| CitiBank N. A. Pakistan Branches |
|
|
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
| (Incorporated
in the U.S.A. The liability of members being limited) |
|
|
|
| AUDITORS
REPORT TO THE DIRECTORS |
|
|
| We
have audited the annexed balance sheet of CITIBANK, N.A.- PAKISTAN BRANCHES
as at December 31, 1998 and the related profit and loss account and the |
|
| cash
flow statement, together with the notes forming part thereof for the year
then ended, and we state that we have obtained all the information and
explanations which |
| to
the best of our knowledge and belief were necessary for the purposes of our
audit and, after due verification thereof, found them satisfactory and, we
report that: |
|
| (a)
in our opinion proper books of account have been kept by CITIBANK, N.A.-
PAKISTAN BRANCHES as required by the Companies Ordinance, 1984. |
|
|
| (b)
in our opinion- |
|
|
| (i)
the balance sheet and profit and loss account together with the notes thereon
have been drawn up in conformity with the Banking Companies |
|
| Ordinance,
1962, and the Companies Ordinance, 1984, and are in agreement with the books
of account and are further in accordance with account- |
|
| ing
policies consistently applied; |
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the Branches
business; and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year were in accordance with the objects of the Branches and |
|
| the
transactions of the Branches which have come to our notice have been within
the powers of the Branches; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us, the balance sheet and the profit and loss account
and the cash |
| flow
statement, together with the notes forming part thereof give the information
required by the Banking Companies Ordinance, 1962, and the Companies |
|
| Ordinance,
1984, in the manner so required and give a true and fair view of the state of
the Branches' affairs as at December 31, 1998 and their true balance of |
| the
loss and the cash flow statement for the year then ended; and |
|
|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980, was deducted by the Branches and deposited in the Central Zakat Fund |
|
| established
under section 7 of the Ordinance. |
|
|
| Karachi- |
|
Chartered Accountants |
|
| March, 10, 1999 |
|
|
|
| BALANCE
SHEET AS AT DECEMBER 31, 1998 |
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
Rupees in
'000 |
|
| ASSETS |
|
|
|
| CASH |
|
|
4 |
6,848,631 |
10,215,541 |
|
| BALANCES
WITH OTHER BANKS |
|
5 |
14,424 |
11,530 |
|
| MONEY
AT CALL AND SHORT NOTICE |
|
|
500,000 |
500,000 |
|
| INVESTMENTS |
|
|
6 |
22,902,866 |
21,599,641 |
|
| ADVANCES-NET
OF PROVISIONS |
|
7 |
21,854,837 |
26,599,641 |
|
| OPERATING
FIXED ASSETS |
|
|
8 |
637,875 |
26,197,583 |
|
| OTHER
ASSETS |
|
|
9 |
4,592,295 |
561,746 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
57,350,928 |
65,193,468 |
|
|
|
|
|
| LIABILITIES |
|
|
|
|
| DEPOSITS
AND OTHER ACCOUNTS |
|
10 |
49,304,035 |
56,428,511 |
|
| BORROWINGS
FROM OTHER BANKS, AGENTS, ETC. |
11 |
1,799,641 |
2,057,447 |
|
| BILLS
PAYABLE |
|
|
|
387,566 |
426,849 |
|
| OTHER
LIABILITIES |
|
|
12 |
5,947,264 |
5,898,746 |
|
|
|
|
---------- |
---------- |
|
|
|
|
57,438,506 |
5,898,746 |
|
|
|
|
---------- |
---------- |
|
| NET ASSETS |
|
|
|
(87,578) |
381,915 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| REPRESENTED
BY: |
|
|
|
|
| HEAD
OFFICE CAPITAL ACCOUNT |
|
13 |
|
|
| ACCUMULATED
(LOSS)/UNREMITTED PROFIT |
|
(87,578) |
381,915 |
|
|
|
|
---------- |
---------- |
|
|
|
|
(87,578) |
381,915 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| MEMORANDUM
ITEMS: |
|
|
|
|
| BILLS
FOR COLLECTION |
|
|
14 |
1,217,345 |
1,191,681 |
|
| ACCEPTANCES,
ENDORSEMENTS AND OTHER |
|
|
|
