Banking Survey 2015

BANKING SURVEY 2015

BANKING SURVEY

2015 Junaidy Shoaib Asad Chartered Accountants 1 BANKING SURVEY 2015

Table of Contents Purpose of the Banking survey 4 Structure of the survey 5 About Us 6 Liability Disclaimer 7 Income Streams 10 Markup vs. Non Markup Income (PK in millions) 10 Non Markup Income Composition 16 Expenses 19 Composition of Markup Income and Markup Expenses 22 Profitability 25 Private Sectors (Profit Before Taxation) 27 Public Sector (Profit Before Taxation) 29 Islamic Sector (Profit Before Taxation) 31 Value Addition 32 Gross Advances 35 Net Advances 39 Non Performing Assets 40 Non performing asset to Gross advances comparison 44 Deposits 45 Deposit composition sector wise 47 Advances to Deposits 51 Capital Adequacy Ratio 54

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Earning per share 57 Performing asset vs. Non performing assets 59 Deposits per branch 65 Administration expenses per branch 67 Markup expense over Markup earned 69 Net Markup Income per branch 71 Fee, commission and brokerage income per branch 73 BASEL III 85 CREDIT RATINGS 95 Glossary 97

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Purpose of the Banking survey

The purpose of this survey is to give an overview of the financial performance of the banking industry of Pakistan during the year 2015 and compare the performance of different banks with the preceding year. For this purpose, the banking sector is divided into following three categories, namely:

 Private Banks  Public Sector Banks  Islamic Banks

There are other classifications of the banking sector as well, but the selected categories cover the broad classifications of each sector. The information contained in this survey has been obtained from the published consolidated financial statements of the banks, statistical bulletins and quarterly / annual reports published by State Bank of Pakistan (“SBP”), analysts and research reports and information published in business magazines and newspapers.

To enhance the understanding of ratios and analysis of performance of a particular bank, reference should be made to the published financial statements of the banks and glossary included at the end of this survey. We have tried to provide relevant financial analysis of banks, which we thought would be useful for benchmarking and comparison purposes.

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Structure of the survey

The three categories, on which the banks are being classified as mentioned above, are from the perspective of Profitability, Assets and Liability. Under these perspectives, the banks are individually analyzed and compared with their peers. The Profitability perspective provides the revenue streams of the banks with more emphasis on mark-up income and non-mark-up income. While under the Assets perspective, the performing and non- performing assets are discussed on the basis of available information. The survey then discusses the liabilities of the respective banks with a focus on the composition and growth in deposits. At the end of this survey, some significant ratios are calculated for each bank and discussed in detail with the aim of highlighting the respective banks’ performance. A detailed list of banks’ operating in Pakistan is presented on the pg. 8.

This list also contain list of some microfinance banks operating in the country but they have not been analyzed in this survey.

We feel that the performance could be analyzed in more detail however given the availability of limited information and time we have restricted the survey to the analysis as desired in this survey. We would however encourage readers to provide further insight for making the survey more meaningful and useful for banking regulators, banking sector and deposit holders. You can email your suggestion to [email protected]

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About Us

The firm was established in 2007 and represent Morison International as its member in Pakistan.

The firm is delivering value added prompt professional services to its valued clients with strong professional team lead by its Partners and qualified staff through its offices in Karachi, Lahore and Islamabad.

Over the last nine years that the firm is operating, it has made its presence felt in the market and has built strong reputation as providers of quality services with almost respect for the Ethical & Moral Standards. The list of our clients to whom we provide professional services include Non Banking Financial Institutions, Public and Private Limited Companies operating in manufacturing, service and trading sectors.

JSA provides industry-focused services to its clients in order to build public trust and enhance value through the application of what we call Linked Ideas. Our service culture combined with our cumulative knowledge culminates into innovative solutions to help promote the growth of our client’s business. Before rendering innovative advice, we minutely ensure that all the legal and ethical obligations are respected. This is what we call Innovative Solutions.

In brief, our firm is in the profession of audit, accountancy, taxation, corporate finance and corporate advisory services, which include professional services on other related laws like competition law, Foreign Exchange Regulations, etc.

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Liability Disclaimer

Junaidy Shoaib Asad, Chartered Accountants makes no warranties or representations about this survey or any of its content. We are not responsible for any direct, indirect or consequential loss suffered in connection with the use of this survey. We exclude, to the extent permitted by law, any liability, which may arise as a result of use of this survey.

By using this survey on the Banking Industry of Pakistan, you agree to indemnify us for any loss or liability arising out of your use of this survey. This material is produced by Junaidy Shoaib Asad, Chartered Accountants under the voluntary capacity and is based on public information.

This survey provides general information in a summarized form on banking industry performance for the year 2015 and 2014. The contents do not compose suggestions and should not be relied upon as such. However, formal advice may be sought in particular matters, if considered necessary.

To the extent possible, we have avoided expressing opinion on the performance of banking companies analyzed in this survey. However if any analyses is purported to constitute our opinion the same could only be inadvertent.

We have also endeavored to carry out the analysis on uniform criterion, which we consider necessary for establishing benchmarking criteria. Readers are therefore encouraged to enlighten us if they feel some additional criterion or further refinement in the criterion used is necessitated.

Date: April 2015 Karachi

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PRIVATE BANKS PUBLIC BANKS ISLAMIC BANKS MICROFINANCE

 Allied Bank Limited (ABL);  National Bank of Pakistan BANKS  AL Baraka Bank (Pakistan)  Askari Bank Limited (AKBL); (NBP); Limited (AB); 1- Khushhali Bank Limited;  Bank Alfalah Limited (BAFL); Sindh Bank Limited(SBL);   Bank Islami Pakistan Limited 2- APNA Microfinance Bank  Bank Al Habib Limited (BAHL); (BIP); Limited;

 Faysal Bank Limited (FABL); 3- NRSP Microfinance Bank  First Women Bank Limited  Burj Bank Limited(BB);  Habib Bank Limited (HBL) ; Limited; (FWBL);  Habib Metropolitan Bank 4- Pak Oman Microfinance Bank  Dubai Islamic Bank Pakistan Limited (HMB); Limited; Limited (DIB); The Bank of Punjab(BOP)  JS Bank Limited (JS);  5- Tameer Microfinance Bank Limited;  MCB Bank Limited (MCB);  Meezan Bank Limited (MB) 6- Waseela Microfinance Bank  NIB Bank Limited (NIB);  The Bank of Khyber (BOK) Limited; and

 SAMBA Bank Limited (SAMBA); 7- ADVANS Pakistan  SILK Bank Limited (SILK) Microfinance Bank Limited

 Soneri Bank Limited (SONERI);

 Standard Chartered Bank (SCB);

 Summit Bank Limited (SUMMIT);

 United Bank Limited (UBL).

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Banking Activities

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Income Streams

The major source of banks’ income is markup, which they derive through lending activities. Apart from this, they do earn non mark-up income generated through provision of other services to their clients. The following graphical statistics segregate banks income into markup and non-markup income. The statistics shows that around 80% of banks’ income is driven through lending activities.

