PK Ar Final Approved

Annual Report 2017
Driving investment, trade

and the creation of wealth
across Asia, Africa and the Middle East.
Standard Chartered Bank (Pakistan) Ltd.
Points of interest
Standard Chartered is proud to be operating in Pakistan as the largest and oldest international
bank since 1863.
2013 marked Standard Chartereds 150th year of presence in the country.

Goal is Standard Chartereds leading education programme that provides financial literacy, life
skills and employability training to low-income adolescent girls across its footprint. Since the
launch of the programme in April 2016, the Bank has reached a total of 2447 beneficiaries in
Pakistan.
As a result of our Seeing is Believing projects in Pakistan, we are attributed to decreasing

avoidable blindness by 20 per cent across the country. We are the only corporate partner of the
Government and play a pivotal role in the National Committee of Eye Health
A historic milestone was achieved in 2017 whereby the Banks total assets crossed over PKR
500 billion.
The largest international Bank in Pakistan with 93 branches in 11 cities and a workforce of over
3000 employees.
Standard Chartered Pakistan is the first international bank to get an islamic Banking license and
to open the first Islamic Banking branch in Pakistan.
Strong recognition by our stakeholders

Asia Money Awards - 2017
· Best International Bank in Pakistan
Global Finance Awards 2016 - 2017

· Best Digital Islamic Bank Award for 2016
· Pakistan - Best Emerging Market Bank In Asia Pacific 2015 and 2016
· Best Consumer Digital Bank Award
The Asset Triple A Treasury, Trade & Risk Management Awards 2016
· Best Treasury & Cash Management Bank
· Best Working Capital & Trade Finance Bank
· Best Structured Trade Finance Bank
· Best e-Solutions and Technology Partner Bank
Finance Asia Award for 2015

· Best Foreign Bank in Pakistan award 2015
Islamic Finance News (IFN) Awards for 2015

· Pakistan Deal of the year award for Standard Chartered Saadiqs USD 1bn Sukuk issue
Standard Chartered Bank (Pakistan) Limited - Board of Directors
Standing from left to right Parvez Ghias | Spenta Kandawalla | Ian Bryden (Chairman) | Shazad Dada (Chief Executive) | Ferdinand Pieterse | Najam Chaudhri
Pakistan Executive Committee -- 2017
Mubbashir Yasin | Naveed Qazi | Muslim Raza | Zaheer Mehdi | Khurran Khan | Majid Aziz | Azhar Aslam | Shahzad Salamullah | Asad Ali Shariff
Shezad Arif | Muhammad Umer | Adil Salahuddin | Sunil Kaushal | Bill Winters | Shazad Dada | Khadija Hashimi | Mujahid Zuberi | Arslan Nayeem
Company Information
Board of Directors Registered Office
Mr. Ian Anderson Bryden Chairperson Standard Chartered Bank (Pakistan) Limited
Mr. Shazad Dada Chief Executive Officer P.O. Box No. 5556, I.I. Chundrigar Road
Mr. Najam I. Chaudhri Karachi 74000 Pakistan
Mr. Parvez Ghias Tel: (021) 32450000
Mrs. Spenta Kandawalla Fax:(021) 32414914
Mr. Ferdinand Pieterse
Mr. Mohamed Abdelbary Main Office
Company Secretary Standard Chartered Bank (Pakistan) Limited

P.O. Box No. 5556, I.I. Chundrigar Road
Mr. Asif Iqbal Alam Karachi 74000 Pakistan
Tel: (021) 32450000
Audit Committee Fax: (021) 32414914
Mr. Najam I. Chaudhri Chairperson Website

Mr. Parvez Ghias Member
Mr. Ferdinand Pieterse Member www.sc.com/pk
Human Resource & Registrar and Share Transfer Office

Remuneration Committee
M/s Central Depository Company of Pakistan Limited
Mrs. Spenta Kandawalla Chairperson (Share Registrar Department)
Mr. Parvez Ghias Member CDC House, 99-B, Block B
Mr. Mohamed Abdelbary Member SMCHS, Main Shahra-e-Faisal
Karachi - 74400
Auditors Toll Free:0800 - CDCPL (23275)
Fax: (021) 34326053
M/s KPMG Taseer Hadi & Co Email: [email protected]
Chartered Accountants
Legal Advisors
HaidermotaBNR & Co
Barristers at Law & Corporate Counselors
1
Table of Contents
Page
Notice of Annual General Meeting 3
Chairman's Review 6
Directors` Report - English 7
Directors` Report - Urdu 11
Managements Statements on Internal Controls and Risk Management Framework 17
Report of Shariah Board - English 21
Report of Shariah Board - Urdu 24
Auditors Review Report on Statement of Compliance with the Code of Corporate Governance 28
Statement of Compliance with the Code of Corporate Governance 29
Auditors Report to the Members 33
Audited Financial Statements 34
Pattern of Shareholding 114
Form of Proxy 117
Disclosure on Complaint Handling 119
2 Standard Chartered Annual Report 2017

STANDARD CHARTERED BANK (PAKISTAN) LIMITED
NOTICE OF ANNUAL GENERAL MEETING
STANDARD CHARTERED BANK (PAKISTAN) LIMITED

Notice is hereby given that the Twelfth Annual General Meeting

of the shareholders of Standard Chartered Bank (Pakistan)
Limited ("Bank") will be held on Monday, 09 April 2018 at 12:00
PM at the ICAP House, Institute of Chartered Accountants of
Pakistan, Block 8, Clifton, Karachi, to transact the following 09
business:
A. ORDINARY BUSINESS
1. To receive, consider and adopt the Audited Accounts

of the Bank for the year ended 31 December 2017
along with the Directors' and Auditors' Reports thereon.
2. To consider the appointment of external auditors
namely M/s KPMG Taseer Hadi & Co., Chartered
Accountants (who being eligible, have offered
themselves for re-appointment), for the year 2018 and
to authorize the Chief Executive Officer and Chief
Financial Officer to negotiate and agree upon their
remuneration subject to concurrence of the Board in
the subsequent meeting.
3. To consider and approve final cash dividend @ 10% 1/- 10

(i.e. Re. 1 per share) as recommended by the Board
of Directors in addition to interim dividend of 7.5%
already paid for the year 2017.
B. SPECIAL BUSINESS
4. To approve the remuneration paid to the Independent

Non Executive Directors of the Bank for the year
ended 31 December 2017 in accordance with the
Articles of Association of the Bank and in that
connection to pass the following resolution, as ordinary
resolution, with or without modification, addition or
deletion:
"RESOLVED THAT the decision of the Board of

Directors of Standard Chartered Bank (Pakistan)
Limited to pay a fee of Rs. 6,170,000 during the
year ended 31 December 2017 to the independent
non-executive members of the Board, in terms of
their discretion under the Articles of Association
of the Bank, be and is hereby confirmed and
approved by the shareholders."
A statement of material facts under section 134 (3) of the

Companies Act, 2017 relating to the aforesaid special business
to be transacted in the said Annual General Meeting is appended
below.
C. OTHER BUSINESS
5. To transact any other business as may be placed

before the meeting with the permission of the Chair.
By Order of the Board
Asif Iqbal Alam

Company Secretary 19
Karachi: 19 March 2018
3
Notes:
1. The Share Transfer Books of the Bank will remain closed from 02 April 09
2018 to 09 April 2018 (both days inclusive). Transfer received at the Share
Registrar by the close of business on 30 March 2018 will be treated in time.
2. Only those persons whose names appear in the Register of Members of

the Bank as at 30 March 2018 will be entitled to attend / participate in /
vote at the Annual General Meeting, and be entitled to receive above stated
cash dividend.
3. A member entitled to attend and vote at the above meeting is entitled to

appoint another member as his/ her proxy to attend and vote instead of
him/ her. Proxies, in order to be valid, must be received by the Bank at its
registered office marked for the attention of the office of the Company
Secretary, not less than 48 hours before the time for holding the meeting
and must be duly stamped, signed and witnessed. A member shall not be
entitled to appoint more than one proxy.
4. Members are requested to notify change in their address, if any, to the

Bank's Share Registrars, M/s. Central Depository Company of Pakistan
Limited (Share Registrar Department), CDC House, 99-B, Block B, SMCHS,
Main Shahra-e-Faisal, Karachi - 74400. Toll Free: 0800-CDCPL (23275),
Fax: (021) 34326053, Email: [email protected].
5. A. For Attending the Meeting:

i) In case of individuals, the account holder or sub-account holder
and/or the person whose securities are in group account and
their registration details are uploaded as per the Regulations,
shall authenticate his identity by showing his original
Computerized National Identity Card (CNIC) or original passport
at the time of attending the Meeting.
ii) In case of corporate entity, the Board of Directors' resolution /

power of attorney with specimen signature of the nominee shall
be produced at the time of the Meeting.
B. For Appointing Proxies:
i) In case of individuals, the account holder or sub-account holder

and / or the person whose securities are in group account and
their registration details are uploaded as per the Regulations,
shall submit the proxy form as per the above requirement.
ii) The proxy form shall be witnessed by two persons whose

names, addresses and CNIC numbers shall be mentioned on
the form.
iii) Attested copies of CNIC or the passport of the beneficial owners

and the proxy shall be furnished with the proxy form.
iv) The proxy shall produce his original CNIC or original passport
at the time of the Meeting.
v) In case of corporate entity, the Board of Directors' resolution /

power of attorney with specimen signature shall be submitted
along with proxy form to the Bank.
6. Members may inspect the minutes of the Annual General Meeting held on
30 March 2017, in terms of Section 52 of the Companies Act, 2017, at the
Banks registered address.
7. In terms of Section 223 (7), the Annual Report for the year ended 2017
will also be placed on the Bank's website simultaneously with the dispatch
of the same to the members.
Statement under section 160(1) (b)
Item (4) to the Agenda
The meeting fee payable to the independent non-executive members of the Board
was approved by the Board of Directors in terms of Article 60 of the Articles of
Association of the Bank. This meeting fee requires approval of the shareholders
in Annual General Meeting in terms of paragraph C-2 of Regulation G-1 of
Prudential Regulations for Corporate / Commercial Banking issued by the State
Bank of Pakistan. The independent non-executive members of the Board are
interested in the payment of fees and remaining members of the Board have no
interest in the matter.

SHAREHOLDERS AWARENESS:
1. E-Dividend Requirements: In accordance with the Companies

(Distribution of Dividend) Regulation 2017, shareholders are advised
to provide their Identification Number/ Computerized National Identity
Card (CNIC) Number and International Bank Account Number (IBAN)
details, if they have not already done so, to our Share Registrar (if
shares are held in physical form) at their above referred office address
or to the respective Participants/ Broker (if shares are held through
CDS Account) latest by 30 March 2018. Failing which may result in
withholding of dividend payments of respective shareholders.
2. Tax Requirements: The dividend income on shares is liable to deduction

of withholding tax under Section 150 of the Income Tax Ordinance,
2001 and pursuant to the provisions of Finance Act, 2017, effective
from 01 July 2017; the 'Filer' and 'Non-Filer' shareholders will pay tax
on dividend income @ 15% and 20% respectively. The Filer status of
shareholders will only be determined on the basis of latest available
Active Taxpayers List (ATL) uploaded by the Federal Board of Revenue
(FBR) on their website http://www.fbr.gov.pk/.
In case a Folio/ CDS Account is jointly held, each joint-holder will be

treated separately as Filer or Non-Filer and tax will be deducted on
the gross dividend amount determined by bifurcating the shareholding
of each joint-holder on equal proportions, except where shareholding
proportion of joint-holders is pre-defined as per the records of Bank's
Share Registrar and thus tax rates will be applied in line with respective
proportions. Those shareholders, who are holding shares jointly, are
requested to update/ notify the shareholding proportions of Principal
and Joint-holder(s) in writing to our Share Registrar latest by 30 March
2018 at their above referred office address.
In this regard, all shareholders, whose names are not entered into the
ATL despite the fact that they are filers, are advised to make sure that:
(i) their names appear into the ATL before start of closed period
(referred above), otherwise they will be treated as non-filers for tax
deduction purpose, and (ii) a copy of their National Tax Number is
submitted to their relevant Participant/ CDC Investor Account Services
or to our Share Registrar (in case of physical shareholding only) at
their above referred office address.
Corporate shareholders are requested to provide of a copy of valid

Income Tax Exemption Certificate issued by the concerned authority
to your institution which is compulsorily required to claim tax exemption
in terms of clarification issued by FBR vide their letter C.No.1 (43) DG
(WHT)/ 2008-Vol.11-66417-R dated 12 May 2015 (viewable at FBR's
website at following link:
http://www.fbr.gov.pk/ShowDocument.aspx?type=Doc&Actionid=4141).
In case you are subject to any special tax rate, please also provide
a copy of relevant certificate issued by the concerned authority.
Relevant copies should reach our Share Registrar at their above
mentioned office address.
5
CHAIRMAN'S REVIEW - December 31, 2017
It is both an honour and a privilege to deliver my first review, as Chairman of the Board of Directors ('the Board') of
Standard Chartered Bank (Pakistan) Limited ('the Bank'), in line with requirements of Section 192 of the Companies
Act, 2017.
Board's Overall Role
The Standard Chartered Group views high standards of corporate governance as a critical component for the long-
term success of all companies, and for the economic health and stability of markets across the globe. As part of
the Group's approach to corporate governance, the Board also fully recognises that the success of the Bank ultimately
depends upon the capacity of Directors to provide the vision and direction needed not only to survive, but to develop
and prosper. The Board endeavoured to maintain and strengthen the high level of corporate governance, continuously
improving corporate transparency, ensuring the healthy development of the Bank and endeavouring to enhance
corporate values.
The Board performs its statutory role and fulfils its objectives by ensuring that the Bank has a competitive leadership
and an effective executive management. The Board then establishes significant policies/ frameworks and the code
of conduct, and delegates the authorities and responsibilities down the line for the Bank's smooth operations.
In accordance with regulations, the Board has formulated an effective mechanism to undertake the Board Effectiveness
Review.
Performance Evaluation of the Board
The Board has a process in place to evaluate and enhance the overall effectiveness of the Board, its Committees
and individual Directors (including the Chief Executive Officer and Independent Non Executive Directors) on an
annual basis. The services of an external consultant are engaged to facilitate the Board's annual performance
evaluation. The process begins with the design of a set of surveys which are tailored to the specific circumstances
of the Bank and comprise a mix of rating and free-text questions. All Board members are required to complete their
surveys online and the anonymity of the respondents is ensured throughout the process in order to promote an open
and frank exchange of views. The consolidated results of the exercise are shared with the Chairman and presented
to the Board. The outcomes from the review are collated and form the basis of the action plan which is agreed by
the Board for implementation.
During the period under review, an annual evaluation of the Board has been carried out in line with the above stated
process which covered various aspects including the Board's composition, Board's understanding of its role/
responsibilities/ duties, risk profile, regulatory environment, directors' induction/ training, the Board's involvement
in strategy planning, quality of information which the Board receives and the following up on action points. The overall
performance and effectiveness of the Board was assessed as 'Satisfactory'. Survey results of individual directors,
including the Chairman and Chief Executive, and two committees of the Board were also found 'Satisfactory'.
The Board meets frequently enough to adequately discharge its responsibilities and it receives the agenda papers
and appropriate supporting material in sufficient time prior to the Board and its committee meetings. The Board
members enjoy a very open and candid atmosphere in the boardroom.
Improvement areas identified during the last performance evaluation of the Board have been mostly addressed and
the remaining ones are being tracked, as agreed.
Acknowledgement
I would like to thank all the stakeholders for their trust and support. I also take this opportunity to convey my gratitude
to my fellow Board members for their valuable contribution.
Ian Bryden
Chairman
08 March 2018

DIRECTORS REPORT - December 31, 2017
On behalf of the Board of Directors, I am pleased to present the Directors' Report of Standard Chartered Bank (Pakistan) Limited
(SCBPL) along with the audited financial statements and auditors' report thereon for the year ended 31 December 2017.
Economy
GDP growth accelerated to a 10-year high of 5.3% in FY17 on the strength of domestic demand. Looking ahead, the government
is targeting 6% growth for FY18 as economic activity gains momentum and infrastructure and energy projects as a part of the
China-Pakistan Economic Corridor are implemented.
However, as the domestic economy gathers pace, the country's twin deficits are widening. The fiscal deficit for FY18 widened
to 5.8% of GDP, compared with an earlier estimate of 4.2% of GDP. Meanwhile, external-sector weakness continues to pose risks
to the near-term outlook. Although exports have rebounded in the past couple of months, a rising import bill amid slowing overseas
workers' remittances has seen the current-account deficit (C/A) widen. For H1-FY18, the C/A deficit was 4.4% of GDP compared
with 3.1% for the same period in the previous year.
In the context of external-sector weakness and subsequent decline in FX reserves, USD-PKR moved higher in December 2017
to 110.50, breaking a period of exceptional stability over the past few years. Highlighting the risks, SBP increased its policy rate
by 25bps to 6% in Jan 2018.
The banking system remains well capitalized and profitable with a capital adequacy ratio of 15.5% and ROE of 10.9%. Non-
performing loans of the banking sector declined further to 9.2% of total loans by 30 September 2017 from 11.3% in September
2016.
Operating Results and Business Overview

December 31, 2017 December 31, 2016
Balance Sheet (PKR millions) (PKR millions)
Paid-up capital 38,716 38,716

Total equity 57,335 56,872
Deposits 377,576 365,562
Advances gross 157,280 133,631
Advances net 137,655 113,951
Investments net 272,488 245,850
Profit and Loss
Revenue 25,480 26,548

Administrative expenses 11,457 11,964
Other non mark-up expenses 279 380
Operating profit (before provisions and tax) 13,744 14,204
Recoveries / (Provisions) - net (291) 1,141
Profit before tax 13,453 15,345
Profit after tax 8,245 9,618
Earnings per Share (EPS) - Rupees 2.13 2.48
The Bank performed fundamentally well and delivered Profit before tax of PKR 13.5 billion compared to PKR 15.3 billion in
corresponding period last year. Revenue was lower by PKR 1.1 billion primarily due to reduced margins and re-pricing within
the investments portfolio. However, client revenue across all segments has increased and is up by 11% year on year. The impact
of margin compression on revenue was partially offset by a growing non-funded income and decreasing cost of funds. Administrative
costs continue to be well managed through operational efficiencies and disciplined spending with a decrease of 4% from
comparative period last year.
An historic milestone was achieved during the year whereby the Bank's total assets crossed over PKR 500 billion. All businesses
have positive momentum in client income with strong growth in underlying drivers. This is evident from pickup in net advances,
which have grown by 21% since the start of this year. This was a result of targeted strategy to build profitable, high quality and
sustainable portfolios. With a diversified product base, the Bank is well positioned to cater for the needs of its clients. On the
liabilities side, the Bank's total deposits grew by 3%, whereas current and saving accounts grew by 1% since the start of this
year. The continuous increase in low cost deposits has significantly supported the Bank's performance with current and savings
accounts comprising 92% of the deposit base.
During 2017, the Bank contributed around PKR 11.4 billion to the national exchequer in lieu of direct income taxes, as an agent
of Federal Board of Revenue and on account of FED / Provincial Sales Taxes.
7
DIRECTORS REPORT
During 2017, the bank partnered with Emirates in Pakistan to launch a new suite of co-branded cards, giving our clients the
opportunity to benefit from the facilities offered through Emirates Standard Chartered Cobrand cards. The proposition is a first
of its kind in Pakistan and part of our strategy to collaborate and partner for the benefit of our clients in Pakistan.
The Bank continues to invest in its digital capabilities and infrastructure to enhance banking experience through introduction of
innovative solutions. We have made steady progress in further strengthening our control and compliance environment by focusing
on our people, culture and systems. We are fully committed to sustained growth by consistently focusing on our clients and
product suite along with a prudent approach to building the balance sheet while bringing the best in class services to our customers.
Outlook
These results further demonstrate our commitment to delivering a consistent and sustained performance. Having strengthened
our foundations on controls and conduct, we recognise the importance of re-energising growth with a focus on income whilst
keeping strong cost and risk management. This ensures that returns continue to grow at a sustainable level. The external
environment remains challenging and we are committed to improving our performance whilst ensuring our clients' needs are at
the heart of everything we do.
Dividend
Final cash dividend of 10.00% (Rs. 1.00/- per share) has been recommended by the Board of Directors for approval at the 12th
Annual General Meeting of the Bank's shareholders. This is in addition to 7.50% (Rs. 0.75/- per share) interim cash dividend
announced / paid during the year.
External Annual Audit
The financial statements of SCBPL have been audited without any qualification by the auditors of the Bank, namely KPMG Taseer
Hadi & Co., Chartered Accountants.
Credit Rating
Pakistan Credit Rating Agency (PACRA) has maintained the Bank's long-term and short-term ratings of "AAA" (Triple A) and
"A1+" (A One Plus) respectively in 2017. These ratings denote the lowest expectation of credit risk emanating from an exceptionally
strong capacity for timely payment of financial commitments.
Purpose
In September 2017, the Bank refreshed its purpose statement to align it further to its Brand promise. ''Driving commerce and
prosperity through our unique diversity" captures the spirit of Standard Chartered by bringing together the best of what we already
have - our incredible diversity of locations, cultures and expertise and ties it to what we do as a Bank - facilitating commerce in
the real economy.
The refreshed purpose signifies the way we want to do business, the human aspect as prosperity is not just about financial wealth
but contributing towards creating healthier and happier communities. The purpose also embodies a more proactive and high
performance culture.
Sustainability
As the largest International Bank in the country, with 93 branches in 11 cities of Pakistan, Standard Chartered is an integral part
of Pakistan's financial landscape. Through its sustainability and community investment agenda the Bank has demonstrated its
commitment to the community. Through our sustainability strategy we seek to strengthen relationships between our business,
community, government and clients.
In Pakistan, the Bank's community efforts are focused on health and education. Through our flagship Community Investment
health programme "Seeing is Believing", we continue contributing to the prevention of avoidable blindness. Currently our projects
address Diabetic Retinopathy - an emerging health problem across the nation and looking at touching over 1 million people over
the span of five years. A second project is working to strengthen the overall eye healthcare system in four districts in Khyber
Pakhtunkwa. Through our partners we are accredited with a 20% reduction in avoidable blindness and the Government of
Pakistan has appointed Standard Chartered as the only corporate partner with presence on both the National and Sindh eye
councils of the country. Through a number of local projects, we have also prioritised eye healthcare for women through our partner,
Layton Rehmatulla Benevolent Trust (LRBT).
It has now been over a year since the Bank launched Goal in Pakistan. Goal is Standard Chartered's leading girls' education
programme. Through a combination of sports and life skills training, Goal aims to empower and equip adolescent girls with the
confidence, knowledge and skills they need to be integral economic leaders in their families, communities and societies. In our
first year we touched close to 2,500 girls in urban Karachi slums through this programme. In our second year we have expanded
the number of schools we are present in and hope to grow this further.
To encourage employees to participate in these initiatives and engage with communities, Standard Chartered provides three
days paid volunteering leave to each member of staff. In 2017, SCBPL employees logged 1,499 volunteering days.

DIRECTORS REPORT
Corporate Governance
As required by the Code of Corporate Governance, 2012 (the Code), a prescribed statement by the Board, along with Auditors'
Review Report thereon, forms part of this Annual Report.
The directors are pleased to give the following statements as required by clause (xvi) of the Code:
l The financial statements present fairly the Bank's state of affairs, results of its operations, cash flows and changes in equity.
l Proper books of accounts of the Bank have been maintained.
l Appropriate accounting policies have been consistently applied in the preparation of financial statements and accounting
estimates are based on reasonable and prudent judgment.
l The International Financial Reporting Standards and International Accounting Standards as applicable in Pakistan have
been followed in the preparation of financial statements.
l The system of internal control is sound in design and has been effectively implemented and monitored.
l There is no doubt upon the Bank's ability to continue as a going concern.
l There has been no material departure from the best practices of corporate governance, as detailed in the listing regulations.
l Summarized key operating and financial data is tabulated in this Annual Report.
l Details of Board and its Committees meetings held and attended by the Directors/ Members form part of this report.
l The Directors, CEO, CFO, Head of Internal Audit and Company Secretary have confirmed that neither they nor their spouses
are engaged in the business of stock brokerage.
l Statement of Compliance with the Code and the Auditors' review report thereon form part of this Annual Report.
l Details of training programs attended by directors are provided in above-referred Statement of Compliance.
l All statutory liabilities, if any, have been adequately disclosed in the financial statements.
Statements on Internal Controls and Risk Management Framework
The management of SCBPL is responsible for establishing and maintaining a system of adequate internal controls and procedures.
Management's statements on Internal Controls and Risk Management Framework form part of this Annual Report.
Directors' Meetings
Six (06) meetings of the Board of Directors, six (06) meetings of Board Audit Committee and five (05) meetings of Board Human
Resource (HR) and Remuneration Committee were held during 2017. Attendance by each director/ member was as follows:
Board of Directors Board Audit Board HR &

Sr. Name of Director Meetings Committee Meetings Remuneration Meetings
No.
Held1 Attended2 Held1 Attended2 Held1 Attended2
1 Ian Bryden4 6 5 - - 2 1
2 Shazad Dada 6 6 - - - -
4 Najam I. Chaudhri3 6 5 6 6 - -
5 Parvez Ghias3&4 6 6 6 6 5 5
6 Spenta Kandawalla 4
6 4 - - 5 3
7 Ferdinand Pieterse3 6 5 6 6 - -
8 Mohamed Abdelbary 4
4 4 - - 3 3
1
Number of meetings held during the tenor of relevant director/ member
2
Leave of absence was granted to the Directors/Members who could not attend some of the meetings
3
Member of Board Audit Committee
4
Member of Board HR & Remuneration Committee
9
DIRECTORS REPORT
Statement of investments of Provident, Gratuity and Pension Funds
Value of investments including accrued income of provident and gratuity funds as at 31 December 2017 on the basis of un-
audited accounts are:
PKR 000
Provident Fund 1,788,417

Management Staff Gratuity Fund 1,214,288
Non- Management Staff Gratuity Fund 111,984
Management Staff Pension Fund 53,880
Non- Management Staff Pension Fund 53,265
Changes in Board of Directors
The following changes have taken place in the Board of Directors:
Term of Mr. Najam I. Chaudhri as Independent Director expired on 23 April 2017. However, with the permission of State Bank
of Pakistan, his term was extended until 31 March 2018. Moreover, Mr. Parvez Ghias also completed his term as Independent
Director on 15 January 2018 but he is continuing as Non-Executive Director. He will step down from 01 April 2018 and a new
Independent Director will replace him in due course.
Pattern of Shareholding
The pattern of shareholding forms part of this Annual Report. At 31 December 2017, Standard Chartered Bank, UK (holding
company) held 98.99% shares of SCBPL.
External Auditors
The Audit Committee has suggested the name of KPMG Taseer Hadi & Co., Chartered Accountants as external auditors of the
Bank for the next term. The Board of Directors, on the suggestion of Audit Committee recommended the name of retiring auditors
KPMG Taseer Hadi & Co., Chartered Accountants as external auditors for the next term. The retiring auditors, being eligible, offer
themselves for re-appointment in the forthcoming Annual General Meeting.
Appreciation and Acknowledgment
We take this opportunity to express our gratitude to our clients and business partners for their continued support and trust. We
offer sincere appreciation to the State Bank of Pakistan for their guidance and cooperation extended to the Bank. Finally, we are
also thankful to our associates, staff and colleagues for their committed services provided to our valued clients.
On behalf of the Board
Shazad Dada Najam I. Chaudhri

