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ABN AMRO Bank N.V.
Annual Report 1999
(Incorporated in The Netherlands with limited liability)
Pakistan branches
AUDITORS' REPORT TO THE DIRECTORS
We have audited the annexed balance sheet of ABN AMRO BANK N.V. -- PAKISTAN BRANCHES as at
December 31, 1999 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 of ABN AMRO, BANK N.V. -- 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 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 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, 1999 and its true balance of the profit 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 that Ordinance.
Karachi Ford, Rhodes, Robson, Morrow
February 22, 2000 Chartered Accountants.
BALANCE SHEET AS AT
DECEMBER 31, 1999
1999 1998
Note                 Rupees in '000
ASSETS
CASH 4 4,194,238 3,570,965
BALANCES WITH OTHER BANKS 5 16,198 15,021
INVESTMENTS 6 3,020,077 3,812,457
ADVANCES -- NET OF PROVISIONS 7 17,023,952 16,296,278
OPERATING FIXED ASSETS 8 585,141 392,106
CAPITAL WORK-IN-PROGRESS (Buildings) 247,836 201,280
OTHER ASSETS 9 2,821,378 1,227,979
--------------------- ---------------------
27,908,820 25,516,086
LIABILITIES
DEPOSITS AND OTHER ACCOUNTS 10 19,936,750 21,031,121
BORROWINGS FROM OTHER BANKS, AGENTS ETC. 11 4,788,001 1,919,550
BILLS PAYABLE 216,768 317,260
OTHER LIABILITIES 12 2,369,915 1,673,442
--------------------- ---------------------
27,311,434 24,941,373
--------------------- ---------------------
NET ASSETS 597,386 574,713
============ ============
REPRESENTED BY:
HEAD OFFICE CAPITAL ACCOUNT 13
UNREMITTED PROFIT 597,386 574,713
--------------------- ---------------------
597,386 574,713
============ ============
MEMORANDUM ITEMS:
BILLS FOR COLLECTION 14 1,672,025 1,858,452
ACCEPTANCES, ENDORSEMENTS AND OTHER
OBLIGATIONS 5,520,241 6,085,720
CONTINGENT LIABILITIES AND COMMITMENTS 15
The annexed notes form an integral part of these accounts.
MUHAMMAD AURANGZEB YAMEEN KERAI
COUNTRY MANAGER COUNTRY FINANCIAL OFFICER
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED DECEMBER 31, 1999
1999 1998
Note                Rupees in '000
Mark-up/interest and discount and/or return earned 3,250,710 3,297,062
Less: Cost/Return on deposits, borrowings etc. 2,587,270 2,840,234
663,440 456,828
Fees, commission and brokerage 370,069 292,636
Other operating income 16 268,330 290,179
--------------------- ---------------------
638,399 582,815
--------------------- ---------------------
1,301,839 1,039,643
Operating expenses:
Administrative expenses 17 628,180 509,947
Provision against non-performing advances 7.2 (25,000) (10,322)
--------------------- ---------------------
(603,180) (499,625)
--------------------- ---------------------
698,659 540,018
Other income 18 5,410 1,510
--------------------- ---------------------
Profit before taxation 704,069 541,528
Taxation -current 19 340,000 283,000
-prior 76,000 42,000
-deferred (6,300)' (8,600)
--------------------- ---------------------
409,700 316,400
--------------------- ---------------------
Profit after taxation 294,369 225,128
Unremitted profit brought forward 574,713 349,585
--------------------- ---------------------
869,082 574,713
Remittance to Head Office (271,696) --
--------------------- ---------------------
Unremitted profit carried forward 597,386 574,713
============ ============
The annexed notes form an integral part of these accounts.