Markup vs. Non Markup Income (PK in millions) Markup vs Non Markup Income (PKR in millions)

Markup Non Markup

150,534

900,000 800,000

700,000 600,000 500,000 719,472 400,000 300,000 30,203 200,000 6,529 114,386 100,000 48,109 - private public islamic

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Private banks - Markup vs Non Markup Income (PKR in millions) Private banks - Markup vs Non Markup Income (PKR in millions)

Markup Non Markup

200,000

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

- ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit

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Private banks - Markup vs Non Markup Income (PKR in millions)

100%

90% Public banks - Markup vs Non Markup (PKR in millions)

80% Markup Non Markup

70% 100% 1,799 409 35,102 3,492 7,636 60%80% 60% 1,516 10,869 31,263 50%40% 114,386 10,129 20% 40% 0% FWBL SBL BOP BOK NBP

30%

20%

10% Islamic banks - Markup vs. Non Markup (PKR in millions)

0% ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit Non Markup 9,755 36,583 17,639 23,687 6,780 9,102 4,486 5,564 9,247 4,298 6,004 805 1,895 3,153 7,117 4,419 Markup 72,116 144,23 80,532 97,574 36,594 61,425 50,310 32,313 36,860 15,465 14,737 5,468 8,933 18,320 33,883 10,710

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Islamic banks - Markup vs. Non Markup (PKR in millions) Islamic banks - Markup vs Non Markup (PKR in millions)

Markup Non Markup

100% 657 4,597 95% 458 1,275 90% 85% 6,269 33,114 2,528 8,726 80% 75% AB BB DIB MBL

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Private banks - Markup compositions (PKR in millions) Private banks - Markup compositions (PKR in millions)

on loans and advance to customers on loans and advance to financial institution On investment in securities available for sale

On investment in securities held to maturity On investment in securities held for trading On deposits with financial institutions

On securities purchased under resale agreement On certificates of Investment On call money lending

Summit 5,696 4,888 SCB 12,670 20,498 Soneri 8,562 9,066 289 SILK 6,797 1,766 SAMBA 1,690 2,053 1,248 NIB 8,451 5,007 JS 6,021 8,473 HMB 9,565 23,850 2,731 Faysal 17,497 11,395 2,896 BAH 14,576 20,743 14,635 BAF 25,459 22,521 9,105 Askari 15,755 19,750 243 UBL 35,409 35,207 24,128 MCB 26,262 53,290 571 HBL 65,668 73,853 14,099 ABL 24,959 23,750 22,399 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

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Islamic bank - Markup compositions (PKR in millions)

On call money lending 182 100% 1,194 On certificates of Investment 1,226 416 12,762 On securities purchased under resale agreement 80% 1,432 On deposits with financial institutions 60% 6,599 On investment in securities held for trading 2,041 40% 6,063 4,115 On investment in securities held to maturity 13,751 20% On investment in securities available for sale on loans and advance to financial institution 0% DIP AB MB BB on loans and advance to customers

Public bank - Markup income composition (PKR in milions)

On call money lending

100% 47 On certificates of Investment 1,009 1,810 587 16,360 90% On securities purchased under resale agreement 80% 730 12,806 On deposits with financial institutions 70% 38,925 4,749 6,560 On investment in securities held for trading 60% 50% On investment in securities held to maturity 40% On investment in securities available for sale 30% 718 15,560 57,023 4,064 on loans and advance to financial institution 20% 3,285 10% on loans and advance to customers 0% FWBL SB BOP BOK NBP

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Non Markup Income Composition

Total non-markup income of the banking industry has been booked at PKR 197.865 billion (2014: PKR 167.933 billion). Private sector’s share amounted to PKR150.534 billion (2014: PKR 123.933 billion). Whereas Public sector contributes about PKR 40.802 billion (2014: PKR 36.304 billion) and Islamic banks had a share of PKR 6.529 billion (2014: PKR 7.696 billion). The statistics highlights that majority of banks reported growth in non-markup income except Islamic banks where growth being negative.

Further non-markup income of the banking industry comprised fee, commission & brokerage income of 84.895 billion (2014: PKR 75.448 billion), that amounts to 43.18% of total non-funded income (2014: 45.1%) during the year, whereas PKR 59.636 billion (2014: PKR 32.678 billion) was booked on account of sale of securities, which makes up 30.34% (2014: 19.5%) of total non-funded income. The banks included in this survey had also reported PKR 22.65 billion on account of income from dealing in foreign currency (2014: PKR 26.255 billion), that is 11.5% of total non funded income, and PKR 14.21 billion (2014: PKR 11.705 billion) as dividend income. Based on statistics given above we may conclude that fee, commission and brokerage are main contributors in banks non-markup income.

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Private banks - Non Markup income compositions (PKR in millions)

Fees,Commission & Brokerage Dividend Income Income from dealing in foreign currencies Gain on sale & redemption of securities Unrealized gain on revaluation of investment held for trading Share of profit from joint ventures Share of profit from associates other income

Summit 1,273 78 534 2,443 104

SCB 3,636 1 2,061 1,016 399

Soneri 1,344 160 473 1,126 52

SILK 977 41 182 651 43

SAMBA 126 22 75 485 96

NIB 1,421 191 357 4,008 42

JS 1,785 180 288 1,995 36

HMB 2,893 149 1,083 4,781 341

Faysal 2,303 318 965 1,739 266

BAH 2,321 537 707 137 695

BAF 4,570 350 1,379 1,535 730

Askari 1,937 308 835 3,120 581

UBL 14,239 2,350 2,588 3,195 1,299

MCB 8,994 861 772 4,344 2,091

HBL 17,089 1,543 2,749 11,042 743

ABL 3,570 3,528 838 833 986

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Public banks Non Markup Income Composition (PKR in millions) Fee,Commission & Brokerage Income Dividend Income Income from dealing in foreign currencies Gain on sale & redemption of securities Unrealized gain on revaluation of investment held for trading Share of profit from joint ventures Share of profit from associates other income

NBP 13,460 2,707 4,899 12,283 2,111

BOK 258 100 139 1,189 119

BOP 828 5,014 1,635

SB 234 120 3,063 6

FWBL 39 20 29 296 25

Islamic banks Non Markup Income Compositions (PKR in millions) Fee,Commission & Brokerage Income Dividend Income Income from dealing in foreign currencies Gain on sale & redemption of securities Unrealized gain on revaluation of investment held for trading Share of profit from joint ventures Share of profit from associates other income

152 75 26 182 25

1,987 629 1,471 342 167

439 22 161 13 19

1,250 - 7 16 2

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Expenses

The following graph shows the expenses section of the three banking sectors, for the purposes of our analysis we have selected only selected one line item i.e. Administration expense.

Administration expenses for the year stood at PKR301.084 billion (2014: PKR 292.08 billion) which means absolute increase of 3.08% during the year. Staff costs remained one of the most significant components of administrative expenses for the banks, averaging approximately 50% (2014: 50.4%) of total Administration expenses.

Furthermore, provisions amounted to PKR 40.82 billion (2013: PKR 28.312 billion), which posted an increase of 44% during the year, out of which, PKR 34.59 billion was booked against NPL (2014: PKR 26.507 billion). The statistics shows that increased provision is mainly attributable to 30.5% growth in NPL.

The following graph below will provide better insight about the administration expenses with their compositions as well as their related comparisons.

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Private Banks - Admin expenses (PKR in millions)

Salaries & Allowances Charge for define benefit plans Rent,taxes,insurance,electricity & Other utility Legal & Professional charges Repair & maintenance Communication Books,stationery,printing & other computer accessories Advertisement,sponsorship & publicity Depreciation & Amortization Security services Outsourcing & janitorial services Auditor Remuneration Others

Summit 1,905 1,093 174 608 489 SCB 5,624 1,289 1,071 522 2,289 Soneri 2,353 910 167 622 975 SILK 2,416 694 298 444 472 SAMBA 885 326 230 124 177 NIB 2,972 1,007 455 627 423 JS 2,264 857 389 498 799 HMB 4,294 1,203 282 567 1,043 Faysal 4,448 2,018 822 821 1,080 BAH 6,762 2,058 1,090 1,268 1,570 BAF 9,387 3,379 1,527 2,081 1,714 Askari 6,194 1,704 600 874 1,291 UBL 12,386 4,284 1,762 2,315 5,191 MCB 9,224 2,930 1,674 2,418 2,145 HBL 22,100 5,476 3,317 3,099 4,166 ABL 9,864 2,134 522 2,018 969

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Public banks - Admin Expenses composition (PKR in millions) Salaries & Allowances Charge for define benefit plans Rent,taxes,insurance,electricity & Other utility Legal & Professional charges Repair & maintenance Communication Books,stationery,printing & other computer accessories Advertisement,sponsorship & publicity Depreciation & Amortization Security services Outsourcing & janitorial services Auditor Remuneration Others NBP 24,638 4,417 3,329 2,282 1,995 2,173

