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Our Vision
To be the leading financial services provider, partnering with our customers for a more prosperous and secure future
Our Mission
We are a team of committed professionals, providing innovative and efficient financial solutions to create and nurture long-term relationships with our customers. In doing so, we ensure that our shareholders can invest with confidence in us
Our Values
The standards and principles which determine our behavior and how we interact with our customers and each other
MCB
Board of Directors:
Mian Mohammad Mansha S.M. Muneer Tariq Rafi Shahzad Saleem Sarmad Amin Mian Raza Mansha Mian Umer Mansha Aftab Ahmad Khan Manzar Mushtaq Ahmad Alman Aslam Dato Seri Ismail Shahudin Abdul Farid Bin Alias M.U.A. Usmani Chairman Vice Chairman Director Director Director Director Director Director Director Director Director Director President / CEO
Audit Committee:
Tariq Rafi Aftab Ahmad Khan Dato Seri Ismail Shahudin Ahmad Alman Aslam
Chief Financial Officer: Company Secretary: Auditors: Legal Advisors: Registered Office:
MCB
MCB
I am pleased to place before you, on behalf of the Board of Directors, the quarterly financial statements of your Bank for the period ended March 31, 2012.
PACRA maintained the long term credit rating of AA+ [double A plus] and short term credit rating of A1+ [A one plus] of the Bank, through its notification in June 2011 (2010: Long term: AA+ [double A plus] and Short term: A1+ [A one plus]). Economy Review The macroeconomic platform of the economy is in much need of prudent corrections and instigation of enforced measures to curb the impaired controls on inflationary pressures. The prevalent political unrest, trade gaps, deteriorating reserves and international pressure on commodity prices are reaping its adversities at a much higher pace. In the banking sector, remarkable results have been witnessed in a continuing trend despite economic disturbances. However, the modes and quality of financing is a major concern vis--vis the invisible demand in the private sector and limited growth opportunities in the area. Growing concentration levels in government securities at banking industry level has raised concerns internationally and is likely to impact ratings of financial institutions. However, to spur private sector credit, concrete remedial actions are required with stable discount rate being the only factor considered so far. Future Outlook Moving forward, unless the adversities are reversed there remains little room for foreign investments and injections in the economy. Main industries have already suffered the loss on part of power shortages and lack of government support. Tax evasion issues, rising deficit, impact of negative parity on exchanges and debt repayments is putting the economy under further strain. Although equity market has performed exceptionally well in the first quarter of 2012, necessary measures should be adopted to repose international confidence going forward. MCB Bank Limited is determined in growth and creating opportunities to strengthen itself further to meet the fore coming challenges. The Bank's focus shall be in product and services innovation, further improvements in quality of services on offer, improved use of technology, strengthening of internal policy and control frameworks and adding value in the economy through its channel of businesses. Acknowledgement In the end the Board would like to greet and thank all shareholders and customers for their trust, our staff for their continuous hard work and dedication, and the Government and the State Bank of Pakistan for their patronage and support.
Financial Highlights
Profit Before Taxation Taxation Profit After Taxation Un-appropriated Profit Brought Forward Transfer from Surplus on Revaluation of Fixed Assets (net of tax) Profit Available for Appropriation Appropriations: Statutory Reserve Final Cash Dividend December 2011 Issue of Bonus Shares December 2011 Total Appropriations Un-appropriated Profit Carried Forward Rs. in Millions 8,656 (3,012) 5,644 28,366 9 28,375 34,019
564
Performance Review The Bank registered remarkable performance in the first quarter as profit before and after tax increased to Rs. 8.656 billion and Rs. 5.644 billion respectively, increasing by 10% and 12% over the corresponding quarter last year. Net markup income of the Bank decreased by 2% over March 2011 whereas non-markup income increased by 20% to Rs. 2.413 billion. On the operating expenses side, gross administrative expenses (excluding the impact of pension fund reversal) increased by a controlled growth of 11% over March 2011, whereas provisions significantly reduced by 94% to Rs. 75 million. The asset base of the Bank grew to Rs. 666.644 billion from Rs. 653.233 billion as at year end 2011. Advances (gross) of the Bank registered a growth of 2% over December 31, 2011, increasing to Rs. 252.787 billion. The classified portfolio of the Bank decreased by 1% owing to effective risk management framework adopted by the Bank, improving the quality of advances with a lower infection ratio of 10.38% from 10.75% in December 31, 2011. The investment portfolio increased by 3% over December 2011 to Rs. 327.630 billion. The deposit base of the Bank went up by 4%, with 3% and 8% increase reported in current and saving deposits respectively, improving the CASA percentage to 82% from 81% as of December 31, 2011. Earnings per share (EPS) for the quarter was reported at Rs. 6.14 compared to Rs. 5.46 for the corresponding quarter last year. Return on assets improved to 3.42% (2011: 3.18%) whereas return on equity improved to 28.09% (2011: 26.23%).
On behalf of Directors
MCB
MCB
Note Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against loans and advances - net Provision for diminution in the value of investments - net Bad debts written off directly Net mark-up / interest income after provisions Non mark-up / interest income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities - net Unrealized loss on revaluation of investments classified as held for trading Other income Total non mark-up / interest income Non-mark-up / interest expenses Administrative expenses Other provisions / (reversals) Other charges Total non mark-up/interest expenses Extra ordinary / unusual item
Quarter ended Quarter ended March 31, March 31, 2012 2011 ---------- (Rupees in '000) ---------17,545,206 6,846,822 10,698,384 74,532 591 120 75,243 10,623,141 15,960,038 5,036,886 10,923,152 1,002,304 187,177 7,394 1,196,875 9,726,277
7 8 9
Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Deferred tax liabilities - net Other liabilities 8,404,870 28,544,617 512,067,061 6,538,486 18,658,258 574,213,292 92,430,774 9,466,818 39,100,627 491,188,710 6,294,886 18,379,700 564,430,741 88,802,482
10 11
1,462,470 505,117 255,268 55,436 (1,486) 136,694 2,413,499 13,036,640 4,123,496 15,775 241,136 4,380,407 8,656,233 8,656,233 2,769,475 242,617 3,012,092 5,644,141 14 6.14
1,182,288 188,515 213,995 278,448 144,772 2,008,018 11,734,295 3,668,980 (13,763) 242,705 3,897,922 7,836,373 7,836,373 2,705,674 107,082 2,812,756 5,023,617 5.46
12
Net assets Represented by: Share capital Reserves Un-appropriated profit Surplus on revaluation of assets - net of tax
Profit after taxation Contingencies and commitments Earnings per share - basic and diluted - Rupees The annexed notes 1 to 21 form an integral part of these unconsolidated condensed interim financial statements.
