing law(s) of the instrument Capital Market Laws Capital Market Laws

Regulatory treatment 4 Transitional Basel III rules Common equity Tier 1 Tier 2 5 Post-transitional Basel III rules Common equity Tier 1 Tier 2 6 Eligible at solo/ group/ group & solo Group & standalone Group & standalone 7 Instrument type Ordinary Shares Subordinated Debt 8 Amount recognized in regulatory capital (Currency in PKR thousands) PKR 103,028,512 PKR 4,193,837 9 Par value of instrument PKR 10 PKR 5,000 10 Accounting classification Shareholder equity Liability - Subordinated Loans 11 Original date of issuance 2003 19-June-2014 12 Perpetual or dated Perpetual Dated 13 Original maturity date Not applicable 19-June-2022 14 Issuer call subject to prior supervisory approval No Yes (SBP's) 15 Optional call date, contingent call dates and redemption amount Not applicable Not applicable 16 Subsequent call dates, if applicable Not applicable Not applicable

Coupons / dividends 17 Fixed or floating dividend/ coupon Not applicable Floating 18 Coupon rate and any related index/ benchmark Not applicable Six months KIBOR (Ask side)+1.15 19 Existence of a dividend stopper Not applicable Not applicable 20 Fully discretionary, partially discretionary or mandatory Fully discretionary Mandatory 21 Existence of step up or other incentive to redeem Not applicable Not applicable 22 Non cumulative or cumulative Not applicable Non cumulative

23 Convertible or non-convertible 24 If convertible, conversion trigger (s) Not applicable Upon the occurrence of a Point of Non-Viability PONV event as defined below, SBP may at its option, fully and permanently convert the TFCs into common shares of the Bank and / or have them immediately written off (either partially or in full).

84 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

Sr. No. Main Features Common Shares Instrument - 2 25 If convertible, fully or partially Not applicable As the case may be 26 If convertible, conversion rate Not applicable At a minimum conversion rate of Rs. 2.36 per share.

27 If convertible, mandatory or optional conversion Not applicable Mandatory

28 If convertible, specify instrument type convertible into Not applicable Shares 29 If convertible, specify issuer of instrument it converts into Not applicable NIB Bank Limited

30 Write-down feature 31 If write-down, write-down trigger(s) Not applicable Explained at 24 above 32 If write-down, full or partial Not applicable Not applicable 33 If write-down, permanent or temporary Not applicable Not applicable 34 If temporary write-down, description of write-up mechanism Not applicable Not applicable 35 Position in subordination hierarchy in liquidation (specify instrument type immediately senior to instrument Not applicable Not applicable 36 Non-compliant transitioned features No No 37 If yes, specify non-compliant features Not applicable Not applicable

NIB Bank Limited Annual Report 2016 85 Notes to the Financial Statements For the year ended December 31, 2016

41.5 Capital Adequacy Objectives of Managing Capital Capital Management aims to ensure that there is sufficient capital to meet the capital requirements of the Bank as determined by the underlying business strategy and the minimum regulatory requirements of the SBP.

Bank's capital management seeks: – to comply with the capital requirements set by the regulators; – to maintain a strong capital base so as to maintain investor, depositor and market confidence and to sustain future development of the business; – to safeguard the Bank's ability to continue as a going concern so that it can continue to provide adequate return to shareholders; – availability of adequate capital at a reasonable cost so as to enable the Bank to expand; and – to protect the Bank against unexpected events.

Externally Imposed Capital Requirements In order to strengthen the solvency of Banks, SBP vide BSD Circular No. 07 of 2009 dated April 15, 2009 has asked the Banks to raise their minimum paid up capital to Rs. 10 billion free of losses by the end of financial year 2013. SBP through its BSD Circular No. 09 dated April 15, 2009 has asked Banks to achieve the minimum Capital Adequacy Ratio (CAR) of 10% on standalone as well as on consolidated basis latest by December 31, 2010. The paid up capital and CAR of the Bank stands at Rs. 103 billion and 12.38% respectively of its risk weighted exposure as at December 31, 2016. The Bank has complied with all externally imposed capital requirements as at year end. The capital requirements for the banking group as per the major risk categories should be indicated in the manner given below:

Capital Requirements Risk Weighted Assets 2016 2015 2016 2015 (Rupees in ‘000) Credit Risk Portfolios subject to Simple Approach On-Balance Sheet Corporate 6,365,370 5,502,097 63,653,700 55,020,965 Sovereign 4,622 9,174 46,221 91,740 Retail 607,314 552,705 6,073,143 5,527,050 Banks 70,059 91,176 700,590 911,755 Public Sector Entities 53,894 46,226 538,941 462,261 Past Due Loans 629,478 420,442 6,294,780 4,204,423 Claims against Residential Mortgage 56,238 66,366 562,383 663,659 Investments in premises, plant and equipment and all other fixed assets 277,823 303,832 2,778,226 3,038,323 Other assets 1,060,110 1,230,152 10,601,100 12,301,520 9,124,908 8,222,170 91,249,084 82,221,696

Off-Balance Sheet Market related 28,057 18,659 280,568 186,593 Non-market related 3,152,622 2,486,816 31,526,217 24,868,159 3,180,679 2,505,475 31,806,785 25,054,752

86 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

Capital Requirements Risk Weighted Assets 2016 2015 2016 2015 (Rupees in ‘000) Equity Exposure Risk in the Banking Book Listed 117,960 33,473 1,179,604 334,731 Unlisted 8,149 8,162 81,485 81,623

126,109 41,635 1,261,089 416,354 12,431,696 10,769,280 124,316,958 107,692,802

Market Risk Capital Requirement for portfolios subject to Standardized Approach Interest rate risk 111,731 46,634 1,117,313 466,338 Equity position risk etc. 597,295 565,200 5,972,950 5,652,000 Foreign exchange risk etc. 14,788 40,580 147,875 405,800

Total Market Risk 723,814 652,414 7,238,138 6,524,138 Operational Risk Capital Requirement for operational risks 1,379,929 1,222,137 13,799,285 12,221,369

14,535,439 12,643,831 145,354,381 126,438,309

2016 2015 Capital Adequacy Ratio Required Actual Required Actual CET1 to total RWA 6.00% 9.37% 6.00% 9.12% Tier-1 capital to total RWA 7.50% 9.37% 7.50% 9.12% Total capital to total RWA 10.00% 12.38% 10.00% 11.86%

41.6 Credit Risk: subject to Standardised Approach The Bank has adopted Standardized approach for calculation of capital charge against credit risk in line with SBP's requirements. For domestic claims, External Credit Assessment Institutions (ECAIs) recommended by the SBP, namely Pakistan Credit Rating Agency Limited (PACRA) and JCR-VIS Credit Rating Company Limited (JCR- VIS) are used. For claims on foreign entities, ratings assigned by Fitch, Standard and Poor`s, and Moody`s are used. Types of exposure for which each agency is used in the year ended December 31, 2016 are as follows:

Other (S&P / Exposures PACRA JCR-VIS Moody's / Fitch) Corporate ✓ ✓ – Banks ✓ ✓ ✓ Sovereigns – – ✓ Public Sector Enterprises ✓ ✓ –

NIB Bank Limited Annual Report 2016 87 Notes to the Financial Statements For the year ended December 31, 2016

41.7 The State Bank of Pakistan (SBP) through its BPRD Circular No. 06 of 2013 has issued instructions regarding implementation of parallel run of leverage ratio reporting and its components from December 31, 2013 to December 31, 2017. During this period the final calibration, and any further adjustments to the definition, will be completed, with a view to set the leverage ratio as a separate capital standard on December 31, 2018. Banks are required to disclose the leverage ratio from December 31, 2015. The Basel III leverage ratio is defined as the capital measure (the numerator) divided by the exposure measure (the denominator), with this ratio expressed as a percentage:

Tier 1 capital (after related deductions) Leverage Ratio = Total Exposure

As at December 31, 2016 the Bank’s Leverage ratio stood at 3.34% (minimum requirement of 3.0% ).

2016 2015 (Rupees in ‘000) On-Balance Sheet Assets Cash and balances with treasury banks 8,766,811 10,052,543 Balances with other banks 777,302 1,645,086 Lendings to financial institutions 3,243,130 1,599,044 Investments (including assets held for sale) 124,489,098 98,856,180 Advances 87,305,928 110,668,994 Operating fixed assets 2,796,052 3,086,446 Deferred tax assets 8,625,041 9,539,749 Financial Derivatives (A.1) 175,613 135,276 Other assets 7,765,893 7,913,194 Total Assets (A) 243,944,868 243,496,512

Derivatives (On-Balance Sheet) Interest Rate – – Equity – – Foreign Exchange & gold 175,613 135,276 Precious Metals (except gold) – – Commodities – – Credit Derivatives (protection brought & sold) – – Any other derivatives – – Total Derivatives (A.1) 175,613 135,276

Off-Balance Sheet Items excluding derivatives Direct Credit Substitutes (i.e. Acceptances, general guarantees for indebtness etc.) 8,567,031 6,543,941 Performance-related Contingent Liabilities (i.e. Guarantees) 28,073,029 23,301,861 Trade-related Contingent Liabilities (i.e. Letter of Credits) 16,173,250 22,019,529 Lending of securities or posting of securities as collaterals 86,992,513 – Undrawn committed facilities (which are not cancellable) 6,196,257 4,229,045 Unconditionally cancellable commitments 11,747,853 4,559,498 Commitments in respect of operating leases – – Commitments for the acquisition of operating fixed assets 62,820 15,255 Other commitments 6,280,440 2,618,370

Total Off-Balance Sheet Items excluding Derivatives (B) 164,093,193 63,287,499

88 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

2016 2015 (Rupees in ‘000) Commitments in respect of Derivatives - Off Balance Sheet Items (Derivatives having negative fair value are also included) Interest Rate – – Equity – – Foreign Exchange & gold 414,247 189,323 Precious Metals (except gold) – – Commodities – – Credit Derivatives (protection sold and bought)* – – Other derivatives – – Total Derivatives (C) 414,247 189,323

Tier-1 Capital 13,623,889 11,533,316 Total Exposures (sum of A, B and C) 408,452,308 306,973,334 Leverage Ratio 3.34% 3.76%

42 RISK MANAGEMENT The risk management framework of NIB is approved by the Board of Directors (“BOD”) and implemented by the senior management. The Bank’s risk management policies are established to identify and analyze the risks faced by the Bank, to set standard and appropriate risk limits and controls to ensure quality of portfolio and credit process. Risk management policies are reviewed annually to reflect changes in economic environment, market conditions and products offerings. The BOD sets forth the vision and strategy of NIB and has entrusted the monitoring to the Board’s Risk Management Committee (“BRMC”), which is an oversight committee and meets at least quarterly. Findings of the BRMC are escalated to the BOD. Terms and references of BRMC are documented and duly approved by the BOD and broadly includes oversight responsibility at the highest level under the Risk Management Governance Framework. The BRMC relies on three management committees namely the Asset Liability Committee (“ALCO”), the Credit Risk Committee (“CRC”) and the Operational Risk Committee (“ORC”), to identify, manage and monitor risks.

Asset Liability Committee (“ALCO”) The ALCO functions as the top operational unit for managing the statement of financial position within the performance/risk parameters laid down by the BOD. Its objective is to derive the most appropriate strategy for NIB in terms of mix of assets & liabilities given future expectations and potential consequence of interest rate movements, liability constraints, and foreign currency exchange exposure and capital adequacy.

Credit Risk Committee (“CRC”) In our normal business activities there is a need to manage effectively potential credit risk. To address this risk, Credit Risk Committee (CRC) is established under the leadership of the Chief Risk Officer (CRO) of the Bank and membership comprises the President and Senior Management of the Bank. The main objective of the CRC is to ensure effective and proactive management of Credit Risk throughout the Bank in accordance with the Risk Management Framework and related Risk Policies and Procedures. Terms and references of the CRC, which meets six times a calendar year, broadly include the following: To ensure that all relevant risk policies of the Bank are developed, implemented and are not in conflict with any of the applicable laws and regulations. To oversee implementation of credit risk related policies and procedures relevant to all business units through review of standard MIS decks. To ensure that all activities are in compliance with the Prudential Regulations and also with the policies and controls established by the relevant units of the Bank through periodic review of business issues highlighted in internal / external audit reports and SBP Inspection Report.

NIB Bank Limited Annual Report 2016 89 Notes to the Financial Statements For the year ended December 31, 2016

To review stress testing on portfolio considering the major factors like interest rate sensitivity, inflation, Rupee devaluation, fluctuation in oil prices and /or global meltdown etc. To review the credit portfolio, primarily through Key Risk Indicators, and to assess: – quality of the portfolio; – recovery of remedial accounts; – variance analysis of actual with plan and forecasts – portfolio exceptions To advise business where activities are not aligned with control requirements or risk appetite and to recommend Risk Policies.

Operational Risk Committee (“ORC”) In our normal business activities there is a need to effectively manage potential risk arising out of banking operation of the Bank. To address this risk, Operational Risk Committee (ORC) is established under the leadership of the President of the Bank and membership comprises the CRO and Senior Management of the Bank. The main objective of the ORC is to ensure effective and proactive management of Operational Risk throughout the Bank in accordance with the Risk Management Framework and related Risk Policies and Procedures. Terms and references of the ORC, which meets on a monthly basis, broadly include the following: To ensure operational risk identification and measurement covers all activities/products/processes of the Bank, and compliant with the Bank's standards and applicable regulations, and that risk control and risk origination decisions are properly informed. To develop, maintain and review a consolidated MIS of key operational risks in the Bank in the form of Risk & Control Assessment Matrix. To monitor all material Operational Risk exposures and key external trends, through KRIs and appropriate management action as per defined thresholds, in accordance with Operational Risk policies and procedures. To review Ops Loss Data (OLD) and take proactive measures to reduce Ops Losses. To direct appropriate action in response to material events, risk issues or themes that come to the Committee's attention. To ensure any areas of potential overlap with another entity or Risk Control Area, Business or Function are notified to the affected entity Risk Control Owner, Business or Function Head.

Risk Management Organisation at NIB The Chief Risk Officer (“CRO”) is responsible for enterprise wide risk management and implementation of the overall risk management framework of NIB. In this respect, the CRO has to ensure that the risk organisation structure of NIB is equipped with the best people, policies and processes, which enable it to perform efficiently and effectively. The CRO is supported by a Chief Operating Officer - Risk responsible for Risk Policies & Procedures, Portfolio Risk and Country Risk Assessment, and five Risk Heads, responsible for Corporate, Trade Finance, Commercial/SME and Consumer Finance businesses and Market, Liquidity and Operational Risks respectively and they are responsible for ensuring the implementation of NIB’s risk framework, Bank’s policies and Central Bank regulations in their respective domains.

42.1 Credit Risk Credit risk is the risk that a counterparty or customer will be unable to pay amounts in full when due. NIB’s main credit exposure arises from the risk of failure by a client or counterparty to meet its contractual obligations. The risks are inherent in loans and bills receivable from non-bank customers, commitments to lend, repurchase agreements, securities borrowing and lending transactions, and contingent liabilities. Settlement risk is the risk of loss due to the failure of an entity to honor its obligations to deliver cash, securities or other assets as contractually agreed. Clean risk at liquidation or settlement risk occurs when items of agreed upon original equal value are not

90 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

simultaneously exchanged between counterparties and/or when items are released without knowledge that counter- value items have been received by the Bank. Typically the duration is intra-day, overnight/over weekend, or in some situations even longer. The risk is that we deliver but do not receive delivery. In this situation 100% of the principal amount is at risk. The risk may be larger than 100% if in addition there was an adverse price fluctuation between the contract price and the market price. Cross-border risk is the risk that we will be unable to obtain payment from our customers or third parties on their contractual obligations as a result of certain actions taken by foreign governments, chiefly relating to convertibility and transferability of foreign currency. Cross-border assets comprise loans and advances, interest-bearing deposits with other banks, trade and other bills, acceptances, amounts receivable under finance leases, certificates of deposit and other negotiable paper, and formal commitments where the counterparty is resident in a country other than where the assets are recorded. Cross-border assets also include exposures to local residents denominated in currencies other than the local currency. NIB has established limits for cross-border exposure and manages exposures within these limits. NIB has established an appropriate credit risk environment which is operating under a sound credit-granting process; maintaining an appropriate credit administration, measurement and monitoring process and ensuring adequate controls. For risk management reporting purposes the Bank considers and consolidates all elements of credit risk exposures. There is a proper credit delegation matrix for review and approving credit applications. Businesses have no credit approving authority. All credit approvals are accorded by the Credit Officers/Senior Credit Officers in the Risk Management Group. Corporate Credit Risk Management also approves exposure to Financial Institutions. The concept of “three initial system” is very much in existence in NIB. Based upon regional considerations and availability of Credit Talent, any initiating unit has to have formal recommendation by the Relationship Manager, his/her Team Leader and Regional Head/Corporate Banking Head/Group Head. The essence here is that the credit proposal must not be left to the sole judgment of one person – rather, the application of minds must be diverse and independent of each other. Further, in order to measure credit risk, an indigenously developed rating system is followed. This rating system is being continuously fine tuned to address regulatory and global benchmarks. NIB manages credit risk through: - Accurate and detailed information about the borrower, cash flows, production, service and operation of the company; - Insights into the major factors influencing customer attrition and product cancellation; - Credit and collections treated as a highly people-intensive business; and - Establishment of acceptable risk levels. NIB monitors exposure to credit risk through: Post-disbursement maintenance of accounts is done through Credit Administration Department (“CAD”) reporting into a CAD Head. The CAD Head has direct reporting line to the CRO; Submission of regulatory returns pertaining to reporting of NIB’s portfolio.

Impaired financial assets Impaired financial assets including loans and debt instruments are those which NIB determines that it is probable that it will not be able to collect all principal and interest due according to the contractual terms of the agreement(s) underlying the financial assets. Financial assets carried at fair value through profit or losses are not assessed for impairment since the measure of fair value reflects their credit qualities. For the monitoring of the credit quality of the financial assets not carried at fair value through profit or loss, NIB follows the guidelines issued by the State Bank of Pakistan. Credit quality is determined based on three pillars: namely business prospect, financial performance and repayment capacity.