Chief Executive Officer Director
Dated: 08 March 2018

Karachi

2017 31
2016 31
11
13
4&3
15
Managements Statements on Internal Controls
and Risk Management Framework
The following statements are made by the management to meet the requirements of the State Bank of Pakistan (SBP) BSD
Circular letter no. 2 of 2005 and BSD Circular letter no. 3 of 2005.
Internal Controls
Management of Standard Chartered Bank (Pakistan) Limited (the Bank or SCBPL) is responsible for establishing and maintaining
a sound system of internal controls aimed at achieving the following objectives of the Bank:
< Efficiency and effectiveness of operations
< Compliance with applicable laws and regulations
< Reliability of financial reporting
1. The Management has adopted different strategies to ensure effective monitoring and improvement of internal controls.
These include Internal Audit and Operational Risk Framework (ORF) in which assurance responsibilities are divided into
three lines of defense i.e. first being the business function, second is the Operational Risk Assurance and support from
Group Internal Audit is the third line of defense.
2. The policies and procedures in all significant areas and as per the directives of the regulators have been duly approved
by the Board.
3. An organization structure has been established which supports clear lines of communication and tiered levels of authority
with accountability.
4. The Bank has an effective Internal Audit Department, which reports directly to the Audit Committee of the Board. The
department periodically carries out detailed reviews/audits of its branches and various departments/ units based on a
yearly plan which is approved by the Audit Committee.
5. Internal control policies, tools and reporting structures have been enhanced to provide greater clarity over roles and
responsibilities. Relevant training materials have also been updated and deployment is underway.
6. Management gives due consideration to the recommendations made by the internal and external auditors for improvements
in the internal control system and take action to implement such recommendations.
7. The management has put in place evaluation and approval procedures for major capital expenditure and other transactions.
8. There is an annual budgeting and strategic planning process. Financial forecasts are reviewed during the year on a periodic
basis to reflect significant changes in business environment. Regular reporting and monitoring of financial performance
of the departments and the Bank as a whole, using operating statistics and monthly management accounts which highlight
key performance indicators and variance from budgets and forecasts is in place.
9. Review and implementation of health, safety, environment and contingency management processes and other significant
policies are carried out and reporting mechanism is in place.
10. SCBPL has adopted the internationally accepted Committee of Sponsoring Organizations of the Treadway Commission
(COSO) Internal Controls Integrated Framework 1992 and available international practices in relation to Internal Controls
over Financial Reporting (ICFR) to comply with SBP guidelines on Internal Controls.
SCBPL maintains a system of ICFR, which is designed to provide reasonable assurance to the Bank's management and
Board of Directors regarding the preparation of reliable published financial statements. The system contains self-monitoring
mechanisms, and actions are taken to correct deficiencies as they are identified. Even an effective internal control
system, no matter how well designed, has inherent limitations and therefore can provide only reasonable assurance with
respect to financial statements preparation. Further, because of changes in conditions, internal control system effectiveness
may vary over time.
SCBPL has devised a well defined and comprehensive Internal Control Program along the lines of stage wise roadmap,
as suggested by SBP. Accordingly, the Bank has successfully completed all of the stages of the SBP roadmap on ICFR.
This involved completing detailed documentation of the existing processes and controls and related Risk and Control
Matrices. It also involved completing a comprehensive gap analysis of the control design and developing remediation plans
for the gaps identified. The bank has developed comprehensive management testing plans and reporting framework to
ensure operating effectiveness of key controls.
The Bank will continue enhancing its coverage and compliance with the SBP guidelines on Internal Controls and further
strengthen its control environment on an ongoing basis. The Bank engaged external consultants to facilitate in reviewing
the process and control documentation and provide professional guidance in documenting, assessing and testing the
existing key Processes and Controls in line with requirements of SBP guidelines and leading practices. Further the
consultants also independently performed the Quality Assurance/ Validation exercise to provide assurance whether after
completion of remedial plans, gaps have been bridged accordingly.
17
Risk Management Framework
The Bank in an effort to fully implement guidelines issued by SBP on risk management throughout the Bank, has integrated
enterprise wide risk management, which brings together various types of risks being faced by the entire organization under one
umbrella. Through the risk management framework the Bank seeks to manage efficiently the core risks: credit, market and liquidity
risk. These arise directly through the Bank's commercial activities whilst operational risk, reputational risk, pension risk, capital
risk and strategic risk are normal consequences of any business undertaking.
The basic risk management principles followed by the Bank include:
Balancing risk and reward: Risk is taken in line with the requirements of the Bank's stakeholders. Risk should be taken within
the Bank's risk appetite, consistent with the approved strategy. Any such risks are avoided which have a material probability of
causing financial distress to the Bank or its clients or customers.
Responsibility: Given the Bank is in the business of taking risk, it is everyone's responsibility to ensure that risk taking is both
disciplined and focused. The Bank takes account of its social responsibilities and its commitment to customers in taking risk to
produce a return.
Accountability: Risk is taken only within agreed authorities and where there is appropriate infrastructure and resource. All risk
taking must be transparent, controlled and reported.
Anticipation: The Bank looks to anticipate future risks and to ensure awareness of all risk.
Competitive Advantage: The Bank seeks to achieve competitive advantage through efficient and effective risk management and
control.
Risk management: The Bank aims to implement best practices and have a specialist risk function of international standards, with
strength in depth, experience across risk types and economic scenarios.
Ultimate responsibility for the effective management of risk rests with the Bank's Board of Directors. Acting within an authority
delegated by the Board, the Executive Committee reviews specific risk areas and monitors the activities of the Executive Risk
Committee ("ERC") and the Asset and Liability Committee ("ALCO").
ERC headed by Country Chief Risk Officer (CCRO), through authority delegated by the Board through the Bank's Executive
Committee, is responsible for credit risk, market risk, operational risk, compliance and regulatory risk, legal risk and reputational
risk. ALCO, through authority delegated by the Board through the Bank's Executive Committee, is responsible for management
of the Bank's liquidity, capital adequacy and structural foreign exchange risk. The Pensions Executive Committee through authority
delegated by the Board through the Bank's Executive Committee, is responsible for the management of pension risk.
The day to day responsibility for managing risk rests with CCRO who oversees and manages the risk through a team of managers;
Senior Credit Officer responsible for credit risk in Corporate & Institutional Banking and Commercial Banking, Country Credit
Head is responsible for credit risk in Retail Banking including Collections and Recoveries, Head of Group Special Assets
Management responsible for remedial risk and non-performing loans management, Head of Risk Operations is responsible for
Credit Risk Controls, Credit Initiation and Fraud Risk Management, Market and Traded Credit Risk (MTCR) is responsible for
risks associated with price movements, arising from interest and exchange rate movements. The Country Head of Operational
Risk is responsible for enterprise wide operations risk. The Bank has established policies, procedures, processes, and controls
and has provided the Risk team adequate support by way of risk systems and tools for measuring and reporting risk for monitoring,
controlling, reviewing and managing risk.
Following are the important factors of the risk management function within the Bank.
Credit Risk
Credit risk is the risk that a counter party will not settle its obligations in accordance with agreed terms. Credit exposures may
arise from lending, trade finance, securities and derivative exposures. Credit exposures include both individual borrowers and
groups of connected counterparties and portfolios in the banking and trading books.
The Board of Directors has delegated down the authority to ERC through the Bank's Executive Committee to establish risk
appetite and make recommendations to the Board for approval of risk appetite and policies for managing credit risk. The CEO
and the Executive Committee in turn rely on CCRO and the CRC to determine these and recommend for their support and
Board's approval. Board has delegated credit authorities to CCRO, Senior Credit Officer (Corporate & Institutional Banking and
Commercial Banking), Country Credit Head (Retail Banking), Head GSAM, Head of Risk Operations and Head of Collections
and Recovery. These in turn, delegate authorities to their team members. Any approvals above individual delegated authority
are approved by Approvals Committee.
Credit risk appetite is established through business strategy papers and underwriting standards by the business managers, which
are approved by the Board once recommended, and supported by the Executive Committee.
Specific procedures for managing credit risk within Corporate & Institutional Banking, Commercial Banking and Retail Banking
are determined at the Senior Credit Officer and Country Credit Head levels for their respective jurisdictions with specific policies
and procedures being adapted to different risk environments and business goals. Credit analysis includes review of facility details,
credit grade determination and financial spreading/ ratio analysis. Portfolio review, Early Alerts and Stress Testing based on
scenario analysis is a combined responsibility of Client Relationship and Risk and Finance function. Client relationship origination
and credit approval roles are clearly segregated throughout Corporate & Institutional Banking, Commercial Banking and Retail
Banking.
Corporate & Institutional Banking and Commercial Banking: Within the Corporate & Institutional Banking and Commercial Banking
business, an alpha numerical risk grading system is used for quantifying the risk associated with counter-party. The grading is
based on a probability of default measure, with customers analyzed against a range of quantitative and qualitative measures.
Expected Loss is used for further assessment of individual exposures and portfolio analysis. There is a clear segregation of duties
with loan applications being prepared separately from the approval chain.
Retail Banking: Program based standard credit application forms are generally used which are processed in central units for
different products and market segments. Credit Portfolio Monitoring and Forecasting team has developed Bureau scores and
uses Bureau data for portfolio monitoring and for underwriting new business.
Market Risk
The Bank recognizes Market risk as the exposure created by potential changes in the market prices and rates. Market Risk
exposures arise primarily from interest rate and foreign exchange related contracts. The Bank has no significant exposure to
equity and commodity price risk.
MTCR approves the limits within delegated authorities and monitors exposures against these limits, and is locally under governance
of CCRO, who agrees policies and procedures and levels of risk appetite in terms of Value at Risk (VaR). Limits are then proposed
by business within the terms of agreed policy. These are agreed and delegated down by ERC and Approvals Committee under
delegated authority from the Board. Policies cover both trading and non-trading books.
In addition to Market Risk policies, as well as VaR and other market risk limits, independent stress testing of portfolios, factor sensitivity
measures and derivatives are also employed as additional risk management tools to manage and hedge market risk exposures. Risk
models are periodically back tested against actual results to ensure that pre-determined levels of accuracy are maintained.
VaR is the main limit that is being applied by the bank along with other supporting price risk limits and MATs. Interest Rate Risk
is controlled via PV01 limits which are set on Net as well as Gross basis across various tenors and at currency level. Additionally
curve tenor limits are applied to contain the interest rate risk exposure going beyond certain tenors. PV01s measure the sensitivity
of the Net Present Value (NPV) to +1bp shift applied at pre-defined points on a zero-coupon yield curve. PV01 strip is then applied
to the historical scenarios i.e. Risk factors over the last 260 days to derive the NPV distribution which is then used to determine
VaR and Stress VaR.
All limits are hard limits and any excess results in escalation to senior management, with the level of escalation depending upon
nature of excess. These limits are monitored on a daily basis as part of daily risk reporting."
Liquidity Risk
The Bank defines liquidity risk potential for loss where the bank may not have sufficient stable or diverse sources of funding or
financial resources to meet our obligations as they fall due.Liquidity risk, both short-term and structural, is monitored through
liquidity risk management framework and is managed by ALCO. This committee, chaired by the CEO, is responsible for liquidity
risk management.
A range of tools are used for the management of liquidity. Tools for structural liquidity comprise of commitment and wholesale
borrowing guidelines, key balance sheet ratios, and medium term funding requirements whereas short-term liquidity tools include
day to day monitoring of future cash flows and liquidity stress tests using various behavioral and rollover assumptions.
In addition, liquidity contingency funding plans are reviewed periodically to ensure that alternative funding strategies are in place
and can be implemented on a timely basis to minimize the liquidity risk that may arise due to unforeseen adverse changes in
the market place.
A substantial portion of the Bank's assets are funded by customer deposits made up of current and savings accounts and other
deposits. These customer deposits, which are widely diversified by type and maturity, represent a stable source of funds.
The Bank also maintains significant levels of marketable securities either for compliance with local statutory requirements or as
prudential investments of surplus funds.
Operational Risk
Operational risk is the potential for loss resulting from inadequate or failed internal processes, people and systems or from external
events, including legal risk. Operational risk is inherent in the Bank's activities and as with the other risk types is managed through
an overall framework with checks and balances that includes recognized ownership of the risk by the businesses, independent
risk management oversight and an independent review by the Group Internal Audit.
The ORF sets out the approach to management of operational risk as well as the roles and responsibilities of the various
stakeholders. In accordance with the framework, business areas and functions are responsible to identify its key operational risks
19
and to establish and execute controls, and to ensure compliance with the laws, regulations, regulatory administrative actions
and the Bank's policies. The independent risk management challenges and approves risk identification and assessment.
Furthermore, the Country Operational Risk Committee ("CORC") ensures that an appropriate risk management framework is
in place and reports, monitors and manages significant operational risks. The CORC is chaired by the CEO, and the CCRO is
an active member of this committee. Depending on the severity, significant risks and issues are also picked by the independent
Risk function for discussion at the Executive Risk Committee, chaired by the CCRO.
Disaster recovery procedures, business contingency planning and internal audits also form an integral part of the operational
risk management process.
Reputational Risk
Reputational risk is the potential for damage to the franchise, resulting in loss of earnings or adverse impact on market capitalisation
as a result of stakeholders taking a negative view of the organisation, its actions or inactions - leading stakeholders to change
their behavior. Practically, reputational risk can arise from the Bank's strategic choices. It will also arise from the failure to mitigate
effectively any of the Group's principal risk types. It may also arise from the failure to comply with environment, social and
governance standards and failure to meet key stakeholders' expectations.
The CCRO is the responsible for management of reputational risk and actively encourages the business and functions to take
account of the Bank's reputation in all decision making, including dealings with customers and suppliers and promotes effective,
proactive stakeholder management through ongoing engagement.
Pension Risk
Pension risk is the potential for loss that surfaces from having to meet an actuarially-assessed shortfall in the Bank's defined-
benefit pension schemes. The pension obligation risk to a bank arises from its contractual or other liabilities to, or related to, an
occupational pension scheme. In other words, it represents the risk that additional contributions will need to be made to a pension
scheme because of a future shortfall in the funding of the scheme.
The Bank assesses and monitors the assets and liabilities within the defined-benefit scheme, with support from independent
actuarial advisers. Actuarial methodologies are used for determining the present values of the assets and liabilities of the defined-
benefit scheme. The assumptions used account for the projected trends in the salaries, turnover and mortality of the membership.
The Bank's Country Pensions Committee has oversight of the pension schemes and reviews the assets and liabilities position
on a regular basis.
Capital Risk
Capital risk is the potential for insufficient level or composition of capital to support bank's normal activities
The Bank manages its demand for capital by regular monitoring of capital requirements and asset exposures. The Bank's ALCO
monitors Risk Weighted Assets (RWA) growth and provides guidance for RWA management, capital structure and maintenance
of capital adequacy ratio.
Compliance and Regulatory Risk
Compliance and Regulatory risk includes the risk of non-compliance with regulatory requirements. The Compliance and Regulatory
risk function is responsible for establishing and maintaining an appropriate framework for implementation of regulatory requirement
and compliance policies and procedures. Compliance with such policies and procedures is the responsibility of all bank staff
Legal Risk
Legal Risk is the risk of unexpected loss, including but not limited to reputational loss arising from defective transaction or contracts,
claims being made or some other event resulting in a liability (anticipated/contingent) or other loss for the Bank, failure to protect
the title to and ability to control the rights to assets of the Bank (including intellectual property rights), changes in the law or
jurisdiction risk. The Bank manages legal risk through Legal function, Legal documentation policy and procedures and effective
use of its internal and external lawyers.
In addition to above, the bank will be rolling out Enterprise Risk Management Framework during 2018 that sets out the Bank's
approach to risk management and the control framework within which risks are managed with the objective of maximising risk-
adjusted returns while remaining within our risk appetite. It establishes common principles and standards for the management
and control of all risks, and to inform behaviour across the organisation.
By order of the Board
Shazad Dada
Chief Executive Officer

Report of Shariah Board
For the year ended December 31, 2017
By the grace of Allah Almighty, the year under review was the fourteenth year of Islamic Banking for Standard
Chartered Bank (Pakistan) Limited (SCBPL) through 'Saadiq' platform.
As per the Shari'ah Governance Framework, the Shari'ah compliance of Islamic Banking within Standard Chartered
Bank (Pakistan) Limited (SCBPL) is the sole responsibility of Board of Directors and Executive Management. While,
as being Shari'ah Board of the SCBPL, we are presenting this report on overall Shari'ah compliance environment
of the bank (SCBPL).
To form an opinion on Shari'ah Compliance of the bank, the Shari'ah Compliance Department (SCD) of the bank
carried out various Shari'ah compliance reviews during the year under review, on test check basis of each Islamic
segment which includes transactions, the relevant documentation and process flows etc. Furthermore, we have also
reviewed the report of the internal & external Shari'ah Audits. Based on the above and our regular engagement with
the Bank's management, we are of the view that:
1. The Bank has complied with Shari'ah rules and principles provided in the fatawa, rulings and guidelines issued
by Shari'ah Board earlier and during the year under review.
2. The Bank has complied with directives, regulations, instructions and guidelines related to Shari'ah compliance
issued by SBP in accordance with the rulings of SBP's Shari'ah Board.
3. The bank has a comprehensive mechanism in place to ensure Shari'ah compliance in their overall operations.
For effective implementation of Shari'ah Compliance Mechanism (SCM), SCD conducted meetings with different
departments of the bank to explain them the importance and requirement of Shari'ah Compliance in their
respective operations. Departments submitted their policies and procedures to Shari'ah Board through SCD and
Shari'ah Board reviewed and approved the documents in gradual manner.
4. The Shari'ah Board has been provided resources enabling it to discharge its duties. However, considering the
increase in volume of work, an additional resource in Shariah Team will further strengthen the Shari'ah Compliance
function in the bank.
Islamic Business Review:
During the year under review, SCBPL has diversified its portfolio into various Islamic financing and investment modes
including Musharakah, Diminishing Musharakah, Murabaha, Musawamah, Ujrah and Sukuk. At the close of the year
ended 31 December 2017, the Bank had total Islamic Financing and investment of Rs. 48.806 Billion. The breakup
of these assets in different modes of Islamic finance is as follows:
21
Report of Shariah Board
For the year ended December 31, 2017
At the year ended 31 December 2017, the bank had total Islamic deposits of Rs. 40.274 Billion. Islamic deposits
are based on Qard (Current Account) and Mudarabah (including Saving & Term Accounts) concepts. The breakup
of these Islamic deposits is as follows:
Shari'ah Compliant Product Initiatives:
Shari'ah Compliance Department in (SCD) collaboration with Human Resource Department introduced 'Shari'ah
compliant Provident & Gratuity Fund' option for SCBPL staff. Shari'ah Board appreciate the efforts of SCD & Human
Resource department on launching of Shari'ah Compliant Provident & Gratuity Fund.
Shari'ah Board approved various new structures based on Musawamah (Transactional Commodities Finance "TCF"),
Diminishing Musharakah, Musharakah, and Kafalah LCs structure for multiple bank's clients.
Shari'ah Compliance Reviews:
During the year under review, annual Shari'ah compliance review of Islamic Banking Business was conducted on
a test check basis. During the Shari'ah compliance reviews, Islamic Products including liabilities and financing
transactions based on different modes of Islamic finance including Murabahah, Musawamah, Musharakah, Diminishing
Musharakah, and Ujrah etc. were checked.
The following major activities have been performed to ensure Shari'ah Compliance of Islamic Banking Business:
I. Review of Standard Agreements of Financing products,
II. Review of Murabahah transaction notices, confirmation of purchases, Form of offers, Payment evidences,
Purchase evidences and Physical inspections,
III. Review of Process flow adherence in Murabahah transactions,
IV. Review of Qard and Mudarabah based accounts documents,
V. Review of profit and loss distribution and Pool Management framework,
VI. Review of Participation ratio of Bank & clients in Diminishing Musharakah, and
VII. Review of Profit / Loss Sharing Ratio and Profit Adjustment activity of Musharakah.
Shari'ah compliance review of dedicated Islamic branches and Islamic Windows were also conducted and suggestions
for Shari'ah excellence and further improvement in understanding of Islamic Banking and Saadiq Products were
advised to the relevant staff / branches. The overall Shari'ah compliance of the Islamic Business operation and their
alignment with the Shari'ah guidelines was also reviewed.

Further, to comply with IBD Circular Letter No. 01 of 2017; SCD started verification of distribution of profit & loss to
the depositors prior to its disbursement on monthly basis. The bank's internal Shari'ah audit department also
conducted a post disbursement Shari'ah audit on quarterly basis and submitted its report to Shari'ah Board. The
bank has complied with SBP instructions on profit & loss distribution and pool management.
In addition, as part of continuous improvement necessary recommendations and corrective measures have been
suggested, all issues identified were duly addressed by management and agreed for implementation.
Late Payment and Non-Compliant Income Charity:
The Bank has a well-defined system in place to ensure that any earnings realized from sources or by means prohibited
in Shari'ah have been credited to charity account and are being properly transferred to the approved charities.
During the year, an amount of Rs. 6.343 million has been credited to charity account. Rs. 3.436 million was received
from clients due to "Delay in payments" and Rs. 2.907 million was realized from sources prohibited in Shari'ah. Further,
charity amount Rs. 4.584 million has been disbursed to different approved charitable institutions.
Awareness, Training and Capacity Building:
During the year under review, approximately 102 training sessions related to Shari'ah and Islamic Banking products
have been arranged and more than 1700 staff was trained throughout Pakistan. In addition, a session for BOD
members has also been conducted by Shari'ah Board members on the concepts of Islamic Banking and Shari'ah.
Further, a comprehensive training material on the concepts of Islamic Banking and Shari'ah was also shared with
EXCO members for their learning purpose.
Apart from in-house training sessions, the Bank has launched e-learning modules of "basic Islamic banking", "advance
retail banking Islamic products" and "Corporate & Institutional Banking and Commercial Banking Islamic products".
Number of Bank's staff has been benefited from these e-learnings. Further, the Bank has also nominated multiple
staff for external Islamic Banking training programs conducted by IBA-CEIF.
SCBPL has also organized awareness sessions for the Bank's clients in October 2017, under thought provoking
series with the name of 'Living Islam', where leading Muslim scholars of the country discussed the topic of "Business
Ethics - inspirations from the life of Prophet Muhammad (PBUH)" to create overall awareness of the clients. Shari'ah
Board appreciate Bank's management on arranging such kind of sessions for the awareness of the clients and hope
they will keep this momentum in future as well.
Shari'ah Board encourages the BOD and management on focusing the importance of Shari'ah compliance on all
level including awareness, capacity, sensitization of the staff etc.
Recommendation:
1- The Bank should continue to nominate Key Executives and Islamic Banking staff for certificate / diploma programs,
seminars and workshops etc. of Islamic Banking and Finance. The management is also advised to keep refreshing
knowledge of front line staff on Islamic Banking & relevant Islamic Products either through class room trainings
or through cascade self-reading material and its acknowledgement from them.
2- It is advised to the bank that Shari'ah compliant products option make available while on boarding new clients
in bank.
And Allah Subhanah wa Ta'ala knows the Best.
May Allah Subhanah wa Ta'ala accept our endeavours and grant us devotion to accomplish His cherished tasks,
make us successful in this world and in the hereafter, and forgive our mistakes.
Date of Report: 01 March 2018

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KPMG Taseer Hadi & Co. Telephone: + 92 (21) 3568 5847
Chartered Accountants Fax: + 92 (21) 3568 5095
First Floor Internet: www.kpmg.com.pk
Sheikh Sultan Trust Building No. 2
Beaumont Road
Karachi 75530 Pakistan
Review Report to the Members on Statement of Compliance with the

Code of Corporate Governance
We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of Corporate Governance
("the Code") prepared by the Board of Directors of Standard Chartered Bank (Pakistan) Limited ("the Bank") for the year ended
31 December 2017 to comply with the requirements of Listing Regulations of the Pakistan Stock Exchange ("PSX") where the
Bank is listed.
The responsibility for compliance with the Code is that of the Board of Directors of the Bank. Our responsibility is to review, to
the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the
Bank's compliance with the provisions of the Code and report if it does not and to highlight any non-compliance with the
requirements of the Code. A review is limited primarily to inquiries of the Bank's personnel and review of various documents
prepared by the Bank to comply with the Code.
As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control
systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board
of Directors' statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal
controls, the Bank's corporate governance procedures and risks.
The Code requires the Bank to place before the Audit Committee, and upon recommendation of the Audit Committee, place
before the Board of Directors for their review and approval of related party transactions distinguishing between transactions
carried out on terms equivalent to those that prevailed in arm's length transactions and transactions which are not executed at
arm's length price and recording proper justification for using such alternate pricing mechanism. We are only required and have
ensured compliance of this requirement to the extent of approval of related party transactions by the Board of Directors upon
recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party
transactions were undertaken at arm's length price or not.
Based on our review, nothing has come to our attention, which causes us to believe that the Statement of Compliance does not
appropriately reflect the Bank's compliance, in all material respects, with the best practices contained in the Code as applicable
to the Bank for the year ended 31 December 2017.
Date: 08 March, 2018 KPMG Taseer Hadi & Co.

Karachi

Statement of Compliance with the Code of
The Board of Directors of Standard Chartered Bank (Pakistan) Limited ("Bank") supports and re-confirms its commitment to
continued support and implementation of the highest standards of Corporate Governance at all times.
This statement is being presented to comply with Clause 5.19 of the Code of Corporate Governance ('the Code') as contained
in the Rule Book of the Pakistan Stock Exchange, for the purpose of establishing a framework of Good Governance, whereby a
listed company is managed in compliance with the best practices of Corporate Governance.
For the year ended 31 December 2017, the Bank has applied the principles contained in the Code in the following manner:
1. The Bank encourages representation of independent non-executive directors on its Board of Directors. At year end, the
Board consisted of the following directors:
Mr. Ian Bryden (Chairman) Non Executive Director

Mr. Shazad Dada (CEO) Executive Director
Mr. Ferdinand Pieterse Non Executive Director
Mr. Mohamed Abdelbary Non Executive Director
Mr. Parvez Ghias Independent Non Executive Director
Mr. Najam I. Chaudhri Independent Non Executive Director *
Mrs. Spenta Kandawalla Independent Non Executive Director
Independent non-executive directors meet the criteria of independence under clause 5.19.1 (b) of the Code.
2. The Directors have confirmed that none of them is serving as a director in more than seven listed companies, including this
Bank.
3. All the resident directors of the Bank are registered taxpayers and none of them has defaulted in payment of any loan to a
banking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock
exchange.
4. The Bank has adopted Group's 'Code of Conduct', which has been approved by the Board and is disseminated to all the
directors and employees of the Bank along with its supporting policies and procedures.
5. The Board has developed and approved a vision/ mission statement and overall corporate strategy. The Board has also
approved significant policies and adopted certain Standard Chartered Group policies as far as they are in accordance with
the local laws and regulations. A complete record of particulars of significant policies along with the dates on which they
were approved or amended has been maintained.
6. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and
determination of remuneration and terms and conditions of employment of the CEO are taken by the Board.
7. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for
this purpose.
8. No casual vacancy occurred during the period under review.
9. The Board met at least once in every quarter. Notices of meetings, agendas and related papers are circulated at least seven
days before the meeting except in case where an emergent meeting is to be held. The minutes of the meetings were
appropriately recorded and circulated.
10. The Board has approved appointment of CFO, Head of Internal Audit and Company Secretary including their remuneration
and terms and conditions of employment.
11. The Board has formed an Audit Committee. Committee also ensures independence of the internal audit function and
independence and objectivity of the External Auditors.
12. The Audit Committee of the Board comprised of three members. Two of them including Chairperson were Independent Non-
Executive Directors while third member was a Non-Executive Director.
13. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and final results of
the Bank as required by the Code. The terms of reference of this Committee have been approved by the Board and advised
to the Committee for compliance.
* As per specific approval from State Bank of Pakistan
29
Statement of Compliance with the Code of
14. The Board has constituted a three member Human Resource & Remuneration Committee. Two of them including Chairperson
were Independent Non-Executive Directors whereas third member was a Non-Executive Director.
15. The Directors' Report for the year under review has been prepared in compliance with the requirements of the Code and
fully describes the salient matters required to be disclosed.
16. The financial statements of the Bank were duly endorsed by CEO and CFO before approval of the Board.
17. The directors, CEO and executives do not hold any interest in the shares of the Bank other than that disclosed in the pattern
of shareholding. No trading in shares of the Bank was carried out by the Directors, Executives and their spouses and minor
children during the year as confirmed by them.
18. All Directors are provided with an Orientation Pack on their appointment. All Directors on the Board have completed directors
training programs/courses arranged by Pakistan Institute of Corporate Governance. During the period under review, a number
of in-house orientation sessions were attended by the directors.
19. The Bank has complied with all the corporate and financial reporting requirements of the Code.
20. The Board has set up an effective Internal Audit Department (IAD). Head of IAD reports directly to the Chairman of the Board
Audit Committee. Personnel of internal audit function are suitably qualified and experienced for the purpose and are conversant
with the policies and procedures of the Bank.
21. The Board of Directors has put in place a mechanism for undertaking annual evaluation of the performance of the Board.
22. The statutory auditors of the Bank have confirmed that they have been given a satisfactory rating under the quality control
review program of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses
and minor children do not hold shares of the Bank and that the firm and all its partners are in compliance with International
Federation of Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Chartered Accountants of Pakistan.
23. The statutory auditors or the persons associated with them have not been appointed to provide other services except in
accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this
regard.
24. Material/ price sensitive information, if any, has been disseminated to the Stock Exchange and Securities and Exchange
Commission of Pakistan in a timely manner.
25. The 'closed period', prior to the announcement of interim/final results, and business decisions, which may materially affect
the market price of company's securities, was determined and intimated to directors, employees and stock exchange(s).
26. The Bank has all requisite information of persons having access to inside information which is maintained by designated
senior management officer in a timely manner. The Bank has made significant progress in formalizing the register and will
make further improvements as per the requirements.
27. The Bank has complied with the requirements of the Listing Regulations relating to Related Party transactions. The definition
of related party used is in accordance with repealed Companies Ordinance, 1984 and applicable financial reporting frame
work as the regulations under Section 208 of the Companies Act, 2017 have not yet been announced.
28. All other material principles contained in the Code have been complied with.
By Order of the Board
Shazad Dada Najam I. Chaudhri

Chief Executive Officer Director

Six Years Key Financial Data
Rupees in million
2012 2013 2014 2015 2016 2017
Key Financial Date
Revenue 26,796 24,214 28,256 29,405 26,548 25,480

Operating Profit 12,705 15,213 15,696 16,942 14,204 13,744
Profit before Tax 9,108 16,144 15,231 15,385 15,345 13,453
Profit after Tax 5,911 10,528 9,725 9,288 9,618 8,245
Net Mark-up Income before provision 19,480 18,329 20,863 22,308 19,385 17,280
Non Mark-up Income 7,316 5,885 7,393 7,097 7,163 8,200
Non Mark-up Expenses 14,091 9,000 12,560 12,463 12,344 11,736
Shareholders Equity 50,331 52,286 54,456 55,016 56,872 57,335
Total Assets 388,872 394,508 409,568 447,348 474,752 513,549
Advances - net 135,184 135,495 128,590 108,853 113,951 137,655
Investments - net 131,977 146,687 189,678 231,837 245,850 272,488
Deposits 266,670 296,557 304,504 327,238 365,562 377,576
Expense / Income Ratio 53% 37% 44% 42% 46% 46%
Advances / Deposits Ratio 51% 46% 42% 33% 31% 36%
Return on Equity 11.63% 20.52% 18.22% 17.23% 17.60% 14.74%
Return on Assets 1.59% 2.69% 2.42% 2.23% 2.23% 1.79%
31
Standard Chartered Bank (Pakistan) Limited
Financial Statements
For the year ended
31 December 2017

KPMG Taseer Hadi & Co. Telephone: + 92 (21) 3568 5847
Chartered Accountants Fax: + 92 (21) 3568 5095
First Floor Internet: www.kpmg.com.pk
Sheikh Sultan Trust Building No. 2
Beaumont Road
Karachi 75530 Pakistan
Auditors Report to the Members

We have audited the annexed statement of financial position of Standard Chartered Bank (Pakistan) Limited ("the Bank") as
at 31 December 2017 and the related profit and loss account, statement of comprehensive income, cash flow statement and
statement of changes in equity together with the notes forming part thereof (here-in-after referred to as the 'financial statements')
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.
It is the responsibility of the Bank's Board of Directors to establish and maintain a system of internal control, and prepare and
present the financial statements in conformity with approved accounting standards and the requirements of the Banking Companies
Ordinance, 1962 (LVII of 1962), and the repealed Companies Ordinance, 1984 (XLVII of 1984). Our responsibility is to express
an opinion on these statements based on our audit.
We conducted our audit in accordance with the International Standards on Auditing as applicable in Pakistan. These standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
any material misstatement. An audit includes examining, on a test basis, evidence supporting amounts and disclosures in the
financial statements. An audit also includes assessing the accounting policies and significant estimates made by management,
as well as, evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis
for our opinion and after due verification, which in case of loans and advances covered more than sixty percent of the total loans
and advances of the Bank, we report that:
a) in our opinion, proper books of account have been kept by the Bank as required by the repealed Companies Ordinance,
1984 (XLVII of 1984);
b) in our opinion:
i) the statement of financial position and the profit and loss account together with the notes thereon have been drawn up
in conformity with the Banking Companies Ordinance, 1962 (LVII of 1962), and the repealed Companies Ordinance,
1984 (XLVII of 1984), and are in agreement with the books of account and are further in accordance with the accounting
policies consistently applied,
ii) the expenditure incurred during the year was for the purpose of the Bank's business; and,
iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the
objects of the Bank and the transactions of the Bank which have come to our notice have been within the powers of
the Bank;
c) in our opinion and to the best of our information and according to the explanations given to us, the statement of financial
position, profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in
equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan,
and, give the information required by the Banking Companies Ordinance, 1962 (LVII of 1962), and the repealed Companies
Ordinance, 1984 (XLVII of 1984), in the manner so required and give a true and fair view of the state of the Bank's affairs
as at 31 December 2017 and its true balance of profit, its cash flows and changes in equity for the year then ended; and
d) in our opinion Zakat deductible at source, under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the
Bank and deposited in the Central Zakat Fund established under section 7 of that Ordinance.
Date: 08 March, 2018 KPMG Taseer Hadi & Co.

