CONTENTS 02 Vision Unconsolidated Financial Statements 02 Mission 02 Core Values of Allied Bank Limited 63 Auditors’ Report to the Members 03 Company Information 64 Statement of Financial Position 03 Board of Directors 65 Profit and Loss Account 04 Profile of the Directors 66 Statement of Other Comprehensive 06 Board Committees Income 08 Chairman’s Message 67 Statement of Cash Flow 10 Directors’ Report 68 Statement of Changes in Equity 15 Calendar of Major Events 70 Notes to the Financial Statements 16 Corporate Structure 144 Annexure I 17 Management & Committees 147 Annexure II 18 Chief Executive Officer’s Review 148 Annexure III 26 Group’s Review 152 Annexure IV 34 Performance Highlights 38 Horizontal Analysis 40 Vertical Analysis Consolidated Financial Statements 42 Statement of Value Addition of Allied Bank Limited and its 43 Cash Flow - Direct Method Subsidiary 44 Concentration & Maturity Profile 158 Directors’ Report on Consolidated 45 Quarterly Comparison of Financial Results Financial Statements 46 Product & Services 159 Auditors’ Report to the Members 48 Corporate Sustainability 160 Statement of Financial Position 51 Notice of 68th Annual General Meeting 161 Profit and Loss Account 53 Statement of Compliance with Code of 162 Statement of Other Comprehensive Corporate Governance (CCG) Income 55 Auditors’ Review Report to the Members on 163 Statement of Cash Flow Statement of Compliance with CCG 164 Statement of Changes in Equity 56 Statement of Ethics and Business Practices 166 Notes to the Financial Statements 58 Statement of Internal Controls 239 Annexure I 59 Whistle Blowing Policy 240 Pattern of Shareholding 247 Glossary of Financial & Banking Terms 251 Form of Proxy Annual Report of Allied Bank Limited for the year 2014 PERFORMANCE 2014 DEPOSITS UP BY10% Rs. 667.9 billion (2013: Rs.608.4 billion) LOANS & INVESTMENTS UP BY 17% Rs. 734.8 billion (2013: Rs. 630.4 billion) TOTAL ASSETS UP BY 15% Rs.842.3 billion (2013: Rs. 734.2 billion) PROFIT (AFTER TAX) 15 BILLION (2013: Rs. 14.6 billion) EPS 13.11 (2013: Rs. 12.79 ) ROE 26% (2013: 30% ) 1 To become a dynamic and efficient bank providing VISION integrated solutions in order to be the first choice bank for the customers. MISSION • To provide value added services to our customers. • To provide high tech innovative solutions to meet customers’ requirements. • To create sustainable value through growth, efficiency and diversity for all stakeholders. • To provide a challenging work environment and reward dedicated team members according to their abilities and performance. • To play a proactive role in contributing towards the society. CORE VALUES INTEGRITY EXCELLENCE IN SERVICE HIGH PERFORMANCE INNOVATION AND GROWTH • Enhancing brand image and creating shareholders’ value STRATEGIC through sustainable performance, while optimizing return OBJECTIVES against acceptable risk appetite. • Augmenting Financial inclusion of unbanked population through innovative and diversified technologies, building customers’ confidence through convenient delivery channels and product designs. • Continuous re-engineering of policies, procedures, SOPs, SLAs and TATs, ensuring operational efficiencies through effective management of key resources. • Instilling a culture of ethics and responsibility among human resource and becoming an ‘Employer of Choice’ for the Top Professionals. 2 Annual Report of Allied Bank Limited for the year 2014 COMPANY INFORMATION Board of Directors Mohammad Naeem Mukhtar Sheikh Mukhtar Ahmad Muhammad Waseem Mukhtar Abdul Aziz Khan Mubashir A. Akhtar Pervaiz Iqbal Butt A.Akbar Sharifzada Tariq Mahmood Audit Committee of the Board Mubashir A. Akhtar (Chairman) Pervaiz Iqbal Butt A. Akbar Sharifzada Human Resource & Remuneration Committee Abdul Aziz Khan (Chairman) Muhammad Waseem Mukhtar Pervaiz Iqbal Butt Tariq Mahmood Company Secretary Muhammad Raffat Auditors Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants Legal Adviser Mandviwalla & Zafar Advocate. Shares Registrar Technology Trade (Pvt.) Limited Registered & Head Office 3 Tipu Block New Garden Town Lahore - Pakistan (9242) 35880043 Postal Code 54000 Website & Email www.abl.com [email protected] U.A.N Number (+92 42) 111-110-110 3 PROFILE OF THE DIRECTORS Mohammad Naeem Mukhtar Chairman / Non Executive Sponsor Director He is Chairman of the Board of Allied Bank since 2004. He is MBA from Cardiff Business School U.K, Post Graduate diploma in Textiles from UK and Chartered Textile Engineer (CText ATI) from The Textile Institute in Manchester U.K. He has 29 years of experience of finance and industry. Besides Chairman of Board of Directors of Allied Bank, he is also Chief Executive Officer, Ibrahim Fibres Limited, Director of Ibrahim Agencies (Pvt.) Limited and ABL Asset Management Company