The annexed notes 1 to 21 form an integral part of these unconsolidated condensed interim financial statements.
S.M. Muneer
S.M. Muneer
MCB
MCB
March 31, March 31, 2012 2011 ---------- (Rupees in '000) ---------Cash flows from operating activities Profit before taxation Less: Dividend income Adjustments for non-cash charges Depreciation Amortization Provision against loans and advances - net Provision for diminution in the value of investments - net Other provisions / (reversals) Bad debts written off directly Unrealized loss on revaluation of investments classified as held for trading Gain on disposal of fixed assets (Increase) / decrease in operating assets Lendings to financial institutions Net investment in held for trading securities Advances - net Other assets - net Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities 8,656,233 (505,117) 8,151,116 312,693 62,391 74,532 591 15,775 120 1,486 (4,298) 463,290 8,614,406 (1,864,681) (5,198,447) (4,730,175) 1,522,562 (10,270,741) (1,061,948) (10,556,010) 20,878,351 (1,895,995) 7,364,398 5,708,063 (5,657,112) 50,951 (6,631,753) 1,588,228 267,203 (731,861) (5,508,183) (334,156) (334,156) (244,940)
(6,036,328) 55,403,785 49,367,457
7,836,373 (188,515) 7,647,858 265,918 47,025 1,002,304 187,177 (13,763) 7,394 (3,798) 1,492,257 9,140,115 3,376,781 (5,514,460) (233,589) (2,371,268) (638,933) 3,985,767 30,929,050 (2,042,505) 32,233,379 39,002,226 (3,953,961) 35,048,265 (37,400,104) 118,598 (52,521) 117,509 (765,522) (37,982,040) (258,570) (258,570) 4,773
(3,187,572) 46,885,752 43,698,180
The annexed notes 1 to 21 form an integral part of these unconsolidated condensed interim financial statements.
Income tax paid Net cash flows from operating activities Cash flows from investing activities Net investments in available-for-sale securities Net investments in held-to-maturity securities Investment in associated undertaking Dividend income received Investment in operating fixed assets - net of disposals Net cash flows from investing activities Cash flows from financing activities Dividend paid Net cash flows from financing activities Exchange difference on translation of net investment in foreign branches
Increase in cash and cash equivalents Cash and cash equivalents at January 1 Cash and cash equivalents at March 31
The annexed notes 1 to 21 form an integral part of these unconsolidated condensed interim financial statements.
S.M. Muneer
S.M. Muneer
MCB
MCB
Capital Reserves Reserve for Share capital issue of bonus shares Share premium Exchange translation reserve Statutory reserve
---------------------------------------------------------- (Rupees in'000) ---------------------------------------------------------Balance as at December 31, 2010 Change in equity for three months ended March 31, 2011 Transferred from surplus on revaluation of fixed assets to unappropriated profit - net of tax Exchange differences on translation of net investment in foreign branches Profit after taxation for three months period ended March 31, 2011 Total comprehensive income for the period ended March 31, 2011 Transferred to statutory reserve Transfer to reserve for issue of bonus shares Final cash dividend - December 31, 2010 Balance as at March 31, 2011 Change in equity for nine months ended December 31, 2011 Transferred from surplus on revaluation of fixed assets to unappropriated profit - net of tax Exchange differences on translation of net investment in foreign branches Profit after taxation for nine months period ended December 31, 2011 Total comprehensive income for nine months ended December 31, 2011 Transferred to statutory reserve Issue of bonus shares - December 31, 2010 Interim cash dividend - March 31, 2011 Interim cash dividend - June 30, 2011 Interim cash dividend - September 30, 2011 Balance as at December 31, 2011 Change in equity for three months ended March 31, 2012 Transferred from surplus on revaluation of fixed assets to unappropriated profit - net of tax Exchange differences on translation of net investment in foreign branches Profit after taxation for three months period ended March 31, 2012 Total comprehensive income for the period ended March 31, 2012 Transferred to statutory reserve Transfer to reserve for issue of bonus shares Issue of bonus shares - December 31, 2011 Final cash dividend - December 31, 2011 Balance as at March 31, 2012 836,236 9,198,601 836,236 (836,236) 9,702,528 (244,940) (244,940) 182,109 564,414 14,021,304 18,600,000 8,947 5,644,141 5,644,141 (564,414) (836,236) (2,508,709) 30,109,900 8,947 760,215 8,362,365 (760,215) 9,702,528 76,297 76,297 427,049 1,440,129 13,456,890 18,600,000 26,841 14,401,289 14,401,289 (1,440,129) (2,508,709) (2,508,709) (2,508,709) 28,366,171 26,841 76,297 14,401,289 14,477,586 (2,508,709) (2,508,709) (2,508,709) 78,915,003 7,602,150 760,215 760,215 9,702,528 4,773 4,773 350,752 502,362 12,016,761 18,600,000 8,947 5,023,617 5,023,617 (502,362) (760,215) (2,280,645) 22,904,297 8,947 4,773 5,023,617 5,028,390 (2,280,645) 71,936,703 7,602,150 9,702,528 345,979 11,514,399 18,600,000 21,414,955 69,180,011
2.1
2.2
3 3.1
3.2
3.3
(244,940) 5,644,141 5,399,201 (2,508,709) 81,814,442
4 4.1
4.2
The annexed notes 1 to 21 form an integral part of these unconsolidated condensed interim financial statements.
