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[ Vision ]

To be a world class bank dedicated to excellence and to surpass the highest expectations of our customers and all other stakeholders.

[ Mission ]
Set the highest industry standard for quality, across all areas of our operation, on a sustained basis Optimize people, processes and technology to deliver the best possible financial solutions to our customers Become the most sought after investment and Be recognized as the employer of choice

[ Core Values ]
Honesty and integrity Commitment and dedication Fairness and meritocracy Teamwork and collaborative spirit Humility and mutual respect Caring and socially responsible

[ Contents ]
Company Information Directors Profiles Directors Report to the Members Statement of Corporate Social Responsibility President & CEO Review Growth at a Glance International Network Shari'ah Advisor's Report Statement of Compliance with the Code of Corporate Governance Review Report to the Members on Statement of Compliance with Best Practices of Code of Corporate Governance Statement of Internal Controls Auditors Report to the Members Unconsolidated Statement of Financial Position Unconsolidated Profit & Loss Account Unconsolidated Statement of Comprehensive Income Unconsolidated Cash Flow Statement Unconsolidated Statement of Changes in Equity Notes to and forming part of the Unconsolidated Financial Statement Annexure A as referred to in note 9.8 of Banks Unconsolidated Financial Statements Annexure B as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements Annexure C as referred to in note 11.7 of Banks Unconsolidated Financial Statements Annexure D of the Bank's Unconsolidated Financial Statements Auditors Report to the Members Consolidated Statement of Financial Position Consolidated Profit & Loss Account Consolidated Statement of Comprehensive Income Consolidated Cash Flow Statement Consolidated Statement of Changes in Equity Notes to and forming part of the Consolidated Financial Statements Annexure 'A' as referred to in note 9.8 of Group's Consolidated Financial Statements Annexure 'C' as referred to in note 11.7 of Group's Consolidated Financial Statements Annexure 'D' of Group's Consolidated Financial Statements Consolidated Statement of Financial Position (in US Dollars) Consolidated Profit and Loss Account (in US Dollars) Categories of Shareholders Pattern of Shareholding Notice of 51st Annual General Meeting Statement of Material Facts Form of Proxy 02 03 06 12 13 17 21 23 25 26 27 29 30 31 32 33 34 35 114 122 158 166 167 168 169 170 171 172 173 264 275 284 285 286 287 288 290 292

[ Company Information ]
Board of Directors Chief Financial Officer
Mr. Rayomond Kotwal

His Highness Sheikh Nahayan Mabarak Al Nahayan Chairman Sir Mohammed Anwar Pervez, OBE, HPk Deputy Chairman Mr. Omar Z. Al Askari Director Mr. Zameer Mohammed Choudrey Director Mr. Muhammad Sami Saeed Director Mr. Seerat Asghar Director Mr. Amin Uddin Director Mr. Arshad Ahmad Mir Director Mr. Atif R. Bokhari President & CEO

Company Secretary & Chief Legal Counsel


Mr. Aqeel Ahmed Nasir

Registered Office

13th Floor, UBL Building, Jinnah Avenue, Blue Area, Islamabad, Pakistan.

Head Office

State Life Building No.1, I.I. Chundrigar Road, Karachi - 74000, Pakistan

Share Registrar

M/s. THK Associates (Pvt.) Limited Ground Floor, State Life Building No. 3, Dr. Ziauddin Ahmed Road, Karachi - Pakistan

Auditors

M/s. Ernst & Young Ford Rhodes Sidat Hyder, Chartered Accountants M/s. BDO Ebrahim & Co., Chartered Accountants

Committees of the Board Board Audit Committee


Mr. Muhammad Sami Saeed Member Mr. Amin Uddin Member Mr. Aqeel Ahmed Nasir Secretary Mr. Zameer Mohammed Choudrey Chairman

Legal Advisors

M/s. Mehmood Abdul Ghani & Co., Advocate

Contacts

UAN: 111-825-111 Contact Centre: 111-825-888 Website: www.ubl.com.pk

Board Human Resource & Compensation Committee


Mr. Omar Z. Al Askari Chairman Mr. Seerat Asghar Member Mr. Atif R. Bokhari Member Mr. Jamal Nasir Secretary

Board Risk Management Committee


Mr. Omar Z. Al Askari Chairman Mr. Arshad Ahmad Mir Member Mr. Atif R. Bokhari Member Mr. Ali Sameer Member

02

United Bank Limited

[ Directors Profile ]
Sheikh Nahayan Mabarak Al Nahayan Sir Mohammed Anwar Pervez, OBE HPk
Deputy Chairman Sir Mohammed Anwar Pervez, OBE HPk is the Deputy Chairman of the Board of Directors of United Bank Limited since 19 October, 2002. He is also the Chairman of Bestway (Holdings) Limited, UK & its subsidiaries, which include Batleys Limited in UK, Bestway Cement in Pakistan & Bestway Northern Limited in UK. Sir Anwar began his career in food business in 1963 when he opened a mini supermarket in London. He ventured into the cash & carry business in 1976 and has been responsible for growing Bestway into the second largest cash & carry operator in the UK. Sir Anwar was awarded the Order of the British Empire (OBE) in 1992 and was conferred the title of Knight's Bachelor in 1999. In 2000 he was awarded Hilal-e-Pakistan. In 2005, Sir Anwar Pervez was voted winner of the prestigious Grocer Cup for Outstanding Business Achievement by the Institute of Grocery Distribution, UK. In 2006 he received Sitra-e-Essar and was chosen as the Master Entrepreneur - UK at the Ernst & Young Entrepreneur of the Year 2006 Awards. He is also the Chairman of Bestway Foundation UK and Patron-inChief of Bestway Foundation Pakistan and a charter member of the Duke of Edinburgh Awards Scheme.

Chairman, Board of Directors of United Bank Limited The Chairman of the Board, Sheikh Nahayan Mabarak Al Nahayan's life and career have been characterized by creativity, innovation, and dedicated public service. In his role as the Minister of Higher Education and Scientific Research, he has guided and shaped higher education in the United Arab Emirates and has established a successful model for higher education throughout the Gulf region. In private business, Sheikh Nahayan is an active, successful businessman, both within the United Arab Emirates and on the international stage. He heads the Abu Dhabi Group, one of the largest international investors in Pakistan, with interests in banking, telecommunications, pharmaceuticals, construction, petrochemicals, hotels, and real estate. He is chairman of the board of many important companies, including Chairman of the Union National Bank in the UAE, Founder and Chairman of Warid Communications, Founder of Bank Al-Falah, in addition to being the chairman of United Bank Limited. In business, Sheikh Nahayan insists that all his projects must be value based as well as goal driven. Those who would work with him must have integrity, a sound ethical touchstone, and a genuine concern for those who are affected by the actions they take and the decisions they make. Sheikh Nahayan sees his role as one who sets standards, serves as a role model, and insists on accountability. He is also a great believer in the social responsibility of private business, where ethics, morality, and transparency are important and where the operations, practices, and attitudes of private companies must have relevance to contemporary community values and needs. A noted patron of the arts, Sheikh Nahayan strongly supports a wide range of activities, from natural history to music and culture, from national heritage to sports. He is a strong proponent of advanced technology and global best practices in education and business. An active philanthropist with a high sense of social responsibility, he champions many humanitarian causes and provides strong support for individuals with disabilities. He also chairs and actively supports many groups and associations. These include: the Abu Dhabi Music and Arts Foundation, the UAE Natural History Group, the Mdecins Sans Frontires in the UAE, the Society of History and Historical Heritage of the UAE, The Millfield Association in the Arabian Peninsula, the Young Presidents Organization (YPO), the Abu Dhabi Cricket Club, the UAE Table Tennis Federation, the Arab Universities Sports Federation, and Friends of Al-Quds University in Abu Dhabi. A strong supporter of all cultural activities in Abu Dhabi and the UAE, including literature, theater, music, painting, sculpture, photography, and folk arts, Sheikh Nahayan is a regular patron of art exhibitions and heritage festivals. Sheikh Nahayan is also a recognized leader in dealing with the major social and economic issues that impact the United Arab Emirates and the Arab region. He has played a major role in policy formulation related to the economic and social development of the United Arab Emirates. Sheikh Nahayan has chaired several cabinet committees on manpower planning and social development in the United Arab Emirates; committees charged with formulating policies for human and social development in the country. He is an accomplished public speaker. He gives more than 150 public speeches and presentations every year. He is also an active sportsman. His sports hobbies include horseback riding, flying helicopters and light aircraft, and falconry. Sheikh Nahayan is the recipient of many national and international honors and awards in addition to numerous honorary degrees from universities around the world.

Omar Z. Al Askari
Director Omar Ziad Al Askari is the Chairman and Chief Executive Officer of United Technical Services. In 1972 he attained an MBA degree from the Kellogg Graduate School of Management at Northwestern University, having graduated in 1971 from the University of Oregon with a BBA degree in business administration. He is a Certified Public Accountant. He began his career with Arthur Andersen & Co. in 1972 where he specialized in audit and management consulting. In 1976, he assumed control of Technical Services and Supply Company, a family concern based in Abu Dhabi, United Arab Emirates. In 1980, Mr. Al Askari established United Technical Services (UTS), now a leading force in sales and service of engineered products to the oilfield and building services industries in the United Arab Emirates. He has served on numerous public and private company Boards. Currently he is a member of the Board of Directors of United Bank Limited and is Chairman of AlFalah Exchange Co. Mr. Al Askari served as International President of the Young Presidents' Organization in 1999-2000. He is a member of the World Presidents' Organization, the Chief Executives Organization, the American Institute of Certified Public Accountants, Illinois CPA Society and the Kellogg Alumni Advisory Board. He is a director of the Emirates Cricket Board.

Annual Report 2010

03

Zameer Mohammed Choudrey


Director Mr. Zameer Mohammed Choudrey has been a Member of the Board of Directors of United Bank Limited since 19 October, 2002. He is Chairman of the Board Audit Committee. He is also a Director of UBL Insurers Limited. He is Chief Executive of Bestway Group, which is among the top ten family businesses in the UK with annual turnover of 2.1 billion. The Group's wholesale operations are the 2nd largest in the UK with an 18% market share. Its cement operation is the second largest cement manufacturer in Pakistan. Zameer is a Chartered Accountant by profession. He joined Bestway Group as a financial controller in 1984. In 1990, he was promoted as the Group Finance Director. In 1995, he was given additional responsibilities of business diversification both in UK and Pakistan and was promoted as Chief Executive of Bestway Cement Limited. He was appointed as the Group CEO in 2004. He is a fellow of the Institute of Chartered Accounts of England & Wales and a member of the Institute of Directors. Zameer is a trustee of Bestway Foundation UK and Chairman of Bestway Foundation Pakistan. He is also a trustee of Caravan and Crimestoppers.

Amin Uddin
Director Mr. Amin Uddin has been appointed as member of Board of Directors of United Bank Limited with effect from 5 March 2009. He is a member of Board Audit Committee of UBL. He is also a Director of UBL Insurers Limited. He did Banking Management course in 1986-87 from McGill University, Canada and B.A. (Economics and Statistics) from Punjab University, Lahore. He also attended various international professional training programs. He has a 40 years experience in Pakistan, Middle East, Europe, Africa & Canada. He worked in Ecobank Group, a leading Pan-African commercial banking group (1991-2002). He also worked in Bank of Credit and Commerce INT (1977-1990) and Habib Bank Limited (1967-1977).

Muhammad Sami Saeed


Director Mr. Muhammad Sami Saeed has been appointed as Director of United Bank Limited by the Government of Pakistan with effect from 26 February 2008. He is also a Member of the Board Audit Committee of the Bank. He did his M.A. from Punjab University in 1976 and postgraduation in Development Economics from University of Cambridge, UK, in 1986. He has done professional courses in economic management and public finance from the IMF Institute, Washington and Kennedy School of Government, Harvard University, USA. At present, he is Additional Chief Secretary, Government of Punjab. Prior to this, he was Chairman of Planning & Development Board, Government of Punjab, Additional Finance Secretary (Banking), Government of Pakistan. He also worked as Joint Secretary/Additional Secretary in Prime Minister's Secretariat (2006-2008), Secretary, Excise & Taxation Department (2002-2006), Secretary Agriculture (1998-99) in Government of Punjab and Deputy Commissioner Faisalabad (199093). He joined the Civil Service of Pakistan (District Management Group) in 1980. He also attended various international conferences and took part in bilateral negotiations in many countries as member of Government of Pakistan delegation. In January 2007, he attended World Economic Forum 2007 in Davos, Switzerland, as a member of the Pakistan delegation headed by the Prime Minister of Pakistan.

04

United Bank Limited

Arshad Ahmad Mir


Director Mr. Arshad Ahmad Mir, appointed as member of Board of Directors with effect from 26 October 2009, has over four decades of extensive corporate experience in financial services, oil industry, management consultancy, manufacturing and wholesale distribution businesses. He has served with major corporate entities in areas of general management, corporate planning, project management, compliance and consultancy. Geographical coverage of his corporate roles and responsibilities encompass Pakistan, Middle East, Africa, UK & Europe. Arshad Mir is a member of Institute of Chartered Accountants and Institute of Bankers, UK. He has attended various management courses and conferences including Advanced Management Programme of London Business School. He is also a member of the Board Risk Management Committee of the Bank.

Atif R. Bokhari
President & CEO Mr. Atif R. Bokhari, currently President & CEO, United Bank Limited (UBL) is a seasoned banker with extensive experience in domestic and international banking. He started his banking career in 1985 with Bank of America, where he handled diverse assignments over a period of 15 years. Subsequent to leaving Bank of America in July 2000, Mr. Bokhari joined Habib Bank Limited wherein he was Head of Corporate and Investment Banking. Mr. Bokhari was appointed as President & CEO of UBL in May 2004 (18 months after privatization). Since then UBL has ventured into new diversified business and revenue streams namely consumer financing, E-commerce, asset management and general insurance. Mr. Bokhari holds the office of Chairman or Director in several UBL Group companies. He is also a Director of First Women Bank Limited and is very actively involved with a private sector program for the development of education in Karachi. Specifically he is a Director for the envisaged Karachi Business School affiliated with the Judge Business School, Cambridge, UK. He has been appointed as Chairman of the Human Resource Committee of the Institute of Bankers in Pakistan, which is headed by the Governor State Bank of Pakistan. He is also a member of the Executive Committee of Pakistan Banks' Association.

Seerat Asghar
Director Mr. Seerat Asghar has been appointed as Director of United Bank Limited by the Government of Pakistan with effect from 30 March, 2010. He is also a member of the Human Resources Committee of the Bank. Mr. Asghar has a vast experience gathered over a span of more than twenty nine years in public service at key GOP posts. He brings with him a rich professional and academic experience. He holds an LLB and Master's degree in Political Science from Punjab University, Lahore. His last academic pursuit was at the prestigious Cornell University, USA, where he attended Executive Development Program in Food and Agriculture Business Management. With a strong base in Executive Leadership Development from Harvard University, he has developed a gradual niche in Project Management, Procurement, as well as macro economic planning, resulting in representation of Pakistan at key international foras like International Conference on E-Procurement In Seoul - Korea, Tokyo Ubiquitous Network Conference, Conference on Hazard Risk Management at Delhi - India, 25th Session of the International Grain Council at London - UK, 133rd Session of the FAO Council and 34th Session of FAO Conference at Rome - Italy, US-Afghanistan-Pakistan Agricultural Trilateral Conference In Istanbul, Turkey. At present, he is Additional Secretary, Ministry of Finance, Government of Pakistan.

Annual Report 2010

05

[ Directors Report to the Members ]


On behalf of the Board of Directors, I am pleased to present to you the 52nd Annual Report of United Bank Limited for the year ended December 31, 2010. Total provisions of Rs 8.1 billion for 2010 were significantly lower compared to Rs 13.3 billion in 2009 whilst our coverage at December 2010 stands at 69%. As a result, net credit loss ratio improved from 3.2% in 2009 to 2.3% in 2010. Net interest income after provisions is therefore up 28% to Rs 26.1 billion.
Rs. in Billion

Financial Highlights
UBL achieved a profit after tax of Rs 11.2 billion which is 21% higher than the corresponding period last year and translates into earnings per share of Rs 9.12 (2009: Rs 7.51). On a consolidated basis, UBL achieved a profit after tax of Rs 11 billion, an increase of 16% over 2009.
Rs. in Billion

15
3.2%

3.5%
13.3

12 9 6

2.6%
2.3%

18.0 15.0 12.0 9.0 6.0

17.7

1.8%
8.1

0.9% 0.0%

14.0 11.2 9.2

3
2009 2010
Total Provisions

NCL Ratio

PBT

PAT
2009 2010

The Board of Directors' is pleased to recommend a Final cash dividend of Rs 4 per share i.e. 40% and a bonus share issue of Nil for the year ended December 31, 2010, bringing the total cash dividend for the year 2010 to 50%. Despite the challenging economic environment, UBL has achieved a profit before tax of Rs 17.7 billion. This is 26% higher than last year as a result of continued improvement in operating efficiency and margins. Provisions for the year declined substantially due to the Bank's prudent approach given the difficult credit environment whilst the NPL formation has also reduced year on year.
Rs. in Billion

Fees and commissions generated from core banking businesses increased by 7% to Rs 6.3 billion as the bank significantly increased its market share of home remittances, and due to an overall growth in trade volumes and cross-sell of bancassurance. Exchange income increased by 36% to Rs 1.7 billion as a result of higher transaction volumes and better leveraging of market opportunities. In 2009, the bank recorded significant capital gains both on fixed income securities in the falling rate environment, as well as on equity securities as the stock market increased rapidly post the 2008 crisis. Consequently, capital gains reduced in 2010 by Rs 471 million. This, coupled with exceptional derivatives gains booked in the first half of 2009 resulted in the Bank recording lower Non-interest income, which reduced by 11% from the prior year.

Focused Cost Management


Despite significant inflationary pressures (December YoY CPI of 15.5%), overall administrative expenses increased by only 7.0% over last year. Of this increase, nearly 60% (or Rs 692 million) was as a result of business building activities such as advertising spend and investments in IT, while 13% (approximately Rs 150 million) was due to the impact of Rupee devaluation on International expenses which, in US dollar terms, were restricted to 2009 levels. UBL successfully managed to restrict the rise in premises and utility costs to 9% over last year, a considerable achievement given the spiraling increase in utility costs. Outsourced service charges increased by 15%. Some of these increases were partially offset by reduced personnel costs which declined by 3.7%.

36 7.3% 34
6.9% 7.1%
34.1

7.0% 6.8% 6.5%

32

32.9

30
2009
Net Interest Income

Rationalized Balance Sheet


Gross advances have reduced by 3.6% as a result of rationalization across our portfolios and more prudent lending. The advances to deposits ratio (ADR) decreased from 78% in December 2009 to 67% in December 2010. The bank increased total deposits by 11.9% over 2009 levels but at a significantly reduced cost, in line with its strategy of replacing high cost deposits with lower cost current and savings accounts. The Bank's domestic CASA increased from 76% in December 2009 to 78% in December 2010. Similarly, the bank's domestic low cost deposit mix improved from 66% in December 2009 to 68% in December 2010.

2010
Net Interest Margin

Net interest income before provisions increased to Rs 34.1 billion, 4% higher than last year. The Bank's low cost deposit efforts resulted in an 80 bps reduction in the cost of deposits over last year. However, the yield on earning assets declined as average 6M KIBOR was 39 bps lower in 2010 compared to 2009. Consequently, net interest margin increased from 6.9% in 2009 to 7.1% in 2010.

06

United Bank Limited

Rs. in Billion

492 197 295

551 211

in volatile food prices and remained a key driver behind surging price pressures. Escalating power tariffs remained a regular feature throughout 2010, further fueling inflation. The fiscal position remained fragile as revenue generation remained weak whilst expenditures escalated. FY 2010 fiscal deficit stood at 6.3% of GDP, far exceeding the IMF target. Furthermore, taxation reforms including the Reformed General Sales Tax (RGST) have not yet been implemented due to severe opposition by political parties. The fiscal slippages and spiraling inflation have resulted in a steady increase in interest rates with the State Bank of Pakistan (SBP) raising the discount rate by 150 bps since July 2010 to 14.0%. Lack of fiscal austerity continues to strain domestic liquidity as banks shift towards government paper, which in turn has led to further crowding out of the private sector. The external account position remained a key positive as the current account deficit for FY 2010 was better than expectations at 2% of GDP due to higher remittances and aid inflows, services inflows and increased exports. This trend has continued in FY 2011 as the country posted its first half-yearly current account surplus since 2003. Pakistan's equity markets also performed well and continued to attract foreign investment, with the KSE-100 Index gaining approximately 26% during 2010. The banking sector of Pakistan has been in a consolidation phase since the beginning of 2009 due to the country's economic vulnerabilities. The sector has remained focused on deposits, which grew by nearly 15% in 2010, with aggressive solicitation of current and savings accounts (CASA). Credit lending has remained subdued and Gross Advances increased by only around 5% during 2010. The effects of the depressed economic activity, power shortages and high interest rates have significantly impacted borrowers. NonPerforming Loans (NPLs) have seen a sharp increase of 22%, standing at Rs 494 billion as of December 2010 while infection of the sector's portfolio has also deteriorated from 12.2% in December 2009 to 14.0% in December 2010.

340

Dec-09

Dec-10 Expensive Deposits Low Cost Deposits

We were successful in improving our return on average assets from 1.5% in 2009 to 1.7% in 2010. Return on equity also improved from 19.5% in 2009 to 19.8% in 2010.

Improved Capital Ratios


UBL's strong internal capital generation resulted in a Rs 6.1 billion (14%) increase in Tier 1 Capital, despite keeping Risk Assets flat. Consequently, the unconsolidated Capital Adequacy Ratio (CAR) of the Bank improved from 13.2% in December 2009 to 14.5% in December 2010. The Tier-1 CAR of the Bank has also improved from 9.0% in December 2009 to 10.3% in December 2010. On a consolidated basis, the CAR improved to 15.0% in December 2010 (December 2009: 14.0%) while Tier-1 CAR improved from 9.5% in December 2009 to 10.4% in December 2010.
14.5% 13.2%

International
10.3% 9.0%

Tier 1 CAR

Total CAR
2009 2010

Economy Review
The year 2010 remained fraught with challenges, which impacted the macroeconomic landscape of the country. In the second half of the year, record floods inundated nearly 20% of the country and inflicted significant damage to the fragile economy. Continuing severe shortages of power and gas have exacerbated the situation and Large Scale Manufacturing (LSM), after exhibiting good growth of 5% in FY10, remained subdued during the first half of the current fiscal year. As a consequence, GDP growth estimates for 2010-11 have been scaled down to 2.8% from pre-flood estimates of 4.3%. Inflationary pressures remained active throughout the year, with CPI at 15.5% year-on-year in December 2010 and averaging 13.9% for the year. Supply chain interruptions caused by crop damage resulted

UBL's International business continues to be a key segment for the Bank. In line with the Bank's overall policy, lending remained cautious, resulting in a reduction of 10% in loans and advances. Revenue from the International Business thus declined by 3% from 2009. This was more than offset by cost being contained at prior year levels as well as a 23% reduction in provisions. Consequently, pretax profit increased by 14% over last year. As the global economy continues to recover, UBL is enthusiastic about the future prospects of the International Business. The Bank will explore expansion into new territories which have the potential to enhance shareholder value and represent a natural progression from the existing footprint.

Core Banking Platform Implementation (Project Genesis)


Project Genesis continues to move forward as planned and six branches went live this year on the new core banking system (CBS). This was a significant milestone as it enabled the Bank to test the capabilities of the system on a real time basis. The Customer Service Platform (CSP), a customer relationship management tool, been rolled out in over 350 branches in 2010 and will be rolled out across the country in 2011. The Loan Origination System (LOS) has been implemented for Commercial loans and Consumer products. LOS implementation for the rest of the Bank will be completed by 2012.

Annual Report 2010

07

[ Directors Report to the Members ]


UBL is already starting to see the technological benefits and the improved service capability that these systems will bring to the Bank and its customers.

Launch of UBL Business Partner Plus


UBL launched 'Business Partner Plus' in 2010, the best current account offering in Pakistan. This is a specialized current checking account, with a full menu of services, aimed at providing the necessary tools for individuals, traders, businessmen and commercial customers to transact their entire bank related business activities nationwide through a single platform. This product has been a major success story in its first year of launch.

Key Developments During 2010 Watan Card


The Government of Pakistan (GOP) selected UBL to disburse Rs 20,000 each to over one million families displaced by the flooding. For this effort UBL issued debit cards, called Watan cards, to beneficiaries identified by NADRA and GOP. Additional planned installments in 2011 will assure beneficiaries have multiple opportunities to use (and get used to) the cards. UBL's ultimate goal is to retain the beneficiaries as Branchless Banking customers by introducing them to the benefits of using additional services such as savings, remittances, and bill payments that are accessible via their Watan card Omni accounts. The Bill & Melinda Gates Foundation will contribute US$1.5 million through MEDA (Mennonite Economic Development Association) to support UBL's management and administrative costs of procuring and distributing the cards as well as the cost of ongoing disbursements via Omni Agents. The funding will also support MEDA in monitoring and documenting the UBL Watan experience, in order to share learnings with the wider microfinance and financial sector communities globally.

Signature: Priority Banking


2010 was the first full year of operations for the UBL Priority Banking lounges launched in November 2009. These exclusive lounges cater to the Bank's existing and potential high-net-worth customers, with relationship managers trained to offer a range of wealth management products to service customer needs. UBL has had a successful experience with this offering and plans to expand this business across Pakistan in the future.

Launch of Pakistan's First Premium Debit Card


In 2010, UBL in collaboration with MasterCard, announced the launch of Pakistan's first Premium Debit MasterCard, exclusively designed to cater to the needs of affluent consumers in Pakistan. Customers who fulfill the stipulated eligibility criteria are being offered this card, as part of UBL's continuing commitment to offering the best products to its customers. In addition to the features and privileges inherent in the card program, UBL has also teamed up with various partners to provide preferential benefits to its cardholders.

UBL Omni
UBL Omni commenced commercial operations in April 2010 and with it UBL achieved the honor of being the first commercial bank to launch branchless banking operations in Pakistan. With Omni, UBL aims to attract the unbanked population via its retail business agents called Omni Dukaans which are located in over 350 towns and cities of Pakistan and currently number more than 2,300. Pakistan has nearly 65 million unique mobile phone subscribers whilst it has less than 20 million individuals with bank accounts. This provides the Bank with the unique platform of being able to include a large segment of the country's unbanked population and provide them financial services which have previously remained inaccessible to them. In recognition of UBL's innovative product offering, strong management credentials and admirable goals of financial inclusion, the Bill and Melinda Gates Foundation has given UBL a grant of US$6.9 million through ShoreBank International to promote UBL Omni and ensure its reach to the widest possible community.

Wiz for ACCA


Wiz is a prepaid debit card which was launched in 2008, and UBL is the only bank in the country to have this offering. Customers can deposit up to a limit of Rs 200,000 in their debit card and use it all over the world. The card can be topped-up for usage (just like a prepaid mobile phone connection) from any UBL online branch. UBL entered into a partnership with the Association of Chartered Certified Accountants, UK (ACCA), a global body of accounting professionals, which has thousands of registered students in Pakistan. In this connection, the Bank has launched a Wiz prepaid card specifically for ACCA students, which is especially convenient to them in making fee payments online. This is a key initiative that is expected to increase awareness and usage of the Wiz card.

Credit Ratings
The credit rating company JCR-VIS re-affirmed the bank's long-term entity rating at AA+ and the ratings of its four subordinated debt instruments at AA. The short term ratings remain at A-1+ which is the highest rating denoting the greatest certainty of timely payments by a financial institution. All ratings for UBL have been assigned a Stable outlook. Capital Intelligence (CI), the international credit rating agency, has re-affirmed UBL's Foreign Currency long-term rating at B-, while it's Foreign Currency short-term rating has been upgraded from C to B in line with CI's sovereign ratings action on Pakistan. In addition, the Bank's Financial Strength rating has been re-affirmed at BB+, with the Outlook upgraded from Negative to Stable based on the Bank's strong performance in 2009 and the first half of 2010.

Launch of UBL First Minor Account


The Bank launched 'UBL First Minor PLS Savings Account' in 2010, a savings account designed especially for children, with exciting benefits that are unmatched in the industry. By providing an avenue to parents for financial planning for their children, it should also increase the number of parents in the banking system, as well as develop a new generation of customers loyal to UBL. This product has already generated a high degree of interest amongst children via the Bank's youth outreach and social media campaigns.

08

United Bank Limited

Future Outlook
Going forward, achieving macroeconomic stability remains a key challenge for Pakistan. Continued power and gas shortages along with high borrowing costs are expected to place further pressure on the LSM sector and consequently on GDP growth. Inflationary pressures are expected to remain high, averaging close to 15-16% for 2011. Achieving fiscal austerity remains of utmost significance. The deficit target for 2011 is likely to be breached due to lower revenue generation along with weak expenditure control. However, the external account position should remain healthy as higher remittances, services inflows and increased exports are likely to continue during 2011. Inflationary pressures combined with the weak fiscal position are expected to result in a continued tight monetary policy during 2011. Given the macroeconomic scenario, UBL's focus will remain on proactively managing its asset portfolio while exploring the acquisition of quality assets. The Bank will continue to grow its low cost deposit base by more efficiently leveraging its branch network. UBL also plans to significantly expand its Branchless Banking product to make financial services available to a broader range of people. The Bank is confident that, with the investments it has made in people, technology and products, it is well positioned for further growth.

The Bank operates five post retirement funds Provident Fund, Gratuity, Pension, Benevolent, and General Provident Fund and two benefit schemes Post Retirement Medical and Compensated Absences. Gratuity and Provident Fund Schemes are available to staff who joined the bank post privatization. The value of investments based on latest audited financial statements as at December 31, 2009 of these funds is as follows: Amounts in '000 Employees' Provident Fund Employees' Gratuity Fund Staff Pension Fund Staff General Provident Fund Officers / Non-Officers Benevolent Fund 2,829,590 297,030 6,132,050 1,296,753 787,303

Meetings of the Board


During the year under review, the Board of Directors met six times. The number of meetings attended by each director during the year is shown below:

Statement Under Section XIX of the Code of Corporate Governance


The Board is committed to ensure that requirements of corporate governance set by Securities and Exchange Commission of Pakistan are fully met. The Bank has adopted good Corporate Governance practices and the Directors are pleased to report that: The financial statements present fairly the state of affairs of the Bank, the result of its operations, cash flows and changes in equity. Proper books of account of the Bank have been maintained. Appropriate accounting policies have been consistently applied in preparation of these unconsolidated financial statements, except for the changes in the accounting policies as described in note 5.1. Accounting estimates are based on reasonable and prudent judgment. International Accounting Standards, as applicable to Banks in Pakistan have been followed in the preparation of the Accounts of financial statements without any departure there-from. The system of internal control in the Bank is sound in design, and effectively implemented and monitored. There are no significant doubts upon the Bank's ability to continue as a going concern. There has been no material departure from the best practices of Corporate Governance. The Board has appointed the following three Committees with defined terms of references Board Risk Management Committee Board Human Resources & Compensation Committee Board Audit Committee

Name of the Director


His Highness Sheikh Nahayan Mabarak Al Nahayan Chairman Sir Mohammed Anwar Pervez, OBE, HPk Deputy Chairman Mr. Omar Z. Al Askari Director Mr. Zameer Mohammed Choudrey Director Dr. Ashfaque Hasan Khan * Director Mr. Muhammad Sami Saeed Director Mr. Amin Uddin Director Mr. Arshad Ahmad Mir Director Mr. Seerat Asghar * Director Mr. Atif R. Bokhari President & CEO

Meetings attended
03 06 06 06 01 06 06 06 05 06

Performance highlights for the last six years are attached to these unconsolidated financial statements.

The Board appreciated the services rendered by Dr. Ashfaque Hasan Khan, the out going director. * Mr. Seerat Asghar was appointed as a Director of UBL in place of Dr. Ashfaque Hasan Khan with effect from March 30, 2010.

