| ANZ Grindlays Bank Limited |
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
| 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 1999 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 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, 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 21.3, give a true and fair view of the state of the branches' affairs
as at 31 |
|
| December
1999 and their true balance of the profit before incorporating head office
expenses and |
|
| their
cash flow 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: |
|
|
Taseer Hadi Khalid &
Co. |
|
| Date:
14 March, 2000 |
|
Chartered Accountants |
|
|
|
|
|
|
|
|
|
|
|
| BALANCE
SHEET AS AT |
|
| DECEMBER 31, 1999 |
|
|
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Rupees in
'000 |
|
|
|
|
|
|
| ASSETS |
|
|
| Cash |
|
4 |
6,088,201 |
5,291,458 |
|
| Balances
with other banks |
|
5 |
1,029,469 |
87,812 |
|
| Money
at call and short notice |
6 |
196,000 |
-- |
|
| Investments |
|
7 |
3,778,581 |
10,675,796 |
|
| Advances
- Net of Provision |
8 |
18,135,804 |
15,568,271 |
|
| Opening
fixed assets |
|
9 |
109,023 |
83,092 |
|
| Capital
work-in-progress |
|
10 |
67,574 |
120,881 |
|
| Other assets |
|
11 |
2,179,281 |
1,917,856 |
|
|
----------------- |
----------------- |
|
|
|
31,583,933 |
33,745,166 |
|
| LIABILITIES |
|
| Deposits
and other accounts |
12 |
22,074,053 |
28,495,209 |
|
| Borrowings
from other banks, agents, etc |
13 |
5,341,518 |
1,354,899 |
|
| Bills payable |
|
14 |
200,874 |
211,488 |
|
| other
liabilities |
|
15 |
2,745,001 |
2,552,908 |
|
|
|
|
----------------- |
----------------- |
|
|
|
|
30,361,446 |
32,614,504 |
|
|
|
|
----------------- |
----------------- |
|
| NET
ASSETS |
|
|
1,222,487 |
1,130,662 |
|
|
|
|
========= |
========= |
|
| REPRESENTED
BY |
|
| head
Office capital account |
|
16 |
|
| Capital
reserve |
|
17 |
15,018 |
15,018 |
|
| Unremitted
profit |
|
|
1,198,013 |
1,106,188 |
|
|
|
|
|
----------------- |
----------------- |
|
|
|
1,213,031 |
1,121,206 |
|
| Surplus
on revaluation of fixed assets |
|
9,456 |
9,456 |
|
|
|
|
|
----------------- |
----------------- |
|
|
|
1,222,487 |
1,130,662 |
|
|
|
========= |
========= |
|
| MEMORANDUM
ITEMS |
|
|
|
| Bills
for collection |
|
18 |
392,525 |
264,649 |
|
|
|
|
========= |
========= |
|
| Acceptances,
endorsements and other obligations |
3,981,749 |
3,687,381 |
|
|
|
|
========= |
========= |
|
| Contingent
liabilities and commitments |
19 |
|
|
| 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, 1999 |
|
|
|
|
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
|
Rupees in
'000 |
|
|
|
|
|
|
|
|
| Mark-up/interest
and discount and/or return earned |
3,861,437 |
4,974,817 |
|
| Cost/Return
on deposits, borrowings etc. |
|
2,626,787 |
3,427,958 |
|
|
|
----------------- |
----------------- |
|
|
1,234,650 |
1,546,859 |
|
| Fees,
commission & brokerage |
|
528,075 |
517,103 |
|
| Dividend
income |
|
22,506 |
20,823 |
|
| Other
operating income |
|
20 |
173,847 |
241,315 |
|
|
|
|
|
----------------- |
----------------- |
|
|
|
1,959,078 |