BOK 1,525 83 376 191 93 269

BOP 3,774 103 871 618 - 1,271

SB 1,533 81 638 371 189 142

FWBL 413 33 127 75 - 36

Islamic banks - Admin Expenses composition (PKR in millions) Salaries & Allowances Charge for define benefit plans Rent,taxes,insurance,electricity & Other utility Legal & Professional charges Repair & maintenance Communication Books,stationery,printing & other computer accessories Advertisement,sponsorship & publicity Depreciation & Amortization Security services Outsourcing & janitorial services Auditor Remuneration Others Meezan 6,355 2,084 481 1145 1876

DIB 2,039 1,204 285 392 496

Burj 770 499 96 204 278

Albaraka 1,162 584 64 237 425

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Composition of Markup Income and Markup Expenses

Private banks (PKR in millions)

Markup income Markup Expenses

100%

90% 11,117 31,210 66,064 39,715 35,977 32,810 25,476 21,688 18,358 22,461 9,681 3,326 10,722 80% 10,087 5,834 7,654

70%

60%

50%

40% 33,883 80,532 97,574 144,232 72,116 61,425 50,310 36,594 32,313 18,320 36,860 15,465 5,468 8,933 30% 14,737 10,710

20%

10%

0% ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit

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Public banks - Markup Income vs Markup Expenses (PKR in millions)

Markup income Markup Expenses

819 5,648 20,199 6,441 59,999

1,516 10,129 31,263 10,869 114,386

First Women Bank Sindh Bank Bank of Punjab Bank of Khyber National Bank

Islamic Bank - Markup Income vs Markup Expenses (PKR in millions)

Mark up Income Mark up Expense

14,897 4,091 3,791 1,395

33,114 8,726 6,269 2,528

DIP al baraka Meezan burj

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PROFITABILITY

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Profitability

The banks included in this survey have reported a total net Profit before Tax (“PBT”) for the year ended 31 December 2015 amounting to PKR 300.185 billion (2014: PKR 238.807 billion), whereas, total net Profit after Tax (“PAT”) was PKR 189.04 billion (2014: PKR 158.948 billion). The banks have managed to earn total gross revenue of PKR 1,102.346 billion during the year (2014: PKR 1,052.508 billion); non-funded income amounted to around PKR 197.865 billion (2014: PKR 167.465 billion), accounting for around 17.94% of total gross revenue for the year (2014: 15.9%). The following chart shows the profit before tax (PBT) of the three banking sectors and their respective variations during the year.

PBT 2015 2014 Increase/(Decrease) Variation Public Banks 39,339 30,343 8,995 30%

Private Banks 251,098 199,965 51,133 26%

Islamic Banks 9,990 8,508 1,482 17%

Profit before tax 2015

3% Public Banks 13% (34,271)

Private Banks (251,098)

84% Islamic Banks (9277)

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The following chart shows the profit after tax (PAT) of the three banking sectors and their respective variations during the year. The chart given below reflects all three sectors of banks have reported significant growth in profit after tax (PAT).

PAT 2015 2014 Increase/Decrease Variation

Public Banks 23,263 15,626 7,637 49%

Private Banks 158,991 132,529 26,463 20%

Islamic Banks 6,790 5,157 1,633 32%

Profit After Tax 2015

4% 12% Public Banks

Private Banks

Islamic Banks 84%

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Private Sectors (Profit Before Taxation)

Private Sector Banks have registered Net PBT of PKR 251.098 billion (2014: PKR 199.956 billion) during the year which amounts to 83.64% (2014: 83.7%) of total net PBT reported by the banks under review.

Net PAT for the private sector stood at PKR 158.991 billion for the year (2014: PKR 132.52 billion). Total gross revenue contributed PKR 870.006 billion (2014: PKR 792.904 billion), whereas PKR 352.18 billion (2014: PKR 360.013 billion) had been earned on account of interest/mark-up/return income.

The overall net provision booked in this sector was PKR 25.491 billion (2014: PKR 14.521 billion), out of which, PKR 19.97 billion (2014: PKR 12.492 billion) was booked against NPL. Total operating cost in this sector was PKR 241.237 billion (2014: PKR 218.414 billion).

During the current year, HBL had posted the highest PBT of PKR 60.532 billion and PAT of PKR 35.347 billion. However, the highest total provisions of PKR 4.507 billion was also booked by HBL, out of which, PKR 4.853 billion was provided against NPL. The graph given below reflects that all the private sector banks under review-experienced growth in profit before tax (PBT).

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Private Sector - Profit Before tax (PKR in millions)

Summit SCB Soneri SILK SAMBA NIB JS HMB Faysal BAH BAF Askari UBL MCB HBL ABL

(10,000) - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit 2014 22,432 48,515 37,235 35,617 5,869 8,514 10,012 3,551 7,336 2,589 (108) 426 132 2,442 15,368 35 2015 25,504 60,532 42,337 43,449 8,337 12,657 12,265 6,920 12,564 3,768 3,858 907 (1,839) 3,585 15,566 689

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Public Sector (Profit Before Taxation)

Public Sector Banks have registered net PBT of PKR 39.339 billion (2014: PKR 25.168 billion) during the year, i.e. around 13.1% (2014: 8.38%) of total net PBT booked by the banks in this survey.

Net PAT for the sector stood at PKR 23.263 billion for the year (2014: PKR 15.626 billion). Contribution of total gross revenue had been of PKR 177.702 billion (2014: PKR 196.380 billion), whereas PKR 72.907 billion (2014: PKR 103.45 billion) had been earned on account of interest/mark-up/return income.

The overall net provision booked in this sector was PKR 14.644 billion (2014: PKR 12.796 billion), out of which, PKR 14.111 billion (2014: PKR 13.178 billion) was booked against NPL. Total operating cost in this sector was PKR 50.812 billion (2014: PKR 54.966 billion).

During the current year, NBP had posted the highest PBT of PKR 34.271 billion and PAT of PKR 20.176 billion. However, highest total provisions of PKR 11.319 billion was also booked by NBP, out of which, PKR 10.864 billion was booked against NPL. The graph given below shows that except first women bank limited all public sector banks reported growth in profit before tax (PBT).

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Public Sector Profit Before Tax (PKR in millions) NBP

BOK

BOP

FWBL

(5,000) - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 FWBL SB BOP BOK NBP 2014 (666) 4,361 1,901 1,611 23,136 2015 33 - 2,959 2,076 34,271

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Islamic Sector (Profit Before Taxation)

Islamic Sector Banks have registered net PBT of PKR 9.748 billion (2014: PKR 7.894 billion) during the year, i.e. around 3.25% (2014: 2.63%) of total net PBT booked by the banks included in this survey. The highlights the fact that Islamic banking industry is still in its developing phase.

Net PAT for the sector stood at PKR 23.263 billion for the year (2014: PKR 15.626 billion). Contribution of total gross revenue had been of PKR 177.702 billion (2014: PKR 196.380 billion), whereas PKR 72.907 billion (2014: PKR 103.45 billion) had been incurred on account of interest/mark-up/return income.

During the current year, Meezan had posted the highest PBT of PKR 8.87 billion and PAT of PKR 20.176 billion. Highest total provisions of PKR 11.319 billion was booked by NBP, out of which, PKR 10.864 billion was booked against NPL. The graph has been provided below: Islamic Sector Profit Before Tax (PKR in millions) burj

Meezan

al baraka

DIP

(2,000) - 2,000 4,000 6,000 8,000 10,000 DIP al baraka Meezan burj 2014 925 216 6,898 (614) 2015 713 407 8,870 (481)

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Value Addition

During the year ended 31 December 2015, total value added by the banks under survey amounted to PKR 493.180 billion (2014: 408.085 billion), after taking into account the Service Cost of PKR 120.477 billion (2014: PKR 124.802 billion). Out of the said value addition, PKR 150.089 billion (2014: PKR 1146.270 billion) was allocated to Employees, while PKR 69.049 billion (2014: PKR 91.231 billion) and PKR 41.806 billion (2014: PKR 23.018 billion) was allocated to Shareholders and for Growth & Expansion by the banks respectively.