| OBLIGATIONS |
|
|
|
3,498,389 |
3,323,982 |
|
| CONTINGENT
LIABILITIES AND COMMITMENTS |
15 |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
|
|
SHEHZAD NAQVI |
|
AKBAR ABDUL AZIZ |
|
|
Country General Manager |
|
Country Finance Controller |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 1998 |
|
|
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
Rupees in
'000 |
|
|
|
|
|
| Mark-up/interest
and discount and/or return earned |
7,407,092 |
7,808,005 |
|
| Less:
Cost/Return on deposits, borrowings etc. |
|
5,903,281 |
5,816,777 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,503,811 |
1,991,228 |
|
|
|
|
|
| Fees,
commission and brokerage |
|
|
835,486 |
923,982 |
|
| Profit
from investment securities |
|
|
43,743 |
7,528 |
|
| Dividend
income |
|
|
|
- |
119 |
|
| Other
operating income |
|
|
16 |
473,178 |
484,570 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,352,407 |
1,416,199 |
|
|
|
|
---------- |
---------- |
|
|
|
|
2,856,218 |
3,407,427 |
|
|
|
|
|
| Operating
expenses: |
|
|
|
|
| Administrative
expenses |
|
|
17 |
1,977,459 |
1,718,410 |
|
| Provisions
against non-performing advances |
7.2 |
415,597 |
231,691 |
|
| Bad
debts written off directly |
|
7.3 |
216,636 |
292,134 |
|
|
|
|
---------- |
---------- |
|
|
|
|
(2,609,692) |
(2,242,235) |
|
|
|
|
---------- |
---------- |
|
|
|
|
246,526 |
1,165,192 |
|
| Other
Income |
|
|
18 |
1,918 |
1,660 |
|
|
|
|
---------- |
---------- |
|
|
|
|
248,444 |
1,166,852 |
|
| Other
charges |
|
|
19 |
(22,502) |
(6,071) |
|
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
|
225,942 |
1,160,781 |
|
| Taxation-current |
|
|
20 |
(453,435) |
(871,525) |
|
|
|
|
---------- |
---------- |
|
| (Loss)/profit
after taxation |
|
|
(227,493) |
289,256 |
|
| Unremitted
profit brought forward |
|
|
381,915 |
2,126,749 |
|
|
|
|
---------- |
---------- |
|
|
|
|
154,422 |
516,005 |
|
| Remittance
to Head Office |
|
|
(242,000) |
(134,090) |
|
|
|
|
---------- |
---------- |
|
| Accumulated
(loss)/unremitted profit carried forward |
(87,578) |
381,915 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
SHAHZAD NAQVI |
|
AKBAR ABDUL AZIZ |
|
|
Country General Manager |
|
Country Financial Controller |
|
|
|
|
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1998 |
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
Rupees in
'000 |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
| Profit
before taxation |
|
|
|
225,942 |
1,160,781 |
|
| (Profit)
from investment securities |
|
|
(43,743) |
(7,528) |
|
| Dividend
income |
|
|
|
- |
(119) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
(43,743) |
(7,647) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
182,199 |
1,153,134 |
|
|
|
|
|
|
|
| Adjustment
for non-cash charges: |
|
|
|
| Depreciation |
|
|
|
144,756 |
132,986 |
|
| Provision
against non-performing advances |
|
415,597 |
231,691 |
|
| Bad
debts written of directly |
|
|
216,636 |
292,134 |
|
| Net
loss on sale of fixed assets |
|
|
2,668 |
6,071 |
|
| Write-off
of fixed assets |
|
|
19,834 |
- |
|
|
|
---------- |
---------- |
|
|
|
|
|
799,491 |
662,882 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
981,690 |
1,816,016 |
|
|
|
|
| (Increase/decrease
in operating assets: |
|
|
| Advances |
|
3,710,513 |
(4,420,187) |
|
| Other
assets (excluding advance tax) |
|
2,486,096 |
921,073 |
|
|
|
---------- |
---------- |
|
|
|
6,196,609 |
(3,499,114) |
|
|
|
|
|
|
| (Decrease)/increase
in operating liabilities: |
|
|
| Deposits
and other accounts |
|
(7,124,476) |
13,124,399 |
|
| Bills
payable |
|
(39,283) |
(261,359) |
|
| Other
liabilities |
|
48,518 |
1,336,111 |
|
|
|
---------- |
---------- |
|
|
|
(7,115,241) |
14,199,151 |
|
|
|
---------- |
---------- |
|
| Cash
flow before tax |
|
63,058 |