Karachi Syed Iftikhar Anjum
33
Statement of Financial Position
As at 31 December 2017
Note 2017 2016

(Rupees in 000)
ASSETS
Cash and balances with treasury banks 4 35,085,289 40,729,979

Balances with other banks 5 779,856 5,699,791
Lendings to financial institutions 6 8,067,665 19,798,390
Investments 7 272,487,815 245,850,227
Advances 8 137,655,093 113,950,767
Operating fixed assets 9 8,033,890 5,773,296
Intangible assets 10 26,095,642 26,095,890
Other assets 11 25,343,352 16,853,879
513,548,602 474,752,219
LIABILITIES
Bills payable 12 18,958,345 10,821,793

Borrowings 13 26,029,816 14,400,841
Deposits and other accounts 14 377,576,064 365,562,094
Sub-ordinated loans 15 - 2,500,000
Deferred tax liabilities - net 16 3,706,408 1,754,807
Other liabilities 17 24,341,273 18,430,391
450,611,906 413,469,926
NET ASSETS 62,936,696 61,282,293
REPRESENTED BY:
Share capital 18 38,715,850 38,715,850

Reserves 19 14,419,594 12,770,562
Unappropriated profit 4,199,687 5,385,558
57,335,131 56,871,970
Surplus on revaluation of assets - net of deferred tax 20 5,601,565 4,410,323
62,936,696 61,282,293
CONTINGENCIES AND COMMITMENTS 21
The annexed notes 1 to 43 and Annexure I form an integral part of these annual financial statements.
Shazad Dada Asad Ali Shariff Najam I. Chaudhri Parvez Ghias Mohamed Abdelbary
Chief Executive Officer Chief Financial Officer Director Director Director

Profit and Loss Account
For the year ended 31 December 2017
Note 2017 2016

------------- (Rupees in 000) ------------
Mark-up / return / interest earned 22 26,798,792 28,395,001
Mark-up / return / interest expensed 23 (9,519,290) (9,009,663)
Net mark-up / return / interest income 17,279,502 19,385,338
(Provision) / recovery against non-performing loans and advances - net 8.3 & 17.2 (329,069) 1,069,467
Recovery of amounts written off 221,953 224,126
Provision for diminution in the value of investments 7.3 (64,029) -
Bad debts written off directly 8.5.1 (119,416) (152,695)
(290,561) 1,140,898
Net mark-up / return / interest income after provisions 16,988,941 20,526,236
NON MARK-UP / NON INTEREST INCOME

Fees, commission and brokerage income 4,411,718 3,329,942
Dividend income 875 -
Income from dealing in foreign currencies 24 2,299,364 1,732,619
Gain on sale of securities - net 25 874,325 1,543,649
Unrealized gain on revaluation of investments
classified as held for trading 7.11 18,876 7,761
Other income 26 595,259 548,804
Total non mark-up / non interest income 8,200,417 7,162,775
25,189,358 27,689,011
NON MARK-UP / NON INTEREST EXPENSES
Administrative expenses 27 (11,456,760) (11,964,196)
Other (provisions) / reversal / asset write-offs 28 6,897 (27,593)
Other charges 29 (286,370) (352,356)
Total non mark-up / non interest expenses (11,736,233) (12,344,145)
13,453,125 15,344,866
Extra-ordinary / unusual items - -
PROFIT BEFORE TAXATION 13,453,125 15,344,866
Taxation - current (5,240,335) (5,500,616)
- prior years' 2,230,743 (340,495)
- deferred (2,198,371) 114,030
30 (5,207,963) (5,727,081)
PROFIT AFTER TAXATION 8,245,162 9,617,785
----------------- (Rupees) ------------------
Financial statements and notes

BASIC / DILUTED EARNINGS PER SHARE 31 2.13 2.48
35
Statement of Comprehensive Income
2017 2016
------------ (Rupees in 000) ------------
Profit after tax for the year 8,245,162 9,617,785
Other comprehensive income

Items that will never be reclassified to profit or loss subsequently
Remeasurement of post employment obligations (5,394) 5,868

Related tax charge 1,888 (2,054)
(3,506) 3,814
Comprehensive income transferred to equity 8,241,656 9,621,599
Components of comprehensive income not reflected in equity
Deficit on revaluation of available for sale securities - net (1,211,104) (3,866,819)

Surplus on revaluation of fixed assets 2,173,629 -
Related tax charge 244,882 1,353,386
1,207,407 (2,513,433)

Cash Flow Statement
Note 2017 2016
------------ (Rupees in 000) ------------
CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation for the year 13,453,125 15,344,866
Less: Dividend income (875) -
13,452,250 15,344,866
Adjustments for:
Depreciation 453,537 445,603
Amortization 248 30,830
Gain realised on disposal of subsidiaries's operations - (248,621)
Gain on disposal of fixed assets - net (16,813) (49,203)
Unrealized gain on revaluation of investments classified as held for trading - net (18,876) (7,761)
Asset write-offs / other provisions / (reversals) 28 (6,897) 27,593
Provision for diminution in the value of investments 64,029 -
Provision / (recovery) against non-performing loans and advances 226,532 (1,140,898)
701,760 (942,457)
14,154,010 14,402,409
(Increase) / decrease in operating assets
Lendings to financial institutions 11,730,725 652,230
Net investments in 'held for trading' securities (3,678,760) 353,731
Advances (23,930,858) (3,956,433)
Other assets (excluding advance taxation) (5,365,719) 5,650,533
(21,244,612) 2,700,061
Increase / (decrease) in operating liabilities
Bills payable 6,024,552 (579,398)
Borrowings from financial institutions (excluding overdrawn nostros) 12,122,908 (6,909,461)
Deposits and other accounts 12,013,970 38,324,567
Other liabilities 5,848,649 (2,286,563)
36,010,079 28,549,145
Cash inflow before taxation 28,919,477 45,651,615
Income tax paid (6,116,014) (6,588,269)
Net cash generated from operating activities 22,803,463 39,063,346
CASH FLOW FROM INVESTING ACTIVITIES

Net investments in 'available for sale' securities (24,215,085) (18,911,938)
Proceeds from sale of investment in subsidiaries - 935,767
Dividend income received 875 -
Net investment in fixed assets (including intangible assets) (556,331) (420,790)
Sale proceeds on disposal of operating fixed assets 16,813 188,319
Net cash used in investing activities (24,753,728) (18,208,642)

CASH FLOW FROM FINANCING ACTIVITIES
Repayment of sub-ordinated loan (388,000) -
Dividend paid (7,732,427) (7,732,921)
Net cash used in financing activities (8,120,427) (7,732,921)
(Decrease) / increase in cash and cash equivalents for the year (10,070,692) 13,121,783
Cash and cash equivalents at beginning of the year 45,849,084 32,727,301
Cash and cash equivalents at end of the year 33 35,778,392 45,849,084
37
Statement of Changes in Equity
Share Share Statutory Unappropriated

Total
Capital Premium Reserve Profit (a)
------------------------------------------ (Rupees in 000) ------------------------------------------
Balance as at 01 January 2016 38,715,850 1,036,090 9,810,915 5,453,310 55,016,165

Total Comprehensive income for the year
Profit after tax for the year ended 31 December 2016 - - - 9,617,785 9,617,785
Other Comprehensive income
Remeasurement of post employment obligations - net of tax - - - 3,814 3,814
- - - 9,621,599 9,621,599
Transactions with owners, recorded directly in equity
Share based payment transactions (Contribution from
holding Company) - - - 21,890 21,890
Payment against share based payment transactions (to

holding Company) - - - (55,047) (55,047)
Cash dividend (Final 2015) at Rs. 1.25 per share - - - (4,839,481) (4,839,481)
Cash dividend (Interim 2016) at Rs. 0.75 per share - - - (2,903,689) (2,903,689)
- - - (7,776,327) (7,776,327)
Transfer to statutory reserve - - 1,923,557 (1,923,557) -
Transferred from surplus on revaluation of

fixed asset - net of deferred tax - - - 10,533 10,533
Balance as at 31 December 2016 38,715,850 1,036,090 11,734,472 5,385,558 56,871,970
Total Comprehensive income for the year

Profit after tax for the year ended 31 December 2017 - - - 8,245,162 8,245,162
Other Comprehensive income
Remeasurement of post employment obligations - net of tax (3,506) (3,506)
- - - 8,241,656 8,241,656
Transactions with owners, recorded directly in equity
Share based payment transactions (Contribution from
holding Company) - - - 28,661 28,661
Payment against share based payment transactions (to

holding Company) - - - (80,151) (80,151)
Cash dividend (Final 2016) at Rs. 1.25 per share - - - (4,839,481) (4,839,481)
Cash dividend (Interim 2017) at Rs. 0.75 per share - - - (2,903,689) (2,903,689)
- - - (7,794,660) (7,794,660)
Transfer to statutory reserve - - 1,649,032 (1,649,032) -

Transferred from surplus on revaluation of
fixed assets - net of deferred tax - - - 16,165 16,165
Balance as at 31 December 2017 38,715,850 1,036,090 13,383,504 4,199,687 57,335,131
(a) As further explained in note 8.2.1 of these annual financial statements the amount of Rs. 105.660 million as at 31 December 2017 represents
additional profit arising from availing forced sale value benefit for determining provisioning requirement which is not available for the purpose of
distribution of dividend to shareholders / bonus to employees.

Notes to the Financial Statements
1. STATUS AND NATURE OF BUSINESS
Standard Chartered Bank (Pakistan) Limited ("the Bank") was incorporated in Pakistan on 19 July 2006 and was granted
approval for commencement of banking business by State Bank of Pakistan, with effect from 30 December 2006. The
ultimate holding company of the Bank is Standard Chartered PLC, incorporated in England. The registered office is at
Standard Chartered Bank Building, I.I. Chundrigar Road, Karachi.
The Bank commenced formal operations on 30 December 2006 through amalgamation of entire undertaking of Union
Bank Limited and the business carried on by the branches in Pakistan of Standard Chartered Bank, a bank incorporated
by Royal Charter and existing under the laws of England. The scheme of amalgamation was sanctioned by State Bank
of Pakistan vide its order dated 4 December 2006. The Bank's shares are listed on Pakistan Stock Exchange.
The Bank is engaged in the banking business as defined in the Banking Companies Ordinance, 1962 and has a total
number of 93 branches in Pakistan (2016: 101 branches in Pakistan) in operation at 31 December 2017.
2. BASIS OF PREPARATION
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. One permissible form of trade related mode
of financing comprises of purchase of goods by the Bank from its 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 financial statements as such but are restricted to the amount of facility actually utilised and the appropriate portion
of mark-up thereon.
Key financial figures of the Islamic banking branches are disclosed in note 42 to these financial statements.
2.2 Statement of compliance
These financial statements have been prepared in accordance with the 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) and Islamic Financial Accounting Standards (IFASs) issued by
the Institute of Chartered Accountants of Pakistan, as are notified under the repealed Companies Ordinance, 1984, the
provisions and directives issued under the repealed Companies Ordinance, 1984, the Banking Companies Ordinance,
1962 and the directives issued by the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of
Pakistan (SBP). In case the requirements differ, the provisions of and directives issued under the repealed Companies
Ordinance, 1984 and Banking Companies Ordinance, 1962 and the directives issued by the SECP and SBP shall prevail.

The Companies Ordinance, 1984 was repealed by enactment of the Companies Act, 2017 on May 30, 2017. The circular
no. 23/2017 dated October 04, 2017 of SECP has clarified that all those companies whose financial year closes on or
before December 31, 2017 can prepare financial statements in accordance with the repealed Companies Ordinance,
1984.
The SBP has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments: Recognition
and Measurement' and International Accounting Standard (IAS) 40, 'Investment Property' for Banking Companies in
Pakistan through BSD Circular Letter 10 dated August 26, 2002 till further instructions. Further, the SECP has deferred
the applicability of International Financial Reporting Standard (IFRS) 7 'Financial Instruments: Disclosures' through its
notification S.R.O 411(I)/2008 dated April 28, 2008. Accordingly, the requirements of these standards have not been
considered in the preparation of these financial statements. However, investments have been classified and valued in
accordance with the requirements prescribed by the SBP through various circulars.
The Securities and Exchange Commission of Pakistan (SECP) has notified Islamic Financial Accounting Standard (IFAS)
3, 'Profit and Loss Sharing on Deposits' issued by the Institute of Chartered Accountants of Pakistan. IFAS 3 shall be
followed with effect from the financial periods beginning after January 1, 2014 in respect of accounting for transactions
relating to 'Profit and Loss Sharing on Deposits' as defined by the said standard. The standard has resulted in certain
new disclosures in the financial statements of the Bank. The SBP through BPRD Circular Letter No. 4 dated February
25, 2015, has deferred the applicability of IFAS 3 till further instructions and prescribed the Banks to prepare their annual
and periodical financial statements as per existing prescribed formats issued vide BSD Circular 04 of 2006 and BSD
Circular Letter No. 02 of 2004, as amended from time to time.
39
2.3 Basis of measurement
These financial statements have been prepared under the historical cost convention, except that certain available for sale,
trading and derivative financial instruments have been measured at fair value, whereas certain fixed assets are stated
at revalued amounts less accumulated depreciation and accumulated impairment losses, where applicable.
2.4 Use of estimates and judgments
The preparation of financial statements in conformity with approved accounting standards requires management to make
judgments, estimates and assumptions that effect the application of accounting policies and reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate
is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects
both current and future periods.
In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting
policies that have the most significant effect on the amounts recognised in the financial statements are described in the
following:
- Note 7 Classification and provisioning against investments

- Note 8.2 Classification and provisioning against non-performing advances
- Note 9 & 10 Valuation and depreciation / amortisation rates for fixed / intangible assets
- Note 9 & 10 Impairment of non-financial assets including goodwill and other intangibles
- Note 16 Deferred taxation
- Note 21.8 Derivative instruments
- Note 30 Income taxes
- Note 34 Employees' retirement defined benefit plans
2.5 Functional and presentation currency
These financial statements are presented in Pakistan Rupees, which is the Banks functional currency. Except as indicated,
financial information presented in Pakistan Rupees has been rounded to the nearest thousand.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies
have been applied consistently to all years presented.
3.1 Business acquisitions
Acquisitions from entities under common control
Business combinations arising from transfers of interests in entities that are under the control of the shareholder that
controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period
presented. For this purpose comparatives are restated, where required. The assets and liabilities acquired are recognised
at the carrying amounts recognised previously in the combining entity's financial statements.
Other acquisitions
Other business combinations are accounted for using the acquisition method. For acquisition prior to 1 January 2009,
the cost of acquisition is measured as the fair value of the asset given, equity instruments issued and the liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identified assets acquired are fair
valued at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of cost of acquisition
over the fair value of identifiable net assets acquired is recorded as goodwill. Subsequently, any recoveries or losses to
fair value of net assets are taken to profit and loss account and disclosed in note 26 to these financial statements.
3.2 Cash and cash equivalents
For the purposes of cash flow statement, cash and cash equivalents comprise of cash and balances with treasury banks,
balances with other banks and overdrawn nostros.

3.3 Investments
The Bank classifies its investments as follows:
a) Held for trading
These are securities, which are acquired with the intention to trade by taking advantage of short term market / interest
rate movements and are carried at market value. The surplus / deficit arising as a result of revaluation at market value is
recognised in the profit and loss account. These securities are to be sold within 90 days from the date of their classification
as 'Held for trading' under normal circumstances, in accordance with the requirements specified by BSD Circular 10 dated
13 July 2004 issued by the State Bank of Pakistan. Market value of investment in Government securities is determined
based on the relevant PKRV and PKISRV rates.
b) Held to maturity
These are securities with fixed or determinable payments and fixed maturity that are held with the intention and ability
to hold to maturity. These are carried at amortised cost.
c) Available for sale
These are investments that do not fall under the held for trading or held to maturity categories and are carried at market
value. The surplus / deficit arising as a result of revaluation at market value is kept in a separate account below equity.
Market value of investment in Government securities is determined based on the relevant PKRV and PKISRV rates.
All 'regular way' purchases and sales of investments are recognised on the trade date i.e. the date that the bank commits
to purchase or sell the asset. Regular way purchases or sales are purchases or sales of investments that require delivery
of assets within the time frame generally established by regulation or convention in the market place.
Impairment
Impairment loss in respect of equity securities classified as available for sale and subsidiaries is recognised based on
management's assessment of objective evidence of impairment as a result of one or more events that may have an impact
on the estimated future cash flows of the investments. A significant or prolonged decline in fair value of an equity investment
below its cost is also considered an objective evidence of impairment. Provision for diminution in the value of debt securities
is made as per the Prudential Regulations issued by the State Bank of Pakistan. In case of impairment of available for
sale securities, the cumulative loss that has been recognised directly in surplus / (deficit) on revaluation of securities on
the statement of financial position below equity is removed there from and recognised in the profit and loss account. For
investments in subsidiaries, the impairment loss is assessed with reference to estimated cash flows of the investment
and the loss is recognised in the profit and loss account.
3.4 Sale and repurchase agreements

Securities sold subject to repurchase agreements ('repos') remain on the balance sheet; the counterparty liability is
included in borrowings from financial institutions. Securities purchased under agreements to resell ('reverse repos') are
recorded as lendings to financial institutions. The difference between sale and repurchase price is treated as interest /
mark-up / return and accrued over the life of the underlying agreement using the effective interest method.
3.5 Advances
Advances are stated net of provision against non-performing advances. Specific and general provisions are made based
on an appraisal of the loan portfolio that takes into account Prudential Regulations issued by the State Bank of Pakistan
from time to time. Specific provisions are made where the repayment of identified loans is in doubt and reflect an estimate
of the amount of loss expected. The general provision is for the inherent risk of losses which, although not separately
identified, are known from experience to be present in any loan portfolio. Provision made / reversed during the year is
charged to the profit and loss account and accumulated provision is netted off against advances. Advances are written-
off when there is no realistic prospect of recovery.
When the Bank is the lessor in a lease agreement that transfers substantially all of the risks and rewards incidental to
ownership of an asset to the lessee, the arrangement is presented within loans and advances.
Islamic financing
Murabaha financings are reflected as receivables at the sale price. Actual sale and purchase is not reflected as the goods
are purchased by the customer as agent of the Bank and all documents relating to purchase are in customer's name.
Funds disbursed under Murabaha financing arrangements for purchase of goods are recorded as Advance Against
Murabaha.
41
In Diminishing Musharaka based financing, the Bank enters into a Musharaka based on Shirkat-ul-milk for financing an
agreed share of fixed asset (e.g. house, land, plant or machinery) with its customers and enters into a periodic rental
payment agreement for the utilization of the Bank's Musharaka share by the customer.
Assets under Ijarah are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Assets
under Ijarah are depreciated over the term of the lease.
Musharakah is a partnership contract where the Bank enters into financing relationship with the customer based on
Shirkat-ul-Aqd. The profits are shared as per agreed ratios between partners and losses are borne in proportion to their
respective capital contributions.
3.6 Operating fixed assets - tangible
Owned
Operating fixed assets, other than land and buildings, are stated at cost less accumulated depreciation and accumulated
impairment losses thereon. Cost includes expenditure that is directly attributable to the acquisition of fixed assets. Land
and buildings are stated at revalued amounts less accumulated depreciation.
Subsequent costs are included in the asset's carrying amount or are recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item
can be measured reliably. All other repairs and maintenance expenditures are charged to profit and loss account during
the financial period in which they are incurred.
Land and buildings are revalued by independent professionally qualified valuer(s). Surplus arising on revaluation is credited
to the 'surplus on revaluation of fixed assets' account (net of deferred tax). Under the provisions of the repealed Companies
Ordinance, 1984, deficit arising on revaluation of fixed assets is adjusted against the balance in the above-mentioned
surplus account. The revaluation is carried out with sufficient regularity to ensure that the carrying amount does not differ
materially from that which would have been determined using fair value at the balance sheet date.
Accumulated depreciation on owned buildings, at the date of revaluation, is eliminated against the gross carrying amount
of buildings. The net amount is then restated to the revalued amount.
Surplus on revaluation of fixed assets (net of deferred tax) is transferred to unappropriated profit to the extent of incremental
depreciation charged on related assets.
Land is not depreciated. Depreciation on all other fixed assets is calculated using the straight line method to allocate their
depreciable cost or revalued amount to their residual values over their estimated useful lives.
The residual values and useful lives of fixed assets are reviewed, and adjusted (if appropriate) at each balance sheet date.
Gains and losses on disposal of fixed assets are included in profit and loss account currently, except that the related
surplus on revaluation of fixed assets (net of deferred tax) is transferred directly to unappropriated profits.
Leased
Fixed assets held under finance lease are stated at the lower of fair value of asset and present value of minimum lease
payments at the inception of lease, less accumulated depreciation. Financial charges are allocated over the period of
lease term so as to provide a constant periodic rate of financial charge on the outstanding liability. Depreciation is charged
on the basis similar to owned assets.
3.7 Intangible assets
Goodwill
Goodwill represents the excess of cost of an acquisition over the fair value of net identifiable assets acquired at the date
of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment.
Computer software
Acquired computer software licenses are capitalised on the basis of costs incurred to acquire and bring to use the specific
software. These costs are amortised over their expected useful lives using the straight line method.

Acquired intangibles in business combination
Acquired intangibles in business combination that have finite lives are amortised over their economic useful life based
on the manner that benefits of the relevant assets are consumed.
3.8 Impairment of non-financial assets
The carrying amounts of the Banks non-financial assets, other than deferred tax assets, are reviewed at each reporting
date to determine whether there is any indication of impairment. If any such indication exists then the assets recoverable
amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit
exceeds its recoverable amount.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs
to sell. In assessing value in use, the estimated pre-tax future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in
prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
3.9 Staff retirement benefits
Defined benefit plan
The Bank operates approved funded management and non management pension scheme only for its existing pensioners.
For defined benefit plans, the net defined benefit liability /asset recognised in the balance sheet is the deficit or surplus,
adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. The deficit or surplus is:
(a) the present value of the defined benefit obligation less

(b) the fair value of plan assets (if any).
The present value of defined benefit obligation is calculated annually by independent actuaries by discounting the estimated
future cash flows using an interest rate equal to the yield on high-quality corporate bonds.
Actuarial gains or losses that arise are recognised in other comprehensive income in the period they arise. Service cost
and Net interest on net defined benefit liability / (asset) are also recognised in profit and loss account.
Defined contribution plan

The Bank also operates a defined contribution gratuity scheme for all its management and non management staff, and
a provident fund scheme for all its permanent staff, contributing at 8.33 percent and 10 percent of basic salary respectively.
3.10 Foreign currency transactions
Transactions in foreign currencies are translated to Pakistan Rupees at exchange rates prevailing at the date of transaction.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to Pakistan Rupees
at the exchange rate prevailing at that reporting date. Foreign currency differences arising on retranslation are recognised
in profit or loss.
3.11 Taxation
Income tax expense comprises of current and deferred tax. Income tax expense is recognised in the profit and loss account
except to the extent that it relates to items recognised directly in equity or in other comprehensive income.
Current tax
Current tax is the expected tax payable on the taxable income for the year (using tax rates enacted or substantively
enacted at the balance sheet date), and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is provided for using the balance sheet method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
43
Deferred tax is measured at tax rates that are expected to be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realised.
3.12 Revenue recognition
Mark-up / return on advances and investments is recognised on an accrual basis using the effective interest rate method.
The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the
expected life of the financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial
asset or liability.
Mark-up recoverable on classified loans, advances and investments is recognised on a receipt basis in accordance with
the requirements of Prudential Regulations issued by the State Bank of Pakistan. Mark-up on rescheduled / restructured
loans, advances and investments is also recognised in accordance with the requirements of these Prudential Regulations.
Where debt securities are purchased at a premium or discount, those premiums / discounts are amortized through profit
and loss account over the remaining maturity, using the effective yield method.
Fees, commission and brokerage income is recognised on an accrual basis except where in the opinion of the management,
it would not be prudent to do so. Fees and commission which in substance amount to an additional interest charge, are
recognised over the life of the underlying transaction on a level yield basis.
Dividend income is recognised when the right to receive income is established.
A portion of income is deferred for loyalty reward credits awarded to customers for usage of banks credit card and are
measured by reference to their fair value. Upon expiry / redemption of the reward credits, the income previously deferred
will be reversed and cost related to the redemption will be recognized.
Murabaha transactions are reflected as receivable at sale price. Actual sale and purchase are not reflected as the goods
are purchased by the customer as agent of the Bank. Profit on the sales revenue not due for payment is deferred by
recording a credit to 'Deferred Murabaha Income' account.
Ijarah income is recognized on an accrual basis as and when the rental becomes due unless another systematic basis
is more representative of the time pattern in which benefit of use is derived from the leased asset is diminished.
3.13 Derivative financial instruments
Derivative financial instruments are initially recognised at fair value and are subsequently remeasured at fair value. All
derivative financial instruments are carried as assets when fair value is positive and liabilities when fair value is negative.
Any change in the fair value of derivative financial instruments is taken to profit and loss account.
3.14 Provisions
Provisions for restructuring costs and legal claims are recognised when: (i) the Bank has a present legal or constructive
obligation as a result of past events; (ii) it is more likely than not that an outflow of resources will be required to settle
the obligation; and (iii) the amount has been reliably estimated.
3.15 Fiduciary activities
The Bank commonly acts in fiduciary capacities that result in the holding or placing of assets on behalf of individuals,
trusts, retirement benefit plans and other institutions for which it earns a fee. These assets and its related income arising
thereon are excluded from these financial statements, as they are not assets of the Bank.
3.16 Segment reporting
A segment is a component of the Bank that engages in business activities for which it may earn revenues and incur
expenses (including revenue and expense relates to transactions with other component), whose results are regularly
reviewed by the Chief decision maker to make decisions about resources to be allocated to the segment and access its
performance and for which financial information is available. A brief description of the products and services offered by
different segments of the Bank is given in note 38 to these financial statements.

3.17 Offsetting
Financial assets and liabilities are set off and the net amount presented in the balance sheet when, and only when, the
Bank has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle
the liability simultaneously.
3.18 Subordinated liabilities
Subordinated liabilities are initially measured at fair value plus transaction costs, and subsequently measured at their
amortised cost using the effective interest method.
3.19 Share-based compensation
The Group operates various share-based compensation plans which are accounted for as equity settled share based
payment transactions, regardless of inter group repayment arrangements. The cost for such share based payment
transactions is determined by reference to the fair value of options at the grant date. The fair value is determined based
on the market price or using an appropriate valuation technique. The cost is charged to profit and loss account and credited
to equity as a contribution from parent. The liability for these transactions which is based on the fair value of these options
at the settlement date is settled through debiting equity.
3.20 Acceptances
Acceptances comprise undertakings by the Bank to pay bills of exchange drawn on customers. The Bank expects most
acceptances to be simultaneously settled with the reimbursement from the customers. Acceptances are accounted for
as off-balance sheet transactions.
3.21 Basic and diluted earnings per share
The Bank presents basic and diluted earnings per share (EPS) for its shareholders. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares
outstanding during the period / year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary
shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential
ordinary shares, if any. There were no convertible dilutive potential ordinary shares in issue at 31 December 2017.
3.22 Dividend and appropriation to reserves
Dividend and appropriation to reserves, except appropriation which are required by law after the balance sheet date, are
recognised as liability in the Bank's financial statements in the year in which these are approved.
3.23 Borrowings / deposits and their cost

- Borrowings / deposits are recorded at the time when the proceeds are received.
- Borrowing / deposit costs are recognised as an expense in the period in which these are incurred using effective mark-
up / interest rate method.
3.24 Financial assets and liabilities
Financial instruments carried on the balance sheet include cash and balances with treasury banks, balances with other
banks, lendings to financial and other institutions, investments, advances, certain receivables, bills payable, borrowings
from financial institutions, deposit accounts and other payables. The particular recognition methods adopted for significant
financial assets and financial liabilities are disclosed in the individual policy statements associated with them.
3.25 Provision for guarantee claims and other off balance sheet obligations
Provision for guarantee claims and other off balance sheet obligations are recognised when intimated and reasonable
certainty exists for the Bank to settle the obligation. Charge to profit and loss account is stated net of expected recoveries.
3.26 Standards, interpretations and amendments to published approved accounting standards

that are effective in the current year
There were certain new and amended standards, interpretations and amendments that were mandatory for the Bank
effective 1 January 2017 but did not have any significant effect on the Bank's financial statements and therefore not
detailed in these financial statements.
45
3.27 Standards, interpretations and amendments to published approved accounting standards that are not yet effective
The following standards, amendments and interpretations of approved accounting standards will be effective for accounting
periods beginning on or after 1 January 2018:
l Classification and measurement of Share Based Payment transactions amendments to IFRS 2 - Share-based Payment
clarify the accounting for certain types of arrangements and are effective for annual periods beginning on or after 1
January 2018. The amendments cover three accounting areas (a) measurement of cash-settled share-based payments;
(b) classification of share-based payments settled net of tax withholdings; and (c) accounting for a modification of a
share-based payment from cash-settled to equity-settled. The new requirements could affect the classification and /
or measurement of these arrangements and potentially the timing and amount of expense recognized for new and
outstanding awards. The amendments are not likely to have an impact on Banks financial statements.
l Annual Improvements to IFRSs 2014-2016 Cycle [Amendments to IAS 28 Investments in Associates and Joint
Ventures] (effective for annual periods beginning on or after 1 January 2018) clarifies that a venture capital organization
and other similar entities may elect to measure investments in associates and joint ventures at fair value through profit
or loss, for each associate or joint venture separately at the time of initial recognition of investment. Furthermore,
similar election is available to non-investment entity that has an interest in an associate or joint venture that is an
investment entity, when applying the equity method, to retain the fair value measurement applied by that investment
entity associate or joint venture to the investment entity associate's or joint venture's interests in subsidiaries. This
election is made separately for each investment entity associate or joint venture. The amendments are not likely to
have an impact on Banks financial statements.
l IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective for annual periods beginning on or
after 1 January 2018) clarifies which date should be used for translation when a foreign currency transaction involves
payment or receipt in advance of the item it relates to. The related item is translated using the exchange rate on the
date the advance foreign currency is received or paid and the prepayment or deferred income is recognized. The date
of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset,
expense or income (or part of it) would remain the date on which receipt of payment from advance consideration was
recognized. If there are multiple payments or receipts in advance, the entity shall determine a date of the transaction
for each payment or receipt of advance consideration. The application of interpretation is not likely to have an impact
on Bank's financial statements.
l IFRIC 23 Uncertainty over Income Tax Treatments (effective for annual periods beginning on or after 1 January 2019)
clarifies the accounting for income tax when there is uncertainty over income tax treatments under IAS 12. The
interpretation requires the uncertainty over tax treatment be reflected in the measurement of current and deferred tax.
The application of interpretation is not likely to have impact on Bank's financial statements.
l IFRS 15 Revenue from contracts with customers (effective for annual periods beginning on or after 1 July 2018). IFRS
15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It
replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC
13 Customer Loyalty Programmes. The Bank is currently in the process of analyzing the potential impact of changes
required in revenue recognition policies on adoption of the standard. The application of the standard is not likely to
have any material impact on Bank's financial statements.
l IFRS 9 Financial Instruments and amendment - Prepayment Features with Negative Compensation (effective for
annual periods beginning on or after 1 July 2018 and 1 January 2019 respectively). IFRS 9 replaces the existing
guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the
classification and measurement of financial instruments, a new expected credit loss model for calculating impairment
on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition
and derecognition of financial instruments from IAS 39. The Bank is currently awaiting instructions from SBP as
applicability of IAS 39 was deferred by SBP till further instructions.
l Amendment to IAS 28 Investments in Associates and Joint Ventures - Long term interests in Associates and Joint
Ventures (effective for annual periods beginning on or after 1 January 2019). An amendment to IAS 28 Investments
in Associates and Joint Ventures will affect companies that finance such entities with preference shares or with loans
for which repayment is not expected in the foreseeable future (referred to as long-term interests or LTI). The amendment
and accompanying example state that LTI are in the scope of both IFRS 9 and IAS 28 and explain the annual sequence
in which both standards are to be applied. The amendment is not likely to have an impact on the Bank's financial
statements.
Annual Improvements to IFRS Standards 20152017 Cycle - the improvements address amendments to following approved
accounting standards:
l IFRS 3 Business Combinations and IFRS 11 Joint Arrangements the amendment aims to clarify the accounting
treatment when a company increases its interest in a joint operation that meets the definition of a business. A company
remeasures its previously held interest in a joint operation when it obtains control of the business. A company does
not remeasure its previously held interest in a joint operation when it obtains joint control of the business.

l IAS 12 Income Taxes - the amendment clarify that all income tax consequences of dividends (including payments on
financial instruments classified as equity) are recognized consistently with the transaction that generates the distributable
profits.
l IAS 23 Borrowing Costs, the amendment clarifies that a company treats as part of general borrowings any borrowing
originally made to develop an asset when the asset is ready for its intended use or sale.
The above amendments are not likely to have an impact on the Bank's financial statements.
l In addition the Companies Act, 2017 was enacted on 30 May 2017 and according to circular referred to in note 2.2,
for financial statements purposes would be applicable to financial statements for periods after 1 January 2018.
Furthermore, SBP has also notified a new format of financial statements which would be effective from the accounting
year ending 31 December 2018. The Companies Act, 2017 and the revised format would result in additional disclosures
and certain changes in the financial statements presentation.
Note 2017 2016

4 CASH AND BALANCES WITH TREASURY BANKS
------------ (Rupees in 000) ------------
In hand
- Local currency 4.1 3,876,767 2,941,306
- Foreign currencies 4,389,291 3,451,082
With State Bank of Pakistan in:

- Local currency current account 13,223,096 16,763,160
- Local currency current account - Islamic Banking 1,853,289 6,002,173
- Foreign currency deposit account
Cash reserve account 2,974,253 2,822,747
Special cash reserve account 8,364,702 7,944,823
Local US Dollar collection account 53,843 87,739
With National Bank of Pakistan in:
- Local currency current account 350,048 716,949
35,085,289 40,729,979
4.1 This includes National Prize Bonds of Rs. 2.514 million (2016: Rs. 0.888 million).
5 BALANCES WITH OTHER BANKS 2017 2016

------------ (Rupees in 000) ------------
In Pakistan
- In current accounts - -
Outside Pakistan 779,856 5,699,791

- In current accounts 5.1 779,856 5,699,791

5.1 This includes balances of Rs. 735.502 million (2016: Rs. 5,578.725 million) held with other branches and subsidiaries of Standard
Chartered Group outside Pakistan.
6 Note 2017 2016

LENDINGS TO FINANCIAL INSTITUTIONS
------------ (Rupees in 000) ------------
Repurchase agreement lendings (Reverse Repo) 6.1 & 6.5 2,161,425 8,135,575
Bai Muajjal receivable from State Bank of Pakistan 6.2 509,253 -
Placements 6.3 5,396,987 11,662,815
8,067,665 19,798,390
6.1 These carry mark-up rates at return of 5.75 percent per annum (2016: 5.80 percent to 5.85 percent per annum) payable at maturity,
and are due to mature during January 2018. These arrangements are governed under Master Repurchase Agreements.
6.2 These represent lendings to State Bank of Pakistan by Islamic Banking Business under Bai Muajjal agreements at expected return
of 5.51 percent per annum with maturities upto June 2018.
6.3 This represents placements with other branches and subsidiaries of Standard Chartered Group outside Pakistan at mark-up rates
ranging from 0.3 percent to 1.15 percent per annum (2016: 0.08 percent to 1.20 percent per annum), and are due to mature during
January 2018.
47
6.4 Particulars of lending 2017 2016

----------- (Rupees in 000) -----------
In local currency 2,670,678 8,135,575

In foreign currencies 5,396,987 11,662,815
8,067,665 19,798,390
6.5 Securities held as collateral against lendings to financial institutions
2017 2016
Held by Further Total Held by Further Total
bank given as bank given as
collateral collateral
----------------------------------------------- (Rupees in 000) ---------------------------------------------
Market Treasury Bills - - - 7,832,398 - 7,832,398

Pakistan Investment Bonds 2,161,425 - 2,161,425 303,177 - 303,177
2,161,425 - 2,161,425 8,135,575 - 8,135,575
6.5.1 The market value of securities held as collateral against lendings to financial institutions amounted to Rs. 2,167.386 million (2016:
Rs. 8,135.960 million).
7 INVESTMENTS
2017 2016
Held by Given as Total Held by Given as Total
bank collateral bank collateral
7.1 Investments by type
Note --------------------------------------------- (Rupees in 000) ---------------------------------------------
Held for trading securities
Market Treasury Bills 4,536,363 - 4,536,363 59,794 - 59,794
Pakistan Investment Bonds 277,838 - 277,838 1,075,647 - 1,075,647
Available for sale securities
Market Treasury Bills 7.6 255,150,423 6,297,554 261,447,977 192,086,748 - 192,086,748
Pakistan Investment Bonds 7.6 - - - 43,219,957 18,849 43,238,806
GoP Ijarah Sukuk Bond 7.6 5,356,369 - 5,356,369 7,005,946 - 7,005,946
Sukuk Bonds 7.7 800,000 - 800,000 1,050,000 - 1,050,000
Term Finance Certificates - unlisted 7.8 285,025 - 285,025 285,025 - 285,025
Equity shares of listed companies 7.9 783,077 - 783,077 783,077 - 783,077
Equity shares of unlisted companies 7.10 3,004 - 3,004 3,004 - 3,004
Investments at cost 267,192,099 6,297,554 273,489,653 245,569,198 18,849 245,588,047
Provision for diminution in
the value of investments 7.3 (962,147) - (962,147) (898,118) - (898,118)
Investments (net of provisions) 266,229,952 6,297,554 272,527,506 244,671,080 18,849 244,689,929
Surplus on revaluation of
held for trading securities - net 7.11 18,876 - 18,876 7,761 - 7,761
Surplus / (Deficit) on revaluation of
available for sale securities - net (58,712) 145 (58,567) 1,152,060 477 1,152,537
Total Investments - net 266,190,116 6,297,699 272,487,815 245,830,901 19,326 245,850,227

7.2 Investments by segment Note 2017 2016

------------ (Rupees in 000) ------------
Federal Government Securities
Market Treasury Bills 265,984,340 192,146,542
Pakistan Investment Bonds 277,838 44,314,453
GoP Ijarah Sukuk Bonds 5,356,369 7,005,946
Fully paid up ordinary shares
Listed companies 783,077 783,077
Unlisted companies 3,004 3,004
Bonds and Term Finance Certificates - Unlisted
Term Finance Certificates 285,025 285,025
Sukuk Bonds 800,000 1,050,000
Total investment at cost 273,489,653 245,588,047
Less: Provision for diminution in the value of investments 7.3 (962,147) (898,118)
Investment (net of provisions) 272,527,506 244,689,929
Surplus on revaluation of held for trading securities - net 18,876 7,761
Surplus on revaluation of available for sale securities - net 20.2 (58,567) 1,152,537
Total Investments - net 272,487,815 245,850,227
7.3 Particulars of provision for diminution in the value of investments
Opening balance 898,118 808,221

Charge for the year 64,029 -
Other movement - 89,897
Closing Balance 7.3.1 962,147 898,118
7.3.1 The details of provision held against investments are as follows:
Ordinary shares - available for sale 7.9 & 7.10 677,122 613,093
Term Finance Certificates - unlisted 7.8 285,025 285,025
962,147 898,118
7.4 Investments include securities having book value of Rs. 18.369 million (2016: Rs. 18.849 million) pledged with the State Bank of
Pakistan as security to facilitate T.T. discounting facility to the Bank, including an amount earmarked against the facilities allocated
to branches now in Bangladesh.
7.5 Market Treasury Bills and Pakistan Investment Bonds are eligible for discounting with the State Bank of Pakistan.