PARTICULARS PRIVATE PUBLIC ISLAMIC TOTAL Income from banking services 516,785 89,474 25,888 632,147 Cost of services (95,910) (12,534) (7,021) (115,465) Value added by banking services 420,875 76,940 18,867 516,682 Non-banking income 1,041 15 61 1,117 Provisions against non-performing assets (25,491) (11,319) (501) (37,311)

Total value added / (lost) 396,425 65,636 18,427 480,488 Value allocated to: Employees 107,122 29,081 8,009 144,212 Government 90,456 14,095 3,596 108,147 Growth & expansion 37,117 2,283 1,383 40,783 Society 1,088 1 - 1,089 Shareholders 49,835 15,956 3,258 69,049

Retained / (absorbed) in business 110,902 4,220 2,012 117,134

The pie chart given below highlights that all sectors of banks reported increase in value added services as compare to last year.

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Value Added Services 2015 Value Added Services 2014

4.9% 4% 16.9% 14%

78.2% 82%

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BANKING ASSETS

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Gross Advances

Total advances during the year stood at PKR 4.849 billion (2014: PKR 4.856 billion) which is 34.32% (2014: 41.48%) of the total asset base of the banking industry. Sector wise breakup of the advances is as under:

Gross Advances

Sectors 2015 2014 Increase/Decrease Variation

Public Banks 790,440 1,022,911 (232,471) -23%

Private Banks 3,686,088 3,477,038 209,050 6%

Islamic Banks 372,974 356,777 16,197 5%

The above table reflects that public sector banks have reported significant decline in total advances, however situation is reversed in case of private and Islamic sectors.

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Gross Advances 2015 Gross Advances 2014

Public Banks Private Banks Islamic Banks Public Banks Private Banks Islamic Banks

8% 7% 16% 21%

76% 72%

All private sectors experienced mixed result but HBL reported significant increase in advances. In public sector banks the decline in advances attributable to significant decline in NBP advances, apart from NBP majority of banks reported increase. In case of Islamic Sector Meezan and DIP reported significant growth in advances.

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Private Sector Gross Advances (PKR in millions)

800,000

700,000

600,000

500,000

400,000

300,000

200,000

100,000

- ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit 2015 340,76 702,56 333,81 529,91 228,41 343,49 214,27 202,54 150,73 79,402 135,02 26,260 67,045 120,61 128,11 83100 2014 325,86 661,47 322,75 514,28 198,67 304,84 187,97 204,67 150,16 58,775 117,65 23,916 64,417 113,72 150,02 77804

Junaidy Shoaib Asad Chartered Accountants 37 BANKING SURVEY 2015

Public Sector Gross Advances (PKR In millions)

800,000

600,000

400,000

200,000

- First Women Bank Sindh Bank Bank of Punjab Bank of Khyber National Bank 2015 9,253 46,665 250,342 40,137 694,385 2014 9,401 41,204 197,083 43,243 731,980 Islamic Sector Gross Advances (PKR in millions)

250,000

200,000

150,000

100,000

50,000

- DIP al baraka Meezan burj 2015 106,651 50,548 215,775 19,567 2014 60,350 49,835 183,285 21,609

Junaidy Shoaib Asad Chartered Accountants 38 BANKING SURVEY 2015

Net Advances

Net advances during the year dialed in at PKR 4.390 billion (2014: PKR 4.395 billion) which is 34.32% (2014: 41.48%) of the total asset of the banking industry. Sector wise breakup of the advances is as under:

Net Advances

Sectors 2015 2014 Increase/Decrease Variation

Public Banks 668,687 890,090 (221,403) -25%

Private Banks 3,361,901 3,162,857 199,044 6%

Islamic Banks 360,168 342,632 17,536 5%

Net Advances 2015 Net Advances 2014

Public Banks Private Banks Islamic Banks Public Banks Private Banks Islamic Banks

8% 4% 15% 20%

76% 77%

Junaidy Shoaib Asad Chartered Accountants 39 BANKING SURVEY 2015

Non Performing Assets

Gross Advances include PKR 515.766 billion (2014: PKR 574.319 billion) non-performing assets against which, provision of PKR 456.869 billion (2014: PKR 459.498 billion) had been booked by the banks under review of this survey. Aggregate provision to NPL ratio stood at 88.58% (2014: 80.01%).

Junaidy Shoaib Asad Chartered Accountants 40 BANKING SURVEY 2015

2015 2014 Banking Sectors NPL Provision NPL Provision Private Sector 366,161 322,266 376,247 314,181 Public Sector 135,595 121,797 183,552 132,821 Islamic Sector 14,010 12,806 16,333 14,144

Non performing asset 2015 Non performing asset 2014

Private Sector Public Sector Islamic Sector Private Sector Public Sector Islamic Sector

3% 3% 26% 32%

71% 65%

The composition of non-performing assets within the various banks were as follows The highest amount of nonperforming asset (NPA) has been booked by HBL among private banking sector which is PKR 76.792 billion (2014: PKR 79.527 billion) with a total gross advances of PKR 3,686.088 billion (2014: PKR 3,477.038 billion). Whereas NBP among public banking sector, which is PKR 128.277 billion (2014: PKR 121.680 billion), have posted the highest figures against NPA with a total gross advances of PKR 790.440 billion (2014: PKR 1,022.911 billion). Moreover MBL have highest amount of NPA among Islamic sector, which is PKR 7.064 billion (2014: PKR 6.912 billion), with a total gross advances of PKR 372.974 billion (2014: PKR 356.777 billion).

Junaidy Shoaib Asad Chartered Accountants 41 BANKING SURVEY 2015

Private Sector Non Performing Assets (PKR in millions) 90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

- ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit 2015 21,904 76,792 20,369 48,072 31,484 18,455 5,874 30,289 18,487 2,983 28,173 1,974 8,520 11,584 24,018 17,183 2014 22,922 79,527 21,908 57,105 31,376 19,412 5,025 29,293 19,325 2,813 29,017 2,144 8,222 10,224 23,096 14,838

Junaidy Shoaib Asad Chartered Accountants 42 BANKING SURVEY 2015

Public Sector Non Performing Assets (PKR in millions) 140,000 120,000 100,000 80,000 60,000 40,000 20,000 - First Women Bank Sindh Bank Bank of Punjab Bank of Khyber National Bank 2015 1,895 290 60,165 5,133 128,277 2014 1,411 340 55,611 4,509 121,680

Islamic Sector Non Performing Assets (PKR in millions)

8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - DIP AB MBL BB 2015 2,904 4,042 7,064 1,477 2014 2,369 4,177 6,912 1,813

Junaidy Shoaib Asad Chartered Accountants 43 BANKING SURVEY 2015

Non performing asset to Gross advances comparison

Total Gross advances for banking sector totaled PKR 4848 billion (2014:4855 billion) of which PKR 515.766 billion (2014: PKR 574.319 billion) has been booked as non-performing assets.

Public sector banks reported highest NPA to Gross Advance ratio, which remained 17% for both the years; whereas Islamic banking sector reported lowest NPA to gross advance ratio, which remained around 4% for both the years.

2015 2014 Banking sectors Non Performing loans Gross Advances Non Performing loans Gross Advances

Public Bank 135,595 790,440 183,552 1,022,911 Private Bank 366,161 3,686,088 376,247 3,477,038 Islamic Bank 14,010 372,974 16,333 356,777

2015 Non Performing loans Gross Advances 2014 Non Performing loans Gross Advances 3,686,088 3,477,038 4,000,000 3,500,000 3,500,000 3,000,000 3,000,000 2,500,000 2,500,000 2,000,000 2,000,000 1,500,000 1,500,000 1,022,911 790,440 1,000,000 1,000,000 376,247 356,777 366,161 372,974 183,552 500,000 135,595 14,010 500,000 16,333 - - Public Bank Private Bank Islamic Bank Public Bank Private Bank Islamic Bank

Junaidy Shoaib Asad Chartered Accountants 44 BANKING SURVEY 2015

Deposits

Total deposits of the banking industry during the year stood at PKR 9,618.427 billion (2014: PKR 9,166.319 billion) which includes fixed deposits i.e. PKR 2,210.348 billion (2014: PKR 2,299.958billion), saving deposits PKR 3,521.586 billion (2014: PKR 3,394.651 billion) and financial institution deposits PKR 521.586 billion (2014: PKR 356.907 billion). Further breakup of the deposits has been provided below:

DEPOSITS

Deposits 2015 2014 Increase/(Decrease) Variance %

Fixed Deposits 2,210,348 2,299,958 (89,610) -4%

Saving Deposits 3,521,586 3,394,651 126,935 4%

Current Deposits - remunerative 340,795 336,047 4,748 1%

Current Deposits - non remunerative 2,976,606 2,724,364 252,242 9%

Other Deposits 47,506 54,393 (6,887) -13%

Financial Institutions 521,586 356,907 164,679 46%

There are mixed results reported for various types of deposits however, the significant growth was experienced in Financial Institution deposits.

