Commercial Banks Operating in Pakistan

kpmg KPMG Taseer Hadi & Co. Chartered Accountants

Banking Survey 2015

Banking Survey 2015

This survey has been prepared by KPMG Taseer Hadi & Co. and summarizes the performance of selected commercial banks in Pakistan for the year ended 31 December 2015.

Banking sector in Pakistan has been divided in four categories for the purpose of this survey to facilitate comparison of peer groups:

I. Large Banks: Total assets in excess of Rs. 700 billion.

II. Medium size Banks: Total assets in excess of Rs. 150 billion but less than Rs. 700 billion.

III. Small Banks: Total assets less than Rs. 150 billion.

IV. Islamic Banks: All banks carrying out Islamic banking activities only.

“Islamic Banks” have been presented as a separate category and included in their respective category of Medium and Small Banks based on total assets threshold.

Further, summarized financial information of “Islamic Banking Branches of Conventional Banks” has also been presented to have an idea about size of Islamic Banking in Pakistan.

The information contained in this survey has been obtained from the published consolidated financial statements of the banks, statistical bulletins published by State Bank of Pakistan (SBP) and information published in business magazines and newspapers. Where consolidated financial statements were required and were not available, standalone financial statements have been used.

Reference should be made to the published financial statements of the banks and definitions included in this survey to enhance the understanding of ratios and analysis of performance of a particular bank.

The financial statements of Bank of Punjab and BankIslami Pakistan Limited were not published till the date of our publication, and accordingly not included in this survey.

Comparative figures of 2014 as reported in our Banking Survey 2014 have been updated to correspond with comparative figures reported in 2015 financial statements.

We have tried to provide relevant financial analysis of the banks which we thought would be useful for benchmarking and comparison. However, we welcome any comments, which would facilitate in improving the contents of this survey. The comments may be sent on karachi@kpmg.com

Karachi: 27 April 2016

© 2016 KPMG Taseer Hadi & Co., a Partnership firm registered in Pakistan and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Contents

At a Glance ...... 1 Summary of Financial Information ...... 7 Profitability ...... 13 Spread ...... 15 Non-Funded Income ...... 19 Staff Costs ...... 21 Loans and Advances ...... 23 Liquidity (Average Advances to Average Deposits) ...... 29 Deposits ...... 33 Credit Ratings ...... 39 Number of Branches and Legend ...... 41 Definitions ...... 43

Banking Survey 2015 1 At a Glance

Large Banks

HBL NBP UBL MCB ABL BAF 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

Ranking By total assets 1 1 2 2 3 3 4 4 5 5 6 6 By net assets 1 2 2 1 3 3 4 4 5 5 7 7 By profit before tax 1 1 4 4 2 3 3 2 5 5 7 8

Profit before tax 60,286 48,250 34,172 23,136 43,447 35,616 42,789 37,354 25,776 22,433 12,657 8,677 (Rupees in millions)

Net Interest Margin 2.8% 2.7% 2.5% 1.5% 3.5% 3.0% 4.0% 3.3% 3.1% 2.3% 2.4% 1.5%

Spread 4.4 5.0 5.4 5.6 4.4 4.7 5.1 5.9 4.3 5.7 4.7 5.5

Return on Average Equity 19.9% 20.2% 11.3% 9.4% 18.4% 19.3% 18.0% 19.7% 17.8% 20.5% 15.1% 14.9%

Return on Average Assets 1.7% 1.8% 1.2% 1.1% 2.0% 2.1% 2.6% 2.8% 1.7% 1.9% 0.9% 0.9%

Operating Cost to Net 63.9% 62.0% 83.4% 97.7% 60.7% 69.7% 48.6% 50.6% 52.8% 62.8% 79.6% 94.9% Interest Income Ratio

Net provision / (reversal) 4,508 1,234 9,945 9,303 3,823 1,336 545 (1,941) 1,586 1,220 2,288 1,572 (Rupees in millions)

Impairment cover 14.4 40.1 4.4 3.5 12.4 27.7 79.4 - 17.3 19.4 6.5 6.5 (Times)

Non Performing Advances 10.9% 12.0% 18.5% 16.6% 9.1% 11.1% 6.1% 6.8% 6.4% 7.0% 5.4% 6.4% to gross loans

Total Assets 2,218,423 1,864,618 1,711,874 1,549,659 1,486,187 1,182,453 1,020,980 941,606 992,739 843,098 903,416 743,959 (Rupees in millions)

Net Assets 182,620 169,595 171,655 182,593 155,599 137,505 142,177 136,269 90,125 81,565 54,093 45,568 (Rupees in millions)