2017 2016
Quality of 'Available for Sale' securities Note Rating Cost Market Rating Cost Market
value value
7.6 --------------- (Rupees in 000) --------------- --------------- (Rupees in 000) ---------------

Market Treasury Bills Unrated 261,447,977 261,312,332 Unrated 192,086,748 192,011,182

Pakistan Investment Bonds Unrated - - Unrated 43,238,806 44,208,797
GoP Ijarah Sukuk Bonds Unrated 5,356,369 5,411,447 Unrated 7,005,946 7,154,256
Total 266,804,346 266,723,779 242,331,500 243,374,235
7.7 Sukuk Bonds
Wapda Sukuk Bonds Unrated - - Unrated 50,000 49,093

Fatima Fertilizer Sukuk Bonds 7.7.1 AA- 800,000 822,000 AA- 1,000,000 1,000,000
800,000 822,000 1,050,000 1,049,093
49
7.7.1 Fatima Fertilizer Sukuk bonds carry mark-up rates 1.1% above 6 months KIBOR. The principal and profit is payable semi-annually
with maturity in November 2021.
7.8 Bonds and Term Finance Certificates - unlisted 2017 2016

(Rupees in 000)
Term Finance Certificates of Rs. 5,000 each
Agritech Limited 147,000 147,000
Azgard Nine Limited 138,025 138,025
285,025 285,025
Provision for diminution in the value - note 7.3.1 (285,025) (285,025)

- -
7.9 Particulars of shares held - listed

2017 2016
Rating Cost Market Rating Cost Market
2017 2016 value value
(Number of shares) --------------- (Rupees in 000) --------------- --------------- (Rupees in 000) ---------------
22,373,615 22,373,615 Agritech Limited Unrated 783,077 783,077 Unrated 783,077 783,077
783,077 783,077 783,077 783,077
Provision for diminution in
the value - note 7.3.1 - (674,118) - (610,089)
Surplus on revaluation - - - 110,709
783,077 108,959 783,077 283,697
All shares are ordinary shares of Rs. 10 each except otherwise mentioned.
7.10 Particulars of shares held - unlisted

2017 2016 2017 2016 2017 2016
(Number of shares) Rating (Rupees in 000)
573,769 573,769 Pakistan Export Finance Unrated Unrated 3,004 3,004

Guarantee Agency Limited
3,004 3,004
Provision for diminution
in the value - note 7.3.1 (3,004) (3,004)
- -
7.11 Unrealized gain on revaluation of investments classified as held for trading 2015 2017 2016
------- (Rupees in 000) ------
Market Treasury Bills 15,942 149

Pakistan Investment Bonds 2,934 7,612
18,876 7,761

8 ADVANCES Note 2017 2016

------------ (Rupees in 000) ------------
Loans, cash credits, running finances, etc.
- In Pakistan 106,379,877 94,098,584
- Outside Pakistan - -
106,379,877 94,098,584
Islamic Financing and Related Assets (Gross) 43,159,548 32,822,175
Bills discounted and purchased (excluding treasury bills)

- Payable in Pakistan 6,456,222 3,901,614
- Payable outside Pakistan 1,284,007 2,808,964
7,740,229 6,710,578
Advances - gross 157,279,654 133,631,337
Provision for non-performing advances 8.2 (19,624,561) (19,680,570)
Advances - net of provision 137,655,093 113,950,767
8.1 Particulars of advances - gross
8.1.1 In local currency 149,126,002 124,203,041

157,279,654 133,631,337
8.1.2 Short term (for upto one year) 134,275,585 116,817,126

Long term (for over one year) 23,004,069 16,814,211
157,279,654 133,631,337
8.2 Advances include Rs. 19,587.098 million (31 December 2016: Rs. 21,873.219 million) which have been placed under non-performing status
as detailed below:
2017
Classified Advances Provision Required Provision Held
Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total
Category of classification ----------------------------------------------------- (Rupees in 000) ------------------------------------------------------
OAEM 7,961 - 7,961 - - - - - -
Substandard 249,632 - 249,632 44,470 - 44,470 44,470 - 44,470
Doubtful 892,775 - 892,775 644,096 - 644,096 644,096 - 644,096
Loss 18,436,730 - 18,436,730 18,265,415 - 18,265,415 18,265,415 - 18,265,415
19,587,098 - 19,587,098 18,953,981 - 18,953,981 18,953,981 - 18,953,981

General Provision - - - 670,580 - 670,580 670,580 - 670,580
19,587,098 19,587,098 19,624,561 - 19,624,561 19,624,561 - 19,624,561
2016
Classified Advances Provision Required Provision Held
Domestic Overseas Total Domestic Overseas Total Domestic Overseas Total
Category of classification ----------------------------------------------------- (Rupees in 000) ------------------------------------------------------
OAEM 37,407 - 37,407 - - - - - -
Substandard 444,903 - 444,903 60,341 - 60,341 60,341 - 60,341
Doubtful 4,684,018 - 4,684,018 2,920,254 - 2,920,254 2,920,254 - 2,920,254
Loss 16,706,891 - 16,706,891 16,152,454 - 16,152,454 16,152,454 - 16,152,454
21,873,219 - 21,873,219 19,133,049 - 19,133,049 19,133,049 - 19,133,049
General Provision - - - 547,521 - 547,521 547,521 - 547,521

21,873,219 - 21,873,219 19,680,570 - 19,680,570 19,680,570 - 19,680,570
8.2.1 At 31 December 2017, the provision requirement has been reduced by Rs. 162.554 million (31 December 2016: Rs. 401.589 million) being
benefit of Forced Sale Value (FSV) of commercial, residential and industrial properties (land and building only) held as collateral, in accordance
with the State Bank of Pakistan Prudential Regulations (PR) and SBP Circular 10 dated 21 October 2011. Increase in accumulated profits
amounting to Rs. 105.660 million due to the said FSV benefit is not available for distribution of cash and stock dividend / bonus to employees.
51
8.3 Particulars of provision against non-performing advances
2017 2016
Note Specific General Total Specific General Total
--------------------------------------------- (Rupees in 000) ----------------------------------------------
Opening balance 19,133,049 547,521 19,680,570 20,960,812 555,906 21,516,718
Charge for the year 1,469,674 137,629 1,607,303 1,752,208 70,134 1,822,342
Reversals (1,216,481) (14,570) (1,231,051) (2,565,869) (78,519) (2,644,388)
253,193 123,059 376,252 (813,661) (8,385) (822,046)
Amounts written off 8.5.1 (405,961) - (405,961) (997,832) - (997,832)
Other movements (26,300) - (26,300) (16,270) - (16,270)
Closing balance 18,953,981 670,580 19,624,561 19,133,049 547,521 19,680,570
Note 2017 2016

8.4 Particulars of provision against non-performing advances
------------ (Rupees in 000) ------------
In foreign currencies 702,263 702,263
19,624,561 19,680,570
8.5 Particulars of write offs
8.5.1 Against provisions 405,961 997,832

Charged and written off during the year 119,416 152,695
8.5.2 525,377 1,150,527
8.5.2 Write-offs of Rs. 500,000 and above 299,131 826,888

Write-offs of below Rs. 500,000 226,246 323,639
525,377 1,150,527
8.6 Details of loans written-off of Rs. 500,000 and above
In terms of sub-section (3) of section 33A of the Banking Companies Ordinance, 1962, the statement in respect of written-off
loans or any other financial relief of five hundred thousand rupees or above allowed to a person(s) during the year ended 31
December 2017 is given in Annexure I.
8.7 This includes loans charged off as per Bank's policy. Recovery efforts on the amount charged off are ongoing, as the Bank
continues to have the legal right of recovery.

8.8 Particulars of loans and advances to directors, associated companies, etc.
Note 2017 2016

(i) Debts due by directors, executives or officers of the bank or any of them either ------------ (Rupees in 000) ------------
severally or jointly with any other persons
Balance at beginning of the year 2,496,544 2,004,638

Loans granted during the year 1,077,821 879,516
Repayments (439,028) (387,610)
Balance at end of the year 3,135,337 2,496,544
(ii) 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
Balance at beginning of the year 64,789 121,347

Loans granted during the year 688,571 877,440
Repayments (704,510) (933,998)
Balance at end of the year 48,850 64,789
(iii) Debts due by subsidiary companies, controlled firms, managed modarabas

and other related parties
Balance at beginning of the year 131,989 321,813

Loans granted during the year 168,427 1,178,183
Repayments (121,865) (1,368,007)
Balance at end of the year 178,551 131,989
9 OPERATING FIXED ASSETS
Capital work-in-progress 9.1 228,027 45,753

Property and equipment 9.2 7,805,863 5,727,543
8,033,890 5,773,296
9.1 Capital work-in-progress
Civil works 61,146 45,592

Advance payment towards property and equipment 165,744 -
Consultants' fee and other charges 1,137 161
228,027 45,753
53
9.2 Property and equipment

2017
Buildings on Leased Furniture,
Freehold Leasehold Buildings on fixtures and
leasehold hold office Vehicles Total
land land freehold land land improvements equipment
------------------------------------------------------ (Rupees in 000) ------------------------------------------------------
Cost / Valuations
At 1 January 2017 580,694 3,654,498 234,650 623,733 1,138,321 3,027,336 94,895 9,354,127
Surplus / (Deficit) on revaluation 81,442 1,582,784 79,404 429,999 - - - 2,173,629
Revaluation adjustment * - - (101,668) (263,458) - - - (365,126)
Additions during the year - - 6,727 15,082 85,338 264,160 2,750 374,057
Transfers / write offs - - - - (62,482) (162,086) - (224,568)
Deletions - - - - - (170,484) (809) (171,293)
At 31 December 2017 662,136 5,237,282 219,113 805,356 1,161,177 2,958,926 96,836 11,140,826
Accumulated Depreciation
At 1 January 2017 - - 70,195 182,119 854,862 2,427,587 91,821 3,626,584

Charge for the year - - 31,473 81,339 80,091 258,668 1,966 453,537
Revaluation adjustment * - - (101,668) (263,458) - - - (365,126)
Transfers / write offs - - - - (46,653) (162,086) - (208,739)
Deletions - - - - - (170,484) (809) (171,293)
At 31 December 2017 - - - - 888,300 2,353,685 92,978 3,334,963
Net book value 662,136 5,237,282 219,113 805,356 272,877 605,241 3,858 7,805,863
Rate of depreciation - - 6.67% 6.67% 6.67%-10% 14.28% - 33.33% 33.33%
2016
Leased Furniture,
Freehold Leasehold Buildings on Buildings on fixtures and
leasehold hold office Vehicles Total
land land freehold land improvements
land equipment
------------------------------------------------------ (Rupees in 000) ------------------------------------------------------
Cost / Valuations
At 1 January 2016 588,374 3,778,358 238,401 605,441 1,253,150 2,693,339 95,134 9,252,197
Additions during the year - - - 10,046 - 361,518 3,473 375,037
Transfers / write offs - - 153 13,337 (114,820) 2,909 - (98,421)
Deletions (7,680) (123,860) (3,904) (5,091) (9) (30,430) (3,712) (174,686)
At 31 December 2016 580,694 3,654,498 234,650 623,733 1,138,321 3,027,336 94,895 9,354,127
At 1 January 2016 - - 39,644 88,532 838,754 2,227,902 93,413 3,288,245
Charge for the year - - 30,988 81,079 104,290 227,126 2,120 445,603
Transfers / write offs - - 153 13,337 (88,173) 2,989 - (71,694)
Deletions - - (590) (829) (9) (30,430) (3,712) (35,570)
At 31 December 2016 - - 70,195 182,119 854,862 2,427,587 91,821 3,626,584
Net book value 580,694 3,654,498 164,455 441,614 283,459 599,749 3,074 5,727,543
Rate of depreciation - - 6.67% 6.67% 6.67%-10% 14.28% - 33.33% 33.33%
* The revaluation adjusment relates to the accumulated depreciation as at revaluation date that was eliminated against the gross carrying amount
of the revalued buildings.
9.3 The Bank's owned land and buildings were revalued by independent accredited professional valuers, Iqbal A. Nanjee & Co.
(Private) Limited and Colliers International (Level 3 measurements). Both valuers appointed by the Bank are also on the panel
of State Bank of Pakistan. The valuation experts used a market based approach to arrive at the fair value of the Banks properties.
The market approach uses prices and other relevant information generated by market transactions involving identical or comparable
or similar properties. These values are adjusted to reflect the nature, current condition and location of the properties. The effect
of changes in the unobservable inputs used in the valuations cannot be determined with certainty, accordingly a qualitative
disclosure of sensitivity has not been presented in these financial statements.
The date of revaluation was 31 December 2017. If the owned land and buildings were measured using the cost model, the carrying
amounts would have been as follows:

2017 2016
-------- (Rupees in 000) ---------
Carrying amount
Freehold land 121,205 121,205

Leasehold land 541,834 541,834
Buildings on freehold land 98,371 112,639
Buildings on leasehold land 309,875 361,741
1,071,285 1,137,419
The movement in surplus on revaluation of fixed assets is given in note 20.1 to the financial statements.
9.4 As at 31 December 2017, the cost of fully depreciated fixed assets still in use amounted to Rs. 2,971.509 million (2016:
Rs. 2,764.999 million).
9.5 Depreciation rates for furniture, fixtures and office equipment are as follows:
Furniture and fixtures 33.33 percent

Printers 33.33 percent
Other office equipment 20.00 percent
Computer equipment 33.33 percent
ATM machines 14.28 percent
9.6 Details of disposal of fixed assets whose original cost or book value exceeds Rs. 1 million or Rs. 250,000, which ever is less, and
assets disposed of to the Chief Executive or to a director or to executives or to a shareholder holding not less than 10% of the
voting shares of the bank or to any related party, irrespective of value, are given below:
Cost Accumulated Book Sale Gain on Sale Mode of Particulars of

depreciation value Proceeds Disposal Purchaser
---------------------------- (Rupees in 000) ----------------------------
Furniture, fixtures and 78,048 78,048 - 3,419 3,419 Agreement M/S NCR Corporation
office equipment 25,596 25,596 - - - Agreement M/S NCR Corporation
12,870 12,870 - 1,340 1,340 Tender M/S Pakistan International
9,290 9,290 - 2,773 2,773 Tender M/S Mughal Traders
8,604 8,604 - 2,000 2,000 Tender M/S Zim Trading
6,352 6,352 - 973 973 Tender M/S Mughal Traders
5,852 5,852 - 867 867 Tender M/S Muhammad Shahid Soomro
5,815 5,815 - 375 375 Tender M/S Pakistan International

3,339 3,339 - 875 875 Tender Mr. Muhammad Shahid Soomoro
3,247 3,247 - 886 886 Tender Mr. Muhammad Shahid Soomoro
1,450 1,450 - 196 196 Tender M/S Naveed Enterprise
163,799 163,799 - 14,284 14,284
Items having book value

of less than Rs. 250,000
and cost of less than
Rs. 1,000,000:
Furniture, fixtures and

office equipment 6,685 6,685 - 1,824 1,824
Vehicle 809 809 - 705 705
Total 171,293 171,293 - 16,813 16,813
55
10 INTANGIBLE ASSETS
2017
Core Customer Brand Computer

Goodwill Deposits Relationships Total
Intangible Names Software
Intangible
----------------------------------------------------- (Rupees in 000) ------------------------------------------------------
Cost
At 1 January 2017 26,095,310 1,982,413 774,680 389,400 338,350 29,580,153
Transfers / write offs - - - - (2,030) (2,030)
At 31 December 2017 26,095,310 1,982,413 774,680 389,400 336,320 29,578,123
Amortised
At 1 January 2017 - 1,982,413 774,100 389,400 338,350 3,484,263
Charge for the year - - 248 - - 248
Transfers / write offs - - - (2,030) (2,030)
At 31 December 2017 - 1,982,413 774,348 389,400 336,320 3,482,481
Net book value 26,095,310 - 332 - - 26,095,642
Rate of amortisation 20%
2016
Core Customer Brand Computer
Goodwill Deposits Relationships Total
Intangible Names Software
Intangible
----------------------------------------------------- (Rupees in 000) ------------------------------------------------------

Cost
At 1 January 2016 26,095,310 1,982,413 774,680 389,400 338,350 29,580,153
Additions during the year - - - - - -
At 31 December 2016 26,095,310 1,982,413 774,680 389,400 338,350 29,580,153
Amortised
At 1 January 2016 - 1,982,413 769,071 363,599 338,350 3,453,433
Charge for the year - - 5,029 25,801 - 30,830
At 31 December 2016 - 1,982,413 774,100 389,400 338,350 3,484,263
Net book value 26,095,310 - 580 - - 26,095,890
Rate of amortisation 20%
10.1 As at 31 December 2017, the cost of fully amortised intangible assets (computer software) still in use amounted to Rs. 336.320
million (2016: Rs. 338.350 million).
10.2 At 31 December 2017, accumulated goodwill (less impairment losses if any) amounted to Rs. 26,095 million (2016: Rs. 26,095
million).
An annual assessment is made as to whether the current carrying value of goodwill is impaired. For the purposes of impairment
testing, goodwill has been allocated to the CGUs that are expected to benefit from the synergies of the combination, irrespective
of whether other assets or liabilities of the acquiree are assigned to those CGUs. At 31 December 2017, recoverable amount
of all CGUs exceeded the carrying amount.
The recoverable amount for the purpose of assessing impairment of goodwill on acquisition of Union Bank Limited was based
on value in use. The calculations are based on the five year forecast approved by the management and a terminal value determined
using Gordon Growth Model (using long term GDP growth rate of 5.79%). The cash flows are discounted using a discount rate
(13.40%) which reflects the current market rate appropriate for the business, computed using Capital Asset Pricing Model. In
prior years, the terminal value element was calculated by projecting further fifteen years of cash flows and then including a
terminal value. The change in assessment methodology is not materially different between the two approaches. The allocation
of goodwill to CGUs for the purpose of impairment testing is given below:

2017 2016
----------- (Rupees in 000) ----------
Cash Generating Unit
Corporate & Institutional Business 6,841,098 6,841,098
Commercial Business 5,801,256 5,801,256
Retail Business 13,452,956 13,452,956
Total Goodwill 26,095,310 26,095,310
The management believes that any reasonable possible changes to the key assumptions on which calculation of recoverable
amount is based, would not cause the carrying amount to exceed the recoverable amount. The Bank has performed
sensitivity analysis on the key assumptions for recoverable amount. These include a 1 per cent increase in the discount
rate, a 1 per cent reduction in long-term GDP growth rate and a 10 per cent reduction in estimated cash flows. In all the
three scenarios mentioned above, the recoverable values in all the CGUs exceed their carrying values and hence no
impairment exists.
Note 2017 2016
(Restated)
11 OTHER ASSETS ------------ (Rupees in 000) ------------
Income / mark-up accrued in local currency 2,301,428 3,962,941
Income / mark-up accrued in foreign currencies 19,350 13,911
Advances, deposits, advance rent and other prepayments 655,802 577,171
Receivable from defined benefit plans 34.3 - 5,635
Advance taxation (payments less provisions) 11.1 & 17.4 13,599,105 10,492,683
Branch adjustment account 972 481
Unrealized gain on forward foreign exchange contracts 4,666,957 430,464
Interest rate derivatives and currency options - positive fair value 158,703 1,557
Receivable from SBP / Government of Pakistan 885,526 197,966
Receivable from associated undertakings 519,099 280,255
Receivable from Standard Chartered Bank, Sri Lanka operations 11.2 35,581 34,471
Advance Federal Excise Duty 188,443 188,443
Unsettled trades 1,336,621 104,284
Others 1,011,260 627,561
25,378,847 16,917,823
Less: Provision against other assets 11.3 (35,495) (63,944)
25,343,352 16,853,879

11.1 Advance taxation (payments less provisions) represents the amounts paid under appeals / litigations of Rs. 9,898 million
(including amount paid against claim for amortisation of goodwill of Rs. 3,607 million, refer note 30.2) and advance tax
paid under section 147 and other tax payments.
11.2 Consequent to Sale and Purchase Agreement (SPA) signed between Standard Chartered Bank, Sri Lanka (SCBSL) and
Standard Chartered Bank (Pakistan) Limited (SCBPL), the Sri Lanka branch operations of SCBPL were amalgamated
with SCBSL with effect from close of business on 10 October 2008. According to the terms of SPA, unproductive debts,
staff loans of SCBPL who are not retained by the purchaser, their corresponding housing loans and assets arising from
litigation which cannot be assigned are held in trust with SCBSL. The recoveries made (net of expenses) from such assets
are taken to income from Sri Lanka branch operations along with foreign exchange translation impacts as disclosed in
note 26 to these financial statements, and consequently recorded as receivable. Moreover, loans which were fully provided
and deemed non recoverable were written-off after necessary approvals.
2017 2016
11.3 Provision against other assets ----------- (Rupees in 000) ----------

Net reversal for the year (22,033) -
Write off during the year - (52,429)
Other movements (6,416) -
Closing balance 35,495 63,944
57
12 BILLS PAYABLE Note 2017 2016

------------ (Rupees in 000) ------------
In Pakistan 18,194,915 10,149,120

Outside Pakistan 763,430 672,673
18,958,345 10,821,793
13 BORROWINGS
In Pakistan 25,954,290 13,820,357

Outside Pakistan 75,526 580,484
26,029,816 14,400,841
13.1 Particulars of borrowings with respect to currencies

In foreign currencies 75,526 580,484
26,029,816 14,400,841
13.2 Details of borrowings secured / unsecured
Secured
Borrowings from State Bank of Pakistan

under Export Refinance (ERF) scheme 13.2.1 17,392,305 13,147,531
Repurchase agreement borrowings (Repo) 13.2.2 6,279,185 -
State Bank of Pakistan - LTFF 13.2.3 431,573 672,624
24,103,063 13,820,155
Unsecured
Call borrowings 13.2.4 1,840,000 -

Overdrawn nostro accounts 13.2.5 86,753 580,686
26,029,816 14,400,841
13.2.1 Mark-up on Export Refinance (ERF) from State Bank of Pakistan is charged at 2 percent (2016: 1 percent to 3 percent)
per annum. ERF borrowings also include borrowings under Islamic Export Refinance scheme amounting to Rs. 3,094
million (2016: Rs. 2,625 million). These borrowings are secured against demand promissory notes executed by the Bank
in favour of State Bank of Pakistan.
13.2.2 Repurchase agreement borrowings carry mark up rates ranging from 5.85 percent to 6.05 percent (2016: Nil) per annum
payable at maturity and are due to mature by January 2018. These are secured against six months market treasury bills.
The market value of securities given as collateral against these borrowings amounted to Rs. 6,279.339 million.
13.2.3 Mark-up on Long Term Finance Facility (LTFF) from State Bank of Pakistan carry mark up rates ranging from 2.5 percent
to 6.5 percent (2016: 2.5 percent to 6.5 percent) per annum. These loans are secured against promissory notes executed
by the Bank in favour of State Bank of Pakistan.
13.2.4 These carry mark-up rates ranging from 5.85 percent to 6.05 percent per annum (2016: Nil) payable at maturity, and are
due to mature during January 2018.
13.2.5 These include overdrawn nostro accounts with other branches and subsidiaries of Standard Chartered Group outside
Pakistan amounting to Rs. 75.526 million (2016: Rs. 498.580 million).

14 DEPOSITS AND OTHER ACCOUNTS Note 2017 2016
------------ (Rupees in 000) ------------
Customers
Remunerative 29,598,100 22,231,104
- Fixed deposits 185,500,901 186,007,700
- Savings deposits
Non-Remunerative 154,429,040 151,796,941
- Current accounts 1,512,656 1,354,922
- Margin accounts 3,264,141 1,853,939
- Special exporters' account 374,304,838 363,244,606
Financial Institutions
- Remunerative deposits 52,198 64,888
- Non-remunerative deposits - Current account 14.1 3,219,028 2,252,600
377,576,064 365,562,094
14.1 This includes Rs. 835.108 million (2016: Rs. 589.579 million) against balances of other branches and subsidiaries of
Standard Chartered Group operating outside Pakistan.
14.2 Particulars of deposits Note 2017 2016

------------ (Rupees in 000) ------------

377,576,064 365,562,094
15 SUB-ORDINATED LOANS
Term Finance Certificates issued 15.1 - 2,500,000
15.1 During the year, the Bank exercised Call option of Term Finance Certificates - IV in accordance with the Trust Deed and
Terms and Conditions for the TFC issue, after completing the regulatory requirements. Accordingly, the said TFCs were
redeemed in full on 29 December 2017.
16 DEFERRED TAX ASSETS / (LIABILITIES)

The following are major deferred tax assets / (liabilities) recognised and movement thereon:
Note 2017
At 1 (Charge) / Debit / (credit) At 31
January credit to profit to equity / other December
2017 and loss comprehensive 2017
income
------------------------------------------ (Rupees in 000) -------------------------------------------
Available for sale investments 20.2 (403,388) - 423,886 20,498

Provisions for loans and advances 16.1 5,948,788 (2,988,971) - 2,959,817
Other assets 757,343 659,795 - 1,417,138
Fixed assets (82,341) 16,303 - (66,038)
Surplus on revaluation of Fixed assets (42,668) - (179,004) (221,672)
Goodwill (7,945,488) 114,502 - (7,830,986)
Actuarial gains on retirement
benefits 12,947 - 1,888 14,835
(1,754,807) (2,198,371) 246,770 (3,706,408)
59
Note 2016
At 1 (Charge) / Debit / (credit) At 31
January credit to profit to equity /other December
2016 and loss comprehensive 2016
income
------------------------------------------ (Rupees in 000) -------------------------------------------
Available for sale investments 20.2 (1,756,774) - 1,353,386 (403,388)

Provisions for loans and advances 5,870,796 77,992 - 5,948,788
Other assets (87,150) 844,493 - 757,343
Fixed assets (142,840) 60,499 - (82,341)
Surplus on revaluation of Fixed assets (52,206) 8,587 951 (42,668)
Goodwill (7,067,947) (877,541) - (7,945,488)
Actuarial gains on retirement
benefits 15,001 - (2,054) 12,947
(3,221,120) 114,030 1,352,283 (1,754,807)
16.1 During the year, an exercise was carried out to reconcile the amount of provision relating to period before tax year 2008
and the amount of write off claimed from that provision. As a result an amount of Rs. 2.838 billion has been reclassified
from deferred tax to taxation provision. The deferred tax asset on provision for doubtful debts includes an amount of Rs.
1.258 billion. The management, based on projection of taxable profit considers that the Bank would be able to claim
deductions through the prescribed limits in seventh schedule in future years.
Note 2017 2016

17 OTHER LIABILITIES (Restated)
------------ (Rupees in 000) -----------
Mark-up / return / interest payable in local currency 298,628 196,128

Accrued expenses 17.4 3,040,186 3,457,106
Advance payments 276,522 242,630
Sundry creditors 3,324,496 2,718,688
Unrealized loss on forward foreign exchange contracts 2,894,953 85,338
Unrealized loss on interest rate derivatives and currency options 21.8.2 213,527 134,365
Payable to defined benefit plans 4,981 -
Due to Holding Company 17.1 10,330,627 9,247,383
Unclaimed balances 33,074 30,180
Dividend Payable 73,045 62,302
Provision against off balance sheet obligations 17.2 282,927 330,110
Worker's Welfare Fund (WWF) payable 17.3 1,647,979 1,378,918
Unsettled trades 1,325,812 29,781
Others 594,516 517,462
24,341,273 18,430,391
17.1 Due to Holding Company
On account of reimbursement of executive and general

administrative expenses 10,330,627 8,751,072
Royalty payable - 496,311
10,330,627 9,247,383
17.2 Provision against off-balance sheet obligations

Charge for the year 2,574 43,755
Reversals (49,757) (291,176)
Other movements - (89,897)

17.3 The Supreme Court of Pakistan vide its order dated 10 November 2016 has held that the amendments made in the law
introduced by the Federal Government by Finance Act 2008 for the levy of Workers Welfare Funds (WWF) on banks were
not lawful. The Federal Board of Revenue has filed review petitions against this order, which are currently pending. Legal
advice obtained on the matter indicates that consequent to filing of these review petitions the judgment may not currently
be treated as conclusive until the review petition is decided. Accordingly, the amount charged for WWF since 2008 has
not been reversed.
Further, as a consequence of passage of 18th Amendment to the Constitution, levy for Workers Welfare was also introduced
by the Government of Sindh (Sindh WWF) which was effective from 01 January 2014. The definition of industrial undertakings
under the aforesaid Sindh WWF law includes banks and financial institutions as well. The Bank has challenged applicability
of the said law on Banks before the Sindh High Court.
17.4 During the year a debit of Rs. 1,420.5 million was identified as of 31 December 2016 in accrued expenses which related
to advance taxation. The amount has been appropriately classified and corresponding figure for assets, liabilities and
capital adequacy ratios have been adjusted.
18 SHARE CAPITAL
18.1 Authorized Capital
2017 2016 Note 2017 2016

--------- (Number of shares) ---------- ------------ (Rupees in 000) -----------
4,000,000,000 4,000,000,000 Ordinary shares of Rs.10 each 40,000,000 40,000,000
18.2 Issued, subscribed and paid-up Capital
2,939,785,018 2,939,785,018 Ordinary shares of Rs. 10 each 29,397,850 29,397,850

Fully paid in cash
931,800,003 931,800,003 Issued in terms of scheme of 18.3 9,318,000 9,318,000

amalgamation
3,871,585,021 3,871,585,021 38,715,850 38,715,850
18.3 These represent 892,554,151 shares of Rs. 10/- each issued and allotted at par to Standard Chartered Bank, United Kingdom
against transfer of entire undertaking of SCB Branch Business by SCB to the Bank, and 39,245,852 shares issued and

allotted at par credited as fully paid up to persons who were registered shareholders of Union Bank. These shares have been
issued in accordance with the scheme of amalgamation duly approved by State Bank of Pakistan on 4 December 2006.
18.4 At 31 December 2017, Standard Chartered Bank, United Kingdom, held 98.99% shares of the Bank.
19 RESERVES Note 2017 2016

------------ (Rupees in 000) ------------
Share premium 19.1 1,036,090 1,036,090

Statutory reserve 19.2 13,383,504 11,734,472
14,419,594 12,770,562
19.1 This represents excess of fair value of the shares over par value of shares issued to registered shareholders of Union
Bank in terms of the amalgamation scheme.
19.2 In accordance with the Banking Companies Ordinance, 1962, the Bank is required to transfer twenty percent of its profit
of each year to a reserve fund until the amount in such fund equals the paid-up capital of the Bank.
19.3 The Board of Directors in their meeting held on 8 March 2018 have announced a final cash dividend of 10.00 % (Rs. 1.00
/- per share) in respect of the year ended 31 December 2017 (2016: Rs. 1.25 per share). This is in addition to 7.50% (Rs.
0.75/- per share) interim cash dividend announced during the year. The financial statements for the year ended 31
December 2017 do not include the effect of final dividend appropriations which will be accounted for subsequent to the
year end.
61
20 SURPLUS ON REVALUATION OF Note 2017 2016

ASSETS - NET OF DEFERRED TAX
------------ (Rupees in 000) -----------
Surplus arising on revaluation of:
Fixed assets 20.1 5,639,634 3,661,174
Available for Sale Securities 20.2 (38,069) 749,149
5,601,565 4,410,323
20.1 Surplus on revaluation of fixed assets - net of tax
Surplus on revaluation of fixed assets as at 1 January 3,703,842 3,723,913

Surplus on revaluation of owned properties recorded during the year 9.2 2,173,629 -
Surplus realized on disposal of revalued properties - 4,508
Transferred to unappropriated profit in respect of incremental depreciation

charged during the year - net of deferred tax (16,165) (15,992)
Related deferred tax liability (8,704) (8,587)
(24,869) (24,579)
Surplus on revaluation of fixed assets as at 31 December 5,852,602 3,703,842
Less: Related deferred tax liability on:
Revaluation surplus as at 1 January (42,668) (52,206)
Revaluation surplus recorded during the year (179,004) -
Revaluation surplus realized on disposal during the year - 951
Incremental depreciation charged during the year transferred to profit and loss account 8,704 8,587
(212,968) (42,668)
Surplus on revaluation of fixed assets as at 31 December - net of tax 5,639,634 3,661,174
20.2 Surplus / (deficit) on revaluation of Available for Sale securities - net of tax
Market Treasury Bills (135,645) (75,566)

Pakistan Investment Bonds - 969,991
Sukuk and Ijarah Bonds 77,078 147,403
Listed shares - 110,709
(58,567) 1,152,537
Related deferred tax liability 20,498 (403,388)

(38,069) 749,149
21 CONTINGENCIES AND COMMITMENTS
21.1 Transaction-related contingent liabilities
Guarantees issued favouring: 21.1.1

- Government 60,698,935 49,381,038
- Others 37,713,529 40,631,891
98,412,464 90,012,929
21.1.1 Guarantees relating to Islamic Banking Business amount to Rs. 400 million (31
December 2016: Rs. 620 million).
21.2 Trade-related contingent liabilities
Letters of credit 21.2.1 18,747,847 22,583,980
21.2.1 Letters of credit relating to Islamic Banking Business amount to Rs. 3,801
million (31 December 2016: Rs. 3,195 million).
21.3 Trade-related commitments
Acceptances 21.3.1 6,283,546 6,988,336
21.3.1 Acceptances relating to Islamic Banking Business amount to Rs. 1,035 million
(31 December 2016: Rs. 1,599 million).