2,326,100 |
|
| Operating
expenses |
|
| Administrative
expenses |
|
21 |
833,172 |
808,517 |
|
| Provision
for non-performing advances -Net |
8.2 |
103,149 |
156,454 |
|
| Provision
for diminution in value of investments |
-- |
13,158 |
|
| Other
provisions |
|
|
1,493 |
4,221 |
|
|
----------------- |
----------------- |
|
|
|
937,814 |
982,350 |
|
|
|
----------------- |
----------------- |
|
|
|
1,021,264 |
1,343,750 |
|
| Other income |
|
|
22 |
9,701 |
16,027 |
|
| Other
charges |
|
23 |
18,272 |
2,190 |
|
|
|
|
----------------- |
----------------- |
|
| Net
operational earnings |
|
1,012,693 |
1,357,587 |
|
| Restructuring
cost |
|
24 |
125,700 |
-- |
|
|
|
|
|
----------------- |
----------------- |
|
| Profit
before taxation |
|
886,993 |
1,357,587 |
|
| Taxation |
|
| Current |
|
|
25 |
512,846 |
759,954 |
|
| Prior |
|
-- |
60,546 |
|
|
----------------- |
----------------- |
|
|
512,846 |
820,500 |
|
|
----------------- |
----------------- |
|
| Profit
after taxation |
|
|
374,147 |
537,087 |
|
| Unremitted
profit brought forward |
|
1,106,188 |
919,101 |
|
|
----------------- |
----------------- |
|
|
1,480,335 |
1,456,188 |
|
| Remittance
of profit to head office |
|
282,322 |
350,000 |
|
|
----------------- |
----------------- |
|
| Unremitted
profit |
|
1,198,013 |
1,106,188 |
|
|
========= |
========= |
|
|
| 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, 1999 |
|
|
|
1999 |
1998 |
|
|
|
Rupees in '000 |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Profit
before taxation |
|
886,993 |
1,357,587 |
|
| Adjustments: |
|
| Depreciation |
|
13,128 |
10,913 |
|
| Provision
for diminution in the value of investments |
-- |
13,158 |
|
| Provision
against non-performing advances - Net |
103,149 |
156,454 |
|
| Net
profit on sale of fixed assets |
|
(5,521) |
(7,943) |
|
| Dividend
income |
|
(22,506) |
(20,823) |
|
|
|
---------------- |
---------------- |
|
|
|
975,243 |
1,509,346 |
|
| (Increase)/Decrease
in operating assets |
|
| Advances |
|
(2,670,681) |
(968,392) |
|
| Other assets |
|
|
|
14,344 |
581,058 |
|
|
|
|
|
---------------- |
---------------- |
|
|
|
(2,656,337) |
' (387,336) |
|
| Increase/(Decrease)
in operating liabilities |
|
| Deposits
and other accounts |
|
(6,421,156) |
(2,013,901) |
|
| Bills payable |
|
|
(10,615) |
(314,601) |
|
|
| Other
liabilities |
|
|
(54,733) |
78,145 |
|
|
|
|
|
---------------- |
---------------- |
|
|
|
(6,486,504) |
(2,250,357) |
|
|
|
---------------- |
---------------- |
|
| Cash
flow before tax |
|
|
(8,167,598) |
(1,128,347) |
|
| Income
tax paid |
|
|
(788,615) |
(1,192,918) |
|
|
|
---------------- |
---------------- |
|
| Net
cash flow from operating activities |
|
(8,956,213) |
(2,321,265) |
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Sale
proceeds from investment securities - Net |
6,897,215 |
461,662 |
|
| Dividend
income |
|
22,506 |
20,823 |
|
| Capital
expenditure incurred |
|
11,366 |
(55,224) |
|
| Sale
proceeds of fixed assets |
|
8,403 |
8,346 |
|
|
|
---------------- |
---------------- |
|
| Net
cash flow from investing activities |
|
6,939,490 |