12,516,053 |
|
| Income
tax paid |
|
(1,424,399) |
(1,893,679) |
|
|
|
---------- |
---------- |
|
| Net
cash flow from operating activities |
|
(1,361,341) |
10,622,374 |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Net
sale proceeds of investment securities |
|
(1,259,482) |
(7,582,067) |
|
| Dividend
Income |
|
|
|
- |
119 |
|
| Fixed
capital expenditure |
|
|
(293,678) |
(219,798) |
|
| Sale
proceeds of fixed assets |
|
|
50,291 |
17,636 |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(1,502,869) |
(7,784,110) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Borrowings
from other banks, agents etc. |
|
(257,806) |
320,336 |
|
| Remittances
to Head Office |
|
(242,000) |
(134,090) |
|
|
|
---------- |
---------- |
|
| Net
cash flow from financing activities |
|
(499,806) |
186,246 |
|
|
|
---------- |
---------- |
|
| (Decrease)/increase
in cash and cash equivalents for the year |
(3,364,016) |
3,024,510 |
|
| Cash
and cash equivalents at the beginning of the year |
10,727,071 |
7,702,561 |
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
7,363,055 |
10,727,071 |
|
|
|
========== |
========== |
|
|
|
|
|
| Cash
and cash equivalents |
|
|
| Cash |
|
6,848,631 |
10,215,541 |
|
| Balances
with other banks |
|
14,424 |
11,530 |
|
| Money
at call and short notice |
|
|
500,000 |
500,000 |
|
|
|
---------- |
---------- |
|
|
|
7,363,055 |
10,727,071 |
|
|
|
========== |
========== |
|
|
|
|
|
|
SHEHZAD NAQVI |
|
AKBAR ABDUL AZIZ |
|
|
|
Country General Manager |
|
Country Financial Controller |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 1998 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| Citibank
N.A. is a foreign banking company incorporated in the U.S.A. The bank |
|
| commenced
operations in Pakistan in 1962, it presently operates through branch- |
|
| es
in Pakistan at Karachi, Lahore, Islamabad, Rawalpindi and Faisalabad. |
|
|
| 2.
BASIS OF PRESENTATION |
|
|
| These
financial statements have been prepared in accordance with the require- |
|
| ments
of the State Bank of Pakistan (under the powers conferred upon it under the |
|
| Banking
Companies Ordinance, 1962) to conform with BPRD Circular No. 31 |
|
| dated
August 13, 1997. |
|
|
|
|
| 3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
| 3.1
Accounting convention |
|
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 3.2
Staff retirement benefits |
|
|
|
| The
bank has established approved provident and staff gratuity funds, pay- |
|
| ments
in respect of which are made in accordance with the relevant rules. |
|
| The
amount available in the gratuity fund as of year end is considered ade- |
|
| quate
to meet the current liability in respect of this obligation. |
|
|
| 3.3
Taxation |
|
|
|
| Taxation
charged in the accounts is based on taxable income. The bank |
|
| accounts
for deferred taxation on material timing differences using the liabili- |
|
| ty
method. Deferred tax debits are recognised only if there is a reasonable |
|
| expectation
of realisation in the foreseeable future. |
|
|
|
| 3.4
Advances |
|
| Provisions
for non-performing advances (and relevant mark-up) are made |
|
| against
specific non-performing advances determined on the basis of |
|
| Prudential
Regulations issued by the State Bank of Pakistan and according |
|
| to
the bank's own criteria. |
|
|
| 3.5
Investments |
|
| Investments
are carried at cost adjusted for amortisation of premium or |
|
| accretion
of discount (where applicable). No account is taken of temporary |
|
| fluctuations
in the market value of investments. However, a permanent |
|
| diminution
in individual values is given effect to by writing down the cost |
|
| thereof
appropriately and charging the difference to the profit and loss |
|
| account.