Note 2017 2016
------------ (Rupees in 000) -----------
21.4 Commitment for acquisition of fixed assets 173,129 23,491
21.5 Other contingencies

Claims against the Bank not acknowledged as debt 21.5.1 10,988,832 12,303,413
21.5.1 These represent certain claims by third parties against the Bank, which are being contested in the Courts of law. The
management is of the view that these relate to the normal course of business and the possibility of an outflow of economic
resources is remote.
21.5.2 The Bank has identified that a case has been before the Court on the land where an office building is constructed and
the bank owns a portion of that premises. A request for clearance of its premises from the competent court has been filed
based on the fact that the bank is a bonafide purchaser of the premises having no relevance with the principal case.
Considering the facts of the case, the management expects a favourable decision in this case from the competent court.
The Bank is also in litigation with various tenants for repossessing its office space in one of its other owned properties.
These cases are now being adjudicated before the Court of Rent Controller. During the year, positive decision were
rendered for certain office spaces in favour of the Bank. Based on the facts of the case and the opinion of legal counsel,
the management expects a favourable decision from the dealing court in remaining cases.
21.5.3 The Tax Authorities have passed orders for the income years 2009 and 2010 levying Federal Excise Duty amounting to
Rs. 188 million on certain items. The Bank has paid entire amount under protest and contesting the orders in the appeals.
Further, an order for income year 2011 levying Federal Excise Duty of Rs. 515.6 million has been issued. The demand
has been stayed by the Sindh High Court.
21.6 Commitments in respect of forward foreign 2017 2016

exchange contracts
------------ (Rupees in 000) -----------

Purchase from:
State Bank of Pakistan 119,080,713 16,321,650
Other banks 39,719,754 53,856,408
Customers 377,862 3,524,916
Sale to:
Other banks 115,408,324 48,280,141
Customers 13,663,482 3,397,802
The maturities of the above contracts are spread over a period of one year.
21.7 Commitments to extend credit
The bank makes commitments to extend credit in the normal course of its business but these being revocable commitments
do not attract any significant penalty or expense if the facility is unilaterally withdrawn.
63
21.8 Derivative instruments
21.8.1 Product analysis 2017

Interest Rate Swaps FX Options
Cross Currency Swaps
Counterparties No. of Notional No. of Notional
Contracts Principal * Contracts Principal *
(Rupees in 000) (Rupees in 000)
With Banks for
Hedging - - - -
Market Making 12 6,877,997 7 115,705
With FIs other than banks

Hedging - - - -
Market Making - - - -
With other entities for

Hedging - - - -
Market Making 16 7,099,180 7 115,705
Total
Hedging - - - -
Market Making 28 13,977,177 14 231,410
2016
Interest Rate Swaps FX Options
Cross Currency Swaps
Counterparties No. of Notional No. of Notional
Contracts Principal * Contracts Principal *
(Rupees in 000) (Rupees in 000)
With Banks for
Hedging - - - -
Market Making 12 3,290,210 41 874,205
With FIs other than banks

Hedging - - - -
Market Making - - - -
With other entities for

Hedging - - - -
Market Making 13 3,803,088 41 874,205
Total
Hedging - - - -
Market Making 25 7,093,298 82 1,748,410
* At the exchange rate prevailing at year end.
Contracts with banks represent contracts entered with branches of Standard Chartered Bank, UK to obtain cover against
the contracts with customers, except for 3 contracts with local banks having notional principal of Rs. 1,234.133 million.

21.8.2 Maturity analysis

Interest Rate Swaps & Cross Currency Swaps
Remaining No. of Notional Mark to Market
Maturity contracts principal Negative Positive Net
---------------------------- (Rupees in 000) ----------------------------
Upto 1 month - - - - -
1 to 3 months - - - - -
3 to 6 months 3 193,180 4,306 (245) 4,061
6 month to 1 year - - - 5,604 5,604
1 to 2 years 7 8,199,953 (3,014) 3,014 -
2 to 3 years 4 1,649,191 (113,171) 107,637 (5,534)
3 to 5 years - - (2,648) 2,648 -
5 to 10 years 14 3,934,853 (99,000) 40,045 (58,955)
Above 10 years - - - - -
28 13,977,177 (213,527) 158,703 (54,824)
22 MARK-UP / RETURN / INTEREST EARNED Note 2017 2016

------------ (Rupees in 000) -----------
On loans and advances to customers 10,027,320 9,565,766
On loans and advances to financial institutions 78,377 108,036
On investments in: i) Held for trading securities 59,149 275,054
ii) Available for sale securities 16,414,680 17,962,422
On deposits with financial institutions / State Bank of Pakistan 8,248 -
On securities purchased under resale agreements 150,259 480,815
On call money lending / Placements 60,759 2,908
26,798,792 28,395,001
23 MARK-UP / RETURN / INTEREST EXPENSED
Deposits 8,703,354 8,183,708
Securities sold under repurchase agreements 286,789 282,597
Call borrowings 53,899 15,824
Borrowings from State Bank of Pakistan under
Export Refinance (ERF) scheme 303,810 351,356
Term Finance Certificates (sub-ordinated loan) 171,438 176,178
9,519,290 9,009,663
24 INCOME FROM DEALING IN FOREIGN CURRENCIES

Gain / (loss) realised from dealing in:
Foreign Currencies 1,941,458 1,632,881
Derivative financial instruments 357,906 99,738
2,299,364 1,732,619
25 GAIN ON SALE OF SECURITIES - NET

Market Treasury Bills 319,678 93,420
Pakistan Investment Bonds 555,979 1,446,926
Ijarah Sukuks (1,332) 3,303
874,325 1,543,649
26 OTHER INCOME
Rent on property 20,853 19,651

Gain on disposal of fixed assets 16,813 49,203
Gain on sale of subsidiaries operation - 248,621
Gain / (loss) on derivatives - net 527,693 220,053
Sri Lanka branch operations cost & fx translation 11.2 1,110 (5,183)
Recoveries against assets at acquisition of Union Bank Limited 26,300 16,270
Other income 2,490 189
595,259 548,804
65
27 ADMINISTRATIVE EXPENSES Note 2017 2016
------------ (Rupees in 000) -----------
Salaries, allowances etc. 5,503,664 5,445,024

Charge / (reversals) for defined benefit plans (439) 233
Contributions to defined contribution plans 354,750 330,251
Non Executive Directors fee 6,170 6,210
Rent, taxes, insurance etc. 895,487 824,948
Utility charges 310,441 355,409
Legal and professional charges 149,048 135,334
Communications 424,359 436,781
Premises repairs and refurbishment 282,444 645,029
Cleaning and Janitorial 276,778 250,233
Equipment and consumables 271,233 225,682
Software licenses and renewals 130,263 122,630
Stationery and printing 192,825 204,717
Advertisement and publicity 431,757 196,539
Donations 27.1 13,300 24,436
Auditors' remuneration 27.2 22,987 21,193
Amortization 248 30,830
Travelling, conveyance and vehicles' running 146,596 161,217
Reimbursement of executive and general
administrative expenses - net 27.3 1,555,449 1,436,786
Royalty - net 27.4 (496,311) -
Premises security and cash transportation services 303,652 333,000
Documentation and processing charges 149,307 156,579
Others 79,215 175,532
11,456,760 11,964,196
27.1 Details of the donations given in excess of Rs. 100,000 are given below:
Donee
Institute of Business Administration 8,000 8,000
Right to Play International - Goal Programme 5,300 5,280
Aman Foundation - 3,600
Lahore University of Management Sciences - 1,056
27.2 Auditors remuneration
Audit and review fee 18,889 18,498

Fee for audit of pension, gratuity and provident funds 310 310
Special certifications and others 2,788 1,385
Out-of-pocket expenses 1,000 1,000
22,987 21,193
27.3 Total cost for the year included in Administrative Expenses relating to outsourced activities is Rs. 1,793 million (2016:
Rs. 1,820 million). This includes payments to local companies for obtaining routine services such as technology maintenance,
courier services and executive and general administrative expenses of SCB UK.
27.4 The Bank was not allowed remittance of royalty charged by the Group in previous years. Accordingly, the Group has
decided to reverse the amount previously charged and not to charge royalty to Pakistan operations effective 1 January
2017.
2017 2016
28 OTHER PROVISIONS / ASSET WRITE OFFS ------------ (Rupees in 000) -----------
Fixed asset write offs 15,829 26,727

(Reversal) / provision released against other assets (22,726) 866
(6,897) 27,593

Note 2017 2016
------------ (Rupees in 000) -----------

29 OTHER CHARGES
Net charge against fines and penalties imposed by SBP 17,309 45,382
Worker's Welfare Fund (WWF) 17.3 269,061 306,974
286,370 352,356
30 TAXATION
For the year

- Current 5,240,335 5,500,616
- Deferred 2,198,371 (114,030)
7,438,706 5,386,586
For prior years (2,230,743) 340,495

5,207,963 5,727,081
30.1 Relationship between tax expense and accounting profit
Profit before taxation 13,453,125 15,344,866
Tax at the applicable tax rate of 35% (2016: 35%) 4,708,594 5,370,703
Expenses that are not deductible in determining taxable income 6,056 15,883
Prior year provision 493,313 340,495
5,207,963 5,727,081
30.2 The return for income year 2017 (Tax Year 2018) is due for filing by 30 September 2018.
The tax department amended the assessments for income years 2007 to 2016 (tax years 2008 to 2017 respectively) under the
related provisions of the Income Tax Law, determining additional tax liability amounting to Rs. 6,291 million on account of various
issues such as disallowances relating to provision against loans and advances and Rs. 3,607 million on account of goodwill
amortization (for which deferred tax is also booked) which have been paid by the Bank. Appeals against the amended assessment
orders are pending before different appellate forums. The management considers that a significant amount of the additional tax
liability is the result of timing differences and is confident that the issues in the above mentioned tax years will be decided in
favour of the Bank at appellate forums. Accordingly, no additional provision is required.
The Sindh High Court has decided the issue of goodwill amortization in favour of the Bank for the years 2007 and 2011. An
appeal effect order determining tax refund of Rs. 893 million has been issued by the Assessing Officer. The Federal Board of
Revenue has filed leave to appeal before the Supreme Court of Pakistan.
31 EARNINGS PER SHARE - BASIC AND DILUTED 2017 2016

------------ (Rupees in 000) -----------
Profit for the year 8,245,162 9,617,785
(Number of shares)
Weighted average number of ordinary shares in issue during the year 3,871,585,021 3,871,585,021
----------------- (Rupees) -----------------
Earnings per share - basic and diluted 2.13 2.48
32 STAFF STRENGTH ----------------- (Number) -----------------
Permanent 3,420 3,559

Temporary / on contractual basis / direct contracts 12 6
Bank's own staff at the end of year 3,432 3,565
Outsourced 218 238

Total staff strength 3,650 3,803
33 CASH AND CASH EQUIVALENTS ------------ (Rupees in 000) -----------
Cash and balances with treasury banks 35,085,289 40,729,979

Balances with other banks 779,856 5,699,791
Overdrawn nostros (86,753) (580,686)
35,778,392 45,849,084
67
68
33.1 Reconciliation of movement of liabilities to cash flows arising from financing activities
Liabilities Equity Total
Bills payable Borrowings Deposits and Sub-ordinated Other liabilities Share capital Reserves Unappropriated
other accounts debt profit
----------------------------------------------------------------------------------------- (Rupees in 000) -----------------------------------------------------------------------------------------
Balance as at 01 January 2017 10,821,793 14,400,841 365,562,094 2,500,000 18,430,391 38,715,850 12,770,562 5,385,558 468,587,089
Changes from financing cash flows

Repayment of sub-ordinated debt - - - (388,000) - - - - (388,000)
Dividend paid - - - - (7,732,427) - - - (7,732,427)
Standard Chartered Annual Report 2017

Issuance of share capital - - - - - - - - -
Total changes from financing cash flows - - - (388,000) (7,732,427) - - - (8,120,427)
Other changes - - - - - - - 463,161 463,161

Liability-related
Changes in bills payable 8,136,552 (2,112,000) 6,024,552

Changes in due to borrowing 11,628,975 11,628,975
Changes in deposits and other accounts 12,013,970 12,013,970
Changes in other liabilities 13,648,703 13,648,703
- Cash based -
- Non-cash based - Actuarial loss on -
remeasurements of defined benefit plan (5,394) (5,394)
Transfer of profit to reserve 1,649,032 (1,649,032) -
Transaction costs on issuance of right shares -
8,136,552 11,628,975 12,013,970 (2,112,000) 13,643,309 - 1,649,032 (1,649,032) 43,310,806
Balance as at 31 December 2017 18,958,345 26,029,816 377,576,064 - 24,341,273 38,715,850 14,419,594 4,199,687 504,240,629
34 DEFINED BENEFIT PLANS
34.1 General description
Non Management Staff Pension Fund
The plan provides pension calculated at 50% of the average pensionable salary after completing 30 years of service. The
employees of the bank are entitled to either pension or gratuity, but not both. However, the employees of ANZ Grindlays Bank
transferred to the bank are entitled to both pension and gratuity and the minimum number of years required for entitlement of
pension is 25 years for these employees. Pension is calculated as 1/120 times the last drawn merged salary for each year of
service. The plan is closed to active employees. The entire liability is in respect of existing pensioners.
Non Management Staff Gratuity Fund
The plan provided a lump sum gratuity calculated at one month's salary for each completed year of service (maximum
40 months) after completing 5 years of service. For the employees of ex-ANZ Grindlays Bank, the plan provided a lump sum
calculated at 50% of last drawn merged salary for each completed year of service (maximum 40 months) after completing 5
years of service. However, if the employee is not entitled for pension, the percentage is increased to 100%. The employees of
SCB were entitled to either pension or gratuity, but not both.
Management Staff Pension Fund
The plan is closed to active employees. The entire liability is in respect of existing pensioners.
34.2 Principal Actuarial Assumptions
The last actuarial valuation of the scheme was carried out on 31 December 2017 and the key assumptions used for actuarial
valuation were as follows:
2017 2016
Discount rate 7.75% p.a. 8.1% p.a.

Expected rate of increase in salary in future years N/A 8.0% p.a.
Expected rate of return on plan assets 8.1% p.a. 8.1% p.a.
Expected long term rate of increase in pension 3.5% p.a. 3.5% p.a.
Mortality rate SLIC (2001-05) ultimate mortality SLIC (2001-05) ultimate mortality
table rated down one year table rated down one year
Withdrawal rate Light Light
SCB Non Management SCB Non Management SCB Management Total

Pension Fund Gratuity Fund Pension Fund
2017 2016 2017 2016 2017 2016 2017 2016

34.3 Reconciliation of (receivable) / payable from / to defined benefit plan ------------------------------------------------------------- (Rupees in 000) -------------------------------------------------------------
Present value of defined benefit obligations 54,396 53,466 - - 57,730 55,363 112,126 108,829
Fair value of plan assets (53,265) (56,825) - - (53,880) (57,639) (107,145) (114,464)
(Asset) / liability recognised 1,131 (3,359) - - 3,850 (2,276) 4,981 (5,635)
34.4 Movement in defined benefit obligation
Obligation as at 1 January 53,466 55,546 - - 55,363 59,277 108,829 114,823

Current service cost - - - - - - - -
Interest cost 4,330 4,731 - - 4,484 5,057 8,814 9,788
Amount transferred to defined contribution plan - - -
Benefits paid (6,082) (5,903) - - (6,004) (6,038) (12,086) (11,941)
Re measurement: Actuarial (gain) / loss on obligation 2,682 (908) - - 3,887 (2,933) 6,569 (3,841)
Liability Settlement (gain) / loss - - - - - - - -
Obligation as at 31 December 54,396 53,466 - - 57,730 55,363 112,126 108,829
34.5 Movement in fair value of plan assets
Fair value as at 1 January 56,825 51,615 - 20,772 57,639 60,461 114,464 132,848
Interest income on plan asset 4,592 4,392 - - 4,661 5,163 9,253 9,555
Contribution / (refund) by the bank (3,359) 3,931 - - (2,302) (1,184) (5,661) 2,747
Amount transferred to defined contribution plan - - - (20,772 ) - - - (20,772)
Benefits paid (6,082) (5,903) - - (6,004) (6,038) (12,086) (11,941)
Re measurement :Actuarial gain / (loss) on plan assets 1,289 2,790 - - (114) (763) 1,175 2,027
Fair value as at 31 December 53,265 56,825 - - 53,880 57,639 107,145 114,464
69
SCB Non Management SCB Non Management SCB Management Total

Pension Fund Gratuity Fund Pension Fund
2017 2016 2017 2016 2017 2016 2017 2016
------------------------------------------------------------- (Rupees in 000) -------------------------------------------------------------
34.6 Movement in (receivable) / payable from / to defined benefit plan
Balance as at 1 January (3,359) 3,931 - (20,772) (2,276) (1,184) (5,635) (18,025)

Charge for the year (262) 339 - - (177) (106) (439) 233
Contribution to the fund during the year 3,359 (3,931) - - 2,302 1,184 5,661 (2,747)
Amount transferred to defined contribution plan - - - 20,772 - - - 20,772
Actuarial (gain) / loss on plan assets 1,393 (3,698) - - 4,001 (2,170) 5,394 (5,868)
Balance as at 31 December 1,131 (3,359) - - 3,850 (2,276) 4,981 (5,635)
34.7 Actual return on plan assets
Expected return on plan assets 4,592 4,392 - - 4,661 5,163 9,253 9,555
Actuarial gain / (loss) on plan assets 1,289 2,790 - - (114) (763) 1,175 2,027
5,881 7,182 - - 4,547 4,400 10,428 11,582
Amount recognized in total comprehensive income

The following amounts have been charged in respect of these benefits to profit and loss account and other comprehensive income:
Components of defined benefit costs recognized in profit and loss account.
Current service cost - - - - - - - -

Interest cost 4,330 4,731 - - 4,484 5,057 8,814 9,788
Expected return on plan assets (4,592) (4,392) - - (4,661) (5,163) (9,253) (9,555 )
Liability settlement (gain) / loss - - - - - - - -
(262) 339 - - (177) (106) (439) 233
Components of defined benefit costs (re-measurement) recognised in other comprehensive income
Re-measurement: Actuarial gain / loss on obligation

- Change in financial assumptions 2,384 (2,737) - - 2,375 (2,635) 4,759 (5,372)
- Change in experience assumptions 298 1,829 - - 1,512 (298) 1,810 1,531
2,682 (908) - - 3,887 (2,933) 6,569 (3,841)
Re-measurement: Interest income net of return on plan assets
Actual net return on plan assets 5,865 (6,341) - - 4,263 (5,733) 10,128 (12,074)
Interest income on plan assets 4,592 4,392 - - 4,661 5,163 9,253 9,555
Opening difference 16 (841) - - 284 1,333 300 492
(1,289) (2,790) - - 114 763 (1,175) (2,027)
Net re-measurement recognised in other comprehensive income 1,393 (3,698) - - 4,001 (2,170) 5,394 (5,868)
34.7.1 Components of plan assets as a percentage of total plan assets
Bonds 91% 88% - - 82% 70%

Cash and net current assets 9% 12% - - 18% 30%
34.7.2 Sensitivity Analysis on defined benefit obligations +1% -1% +1 % -1 %

Discount Discount Pension Pension
rate rate increase increase
------------------------------- (Amount in '000) -------------------------
Non Management Pension Fund 50,593 58,755 58,890 50,421

Management Pension Fund 53,936 62,048 62,181 53,764

34.7.3 Five year data on surplus/ (deficit) of the plans 2017 2016 2015 2014 2013
and experience adjustments
------------------------------------------ (Rupees in '000) ------------------------------------------
Present value of defined benefit obligation 112,126 108,829 114,823 175,889 206,827
Fair value of plan assets 107,145 114,464 132,848 143,812 179,291
Deficit / (Surplus) 4,981 (5,635) (18,025) 32,077 27,536
Experience adjustments on plan liabilities - loss / (gain) 1,810 1,531 65,004 (6,493) 5,373
Experience adjustments on plan assets - loss / (gain) 875 (2,519) 1,145 3,977 6,439
35 SHARE BASED PAYMENTS

The Bank's employees participate in the following share compensation plans operated globally by the ultimate holding company, Standard
Chartered Plc (SCPLC). The market value of shares is denominated in pounds sterling at the time of grant.
The total income / expense recognised in respect of above schemes on equity settled basis amounts to Rs. 51.490 million (2016: Rs. 33.157
million) and is also included in managerial remuneration in note 36. The main features of each plan are as follows:
i) Standard Chartered Share Plan
The 2012 Standard Chartered Share Plan replaced all the Groups existing discretionary share plan arrangements following approval
by shareholders at the Groups Annual General Meeting on 5 May 2011. It is the Groups main share plan, applicable to all employees
with the flexibility to provide a variety of award types including performance shares, deferred awards (shares or cash) and restricted
shares. Performance and restricted share awards will generally be in the form of nil price options to participate in the shares of SCPLC.
The remaining life of the plan is ten years.
Movements in the number of share options held by the Bank's employees are as follows:
2017 Weighted 2016 Weighted

Number average Number average
('000) exercise price ('000) exercise price
£ per share £ per share
At 1 January 67 - 82 -
Granted during the year 19 - 14 -
Exercised during the year (14) - (9) -
Lapsed during the year (11) - (20) -
Notional dividend - - - -

Adjustment due to right issue - - - -
At 31 December 61 - 67 -
The weighted average price at the time the options were exercised during 2017 was £ NIL (2016: £ NIL).
2017 2016
Weighted average remaining life Weighted average remaining life
Range of exercise price Weighted No. of Expected Contractual Weighted No. of Expected Contractual
average options years years average options years years
exercise price (000) exercise price (000)
NIL - 61 10 3.44 / 7.77 - 67 10 6.74 / 8.04
The intrinsic value of vested International Sharesave cash-settled awards as at 31 December 2017 was Rs. 33,702 thousand
(2016: Rs. 34,370 thousand).
As at 31 December 2017, total number of options exercisable were 22,300.
ii) International Sharesave Scheme
The International Sharesave Scheme was first launched in 1996 and made available to all employees of the Bank. Employees have the
choice of opening a three-year or a five-year savings contract. Within a period of six months after the third or fifth anniversary, employees
may exercise the awards and receive any benefit in cash; alternatively, the employee may elect to have the savings, plus interest, repaid
in cash. The price at which they may purchase shares is at a discount of up to 20 percent on the share price at the date of the invitation.
There are no performance conditions attached to options granted. The options granted do not confer any right to participate in any share
issue of any other company.
71
Movements in the number of share options held by the Bank's employees are as follows:-

At 1 January 44 7.74 62 8.11 / 10.89
Granted during the year 17 6.20 7 5.30
Exercised during the year - - - -
Lapsed during the year (23) 8.89 (25) 8.33 / 13.93
Adjusment due to right issue - - - -
At 31 December 38 6.32 44 7.47 / 10.14
The weighted average price at the time the options were exercised during 2017 was NIL (2016: NIL).
2017 2016
£5.3 / £9.38 6.32 38 3.33 / 5.33 0.41 / 1.99 7.47 / 10.14 44 3.33 / 5.33 0.41 / 1.99
The intrinsic value of vested International Sharesave cash-settled awards as at 31 December 2017 was Rs. 7,113 thousand
(2016: Rs. 20,461 thousand).
iii) Restricted Share Scheme

The Restricted Share Scheme is a discretionary share incentive scheme for high performing and high potential staff at any level of the
organisation whom the Group wishes to motivate and retain. Except upon appointment when an executive director may be granted an
award of restricted shares, the Restricted Share Scheme is not applicable to the Group's executive directors, as it has no performance
conditions attached to it. Fifty per cent of the award vests two years after the date of the grant and the remainder after three years. The
awards granted under this scheme are nil cost options with any benefit payable in cash. The options granted do not confer any right to
participate in any share issue of any other company.

Number £ per share Number £ per share
('000) ('000)
Granted during the year - - - -
Exercised during the year (5) - - -
Lapsed during the year (1) - (3) -
The weighted average price at the time the options were exercised during 2017 was Nil (2016: Nil).
2017 2016
£5.3 / £9.38 - 1 - 0.19 - 10 - 0.62

The intrinsic value of vested Restricted Share Scheme cash-settled awards as at 31 December 2017 was Rs. 1,341
thousand (2016 : Rs. 12,191 thousand).
As at 31 December 2017, total number of options exercisable were 881.
iv) Supplementary Restricted Share Scheme
The Group operates a Supplementary Restricted Share Scheme which can be used to defer part of an employee's
annual bonus in shares. The plan is principally used for employees in the global markets area and is similar to
the RSS outlined above for three important factors: executive directors are specifically prohibited from the plan;
no new shares can be issued to satisfy awards; and there is no individual annual limit.

Granted during the year - - - -
Lapsed during the year - - - -
2017 2016
N/A - 1 5 0.19 - 1 5 1.07
The intrinsic value of vested Supplementary Restricted Share Scheme cash-settled awards as at 31 December 2017
was Rs. 1,888 thousand (2016: Rs. 2,558 thousand).

v) Management Long-Term Incentive Plan (MLTIP)
Management Long-term incentive plan (LTIP) awards are granted to selected senior management with vesting subject
to performance measures. Performance measures attached to awards granted includes: total shareholder return(TSR);
return on equity (RoE) with a Common Equity Tier 1 (CET1) underpin; strategic measures; earnings per share
(EPS) growth; and return on risk-weighted assets (RoRWA). Each measure is assessed independently over a three-
year period. In an event of non compliance in conduct gateway requirement or exit from the Group (unless it falls
within eligible leaver criteria) the MLTIP will be forfeited / lapsed.

At 1 January 92 - - -
Granted during the year - - 92 -
Lapsed during the year - - - -
73
2017 2016
N/A - 92 3 8.2 - 92 3 9.2
The intrinsic value of vested Management Long-Term Incentive Plan (MLTIP) awards as at 31 December 2017 was
Rs. NIL (2016: Rs. NIL).
As at 31 December 2017, total number of options exercisable were NIL .
36 COMPENSATION OF CHIEF EXECUTIVE AND EXECUTIVES
Chief Executive Directors Executives

Note 2017 2016 2017 2016 2017 2016
---------------------------------------- (Rupees in 000) -----------------------------------------
Director's remuneration / fees 36.1 - - 6,170 6,210 - -

Managerial remuneration 36.2 46,688 45,000 - - 2,160,758 2,029,272
Contribution to defined
contribution plans 5,705 5,499 - - 267,537 250,780

Rent and house allowance 13,200 13,200 - - - -
Utilities - - - - - -
Medical - - - - - -
Others 7,851 8,033 - - 893,064 693,013
73,444 71,732 6,170 6,210 3,321,359 2,973,065
1 1 3 3 1,268 1,236
36.1 The director's remuneration / fees represents remuneration paid to the Bank's 3 non-executive directors
(2016: 3) for attending Board and Sub-Committee meetings.
36.2 Managerial remuneration comprises of gross salary.
36.3 The Chief Executive is also entitled to house allowance in lieu of furnished accommodation and provided with Bank
maintained car. In addition, the Chief Executive and some of the executives are also reimbursed for cost of medical
expenses and other benefits like club subscription, utilities, etc. as per their terms of employment.
36.4 In addition to the above, all Executives, including Chief Executive of the Bank are also eligible for discretionary
variable compensation which includes cash and / or share awards. This is determined on the basis of employee's
evaluation and the Bank's performance during the year. The aggregate amount in this respect, relating to all
Executives, including Chief Executive of the Bank amounted to Rs. 841.222 million (2016: Rs. 882.021 million).

37 FAIR VALUE OF FINANCIAL INSTRUMENTS
37.1 The table below analyses financial instruments measured at the end of the reporting period by the level in the fair
value hierarchy into which the fair value measurement is categorised:
On balance sheet financial instruments
2017
Carry value Fair value
Note Held Available Loans Other Other
for for and financial financial Total Level 1 Level 2 Level 3 Total
Trading Sale Receivables Assets liabilities
-------------------------------------------------------- (Rupees in 000) ----------------------------------------------------------
Financial assets measured at fair value

- Investments
- Government Secrurities (Tbills + PIBs + Sukuks) 4,833,077 266,745,779 - - - 271,578,856 - 271,578,856 - 271,578,856
- Sukuk Bonds (other than government) - 822,000 - - - 822,000 - 822,000 - 822,000
- Equity securities traded (Shares) - 108,959 - - - 108,959 108,959 - - 108,959
- Other assets
- Unrealized gain on Forward foreign exchange contracts - 4,666,957 - - - 4,666,957 - 4,666,957 - 4,666,957
- Unrealized gain on Interest rate derivatives & currency options - 158,703 - - - 158,703 - 158,703 - 158,703
Financial assets not measured at fair value

- Cash and bank balances with SBP and NBP 37.2 - - - 35,085,289 35,085,289
- Balances with other banks 37.2 - - - 779,856 779,856
- Lending to financial instruments 37.2 - - - 8,067,665 8,067,665
- Sukuk Bonds (other than government) 37.2 - - - - - -
- Advances 37.2 - - 137,655,093 137,655,093
- Other assets 37.2 - - - 6,165,540 - 6,165,540
4,833,077 272,502,398 137,655,093 50,098,350 - 465,088,918
Financial liabilities measured at fair value

- Other liabilities
- Unrealized loss on Forward foreign exchange contracts 37.2 - 2,894,953 - - - 2,894,953 - 2,894,953 - 2,894,953
- Unrealized loss on Interest rate derivatives & currency options 37.2 - 213,527 - - - 213,527 - 213,527 - 213,527
Financial liabilities not measured at fair value
- Bills Payable 37.2 - - - - 18,958,345 18,958,345
- Deposits and other accounts 37.2 - - - - 377,576,064 377,576,064

- Borrowings 37.2 - - - - 26,029,816 26,029,816
- Sub - ordinated loans 37.2 - - - - - -
- Other liabilities (excluding liabilities against
assets subject to finance lease) 37.2 - - - - 20,078,826 20,078,826
- 3,108,480 - - 442,643,051 445,751,531
Off balance sheet financial instruments
Interst Rate swaps / Foreign currency options /
Forward purchase contracts - - - 167,583,816 - 167,583,816 - 172,409,475 - 172,409,475
Interest Rate swaps / Foreign currency options /
Forward sale contracts - - - 134,874,907 - 134,874,907 - 137,983,387 - 137,983,387
75
On balance sheet financial instruments
2016
Carry value Fair value
Note Held Available Loans Other Other
for for and financial financial Total Level 1 Level 2 Level 3 Total
Trading Sale Receivables Assets liabilities
-------------------------------------------------------- (Rupees in 000) ----------------------------------------------------------
Financial assets measured at fair value

- Investments
- Government Secrurities (Tbills + PIBs + Sukuks) 1,143,202 242,315,567 - - - 243,458,769 - 243,458,769 - 243,458,769
- Sukuk Bonds (other than government) - 1,049,093 - - - 1,049,093 - 1,049,093 - 1,049,093
- Equity securities traded (Shares) - 283,697 - - - 283,697 283,697 - - 283,697
- Other assets
- Unrealized gain on Forward foreign exchange contracts - 430,464 - - - 430,464 - 430,464 - 430,464
- Unrealized gain on Interest rate derivatives & currency options - 1,557 - - - 1,557 - 1,557 - 1,557
Financial assets not measured at fair value

- Cash and bank balances with SBP and NBP 37.2 - - - 40,729,979 40,729,979
- Balances with other banks 37.2 - - - 5,699,791 5,699,791
- Lending to financial instruments 37.2 - - - 19,798,390 19,798,390
- Sukuk Bonds (other than government) 37.2 - - - - - -
- Advances 37.2 - - 113,950,767 113,950,767
- Other assets 37.2 - - - 5,253,738 - 5,253,738
1,143,202 243,080,378 113,950,767 71,481,898 - 429,656,245
Financial liabilities measured at fair value

- Other liabilities
- Unrealized loss on Forward foreign exchange contracts 37.2 - 85,338 - - - 85,338 - 85,338 - 85,338
- Unrealized loss on Interest rate derivatives & currency options 37.2 - 134,365 - - - 134,365 - 134,365 - 134,365
Financial liabilities not measured at fair value
- Bills Payable 37.2 - - - - 10,821,793 10,821,793
- Deposits and other accounts 37.2 - - - - 365,562,094 365,562,094
- Borrowings 37.2 - - - - 14,400,841 14,400,841
- Sub - ordinated loans 37.2 - - - - 2,500,000 2,500,000
- Other liabilities (excluding liabilities against
assets subject to finance lease) 37.2 - - - - 15,699,985 15,699,985
- 219,703 - - 408,984,713 409,204,416
Off balance sheet financial instruments
Interst Rate swaps / Foreign currency options /
Forward purchase contracts - - - 79,553,584 - 79,553,584 - 79,985,604 - 79,985,604
Interest Rate swaps / Foreign currency options /
Forward sale contracts - - - 54,669,043 - 54,669,043 - 54,888,746 - 54,888,746
The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs
used in making the measurements:
Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable
for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Fair value measurements using input for the asset or liability that are not based on observable market data
(i.e. unobservable inputs).
37.2 These financial assets and liabilities are for short term or reprice over short term. Therefore their carrying amounts are
reasonable approximation of fair value.