435,607 |
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Borrowings
from banks, agents, etc. |
|
3,986,619 |
860,943 |
|
| Increase
in capital on account of revaluation |
246,826 |
81,595 |
|
| Remittance
to head office |
|
|
(282,322) |
(350,000) |
|
|
|
|
|
---------------- |
---------------- |
|
| Net
cash flow from financing activities |
|
3,951,123 |
592,538 |
|
|
|
|
|
|
|
| Increase/(Decrease)
in cash and cash equivalent |
1,934,400 |
(1,293,120) |
|
| Cash
and cash equivalents at beginning of the year |
5,379,270 |
6,672,390 |
|
|
|
---------------- |
---------------- |
|
| Cash
and cash equivalents at end of the year |
7,313,670 |
5,379,270 |
|
|
|
========= |
========= |
|
| CASH
AND CASH EQUIVALENTS |
|
| Cash |
|
|
|
6,088,201 |
5,291,458 |
|
| Balances
with other banks |
|
|
1,029,469 |
87,812 |
|
| Money
at call and short notice |
|
196,000 |
-- |
|
|
|
|
|
---------------- |
---------------- |
|
|
|
7,313,670 |
5,379,270 |
|
|
========= |
========= |
|
|
|
| Azhar
Hamid |
|
Asif S. Sindhu |
|
| Country
Head, Pakistan |
|
Head of Finance, Pakistan |
|
|
|
|
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR |
|
| ENDED
DECEMBER 31, 1999 |
|
|
|
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| ANZ
Grindlays Bank Limited is a foreign banking company registered in the State
of Victoria, |
|
| Australia.
The ultimate holding company of the bank is Australia and New Zealand Banking
Group |
|
| Limited.
The bank operates through a network of fifteen branches in Pakistan which are
engaged in |
|
| banking
services as defined in the Banking Companies Ordinance, 1962. |
|
|
| 2.
BASIS OF PRESENTATION |
|
| In
accordance with the directives of the Federal Government regarding the
shifting of the banking |
|
| system
to the Islamic modes, the State Bank of Pakistan has issued various circulars
from time to |
|
| time.
One permissible form of trade-related mode of financing companies of purchase
of goods by |
|
| the
bank from their customers and resale to them at appropriate mark-up in price
on deferred payment |
|
| basis.
The purchase and resale arising under these arrangements are not reflected in
these |
|
| financial
statements 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 the historical cost convention as modified
by the |
|
| revaluation
of certain premises. |
|
|
|
|
| 3.2
Staff retirement benefits |
|
|
|
| 3.2.1
Defined contribution plan |
|
| The
bank operates an approved funded provident fund scheme for all its permanent
employees, |
|
| except
expatriates, which is administered by the board of trustees. Equal monthly
contributions are |
|
| made,
both by the bank and its employees, to the fund at the rate of 10 percent of
basic salaries of |
|
| employees. |
|
|
| 3.2.2
Defined benefit plans |
|
| The
bank operates approved funded pension and gratuity schemes covering all its
permanent |
|
| employees,
except expatriates, which are administered by the boards of trustees. The
most recent |
|
| actuarial
valuation was carded out on 01 January 1998 using "Attained Age Normal
Actuarial Cost |
|
| Method".