5 5.1
S.M. Muneer
5.2
MCB
MCB
7.
Loans, cash credits, running finances, etc - In Pakistan - Outside Pakistan Net Investment in finance lease - In Pakistan - Outside Pakistan Bills discounted and purchased (excluding treasury bills)
8 8.1
INVESTMENTS - NET Investments by types Held-for-trading securities Available-for-sale securities Held-to-maturity securities Associates Subsidiaries Investments at cost Less: Provision for diminution in the value of investments Investments (net of provisions) Surplus / (deficit) on revaluation of available for sale securities - net Deficit on revaluation of held-for-trading securities - net Investments at revalued amounts - net of provisions 8.2 8.2 8.3
---------- (Rupees in '000) ---------5,198,447 301,670,391 7,304,613 314,173,451 1,059,421 482,208 1,541,629 315,715,080 (2,918,252) 312,796,828 1,231,109 (1,486) 314,026,451 13,548,342 62,087 13,610,429 13,610,429 13,610,429 (6,586) 13,603,843 December 31, 2011 Held by Given as Total bank collateral ---------- (Rupees in '000) ---------Held-for-trading securities Available-for-sale securities Held-to-maturity securities Associates Subsidiaries Investments at cost Less: Provision for diminution in the value of investments Investments (net of provisions) Surplus on revaluation of available for sale securities - net Investments at revalued amounts - net of provisions
8.2
5,198,447 315,218,733 7,366,700 327,783,880 1,059,421 482,208 1,541,629 329,325,509 (2,918,252) 326,407,257 1,224,523 (1,486) 327,630,294
- Payable in Pakistan - Payable outside Pakistan Advances - gross Less: Provision against loans and advances - Specific provision - General provision - General provision against consumer loans - General Provision for potential lease losses (in Srilanka operations)
284,689,998 8,471,928 293,161,926 1,059,421 482,208 1,541,629 294,703,555 (3,327,065) 291,376,490 472,254 291,848,744
308,996,384 8,954,928 317,951,312 1,059,421 482,208 1,541,629 319,492,941 (3,327,065) 316,165,876 485,737 316,651,613
Advances include Rs. 26,270.292million(December 31, 2011:Rs. 26,664.873million)which have been placed under non-performing status as detailed below: March 31, 2012 Classified Advances Specific Specific Provision Provision Category of Classification Domestic Overseas Total Required Held ------------------------------------- Rupees in '000 -----------------------------------Other Assets Especially Mentioned (OAEM) 9.1.1 10,605 10,605 Substandard 2,007,885 2,007,885 439,221 439,221 Doubtful 358,140 3,324 361,464 178,247 178,247 Loss 19,600,150 4,290,188 23,890,338 21,250,927 21,250,927 21,976,780 4,293,512 26,270,292 21,868,395 21,868,395 Specific Specific Provision Provision Domestic Overseas Total Required Held ------------------------------------- Rupees in '000 -----------------------------------9.1.1 2,036,968 292,466 20,061,976 22,391,410 7,857 4,265,606 4,273,463 2,044,825 292,466 24,327,582 26,664,873 461,374 115,289 21,292,738 21,869,401 461,374 115,289 21,292,738 21,869,401 December 31, 2011 Classified Advances
Category of Classification Other Assets Especially Mentioned (OAEM) Substandard Doubtful Loss
Investments include Pakistan Investment Bonds amounting to Rs. 232.600 million (December 31, 2011: Rs. 232.600 million) earmarked by the State Bank of Pakistan and National Bank of Pakistan against TT / DD discounting facilities and demand note facilities sanctioned to the Bank. In addition, Pakistan Investment Bonds amounting to Rs. 5 million (December 31, 2011: Rs. 5 million) have been pledged with the Controller of Military Accounts on the account of Regimental Fund Account.
9.1.1 This represents non-performing portfolioof agricultural financing classified as OAEM as per the requirements of the Prudential Regulation for Agricultural Financing issued by the SBP.
MCB
MCB
In Pakistan Outside Pakistan 10.1 Details of borrowings (secured / unsecured) Secured Borrowings from State Bank of Pakistan Export refinance scheme Long term financing facility Long term financing - export oriented projects scheme Financing Facility for Storage of Agricultural Produce Scheme for Revival of SMEs & Agricultural Activities in Flood Affected Areas
9,903,657 2,026,175 949,375 219,932 450 13,099,589 293,113 24,781,254 25,074,367 38,173,956 816,139 110,532 926,671 39,100,627
13 13.1
CONTINGENCIES AND COMMITMENTS Direct credit substitutes Contingent liabilities in respect of guarantees given favouring - Government - Banks and financial institutions - Others 4,369,412 2,744,964 5,022,186 12,136,562 2,634,218 2,519,451 4,885,951 10,039,620
13.2
Transaction-related contingent liabilities Guarantees in favour of: - Government - Others Suppliers credit / payee guarantee Trade-related contingent liabilities Other contingencies Claims against the Bank not acknowledged as debts Commitments to extend credit
11
DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Savings deposits Current accounts Margin accounts Financial institutions Remunerative deposits Non-remunerative deposits 4,911,666 2,133,956 7,045,622 512,067,061 6,319,827 2,253,658 8,573,485 491,188,710 90,839,753 244,609,624 166,504,701 3,067,361 505,021,439 91,501,846 225,920,953 161,680,596 3,511,830 482,615,225
The Bank makes commitmentsto extend credit in the normal course of its business but these being revocablecommitments do not attract any significant penalty or expense if the facility is unilaterally withdrawn. 13.6 Commitments in respect of forward foreign exchange contracts Purchase Sale 13.7 13.8 Commitments for the acquisition of fixed assets Taxation The income tax assessments of the Bank have been framed upto and including the Tax Year 2011. For the Assessment Year 1988-89 through Tax Year 2011, the department has amended the assessments on certain issues against the Bank. The Bank has filed appeals which are pending at various appellateforums. in addition, certain decision made in favour of the Bank are being contested by the department at higher forums. No provision has been made in the financial statements as the management and the Bank's legal counsel are of the view that the issues will be decided in the Bank's favour as and when these are taken up by the Appellate Authorities. Three months ended March 31, March 31, 2012 2011 ---- (Rupees in '000) ---BASIC AND DILUTED EARNINGS PER SHARE - AFTER TAX Profit after taxation 5,644,141 5,023,617 Number of shares Weighted average number of shares outstanding during the period Basic and diluted Earnings per share - after tax 15 919,860,123 Rupees 6.14 919,860,123 5.46 26,888,166 26,658,002 191,335 32,395,900 35,030,445 276,277
12
DEFERRED TAX LIABILITY / (ASSET) - NET The details of the tax effect of taxable and deductible temporary differences are as follows: Taxable temporary differences on: Surplus on revaluation of operating fixed assets Accelerated tax depreciation Receivable from pension fund Surplus on revaluation of securities Deductible temporary differences on: Provision for bad debts Provision for contributory benevolent scheme Provision for post retirement medical benefits
14
CREDIT RATING PACRA throughits notificationin June 2011, has assigned longterm credit rating of AA+ [doubleA plus] and short-term credit rating of A1+ [A one plus] to the Bank.
