Annual Report 2021

VISION STATEMENT
TO BE OUR CUSTOMERS’ MOST CONVENIENT

AND TRUSTED BANK
MISSION STATEMENT
TO MAKE BANKING SAFE, SIMPLE, AND PLEASANT

CORPORATE INFORMATION
Board of Abbas D. Habib Chairman

Directors Anwar Haji Karim
Farhana Mowjee Khan
Syed Mazhar Abbas
Qumail R. Habib Executive Director
Safar Ali Lakhani
Syed Hasan Ali Bukhari
Murtaza H. Habib
Arshad Nasar
Adnan Afridi
Mansoor Ali Khan Chief Executive
Audit Safar Ali Lakhani Chairman

Committee Syed Mazhar Abbas Member
Anwar Haji Karim Member
Syed Hasan Ali Bukhari Member
Arshad Nasar Member
Human Resource Syed Hasan Ali Bukhari Chairman

& Remuneration Syed Mazhar Abbas Member
Committee Abbas D. Habib Member
Farhana Mowjee Khan Member
Arshad Nasar Member
Credit Risk Syed Mazhar Abbas Chairman

Management Safar Ali Lakhani Member
Committee Qumail R. Habib Member
Syed Hasan Ali Bukhari Member
Murtaza H. Habib Member
Risk Management Adnan Afridi Chairman

Farhana Mowjee Khan Member
Anwar Haji Karim Member
Safar Ali Lakhani Member
IT Abbas D. Habib Chairman

Arshad Nasar Member
Syed Mazhar Abbas Member
Mansoor Ali Khan Member
IFRS 9 Syed Hasan Ali Bukhari Chairman
Committee Arshad Nasar Member
Qumail R. Habib Member
Company
Secretary Mohammad Taqi Lakhani
Chief Financial
Officer Ashar Husain
Statutory EY Ford Rhodes

Auditors Chartered Accountants
Legal LMA Ebrahim Hosain

Advisor Barristers, Advocates & Corporate Legal Consultants
Registered 126-C, Old Bahawalpur Road,

Office Multan
Principal 2nd Floor, Mackinnons Building,

Office I.I. Chundrigar Road,
Karachi
Share CDC Share Registrar Services Limited

Registrar CDC House 99-B, Block-B, S.M.C.H.S.
Main Shahrah-e-Faisal, Karachi-74400.
Website www.bankalhabib.com
CONTENTS
History 1
Review Report by the Chairman 6
Directors' Report 7
Corporate Governance 14
Statement of Compliance with Listed Companies (Code of Corporate Governance)

Regulations, 2019 28
Independent Auditors’ Review Report on the Statement of Compliance contained in

Listed Companies (Code of Corporate Governance) Regulations, 2019 31
Statement on Internal Controls 32
Independent Auditors’ Report to the Members 33
Unconsolidated Statement of Financial Position 37
Unconsolidated Profit and Loss Account 38
Unconsolidated Statement of Comprehensive Income 39
Unconsolidated Statement of Changes in Equity 40
Unconsolidated Cash Flow Statement 41
Notes to the Unconsolidated Financial Statements 42
Disclosure on Complaint Handling 128
Report of Shariah Board 129
Notice of Annual General Meeting 130
Pattern of Shareholding 138
Consolidated Financial Statements 141
242
252
253
Branch Network 254
E - Dividend Bank Mandate Form
Form of Proxy
1
HIGHLIGHTS YEAR 2021
Total
Assets Deposits
Rs
PKR 1.85 Tr PKR 1.31 Tr
Profit Awards
Best Bank of the year-Runnerup
before tax (Large-Size Bank)
PKR 30.3 Bn 2020 from Chartered Financial
Analyst (CFA) Society Pakistan.
Total Domestic ATM

Network Network
956 Over 1100+
Branches & Sub-Branches
Total Cities Total Foreign Branches

Served and Representative Offices
381 6
in Pakistan Countries Across the Globe
2
PERFORMANCE 1992-2021
Deposits
1400
1309.8
1300
1200
1099.7
1100
1000
900 903.7
796.9
800
700 692.6
600 584.2
516.2
Rs. in Billion
500
446.4
400 386.2
340.4
302.1
300
249.8
200 189.3
144.4
114.8
100 75.8 91.4
34.2 46.2 62.2
1.7 13.4 24.7
1992 1997 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
30.3
32
Profit Before Tax
28.6
30
28
26
24
22
19.0
20
18
14.3
16 13.2
13.9
12.3
14
12 9.9
8.9
Rs. in Billion
10 7.2 7.5
8 5.7
4.5
6 3.6
2.7 3.1
4 1.5 2.0
0.6 0.6 1.0
0.05 0.4
2
3
1992 1997 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
PERFORMANCE 1992-2021
90
Shareholders' Equity excluding surplus on revaluation of assets
83.6
80
69.6
70
60
55.5
50
46.3
40.4
40
35.7
Rs. in Billion
31.7
30 27.6
23.2
21.1
20 17.7
14.7
12.3
10 10.0
8.0
6.2
4.7
1.8 2.7 3.3
0.3 0.9 1.5
1992 1997 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
956
1000
Branches / Sub - Branches
850
900
755
800 721
650
700
605
528
600
459
500 416
390
351
400
Number
302
255
300 225
152 175
200
100
70 74
100 41 57
27
6
4
1992 1997 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Performance 1992-2021 (Rupees in Million)
Years Assets Deposits Advances Investments Shareholders’ Equity Profit Profit Cash Stock
excluding surplus on Before Tax After Tax Dividend Dividend
revaluation of assets
1992 2,727 1,679 607 1,060 325 51 25 –0 –0
1993 5,590 3,372 1,647 1,907 421 151 96 –0 –0
1994 8,346 5,200 3,067 1,932 528 224 107 –0 –0
1995 11,395 6,353 4,254 2,055 611 255 127 15.0% –0
1996 11,248 8,573 5,664 2,489 718 341 153 15.0% 10.0%
1997 16,515 13,445 7,372 7,440 851 442 199 20.0% 15.0%
1998 16,897 13,226 7,564 6,999 1,016 445 203 10.0% 32.0%
1999 19,870 14,113 10,925 4,601 1,169 373 153 –0 20.0%
2000 24,226 17,823 14,722 1,289 1,322 403 153 –0 20.0%
2001 29,025 24,697 15,902 5,664 1,532 551 246 5.0% 20.0%
2002 49,437 34,240 23,775 18,831 1,822 620 290 –0 25.0%
2003 58,066 46,178 35,232 14,109 2,726 1,513 1,012 10.0% 25.0%
2004 77,436 62,171 47,367 14,414 3,274 1,039 541 –0 35.0%
2005 91,502 75,796 55,304 19,758 4,746 2,022 1,464 15.0% 40.0%
2006 114,998 91,420 70,796 21,023 6,186 2,689 1,761 15.0% 40.0%
2007 141,234 114,819 79,224 35,287 8,014 3,052 2,211 15.0% 30.0%
2008 177,324 144,390 100,197 48,234 9,967 3,579 2,425 12.5% 27.5%
2009 249,807 189,280 105,985 111,018 12,287 4,512 2,856 20.0% 20.0%
2010 301,552 249,774 125,773 137,168 14,706 5,656 3,602 20.0% 20.0%
2011 384,282 302,099 114,872 222,959 17,723 7,155 4,533 25.0% 15.0%
2012 453,106 340,393 147,869 249,754 21,058 8,878 5,455 30.0% –0
2013 460,727 386,161 167,579 239,753 23,227 7,513 5,155 20.0% 10.0%
2014 579,394 446,409 181,737 331,423 27,555 9,917 6,349 30.0% –0
2015 639,973 516,213 207,289 356,649 31,698 12,332 7,405 35.0% –0
2016 768,018 584,172 261,440 405,028 35,673 13,164 8,119 35.0% –0
2017 944,134 692,576 339,833 476,125 40,409 13,890 8,501 30.0% –0
2018 1,048,239 796,901 478,215 414,605 46,283 14,264 8,418 25.0% –0
2019 1,298,682 903,703 488,669 586,141 55,489 19,011 11,169 35.0% –0
2020 1,522,091 1,099,686 510,252 764,944 69,570 28,581 17,81 45.0% –0
2021 1,849,652 1,309,823 733,799 826,600 83,569 30,273 18,702 70.0% –0
5
REVIEW REPORT BY THE CHAIRMAN
ON THE OVERALL PERFORMANCE OF THE BOARD
Alhamdolillah, I am pleased to present a report on the overall performance of the Board and effectiveness of
the role played by the Board in achieving the Bank’s objectives.
Power for management and control of affairs of the Bank rest with the Board of Directors, except for powers
expressly required to be exercised by shareholders in general meeting. The Directors delegate day-to-day
operations of the Bank to the Management, but such delegation remains subject to the control and direction of
the Board, to the best of their knowledge. The Directors are required to carry out their fiduciary duties and
exercise their independent judgement to the best of their abilities in the interests of the Bank.
The Board has approved a formal process for its performance evaluation. The Bank has adopted In-House
Approach and Quantitative Technique with scored questionnaires for Board evaluation.
Overall objective of performance evaluation of the Board is to ensure sustainable growth and development of
the Bank, with focus on the following areas:
(a) Board Composition and Functioning

(b) Corporate Strategy and Business plan
(c) Monitoring of Bank Performance
(d) Internal Audit and Internal Control
(e) Risk Management and Compliance
(f) Disclosure of Material Information
(g) Ideas for Improvement
Accordingly, performance evaluation of the Board was conducted in 2021 as per mechanism approved by the
Board. It was concluded that the overall performance of the Board, including effectiveness of the role played
by the Board in achieving the Bank’s objective, was found to be generally satisfactory.
Abbas D. Habib
Chairman
Karachi: February 09, 2022 Board of Directors
6
DIRECTORS' REPORT
Alhamdolillah, the Directors of Bank AL Habib Limited are pleased to present the Thirty First Annual Report
together with the audited financial statements of the Bank for the year ended December 31, 2021.
The operating results and appropriations, as recommended by the Board, are given below:
(Rupees in '000)
Profit for the year before tax 30,272,788
Taxation (11,570,489)
Profit for the year after tax 18,702,299
Unappropriated profit brought forward 40,024,361
Transfer from surplus on revaluation of fixed assets – net of tax 120,440
Other comprehensive income – net of tax (177,387)
39,967,414
Profit available for appropriations 58,669,713
Appropriations:
Transfer to Statutory Reserve (1,870,230)
Cash dividend – 2020 (5,001,414)
(6,871,644)
Unappropriated profit carried forward 51,798,069
Basic / Diluted earnings per share – after tax Rs. 16.83
For the year ended December 31, 2021, the Directors propose a cash dividend of 70%, i.e., Rs. 7.0 per
share.
Performance Review
Alhamdolillah, the performance of your Bank continued to be satisfactory during the year. Deposits rose to
Rs. 1,309.8 billion against Rs. 1,099.7 billion a year earlier, while advances increased to Rs. 733.8 billion
from Rs. 510.3 billion. Foreign Trade Business handled by the Bank during the year was Rs. 2,540.6 billion.
Profit before tax for the year was Rs. 30.3 billion as compared to Rs. 28.6 billion last year, while profit after
tax was Rs. 18.7 billion against Rs. 17.8 billion last year.
During the year, the Bank opened 107 new branches and converted 3 sub-branches into full-fledged
branches, bringing our network to 960, which comprises 927 branches (including 138 Islamic Banking
Branches and 2 Overseas Branches, one each in Bahrain and Malaysia), 29 sub-branches, and 4
Representative Offices, one each in Dubai, Istanbul, Beijing, and Nairobi. The Bank will continue to expand
its network. During the year, the Bank had closed its overseas branch in Seychelles. The closure of a Branch
is in line with the Bank’s strategy, and it will not have any material impact on the overall operating and
financial position of the Bank.
In September 2021, the Bank successfully completed its eighth issue of rated, unsecured, and subordinated
Term Finance Certificates (TFCs) amounting to Rs. 5,000 million (inclusive of a “Green Shoe” option of
Rs. 2,000 million), through private placement. This private placement was managed and arranged by your
Bank. These TFCs have further enhanced the Bank's capital adequacy and will also support future growth
in our operations.
7
AWARDS AND RECOGNITION
Chartered Financial Analyst (CFA) Society Pakistan Award for the Year 2020
The Bank received the Runner Up award for “Best Bank of the Year (Large-Size Banks) 2020” from the
Chartered Financial Analyst (CFA) Society Pakistan. These awards recognized the outstanding performance
of a financial institution.
COMPOSITION OF BOARD OF DIRECTORS

Total number of Directors is as follows:
• Male 09
• Female 01
10
The composition of the Board is as follows:

Independent Directors Mr. Arshad Nasar
Mr. Safar Ali Lakhani
Mr. Abbas D. Habib
Mr. Anwar Haji Karim
Non-Executive Directors Syed Mazhar Abbas
Mr. Murtaza H. Habib
Mr. Adnan Afridi
Executive Director Mr. Qumail R. Habib
Female Director-Non Executive Ms. Farhana Mowjee Khan
Mr. Mansoor Ali Khan is the Chief Executive of the Bank. Being CEO of the Bank, he is deemed to be a
Director.
Board Meetings
During the year, four meetings of the Board were held and the attendance of each Director was as follows:
Name of Director Meetings Held Meetings Attended
Mr. Abbas D. Habib 4 4
Mr. Anwar Haji Karim 4 4
Ms. Farhana Mowjee Khan 4 4
Syed Mazhar Abbas 4 4
Mr. Qumail R. Habib 4 4
Mr. Safar Ali Lakhani 4 3
Syed Hasan Ali Bukhari 4 3
Mr. Murtaza H. Habib 4 4
Mr. Arshad Nasar 4 3
Mr. Adnan Afridi 4 4
Mr. Mansoor Ali Khan, Chief Executive 4 4
8
Committees Meetings
The Listed Companies (Code of Corporate Governance) Regulations, 2019 requires the Bank to disclose
the composition of all Committees of the Board, viz. Audit Committee, Human Resource & Remuneration
Committee, Credit Risk Management Committee, Risk Management Committee, IT Committee, and IFRS 9
Committee.
During the year, eight meetings of the Audit Committee, and four meetings of Human Resource & Remuneration
Committee were held, and the attendance of members was as follows:
Audit Committee Human Resource & Remuneration Committee
Name of Director Meetings Meetings Name of Director Meetings Meetings
Held Attended Held Attended
Mr. Safar Ali Lakhani, Syed Hasan Ali Bukhari,
Chairman 8 6 Chairman 4 3
Syed Mazhar Abbas 8 8 Syed Mazhar Abbas 4 4
Mr. Anwar Haji Karim 8 7 Mr. Abbas D. Habib 4 4
Syed Hasan Ali Bukhari 8 6 Ms. Farhana Mowjee Khan 4 4
Mr. Arshad Nasar 8 6 Mr. Arshad Nasar 4 3
Credit Risk Management Committee Risk Management Committee

Syed Mazhar Abbas, Mr. Adnan Afridi,
Mr. Safar Ali Lakhani 4 3 Mr. Qumail R. Habib 4 3
Mr. Qumail R. Habib 4 4 Ms. Farhana Mowjee Khan 4 4
Syed Hasan Ali Bukhari 4 3 Mr. Anwar Haji Karim 4 3
Mr. Murtaza H. Habib 4 4 Mr. Safar Ali Lakhani 4 3
IT Committee IFRS 9 Committee

Mr. Abbas D. Habib, Syed Hasan Ali Bukhari,
Mr. Qumail R. Habib 4 3 Mr. Arshad Nasar 4 3
Mr. Arshad Nasar 4 3 Mr. Qumail R. Habib 4 3
Syed Mazhar Abbas 4 4
Mr. Mansoor Ali Khan 4 4
Directors Training Programme
Directors have either attended the required training in prior years or stand exempted, as per criteria mentioned
in the Code.
9
Directors’ Remuneration Policy
The shareholders of the Bank have approved a ‘Policy & Procedure for Fixing Remuneration of Directors’,
which states that:
• The remuneration of Non-Executive Directors for attending Board and Committee meetings shall be
decided by the Board within the maximum limit as specified by the State Bank of Pakistan from time to
time.
• The Chairman of the Board is also entitled to have 20% additional remuneration fee of the remuneration
set for him for attending Board and its Committee meeting considering the Chairman’s vast knowledge,
experience, insight, sense of judgement and market contacts. The Chairman of the Board shall also
monitor the performance of the Bank’s management and implementation of the Business Plan of the
Bank on behalf of the Board.
• A full time Director shall receive such remuneration as the members (shareholders) may fix.
• The Chairman of the Board (in case of individual Directors) and Independent Directors with the help of
other Directors (in case of Chairman of the Board) shall decide regarding reconsideration in remuneration
of underperforming Director/Chairman if the overall performance of the Director/Chairman consistently
remains in “Needs Improvement” category for the two consecutive years as per Annual Performance
Evaluation of the Board members.
Credit Rating
Alhamdollilah, as informed earlier in our review for the period ended June 30, 2021, Pakistan Credit Rating
Agency Limited (PACRA) has upgraded the Bank's long term entity rating from AA+ (Double A plus) to AAA
(Triple A) while maintaining the short term entity rating at A1+ (A One plus). This long term credit rating AAA
(Triple A) denotes the highest credit quality with the lowest expectation of credit risk, and indicates exceptionally
strong capacity for timely payment of financial commitments.
The ratings of our unsecured, subordinated Term Finance Certificates (TFCs) were also upgraded from AA
(Double A) to AA+ (Double A Plus) for TFC-2018 and from AA- (Double A minus) to AA (Double A) for
TFC-2017 (perpetual). The initial rating of our unsecured, subordinated TFC–2021 issued during the year
is AA+ (Double A plus). These ratings denote a very low expectation of credit risk emanating from a very
strong capacity for timely payment of financial commitments.
Future Outlook
Proactive steps taken by the Government and the State Bank of Pakistan mitigated the effects of Covid-19
during the year to a large extent, making Pakistan one of the best performing countries for its effective
handling of the pandemic. The country’s GDP posted a remarkable recovery after registering a contraction
in the previous year. Growth in GDP was led by large scale manufacturing, construction, and agriculture.
Fiscal deficit declined in spite of additional government spending related to Covid-19; current account deficit
reached a ten-year low; workers’ remittances continued to rise; and foreign exchange reserves witnessed
a surge. However, mismatch between the country’s imports and exports and unanticipated increase in global
commodity prices have exposed the economy to exchange rate instability as well as inflationary pressures.
The State Bank has, therefore, commenced raising the benchmark policy rate, while the Government has
decided to introduce new fiscal measures. These, together with potential emergence of new Covid-19
variants, may affect the overall economic and business environment. Nevertheless, the aforementioned
sectors may continue to support the economy. Accordingly, we are confident that, by the Grace of Allah, the
Bank will continue to grow and progress, as in the past.
Auditors
The present auditors EY Ford Rhodes, Chartered Accountants, retire and offer themselves for reappointment.
As suggested by the Audit Committee, the Board of Directors has recommended their reappointment as
auditors of the Bank for the year ending December 31, 2022, at a fee to be mutually agreed.
10
Risk Management Framework
The Bank always had a risk management framework commensurate with the size of the Bank and the nature
of its business. This framework has developed over the years and continues to be refined and improved. A
key guiding principle of the Bank is to treat the depositors’ money as a trust which must be protected.
Therefore, the Bank aims to take business risks in a prudent manner, guided by a conservative outlook.
Salient features of the Bank’s risk management framework are summarized below:
• Credit risk is managed through the credit policies approved by the Board; a well-defined credit approval
mechanism; use of internal risk ratings; prescribed documentation requirements; post-disbursement
administration, review, and monitoring of credit facilities; and continuous assessment of credit worthiness
of counterparties. The Bank has also established a mechanism for independent, post-disbursement
review of large credit risk exposures. Decisions regarding the credit portfolio are taken mainly by the
Central Credit Committee. Credit Risk Management Committee of the Board provides overall guidance
in managing the Bank’s credit risk.
• Market risk is managed through the market risk policy approved by the Board; approval of counterparty
limits and dealer limits; treasury & investment policy; and regular review and monitoring of the investment
portfolio by the Bank’s Asset Liability Management Committee (ALCO). In addition, the liquidity risk policy
provides guidance in managing the liquidity position of the Bank, which is monitored on daily basis by
the Treasury and the Middle Office. Decisions regarding the investment portfolio are taken mainly by
ALCO. Risk Management Committee of the Board provides overall guidance in managing the Bank’s
market and liquidity risks, capital adequacy, and integrated risk management (also known as enterprise
risk management).
• Operational risk is managed through the audit policy, the operational risk policy, the compliance policy
& programme, IT and IT security policies, human resource policy, consumer protection framework, and
outsourcing policy approved by the Board, along with the fraud prevention policy; consumer grievance
handling policy; operational manuals and procedures issued from time to time; a system of internal
controls and dual authorization for important transactions and safe-keeping; a Business Continuity Plan,
including a Disaster Recovery Plan for I.T.; and regular audit of the branches and divisions. Audit
Committee of the Board provides overall guidance in managing the Bank’s operational risk.
In addition, Risk Management Policy, Risk Tolerance Statement, and Country Risk Management Policy
provide further guidance on managing the potential risk exposures of the Bank.
In order to comply with SBP’s guidelines on risk management, the Bank has established a separate Risk
Management Division, including a Middle Office, that independently monitors and analyses the risks inherent
in Treasury operations. The steps taken by the Division include: sensitivity testing of Government Securities
portfolio; computation of portfolio duration and modified duration; analysis of maturity mismatch and rate
sensitive assets and liabilities, analysis of forward foreign exchange gap positions; more detailed reporting
of TFCs and equities portfolios; development of improved procedures for dealing in equities and settlements;
monitoring of off-market foreign exchange rates and foreign exchange earnings; collecting operational loss
data and developing Key Risk Indicators; identifying Top Ten Risks of the Bank; conducting risk evaluation
of products and processes; and establishment of a mechanism for independent, post-disbursement review
of large credit risk exposures. Assessment of enterprise-wide integrated risk profile of the Bank is carried
out, using the Basel Framework, Key Risk Indicators, Internal Capital Adequacy Assessment Process, Stress
Testing, and Recovery Plan.
Corporate Social Responsibility (CSR)
Your Bank is fully committed to the concept of Corporate Social Responsibility and fulfills this responsibility
by engaging in a wide range of activities which include:
• corporate philanthropy amounting to Rs. 487.32 million by way of donations & charities during the year
for social and educational development and welfare of people;
• energy conservation, environmental protection, and occupational safety and health by restricting
unnecessary lighting, implementing tobacco control law and “No Smoking Zone”, and providing a safe
and healthy work environment;
11
• business ethics and anti-corruption measures, requiring all staff members to comply with the Bank’s
“Code of Conduct” and “Anti-Bribery And Corruption Policy”.
• consumer protection measures, requiring disclosure of the schedule of charges and terms and conditions
that apply to the Bank’s products and services;
• amicable staff relations, recognition of merit and performance, and on-going opportunities for learning
and growth of staff, both on-the-job and through formal training programmes;
• employment through a transparent procedure, without discrimination on the basis of religion, caste,
language, etc., including employment of special persons;
• expansion of the Bank’s branch network to rural areas, which helps in rural development;
• contribution to the national exchequer by the Bank by way of direct taxes of about Rs. 10.51 billion paid
to the Government of Pakistan during the year; furthermore, an additional amount of over Rs. 18.41
billion was deducted/collected by the Bank on account of withholding taxes, federal excise duties and
sales tax on services, and paid to the Government of Pakistan/Provincial Governments.
• During the last five years, the Bank has disbursed Rs. 16.21 million under the Prime Minister’s Youth
Business Loan programme.
Statement on Corporate and Financial Reporting
1. The financial statements, prepared by the Bank, present fairly its state of affairs, the result of its operations,
cash flows and changes in equity.
2. Proper books of account have been maintained by the Bank.
3. Appropriate accounting policies have been consistently applied in preparation of the financial statements;
changes, if any, have been adequately disclosed and accounting estimates are based on reasonable
and prudent judgment.
4. International Financial Reporting Standards and Islamic Financial Accounting Standards, as applicable
in Pakistan, have been followed in preparation of financial statements and departure therefrom, if any,
has been adequately disclosed.
5. The system of internal controls is sound in design and has been effectively implemented and monitored.
The Board’s endorsement of the management’s evaluation related to Internal Control over Financial
Reporting, along with endorsement of overall Internal Controls is given on page 32.
6. Going concern assumption is appropriate. There is no identifiable material uncertainty that raises doubt
about the ability of the Bank to continue as a going concern.
7. Key operating and financial data for last six years are summarized below:
(Rupees in million)
2021 2020 2019 2018 2017 2016
Total customer deposits 1,309,823 1,099,686 903,703 796,901 692,576 584,172

Total advances 733,799 510,252 488,669 478,215 339,833 261,440
Profit before tax 30,273 28,581 19,011 14,264 13,890 13,164
Profit after tax 18,702 17,812 11,169 8,418 8,501 8,119
Shareholders' Equity 83,569 69,570 55,489 46,283 40,409 35,673
Earnings per share (Rs.) 16.83 16.03 10.05 7.57 7.65 7.31
Cash Dividend (%) 70 45 35 25 30 35
12
8. Value of investments of Provident Fund and Gratuity Fund Schemes based on latest audited financial
statements as at December 31, 2020 was as follows:
(Rupees in '000)
Provident Fund 8,314,541
Gratuity Fund 3,439,971
9. The pattern of shareholding and additional information regarding pattern of shareholding is given on
pages 138, 139 & 140.
10. The Board has approved a formal process for its performance evaluation. The Bank has adopted In-House
Approach and Quantitative Technique with scored questionnaires for Board evaluation. Scope of Board
evaluation covers evaluation of the full Board, Individual Directors, Board Committees, the Chairman,
and the Chief Executive. Consolidated results/findings will be discussed with the relevant parties. Any
areas of improvement identified during the evaluation will be noted for appropriate action. Evaluation
process for each calendar year will be completed latest by March 31 of the next year. Additionally,
performance evaluation of the Board will be conducted by an external independent evaluator at least
every three years. We have appointed Pakistan Institute of Corporate Governance (PICG) for external
independent evaluation of the Board.
There is no conflict of interest between the experts hired by the Bank and any Board member or Key
Executive.
11. No trade in the shares of the Bank was carried out by the Directors, CEO, CFO, Head of Internal Audit,
Company Secretary, and Executives and their spouses and minor children, during the year, except the
following:
• Son of a Director, who acts independently, sold 77,042 shares through a CDC account in which
spouse of the Director is a joint account holder with the son.
• 400 shares purchased by an Executive.
For the purpose of this disclosure, the definition of “Executive” includes Assistant General Managers and
above, in addition to officials already mentioned in the Rule Book of the Pakistan Stock Exchange regulations.
General
We wish to thank our customers, for their continued trust and support, local and foreign correspondents for
their confidence and cooperation, and the State Bank of Pakistan for their guidance. We also thank all our
staff members for their sincerity, dedication and hard work.
MANSOOR ALI KHAN ABBAS D. HABIB

Chief Executive Chairman
Board of Directors
Karachi: February 09, 2022
13
CORPORATE GOVERNANCE
Corporate Governance Culture
Habib Family has been engaged in the business of banking for over 80 years, and is well known for commitment
to its traditional values of integrity, prudence, and trust. We are committed to continue all our business activities
as per highest ethical and professional standards and practices. We ensure good corporate governance culture
by remaining true to our values and by following the Prudential Regulations issued by the State Bank of Pakistan
and the Code of Corporate Governance Regulations issued by the Securities & Exchange Commission of
Pakistan. Board of Directors of the Bank comprises reputable businessmen, bankers, professional managers,
and chartered accountants, representing a range of industries. They carry out their fiduciary duties to protect
the interests of shareholders, depositors, and creditors, and exercise their independent judgement in the best
interests of the Bank. We have clearly defined the responsibilities of the Board, Chief Executive, and Senior
Management.
Nomination and Selection of Board Members
There is a defined procedure for election of Directors in Companies Act, 2017 and the Bank’s Articles of
Association which has been strictly followed by the Bank. Accordingly, the Bank announces the schedule of
election of Directors in the year when the election is due. Any person desirous to become a Director can submit
his/her nomination papers as per the requirements of the Companies Act, 2017 and regulations of State Bank
of Pakistan (SBP). The person elected by the shareholders shall hold the office of Director, subject to Fit and
Proper Criteria and approval of the State Bank of Pakistan. Any casual vacancy on the Board is filled up by the
Directors, subject to applicable regulations.
Profile of Board Members
1. Mr. Abbas D. Habib – Chairman
Mr. Abbas D. Habib, Founder Member & Chairman of the Board, has over 50 years’ commercial, industrial and
banking experience in the domestic and international markets. He is a Fellow Member of the Institute of Bankers,
Pakistan. He has held senior management positions with various organizations of the Habib Group and gained
international banking experience while working with Habibsons Bank Limited, London, as Regional Director and
later as Executive Director. Upon the inception of Bank AL Habib Limited in 1991, he became its Director and
Joint Managing Director. He assumed responsibilities as Managing Director and Chief Executive of the Bank
on May 8, 1994 and served in that position till October 31, 2016. He has been on the Board of Habib Insurance
Company Limited since June 13, 2000. He became Chairman of Bank AL Habib Limited on November 1, 2016.
He is also the Chairman of the Board of AL Habib Asset Management Limited a wholly owned subsidiary of the
Bank since August 11, 2020.
2. Mr. Anwar Haji Karim
Mr. Anwar Haji Karim holds a Bachelor’s degree in commerce and has over 40 years’ experience in business
and industry. He belongs to the Al Karam Group, a reputable business group of Pakistan, with interests in textiles
and synthetics. He is Chief Executive of Al Karam Textile Mills (Private) Limited and Iqbal Textile Mills (Private)
Limited. He is a Founder Member of the Board of Directors of the Bank since its inception in 1991.
3. Ms. Farhana Mowjee Khan
Ms. Farhana Mowjee Khan, Director of Razaque Steels (Private) Limited, has over 30 years’ experience in the
local and international environment. She has also served as Managing Director of Razaque Steels (Private)
Limited from 1994 to 2006. She graduated from University College London, UK and is a qualified Chartered
Accountant from Institute of Chartered Accountants in England and Wales, UK. Ms. Farhana Mowjee Khan is
also a director of Shabbir Tiles and Ceramics Limited. She joined the Board of Bank AL Habib Limited in April
2019.
14
4. Syed Mazhar Abbas
Syed Mazhar Abbas studied at American University of Beirut. He has over 45 years’ experience in
commercial banking, including senior executive positions at Habib Bank Limited and Bank AL Habib
Limited. He has had extensive exposure to international banking in several countries including Bahrain,
Lebanon, France, UK, Egypt, and Hong Kong. He joined Bank AL Habib Limited in 1992 as a senior
executive and became its Director in 2000.
5. Mr. Qumail R. Habib – Executive Director
Mr. Qumail R. Habib is a graduate of the University of California in Business Economics and has over
35 years’ commercial, industrial, and banking experience. He is a Founder Member of the Board and
Executive Director of the Bank since its inception in 1991. Prior to that, he was Resident Director of AL
Ghazi Tractors Limited. He has been actively involved with the operations of the Bank since its inception.
He is responsible for enhanced oversight on Enterprise Risk and Corporate Strategy, and for monitoring
Fraud Investigation Unit. He has been on the Board of Habib Insurance Company Limited since October
03, 2017.
6. Mr. Safar Ali Lakhani
Mr. Safar A. Lakhani holds a Bachelor’s degree in Commerce and is also a Law graduate. He is a
Diplomaed Associate of the Institute of Bankers, Pakistan. He has extensive experience of working in
banks in senior positions. He served in Habib Bank Limited as Senior Executive Vice President & General
Manager for East & Pacific Region, based in Singapore. Also served as the founder President of Soneri
Bank from 1991 until his retirement in 2010. He has been associated with Bank AL Habib Limited as
advisor/consultant during the years 2011-2013 and was appointed as a Director in January 2014.
7. Syed Hasan Ali Bukhari
Syed Hasan Ali Bukhari is a Commerce graduate and a Fellow of the Institute of Chartered Accountant
of Pakistan (FCA). Mr. Bukhari has also attended General Management Course at Henley Management
College, England. He has vast experience in a professional accounting firm and the shipping industry.
His corporate experience span over 36 years in various positions with Mackinnon Mackenzie & Co. of
Pakistan, until his retirement as Chief Executive & Managing Director of the company in 2010. Mr. Bukhari
is Advisor to Chairman of Hilton Pharma (Private) Limited since 2011. Mr. Bukhari has served as a Board
member of Karachi Port Trust and Pakistan Institute of Corporate Governance, and he is currently a
Director of Pakistan Oxygen Limited, Quick Food Industries (Private) Limited, and Pakistan Gum &
Chemicals Limited. He was appointed as a Director of Bank AL Habib Limited in June 2014.
8. Mr. Murtaza H. Habib
Mr. Murtaza H. Habib holds a Bachelor’s degree in finance from Texas A&M University, USA, and has
over 25 years’ experience in business and industry. He is currently Executive Director of Habib Sugar
Mills, and also holds Directorships in several other companies of Habib Group. He is actively involved
with social welfare activities of the Group. He is a Founder Member of the Board of Directors of the Bank
since its inception in 1991, except for a gap of one year.
9. Mr. Arshad Nasar
Mr. Arshad Nasar served as Chairman and Chief Executive of Oil & Gas Development Company Ltd
(OGDCL) from 2005 - 2008. Under his watch, OGDCL successfully launched a Global Depository Receipt
(GDR) issue and was listed on London Stock Exchange. Mr. Nasar previously served as Country Chairman
and Managing Director of Caltex Oil (Chevron) Pakistan Ltd from 1998 – 2004, the first Pakistani to lead
Caltex Oil in Pakistan. He retired from the Company after 36 years of service. He holds a Master's Degree
in Economics and has extensive functional and Management experience in a wide ranging international
corporate career spanning more than 40 years. Mr. Nasar has served as Director on the Boards of: Oil
& Gas Development Company Limited (OGDCL), Caltex Oil (Chevron) Pakistan Ltd, Engro Corporation
Pakistan Ltd, Engro Fertilizer Ltd, Pakistan Industrial Development Corporation (PIDC), Pakistan Refinery
Limited (PRL), Mari Gas Company, The American Business Council of Pakistan, and Petroleum Institute
of Pakistan. Presently, he is also on the Board of FAST National University of Computer and Emerging
Sciences. He joined the Board of Bank AL Habib Limited in March 2016.
15
10. Mr. Adnan Afridi
Mr. Adnan Afridi holds a Bachelor’s degree in Economics and a Juris Doctor degree in Law from Harvard
University, USA. He assumed charge as Managing Director, National Investment Trust Limited (NITL)
in February 2019. He has 26 years’ international experience in change management, business
transformation, innovation and profitability enhancement in blue chip companies, public sector, and
start-up situations. He had a distinguished local career in financial services and capital markets, including
the position of Managing Director of the Karachi Stock Exchange, CEO of Overseas Chamber of Commerce
and Industry, Chairman of National Clearing Corporation of Pakistan, and a Director of Central Depository
Company. He is also a Member of the SECP Policy Board. He represents NITL as a Director on the
Boards of several well-known and multinational companies in Pakistan. Mr. Afridi also serves as Vice
Chairman of the Board of Governors of The Kidney Center Post Graduate Institute and also as Board
member of Shaukat Khanum Memorial Trust. He was also former president of Old Grammarians Society
and Board member of Young Presidents’ Organization (YPO) as well and currently serving as member
of Young Presidents’ Organization (YPO) – Gold Pakistan. He joined the Board of Bank AL Habib Limited
as a nominee of NITL in April 2019.
Details of Membership on the Bank’s & other Boards

Date of Status of
Joining Number of other
Director
Sr. /Leaving the (Independent, Member of Board Memberships
No. Name of Director Board Committees along with name of
Board Non-Executive,
Company(ies)
(dd/mm/yyyy) Executive)
1 Mr. Abbas D. Habib 15/10/1991 Non-Executive • Human Resource and 1. Habib Insurance Company
Remuneration Committee Limited
• IT Committee 2. Habib & Sons (Private)
Limited
3. AL Habib Asset
Management Limited
2 Mr. Anwar Haji Karim 15/10/1991 Non-Executive • Audit Committee 1. AL - Karam Textile Mills
• Risk Management (Private) Limited
Committee 2. Iqbal Textile Mills
(Private) Limited
3 Ms. Farhana Mowjee Khan 17/04/2019 Non-Executive • Human Resource and 1. Razaque Steels (Private)
Remuneration Committee Limited
• Risk Management 2. Razaque Sino (Private)
Committee Limited
3. Shabbir Tiles and Ceramics
Limited
4 Syed Mazhar Abbas 10/10/2000 Non-Executive • Audit Committee
• Human Resource and
Remuneration Committee -
• Credit Risk Management
Committee
• IT Committee
5 Mr. Qumail R. Habib 15/10/1991 Executive • Credit Risk Management Habib Insurance Company
Committee Limited
• Risk Management
Committee
• IT Committee
• IFRS 9 Committee
6 Mr. Safar Ali Lakhani 29/01/2014 Independent • Audit Committee
• Credit Risk Management
Committee -
• Risk Management
Committee
16
Details of Membership on the Bank’s & other Boards
Date of Status of
Joining Number of other
Director
Sr. /Leaving the (Independent, Member of Board Memberships
No. Name of Director Board Committees along with name of
Board Non-Executive,
Company(ies)
(dd/mm/yyyy) Executive)
7 Syed Hasan Ali Bukhari 02/06/2014 Independent • Audit Committee 1. Pakistan Gum & Chemicals
• Human Resource and Limited
Remuneration Committee 2. Pakistan Oxygen Limited
• Credit Risk Management 3. Quick Food Industries
Committee (Private) Limited
8 Mr. Murtaza H. Habib 15/10/1991 to Non-Executive • Credit Risk Management 1. Habib Sugar Mills Limited
22/12/1997 Committee 2. Habib & Sons (Private)
and Limited
24/11/1998 to 3. Investment Consultancy
date (Private) Limited
4. Habib Capital Management
(Private) Limited
5. Habib Leasing Corporation
(Private) Limited
6. Habib Management
Services (Private) Limited
7. Habib Energy (Private) Limited
8. HSM Energy Limited
9 Mr. Arshad Nasar 28/03/2016 Independent • Audit Committee

• Human Resource and –
Remuneration Committee
• IT Committee
10 Mr. Adnan Afridi 17/04/2019 Non-Executive • Risk Management 1. Habib Sugar Mills Limited
Committee 2. Dynea Pakistan Limited
3. International Industries
Limited
4. Mari Petroleum Company
Limited
5. Lotte Chemical Pakistan
Limited
6. Siemens (Pakistan) Engineering
Limited
Appointment of the Shariah Board (SB) Members
Shariah scholars who meet the Fit and Proper Criteria as laid down by State Bank of Pakistan are appointed
as SB members for a term of three years by the Board of Directors and are eligible for re-appointment. Their
appointment and re-appointment is subject to prior written clearance of SBP. The three years’ term of SB
commenced from the date of SBP’s clearance for appointment / re-appointment. Any SB member (including
Chairperson) may be re-appointed as a member of SB for another term by the Board of Directors, at least two
months prior to expiry of the term, subject to a fresh prior written clearance of SBP and pursuant to Fit and
Proper Criteria of SBP.
During the year, SBP amended the criteria of composition of Shariah Board members with effect from July 1st,
2021 via IBD Circular Letter No. 01 of 2021 dated February 03, 2021 as follows;
“The SB members, except Resident Shariah Board Member (RSBM), may serve on the SBs of up to three IBIs
in Pakistan. However, the IBI must ensure that its SB has at least 2 members (other than RSBM), who are not
on the SB of any other IBI. Hence, each Islamic Banking Institution (IBI) will have at least three unique members
in SB including RSBM”.
17
Shariah Board of the Bank constituted of three Shariah Board members including the Resident Member (RSBM)
who was the only unique member at that time. To comply with the new regulatory requirement, a new member,
Mufti Sher Ali, was inducted as a unique member in the Shariah Board while the Chairman, Mufti Ismatullah
Hamdullah opted to become a unique member in the Bank’s Shariah Board by resigning as member Shariah
Board of other Financial Institution. Effective July 01, 2021 Bank’s Shariah Board is compliant with the SBP’s
related directives. It is pertinent to mention that upon expiry of their 3-Year term, these members have been
reappointed for another 3-Year term w.e.f October 8, 2021.
Casual vacancy
Board of Directors of the Bank fills the casual vacancy on the SB that may occur as a result of resignation,
removal, termination or death of a member, within three months from the date on which such vacancy arises.
However, the SB member appointed on casual vacancy shall hold the office till the expiry of the existing term
of the SB. During the year, RSBM Mufti Muhammad Sarfraz Nihal resigned and, to fill this vacancy a new
member Mufti Muhammad Hamza was appointed as Shariah Board Member, while Mufti Sher Ali was designated
as Resident Shariah Board Member.
Profile of each of the Shariah Board member
Mufti Ismatullah Hamdullah
Mufti Ismatullah holds the degrees of “Shahadat-ul-Aalamiyah” and “Takhassus Fil Fiqh” from Jamia Dar-ul-Uloom,
Karachi. He is a PhD in Islamic Economics from University of Karachi. He has been associated with Islamic
Banking Division of Bank AL Habib Limited since 2006 as Shariah Advisor prior to his appointment as the
Chairman of Shariah Board.
He has been teaching Quran, Hadith, Fiqh, Philosophy and Arabic Grammar in Dar-ul-Uloom since 1993. He
has a vast experience in issuing Shariah rulings (Fatwa) and is currently serving Dar-ul-Ifta’ of Dar-ul-Uloom.
So far, he has issued about 25,000 Fatwas regarding various topics and Shariah issues.
His thesis – Zar (Money) in light of Shariah – is considered as one of the most useful research on Islamic
Economics and has already been published. He is a renowned research scholar; his research papers have
been published in Monthly “Al Balaagh”. He wrote a book “Guide to Takaful or Islamic Insurance” that has also
been published.
Mufti Sahab is Shariah Advisor of AL Habib Asset Management Limited, IGI window Takaful and Pak Qatar
Family Takaful Ltd, he is also a Shariah Board member of Pak Qatar Takaful Group.
Mufti Mohib ul Haq
Mufti Mohib ul Haq Siddiqui graduated from Jamia Dar-ul-Uloom, Karachi. He obtained Shahadat-ul-Aalamia
(Master’s in Arabic and Islamic Studies) and Al-T’akhassus fi al-Iftaa’ (Specialization in Islamic Jurisprudence
and Fatwa) qualifications from Darul Uloom.
He joined the Shariah Board of Bank AL Habib Limited – Islamic Banking in November 2015 as a Member. With
substantial and diversified experience in the field of Islamic Finance, he has served several financial institutions
as a member of their Shariah Boards.
Mufti Mohib ul Haq is currently associated with Faysal Barkat Islamic Banking as the Chairman of Shariah Board.
He is also a member of the State Bank of Pakistan’s Forum for Shariah review, standardization of Islamic
products and processes, and formalization of Shariah Accounting standards for the Pakistan banking industry.
He is a member of the Shariah Board of Bank Alfalah Islamic Banking Division. Formerly, he was also member
of the Shariah Board of Takaful Pakistan Limited, Royal Bank of Scotland Berhad, Malaysia and JS Islamic
Fund. He has over twelve years of teaching experience at renowned institutions and is also a Faculty Member/
Visiting Faculty Member of various well-known institutions such as:
• Jamia Dar-ul-Uloom Karachi – Centre for Islamic Economics
• National Institute of Banking and Finance (NIBAF) – SBP
Mufti Sher Ali
Mufti Sher Ali obtained the degrees of “Shahadat-ul-Aalamiyyah and “Specialization in Ifta wa Fiqhil halal” from
Jamiah tur Rasheed, besides having a Masters degree in Islamic Studies from the University of Karachi, while
currently he is pursuing his M.Phil. He has an outstanding academic record in both Islamic and Contemporary
education throughout his career, winning numerous awards & positions at institution, university and national
level. Before becoming Shariah Board member Mufti Sher Ali served in Shariah Compliance Department of
BAHL-IB as Shariah Scholar for three years.
18
Having been a member of the Darul Ifta at Jamia tur Rasheed, he has issued numerous verdicts (Fatawas) on
various issues. He also serves as a faculty member at Al –Burhan (An International Academy offering Islamic
education for professionals.). He possesses a vast Shariah Compliance experience and command over conducting
Shariah review of corporate, SME and consumer post-execution transactions, review of legal documents and
internal policies, training and educating branch and corporate banking staff on Islamic Banking & Finance, vetting
of investment banking transactions, Shariah review of product manuals and policies etc.
Mufti Muhammad Hamza
Mufti Muhammad Hamza is serving Bank AL Habib – Islamic Banking as Shariah Board Member since September
2021. He has a diverse professional experience in IBIs and Audit Firms. Prior to his joining, he has served as
Shariah Scholar (Assistant Manager Shariah Support) in Product Management and Development Department
at Faysal Bank Limited-Islamic. He also served as Shariah Consultant in EY Ford Rhodes.
Mufti Muhammad Hamza possesses both contemporary as well as religious academic qualifications. He holds
Shahadat-ul-Aalamiyah (Masters in Islamic and Arabic Studies) along with Takhassus Fiqh-ul-Muamlaat (Islamic
Commercial Law and Management Science) from Jamia Tur Rasheed, Karachi.
He is also an MBA (Finance) from University of Karachi. Furthermore, he holds “Post Graduate Diploma in
Islamic Banking and Takaful” from Centre for Islamic Economics Jamia Darul Uloom Karachi.
He is presently associated with Jamia-tur-Rasheed, Karachi as a Member of Darul Iftaa and lecturer in department
of Dars-e-Nizami. Mufti Muhammad Hamza has significant experience of teaching Islamic Jurisprudence (Fiqh)
and other related subjects in renowned institutions as Permanent and Visiting Faculty Member such as Jamia
tur Rasheed and Al-Burhan international Karachi.
Details of Membership on Bank’s and other Shariah Boards
Date of Joining Number of other
Sr. /Leaving the Status of Shariah Shariah Board
No. Name of Shariah Board Member Shariah Board Board Member Memberships
(dd/mm/yyyy) along with name of
Company(ies)
1 Mufti Ismatullah Hamdullah 08/10/2015 Chairman • Member, Shariah

(Unique) Board - Pak Qatar
Takaful Group
Mufti Mohib ul Haq 08/10/2015 Member • Chairman, Shariah

2
Board - Faysal Bank
Limited
• Member, Shariah
Board - Bank Alfalah
Limited
3 Mufti Muhammad Sarfaraz Nihal Date of Leaving Outgoing Resident –

07/07/2021 Member
Resident Member –
4 Mufti Sher Ali 01/07/2021
(Unique)
Member
5 Mufti Muhammad Hamza 07/10/2021 –
(Unique)
19
Composition of Board Committees and their Terms of References (TORs)
The Listed Companies (Code of Corporate Governance) Regulations, 2019 requires the Bank to disclose
the composition of all Committees of the Board, viz. Audit Committee, Human Resource & Remuneration
Committee, Credit Risk Management Committee, Risk Management Committee, IT Committee and IFRS 9
Committee.
Composition of Board’s Committees
Human Resource & Credit Risk
Risk Management
Audit Committee Remuneration Management IT Committee IFRS 9 Committee
Committee
Committee Committee
Mr. Safar Ali Lakhani, Syed Hasan Ali Bukhari, Syed Mazhar Abbas, Mr. Adnan Afridi, Mr. Abbas D. Habib, Syed Hasan Ali Bukhari,
Chairman Chairman Chairman Chairman Chairman Chairman
Syed Mazhar Abbas Syed Mazhar Abbas Mr. Safar Ali Lakhani Mr. Qumail R. Habib Mr. Qumail R. Habib Mr. Arshad Nasar
Ms. Farhana Mowjee

Mr. Anwar Haji Karim Mr. Abbas D. Habib Mr. Qumail R. Habib Mr. Arshad Nasar Mr. Qumail R. Habib
Khan
Syed Hasan Ali Ms. Farhana Mowjee Syed Hasan Ali
Mr. Anwar Haji Karim Syed Mazhar Abbas –
Bukhari Khan Bukhari
Mr. Arshad Nasar Mr. Arshad Nasar Mr. Murtaza H. Habib Mr. Safar Ali Lakhani Mr. Mansoor Ali Khan –
During the year, eight meetings of the Audit Committee and four meetings of Human Resource & Remuneration
Committee were held, and the attendance of members was as follows:
Number of Board Committees Meetings Attended

No. of
Sr. Board Human
Name of Director Risk Credit Risk
No. Meetings Audit Resource & IT IFRS 9
Management Management
Attended Committee Remuneration Committee Committee
Committee Committee
Committee
1 Mr. Abbas D. Habib 4 - 4 - - 4 -
2 Mr. Anwar Haji Karim 4 7 - 3 - - -
3 Ms. Farhana Mowjee Khan 4 - 4 4 - - -
4 Syed Mazhar Abbas 4 8 4 - 4 4 -
5 Mr. Qumail R. Habib 4 - - 3 4 3 3
6 Mr. Safar Ali Lakhani 3 6 - 3 3 - -
7 Syed Hasan Ali Bukhari 3 6 3 - 3 - 3
8 Mr. Murtaza H. Habib 4 - - - 4 - -
9 Mr. Arshad Nasar 3 6 3 - - 3 3
10 Mr. Adnan Afridi 4 - - 4 - - -
11 Mr. Mansoor Ali Khan 4 - - - - 4 -
Total Meetings Held 4 8 4 4 4 4 4
20
TORs of Audit Committee of the Board
The key functions in the TORs include the following:
• Recommend to the Board the appointment / re-appointment of external auditors, their removal, audit
fees and provision by external auditors of any services to the Bank in addition to audit of its financial
statements for Pakistan Operations and Overseas jurisdictions.
• Discuss with external auditors the major observations arising from interim and final audits and review
management letter issued by them and management’s response thereto;
• Review quarterly, half-yearly and annual financial statements of the Bank before their publication.
• Review of quarterly, half-yearly and annual financial statements of the Bank, focusing on:
n
Major judgmental areas;
n
Significant adjustments resulting from the audit;
n
the going-concern assumption;
n
any changes in accounting policies and practices;
n
compliance with applicable accounting standards;
n
compliance with listing regulations and other statutory and regulatory requirements;
n
review of preliminary announcement of results prior to publication;
n
review of significant related party transactions.
• Appropriate measures to safeguard the Bank’s assets.
• Review of implementation of Customer Risk Profile (CRP), Know Your Customers (eKYC), Anti Money
Laundering (AML)/Combating Financing Terrorism (CFT), Terrorist Financing (TF), Proliferation Financing
(PF), Trade Based Money Laundering (TBML), and sanctioned screening related measures.
• Approve the half-yearly audit planning schedule and the estimated timeframe for completion of various
audits.
• Ensure that policies and procedures of the Bank are in line with prevailing banking laws and regulations
of the State Bank of Pakistan and other relevant statutory requirement.
• Institute special projects, value for money studies or other investigations on any matter specified by the
Board, in consultation with the CEO and to consider remittance of any matter to the external auditors
or to any other external body.
• Recommend the development/ amendments in the Bank’s Internal Control Systems and Internal Audit
Policy, Audit Manual and Internal Audit Strategy to the Board of Directors for approval.
• Review and approve Internal Audit Charter and Internal Audit Risk Assessment Policy.
• Review of periodical reporting made by the Audit Division on significant findings pointed out during the
testing of existing key controls relating to Internal Control over Financial Reporting (ICFR).
• Review the significant audit findings presented by Audit Division in Internal Audit Reports of domestic
& overseas operations (Branch Audits, Centralized Credit Audits, Management Audits, Information
System Audit, Islamic Banking Branches Audits and Shariah Audits).
• Review the significant findings of Inspection Reports of State Bank of Pakistan, regulators of overseas
branches and the status of compliance submitted by the Bank’s Management.
• Ensure compliance of the corrective actions as required by Shariah Board on the reports of ‘Internal
Shariah Audit’ and ‘External Shariah Audit’ as per Shariah Governance Framework for Islamic Banking
Institutions.
• Review of quarterly report of all Shariah Non-Compliance events/transactions.
• Review the reports on internal control system presented by Audit Division on quarterly basis as required
under internal control guidelines issued by the State Bank of Pakistan.
• Review of six monthly compliance report on Bank’s compliance status, in each jurisdiction, to host
country’s regulatory requirements and inspection reports etc. as required under SBP Governance
Framework for Bank Overseas Operations.
• Review and approve the increments of internal auditors and recommend the performance appraisal and
increment / promotion of Head of Internal Audit.
21
• Approve annual budget of Audit Division for expenditures and staff requirements.
• Coordination between the internal and external auditors of the Bank and review their findings to ensure
that necessary steps for implementing their recommendations have been taken.
• Adequacy and effectiveness of internal control systems including financial and operational controls,
accounting systems and reporting structure;
• Compliance with the best practices of Corporate Governance;
• Consideration of major findings of internal investigation of activities characterized by fraud, forgeries
and misuse of powers and management responses.
• Review of matters relating to operational risk and operational loss event reports including implementation
of Operational Risk Framework.
• Review of observations pointed out by the Audit Division during the annual review of BASEL design and
implementation.
• Review of Zero Tolerance cases decided by the Disciplinary Action Committee.
• Review of summary of cases investigated by Fraud Investigation Unit (FIU) under Bank’s Policy on
Employees’ Duty to Report (Whistle Blowing Policy).
• Review of summary of cases received and investigated by Fraud Investigation Unit (FIU) under Bank’s
Anti-Bribery & Corruption Policy.
• Review of the significant audit findings on the Bank’s outsourced/insourced arrangements.
• Review of annual report of containing incidents of robbery and dacoity.
• Review of summary of long-outstanding issues / exceptions and the suggested future course of action.
• Consider any other issue or matter as may be assigned by the Board of Directors or required by regulatory
authorities.
TORs of Human Resource & Remuneration Committee of the Board
• Review and recommend to the Board for approval of Human Resource Policy & Service Rules of the
Bank.
• Recommend to the Board the selection, evaluation, compensation (including retirement benefits) and
succession planning of the CEO.
• Recommend to the Board the selection, evaluation, compensation (including retirement benefits) of COO
(if any), CFO, Company Secretary, and Head of Internal Audit.
• Consider and approve recommendations of CEO on above matters for key management positions who
report directly to CEO or COO (if any).
• Review the manpower budget of the Bank, taking into consideration the expansion programme proposed
by the Management.
• Review training activities and management development programmes for employees of the Bank.
• Review total staff strength with cadre and location-wise break-up of employees.
• Review on quarterly basis name-wise details of employees of Senior Chief Manager level and above
who have joined on left service of the Bank during the period, along with reasons for their separation.
• Recommend the Remuneration Policy to the Board for approval, ensuring that the Remuneration Policy
is fair and competitive, and encourages performance and motivation.
• Recommend to the Board the “structure” of compensation package of Executive Directors, Chief Executive,
Key Executives, and other employees, as may be required by the Board.
TORs of Credit Risk Management Committee of the Board
• Review from time to time that the Management has put in place effective policies and information systems
to identify and mitigate credit risk.
• Review that the Management follows appropriate procedures to recognize adverse trends in the credit
portfolio of the Bank, identifies weaknesses in the loan portfolio, takes corrective/remedial actions and
maintains an adequate level of provisions for potential loan losses in the light of the requirements of the
Prudential Regulations.
• Review and recommend to the Board any changes in the Bank's policies related to credit.
22
• Review the quality of the Bank's credit portfolio on a quarterly basis through various comparisons /
benchmarking, including but not limited to:
n
Industry Benchmarks / Positioning.
n
Diversification of advances by industry, business segment, etc.
n
Concentration of advances in private and public sectors.
n
Movement / changes in advances by region / industry / business segments.
n
Details of large limits approved / enhanced during the quarter, as per the threshold prescribed by the
Committee.
n
Maturity profile of the loan portfolio.
n
Review of Non-Performing Loans (NPLs).
n
Review of Watch-List & NPL accounts, as per the threshold prescribed by the Committee.
n
Review / approval of any policy exceptions.
n
Review restructured / rescheduled accounts and written-off advances, as per the threshold prescribed
by the Committee.
n
Review any adverse findings of Credit Risk Review Department (CRRD).
• Consider Write Off/Waiver of NPLs up to Rs. 50 million.
• Recommend cases for Write Off/Waiver, exceeding Rs. 50 million, to the Board of Directors for consideration
and approval.
TORs of Risk Management Committee of the Board
• Review from time to time that the management has put in place effective policies and information systems
to identify and mitigate the following risks.
• Market Risk, which includes Interest Rate Risk, Foreign Exchange Risk, and Equity Price Risk.
• Liquidity Risk.
• Review summary of risk reports relating to the following risks:
• Credit Risk
• Operational Risk
Which are reviewed in detail by the Credit Risk Management Committee and the Audit Committee of the
Board, respectively.
• Review and provide guidance regarding integrated risk management (also known as enterprise risk
management), covering various significant risk exposures of the Bank.
• Review the Bank’s capital adequacy ratio and establish a process for internal capital adequacy assessment
process (ICAAP) using integrated risk management.
• Review and recommend to the Board any changes in the Bank’s Treasury and Investment Policy, Market
Risk Policy, Liquidity Risk Policy, Risk Management Policy, and ICAAP.
• Review the credit rating report of the Bank, issued by the credit rating agency.
• Review any changes in laws and regulations relating to Market Risk, Liquidity Risk and Capital Adequacy.
• Review changes in prevailing economic and market conditions.
• Review the financial data of other comparable banks.
TORs of IT Committee of the Board
• Review and recommend the Bank's IT and digital strategies, relevant policies, frameworks and changes
thereof, for the Board's approval.
• Review the role of IT as an enabler to provide competitive advantage and efficient services to customers.
• Review the level of expertise of IT personnel and assess their adequacy in number and skillset as well
as continuous professional development.
• Review major IT related risks and ensure that IT Risk Management strategies are designed and implemented
to address IT related risks including cyber-attacks and attacks on multiple critical infrastructure sectors
in order to achieve resilience.
• Receive periodic updates from IT Steering Committee to monitor all IT related projects, particularly those
which are approved by the Board.
23
• Ensure that IT related procurements are in line with the strategic directions provided by the Board.
• Review and recommend any IT related material outsourcing arrangement including obtaining IT experts'
opinion.
• Constitute/reconstitute IT Steering Committee and approve its TORs and any revisions thereof.
• Review the MIS on incidents, logs, breaches and significant incidents on a regular basis.
TORs of IFRS 9 Committee of the Board
• Constitution of IFRS 9 Project Steering Committee of management to administer the Project.
• Review and approve Bank AL Habib Limited’s transition plan for IFRS 9 implementation.
• Quarterly review of the progress made against the IFRS 9 implementation challenges (resolution plan).
• Ensure smooth implementation of IFRS 9 within the timelines stipulated by State Bank of Pakistan.
• Review of Expected Credit Loss (ECL) and ensure compliance of ECL policy.
Board’s Oversight over Shariah Compliance Functions and Shariah Board (SB)
The Shariah Board members meet the Board of Directors on half yearly basis and give detailed briefings on
the Shariah compliance environment, the issues/weaknesses (if any), and recommendations to improve
Shariah compliance environment and to ensure timely and effective enforcement of the SB’s decisions,
Fatwas, observations and recommendations.
Further, every year, Shariah Board Report is also presented by the Shariah Board in the meeting of the Board
of Directors of the Bank.
TORs of Shariah Board (SB) of the Bank
• The SB shall be empowered to consider, decide and supervise all Shariah related matters of Islamic
Banking Division. All decisions, rulings, Fatwas of the SB shall be binding on Islamic Banking Division
whereas SB shall be responsible and accountable for all its Shariah related decisions.
• The SB shall cause to develop a comprehensive Shariah compliance framework for all areas of operations
of the Islamic Banking Division and shall approve all products/services to be offered and/or launched by
the Islamic Banking Division.
• The SB shall review and approve all the Islamic Banking Division’s procedure manuals, product
programs/structures, process flows, related agreements, marketing advertisements, sales illustrations
and brochures so that they are in conformity with the rules and principles of Shariah.
• The SB shall have at all reasonable times unhindered access to all books of accounts, records, documents
and information from all sources including professional advisors and Bank’s employees in the due discharge
of its duties.
• Considering the importance of the SB decisions, rulings and Fatwas given by SB, it shall rigorously
deliberate on the issue placed before it for consideration before giving any decision/ Fatwa. All such
deliberations and rationale for allowing or disallowing a particular product or service shall be duly recorded
and documented.
• All reports of internal Shariah audit, external Shariah audit, Shariah compliance reviews and SBP Shariah
compliance inspection shall be submitted to the SB for consideration and prescribing appropriate
enforcement action. The report of Internal Shariah shall be finalized by the Internal Shariah Audit Unit
(ISAU) and the final report shall be submitted to SB for prescribing appropriate enforcement/corrective
actions. The SB shall take up the unresolved issues with Management and shall include all significant
outstanding issues in its annual report on the Shariah compliance environment of Islamic Banking Division.
Moreover, the Head-Shariah Compliance Department and RSBM shall discuss both the significant and
unresolved issues with SBP inspection team during their onsite inspection.
• The SB shall also specify the process/procedures for changing, modifying or revisiting
Fatwas/rulings/guidelines etc. already issued by SB.
• The SB shall not delegate any of its roles and responsibilities prescribed in Shariah Governance Framework
(updated time to time) to any other person or any of its members.
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• All the decisions and rulings of the SB of the Bank shall be in conformity with the directives, regulations,
instructions and guidelines issued by SBP in accordance with the rulings of Shariah Advisory Committee
of SBP.
• The SB shall, in addition to its meetings with the BOD, meet at least on quarterly basis and each member
of SB shall attend at least two-thirds of the meetings during a calendar year. Further, in addition to the
mandatory quarterly meeting, the Chairperson of SB may convene SB meetings as and when he deems
it necessary.
• The quorum of the SB meetings, including that with BOD of the Bank, shall be at least two thirds of
Shariah Board members.
• The SB decisions should preferably be made through consensus of the Shariah Board members; however,
in case of difference of opinion, the decisions may be made by a majority vote of the Shariah Board
members. In the event of equality of votes, the Chairman shall have a second or casting vote.
• All meetings shall be chaired by the Chairman of SB and in his absence one of the Shariah Board
members, other than the RSBM, shall be elected as the acting Chairperson to preside over the meeting.
• The agenda of the SB meeting along with sufficient details and documents shall be sent to SB members
well in advance enabling them to come prepared to the meeting; the specific timelines for submission
of the agenda shall be set by the SB itself.
• The meetings of the SB shall be held by physical presence of the members. However, in appropriate
circumstances to be determined by the Chairman of the SB, meeting(s) may be held through video
conferencing subject to recording of proper minutes of the meeting.
• The SB shall ensure to cause that minutes of its meetings are properly recorded incorporating necessary
details of all deliberations, decisions, rulings and Fatwas issued along with the rationale and difference
of opinion or dissenting note, if any. Further, the minutes shall be signed by all the SB members who
attended the meeting and a copy thereof be provided to each member of the SB.
• All SB approvals taken through circulation shall be placed for ratification of the SB at its next meeting.
A resolution in writing signed by all SB members for the time being and shall be as valid and effective
as if it had been ratified at a SB meeting.
• For implementation of the decisions of SB meeting prior to the confirmation of the minutes of the meeting,
the approval/ confirmation of the relevant resolution / decision for the specific agenda must be obtained
from SB through written consent duly signed by the SB members or through email by the SB members.
However, the same shall be ratified in the subsequent meeting of SB.
• The approved / confirmed minutes of meetings of the SB shall be submitted to IBD-SBP within 15 days
of its approval/confirmation for information and record. Further, the minutes shall be made available to
the BOD, SBP inspection teams, internal auditors and external auditors on request, enabling them to
appreciate and understand the rationale and background of the SB rulings, decisions and fatawa.
• The SB shall, based on the findings and reports of internal Shariah audit and external Shariah audit and
Shariah compliance review, prepare a report on Islamic Banking Division’s Shariah compliance environment
and conditions. The minimum requirements for the report shall be as per prescribed Annexure – B of
Shariah Governance Framework. The report shall be signed by all the members of the SB. Further,
the report shall also be placed before the BOD meeting for discussion and shall be published in English
and Urdu translation in the Bank’s annual report.
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Shariah Board Meetings
During the year, four meetings of the Shariah Board were held and the attendance of each member was as
follows:
Name of Member Meetings Held Meetings Attended
Mufti Ismatullah Hamdullah, Chairman 4 4
Mufti Mohib ul Haq, Member 4 4
Mufti Muhammad Sarfaraz Nihal, Outgoing Resident Member * 4 2
Mufti Sher Ali, Resident Member ** 4 2
Mufti Muhammad Hamza, Member ** 4 1

* Mufti Muhammad Sarfaraz Nihal ceased to be the members of the Shariah Board. He attended all Shariah Board
meeting while he was a member.
** Mufti Sher Ali and Mufti Muhammad Hamza attended all meetings after they become Shariah Board member.
The Bank had engaged KPMG Taseer Hadi & Co. to assist in developing the draft of remuneration policy,
keeping in view the culture and values of the Bank, and other related matters.
Additionally, performance evaluation of the Board is to be conducted by an external independent evaluator
at least every three years. The Bank has appointed Pakistan Institute of Corporate Governance (PICG) for
external independent evaluation of the full Board, Individual Directors, Board Committees, the Chairman,
and the Chief Executive.
There is no conflict of interest between the experts hired by the Bank and any Board member or Key Executive.
Disclosure relating to the Remuneration Policy:
Key objectives of Remuneration Policy are to:
• Attract, retain, and develop competent employees.
• Identify senior Risk Takers and Controllers.
• Offer remuneration that is fair and competitive.
• Encourage behaviour and practices, consistent with the Bank’s Strategy, Vision, Mission, Values, and
Guiding Principles.
• Discourage material risk taking.
• Avoid any conflict of interest between the employee and the Bank.
• Establish a management structure to administer and oversee implementation of this Policy.
Bank AL Habib has low tolerance for risk and is averse to taking material risks, i.e., risks that can have a
material adverse impact on its business and financial position. Therefore, the Bank does not have any defined
Bonus Policy (in any form like cash, stocks, stock options, or other types of incentive pay) to incentivise
achievement of performance targets, which may prompt material risk taking. Accordingly, a fundamental
principle of the Bank is that employee remuneration is paid in the form of Fixed Remuneration. This has
enabled the Bank to maintain sustainable growth and profitability over the years, with a low risk profile and
low staff turnover.
There are management committees/senior employees who are authorized to approve risk exposures involving
large amounts and deal with other institutionally important matters. They are designated as Senior Risk
Takers, who are responsible not only for taking risks, but also for mitigating, monitoring, and controlling the
risks taken by the Bank. The Bank encourages and emphasizes risk control, rather than risk taking, which
means that control responsibilities take precedence for employees at all levels. Therefore, in case of Senior
Risk Takers also, their control responsibilities are paramount and take precedence over their other
responsibilities.
26
Risk Controllers are employees whose professional activities include review, identification, mitigation, and
control of risks to which the Bank may be exposed, or providing assistance or assurance related to such
activities. Risk control is the responsibility of all functional units of the Bank, including various functions at
Principal Office who provide input to line functions on risk management and control, assist them in designing
and implementing adequate controls, and independently monitor that the prescribed controls and limits are
being complied with.
It is a key principle of employee appraisal that employees must not get penalized or suffer as a consequence
of carrying out control activities for which they are institutionally responsible and duly authorized. Any deviation
from this principle will be taken very seriously.
Key criteria for evaluation of performance are as follows:
• Compliance with applicable laws and regulations.

