Contents

Company Information Directors Review Independent Auditors Report on Review of Unconsolidated Condensed Interim Financial Information to the Members Unconsolidated Condensed Interim Statement of Financial Position Unconsolidated Condensed Interim Profit and Loss Account Unconsolidated Condensed Interim Statement of Comprehensive Income Unconsolidated Condensed Interim Statement of Changes in Equity Unconsolidated Condensed Interim Cash Flow Statement Notes to the Unconsolidated Condensed Interim Financial Information Independent Auditors Report on Review of Consolidated Condensed Interim Financial Information to the Members Consolidated Condensed Interim Statement of Financial Position Consolidated Condensed Interim Profit and Loss Account Consolidated Condensed Interim Statement of Comprehensive Income Consolidated Condensed Interim Statement of Changes in Equity Consolidated Condensed Interim Cash Flow Statement Notes to the Consolidated Condensed Interim Financial Information

02 03 06 07 08 09 10 11 12

23 24 25 26 27 28 29

NIB BANK LIMITED

Company Information
Board of Directors
Teo Cheng San, Roland Tejpal Singh Hora Chia Yew Hock, Wilson Ong Kian Ngee Asif Jooma Najmus Saquib Hameed Muhammad Abdullah Yusuf Badar Kazmi Muhammad Abdullah Yusuf Najmus Saquib Hameed Chia Yew Hock, Wilson Tejpal Singh Hora Asif Jooma Badar Kazmi Teo Cheng San, Roland Asif Jooma Ong Kian Ngee Badar Kazmi Ather Ali Khan Yameen Kerai First Floor, Post Mall F-7 Markaz, Islamabad. PNSC Building M.T. Khan Road Karachi-74000. UAN: +9221 111 333 111 Email: info@nibpk.com URL: www.nibpk.com THK Associates (Pvt.) Limited Ground Floor, State Life Building No. 3 Dr. Ziauddin Ahmed Road Karachi-75530. UAN: +9221 111 000 322 M/s. KPMG Taseer Hadi & Co. Chartered Accountants M/s. Mandviwalla & Zafar Advocates Long Term: Short Term: NIB TFC: Rating Agency: AAA1+ A+ PACRA Chairman Director Director Director Director Director Director Director & President / CEO Chairman Member Member Chairman Member Member Chairman Member Member Member

Board Audit Committee

Board Risk Management Committee Board Human Resource Committee

Company Secretary Chief Financial Officer Registered Office Head Office

Email & URL Share Registrar Office

Auditors Legal Advisor Credit Rating

NIB BANK LIMITED

Directors Review For the half year ended June 30, 2013
ECONOMY & BANKING SECTOR Despite difficult economic conditions, inflation remained within single digits, averaging 6.5% for H1 2013. Following successful elections and peaceful democratic transition in the country, focus on economic growth has revived. The Central Bank recognizing the need to revive growth and lower inflation reduced the discount rate to 9% in June 2013. However, the fiscal deficit and the balance of payments remained the prime concern for policymakers. A record deficit of Rs 2 trn or 8.8% of GDP was registered in fiscal 2013. Shortfall in tax collection and higher than budgeted electricity subsidies led to increased government borrowing, pushing debt servicing costs to over Rs 1 trn in fiscal 2013.The new government is already targeting measures to improve tax collection by raising sales tax, reducing subsidies by revising electricity tariff and driving austerity on the expenditure side. These measures are expected to reduce the fiscal deficit to 6.3% in fiscal 2014. In the first phase of its attempt to aggressively resolve the power crisis, the government has settled inter-corporate circular debt of Rs 503 bn which is fortified to improved domestic liquidity. Overall foreign exchange reserves depleted by USD 3.7 bn relative to December 2012 mainly due to repayments of external loans. As a result, the country is now in the process of entering into another IMF program which is expected to materialize by the end of the year. In the backdrop of aggressive monetary easing, the Banking sector continued to face pressure on net interest margins. Since June 2012, banking spreads have declined by 79 bps on average, due to a 160 bps decline in average lending rates. Private Sector credit off-take has failed to improve despite the reduction in rates, indicating low demand for fresh credit due to poor economic conditions, persistence of the energy crisis and lack of fresh foreign investment in the country. Banks resultantly continued to channel deposit growth (14% growth in H1 2013 compared to same period last year) towards government securities and public sector lending. Further austerity by the SBP in the form of reduced open market operations leading to excess liquidity will put further stress on net interest margins in the event that private sector lending does not pick up. BANKS PERFORMANCE As a consequence of the Banks improvements in operational efficiencies, organizational effectiveness and a sharp focus on prudent lending and low cost deposit mobilisaton, the core franchise is effectively positioned for growth. The yield erosion precipitated by a 3% reduction in interest rates in the last 18 months was addressed by increasing loan volumes in blue chip and public sector corporates, larger commercial enterprises and secured consumer loans. Exit from weaker names and installment based repayments of consumer loans have mostly offset the incremental lending. The increased exposures in selected segments were governed by a tightly controlled risk management framework and clearly defined product programs. On the liability side, the Bank pro-actively reduced reliance on high cost deposits, whilst at the same time offered transactions based solutions to customers across all business segments. Growth has increasingly been driven by improved service quality at each customer touch point aided by innovative technological support. Consequently, low-cost deposits grew both through deepening of existing relationships as well as from new customers, with cost of funds reducing by 1.88% in the 18 months ending June 30, 2013. The treasury function also played a key role by exploiting opportunities in the bond and equity markets whilst remaining within the defined market risk parameters. Through active balance sheet management, the decline in gross interest income was more than offset by lower gross interest expense, driving net interest income higher by 23% between H1 2012 and H1 2013.

NIB BANK LIMITED

Directors Review For the quarter ended March 31, 2013

The Bank's growth and profitability has been driven by diligently focusing on its geographical footprint, its clients and products. With 179 branches in 59 cities across Pakistan, the Bank's reach is ideally positioned to be able to deliver integrated transaction services, acquire new customers through supplier/customer integration and also benefit from the agrarian boom from smaller city and peripheral large city branches. Emphasis on branch as a distribution unit for all products has resulted in a significant increase in branch profitability in the last 18 months. However, the Bank is aware that the relatively low per branch volume provides a significant opportunity for growth without increasing the branch count in the short term. Nevertheless, some branch relocations will be beneficial by relocating to areas with more potential for growth thereby fully leveraging on geographical footprint. Client acquisition and deepening is now exclusively based on risk-adjusted returns as well as potential opportunities for cross-sell not only directly but also indirectly to the client's employees, customers and suppliers. Client acquisition in consumer lending is also based on strict selection criteria. The Bank has significantly increased its product range and with the recent launch of the first ever Master Card chip-based debit card in Pakistan, its product suite is comparable not only to its peers but to larger banks as well. By introducing product champions for trade, foreign exchange, general banking products, bancassurance, cash management, investment advisory etc, there is sharper accountability and pricing focus across all products. In addition to its impact on net interest income, the result of these efforts is also noticeable in non-funded income which grew by 19% between H1 2012 and H1 2013. The Bank is acutely aware that growth needs to be self-funded. Therefore, to distinguish good spend from bad, investments in people, infrastructure and technology are based on well-defined payback criteria. Additionally, a central unit dedicated to optimize expenses through technological innovation, process re-engineering and strict monitoring has been formed. The success of these efforts is evidenced by the fact that the impressive growth in revenue of 21% between H1 2012 and H1 2013 was achieved by keeping administrative expenses almost flat in the same period, thereby significantly reducing the cost to income ratio. In H1 2013 compared to H1 2012 on an unconsolidated basis: Revenue grew by 21% Costs almost flat Operating profit of Rs 383 mn vs operating loss of Rs 131 mn Profit before tax of Rs 1,004 mn vs loss before tax of Rs 154 mn

As the Bank enters the next phase of transformation, the goal of delivering consistent and high quality earnings will be achieved through flawless execution. The transformation in itself has created a belief, and, a positive energy that will no doubt enable the Bank to achieve more challenging milestones in the future. NIB is grateful to its customers for their continued support. The Bank would also like to acknowledge the unstinted support from its shareholders. We also appreciate the guidance and continued support from our regulators State Bank of Pakistan and SECP. NIB would especially like to recognize and applaud the efforts of its employees for their hard work in the significantly improved performance and more importantly for living its values of responsive, one bank, integrity and excellence. On behalf of the Board

Teo Cheng San, Roland Chairman

Badar Kazmi Director / President & CEO

NIB BANK LIMITED

Unconsolidated Condensed Interim Financial Statements

Independent Auditors Report on Review of Unconsolidated Condensed Interim Financial Information to the Members
Introduction We have reviewed the accompanying unconsolidated condensed interim Statement of financial position of NIB Bank Limited (the Bank) as at June 30, 2013 and the related unconsolidated condensed interim profit and loss account, unconsolidated condensed interim statement of comprehensive income, unconsolidated condensed interim cash flow statement, unconsolidated condensed interim statement of changes in equity and notes to the condensed interim financial information for the six-months period then ended (herein after referred to as the "unconsolidated condensed interim financial information"). Management is responsible for the preparation and presentation of the unconsolidated condensed interim financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on this unconsolidated condensed interim financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review of unconsolidated condensed interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying unconsolidated condensed interim financial information is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Other Matter The figures of the unconsolidated condensed interim profit and loss account and the unconsolidated condensed interim statement of comprehensive income for the quarters ended June 30, 2013 have not been reviewed, and we do not express a conclusion on them.

Date: 21 August 2013 Karachi

KPMG Taseer Hadi & Co. Chartered Accountants Amir Jamil Abbasi

NIB BANK LIMITED

NIB Bank Limited Unconsolidated Condensed Interim Statement of Financial Position As at June 30, 2013
Unaudited June 30, 2013 Audited December 31, 2012 Restated

Note

(Rupees '000')
ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Intangible assets Deferred tax assets - net Other assets 9,318,533 795,413 2,203,027 55,857,846 72,678,667 2,726,460 1,555,410 10,803,271 5,964,862 161,903,489 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities Other liabilities NET ASSETS REPRESENTED BY: Share capital Reserves Discount on issue of shares Accumulated loss Shareholders' equity Surplus on revaluation of assets - net 14 103,028,512 393,280 (45,769,623) (43,174,868) 14,477,301 498,303 14,975,604 CONTINGENCIES AND COMMITMENTS 15 103,028,512 225,889 (45,769,623) (43,847,814) 13,636,964 391,658 14,028,622 8,147,946 42,868,521 89,461,977 3,992,000 2,457,441 146,927,885 14,975,604 2,430,030 76,179,065 91,291,234 3,992,800 2,687,610 176,580,739 14,028,622 7,672,866 960,850 3,440,910 85,386,110 71,564,237 2,708,498 1,720,424 10,881,284 6,274,182 190,609,361

7 8 9 10 11

12 13

The annexed notes from 1 to 18 form an integral part of these unconsolidated condensed interim financial information.