Annual Report 2010

09

[ Directors Report to the Members ]


Pattern of Shareholding
The pattern of shareholding as required u/s 236 of the Companies Ordinance, 1984 and Articles (xix) of the Code of Corporate Governance is given below : Shareholders Bestway Group (BG) Abu Dhabi Group (ADG) State Bank of Pakistan Government of Pakistan Privatization Commission of Pakistan General Public & others NIT Bank, DFIs & NBFIs Insurance Companies Modarabas & Mutual Funds Securities & Exchange Commission of Pakistan * International GDRs (non voting shares) TOTAL OUTSTANDING SHARES * ADG also holds 4.80% additional shares in the form of GDRs. No. of Shares 380,355,324 312,165,804 238,567,381 3,354,550 1,714 169,818,347 1,307,327 15,267,751 7,355,969 17,482,437 1 78,503,082 1,224,179,687 % of ordinary Shares 31.07 25.50 19.49 0.27 0.00 13.87 0.11 1.25 0.60 1.43 0.00 6.41 100.00

The aggregate shares held by the following are: No. of shares


a) Associated Companies, undertakings & related parties - Bestway (Holdings) Limited - Bestway Cement Limited - Al Jaber Transport & General Contracting b) NIT -National Bank of Pakistan - Trustee Department NI(U)T Fund -National Investment Trust Limited c) d) e) Public sector companies and corporations Banks, DFIs, NBFIs, Insurance Companies, Modaraba & Mutual Funds Directors / CEO / Executives -H.H. Sheikh Nahayan Mabark Al Nahayan -Sir Mohammed Anwar Pervez,OBE,HPk -Omar Z. Al Askari -Zameer Mohammed Choudrey -Amin Uddin -Atif R. Bokhari -Other Executives * * Figure for Other Executives includes 942 shares held by their spouses and minor children. 78,942,102 62,433,163 14,998,307 1,497,234 2,750 931,519 2,985,792 1,302,665 4,662 147,515 40,106,157 222,775,183 93,649,744 59,993,236

Shareholders holding 10% or more voting interest


-State Bank of Pakistan -Bestway (Holdings) Limited

No. of shares
238,567,381 222,775,183

%
19.4879 18.1979

There was no trading in UBL shares carried out by any of the directors, CEO, CFO, and Company Secretary, or their spouses and minor children during the year.

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United Bank Limited

Risk Management Framework


The Bank has an integrated Risk Management structure in place. The Board Risk Management Committee (BRMC) oversees the whole risk management process of the Bank. The Risk and Credit Policy Group assists the BRMC. The Group is organized into the functions of Credit Administration, Market and Treasury Risk, Commercial and FI Credit Policy, Consumer and Retail Credit, Credit Risk Management and Operational Risk & Basel II. Each risk category is headed by a senior manager who reports directly to the Group Executive, Risk and Credit Policy. As Pakistan progresses through a period of eco-political turmoil, UBL strengthened its capacity for identifying and reducing risk. The year saw emphasis on close monitoring of the asset portfolio across all segments, including actively working with clients to help them with repayments and restructuring. Steps were also taken to enhance the efficiency of the credit approval process through appropriate delegation of approval authority. A holistic Risk Management Policy was finalized in 2010. This is an umbrella policy, providing an integrated framework to encompass Credit, Liquidity, Agricultural, International, Market and Human Resource risk, aimed at portfolio quality improvement. A comprehensive Agriculture Credit Policy was also developed and finalized over the year. The formulation and approval of these policies involved input from the Board and senior management to ensure that risks were accurately assessed. In order to keep businesses aware of market and industry developments, the Credit Policy & Research Division provided regular updates on major macroeconomic issues and specific industry developments. The Capital Adequacy Ratio (CAR) was maintained well above the prescribed regulatory threshold throughout the year. The CAR calculation process has been optimized through automation and system based reporting is expected to commence from 2011. The Bank continued its efforts towards implementing the Operational Risk Management Framework across the bank and achieved the deployment of operational risk monitor, a key milestone in this regard. The Bank plans to move to the Advanced Approach for Basel II, including all its components and has prepared a roadmap towards implementation. In order to automate the loan origination process for Corporate, Commercial and SME borrowers, a Loan Origination System (LOS), one of the most critical components of UBL's new Core Banking System, has been implemented. LOS facilitates routing of credit applications created on a predefined format to recommenders and approvers electronically. During the year, the LOS has been successfully implemented for Consumer & SME loans. User Acceptance Testing (UAT) for Corporate and Commercial credit applications on LOS has been done successfully and Bank wide roll out covering all segments and customers is expected in 2012. Consumer financing portfolios remain stressed around the country due to the high inflationary environment with consequent escalation in borrowing costs. UBL continued to effectively manage its portfolio and developed a behavior scoring model as a risk management tool to facilitate automated credit limit management, collections management and transaction authorization. The Bank is in the process of developing an Application Scoring model for identification of quality acquisition prospects across the consumer portfolio. The Market and Treasury Risk unit has continued to review risk policies and procedures to ensure that operating controls are robust and limits are in place to manage risk without unduly hampering business. Towards this end, several initiatives have been taken during the current year. For the equity trading portfolio, a Value-at-Risk

approach is being back tested and fine-tuned whereas for the derivatives portfolio a revised mechanism has been rolled out to measure and monitor pre-settlement risk. Market Risk Limit setting mechanisms have also been updated to place greater reliance on quantitative rather than subjective methods. For the banking book, several analytical tools are under review to supplement stress testing requirements. The Bank also continues to invest in systems and people as part of its process of continuously strengthening the risk management function.

Auditors
The present auditors M/S. Ernst & Young Ford Rhodes Sidat Hyder, Chartered Accountants and M/S. BDO Ebrahim & Co., Chartered Accountants retire and being eligible, offer themselves for reappointment in the forthcoming Annual General Meeting.

Conclusion
In conclusion, I extend my thanks and appreciation to UBL shareholders and customers as well as to my fellow members of the Board of Directors for their trust and support. We acknowledge the efforts and dedication demonstrated by our staff and would also like to express our earnest appreciation to the Government, the State Bank of Pakistan, the Securities & Exchange Commission and other regulatory bodies for their continued support. For and on behalf of the Board,

Nahayan Mabarak Al Nahayan


Chairman Abu Dhabi February 21, 2011

Annual Report 2010

11

[ Statement of Corporate Social Responsibility ]


The commitment to continuously create value for its customers, employees and local communities is a major priority of UBL. In 2010, the Bank provided support of over Rs 80 million for CSR initiatives principally in the areas of education, health care and community development. UBL's efforts in the field of CSR were also acknowledged by the Pakistan Center for Philanthropy (PCP), an independent organization, as one of the largest donors to charitable causes in Pakistan. UBL, as a Contributing Sponsor of the Karachi Education Initiative (KEI), contributed Rs 40 million to this cause. This initiative aims to set up a world class School of Business and Leadership in Karachi. Additionally, Rs 3.9 million were also donated to other organizations operating in the field of education, including The Citizens' Foundation and the Lahore University of Management Sciences. In the areas of health and community development, UBL contributed over Rs 10 million to the Edhi Foundation, SOS Villages of Pakistan, Marie Adelaide Leprosy Centers, Special Olympics Pakistan, The Police Hospital Fund and Friends of Burns Center. The massive floods across Pakistan in July 2010, resulted in almost 20% of the country being inundated, and over 20 million people rendered homeless and stripped of basic needs such as food and clean drinking water. UBL initiated a donation program nationwide, accompanied by a significant media campaign, with a pledge to match each donation rupee for rupee. UBL's employees also answered the call; voluntarily donating one day's salary, which was also matched by the Bank. These funds were then utilized towards rehabilitation of the flood affectees, with a focus on the provision of clean drinking water. As a result of its previous success and credibility in distributing Government aid to the Internally Displaced Persons in Swat, the Government of Pakistan chose UBL to route payments of Rs 20,000 each to 1 million households displaced in the floods. UBL made this possible by collaborating with NADRA and using the Bank's established Omni Branchless Banking platform to deliver payments to recipients via Watan-Visa debit cards. UBL successfully disbursed the funds in 70 districts of Pakistan in record time, and with a transparency that has been appreciated by several international donor organizations. Recognizing UBL Omni's efforts for financial inclusion of this previously unbanked population, the Bill and Melinda Gates Foundation has supported UBL through a US$ 1.5 million grant for supporting the Watan project.

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United Bank Limited

[ President & CEO Review 2010 ]


Introduction
Pakistan's weak macroeconomic situation remained under pressure during 2010, particularly in the wake of the floods that affected a large part of the country. This was manifested through spiraling inflation driven by escalating food prices and frequent increases in utility rates, rising interest rates and slippages on fiscal targets. In this difficult environment, UBL has delivered a healthy growth of 26% on pretax profit. During the year, the Bank's focus remained on prudent and proactive management of its loan portfolio, low cost deposit growth and control over costs. The Bank has been successful in these efforts as seen by lower provisions, reduced cost of funds and expense growth substantially below inflation levels. UBL also invested in technology and new products and distribution channels which it believes will help the Bank in achieving its ambitious growth plans. The performance of the Bank's International business also improved over the last year as the Middle East economies stabilized. Costs were held at prior year levels while active portfolio management resulted in significantly lower provisions. This business remains a key part of UBL's strategy and the Bank will be looking to consolidate and build on gains achieved this year. UBL's key ratios showed improvement as the unconsolidated CAR improved from 13.2% to 14.5%, while Tier-1 CAR of the Bank improved from 9.1% to 10.3%. The consolidated CAR also improved by similar amounts. Shareholder returns also improved as the Return on Assets improved from 1.5% to 1.7% and the Return on Equity improved from 19.5% to 19.8%. The advances to deposits ratio (ADR) also reduced from 78% to 67% reflecting the improved liquidity situation of the Bank.

Retail Bank
The Retail Bank consists of Commercial and Consumer Assets and Agri Lending. This business is also responsible for the majority of the branch network and deposit mobilization. In 2010, the Retail Bank undertook some major new initiatives and product introductions to supplement the menu of products and services. The liabilities and branch banking business had a strong year, resulting in an improved deposit mix. Low cost deposit generation remained the key element of the deposit strategy and enabled the Bank to achieve a significantly lower cost of deposits. For the asset businesses, 2010 was a year of consolidation, focusing on leveraging the right mix of technology and people to manage the portfolio. There was also a focus on the newly introduced Relationship Model, to best deploy the strengths of the branch network in initiating and managing asset relationships. Market conditions are still not conducive for large scale consumer lending. Consequently, the focus was on quality acquisitions, loss containment from the legacy portfolio, and cost rationalization. This strategy was complemented with key strategic alliances on both the acquisitions and the collections fronts, and initiatives to improve the offering and service levels to our existing customers to maximize loyalty. During 2010, UBL also reached out to two significant segments; one was the high net worth segment, through Signature, UBL's Priority Banking offering. This has shown encouraging results in its first year of operation, and is augmented by the introduction of the Premium Debit MasterCard, a product which offers a range of benefits to the Bank's large base of affluent customers. The other segment targeted by the Retail Bank was the youth. Over 70% of the population of Pakistan is under the age of 21, and various targeted offerings were developed for this market. UBL First Minor Savings Account, a product with exciting benefits targeted specifically at children and their parents, offers a creative vehicle for parents to save for their children as well as to teach them about sound financial planning. UBL First will also serve to introduce a new generation to UBL and build customers for life.

Key financials
Despite the challenging economic environment, UBL has achieved an unconsolidated profit before tax of Rs 17.7 billion, 26% higher than last year as a result of continued improvement in operating efficiency and margins. Deposits grew by nearly 12% as the Bank remained focused on mobilizing low cost deposits. UBL's domestic low cost deposit mix improved from 66% to 68% resulting in a reduction of 80 bps in the cost of deposits. Gross advances reduced by 4% as a result of rationalization across our portfolios, and more prudent lending which, along with a lower average KIBOR, led to lower asset yields. Consequently, net interest margin increased from 6.9% in 2009 to 7.1% in 2010 and Net interest income before provisions increased to Rs 34.1 billion, 4% higher than last year. Management of the loan portfolio remained a key priority for the Bank which actively worked with borrowers to restructure those with genuine difficulties while pursuing recoveries from defaulters. Lending parameters were also tightened to ensure growth of quality assets. The Bank was thus able to reduce provisions to Rs 8.1 billion for 2010 from Rs 13.3 billion in 2009, while also slowing the growth in non-performing loans. Net credit loss ratio improved to 2.3% in 2010. Fees and commissions generated from core banking businesses increased by 7% to Rs 6.3 billion through growth in home remittances, trade volumes and cross-sell of bancassurance. Exchange income increased by 36% to Rs 1.7 billion as a result of higher transaction volumes and better leveraging of market opportunities. However, the high capital gains recorded in 2009 were not repeated and these reduced to Rs 159 million in 2010. Income from the derivatives business also reduced as 2009 results included one-off gains which were not expected to recur. Despite inflation of around 14%, overall administrative expenses increased by only 7% over last year. Of this increase, the majority was for business building activities such as advertising spend and investments in IT. UBL remains committed to managing its costs prudently, in the best interests of its shareholders and customers.

Islamic Bank
UBL's Islamic Banking business, Ameen, also took steps towards establishing itself with an additional dedicated Islamic Banking branch and better leveraging of the availability of Islamic Banking services throughout all UBL branches, including specialist Islamic Banking windows in key areas. The business doubled its deposit base in 2010, and expects further strong growth in 2011.

Corporate Bank
The Corporate Banking Group at UBL continues to remain a preferred provider of strategic and structured financial solutions to the top tier corporate clientele in Pakistan. Backed by an experienced Relationship Management team stationed at Regional Corporate Centers across

Annual Report 2010

13

[ President & CEO Review 2010 ]


the country, the team is recognized for their knowledge and innovative solutions which help maintain the highest quality of service standards and further allows cross-sell of other UBL products within the Investment Banking Group, Treasury, Trade Finance and Cash Management. For the Corporate Bank, 2010 has been a year of proactive management of its loan book, restructuring of stressed assets and recovery. Despite the prevailing strained credit and economic environment, good progress was made as provisions declined by 60% and NPL formation reduced substantially. However, with a continued focused approach towards marketing, fees and commissions revenue generated during the year increased by 50% over the previous year, primarily due to the innovative products and the superior client servicing capabilities of the bank in the areas of Trade Finance, Cash Management and Home Remittances. Complementing this healthy growth, operating cost increase was restricted to only 5%. The Cash Management Business sustains its market leadership position and continued to provide around 31% growth over last year. Overall transaction volume handled reached nearly Rs 450 billion through provision of industry specific products and solutions for collections and payments, despite increasing competitive pressures. The migration to the new core banking system (Symbols) is likely to further enhance maneuverability in terms of centralized data base management and improved working capital cycle management. The Home Remittances business during the year has further established UBL as a lead player, where market share has increased to 18% recording an aggregate volume of US$1.7 billion. This YOY growth in volumes by around 43% is a result of continued support of the Bank's correspondents all over the globe, persistent marketing efforts, development of new products and high quality service standards. UBL continued to launch innovative products for domestic and offshore clients, using its in-house state of the art cash management and net banking solutions. Products like Tezraftaar Cheque and Account to Account Transfer have been in the market for some time while Tezraftaar Cash - Cash Over the Counter product was introduced during the year and was a significant contributor towards attainment of these volumes. UBL plans to further expand its presence through actively pursuing foreign counterparty tie-ups with the support from the Pakistan Remittance Initiative and has already taken several steps in this direction. Middle East initiative remained a priority area during the year, especially in Yemen and the smaller UAE emirates with a focus on the Energy and Power sectors. The Equity & Advisory business emerged as a strong private equity shop within the domestic banking industry, aimed at developing and growing a middle-market M&A expertise both in Pakistan and the GCC. Carrying a sustainable deal pipeline into 2011, the business has gained significant momentum over the last eighteen months with a notable success being the successful arrangement of foreign direct investment by a Korean multinational in one of the country's most notable food brands.

International
The impact of the global financial crisis that started in 2008 continued to be felt in 2010, however, in general, macroeconomic stability was seen in most GCC economies. Oil prices continued to rise and enhanced the revenue generation of two key markets of the franchise, Abu Dhabi and Qatar. The restructuring of the Dubai World conglomerate provided a much needed boost and helped revive investor confidence in the region. This was evidenced by the launch of new bonds that were extremely well received and heavily oversubscribed. The International Business continued to remain focused on liquidity management, asset quality management and expense control. The Asset portfolio was under constant scrutiny in every territory through proactive relationship management and prudent risk taking. Corporate Banking, the mainstay of the bank in most of the overseas operations, performed well, and the bank continued to do business with top rated borrowers. Delinquencies in the unsecured retail portfolio have stabilized; however, the mortgage portfolio in UAE suffered on account of the further downturn in the real estate market. The overall lending was very closely monitored, with prudent provisioning of loans as evidenced by the improvement in the coverage ratio. The Bank successfully completed the first syndicated investment banking transaction for a private power project in Yemen. This was the first ever transaction of its nature in Yemen and also the first ever for the Bank outside Pakistan. It has opened up new avenues for revenue generation for the international operations and also enhanced the brand image of the franchise. Going forward, the international business of the bank is well positioned to build on the momentum started in 2010 with particular emphasis on optimizing the existing customer base, focusing on non-fund income streams and continuing proactive risk management strategies. The business remains alert to potential opportunities and will continue to enhance its presence both in existing and in new markets, where appropriate returns are available.

Investment Banking
Despite a difficult environment, the Investment Banking Group (IBG) maintained its leadership in the domestic market during 2010. UBL continues to build on its Middle East initiative with a significant rise in overseas earnings supplementing domestic revenues. A landmark transaction during 2010 was the successful close of the first ever syndicated project finance transaction in Yemen amounting to US$ 20 million. Debt Capital Markets & Syndications remained a strong performer by successfully concluding a number of large and important transactions including leading one of the most high profile local market transactions of the year, i.e. the Rs 8 billion syndicated financing facility for Qasim International Container Terminal. Project & Structured Finance remained the largest contributor to IBG's fee earnings for the fifth consecutive year. Focus for the year was on soliciting and executing non-fund-based project advisory assignments domestically, most notably that for a hydro power project sponsored by a Government of Korea owned entity. The

Branchless & E-Banking


UBL rolled out the commercial launch of Branchless Banking in April 2010. The array of services offered include basic banking services such as account opening, cash withdrawals and deposits as well as several value added services including remittances, bill payments and purchase of mobile airtime. Branchless Banking users have access to multiple channels including ATMs and Phone Banking. In its first eight months, UBL Omni has managed to grow to a network of more than 2,300 Dukaans (i.e. retail business agents) spread across more than 350 cities and towns of Pakistan. In 2010, more

14

United Bank Limited

than 4 million transactions amounting to more than Rs 22 billion were carried out through the Omni platform, including the payments to the flood affected population. UBL Omni also managed to take the lead in transforming the Government to People (G2P) arena in Pakistan by working closely with the GOP and multilateral agencies. The Bank provided transparent and efficient cash disbursement services for more than one million flood affected people in KPK, Punjab, Sind and AJK, more than 20,000 World Food Program beneficiaries and more than 400,000 recipients of the Benazir Income Support Program in different remote parts of Pakistan. These efforts have led UBL Omni to be recognized as a benchmark and a role model for G2P payment services not only locally but also internationally. UBL Omni was also the recipient of a US$ 1.5 million grant by the Bill & Melinda Gates Foundation through MEDA, for supporting the flood relief payments Watan project. In addition, the Bill & Melinda Gates Foundation has also announced a US$ 6.9 million grant through ShoreBank to support enhanced financial inclusion of the country's underbanked population through UBL Omni. This grant will be made available over a period of two years. UBL Omni continues to create new and more efficient business models and is already providing cash management services to FMCGs, fee collection services to schools and facilitating microfinance institutions in increasing their reach by leveraging the 2,300 strong Dukaan network for disbursements and collections services. UBL Omni plans to continue offering new products and services through its platform. In addition to providing convenience to the Bank's customers, this channel also allows UBL to service its branch customers more efficiently by leveraging the agent network to divert routine, repetitive transactions out of the branches. Within the E-Banking area, products introduced by UBL over the years such as Click-N-Remit, Click-N-Bank and NRP Direct have already had wide acceptance. During 2010, UBL's Middle East business was enabled to offer netbanking service to its customers - a feature that has been eagerly anticipated for a while by the Bank's clients in those countries. At the same time, the internet banking platform is being enhanced locally to enable Corporate and SME customers to also use this facility.

A major milestone was the development and implementation of a new FX Sales system allowing streamlining of operational requirements at all levels, and strengthening the MIS and transaction tracking system. Cross-functional training sessions were held for branches handling Foreign Exchange transactions, resulting in better client handling, transaction booking and efficient reporting. UBL has improved the turnover ratio for usage of its allocated limits and increased its FX trading volumes resulting in substantial increase in profitability The Capital Markets team has consolidated and restructured its Equity Trading portfolio and the Derivatives business continues to provide innovative solutions and competitive pricing to Corporate clients.

Human Resources
In 2010 UBL maintained its focus on enhancing the quality of the staff through development initiatives as well as induction of talent at various levels. As part of its annual plan, the Bank inducted over 180 Retail Banking Officers and provided them comprehensive training in its Karachi, Lahore and Islamabad training centers, subsequent to which they have currently been assigned to various Retail branches for on-the-job training. The Bank also inducted 250 Cash officers into the permanent cadre through a rigorous selection process after having completed on-the-job training of over one year. The emphasis on training and development of employees continued, with approximately 30,000 man days of training conducted during the year. The focus remained on enhancing technical and product knowledge with the goal of ultimately improving the service provided to the Bank's customers. Investment was also initiated in the implementation of a state-of-the art employee and managerial self service system along with e-learning capability. This is expected to be in place by early 2011 and will provide the basis for enhanced skill and knowledge development capability as well as management of staff related issues such as loan processing, leave applications, etc. Nearly 200 UBL staff were also affected by the flooding in the country. The Bank provided all such staff logistical and financial support to help them in their hour of need.

Treasury & Capital Markets


UBL promoted the introduction of SBP's electronic platform for GOP Securities trading which was launched in January 2010. As a leading Primary Dealer, UBL provided support by actively trading on the Bloomberg Electronic Bond platform, establishing itself as one of the top players for GOP Securities distribution. UBL has also been ranked amongst the top 3 Primary Dealers for the fiscal year 20092010. UBL has been able to strengthen its liquidity management by investing in Securities portfolios which are generating regular inflows. The Investments portfolio has grown significantly and UBL has successfully taken advantage of higher interest rates to optimize portfolio returns. 2010 saw a strong performance from the Treasury Sales desk with a focus towards greater client coverage in FX, Fixed Income and Derivatives products. The Treasury Sales team was strengthened with the addition of new dealers, along with formal training for the existing staff. A separate Fixed Income desk was successfully set up and secondary market activity was doubled, making UBL a leading player in the fixed income market.

Risk and Credit Policy


With the economy in a turbulent state, Risk & Credit Policy Group increased efforts to improve the Bank's risk management framework to bolster the asset quality of the corporate, commercial, consumer and international portfolios. Proactive portfolio management was conducted through stringent monitoring of troubled accounts, specifically those of the Power and Textile sectors, coupled with facilitating recovery through active restructuring. Steps were taken to enhance the efficiency of the approval process through appropriate delegation of credit approval authority, along with automation of the approval process. A comprehensive Risk Management Policy was finalized in 2010. This is an umbrella policy which develops an integrated framework to encompass Liquidity, Agricultural Credit, International/Local Credit, Market as well as Human Resource risk. An Agriculture Credit Policy has also been developed and finalized over the year. Efforts to implement the Operational Risk Management Framework across the Bank have been ongoing and deployment of an Operational Risk

Annual Report 2010

15

[ President & CEO Review 2010 ]


Monitor system is one of the major milestones in this regard. In order to automate the loan origination process for Corporate, Commercial and SME borrowers, a Loan Origination (LO) module has also been indigenously designed. During the year the LO has been successfully implemented for SME and Consumer loans in Karachi and this is expected to be rolled out Bank-wide in 2012. For the equity trading portfolio, a value-at-risk methodology has been implemented and is being back tested, while for the derivatives portfolio a revised mechanism has been rolled out for measurement and monitoring of pre-settlement risk. Market Risk limit setting mechanisms have also been revised to rely on quantitative rather than subjective methods. With regards to consumer credit, behavioral scoring and automated delinquent collection strategies have been implemented in order to perform customer segregation and the subsequent curative action in a more efficient manner. UBL is also in the process of implementing an Application Scoring model, which will enable the risk decision makers to allocate limits/pricing facilities on the basis of risk profile. Steps have also been taken towards better information management during the year, with the Credit Policy & Research Division providing regular updates to business units on major macroeconomic and specific industry related happenings.

Conclusion
Through a difficult year, UBL has demonstrated a strong performance. This has been made possible through attention to several core issues, stringent monitoring of asset quality and credit performance and hiring and development of high quality talent. While the Bank remains conscious of costs, it continues to make selective investments in technology and new products and channels to maintain its reputation as an innovator. Although economic conditions remain challenging, the actions taken during the year position the Bank well to build on its solid base and take advantage of opportunities both locally and in overseas markets.

Atif R. Bokhari
President & CEO Karachi. February 22, 2011

Core Banking Platform Implementation (Project Genesis)


During the year 2010, Project Genesis achieved a major milestone; six branches went live on the new Core Banking System (CBS). These included three Retail Branches and the Corporate branch of Karachi besides Mortgage and Personal loan branches. This enabled the bank to test the CBS with almost the entire spectrum of transactions being conducted in UBL. With this migration, UBL also achieved a single Customer Information File for all the Bank's customers, providing a full view of all the customer's products with the Bank. The Enterprise Banking Suite (EBS) is the front end solution for CBS comprising the customer service platform (CSP) and the loan origination system (LOS). CSP is a customer relationship management tool and has been rolled out in over 350 branches. LOS has been implemented for Commercial loans and Consumer products and is underway for Corporate loans and Credit Cards. During 2011, CSP will be rolled out across the country while LOS implementation for all products will be completed in 2012. The implementation and integration of CBS and EBS has provided seamless end to end processing for customer transactions.

Corporate Social Responsibility


UBL undertook several initiatives in its role as a good Corporate Citizen, which are described in detail on Page 12. The most important of these was where UBL and its employees contributed nearly Rs 38 million towards helping their fellow countrymen who were badly affected by the floods. UBL provided flood affectees with a unique LifeStraw filter, each of which purifies enough dirty water to cater to a family of five for 3 years. This not only ameliorated their immediate concerns of access to clean drinking water, but had an equally important secondary impact of staving off water-borne diseases, a great threat in those conditions. UBL also ran a campaign encouraging the general public to contribute towards this initiative and received generous contributions which were matched by UBL.

16

United Bank Limited

[ Growth at a Glance ]
Six Years Financial Summary December 31 BALANCE SHEET Assets Cash and balances with treasury and other banks Lending to financial institutions Investments- gross Advances - gross Operating fixed assets Other assets Total assets - gross Provisions against non-performing advances Provisions against diminution in value of investment Total assets - net of provision Liabilities & Equity Deposits & other Accounts Borrowing from financial institutions Sub-ordinated loans Bills payable Other liabilities Total Liabilities Net Assets / Liabilities Share capital Reserves Un - appropriated profit / (loss) Equity - Tier 1 Surplus on revaluation of assets Equity Total liabilities & equity PROFITABILITY Markup / rerurn / interest earned Markup / rerurn / interest expensed Net Markup / Interest income Fee, commission, brokerage and exchange income Capital gain & dividend income Other income Non interest income Gross income Administrative expenses and other charges Profit before provisions Donations Provisions Profit before taxation Taxation Profit / (Loss) after taxation CASH FLOW STATEMENT - SUMMARY Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Cash and cash equivalents at the beginning of the year Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the year FINANCIAL RATIOS Return on equity (RoE) Return on assets (RoA) Profit before tax ratio Gross spread ratio Return on capital employed (ROCE) Advances to deposits ratio (ADR) - gross Advances to deposits ratio (ADR) - net Income to expense ratio Cost to revenue ratio Growth in gross income Growth in net profit after tax Total assets to shareholders' funds Intermediation cost ratio NPL ratio Net infection ratio Weighted average cost of Funds Capital adequacy ratio (CAR)* 19.8% 1.7% 40.1% 57.5% 16.4% 67.0% 60.6% 2.41 41.5% -0.3% 21.4% 10.2 3.5% 13.2% 4.1% 5.4% 14.5% 19.5% 1.5% 31.6% 53.9% 15.5% 77.7% 72.0% 2.61 38.4% 15.1% 10.3% 10.2 3.5% 10.2% 3.0% 5.6% 13.2% 21.9% 1.5% 36.0% 53.7% 17.7% 80.8% 76.8% 2.39 41.8% 16.4% -0.8% 13.8 3.6% 7.1% 2.2% 5.2% 9.9% 27.5% 1.8% 39.3% 58.7% 23.0% 79.0% 74.7% 2.47 40.6% 19.0% -11.3% 12.5 3.6% 6.9% 1.5% 4.5% 10.3% 41.2% 2.5% 51.4% 63.2% 33.8% 77.9% 73.8% 2.54 39.4% 45.4% 59.2% 14.2 3.5% 6.2% 1.1% 4.0% 11.1% 35.9% 1.9% 49.6% 70.0% 29.3% 75.8% 70.8% 2.45 40.9% 59.4% 60.7% 16.0 3.0% 7.7% 1.2% 2.6% 9.3% 100,070 (77,703) (4,010) 66,878 420 85,654 23,099 (14,323) (1,016) 57,567 1,549 66,878 388 (10,440) 2,051 61,718 3,850 57,567 50,592 (50,187) (1,944) 62,974 283 61,718 22,897 (6,531) 704 46,792 (888) 62,974 16,433 (9,817) (278) 41,544 (1,090) 46,792 59,332 (25,223) 34,109 7,992 712 1,418 10,121 44,229 (18,337) 25,892 (82) (8,068) 17,742 (6,582) 11,160 61,107 (28,164) 32,943 7,139 1,233 3,048 11,420 44,363 (17,015) 27,348 (56) (13,258) 14,035 (4,842) 9,193 51,919 (24,062) 27,857 8,044 769 1,866 10,680 38,537 (16,103) 22,434 (12) (8,548) 13,874 (5,541) 8,333 41,046 (16,936) 24,109 5,992 1,382 1,618 8,992 33,102 (13,425) 19,677 (14) (6,658) 13,005 (4,602) 8,403 32,992 (12,127) 20,865 5,095 1,115 738 6,948 27,813 (10,967) 16,846 (11) (2,543) 14,292 (4,824) 9,468 20,159 (6,046) 14,113 3,219 584 1,210 5,013 19,126 (7,818) 11,308 (63) (1,763) 9,482 (3,533) 5,949 85,654 12,385 227,237 368,692 22,424 20,012 736,403 (34,960) (2,658) 698,785 550,646 45,105 11,986 5,046 17,588 630,370 68,415 12,242 21,689 26,250 60,181 8,234 68,415 698,785 66,878 23,162 138,398 382,478 21,926 17,514 650,356 (28,387) (2,253) 619,716 492,036 35,145 11,990 5,147 14,462 558,780 60,937 11,129 18,960 22,188 52,276 8,660 60,937 619,716 57,567 22,805 118,865 390,903 18,021 19,677 627,839 (19,763) (2,537) 605,539 483,560 44,196 11,994 5,194 16,732 561,677 43,863 10,117 15,502 16,604 42,223 1,640 43,863 605,539 61,718 24,782 115,937 316,737 16,944 11,741 547,858 (17,383) (351) 530,124 400,975 59,103 5,997 6,079 15,549 487,703 42,421 8,094 10,262 15,654 34,009 8,412 42,421 530,124 62,974 29,572 67,661 260,909 5,234 10,915 437,266 (13,600) (401) 423,266 335,078 38,491 5,998 4,561 9,275 393,402 29,863 6,475 8,299 12,430 27,204 2,660 29,863 423,266 46,792 17,868 63,661 219,275 4,449 10,103 362,148 (14,465) (634) 347,049 289,226 21,790 3,999 4,160 6,205 325,381 21,668 5,180 6,225 7,351 18,756 2,912 21,668 347,049 2010 2009 2008 2007 Standalone PKR 'million 2006 2005