• Commitment to the Bank’s Vision, Mission, and Values.
• Compliance with the Bank’s risk and control policies, procedures, and limits.
• Behaviour with customers and colleagues.
• Knowledge and quality of work.
• New ideas and suggestions.
• Growth of business and profitability vs. business objectives (as applicable).
• Persistence and productivity.
• Job performance.
• Teamwork and People Development.
Fixed Remuneration is determined on the basis of role and responsibility of the individual, professional
expertise and experience, job performance, and potential for growth. In addition, all employees of the Bank
are required to carry out their duties with due care and in an ethical manner. They must act in accordance
with the Bank’s Strategy, Vision, Mission, Values, Guiding Principles, Code of Conduct, Policies and
Procedures, within the authorities and limits delegated to them. This means that protection of the Bank’s
reputation, trustworthiness, and safety is of paramount importance and takes precedence over profit
maximization.
Risk management policies, together with the Risk Tolerance Statement, authorities, and limits approved by
the Board, provide the necessary guidance on risk taking activities of the Bank. Actions taken and decisions
made by the employees are institutionally owned and protected by the Bank, as long as these are within the
ambit of the prescribed policies and procedures and there is no evidence of self-dealing.
Governance of remuneration is accomplished through a formal structure which includes: Board of Directors;
Human Resource & Remuneration Committee; Chief Executive; Human Resource Division; and Finance,
Audit, Compliance, and Risk Management Divisions.
27
STATEMENT OF COMPLIANCE WITH LISTED COMPANIES
(CODE OF CORPORATE GOVERNANCE) REGULATIONS, 2019
FOR THE YEAR ENDED DECEMBER 31, 2021

The Bank has complied with the requirements of the Regulations in the following manner:
1. The total number of Directors are ten as per the following:
• Male 09
• Female 01
2. The composition of the Board is as follows:

Independent Directors Mr. Arshad Nasar
Mr. Safar Ali Lakhani
Mr. Abbas D. Habib
Mr. Anwar Haji Karim
Non - Executive Directors Syed Mazhar Abbas
Mr. Murtaza H. Habib
Mr. Adnan Afridi
Executive Director Mr. Qumail R. Habib
Female Director - Non - Executive Ms. Farhana Mowjee Khan
The Bank has Ten (10) elected Directors. The Independent Directors’ fraction of 0.33 is below half
(0.50) and accordingly, the same has not been rounded up as one.
Mr. Mansoor Ali Khan is the Chief Executive of the Bank. Being the CEO of the Bank, he is deemed
to be a Director.
3. The directors have confirmed that none of them is serving as a director on more than seven listed
companies, including the Bank.
4. The Bank has prepared a Code of Conduct and has ensured that appropriate steps have been taken
to disseminate it throughout the Bank along with its supporting policies and procedures.
5. The Board has developed a vision / mission statement, overall corporate strategy and significant policies
of the Bank. The Board has ensured that complete record of particulars of significant policies along
with their date of approval or updating is maintained by the Bank.
6. All the powers of the Board have been duly exercised and decisions on relevant matters have been
taken by Board / Shareholders as empowered by the relevant provisions of the Act and these regulations.
7. The meetings of the Board were presided over by the Chairman. The Board has complied with the
requirements of the Act and the Regulations with respect to frequency, recording and circulating minutes
of meeting of Board.
8. The Board have a formal policy and transparent procedures for remuneration of Directors in accordance
with the Act and these Regulations.
9. The Bank is compliant with the requirement of Directors’ Training Program provided in these Regulations.
Directors have either attended the required training in prior years or stand exempted, as per criteria
mentioned in the Code.
10. The Board has approved appointment of Chief Financial Officer, Company Secretary and Head of
Internal Audit, including their remuneration and terms and conditions of employment and complied with
relevant requirements of the Regulations.
11. Chief Financial Officer and Chief Executive Officer duly endorsed the financial statements before
approval of the Board.
28
12. The Board has formed six committees comprising of members given below:
A. Audit Committee Position

1 Mr. Safar Ali Lakhani Chairman
2 Syed Mazhar Abbas Member
3 Mr. Anwar Haji Karim Member
4 Syed Hasan Ali Bukhari Member
5 Mr. Arshad Nasar Member
B. Human Resource & Remuneration Committee Position

1 Syed Hasan Ali Bukhari Chairman
3 Mr. Abbas D. Habib Member
4 Ms. Farhana Mowjee Khan Member
C. Credit Risk Management Committee Position

1 Syed Mazhar Abbas Chairman
2 Mr. Safar Ali Lakhani Member
3 Mr. Qumail R. Habib Member
4 Syed Hasan Ali Bukhari Member
5 Mr. Murtaza H. Habib Member
D. Risk Management Committee Position

1 Mr. Adnan Afridi Chairman
3 Ms. Farhana Mowjee Khan Member
4 Mr. Anwar Haji Karim Member
5 Mr. Safar Ali Lakhani Member
E. IT Committee Position
1 Mr. Abbas D. Habib Chairman
5 Mr. Mansoor Ali Khan Member
29
F. IFRS 9 Committee Position
1 Syed Hasan Ali Bukhari Chairman
13. The terms of reference of the aforesaid committees have been formed, documented, and advised to
the committees for compliance.
14. The frequency of meetings of Board’s Committees were as per following:
Board’s Committees Frequency

Audit Committee Eight meetings held in the year
Human Resource & Remuneration Committee Four meetings held in the year
Credit Risk Management Committee Four meetings held in the year
Risk Management Committee Four meetings held in the year
IT Committee Four meetings held in the year
IFRS 9 Committee Four meetings held in the year
15. The Bank has an effective internal audit division that is manned by suitably qualified and experienced
personnel. The audit team is conversant with the policies and procedures of the Bank.
16. 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 and registered
with Audit Oversight Board of Pakistan, that they and all their partners are in compliance with International
Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered
Accountants of Pakistan and that they and the partners of the firm involved in the audit are not a close
relative (spouse, parent, dependent and non-dependent children) of the Chief Executive Officer, Chief
Financial Officer, Head of Internal Audit, Company Secretary or Director of the Bank.
17. The statutory auditors or the persons associated with them have not been appointed to provide other
services except in accordance with the Act, these regulations or any other regulatory requirement and
the auditors have confirmed that they have observed IFAC guidelines in this regard.
18. We confirm that all requirements of regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the Regulations have
been complied with.

Board of Directors
30
INDEPENDENT AUDITORS’ REVIEW REPORT
To the members of Bank AL Habib Limited
Review Report on the Statement of Compliance contained in Listed Companies (Code of

Corporate Governance) Regulations, 2019
We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of
Corporate Governance) Regulations, 2019 (the Regulations) prepared by the Board of Directors
of Bank AL Habib Limited (the Bank) for the year ended 31 December 2021 in accordance with
the requirements of regulation 36 of the Regulations.
The responsibility for compliance with the Regulations is that of the Board of Directors of the bank.
Our responsibility is to review whether the Statement of Compliance reflects the status of the
Bank’s compliance with the provisions of the Regulations and report if it does not and to highlight
any non-compliance with the requirements of the Regulations. 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 Regulations.
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 Regulations require 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, its
related party transactions. We are only required and have ensured compliance of this requirement
to the extent of the approval of the related party transactions by the Board of Directors upon
recommendation of the Audit Committee.
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 requirements contained in the Regulations as applicable to the Bank for the
year ended 31 December 2021.
EY Ford Rhodes
Karachi: February 28, 2022 Chartered Accountants
UDIN: CR202110191Qim2cJzDL
31
STATEMENT ON INTERNAL CONTROLS
The Management of the Bank is responsible for establishing the Internal Control System with the main
objectives of ensuring effectiveness and efficiency of operations; reliability of financial reporting;
safeguarding of assets; and compliance with applicable laws and regulations. The Internal Control System
has evolved over the years, as it is an ongoing process and is included in the Bank’s policies, procedures,
financial limits, etc., as detailed in various manuals, circulars and instructions issued by the Bank. This
system continues to be reviewed, refined and improved from time to time and immediate corrective action
is taken to minimize risks which are inherent in banking business and operations.
The Internal Control System is reviewed by the Internal Auditors as well as External Auditors and their
findings and recommendations are reported to the management and to the Audit Committee of the Board,
and corrective action is taken to address control deficiencies and for improving procedures and systems as
they are identified. The Board, acting through the Audit Committee, provides supervision and overall
guidance in improving the effectiveness of the Internal Control System.
While the Internal Control System is effectively implemented and monitored, there are inherent limitations
in the effectiveness of any system, including the possibility of human error or system failure and
circumvention or overriding of controls. Accordingly, even an effective Internal Control System can only
provide reasonable but not absolute assurance that the system’s objectives will be achieved.
Internal Control over Financial Reporting (ICFR) aims to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with the applicable financial reporting standards. During the year, Internal Auditors tested the
Bank’s ICFR and reported their findings to the management and the Audit Committee of the Board. While
no material deficiencies were detected, indicating that ICFR is effectively implemented in the Bank, it may
be reiterated that any control system can provide reasonable but not absolute assurance that its objectives
will be achieved.
In accordance with the State Bank of Pakistan (SBP) directives, the Bank has completed all the stages of
ICFR. Upon satisfactory completion of ICFR roadmap, the Bank has been granted exemption by SBP from
the requirement of submission of Long Form Report by the External Auditors.
The Bank has endeavored to follow the guidelines issued by SBP on internal controls. Updation and review
of ICFR exercise for the year 2021 as per SBP Guidelines on Internal Controls has been successfully
completed. In accordance with SBP directives, the annual assessment report for the year 2021 is being
prepared. Evaluation and management of significant risks is an on-going process and we will make further
efforts to improve our Internal Control System during 2022.
ASHAR HUSAIN ARIF SAEED KHAN

Chief Financial Officer Head of Internal Audit

BOARD OF DIRECTORS’ REMARKS ON THE
MANAGEMENT’S EVALUATION OF INTERNAL CONTROLS
Keeping in view the feedback received by the Board of Directors from the Audit Committee and the
management, the Board of Directors endorse management’s evaluation of Internal Controls, including
Internal Control over Financial Reporting.
On behalf of the Board of Directors
ABBAS D. HABIB
Chairman
Karachi: February 09, 2022 Board of Directors
32
INDEPENDENT AUDITORS’ REPORT
To the members of Bank AL Habib Limited
Report on the Audit of the Financial Statements
Opinion
We have audited the annexed unconsolidated financial statements of Bank Al Habib Limited, which comprise
the unconsolidated statement of financial position as at 31 December 2021, and the unconsolidated profit and
loss account and the unconsolidated statement of comprehensive income, the unconsolidated statement of
changes in equity and the unconsolidated cash flows statement for the year then ended, along with unaudited
certified returns received from the branches except for thirty branches which have been audited by us and
notes to the financial statements, including a summary of significant accounting policies and other explanatory
information 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 the audit.
In our opinion and to the best of our information and according to the explanations given to us, the unconsolidated
statement of financial position, unconsolidated statement of profit and loss and the unconsolidated statement
of comprehensive income, unconsolidated statement of changes in equity and unconsolidated cash flow
statement together with the notes forming part thereof conform with the accounting and reporting standards
as applicable in Pakistan, and give the information required by the Banking Companies Ordinance, 1962 and
the Companies Act, 2017(XIX of 2017), in the manner so required and respectively give a true and fair view
of the state of the Bank’s affairs as at 31 December 2021 and of the profit and other comprehensive income,
the changes in equity and its cash flows for the year then ended.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan.
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report. We are independent of the Bank in accordance with the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted
by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical
responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
33
Following is the key audit matter:
Key audit matter How the matter was addressed in our audit
1. Provision against non-performing loans and advances
The Bank’s advances portfolio represents 39.67% We applied a range of audit procedures including
of its total assets as of 31 December 2021. A the following:
substantial portion of the advances portfolio include
corporate finances to public sector entities and - We reviewed the Bank’s process for identification
large to small size businesses operating in diverse and classification of non-performing advances.
sectors of the economy. As part of such review we performed an analysis
of the changes within the different categories of
As per the Bank’s accounting policy (refer note 4.4 classified non-performing accounts from last
to the unconsolidated financial statements), the year to the current reporting date. This analysis
Bank determines provisions against non-performing
was used to gather audit evidence regarding
advances exposures in accordance with the
requirements of Prudential Regulations of State downgrading of impaired advances and
Bank of Pakistan (SBP) and also maintains general declassification of accounts from non-performing
provision in respect of potential credit losses in the to regular and vice versa, as the case may be.
portfolio. The Prudential Regulations require specific
provisioning for loan losses on the basis of an - We performed independent checks on test basis
age-based criteria which should be supplemented for the computations of provisions to assess that
by a subjective evaluation of Bank’s credit portfolio. the same is in line with the requirements of the
The determination of loan loss provision therefore, applicable Prudential Regulations;
involve use of management judgment, on a case
to case basis, taking into account factors such as - In addition, we selected a representative sample
the economic and business conditions, borrowers of borrowers from the advances portfolios
repayment behaviors and realizability of collateral including individually significant credit facilities
held by the Bank. and performed tests and procedures such as
review of credit documentation, repayment
In view of the significance of this area in terms of history and past due status, financial condition
its impact on the unconsolidated financial as depicted by the borrowers’ financial
statements and the level of involvement of
statements, nature of collateral held by the Bank
management’s judgment, we identified adequacy
and completeness of provision against advances and status of litigation, if any, with the borrower;
as a significant area of audit judgment and a key
audit matter. - In respect of the level of general provision
maintained by the Bank, we discussed the
The accounting policy and disclosures relating to approach and policy followed by the Bank with
provisioning against non- performing advances are the management and the regulatory approvals
included in note 4.4 and 9 respectively to the in place for such policy.
unconsolidated financial statements.
- We also assessed adequacy of disclosures as
included in note 9 to the unconsolidated financial
statements regarding the non-performing
advances and provisions made for the same in
the unconsolidated financial statements in
accordance with the requirements of the
applicable financial reporting framework.
34
Information Other than the Financial Statements and Auditors’ Report Thereon
Management is responsible for the other information. The other information comprises the information
included in the Annual Report, but does not include the financial statements and our auditors’ report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and the Board of Directors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with accounting and reporting standards as applicable in Pakistan, the requirements of Banking Companies
Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017) and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Bank’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has
no realistic alternative but to do so.
The Board of directors is responsible for overseeing the Bank’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Bank’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
35
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Bank to cease to continue as a going
concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide to the Board of Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Based on our audit, we further report that in our opinion:
a) proper books of account have been kept by the Bank as required by the Companies Act, 2017 (XIX
of 2017) and the returns referred above from the branches have been found adequate for the purpose
of our audit;
b) the statement of financial position, the statement of profit or loss, the statement of comprehensive
income, statement of changes in equity and cash flow statement (together with the notes thereon have
been drawn up in conformity with the Banking Companies Ordinance, 1962 and the Companies Act,
2017(XIX of 2017) and are in agreement with the books of account and returns;
c) investments made, expenditure incurred and guarantees extended during the year were in accordance
with the objects and powers of the Bank and the transactions of the Bank which have come to our
notice have been within the powers of the Bank; and
d) 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.
2. We confirm that for the purpose of our audit we have covered more than sixty per cent of the total
loans and advances of the Bank.
The engagement partner on the audit resulting in this independent auditors’ report is Arslan Khalid.
EY Ford Rhodes
UDIN: AR202110191SEBrPfL8y
36
UNCONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
Note 2021 2020
(Rupees in '000)
ASSETS
Cash and balances with treasury banks 5 118,599,741 105,935,947

Balances with other banks 6 6,740,008 19,662,515
Lendings to financial institutions 7 20,063,828 2,175,301
Investments 8 826,599,884 764,943,506
Advances 9 733,799,311 510,251,632
Fixed assets 10 55,692,777 43,967,993
Intangible assets 11 268,246 211,111
Deferred tax assets 12 2,074,828 –000
Other assets 13 85,813,497 74,943,322
1,849,652,120 1,522,091,327
LIABILITIES
Bills payable 15 29,803,755 31,013,221

Borrowings 16 302,212,902 211,599,405
Deposits and other accounts 17 1,309,823,329 1,099,686,361
Liabilities against assets subject to finance lease –000 –000
Subordinated debt 18 15,995,200 14,989,600
Deferred tax liabilities 12 –000 176,751
Other liabilities 19 101,801,886 84,769,613
1,759,637,072 1,442,234,951
NET ASSETS 90,015,048 79,856,376
REPRESENTED BY
Share capital 20 11,114,254 11,114,254

Reserves 20,656,466 18,431,277
Surplus on revaluation of assets 21 6,446,259 10,286,484
Unappropriated profit 51,798,069 40,024,361
90,015,048 79,856,376
CONTINGENCIES AND COMMITMENTS 22
The annexed notes 1 to 47 and annexures I and II form an integral part of these unconsolidated financial statements.
MANSOOR ALI KHAN ASHAR HUSAIN

Chief Executive Chief Financial Officer
SYED HASAN ALI BUKHARI ANWAR HAJI KARIM ABBAS D. HABIB

Director Director Chairman
37
UNCONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2021
Note 2021 2020

(Rupees in '000)
Mark-up / return / interest earned 24 116,752,195 125,272,587

Mark-up / return / interest expensed 25 (61,143,480) (67,652,611)
Net mark-up / interest income 55,608,715 57,619,976
NON MARK - UP / INTEREST INCOME
Fee and commission income 26 9,304,850 6,636,244
Dividend income 655,075 486,008
Foreign exchange income 2,969,917 2,142,728
Income / (loss) from derivatives –00 –00
(Loss) / gain on securities-net 27 (41,146) 185,622
Other income 28 1,138,321 780,255
Total non mark-up / interest income 14,027,017 10,230,857
Total income 69,635,732 67,850,833
NON MARK-UP / INTEREST EXPENSES

Operating expenses 29 (38,753,850) (33,997,952)
Workers welfare fund (620,060) (671,716)
Other charges 30 (36,294) (56,672)
Total non mark-up / interest expenses (39,410,204) (34,726,340)
Profit before provisions 30,225,528 33,124,493
Reversals / (provisions) and write offs-net 31 47,260 (4,543,429)
Extra ordinary / unusual items –00 –00
PROFIT BEFORE TAXATION 30,272,788 28,581,064
Taxation 32 (11,570,489) (10,769,528)
PROFIT AFTER TAXATION 18,702,299 17,811,536
(Rupees)
Basic and diluted earnings per share 33 16.83 16.03


38
UNCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2021 2020
(Rupees in '000)
Profit after taxation for the year 18,702,299 17,811,536
Other comprehensive income
Items that may be reclassified to profit and loss account

in subsequent periods:
Effect of translation of net investment in foreign branches 533,555 182,841

Movement in (deficit) / surplus on revaluation of investments
- net of tax (3,419,883 ) 1,222,568
(2,886,328 ) 1,405,409
Items that will not be reclassified to profit and loss account

Remeasurement loss on defined benefit

obligations-net of tax (177,387 ) (128,275)
Movement in surplus on revaluation of operating
fixed assets-net of tax (260,923 ) 3,056,238
Movement in surplus on revaluation of non banking
assets-net of tax (38,979 ) 98,346
(477,289 ) 3,026,309
Total comprehensive income 15,338,682 22,243,254


39
UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Revenue Reserves Surplus / (deficit) on revaluation of
Share Statutory Foreign Currency Special General Investments Fixed / Non Unappropriated Total
Capital Reserve Translation Reserve Reserve Banking Assets Profit
Reserve
(Rupees in '000)
Balance as at 01 January 2020 11,114,254 13,859,667 1,941,115 126,500 540,000 1,538,874 4,474,942 27,907,758 61,503,110
Profit after taxation –00 –00 –00 –00 –00 –00 –00 17,811,536 17,811,536
Other comprehensive income - net of tax –00 –00 182,841 –00 –00 1,222,568 3,154,584 (128,275 ) 4,431,718
Total comprehensive income for the year –00 –00 182,841 –00 –00 1,222,568 3,154,584 17,683,261 22,243,254
Transfer to statutory reserve –00 1,781,154 –00 –00 –00 –00 –00 (1,781,154 ) –00
Transfer from surplus on revaluation of

assets to unappropriated profit - net of tax –00 –00 –00 –00 –00 –00 (104,484 ) 104,484 –00
Transactions with owners, recorded directly in equity

Final cash dividend (Rs. 3.5 per share) –00 –00 –00 –00 –00 –00 –00 (3,889,988 ) (3,889,988 )
Balance as at 31 December 2020 11,114,254 15,640,821 2,123,956 126,500 540,000 2,761,442 7,525,042 40,024,361 79,856,376
Profit after taxation –00 –00 –00 –00 –00 –00 –00 18,702,299 18,702,299
Other comprehensive income - net of tax –00 –00 533,555 –00 –00 (3,419,883 ) (299,902 ) (177,387 ) (3,363,617 )
Total comprehensive income for the year –00 –00 533,555 –00 –00 (3,419,883 ) (299,902 ) 18,524,912 15,338,682
Transfer to statutory reserve –00 1,870,230 –00 –00 –00 –00 –00 (1,870,230 ) –00

assets to unappropriated profit - net of tax –00 –00 –00 –00 –00 –00 (120,440 ) 120,440 –00
Exchange gain realised on closure of overseas

branch - net of tax –00 –00 (178,596) –00 –00 –00 –00 –00 (178,596 )
Transaction with owners, recorded directly in equity
Final cash dividend (Rs. 4.5 per share) –00 –00 –00 –00 –00 –00 –00 (5,001,414 ) (5,001,414 )
Balance as at 31 December 2021 11,114,254 17,511,051 2,478,915 126,500 540,000 (658,441 ) 7,104,700 51,798,069 90,015,048


40
UNCONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021 Note 2021 2020
(Rupees in '000)
CASH FLOW FROM OPERATING ACTIVITIES
Profit before taxation 30,272,788 28,581,064
Less: Dividend income (655,075) (486,008 )
29,617,713 28,095,056
Adjustments:
Depreciation 2,962,305 2,787,181
Depreciation on right-of-use assets 1,854,453 1,661,393
Amortisation 306,880 287,387
(Reversals) / provisions and write - offs - net 31 (47,260) 4,543,429
Gain on sale of fixed assets - net (460,918) (437,189 )
Loss / (gain) on sale / redemption of securities - net 41,146 (185,622 )
Charge for compensated absences 155,639 247,041
Mark-up expense on lease liability against right-of-use assets 1,124,704 956,906
Exchange gain realised on closure of overseas branch (292,780) –
5,644,169 9,860,526
35,261,882 37,955,582
(Increase) / decrease in operating assets
Lendings to financial institutions (17,888,527) (317,726 )
Held - for - trading securities 656 (85,792 )
Advances (223,754,717) (24,572,057 )
Other assets (10,885,386) (13,843,443 )
(252,527,974) (38,819,018 )
(Decrease) / increase in operating liabilities
Bills payable (1,209,466) 10,844,548
Borrowings from financial institutions 90,451,133 (16,439,509 )
Deposits and other accounts 210,136,968 195,983,579
Other liabilities (excluding current taxation) 13,479,937 13,405,228
312,858,572 203,793,846
95,592,480 202,930,410
Income tax paid (10,511,307) (12,095,087 )
Net cash flow generated from operating activities 85,081,173 190,835,323
CASH FLOW FROM INVESTING ACTIVITIES
Net investments in available-for-sale securities (49,058,361) (160,952,824)
Net investments in held-to-maturity securities (11,978,746) (15,538,169)
Net investments in associates (5,710,108) (890,390)
Investment in subsidiary – (683,250)
Dividends received 666,539 471,651
Investments in operating fixed assets (14,072,244) (5,262,480)
Proceeds from sale of fixed assets 436,082 596,045
Exchange differences on translation of net investment in foreign branches 354,959 182,841
Net cash flow used in investing activities (79,361,879) (182,076,576)
CASH FLOW FROM FINANCING ACTIVITIES

Receipts / (payments) of subordinated debt-net 1,005,600 (3,200)
Dividend paid (4,930,117) (3,841,582)
Payment against lease liabilities (2,215,854) (1,972,143)
Net cash flow used in financing activities (6,140,371) (5,816,925)
(Decrease) / increase in cash and cash equivalents (421,077) 2,941,822
Cash and cash equivalents at beginning of the year 34 125,400,165 122,458,343
Cash and cash equivalents at end of the year 34 124,979,088 125,400,165


41
NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS
1. STATUS AND NATURE OF BUSINESS

Bank AL Habib Limited (the Bank) is a banking company incorporated in Pakistan on 15 October 1991 as
a public limited company under repealed Companies Ordinance, 1984 (now the Companies Act, 2017)
having its registered office at 126-C, Old Bahawalpur Road, Multan with principal place of business in
Karachi. Its shares are listed on Pakistan Stock Exchange Limited. It is a scheduled bank principally
engaged in the business of commercial banking with a network of 927 branches (2020: 818 branches), 29
sub-branches (2020: 32 sub-branches), 04 representative offices (2020: 04 representative offices) and 03
booths (2020: 02 booths). The branch network of the Bank includes 02 overseas branches (2020: 03
overseas branches) and 138 Islamic Banking branches (2020: 106 Islamic Banking branches). During the
year, the Bank closed its branch in Seychelles.
2. BASIS OF PRESENTATION
2.1 These unconsolidated financial statements have been prepared in conformity with the format of financial
statements prescribed by the State Bank of Pakistan (SBP) vide BPRD Circular No. 02, dated 25 January
2018.
2.2 In accordance with the directives of the Federal Government regarding the shifting of the banking system
to Islamic modes, SBP has issued various circulars from time to time. Permissible forms of trade-related
modes of financing includes purchase of goods by banks from customers and immediate resale to them at
appropriate mark-up in price on deferred payment basis. The purchase and resale arising under these
arrangements are not reflected in these unconsolidated financial statements as such, but are restricted to
the amount of facility actually utilised and the appropriate portion of mark-up thereon. However, the Islamic
Banking branches of the Bank have complied with the requirements set out under the Islamic Financial
Accounting Standards (IFAS), issued by the Institute of Chartered Accountants of Pakistan (ICAP) as are
notified under the provisions of the Companies Act, 2017.
2.3 Key financial information of the Islamic Banking branches is disclosed in annexure II to these
2.4 These are separate financial statements of the Bank in which investments in subsidiaries and associates
are stated at cost less provision for impairment, if any and are not consolidated or accounted for by using
equity method of accounting.
2.5 The Bank believes that there is no significant doubt on the Bank’s ability to continue as a going concern.
Therefore, the unconsolidated financial statements continue to be prepared on the going concern basis.
2.6 Statement of compliance
2.6.1 These unconsolidated financial statements have been prepared in accordance with the accounting and
reporting standards as applicable in Pakistan. The accounting and reporting standards comprise of:
- International Financial Reporting Standards (IFRS) issued by the International Accounting Standards
Board (IASB) as are notified under the Companies Act, 2017;
- IFAS issued by ICAP, as are notified under the Companies Act, 2017;
- Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the
Companies Act, 2017; and
- Directives issued by SBP and the Securities and Exchange Commission of Pakistan (SECP).
Whenever the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 or the
directives issued by SBP and SECP differ with the requirements of the IFRS or IFAS, requirements of the
Banking Companies Ordinance, 1962, the Companies Act, 2017 and the said directives shall prevail.
42
2.6.2 SBP has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments:
Recognition and Measurement' and IAS 40, 'Investment Property' for Banking Companies in Pakistan
through BSD Circular Letter No. 10 dated 26 August 2002 till further instructions. Further, SBP vide its
BPRD Circular Letter No. 24 of 2021 dated 05 July 2021 directed the banks in Pakistan to implement IFRS
9, 'Financial Instruments' with effect from 01 January 2022. SECP has deferred the applicability of IFRS 7,
'Financial Instruments: Disclosures' through its notification S.R.O 411 (I) / 2008 dated 28 April 2008.
Accordingly, the requirements of these standards have not been considered in the preparation of these
unconsolidated financial statements. However, investments have been classified and valued in accordance
with the requirements prescribed by SBP through various circulars. In case of overseas branches, IFRS 9
/ respective foreign regulatory requirements are considered for recording, classification and valuation of
investment.
2.6.3 SBP vide its BPRD Circular No. 04 dated 25 February 2015, has clarified that the reporting requirements
of IFAS 3, 'Profit and Loss Sharing on Deposits' for Islamic Banking Institutions (IBIs) relating to annual, half
yearly and quarterly financial statements would be notified by SBP though issuance of specific instructions
and uniform disclosure formats in consultation with IBIs. These reporting requirements have not been
ratified to date. Accordingly, the disclosure requirements under IFAS 3 have not been considered in the
preparation of these unconsolidated financial statements.
2.6.4 IFRS 10, 'Consolidated Financial Statements' was made applicable from period beginning on or after 01
January 2015 vide S.R.O 633 (I) / 2014 dated 10 July 2014 by SECP. However, SECP has directed
through S.R.O 56 (I) / 2016 dated 28 January 2016 that the requirement of consolidation under section 228
of the Companies Act, 2017 and IFRS 10, 'Consolidated Financial Statements' is not applicable incase of
investment by companies in mutual funds established under trust structure.
2.7 Standards, interpretations of and amendments to published approved accounting standards that
are effective in the current year
The Bank has adopted the following accounting standards, interpretations and amendments of IFRSs and
the improvements to accounting standards which became effective for the current year:
COVID-19-Related Rent Concessions - Amendment to IFRS 16
The IASB has issued amendments to IFRS 16 (the amendments) to provide optional practical relief for
lessees in accounting for rent concessions. Under the practical expedient, lessees are not required to
assess whether eligible rent concessions are lease modifications, and instead are permitted to account for
them as if they were not lease modifications. The practical expedient applies only to rent concessions
occurring as a direct consequence of the COVID-19 pandemic and only if all the conditions described in
IFRS 16 paragraph 46B are met.
Interest Rate Benchmark Reform - Phase 2 - Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16
The amendments provide temporary reliefs which address the financial reporting effects when an interbank
offered rate (IBOR) is replaced with an alternative nearly risk-free mark-up rate (RFR).
The above mentioned accounting standards and amendments of IFRSs did not have any material impact
on the unconsolidated financial statements of the Bank.
are not yet effective
2.8.1 IFRS 9, 'Financial Instruments'
IFRS 9, 'Financial Instruments' - IFRS 9 will replace 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. It
43
also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39.
SBP vide its BPRD Circular Letter No. 24 of 2021 dated July 05, 2021 has extended the implementation
date of IFRS 9 to January 01, 2022 from an earlier implementation date of January 01, 2021. However,
SBP has directed the banks in Pakistan to submit IFRS 9 parallel run and proforma financial statements on
periodic basis based on the instructions issued by SBP for parallel run of IFRS 9 and the Bank has been
complying with these requirements.
2.8.2 Further, the following IFRS as notified under the Companies Act, 2017 and the amendments thereto
will be effective for future periods and not early adopted:
Standards and amendments Effective date (accounting periods
beginning on or after)
- IAS 37 - Onerous Contracts – Cost of Fulfilling a Contract (Amendments) January 01, 2022
- IAS 16 - Property, Plant and Equipment: Proceeds before Intended Use
(Amendments) January 01, 2022
- IFRS 3 - Reference to the Conceptual Framework January 01, 2022
- IAS 1 - Classification of liabilities as current or non-current (Amendments) January 01, 2022
- IFRS 9 - Financial Instruments - Fees in the '10 percent' test for derecognition
of financial liabilities (Amendments) January 01, 2022
- IAS 8 - Definition of Accounting Estimates January 01, 2022
- IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies January 01, 2023
- IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture (Amendments) Not yet announced
The above standards, amendments and improvements are not expected to have any material impact on
the unconsolidated financial statements of the Bank for the futures periods.
Further, following new standards have been issued by IASB which are yet to be notified by SECP for the
purpose of applicability in Pakistan.
Standard IASB effective date (accounting
periods beginning on or after)
- IFRS 1 – First time adoption of IFRSs January 01, 2004
- IFRS 17 – Insurance Contracts January 01, 2023
2.9 Critical accounting estimates, judgments and assumptions
The preparation of financial statements requires management to make estimates, judgments and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances, the result of which forms the
basis of making judgment about carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates. The estimates and underlying assumptions
are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period, or in period of revision and future periods if the
revision affects both current and future periods. The estimates and judgments that have a significant effect
on the unconsolidated financial statements are in respect of the following:
44
Note
Classification and provisioning against investments 4.3, 4.13 & 31

Classification and provisioning against loans and advances 4.4, 9 & 31
Useful lives of fixed, right of use assets and intangible assets, depreciation,
amortisation and revaluation 4.5, 10 & 11
Determination of lease term and borrowing rate 4.5, 10 & 19
Non - banking assets acquired in satisfaction of claims 4.6 & 13
Defined benefit plan related assumptions 4.9 & 36
Provisions against off-balance sheet obligations 4.15, 19 & 31
Current and deferred taxation 4.12, 12 & 32
3. BASIS OF MEASUREMENT
These unconsolidated financial statements have been prepared under the historical cost convention except
for certain investments and derivative financial instruments which are carried at fair value, certain land and
buildings, and non-banking assets acquired in satisfaction of claims are carried at revalued amount. Employee
benefits and lease liability against right-of-use assets are carried at present value.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted in the preparation of these unconsolidated financial statements are consistent
with those of the previous financial year.
4.1 Cash and cash equivalents
Cash and cash equivalents as referred to in the unconsolidated cash flow statement comprise cash and
non restricted balances with treasury and other banks less overdrawn nostros accounts. Restricted balances
not available for use if any, are excluded from cash and cash equivalents.
4.2 Lendings to / borrowings from financial institutions

The Bank enters into transactions of lendings and borrowings at contracted rates for a specified period of
time. These are recorded as under:
Sale under repurchase obligation
Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue
to be recognised in the statement of financial position and are measured in accordance with accounting
policies for investments. Amounts received under these agreements are recorded as repurchase agreement
borrowings. The difference between sale and repurchase price is amortised as expense over the term of
the repo agreement. These are initially recognised at amount of funds received and subsequently reported
as payable under the contractual terms.
Purchase under resale obligation
Securities purchased with a corresponding commitment to resale at a specified future date (reverse repos)
are not recognised as investments in the statement of financial position. Amounts paid under these
arrangements are included in repurchase agreement lendings. The difference between purchase and resale
price is accrued as income over the term of the reverse repo agreement. These are initially recognised at
amount of funds disbursed and subsequently reported as receivable under the contractual terms.
Bai Muajjal
In Bai Muajjal, the Bank sells sukuk on credit to other financial institutions. The credit price is agreed at the
time of sale and such proceeds are received at the end of the credit period.
4.3 Investments
Subsidiaries
Subsidiaries are entities over which the Bank has control. Investment in subsidiaries is stated at cost less
provision for impairment, if any.
45
Associates
Associates are all entities over which the Bank has significant influence but not control. Investment in
associates is stated at cost less provision for impairment, if any. Certain mutual funds are managed
by the subsidiary company of the Bank and hence, the Bank has significant influence over such funds
and therefore, investments in these mutual funds are considered as investment in associates.
Held-for-trading
These are investments acquired principally for the purpose of generating profits from short-term
fluctuations in price or dealer’s margin or are securities included in a portfolio in which a pattern of
short-term trading exists.
Held-to-maturity
These are investments with fixed or determinable payments and fixed maturities which the Bank has
the intention and ability to hold till maturity.
In Bai Muajjal, the Bank sells sukuk on credit to Government of Pakistan. The credit price is agreed at
the time of sale and such proceeds are received at the end of the credit period.
Available-for-sale
These are investments which do not fall under held for trading and held to maturity categories.
All purchases and sales of investments that require delivery within the time frame established by
regulations or market convention are recognised at the trade date. Trade date is the date on which the
Bank commits to purchase or sell the investments.
Investments (other than held for trading) are initially measured at fair value plus transaction cost
associated with the investment. Investments classified as held for trading are initially measured at fair
value, and transaction costs are expensed in the profit and loss account.
After initial recognition, quoted securities (other than those classified as held to maturity) are carried
at market value. Unquoted securities are valued at cost less impairment in value, if any. Held to
maturity securities are carried at amortised cost.
Surplus / (deficit) arising on revaluation of quoted securities which are classified as 'available-for-sale',
is included in the statement of comprehensive income and is shown in the statement of financial
position as part of equity. The surplus / (deficit) arising on these securities is taken to the profit and
loss account when actually realised upon disposal or in case of impairment of securities. The
unrealised surplus / (deficit) arising on revaluation of quoted securities which are classified as held for
trading is taken to the profit and loss account.
Premium or discount on debt securities classified as available for sale and held to maturity is
amortised using effective interest method and taken to the profit and loss account.
Details of valuation techniques used in determination of fair value is included in note 39 of
4.4 Advances
Loans and advances
These are stated net of provisions for non-performing advances.
Receivables against lease finance where Bank is a lessor (other than Ijarah)
Leases where the Bank transfers substantially all the risks and rewards incidental to ownership of an
asset to the lessee are classified as finance leases. A receivable is recognised at an amount equal to
the present value of the lease payments including any guaranteed residual value.
Islamic Financing and Related Assets
Ijarah finance
Assets leased out under ijarah arrangements are stated at cost less accumulated depreciation and
impairment, if any. Such assets are depreciated over the terms of ijarah contracts.
46
Murabaha
Funds disbursed under murabaha arrangements for purchase of goods are recorded as advance for
murabaha. On culmination of murabaha i.e. sale of goods to customers, murabaha receivables are
recorded at the sale price net of deferred income. Goods purchased but remaining unsold at the
reporting date are recorded as inventories.
Inventory
The Bank values its inventories at the lower of cost and net realisable value. The net realisable value
is the estimated selling price in the ordinary course of business less the estimated cost necessary to
make the sale. Cost of inventories represents actual purchases made by the Bank / customers as an
agent of the Bank for subsequent sale. Inventory against each contract is maintained on specific
identification method.
Istisna
In Istisna financing, the Bank places an order to purchase some specific goods / commodities from its
customers to be delivered to the Bank within an agreed time. The goods are then sold and the amount
hence financed is paid back to the Bank.
Diminishing Musharaka
In Diminishing Musharaka financing, the Bank enters into 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 periodic rental payment agreement for the utilisation of the Bank’s Musharaka share by the
customer. The customer purchases the Bank's share gradually as per his undertaking.
Running Musharaka
In Running Musharaka financing, the Bank enters into financing with the customer based on
Shirkat-ul-Aqd or Business Partnership in customers operating business. Under this mechanism the
customer can withdraw and return funds to the Bank subject to his Running Musharakah Financing
limit during the Musharakah period. At the end of each quarter / half year the customer pays the
provisional profit as per the desired profit rate which is subject to final settlement based on the relevant
quarterly / half-yearly / annual accounts of the customer.
Musawama
In Musawama financing, the Bank purchases specific goods / commodities on cash basis from its
customer for onward sale. Upon realisation of sale proceeds, the finance is adjusted.
Provision for non-performing advances
Provision for non-performing advances is determined in accordance with the requirements of the
Prudential Regulations for domestic branches, whereas requirements of respective central banks is
followed in respect of overseas branches and is charged to the profit and loss account. The Bank also
maintains general provision in addition to the requirements of the Prudential Regulations on the basis
of the management's risk assessment.
The Bank reviews its loan portfolio to assess amount of non-performing loans and determine provision
required there against. While assessing this requirement various factors including the past dues,
delinquency in the account, financial position and future business / financial plan of the borrower,
value of collateral held and requirements of Prudential Regulations are considered. The Bank is
allowed to consider the effect of Forced Sale Value (FSV) of collaterals in determining the amount of
provision, however, no benefit of FSV of collateral is taken in determining provisioning amount.
The amount of general provision against domestic consumer and SME advances is determined in
accordance with the relevant \ Prudential Regulations and SBP directives.
For overseas operations, the Bank records an allowance for Expected Credit Loss (ECL) for all loans
and other debt financial assets not held at Fair Value through Profit and Loss (all referred to as
‘financial instruments’). The ECL allowance is based on the credit losses expected to arise over the
life of the asset (the Lifetime Expected Credit Losses or LTECL), unless there has been no significant
increase in credit risk since origination, in which case, the allowance is based on the 12 months’
Expected Credit Losses (12mECL). The Bank has established a policy to perform an assessment, at
the end of each reporting period, of whether a financial instrument’s credit risk has increased
significantly since initial recognition, by considering the change in the risk of default occurring over the
remaining life of the financial instrument.
47
Advances are written-off when there are no realistic prospects of recovery.
4.5 Operating fixed assets and depreciation
Capital work in progress
Capital work in progress is stated at cost less impairment, if any.
Property and equipment - owned
Land is measured at cost at the time of initial recognition and is subsequently carried at revalued
amount less impairment, if any. Buildings are initially measured at cost and upon revaluation, are
carried at revalued amount less accumulated depreciation and impairment, if any. All other operating
fixed assets are stated at cost less accumulated depreciation and impairment, if any. Depreciation is
charged to profit and loss account on straight line basis so as to charge the assets over their expected
useful lives at the rates specified in note 10.2. The depreciation charge is calculated after taking into
account residual value, if any. The residual values, useful lives and depreciation method are reviewed
annually and adjusted, if appropriate. Depreciation is charged on prorata basis, i.e., full month charge
in the month of purchase and no charge in the month of disposal.
Land and buildings are revalued by independent professionally qualified valuers with sufficient
regularity to ensure that the net carrying amount does not differ materially from the fair value. The
valuations involve estimates / assumptions and various market factors and conditions. Any
revaluation surplus is credited to the surplus on revaluation of land and buildings, except to the extent
that it reversal of a deficit already charged to profit and loss account on the same asset. Any
revaluation deficit is recognised in profit and loss account, except for a deficit directly offsetting a
previous surplus on the same asset recognised in the asset revaluation surplus.
Subsequent costs are included in the asset’s carrying amount or 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. The carrying amount of the replaced part
is derecognised. All other repairs and maintenance are charged to the income statement during the
financial period in which they are incurred.
Gains and losses on disposal of fixed assets are included in income currently, except that the related
surplus on revaluation of land and buildings (net of deferred tax) is transferred directly to
unappropriated profit.
Leases
The Bank assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
Bank as a lessee
The Bank applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Bank recognises lease liabilities to make lease payments
and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Bank recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
and lease payments made at or before the commencement date less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis over the lease term.
The right-of-use assets are presented within note 10 fixed assets and are subject to impairment in line
with the Bank’s policy as described in note 4.13 impairment of non-financial assets.
48
Lease liabilities
At the commencement date of the lease, the Bank recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. The Bank determines the lease term as the
non-cancellable term of the lease, together with any periods covered by an option to extend the lease
if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease,
if it is reasonably certain not to be exercised. After the commencement date, the Bank reassesses the
lease term if there is a significant event or change in circumstances that is within its control that affects
its ability to exercise or not to exercise the option to renew or to terminate. The Bank cannot readily
determine the interest rate implicit in the lease, therefore, it uses its incremental lending rate to
measure lease liabilities.
Intangible assets
Intangible assets having a finite useful life are stated at cost less accumulated amortisation and
impairment, if any. Amortisation is based on straight line method by taking into consideration the
estimated useful life of assets at the rates specified in note 11. Intangible assets are amortised on
prorata basis i.e. full month amortisation in the month of purchase and no amortisation in the month of
disposal.
4.6 Non-banking assets acquired in satisfaction of claims
Non-banking assets acquired in satisfaction of claims are initially measured at settlement amount and
upon revaluation, are carried at revalued amounts less accumulated depreciation and impairment, if
any. The useful lives and depreciation method are reviewed annually and adjusted, if appropriate.
These assets are revalued as per SBP's requirement by independent professionally qualified valuers
to ensure that their net carrying value does not differ materially from their fair value. A surplus arising
on revaluation of assets is credited to the 'surplus on revaluation of non-banking assets acquired in
satisfaction of claims' account and any deficit arising on revaluation is taken to profit and loss account
directly. Legal fees, transfer costs and direct costs of acquiring title of assets is charged to profit and
loss account and not capitalised.
4.7 Borrowings / deposits
Borrowings / deposits are recorded at the amount of proceeds received. The cost of borrowings /
deposits is recognised on an accrual basis as an expense in the period in which it is incurred.
Deposits mobilized under Islamic Banking operations are generated under two modes i.e. “Qard” and
“Modaraba”. Deposits taken on Qard basis are classified as ‘Current accounts’ and Deposits
generated on Modaraba basis are classified as ‘Saving deposits / Fixed deposits / Current
remunerative deposits’.
4.8 Subordinated debt
Subordinated debt is initially recorded at the amount of proceeds received and subsequently reported
at outstanding amounts as a financial liability. Mark-up accrued on subordinated debt is recognised
separately as part of other liabilities and is charged to the profit and loss account over the period on
an accrual basis.
4.9 Employees' benefits
Defined benefit plan
The Bank operates an approved gratuity fund for all its confirmed employees, which is administered
by the Trustees. The Bank's costs and contributions are determined based on actuarial valuation
carried out at each year end using Projected Unit Credit Actuarial Method. All actuarial gains and
losses are recognised in 'other comprehensive income' as they occur and are not reclassified to profit
and loss in subsequent periods. The liabilities for employees' benefits plans are determined using
actuarial valuations. The actuarial valuations involve assumptions about discount rates, expected
rates of return on assets and future salary increases as disclosed in note 36. Due to the long term
nature of these plans, such estimates are subject to significant uncertainty.
49
Defined contribution plan
The Bank operates an approved provident fund scheme for all its regular permanent employees,
administered by the Trustees. Equal monthly contributions are made both by the Bank and its
employees to the fund at the rate of 10% of the basic salary in accordance with the terms of the
scheme.
Compensated absences
The Bank accounts for all accumulating compensated absences when employees render service that
increases their entitlement to future compensated absences. The liability is determined based on
actuarial valuation carried out using the Projected Unit Credit Method.
4.10 Foreign currencies
Functional and presentation currency
These financial statements are presented in Pak Rupees which is the Bank's functional and
presentation currency.
Transactions and balances in foreign currencies
Foreign currency transactions are translated into Pak Rupees at the exchange rates prevailing on the
date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees
at the exchange rates prevailing at the reporting date. Non-monetary items that are measured in terms
of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial
transactions. Non-monetary items measured at fair value in a foreign currency are translated using
exchange rates at the date when the fair value was determined. Exchange gains or losses are included
in income currently.
Foreign operations
The assets and liabilities of foreign operations are translated to Pak Rupees at exchange rates
prevailing at the reporting date. The income and expense of foreign operations are translated at rate
of exchange prevailing during the year. Exchange gain or loss on such translation is taken to equity
through statement of other comprehensive income under "foreign currency translation reserve".
Commitments
Commitments for outstanding forward foreign exchange contracts are translated at forward rates
applicable to their respective maturities. Contingent liabilities / commitments for letter of credit and
letters of guarantee denominated in foreign currencies are expressed in rupee terms at the exchange
rates ruling on the reporting date.
Translation gains and losses are included in the profit and loss account.
4.11 Revenue recognition
(a) Mark-up / return / interest on advances and investments is recognised on accrual basis, except in
case of advances classified under the Prudential Regulations on which mark-up is recognised on
receipt basis. Mark-up / return / interest on rescheduled / restructured loans and advances and
investments is recognised as permitted by the regulations of SBP.
(b) Financing method is used in accounting for income from lease financing. Under this method, the
unrealised lease income is deferred and taken to income over the term of the lease period so as
to produce a constant periodic rate of return on the outstanding net investment in lease. Gain / loss
on termination of lease contracts, front end fee and other lease income are recognised as income
on receipt basis.
(c) The rentals from ijarah are recognised as income over the term of the contract net of depreciation
expense relating to the ijarah assets.
50
(d) Income from murabaha is accounted for on a time proportionate basis over the period of
murabaha transaction.
(e) Income from istisna and musawama is recognised on time proportionate basis commencing from
the time of sale of goods till the realisation of sale proceeds.
(f) Income from diminishing musharaka is recognised on time proportionate basis over the term of
contract.
(g) Income from running musharaka financing is recognised on time proportionate basis and is
subject to adjustment upon declaration of profit by musharaka partners.
(h) Income from Bai-Muajjal is recognised on time proportionate basis from the date of disbursement
to the due date of payment.
(i) Dividend income is recognised when the right to receive is established.
(j) Gain or loss on sale of investments are recognised in profit and loss account in the year in which
they arise.
(k) The Bank earns fee and commission income from a diverse range of financial services it provides
to its customers. Fee and commission income is recognised at an amount that reflects the
consideration to which the Bank expects to be entitled in exchange for providing the services.
The Bank recognises fees earned on transaction-based arrangements at a point in time when the
Bank has provided the service to the customer. Where the contract requires services to be
provided over time, income is recognised on a systematic basis over the life of the related
services. Unearned fee and commission are included under Other Liabilities.
4.12 Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit
and loss account except to the extent that it relates to the items recognised directly in equity or surplus
on revaluation of assets, in which case it is recognised in equity or surplus on revaluation of assets.
Current
Provision for current tax is based on the taxable income for the year, using tax rates enacted or
substantively enacted at the statement of financial position date and any adjustments to the tax
payable in respect of previous years. Current tax assets and liabilities are measured at the amount
expected to be recovered from or paid to taxation authorities.
Deferred
Deferred tax is provided on all temporary differences at the statement of financial position date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, to
the extent that it is probable that taxable profits will be available against which the deductible
temporary differences and unused tax losses can be utilised.
Deferred tax liabilities are recognised for all taxable temporary differences, except in respect of
taxable temporary differences associated with investment in foreign operations, when the timing of the
reversal of the temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
The carrying amount of deferred income tax assets are reviewed at each statement of financial
position date and reduced to the extent that it is no longer probable that sufficient taxable profit or
taxable temporary differences will be available to allow all or part of the deferred income tax asset to
be utilised.
51
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the statement of financial position date.
In making the estimates for current and deferred taxes, the management looks at the income tax law
and the decisions of appellate authorities on certain issues in the past. There are certain matters
where the Bank’s view differs with the view taken by the income tax department and such amounts are
shown as contingent liability.
4.13 Impairment
Investments
Provision for diminution in the investments classified as available-for-sale and held-to-maturity
(except for debt securities) is recognised after considering impairment, if any, in their value and is
taken to profit and loss account. Impairment is booked when there is an objective evidence of
significant or prolonged decline in the value of such securities. This determination of what is significant
or prolonged requires judgment.
Provision for impairment against debt securities (other than government securities) is made in
accordance with the requirements of the Prudential Regulations of SBP. In case of unquoted equity
securities, the breakup value of the security is considered to determine impairment amount.
Associates and subsidiaries
The carrying values of investments in associates and subsidiaries are reviewed for impairment when
events or changes in circumstances indicate that the carrying values may not be recoverable. If any
such indication exists and where the carrying values exceed the estimated recoverable amounts, the
investments are written down to their recoverable amounts and the resulting impairment loss is taken
to profit and loss account.
Non-financial assets
The carrying values of assets are reviewed for impairment when events or changes in circumstances
indicate that the carrying values may not be recoverable. If any such indication exists and where the
carrying values exceed the estimated recoverable amounts, the assets are written down to their
recoverable amounts and the resulting impairment loss is taken to profit and loss account except for
impairment loss on revalued assets which is adjusted against the related revaluation surplus to the
extent that the impairment loss does not exceed the relevant surplus.
4.14 Contingent assets / liabilities
Contingent assets are not recognised, and are also not disclosed unless an inflow of economic
benefits is probable. Contingent liabilities are not recognised and are disclosed unless the probability
of an outflow of resources embodying economic benefits are remote.
4.15 Provisions against off - balance sheet obligations
The Bank, in the ordinary course of business, issues letters of credit, guarantees, bid bonds,
performance bonds etc. The commission against such contracts is recognised in the profit and loss
account under "fees and commission income" over the period of contracts. The Bank's liability under
such contracts is measured at the higher of the amount representing unearned commission income at
the reporting date and the best estimate of the amount expected to settle any financial obligation
arising under such contracts.
4.16 Off setting
Financial assets and financial liabilities are only off-set and the net amount is reported in the financial
statements when there is a legally enforceable right to set-off the recognised amount and the Bank
intends either to settle on a net basis, or to realise the assets and to settle the liabilities
simultaneously. Income and expense items of such assets and liabilities are also off-set and the net
amount is reported in the financial statements. Income and expenses are presented on a net basis
only when permitted by the approved accounting standards as applicable in Pakistan.
52
4.17 Financial assets and liabilities
Financial assets and financial liabilities are recognised at the time when the Bank becomes a party to
the contractual provision of the instrument. Financial assets are derecognised when the contractual
right to future cash flows from the asset expires or is transferred along with the risk and reward of
ownership of the asset. Financial liabilities are derecognised when obligation is discharged, cancelled
or expired. Any gain or loss on derecognition of the financial asset and liability is recognised in the
profit and loss account of the current period.
4.18 Derivative financial instruments

Derivative financial instruments are initially recognised at their fair value on the date on which the
derivative contract is entered into and are subsequently remeasured at fair value. All derivative
financial instruments are carried as asset when fair value is positive and liabilities when fair value is
negative. Any change in the value of derivative financial instruments is taken to the profit and loss
account.
4.19 Dividend and reserves
Dividend declared and appropriations, except for transfer to statutory reserve, made subsequent to
the date of statement of financial position are considered as non adjusting events and are recorded as
a liability in the financial statements in the year in which these are approved by shareholders /
directors as appropriate.
4.20 Earnings per share
The Bank presents basic and diluted earnings per share (EPS). 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 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 2021.
4.21 Segment reporting
A segment is a distinguishable component of the Bank that is engaged in providing products and
services (business segment), or in providing products or services within a particular economic
environment (geographical segment), which is subject to risk and rewards that are different from those
of other segments. The Bank's primary format of reporting is based on business segments.
4.22 Business segments
Retail banking
It consists of retail lending, deposits and banking services to private individuals and small businesses.
The retail banking activities include provision of banking and other financial services, such as current
and savings accounts, credit cards, consumer banking products etc., to individual customers, small
merchants and small and medium enterprises.
Commercial banking
Commercial banking represents provision of banking services including treasury and international
trade related activities to large corporate customers, multinational companies, government and semi
government departments and institutions and small and medium enterprises treated as corporate
under the Prudential Regulations.
53
4.23 Geographical segments
The Bank operates in four geographic regions, being:
- Pakistan
- Middle East
- Asia Pacific
- Africa
4.24 Statutory / special reserve
Every bank incorporated in Pakistan is required to transfer 20% of its profit to a statutory reserve until
the reserve equals share capital, thereafter 10% of the profit of the Bank is to be transferred to this
reserve.
Special reserve was created to meet regulatory requirements.
4.25 Provisions against liabilities
These are recognised when the Bank has a legal or constructive obligation as a result of past events,
it is probable that an outflow of resources will be required to settle the obligation and a reliable
estimate of the amount can be made. Provision against contingencies is determined based on the
management judgement regarding the probability of future out flows of resources embodying
economic benefits to settle an obligation arising from past events. Provisions are reviewed at each
reporting date and are adjusted to reflect the current best estimate.
4.26 Clients' assets
The Bank provides services that result in the holding of assets on behalf of its clients. Such assets are
not reported in the financial statements, as they are not the assets of the Bank.
4.27 Acceptances
Acceptances comprise undertakings by the Bank to pay bill of exchange drawn on customers.
Acceptances are recognised as financial liability in the statement of financial position with a
contractual right of reimbursement from the customer as a financial asset. Therefore, commitments in
respect of acceptances have been accounted for as financial assets and financial liabilities.
54
Note 2021 2020
(Rupees in '000)
5. CASH AND BALANCES WITH TREASURY BANKS

In hand:
Local currency 25,102,090 23,716,890
Foreign currencies 1,731,629 4,761,414
26,833,719 28,478,304
In transit:
Local currency 230,555 600,285
Foreign currencies 422 4,412
230,977 604,697
With State Bank of Pakistan in:
Local currency current accounts 5.1 53,360,569 44,211,071
Local currency current accounts - Islamic Banking 5.1 5,651,972 3,339,015
Foreign currency deposit accounts
Cash reserve account 5.1 3,733,261 3,508,365
Cash reserve / special cash reserve account
- Islamic Banking 5.1 408,717 299,769
Special cash reserve account 5.1 7,466,521 7,016,730
Local US Dollar collection account 5.2 786,071 99,696
71,407,111 58,474,646
With National Bank of Pakistan in:

Local currency current account 19,846,650 16,110,129
Prize bonds 281,284 2,268,171
118,599,741 105,935,947
5.1 These deposits and reserves are maintained by the Bank to comply with the statutory requirements. The
special cash reserve carries interest rate of Nil (2020: upto 0.76%) per annum.
5.2 This represents US Dollar collection account maintained with SBP.
Note 2021 2020

(Rupees in '000)
6. BALANCES WITH OTHER BANKS

In Pakistan:
In current accounts 229,228 131,311
In deposit accounts 6.1 557,419 184,012
786,647 315,323
Outside Pakistan:
In current accounts 6.2 4,131,543 5,965,561
In deposit accounts 6.3 1,821,822 13,381,635
5,953,365 19,347,196
6,740,012 19,662,519
Less: impairment against IFRS 9 in overseas branches (4) (4)
6,740,008 19,662,515
55
6.1 These carry expected profit rates ranging from 2.32% to 7.26% (2020: 2.32% to 11.28%) per annum.
6.2 These carry interest rates upto 0.75% (2020: upto 0.75%) per annum.
6.3 These carry interest rates of Nil (2020: upto 1.32%) per annum.
2021 2020
(Rupees in '000)
7. LENDING TO FINANCIAL INSTITUTIONS

In local currency:
Repurchase agreement lendings (Reverse Repo) 20,063,828 –00
Bai Muajjal receivable from the State Bank of Pakistan –00 2,175,301
20,063,828 2,175,301
7.1 Securities held as collateral against amounts due from financial institutions
2021 2020
Held by Further given Held by Further given
Bank as collateral Total Bank as collateral Total
(Rupees in '000)
Market Treasury Bills 18,343,998 –00 18,343,998 –00 –00 –00
Pakistan Investment Bonds 1,719,830 –00 1,719,830 –00 –00 –00
20,063,828 –00 20,063,828 –00 –00 –00
7.1.1 Repurchase agreement lendings carry mark-up at rates ranging from 10.00% to 10.75% per annum
(2020: Nil).
7.1.2 The market value of securities held as collateral against repurchase agreement lendings amounted to
Rs. 20,120.78 million (2020: Nil).
8. INVESTMENTS
Note 2021 2020
Cost / Provision Cost / Provision
amortised for Surplus / Carrying amortised for Surplus / Carrying
cost diminution (deficit) value cost diminution (deficit) value
8.1 Investments by type:
(Rupees in '000)
Held-for-trading securities
Shares 96,835 –00 1,641 98,476 95,778 –00 771 96,549
Available-for-sale securities 8.3 & 8.4
Federal Government Securities 594,514,031 (224,825 ) (1,277,763 ) 593,011,443 548,726,362 (226,825 ) 4,578,492 553,078,029
Shares 4,541,805 (1,781,770 ) 614,262 3,374,297 4,376,102 (1,791,073 ) 580,654 3,165,683
Non Government Debt Securities 29,941,356 –00 141,257 30,082,613 26,645,389 –00 (46,105 ) 26,599,284
Foreign Securities 6,718,457 (947,343 ) (853,977 ) 4,917,137 6,891,856 (909,432 ) (1,215,066 ) 4,767,358
Units of Mutual Funds 2,176,022 (365,225 ) 296,808 2,107,605 2,125,000 (444,440 ) 350,397 2,030,957
637,891,671 (3,319,163 ) (1,079,413 ) 633,493,095 588,764,709 (3,371,770 ) 4,248,372 589,641,311
Held-to-maturity securities 8.3 & 8.5
Federal Government Securities 182,347,089 (100,982 ) –00 182,246,107 170,825,082 (130,790 ) –00 170,694,292
Foreign Securities 2,191,873 (77,573 ) –00 2,114,300 1,708,659 (127,901 ) –00 1,580,758
Other 4,481 (4,481 ) –00 –00 4,481 (4,481 ) –00 –00
184,543,443 (183,036 ) –00 184,360,407 172,538,222 (263,172 ) –00 172,275,050
Associates 8.6 7,764,656 –00 –00 7,764,656 2,047,346 –00 –00 2,047,346
Subsidiaries 8.7 883,250 –00 –00 883,250 883,250 –00 –00 883,250
Total Investments 831,179,855 (3,502,199 ) (1,077,772 ) 826,599,884 764,329,305 (3,634,942 ) 4,249,143 764,943,506
56
2021 2020
8.2 Investments by segments:
(Rupees in '000)
Federal Government Securities
Market Treasury Bills 123,991,225 –00 (374,150 ) 123,617,075 143,416,675 –00 490,699 143,907,374
Pakistan Investment Bonds 534,070,230 –00 (591,411 ) 533,478,819 515,252,493 –00 4,083,498 519,335,991
Foreign Currency Bonds 18,002,018 (312,404 ) 165,736 17,855,350 10,724,047 (292,213 ) 198,212 10,630,046
Ijarah Sukuks 86,966,523 –00 (489,423 ) 86,477,100 26,952,616 –00 (209,517 ) 26,743,099
Sukuks 13,023,972 (13,403 ) 11,485 13,022,054 22,919,899 (65,402 ) 15,600 22,870,097
Naya Pakistan Certificates 807,152 –00 –00 807,152 –00 –00 –00 –00
Term Finance Certificates - Unlisted –00 –00 –00 –00 285,714 –00 –00 285,714
776,861,120 (325,807 ) (1,277,763 ) 775,257,550 719,551,444 (357,615 ) 4,578,492 723,772,321
Shares
Listed Companies 4,484,404 (1,776,070 ) 615,903 3,324,237 4,317,644 (1,785,373 ) 581,425 3,113,696
Unlisted Companies 154,236 (5,700 ) –00 148,536 154,236 (5,700 ) –00 148,536
4,638,640 (1,781,770 ) 615,903 3,472,773 4,471,880 (1,791,073 ) 581,425 3,262,232
Non Government Debt Securities