NIB Bank Limited Annual Report 2016 91 Notes to the Financial Statements For the year ended December 31, 2016

Write offs NIB’s Write off Policy is laid out in line with the SBP rules. All credit write offs are approved under the approved delegation matrix. Writing off a loan in no way implies that the Bank has given up its claim on a borrower and does not impact the Bank’s ability to legally collect written off credits from the customer(s).

42.1.1 Segmental Information 42.1.1.1 Segments by class of business

2016 Contingencies and Advances (Gross) Deposits Commitments (Rupees in ‘000) Percent (Rupees in ‘000) Percent (Rupees in ‘000) Percent Agriculture, Forestry, Hunting and Fishing 47,494 0.04 1,769,811 1.82 29,805 0.03 Automobile and Transportation Equipment 762,349 0.69 445,254 0.46 170,757 0.16 Cement, Glass and Ceramics 1,720,561 1.55 950,763 0.98 4,004,968 3.75 Chemicals and Pharmaceuticals 3,447,319 3.10 1,754,853 1.81 1,902,026 1.78 Construction 1,285,993 1.16 8,018,415 8.26 709,604 0.67 Electronics and Electrical Appliances 110,666 0.10 601,367 0.62 15,074 0.01 Engineering 5,386,271 4.85 4,144,896 4.27 5,187,054 4.86 Exports / Imports 1,331,042 1.20 817,378 0.84 263,044 0.25 Financial 4,997,588 4.50 3,386,180 3.49 66,445,964 62.28 Food and Beverages 11,620,362 10.46 879,460 0.91 1,596,560 1.50 Footwear and Leather Garments 326,939 0.29 279,685 0.29 24,306 0.02 Individuals 7,279,594 6.55 33,872,547 34.89 – – Insurance – – 491,861 0.51 – – Mining and Quarrying 650,818 0.59 854,542 0.88 341,086 0.32 Non Profit Organizations / Trusts 946,629 0.85 6,320,898 6.51 1,200,000 1.12 Oil and Gas 3,921,197 3.53 2,908,241 3.00 4,648,374 4.36 Paper and Printing 866,643 0.78 1,139,759 1.17 311,917 0.29 Power, Gas, Water, Sanitary 13,127,846 11.81 1,199,785 1.24 3,737,869 3.50 Services 3,293,980 2.96 10,194,475 10.50 1,040,716 0.98 Sugar 4,100,922 3.69 26,982 0.03 283,676 0.27 Textile 30,672,592 27.60 1,530,034 1.58 5,663,409 5.31 Transport, Storage and Communication 7,261,339 6.54 4,726,159 4.87 3,307,563 3.10 Wholesale and Retail Trade 3,580,697 3.22 3,728,279 3.84 2,555,887 2.40 Others 4,374,032 3.92 7,030,743 7.21 3,251,212 3.06

111,112,873 100.00 97,072,367 100.00 106,690,871 100.00

92 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

2015 Contingencies and Advances (Gross) Deposits Commitments (Rupees in ‘000) Percent (Rupees in ‘000) Percent (Rupees in ‘000) Percent Agriculture, Forestry, Hunting and Fishing 194,951 0.14 2,256,047 1.73 14,847 0.02 Automobile and Transportation Equipment 855,299 0.63 901,449 0.69 152,196 0.20 Cement, Glass and Ceramics 1,627,741 1.21 2,308,874 1.77 2,420,079 3.22 Chemicals and Pharmaceuticals 3,600,758 2.67 4,182,515 3.21 3,926,423 5.22 Construction 1,186,523 0.88 10,001,328 7.67 704,925 0.94 Electronics and Electrical Appliances 147,668 0.11 1,313,408 1.01 54,612 0.07 Engineering 5,791,017 4.29 2,529,195 1.94 7,574,394 10.06 Exports / Imports 1,231,482 0.91 790,011 0.61 283,410 0.38 Financial 2,933,800 2.17 17,248,655 13.22 29,981,601 39.84 Food and Beverages 28,459,577 21.08 2,061,224 1.58 1,913,753 2.54 Footwear and Leather Garments 407,314 0.30 447,926 0.34 38,508 0.05 Individuals 6,612,770 4.90 36,481,956 27.97 – – Insurance – – 2,619,886 2.01 – – Mining and Quarrying 24,801 0.02 2,449,888 1.88 46,510 0.06 Non Profit Organizations / Trusts 731,429 0.54 5,075,103 3.89 – – Oil and Gas 6,049,165 4.48 3,724,250 2.86 3,229,642 4.29 Paper and Printing 1,035,346 0.77 969,840 0.74 422,032 0.56 Power, Gas, Water, Sanitary 12,014,930 8.90 3,163,590 2.43 7,075,031 9.40 Services 1,399,171 1.04 10,408,227 7.98 209,103 0.28 Sugar 4,115,166 3.05 179,256 0.14 386,287 0.51 Textile 34,013,047 25.19 2,350,753 1.80 5,263,107 6.99 Transport, Storage and Communication 14,256,258 10.56 4,443,356 3.41 5,052,840 6.71 Wholesale and Retail Trade 3,693,428 2.74 4,223,996 3.24 3,320,446 4.41 Others 4,646,383 3.42 10,314,161 7.88 3,190,683 4.25 135,028,024 100.00 130,444,894 100.00 75,260,429 100.00

42.1.1.2 Segment by sector 2016 Contingencies and Advances (Gross) Deposits Commitments (Rupees in ‘000) Percent (Rupees in ‘000) Percent (Rupees in ‘000) Percent

Public / Government 10,179,612 9.16 13,087,493 13.48 7,973,673 7.47 Private 100,933,261 90.84 83,984,874 86.52 98,717,198 92.53 111,112,873 100.00 97,072,367 100.00 106,690,871 100.00

2015 Contingencies and Advances (Gross) Deposits Commitments (Rupees in ‘000) Percent (Rupees in ‘000) Percent (Rupees in ‘000) Percent

Public / Government 36,361,028 26.93 19,127,524 14.66 7,048,541 9.37 Private 98,666,996 73.07 111,317,370 85.34 68,211,888 90.63 135,028,024 100.00 130,444,894 100.00 75,260,429 100.00

NIB Bank Limited Annual Report 2016 93 Notes to the Financial Statements For the year ended December 31, 2016

2016 2015 Classified Specific Classified Specific Advances Provisions Advances Provisions Held Held (Rupees in ‘000) 42.1.1.3 Details of non-performing advances and specific provisions by class of business segment Agriculture, Forestry, Hunting and Fishing – – – – Automobile and Transportation Equipment 687,761 598,398 715,098 593,450 Cement, Glass and Ceramics 586,032 495,287 609,884 503,104 Chemicals and Pharmaceuticals 730,511 664,673 598,894 492,842 Construction 295,494 289,646 418,525 394,639 Electronics and Electrical Appliances 10,042 4,072 23,300 21,815 Engineering 1,989,561 1,763,589 2,292,070 2,015,985 Exports / Imports 379,210 246,079 – – Financial 126,972 122,499 130,255 125,776 Food and Beverages 1,901,050 1,418,767 1,637,370 1,287,099 Footwear and Leather Garments 215,344 197,130 272,993 209,662 Individuals 687,413 536,849 695,829 527,625 Mining and Quarrying 23,808 23,808 23,808 16,755 Oil and Gas 8,982 8,366 12,905 8,366 Paper and Printing 527,096 456,474 593,171 540,842 Power, Gas, Water, Sanitary 379,514 377,716 379,514 377,716 Services 1,069,573 721,254 902,983 563,884 Sugar 905,147 565,972 645,118 600,450 Textile 12,228,863 11,244,360 13,863,107 12,282,412 Transport, Storage and Communication 771,287 563,206 815,198 581,908 Wholesale and Retail Trade 2,745,870 2,549,312 2,335,717 2,099,123 Others 2,700,332 796,439 1,207,485 961,205 28,969,862 23,643,896 28,173,224 24,204,658

2016 2015 Classified Specific Classified Specific Advances Provisions Advances Provisions Held Held (Rupees in ‘000) 42.1.1.4 Details of non-performing advances and specific provisions by sector Public / Government _ _ _ _ Private 28,969,862 23,643,896 28,173,224 24,204,658 28,969,862 23,643,896 28,173,224 24,204,658

94 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

2016 Profit Contingencies Total assets Net assets before and employed employed taxation Commitments (Rupees in ‘000) 42.1.1.5 Geographical Segment Analysis Pakistan 2,519,292 243,944,868 18,804,809 106,690,871

2015

Pakistan 4,026,608 243,496,512 17,140,132 75,260,429

42.2 Market Risk Market risk refers to the potential loss that an entity may be exposed to due to market volatility. It is important for the Bank to put in place an effective market risk management framework to manage its market risk exposures. Market risk arises from all positions in financial instruments held by the Bank which exposes the Bank to market risk factors namely interest rates, foreign exchange (“FX”) rates and equity prices. Bank has adopted a market risk management structure that commensurate with its size and the nature of its business activities and facilitates effective management oversight and execution of market risk management and control processes. Currently Bank’s risk appetite for market risk is a combination of notional and sensitivity based limits. Following are the regulatory and internal guidelines monitored by Market & Liquidity Risk Unit (MLRU). – Foreign Exchange Exposure Limit – Equity Exposure Limit – FX Tenor mismatch – DV01 – VaR

NIB also applies a Value-at-Risk (VaR) methodology to assess the market risk positions held. Currently NIB is using historical simulation model for calculating VaR.

Interest rate risk The principal risk to which NIB’s portfolios are exposed is the risk of losses from fluctuations in the future cash flows or fair values of financial instruments because of a change in market interest rates. Interest rate risk is measured through DV01 and VaR.

42.2.1 Foreign Exchange Risk NIB has set the following objectives for managing the inherent risk on foreign currency exposures: Maximize profitability with minimum risk by keeping the exposure at desirable levels in view of strict compliance of regulatory/international standards and the Bank's internal guidelines, which are being adopted from regulator and followed vigorously;

NIB Bank Limited Annual Report 2016 95 Notes to the Financial Statements For the year ended December 31, 2016

Manage appropriate forward mismatch gaps; Usage of different tools to manage the inherent risk of product and market, such as compliance of credit limit, monitoring of foreign exchange exposure limit, review of marked to market portfolio etc. NIB takes steps to ensure that foreign currency exposures adhere to regulatory or international standards and NIB’s internal guidelines. NIB uses tools such as Foreign Exchange Exposure Limit (FEEL), VaR and FX tenor gaps to monitor FX risk.

2016 Net foreign Off Balance currency Assets Liabilities sheet items exposure (Rupees in ‘000)

Pakistan Rupee 236,444,335 218,476,177 689,749 18,657,907 United States Dollar 6,642,842 5,234,423 (1,280,181) 128,238 Great Britain Pound 233,487 990,522 756,906 (129) Euro 580,072 424,535 (155,133) 404 Japanese Yen 2,871 80 (3,581) (790) Swiss Franc 1,444 898 – 546 Others 39,817 13,424 (7,760) 18,633 243,944,868 225,140,059 – 18,804,809

2015 Net foreign Off Balance currency Assets Liabilities sheet items exposure (Rupees in ‘000)

Pakistani Rupee 232,358,232 218,389,076 2,765,043 16,734,199 United States Dollar 10,379,610 6,408,262 (3,627,171) 344,177 Great Britain Pound 255,297 1,057,097 805,815 4,015 Euro 423,129 460,723 37,628 34 Japanese Yen 1,276 26,745 26,979 1,510 Swiss Franc 2,413 923 – 1,490 Others 76,555 13,554 (8,294) 54,707 243,496,512 226,356,380 – 17,140,132

42.2.2 Equity price risk and Fixed Income rate risk Equity price risk is the risk to earnings or capital that results from adverse changes in the value of equity related portfolios of NIB. NIB conducts stress testing analysis over the equity portfolio, by anticipating changes / shocks of -30%, -40% and -50% on the current price of shares within a portfolio, thereby monitoring the effects of the predicted changes in the structure of shares portfolio on the Capital Adequacy Ratio (“CAR”). Further, NIB reviews new products to ensure that market risk aspects are properly quantified and mitigated.

96 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016 – – – – – – – 771,391 162,287 8,766,811 3,679,517 3,092,112 2,634,398 2,476,315 3,472,208 instruments Non-interest 16,309,831 32,884,111 38,157,111 (21,847,280) (21,847,280) bearing financial – – – – – – – – – – – – – – – Over 350,000 350,000 350,000 350,000 10 Years 10 25,319,488 – – – – – – – – – – – – – – to 10 Years Over 5 393,524 6,155,267 6,548,791 6,548,791 6,548,791 24,969,488 – – – – – – – – – – – – to 5 Years 80,942 80,942 Over 3 1,147,311 6,114,314 7,261,625 7,180,683 7,180,683 18,420,697 – – – – – – – – – – – – – – to 3 Years Over 2 205,014 1,183,423 1,388,437 1,388,437 1,388,437 11,240,014 – – – – – – – – – – – – 2016 852 852 to 2 Years Over 1 1,318,552 1,602,306 2,920,858 2,920,006 2,920,006 9,851,577 (Rupees in ‘000) Exposed to Yield / Interest risk Yield Exposed to – – – – – – – – – Year Over 6 446,415 446,415 3,659,488 2,928,741 6,931,571 Months to 1 22,777,067 26,436,555 12,296,924 15,225,665 11,210,890 11,657,305 – – – – – – – to 6 Over 3 776,506 Months 2,385,800 4,193,837 7,362,868 2,666,910 (4,725,734) 10,862,098 11,638,604 48,837,937 55,417,574 10,029,778 (43,778,970) (41,112,060) – – – – – – – – to 3 Over 1 (18,421) Months 5,858,282 6,896,976 6,915,397 73,037,847 48,476,186 10,162,916 16,021,198 36,386,326 121,514,033 105,492,835 105,474,414 – – – – 5,911 Month Upto 1 9,663,904 3,243,130 6,481,502 5,918,561 (3,745,343) 10,425,014 19,631,592 33,305,647 92,166,890 98,648,392 (65,342,745) (69,088,088) (69,088,088) – Total 777,302 (650,439) 8,766,811 3,243,130 3,092,112 2,634,398 4,193,837 2,476,315 4,122,647 23,942,169 87,305,928 97,072,367 23,291,730 14,682,162 18,804,809 227,674,381 124,489,098 117,174,817 223,551,734 – – – – – rate Yield / Yield 0.11% 5.86% 6.31% 7.23% 5.51% 3.67% 7.47% Interest Effective Mismatch of Interest Rate Sensitive Assets and Liabilities Mismatch of Interest Rate Sensitive Details of the interest rate profile Bank based on earlier contractual repricing or maturity date is as follows: On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Assets held for sale Other assets Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities Non Financial Net Assets Total Net Assets Off-balance sheet financial instruments Foreign exchange contracts - sale On-balance sheet gap Foreign exchange contracts - purchase Off-balance sheet gap Total Yield / Interest Rate Risk Sensitivity Gap Yield Total Cumulative Yield / Interest Rate Risk Yield Cumulative Sensitivity Gap 42.2.3

NIB Bank Limited Annual Report 2016 97 Notes to the Financial Statements For the year ended December 31, 2016 – – – – – – – 85,074 188,954 1,608,415 2,924,870 2,576,216 1,898,034 instruments 14,670,902 Non-interest 10,052,543 36,261,139 40,924,343 (4,601,487) (26,253,441) (26,253,441) bearing financial – – – – – – – – – – – – – – – Over 564,501 564,501 564,501 564,501 10 Years 10 21,651,954 – – – – – – – – – – – – – – to 10 Years Over 5 527,440 10,418,502 10,945,942 10,945,942 10,945,942 21,087,453 – – – – – – – – – – – – 188 188 to 5 Years Over 3 5,466,404 1,399,108 6,865,512 6,865,324 6,865,324 10,141,511 – – – – – – – – – – – – 546 546 to 3 Years Over 2 1,331,570 1,242,792 2,574,362 2,573,816 2,573,816 3,276,187 – – – – – – – – – – – – - 2015 to 2 Years 29,601 29,601 Over 1 702,371 1,226,187 1,226,187 1,196,586 1,196,586 (Rupees in ‘000) Exposed to Yield / Interest risk Yield Exposed to – – – – – – – – Year 23,461 Over 6 487,304 463,843 (494,215) 4,901,247 3,449,694 8,118,117 Months to 1 49,467,191 54,368,438 11,567,811 42,800,627 43,264,470 – – – – – – – to 6 391,324 Over 3 Months 3,155,050 4,195,516 1,793,540 1,402,216 20,932,109 11,603,118 32,535,227 64,004,873 71,355,439 (38,820,212) (38,428,888) (43,758,685) – – – – – – – to 3 Over 1 Months 3,345,770 3,112,731 7,867,110 3,796,734 5,964,027 48,195,935 (2,167,293) (5,329,797) 61,954,346 68,412,847 10,182,509 18,049,619 50,363,228 – – – – – – 36,671 Month Upto 1 1,599,044 1,997,611 2,874,365 4,419,824 (1,545,459) 27,250,255 30,883,581 71,015,933 11,847,921 82,863,854 (51,980,273) (53,525,732) (53,525,732)

Total 1,645,086 1,599,044 3,112,731 2,924,870 2,576,216 4,195,516 1,898,034 8,951,943 (1,743,902) 10,052,543 93,044,231 85,676,741 18,884,034 17,140,132 (2,857,585) 11,809,528 110,668,994 223,047,499 130,444,894 224,791,401 – – – – – rate Yield / Yield 0.05% 7.50% 7.61% 8.69% 6.48% 4.58% 9.38% Interest Effective On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Assets held for sale Other assets Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities Off-balance sheet financial instruments Foreign exchange contracts - sale On-balance sheet gap Foreign exchange contracts - purchase Non Financial Net Assets Total Net Assets Off-balance sheet gap Total Yield / Interest Rate Risk Sensitivity Gap Yield Total Cumulative Yield / Interest Rate Risk Sensitivity Gap Yield Cumulative