Annual Report 2010

17

[ Growth at a Glance ]
December 31 SHARE INFORMATION Cash dividend per share Proposed bonus issue per share Dividend yield (based on cash dividend) Dividend payout ratio (total payout) Earning per share (EPS) ** Price earnings ratio (PE x) Market value per share - at the end of the year Market value per share - highest during the year Market value per share - lowest during the year Breakup value per share - Without surplus on revaluation of assets Breakup value per share - With surplus on revaluation of assets OTHER INFORMATION Non - performing advances (NPLs) Import Business Export Business Number of employees Number of branches * 2007, 2008 and 2009 numbers are based on BASEL II framework ** EPS for prior years has been adjusted to affect bonus shares issue during 2010. 48,593 447,743 175,826 11,573 1,123 39,101 335,764 136,694 11,371 1,120 27,839 422,958 123,050 12,705 1,119 22,012 286,863 104,780 12,797 1,078 16,255 259,221 85,597 13,376 1,044 16,960 203,628 81,412 11,556 1,043 5.00 7.3% 54.8% 9.12 7.48 68.23 70.00 49.00 49.16 55.89 2.50 1.00 4.3% 42.4% 7.51 7.08 58.45 66.50 27.92 46.97 54.76 2.50 1.00 6.8% 42.5% 6.81 4.48 36.91 223.20 36.91 41.73 43.35 3.00 2.50 1.7% 53.0% 6.86 16.65 172.90 228.55 152.00 42.02 52.41 3.00 2.50 2.0% 37.6% 7.73 10.50 153.50 183.50 110.00 42.01 46.12 2.50 2.50 2.3% 43.5% 4.86 9.56 109.75 112.00 59.25 36.21 41.83 2010 2009 2008 2007 2006 2005

VERTICAL AND HORTIZONTAL ANALYSIS BALANCE SHEET December 31 VERTICAL ANALYSIS Assets Cash and balances with treasury and other banks Lending to financial institutions Investments- net Advances - net Operating fixed assets Other assets Total assets Liabilities & Equity Deposits & Other Accounts Borrowing from financial institutions Sub-ordinated loans Bills payable Other liabilities Total Liabilities Share capital Reserves Un - appropriated profit / (loss) Equity - Tier 1 Surplus on revaluation of assets Total equity 2010 2009 2008 2007 2006 2005

12.3% 1.8% 32.1% 47.8% 3.2% 2.9% 100.0%

10.8% 3.7% 22.0% 57.1% 3.5% 2.8% 100.0%

9.5% 3.8% 19.2% 61.3% 3.0% 3.2% 100.0%

11.6% 4.7% 21.8% 56.5% 3.2% 2.2% 100.0%

14.9% 7.0% 15.9% 58.4% 1.2% 2.6% 100.0%

13.5% 5.1% 18.2% 59.0% 1.3% 2.9% 100.0%

78.8% 6.5% 1.7% 0.7% 2.5% 90.2% 1.8% 3.1% 3.8% 8.6% 1.2% 9.8%

79.4% 5.7% 1.9% 0.8% 2.3% 90.2% 1.8% 3.1% 3.6% 8.4% 1.4% 9.8%

79.9% 7.3% 2.0% 0.9% 2.8% 92.8% 1.7% 2.6% 2.7% 7.0% 0.3% 7.2%

75.6% 11.1% 1.1% 1.1% 2.9% 92.0% 1.5% 1.9% 3.0% 6.4% 1.6% 8.0%

79.2% 9.1% 1.4% 1.1% 2.2% 92.9% 1.5% 2.0% 2.9% 6.4% 0.6% 7.1%

83.3% 6.3% 1.2% 1.2% 1.8% 93.8% 1.5% 1.8% 2.1% 5.4% 0.8% 6.2%

18

United Bank Limited

December 31 HORIZONTAL ANALYSIS Assets Cash and balances with treasury and other banks Lending to financial institutions Investments- net Advances - net Operating fixed assets Other assets Total assets Liabilities & Equity Deposits & Other Accounts Borrowing from financial institutions Sub-ordinated loans Bills payable Other liabilities Total Liabilities Share capital Reserves Un - appropriated profit / (loss) Equity - Tier 1 Surplus on revaluation of assets Total equity PROFIT AND LOSS ACCOUNT VERTICAL ANALYSIS Interest / Return / Non Interest Income earned Markup / Return / Interest earned Fee, Commission, Brokerage and Exchange income Capital gain & Dividend income Other income Total Interest / Return / Non Interest Expense Markup / Return / Interest expensed Operating expenses Provisions Taxation Total expense - percentage of total income Profit / (Loss) after taxation Total HORIZONTAL ANALYSIS Interest / Return / Non Interest Income earned Markup / Return / Interest earned Fee, Commission, Brokerage and Exchange income Capital gain & Dividend income Other income Total Interest / Return / Non Interest Expense Markup / Return / Interest expensed Operating expenses Provisions Taxation Total expense Profit / (Loss) after taxation

2010

2009

2008

2007

2006

2005

183.1% 69.3% 356.3% 162.9% 504.0% 198.1% 201.4%

142.9% 129.6% 216.0% 172.9% 492.8% 173.4% 178.6%

123.0% 127.6% 184.6% 181.2% 405.0% 194.8% 174.5%

131.9% 138.7% 183.4% 146.2% 380.8% 116.2% 152.8%

134.6% 165.5% 106.7% 120.8% 117.6% 108.0% 122.0%

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

190.4% 207.0% 299.7% 121.3% 283.5% 193.7% 236.3% 348.4% 357.1% 320.9% 282.8% 315.7%

170.1% 161.3% 299.8% 123.7% 233.1% 171.7% 214.8% 304.5% 301.8% 278.7% 297.4% 281.2%

167.2% 202.8% 299.9% 124.9% 269.7% 172.6% 195.3% 249.0% 225.9% 225.1% 56.3% 202.4%

138.6% 271.2% 149.9% 146.1% 250.6% 149.9% 156.3% 164.8% 213.0% 181.3% 288.9% 195.8%

115.9% 176.6% 150.0% 109.6% 149.5% 120.9% 125.0% 133.3% 169.1% 145.0% 91.3% 137.8%

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

85.4% 11.5% 1.0% 2.0% 100.0%

84.3% 9.8% 1.7% 4.2% 100.0%

82.9% 12.9% 1.2% 3.0% 100.0%

82.0% 12.0% 2.8% 3.2% 100.0%

82.6% 12.8% 2.8% 1.8% 100.0%

80.1% 12.8% 2.3% 4.8% 100.0%

36.3% 26.5% 11.6% 9.5% 83.9% 16.1% 100.0%

38.8% 23.5% 18.3% 6.7% 87.3% 12.7% 100.0%

38.4% 25.7% 13.7% 8.9% 86.7% 13.3% 100.0%

33.8% 26.9% 13.3% 9.2% 83.2% 16.8% 100.0%

30.4% 27.5% 6.4% 12.1% 76.3% 23.7% 100.0%

24.0% 31.3% 7.0% 14.0% 76.4% 23.6% 100.0%

294.3% 248.3% 121.8% 117.1% 275.9%

303.1% 221.8% 211.1% 251.8% 288.1%

257.6% 249.9% 131.7% 154.2% 248.7%

203.6% 186.2% 236.7% 133.7% 198.8%

163.7% 158.3% 190.9% 61.0% 158.7%

100.0% 100.0% 100.0% 100.0% 100.0%

417.2% 233.7% 457.6% 186.3% 303.2% 187.6%

465.8% 216.6% 751.9% 137.1% 329.5% 154.5%

398.0% 204.5% 484.8% 156.9% 282.3% 140.1%

280.1% 170.5% 377.6% 130.3% 216.6% 141.2%

200.6% 139.3% 144.2% 136.5% 158.5% 159.2%

100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Annual Report 2010

19

[ Growth at a Glance ]
STATEMENT OF VALUE ADDED PKR 'million 51,264 7,992 712 1,418 61,384 10,871 50,513 2010 % 101.5% 15.8% 1.4% 2.8% 121.5% 21.5% 100.0% PKR 'million 47,849 7,139 1,233 3,048 59,269 9,264 50,005 2009 % 95.7% 14.3% 2.5% 6.1% 118.5% 18.5% 100.0%

Mark-up / return / interest earned - net of provisions Fee, commission, brokerage and exchange income Capital gain & dividend income Other income Administrative expenses Value added Distributed as follows: To employees as remuneration To government as income tax To Depositors as profit on investments To Institutions & individuals as profit on borrowings To Society as donations To Shareholders as dividends / bonus Retained in Business as reserves and retained profits

7,465

14.8%

7,751

15.5%

6,582

13.0%

4,842

9.7%

18,963

37.5%

22,210

44.4%

6,261

12.4%

5,953

11.9%

82

0.2%

56

0.1%

5,119

10.1%

2,023

4.0%

6,041 50,513

12.0% 100%

7,169 50,005

14.3% 100%

20

United Bank Limited

[ International Network ]
UAE BAHRAIN

Mohamed & Obaid Almulla Building, Shop #1, Plot # 115-0108, Murshid Bazar, P.O. Box. No. 1000, Deira-Dubai, UAE Tel: 09714-2267191 & 2267532 Fax: 009714-2269209

Deira Branch

Manama Branch

Delmon Tower, 117, Block 304, Govt. Avenue, P.O. Box. No. 546, Manama, Kingdom of Bahrain Tel: 00973-1722-4030 Fax: 00973-1722-9392

Bank Street Building, Khalid Bin Waleed Road, P.O. Box. No. 1367, Dubai, UAE Tel: 009714-6085333 & 6085309 Fax: 009714-3515164

Bur Dubai Branch

Seef Branch

Al-Barsha Sheikh Zayed Road Branch


Show Room # 2, Al Faraidooni Building, Al Barsha First, Sheikh Zayed Road, P.O. Box. No. 3846, Dubai, UAE Tel: 009714-6085309 & 3403115 Fax: 009714-3403645

Addax Tower, Ground Floor, Road No.2806 & 2813, Block # 428, Seef District, P.O. Box. No. 546, Kingdom of Bahrain Tel: 00973-1756-0808 Fax: 00973-1758-7552

Muharraq Branch

Al-Majaz Building, King Faisal Street, P.O. Box. No. 669, Sharjah, UAE Tel: 009716-5751115 (Dir.), 5729444 (PABX) Fax: 009716-5721200

Sharjah Branch

1127B, Road 10, Area 215, P.O. Box. No. 546, Muharraq, Kingdom of Bahrain Tel: 00973-17-343488 Fax: 00973-17-344793

QATAR

Corniche Main Branch

Plot # C28 E9, Hamad Suhail Al Khaily Building, Khalifa Street, Abu Dhabi Tel: 009712-6719787 & 5996500 Fax: 009712-6719900

Khalifa Main Branch

Sh. Jasim Bin Jaber Al-Thani Building, Abdullah Bin Jassim Street, P.O.Box No.242, Doha - Qatar Tel: 00974-44254444 Fax: 00974-44416669

Salwa Road Branch

Ghamran Buti Al Qubaisi Building, Opp. Hamdan Centre, Sheikh Hamdan Bin Mohamed Road, P.O. Box. No. 2340, Abu Dhabi, UAE Tel: 009712-6271210 & 6272429 Fax: 009712-6272134

Sheikh Hamdan Road Branch

Salwa Road, Industrial Area, P.O. Box. No. 242, Doha - Qatar Tel: 00974-44254464 Fax: 00974-44506026

YEMEN

Sana'a Branch

Show Room # 3, M-14, Street 17, Musaffah, P.O. Box. No. 237, Abu Dhabi, UAE Tel: 009712-5548777 & 5548778 Fax: 009712-5548779

Musaffah Branch

Dr. Mohammad Ahmed Othman Al-Absi Building, Al-Zubairi Street, P.O. Box. No. 1295, Sana'a, Republic of Yemen Tel: 00967 1 409947 (Dir.) 407540 (PABX) Fax: 00967 1 408211

Hodeidah Branch

Show Room # L 103 LE 488, Mohammed Salem Owaida Jaber Al Khaily Building, Ali Ibn Ibi Talib Streeet, Oud Al Toba, P.O. Box. No.1141, Al-Ain, UAE Tel: 009713-7641221 & 7641780 Fax: 009713-7666175

Al-Ain Branch

Essam Al-Shami Building, Shahrah-e-Meena, P.O. Box. No. 3927, Hodeidah, Republic of Yemen Tel: 009673-201494 (Dir.), 225560 (Gen.) Fax: 009673-201153

Annual Report 2010

21

[ International Network ]
SUBSIDIARY SWITZERLAND

Aden Mall, Crater, P.O. Box No.104, Aden, Republic of Yemen Tel: 00967 2 269191, 00967 2 269063 Fax: 00967 2 269065

Aden Branch

United Bank AG (Zurich)

Feldeggstrasse 55, P.O. Box. No. 1176, 8034 Zurich, Switzerland Tel: 0041 43 4991920 Fax: 0041 43 4991933

80 Broad Street, 24th Floor, New York, N.Y.10004 - 2209, U.S.A. Tel: 001-212-943-1275 Fax: 001-212-9680557

New York Branch

USA

UK

United National Bank Limited

2 Brook Street, London - W1S 1BQ, U.K. Tel: 0044 20 7290 8000 Fax: 0044 20 7290 3054

Export Processing Zone, Landhi Industrial Area, Mehran Highway, Landhi, Karachi Tel: 009221 35082301-3 Fax: 009221 35082305

EPZ Branch (Karachi)

OBU - EPZ

ASSOCIATE COMPANY OMAN

Oman United Exchange Co. LLC, (Muscat) (i) Ruwi Branch


P.O. Box. No. 889, Near Ruwi Police Station, Postal code 100, Ruwi, Muscat, Sultanate of Oman Tel: 00968 24794305, 24782048 Fax: 00968 24794344

REPRESENTATIVE OFFICES IRAN


Unit 41, 4th floor, Negin Gholhak Tower, Kolahdouz crossing, Shariati Ave., Tehran, Iran Tel: +9821-26601350-1 Fax: +9821-22611297

ii) Salalah Branch

Tehran Rep. Office

P.O. Box. No. 2052, Postal code 211, Salalah, Sultanate of Oman Tel: 00968 23290323 Fax: 00968 23290323

iii) Sohar Branch

KAZAKHSTAN
Suite 205, SAT Business Centre, 32A Manasa Street, Bostandykski District, Almay, 050008, Republic of Kazakhstan Tel: 00 7-727-2378432 & 2378433 Fax: 00 7-727-2378432

Almaty Rep. Office

P.O. Box. No. 889, Postal code 100, Muscat, Sultanate of Oman Tel: 00968 26847021 Fax: 00968 26847022

iv) Ghoubra Branch

Room # 2110, The Exchange Beijing, No.118, Jianguo Road, Chaoyang District, Beijing, 100022, Peoples Republic of China Tel: 0086-10-65675560 & 65675579 Fax: 0086-10-65675560

Beijing Rep. Office

CHINA

P.O. Box. No. 889, Postal code 100, Muscat, Sultanate of Oman Tel: 00968 24495645 Fax: 00968 24495624

v) Industrial Area Salalah Branch


P.O. Box. No. 2052, Postal code 211, Salalah, Sultanate of Oman Tel: 00968 23213264 Fax: 00968 23211260

22

United Bank Limited

[ Shariah Advisors Report ]

The year 2010 was the fourth year in progress of Islamic commercial banking for United Bank Limited. During the year, the Bank has maintained its product offering and has focused mainly on building up deposits. The bank has focused much on the liability side and has developed Islamic banking deposit product after due approval from the Shariah Advisor extending its product line. Following were the developments that took place during the year:

the guidelines issued by SBP and Shariah Advisor. In the Audit, following operations were reviewed: Allocation of funds and Pool Management System Weightages and profit sharing ratios Declarations, description of Assets, relevant purchase invoices, sequence and order of the documents, and time difference between purchases and declaration in Murabaha. Treatment of ownership related cost and recovery of rentals in Ijarah transactions. Import Finance transactions and related documentation. Other related documents and procedures followed by different functional areas. As per SBP guidelines it has been decided to separate Shariah Audit from Shariah Compliance. Under the new system Shariah Audit should be carried out by Internal Audit Department of the bank through a dedicated resource in order to ensure transactions are carried out according to the approved process flows and manuals with independence. The Shariah Audit Report will be placed in front of the Shariah Advisor for review and decision.

Product Development
During the year the Product Development Department of the bank has designed a new deposit product Ameen Business Account to attract corporate customers requiring free facilities as provided by conventional counter parts to their current account holders. UBL Ameen Business Account caters corporate customers providing free value added services and profit together.

Expansion of Branch Network


During the year there was an addition of an Islamic Banking Branch. The process of conversion was duly vetted and successfully completed.

Charity
The charity policy was duly vetted by the Shariah Advisor and was approved by the board of directors. During the year total charity amounting to PKR 0.840 Million from nonShariah compliant sources has been credited to the Charity Account and an amount of PKR 9.780 million was disbursed after the approval of the Shariah Advisor.

Islamic Banking Training


It's the people who are the asset of an organization and it's them who are behind the success of it. Enhancing the quality of these assets will paint a better portrait. UBL Ameen needs to emphasize on training their staff in order to up breast them with Islamic banking and ensure Shariah compliance. This will lead to the success of the whole team. Human resource development is basically an investment in the asset of the organization. Alhamdulillah, this year has been declared The year of Learning and Knowledge. This will help in achieving the milestone with concrete measures.

Shariah Compliance
In order to maintain Shariah compliance following measures were taken; Internal memos on Shariah compliance guidelines were issued by the Shariah Advisor from time to time. In order to avoid any misunderstanding with the customer and voidance of the transaction, it was made mandatory to involve Shariah Compliance from the very inception of the proposal. Prior any formal commitment to the customer in principle approval must be sought from the Shariah Advisor. The Standardize Credit Application (SCA) is shared with the Shariah Compliance Department before any disbursement and process flow of the financing activity approved by the Shariah Compliance Department forms an integral part of the SCA. In order to avoid any delay a turnaround time (TAT) of maximum two days for SCA Shariah approval was decided.

Review of Assets
The Bank's major financing activities during the year were made in Murabaha, Ijarah and Diminishing Musharakah. Ijarah transactions constitute 44.61% of the total financing portfolio while the percentage of Diminishing Musharakah and Murabaha was 30.92% and 24.47% respectively. The Bank's total financing portfolio reduced to PKR 832.848 million as of December 31, 2010 compared to PKR 1,152.522 million in December 31, 2009.

Review of Liabilities
On the liability side, the Bank offered different Shariah Compliant deposit products based on the modes of Mudarabah & Qardh. The total deposits of the Bank was doubled, notably reaching to PKR 4,459.221 million as at December 31, 2010 compared to PKR 2,208.418 million of last year, showing an impressive growth of 101.92%. It was also encouraging that there was nothing contradictory to the dictates of Shariah.

Shariah Advisory

During the year the bank provided Shariah Advisory on restructuring of two Sukuk where UBL was acting as the trustee. In order to avail the benefit from the in house expertise Shariah advisory services should be extended to local and international markets especially in the GCC, Europe and USA regions where UBL has a track record and presence.

Shariah Audit
During the year 2010, Shariah Audit was carried out by the Shariah Audit, Compliance and Advisory department, to check the overall Shariah compliance of the bank's operation and their adherence to

Annual Report 2010

23

[ Shariah Advisors Report ]


Shariah Advisory
During the year the bank provided Shariah Advisory on restructuring of two Sukuk where UBL was acting as the trustee. In order to avail the benefit from the in house expertise Shariah advisory services should be extended to local and international markets especially in the GCC, Europe and USA regions where UBL has a track record and presence.

Recommendation
Based on the review of various transactions we recommend that: The quality growth of the Islamic banking division is connected with employees' training. Utmost focus should be shifted towards proper training of staff. A comprehensive program with result oriented outcomes should be designed and a reasonable budget should be allocated in this regard. The outcomes of the training should become an integral part of employees' appraisal. The Bank should also focus on customer awareness. Proper information should be communicated in order to avoid misunderstanding. The Corporate and Commercial Banking Departments of the Bank should strictly adhere to the Shariah compliance mechanism set out by the bank in order to strengthen the Shariah compliance. Charity should invariably be disbursed to the organizations once enlisted with the bank unless any discrepancy is found. Risk and Credit Departments should allocate a dedicated resource within the department to ensure that there is no non-Shariah compliance risk associated while managing approvals. As now the bank is gathering pace in its activities, it is suggested that in all Shariah related decisions, especially matters pertaining to Shariah compliance, audit, and training, Shariah Advisor's consent may be sought invariably. This will improve the overall quality of Shariah compliance within the bank. It is also suggested that as the bank is growing, a proper Shariah Compliance Manual describing the overall mechanism should be finalized incorporating the instruction laid by the Shariah Advisor from time to time.

Conclusion
It is the responsibility of the Bank's management and employees to ensure application of Shariah principles and guidelines issued by the Shariah Advisor from time to time and to ensure Shariah compliance in all activities of the Islamic Banking Division. Based on the review and management representations, in our opinion the activities and transactions performed by the Islamic banking division during the year comply with the Principles and Guidelines of Islamic Jurisprudence, issued and directed by the Shariah Advisor of United Bank Limited.

Mufti Ehsan Waquar Ahmad


Shariah Advisor United Bank Limited Islamic Banking Group

24

United Bank Limited

[ Statement of Compliance with the code of Corporate Governance year ended December 31, 2010 ]
This statement is being presented to comply with the Code of Corporate Governance (The Code) contained in the Regulation No. 37, XIII & 36 of Listing Regulations of Karachi, Lahore & Islamabad Stock Exchanges for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance. The Board of Directors has adopted the Code of Corporate Governance and applied the principles contained in the Code in the following manner: 1. 2. 3. Except for the Chief Executive Officer, all other directors, including Chairman and Deputy Chairman are non-executive directors. The directors have confirmed that none of them is serving as a director in more than ten listed companies, including this Bank. All the resident directors of the Bank are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange. During the year Government of Pakistan (GOP) has appointed Mr. Seerat Asghar as director with effect from 30 March 2010 in place of Dr. Ashfaque Hasan Khan. During the year 2009, the Board of Directors approved and signed Statement of Ethics and Business Practices and obtaining the signature of employees is under process. The Board has developed a vision / mission statement, overall corporate strategy and significant policies of the Bank. A set of significant policies are maintained by the Bank. All the powers of the Board have been duly exercised and decision on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the Chief Executive Officer have been taken by the Board. The meetings of the Board were presided over by the Chairman and, in his absence, by the Deputy Chairman and in absence of Deputy Chairman by any other director. The Board met at least once in every quarter. Written notices of the Board meeting, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. The Company Secretary and Chief Financial Officer attended the meetings of the Board of Directors. The appointments of Chief Financial Officer, Company Secretary and Head of Internal Audit including their remuneration and terms of employment have been approved by the Board. 13. The Directors, Chief Executive Officer and executives do not hold any interest in the shares of the Bank other than those disclosed in pattern of shareholding. 14. The Bank has complied with all the corporate and financial reporting requirements. 15. The Board has formed an audit committee. It comprises of three members, all of whom are non-executive directors including the Chairman of the Committee. 16. The meetings of the audit committee are held at least once every quarter prior to approval of interim and final results of the Bank, as required by the Code. The terms of reference of the committee have been formulated and advised to the committee for compliance. 17. The Board has set up an effective internal audit function. Personnel of the Internal Audit Department are suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the Bank and they are involved in the internal audit function on a full time basis. 18. The statutory auditors of the Bank have confirmed that they have been given a satisfactory rating under the Quality Control Review Program of The Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Bank and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on Code of Ethics as adopted by the Institute of Chartered Accountants of Pakistan. 19. The statutory auditors or the persons associated with them have not been appointed to provide services other than approved services and the auditors have confirmed that they have observed IFAC guidelines in this regard. 20. We confirm that all other material principles contained in the Code have been complied with. For and on behalf of the Board of Directors

4.

5.

6.

7.

8.

9.

Nahayan Mabarak Al Nahayan


Chairman Abu Dhabi

10. In compliance of Sub Clause (xiv) of Clause 35 of Listing Regulations, three directors have attended and completed Part 1 of Corporate Governance Leadership Skills program on 20 December 2010 under the Board Development Series of Pakistan Institute of Corporate Governance. 11. The directors report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. 12. The financial statements of the Bank were duly endorsed by the Chief Executive Officer and Chief Financial Officer before approval of the Board.

Date: February 21, 2011

Annual Report 2010

25

BDO Ebrahim & Co.

Chartered Accountants 2nd Floor, Block C Lakson Square Building No.1 Sarwar Shaheed Road Karachi 74200

Ernst & Young Ford Rhodes Sidat Hyder


Chartered Accountants Progressive Plaza Beaumont Road PO Box 15541 Karachi 75530

Review Report to the Members on Statement of Compliance with best practices of Code of Corporate Governance
We have reviewed the Statement of Compliance with the best practices (the Statement) contained in the Code of Corporate Governance (the Code) for the year ended December 31, 2010 prepared by the Board of Directors of UNITED BANK LIMITED (the Bank) to comply with the Listing Regulation No.35 (Chapter XI) of the Karachi Stock Exchange (Guarantee) Limited, Lahore Stock Exchange (Guarantee) Limited and Islamabad Stock Exchange (Guarantee) Limited, where the Bank is listed. The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Bank. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Banks compliance with the provisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to inquiries of the Banks personnel and review of various documents prepared by the Bank to comply with the Code. As part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Boards statement on internal control covers all risks and controls, or to form an opinion on the effectiveness of such internal controls, the Banks corporate governance procedures and risks. Further, the Listing Regulations require the Bank to place before the Board of Directors for their consideration and approval, related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arms length transactions and transactions which are not executed at arms length price recording proper justification for using such alternate pricing mechanism. Further, all such transactions are also required to be separately placed before the Audit Committee. We are only required and have ensured compliance of requirement to the extent of approval of related party transactions by the Board of Directors and placement of such transactions before the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arms length price or not. Based on our review nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Banks compliance, in all material respects, with the best practices contained in the Code of Corporate Governance as applicable to the Bank for the year ended December 31, 2010.

BDO Ebrahim & Co. Chartered Accountants Audit Engagement Partner: Zulfikar Ali Causer Date: February 21, 2011 Karachi

Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants Audit Engagement Partner: Shabbir Yunus

26

United Bank Limited

[ Annual Statement on Internal Controls - 2010 ]


The Internal Control system comprises various inter-related components including Control Environment, Risk Assessment, Control Activities, Information & Communication and Monitoring. It is the responsibility of Bank's management to establish an Internal Control System to maintain an adequate and effective Internal Control Environment. It is a process designed to identify and mitigate the risk of failure to achieve overall business objectives of the Bank. Internal controls and policies are designed to provide reasonable assurance regarding effectiveness and efficiency of the Bank's operations, reliability of financial information and compliance with applicable laws and regulations. Bank's Internal Control system has been designed to provide reasonable assurance to the shareholders and Board of Directors; however these systems may not entirely eliminate the risk of misreporting and failure of certain controls under a changing environment. Based upon the results achieved from reviews and audits conducted during the year, management considers that the existing Internal Control system is adequate and has been effectively implemented and monitored, though room for improvement always exists.

Evaluation
Evaluation of the Bank's Internal Control System comprises different levels of monitoring activities i.e. Line Management, Internal Control Department and Internal Audit. Internal Audit Group continued to evaluate the implementation & efficacy of internal controls throughout the year 2010 by carrying out bank-wide audit activities. The Compliance and Control Assurance Group (CCAG) continued to review the Bank's process manuals developed during 2010 or any change in existing process manuals to ensure the existence of proper controls in the design of processes. CCAG also conducted reviews of branches and departments to identify gaps in execution of approved processes. All significant and material findings of the internal and external auditors and regulators were addressed on priority basis and reported to the Board Audit Committee, who ensured that management put in place a system for the strengthening of the control environment, identifying areas requiring improvement and devising appropriate remedial action on a timely basis to safeguard the Bank's interest. Management's consistent & continuous monitoring through automation initiatives has also helped in reducing the error rate and shall help further in improving the overall control environment in the Bank. The Bank endeavors to follow the guidelines on Internal Controls. Testing of effectiveness of Internal Controls over Financial Reporting (ICFR) prevalent throughout the Bank was carried out. However, none of the deficiencies identified are expected to have a material impact on the accurate reporting of Financial Statements. The Bank has made enhanced efforts to ensure that an effective and efficient Internal Control System remained active & implemented. The

Rayomond Kotwal
Chief Financial Officer

Atif Rasheed

Head Compliance & Control Assurance

M. Ejazuddin

Group Executive Audit & Inspection

Atif R. Bokhari
President & CEO

Annual Report 2010

27

Chartered Accountants 2nd Floor, Block C Lakson Square Building No.1 Sarwar Shaheed Road Karachi 74200

BDO Ebrahim & Co.

Ernst & Young Ford Rhodes Sidat Hyder


Chartered Accountants Progressive Plaza Beaumont Road PO Box 15541 Karachi 75530

Auditors Report to the Members


We have audited the annexed unconsolidated statement of financial position of UNITED BANK LIMITED (the Bank) as at December 31, 2010 and the related unconsolidated profit and loss account, unconsolidated statement of comprehensive income, unconsolidated cash flow statement, and unconsolidated statement of changes in equity, together with the notes forming part thereof (here-in-after referred to as the financial statements) for the year then ended, in which are incorporated the unaudited certified returns from the branches except for thirty six branches which have been audited by us and seventeen branches audited by auditors abroad and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. It is the responsibility of the Banks Board of Directors to establish and maintain a system of internal control, and prepare and present the financial statements in conformity with approved accounting standards and the requirements of the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984). Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with the International Standards on Auditing as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion and after due verification, which in case of loans and advances covered more than sixty percent of the total loans and advances of the Bank, we report that: (a) in our opinion proper books of account have been kept by the Bank as required by the Companies Ordinance, 1984 (XLVII of 1984), and the returns referred to above received from the branches have been found adequate for the purposes of our audit; (b) in our opinion: (i) the unconsolidated statement of financial position and unconsolidated profit and loss account together with the notes thereon have been drawn up in conformity with the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984), and are in agreement with the books of account and are further in accordance with accounting policies consistently applied except for the changes in accounting policies as disclosed in note 5.1 to the accompanying financial statements, with which we concur; (ii) the expenditure incurred during the year was for the purpose of the Banks business; and (iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the Bank and the transactions of the Bank which have come to our notice have been within the powers of the Bank; (c) in our opinion and to the best of our information and according to the explanations given to us the unconsolidated statement of financial position, unconsolidated profit and loss account, unconsolidated statement of comprehensive income, unconsolidated cash flow statement and unconsolidated statement of changes in equity, together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan and give the information required by the Banking Companies Ordinance, 1962 (LVII of 1962), and the Companies Ordinance, 1984 (XLVII of 1984), in the manner so required and give a true and fair view of the state of the Banks affairs as at December 31, 2010 and its true balance of the profit, its comprehensive income, its cash flows and changes in equity for the year then ended; and (d) in our opinion zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Bank and deposited in the Central Zakat Fund established under Section 7 of that Ordinance.

Date: February 21, 2011 Karachi

BDO Ebrahim & Co. Chartered Accountants Audit Engagement Partner: Zulfikar Ali Causer

Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants Audit Engagement Partner: Shabbir Yunus

Annual Report 2010

29

[ Unconsolidated Statement of Financial Position As at December 31, 2010 ]


Note 2010 2009 ----- (Rupees in 000) -----

ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Performing Non-performing - net of provision Operating fixed assets Deferred tax asset - net Other assets

6 7 8 9 10 10 11 12 13

67,461,668 18,192,142 12,384,778 224,578,556 318,673,884 15,058,288 333,732,172 22,424,072 1,298,403 18,713,188 698,784,979

61,470,047 5,407,470 23,162,130 136,145,524 342,663,339 11,428,374 354,091,713 21,925,669 608,876 16,905,004 619,716,433

LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Other liabilities NET ASSETS REPRESENTED BY: Share capital Reserves Unappropriated profit Surplus on revaluation of assets - net of deferred tax

15 16 17 18 19

5,045,815 45,104,849 550,645,767 11,985,748 17,587,735 630,369,914 68,415,065

5,147,259 35,144,823 492,036,103 11,989,800 14,461,725 558,779,710 60,936,723

20

21

12,241,798 21,688,637 26,250,489 60,180,924 8,234,141 68,415,065

11,128,907 18,959,537 22,187,802 52,276,246 8,660,477 60,936,723

CONTINGENCIES AND COMMITMENTS

22

The annexed notes from 1 to 48 and annexures form an integral part of these unconsolidated financial statements.