Capital Adequacy Ratio 17.0% 16.2% 18.4% 18.2% 14.7% 14.3% 20.1% 20.4% 21.0% 19.9% 13.6% 12.7%

CASA 82.8% 77.9% 73.1% 72.8% 69.7% 70.2% 92.2% 90.2% 72.1% 73.9% 75.5% 72.0%

EPS 23.93 21.56 9.44 7.56 21.36 19.32 22.38 22.15 13.37 13.28 4.72 4.18

Market Price 200.12 216.26 54.04 69.46 154.95 176.71 216.85 305.65 94.26 113.58 28.82 34.88

Market Capitalization 293,546 317,221 114,971 147,777 189,687 216,325 241,361 340,198 107,935 130,057 45,818 55,363 (Rupees in million)

2 Banking Survey 2015

Medium Size Banks

BAH Askari Meezan HMB SCB Faysal 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

Ranking By total assets 7 7 8 8 9 9 10 11 11 10 12 12 By net assets 8 9 11 11 12 12 9 8 6 6 10 10 By profit before tax 9 7 11 11 10 10 8 9 6 6 12 13

Profit before tax 12,266 10,003 8,337 5,869 8,451 6,899 12,565 7,336 15,565 15,368 6,920 3,552 (Rupees in millions)

Net Interest Margin 2.8% 2.1% 2.3% 1.8% 2.8% 2.1% 1.9% 1.2% 4.1% 3.5% 2.6% 2.7%

Spread 3.7 3.8 4.0 5.1 3.8 3.8 2.6 2.7 7.8 8.2 5.6 6.5

Return on Average Equity 20.6% 22.0% 19.4% 19.0% 20.0% 21.4% 21.4% 15.8% 15.1% 16.5% 14.9% 10.2%

Return on Average Assets 1.2% 1.2% 1.0% 1.0% 1.0% 1.2% 1.7% 1.4% 2.2% 2.4% 1.0% 0.7%

Operating Cost to Net 60.8% 65.3% 83.7% 95.8% 75.7% 80.5% 61.5% 70.1% 56.1% 60.5% 80.2% 88.9% Interest Income Ratio

Net provision / (reversal) 1,965 558 879 322 563 467 2,226 1,779 1,555 483 1,393 2,359 (Rupees in millions)

Impairment cover 7.2 18.9 10.5 19.2 16.0 15.8 6.6 5.1 11.0 32.8 6.0 2.5 (Times)

Non Performing Advances 2.7% 2.7% 13.8% 15.6% 3.3% 3.8% 12.3% 12.8% 18.7% 15.4% 15.0% 14.3% to gross loans

Total Assets 640,024 579,310 536,189 447,612 531,850 437,510 489,886 397,675 455,992 419,723 430,073 388,126 (Rupees in millions)

Net Assets 38,192 33,027 27,074 24,026 26,347 23,890 36,862 34,769 63,158 61,900 30,352 26,303 (Rupees in millions)

Capital Adequacy Ratio 13.9% 15.0% 12.6% 13.2% 11.0% 11.9% 18.5% 17.4% 20.7% 18.9% 14.4% 12.2%

CASA 76.1% 76.0% 78.8% 75.6% 71.5% 71.2% 55.9% 57.7% 92.0% 92.0% 66.9% 64.2%

EPS 6.60 5.79 3.92 3.25 5.01 4.56 7.32 4.72 2.39 2.49 3.52 2.06

Market Price 41.60 48.55 21.74 23.07 45.75 47.00 30.47 37.30 21.90 23.60 15.43 18.20

Market Capitalization 46,235 53,960 27,398 29,074 45,875 47,129 31,927 39,084 84,788 91,369 18,512 18,988 (Rupees in million)

Banking Survey 2015 3

Soneri NIB JS Summit DIB BOK 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

Ranking By total assets 13 13 14 14 15 15 16 16 17 20 18 17 By net assets 14 13 15 14 13 15 19 18 22 22 16 16 By profit before tax 16 15 14 26 15 14 23 25 22 19 17 16

Profit before tax 3,596 2,442 4,029 (108) 3,768 2,589 693 36 712 926 2,959 1,901 (Rupees in millions)

Net Interest Margin 2.6% 2.4% 1.7% 1.7% 2.2% 1.9% 1.6% 1.3% 2.9% -1.7% 2.0% 1.8%

Spread 2.9 3.4 3.8 4.6 3.5 4.7 3.8 4.4 3.9 5.4 3.4 2.5

Return on Average Equity 12.6% 10.4% 14.6% -3.8% 14.0% 13.8% 2.0% 3.1% 5.6% 8.3% 11.6% 9.5%