Gains and losses on disposal of investments are taken to income |
|
| currently. |
|
|
| The
bank also enters into transactions of repo/reverse repo of securities at |
|
| contracted
rates for specific periods of time. These are recorded as follows: |
|
|
| (a)
In the case of sale under repurchase obligations the securities are |
|
| deleted
from the books and the charges arising from the differential in |
|
| sale
and repurchase values are accrued on a pro-rata basis and |
|
| recorded
as expense. Upon repurchase the securities are reinstated. |
|
|
|
|
| (b)
In the case of purchase under resale obligations the securities are |
|
| booked
at the contracted purchase price and the differential of the |
|
| contracted
purchase and resale price is amortised over the period of |
|
| their
contract and recorded as income. |
|
|
|
| 3.6
Operating fixed assets and depreciation |
|
|
|
| These
are stated at cost less accumulated depreciation. Depreciation on |
|
| fixed
assets is calculated so as to write-off the assets over their estimated |
|
| useful
life. Profit or loss on disposal of fixed assets is taken to income cur- |
|
| rently. |
|
|
|
|
| 3.7
Revenue recognition |
|
| Mark-up/return
on advances and investments is recognised on an accrual |
|
| basis,
except in the case of non-performing advances which warrant carry |
|
| forward
in compliance with the Prudential Regulations of the State Bank of |
|
| Pakistan.
Commission is generally recognised on an accrual basis. |
|
|
| 3.8
Foreign currencies |
|
|
|
| Assets
and liabilities in foreign currencies are translated into rupees at rates |
|
| of
exchange appropriate to those prevalent on the balance sheet date. |
|
| Exchange
gains and losses are included in income currently. |
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
Rupees in
'000 |
|
|
|
|
| 4. CASH |
|
|
|
| in hand: |
|
525,657 |
253,717 |
|
| Local
currency |
|
478,067 |
545,993 |
|
| Foreign
currencies |
|
---------- |
---------- |
|
|
|
1,003,724 |
799,710 |
|
|
|
|
| With
State Bank of Pakistan: |
|
|
|
|
|
| Special
deposit account |
|
|
|
- |
3,844,850 |
|
| Capital
deposited in foreign currency |
|
3,457,771 |
3,311,191 |
|
| Current
account |
|
|
|
2,384,642 |
2,259,790 |
|
|
|
|
---------- |
---------- |
|
|
|
|
5,842,413 |
9,415,831 |
|
| With
National Bank of Pakistan in current account |
2,494 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
6,848,631 |
10,215,541 |
|
|
|
|
========== |
========== |
|
|
|
|
| 5.
BALANCES WITH OTHER BANKS |
|
|
|
|
|
|
|
|
|
| In
Pakistan: |
|
|
|
|
|
| current
accounts |
|
|
|
11,192 |
11,405 |
|
| Outside
Pakistan: |
|
|
|
|
|
| current
accounts |
|
|
|
3,232 |
125 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
14,424 |
11,530 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| 6.