Badar Kazmi President / Chief Executive

Teo Cheng San, Roland Chairman / Director

Ong Kian Ngee Director

Asif Jooma Director

NIB BANK LIMITED

NIB Bank Limited Unconsolidated Condensed Interim Profit and Loss Account (Unaudited) For the half year and quarter ended June 30, 2013
Half year ended June 30, June 30, 2013 2012 Quarter ended June 30, June 30, 2013 2012

(Rupees '000')

Mark-up / Return / Interest earned Mark-up / Return / Interest expensed Net Mark-up / Interest Income (Reversal) / Provision against non-performing loans and advances (Reversal) / Provision for diminution in the value of investments Bad debts written off directly Net Mark-up / Interest income after provisions NON MARK-UP / INTEREST INCOME Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities Unrealized gain on revaluation of investments classified as held-for-trading Other income Total Non Mark-up / Interest income NON MARK-UP / INTEREST EXPENSES Administrative expenses Other provisions / write offs Other charges Total Non Mark-up / Interest expenses Extraordinary / Unusual items PROFIT / (LOSS) BEFORE TAXATION Taxation - Current - Prior years - Deferred PROFIT / (LOSS) AFTER TAXATION Basic / diluted earnings / (loss) per share (Rupees)

6,837,690 5,179,000 1,658,690 (494,084) (165,953) 2,654 (657,383) 2,316,073

6,987,619 5,637,738 1,349,881 169,530 (153,724) 2,707 18,513 1,331,368

3,408,954 2,640,447 768,507 (124,985) (113,255) 43 (238,197) 1,006,704

3,615,240 2,848,125 767,115 11,486 6,711 808 19,005 748,110

594,912 165,841 188,305 306,895 49,032 1,304,985 3,621,058

404,580 210,583 176,794 243,556 57,416 1,092,929 2,424,297

299,448 150,001 114,407 168,423 42,084 774,363 1,781,067

214,845 2,906 54,776 172,099 54,939 499,565 1,247,675

2,529,512 36,301 50,857 2,616,670 1,004,388 1,004,388 81,431 86,000 167,431 836,957 0.08

2,566,490 4,603 7,280 2,578,373 (154,076) (154,076) 40,403 40,403 (194,479) (0.02)

1,241,217 36,301 48,354 1,325,872 455,195 455,195 61,634 71,000 132,634 322,561 0.03

1,297,565 4,603 1,115 1,303,283 (55,608) (55,608) (6,254) (6,254) (49,354) (0.00)

The annexed notes from 1 to 18 form an integral part of these unconsolidated condensed interim financial information.

Badar Kazmi President / Chief Executive

Teo Cheng San, Roland Chairman / Director

Ong Kian Ngee Director

Asif Jooma Director

NIB BANK LIMITED

NIB Bank Limited Unconsolidated Condensed Interim Statement of Comprehensive Income (Unaudited) For the half year and quarter ended June 30, 2013
Half year ended June 30, June 30, 2013 2012 Quarter ended June 30, June 30, 2013 2012

(Rupees '000') Profit / (Loss) after taxation for the period Other comprehensive income Effect of change in accounting policy with respect to accounting for actuarial gains and losses Total comprehensive income for the period 836,957 (194,479) 322,561 (49,354)

3,380 840,337

4,324 (190,155)

3,380 325,941

2,162 (47,192)

Surplus / deficit on revaluation of ''Available-for-Sale'' securities is presented under a separate head below equity as ''surplus / deficit on revaluation of assets'' in accordance with the requirements specified by the Companies Ordinance, 1984, and the State Bank of Pakistan vide its BSD Circular 20 dated August 4, 2000 and BSD Circular 10 dated July 13, 2004.

The annexed notes from 1 to 18 form an integral part of these unconsolidated condensed interim financial information.

Badar Kazmi President / Chief Executive

Teo Cheng San, Roland Chairman / Director

Ong Kian Ngee Director

Asif Jooma Director

NIB BANK LIMITED

NIB Bank Limited Unconsolidated Condensed Interim Statement of Changes in Equity (Unaudited) For the half year ended June 30, 2013
Capital Reserves Share capital Discount on issue of shares Statutory reserve Revenue Reserves General reserve Accumulated loss Total

(Rupees '000')
Balance as at December 31, 2011 as previously reported Effect of retrospective change in accounting policy with respect to accounting for actuarial gains and losses Balance as at December 31, 2011 restated Total comprehensive income / (loss) for the period Effect of retrospective change in accounting policy with respect to accounting for actuarial gains and losses Loss after taxation for the period Balance as at June 30, 2012 restated Total comprehensive income / (loss) for the period Effect of retrospective change in accounting policy with respect to accounting for actuarial gains and losses Profit after taxation for the period Transfer to statutory reserve Balance as at December 31, 2012 restated Total comprehensive income / (loss) for the period Effect of change in accounting policy with respect to accounting for actuarial gains and losses Profit after taxation for the period Transfer to statutory reserve Balance as at June 30, 2013 103,028,512 (45,769,623) 212,804 5,472 (43,893,095) 13,584,070

103,028,512

(45,769,623)

212,804

5,472

6,181 (43,886,914)

6,181 13,590,251

103,028,512

(45,769,623)

212,804

5,472

4,324 (194,479) (44,077,069)

4,324 (194,479) 13,400,096

103,028,512

(45,769,623)

7,613 220,417

5,472

4,323 232,545 (7,613) (43,847,814)

4,323 232,545 13,636,964

103,028,512

(45,769,623)

167,391 387,808

5,472

3,380 836,957 (167,391) (43,174,868)

3,380 836,957 14,477,301

The annexed notes from 1 to 18 form an integral part of these unconsolidated condensed interim financial information.

Badar Kazmi President / Chief Executive

Teo Cheng San, Roland Chairman / Director

Ong Kian Ngee Director

Asif Jooma Director

10

NIB BANK LIMITED

NIB Bank Limited Unconsolidated Condensed Interim Cash Flow Statement (Unaudited) For the half year ended June 30, 2013
June 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES Profit / (loss) before taxation Dividend income Adjustments for non-cash items Depreciation Amortization (Reversal) / Provision against non-performing loans and advances Bad debts written off directly Fixed assets written off Gain on sale of operating fixed assets Gain on sale of securities Reversal for diminution in the value of investments Other provisions / write offs 1,004,388 (165,841) 838,547 138,467 165,014 (494,084) 2,654 (29,114) (306,895) (165,953) 36,301 (653,610) 184,937 1,237,883 (623,000) (660,441) 5,717,916 (33,310,544) (1,829,257) (301,881) (29,584,387) (146,289) (29,730,676) 29,266,806 1,831,281 165,841 (50,260) (61,970) 60,091 31,211,789 (800) (83) (883) 1,480,230 8,633,716 10,113,946 (154,076) (210,583) (364,659) 115,730 183,812 169,530 2,707 45,970 (5,465) (243,556) (153,724) 4,603 119,607 (245,052) 11,823,534 (3,465,577) (1,679,518) 546,807 (16,487,286) 4,673,289 8,190 (4,825,613) (148,299) (4,973,912) 4,403,275 48,248 210,580 (96,428) (33,399) (2,850) 14,295 4,543,721 (800) (230) (1,030) (431,221) 9,455,874 9,024,653

June 30, 2012

(Rupees '000')

(Increase) / decrease in operating assets Lendings to financial institutions Advances Other assets (excluding advance taxation) Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities (excluding current taxation) Income tax paid Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Net Investments in available-for-sale securities Net Investments in held-to-maturity securities Dividend received Payments for capital work in progress Acquisition of property and equipment Acquisition of intangible assets Sale proceeds of property and equipment disposed of Net cash from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Redemption of sub-ordinated loans Dividend paid Net cash used in financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period

The annexed notes from 1 to 18 form an integral part of these unconsolidated condensed interim financial information.
Badar Kazmi President / Chief Executive Teo Cheng San, Roland Chairman / Director Ong Kian Ngee Director Asif Jooma Director

NIB BANK LIMITED

11

NIB Bank Limited Notes to the Unconsolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
1. STATUS AND NATURE OF BUSINESS NIB Bank Limited the Bank is incorporated in Pakistan and its registered office is situated at first floor, Post Mall, F-7 Markaz, Islamabad. The Bank is listed on all the stock exchanges in Pakistan and has 179 branches (December 31, 2012: 179 branches). The Bank is a scheduled commercial bank and is principally engaged in the business of banking as defined in the Banking Companies Ordinance, 1962. NIB Bank Limited is a subsidiary of Bugis Investments (Mauritius) Pte. Limited which is a wholly owned subsidiary of Fullerton Financial Holdings Pte. Limited which in turn is a wholly owned subsidiary of Temasek Holdings, an investment arm of the Government of Singapore. 2. 2.1 STATEMENT OF COMPLIANCE These unconsolidated condensed interim financial statements of the Bank for the six months period ended June 30, 2013 have been prepared in accordance with the requirements of International Accounting Standard (IAS) 34 - Interim Financial Reporting, the provisions of and directives issued under the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and directives issued by the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP). In case requirements differ, the provisions of and directives issued under the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the said directives have been followed. The SBP has deferred the applicability of IAS 39 - Financial Instruments: Recognition and Measurement, and IAS 40 - Investment Property, for Banking Companies through BSD Circular letter no. 10, dated August 26, 2002. Further, according to the notification of SECP dated April 28, 2008, the IFRS 7 - Financial Instruments: Disclosures, has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these condensed interim financial information. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP. The disclosures made in these unconsolidated condensed interim financial information have been limited based on the format prescribed by the SBP vide BSD circular letter no. 2 of May 12, 2004 and IAS 34 - Interim Financial Reporting, and do not include all the information required in annual financial statements. Accordingly, these unconsolidated condensed interim financial information should be read in conjunction with the unconsolidated financial statements of the Bank for the year ended December 31, 2012. These unconsolidated condensed interim financial statements represent separate financial statements of the Bank. The consolidated condensed interim financial statements of the Bank, its subsidiaries and associates are presented separately. BASIS OF MEASUREMENT These unconsolidated condensed interim financial information have been prepared under the historical cost convention, except for the measurement of certain investments and commitments in respect of forward foreign exchange contracts that are stated at revalued amounts / fair values, staff retirement benefits (Gratuity) which are stated at present value and certain financial assets that are stated net of provisions. These unconsolidated condensed interim financial statements have been presented in Pakistan Rupees, which is the Bank's functional and presentation currency. The amounts are rounded off to the nearest thousand rupees. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies and method of computation adopted in the preparation of these unconsolidated condensed interim financial information are the same as those applied in the

2.2

2.3

2.4

3. 3.1

3.2

4.