MCB
MCB
---------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------4,398,756 1,100,134 (1,064,312) 4,434,578 2,088,985 766,387 20,407,581 30,536,355 (18,097,810) (30,733,501) 4,398,756 569,241 955,014 169,261,154 (169,449,781) 766,387 43,854 312,093 (312,884) 43,063 77,043 986,420 (1,019,609) 43,854 25,393,804 74,117,220 (73,141,611) 26,369,413 24,677,392 250,452,445 (249,736,033) 25,393,804 50,178 190,356 (178,102) 62,432 90,816 830,780 (871,418) 50,178
713 -
1,137 -
Directors Associates Subsidiary companies Other Related Parties Key management personnel March 31 / March 31 / March 31 / March 31 / March 31 / March 31, March 31, March 31, March 31, March 31, December 31, December 31, December 31, December 31, December 31, 2012 2012 2012 2012 2012 2011 2011 2011 2011 2011 ---------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------Adamjee Insurance Company Limited Insurance premium paid-net of refund Insurance claim settled Rent Income received Outstanding commitments and contingent liabilities Commission income from bancassurance Adamjee Life Assurance Company Limited Insurance Premium Paid Outstanding commitments and contingent liabilities Euronet Pakistan Private Limited ATM Outsourcing Revenue Capital injection Trade payable Training expenses reimbursed Mayban International Trust (Labuan) Berhad Forward foreign exchange contracts (Notional) Unrealized loss on forward foreign exchange contracts MNET Services (Private) Limited Dividend received Outsourcing service expenses Payment system managed service revenue (PSM) Payable for trade debts Receivable for other expenses "MCB Leasing" Closed Joint Stock Company Markup Receivable MCB Trade Services Limited Dividend received Arif Habib Investments Limited Dividend received Markup payable Commission Receivable Commission on distribution of units and management fee sharing MCB Employees Foundation Service expenses Cash sorting expenses Stationery Expenses Advance receivable Payable for stationery expenses MCB Employees Security System and Services (Private) Limited Security guard expenses Others Remuneration and non-executive directors' fee Mark-up expense on deposits Markup income on advances Clearing expenses paid to NIFT Other miscellaneous expenses Investment in Metro-Bank Pakistan Sovereign Fund-Perpetual Dividend Income Contribution to provident fund Commission Received Gas charges Rent Paid 202,676 17,863 405 8,365 89,554 25,262 500 29,258 4,292 8,443 1,638 8,365 38,144 26,342 500 5,607 52,519 7,317 27 1,913,753 40,914 -
Three months ended March 31, 2011 Total income Total expenses Income tax expense Net income Segment assets - (Gross of NPLs provision) Advance taxation (payment less provision) Total assets Segment non performing loans Segment specific provision required Segment liabilities Deferred tax assets 3,858 (3,393) 465 7,478,375 (1,456,446) 6,021,929 274,667,774 274,667,774 24,466,656 3,470,816 (7,121,176) (3,650,360) 112,698,621 112,698,621 6,700,062 5,376,326 463,742,920 7,015,007 (1,550,668) 5,464,339 233,524,193 233,524,193 18,193,854 14,599,279 29,460,264 17,968,056 (10,131,683) (2,812,756) 5,023,617 620,890,588 3,782,057 624,672,645 24,893,916 19,975,605 517,669,840 5,121,195
15,283 20,814 -
2,960
4,265
4,664
63,507
47,384
Total liabilities - net Segment return on assets (ROA) (%) Segment cost of fund (%)
522,791,035 -
16,134 89,899 -
15,302 21,785 -
20,410 919 -
16,535 -
1,056 4,739 -
723 1,264 -
The chairman has been provided with free use of the Bank maintained car. The Chief Executive and certain executives are provided with free use of the Bank's maintained cars and household equipment in accordance with the terms of their employment.
MCB
MCB
GENERAL - Figures have been rounded off to the nearest thousand of rupees unless otherwise stated. - Comparative information has been reclassified and rearranged in these unconsolidated condensed interim financial statements for the purpose of comparison. NON-ADJUSTING EVENT The Board of Directors in its meeting held on April 24, 2012 has announced cash dividend in respect of the three months period ended March 31, 2012 of Rs. 3.00 per share (March 31, 2011: Rs. 3.00 per share). These unconsolidated condensed interim financial statements for the three months period ended March 31, 2012 do not include the effect of these appropriations which will be accounted for subsequent to the period end.
20
21
DATE OF AUTHORIZATION FOR ISSUE These unconsolidated condensed interim financial statements were authorized for issue by the Board of Directors of the Bank in their meeting held on April 24, 2012 .