INVESTMENTS |
|
|
| Investment
securities-unquoted |
|
|
| Federal
and Provincial Governments Securities: |
|
| Market
Treasury Bills - note 6.1 |
|
|
22,900,358 |
- |
|
| Federal
Investment Bonds |
|
|
595,039 |
595,039 |
|
| Short
Term Federal Bonds |
|
|
- |
21,002,069 |
|
| Government
loans |
|
|
- |
25 |
|
|
|
|
---------- |
---------- |
|
|
|
|
22,900,358 |
215,971 |
|
| Fully
paid-up ordinary shares |
|
|
|
|
| unlisted
companies |
|
|
|
2,508 |
2,508 |
|
|
|
|
---------- |
---------- |
|
|
|
|
22,902,866 |
21,599,641 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| Book
value of unquoted investments - Rs 22,902,866 million. |
|
|
|
|
|
|
|
|
|
|
|
| 6.1
Includes Rs 25 million deposited with the State Bank of Pakistan against
TT/dis- |
|
| counting
facility granted by them and Rs 300 million against other facilities. |
|
|
|
|
1998 |
1997 |
|
|
|
|
Rs. in '000 |
|
| 7. ADVANCES |
|
|
|
|
|
|
| Loans,
cash credits, overdrafts etc. |
|
|
| In Pakistan |
|
|
|
|
21,861,423 |
25,431,617 |
|
| Bills
discounted and purchased |
|
|
| Payable
in Pakistan |
|
|
|
403,199 |
196,582 |
|
| Payable
outside Pakistan |
|
|
707,913 |
1,244,029 |
|
|
|
|
---------- |
---------- |
|
|
|
1,111,112 |
1,440,611 |
|
|
|
---------- |
---------- |
|
|
|
* 22,972,535 |
26,872,228 |
|
| Provisions
for non-performing advances - note 7.2 |
(1,117,698) |
(674,645) |
|
|
|
---------- |
---------- |
|
|
|
21,854,837 |
26,197,583 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| *
Advances include Rs 1,709.340 million (1997: Rs 1,453.115 million) which have |
|
| been
placed on non-performing status. |
|
|
| Particulars
of advances |
|
|
|
|
| In
local currency |
|
|
|
21,146,924 |
24,953,554 |
|
| In
foreign currencies |
|
|
|
707,913 |
1,244,029 |
|
|
|
|
|
---------- |
---------- |
|
|
|
21,854,837 |
26,197,583 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| Debts
considered good in respect of which |
|
|
| the
bank is fully secured |
|
|
15,931,748 |
21,676,458 |
|
|
|
|
|
|
|
| Debts
considered good for which the bank |
|
|
| holds
no other security than the debtors |
|
|
| personal
security. |
|
|
|
38,177 |
27,801 |
|
|
|
|
|
|
|
| Debts
considered good, secured by the |
|
|
| personal
liabilities of one or more parties in |
|
|
| addition
to the personal security of the |
|
|
| debtors. |
|
|
5,864,912 |
4,493,324 |
|
|
|
---------- |
---------- |
|
|
|
|
21,854,837 |
26,197,583 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
Balance |
Maximum total amount of |
|
|
|
|
outstanding |
advances including
temporary |
|
|
|
at December |
advances granted during |
|
|
|
|
31, 1998 |
the year |
|
|
|
|
|
|
|
|
|
Rupees in
'000 |
|
| Debts
due by executives of |
|
|
|
| the
bank or any of them |
|
|
|
| either
severally or jointly |
|
|
|
| with
any other persons |
|
157,340 |
180,292 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| 7.2
Particulars of provisions against non-performing advances |
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
Rs. in '000 |
|
|
|
|
| Opening
balance |
|
|
674,645 |
484,002 |
|
| Charge
for the year |
|
415,597 |
231,691 |
|
| Amounts
written off |
|
(7,666) |
(33,098) |
|
| Reversals
(recoveries) |
|
(37,520) |
(7,950) |
|
| Adjustments |
|
|
72,642 |
- |
|
|
|
---------- |
---------- |
|
| Closing
balance |
|
1,117,698 |
674,645 |
|
