ANNUAL REPORT 2016 Better STRONGER Together Better STRONGER Together TABLE of contents 02 Corporate Information 03 Vision, Mission Statement 05 Core Values 06 Management 10 Credit Rating 11 Six Years at a Glance 14 Corporate Social Responsibility (CSR) 18 President’s Message 22 Economic Review 24 Directors’ Report 45 Statement of Compliance with the Code of Corporate Governance 48 Auditors’ Review Report to the members on Code of Corporate Governance 49 Report of Shariah Board 54 Statement of Internal Controls 55 Notice of Annual General Meeting 59 Unsolidated Financial Statements of The Bank of Punjab 155 03Consolidated Financial Statements of The Bank of Punjab and its Subsidiary Punjab Modaraba Services (Pvt.) Limited 250 Pattern of Shareholding 256 Foreign Correspondents Form of Proxy ANNUAL REPORT 2016 01 CORPORATE information Board Of Directors Dr. Pervez Tahir Chairman Mr. Naeemuddin Khan President / CEO Mr. Mohammad Jehanzeb Khan Director Mr. Hamed Yaqoob Sheikh Director Dr. Umar Saif Director Syed Maratib Ali Director Dr. Muhammad Amjad Saqib Director Mr. Mohammed Afzaal Bhatti Director Khawaja Farooq Saeed Director Mr. Saeed Anwar Director Mr. Omar Saeed Director Mr. Raza Saeed Secretary to the Board Central Audit Committee (CAC) Khawaja Farooq Saeed Chairman Mr. Mohammed Afzaal Bhatti Member Mr. Saeed Anwar Member Mr. Omar Saeed Member Board Risk Management Committee (BRMC) Syed Maratib Ali Chairman Mr. Saeed Anwar Member Mr. Omar Saeed Member Human Resource & Remuneration Committee (HR&RC) Mr. Mohammad Jehanzeb Khan Chairman Syed Maratib Ali Member Mr. Mohammed Afzaal Bhatti Member Mr. Naeemuddin Khan Ex-oficio Member Auditors Deloitte Yousuf Adil Chartered Accountants Registered Ofce BOP Tower, 10-B, Block-E-II, Main Boulevard, Gulberg-III, Lahore. Telephones: +92 - 042-35783700-10 Fax No. +92 - 042 - 35783975 UAN: 111-200-100 Website www.bop.com.pk Registrar M/s. Corplink (Pvt) Limited Wings Arcade, 1-K, Commercial, Model Town, Lahore. Telephones: +92 42 35916714, 35916719, 35839182 Fax No. +92 042 35869037 02 THE BANK OF PUNJAB Better STRONGER Together moving forward VISION To be a customer focused bank with service excellence. MISSION To exceed the expectation of our stakeholders by leveraging our relationship with the Government of Punjab and delivering a complete range of professional solutions with a focus on programme driven products and services in the agriculture and middle tier markets through a motivated team. ANNUAL REPORT 2016 03 453 Experience the service that makes BOP exceptional 04 THE BANK OF PUNJAB Better STRONGER Together CORE values OUR CUSTOMERS as our first priority PROFITABILITY for the prosperity of our stakeholders that allows us to constantly invest, improve and succeed CORPORATE SOCIAL RESPONSIBILITY to enrich the lives of community where we operate RECOGNITION AND REWARD for the talented and high performing employees EXCELLENCE in everything we do INTEGRITY in all our dealings RESPECT for our customers and each other ANNUAL REPORT 2016 05 MANAGEMENT Naeemuddin Khan President / CEO 06 THE BANK OF PUNJAB Better STRONGER Together Shahid Waqar Mahmood Khalid S. Tirmizey Nadeem Amir Group Head SAM & Legal Deputy CEO Chief Financial Ofcer Ijaz ur Rehman Qureshi Taimur Afzal Ahmed Shah Durrani Chief Risk Ofcer Group Head Retail Finance Group Head Retail Banking, SME & Payment Services Mustafa Hamdani Moghis Bokhari Asim Jahangir Seth Group Head IB & WB (South) Group Head Human Resource Head Wholesale Banking-II ANNUAL REPORT 2016 07 Khawar S. Ansari Omer Iqbal Sheikh Muhammad Babar Ayyaz Group Head Treasury & FIs Head Islamic Banking Head Wholesale Banking-I Javed Iqbal Aamir Ali Siddiqui Khalid Munir Chief Information Ofcer Head Operations Head Compliance & Internal Control Asad Ullah Khan Col (R) Tenwir ul Hassan Aalya Mawaz Head Audit & RAR Head Administrative Support Head Corporate Communication 08 THE BANK OF PUNJAB PUNJAB’S ONLY BANK WITH EASY ACCESS TO E-STAMP ANNUAL REPORT 2016 09 Credit Rating upgraded to Short Term Rating CREDIT Rating Defnition rating Long Term Rating AA: Very High Credit Quality. AA Ratings denote a very low expectation of credit risk. Entity Ratings by PACRA They indicate very strong capacity for timely Long Term: AA payment of financial commitments. This Short Term: A1+ capacity is not significantly vulnerable for foreseeable events. Short Term Rating A1+: Obligations supported by the highest capacity for timely repayment. 