1,625
S.M. Muneer
MCB
(Consolidated Financial Statements of MCB Bank Limited and its Subsidiary Companies)
MCB
MCB
Unaudited Audited Note March 31, December 31, 2012 2011 ---------- (Rupees in '000) ---------Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments - net Advances - net Operating fixed assets Deferred tax assets - net Other assets - net Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Deferred tax liabilities - net Other liabilities 10 11 8,404,870 28,544,617 512,027,617 6,760,596 18,731,596 574,469,296 95,791,558 9,466,818 39,100,627 491,146,798 6,497,097 18,459,162 564,670,502 91,654,305 46,915,598 2,542,298 2,819,768 330,522,492 230,442,850 22,775,547 34,242,301 670,260,854 53,122,620 2,357,418 955,087 319,005,983 225,794,738 22,418,450 32,670,511 656,324,807
Quarter ended Quarter ended March 31, March 31, 2012 2011 ---------- (Rupees in '000) ---------17,560,674 15,969,922 6,846,237 10,714,437 74,532 591 120 75,243 10,639,194 1,463,841 4,787 477,399 255,519 43,922 23,473 240,102 2,509,043 13,148,237 5,036,958 10,932,964 1,002,304 187,177 7,394 1,196,875 9,736,089 1,182,967 5,525 149,042 214,890 256,755 32,945 203,806 2,045,930 11,782,019 3,722,592 (13,763) 243,405 3,952,234 139,462 7,969,247 2,716,762 116,983 22,969 2,856,714 5,112,533 357 5,112,890 5.56
Provision against loans and advances - net Provision for diminution in the value of investments - net Bad debts written off directly Net mark-up / interest income after provisions Non mark-up / interest income Fee, commission and brokerage income Income earned as trustee to various funds Dividend income Income from dealing in foreign currencies Gain on sale of securities - net Unrealized gain on revaluation of investments classified as held for trading Other income Total non mark-up / interest income Non-mark-up / interest expenses Administrative expenses Other provisions / (reversals) Other charges Total non mark-up/interest expenses Share of profit of associates Extra ordinary / unusual item Profit before taxation Taxation - current period - prior years - deferred Share of tax of associates Profit after taxation (Profit) / Loss attributable to minority interest Profit attributable to ordinary share holders Earnings per share - basic and diluted - Rupees 14
7 8 9
12
4,205,129 15,775 241,136 4,462,040 130,309 8,816,506 2,779,174 262,828 6,880 3,048,882 5,767,624 (19,709) 5,747,915 6.25
Net assets Represented by: Share capital Reserves Un-appropriated profit Minority interest Surplus on revaluation of assets - net of tax
The annexed notes 1 to 21 form an integral part of these consolidated condensed interim financial statements.
The annexed notes 1 to 21 form an integral part of these consolidated condensed interim financial statements.
S.M. Muneer
S.M. Muneer
MCB
MCB
March 31, March 31, 2012 2011 ---------- (Rupees in '000) ---------Cash flows from operating activities Profit before taxation Less: Dividend income & share of profit of associates Adjustments for non-cash charges Depreciation Amortization Provision against loans and advances - net Provision for diminution in the value of investments - net Other provisions / (reversals) Bad debts written off directly Unrealized gain on revaluation of investments classified as held for trading Gain on disposal of fixed assets (Increase) / decrease in operating assets Lendings to financial institutions Net investment in held for trading securities Advances - net Other assets - net Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities 8,816,506 (607,708) 8,208,798 312,693 62,391 74,532 591 15,775 120 (23,473) (4,298) 438,331 8,647,129 (1,864,681) (5,176,473) (4,722,764) 1,528,284 (10,235,634) (1,061,948) (10,556,010) 20,880,819 (1,902,119) 7,360,742 5,772,237 (5,657,426) 114,811 (6,631,753) 1,588,228 239,485 (727,883) (5,531,923) (360,438) (360,438) (244,592) (6,022,142) 55,480,038 49,457,896 7,969,247 (288,504) 7,680,743 265,918 47,025 1,002,304 187,177 (13,763) 7,394 (32,945) (3,798) 1,459,312 9,140,055 3,376,781 21,693 (5,511,279) (230,052) (2,342,857) (638,933) 3,985,767 30,959,449 (2,037,808) 32,268,475 39,065,673 (3,969,237) 35,096,436 (37,400,104) 118,598 (52,521) 78,036 (761,915) (38,017,906) (258,574) (258,574) 4,727 (3,175,317) 46,958,782 43,783,465
Profit after tax for the period Other comprehensive income Effect of translation of net investment in foreign branches and subsidiaries - Equity shareholders of the Bank - Minority interest Comprehensive income transferred to equity Components of comprehensive income not reflected in equity Net change in fair value of available for sale securities Deferred tax
5,767,624
5,112,533
The annexed notes 1 to 21 form an integral part of these consolidated condensed interim financial statements.
Income tax paid Net cash flows from operating activities Cash flows from investing activities Net investments in available-for-sale securities Net investments in held-to-maturity securities Investment in associated undertaking Dividend income received Investment in operating fixed assets - net of disposals Net cash flows from investing activities Cash flows from financing activities Dividend paid Net cash flows from financing activities Exchange difference on translation of net investment in foreign branches and subsidiaries Increase in cash and cash equivalents Cash and cash equivalents at January 1 Cash and cash equivalents at March 31
The annexed notes 1 to 21 form an integral part of these consolidated condensed interim financial statements.