Junaidy Shoaib Asad Chartered Accountants 45 BANKING SURVEY 2015

Deposits (2015) Deposits (2014)

Fixed Deposits Fixed Deposits

5% 4% 23% Saving Deposits 25% Saving Deposits 31% 30% Current Deposits - Current Deposits - remunerative remunerative Current Deposits - Current Deposits - 4% 37% 4% 37% non remunerative non remunerative Other Deposits Other Deposits

Junaidy Shoaib Asad Chartered Accountants 46 BANKING SURVEY 2015

Deposit composition sector wise

private sector posted highest deposits among banking sector i.e. PKR 7,506.688 billion (2014: PKR 6,761.399 billion) which makes up approximately 80% of total banking industry deposits; whereas the share of public sector and Islamic banking sector is 17.6% and 2.4% respectively

Deposits Deposit composition Private Public Islamic Fixed Deposits 1,685,158 408,202 194,638 Saving Deposits 2,871,131 459,012 268,200 Current Deposits - remunerative 157,463 187,563 - Current Deposits - non remunerative 2,449,351 382,434 195,029 Other Deposits 45,625 4,517 1,881 Financial Institutions 297,960 206,184 20,456

Deposit composition 2015 Fixed Deposits Saving Deposits Current Deposits - remunerative Current Deposits - non remunerative Other Deposits Financial Institutions Deposits Growth Comparison

Islamic 194,638 268,200 - 195,029 20,456

Public 408,202 459,012 187,563 382,434 206,184

Private 1,685,158 2,871,131 157,463 2,449,351 297,960

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Junaidy Shoaib Asad Chartered Accountants 47 BANKING SURVEY 2015

Deposits PKR in millions Deposits Total 7,506,688 6,761,399 8,000,000

6,000,000

4,000,000 1,647,912 1,744,292 680,204 660,628 2,000,000

- 2015 2014 2015 2014 2015 2014 Private Islamic Public

Public banks - Total deposits (PKR in million)

1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 - FWBL SBL BOP BOK NBP 2015 15,163 83,922 374,961 117,292 1,431,535 2014 13,449 61,884 342,291 92,264 1,234,405

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Islamic banks - Total deposits (PKR in million)

500,000

400,000

300,000

200,000

100,000

- DIP al baraka Meezan burj 2015 136,742 71,644 471,818 25,637 2014 83,844 80,222 380,422 25,809

Junaidy Shoaib Asad Chartered Accountants 49 BANKING SURVEY 2015

Private banks - Total deposits comparision (PKR in million)

1,800,000

1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

- ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit 2015 734,597 1,634,9 708,091 1,119,9 433,166 640,137 516,199 292,130 403,208 141,840 130,399 38,844 81,098 185,222 327,121 119,741 2014 667,864 1,524,5 688,270 951,902 387,535 605,963 446,311 26,303 319,948 107,430 105,103 31,642 68,770 163,250 304,305 105,222

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Advances to Deposits

Advance to deposits ratio measures how much advances lent by banks is done through deposits. The outcome of this ratio reflects the ability of banks to make optimal use of deposits.

Total gross advances to deposit (ADR) ratio is approximately decreased to 49.31% in 2015 from 52.9% in 2014 As the growth rate of deposits being higher than growth rate in advances. Advances to deposits ratio (PKR in millions) 2015 2014

58.64% 54.01% 51.42% 54.83% 60.00% 49.10% 47.97% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Private Public Islamic

The bar chart given above reflects that both private and public sector experienced overall decline in ADR however, the Islamic banking sector being exception and reported minor increase in ADR.

Junaidy Shoaib Asad Chartered Accountants 51 BANKING SURVEY 2015

Private Banks - Advances to deposits (PKR in millions)

2015 2014

Summit 69.40% 73.94%

SCB 39.16% 49.30%

Soneri 65.12% 69.67%

SILK 82.67% 93.67%

SAMBA 67.60% 75.58%

NIB 103.55% 111.94%

JS 55.98% 54.71%

HMB 37.38% 46.93%

Faysal 69.33% 72.24%

BAH 41.51% 42.12%

BAF 53.66% 50.31%

Askari 52.73% 51.27%

UBL 47.32% 54.03%

MCB 47.14% 46.89%

HBL 42.97% 43.39%

ABL 46.39% 48.79%

Junaidy Shoaib Asad Chartered Accountants 52 BANKING SURVEY 2015

Public banks -Advances to deposits (PKR in millions)

2015 2014

BOP 66.76% 57.58%

BOK 34.22% 46.87%

Sindh 55.61% 66.58%

NBP 48.51% 59.30%

FWBL 61.02% 69.90%

Islamic banks -Advances to deposits (PKR in millions) 2015 2014

Meezan 45.73% 48.18%

DIB 77.99% 71.98%

Burj 76.32% 83.73%

Al abaraka 70.55% 62.12%

Junaidy Shoaib Asad Chartered Accountants 53 BANKING SURVEY 2015

Capital Adequacy Ratio

Banks capital adequacy ratio is the ratio of bank qualifying capital to risk adjusted assets. The higher capital adequacy ratio shows that banks are adequately capitalized to expand its operations.

The graph given below reflects that mixed results were experienced by private sectors banks however samba bank reported highest capital adequacy ratio. i.e. 30.30% (2014: 37.08%) whereas silk bank reported lowest ratio i.e. 10.00% (2014: 9.14%). Moreover, First women bank i.e. 41.23% (2014: 29.12%) and Al Baraka 18.2% (2014:14.24%) being the leading public sector and Islamic sector banks respectively.

Junaidy Shoaib Asad Chartered Accountants 54 BANKING SURVEY 2015

Private Banks - Capital adequacy ratio (PKR in millions)

2015 2014 37.08% 70.00%

60.00%

50.00% 19.88% 20.41% 17.39% 18.91% 40.00% 16.21% 16.73% 14.30% 14.97% 12.50% 13.18% 12.75% 12.22% 30.00% 11.98% 12.22% 9.14% 20.00% 30.30% 20.85% 10.00% 16.98% 19.00% 18.40% 18.20% 14.70% 13.40% 13.87% 14.41% 15.23% 15.39% 12.50% 10.00% 10.00% 10.05%

0.00% ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit

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Public Banks - Capital adequacy ratio (PKR in millions) 2015 2014

80.00%

60.00% 29.12%

40.00% 22.57% 22.65% 18.17% 41.23% 20.00% 10.21% 18.38% 20.41% 23.75% 10.50% 0.00% FWBL NBP Sindh BOK BOP

Islamic Banks - Capital adequacy ratio (PKR in millions) 2015 2014

40.00% 35.00% 30.00% 18.64% 14.24% 25.00% 17.08% 20.00% 11.88% 15.00% 18.20% 10.00% 18.06% 11.13% 10.98% 5.00% 0.00% Al abaraka Burj DIB Meezan

Junaidy Shoaib Asad Chartered Accountants 56 BANKING SURVEY 2015

Earning per share

Earning per Share (EPS) is the key indicator of banks financial performance as it is linked to profitability of banks. Majority of banks included in this survey have either reported minor increase in EPS or the same results were obtained as in last year however, few exceptions were also reported.