98 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016 – – – – – – – – – – – 8,862 8,862 59,467 Above 590,037 2,004,264 1,995,402 10 Years 10 1,354,760 33 – – – – – – – – 66,714 367,970 229,001 to 10 Years 162,287 Over 5 4,201,977 1,376,282 13,019,286 12,790,285 7,073,024 – – – – – – 3,414 19,623 21,082 80,941 to 5 282,126 Years 4,396,581 Over 3 6,235,457 7,692,699 4,273,152 4,188,797 18,647,568 14,374,416 – – – – – – – 1,680 62,100 21,294 22,974 284,478 236,542 to 3 Years Over 2 5,459,363 3,283,742 11,155,364 11,132,390 1,829,139 – 852 – – – – – 1,680 29,406 to 2 197,674 204,221 206,753 Years Over 1 227,049 1,675,263 5,532,784 1,635,089 9,297,265 9,090,512 2016 (Rupees in ‘000) – – – – – 840 94,511 158,253 425,174 382,116 Year 141,513 1,563,577 2,928,741 9,725,102 Over 6 23,036,811 25,376,781 15,651,679 Months to 1 12,296,924 840 – – – – – to 6 191,058 212,331 582,265 Over 3 80,013 Months 7,244,212 2,385,800 8,525,119 102,566 (4,249,812) 11,494,024 3,502,877 3,155,367 – – – – – – 56,883 54,218 to 3 127,372 Over 1 Months 5,858,282 1,790,845 11,815,733 85,601,885 10,162,916 17,812,043 67,789,842 1,238,832 72,308,847 – – 27,131 26,643 63,686 777,302 961,851 Month Upto 1 8,766,811 1,026,808 2,634,398 3,243,130 10,372,341 47,294,391 71,598,243 92,166,890 79,678,432 175,441,571 (103,843,328) – 322,063 777,302 599,045 Total 2,634,398 1,281,655 8,766,811 3,243,130 2,796,052 8,625,041 7,342,461 4,193,837 4,064,640 18,482,746 18,804,809 87,305,928 97,072,367 18,804,809 103,028,512 124,489,098 243,944,868 117,174,817 225,140,059 (45,769,623) (40,057,798) Controlling the cash flow mismatch between on and off balance sheet assets liabilities through MCO; 5-Day stress testing on Bank’s balance sheet carried out daily basis assuming 50% run offs in CASA (Current and Saving) deposits over 5 days; Maintaining stable and diversified sources of funding; Ensuring the Bank has right asset portfolio mix and sufficient liquid assets on hand in relation to its daily cash flows; Stress testing on portfolio as required by local regulator Liquidity Risk Liquidity risk is defined as the that a Bank, either does not have enough financial resources to meet its obligation and commitments they fall due or can secure funds at an excessive cost; even when the Bank is solvent. Liquidity risk due to difference between Bank’s assets and liabilities generally known as mismatches. management important as the ultimate cost of a lack liquidity is being out business. The liquidity risk policy is formulated keeping in view of the SBP's guidelines on management, Basel standards and best practices. NIB maintains its by a level liquid assets in such amount which is considered sufficient to anticipate payment of customers' deposits. The Bank manages its liquidity risk through – – – – – Cash and balances with treasury banks Assets Balances with other banks Lending to financial institutions Investments Advances Operating fixed assets Intangible assets Deferred tax assets - net Assets held for sale Other assets Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities Net assets Share capital Reserves Discount on issue of shares Accumulated loss Shareholders' equity Surplus on revaluation of assets - net Maturities of Assets and Liabilities - Based on contractual maturity of the Assets and Liabilities of the Bank Assets and Liabilities - Based on contractual maturity of the Maturities of The above maturity profile has been prepared in accordance with International Financial Reporting Standard 7, Instruments: Disclosures, based on contractual maturities. Consequently, all demand assets and liabilities such as running finance, current a ccounts saving accounts are shown having maturity upto one month. However, based on historical behaviour, management is of the opinion that possibility these inflows / outflows actually occurring entirely within one month remote, as flows normally occur over a longer period time. 42.3.1 42.3

NIB Bank Limited Annual Report 2016 99 Notes to the Financial Statements For the year ended December 31, 2016 – – – – – – – – – – 71,087 10,547 10,547 632,366 Above 2,699,218 1,413,308 4,815,979 4,805,432 10 Years 10 – – – – – – - 51 57,911 468,339 162,286 to 10 Years Over 5 2,854,812 1,280,490 4,187,117 4,407,314 10,450,069 15,053,761 10,646,447 – – – – – – 188 3,359 58,471 21,761 27,245 30,792 to 5 336,572 Years Over 3 5,685,457 7,633,868 4,290,048 18,026,177 17,995,385 – – – – – – 546 1,680 16,613 18,839 235,488 190,136 to 3 Years Over 2 1,681,288 6,099,851 2,078,002 3,078,806 13,363,571 13,344,732 – – – – – – 1,680 25,790 29,601 to 2 687,939 273,751 317,759 245,333 276,614 Years Over 1 6,379,648 1,631,515 9,316,402 9,039,788 2015 – – – – – (Rupees in ‘000) 840 160,354 161,942 770,092 137,735 235,038 Year 2,648,854 3,449,695 8,118,117 Over 6 49,765,118 53,644,095 11,803,690 41,840,405 Months to 1 – – – – – 840 81,064 to 6 109,588 385,046 123,312 575,506 Over 3 Months 4,547,804 3,155,050 9,569,214 20,483,899 25,730,713 13,300,610 12,430,103 – – – – – 60,386 54,045 to 3 256,697 Over 1 Months 2,292,850 3,112,731 1,657,618 7,867,110 1,547,869 3,496,216 15,659,377 23,093,704 10,182,509 19,597,488 – – 28,660 27,023 128,349 761,380 746,951 1,599,044 1,997,611 2,576,216 Month 1,645,086 Upto 1 64,212,414 80,452,110 71,042,600 10,052,543 102,544,719 176,910,486 (96,458,376) 78,866 890,491 997,582 Total 1,645,086 1,599,044 3,086,446 9,539,749 3,112,731 7,157,979 2,576,216 4,195,516 3,463,013 17,140,132 17,061,266 10,052,543 95,743,449 85,676,741 17,140,132 243,496,512 110,668,994 130,444,894 226,356,380 (45,769,623) (41,195,205) 103,028,512 Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Intangible assets Deferred tax assets - net Assets held for sale Other assets Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities Net assets Share capital Reserves Discount on issue of shares Surplus on revaluation of assets - net Accumulattd loss Shareholders' equity

100 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016 – – – – – – – – – – 8,863 8,863 – 59,463 590,036 Above 1,995,395 10 Years 10 1,354,759 2,004,258 33 – – – – – – – 66,714 162,287 to 10 Years 367,971 Over 5 7,073,024 4,201,977 25,981,259 1,376,286 26,210,260 13,019,291 (13,190,969) – – – – – – 3,414 19,623 21,082 to 5 282,126 Years Over 3 3,981,911 4,188,797 6,235,456 7,692,699 14,665,656 4,396,581 18,647,567 10,473,445 – – – – – – 1,680 21,294 62,100 284,480 236,542 to 3 Years 5,936,140 Over 2 5,459,363 5,219,226 1,829,139 3,283,742 5,196,252 11,155,366 – – – – – 1,680 to 2 – 204,220 227,049 197,674 29,406 Years Over 1 3,894,261 5,197,103 5,532,784 5,403,003 1,635,089 9,297,264 1,675,262 2016 (Rupees in ‘000) – – – – – 840 94,511 425,174 141,513 158,253 382,116 Year Over 6 13,146,828 18,200,635 16,144,073 23,036,811 28,867,011 42,013,839 Months to 1 12,296,924 840 – – – – – 80,013 to 6 582,265 102,566 212,331 Over 3 Months 2,385,800 191,058 (2,538,949) 18,101,690 15,562,741 3,502,877 11,473,896 15,132,785 – – – – – – to 3 56,883 Over 1 54,218 Months 1,790,845 127,372 68,930,417 72,308,847 17,361,419 22,217,154 1,238,832 91,147,571 10,162,916 10,263,393 – – 27,131 26,643 63,686 777,302 961,851 Month Upto 1 8,766,811 2,634,398 8,684,057 3,243,130 1,026,808 92,166,890 10,372,341 16,793,119 41,096,971 (63,350,225) 104,447,196 – 322,063 Total 777,302 599,045 1,281,655 2,634,398 8,766,811 3,243,130 4,193,837 4,064,640 2,796,052 8,625,041 7,342,461 18,804,809 18,482,746 18,804,809 97,072,367 87,305,928 103,028,512 (45,769,623) (40,057,798) 117,174,817 124,489,098 225,140,059 243,944,868 Assets Liabilities Bills payable Cash and balances with treasury banks Borrowings Net assets Non-contractual assets and liabilities have been profiled by using Core/Non-core Balance Methodology. Core balances are defined as those which expected to remain in our books for a longer period and thus placed in longer time buckets. Whereas, non-core balances are considered volatile expected to attrite from our books the short run. In order to work out non-core balances, volatility is calculated using standard deviation and scaled for computing respective tenor volatility. Non-core Core balances are equally distributed in time buckets from 1 month till year and 2 years furtherest availa ble time bucket respectively. Similarly, non-core balances for Running Finance are placed in 1-month core equally distributed in buckets 2-months till 1-year. Deposits and other accounts Balances with other banks Share capital Reserves Discount on issue of shares Accumulated loss Shareholders' equity Surplus on revaluation of assets-net Sub-ordinated loans Lending to financial institutions Investments Other liabilities Advances Operating fixed assets Intangible assets Deferred tax assets - net Assets held for sale Other assets Maturities of Assets and Liabilities - Based on historical pattern of the Assets and Liabilities of the Bank Assets and Liabilities - Based on historical pattern of the Maturities of 42.3.2

NIB Bank Limited Annual Report 2016 101 Notes to the Financial Statements For the year ended December 31, 2016 – – – – – – – – – – 71,087 10,547 10,547 632,366 Above 10 Years 10 2,699,218 1,413,308 4,815,979 4,805,432 – – – – – – 51 57,911 468,339 162,286 to 10 Years Over 5 2,854,812 1,280,490 4,187,117 10,450,069 15,053,761 33,068,571 37,475,885 (22,422,124) – – – – – - 3,359 58,471 21,761 27,245 to 5 336,572 Years Over 3 5,685,457 7,633,868 4,290,048 4,767,957 18,026,177 13,227,616 13,258,220 - – – – – – 1,680 16,613 235,488 190,136 to 3 Years Over 2 1,681,288 6,099,851 2,078,002 3,078,806 6,614,261 6,632,554 6,731,017 13,363,571 – – – – – - 1,680 25,790 to 2 687,939 273,751 317,759 245,333 Years Over 1 6,379,648 1,631,515 9,316,402 6,643,316 6,890,329 2,426,073 2015 – – – – – (Rupees in ‘000) 840 160,354 161,942 770,092 137,735 235,038 Year Over 6 3,449,695 49,765,118 27,069,390 78,064,631 23,704,802 27,390,375 50,674,256 Months to 1 – – – – – 840 81,064 to 6 109,588 385,046 123,312 575,506 Over 3 Months 3,155,050 20,483,899 16,758,072 37,940,981 17,362,556 21,093,952 16,847,029 – – – – – 60,386 54,045 to 3 256,697 Over 1 Months 2,292,850 3,112,731 1,657,618 7,867,110 1,547,869 6,440,832 23,799,555 31,233,882 15,378,071 24,793,050 – – 28,660 27,023 128,349 761,380 746,951 Month Upto 1 1,645,086 1,599,044 1,997,611 2,576,216 10,052,543 19,441,432 35,681,128 71,042,600 14,445,701 88,811,468 (53,130,340) 78,866 890,491 997,582 Total 1,645,086 1,599,044 3,086,446 9,539,749 3,112,731 7,157,979 2,576,216 4,195,516 3,463,013 10,052,543 95,743,449 85,676,741 17,140,132 17,061,266 17,140,132 (45,769,623) (41,195,205) 110,668,994 243,496,512 130,444,894 226,356,380 103,028,512 Assets Cash and balances with treasury banks Balances with other banks Lending s to financial institutions Investments Advances Operating fixed assets Intangible assets Deferred tax assets - net Assets held for sale Other assets Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities Net assets Share capital Reserves Discount on issue of shares Accumulated loss Shareholders' equity Surplus on revaluation of assets - net

102 Annual Report 2016 NIB Bank Limited Notes to the Financial Statements For the year ended December 31, 2016

42.4 Operational Risk Management The Bank defines operational risk as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The Bank seeks to ensure that key operational risks are managed in a timely and effective manner. NIB approaches operational risk management from two perspectives to best manage operational risk within the structure of the Bank: – at the enterprise level to provide independent, integrated management of operational risk across the Bank, and – at the business and enterprise control function levels to address operational risk in revenue generating and non-revenue generating units. A sound internal governance structure enhances the effectiveness of NIB’s Operational Risk Management and is accomplished at the enterprise level through formal oversight by the Board, the CRO and risk management committees aligned to the Bank’s overall risk governance framework and practices. The Operational Risk Committee (ORC) oversees the processes for sound operational risk management and also serves as an escalation point for critical operational risk matters within the Bank. The ORC reports operational risk activities to the Board Risk Management Committee. Within the Integrated Risk Management Group, the Operational Risk Unit is now further strengthened after formation of Business Operational Risk Committees for Wholesale Banking, Commercial Banking & Consumer Banking. Businesses are now more focused on their relevant Operational Risk issues. Operational Risk System has been rolled out Bank - wide. Key Risk Indicators, operational loss incidents and testing of controls are now captured in the Operational Risk System. BCP being part of Bank’s control activity is now under the umbrella of Operational Risk Management Unit and fortifies the Integrated Risk Management Group.

43 DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue on 22 February 2017 by the Board of Directors of the Bank.

Yameen Kerai Muhammad Abdullah Yusuf Lee Boon Huat Lee Ah Boon President / Chief Executive Chairman / Director Director Director

NIB Bank Limited Annual Report 2016 103 Annexure - 1 955 832 751 941 978 694 538 530 778 975 625 Total 1,057 1,137 1,188 2,153 1,199 1,764 1,145 1,077 ------Other Relief Financial (Rupees in '000) 75 99 79 82 93 86 62 90 72 64 63 115 135 202 143 218 118 381 110 Mark-up Interest/ written-off 942 820 935 757 652 862 835 970 576 456 532 444 716 911 1,772 1,109 1,654 1,073 1,014 Principal written-off 910 812 710 911 903 617 485 556 457 793 982 Total 1,029 1,072 1,045 1,974 1,167 1,738 1,146 1,114 ------Others 80 89 55 58 49 56 75 41 24 24 13 30 27 20 12 21 11 137 177 Mark-up Accrued beginning of Period 949 821 935 757 652 862 847 970 576 461 532 444 763 961 Outstanding liabilities at the 1,797 1,140 1,718 1,134 1,103 Principal Father’s / Husband’s Name Father’s / Husband’s BANARIS KHAN MUHAMMAD ASLAM CHAUDHRY MUHAMMAD ANWAR UL HAQ MUHAMMAD AYUB SHEIKH LIQUAT ALI MUHAMMAD SALEEM AKHTER RANA HABIB AHMED GHULUM MOHI UD DIN YOUSAF MASIH HAIDER ALI AIJAZ AHMED KHURSHEED ALAM SYED AFSAR HUSSAIN KAZMI GHULAM MUSTAFA MUHAMMAD HUSSAIN KHADIM HUSSAIN SAEED UL HASSAN AKBAR KHAN SAHI MUHAMMAD NIC No. 37103-3049173-3 42301-4175414-3 41304-4998464-7 37405-7470389-7 33100-9531942-5 37405-0647182-5 35103-4447656-5 35202-8223336-5 33301-4150156-5 42101-8829217-9 42000-7115051-9 42201-6508302-9 42201-8002285-7 45402-0309751-3 36302-3316585-5 36302-8454300-1 13101-4569678-5 17301-1335366-9 42401-5962289-1 during the year ended December 31, 2016 Name Name of Individuals / partners directors five hundred thousand rupees or above provided MUBARIS KHAN KAMRAN ASLAM MUHAMMAD AMIN UL HAQ QURESHI TAHIR AYUB SHEIKH NASIR ALI MUHAMMAD ADEEL AHMED IMTIAZ ALI MUHAMMAD SHAHZAD HUMMAYUN CORNELIUS MUHAMMAD JAWAD MUHAMMAD FAISAL AIJAZ REHAN ALAM SYED MUHAMMAD HAIDER ABBAS KAZMI ZULFIQAR ALI MUHAMMAD YAQOOB BASHIR AHMED FAWAD BIN HASSAN ARSHAD KHAN MUHAMMAD AMEER Statement showing written-off loans or any other financial relief of Name & Address of borrower Name & * MUBARIS KHAN KHAN ABAD MOHALLAH MEELAD NAGAR NEAR BOYS HIGH SCHOOL ABBOTTABAD MORE HASSANABDAL. * KAMRAN ASLAM PICIC ASSET MANAGEMENT CO LTD, 3RD FLOOR, PNSC BUILDING, M.T KHAN ROAD, KARACHI. * MUHAMMAD AMIN UL HAQ QURESHI AL AMIN AND SONS H B 88 UNIT # 2, LATIFABAD. * TAHIR AYUB SHOP # 23/62, AYUB PLAZA, INSIDE ITALIAN SHOES STREET BANK ROAD, SADDAR, RAWALPINDI. * SHEIKH NASIR ALI H # 941, ST 12, MUHAMMADABAD SATAYANA ROAD, FAISALABAD. * MUHAMMAD ADEEL AHMED DATA ELECTRIC SHOP NO 05 NEAR ALIF SHAH QABRISTAN DHERI HASSANABAD RAWALPINDI. * IMTIAZ ALI HOUSE 548-H- J-3-JOHAR TOWN, LAHORE. * MUHAMMAD SHAHZAD HUMMAYUN HOUSE NO 252, MOHALLAH BLOCK # 1, SECTOR D-2 GREEN TOWN LAHORE. * CORNELIUS H # 150 NEAR THE LITTLE DELIGHT MONTESSORY SCHOOL, NEW IQBAL TOWN, LAHORE. * MUHAMMAD JAWAD HOUSE NO. C-77, DARAKHSHAN VILLA, PHASE-VI, DHA KARACHI, BEHIND BEACH VIEW CLUB, KARACHI. * MUHAMMAD FAISAL AIJAZ AL HABIB GARDEN D-I, 1ST FLOOR, CLIFTON BLOCK-9, NR DUNKIN DONUTS, KARACHI, * REHAN ALAM H # 12/37, AREA 36-B, LANDHI. * SYED MUHAMMAD HAIDER ABBAS KAZMI H # H-374, BLOCK-9 GULISTAN-E-JOHAR, * ZULFIQAR ALI HOUSE # A, 112 HOUSING SOCIETY, NAWAB SHAH. * MUHAMMAD YAQOOB UMEED PROPERTY MARKETING MASOOM SHAH ROAD NEAR RAHIM CHOWK MULTAN. * BASHIR AHMED SHAHSAMAS DARBAR ROAD, NEAR OLD ANIMAL MARKET MULTAN. * FAWAD BIN HASSAN HOUSE 266, BLOCK EE, ST NO 8, PHASE 4 DHA * ARSHAD KHAN ALISHBA COSMATIC CENTER, NEAR TAKHTO JAMAT PESHAWAR CANTT. * MUHAMMAD AMEER BHALWAL DAKHANA MANZOOR HAYAT COLONY, ZILLA SARGODHA. 1 2 3 4 5 6 8 9 7 10 11 12 13 14 15 16 17 18 19 S.No. * Policy write-off customers