Atif R. Bokhari
President & Chief Executive Officer

Muhammad Sami Saeed


Director

Sir Mohammed Anwar Pervez , OBE, HPk


Deputy Chairman

Nahayan Mabarak Al Nahayan


Chairman

30

United Bank Limited

[ Unconsolidated Profit and Loss Account For the year ended December 31, 2010 ]
Note 2010 2009 ----- (Rupees in 000) ----59,331,761 25,223,253 34,108,508 6,803,355 204,573 996,772 8,004,700 26,103,808 61,107,025 28,163,787 32,943,238 9,623,204 560,852 945,342 1,485,976 12,615,374 20,327,864

Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against loans and advances - net Provision against lending to financial institutions Provision for diminution in value of investments - net Bad debts written off directly Net mark-up / return / 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 - net Unrealized loss on revaluation of investments classified as held for trading Other income Total non mark-up / return / interest income Non Mark-up / Interest Expenses Administrative expenses Other provisions / write offs - net Workers' Welfare Fund Other charges Total non mark-up / interest expenses Profit before taxation Taxation - Current - Prior years - Deferred Profit after taxation

24 25

10.5 8.5 9.3 10.6

26 9.4 27

6,337,745 591,017 1,653,793 158,885 (38,365) 1,417,557 10,120,632 36,224,440 17,765,056 63,233 413,542 240,391 18,482,222 17,742,218 6,805,506 415,136 (638,354) 6,582,288 11,159,930

5,925,082 606,347 1,213,881 629,418 (3,006) 3,047,849 11,419,571 31,747,435 16,608,561 642,274 397,547 64,552 17,712,934 14,034,501 6,930,585 76,328 (2,165,099) 4,841,814 9,192,687

28 29 30 31

32 32 32

----- (Rupees) ----Earnings per share - basic and diluted 33 9.12 Restated 7.51

The annexed notes from 1 to 48 and annexures form an integral part of these unconsolidated financial statements.

Atif R. Bokhari
President & Chief Executive Officer

Muhammad Sami Saeed


Director

Sir Mohammed Anwar Pervez , OBE, HPk


Deputy Chairman

Nahayan Mabarak Al Nahayan


Chairman

Annual Report 2010

31

[ Unconsolidated Statement of Comprehensive Income For the year ended December 31, 2010 ]
2009 2010 ----- (Rupees in 000) ----Profit after taxation Other comprehensive income / (loss): Exchange differences on translation of net investment in foreign branches Net gain on cash flow hedges Related deferred tax liability on cash flow hedges 419,851 118,866 (41,603) 77,263 497,114 Comprehensive income transferred to equity - net of tax 11,657,044 1,549,269 108,028 (37,810) 70,218 1,619,487 10,812,174 11,159,930 9,192,687

Surplus / (deficit) arising on revaluation of assets has been reported in accordance with the requirements of the Companies Ordinance, 1984 and the directives of the State Bank of Pakistan in a separate account below equity. The annexed notes from 1 to 48 and annexures form an integral part of these unconsolidated financial statements.

Atif R. Bokhari
President & Chief Executive Officer

Muhammad Sami Saeed


Director

Sir Mohammed Anwar Pervez , OBE, HPk


Deputy Chairman

Nahayan Mabarak Al Nahayan


Chairman

32

United Bank Limited

[ Unconsolidated Cash Flow Statement For The Year Ended December 31, 2010 ]
Note
CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Less: Dividend income Adjustments: Depreciation Amortization Workers Welfare Fund Provision for retirement benefits Provision against loans and advances Provision against lending to financial institutions Provision for diminution in value of investments Reversal of provision in respect of investments disposed off during the year Provision against off balance sheet items Gain on sale of fixed assets Bad debts written-off directly Amortization of cash flow hedge reserve Unrealized loss on revaluation of investments classified as held for trading Provision / (reversal of provision) against other assets

2010 2009 ----- (Rupees in 000) ----17,742,218 591,017 17,151,201 1,492,922 221,047 413,542 16,638 6,803,355 204,573 (337,899) (16,248) 996,772 118,866 38,365 63,233 10,015,166 27,166,367 10,777,352 (12,484,294) 12,559,414 (1,185,766) 9,666,706 (101,444) 9,960,026 58,609,664 2,697,443 71,165,689 107,998,762 977,691 (8,906,105) 100,070,348 14,034,501 606,347 13,428,154 1,471,525 184,241 397,547 462,726 9,623,204 560,852 945,342 (1,208,712) 20,250 (30,856) 1,485,976 108,028 3,006 622,024 14,645,153 28,073,307 (917,641) 743,410 5,938,782 1,563,434 7,327,985 (47,190) (9,051,063) 8,476,041 (1,383,783) (2,005,995) 33,395,297 (637,322) (9,658,543) 23,099,432

Decrease / (increase) in operating assets Lendings to financial institutions Held for trading securities Advances Other assets (excluding advance taxation) (Decrease) / increase in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities (excluding current taxation)

Staff retirement benefits received / (paid) Income taxes paid Net cash inflow from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investment in securities Dividend income received Investment in operating fixed assets Sale proceeds from disposal of property and equipment Net cash outflow from investing activities CASH FLOW FROM FINANCING ACTIVITIES Repayments of principal of sub-ordinated loans Dividends paid Net cash used in financing activities Exchange differences on translation of net investment in foreign branches Increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 34

(76,127,684) 591,017 (2,263,630) 96,850 (77,703,447)

(13,565,270) 620,499 (1,550,661) 172,876 (14,322,556)

(4,052) (4,006,407) (4,010,459) 419,851 18,776,293 66,877,517 85,653,810

(4,048) (1,011,719) (1,015,767) 1,549,269 9,310,378 57,567,139 66,877,517

The annexed notes from 1 to 48 and annexures form an integral part of these unconsolidated financial statements.

Atif R. Bokhari
President & Chief Executive Officer

Muhammad Sami Saeed


Director

Sir Mohammed Anwar Pervez , OBE, HPk


Deputy Chairman

Nahayan Mabarak Al Nahayan


Chairman

Annual Report 2010

33

[ Unconsolidated Statement of Changes in Equity For the year ended December 31, 2010 ]
Capital reserves Statutory Exchange Reserve for reserve translation issue of boreserve nus shares

Share Capital

Cash flow hedge reserve

Unappropriated profit

Total

------------------------------------------- (Rupees in '000) ------------------------------------------Balance as at January 1, 2009 Final cash dividend for the year ended December 31, 2008 declared subsequent to year end at Re.1.00 per share Transfer to reserve for issue of bonus share Issue of bonus shares at 10% Changes in equity for 2009 Profit after taxation for the year ended December 31, 2009 Other comprehensive income - net of tax Total comprehensive income Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax Transfer to statutory reserve Balance as at December 31, 2009 Final cash dividend for the year ended December 31, 2009 declared subsequent to year end at Rs.2.50 per share Interim cash dividend for the half year ended June 30, 2010 declared at Re. 1.00 per share Transfer to reserve for issue of bonus shares Issue of bonus shares at 10% Changes in equity for 2010 Profit after taxation for the year ended December 31, 2010 Other comprehensive income - net of tax Total comprehensive income Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax Transfer to statutory reserve Balance as at December 31, 2010 2,231,986 419,851 419,851 7,370,891 77,263 77,263 11,159,930 11,159,930 254,041 (2,231,986) 11,159,930 497,114 11,657,044 254,041 60,180,924 1,838,537 1,549,269 1,549,269 6,951,040 1,112,891 (1,112,891) 70,218 70,218 9,192,687 9,192,687 253,014 (1,838,537) 9,192,687 1,619,487 10,812,174 253,014 52,276,246 (2,782,227) (1,224,180) 10,117,188 10,376,375 1,011,719 5,401,771 1,011,719 (1,011,719) (276,633) 16,604,076 (1,011,719) (1,011,719) 42,222,777 (1,011,719) -

11,128,907 12,214,912 1,112,891 -

(206,415) 22,187,802 (2,782,227) (1,224,180) (1,112,891) -

12,241,798 14,446,898

(129,152) 26,250,489

Appropriations made by the Directors subsequent to the year ended December 31, 2010 are disclosed in note 46 to these unconsolidated financial statements. The annexed notes from 1 to 48 and annexures form an integral part of these unconsolidated financial statements.

Atif R. Bokhari
President & Chief Executive Officer

Muhammad Sami Saeed


Director

Sir Mohammed Anwar Pervez , OBE, HPk


Deputy Chairman

Nahayan Mabarak Al Nahayan


Chairman

34

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
1. STATUS AND NATURE OF BUSINESS United Bank Limited (the Bank) is a banking company incorporated in Pakistan and is engaged in commercial banking and related services. The Bank's registered office and principal office are situated at UBL building, Jinnah Avenue, Blue Area, Islamabad and at State Life Building No. 1, I. I. Chundrigar Road, Karachi respectively. The Bank operates 1,123 (2009: 1,120) branches including 6 (2009: 5) Islamic banking branches, 1 (2009: 1) branch in Karachi Export Processing Zone (KEPZ) and 17 (2009: 17) branches outside Pakistan. The Bank's Ordinary shares are listed on all three stock exchanges in Pakistan whereas its Global Depository Receipts (GDRs) are on the list of the UK Listing Authority and the London Stock Exchange Professional Securities Market. These GDRs are also eligible for trading on the International Order Book System of the London Stock Exchange. Further, the GDRs constitute an offering in the United States only to qualified institutional buyers in reliance on Rule 144A under the US Securities Act of 1933 and an offering outside the United States in reliance on Regulation S. 2. 2.1 BASIS OF PRESENTATION In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, the State Bank of Pakistan (SBP) has issued various circulars from time to time. Permissible forms of trade-related modes of financing include purchase of goods by banks from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these unconsolidated financial statements as such, but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. However, the Islamic Banking branches of the Bank have complied with the requirements set out under the Islamic Financial Accounting Standards issued by the Institute of Chartered Accountants of Pakistan and notified under the provisions of the Companies Ordinance, 1984. The financial results of the Islamic banking branches of the Bank have been included in these unconsolidated financial statements for reporting purposes, after eliminating material inter-branch transactions / balances. Key financial figures of the Islamic banking branches are disclosed in note 45 to these unconsolidated financial statements. With effect from the current year, 'Balance Sheet' has been renamed as 'Statement of Financial Position' keeping in view the requirement of BSD Circular letter No.7 of 2010 dated April 20, 2010 issued by the SBP. STATEMENT OF COMPLIANCE These unconsolidated financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) and interpretations issued by the International Accounting Standards Board and Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan, the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or directives issued by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan. Wherever the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or directives issued by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan differ with the requirements of IFRS or IFAS, the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or said directives prevail. The SBP vide BSD Circular letter No. 10, dated August 26, 2002 has deferred the applicability of International Accounting Standard 39, Financial Instruments: Recognition and Measurement (IAS 39) and International Accounting Standard 40, Investment Property (IAS 40) for banking companies till further instructions. Further, according to the notification of SECP issued vide SRO 411(I)/2008 dated April 28, 2008, 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 financial statements. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP.

2.2

2.3

3. 3.1

3.2

Annual Report 2010

35

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
3.3 These unconsolidated financial statements represent the separate standalone financial statements of the Bank. The consolidated financial statements of the Bank and its subsidiary companies are presented separately. Standards, interpretations and amendments to approved accounting standards that are not yet effective The following revised standards, amendments and interpretations with respect to approved accounting standards as applicable in Pakistan would be effective from the dates mentioned below against the respective standard or interpretation: Standard or Interpretation Effective date (annual periods beginning on or after)

3.4

IAS 32 - Financial Instruments: Presentation Classification of Rights Issues (Amendment) IAS 24 - Related Party Disclosures (Revised) IAS 12 - Income Taxes: Deferred Tax Amendment Recognition of Underlying Assets IFRIC 14 - IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (Amendments) IFRIC 19 - Extinguishing Financial Liabilities with Equity Instruments

01 February 2010 01 January 2011

01 January 2012

01 January 2011 01 July 2010

The Bank expects that the adoption of the above revisions, amendments and interpretations of the standards will not affect the Bank's financial statements in the period of initial application. In addition to the above, amendments to various accounting standards have also been issued by the IASB. Such improvements are generally effective for accounting periods beginning on or after 01 January 2011. The Bank expects that such improvements to the standards will not have any material impact on the Bank's financial statements in the period of initial application. 4. 4.1 BASIS OF MEASUREMENT Accounting convention These unconsolidated financial statements have been prepared under the historical cost convention except that certain operating fixed assets have been stated at revalued amounts and certain investments and derivative financial instruments have been stated at fair value. 4.2 Critical accounting estimates and judgments The preparation of these unconsolidated financial statements in conformity with approved accounting standards requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and income and expenses. It also requires management to exercise judgment in application of its accounting policies. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

36

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Significant accounting estimates and areas where judgments were made by the management in the application of accounting policies are as follows: i) ii) iii) iv) v) vi) vii) 5. 5.1 classification of investments (notes 5.4 and 9) provision against investments (notes 5.4 and 9.3) and advances (notes 5.5 and 10.5) income taxes (notes 5.8 and 32) staff retirement benefits (notes 5.10 and 36) fair value of derivatives (notes 5.15 and 19.4) operating fixed assets, depreciation and amortization (notes 5.6 and 11) impairment (note 5.7)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies The accounting policies adopted in the preparation of these financial statements are consistent with those of the previous financial year except as follows: The Bank has adopted the following new and amended IFRS and related interpretations which became effective during the year: IFRS 2 - Share-based Payments: Amendments relating to Group Cash-settled Share-based Payment Transactions IFRS 3 - Business Combinations (Revised) IAS 27 - Consolidated and Separate Financial Statements (Amendment) IFRIC 17 - Distributions of Non-cash Assets to owners In May 2008 and April 2009, International Accounting Standards Board issued amendments to various standards primarily with a view to removing inconsistencies and clarifying wording. These improvements are listed below: Issued in May 2008 IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations Issued in April 2009 IFRS 2 Share-based Payments (note 37.3) IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations IFRS 8 Operating Segments IAS 1 Presentation of Financial Statements IAS 7 Statement of Cash Flows IAS 17 Leases IAS 36 Impairment of Assets IAS 38 Intangible Assets IAS 39 Financial Instruments: Recognition and measurement IFRIC 9 Reassessment of Embedded Derivatives IFRIC 16 Hedges of a Net Investment in a Foreign Operation The adoption of the above standards, amendments / improvements and interpretations did not have a material effect on the financial statements.

Annual Report 2010

37

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
5.2 Cash and cash equivalents Cash and cash equivalents for the purpose of the cash flow statement represent cash and balances with treasury banks and balances with other banks in current and deposit accounts. 5.3 Lendings to / borrowings from financial institutions The Bank enters into transactions of repos and reverse repos at contracted rates for a specified period of time. These are recorded as under: 5.3.1 Sale under repurchase agreements Securities sold subject to a re-purchase agreement (repo) are retained in the unconsolidated financial statements as investments and the counter party liability is included in borrowings from financial institutions. The differential in sale and repurchase value is accrued over the period of the agreement and recorded as an expense. 5.3.2 Purchase under resale agreements Securities purchased under agreement to resell (reverse repo) are included in lendings to financial institutions. The differential between the purchase price and resale price is amortized over the period of the agreement and recorded as income. Securities held as collateral are not recognized in the unconsolidated financial statements, unless these are sold to third parties, in which case the obligation to return them is recorded at fair value as a trading liability under borrowings from financial institutions. 5.4 Investments Investments of the Bank, other than investments in subsidiaries and associates are classified as held for trading, held-tomaturity and available for sale. Held for trading These are securities which are either acquired for generating a profit from short-term fluctuations in market prices, interest rate movements, dealer's margin or are securities included in a portfolio in which a pattern of short-term profit taking exists. Held to maturity These are securities with fixed or determinable payments and fixed maturity in respect of which the Bank has the positive intent and ability to hold to maturity. Available for sale These are investments, other than those in subsidiaries and associates, that do not fall under the held for trading or held to maturity categories. Initial measurement All regular way purchases and sales of investments are recognized on the trade date, i.e., the date that the Bank commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of investments that require delivery of assets within the time frame generally established by regulation or convention in the market place.

38

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Investments are initially recognized at fair value which, in the case of investments other than held-for-trading, includes transaction costs associated with the investments. Subsequent measurement Held for trading These are measured at subsequent reporting dates at fair value. Gains and losses on re-measurement are included in the profit and loss account. Held to maturity These are measured at amortized cost using the effective interest rate method, less any impairment loss recognized to reflect irrecoverable amounts. Available for sale Quoted-securities classified as available-for-sale investments are measured at subsequent reporting dates at fair value. Any surplus / deficit arising thereon is kept in a separate account shown in the balance sheet below equity and taken to the profit and loss account when actually realized upon disposal or when the investment is considered to be impaired. Unquoted equity securities are valued at the lower of cost and break-up value. A decline in the carrying value is charged to the profit and loss account. The break-up value of these equity securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements. Investments in other unquoted securities are valued at cost less impairment losses. Provision for diminution in the value of securities (except term finance certificates) is made for impairment, if any. Provision for diminution in the value of term finance certificates is made as per the aging criteria prescribed by the Prudential Regulations issued by the SBP. Investments in Subsidiaries and Associates Investments in subsidiaries and associates are valued at cost less impairment, if any. A reversal of an impairment loss on associates and subsidiaries is recognized as it arises provided the increased carrying value does not exceed that it would have been had no impairment loss been recognized. Gain or loss on sale of investments in subsidiaries and associates is included in the profit and loss account for the year. 5.5 Advances Advances are stated net of specific and general provisions. Specific provision against domestic advances is determined on the basis of the Prudential Regulations and other directives issued by the SBP and is charged to the profit and loss account. General provision against consumer loans is made in accordance with the requirements of the Prudential Regulations issued by the SBP. General and specific provisions pertaining to overseas advances are made in accordance with the requirements of the monetary agencies and the regulatory authorities of the respective countries. The Bank, from time to time, makes general provision against weaknesses in its portfolio if circumstances warrant on the basis of management's estimation. Advances are written off when there is no realistic prospect of recovery. The amount so written off is a book entry without prejudice to the Bank's right of recovery against the customer. The Bank determines write-offs in accordance with the criteria prescribed by the SBP vide BPRD Circular No. 06 dated June 05, 2007.

Annual Report 2010

39

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
5.6 Operating fixed assets and depreciation

5.6.1 Owned Property and equipment, other than freehold land (which is not depreciated) and capital work-in-progress, are stated at cost or revalued amount less accumulated depreciation and accumulated impairment losses (if any). Freehold land is carried at revalued amount less impairment losses while capital work-in-progress is stated at cost less impairment losses. The cost of property and equipment of foreign branches includes exchange difference arising on currency translation at the year-end rates of exchange. Depreciation is calculated so as to write off the depreciable amount of the assets over their expected economic lives at the rates specified in note 11.2 to these unconsolidated financial statements. The depreciation charge for the year is calculated after taking into account residual value, if any, and using methods depending on the nature of the asset and the country of its location. The residual values, useful lives and depreciation methods are reviewed and adjusted, if appropriate, at each statement of financial position date. Depreciation on additions is charged from the month the asset is available for use. No depreciation is charged in the month of disposal. Land and buildings are revalued by professionally qualified valuers with sufficient regularity to ensure that their net carrying value does not differ materially from their fair value. Surplus arising on revaluation is credited to the surplus on revaluation of fixed assets account. Deficit arising on subsequent revaluation of fixed assets is adjusted against the balance in the above-mentioned surplus account as allowed under the provisions of the Companies Ordinance, 1984. The surplus on revaluation of fixed assets, to the extent of incremental depreciation charged on the related assets, is transferred to unappropriated profit. Gains and losses on sale of fixed assets are included in income currently, except that the related surplus on revaluation of fixed assets (net of deferred taxation) is transferred directly to unappropriated profit. Major renewals and improvements are capitalized and the assets so replaced, if any, are retired. Normal repairs and maintenance are charged to the profit and loss account as and when incurred. 5.6.2 Leased (Ijarah) Assets leased out under Ijarah are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Assets under Ijarah are depreciated over the period of the lease term. Ijarah income is recognized on an accrual basis as and when the rental becomes due. 5.6.3 Intangible assets Intangible assets having a finite useful life are stated at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized using the straight line method, from the month when these assets are available for use, whereby the cost of the intangible asset is amortized on the basis of the estimated useful life over which economic benefits are expected to flow to the Bank. The residual values and useful lives are reviewed and adjusted, if appropriate, at each statement of financial position date.

40

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
5.7 Impairment Impairment in available for sale equity investments Available for sale equity investments are impaired when there has been a significant or prolonged decline in the fair value below its cost. The determination of what is significant or prolonged requires judgment. In making this judgment, the Bank evaluates among other factors, the normal volatility in share price. Impairment in investments in associates and subsidiaries The Bank considers that a decline in the recoverable value of investment in associates and subsidiaries below their cost may be evidence of impairment. Recoverable value is calculated as the higher of fair value less costs to sell and value in use. An impairment loss is recognized when the recoverable value falls below the carrying value and is charged to the profit and loss account. Subsequent reversal of impairment loss, upto the cost of investment in associates and subsidiaries is credited to the profit and loss account. Impairment in non-financial assets (excluding deferred tax) The carrying amounts of non-financial assets are reviewed at each reporting date for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. If such indication exists, and where the carrying value exceeds the estimated recoverable amount, assets are written down to their recoverable amount. The resulting impairment loss is taken to the profit and loss account except for impairment loss on revalued assets, which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of the revalued assets. 5.8 Taxation

5.8.1 Current Provision for current taxation is based on taxable income for the year determined in accordance with the prevailing laws for taxation on income earned from local as well as foreign operations, as applicable to the respective jurisdictions. The charge for current tax is calculated using prevailing tax rates. The charge for current tax also includes, where considered necessary, adjustments relating to prior years, arising from assessments made during the year. 5.8.2 Deferred Deferred tax is recognized using the liability method on all major temporary differences between the amounts attributed to assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. In addition, the Bank also records a deferred tax asset on available tax losses. Deferred tax is calculated at the rates that are expected to apply to the period when the differences are expected to reverse, based on tax rates that have been enacted or substantively enacted at the statement of financial position date. Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the assets can be utilized. The carrying amount of the deferred tax asset is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized. The Bank also recognizes a deferred tax asset / liability on deficit / surplus on revaluation of fixed assets, cash flow hedge reserve and securities which is adjusted against the related deficit / surplus in accordance with the requirements of the revised International Accounting Standard (IAS) 12, Income Taxes.

Annual Report 2010

41

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
5.9 Provisions Provisions are recognized when the Bank has a legal or constructive obligation as a result of past events which makes it probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provision against identified non-funded losses is recognized when intimated and reasonable certainty exists for the Bank to settle the obligation. The loss is charged to the profit and loss account net of expected recovery and the provision is classified under other liabilities. Provisions are reviewed at each statement of financial position date and are adjusted to reflect the current best estimate. 5.10 Staff retirement and other benefits

5.10.1 Staff retirement benefit schemes The Bank operates the following staff retirement schemes for its employees a) For new employees and for those who opted for the new scheme introduced in 1991, the Bank operates an - approved contributory provident fund (defined contribution scheme); and - approved gratuity scheme (defined benefit scheme). b) For employees who have not opted for the new scheme introduced in 1991, the Bank operates an - approved funded pension scheme, introduced in 1986 (defined benefit scheme); and - approved non-contributory provident fund in lieu of the contributory provident fund. In the year 2001, the Bank modified the pension scheme and introduced a conversion option for employees covered under option (b) above to move to option (a). This conversion option ceased on December 31, 2003. The Bank also operates a contributory benevolent fund for all its eligible employees (defined benefit scheme). Annual contributions towards the defined benefit schemes are made on the basis of actuarial advice using the Projected Unit Credit Method. For defined contribution plans, the Bank pays contributions to the Fund on a periodic basis. The Bank has no further payment obligation once the contributions have been paid. The contributions are recognized as an expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction of the future payments is available. 5.10.2 Other benefits a) Employees' compensated absences The Bank makes provisions for compensated vested and non-vested absences accumulated by its eligible employees on the basis of actuarial advice under the Projected Unit Credit Method.

42

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
b) Post retirement medical benefits (defined benefit scheme) The Bank provides post retirement medical benefits to eligible retired employees. Provision is made annually to meet the cost of such medical benefits on the basis of actuarial advice under the Projected Unit Credit Method. c) Employee motivation and retention scheme The Bank operates a long term motivation and retention scheme for its employees with the objective of rewarding, motivating and retaining its high performing executives and officers. The liability of the Bank is fixed and is determined each year based on the performance of the Bank. 5.10.3 Actuarial gains and losses Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in excess of the greater of 10% of the value of the plan assets or 10% of the defined benefit obligation at the end of the last reporting year are charged or credited to income over the employees' expected average remaining working lives. These limits are calculated and applied separately for each defined benefit plan. Actuarial gains and losses pertaining to long term compensated absences are recognized immediately. 5.11 Sub-ordinated Debt Sub-ordinated debt is initially recorded at the amount of proceeds received. Mark-up accrued on subordinated debt is recognised separately as part of other liabilities and is charged to the profit and loss account over the period on an accrual basis. 5.12 Borrowings / deposits and their cost a) Borrowings / deposits are recorded at the proceeds received. b) Borrowings / deposits costs are recognized as an expense in the period in which these are incurred. 5.13 Revenue recognition Revenue is recognized to the extent that the economic benefits will flow to the Bank and the revenue can be reliably measured. The following recognition criteria must be met before revenue is recognized. 5.13.1 Advances and investments Mark-up / return on performing advances and investments is recognized on a time proportionate basis over the term of the advances and investments. Where debt securities are purchased at premium or discount, such premium / discount is amortized through the profit and loss account over the remaining period of maturity. Interest or mark-up recoverable on non-performing advances and classified investments is recognized on receipt basis. Interest / return / mark-up on rescheduled / restructured loans and advances and investments is recognized as permitted by the regulations of the SBP or overseas regulatory authorities of the countries where the branches operate, except where, in the opinion of the management, it would not be prudent to do so. 5.13.2 Dividend income Dividend income is recognised when the right to receive the dividend is established.

Annual Report 2010

43

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
5.13.3 Fee, brokerage and commission Fee, brokerage, commission and other income is recognized on an accrual basis. 5.14 Foreign currencies

5.14.1 Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the Bank operates. The financial statements are presented in Pakistani Rupees, which is the Bank's functional and presentation currency. 5.14.2 Foreign currency transactions Transactions in foreign currencies are translated to rupees at the foreign exchange rates prevailing on the transaction date. Monetary assets and liabilities in foreign currencies are expressed in rupee terms at the rates of exchange prevailing at the statement of financial position date. Forward foreign exchange contracts and foreign bills purchased are valued at forward rates applicable to their respective maturities. 5.14.3 Foreign operations The assets and liabilities of foreign operations are translated to rupees at exchange rates prevailing at the statement of financial position date. The results of foreign operations are translated at the average rate of exchange for the year. 5.14.4 Translation gains and losses Translation gains and losses are taken to the profit and loss account, except those arising on the translation of net investment in foreign branches which are taken to capital reserve (Exchange Translation Reserve) until the disposal of the net investment at which time these are recognised in the profit and loss account. 5.14.5 Commitments Commitments for outstanding forward foreign exchange contracts are disclosed in the unconsolidated financial statements at contracted rates. Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in rupee terms at the rates of exchange prevailing at the date of the statement of financial position. All other commitments are disclosed in the unconsolidated financial statements at the committed amount. 5.15 Financial instruments

5.15.1 Financial assets and liabilities Financial instruments carried on the statement of financial position include cash and bank balances, lendings to financial institutions, investments, advances, certain receivables, bills payable, borrowings from financial institutions, deposits, subordinated loans and certain other payables. The particular recognition methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy notes associated with them. 5.15.2 Derivative financial instruments Derivative financial instruments are initially recognized at fair value on the date on which the derivative contract is entered into and are subsequently re-measured at fair value using appropriate valuation techniques. All derivative financial instruments are carried as assets when their fair value is positive and liabilities when their fair value is negative. Any change in the fair value of derivative financial instruments is taken to the profit and loss account.

44

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
5.15.3 Hedge accounting The Bank makes use of derivative instruments to manage exposures to interest rate, foreign currency and credit risks, including exposures arising from forecast transactions. In order to manage particular risks, the Bank applies hedge accounting for transactions which meet the specified criteria. At the inception of the hedge relationship, the Bank formally documents the relationship between the hedged item and the hedging instrument, including the nature of the risk, the objective and strategy for undertaking the hedge and the method that will be used to assess the effectiveness of the hedging relationship. Also, at the inception of the hedge relationship, a formal assessment is undertaken to ensure the hedging instrument is expected to be highly effective in offsetting the designated risk in the hedged item. Hedges are formally assessed each quarter. A hedge is regarded as highly effective if the changes in fair value or cash flows attributable to the hedged risk during the period for which the hedge is designated are expected to offset in a range of 80% to 125%. For situations where the hedged item is a forecast transaction, the Bank assesses whether the transaction is highly probable and presents an exposure to variations in cash flows that could ultimately affect the profit and loss account. (a) Fair value hedges For designated and qualifying fair value hedges, the change in the fair value of a hedging derivative is recognised in the profit and loss account within other income. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in the profit and loss account within other income. (b) Cash flow hedges For qualifying cash flow hedges, the fair value gain or loss associated with the effective portion of the cash flow hedge is recognised initially in the statement of changes in equity, and recycled to the profit and loss account in the periods when the hedged item will affect profit or loss. Any ineffective portion of the gain or loss on the hedging instrument is recognised in the profit and loss account immediately. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the hedged item is ultimately recognised in the profit and loss account . When a forecast transaction occurs or is no longer expected to occur, the cumulative gain or loss that was recognised in equity is immediately transferred to the profit and loss account. 5.15.4 Off setting Financial assets and financial liabilities are set off and the net amount is reported in the unconsolidated financial statements when there is a legally enforceable right to set off and the Bank intends to either settle on a net basis, or to realize the assets and to settle the liabilities simultaneously. 5.16 Segment reporting A segment is a distinguishable component of the Bank that is engaged either in providing particular products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

Annual Report 2010

45

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
5.16.1 Business segments (a) Corporate finance Corporate banking includes services provided in connection with mergers and acquisition, underwriting, privatization, securitization, research, debts instruments, equity, syndication, IPO and secondary private placements. (b) Trading and sales Trading and sales includes fixed income, equity, foreign exchange, commodities, credit, funding, own position securities, lending and repos, brokerage debt and prime brokerage. (c) Retail banking Retail banking includes retail lending and deposits, banking services, trusts and estates, private lending and deposits, investment advice, merchant / commercial / corporate cards. (d) Commercial banking Commercial banking includes project finance, real estate, export finance, trade finance, factoring, leasing, lending, guarantees, bills of exchange and deposits. (e) Others Other includes support functions of the bank which can not be classified in any of the above segment. 5.16.2 Geographical segments The Bank operates in four geographical regions being: 5.17 Pakistan Karachi Export Processing Zone United States of America Middle East

Dividends and appropriations to reserves Dividends and appropriations to reserves are recorded in the year in which these are approved, except appropriations required by the law which are recorded in the period to which they pertain.

5.18

Earnings per share The Bank presents basic and diluted earnings per share (EPS) for its shareholders. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the bank by the weighted average number of ordinary shares outstanding during the year.

46

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Note 6. CASH AND BALANCES WITH TREASURY BANKS In hand Local currency Foreign currency With State Bank of Pakistan in Local currency current account Local currency deposit account Foreign currency current account Foreign currency deposit account With other central banks in foreign currency current account With National Bank of Pakistan in local currency current account National Prize Bonds 2010 2009 ----- (Rupees in 000) -----

11,680,324 2,539,542 14,219,866 6.1 6.2 6.3 6.4 22,362,478 3,864 1,287,860 3,781,588 27,435,790 11,960,999 13,798,332 46,681 67,461,668

10,911,325 3,088,167 13,999,492 18,937,149 3,864 1,125,581 3,365,199 23,431,793 15,372,202 8,609,162 57,398 61,470,047

6.1

This represents current accounts maintained with the SBP under the requirements of section 22 (Cash Reserve Requirement) of the Banking Companies Ordinance, 1962. This represents US Dollar Settlement Account maintained with SBP and includes current accounts maintained with SBP to meet cash reserve requirement of 5% on FE 25 deposits, under the requirements of BSD Circular No. 18 dated March 31, 2001 and OSED Circular No. 1 dated November 13, 2006. This represents special cash reserve requirement maintained with SBP under the requirements of BSD Circular No. 14 of 2008 dated June 21, 2008. The return on this account is declared by SBP on a monthly basis and, as at December 31, 2010 carries, mark-up at the rate of 0% (2009: 0%) per annum. Deposits with other central banks are maintained to meet the minimum cash reserves and capital requirements pertaining to the foreign branches of the Bank. Note 2010 2009 ----- (Rupees in 000) ----BALANCES WITH OTHER BANKS Inside Pakistan In current accounts In deposit accounts Outside Pakistan In current accounts In deposit accounts

6.2

6.3

6.4

7.