Habib bank posted highest EPS among all private banks i.e. 23.93 (2014: 21.63).Moreover leading earning per share among public sector and Islamic sector being national bank i.e. 9.44 (2014: 7.56) and Meezan Bank of 5.01 (2014: 4.56) respectively Private Banks - Earning per share (PKR in rupees) Summit SCB Soneri SILK SAMBA NIB JS HMB Faysal BAH BAF Askari UBL MCB HBL ABL (10.00) - 10.00 20.00 30.00 40.00 50.00 ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit 2015 13.20 23.93 22.38 21.36 4.00 4.72 6.60 3.52 7.32 1.95 0.24 0.43 0.58 2.01 2.39 0.16 2014 13.28 21.63 22.15 19.32 3.19 4.08 5.79 2.37 4.72 1.35 (0.07) 0.24 0.03 1.44 2.49 0.16

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Public banks - Earning per share (PKR in Rupees)

BOP

BOK

Sindh

NBP

FWBL

(5.00) - 5.00 10.00 15.00 20.00 FWBL NBP Sindh BOK BOP 2015 0.21 9.44 - 1.79 3.03 2014 (2.75) 7.56 1.08 1.31 1.97

Islamic banks - Earning per share (PKR in Rupees)

MBL

DIB

- 2.00 4.00 6.00 8.00 10.00 12.00 AB BB DIB MBL 2015 0.27 0.48 0.62 5.01 2014 0.16 0.58 0.86 4.56

Junaidy Shoaib Asad Chartered Accountants 58 BANKING SURVEY 2015

Performing asset vs. Non performing assets

Private Banks - performing and non performing (PKR in millions) Non Performing Performing 2015 17,183 Summit 65,917 24,018 SCB 104,094 11,584 Soneri 109,033 8,520 SILK 58,525 1,974 SAMBA 24,286 28,173 NIB 106,855 2,983 JS 76,419 18,487 HMB 132,252

Faysal 30,289 172,254 5,874 BAH 208,399

BAF 18,455 325,035 31,484 Askari 196,935

UBL 48,072 481,843

20,369 MCB 313,446

HBL 76,792 625,769 21,904 ABL 318,865

Junaidy Shoaib Asad Chartered Accountants 59 BANKING SURVEY 2015

Public banks - performing and non performing (PKR in millions) Non Performing Performing

128,277 NBP 566,108

BOK 5,133 35,004 60,165 BOP 190,177 290 SB 46,375

1,895 FWBL 7,358

Islamic banks - performing and non performing (PKR in million) Non Performing Performing

1,477 BB 18,090

7,064 MBL 208,711

4,042 ABL 46,506 2,904

DIP 103,747

Junaidy Shoaib Asad Chartered Accountants 60 BANKING SURVEY 2015

The non-performing to performing assets ratio indicates quality of banks loans. The bank with higher said ratio indicates lower profitability in future due to higher requirement for provision against non-performing assets. Among large private sector banks, HBL has higher portion of non-performing assets, which is around 12% in relation to performing assets. While among public sector banks BOP has highest portfolio of non-performing assets that is approximately 31 %.Moreover, the Burj bank posted highest proportion of non-performing asset in Islamic banking sector.

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RATIO ANALYSIS

Asset over deposits

Asset over deposit ratio is used to assess the overall liquidity of banks. The higher assets to deposit ratio shows high liquidity.

The average assets to deposits ratio in private sector banks revolves around 1.35 times. Among private banks, SAMBA bank reported highest assets over deposits ratio i.e. 2.06.

Public sector banks also reported the similar result where the assets over deposits ratio revolves around 1.32 times however, the Sindh bank achieved highest assets to deposit ratio.

Junaidy Shoaib Asad Chartered Accountants 62 BANKING SURVEY 2015

Among Islamic banks the average assets over deposit ratio is around 1.15 times. However, the Burj bank reported highest assets over deposit ratio in sector i.e. 1.32 times. Private banks - Asset Over Deposits

2.50 2.06 1.88 2.00 1.64 1.57 1.44 1.41 1.47 1.56 1.37 1.39 1.35 1.36 1.33 1.24 1.50 1.24 1.21

1.00

0.50

- ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit

Public banks - Assets over Deposits 1.80 1.60 1.53 1.41 1.32 1.40 1.26 1.20 1.20 1.00 0.80 0.60 0.40 0.20 - First Women Bank Sindh Bank Bank of Punjab Bank of Khyber National Bank

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Islamic banks - Asset Over Deposits

1.3 1.3

1.3 1.2 1.2 1.1 1.2 1.1 1.1

1.1 DIP al baraka Meezan burj

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Deposits per branch

Private banks - Deposits Per Branch (PKR in million)

3,000 2,820

2,500

2,000 1,701 1,500 1,256 1,043 1,142 958 980 978 922 1,000 842 763 700 696 512 624 568 500

- ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit

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Public bank - Deposits per Branch (PKR in millions) 1,200.00 1,005.29 1,000.00 923.55 902.25

800.00

600.00

400.00 361.02 335.69

200.00

- First Women Bank Sindh Bank Bank of Punjab Bank of Khyber National Bank Islamic banks - Deposits per branch (PKR in million)

900 856 800 700 684 600 531 500 400 346 300 200 100 0 DIP(200) al baraka(135) Meezan(551) burj

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Administration expenses per branch

Private banks - Expenses per branch (PKR in million) Salary and allowances Rents and rates, electricity, insurance Legal and Professional Repair and Maintenance Communications

0.35 0.59 0.36 0.29 0.93 0.91 1.27 1.13 1.05 1.01 1.03 2.73 3.84 1.05 0.98 3.53 0.63 0.50 1.19 1.74 1.40 1.94 2.34 2.06 2.94 2.66 3.39 0.91 1.32 9.23 1.34 2.03 6.76 5.08 4.94 3.42 3.90 3.21 3.22 3.09 5.89 11.11 5.17 7.21 5.69 2.35 7.89 9.59

9.39 17.95 18.12 12.95 12.81 8.85 48.48 7.40 9.31 14.38 8.17 17.38 27.45 15.89 26.03 9.92

ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit

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Public banks - Expenses Per Branch (PKR in millions)

Communication Stationery Repair & Maintenance Rents & Electricity Legal charges

0.33 0.04 0.12 0.38 0.22

2.34 3.02 2.55 2.15 2.89

0.75 0.86 0.60 0.40 0.29

0.86 0.40 0.32 0.75 0.66 First Women Bank Sindh Bank Bank of Punjab Bank of Khyber National Bank

Islamic banks - Expenses per branch (PKR in million)

Communication stationary Rent and electricity Repair & maintenance Legal & Professional charges

0.27 0.46 0.44 0.03 0.47 0.87 1.30 1.42

4.33 3.78 6.74 6.02

0.56 0.34 0.24 0.73 0.96 1.07 0.67 Albaraka Burj DIB Meezan

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Markup expense over Markup earned

Private banks - Markup expense over Markup earned (in %)

2014 2015

Summit 75.22 71.47

SCB 39.33 32.81

Soneri 62.98 58.53

SILK 63.30 65.31

SAMBA 60.75 60.83

NIB 74.62 68.45

JS 63.84 62.60

HMB 65.28 60.94

Faysal 57.19 56.81

BAH 56.66 50.64

BAF 60.50 53.41

Askari 65.60 59.27

UBL 45.30 40.70

MCB 43.62 38.75

HBL 49.88 45.80

ABL 57.95 49.89

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Public banks - Markup expense over Markup earned (in %) 2015 2014

National Bank 52.45 60.82

Bank of Khyber 59.26 63.69

Bank of Punjab 64.61 69.54

Sindh Bank 55.76 61.54

First Women Bank 54.02 62.18

Islamic banks - Markup Expense over Markup earned (in %)

2015 2014

BB 55.18 69.19

MBL 44.99 53.61

ABL 60.47 67.53

DIB 46.88 45.65

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Net Markup Income per branch

Private banks - Markup Income per branch (PKR in millions)