12

NIB BANK LIMITED

Notes to the Unconsolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
preparation of the annual unconsolidated financial statements of the Bank for the year ended December 31, 2012 except as mentioned below: 4.1 Change in accounting policy - Employee Benefits (Defined Benefit Plan) During the current period (with effect from January 1, 2013), the Bank adopted revised IAS 19 - Employee Benefits, standard and changed its basis for recognition of actuarial gains and losses. The revised IAS 19 require actuarial gains and losses to be recognised immediately in other comprehensive income. Previously, actuarial gains and losses were amortised using the 10% corridor approach as allowed under the relevant provision of IAS 19. Revised accounting policy of employee benefits - defined benefit plan is as follows: 4.2 Staff retirements benefits Defined benefit plans The Bank operates an unfunded gratuity scheme covering all eligible employees who have attained the minimum qualifying period of five years. Eligible employees are those employees who have joined the service of the Bank on or before March 31, 2006. Provision is made in accordance with actuarial recommendations. Actuarial valuation is carried out periodically using the Projected Unit Credit Method. Actuarial gains and losses are recognised immediately in other comprehensive income. 4.3 Effect of change in accounting policy This change in accounting policy has been accounted for retrospectively in accordance with International Accounting Standard - 8 Accounting policies, Changes in Accounting Estimates and Errors, these have resulted in adjustment of prior year financial statements. Effects of retrospective application of change in accounting policy are as follows: Un-recognised actuarial gains and losses of prior periods have been recognised in the statement of financial position through other comprehensive income. The cumulative balance for un-recognised actuarial losses that existed as at January 1, 2012 as well as the actual amounts recognised for the year 2012 have been presented and disclosed as part of the statement of changes in equity, while the corresponding period adjustment through other comprehensive income is presented and disclosed as part of the Statement of Comprehensive Income. The Statement of Financial Position also presents the prior year numbers as restated, due to the said change.
As at December 31, 2012 As previously reported Effect of change (Rupees '000') As Restated

Effect on statement of financial position Decrease in payable to gratuity fund Decrease in accumulated loss 78,416 43,862,642 (14,828) (14,828) 63,588 43,847,814

Six months Six months Six months Prior to period ended period ended period ended January 01, on June 30, on December 31, on June 30, 2012 2013 2012 2012 (Rupees '000')

Effect on other comprehensive Income Actuarial gains / (losses) reclassified to other comprehensive income 3,380 4,323 4,324 6,181

NIB BANK LIMITED

13

Notes to the Unconsolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
The new standards, amendments and interpretations that are effective for accounting periods beginning on or after January 1, 2013 and are not considered effective or do not have any significant effect on the Banks operations, are not detailed in these unconsolidated condensed interim financial information. 5. ACCOUNTING ESTIMATES The basis for the accounting estimates adopted in the preparation of these unconsolidated condensed interim financial statements are the same as those applied in the preparation of the annual unconsolidated financial statements of the Bank for the year ended December 31, 2012. 6. FINANCIAL RISK MANAGEMENT The financial risk management objectives and policies adopted by the Bank are consistent with those disclosed in the annual unconsolidated financial statements of the Bank for the year ended December 31, 2012.
Unaudited June 30, 2013 Held by Given as Bank collateral Audited December 31, 2012 Held by Given as Total Bank collateral

Total

(Rupees '000')

7.

INVESTMENTS
Investments by types:
Available-for-sale securities Market Treasury Bills Pakistan Investment Bonds GOP Ijara Sukuk Bonds Defense Savings Certificates Sukuk Bonds Cumulative preference shares Ordinary shares / certificates in listed companies / modarabas Ordinary shares of unlisted companies Term Finance Certificates Held-to-maturity securities Pakistan Investment Bonds Term Finance Certificates 2,850,379 11,028 2,861,407 Associates Subsidiaries Investments at cost Provision for diminution in the value of investments Investments - net of provisions Surplus on revaluation of available-for-sale securities Net Investments 1,573,832 4,584,741 34,807,500 20,709,299 2,850,379 11,028 2,861,407 1,573,832 4,584,741 55,516,799 4,649,177 43,511 4,692,688 1,573,832 4,584,741 25,452,164 59,978,699 4,649,177 43,511 4,692,688 1,573,832 4,584,741 85,430,863 11,714,838 5,798,000 4,030,138 1,486,865 80,178 61,032 65,920 2,550,549 25,787,520 6,898,372 13,768,723 2,730 39,474 20,709,299 18,613,210 19,566,723 4,030,138 2,730 1,486,865 80,178 61,032 65,920 2,590,023 46,496,819 1,896,778 367,876 9,559,180 502,117 80,178 167,232 65,872 1,961,670 14,600,903 47,428,597 12,547,372 2,730 59,978,699 49,325,375 12,915,248 9,559,180 2,730 502,117 80,178 167,232 65,872 1,961,670 74,579,602

(410,633) 34,396,867

20,709,299

(410,633) 55,106,166

(611,775) 24,840,389

59,978,699

(611,775) 84,819,088

268,529 34,665,396

483,151 21,192,450

751,680 55,857,846

150,708 24,991,097

416,314 60,395,013

567,022 85,386,110

7.1

The SBP, vide Letter No. BPRD/BRD-(Policy)/2013-1857 dated February 15, 2013 has permitted banks to maintain provision against Term Finance Certificates issued by Azgard Nine Limited, classified in Loss category, at 50% of the exposure. Had this relaxation not been received the provision against TFCs of Azgard Nine Ltd would have been higher by Rs. 8.135 million.
NIB BANK LIMITED

14

Notes to the Unconsolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
Unaudited Audited June 30, December 31, 2013 2012 (Rupees '000') 8. ADVANCES Loans, cash credits, running finance etc. - in Pakistan Net investment in finance lease - in Pakistan Bills discounted and purchased (excluding Treasury Bills) Payable in Pakistan Payable outside Pakistan Advances - Gross Provision against non performing advances - Specific - General 90,314,935 1,775,368 64,137 3,336,649 95,491,089 (22,729,807) (82,615) (22,812,422) Advances - Net of provisions 8.1 72,678,667 88,990,934 1,897,676 189,544 3,779,947 94,858,101 (23,214,941) (78,923) (23,293,864) 71,564,237

Advances include Rs. 31,813.450 million (December 31, 2012: Rs. 32,921.495 million), which have been placed under non-performing status as detailed below: Domestic Overseas Total (Rupees '000')
Category of Classification Substandard Doubtful Loss 2,788,104 1,338,515 27,686,831 31,813,450 2,788,104 1,338,515 27,686,831 31,813,450 630,841 317,354 21,781,612 22,729,807 630,841 317,354 21,781,612 22,729,807

Provision required

Provision held

8.2 8.3

Included in the provision required is an amount of Rs. 303.889 million (2012: Rs. 410.960 million) which represents provision in excess of the requirements of the State Bank of Pakistan. The SBP, vide Letter No. BPRD/BRD-04/Faysal/2013/1695 dated February 13, 2013 provided relaxation for provision against Gulistan Group to the extent of 75% of the required provision by June 30, 2013. Had this relaxation not been received the provision for non performing loans to Gulistan group would have been higher by Rs. 72.322 million. In accordance with BSD Circular No. 1 dated October 21, 2011 issued by the State Bank of Pakistan, the Bank has availed the benefit of Forced Sale Value (FSV) against the non-performing advances. During the half year ended June 30, 2013, total FSV benefit erosion resulted in decrease in profit before tax of Rs. 491.791 million. Had the benefit under the said circular not been taken by the Bank, the specific provision against non-performing advances would have been higher by Rs. 5,427.380 million (December 31, 2012: Rs. 5,919.171 million). The FSV benefit recognised will not be available for distribution of cash and stock dividend to shareholders.

8.4

NIB BANK LIMITED

15

Notes to the Unconsolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
Unaudited Unaudited June 30, June 30, 2013 2012 (Rupees '000')

9. 9.1

OPERATING FIXED ASSETS Additions to fixed assets The following additions have been made to fixed assets during the period ended June 30, 2013: Furniture and fixtures Electrical, office and computer equipment Vehicles Leasehold improvements Capital work in progress 3,230 90,923 5,748 22,720 50,503 677 31,594 10,035 97,112

9.2

Disposal of fixed assets - cost The following disposals have been made from fixed assets during the period ended June 30, 2013: Freehold land Leasehold land Furniture and fixtures Electrical, office and computer equipment Vehicles Leasehold improvements 18,920 13,157 4,928 15,266 457 156 15,144 33,601 2,999 150

10.

DEFERRED TAX ASSETS The deferred tax asset recognised in the books has been restricted to Rs. 10,803 million due to uncertainty of availability of future tax profits for utilization of the unrecognised deferred tax assets. The deductible differences available to the Bank are Rs. 11,485 million. Had the deferred tax asset been recognized on all deductible timing differences, the profit after tax for the half year ended on June 30, 2013 would have been higher by Rs. 682 million. The management has recorded deferred tax asset based on financial projections indicating absorption of deferred tax asset over a number of future years through reversals as a result of recoveries from borrowers and absorption of remaining deferred tax asset against future taxable profits. The financial projections involve certain key assumptions such as deposits composition, interest rates, growth of deposits and advances, investment returns and potential provision / reversals against assets. Any significant change in the key assumptions may have an effect on the absorption of the deferred tax asset. Unaudited Audited June 30, December 31, 2013 2012 (Rupees '000')

11.