7.1

3,472 3,472 2,902,027 15,286,643 18,188,670 18,192,142

26,715 75,630 102,345 3,933,891 1,371,234 5,305,125 5,407,470

7.1

7.1.

These carry mark-up at rates ranging from 0.10% to 5.00% (2009: 0.12% to 2.01%) per annum.

Annual Report 2010

47

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Note 2010 2009 ----- (Rupees in 000) -----

8.

LENDINGS TO FINANCIAL INSTITUTIONS Call money lendings Repurchase agreement lendings Other lendings to financial institutions Provision against lendings to financial institutions 8.2 8.3 8.4 8.5 450,000 4,431,877 7,502,901 12,384,778 12,384,778 1,110,610 17,941,216 4,671,156 23,722,982 (560,852) 23,162,130

8.1

Particulars of lendings to financial institutions In local currency In foreign currencies 6,466,878 5,917,900 12,384,778 21,140,954 2,021,176 23,162,130

8.2

These are unsecured lendings carrying mark-up at rates ranging from 10.25% to 11.75% per annum (2009: 11.95% to 12.65% per annum) and are due to mature latest by March 2011. Securities held as collateral against repurchase agreement lendings 2010 2009 Further given Total Held by Further given Total as collateral / Bank as collateral / sold sold -------------------------------------- (Rupees in '000) -------------------------------------Held by Bank Market Treasury Bills Pakistan Investment Bonds 2,881,877 650,000 3,531,877 900,000 900,000 2,881,877 1,550,000 4,431,877 16,691,063 159,587 16,850,650 990,566 100,000 1,090,566 17,681,629 259,587 17,941,216

8.3

These carry mark-up at rates ranging from 11.75% to 13.50% per annum (2009: 10.75% to 12.35% per annum) and are due to mature latest by February 2011. 8.4 Lendings pertaining to domestic operations carry mark-up at rates ranging from 3.00% to 15.34% per annum (2009: 3.00% to 15.87% per annum) and are due to mature latest by April 2014, whereas lendings pertaining to overseas operations carry mark-up at rates ranging from 0.75% to 3.8% per annum (2009: 1.03% to 3.46% per annum) and are due to mature latest by December 2012. This represents provision made against lendings to overseas financial institutions with movement as follows: Note 2010 2009 ----- (Rupees in 000) ----560,852 (560,852) 560,852 560,852

8.5

Opening balance Charged during the year Transferred during the year Closing balance

8.5.1

8.5.1 The balance has been transferred to 'Investments' on issuance of recovery notes and preference shares by the financial institution.

48

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
9. INVESTMENTS
Note 2010 2009

9.1 Investments by types

Held by Given as Total Held by Given as Total collateral Bank collateral Bank ----------------------------------------- (Rupees in '000) -----------------------------------------

Held for trading securities Market Treasury Bills Pakistan Investment Bonds Ordinary shares of listed companies Foreign securities Available for sale securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan - Sukuk Government of Pakistan Eurobonds Ordinary shares of listed companies Preference shares Ordinary shares of unlisted companies Term Finance Certificates Units of mutual funds Foreign securities Held to maturity securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan - Sukuk Government of Pakistan - Eurobonds Government of Pakistan - Guaranteed Bonds Term Finance Certificates Sukuk Bonds Participation Term Certificates Debentures Foreign securities CDC SAARC Fund Associates United Growth and Income Fund UBL Liquidity Plus Fund United Composite Islamic Fund United Islamic Income Fund United Stock Advantage Fund UBL Participation Protected Plan UBL Capital Protected Fund - II UBL Savings Income Fund UBL Islamic Savings Fund UBL Islamic Retirement Savings Fund UBL Retirement Savings Fund UBL Capital Protected Fund - I UBL Insurers Limited Oman United Exchange Company, Muscat Subsidiaries United National Bank, UK United Bank AG Zurich, Switzerland UBL Fund Managers Limited United Executors and Trustees Company Ltd 1,482,011 589,837 100,000 30,100 2,201,948 208,174,713 (2,658,000) 205,516,713 21.2 9.4 (3,309,144) (38,201) 202,169,368 1,482,011 589,837 100,000 30,100 2,201,948 22,421,070 230,595,783 (2,658,000) 22,421,070 227,937,783 (11,718) (164) (3,320,862) (38,365) 1,482,011 589,837 100,000 30,100 2,201,948 137,372,509 (2,252,653) 135,119,856 (3,049,359) (2,286) 132,068,211 1,482,011 589,837 100,000 30,100 2,201,948 4,075,629 141,448,138 (2,252,653) 4,075,629 139,195,485 2,404 (720) (3,046,955) (3,006) 12,984,400 805,257 8,928 1,297,405 15,095,990 39,519,598 18,988,194 4,122,000 3,938,516 3,629,299 463,977 445,382 2,163,810 164,662 14,878,099 88,313,537 58,843,648 4,392,225 30,000 51,399 27,106,749 2,548,739 19,202 4,392 2,184,264 428 95,181,046 3,030,136 2,600,000 250,000 200,000 250,000 200,000 100,000 100,000 150,000 90,000 90,000 75,075 240,000 6,981 7,382,192 1,189,144 1,189,144 14,173,544 805,257 8,928 1,297,405 16,285,134 3,268,035 438,505 3,706,540 35,572,747 16,728,759 3,470,000 3,870,557 3,639,088 188,895 441,574 1,948,689 191,299 12,740,879 78,792,487 11,611,110 2,497,301 30,000 478,184 1,485,057 25,289,199 2,640,040 26,838 4,592 1,687,712 421 45,750,454 5,002,027 600,000 386,997 250,000 250,000 200,000 75,075 150,000 6,981 6,921,080 97,306 97,306 3,978,323 3,978,323 3,268,035 535,811 3,803,846 39,551,070 16,728,759 3,470,000 3,870,557 3,639,088 188,895 441,574 1,948,689 191,299 12,740,879 82,770,810 11,611,110 2,497,301 30,000 478,184 1,485,057 25,289,199 2,640,040 26,838 4,592 1,687,712 421 45,750,454 5,002,027 600,000 386,997 250,000 250,000 200,000 75,075 150,000 6,981 6,921,080

9.7

20,695,498 60,215,096 536,428 19,524,622 4,122,000 3,938,516 3,629,299 463,977 445,382 2,163,810 164,662 - 14,878,099 21,231,926 109,545,463 58,843,648 4,392,225 30,000 51,399 27,106,749 2,548,739 19,202 4,392 2,184,264 428 95,181,046 3,030,136 2,600,000 250,000 200,000 250,000 200,000 100,000 100,000 150,000 90,000 90,000 75,075 240,000 6,981 7,382,192

9.9

Provision for diminution in value of investments Investments (net of provisions) Deficit on revaluation of available for sale securities Deficit on revaluation of held for trading securities Total investments

9.3

22,409,188 224,578,556

4,077,313 136,145,524

Annual Report 2010

49

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Note 2010 2009 ----- (Rupees in 000) -----

9.2

Investments by segments Federal Government Securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan - Sukuk Government of Pakistan - Eurobonds Government of Pakistan - Guaranteed Bonds

127,315,215 24,722,104 4,152,000 3,938,516 51,399 160,179,234

48,577,758 19,761,871 3,500,000 4,348,741 1,485,057 77,673,427

Foreign Securities Market Treasury Bills Government securities CDC SAARC Fund Other securities

5,917,073 4,770,078 428 13,589,690 24,277,269

5,852,457 3,214,893 421 11,213,698 20,281,469

Ordinary Shares Listed companies Unlisted companies

9.7

3,638,227 445,382 4,083,609 463,977 164,662

3,639,088 441,574 4,080,662 188,895 191,299

Preference Shares Units of Mutual Funds Term Finance Certificates Listed companies Unlisted companies

2,437,296 26,833,263 29,270,559 2,548,739 4,392 19,202 9.9 9,584,140 230,595,783 9.3 (2,658,000) 227,937,783 21.2 9.4 (3,320,862) (38,365) 224,578,556

2,667,774 24,570,114 27,237,888 2,640,040 4,592 26,838 9,123,028 141,448,138 (2,252,653) 139,195,485 (3,046,955) (3,006) 136,145,524

Sukuk Bonds Debentures Participation Term Certificates Investments in subsidiaries and associates Total investments at cost Provision for diminution in value of investments Investments (net of provisions) Deficit on revaluation of available for sale securities Deficit on revaluation of held for trading securities Total investments

50

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 ----- (Rupees in 000) ----9.3 Particulars of provision for diminution in value of investments 2,252,653 342,610 (138,037) 204,573 (337,899) 548,318 210,419 (9,645) 2,658,000 2,536,770 1,249,158 (303,816) 945,342 (1,208,712) (1,208,712) (20,747) 2,252,653

9.3.1 Opening balance Charged during the year Reversed during the year Net charge for the year Reversed on disposal Transfers

Written off during the year Closing balance 9.3.2 Particulars of provision for diminution in value of investments by type Available for sale securities Ordinary shares of listed companies Ordinary shares of unlisted companies Foreign securities Held to maturity securities Term Finance Certificates Sukuk Debentures Participation Term Certificates Associates

2,017,835 141,512 281,585 2,440,932 100,448 77,667 4,391 19,202 201,708 15,360 2,658,000

1,830,318 150,275 1,980,593 104,985 4,591 26,838 136,414 135,646 2,252,653

9.3.3 Particulars of provision for diminution in value of investments by segment Ordinary Shares Listed companies Unlisted companies Foreign securities

2,017,835 141,512 281,585 2,440,932

1,830,318 150,275 1,980,593

Term Finance Certificates, Debentures and Participation Term Certificates Term Finance Certificates Sukuk Debentures Participation Term Certificates Associates

100,448 77,667 4,391 19,202 201,708 15,360 2,658,000

104,985 4,591 26,838 136,414 135,646 2,252,653

Annual Report 2010

51

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 ----- (Rupees in 000) ----9.4 Unrealized gain / (loss) on revaluation of held for trading securities Market Treasury Bills Pakistan Investment Bonds Ordinary shares of listed companies Foreign securities (353) 2,440 91 (40,543) (38,365) 1,416 (4,422) (3,006)

9.5

Investments include certain approved / government securities which are held by the Bank to comply with the Statutory Liquidity Requirement as set out under Section 29 of the Banking Companies Ordinance, 1962. Investments include Rs.282 million (2009: Rs.282 million) held by the State Bank of Pakistan and National Bank of Pakistan as pledge against demand loan, TT / DD discounting facilities and foreign exchange exposure limit sanctioned to the Bank and Rs.5 million (2009: Rs.5 million) held by the Controller of Military Accounts (CMA) under Regimental Fund Arrangements. This includes the Bank's subscription towards the paid-up capital of Khushhali Bank Limited amounting to Rs.200 million (2009: Rs.200 million). Pursuant to Section 10 of the Khushhali Bank Ordinance, 2000 strategic investors including the Bank could not sell or transfer their investment before a period of five years that has expired on October 10, 2005. Thereafter, such sale / transfer would be subject to the prior approval of the SBP. In addition, the profit of Khushhali Bank Limited cannot be distributed as dividend under clause 35(i) of the Khushhali Bank Ordinance, 2000. The SBP prepared a conversion structure for Khushhali Bank Limited to operate as a Microfinance Bank under the Microfinance Institutions Ordinance, 2001 which was approved by the Ministry of Finance. The scheme of conversion was also approved by the shareholders of Khushhali Bank Limited in an Extra-Ordinary General Meeting held on December 17, 2007. Accordingly, an application for incorporation was submitted to the SECP on February 15, 2008. The SECP has incorporated Khushhali Bank Limited under the Microfinance Institutions Ordinance, 2001 and issued a Certificate of Incorporation on February 28, 2008 under section 32 of the Companies Ordinance, 1984. In a meeting between SBP and the Board of Directors of Khushhali Bank Limited held on June 12, 2008, it was agreed that since Khushhali Bank Limited has a majority of private sector commercial banks as its shareholders and is legally a private sector bank, it is required to be managed as a private sector institution. In order to achieve the strategic restructuring of Khushhali Bank Limited, a consortium of commercial banks including the Bank decided to completely divest their shareholding in Khushhali Bank Limited. Thereafter, the Consortium appointed Advisors (financial, legal and accounting) for conducting preliminary due diligence for valuation and preparing a data room for the prospective purchasers. Khushhali Bank Limited, on behalf of the Consortium of the Commercial Banks has sought prior clearance/approval of the SBP for appointment of Advisors to conduct due diligence of Khushhali Bank Limited. SBP has conveyed its, in principle, no objection to the consortium of selling shareholders of Khushhali Bank Limited for conducting due diligence/valuation of Khushhali Bank Limited subject to compliance with all the applicable laws/rules/regulations etc. The due diligence / valuation is in the process of being carried out. The establishment of a data room and due diligence report/ valuation from Accounting and Financial Advisor is in process.

9.6

9.7

52

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
9.8 Information relating to investments in Ordinary and Preference shares / certificates of listed and unlisted companies / modarabas / mutual funds, term finance certificates, debentures and bonds, required to be disclosed as part of the financial statements under State Bank of Pakistan's BSD Circular No. 4 dated February 17, 2006, is given in Annexure 'A' to these unconsolidated financial statements. Details in respect of quality of available for sale securities are also disclosed in Annexure 'A'. This includes investment in the seed capital aggregating to Rs.630 million (2009: Rs.1,100 million) which is required to be kept for a period of two years. The Bank has tested the investment in its associates for impairment by comparing the recoverable value to the carrying value. For Mutual Funds, the recoverable value is determined to be the Net Asset Value of the Fund. The Bank has determined that no impairment loss exists for the year. For certain Funds, an improvement in the recoverable value during the year has resulted in reversal of impairment losses recognized till the year ended December 31, 2009 which has been credited to the profit and loss account for the year. For UBL Insurers Ltd (UIL), the recoverable value was determined using a value in use (VIU) calculation using cashflow projections based on financial budgets prepared by the management of UIL for the forecast period. Cashflows beyond the forecast period have been extrapolated using growth rates consistent with the economic environment of the country. The discount rate of 18.77% is used for determining the VIU of UIL, which reflects UIL managements estimate of the cost of equity applicable to UIL. The cost of equity has been calculated using the Capital Asset Pricing Model (CAPM). Parameters used in the CAPM calculation are based on published third party data. In the current year, the Bank has determined that no impairment loss exists in its investment in UIL. Accordingly, reversal of impairment losses on UIL recognized till the year ended December 31, 2009 has been credited to the profit and loss account for the year.

9.9

9.10

Annual Report 2010

53

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Note Performing Non-performing Total 2010 2009 2010 2009 2010 2009 --------------------------------------- (Rupees in '000) ---------------------------------------

10.

ADVANCES Loans, cash credits, running finances, etc. In Pakistan Outside Pakistan Bills discounted and purchased Payable in Pakistan Payable outside Pakistan Advances - gross Provision against advances - Specific - General 10.5 (1,425,496) (1,425,496) 318,673,884 (713,507) (713,507) 342,663,339 (33,534,272) (33,534,272) 15,058,288 (27,673,022) (27,673,022) 11,428,374 (33,534,272) (1,425,496) (34,959,768) 333,732,172 (27,673,022) (713,507) (28,386,529) 354,091,713 12,429,950 4,404,982 16,834,932 320,099,380 11,607,055 4,916,421 16,523,476 343,376,846 2,235,582 431,925 2,667,507 48,592,560 2,400,013 416,683 2,816,696 39,101,396 14,665,532 4,836,907 19,502,439 368,691,940 14,007,068 5,333,104 19,340,172 382,478,242 10.2 228,034,418 75,230,030 303,264,448 244,389,399 82,463,971 326,853,370 40,726,130 5,198,923 45,925,053 32,220,534 4,064,166 36,284,700 268,760,548 80,428,953 349,189,501 276,609,933 86,528,137 363,138,070

Advances - net of provision

Performing Non-performing Total 2010 2009 2010 2009 2010 2009 --------------------------------------- (Rupees in '000) --------------------------------------10.1 Particulars of advances - gross 10.1.1 In local currency In foreign currencies 235,079,268 85,020,112 320,099,380 244,216,178 75,883,202 320,099,380 253,182,814 90,194,032 343,376,846 230,096,641 113,280,205 343,376,846 42,816,359 5,776,201 48,592,560 48,592,560 48,592,560 33,781,868 5,319,528 39,101,396 39,101,396 39,101,396 277,895,627 90,796,313 368,691,940 244,216,178 124,475,762 368,691,940 286,964,682 95,513,560 382,478,242 230,096,641 152,381,601 382,478,242

10.1.2 Short term Long term

10.2 This includes performing advances given under various Islamic financing modes amounting to Rs.461.342 million (2009: Rs.638.131 million).

10.3 Non-performing advances include advances having gross book value of Rs.5,774.675 million (2009: Rs.1,596.136 million) and net book value of Rs. 2,110.614 million (2009: Rs.919.006 million) which, though restructured and performing have been placed under non-performing status as required by the revised Prudential Regulations issued by the SBP, which requires monitoring for at least one year before any upgradation is considered.

54

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
10.4 Advances include Rs.48,593 million (2009: Rs.39,101 million) which have been placed under non-performing status as detailed below: 2010
Category of Classification Classified Advances Domestic Overseas Total Provision Required Domestic Overseas Total Domestic Provision Held Overseas Total

--------------------------------------------------- (Rupees in '000) --------------------------------------------------Other Assets Especially Mentioned * Substandard Doubtful Loss 336,651 6,320,318 5,716,839 30,587,904 42,961,712 1,037,361 3,005,088 336,651 7,357,679 8,721,927 1,414,035 1,530,397 259,344 1,502,546 1,673,379 3,032,943 1,414,035 1,530,397 259,344 1,502,546 1,673,379 3,032,943

1,588,399 32,176,303 27,239,551 5,630,848 48,592,560 30,183,983

1,588,399 28,827,950 27,239,551 3,350,289 33,534,272 30,183,983

1,588,399 28,827,950 3,350,289 33,534,272

2009
Category of Classification Classified Advances Domestic Overseas Total Provision Required Domestic Overseas Total Domestic Provision Held Overseas Total

--------------------------------------------------- (Rupees in '000) --------------------------------------------------Other Assets Especially Mentioned * Substandard Doubtful Loss 386,517 3,802,275 6,007,332 24,424,423 34,620,547 1,473,002 1,696,401 386,517 5,275,277 7,703,733 891,498 2,651,589 368,251 848,206 1,259,749 3,499,795 891,498 2,651,589 368,251 848,206 1,259,749 3,499,795

1,311,446 25,735,869 21,602,032 4,480,849 39,101,396 25,145,119

1,311,446 22,913,478 21,602,032 2,527,903 27,673,022 25,145,119

1,311,446 22,913,478 2,527,903 27,673,022

* The Other Assets Especially Mentioned category pertains to agricultural finance only.

10.5 Particulars of provision against advances


2010 Note Specific General Total Specific 2009 General Total

------------------------------ (Rupees in '000) ------------------------------Opening balance Exchange adjustments Charge / (Reversals) Charge for the year Reversals Transfers Amounts written off Closing balance 10.6 8,043,159 (1,956,300) 6,086,859 133,267 (556,150) 33,534,272 910,973 (194,477) 716,496 (4,507) 1,425,496 8,954,132 (2,150,777) 6,803,355 128,760 (556,150) 34,959,768 11,530,793 (944,245) 10,586,548 (464,064) (1,285,082) 27,673,022 (963,344) (963,344) 464,064 713,507 11,530,793 (1,907,589) 9,623,204 (1,285,082) 28,386,529 27,673,022 197,274 713,507 28,386,529 18,563,334 197,274 272,286 1,199,769 19,763,103 13,018 285,304

10.5.1 General provision represents provision amounting to Rs.375.327 million (2009: Rs.569.195 million) against consumer finance portfolio as required by the Prudential Regulations issued by the SBP, Rs.415.169 million (2009: Rs.144.311 million) pertaining to overseas advances to meet the requirements of monetary agencies and regulatory authorities of the respective countries in which the overseas branches operate. General provisions also include an amount of Rs.635 million (2009: Nil) which the Bank carries as matter of prudence given the current economic environment and is based on management estimates.

10.5.2 Particulars of provision against advances


2010 Specific General Total Specific 2009 General Total

------------------------------ (Rupees in '000) ------------------------------In local currency In foreign currencies 30,183,984 3,350,288 33,534,272 1,010,327 31,194,311 24,327,702 415,169 3,765,457 3,345,320 1,425,496 34,959,768 27,673,022 569,195 24,896,897 144,311 3,489,631 713,506 28,386,528

Annual Report 2010

55

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Note 2010 2009 ----- (Rupees in 000) -----

10.6

Particulars of write-offs 10.5 556,150 996,772 1,552,922 764,563 788,359 1,552,922 1,285,082 1,485,976 2,771,058 1,588,946 1,182,112 2,771,058

10.6.1 Against provisions Directly charged to profit and loss account

10.6.2 Write-offs of Rs.500,000 and above Write-offs of below Rs.500,000

10.7

10.7

Details of loan write-offs of Rs.500,000 and above In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the statement in respect of writtenoff loans or any other financial relief of five hundred thousand rupees or above allowed to a person during the year ended December 31, 2010 is given in Annexure 'B' to these unconsolidated financial statements. These loans are written off as a book entry without prejudice to the Bank's right of recovery against the customers. Note 2010 2009 ----- (Rupees in 000) -----

10.8

Particulars of loans and advances to executives, directors, associated companies etc. Debts due by directors or executives of the Bank or any of them either severally or jointly with any other persons Balance at the beginning of the year Loans granted during the year Repayments made during the year Balance at the end of the year 1,482,474 717,242 (581,135) 1,618,581 981,319 1,020,264 (519,109) 1,482,474

11.

OPERATING FIXED ASSETS Capital work-in-progress Property and equipment Intangible assets 11.1 11.2 11.3 1,334,951 20,166,071 923,050 22,424,072 997,617 20,439,417 488,635 21,925,669

11.1

Capital work-in-progress Civil works Equipment Software Advances to suppliers and contractors 11.1.1 11.1.2 537,257 268,949 517,776 10,969 1,334,951 484,612 202,119 297,984 12,902 997,617

11.1.1 This includes Rs.437.916 million (2009: Rs.297.430 million) paid in respect of construction of the Head Office building. 11.1.2 This includes Rs.516.081 million (2009: Rs.221.56 million) paid in respect of the Core Banking Software.

56

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
11.2 Property and equipment
2010 COST/ REVALUATION ACCUMULATED DEPRECIATION At Additions / Surplus on Reclassif- Exchange At At Charge for Reversal Exchange At Net book January (deletions) revaluation / ication Adjustment / December January the year / due to Adjustment / December value at 01, 2010 (Reversal of Other 31, 2010 01, 2010 (deprec- revaluation Other 31, 2010 December accumulated adjustments iation on adjustments 31, 2010 depreciation) deletions) ------------------------------------------------------------------ (Rupees in '000) -----------------------------------------------------------------1,825,754 12,802,015 118,967 2,149,539 1,495,013 885,786 3,896,827 267,752 810,456 24,252,109 125,305 9,865 22,025 56,072 (5,431) 169,079 (7,818) 75,064 (17,770) 704,628 (31,186) 48,877 (34,854) 59,658 (133,066) 1,270,573 (230,125) - 1,090,717 - (1,090,717) - 173,900 8,788 (8,707) (173,900) 8,788 1,264,617 (8,707) (1,264,617) 3,041,776 1,052 291,697 15,002 99,979 (5,431) 153,380 (5,436) 78,998 (14,760) 682,097 (29,681) 34,307 (22,631) (8,707) (8,707) 18 347 (502) 2,196 (24,665) (2,549) - 3,041,776 292,767 11,428,418 15,002 299,890

Note

Annual rate of depreciation %

Owned Freehold land Leasehold land Buildings on freehold land Buildings on leasehold land Leasehold Improvements Furniture and fixtures Electrical, office and computer equipment Vehicles Assets held underoperating lease Ijarah assets 11.8 2010

1 - 3.33 5 5 10 10 20-25 20

22 11,721,185

314,892 161 2,026,522 36,283 4,911 1,661,185 415,414 2,192 945,272 477,661 - 4,562,070 2,427,235 (8,199) 174 281,949 158,981 -

122,471 1,904,051 562,856 1,098,329 544,095 401,177

3,054,986 1,507,084 168,108 113,841

2,931 739,979 296,066 137,463 (65,055) 10,391 25,294,830 3,812,692 1,492,923 (8,199) (142,994)

- 368,474 371,505 20 - 33.33 2,561 5,128,759 20,166,071 (27,716)

2009 COST/ REVALUATION ACCUMULATED DEPRECIATION At Additions / Surplus on Reclassif- Exchange At At Charge for Reversal Exchange At Net book January (deletions) revaluation / ication Adjustment / December January the year / due to Adjustment / December value at 01, 2009 (Reversal of Other 31, 2009 01, 2009 (depriciation revaluation Other 31, 2009 December accumulated adjustments on deletions) adjustments 31, 2009 depreciation) ------------------------------------------------------------------ (Rupees in '000) -----------------------------------------------------------------Owned Freehold land Leasehold land Buildings on freehold land Buildings on leasehold land Leasehold Improvements Furniture and fixtures Electrical, office and computer equipment Vehicles Assets held under operating lease Ijarah assets 11.8 2009 1,502,746 10,092,131 81,021 1,904,654 1,169,850 801,949 3,137,525 272,066 895,217 19,857,159 1,724 332,426 (11,142) 9,470 3,328,235 (106,551) (523,063) 44,923 (112) (7,840) - 434,008 (5,240) (184,470) 305,714 104,078 (28,986) 777,812 (52,476) 51,958 (58,969) 39,648 (104,750) 1,290,404 4,139,592 (368,226) (715,373) 1,825,754 307,447 3,826 128,769 255,761 418,311 63 (1,275) 498 (483) 9,929 8,805 20,440 2,175 - 1,825,754 1,052 12,800,963 118,967

Annual rate of depreciation %

1 - 3.33 5 5 10 10 20-25 20

1,793 12,802,015 975 587 19,449 8,745 33,966 2,697 118,967 2,149,539 1,495,013 885,786

3,896,827 1,833,212 267,752 141,973

305,640 (87,760) (523,063) 4,126 (112) (7,840) 93,934 (1,965) (184,470) 149,724 73,279 (22,734) 616,013 (42,430) 58,523 (43,690) -

36,283 2,113,256 415,414 1,079,599 477,661 408,125

2,427,235 1,469,592 158,981 108,771

810,456 153,297 170,285 (19,659) (27,516) 68,212 24,252,109 3,242,596 1,471,524 (19,659) (226,207) (715,373)

- 296,066 514,390 20-33.33 41,910 3,812,692 20,439,417 (1,758)

Annual Report 2010

57

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
11.3 Intangible assets
2010 Cost Accumulated Amortization At Additions/ Exchange At At Charge for Exchange At Net book January 01, (deletions) Adjustment/ December 31, January 01, the year / Adjustment/ December 31, value at 2010 Other 2010 2010 (reversal on Other 2010 December 31, adjustments deletion) adjustments 2010 ------------------------------------------------------------------ (Rupees in '000) --------------------------------------------------------Software 1,043,528 654,002 (4,140) 19,899 1,713,289 554,893 221,047 (2,691) 16,990 790,239 923,050

Annual rate of amortisation %

10-25

2009 Cost Accumulated Amortization At Additions/ Exchange At At Charge for Exchange At Net book January 01, (deletions) Adjustment/ December 31, January 01, the year / Adjustment/ December 31, value at 2009 Other 2009 2009 (reversal on Other 2009 December 31, adjustments deletion) adjustments 2009 ------------------------------------------------------------------ (Rupees in '000) --------------------------------------------------------Software 777,027 267,182 (8,825) 8,144 1,043,528 374,687 184,241 (8,825) 4,790 554,893 488,635

Annual rate of amortisation %

10-25

11.4

Revaluation of properties The properties of the Bank were last revalued by independent professional valuers as at December 31, 2009. The revaluation was carried out by M/s. Pirsons Chemicals Engineering (Private) Limited, M/s. Sadruddin Associates, M/s. Maricon Consultants (Private) Limited and M/s. Engineering Pakistan International (Private) Limited on the basis of professional assessment of present market values and resulted in a surplus of Rs.4,139.592 million. Had there been no revaluation, the carrying amount of revalued assets at December 31, 2010 would have been as follows: 2010 2009 ----- (Rupees in 000) ----Freehold land Leasehold land Buildings on freehold land Buildings on leasehold land 1,484,906 9,168,903 69,201 1,584,701 59,812 1,484,906 9,472,729 73,256 1,679,280 158,927

11.5 11.6

Carrying amount of temporarily idle properties of the Group The cost of fully depreciated assets still in use Furniture and fixtures Electrical, office and computer equipment Vehicles

234,275 1,665,921 69,474 1,969,670

233,962 1,220,822 33,601 1,488,385

11.7

Details of disposal of operating fixed assets The information relating to operating fixed assets disposed off during the year is given in Annexure 'C' and is an integral part of these unconsolidated financial statements.