Listed 24,768,436 –00 141,257 24,909,693 24,420,449 –00 (46,105 ) 24,374,344
Unlisted 5,172,920 –00 –00 5,172,920 2,224,940 –00 –00 2,224,940
29,941,356 –00 141,257 30,082,613 26,645,389 –00 (46,105 ) 26,599,284
Others
Unlisted Company 4,481 (4,481 ) –00 –00 4,481 (4,481 ) –00 –00
Foreign Securities
Government Securities 8,910,330 (1,024,916 ) (853,977 ) 7,031,437 8,600,515 (1,037,333 ) (1,215,066 ) 6,348,116
Associates
Habib Sugar Mills Limited –00 –00 –00 –00 182,690 –00 –00 182,690
AL Habib Money Market Fund 100,000 –00 –00 100,000 –00 –00 –00 –00
AL Habib Islamic Cash Fund 100,000 –00 –00 100,000 –00 –00 –00 –00
AL Habib Islamic Savings Fund 100,000 –00 –00 100,000 –00 –00 –00 –00
First Habib Income Fund 400,000 –00 –00 400,000 150,000 –00 –00 150,000
First Habib Stock Fund 10,000 –00 –00 10,000 10,000 –00 –00 10,000
First Habib Cash Fund 7,000,000 –00 –00 7,000,000 1,650,000 –00 –00 1,650,000
First Habib Islamic Stock Fund 10,000 –00 –00 10,000 10,000 –00 –00 10,000
First Habib Islamic Income Fund 24,656 –00 –00 24,656 24,656 –00 –00 24,656
First Habib Asset Allocation Fund 20,000 –00 –00 20,000 20,000 –00 –00 20,000
7,764,656 –00 –00 7,764,656 2,047,346 –00 –00 2,047,346
Subsidiaries
AL Habib Capital Markets (Private) Limited 200,000 –00 –00 200,000 200,000 –00 –00 200,000
AL Habib Asset Management Limited 683,250 –00 –00 683,250 683,250 –00 –00 683,250
883,250 –00 –00 883,250 883,250 –00 –00 883,250
57
2021 2020
(Rupees in '000)
8.2.1 Investments given as collateral
Market Treasury Bills 34,993,379 98,427,365
Pakistan Investment Bonds 84,993,500 –00
119,986,879 98,427,365
8.3 Provision for diminution in value of investments
Opening balance 3,634,942 2,211,794
Exchange adjustments against IFRS 9 in overseas branches 144,654 3,978
(Reversals) / charge
Charge for the year –00 295,807
(Reversals) / charge of impairment as per IFRS 9 in overseas
branches (188,882) 1,120,117
Reversal on disposal (88,515) (1,235)
(277,397) 1,414,689
Others –00 4,481
Closing balance 3,502,199 3,634,942
8.4 Quality of Available for Sale Securities

Details regarding quality of available-for-sale securities are as follows:
Cost
2021 2020
(Rupees in '000)
8.4.1 Federal Government Securities - Government guaranteed
Pakistan Investment Bonds 367,146,464 360,611,418
Foreign Currency Bonds 12,155,197 6,510,541
Ijarah Sukuks 86,966,523 26,952,616
Sukuks 3,447,470 10,949,398
Naya Pakistan Certificates 807,152 –00
Term Finance Certificates-Unlisted –00 285,714
594,514,031 548,726,362
8.4.2 Shares
8.4.2.1 Listed companies
Automobile Assembler 199,842 199,842
Cement 292,921 292,921
Commercial Banks 150,024 150,024
Fertiliser 923,380 923,380
Food and Personal Care Products 23,211 23,211
Insurance 29,975 29,975
Securities Companies 92,509 92,509
Oil and Gas Marketing Companies 788,541 788,541
Paper and Board 38,264 38,264
Pharmaceuticals 21,775 21,775
Power Generation and Distribution 1,590,653 1,607,640
Technology and Communication 13,140 13,140
Textile Composite 40,644 40,644
Sugar and Allied Industries 182,690 –00
4,387,569 4,221,866
58
2021 2020
8.4.2.2 Unlisted Companies Break up Cost Breakup Cost Breakup
value value value
(Rupees in '000)
Khushhali Bank Limited December 31, 2020 30,000 189,922 30,000 165,372
Pakistan Export Finance Guarantee
Agency Limited – 5,700 –00 5,700 –00
Society for Worldwide Interbank Financial
Telecommunication (S.W.I.F.T) – 18,536 –00 18,536 –00
Pakistan Mortgage Refinance
Company Limited December 31, 2020 50,000 83,892 50,000 64,183
1LINK (Guarantee) Limited December 31, 2020 50,000 267,895 50,000 202,032
154,236 541,709 154,236 431,587

The above breakup values are based on the latest available audited financial statements of the unlisted
companies.
Cost
2021 2020
(Rupees in '000)
8.4.3 Non Government Debt Securities
8.4.3.1 Listed
AA+ 1,086,038 1,267,724
AA 200,000 200,000
AA- 1,029,894 500,000
A+ 1,000,000 –00
A 300,000 1,300,000
A- 50,000 50,000
Government Guaranteed 21,102,504 21,102,725
24,768,436 24,420,449
8.4.3.2 Unlisted
AAA 1,798,000 –00
AA+ 1,450,000 –00
AA –00 1,200,000
AA- 1,550,000 750,000
A+ 75,000 75,000
A 200,000 100,000
BBB+ 99,920 99,940
5,172,920 2,224,940
8.4.4 Mutual Funds

AAA(f) 50,000 50,000
AA(f) 550,000 550,000
AA-(f) 200,000 200,000
A+(f) –00 100,000
Unrated 1,376,022 1,225,000
2,176,022 2,125,000
59
2021 2020
8.4.5 Foreign Securities Cost Rating Cost Rating
(Rupees in '000)
Government Securities
Bahrain –00 – 319,668 B+
Egypt 2,309,504 B+ 2,097,411 B+
Srilanka 3,570,661 CC 3,723,756 CCC
Turkey 838,292 BB- 751,021 BB-
6,718,457 6,891,856
Cost
2021 2020
(Rupees in '000)
8.5 Particulars relating to Held to Maturity securities are as follows:
Federal Government Securities - Government guaranteed

Sukuks 9,576,502 11,970,501
182,347,089 170,825,082
Others
Pakistan Corporate Restructuring Company Limited (PCRCL) 4,481 4,481
2021 2020
Foreign Securities Cost Rating Cost Rating
(Rupees in '000)
Egypt 531,5550 B+ 482,090 B+

Srilanka 1,660,3180 CC 1,226,569 CCC
2,191,8730 1,708,659
8.5.1 The market value of securities classified as held to maturity at 31 December 2021 amounted to
Rs. 181,472 million (2020: Rs. 168,809 million).
60
8.6 Associates
2021 2020 Name of company / funds 2021 2020
No. of ordinary shares / units (Rupees in '000)
–00 9,415,312 Habib Sugar Mills Limited –00 182,690
1,000,000 –00 AL Habib Money Market Fund 100,000 –00

% of holding 22.14% (2020: Nil)
Average cost per unit: Rs. 100 (2020: Nil)
Net asset value Rs. 100 (2020: Rs. Nil)
1,000,000 –00 AL Habib Islamic Cash Fund 100,000 –00
% of holding 22.19% (2020: Nil)
1,000,000 –00 AL Habib Islamic Saving Fund 100,000 –00
% of holding 5.54% (2020: Nil)
Average cost per unit: Rs. 100 (2020: Rs. Nil)
3,788,497 1,363,808 First Habib Income Fund 400,000 150,000
% of holding: 24.65% (2020: 17.86%)
Average cost per unit: Rs. 105.58 (2020: Rs. 109.99)
Net asset value: Rs. 105.02 (2020: Rs. 103.48)
100,000 100,000 First Habib Stock Fund 10,000 10,000
% of holding: 2.81% (2020: 7.09%)
Average cost per unit: Rs. 100 (2020: Rs. 100)
69,271,923 16,288,303 First Habib Cash Fund 7,000,000 1,650,000
% of holding: 24.52% (2020: 12.47%)
100,929 100,929 First Habib Islamic Stock Fund 10,000 10,000
% of holding: 2.61% (2020: 8.23%)
250,421 250,421 First Habib Islamic Income Fund 24,656 24,656
% of holding: 0.39% (2020: 0.22%)
200,149 200,149 First Habib Asset Allocation Fund 20,000 20,000

% of holding: 19.22% (2020: 19.75%)
7,764,656 2,047,346
8.6.1 The place of incorporation and business of associates is Pakistan.
8.6.2 All of the above funds are managed by AL Habib Asset Management Limited (the subsidiary company). The Chief Executive of the Management
Company is Mr. Kashif Rafi.
8.6.3 During the year, the Bank reclassified Habib Sugar Mills Limited from associates to available-for-sale investments due to change in directorship structure.
61
8.6.4 Associates - Key Information
First Habib First Habib First Habib First Habib First Habib First Habib
Income Stock Cash Islamic Islamic Income Asset Allocation
Fund Fund Fund Stock Fund Fund Fund
(Rupees in '000)
Assets 1,436,424 240,141 16,952,954 294,039 14,184,707 110,998
Liabilities 23,862 5,668 53,605 5,671 54,930 2,049
Total income 80,647 36,617 568,923 29,221 888,016 19,111
Profit before taxation 65,321 30,629 513,010 21,113 768,015 14,788
Profit after taxation 65,321 30,629 513,010 21,113 768,015 14,788
8.7 Subsidiaries
2021 2020 Name of companies 2021 2020

No. of ordinary shares (Rupees in '000)
20,000,000 20,000,000 AL Habib Capital Markets (Private) Limited 200,000 200,000

% of holding: 66.67% (2020: 66.67%)
Par value per share: Rs. 10
Break up value per share: Rs. 11.56 based on audited
financial statements for the year ended 31 December 2020
Chief Executive: Mr. Aftab Q. Munshi
75,000,000 75,000,000 AL Habib Asset Management Limited 683,250 683,250
% of holding: 100% (2020: 100%)
Par value per share: Rs. 10
Break up value per share: Rs. 10.18 based on audited
financial statements for the year ended 31 December 2021
Chief Executive: Mr. Kashif Rafi
883,250 883,250
8.7.1 The place of incorporation and business of subsidiaries is Pakistan.
9. ADVANCES
Note Performing Non-Performing Total
2021 2020 2021 2020 2021 2020
(Rupees in '000)
Loans, cash credits, running finances, etc. 9.1 602,544,792 429,521,092 7,123,857 6,970,943 609,668,649 436,492,035
Islamic financing and related assets 84,965,477 58,248,930 410,650 218,174 85,376,127 58,467,104
Bills discounted and purchased 51,632,418 27,742,924 212,428 192,356 51,844,846 27,935,280
Advances - gross 739,142,687 515,512,946 7,746,935 7,381,473 746,889,622 522,894,419
Provision against advances

- Specific –00 –00 6,494,129 6,497,479 6,494,129 6,497,479
- General as per regulations 369,390 267,290 –00 –00 369,390 267,290
- General 5,750,000 5,750,000 –00 –00 5,750,000 5,750,000
- As per IFRS 9 in overseas branches 476,792 128,018 –00 –00 476,792 128,018
6,596,182 6,145,308 6,494,129 6,497,479 13,090,311 12,642,787
Advances-net of provision 732,546,505 509,367,638 1,252,806 883,994 733,799,311 510,251,632
62
9.1 Includes net investment in finance lease as disclosed below:
2021 2020
Later than Later than
Not later one and Not later one and
than one less than than one less than
year five years Total year five years Total
(Rupees in '000)
Lease rentals receivable 9,110,176 12,824,748 21,934,924 7,448,062 12,376,700 19,824,762

Residual value 1,598,147 5,211,797 6,809,944 1,707,629 2,978,287 4,685,916
Minimum lease payments 10,708,323 18,036,545 28,744,868 9,155,691 15,354,987 24,510,678
Financial charges for future periods (1,734,744) (1,522,420) (3,257,164) (1,059,738) (1,702,182) (2,761,920)
Present value of minimum lease payments 8,973,579 16,514,125 25,487,704 8,095,953 13,652,805 21,748,758
9.2 Particulars of advances (Gross) 2021 2020

(Rupees in '000)
In local currency 621,968,544 453,533,720

In foreign currencies 124,921,078 69,360,699
746,889,622 522,894,419
9.3 Advances include Rs. 7,746.935 million (2020: Rs. 7,381.473 million) which have been placed under
non-performing status as detailed below:
2021 2020
Category of classification Non Non
Performing Provision Performing Provision
Loans Loans
(Rupees in '000)
Domestic
Other assets especially mentioned 47,122 1,887 62,671 292
Substandard 1,352,895 331,166 165,014 33,385
Doubtful 222,455 105,141 1,118,292 499,908
Loss 4,028,738 3,960,210 3,987,501 3,965,101
5,651,210 4,398,404 5,333,478 4,498,686
Overseas
Overdue by:
181 to 365 days 85,363 85,363 136,600 87,398
> 365 days 2,010,362 2,010,362 1,911,395 1,911,395
2,095,725 2,095,725 2,047,995 1,998,793
Total 7,746,935 6,494,129 7,381,473 6,497,479
63
9.4 Particulars of provision against advances
Note 2021 2020

Specific General Total Specific General Total
(Rupees in '000)
Opening balance 6,497,479 6,145,308 12,642,787 6,201,412 3,389,309 9,590,721
Exchange adjustments 223,681 17,349 241,030 68,496 5,158 73,654
Charge for the year
- Specific provision 807,714 –00 807,714 887,878 –00 887,878

- General provision
as per regulations –00 102,100 102,100 –00 4,000 4,000
- As per IFRS 9 in
overseas branches –00 331,425 331,425 –00 (3,159) (3,159)
- General provision for
loans and advances 9.4.2 –00 –00 –00 –00 2,750,000 2,750,000
Reversals (1,034,201) –00 (1,034,201) (648,847) –00 (648,847)
(226,487) 433,525 207,038 239,031 2,750,841 2,989,872
Amounts written off 9.5 (544) –00 (544) (6,979 ) –00 (6,979)
Others –00 –00 –00 (4,481 ) –00 (4,481)
Closing balance 6,494,129 6,596,182 13,090,311 6,497,479 6,145,308 12,642,787
9.4.1 Particulars of provision against advances

2021 2020
(Rupees in '000)
In local currency 4,398,404 6,119,390 10,517,794 4,498,686 6,017,290 10,515,976

In foreign currencies 2,095,725 476,792 2,572,517 1,998,793 128,018 2,126,811
6,494,129 6,596,182 13,090,311 6,497,479 6,145,308 12,642,787
9.4.2 In line with its prudent policies, the Bank also makes general provision against its loans and advances portfolio.
This general provision is in addition to the requirements of the Prudential Regulations and as of 31 December 2021
amounts to Rs. 5,750 million (2020: Rs. 5,750 million).
9.4.3 For the purposes of determining provision against non-performing advances, the Bank has not taken into account
the Forced Sales Value of pledged stock and mortgaged properties held as collateral against non-performing advances.
9.5 PARTICULARS OF WRITE OFFs Note 2021 2020

(Rupees in '000)
9.5.1 Against Provisions 9.4 544 6,979
Directly charged to Profit and Loss account –00 –00
544 6,979
9.5.2 Against Provisions
Write Offs of below Rs. 500,000 9.6 544 2,619
Write Offs of Rs. 500,000 and above –00 4,360
544 6,979
64
9.6 DETAILS OF LOAN WRITE 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 rupees five hundred thousand or above allowed
to a person(s) during the year ended is given in Annexure I.
Note 2021 2020

(Rupees in '000)
10. FIXED ASSETS

Capital work-in-progress 10.1 1,738,112 2,279,324
Property and equipment 10.2 53,954,665 41,688,669
55,692,777 43,967,993
10.1 Capital work-in-progress

Civil works 595,516 454,808
Advance payment for purchase of equipments 125,432 51,867
Advance payment towards suppliers, contractors and property 1,015,099 1,740,546
Consultants’ fee and other charges 2,065 32,103
1,738,112 2,279,324
10.2 Property and Equipment

2021
Leasehold Building on Furniture Electrical, office Improvements Right of use

land Leasehold and and computer Vehicles to leasehold assets Total
land fixture equipment building
(Rupees in '000)
At 01 January 2021
Cost / Revalued amount 12,850,032 12,082,997 1,681,760 10,117,278 3,731,350 3,114,048 12,652,438 56,229,903
Accumulated depreciation –00 (284,535 ) (694,593 ) (6,686,117) (1,755,689) (2,208,605 ) (2,911,695 ) (14,541,234 )
Net book value 12,850,032 11,798,462 987,167 3,431,161 1,975,661 905,443 9,740,743 41,688,669
Year ended 31 December 2021

Opening net book value 12,850,032 11,798,462 987,167 3,431,161 1,975,661 905,443 9,740,743 41,688,669
Additions 3,565,705 6,188,274 329,501 2,234,677 921,689 1,009,595 –00 14,249,441
Additions to ROUs –00 –00 –00 –00 –00 –00 3,184,111 3,184,111
Movement in surplus on assets
revalued during the year –00 –00 –00 –00 –00 –00 –00 –00
Disposals –00 (2,226 ) (3,365 ) (6,720) (35,494) (6,652 ) (335,406 ) (389,863 )
Depreciation charge –00 (583,277 ) (154,430 ) (1,134,945) (684,373) (397,980 ) (1,854,453 ) (4,809,458 )
Other adjustments / transfers –00 4,406 –00 –00 –00 (4,406 ) 31,765 31,765
Closing net book value 16,415,737 17,405,639 1,158,873 4,524,173 2,177,483 1,506,000 10,766,760 53,954,665
At 31 December 2021
Net book value 16,415,737 17,405,639 1,158,873 4,524,173 2,177,483 1,506,000 10,766,760 53,954,665
Rate of depreciation (percentage) –00 2.08% - 20% 10% 20% 20% 20% As per lease term
65
2020
(Rupees in '000)
At 01 January 2020
Net book value 10,724,438 9,304,509 843,716 3,070,531 1,788,886 1,034,186 8,198,691 34,964,957
Opening net book value 10,724,438 9,304,509 843,716 3,070,531 1,788,886 1,034,186 8,198,691 34,964,957
Additions 291,338 1,100,546 274,354 1,439,840 947,251 394,308 –00 4,447,637
revalued during the year 1,703,806 1,914,291 –00 –00 –00 –00 –00 3,618,097
Disposals –00 (14,051 ) (2,207 ) (3,680) (137,195) (1,723 ) –00 (158,856 )
Other adjustments / transfers 130,450 (72,826 ) –00 –00 –00 (2,720 ) (21,213 ) 33,691
Closing net book value 12,850,032 11,798,462 987,167 3,431,161 1,975,661 905,443 9,740,743 41,688,669
At 31 December 2020
Net book value 12,850,032 11,798,462 987,167 3,431,161 1,975,661 905,443 9,740,743 41,688,669
Rate of depreciation (percentage) –00 2.22% - 12.5% 10% 20% 20% 20% As per lease term
10.3 In accordance with the Bank's accounting policy, the Bank's leasehold land and buildings on leasehold
land were revalued at 01 June 2020. The revaluation was carried out by an independent valuer, M/s. Iqbal
A. Nanjee & Co. on the basis of present physical condition and location of leasehold land and buildings
on leasehold land. Fair values were ascertained by the independent valuer under market approach through
various enquiries conducted by them at site from real estate agents and brokers. The revaluation resulted
in surplus of Rs. 3,618.097 million over the book value of the respective properties and also net deficit of
Rs. 122.190 million on certain properties. Had the leasehold land and buildings on leasehold land not
been revalued, the total carrying amounts of revalued properties as at 31 December 2021 would have
been as follows:
2021 2020
(Rupees in '000)
Leasehold land 12,474,150 8,908,446
Buildings on leasehold land 13,053,397 7,253,599
10.4 The gross carrying amount of fully depreciated assets
still in use is as follows:
Furniture and fixture 257,991 225,879
Electrical, office and computer equipment 5,058,620 4,099,451
Vehicles 660,814 514,711
Improvements to leasehold buildings 1,606,236 1,330,514
7,583,661 6,170,555
66
10.5 Details of disposal of fixed assets during the year:
2021
Particulars Cost Book Insurance
value claim
Habib Insurance Company Limited - (Rupees in '000)
(Related Party - Karachi)
Furniture and fixture 2,137 1,227 3,239
Electrical, office and computer equipment 14,024 5,084 11,886
Vehicles 13,664 7,420 13,735
11. INTANGIBLE ASSETS 2021 2020

(Rupees in '000)
Computer software
At 01 January,
Cost 1,412,077 1,279,007
Accumulated amortisation and impairment (1,200,966) (913,579 )
Net book value 211,111 365,428
Year ended 31 December,
Opening net book value 211,111 365,428
Additions - directly purchased 364,015 133,070
Amortisation charge (306,880) (287,387 )
Closing net book value 268,246 211,111
At 31 December,
Cost 1,776,092 1,412,077
Accumulated amortisation and impairment (1,507,846) (1,200,966 )
Net book value 268,246 211,111
Rate of amortisation (percentage) 50% 50%
Useful life 2 years 2 years
11.1 As at 31 December 2021, the gross carrying amount of fully amortised intangible assets still in use
amounted to Rs. 1,507.846 million (2020: Rs. 867.542 million).
12. DEFERRED TAX ASSET / (LIABILITIES)
2021
As at 01 Recognised Recognised As at 31
January in profit and in other December
2021 loss account comprehensive 2021
income
(Rupees in '000)
Deductible Temporary Differences on
Provision against diminution in the value of investments 1,270,805 93,402 –00 1,364,207
Provision against loans and advances, off-balance sheet, etc. 1,725,436 358,170 –00 2,083,606
Workers’ welfare fund 848,152 338,756 –00 1,186,908
3,844,393 790,328 –00 4,634,721
Taxable Temporary Differences on
Accelerated tax depreciation (927,430) (219,219) –00 (1,146,649)
Surplus on revaluation of fixed assets / non-banking assets (1,606,514) 77,005 (304,067) (1,833,576)
Remeasurement of defined benefit plan –00 –00 –00 –00
Surplus on revaluation of available-for-sale investments (1,486,930) –00 1,907,902 420,972
Surplus on revaluation of held-for-trading securities (270) (370) –00 (640)
(4,021,144) (142,584) 1,603,835 (2,559,893)
(176,751) 647,744 1,603,835 2,074,828
67
2020
As at 01 Recognised Recognised As at 31
January in profit and in other December
income
(Rupees in '000)

Provision against diminution in the value of investments 772,704 498,101 –00 1,270,805
Provision against loans and advances, off-balance sheet, etc. 785,860 939,576 –00 1,725,436
Workers’ welfare fund –00 848,152 –00 848,152
1,558,564 2,285,829 –00 3,844,393

Accelerated tax depreciation (960,038) 32,608 –00 (927,430)
Surplus on revaluation of fixed assets / non-banking assets (984,461) 56,261 (678,314) (1,606,514)
Remeasurement of defined benefit plan (165,629) 165,629 –00 –00
Surplus on revaluation of available-for-sale investments (828,625) –00 (658,305) (1,486,930)
Surplus on revaluation of held-for-trading securities –00 (270) –00 (270)
(2,938,753) 254,228 (1,336,619) (4,021,144)
(1,380,189) 2,540,057 (1,336,619) (176,751)
13. OTHER ASSETS Note 2021 2020

(Rupees in '000)
Income / mark-up accrued in local currency - net of provision 19,758,226 16,941,538

Income / mark-up accrued in foreign currencies - net of provision 1,174,158 691,713
Advances, deposits, advance rent and other prepayments 1,161,812 672,169
Non-banking assets acquired in satisfaction of claims 13.1 811,454 814,912
Mark to market gain on forward foreign exchange contracts 2,993,003 931,153
Acceptances 55,030,553 52,522,498
Stationery and stamps on hand 436,018 393,693
Receivable from SBP on encashment of Government Securities 150,135 33,013
ATM settlement account –00 943,062
Others 4,166,147 867,290
85,681,506 74,811,041
Less: Provision held against other assets 13.2 (7,497 ) (6,884 )
Other Assets (net of provision) 85,674,009 74,804,157
Surplus on revaluation of non-banking assets acquired in
satisfaction of claims 13.1 139,488 139,165
Other Assets-total 85,813,497 74,943,322
13.1 Market value of non-banking assets acquired in satisfaction of claims 1,016,627 957,093
Market value of the non-banking assets acquired in satisfaction of claims has been carried out by independent
valuers, M/s. K.G.Traders (Pvt.) Ltd. and M/s. MYK Associates (Pvt.) Ltd. based on present physical condition and
location of non-banking assets. Fair values were ascertained by the independent valuers under market approach
through various enquiries conducted by them at site from real estate agents and brokers.
68
2021 2020
(Rupees in '000)
13.1.1 Non-banking assets acquired in satisfaction of claims
Opening balance 954,077 909,382
Revaluations 4,165 106,658
Transferred to fixed assets –00 (54,904)
Depreciation (7,300) (7,059)
Closing balance 950,942 954,077
13.2 Provision held against other assets

Receivable against consumer loans 7,497 6,884
13.2.1 Movement in provision held against other assets
Charge for the year 2,740 6,080
Reversals (2,127) (5,255)
613 825
Amount written off –00 (1,324)
14. CONTINGENT ASSETS
There were no contingent assets of the Bank as at 31 December 2021 (2020: Nil).
Note 2021 2020
(Rupees in '000)
15. BILLS PAYABLE

In Pakistan 29,803,755 31,013,221
16. BORROWINGS
Secured
Borrowings from the State Bank of Pakistan
Under export refinance scheme 16.1 72,330,093 58,086,099
Under renewable energy 16.2 13,588,833 8,958,686
Under long term financing for imported and locally
manufactured plant and machinery 16.3 31,605,152 25,128,756
Under modernisation of small and medium enterprises 16.4 566,723 331,848
Under women entrepreneurship 16.5 26,893 26,957
Under financing facility for storage of agricultural produce 16.6 735,467 416,073
Under refinance scheme for payment of wages and salaries 16.7 7,842,569 15,720,186
Under temporary economic refinance facility 16.8 32,012,142 4,387,473
Under refinance facility for combating COVID-19 16.9 100,000 –00
158,807,872 113,056,078
Repurchase agreement borrowings 16.10 119,942,164 98,345,030
Borrowings from financial institutions 16.11 23,102,205 –00
Total secured 301,852,241 211,401,108
Unsecured
Overdrawn nostro accounts 360,661 198,297
302,212,902 211,599,405
16.1 These carry mark-up rates ranging from 1% to 2% (2020: 1% to 2%) per annum, payable quarterly at
the time of partial payment or upon maturity of loan, whichever is earlier.
16.2 These carry mark-up rates of 2% to 3% (2020: 2% to 3%) per annum having maturity periods over ten
years.
69
16.3 These carry mark-up rates ranging from 2% to 6% (2020: 2% to 6%) per annum having maturity periods
upto ten years.
16.4 These carry mark-up rates of 2% (2020: 2%) per annum having maturity periods upto ten years.
16.5 These carry mark-up rate of Nil (2020: Nil) per annum having maturity periods upto five years.
16.6 These carry mark-up rates from 2.0% to 3.5% (2020: 2.5% to 3.5%) per annum having maturity periods
upto seven years.
16.7 These carry mark-up rates upto 1% (2020: 1%) per annum having maturity periods upto three years.
16.9 These carry mark-up rates of Nil (2020: Nil) per annum having maturity periods upto five years.
16.10 These repurchase agreement borrowings are secured against Pakistan Investment Bonds and Market
Treasury Bills. These carry effective mark-up rates ranging from 9.89% to 10.70% (2020: 7.05%) per
annum, having maturity periods upto two months.
16.11 These borrowings from financial institutions carry mark - up rates ranging from 0.95% to 1.64% per annum
having maturity periods upto one year.
16.12 Particulars of borrowings with respect to currencies 2021 2020

(Rupees in '000)

In foreign currencies 23,462,866 198,297
302,212,902 211,599,405
17. DEPOSITS AND OTHER ACCOUNTS

2021 2020
In local In foreign In local In foreign
currency currencies Total currency currencies Total
(Rupees in '000)
Customers
Current deposits 451,790,944 50,037,483 501,828,427 351,389,228 40,963,348 392,352,576
Savings deposits 331,340,746 47,617,002 378,957,748 283,179,499 43,773,628 326,953,127
Term deposits 204,273,302 38,981,706 243,255,008 177,719,569 40,377,454 218,097,023
Current deposits
- remunerative 117,604,631 3,844,969 121,449,600 120,360,146 2,247,064 122,607,210
Others 20,969,061 8,647,765 29,616,826 15,419,195 7,337,309 22,756,504
1,125,978,684 149,128,925 1,275,107,609 948,067,637 134,698,803 1,082,766,440
Financial institutions
Current deposits 4,373,863 361,260 4,735,123 3,568,698 203,742 3,772,440
Savings deposits 10,929,524 18 10,929,542 576,096 18 576,114
Term deposits 1,363,787 193,282 1,557,069 1,335,500 135,060 1,470,560
Current deposits
- remunerative 17,195,258 284,878 17,480,136 10,381,784 697,737 11,079,521
Others 13,850 –00 13,850 21,286 –00 21,286
33,876,282 839,438 34,715,720 15,883,364 1,036,557 16,919,921
1,159,854,966 149,968,363 1,309,823,329 963,951,001 135,735,360 1,099,686,361
70
2021 2020
(Rupees in '000)
17.1 Composition of deposits

- Individuals 805,485,582 694,690,728
- Government (Federal and Provincial) 42,529,298 43,377,359
- Public Sector Entities 53,091,501 52,701,961
- Banking Companies 240,760 341,145
- Non-Banking Financial Institutions 34,474,960 16,578,776
- Private Sector 374,001,228 291,996,392
1,309,823,329 1,099,686,361
17.2 Deposits includes eligible deposits covered under deposit protection mechanism as required by the
Deposit Protection Act, 2016 amounting to Rs. 903,117.371 million (2020: Rs. 787,834.683 million).
Note 2021 2020
(Rupees in '000)
18. SUBORDINATED DEBT - Unsecured

Term Finance Certificates (TFCs) - V - (Unquoted) 18.1 –00 3,992,800
Term Finance Certificates (TFCs) - VI - (Unquoted) 18.2 7,000,000 7,000,000
Term Finance Certificates (TFCs) - VII - (Unquoted) 18.3 3,995,200 3,996,800
Term Finance Certificates (TFCs) - VIII - (Unquoted) 18.4 5,000,000 –00
15,995,200 14,989,600
18.1 During the period, the Bank exercised the call option of Term Finance Certificates - V 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 17 March 2021.
18.2 Term Finance Certificates - VI (Unquoted)
Issue amount Rupees 7,000 million

Issue date December 2017
Maturity date Perpetual
Rating AA
Profit payment frequency semi-annually
Redemption No fixed or final redemption date.
Mark-up Payable six monthly at six months KIBOR (ask side) plus 1.50%
without any floor or cap.
The Issuer will have full discretion over the amount and timing of
profit distribution and waiver of any profit distribution or other payment
will not constitute an event of default.
Call option On or after five years with prior SBP approval. As per SBP's
requirement, the Bank shall not exercise call option unless the called
instrument is replaced with capital of same or better quality.
Lock-in-clause No profit may be paid if such payment will result in shortfall (or
increase the shortfall) in the Bank’s Minimum Capital Requirement
(“MCR”), Leverage Ratio ("LR") or Capital Adequacy Ratio (“CAR”).
Loss absorbency clause The instrument will be subject to loss absorption and / or any other
requirements under SBP’s Basel III Capital Rules. Upon the occurrence
of a point of non-viability event as defined by SBP's Basel III Capital
Rules, SBP may at its option, fully and permanently convert the TFCs
into common shares of the Bank (subject to a cap) at a price equivalent
to the market value of shares of the Bank on the date of trigger, and
/ or have them immediately written off (either partially or in full).
71
18.3 Term Finance Certificates - VII (Unquoted)

Maturity date December 2028
Rating AA+
Redemption 6th - 108th month: 0.02% per each semi-annual period; 114th and
120th month: 49.82% each.
Mark-up 6 - Months KIBOR (ask side) + 1.00% per annum.
Call option On or after five years with prior SBP approval.
Lock-in-clause Neither profit nor principal may be paid if such payments will result
in shortfall (or increase the shortfall) in the Bank’s Minimum Capital
Requirement (“MCR”), Leverage Ratio ("LR") or Capital Adequacy
Ratio (“CAR”).
requirements under SBP’s Basel III Capital Rules. Upon the
occurrence of a Point of Non-Viability event as defined by SBP's
Basel III Capital Rules, SBP may at its option, fully and permanently
convert the TFCs into common shares of the Bank (subject to a cap)
at a price equivalent to the market value of shares of the Bank on the
date of trigger, and / or have them immediately written off (either
partially or in full).
18.4 Term Finance Certificates - VIII (Unquoted)

Issue date September 2021
Maturity date September 2031
Rating AA+
Ratio (“CAR”).
requirements under SBP’s Basel III Capital Rules. Upon the
occurrence of a Point of Non-Viability event as defined by SBP's
Basel III Capital Rules, SBP may at its option, fully and permanently
convert the TFCs into common shares of the Bank (subject to a cap)
at a price equivalent to the market value of shares of the Bank on the
date of trigger, and / or have them immediately written off (either
partially or in full).
72
Note 2021 2020
(Rupees in '000)
19. OTHER LIABILITIES
Mark-up / return / interest payable in local currency 2,045,632 1,683,612

Mark-up / return / interest payable in foreign currencies 302,370 196,066
Unearned commission income 1,416,819 304,009
Accrued expenses 2,942,988 2,532,647
Acceptances 55,030,553 52,522,498
Unclaimed / dividend payable 546,228 474,931
Mark to market loss on forward foreign exchange contracts 787,128 490,822
Branch adjustment account 5,764,199 2,639,104
Payable to defined benefit plan 974,313 683,514
Charity payable 12,978 41,298
Provision against off - balance sheet items 19.1 173,319 146,692
Security deposits against leases / ijarah 7,174,202 5,690,619
Provision for compensated absences 19.2 1,127,704 969,754
Other security deposits 765,531 647,203
Workers’ welfare fund 3,043,353 2,423,293
Payable to SBP / NBP 1,323,252 455,014
Payable to supplier against murabaha 223,202 166,017
Insurance payable 610,916 470,883
Lease liability against right-of-use assets 12,235,539 10,526,139
Current taxation (payments less provisions) 2,043,762 450,248
ATM settlement account 1,729,169 –00
Others 1,528,729 1,255,250
101,801,886 84,769,613
19.1 Provision against off - balance sheet obligations
Exchange adjustment against IFRS 9 in overseas branches 4,141 1,470

Reversals (38,277 ) (3,895 )
22,486 15,853
19.1.1 The provision against off-balance sheet obligations includes provision in respect of letter of guarantees
and shipping guarantee.
19.2 Provision for compensated absences has been determined on the basis of independent actuarial
valuation. The significant assumptions used for actuarial valuation were as follows:
2021 2020
(% per annum)
Discount rate 12.25% 10.25%
Expected rate of increase in salary in future years 11.25% 9.25%
73
20. SHARE CAPITAL
20.1 Authorised Capital
2021 2020 2021 2020
Number of shares (Rupees in '000)
1,500,000,000 1,500,000,000 Ordinary shares of Rs. 10 each 15,000,000 15,000,000
20.2 Issued, subscribed and paid up capital

2021 2020
Number of shares
30,000,000 30,000,000 Fully paid in cash 300,000 300,000

1,081,425,416 1,081,425,416 Issued as bonus shares 10,814,254 10,814,254
1,111,425,416 1,111,425,416 11,114,254 11,114,254
20.3 As of statement of financial position date 162,731,961 (2020: 162,818,503) ordinary shares of
Rs. 10/- each were held by the related parties.
Note 2021 2020
(Rupees in '000)
21. SURPLUS ON REVALUATION OF ASSETS
Surplus / (deficit) on revaluation of:
- Available for sale securities 8.1 (1,079,413 ) 4,248,372

- Fixed Assets 21.1 8,869,136 9,062,739
- Non-banking assets acquired in satisfaction of claims 21.2 139,488 139,165
7,929,211 13,450,276
Deferred tax on surplus / (deficit) on revaluation of:
- Available for sale securities (420,972 ) 1,486,930

- Fixed Assets 21.1 1,849,120 1,663,701
- Non-banking assets acquired in satisfaction of claims 21.2 54,804 13,161
1,482,952 3,163,792
6,446,259 10,286,484
21.1 Surplus on revaluation of fixed assets

Surplus on revaluation of fixed assets as at 01 January 9,062,739 5,495,269
Surplus on revaluation of the Bank’s fixed assets during the year –00 3,726,240
Transferred to unappropriated profit in respect of incremental
depreciation charged during the year (193,603 ) (158,770 )
Surplus on revaluation of fixed assets as at 31 December 8,869,136 9,062,739
Less: related deferred tax liability on:
- revaluation as at 01 January 1,663,701 1,049,269

- adjustment / revaluation recognised during the year 260,923 670,002
- incremental depreciation charged during the year (75,504 ) (55,570 )
1,849,120 1,663,701
7,020,016 7,399,038
74
Note 2021 2020
(Rupees in '000)
21.2 Surplus on revaluation of non - banking assets acquired
in satisfaction of claims
Surplus on revaluation of non-banking assets as at 01 January 139,165 34,482
Surplus on revaluation of non-banking assets during the year 4,165 106,658
Surplus on revaluation of non-banking assets as at 31 December 139,488 139,165
- revaluation as at 01 January 13,161 5,540
- adjustment / revaluation recognised during the year 43,144 8,312
- incremental depreciation charged during the year (1,501 ) (691)
54,804 13,161
84,684 126,004
22. CONTINGENCIES AND COMMITMENTS
- Guarantees 22.1 126,082,119 92,814,672
- Commitments 22.2 438,585,630 351,718,547
- Other contingent liabilities 22.3 2,030,711 1,537,827
566,698,460 446,071,046
22.1 Guarantees:
Financial guarantees 24,274,161 20,716,906
Performance guarantees 101,807,958 72,097,766
126,082,119 92,814,672
22.2 Commitments:
Documentary credits and short term trade-related transactions
- letters of credit 301,891,236 207,740,057
Commitments in respect of:
- forward foreign exchange contracts 22.2.1 131,220,965 128,823,137
- forward lending 22.2.2 4,717,424 7,124,914
Commitments for acquisition of:
- operating fixed assets 756,005 8,030,439
438,585,630 351,718,547
22.2.1 Commitments in respect of forward foreign exchange contracts

Purchase 72,497,648 75,472,905
Sale 58,723,317 53,350,232
131,220,965 128,823,137
The maturities of above contracts are spread over the periods upto two years.
22.2.2 Commitments in respect of forward lending 4,717,424 7,124,914
These represent commitments that are irrevocable because they cannot be withdrawn at the discretion
of the Bank without the risk of incurring significant penalty or expense.
75
2021 2020
(Rupees in '000)
22.3 Claims against the Bank not acknowledged as debts 2,030,711 1,537,827
22.4 Other contingent liabilities
Income tax returns of the Bank have been submitted upto and including the Bank’s financial year 2020
(Tax Year 2021). The income tax assessments of the Bank have been finalized upto and including tax
year 2018. Matters of disagreement exist between the Bank and tax authorities for various tax years
and are pending with the Commissioner Inland Revenue (Appeals) and Income Tax Appellate Tribunal
(ITAT). These issues mainly relate to addition of general provision (specific), reversal of provision for
non-performing loans, charge for defined benefit plan and provision for compensated absences.
For tax year 2012 and 2013, the Additional Commissioner Inland Revenue (ACIR) passed an amended
order u/s. 122(5A) of the Income Tax Ordinance, 2001 resulting in an impact of Rs. 482.233 million.
Subsequently, Commissioner Inland Revenue (Appeals) has passed order by allowing Rs. 134.616
million resulting in an aggregate net tax impact of Rs. 347.617 million. The Bank has filed an appeal
before Income Tax Appellate Tribunal (ITAT) against the above mentioned orders.
Commissioner Inland Revenue (Appeals) passed an appellate order against Deputy Commissioner
Inland Revenue (DCIR) order for Tax Year 2014 (Accounting Year 2013) by allowing certain expenses
resulting in an impact of Rs. 25.300 million and remanded back certain expenses to DCIR. The resulted
aggregate net tax impact stands at Rs. 125.469 million. The Bank has filed an appeal before Income
Tax Appellate Tribunal (ITAT) against the above mentioned order.
Commissioner Inland Revenue (Appeals) passed an appellate order against Additional Commissioner
Inland Revenue (ACIR) order for Tax Year 2015 (Accounting Year 2014) by allowing certain expenses
resulting in an impact of Rs. 75.256 million and remanded back certain expenses to ACIR. The resulted
resulting in an impact of Rs. 65.722 million. The resulted aggregate net tax impact stands at Rs. 194.376
million. The Bank has filed an appeal before Income Tax Appellate Tribunal (ITAT) against the above
mentioned order.
Commissioner Inland Revenue (Appeals) has remanded back the order of Deputy Commissioner Inland
Revenue (DCIR) against Federal Excise Duty levy on certain items for the period January 2013 to
December 2015. The resulted aggregate net tax impact stands at Rs. 80.766 million.
Commissioner (HQ), Punjab Revenue Authority has passed order for the period from January to
December 2016 levying Punjab Sales Tax on services on certain items resulting in an impact of
Rs. 112.641 million. Appellate Tribunal – Punjab Revenue Authority has remanded back the order of
Commissioner (HQ), Punjab Revenue Authority.
Commissioner Inland Revenue (Appeals) has passed orders for tax years 2009 and 2011 confirming
disallowance of provision for non-performing loans, other provisions and amortization of intangible
assets having an aggregate tax impact of Rs. 15.372 million. The Bank has filed an appeal before
Income Tax Appellate Tribunal (ITAT) against the above mentioned orders.
Commissioner Inland Revenue (Appeals), Mirpur AJ&K has annulled the amendments made by Assistant
Commissioner Inland Revenue, Mirpur AJ&K for Tax Year 2014 to 2018. This resulted in a favorable
aggregate net tax impact of Rs. 93.443 million.
Assistant Commissioner Inland Revenue, Mirpur AJ&K has finalized audit of the Bank’s Azad Kashmir
operations for Tax Year 2019 by disallowing certain expenses resulting in an impact of Rs. 92.311
million. The Bank has filed an appeal before Commissioner Inland Revenue (Appeals), Mirpur AJ&K.
The management, based on the opinion of its tax advisor, is confident about the favorable outcome of
the above matters.
76
23. DERIVATIVE INSTRUMENTS
The Bank deals in derivative financial instruments namely forward foreign exchange contracts and
foreign currency swaps with the principal view of hedging the risks arising from its trade business. As
per the Bank’s policy, these contracts are reported on their fair value at the statement of financial position
date. The gains and losses from revaluation of these contracts are included under “income from dealing
in foreign currencies”. Unrealised gains and losses on these contracts are recorded in the statement
of financial position under “other assets / other liabilities”. These products are offered to the Bank’s
customers to protect from unfavourable movements in foreign currencies. The Bank hedges such
exposures in the inter-bank foreign exchange market.
23.1 Product Analysis
2021
CONTRACT SWAP TOTAL
Counter Parties Notional Mark to Notional Mark to Notional Mark to
Principal Market Principal Market Principal Market
gain / (loss) gain / (loss) gain / (loss)
(Rupees in '000)
Banks
Hedging 7,709,331 (24,745) 62,902,410 (368,653) 70,611,741 (393,398)
Other Entities
Hedging 60,609,224 2,599,273 –000 –000 60,609,224 2,599,273
Total
Hedging 68,318,555 2,574,528 62,902,410 (368,653) 131,220,965 2,205,875
2020
Banks
Hedging 9,107,115 (27,012) 68,172,458 372,325 77,279,573 345,313
Other Entities
Hedging 51,543,564 95,018 –000 –000 51,543,564 95,018
Total
Hedging 60,650,679 68,006 68,172,458 372,325 128,823,137 440,331
23.2 Maturity Analysis 2021

Number of Notional Mark to Market
Contracts Principal
Negative Positive Net
(Rupees in '000)
Upto 1 month 220 18,737,362 (100,927) 257,804 156,877
1 to 3 months 494 59,723,927 (402,549) 921,515 518,966
3 to 6 months 470 37,622,436 (229,758) 1,215,887 986,129
6 months to 1 year 254 15,044,175 (53,894) 595,124 541,230
1 to 2 years 1 93,065 –00 2,673 2,673
1,439 131,220,965 (787,128) 2,993,003 2,205,875
2020
Upto 1 month 297 51,974,821 (112,849) 296,381 183,532

1 to 3 months 412 46,596,575 (218,736) 340,228 121,492
3 to 6 months 352 19,991,703 (128,829) 161,815 32,986
6 months to 1 year 177 10,260,038 (30,408) 132,729 102,321
1 to 2 years –0 –00 –00 –00 –00
1,238 128,823,137 (490,822) 931,153 440,331
77
Note 2021 2020
(Rupees in '000)
24. MARK-UP / RETURN / INTEREST EARNED
On loans and advances 39,771,828 43,412,475
On investments 76,469,461 81,094,310
On deposits with financial institutions 253,845 350,731
On securities purchased under resale agreements 241,458 198,514
On lending to financial institutions 15,233 216,003
On call money lendings 370 554
116,752,195 125,272,587
25. MARK-UP / RETURN / INTEREST EXPENSED

Deposits 43,251,869 48,041,028
Borrowings from SBP 2,310,305 1,616,923
Subordinated debt 1,178,571 1,753,337
Cost of foreign currency swaps 1,511,934 1,165,922
Repurchase agreement borrowings 11,530,205 13,923,326
Other borrowings 235,892 195,169
61,143,480 67,652,611
26. FEE AND COMMISSION INCOME

Branch banking customer fees 1,309,872 1,054,380
Investment banking fees 72,167 127,450
Consumer finance related fees 80,006 48,499
Card related fees (debit and credit cards) 1,376,752 491,655
Credit related fees 333,942 153,330
Commission on trade 5,132,467 4,046,591
Commission on guarantees 592,864 406,053
Commission on cash management 221,048 176,337
Commission on home remittances 149,562 118,958
Others 36,170 12,991
9,304,850 6,636,244
27. (LOSS) / GAIN ON SECURITIES

Realised 27.1 (42,016 ) 184,851
Unrealised-held for trading 870 771
(41,146 ) 185,622
27.1 Realised (loss) / gain on:

Federal Government Securities 5,199 5,494
Shares 470 10,960
Mutual Funds (47,685 ) 168,397
(42,016 ) 184,851
28. OTHER INCOME

Rent on property 11,036 5,990
Gain on sale of fixed assets-net 460,918 437,189
Recovery of expenses from customers 28.1 355,536 322,776
Lockers rent 15,846 13,176
Exchange gain realised on closure of overseas branch 292,780 –00
Others 2,205 1,124
1,138,321 780,255
28.1 Includes courier, SWIFT, postage and other charges recovered from customers.
78
Note 2021 2020
(Rupees in '000)
29. OPERATING EXPENSES
Total compensation expenses 29.1 17,073,534 15,442,454
Property expenses
Rent and taxes 314,726 310,778
Insurance 14,830 19,265
Utilities cost 1,522,002 1,094,841
Security (including guards) 1,289,995 1,029,806
Repair and maintenance (including janitorial charges) 390,784 326,252
Depreciation 2,843,008 2,621,067
6,375,345 5,402,009
Information technology expenses

Software maintenance 5,367 4,667
Hardware maintenance 1,308,829 1,194,369
Depreciation 370,878 223,401
Network charges 559,819 430,124
2,551,773 2,139,948
Other operating expenses

Directors’ fees and allowances 40,770 35,037
Fees and allowances to Shariah Board 14,779 12,679
Insurance 519,064 494,678
Legal and professional charges 305,256 171,636
Outsourced services costs 29.2 1,819,571 1,639,293
Travelling and conveyance 282,181 188,097
NIFT and other clearing charges 193,036 136,532
Depreciation 1,602,872 1,604,106
Repair and maintenance 1,570,464 1,453,085
Training and development 47,460 27,116
Postage and courier charges 265,970 231,505
Communication 498,510 344,705
Stationery and printing 844,312 782,915
Marketing, advertisement and publicity 460,293 628,577
Donations 29.3 244,407 157,132
Auditors remuneration 29.4 9,187 8,117
Commission and brokerage 611,636 408,345
Entertainment and staff refreshment 385,803 285,541
Vehicle running expenses 1,599,765 1,097,251
Subscriptions and publications 224,562 209,754
CNIC verification charges 169,702 92,171
Security charges 473,360 311,961
Others 570,238 693,308
12,753,198 11,013,541
38,753,850 33,997,952
79
2021 2020
(Rupees in '000)
29.1 Total compensation expense
Fees and allowances etc. 1,136,888 663,964
Managerial remuneration 10,173,036 9,748,008
Charge for defined benefit plan 491,348 424,170
Contribution to defined contribution plan 703,596 600,454
Rent and house maintenance 3,070,940 2,592,508
Utilities 767,899 648,628
Medical 553,727 505,450
Charge for employees compensated absences 155,639 247,041
Social security 6,330 1,477
Staff indemnity 14,131 10,754
17,073,534 15,442,454
The compensation provided by the Bank to employees is composed of fixed pay structures and do not
include any variable element that varies based on performance benchmarks or targets.
29.2 Total cost for the year included in other operating expenses relating to material outsourced activities is
Rs. 38.575 million (2020: Rs. 35.885 million) paid to a company incorporated outside Pakistan. Material
outsourcing arrangements are as follows:
S.No. Name of material outsourced activity Name of service provider Nature of service
1. Point of Sale (POS) Acquiring M/s. Wemsol (Private) Limited Terminal Management
& Merchant On Boarding
2. Vision Plus-Credit Card System M/s. Arab Financial Services (AFS) Credit Card
2021 2020
(Rupees in '000)
29.3 The detail of donations is given below:
Al-Sayyeda Benevolent Trust 6,000 3,000
Childlife Foundation 15,000 10,000
Habib Education Trust* 6,000 3,000
Habib Medical Trust 6,000 3,000
Habib Poor Fund** 6,000 3,000
Masoomeen Hospital –00 13,000
Patients’ Aid Foundation 146,207 50,000
Prime Minister’s Corona Philanthropy Drive –00 25,532
Rahmatbai Habib Food and Clothing Trust 6,000 3,000
Rahmatbai Habib Widows and Orphans Trust 6,000 3,000
The Citizens Foundation 6,200 5,600
The Health Foundation 1,000 –00
The Indus Hospital 40,000 10,000
The Kidney Centre –00 25,000
244,407 157,132
* Mr. Qumail R. Habib, Executive Director, is Managing Trustee of Habib Education Trust.
** Mr. Murtaza H. Habib, Director, is Trustee of Habib Poor Fund.
29.4 Auditors’ remuneration
Audit fee 3,135 3,135
Half yearly review 990 990
Other certifications 3,459 2,759
Gratuity fund 109 109
Out of pocket expenses 1,494 1,124
9,187 8,117
30. OTHER CHARGES
Penalties imposed by the State Bank of Pakistan 36,294 56,672
80
2021 2020
Note (Rupees in '000)
31. (REVERSALS) / PROVISIONS AND WRITE OFFS-NET
(Reversal) / provision for diminution in value of investments - net 8.3 (277,397 ) 1,414,689
Provision against loans and advances - net 9.4 207,038 2,989,872
Provision against other assets 13.2.1 613 825
Provision against off-balance sheet items 19.1 22,486 15,853
Deficit on revaluation of fixed asset - net – 122,190
(47,260 ) 4,543,429
32. TAXATION
Current 12,218,233 13,300,165
Prior years –00 9,420
Deferred (647,744 ) (2,540,057 )
11,570,489 10,769,528
32.1 Relationship between tax expense and accounting profit

Tax at the applicable rate of 35% (2020: 35%) 10,595,476 10,003,372

Tax effects of:
Expenses that are not deductible in determining
taxable income (278,139 ) (715,091 )
Tax effect of super tax 1,253,152 1,351,810
Others –00 129,437
11,570,489 10,769,528
The effective tax rate for the year is 38% (2020: 38%).
2021 2020
(Rupees in '000)
33. BASIC AND DILUTED EARNINGS PER SHARE
Profit for the year 18,702,299 17,811,536
(Number)
Weighted average number of ordinary shares 1,111,425,416 1,111,425,416
(Rupees)
Basic and diluted earnings per share 16.83 16.03
2021 2020
Note (Rupees in '000)
34. CASH AND CASH EQUIVALENTS

Overdrawn nostro accounts 16 (360,661) (198,297)
124,979,088 125,400,165
81
34.1 Reconciliation of movement of liabilities to cash flows arising from financing activities
2021
Subordinated Lease Dividend
debt liability payable
(Rupees in '000)
Balance as at 01 January 2021 14,989,600 10,526,139 474,931
Changes from financing cash flows

Receipts / (payments) against subordinated debt-net 1,005,600 –00 –00
Payment against lease liability –00 (2,215,854) –00
Dividend paid –00 –00 (4,930,117 )
Total changes from financing cash flows 1,005,600 (2,215,854) (4,930,117 )
Other changes
Addition to right-of-use-assets-net –00 2,800,550 –00
Mark-up expense on lease liability against
right-of-use assets –00 1,124,704 –00
Final cash dividend (Rs. 4.50 per share) –00 –00 5,001,414
–00 3,925,254 5,001,414
Balance as at 31 December 2021 15,995,200 12,235,539 546,228
2020
(Rupees in '000)

Payments against subordinated debt (3,200 ) –00 –00
Dividend paid –00 –00 (3,841,582 )
Total changes from financing cash flows (3,200 ) (1,972,143) (3,841,582 )
Other changes
Addition to right-of-use-assets –00 3,224,658 –00
right-of-use assets –00 956,906 –00
–00 4,181,564 3,889,988
82
2021 2020
(Number)
35. STAFF STRENGTH
Permanent 14,767 12,485

Temporary / on contractual basis 281 243
Bank’s own staff at end of the year 15,048 12,728
Outsourced 3,087 2,768
Total staff strength 18,135 15,496
35.1 Domestic 18,085 15,443

Offshore 50 53
18,135 15,496
36. DEFINED BENEFIT PLAN

36.1 General description
The Bank operates an approved gratuity fund for all its confirmed employees, which is administered by
the Trustees. The benefits under the gratuity scheme are payable on retirement at the age of 60 years
or on earlier cessation of service as under:
Number of years of eligible service completed: Amount of gratuity payable:
Less than 5 years Nil
5 years or more but less than 10 years 1/3rd of basic salary for each year served
15 years or more Full basic salary for each year served
The Bank's costs and contributions are determined based on actuarial valuation carried out at each
year end using Projected Unit Credit Actuarial Method. All actuarial gains / losses are recognised in
'other comprehensive income' as they occur and are not reclassified to profit and loss account in
subsequent periods.
36.2 Number of employees under the scheme
The number of employees covered under the defined benefit scheme are 14,718 (2020: 12,459).
36.3 Principal actuarial assumptions
The latest actuarial valuation of the scheme was carried out on 31 December 2021 and the significant
assumptions used for actuarial valuation were as follows:
2021 2020
Discount Rate 11.75% 10.25%

Expected rate of return on plan assets 11.03% 14.83%
Expected rate of salary increase : Year 1 10.75% 9.25%
Year 2 10.75% 9.25%
Mortality rates (for death in service) SLIC(2001-05)-1 SLIC(2001-05)-1
Rates of employee turnover Moderate Moderate
83
36.4 Reconciliation of payable to defined benefit plan Note 2021 2020
(Rupees in '000)
Present value of obligations 5,252,581 4,323,932

Fair value of plan assets (4,278,268 ) (3,640,418 )
Payable 974,313 683,514
36.5 Movement in defined benefit obligations
Obligation at the beginning of the year 4,323,932 3,590,184

Current service cost 424,622 369,454
Interest cost 451,993 450,696
Benefits paid during the year (141,808 ) (72,206 )
Remeasurement loss / (gain) 193,842 (14,196 )
Obligation at the end of the year 5,252,581 4,323,932
36.6 Movement in fair value of plan assets
Fair value at the beginning of the year 3,640,418 3,116,957

Interest income on plan assets 385,267 395,980
Contribution by the Bank-net 491,348 424,170
Actual benefits paid during the year (141,808 ) (72,206 )
Remeasurement loss on plan assets 36.8.2 (96,957 ) (224,483 )
Fair value at the end of the year 4,278,268 3,640,418
36.7 Movement in payable under defined benefit scheme

Contribution by the Bank (491,348 ) (424,170 )
Remeasurement loss recognised in
Other Comprehensive Income during the year 36.8.2 290,799 210,287
Closing Balance 974,313 683,514
36.8 Charge for defined benefit plan
36.8.1 Cost recognised in profit and loss

Net interest on defined benefit liability 66,726 54,716
491,348 424,170
84
2021 2020
(Rupees in '000)
36.8.2 Re-measurements recognised in OCI during the year
Loss / (gain) on obligation
- Financial assumptions 42,818 (47,418 )
- Experience assumptions 151,024 33,222
193,842 (14,196 )
Actuarial loss on plan assets 96,957 224,483
Total Remeasurement loss recognised in OCI 290,799 210,287
36.9 Components of plan assets

Cash and cash equivalents-net 180,052 30,183
Government securities 4,098,214 3,610,235
Total fair value of plan assets 4,278,266 3,640,418
36.10 Sensitivity analysis 2021

(Rupees in '000)
1% increase in discount rate 4,767,772

1% decrease in discount rate 5,819,239
1% increase in expected rate of salary increase 5,845,452
1% decrease in expected rate of salary increase 4,738,066
2022
(Rupees in '000)
36.11 Expected contributions to be paid to the funds in the next financial year 628,504
36.12 Expected charge for the next financial year 628,504
2021
(Rupees in '000)
36.13 Maturity profile
The weighted average duration of the obligation is 9.95 years.
Distribution of timing of benefit payments

within the next 12 months (next annual reporting period) 256,599
between 1 and 5 years 1,984,973
6,991,019
85
36.14 Funding Policy
The Bank will fund the yearly contribution to the defined benefit plan each year, as per the amount
calculated by the valuer.
36.15 Significant Risk
Asset Volatility
The Defined Benefit Gratuity Fund is almost entirely invested in Government Bonds with mostly fixed
income bonds. Almost 32.29% of the total Investments (Rs. 1,323 billion) is invested in PIB's. This gives
rise to significant reinvestment risk.
The remaining fund is invested in Treasury Bills. The T-Bills exposure is almost 67.71% (Rs. 2,775 billion).
The asset class is volatile with reference to the yield on this class. This risk should be viewed together
with change in the bond yield risk.
Changes in Bond Yields
There are two dimensions to the changes in bond yields: first, as described above; second, the valuation
of the gratuity liability is discounted with reference to these bond yields. So any increase in bond yields
will lower the gratuity liability and vice versa, but, it will also lower the asset values.
Inflation Risk
The salary inflation is the major risk that the gratuity fund liability carries. In a general economic sense and
in a longer view, there is a case that if bond yields increase, the change in salary inflation generally offsets
the gains from the decrease in discounted gratuity liability. But viewed with the fact that asset values will
also decrease, the salary inflation does, as an overall affect, increases the net liability of the Bank.
Life Expectancy / Withdrawal Rate
The gratuity is paid off at the maximum of age 60. The life expectancy is in almost minimal range and
is quite predictable in the ages when the employee is in the accredited employment of the Bank for the
purpose of the gratuity. Thus, the risk of life expectancy is almost negligible. However, had a post
retirement benefit been given by the Bank like monthly pension, post retirement medical etc., this would
have been a significant risk which would have been quite difficult to value even by using advance mortality
improvement models.
The withdrawal risk is dependent upon the: benefit structure; age and retention profile of the staff; the
valuation methodology; and long-term valuation assumptions.
Other Risks
Though, not imminent and observable, over long term there are some risks that may crystallise. This
includes:
86
Model Risk
The defined benefit gratuity liability is usually actuarially valued each year. Further, the assets in the
gratuity fund are also marked to market. This two-tier valuation gives rise to the model risk.
Retention Risk
The risk that employee will not be motivated to continue the service or start working with the Bank if no
market comparable retirement benefit is provided.
Final Salary Risk
The risk, for defined benefit gratuity, that any disproportionate salary merit increases in later service
years will give rise to multiplicative increase in the gratuity liability as such increase is applicable to all
the past years of service.
Operational Risk related to a Separate Entity
Retirement benefits are funded through a separate trust fund which is a different legal entity than the Bank.
Generally, the protocols, processes and conventions used throughout the Bank are not applicable or are not
actively applied to the retirement benefit funds. This gives rise to some specific operational risks.
Compliance Risk
The risk that retirement benefits offered by the Bank does not comply with minimum statutory requirements.
Legal / Political Risk
The risk that the legal / political environment changes and the Bank is required to offer additional or
different retirement benefits than what the Bank projected.
37. DEFINED CONTRIBUTION PLAN
The general description of the plan is included in note 4.9.
2021
Contributions made during the year : (Rupees in '000)
Employer’s contribution 703,596

Employees’ contribution 703,596
The number of employees covered under the defined contribution plan are 12,280 (2020: 11,110).
87
38. COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
38.1 Total Compensation Expense

2021
Directors
Chairman Executives Non- Members Chief Key Other Risk
(other than Executives Shariah Executive Management Takers /
CE) Board Personnel Controllers
(Rupees in '000)
Fees and allowances etc. 11,520 –00 29,250 –00 –00 –00 –00
Managerial remuneration –00 32,670 –00 9,628 71,333 360,325 1,548,808
Charge for defined benefit plan –00 –00 –00 88 22,793 61,981 232,694
Contribution to defined
contribution plan –00 –00 –00 109 5,733 21,866 118,783
Rent and house maintenance –00 10,406 –00 3,766 22,933 115,752 498,649
Utilities –00 2,602 –00 942 5,734 28,938 124,662
Medical –00 –00 –00 118 –00 1,136 37,065
Others –00 –00 –00 128 –00 4,936 42,039
Total 11,520 45,678 29,250 14,779 128,526 594,934 2,602,700
Number of persons 1 1 8 5 1 37 1,057
2020
Fees and allowances etc. 6,720 –00 24,400 –00 –00 –00 –00
Utilities –00 2,374 –00 758 5,480 28,199 100,595
Medical –00 22 –00 108 –00 1,299 30,896
Others 3,917 –00 –00 –00 –00 5,074 25,653
Total 10,637 45,406 24,400 12,679 124,652 664,940 2,325,646
Number of persons 1 1 8 3 1 40 879
88
Chief Executive, Executive Director, Members Shariah Board, Key Management Personal and Other Risk Takers / Controllers are entitled
to Bank's maintained cars with fuel in accordance with the terms of their employment and are entitled to medical and life insurance
benefits in accordance with the policy of the Bank. In addition, the Chief Executive and Executive Director are also provided with drivers,
security arrangements and payment of travel bills in accordance with their terms of employment.
Chairman of the Board is also entitled to Bank’s maintained cars with fuel, security guard services, payment of utility bills, club and
entertainment bills, travelling bills, appropriate office, staff, and administrative support.
38.2 Remuneration paid to Directors for participation in Board and Committee Meetings
2021
Meeting Fees and Allowances Paid
For Board Committees
Human
Resource & Risk Credit Risk Total
S.No. Name of Director For Board Audit Remuneration Management Management IFRS 9 IT Amount
Meetings Committee Committee Committee Committee Committee Committee Paid
(Rupees in '000)
1. Mr. Abbas D. Habib 3,840 –00 3,840 –00 –00 –00 3,840 11,520
2. Mr. Anwar Haji Karim 1,000 1,750 –00 750 –00 –00 –00 3,500
3. Ms. Farhana Mowjee Khan 1,000 –00 1,000 1,000 –00 –00 –00 3,000
4. Syed Mazhar Abbas 1,000 2,000 1,000 –00 1,000 –00 1,000 6,000
5. Mr. Safar Ali Lakhani 750 1,500 –00 750 750 –00 –00 3,750
6. Syed Hasan Ali Bukhari 750 1,500 750 –00 750 750 –00 4,500
7. Mr. Murtaza H. Habib 1,000 –00 –00 –00 1,000 –00 –00 2,000
8. Mr. Arshad Nasar 750 1,500 750 –00 –00 750 750 4,500
9. Mr. Adnan Afridi 1,000 –00 –00 1,000 –00 –00 –00 2,000
11,090 8,250 7,340 3,500 3,500 1,500 5,590 40,770
89
2020
Human
(Rupees in '000)
1. Mr. Abbas D. Habib 2,880 –00 1,920 –00 –00 –00 1,920 6,720
2. Mr. Anwar Haji Karim 900 1,550 –00 400 –00 –00 –00 2,850
3. Ms. Farhana Mowjee Khan 900 –00 650 650 –00 –00 –00 2,200
4. Syed Mazhar Abbas 900 1,400 650 –00 650 –00 650 4,250
7. Mr. Murtaza H. Habib 900 –00 –00 –00 650 –00 –00 1,550
8. Mr. Arshad Nasar 900 1,550 650 –00 –00 500 650 4,250
9. Mr. Adnan Afridi 900 –00 –00 650 –00 –00 –00 1,550
10,080 7,600 4,520 2,350 2,350 1,000 3,220 31,120
38.3 Remuneration paid to Shariah Board Members