38 SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES
Segment analysis with respect to business activity

Corporate and Commercial Retail Central and Total
Institutional Banking Banking Other Items
2017 Banking
---------------------------------------- (Rupees in 000) ----------------------------------------
Internal income 3,635,826 (2,459,465) 11,318,985 (12,474,327) 21,019
Net mark-up / return / interest income (1,239,675) 3,958,398 (1,983,549) 16,544,328 17,279,502
Non mark-up / non interest income 3,403,867 1,286,677 4,088,902 (579,029) 8,200,417
Operating income 5,800,018 2,785,610 13,424,338 3,490,972 25,500,938
Non mark-up / non interest expenses 2,181,660 1,309,443 7,722,427 522,703 11,736,233
Internal non mark-up / non interest expenses 3,112 1,482 16,118 307 21,019
Operating profit before provisions and taxation 3,615,246 1,474,685 5,685,793 2,967,962 13,743,686
Direct write-offs / provisions against non-performing

loans and advances - net of recoveries 683,427 (286,325) (170,570) - 226,532
Provision for diminution in the value of investments - net - - - 64,029 64,029
Profit before taxation 2,931,819 1,761,010 5,856,363 2,903,933 13,453,125
Other segment items:

Depreciation on tangible fixed assets 94,918 52,403 301,462 4,754 453,537
Amortisation on intangible assets 52 29 164 3 248
Segment assets (gross) 63,651,108 91,902,276 50,443,471 328,173,950 534,170,805
Segment non performing loans 3,303,458 13,472,072 2,811,568 - 19,587,098
Segment provision - non performing loans 3,278,719 13,040,538 3,305,304 - 19,624,561
Segment liabilities 114,200,105 21,360,002 284,644,866 30,406,933 450,611,906
Segment return on net assets (ROA) (%) * 4.86% 2.23% 12.42% 0.88% 2.61%
Segment cost of funds (%) ** 3.24% 2.81% 1.84% 4.05% 2.35%
2016
Internal Income 3,422,920 (2,543,417) 11,200,194 (12,023,385) 56,312

Net mark-up / return / interest income (945,713) 3,797,684 (1,785,892) 18,319,259 19,385,338
Non mark-up / non interest income 2,606,481 690,832 3,430,593 434,869 7,162,775
Operating income 5,083,688 1,945,099 12,844,895 6,730,743 26,604,425
Non mark-up / non interest expenses 2,215,512 1,275,565 8,207,467 645,601 12,344,145
Internal non mark-up / non interest expenses 8,291 4,426 42,846 749 56,312
Operating profit before provisions and taxation 2,859,885 665,108 4,594,582 6,084,393 14,203,968

Direct write-offs / provisions against non-performing
loans and advances - net of recoveries 673,935 (1,657,326) (157,507) - (1,140,898)
Provision for diminution in the value of investments - net - - - - -
Profit before taxation 2,185,950 2,322,434 4,752,089 6,084,393 15,344,866
Other segment items:

Depreciation on tangible fixed assets 93,258 51,486 282,449 18,410 445,603
Amortisation on intangible assets 6,453 3,562 19,541 1,274 30,830
Segment assets (gross) 57,128,604 81,666,666 37,982,320 318,617,262 495,394,852
Segment non performing loans 3,304,769 15,222,537 3,345,913 - 21,873,219
Segment provision required 2,595,292 13,453,675 3,631,603 - 19,680,570
Segment liabilities 110,933,385 14,008,794 269,513,214 19,014,533 413,469,926
Segment return on net assets (ROA) (%) * 4.01% 3.40% 13.83% 1.91% 3.23%
Segment cost of funds (%) ** 3.77% 3.03% 1.84% 5.16% 2.48%
* Segment ROA = Profit before tax / (Segment assets - Segment provisions)
** Segment cost of funds have been computed based on the average balances.
Corporate and Institutional Banking
Corporate & Institutional Banking comprises International Corporates and Financial Institutions clients. The services include
deposits, trade, advisory services and other lending activities. The products include FX forwards, FX options and interest
rate swaps.
77
Commercial Banking
Commercial Banking serves small and medium-sized corporate clients. The services include deposits, trade, wealth
management and other lending activities for SME and local corporate clients.
Retail Banking
Retail Banking serves Priority, Personal and Small Business Clients. The services include wealth management, deposits,
secured lending (mortgages, overdrafts etc.), unsecured lending (credit cards, personal loans etc.).
Central & Other Items
Activities not directly related to a client segment are included in Central & other Items. This mainly includes Treasury-Markets
(Asset and Liability Management), specific strategic investments (if any) and certain central costs of the Bank such as
workers welfare fund and property management unit.
39 RELATED PARTY TRANSACTIONS
Related parties comprise of Standard Chartered Plc., ultimate parent company, its other subsidiaries and branches, key
management personnel, employees' retirement benefit funds and other associated undertakings. The transactions with
related parties are conducted at commercial / agreed terms. The bank also provides advances to employees at reduced
rates in accordance with their terms of employment.
The transactions and balances with related parties are summarised as follows:
Note 2017 2016

OUTSTANDING BALANCES
------------ (Rupees in 000) ------------
Group
Nostro balances with other subsidiaries and branches of the holding company 735,502 5,578,725
Overdrawn nostro balances with other subsidiaries and branches of the holding company 75,526 498,580
Vostro balances of other subsidiaries and branches of the holding company 835,108 589,579
Placements with other subsidiaries and branches of the holding company 5,396,987 11,662,815
Deposits of group company 39.1 10,021 12,029
Due to holding company 10,330,627 9,247,383
Due from other subsidiaries and branches of the company 554,680 314,725
Interest receivable from group companies 754 17,396
Inter-company derivative assets 73,524 67,738
Inter-company derivative liabilities 99,492 122,218
Other receivables - SLA - 847
Transaction-related contingent liabilities - Guarantees 34,653,395 31,113,935
Commitments in respect of forward foreign exchange contracts 6,814,535 5,039,057
Derivative instruments - Interest rate swaps - Notional 5,643,865 2,155,390
Derivative instruments - FX options - Notional 115,705 874,205
Key management personnel
Loans and advances to key management personnel 39.1 178,551 131,989

Deposits of key management personnel 39.1 100,273 79,199
Advance rent 1,259 1,171
Others
Loans and advances to customers with common directorship 39.1 48,850 64,789
Deposits by staff retirement benefit funds 39.1 482,103 144,940
Deposits by customers with common directorship 39.1 986,971 329,148
Accued interest receivable against loans and advances to customers
with common directorship 823 1,299
(Payable) / receivable from defined benefit plans (4,981) 5,635
Derivative liabilities 621 801
Transaction-related contingent liabilities - Guarantees 1,782,776 591,040
Trade-related contingent liabilities - Letters of Credit 171,485 23,739
Trade-related commitment liabilities - Acceptances 12,116 -

Note 2017 2016

PROFIT AND LOSS
------------ (Rupees in 000) ------------
Group
Mark-up / return / interest earned 18,216 1,462
Mark-up / return / interest expensed 13,907 22,303
Fee and commission expense 5,742 -
Fee and commission income 222,719 245,509
Reimbursement of executive and general administrative expenses 27.3 1,555,449 1,436,786
Reimbursement of administrative expenses (including rent and other charges) - 7,757
Net gain / (loss) on inter-company derivatives 28,512 (29,376)
Royalty expense reversal (496,311) -
Dividend paid 7,664,678 7,664,678
Subsidiaries
Mark-up / return / interest earned - 3,646

Mark-up / return / interest expensed - 1,522
Commision income earned - 24,998
Reimbursement of administrative expenses (including rent and other charges) - 11,000
Key management personnel
Mark-up / return / interest earned 15,942 4,981

Mark-up / return / interest expensed 1,559 997
Salaries and benefits 510,930 519,147
Post retirement benefits 27,638 25,423
Remuneration / fee paid to non-executive directors 6,170 6,210
Rent expenses 3,127 5,217
Others
Contribution to defined contribution plans - net of payments received 354,750 330,251

Charge for defined contribution plans 354,750 330,251
Net charge / (income) for defined benefit plans (439) 233
Mark-up / return / interest expensed on deposits of staff retirement benefit funds 9,891 13,704
Mark-up / return / interest expensed on deposits of customers with common directorship 14,883 16,369
Mark-up / return / interest earned on advances to customers with common directorship 5,641 7,699
Fee and commission income from customers with common directorship 36,604 11,730
Net gain / (loss) on derivatives 180 (801)
Other charges - 585

39.1 Net movements in loans and deposits are summarised as follows:
Balance as at Net Net Balance as at

31 December disbursement / repayments / 31 December
2016 deposits withdrawals 2017
------------------------------------------- (Rupees in 000) -------------------------------------------
Loans and advances
Key management personnel 131,989 168,427 (121,865) 178,551
Others 64,789 688,571 (704,510) 48,850
Placements
Group companies 11,662,815 1,279,043,203 (1,285,309,031) 5,396,987
Deposits
Group companies 12,029 6,941 (8,949) 10,021
Key management personnel 79,199 838,961 (817,887) 100,273
Others 474,088 386,518,755 (385,523,769) 1,469,074
79
40 CAPITAL ASSESSMENT AND ADEQUACY
Capital Structure
The State Bank of Pakistan through its BSD Circular No.07 dated 15 April 2009 requires the minimum paid up capital (net
of losses) for all locally incorporated banks to be Rs. 10 billion on 31 December 2013 and onwards. The paid up capital of
the Bank as at 31 December 2017 stands at Rs. 38.715 billion and is in compliance with the SBP requirement.
Furthermore, the State Bank requires the Bank to maintain prescribed capital to total risk-weighted assets ratios. The capital
adequacy ratios of the Bank were subject to the Basel 3 capital adequacy guidelines stipulated by the State Bank through
its BPRD Circular No.6 dated 15 August 2013. These instructions are effective from 31 December 2013 in a phased manner
with full implementation intended by 31 December 2019. Under Basel III guidelines banks are required to maintain the
following ratios on an ongoing basis:
Phase-in arrangement and full implementation of the minimum capital requirements:
Year End 31 December

S No. Ratio 2017 2018 2019
1 Common Equity Tier 1 (CET 1) 6.00% 6.00% 6.00%
2 Additional Tier-1 (ADT 1) 1.50% 1.50% 1.50%
3 Tier 1 7.50% 7.50% 7.50%
Total Capital 10.00% 10.00% 10.00%
4 *Capital Consumption Buffer (CCB) 1.275% 1.900% 2.50%
Total Capital plus CCB 11.275% 11.900% 12.50%
*(Consisting of CET1 only)
Banking operations are categorised in either the trading book or the banking book, and risk-weighted assets are determined
according to specified requirements that seek to reflect the varying levels of risk attached to assets and off-balance sheet
exposures.
The Banks regulatory capital is analysed into three tiers, with total Tier 1 capital being the sum of CET1 and ADT1 below:
- Common Equity Tier I capital, which includes fully paid up capital (including the bonus shares), balance in share premium
account, general reserves, statutory reserves as disclosed on the balance sheet and un-appropriated profits (net of
accumulated losses, if any). Goodwill and other intangibles are deducted from Tier I capital.
- Additional Tier I capital, which includes perpetual non-cumulative preference shares and share premium resulting from
the same. The Bank did not have any ADT1 as of 31 December 2017.
The deduction from Tier 1 Capital include mainly:
i) Book value of goodwill / intangibles;

ii) Deficit on revaluation of available for sale investments
iii) Defined-benefit pension fund net assets
iv) Reciprocal cross holdings in equity capital instruments of other banks, financial institutions and insurance companies;
v) Investment in mutual funds above a prescribed ceiling;
vi) Threshold deductions applicable on deferred tax assets and certain investments;
vii) 50% of investments in majority owned securities or other financial subsidiaries not consolidated in the statement of
financial position.
- Tier II capital includes sub-ordinated debt, revaluation reserves on assets, exchange translation reserves and impairment
allowances that are not held against identified debts. Information on the terms, conditions and other features of the
Bank's sub-ordinated debt currently in issue is given in note 16 to these financial statements. There is a restriction on
the amount of impairment allowances that are not held against identified debts upto 1.25 percent of credit risk weighted
assets.
The deductions from Tier 2 include mainly:
i) Reciprocal cross holdings in other capital instruments of other banks, financial institution and insurance companies;
ii) 50% of investments in majority owned securities or other financial subsidiaries not consolidated in the statement of f
inancial position, during transition phase.
The Bank remained compliant with all externally imposed capital requirements through out the year. Further, there has
been no material change in the Banks management of capital during the year.
Leverage Ratio
SBP vide BPRD Circular No. 06 dated August 15, 2013 introduced leverage ratio (Tier 1 Capital to total exposure) under
Basel III Framework. Banks are required to maintain minimum leverage ratio of 3%.
As per SBP guidelines, average of last three months exposures is used to derive the total exposure.
Particulars 2017 2016
------------ (Rupees in 000) ------------
On-Balance Sheet Assets
On-balance sheet items (excluding derivatives) 501,512,751 465,154,629
Derivatives 2,116,541 441,403
Total On balance sheet exposure (A) 503,629,292 465,596,032
Off-Balance Sheet Assets

Off-balance sheet Items (excluding derivatives) 124,684,260 122,671,794
Commitments in respect of Derivatives 1,774,836 1,064,296
(Derivatives having negative fair value are also included)
Total Off balance sheet exposure (B) 126,459,096 123,736,090
Capital and Total Exposures
Tier-1 Capital (C) 38,625,168 37,009,696
Total Exposures (D = A + B) 630,088,388 589,332,122
Leverage Ratio (C / D) 6.13% 6.28%
40.1 Capital Adequacy Ratio
Common Equity Tier 1 capital (CET1): Instruments and reserves

1 Fully Paid-up Capital 38,715,850 38,715,850
2 Balance in Share Premium Account 1,036,090 1,036,090
3 Reserve for issue of Bonus Shares - -
4 Discount on Issue of shares - -
5 General/ Statutory Reserves 13,383,504 11,734,472

6 Gain/(Losses) on derivatives held as Cash Flow Hedge - -
7 Unappropriated profits 4,199,687 5,385,558
8 Minority Interests arising from CET1 capital instruments issued to third parties by
consolidated bank subsidiaries (amount allowed in CET1 capital of the consolidation group) - -
9 CET 1 before Regulatory Adjustments 57,335,131 56,871,970
10 Total regulatory adjustments applied to CET1 (Note 40.2.1) 18,709,963 19,862,274
11 Common Equity Tier 1 38,625,168 37,009,696
Additional Tier 1 (AT 1) Capital

12 Qualifying Additional Tier-1 capital instruments plus any related share premium - -
13 of which: Classified as equity - -
14 of which: Classified as liabilities - -
15 Additional Tier-1 capital instruments issued to third parties by consolidated subsidiaries
(amount allowed in group AT 1) - -
16 of which: instrument issued by subsidiaries subject to phase out - -
17 AT1 before regulatory adjustments - -
18 Total regulatory adjustment applied to AT1 capital (Note 40.2.2) - -
19 Additional Tier 1 capital after regulatory adjustments - -
20 Additional Tier 1 capital recognized for capital adequacy - -
21 Tier 1 Capital (CET1 + admissible AT1) (11+20) 38,625,168 37,009,696
81
2017 2016
------------ (Rupees in 000) ------------
Tier 2 Capital
22 Qualifying Tier 2 capital instruments under Basel III plus any related share premium - -
23 Tier 2 capital instruments subject to phase-out arrangement issued under pre-Basel 3 rules - 1,500,000
24. Tier 2 capital instruments issued to third parties by consolidated subsidiaries
(amount allowed in group tier 2) - -
25 of which: instruments issued by subsidiaries subject to phase out - -
26 General provisions or general reserves for loan losses-up to maximum of 1.25% of Credit
Risk Weighted Assets 670,580 547,521
27 Revaluation Reserves (net of taxes) 5,019,274 3,440,052
28 of which: Revaluation reserves on fixed assets 5,019,274 2,855,716
29 of which: Unrealized gains/losses on AFS - 584,336
30 Foreign Exchange Translation Reserves - -
31 Undisclosed/Other Reserves (if any) - -
32 T2 before regulatory adjustments 5,689,854 5,487,573
33 Total regulatory adjustment applied to T2 capital (Note 40.2.3) - -
34 Tier 2 capital (T2) after regulatory adjustments - -
35 Tier 2 capital recognized for capital adequacy - -
36 Portion of Additional Tier 1 capital recognized in Tier 2 capital - -
37 Total Tier 2 capital admissible for capital adequacy 5,689,854 5,487,573
38 TOTAL CAPITAL (T1 + admissible T2) (21+37) 44,315,022 42,497,269
39 Total Risk Weighted Assets (RWA) {for details refer Note 40.6} 230,009,947 210,473,425
Capital Ratios and buffers (in percentage of risk weighted assets)

40 CET1 to total RWA 16.79% 17.58%
41 Tier-1 capital to total RWA 16.79% 17.58%
42 Total capital to total RWA 19.27% 20.19%
43 Bank specific buffer requirement (minimum CET1 requirement plus capital conservation
buffer plus any other buffer requirement) - -
44 of which: capital conservation buffer requirement - -
45 of which: countercyclical buffer requirement - -
46 of which: D-SIB or G-SIB buffer requirement - -
47 CET1 available to meet buffers (as a percentage of risk weighted assets) 5.52% 6.93%
National minimum capital requirements prescribed by SBP

48 CET1 minimum ratio (including Capital Conservation Buffer) 7.275% 6.650%
49 Tier 1 minimum ratio (including Capital Conservation Buffer) 8.775% 8.150%
50 Total capital minimum ratio 11.275% 10.650%

40.2 Regulatory Adjustments and Additional Information 2017 2016
------------------ (Rupees in 000) ------------------

Amount Amounts Amount
subject to Pre-
Basel III
40.2.1 Common Equity Tier 1 capital: Regulatory adjustments treatment*
1 Goodwill (net of related deferred tax liability) 18,264,324 - 18,149,823
2 All other intangibles (net of any associated deferred tax liability) 322 - 579
3 Shortfall in provisions against classified assets - - -
4 Deferred tax assets that rely on future profitability excluding those
arising from temporary differences (net of related tax liability) -
5 Defined-benefit pension fund net assets - - 3,381
6 Reciprocal cross holdings in CET1 capital instruments of banking,
financial and insurance entities - -
7 Cash flow hedge reserve - -
8 Investment in own shares/ CET1 instruments - -
9 Securitization gain on sale - -
10 Capital shortfall of regulated subsidiaries - -
11 Deficit on account of revaluation from bank's holdings of fixed assets/ AFS 38,069 - -
12 Investments in the capital instruments of banking, financial and insurance
entities that are outside the scope of regulatory consolidation, where the bank
does not own more than 10% of the issued share capital
(amount above 10% threshold) - -
13 Significant investments in the common stocks of banking, financial and
insurance entities that are outside the scope of regulatory consolidation
(amount above 10% threshold) -
14 Deferred Tax Assets arising from temporary differences (amount above 407,238 101,810 1,708,491
10% threshold, net of related tax liability)
15 Amount exceeding 15% threshold - - -
16 of which: significant investments in the common stocks of financial entities -
17 of which: deferred tax assets arising from temporary differences - -
18 National specific regulatory adjustments applied to CET1 capital - -
19 Investments in TFCs of other banks exceeding the prescribed limit -
20 Any other deduction specified by SBP - - -
21 Adjustment to CET1 due to insufficient AT1 and Tier 2 to cover deductions - - -
22 Total regulatory adjustments applied to CET1 (sum of 1 to 21) 18,709,963 - 19,862,274
40.2.2 Additional Tier-1 & Tier-1 Capital: regulatory adjustments

23 Investment in mutual funds exceeding the prescribed limit - - -
24 Investment in own AT1 capital instruments - - -

25 Reciprocal cross holdings in Additional Tier 1 capital instruments of banking, - - -
financial and insurance entities
26 Investments in the capital instruments of banking, financial and insurance entities - - -
that are outside the scope of regulatory consolidation, where the bank does not
own more than 10% of the issued share capital (amount above 10% threshold)
27 Significant investments in the capital instruments of banking, financial and - - -
insurance entities that are outside the scope of regulatory consolidation
28 Portion of deduction applied 50:50 to Tier-1 and Tier-2 capital based on pre-Basel - - -
III treatment which, during transitional period, remain subject to deduction from
additional tier-1 capital
29 Adjustments to Additional Tier 1 due to insufficient Tier 2 to cover deductions - - -
30 Total regulatory adjustment applied to AT1 capital (sum of 23 to 29) - - -
* As the Bank does not have Additional TIER 1 Capital, deduction is made from CET 1
40.2.3 Tier 2 Capital: regulatory adjustments
31 Portion of deduction applied 50:50 to Tier-1 and Tier-2 capital based on pre-Basel III treatment - - -
which, during transitional period, remain subject to deduction from tier-2 capital
32 Reciprocal cross holdings in Tier 2 instruments of banking, financial and insurance entities - - -
33 Investment in own Tier 2 capital instrument - - -
34 Investments in the capital instruments of banking, financial and insurance entities that are outside - - -
the scope of regulatory consolidation, where the bank does not own more than 10% of the issued
share capital (amount above 10% threshold)
35 Significant investments in the capital instruments issued by banking, financial and insurance - - -
entities that are outside the scope of regulatory consolidation
36 Total regulatory adjustment applied to T2 capital (sum of 31 to 35) - - -
83
40.2.4 Additional Information 2017 2016
--------- (Rupees in 000) ---------

Risk Weighted Assets subject to pre-Basel III treatment
37 Risk weighted assets in respect of deduction items (which during the - -
transitional period will be risk weighted subject to Pre-Basel III Treatment)
(i) of which: deferred tax assets 101,810 1,138,994
(ii) of which: Defined-benefit pension fund net assets
(iii) of which: Recognized portion of investment in capital of banking, - -
financial and insurance entities where holding is less than 10% of - -
the issued common share capital of the entity
(iv) of which: Recognized portion of investment in capital of banking,
financial and insurance entities where holding is more than 10% of
the issued common share capital of the entity
Amounts below the thresholds for deduction (before risk weighting)
38 Non-significant investments in the capital of other financial entities - -
39 Significant investments in the common stock of financial entities - -
40 Deferred tax assets arising from temporary differences (net of related tax liability) 3,903,241 3,871,593
Applicable caps on the inclusion of provisions in Tier 2
41 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to standardized 670,580 547,521
approach (prior to application of cap)
42 Cap on inclusion of provisions in Tier 2 under standardized approach 2,239,074 1,939,048
43 Provisions eligible for inclusion in Tier 2 in respect of exposures subject to internal - -
ratings-based approach (prior to application of cap)
44 Cap for inclusion of provisions in Tier 2 under internal ratings-based approach - -
40.3 Capital Structure Reconciliation Balance sheet as

Under regulatory
in published
scope of
40.3.1 Step 1 financial
consolidation
statements
2017
2017
-------- (Rupees in 000) ---------
Assets
Cash and balances with treasury banks
Balanced with other banks 35,085,289 35,085,289
Lending to financial institutions 779,856 779,856
Investments 8,067,665 8,067,665
Advances 272,487,815 272,487,815
Operating fixed assets 137,655,093 137,655,093
Deferred tax assets 8,033,890 8,033,890
Other assets - 4,412,288
Total assets 51,438,994 51,438,994
513,548,602 517,960,890
Liabilities & Equity

Bills payable
Borrowings 18,958,345 18,958,345
Sub-ordinated loans 377,576,064 377,576,064
Liabilities against assets subject to finance lease - -
Deferred tax liabilities - -
Other liabilities 3,706,408 8,118,696
Total liabilities 24,341,273 24,341,273
450,611,906 455,024,194
Share capital
Reserves 38,715,850 38,715,850
Unappropriated profit 14,419,594 14,419,594
Surplus on revaluation of assets 4,199,687 4,199,687
Total liabilities & equity 5,601,565 5,601,565
513,548,602 517,960,890
Note: Difference between 'Balance sheet as in published financial statements' and 'Under regulatory scope of consolidation' is due to BASEL
III transitional arrangements

Balance sheet as Under regulatory

in published scope of
40.3.2 Step 2 financial consolidation Reference
statements 2017
2017
-------- (Rupees in 000) ---------
Assets
Balanced with other banks 779,856 779,856
Lending to financial institutions 8,067,665 8,067,665
Investments 272,487,815 272,487,815
of which: Non-significant investments in the capital instruments - - a
of banking, financial and insurance entities exceeding 10% threshold
of which: significant investments in the capital instruments issued by
banking, financial and insurance entities exceeding regulatory threshold - - b
of which: Mutual Funds exceeding regulatory threshold - - c
of which: reciprocal crossholding of capital instrument (separate for
CET1, AT1, T2) - - d
of which: others - - e
Advances 137,655,093 137,655,093
shortfall in provisions / excess of total EL amount over eligible provisions
under IRB - - f
general provisions reflected in Tier 2 capital 670,580 670,580 g
Fixed Assets 8,033,890 8,033,890
Deferred Tax Assets
of which: DTAs that rely on future profitability excluding those - 4,412,288
arising from temporary differences
of which: DTAs arising from temporary differences exceeding - - h
regulatory threshold 407,238 407,238 i
Other assets 51,438,994 51,438,994
of which: Goodwill 26,095,310 26,095,310 j
of which: Intangibles 332 332 k
of which: Defined-benefit pension fund net assets - - l
Total assets 513,548,602 517,960,890
Liabilities & Equity

Bills payable 18,958,345 18,958,345
Borrowings 26,029,816 26,029,816
Sub-ordinated loans - -
of which: eligible for inclusion in AT1 - - m
of which: eligible for inclusion in Tier 2 - - n

Liabilities against assets subject to finance lease - -
Deferred tax liabilities 3,706,408 8,118,696
of which: DTLs related to goodwill - 7,830,986 o
of which: DTLs related to intangible assets - - p
of which: DTLs related to defined pension fund net assets - - q
of which: other deferred tax liabilities - 287,710 r
Total liabilities 450,611,906 455,024,194
Share capital 38,715,850 38,715,850 s
of which: amount eligible for CET1 38,715,850 38,715,850 t
of which: amount eligible for AT1
Reserves 14,419,594 14,419,594
of which: portion eligible for inclusion in CET1 (Share Premium) 1,036,090 1,036,090 u
of which: portion eligible for inclusion in CET1 (Statutory Reserve) 13,383,504 13,383,504 v
of which: portion eligible for inclusion in Tier 2 - - w
Unappropriated profit 4,199,687 4,199,687 x
Minority Interest - -
of which: portion eligible for inclusion in CET1 - - y
of which: portion eligible for inclusion in AT1 - - z
of which: portion eligible for inclusion in Tier 2 - - aa
Surplus on revaluation of assets 5,601,565 5,601,565
of which: Revaluation reserves on Property 5,639,634 5,639,634 ab
of which: Unrealized Gains/Losses on AFS (38,069) (38,069) ac
In case of Deficit on revaluation (deduction from CET1) - -
Total liabilities & Equity 513,548,602 517,960,890
85
Note: Difference between 'Balance sheet as in published financial statements' and 'Under regulatory scope of consolidation' is due
to BASEL III transitional arrangements
40.3.3 Basel III Disclosure Component of Source based on

regulatory capital reference
reported by bank number from
(Rupees in '000) step 2
Common Equity Tier 1 capital (CET1): Instruments and reserves
1 Fully Paid-up Capital/ Capital deposited with SBP 38,715,850 (s)
2 Balance in Share Premium Account 1,036,090 (u)
3 Reserve for issue of Bonus Shares -
4 General/ Statutory Reserves 13,383,504 (v)
5 Gain/(Losses) on derivatives held as Cash Flow Hedge -
6 Unappropriated profits 4,199,687 (x)
7 Minority Interests arising from CET1 capital instruments issued to third party
by consolidated bank subsidiaries (amount allowed in CET1 capital of the
consolidation group) - (y)
8 CET 1 before Regulatory Adjustments 57,335,131
Common Equity Tier 1 capital: Regulatory adjustments
9 Goodwill (net of related deferred tax liability) 18,264,324 (j) - (o)
10 All other intangibles (net of any associated deferred tax liability) 332 (k) - (p)
11 Shortfall of provisions against classified assets - (f)
12 Deferred tax assets that rely on future profitability excluding those arising
from temporary differences (net of related tax liability) - {(h) - (r} * x%
13 Defined-benefit pension fund net assets - {(l) - (q)} * x%
14 Reciprocal cross holdings in CET1 capital instruments - (d)
15 Cash flow hedge reserve -
16 Investment in own shares/ CET1 instruments -
17 Securitization gain on sale
18 Capital shortfall of regulated subsidiaries -
19 Deficit on account of revaluation from bank's holdings of fixed assets/ AFS 38,069 (ac)
entities that are outside the scope of regulatory consolidation, where the
bank does not own more than 10% of the issued share capital (amount
above 10% threshold) - (a) - (ad) - (af)
21 Significant investments in the capital instruments issued by banking, financial
and insurance entities that are outside the scope of regulatory consolidation
(amount above 10% threshold) - (b) - (ae) - (ag)
22 Deferred Tax Assets arising from temporary differences (amount above 10%
threshold, net of related tax liability) 407,238 (i)
23 Amount exceeding 15% threshold -
24 of which: significant investments in the common stocks of financial entities -
25 of which: deferred tax assets arising from temporary differences -
26 National specific regulatory adjustments applied to CET1 capital -
27 of which: Investment in TFCs of other banks exceeding the prescribed limit -
28 of which: Any other deduction specified by SBP -
29 Regulatory adjustment applied to CET1 due to insufficient AT1 and Tier 2 to
cover deductions -
30 Total regulatory adjustments applied to CET1 18,709,963
Common Equity Tier 1 38,625,168
Additional Tier 1 (AT 1) Capital

31 Qualifying Additional Tier-1 instruments plus any related share premium -
32 of which: Classified as equity - (t)
33 of which: Classified as liabilities - (m)
34 Additional Tier-1 capital instruments issued by consolidated subsidiaries and
held by third parties (amount allowed in group AT 1) - (z)
35 of which: instrument issued by subsidiaries subject to phase out -
36 AT1 before regulatory adjustments
Additional Tier 1 Capital: regulatory adjustments
37 Investment in mutual funds exceeding the prescribed limit (SBP specific adjustment) -
38 Investment in own AT1 capital instruments -
39 Reciprocal cross holdings in Additional Tier 1 capital instruments -
40 Investments in the capital instruments of banking, financial and insurance entities -
that are outside the scope of regulatory consolidation, where the bank does not own -
more than 10% of the issued share capital (amount above 10% threshold) - (ad)