S.M. Muneer
S.M. Muneer
MCB
MCB
Capital reserves
Minority Interest
STATUS AND NATURE OF BUSINESS The Group consists of: Holding Company - MCB Bank Limited "Percentage holding of MCB Bank Limited" 99.99% 99.95% 100% 51.329% 95.00%
Balance as at December 31, 2010 Change in equity for three months ended March 31, 2011 Profit after taxation for three months period ended March 31, 2011 Profit attributable to minority interest Profit after taxation for the three months ended March 31, 2011 attributable to ordinary shareholders of the group Exchange differences on translation of net investment in foreign branches and subsidiaries Total comprehensive income for the three months period ended March 31, 2011 Transferred from surplus on revaluation of fixed assets to unappropriated profit - net of tax Share of dividend attributable to minority shareholders Transferred to statutory reserve Transfer to reserve for issue of bonus shares Final cash dividend - December 2010 Balance as at March 31, 2011 Profit after taxation for the year ended December 31, 2011 Profit attributable to minority interest Profit after taxation for the nine months ended December 31, 2011 attributable to ordinary shareholders of the group Exchange differences on translation of net investment in foreign branches and subsidiaries Total comprehensive income for the nine months ended December 31, 2011 Transferred from surplus on revaluation of fixed assets to unappropriated profit - net of tax Transferred to statutory reserve Issue of bonus shares - December 2010 Adjustments pertaining to additional issue of share capital to minority interest on amalgamation of MCB Assets Management Company Limited with Arif Habib Investments Limited Share of dividend attributable to minority interest Interim cash dividend - March 2010 Interim cash dividend - June 2010 Interim cash dividend - September 2010 Balance as at December 31, 2011 Profit after taxation for the three months period ended March 31, 2012 Profit attributable to minority interest Profit after taxation for the three months period ended March 31, 2012 attributable to ordinary shareholders of the group Exchange differences on translation of net investment in foreign branches and subsidiaries Total comprehensive income for the three months period ended March 31, 2012 Transferred from surplus on revaluation of fixed assets to unappropriated profit - net of tax Transferred to statutory reserve Transfer to reserve for issue of bonus shares Issue of bonus shares - December 2011 Share of dividend attributable to minority interest Final cash dividend - December 2011 Balance as at March 31, 2012
7,602,150
2,698
71,227,803
7,602,150
760,215 760,215
9,702,528
502,362 12,016,761
18,600,000
Subsidiary Companies - MCB Financial Services Limited - MNET Services (Private) Limited - MCB Trade Services Limited - Arif Habib Investments Limited - "MCB Leasing" Closed' Joint Stock Company
(2,280,645) 74,071,140
2,345
MCB Bank Limited ('the Bank') is a banking company incorporated in Pakistan and is engaged in commercial banking and related services. The Bank's ordinary shares are listed on all the stock exchanges in Pakistan whereas its Global Depositary Receipts (GDRs) (representing two ordinary equity shares) are traded on the International Order Book (IOB) system of the London Stock Exchange. The Bank's registered office and principal office are situated at MCB Building, Jinnah Avenue, Islamabad and MCB 15Main, Gulberg, Lahore, respectively. The Bank operates 1,165 branches including 22 Islamic banking branches (December 31, 2011: 1,165 branches including 22 Islamic banking branches) with in Pakistan and 8 (December 31, 2011: 8) branches outside the country (including the Karachi Export Processing Zone Branch). 2 2.1 BASIS OF PRESENTATION In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, the State Bank of Pakistan has issued various circulars from time to time. Permissible forms of trade-related modes of financing include purchase of goods by banks from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these consolidated condensed interim financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. The financial results of the Islamic banking branches have been consolidated in these consolidated condensed interim financial statements for reporting purposes, after eliminating material intra branch transactions / balances. Key financial figures of the Islamic banking branches are disclosed in note 18 to these consolidated condensed interim financial statements. The consolidated condensed financial statements include the financial statements of MCB Bank Limited and its subsidiary companies and associates. a) Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date when control ceases. The assets and liabilities of subsidiary companies have been consolidated on a line by line basis based on the unaudited financial statements for the period ended March 31, 2012 and the carrying value of investments held by the Group is eliminated against the subsidiaries' shareholders' equity in these consolidated condensed interim financial statements. Material intra-Group balances and transactions have been eliminated. b) Associates are entities over which the Group has significant influence but not control. Investments in associates are accounted for under the equity method of accounting and are initially recognised at cost, thereafter adjusted for the post-acquisition change in the Group's share of net assets of the associate. The cumulative post-acquisition movements are adjusted in the carrying amount of the investment. Accounting policies of the associate have been changed where necessary to ensure consistency with the policies adopted by the Group. The Group's share in associate has been accounted for based on the financial statements for the period ended March 31, 2012. c) Minority interest are that part of the net results of operations and of net assets of subsidiary companies attributable to interests which are not owned by the Group. 3 3.1 STATEMENT OF COMPLIANCE These consolidatedcondensed interim financialstatements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved Accounting Standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Banking Companies Ordinance, 1962, the Companies Ordinance, 1984, and the directives issued by SBP. In case requirements differ, the provisions of and directives issued under the Banking Companies Ordinance, 1962, the Companies Ordinance, 1984, and the directives issued by SBP shall prevail.
760,215
(760,215)
78,942 78,942 -
1,440,129 -
2.2
8,362,365
221,910 9,924,438
431,260
13,456,890
18,600,000
513,947 (52,581)
2.3
492,497
836,236 9,198,601
836,236 (836,236) -
9,924,438
564,414 14,021,304
18,600,000
The annexed notes 1 to 21 form an integral part of these consolidated condensed interim financial statements.
