| Grindlays Bank Limited |
|
|
|
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
| AUDITORS'
REPORT TO THE DIRECTORS |
|
|
| We
have audited the annexed balance sheet of the Pakistan Branches of ANZ
Grindlays Bank Limited as at 31 December 1998 and the related profit and loss
account and |
| cash
flow statement, together with the notes forming part thereof for the year
then ended, in which are incorporated the unaudited certified returns from
the branches |
| except
for five branches which have been audited by us 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 the branches as
required by the Companies Ordinance, 1984, and, the returns referred to above
received |
| from
the branches have been found adequate for the purposes of our audit; |
|
|
| (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 accounting 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 transac- |
| tions
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 profit and loss account and 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 except for the effect of matter referred in note 19.4 give a
true and fair view of the state of the branches' affairs as at 31 December
1998, |
| and
their true balance of the profit before incorporating head office general
expenses and their cash flows for the year than ended; |
|
|
| (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 estab- |
| lished
under Section 7 of that Ordinance. |
|
|
| Karachi: |
|
Taseer Hadi Khalid & Co. |
|
| Date:
19 March, 1999 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT DECEMBER 31, 1998 |
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
Rupees in
'000 |
|
| ASSETS |
|
|
|
| Cash |
|
|
4 |
5,288,912 |
6,560,492 |
|
| Balances
with other banks |
|
5 |
86,168 |
111,898 |
|
| Investments |
|
|
6 |
10,678,343 |
11,150,617 |
|
| Advances-net
of provision |
|
7 |
15,968,727 |
15,156,789 |
|
| Operating
fixed assets |
|
|
8 |
83,092 |
69,924 |
|
| Capital
work in progress |
|
9 |
120,881 |
90,141 |
|
| Other
assets |
|
|
10 |
1,564,291 |
1,772,929 |
|
|
|
|
---------- |
---------- |
|
|
|
|
33,790,414 |
34,912,790 |
|
|
|
|
|
| LIABILITIES |
|
|
|
|
| Deposits
and other accounts |
|
11 |
28,483,717 |
30,497,618 |
|
| Borrowings
from other banks, agents etc. |
12 |
1,354,899 |
493,956 |
|
| Bills
payable |
|
|
|
211,488 |
526,089 |
|
| Other
liabilities |
|
|
13 |
2,609,648 |
2,451,552 |
|
|
|
|
---------- |
---------- |
|
|
|
|
32,659,752 |
33,969,215 |
|
|
|
|
---------- |
---------- |
|
| NET ASSETS |
|
|
|
1,130,662 |
943,575 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| REPRESENTED
BY |
|
|
|
|
| Head
office capital account |
|
14 |
- |
- |
|
| Reserve
fund & other reserves |
|
15 |
15,018 |
15,018 |
|
| Unremitted
profit |
|
|
|
1,106,188 |
919,101 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,121,206 |
934,119 |
|
| Surplus
on revaluation of fixed assets |
|
9,456 |
9,456 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,130,662 |
943,575 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| MEMORANDUM
ITEMS |
|
|
|
|
| Bills
for collection |
|
|
16 |
264,649 |
322,855 |
|
| Acceptances,
endorsements and other |
|
|
|
| obligations |
|
|
|
3,687,381 |
5,283,601 |
|
| Contingent
liabilities and commitments |
17 |
|
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts |
|
|
|
|
|
|
|
|
Azhar Hamid |
|
Asif S Sindhu |
|
|
Country Head, Pakistan |
|
Head of Finance, Pakistan |
|
|
|
|
|
|
|