Return on Average Assets 0.9% 0.8% 1.2% -0.3% 1.2% 1.3% 0.1% 0.2% 0.3% 0.7% 1.3% 1.1%

Operating Cost to Net 80.6% 92.3% 138.1% 164.9% 96.7% 113.9% 170.5% 207.0% 108.1% 97.6% 60.7% 69.8% Interest Income Ratio

Net provision / (reversal) 1,029 549 386 1,527 718 421 1,575 563 187 292 581 235 (Rupees in millions)

Impairment cover 4.5 5.4 11.4 0.9 6.2 7.2 1.4 1.1 4.8 4.2 6.1 9.1 (Times)

Non Performing Advances 9.6% 8.8% 20.9% 24.7% 3.8% 4.4% 20.7% 19.1% 2.1% 3.9% 12.8% 10.4% to gross loans

Total Assets 253,342 213,175 245,043 194,995 220,807 179,381 188,366 148,444 157,093 101,553 155,159 126,106 (Rupees in millions)

Net Assets 18,192 17,039 18,089 16,932 19,008 16,197 11,949 12,332 7,976 7,439 15,918 14,920 (Rupees in millions)

Capital Adequacy Ratio 15.4% 12.5% 12.5% 12.0% 15.2% 16.7% 10.2% 12.2% 11.1% 17.1% 23.8% 22.7%

CASA 67.9% 66.1% 69.4% 73.0% 51.4% 53.0% 70.7% 70.0% 63.4% 64.1% 56.9% 62.8%

EPS 2.01 1.44 0.25 (0.07) 1.95 1.35 0.16 0.16 0.62 0.86 1.79 1.31

Market Price 15.13 12.33 1.90 2.32 7.75 7.14 3.93 4.45 - - 11.26 9.85

Market Capitalization 16,680 13,593 19,575 23,903 8,312 7,657 4,236 4,797 - - 11,263 9,852 (Rupees in million)

4 Banking Survey 2015

Small Banks

ICBC Silk Sindh Citibank Albaraka 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014

Ranking By total assets 19 23 20 19 21 18 22 22 23 21 By net assets 23 25 18 21 17 17 21 20 24 23 By profit before tax 18 18 27 23 19 17 13 12 24 22

Profit before tax 2,821 1,405 (1,839) 131 2,075 1,612 5,659 4,603 406 217 (Rupees in millions)

Net Interest Margin 4.3% 4.8% 2.5% 3.7% 2.7% 2.1% 3.9% 3.7% 3.0% 2.0%

Spread 4.3 4.2 6.1 6.9 4.1 5.9 4.1 2.1 4.1 4.1

Return on Average Equity 32.6% 22.3% -14.8% 1.1% 8.6% 8.5% 33.9% 32.4% 3.9% 2.5%

Return on Average Assets 1.6% 1.3% -1.5% 0.1% 1.0% 1.1% 4.2% 4.4% 0.3% 0.2%

Operating Cost to Net 23.9% 25.9% 197.1% 135.3% 75.4% 80.4% 51.6% 44.9% 115.1% 119.6% Interest Income Ratio

Net provision / (reversal) - - 724 368 2,520 19 (175) (129) (125) 85 (Rupees in millions)

Impairment cover - - - 1.4 1.8 85.5 - - - 3.5 (Times)

Non Performing Advances - - 12.7% 12.8% 0.6% 0.8% 12.6% 10.8% 8.0% 8.4% to gross loans

Total Assets 140,254 75,950 133,137 102,736 128,104 124,871 88,643 81,254 86,933 94,349 (Rupees in Millions)

Net Assets 6,399 4,508 14,577 8,501 14,774 14,102 10,767 10,534 6,273 5,901 (Rupees in Millions)

Capital Adequacy Ratio 13.1% 14.7% 13.8% 9.1% 20.4% 22.6% 31.6% 28.9% 14.5% 14.2%

CASA 84.6% 59.0% 53.7% 54.9% 63.7% 66.9% 72.3% 78.0% 74.2% 61.1%

EPS - - (0.58) 0.03 1.25 1.23 - - 0.27 0.16

Market Price - - 1.82 2.22 ------

Market Capitalization - - 14,196 5,931 ------(Rupees in million)

Banking Survey 2015 5

Samba FWB DB BOT 2015 2014 2015 2014 2015 2014 2015 2014

Ranking By total assets 24 24 25 26 26 25 27 27 By net assets 20 19 27 27 25 24 26 26 By profit before tax 21 21 26 27 20 20 25 24

Profit before tax 815 425 35 (666) 1,656 910 63 69 (Rupees in millions)