S.M. Muneer
MCB
MCB
---------- (Rupees in '000) ---------8.2 8.2 8.3 8.4 8.5 345,602 309,308,646 8,954,928 318,609,176 3,101,352 53,917 63,300 3,218,569 321,827,745 (3,327,065) 318,500,680 488,687 16,616 319,005,983
3.3
4 4.1
4.2
5 5.1 5.2 6
Investments include Pakistan Investment Bonds amounting to Rs. 232.600 million (December 31, 2011: Rs. 232.600 million) earmarked by the State Bank of Pakistan and National Bank of Pakistan against TT / DD discountingfacilities and demand note facilities sanctioned to the Bank. In addition, Pakistan Investment Bonds amounting to Rs. 5 million (December 31, 2011: Rs. 5 million) have been pledged with the Controller of Military Accounts on the account of Regimental Fund Account. Investment of the Group in Adamjee Insurance Company Limited has been accounted for under the equity method of accountingin accordance with the treatment specified in International Accounting Standard 28, (IAS 28) 'Accounting for Investments in Associates'. The market value of the investment in Adamjee Insurance Company Limited as at March 31, 2012 amounted to Rs. 2,039.867 million (December 31, 2011: Rs. 1,675.927 million). Investment in Adamjee Insurance Company Limited under equity method - holding 29.13% March 31, 2012 Opening Balance Share of profit / (loss) for the period / year before tax Dividend from associate Share of tax 3,101,352 130,707 (6,774) 123,933 Share of unrealized surplus on assets -net of tax Closing Balance 389,218 3,614,503 December 31, 2011 3,703,265 (73,069) (90,084) 71,214 (91,939) (509,974) 3,101,352
8.3
---------- (Rupees in '000) ---------5,538,691 301,982,653 7,304,613 314,825,957 3,614,503 53,413 63,300 3,731,216 318,557,173 (2,918,252) 315,638,921 1,256,255 23,473 316,918,649 13,548,342 62,087 13,610,429 13,610,429 13,610,429 (6,586) 13,603,843 5,538,691 315,530,995 7,366,700 328,436,386 3,614,503 53,413 63,300 3,731,216 332,167,602 (2,918,252) 329,249,350 1,249,669 23,473 330,522,492
8.4
Investment of the Group in Euronet Pakistan Private Limited has been accounted for under the equity method of accounting in accordance with the treatment specified in International Accounting Standard 28, (IAS 28) 'Accounting for Investments in Associates'. Investment in Euronet Pakistan Private Limited under equity method - holding 30% March 31, 2012 Opening balance Investment made during the year
Share of profit / (loss) for the period / year before tax Share of tax
Adamjee Insurance Company Limited Euronet Pakistan (Private) Limited First Women Bank Limited Investments at cost Less: Provision for diminution in the value of investments Investments (net of provisions)
---------- (Rupees in '000) ---------53,917 (398) (106) (504) Closing Balance 8.5 53,413
Surplus / (deficit) on revaluation of available for sale securities - net Gain on revaluation of held-for-trading securities - net Investments at revalued amounts - net of provisions
The Group's investment in First Women Bank Limited is carried at cost and have not been accounted for under equity method of accounting as the Group does not have significant influence over the entity.
MCB
MCB
March 31, December 31, 2012 2011 ---------- (Rupees in '000) ---------11 DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Savings deposits Current accounts Margin accounts Financial institutions Remunerative deposits 4,911,666 2,133,956 7,045,622 512,027,617 12 DEFERRED TAX LIABILITY / (ASSET) - NET The details of the tax effect of taxable and deductible temporary differences are as follows: Taxable temporary differences on: Surplus on revaluation of operating fixed assets Accelerated tax depreciation Receivable from pension fund Investments in associates Others Surplus on revaluation of securities 6,319,827 2,253,658 8,573,485 491,146,798
Advances include Rs. 26,270.292million(December 31, 2011: Rs. 26,664.873million)which have been placed under non-performing status as detailed below: March 31, 2012 Classified Advances Category of Classification Other Assets Especially Mentioned (OAEM) Substandard Doubtful Loss 9.1.1 10,605 2,007,885 358,140 19,600,150 21,976,780 3,324 4,290,188 4,293,512 10,605 2,007,885 361,464 23,890,338 26,270,292 439,221 178,247 21,250,927 21,868,395 439,221 178,247 21,250,927 21,868,395 Domestic Overseas Total Specific Provision Required Specific Provision Held
Non-remunerative deposits
December 31, 2011 Classified Advances Category of Classification Domestic Overseas Total
------------------------------------- Rupees in '000 -----------------------------------Other Assets Especially Mentioned (OAEM) Substandard Doubtful Loss 9.1.1 2,036,968 292,466 20,061,976
22,391,410
7,857 4,265,606
4,273,463
Deductible temporary differences on: Provision for bad debts Provision for contributory benevolent scheme Provision for post retirement medical benefits Provision for gratuity Taxable losses
9.1.1 This represents non-performing portfolio of agricultural financing classified as OAEM as per the requirements of the Prudential Regulation for Agricultural Financing issued by the SBP.
MCB
MCB
Corporate Finance
Total
13 13.1
Total income Total expenses Income tax expense Net income Segment assets - (Gross of NPLs Provisions) Advance taxation (payment less provision) Total assets Segment non performing loans Segment specific provision required Segment liabilities
20,200,026 (11,383,520) (3,048,882) 5,767,624 683,260,842 8,868,407 692,129,249 26,270,292 21,868,395 567,708,700 6,760,596 574,469,296 -
13.3 13.4
844,099
Deferred tax liabilities - net Total liabilities - net Segment return on assets (ROA) (%) Segment cost of fund (%)
13.6
Commitments to extend credit The Bank makes commitmentsto extend credit in the normal course of its business but these being revocable commitmentsdo not attract any significant penalty or expense if the facility is unilaterally withdrawn. Commitments in respect of forward foreign exchange contracts Purchase Sale 26,888,166 26,658,002 191,335 32,395,900 35,030,445 276,277
11.57% 11.37%
12.93% 4.44%
12.77% 6.11%
34.80% -
Three months ended March 31, 2011 Total income Total expenses Income tax expense Net income 10,212 (7,651) 2,561 7,506,536 (1,459,525) 6,047,011 3,507,540 (7,132,321) (3,624,781) 7,084,788 (1,572,564) 5,512,224 71,678 (39,446) 32,232 (25,440) 25,440 18,155,314 (10,186,067) (2,856,714) 5,112,533
13.7 13.8
14
The income tax assessments of the Bank have been framed upto and including the Tax Year 2011. For the Assessment Year 1988-89 through Tax Year 2011, the department has amended the assessments on certain issues against the Bank. The Bank has filed appeals which are pending at various appellateforums. in addition, certain decision made in favour of the Bank are being contested by the department at higher forums. No provision has been made in the financial statements as the management and the Bank's legal counsel are of the view that the issues will be decided in the Bank's favour as and when these are taken up by the Appellate Authorities. Three months ended March 31, March 31, 2012 2011 ---------- (Rupees in '000) ---------BASIC AND DILUTED EARNINGS PER SHARE - AFTER TAX Profit after taxation 5,747,915 5,112,890 Number of shares Weighted average number of shares outstanding during the period Basic and diluted Earnings per share - after tax 919,860,123 Rupees 6.25 919,860,123 5.56
Segment assets - (Gross of NPLs provision) Advance taxation (payment less provision) Total assets Segment non performing loans Segment specific provision required Segment liabilities Deferred tax assets Total liabilities - net Segment return on assets (ROA) (%) Segment cost of fund (%)
15
CREDIT RATING PACRA throughits notificationin June 2011, has assigned longterm credit rating of AA+ [doubleA plus] and short-term credit rating of A1+ [A one plus] to the Bank.