58

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
11.8 The Islamic Banking Branches of the Bank have entered into Ijarah transactions with customers during the year. The majority of Ijarah transactions entered into are in respect of vehicles. The ijarah payments receivable from customers for each of the following periods under the terms of the respective arrangements are given below: Note 2010 2009 ----- (Rupees in 000) ----Not later than one year Later than one year but not later than five years Later than five years 12. DEFERRED TAX ASSET - NET Deferred tax asset - net 12.1 Movement in temporary differences during the year 2010 Recognised in Others At December 31, profit and loss 2010 account ------------------------------------- (Rupees in '000) ------------------------------------At January 01, 2010 Deductible temporary differences on - Deficit on revaluation of investments - Ijarah financing - Workers' Welfare Fund - Cash flow hedge reserve - Provision against off balance sheet items, post retirement medical benefits and advances Taxable temporary differences on - Surplus on revaluation of fixed assets - Accelerated tax depreciation 12.1 1,298,403 608,876 103,811 242,387 94 346,292 270,864 436,129 3,020 710,013

1,066,434 52,314 139,142 111,148

(66,685) 5,598 -

95,868 (41,603)

1,162,302 (14,371) 144,740 69,545

4,662,598 6,031,636 (5,275,900) (146,860) (5,422,760) 608,876

541,702 480,615 136,794 20,945 157,739 638,354

54,265 (3,092) (3,092) 51,173

5,204,300 6,566,516 (5,142,198) (125,915) (5,268,113) 1,298,403

Annual Report 2010

59

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
2009 Recognised in Others At December 31, profit and loss 2009 account ------------------------------------- (Rupees in '000) ------------------------------------At January 01, 2009 Deductible temporary differences on - Deficit on revaluation of investments - Ijarah financing - Workers' Welfare Fund - Cash flow hedge reserve - Provision against off balance sheet items, post retirement medical benefits and advances Taxable temporary differences on - Surplus on revaluation of fixed assets - Accelerated tax depreciation

3,201,075 118,653 117,950 148,956

(66,339) 21,192 -

(2,134,641) (37,808)

1,066,434 52,314 139,142 111,148

2,658,457 6,245,091 (3,972,755) (216,727) (4,189,482) 2,055,609

2,004,141 1,958,994 136,238 69,867 206,105 2,165,099

(2,172,449) (1,439,383) (1,439,383) (3,611,832)

4,662,598 6,031,636 (5,275,900) (146,860) (5,422,760) 608,876

Note 13. OTHER ASSETS Income / mark-up accrued in local currency Income / mark-up accrued in foreign currency

2010 2009 ----- (Rupees in 000) -----

11,753,658 1,181,889 12,935,547 13.1 3,686,910 66,595 43,086 31,121 1,219,425 145,346 693,675 224,948 151,528 727,888 1,139,563 21,065,632 (2,352,444) 18,713,188

11,036,384 272,232 11,308,616 2,001,447 1,045,899 74,406 124,977 897,457 836,556 142,266 499,672 383,929 169,309 143,825 771,109 1,139,428 19,538,896 (2,633,892) 16,905,004

Advance taxation - net of provision for taxation Receivable from staff retirement funds Receivable on account of encashment of savings certificates Receivable in respect of derivative transactions Receivable against sale of securities Receivable from other banks against telegraphic transfers and demand drafts Unrealized gain on forward foreign exchange contracts Unrealized gain on derivative financial instruments Advance against Murabaha Suspense accounts Stationery and stamps on hand Advances, deposits, advance rent and other prepayments Others Provision held against other assets Other assets (net of provisions)

23.2

13.2

60

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
13.1 The Income Tax returns of the Bank have been filed up to the tax year 2010 (accounting year ended December 31, 2009) and were deemed to be assessed under section 120 of the Income Tax Ordinance, 2001 (Ordinance) unless amended by the Commissioner of Inland Revenue. The tax authorities have issued the amended assessment orders for the tax years 2003 to 2010 (accounting year ended December 31, 2002 to 2009) determining additional tax liability of Rs.7,308 million. The amount has been fully paid as required under the law. For the tax years 2004 to 2009, appeals have been decided by the Commissioner of Inland Revenue [CIR(A)] by allowing relief on certain issues. For the remaining issues, the Bank has filed an appeal before the Appellate Tribunal Inland Revenue (ATIR). For the tax years 2003 and 2010, the hearing is still pending with CIR (A). The management is confident that the appeals will be decided in favor of the Bank. During the year, the tax authorities have further amended the assessment order for the tax year 2009 adding back unrealized losses on derivative transactions resulting in a demand of Rs.146 million, which has been paid. CIR(A) has upheld the order of the taxation officer, however, the Bank is in the process of filing an appeal before ATIR. The Management is confident that this matter will be decided in favor of the Bank. The tax returns for Azad Kashmir (AK) Branches have been filed for tax years 2005 to 2010 (financial years ended December 31, 2004 to 2009) under the provisions of section 120(1) read with section 114 of the Ordinance and in compliance with the terms of agreement between banks and the Azad Kashmir Council in May 2005. The returns filed are considered as deemed assessment orders under the law. The Seventh Schedule to the Ordinance has been amended through the Finance Act, 2010. Through this amendment, provision for advances and off balance sheet exposures would be allowed @ 5% of advances to consumer and small and medium enterprises (SMEs), and 1% for other advances. The said change will be applicable from current year. A deferred tax asset of Rs. 2,574 million has been recognized relating to amounts in excess of the allowable limits which is carried forward to future years. The Bank also carries a tax asset amounting to Rs.5,454 million (2009: 5,454 million), representing disallowance of provisions against advances and off balance sheet obligations, for the periods prior to the applicability of the Seventh schedule. The Management, in consultation with its tax advisors, is confident that these would be allowed to the Bank at appellate levels. Note 2010 2009 ----- (Rupees in 000) -----

13.2

Provision against other assets Opening balance Exchange adjustments Charge for the year Reversals 29 Transfers Amounts written off Closing balance 2,633,892 8,638 2,642,530 40,598 (162,859) (122,261) 221,772 (389,597) 2,352,444 2,473,775 32,381 2,506,156 361,391 (22,260) 339,131 117,690 (329,085) 2,633,892

Annual Report 2010

61

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Note 2010 2009 ----- (Rupees in 000) -----

14.

CONTINGENT ASSETS There were no contingent assets as at the balance sheet date.

15.

BILLS PAYABLE In Pakistan Outside Pakistan 4,136,487 909,328 5,045,815 4,944,903 202,356 5,147,259

16.

BORROWINGS In Pakistan Outside Pakistan 43,401,942 1,702,907 45,104,849 30,953,356 4,191,467 35,144,823

16.1

Particulars of borrowings with respect to currencies In local currency In foreign currencies 43,401,942 1,702,907 45,104,849 30,953,357 4,191,466 35,144,823

16.2

Details of borrowings from financial institutions Secured Borrowings from the State Bank of Pakistan under: - Export refinance scheme - Refinance facility for modernization of SME - Long term fixed finance - Long-term financing under export oriented projects Repurchase agreement borrowings Unsecured Call borrowings Overdrawn nostro accounts Trading liabilities Other borrowings

16.3 16.4 16.5 16.6 16.7

14,840,163 27,500 2,444,872 2,770,789 20,083,324 22,412,235 42,495,559 428,195 456,617 806,942 917,536 2,609,290 45,104,849

14,666,570 1,018,535 3,705,568 19,390,673 5,066,098 24,456,771 8,679,283 648,559 96,586 1,263,624 10,688,052 35,144,823

16.8

16.9

62

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
16.3 The Bank has entered into agreements with the SBP for extending export finance to customers. As per the terms of the agreement, the Bank has granted the SBP the right to recover the outstanding amounts from the Bank at the date of maturity of the finances by directly debiting the current account maintained by the Bank with the SBP. These borrowings are repayable within six months, latest by June 2011. These carry markup rates at 9% per annum (2009: 7.5% per annum). These borrowings have been obtained from the SBP for modernization of Small and Medium Enterprises (SMEs) by providing financing facilities for purchase of new plant & machinery for BMR of existing units and setting up of new units. In addition, financing for import /local purchase of new generators upto a maximum capacity of 500 KVA shall also be eligible under this Scheme. These borrowings are repayable within a period ranging from 3 years to 10 years and the Scheme will remain effective up to December 31, 2012. These carry markup rates ranging from 5.5% to 7.0% per annum. These borrowings have been obtained from the SBP for providing financing facilities to exporters for adoption of new technologies and modernizing their plant and machinery. These borrowings are repayable within a period ranging from 3 years to 10 years. These carry markup rates ranging from 8.2% to 9.5% per annum (2009: 7.2% to 7.7% per annum). These borrowings have been obtained from the SBP for providing financing facilities to customers for import of machinery, plant, equipment and accessories thereof by export oriented units. These carry markup rates ranging from 4% to 5% per annum (2009: 4% to 5% per annum). These repurchase agreement borrowings are secured against Market Treasury Bills and Pakistan Investment Bonds and carry mark-up at rates ranging from 12.50% to 13.25% per annum (2009: 11.50% to 12.40% per annum). These borrowings are repayable latest by January 2011. The carrying value of securities given as collateral is given in note 9.1. These are borrowings pertaining to overseas operations which carry mark-up at rates ranging from 0.35% to 1.58% per annum (2009: 0.5% to 0.6% per annum) and are due to mature latest by June 2011. This represents borrowing from an overseas bank for the development of Small and Medium Sized Enterprises (SMEs) in Pakistan, carries mark-up at the rate of six months LIBOR + 1.2% (2009: six months LIBOR + 1.2%) and is repayable by June 2013. 2010 2009 ----- (Rupees in 000) ----17. DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Savings deposits Sundry deposits Margin deposits Current accounts - remunerative Current accounts - non-remunerative Financial Institutions Remunerative deposits Non-remunerative deposits

16.4

16.5

16.6

16.7

16.8 16.9

162,426,884 193,982,616 4,767,873 3,696,330 3,412,476 180,688,420 548,974,599 1,518,443 152,725 1,671,168 550,645,767

150,792,206 178,287,618 4,643,923 4,319,476 2,114,809 150,803,732 490,961,764 964,066 110,273 1,074,339 492,036,103

17.1

Particulars of deposits and other accounts In local currency In foreign currencies 415,739,343 134,906,424 550,645,767 368,303,869 123,732,234 492,036,103

Annual Report 2010

63

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
18. SUB-ORDINATED LOANS - UNSECURED Note Issue Date Tenor Rate % per annum Maturity Frequency of principal redemption

2010

2009

--- (Rupees in '000) --Term Finance Certificates - I Term Finance Certificates - II Term Finance Certificates - III Term Finance Certificates - IV 18.1 August 2004 March 2005 September 2006 February 2008 8 years 8.45% August 2012 March 2013 Semi Annual Semi Annual Semi Annual Semi Annual 1,995,388 1,996,160

18.1

8 years

9.49%

1,999,560

1,999,640

18.1 18.2

8 years 10 Years

6 months KIBOR+1.70% September 2014 For the first five years February 6 months 2018 KIBOR+0.85% and for the remaining term, 6 months KIBOR+1.35%

1,996,800 5,994,000

1,997,600 5,996,400

11,985,748 11,989,800

18.1

These represent listed Term Finance Certificates (TFCs) issued by the Bank. The liability of the Bank is subordinated as to the payment of principal and profit to all other indebtedness of the Bank (including deposits) and is not redeemable before maturity without approval of the State Bank of Pakistan. This represents listed Term Finance Certificates (TFCs) issued by the Bank. The liability of the Bank is subordinated as to the payment of principal and profit to all other indebtedness of the Bank (including deposits). The Bank has the right to exercise a call option after a period of 5 years from the issue date. Note 2010 2009 ----- (Rupees in 000) -----

18.2

19.

OTHER LIABILITIES Mark-up / return / interest payable in local currency Mark-up / return / interest payable in foreign currency Accrued expenses Branch adjustment account Payable against purchase of securities Payable under severance scheme Unearned commission Provision against off - balance sheet obligations Unrealized loss on forward foreign exchange contracts Deferred liabilities Unrealized loss on derivative financial instruments Workers Welfare Fund payable Insurance payable against consumer assets Others 8,427,554 334,841 2,141,153 1,399,052 236,683 32,563 99,544 669,891 654,579 2,113,439 753,854 413,542 183,095 127,945 17,587,735 7,015,536 353,032 1,528,824 839,346 197,722 33,452 95,736 682,141 207,567 2,098,414 557,414 397,547 393,288 61,706 14,461,725

19.1

19.2 19.3 19.4.1 & 23.2

64

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
19.1 This includes an accrual of Rs.250 million (2009: Rs.210 million) for the year ended December 31, 2010 in respect of employee benefit scheme. The objective of the scheme is to reward, motivate and retain high performing executives and officers of the Bank by way of bonus in the form of shares of the Bank. The liability of the Bank in respect of this scheme is fixed and is approved each year by the Board of Directors of the Bank. The scheme for each year is managed by a separate Trust formed for this purpose. Note 19.2 Provision against off - balance sheet obligations Opening balance Charge during the year Transfers during the year Payments during the year 29 682,141 (12,250) 669,891 651,697 20,250 10,194 30,444 682,141 2010 2009 ----- (Rupees in 000) -----

19.3

Deferred liabilities Provision for post retirement medical benefits Provision for gratuity Provision for compensated absences 36.4 36.4 1,139,616 296,671 677,152 2,113,439 1,147,095 219,411 731,908 2,098,414

19.4

Unrealized gain / (loss) on derivative financial instruments Note Contract/ notional amount Unrealised gain / (loss) 2010 2009 2010 2009 ------------------------------- (Rupees in '000) -------------------------------

Derivatives held for trading - Interest rate swaps - Cross currency swaps - Swaptions - Fx options - Forward sale contracts of government securities 19.4.1

6,985,703 35,570,843 4,110,884 441,981 47,109,411

11,014,381 36,372,837 2,527,248 821,070 50,735,536 Note

(111,793) 51,100 514 (60,179)

(187,593) 143,894 (14,044) (57,743)

2010 2009 ----- (Rupees in 000) -----

19.4.1 Unrealized loss on derivative financial instruments - net Unrealized gain on derivative financial instruments Unrealized loss on derivative financial instruments 13 19 23.2 693,675 (753,854) (60,179) 499,671 (557,414) (57,743)

Annual Report 2010

65

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
20. 20.1 SHARE CAPITAL Authorized Capital 2010 2009 (Number of shares) 2,000,000,000 20.2 2,000,000,000 Ordinary shares of Rs.10 each 2010 2009 ----- (Rupees in 000) ----20,000,000 20,000,000

Issued, subscribed and paid-up capital Fully paid-up ordinary shares of Rs. 10 each 2010 2009 (Number of shares) 518,000,000 706,179,687 1,224,179,687 518,000,000 594,890,625 1,112,890,625 Fully paid-up ordinary shares of Rs.10 each Issued for cash Issued as bonus shares 5,180,000 7,061,798 12,241,798 5,180,000 5,948,907 11,128,907

20.3

During the year 2007, the Bank was admitted to the official list of the UK Listing Authority and to the London Stock Exchange Professional Securities Market for trading of Global Depository Receipts (GDRs), each representing four ordinary equity shares issued by the Bank. The GDRs constitute an offering in the United States only to qualified institutional buyers in reliance on Rule 144A under the U.S Securities Act of 1933 and an offering outside the United States in reliance on Regulation S. Holders of GDRs are entitled, subject to the provision of the depository agreement, to receive dividends, if any, and rank pari passu with other equity shareholders in respect of such entitlement to receive dividends. However, the holders of GDRs have no voting rights or other direct rights of shareholders with respect to the equity shares underlying such GDRs. Subject to the terms and restrictions set out in the offering circular dated June 25, 2007, the deposited equity shares in respect of which the GDRs were issued may be withdrawn from the depository facility. Upon withdrawal, the holders will rank pari passu with other equity shareholders in respect of voting powers. As at December 31, 2010: 78,503,082 (2009: 92,519,435) GDR shares were in issue.

20.4

Major shareholders (holding more than 5% of total paid-up capital) 2010 Percentage of shareholding 19.49% 18.20% 7.65% 6.45% 5.51% 5.10% 2009 Percentage of shareholding 19.49% 18.20% 7.65% 6.45% 5.51% 5.10%

Name of shareholders

Number of shares held

Number of shares held 216,879,438 202,522,894 85,136,131 71,765,548 61,356,720 56,757,421

Government of Pakistan 238,567,381 Bestway (Holdings) Limited 222,775,183 Bestway Cement Limited 93,649,744 His Highness Shaikh Nahayan Mabarak Al Nahayan 78,942,102 H.E. Dr. Mana'a Saeed Al Otaiba 67,492,392 Sir Mohammed Anwar Pervez, OBE, HPk 62,433,163

As at December 31, 2010 the Abu Dhabi Group (ADG) held 30.30% (2009: 30.30%) shareholding (including GDRs) and the Bestway Group (Bestway) held 31.07% (2009: 31.07%) shareholding of the Bank.

66

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
ADG and Bestway (Holdings) Limited had entered into a Share Purchase Agreement dated December 28, 2010 for the sale of 20% of the issued and outstanding ordinary shares of the Bank held by ADG to Bestway (Holdings) Limited. Subsequent to the statement of financial position date, Bestway held 51.07% of the issued and outstanding ordinary shares of the Bank whereas control shall continue to rest with the consortium of ADG and Bestway for which all regulatory approvals have been obtained. Note 21. SURPLUS / (DEFICIT) ON REVALUATION OF ASSETS NET OF DEFERRED TAX Surplus arising on revaluation of assets - net of tax : Fixed assets Securities 21.1 21.2 10,392,701 (2,158,560) 8,234,141 10,640,998 (1,980,521) 8,660,477 2010 2009 ----- (Rupees in 000) -----

21.1

Surplus on revaluation of fixed assets Surplus on revaluation of fixed assets at January 01 Revaluation of fixed assets during the year / adjustments Written off during the year Exchange adjustments Transferred to unappropriated profit in respect of incremental depreciation charged during the year Related deferred tax liability on incremental depreciation charged during the year 15,916,898 8,788 48 (254,041) 12.1 (136,794) (381,999) 15,534,899 5,275,900 3,092 (136,794) 5,142,198 10,392,701 12,193,629 4,139,592 (27,071) (253,014) (136,238) 3,723,269 15,916,898 3,972,755 1,448,858 (9,475) (136,238) 5,275,900 10,640,998

Less: Related deferred tax liability on: Revaluation as on January 01 Revaluation of fixed assets during the year Written off during the year Incremental depreciation charged on related assets 12.1

21.2

Surplus / (Deficit) on revaluation of available-for-sale securities Market Treasury Bills Pakistan Investment Bonds Listed shares Mutual fund units Term Finance Certificates, Sukuk, other Bonds etc Overseas securities Related deferred tax asset 12.1 (55,830) (1,937,605) (34,452) (709) (27,242) (1,265,024) (3,320,862) 1,162,302 (2,158,560) 20,995 (1,129,224) 93,619 (2,302) (43,856) (1,986,187) (3,046,955) 1,066,434 (1,980,521)

Annual Report 2010

67

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 ----- (Rupees in 000) ----22. 22.1 CONTINGENCIES AND COMMITMENTS Direct credit substitutes Contingent liabilities in respect of guarantees given favouring Government Banking companies and other financial institutions Others 22.2 Transaction-related contingent liabilities Contingent liabilities in respect of performance bonds, bid bonds, warranties, etc. given favouring Government Banking companies and other financial institutions Others 22.3 Trade-related contingent liabilities Contingent liabilities in respect of letters of credit opened favouring Government Others 22.4 Other contingencies Claims against the Bank not acknowledged as debts 22.5 Commitments in respect of forward lending The Bank makes commitments to extend credit in the normal course of its business but these being revocable commitments do not attract any significant penalty or expense if the facility is unilaterally withdrawn. 2010 2009 ----- (Rupees in 000) ----Commitments in respect of forward foreign exchange contracts Sale Purchase 22.7 Commitments in respect of derivatives Interest rate swaps Cross currency swaps Swaptions FX options - purchased FX options - sold Forward sale contracts of government securities 6,985,703 35,570,843 2,055,442 2,055,442 441,981 11,014,381 36,372,837 2,527,248 410,535 410,535 85,434,818 130,653,749 46,364,122 90,952,188 29,934,358 20,668,309 58,157,874 69,337,219 127,495,093 56,186,541 61,762,728 117,949,269 8,742,208 5,316,009 6,079,170 20,137,387 10,818,102 2,758,243 7,396,201 20,972,546

82,423,478 2,470,740 14,018,380 98,912,598

77,448,985 3,311,075 18,521,775 99,281,835

22.6

68

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 ----- (Rupees in 000) ----22.8 22.9 23. Commitments in respect of capital expenditure For contingencies relating to taxation refer note 13.1 DERIVATIVE INSTRUMENTS Derivatives are a type of financial contract, the value of which is determined by reference to one or more underlying assets or indices. The major categories of such contracts include forwards, futures, swaps and options. Derivatives also include structured financial products that have one or more characteristics of forwards, futures, swaps and options. The Bank as an Authorized Derivative Dealer (ADD) is an active participant in the Pakistan derivatives market. Although the ADD license covers the below mentioned transactions only (permitted under Financial Derivatives Business Regulations issued by the SBP), the Bank offers a wide variety of derivative products to satisfy customers needs, specific approval for which is sought from the SBP on a transaction by transaction basis: (a) (b) (c) (d) (e) (f) Foreign Currency Options Forward Rate Agreements Interest Rate Swaps Cross Currency Swaps Equity indices Commodity options 571,403 567,882

These transactions cover the aspects of both market making and hedging. The authority for approving policies lies with the Board of Directors (BoD) and Board Risk Management Committee (BRMC), who has delegated its powers to the Market Risk Committee (MRC). With regard to derivatives, the MRC is authorized to: Review the derivatives business with reference to market risk exposure and assign various limits in accordance with the risk appetite of the Bank Review and approve the Derivatives Business Policy Review and sign off derivatives product programs Authorize changes in procedures and processes regarding derivatives and structured products

Overall responsibility for derivatives trading activity lies with the Treasury and Capital Markets Group (TCM). Identifying and quantifying market risk on derivatives, coordinating approvals on temporary or permanent market risk limits, formulation of policies and procedures with respect to market risk arising from derivatives, formal monitoring of market and credit risk exposure and limits and its reporting to the senior management and BoD is done by the Treasury and Market Risk (TMR) Department. Treasury Operations records derivative activity in the Banks books, and handles its reporting to the SBP.

Annual Report 2010

69

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Derivative Risk Management There are a number of risks undertaken by the Bank, which need to be monitored and assessed, and they include: Credit Risk Credit risk refers to the risk of non-performance or default by a party (a customer, guarantor, trade counterparty, third party, etc.), resulting in an adverse impact on the Banks profitability. Credit risk associated with derivative transactions is categorized into settlement risk and pre-settlement risk. Credit limit proposals for derivative transactions are reviewed by Head Market and Treasury Risk who recomends the appropriate limits to the Credit Committee for approval. Credit exposure of each counterparty is estimated and monitored by Treasury Middle Office on daily basis. Settlement risk is also mitigated by netting off the amounts receivable and payable i.e., the net amount is either received or paid. Market Risk The Bank, as a policy, hedges back-to-back all Options transactions. The Bank also does not carry any exchange risk on its Cross Currency Swaps portfolio as it hedges the exposure in the interbank market. To manage interest rate risk of Interest Rate Derivatives the Bank has implemented various limits which are monitored and reported by Treasury Middle Office on daily basis. Liquidity Risk Derivative transactions, usually being non-funded in nature, do not involve funds therefore there is no specific liquidity risk. However, there is another aspect of liquidity which is the availability of certain instruments or hedges in the market. This is relevant to the Pakistan market, as interest rate derivatives have a uni-directional demand, and no perfect hedge is available. The Bank mitigates its risk, on one side, by limiting the portfolio in terms of tenor, notional and sensitivity limits, and on the other side by taking on and off balance sheet positions in the interbank market, where available. Operational Risk The staff involved in the process of trading, settlement and risk management of derivatives are carefully trained to deal with the complexities involved in the process. A state-of-the-art system has been put in place which handles derivative transactions. Each transaction is processed in accordance with the product program or transaction memo, which contains detailed accounting and operational aspects of the transaction to further mitigate operational risk. In addition, the Treasury Middle Office and the Compliance and Control Department are assigned the responsibility of monitoring any deviation from the policies and procedures. The Banks Audit and Inspection Group also reviews this function, which covers regular review of systems, transactional processes, accounting practices, end-user roles and responsibilities.

70

United Bank Limited

The Bank has installed a state of the art derivatives system called 'Super Derivatives' which provides an end-to-end solution. Other than supporting the routine transactional process it also provides analytical tools to measure various risk exposures, stress tests and sensitivity analysis.

Treasury Middle Office produces various reports for higher management (BoD, BRMC, MRC, etc) on a periodic basis. These reports provide details of the derivatives business profile and various risk exposures.

23.1

Product Analysis

Interest rate swaps National principal (Rupees in '000) Number of contracts Notional principal (Rupees in '000) Number of contracts Notional principal (Rupees in '000) Number of contracts Notional principal (Rupees in '000)

Cross currency swaps

2010 Swaptions FX options

Number of contracts

Forward sale contracts of government securities Number of Notional Total contracts principal Notional (Rupees in '000) (Rupees in '000)

With Banks for Hedging Market making 4 3 7 3,475,777 1,871,064 5,346,841 4 2 6 14,996,850 2,201,000 17,197,850 82 82 2,055,442 2,055,442 -

20,528,069 4,072,064 24,600,133

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]

With other entities Market Making 4 1,638,862 9 18,372,993 82

2,055,442

441,981

22,509,278

Total Hedging Market making 4 7 11 3,475,777 3,509,926 6,985,703 4 11 15 14,996,850 20,573,993 35,570,843 82 82 164

2,055,442 2,055,442 4,110,884

2 2

441,981 441,981

20,528,069 26,581,342 47,109,411

Interest rate swaps National principal (Rupees in '000) Number of contracts Notional principal (Rupees in '000) Number of contracts

Cross currency swaps

2009 Swaptions Notional principal (Rupees in '000)

FX options Number of contracts Notional principal (Rupees in '000)

Number of contracts

Forward sale contracts of government securities Number of Notional Total contracts principal Notional (Rupees in '000) (Rupees in '000)

With Banks for Hedging Market making 8 4 12 8 1,067,273 8 19,465,353 7,740,900 2,206,208 9,947,108 4 5 9 14,571,600 2,335,884 16,907,484

1 1 -

2,527,248 2,527,248 -

4 4 4

410,535 410,535 410,535

22,723,035 7,069,340 29,792,375 20,943,161

With other entities Market Making

Annual Report 2010


8 12 20 7,740,900 3,273,481 11,014,381 4 13 17

Total Hedging Market making

14,571,600 21,801,237 36,372,837

1 1

2,527,248 2,527,248

4 4 8

410,535 410,535 821,070

22,723,035 28,012,501 50,735,536

71

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
23.2 Maturity analysis of derivatives 2010 No. of Notional Mark to market contracts principal (Loss) Gain Net --------------------- (Rupees in '000) --------------------66 101 1 2 2 8 4 8 192 1,152,095 3,425,771 9,091 1,050,000 6,921,500 6,039,258 8,883,870 19,627,826 47,109,411 (360) (264) (27,191) (19,363) (60,313) (816) (645,547) (753,854) 514 117 220,133 195,625 254,858 22,428 693,675 514 (360) (264) (27,074) 200,770 135,312 254,042 (623,119) (60,179)

Remaining Maturity

Upto 1 Month 1 to 3 Month 3 to 6 Month 6 Month to 1 Year 1 to 2 Year 2 to 3 Year 3 to 5 Year 5 to 10 Year Above 10 Year

Remaining Maturity

2009 No. of Notional Mark to market contracts principal (Loss) Gain Net --------------------- (Rupees in '000) --------------------2 11 7 4 2 14 6 46 40,000 979,704 1,225,196 1,202,273 6,975,000 17,317,094 22,996,269 50,735,536 (918) (8,367) (61,448) (32,171) (145,045) (309,465) (557,414) 2,150 21,138 57 119,516 215,404 141,406 499,671 (918) 2,150 12,771 (61,391) 87,345 70,359 (168,059) (57,743)

Upto 1 Month 1 to 3 Month 3 to 6 Month 6 Month to 1 Year 1 to 2 Year 2 to 3 Year 3 to 5 Year 5 to 10 Year Above 10 Year

72

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 ----- (Rupees in 000) ----24. MARK-UP / RETURN / INTEREST EARNED On loans and advances to customers On lending to financial institutions - Call money lending - Securities purchased under resale agreements - Advances to financial institutions On investments in - Held for trading securities - Available for sale securities - Held to maturity securities - Associates and subsidiaries 40,027,810 75,784 930,386 227,360 1,233,530 780,660 8,116,778 8,921,541 340 17,819,319 218,100 33,002 59,331,761 45,512,875 300,863 1,115,663 286,755 1,703,281 941,878 9,417,929 3,372,692 18,532 13,751,031 115,508 24,330 61,107,025

On deposits with financial institutions Discount income

25.

MARK-UP / RETURN / INTEREST EXPENSED On deposits On securities sold under repurchase agreements On other short - term borrowings On long - term borrowings Discount expense 18,962,625 1,686,337 2,974,333 1,428,292 171,666 25,223,253 22,210,362 1,622,552 2,584,549 1,511,574 234,750 28,163,787

26.

GAIN ON SALE OF SECURITIES - NET Federal Government Securities Market Treasury Bills Pakistan Investment Bonds Ordinary shares Listed companies Other Securities

(598) (12,899) (13,497) 110,967 61,415 158,885

108,683 46,290 154,973 331,362 143,083 629,418

27.

OTHER INCOME Charges recovered from customers Rent on properties Income from dealing in derivatives Others 770,293 121,551 509,465 16,248 1,417,557 1,162,018 134,643 1,720,332 30,856 3,047,849

Annual Report 2010

73

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Note 2010 2009 ----- (Rupees in 000) -----

28.

ADMINISTRATIVE EXPENSES Personnel cost Salaries, allowances etc. Charge for compensated absences Medical expenses Contribution to defined contribution plan Reversal in respect of defined benefit obligations

28.1 36.7

7,067,760 152,261 380,919 104,035 (239,658) 7,465,317

6,914,343 418,143 373,907 416,114 (371,531) 7,750,976

Premises cost Rent, taxes, insurance, electricity etc. Depreciation Repairs and maintenance Other operating cost Outsourced service charges including sales commission Advertisement and publicity Communications Depreciation Legal and professional charges Banking service charges Stationery and printing Travelling Cash transportation charges Repairs and maintenance Maintenance contracts Insurance expense Vehicle expense Amortization Training and seminars Office running expense Entertainment Cartage, freight and conveyance Auditors' remuneration Subscriptions Brokerage expenses Sub-ordinated debt related costs Donations Non-executive Directors' fee and allowances Miscellaneous expenses

11.2

2,266,225 560,058 82,906 2,909,189 1,515,927 765,856 742,184 932,864 276,249 408,576 431,297 176,953 287,641 102,485 509,225 82,819 132,446 221,047 43,497 199,861 96,486 64,411 39,620 22,097 16,521 7,086 82,282 42,993 190,127 7,390,550 17,765,056

2,025,555 553,425 85,684 2,664,664 1,313,164 221,107 722,241 918,100 217,776 355,089 336,597 161,192 339,024 82,607 362,105 164,073 107,213 184,241 44,326 152,318 89,921 68,553 44,835 26,121 19,457 7,990 55,975 54,090 144,806 6,192,921 16,608,561

11.2

11.3

28.3

28.2

74

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
28.1 This includes employee benefits in the form of awards / bonus to all permanent staff including the Chief Executive Officer and is determined on the basis of employees' evaluation and the Bank's performance during the year. The aggregate benefit determined in respect of all permanent staff amounted to Rs. 570.475 million (2009: Rs. 312.106 million). Note 2010 2009 ----- (Rupees in 000) -----

28.2

Donations exceeding Rs.0.1 million Karachi Education Initiative UBL Flood Relief Campaign Police Hospital Fund The Citizens Foundation Hisaar Foundation Friends of Burns Centre Family Education Services Foundation Marie Adelaide Leprosy Centre Lahore University of Management Sciences Patient Welfare Association SOS Childrens' Villages of Sindh Edhi Foundation Special Olympics Pakistan Umeed-e-Noor Karachi City Police Shalamar Hospital Sun Development Foundation Institute of Business Administration 28.2.1 40,000 28,142 5,000 2,200 1,086 1,008 900 850 815 800 581 550 200 150 82,282 40,000 550 1,728 900 850 315 451 9,793 545 483 360 55,975

28.2.1 The President is a Director on the Board of the Karachi Education Initiative, a sponsoring and fund raising entity of the Karachi School for Business & Leadership. 28.3 Auditors' remuneration 2010 Ernst & Young BDO Overseas Total Ford Rhodes Ebrahim Auditors Sidat Hyder & Co. ---------------------------- (Rupees in '000) ---------------------------Audit fee Fee for audit of EPZ branch Out of pocket expenses 5,738 250 1,725 7,713 5,738 1,709 7,447 24,226 234 24,460 35,702 250 3,668 39,620

Annual Report 2010

75

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
2009 Ernst & Young BDO Overseas Total Ebrahim Auditors Ford Rhodes & Co. Sidat Hyder ---------------------------- (Rupees in '000) ---------------------------Audit fee Fee for audit of EPZ branch Out of pocket expenses 5,738 221 1,868 7,827 5,738 1,682 7,420 Note 29. OTHER PROVISIONS / WRITE OFFS - NET (Reversal) / provision against other assets - net Provision against off - balance sheet obligations Other provisions / write offs (Reversal) / provision against Ijarah assets - specific Reversal against Ijarah assets - general 13.2 19.2 (122,261) 188,424 (803) (2,127) 63,233 339,131 20,250 276,716 9,191 (3,014) 642,274 29,588 29,588 41,064 221 3,550 44,835

2010 2009 ----- (Rupees in 000) -----

30.

WORKERS WELFARE FUND The Bank is liable to pay Workers' Welfare Fund @ 2% of profit before tax as per the accounts or declared income as per the income tax return, whichever is higher, under the Workers' Welfare Ordinance, 1971. 2010 2009 ----- (Rupees in 000) -----

31.