104 Annual Report 2016 NIB Bank Limited Annexure - 1 536 537 896 506 505 523 534 505 575 521 561 735 504 713 530 Total 1,031 1,443 1,491 ------Other Relief Financial (Rupees in '000) 74 91 66 75 68 87 174 207 152 328 302 396 445 351 545 364 506 303 Mark-up Interest/ written-off 76 462 857 446 744 440 430 455 447 203 179 210 190 140 207 227 1,236 1,163 Principal written-off - 487 931 478 489 472 494 487 505 575 521 561 735 504 943 662 Total 1,366 1,336 ------Others - 11 20 33 11 33 11 12 11 11 302 396 445 351 545 364 506 303 Mark-up Accrued beginning of Period - 76 476 911 467 478 460 483 476 203 179 210 190 140 437 359 Outstanding liabilities at the 1,333 1,303 Principal Father’s / Husband’s Name Father’s / Husband’s GHULAM ALI MEHAR ABDUL LATIF NIZAMANI MUHAMMAD SADIQ QMAR UR ZAMAN MUHAMMAD ASLAM JAVED MUHAMMAD YASEEN ABDUL LATIF NIZAMANI SYED AHMED HUSSAIN FAWAD UZ ZAFAR KHAN ABDULLAH BALOCH MOHAMMAD SIDDIQ MUHAMMAD NAZIM BASIR AHMED CHOHAN HAJI MITHU KHAN AMEER MUHAMMAD KHAN SAJID WALLAYAT MASIH BASHIR AHMED MUHAMMAD HASSAN NIC No. 42000-1133921-5 41304-7468713-5 35201-9064385-1 35202-5411364-9 36302-1190391-1 37201-1659331-9 42201-0471360-7 42401-2797229-3 42301-3022830-4 42501-4645748-9 42000-0520525-3 42401-8654921-9 35202-2612824-1 32103-1327586-5 36303-0938673-3 35201-3448897-3 36101-5975401-7 33100-0412075-1 during the year ended December 31, 2016 Name Name of Individuals / partners directors five hundred thousand rupees or above provided MUNAZZAM ALI MEHAR MUHAMMAD SIDDIQUE MUHAMMAD MUSHTAQ SOHAIB QAMAR MUBASHAR ALI SAJJAD HUSSAIN MANZOOR ALI JARWAR SYED NAZAR ABBAS ZAIDI ERUM SHAHID KHAN ANWAR ALI BALOCH MOHAMMAD FAISAL SABIR ALI ABID HUSSAIN CHOHAN ABDUL RAFIQUE MOHAMMAD TANVEER SAJID UMAR WALLAYAT SHAFIQUE AHMED ABID MUHAMMAD SAJJAD Statement showing written-off loans or any other financial relief of Name & Address of borrower Name & * MUNAZZAM ALI MEHAR HOUSE NO. 219, ZEHRA NAGAR SCH 33, OF UNI ROAD, NEAR MEMON HOSPITAL, KARACHI. * MUHAMMAD SIDDIQUE H # B-9, STREET 07, GECH SOCIETY, QASIMABAD, NEAR SONEHRI BOOK, HYDERABAD. * MUHAMMAD MUSHTAQ HOUSE NO. 4, MAIN BAZAR, AFZAL PARK, HARBANS PURA, * SOHAIB QAMAR HOUSE NO. 96, KARIM PARK, RAVI ROAD. MUBASHAR ALI OFFICE 8, 1ST FLOOR, JALAL CENTRE 9 KASHMIR BLOCK MOON MARKET, LAHORE, * SAJJAD HUSSAIN H # 65, ST-5, MOHALLAH KHAN AVENUE, CHAKLALA SCHEME-III, RAWALPINDI. * MANZOOR ALI JARWAR FLAT NO. 4,106, 1ST FLOOR, SARA AVENUE, PHASE-2 SCH 33, GULZAR E HIJRI * SYED NAZAR ABBAS ZAIDI H # 662, STREET NO. 6, SECTOR 48-C, KORANGI 2-1/2, NEAR POST GROUND HEAD OFFICE, KARACHI. * ERUM SHAHID KHAN F # A-II, JASON APPARTMENTS, BOAT BASIN, NEAR PIZZA HUT, KARACHI. * ANWAR ALI BALOCH BANGLOW NO. C-57 BLOCK-8, GULISTAN-E-JAUHAR, ARCTIC ENGINEERING CO-OPERATIVE HOUSING SOCIETY, MAIN UNI ROAD, SAFORA CHOWRANGI, KARACHI. MOHAMMAD FAISAL OSAKA COMMUNICATION, PLOT # GK-7/100, JILLANI CENTRE, G-39, NEAR BAGH-E-ZEHRA STREET TOWER KARACHI. SABIR ALI HOUSE NO.129, SEC 13-D, NEAR AZIZ-E-MILLAT SCHOOL, ORANGI TOWN, KARACHI. ABID HUSSAIN CHOHAN HOUSE 2, STREET 1, CHOHAN HOUSE, KAMBO COLONY, ABDUL RAFIQUE H NO 1019 - E 1, 1ST FLOOR, JOHAR TOWN MOHAMMAD TANVEER SAJID SHOP # 50, COMMERCIAL CENTRE, AL QURESH TOWN, PHASE-2, SHER SHAH ROAD, MULTAN. UMAR WALLAYAT E-833/2, MIRYAM NISHAT COLONY, NEAR SAJJAN CHOWK, CANTT SHAFIQUE AHMED ABID HOSUE 1, STREET 4, PAM STREET, OLD ANARKALI MUHAMMAD SAJJAD H # 23-A, KHAKASHAN COLONY 1, JARAWALA ROAD, FAISALABAD. 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 S.No. * Policy write-off customers

NIB Bank Limited Annual Report 2016 105 Annexure - 1 534 523 936 724 814 592 570 713 510 505 557 550 521 506 571 556 Total 1,055 ------Other Relief Financial (Rupees in '000) 325 389 569 610 360 594 514 414 506 755 177 293 323 351 350 339 424 Mark-up Interest/ written-off 78 209 134 367 114 196 220 156 207 300 333 212 234 199 171 167 147 Principal written-off 549 563 963 644 992 700 943 824 685 566 765 711 635 721 Total 1,011 1,044 1,490 ------Others 323 389 564 610 360 594 514 414 506 755 108 293 323 351 350 339 424 Mark-up Accrued beginning of Period 226 174 447 353 284 450 478 286 437 735 716 392 243 414 361 296 297 Outstanding liabilities at the Principal Father’s / Husband’s Name Father’s / Husband’s DILDAR AHMED SALEMI MUSHTAQ AHMAD CHOHAN RAJA KHURSHEED AKHTER ABDUL GHANI MUHAMMAD AMEEN MUHAMMAD SHAFI QASIM ABDUL HAFEEZ MUHAMMAD FEROZ KHAN SHABBIR AHMED KHIYANOT MAL MUHAMMAD HUSSAIN MUNAWAR HUSSAIN MUHAMMAD YAQOOB NOOR MUHAMAMD ATTA ULLAH KHAN ABBAS BHAI SHEIKH MUHAMMAD SHAFIQ NIC No. 36102-1927217-5 34104-0548697-9 37405-9826561-7 42301-4826413-1 35202-2193903-3 42101-1347768-3 41303-6528139-9 42201-0417097-7 35202-6091089-9 45203-1852104-3 37405-3920816-3 35202-2974145-5 36302-9154138-5 42101-4576252-5 37405-8217595-9 42301-3616434-9 34104-0412709-7 during the year ended December 31, 2016 Name Name of Individuals / partners directors five hundred thousand rupees or above provided SAJID DILDAR SALEMI MUHAMMAD NOOMAN CHOHAN RAJA SHAHID KHURSHEED RASHID AWAN MUHAMMAD MUBEEN MUHAMMAD JUNAID SHAFI RAEES AHMED NADIR FEROZ TAUQEER AHMED MUKESH MAL MUHAMMAD ADEEL HASSAN SHEIKH NADEEM AKHTAR SHEIKH MUHAMAMD IRFAN MUHAMMAD ISHTIAQ SIDDIQUI AZIZ UR REHMAN KHAN MOIZ AMIR SHAFIQUE Statement showing written-off loans or any other financial relief of Name & Address of borrower Name & SAJID DILDAR SALEMI CHAUDHARY HOUSE ST # 01, NEW SHADAB COLONY NO. 2, MDA ROAD, PULL BARARAN, MULTAN. MUHAMMAD NOOMAN CHOHAN KOT KHIZRI TEHSIL, WAZIRABAD DISTRICT, GUJRANWALA GAKHAR MANDI. RAJA SHAHID KHURSHEED KADIR ENTERPRISES, 40/3 JEHANZEB CENTRE BANK ROAD, SADDAR, RAWALPINDI. RASHID AWAN SOS SECURITY OPERATIONS SERVICES 63-C 12TH COMMERCIAL STREET, DEFENCE PHASE-II EXT., KARACHI. MUHAMMAD MUBEEN H-9, FAZAL STREET MUHALLA 8 GARI SHAHU LAHORE NEAR AMMB PEER CHUGIAN. MUHAMMAD JUNAID SHAFI FLAT NO P-1 (PAINT HOUSE), MAIN BAHADURABAD, FARRUKH HEIGHTS, NEAR UNITED BAKERY, KARACHI. RAEES AHMED CROWN FOOD INDUSTRIES SHAMA COMM INDUSTRIAL AREA, HYDERABAD. NADIR FEROZ HOUSE # D-20, CENTRAL GOVERNMENT HOUSING SOCIETY, BLOCK # 10-A, GULSHAN-E-IQBAL, KARACHI. TAUQEER AHMED HOUSE 286 2 BOR SOCIETY, JOHAR TOWN BLOCK-A MUKESH MAL SHAH TRADERS, MARHABA CENTRE, SHOP NO. 16, DHAK ROAD, SUKKUR. MUHAMMAD ADEEL HASSAN H # 225, GF MOHALLA CHACHI COMMITTEE CHOWK RAWALPINDI. SHEIKH NADEEM AKHTAR HOUSE # 6, AKRAM PARK, SHADBAGH. SHEIKH MUHAMAMD IRFAN GHALLAH MANDI, SHOP # 182, MULTAN. MUHAMMAD ISHTIAQ SIDDIQUI GLOBE STATIONERY WORK SHOP NO 6-7, ARSHAD SQUARE, A M-5 BURNS ROAD, KARACHI. AZIZ UR REHMAN KHAN HOUSE SA 795, GHAZALI ROAD, SADIQABAD RAWALPINDI. MOIZ MOIZ PERFUME HOUSE, SHOP 3, ALTAF MANZIL BOTLLE BAZAR, M.A. JINNAH ROAD, LIGHT HOUSE, KARACHI. AMIR SHAFIQUE MOHALLAH SHAH SADDAQ, WAZIRABAD. 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 S.No.

106 Annual Report 2016 NIB Bank Limited Annexure - 1 710 536 646 633 520 568 581 506 826 807 581 570 647 Total 1,122 1,539 1,418 1,136 ------Other Relief Financial (Rupees in '000) 535 885 368 497 453 371 363 409 362 491 655 507 485 354 421 787 1,147 Mark-up Interest/ written-off 96 175 237 168 149 180 149 205 392 172 144 335 763 300 216 226 349 Principal written-off 897 704 717 873 670 774 622 652 891 795 902 Total 1,582 2,139 1,164 1,418 1,192 1,511 ------Others 535 885 368 497 453 371 363 409 362 491 655 491 485 354 421 787 1,147 Mark-up Accrued beginning of Period 362 697 336 220 420 299 411 992 213 290 673 763 701 406 441 481 724 Outstanding liabilities at the Principal Father’s / Husband’s Name Father’s / Husband’s KHANI ZAMAN SYED MINHAJ UDDIN ZAFAR MEHERBAN SHAH MUHAMMAD ABDULLAH SYED ALI RAZA ILTAF KHAN RAEES AHMED KHAN ABDUL RAZZAQ RAMZAN ALI ALLAH DITA RAO ASHFAQ ALI KHAN MIRZA INAYAT ULLAH MUHAMMAD ISLAM MUHAMMAD ASHRAF BASHEER GILL ZAFAR JAVED ABDUL RAZZAQ NIC No. 42501-6776734-5 42201-0911495-8 42101-9333444-5 38402-5504943-5 42201-1409925-7 37405-0671376-3 42101-5235261-5 42401-3095168-1 42201-0585418-7 33202-4173639-3 36302-3330524-3 35201-1907529-3 35202-2574889-1 35201-6840988-5 42401-2460126-1 42301-0876815-1 42101-1372177-1 during the year ended December 31, 2016 Name Name of Individuals / partners directors five hundred thousand rupees or above provided NAZAKAT ALI FOZIA MINHAJ FAZAL UR REHMAN MUHAMMAD MUMTAZ SYED HUSSAIN RAZA IQBAL KHAN NAWAZ AHMED KHAN YOUSUF SULTAN ALI WASIF NAWAZ TARIQ ASHFAQ RAO ZAHEER AHMED BABER MUHAMMAD FAYYAZ RANA JAVED ASHRAF ILYAS GILL ABID ZAFAR GHULAM MUSTAFA Statement showing written-off loans or any other financial relief of Name & Address of borrower Name & NAZAKAT ALI NAZAKAT TRADERS, OFFICE 1, PLOT 4184, SECTOR 21, KORANGI INDUSTRIAL AREA, KARACHI. FOZIA MINHAJ PLOT NO. F-53/1, BLOCK-F, NORTH NAZIMABAD KARACHI. FAZAL-UR-REHMAN HOUSE 90, JAN MUHAMMAD VILLAGE, GOLIMAR 1, KARACHI 18. MUHAMMAD MUMTAZ KH # 320, STREET 06, NEW AFZAL TOWN, DHOKE KALA KHAN CHAKLALA SCHEME-III, RAWALPINDI. SYED HUSSAIN RAZA FLAT B-204, 2ND FLOOR, RABI SQUARE, BLOCK-2 PECHS, KARACHI. IQBAL KHAN HOUSE NO. 10, RAILWAY LOKO SHED DHOK RATTA, BLOCK 302, RAWALPINDI. NAWAZ AHMED KHAN NIOMI SHOES SHOP NO. G-A 136 ERUM SHOPPING CENTER PHASE-2, BUFFER ZONE, NEAR CROWN SHOPPING CENTRE, KARACHI. YOUSUF YOH TRADERS PLOT 50-51, FIRST FLOOR, COMMERCIAL AREA, NAZIMABAD 4, KARACHI. SULTAN ALI FLAT N 6, PRINCE ALI S KHAN COLONY, GARDEN EAST, KARACHI. WASIF NAWAZ FLAT 4, BUILDING 9 ST 32 CANAL PARK GULBERG-II TARIQ ASHFAQ RAO HOUSE 17E/2, OFFICER COLONY, CHUNGI NO. 9, MULTAN. ZAHEER AHMED BABER HOUSE 64-A/2, MOHALLAH DEFENCE HOUSING AUTHORITY, CANT. MUHAMMAD FAYYAZ RANA H NO. 24 ST 46, MOHALLA RAK COLONY, TIMBER MARKET, RAVI ROAD, JAVED ASHRAF HOUSE 67, STREET MOHALLAH 42, NEW BAKANWAL, SHALIMAR TOWN. ILYAS GILL ILYAS TRADERS PLOT # 715/5 D/16, MAZZANINE FLOOR, AL MADINA PRIDE, NEW M.A. JINNAH ROAD, ISLAMIA COLLEGE ROAD, KARACHI. ABID ZAFAR HOUSE # 302, STREET 2-E, MEHMOODABAD-4, KARACHI. GHULAM MUSTAFA HOUSE # R762/1, F.B. AREA 1, SHARIFABAD NO.1, KARACHI. 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 S.No.