Summit 15.92

SCB 196.26

Soneri 28.56

SILK 35.22

SAMBA 63.00

NIB 27.19

JS 20.88 60.76 HMB 49.84 Faysal

BAH 47.03

BAF 33.50

Askari 43.21

UBL 43.50

MCB 39.58

HBL 45.79

ABL 34.42

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Public banks - Net Markup Income Per Branch (PKR in millions)

NBP 38.19

BOK 34.06

BOP 27.25

SB 17.92

FWBL 16.60

Net Markup Income Per Branch (PKR in millions)

BB 15.31

MBL 33.06

ABL 18.36

DIB 23.18

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Fee, commission and brokerage income per branch

Private banks - Fees, commission, brokerage income per branch (PKR in millions)

14.00

12.00

10.00

8.00

6.00 12.21 10.71 11.10 10.01

4.00 8.23 8.31 7.22 7.00 6.44 6.63 5.61 5.05 2.00 4.40 3.40 3.71

- 0.01 ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit

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Public banks - Fee, Commission & Brokerage Income Per Branch (PKR in millions)

2015

10.35 9.45

8.35

6.35

4.35 2.04 2.35 1.98 0.93 0.94 0.35 First Women Bank Sindh Bank Bank of Punjab Bank of Khyber National Bank Islamic banks - Fee, Commission & Brokerage Income Per Branch (PKR in millions) 2015 7.35 6.25 6.35 5.35 4.35 3.61 3.25 3.35 2.05 2.35 1.35 0.35 DIP al baraka Meezan burj

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Income from dealing in foreign currency per branch Private banks - Income from dealing in foreign currencies (PKR in million) 20.00 17.77

15.00

10.00

5.00 3.45 4.57 1.95 2.42 2.11 1.34 2.09 2.21 2.07 1.78 2.78 1.61 0.62 0.80 1.04 - ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK Soneri SCB Summit

Public banks - Income from dealing in foreign currencies Per Branch

3.85 (PKR in million)

3.35

2.85

2.35

1.85 3.44

1.35

0.85 1.07 0.69 0.35 First Women Bank Sindh Bank Bank of Punjab Bank of Khyber National Bank

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Islamic Banks- Income from dealing in foreign currencies (PKR in millions) 2.85

2.67 2.35

1.85

1.35

1.19 0.85

0.35 0.35 DIB al baraka Meezan burj

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Income stream of Private Banks for the year ended 2015

Income Streams

Income Streams ABL HBL MCB UBL Askari BAF BAH Faysal HMB JS NIB SAMBA SILK SONERI SCB SUMMIT

Net Markup 36,139 78,168 49,322 57,859 14,906 28,615 24,834 13,955 14,399 5,784 4,650 2,142 3,099 7,598 22,766 3,056 Income

Fees, commission and brokerage 3,570 17,089 8,994 14,239 1,937 4,570 2,321 2,303 2,893 1,785 1,421 126 977 1,344 3,636 1,273 income

Dividend income 3,528 1,543 861 2,350 308 350 537 318 149 180 191 22 41 160 1 78

Income from dealing in foreign 838 2,749 772 2,588 835 1,379 707 965 1,083 288 357 75 182 473 2,061 534 currency

Gain on sale of 833 11,042 4,344 3,195 3,120 1,535 137 1,739 4,781 1,995 4,008 485 651 1,126 1,016 2,443 securities

Un-realized gain / (loss) on - 18 577 16 (1) 229 - (27) - 14 (15) 1 1 (2) 4 (13) revaluation of HFT portfolio

Share of profit from joint - 3,399 - - - 309 89 ------venture / associates

Other Income 986 743 2,091 1,299 581 730 695 266 341 36 42 96 43 52 399 104

Junaidy Shoaib Asad Chartered Accountants 77 BANKING SURVEY 2015

ABL HBL MCB UBL 4% 3% 3% 3% 7% 3% 7% 10% 8% 13% 17% 15% 68% 79% 74% 71%

JS Askari BAF BAH

3% 4% 2% 4% 2% 20% 14% 8% 12% 3% 4% 9% 18% 57% 69% 76% 85%

HMB Faysal NIB SAMBA 3% 5% 9% 16% 20% 2% 38% 44% 3% 5% 12% 4% 12% 61% 73% 71% 3% 2% 13%

Junaidy Shoaib Asad Chartered Accountants 78 BANKING SURVEY 2015

SILK SONERI SCB SUMMIT 4% 10% 13% 4% 7% 4% 2% 12% 33% 41% 13% 19% 62% 71% 76% 7% 17%

KEY

Net markup income Gain on sale of securities Fees, commission and brokerage income Unrealized gain/ (loss) on revaluation HFT portfolio Dividend income Share of profit from joint venture/associates Income from dealing in foreign currencies Other income

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Income stream of Public Banks for the year ended 2015

Income Streams

Income Streams First Women Bank Sindh Bank Bank of Punjab Bank of Khyber National Bank 11,064 Net Markup Income 697 4,481 4,428 54,387 828 Fees, commission and brokerage income 39 234 258 13,460 58 Dividend income 20 120 120 2,707 109 Income from dealing in foreign currency 29 69 139 4,899 5,014 Gain on sale of securities 296 3,063 3,063 12,283 (8) Un-realized gain / (loss) on revaluation of HFT portfolio - - (6) 5 - Share of profit from joint venture / associates - - - (363) 1,635 Other Income 25 6 119 2,111

Junaidy Shoaib Asad Chartered Accountants 80 BANKING SURVEY 2015

Bank of Khyber National Bank First Women Bank

14% 27% 38% 6% 3% 54% 15% 60% 3%2% 63% 3% 3%

Sindh Bank Bank of Punjab 9%

38% 27%

56% 59% 2% 4% 3% Key

Net Markup income Gain on sale of securities Fees, commission and brokerage income Unrealized gain/ (loss) on revaluation HFT portfolio Dividend income Share of profit from joint venture/associates Income from dealing in foreign currencies Other income

Junaidy Shoaib Asad Chartered Accountants 81 BANKING SURVEY 2015

Income stream of Islamic banks for the year ended 2015

Income streams

INCOME STREAMS DIB Al Baraka Meezan Burj

Net Markup Income 4635 2478 18217 1133

Fees, commission and brokerage income 1250 439 1987 152

Dividend income 0 22 629 75

Income from dealing in foreign currency 7 161 1471 26

Gain on sale of securities 16 13 342 182

Un-realized gain / (loss) on revaluation of HFT portfolio 0 3 0 -2

Share of profit from joint venture / associates 0 0 0 0

Other Income 2 19 168 25

Junaidy Shoaib Asad Chartered Accountants 82 BANKING SURVEY 2015

DIB Al Baraka Burj 5% 11% 21% 14% 5% 9%

71% 79% 79%

Meezan

3% 6% 9%

80%

Key

Junaidy Shoaib Asad Chartered Accountants 83 BANKING SURVEY 2015

Junaidy Shoaib Asad Chartered Accountants 84 BANKING SURVEY 2015

BASEL III

BASEL III is a comprehensive set of rules framed by the BASEL committee in order to strengthen financial regulations in banks so that banks are fully compliant with the risk management principles in order to avoid financial losses.

BASEL III aims to improve the capability of banking sector to survive during financial and economic crisis, through improvement in governance structure, risk management and further strengthening banks transparency.

BASEL III emphasizes on capital adequacy ratio and market liquidity, moreover these standards minimizes the deficiencies faced by the banking sector throughout the world. BASEL III standards became effective as at 31 December 2013 with the intentions to fully implement it by December 31 2019.

In this survey, we have provided a bird eye view of different banks as per the requirements of BASEL III standards. We have discussed the standards of Conventional, Islamic and Public banks respectively. This survey compared the BASEL III standard requirements with the actual results of Banks.