OTHER CHARGES Penalties imposed by the SBP Pertaining to current year Pertaining to prior year Other penalties

107,491 128,000 235,491 4,900 240,391

25,535 39,000 64,535 17 64,552

76

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
32. TAXATION 2010 Azad Kashmir Domestic Total Overseas ---------------------------- (Rupees in '000) ---------------------------Current tax Prior year tax Deferred tax 1,002,082 415,136 (2,343) 1,414,875 22,653 (239) 22,414 5,780,771 (635,722) 5,144,999 6,805,506 415,136 (638,354) 6,582,288

2009 Overseas Azad Kashmir Domestic Total ---------------------------- (Rupees in '000) ---------------------------Current tax Prior year tax Deferred tax 872,430 76,328 (7,677) 941,081 113,181 (684) 112,497 5,944,974 (2,156,738) 3,788,236 6,930,585 76,328 (2,165,099) 4,841,814

2010 2009 ----- (Rupees in 000) ----32.1 Relationship between tax expense and accounting profit Accounting profit for the year Tax on income @ 35% (2009: 35%) Tax effect of items that are either not included in determining taxable profit or taxed at reduced rates / permanent difference Prior year tax charge Other charges Tax charge 33. EARNINGS PER SHARE Profit after tax attributable to equity shareholders of the Bank 11,159,930 9,192,687 17,742,218 6,209,776 14,034,501 4,912,075

(44,107) 415,136 1,483 6,582,288

(271,683) 76,328 125,094 4,841,814

------ (Number of shares) -----Weighted average number of ordinary shares 1,224,179,687 1,224,179,687

---------- (Rupees) ---------Earnings per share - basic and diluted 9.12 7.51

Annual Report 2010

77

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
33.1 Diluted earnings per share has not been presented as the Bank does not have any convertible instruments in issue at December 31, 2010 and 2009 which would have any effect on the earnings per share if the option to convert is exercised. Earnings per share for the year 2009 has been restated for the effect of bonus shares issued during the year. Note 2010 2009 ----- (Rupees in 000) -----

33.2

34.

CASH AND CASH EQUIVALENTS Cash and balances with treasury banks Balances with other banks 6 7 67,461,668 18,192,142 85,653,810 61,470,047 5,407,470 66,877,517

35.

STAFF STRENGTH Permanent Contractual basis Group's own staff strength at the end of the year Outsourced Total number of employees at the end of the year

------------ (Number) -----------8,473 26 8,499 3,074 11,573 8,448 18 8,466 2,905 11,371

36. 36.1

DEFINED BENEFIT PLANS General description The Bank operates a funded pension scheme established in 1986. The Bank also operates a funded gratuity scheme for new employees and those employees who have not opted for the pension scheme. The Bank also operates a contributory benevolent fund scheme and provides post retirement medical benefits to eligible retired employees. The benevolent fund plan and the post-retirement medical plan cover all regular employees of the Bank who joined the Bank pre-privatisation. The Bank also maintains an employee compensated absences scheme. The liability of the Bank in respect of long-term employee compensated absences is determined based on actuarial valuation carried out using the Projected Unit Credit Method. Actuarial valuation of the defined benefit plan scheme is carried out every year and the latest valuation was carried out as at December 31, 2010.

36.2

Number of Employees under the scheme The number of employees covered under the following defined benefit scheme / plans are: 2010 2009 --------- (Number) --------Pension fund Gratuity fund Benevolent fund Employee's compensated absences Post retirement medical benefit scheme 7,723 5,589 7,490 6,708 4,480 7,845 5,416 7,888 6,942 4,790

The Pension fund, benevolent fund and post retirement medical benefit schemes include 5,384 (2009: 5,372), 3,010 (2009: 3,098) and 2,228 (2009: 2,152) members respectively who have retired or whose widows are receiving the benefits.

78

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
36.3 Principal actuarial assumptions The actuarial valuations were carried out as at December 31, 2010 based on the Projected Unit Credit Actuarial Cost Method, using the following significant assumptions: 2010 2009 ----- (Per annum) ----Discount rate Expected rate of return on plan assets Expected rate of salary increase Expected rate of pension increase 36.4 Reconciliation of (receivable from) / payable to defined benefit plans
2010 Benevolent fund

14.50% 14.50% 12.50% 6.75%

12.75% 12.75% 10.50% 5.00%

Pension fund

Post Employee retirement compensated medical absences benefit ----------------------- (Rupees in '000) ----------------------417,733 (325,781) 91,952 (100,137) (8,185) 420,778 (799,917) (379,139) 198,356 (180,783) 2009 Benevolent fund 826,088 313,528 1,139,616 677,152 677,152

Gratuity fund

Present value of funded obligations Fair value of plan assets Present value of unfunded obligation Net actuarial gains or (losses) not recognized (Receivable) / payable

3,598,231 (5,527,239) (1,929,008) 1,925,416 (3,592)

Pension fund

Post Employee retirement compensated medical absences benefit ----------------------- (Rupees in '000) ----------------------365,292 (301,174) 64,118 (79,620) (15,502) 459,080 (796,302) (337,222) 205,656 (131,566) 852,603 294,492 1,147,095 731,908 731,908

Gratuity fund

Present value of funded obligations Fair value of plan assets Present value of unfunded obligation Net actuarial gains or (losses) not recognized (Receivable) / payable

3,585,208 (6,107,212) (2,522,004) 2,119,273 (402,731)

Annual Report 2010

79

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
36.5 Movement in defined benefit obligation Note Pension fund Gratuity fund 2010 Benevolent fund

Post Employee retirement compensated medical absences benefit ----------------------- (Rupees in '000) ----------------------365,292 48,711 48,331 (61,513) 16,912 417,733 459,080 6,694 48,347 (73,242) (20,101) 420,778 2009 Benevolent fund 852,603 6,430 112,903 (100,658) (45,190) 826,088 731,908 41,106 104,760 (207,017) 6,395 677,152

Obligation at the beginning of the year Current service cost Interest cost Benefits paid by the Bank Recognition of prior service cost Return allocated to other funds Early retirement liability Actuarial (gain) / loss on obligation Obligation at the end of the year

36.8.1

3,585,208 10,788 118,861 (333,708) 232,232 (15,150) 3,598,231

Pension fund

Post Employee retirement compensated medical absences benefit ----------------------- (Rupees in '000) ----------------------384,786 46,619 53,312 (86,446) (32,979) 365,292 529,647 7,103 62,995 (127,518) (13,147) 459,080 875,509 5,914 103,084 (125,019) (24,242) 17,357 852,603 613,602 34,461 110,245 (299,837) 62,201 211,236 731,908

Gratuity fund

Obligation at the beginning of the year Current service cost Interest cost Benefits paid by the Bank Recognition of prior service cost Return allocated to other funds Early retirement liability Actuarial (gain) / loss on obligation Obligation at the end of the year 36.6 Movement in fair value of plan assets

3,625,280 10,051 156,655 (653,986) 322,253 124,955 3,585,208

Pension fund

Post Employee retirement compensated medical absences benefit ----------------------- (Rupees in '000) ----------------------301,174 40,904 68,631 (77,251) (7,677) 325,781 796,302 87,822 5,450 5,450 (85,232) (9,875) 799,917 -

Gratuity fund

2010 Benevolent fund

Fair value at the beginning of the year Expected return on plan assets Contribution by the Bank Contribution by the employees Amount paid by the fund to the Bank Payment received on behalf of the fund Actuarial gain / (loss) on plan assets Fair value at the end of the year

6,107,212 642,077 (1,214,658) (7,392) 5,527,239

80

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Pension fund Post Employee retirement compensated medical absences benefit ----------------------- (Rupees in '000) ----------------------291,292 41,702 75,044 (119,390) 12,526 301,174 739,180 90,031 5,979 5,979 (122,924) 78,057 796,302 Gratuity fund 2009 Benevolent fund

Fair value at the beginning of the year Expected return on plan assets Contribution by the Bank Contribution by the employees Amount paid by the fund to the Bank Payment received on behalf of the fund Actuarial gain / (loss) on plan assets Fair value at the end of the year 36.7 Movement in (receivable from) / payable to defined benefit plans

6,526,828 843,551 (1,272,621) 9,454 6,107,212

Pension fund

Post Employee retirement compensated medical absences benefit ----------------------- (Rupees in '000) ----------------------(15,502) (237) 60,447 (68,631) 77,251 (61,513) (8,185) (131,566) (1,773) (53,984) (5,450) 85,232 (73,242) (180,783) 2009 Benevolent fund 1,147,095 93,179 (100,658) 1,139,616 731,908 152,261 (207,017) 677,152

Gratuity fund

2010 Benevolent fund

Opening balance Mark-up receivable on Bank's balance Charge / (reversal) for the year Contribution by the Bank Amount paid by the Fund to the Bank Payment received on behalf of the Bank Benefits paid by the Bank Closing balance

(402,731) (13,046) (468,765) 1,214,658 (333,708) (3,592)

Pension fund

Post Employee retirement compensated medical absences benefit ----------------------- (Rupees in '000) ----------------------(40,318) (846) 67,762 (75,044) 119,390 (86,446) (15,502) (89,177) (99) (31,717) (5,979) 122,924 (127,518) (131,566) 1,219,400 52,714 (125,019) 1,147,095 613,602 418,143 (299,837) 731,908

Gratuity fund

Opening balance Mark-up receivable on Bank's balance Charge / (reversal) for the year Contribution by the Bank Amount paid by the Fund to the Bank Payment received on behalf of the Bank Benefits paid by the Bank Closing balance

(414,783) (22,731) (583,852) 1,272,621 (653,986) (402,731)

Annual Report 2010

81

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
36.8 Charge for defined benefit plans 2010 Benevolent fund

Note

Pension fund

Post Employee retirement compensated medical absences benefit ----------------------- (Rupees in '000) ----------------------48,711 48,331 (40,904) 4,309 60,447 6,694 48,347 (87,822) (15,753) (5,450) (53,984) 2009 Benevolent fund 6,430 112,903 (26,154) 93,179 41,106 104,760 6,395 152,261

Gratuity fund

Current service cost Interest cost Expected return on plan assets Recognition of prior service cost Actuarial (gains) and losses Return allocated to other funds Employees' contribution Settlement loss / gains

36.8.1

10,788 118,861 (642,077) (188,569) 232,232 (468,765)

Pension fund

Post Employee retirement compensated medical absences benefit ----------------------- (Rupees in '000) ----------------------46,619 53,312 (41,702) 9,533 67,762 7,103 62,995 (90,031) (5,805) (5,979) (31,717) 5,914 103,084 (32,042) (24,242) 52,714 34,461 110,245 62,201 211,236 418,143

Gratuity fund

Current service cost Interest cost Expected return on plan assets Recognition of prior service cost Actuarial (gains) and losses Return allocated to other funds Employees' contribution Settlement loss / gains

10,051 156,655 (843,551) (229,260) 322,253 (583,852)

36.8.1 This represents return allocated to those employees who exercised the conversion option offered in the year 2001 as referred to in note 5.10.1. 36.9 Actual return on plan assets Amongst the defined benefit plans, the pension, gratuity and benevolent fund plans are funded. The actual return earned on the assets during the year are: 2010 Pension Gratuity Benevolent Post Employee fund fund fund retirement compensated medical absences benefit ----------------------- (Rupees in '000) ----------------------Expected return on plan assets Actual gain / (loss) on plan assets 642,077 (7,392) 634,685 40,904 (7,677) 33,227 87,822 (9,875) 77,947 -

82

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Pension fund Post Employee retirement compensated medical absences benefit ----------------------- (Rupees in '000) ----------------------41,702 12,526 54,228 90,031 78,057 168,088 Gratuity fund 2009 Benevolent fund

Expected return on plan assets Actual gain / (loss) on plan assets

843,551 9,454 853,005

36.10

Five year data on surplus/ (deficit) of the plans and experience adjustments 2010 2009 2008 2007 2006 ----------------------- (Rupees in '000) ----------------------Pension Fund Present value of defined benefit obligation Fair value of plan assets Surplus Experience adjustments on plan liabilities [loss / (gain)] Experience adjustments on plan assets [loss / (gain)] Gratuity Fund Present value of defined benefit obligation Fair value of plan assets Surplus / (deficit) Experience adjustments on plan liabilities [loss / (gain)] Experience adjustments on plan assets [loss / (gain)] Benevolent Fund Present value of defined benefit obligation Fair value of plan assets Surplus / (deficit) Experience adjustments on plan liabilities [loss / (gain)] Experience adjustments on plan assets [loss / (gain)] Post retirement medical benefit Present value of defined benefit obligation Experience adjustments on plan liabilities [loss / (gain)] Employee compensated absences Present value of defined benefit obligation Experience adjustments on plan liabilities [loss / (gain)] 677,152 731,908 613,602 843,193 1,074,258 (826,088) (26,232) (852,603) 37,473 (875,509) 761 (1,202,462) (67,904) (1,298,048) (37,633) (420,778) 799,917 379,139 1,505 2,737 (459,080) 796,302 337,222 (8,798) (56,670) (529,647) 739,180 209,533 138,712 144,550 (564,591) 914,356 349,765 (90,203) (45,638) (670,979) 917,522 246,543 (11,064) (64,187) (417,733) 325,781 (91,952) 36,338 6,400 (365,292) 301,174 (64,118) 137,106 96,896 (384,786) 291,292 (93,494) 43,905 55,290 (399,289) 356,676 (42,613) 27,782 (5,179) (437,373) 335,449 (101,924) 33,547 10,979 (3,598,231) 5,527,239 1,929,008 (214,828) 57,726 (3,585,208) (3,625,280) 6,107,212 2,522,004 89,216 (282,376) 6,526,828 2,901,548 (87,141) (1,195) (4,343,529) 7,260,256 2,916,727 126,265 (11,848) (4,433,583) 7,116,577 2,682,994 238,500 (411,713)

36.11

Effects of a 1% movement in assumed medical cost trend rates Annual medical expense limit is based on frozen non-monetized basic pay of employees as on June 30, 2001. Accordingly, movement in medical cost trend rates would not affect current service cost, interest cost and defined benefit obligations.

Annual Report 2010

83

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
36.12 Components of plan assets as a percentage of total plan assets Pension fund Gratuity fund 2010 Benevolent Post retirem- Employee fund ent medical compensated benefit absences 95.35% 0.00% 2.55% 1.99% 0.11% 100.00% -

Government securities Units of mutual funds Ordinary shares of listed companies Term finance certificates Others (including bank balances)

6.58% 5.20% 0.68% 9.72% 77.82% 100.00%

98.51% 0.00% 0.75% 0.73% 0.01% 100.00%

Pension fund

Gratuity fund

2009 Benevolent Post retirem- Employee fund ent medical compensated benefit absences 41.32% 45.40% 3.63% 9.65% 100.00% -

Government securities Units of mutual funds Ordinary shares of listed companies Term finance certificates Others (including bank balances)

15.95% 24.98% 0.62% 7.23% 51.22% 100.00%

51.14% 17.84% 0.77% 29.35% 0.90% 100.00%

As per the actuarial recommendations the expected return on plan assets was taken as 14.5% per annum on Pension Fund Assets, Gratuity Fund Assets and Benevolent Fund Assets. The expected return on plan assets was determined by considering the expected returns available on the assets underlying the current investment policy. 36.13 Expected contributions to be paid to the funds in the next financial year The Bank contributes to the pension and gratuity funds according to the actuary's advice. Contribution to the benevolent fund is made by the Bank as per the rates set out in the benevolent scheme. Based on actuarial advice, the management estimates that the charge in respect of defined benefit plans for the year ended December 31, 2011 would be as follows: 2011 Benevolent fund

Pension fund

Post Employee retirement compensated medical absences benefit ----------------------- (Rupees in 000) ----------------------71,743 (59,992) 96,810 190,540

Gratuity fund

Expected charge for the year

(410,926)

84

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
37. 37.1 OTHER EMPLOYEE BENEFITS Defined contribution plan The Bank operates a contributory provident fund scheme for 5,209 (2009: 5,356) employees who are not in the pension scheme. The employer and employee both contribute 8.33% of the basic salary to the funded scheme every month. 37.2 Employee Motivation and Retention Scheme The Bank operates a long term motivation and retention scheme for its employees. The objective of the scheme is to reward, motivate and retain high performing executives and officers of the Bank by way of bonus in the form of shares of the Bank. The liability of the Bank in respect of this scheme is fixed and approved each year by the Board of Directors of the Bank .The scheme is managed by separate Trusts formed in respect of each year. During the year, Rs. 206.819 million (2009: Rs. 40.212 million) and Rs. 33.817 million (2009: Rs. 6.409 million) were received by the executives and the chief executive respectively from the scheme. For further details, refer note 19.1. 37.3 Benazir Employees Stock Option Scheme The Government of Pakistan (GoP), being one of the shareholders of the Bank, decided to launch the Benazir Employees Stock Option Scheme on August 14, 2009, whereby the GoP intends to transfer free of cost 26,391,483 shares of the Bank, including 26,025,533 shares held by the SBP as at December 31, 2010, to UBL Employees Empowerment Trust [the Trust]. As per the Trust Deed such shares will be allocated through Unit Certificates to eligible employees in proportion to their entitlement which will be based on length of service subject to certain restrictions. The Trust is entitled to receive dividends declared, of which 50 percent will be distributed amongst employees on the basis of units held. The balance 50 percent would be remitted to a Central Revolving Fund of the Privatization Commission of Pakistan for payment to employees at the time of end of service settlement on fulfilment of vesting conditions, against surrendered units with the shares underlying such surrendered units being transferred back to the GoP. This generalized scheme being a government policy to provide empowerment to employees of State Owned Enterprises and other entities where the GoP has a shareholding, may attract the provisions of amended IFRS- 2 (Share-based Payments). However, keeping in view the nature, characteristics, exceptions and manner of operation of the generalized scheme, the applicability of IFRS-2 to the said scheme is under consideration of the Institute of Chartered Accountants of Pakistan and the Securities and Exchange Commission of Pakistan.

Annual Report 2010

85

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
38. COMPENSATION OF DIRECTORS AND EXECUTIVES President / Chief Executive

Directors

Executives

2010 2009 2010 2009 2010 2009 --------------------------------- (Rupees in '000) ---------------------------------

Fees Managerial remuneration Charge for defined benefit plans Charge for defined contribution plan Rent and house maintenance Utilities Medical Conveyance Reimbursement of children's education fees Others

61,349 1,001 1,880 4,750 269 65 1,106 3,133 73,553

61,287 1,001 1,880 2,375 148 56 5,928 1,880 74,555 1

42,993 42,993 9

54,090 54,090 7

2,415,831 215,447 56,021 384,325 171,749 78,025 306,773 123,137 3,751,308 1,244

2,272,550 189,601 48,875 333,228 105,803 66,902 292,845 110,800 3,420,604 1,135

Number of persons

The Bank's President / Chief Executive Officer and certain Executives are provided with free use of Bank maintained cars and household equipment. In addition to the above, all executives including Chief Executive Officer of the Bank, are also entitled to certain short and long term employee benefits which are disclosed in notes 36 and 37 to these financial statements. 39. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of traded investments other than those classified as held to maturity is based on quoted market price. Fair value of unquoted equity investments, other than investments in associates and subsidiaries, is determined on the basis of break-up value of these investments as per the latest available audited financial statements. The provision for impairment of associates and other investments has been determined in accordance with the Bank's accounting policy as stated in notes 4.2 and 5.7 to these unconsolidated financial statements respectively. The fair value of fixed term loans, other assets, other liabilities and fixed term deposits cannot be calculated with sufficient reliability due to the absence of a current and active market for assets and liabilities and reliable data regarding market rates for similar instruments. The provision for impairment of loans and advances has been calculated in accordance with the Bank's accounting policy as stated in note 5.5 to these unconsolidated financial statements. The repricing profile, effective rates and maturity of financial instruments are stated in note 44 to these unconsolidated financial statements. In the opinion of the management, the fair value of the remaining financial assets and liabilities are not significantly different from their carrying values since these are either short-term in nature or, in the case of customer loans and deposits, are frequently repriced.

86

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
40. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES
For the year ended December 31, 2010 Corporate Trading and Retail Commercial Finance Sales Banking Banking Others ---------------------------------- (Rupees in '000) ---------------------------------Total income Total expenses Profit / (loss) before tax Segment return on assets (ROA) (%) Segment cost of funds (%) 471,169 (102,402) 368,767 5.4% 0.3% 2,647,783 (690,072) 1,957,710 0.7% 8.0% 31,156,420 (20,600,157) 10,556,263 1.2% 4.0% 9,208,767 (4,291,011) 4,917,756 1.8% 10.7% 745,001 (803,280) (58,279) -

For the year ended December 31, 2009 Corporate Trading and Retail Commercial Finance Sales Banking Banking Others ---------------------------------- (Rupees in '000) ---------------------------------Total income Total expenses (Loss) / profit before tax Segment return on assets (ROA) (%) Segment cost of funds (%) 187,140 (641,566) (454,426) -5.4% 6.6% 3,860,120 (831,738) 3,028,383 1.4% 9.3% 29,250,527 (20,483,277) 8,767,250 1.0% 4.9% 9,456,906 (7,302,410) 2,154,496 1.0% 10.0% 1,608,116 (1,069,316) 538,799 -

For the year ended December 31, 2010 Corporate Trading and Retail Commercial Finance Sales Banking Banking Others ---------------------------------- (Rupees in '000) ---------------------------------Segment assets (gross of NPL provisions) Segment non performing loans (NPL) Segment provision required against NPL Segment liabilities 5,004,302 4,665,722 257,667,931 173,895,858 2,002,017 21,766,521 10,105 16,682,106 258,459,687 150,835,644 265,008,433 24,810,869 16,828,908 245,510,597 30,742,726 13,153 13,153 (29,101,736)

For the year ended December 31, 2009 Corporate Trading and Retail Commercial Finance Sales Banking Banking Others ---------------------------------- (Rupees in '000) ---------------------------------Segment assets (gross of NPL provisions) Segment non performing loans (NPL) Segment provision required against NPL Segment liabilities 7,166,858 6,410,759 166,715,474 161,934,319 199,789,782 18,378,603 13,519,170 189,251,044 247,434,473 20,709,293 14,140,352 221,518,027 26,282,869 13,500 13,500 (20,334,440)

Annual Report 2010

87

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
41. TRUST ACTIVITIES The Bank is not engaged in any significant trust activities. However, it acts as custodian for some of the Term Finance Certificates it arranges and distributes on behalf of its customers. 42. RELATED PARTY TRANSACTIONS The Bank has related party transactions with its associates, subsidiary companies (refer note 9), employee benefit plans (refer notes 36 and 37) and its directors and executive officers (including their associates). Details of loans and advances to key management personnel, the companies or firms in which the Directors of the Bank are interested as directors, partners or in case of private companies as members are given in note 10.8 to these unconsolidated financial statements. Contributions to and accruals in respect of staff retirements and other benefit plans are made in accordance with the actuarial valuations / terms of the contribution plan (refer note 36 to these unconsolidated financial statements for the details of plans). 42.1 RELATED PARTY TRANSACTIONS Details of transactions with related parties during the year, other than those which have been disclosed elsewhere in these financial statements, are as follows:
2010 2009

Key Other Key Other management Subsidiaries Associates related management Subsidiaries Associates related personnel parties personnel parties --------------------------------------------------------- (Rupees in '000) --------------------------------------------------------Balances with other banks In current accounts In saving accounts In deposit accounts Opening balance Placements during the year Settled during the year Closing balance Lendings to financial institutions Call Money Lendings Investments In shares / mutual funds - cost Opening balance Investment made during the year Investment sold / liquidated during the year Closing balance 2,201,948 2,201,948 6,921,080 2,620,000 (2,158,888) 7,382,192 50,372 50,372 2,201,948 2,201,948 2,899,663 4,157,468 (136,051) 6,921,080 50,372 50,372 350,000 4,960,214 (4,960,214) 1,251,860 (1,251,860) 1,274,033 2,773 564,453 -

88

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
2010 2009
Key Other Key Other management Subsidiaries Associates related management Subsidiaries Associates related personnel parties personnel parties --------------------------------------------------------- (Rupees in '000) --------------------------------------------------------Ordinary Shares Term Finance Certificates Advances Opening balance Addition during the year Repaid during the year Closing balance Other Assets Interest markup accrued Receivable from staff retirement funds Prepaid insurance Other receivable Borrowings Opening balance Borrowings during the year Settled during the year Closing balance Overdrawn nostros Deposits and other accounts Opening balance Received during the year Withdrawn during the year Closing balance Sub-ordinated loans Other Liabilities Interest / markup payable on deposits Interest / markup payable on borrowings Interest / markup payable on sub-ordinated loans Unrealised loss on derivative transactions Unearned income Provision for employee benefit scheme Other payable Others 41 50 10,000 17,769 167 1,024 618,818 250,000 174 170 435 449 814 36,497 26,851 1,095 1,899 307,241 210,000 19,365 112,363 164,877 56,453 20,149 258,920 (259,704) 19,365 5 35,835 77,334,856 (77,258,327) 112,364 147,701 308,347 444,766 127,967,474 24,857 5 150,477 31,725,811 34,749,151 3,779,008 5,999 62,986 15,508,596 1,151,870 (15,491,420) (1,403,764) 164,877 761,987 56,453 1,461,661 (1,461,661) 120,552 300,000 2,100,000 (2,400,000) 533 100,000 (100,000) 160,227 1,650,000 1,100,000 (1,350,000) (1,000,000) 300,000 319 100,000 2,369 1,368 4,656 66,595 4,109 18,759 108,522 2,103 - 1,045,899 102,750 170,447 (131,435) 141,762 148,875 38,092 (84,217) 102,750 . 46,634 148,368 13,950 41,534

(439,274) (127,929,360) (28,111,680) (34,742,618)

Annual Report 2010

89

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
2010 2009
Key Other Key Other management Subsidiaries Associates related management Subsidiaries Associates related personnel parties personnel parties --------------------------------------------------------- (Rupees in '000) --------------------------------------------------------Mark-up / return / interest earned Dividend income Net gain on sale of investment Realised gain on derivative transactions Other income 9,238 528 1,012 101,870 3,193 356,010 2,393 749 75,321 1,600 2,127,895 23 7,398 17,828 164,068 5,990 228,516 576 29,597 -

- 1,662,595

Mark-up / return / interest paid Remuneration paid Post employment benefits Non-executive directors' fee and allowances Net charge for defined contribution plans Net reversal for defined benefit plans Payment for employee motivation and retention scheme Other expenses Insurance premium paid Insurance claims settled Contingencies and Commitments FX interbank deal purchase FX interbank deal sale

716 336,588 12,224 -

679 13,407 -

242,488 204,492 164,859

8,984 42,993 104,035 (402,939) 210,000 -

389 268,383 10,286 -

388 -

69,402 215,804 217,907

816 54,090 416,114 (493,415) 50,005 -

63 63

43. CAPITAL ADEQUACY 43.1 The Basel II Framework is applicable to the Bank whereby the Standardized Approach for reporting Capital Adequacy is currently implemented. Under the said approach, credit risk and market risk exposures are measured using the Standardized Approach and operational risk is measured using the Basic Indicator Approach. The Banks capital adequacy is reported using the rules and ratios provided by the State Bank of Pakistan. The capital adequacy ratio is a measure of the amount of a Bank's capital expressed as a percentage of its risk weighted assets. Measuring capital adequacy requires risk mitigants to be applied to the amount of assets shown on a Bank's balance sheet. These assets are then applied weightages according to the degree of inherent risk. The capital adequacy ratios compare the amount of eligible capital with the total of risk-weighted assets (RWAs). The Bank has developed Internal Capital Adequacy Assessment Process (ICAAP) as per the guidelines provided by the SBP. This framework has been approved by the Banks Board of Directors and submitted to the SBP. The Bank additionally covers risk not yet included under Pillar I, so as to carry adequate capital to cater for any future business requirements. The Bank will review the ICAAP framework on an annual basis and changes/updates will be recommended to the Basel II committee for onward submission to the Board of Directors.

90

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
The Bank plans to move towards the Advanced Approach for Basel II, including the Foundation Internal Ratings Based Approach for credit risk, Internal Models Approach for market risk and the Alternate Standardized Approach for operational risk. 43.2 Capital Management The objective of managing capital is to safeguard the Bank's ability to continue as a going concern. It is the policy of the Bank to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The impact of the level of capital on shareholders return is also recognized and the Bank recognizes the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position. Statutory minimum capital and capital adequacy requirements The SBP through its BSD Circular No. 07 dated April 15, 2009 has prescribed the minimum paid-up capital (net of accumulated losses) for Banks / Development Finance Institutions to be raised to Rs.10 billion by the year ending December 31, 2013. The paid-up capital of the Bank for the year ended December 31, 2010 stood at Rs.12,241.798 million (2009:11,128.907 million) and is in compliance with SBP requirements. In addition, banks are also required to maintain a minimum Capital Adequacy Ratio (CAR) of 10% of the risk weighted exposure of the Bank. The Banks CAR as at December 31, 2010 was 14.51% (2009: 13.18%). The Bank and its individually regulated operations have complied with all capital requirements throughout the year. Tier 1 capital, includes fully paid-up capital, balance in share premium account, general reserves as per the financial statements and net un-appropriated profits after deduction of book value of goodwill / intangibles, deficit on revaluation of available for sale investments and 50% of investments in equity and other regulatory capital of majority owned securities or other financial subsidiaries not consolidated in the statement of financial position as per the guidelines laid under the Basel II Framework. Tier 2 capital includes general provisions for loan losses, reserves on the revaluation of fixed assets and equity investments, foreign exchange translation reserves and subordinated debts (upto maximum of 50% of total eligible tier 1 capital) after deduction of 50% of investments in equity and other regulatory capital of majority owned securities or other financial subsidiaries not consolidated in the statement of financial position as per the guidelines laid under the Basel II Framework. Tier 3 capital has also been prescribed by the SBP for managing market risk; however, the Bank does not have any Tier 3 capital. Banking operations are categorized as either trading book or banking book and risk-weighted assets are determined according to specified requirements of the SBP that seek to reflect the varying levels of risk attached to assets and off-balance sheet exposures. The total risk-weighted exposures comprise of credit risk, market risk and operational risk.