OTHER ASSETS

5,964,862

6,274,182

11.1 Other assets include settlement of certain accounts through acquiring properties from the borrowers amounting to Rs. 1,474.592 million (December 31, 2012: Rs. 1,245.592 million). The settlement agreements signed with borrowers in certain cases entails a buy back option. 12. DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Savings deposits Current accounts - Non remunerative Margin accounts Financial Institutions Remunerative deposits Non-remunerative deposits 20,671,140 36,430,764 29,670,152 464,968 1,939,795 285,158 89,461,977 24,859,849 33,574,896 27,784,055 749,733 4,068,911 253,790 91,291,234

16

NIB BANK LIMITED

Notes to the Unconsolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
Unaudited Audited June 30, December 31, 2013 2012 (Rupees '000') 3,992,000 3,992,800

13.

SUB-ORDINATED LOANS Term Finance Certificates - Quoted, Unsecured Mark-up Subordination Issue Date Issue Amount Rating Tenor Redemption

Floating (no floor, no cap) rate of return at Base Rate +1.15% (The Base Rate is defined as the average Ask Side rate of the six month Karachi Interbank Offered Rate (KIBOR)) The TFCs are subordinated to all other indebtedness of the Bank including deposits March 5, 2008 Rs. 4,000 million A+ (A plus) 8 years from the Issue Date Ten equal semi-annual installments of 0.02% of the Issue Amount for the first sixty months followed by six equal semi-annual installments of 16.63% of the Issue Amount from the sixty-sixth month onwards March 5, 2016 The Bank can also exercise the Call Option or the Partial Call Option after obtaining written approval from the State Bank of Pakistan at any time after a period of sixty months from the Issue Date

Maturity Call Option

13.1 The Bank has decided to redeem Term Finance Certificates and exercise call option after completion of five years from the issue date. 14. SHARE CAPITAL Unaudited June 30, 2013 Audited December 31, 2012 Unaudited June 30, 2013 Audited December 31, 2012

14.1 Authorized

(Number of shares) 12,000,000,000 12,000,000,000

(Rupees '000') Ordinary shares of Rs. 10 each 120,000,000 120,000,000

14.2 Issued, subscribed and paid up Fully paid up ordinary shares of Rs. 10 each 3,278,902,659 3,278,902,659 Fully paid in cash Issued for consideration other than cash (under schemes of amalgamation) Issuance of shares on discount 32,789,027 32,789,027

764,824,417 6,259,124,088 10,302,851,164

764,824,417 6,259,124,088 10,302,851,164

7,648,244 62,591,241 103,028,512

7,648,244 62,591,241 103,028,512

14.3 The holding Company Bugis Investments (Mauritius) Pte. Limited holds 9,132,728,598 (December 31, 2012: 9,132,728,598) ordinary shares.

NIB BANK LIMITED

17

Notes to the Unconsolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
Unaudited June 30, 2013 15. CONTINGENCIES AND COMMITMENTS Contingent liability in respect of guarantees given favouring: Government Financial Institutions Others 15.2 Transaction-related contingent liabilities / commitments Guarantees given in favour of: Government Financial Institutions Others 15.3 Trade-related contingent liabilities Letters of credit Acceptances 15.4 Other contingencies Claims against the Bank not acknowledged as debts 15.5 Commitments in respect of forward lending Commitments to extend credit 6,908,000 1,292,340 The Bank makes commitments to extend credit in the normal course of its business but none of these commitments are irrevocable and do not attract any significant penalty or expense if the facility is ultimately withdrawn except commitments mentioned above. 15.6 Commitments in respect of forward exchange contracts Purchase Sale 15.7 Commitments for the acquisition of operating fixed assets 15.8 Commitments with respect to Government Securities Purchase Sale 15.9 Tax Contingencies
The income tax returns of NIB Bank Limited have been filed up to and including tax year 2012 relevant to the financial year ended December 31, 2011. The tax authorities have made certain disallowances including additions on account of proration of expenses against dividends and capital gains, disallowances of interest and administrative expenses and renovation expenses incurred on rented premises (allowed historically) pertaining to tax years 2003-2008 for Ex-Pakistan Industrial Credit and Investment Corporation Limited (Ex-PICIC), pertaining to tax years 2004-2008 for Ex-PICIC Commercial Bank Limited (Ex-PCBL), pertaining to tax years 2003-2004 for Ex-National Development Leasing Corporation Limited (Ex-NDLC) and pertaining to tax years 2004-2008 for NIB Bank Limited. These disallowances may result in additional tax aggregating to Rs. 1,370 million (2012: 1,370 million), which the management of the Bank in discussion with their tax consultants believes to be unjustified and not in accordance with the true interpretation of the law. Appeals filed against orders are pending at various appellate forums. Management is confident that the eventual outcome of the cases will be in favour of the Bank.

Audited December 31, 2012

(Rupees '000')

15.1 Direct credit substitutes 2,200 2,200

16,906,679 890,955 17,797,634 16,673,213 2,764,403 19,437,616 266,133

13,226,815 796,509 14,023,324 20,248,003 3,055,764 23,303,767 266,133

23,810,858 23,881,239 47,692,097 101,197 50,000

17,670,541 18,716,569 36,387,110 65,530 513,980 1,900,540

18

NIB BANK LIMITED

Notes to the Unconsolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
16. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES The Bank is organised into reportable segments as disclosed in note 6.20.1 of the annual unconsolidated financial statements. These segments are managed by respective segment heads and the results of these segments are regularly reviewed by the Bank's President / Chief Executive. Segment performance is reviewed on the basis of various factors including profit before taxation. The segment analysis with respect to business activity is as follows:
Corporate and Small & Medium Investment Enterprises and Banking Commercial Retail Treasury Head Office / *Adjustments Other

(Rupees '000')

For the half year ended June 30, 2013 (Unaudited)

Net Interest Income Non Funded Income Net Interest and non mark-up Income Total expenses including provisions (excluding Impairment) Impairment against Investment Total expenses including provisions Segment Net income/ (loss) before tax Segment Return on net assets (ROA) (%) Segment Cost of funds (%) 121,712 347,793 469,505 (772,641) 34,287 (738,354) 1,207,859 3.59% 8.09% (244,530) 132,165 (112,365) 923,436 923,436 (1,035,801) (11.76%) 4.33% 1,503,585 279,785 1,783,370 1,822,454 1,822,454 (39,084) (0.34%) 4.51% 194,336 357,073 551,409 142,566 2,210 144,776 406,633 1.80% 9.44% 83,587 188,169 271,756 9,425 (202,450) (193,025) 464,781 N/A N/A

For the half year ended June 30, 2012 (Unaudited)

Net Interest Income Non Funded Income Net Interest and non mark-up Income Total expenses including provisions (excluding Impairment) Impairment against Investment Total expenses including provisions Segment Net income/ (loss) before tax Segment Return on net assets (ROA) (%) Segment Cost of funds (%) (212,032) 220,610 8,578 (139,772) (30,854) (170,626) 179,204 0.40% 10.45% (278,429) 66,888 (211,541) 708,377 708,377 (919,918) (8.73%) 6.49% 1,740,159 186,060 1,926,219 2,082,134 2,082,134 (155,915) (0.24%) 5.65% 38,592 415,340 453,932 100,607 7,491 108,098 345,834 1.23% 11.93% 61,591 204,031 265,622 (736) (130,361) (131,097) 396,719 N/A N/A

As at June 30, 2013 (Unaudited)

Segment Assets (Gross of advances provisions) Segment Non Performing Loans Segment Provision against advances (including general provisions) Segment Assets (Net) Segment Liabilities 79,329,336 16,147,605 13,034,845 66,294,491 64,262,551 25,793,036 12,506,170 8,135,767 17,657,269 17,050,015 83,324,824 2,907,269 1,421,298 81,903,526 80,223,381 42,069,621 42,069,621 41,370,267 10,615,183 252,406 220,512 10,394,671 437,760 (56,416,089) (56,416,089) (56,416,089)

As at December 31, 2012 (Audited)

Segment Assets (Gross of advances provisions) Segment Non Performing Loans Segment Provision against advances (including general provisions) Segment Assets (Net) Segment Liabilities 74,436,950 16,898,687 13,819,614 60,617,336 58,188,964 28,055,858 12,565,891 7,839,657 20,216,201 19,568,333 83,903,677 3,193,076 1,421,070 82,482,607 80,760,809 75,683,089 75,683,089 74,638,327 8,616,481 263,841 213,523 8,402,958 217,136 (56,792,830) (56,792,830) (56,792,830)

* The respective segment assets and liabilities incorporate intersegment lending and borrowing, with an appropriate market based transfer pricing. The adjustments column eliminates intersegment lending and borrowing.

NIB BANK LIMITED

19

Notes to the Unconsolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013

20
Holding company Unaudited Audited June 30, December 31, 2013 2012 32,823 118 233 (11,146) 22,028 4,584,741 4,584,741 1,573,832 1,573,832 4,584,741 4,584,741 1,573,832 1,573,832 32,823 16,783 196,787 454,031 611,316 29,594 42,653 904 926 (11,660) 196,787 2,741,983 (2,921,987) 16,038 611,316 4,854,627 11,154,289 (4,673,878) (11,311,574) 298,751 22,039,707 (21,727,142) 33,433 139,351 (138) (143,052) 139,680 133,913 42,013 321,388 1,893 (331,861) 33,433 133,913 56,610 (50,843) 119,254 85,308 (70,649) 21,951 970 (1,441) 21,480 54,126 485,413 (54) (473,217) 66,268 Subsidiaries Unaudited Audited June 30, December 31, 2013 2012 Associates Unaudited Audited June 30, December 31, 2013 2012 (Rupees '000') Key management personnel Unaudited Audited June 30, December 31, 2013 2012 Other related parties Unaudited Audited June 30, December 31, 2013 2012 24,997 1,069 (4,115) 21,951 94,200 1,197,079 7,910 (1,245,063) 54,126 149,705 (149,705) 1,078,909 171 171 137 23,480 3,134 3,134 5,958

17.