Component of Source based on

regulatory capital reference
reported by bank number from
(Rupees in '000) step 2
41 Significant investments in the capital instruments issued by banking,
financial and insurance entities that are outside the scope of
regulatory consolidation - (ae)
42 Portion of deduction applied 50:50 to core capital and supplementary
capital based on pre-Basel III treatment which, during transitional period,
remain subject to deduction from tier-1 -
43 Regulatory adjustments applied to Additional Tier 1 due to insufficient
Tier 2 to cover deductions -
44 Total of Regulatory Adjustment applied to AT1 capital -
45 Additional Tier 1 capital -
46 Additional Tier 1 capital recognized for capital adequacy -
Tier 1 Capital (CET1 + admissible AT1) 38,625,168
Tier 2 Capital
47 Qualifying Tier 2 capital instruments under Basel III plus any related
share premium -
48 Capital instruments subject to phase out arrangement from tier 2
(Pre-Basel III instruments) - (n)
49 Tier 2 capital instruments issued to third party by consolidated subsidiaries
(amount allowed in group tier 2) - (aa)
50 of which: instruments issued by subsidiaries subject to phase out -
51 General Provisions or general reserves for loan losses-up to maximum
of 1.25% of Credit Risk Weighted Assets 670,580 (g)
52 Revaluation Reserves 5,019,274
53 of which: Revaluation reserves on fixed assets 5,019,274 portion of (ab)
54 of which: Unrealized Gains/Losses on AFS -
55 Foreign Exchange Translation Reserves - (w)
56 Undisclosed/Other Reserves (if any) -
57 T2 before regulatory adjustments 5,689,854
Tier 2 Capital: regulatory adjustments
58 Portion of deduction applied 50:50 to core capital and supplementary capital
based on pre-Basel III treatment which, during transitional period, remain
subject to deduction from tier-2 -
59 Reciprocal cross holdings in Tier 2 instruments -
60 Investment in own Tier 2 capital instrument -
entities that are outside the scope of regulatory consolidation, where the

bank does not own more than 10% of the issued share capital
(amount above 10% threshold) - (af)
62 Significant investments in the capital instruments issued by banking,
financial and insurance entities that are outside the scope of
regulatory consolidation - (ag)
63 Amount of Regulatory Adjustment applied to T2 capital -
64 Tier 2 capital (T2) 5,689,854
65 Tier 2 capital recognized for capital adequacy 5,689,854
66 Excess Additional Tier 1 capital recognized in Tier 2 capital -
67 Total Tier 2 capital admissible for capital adequacy 5,689,854
TOTAL CAPITAL (T1 + admissible T2) 44,315,022
87
40.4 Main features of regulatory capital instruments
Main Features Common Shares
1 Issuer Standard Chartered Bank

(Pakistan) Limited
2 Unique identifier (KSE Symbol) SCBPL
3 Governing law(s) of the instrument Relevant regulations/ laws
Regulatory treatment
4 Transitional Basel III rules Common Equity Tier 1
5 Post-transitional Basel III rules Common Equity Tier 1
6 Eligible at solo/ group/ group & solo Solo and Group
7 Instrument type Ordinary shares
8 Amount recognized in regulatory capital (Currency in
PKR thousands, as of reporting date) 38,715,850
9 Par value of instrument PKR 10 per share
10 Accounting classification Shareholders' equity
11 Original date of issuance Dec 2006
12 Perpetual or dated Perpetual
13 Original maturity date Not applicable
14 Issuer call subject to prior supervisory approval Not applicable
15 Optional call date, contingent call dates and redemption amount Not applicable
16 Subsequent call dates, if applicable Not applicable
Coupons / dividends
17 Fixed or floating dividend/ coupon Not applicable
18 Coupon rate and any related index/ benchmark Not applicable
19 Existence of a dividend stopper Not applicable
20 Fully discretionary, partially discretionary or mandatory Fully Discretionary
21 Existence of step up or other incentive to redeem Not applicable
22 Noncumulative or cumulative Not applicable
23 Convertible or non-convertible Not applicable
24 If convertible, conversion trigger (s) Not applicable
25 If convertible, fully or partially Not applicable
26 If convertible, conversion rate Not applicable
27 If convertible, mandatory or optional conversion Not applicable
28 If convertible, specify instrument type convertible into Not applicable
29 If convertible, specify issuer of instrument it converts into Not applicable
30 Write-down feature Not applicable
31 If write-down, write-down trigger(s) Not applicable
32 If write-down, full or partial Not applicable
33 If write-down, permanent or temporary Not applicable
34 If temporary write-down, description of write-up mechanism Not applicable
35 Position in subordination hierarchy in liquidation (specify Subordinated debt/TFCs
instrument type immediately senior to instrument)
36 Non-compliant transitioned features Not applicable
37 If yes, specify non-compliant features Not applicable

40.5 Capital Adequacy
The Banks capital management approach is driven by its desire to maintain a strong capital base to support the development
of its business, to meet regulatory capital requirements at all times and to maintain good credit ratings, maximising
shareholder value and at the same time maintaining investor, creditor and market confidence.
The capital position is reviewed and monitored by the Asset and Liability Committee (ALCO) of the Bank. Regular reviews
help to ensure that adequate levels of capital and an optimum mix of the different components of capital are maintained
by the Bank to support the strategy. This is integrated with the Banks annual planning process that takes into consideration
business growth assumptions across products and business segments and the related impact on capital resources.
The following matters are taken into account while reviewing the Bank's capital position:
a) current regulatory capital requirements and our assessment of future standards;
b) demand for capital due to business growth forecasts;
c) forecasted demand for capital to support credit ratings and as a signaling tool to the market; and
d) available supply of capital and capital-raising options.
For calculation of Capital Adequacy Ratio, the Bank adheres to the calculation of capital requirements for credit, market
and operational risk as per the guidelines of SBP.
For credit risk, the Bank uses the 'Standardized Approach'. The Bank uses reputable and SBP approved rating agencies
(ECAIs) for deriving risk weights for specific credit exposures. These are consistently applied across the Bank's credit
portfolio for both on and off balance sheet exposures. The ECAIs used for rating various types of exposures are tabled
in note 39.6 to these financial statements.
For the purposes of Credit Risk Mitigation under the 'Standardized Approach', the Bank follows the instructions laid down
by SBP vide their Circular No. 08 dated 27 June 2006 with regard to eligibility of collaterals, valuation and management.
Where a transaction is secured by an eligible collateral and meets the eligibility criteria and minimum requirements as
laid down by SBP, the Bank reduces its exposure under that particular transaction by taking into account the risk mitigating
effect of the collateral for the calculation of capital requirement. Collaterals used include: Government of Pakistan guarantees,
Inter-group guarantees, margins / liens and saving certificates.
The Bank calculates its capital requirement for market risk in its portfolio, based on the methodology provided by SBP

which takes account of specific and general market risk capital charge for interest rate risk using the duration method.
For calculation of operational risk capital charge, the business activities of the Bank are divided into eight business lines:
corporate finance, trading and sales, retail banking, commercial banking, payments and settlement, agency services,
asset management and retail brokerage. The Bank's operations are mapped into these eight business lines as per the
criteria laid down by SBP vide Circular No 08 dated 27 June 2006.
Within each business line, gross income is the broad indicator that serves as a proxy for the scale of business operations
and thus the likely scale of operational risk exposure within each of these business lines. The capital charge for each
business line is calculated by multiplying gross income by beta factors assigned by SBP to that business line. Beta serves
as a proxy for the industry-wide relationship between the operational risk loss experience for a given business line and
the aggregate level of gross income for that business line.
The total capital charge is calculated as the three-year average of the simple summation of the regulatory capital charges
across each of the business lines in each year.
The 'Standardised Approach' is preferred over the 'Basic Indicator Approach' so as to arrive at a capital charge that is
reflective of the risks associated with each of the Bank's business lines.
89
Capital Requirements Risk Weighted Assets

2017 2016 2017 2016
Restated Restated
Credit Risk
------------------------- (Rupees in 000) ------------------------
Portfolios subject to standardized approach (Simple)
Cash & cash equivalents - - - -
Sovereign 9,106 14,016 80,765 131,609
Public Sector entities - 2,614 - 24,546
Banks 350,111 414,551 3,105,195 3,892,497
Corporate 9,570,006 7,502,260 84,878,106 70,443,759
Retail 1,370,740 1,064,189 12,157,342 9,992,382
Residential Mortgages 187,348 119,734 1,661,627 1,124,259
Past Due loans 71,982 274,021 638,422 2,572,963
Operating Fixed Assets 905,821 614,856 8,033,890 5,773,296
Other assets 1,759,260 1,508,722 15,603,189 14,166,404
14,224,374 11,514,963 126,158,536 108,121,715
Off-Balance sheet
Non-market related
Loan Repayment Guarantees 3,083,664 2,492,604 27,349,568 23,404,730
Performance Bonds etc. 2,282,460 2,025,509 20,243,546 19,018,866
Stand By Letters of Credit 449,465 402,885 3,986,384 3,782,957
5,815,589 4,920,998 51,579,498 46,206,553
Market related 144,202 54,515 1,278,957 511,875
Equity Exposure Risk in the Banking Book

Listed 12,285 30,214 108,959 283,697
Unlisted - - - -
12,285 30,214 108,959 283,697
Market Risk
Capital Requirement for portfolios subject to Standardized Approach

Interest rate risk 184,619 256,949 1,637,420 2,412,663
Equity position risk - - - -
Foreign Exchange risk 32,821 213,966 291,094 2,009,073
217,440 470,915 1,928,514 4,421,736
Operational Risk
Capital Requirement for operational risks 5,519,731 5,423,816 48,955,483 50,927,849
TOTAL 25,933,621 22,415,420 230,009,947 210,473,425
Capital Adequacy Ratio 2017 2016

Required Actual Required Actual
CET1 to total RWA (e) 7.28% 16.79% 6.65% 17.58%

Tier-1 capital to total RWA (i) 8.78% 16.79% 8.15% 17.58%
Total capital to total RWA 11.28% 19.27% 10.65% 20.19%

41. RISK MANAGEMENT
Through its risk management structure, the Bank seeks to manage efficiently the core risks: credit, market, operational,
country, and liquidity risks. These arise directly through the Banks commercial activities whilst compliance and regulatory
risk, operational risk and reputational risks are normal consequences of any business undertaking.
The basic principles of risk management followed by the Bank include:
Balancing risk and return
Risk is taken in line with the requirements of the Banks stakeholders. Risk should be taken within the Bank's risk appetite,
consistent with the approved strategy. Any such risks are avoided which have a material probability of causing financial
distress to the Bank or its clients or customers.
Responsibility
Given the Bank is in the business of taking risk, it is everyones responsibility to ensure that risk taking is both disciplined
and focused. The Bank takes account of its social responsibilities and its commitment to customers in taking risk to produce
a return.
Accountability
Risk is taken only within agreed authorities and where there is appropriate infrastructure and resource. All risk taking must
be transparent, controlled and reported.
Anticipation
The Bank looks to anticipate future risks and to ensure awareness of all risk.
Competitive advantage
The Bank seeks to achieve competitive advantage through efficient and effective risk management and control.
Risk management
The Bank aims to implement best practices and have a specialist risk function of international standards, with strength
in depth, experience across risk types and economic scenarios.

Ultimate responsibility for the effective management of risk rests with the Companys Board of Directors. Acting within
an authority delegated by the Board, the Executive Committee reviews specific risk areas and monitors the activities of
the Executive Risk Committee (ERC) and the Asset and Liability Committee (ALCO).
ERC headed by Country Chief Risk Officer (CCRO), through authority delegated by the Board through the Banks
Executive Committee, is responsible for credit risk, market risk, operational risk, compliance risk and regulatory risk, legal
risk, information security risk and reputational risk. ALCO, through authority delegated by the Board through the Banks
Executive Committee, is responsible for management of the Bank's liquidity, capital adequacy and structural foreign
exchange risk.
The Pension Executive Committee, through authority delegated by the Board through the Bank's Executive Committee
is responsible for management of pension risk.
The day to day responsibility for managing risk rests with CCRO who oversees and manages the risk through a team of
managers; Senior Credit Officer responsible for credit risk in Corporate & Institutional Banking and Commercial Banking,
Country Credit Head responsible for credit risk in Retail Banking, Head of Special Assets Management responsible for
remedial risk management, Head of Credit Risk Controls responsible for collateral management, security documentation,
credit MIS and controls, Head of Market Risk responsible for liquidity risk and risks associated with price movements,
arising from interest and exchange rate movements and Head of Operational Risk responsible for enterprise wide
operations. The Bank has established policies, procedures, processes, and controls and has provided the Risk team
adequate support by way of risk systems and tools for measuring and reporting risk for monitoring, controlling, reviewing
and managing risk.
91
41.1 Credit risk
Credit risk is the risk that a counter party will not settle its obligations in accordance with agreed terms. Credit exposures
may arise from lending, trade finance, securities and derivative exposures. Credit exposures include both individual
borrowers and groups of connected counterparties and portfolios in the banking and trading books.
The Board of Directors has delegated down the authority to ERC through the Banks Executive Committee to propose
risk appetite and make recommendations to the Board for approval of risk appetite and policies for managing credit risk.
The CEO and the Executive Committee in turn rely on CCRO and the Risk Committee to determine these and recommend
for their support and Board's approval. BOD delegates credit authorities to CCRO, SCO, RCO.
Credit risk appetite is established through business strategy papers and underwriting standards by the business managers,
which are approved by the Board once recommended, and supported by the Executive Committee.
Specific procedures for managing credit risk within Corporate & Institutional Banking, Commercial Banking and Retail
Banking are determined at the Senior Credit Officer and Country Credit Head levels for their respective jurisdictions with
specific policies and procedures being adapted to different risk environments and business goals. Credit analysis includes
review of facility details, credit grade determination and financial spreading / ratio analysis. Portfolio review, Early Alerts
and Stress Testing based on scenario analysis is a combined responsibility of Client Relationship and Risk and Finance
function. Client relationship origination and credit approval roles are clearly segregated throughout the business segments.
Credit concentration risk is governed by specific policy, the adherence to which is managed by the Executive Risk
Committee (ERC). Credit concentration risk is principally managed based on three components: single name borrower
exposure, industry concentrations and product concentration. In addition to the SBP specified prudential limits on single
or group exposures, limits are also established by the CCRO and approved by ERC.
41.1.1 Corporate and Institutional & Commercial Banking
Within the two business segments, a alpha numerical risk grading system is used for quantifying the risk associated with
a counter-party. The grading is based on a probability of default measure, with customers analysed against a range of
quantitative and qualitative measures. Expected Loss is used for further assessment of individual exposures and portfolio
analysis. There is a clear segregation of duties with loan applications being prepared separately from the approval chain.
41.1.2 Retail Banking
For Retail Banking, program based standard credit application forms are generally used, which are processed in central
units for different products and market segments. Retail Banking Analytics team has developed Bureau scores and uses
Bureau data for portfolio monitoring and for underwriting new business.

2017
41.1.3 Segment by Class of Business
Contingencies and
Advances - Gross Deposits
Commitments
(Rupees Percent (Rupees Percent (Rupees Percent
in '000) in '000) in '000)
Chemical and pharmaceuticals 11,818,515 7.51 9,855,766 2.61 13,511,935 10.95

Agri business 5,762,958 3.66 114,961 0.03 - -
Textile 34,621,979 22.01 1,585,790 0.42 4,430,185 3.59
Communication 4,964,961 3.16 21,443,385 5.68 215,840 0.17
Insurance - - 1,704,922 0.45 - -
Telecommunications and
information technology 4,481,363 2.85 2,021,858 0.54 6,361,509 5.15
Cement 2,803,423 1.78 34,253 0.01 1,217,246 0.99
Sugar 2,385,531 1.52 4,639 - 2,400 -
Automobile and transportation
equipment 872,308 0.55 2,530,515 0.67 5,364,137 4.35
Transportation 1,338,793 0.85 2,599,124 0.69 1,850,344 1.50
Financial 884,055 0.56 919,423 0.24 60,052,728 48.65
Electronics and electrical
appliances 3,955,648 2.52 3,270,166 0.87 11,317,151 9.17
Production and transmission
of energy 26,188,738 16.65 15,831,439 4.19 7,338,579 5.94
Shoes and leather garments 1,678,575 1.07 41,992 0.01 53,992 0.04
Individuals 22,735,170 14.46 229,520,701 60.79 - -
Others 32,787,637 20.85 86,097,130 22.80 11,727,811 9.50
157,279,654 100.00 377,576,064 100.00 123,443,857 100.00
2016
Contingencies and
Advances - Gross Deposits
Commitments
(Rupees Percent (Rupees Percent (Rupees Percent

in '000) in '000) in '000)

Chemical and pharmaceuticals 13,575,855 10.16 8,600,736 2.35 9,814,479 8.21
Agri business 5,629,922 4.21 100,852 0.03 - -
Textile 30,384,716 22.74 2,070,810 0.57 3,576,038 2.99
Communication 213,887 0.16 13,917,222 3.81 131,477 0.11
Insurance - - 1,365,878 0.37 - -
Telecommunications and
information technology 3,353,534 2.51 3,658,197 1.00 8,367,855 7.00
Cement 972,214 0.73 16,595 0.00 437,339 0.37
Sugar 2,761,707 2.07 10,744 0.00 2,400 0.00
Automobile and transportation
equipment 1,498,827 1.12 1,645,328 0.45 4,632,330 3.87
Transportation 2,058,957 1.54 4,501,619 1.23 6,175,898 5.16
Financial 666,222 0.50 697,904 0.19 51,350,328 42.94
Electronics and electrical
appliances 2,384,480 1.78 7,566,727 2.07 11,155,557 9.33
Production and transmission
of energy 17,235,785 12.90 18,624,038 5.09 3,915,887 3.27
Shoes and leather garments 1,301,643 0.97 56,882 0.02 202,328 0.17
Individuals 19,677,889 14.73 223,054,028 61.02 - -
Others 31,915,699 23.88 79,674,534 21.80 19,823,329 16.58
133,631,337 100.00 365,562,094 100.00 119,585,245 100.00
93
41.1.4 Details of Non-performing Advances and Specific Provisions 2017 2016

by Class of Business Segment
Classified Specific Classified Specific
Advances Provision Advances Provision
held held
---------------- (Rupees in 000) -----------------
Chemical and pharmaceuticals 232,178 232,178 238,468 238,468

Textile 6,384,972 6,367,273 6,273,480 6,249,881
Automobile and transportation equipment 323,359 277,299 388,905 306,120
Production and transmission of energy 372,774 372,774 616,009 385,259
Individuals 14,500 14,500 14,500 14,500
Telecommunications and information technology 2,697,930 2,697,930 2,700,088 2,026,612
Others 9,561,385 8,992,027 11,641,769 9,912,209
19,587,098 18,953,981 21,873,219 19,133,049
41.1.5 Segment by Sector 2017
Advances Deposits Contingencies and

Commitments
(Rupees 100.00% (Rupees 100.00% (Rupees 100.00%
in '000) in '000) in '000)
Public / Government 10,706,233 6.81% 9,054,635 2.40% 4,443,438 3.60%

Private 146,573,421 93.19% 368,521,429 97.60% 119,000,419 96.40%
157,279,654 100% 377,576,064 100% 123,443,857 100%
2016
Advances Deposits Contingencies and

Commitments
(Rupees 100.00% (Rupees 100.00% (Rupees 100.00%
in '000) in '000) in '000)
Public / Government 5,780,841 4.33% 7,893,642 2.16% - 0.00%

Private 127,850,496 95.67% 357,668,452 97.84% 119,585,245 100.00%
133,631,337 100% 365,562,094 100% 119,585,245 100%
41.1.6 Details of Non-performing Advances and Specific Provisions by Sector

2017 2016
Classified Specific Classified Specific
Advances Provision Advances Provision
held held
---------------- (Rupees in 000) -----------------
Public / Government - - - -
Private 19,587,098 18,953,981 21,873,219 19,133,049
19,587,098 18,953,981 21,873,219 19,133,049
41.1.7 Geographical Segment Analysis 2017

Profit Total Net Assets Contingencies
before assets employed and
taxation employed Commitments
---------------- (Rupees in 000) -----------------
Pakistan 13,453,125 513,548,602 62,936,696 117,160,311
13,453,125 513,548,602 62,936,696 117,160,311
2016
Profit Total Net Assets Contingencies
before assets employed and
taxation employed Commitments
---------------- (Rupees in 000) -----------------
Pakistan
15,344,866 474,752,219 61,282,293 112,596,909
15,344,866 474,752,219 61,282,293 112,596,909
41.2 Market Risk

The Bank recognizes Market risk as the exposure created by potential changes in the market prices and rates. Market Risk
exposures arise primarily from interest rate and foreign exchange related contracts. The Bank has no significant exposure to
equity and commodity price risk.
Market and Traded Credit Risk (MTCR) approves the limits within delegated authorities and monitors exposures against these
limits, and is locally under governance of Country Chief Risk Officer, who agrees policies and procedures and levels of risk
appetite in terms of Value at Risk (VaR). Limits are then proposed by business within the terms of agreed policy. These are agreed
and delegated down by Executive Risk Committee (ERC) and Approvals Committee under delegated authority from the BoD.
Policies cover both trading and non-trading books.
In addition to Market Risk policies, as well as VaR and other market risk limits, independent stress testing of portfolios, factor
sensitivity measures and derivatives are also employed as additional risk management tools to manage and hedge market risk
exposures. Risk models are periodically back tested against actual results to ensure that pre-determined levels of accuracy are
maintained.
VaR is the main limit that is being applied by the bank along with other supporting price risk limits and MATs. Interest Rate Risk
is controlled via PV01 limits which are set on Net as well as Gross basis across various tenors and at currency level. Additionally
curve tenor limits are applied to contain the interest rate risk exposure going beyond certain tenors. PV01s measure the sensitivity
of the Net Present Value (NPV) to +1 bp shift applied at pre-defined points on a zero-coupon yield curve. PV01 strip is then
applied to the historical scenarios i.e. Risk factors over the last 260 days to derive the NPV distribution which is then used to
determine Value at Risk (VaR) and Stress VaR.
All limits are hard limits and any excess results in escalation to senior management, with the level of escalation depending upon
nature of excess. These limits are monitored on a daily basis as part of daily risk reporting.
41.3 Foreign Exchange Risk

2017
Assets Liabilities Off-balance Net foreign
sheet items currency
exposure
----------------------------- (Rupees in 000) -----------------------------
Pakistan rupee 434,617,274 384,904,841 62,014,689 111,727,122
United States dollar 25,189,514 50,502,095 (56,267,931) (81,580,512)
Great Britain pound 3,272,675 5,508,967 2,075,378) (160,914)
Euro 1,877,412 4,772,393 (5,652,354) (8,547,335)
Swiss Franc 23,690 23,690 (102,086) (102,086)
Japanese yen 48,014 6,396 (1,145,471) (1,103,853)
Others 38,339 33,149 (922,225) (917,035)
465,066,918 445,751,531 - 19,315,387

2016
Assets Liabilities Off-balance Net foreign
sheet items currency
exposure
----------------------------- (Rupees in 000) -----------------------------
Pakistan rupee 391,999,774 349,455,923 60,954,074 103,497,925
United States dollar 31,926,509 52,138,147 (51,935,721) (72,147,359)
Great Britain pound 4,792,953 4,792,954 (345,407) (345,408)
Euro 2,839,727 2,691,669 (6,927,164) (6,779,106)
Swiss Franc 21,554 21,554 (153,283) (153,283)
Japanese yen 36,088 2,569 (870,708) (837,189)
Others 98,308 101,600 (721,791) (725,083)
431,714,913 409,204,416 - 22,510,497
41.3.1 Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.
41.3.2 The management sets limits on the level of exposure by currency in total which are monitored daily.
95
41.4 Mismatch of Interest Rate Sensitive Assets and Liabilities

2017
Exposed to yield / interest rate risk
Effective Total
Upto one Over one Over three Over six Over one Over two Over three Over five Over ten Non interest
yield /
month month to months to months to year to years to years to years to years bearing
interest
three months six months one year two years three years five years ten years financial
On-balance sheet rate
instruments
financial instruments --------------------------------------------------------------------------------------------------- (Rupees in 000) -----------------------------------------------------------------------------------------------------------
Assets
Cash and balances with treasury banks - 35,085,289 8,364,702 - - - - - - - - 26,720,587
Balances with other banks - 779,856 - - - - - - - - - 779,856
Lendings to financial institutions 2.08% 8,067,665 8,067,665 - - - - - - - - -
Investments 6.36% 272,487,815 101,076,595 155,303,727 10,087,087 957,747 4,254,000 699,700 - - - 108,959
Advances 7.45% 137,655,093 50,759,436 59,884,588 15,313,318 3,740,960 3,108,951 3,432,000 1,408,531 44,772 - (37,463)
Other assets - 10,991,200 - - - - - - - - - 10,991,200
465,066,918 168,268,398 215,188,315 25,400,405 4,698,707 7,362,951 4,131,700 1,408,531 44,772 - 38,563,139
Liabilities
Bills payable - 18,958,345 - - - - - - - - - 18,958,345
Borrowings 3.19% 26,029,816 8,282,854 14,849,636 2,379,000 - 256,468 175,105 - - - 86,753
Deposits and other accounts 3.63% 377,576,064 190,319,332 5,564,961 14,740,645 2,473,144 732,084 1,321,033 - - - 162,424,865
Sub-ordinated loans 0.00% - - - - - - - - - - -
Other liabilities - 23,187,306 - - - - - - - - - 23,187,306
445,751,531 198,602,186 20,414,597 17,119,645 2,473,144 988,552 1,496,138 - - - 204,657,269
On-balance sheet gap 19,315,387 (30,333,788) 194,773,718 8,280,760 2,225,563 6,374,399 2,635,562 1,408,531 44,772 - (166,094,130)
Off-balance sheet financial instruments
Forward Lending
Interest Rate Swap 8,289,783 - - 193,180 - 4,433,310 1,235,127 - 2,428,166 - -
Foreign Currency option 115,705 58,694 57,011 - - - - - - - -
Forward Foreign Exchange Contracts 159,178,328 82,123,295 66,404,045 10,650,988 - - - - - - -
167,583,816 82,181,989 66,461,056 10,844,168 - 4,433,310 1,235,127 - 2,428,166 - -
Forward Borrowing
Interest Rate Swap 5,687,395 - - - - 3,766,643 414,065 - 1,506,687 - -
Foreign Currency option 115,705 58,694 57,011 - - - - - - - -
Forward Foreign Exchange Contracts 129,071,806 71,240,356 42,145,632 13,443,330 2,242,488 - - - - - -
134,874,906 71,299,050 42,202,643 13,443,330 2,242,488 3,766,643 414,065 - 1,506,687 - -
Off-balance sheet gap 32,708,910 10,882,939 24,258,413 (2,599,162) (2,242,488) 666,667 821,062 - 921,479 - -
Total yield / interest risk sensitivity gap 52,024,297 (19,450,849) 219,032,131 5,681,598 (16,925) 7,041,066 3,456,624 1,408,531 966,251 - (166,094,130)
Cumulative yield / interest risk sensitivity gap 199,581,282 205,262,880 205,245,955 212,287,021 215,743,645 217,152,176 218,118,427 218,118,427
2016
Exposed to yield / interest rate risk
Effective Total
Upto one Over one Over three Over six Over one Over two Over three Over five Over ten Non interest
yield /
month month to months to months to year to years to years to years to years bearing
interest
three months six months one year two years three years five years ten years financial
On-balance sheet rate
instruments
financial instruments --------------------------------------------------------------------------------------------------- (Rupees in 000) -----------------------------------------------------------------------------------------------------------
Assets
Cash and balances with
treasury banks - 40,729,979 7,944,823 - - - - - - - - 32,785,156
Balances with other banks - 5,699,791 - - - - - - - - - 5,699,791
Lendings to financial
institutions 2.94% 19,798,390 18,972,220 826,170 - - - - - - - -
Investments 7.64% 245,850,227 58,687,895 120,667,643 10,180,462 46,595,249 5,304,881 4,130,400 - - - 283,697
Advances 6.75% 113,950,767 49,297,505 37,053,900 18,069,947 3,298,434 1,587,060 1,277,891 1,173,381 - - 2,192,649
Other assets - 5,685,759 - - - - - - - - - 5,685,759
431,714,913 134,902,443 158,547,713 28,250,409 49,893,683 6,891,941 5,408,291 1,173,381 - - 46,647,052
Liabilities
Bills payable - 10,821,793 - - - - - - - - - 10,821,793
Borrowings 3.59% 14,400,841 225,000 9,956,585 2,961,278 - - 437,524 239,768 - - 580,686
Deposits and other accounts 4.14% 365,562,094 198,905,553 4,639,510 1,387,163 2,465,421 210,222 695,823 - - - 157,258,402
Sub-ordinated loans 7.05% 2,500,000 - - 2,500,000 - - - - - - -
Other liabilities - 15,919,688 - - - - - - - - - 15,919,688
409,204,416 199,130,553 14,596,095 6,848,441 2,465,421 210,222 1,133,347 239,768 - - 184,580,569
On-balance sheet gap 22,510,497 (64,228,110 ) 143,951,618 21,401,968 47,428,262 6,681,719 4,274,944 933,613 - - (137,933,517)
Off-balance sheet financial instruments
Forward Lending
Interest Rate Swap 4,976,406 - - 278,929 121,960 1,233,282 1,830,826 911,681 599,728 - -
Foreign Currency option 874,205 263,471 457,502 153,232 - - - - - - -
Forward Foreign Exchange Contracts 73,702,973 34,475,024 32,434,697 6,777,307 15,945 - - - - - -
79,553,584 34,738,495 32,892,199 7,209,468 137,905 1,233,282 1,830,826 911,681 599,728 - -
Forward Borrowing
Interest Rate Swap 2,116,894 - - 278,929 - - 830,826 444,544 562,595 - -
Foreign Currency option 874,205 263,471 457,502 153,232 - - - - - - -
Forward Foreign Exchange Contracts 51,677,943 28,943,803 18,208,353 3,425,937 1,099,850 - - - - - -
54,669,042 29,207,274 18,665,855 3,858,098 1,099,850 - 830,826 444,544 562,595 - -
Off-balance sheet gap 24,884,542 5,531,221 14,226,344 3,351,370 (961,945) 1,233,282 1,000,000 467,137 37,133 - -
Total yield / interest risk sensitivity gap 47,395,039 (58,696,889) 158,177,962 24,753,338 46,466,317 7,915,001 5,274,944 1,400,750 37,133 - (137,933,517)
Cumulative yield / interest risk sensitivity gap 99,481,073 124,234,411 170,700,728 178,615,729 183,890,673 185,291,423 185,328,556 185,328,556

41.5 Yield / Interest Rate Risk
Yield risk is the risk of decline in earnings due to adverse movement of the yield curve. Interest rate risk is the risk that
the value of financial instruments will fluctuate due to changes in the market interest rates. The Bank is exposed to various
risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial position and
cash flows. The Bank manages this risk by matching the re-pricing of assets and liabilities and off-balance sheet instruments.
41.6 Liquidity Risk
Liquidity risk is the potential for loss because the bank, although solvent, does not have available sufficient financial
resources to enable it to meet its obligations as they fall due, or can access these financial resources only at excessive
cost.
Funding risk is the potential for actual or opportunity loss because the bank does not have stable or diversified sources
of funding in the medium and long term to enable it to meet its financial obligations in pursuit of its desired business
strategy or growth objectives.
Liquidity risk, both short term and structural is monitored through the internal liquidity risk management framework and
is managed through the Asset and Liability Committee ("ALCO"). This committee, chaired by the CEO, is responsible for
both statutory and prudential liquidity. The ALCO prudently monitors the Banks Balance Sheet and ensures that the bank
remains liquid at all times. A robust Liquidity and Funding Risk Type Framework helps to ensure that the bank maintains
sufficient liquidity and a cushion of unencumbered, high quality liquid assets to withstand a range of stress events including
those involving the loss or impairment of both unsecured and secured funding sources.
A range of tools are used for the management of liquidity and presented to ALCO on monthly basis:
- Wholesale Borrowing External

- Wholesale Borrowing Internal
- Swapped Funds
- Maximum Cumulative Outflow
- Intraday Liquidity Risk
- Liquidity Stress Testing
- Advances to Deposit Ratio
- Liquidity Coverage Ratio
- Net Stable Funding Ratio
- Asset Encumbrance
- Concentration of funding
- Top advances concentration
- Behavioural and Contractual Maturity mismatch

In addition, liquidity contingency funding plans are reviewed periodically to ensure that alternative funding strategies are
in place and can be implemented on a timely basis to minimize the liquidity risk that may arise due to unforeseen adverse
changes in the market place. The Bank also maintains significant levels of marketable securities either for compliance
with local statutory requirements or as prudential investments of surplus funds.
Furthermore, stress testing and scenario analysis are used to assess the financial and management capability to continue
to operate effectively under extreme, but plausible, operating conditions and to understand the potential threats to the
banks liquidity and other financial resources. Routine stress tests for liquidity risk under the Liquidity and Funding Risk
Policy comprises of name-specific and market-wide stress.
41.6.1 BASEL III Liquidity Standards Implementation
As per SBP Basel III Liquidity Standards issued under BPRD circular no 08 dated June 23, 2016, banks are required to
report BASEL III Liquidity standards to SBP and disclose the same in their financial statements
Liquidity Coverage Ratio (LCR)