2021 2020
Resident Non-Resident Resident Non-Resident
Items Chairman Members Members Chairman Member Member
(Rupees in '000)
Managerial remuneration 4,600 1,882 3,146 3,400 2,516 2,400

Charge for defined benefit plan –00 88 –00 –00 255 –00
Contribution to defined contribution plan –00 109 –00 –00 212 –00
Rent and house maintenance 1,840 667 1,259 1,360 710 960
Utilities 460 167 315 340 178 240
Medical 36 35 47 36 36 36
Others –00 128 –00 –00 –00 –00
Total 6,936 3,076 4,767 5,136 3,907 3,636
Number of persons 1 2 2 1 1 1
90
39. FAIR VALUE MEASUREMENTS
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable willing parties in an arm's length transaction. Fair value of financial instruments is based
on:
Federal Government securities PKRV rates (Reuters page)
Foreign securities Market prices / Mashreqbank PSC
Listed securities Prices quoted at Pakistan Stock Exchange Limited
Mutual funds Net asset values declared by respective funds
Unlisted equity investments Break-up value as per latest available audited financial
statements
Fair value of fixed term advances of over one year, staff loans and fixed term deposits of over one year
cannot be calculated with sufficient reliability due to non - availability of relevant active market for similar
assets and liabilities. The provision for impairment of debt securities and loans and advances has been
calculated in accordance with the Bank's accounting policies as stated in notes 4.13 and 4.4.
39.1 Fair value of financial assets
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).
There were no transfers between levels 1 and 2 during the year.
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:
2021
Level 1 Level 2 Level 3 Total
On balance sheet financial instruments (Rupees in '000)
Financial assets-measured at fair value
Investments
Federal Government Securities –00 593,011,443 –00 593,011,443
Shares 3,324,237 –00 –00 3,324,237
Non-Government Debt Securities 24,909,693 5,172,920 –00 30,082,613
Foreign Securities –00 4,917,137 –00 4,917,137
Mutual Funds –00 2,107,605 –00 2,107,605
Financial assets-disclosed but not
measured at fair value
Investments
Non-Government Debt Securities –00 1,822,342 –00 1,822,342
Associates 00
Listed Shares –00 –00 –00 –00
Mutual Funds –00 7,841,384 –00 7,841,384
Off-balance sheet financial instruments -

Forward purchase of foreign exchange contracts –00 75,147,663 –00 75,147,663
Forward sale of foreign exchange contracts –00 58,279,177 –00 58,279,177
91
2020


Investments
Shares 3,113,696 –00 –00 3,113,696
Mutual Funds –00 2,030,957 –00 2,030,957

Investments
Associates 00
Listed Shares 319,273 –00 –00 319,273
Mutual Funds –00 1,848,641 –00 1,848,641

39.2 Certain fixed assets and non banking assets acquired in satisfaction of claims have been carried at revalued amounts
determined by professional valuer (level 3 measurement) based on their assessment of the market value.
39.3 Foreign exchange contracts are valued using exchange rates declared by the State Bank of Pakistan.
40. TRUST ACTIVITIES

The Bank is not engaged in any trust activities other than holding investments of individuals and entities
in its IPS account maintained with the State Bank of Pakistan.
92
41. SEGMENT INFORMATION
41.1 Segment Details with respect to Business Activities
The segment analysis with respect to business activity is as follows:
2021
Commercial Retail Total

banking banking
(Rupees in '000)
Profit and loss account
Mark-up / return / profit 105,243,360 11,508,835 116,752,195
Inter segment revenue - net –00 27,848,015 27,848,015
Non mark-up / return / interest income 4,415,340 9,611,677 14,027,017
Total income 109,658,700 48,968,527 158,627,227
Segment direct expenses (66,865,761) (33,687,923) (100,553,684 )

Inter segment expense allocation (27,848,015) –00 (27,848,015 )
Total expenses (94,713,776) (33,687,923) (128,401,699 )
Reversals / (provisions) 157,945 (110,685) 47,260
Profit before tax 15,102,869 15,169,919 30,272,788
Statement of financial position

Cash and bank balances 105,483,009 19,856,740 125,339,749
Investments 826,599,884 –00 826,599,884
Net inter segment lending –00 743,304,470 743,304,470
Lendings to financial institutions 20,063,828 –00 20,063,828
Advances - performing 616,311,521 116,234,984 732,546,505
- non-performing 1,236,861 15,945 1,252,806
Others 121,126,947 22,722,401 143,849,348
Total assets 1,690,822,050 902,134,540 2,592,956,590
Borrowings 302,212,902 –00 302,212,902

Subordinated debt 15,995,200 –00 15,995,200
Deposits and other accounts 504,337,747 805,485,582 1,309,823,329
Net inter segment borrowing 743,304,470 –00 743,304,470
Others 50,673,775 80,931,866 131,605,641
Total liabilities 1,616,524,094 886,417,448 2,502,941,542
Equity 74,297,952 15,717,092 90,015,048
Total equity and liabilities 1,690,822,050 902,134,540 2,592,956,590
Contingencies and commitments 419,856,696 8,116,659 427,973,355
93
2020
Commercial Retail Total
banking banking
(Rupees in '000)
Mark-up / return / profit 107,083,569 18,189,018 125,272,587
Inter segment revenue-net –00 29,560,092 29,560,092
Non mark-up / return / interest income 2,925,253 7,305,604 10,230,857
Total income 110,008,822 55,054,714 165,063,536
Segment direct expenses (68,239,144) (34,139,807) (102,378,951 )

Inter segment expense allocation (29,560,092) –0000 (29,560,092 )
Total expenses (97,799,236) (34,139,807) (131,939,043 )
Provisions (4,511,744) (31,685) (4,543,429 )
Profit before tax 7,697,842 20,883,222 28,581,064

Cash and bank balances 108,376,778 17,221,684 125,598,462
Investments 764,943,506 –0000 764,943,506
Net inter segment lending –0000 663,583,850 663,583,850
Lendings to financial institutions 2,175,301 –0000 2,175,301
Advances-performing 439,429,041 69,938,597 509,367,638
-non-performing 858,418 25,576 883,994
Others 102,788,717 16,333,709 119,122,426
Total assets 1,418,571,761 767,103,416 2,185,675,177
Borrowings 211,599,405 –0000 211,599,405

Subordinated debt 14,989,600 –0000 14,989,600
Deposits and other accounts 412,837,148 686,849,213 1,099,686,361
Net inter segment borrowing 663,583,850 –0000 663,583,850
Others 43,715,576 72,244,009 115,959,585
Total liabilities 1,346,725,579 759,093,222 2,105,818,801
Equity 71,846,182 8,010,194 79,856,376
Total equity and liabilities 1,418,571,761 767,103,416 2,185,675,177
Contingencies and commitments 300,377,484 177,245 300,554,729
94
41.2 Segment details with respect to geographical locations
GEOGRAPHICAL SEGMENT ANALYSIS

2021
Pakistan Middle East Asia Pacific Africa Total
(Rupees in '000)
Mark-up / return / profit 112,812,466 1,691,982 2,134,728 113,019 116,752,195
Non mark-up / return / interest income 13,090,804 449,371 403,358 83,484 14,027,017
Total income 125,903,270 2,141,353 2,538,086 196,503 130,779,212
Segment direct expenses (98,644,466) (885,976) (931,798) (91,444) (100,553,684)

Reversals / (provisions) 178,839 (117,829) (73,793) 60,043 47,260
Profit before tax 27,437,643 1,137,548 1,532,495 165,102 30,272,788

Cash and bank balances 124,685,948 621,887 31,914 –00 125,339,749
Investments 800,931,505 14,218,541 11,449,838 –00 826,599,884
Net inter segment lendings 6,884,028 18,366,725 1,235,596 –00 26,486,349
Lending to financial institutions 20,063,828 –00 –00 –00 20,063,828
Advances-performing 673,978,253 28,652,979 29,915,273 –00 732,546,505
-non-performing 1,252,806 –00 –00 –00 1,252,806
Others 123,891,057 3,243,433 16,714,858 –00 143,849,348
Total assets 1,751,687,425 65,103,565 59,347,479 –00 1,876,138,469
Borrowings 288,818,938 13,393,964 –00 –00 302,212,902

Subordinated debt 15,995,200 –00 –00 –00 15,995,200
Deposits and other accounts 1,251,166,020 36,504,392 22,152,917 –00 1,309,823,329
Net inter segment borrowings 1,588,748 6,707,512 18,190,089 –00 26,486,349
Others 112,198,326 3,255,029 16,152,286 –00 131,605,641
Total liabilities 1,669,767,232 59,860,897 56,495,292 –00 1,786,123,421
Equity 81,920,193 5,242,668 2,852,187 –00 90,015,048
Total equity and liabilities 1,751,687,425 65,103,565 59,347,479 –00 1,876,138,469
Contingencies and commitments 418,518,577 8,375,380 1,079,398 –00 427,973,355
95
2020
(Rupees in '000)
Non mark-up / return / interest income 9,661,787 388,209 181,411 (550) 10,230,857
Total income 132,162,787 1,656,989 1,554,017 129,651 135,503,444

Provisions (3,422,585) (576,013) (528,892) (15,939) (4,543,429)
Profit before tax 28,149,025 286,355 137,869 7,815 28,581,064

Cash and bank balances 125,387,063 160,218 47,955 3,226 125,598,462
Investments 745,208,314 10,132,651 7,503,288 2,099,253 764,943,506
Net inter segment lendings 4,489,540 7,006,181 829,541 2,552 12,327,814
Advances - performing 474,619,293 18,747,396 15,967,837 33,112 509,367,638
- non-performing 834,792 49,202 –00 –00 883,994
Others 98,626,780 2,462,635 17,992,718 40,293 119,122,426
Total assets 1,451,341,083 38,558,283 42,341,339 2,178,436 1,534,419,141
Borrowings 211,599,405 –00 –00 –00 211,599,405

Deposits and other accounts 1,049,290,270 27,167,746 23,137,597 90,748 1,099,686,361
Net inter segment borrowings 5,143,103 5,307,456 394,791 1,482,464 12,327,814
Others 95,778,810 2,363,473 17,805,707 11,595 115,959,585
Total liabilities 1,376,801,188 34,838,675 41,338,095 1,584,807 1,454,562,765
Equity 74,539,895 3,719,608 1,003,244 593,629 79,856,376
Total equity and liabilities 1,451,341,083 38,558,283 42,341,339 2,178,436 1,534,419,141
Contingencies and commitments 294,581,495 5,157,900 815,334 –00 300,554,729
42. RELATED PARTY TRANSACTIONS

Related parties of the Bank comprise subsidiaries, associates, directors, key management personnel and
other related parties.
Transactions with related parties of the Bank are carried out on arm's length basis in terms of the policy
as approved by the Board of Directors. The transactions with employees of the Bank are carried out in
accordance with the terms of their employment.
96
Transactions with related parties, other than those disclosed in note 10.5, 20.3 and 38 are summarised as follows:
2021 2020
Directors Key management Subsidiaries Associates Other related Directors Key Management Subsidiaries Associates Other related
personnel parties personnel parties
(Rupees in '000)
Investments
Opening balance –00 –00 883,250 2,047,346 –00 –00 –00 200,000 1,153,346 –00
Investment made during the year –00 –00 –00 10,200,000 182,690 –00 –00 683,250 1,500,000 –00
Investments adjusted / redeemed / disposed off during the year –00 –00 –00 (4,482,690 ) –00 –00 –00 –00 (606,000 ) –00
Surplus / (deficit) on revaluation –00 –00 –00 –00 123,308 –00 –00 –00 –00 –00
Closing balance –00 –00 883,250 7,764,656 305,998 –00 –00 883,250 2,047,346 –00
Advances
Opening balance 332 171,544 201,173 –00 2,217,749 1,487 76,626 15,622 –00 3,015,256
Addition during the year 76,666 235,679 26,196,301 –00 57,968,205 35,349 333,923 16,369,273 –00 56,387,053
Repaid during the year (75,378 ) (211,741 ) (25,934,049 ) –00 (57,768,669) (36,504 ) (239,005 ) (16,183,722 ) –00 (57,184,560)
Closing balance 1,620 11195,482 463,425 –00 2,417,285 332 171,544 201,173 –00 2,217,749
Operating fixed assets
Right of use –00 –00 –00 –00 786 –00 –00 –00 –00 3,931
Other assets
Interest / mark-up accrued –00 120 –00 –00 –00 –00 118 –00 –00 1,289
L/C acceptance –00 –00 –00 –00 –00 –00 –00 –00 –00 1,090,910
Other receivable –00 –00 –00 118 –00 –00 –00 3,890 –00 –00
Subordinated debt
Opening balance –00 –00 –00 –00 44,000 –00 –00 –00 –00 44,000
Issued / purchased during the year –00 –00 –00 75,000 –00 –00 –00 –00 –00 –00
Redemption / sold during the year –00 –00 –00 (75,000 ) –00 –00 –00 –00 –00 –00
Closing balance –00 –00 –00 –00 44,000 –00 –00 –00 –00 44,000
Deposits and other accounts
Opening balance 1,072,684 720,918 476,584 739,762 3,619,310 955,078 624,163 111,826 1,289,465 2,761,222
Received during the year 6,376,086 3,125,505 21,273,904 83,337,951 63,034,965 6,891,056 3,205,958 20,436,016 147,123,023 50,717,883
Withdrawn during the year (6,678,852) (3,071,987) (21,660,404) (84,018,330 ) (59,718,023) (6,773,450 ) (3,109,203 ) (20,071,258 ) (147,672,726) (49,859,795)
Closing balance 769,918 774,436 90,084 59,383 6,936,252 1,072,684 720,918 476,584 739,762 3,619,310
Other liabilities
Interest / mark-up payable 404 1,327 –00 725 30,043 305 508 –00 2,359 14,567
Payable to staff retirement fund –00 –00 –00 –00 974,312 –00 –00 –00 –00 683,514
L/C acceptance –00 –00 –00 –00 –00 –00 –00 –00 –00 1,090,910
Unrealised loss on forward exchange contracts –00 –00 –00 –00 –00 –00 –00 –00 –00 922
Other liabilities –00 2 908 –00 –00 –00 4 1,353 –00 –00
Contingencies and commitments –00 –00 –00 –00 918,205 –00 –00 –00 –00 2,022,871
Other transactions - Investor Portfolio Securities
Opening balance –00 –00 85,000 –00 6,120,840 –00 –00 85,000 –00 4,986,840
Increased during the year –00 –00 75,000 –00 7,725,000 –00 –00 –00 –00 3,562,000
Decreased during the year –00 –00 (85,000) –00 (9,054,040) –00 –00 –00 –00 (2,428,000)
Closing balance –00 –00 75,000 –00 4,791,800 –00 –00 85,000 –00 6,120,840
97
42.1 RELATED PARTY TRANSACTIONS
2021 2020
Directors Key Subsidiaries Associates Other related Directors Key Subsidiaries Associates Other related
management parties Management parties
personnel personnel
(Rupees in '000)
Income
Mark-up / return / interest earned –00 10,175 21,880 –00 110,324 5 6,479 4,555 –00 203,818
Fee and commission income 39 225 15 116 13,622 21 65 16 85 14,534
Dividend income –00 –00 –00 187,766 –00 –00 –00 –00 56,400 –00
Net gain / (loss) on sale / redemption of
securities and units of mutual funds –00 –00 –00 7,201 –00 –00 –00 –00 –00 5,442
Rental Income –00 –00 11,036 –00 –00 –00 –00 5,990 –00 –00
Other income –00 –00 784 30 406 –00 –00 782 50 372
Expense
Mark-up / return / interest expensed 58,576 48,425 15,882 38,763 245,699 79,997 58,180 12,578 251,681 255,463
Operating expenses –00 –00 –00 –00 4,528 –00 –00 –00 –00 5,491
Brokerage commission –00 –00 12,600 –00 –00 –00 –00 8,230 –00 –00
Salaries and allowances –00 625,972 –00 –00 –00 –00 541,938 –00 –00 –00
Bonus –00 100,101 –00 –00 –00 –00 154,824 –00 –00 –00
Contribution to defined contribution plan –00 28,137 –00 –00 –00 –00 24,211 –00 –00 –00
Contribution to defined benefit plan –00 82,334 –00 –00 –00 –00 76,250 –00 –00 –00
Staff provident fund –00 –00 –00 –00 703,596 –00 –00 –00 –00 600,454
Staff gratuity fund –00 –00 –00 –00 491,348 –00 –00 –00 –00 424,170
Directors’ fees 38,770 –00 –00 –00 –00 33,487 –00 –00 –00 –00
Donation –00 –00 –00 –00 12,000 –00 –00 –00 –00 6,000
Insurance premium paid –00 –00 –00 –00 142,646 –00 –00 –00 –00 133,244
Insurance claims settled –00 –00 –00 –00 78,101 –00 –00 –00 –00 41,925
98
43. CAPITAL ADEQUACY, LEVERAGE RATIO AND LIQUIDITY REQUIREMENTS
2021 2020
(Rupees in '000)
Minimum Capital Requirement (MCR):
Paid-up capital 11,114,254 11,114,254
Capital Adequacy Ratio (CAR):

Eligible Common Equity Tier 1 (CET 1) Capital 80,641,265 67,035,260
Eligible Additional Tier 1 (ADT 1) Capital 6,570,734 6,676,269
Total Eligible Tier 1 Capital 87,211,999 73,711,529
Eligible Tier 2 Capital 25,750,539 23,890,019
Total Eligible Capital (Tier 1 + Tier 2) 112,962,538 97,601,548
Risk Weighted Assets (RWAs):

Credit Risk 703,135,583 539,058,015
Market Risk 17,023,428 9,834,577
Operational Risk 117,517,781 97,721,745
Total 837,676,792 646,614,337
Common Equity Tier 1 Capital Adequacy Ratio 9.627% 10.367%

Tier 1 Capital Adequacy Ratio 10.411% 11.400%
Total Capital Adequacy Ratio 13.485% 15.094%
Minimum Capital Requirement (MCR)

The MCR standard sets the paid-up capital that the Bank is required to hold at all times. As of the
statement of financial position date, the Bank's paid-up capital stands at Rs. 11.114 billion as against
the required MCR of Rs. 10 billion.
Minimum Capital Adequacy Ratio (CAR)
The CAR on the basis of above framework works out to be as follows:
2021 2020
Required CAR 11.500% 11.500%
CAR on Bank level 13.485% 15.094%
The Bank calculates capital requirement as per Basel III regulatory framework, using the following
approaches:
Credit Risk Standardised Approach

Market Risk Standardised Approach
Operational Risk Basic Indicator Approach
99
2021 2020
(Rupees in '000)
Leverage Ratio (LR):
Total Exposures 2,334,221,910 1,852,877,396
Leverage Ratio 3.736% 3.978%
Liquidity Coverage Ratio (LCR):

Total High Quality Liquid Assets 631,288,320 490,128,291
Total Net Cash Outflow 244,836,260 187,207,371
Liquidity Coverage Ratio 257.841% 261.810%
Net Stable Funding Ratio (NSFR):

Total Available Stable Funding 1,379,682,140 999,714,329
Total Required Stable Funding 825,749,841 702,593,516
Net Stable Funding Ratio 167.082% 142.289%
43.1 The full disclosures on the CAPITAL ADEQUACY, LEVERAGE RATIO AND LIQUIDITY REQUIREMENTS
as per SBP instructions issued from time to time have been placed on the Bank's website. The link to the full
disclosure is available at https://www.bankalhabib.com/capitaladequacy/leverage/liquidityratio-banklevel2021.
44. RISK MANAGEMENT

The Bank has a risk management framework commensurate with its size and the nature of its business. The
Board of Directors has approved risk management policies covering key areas of activities for the guidance
of management and committees of the Board, management committees, and Divisions / Departments of the
Bank.
This section presents information about the Bank’s exposure to and its management and control of risks, in
particular the primary risks associated with its use of financial instruments.
44.1 Credit Risk
Credit risk is the risk of loss arising from failure by a client or counterparty to meet its contractual obligation.
It emanates from loans and advances, commitments to lend, contingent liabilities such as letters of credit and
guarantees, and other similar transactions both on and off balance sheet. These exclude investments and
treasury-related exposures, which are covered under market risk.
It is the Bank’s policy that all credit exposures shall be adequately collateralised, except when specially
exempted by SBP as in case of personal loans and credit cards, and those at overseas branches where the
accepted local banking practice is followed.
The objective of credit risk management is to keep credit risk exposure within permissible level, relevant to
the Bank’s risk capital, to maintain the soundness of assets and to ensure returns commensurate with risk.
Credit risk of the Bank is managed through the credit policy approved by the Board, a well defined credit
approval mechanism, prescribed documentation requirement, post disbursement administration, review and
monitoring of all credit facilities; and continuous assessment of credit worthiness of counterparties. Decisions
regarding the credit portfolio are taken mainly by the Central Credit Committee. Credit Risk Management
Committee of the Board provides overall guidance in managing the Bank's credit risk.
Counterparty exposure limits are approved in line with the Prudential Regulations and the Bank's own
policies, by taking into account both qualitative and quantitative criteria. There is an established system
for continuous monitoring of credit exposures and follow - up of any past due loans with the respective
business units. All past due loans, including trade bills, are reviewed on fortnightly basis and pursued
for recovery. Any non-performing loans are classified and provided for as per Prudential Regulations.
The Bank has also established a mechanism for independent post - disbursement review of large credit
risk exposures.
100
Credit facilities, both fund based and non - fund based, extended to large customer groups and industrial
sectors are regularly monitored. The Bank has concentration of credit in textile which is the largest
sector of Pakistan's economy. Concentration risk is managed by diversification within sub - sectors like
spinning, weaving and composites, credit worthiness of counterparties, and adequate collateralisation
of exposures.
Credit administration function has been placed under a centralised set - up. Its main focus is on
compliance with terms of sanction of credit facilities and the Bank’s internal policies and procedures,
scrutiny of documentation, monitoring of collateral, and maintenance of borrowers’ limits, mark-up rates,
and security details.
The Bank has implemented its own internal risk rating system for the credit portfolio, as per guidelines
of SBP. Credit ratings by external rating agencies, if available, are also considered.
The Bank lends primarily against the cash flow of the business with recourse to the assets being financed
as primary security. Collaterals in the form of liquid securities, tangible securities, and other acceptable
securities are obtained to hedge the risk, as deemed appropriate. Main types of collaterals taken by
the Bank include charge on stock - in - trade, receivables, machinery, mortgage of properties, pledge
of goods, shares and other marketable securities, government securities, government guarantees, bank
guarantees and cash margins and bank deposits.
Specific provisions on credit portfolio are determined in accordance with the Prudential Regulations.
General provision on the consumer and SEs portfolios is also determined as per Prudential Regulations.
The Bank maintains additional general provision in line with its prudent policies and as per IFRS 9 for
overseas branches. Particulars of provisions against advances are given in note 9.4.
The Bank uses the Standardised Approach to calculate capital charge for credit risk as per Basel
regulatory framework, with comprehensive approach for credit risk mitigation.
Stress testing for credit risk is carried out regularly to estimate the impact of increase in non - performing
loans and downward shift in these categories.
44.1.1 Lendings to financial institutions

Gross lendings Non-performing lendings Provision held
Credit risk by public / private sector 2021 2020 2021 2020 2021 2020
(Rupees in '000)
Public / Government –00 2,175,301 –00 –00 –00 –00
Private 20,063,828 –00 –00 –00 –00 –00
20,063,828 2,175,301 –00 –00 –00 –00
44.1.2 Investment in debt securities
Gross investments Non-performing investments Provision held

Credit risk by industry sector 2021 2020 2021 2020 2021 2020
(Rupees in '000)
Power (electricity), gas, water, sanitary 26,966,592 25,442,218 –00 –00 –00 –00
Financial 786,496,214 728,355,130 –00 –00 1,350,723 1,394,948
Iron and steel 1,000,000 1,000,000 –00 –00 –00 –00
Oil refinery / marketing 1,250,000 –00 –00 –00 –00 –00
815,712,806 754,797,348 –00 –00 1,350,723 1,394,948
Credit risk by public / private sector

Public / Government 776,861,120 719,551,444 –00 –00 325,807 357,615
Private 38,851,686 35,245,904 –00 –00 1,024,916 1,037,333
815,712,806 754,797,348 –00 –00 1,350,723 1,394,948
101
44.1.3 Advances
Gross Non-performing Provision

advances advances held
(Rupees in '000)
Agriculture, forestry, hunting and fishing 18,197,880 11,982,018 305,781 300,284 242,351 149,088
Mining and quarrying 135,313 86,946 –00 –00 –00 –00
Textile 237,019,393 163,702,549 1,690,844 1,824,246 1,671,265 1,753,709
Chemical and pharmaceuticals 19,082,769 16,796,308 5,791 5,891 4,397 4,423
Cement 6,833,811 8,847,702 –00 –00 –00 –00
Sugar 10,984,011 6,952,458 –00 –00 –00 –00
Footwear and leather garments 4,077,672 3,608,526 –00 –00 –00 –00
Automobile and transportation equipment 8,083,375 3,726,079 826 –00 103 –00
Electronics and electrical appliances 5,885,392 5,323,013 247,814 –00 61,953 –00
Construction 23,288,386 7,802,038 302,504 194,339 177,501 192,103
Power (electricity), gas, water, sanitary 47,024,486 48,335,823 –00 155,883 –00 100,810
Wholesale and retail trade 114,747,695 79,543,240 1,340,453 1,494,236 1,291,922 1,361,415
Transport, storage and communication 11,242,380 10,543,770 63,990 70,175 35,823 27,853
Financial 13,514,777 10,603,805 101,949 101,949 84,845 86,587
Insurance 294,275 475,167 61,180 128,426 61,180 31,108
Services (other than financial services) 16,786,483 14,524,500 45,762 112,896 125 33,502
Individuals 42,210,644 23,863,779 83,610 90,956 67,353 63,427
Food and allied 90,055,992 62,311,964 17,432 43,773 17,432 27,353
Iron and steel 39,040,954 23,895,854 1,066,177 992,229 1,066,177 992,229
Oil refinery / marketing 2,634,814 2,005,943 –00 354,082 –00 178,367
Paper and board 5,671,358 2,662,909 7,431 3,098 3,132 3,098
Plastic products 9,075,520 6,388,435 385,843 54,253 137,866 54,253
Others 21,002,242 8,911,593 2,019,548 1,454,757 1,570,704 1,438,154
746,889,622 522,894,419 7,746,935 7,381,473 6,494,129 6,497,479
Public / Government 58,448,122 55,368,812 –00 –00 –00 –00

Private 688,441,500 467,525,607 7,746,935 7,381,473 6,494,129 6,497,479
746,889,622 522,894,419 7,746,935 7,381,473 6,494,129 6,497,479
102
44.1.4 Contingencies and Commitments
Credit risk by industry sector
2021 2020
(Rupees in '000)
Agriculture, forestry, hunting and fishing 1,815,024 1,201,754
Mining and quarrying 209 –00
Textile 91,451,426 60,886,061
Chemical and pharmaceuticals 16,097,626 10,560,544
Cement 3,680,905 1,681,965
Sugar 1,194,779 445,917
Footwear and leather garments 2,939,561 2,400,625
Automobile and transportation equipment 22,228,569 18,054,588
Electronics and electrical appliances 7,250,575 5,306,142
Construction 10,708,668 8,396,568
Power (electricity), gas, water, sanitary 20,026,883 8,008,957
Wholesale and retail trade 68,530,385 52,552,907
Transport, storage and communication 1,454,475 415,645
Financial 17,959,726 12,384,053
Insurance 120,470 26,841
Services (other than financial services) 51,058,164 41,166,805
Individuals 8,116,659 177,245
Food and allied 40,727,640 36,490,464
Iron and steel 17,817,723 16,689,629
Oil refinery / marketing 6,978,651 3,016,513
Paper and board 8,964,522 2,129,946
Plastic products 17,609,850 11,584,210
Others 11,240,865 6,977,350
427,973,355 300,554,729
Public / Government 66,085,881 41,435,912
Private 361,887,474 259,118,817
427,973,355 300,554,729
44.1.5 Concentration of Advances

The Bank’s top 10 exposures on the basis of total (funded and non-funded exposures) aggregated to
Rs. 203,461 million (2020: Rs. 150,619 million) are as following:
2021 2020
(Rupees in '000)
Funded 99,235,533 87,140,927
Non Funded 104,225,085 63,477,948
Total Exposure 203,460,618 150,618,875
The sanctioned limits against these top 10 exposures aggregated to Rs. 226,451 million (2020:
Rs. 179,596 million). Provision against top 10 exposures amounts to be Nil (2020: Nil).
103
44.1.6 Advances - Province / Region - wise Disbursement and Utilization
2021
Disbursements Utilization
AJK including
Province / Region KPK including Gilgit-
Punjab Sindh FATA Balochistan Islamabad Baltistan
(Rupees in '000)
Punjab 278,555,414 274,912,036 452,150 93,962 40,394 3,007,506 49,366

Sindh 297,374,464 2,156,339 293,052,373 1,654,607 511,145 –0 –0
KPK including FATA 6,658,000 –0 1,296 6,299,401 –0 357,303 –0
Balochistan 1,287,778 –0 207,440 –0 1,080,338 –0 –0
Islamabad 44,360,457 9,005 20,103 133,925 –0 44,197,424 –0
AJK including Gilgit - Baltistan 910,260 –0 242 6,119 –0 52,723 851,176
Total 629,146,373 277,077,380 293,733,604 8,188,014 1,631,877 47,614,956 900,542
2020
AJK including
(Rupees in '000)
Punjab 201,150,395 199,695,718 202,288 222,110 33,345 980,461 16,473

Sindh 210,692,996 2,259,607 206,820,742 1,066,542 543,154 2,830 121
KPK including FATA 4,547,764 6,476 10,079 4,232,515 5,053 293,641 –0
Balochistan 828,144 –0 106,412 –0 721,732 –0 –0
Islamabad 35,398,979 34,931 16,888 15,497 –0 35,331,663 –0
AJK including Gilgit - Baltistan 639,146 392 –0 2,692 –0 25,064 610,998
Total 453,257,424 201,997,124 207,156,409 5,539,356 1,303,284 36,633,659 627,592
44.2 Market Risk

Market risk is the risk of loss arising from movements in market rates or prices, such as interest rates,
foreign exchange rates, and equity prices.
The Bank takes positions in securities for the purpose of investment and not to run a trading book, except
to a very limited extent (maximum of Rs. 300 million) for trading in equities. As regards foreign exchange
positions, the purpose is to serve the needs of clients. Except as aforesaid, the Bank does not engage
in trading or market making activities.
Market risk is managed through the market risk policy approved by the Board, approval of counterparty
and dealer limits, specific senior management approval for each investment and regular review and
monitoring of the investment portfolio by the Asset Liability Management Committee (ALCO). A key
element of the Bank’s market risk management is to balance safety, liquidity, and income in that order
of priority. Another key element is separation of functions and reporting lines for the Treasury Division
and Equity Market Department, which undertake dealing activities within the limits and parameters set
by ALCO, Settlements Department which confirms and settles the aforesaid deals, and Middle Office
which independently monitors and analyses the risks inherent in treasury operations. Risk Management
Committee of the Board provides overall guidance in managing the Bank’s market risk.
Dealing activities of the Bank include investment in government securities, term finance certificates,
sukuks / bonds, shares and mutual funds, money market transactions and foreign exchange transactions
catering to the needs of its customers. All such activities are carried out within the prescribed limits. Any
excess over limits noted by the Settlements Department and / or the Middle Office is reported to senior
management and ALCO. Stress testing is performed as per guidelines of SBP as well as Bank's internal
policy. Portfolio risks arising in banking book is also measured through Value at Risk (VAR).
104
44.2.1 Balance sheet split by trading and banking books
2021 2020
Banking Trading Banking Trading
book book Total book book Total
(Rupees in '000)
Cash and balances with treasury banks 118,599,741 –00 118,599,741 105,935,947 –00 105,935,947
Balances with other banks 6,740,008 –00 6,740,008 19,662,515 –00 19,662,515
Lendings to financial institutions 20,063,828 –00 20,063,828 2,175,301 –00 2,175,301
Investments 826,501,408 98,476 826,599,884 764,846,957 96,549 764,943,506
Advances 733,799,311 –00 733,799,311 510,251,632 –00 510,251,632
Fixed assets 55,692,777 –00 55,692,777 43,967,993 –00 43,967,993
Intangible assets 268,246 –00 268,246 211,111 –00 211,111
Deferred tax assets 2,074,828 –00 2,074,828 –00 –00 –00
Other assets 85,813,497 –00 85,813,497 74,943,322 –00 74,943,322
1,849,553,644 98,476 1,849,652,120 1,521,994,778 96,549 1,522,091,327
44.2.2 Foreign Exchange Risk
Foreign exchange risk is the risk of loss from adverse changes in currency exchange rates. The Bank’s
foreign exchange exposure comprises forward contracts, purchase of foreign bills, foreign currency
loans and investments, foreign currency cash in hand, balances with banks abroad, foreign currency
deposits and foreign currency placements with SBP and other banks. Focus of the Bank’s foreign
exchange activities is on catering to the needs of its customers, both in spot and forward markets.
Foreign exchange risk exposures of the Bank are controlled through dealer limits, open foreign exchange
position limits, counterparty exposure limits, and country limits. The Bank manages its foreign exchange
exposure by matching foreign currency assets and liabilities within strict limits. The net open position in
any single currency and the overall foreign exchange exposure are both managed within the statutory
limits as prescribed by SBP as well as the internal limits set by the Bank itself. Stress testing for foreign
exchange risk is carried out regularly to estimate the impact of adverse changes in foreign exchange rates.
2021
Foreign Foreign Net foreign
currency currency Off-balance currency
assets liabilities sheet items exposure
(Rupees in '000)
United States Dollar 182,442,901 177,522,831 4,779,180 9,699,250

Great Britain Pound 1,652,971 12,805,309 7,489,831 (3,662,507)
Japanese Yen 6,782 363,092 357,519 1,209
Euro 4,231,547 6,846,326 1,842,032 (772,747)
Other currencies 945,356 534,954 (694,227) (283,825)
189,279,557 198,072,512 13,774,335 4,981,380
105
2020
(Rupees in '000)

Great Britain Pound 1,660,711 11,828,815 10,088,312 (79,792)
Japanese Yen 44,539 15,462 (20,792) 8,285
Euro 4,389,562 6,272,656 1,898,410 15,316
142,823,047 159,721,388 22,122,673 5,224,332
2021 2020
book book book book
(Rupees in ‘000)
Impact of 1% change in foreign exchange rates on
– Profit and loss account –0 –0 –0 –0
– Other comprehensive income 22,220 –0 9,729 –0
44.2.3 Equity Position Risk
Equity position risk is the risk of loss from adverse movements in equity prices. The Bank’s policy is to
take equity positions for investment purposes and not to run a trading book, except to a very limited
extent (maximum of Rs. 300 million) for trading in equities.
Equity position risk of the Bank is controlled through equity portfolio limits, sector limits, scrip limits, and
future contracts limits. Direct investment in equities and mutual funds is managed within the statutory
limits as prescribed by SBP as well as the internal limits set by the Bank itself. Stress testing for equity
price risk is carried out regularly to estimate the impact of decline in stock prices. The Bank invests
mainly in blue chip securities.
2021 2020
book book book book
(Rupees in ‘000)
Impact of 5% change in equity prices on
– Profit and loss account –0 4,885 –0 4,827
– Other comprehensive income 213,585 –0 227,609 –0
44.2.4 Yield / Interest Rate Risk in the Banking Book (IRRBB) - Basel II Specific
Interest rate risk is the risk of loss from adverse movements in interest rates. ALCO monitors and
manages the interest rate risk with the objective of limiting the potential adverse effects on the
profitability of the Bank arising from fluctuation in the market interest rates and mismatching or gaps in
the amount of financial assets and financial liabilities in different maturity time bands.
The Bank's interest rate exposure is calculated by categorising its interest sensitive assets and
liabilities into various time bands based on the earlier of their contractual repricing or maturity dates.
106
Interest rate risk exposures of the Bank are controlled through dealer limits, counter - party exposure limits and
(when necessary) type-of-instrument limits. Outright purchase and sale of securities are also approved by
ALCO. Duration and modified duration of various types of debt securities as well as their entire portfolio are
also calculated, and the impact of adverse change in interest rates on the market value of the securities is
estimated. Stress testing for interest rate risk is carried out regularly to estimate the impact of adverse changes
in the interest rates.
Interest rate / yield risk in the banking book – Basel Specific
The Bank holds financial assets and financial liabilities with different maturities or repricing dates and linked to
different benchmark rates, thus creating exposure to unexpected changes in the level of interest rates. Interest
rate risk in the banking book refers to the risk associated with interest-bearing financial instruments that are not
held in the trading book of the Bank.
Repricing gap analysis presents the Bank’s Interest Sensitive Assets (ISA) and Interest Sensitive Liabilities
(ISL), categorised into various time bands based on the earlier of their contractual repricing or maturity dates
(or settlement dates for off-balance sheet instruments). Deposits with no fixed maturity dates (for example,
saving deposits and treasurer’s call deposits) are included in the lowest, one-month time band, but these are
not expected to be payable within a one-month period. The difference between ISA and ISL for each time band
signifies the gap in that time band, and provides a workable framework for determining the impact on net interest
income.
The Bank reviews the repricing gap analysis periodically to monitor and manage interest rate risk in the banking
book.
2021 2020
book book book book
(Rupees in ‘000)
Impact of 1% change in interest rates on
– Profit and loss account –0 –0 –0 –0
– Other comprehensive income 5,702,612 –0 6,113,382 –0
107
44.2.5 Mismatch of Interest Rate Sensitive Assets and Liabilities
2021
Effective Total Exposed to Yield / Interest risk Non interest
Yield / Upto 1 Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Above bearing
Interest month to 3 to 6 months to 1 to 2 to 3 to 5 to 10 10 years financial
Rate months months year years years years years instruments
(Rupees in '000)
On-balance sheet financial instruments
Assets
Cash and balances with treasury banks –00 118,599,741 8,475,529 –00 –00 –00 –00 –00 –00 –00 –00 110,124,212
Balances with other banks 0.46% 6,740,008 4,358,454 –00 –00 –00 –00 –00 –00 –00 –00 2,381,554
Lendings to financial institutions 10.60% 20,063,828 20,063,828 –00 –00 –00 –00 –00 –00 –00 –00 –00
Investments 9.93% 826,599,884 150,428,818 95,743,854 314,734,525 79,112,792 9102,760,235 38,705,182 9,681,128 21,200,587 –00 14,232,763
Advances 7.21% 733,799,311 401,011,429 117,203,571 91,802,847 30,011,024 16,295,778 22,354,796 20,069,057 25,864,446 9,176,575 9,788
Other assets –00 83,264,725 –00 –00 –00 –00 –00 –00 –00 00–00 –00 83,264,725
1,789,067,497 584,338,058 212,947,425 406,537,372 109,123,816 119,056,013 61,059,978 29,750,185 47,065,033 9,176,575 210,013,042
Liabilities
Bills payable –00 29,803,755 –00 –00 –00 –00 –00 –00 –00 –00 –00 29,803,755
Borrowings 4.97% 302,212,902 130,540,002 55,284,225 32,529,294 11,403,231 9,542,625 10,585,069 19,745,203 32,324,292 258,961 –00
Deposits and other accounts 7.15% 1,309,823,329 635,347,974 42,492,322 26,302,731 51,151,535 2,894,746 12,103,107 3,309,696 16,099 10,893 536,194,226
Subordinated debt 11.54% 15,995,200 –00 5,000,000 10,995,200 –00 –00 –00 –00 –00 –00 –00
Other liabilities –00 75,997,191 –00 –00 –00 –00 –00 –00 –00 –00 –00 75,997,191
1,733,832,377 765,887,976 102,776,547 69,827,225 62,554,766 12,437,371 22,688,176 23,054,899 32,340,391 269,854 641,995,172
On-balance sheet gap 55,235,120 (181,549,918 ) 110,170,878 336,710,147 46,569,050 106,618,642 38,371,802 6,695,286 14,724,642 8,906,721 (431,982,130 )
Off-balance sheet financial instruments
Documentary credits and short term trade
related transactions 301,891,236 81,149,692 107,059,657 41,036,633 34,172,931 34,369,615 4,102,708 –00 –00 –00 –00
Forward purchase of foreign exchange contracts 72,497,648 11,062,507 26,511,686 23,742,935 11,087,455 93,065 –00 –00 –00 –00 –00
Forward sale of foreign exchange contracts (58,723,317) (11,276,267) (30,040,434) (14,937,676) (2,468,940) –00 –00 –00 –00 –00 –00
Forward commitments to extend credit 4,717,424 857,164 1,456,170 809,660 1,594,430 –00 –00 –00 –00 –00 –00
Off-balance sheet gap 18,491,755 643,404 (2,072,578 ) 9,614,919 10,212,945 93,065 –00 –00 –00 –00 –00
Total Yield / Interest Risk Sensitivity Gap (99,756,822 ) 215,157,957 387,361,699 90,954,926 141,081,322 42,474,510 6,695,286 14,724,642 8,906,721 (431,982,130 )
Cumulative Yield / Interest Risk Sensitivity Gap (99,756,822 ) 115,401,135 502,762,834 593,717,760 734,799,082 777,273,592 783,968,878 798,693,520 807,600,241 375,618,111
108
2020
(Rupees in '000)
On-balance sheet financial instruments
Assets
Investments 9.30% 764,943,506 72,567,717 75,117,948 300,591,571 125,011,937 990,533,012 29,215,595 44,087,033 19,599,391 –00 8,219,302
Advances 6.60% 510,251,632 275,925,509 100,524,346 54,004,723 23,795,801 14,468,084 10,164,684 12,231,329 12,759,516 6,371,366 6,274
Other assets –00 72,923,383 –00 –00 –00 –00 –00 –00 –00 00–00 –00 72,923,383
1,475,892,284 375,607,738 175,642,294 354,596,294 148,807,738 105,001,096 39,380,279 56,318,362 32,358,907 6,371,366 181,808,210
Liabilities
Bills payable –00 31,013,221 –00 –00 –00 –00 –00 –00 –00 –00 –00 31,013,221
Borrowings 4.21% 211,599,405 145,735,236 4,863,416 10,624,222 6,040,892 12,927,163 5,891,219 10,195,980 14,808,462 512,815 –00
1,424,598,961 694,976,811 44,395,300 45,697,430 54,992,853 19,584,660 8,338,071 24,031,498 14,830,589 525,347 517,226,402
On-balance sheet gap 51,293,323 (319,369,073 ) 131,246,994 308,898,864 93,814,885 85,416,436 31,042,208 32,286,864 17,528,318 5,846,019 (335,418,192 )
Off-balance sheet financial instruments
related transactions 207,740,057 133,608,804 51,510,174 11,122,373 11,498,706 –00 –00 –00 –00 –00 –00
Forward purchase of foreign exchange contracts 75,472,905 19,581,701 29,570,273 17,076,813 9,244,118 –00 –00 –00 –00 –00 –00
Off-balance sheet gap 29,247,587 (12,326,414) 17,272,009 14,404,683 9,897,309 –00 –00 –00 –00 –00 –00
109
44.2.5.1 Reconciliation of Financial Assets and Liabilities
2021 2020
(Rupees in '000)
Assets as per statement of financial position 1,849,652,120 1,522,091,327
Less:
Fixed assets 55,692,777 43,967,993
Intangible assets 268,246 211,111
Deferred tax assets 2,074,828 –00

Non-banking assets acquired in satisfaction of claims 950,942 954,077
2,548,772 2,019,939
Interest Rate Sensitive Assets 1,789,067,497 1,475,892,284
Liabilities as per statement of financial position 1,759,637,072 1,442,234,951
Less:
Deferred tax liabilities –00 176,751

Provision against off - balance sheet items 173,319 146,692
Provision for compensated absences 1,127,704 969,754
25,804,695 17,459,239
Interest Rate Sensitive Liabilities 1,733,832,377 1,424,598,961
44.3 Operational Risk

Operational risk is the risk of loss resulting from in adequate or failed internal processes, people, and
systems or from external events. This definition includes legal risk but excludes strategic and reputational
risks. Bank classifies operational loss / near miss incidents into seven loss incidents types, which are
Internal Fraud, External Fraud, Employment Practice & Workplace Safety, Client, Product & Business
Practice, Damage to Physical Assets, Business Disruption & System Failure, and Execution, Delivery
& Process Management.
Operational risk is managed through the Operational Risk Policy, Audit Policy, Compliance Policy &
Programme, Information Technology (I.T.) Policy, I.T. Governance Framework, I.T. Security Policy,
Human Resource Policy, Consumer Protection Framework, KYC / CDD Policy, AML / CFT Policy, Fraud
Prevention Policy, Consumer Grievance Handling Policy and Outsourcing Policy approved by the Board,
along with the operational manuals and procedures issued from time to time; system of internal controls;
Business Continuity Plan, Disaster Recovery Plan for I.T.; and regular audit of the branches and divisions.
Operational risk related matters are discussed in the operations committee, compliance committee of
management and I.T. steering committee. Audit Committee of the Board provides overall guidance in
managing the Bank’s operational risk.
The Bank’s operational risk management framework, as laid down in the operational risk policy, permits
the overall risk management approach to evolve in the light of organisational learning and the future
needs of the Bank.
The Bank places a high priority on conducting all business dealings with integrity and fairness, as laid
down in the Code of Conduct, which is required to be complied with by all employees.
110
Internal controls are an essential feature of risk reduction in operational risk management and the Bank
continues to improve its internal controls.
Business Continuity Plan of the Bank pays special attention to identification of potential threats and
associated risks in critical business processes by carrying out Business Impact Analysis and Risk
Assessment including those which are dependent on external vendors or third parties, identification of
alternative mechanisms for timely resumption of services, with special focus on critical business processes,
location of off-site backup & regular review and testing of the plan.
Bank has devised and implemented IT Project Management and IT Risk Management Frameworks.
Bank is also CMMI Maturity (Level - 3) certified. Bank AL Habib’s website for Conventional and Islamic
banking has been revamped with dynamic features. Furthermore, OBDX (Oracle Banking Digital
Experience) web and mobile application have been commercially launched.
Bank has taken various measures to strengthen I.T. Security, which includes implementation of Cyber
Security Strategy and Action Plan, Vulnerability Management Program, virtual patching and database
activity monitoring solution on critical systems, 24/7 Security Operation centre (SOC), regular Internal
and external penetration testing of applications, anti malware and antivirus security solution, subscription
to I.T. security threat intelligence service and recertification of controls as per SWIFT customer Security
Program.
44.3.1 Operational Risk-Disclosures Basel II Specific
The Bank uses Basic Indicator Approach to calculate capital charge for operational risk as per Basel
regulatory framework. This approach is considered to be most suitable in view of the business model
of the Bank which relies on an extensive network of branches to offer one - stop, full – service banking
to its clients. The Bank has developed and implemented an Operational Loss Database. Operational
loss and "near miss" events are reviewed and appropriate corrective actions taken on an ongoing basis,
including measures to improve security and control procedures. Key Risk Indicators have also been
developed along with thresholds which are being closely monitored for breaches. Risk Evaluation
exercise is carried out for new products, processes and systems or any significant change in the existing
product, processes and systems as per the operational risk policy of the Bank.
44.4 Liquidity Risk
Liquidity risk is the risk of loss to a bank arising from its inability to meet obligations as they fall due or
to fund growth in assets, without incurring unacceptable cost or losses.
Key elements of the Bank’s liquidity risk management are as follows:
- To maintain a comfortable margin of excess liquidity in the form of cash and readily marketable assets
to meet the Bank’s funding requirements at any time.
- To keep a strong focus on mobilization of low-cost core deposits from customers.
- To maintain a realistic balance between the behavioral maturity profiles of assets and liabilities.
- To maintain excellent credit rating (as borrowing cost and ability to raise funds are directly affected by
credit rating).
- To have a written contingency funding plan to address any hypothetical situations when access to
normal sources of funding is constrained.
44.4.1 Liquidity Coverage Ratio
SBP issued BPRD Circular No. 08 dated June 23, 2016 advising implementation of Basel III liquidity
standards that constitute two ratios, i.e., Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio
(NSFR), and five monitoring tools.
LCR is the measure of conversion capability of the Bank’s High Quality Liquid Assets (HQLAs) into cash
to meet immediate liquidity requirements over a 30 days horizon.
The Bank calculates Liquidity Coverage Ratio (LCR) on monthly basis as per the guidelines given in
the above mentioned circular. The objective of LCR is to ensure the short-term resilience of the liquidity
risk profile which requires the Bank to maintain sufficient High Quality Liquid Assets (HQLAs) to meet
stressed cash outflows over a prospective 30 calendar - days period. As of 31 December 2021, the
Bank’s LCR stood at 251% against the SBP’s minimum requirement of 100%.
111
44.4.2 Governance of Liquidity Risk Management
Liquidity risk is managed through the liquidity risk policy approved by the Board. The Bank has “zero
tolerance” for liquidity risk and will continue to maintain a comfortable margin of excess liquidity in the
form of cash and readily marketable assets to meet its funding requirements at any time.
Management of liquidity risk is accomplished through a formal structure which includes:
- Board of Directors (BOD)
- Risk Management Committee
- Asset Liability Management Committee (ALCO)
- Treasury Division
- Risk Management Division and Middle Office
- Finance Division
- Information Technology Division
The Board of Directors approves the liquidity risk policy and ensures, through quarterly reviews by the
Risk Management Committee of the Board, that the Bank’s liquidity risk is being managed prudently.
Risk Management Committee of the Board provides overall guidance in managing the Bank’s liquidity
risk. Liquidity position is monitored daily by the Treasury Division and the Middle Office and reviewed
regularly by ALCO.
44.4.3 Funding Strategy
The Bank’s prime source of liquidity is the customers' deposit base. Within deposits, the Bank strives
to maintain core deposit base in form of current and saving deposits and avoids concentration in particular
products, tenors and dependence on large fund providers. As a general rule, the Bank will not depend
on borrowings in the inter-bank market, including repos, to be a part of its permanent pool of funds for
financing of loans, but will use these as a source for obtaining moderate amounts of additional funds to
meet temporary liquidity needs in the normal course of business or for money market operations.
44.4.4 Liquidity Risk Mitigation Techniques
Various tools and techniques are used to measure and monitor the possible liquidity risk. These include
monitoring of different liquidity ratios like core deposits to total deposits, advances to deposits, liquid
assets to total deposits, Interbank borrowing to total deposits, which are monitored on regular basis
against limits. Further, the Bank also prepares the maturity profile of assets and liabilities to monitor the
liquidity gaps over different time bands. For maturity analysis, behavioral study is carried out to determine
the behavior of non - contractual assets and liabilities. The Bank also ensures that statutory cash and
liquidity requirements are maintained at all times.
In addition, LCR, NSFR and Monitoring Tools of Basel III framework further strengthen liquidity risk
management of the Bank.
44.4.5 Liquidity Stress Testing
As per SBP FSD Circular No. 01 of 2020, Liquidity stress testing is being conducted under various stress
scenarios. Shocks include the withdrawals of deposits, withdrawals of wholesale / large deposits &
interbank borrowing, withdrawal of top deposits, etc. Results of stress testing are presented to ALCO
and Risk Management Committee. The Bank’s liquidity risk management addresses the goal of protecting
solvency and the ability to withstand stressful events in the market place. Stress testing for liquidity as
prescribed in the liquidity risk policy is carried out regularly to estimate the impact of decline in liquidity
on the ratio of liquid assets to deposits plus borrowings.
44.4.6 Contingency Funding Plan
Contingency Funding Plan (CFP) is a part of liquidity risk policy of the Bank which identifies the trigger
events that could cause a liquidity contingency and describes the actions to be taken to manage it. The
contingency funding plan highlights liquidity management actions that needs to be taken to deal with
the contingency. Responsibilities and response levels are also incorporated in order to tackle the
contingency. Moreover, CFP highlights possible funding sources, in case of a liquidity contingency.
44.4.7 Main Components of LCR
Main components of LCR are High Quality Liquid Assets and Net Cash Outflows. Outflows are mainly
deposit outflows net of cash inflows which consist of inflows from financing and money market placements
up to 1 month. The inputs for calculation of LCR are based on SBP BPRD Circular No. 08 dated 23
June 2016.
112
44.4.8 Composition of HQLAs
High Quality Liquid Assets consist of Level 1 Assets which are included in the stock of liquid assets at
100% weightage of their market value i.e., Cash & Treasury balances, Conventional Government
Securities, GOP Ijarah Sukuks, Foreign Currency Sukuks & Bonds issued by sovereigns. While Level
2 Assets comprise all equity shares (excluding shares of Financial Institutions) listed on PSX 100.
44.4.9 Concentration of Funding Sources
The Bank relies on customers' deposits as its key source of funding, specially current and saving deposits
and time deposits of small / medium denominations, and avoids concentration of large deposits. Share
of core deposits in total deposits and of large deposits in total deposits are regularly monitored. In
particular the Bank does not depend on large depositors or borrowings from SBP and financial institutions
to meet its funding requirements.
44.4.10 Currency Mismatch in the LCR
About 90% of the Bank's assets and liabilities are in local currency. Currency mismatch in other currencies
is regularly monitored.
44.4.11 Centralisation of Liquidity Management
Overall liquidity management of the Bank is centralised in Treasury Division at Principal Office. The
Bank mobilises deposits through its branch network. It also uses the branch network to grant loans to
customers. Branches that have more deposits than loans, transfer (“lend”) their excess deposits to the
Principal Office. Branches that do not have enough deposits to fund their loans, acquire (“borrow”)
additional funds from the Principal Office.
44.4.12 Other Inflows & Outflows
Benefit of pledged deposits (deposits under lien) are not accounted for in calculation of LCR.
44.4.13 Net Stable Funding Ratio (NSFR)
NSFR is the ratio of the amount of Available Stable Funding (ASF) - source of funds, capital and liabilities
relative to the amount of Required Stable Funding (RSF) - use of funds, assets and off - balance sheet
exposures.
The objective of NSFR is to ensure the availability of stable funds that a bank must hold to enable it to
build and maintain its assets, investments and off balance sheet portfolio on an ongoing basis for longer
term, i.e., over a one year horizon. NSFR reduces maturity mismatches between the asset and liability
items on the balance sheet and thereby reduces funding and roll - over risk. The Bank’s NSFR stood
at 167% as on 31 December 2021.
113
44.5 Maturities of Assets and Liabilities - based on contractual maturity of the assets and liabilities of the Bank
The following maturity profile is based on contractual maturities for assets and liabilities that have a contractual maturity. Assets and liabilities that
do not have a contractual maturity have been categorised in the shortest maturity band.
Total 2021
Over 1 Over 7 Over 14 Over 1 Over 2 Over 3 Over 6 Over 9 Over 1 Over 2 Over 3
Upto 1 to 7 to 14 days to to 2 to 3 to 6 to 9 months to to 2 to 3 to 5 Over 5
day days days 1 month months months months months 1 year years years years years
(Rupees in '000)
Assets
Cash and balances with treasury banks 118,599,741 118,599,741 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Balances with other banks 6,740,008 6,740,008 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Lendings to financial institutions 20,063,828 –00 20,063,828 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Investments 826,599,884 12,939,210 (175,858 ) 24,857,332 26,170,521 56,009,462 27,486,128 (410,686 ) 79,072,916 314,565 207,940,176 40,353,512 193,664,781 158,377,825
Advances 733,799,311 62,322,894 16,559,970 25,896,302 52,410,345 94,703,829 94,964,569 127,675,042 39,097,554 24,479,731 48,372,383 48,828,863 48,004,081 50,483,748
Fixed assets 55,692,777 22,506,089 –00 –00 438,826 429,554 574,611 1,101,378 1,215,390 001,184,060 4,395,192 3,660,512 5,284,010 14,903,155
Intangible assets 268,246 –00 –00 –00 43,454 42,783 22,693 55,879 49,822 0040,686 12,929 –00 –00 –00
Deferred tax assets 2,074,828 2,693,262 –00 –00 (22,701) (27,442) (27,442 ) (79,880 ) (52,930) 00(70,296) (249,744) (80,264 ) 287,705 (295,440 )
Other assets 85,813,497 16,784,590 5,142,949 6,220,977 13,547,227 14,422,657 9,760,794 7,770,376 4,117,500 007,835,258 112,638 68,849 18,117 11,565
1,849,652,120 242,585,794 41,590,889 56,974,611 92,587,672 165,580,843 132,781,353 136,112,109 123,500,252 33,784,004 260,583,574 92,831,472 247,258,694 223,480,853
Liabilities
Bills payable 29,803,755 29,803,755 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 302,212,902 537,376 72,474,365 1,094,262 2,336,666 75,846,330 23,083,908 42,619,114 7,519,175 4,245,556 9,542,625 10,585,069 19,745,203 32,583,253
Deposits and other accounts 1,309,823,329 1,077,838,256 16,117,169 26,665,733 50,921,042 18,700,448 23,791,875 26,302,731 20,686,097 30,465,438 2,894,746 12,103,107 3,309,696 26,991
Liabilities against assets subject
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Subordinated debt 15,995,200 –00 –00 –00 –00 –00 1,000 800 1,000 800 3,600 3,600 7,200 15,977,200
Deferred tax liabilities –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Other liabilities 101,801,886 30,523,057 5,162,952 4,852,827 9,938,161 12,314,874 7,175,748 5,302,990 6,644,426 8,570,540 1,326,302 1,154,690 2,384,506 6,450,813
1,759,637,072 1,138,702,444 93,754,486 32,612,822 63,195,869 106,861,652 54,052,531 74,225,635 34,850,698 43,282,334 13,767,273 23,846,466 25,446,605 55,038,257
Net assets 90,015,048 (896,116,650 ) (52,163,597 ) 24,361,789 29,391,803 58,719,191 78,728,822 61,886,474 88,649,554 (9,498,330) 246,816,301 68,985,006 221,812,089 168,442,596
Share capital 11,114,254

Reserves 20,656,466
Surplus on revaluation of assets 6,446,259
Unappropriated profit 51,798,069
90,015,048
114
Total 2020
(Rupees in '000)
Assets
Lendings to financial institutions 2,175,301 (494) (2,966) (3,461) 2,182,222 –00 –00 –00 –00 –00 –00 –00 –00 –00
Investments 764,943,506 11,484,141 (341,794) (398,760) (648,823) 48,629,312 13,809,722 42,481,419 105,260,936 19,857,075 90,042,620 108,105,472 170,789,915 155,872,271
Advances 510,251,632 53,335,773 7,371,280 9,070,048 33,016,839 59,638,378 82,793,789 79,781,992 23,793,801 22,992,880 44,412,146 30,614,506 31,490,891 31,939,309
Fixed assets 43,967,993 19,674,219 –00 –00 382,876 376,200 506,268 936,966 1,021,036 00996,376 3,601,624 3,054,538 4,120,142 9,297,748
Intangible assets 211,111 –00 –00 –00 22,627 22,627 22,622 62,059 23,260 0017,007 40,909 –00 –00 –00
Deferred tax assets –00 –00 –00 –00 –00 –00 –00 –00 –00 00–00 –00 –00 –00 –00
Other assets 74,943,322 10,902,949 2,013,296 7,406,967 9,134,405 11,636,343 11,676,859 12,270,539 7,663,578 00587,341 1,617,298 7,776 25,971 –00
1,522,091,327 220,995,050 9,039,816 16,074,794 44,090,146 120,302,860 108,809,260 135,532,975 137,762,611 44,450,679 139,714,597 141,782,292 206,426,919 197,109,328
Liabilities
Bills payable 31,013,221 31,013,221 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 211,599,405 320,328 98,718,568 545,085 2,144,448 18,910,564 22,939,478 17,644,403 2,944,525 3,096,367 12,927,163 5,891,219 10,195,980 15,321,277
Deposits and other accounts 1,099,686,361 892,095,621 25,825,810 9,876,099 40,346,851 12,476,736 23,062,348 24,076,408 25,029,560 23,922,401 6,657,497 2,446,852 13,835,519 34,659
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Subordinated debt 14,989,600 –00 –00 –00 –00 –00 800 800 800 800 3,200 3,200 6,400 14,973,600
Deferred tax liabilities 176,751 (261,424) –00 –00 37,094 34,482 34,482 97,114 72,985 65,683 204,367 182,160 (216,962 ) (73,230)
Other liabilities 84,769,613 20,763,276 1,979,114 3,200,147 6,856,769 11,263,412 9,148,184 11,052,652 8,215,432 792,640 2,754,422 1,259,471 2,154,287 5,329,807
1,442,234,951 943,931,022 126,523,492 13,621,331 49,385,162 42,685,194 55,185,292 52,871,377 36,263,302 27,877,891 22,546,649 9,782,902 25,975,224 35,586,113
Net assets 79,856,376 (722,935,972 ) (117,483,676) 2,453,463 (5,295,016) 77,617,666 53,623,968 82,661,598 101,499,309 16,572,788 117,167,948 131,999,390 180,451,695 161,523,215

Reserves 18,431,277
79,856,376
115
44.6 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Bank
For assets and liabilities that have a contractual maturity, the expected maturity is considered to be the same as contractual maturity.
Assets and Liabilities that do not have a contractual maturity have been categorised on the basis of expected maturities as determined
by ALCO. In case of saving and current accounts, their historical net withdrawal pattern over the next one year was reviewed, based on
year - end balances for the last three years. Thereafter, taking a conservative view, ALCO categorised these deposits in various
maturity bands. Other assets and liabilities have been categorised on the basis of assumptions / judgments that are believed to be
reasonable.
Total 2021
Upto 1 Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 Above
month to 3 to 6 months to 2 to 3 to 5 to 10 10 years
months months to 1 year years years years years
(Rupees in '000)
Assets
Cash and balances with treasury banks 118,599,741 118,599,741 –00 –00 –00 –00 –00 –00 –00 –00
Balances with other banks 6,740,008 6,740,008 –00 –00 –00 –00 –00 –00 –00 –00
Lendings to financial institutions 20,063,828 20,063,828 –00 –00 –00 –00 –00 –00 –00 –00
Investments 826,599,884 51,588,076 83,187,790 (409,505 ) 92,640,504 207,866,320 40,129,080 192,321,659 155,947,899 3,328,061
Advances 733,799,311 157,189,511 189,668,398 127,675,042 63,577,285 48,372,383 48,828,863 48,004,081 37,530,239 12,953,509
Fixed assets 55,692,777 529,625 1,921,326 1,338,918 3,320,713 12,260,368 3,660,512 5,284,010 5,787,232 21,590,073
Intangible assets 268,246 43,454 65,476 55,879 90,508 12,929 –00 –00 –00 –00
Deferred tax assets 2,074,828 3,268,620 47,652 (101,422 ) 222,871 (1,939,116 ) 7,264 811,703 917,429 (1,160,173 )
Other assets 85,813,497 40,228,849 24,256,741 7,927,102 12,172,629 248,217 68,849 18,117 11,566 881,427
1,849,652,120 398,251,712 299,147,383 136,486,014 172,024,510 266,821,101 92,694,568 246,439,570 200,194,365 37,592,897
Liabilities
Bills payable 29,803,755 29,803,755 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 302,212,902 76,442,669 98,930,238 42,619,114 11,764,731 9,542,625 10,585,069 19,745,203 32,327,849 255,404
Deposits and other accounts 1,309,823,329 213,032,074 148,993,447 132,803,856 157,652,660 162,646,434 171,854,795 163,061,384 159,767,786 10,893
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Subordinated debt 15,995,200 –00 1,000 800 1,800 3,600 3,600 7,200 8,977,200 7,000,000
Deferred tax liabilities –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Other liabilities 101,801,886 41,720,363 19,490,621 5,302,990 15,214,966 1,326,302 1,154,690 9,132,049 5,182,995 3,276,910
1,759,637,072 360,998,861 267,415,306 180,726,760 184,634,157 173,518,961 183,598,154 191,945,836 206,255,830 10,543,207
Net assets 90,015,048 37,252,851 31,732,077 (44,240,746 ) (12,609,647) 93,302,140 (90,903,586) 54,493,734 (6,061,465) 27,049,690

Reserves 20,656,466
90,015,048
116
Total 2020
(Rupees in '000)
Assets
Investments 764,943,506 (1,350,589 ) 62,899,171 42,492,324 132,508,160 91,579,088 108,936,020 171,274,822 153,093,362 3,511,148
Advances 510,251,632 102,793,940 142,432,167 79,781,992 46,786,681 44,412,146 30,614,505 31,490,892 24,104,075 7,835,234
Fixed assets 43,967,993 428,001 1,945,378 1,601,060 2,563,364 3,950,045 11,153,810 4,120,142 4,408,160 13,798,033
Deferred tax assets –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Other assets 74,943,322 28,082,038 23,379,236 12,369,589 8,449,019 1,753,753 7,776 25,971 –00 875,940
1,522,091,327 257,749,780 230,701,201 136,307,024 190,347,491 141,735,941 150,712,111 206,911,827 181,605,597 26,020,355
Liabilities
Bills payable 31,013,221 31,013,221 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 211,599,405 101,728,429 41,850,042 17,644,403 6,040,892 12,927,163 5,891,219 10,195,980 14,808,462 512,815
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Subordinated debt 14,989,600 –00 800 800 1,600 3,200 3,200 6,400 7,973,600 7,000,000
Deferred tax liabilities 176,751 (2,533,473 ) 236,066 110,015 (130,643) 780,634 1,991,335 (47,244) (679,113) 449,174
1,442,234,951 332,090,294 186,049,466 140,896,156 151,883,759 181,544,296 170,013,458 198,613,329 70,398,777 10,745,416
Net assets 79,856,376 (74,340,514) 44,651,735 (4,589,132 ) 38,463,732 (39,808,355) (19,301,347) 8,298,498 111,206,820 15,274,939

Reserves 18,431,277
79,856,376
117
45. EVENTS AFTER THE REPORTING DATE
Subsequent to the year end, the Board of Directors proposed a final cash dividend of Rs. 7.0 (2020:
Rs. 4.5) per share.
46. GENERAL
46.1 Captions, as prescribed by BPRD Circular No. 02 of 2018 issued by SBP, in respect of which there are
no amounts, have not been reproduced in these unconsolidated financial statements, except for captions
of the statement of financial position and profit and loss account.
46.2 Figures have been rounded off to the nearest thousand rupees, unless otherwise stated.
46.3 Comparative information has been re-classified, re-arranged or additionally incorporated in these
unconsolidated financial statements wherever necessary to facilitate comparison and better presentation.
47. DATE OF AUTHORISATION
These unconsolidated financial statements were authorised for issue in the Board of Directors' meeting
held on 09 February 2022.