Junaidy Shoaib Asad Chartered Accountants 85 BANKING SURVEY 2015

Private Banks

Conventional Banks BASEL III Leverage Ratio

UBL Bank Summit Bank Soneri Bank Silk Bank SCB Bank Samba Bank NIB Bank MCB Bank JS Bank Habib Bank Limited Habib Metro Bank Faysal Bank Bank Alfalah Askari Bank Allied Bank Limited Bank Al Habib Required 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00%

Allied Habib Habib Bank Al Askari Bank Faysal MCB Samba Soneri Summit Required Bank Metro Bank JS Bank NIB Bank SCB Bank Silk Bank UBL Bank Habib Bank Alfalah Bank Bank Bank Bank Bank Limited Bank Limited Leverage Ratio 3.00% 3.78% 5.02% 2.63% 3.41% 4.26% 5.48% 5.10% 5.03% 8.17% 3.80% 12.20% 6.73% 7.74% 5.10% 3.21% 5.13%

Junaidy Shoaib Asad Chartered Accountants 86 BANKING SURVEY 2015

BASEL III Common equity tier 1 to Total risk weighted assets requirement UBL Bank Summit Bank Soneri Bank Silk Bank SCB Bank Samba Bank NIB Bank MCB Bank JS Bank Habib Bank Limited Habib Metro Bank Faysal Bank Bank Alfalah Askari Bank Allied Bank Limited Bank Al Habib Required

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% Allied Habib Habib Bank Al Askari Bank Faysal Samba Soneri Summit Required Bank Metro Bank JS Bank MCB Bank NIB Bank SCB Bank Silk Bank UBL Bank Habib Bank Alfalah Bank Bank Bank Bank Limited Bank Limited Comon equity tier 1 to total Risk weighted Average requirement 6.00% 10.70% 17.08% 8.90% 9.83% 12.54% 16.72% 13.14% 12.16% 17.41% 19.15% 28.78% 17.35% 10.24% 11.66% 6.86% 10.44%

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BASEL III Tier 1 Capital to Risk weighted assets

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

Allied Habib Habib Bank Al Askari Bank Faysal Samba Soneri Summit Required Bank Metro Bank JS Bank MCB Bank NIB Bank SCB Bank Silk Bank UBL Bank Habib Bank Alfalah Bank Bank Bank Bank Limited Bank Limited Tier 1 Capital to Risk weighted Average 7.50% 10.69% 17.08% 8.90% 9.83% 12.54% 16.72% 13.14% 13.25% 17.41% 19.15% 28.78% 17.36% 12.60% 11.66% 8.74% 10.44%

Junaidy Shoaib Asad Chartered Accountants 88 BANKING SURVEY 2015

BASEL III Total capital to Risk weighted assets

Islamic Banks UBL Bank Summit Bank Soneri Bank BASEL III Silk Bank Leverage Ratio SCB Bank Samba Bank Burj Bank NIB Bank Required Dubai Islamic Bank MCB Bank Albaraka Bank Meezan Bank JS Bank Meezan Bank Habib Bank Limited Albaraka Bank Dubai Islamic Bank Habib Metro Bank Required Burj Bank Faysal Bank 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% Bank Alfalah Askari Bank Allied Bank Limited Bank Al Habib Required 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%

Allied Habib Habib Bank Al Askari Bank Faysal MCB Samba Soneri Summit Required Bank Metro Bank JS Bank NIB Bank SCB Bank Silk Bank UBL Bank Habib Bank Alfalah Bank Bank Bank Bank Bank Limited Bank Limited Total capital to Risk weighted Average 10.25% 13.87% 20.85% 12.51% 13.54% 14.41% 18.45% 16.98% 15.23% 20.07% 12.52% 30.30% 20.72% 13.84% 15.39% 10.18% 14.68%

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Islamic Banks

BASEL III Total capital to risk weighted average

Burj Bank Required Dubai Islamic Bank Albaraka Bank Meezan Bank Meezan Bank Albaraka Bank Dubai Islamic Bank Required Burj Bank

0.00% 5.00% 10.00% 15.00% 20.00%

BASEL III Tier 1 Capital to risk weighted average

Burj Bank

Dubai Islamic Bank Required Albaraka Bank Meezan Bank Meezan Bank Albaraka Bank Dubai Islamic Bank Burj Bank Required

0.00% 5.00% 10.00% 15.00% 20.00%

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BASEL III Comon equity tier 1 to total Risk weighted average requirement

Burj Bank Required Dubai Islamic Bank Albaraka Bank Meezan Bank Meezan Bank Albaraka Bank Dubai Islamic Bank Required Burj Bank 0.00% 5.00% 10.00% 15.00% 20.00%

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Public Banks

BASEL III Leverage Ratio

Bank of Punjab Required Sindh Bank Bank of Khyber National Bank of Pakistan First Women Bank Limited First Women Bank Limited National Bank of Pakistan Bank of Khyber Sindh Bank Required Bank of Punjab 0.00% 2.00% 4.00% 6.00% 8.00% 10.00%12.00%

BASEL III Total capital to risk weighted average

Bank of Punjab Required Sindh Bank Bank of Khyber National Bank of… First Women Bank Limited First Women Bank… National Bank of Pakistan Bank of Khyber Sindh Bank Required Bank of Punjab 0.00% 10.00% 20.00% 30.00% 40.00% 50.00%

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BASEL III Tier 1 Capital to Risk weighted Average

0.00% 10.00% 20.00% 30.00% 40.00%

BASEL III Comon equity tier 1 to total risk weighted average requirement

0.00% 10.00% 20.00% 30.00% 40.00%

Junaidy Shoaib Asad Chartered Accountants 93 BANKING SURVEY 2015

Junaidy Shoaib Asad Chartered Accountants 94 BANKING SURVEY 2015

CREDIT RATINGS

Private Banks Credit Rating Long Term Short Term ABL AA+ A1+ HBL AAA A1+ MCB AAA A1+ UBL AA+ A1+ Askari AA A1+ BAF AA A1+ BAH AA+ A1+ Faysal AA A1+ HMB AA+ A1+ JS AA A1+ NIB AA- A1+ SAMBA AA- A1 SILK A- A2 Soneri AA- A1+ SCB AAA A1+ Summit A A1

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Public Banks Credit Rating Long Term Short Term FWBL BBB+ A2 NBP AAA A1 + Sindh AA A1 + BOK A A1

Islamic Banks Credit Rating Long Term Short Term AL Baraka A A1 DIB A+ A1 Meezan AA A1+

Junaidy Shoaib Asad Chartered Accountants 96 BANKING SURVEY 2015

Glossary

Average Advances The average of opening and closing advances at two-year ends.

Average Assets The average of opening and closing total assets at two year ends.

Average Deposits The average of opening and closing deposits at two-year ends.

Average Earning Assets The average of opening and closing earning assets at two year ends.

Average Equity The average of opening and closing equity at two year ends.

Earning Assets Deposits with treasury & other banks’ lending to financial institutions, investments and advances.

Equity Equity includes shares capital, reserves, inappropriate profit/accumulated loss, minority interest and surplus / deficit on revaluation of assets.

Gross Advances Loans, cash credits, overdrafts, ijaras, etc. and local & foreign bills discounted &purchased before provisions.

Gross Spread Ratio Net mark-up return as a percentage of total mark-up income earned.

Non-funded Income Non-funded income comprises of non mark-up based income, which consists of fee, commission & brokerage income, income from dealing in foreign currencies, realized and un-realized gain on sale of assets & securities, etc.

Net markup margin Mark-up / return / interest earned (before provisions) as a percentage of interest bearing assets less markup / return / interest expensed as a percentage of interest bearing liabilities.

Operating costs includes all expenses charged to arrive at profit before tax excluding cost of funds and provisions.

Operating fixed assets operating fixed assets include intangible assets.

Other assets other assets include deferred tax assets.

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Other liabilities other liabilities include deferred tax liabilities and liabilities against assets subject to finance lease.

Provisions Total of specific and general provisions against gross advances, charge & reversal of provision against non-performing advances, for diminution in value of investments, bad debts directly written-off and recoveries of previously written-off debts.

Return on Average Assets Net Income as a percentage of average total assets.

Return on Average Equity Profit before tax as a percentage of average equity.

Staff Cost Salaries, allowances, etc., staff retirement benefits and cost of redundancy / voluntary retirement etc., excluding Workers’ Welfare Fund.

Taxations Charge for current (including prior) and deferred taxation in the profit and loss account.

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