At latest actuarial valuation date, the aggregate positions of the fair value
of funds' assets, |
|
| the
book provisions and the actuarial liabilities of the pension funds and
gratuity were Rs. 173.176 |
|
| million,
Rs. 5.073 million and Rs. 261.489 million respectively. |
|
|
| As
per policy, the bank has arranged to obtain approval for special contribution
from the |
|
| Commissioner
of Income Tax to the extent to which payments from the funds fall short of
available |
|
| resources;
as granted by the tax authorities in prior years. |
|
|
| Main
valuation assumptions used for actuarial valuation were as under: |
|
| · Discount rate is 12 percent per annum. |
|
| · Expected rate of increase in pension is 6
percent per annum. |
|
| · Expected rate of increase in management
staff salaries is 11.8 percent per annum. |
|
| · Expected rate of increase in workmen
staff salaries is 14 percent per annum. |
|
| · Expected rate of return on investment is
12 percent per annum. |
|
|
|
|
| 3.3 Taxation |
|
|
|
| Current
tax is the expected tax payable on the taxable income for the year using tax
rates enacted |
|
| at
the balance sheet date and any adjustment to tax payable in respect of
previous years. |
|
| The
bank accounts for deferred taxation using the liability method on all
material timing differences. |
|
| However,
deferred tax debit balance, if any, is not recognised in the financial
statements. |
|
|
|
|
| 3.4 Advances |
|
| Advances
are stated net of specific and general provisions. Specific provision is made
for non-per- |
|
| forming
advances to reduce book value of such advances to their expected realizable
value in |
|
| compliance
with the Prudential Regulations of the State Bank of Pakistan and the bank's
own criteria. |
|
| Advances
are written-off where there is no realistic prospect of recovery. |
|
|
| 3.5
Investments |
|
| Securities
held for yield or capital growth purposes (investment securities) are carded
at cost less |
|
| provision
for any permanent diminution in value. The difference between the face value
and purchase |
|
| price
is amortised over the remaining life of security. Securities held for trading
purposes |
|
| (dealing
securities) are stated at market value, with resultant gain or loss
recognised in the profit and |
|
| loss account. |
|
|
| 3.6
Operating fixed assets and depreciation |
|
| These
are stated at cost or revalued amount less accumulated depreciation.
Depreciation is |
|
| charged
using straight-line 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 disposal is taken to income currently. |
|
|
| 3.7
Foreign currencies |
|
| Foreign
currency transactions are translated in rupees at exchange rates prevailing
on the date of |
|
| transaction.
Assets and liabilities in foreign currencies are revalued in rupees at the
exchange rates |
|
| prevailing
at the balance sheet date, except foreign currency deposits for which forward
cover is |
|
| taken
from State Bank of Pakistan. These deposits are translated at their
respective cover rates. |
|
| Outstanding
forward foreign exchange contracts are valued at the rates applicable to
their respective |
|
| maturities.
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 |
|
| and
the bank's own criteria. Dividend income is accounted for in the accounts
when the right to |
|
| receive
the dividend is established. |
|
|
|
|
|
1999 |
1998 |
|
|
Rupees in '000 |
|
| 4. CASH |
|
|
| In hand |
|
|
| Local
currency |
|
4.1 |
548,884 |
300,322 |
|
| Foreign
currencies |
|
|
169,898 |
151,594 |
|
| With
State Bank of Pakistan in |
|
| Special
deposit account |
|
| Foreign
currency capital account |
16 |
2,171,626 |
1,924,800 |
|
| Deposits
against swap funds |
|
1,899,308 |
1,553,554 |
|
| Local
currency current account |
|
1,280,530 |
1,353,211 |
|
| With
National Bank of Pakistan in |
|
|
|
|
| Local
currency current account |
|
17,955 |
7,977 |
|
|
|
|
---------------- |
---------------- |
|
|
|
|
6,088,201 |
5,291,458 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 4.1
This includes National Prize Bonds of Rs. 14.721 million (1998: Rs. 2.547
million). |
|
|
|
|
|
|
| 5.
BALANCES WITH OTHER BANKS |
|
|
|
| These
represent balances held outside Pakistan in current accounts. |
|
|
|
|
|
|
|
| 6.
MONEY AT CALL AND SHORT NOTICE |
|
|
| This
carries mark-up at the rate of 10.50 percent per annum payable on monthly
basis within |
|
| the
maturity date of 31 January 2000. |
|
|
|
|
|
|
1999 |
1998 |
|
|
Rupees in '000 |
|
|
| 7.