MUHAMMAD AURANGZEB YAMEEN KERAI
COUNTRY MANAGER COUNTRY FINANCIAL OFFICER
CASH FLOW STATEMENT FOR THE
YEAR ENDED DECEMBER  31, 1999
1999 1998
              Rupees in '000
CASH FLOW FROM OPERATING ACTIVITIES
Profit before taxation 704,069 541,528
Adjustment for non-cash items:
Depreciation 95,258 62,069
Provision against non-performing advances (25,000) (10,322)
Net profit on sale of fixed assets (2,381) (485)
--------------------- ---------------------
67,877 51,262
--------------------- ---------------------
771,946 592,790
(Increase)/decrease in operating assets:
Investments 792,380 837,043
Advances (702,674) ( 1,323,519)
Other assets (excluding tax) (1,604,728) 67,972
--------------------- ---------------------
(1,515,022) (418,504)
Increase/(decrease) in operating liabilities:
Deposits and other accounts (1,094,371) 771,758
Bills payable (100,492) (445,809)
Other liabilities 696,473 (93,250)
--------------------- ---------------------
(498,390) 232,699
--------------------- ---------------------
Cash flow before tax (1,241,466) 406,985
Income-tax paid (398,371) (346,161)
--------------------- ---------------------
Net cash (outflow)/inflow from operating activities (1,639,837) 60,824
CASH FLOW FROM INVESTING ACTIVITIES
Fixed capital expenditure (340,599) (264,742)
Sale proceeds of fixed assets 8,131 2,298
--------------------- ---------------------
Net cash used in investing activities (332,468) (262,444)
CASH FLOW FROM FINANCING ACTIVITIES
Borrowings from other banks, agents etc. 2,868,451 556,018
Remittance to Head Office (271,696) --
--------------------- ---------------------
Net cash inflow from financing activities 2,596,755 556,018
--------------------- ---------------------
Increase in cash and cash equivalents for the year 624,450 354,398
Cash and cash equivalents at the beginning of the year 3,585,986 3,231,588
--------------------- ---------------------
Cash and cash equivalents at the end of the year 4,210,436 3,585,986
============ ============
Cash and cash equivalents
Cash 4,194,238 3,570,965
Balance with the banks 16,198 15,021
4,210,436 3,585,986
============ ============
MUHAMMAD AURANGZEB YAMEEN KERAI
COUNTRY MANAGER COUNTRY FINANCIAL OFFICER
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 1999
1. STATUS AND NATURE OF BUSINESS
ABN AMRO Bank N.V. was incorporated in Netherlands in 1825. Pakistan operations commenced in
1948 and are currently being conducted in Pakistan through five branches in Karachi, Lahore and
Islamabad. It is engaged in banking business permitted under the Banking Companies Ordinance, 1962.
2. BASIS OF PRESENTATION
These financial statements have been prepared in accordance with the requirements of the State Bank of
Pakistan under the powers conferred upon it under the Banking Companies Ordinance, 1962.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1 Accounting convention
  These financial statements are prepared on the historical cost convention.
3.2 Staff Retirement Benefits
The bank operates an approved gratuity fund scheme for all its permanent employees who have
completed 5 years' service or more. Monthly contribution is made by the bank as per actuarial advice.
The bank also operates an approved provident fund scheme for all its permanent employees. Equal
monthly contributions are made, both by the bank and the employees to the fund at the rate of 10% of
basic salary.
3.3 Taxation
Provision for taxation is based on taxable income at the current rates of taxation after taking into
account tax credits available, if any.
Deferred taxation is computed and recorded, using the liability method, on all materiel timing differences
except those which are considered not likely to reverse in the foreseeable future.
3.4 Advances
Advances and mark-up are stated net of provisions for possible losses and reserved mark-up, respectively.
Provisions for advances (and relevant mark-up) are made against special non-performing advances, in
compliance with the requirements of the Prudential Regulations of the State Bank of Pakistan.
3.5 Investments
Investments are carded at cost adjusted for amortisation of premium or discount, where applicable.
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
Fixed assets are stated at cost less accumulated depreciation. Depreciation is charged over the estimated
useful lives of the related assets at the rates specified in note 8 on straight line method except
for buildings, on which depreciation is calculated using the reducing balance method. Commencing
from the current year furniture and fixtures, which were depreciated at the rate of 10% on straight line
method in the previous years, are being depreciated at the rate of 20% on straight line method. The
impact of this change on the financial statement is immaterial.
3.7 Revenue recognition
Interest/Mark-up income is recognised on an accrual basis except if the recovery is considered doubtful,
recognition is deferred until it is received. Commission and fees are generally recognised as
income at the time of affecting the transaction to which they relate.
3.8 Foreign currencies
Assets and liabilities in foreign currencies have been translated into rupees at the rates of exchange
approximating to those ruling at the balance sheet date except those in respect of which forward
exchange cover is available. Exchange gains and losses are included in income currently.
1999 1998
                Rupees in '000
4. CASH
In hand:
- Local currency 289,160 109,739
- Foreign currency 199,935 95,111
--------------------- ---------------------
489,095 204,850
With State Bank of Pakistan:
Special deposit account 1,141,777 1,150,000
Capital deposited in foreign currency with SBP 1,561,155 1,383,714
Current account 1,001,980 832,061
--------------------- ---------------------
3,704,912 3,365,775
With National Bank of Pakistan in current account 231 340
--------------------- ---------------------
4,194,238 3,570,965
========== ==========
5. BALANCES WITH OTHER BANKS
In Pakistan:
- current accounts 15,520 10,354
Outside Pakistan:
- current accounts 678 4,667
--------------------- ---------------------
16,198 15,021
========== ==========
6. INVESTMENTS
Investment securities -- unquoted:
Federal and Provincial government securities:
Treasury Bills 2,267,937 3,325,724
Federal Investment Bonds - note 6.1 530,473 278,400
--------------------- ---------------------
2,798,410 3,604,124
Term Finance Certificates 76,667 208,333
Certificates of Investment - note 6.2 145,000 --
--------------------- ---------------------
3,020,077 3,812,457
========== ==========
6.1 . Includes Federal Investment Bonds of Rs. 100 million which are under lien with the State Bank of
Pakistan.