RELATED PARTY TRANSACTIONS

The Bank has related party transactions with its holding company, subsidiaries, associated undertakings, employee benefit plans and its key management personnel. Transactions with related parties are executed on the same terms as those prevailing at the time for comparable transactions with unrelated parties. The detail of transactions with related parties is given below:

NIB BANK LIMITED

17.1 Balances outstanding as at period / year end

Advances At the beginning of the period / year Given / addition during the period / year Repaid during the period / year

At the end of the period / year

Deposits At the beginning of the period / year Deposits during the period / year Exchange difference Withdrawal during the period / year

At the end of the period / year

Investment in shares / mutual funds-cost

At the beginning of the period / year Investments made during the period / year Investments sold during the period / year

At the end of the period / year

Investment in Term Finance Certificates-cost

At the end of the period / year

Receivables

At the end of the period / year

Payables

At the end of the period / year

17.2 Income / Expense for the period Holding company

Unaudited

Subsidiaries
Period ended June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012 Period ended Period ended Period ended

Associates

Key management personnel

Other related parties

Period ended June 30, 2013 June 30, 2012

(Rupees '000')
2,013 285 1,042 204,351 4,000 112,185 150,000 165,000 4,279 2,219 48,776 450 3,612 3,140 36,151 31,145 355 524 1,202 2,411 2,434 1,350 1,830 77,643 6,355 2,885 429 2,539 279 43,992

Mark-up / Return / Interest earned on advances

Mark-up / Return / Interest earned on Term Finance Certificates

Mark-up / Return / Interest expensed on deposits

Dividend income from shares / mutual funds

Brokerage expense

Directors remuneration

Notes to the Unconsolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013

Directors travelling expense

Remuneration to key management personnel*

Contribution to provident fund

Rent expense

Fees and subscription

Commission income

* As a component of the Presidents compensation, the Parent of the Bank is considering grant of shares of NIB Bank Limited which would be subject to certain performance criteria. Currently the extent and timing of this component of the Presidents compensation are being finalized and will be accounted for under relevant accounting standards once finalized.

18.

DATE OF AUTHORIZATION FOR ISSUE

NIB BANK LIMITED

These unconsolidated condensed interim financial statements were authorized for issue by the Board of Directors of the Bank on August 21, 2013.
Teo Cheng San, Roland Chairman / Director Ong Kian Ngee Director Asif Jooma Director

21

Badar Kazmi President / Chief Executive

Consolidated Condensed Interim Financial Statements

Independent Auditors Report on Review of Consolidated Condensed Interim Financial Information to the Members
Introduction We have reviewed the accompanying consolidated condensed interim statement of financial position of NIB Bank Limited (the Bank) as at 30 June 2013 and the related consolidated condensed interim profit and loss account, consolidated condensed interim statement of comprehensive income, consolidated condensed interim cash flow statement, consolidated condensed interim statement of changes in equity and notes to the condensed interim financial information for the six months period then ended (here-in-after referred to as the consolidated condensed interim financial information). Management is responsible for the preparation and presentation of the consolidated condensed interim financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on this consolidated condensed interim financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of consolidated condensed interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated condensed interim financial information is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Other Matter The figures of the consolidated condensed interim profit and loss account and the consolidated condensed interim statement of comprehensive income for the quarters ended June 30, 2013 have not been reviewed, and we do not express a conclusion on them.

Date: 21 August 2013 Karachi

KPMG Taseer Hadi & Co. Chartered Accountants Amir Jamil Abbasi

NIB BANK LIMITED

23

NIB Bank Limited Consolidated Condensed Interim Statement of Financial Position As at June 30, 2013
Unaudited Audited June 30, December 31, 2013 2012 (Restated) (Rupees '000')
ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Intangible assets Deferred tax assets - net Other assets 9,325,520 787,011 2,203,027 55,235,042 72,701,055 2,772,418 3,284,415 10,636,869 6,130,742 163,076,099 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities Other liabilities NET ASSETS REPRESENTED BY: Share capital Reserves Discount on issue of shares Accumulated loss Shareholders Equity Surplus / (Deficit) on revaluation of assets - net 15 103,028,512 393,280 (45,769,623) (42,184,995) 15,467,174 596,920 16,064,094 CONTINGENCIES AND COMMITMENTS 16 103,028,512 225,889 (45,769,623) (43,069,410) 14,415,368 (19,804) 14,395,564 8,147,946 42,868,521 89,445,193 3,992,000 2,558,345 147,012,005 16,064,094 2,430,030 76,179,065 91,094,447 3,992,800 2,763,271 176,459,613 14,395,564 7,672,866 956,809 3,440,910 83,802,727 71,585,896 2,754,051 3,449,976 10,766,279 6,425,663 190,855,177

Note

8 9 10 11 12

13 14

The annexed notes from 1 to 19 form an integral part of these consolidated condensed interim financial information.

Badar Kazmi President / Chief Executive

Teo Cheng San, Roland Chairman / Director

Ong Kian Ngee Director

Asif Jooma Director

24

NIB BANK LIMITED

NIB Bank Limited Consolidated Condensed Interim Profit and Loss Account (Unaudited) For the half year and quarter ended June 30, 2013
Half year ended June 30, 2013
Mark-up / Return / Interest earned Mark-up / Return / Interest expensed Net Mark-up / Interest Income (Reversal) / Provision against non-performing loans and advances Provision (Reversal) for diminution in the value of investments Bad debts written off directly Net Mark-up / Interest income after provisions NON MARK-UP / INTEREST INCOME Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities Unrealized gain on revaluation of investments classified as held-for-trading Other income Total Non Mark-up / Interest income NON MARK-UP / INTEREST EXPENSES Administrative expenses Other provisions / write offs Other charges Workers welfare fund Total Non Mark-up / Interest expenses Share of profit of associates Extraordinary / Unusual items PROFIT / (LOSS) BEFORE TAXATION Taxation - Current - Prior years - Deferred PROFIT / (LOSS) AFTER TAXATION Profit / (loss) attributable to: Equity shareholders of the Bank Minority unit holders of PICIC Stock Fund 6,838,262 5,175,388 1,662,874 (494,084)

Quarter ended June 30, 2013

3,409,450 2,639,846 769,604 (124,985) 36,497 43 (88,445) 858,049 388,269 1,779 114,407 186,072 8,311 50,986 749,824 1,607,873 1,270,855 36,301 48,354 3,072 1,358,582 346,463 595,754 79,002 71,000 34,565 184,567 411,187 403,262 7,925 411,187 0.04

June 30, 2012

6,987,953 5,634,599 1,353,354 169,530

June 30, 2012

3,615,402 2,845,876 769,526 11,486 (40,217) 808 (27,923) 797,449 282,365 4,309 54,776 173,336 (56) 58,243 572,973 1,370,422 1,327,079 4,603 1,115 1,551 1,334,348 39,119 75,193 (12,512) 4,137 (8,375) 83,568 83,482 86 83,568 0.01

(Rupees '000')

36,497 (23,363) 2,654 2,707 (454,933) 148,874 2,117,807 1,204,480 758,144 20,883 188,305 326,317 15,672 59,792 1,369,113 3,486,920 2,604,984 36,301 50,857 4,672 2,696,814 514,385 1,304,491 111,382 86,000 51,397 248,779 1,055,712 1,048,426 7,286 1,055,712 0.10 537,813 50,692 176,794 257,792 3,138 60,720 1,086,949 2,291,429 2,635,652 4,603 7,280 2,345 2,649,880 387,049 28,598 34,207 39,211 73,418 (44,820) (44,932) 112 (44,820) (0.00)

Basic / diluted earnings / (loss) per share (Rupees)

The annexed notes from 1 to 19 form an integral part of these consolidated condensed interim financial information.
Badar Kazmi President / Chief Executive Teo Cheng San, Roland Chairman / Director Ong Kian Ngee Director Asif Jooma Director

NIB BANK LIMITED

25

NIB Bank Limited Consolidated Condensed Interim Statement of Comprehensive Income (Unaudited) For the half year and quarter ended June 30, 2013
Half year ended June 30, 2013 June 30, 2012 Quarter ended June 30, 2013 June 30, 2012

(Rupees '000')
Profit / (loss) after taxation for the period attributable to: Equity shareholders of the Bank Minority unit holders of PICIC Stock Fund Other comprehensive income Effect of change in accounting policy with respect to accounting for actuarial gains and losses Total comprehensive income for the period

1,048,426 7,286

(44,932) 112

403,262 7,925

83,482 86

3,380 1,059,092

4,324 (40,496)

3,380 414,567

2,162 85,730

Surplus / deficit on revaluation of ''Available-for-Sale'' securities is presented under a separate head below equity as ''surplus / deficit on revaluation of assets'' in accordance with the requirements specified by the Companies Ordinance, 1984, and the State Bank of Pakistan vide its BSD Circular 20 dated August 4, 2000 and BSD Circular 10 dated July 13, 2004. The annexed notes from 1 to 19 form an integral part of these consolidated condensed interim financial information.