It refers to the highly liquid assets held by the bank to meet its short term obligations. LCR is used as a tool to manage
liquidity risk. LCR has two components: high quality liquid asset (HQLA) and total net cash outflows. HQLA comprises
of those assets that can be readily sold or employed as collateral for obtaining fund HQLA structure has been divided
into 1) cash and treasury balance, 2) marketable securities, 3) corporate debt securities with credit rating, 4) non-financial
equity shares respectively. Outflows are mainly deposit outflows net of cash inflows which consist of inflows from financing
and money market placements up to 1 month.
97
Net Stable Funding Ratio (NSFR)

It is used to reduce funding risk over a longer time horizon by requiring banks to fund their activities with sufficiently stable
sources of funding in order to mitigate the risk of future funding stress. The NSFR limits overreliance on short-term
wholesale funding, encourages better assessment of funding risk across all on and off-balance sheet items and promotes
funding stability. The ratio is defined as the amount of available stable funding (ASF), relative to the amount of required
stable funding (RSF).
Concentration of Funding Sources

Standard Chartered bank mainly relies on funds provided by depositors. Bank has one of the best CASA to total deposits
ratio in the industry of 92%. Moreover the Bank does not rely on top few depositors to meet its funding requirements which
reflect its effective diversification strategy. These customer deposits, which are widely diversified by type and maturity,
represent a stable source of funds.
Currency Mismatch in the LCR
Currency mismatch is minimal as PKR deposits are 84% of Banks total deposits. Also bank separately monitors local
and foreign currency maturity mismatch on a monthly basis.
41.6.2 Liquidity Coverage Ratio
The Liquidity Coverage Ratio (LCR) is a quantitative requirement which aims to ensure that a bank maintains an adequate
level of unencumbered high quality liquid assets which can easily be converted into cash at little or no loss of value in
private markets, to withstand an acute liquidity stress scenario over a 30-day horizon.
TOTAL TOTAL
a b
(in local currency) UNWEIGHTED WEIGHTED VALUE
VALUE (average of last (average of last
four quarters) four quarters)
HIGH QUALITY LIQUID ASSETS
1 Total high quality liquid assets (HQLA) - 305,361,466
CASH OUTLFLOWS - -
2 Retail deposits and deposits from small business customers of which: - -
2.1 Stable deposit - -
2.2 Less stable deposit 248,266,458 24,826,646
3 Unsecured wholesale funding of which: - -
3.1 Operational deposits (all counterparties) 77,143,835 19,285,959
3.2 Non-operational deposits (all counterparties) 61,309,356 24,523,742
3.3 Unsecured debt 7,877,613 7,877,613
4 Secured wholesale funding 4,382,131 887,904
5 Additional requirements of which: - -
5.1 Outflows related to derivative exposures and other collateral requirements 720,169 720,169
5.2 Outflows related to loss of funding on debt products - -
5.3 Credit and Liquidity facilities 81,834,198 1,288,047
6 Other contractual funding obligations 16,133,513 16,133,513
7 Other contingent funding obligations - -
8 TOTAL CASH OUTFLOWS - 95,543,593
CASH INFLOWS - -
9 Secured lending - -
10 Inflows from fully performing exposures 38,328,363 20,201,488
11 Other Cash inflows 11,004,388 10,890,772
12 TOTAL CASH INLFOWS - 31,092,260
21 TOTAL HQLA (1) 305,361,466

22 TOTAL NET CASH OUTFLOWS (8-12) 64,451,333
23 LIQUIDITY COVERAGE RATIO (21/22) 473.79%
a unweighted values must be calculated as outstanding balances maturing or callable within 30 days ( for inflows and outflows)
b Weighted values must be calculated after the application of respective haircuts (for HQLA) or inflow and outflow rates ( for
inflows and outflows)
c Adjusted values must be calculated after the application of both (i) haircuts and inflow and outflow rates and (ii) any applicable
caps (i.e. cap on level 2B and level 2 assets for HQLA and cap on inflows.
41.6.3 Net Stable Funding Ratio
The objective of NSFR is to reduce funding risk over a longer time horizon by requiring banks to fund their activities with sufficiently
stable sources of funding in order to mitigate the risk of future funding stress.
unweighted value by residual maturity weighted

(Amount in PKR in thousands) value
No Maturity < 6 months 6 months to >1 yr
< 1 yr
ASF Item
1 Capital: - - - - -
2 Regulatory capital 57,335,131 - - - 57,335,131
3 Other capital instruments 6,310,214 - - - 6,310,214
4 Retail deposits and deposit from small business customers: - - - - -
5 Stable deposits - - - - -
6 Less stable deposits 246,874,445 2,183,802 890,847 833,017 224,954,184
7 Wholesale funding: - - - - -
8 Operational deposits 75,468,572 - - - 37,734,286
9 Other wholesale funding 25,534,547 40,380,742 1,582,298 1,220,100 40,122,879
10 Other liabilities: - - - - -
11 NSFR derivative liabilities - 3,108,480 - - -
12 All other liabilities and equity not included in other categories - 32,641,637 15,651,528 4,241,892 6,295,009
13 Total ASF - - - - 372,751,703
RSF Item
14 Total NSFR high-quality liquid assets (HQLA) - -
15 Deposits held at other financial institutions for - - - - -
operational purposes
16 Performing loans and securities:
17 Performing loans to financial institutions secured by - 2,161,425 - - 324,214
Level 1 HQLA
18 Performing loans to financial institutions secured by - 5,396,987 - 809,548
non-Level 1 HQLA and unsecured performing loans
to financial institutions -

19 Performing loans to non- financial corporate clients, - 82,813,336 32,616,512 15,968,170 71,287,869
loans to retail and small business customers, and
loans to sovereigns, central banks and PSEs, of which:
20 With a risk weight of less than or equal to 35% under - 1,545,775 147,125 4,586,174 3,827,464
the Basel II Standardised Approach for credit risk
21 Securities that are not in default and do not qualify as - - - - -
HQLA including exchange-traded equities.
22 Other assets:
23 Physical traded commodities, including gold - - -
24 Assets posted as initial margin for derivative contracts - - -
25 NSFR derivative assets 4,825,660 2,338,876
26 NSFR derivative liabilities before deduction of variation - -
margin posted
27 All other assets not included in the above categories - 19,488,389 1,780,558 34,182,564 44,817,037
28 Off-balance sheet items - - - - 9,147,972
29 Total RSF - - - - 132,552,979
30 Net Stable Funding Ratio (%) (13/29) 281%
99
41.7 MATURITIES OF ASSETS AND LIABILITIES - based on contractual maturity of assets and liabilities of the bank
In accordance with the guidelines issued by SBP through BSD Circular Letter No. 3 of 2011 and BSD Circular Letter No.
2 of 2013, Banks are required to disclose maturities of assets and liabilities separately for 'contractual maturities' and
'expected maturities'. The expected maturities are calculated using three (3) years historical balances and identifying
"Core" and "Non-Core" balances using monthly volatility analysis. Fixed / intangible assets are presented on the basis
of their depreciation / amortisation schedule.
2017
Total Upto one Over one Over three Over six Over one Over two Over three Over five Over ten
month month to months to months to year to years to years to years to years
three months six months one year two years three years five years ten years
Assets
---------------------------------------------------------------------------------------------------------- (Rupees in 000) -----------------------------------------------------------------------------------------------------------
treasury banks 35,085,289 35,085,289 - - - - - - - -
Balances with other banks 779,856 779,856 - - - - - - - -
Lendings to financial institutions 8,067,665 8,067,665 - - - - - - - -
Investments 272,487,815 101,076,594 155,303,727 9,887,087 957,747 4,254,000 699,700 200,000 108,960 -
Advances 137,655,093 48,184,040 51,287,054 9,777,841 5,439,553 7,225,711 6,223,189 6,187,403 1,445,470 1,884,832
Other assets 25,343,352 3,569,824 7,066,637 526,884 428,470 2,959,127 10,750,173 2,193 40,044 -
Operating fixed assets 8,033,890 81,746 163,493 245,240 490,479 1,208,985 980,957 1,961,916 2,731,996 169,078
Intangible assets 26,095,642 21 41 62 124 84 - - - 26,095,310
Deferred tax assets - - - - - - - - - -
513,548,602 196,845,035 213,820,952 20,437,114 7,316,373 15,647,907 18,654,019 8,351,512 4,326,470 28,149,220
Liabilities
Bills payable 18,958,345 18,958,345 - - - - - - - -

Borrowings 26,029,816 8,369,607 14,849,636 2,379,000 - 256,468 175,105 - - -
Deposits and other accounts 377,576,064 366,167,625 5,564,961 1,317,217 2,473,144 732,084 1,321,033 - - -
Other liabilities 24,341,273 4,775,765 3,990,386 429,665 14,922,642 7,995 113,171 2,648 99,001 -
Deferred tax liabilities 3,706,408 - - - - - - 3,706,408 - -
450,611,906 398,271,342 24,404,983 4,125,882 17,395,786 996,547 1,609,309 3,709,056 99,001 -
62,936,696 (201,426,307) 189,415,969 16,311,232 (10,079,413 ) 14,651,360 17,044,710 4,642,456 4,227,469 28,149,220
Net assets
Share capital 38,715,850

Reserves 14,419,594
Unappropriated profit 4,199,687
Surplus on revaluation
of assets - net 5,601,565
62,936,696
2016
Assets
---------------------------------------------------------------------------------------------------------- (Rupees in 000) -----------------------------------------------------------------------------------------------------------
treasury banks 40,729,979 40,729,979 - - - - - - - -
Balances with other banks 5,699,791 5,699,791 - - - - - - - -
Lendings to financial - - - - - - - -
institutions 19,798,390 18,972,220 826,170 - - - - - - -
Investments 245,850,227 58,687,894 120,667,643 9,180,462 46,595,249 5,304,881 4,130,400 1,000,000 283,698 -
Advances 113,950,767 47,086,594 31,335,271 12,782,164 3,739,878 7,997,671 4,624,376 4,057,752 1,045,263 1,281,798
Other assets 16,853,879 793,781 4,413,296 241,612 911,877 4,747,813 5,745,735 (58,154) 57,919 -
Operating fixed assets 5,773,296 59,767 119,530 179,296 358,590 762,934 717,182 1,434,363 1,997,701 143,933
Intangible assets 26,095,890 22 41 62 124 166 152 13 - 26,095,310
474,752,219 172,030,048 157,361,951 22,383,596 51,605,718 18,813,465 15,217,845 6,433,974 3,384,581 27,521,041
Liabilities
Bills payable 10,821,793 10,821,793 - - - - - - - -

Borrowings 14,400,841 805,686 9,956,585 2,961,278 - - 437,524 239,768 - -
Deposits and other accounts 365,562,094 356,163,955 4,639,510 1,387,163 2,465,421 210,222 695,823 - - -
Sub-ordinated loans 2,500,000 - - - - - - - 2,500,000 -
Other liabilities 18,430,391 2,529,504 3,354,290 704,678 11,801,036 - 2,492 660 37,731 -
413,469,926 370,320,938 17,950,385 5,053,119 14,266,457 210,222 1,135,839 1,995,235 2,537,731 -
61,282,293 (198,290,890) 139,411,566 17,330,477 37,339,261 18,603,243 14,082,006 4,438,739 846,850 27,521,041
Net assets

Reserves 12,770,562
Deficit on revaluation
61,282,293

41.8 MATURITIES OF ASSETS AND LIABILITIES - based on expected maturity of assets and liabilities of the bank
2017
Assets
------------------------------------------------------------------------------------------------ (Rupees in 000) -------------------------------------------------------------------------------------------------
treasury banks 35,085,289 35,085,289 - - - - - - - -
Balances with other banks 779,856 779,856 - - - - - - - -
Lendings to financial institutions 8,067,665 8,067,665 - - - - - - - -
Investments 272,487,815 101,076,594 155,303,727 9,887,087 957,747 4,254,000 699,700 200,000 108,960 -
Advances 137,655,093 22,138,660 53,181,800 12,619,960 11,123,790 22,849,989 6,223,189 6,187,403 1,445,470 1,884,832
Other assets 25,343,352 3,569,824 7,066,637 526,884 428,470 2,959,127 10,750,173 2,193 40,044 -
Operating fixed assets 8,033,890 81,746 163,493 245,240 490,479 1,208,985 980,957 1,961,916 2,731,996 169,078
Intangible assets 26,095,642 21 41 62 124 84 - - - 26,095,310
513,548,602 170,799,655 215,715,698 23,279,233 13,000,610 31,272,185 18,654,019 8,351,512 4,326,470 28,149,220
Liabilities
Bills payable 18,958,345 18,958,345 - - - - - - - -

Borrowings 26,029,816 8,369,607 14,849,636 2,379,000 - 256,468 175,105 - - -
Deposits and other accounts 377,576,064 44,987,827 15,433,756 16,120,410 32,079,530 267,633,508 1,321,033 - - -
Other liabilities 24,341,273 4,775,765 3,990,386 429,665 14,922,642 7,995 113,171 2,648 99,001 -
450,611,906 77,091,544 34,273,778 18,929,075 47,002,172 267,897,971 1,609,309 3,709,056 99,001 -
62,936,696 93,708,111 181,441,920 4,350,158 (34,001,562 ) (236,625,786) 17,044,710 4,642,456 4,227,469 28,149,220
Net assets

Reserves 14,419,594
Surplus on revaluation
62,936,696
2016
Assets
------------------------------------------------------------------------------------------------ (Rupees in 000) -------------------------------------------------------------------------------------------------
treasury banks 40,729,979 40,729,979 - - - - - - - -
Balances with other banks 5,699,791 5,699,791 - - - - - - - -
Lendings to financial institutions 19,798,390 18,972,220 826,170 - - - - - - -
Investments 245,850,227 58,687,894 120,667,643 9,180,462 46,595,249 5,304,881 4,130,400 1,000,000 283,698 -
Advances 113,950,767 19,631,911 34,759,912 17,919,127 14,013,803 16,616,825 4,624,376 4,057,752 1,045,263 1,281,798
Other assets 16,853,879 793,781 4,413,296 241,612 911,877 4,747,813 5,745,735 (58,154) 57,919 -
Operating fixed assets 5,773,296 59,767 119,530 179,296 358,590 762,934 717,182 1,434,363 1,997,701 143,933
Intangible assets 26,095,890 22 41 62 124 166 152 13 - 26,095,310
474,752,219 144,575,365 160,786,592 27,520,559 61,879,643 27,432,619 15,217,845 6,433,974 3,384,581 27,521,041
Liabilities

Bills payable 10,821,793 10,821,793 - - - - - - - -
Borrowings 14,400,841 805,686 9,956,585 2,961,278 - - 437,524 239,768 - -
Deposits and other accounts 365,562,094 44,633,945 17,433,622 20,578,331 40,847,757 241,372,616 695,823 - - -
Sub-ordinated loans 2,500,000 - - - - - - - 2,500,000 -
Other liabilities 18,430,391 2,529,504 3,354,290 704,678 11,801,036 - 2,492 660 37,731 -
413,469,926 58,790,928 30,744,497 24,244,287 52,648,793 241,372,616 1,135,839 1,995,235 2,537,731 -
61,282,293 85,784,437 130,042,095 3,276,272 9,230,850 (213,939,997) 14,082,006 4,438,739 846,850 27,521,041
Net assets

Reserves 12,770,562
Deficit on revaluation
61,282,293
41.9 Operational Risk
Operational risk is defined as the potential for loss from inadequate or failed internal processes, people, and systems or from
the impact of external events, including legal risks.
The Operational Risk Framework (ORF) sets out SCBs approach to the management of operational risk. The Country
Operational Risk Committee (CORC) oversee the management of operational risks at the country level and its scope includes
all client segments, products and functions. The CORC is chaired by the CEO, and CCRO is an active member of this forum,
and monitors and reviews the full operational risk profile in the country.
All areas within the Bank monitor their operational risks using set standards and indicators, with significant issues and
exceptions reported to CORC.
101
42 ISLAMIC BANKING BUSINESS
The Bank is operating with 9 Islamic Banking branches at the end of current year (2016: 10 branches).
Note 2017 2016

------------ (Rupees in 000) ------------
42.1 Balance Sheet
Assets
Due from financial institutions 4,788,058 4,513,007
Investments 6,233,447 8,203,350
Islamic financing and related assets 42.1.1 42,572,814 32,133,361
Operating fixed assets 40,400 39,526
Other assets 500,941 717,271
56,861,629 52,399,771
Liabilities
Bills payable 162,877 209,340
Due to financial institutions 3,724,000 2,625,237
Deposits and other accounts

Current accounts 25,744,605 24,894,128
Saving accounts 13,423,428 12,892,874
Term deposits 1,052,881 1,538,052
Others 50,366 55,494
Deposit from financial institutions - remunerative 2,948 16,204
40,274,228 39,396,752
Due to Head Office 6,675,569 4,964,928

Other liabilities 661,180 594,650
51,497,854 47,790,907
Net Assets 5,363,775 4,608,864
Represented by:
Islamic Banking Fund 200,000 200,000
Unappropriated / Unremitted profit 5,086,697 4,261,461
5,286,697 4,461,461
Surplus on revaluation of assets - net 77,078 147,403
5,363,775 4,608,864
CONTINGENCIES AND COMMITMENTS 21
42.1.1 Islamic Financing and related assets
Murabaha 42.1.1a 1,004,855 980,380

Musharakah 42.1.1b 20,072,238 15,527,233
Diminishing Musharakah 42.1.1c 19,862,104 15,149,995
Ijarah 42.1.1d - 95,211
Musawammah 42.1.1e 1,245,000 21,200
Others 42.1.1f 388,617 359,342
42,572,814 32,133,361
42.1.1a Murabaha
Financings / Investments / Receivables 682,554 822,451

Advances 6,277 157,929
Assets/Inventories 316,024 -
1,004,855 980,380
42.1.1b Musharakah
Financings / Investments / Receivables 20,072,238 15,527,233

2017 2016
------------ (Rupees in 000) ------------
42.1.1c Diminishing Musharakah
Financings / Investments / Receivables 19,806,390 15,149,995

Advances 55,714 -
19,862,104 15,149,995
42.1.1d Ijarah Financing
Cost
As at January 1 1,206,000 1,206,000
Additions during the year - -

Transfer / Write offs (1,206,000) -
Deletions - -
As at December 31 - 1,206,000
At January 1 1,110,789 729,947
Charge for the year 95,211 380,842
Transfer / Write offs (1,206,000) -
Deletions - -
As at December 31 - 1,110,789
Net Book value - 95,211
Future Ijarah payments

Not later than one year - 110,151
Later than one and less than five years - -
Total Future Ijarah payments - 110,151
42.1.1e Musawammah
Financings / Investments / Receivables 1,245,000 21,200
42.1.1f Others
Financings / Investments / Receivables 388,617 359,342

42.1.2 Deposit and other accounts include redeemable capital of Rs. 14,479.26 million (2016: Rs. 14,447.13 million) and deposits
on Qard basis of Rs. 25,794.97 million (2016: Rs. 24,949.62 million). Remunerative deposits which are on Mudarabah basis
are considered as Redeemable Capital and non-remunerative deposits are classified as being on Qard basis.
42.2 Profit and Loss
Profit / return earned on financings, investments and placements 3,116,094 3,388,511

Return on deposits and others dues expensed (658,124) (946,563)
Net spread earned 2,457,970 2,441,948
Reversal against non performing financing 92,685 39,904
Net spread after provisions 2,550,655 2,481,852
Other income
Fees, commission and brokerage income 802,664 671,767
Other income 639 607
Total other income 803,303 672,374
3,353,958 3,154,226
Other expenses
Administrative expenses (1,778,722) (1,915,785)
Profit before taxation 1,575,236 1,238,441
42.2.1 Remuneration to Shariah Advisor / Board 5,188 5,456
103
2017 2016
42.3 Cash flow from operating activities ------------ (Rupees in 000) ------------
Profit before tax for the year 1,575,236 1,238,441

Adjustments for:

Gain on disposal of fixed assets - net (639) (607)
(Reversal) against loans and advances - net of recoveries (92,685) (39,904)
(78,487) (24,436)
1,496,749 1,214,005
Decrease / (increase) in operating assets
Lendings to financial institutions (275,051) (594,437)

Net investments in 'held for trading' securities - 1,998
Advances (10,346,767) (2,488,225)
Other assets 216,330 (180,202
(10,405,488) (3,260,866)
Increase / (decrease) in operating liabilities
Bills payable (46,463) 62,223)

Borrowings from financial institutions 1,098,763 1,166,237
Deposits and other accounts 877,476 1,438,185
3,706,947 4,081,900
Cash inflow before taxation (5,201,792) 2,035,039
Income tax paid - -

Net cash generated from operating activities (5,201,792) 2,035,039
Net investments in 'available for sale' securities 1,899,577 3,888,000

Net investment in fixed assets (15,072) (15,350)
Net cash used in / (generated from) investing activities 1,884,505 3,872,650
Appropriation/ payments made to Head office (750,000) (1,500,000)

Net cash used in financing activities (750,000) (1,500,000)
(Decrease) / increase in cash and cash equivalents for the year (4,067,287) 4,407,689
Cash and cash equivalents at beginning of the year 6,793,256 2,385,567
Cash and cash equivalents at end of the year 2,725,969 6,793,256

Balances with other banks - -
2,725,969 6,793,256
42.4 Charity fund
Additions during the year

Penalty on delayed payment 3,436 3,687
Income purification 2,907 2,755
6,343 6,442
Payments / utilization during the year
Education (1,540) (3,261)
Health (3,044) (2,426)
(4,584) (5,687)

42.5 Profit and Loss distribution and Pool Management
The Bank manages following assets pools for profit and loss distribution:
a) Islamic Export Refinance Scheme (IERS) Musharakah Pool; and
b) Mudarabah Depositors Pool
a) IERS Musharakah Pool
Key features, risks, rewards and calculation of profit / loss of this pool are in compliance with the SBP IER Scheme and the
relevant circulars issued by SBP from time to time.
Type of Pool Profit rate and Average return Bank SBP Bank SBP
weightage on Pool Profit Profit Profit % Profit
announcement Assets
period
IERF Pool Monthly 4.66% 244,125 62,234 79.69% 20.31%
b) Mudarabah Depositors Pool
1. General Depositors Pool

2. Special Depositors Pool
i) Key features and risk & reward characteristics
Saadiq Current account is a shariah compliant non-profit bearing transactional account, based on the Islamic banking principle
of Qard. While Saadiq Savings & Term accounts are Shariah compliant account based on the Islamic principle of Mudarabah.
Mudarabah is a partnership where one party gives money to other for investing in a business. The partner who is providing
the money is Rab-ul-Maal (Investor) and the partner who manages the investment is Mudarib (working partner). The Bank
(Mudarib) invests the funds given by the account holder Rab-ul-Maal in shariah compliant businesses to earn profits. This
profit is shared on the basis of profit & loss sharing as per the pre-agreed ratio between the Bank and the customer.
In case of loss, the same is borne by the depositors in proportion to their investments, and the Bank (Mudarib) bears the loss
of its efforts/services in managing Mudarabah.
ii) Parameters used for allocation of profit, charging expenses and provisions
The profit for the deposit pool is calculated from income earned on all the remunerative assets booked by utilising the funds
from the deposit pool and is distributed between Mudarib and Rab-ul-Maal based on declared sharing ratios (before start of
every given month).
The ratio for Mudarib and Rab-ul-maal is 50:50 for general pool and Special pool. No general or administrative expenses are
charged to pools. No provision against any non-performing asset of the pool is passed on to the pool except for the actual
loss / write-off of such non-performing asset.
iii) Deployment of Mudarabah based deposits

The deposits and funds accepted under the above mentioned pools are provided to diverse sectors including Sugar, Textile,
Fertilizer, Power Production, Energy, Packaging Material etc. as well as in Government of Pakistan backed Ijarah Sukuks.
iv) Other information Type of Pool
General Special
Profit rate / weightage announcement frequency Monthly Monthly
Mudarib share (amount in 000) 283,954 109,833
Mudarib share (%) 48.57% 36.27%
Mudarib Share transferred through Hiba (Amount in 000) 8,379 41,576
Mudarib Share transferred through Hiba (%) 2.87% 27.46%
Average return on pool assets 5.88% 6.69%
Average return on deposits 3.03% 4.27%
43 DATE OF AUTHORIZATION
These financial statements were authorized for issue in the Board of Directors meeting held on 08 March 2018.
105
Annexure-1
Amount in PKR Rupees
Outstanding Libilities at Beginning of Year Amount Written off / Concession
Sr. Name of Partners/ Interest/ Interest/ Total
Name Address Father / Husband Name Principal Total Principal
NO. Directors NIC / CNIC Mark up Mark up Balance

Annexure-1
107
Annexure-1

Annexure-1
109
Annexure-1

Annexure-1
111
Annexure-1

Annexure-1
113
PATTERN OF SHAREHOLDERS
As of 31 December 2017
NO. OF TOTAL SHARES

SHAREHOLDERS SHAREHOLDINGS' SLAB HELD
1229 1 to 100 45,225

1793 101 to 500 550,543
1000 501 to 1000 771,121
2232 1001 to 5000 5,649,671
748 5001 to 10000 4,598,669
99 10001 to 15000 1,220,230
66 15001 to 20000 1,150,325
31 20001 to 25000 712,013
26 25001 to 30000 735,695
18 30001 to 35000 579,181
9 35001 to 40000 338,182
4 40001 to 45000 168,632
7 45001 to 50000 342,705
3 50001 to 55000 154,856
3 55001 to 60000 171,018
2 60001 to 65000 122,397
7 65001 to 70000 477,743
1 70001 to 75000 75,000
2 75001 to 80000 155,817
1 90001 to 95000 91,500
5 95001 to 100000 499,500
1 100001 to 105000 103,045
1 110001 to 115000 111,100
1 115001 to 120000 118,900
2 125001 to 130000 255,400
1 130001 to 135000 133,000
1 155001 to 160000 157,000
1 170001 to 175000 175,000
1 185001 to 190000 185,500
2 195001 to 200000 400,000
1 215001 to 220000 220,000
1 220001 to 225000 220,200
1 235001 to 240000 238,900
2 245001 to 250000 497,232
1 260001 to 265000 262,000
1 265001 to 270000 270,000
3 295001 to 300000 900,000
1 320001 to 325000 325,000
1 325001 to 330000 329,000
1 370001 to 375000 375,000
2 420001 to 425000 845,500
1 425001 to 430000 430,000
1 440001 to 445000 440,179
1 455001 to 460000 459,415
2 495001 to 500000 1,000,000
1 710001 to 715000 712,500
1 905001 to 910000 905,295
1 910001 to 915000 914,570
1 920001 to 925000 922,500
1 1075001 to 1080000 1,078,600
1 1560001 to 1565000 1,564,000
2 1995001 to 2000000 4,000,000
1 2085001 to 2090000 2,087,000
1 3832335001 to 3832340000 3,832,339,162
7327 3,871,585,021

CATEGORY WISE LIST OF SHAREHOLDERS
As at 31 December 2017
Categories of Shareholders Shareholders Shares Held Percentage
Directors and their spouse(s) and minor children

MR. NAJMUL ISLAM CHAUDHRI 1 1 0.00
MR. SULTAN MOHAMMAD PARVEZ GHIAS 1 1 0.00
MRS. SPENTA KANDAWALLA 1 1 0.00
MR. SHAZAD DADA 1 1 0.00
MR. IAN ANDERSON BRYDEN 1 1 0.00
MR. FERDINAND PIETERSE 1 1 0.00
MR. MOHAMED ABDELBARY 1 1 0.00
Associated Companies, undertakings and related parties

Standard Chartered Bank (UK) 1 3,832,339,162 98.99
Executives - - -
Public Sector Companies and Corporations 6 2,087,951 0.05
Banks, development finance institutions, non-banking finance

companies, insurance companies, takaful, modarabas and
pension funds 9 18,373 0.00
Mutual Funds
CDC - TRUSTEE AKD INDEX TRACKER FUND 1 40,848 0.00
General Public
a. Local 7208 27,289,151 0.70
b. Foreign 5 306,472 0.01
Foreign Companies 13 2,462,579 0.06
Others 77 7,040,478 0.18

Totals 7327 3,871,585,021 100.00
Share holders holding 5% or more Shares Held Percentage

Standard Chartered Bank (UK) 3,832,339,162 98.99
115
Disclosure on Complaint Handling
In line with Bank's newly launched, purpose statement of 'Driving commerce and prosperity through our unique
diversity', renewed focus is laid upon client complaints and grievance management. The Bank has further improved
its framework to Treat Clients Fairly (TCF) that is the bedrock for all policies and procedures set forth.
TCF is the key performance indicator and enabler of the Bank's strategy. In addition to the TCF, Bank has a well-
defined Complaints Handling Procedure (CHP) along with regulatory guidelines of Consumer Grievance Handling
Mechanism (CGHM) and Financial Consumer Protection (FCP), which is fully integrated in the Bank's DNA.
Maintaining its legacy of superior service delivery, in year 2017 the number of complaints went down significantly.
Considerable refinements have been made in IT infrastructure and digital offering to provide clients more convenience
and hassle-free banking experience by making transactions seamless and faster. Back-office operational efficiency
has also improved resulting in reduced turnaround time for product delivery and service requests, and streamlined
client on-boarding process.
Significant importance has been given on logging of client complaints and concerns on Client Experience Management
System (CEMS) resulting in straight through processing, better visibility and traction.
Total complaints logged in year 2017 were 32,509, 13% less than year 2016. Over 95% concerns were resolved
well within the regulatory timelines, with average turnaround time of approx. 3 days.
10 Client Touch points have been made available to lodge concerns / complaints. They are as follows:
- Phone: 24/7 Client Centre 111-002-002

- Email: Client Care Centre [email protected] and [email protected]
- Website: www.sc.com/pk
- Postal Address: Client Care Unit, Standard Chartered Bank (Pakistan) Limited, 1st Floor, Jubilee Insurance
Building, I.I. Chundrigar Road, Karachi.
- Social Media: www.facebook.com/standardcharteredpk
- State Bank of Pakistan
- Banking Mohtasib Pakistan
- Insurance Ombudsmen
- Federal Ombudsmen
- Securities and Exchange Commission of Pakistan
119

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Annual Report 2017

Driving investment, trade

 2013 marked Standard Chartereds 150th year of presence in the country.

 As a result of our Seeing is Believing projects in Pakistan, we are attributed to decreasing

Strong recognition by our stakeholders

Global Finance Awards 2016 - 2017

Finance Asia Award for 2015

Islamic Finance News (IFN) Awards for 2015

Board of Directors Registered Office

Company Secretary Standard Chartered Bank (Pakistan) Limited

Mr. Najam I. Chaudhri Chairperson Website

Human Resource & Registrar and Share Transfer Office

Notice of Annual General Meeting 3

Directors` Report - English 7

Directors` Report - Urdu 11

Managements Statements on Internal Controls and Risk Management Framework 17

Report of Shariah Board - English 21

Report of Shariah Board - Urdu 24

Statement of Compliance with the Code of Corporate Governance 29

Auditors Report to the Members 33

Audited Financial Statements 34

Pattern of Shareholding 114

Form of Proxy 117

Disclosure on Complaint Handling 119

2 Standard Chartered Annual Report 2017

STANDARD CHARTERED BANK (PAKISTAN) LIMITED

Notice is hereby given that the Twelfth Annual General Meeting

1. To receive, consider and adopt the Audited Accounts

3. To consider and approve final cash dividend @ 10% 1/- 10

4. To approve the remuneration paid to the Independent

"RESOLVED THAT the decision of the Board of

A statement of material facts under section 134 (3) of the

5. To transact any other business as may be placed

By Order of the Board

Asif Iqbal Alam

2. Only those persons whose names appear in the Register of Members of

3. A member entitled to attend and vote at the above meeting is entitled to

4. Members are requested to notify change in their address, if any, to the

5. A. For Attending the Meeting:

ii) In case of corporate entity, the Board of Directors' resolution /

B. For Appointing Proxies:

i) In case of individuals, the account holder or sub-account holder

ii) The proxy form shall be witnessed by two persons whose

iii) Attested copies of CNIC or the passport of the beneficial owners

v) In case of corporate entity, the Board of Directors' resolution /

Statement under section 160(1) (b)

Item (4) to the Agenda

4 Standard Chartered Annual Report 2017

1. E-Dividend Requirements: In accordance with the Companies

2. Tax Requirements: The dividend income on shares is liable to deduction

In case a Folio/ CDS Account is jointly held, each joint-holder will be

Corporate shareholders are requested to provide of a copy of valid

Board's Overall Role

Performance Evaluation of the Board

6 Standard Chartered Annual Report 2017

Operating Results and Business Overview

Paid-up capital 38,716 38,716

Profit and Loss

Revenue 25,480 26,548

External Annual Audit

8 Standard Chartered Annual Report 2017

l Proper books of accounts of the Bank have been maintained.

2013 marked Standard Chartereds 150th year of presence in the country.

As a result of our Seeing is Believing projects in Pakistan, we are attributed to decreasing

Managements Statements on Internal Controls and Risk Management Framework 17

Report of Shariah Board - English 21

Report of Shariah Board - Urdu 24

Auditors Report to the Members 33

Auditors Report to the Members

------------ (Rupees in 000) ------------

------------------------------------------ (Rupees in 000) ------------------------------------------