INVESTMENTS |
|
| Investment
Securities |
|
|
|
| Federal
Investments Bonds |
|
|
1,557,100 |
1,051,228 |
|
|
| Federal
and Provincial Governments loans |
286,513 |
332,902 |
|
|
| Government
Treasury Bills |
|
|
1,830,864 |
9,187,562 |
|
|
| Investments
in subsidiary company and associated undertaking |
86,500 |
86,500 |
|
|
| Fully
paid-up ordinary shares of unlisted companies |
2,031 |
2,031 |
|
|
|
| National
Investment Trust Units |
|
31,389 |
31,389 |
|
|
|
---------------- |
---------------- |
|
|
|
3,794,397 |
10,691,612 |
|
|
| Provision
for diminution in the value of investments |
(15,816) |
(15,816) |
|
|
|
---------------- |
---------------- |
|
|
|
3,778,581 |
10,675,796 |
|
|
|
========== |
========== |
|
| Market
value of quoted investments |
|
3,505,119 |
10,352,769 |
|
|
|
|
========== |
========== |
|
| Book
value of unquoted investments |
|
333,043 |
379,432 |
|
|
|
========== |
========== |
|
|
|
| 7.1
Investments include securities having a book value of Rs 16.6 million
(1998:39.588 million) pledged |
|
| with
State Bank of Pakistan as security to facilitate T.T. discounting facility to
Pakistan branches of |
|
| the
bank, (including an amount earmarked against the facilities allocated prior
to 31 December 1999 |
|
| to
branches now in Bangladesh). |
|
|
|
|
|
|
| 7.2
Investments also include securities having a book value of Rs. 274.8 million
(1998: Rs. 274.8 million) |
|
| pledged
with State Bank of Pakistan as security to facilitate same day Rupee credit
against surrender |
|
| of
foreign currency deposits. |
|
|
|
|
|
|
| 7.3
At 31 December 1999, securities held under resale commitments (reserve repo)
with book value of |
|
| Rs.
912 million (1998: Rs. 4,571 million) were included in investments, while
securities sold under |
|
| repurchase
commitments (repo) with book value of Rs. 1,745 million (1998: 1,793 million)
were |
|
| excluded
from investments. |
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees in '000 |
|
|
|
| 8.
ADVANCES - Net of provision |
|
| Loans,
cash credits, overdrafts, etc. |
|
|
| In Pakistan |
|
|
17,861,646 |
15,125,253 |
|
| Bills
discounted and purchased |
|
|
|
|
| Payable
in Pakistan |
|
|
367,938 |
794,056 |
|
|
| Payable
outside Pakistan |
|
|
429,921 |
158,837 |
|
|
|
|
---------------- |
---------------- |
|
|
|
|
18,659,505 |
16,078,146 |
|
|
| General
and specific provision for |
|
|
|
| non-performing
advances |
|
8.2 |
(523,701) |
(509,875) |
|
|
---------------- |
---------------- |
|
|
|
18,135,804 |
15,568,271 |
|
|
|
========== |
========== |
|
|
|
|
| Advances
include Rs. 763.791 million (1998: Rs. 747.14 million) which have been placed
on non- |
|
| performing
status. |
|
|
|
|
|
|
| 8.1
Particulars of advances |
|
|
|
|
| In
local currency |
|
17,705,883 |
15,409,434 |
|
|
| In
foreign currencies |
|
429,921 |
158,837 |
|
|
|
---------------- |
---------------- |
|
|
|
|
18,135,804 |
15,568,271 |
|
|
|
========== |
========== |
|
|
|
|
| Debts
considered good in respect of which |
|
|
|
| the
bank is fully secured |
|
18,135,804 |
15,568,271 |
|
|
|
|
|
|
| Debts
considered good for which the bank holds no |
|
|
|
| security
other than the debtors' personal security |
-- |
-- |
|
|
|
|
|
|
| Debts
considered good secured by the personal |
|
|
|
| liabilities
of one or more parties in addition to the |
|
|
|
| personal
security of the debtors |
|
-- |
-- |
|
|
|
|
|
| Debts
considered doubtful or bad not provided for |
-- |
-- |
|