NIB Bank Limited Annual Report 2016 107 Annexure - 1 598 873 512 852 935 890 Total 1,035 1,247 1,547 1,427 2,171 3,575 3,012 3,074 3,004 1,442 2,577 3,644 2,332 ------Other Relief Financial (Rupees in '000) 438 630 290 852 935 890 1,035 1,247 1,547 1,427 2,171 3,575 3,012 3,074 3,004 1,442 2,577 3,644 2,332 Mark-up Interest/ written-off ------160 243 222 Principal written-off 808 782 995 Total 1,173 1,651 1,247 2,604 1,693 4,449 4,503 4,502 6,007 1,602 3,343 2,033 2,889 1,476 3,806 3,171 ------Others 438 630 290 980 835 822 891 1,247 1,436 1,324 1,859 3,207 3,122 3,157 2,930 1,391 2,409 3,357 2,332 Mark-up Accrued beginning of Period - 370 543 492 671 160 369 780 413 642 480 585 449 839 Outstanding liabilities at the 1,168 2,590 1,296 1,380 2,850 Principal Father’s / Husband’s Name Father’s / Husband’s AHMED KHAN KHAWAJA ABDUL RAHEEM SIDDIQUE TUFAIL HUSSAIN DIN BABO WAHEED UDDIN MUHAMMAD SALEEM BASHIR AHMED QURESHI MUHAMMAD ABID SYED NAZAR HUSSAIN SHAH MANSOOR ALAM ABDUL KHALIK ABDUL RASHEED SHAIKH MAQSOOD ALI KHAN ABDUL RASHEED MIRZA NIAZ AHMED BAIG ABDUL SATTAR MUHAMMAD NAWAZ SARDAR ALI HAJI AHMED KHAN NIC No. 42201-1817773-1 36302-3891439-7 35404-0529612-3 42101-3803804-3 42201-3576503-9 42401-7252719-0 42201-7164033-1 42501-1553067-9 37201-9721735-7 42401-1776263-5 31303-4159796-3 42201-2423435-5 42101-1575043-1 34101-1769114-3 42201-6245036-3 42301-9503480-9 31303-6838994-9 37401-2782569-5 17301-7827478-1 during the year ended December 31, 2016 Name Name of Individuals / partners directors five hundred thousand rupees or above provided SAEED AHMED KHAWAJA SAADAT MASOOD SIDDIQUE SHEIKH ABID MUKARAM ASGHAR ALI NAEEM UDDIN MUJEEB UNNISA MUHAMMAD HAFEEZ MUHAMMAD HAMID SYED ALI ASGHAR SHAH PERVAIZ ALAM MUHAMMAD JAMEEL MUHAMMAD MUBEEN IMTIAZ ALI JAWAID MUHAMMAD YOUSAF MIRZA SOHAIL AHMED MOHAMMAD IQBAL MUHAMMAD WASEEM JAVED HUSSAIN ABDUL WAHID Statement showing written-off loans or any other financial relief of Name & Address of borrower Name & SAEED AHMED FLAT A-41, BUKHARI MUNZAIL, FIRST FLOOR, SINDH PARA, SHANTI NAGAR, KARACHI. KHAWAJA SAADAT MASOOD SIDDIQUE HOUSE 3081/8-M, PAPER MARKET, BEROON BOHAR GATE, MULTAN. SHEIKH ABID MUKARAM HOUSE # 260, SHEIKH GHULLAM MUHAMMAD AHMAD PURA, SHEIKHUPURA. ASGHAR ALI NAZ-E-ERUM SHOP # 2, PLOT 39/1, MAIN BUS STOP, NAZIMABAD # 2, KARACHI. NAEEM UDDIN KING COMPUTER GAME & PCO, SHOP NO. 99-A, RAFIQ PLAZA, LUCKY STAR, SADDAR, KARACHI. MUJEEB UNNISA OFFICE NO.38/8, 8TH FLOOR, ARKAY SQUARE, NEW CHALLI SHAHRAH-E-LIAQUAT, KARACHI. MUHAMMAD HAFEEZ HOUSE # F-1/10/9, MOHALLA MALIR TOUSSI COLONY, KHOKHRAPAR, KARACHI. MUHAMMAD HAMID PLOT NO. F-53/1, BLOCK-F, NORTH NAZIMABAD, KARACHI. SYED ALI ASGHAR SHAH MUHALLAH SHAH NAZARABAD, HOUSE # 704/A, ODMARWAL DAK KHANA KHAS TEHSIL & DISTT CHAKWAL. PERVAIZ ALAM MISS SHOES LADIES, HOUSE # 54/6, BLOCK-D, GALI # 10, ORANGI TOWN 11-1/2, KARACHI. MUHAMMAD JAMEEL H NO. 503/B, 111 NOO RAHIM YAR KHAN. MUHAMMAD MUBEEN HOUSE NO. D-202, BHITAI COLONY, KORANGI CROSSING, KARACHI. IMTIAZ ALI JAWAID FLAT A-24, LATIF TERRACE, FEDERAL B. AREA, BLOCK-20, KARACHI. MUHAMMAD YOUSAF HOUSE NO.18, STREET NO.3, JINNAH PARK, GUJRANWALA. MIRZA SOHAIL AHMED SOHAIL SUPER STORE, SHOP 1-2, PLOT A-377, KAMRAN MARKET, G IQBAL, BLOCK-1, KARACHI. MOHAMMAD IQBAL LIVE ENTERPRISES, SHOP G-115, RAINBOW CENTRE, SADDAR, KARACHI. MUHAMMAD WASEEM ST # 1, QAZAFI COLONY, RAHIMYAR KHAN. JAVED HUSSAIN JAVED GENERAL MARCHANT, MAIN BAZAR, GUJAR KHAN. ABDUL WAHID OPP. SHAIKH SIRI PAI, JEHANGIR PURA,PESHAWAR. 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 S.No.

108 Annual Report 2016 NIB Bank Limited Annexure - 1 556 618 531 565 589 713 660 720 542 770 955 595 Total 5,207 2,153 1,081 1,868 1,443 1,372 1,445 ------Other Relief Financial (Rupees in '000) 556 618 531 565 589 713 660 720 542 770 955 595 5,207 2,153 1,081 1,868 1,443 1,372 1,445 Mark-up Interest/ written-off ------Principal written-off 738 531 Total 9,431 4,457 3,644 4,248 2,543 1,061 2,297 1,853 1,324 1,968 3,019 3,699 1,599 1,937 2,020 3,434 1,325 ------Others 556 738 531 565 586 707 609 681 594 707 893 567 5,031 1,964 1,081 2,077 1,444 1,396 1,400 Mark-up Accrued beginning of Period - - 505 901 738 918 758 Outstanding liabilities at the 4,400 2,493 2,563 2,171 1,099 1,288 1,261 1,619 3,090 1,343 1,313 2,541 Principal Father’s / Husband’s Name Father’s / Husband’s WILAYAT ALI AHMED DEEN MUHAMMAD IRFAN KHAN ABDUL RAZZAQUE MUHAMMAD RAFI FATEH MUHAMMAD MUHAMMAD SIDDIQUE CHAUDHRI RAFEEQ AHMED SHEIKH ABDUL SHAKOOR MUHAMMAD SALEEM MUHAMMAD ALI KHAN MUHAMMAD SHAFI NAGI MEHAR ALLAH RAKHA INNAYAT ALI CHEEMA MUHAMMAD SHAFI MUHAMMAD UMER MUHAMMAD DIN MUNIR AHMAD HAKIM ALI NIC No. 42201-2919138-9 42101-4978578-1 35202-3021953-5 41303-0170008-7 42401-9934292-1 35403-2116167-3 42301-9815762-9 42101-3191641-3 35404-1640785-5 36302-9841700-0 35202-8832891-5 35202-7662719-5 35201-7362414-3 34104-2258876-9 33100-0727286-9 34101-2700113-7 35401-0855774-3 35201-2121617-1 34603-2351498-3 during the year ended December 31, 2016 Name Name of Individuals / partners directors five hundred thousand rupees or above provided MANZOOR HUSSAIN SIDDIQ AHMED MUHAMMAD RIAZ KHAN MUHAMMAD IRFAN MUHAMMAD SALMAN MUHAMMAD SULEMAN ZAFAR SHAHID SHAHID RAFEEQ SHEIKH ZAHID MEHMOOD MRS ASMA SALEEM ZULFIQAR ALI KHAN ANWAR RAFI MUHAMMAD ASLAM MEHER AYAZ NASIM CHEEMA TAHIR EJAZ MUHAMMAD NAZIR MUHAMMAD SIDDIQUE MUHAMMAD AHMED HAJI MUHAMMAD & HAKIM ALI Statement showing written-off loans or any other financial relief of Name & Address of borrower Name & MANZOOR HUSSAIN AL MANZOOR CARGO CARRIERS, ROOM 4, FIRST FLOOR, DINAR CHAMBER, WEST WHARF, KARACHI. SIDDIQ AHMED HOUSE NO. B-48, BLOCK-R, NORTH NAZIMABAD, KARACHI. MUHAMMAD RIAZ KHAN HOUSE # 13, SHAMS BLOCK, LAHORE MEDICAL HOUSING SCHEME, LAHORE. MUHAMMAD IRFAN PLOT 54, BAND COMMERCIAL AREA, UNIT 1, LATIFABAD, HYDERABAD. MUHAMMAD SALMAN LS-30, SECTOR NO. 6/E, ORANGI TOWN KARCHI. MUHAMMAD SULEMAN ZAFAR HOUSE # 27/A, STREET 17, CHIRAG PARK, NEAR SARDAR GOODS TRANSPORT COMPANY, LAHORE. SHAHID ANWARI MANZIL, 2ND FLOOR, FLAT 4, AK FREAD STREET, SUNDAS ROAD, RANCHORLINE, KARACHI. SHAHID RAFEEQ BLUE SKY BAKERY, PLOT D-74/1, BLOCK-5, F.B. AREA, KARACHI. SHEIKH ZAHID MEHMOOD NEW SABZI MANDI, GHUMAN TOWN, STREET # 2, SHEIKHUPURA. MRS ASMA SALEEM BEHIND SALEEM SURGICAL HOSPITAL BUILDING, BOSAN ROAD, MULTAN. ZULFIQAR ALI KHAN HOUSE # 207, ST 1, AL MEHTAB PARK, BAKKARMANDI, LAHORE. ANWAR RAFI 566-E, SABZAZAR SCHEME, LAHORE. MUHAMMAD ASLAM MEHER 44-A, GULDASHT TOWN, ZARAR SHAHEED ROAD, LAHORE CANTT. AYAZ NASIM CHEEMA 402 G1, JOHAR TOWN, LAHORE. TAHIR EJAZ HOUSE # 221-B, GULBERG COLONY, FAISALABAD. MUHAMMAD NAZIR 234 A/2, WAPDA TOWN, GUJRANWALA. MUHAMMAD SIDDIQUE 285, M BLOCK, SABZAZAR, LAHORE. MUHAMMAD AHMED HOUSE # 12, STREET 25, SHAM NAGAR, LAHORE. HAJI MUHAMMAD & HAKIM ALI 6/7 RAILWAY COLONY, ROAD, SIALKOT. 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 S.No.

NIB Bank Limited Annual Report 2016 109 Annexure - 1 660 763 Total 4,291 1,193 2,328 2,546 1,135 1,107 4,113 5,902 4,829 1,806 1,762 10,090 17,409 12,715 96,908 11,737 ------Other Relief Financial (Rupees in '000) 660 763 4,291 1,193 2,328 2,546 1,135 1,107 4,113 5,902 4,829 1,806 1,762 10,090 17,409 12,715 47,609 11,737 Mark-up Interest/ written-off ------49,299 Principal written-off Total 2,459 9,600 4,542 1,393 3,984 7,984 2,090 2,509 5,439 7,695 4,829 3,180 1,762 12,078 22,333 12,715 25,236 100,586 ------Others 601 932 4,332 9,978 1,393 2,265 2,486 1,090 1,009 4,140 5,895 4,829 1,764 1,762 16,783 12,715 47,609 25,236 Mark-up Accrued beginning of Period - - - - - 210 Outstanding liabilities at the 2,100 1,858 8,668 1,719 5,498 1,000 1,500 1,299 5,550 1,800 1,416 52,977 Principal Father’s / Husband’s Name Father’s / Husband’s SHEIKH NAZIR AHMAD M.ARSHAD ABDUL GHANI I) AMJAD SHEIKH II) S.M. SHARIF MUHAMMD HANIF SHAHAB-UD-DIN AHMAD GHULAM SARWAR SYED AKHTAR ALI GHULLAM QADIR HAJI SHEIKH MUHAMMAD ASHRAF MUHAMMAD SIDDIQIUE SAJJAD HAIDER KHAN HKHURSHEED AHMAD SYED NOOR SHAH MUHAMMAD DIN ZUBAIR BEGUM (I) SHEIKH MUBARAK ALI (II) MR. AGHA MUHAMMAD SAEED (III) MUHAMMAD ASLAM (IV) AKHTAR ALI (I) ASIF ALI KHAN (II) REHMAT ALI KHAN NIC No. 35201-1480374-5 61101-8544922-7 42101-5413622-1 35202-2400132-5 35202-2963954-5 34402-1576348-1 35201-1544437-1 34102-7010824-9 34101-2555289-5 81302-3794133-7 35202-7639750-3 36302-4811093-1 37203-4323505-3 35202-2896422-9 42301-0917704-7 (I) 35202-6601919-1 (I) 35202-2936282-0 (II)35202-2767318-4 (I) 42000-7244568-7 (II) DECEASED (II) 42301-7778083-3 (III) 35202-8018877-5 (IV) 35202-1786443-9 during the year ended December 31, 2016 Name Name of Individuals / partners directors five hundred thousand rupees or above provided MR AND MRS NAJEEB AHMED SHEIKH MUHAMMAD RASHID KAMRAN SULTAN GHANI I) ARSLAN AMJAD SHEIKH II) AMJAD SHEIKH RIZWAN AHMED NADEEM UMER ADNAN SARWAR SYED IMRAN AKHTAR MEHRBAN ALI SH. ARSHAD SHAHZAD EHSAN UL HAQ SADDIQIE JAVED AKHTAR SHAFIQ AHMED SYED TASADDUQ HUSSAIN SHAH MUHAMMAD AYUB GHAFOOR KAMANI (I) SHEIKH NIAZ ANJUM (II) ZOHRA BATOOL (III) MR. QAISAR ALI (IV) MR. MUHAMMAD ALI (I) KASHIF ALI KHAN (II) ASIF ALI KHAN Statement showing written-off loans or any other financial relief of Name & Address of borrower Name & MR AND MRS NAJEEB AHMED SHEIKH 6-ZAMAN COLONY, CALVARY GROUND, LAHORE. AIK INTERNTIONAL 62 CANNING ROAD, SADDAR, RAWALPINDI. AL-HASEEB IND ENG CORP PVT LTD. PLOT NO. 23/1, SECTOR 12-A, NORTH KARACHI. MEENA KAR H 294-A, NEW MUSLIM TOWN, LAHORE. MIAN & COMPANY 664-NASHEMAN IQBAL HOUSING SOCITY, LAHORE. CORNER CLOTH HOUSE # 131, KHAWAJA STREET, CHOHAN ROAD, ISLAMPURA, LAHORE. ADNAN SARWAR HOUSE NO.7/216 HAKEEM INAMULLAH ROAD, MANDI BAHAUDDIN. SYED TRADE IMPEX HOUSE # 4, STREET 55, TAJPURA ROAD, MUGHALPURA, LAHORE. MEHARBAN ENTERPRISES CHAUDARY STREET, NEAR CALTEX PUMP, G.T. ROAD, KAMOKI. TRI BRO.ELECTRONICS HOUSE NO. 75, STREET 5, DEFENCE OFFICER HOUSING COLONY NO. 1 GUJRANWALA. EHSAN UL HAQ SADDIQIE HOUSE NO. 121 SECTOR F/1, MIRPUR, AZAD KASHMIR. JAVED AKHTAR 33-B, WARIS ROAD, LAHORE. AL-NOOR TRADERS 10 GILLANI COLONY, MULTAN. AL-NOOR ENTERPRISES H NO. 66 SECTOR 3 STREET 7, HAROON BAHRIA HUB RIVER ROAD, NAVAL COLONY 34. MUHAMMAD AYUB RASHID PARK BEGUM KOT NEAR DARBAR SADA HUSSAIN SHEIKHUPURA ROAD, SHAHDRA. GHAFUR INDUSTRIES NEW QUEENS ROAD, LALAZAR, KARACHI. ANMOL TEXTILE MILLS 83-A/H, RACE VIEW,JAIL ROAD, LAHORE SHADMAN ELECTRONICS 201, SECTOR-23, INDUSTRIAL AREA, KORANGI TOWNSHIP, KARACHI 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 S.No. 127