Badar Kazmi President / Chief Executive

Teo Cheng San, Roland Chairman / Director

Ong Kian Ngee Director

Asif Jooma Director

26

NIB BANK LIMITED

NIB Bank Limited Consolidated Condensed Interim Statement of Changes in Equity (Unaudited) For the half year ended June 30, 2013
Attributable to ordinary shareholders of the Bank Reserves Capital Revenue Share Discount Statutory General Accumulated Sub Non capital on issue of reserve reserve loss Total Controlling Total shares Interest (Rupees '000')
Balance as at December 31, 2011 as previously reported 103,028,512 Effect of retrospective change in accounting policy with respect to accounting for actuarial gains and losses Minority unit holders share of PICIC Stock Fund transferred to other liabilities Balance as at December 31, 2011- restated 103,028,512 Total comprehensive income / (loss) for the period Effect of retrospective change in accounting policy with respect to accounting for actuarial gains and losses Profit / (loss) after taxation for the period Minority unit holders share of PICIC Stock Fund transferred to other liabilities Balance as at June 30, 2012 - restated 103,028,512 Total comprehensive income / (loss) for the period Effect of retrospective change in accounting policy with respect to accounting for actuarial gains and losses Profit / (loss) after taxation for the period Transfer to statutory reserve Minority unit holders share of PICIC Stock Fund transferred to other liabilities Balance as at December 31, 2012-restated 103,028,512 Total comprehensive income / (loss) for the period Effect of retrospective change in accounting policy with respect to accounting for actuarial gains and losses Profit / (loss) after taxation for the period Transfer to statutory reserve Minority unit holders share of PICIC Stock Fund transferred to other liabilities Balance as at June 30, 2013 103,028,512 (45,769,623) 212,804 5,472 (43,333,909) 14,143,256 9 14,143,265

(45,769,623)

212,804

5,472

6,181

6,181

(9)

6,181 (9) 14,149,437

(43,327,728) 14,149,437

(45,769,623)

212,804

5,472

4,324 (44,820)

4,324 (44,820)

4,324 (44,820) (112) 14,108,829

(112) (112) (43,368,336) 14,108,829

(45,769,623)

7,613 220,417

5,472

4,323 306,900 (7,613)

4,323 306,900

4,323 306,900 (4,684) 14,415,368

(4,684) (4,684) (43,069,410) 14,415,368

(45,769,623)

167,391 387,808

5,472

3,380 3,380 1,055,712 1,055,712 (167,391) (7,286) (7,286) (42,184,995) 15,467,174

3,380 1,055,712 (7,286) 15,467,174

The annexed notes from 1 to 19 form an integral part of these consolidated condensed interim financial information.
Badar Kazmi President / Chief Executive Teo Cheng San, Roland Chairman / Director Ong Kian Ngee Director Asif Jooma Director

NIB BANK LIMITED

27

NIB Bank Limited Consolidated Condensed Interim Cash Flow Statement (Unaudited) For the half year ended June 30, 2013
June 30, June 30, 2013 2012 (Rupees '000')
1,304,491 (20,883) 1,283,608 143,178 165,561 4,672 (494,084) 2,654 10,932 (33,306) (326,317) (15,672) 36,497 36,301 (514,385) (983,969) 299,639 1,237,883 (8,804) (623,729) (693,970) 5,717,916 (33,310,544) (1,649,254) (299,813) (29,330,676) (157,648) (29,488,324) 29,266,806 1,831,281 (94,667) 21,419 (50,260) (83,351) 69,616 30,960,844 (800) (83) 11,219 10,336 1,482,856 8,629,675 10,112,531 28,598 (50,692) (22,094) 119,711 184,982 2,345 169,530 2,707 45,970 (8,830) (257,792) (23,363) 4,603 (387,049) (147,186) (169,280) 11,823,534 (12,587) (3,465,101) (1,682,313) 546,807 (16,487,286) 4,680,449 (9,544) (4,775,321) (158,178) (4,933,499) 4,403,275 48,248 123,434 50,507 (96,428) (40,421) (2,850) 17,704 4,503,469 (800) (230) 845 (185) (430,215) 9,455,604 9,025,389

CASH FLOWS FROM OPERATING ACTIVITIES Profit / (loss) before taxation Dividend income Adjustments for non-cash items Depreciation Amortization Workers welfare fund (Reversal) / Provision against non-performing loans and advances Bad debts written off directly Fixed assets written off Gain on sale of operating fixed assets Gain on sale of securities Unrealized gain on revaluation of investments classified as held-for-trading Provision / (Reversals) for diminution in the value of investments Other provisions / (reversal) / write offs Share of profit of associates

(Increase) / decrease in operating assets Lendings to financial institutions Net investments in held-for-trading securities Advances Other assets (excluding advance taxation) Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities (excluding current taxation) Income tax paid Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Net investments in available-for-sale securities Net investments in held-to-maturity securities Net investments in associates Dividend received Payments for capital work in progress Acquisition of property and equipment Acquisition of intangible assets Sale proceeds of property and equipment disposed of Net cash from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Net Payments against sub-ordinated loans Dividend paid Receipt from minority investor of PICIC Stock Fund Net cash (used in) / financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period

The annexed notes from 1 to 19 form an integral part of these consolidated condensed interim financial information.

Badar Kazmi President / Chief Executive

Teo Cheng San, Roland Chairman / Director

Ong Kian Ngee Director

Asif Jooma Director

28

NIB BANK LIMITED

NIB Bank Limited Notes to the Consolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
1. STATUS AND NATURE OF BUSINESS The "Group" consists of: Holding Company: NIB Bank Limited (the Bank) NIB Bank Limited "the Bank" is incorporated in Pakistan and its registered office is situated at first floor, Post Mall, F-7 Markaz, Islamabad. The Bank is listed on all the stock exchanges in Pakistan and has 179 branches (December 31, 2012: 179 branches). The Bank is a scheduled commercial bank and is principally engaged in the business of banking as defined in the Banking Companies Ordinance, 1962. NIB Bank Limited is a subsidiary of Bugis Investments (Mauritius) Pte. Limited which is a wholly owned subsidiary of Fullerton Financial Holdings Pte. Limited which in turn is a wholly owned subsidiary of Temasek Holdings, an investment arm of the Government of Singapore. Subsidiary Companies PICIC Asset Management Company Limited (PICIC AMC) PICIC AMC is a wholly owned subsidiary of the Bank and is an unquoted public limited company with principal business to carry out investment advisory services and asset management services. The Bank acquired interest in PICIC AMC by virtue of acquisition and amalgamation of Pakistan Industrial Credit and Investment Corporation Limited (PICIC) as of June 30, 2007. PICIC Stock Fund (PSF) The Group has acquired 86.94% interest in the PSF. PSF is an open ended mutual fund approved by the Securities and Exchange Commission of Pakistan (SECP) and is listed on the Islamabad Stock Exchange (Guarantee) Limited. The units of the PSF are offered to the public for subscription on a continuous basis and are transferable and redeemable by surrendering them to the PSF. The investment objective of the Fund is to provide investors a diversified equity portfolio with a primary objective of maximizing risk adjusted returns over longer investment horizon through a combination of capital gains and dividend income. Financial and Management Services (Private) Limited (FMSL) The Bank also acquired 95.89% interest in Financial and Management Services (Private) Limited by virtue of acquisition and amalgamation of PICIC. 2. 2.1 STATEMENT OF COMPLIANCE These consolidated condensed interim financial statements of the Bank for the six months period ended June 30, 2013 have been prepared in accordance with the requirements of International Accounting Standard (IAS) 34 - Interim Financial Reporting, the provisions of and directives issued under the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and directives issued by the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP). In case requirements differ, the provisions of and directives issued under the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the said directives have been followed. The SBP has deferred the applicability of IAS 39 - Financial Instruments: Recognition and Measurement, and IAS 40 - Investment Property, for Banking Companies through BSD Circular letter no. 10, dated August 26, 2002. Further, according to the notification of SECP dated April 28, 2008, the IFRS 7 - Financial Instruments: Disclosures, has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these condensed interim financial information. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP. The disclosures made in these consolidated condensed interim financial information have been limited based on the format prescribed by SBP vide BSD circular letter no. 2 of May 12, 2004 and IAS 34 - Interim Financial Reporting, and do not include all the information

2.2

2.3

NIB BANK LIMITED

29

Notes to the Consolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
required in annual financial statements. Accordingly, these consolidated condensed interim financial information should be read in conjunction with the consolidated financial statements of the Bank for the year ended December 31, 2012. 3. 3.1 BASIS OF MEASUREMENT These consolidated condensed interim financial information have been prepared under the historical cost convention, except for the measurement of certain investments and commitments in respect of forward foreign exchange contracts that are stated at revalued amounts / fair values, staff retirement benefits (Gratuity) which are stated at present value and certain financial assets that are stated net of provisions. These consolidated condensed interim financial statements have been presented in Pakistan Rupees, which is the Group's functional and presentation currency. The amounts are rounded off to the nearest thousand rupees. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies and method of computation adopted in the preparation of these consolidated condensed interim financial statements are the same as those applied in the preparation of the annual consolidated financial statements of the Group for the year ended December 31, 2012 except as mentioned below: 4.1 Change in accounting policy - Employee Benefits (Defined Benefit Plan) During the current period (with effect from January 1, 2013), the Bank adopted revised IAS 19 - Employee Benefits, standard and changed its basis for recognition of actuarial gains and losses. The revised IAS 19 require actuarial gains and losses to be recognised immediately in other comprehensive income. Previously, actuarial gains and losses were amortised using the 10% corridor approach as allowed under the relevant provision of IAS 19. Revised accounting policy of employee benefits - defined benefit plan is as follows: 4.2 Staff retirements benefits Defined benefit plans The Bank operates an unfunded gratuity scheme covering all eligible employees who have attained the minimum qualifying period of five years. Eligible employees are those employees who have joined the service of the Bank on or before March 31, 2006. Provision is made in accordance with actuarial recommendations. Actuarial valuation is carried out periodically using the Projected Unit Credit Method. Actuarial gains and losses are recognised immediately in other comprehensive income. 4.3 Effect of change in accounting policy This change in accounting policy has been accounted for retrospectively in accordance with International Accounting Standard 8 - Accounting policies, Changes in Accounting Estimates and Errors, these have resulted in adjustment of prior year financial statements. Effects of retrospective application of change in accounting policy are as follows: Un-recognised actuarial gains and losses of prior periods have been recognised in the statement of financial position through other comprehensive income. The cumulative balance for un-recognised actuarial losses that existed as at January 1, 2012 as well as the actual amounts recognised for the year 2012 have been presented and disclosed as part of the statement of changes in equity, while the corresponding period adjustment through other comprehensive income is presented and disclosed as part of the Statement of Comprehensive Income. The Statement of Financial Position also presents the prior year numbers as restated, due to the said change.

3.2

4.