118
Annexure I
STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF

OF RUPEES FIVE HUNDRED THOUSAND OR ABOVE PROVIDED
DURING THE YEAR ENDED 31 DECEMBER 2021
(Rupees in '000)
Name of Outstanding liabilities

Name and at beginning of the year Interest / Other
individuals / Father's / Principal
S. address Mark-up Charges Total
partners / Husband's Written
No. of the Interest / Other Written written (9+10+11)
directors (with Name Principal Total off
borrower(s) Mark-up Charges off off
CNIC Nos.)
1 2 3 4 5 6 7 8 9 10 11 12
1. Fazal Centre Muhammad Ali Fazal Muhammad Khan 66,711 8,165 – 74,876 – 5,911 – 5,911
Rahwali G. T Road Cantt (CNIC: 34101-4602895-1)
Gujranwala
2. Mukhtar Ali Alwani Mukhtar Ali Alwani Sher Ali Alwani 1,275 88 751 2,114 475 88 751 1,314
Fatima Manzil, Flat No. 20 (CNIC: 42301-4605058-9)
5th Floor, Near HBL Kharadar
Branch, Kharadar, Karachi.
3. Inayatullah Memon Inayatullah Memon Khuda Dino 2,668 2,129 – 4,797 69 2,360 266 2,695
Flat # 25, 3rd Floor, Hashim (CNIC: 42201-4006030-9)
Galleria, Commercial Housing
Scheme, Qasimabad,
Hyderabad.
Total 70,654 10,382 75100 81,787 544 8,359 1,01700 9,920
119
Annexure II
ISLAMIC BANKING BUSINESS
The Bank is operating 138 (2020: 106) Islamic banking branches and 145 (2020: 143) Islamic banking windows
at the end of the year.
Note 2021 2020

(Rupees in '000)
ASSETS
Cash and balances with treasury banks 8,423,970 5,727,007

Balances with other banks 6,633 6,557
Due from financial institutions –000 2,175,301
Investments 1 126,593,021 71,453,147
Islamic financing and related assets-net 2 85,209,570 58,304,712
Fixed assets 691,623 479,006
Intangible assets –000 –000
Due from Head Office –000 –000
Other assets 8,215,798 5,167,572
Total Assets 229,140,615 143,313,302
LIABILITIES
Bills payable 306,474 137,796

Due to financial institutions 30,479,303 18,962,087
Deposits and other accounts 3 128,090,092 93,238,405
Due to Head Office 39,305,108 14,457,740
Subordinated debt –000 –000
Other liabilities 16,989,976 6,315,054
215,170,953 133,111,082
NET ASSETS 13,969,662 10,202,220
REPRESENTED BY
Islamic Banking Fund 7,600,000 7,600,000

Reserves –000 –000
Deficit on revaluation of assets (238,060) (142,701)
Unappropriated profit 5 6,607,722 2,744,921
13,969,662 10,202,220
120
The profit and loss account of the Bank's Islamic banking branches for the year ended 31 December 2021 is as
follows:
Note 2021 2020
(Rupees in '000)
Profit / return earned 7 10,936,284 8,493,424

Profit / return expensed 8 (4,829,642) (4,047,777)
Net Profit / return 6,106,642 4,445,647
Other income
Fee and commission income 675,695 310,209
Foreign exchange income 145,850 97,171
Gain on securities 10,123 169,484
Other income 42,498 95,723
Total other income 880,281 767,035
Total income 6,986,923 5,212,682
Other expenses
Operating expenses (3,129,078) (2,349,393)
Other charges (180) (44)
Total other expenses (3,129,258) (2,349,437)
Reversals / (provisions) and write offs-net 5,136 (118,324)
2021 2020
amortised for (Deficit) / Carrying amortised for (Deficit) / Carrying
cost diminution surplus value cost diminution surplus value
1. Investments by segments
(Rupees in '000)
- Ijarah Sukuks 86,966,521 –00 (489,423 ) 86,477,098 31,954,335 –00 (208,246 ) 31,746,089
- Neelum Jhelum Hydropower Co Ltd. Sukuk 3,093,750 –00 –00 3,093,750 3,781,250 –00 –00 3,781,250
- Bai Muajjal with Government of Pakistan 9,222,783 –00 –00 9,222,783 11,328,818 –00 –00 11,328,818
- Islamic Naya Pakistan Certificate 807,152 –00 –00 807,152 –00 –00 –00 –00
100,090,206 –00 (489,423 ) 99,600,783 47,064,403 –00 (208,246 ) 46,856,157
Shares
- Listed Companies 80,455 (54,083 ) 11,665 38,037 97,442 (63,384 ) 15,861 49,919
- Listed 22,243,347 –00 215,177 22,458,524 22,425,254 –00 27,418 22,452,672
- Unlisted 3,973,000 –00 –00 3,973,000 2,025,000 –00 –00 2,025,000
26,216,347 –00 215,177 26,431,524 24,450,254 –00 27,418 24,477,672
Units of Mutual Funds 351,022 (52,866 ) 24,521 322,677 100,000 (52,866 ) 22,265 69,399
Associates
- AL Habib Islamic Cash Fund 100,000 –00 –00 100,000 –00 –00 –00 –00
- AL Habib Islamic Savings Fund 100,000 –00 –00 100,000 –00 –00 –00 –00
200,000 –00 –00 200,000 –00 –00 –00 –00
Total Investments 126,938,030 (106,949 ) (238,060 ) 126,593,021 71,712,099 (116,250 ) (142,702 ) 71,453,147
121
Note 2021 2020
(Rupees in '000)
2. Islamic financing and related assets
Ijarah 2.1 1,510,759 1,656,565
Murabaha 2.2 10,763,354 9,148,387
Diminishing Musharaka 14,068,266 11,404,565
Islamic Long Term Financing Facility (ILTFF) 2,354,060 1,737,762
Istisna 5,342,869 2,364,376
Islamic Refinance for Renewable Energy (IFRE) 36,245 14,035
Islamic Refinance for Wages & Salaries (IRWS) 1,220,603 2,355,044
Islamic Refinance for Temporary Economic Refinance Facility (ITERF) 908,150 –00
Islamic Export Refinance - Istisna 1,116,424 1,083,650
Musawamah 4,583,663 3,710,693
Islamic Export Refinance-Musawamah 529,750 826,500
Running Musharaka 326,612 84,799
Islamic Export Refinance-Running Musharaka 5,263,500 6,270,000
Financing against Bills-Musawamah 1,580,871 293,805
Staff Financing 1,025,435 594,202
Musawamah Inventory 2,290,127 1,700,257
Advance against Istisna 7,974,093 5,702,233
Advance against Istisna - IERF 9,475,930 4,829,300
Advance against Ijarah 505,797 735,441
Advance against Diminishing Musharaka 4,440,130 1,083,563
Advance against ILTFF 1,756,300 1,082,706
Advance against IFRE 2,161,708 875,000
Advance against ITERF 6,101,556 914,221
Advance against IRF SME 39,925 –00
Gross Islamic financing and related assets 85,376,127 58,467,104
Less: provision against Islamic financings

- Specific (123,001) (135,936)
- General (43,556) (26,456)
(166,557) (162,392)
Islamic financing and related assets-net of provision 85,209,570 58,304,712
2.1 Ijarah
2021
Cost Accumulated depreciation Book value
As at 01 Additions / As at 31 As at 01 Charge for As at 31 as at 31
January (deletions) December January the year / December December
2021 2021 2021 (deletions) 2021 2021
(Rupees in '000)
Plant and Machinery 404,078 348,701 583,404 179,121 191,555 294,330 289,074
(169,375) (76,346)
Vehicles 2,227,410 540,587 2,137,519 891,153 490,799 972,561 1,164,958
(630,478 ) (409,391 )
Equipment 286,147 106,718 203,408 190,796 91,675 146,681 56,727
(189,457 ) (135,790 )
Total 2,917,635 996,006 2,924,331 1,261,070 774,029 1,413,572 1,510,759
(989,310 ) (621,527 )
122
2020
2020 2020 2020 (deletions) 2020 2020
(Rupees in '000)
(699,823) (397,996)
Vehicles 2,406,744 546,978 2,227,410 890,722 467,430 891,153 1,336,257
(726,312 ) (466,999 )
Equipment 607,883 –00 286,147 334,105 123,163 190,796 95,351
(321,736 ) (266,472 )
Total 3,948,972 716,534 2,917,635 1,583,733 808,804 1,261,070 1,656,565
(1,747,871 ) (1,131,467 )
2.1.1 Future ijarah payments receivable

2021 2020
Not later Later than Not later Later than
than 1 1 year and less than 1 1 year and less
year than 5 years Total year than 5 years Total
(Rupees in '000)
Ijarah rental receivables 160,721 1,192,485 1,353,206 685,438 871,283 1,556,721
Note 2021 2020

(Rupees in '000)
2.2 Murabaha
Murabaha financing 2.2.1 7,685,008 7,020,386
Advances for Murabaha 3,078,346 2,128,001
10,763,354 9,148,387
2.2.1 Murabaha receivable-gross
Less: Deferred murabaha income 2.2.2 7,929,218 7,202,836
Profit receivable shown in other assets 2.2.4 (130,922 ) (75,641 )
Murabaha financings (113,288 ) (106,809 )
7,685,008 7,020,386
2.2.2 The movement in Murabaha financing during the year is as follows:

Sales during the year 32,356,284 26,037,743
Adjusted during the year (31,629,902 ) (26,047,650 )
2.2.3 Murabaha sale price 32,281,567 25,990,650

Murabaha purchase price (31,578,935 ) (25,303,306 )
702,632 687,344
2.2.4 Deferred murabaha income

Opening balance (75,641 ) (125,034 )
Arising during the year (704,180 ) (694,160 )
Less: Recognised during the year 648,899 743,553
Closing balance (130,922 ) (75,641 )
123
3. Deposits and other accounts
2021 2020
(Rupees in '000)
Customers
Term deposits 19,890,218 –00 19,890,218 21,354,917 –00 21,354,917
115,177,874 3,699,733 118,877,607 89,825,137 2,934,480 92,759,617
Current deposits 18,895 –00 18,895 62,908 –00 62,908
Savings deposits 9,193,590 –00 9,193,590 415,880 –00 415,880
9,212,485 –00 9,212,485 478,788 –00 478,788
124,390,359 3,699,733 128,090,092 90,303,925 2,934,480 93,238,405
2021 2020
(Rupees in '000)
- Individuals 76,106,049 58,871,300
- Government / Public Sector Entities 1,491,016 2,096,892
- Banking Companies 46 46
- Non-Banking Financial Institutions 9,212,439 478,742
- Private Sector 41,280,542 31,791,425
128,090,092 93,238,405
3.1.1 Deposits includes eligible deposits covered under deposit protection mechanism as required by the Deposit
Protection Act, 2016 amounting to Rs. 107,417.050 million (2020: Rs. 75,124.486 million).
2021 2020
(Rupees in '000)
4. Charity Fund
Additions during the year
Received from customers on account of delayed payment 232 26,975
Charity accrued but not yet received 478 5,072
Dividend purification amount 825 205
Other Non - Shariah compliant income 942 2,330
Profit on charity saving account 1,032 2,314
3,509 36,896
Payments / utilization during the year
Health (19,131) (26,144)
Social Welfare (12,698) (10,428)
Education –00 (2,500)
(31,829) (39,072)
124
2021 2020
(Rupees in '000)
4.1 Detail of charity is as follows:
Afzaal Memorial Thalassemia Foundation 3,000 –00
Al Mustafa Trust 1,500 1,607
ASF Foundation 939 –00
Bait-ul-Sukun 1,939 1,607
Child Aid Association 1,000 3,607
Dar-ul-Sukun 1,939 3,607
Edhi Foundation 1,939 3,607
Gawadar Development Authority Hospital –00 5,494
Green Crescent Trust 1,939 1,607
IDA RIEU Welfare Association 1,939 1,607
Indus Hospital 1,939 3,615
Jinnah Foundation –00 2,000
Karachi Down Syndrome Program 1,000 –00
Lady Dufferin Hospital 1,000 –00
National Institute of Child Health 1,000 3,000
Osmania Hospital 1,000 1,607
Pakistan Children’s Heart Foundation 1,939 1,000
Pakistan Foundation Fighting Blindness 1,000 –00
Panah Trust 1,000 –00
Pink Ribbon 1,000 –00
SIUT 1,939 3,607
The Cancer Foundation 939 –00
The Kidney Centre 1,939 1,000
31,829 38,572
5. Islamic Banking Business Unappropriated Profit

Add: Islamic Banking profit for the year 3,862,801 2,744,921
Less: Remitted to Head Office –00 (2,551,373)
6. Contingencies and Commitments

- Guarantees 10,930,898 4,415,658
- Commitments 27,490,079 17,468,898
38,420,977 21,884,556
7. Profit / Return Earned on Financing, Investments and Placement

Profit earned on:
Financing 3,999,268 4,389,705
Investments 6,915,752 3,712,628
Placements 21,264 391,091
10,936,284 8,493,424
8. Profit on Deposits and Other Dues Expensed

Due to Financial Institutions 403,087 259,532
Due to Head Office 824,824 193,781
4,829,642 4,047,777
125
9. Profit and Loss Distribution and Pool Management
9.1 The number and nature of pools maintained by the Islamic Banking Branches along with their key
features and risk and reward characteristics:
General Pool PKR (Mudaraba)
Deposits which assume minimal risk of loss due to diversified assets being tagged thereto are parked
in the general pool. In case of loss in general pool, the loss will be borne by the general pool members.
Special Pool(s) PKR (Mudaraba)
Special pool(s) are created where the customers desire to invest in high yield assets. In case of loss
in a special pool the loss will be borne by the special pool members.
General Pool FCY (Mudaraba)
In FCY pool, all FCY deposits and Investments are parked to share the return among the FCY deposit
holders. In case of loss in a FCY General Pool, the loss will be borne by the FCY general pool members.
Special Pool FCY (Mudaraba)
Islamic Export Refinance Scheme (IERS) Pool PKR (Musharaka)
IERS pool is required by the SBP to facilitate the exporters under Islamic Export Refinance Scheme.
Equity Pool
Investments with relatively higher risks such as investment in shares and mutual funds are tagged to
the equity pool in order to safeguard the interest of depositors. The Bank as Mudarib in the general
pool is responsible for administrative costs and cost of operating fixed assets, which are financed from
equity. Furthermore, subsidized financing to employees are also financed from equity as per SBP
guidelines.
Parameters associated with risk and rewards:
Following are the key considerations attached with risk and reward of the pool:
- Period, return, safety, security and liquidity of investment.
- Maturities of funds obtained from Principal Office, Islamic Banking Institutions and Shariah compliant
organisations as regulated in Pakistan.
- Element of risk attached to various types of investments.
- SBP rules and Shariah clearance.
9.2 Avenues / sectors of economy / business where Mudaraba based deposits have been deployed:
The Mudaraba based funds have been deployed in the following avenues / sectors / business:
- Chemical and pharmaceuticals
- Agribusiness
- Textile
- Sugar
- Shoes and leather garments
- Investment in sukuks, shares and mutual funds
- Production and transmission of energy
- Food and allied except sugar
- Cement
- Financial
- Wheat
- Individuals
- Others (domestic whole sale, engineering goods, plastic product, etc.)
126
9.3 Parameters used for allocation of profit, charging expenses and provisions etc. along with a
brief description of their major components:
The Bank’s Islamic Banking Division (IBD) is accepting Term Deposits and Saving Deposits under
Mudaraba arrangements, wherein the Bank is Mudarib and depositors are Rab-Ul-Maal. The Bank with
the prior approval of Depositors also commingles its funds with those of depositors.
The funds so generated are invested by the Bank in Shariah compliant modes of financing and investments
such as Murabaha, Ijarah, Istisna, Diminishing Musharakah, Running Musharakah, Musawama, Shares,
Mutual Funds and Sukuks etc.
The Bank calculates the profit of the pool at every month. Profit is distributed at the net income level.
Net income is calculated after deducting direct costs such as cost of Murabaha, cost of Takaful,
depreciation on Ijarah Assets, and amortization of premium on sukuks and loss of investments directly
incurred in deriving that Income.
The net income / loss is being allocated between the Bank’s equity and the depositors’ fund in proportion
to their respective share in pool.
The Bank’s profit sharing ratio during the year was 50% (2020: 50%) of Net Income and the depositors’
profit sharing ratio was 50% (2020: 50%) of net income.
After the allocation of Income between the equity holder and depositors the profit is distributed among
the account holders on the basis of predetermined weightages, announced by the Bank at the beginning
of the month based on their respective category / tiers. In case of loss, Rab-ul-Maal has to bear the
loss in the ratio of its investment.
In case of provisioning, the general and specific provisions created against non-performing financing
and diminution in the value of investments as under prudential regulations and other SBP directives
shall be borne by the IBIs as Mudarib. However, write-offs of financings and loss on sale of investments
shall be charged to the pool along with other direct expenses.
9.4 Mudarib share and HIBA distributed to depositor’s pool and specific pool
2021
Distributable Mudarib Mudarib HIBA HIBA
Income Share Share Amount
(Rupees in '000) (Percentage) (Rupees in '000) (Percentage)
LCY Pool 6,921,290 2,821,081 40.76% 342,246 12.13%
FCY Pool 85,200 79,472 93.28% 8,594 10.81%
2020
LCY Pool 6,354,802 2,118,598 33.34% 413,276 19.51%

FCY Pool 96,447 61,600 63.87% 8,754 14.21%
2021 2020
(Percentage)
9.5 Profit rate earned vs. profit rate distributed to the depositors
during the year
Profit rate earned 7.21% 9.99%
Profit rate distributed 3.34% 4.69%
127
Complaint Handling
The Bank has a comprehensive Customer Grievances Handling Policy, which is based on the principles of
fairness, promptness, and customer’s right to approach alternate remedial avenues in case of need.
Customers may register their complaints through Call Center, Bank’s Website, direct emails, Social Media and
letters through drop-boxes or directly to Customer Services Division/CEO’s Office, which are promptly logged
and acknowledged. The complaints are tracked for end-to-end resolution within regulatory timelines and
escalated to Senior Management, as required. In case a complainant is not satisfied with the resolution
provided by the Bank, he may escalate his complaint to Banking Mohtasib Pakistan. This process is
communicated to customers through notices in Branches and the Website.
During 2021, Bank’s Customer Complaint Unit has been further strengthened to ensure quick resolution of
customers’ complaints. Further, training on complaints handling guidelines was also provided to a large
number of staff.
In 2021, the Bank received 216,799 complaints which were investigated and closed within an average
turnaround time of 4 working days.
128
Report of Shariah Board for the year ending December 31, 2021
In the name of Allah, the Beneficent, the Merciful
1. While the Board of Directors and Executive Management are solely responsible to ensure that the
operations of Bank AL Habib – Islamic Banking Division (BAHL-IBD) are conducted in a manner that
comply with Shariah principles and guidelines issued by the Shariah Board of the BAHL-IBD at all times.
The Shariah Governance Framework issued by the State Bank of Pakistan, required from the Shariah
Board (SB) to submit a report on the overall Shariah compliance environment of BAHL-IBD.
2. To form the opinion as expressed in this report, the Shariah Compliance Department carried out Shariah
Reviews, on test check basis, of each class of transactions, the relevant documentation and process
flows. Further, during the last year, Shariah Board reviewed the Internal Shariah Audit and External
Shariah Audit Reports. Based on above, we are of the view that:
I. BAHL-IBD has complied with Shariah rules and principles in the light of fatawa, rulings and
guidelines issued by its Shariah Board.
II. BAHL-IBD has complied with directives, regulations, instructions and guidelines i.e. related to
Shariah compliance issued by SBP in accordance with the rulings of SBP’s Shariah Board.
III. BAHL-IBD has complied with the SBP instructions on profit and loss distribution and Pool
Management. On recommendations of Shariah Board measures are being taken to further strengthen
the Pool Management system.
IV. BAHL-IBD has a comprehensive mechanism in place to ensure Shariah Compliance in its overall
operations.
V. The Shariah Board appreciates the view and commitment of BOD towards ensuring the Shariah
Compliance in the products, processes and operations of the BAHL-IBD. Improvement is required
in level of awareness of Islamic Banking staff as well Executive Management in order to improve
their understanding on the importance of Shari’ah Compliance in their respective areas, particularly
in Foreign Trade Department.
VI. The Management has provided adequate resources to Shariah Compliance Department and also
committed to provide further staff enabling them to discharge their duties effectively.
VII. The Bank has a well-defined mechanism in place which is sound enough to ensure that any
earnings realized from sources or by means prohibited by Shariah have been credited to charity
account and are being properly utilized. In year 2021, charity amount of Rs. 12.499 Million has
been realized, out of which an income of Rs. 0.941 Million was credited to charity due to Shariah
non-compliance as per instructions of Shariah Board. An amount of Rs. 31.823 Million has been
granted to various charitable institutions against previous year’s balances.
Mufti Sher Ali Mufti Muhammad Hamza

Resident Shariah Board Member Shariah Board Member
Mufti Mohib ul Haq Siddiqui Mufti Ismatullah Hamdullah

Shariah Board Member Chairman Shariah Board
Karachi: 07 February, 2022

129
Notice of Annual General Meeting
Notice is hereby given that the Thirty-first Annual General Meeting of Bank AL Habib Limited will be held at the
Registered Office of the Bank located at 126-C, Old Bahawalpur Road, Multan, on Tuesday, March 29, 2022
at 10:30 a.m. to transact the following business. The shareholders may also attend the meeting through electronic
means as advised by Securities and Exchange Commission of Pakistan (SECP).
1. To receive and adopt the Audited Annual Accounts and Consolidated Accounts of the Bank for the year
ended December 31, 2021 together with the Reports of Chairman, Directors and Auditors.
2. To consider and approve payment of cash dividend @ 70%, i.e., Rs. 7.0 per share of Rs. 10/- each for
the year ended December 31, 2021 as recommended by the Board of Directors.
3. To appoint auditors for the year 2022 and to fix their remuneration. EY Ford Rhodes, Chartered Accountants,
being eligible, offer themselves for re-appointment.
4. To elect Directors of the Bank in accordance with Section 159(1) of the Companies Act, 2017. The number
of Directors to be elected pursuant to Section 159(1) of the Companies Act, 2017 has been fixed at 10
(ten) by the Board of Directors including one female Director in compliance with clause 7 of the Listed
Companies (Code of Corporate Governance) Regulations, 2019.
The following are the retiring Directors, who may offer themselves for election:
Mr. Abbas D. Habib, Mr. Anwar Haji Karim, Ms. Farhana Mowjee Khan, Syed Mazhar Abbas, Mr. Qumail
R. Habib, Mr. Safar A. Lakhani, Syed Hasan Ali Bukhari, Mr. Murtaza H. Habib, Mr. Arshad Nasar, and
Mr. Adnan Afridi - NIT Nominee.
5. To consider any other business of the Bank with the permission of the Chair.
Special Business
6. To Consider and approve increase in Authorized Capital of the Bank from Rs. 15,000,000,000 (Rupees
Fifteen Billion) to Rs. 25,000,000,000 (Rupees Twenty Five Billion).
7. To consider and approve the conversion terms of Tier 2 Term Finance Certificates of the Bank, issued
in 2021 in the amount of Rs. 5,000,000,000 (Rupees Five Billion) into Ordinary Shares of the Bank upon
occurrence of a conversion event if so required by the State Bank of Pakistan.
8. To consider and approve the conversion terms of Tier 1 Term Finance Certificates of the Bank, intended
to be issued in 2022 in the amount of Rs. 7,000,000,000 (Rupees Seven Billion) into Ordinary Shares of
the Bank upon occurrence of a conversion event if so required by the State Bank of Pakistan.
9. To consider and approve remuneration payable to Executive Director of the Bank.
Statements under Section 166(3) for Item No. 4, and under Section 134(3) of the Companies Act, 2017 in
respect of special business contained in Items Nos. 6, 7, 8 & 9 are annexed
By order of the Board
MOHAMMAD TAQI LAKHANI

Karachi: March 08, 2022 Company Secretary
Notes:
1. Participation in the Annual General Meeting (AGM) through Electronic Means:
The entitled shareholders who are interested to attend AGM through online platform and whose names
appeared in the Books of the Bank by the close of business on March 18, 2022 are hereby requested to
get themselves registered with the Company Secretary Office by providing the following details at the
earliest but not later than 48 hours before the time of AGM (no account shall be taken of any part of the
day that is not a working day) at [email protected].
130
Name of CNIC No. Folio Number Cell Number Email
Shareholder /CDC No. Address
Upon receipt of the above information from interested shareholders, the Bank will send the login details
at their email addresses. On the AGM day, shareholders will be able to login and participate in the AGM
proceedings through their smartphones or computer devices from any convenient location.
The login facility will be opened 30 minutes before the meeting time to enable the participants to join the
meeting after identification and verification process.
The entitled shareholders (whose names appeared in the Books of the Bank by the close of business on
March 18, 2022) along with the details mentioned above may send their comments/suggestions for the
proposed Agenda items at the above email address atleast 48 hours before the time of AGM (no
account shall be taken of any part of the day that is not a working day).
2. Any member desirous to contest the election of Directors shall file the following with Company Secretary
of the Bank at its Registered Office located at 126-C, Old Bahawalpur Road, Multan, not later than 14
days before the day of the above said meeting:
(a) His/Her intention to offer himself/herself for the election in terms of Section 159(3) of the Companies
Act, 2017. He/She should also confirm that:
(i) He/She is not ineligible to become a director of the Bank under any applicable laws and
regulations.
(ii) Neither he/she nor his/her spouse is engaged in the business of brokerage or is a sponsor,
director or officer of a corporate brokerage house.
(iii) He/She is not serving as a director in more than seven listed companies simultaneously.
Provided that this limit shall not include the directorships in the listed subsidiaries of a listed
holding company.
(iv) In case of Independent Director, a declaration of Independence in terms of Section 166(2) of
the Companies Act, 2017 as required under clause 6(3) of Listed Companies (Code of
Corporate Governance) Regulations, 2019.
(b) Consent to act as Director in Form 28 under Section 167 of the Companies Act, 2017.
(c) Fit and Proper Test Proforma, Affidavit, Declarations, and Questionnaire as provided in “Corporate
Governance Regulatory Framework” issued by SBP vide BPRD Circular No. 5 dated November 22,
2021.
3. In terms of the criteria prescribed by SBP, a person shall not be eligible to become a Director of a bank,
if the person:
(a) is disqualified/ineligible under Banking Companies Ordinance 1962, Companies Act 2017, and other
applicable laws, rules and regulations;
(b) is in default of payment of dues owed to any financial institution in personal capacity;
(c) is associated as executive director/sponsor director/nominee of the sponsor and/or President/CEO
of a proprietary concern, partnership firm, or corporate body excluding public sector organization,
which is in default of dues owed to any financial institution;
(d) has contravened any of the requirements and standards of SBP or equivalent
standards/requirements of other local or foreign regulatory authorities, professional bodies, or
government bodies/agencies of such a nature that makes such person’s association with the
bank/DFI undesirable;
(e) is a designated person / proscribed person or is associated directly or indirectly with any
designated person / proscribed person;
(f) is convicted of or is associated directly or indirectly with any person convicted of any serious
offence, including any Money Laundering/ Terrorism Financing offence or any predicate offence set
out in Schedule I of the Anti-Money Laundering Act, 2010.
131
It should also be noted that under SBP regulations a person is not permitted to be a Director of more
than one financial institution, and the Directors will not assume the charge of their respective offices until
their appointments are approved in writing by SBP.
4. A copy of relevant documents may be obtained from the office of the Company Secretary of the Bank or
may be downloaded from the website of SBP.
5. A detailed profile along with office address will be available on website as required under SECP’s SRO
1196 (I)/2019, dated October 03, 2019.
6. The share transfer book of the Bank will remain closed from March 21, 2022 to March 29, 2022 (both
days inclusive). Transfers received in order at the office of our Share Registrar, CDC Share Registrar
Services Limited, located at CDC House, 99-B, Block B, S.M.C.H.S., Main Shahra-e-Faisal, Karachi –
74400, by the close of business on March 18, 2022 will be treated in time for payment of cash dividend
(subject to approval of the members). Members are requested to promptly communicate any change in
their addresses to our above-mentioned Share Registrar.
7. A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend, speak and
vote on his/her behalf. A proxy (except for a corporation) must be a member of the Bank. Proxy form, in
order to be effective, must be received at the Registered Office of the Bank located at 126-C, Old
Bahawalpur Road, Multan, duly stamped and signed not less than 48 hours before the time of meeting
(no account shall be taken of any part of the day that is not a working day).
8. The entitled shareholders are requested to keep with them their original Computerized National Identity
Cards (CNICs) / Passport along with their folio numbers / participant(s) ID numbers and CDC account
numbers at the time of attending the Annual General Meeting in order to facilitate identification of the
respective shareholders. The proxy shall also produce his/her original CNIC or Passport at the time of
the meeting. In case of a corporate entity, the Board of Directors’ Resolution/Power of Attorney with
specimen signatures shall be submitted along with Proxy Form in the Bank.
9. Payment of Cash Dividend through Electronic Mode
Under the provision of Section 242 of Companies Act, 2017 and Companies (Distribution of Dividends)
Regulations, 2017, it is mandatory for a listed company to pay cash dividend to their shareholders only
through electronic mode directly into the bank account designated by the entitled shareholders instead
of issuing physical dividend warrants.
In order to receive cash dividend directly into the designated bank account, members who have not yet
provided the bank account details are requested to fill and sign the “E-Dividend Bank Mandate Form”
available on the Bank’s website link, https://www.bankalhabib.com/download-forms, and send to the
relevant Participants/Investor Account Services of the CDC/Share Registrar of the Bank (as the case
may be) latest by March 18, 2022 along with a copy of their valid CNICs. The aforesaid form is also
available in the Annual Report of the Bank.
In case of non-receipt or incorrect International Bank Account Number (IBAN) with other related details
or non-availability of valid CNICs, the Bank will withhold cash dividend of such members.
10. The Government of Pakistan through Finance Act, 2021 has made certain amendments in Section 150
of the Income Tax Ordinance, 2001 whereby different rates are prescribed for deduction of withholding
tax on the amount of cash dividend paid by the companies/banks. These tax rates are as follows:
(a) For filers of income tax returns 15%
(b) For non-filers of income tax returns 30%
To enable the Bank to make tax deduction on the amount of cash dividend @ 15% instead of 30% all
the shareholders whose names are not entered into the Active Tax-payers List (ATL) provided on the
website of Federal Board of Revenue (FBR), despite the fact that they are filers, are advised to make
sure that their names are entered into ATL before the date of payment of cash dividend i.e., March 29,
2022; otherwise tax on their cash dividend will be deducted @ 30% instead of 15%.
According to FBR, withholding tax will be determined separately on ‘Filer/Non-Filer’ status of principal
shareholder as well as joint-shareholder(s) based on their shareholding proportions, in case of joint
accounts. Members that hold shares with joint-shareholder(s) are requested to provide shareholding
proportions of principal shareholder and joint-shareholder(s) in respect of shares held by them to the
Bank’s Share Registrar in writing in the following format.
132
Principal Shareholder Joint-Shareholder(s)
Bank Folio/CDC Total Name Shareholding Name Shareholding

Name Account Shares and Proportion and Proportion
No. CNIC (No. of Shares) CNIC (No. of Shares)
In case the required information is not provided to our Share Registrar latest by March 18, 2022, it will
be assumed that the shares are equally held by them.
In case of corporate entity, withholding tax exemption from dividend income shall only be allowed if copy
of valid tax exemption certificate is made available to our Share Registrar latest by March 18, 2022.
As per instructions of Securities & Exchange Commission of Pakistan (SECP) and Central Depository
Company of Pakistan (CDC) circular No. 6 of 2018, the shareholders are hereby informed that the CDC
has developed Centralized Cash Dividend Register (CCDR) on eServices Web Portal which contains
details of cash dividend such as either paid or unpaid, withheld by the Bank, total amount of cash
dividend, tax and zakat deductions and net amount credited into designated bank account of
shareholders. The shareholders are requested to register themselves to CDC's eServices Portal link,
https://eservices.cdcaccess.com.pk to obtain the aforesaid information.
11. Audited Financial Statements through e-mail
SECP through its Notification SRO 787(I)/2014 dated September 8, 2014 has allowed the circulation of
Audited Financial Statements along with Notice of Annual General Meeting to the members through
e-mail. Soft copies of Annual Report 2021 including Audited Financial Statements and Notice of Annual
General Meeting are being e-mailed to the members who have provided their e-mail addresses for the
said purpose. Other members of the Bank who wish to receive soft copy of Annual Report are requested
to send their e-mail addresses to our Share Registrar through consent form. The said consent form for
electronic transmission can be downloaded from the Bank’s website link, https://www.bankalhabib.com/reports
Audited Financial Statements and reports are being placed on the aforesaid link.
Members are also requested to intimate change (if any) in their registered e-mail addresses to our Share
Registrar for the above-mentioned purpose.
Additional Information for Shareholders:
a. Unclaimed / Unpaid Cash dividend and Share Certificates:
In compliance of Section 244 of the Act, the Bank has already requested through individual letters
to shareholders and also through newspaper dated May 25, 2021 to collect their unclaimed shares
/ unpaid cash dividend, if any. Shareholders are once again requested to lodge a claim for
unclaimed shares / unpaid cash dividends with the Bank’s Share Registrar i.e. CDC Share Registrar
Services Limited.
b. Deposit / Conversion of Physical shares into Book-Entry form:
The shareholders having shares in physical share certificates of the Bank are advised to place /
convert their physical shares into Book-Entry form in CDC as required under the provisions of
Section 72 of the Companies Act, 2017.
133
Statement under Section 166(3) of the Companies Act, 2017
Item No. 4 of the Agenda
Statement under Section 166(3) of the Companies Act, 2017 in respect of Election of Independent
Directors of the Bank:
Independent Directors will be elected through the process of election of directors in terms of Section 159 of the
Companies Act, 2017 and they shall meet the criteria laid down under Section 166 (2) of the Companies Act,
2017.
Statement under Section 134(3) of the Companies Act, 2017
The statement is annexed to the Notice of the Thirty-first (31st) Annual General Meeting of Bank AL Habib
Limited at which a special business is to be transacted. The purpose of this statement is to set forth the
material fact concerning such special business.
As recommended by the Board of Directors in their meeting held on February 09, 2022, it is proposed to
increase the Authorised Capital of the Bank from Rs. 15,000,000,000 (Rupees Fifteen Billion) to
Rs. 25,000,000,000 (Rupees Twenty Five Billion) to meet the future requirements of paid-up capital and to
pass the following resolutions as a Special Resolutions:
“RESOLVED THAT the Authorised Capital of the Bank be and is hereby increased from Rs. 15,000,000,000
(Rupees Fifteen Billion) to Rs. 25,000,000,000 (Rupees Twenty Five Billion) by the creation of 1,000,000,000
Ordinary Shares of Rs. 10/- each.
FURTHER RESOLVED THAT the figures and words “Rs. 15,000,000,000 (Rupees Fifteen Billion) divided into
1,500,000,000 (One Billion Five Hundred Million) ordinary shares of Rs. 10/- each” appearing in Clause V of
the Memorandum of Association and that the figures and words “Rs. 15,000,000,000 (Rupees Fifteen Billion)
divided into 1,500,000,000 (One Billion Five Hundred Million) ordinary shares of Rs. 10/- each” in Article 4 of
the Articles of Association of the Bank be and are hereby substituted by the figures and words “Rs.
25,000,000,000 (Rupees Twenty Five Billion) divided into 2,500,000,000 (Two Billion Five Hundred Million)
ordinary shares of Rs. 10/- each”.
In order to contribute towards its Tier 2 Capital, Bank AL Habib Limited (the “Bank”) has issued redeemable
capital in the form of Term Finance Certificates (“TFCs”) amounting to Rs. 5,000,000,000/- (Rupees Five
Billion), pursuant to the terms of the TFC Issuance Agreement dated September 24, 2021 in accordance with
the Basel III Capital Instructions issued by SBP vide BPRD Circular No. 6 dated August 15, 2013.
Pursuant to the Basel III Capital Instructions, if SBP determines that a Point of Non-Viability (“PONV”) has
occurred, it may direct a bank to convert its Tier 2 Capital instruments (or any part thereof), including TFCs,
into ordinary shares of the bank at such time or times and for such consideration and on such terms and
conditions as may be determined by SBP, under and pursuant to and in accordance with the Basel III Capital
Instructions and any other instructions issued by SBP.
134
Additional information required as per applicable laws and regulations is as follows:
Name of the persons to whom shares will be The shares will be issued to the TFC Holders (at
issued that time).
Price at which the proposed shares will be At a price equivalent to market value of the shares
issued of the Bank on the date of trigger of PONV as
declared by SBP.
Purpose of the issue, utilization of the proceeds To convert the outstanding TFC amount (in whole
of the issue and benefits to the Bank and its or part) into shares of the Bank.
shareholders with necessary details
Existing shareholding of the persons to whom Not Applicable
the proposed shares will be issued
Total shareholding of the persons after the Not Applicable
proposed issue of shares
Whether the persons have provided written The terms of the TFC Issuance Agreement for the
consent for purchase of such shares TFC issue contain the details regarding such
conversion.
Justification as to why proposed shares are to This is in accordance with the requirements of SBP
be issued otherwise than rights and not as vide its Circular No. 6 of Banking Policy and
rights shares Regulation Department (“BPRD”) dated August 15,
2013.
Justification, with details of the latest available Not Applicable
market price and break-up value per share, if
such price differs from par value
Details of the average market price during the Not Applicable
last 3 (three) months and 6 (six) months
preceding the Board announcement as well as
the latest available market price
Therefore, for the purpose of the above, the Board of Directors has recommended that members may pass the
following resolution as a Special Resolutions:
“RESOLVED THAT the Term Finance Certificates (“TFCs”) of Bank AL Habib Limited in the amount of
Rs. 5,000,000,000/- (Rupees Five Billion) issued pursuant to the terms of the TFC Issuance Agreement dated
September 24, 2021 for the purpose of Tier 2 Capital under Basel III Capital Instructions of the State Bank of
Pakistan (“SBP”), may be converted into ordinary shares of the Bank subject to a maximum of 80,000,000
(Eighty Million) additional ordinary shares being issued upon such conversion, if so directed by SBP on the
occurrence of a point of non-viability as determined by SBP, at a price equivalent to the market value of the
shares of the Bank on the date of trigger of the point of non-viability as declared by SBP, in accordance with
the applicable rules and regulations of SBP, and all such ordinary shares shall be issued other than by way of
rights in accordance with Section 83(1)(b) of the Companies Act, 2017 and shall further be subject to the
approval of Securities and Exchange Commission of Pakistan in accordance with Section 83(1)(b) of the
Companies Act, 2017.
“FURTHER RESOLVED THAT the Board of Directors of the Bank (“the Board”) or such officers or officers of
the Bank as may be authorized by the Board, be and are hereby authorized to take all steps necessary,
ancillary, and incidental to the above-mentioned conversion, as and when required, and are further authorized
to sign, execute, and deliver all necessary documents, agreements, and letters on behalf of the Bank, as may
be deemed appropriate and as may be required for the purposes above-mentioned.”
The ordinary shares issued will rank pari passu in all respects with the existing shares of the Bank.
The Directors of the Bank have no direct or indirect interest in the above-mentioned resolutions except in their
capacity as shareholders of the Bank to the extent of their respective shareholding.
135
In order to contribute towards its Additional Tier 1 Capital, Bank AL Habib Limited (the “Bank”) intends to issue
perpetual, rated, unsecured, non-cumulative and subordinated Term Finance Certificates (“TFCs”) amounting
up to Rs. 7,000,000,000/ (Rupees Seven Billion) inclusive of a green shoe option of Rs. 3,000,000,000/-
(Rupees Three Billion), in accordance with the Basel III Capital Instructions issued by SBP vide BPRD Circular
No. 6 dated August 15, 2013. The Bank may at its option, have the TFCs subsequently listed on the Pakistan
Stock Exchange Limited pursuant to the Privately Placed Debt Securities Listing Regulations of the Pakistan
Stock Exchange Limited.
The aforesaid TFCs may be converted into ordinary shares of the Bank in accordance with the applicable rules
and regulations of SBP, subject to a maximum of 118,574,000 (One Hundred Eighteen Million Five Hundred
Seventy Four Thousand) additional ordinary shares being issued upon such conversion, (i) if so directed by
SBP on the occurrence of a point of non-viability as determined by SBP or (ii) at the option of the Bank upon
the occurrence of a pre-specified trigger point pursuant to Basel III Capital Instructions of SBP, or (iii) due to
any inability to exercise the Lock-in Clause or Non-Cumulative features of the TFCs, subject to such terms and
conditions as may be determined by SBP. All such ordinary shares shall be issued other than by way of rights
in accordance with Section 83(1)(b) of the Companies Act, 2017.
Additional information required as per applicable laws and regulations is as follows.
Name of the person to whom shares will be The shares will be issued to the TFC holders (at
issued that time).
Prices at which the proposed shares will be (i) Point of non-viability: at a price equivalent to
issued market value of the shares of the Bank
(ii) Pre-specified trigger point: at a price
equivalent to market value of the shares of the
Bank
(iii) Inability to exercise the Lock-in Clause or
Non-Cumulative features: at the discretion of
SBP
Purpose of the issue, utilization of the proceeds To convert the outstanding TFC amount (in whole
of the issue and benefits to the Company and or part) into shares of the Bank.
its shareholders with necessary details
Existing shareholding of the persons to whom Not Applicable
the proposed shares will be issued
Total shareholding of the persons after the Not Applicable
proposed issue of shares
Whether the person have provided written The terms of the TFC Issuance Agreement for the
consent for purchase of such shares TFC issue shall contain the details regarding such
conversion.
Justification as to why proposed shares are to This is in accordance with the requirements of SBP
be issued otherwise than rights and not as vide its Circular No. 6 of Banking Policy &
rights shares Regulations Department (“BPRD”) dated August
15, 2013.
Justification, with details of the latest available Not Applicable.
market price and break-up value per share, if
such price differs from par value
136
Therefore, for the purpose of the above, the Board of Directors has recommended that members may pass the
following resolution as a Special Resolutions:
“RESOLVED THAT the perpetual Term Finance Certificates (“TFCs”) of Bank AL Habib Limited (the “Bank”)
in the amount of up to Rs. 7,000,000,000/= (Rupees Seven Billion) (inclusive of a green shoe option of PKR
3,000,000,000/- (Pak Rupees Three Billion) for the purpose of Additional Tier 1 Capital under Basel III Capital
Instructions of the State Bank of Pakistan (“SBP”), may be converted into ordinary shares of the Bank subject
to a maximum of 118,574,000 (One Hundred Eighteen Million Five Hundred Seventy Four Thousand)
additional ordinary shares being issued upon such conversion, (i) if so directed by SBP on the occurrence of
a point of non-viability as determined by SBP, at a price equivalent to the market value of the shares of the
Bank on the date of trigger of the point of non-viability as declared by SBP or (ii) at the option of the Bank upon
the occurrence of a pre-specified trigger point pursuant to Basel III Capital Instructions of SBP, at a price
equivalent to the market value of the shares of the Bank on the date of occurrence of the pre-specified trigger
point, or (iii) due to any inability to exercise the Lock-in Clause or Non-Cumulative features of TFCs, subject to
such terms and conditions as may be determined by SBP, in accordance with the applicable rules and
regulations of SBP, and all such ordinary shares shall be issued other than by way of rights in accordance with
Section 83(1)(b) of the Companies Act, 2017 and shall further be subject to the approval of Securities and
Exchange Commission of Pakistan in accordance with Section 83(1)(b) of the Companies Act, 2017.
“FURTHER RESOLVED THAT the Board of Directors of the Bank (“the Board”) or such officers or officers of
the Bank as may be authorized by the Board, be and are hereby authorized to take all steps necessary,
ancillary, and incidental to the above-mentioned conversion, as and when required, and are further authorized
to sign, execute, and deliver all necessary documents, agreements, and letters on behalf of the Bank, as may
be deemed appropriate and as may be required for the purposes above-mentioned.”
The ordinary shares issued will rank pari passu in all respects with the existing shares of the Bank.
The Directors of the Bank have no direct or indirect interest in the above-mentioned resolutions except in their
capacity as shareholders of the Bank to the extent of their respective shareholding.
Item No.9 of the Agenda
As recommended by the Board of Directors in their meeting held on February 09, 2022, it is intended to
propose the following resolution to be passed as an Ordinary Resolution:
“RESOLVED THAT the remuneration of Mr. Qumail R. Habib, Executive Director shall not exceed
Rs. 3,750,000/- per month exclusive of perquisites, benefits and other allowances to which he is entitled under
the terms of his employment.”
137
Pattern of Shareholding as at December 31, 2021
Number of Total Shares

Size of Shareholding
Shareholders Held
506 From 1 To 100 20,259
842 From 101 To 500 275,816
587 From 501 To 1,000 478,915
2,045 From 1,001 To 5,000 5,600,003
604 From 5,001 To 10,000 4,543,191
334 From 10,001 To 15,000 4,175,150
1,145 From 15,001 To 20,000 20,985,919
97 From 20,001 To 25,000 2,190,873
72 From 25,001 To 30,000 2,000,433
64 From 30,001 To 35,000 2,095,064
88 From 35,001 To 40,000 3,293,209
87 From 40,001 To 50,000 4,043,442
55 From 50,001 To 60,000 3,011,898
89 From 60,001 To 80,000 6,185,290
59 From 80,001 To 100,000 5,439,116
93 From 100,001 To 150,000 11,053,693
76 From 150,001 To 200,000 13,546,818
38 From 200,001 To 250,000 8,359,870
28 From 250,001 To 300,000 7,690,959
20 From 300,001 To 350,000 6,481,605
101 From 350,001 To 600,000 47,238,802
46 From 600,001 To 1,000,000 35,577,298
144 From 1,000,001 To 100,000,000 917,137,793
7,220 1,111,425,416
Categories of Number of Number of

Shareholders Shareholders Shares Held Percentage
Individuals 6,854 600,666,290 54.05

Investment & Insurance
Companies 14 109,704,394 9.87
Joint Stock Companies 136 167,700,496 15.09
Financial Institutions 12 11,278,034 1.01
Modaraba & Mutual Funds 38 90,625,476 8.15
Foreign Companies 17 29,481,562 2.65
Pension Funds 27 34,637,665 3.12
Others 122 67,331,499 6.06
TOTAL 7,220 1,111,425,416 100.00
138
Pattern of Shareholding as at December 31, 2021
Additional Information
Shareholders' Category Number of Number of
Shareholders Shares Held
Associated Companies
Habib Insurance Co. Ltd. 1 2,000,000
Habib Sugar Mills Limited 1 24,136,691
Mutual Funds
TRI-STAR MUTUAL FUND LIMITED 1 1,904

SAFEWAY FUND (PVT) LTD. 1 5,001
CDC - TRUSTEE UBL DEDICATED EQUITY FUND 1 15,800
CDC-TRUSTEE NITPF EQUITY SUB-FUND 1 20,000
CDC - TRUSTEE NBP PAKISTAN GROWTH EXCHANGE TRADED FUND 1 34,314
CDC - TRUSTEE FIRST HABIB ASSET ALLOCATION FUND 1 36,500
CDC - TRUSTEE NIT PAKISTAN GATEWAY EXCHANGE TRADED FUND 1 40,290
CDC - TRUSTEE FIRST HABIB STOCK FUND 1 45,500
CDC - TRUSTEE LAKSON TACTICAL FUND 1 47,747
CDC - TRUSTEE HBL PF EQUITY SUB FUND 1 58,000
CDC - TRUSTEE JS PENSION SAVINGS FUND - EQUITY ACCOUNT 1 92,000
CDC - TRUSTEE HBL - STOCK FUND 1 119,000
CDC - TRUSTEE NIT ASSET ALLOCATION FUND 1 120,000
CDC - TRUSTEE ALFALAH GHP VALUE FUND 1 156,301
CDC - TRUSTEE AKD INDEX TRACKER FUND 1 180,032
CDC - TRUSTEE UBL ASSET ALLOCATION FUND 1 192,961
CDC - TRUSTEE JS LARGE CAP. FUND 1 273,020
CDC - TRUSTEE APF-EQUITY SUB FUND 1 290,000
CDC - TRUSTEE ALLIED FINERGY FUND 1 293,000
CDC - TRUSTEE UNIT TRUST OF PAKISTAN 1 302,134
CDC - TRUSTEE ALFALAH GHP ALPHA FUND 1 302,246
CDC - TRUSTEE PICIC INVESTMENT FUND 1 307,000
CDC - TRUSTEE NBP BALANCED FUND 1 334,400
CDC - TRUSTEE LAKSON EQUITY FUND 1 349,250
CDC - TRUSTEE PICIC GROWTH FUND 1 407,317
CDC - TRUSTEE NBP SARMAYA IZAFA FUND 1 468,650
CDC - TRUSTEE NBP FINANCIAL SECTOR FUND 1 849,383
CDC - TRUSTEE NIT-EQUITY MARKET OPPORTUNITY FUND 1 864,489
CDC - TRUSTEE ALFALAH GHP STOCK FUND 1 900,847
CDC - TRUSTEE UBL RETIREMENT SAVINGS FUND - EQUITY SUB FUND 1 935,500
MC FSL - TRUSTEE JS GROWTH FUND 1 1,583,600
CDC - TRUSTEE ABL STOCK FUND 1 1,675,929
CDC - TRUSTEE UBL FINANCIAL SECTOR FUND 1 2,182,467
CDC - TRUSTEE UBL STOCK ADVANTAGE FUND 1 4,204,495
CDC - TRUSTEE ATLAS STOCK MARKET FUND 1 5,501,438
CDC - TRUSTEE NBP STOCK FUND 1 10,290,200
CDC - TRUSTEE NATIONAL INVESTMENT (UNIT) TRUST 1 57,144,749
National Bank of Pakistan, Trustee Dept.
139
Shareholders' Category Number of Number of
Shareholders Shares Held
Directors
Abbas D. Habib 1 42,450,257

Qumail R. Habib 1 17,522,296
Anwar Haji Karim 1 6,349,159
Murtaza H. Habib 1 13,698,691
Syed Mazhar Abbas 1 18,474
Syed Hasan Ali Bukhari 1 15,092
Arshad Nasar 1 500
Safar Ali Lakhani 1 116,840
Farhana Mowjee Khan 1 25,180
Chief Executive Officer

Mansoor Ali Khan – NIL
Directors' Spouses
Mrs. Niamet Fatima 1 4,818,197
W/o. Mr. Abbas D. Habib
Executives 52 9,073,910
Joint Stock Companies and Corporations 135 143,563,805
Banks, Development Financial Institutions, Non - Banking

Finance Companies, Insurance Companies, Takaful,
Modarabas and Pension Funds 52 80,184,951
Shareholders holding five percent or more voting rights

State Life Insurance Corporation of Pakistan 1 73,435,154
National Investment (Unit) Trust (included in the list above under
Mutual Funds)
Individuals 6,792 506,577,694
Others (including foreign companies) 139 96,813,061
TOTAL 7,220 1,111,425,416
140
Consolidated Financial Statements
Bank AL Habib Limited
and
Subsidiary Companies
141
Bank AL Habib Limited and its Subsidiary Companies
Directors’ Report on Audited Consolidated Financial Statements
The Directors are pleased to present the Audited Consolidated Financial Statements of Bank AL Habib
Limited and the Bank’s Subsidiaries AL Habib Capital Markets (Private) Limited and AL Habib Asset
Management Limited for the year ended December 31, 2021.
(Rupees in '000)
Profit for the year before tax 30,217,136
Taxation (11,620,151 )
Profit for the year after tax 18,596,985
Share of profit attributable to non-controlling interest (13,665 )
Profit attributable to shareholders of Holding Company 18,583,320
Un-appropriated profit brought forward 40,416,713
Transfer from surplus on revaluation of fixed assets-net of tax 120,440
Other comprehensive income-net of tax (177,387 )
40,359,766
Profit available for appropriation 58,943,086
Appropriations:
Transfer to Statutory Reserve (1,870,230 )
Cash dividend – 2020 (5,001,414 )
(6,871,644 )
Un-appropriated profit carried forward 52,071,442
Earnings per share (after tax) – Holding Company Rs. 16.72
Pattern of Shareholding
The pattern of shareholding as at December 31, 2021 is annexed with the financial statements of Bank AL
Habib Limited.

Board of Directors

142
To the members of Bank Al Habib Limited
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the annexed consolidated financial statements of Bank Al Habib Limited (the Bank), and its
subsidiary companies, (the Group) which comprise the consolidated statement of financial position as at 31
December 2021, and the consolidated profit and loss account and the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the consolidated cash flow statement for the year
then ended, notes to the consolidated financial statements, including a summary of significant accounting
policies and other explanatory information.
In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position
of the Group as at 31 December 2021, and its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with the accounting and reporting standards as applicable in
Pakistan.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan.
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report. We are independent of the Group in accordance with the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted
by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical
responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
143
Following is the key audit matter:
Key audit matter How the matter was addressed in our audit
1. Provision against non-performing loans and advances
The Group’s advances portfolio represents 39.64% We applied a range of audit procedures including
of its total assets as of 31 December 2021. A the following:
substantial portion of the advances portfolio include
corporate finances to public sector entities and large - We reviewed the Group’s process for identification
to small size businesses operating in diverse sectors and classification of non-performing advances.
of the economy. As part of such review we performed an analysis
of the changes within the different categories of
As per the Group’s accounting policy (refer note 4.5 classified non-performing accounts from last year
to the consolidated financial statements), the Group to the current reporting date. This analysis was
determines provisions against non-performing used to gather audit evidence regarding
advances exposures in accordance with the downgrading of impaired advances and
requirements of Prudential Regulations of State declassification of accounts from non-performing
Bank of Pakistan (SBP) and also maintains general to regular and vice versa, as the case may be.
provision in respect of potential credit losses in the
portfolio. The Prudential Regulations require specific - We performed independent checks on test basis
provisioning for loan losses on the basis of an for the computations of provisions to assess that
age-based criteria which should be supplemented the same is in line with the requirements of the
by a subjective evaluation of Group’s credit portfolio. applicable Prudential Regulations;
The determination of loan loss provision therefore,
involve use of management judgment, on a case to - In addition, we selected a representative sample
case basis, taking into account factors such as the of borrowers from the advances portfolios
economic and business conditions, borrowers including individually significant credit facilities
repayment behaviors and realizability of collateral and performed tests and procedures such as
held by the Group. review of credit documentation, repayment history
and past due status, financial condition as
In view of the significance of this area in terms of its depicted by the borrowers’ financial statements,
impact on the consolidated financial statements and nature of collateral held by the Group and status
the level of involvement of management’s judgment, of litigation, if any, with the borrower;
we identified adequacy and completeness of
provision against advances as a significant area of - In respect of the level of general provision
audit judgment and a key audit matter. maintained by the Group, we discussed the
approach and policy followed by the Group with
The accounting policy and disclosures relating to the management and the regulatory approvals in
provisioning against non-performing advances are place for such policy.
included in note 4.5 and 9 respectively to the
consolidated financial statements. - We also assessed adequacy of disclosures as
included in note 9 to the consolidated financial
statements regarding the non-performing
advances and provisions made for the same in
the consolidated financial statements in
accordance with the requirements of the
applicable financial reporting framework.
144
Information Other than the Financial Statements and Auditors’ Report Thereon
Management is responsible for the other information. The other information comprises the information included in
the Annual Report, but does not include the financial statements and our auditors’ report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
Responsibilities of Management and the Board of Directors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with
accounting and reporting standards as applicable in Pakistan, the requirements of Banking Companies Ordinance,
1962 and the Companies Act, 2017 (XIX of 2017) and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
The Board of directors is responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the
Group to cease to continue as a going concern.
145
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our
audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide to the Board of Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditors’ report is Arslan Khalid.
EY Ford Rhodes
UDIN: AR202110191GHMFkzDsq
146
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
Note 2021 2020
(Rupees in '000)
ASSETS
Lendings to financial institutions 7 20,063,828 2,175,301
Investments 8 826,698,791 765,318,984
Advances 9 733,335,453 510,050,394
Fixed assets 10 55,701,205 43,976,664
Intangible assets 11 354,580 294,862
Deferred tax assets 12 2,103,393 –000
Other assets 13 86,548,232 75,345,810
1,850,208,846 1,522,779,386
LIABILITIES
Bills payable 15 29,803,755 31,013,221
Borrowings 16 302,212,902 211,627,267
Deposits and other accounts 17 1,309,734,964 1,099,223,458
Liabilities against assets subject to finance lease –000 –000
Subordinated debt 18 15,995,200 14,989,600
Deferred tax liabilities 12 –000 139,836
Other liabilities 19 102,042,740 85,342,289
1,759,789,561 1,442,335,671
NET ASSETS 90,419,285 80,443,715
REPRESENTED BY
Share capital 20 11,114,254 11,114,254
Reserves 20,656,466 18,431,277
Surplus on revaluation of assets 21 6,453,983 10,366,693
Unappropriated profit 52,071,442 40,416,713
Equity attributable to the shareholders of the

Holding Company 90,296,145 80,328,937
Non-controlling interest 22 123,140 114,778
Total equity 90,419,285 80,443,715

The annexed notes 1 to 48 and annexures I and II form an integral part of these consolidated financial statements.