110 Annual Report 2016 NIB Bank Limited Annexure - 1 Total 3,570 5,755 1,054 3,917 8,249 8,802 5,241 3,296 2,652 66,681 42,078 18,991 38,242 17,406 190,136 179,442 ------Other Relief Financial (Rupees in '000) 652 1,463 1,550 4,263 1,054 3,917 8,249 8,802 5,241 2,781 45,073 13,122 22,643 14,289 79,205 106,034 Mark-up Interest/ written-off - - - - - 515 2,020 1,492 5,869 3,117 2,000 84,102 21,608 40,615 15,599 100,237 Principal written-off Total 3,570 5,755 3,917 8,249 8,823 7,323 7,652 83,430 25,826 39,991 40,550 36,749 12,296 296,923 132,648 239,442 ------Others 826 652 1,463 1,550 4,263 3,917 8,249 8,823 5,684 2,781 45,073 13,122 22,643 13,632 79,205 Mark-up Accrued 106,034 beginning of Period - - - Outstanding liabilities at the 9,515 2,020 1,492 1,639 7,000 25,000 38,357 26,869 17,907 23,117 190,889 131,185 160,237 Principal Father’s / Husband’s Name Father’s / Husband’s (I) CH. DIN MUHAMMAD (II) CH. DIN MUHAMMAD (III) CH. DIN MUHAMMAD (IV) CH. DIN MUHAMMAD (V) MIAN MUHAMMAD JEHANGIR (VI) MIAN MUHAMMAD JEHANGIR (VII) CHAUDHRY DIN MUHAMMAD (I) HASSAN A. JAVERI (II) HASSAN A. JAVERI (III) HASSAN A. JAVERI (IV) NAVEED MOHAMMAD JAVERI (V) WIFE OF HASSAN A. JAVERI (VI) WIFE OF SHAHAB GHANI KHAN (VII) SYED ASHRAF AHMED (I) MR. MANZOOR HUSSAIN SHAIKH (II) MR. MANZOOR HUSSAIN SHEIKH (III) MR. FAZAL HUSSAIN SHEIKH (V) MR. GHAYAS-UD-DIN SHEIKH (IV) MR. MANZOOR HUSSAIN SHEIKH SYED M. JAMIL RIZVI MUHAMMAD UMAR (I) IFTIKHAR UD DIN (II) IFTIKHAR UD DIN (III) IFTIKHAR NISAR AHMED SHEIKH REHMAT KHAN (I) AKBAR ALI WASTANI (II) AMIN WASTANI (III) WASTANI (I) MUHAMMAD HUSSAIN (II) MUHAMMAD HASHM ZUBAIR BEGUM (I) HASSAN ALI CHATOOR (II) HASSAN ALI CHATOOR (III) KASSAM ALI CHATOOR (I) HAJI MUHAMMAD RAMZAN SIDDIQI (II) ABDUL QAYUM SIDDIQUI RANA MIAN NASEER UD DIN AMINI (I) SADDIQ ALI (II) LAL DIN (III) SADIQ ALI (IV) ABBAS MALIK ABDUR RAZAQ NIC No. 42101-1840071-3 35202-7843318-9 42301-8315847-3 35202-8921328-5 42301-0917704-7 37405-8974203-9 35202-2940781-5 (I) 517-56-216283 (II) 517-65-216287 (V) 517-35-216284 (III) 517-92-216288 (IV) 517-86-405096 (VI) 514-88-121096 (IV) 502-85-176777 (VII) 517-53-139222 (I) 41305-6033700-2 (I) 35202-1488063-9 (I) 33102-1749610-9 (I) 42101-2555496-5 (I) 42101-0423779-5 (I) 42201-3686754-5 (I) 35202-3672698-7 (I) 35202-6587436-7 (II) 35202-2771296-7 (II) 33102-1749610-3 (II) 42101-5357738-4 (II) 42101-5796062-4 (II) 35200-6742103-9 (II) 35202-7892740-8 (II) 35405-0358647-9 (V) 35202-2887796-1 (V) 35202-2030145-5 (III) 35202-2987001-1 (III) 35202-3354214-7 (III) 33100-9694643-3 (III) 42101-9436094-5 (III) 35200-1559192-3 (III) 35404-3634963-5 (IV) 35202-3351966-9 (VI) 35202-3186675-6 (IV) 35401-6390559-9 (VII) 35202-5249783-5 (II) FOREIGN DIRECTOR during the year ended December 31, 2016 Name Name of Individuals / partners directors five hundred thousand rupees or above provided (I) MIAN MOHAMMAD JEHANGIR (II) MIAN WAHEED AHMED (III) MIAN MUHAMMAD NAWAZ (IV) MIAN WAQAR AHMED (V) MIAN KHURRAM JEHANGIR (VI) MRS NARGIS JEHANGIR (VII) MIAN KHURSHID AHMED (I) MR. NAVEED MOHAMMAD JAVERI (II) MR. MUSTAPHA FARABI JAVERI (III) MS. ZEHRA JAVERI (IV) MRS. HILAL JAVERI (V) MRS. AYESHA JAVERI (VI) MRS. AMBER GHANI KHAN (VII) SYED MOHAMMAD MEER (I) MR. MUHAMMAD YOUNUS SHAIKH (II) MR.MAQBOOL HUSSAIN SHAIKH (III) MR. MANZOOR HUSSAIN SHEIKH (IV) MR. MOHAMMAD YOUSAF SHEIKH (V) MR. WAJIH-UD-DIN SHEIKH SYED HASNAIN MEHDI RIZVI ADNAN UMAR (I) KHURRAM IFTIKHAR (II) SHAHZAD IFTIKHAR (III) NADEEM IFTIKHAR AFTAB AHMED SHARAFAT KHAN (I) AMIN WASTANI (II) ROZMINA WASTANI (III) SALEEM WASTANI (I) MUHAMMAD HASHIM (II) AMINA BEGUM GHAFOOR KAMANI (I) AMIR ALI HASSAN CHATOOR (II) KARIM ALI CHATOOR (III) IMRAN KASSAM ALI (I) ABDUL QAYYUM SIDDIQI (II) SHAHIDA BANO RANA WASEEM NASEER AMINI (I) RANA MUHAMMAD KHAN (II) ZAHID MEHMOOD (III) RANA ZAHID MEHMOOD (IV) RANA MUHAMMAD ABBAS MALIK MUHAMMAD ARSHAD Statement showing written-off loans or any other financial relief of Name & Address of borrower Name & MIAN TEXTILE INDUSTRIES 29B/7 MODEL TOWN LAHORE DIGRI SUGAR MILLS LIMITED SUITE 514, CLIFTON CENTRE, BLOCK-5, KEHKESHAN CLIFTON, KAKARACHI MANZOOR TEXTILE MILLS LIMTIED MANZOOR HYTES, 6-ST. MARY PARK, GULBERG-III, LAHORE. KEMIKO KEMIKALS E-22, RIZVIA COOPERATIVE HOUSING SOCIETY, NAZIMABAD, KARACHI. MODERN MACHINERY 1-BULL ROAD, BRANDERTH LAHORE. AMTEX LIMITED P-225, TEEKA GALI NO2, AMTEX PLAZA, YARN MARKET FAISALABAD. AFTAB SILK INDUSTRIES 11-B/1, 6TH ZAMZAMA STREET, DHA PHASE-V, KARACHI. SHARAFAT BROTHERS HOUSE NO.105, ST NO.2, AHBAB COLONY, MULTAN ROAD, LAHORE. WASTANI ENGINEERING INDUSTRIES PVT E-96, HUB INDUSTRIAL TRADING ESTATE, HUB CHOWKI DISTT. LASBELLA, BALUCHISTAN. AL AZEEM ENTERPRISES A-3 & 4, ST-7, SECTOR 5-L, MAZZANINE FLOOR, NORTH KARACHI, KARACHI. STAR WEAVING MILLS B-40, NEW QUEENS ROAD, LALAZAR, KARACHI. GOLDEN TEXTILE MILLS LIMITED 213/214, UNI PLAZA, I.I. CHUNDRIGAR ROAD, KARACHI. SHAHEEN PVC IND (PVT) LIMITED OPP CHOHAN PARKBUND ROAD, LAHORE. AMINI GARMENTS U-6/A BAZAAR TALWARAAN, RAWALPINDI. UHAD POLY PACKAGES NANKANA MANANWALA ROAD, KOT WARTEH SHAHKOT, DISTT. NANKANA SAHIB. FOOD CHAIN 48M MODEL TOWN EXT LAHORE. 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 S.No. 128

NIB Bank Limited Annual Report 2016 111 Annexure - 1 Total 3,419 1,727 1,119 4,193 2,705 1,526 30,718 41,974 40,414 11,474 26,275 13,809 90,040 1,799,134 189,301 302,104 148,354 ------Other Relief Financial (Rupees in '000) 1,419 1,727 1,119 4,193 2,705 1,526 6,462 18,718 23,984 40,414 10,904 13,809 70,290 40,415 129,051 179,381 Mark-up Interest/ 1,076,159 written-off ------570 2,000 12,000 17,990 60,250 19,813 19,750 722,975 122,723 107,939 Principal written-off Total 2,867 1,119 5,993 6,705 2,725 16,419 30,718 41,974 62,716 23,854 36,085 2,862,494 182,344 402,248 394,787 104,148 203,096 ------Others 1,419 1,668 1,119 5,993 2,705 1,526 6,462 18,718 23,984 39,823 10,904 14,603 66,594 40,395 Mark-up Accrued 119,094 179,381 1,072,563 beginning of Period - - Outstanding liabilities at the 1,199 4,000 1,199 15,000 12,000 17,990 22,893 12,950 63,250 21,482 37,554 222,867 388,325 162,701 1,789,931 Principal Father’s / Husband’s Name Father’s / Husband’s MALIK ABDUL RAZZAQ IQBAL AHMD KHAN IQBAL AHMED KHAN (I) EJAZ AHMED (II) USMAN MEMON HABIBULLAH KHAN (I) MIAN NASEEM ANWAR (II) MIAN MUHAMMAD ASLAM (III) MIAN NASEEM ANWAR (V) QAMAR (IV) SYED RIAZ-UL-HASSAN (VI) MAHMOOD ABDUL SATTAR DAGRAH (I) SYED AZMAT ALI ABIDI (II) JALEES ABIDI (I) ALLAHDITTA SHAHID MALIK (II) ALLAHDITTA SHAHID MALIK (III) MALIK (IV) MALIK RANA MANZOOR HUSSAIN (I) MUHAMMAD YAQOOB (II) JAVAID (I) ABDUL RAZZAK (II) ZAHID A. RAZZAK (I) MUHAMMAD ISMAIL (II) BASHIR AHMED (III) BASHIR AHMED (IV) BASHIR AHMED (I) SYED MUHAMMAD SIBTAIN (II) SYED SIBTAY ABBAS (I) BARKAT ALI (II) BARKAT ALI (III) SHOUKAT ALI SHEIKH (I) ABDUL MAJEED (II) ABDUL MAJEED (III) MAJEED NIC No. 35202-2940779-3 42301-5661982-7 42301-5566887-7 35202-3475489-6 42301-0642753-5 33100-4050145-9 (I) 41303-0298236-9 (I) 33100-8343512-9 (I) 42301-9079012-3 (I) 42101-2309109-9 (I) 35201-4941173-3 (I) 42000-0571249-5 (I) 35202-2498826-9 (I) 42101-1776405-9 (I) 33100-7845097-5 (I) 33100-0686482-3 (II) 41303-1495552-1 (II) 35202-1622560-7 (II) 42301-1438543-0 (II) 42201-4267542-7 (II) 35201-1592196-1 (II) 42000-0514201-6 (II) 35202-6362988-1 (II) 42101-1539052-1 (II) 33100-0893232-3 (II) 33100-0729198-7 (V) 37405-5680091-9 (III) 35202-6929272-1 (III) 42101-7405478-7 (III) 35202-1259245-5 (III) 33100-1014808-7 (III) 33100-1985142-5 (IV) 35202-2193696-3 (IV) 33100-5345698-3 (IV) 42101-2993777-4 (IV) 35202-2652819-5 during the year ended December 31, 2016 Name Name of Individuals / partners directors five hundred thousand rupees or above provided MUHAMMAD FAROOQ RAZZAK JAVID IQBAL KHAN FAISAL IQBAL KHAN (I) MUHAMMAD ALI (II) MUHAMMAD ARIF SHEIKH SAIRA HABIB (I) MIAN FARRUKH NASEEM (II) MIAN SHAHZAD ASLAM (III) MIAN AAMIR NASEEM (IV) SYED ARIF HUSSAIN (VI) SHAHID MAHMOOD (V) IRFAN QAMAR ASIF SATTAR DAGRAH (I) JALEES OSMAN ABIDI (II) ASHRAF JEHAN ABIDI (I) SOHAIL SHAHID MALIK (II) AMJAD MALIK (III) RASHID MALIK (IV) INAYAT BEGUM FARRUKH MAHMOOD (I) MUHAMMAD SHAHID IQBAL (II) MUHAMMAD ZAHID JAVAID (I) ZAHID A. RAZZAQ (II) AMBREEN ZAHID (I) BASHIR AHMED (II) MUHAMMAD TAHIR BASHIR (III) MUHAMMAD SHAHID BASHIR (IV) MUHAMMAD ZAHID BASHIR (I) SYED SIBTAY ABBAS (II) SYED KHIZAR ABBAS (I) MUBASHIR ALI (II) AYUB ALI (III) ASAD ALI SHEIKH (I) AZHAR MAJEED SHEIKH (II) ARSAL MAJEED (III) AFZAL MAJEED Statement showing written-off loans or any other financial relief of Name & Address of borrower Name & B.CHIRAGH DIN-H.HASSAN MUHAMMAD 48-M, MODEL TOWN EXT, LAHORE. JAFCO INTERNATIONAL 37/11, KHAYABAN-E-BAHRIA, PHASE-5, KARACHI. JINNAH MEDICOS & SURGICALS 37/11, KHAYABAN-E-BAHRIA, PHASE-5, DHA, KARACHI. DEEZINA TEXTILE PLOT NO. L-13, 1ST FLOOR, BLOCK-21, F.B. AREA, KARACHI. UMAR EMBRIODERY 291-L EXTENSION MODEL TOWN, LAHORE. SARGODHA SPINNING MILLS LIMITED A-601/B, CITY TOWERS, 6-K, MAIN BOULEVARD, LAHORE. WELLWORTH ENTERPRISES F-22/3, BLOCK-8, CLIFTON, KARACHI. OYSTER WORKS PVT LIMITED 218, 2ND FLOOR, PARK TOWERS, FI-5, CLIFTON, KARACHI. MALIK TEXTILE IND.(PVT) LIMITED L-30, BLOCK-22, INDUSTRIAL ESTATES, F.B. AREA, KARACHI. FARRUKH TRADERS 207 SANAT SINGH WALA PORT OFF NISHAT ABAD FAISALABAD. SHAHID AND COMPANY HOUSE NO.4, STR. NO.2 NAVEED PARK, MUGHALPURA, LAHORE. CENTURY 21 TEXTILE AND SPORTSWEAR C-55, KDA SCHEME NO.1, KARSAZ ROAD, KARACHI. UNITED ETHANOL 458-K, MODEL TOWN, LAHORE. SHAZAIB INDUSTRIES PLOT NO. B 33/A, S.I.T.E, KARACHI. TAJ PROCESSING P-457 SARGODHA ROAD, FAISALABAD. ARZOO TEXTILE 21-A, PEOPLES COLONY NO.1, FAISALABAD. 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 S.No.

112 Annual Report 2016 NIB Bank Limited FINANCIAL AND MANAGEMENT SERVICES (PRIVATE) LIMITED

The Bank has not consolidated the financial statements of Financial & Management Services (Private) Limited (“FMSL”) - Subsidiary, as the investment is fully provided for. The Bank has also received relaxation from Securities and Exchange Commission of Pakistan (SECP) of the requirements of Section 237 of the Companies Ordinance, 1984 through SECP letter EMD/233/654/2002- 526 dated December 22, 2016. As per the requirements of the SECP, enclosed herein are the financial highlights of FMSL for the year ended December 31, 2015 and the Auditors' opinion. Annual financial statements of FMSL would be available for inspection at Registered Office of the Bank and would also be available to the members on request, without any cost.

NIB Bank Limited Annual Report 2016 113 Auditors’ Report to the Members

We have audited the annexed balance sheet of Financial and Management Services (Private) Limited ("the Company") as at 31 December 2015 and the related profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. It is the responsibility of the Company's management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984 (XLVII of 1984). Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that: a) in our opinion, proper books of account have been kept by the Company as required by the Companies Ordinance, 1984 (XLVII of 1984); b) in our opinion: i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984 (XLVII of 1984), and are in agreement with the books of account and are further in accordance with accounting policies consistently applied; ii) the expenditure incurred during the year was for the purpose of the Company's business; and iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the Company; c) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the Company's affairs as at 31 December 2015 and of the results of the operations, its cash flows and changes in equity for the year then ended; and d) in our opinion, no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980). We draw attention to note 1.2 to the financial statements which states that the Board of directors of the Company in their meeting dated 25 March 2009 had decided to place the Company on a dormant status and future regulatory expenses of the Company will be borne by the Holding Company. Our opinion is not qualified in respect of this matter.

Date: 25 March 2016 KPMG Taseer Hadi & Co. Karachi Chartered Accountants Amyn Pirani

114 Annual Report 2016 NIB Bank Limited Financial and Management Services (Private) Limited Balance Sheet As at December 31, 2015

2015 2014 (Rupees in ‘000)

SHARE CAPITAL AND ACCUMULATED LOSS

Authorized share capital 300,000 ordinary shares of Rs.100 each 30,000 30,000

Issued, subscribed and paid-up share capital 9,265 9,265

Accumulated loss (9,265) (9,265)

– –

TOTAL EQUITY – –

Contingencies and commitments

Hakim Ali Laghari Yameen Kerai Chief Executive Director

NIB Bank Limited Annual Report 2016 115 Financial and Management Services (Private) Limited Profit and Loss Account For the year ended December 31, 2015

2015 2014 (Rupees in ‘000)

Income – –

Expenses – –

Profit / (loss) for the year – –

Hakim Ali Laghari Yameen Kerai Chief Executive Director

116 Annual Report 2016 NIB Bank Limited Pattern of Shareholding as at December 31, 2016

Number of Shareholdings Shares held Percentage Shareholders From To 1,408 1 100 53,445 0.00 2,915 101 500 1,007,077 0.01 3,022 501 1,000 2,596,801 0.03 8,697 1,001 5,000 25,449,913 0.25 2,588 5,001 10,000 20,478,391 0.20 3,563 10,001 50,000 88,376,608 0.86 892 50,001 100,000 69,323,084 0.67 552 100,001 200,000 80,657,231 0.78 201 200,001 300,000 50,993,990 0.49 97 300,001 400,000 34,603,567 0.34 89 400,001 500,000 38,437,507 0.37 37 500,001 600,000 21,661,058 0.21 26 600,001 700,000 18,466,206 0.18 26 700,001 800,000 22,047,879 0.21 18 800,001 900,000 15,376,116 0.15 28 900,001 1,000,000 27,297,941 0.27 60 1,000,001 2,000,000 85,892,864 0.83 27 2,000,001 3,000,000 66,963,041 0.65 11 3,000,001 4,000,000 37,525,290 0.36 6 4,000,001 5,000,000 28,310,385 0.27 18 5,000,001 10,000,000 119,359,162 1.16 3 10,000,001 15,000,000 40,138,690 0.39 1 15,000,001 20,000,000 16,083,935 0.16 1 20,000,001 25,000,000 24,578,800 0.24 1 25,000,001 30,000,000 28,420,050 0.28 1 30,000,001 50,000,000 32,387,351 0.31 1 50,000,001 1,000,000,000 200,636,184 1.95 1 1,000,000,001 10,000,000,000 9,105,728,598 88.38