| 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 |
4,974,817 |
4,494,320 |
|
| Less:
Cost/Return on deposits, borrowings etc. |
|
3,427,958 |
2,770,880 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,546,859 |
1,723,440 |
|
|
|
|
|
|
| Fees,
commission & brokerage |
|
|
517,103 |
426,760 |
|
| Dividend
income |
|
|
|
20,823 |
10,454 |
|
| Other
operating income |
|
|
18 |
269,082 |
201,449 |
|
|
|
|
---------- |
---------- |
|
|
|
|
807,008 |
638,663 |
|
|
|
|
---------- |
---------- |
|
| Total
Operating Income |
|
|
|
2,353,867 |
2,362,103 |
|
|
|
|
|
| Operating
Expenses |
|
|
|
|
| Administrative
expenses |
|
|
19 |
808,517 |
801,659 |
|
| Provisions
against non-performing advances |
7.2 |
184,221 |
122,606 |
|
| Provision
for diminution in value of investments |
13,158 |
2,658 |
|
| Other
provisions |
|
|
|
4,221 |
2,776 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,010,117 |
929,699 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,343,750 |
1,432,404 |
|
| Other
Income |
|
|
20 |
16,027 |
9,090 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,359,777 |
1,441,494 |
|
| Other
charges |
|
|
|
2,190 |
2,621 |
|
| Profit
before taxation |
|
|
|
---------- |
---------- |
|
|
|
|
1,357,587 |
1,438,873 |
|
|
|
|
|
| Taxation-Current |
|
|
22 |
759,954 |
799,500 |
|
| -Prior years |
|
|
|
60,546 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
820,500 |
799,500 |
|
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
|
|
537,087 |
639,373 |
|
| Unremitted
profit brought forward |
|
|
919,010 |
712,797 |
|
|
|
|
|
---------- |
---------- |
|
| Unremitted
profit |
|
|
|
1,456,188 |
1,352,170 |
|
| Remittance
of profit to head office |
|
|
350,000 |
433,069 |
|
|
|
|
---------- |
---------- |
|
| Unremitted
profit carried forward |
|
|
1,106,188 |
919,101 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an-integral part of these accounts |
|
|
|
|
|
Azhar Hamid |
|
Asif S Sindhu |
|
|
Country Head, Pakistan |
|
Head of Finance, Pakistan |
|
|
|
|
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1998 |
|
|
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
Rupees in
'000 |
|
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
| Profit
before tax |
|
|
|
1,357,587 |
1,438,873 |
|
| Add/(Less):
Profit on sale of fixed assets |
|
(7,943) |
- |
|
| Dividend
income |
|
|
|
(20,823) |
(10,454) |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,328,821 |
1,428,419 |
|
|
|
|
|
| Adjustment
for non-cash charges |
|
|
|
| Depreciation |
|
|
|
10,913 |
10,599 |
|
| Provision
for diminution in the value of investments |
13,158 |
2,658 |
|
| Provision
against non-performing advances |
|
184,221 |
122,606 |
|
| Provision
for frauds and forgeries |
|
|
1,802 |
2,776 |
|
|
|
|
---------- |
---------- |
|
|
|
|
210,094 |
138,639 |
|
| (Increase)/Decrease
in operating assets |
|
|
| Advances |
|
|
|
(996,159) |
(3,911,399) |
|
| Investment
securities |
|
|
|
459,116 |
957,582 |
|
| Other
assets (excluding advances tax) |
|
581,056 |
(339,683) |
|
|
|
|
---------- |
---------- |
|
|
|
|
44,013 |
(3,392,500) |
|
|
|
|
|
| Increase/(Decrease)
in operating liabilities |
|
|
| Deposits
and other accounts |
|
|
(2,013,901) |
4,516,481 |
|
| Bills
payable |
|
|
|
(314,601) |
263,491 |
|
| Other
liabilities (excluding capital) |
|
74,699 |
64,565 |
|
|
|
|
---------- |
---------- |
|
|
|
|
(2,253,803) |
4,844,537 |
|
|
|
|
---------- |
---------- |
|
| Cash
flow before tax |
