ANNUAL REPORT 2013 CONTENTS VISION & MISSION STATEMENT 02 VALUES 03 SERVICES 04 THE GROUP 05 MILESTONES 2013 06 CORPORATE INFORMATION 12 MANAGEMENT COMMITTEES 13 DIRECTORS' REPORT TO THE SHAREHOLDERS 14 KEY FINANCIAL DATA 18 HORIZONTAL ANALYSIS 19 STATEMENT OF VALUE ADDITION 20 NOTICE OF NINETEENTH ANNUAL GENERAL MEETING 21 STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE 22 REVIEW REPORT TO THE MEMBERS ON STATEMENT OF CODE OF CORPORATE GOVERNANCE 23 STATEMENT OF INTERNAL CONTROLS 25 STANDALONE FINANCIAL STATEMENTS AUDITORS' REPORT TO THE MEMBERS 28 STATEMENT OF FINANCIAL POSITION 30 PROFIT AND LOSS ACCOUNT 31 STATEMENT OF COMPREHENSIVE INCOME 32 CASH FLOW STATEMENT 33 STATEMENT OF CHANGES IN EQUITY 34 NOTES TO THE FINANCIAL STATEMENTS 35 STATEMENT OF WRITTEN-OFF LOANS 90 CONSOLIDATED FINANCIAL STATEMENTS DIRECTORS' REPORT ON CONSOLIDATED FINANCIAL STATEMENTS 92 AUDITORS' REPORT TO THE MEMBERS 94 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 95 CONSOLIDATED PROFIT AND LOSS ACCOUNT 96 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 97 CONSOLIDATED CASH FLOW STATEMENT 98 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 99 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 100 STATEMENT OF WRITTEN-OFF LOANS 159 PATTERN OF SHAREHOLDING 160 BRANCH NETWORK 163 FORM OF PROXY VISION Partnering Success MISSION STATEMENT Excellence in customer service and innovation for sustained profitable growth through prudent business practices VALUES Vision - Customer Focus and Innovation Attitude - Passion and Quest that Drives Us Leadership - Sense of Integrity, Trust & Accountability Upright - Commitment to Being a Credible Corporate Citizen Excellence - Distinction as a Habit Synergy - Ability to Harness the Power of Teams SERVICES Commercial Banking Retail Banking | Middle Market Financing SME Financing | Agriculture Financing | Wealth Management Corporate Banking Term Loans | Working Capital & Trade Finance | Project Finance Investment Banking Financial Advisory Services | Equity Capital Markets | Debt Capital Markets Treasury & Financial Institutions Money Markets: Portfolio Management & Fixed Income Sales Including IPS Services (Investor Portfolio Securities Account) Forex Markets: FX Sales USD/Third Currencies, FCY Financing, Bill Discounting, Trade Related Support Financial Institutions: Correspondent Banking | NBFI Financing Global Transactional Services Home Remittances | Cash Management Services | Trade Finance Consumer Financial Services Home Loans | Personal Loans | Purpose Loans | Equity Unlock Value Added Services VISA Debit Card | ATM Network | Phone Banking | Internet Banking | E-Banking | SMS Alerts | Mobile Banking THE GROUP KASB Bank is now serving clients through 105 branches in 45 cities of Pakistan, offering unique and innovative financial solutions to a large portfolio of investment, corporate and consumer banking customers. KASB Bank is regarded as the flagship entity of the group with state-of-the-art technology providing wide scale financial services to a diversified client base. The Bank also provides a host of financial services offered by the KASB Group. KASB Securities is one of the oldest securities firms in Pakistan tracing its roots back to 1955. A full service firm, intermediary services are offered in equities, commodity futures, fixed income and interdealer foreign exchange, supplemented by award winning research. Over 15,000 institutional, individual and foreign clients place their trust in KASB Securities. Research is co-branded with Bank of America Merill Lynch. KASB Funds Limited is in the business of providing investment and savings solutions to its investors through a range of investment products. KASB Funds serves a large and diversified investor base with its investment products, ranging from retail investors to high net worth individuals and from pension funds, employee benefit funds to corporations and institutions. KASB Funds also provides investment advisory services to a host of clients. KASB Modaraba is a multipurpose, perpetual and multi-dimensional Modaraba, floated as First Mehran Modaraba in October 1990 under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980. The main lines of business of Modaraba are Ijarah, Musharaka, Murabaha and Modaraba transactions & Capital Market operations. KASB Modaraba is one of the first to take Modaraba business to high streets in Pakistan. My Solutions is a business consulting firm offering companies with customized & innovative business solutions, specially tailored to meet the functional/operational needs of its clients. The company currently provides products and services in the fields of Technology, Billing Payment Services and Human Resources and is continuously expanding its areas of business services