30

NIB BANK LIMITED

Notes to the Consolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
As at December 31, 2012 As previously Effect on As reported change Restated
(Rupees '000')

Effect on statement of financial position Decrease in payable to gratuity fund Decrease in accumulated loss 78,416 43,084,238 (14,828) (14,828) 63,588 43,069,410 Prior to January 01, 2012

Six months Six months Six months period ended period ended period ended on June 30, on December on June 30, 2013 31, 2012 2012
(Rupees '000')

Effect on other comprehensive income Actuarial gains / (losses) reclassified to other comprehensive income 3,380 4,323 4,324 6,181

The new standards, amendments and interpretations that are effective for accounting periods beginning on or after January 1, 2013 and are not considered effective or do not have any significant effect on the Banks operations, are not detailed in these these consolidated condensed interim financial statements. 5. ACCOUNTING ESTIMATES The basis for the accounting estimates adopted in the preparation of these consolidated condensed interim financial statements are the same as those applied in the preparation of the annual consolidated financial statements of the Group for the year ended December 31, 2012. 6. FINANCIAL RISK MANAGEMENT The financial risk management objectives and policies adopted by the Group are consistent with those disclosed in the annual consolidated financial statements of the Group for the year ended December 31, 2012. 7. BASIS OF CONSOLIDATION The assets and liabilities of the subsidiary company have been consolidated on a line by line basis and the carrying value of the investment in subsidiary held by the holding company is eliminated against the shareholders' equity in the consolidated financial statements. Material intra-group balances and transactions have been eliminated. Financial and Management Services (Private) Limited has not been consolidated as it is not material and this investment has been fully provided.

NIB BANK LIMITED

31

Notes to the Consolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
Unaudited June 30, 2013 Held by Group Given as collateral Total Audited December 31, 2012 Held by Group (Rupees '000') Given as collateral Total

8. 8.1

INVESTMENTS Investments by types:

Held-for-trading securities Ordinary Shares / Certificates in Listed Companies / Modarabas Available-for-sale securities Market Treasury Bills Pakistan Investment Bonds GOP Ijara Sukkuk Bonds Defense Savings Certificates Sukuk Bonds Cumulative Preference Shares Ordinary Shares / Certificates in Listed Companies / Modarabas Ordinary Shares of Unlisted Companies Term Finance Certificates 11,714,838 6,898,372 5,798,000 13,768,723 4,030,138 2,730 1,486,865 80,178 61,032 65,920 2,550,549 39,474 18,613,210 19,566,723 4,030,138 2,730 1,486,865 80,178 61,032 65,920 2,590,023 1,896,778 47,428,597 49,325,375 367,876 12,547,372 12,915,248 9,559,180 9,559,180 2,730 2,730 502,117 502,117 80,178 80,178 167,232 65,872 1,961,670 167,232 65,872 1,961,670

150,975 150,975

8,460 8,460

159,435 159,435

121,748 121,748

6,184 6,184

127,932 127,932

25,787,520 20,709,299 Held-to-maturity securities Pakistan Investment Bonds Term Finance Certificates 2,850,379 11,028 2,861,407 Associates Subsidiary Total investments - Gross Provision for diminution in value of investments Investments - net of provisions Surplus / (Deficit) on revaluation of held-for-trading securities Surplus on revaluation of available-for-sale securities Net Investments 5,088,588 724

46,496,819 14,600,903 59,978,699 74,579,602

2,850,379 11,028 2,861,407 5,088,588 724

4,649,177 43,511 4,692,688 3,969,457 724

4,649,177 43,511 4,692,688 3,969,457 724

33,889,214 20,717,759 (139,283)

54,606,973 23,385,520 59,984,883 83,370,403 (139,283) (137,975) (137,975)

33,749,931 20,717,759 11,802 268,529 3,870 483,151

54,467,690 23,247,545 59,984,883 83,232,428 15,672 751,680 2,675 150,708 602 416,314 3,277 567,022

34,030,262 21,204,780

55,235,042 23,400,928 60,401,799 83,802,727

8.2

The SBP, vide Letter No. BPRD/BRD-(Policy)/2013-1857 dated February 15, 2013 has permitted banks to maintain provision against Term Finance Certificates issued by Azgard Nine Limited, classified in Loss category, at 50% of the exposure. Had this relaxation not been received the provision against TFCs of Azgard Nine Ltd would have been higher by Rs. 8.135 million.

32

NIB BANK LIMITED

Notes to the Consolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
Unaudited June 30, 2013 Audited December 31, 2012

Note

(Rupees '000')

9.

ADVANCES
Loans, cash credits, running finance, etc. - in Pakistan Net investment in finance lease - in Pakistan Bills discounted and purchased (excluding Treasury Bills) Payable in Pakistan Payable outside Pakistan Advances - Gross Provision against non-performing advances - Specific - General Advances - Net of provisions 9.1 90,337,323 1,775,368 64,137 3,336,649 95,513,477 (22,729,807) (82,615) (22,812,422) 72,701,055 89,012,593 1,897,676 189,544 3,779,947 94,879,760 (23,214,941) (78,923) (23,293,864) 71,585,896

9.1

Advances include Rs. 31,813.450 million (December 31, 2012: Rs. 32,921.495 million), which have been placed under non-performing status as detailed below:

Domestic

Overseas

Total (Rupees '000')

Provision required

Provision held

Category of Classification Substandard Doubtful Loss 2,788,104 1,338,515 27,686,831 31,813,450 2,788,104 1,338,515 27,686,831 31,813,450 630,841 317,354 21,781,612 22,729,807 630,841 317,354 21,781,612 22,729,807

9.2 9.3

Included in the provision required is an amount of Rs. 303.889 million (2012: Rs. 410.960 million) which represents provision in excess of the requirements of the State Bank of Pakistan. The SBP, vide Letter No. BPRD/BRD-04/Faysal/2013/1695 dated February 13, 2013 provided relaxation for provision against Gulistan Group to the extent of 75% of the required provision by June 30, 2013. Had this relaxation not been received the provision for non performing loans to Gulistan group would have been higher by Rs. 72.322 million. In accordance with BSD Circular No. 1 dated October 21, 2011 issued by the State Bank of Pakistan, the Bank has availed the benefit of Forced Sale Value (FSV) against the non-performing advances. During the half year ended June 30, 2013, total FSV benefit erosion resulted in decrease in profit before tax of Rs. 491.791 million. Had the benefit under the said circular not been taken by the Bank, the specific provision against non-performing advances would have been higher by Rs. 5,427.380 million (December 31, 2012: Rs. 5,919.171 million). The FSV benefit recognised will not be available for distribution of cash and stock dividend to shareholders.

9.4

NIB BANK LIMITED

33

Notes to the Consolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
Unaudited June 30, 2013 10. OPERATING FIXED ASSETS Unaudited June 30, 2012

(Rupees '000')

10.1 Additions to fixed assets The following additions have been made to fixed assets during the half year ended June 30, 2013: Furniture and fixtures Electrical, office and computer equipment Vehicles Leasehold improvements Capital work in progress 4,857 93,850 5,748 53,174 50,503 2,073 33,581 3,640 10,035 97,112

10.2 Disposal of fixed assets - cost The following disposals have been made from fixed assets during the half year ended June 30, 2013: Freehold land Leasehold land Furniture and fixtures Electrical, office and computer equipment Vehicles Leasehold improvements 11. DEFERRED TAX ASSETS The deferred tax asset recognised in the books has been restricted to Rs. 10,636 million due to uncertainty of availability of future tax profits for utilization of the unrecognised deferred tax assets. The deductible differences available to the Bank are Rs. 11,318 million. Had the deferred tax asset been recognized on all deductible timing differences, the profit after tax for the half year ended on June 30, 2013 would have been higher by Rs. 682 million. The management has recorded deferred tax asset based on financial projections indicating absorption of deferred tax asset over a number of future years through reversals as a result of recoveries from borrowers and absorption of remaining deferred tax asset against future taxable profits. The financial projections involve certain key assumptions such as deposits composition, interest rates, growth of deposits and advances, investment returns and potential provision / reversals against assets. Any significant change in the key assumptions may have an effect on the absorption of the deferred tax asset. Unaudited June 30, 2013 12. OTHER ASSETS 6,130,742 Audited December 31, 2012 6,425,663 18,920 13,157 9,730 21,586 8,825 156 15,144 33,674 6,720 150

(Rupees '000')

12.1 Other assets include settlement of certain accounts through acquiring properties from the borrowers amounting to Rs. 1,474.592 million (December 31, 2012: Rs. 1,245.592 million). The settlement agreements signed with borrowers in certain cases entails a buy back option.

34

NIB BANK LIMITED

Notes to the Consolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
Unaudited June 30, 2013 13. DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Savings deposits Current accounts - Non remunerative Margin accounts Financial Institutions Remunerative deposits Non-remunerative deposits 1,923,011 285,158 89,445,193 14. SUB-ORDINATED LOANS Term Finance Certificates - Quoted, Unsecured 3,992,000 3,992,800 3,872,124 253,790 91,094,447 20,671,140 36,430,764 29,670,152 464,968 24,859,849 33,574,896 27,784,055 749,733 Audited December 31, 2012

(Rupees '000')

Mark-up

Floating (no floor, no cap) rate of return at Base Rate +1.15% (The Base Rate is defined as the average Ask Side rate of the six month Karachi Interbank Offered Rate (KIBOR)) The TFCs are subordinated to all other indebtedness of the Bank including deposits March 5, 2008 Rs. 4,000 million A+ (A plus) 8 years from the Issue Date Ten equal semi-annual instalments of 0.02% of the Issue Amount for the first sixty months followed by six equal semi-annual instalments of 16.63% of the Issue Amount from the sixty-sixth month onwards March 5, 2016 The Bank can also exercise a Call Option or a Partial Call Option after obtaining written approval from the State Bank of Pakistan at any time after a period of sixty months from the Issue Date

Subordination Issue Date Issue Amount Rating Tenor Redemption

Maturity Call Option

14.1 The Bank has decided to redeem Term Finance Certificates and exercise call option after completion of five years from the issue date.