1 0 THE BANK OF PUNJAB Better STRONGER Together SIX YEARS at a glance Criteria 2016 2015 2014 2013 2012 2011 BALANCE SHEET Total Assets Rs in m 545,214 472,284 420,370 352,698 332,111 280,998 Advances (net) Rs in m 262,068 219,399 170,313 157,286 149,605 127,130 Investments (net) Rs in m 199,742 176,043 154,875 123,956 129,519 92,581 Shareholders’ Equity Rs in m 24,248 19,397 15,256 12,577 10,733 10,135 Revaluation Reserves Rs in m 3,607 3,282 4,071 905 1,638 638 Deposits Rs in m 453,220 374,961 342,291 306,561 266,056 237,897 Borrowings Rs in m 39,829 55,236 44,743 22,802 44,684 24,964 OPERATING RESULTS Markup/ return/ interest earned Rs in m 29,674 31,266 29,522 24,228 24,666 20,685 Markup/ return/ interest expensed Rs in m 17,430 20,199 20,526 20,209 22,523 21,073 Net markup income Rs in m 12,244 11,068 8,996 4,019 2,143 (388) Non-markup based income Rs in m 5,294 7,624 2,790 3,596 3,191 1,990 Non-markup based expenses Rs in m 8,464 7,666 6,250 5,280 4,558 3,711 Provision against NPLs Rs in m 922 3,431 1,119 (673) (965) (3,164) Net profit/(loss) before tax Rs in m 8,050 7,529 4,307 3,001 1,404 523 Net profit/(loss) after tax Rs in m 4,858 4,748 2,787 1,938 1,634 348 OTHER INFORMATION EPS (Non dilutive) Rs. per share 3.12 3.05 1.94 2.34 2.63 0.66 Dividend - Cash % - - - - - - Dividend - Bonus issue-Interim % - - - - - - - Bonus issue-Final % - - - - - - No. of Branches No. 453 406 364 334 306 284 Staf Strength No. 7,388 6,739 6,180 6,092 5,491 4,999 Break up value per share* Rs. per share 10.75 8.60 6.77 5.58 4.82 4.55 *including impact of share deposit money at par value. ANNUAL REPORT 2016 1 1 GROWTH trends Deposits CASA (Rs. in million) (Rs. in million) 2016 453,220 2016 322,445 2015 374,961 2015 247,915 2014 342,291 2014 222,079 2013 306,561 2013 179,671 2012 266,056 2012 154,746 2011 237,897 2011 129,867 Advances Investments (Rs. in million) (Rs. in million) 2016 293,922 2016 201,516 2015 250,342 2015 177,213 2014 197,122 2014 155,069 2013 182,961 2013 127,213 2012 175,919 2012 132,192 2011 152,551 2011 96,706 1 2 THE BANK OF PUNJAB Better STRONGER Together GROWTH trends Assets Shareholders’ Fund (Rs. in million) (Rs. in million) 2016 545,214 2016 24,248 2015 472,284 2015 19,397 2014 420,370 2014 15,256 2013 352,698 2013 12,577 2012 332,111 2012 10,733 2011 280,998 2011 10,135 Net Interest Margin Proft Before Tax (Rs. in million) (Rs. in million) 2016 12,244 2016 8,050 2015 11,068 2015 7,529 2014 8,996 2014 4,307 2013 4,019 2013 3,001 2012 2,143 2012 1,404 2011 (388) 2011 523 ANNUAL REPORT 2016 1 3 The Bank of Punjab, as a vibrant CORPORATE modern corporate entity, is fully cognizant of the fact that in SOCIAL current era Bank is not only RESPONSIBILITY responsible to shareholders alone but there are certain social, (CSR) environmental and financial obligations that are required to be discharged through implementation of diferent social activities under Corporate Social Responsibility (CSR) initiatives. The Bank’s CSR initiatives are directed to attain a balance or integration of economic, environmental and social imperatives while at the same time addressing shareholders’ expectations. 1 4 THE BANK OF PUNJAB Better STRONGER Together a long way in promoting economic activities in underprivileged areas through uplifting agriculture and SME sectors. The Bank takes pride in improving the social lives of millions of peoples across the country by addressing their financial woes through its vast network of branches. In order to make every segment of the society more efective, with an equal opportunity to excel and contribute towards national economy, the Bank has been making a conscious efort to empower women. Besides ofering equal opportunity to women in all dealings of the Bank, specially designed products and services are also being ofered to encourage women empowerment. The Bank has been whole heartedly supporting the Government’s Pakistan Remittance initiative (PRI). With long established relationship with top exchange companies, the Bank is providing personalized services to the beneficiaries of the home remittances. country. Accordingly, Bank generously participates in introduced Solar Penal financing scheme with an Accordingly, the Bank has been taking keen interest in Further, Bank has been playing instrumental role in activities promoting the culture, sports and local objective to reduce energy woes of common man development of specially designed programs, Government of the Punjab (GOPb) Wheat heritage. Besides organizing and sponsoring diferent and help produce low cost environment friendly products and services to meet the requirements of procurement initiative for last several years, helping sports events across the country, the Bank also energy. under privileged communities across the country. GOPb on one hand and ensuring quickest extends financial support to the cultural events at the Besides focusing the areas of human development, disbursement of funds to the farmers through its vast Regional levels to help promote local culture.