|
|
|
(670,875) |
3,118,095 |
|
| Income
tax paid |
|
|
|
1,192,918 |
985,287 |
|
|
|
|
---------- |
---------- |
|
| Net
Cash Flow from Operating Activities |
|
(1,863,793) |
2,132,808 |
|
|
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
| Dividend
Income |
|
|
|
20,823 |
10,454 |
|
| Fixed
capital expenditure |
|
|
(55,224) |
(20,232) |
|
| Sale
proceeds of fixed assets |
|
|
8,346 |
- |
|
|
|
|
|
---------- |
---------- |
|
| Net
Cash Used in Investment Activities |
|
(26,055) |
(9,778) |
|
|
|
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
| Borrowings
from other banks and agents etc |
|
860,943 |
(337,890) |
|
| Increase
in capital on account of-Revaluation |
|
81,595 |
164,445 |
|
|
-Additional placement |
- |
116,302 |
|
|
|
|
---------- |
---------- |
|
| Remittance
to Head Office |
|
|
(350,000) |
(433,069) |
|
|
|
|
---------- |
---------- |
|
| Net
Cash Flow from Finance Activities |
|
592,538 |
(490,212) |
|
|
|
|
|
| Increase/(Decrease)
in cash and cash equivalent for the year |
(1,297,310) |
1,632,818 |
|
| Cash
and cash equivalent at the beginning of the year |
6,672,390 |
5,039,572 |
|
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalent at the end of December 31 |
5,375,080 |
6,672,390 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| Cash
and Cash Equivalent (includes) |
|
|
|
| Cash |
|
|
|
5,288,912 |
6,560,492 |
|
| Balances
with Other banks |
|
|
86,168 |
111,898 |
|
|
|
|
---------- |
---------- |
|
|
|
|
5,375,080 |
6,672,390 |
|
|
|
|
========== |
========== |
|
|
|
|
|
Azhar Hamid |
|
Asif S Sindhu |
|
|
Country Head, Pakistan |
|
Head of Finance, Pakistan |
|
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 1998 |
|
|
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
|
| ANZ
Grindlays Bank Ltd is a foreign banking company operating in Pakistan |
|
| through
a network of fifteen branches, having its registered office in the State of |
|
| Victoria,
Australia. |
|
|
|
|
|
|
| 2.
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
var- |
|
| ious
circulars from time to time. Permissible forms of trade-related modes of
financ- |
|
| ing
includes purchase of goods by the banks from their customers and immediate |
|
| resale
to them at appropriate mark-up in price on deferred payment basis. The pur- |
|
| chases
and sales arising under these arrangements are not reflected in these |
|
| accounts
as such, but are restricted to the amount of facility actually utilised and
the |
|
| appropriate
portion of mark-up thereon. |
|
|
|
|
|
| 3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
|
| 3.1
Historical cost convention |
|
|
|
| These
accounts have been prepared using historical cost convention as modified |
|
| by
the revaluation of certain premises. |
|
|
|
|
|
| 3.2
Staff retirement benefits |
|
|
|
| The
Bank operates approved funded gratuity and pension schemes covering all |
|
| employees
except expatriates staff. The bank's contribution to these schemes for |
|
| the
year amounting to Rs. 14.998 million (1997: Rs 25.143 million) has been |
|
| charged
to the profit and loss account. |
|
|
|
|
|
| The
bank also operates a provident fund scheme for eligible employees which
is |
|
| recognised
under the Income Tax Ordinance, 1979. |
|
|
|
|
| 3.3
Taxation |
|
|
|
| Taxation
is charged in the accounts based on taxable income. The bank accounts |
|
| for
deferred taxation on all major timing differences using liability method.
