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COLLABORATION WITH INNOVATION

Impairment Losses

Throughout the year we continued to


strengthen our credit risk prevention and
control mechanism. Better recoveries and
declassification resulted into a net reduction
in Non-Performing Loans (NPL) which, as of
Dec '16 amounted to PKR 119,416 million,
PKR 7,864 million or 6.2% lower against
PKR 127,280 milion at the end of year
2015.

This improvement resulted into a net


reduction in specific provision for
impairment against bans by PKR 1,110
milion, As of Dec 2016 the non-performing
loans (NPL) were covered by a 92%
provision as against 87% of previous year.
The provisions gap is due to NPL in
categories of classificadon that require less
than 100% provision. The bank folows a
prudent policy of maintaining adequate
provisions reserves to effectively cover &
address any potential impairment risk of
credit portfolio.

Strengthening our portfolio risk management


strategy, we are in the process of revising
Recovery Strategies and loan rehabilitation
framework for infected portfolio. This wit
introduces incentive for both staff as well as
borrower against recoveries and
regularisation of NPL

Net Profit and Earnings per


Share
The Bank's net profit for the year 2016
amounted to PKR 22,752 milion i.e. higher
by 18.4% against PKR 19,219 milion for
2015. "Thts translates into basic and dieted
after-tax earnings per share of Rs. 10.69,
higher by Rs. 1.66 or 18.4% against that of
2015.

Review of Financial
Position 2016-

In 2016, the bank continualy aligned its


business strategies to the changing
macroeconomic environment, improved its
balance sheet structure and maintained
coordinated & optimal growth of earning
assets mix. We equaly strengthened
liquidity and ban pricing management and
strived to enhance the efficiency of
resource (location for both assets and
liabilities. Considering the growing needs of
the real economy, the bank optimized its
credit structure by targeting more efficient
and lucrative industrial sectors. Closely
monitoring the trends of the domestic and
intemational financial markets, the bank
expanded its investment portfolio to optimise
the earning yields. Furthermore, the bank
actively adopted measures to mobilse
greater deposits, and managed to expand
the low-cost haat)/ business, thereby
ensuring a stable and sustainable souroo of
bquidity & funding.

Assets
As of Doc '16, total assets of the bank
amounted to PKR 1.976 bllion, PKR 269
billion or 15.8% higher than that at the end
of yoar 2015. Growth was optimally
achieved in each type of earning asset.
Net bans and advances increased by PKR
89,267 milion or 15.4%. Similarly
investment increased by PKR 67,885 million
or 8.2%.

L o a n s & a d v an c e s

1
Key Balance Sheet kerns (PKR 'Bn)

to I
In 2016, the bank attached importance of incremental credit to existing low-risk borrowers, cross sel of non-credi
financial service echoing the changes in macroeconomic environment and financial regulatory requirements. The bank
continued to bolster financing for the infrastructurel construction protect of economic importance. The locus also
remained on financing more credit to SME and retai sector for economic upbringing of the masses. The loan growth
was steady and balanced. As at the end of 2016, gross loans amounted to PKR 781,476 milion, PKR 89,624 million
or 13% higher than that of corresponding yoar.

Si ANNUAL REPORT 2016

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