24,290 10,302,851,164 100.00

Categories of Shareholders Number of Shares held Percentage Category Shareholders Directors, Chief Executive Officer, and their spouses and minor children 0 0 0.0000 Associated Companies, Undertakings and Related Parties 1 9,105,728,598 88.3807 NIT, ICP & IDBP/ICP 3 1,665,048 0.0162 Banks, Development Financial Institutions, Non Banking Financial Institutions 27 37,935,395 0.3682 Insurance Companies 11 494,742 0.0048 Modarabas and Mutual Funds 13 8,114,168 0.0788 Public Sector Companies, Corporations and Offices 6 237,547,935 2.3057 Executives/Employees 11 3,363,250 0.0326 Foreign Companies 62 60,467,638 0.5869 Shareholders holding 5% or more [excluding Bugis Investments (Mauritius) Pte Limited] 0 0 0.0000 General Public (including local & foreign individuals) 23,969 765,508,305 7.4301 Others 187 82,026,085 0.7961

Total 24,290 10,302,851,164 100.0000

NIB Bank Limited Annual Report 2016 117 Pattern of Shareholding as at December 31, 2016

Details of Pattern of Shareholding Number of Number of S. No. Categories of Shareholders Shareholders Shares held Percentage 1 Associated Companies, Undertakings and related parties Bugis Investments (Mauritius) Pte Ltd 1 9,105,728,598 88.3807

2 NIT & ICP CDC - Trustee National Investment (Unit) Trust 1 1,651,532 0.0160 Investment Corporation of Pakistan 2 13,516 0.0001

3 Directors, CEO and their spouses and minor children 0 0 0.0000 4 Executives and Employees 11 3,363,250 0.0326 5 Public Sector Companies, Corporations and Offices 6 237,547,935 2.3057 6 Foreign Companies 62 60,467,638 0.5869 7 Banks, Development Financial Institutions, Non-banking Financial Institutions, Insurance Companies, Modarabas and Mutual Funds 51 46,544,305 0.4518 8 General Public (including local & foreign individual) 23,969 765,508,305 7.4301 9 Others 187 82,026,085 0.7961

Total 24,290 10,302,851,164 100.0000

Details of Modaraba / Mutual Funds

S.No. Name of Modaraba / Mutual Funds Number of Shares Held 1 Safeway Mutual Fund Ltd. 651 2 Golden Arrow Selected Stocks Fund Ltd. 2,127 3 First Tri Star Modaraba 6 4 Prudential Stocks Funds Ltd. 3,367 5 Unicap Modaraba 2,152 6 Safeway Fund ( Pvt) Ltd. 1,965 7 First Interfund Modaraba 289 8 Industrial Capital Modaraba 575 9 Safeway Mutual Fund Ltd. 1,812 10 Asian Stock Fund Ltd. 575 11 Prudential Stock Fund Ltd. 4,223 12 Golden Arrow Selected Stocks Fund Ltd. 6,272,955 13 CDC - Trustee AKD Opportunity Fund 1,823,471 8,114,168

Trades in the shares by Executives (Direct Reportees): S.No. Name of Executives Purchase Sale 1 Tufail Jawed Ahmad * – 949,000 2 Imtiaz Ahmad Sheikh – 390,000 3 Zeeba Ansar – 10,000

*Employment contract expired during 2016.

118 Annual Report 2016 NIB Bank Limited NIB Bank Limited Annual Report 2016 119 120 Annual Report 2016 NIB Bank Limited NIB Bank Limited Annual Report 2016 121 122 Annual Report 2016 NIB Bank Limited NIB Bank Limited Annual Report 2016 123 124 Annual Report 2016 NIB Bank Limited Branch Network

ABBOTTABAD GUJRANWALA F-11 Markaz Branch Plot # 18, Trade Centre, Main Double Road Al-Pine Hotel Branch Anwar Industries Branch Khasra No. 2047, 2049, Near Al-Pine Hotel Khewat No. 1627, Khatooni No.1804 F-11 Markaz, Islamabad Tel: 051-2107862-65 Opposite Sui Gas Office, Mansehra Road Khasra No. 5039/2529, Revenue Estate Abbottabad, Khyber Pakhtoon Khwa Khiali Shahpur, Tehsil & Distt. Tel: 0992-344076-80, 9310315 Gujranwala, Punjab F-8 Markaz Branch Shop # 12 & 13, Al-Babar Center Tel: 055-4272160, 4272169, 4555091, 4272144 F-8 Markaz, Islamabad, Punjab ATTOCK Tel: 051-2818246, 2852653, 2852655 Attock City Branch Al-Hameed Centre Branch Shop # B-III/37, C-152, Dr. Ghulam Gillani Burq Road BX 11-7S-149, G.T. Road, I-10 Markaz Branch Attock City, Punjab Gujranwala, Punjab Plot # 3-A, I-10 Markaz, Islamabad Tel: 057-2700903-04, 2701909 Tel: 055-9201234,9200234-37, 3254360 Tel: 051-4447180, 4444619-20, 4447140

BAHAWALPUR GUJRAT PWD Employee Bahawalpur Branch Gujrat Branch Coop. Housing Society Branch 913/2 BV, Near Fawara Chowk, Circular Road Shafique Plaza, Opp. Wahid Industries 40-B, Block-B, Commercial Area (Extension) Bahawalpur, Punjab G.T. Road, Gujrat, Punjab PWD Employees Housing Society, Lohi Bhair Tel: 062-2889371-72 Tel: 053-3530172-73, 3530289-90 Islamabad Highway, Islamabad Tel: 051-5957660, 5194302, 5957422 CHAKWAL HYDERABAD JHANG Chakwal Branch Risala Road Branch B1-1/1634/1, B-1-1635, Talagang Road F-71/2, Risala Road, Jhang Branch Chakwal, Punjab Hyderabad, Sindh Khewat # 698, Khatooni # 203, Usaf Shah Road Tel: 0543-602050-52, 600684, 550121 Tel: 022-2731000, 2729437, 2785931-32 (Opposite District Courts Jhang) District Jhang, Punjab Tel: 047-7629590-92, 7629594 CHAMAN Cantt Branch Plot No. 41/53-54, JHELUM Chaman Branch Cantt Saddar, Hyderabad Plot # 1332, 1333, Civil Lines Branch Chamber of Commerce Road, Tel: 022-2787462, 2784560, 2730685 B-V-112, Resham Plaza, Civil Lines, Jhelum, Punjab Chaman, Balochistan 2784647-48 Tel: 0544-627286, 628677, 627128, 629909, 629174 Tel: 0826-615217-9 Market Area Branch KAMOKI Plot # /1272/1, Sheet No.2, Ward “A” DASKA Kamoki Branch City Survey, Market Area, Hyderabad, Sindh Khasra No.9693/2778/2, Khewat No. 2066, Daska Branch Tel: 022-2635070-72 Property # BV III-883, Khatooni No.2152, GT Road, Kamoki Tehsil Kamiki, Gujranwala Road, Near Canal Rest House, District Gujranwala, Punjab Daska District Sialkot, Punjab Latifabad Branch Tel: 055-6816723, 6816823, 6816923 Tel: 052-9200080-85 Plot # 175, Block "D", Unit # 7, Latifabad Hyderabad, Sindh Tel: 022-3818437, 3821641, 3821639 KAMRA FAISALABAD Kamra Branch NIB Bank Mini Plaza, PAC Chowk, Liaquat Road Branch Qasimabad Branch Plot No. 3, Liaquat Road, Faisalabad, Punjab Plot No. B-01, GECH Society G.T. Road, Kamra Cantt, District Attock Tel: 041-2604939-40, 2604935, 2604931-32, Near Ali CNG, Qasimabad, Hyderabad, Sindh Tel: 057-2642511, 2642520-21 2619563, 2541217 Tel: 022-2670527, 2654801, 2654002 KARACHI Gulistan Colony Branch ISLAMABAD Gul Tower Branch Commercial Center # 2, Millat Road, Gul Tower, I.I Chundrigar Road, Karachi, Sindh Faisalabad, Punjab Post Mall Branch Tel: 021-35277220, 32426140, 32419166, 111-333-111, Tel: 041-8846916, 8849935-36, 8847253 Plot # 3, F-7 Markaz, Post Office Mall Building, Islamabad 35277110, 35277271 Ext. 6261, 6112, 6230, 6231 Tel: 051-2653430, 2608017-18, Regency Arcade Branch 2608003, 2608010, 2653531-33 DHA 26th Street Branch The Mall, Regency Shopping Arcade 42-C, 26th Street Faisalabad, Punjab Tauheed Commercial Area Tel: 041-2604875-77, 2612890 I-8 Branch Phase-V, DHA, Karachi, Sindh MB City Mall, Plot No. 34, Tel: 021-35304163, 35304159-60 I-8 Markaz, Islamabad Karkhana Bazar Branch Property # 122, Khatooni # 1650 Tel: 051-4862279, 4862278, 4862271, Jodia Bazar Branch Khewat # 1647, Faisalabad, Punjab 4862287, 4862347 MR 6/2, Market Plaza, Virjee Street Tel:041-2601805-08 Karachi, Sindh F-10 Branch Tel: 021-32432849, 32443758, 32410395 Block # 1 R, Unit # 3, 4, & 5, GAWADAR Main Double Road, F-10 Markaz North Karachi Industrial Area Branch Gawadar Branch Islamabad Plot # 1, Sector 12-B, Industrial Area Plot Khayut & Khatooni # 35, Thana Ward Tel: 051-2215856-57, 2215834, 2215842 Main Airport Road, Gawadar, Balochistan North Karachi, Sindh Tel: 086-4212207-10 Tel: 021-36962726-27, 36962724 E-11/3 Branch Commercial Plot No. 2, Sector E-11/3, Islamabad Korangi Industrial Area Branch GHAKAR MANDI Gardens, Islamabad. Plot # SC-5, ST-17, Sector-15, Ghakar Mandi Branch Tel: 051-2375343-44, 2375434-6 Korangi Industrial Area, Karachi, Sindh Khewat # 2414, Khatooni # 3600, Tel: 021-35114151, 35114153-54, 35114146 Khasra # 3359, Mauza Ghakar, Centauras Mall Branch 35114148, 35114350, 35114150 District Wazirabad, Punjab Shop No. 313, 3rd Floor Tel: 055-3886660-65 Centaurus Shopping Mall, Islamabad Gulshan-e-Iqbal Branch Tel: 051-2701313 Plot # FL-2/3, Block-6 GUJAR KHAN Improvement Scheme No. 24 Gulshan-e-Iqbal, Karachi, Sindh Gujar Khan Branch Blue Area Branch Commercial Property # BIII 379 & BIII 377 Plot No. 89, Blue Area, F-7 / G / 7 Tel: 021-34986186, 34987547, 34991326 G.T. Road, (Near MCB), Gujar Khan, Punjab Bilal Plaza, Islamabad 34897547, 34986387 Tel: 051-3513116, 3511894, 3513734-35 Tel: 051-2150058, 2150060-63 3511890 Cloth Market Branch Stock Exchange Branch Plot # 21/1, Bunder Quarters Islamabad Stock Exchange Cloth Market, Karachi, Sindh Rauf Center, 102, Fazl-e-Haq Road, Islamabad Tel: 021-32472148-49, 32471726-29 Tel: 051-2806422, 2348270-1

NIB Bank Limited Annual Report 2016 125 Branch Network

Steel Market Branch New Challi Branch F.B. Area Branch Shop # G-2, Ground Floor, Plot # RC-1/11 Plot # SR-6, Hussain Trade Center Plot # C-15, Block-13, F.B. Area, Ranchore Quarters, Mehar Nawaz Building Altaf Hussain Road, New Challi, Karachi, Sindh K.D.A Scheme # 16, Shahrah-e-Pakistan, Opposite Moin Steel Market, Mission Road Tel: 021-32211673-75, 32275637, 32216865, Karachi, Sindh Karachi, Sindh 32275634, 32211672 Tel: 021-36804433-34, 36805559 Tel: 021-32751031, 32751086, 32751066 32751093, 32751101 Defence Phase-I Branch Tariq Road Branch 19-C & 21-C, 21st East Street, Shop # 1, Ground Floor, Zuljilal Center Plot # 1 Regal Chowk Saddar Branch Off National Highway, DHA Phase-I, Karachi 72-F/2, Block 2, PECHS, Karachi, Sindh Shop No G-1 /A and G/1 Tel: 021-35386881-83, Tel: 021-34322761-62, 34398489, 34314222 Artillery Maidan, 293-III, B-192, Regal Chowk Saddar, Karachi, Sindh Johar Morr Branch Malir Branch Tel: 021-32750007, 32750268, 32750264, 32750001 Commercial Shop # 3,4,5, & 6, Javed Arcade Plot # 2-A/423, Drakhshan Society, Plot # SB-1, Block # 17, KDA Scheme # 36 Malir Halt, Karachi, Sindh Orangi Town Branch Gulistan-e-Johar, Karachi, Sindh Tel: 021-34115090-91, 34116236 LS-45, Sector 1-D, Orangi Town, Karachi, Sindh Tel: 021-34632745, 34632739, 34636746 Tel: 021-36695781, 36762506, 36667481 Boulton Market Branch Plot # SR-1/6, New Cloth Market Building, Serai Quarters SITE Branch Allama Iqbal Road Branch Shop No. 2, Plot B/9, SITE Area Boulton Market, M.A. Jinnah Road, Karachi, Sindh Plot No. 683-C, Ground Floor & Mezzanine Floor Karachi, Sindh Tel: 021-32411553, 32426942-43, 32414612 Block-2, PECHS, Allama Iqbal Road, Karachi, Sindh Tel: 021-32562504, 32555051, 32562656 Tel: 021-34301814-15, 34301817-18 Bilawal Chowk Branch Sands Apartment, Plot No. 7/4 Saba Avenue Branch PIB Colony Branch Saba Avenue, Plot # 8-C, Badar Commercial Shop No. 8, Clifton, Block-2, KDA Scheme-5 H. No. 156, PIB Colony, Karachi, Sindh Street # 6, Phase-V Ext., DHA, Karachi, Sindh Khayaban-e-Sadi Road, Kehkashan, Karachi, Sindh Tel: 021-34860637, 34860633, 34860635, 34860631 Tel: 021-35341673, 35341675, 35342003 Tel: 021-35140412, 35375014, 35376891 35375011-12 DHA Phase-II Branch 106/C, Phase-II, National Highway Shaheed-e-Milat Road Branch Bismillah Blessings, Plot # 7-A/228 DHA Phase-IV Branch D.H.A., Karachi, Sindh SS # 35-P/1,Block-3, DMCHS Plot # 99-E, Survey # 26, 9th Commercial Street Tel: 021-35314081, 35314161-63 Main Shaheed-e-Millat Road, Karachi Phase-IV, DHA, Karachi, Sindh 35304083 Tel: 021-34943777, 34943888 Tel: 021-35885718, 35890325

Liaquatabad Branch Saddar Branch West Wharf Road Branch Shop Nos. 63 to 66, 'B' Road Liaquatabad No. 5 State Life Building # 5 Puri House, 4/22, Near Post Office Roundabout, Karachi, Sindh Zaibunnisa Street, Saddar, Karachi, Sindh West Wharf Road, Karachi. Tel: 021-34860625, 34860630, 34860621, 34860624 Tel: 021-35212102, 35219710, 35212104 Tel: 021-32204639, 32205488, 32200345

Port Qasim Branch M.A Jinnah Road Branch Nishtar Road Branch CP-10/2-B/11-A, Port Operation Area, 70 N.I. Lines, Godrej Kandawala Building Shop # 7, 8 & G/19, Ground Floor Port Qasim Authority, Karachi. M.A. Jinnah Road, Karachi, Sindh Ana Crown Palace, Nishter Road Tel: 021-35277184, 35277189 Tel: 021-32294730-31, 32239867 Garden West, Karachi, Sindh. Tel: 021-32239419, 32295081, 32231338-39 32295082 EOBI House Branch North Napier Road Branch EOBI House, (Awami Markaz) Marium Manzil, Plot # 161, Survey Sheet # MR-1 Plot No. ST-1-A/1, KDA Com Complex Scheme 1 Market Quarters Napier Road, Karachi, Sindh Shershah Branch Shop No. G-01/B, Shahrah-e-Faisal Tel: 021-32430488-89, 32440583, 32473320 Plot # M-II-E-606, Shershah, Karachi, Sindh Karachi, Sindh Tel: 021-32587581, 32587579, 32587583 Tel: 021-34536731-32 Stock Exchange Branch Room Nos. 109 to 112, 2nd Floor Nagan Chowrangi Branch Khalid Bin Waleed Road Branch Karachi Stock Exchange Building Plot # SC 20, Sector 11-H 168-D, Block-III, Rabi Square Stock Exchange Road, Karachi, Sindh North Karachi Township, Karachi, Sindh Khalid Bin Waleed Road Tel: 021-32417944, 32418675 Tel: 021-36900591, 36984856, 36987948, 36900654 PECHS Karachi, Sindh Tel: 021-34323139, 34398481-82 34323136, 34323143 Timber Market Branch Nazimabad No. 1 Branch Ground Floor, Plot # 1/2, 7 Lea Quarters Property No.1, Row No. 11, Timber Market, Siddiq Wahab Road, Karachi, Sindh Sub Block E Block No. 1, Khayaban-e-Shahbaz Branch Tel: 021-32751119, 32752198, 32752192, 32752201 Nazimabad, Karachi, Sindh Plot # 18-C, Phase-VI, Shahbaz Lane-II Tel: 021-36610970-71, 36610992-93 Survey No. 26, DHA, Karachi, Sindh Tel: 021-35348300, 35348771-72 Garden East Branch Shop # 2, 3, & 4, Ground Floor, Garden Luxury Rashid Minhas Road Branch Apartments, Garden East, Karachi, Sindh Plot No. FL-20, Project No. 2, Pakistan Railway University Road Branch Tel: 021-332258007, 32238473, 32227267 Employees Co-operative Housing Society Limited SB-4, Block 13-B, University Road, Karachi, Sindh Gulshan-e-Jamal, Rashid Minhas Road, Karachi, Sindh Tel: 021-34989828, 34980430, 34980433 Tel: 021-34688631, 34688634, 34688619-20 Jamshed Quarters Branch Ground Floor, Show Room # 2, Ashfaq Plaza Kulsoom Court Branch Plot # 714/5, Jamshed Quarters, New M.A.Jinnah Road North Nazimbad Branch Kulsoom Court, Shop # 2,3,5A & 6, Plot No. BC-3 Plot # SD-12, Block- A KDA Sceme # 5, Block-9, Clifton, Karachi, Sindh Karachi, Sindh Tel: 021-34914840, 34126552 North Nazimabad, Karachi, Sindh Tel: 021-35837011-12, 35837015, 35837017 Tel: 021-36673568, 36635618, 36673597 Stadium Road Branch Zamzama, Branch Shop # 2 & 3, Ground Floor, Plot # SC-45, Chandni Landhi Branch 18-C, 5th Zamzama Lane, Plot # 48/1-48/2, Area 4-D, DHA Phase-V, Karachi, Sindh Chowk, KDA Sch # 7, Stadium Road, Karachi, Sindh Tel: 021-34932266, 34932338, 34946680, 34941751 Landhi # 06, Landhi, Karachi, Sindh. Tel: 021-35822294, 35295209-10, 35295015 Tel: 021-35040601-05