6.2 Includes certificate of investment for Rs. 45 million which is under lien with Pakistan Kuwait 
Investment Company (Pvt) Limited.
Book value of unquoted investments Rs. 3.020.08 (1998: Rs 3,812.46) million.
1999 1998
                  Rupees in '000
7. ADVANCES
Loans, cash credits, overdrafts etc.
In Pakistan 15,919,786 15,294,875
Bills discounted and purchased:
Payable in Pakistan 831,864 925,180
Payable outside Pakistan 403,375 232,296
--------------------- ---------------------
1,235,239 1,157,476
--------------------- ---------------------
17,155,025 16,452,351
Provisions for non-performing advances w note 7.2 (131,073) (156,073)
--------------------- ---------------------
17,023,952 16,296,278
========== ==========
Advances include Rs 198.009, (1998: Rs. 244.658) million which have been placed on non-performing status.
7.1 Particulars of advances
In local currency 16,620,577 16,063,982
In foreign currencies 403,375 232,296
--------------------- ---------------------
17,023,952 16,296,278
========== ==========
Debts considered good in respect of which the bank
is fully secured 13,880,568 13,347,538
Debts considered good for which the bank holds no
other security than the debtors' personal security 7,414 6,690
Debts considered good secured by the personal
liabilities of one or more parties in addition to the
personal security of the debtors 3,135,970 2,942,050
Debts considered doubtful or bad not provided for -- --
--------------------- ---------------------
17,023,952 16,296,278
========== ==========
Maximum total amount of
advance including temporary
Balance Outstanding  advances granted during the
December 31,1999 year
               Rupees in '000
Debts due by directors or executives of the
bank or any of them either severally or
jointly with any other persons 182,998 182,998
Debts due by companies or firms in which
the directors of the bank are interested as
directors, partners or in the case of private
companies, as members -- --
Debts due by subsidiary companies,
controlled firms, managed modarabas and
other associated undertakings -- --
7.2 Particulars of provisions against non-performing advances
                    Total
Specific 1999 1998
                     Rupees in '000
Opening balance 156,073 156,073 166,395
Charge for the year -- -- --
Reversals (25,000) (25,000) (10,322)
-------------------- -------------------- --------------------
Closing balance 131,073 131,073 156,073
========== ========== ==========
Provisions against:
Advances to banks -- -- --
Advances to others 131,073 131,073 156,073
-------------------- -------------------- --------------------
131,073 131,073 156,073
========== ========== ==========
7.3 In terms of sub-section (3) of section of 33-A of the Banking Companies Ordinance, 1962, the statement
in respect of written off loans or any other financial relief of five hundred thousand rupees of above
allowed to a person(s) during the year ended 31 December, 1999 is given in Annexure -I
8. OPERATING FIXED ASSETS
               COST DEPRECIATION
At January Additions/ At December At January Charge for At December Book Value Rate of
1, 1999 (deletions) 31, 1999 1, 1999 the year 31, 1999 At December depreciation
          Rupees in '000 31, 1999 %
Land-free hold 138,608 -- 138,608 -- -- -- 138,608 --
Buildings on freehold land 34,409 190,000 224,409 3,774 4,328 8,102 216,307 2.5
Furniture, fixtures and
office equipment
(including computer 277,976 77,382 345,472 103,663 60,489 155,512 189,960 20 & 33.33
hardware and software) (9,886) (8,640)
Vehicles 50,635 24,783 60,545 25,533 11,215 26,379 34,166 20
(14,873) (10,369)
Alteration cost of rented 61,934 1,878 63,812 38,486 19,226 57,712 6,100 *
premises
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
563,562 294,043 832,846 171,456 95,258 247,705 585,141
(24,759) (19,009)
========== ========== ========== ========== ========== ========== ==========
1998 423,311 143,572 563,562 110,895 62,069 171,456 392,106
(3,321) (1,508)
========== ========== ========== ========== ========== ========== ==========
* Amortized on the basis of lease periods.
8.1 Details of disposal of certain fixed assets.
Book Sale Mode of
Assets Cost Value price disposal Particulars of purchasers