147
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Note 2021 2020
(Rupees in '000)
Mark-up / return / interest earned 25 116,747,434 125,290,292

Mark-up / return / interest expensed 26 (61,138,242) (67,649,002)
Net mark-up / interest income 55,609,192 57,641,290
NON MARK-UP / INTEREST INCOME
Fee and commission income 27 9,559,133 6,777,694
Foreign exchange income 2,969,917 2,142,728
(Loss) / gain on securities-net 28 (38,253) 182,013
Share of profit from associates 372,034 114,337
Other income 29 1,151,803 821,385
Total non mark-up / interest income 14,490,077 10,470,517
Total income 70,099,269 68,111,807
NON MARK-UP / INTEREST EXPENSES

Operating expenses 30 (38,907,744) (34,125,725)
Workers welfare fund (623,615) (673,046)
Other charges 31 (36,294) (56,672)
Total non mark-up / interest expenses (39,567,653) (34,855,443)
Provisions and write offs-net 32 (314,480) (4,546,944)
Extra ordinary / unusual items –00 –00
PROFIT BEFORE TAXATION 30,217,136 28,709,420
Taxation 33 (11,620,151) (10,751,960)
PROFIT AFTER TAXATION 18,596,985 17,957,460
Attributable to:
Shareholders of the Holding Company 18,583,320 17,947,732
Non-controlling interest 13,665 9,728
18,596,985 17,957,460
(Rupees)
Basic and diluted earnings per share attributable to
equity holders of the Holding Company 34 16.72 16.15


148
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2021 2020
(Rupees in '000)
Profit after taxation for the year 18,596,985 17,957,460
Other comprehensive income
Items that may be reclassified to profit and loss account

Effect of translation of net investment in foreign branches 533,555 182,841

Movement in (deficit) / surplus on revaluation of investments
- net of tax (3,497,671 ) 1,234,402
(2,964,116 ) 1,417,243
Items that will not be reclassified to profit and loss account

Remeasurement loss on defined benefit

obligations-net of tax (177,387 ) (128,275)
Movement in surplus on revaluation of operating
fixed assets-net of tax (260,923 ) 3,056,238
Movement in surplus on revaluation of non banking
assets-net of tax (38,979 ) 98,346
(477,289 ) 3,026,309
Total comprehensive income 15,155,580 22,401,012
Attributable to:
Shareholders of the Holding Company 15,160,883 22,401,472
Non-controlling interest (5,303 ) (460)
15,155,580 22,401,012


149
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to shareholders of the Holding Company
Revenue Reserves Surplus / (deficit) on revaluation of
Foreign Currency Fixed / Non
Share Statutory Translation Special General Investments Banking Unappropriated Sub Total Non-controlling Total
Capital Reserve Reserve Reserve Reserve Assets Profit Interest
(Rupees in '000)
Balance as at 01 January 2020 11,114,254 13,859,667 1,941,115 126,500 540,000 1,606,789 4,474,942 28,163,914 61,827,181 105,510 61,932,691
Profit after taxation –00 –00 –00 –00 –00 –00 –00 17,947,732 17,947,732 9,728 17,957,460
Other comprehensive income - net of tax –00 –00 182,841 –00 –00 1,234,862 3,154,584 (128,275) 4,444,012 (460) 4,443,552
Total comprehensive income for the year –00 –00 182,841 –00 –00 1,234,862 3,154,584 17,819,457 22,391,744 9,268 22,401,012
Transfer to statutory reserve –00 1,781,154 –00 –00 –00 –00 –00 (1,781,154) –00 –00 –00
assets to unappropriated profit - net of tax –00 –00 –00 –00 –00 –00 (104,484 ) 104,484 –00 –00 –00
Final cash dividend (Rs. 3.5 per share) –00 –00 –00 –00 –00 –00 –00 (3,889,988) (3,889,988 ) –00 (3,889,988)
Balance as at 31 December 2020 11,114,254 15,640,821 2,123,956 126,500 540,000 2,841,651 7,525,042 40,416,713 80,328,937 114,778 80,443,715
Profit after taxation –00 –00 –00 –00 –00 –00 –00 18,583,320 18,583,320 13,665 18,596,985
Other comprehensive income - net of tax –00 –00 533,555 –00 –00 (3,492,368 ) (299,902) (177,387) (3,436,102 ) (5,303) (3,441,405)
Total comprehensive income for the year –00 –00 533,555 –00 –00 (3,492,368 ) (299,902 ) 18,405,933 15,147,218 8,362 15,155,580
Transfer to statutory reserve –00 1,870,230 –00 –00 –00 –00 –00 (1,870,230) –00 –00 –00
assets to unappropriated profit - net of tax –00 –00 –00 –00 –00 –00 (120,440 ) 120,440 –00 –00 –00
Exchange gain realised on closure of overseas
branch - net of tax –00 –00 (178,596) –00 –00 –00 –00 –00 (178,596 ) –00 (178,596)
Final cash dividend (Rs. 4.5 per share) –00 –00 –00 –00 –00 –00 –00 (5,001,414) (5,001,414 ) –00 (5,001,414)
Balance as at 31 December 2021 11,114,254 17,511,051 2,478,915 126,500 540,000 (650,717 ) 7,104,700 52,071,442 90,296,145 123,140 90,419,285


150
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021 Note 2021 2020
(Rupees in '000)
CASH FLOW FROM OPERATING ACTIVITIES
Less: Dividend income (475,443) (432,360)
29,741,693 28,277,060
Adjustments:
Depreciation 2,965,066 2,789,676
Depreciation on right-of-use assets 1,854,453 1,661,393
Provisions and write-offs-net 32 314,480 4,546,944
Gain on sale of fixed assets-net (467,551) (440,311)
Share of profit from associates (372,034) (114,337)
Loss / (gain) on sale / redemption of securities-net 38,253 (182,013)
Charge for compensated absences 155,639 248,264
Exchange gain realised on closure of overseas branch (292,780) –00
5,627,602 9,754,901
35,369,295 38,031,961
Increase in operating assets
Lendings to financial institutions (17,888,527) (317,726)
Held-for-trading securities (23,996) (85,792)
Advances (223,492,097) (24,387,418)
Other assets (11,217,718) (14,183,514)
(252,622,338) (38,974,450)
(Decrease) / increase in operating liabilities
Bills payable (1,209,466) 10,844,548
Borrowings from financial institutions 90,423,271 (16,411,647)
Other liabilities (excluding current taxation) 13,131,441 13,863,126
312,856,752 203,926,505
95,603,709 202,984,016
Income tax paid (10,533,792) (12,198,036)
Net cash flow generated from operating activities 85,069,917 190,785,980
CASH FLOW FROM INVESTING ACTIVITIES
Net investments in available-for-sale securities (48,977,289) (160,929,584)
Net investments in held to maturity securities (11,978,746) (15,538,169)
Net investments in associates (5,556,710) (1,478,845)
Dividends received 486,991 417,919
Investments in operating fixed assets (14,077,982) (5,264,293)
Proceeds from sale of fixed assets 442,860 599,433
Exchange differences on translation of net investment in foreign branches 354,959 182,841
Net cash flow used in investing activities (79,305,917) (182,010,698)
CASH FLOW FROM FINANCING ACTIVITIES
Receipts / (payments) of subordinated debt-net 1,005,600 (3,200)
Dividend paid (4,930,117) (3,841,582)
Payment against lease liabilities (2,215,854) (1,972,143)
Net cash flow used in financing activities (6,140,371) (5,816,925)
(Decrease) / increase in cash and cash equivalents (376,371) 2,958,357
Cash and cash equivalents at beginning of the year 35 125,419,074 122,460,717
Cash and cash equivalents at end of the year 35 125,042,703 125,419,074


151
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. STATUS AND NATURE OF BUSINESS
1.1 The Group comprises of:
Holding Company
- Bank AL Habib Limited
Subsidiaries
- AL Habib Capital Markets (Private) Limited
- AL Habib Asset Management Limited
1.2 Bank AL Habib Limited (the Bank) is a banking company incorporated in Pakistan on 15 October 1991
as a public limited company under repealed Companies Ordinance, 1984 (now the Companies Act,
2017) having its registered office at 126-C, Old Bahawalpur Road, Multan with principal place of
business in Karachi. Its shares are listed on Pakistan Stock Exchange Limited. It is a scheduled bank
principally engaged in the business of commercial banking with a network of 927 branches (2020: 818
branches), 29 sub-branches (2020: 32 sub-branches), 04 representative offices (2020: 04
representative offices) and 03 booths (2020: 02 booths). The branch network of the Bank includes 02
overseas branches (2020: 03 overseas branches) and 138 Islamic Banking branches (2020: 106
Islamic Banking branches). During the year, the Bank closed its branch in Seychelles.
1.3 The Bank has invested in 66.67% shares of AL Habib Capital Markets (Private) Limited. The
Company was incorporated in Pakistan on 23 August 2005 as a private limited company under
repealed Companies Ordinance, 1984 (now the Companies Act, 2017). The Company is a corporate
member of the Pakistan Stock Exchange Limited and is engaged in equity, money market and foreign
exchange brokerage services, equity research, corporate financial advisory and consultancy services.
1.4 The Bank has invested in 100% shares of AL Habib Asset Management Limited. The Company was
incorporated in Pakistan on 30 September 2005 as an unquoted public limited company under
repealed Companies Ordinance, 1984 (now the Companies Act, 2017). The Company has been
issued a license by the Securities and Exchange Commission of Pakistan (SECP) to undertake asset
management services as a Non-Banking Finance Company. The principal business of the Company
is to provide Investment Advisory Services and Asset Management Services.
The Company is managing following funds:
- AL Habib Islamic Cash Fund
- AL Habib Islamic Savings Fund
- AL Habib Money Market Fund
- First Habib Asset Allocation Fund
- First Habib Cash Fund
- First Habib Income Fund
- First Habib Islamic Income Fund
- First Habib Islamic Stock Fund
- First Habib Stock Fund
2. BASIS OF PRESENTATION
2.1 These consolidated financial statements have been prepared in conformity with the format of financial
statements prescribed by the State Bank of Pakistan (SBP) vide BPRD Circular No. 02, dated 25
January 2018.
2.2 In accordance with the directives of the Federal Government regarding the shifting of the banking
system to Islamic modes, SBP has issued various circulars from time to time. Permissible forms of
trade-related modes of financing includes purchase of goods by banks from customers and immediate
resale to them at appropriate mark-up in price on deferred payment basis. The purchase and resale
arising under these arrangements are not reflected in these consolidated financial statements as
such, but are restricted to the amount of facility actually utilised and the appropriate portion of mark-up
thereon. However, the Islamic Banking branches of the Bank have complied with the requirements set
out under the Islamic Financial Accounting Standards (IFAS), issued by the Institute of Chartered
Accountants of Pakistan (ICAP) as are notified under the provisions of the Companies Act, 2017.
152
2.3 Key financial information of the Islamic Banking branches is disclosed in annexure II to these consolidated
financial statements.
2.4 The Group believes that there is no significant doubt on the Group’s ability to continue as a going concern.
Therefore, the consolidated financial statements continue to be prepared on the going concern basis.
2.5 Statement of compliance
2.5.1 These consolidated financial statements have been prepared in accordance with the accounting and
reporting standards as applicable in Pakistan. The accounting and reporting standards comprise of:
- International Financial Reporting Standards (IFRS) issued by the International Accounting Standards
Board (IASB) as are notified under the Companies Act, 2017;
- IFAS issued by ICAP, as are notified under the Companies Act, 2017;
- Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the
Companies Act, 2017; and
- Directives issued by SBP and the Securities and Exchange Commission of Pakistan (SECP).
Whenever the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 or the
directives issued by SBP and SECP differ with the requirements of the IFRS or IFAS, requirements of the
Banking Companies Ordinance, 1962, the Companies Act, 2017 and the said directives shall prevail.
2.5.2 SBP has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments:
Recognition and Measurement' and IAS 40, 'Investment Property' for Banking Companies in Pakistan
through BSD Circular Letter No. 10 dated 26 August 2002 till further instructions. Further, SBP vide its
BPRD Circular Letter No. 24 of 2021 dated 05 July 2021 directed the Banks in Pakistan to implement IFRS
9, 'Financial Instruments' with effect from 01 January 2022. SECP has deferred the applicability of IFRS 7,
'Financial Instruments: Disclosures' through its notification S.R.O 411 (I) / 2008 dated 28 April 2008.
Accordingly, the requirements of these standards have not been considered in the preparation of these
consolidated financial statements. However, investments have been classified and valued in accordance
with the requirements prescribed by SBP through various circulars. In case of overseas branches, IFRS 9
/ respective foreign regulatory requirements are considered for recording, classification and valuation of
investment.
2.5.3 SBP vide its BPRD Circular No. 04 dated 25 February 2015, has clarified that the reporting requirements
of IFAS 3, 'Profit and Loss Sharing on Deposits' for Islamic Banking Institutions (IBIs) relating to annual, half
yearly and quarterly financial statements would be notified by SBP though issuance of specific instructions
and uniform disclosure formats in consultation with IBIs. These reporting requirements have not been
ratified to date. Accordingly, the disclosure requirements under IFAS 3 have not been considered in the
preparation of these consolidated financial statements.
2.5.4 IFRS 10, 'Consolidated Financial Statements' was made applicable from period beginning on or after 01
January 2015 vide S.R.O 633 (I) / 2014 dated 10 July 2014 by SECP. However, SECP has directed
through S.R.O 56 (I) / 2016 dated 28 January 2016 that the requirement of consolidation under section 228
of the Companies Act, 2017 and IFRS 10, 'Consolidated Financial Statements' is not applicable incase of
investment by companies in mutual funds established under trust structure.
are effective in the current year
The Group has adopted the following accounting standards and amendments of IFRSs and the
improvements to accounting standards which became effective for the current year:
COVID-19-Related Rent Concessions - Amendment to IFRS 16
The IASB has issued amendments to IFRS 16 (the amendments) to provide optional practical relief for
lessees in accounting for rent concessions. Under the practical expedient, lessees are not required to
assess whether eligible rent concessions are lease modifications, and instead are permitted to account for
them as if they were not lease modifications. The practical expedient applies only to rent concessions
occurring as a direct consequence of the COVID-19 pandemic and only if all the conditions described in
IFRS 16 paragraph 46B are met.
153
Interest Rate Benchmark Reform - Phase 2 - Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16
The amendments provide temporary reliefs which address the financial reporting effects when an interbank
offered rate (IBOR) is replaced with an alternative nearly risk-free mark-up rate (RFR).
The above mentioned accounting standards and amendments of IFRSs did not have any material impact
on the consolidated financial statements of the Group.
are not yet effective
2.7.1 IFRS 9, 'Financial Instruments'
IFRS 9, 'Financial Instruments' - IFRS 9 will replace 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. It
also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39.
SBP vide its BPRD Circular Letter No. 24 of 2021 dated July 05, 2021 has extended the implementation
date of IFRS 9 to January 01, 2022 from an earlier implementation date of January 01, 2021. However,
SBP has directed the banks in Pakistan to submit IFRS 9 parallel run and proforma financial statements on
periodic basis based on the instructions issued by SBP for parallel run of IFRS 9 and the Bank has been
complying with these requirements.
2.7.2 Further, the following IFRS as notified under the Companies Act, 2017 and the amendments thereto will be
effective for future periods and not early adopted:
Standards and amendments Effective date (accounting
- IAS 37 - Onerous Contracts – Cost of Fulfilling a Contract (Amendments) January 01, 2022
- IAS 16 - Property, Plant and Equipment: Proceeds before Intended Use
(Amendments) January 01, 2022
- IFRS 3 - Reference to the Conceptual Framework January 01, 2022
- IAS 1 - Classification of liabilities as current or non-current (Amendments) January 01, 2022
- IFRS 9 - Financial Instruments - Fees in the '10 percent' test for derecognition
of financial liabilities (Amendments) January 01, 2022
- IAS 8 - Definition of Accounting Estimates January 01, 2022
- IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies January 01, 2023
- IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture (Amendments) Not yet announced
The above standards, amendments and improvements are not expected to have any material impact on
the consolidated financial statements of the Group for the futures periods.
Further, following new standards have been issued by IASB which are yet to be notified by SECP for the
purpose of applicability in Pakistan.
Standard IASB effective date (accounting
- IFRS 1 – First time adoption of IFRSs January 01, 2004

- IFRS 17 – Insurance Contracts January 01, 2023
154
2.8 Critical accounting estimates, judgments and assumptions
The preparation of financial statements requires management to make estimates, judgments and assumptions
that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the result of which forms the basis of making
judgment about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on
an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimate is
revised if the revision affects only that period, or in period of revision and future periods if the revision affects
both current and future periods. The estimates and judgments that have a significant effect on the consolidated
financial statements are in respect of the following:
Note
Classification and provisioning against investments 4.4, 4.14 & 32
Classification and provisioning against loans and advances 4.5, 9 & 32
Useful lives of fixed, right of use assets and intangible assets, depreciation,
amortisation and revaluation 4.6, 10 & 11
Determination of lease term and borrowing rate 4.6, 10 & 19
Non - banking assets acquired in satisfaction of claims 4.7 & 13
Defined benefit plan related assumptions 4.10 & 37
Provisions against off-balance sheet obligations 4.16, 19 & 32
Current and deferred taxation 4.13, 12 & 33
3. BASIS OF MEASUREMENT
These consolidated financial statements have been prepared under the historical cost convention except
for certain investments and derivative financial instruments which are carried at fair value, certain land and
buildings, and non-banking assets acquired in satisfaction of claims are carried at revalued amount. Employee
benefits and lease liability against right-of-use assets are carried at present value.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted in the preparation of these consolidated financial statements are consistent
with those of the previous financial year.
4.1 Basis of consolidation
These consolidated financial statements include the financial statements of the Holding Company and its
subsidiaries.
The financial statements of the subsidiaries are included in the consolidated financial statements from the
date the control commences until the date the control ceases. In preparing consolidated financial statements,
the financial statements of the Holding Company and subsidiaries are consolidated on a line by line basis
by adding together like items of assets, liabilities, income and expenses. Significant inter - company
transactions have been eliminated.
Non-controlling interest are part of results of operations and net assets of the subsidiary companies attributable
to interests which are not owned by the Group. Interest in the equity of the subsidiaries not attributable to
the Holding Company is reported in the consolidated statement of changes in equity as non - controlling
interest. Profit or loss attributable to non - controlling interest is reported in the consolidated profit and loss
account as profit or loss attributable to non - controlling interest.
4.2 Cash and cash equivalents
Cash and cash equivalents as referred to in the consolidated cash flow statement comprise cash and non
restricted balances with treasury and other banks less overdrawn nostros accounts. Restricted balances not
available for use if any, are excluded from cash and cash equivalents.
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4.3 Lendings to / borrowings from financial institutions
The Bank enters into transactions of lendings and borrowings at contracted rates for a specified period of
time. These are recorded as under:
Sale under repurchase obligation
Securities sold with a simultaneous commitment to repurchase at a specified future date (repos) continue
to be recognised in the statement of financial position and are measured in accordance with accounting
policies for investments. Amounts received under these agreements are recorded as repurchase agreement
borrowings. The difference between sale and repurchase price is amortised as expense over the term of
the repo agreement. These are initially recognised at amount of funds received and subsequently reported
as payable under the contractual terms.
Purchase under resale obligation
Securities purchased with a corresponding commitment to resale at a specified future date (reverse repos)
are not recognised as investments in the statement of financial position. Amounts paid under these
arrangements are included in repurchase agreement lendings. The difference between purchase and resale
price is accrued as income over the term of the reverse repo agreement. These are initially recognised at
amount of funds disbursed and subsequently reported as receivable under the contractual terms.
Bai Muajjal
In Bai Muajjal, the Bank sells sukuk on credit to other financial institutions. The credit price is agreed at the
4.4 Investment
Investments (other than associates) are classified as follows:
Held-for-trading
These are investments acquired principally for the purpose of generating profits from short-term fluctuations
in price or dealer’s margin or are securities included in a portfolio in which a pattern of short-term trading
exists.
Held-to-maturity
These are investments with fixed or determinable payments and fixed maturities which the Group has the
intention and ability to hold till maturity.
In Bai Muajjal, the Bank sells sukuk on credit to Government of Pakistan. The credit price is agreed at the
Available-for-sale
These are investments which do not fall under held for trading and held to maturity categories.
All purchases and sales of investments that require delivery within the time frame established by regulations
or market convention are recognised at the trade date. Trade date is the date on which the Group commits
to purchase or sell the investments.
Investments (other than held for trading) are initially measured at fair value plus transaction cost associated
with the investment. Investments classified as held for trading are initially measured at fair value, and
transaction costs are expensed in the profit and loss account.
After initial recognition, quoted securities (other than those classified as held to maturity) are carried at market
value. Unquoted securities are valued at cost less impairment in value, if any. Held to maturity securities
are carried at amortised cost.
Surplus / (deficit) arising on revaluation of quoted securities which are classified as 'available-for-sale', is
included in the statement of comprehensive income and is shown in the statement of financial position as
part of equity. The surplus / (deficit) arising on these securities is taken to the profit and loss account when
actually realised upon disposal or in case of impairment of securities. The unrealised surplus / (deficit) arising
on revaluation of quoted securities which are classified as held for trading is taken to the profit and loss
account.
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Premium or discount on debt securities classified as available for sale and held to maturity is amortised
using effective interest method and taken to the profit and loss account.
Details of valuation techniques used in determination of fair value is included in note 40 of consolidated
financial statements.
Investments in associates
Under the equity method, the investment in an associate is initially recognised at cost. The carrying amount
of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate since
the acquisition date. The profit and loss account reflects the Group’s share of the results of operations of
the associate. Any change in OCI of associates is presented as part of the Group’s OCI. In addition, when
there has been a change recognised directly in the equity of the associate, the Group recognises its share
of any changes, when applicable, in the statement of changes in equity.
4.5 Advances
Loans and advances
These are stated net of provisions for non-performing advances.
Receivables against lease finance where Bank is a lessor (other than Ijarah)
Leases where the Bank transfers substantially all the risks and rewards incidental to ownership of an asset
to the lessee are classified as finance leases. A receivable is recognised at an amount equal to the present
value of the lease payments including any guaranteed residual value.
Islamic Financing and Related Assets
Ijarah finance
Assets leased out under ijarah arrangements are stated at cost less accumulated depreciation and impairment,
if any. Such assets are depreciated over the terms of ijarah contracts.
Murabaha
Funds disbursed under murabaha arrangements for purchase of goods are recorded as advance for
murabaha. On culmination of murabaha i.e. sale of goods to customers, murabaha receivables are recorded
at the sale price net of deferred income. Goods purchased but remaining unsold at the reporting date are
recorded as inventories.
Inventory
The Bank values its inventories at the lower of cost and net realisable value. The net realisable value is the
estimated selling price in the ordinary course of business less the estimated cost necessary to make the
sale. Cost of inventories represents actual purchases made by the Bank / customers as an agent of the
Bank for subsequent sale. Inventory against each contract is maintained on specific identification method.
Istisna
In Istisna financing, the Bank places an order to purchase some specific goods / commodities from its
customers to be delivered to the Bank within an agreed time. The goods are then sold and the amount
hence financed is paid back to the Bank.
Diminishing Musharaka
In Diminishing Musharaka financing, the Bank enters into 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
periodic rental payment agreement for the utilisation of the Bank’s Musharaka share by the customer. The
customer purchases the Bank's share gradually as per his undertaking.
Running Musharaka
In Running Musharaka financing, the Bank enters into financing with the customer based on Shirkat-ul-Aqd
or Business Partnership in customers operating business. Under this mechanism the customer can withdraw
and return funds to the Bank subject to his Running Musharakah Financing limit during the Musharakah
period. At the end of each quarter / half year the customer pays the provisional profit as per the desired
profit rate which is subject to final settlement based on the relevant quarterly / half-yearly / annual accounts
of the customer.
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Musawama
In Musawama financing, the Bank purchases specific goods / commodities on cash basis from its customer
for onward sale. Upon realisation of sale proceeds, the finance is adjusted.
Provision for non-performing advances
Provision for non-performing advances is determined in accordance with the requirements of the Prudential
Regulations for domestic branches, whereas requirements of respective central banks is followed in respect
of overseas branches and is charged to the profit and loss account. The Bank also maintains general
provision in addition to the requirements of the Prudential Regulations on the basis of the management's
risk assessment.
The Bank reviews its loan portfolio to assess amount of non-performing loans and determine provision
required there against. While assessing this requirement various factors including the past dues, delinquency
in the account, financial position and future business / financial plan of the borrower, value of collateral held
and requirements of Prudential Regulations are considered. The Bank is allowed to consider the effect of
Forced Sale Value of collaterals in determining the amount of provision, however, no benefit of FSV of
collateral is taken in determining provisioning amount.
The amount of general provision against domestic consumer and SME advances is determined in accordance
with the relevant \ Prudential Regulations and SBP directives.
For overseas operations, the Bank records an allowance for Expected Credit Loss (ECL) for all loans and
other debt financial assets not held at Fair Value through Profit and Loss (all referred to as ‘financial
instruments’). The ECL allowance is based on the credit losses expected to arise over the life of the asset
(the Lifetime Expected Credit Losses or LTECL), unless there has been no significant increase in credit risk
since origination, in which case, the allowance is based on the 12 months’ Expected Credit Losses (12mECL).
The Bank has established a policy to perform an assessment, at the end of each reporting period, of whether
a financial instrument’s credit risk has increased significantly since initial recognition, by considering the
change in the risk of default occurring over the remaining life of the financial instrument.
Advances are written-off when there are no realistic prospects of recovery.
4.6 Operating fixed assets and depreciation
Capital work in progress
Capital work in progress is stated at cost less impairment, if any.
Property and equipment - owned
Land is measured at cost at the time of initial recognition and is subsequently carried at revalued amount
less impairment, if any. Buildings are initially measured at cost and upon revaluation, are carried at revalued
amount less accumulated depreciation and impairment, if any. All other operating fixed assets are stated
at cost less accumulated depreciation and impairment, if any. Depreciation is charged to profit and loss
account on straight line basis so as to charge the assets over their expected useful lives at the rates specified
in note 10.2. The depreciation charge is calculated after taking into account residual value, if any. The
residual values, useful lives and depreciation method are reviewed annually and adjusted, if appropriate.
Depreciation is charged on prorata basis, i.e., full month charge in the month of purchase and no charge in
the month of disposal.
Land and buildings are revalued by independent professionally qualified valuers with sufficient regularity to
ensure that the net carrying amount does not differ materially from the fair value. The valuations involve
estimates / assumptions and various market factors and conditions. Any revaluation surplus is credited to
the surplus on revaluation of land and buildings, except to the extent that it reversal of a deficit already
charged to profit and loss account on the same asset. Any revaluation deficit is recognised in profit and loss
account, except for a deficit directly offsetting a previous surplus on the same asset recognised in the asset
revaluation surplus.
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Subsequent costs are included in the asset’s carrying amount or 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. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged to the income statement during the financial
period in which they are incurred.
Gains and losses on disposal of fixed assets are included in income currently, except that the related surplus
on revaluation of land and buildings (net of deferred tax) is transferred directly to unappropriated profit.
Leases
The Bank assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Bank as a lessee
The Bank applies a single recognition and measurement approach for all leases, except for short-term leases
and leases of low-value assets. The Bank recognises lease liabilities to make lease payments and right-of-use
assets representing the right to use the underlying assets.
Right-of-use assets
The Bank recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation
and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments
made at or before the commencement date less any lease incentives received. Right-of-use assets are
depreciated on a straight-line basis over the lease term.
The right-of-use assets are presented within note 10 fixed assets and are subject to impairment in line with
the Bank’s policy as described in note 4.14 impairment of non-financial assets.
Lease liabilities
At the commencement date of the lease, the Bank recognises lease liabilities measured at the present value
of lease payments to be made over the lease term. The Bank determines the lease term as the non-cancellable
term of the lease, together with any periods covered by an option to extend the lease if it is reasonably
certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain
not to be exercised. After the commencement date, the Bank reassesses the lease term if there is a significant
event or change in circumstances that is within its control that affects its ability to exercise or not to exercise
the option to renew or to terminate. The Bank cannot readily determine the interest rate implicit in the lease,
therefore, it uses its incremental lending rate to measure lease liabilities.
Intangible assets
Intangible assets having a finite useful life are stated at cost less accumulated amortisation and impairment,
if any. Amortisation is based on straight line method by taking into consideration the estimated useful life of
assets at the rates specified in note 11. Intangible assets are amortised on prorata basis i.e. full month
amortisation in the month of purchase and no amortisation in the month of disposal.
4.7 Non-banking assets acquired in satisfaction of claims
Non-banking assets acquired in satisfaction of claims are initially measured at settlement amount and upon
revaluation, are carried at revalued amounts less accumulated depreciation and impairment, if any. The
useful lives and depreciation method are reviewed annually and adjusted, if appropriate. These assets are
revalued as per SBP's requirement by independent professionally qualified valuers to ensure that their net
carrying value does not differ materially from their fair value. A surplus arising on revaluation of assets is
credited to the 'surplus on revaluation of non-banking assets acquired in satisfaction of claims' account and
any deficit arising on revaluation is taken to profit and loss account directly. Legal fees, transfer costs and
direct costs of acquiring title of assets is charged to profit and loss account and not capitalised.
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4.8 Borrowings / deposits
Borrowings / deposits are recorded at the amount of proceeds received. The cost of borrowings / deposits
is recognised on an accrual basis as an expense in the period in which it is incurred.
Deposits mobilized under Islamic Banking operations are generated under two modes i.e. “Qard” and
“Modaraba”. Deposits taken on Qard basis are classified as ‘Current accounts’ and Deposits generated on
Modaraba basis are classified as ‘Saving deposits / Fixed deposits / Current remunerative deposits’.
4.9 Subordinated debt
Subordinated debt is initially recorded at the amount of proceeds received and subsequently reported at
outstanding amounts as a financial liability. Mark - up accrued on subordinated debt is recognised separately
as part of other liabilities and is charged to the profit and loss account over the period on an accrual basis.
4.10 Employees' benefits
Defined benefit plan
The Bank operates an approved gratuity fund for all its confirmed employees, which is administered by the
Trustees. The Bank's costs and contributions are determined based on actuarial valuation carried out at
each year end using Projected Unit Credit Actuarial Method. All actuarial gains and losses are recognised
in 'other comprehensive income' as they occur and are not reclassified to profit and loss in subsequent
periods. The liabilities for employees' benefits plans are determined using actuarial valuations. The actuarial
valuations involve assumptions about discount rates, expected rates of return on assets and future salary
increases as disclosed in note 37. Due to the long term nature of these plans, such estimates are subject
to significant uncertainty.
Defined contribution plan
The Bank operates an approved provident fund scheme for all its regular permanent employees, administered
by the Trustees. Equal monthly contributions are made both by the Bank and its employees to the fund at
the rate of 10% of the basic salary in accordance with the terms of the scheme.
AL Habib Capital Markets (Private) Limited provides provident fund benefits to all its permanent employees.
Contributions are made by the Company and the employees at the rate of 10% of the basic salary in
accordance with the terms of scheme.
AL Habib Asset Management Limited operates approved funded contributory provident fund for all its
permanent employees. Equal monthly contributions are made both by the Company and the employees
which is equivalent to one basic salary of employees.
Compensated absences
The Bank accounts for all accumulating compensated absences when employees render service that
increases their entitlement to future compensated absences. The liability is determined based on actuarial
valuation carried out using the Projected Unit Credit Method.
4.11 Foreign currencies
Functional and presentation currency
These financial statements are presented in Pak Rupees which is the Group’s functional and presentation
currency.
Transactions and balances in foreign currencies
Foreign currency transactions are translated into Pak Rupees at the exchange rates prevailing on the date
of transaction. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the
exchange rates prevailing at the reporting date. Non - monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
Non - monetary items measured at fair value in a foreign currency are translated using exchange rates at
the date when the fair value was determined. Exchange gains or losses are included in income currently.
160
Foreign operations
The assets and liabilities of foreign operations are translated to Pak Rupees at exchange rates prevailing
at the reporting date. The income and expense of foreign operations are translated at rate of exchange
prevailing during the year. Exchange gain or loss on such translation is taken to equity through statement
of other comprehensive income under "foreign currency translation reserve".
Commitments
Commitments for outstanding forward foreign exchange contracts are translated at forward rates applicable
to their respective maturities. Contingent liabilities / commitments for letter of credit and letters of guarantee
denominated in foreign currencies are expressed in rupee terms at the exchange rates ruling on the reporting
date.
Translation gains and losses are included in the profit and loss account.
4.12 Revenue recognition
(a) Mark-up / return / interest on advances and investments is recognised on accrual basis, except in case
of advances classified under the Prudential Regulations on which mark-up is recognised on receipt
basis. Mark-up / return / interest on rescheduled / restructured loans and advances and investments is
recognised as permitted by the regulations of SBP.
(b) Financing method is used in accounting for income from lease financing. Under this method, the
unrealised lease income is deferred and taken to income over the term of the lease period so as to
produce a constant periodic rate of return on the outstanding net investment in lease. Gain / loss on
termination of lease contracts, front end fee and other lease income are recognised as income on receipt
basis.
(c) The rentals from ijarah are recognised as income over the term of the contract net of depreciation
expense relating to the ijarah assets.
(d) Income from murabaha is accounted for on time proportionate basis over the period of murabaha
transaction.
(e) Income from istisna and musawama is recognised on time proportionate basis commencing from the
time of sale of goods till the realisation of sale proceeds.
(f) Income from diminishing musharaka is recognised on time proportionate basis over the term of contract.
(g) Income from running musharaka financing is recognised on time proportionate basis and is subject to
adjustment upon declaration of profit by musharaka partners.
(h) Income from Bai-Muajjal is recognised on time proportionate basis from the date of disbursement to
the due date of payment.
(i) Dividend income is recognised when the right to receive is established.
(j) Gain or loss on sale of investments are recognised in profit and loss account in the year in which they arise.
(k) The Bank earns fee and commission income from a diverse range of financial services it provides to
its customers. Fee and commission income is recognised at an amount that reflects the consideration
to which the Bank expects to be entitled in exchange for providing the services.
The Bank recognises fees earned on transaction-based arrangements at a point in time when the Bank
has provided the service to the customer. Where the contract requires services to be provided over
time, income is recognised on a systematic basis over the life of the related services. Unearned fee and
commission are included under Other Liabilities.
4.13 Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit and
loss account except to the extent that it relates to the items recognised directly in equity or surplus on
revaluation of assets, in which case it is recognised in equity or surplus on revaluation of assets.
161
Current
Provision for current tax is based on the taxable income for the year, using tax rates enacted or substantively
enacted at the statement of financial position date and any adjustments to the tax payable in respect of
previous years. Current tax assets and liabilities are measured at the amount expected to be recovered
from or paid to taxation authorities.
Deferred
Deferred tax is provided on all temporary differences at the statement of financial position date between the
tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, to the
extent that it is probable that taxable profits will be available against which the deductible temporary differences
and unused tax losses can be utilised.
Deferred tax liabilities are recognised for all taxable temporary differences, except in respect of taxable
temporary differences associated with investment in foreign operations, when the timing of the reversal of
the temporary differences can be controlled and it is probable that the temporary differences will not reverse
in the foreseeable future.
The carrying amount of deferred income tax assets are reviewed at each statement of financial position
date and reduced to the extent that it is no longer probable that sufficient taxable profit or taxable temporary
differences will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the statement of financial position date.
In making the estimates for current and deferred taxes, the management looks at the income tax law and
the decisions of appellate authorities on certain issues in the past. There are certain matters where the
Bank’s view differs with the view taken by the income tax department and such amounts are shown as
contingent liability.
4.14 Impairment
Investments
Provision for diminution in the investments classified as available-for-sale and held-to-maturity (except for
debt securities) is recognised after considering impairment, if any, in their value and is taken to profit and
loss account. Impairment is booked when there is an objective evidence of significant or prolonged decline
in the value of such securities. This determination of what is significant or prolonged requires judgment.
Provision for impairment against debt securities (other than government securities) is made in accordance
with the requirements of the Prudential Regulations of SBP. In case of unquoted equity securities, the
breakup value of the security is considered to determine impairment amount.
Associates
The carrying values of investments in associates are reviewed for impairment when events or changes in
circumstances indicate that the carrying values may not be recoverable. If any such indication exists and
where the carrying values exceed the estimated recoverable amounts, the investments are written down to
their recoverable amounts and the resulting impairment loss is taken to profit and loss account.
Non-financial assets
The carrying values of assets are reviewed for impairment when events or changes in circumstances indicate
that the carrying values may not be recoverable. If any such indication exists and where the carrying values
exceed the estimated recoverable amounts, the assets are written down to their recoverable amounts and
the resulting impairment loss is taken to profit and loss account except for impairment loss on revalued
assets which is adjusted against the related revaluation surplus to the extent that the impairment loss does
not exceed the relevant surplus.
162
4.15 Contingent assets / liabilities
Contingent assets are not recognised, and are also not disclosed unless an inflow of economic benefits is
probable. Contingent liabilities are not recognised and are disclosed unless the probability of an outflow of
resources embodying economic benefits are remote.
4.16 Provisions against off - balance sheet obligations
The Bank, in the ordinary course of business, issues letters of credit, guarantees, bid bonds, performance
bonds etc. The commission against such contracts is recognised in the profit and loss account under "fees
and commission income" over the period of contracts. The Bank's liability under such contracts is measured
at the higher of the amount representing unearned commission income at the reporting date and the best
estimate of the amount expected to settle any financial obligation arising under such contracts.
4.17 Off setting
Financial assets and financial liabilities are only off - set and the net amount is reported in the financial
statements when there is a legally enforceable right to set - off the recognised amount and the Group intends
either to settle on a net basis, or to realise the assets and to settle the liabilities simultaneously. Income and
expense items of such assets and liabilities are also off - set and the net amount is reported in the financial
statements. Income and expenses are presented on a net basis only when permitted by the approved
accounting standards as applicable in Pakistan.
4.18 Financial assets and liabilities
Financial assets and financial liabilities are recognised at the time when the Bank becomes a party to the
contractual provision of the instrument. Financial assets are derecognised when the contractual right to
future cash flows from the asset expires or is transferred along with the risk and reward of ownership of the
asset. Financial liabilities are derecognised when obligation is discharged, cancelled or expired. Any gain
or loss on derecognition of the financial asset and liability is recognised in the profit and loss account of the
current period.
4.19 Derivative financial instruments
Derivative financial instruments are initially recognised at their fair value on the date on which the derivative
contract is entered into and are subsequently remeasured at fair value. All derivative financial instruments
are carried as asset when fair value is positive and liabilities when fair value is negative. Any change in the
value of derivative financial instruments is taken to the profit and loss account.
4.20 Dividend and reserves
Dividend declared and appropriations, except for transfer to statutory reserve, made subsequent to the date
of statement of financial position are considered as non adjusting events and are recorded as a liability in
the financial statements in the year in which these are approved by shareholders / directors as appropriate.
4.21 Earnings per share
The Group presents basic and diluted earnings per share (EPS). 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 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 2021.
4.22 Segment reporting
A segment is a distinguishable component of the Group that is engaged in providing products and services
(business segment), or in providing products or services within a particular economic environment (geographical
segment), which is subject to risk and rewards that are different from those of other segments. The Group's
primary format of reporting is based on business segments.
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4.23 Business segments
Retail banking
It consists of retail lending, deposits and banking services to private individuals and small businesses. The
retail banking activities include provision of banking and other financial services, such as current and savings
accounts, credit cards, consumer banking products etc., to individual customers, small merchants and small
and medium enterprises.
Commercial banking
Commercial banking represents provision of banking services including treasury and international trade
related activities to large corporate customers, multinational companies, government and semi government
departments and institutions and small and medium enterprises treated as corporate under the Prudential
Regulations.
Retail brokerage
Retail brokerage activities include the business of equity, money market and foreign exchange brokerage,
equity research and corporate financial advisory and consultancy services.
Asset management
It includes asset management activities through the subsidiary AL Habib Asset Management Limited.
4.24 Geographical segments
The Group operates in four geographic regions, being:
- Pakistan
- Middle East
- Asia Pacific
- Africa
4.25 Statutory / special reserve
Every Bank incorporated in Pakistan is required to transfer 20% of its profit to a statutory reserve until the
reserve equals share capital, thereafter 10% of the profit of the Bank is to be transferred to this reserve.
Special reserve was created to meet regulatory requirements.
4.26 Provisions against liabilities
These are recognised when the Group has a legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the
amount can be made. Provision against contingencies is determined based on the management judgement
regarding the probability of future out flows of resources embodying economic benefits to settle an obligation
arising from past events. Provisions are reviewed at each reporting date and are adjusted to reflect the
current best estimate.
4.27 Clients' assets
The Group provides services that result in the holding of assets on behalf of its clients. Such assets are not
reported in the financial statements, as they are not the assets of the Group.
4.28 Acceptances
Acceptances comprise undertakings by the Bank to pay bill of exchange drawn on customers. Acceptances
are recognised as financial liability in the statement of financial position with a contractual right of reimbursement
from the customer as a financial asset. Therefore, commitments in respect of acceptances have been
accounted for as financial assets and financial liabilities.
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Note 2021 2020
(Rupees in '000)
5. CASH AND BALANCES WITH TREASURY BANKS

In hand:
Local currency 25,102,141 23,716,952
Foreign currencies 1,731,629 4,761,414
26,833,770 28,478,366
In transit:
Local currency 230,555 600,285
Foreign currencies 422 4,412
230,977 604,697
With State Bank of Pakistan in:
Local currency current accounts 5.1 53,360,569 44,211,071
Local currency current accounts - Islamic Banking 5.1 5,651,972 3,339,015
Foreign currency deposit accounts
Cash reserve account 5.1 3,733,261 3,508,365
Cash reserve / special cash reserve account
- Islamic Banking 5.1 408,717 299,769
Special cash reserve account 5.1 7,466,521 7,016,730
Local US Dollar collection account 5.2 786,071 99,696
71,407,111 58,474,646
With National Bank of Pakistan in:

Local currency current account 19,846,650 16,110,129
Prize bonds 281,284 2,268,171
118,599,792 105,936,009
5.1 These deposits and reserves are maintained by the Bank to comply with the statutory requirements. The
special cash reserve carries interest rate of Nil (2020: upto 0.76%) per annum.
5.2 This represents US Dollar collection account maintained with SBP.
Note 2021 2020

(Rupees in '000)
6. BALANCES WITH OTHER BANKS

In Pakistan:
In current accounts 231,604 132,466
In deposit accounts 6.1 618,607 201,704
850,211 334,170
Outside Pakistan:
In current accounts 6.2 4,131,543 5,965,561
In deposit accounts 6.3 1,821,822 13,381,635
5,953,365 19,347,196
6,803,576 19,681,366
Less: impairment against IFRS 9 in overseas branches (4) (4)
6,803,572 19,681,362
165
6.1 These carry expected profit rates ranging from 2.32% to 8.25% (2020: 2.32% to 11.28%) per annum.
6.2 These carry interest rates ranging upto 0.75% (2020: upto 0.75%) per annum.
6.3 These carry interest rates of Nil (2020: upto 1.32%) per annum.
2021 2020
(Rupees in '000)
7. LENDING TO FINANCIAL INSTITUTIONS

In local currency:
Repurchase agreement lending (Reverse Repo) 20,063,828 –00
Bai Muajjal receivable from the State Bank of Pakistan –00 2,175,301
20,063,828 2,175,301
7.1 Securities held as collateral against amounts due from financial institutions
2021 2020
Held by Further given Held by Further given
Bank as collateral Total Bank as collateral Total
(Rupees in '000)
Market Treasury Bills 18,343,998 –00 18,343,998 –00 –00 –00
Pakistan Investment Bonds 1,719,830 –00 1,719,830 –00 –00 –00
20,063,828 –00 20,063,828 –00 –00 –00
7.1.1 Repurchase agreement lendings carry mark-up at rates ranging from 10.00% to 10.75% per annum
(2020: Nil).
7.1.2 The market value of securities held as collateral against repurchase agreement lendings amounted to
Rs. 20,120.78 million (2020: Nil).
8. INVESTMENTS
Note 2021 2020
8.1 Investments by type:
(Rupees in '000)
Held-for-trading securities
Shares 134,937 –00 (3,067 ) 131,870 95,778 –00 771 96,549
Available-for-sale securities 8.3 & 8.4
Federal Government Securities 594,584,144 (224,825 ) (1,276,341 ) 593,082,978 548,875,321 (226,825 ) 4,589,209 553,237,705
Shares 4,637,052 (1,799,946 ) 615,637 3,452,743 4,473,575 (1,794,587 ) 575,088 3,254,076
Non Government Debt Securities 29,941,356 –00 141,257 30,082,613 26,645,389 –00 (46,105 ) 26,599,284
Foreign Securities 6,718,457 (947,343 ) (853,977 ) 4,917,137 6,891,856 (909,432 ) (1,215,066 ) 4,767,358
638,057,031 (3,337,339 ) (1,076,616 ) 633,643,076 589,011,141 (3,375,284 ) 4,253,523 589,889,380
Held-to-maturity securities 8.3 & 8.5
Federal Government Securities 182,347,089 (100,982 ) –00 182,246,107 170,825,082 (130,790 ) –00 170,694,292
Foreign Securities 2,191,873 (77,573 ) –00 2,114,300 1,708,659 (127,901 ) –00 1,580,758
Other 4,481 (4,481 ) –00 –00 4,481 (4,481 ) –00 –00
184,543,443 (183,036 ) –00 184,360,407 172,538,222 (263,172 ) –00 172,275,050
Associates 8.6 8,563,438 –00 –00 8,563,438 3,058,005 –00 –00 3,058,005
166
2021 2020
8.2 Investments by segments:
(Rupees in '000)
Market Treasury Bills 123,991,225 –00 (374,150) 123,617,075 143,416,675 –00 490,699 143,907,374
Pakistan Investment Bonds 534,140,343 –00 (589,989) 533,550,354 515,401,452 –00 4,094,215 519,495,667
Foreign Currency Bonds 18,002,018 (312,404 ) 165,736 17,855,350 10,724,047 (292,213 ) 198,212 10,630,046
Ijarah Sukuks 86,966,523 –00 (489,423) 86,477,100 26,952,616 –00 (209,517 ) 26,743,099
Sukuks 13,023,972 (13,403 ) 11,485 13,022,054 22,919,899 (65,402 ) 15,600 22,870,097
Naya Pakistan Certificates 807,152 –00 –00 807,152 –00 –00 –00 –00
Term Finance Certificates - Unlisted –00 –00 –00 –00 285,714 –00 –00 285,714
776,931,233 (325,807 ) (1,276,341) 775,329,085 719,700,403 (357,615 ) 4,589,209 723,931,997
Shares
Listed Companies 4,617,753 (1,794,246 ) 612,570 3,436,077 4,415,117 (1,788,887 ) 575,859 3,202,089
Unlisted Companies 154,236 (5,700 ) –00 148,536 154,236 (5,700 ) –00 148,536
4,771,989 (1,799,946 ) 612,570 3,584,613 4,569,353 (1,794,587 ) 575,859 3,350,625

Listed 24,768,436 –00 141,257 24,909,693 24,420,449 –00 (46,105 ) 24,374,344
Unlisted 5,172,920 –00 –00 5,172,920 2,224,940 –00 –00 2,224,940
29,941,356 –00 141,257 30,082,613 26,645,389 –00 (46,105 ) 26,599,284
Others
Unlisted Company 4,481 (4,481 ) –00 –00 4,481 (4,481 ) –00 –00
Foreign Securities
Government Securities 8,910,330 (1,024,916 ) (853,977 ) 7,031,437 8,600,515 (1,037,333 ) (1,215,066 ) 6,348,116
Associates
Habib Sugar Mills Limited –00 –00 –00 –00 570,080 –00 –00 570,080
AL Habib Money Market Fund 350,697 –00 –00 350,697 –00 –00 –00 –00
AL Habib Islamic Cash Fund 425,638 –00 –00 425,638 –00 –00 –00 –00
AL Habib Islamic Savings Fund 100,100 –00 –00 100,100 –00 –00 –00 –00
First Habib Income Fund 423,435 –00 –00 423,435 141,131 –00 –00 141,131
First Habib Stock Fund 8,793 –00 –00 8,793 8,608 –00 –00 8,608
First Habib Cash Fund 7,080,581 –00 –00 7,080,581 2,194,250 –00 –00 2,194,250
First Habib Islamic Stock Fund 28,184 –00 –00 28,184 48,910 –00 –00 48,910
First Habib Islamic Income Fund 65,573 –00 –00 65,573 25,186 –00 –00 25,186
First Habib Asset Allocation Fund 80,437 –00 –00 80,437 69,840 –00 –00 69,840
8,563,438 –00 –00 8,563,438 3,058,005 –00 –00 3,058,005
167
2021 2020
(Rupees in '000)
8.2.1 Investments given as collateral
Pakistan Investment Bonds 84,993,500 –00
119,986,879 98,427,365
8.3 Provision for diminution in value of investments
Exchange adjustments against IFRS 9 in overseas branches 144,653 3,978
(Reversals) / charge
Charge for the year –00 294,959
(Reversal) / charge of impairment as per IFRS 9 in overseas
branches (174,219) 1,120,117
Reversal on disposal (88,515) (1,235)
(262,734) 1,413,841
Others –00 4,481
8.4 Quality of Available for Sale Securities

Details regarding quality of available-for-sale securities are as follows:
Cost
2021 2020
(Rupees in '000)
8.4.1 Federal Government Securities - Government guaranteed
Ijarah Sukuks 86,966,523 26,952,616
Sukuks 3,447,470 10,949,398
Naya Pakistan Certificates 807,152 –00
Term Finance Certificates-Unlisted –00 285,714
594,584,144 548,875,321
8.4.2 Shares
8.4.2.1 Listed companies
Automobile Assembler 199,842 199,842
Cement 292,921 292,921
Commercial Banks 164,773 164,773
Fertiliser 933,455 933,455
Food and Personal Care Products 23,211 23,211
Insurance 29,975 29,975
Securities Companies 106,222 106,222
Oil and Gas Exploration Companies 27,713 27,696
Oil and Gas Marketing Companies 793,159 793,159
Paper and Board 38,264 38,264
Pharmaceuticals 21,775 21,775
Power Generation and Distribution 1,615,032 1,634,091
Technology and Communication 13,140 13,140
Textile Composite 40,644 40,815
Sugar and Allied Industries 182,690 –00
4,482,816 4,319,339
168
2021 2020
8.4.2.2 Unlisted companies Break up Cost Breakup Cost Breakup
value value value
(Rupees in '000)
Khushhali Bank Limited December 31, 2020 30,000 189,922 30,000 165,372
Pakistan Export Finance Guarantee
Agency Limited – 5,700 –00 5,700 –00
Society for Worldwide Interbank Financial
Telecommunication (S.W.I.F.T) – 18,536 –00 18,536 –00
Pakistan Mortgage Refinance
Company Limited December 31, 2020 50,000 83,892 50,000 64,183
1LINK (Guarantee) Limited December 31, 2020 50,000 267,895 50,000 202,032
154,236 541,709 154,236 431,587
The above breakup values are based on the latest available audited financial statements of the unlisted
companies.
Cost
2021 2020
(Rupees in '000)
8.4.3 Non Government Debt Securities
8.4.3.1 Listed
AA+ 1,086,038 1,267,724
AA 200,000 200,000
AA- 1,029,894 500,000
A+ 1,000,000 –00
A 300,000 1,300,000
A- 50,000 50,000
Government Guaranteed 21,102,504 21,102,725
24,768,436 24,420,449
8.4.3.2 Unlisted
AAA 1,798,000 –00
AA+ 1,450,000 –00
AA –00 1,200,000
AA- 1,550,000 750,000
A+ 75,000 75,000
A 200,000 100,000
BBB+ 99,920 99,940
5,172,920 2,224,940
8.4.4 Mutual Funds

AAA(f) 50,000 50,000
AA(f) 550,000 550,000
AA-(f) 200,000 200,000
A+(f) –00 100,000
Unrated 1,376,022 1,225,000
2,176,022 2,125,000
169
2021 2020
8.4.5 Foreign Securities Cost Rating Cost Rating
(Rupees in '000)
Bahrain –00 – 319,668 B+
Egypt 2,309,504 B+ 2,097,411 B+
Srilanka 3,570,661 CC 3,723,756 CCC
Turkey 838,292 BB- 751,021 BB-
6,718,457 6,891,856
Cost
2021 2020
(Rupees in '000)
8.5 Particulars relating to Held to Maturity securities are as follows:
Federal Government Securities-Government guaranteed

Sukuks 9,576,502 11,970,501
182,347,089 170,825,082
Others
Pakistan Corporate Restructuring Company Limited (PCRCL) 4,481 4,481
2021 2020
Foreign Securities Cost Rating Cost Rating
(Rupees in '000)
Egypt 531,5550 B+ 482,090 B+

Srilanka 1,660,3180 CC 1,226,569 CCC
2,191,8730 1,708,659
8.5.1 The market value of securities classified as held to maturity at 31 December 2021 amounted to
Rs. 181,472 million (2020: Rs. 168,809 million).
170
8.6 Associates
2021 2020 Name of company / funds 2021 2020
No. of ordinary shares / units (Rupees in '000)
–00 9,415,312 Habib Sugar Mills Limited –00 570,080
3,506,970 –00 AL Habib Money Market Fund 350,697 –00

% of holding 77.64% (2020: Nil)
4,256,381 –00 AL Habib Islamic Cash Fund 425,638 –00
% of holding 94.43% (2020: Nil)
1,001,001 –00 AL Habib Islamic Saving Fund 100,100 –00
% of holding 5.55% (2020: Nil)
Average cost per unit: Rs. 100 (2020: Rs. Nil)
4,031,784 1,363,808 First Habib Income Fund 423,435 141,131
% of holding: 26.23% (2020: 17.86%)
557,697 100,000 First Habib Stock Fund 8,793 8,608
% of holding: 15.69% (2020: 7.09%)
Average cost per unit: Rs. 89.65 (2020: Rs. 100)
69,271,923 16,288,303 First Habib Cash Fund 7,080,581 2,194,250
% of holding: 24.52% (2020: 12.47%)
351,713 100,929 First Habib Islamic Stock Fund 28,184 48,910
% of holding: 9.08% (2020: 8.23%)
250,421 250,421 First Habib Islamic Income Fund 65,573 25,186
% of holding: 0.39% (2020: 0.22%)
777,428 200,149 First Habib Asset Allocation Fund 80,437 69,840

% of holding: 74.67% (2020: 19.75%)
8,563,438 3,058,005
8.6.1 The place of incorporation and business of associates is Pakistan.
8.6.2 All of the above funds are managed by AL Habib Asset Management Limited (the subsidiary company). The Chief Executive of the Management
Company is Mr. Kashif Rafi.
8.6.3 During the year, the Bank reclassified Habib Sugar Mills Limited from associates to available-for-sale investments due to change in directorship structure.
171
2021 2020
(Rupees in '000)
8.6.4 Movement of investments in associates
Share of profit 372,034 110,441
Investment - net 5,986,178 1,609,946
Dividend received (217,532) (66,569 )
Capital gain (24,792) (21,402 )
Adjustment (4,143) (60,636 )
Unrealised gain routed to OCI 3,760 14,060
Reclassification (610,072) –00
8.6.5 Associates-Key information

2021
Name of associates Assets Liabilities Equity Revenue Profit / OCI
(loss)
(Rupees in '000)
First Habib Cash Fund 16,952,954 53,605 16,899,349 568,923 513,010 –00
First Habib Income Fund 1,436,424 23,862 1,412,562 80,647 65,321 –00
First Habib Stock Fund 240,141 5,668 234,473 36,617 30,629 –00
First Habib Islamic Stock Fund 294,039 5,671 288,368 29,221 21,113 –00
First Habib Islamic Income Fund 14,184,707 54,930 14,129,777 888,016 768,015 –00
First Habib Asset Allocation Fund 110,998 2,049 108,949 19,111 14,788 –00
2020
Habib Sugar Mills Limited 11,106,205 2,483,243 8,622,962 10,138,211 694,295 265,474
First Habib Cash Fund 4,540,353 903,419 3,636,934 280,375 254,764 –00
First Habib Income Fund 1,507,587 384,865 1,122,722 100,485 85,788 –00
First Habib Stock Fund 111,069 6,227 104,842 3,020 (1,564) –00
First Habib Islamic Stock Fund 119,489 16,084 103,405 3,806 (355) –00
First Habib Islamic Income Fund 9,050,920 20,828 9,030,092 470,279 425,663 –00
First Habib Asset Allocation Fund 107,688 1,136 106,552 3,792 (314) –00
9. ADVANCES
Note Performing Non-Performing Total
2021 2020 2021 2020 2021 2020
(Rupees in '000)
Loans, cash credits, running finances, etc. 9.1 602,080,934 429,319,854 7,123,857 6,970,943 609,204,791 436,290,797
Islamic financing and related assets 84,965,477 58,248,930 410,650 218,174 85,376,127 58,467,104
Bills discounted and purchased 51,632,418 27,742,924 212,428 192,356 51,844,846 27,935,280
Advances - gross 738,678,829 515,311,708 7,746,935 7,381,473 746,425,764 522,693,181
Provision against advances

- Specific –00 –00 6,494,129 6,497,479 6,494,129 6,497,479
- General as per regulations 369,390 267,290 –00 –00 369,390 267,290
- General 5,750,000 5,750,000 –00 –00 5,750,000 5,750,000
- As per IFRS 9 in overseas branches 476,792 128,018 –00 –00 476,792 128,018
6,596,182 6,145,308 6,494,129 6,497,479 13,090,311 12,642,787
Advances-net of provision 732,082,647 509,166,400 1,252,806 883,994 733,335,453 510,050,394
172
9.1 Includes net investment in finance lease as disclosed below:
2021 2020
Later than Later than
Not later one and Not later one and
than one less than than one less than
year five years Total year five years Total
(Rupees in '000)
Lease rentals receivable 9,110,176 12,824,748 21,934,924 7,448,062 12,376,700 19,824,762

Residual value 1,598,147 5,211,797 6,809,944 1,707,629 2,978,287 4,685,916
Minimum lease payments 10,708,323 18,036,545 28,744,868 9,155,691 15,354,987 24,510,678
Financial charges for future periods (1,734,744) (1,522,420) (3,257,164) (1,059,738) (1,702,182) (2,761,920)
Present value of minimum lease payments 8,973,579 16,514,125 25,487,704 8,095,953 13,652,805 21,748,758
9.2 Particulars of advances (Gross) 2021 2020

(Rupees in '000)

In foreign currencies 124,921,078 69,360,699
746,425,764 522,693,181
9.3 Advances include Rs. 7,746.935 million (2020: Rs. 7,381.473 million) which have been placed under
non-performing status as detailed below:
2021 2020
Category of classification Non Non
Performing Provision Performing Provision
Loans Loans
(Rupees in '000)
Domestic
Other assets especially mentioned 47,122 1,887 62,671 292
Substandard 1,352,895 331,166 165,014 33,385
Doubtful 222,455 105,141 1,118,292 499,908
Loss 4,028,738 3,960,210 3,987,501 3,965,101
5,651,210 4,398,404 5,333,478 4,498,686
Overseas
Overdue by:
181 to 365 days 85,363 85,363 136,600 87,398
> 365 days 2,010,362 2,010,362 1,911,395 1,911,395
2,095,725 2,095,725 2,047,995 1,998,793
Total 7,746,935 6,494,129 7,381,473 6,497,479
173
9.4 Particulars of provision against advances
Note 2021 2020

(Rupees in '000)
Opening balance 6,497,479 6,145,308 12,642,787 6,201,412 3,389,309 9,590,721
Exchange adjustments 223,681 17,349 241,030 68,496 5,158 73,654
Charge for the year
- Specific provision 807,714 –00 807,714 887,878 –00 887,878

- General provision
as per regulations –00 102,100 102,100 –00 4,000 4,000
- As per IFRS 9 in
overseas branches –00 331,425 331,425 –00 (3,159) (3,159)
- General provision for
loans and advances 9.4.2 –00 –00 –00 –00 2,750,000 2,750,000
Reversals (1,034,201) –00 (1,034,201) (648,847) –00 (648,847)
(226,487) 433,525 207,038 239,031 2,750,841 2,989,872
Amounts written off 9.5 (544) –00 (544) (6,979 ) –00 (6,979)
Others –00 –00 –00 (4,481 ) –00 (4,481)
Closing balance 6,494,129 6,596,182 13,090,311 6,497,479 6,145,308 12,642,787
9.4.1 Particulars of provision against advances

2021 2020
(Rupees in '000)
In local currency 4,398,404 6,119,390 10,517,794 4,498,686 6,017,290 10,515,976

In foreign currencies 2,095,725 476,792 2,572,517 1,998,793 128,018 2,126,811
6,494,129 6,596,182 13,090,311 6,497,479 6,145,308 12,642,787
9.4.2 In line with its prudent policies, the Bank also makes general provision against its loans and advances portfolio.
This general provision is in addition to the requirements of the Prudential Regulations and as of 31 December 2021
amounts to Rs. 5,750 million (2020: Rs. 5,750 million).
9.4.3 For the purposes of determining provision against non-performing advances, the Bank has not taken into account
the Forced Sales Value of pledged stock and mortgaged properties held as collateral against non-performing advances.
9.5 PARTICULARS OF WRITE OFFs Note 2021 2020

(Rupees in '000)
9.5.1 Against Provisions 9.4 544 6,979
Directly charged to Profit and Loss account –00 –00
544 6,979
9.5.2 Against Provisions
Write Offs of below Rs. 500,000 9.6 544 2,619
Write Offs of Rs. 500,000 and above –00 4,360
544 6,979
174
9.6 DETAILS OF LOAN WRITE 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 rupees five hundred thousand or above allowed
to a person(s) during the year ended is given in Annexure I.
Note 2021 2020

(Rupees in '000)
10. FIXED ASSETS

Capital work-in-progress 10.1 1,738,112 2,279,324
Property and equipment 10.2 53,963,093 41,697,340
55,701,205 43,976,664
10.1 Capital work-in-progress

Civil works 595,516 454,808
Advance payment for purchase of equipments 125,432 51,867
Advance payment towards suppliers, contractors and property 1,015,099 1,740,546
Consultants’ fee and other charges 2,065 32,103
1,738,112 2,279,324
10.2 Property and Equipment

2021

(Rupees in '000)
At 01 January 2021
Net book value 12,850,032 11,802,086 987,676 3,433,493 1,977,867 905,443 9,740,743 41,697,340

Opening net book value 12,850,032 11,802,086 987,676 3,433,493 1,977,867 905,443 9,740,743 41,697,340
Additions 3,565,705 6,188,274 329,501 2,237,040 921,989 1,009,595 –00 14,252,104
Acquisition through business combination –00 –00 –00 –00 –00 –00 –00 –00
revalued during the year –00 –00 –00 –00 –00 –00 –00 –00
Disposals –00 (2,226 ) (3,365 ) (6,771) (35,588) (6,652 ) (335,406 ) (390,008 )
Other adjustments / transfers –00 4,406 –00 –00 –00 (4,406 ) 31,765 31,765
Closing net book value 16,415,737 17,408,538 1,159,308 4,527,656 2,179,094 1,506,000 10,766,760 53,963,093
At 31 December 2021
Net book value 16,415,737 17,408,538 1,159,308 4,527,656 2,179,094 1,506,000 10,766,760 53,963,093
175
2020
(Rupees in '000)
At 01 January 2020
Net book value 10,724,438 9,308,858 844,245 3,071,654 1,792,022 1,034,186 8,198,691 34,974,094

Opening net book value 10,724,438 9,308,858 844,245 3,071,654 1,792,022 1,034,186 8,198,691 34,974,094
Additions 291,338 1,100,546 274,407 1,441,233 947,305 394,308 –00 4,449,137
Acquisition through business combination –00 –00 –00 751 44 –00 –00 795
revalued during the year 1,703,806 1,914,291 –00 –00 –00 –00 –00 3,618,097
Disposals –00 (14,051 ) (2,207 ) (3,857) (137,284) (1,723 ) –00 (159,122 )
Other adjustments / transfers 130,450 (72,826 ) –00 –00 –00 (2,720 ) (21,213 ) 33,691
Closing net book value 12,850,032 11,802,086 987,676 3,433,493 1,977,867 905,443 9,740,743 41,697,340
At 31 December 2020
Net book value 12,850,032 11,802,086 987,676 3,433,493 1,977,867 905,443 9,740,743 41,697,340
10.3 In accordance with the Bank's accounting policy, the Bank's leasehold land and buildings on leasehold
land were revalued at 01 June 2020. The revaluation was carried out by an independent valuer, M/s. Iqbal
A. Nanjee & Co. on the basis of present physical condition and location of leasehold land and buildings on
leasehold land. Fair values were ascertained by the independent valuer under market approach through
various enquiries conducted by them at site from real estate agents and brokers. The revaluation resulted
in surplus of Rs. 3,618.097 million over the book value of the respective properties and also net deficit of
Rs. 122.190 million on certain properties. Had the leasehold land and buildings on leasehold land not been
revalued, the total carrying amounts of revalued properties as at 31 December 2021 would have been as
follows:
2021 2020
(Rupees in '000)
Leasehold land 12,474,150 8,908,446
Buildings on leasehold land 13,056,296 7,257,224
10.4 The gross carrying amount of fully depreciated assets

still in use is as follows:
Furniture and fixture 259,691 227,579
Electrical, office and computer equipment 5,072,815 4,110,076
Vehicles 663,809 517,461
Improvements to leasehold buildings 1,606,236 1,330,514
7,602,551 6,185,630
176
10.5 Details of disposal of fixed assets during the year:
2021
Particulars Cost Book Insurance
value claim
Habib Insurance Company Limited - (Rupees in '000)
(Related Party-Karachi)
Furniture and fixture 2,137 1,227 3,239
Electrical, office and computer equipment 14,024 5,084 11,886
Vehicles 13,664 7,420 13,735
2021
Computer TRE Management Total
software certificates rights
(Rupees in '000)
11. INTANGIBLE ASSETS
At 01 January 2021
Cost 1,420,792 34,750 80,670 1,536,212
Accumulated amortisation and impairment (1,209,100) (32,250) –00 (1,241,350)
Net book value 211,692 2,500 80,670 294,862
Opening net book value 211,692 2,500 80,670 294,862
Additions-directly purchased 367,090 –00 –00 367,090
Amortisation charge (307,372) –00 –00 (307,372)
Closing net book value 271,410 2,500 80,670 354,580
At 31 December 2021
Cost 1,787,882 34,750 80,670 1,903,302
Net book value 271,410 2,500 80,670 354,580
Rate of amortisation (percentage) 50% –00 –00

Useful life 2 years –00 –00
2020
At 01 January 2020
Cost 1,287,061 34,750 –00 1,321,811
Accumulated amortisation and impairment (920,721) (32,250) –00 (952,971)
Net book value 366,340 2,500 –00 368,840
Opening net book value 366,340 2,500 –00 368,840
Additions-directly purchased 133,383 –00 –00 133,383
Business combination 348 –00 80,670 81,018
Amortisation charge (288,379) –00 –00 (288,379)
Closing net book value 211,692 2,500 80,670 294,862
At 31 December 2020
Cost 1,420,792 34,750 80,670 1,536,212
Net book value 211,692 2,500 80,670 294,862
Rate of amortisation (percentage) 50% –00 –00

Useful life 2 years –00 –00
177
11.1 As at 31 December 2021, the gross carrying amount of fully amortised intangible assets still in
use amounted to Rs. 1,519.281 million (2020: Rs. 878.525 million).
12. DEFERRED TAX ASSET / (LIABILITIES)

2021
As at 01 On business Recognised Recognised As at 31
January combination in profit and in other December
income
(Rupees in '000)

Provision against diminution in the value of investments 1,270,805 –00 93,402 –00 1,364,207
Provision against loans and advances, off-balance sheet, etc. 1,725,436 –00 358,170 –00 2,083,606
Workers’ welfare fund 848,152 –00 338,756 –00 1,186,908
Provision for compensated absences 1,742 –00 (1,191) –00 551
Recognised tax losses 33,824 –00 (20,670) –00 13,154
Others 2,774 –00 10,537 –00 13,311
3,882,733 –00 779,004 –00 4,661,737

Accelerated tax depreciation (927,891) –00 (218,919) –00 (1,146,810)
Surplus on revaluation of fixed assets / non-banking assets (1,606,514) –00 77,005 (304,067) (1,833,576)
Remeasurement of defined benefit plan –00 –00 –00 –00 –00
Surplus on revaluation of available-for-sale investments (1,487,188) –00 –00 1,910,055 422,867
Surplus on revaluation of held-for-trading securities (976) –00 151 –00 (825)
(4,022,569) –00 (141,763) 1,605,988 (2,558,344)
(139,836) –00 637,241 1,605,988 2,103,393
2020
As at 01 On business Recognised Recognised As at 31
January combination in profit and in other December
income

Provision against diminution in the value of investments 772,704 –00 498,101 –00 1,270,805
Provision against loans and advances, off-balance sheet, etc. 785,860 –00 939,576 –00 1,725,436
Workers’ welfare fund –00 –00 848,152 –00 848,152
Provision for compensated absences 292 230 1,220 –00 1,742
Recognised tax losses 2,863 –00 30,961 –00 33,824
Others 627 2,032 115 –00 2,774
1,562,346 2,262 2,318,125 –00 3,882,733

Accelerated tax depreciation (960,906) 132 32,883 –00 (927,891)
Surplus on revaluation of fixed assets / non-banking assets (984,461) –00 56,261 (678,314) (1,606,514)
Remeasurement of defined benefit plan (165,629) –00 165,629 –00 –00
Surplus on revaluation of available-for-sale investments (829,057) –00 –00 (658,131) (1,487,188)
Surplus on revaluation of held-for-trading securities –00 (706) (270) –00 (976)
(2,940,053) (574) 254,503 (1,336,445) (4,022,569)
(1,377,707) 1,688 2,572,628 (1,336,445) (139,836)
178
13. OTHER ASSETS Note 2021 2020
(Rupees in '000)
Income / mark - up accrued in local currency - net of provision 19,755,175 16,945,436

Income / mark - up accrued in foreign currencies - net of provision 1,174,158 691,713
Non - banking assets acquired in satisfaction of claims 13.1 811,454 814,912
Mark to market gain on forward foreign exchange contracts 2,993,003 931,153
Acceptances 55,030,553 52,522,498
Receivable from SBP on encashment of Government Securities 150,135 33,013
ATM settlement account –00 943,062
Receivable against securities 505,505 218,199
Others 4,384,135 943,369
86,416,241 75,213,529
Less: Provision held against other assets 13.2 (7,497 ) (6,884 )
Other Assets (net of provision) 86,408,744 75,206,645
Surplus on revaluation of non-banking assets acquired in
satisfaction of claims 13.1 139,488 139,165
Other Assets-total 86,548,232 75,345,810
13.1 Market value of non-banking assets acquired in satisfaction of claims 1,016,627 957,093
Market value of the non-banking assets acquired in satisfaction of claims has been carried out by independent
valuers, M/s. K.G.Traders (Pvt.) Ltd. and M/s. MYK Associates (Pvt.) Ltd. based on present physical condition and
location of non-banking assets. Fair values were ascertained by the independent valuers under market approach
through various enquiries conducted by them at site from real estate agents and brokers.
2021 2020
(Rupees in '000)
13.1.1 Non - banking assets acquired in satisfaction of claims
Revaluations 4,165 106,658
Transferred to fixed assets –00 (54,904)
Accumulated depreciation (7,300) (7,059)
13.2 Provision held against other assets