Hyderi Branch M.T. Khan Road Branch D-14, Block-H, North Nazimabad, Hyderi G-5(a), Ground Floor, Al-Fareed Center KASUR Plot # CL-10/10/1, (Old Survey # F-9/PO 6), Civil Lines Karachi, Sindh Kasur Branch Tel: 021-36724412, 36643390, 36724410, 36643395, Quarters, M.T. Khan Road Near PIDC House, Karachi, Sindh B-III, 9R-53-A, Railway Road, 36643411 Tel: 021-35693637-38, 35693326, 35693640 Kasur, Punjab Tel: 049-2721771, 2770217-18 Business Arcade Branch Pakistan Chowk Branch Plot # 27-A, Business Arcade, Block-6, P.E.C.H.S. Plot Survey # 98, Sheet # S.R 9 (Old Survey # B-21/30), SEF, Karachi, Sindh Serai Quarters, Pakistan Chowk, Karachi, Sindh Tel: 021-34524667-68, 34326570-72 Tel: 021-32212610, 32212356, 32216368-69

126 Annual Report 2016 NIB Bank Limited Branch Network

KHANEWAL Thokar Niaz Beg Branch Ghazi Road Branch S.S. Centre, Kibriya Town Plot # 2/1, Block-B, Guldasht Scheme, Lahore Khanewal Branch Plot No. 80, Block No.5/1059/1781/1731 Main Raiwind Road, Lahore, Punjab Cantonment, Ghazi Road, Lahore, Punjab Khanewal, Punjab Tel: 042-35963291-92, 35963294 Tel: 042-36639775, 36639771-72 Tel: 065-2559075-76, 2559081, 2559060 Shah Alam Market Branch Johar Town E-Block Branch 1-A, Shah Alam Market Road, Lahore, Punjab Plot # 1, Block E1, Johar Town KHARIAN Tel: 042-37631971-73, 37672350, 37672210 Lahore, Punjab Kharian Branch Tel: 042-35220636-37, 35203603 Bilal Plaza, G.T.Road, Kharian, Punjab Tel: 053-7601557, 7601358, 7601325 Bahria Town Branch 65-A, Sector-C, Bahria Town, Lahore. Wahdat Road Branch Tel: 042-37861591-92 19/A, Wahdat Road, Lahore, Punjab KOHAT Tel: 042-37561856, 37502836-37 Kohat Branch Gulberg Main Boulevard Branch Shop # 2 & 3, Behram Plaza, Hangu Road 83-E-I, Main Boulovard, Gulberg-III, Lahore, Punjab Multan Road Branch Kohat, Khyber Pakhtoon Khwa Tel: 042-35763570-71, 35756850-54 9-A, Block Industrial Tel: 0922-510272, 520010-12 Allama Iqbal Town Scheme Model Town Link Road Branch Multan Road, Lahore, Punjab LAHORE Plot # 34-B, Phase-III Tel: 042-37803470, 37803449 Govt Employees Cooperative Housing Society 37806069-70 Bund Road Branch Plot # 8 B-5-595, Chohan Park Model Town Link Road, Lahore, Punjab Tel: 042-35888301-04, 35942206 Bank Stop, Bund Road, Lahore, Punjab Davis Road Branch Tel: 042-37147239, 37147231-38 Aftab Centre, 30 Davis Road 6-Bank Square Branch Lahore, Punjab 6-Bank Square, Shahrah Quaid Azam Lahore, Punjab Tel: 042-36286965, 39204344 DHA Z Block Branch Z-38, Phase-III, D.H.A Lahore Cantt., Lahore, Punjab Tel: 042-37246257, 327233808, 327353624 36287027, 36287029 Tel: 042-35692819, 35692812-13 39212731-33 35692801-02, 35692815 LARKANA Circular Road Branch Babr Center, 51-Circular Road Larkana Branch Plot City Survey # A-700 Ichra Branch Outside Akabri Gate, Lahore, Punjab Shop # 158, Mohalla Rasool Pura, Ichra Bank Square Bunder Road, Larkana, Sindh Tel: 042-37672885, 37379250, 37672882-83 Main Ferozepura Road, Lahore, Punjab Tel: 074-4059041, 4055781-83 Tel: 042-37597093, 37597290, 37588177 37379264-65 MANDI BAHAUDDIN Johar Town R-Block Branch Badami Bagh Branch 70-R, Main Boulevard, 93-Badami Bagh, Lahore, Punjab Mandi Bahauddin Branch Johar Town, Lahore, Punjab Tel: 042-37722829-30, 7705235, 3773209 Plot # 7/211, Ward # 7 Tel: 042-35291605, Ext.107, 35291600-01 Mandi Bahauddin, Punjab 35291603-04 Allama Iqbal Town Branch Tel: 0546-509551-54 24, Gulshan Block, Allama Iqbal Town, Lahore, Punjab Gulberg Hali Road Branch Tel: 042-37812321, 37812325, 37811034, 37812316 70, Block E/1, Gulberg-III, Lahore, Punjab MARDAN Tel: 042-35752531, 35784929, 35756944 Packages Branch Mardan Branch 35757218-19 Packages Limited, Shahrah-e-Roomi CB/436, 20-21, The Mall, Mardan Cantt. P.O Amer Sidhu, Lahore, Punjab Mardan, Khyber Pakhtoon Khwa Tel: 0937-863684, 870172, 873682, 873684 Bilal Gunj Branch Tel: 042-35920550, 35920577, 35920545 SWII-8-S-14/A, Old Sanda Road 35920571-74 Mouza Shesh Mahal MINGORA Tehisl and District Lahore, Punjab Gulshan-e-Ravi Branch Mingora Branch Tel: 042-37880097, 37220098, 37220006-07 159-A, Main Boulevard Haji Muhammad Ismail Manzil Gulshan-e-Ravi, Lahore. Bank Sqaure, Main Bazar, Mingora Swat Azam Cloth Market Branch Tel: 042-37401890, 37401870 Khyber Pakhtoon Khwa F/1085, F/1085-A/1 & F-1083, F-1113 & F-1114 Tel: 0946-724991, 724994, 710440, 712006 Chowk Old Kotwali, Kocha Haji, Sheikh Elahi Buksh, Cavalry Ground Branch inside Delhi Gate, Lahore, Punjab Commercial Plot # 29, Baza Area, Officers Housing Tel: 042-37674722, 37640832, 7658134 Scheme, Cavalry Ground, Lahore, Punjab MIRPUR A.K. Tel: 042-36687401-02, 36687353 Mirpur A.K. Branch Bank Square, Allama Iqbal Road Urdu Bazar Branch SIII-13-S-20 & S-III-2-S-26/RH Majahid Street Mirpur A.K., Azad Jammu & Kashmir Timber Market Branch Behind Urdu Bazaar, Paisa Akhbar Timber Market, Plot # NW.III R-84 Tel: 05827-442118, 442840, 447683, 442840 Lahore, Punjab Ravi Road, Lahore, Punjab Tel: 042-37361222-23, 37361226-27 Tel: 042-37709235, 37720696 MIRPURKHAS 37709231-33 Mirpurkhas Branch Model Town C-Block Branch Ground Floor, bearing City Survey No. 709, 710, Shop No10 & 11, Commercial Market, Ward “A”, Situated at Mohalla Khari Quarters, C-Block, Model Town, Lahore, Punjab New Garden Town Branch 10-B, Aibak Block Mirpurkhas. Tel: 042-35915403, 35915406, 35915408 New Garde Town, Lahore, Punjab Tel: 0233-874148, 0233-875344 35915401, 35915410 Tel: 042-35843885, 35941562, 35843883, 35843882

Punjab Cooperative Society Branch MULTAN Plot No. 68-F, Commercial Area, Punjab Cooperative Mughalpura Branch 13/B, Shalimar Link Road, Mughalpura Housing Society, Defense Road, Lahore, Punjab Abdali Road Branch Lahore, Punjab Tel: 042-35923817, 35923810, 35923801-03 Plot # 66/9, Abdali Road, Multan, Punjab Tel: 042-36844011-14, 36846812 Tel: 061-4580277, 4781535, 4781225, 4517126, 4783641, 4782241, 4782196 NIB House Branch 14-A (Ground Floor), Shahrah-e-Aiwan-e-Tijarat WAPDA Town Branch Plot No. 1-F-2, Wapda Town Employees Co-operative Old Race Course Road, Lahore, Punjab Vihari Road Branch Tel: 042-39203194, 36282446, 36375746, Housing Society, Lahore. Sherry Commercial Area 36375724, 36382590-91 Tel: 042-35189621, 35188449 Opp. Grain Market, Vehari Road, Multan, Punjab Tel: 061-4230700-03 Shahdara Branch Ravi Link Road Branch Shahdara More, Lahore. Mubarik Plaza, Plot No. 3, Ravi Link Road MUZAFFARABAD Badami Bagh, Lahore, Punjab Tel: 042-37940888, 37919163 Domel Syeden Branch Tel: 042-37706086, 37723238-39, 37706366 Plot No. 26-1, Ghari Phan Chowk DHA Phase-II Branch Domel Syedan, Muzaffarabad, AJK Commercial Plot # 12, Block CCA Tel: 05822-920455, 921136-38, 920505 D.H.A. Phase-II, Lahore, Punjab Tel: 042-35749481, 35895776, 35707033

NIB Bank Limited Annual Report 2016 127 Branch Network

NAWABSHAH Mall Road Branch TALUKA KUNRI 31/3-31/A, The Mall Nawabshah Branch Kunri Branch Shop # S-1 to S-4, Firdous Shopping Centre Rawalpindi, Punjab Union Council Chajro, Nabisar Road, Taluka Kunri, Kutchry Road, Nawab Shah, Sindh Tel: 051-5701200, 5701103-05 District Umerkot, P.O. Kunri, Sindh Tel: 0244-372648-49, 360685 5701316, 5701318 Tel: 0238-558013-14,

Satellite Town Branch NOWSHERA North Star Plaza, 20-B, Muree Road TANDO ADAM Nowshera Branch Satellite Town, Rawalpindi, Punjab Tando Adam Branch Shah Building, The Mall, G.T. Road Tel: 051-4426975-76, 442672-73 Plot City Survey # 535, Muhammadi Chowk Nowshera Cantt., Nowshera, Khyber Pakhtoon Khwa Tando Adam, Distt: Sanghar, Sindh Tel: 0923-614881-82, 610146 Tel: 0235-574227, 574081 College Road Branch G-263, College Road, Rawalpindi, Punjab OKARA Tel: 051-5775216, 5775217, 5775227 TANDO ALLAHYAR Okara Branch Tando Allahyar Branch Khewat # 50-18, Chak # 1-A/4-C Adyala Road Branch Plot # 1610/2-B, Adjacent Main Bus Stop M.A. Jinnah Road, Okara, Punjab Khasra # 1365/572, Skindar Plaza, Munawar Colony Hyderabad, Mirpurkhas Road, Tando Allahyar, Sindh Tel: 0442-550901-03, 550903, 551101-02 Main Adyala Road, Rawalpindi, Punjab Tel: 022-2763715-16, 3891040-41 Tel: 051-5572401, 5573424 PESHAWAR WAH Bahria Town Rawalpindi Branch Fakhr-e-Alam Road Branch Spring North Plot # 78, Service Road, Wah Cantt Branch 17-20, Cantonment Plaza, Fakher-e-Alam Road, Shop # 1/37, Commercial Area, Civic Centre, Phase-VII, Rawalpindi, Punjab .Peshawar Cantt., Peshawar, Khyber Pakhtoon Khwa Aslam Market, Wah Cantt, Punjab Tel: 051-5400392 Tel: 091-5287478, 5276232, 5273633 Tel: 051-4902231-34 5261256, 5276914 SAHIWAL WAZIRABAD Hayatabad Branch Sahiwal Branch B-1, Phase 5, Hayatabad, Peshawar Wazirabad Branch 267/B-1, Jinnah Road, Property bearing Khasra No.741, Mouza Mohala, Khyber Pakhtoon Khwa (High Street), Sahiwal, Punjab Tel: 091-5824366, 5825278-79, 5825306 Sialkot Road Wazirabad. Tel: 040-9200477-80 Tel: 055-6607171, 055-6607168

Shoba Chowk Branch SANGHAR Plot # 401/14 & 401/14A, Shuba Chowk, Khyber Bazar Peshawar City, Peshawar, Khyber Pakhtoon Khwa Sanghar Branch Tel: 091-2590157, 2590258, 2590257 Plot City Survey No. 951, Nawabshah Road, Sanghar, Sindh Tel: 0235-543702, 542882, 542898 University Road Branch Ruby Villa, Opposite Jabbar Flats University Road Peshawar, Khyber Pakhtoon Khwa SARAI ALAMGIR Tel: 091-5851453, 5852019, 5851527, 5853164 Sarai Alamgir Branch Fazal Plaza, Main G.T. Road Chowk Yadgar Branch Sarai Alamgir, Gujrat, Punjab Shop No. 1,2,3,4,5 Ground & First Floor Tel: 0544-654929, 654927, 654932, 6654931 Haroon Plaza (Outside Katchery Gate) Chowk Yadgar Peshawar, Khyber Pakhtoon Khwa SARGODHA Tel: 091-2580718-19, 2590761-62 2588004 Mian Khan Road Branch 110 Mian Khan Road, Block-5 Sargodha, Punjab QUETTA Tel: 048-3726609, 3729623, 3729623 Mannan Chowk Branch 2-11/6-303, Mannan Chowk, M.A. Jinnah Road Quetta, Balochistan SHAHDADPUR Tel: 081-2836204-05 Shahdadpur Branch Plot City Survey # 801 to 804 & 813 Station Road, Shahdadpur, Sindh Masjid Road Branch Plot # 2-30/4, (Municipal No. 2-20/425) Tel: 0235-844901-02 Khasra No. 263, Masjid Road, Quetta Balochistan Tel: 081-2843640, 2843651 SHEIKHUPURA Main Branch Sheikhupura RAHIMYAR KHAN Shop No.1, Ground Floor, Al-Hamd Plaza, Batti Chowk, Model Town Branch 14 Model Town, Lahore Road, Sheikhupura, Punjab Town Hall Circle, Rahimyar Khan Tel: 056-3788165, 3812456 Tel: 068-5885642-43, 5887182, 5885651 SIALKOT RAWALPINDI Shahabpura Branch Plot # B-III-8-S-206, Shahabpura Murree Road Saddar Branch Bldg # 11/10, Survey No. 349/10 Sialkot, Punjab Main Murree Road, Near Health Tel: 052-3557365, 3557367 Way Hospital Building, Saddar Rawalpindi, Punjab Tel: 051-5562952, 5562944-45, 5120415 Kashmir Road Branch 5120474, 5120597 155/A, BIII-12S, Sublime Chowk Kashmir Road, Sialkot, Punjab Tel: 052-3241292, 3241491-92 City Saddar Branch Shop # 317 A, City Saddar Road Raja Bazaar, Rawalpindi, Punjab SUKKUR Tel: 051-5778800-02, 5778804, 5778808 Sukkur Barrage Road Branch C.S. No. D-537/1, Situated at Hamilton Road Branch Memon Mohalla Barrage Road, Sukkur. Plot 725-728, Hamilton Road Tel: 071-5618227, 5618224 Mohalla Workshop, Raja Bazar, Rawalpindi, Punjab Tel: 051-5775950, 5778953, 5778950-51, 5778958

128 Annual Report 2016 NIB Bank Limited

Proxy Form

I/We ______S/o,D/o,W/o ______of ______(full address) being a member of NIB Bank Limited and holder of shares as per Registered Folio No. ______and / or CDC Participant I.D. No. ______and Account No. ______do hereby appoint Mr/Mrs/Ms ______of ______(full address) or failing him/her ______of ______(full address) as my/our proxy to attend, speak and vote for me/us and on my/our behalf at the 14th Annual General Meeting of NIB Bank Limited scheduled to be held on Wednesday, 29 March 2017 at 11:00 am at Islamabad Serena Hotel, Khayaban-e- Suhrawardy, Islamabad and at any adjournment thereof.

As witness my / our hand this ______day of ______2017.

Witnesses :

1. ______Name : Signature of Member(s) CNIC No.: on Rs. 5/- Revenue Stamp Address :

2. ______Name: CNIC No.: Address :

NOTE: A member entitled to attend a General Meeting is entitled to appoint a proxy to attend and vote instead of him / her. No person shall act as proxy (except for Corporate Entities) unless he / she is entitled to be present and vote in his / her own right. Proxies, in order to be valid, must be completed in all respect and be received at the Head Office of the Bank situated at PNSC Building, M.T. Khan Road, Karachi-Pakistan, not later than 48 hours before the meeting. For CDC Account Holders / Corporate Entities: In addition to the above, the following requirements have to be met: i) The Proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be stated on the form. ii) Attested copies of CNIC or the Passport of the shareholder and the proxy shall be provided with the proxy form. iii) The proxy shall produce his/her original CNIC or Passport at the time of the meeting. In case of a corporate entity, the Board of Directors’ resolution or power of attorney with specimen signature shall be submitted to the Company (unless it has been provided earlier) along with proxy form.

NIB Bank Limited Annual Report 2016 Annual Report 2016 NIB Bank Limited