However, |
|
| deferred
tax debits balances are not accounted for. |
|
|
|
|
| 3.4
Advances |
|
|
|
| Advances
are stated net of amounts written off, specific provision for uncollectible |
|
| advances
and interest suspense. |
|
|
|
|
|
|
| Advances
are written off where there is no realistic prospect of recovery. Specific |
|
| provisions
are made for non-performing loans to reduce book value of such |
|
| advances
to their expected realisable value according to the bank's own criteria |
|
| and
to comply with Prudential Regulations of the State Bank of Pakistan. |
|
|
|
|
| 3.5
Investments |
|
| Listed
investments are stated in aggregate at the lower of cost or market value. |
|
| Unlisted
Investments are stated at cost. Profit and loss on sale are taken to Income |
|
| currently.
Dividend income is accounted for in the accounts when the dividend are |
|
| declared. |
|
|
| 3.6
Fixed assets and depreciation |
|
| These
are stated at cost or revalued amount less accumulated depreciation. |
|
| Depreciation
is charged using straight the method at rates permitted by the State |
|
| Bank
of Pakistan. Full month's depreciation is charged in the month of addition |
|
| whereas
no depreciation is charged in the month of disposal. Profit or loss on dis- |
|
| posal
is taken to income currently. |
|
|
| 3.7
Foreign currencies |
|
| Assets
and liabilities in foreign currencies are translated into rupees at the rates
of |
|
| exchange
prevailing at the balance sheet date. Forward exchange contracts other |
|
| than
those relating to foreign currency deposits are valued at the rates
applicable to |
|
| the
respective maturities of relevant foreign exchange contracts. |
|
|
| Exchange
gains and losses are included in income currently. |
|
|
| 3.8
Revenue recognition |
|
| Mark-up/return
on advances and investments is recognised on accrual basis, |
|
| except
income which warrant carry forward in compliance with the Prudential |
|
| Regulations
of the State Bank of Pakistan. |
|
|
|
|
1998 |
1997 |
|
|
|
Rupees in
'000 |
|
|
|
|
| 4. CASH |
|
|
|
| In
hand-local currency |
|
|
297,775 |
159,874 |
|
| -foreign currency |
|
|
151,594 |
251,612 |
|
| With
State Bank of Pakistan in: |
|
|
|
|
| Special
deposit account |
|
|
|
|
| Capital
under Section 13(2) of the |
|
|
|
|
| Banking
Companies Ordinance, 1962 |
|
|
1,924,800 |
1,843,205 |
|
| Deposit
against swap funds |
|
|
1,553,554 |
2,913,389 |
|
| Current
account |
|
|
1,353,212 |
1,392,461 |
|
| With
National Bank of Pakistan |
|
|
|
|
| In
current account |
|
|
7,977 |
(49) |
|
|
|
---------- |
---------- |
|
|
|
5,288,912 |
6,560,492 |
|
|
|
========== |
========== |
|
|
|
|
| 5.
BALANCE WITH OTHER BANKS |
|
|
|
| Outside
Pakistan (In current accounts) |
|
86,168 |
111,898 |
|
|
|
---------- |
---------- |
|
|
|
86,168 |
111,898 |
|
|
|
========== |
========== |
|
|
|
|
| 6.