Limited respectively and Member Board of Governors of National Management Foundation, the parent body of Lahore University of Management Sciences (LUMS). Sheikh Mukhtar Ahmad Non Executive Sponsor Director He had started his business career immediately after migrating from India at the time of Independence of Pakistan in 1947 and contributed to the industrial and business growth of Pakistan through his entrepreneurship skills and business acumen. He has over 53 years of experience in establishing and successfully managing various industrial and financial companies. He has been on the Board of Directors of Allied Bank Limited since 2005 and is a “Certified Director” from Pakistan Institute of Corporate Governance. He is also Chairman of the Board of Directors of M/s. Ibrahim Fibres Limited, Ibrahim Agencies (Pvt.) Limited and ABL Asset Management Company Limited. Muhammad Waseem Mukhtar Non Executive Sponsor Director He is an Executive MBA from the University of Chicago Booth School of Business, Illinois, USA. He also holds a Master’s degree in Total Quality Management (TQM) from University of Glamorgan, Wales, U.K., and has 17 years of diversified experience of Finance, IT and Industry. His strategic guidance played a vital role in technological up-gradation of the Bank. He has been on the Board of Directors of Allied Bank Limited since 2004 and is a “Certified Director” from Pakistan Institute of Corporate Governance. He is also Director on the Boards of M/s. Ibrahim Fibres Limited, Ibrahim Agencies (Pvt.) Limited, ABL Asset Management Company Limited, Arabian Sea Country Club and Faisalabad Industrial Estate Development Company (FIEDMC). Abdul Aziz Khan Independent Director He has enriched and diversified experience of more than 51 years in the fields of General Banking, Credit, Lease Finance, Business Development and Administration including 9 years international banking holding key positions in different countries including Switzerland. He is on the Board of Allied Bank Limited since 2004. 4 Annual Report of Allied Bank Limited for the year 2014 Pervaiz Iqbal Butt Independent Director He is an Electrical Engineer and has 45 years of experience in marine engineering and other heavy Industries. His extensive and diversified exposure of Industrial Management effectively complements the decision making process at the Board level. He has been on the Board of Directors of Allied Bank Limited since 2007 and is a “Certified Director” from Pakistan Institute of Corporate Governance. Mubashir A. Akhtar Independent Director He is a law graduate and has 48 years of banking experience in local and international markets. His extensive international banking experience includes key assignments in Turkey, Qatar and UK. He is a Financial Consultant of Asian Development Bank (ADB) and remained actively involved in various assignments of ADB especially on capital markets development and reforms of NBFIs in Pakistan. He is also fellow of Institute of Bankers, Pakistan (1989), Institute of Chartered Secretaries and Managers (1993) and Institute of Marketing Management (1999). He has been on the Board of Directors of Allied Bank Limited since 2006 and is a “Certified Director” from Pakistan Institute of Corporate Governance. A. Akbar Sharifzada Government Nominee Director He has 28 years Civil Service career in the Government of Pakistan and has remained Posted in different Ministries gaining wide ranging policy making and administrative experience. Presently he is an Additional Finance Secretary in the Ministry of Finance Islamabad. He holds a Masters degree in English Literature and Economics. He has also attended various courses/workshops/seminars within the country and abroad. He has been nominated as Director on the Board of Allied Bank Limited by the Government of Pakistan since January 2012. Tariq Mahmood Chief Executive Officer He is one of the senior most bankers in the country having more than 40 years of experience. He has a post graduate degree in commerce and has attended various leadership and strategy workshops/certifications. He has held senior management positions in Habib Bank Limited, Middle East Bank and Askari Bank Limited before he joined ABL in 2007. At ABL he served as Group Chief Operations and Banking Systems implementation. He has been instrumental in the transformation of ABL from Unibank to state of the art core banking system -Temenos T24. He was appointed as CEO by the BOD in June 2013. 5 BOARD COMMITTEES Audit Committee of the Board Terms of Reference Primary responsibilities of the Audit Committee of the Board (ACOB) are to determine Constitution: appropriateness of measures taken by the Management to safeguard Bank’s assets, ensure Mubashir A. Akhtar consistency of accounting policies, review financial