MCB
MCB
The Group has related party relationship with its associates, employee benefit plans and its key management personnel (including their associates) and companies with common directors. The Group entersinto transactions with relatedpartiesin the normalcourseof business. ontributionsto andaccrualsin respectof staff retirementbenefitsandotherbenefitplansaremadein accordance C with the actuarial valuations / terms of the contribution plan. Remuneration to the executives / officers is determined in accordance with the terms of their appointment. Details of transactions with related parties and balances with them as at the period-end were as follows: Directors Three months ended March 31, 2012 Deposits Deposits at beginning of the period / year Deposits received during the period / year Deposits repaid during the period / year Deposits at the end of the period / year Advances (secured) Balance at beginning of the period / year Loan granted during the period / year Repayment during the period / year Balance at end of the period / year Outstanding Balance of credit card Receivable from Pension Fund Year ended Dec 31, 2011 Associates Three months ended March 31, 2012 Year ended Dec 31, 2011 Other Related Parties Three months ended March 31, 2012 Year ended Dec 31, 2011 Key management personnel Three months ended March 31, 2012 Year ended Dec 31, 2011
Assets Cash and balances with treasury banks Investments - net Financing and receivables - Murabaha - Ijara - Islamic export refinance Fixed Assets Deferred tax assets Other assets Liabilities Bills payable Deposits and other accounts - Current accounts - Saving accounts - Term deposits - Others
Borrowing from SBP
---------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------4,398,756 1,100,134 (1,064,312) 4,434,578 2,088,985 20,407,581 (18,097,810) 4,398,756 766,387 30,536,355 (30,733,501) 569,241 955,014 169,261,154 (169,449,781) 766,387 25,393,804 74,117,220 (73,141,611) 26,369,413 24,677,392 250,452,445 (249,736,033) 25,393,804 50,178 190,356 (178,102) 62,432 90,816 830,780 (871,418) 50,178
713 -
1,137 -
Directors Associates Other Related Parties Key management personnel March / March / March / March / March 31, March 31, March 31, March 31, December 31, December 31, December 31, December 31, 2012 2012 2012 2012 2011 2011 2011 2011 ---------------------------------------------------------- (Rupees in '000) -------------------------------------------------------------Adamjee Insurance Company Limited Insurance premium paid-net of refund Insurance claim settled Rent Income received Outstanding commitments and contingent liabilities Banca Revenue Adamjee Life Assurance Company Limited Insurance Premium Paid Insurance claim settled Outstanding commitments and contingent liabilities Euronet Pakistan Private Limited ATM Outsourcing Revenue Capital injection Trade payable Training expenses reimbursed Mayban International Trust (Labuan) Berhad Forward foreign exchange contracts (Notional) Unrealized loss on forward foreign exchange contracts MCB Employees Foundation Service expenses Cash sorting expenses Stationery Expenses Advance receivable Payable for stationery expenses 202,676 17,863 405 8,365 89,554 25,262 18,686 500 29,258 4,292 8,443 1,638 8,365 38,144 26,342 500 5,607 52,519 7,317 27 -
Due to head office Deferred tax liability Other liabilities Net assets Represented by:
1,913,753 40,914
Islamic Banking Fund Other Reserves Unappropriated profit Surplus / (deficit) on revaluation of assets - net of tax CHARITY FUND
MCB Employees Security System and Services (Private) Limited Security guard expenses Others Remuneration of key management personnel Mark-up expense on deposits Markup income on advances Clearing expenses paid to NIFT Other miscellaneous expenses Investment in Metro-Bank Pakistan Sovereign Fund-Perpetual Dividend Income Contribution to provident fund Commission Received Gas charges Rent Paid
63,507
47,384
Opening balance
16,134 89,899 15,302 21,785 20,410 919 16,535 995,318 2,346 29,268 3,195 4,000,000 216,893 43,941 13 3,115 53 1,058,302 30,065 3,924 4,000,000 39,703 2,239 42 46,828 1,059 888 40,212 1,025 636 -
Additions during the year Received from customers on delayed payments Profit on charity saving account
Payments / utilization during the year Social Welfare Health Closing balance
1,625
The chairman has been provided with free use of the Bank maintained car. The Chief Executive and certain executives are provided with free use of the Bank's maintained cars and household equipment in accordance with the terms of their employment.
MCB
MCB
GENERAL - Figures have been rounded off to the nearest thousand of rupees unless otherwise stated. - Comparative information has been reclassified and rearranged in these unconsolidated condensed interim financial statements for the purpose of comparison. NON-ADJUSTING EVENT The Board of Directors in its meeting held on April24, 2012 has announced cash dividendin respect of the three months period ended March 31, 2012 of Rs. 3.00 per share (March 31, 2011: Rs. 3.00 per share). These consolidated condensed interim financial statements for the three months period ended March 31, 2012 do not include the effect of these appropriations which will be accounted for subsequent to the period end.
20
21
DATE OF AUTHORIZATION FOR ISSUE These consolidatedcondensed interim financial statements were authorized for issue by the Board of Directors of the Bank in their meeting held on April 24, 2012 .
S.M. Muneer