including Mobile/Branchless Banking, Home Remittances, Internet Banking, Data Warehousing/BI & Analytics, Talent/Performance Management, Resource Management & Executive Search, Organizational Development and Outsourcing Projects. My Solutions has established partnerships and collaborations with international companies such as Tier-1 partnership with IBM, Microsoft, and CISCO to meet and exceed its industrial requirements to its fullest. MILESTONES 2013 20 Branches out of 105 Online Branches Upgraded to Business Branches In addition to conventional banking, KASB Banks Business Branches now offer the below services Credit Facilities | Trade Finance Solutions Seasonal Financing | FOREX Products Cash Management | Investment Solutions MILESTONES 2013 ONCE AGAIN THE WINNER MILESTONES 2013 FINANCIAL HIGHLIGHTS Non-Performing Loans Operating Profit 237 14,500 13,868 250 14,000 187 200 13,500 13,000 150 12,500 11,573 12,000 100 Rs in Million Rs in Million 11,500 11,000 50 10,500 10,000 0 2012 2013 2012 2013 Net Non-Performing Loans 6,586 7,000 6,000 5,000 4,000 3,189 3,000 Rs in Million 2,000 1,000 0 2012 2013 MILESTONES 2013 FINANCIAL HIGHLIGHTS Administrative Cost Cash Recoveries 2,668 1,653 2,700 1,800 1,600 2,650 1,298 1,400 2,600 1,200 2,550 2,486 1,000 2,500 800 Rs in Million Rs in Million 600 2,450 400 2,400 200 2,350 0 2012 2013 2012 2013 Cost Of Deposits Net Advance/Deposits 4.8 4.61% 60 48% 4.6 50 38.5% 4.4 40 4.2 30 3.97% Percentage Percentage 4.0 20 3.8 10 3.6 0 2012 2013 2012 2013 MILESTONES 2013 FINANCIAL HIGHLIGHTS Deposits/Branch NRFF/Total Assets 601 3.1% 602 3.5 600 3.0 2.5% 598 596 2.5 594 2.0 592 589 1.5 590 Percentage Rs in Million 588 1.0 586 0.5 584 582 0.0 2012 2013 2012 2013 PNPLs/Gross Advances Admin. Exp./Branch 30 25.7% 26 25 19.7% 25 20 25 15 24 Percentage 10 Rs in Million 24 5 0 23 2012 2013 2012 2013 CORPORATE INFORMATION Board of Directors Audit Committee Ashraf M. Hayat Chairman Leon Seynave Tariq M. Rangoonwala Syed Tariq Hussain Gilani (Chairman) Tariq M. Rangoonwala President & Chief Executive Officer Bilal Mustafa Human Resource and Remuneration Committee Directors Ashraf M. Hayat (Chairman) Ashraf M. Hayat Leon Seynave Bilal Mustafa Muzaffar Ali Shah Bukhari Leon Seynave Syed Tariq Hussain Gilani Muzaffar Ali Shah Bukhari Sun Shui Tariq M. Rangoonwala Zia Khaleeli Risk Management and Recovery Committee Chief Financial Officer Ashraf M. Hayat Syed Liaquat Ali Bilal Mustafa Muzaffar Ali Shah Bukhari Company Secretary Syed Tariq Hussain Gilani Muhammad Hamidullah Tariq M. Rangoonwala (Chairman) Zia Khaleeli Auditors Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants Regional Office, Lahore KASB House Legal Advisors 14-C, Jail Road, Gulberg, Mandviwalla & Zafar Lahore. Advocates & Legal Consultants Tel: (92-42) 35776723-4 Fax: (92-42) 35762192 Registered Office Razia Sharif Plaza, Registrar and Share Transfer Office Jinnah Avenue, 90-Blue Area, Islamabad M/s. THK Associates (Private) Limited Tel: (92-51) 2270725, 2276828-30 2nd Floor, State Life Building No. 3, Fax: (92-51) 2270727 Dr. Ziauddin Ahmed Road, Karachi-75530. Tel: (92-21) 111-000-322 Principal Office Fax: (92-21) 35655595 Business & Finance Centre I.I. Chundrigar Road, Karachi Website: www.thk.com.pk Tel: (92-21) 32446772-77 Email: [email protected], Fax: (92-21) 32446828 & 32446865 [email protected] Website http://www.kasb.com/bank 12 MANAGEMENT COMMITTEES Management Committee (MANCOM): Human Resources Management Committee: Bilal Mustafa - President & CEO Bilal Mustafa - President & CEO Imran Malik - Head of GTB & ADC Salman Naqvi - Group Head Branch Banking Khaqan Saadullah Khan - Head Investment Banking Sumair Wahid Abro - Head Human Resources Development Division Mohammad Sadiq Sheikh - Country Credit Officer Syed Fazal Hasnain - Head Special Assets Manangement Muhammad Hamidullah - Company Secretary Syed Liaquat Ali - Chief Financial Officer Muhammad Muzaffar Khan - Country Treasurer Muhammad Sabih Qazi - Head Operations & Support Division Bank Risk Management Committee Mushtaq Ahmed Murad - Chief Information Officer Bilal Mustafa - President & CEO Salman Naqvi - Group Head Branch Banking Muhammad Sabih Qazi - Head Operations Sumair Wahid Abro - Head Human Resources Development Division & Support Division Syed Asif Ali - Group Head Risk Management Muhammad Sadiq Sheikh - Country Credit Officer Syed Fazal Hasnain - Head Special Assets Manangement Salman Naqvi - Group Head Branch Banking Syed Liaquat Ali - Chief Financial Officer Syed Asif Ali - Group Head Risk Management Syed Murshad Ali - Chief Compliance Officer Syed Liaquat Ali - Chief Financial Officer Syed Murshad Ali - Chief Compliance Officer Investment Committee: Bilal Mustafa - President & CEO Information Technology Steering Committee: Khaqan Saadullah Khan -