Net Interest Margin 2.2% 2.0% 2.4% 2.5% 4.4% 3.6% 1.1% 2.1%

Spread 2.3 2.8 4.5 4.6 5.3 6.5 1.1 3.6

Return on Average Equity 3.7% 2.1% 2.1% -26.0% 18.4% 11.3% 1.2% 0.7%

Return on Average Assets 0.7% 0.5% 0.3% -2.5% 4.7% 2.4% 0.5% 0.3%

Operating Cost to Net 98.5% 94.0% 121.4% 115.5% 112.5% 122.2% 251.6% 211.4% Interest Income Ratio

Net provision / (reversal) 22 (99) 225 644 (335) 44 - - (Rupees in millions)

Impairment cover 38.9 - 1.2 0.0 - 21.9 - - (Times)

Non Performing Advances 7.5% 9.0% 20.5% 15.0% 1.4% 4.9% - - to gross loans

Total Assets 80,166 50,581 21,347 18,787 21,114 21,708 10,823 7,845 (Rupees in millions)

Net Assets 11,844 11,255 2,833 2,212 5,900 5,163 4,018 3,832 (Rupees in millions)

Capital Adequacy ratio 30.3% 36.5% 41.2% 29.1% 26.0% 16.2% 83.7% 95.7%

CASA 54.1% 57.9% 85.8% 75.4% 76.9% 71.2% 15.8% 25.0%

EPS 0.43 0.24 0.21 (2.75) - - - -

Market Price 6.00 7.00 ------

Market Capitalization 6,049 7,058 ------(Rupees in million)

6 Banking Survey 2015

Islamic Banks

Meezan DIB Albaraka 2015 2014 2015 2014 2015 2014

Ranking By total assets 1 1 2 2 3 3 By net assets 1 1 2 2 3 3 By profit before tax 1 1 2 2 3 3

Profit before tax 8,451 6,899 712 926 406 217 (Rupees in millions)

Net Interest Margin 2.8% 2.1% 2.9% -1.7% 3.0% 2.0%

Spread 3.8 3.8 3.9 5.4 4.1 4.1

Return on Average Equity 13.7% 21.4% 3.6% 8.3% 2.7% 2.5%

Return on Average Assets 0.7% 1.2% 0.2% 0.7% 0.2% 0.2%

Operating Cost to Net 75.7% 80.5% 108.1% 97.6% 115.1% 119.6% Interest Income Ratio

Net provision / (reversal) 563 467 187 292 (125) 85 (Rupees in millions)

Impairment cover 16.0 15.8 4.8 4.2 - 3.5 (Times)

Non Performing Advances 3.3% 3.8% 2.1% 3.9% 8.0% 8.4% to gross loans

Total Assets 531,850 437,510 157,093 101,553 86,933 94,349 (Rupees in millions)

Net Assets 26,347 23,890 7,976 7,439 6,273 5,901 (Rupees in millions)

Capital Adequacy ratio 11.0% 11.9% 11.1% 17.1% 14.5% 14.2%

CASA 71.5% 71.2% 63.4% 64.1% 74.2% 61.1%

EPS 5.01 4.56 0.62 0.86 0.27 0.16

Market Price 45.75 47.00 - - - -

Market Capitalization 45,875 47,129 - - - - (Rupees in million)

MCBIB financial results have not been shown due to initial years of operations.

Banking Survey 2015 7 Summary of Financial Information

Large Banks

Assets

Operating fixed Lendings to Loans and assets & Bank Cash & bank Investments financial advances - net Other assets Total assets intangible institutions of provisions assets

Rupees in million HBL 207,721 1,244,887 44,318 633,383 31,342 56,772 2,218,423 NBP 171,830 826,247 10,639 580,094 33,301 89,763 1,711,874 UBL 141,476 747,599 31,305 487,278 36,678 41,851 1,486,187 MCB 71,325 564,300 5,132 315,311 32,997 31,915 1,020,980 ABL 60,789 544,833 3,628 321,648 28,870 32,971 992,739 BAF 78,952 397,516 53,629 327,300 17,318 28,701 903,416 732,093 4,325,382 148,651 2,665,014 180,506 281,973 8,333,619

Liabilities and Equity

Subordinated Bank Bills payable Borrowings Deposits Other liabilities Equity Total loans

Rupees in million HBL 28,082 314,319 1,634,944 10,000 48,458 182,620 2,218,423 NBP 9,172 22,385 1,431,535 - 77,127 171,655 1,711,874 UBL 13,396 164,232 1,119,953 - 33,007 155,599 1,486,187 MCB 11,975 118,615 706,240 - 41,973 142,177 1,020,980 ABL 4,942 137,960 734,546 - 25,166 90,125 992,739 BAF 9,734 172,393 640,137 9,983 17,076 54,093 903,416 77,301 929,904 6,267,355 19,983 242,807 796,269 8,333,619