Receivable against consumer loans 7,497 6,884
13.2.1 Movement in provision held against other assets
Reversals (2,127) (5,255)
613 825
Amount written off –00 (1,324)
14. CONTINGENT ASSETS

There were no contingent assets of the Group as at 31 December 2021 (2020: Nil).
179
Note 2021 2020
(Rupees in '000)
15. BILLS PAYABLE
In Pakistan 29,803,755 31,013,221
16. BORROWINGS
Secured
Borrowings from the State Bank of Pakistan
Under export refinance scheme 16.1 72,330,093 58,086,099
Under renewable energy 16.2 13,588,833 8,958,686
Under long term financing for imported and locally
manufactured plant and machinery 16.3 31,605,152 25,128,756
Under modernisation of small and medium enterprises 16.4 566,723 331,848
Under women entrepreneurship 16.5 26,893 26,957
Under financing facility for storage of agricultural produce 16.6 735,467 416,073
Under refinance scheme for payment of wages and salaries 16.7 7,842,569 15,720,186
Under temporary economic refinance facility 16.8 32,012,142 4,387,473
16.9 100,000 –00
158,807,872 113,056,078
Repurchase agreement borrowings 16.10 119,942,164 98,345,030
Borrowings from financial institutions 16.11 23,102,205 –00
Others –00 27,862
Total secured 301,852,241 211,428,970
Unsecured
Overdrawn nostro accounts 360,661 198,297
302,212,902 211,627,267
16.1 These carry mark-up rates ranging from 1% to 2% (2020: 1% to 2%) per annum, payable quarterly at
the time of partial payment or upon maturity of loan, whichever is earlier.
16.2 These carry mark-up rates of 2% to 3% (2020: 2% to 3%) per annum having maturity periods over ten
years.
16.3 These carry mark-up rates ranging from 2% to 6% (2020: 2% to 6%) per annum having maturity periods
upto ten years.
16.5 These carry mark-up rate of Nil (2020: Nil) per annum having maturity periods upto five years.
16.6 These carry mark-up rates from 2.0% to 3.5% (2020: 2.5% to 3.5%) per annum having maturity periods
upto seven years.
16.7 These carry mark-up rates upto 1% (2020: 1%) per annum having maturity periods upto three years.
16.9 These carry mark-up rates of Nil (2020: Nil) per annum having maturity periods upto five years.
16.10 These repurchase agreement borrowings are secured against Pakistan Investment Bonds and Market
Treasury Bills. These carry effective mark-up rates ranging from 9.89% to 10.70% (2020: 7.05%) per
annum, having maturity periods upto two months.
16.11 These borrowings from financial institutions carry mark-up rates ranging from 0.95% to 1.64% per
annum having maturity periods upto one year.
180
16.12 Particulars of borrowings with respect to currencies 2021 2020
(Rupees in '000)

In foreign currencies 23,462,866 198,297
302,212,902 211,627,267
17. DEPOSITS AND OTHER ACCOUNTS

2021 2020
(Rupees in '000)
Customers
Term deposits 204,273,302 38,981,706 243,255,008 177,719,569 40,377,454 218,097,023
Current deposits
- remunerative 117,604,631 3,844,969 121,449,600 120,360,146 2,247,064 122,607,210
Others 20,969,061 8,647,765 29,616,826 15,419,195 7,337,309 22,756,504
1,125,978,684 149,128,925 1,275,107,609 948,067,637 134,698,803 1,082,766,440
Current deposits 4,373,862 361,260 4,735,122 3,568,698 203,742 3,772,440
Savings deposits 10,843,950 18 10,843,968 113,638 18 113,656
Term deposits 1,363,787 193,282 1,557,069 1,335,500 135,060 1,470,560
Current deposits
- remunerative 17,192,468 284,878 17,477,346 10,381,339 697,737 11,079,076
Others 13,850 –00 13,850 21,286 –00 21,286
33,787,917 839,438 34,627,355 15,420,461 1,036,557 16,457,018
1,159,766,601 149,968,363 1,309,734,964 963,488,098 135,735,360 1,099,223,458
2021 2020
(Rupees in '000)

- Individuals 805,485,582 694,690,728
- Government (Federal and Provincial) 42,529,298 43,377,359
- Public Sector Entities 53,091,501 52,701,961
- Banking Companies 240,760 341,145
- Non-Banking Financial Institutions 34,386,595 16,115,873
- Private Sector 374,001,228 291,996,392
1,309,734,964 1,099,223,458
17.2 Deposits includes eligible deposits covered under deposit protection mechanism as required by the
Deposit Protection Act, 2016 amounting to Rs. 903,117.371 million (2020: Rs. 787,834.683 million).
181
Note 2021 2020
(Rupees in '000)
18. SUBORDINATED DEBT - Unsecured

Term Finance Certificates (TFCs) - V - (Unquoted) 18.1 –00 3,992,800
Term Finance Certificates (TFCs) - VI - (Unquoted) 18.2 7,000,000 7,000,000
Term Finance Certificates (TFCs) - VII - (Unquoted) 18.3 3,995,200 3,996,800
Term Finance Certificates (TFCs) - VIII - (Unquoted) 18.4 5,000,000 –00
15,995,200 14,989,600
18.1 During the year, the Bank exercised the call option of Term Finance Certificates - V 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 17 March 2021.
18.2 Term Finance Certificates - VI (Unquoted)

Maturity date Perpetual
Rating AA
Redemption No fixed or final redemption date.
Mark-up Payable six monthly at six months' KIBOR (ask side) plus 1.50%
without any floor and cap.
The issuer will have full discretion over the amount and timing of
profit distribution, and waiver of any profit distribution or other payment
will not constitute an event of default.
Call option On or after five years with prior SBP approval. As per SBP's
requirement, the Bank shall not exercise call option unless the called
instrument is replaced with capital of same or better quality.
Lock-in-clause No profit may be paid if such payment will result in shortfall (or
increase the shortfall) in the Bank’s Minimum Capital Requirement
(“MCR”), Leverage Ratio ("LR") or Capital Adequacy Ratio (“CAR”).
of a point of non-viability event as defined by SBP's Basel III Capital
182
18.3 Term Finance Certificates - VII (Unquoted)

Maturity date December 2028
Rating AA+
Ratio (“CAR”).
of a Point of Non-Viability event as defined by SBP's Basel III Capital
18.4 Term Finance Certificates - VIII (Unquoted)

Issue date September 2021
Maturity date September 2031
Rating AA+
Ratio (“CAR”).
of a Point of Non-Viability event as defined by SBP's Basel III Capital
183
Note 2021 2020
(Rupees in '000)
19. OTHER LIABILITIES
Mark-up / return / interest payable in local currency 2,045,653 1,684,024

Mark-up / return / interest payable in foreign currencies 302,370 196,066
Accrued expenses 2,952,562 2,541,572
Acceptances 55,030,553 52,522,498
Unclaimed / dividend payable 546,228 474,931
Mark to market loss on forward foreign exchange contracts 787,128 490,822
Payable to defined benefit plan 974,313 683,514
Charity payable 12,978 41,298
Security deposits against leases / ijarah 7,174,202 5,690,619
Provision for compensated absences 19.2 1,127,704 974,095
Other security deposits 765,531 647,203
Payable to SBP / NBP 1,323,252 455,014
Payable to supplier against murabaha 223,202 166,017
Insurance payable 610,916 470,883
Payable against sale of marketable securities on behalf of customers 230,415 567,235
ATM settlement account 1,729,169 –00
Others 1,539,576 1,277,245
102,042,740 85,342,289
19.1 Provision against off - balance sheet obligations
Exchange adjustment against IFRS 9 in overseas branches 4,141 1,470

Reversals (38,277 ) (3,895 )
22,486 15,853
19.1.1 The provision against off-balance sheet obligations includes provision in respect of letter of guarantees
and shipping guarantees.
19.2 Provision for compensated absences has been determined on the basis of independent actuarial
valuation. The significant assumptions used for actuarial valuation were as follows:
2021 2020
(% per annum)
Discount rate 12.25% 10.25%
Expected rate of increase in salary in future years 11.25% 9.25%

184
20. SHARE CAPITAL
20.1 Authorised Capital
2021 2020 2021 2020
Number of shares (Rupees in '000)
1,500,000,000 1,500,000,000 Ordinary shares of Rs. 10 each 15,000,000 15,000,000
20.2 Issued, subscribed and paid up capital

2021 2020
Number of shares
30,000,000 30,000,000 Fully paid in cash 300,000 300,000

1,081,425,416 1,081,425,416 Issued as bonus shares 10,814,254 10,814,254
1,111,425,416 1,111,425,416 11,114,254 11,114,254
20.3 As of statement of financial position date 162,731,961 (2020: 162,818,503) ordinary shares of
Rs. 10/- each were held by the related parties.
Note 2021 2020
(Rupees in '000)
21. SURPLUS ON REVALUATION OF ASSETS
Surplus / (deficit) on revaluation of:
- Investments 21.1 (1,071,388 ) 4,329,994

- Fixed Assets 21.2 8,869,136 9,062,739
- Non - banking assets acquired in satisfaction of claims 21.3 139,488 139,165
7,937,236 13,531,898
Deferred tax on surplus / (deficit) on revaluation of:
- Available for sale securities 21.1 (420,671 ) 1,488,343

- Fixed Assets 21.2 1,849,120 1,663,701
- Non - banking assets acquired in satisfaction of claims 21.3 54,804 13,161
1,483,253 3,165,205
6,453,983 10,366,693
21.1 Investments
Available for sale securities (1,076,616 ) 4,253,523
Unrealised surplus on equity accounting –00 76,546
Non-controlling interest 5,228 (75 )
(1,071,388 ) 4,329,994
(420,671 ) 1,488,343
Less: related deferred tax (650,717 ) 2,841,651
185
Note 2021 2020
(Rupees
(Rupees in '000)
21.2 Surplus on revaluation of fixed assets
Surplus on revaluation of fixed assets as at 01 January 9,062,739 5,495,269

Surplus on revaluation of the Bank’s fixed assets during the year –00 3,726,240
Surplus on revaluation of fixed assets as at 31 December 8,869,136 9,062,739
- revaluation as at 01 January 1,663,701 1,049,269
- revaluation recognised during the year 260,923 670,002
- incremental depreciation charged during the year (75,504 ) (55,570 )
1,849,120 1,663,701
7,020,016 7,399,038
21.3 Surplus on revaluation of non - banking assets acquired

in satisfaction of claims
Surplus on revaluation of non-banking assets as at 01 January 139,165 34,482
Surplus on revaluation of non-banking assets during the year 4,165 106,658
Surplus on revaluation of non-banking assets as at 31 December 139,488 139,165
- revaluation as at 01 January 13,161 5,540
- revaluation recognised during the year 43,144 8,312
- incremental depreciation charged during the year (1,501 ) (691)
54,804 13,161
84,684 126,004
22. NON - CONTROLLING INTEREST
Profit attributable to non-controlling interest 13,665 9,728
Loss on equity attributable to non-controlling interest (5,303 ) (460)
23. CONTINGENCIES AND COMMITMENTS

- Guarantees 23.1 126,082,119 92,814,672
- Commitments 23.2 438,585,630 351,718,547
- Other contingent liabilities 23.3 2,030,711 1,537,827
566,698,460 446,071,046
186
Note 2021 2020
(Rupees in '000)
23.1 Guarantees:
Financial guarantees 24,274,161 20,716,906
Performance guarantees 101,807,958 72,097,766
126,082,119 92,814,672
23.2 Commitments:
Documentary credits and short term trade-related transactions
- letters of credit 301,891,236 207,740,057
- forward foreign exchange contracts 23.2.1 131,220,965 128,823,137
- forward lending 23.2.2 4,717,424 7,124,914
Commitments for acquisition of:
- operating fixed assets 756,005 8,030,439
438,585,630 351,718,547
23.2.1 Commitments in respect of forward foreign exchange contracts

Purchase 72,497,648 75,472,905
Sale 58,723,317 53,350,232
131,220,965 128,823,137
The maturities of above contracts are spread over the periods upto two years.
23.2.2 Commitments in respect of forward lending 4,717,424 7,124,914
These represent commitments that are irrevocable because they cannot be withdrawn at the discretion
of the Bank without the risk of incurring significant penalty or expense.
23.3 Claims against the Bank not acknowledged as debts 2,030,711 1,537,827
23.4 Other contingent liabilities
Income tax returns of the Bank have been submitted upto and including the Bank’s financial year 2020
(Tax Year 2021). The income tax assessments of the Bank have been finalized upto and including tax
year 2018. Matters of disagreement exist between the Bank and tax authorities for various tax years
and are pending with the Commissioner Inland Revenue (Appeals) and Income Tax Appellate Tribunal
(ITAT). These issues mainly relate to addition of general provision (specific), reversal of provision for
non-performing loans, charge for defined benefit plan and provision for compensated absences.
For tax year 2012 and 2013, the Additional Commissioner Inland Revenue (ACIR) passed an amended
order u/s. 122(5A) of the Income Tax Ordinance, 2001 resulting in an impact of Rs. 482.233 million.
Subsequently, Commissioner Inland Revenue (Appeals) has passed order by allowing Rs. 134.616
million resulting in an aggregate net tax impact of Rs. 347.617 million. The Bank has filed an appeal
before Income Tax Appellate Tribunal (ITAT) against the above mentioned orders.
Commissioner Inland Revenue (Appeals) passed an appellate order against Deputy Commissioner
Inland Revenue (DCIR) order for Tax Year 2014 (Accounting Year 2013) by allowing certain expenses
resulting in an impact of Rs. 25.300 million and remanded back certain expenses to DCIR. The resulted
187
resulting in an impact of Rs. 65.722 million. The resulted aggregate net tax impact stands at Rs. 194.376
million. The Bank has filed an appeal before Income Tax Appellate Tribunal (ITAT) against the above
mentioned order.
Commissioner Inland Revenue (Appeals) has remanded back the order of Deputy Commissioner Inland
Revenue (DCIR) against Federal Excise Duty levy on certain items for the period January 2013 to
December 2015. The resulted aggregate net tax impact stands at Rs. 80.766 million.
Commissioner (HQ), Punjab Revenue Authority has passed order for the period from January to
December 2016 levying Punjab Sales Tax on services on certain items resulting in an impact of Rs.
112.641 million. Appellate Tribunal – Punjab Revenue Authority has remanded back the order of
Commissioner (HQ), Punjab Revenue Authority.
Commissioner Inland Revenue (Appeals) has passed orders for tax years 2009 and 2011 confirming
disallowance of provision for non-performing loans, other provisions and amortization of intangible
assets having an aggregate tax impact of Rs. 15.372 million. The Bank has filed an appeal before
Income Tax Appellate Tribunal (ITAT) against the above mentioned orders.
Commissioner Inland Revenue (Appeals), Mirpur AJ&K has annulled the amendments made by Assistant
Commissioner Inland Revenue, Mirpur AJ&K for Tax Year 2014 to 2018. This resulted in a favorable
aggregate net tax impact of Rs. 93.443 million.
Assistant Commissioner Inland Revenue, Mirpur AJ&K has finalized audit of the Bank’s Azad Kashmir
operations for Tax Year 2019 by disallowing certain expenses resulting in an impact of Rs. 92.311
million. The Bank has filed an appeal before Commissioner Inland Revenue (Appeals), Mirpur AJ&K.
The management, based on the opinion of its tax advisor, is confident about the favorable outcome of
the above matters.
188
24. DERIVATIVE INSTRUMENTS
The Bank deals in derivative financial instruments namely forward foreign exchange contracts and
foreign currency swaps with the principal view of hedging the risks arising from its trade business. As
per the Bank’s policy, these contracts are reported on their fair value at the statement of financial position
date. The gains and losses from revaluation of these contracts are included under “income from dealing
in foreign currencies”. Unrealised gains and losses on these contracts are recorded in the statement
of financial position under “other assets / other liabilities”. These products are offered to the Bank’s
customers to protect from unfavourable movements in foreign currencies. The Bank hedges such
exposures in the inter-bank foreign exchange market.
24.1 Product Analysis
2021
CONTRACT SWAP TOTAL
Counter Parties Notional Mark to Notional Mark to Notional Mark to
Principal Market Principal Market Principal Market
gain / (loss) gain / (loss) gain / (loss)
(Rupees in '000)
Banks
Hedging 7,709,331 (24,745) 62,902,410 (368,653) 70,611,741 (393,398)
Other Entities
Hedging 60,609,224 2,599,273 –000 –000 60,609,224 2,599,273
Total
Hedging 68,318,555 2,574,528 62,902,410 (368,653) 131,220,965 2,205,875
2020
Banks
Hedging 9,107,115 (27,012) 68,172,458 372,325 77,279,573 345,313
Other Entities
Hedging 51,543,564 95,018 –000 –000 51,543,564 95,018
Total
Hedging 60,650,679 68,006 68,172,458 372,325 128,823,137 440,331
24.2 Maturity Analysis 2021

Number of Notional Mark to Market
Contracts Principal
Negative Positive Net
(Rupees in '000)
Upto 1 month 220 18,737,362 (100,927) 257,804 156,877
1 to 3 months 494 59,723,927 (402,549) 921,515 518,966
3 to 6 months 470 37,622,436 (229,758) 1,215,887 986,129
6 months to 1 year 254 15,044,175 (53,894) 595,124 541,230
1 to 2 years 1 93,065 –00 2,673 2,673
1,439 131,220,965 (787,128) 2,993,003 2,205,875
2020
Upto 1 month 297 51,974,821 (112,849) 296,381 183,532
1 to 3 months 412 46,596,575 (218,736) 340,228 121,492
3 to 6 months 352 19,991,703 (128,829) 161,815 32,986
6 months to 1 year 177 10,260,038 (30,408) 132,729 102,321
1 to 2 years –00 –00 –00 –00 –00
1,238 128,823,137 (490,822) 931,153 440,331
189
Note 2021 2020
(Rupees in '000)
25. MARK-UP / RETURN / INTEREST EARNED
On loans and advances 39,751,634 43,408,133
On investments 76,483,891 81,113,900
On deposits with financial institutions 254,848 353,188
On securities purchased under resale agreements 241,458 198,514
On lending to financial institutions 15,233 216,003
On call money lendings 370 554
116,747,434 125,290,292
26. MARK-UP / RETURN / INTEREST EXPENSED

Deposits 43,244,860 48,036,958
Borrowings from SBP 2,310,305 1,616,923
Subordinated debt 1,178,571 1,753,337
Cost of foreign currency swaps 1,511,934 1,165,922
Repurchase agreement borrowings 11,530,205 13,923,326
Other borrowings 237,663 195,630
61,138,242 67,649,002
27. FEE AND COMMISSION INCOME

Branch banking customer fees 1,309,872 1,054,380
Investment banking fees 72,167 127,450
Consumer finance related fees 80,006 48,499
Card related fees (debit and credit cards) 1,376,752 491,655
Credit related fees 333,942 153,330
Commission on trade 5,132,467 4,046,591
Commission on guarantees 592,864 406,053
Commission on cash management 221,048 176,337
Commission on home remittances 149,562 118,958
Others 290,453 154,441
9,559,133 6,777,694
28. (LOSS) / GAIN ON SECURITIES

Realised 28.1 (34,415 ) 181,242
Unrealised-held for trading (3,838 ) 771
(38,253 ) 182,013
28.1 Realised (loss) / gain on:

Federal Government Securities 5,199 5,494
Shares 15,272 10,960
Mutual Funds (54,886 ) 164,788
(34,415 ) 181,242
29. OTHER INCOME

Gain on sale of fixed assets-net 467,551 440,311
Recovery of expenses from customers 29.1 355,536 322,776
Lockers rent 15,846 13,176
Exchange gain realised on closure of overseas branch 292,780 –00
Income on margin financing 11,174 1,626
Gain on disposal of associate –00 4,614
Bargain purchase on acquisition –00 37,734
Others 8,916 1,148
1,151,803 821,385
29.1 Includes courier, SWIFT, postage and other charges recovered from customers.
190
Note 2021 2020
(Rupees in '000)
30. OPERATING EXPENSES
Total compensation expenses 30.1 17,221,602 15,533,126
Property expenses
Rent and taxes 315,370 312,348
Insurance 14,842 19,265
Utilities cost 1,525,027 1,096,909
Security (including guards) 1,290,994 1,030,702
Repair and maintenance (including janitorial charges) 391,341 327,167
Depreciation 2,843,733 2,621,792
6,381,307 5,408,183
Information technology expenses

Software maintenance 5,367 4,667
Hardware maintenance 1,310,768 1,196,384
Depreciation 371,602 223,815
Network charges 561,396 431,212
2,556,505 2,144,457
Other operating expenses

Directors’ fees and allowances 41,040 35,217
Fees and allowances to Shariah Board 14,779 12,679
Insurance 521,817 496,088
Legal and professional charges 312,454 174,099
Outsourced services costs 30.2 1,819,571 1,639,793
Travelling and conveyance 282,755 188,468
NIFT and other clearing charges 204,452 144,846
Depreciation 1,604,184 1,605,462
Repair and maintenance 1,571,567 1,453,539
Training and development 47,460 27,116
Postage and courier charges 265,970 231,596
Communication 500,613 346,653
Stationery and printing 845,276 783,365
Marketing, advertisement and publicity 461,851 629,188
Donations 30.3 244,407 157,132
Auditors remuneration 30.4 10,049 9,103
Commission and brokerage 611,117 408,118
Entertainment and staff refreshment 386,605 285,755
Vehicle running expenses 1,610,924 1,100,461
Subscriptions and publications 229,753 217,551
CNIC verification charges 169,702 92,171
Security charges 473,360 311,961
Others 518,624 689,598
12,748,330 11,039,959
38,907,744 34,125,725
191
2021 2020
(Rupees in '000)
30.1 Total compensation expense
Fees and allowances etc. 1,136,888 663,964
Managerial remuneration 10,272,992 9,805,388
Charge for defined benefit plan 491,348 424,170
Contribution to defined contribution plan 709,870 604,552
Rent and house maintenance 3,100,741 2,611,202
Utilities 775,350 653,301
Medical 558,313 510,054
Charge for employees compensated absences 155,639 248,264
Social security 6,330 1,477
Staff indemnity 14,131 10,754
17,221,602 15,533,126
The compensation provided by the Bank to employees is composed of fixed pay structures and do not
include any variable element that varies based on performance benchmarks or targets.
30.2 Total cost for the year included in other operating expenses relating to material outsourced activities is
Rs. 38.575 million (2020: Rs. 35.885 million) paid to a company incorporated outside Pakistan. Material
outsourcing arrangements are as follows:
S.No. Name of material outsourced activity Name of service provider Nature of service
1. Point of Sale (POS) Acquiring M/s. Wemsol (Private) Limited Terminal Management
& Merchant On Boarding
2. Vision Plus-Credit Card System M/s. Arab Financial Services (AFS) Credit Card
2021 2020
(Rupees in '000)
30.3 The detail of donations is given below:
Al-Sayyeda Benevolent Trust 6,000 3,000
Childlife Foundation 15,000 10,000
Habib Education Trust* 6,000 3,000
Habib Medical Trust 6,000 3,000
Habib Poor Fund** 6,000 3,000
Masoomeen Hospital –00 13,000
Patients’ Aid Foundation 146,207 50,000
Prime Minister’s Corona Philanthropy Drive –00 25,532
Rahmatbai Habib Food and Clothing Trust 6,000 3,000
Rahmatbai Habib Widows and Orphans Trust 6,000 3,000
The Citizens Foundation 6,200 5,600
The Health Foundation 1,000 –00
The Indus Hospital 40,000 10,000
The Kidney Centre –00 25,000
244,407 157,132
* Mr. Qumail R. Habib, Executive Director, is Managing Trustee of Habib Education Trust.
** Mr. Murtaza H. Habib, Director, is Trustee of Habib Poor Fund.
30.4 Auditors’ remuneration
Audit fee 3,668 3,711
Half yearly review 990 990
Other certifications 3,730 3,115
Gratuity fund 109 109
Out of pocket expenses 1,552 1,178
10,049 9,103
31. OTHER CHARGES
Penalties imposed by the State Bank of Pakistan 36,294 56,672
192
Note 2021 2020
(Rupees in '000)
32. PROVISIONS AND WRITE OFFS - NET
(Reversal) / provisions for diminution in value of investments - net 8.3 (262,734 ) 1,418,204
Provision against loans and advances - net 9.4 207,038 2,989,872
Provision against other assets 13.2.1 613 825
Loss on disposal of associate 347,077 –00
Deficit on revaluation of fixed asset - net – 122,190
314,480 4,546,944
33. TAXATION
Current 12,258,817 13,319,509
Prior years (1,425 ) 5,079
Deferred (637,241 ) (2,572,628 )
11,620,151 10,751,960
33.1 Relationship between tax expense and accounting profit

Tax at the applicable rate of 35% (2020: 35%) 10,575,998 10,048,297

Tax effects of:
Expenses that are not deductible in determining
taxable income (278,139 ) (715,091 )
Tax effect of super tax 1,253,152 1,351,810
Others 69,140 66,944
11,620,151 10,751,960
The effective tax rate for the year is 38% (2020: 37%).
2021 2020
(Rupees in '000)
34. BASIC AND DILUTED EARNINGS PER SHARE ATTRIBUTABLE
TO EQUITY HOLDERS OF THE HOLDING COMPANY
Profit for the year - attributable to equity holders of

the Holding Company 18,583,320 17,947,732
(Number)
Weighted average number of ordinary shares 1,111,425,416 1,111,425,416
(Rupees)
Basic and diluted earnings per share 16.72 16.15
Note 2021 2020

(Rupees in '000)
35. CASH AND CASH EQUIVALENTS

Overdrawn nostro accounts 16 (360,661) (198,297)
125,042,703 125,419,074
193
35.1 Reconciliation of movement of liabilities to cash flows arising from financing activities
2021
(Rupees in '000)

Receipts / (payments) against sub-ordinated debt-net 1,005,600 –00 –00
Dividend paid –00 –00 (4,930,117 )
Total changes from financing cash flows 1,005,600 (2,215,854) (4,930,117 )
Other changes
Addition to right-of-use-assets-net –00 2,800,550 –00
right-of-use assets –00 1,124,704 –00
–00 3,925,254 5,001,414
2020
(Rupees in '000)

Payments against subordinated debt (3,200 ) –00 –00
Dividend paid –00 –00 (3,841,582 )
Total changes from financing cash flows (3,200 ) (1,972,143) (3,841,582 )
Other changes
Addition to right-of-use-assets –00 3,224,658 –00
right-of-use assets –00 956,906 –00
–00 4,181,564 3,889,988
194
2021 2020
(Number)
36. STAFF STRENGTH
Permanent 14,830 12,540

Temporary / on contractual basis 282 244
Group’s own staff at end of the year 15,112 12,784
Outsourced 3,090 2,771
Total staff strength 18,202 15,555
36.1 Domestic 18,152 15,502

Offshore 50 53
18,202 15,555
37. DEFINED BENEFIT PLAN

37.1 General description
The Bank operates an approved gratuity fund for all its confirmed employees, which is administered by
the Trustees. The benefits under the gratuity scheme are payable on retirement at the age of 60 years
or on earlier cessation of service as under:
Number of years of eligible service completed: Amount of gratuity payable:
Less than 5 years Nil
15 years or more Full basic salary for each year served
The Bank's costs and contributions are determined based on actuarial valuation carried out at each
year end using Projected Unit Credit Actuarial Method. All actuarial gains and losses are recognised in
'other comprehensive income' as they occur and are not reclassified to profit and loss in subsequent
periods.
37.2 Number of employees under the scheme
The number of employees covered under the defined benefit scheme are 14,718 (2020: 12,459).
37.3 Principal actuarial assumptions
The latest actuarial valuation of the scheme was carried out on 31 December 2021 and the significant
assumptions used for actuarial valuation were as follows:
2021 2020
Discount Rate 11.75% 10.25%

Expected rate of return on plan assets 11.03% 14.83%
Expected rate of salary increase : Year 1 10.75% 9.25%
Year 2 10.75% 9.25%
Mortality rates (for death in service) SLIC(2001-05)-1 SLIC(2001-05)-1
Rates of employee turnover Moderate Moderate
195
37.4 Reconciliation of payable to defined benefit plan Note 2021 2020
(Rupees in '000)
Present value of obligations 5,252,581 4,323,932

Fair value of plan assets (4,278,268 ) (3,640,418 )
Payable 974,313 683,514
37.5 Movement in defined benefit obligations
Obligation at the beginning of the year 4,323,932 3,590,184

Interest cost 451,993 450,696
Benefits paid during the year (141,808 ) (72,206 )
Remeasurement loss / (gain) 193,842 (14,196 )
Obligation at the end of the year 5,252,581 4,323,932
37.6 Movement in fair value of plan assets
Fair value at the beginning of the year 3,640,418 3,116,957

Interest income on plan assets 385,267 395,980
Contribution by the Bank-net 491,348 424,170
Actual benefits paid during the year (141,808 ) (72,206 )
Remeasurement loss on plan assets 37.8.2 (96,957 ) (224,483 )
Fair value at the end of the year 4,278,268 3,640,418
37.7 Movement in payable under defined benefit scheme

Contribution by the Bank (491,348 ) (424,170 )
Remeasurement loss recognised in
Other Comprehensive Income during the year 37.8.2 290,799 210,287
Closing Balance 974,313 683,514
37.8 Charge for defined benefit plan
37.8.1 Cost recognised in profit and loss

Net interest on defined benefit liability 66,726 54,716
491,348 424,170
196
2021 2020
(Rupees in '000)
37.8.2 Re-measurements recognised in OCI during the year
Loss / (gain) on obligation
- Financial assumptions 42,818 (47,418 )
- Experience assumptions 151,024 33,222
193,842 (14,196 )
Actuarial loss on plan assets 96,957 224,483
Total Remeasurement loss recognised in OCI 290,799 210,287
37.9 Components of plan assets

Cash and cash equivalents-net 180,052 30,183
Government securities 4,098,214 3,610,235
Total fair value of plan assets 4,278,266 3,640,418
37.10 Sensitivity analysis 2021

(Rupees in '000)
1% increase in discount rate 4,767,772

1% decrease in discount rate 5,819,239
1% increase in expected rate of salary increase 5,845,452
1% decrease in expected rate of salary increase 4,738,066
2022
(Rupees in '000)
37.11 Expected contributions to be paid to the funds in the next financial year 628,504
37.12 Expected charge for the next financial year 628,504
2021
(Rupees in '000)
37.13 Maturity profile
The weighted average duration of the obligation is 9.95 years.
Distribution of timing of benefit payments

within the next 12 months (next annual reporting period) 256,599
6,991,019
197
37.14 Funding Policy
The Bank will fund the yearly contribution to the defined benefit plan each year, as per the amount
calculated by the valuer.
37.15 Significant Risk
Asset Volatility
The Defined Benefit Gratuity Fund is almost entirely invested in Government Bonds with mostly fixed
income bonds. Almost 32.29% of the total investments (Rs. 1,323 billion) is invested in PIB's. This gives
rise to significant reinvestment risk.
The remaining fund is invested in Treasury Bills. The T-Bills exposure is almost 67.71% (Rs. 2,775 billion).
The asset class is volatile with reference to the yield on this class. This risk should be viewed together
with change in the bond yield risk.
Changes in Bond Yields
There are two dimensions to the changes in bond yields: first, as described above; second, the valuation
of the gratuity liability is discounted with reference to these bond yields. So any increase in bond yields
will lower the gratuity liability and vice versa, but, it will also lower the asset values.
Inflation Risk
The salary inflation is the major risk that the gratuity fund liability carries. In a general economic sense and
in a longer view, there is a case that if bond yields increase, the change in salary inflation generally offsets
the gains from the decrease in discounted gratuity liability. But viewed with the fact that asset values will
also decrease, the salary inflation does, as an overall affect, increases the net liability of the Bank.
Life Expectancy / Withdrawal Rate
The gratuity is paid off at the maximum of age 60. The Life expectancy is in almost minimal range and
is quite predictable in the ages when the employee is in the accredited employment of the Bank for the
purpose of the gratuity. Thus, the risk of life expectancy is almost negligible. However, had a post
retirement benefit been given by the Bank like monthly pension, post retirement medical etc., this would
have been a significant risk which would have been quite difficult to value even by using advance mortality
improvement models.
The withdrawal risk is dependent upon the: benefit structure; age and retention profile of the staff; the
valuation methodology; and long-term valuation assumptions.
Other Risks
Though, not imminent and observable, over long term there are some risks that may be crystallise. This
includes:
198
Model Risk
The defined benefit gratuity liability is usually actuarially valued each year. Further, the assets in the
gratuity fund are also marked to market. This two-tier valuation gives rise to the model risk.
Retention Risk
The risk that employee will not be motivated to continue the service or start working with the Bank if no
market comparable retirement benefit is provided.
Final Salary Risk
The risk, for defined benefit gratuity, that any disproportionate salary merit increases in later service
years will give rise to multiplicative increase in the gratuity liability as such increase is applicable to all
the past years of service.
Operational Risk related to a Separate Entity
Retirement benefits are funded through a separate trust fund which is a different legal entity than the Bank.
Generally, the protocols, processes and conventions used throughout the Bank are not applicable or are not
actively applied to the retirement benefit funds. This gives rise to some specific operational risks.
Compliance Risk
The risk that retirement benefits offered by the Bank does not comply with minimum statutory requirements.
Legal / Political Risk
The risk that the legal / political environment changes and the Bank is required to offer additional or
different retirement benefits than what the Bank projected.
38. DEFINED CONTRIBUTION PLAN
The general description of the plan is included in note 4.10.
2021
Contributions made during the year : (Rupees in '000)
Employer’s contribution 709,870

Employees’ contribution 709,870
The number of employees covered under the defined contribution plan are 12,343 (2020: 11,165).
199
39. COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
39.1 Total Compensation Expense

2021
Directors
Chairman Executives Non- Members Chief Key Other Risk
(other than Executives Shariah Executive Management Takers /
CE) Board Personnel Controllers
(Rupees in '000)
Fees and allowances etc. 11,575 –00 29,250 –00 80 –00 –00
Utilities –00 2,602 –00 942 5,734 30,014 124,662
Medical –00 –00 –00 118 –00 2,069 37,065
Others –00 –00 –00 128 –00 5,616 42,039
Total 11,575 45,678 29,250 14,779 128,606 632,786 2,602,700
Number of persons 1 1 8 5 1 39 1,057
2020
(Rupees in '000)
Fees and allowances etc. 6,740 –00 24,400 –00 40 –00 –00
Utilities –00 2,374 –00 758 5,480 29,673 100,595
Medical –00 22 –00 108 –00 1,770 30,896
Others 3,917 –00 –00 –00 –00 7,065 25,653
Total 10,657 45,406 24,400 12,679 124,692 690,902 2,325,646
Number of persons 1 1 8 3 1 42 879
200
Chief Executive, Executive Director, Members Shariah Board, Key Management Personal and Other Risk Takers / Controllers are entitled
to Group's maintained cars with fuel in accordance with the terms of their employment and are entitled to medical and life insurance
benefits in accordance with the policy of the Group. In addition, the Chief Executive and Executive Director are also provided with drivers,
security arrangements and payment of travel bills in accordance with their terms of employment.
Chairman of the Board is also entitled to Bank’s maintained cars with fuel, security guard services, payment of utility bills, club and
entertainment bills, travelling bills, appropriate office, staff, and administrative support.
39.2 Remuneration paid to Directors for participation in Board and Committee Meetings
2021
Human
(Rupees in '000)
1. Mr. Abbas D. Habib 3,895 –00 3,840 –00 –00 –00 3,840 11,575
2. Mr. Anwar Haji Karim 1,000 1,750 –00 750 –00 –00 –00 3,500
3. Ms. Farhana Mowjee Khan 1,000 –00 1,000 1,000 –00 –00 –00 3,000
4. Syed Mazhar Abbas 1,000 2,000 1,000 –00 1,000 –00 1,000 6,000
7. Mr. Murtaza H. Habib 1,000 –00 –00 –00 1,000 –00 –00 2,000
8. Mr. Arshad Nasar 750 1,500 750 –00 –00 750 750 4,500
9. Mr. Adnan Afridi 1,000 –00 –00 1,000 –00 –00 –00 2,000
11,145 8,250 7,340 3,500 3,500 1,500 5,590 40,825
201
2020
Human
(Rupees in '000)
1. Mr. Abbas D. Habib 2,900 –00 1,920 –00 –00 –00 1,920 6,740
2. Mr. Anwar Haji Karim 900 1,550 –00 400 –00 –00 –00 2,850
3. Ms. Farhana Mowjee Khan 900 –00 650 650 –00 –00 –00 2,200
4. Syed Mazhar Abbas 900 1,400 650 –00 650 –00 650 4,250
7. Mr. Murtaza H. Habib 900 –00 –00 –00 650 –00 –00 1,550
8. Mr. Arshad Nasar 900 1,550 650 –00 –00 500 650 4,250
9. Mr. Adnan Afridi 900 –00 –00 650 –00 –00 –00 1,550
10,100 7,600 4,520 2,350 2,350 1,000 3,220 31,140
39.3 Remuneration paid to Shariah Board Members

2021 2020
Resident Non-Resident Resident Non-Resident
Items Chairman Members Members Chairman Member Member
(Rupees in '000)
Managerial remuneration 4,600 1,882 3,146 3,400 2,516 2,400

Charge for defined benefit plan –00 88 –00 –00 255 –00
Contribution to defined contribution plan –00 109 –00 –00 212 –00
Rent and house maintenance 1,840 667 1,259 1,360 710 960
Utilities 460 167 315 340 178 240
Medical 36 35 47 36 36 36
Others –00 128 –00 –00 –00 –00
Total 6,936 3,076 4,767 5,136 3,907 3,636
Number of persons 1 2 2 1 1 1
202
40. FAIR VALUE MEASUREMENTS
Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable willing parties in an arm's length transaction. Fair value of financial instruments is based
on:
Federal Government securities PKRV rates (Reuters page)
Foreign securities Market prices / Mashreqbank PSC
Listed securities Prices quoted at Pakistan Stock Exchange Limited
Mutual funds Net asset values declared by respective funds
Unlisted equity investments Break - up value as per latest available audited financial
statements
Fair value of fixed term advances of over one year, staff loans and fixed term deposits of over one year
cannot be calculated with sufficient reliability due to non - availability of relevant active market for similar
assets and liabilities. The provision for impairment of debt securities and loans and advances has been
calculated in accordance with the Group's accounting policies as stated in notes 4.14 and 4.5.
40.1 Fair value of financial assets
The Group 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).
There were no transfers between levels 1 and 2 during the year.
203
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:
2021
Investments
Shares 3,436,075 –00 –00 3,436,075
Mutual Funds –00 2,107,605 –00 2,107,605
Investments
Associates 00
Listed Shares –00 –00 –00 –00
Mutual Funds –00 8,563,436 –00 8,563,436

2020
On balance sheet financial instruments
Investments
Shares 3,202,089 –00 –00 3,202,089
Mutual Funds –00 2,030,957 –00 2,030,957
Investments
Associates 00
Listed Shares 570,080 –00 –00 570,080
Mutual Funds –00 2,485,926 –00 2,485,926

40.2 Certain fixed assets and non banking assets acquired in satisfaction of claims have been carried at revalued amounts
determined by professional valuer (level 3 measurement) based on their assessment of the market value.
40.3 Foreign exchange contracts are valued using exchange rates by the State Bank of Pakistan.
204
41. TRUST ACTIVITIES
The Bank is not engaged in any trust activities other than holding investments of individuals and
entities in its IPS account maintained with the State Bank of Pakistan.
42. SEGMENT INFORMATION

42.1 Segment Details with respect to Business Activities
The segment analysis with respect to business activity is as follows:
2021
Commercial Retail Retail Asset Total
banking banking brokerage management
(Rupees in '000)
Mark-up / return / profit 105,214,471 11,508,835 23,573 555 116,747,434
Inter segment revenue-net 34,725 27,848,015 –00 –00 27,882,740
Non mark-up / return / interest income 4,531,685 9,611,677 169,091 177,624 14,490,077
Total income 109,780,881 48,968,527 192,664 178,179 159,120,251
Segment direct expenses (66,824,241) (33,687,923) (135,942) (57,789) (100,705,895)

Inter segment expense allocation (27,848,015) –00 (6,626) (28,099) (27,882,740)
Total expenses (94,672,256) (33,687,923) (142,568) (85,888) (128,588,635)
Provisions (203,795) (110,685) –00 –00 (314,480)
Profit before tax 14,904,830 15,169,919 50,096 92,291 30,217,136

Cash and bank balances 105,394,644 19,856,740 149,160 2,820 125,403,364
Investments 825,785,140 –00 191,598 722,053 826,698,791
Net inter segment lending 926,859 743,304,470 –00 –00 744,231,329
Advances-performing 615,847,512 116,234,984 151 –00 732,082,647
-non-performing 1,236,861 15,945 –00 –00 1,252,806
Others 121,201,684 22,722,401 723,145 60,180 144,707,410
Total assets 1,690,456,528 902,134,540 1,064,054 785,053 2,594,440,175
Borrowings 301,748,893 –00 464,009 –00 302,212,902

Deposits and other accounts 504,249,382 805,485,582 –00 –00 1,309,734,964
Net inter segment borrowing 743,304,470 –00 176,859 750,000 744,231,329
Others 50,668,147 80,931,866 228,147 18,335 131,846,495
Total liabilities 1,615,966,092 886,417,448 869,015 768,335 2,504,020,890
Equity 74,490,436 15,717,092 195,039 16,718 90,419,285
Total equity and liabilities 1,690,456,528 902,134,540 1,064,054 785,053 2,594,440,175
Contingencies and commitments 419,856,696 8,116,659 –00 –00 427,973,355
205
2020
Commercial Retail Retail Asset Total
banking banking brokerage management
(Rupees in '000)
Mark-up / return / profit 107,073,105 18,189,018 27,341 828 125,290,292
Inter segment revenue - net 41,661 29,560,092 –00 –00 29,601,753
Non mark-up / return / interest income 2,983,606 7,305,604 100,609 80,698 10,470,517
Total income 110,098,372 55,054,714 127,950 81,526 165,362,562
Segment direct expenses (68,222,463) (34,139,807) (92,950) (49,225) (102,504,445)

Inter segment expense allocation (29,560,092) –00 (8,251) (33,410) (29,601,753)
Total expenses (97,782,555) (34,139,807) (101,201) (82,635) (132,106,198)
Provisions (4,511,744) (31,685) (3,515) –00 (4,546,944)
Profit / (loss) before tax 7,804,073 20,883,222 23,234 (1,109) 28,709,420

Cash and bank balances 107,913,875 17,221,684 481,329 483 125,617,371
Investments 764,423,410 –00 256,289 639,285 765,318,984
Net inter segment lending 935,223 663,583,850 –00 –00 664,519,073
Advances-performing 439,227,671 69,938,597 132 –00 509,166,400
-non-performing 858,418 25,576 –00 –00 883,994
Others 102,863,677 16,333,709 404,651 15,299 119,617,336
Total assets 1,418,397,575 767,103,416 1,142,401 655,067 2,187,298,459
Borrowings 211,398,036 –00 229,231 –00 211,627,267

Deposits and other accounts 412,374,245 686,849,213 –00 –00 1,099,223,458
Net inter segment borrowing 663,583,850 –00 185,223 750,000 664,519,073
Others 43,710,174 72,244,009 566,352 (25,189) 116,495,346
Total liabilities 1,346,055,905 759,093,222 980,806 724,811 2,106,854,744
Equity 72,341,670 8,010,194 161,595 (69,744) 80,443,715
Total equity and liabilities 1,418,397,575 767,103,416 1,142,401 655,067 2,187,298,459
Contingencies and commitments 300,377,484 177,245 –00 –00 300,554,729
206
42.2 Segment details with respect to geographical locations
Geographical Segment Analysis

2021
(Rupees in '000)
Non mark-up / return / interest income 13,553,864 449,371 403,358 83,484 14,490,077
Total income 126,361,569 2,141,353 2,538,086 196,503 131,237,511

Reversals / (provisions) (182,901) (117,829) (73,793) 60,043 (314,480)
Profit before tax 27,381,991 1,137,548 1,532,495 165,102 30,217,136

Cash and bank balances 124,749,563 621,887 31,914 –00 125,403,364
Investments 801,030,412 14,218,541 11,449,838 –00 826,698,791
Net inter segment lendings 6,884,028 18,366,725 1,235,596 –00 26,486,349
Advances - performing 673,514,395 28,652,979 29,915,273 –00 732,082,647
- non - performing 1,252,806 –00 –00 –00 1,252,806
Others 124,749,119 3,243,433 16,714,858 –00 144,707,410
Total assets 1,752,244,151 65,103,565 59,347,479 –00 1,876,695,195
Borrowings 288,818,938 13,393,964 –00 –00 302,212,902

Deposits and other accounts 1,251,077,655 36,504,392 22,152,917 –00 1,309,734,964
Net inter segment borrowing 1,588,748 6,707,512 18,190,089 –00 26,486,349
Others 112,439,180 3,255,029 16,152,286 –00 131,846,495
Total liabilities 1,669,919,721 59,860,897 56,495,292 –00 1,786,275,910
Equity 82,324,430 5,242,668 2,852,187 –00 90,419,285
Total equity and liabilities 1,752,244,151 65,103,565 59,347,479 –00 1,876,695,195
Contingencies and commitments 418,518,577 8,375,380 1,079,398 –00 427,973,355
207
2020
(Rupees in '000)
Non mark-up / return / interest income 9,901,447 388,209 181,411 (550) 10,470,517
Total income 132,420,152 1,656,989 1,554,017 129,651 135,760,809

Provisions (3,426,100) (576,013) (528,892) (15,939) (4,546,944)
Profit before tax 28,277,381 286,355 137,869 7,815 28,709,420

Cash and bank balances 125,405,972 160,218 47,955 3,226 125,617,371
Investments 745,583,792 10,132,651 7,503,288 2,099,253 765,318,984
Net inter segment lendings 4,489,540 7,006,181 829,541 2,552 12,327,814
Advances-performing 474,418,055 18,747,396 15,967,837 33,112 509,166,400
-non-performing 834,792 49,202 –00 –00 883,994
Others 99,121,690 2,462,635 17,992,718 40,293 119,617,336
Total assets 1,452,029,142 38,558,283 42,341,339 2,178,436 1,535,107,200
Borrowings 211,627,267 –00 –00 –00 211,627,267

Deposits and other accounts 1,048,827,367 27,167,746 23,137,597 90,748 1,099,223,458
Net inter segment borrowing 5,143,103 5,307,456 394,791 1,482,464 12,327,814
Others 96,314,571 2,363,473 17,805,707 11,595 116,495,346
Total liabilities 1,376,901,908 34,838,675 41,338,095 1,584,807 1,454,663,485
Equity 75,127,234 3,719,608 1,003,244 593,629 80,443,715
Total equity and liabilities 1,452,029,142 38,558,283 42,341,339 2,178,436 1,535,107,200
Contingencies and commitments 294,581,495 5,157,900 815,334 –00 300,554,729
43. RELATED PARTY TRANSACTIONS

Related parties of the Group comprise associates, directors, key management personnel and other related
parties.
Transactions with related parties of the Group are carried out on arm's length basis in terms of the policy
as approved by the Board of Directors. The transactions with employees of the Group are carried out in
accordance with the terms of their employment.
208
Transactions with related parties, other than those disclosed in note 10.5, 20.3 and 39 are summarised as follows:
2021 2020
Directors Key management Associates Other related Directors Key Management Associates Other related
personnel parties personnel parties
(Rupees in '000)
Investments
Opening balance –00 –00 3,058,005 –00 –00 –00 1,472,165 –00
Investment made during the year –00 –00 5,986,178 182,690 –00 –00 1,609,946 –00
Investment adjusted / redeemed / disposed off during the year –00 –00 (480,745 ) –00 –00 –00 (24,106) –00
Surplus / (deficit) on revaluation –00 –00 –00 123,308 –00 –00 –00 –00
Closing balance –00 –00 8,563,438 305,998 –00 –00 3,058,005 –00
Advances
Opening balance 332 171,544 –00 2,217,749 1,487 76,626 –00 3,015,256
Addition during the year 76,666 235,679 –00 57,968,205 35,349 333,923 –00 56,387,053
Repaid during the year (75,378) (211,741) –00 (57,768,669 ) (36,504 ) (239,005) –00 (57,184,560)
Closing balance 1,620 195,482 –00 2,417,285 332 171,544 –00 2,217,749
Operating fixed assets
Right of use –00 –00 –00 786 –00 –00 –00 3,931
Other assets
Interest / mark - up accrued –00 120 –00 –00 –00 118 –00 1,289
L/C acceptances –00 –00 –00 –00 –00 –00 –00 1,090,910
Other receivable –00 –00 118 –00 –00 –00 –00 –00
Subordinated debt
Opening balance –00 –00 –00 44,000 –00 –00 –00 44,000
Issued / purchased during the year –00 –00 75,000 –00 –00 –00 –00 –00
Redemption / sold during the year –00 –00 (75,000 ) –00 –00 –00 –00 –00
Closing balance –00 –00 –00 44,000 –00 –00 –00 –00
Deposits and other accounts
Opening balance 1,072,684 720,918 739,762 3,619,310 955,078 624,163 1,289,465 2,761,222
Received during the year 6,376,086 3,125,505 83,337,951 63,034,965 6,891,056 3,205,958 147,123,023 50,717,883
Withdrawn during the year (6,678,852) (3,071,987) (84,018,330 ) (59,718,023 ) (6,773,450 ) (3,109,203) (147,672,726) (49,859,795)
Closing balance 769,918 774,436 59,383 6,936,252 1,072,684 720,918 739,762 3,619,310
Other liabilities
Interest / mark - up payable 404 1,327 725 30,043 305 508 2,359 14,567
Payable to staff retirement fund –00 –00 –00 974,312 –00 –00 –00 683,514
L/C acceptances –00 –00 –00 –00 –00 –00 –00 1,090,910
Unrealised loss on forward exchange contracts –00 –00 –00 –00 –00 –00 –00 922
Other liabilities –00 2 –00 –00 –00 4 –00 –00
Contingencies and commitments –00 –00 –00 918,205 –00 –00 –00 2,022,871
Other transactions - Investor Portfolio Securities
Opening balance –00 –00 –00 6,120,840 –00 –00 –00 4,986,840
Increased during the year –00 –00 –00 7,725,000 –00 –00 –00 3,562,000
Decreased during the year –00 –00 –00 (9,054,040 ) –00 –00 –00 (2,428,000)
Closing balance –00 –00 –00 4,791,800 –00 –00 –00 6,120,840
209
43.1 RELATED PARTY TRANSACTIONS
2021 2020
Directors Key Associates Other related Directors Key Associates Other related
management parties Management parties
personnel personnel
(Rupees in '000)
Income
Mark-up / return / interest earned –00 10,175 –00 110,324 5 6,479 –00 203,818
Fee and commission income 39 225 131,076 13,622 21 65 85 14,534
Net gain / (loss) on sale / redemption of
securities and units of mutual funds –00 –00 –00 –00 –00 –00 –00 5,442
Share of profit from associates –00 –00 372,034 –00 –00 –00 114,337 –00
Other income –00 –00 30 406 –00 –00 50 372
Expense
Mark-up / return / interest expensed 58,576 48,425 38,763 245,699 79,997 58,180 251,681 255,463
Operating expenses –00 –00 –00 4,528 –00 –00 –00 5,491
Salaries and allowances –00 661,727 –00 –00 –00 563,507 –00 –00
Bonus –00 101,732 –00 –00 –00 154,824 –00 –00
Contribution to defined contribution plan –00 30,234 –00 –00 –00 25,533 –00 –00
Contribution to defined benefit plan –00 82,334 –00 –00 –00 76,250 –00 –00
Staff provident fund –00 –00 –00 709,870 –00 –00 –00 604,551
Staff gratuity fund –00 –00 –00 491,348 –00 –00 –00 424,170
Directors’ fees 38,825 –00 –00 –00 33,487 –00 –00 –00
Donation –00 –00 –00 12,000 –00 –00 –00 6,000
Insurance premium paid –00 –00 –00 142,646 –00 –00 –00 133,786
Insurance claims settled –00 –00 –00 78,101 –00 –00 –00 41,925
210
44. CAPITAL ADEQUACY, LEVERAGE RATIO AND LIQUIDITY REQUIREMENTS
2021 2020
(Rupees in '000)
Minimum Capital Requirement (MCR):
Paid-up capital 11,114,254 11,114,254
Capital Adequacy Ratio (CAR):

Eligible Common Equity Tier 1 (CET 1) Capital 80,838,923 67,350,151
Eligible Additional Tier 1 (ADT 1) Capital 6,237,950 6,658,103
Total Eligible Tier 1 Capital 87,076,873 74,008,254
Total Eligible Capital (Tier 1 + Tier 2) 112,835,136 98,034,307
Risk Weighted Assets (RWAs):

Credit Risk 701,423,647 537,583,556
Market Risk 17,154,366 10,243,551
Operational Risk 118,070,472 98,014,443
Total 836,648,485 645,841,550
Common Equity Tier 1 Capital Adequacy Ratio 9.662% 10.428%

Tier 1 Capital Adequacy Ratio 10.408% 11.459%
Total Capital Adequacy Ratio 13.487% 15.179%
Minimum Capital Requirement (MCR)

The MCR standard sets the paid-up capital that the Bank is required to hold at all times. As of the
statement of financial position date, the Bank's paid - up capital stands at Rs. 11.114 billion as against
the required MCR of Rs. 10 billion.
Minimum Capital Adequacy Ratio (CAR)
The CAR on the basis of above framework works out to be as follows:
2021 2020
Required CAR 11.500% 11.500%
CAR on Bank level 13.485% 15.094%
CAR on Group level 13.487% 15.179%
The Bank calculates capital requirement as per Basel III regulatory framework, using the following
approaches:
Credit Risk Standardised Approach

Market Risk Standardised Approach
Operational Risk Basic Indicator Approach
211
2021 2020
(Rupees in '000)
Leverage Ratio (LR):
Total Exposures 2,334,597,071 1,853,426,344
Leverage Ratio 3.730% 3.993%
Liquidity Coverage Ratio (LCR):

Total High Quality Liquid Assets 631,444,235 490,289,815
Total Net Cash Outflow 244,934,742 187,165,770
Liquidity Coverage Ratio 257.801% 261.955%
Net Stable Funding Ratio (NSFR):

Total Available Stable Funding 1,379,398,079 999,664,575
Total Required Stable Funding 827,532,194 703,064,108
Net Stable Funding Ratio 166.688% 142.187%
44.1 The full disclosures on the CAPITAL ADEQUACY, LEVERAGE RATIO AND LIQUIDITY REQUIREMENTS
as per SBP instructions issued from time to time have been placed on the website. The link to the full
disclosure is available at https://www.bankalhabib.com/capitaladequacy/leverage/liquidityratio-grouplevel2021.
45. RISK MANAGEMENT
The Bank has a risk management framework commensurate with its size and the nature of its business. The
Board of Directors has approved risk management policies covering key areas of activities for the guidance
of management and committees of the Board, management committees, and Divisions / Departments of the
Bank.
This section presents information about the Bank’s exposure to and its management and control of risks, in
particular the primary risks associated with its use of financial instruments.
45.1 Credit Risk
Credit risk is the risk of loss arising from failure by a client or counterparty to meet its contractual obligation.
It emanates from loans and advances, commitments to lend, contingent liabilities such as letters of credit and
guarantees, and other similar transactions both on and off balance sheet. These exclude investments and
treasury - related exposures, which are covered under market risk.
It is the Bank’s policy that all credit exposures shall be adequately collateralised, except when specially
exempted by SBP as in case of personal loans and credit cards, and those at overseas branches where the
accepted local banking practice is followed.
The objective of credit risk management is to keep credit risk exposure within permissible level, relevant to
the Bank’s risk capital, to maintain the soundness of assets and to ensure returns commensurate with risk.
Credit risk of the Bank is managed through the credit policy approved by the Board, a well defined credit
approval mechanism, prescribed documentation requirement, post disbursement administration, review and
monitoring of all credit facilities; and continuous assessment of credit worthiness of counterparties. Decisions
regarding the credit portfolio are taken mainly by the Central Credit Committee. Credit Risk Management
Committee of the Board provides overall guidance in managing the Bank's credit risk.
Counterparty exposure limits are approved in line with the Prudential Regulations and the Bank's own
policies, by taking into account both qualitative and quantitative criteria. There is an established system
for continuous monitoring of credit exposures and follow - up of any past due loans with the respective
business units. All past due loans, including trade bills, are reviewed on fortnightly basis and pursued
for recovery. Any non - performing loans are classified and provided for as per Prudential Regulations.
The Bank has also established a mechanism for independent post - disbursement review of large credit
risk exposures.
212
Credit facilities, both fund based and non - fund based, extended to large customer groups and industrial
sectors are regularly monitored. The Bank has concentration of credit in textile which is the largest
sector of Pakistan's economy. Concentration risk is managed by diversification within sub - sectors like
spinning, weaving and composites, credit worthiness of counterparties, and adequate collateralisation
of exposures.
Credit administration function has been placed under a centralised set - up. Its main focus is on
compliance with terms of sanction of credit facilities and the Bank’s internal policies and procedures,
scrutiny of documentation, monitoring of collateral, and maintenance of borrowers’ limits, mark - up
rates, and security details.
The Bank has implemented its own internal risk rating system for the credit portfolio, as per guidelines
of SBP. Credit ratings by external rating agencies, if available, are also considered.
The Bank lends primarily against the cash flow of the business with recourse to the assets being financed
as primary security. Collaterals in the form of liquid securities, tangible securities, and other acceptable
securities are obtained to hedge the risk, as deemed appropriate. Main types of collaterals taken by
the Bank include charge on stock - in - trade, receivables, machinery, mortgage of properties, pledge
of goods, shares and other marketable securities, government securities, government guarantees, bank
guarantees and cash margins and bank deposits.
Specific provisions on credit portfolio are determined in accordance with the Prudential Regulations.
General provision on the consumer and SEs portfolios is also determined as per Prudential Regulations.
The Bank maintains additional general provision in line with its prudent policies and as per IFRS 9 for
overseas branches. Particulars of provisions against advances are given in note 9.4.
The Bank uses the Standardised Approach to calculate capital charge for credit risk as per Basel
regulatory framework, with comprehensive approach for credit risk mitigation.
Stress testing for credit risk is carried out regularly to estimate the impact of increase in non - performing
loans and downward shift in these categories.
45.1.1 Lendings to financial institutions
Gross lendings Non-performing lendings Provision held
Credit risk by public / private sector 2021 2020 2021 2020 2021 2020
(Rupees in '000)
Public / Government –00 2,175,301 –00 –00 –00 –00
Private 20,063,828 –00 –00 –00 –00 –00
20,063,828 2,175,301 –00 –00 –00 –00
45.1.2 Investment in debt securities
Gross investments Non-performing investments Provision held

(Rupees in '000)
Power (electricity), gas, water, sanitary 26,966,592 25,442,218 –00 –00 –00 –00
Financial 786,566,327 728,504,089 –00 –00 1,350,723 1,394,948
Iron and steel 1,000,000 1,000,000 –00 –00 –00 –00
Oil refinery / marketing 1,250,000 –00 –00 –00 –00 –00
815,782,919 754,946,307 –00 –00 1,350,723 1,394,948

Public / Government 776,931,233 719,700,403 –00 –00 325,807 357,615
Private 38,851,686 35,245,904 –00 –00 1,024,916 1,037,333
815,782,919 754,946,307 –00 –00 1,350,723 1,394,948
213
45.1.3 Advances
Gross Non-performing Provision

advances advances held
(Rupees in '000)
Agriculture, forestry, hunting and fishing 18,197,880 11,982,018 305,781 300,284 242,351 149,088
Mining and quarrying 135,313 86,946 –00 –00 –00 –00
Textile 237,019,393 163,702,549 1,690,844 1,824,246 1,671,265 1,753,709
Chemical and pharmaceuticals 19,082,769 16,796,308 5,791 5,891 4,397 4,423
Cement 6,833,811 8,847,702 –00 –00 –00 –00
Sugar 10,984,011 6,952,458 –00 –00 –00 –00
Footwear and leather garments 4,077,672 3,608,526 –00 –00 –00 –00
Automobile and transportation equipment 8,083,375 3,726,079 826 –00 103 –00
Electronics and electrical appliances 5,885,392 5,323,013 247,814 –00 61,953 –00
Construction 23,288,386 7,802,038 302,504 194,339 177,501 192,103
Power (electricity), gas, water, sanitary 47,024,486 48,335,823 –00 155,883 –00 100,810
Wholesale and retail trade 114,747,695 79,543,240 1,340,453 1,494,236 1,291,922 1,361,415
Transport, storage and communication 11,242,380 10,543,770 63,990 70,175 35,823 27,853
Financial 13,050,767 10,402,567 101,949 101,949 84,845 86,587
Insurance 294,275 475,167 61,180 128,426 61,180 31,108
Services (other than financial services) 16,786,483 14,524,500 45,762 112,896 125 33,502
Individuals 42,210,796 23,863,779 83,610 90,956 67,353 63,427
Food and allied 90,055,992 62,311,964 17,432 43,773 17,432 27,353
Iron and steel 39,040,954 23,895,854 1,066,177 992,229 1,066,177 992,229
Oil refinery / marketing 2,634,814 2,005,943 –00 354,082 –00 178,367
Paper and board 5,671,358 2,662,909 7,431 3,098 3,132 3,098
Plastic products 9,075,520 6,388,435 385,843 54,253 137,866 54,253
Others 21,002,242 8,911,593 2,019,548 1,454,757 1,570,704 1,438,154
746,425,764 522,693,181 7,746,935 7,381,473 6,494,129 6,497,479
Public / Government 58,448,122 55,368,812 –00 –00 –00 –00

Private 687,977,642 467,324,369 7,746,935 7,381,473 6,494,129 6,497,479
746,425,764 522,693,181 7,746,935 7,381,473 6,494,129 6,497,479
214
45.1.4 Contingencies and Commitments
Credit risk by industry sector
2021 2020
(Rupees in '000)
Agriculture, forestry, hunting and fishing 1,815,024 1,201,754
Mining and quarrying 209 –00
Textile 91,451,426 60,886,061
Chemical and pharmaceuticals 16,097,626 10,560,544
Cement 3,680,905 1,681,965
Sugar 1,194,779 445,917
Footwear and leather garments 2,939,561 2,400,625
Automobile and transportation equipment 22,228,569 18,054,588
Electronics and electrical appliances 7,250,575 5,306,142
Construction 10,708,668 8,396,568
Power (electricity), gas, water, sanitary 20,026,883 8,008,957
Wholesale and retail trade 68,530,385 52,552,907
Transport, storage and communication 1,454,475 415,645
Financial 17,959,726 12,384,053
Insurance 120,470 26,841
Services (other than financial services) 51,058,164 41,166,805
Individuals 8,116,659 177,245
Food and allied 40,727,640 36,490,464
Iron and steel 17,817,723 16,689,629
Oil refinery / marketing 6,978,651 3,016,513
Paper and board 8,964,522 2,129,946
Plastic products 17,609,850 11,584,210
Others 11,240,865 6,977,350
427,973,355 300,554,729
Public / Government 66,085,881 41,435,912
Private 361,887,474 259,118,817
427,973,355 300,554,729
45.1.5 Concentration of Advances

The Bank’s top 10 exposures on the basis of total (funded and non-funded exposures) aggregated to
Rs. 203,461 million (2020: Rs. 150,619 million) are as following:
2021 2020
(Rupees in '000)
Funded 99,235,533 87,140,927
Non Funded 104,225,085 63,477,948
Total Exposure 203,460,618 150,618,875
The sanctioned limits against these top 10 exposures aggregated to Rs. 226,451 million (2020:
Rs. 179,596 million). Provision against top 10 exposures amounts to be Nil (2020: Nil).
215
45.1.6 Advances - Province / Region-wise Disbursement and Utilization
2021
AJK including
(Rupees in '000)
Punjab 278,555,414 274,912,036 452,150 93,962 40,394 3,007,506 49,366

Sindh 297,374,464 2,156,339 293,052,373 1,654,607 511,145 –0 –0
KPK including FATA 6,658,000 –0 1,296 6,299,401 –0 357,303 –0
Balochistan 1,287,778 –0 207,440 –0 1,080,338 –0 –0
Islamabad 44,360,457 9,005 20,103 133,925 –0 44,197,424 –0
AJK including Gilgit-Baltistan 910,260 –0 242 6,119 –0 52,723 851,176
Total 629,146,373 277,077,380 293,733,604 8,188,014 1,631,877 47,614,956 900,542
2020
AJK including
(Rupees in '000)
Punjab 201,150,395 199,695,718 202,288 222,110 33,345 980,461 16,473