INVESTMENTS (at cost less provision) |
|
|
| Federal
and Provincial Government Securities: |
|
|
| Federal
Investments Bonds |
|
|
1,051,228 |
485,545 |
|
| Short
Term Federal Bonds |
|
|
- |
10,193,080 |
|
| Federal
and Provincial |
|
|
|
|
| Governments
loans |
|
|
332,902 |
352,290 |
|
| Treasury
Bills |
|
|
9,187,562 |
- |
|
| Investments
in subsidiary companies |
|
|
|
|
| and
associated undertakings |
|
|
86,500 |
86,500 |
|
| Fully
paid-up ordinary shares of |
|
|
|
|
| unlisted
companies |
|
|
2,031 |
2,031 |
|
| Other
Investments |
|
|
|
|
| National
Investment Trust Units |
|
|
31,389 |
31,389 |
|
| National
Prize Bonds |
|
|
2,547 |
2,440 |
|
|
|
---------- |
---------- |
|
|
|
10,694,159 |
11,153,275 |
|
| Less:
Provision for diminution in the value |
|
|
|
| of
investments |
|
|
15,816 |
2,658 |
|
|
|
---------- |
---------- |
|
|
|
10,678,343 |
11,150,617 |
|
|
|
========== |
========== |
|
|
|
|
|
|
| Market
value of quoted investments Rs: 444.333 million (1997: Rs 469.674 million)
and |
|
| book
value of unquoted investments Rs: 10,287.868 million (1997: 10,727,596
million). |
|
|
|
|
|
|
|
| 6.1
Classification between Investment and Dealing Securities |
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
Rupees in
'000 |
|
|
|
|
| INVESTMENT
SECURITIES |
|
|
|
|
| Federal
Investment Bonds |
|
1,051,228 |
1,001,745 |
|
| Short
Term Federal Bonds |
|
- |
7,553,980 |
|
| Treasury
Bills |
|
6,252,562 |
- |
|
| Federal
and Provincial Loans |
|
332,902 |
352,290 |
|
| Investment
in Subsidiary and |
|
|
| Associated
Undertaking |
|
|
86,500 |
86,500 |
|
| Fully
paid-up Ordinary Shares |
|
|
| of
Unlisted Companies |
|
|
2,031 |
2,031 |
|
| Other
Investments - NIT Units (Net of provision) |
15,573 |
28,731 |
|
|
- National Prize Bonds |
|
2,547 |
2,440 |
|
|
|
|
---------- |
---------- |
|
|
|
7,743,343 |
9,027,717 |
|
|
|
========== |
========== |
|
|
|
|
| DEALING
SECURITIES |
|
|
|
|
| Federal
Investment Bonds |
|
|
- |
(516,200) |
|
| Treasury
Bills |
|
|
|
2,935,000 |
- |
|
| Short
Term Federal Bonds |
|
|
- |
2,639,100 |
|
|
|
|
|
---------- |
---------- |
|
|
|
2,935,000 |
2,122,900 |
|
|
|
---------- |
---------- |
|
|
|
10,678,343 |
11,150,617 |
|
|
|
========== |
========== |
|
|
|
|
|
|
| 6.2
Securities having a book value of Rs 274.8 million (1997: Rs 282.417 million) |
|
| have
been deposited with the State Bank of Pakistan as security against tem- |
|
| porary
increase in authorised foreign currency dealer's exposure limit. |
|
|
|
|
| 6.3
Investment securities include securities having book value of Rs 39.588
million |
|
| (1997:
Rs 39.588 million) deposited with the State Bank of Pakistan as security |
|
| for
demand loan and discounting facilities, including amount earmarked against |
|
| the
facilities allocated prior to 31 December, 1971, to branches now in |
|
| Bangladesh. |
|
|
|
|
|
|
| 6.4
At 31 December 1998 the Bank had entered into commitments to acquire |
|
| Government
securities valuing Rs 1,875 million (1997: Rs 2,202.1 million) |
|
| under
sale and repurchasee (Repo) agreements and sell Governments securi- |
|
| ties
valuing Rs 4,810 million (1997: Rs 4,325 million) under purchase and |
|
| resale
(Reverse Repo) Agreements. |
|
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
Rupees in
'000 |
|
| 7. ADVANCES |
|
|
|
|
| Loans,
cash credits, overdrafts etc |
|
|
|
|
|
| In Pakistan |
|
|
15,525,710 |
14,379,709 |
|
| Outside
Pakistan |
|
- |
- |
|
|
|
---------- |
---------- |
|
|
|
|
15,525,710 |
14,379,709 |
|
|
|
========== |
========== |
|
| Bills discounted and purchased |
|
|
|
| (excluding
Government Treasury Bills) |
|
|
| Payable
in Pakistan |
|
|
794,057 |
847,914 |
|
| Payable
outside Pakistan |
|
158,835 |
253,737 |