Income Statement

Non-mark- Other up / Non- Operating Operating Profit Profit after Comprehensive Bank Spread Net provision Taxation interest income expenses before tax tax Income income

Rupees in million HBL 78,169 4,508 36,584 110,245 49,959 60,286 25,185 35,101 358 NBP 54,387 9,945 35,104 79,546 45,374 34,172 14,096 20,076 (19,284) UBL 57,859 3,823 24,549 78,584 35,137 43,447 16,438 27,009 7,179 MCB 49,555 545 17,859 66,868 24,079 42,789 17,754 25,035 (989) ABL 36,152 1,586 10,309 44,876 19,100 25,776 10,461 15,315 1,556 BAF 28,614 2,288 9,103 35,429 22,772 12,657 5,143 7,514 4,049 304,736 22,695 133,508 415,548 196,421 219,127 89,077 130,050 (7,131)

8 Banking Survey 2015

Medium Size Banks

Assets

Operating fixed Lendings to Loans and assets & Bank Cash & bank Investments financial advances - net Other assets Total assets intangible institutions of provisions assets

Rupees in million BAH 41,782 355,081 5,818 205,859 15,782 15,702 640,024 Askari 38,044 268,049 813 199,937 9,278 20,068 536,189 Meezan 54,861 76,910 170,474 207,569 8,057 13,979 531,850 HMB 44,454 280,911 14,445 132,647 3,125 14,304 489,886 SCB 33,782 224,632 26,970 106,595 32,091 31,922 455,992 Faysal 27,152 183,677 12,088 178,079 11,343 17,734 430,073 Soneri 18,353 108,634 3,306 112,002 4,957 6,090 253,342 NIB 11,698 96,024 1,599 110,669 3,977 21,076 245,043 JS 11,790 116,885 3,581 76,679 4,731 7,141 220,807 Summit 13,459 77,558 1,460 70,554 9,609 15,726 188,366 DIB 18,053 18,516 11,725 104,954 1,843 2,002 157,093 BOK 12,060 88,296 13,205 36,454 1,925 3,219 155,159 325,488 1,895,173 265,484 1,541,998 106,718 168,963 4,303,824

Liabilities and Equity

Subordinated Bank Bills payable Borrowings Deposits Other liabilities Equity Total loans

Rupees in million BAH 8,665 62,592 516,198 2,995 11,382 38,192 640,024 Askari 6,095 57,323 433,130 4,997 7,570 27,074 536,189 Meezan 6,560 13,610 471,821 - 13,512 26,347 531,850 HMB 6,344 31,463 403,209 - 12,008 36,862 489,886 SCB 11,401 21,784 327,121 2,500 30,028 63,158 455,992 Faysal 6,009 90,565 292,130 2,994 8,023 30,352 430,073 Soneri 2,751 39,876 185,222 3,000 4,301 18,192 253,342 NIB 2,576 85,677 130,400 4,196 4,105 18,089 245,043 JS 1,609 54,638 140,355 - 5,197 19,008 220,807 Summit 2,729 49,756 119,742 1,497 2,693 11,949 188,366 DIB 1,552 4,552 136,743 3,247 3,023 7,976 157,093 BOK 505 17,130 117,292 - 4,314 15,918 155,159 56,796 528,966 3,273,363 25,426 106,156 313,117 4,303,824

Income Statement

Non-mark- Other up / Non- Operating Operating Profit Profit after Comprehensive Bank Spread Net provision Taxation interest income expenses before tax tax Income income

Rupees in million BAH 24,835 1,965 4,486 27,356 15,090 12,266 4,934 7,332 1,167 Askari 14,906 879 6,780 20,807 12,470 8,337 3,393 4,944 624 Meezan 18,217 563 4,597 22,250 13,799 8,451 3,429 5,022 148 HMB 14,399 2,226 9,249 21,422 8,857 12,565 4,892 7,673 (865) SCB 22,767 1,555 7,117 28,328 12,763 15,565 6,134 9,431 654 Faysal 13,955 1,393 5,557 18,118 11,198 6,920 2,698 4,222 (48) Soneri 7,597 1,029 3,153 9,721 6,125 3,596 1,383 2,213 42 NIB 4,651 386 5,990 10,452 6,423 4,029 1,479 2,550 (1,378) JS 5,784 718 4,297 9,363 5,595 3,768 1,303 2,465 902 Summit 3,056 1,575 4,423 5,904 5,211 693 455 238 (151) D