Sindh 210,692,996 2,259,607 206,820,742 1,066,542 543,154 2,830 121
KPK including FATA 4,547,764 6,476 10,079 4,232,515 5,053 293,641 –0
Balochistan 828,144 –0 106,412 –0 721,732 –0 –0
Islamabad 35,398,979 34,931 16,888 15,497 –0 35,331,663 –0
AJK including Gilgit-Baltistan 639,146 392 –0 2,692 –0 25,064 610,998
Total 453,257,424 201,997,124 207,156,409 5,539,356 1,303,284 36,633,659 627,592
45.2 Market Risk

Market risk is the risk of loss arising from movements in market rates or prices, such as interest rates,
foreign exchange rates, and equity prices.
The Bank takes positions in securities for the purpose of investment and not to run a trading book, except
to a very limited extent (maximum of Rs. 300 million) for trading in equities. As regards foreign exchange
positions, the purpose is to serve the needs of clients. Except as aforesaid, the Bank does not engage
in trading or market making activities.
Market risk is managed through the market risk policy approved by the Board, approval of counterparty
and dealer limits, specific senior management approval for each investment and regular review and
monitoring of the investment portfolio by the Asset Liability Management Committee (ALCO). A key
element of the Bank’s market risk management is to balance safety, liquidity, and income in that order
of priority. Another key element is separation of functions and reporting lines for the Treasury Division
and Equity Market Department, which undertake dealing activities within the limits and parameters set by
ALCO, Settlements Department which confirms and settles the aforesaid deals, and Middle Office which
independently monitors and analyses the risks inherent in treasury operations. Risk Management
Committee of the Board provides overall guidance in managing the Bank’s market risk.
Dealing activities of the Bank include investment in government securities, term finance certificates,
sukuks / bonds, shares and mutual funds, money market transactions and foreign exchange transactions
catering to the needs of its customers. All such activities are carried out within the prescribed limits. Any
excess over limits noted by the Settlements Department and / or the Middle Office is reported to senior
management and ALCO. Stress testing is performed as per guidelines of SBP as well as Bank's internal
policy. Portfolio risks arising in banking book is also measured through Value at Risk (VAR).
216
45.2.1 Balance sheet split by trading and banking books
2021 2020
book book Total book book Total
(Rupees in '000)
Cash and balances with treasury banks 118,599,792 –00 118,599,792 105,936,009 –00 105,936,009
Balances with other banks 6,803,572 –00 6,803,572 19,681,362 –00 19,681,362
Lendings to financial institutions 20,063,828 –00 20,063,828 2,175,301 –00 2,175,301
Investments 826,566,921 131,870 826,698,791 765,222,435 96,549 765,318,984
Advances 733,335,453 –00 733,335,453 510,050,394 –00 510,050,394
Fixed assets 55,701,205 –00 55,701,205 43,976,664 –00 43,976,664
Intangible assets 354,580 –00 354,580 294,862 –00 294,862
Deferred tax assets 2,103,393 –00 2,103,393 –00 –00 –00
Other assets 86,548,232 –00 86,548,232 75,345,810 –00 75,345,810
1,850,076,976 131,870 1,850,208,846 1,522,682,837 96,549 1,522,779,386
45.2.2 Foreign Exchange Risk
Foreign exchange risk is the risk of loss from adverse changes in currency exchange rates. The Bank’s
foreign exchange exposure comprises forward contracts, purchase of foreign bills, foreign currency
loans and investments, foreign currency cash in hand, balances with banks abroad, foreign currency
deposits and foreign currency placements with SBP and other banks. Focus of the Bank’s foreign
exchange activities is on catering to the needs of its customers, both in spot and forward markets.
Foreign exchange risk exposures of the Bank are controlled through dealer limits, open foreign exchange
position limits, counterparty exposure limits, and country limits. The Bank manages its foreign exchange
exposure by matching foreign currency assets and liabilities within strict limits. The net open position in
any single currency and the overall foreign exchange exposure are both managed within the statutory
limits as prescribed by SBP as well as the internal limits set by the Bank itself. Stress testing for foreign
exchange risk is carried out regularly to estimate the impact of adverse changes in foreign exchange rates.
2021
(Rupees in '000)

Great Britain Pound 1,652,971 12,805,309 7,489,831 (3,662,507)
Japanese Yen 6,782 363,092 357,519 1,209
Euro 4,231,547 6,846,326 1,842,032 (772,747)
189,279,557 198,072,512 13,774,335 4,981,380
217
45.2.5 Mismatch of Interest Rate Sensitive Assets and Liabilities
2021
(Rupees in '000)
On - balance sheet financial instruments
Assets
Investments 9.93% 826,698,791 150,455,926 95,743,329 314,733,737 79,111,216 9102,834,923 38,705,182 9,681,128 21,200,587 –00 14,232,763
Advances 7.21% 733,335,453 401,011,438 117,203,589 91,802,874 29,547,069 16,295,821 22,354,796 20,069,057 25,864,446 9,176,575 9,788
Other assets –00 83,985,167 –00 –00 –00 –00 –00 –00 –00 00–00 –00 83,985,167
1,789,486,603 584,428,790 212,946,918 406,536,611 108,658,285 119,130,744 61,059,978 29,750,185 47,065,033 9,176,575 210,733,484
Liabilities
Bills payable –00 29,803,755 –00 –00 –00 –00 –00 –00 –00 –00 –00 29,803,755
Borrowings 4.97% 302,212,902 130,540,002 55,284,225 32,529,294 11,403,231 9,542,625 10,585,069 19,745,203 32,324,292 258,961 –00
1,733,994,869 765,799,611 102,776,547 69,827,225 62,554,766 12,437,371 22,688,176 23,054,899 32,340,391 269,854 642,246,029
On - balance sheet gap 55,491,734 (181,370,821 ) 110,170,371 336,709,386 46,103,519 106,693,373 38,371,802 6,695,286 14,724,642 8,906,721 (431,512,545 )
Off - balance sheet financial instruments
related transactions 301,891,236 81,149,692 107,059,657 41,036,633 34,172,931 34,369,615 4,102,708 –00 –00 –00 –00
Forward purchase of foreign exchange contracts 72,497,648 11,062,507 26,511,686 23,742,935 11,087,455 93,065 –00 –00 –00 –00 –00
Off - balance sheet gap 18,491,755 643,404 (2,072,578 ) 9,614,919 10,212,945 93,065 –00 –00 –00 –00 –00
220
2020
On - balance sheet financial instruments (Rupees in '000)

Assets
Investments 9.30% 765,318,984 72,567,393 75,117,948 300,591,571 125,011,937 90,618,012 29,215,595 44,162,033 19,599,391 –00 8,435,104
Advances 6.60% 510,050,394 275,724,271 100,524,346 54,004,723 23,795,801 14,468,084 10,164,684 12,231,329 12,759,516 6,371,366 6,274
Other assets –00 73,221,559 –00 –00 –00 –00 –00 –00 –00 00–00 –00 73,221,559
1,476,383,609 375,423,868 175,642,294 354,596,294 148,807,738 105,086,096 39,380,279 56,393,362 32,358,907 6,371,366 182,323,405
Liabilities
Bills payable –00 31,013,221 –00 –00 –00 –00 –00 –00 –00 –00 –00 31,013,221
Borrowings 4.21% 211,627,267 145,763,098 4,863,416 10,624,222 6,040,892 12,927,163 5,891,219 10,195,980 14,808,462 512,815 –00
1,424,762,487 694,541,769 44,395,300 45,697,430 54,992,853 19,584,660 8,338,071 24,031,498 14,830,589 525,347 517,824,970
On - balance sheet gap 51,621,122 (319,117,901 ) 131,246,994 308,898,864 93,814,885 85,501,436 31,042,208 32,361,864 17,528,318 5,846,019 (335,501,565 )
Off - balance sheet financial instruments
related transactions 207,740,057 133,608,804 51,510,174 11,122,373 11,498,706 –00 –00 –00 –00 –00 –00
Forward purchase of foreign exchange contracts 75,472,905 19,581,701 29,570,273 17,076,813 9,244,118 –00 –00 –00 –00 –00 –00
Off - balance sheet gap 29,247,587 (12,326,414 ) 17,272,009 14,404,683 9,897,309 –00 –00 –00 –00 –00 –00
221
45.2.5.1 Reconciliation of Financial Assets and Liabilities
2021 2020
(Rupees in '000)
Assets as per statement of financial position 1,850,208,846 1,522,779,386
Less:
Fixed assets 55,701,205 43,976,664
Intangible assets 354,580 294,862
Deferred tax assets 2,103,393 –00

Non-banking assets acquired against claims 950,942 954,077
2,563,065 2,124,251
Interest Rate Sensitive Assets 1,789,486,603 1,476,383,609
Liabilities as per statement of financial position 1,759,789,561 1,442,335,671
Less:
Deferred tax liabilities –00 139,836
Provision for compensated absences 1,127,704 974,095

Unearned commission income 3,048,747 2,425,132
Workers’ welfare fund 173,319 146,692
Provision against off - balance sheet obligations 1,416,819 304,009
25,794,692 17,433,348
Interest Rate Sensitive Liabilities 1,733,994,869 1,424,762,487
45.3 Operational Risk

Operational risk is the risk of loss resulting from in adequate or failed internal processes, people, and
systems or from external events. This definition includes legal risk but excludes strategic and reputational
risks. Bank classifies operational loss / near miss incidents into seven loss incidents types, which are
Internal Fraud, External Fraud, Employment Practice & Workplace Safety, Client, Product & Business
Practice, Damage to Physical Assets, Business Disruption & System Failure, and Execution, Delivery
& Process Management.
Operational risk is managed through the Operational Risk Policy, Audit Policy, Compliance Policy &
Programme, Information Technology (I.T.) Policy, I.T. Governance Framework, I.T. Security Policy,
Human Resource Policy, Consumer Protection Framework, KYC / CDD Policy, AML / CFT Policy, Fraud
Prevention Policy, Consumer Grievance Handling Policy and Outsourcing Policy approved by the Board,
along with the operational manuals and procedures issued from time to time; system of internal controls;
Business Continuity Plan, Disaster Recovery Plan for I.T.; and regular audit of the branches and divisions.
Operational risk related matters are discussed in the operations committee, compliance committee of
management and I.T. steering committee. Audit Committee of the Board provides overall guidance in
managing the Bank’s operational risk.
The Bank’s operational risk management framework, as laid down in the operational risk policy, permits
the overall risk management approach to evolve in the light of organisational learning and the future
needs of the Bank.
The Bank places a high priority on conducting all business dealings with integrity and fairness, as laid
down in the Code of Conduct, which is required to be complied with by all employees.
222
Internal controls are an essential feature of risk reduction in operational risk management and the Bank
continues to improve its internal controls.
Business Continuity Plan of the Bank pays special attention to identification of potential threats and
associated risks in critical business processes by carrying out Business Impact Analysis and Risk
Assessment including those which are dependent on external vendors or third parties, identification of
alternative mechanisms for timely resumption of services, with special focus on critical business processes,
location of off-site backup & regular review and testing of the plan.
Bank has devised and implemented IT Project Management and IT Risk Management Frameworks.
Bank is also CMMI Maturity (Level - 3) certified. Bank AL Habib’s website for Conventional and Islamic
banking has been revamped with dynamic features. Furthermore, OBDX (Oracle Banking Digital
Experience) web and mobile application have been commercially launched.
Bank has taken various measures to strengthen I.T. Security, which includes implementation of Cyber
Security Strategy and Action Plan, Vulnerability Management Program, virtual patching and database
activity monitoring solution on critical systems, 24/7 Security Operation centre (SOC), regular Internal
and external penetration testing of applications, anti malware and antivirus security solution, subscription
to I.T. security threat intelligence service and recertification of controls as per SWIFT customer Security
Program.
45.3.1 Operational Risk-Disclosures Basel II Specific
The Bank uses Basic Indicator Approach to calculate capital charge for operational risk as per Basel
regulatory framework. This approach is considered to be most suitable in view of the business model
of the Bank which relies on an extensive network of branches to offer one - stop, full – service banking
to its clients. The Bank has developed and implemented an Operational Loss Database. Operational
loss and "near miss" events are reviewed and appropriate corrective actions taken on an ongoing basis,
including measures to improve security and control procedures. Key Risk Indicators have also been
developed along with thresholds which are being closely monitored for breaches. Risk Evaluation exercise
is carried out for new products, processes and systems or any significant change in the existing product,
processes and systems as per the operational risk policy of the Bank.
45.4 Liquidity Risk
Liquidity risk is the risk of loss to a bank arising from its inability to meet obligations as they fall due or
to fund growth in assets, without incurring unacceptable cost or losses.
Key elements of the Bank’s liquidity risk management are as follows:
- To maintain a comfortable margin of excess liquidity in the form of cash and readily marketable assets
to meet the Bank’s funding requirements at any time.
- To keep a strong focus on mobilization of low-cost core deposits from customers.
- To maintain a realistic balance between the behavioral maturity profiles of assets and liabilities.
- To maintain excellent credit rating (as borrowing cost and ability to raise funds are directly affected by
credit rating).
- To have a written contingency funding plan to address any hypothetical situations when access to
normal sources of funding is constrained.
45.4.1 Liquidity Coverage Ratio
SBP issued BPRD Circular No. 08 dated June 23, 2016 advising implementation of Basel III liquidity
standards that constitute two ratios, i.e., Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio
(NSFR), and five monitoring tools.
LCR is the measure of conversion capability of the Bank’s High Quality Liquid Assets (HQLAs) into cash
to meet immediate liquidity requirements over a 30 days horizon.
The Bank calculates Liquidity Coverage Ratio (LCR) on monthly basis as per the guidelines given in
the above mentioned circular. The objective of LCR is to ensure the short-term resilience of the liquidity
risk profile which requires the Bank to maintain sufficient High Quality Liquid Assets (HQLAs) to meet
stressed cash outflows over a prospective 30 calendar - days period. As of 31 December 2021, the
Bank’s LCR stood at 251% against the SBP’s minimum requirement of 100%.
223
45.4.2 Governance of Liquidity Risk Management
Liquidity risk is managed through the liquidity risk policy approved by the Board. The Bank has “zero
tolerance” for liquidity risk and will continue to maintain a comfortable margin of excess liquidity in the
form of cash and readily marketable assets to meet its funding requirements at any time.
Management of liquidity risk is accomplished through a formal structure which includes:
- Board of Directors (BOD)
- Risk Management Committee
- Asset Liability Management Committee (ALCO)
- Treasury Division
- Risk Management Division and Middle Office
- Finance Division
- Information Technology Division
The Board of Directors approves the liquidity risk policy and ensures, through quarterly reviews by the
Risk Management Committee of the Board, that the Bank’s liquidity risk is being managed prudently.
Risk Management Committee of the Board provides overall guidance in managing the Bank’s liquidity
risk. Liquidity position is monitored daily by the Treasury Division and the Middle Office and reviewed
regularly by ALCO.
45.4.3 Funding Strategy
The Bank’s prime source of liquidity is the customers' deposit base. Within deposits, the Bank strives
to maintain core deposit base in form of current and saving deposits and avoids concentration in particular
products, tenors and dependence on large fund providers. As a general rule, the Bank will not depend
on borrowings in the inter-bank market, including repos, to be a part of its permanent pool of funds for
financing of loans, but will use these as a source for obtaining moderate amounts of additional funds to
meet temporary liquidity needs in the normal course of business or for money market operations.
45.4.4 Liquidity Risk Mitigation Techniques
Various tools and techniques are used to measure and monitor the possible liquidity risk. These include
monitoring of different liquidity ratios like core deposits to total deposits, advances to deposits, liquid
assets to total deposits, Interbank borrowing to total deposits, which are monitored on regular basis
against limits. Further, the Bank also prepares the maturity profile of assets and liabilities to monitor the
liquidity gaps over different time bands. For maturity analysis, behavioral study is carried out to determine
the behavior of non - contractual assets and liabilities. The Bank also ensures that statutory cash and
liquidity requirements are maintained at all times.
In addition, LCR, NSFR and Monitoring Tools of Basel III framework further strengthen liquidity risk
management of the Bank.
45.4.5 Liquidity Stress Testing
As per SBP FSD Circular No. 01 of 2020, Liquidity stress testing is being conducted under various stress
scenarios. Shocks include the withdrawals of deposits, withdrawals of wholesale / large deposits &
interbank borrowing, withdrawal of top deposits, etc. Results of stress testing are presented to ALCO
and Risk Management Committee. The Bank’s liquidity risk management addresses the goal of protecting
solvency and the ability to withstand stressful events in the market place. Stress testing for liquidity as
prescribed in the liquidity risk policy is carried out regularly to estimate the impact of decline in liquidity
on the ratio of liquid assets to deposits plus borrowings.
45.4.6 Contingency Funding Plan
Contingency Funding Plan (CFP) is a part of liquidity risk policy of the Bank which identifies the trigger
events that could cause a liquidity contingency and describes the actions to be taken to manage it. The
contingency funding plan highlights liquidity management actions that needs to be taken to deal with
the contingency. Responsibilities and response levels are also incorporated in order to tackle the
contingency. Moreover, CFP highlights possible funding sources, in case of a liquidity contingency.
224
45.4.7 Main Components of LCR
Main components of LCR are High Quality Liquid Assets and Net Cash Outflows. Outflows are mainly
deposit outflows net of cash inflows which consist of inflows from financing and money market placements
up to 1 month. The inputs for calculation of LCR are based on SBP BPRD Circular No. 08 dated 23
June 2016.
45.4.8 Composition of HQLAs
High Quality Liquid Assets consist of Level 1 Assets which are included in the stock of liquid assets at
100% weightage of their market value i.e., Cash & Treasury balances, Conventional Government
Securities, GOP Ijarah Sukuks, Foreign Currency Sukuks & Bonds issued by sovereigns. While Level
2 Assets comprise all equity shares (excluding shares of Financial Institutions) listed on PSX 100.
45.4.9 Concentration of Funding Sources
The Bank relies on customers' deposits as its key source of funding, specially current and saving deposits
and time deposits of small / medium denominations, and avoids concentration of large deposits. Share
of core deposits in total deposits and of large deposits in total deposits are regularly monitored. In
particular the Bank does not depend on large depositors or borrowings from SBP and financial institutions
to meet its funding requirements.
45.4.10 Currency Mismatch in the LCR
About 90% of the Bank's assets and liabilities are in local currency. Currency mismatch in other currencies
is regularly monitored.
45.4.11 Centralisation of Liquidity Management
Overall liquidity management of the Bank is centralised in Treasury Division at Principal Office. The
Bank mobilises deposits through its branch network. It also uses the branch network to grant loans to
customers. Branches that have more deposits than loans, transfer (“lend”) their excess deposits to the
Principal Office. Branches that do not have enough deposits to fund their loans, acquire (“borrow”)
additional funds from the Principal Office.
45.4.12 Other Inflows & Outflows
Benefit of pledged deposits (deposits under lien) are not accounted for in calculation of LCR.
45.4.13 Net Stable Funding Ratio (NSFR)
NSFR is the ratio of the amount of Available Stable Funding (ASF) - source of funds, capital and liabilities
relative to the amount of Required Stable Funding (RSF) - use of funds, assets and off - balance sheet
exposures.
The objective of NSFR is to ensure the availability of stable funds that a bank must hold to enable it to
build and maintain its assets, investments and off balance sheet portfolio on an ongoing basis for longer
term, i.e., over a one year horizon. NSFR reduces maturity mismatches between the asset and liability
items on the balance sheet and thereby reduces funding and roll - over risk. The Bank’s NSFR stood
at 167% as on 31 December 2021.
225
45.5 Maturities of Assets and Liabilities - based on contractual maturity of the assets and liabilities of the Group
The following maturity profile is based on contractual maturities for assets and liabilities that have a contractual maturity. Assets and liabilities that
do not have a contractual maturity have been categorised in the shortest maturity band.
Total 2021
(Rupees in '000)
Assets
Lendings to financial institutions 20,063,828 –00 20,063,828 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Investments 826,698,791 12,967,986 (175,919 ) 24,857,271 26,170,390 56,009,199 27,485,865 (411,474 ) 79,072,128 313,777 208,013,450 40,353,512 193,664,781 158,377,825
Advances 733,335,453 62,322,894 16,559,970 25,896,302 52,410,354 94,703,838 94,964,578 127,675,070 39,097,582 24,015,747 48,372,426 48,828,863 48,004,081 50,483,748
Fixed assets 55,701,205 22,506,089 –00 –00 439,056 429,784 574,841 1,102,068 1,216,080 001,184,750 4,397,940 3,662,170 5,285,103 14,903,324
Intangible assets 354,580 –00 –00 –00 43,495 42,824 22,734 55,993 49,889 0040,748 13,146 216 433 85,102
Deferred tax assets 2,103,393 2,694,975 –00 –00 (22,673) (27,414) (27,414 ) (78,859 ) (27,499) 00(70,214) (249,413) (80,296 ) 287,640 (295,440 )
Other assets 86,548,232 17,516,514 5,142,949 6,220,977 13,547,227 14,422,657 9,760,794 7,770,376 4,120,311 007,835,258 112,638 68,849 18,117 11,565
1,850,208,846 243,411,822 41,590,828 56,974,550 92,587,849 165,580,888 132,781,398 136,113,174 123,528,491 33,320,066 260,660,187 92,833,314 247,260,155 223,566,124
Liabilities
Bills payable 29,803,755 29,803,755 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 302,212,902 537,376 72,474,365 1,094,262 2,336,666 75,846,330 23,083,908 42,619,114 7,519,175 4,245,556 9,542,625 10,585,069 19,745,203 32,583,253
Deposits and other accounts 1,309,734,964 1,077,749,891 16,117,169 26,665,733 50,921,042 18,700,448 23,791,875 26,302,731 20,686,097 30,465,438 2,894,746 12,103,107 3,309,696 26,991
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Subordinated debt 15,995,200 –00 –00 –00 –00 –00 1,000 800 1,000 800 3,600 3,600 7,200 15,977,200
Deferred tax liabilities –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Other liabilities 102,042,740 30,763,911 5,162,952 4,852,827 9,938,161 12,314,874 7,175,748 5,302,990 6,644,426 8,570,540 1,326,302 1,154,690 2,384,506 6,450,813
1,759,789,561 1,138,854,933 93,754,486 32,612,822 63,195,869 106,861,652 54,052,531 74,225,635 34,850,698 43,282,334 13,767,273 23,846,466 25,446,605 55,038,257
Net assets 90,419,285 (895,443,111 ) (52,163,658 ) 24,361,728 29,391,980 58,719,236 78,728,867 61,887,539 88,677,793 (9,962,268) 246,892,914 68,986,848 221,813,550 168,527,867

Reserves 20,656,466
Non - controlling interest 123,140
90,419,285
226
Total 2020
(Rupees in '000)
Assets
Lendings to financial institutions 2,175,301 (494 ) (2,966 ) (3,461) 2,182,222 –00 –00 –00 –00 –00 –00 –00 –00 –00
Investments 765,318,984 12,582,868 (341,794 ) (398,760) (648,823 ) 48,629,312 13,809,722 42,481,419 105,260,936 19,857,075 90,127,620 108,105,472 170,864,915 154,989,022
Advances 510,050,394 53,134,403 7,371,280 9,070,048 33,016,839 59,638,378 82,793,789 79,781,992 23,793,933 22,992,880 44,412,146 30,614,506 31,490,891 31,939,309
Fixed assets 43,976,664 19,674,219 –00 –00 382,971 376,295 506,363 937,251 1,021,321 996,661 3,602,764 3,055,678 4,121,980 9,301,161
Intangible assets 294,862 –00 –00 –00 22,651 22,652 22,647 62,132 23,332 0017,079 41,199 –00 –00 83,170
Deferred tax assets –00 –00 –00 –00 –00 –00 –00 –00 –00 00–00 –00 –00 –00 –00
Other assets 75,345,810 11,302,990 2,013,296 7,406,967 9,135,331 11,636,343 11,676,859 12,270,539 7,663,578 00588,862 1,617,298 7,776 25,971 –00
1,522,779,386 222,311,357 9,039,816 16,074,794 44,091,191 120,302,980 108,809,380 135,533,333 137,763,100 44,452,557 139,801,027 141,783,432 206,503,757 196,312,662
Liabilities
Bills payable 31,013,221 31,013,221 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 211,627,267 348,190 98,718,568 545,085 2,144,448 18,910,564 22,939,478 17,644,403 2,944,525 3,096,367 12,927,163 5,891,219 10,195,980 15,321,277
Deposits and other accounts 1,099,223,458 891,632,718 25,825,810 9,876,099 40,346,851 12,476,736 23,062,348 24,076,408 25,029,560 23,922,401 6,657,497 2,446,852 13,835,519 34,659
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Subordinated debt 14,989,600 –00 –00 –00 –00 –00 800 800 800 800 3,200 3,200 6,400 14,973,600
Deferred tax liabilities 139,836 (261,424 ) –00 –00 37,094 34,482 34,482 97,114 36,070 65,683 204,367 182,160 (216,962 ) (73,230 )
Other liabilities 85,342,289 20,800,376 2,546,349 3,200,147 6,857,181 11,263,412 9,148,184 11,052,652 8,183,361 792,640 2,754,422 1,259,471 2,154,287 5,329,807
1,442,335,671 943,533,081 127,090,727 13,621,331 49,385,574 42,685,194 55,185,292 52,871,377 36,194,316 27,877,891 22,546,649 9,782,902 25,975,224 35,586,113
Net assets 80,443,715 (721,221,724 ) (118,050,911 ) 2,453,463 (5,294,383 ) 77,617,786 53,624,088 82,661,956 101,568,784 16,574,666 117,254,378 132,000,530 180,528,533 160,726,549

Reserves 18,431,277
80,443,715
227
45.6 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Group
For assets and liabilities that have a contractual maturity, the expected maturity is considered to be the same as contractual maturity.
Assets and Liabilities that do not have a contractual maturity have been categorised on the basis of expected maturities as determined
by ALCO. In case of saving and current accounts, their historical net withdrawal pattern over the next one year was reviewed, based on
year - end balances for the last three years. Thereafter, taking a conservative view, ALCO categorised these deposits in various maturity
bands. Other assets and liabilities have been categorised on the basis of assumptions / judgments that are believed to be reasonable.
Total 2021
(Rupees in '000)
Assets
Investments 826,698,791 51,621,207 83,187,265 (410,293 ) 93,516,156 207,941,008 40,129,080 192,321,659 155,947,899 2,444,810
Advances 733,335,453 157,189,520 189,668,416 127,675,070 63,113,329 48,372,426 48,828,863 48,004,081 37,530,239 12,953,509
Fixed assets 55,701,205 529,855 1,921,786 1,339,608 3,322,093 12,263,117 3,662,170 5,285,103 5,787,400 21,590,073
Deferred tax assets 2,103,393 3,268,463 47,707 (100,401 ) 250,283 (1,938,785 ) 7,232 811,638 917,429 (1,160,173 )
Other assets 86,548,232 40,963,584 24,256,741 7,927,102 12,172,629 248,217 68,849 18,117 11,566 881,427
1,850,208,846 399,083,316 299,147,473 136,487,079 172,465,127 266,984,880 92,696,194 246,440,598 200,194,533 36,709,646
Liabilities
Bills payable 29,803,755 29,803,755 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 302,212,902 76,442,669 98,930,238 42,619,114 11,764,731 9,542,625 10,585,069 19,745,203 32,327,849 255,404
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Subordinated debt 15,995,200 –00 1,000 800 1,800 3,600 3,600 7,200 8,977,200 7,000,000
Deferred tax liabilities –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
1,759,789,561 361,230,878 267,406,469 180,717,923 184,625,320 173,503,056 183,582,249 191,929,047 206,251,412 10,543,207
Net assets 90,419,285 37,852,438 31,741,004 (44,230,844 ) (12,160,193) 93,481,824 (90,886,055) 54,511,551 (6,056,879) 26,166,439
Reserves 20,656,466
90,419,285
228
Total 2020
(Rupees in '000)
Assets
Investments 765,318,984 (1,350,589 ) 62,899,171 42,492,324 133,255,216 91,579,088 109,010,681 171,274,822 153,093,362 3,064,909
Advances 510,050,394 102,592,570 142,432,167 79,781,992 46,786,813 44,412,146 30,614,505 31,490,892 24,104,075 7,835,234
Fixed assets 43,976,664 428,096 1,945,568 1,601,345 2,563,934 3,951,185 11,154,950 4,121,980 4,409,762 13,799,844
Intangible assets 294,862 22,627 45,249 62,059 40,267 41,490 –00 –00 –00 83,170
Deferred tax assets –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Other assets 75,345,810 28,382,864 23,379,236 12,369,589 8,449,019 1,753,753 7,776 25,971 –00 977,602
1,522,779,386 257,868,240 230,701,391 136,307,309 191,095,249 141,737,662 150,787,912 206,913,665 181,607,199 25,760,759
Liabilities
Bills payable 31,013,221 31,013,221 –00 –00 –00 –00 –00 –00 –00 –00
Borrowings 211,627,267 101,756,291 41,850,042 17,644,403 6,040,892 12,927,163 5,891,219 10,195,980 14,808,462 512,815
to finance lease –00 –00 –00 –00 –00 –00 –00 –00 –00 –00
Subordinated debt 14,989,600 –00 800 800 1,600 3,200 3,200 6,400 7,973,600 7,000,000
Deferred tax liabilities 139,836 (2,533,473 ) 236,066 109,641 (167,184) 780,634 1,991,335 (47,244 ) (679,113) 449,174
1,442,335,671 332,672,272 186,003,176 140,849,492 151,768,857 181,460,973 169,930,135 198,525,377 70,375,632 10,749,757
Net assets 80,443,715 (74,804,032 ) 44,698,215 (4,542,183 ) 39,326,392 (39,723,311 ) (19,142,223) 8,388,288 111,231,567 15,011,002
Reserves 18,431,277
80,443,715
229
46. EVENTS AFTER THE REPORTING DATE
Subsequent to the year end, the Board of Directors proposed a final cash dividend of Rs. 7.0 (2020:
Rs. 4.5) per share.
47. GENERAL
47.1 Captions, as prescribed by BPRD Circular No. 02 of 2018 issued by SBP, in respect of which there
are no amounts, have not been reproduced in these consolidated financial statements, except for
captions of the statement of financial position and profit and loss account.
47.2 Figures have been rounded off to the nearest thousand rupees, unless otherwise stated.
47.3 Comparative information has been re-classified, re-arranged or additionally incorporated in these
consolidated financial statements wherever necessary to facilitate comparison and better presentation.
48. DATE OF AUTHORISATION
These consolidated financial statements were authorised for issue in the Board of Directors' meeting
held on 09 February 2022.


230
Annexure I
STATEMENT SHOWING WRITTEN-OFF LOANS OR ANY OTHER FINANCIAL RELIEF

OF RUPEES FIVE HUNDRED THOUSAND OR ABOVE PROVIDED
DURING THE YEAR ENDED 31 DECEMBER 2021
(Rupees in '000)
Name of Outstanding liabilities

Name and at beginning of the year Interest / Other
individuals / Father's / Principal
S. address Mark-up Charges Total
partners / Husband's Written
No. of the Interest / Other Written written (9+10+11)
directors (with Name Principal Total off
borrower(s) Mark-up Charges off off
CNIC Nos.)
1 2 3 4 5 6 7 8 9 10 11 12
1. Fazal Centre Muhammad Ali Fazal Muhammad Khan 66,711 8,165 – 74,876 – 5,911 – 5,911
Rahwali G. T Road Cantt (CNIC: 34101-4602895-1)
Gujranwala
2. Mukhtar Ali Alwani Mukhtar Ali Alwani Sher Ali Alwani 1,275 88 751 2,114 475 88 751 1,314
Fatima Manzil, Flat No. 20 (CNIC: 42301-4605058-9)
5th Floor, Near HBL Kharadar
Branch, Kharadar, Karachi.
3. Inayatullah Memon Inayatullah Memon Khuda Dino 2,668 2,129 – 4,797 69 2,360 266 2,695
Flat # 25, 3rd Floor, Hashim (CNIC: 42201-4006030-9)
Galleria, Commercial Housing
Scheme, Qasimabad,
Hyderabad.
Total 70,654 10,382 75100 81,787 544 8,359 1,01700 9,920
231
Annexure II
ISLAMIC BANKING BUSINESS
The Bank is operating 138 (2020: 106) Islamic banking branches and 145 (2020: 143) Islamic banking windows
at the end of the year.
Note 2021 2020

(Rupees in '000)
ASSETS
Cash and balances with treasury banks 8,423,970 5,727,007

Balances with other banks 6,633 6,557
Due from financial institutions –000 2,175,301
Investments 1 126,593,021 71,453,147
Islamic financing and related assets-net 2 85,209,570 58,304,712
Fixed assets 691,623 479,006
Intangible assets –000 –000
Due from Head Office –000 –000
Other assets 8,215,798 5,167,572
Total Assets 229,140,615 143,313,302
LIABILITIES
Bills payable 306,474 137,796

Due to financial institutions 30,479,303 18,962,087
Deposits and other accounts 3 128,090,092 93,238,405
Due to Head Office 39,305,108 14,457,740
Subordinated debt –000 –000
Other liabilities 16,989,976 6,315,054
215,170,953 133,111,082
NET ASSETS 13,969,662 10,202,220
REPRESENTED BY
Islamic Banking Fund 7,600,000 7,600,000

Reserves –000 –000
Deficit on revaluation of assets (238,060) (142,701)
Unappropriated profit 5 6,607,722 2,744,921
13,969,662 10,202,220
232
The profit and loss account of the Bank's Islamic banking branches for the year ended 31 December 2021 is as
follows:
Note 2021 2020
(Rupees in '000)
Profit / return earned 7 10,936,284 8,493,424

Profit / return expensed 8 (4,829,642) (4,047,777)
Net Profit / return 6,106,642 4,445,647
Other income
Fee and commission income 675,695 310,209
Foreign exchange income 145,850 97,171
Gain on securities 10,123 169,484
Other income 42,498 95,723
Total other income 880,281 767,035
Total income 6,986,923 5,212,682
Other expenses
Operating expenses (3,129,078) (2,349,393)
Other charges (180) (44)
Total other expenses (3,129,258) (2,349,437)
Reversals / (provisions) and write offs-net 5,136 (118,324)
2021 2020
amortised for (Deficit) / Carrying amortised for (Deficit) / Carrying
cost diminution surplus value cost diminution surplus value
1. Investments by segments
(Rupees in '000)
- Ijarah Sukuks 86,966,521 –00 (489,423 ) 86,477,098 31,954,335 –00 (208,246 ) 31,746,089
- Neelum Jhelum Hydropower Co Ltd. Sukuk 3,093,750 –00 –00 3,093,750 3,781,250 –00 –00 3,781,250
- Bai Muajjal with Government of Pakistan 9,222,783 –00 –00 9,222,783 11,328,818 –00 –00 11,328,818
- Islamic Naya Pakistan Certificate 807,152 –00 –00 807,152 –00 –00 –00 –00
100,090,206 –00 (489,423 ) 99,600,783 47,064,403 –00 (208,246 ) 46,856,157
Shares
- Listed Companies 80,455 (54,083 ) 11,665 38,037 97,442 (63,384 ) 15,861 49,919
- Listed 22,243,347 –00 215,177 22,458,524 22,425,254 –00 27,418 22,452,672
- Unlisted 3,973,000 –00 –00 3,973,000 2,025,000 –00 –00 2,025,000
26,216,347 –00 215,177 26,431,524 24,450,254 –00 27,418 24,477,672
Units of Mutual Funds 351,022 (52,866 ) 24,521 322,677 100,000 (52,866 ) 22,265 69,399
Associates
- AL Habib Islamic Cash Fund 100,000 –00 –00 100,000 –00 –00 –00 –00
- AL Habib Islamic Savings Fund 100,000 –00 –00 100,000 –00 –00 –00 –00
200,000 –00 –00 200,000 –00 –00 –00 –00
Total Investments 126,938,030 (106,949 ) (238,060 ) 126,593,021 71,712,099 (116,250 ) (142,702 ) 71,453,147
233
Note 2021 2020
(Rupees in '000)
2. Islamic financing and related assets
Ijarah 2.1 1,510,759 1,656,565
Murabaha 2.2 10,763,354 9,148,387
Diminishing Musharaka 14,068,266 11,404,565
Islamic Long Term Financing Facility (ILTFF) 2,354,060 1,737,762
Istisna 5,342,869 2,364,376
Islamic Refinance for Renewable Energy (IFRE) 36,245 14,035
Islamic Refinance for Wages & Salaries (IRWS) 1,220,603 2,355,044
Islamic Refinance for Temporary Economic Refinance Facility (ITERF) 908,150 –00
Islamic Export Refinance-Istisna 1,116,424 1,083,650
Musawamah 4,583,663 3,710,693
Islamic Export Refinance-Musawamah 529,750 826,500
Running Musharaka 326,612 84,799
Islamic Export Refinance-Running Musharaka 5,263,500 6,270,000
Financing against Bills-Musawamah 1,580,871 293,805
Staff Financing 1,025,435 594,202
Musawamah Inventory 2,290,127 1,700,257
Advance against Istisna 7,974,093 5,702,233
Advance against Istisna-IERF 9,475,930 4,829,300
Advance against Ijarah 505,797 735,441
Advance against Diminishing Musharaka 4,440,130 1,083,563
Advance against ILTFF 1,756,300 1,082,706
Advance against IFRE 2,161,708 875,000
Advance against ITERF 6,101,556 914,221
Advance against IRF SME 39,925 –00
Gross Islamic financing and related assets 85,376,127 58,467,104
Less: provision against Islamic financings

- Specific (123,001) (135,936)
- General (43,556) (26,456)
(166,557) (162,392)
Islamic financing and related assets-net of provision 85,209,570 58,304,712
2.1 Ijarah
2021
2021 2021 2021 (deletions) 2021 2021
(Rupees in '000)
(169,375) (76,346)
Vehicles 2,227,410 540,587 2,137,519 891,153 490,799 972,561 1,164,958
(630,478 ) (409,391 )
Equipment 286,147 106,718 203,408 190,796 91,675 146,681 56,727
(189,457 ) (135,790 )
Total 2,917,635 996,006 2,924,331 1,261,070 774,029 1,413,572 1,510,759
(989,310 ) (621,527 )
234
2020
2020 2020 2020 (deletions) 2020 2020
(Rupees in '000)
(699,823) (397,996)
Vehicles 2,406,744 546,978 2,227,410 890,722 467,430 891,153 1,336,257
(726,312 ) (466,999 )
Equipment 607,883 –00 286,147 334,105 123,163 190,796 95,351
(321,736 ) (266,472 )
Total 3,948,972 716,534 2,917,635 1,583,733 808,804 1,261,070 1,656,565
(1,747,871 ) (1,131,467 )
2.1.1 Future ijarah payments receivable

2021 2020
Not later Later than Not later Later than
than 1 1 year and less than 1 1 year and less
year than 5 years Total year than 5 years Total
(Rupees in '000)
Ijarah rental receivables 160,721 1,192,485 1,353,206 685,438 871,283 1,556,721
Note 2021 2020

(Rupees in '000)
2.2 Murabaha
Murabaha financing 2.2.1 7,685,008 7,020,386
Advances for Murabaha 3,078,346 2,128,001
10,763,354 9,148,387
2.2.1 Murabaha receivable-gross
Less: Deferred murabaha income 2.2.2 7,929,218 7,202,836
Profit receivable shown in other assets 2.2.4 (130,922 ) (75,641 )
Murabaha financings (113,288 ) (106,809 )
7,685,008 7,020,386
2.2.2 The movement in Murabaha financing during the year is as follows:

Sales during the year 32,356,284 26,037,743
Adjusted during the year (31,629,902 ) (26,047,650 )
2.2.3 Murabaha sale price 32,281,567 25,990,650

Murabaha purchase price (31,578,935 ) (25,303,306 )
702,632 687,344
2.2.4 Deferred murabaha income

Opening balance (75,641 ) (125,034 )
Arising during the year (704,180 ) (694,160 )
Less: Recognised during the year 648,899 743,553
Closing balance (130,922 ) (75,641 )
235
3. Deposits and other accounts
2021 2020
(Rupees in '000)
Customers
Term deposits 19,890,218 –00 19,890,218 21,354,917 –00 21,354,917
115,177,874 3,699,733 118,877,607 89,825,137 2,934,480 92,759,617
Current deposits 18,895 –00 18,895 62,908 –00 62,908
Savings deposits 9,193,590 –00 9,193,590 415,880 –00 415,880
9,212,485 –00 9,212,485 478,788 –00 478,788
124,390,359 3,699,733 128,090,092 90,303,925 2,934,480 93,238,405
2021 2020
(Rupees in '000)
- Individuals 76,106,049 58,871,300
- Government / Public Sector Entities 1,491,016 2,096,892
- Banking Companies 46 46
- Non-Banking Financial Institutions 9,212,439 478,742
- Private Sector 41,280,542 31,791,425
128,090,092 93,238,405
3.1.1 Deposits includes eligible deposits covered under deposit protection mechanism as required by the Deposit
Protection Act, 2016 amounting to Rs. 107,417.050 million (2020: Rs. 75,124.486 million).
2021 2020
(Rupees in '000)
4. Charity Fund
Additions during the year
Received from customers on account of delayed payment 232 26,975
Charity accrued but not yet received 478 5,072
Dividend purification amount 825 205
Other Non - Shariah compliant income 942 2,330
Profit on charity saving account 1,032 2,314
3,509 36,896
Payments / utilization during the year
Health (19,131) (26,144)
Social Welfare (12,698) (10,428)
Education –00 (2,500)
(31,829) (39,072)
236
2021 2020
(Rupees in '000)
4.1 Detail of charity is as follows:
Afzaal Memorial Thalassemia Foundation 3,000 –00
Al Mustafa Trust 1,500 1,607
ASF Foundation 939 –00
Bait-ul-Sukun 1,939 1,607
Child Aid Association 1,000 3,607
Dar-ul-Sukun 1,939 3,607
Edhi Foundation 1,939 3,607
Gawadar Development Authority Hospital –00 5,494
Green Crescent Trust 1,939 1,607
IDA RIEU Welfare Association 1,939 1,607
Indus Hospital 1,939 3,615
Jinnah Foundation –00 2,000
Karachi Down Syndrome Program 1,000 –00
Lady Dufferin Hospital 1,000 –00
National Institute of Child Health 1,000 3,000
Osmania Hospital 1,000 1,607
Pakistan Children’s Heart Foundation 1,939 1,000
Pakistan Foundation Fighting Blindness 1,000 –00
Panah Trust 1,000 –00
Pink Ribbon 1,000 –00
SIUT 1,939 3,607
The Cancer Foundation 939 –00
The Kidney Centre 1,939 1,000
31,829 38,572
5. Islamic Banking Business Unappropriated Profit

Add: Islamic Banking profit for the year 3,862,801 2,744,921
Less: Remitted to Head Office –00 (2,551,373)
6. Contingencies and Commitments

- Guarantees 10,930,898 4,415,658
- Commitments 27,490,079 17,468,898
38,420,977 21,884,556
7. Profit / Return Earned on Financing, Investments and Placement

Profit earned on:
Financing 3,999,268 4,389,705
Investments 6,915,752 3,712,628
Placements 21,264 391,091
10,936,284 8,493,424
8. Profit on Deposits and Other Dues Expensed

Due to Financial Institutions 403,087 259,532
Due to Head Office 824,824 193,781
4,829,642 4,047,777
237
9. Profit and Loss Distribution and Pool Management
9.1 The number and nature of pools maintained by the Islamic Banking Branches along with their key
features and risk and reward characteristics:
General Pool PKR (Mudaraba)
Deposits which assume minimal risk of loss due to diversified assets being tagged thereto are parked
in the general pool. In case of loss in general pool, the loss will be borne by the general pool members.
Special Pool(s) PKR (Mudaraba)
General Pool FCY (Mudaraba)
In FCY pool, all FCY deposits and Investments are parked to share the return among the FCY deposit
holders. In case of loss in a FCY General Pool, the loss will be borne by the FCY general pool members.
Special Pool FCY (Mudaraba)
Islamic Export Refinance Scheme (IERS) Pool PKR (Musharaka)
IERS pool is required by the SBP to facilitate the exporters under Islamic Export Refinance Scheme.
Equity Pool
Investments with relatively higher risks such as investment in shares and mutual funds are tagged to
the equity pool in order to safeguard the interest of depositors. The Bank as Mudarib in the general
pool is responsible for administrative costs and cost of operating fixed assets, which are financed from
equity. Furthermore, subsidized financing to employees are also financed from equity as per SBP
guidelines.
Parameters associated with risk and rewards:
Following are the key considerations attached with risk and reward of the pool:
- Period, return, safety, security and liquidity of investment.
- Maturities of funds obtained from Principal Office, Islamic Banking Institutions and Shariah compliant
organisations as regulated in Pakistan.
- Element of risk attached to various types of investments.
- SBP rules and Shariah clearance.
9.2 Avenues / sectors of economy / business where Mudaraba based deposits have been deployed:
The Mudaraba based funds have been deployed in the following avenues / sectors / business:
- Chemical and pharmaceuticals
- Agribusiness
- Textile
- Sugar
- Shoes and leather garments
- Investment in sukuks, shares and mutual funds
- Production and transmission of energy
- Food and allied except sugar
- Cement
- Financial
- Wheat
- Individuals
- Others (domestic whole sale, engineering goods, plastic product, etc.)
238
Complaint Handling
The Bank has a comprehensive Customer Grievances Handling Policy, which is based on the principles of
fairness, promptness, and customer’s right to approach alternate remedial avenues in case of need.
Customers may register their complaints through Call Center, Bank’s Website, direct emails, Social Media and
letters through drop-boxes or directly to Customer Services Division/CEO’s Office, which are promptly logged
and acknowledged. The complaints are tracked for end-to-end resolution within regulatory timelines and
escalated to Senior Management, as required. In case a complainant is not satisfied with the resolution
provided by the Bank, he may escalate his complaint to Banking Mohtasib Pakistan. This process is
communicated to customers through notices in Branches and the Website.
During 2021, Bank’s Customer Complaint Unit has been further strengthened to ensure quick resolution of
customers’ complaints. Further, training on complaints handling guidelines was also provided to a large
number of staff.
In 2021, the Bank received 216,799 complaints which were investigated and closed within an average
turnaround time of 4 working days.
240
Report of Shariah Board for the year ending December 31, 2021
In the name of Allah, the Beneficent, the Merciful
1. While the Board of Directors and Executive Management are solely responsible to ensure that the
operations of Bank AL Habib – Islamic Banking Division (BAHL-IBD) are conducted in a manner that
comply with Shariah principles and guidelines issued by the Shariah Board of the BAHL-IBD at all times.
The Shariah Governance Framework issued by the State Bank of Pakistan, required from the Shariah
Board (SB) to submit a report on the overall Shariah compliance environment of BAHL-IBD.
2. To form the opinion as expressed in this report, the Shariah Compliance Department carried out Shariah
Reviews, on test check basis, of each class of transactions, the relevant documentation and process
flows. Further, during the last year, Shariah Board reviewed the Internal Shariah Audit and External
Shariah Audit Reports. Based on above, we are of the view that:
I. BAHL-IBD has complied with Shariah rules and principles in the light of fatawa, rulings and
guidelines issued by its Shariah Board.
II. BAHL-IBD has complied with directives, regulations, instructions and guidelines i.e. related to
Shariah compliance issued by SBP in accordance with the rulings of SBP’s Shariah Board.
III. BAHL-IBD has complied with the SBP instructions on profit and loss distribution and Pool
Management. On recommendations of Shariah Board measures are being taken to further strengthen
the Pool Management system.
IV. BAHL-IBD has a comprehensive mechanism in place to ensure Shariah Compliance in its overall
operations.
V. The Shariah Board appreciates the view and commitment of BOD towards ensuring the Shariah
Compliance in the products, processes and operations of the BAHL-IBD. Improvement is required
in level of awareness of Islamic Banking staff as well Executive Management in order to improve
their understanding on the importance of Shari’ah Compliance in their respective areas, particularly
in Foreign Trade Department.
VI. The Management has provided adequate resources to Shariah Compliance Department and also
committed to provide further staff enabling them to discharge their duties effectively.
VII. The Bank has a well-defined mechanism in place which is sound enough to ensure that any
earnings realized from sources or by means prohibited by Shariah have been credited to charity
account and are being properly utilized. In year 2021, charity amount of Rs. 12.499 Million has
been realized, out of which an income of Rs. 0.941 Million was credited to charity due to Shariah
non-compliance as per instructions of Shariah Board. An amount of Rs. 31.823 Million has been
granted to various charitable institutions against previous year’s balances.
Mufti Sher Ali Mufti Muhammad Hamza

Resident Shariah Board Member Shariah Board Member
Mufti Mohib ul Haq Siddiqui Mufti Ismatullah Hamdullah

Shariah Board Member Chairman Shariah Board
Karachi: 07 February, 2022

241
07
242
30,217,136
(11,620,151)
18,596,985
(13,665)
18,583,320
40,416,713
120,440
(177,387)
40,359,766
58,943,086
(1,870,230)
(5,001,414)
(6,871,644)
52,071,442
16.72
243
244
140 139 138
245
32
246
247
248
249
250
251
252
2021
253
Branch Network
The Bank has a network of 956 branches including 29 sub-branches, 02 overseas branches and 138 Islamic
Banking branches. The Bank also has 04 representative offices and 03 booths. The Bank has branches /
sub-branches / representative offices in the following cities:
• Aadha • Dinga • Kankowai • Multan • Sara e Alamgir
• Abbotabad • Domala • Karachi • Multan, khurd • Sargodha
• Adda Ghulam Hussain • Dunyapur • Karak • Muradabad • Satyana Bangla
• Adda Mirza Tahir • Dureji • Karianwala • Muridke • Sawabi
• Adda Pahrianwali • Ellahabad • Karkhana Bazar Vehari • Murree • Shabqadar
• Ahmed Nagar • Eshanpur • Kashmore • Muslim bagh • Shahdadkot
• Ahmed Pur East • Faisalabad • Kassowal • Mustafabad • Shahdadpur
• Ajnala • Faqirwali • Kasur • Muzaffarabad (A.K.) • Shaher Sultan
• Akbarpura • Fateh Jang • Khairpur • Muzaffargarh • Shahi Wala
• Ali Pur Chatta • Fatehpur • Khairpur Nathanshah • Naal • Shahkas
• Ali Pur,Islamabad • Fazil Pur • Khairpur Tamewali • Naar • Shahkot
• Alipur • Feroza • Khanbela • Nankhana Sahib • Shahpur Chakar
• Amin Pur Bangla • Ferozewatoan • Khanewal • Narang Mandi • Shakargarh
• Arif Wala • Fort Abbas • Khanpur • Narowal • Shakrila
• Athara Hazari • Gaggo Mandi • Khar, Bajaur Agency • Naseerabad • Sharaqpur
• Attock • Gambat • Kharan • Nassarpur • Sheikh Wahan
• Badin • Garha Mor • Kharian • Naukot • Sheikhupura
• Bagh (A.K.) • Gawadar • Khichiwala • Naushero Feroze • Shikarpur
• Bagh-o-Bahar • Ghakhar • Khipro • Nawabshah • Shorkot
• Bahawalnagar • Gharo • Khoi Ratta • Nawan Kot • Shujabad
• Bahawalpur • Ghotki • Khudian Khas • Noonawali • Sialkot
• Balakot • Ghulmat • Khurrianwala • Nooriabad • Sibi
• Bampokha • Gilgit • Khushab • Noushki • Skardu
• Bannu • Gojra • Khuzdar • Nowshera • Sorab
• Bara • Golarchi • Khwazakhela • Nowshera Virkan • Sowari
• Basti Malook • Gujar Khan • Killa Saifullah • Okara • Sujawal
• Batkhela • Gujranwala • Kohat • Ormara • Sukkur
• Battagram • Kot Abdul Malik • Pabbi • Sultan Colony
• Gujrat Painsera
• Bhakkar • Gulyana • Kot Addu • • Sumandari
• Bhalwal • Kot Chutta • Pakpattan • Takhtbhai
• Hafizabad • Panjgur
• Bhan Saeedabad • Haidra • Kot Ghulam Muhammad • Talagang
• Bhaun • Kot Radha Kishan • Panu Aqil
• Hala • Parachinar • Talbani
• Bhawana • Hangu • Kot Samaba • Tanda
• Bhera • Kotla Arab Ali Khan • Pasni
• Harapa • Pasrur • Tandlianwala
• Bhiria Road • Haripur • Kotli Pattoki • Tando Adam
• Burewala • Kotri •
• Haroonabad • Peshawar • Tando Allah yar
• Chakdara • Hasan Abdal • Kumber • Phalia, Mandi Bahauddin • Tando Bagho
• Chaksawari (A.K.) • Hasilpur • Kunjah • Phool Nagar • Tando Jam
• Chakwal • Hattar • Kunri • Pindi Bhattian • Tando Muhammad Khan
• Chaman • Havellian • Ladhaywala • Pindi Bohri • Tangi
• Chamber • Hazro • Lahore • Pindi Gheb • Tank
• Charsadda • Head Bakaini • Lala Musa • Pir Mahal • Taranada Muhammad Pannah
• Chenab Nagar • Head Rajkan • Larkana • Pishin • Tarnol
• Chichawatni • Hingorja • Latifabad • Pull Kharan • Tausna Sharif
• Chillas • Hub • Layyah • Pull Manda (A.K.) • Taxila
• Chiniot • Hyderabad • Liaqatpur • Pull sunny • Thari Mirwah
• Chishtian • Inayat Kalay • Liaquatabad Thal • Qambar Ali Khan • Tharu Shah
• Chitral • Islamabad • Lodhran • Qambar Bypass • Thatta
• Chiwanda • Jacobabad • Loralai • Qasba Gujrat • Thull
• Choa Saiden Shah • Jahanian • Mailsi • Qazi Ahmed • Tibba Sultanpur
• Chowk Bahadurpur • Jalalpur Jattan • Malakwal • Qila Didar Singh • Timergara
• Chowk Sarwar Shaheed • Jalalpur Pirwala • Malka • Quaidabad • Toba Tek Singh
• Chunian • Jampur • Mandi Bahauddin • Quetta • Tootkay
• Dadu • Jandanwala • Mandi Faizabad • Radhan • Turbat
• Dadyal (A.K.) • Jaranwala • Mandra • Rahim Yar Khan • Ubauro
• Daharki • Jatoi • Manga Mandi • Rahwali • Uch Sharif
• Dalbandin • Jehangira • Mangowal • Raiwand • Ugoki
• Danyour • Jehlum • Mansehra • Raja Ram • Umerkot
• Daragai Malakand • Jhang • Mardan • Rajanpur • Usman Shah Huri
• Dari Dholay Wali • Joharabad • Maroot • Rajoya Sadat • Usta Muhammad
• Darya Khan • Kabal • Mastung • Rakhni • Wah Cantt
• Darya Khan Mari • Kabirwala • Mathanichangan Swabi • Rangpur Adda • Warri
• Daska • Kacha Pakka • Matiari • Rawalakot (A.K.) • Wazirabad
• Daulat Nagar • Kahror Pacca • Matli • Rawalpindi • Winder , Lasbela
• Deh 75 Nusrat • Kahuta • Mattani • Renala Khurd • Yazman
• Deh Gad • Kala Shah Kaku • Mehar • Rohaillan Wali • Zafarwal
• Deh Noonari • Kalakot • Mehrabpur • Rohri • Zahir Pir
• Deh taib • Kalam • Mian Channu • Sadda • Zhob
• Dehlra • Kalat • Miani Adda • Sadiqabad
• Depalpur • Kalaya • Mianwali • Sahib Nagar Overseas Branches
• Dera Ghazi Khan • Kallar Syedan • Mingora • Sahiwal • Manama (Bahrain)
• Dera Ismail Khan • Kallur Kot • Mirpur (A.K.) • Sakhakot • Labuan (Malaysia)
• Dera Murad Jamali • Kamalia • Mirpur Mathelo • Sakrand
• Derianwala • Kamar Mushani • Mirpurkhas • Saleh Khana Representative Offices
• Dhamtal • Kamoke • Mithi • Samar Bagh • Bejing, China
• Dhudhial • Kamra • More Eminabad • Sambrial • Dubai, U.A.E.
• Digri • Kandhkot • Moro • Sanghar • Istanbul, Turkey
• Dina • Kandiaro • Mulhal Mughlan • Sangla Hill • Nairobi, Kenya
Principal Office Registered Office

Mackinnons Building, I. I. Chundrigar Road, Karachi. 126-C, Old Bahawalpur Road, Multan.
Phones: (92-21) 32412421, 32446916 & 111-786-110 Phones: (92-61) 4580314-16, & 111-786-110
Fax: (92-21) 32419752 Fax: (92-61) 4582471
SWIFT CODE : BAHLPKKA website : www.bankalhabib.com
254
E - DIVIDEND BANK MANDATE FORM
Mandatory Requirements of Bank Account Details with International Bank Account Number (IBAN)
for Electronic Credit of Cash Dividend Payment as per Companies Act 2017
I, Mr. / Ms. / Mrs. ____________________________ S/o, D/o, W/o, _____________________________________
hereby authorize Bank AL Habib Limited (the Bank) to send / directly credit cash dividends declared by the Bank, in
my bank account as detailed below:
Details of Shareholder of Bank AL Habib Limited
Name of the Shareholder
Father /Husband Name
Folio No. /CDC Account and Participant’s I.D
CNIC No. / NICOP No.
Passport No. (in case of foreign shareholder)
NTN (in case of corporate shareholder)
Cell number of shareholder
Landline number of shareholder (if any)
E-mail address of shareholder
Shareholder’s Bank Account Details:
Title of Bank Account
(the bank account title must be in the name of the
title holder/principal holder of the shares)
International Bank Account Number
(IBAN) –24 digits “ Mandatory” P K
(Kindly provide your accurate IBAN number after consulting with your respective bank branch since in case of any error or omission in given
IBAN, the Bank AL Habib Limited and Central Depository Company of Pakistan Limited (CDC) will not be held responsible, in any manner,
for any loss or delay in your cash dividend payment)
Bank’s name
Branch name
Branch address
It is stated that the above-mentioned information is valid and correct and in case of any change therein, I/we will
immediately intimate the Bank’s Share Registrar accordingly.
Signature of Shareholder
(For individual shareholder, signature must be as per specimen signature registered with Bank AL Habib Limited, please also enclose legible copy of
CNIC/NICOP as applicable. In case of corporate entity, signature of authorized person with company stamp is required)
Please note that:
The shareholders who hold shares in Physical Form are requested to fill the above mentioned E-Dividend Bank Mandate Form and send it to the Bank’s Share
Registrar address; i.e.; CDC Share Registrar Services Limited, CDC House, 99-B, Block B, Main Shahrah-e-Faisal, Karachi-74400, Pakistan.
Tel: 0800-23275
The shareholders who hold shares in Book-Entry Form are requested to fill the above mentioned E-Dividend Bank Mandate Form and send it to the relevant
Broker/Participants/Investor Account Services of the Central Depository Company of Pakistan Limited where the shareholders’ CDC account is being dealt.
Bank AL Habib Limited and CDC shall not be responsible for any loss, damage, liability or claim arising, directly or indirectly, from any error, or failure in
performance of any of its obligations whatsoever, caused due to incorrect payment instructions provided by the shareholder and/or due to any event beyond the
control of the Bank.
In case of non-receipt of IBAN with bank details, as requested above, future cash dividend, if any, could be withheld according to the directives of Securities and
Exchange Commission of Pakistan.
Form of Proxy
The Company Secretary
Bank AL Habib Limited
126-C, Old Bahawalpur Road,
MULTAN.
I/We___________________________________________________of ___________________________
being a member(s) of Bank AL Habib Limited and holding ______________________________________
ordinary shares, as per Register Folio No./CDC Account and Participant's I.D. No.___________________
do hereby appoint ________________________________ Folio No./CDC Account and Participant's I.D.
No. ___________________of ____________________________________________________________
or failing him/her __________________________________ Folio No./CDC Account and Participant's I.D.
No. ___________________of ____________________________________________________________
another member of the Bank as my/our proxy to vote for me/us and on my/our behalf at the Thirty-first Annual General
Meeting of the Bank to be held on Tuesday, March 29, 2022 and at any adjournment thereof.
As witness my/our hand this__________________day of_________________2022.
REVENUE
STAMP
RS. 5
SIGNATURE OF MEMBER (S)

(The signature of the shareholder should agree with the specimen signature registered with the Bank or as
per CNIC / Passport in case the share(s) is / are registered in CDC account).
Witnesses:
1. Signature _____________________ 2. Signature _____________________
Name _____________________ Name _____________________
Address _____________________ Address _____________________
CNIC/Passport No. _____________________ CNIC/Passport No._____________________
A member entitled to attend the Annual General Meeting is entitled to appoint a proxy to attend, speak and
vote instead of him/her. No person shall act as proxy (except for a corporation) unless he/she is entitled to
be present and vote in his/her own right.
CDC account holder or sub-account holder appointing a proxy should furnish attested copies of his / her
own as well as the proxy’s CNIC / Passport with the proxy form. The proxy shall also produce his / her
original CNIC / Passport at the time of the meeting. In case of corporate entity, the Board of Directors
resolution / power of attorney with specimen signature shall be submitted along with proxy form.
The instrument appointing a proxy should be signed by the member or by his/her attorney duly authorised
in writing. If the member is a corporation, its common seal (if any) should be affixed to the instrument.
The proxy forms, together with the power of attorney (if any), under which it is signed or a notarially certified
copy thereof, shall be deposited at the Registered Office of the Bank not less than 48 hours before the time
of the meeting (no account shall be taken of any part of the day that is not a working day).

Annual Report 2021

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Annual Report 2021

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VISION STATEMENT

TO BE OUR CUSTOMERS’ MOST CONVENIENT

TO MAKE BANKING SAFE, SIMPLE, AND PLEASANT

Board of Abbas D. Habib Chairman

Mansoor Ali Khan Chief Executive

Audit Safar Ali Lakhani Chairman

Human Resource Syed Hasan Ali Bukhari Chairman

Credit Risk Syed Mazhar Abbas Chairman

Risk Management Adnan Afridi Chairman

IT Abbas D. Habib Chairman

Statutory EY Ford Rhodes

Legal LMA Ebrahim Hosain

Registered 126-C, Old Bahawalpur Road,

Principal 2nd Floor, Mackinnons Building,

Share CDC Share Registrar Services Limited

Review Report by the Chairman 6

Statement of Compliance with Listed Companies (Code of Corporate Governance)

Independent Auditors’ Review Report on the Statement of Compliance contained in

Statement on Internal Controls 32

Independent Auditors’ Report to the Members 33

Unconsolidated Statement of Financial Position 37

Unconsolidated Profit and Loss Account 38

Unconsolidated Statement of Comprehensive Income 39

Unconsolidated Statement of Changes in Equity 40

Unconsolidated Cash Flow Statement 41

Notes to the Unconsolidated Financial Statements 42

Disclosure on Complaint Handling 128

Report of Shariah Board 129

Notice of Annual General Meeting 130

Pattern of Shareholding 138

Consolidated Financial Statements 141

Branch Network 254

E - Dividend Bank Mandate Form

Total Domestic ATM

Total Cities Total Foreign Branches

(a) Board Composition and Functioning

Basic / Diluted earnings per share – after tax Rs. 16.83

COMPOSITION OF BOARD OF DIRECTORS

Syed Hasan Ali Bukhari

Credit Risk Management Committee Risk Management Committee

IT Committee IFRS 9 Committee

Directors Training Programme

2021 2020 2019 2018 2017 2016

Total customer deposits 1,309,823 1,099,686 903,703 796,901 692,576 584,172

MANSOOR ALI KHAN ABBAS D. HABIB

Karachi: February 09, 2022

Details of Membership on the Bank’s & other Boards

9 Mr. Arshad Nasar 28/03/2016 Independent • Audit Committee

1 Mufti Ismatullah Hamdullah 08/10/2015 Chairman • Member, Shariah

Mufti Mohib ul Haq 08/10/2015 Member • Chairman, Shariah

3 Mufti Muhammad Sarfaraz Nihal Date of Leaving Outgoing Resident –

Ms. Farhana Mowjee

Number of Board Committees Meetings Attended

The key functions in the TORs include the following:

Name of Member Meetings Held Meetings Attended

Mufti Ismatullah Hamdullah, Chairman 4 4

Mufti Mohib ul Haq, Member 4 4

Mufti Muhammad Sarfaraz Nihal, Outgoing Resident Member * 4 2

Mufti Sher Ali, Resident Member ** 4 2

Mufti Muhammad Hamza, Member ** 4 1

Key criteria for evaluation of performance are as follows:

• Compliance with applicable laws and regulations.