NIB BANK LIMITED

35

Notes to the Consolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
15. SHARE CAPITAL

15.1 Authorized Unaudited June 30, 2013 Audited December 31, 2012 Unaudited June 30, 2013 Audited December 31, 2012

(Number of shares) 12,000,000,000 12,000,000,000 Ordinary shares of Rs. 10 each

(Rupees '000') 120,000,000 120,000,000

15.2 Issued, subscribed and paid up Fully paid up ordinary shares of Rs. 10 each 3,278,902,659 3,278,902,659 Fully paid in cash Issued for consideration other than cash (under schemes of amalgamation) Issuance of shares on discount 32,789,027 32,789,027

764,824,417 6,259,124,088 10,302,851,164

764,824,417 6,259,124,088 10,302,851,164

7,648,244 62,591,241 103,028,512

7,648,244 62,591,241 103,028,512

15.3 The holding company Bugis Investments (Mauritius) Pte. Limited holds 9,132,728,598 (December 31, 2012: 9,132,728,598) ordinary shares. Unaudited June 30, 2013 16. CONTINGENCIES AND COMMITMENTS Contingent liability in respect of guarantees given favouring: Government Financial Institutions Others 16.2 Transaction-related contingent liabilities / commitments Guarantees given in favour of: Government Financial Institutions Others 16,906,679 890,955 17,797,634 16.3 Trade-related contingent liabilities Letters of credit Acceptances 16,673,213 2,764,403 19,437,616 20,248,003 3,055,764 23,303,767 13,226,815 796,509 14,023,324 2,200 2,200 Audited December 31, 2012

(Rupees '000')

16.1 Direct credit substitutes

36

NIB BANK LIMITED

Notes to the Consolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
Unaudited June 30, 2013 Audited December 31, 2012

(Rupees '000') 16.4 Other Contingencies Claims against the Bank not acknowledged as debts 16.5 Commitments in respect of forward lending Commitments to extend credit 6,908,000 1,292,340 266,133 266,133

The Bank makes commitments to extend credit in the normal course of its business but none of these commitments are irrevocable and do not attract any significant penalty or expense if the facility is ultimately withdrawn except commitments mentioned above. 16.6 Commitments in respect of forward exchange contracts Purchase Sale 16.7 Commitments for the acquisition of operating fixed assets 16.8 Commitments with respect to Government Securities Purchase Sale 16.9 Tax contingencies The income tax returns of NIB Bank Limited have been filed up to and including tax year 2012 relevant to the financial year ended December 31, 2011. The tax authorities have made certain disallowances including additions on account of proration of expenses against dividends and capital gains, disallowances of interest and administrative expenses and renovation expenses incurred on rented premises (allowed historically) pertaining to tax years 2003-2008 for Ex-Pakistan Industrial Credit and Investment Corporation Limited (Ex-PICIC), pertaining to tax years 2004-2008 for Ex-PICIC Commercial Bank Limited (Ex-PCBL), pertaining to tax years 2003-2004 for Ex-National Development Leasing Corporation Limited (Ex-NDLC) and pertaining to tax years 2004-2008 for NIB Bank Limited. These disallowances may result in additional tax aggregating to Rs. 1,370 million (2012: 1,370 million), which the management of the Bank in discussion with their tax consultants believes to be unjustified and not in accordance with the true interpretation of the law. Appeals filed against orders are pending at various appellate forums. Management is confident that the eventual outcome of the cases will be in favour of the Bank. 50,000 513,980 1,900,540 23,810,858 23,881,239 47,692,097 101,197 17,670,541 18,716,569 36,387,110 65,530

NIB BANK LIMITED

37

Notes to the Consolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013
17. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES The Group comprises of the Bank, PICIC Asset Management Company and PICIC Stock Fund. The Bank is organised into reportable segments as disclosed in note 6.20.1 of the annual consolidated financial statements. These segments are managed by respective segment heads and the results of these segments are regularly reviewed by the Group's President / Chief Executive. Segment performance is reviewed on the basis of various factors including profit before taxation. The performance of PICIC Asset Management Company and PICIC Stock Fund is included in Head Office / Other. Transactions between reportable segments are carried out on an arms length basis. The segment analysis with respect to business activity is as follows:
Corporate Small & Medium and Investment Enterprises and Banking Commercial Retail Treasury Head Office / Other *Adjustments

(Rupees '000')

For the Period ended June 30, 2013 (Unaudited)

Net Interest Income Non Funded Income including share of income of associates Net Interest and non mark-up Income Total expenses including provisions (excluding Impairment) Impairment against Investment Total expenses including provisions Segment Net income / (loss) before tax Segment Return on net assets (ROA) (%) Segment Cost of funds (%) 121,712 347,793 469,505 (772,641) 34,287 (738,354) 1,207,859 3.59% 8.09% (244,530) 132,165 (112,365) 923,436 923,436 (1,035,801) (11.76%) 4.33% 1,503,585 279,785 1,783,370 1,822,454 1,822,454 (39,084) (0.34%) 4.51% 194,336 357,073 551,409 142,566 2,210 144,776 406,633 1.80% 9.44% 87,771 766,682 854,453 89,569 89,569 764,884 N/A N/A

For the Period ended June 30, 2012 (Unaudited)

Net Interest Income Non Funded Income including share of income of associates Net Interest and non mark-up Income Total expenses including provisions (excluding Impairment) Impairment against Investment Total expenses including provisions Segment Net income / (loss) before tax Segment Return on net assets (ROA) (%) Segment Cost of funds (%) Segment Assets (Gross of advances provisions) Segment Non Performing Loans Segment Provision against advances (including general provisions) Segment Assets (Net) Segment Liabilities Segment Assets (Gross of advances provisions) Segment Non Performing Loans Segment Provision against advances (including general provisions) Segment Assets (Net) Segment Liabilities (212,032) 220,610 8,578 (139,772) (30,854) (170,626) 179,204 0.40% 10.45% (278,429) 66,888 (211,541) 708,377 708,377 (919,918) (8.73%) 6.49% 1,740,159 186,060 1,926,219 2,082,134 2,082,134 (155,915) (0.24%) 5.65% 38,592 415,340 453,932 100,607 7,491 108,098 345,834 1.23% 11.93% 65,064 585,100 650,164 70,771 70,771 579,393 N/A N/A

As at June 30, 2013 (Unaudited)

79,329,336 16,147,605 13,034,845 66,294,491 64,262,551 25,793,036 12,506,170 8,135,767 17,657,269 17,050,015 83,324,824 2,907,269 1,421,298 81,903,526 80,223,381 42,069,621 42,069,621 41,370,267 11,787,793 252,406 220,512 11,567,281 521,880 (56,416,089) (56,416,089) (56,416,089)

As at December 31, 2012 (Audited)

74,436,950 16,898,687 13,819,614 60,617,336 58,188,964 28,055,858 12,565,891 7,839,657 20,216,201 19,568,333 83,903,677 3,193,076 1,421,070 82,482,607 80,760,809 75,683,089 75,683,089 74,638,327 8,862,297 263,841 213,523 8,648,774 96,010 (56,792,830) (56,792,830) (56,792,830)

* The respective segment assets and liabilities incorporate intersegment lending and borrowing, with appropriate transfer pricing. The adjustments column eliminates intersegment lending and borrowing.

38

NIB BANK LIMITED

18.

RELATED PARTY TRANSACTIONS

The Group has related party transactions with its holding company, unconsolidated subsidiaries, associated undertakings, employee benefit plans, its key management personnel and other related parties.

Transactions with related parties are executed on the same terms as those prevailing at the time for comparable transactions with unrelated parties.

The detail of transactions with related parties is given below:

18.1 Balances outstanding as at the year end

Holding company Unaudited Audited June 30, December 31, 2013 2012 32,823 118 233 (11,146) 22,028 724 724 5,088,588 724 724 3,969,457 3,744,093 (3,649,426) 1,024,464 3,565,988 4,942,867 (5,222,099) 682,701 3,969,457 32,823 454,031 611,316 32,275 42,653 904 926 (11,660) 611,316 11,154,289 (11,311,574) 298,751 22,039,707 (21,727,142) 35,727 161,421 (138) (164,735) 162,067 155,572 42,772 347,655 1,893 (356,593) 35,727 155,572 63,327 (56,832) 136,387 91,608 (72,423) 21,951 970 (1,441) 21,480 71,366 490,462 (54) (477,478) 84,296 18,987 (18,987) Unconsolidated subsidiary Unaudited Audited June 30, December 31, 2013 2012 Associates Unaudited Audited June 30, December 31, 2013 2012 (Rupees '000') Key management personnel Unaudited Audited June 30, December 31, 2013 2012 Other related parties Unaudited Audited June 30, December 31, 2013 2012 24,997 1,069 (4,115) 21,951 106,047 1,219,657 7,910 (1,262,248) 71,366 158,886 18,987 (158,886) 18,987

Advances At the beginning of the period / year Given / addition during the period / year Repaid during the period / year

Notes to the Consolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013

At the end of the period / year

Deposits At the beginning of the period / year Deposits during the period / year Exchange difference Withdrawal during the period / year

At the end of the period / year

Investment in shares / mutual funds

At the beginning of the year Investments made during the year Investments sold during the year Equity accounting method adjustments

At the end of the period / year

Investment in Term Finance Certificates - cost 171 171 39,468 29,094 49,966 24,742 625 1,078,909 6,772

At the end of the period / year

Receivables

NIB BANK LIMITED

At the end of the period / year

Payables

39

At the end of the period / year

18.2 Income / Expense for the period Holding company

Unaudited

40
Unconsolidated subsidiary
Period ended June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012 Period ended Period ended Period ended

Associates

Key management personnel

Other related parties

Period ended June 30, 2013 June 30, 2012

Notes to the Consolidated Condensed Interim Financial Information (Unaudited) For the half year ended June 30, 2013

NIB BANK LIMITED

(Rupees '000')
2,013 267 163,203 133,233 232,543 1,399 751 4,000 139,350 5,509 2,461 49,963 450 36,151 31,145 376 542 1,918 2,983 2,765 1,350 1,830 77,643 7,022 2,885 432 3,325 571 45,549

Mark-up / Return / Interest earned on advances

Mark-up / Return / Interest earned on Term Finance Certificates

Mark-up / Return / Interest expensed on deposits

Dividend income from shares / mutual funds

Brokerage expense

Directors remuneration

Directors travelling expense

Insurance premium expense

Remuneration to key management personnel*

Contribution to Provident Fund

Management fee earned

Fees & Subscription

Commission income

* As a component of the Presidents compensation, the Parent of the Bank is considering grant of shares of NIB Bank Limited which would be subject to certain performance criteria. Currently the extent and timing of this component of the Presidents compensation are being finalized and will be accounted for under relevant accounting standards once finalized.

19.

DATE OF AUTHORIZATION FOR ISSUE

These consolidated condensed interim financial statements were authorized for issue by the Board of Directors of the Bank on August 21, 2013.
Teo Cheng San, Roland Chairman / Director Ong Kian Ngee Director Asif Jooma Director

Badar Kazmi President / Chief Executive