Annual Report 2010

91

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
43.3 Capital Adequacy Ratio The capital adequacy ratio, calculated in accordance with the SBP's guidelines on capital adequacy was as follows: 2010 2009 ----- (Rupees in 000) ----Regulatory capital base Tier 1 Capital Fully paid up capital Statutory reserves Unappropriated profits 12,241,798 14,446,898 26,250,489 52,939,185 1,440,826 261,637 5,999 11,128,907 12,214,912 22,187,802 45,531,621 488,635 -

Deductions: - Book value of intangibles - Shortfall in provisions irrespective of relaxation provided - Reciprocal cross holdings by banks - 50 % of Investments in equity and other regulatory capital of majority owned securities or other financial subsidiaries not consolidated in the statement of financial position Total eligible Tier 1 Capital Supplementary Capital Tier 2 Capital - General provisions or general reserves for loan losses-up to maximum of 1.25% of risk weighted assets - Revaluation reserves up to 45% - Foreign exchange translation reserve - Subordinated debt - upto maximum of 50% of total eligible Tier 1 capital - Cash flow hedge reserve Total Tier 2 Capital Deductions: - 50 % of Investments in equity and other regulatory capital of majority owned securities or other financial subsidiaries not consolidated in the statement of financial position Total eligible Tier 2 Capital Total Eligible Capital

1,224,465 2,932,927 50,006,258

1,134,633 1,623,268 43,908,353

1,425,496 5,496,317 7,370,891 7,852,176 (198,695) 21,946,185

569,195 5,791,474 6,951,040 8,300,938 (317,562) 21,295,085

1,224,465 20,721,720 70,727,978

1,134,633 20,160,452 64,068,805

92

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Risk weighted exposures Capital requirements Risk weighted assets 2010 2009 2010 2009 ----------------------------- (Rupees in 000) -----------------------------

Credit risk Claims on: Federal and Provincial Government, SBP and Other Sovereigns in foreign currency Public Sector Enterprises Banks Corporate Retail portfolio Secured by residential property Past due loans Listed equity investments Unlisted equity investments Investments in fixed assets Other assets 1,806,245 1,285,319 3,197,031 22,086,826 3,428,589 174,425 1,944,316 900,932 83,307 2,098,325 530,330 37,535,645 Market risk Interest rate risk Equity exposure risk Foreign exchange risk Operational risk Capital adequacy ratio Total eligible regulatory capital held Total risk weighted assets Capital adequacy ratio 43.4. Credit Risk - General Disclosures The Bank follows the standardized approach for all its Credit Risk Exposures. The standardized approach to credit risk sets out fixed risk weights corresponding, where appropriate, to external credit assessment levels. Where no external rating is available, a 100% risk weight is used. Under the standardized approach, the capital requirement is based on the credit rating assigned to counterparties by External Credit Assessment Institutions (ECAIs) duly recognized by SBP for capital adequacy purposes. The Bank selects particular ECAI(s) for each type of claim. In this connection, the Bank utilizes the credit ratings assigned by ECAIs such as PACRA (Pakistan Credit Rating Agency), JCR-VIS (Japan Credit Rating Company Limited Vital Information Systems), Fitch, Moodys and Standard & Poors. The Bank also utilizes rating scores of Export Credit Agencies (ECA) participating in the Arrangement on Officially Supported Export Credits. 70,727,978 487,384,224 14.51% 64,068,805 485,957,994 13.18% 2,268,723 296,776 40,273 2,605,772 6,356,450 46,497,867 1,810,310 303,257 45,689 2,159,256 5,800,078 46,605,967 28,359,037 3,709,701 503,413 32,572,151 79,455,626 487,384,224 22,628,873 3,790,707 571,112 26,990,692 72,500,981 485,957,994 1,247,825 1,197,023 2,159,799 24,197,367 4,683,906 196,697 1,289,105 841,421 66,236 2,143,704 623,550 38,646,633 18,062,446 12,853,191 31,970,310 220,868,255 34,285,894 1,744,250 19,443,160 9,009,323 833,073 20,983,246 5,303,299 375,356,447 12,478,248 11,970,232 21,597,993 241,973,670 46,839,059 1,966,966 12,891,048 8,414,206 662,361 21,437,035 6,235,503 386,466,321

Annual Report 2010

93

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Mapping to SBP Rating Grades The selected final ratings (after application of the principles stated above) for all exposures need to be translated to the standard rating grades given by the SBP. In this regard, the mapping tables to be used for converting ECAI ratings to SBP rating grades are given below: Long Term Rating Grades Mapping SBP Rating grade 1 Fitch AAA AA+ AA AAA+ A ABBB+ BBB BBBBB+ BB BBB+ B BCCC+ and below Moodys Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3 B1 B2 B3 Caa1 and below S&P AAA AA+ AA AAA+ A ABBB+ BBB BBBBB+ BB BBB+ B BCCC+ and below PACRA AAA AA+ AA AAA+ A ABBB+ BBB BBBBB+ BB BBB+ B BCCC CC C JCR-VIS AAA AA+ AA AAA+ A ABBB+ BBB BBBBB+ BB BBB+ B BCCC CC C D ECA Scores 0 1

5 6 7

Short Term Rating Grades Mapping SBP Rating Grade S1 S2 S3 S4 Fitch F1 F2 F3 Others Moodys P-1 P-2 P-3 Others S&P A-1+ A-1 A-2 A-3 Others PACRA A-1+ A-1 A-2 A-3 Others JCR-VIS A-1+ A-1 A-2 A-3 Others

Types of exposures and ECAI's used JCR-VIS Corporate Banks Sovereigns PSE PACRA FITCH Moody's ECA scores -

94

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Credit exposures subject to Standardized Approach
Exposures Rating category 2010 -------------------- (Rupees in '000) ------------------Amount Deduction Net amount outstanding CRM 14,266,546 14,266,546 2009 -------------------- (Rupees in '000) ------------------Amount Deduction Net amount outstanding CRM 13,747,521 13,747,521

Cash and Cash Equivalents Claims on Government of Pakistan (Federal or Provincial Governments) and SBP, denominated in PKR Foreign Currency claims on SBP arising out of statutory obligations of banks in Pakistan Claims on other sovereigns and on Government of Pakistan or provincial governments or SBP denominated in currencies other than PKR

121,556,124

12,686,226

108,869,898

62,121,705

6,228,951

55,892,754

1 2 3 4,5 6 Unrated 0 1 2 3,4 5,6 Unrated 0 1 2,3 4,5 6 Unrated

Corporate

Banks

5,043,830 207,144 3,063,371 7,766,882 9,046,552 20,083,949 24,189,772 22,955,606 1,081,533 1,456,141 219,662,847 269,345,899 46,327,423 36,295,927 7,171,065 6,722,706 96,517,121

2,332 2,332 2,437,971 191 75,002 17,775,900 20,289,064 17,890,757 2,470,749 1,162,030 21,523,536

5,043,830 207,144 3,063,371 7,766,882 9,044,220 20,081,617 21,751,801 22,955,415 1,081,533 1,381,139 201,886,947 249,056,835 28,436,666 33,825,178 6,009,035 6,722,706 74,993,585

4,487,971 1,946,332 12,669,156 6,668,157 2,169,127 23,452,772 15,388,248 6,182,276 1,679,117 1,182,235 260,692,866 285,124,742 37,788,122 26,124,854 3,506,514 4,257,435 71,676,925

(22,570) (22,570) 9,092 107,907 28,284,682 28,401,681 22,769,911 47,116 576 158,346 22,975,949

4,487,971 1,946,332 12,669,156 6,690,727 2,169,127 23,475,342 15,379,156 6,074,369 1,679,117 1,182,235 232,408,184 256,723,061 15,018,211 26,077,738 3,505,938 4,099,089 48,700,976

Claims on banks with maturity less than 3 months and denominated in foreign currency

1,2,3 4,5 6 Unrated 0 1 2,3 4,5 6 Unrated 75% 35%

Public sector

Retail

89,861 4,666 81,359,035 81,453,562 48,894,320 4,983,571 53,877,891 9,009,323 555,382 9,564,705 4,923,887 11,360,230 3,677,090 19,961,207

193 2,678 55,690,508 55,693,379 3,179,795 3,179,795 1,450,172 1,450,172

89,668 1,988 25,668,527 25,760,183 45,714,525 4,983,571 50,698,096 9,009,323 555,382 9,564,705 3,473,715 11,360,230 3,677,090 18,511,035

6,656,459 66,982,129 73,638,588 65,720,344 5,619,903 71,340,247 8,414,206 441,574 8,855,780 2,612,613 11,399,342 25,846,230 39,858,185

589,581 45,468,416 46,057,997 3,268,265 3,268,265 184,591 4,191,246 23,347,721 27,723,558

6,066,878 21,513,713 27,580,591 62,452,079 5,619,903 68,071,982 8,414,206 441,574 8,855,780 2,428,022 7,208,096 2,498,509 12,134,627

Equity Investments - Listed - Unlisted Past due loans - Less than 20% - Between 20% to 50% - More than 50% Past due loans secured against mortgage of residential property: - past due for more than 90 days - past due by 90 days All Fixed Assets Others Total

100% 150%

150% 100% 50%

100% 50% 100%

560,433 946,757 1,507,190 20,983,246 5,303,299 719,464,569

114,824,504

560,433 946,757 1,507,190 20,983,246 5,303,299 604,640,066

626,876 891,713 1,518,589 21,437,035 7,782,206 685,042,266

80,912 400,312 481,224 1,546,703 136,661,758

545,964 491,401 1,037,365 21,437,035 6,235,503 548,380,508

Annual Report 2010

95

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Credit Risk: Disclosures with respect to Credit Risk Mitigation for Standardized Approach The Bank has adopted the Comprehensive Approach of Credit Risk Mitigation for the Banking Book. No credit risk mitigation benefit is taken in the Trading Book. In instances where the Banks exposure on an obligor is secured by collateral that conforms to the eligibility criteria under the Comprehensive Approach of CRM, then the Bank reduces its exposure under that particular transaction by taking into account the risk mitigating effect of the collateral for the calculation of capital requirement i.e. the risk weight of the collateral instrument securing the exposure is substituted for the risk weight of the counter party. Cash, lien on deposits, government securities and eligible guarantees etc. are considered as eligible collateral under the Comprehensive Approach of Credit Risk Mitigation. The Bank has in place detailed guidelines with respect to valuation and management of these types of collateral. In order to be prudent, the Bank calculates the Credit Risk Mitigation benefit using the realizable value of eligible collateral. 44. RISK MANAGEMENT This section presents information about the Banks exposure to and its management and control of risks, in particular, the primary risks associated with its use of financial instruments: Credit risk is the risk of loss resulting from client or counterparty default Market risk is the risk of loss arising from adverse movements in market variables such as interest rates, exchange rates and equity indices Liquidity risk is the risk that the Bank may be unable to meet its payment obligations when due Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, and therefore includes legal risk Equity position risk is the risk that arises due to changes in prices of individual stocks or levels of equity indices.

Managing risk continues to present a major challenge to the entire banking industry. Success in the banking business depends on how well an institution manages its risks. The main goal is not to eliminate risk, but rather to be proactive in identifying, assessing and managing risks to the organisations strategic advantage at the optimum. The Bank has an integrated risk management structure in place. The Board Risk Management Committee oversees the whole risk management process of the bank. The Risk & Credit Policy Group assists the Board Risk Management Committee. The group is organized into the functions of Credit Administration, Market and Treasury Risk, Commercial and FIRMU Credit Policy, Consumer and Retail Credit, Credit Risk Management and Operational Risk and Basel II. Each risk category is headed by a senior manager who reports directly to the Group Executive, Risk and Credit Policy. The role of the Risk and Credit Policy Group includes: Determining guidelines relating to Banks appetite for risk. Recommending risk management policies in accordance with the Basel-II framework and international best practices. Reviewing policies/ manuals and ensuring that these are in accordance with the risk management policies.

96

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Developing systems and resources to review the key risk exposures of the Bank . Approving credits. Granting approval authority to qualified and experienced individuals. Reviewing the adequacy of credit training across the Bank. Organizing portfolio reviews focusing on quality assessment, risk profiles, industry concentrations, etc. Setting systems to identify significant portfolio indicators, problem credits and level of provisioning required.

44.1 Credit risk Credit risk is the risk that a customer or counterparty may not settle an obligation for full value, either when due or at any time thereafter. This risk arises from the potential that a customer or counterparty is either unwilling to perform an obligation or its ability to perform such an obligation is impaired resulting in an economic loss to the Bank. The credit risk management process is driven by the Bank's Credit Policy, which provides policies and procedures in relation to credit initiation, approval, documentation and disbursement, credit maintenance and remedial management. The Credit risk function is organized into Corporate, Commercial/SME and Retail credit. Corporate and Retail credit functions are centrally organized while the Commercial credit function is organized regionally across the network. Individual credit authorities are delegated by the Board according to seasoning/maturity of respective credit officers. The Bank manages, limits and controls concentrations of credit risk as identified, in particular, to individual counterparties and groups, and to industries, where appropriate. Concentrations of credit risk exist if clients are engaged in similar activities, or are located in the same geographical region or have comparable economic characteristics such that their ability to meet contractual obligations would be similarly affected by changes in economic, political or other conditions. Limits are also applied in a variety of forms to portfolios or sectors where the Bank considers it appropriate to restrict credit risk concentrations or areas of higher risk, or to control the rate of portfolio growth.

Annual Report 2010

97

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
44.2 Segmental information

44.2.1 Segments by class of business


2010 Deposits (Rupees in '000) 8,389,268 33,824,201 1,289,002 2,477,437 330,764 2,182,465 1,908,802 3,078,292 2,216,787 3,027,770 15,918,040 22,443,630 3,265,744 17,157,862 2,189,563 1,450,750 16,640,821 36,074,167 8,494,701 840,738 3,931,436 308,457 96,185 8,675,833 1,543,051 3,472,111 385,593 1,223,853 4,285,714 365,056 623,175 3,894,923 267,478,119 71,161,457 550,645,767 Percent 1.52% 6.14% 0.23% 0.45% 0.06% 0.40% 0.35% 0.56% 0.40% 0.55% 2.89% 4.08% 0.59% 3.12% 0.40% 0.26% 3.02% 6.55% 1.54% 0.15% 0.71% 0.06% 0.02% 1.58% 0.28% 0.63% 0.07% 0.22% 0.78% 0.07% 0.11% 0.71% 48.58% 12.92% 100.00%

Gross Advances (Rupees in '000) Chemical and pharmaceuticals Agri business Textile spinning Textile weaving Textile composite Textile others Cement Sugar Shoes and leather garments Automobile and transportation equipment Financial Insurance Electronics and electrical appliances Production and transmission of energy Paper and allied Surgical and metal Contractors Wholesale traders Fertilizer dealers Sports goods Food industries Airlines Cables Construction Containers and ports Engineering Glass and allied Hotels Infrastructure Media Polyester and fibre Telecommunication Individuals Others 6,217,583 53,034,196 17,497,654 6,722,278 23,145,685 13,779,179 6,803,468 8,153,681 2,447,523 4,455,055 4,895,906 2,385,744 39,057,078 789,310 2,265,932 4,263,223 20,775,990 6,823,565 803,919 6,848,598 6,033,039 661,900 21,866,860 1,813,903 1,531,426 301,653 2,708,633 2,273,671 620,575 1,980,509 11,333,927 65,802,937 20,597,340 368,691,940 Percent 1.69% 14.38% 4.75% 1.82% 6.28% 3.74% 1.85% 2.21% 0.66% 1.21% 1.33% 0.00% 0.65% 10.59% 0.21% 0.61% 1.16% 5.64% 1.85% 0.22% 1.86% 1.64% 0.18% 5.93% 0.49% 0.42% 0.08% 0.73% 0.62% 0.17% 0.54% 3.07% 17.85% 5.59% 100.00%

Contingencies and commitments (Rupees in '000) Percent 6,082,131 315,807 5,058,213 4,289,442 814,737 3,740,450 2,801,403 358,817 298,515 4,940,641 298,818,733 43,143 1,541,579 58,716,619 660,772 335,306 19,463,140 1,290,820 677,458 17,885 3,699,826 108,106 744,510 10,260,326 2,974,909 1,618,692 220,958 438,627 31,461,991 40,879 78,234 1,167,952 17,737,304 58,859,489 539,677,414 1.13% 0.06% 0.94% 0.79% 0.15% 0.69% 0.52% 0.07% 0.06% 0.92% 55.37% 0.01% 0.29% 10.88% 0.12% 0.06% 3.61% 0.24% 0.13% 0.00% 0.69% 0.02% 0.14% 1.90% 0.55% 0.30% 0.04% 0.08% 5.83% 0.01% 0.01% 0.22% 3.29% 10.91% 100.00%

98

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]

Gross Advances (Rupees in '000) Chemical and pharmaceuticals Agri business Textile spinning Textile weaving Textile composite Textile others Cement Sugar Shoes and leather garments Automobile and transportation equipment Financial Insurance Electronics and electrical appliances Production and transmission of energy Paper and allied Surgical and metal Contractors Wholesale traders Fertilizer dealers Sports goods Food industries Airlines Cables Construction Containers and ports Engineering Glass and allied Hotels Infrastructure Media Polyester and fibre Telecommunication Individuals Others 44.2.2 Segment by Sector 6,081,931 50,894,347 19,541,766 7,788,745 21,246,034 13,088,122 6,508,094 7,068,609 2,200,397 5,213,278 5,485,383 2,143,745 41,179,308 1,125,589 567,366 2,600,466 11,558,910 5,729,029 432,121 7,301,248 5,569,645 379,600 26,087,922 95,855 1,496,050 444,982 2,692,321 2,507,584 3,403,956 8,557,307 78,997,010 34,491,522 382,478,242 Percent 1.59% 13.31% 5.11% 2.04% 5.55% 3.42% 1.70% 1.85% 0.58% 1.36% 1.43% 0.56% 10.77% 0.29% 0.15% 0.68% 3.02% 1.50% 0.11% 1.91% 1.46% 0.10% 6.82% 0.03% 0.39% 0.12% 0.70% 0.66% 0.00% 0.89% 2.24% 20.65% 9.02% 100.00%

2009 Deposits (Rupees in '000) 11,971,327 21,026,267 1,225,983 804,049 965,467 1,981,459 988,097 2,360,348 1,827,377 4,318,840 11,227,495 13,802,720 7,076,567 19,932,300 1,016,292 1,553,961 18,104,119 26,658,663 9,516,985 868,470 3,231,634 1,621,206 225,097 7,793,699 1,223,696 3,124,994 914,092 1,018,965 4,547,147 448,233 409,196 3,526,634 258,791,280 47,933,444 492,036,103 2010 Deposits (Rupees in '000) 71,320,777 479,324,990 550,645,767 2009 Deposits (Rupees in '000) 48,825,774 443,210,329 492,036,103 Percent 9.92% 90.08% 100.00% Percent 12.95% 87.05% 100.00% Percent 2.43% 4.27% 0.25% 0.16% 0.20% 0.40% 0.20% 0.48% 0.37% 0.88% 2.28% 2.81% 1.44% 4.05% 0.21% 0.32% 3.68% 5.42% 1.93% 0.18% 0.66% 0.33% 0.05% 1.58% 0.25% 0.64% 0.19% 0.21% 0.92% 0.09% 0.08% 0.72% 52.60% 9.74% 100.00%

Contingencies and commitments (Rupees in '000) Percent 1,235,141 48,362 3,153,486 3,307,899 244,588 2,521,137 1,471,077 16,915 11,522 1,306,428 261,681,089 37,673 1,931,037 20,328,644 267,165 95,659 20,133,503 1,383,149 1,461,840 70,510 2,241,180 118,910 255,330 7,829,209 1,036,486 3,093,417 316,022 303,976 32,018 77,411 117,122 25,329,025 732,798 84,734,075 446,923,805 0.28% 0.01% 0.71% 0.74% 0.05% 0.56% 0.33% 0.00% 0.00% 0.29% 58.55% 0.01% 0.43% 4.55% 0.06% 0.02% 4.50% 0.31% 0.33% 0.02% 0.50% 0.03% 0.06% 1.75% 0.23% 0.69% 0.07% 0.07% 0.01% 0.02% 0.03% 5.67% 0.16% 18.96% 100.00%

Gross Advances (Rupees in '000) Public / Government Private 64,861,230 303,830,710 368,691,940 Percent 17.59% 82.41% 100.00%

Contingencies and commitments (Rupees in '000) Percent 84,207,505 455,469,909 539,677,414 15.60% 84.40% 100.00%

Gross Advances (Rupees in '000) Public / Government Private 66,893,877 315,584,365 382,478,242 Percent 17.49% 82.51% 100.00%

Contingencies and commitments (Rupees in '000) Percent 63,089,984 383,833,821 446,923,805 14.12% 85.88% 100.00%

Annual Report 2010

99

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
44.2.3 Details of non performing advances and specific provisions by class of business segment 2010 2009

Specific Classified Specific Classified Advances Provision Held Advances Provision Held ------------------------ (Rupees in '000) -----------------------Chemical and pharmaceuticals Agri business Textile spinning Textile weaving Textile composite Textile others Cement Sugar Shoes and leather garments Automobile and transportation equipment Financial Electronics and electrical appliances Production and transmission of energy Paper and allied Surgical and metal Wholesale traders Fertilizer dealers Sports goods Food industries Construction Engineering Glass and allied Hotels Polyester and fibre Individuals Others 226,502 1,430,020 5,417,208 910,470 5,210,214 2,282,350 33,638 226,903 726,577 2,151,805 365,354 3,049,109 179,264 1,167,377 7,490 128,325 1,258,725 3,885,120 440,297 24,527 485,993 1,751,479 13,238,040 3,995,773 48,592,560 196,114 903,057 4,479,514 873,022 2,337,315 1,937,098 33,638 224,110 650,422 57,003 345,164 2,981,719 113,240 881,274 6,878 128,325 964,667 1,134,507 410,139 12,264 113,086 1,743,679 9,816,791 3,191,246 33,534,272 309,349 1,508,525 5,017,860 888,722 998,902 2,935,380 4,450 33,638 241,948 750,787 10,125 542,892 2,927,748 173,212 1,775 1,024,613 6,182 280,675 795,442 4,106,175 353,454 29,796 489,493 1,702,376 11,142,751 2,825,126 39,101,396 177,596 862,526 3,927,267 867,460 765,271 2,365,528 4,450 33,638 180,321 704,676 10,125 428,957 1,942,137 116,438 1,775 648,018 4,364 279,310 781,194 1,249,378 353,454 14,899 116,586 1,668,561 8,073,785 2,095,308 27,673,022

44.2.4 Details of non performing advances and specific provision by sector 2010 2009 Classified Specific Classified Specific Advances Provision Held Advances Provision Held ------------------------ (Rupees in '000) -----------------------Public / Government Private 48,592,560 48,592,560 33,534,272 33,534,272 39,101,396 39,101,396 27,673,022 27,673,022

100

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
44.2.5 Geographical segment analysis 2010 Total assets Net assets Contingencies & Profit before employed employed commitments taxation ------------------------ (Rupees in '000) -----------------------Pakistan operations Middle East United States of America Karachi Export Processing Zone 14,879,127 2,655,182 173,800 34,109 2,863,091 17,742,218 556,278,906 138,860,848 3,158,076 487,149 142,506,073 698,784,979 42,331,160 24,430,003 1,322,216 331,686 26,083,905 68,415,065 428,490,946 108,368,163 2,586,153 232,152 111,186,468 539,677,414

2009 Profit before Total assets Net assets Contingencies & taxation employed employed commitments ------------------------ (Rupees in '000) -----------------------Pakistan operations Middle East United States of America Karachi Export Processing Zone 11,541,844 2,322,795 111,414 58,448 2,492,657 14,034,501 486,389,793 130,479,211 2,138,970 708,459 133,326,640 619,716,433 33,999,377 25,356,043 1,259,785 321,518 26,937,346 60,936,723 369,230,089 77,206,577 320,870 166,269 77,693,716 446,923,805

Total assets employed include intra group items of Rs.Nil. 44.3 Market Risk Market risk is the uncertainity that the Bank may experience due to movements in market prices. It results from changes in interest rates, exchange rates, equity prices and volatilities of individual market factors as well as the correlations between them. Each component of risk includes a general market risk and a specific aspect of market risk that originates in the portfolio structure of a bank. Measuring and controlling market risk is usually carried out at the portfolio level. However, certain controls are applied, where necessary, to individual risk types, to particular books and to specific exposures. Controls are also applied to prevent any undue risk concentrations in trading books, taking into account variations in price, volatility, market depth and liquidity. These controls also include limits on exposure to individual market risk variables ('risk factors') as well as on concentrations of tenors, issuers etc. Trading activities are centered in the Treasury and Capital Markets (TCM) Group to faclitate clients as well as run proprietary positions. The Bank is active in the cash and derivative markets for equity, interest rate and foreign exchange. Market and Treasury Risk (MTR) division performs market risk management activities. The division is composed of two units, i.e., Market Risk Management and Treasury Middle Office. The Market Risk Management unit is responsible for the development and review of market risk policies and processes, and is involved in research, financial modeling and testing/implementation of risk management systems. Treasury Middle Office is responsible for monitoring and implementation of market risk and other policies, escalation of any deviation to senior management, and MIS reporting.

Annual Report 2010

101

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
The scope of market risk management is as follows: To keep the market risk exposure within the Banks risk appetite as assigned by the Board of Directors (BoD) and the Board Risk Management Committee (BRMC). To implement Risk Management policies approved by the BoD and BRMC jointly with the senior management through Market Risk Committee (MRC). To review new product proposals, propose/recommend/approve procedures for market risk management. Various limits are assigned to different businesses on a product-portfolio basis. The products are approved through product programs, where risks are identified and limits and parameters are set. Any transaction/ product falling beyond the Product Policy Manual are approved through separate transaction / product memos. To develop, review and upgrade procedures for effective implementation of market risk management policy. It also includes implementation of an Enterprise Risk Management solution for market risk. To maintain a comprehensive database for performing risk analysis, stress testing and scenario analysis. Stress testing activities are performed on a quarterly basis which also includes banking book along with trading book.

44.3.1 Foreign Exchange Risk 2010 Assets Net foreign currency exposure ------------------------ (Rupees in '000) -----------------------470,070,512 39,509,427 9,743,709 7,916 5,970,493 82,624,436 11,750,538 3,746,636 6,946,247 630,369,914 2009 Assets Net foreign currency exposure ------------------------ (Rupees in '000) -----------------------477,497,360 33,073,859 7,051,265 275,066 4,601,339 2,121,758 18,874,901 15,284,162 558,779,710 (7,384,117) (544,997) 5,995,613 (41,117) 3,497,421 (1,061,846) (842,508) 381,551 61,404,528 (251,912) (57,178) (905) (63,785) (105,409) (24,683) (46,746) 82,813 60,936,723 Liabilities Off - balance sheet items (8,122,491) (12,599,803) 5,342,193 1,053 3,414,013 8,968,295 2,654,725 256,878 85,137 68,551,643 (387,638) 40,142 3,543 174,812 (99,593) (16,182) 52,225 96,113 68,415,065 Liabilities Off - balance sheet items

Pakistan Rupee US Dollar Pound Sterling Japanese Yen Euro UAE Dirham Bahraini Dinar Qatari Riyal Other Currencies

546,744,646 51,721,592 4,441,658 10,406 2,731,292 73,556,548 9,079,631 3,541,983 6,957,223 698,784,979

Pakistan Rupee US Dollar Pound Sterling Japanese Yen Euro UAE Dirham Bahraini Dinar Qatari Riyal Other Currencies

546,286,005 33,366,944 998,474 315,278 1,040,133 3,078,195 18,850,218 795,762 14,985,424 619,716,433

102

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
Foreign Exchange Risk is the uncertainty that the Bank is exposed to due to changes in exchange rates. Foreign exchange positions are reported on a consolidated basis and limits are used to monitor exposure in individual currencies. The Bank is an active participant in currency cash and derivatives markets and carries currency risk from these trading activities, conducted primarily by Treasury and Capital Markets Group. These trading exposures are subject to prescribed stress tests and sensitivity analysis. The Bank's reporting currency is the Pakistani Rupee, but its assets, liabilities, income and expenses are denominated in different currencies. Treasury and Capital Markets Group from time to time, proactively hedges significant expected foreign currency earnings / costs within a time horizon of up to one year, in accordance with the instructions of the SBP and subject to pre-defined limits. 44.3.2 Equity position risk Equity position risk arises due to changes in prices of individual stocks or levels of equity indices. The Banks equity book comprises of Held for Trading (HFT) & Available for Sale (AFS) portfolios. The objective of the HFT portfolio is to make shortterm capital gains, whilst the AFS portfolio is maintained with a medium-term view of capital gains and dividend income. Separate product program manuals have been developed to discuss in detail the objectives and policies, risks and mitigants, limits and controls for the equity portfolios of the Bank. 44.3.3 Yield / Interest Rate Risk Interest rate risk is the uncertainty resulting from changes in interest rates, including changes in the shape of yield curves. Interest rate risk is inherent in many of the Bank's businesses and arises from factors such as mismatches between contractual maturities or re-pricing of on and off balance sheet assets and liabilities. Interest rate risk arises mainly through HTM investments, advances and deposits. The interest sensitivity profile is prepared on a quarterly basis based on the re-pricing or maturities of assets and liabilities. The objective of yield / interest rate risk management is to minimize adverse variances in the Bank's profitability. Interest rate risk in the banking book is managed by performing periodic gap analysis, sensitivity analysis and stress testing.

Annual Report 2010

103

104
Total Upto 1 month 2010 Exposed to Yield / Interest risk Over Over Over Over Over Over Over Over 1 month to 3 months to 6 months to 1 year to 2 year to 3 year to 5 year to 10 years 3 months 6 months 1 year 2 years 3 years 5 years 10 years ----------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------Non- interest bearing financial instruments % 67,461,668 18,192,142 12,384,778 224,578,556 55,872,077 18,603 137,804,798 7,670,247 59,940,763 67,611,010 70,193,788 (23,510,718) 4,903,017 6,398,572 7,534,918 544,798 50,327,484 665,040 51,537,322 332,891 3,044,356 1,330,080 4,707,327 855,859 2,281,413 1,999,400 5,136,672 569,933 2,358,697 2,928,630 3,336,625 8,692,490 12,029,115 5,245,480 9,610,344 4,027,119 4,027,119 4,104,428 48,910 74,498 94 15,290,082 5,170,604 12,623,734 2,679,720 71,921,560 732,223 81,181,895 1,284,550 14,806,550 2,165,956 3,291,050 145,058 3,640,867 206,667 4,300,605 17,197,357 3,952,527 67,461,668 2,902,060 11,662,411 318,673,884 15,058,288 692,584 12,782,351 669,824,251 5,045,815 45,104,849 550,645,767 11,985,748 15,371,258 628,153,437 41,670,814 26,744,251 68,415,065 (52,410,271) 119,144,552 26,295,293 106,133,728 132,429,021 5,499,203 128,561,488 7,991,228 142,051,919 46,588,038 346,292 80,018,750 186,585,426 9,765 261,196,471 11,908,971 26,533 28,026,604 7,623,532 125,787 11,535,244 5,875,584 80,692 10,463,548 41,330 35,908 17,274,595 15,058,288 12,782,351 109,866,778 5,045,815 189,305,348 15,371,258 209,722,421 (99,855,643)

44.3.4 Mismatch of interest rate sensitive assets and liabilities

Effective yield/ Interest rate

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]

United Bank Limited


2,000,000 5,255,285 (5,255,285) (47,916,643) 51,863,243 5,946,600 (46,463,671) (46,463,671) 17,584,812 136,729,364 90,265,693 (5,246,944) 26,823,607 20,076,663 90,270,451 180,536,144 380,183 (1,880,183) 5,422,470 (5,422,470) 500,000 45,387 123,488 (23,387,230) 157,148,914 545,387 5,448,404 162,597,318 6,398,572 168,995,890 7,534,918 176,530,808 500,001 5,745,481 182,276,289 4,027,119 186,303,408 6,985,703 (6,985,702) 35,570,843 (35,570,843) 2,055,442 (2,055,442) (441,981) (85,434,818) 130,653,749 44,776,951 86,447,765 1,129,713 (1,629,713) 24,893,088 (24,893,088) (441,981) (32,245,519) 50,772,312 (1,000,000) (25,712) 1,149,200 1,000,000 (1,000,000) 1,975,807 (1,475,806) 2,055,442 (2,055,442) (99,855,643) 86,447,765

On-balance sheet financial instruments

Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances - Performing - Non-performing Operating fixed assets - Ijara assets Other assets

0.28% 0.67% 9.20% 11.01% 11.75%

6.55%-25.00% 0%

Liabilities Bills payable Borrowings Deposits and other accounts Subordinated loans Other liabilities

0% 11.02% 3.98% 11.91% 0%

On-balance sheet gap

Non financial net assets

Total net assets

Off-balance sheet financial instruments

Interest Rate Derivatives - Long position Interest Rate Derivatives - Short position Cross Currency Swap - Long position Cross Currency Swap - Short Position Swaptions - Long Position Swaptions -Short Position FX Options - Long position FX Options - Short position Commodity options - Long position Commodity options - Short position Equity Indices - Long position Equity Indices - Short position Forward Rate Agreements-Short position Forward Rate Agreements-Long position Forward Purchase of Govt. Securities Forward Sale of Govt. Securities Foreign currency forward sales Foreign currency forward purchases

Off-balance sheet gap

Total Yield/Interest Risk Sensitivity Gap

Cumulative Yield/Interest Risk Sensitivity Gap

Yield risk is the risk of decline in earnings due to adverse movement of the yield curve.

Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in market interest rates.

Effective yield/ Interest rate % 61,470,047 5,407,470 23,162,130 136,145,524 51,399,501 514,391 80,652,811 14,316,171 41,990,016 56,306,187 24,346,624 16,205,564 6,106,363 6,136,430 2,609,206 455,496 51,671,445 424 52,127,365 526,093 7,234,507 665,467 8,426,067 283,755 3,539,662 1,330,085 5,153,502 137,058 3,539,662 1,999,400 5,676,120 14,532,430 10,279,900 3,639,751 88,581 88,581 6,413,663 3,551,170 15,681,570 1,371,234 18,483,355 5,374,947 509,093 2,773,622 47,973,335 385,669 28,353,250 143,875 16,789,553 1,210,609 3,041,921 165,000 4,271,666 1,432,058 12,855,537 3,639,751 45,788,477 3,527,143 12,413,506

Total

2009 Exposed to Yield / Interest risk Upto Over Over Over Over Over Over Over Over 1 month 1 month to 3 months to 6 months to 1 year to 2 year to 3 year to 5 year to 10 years 3 months 6 months 1 year 2 years 3 years 5 years 10 years ----------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------Non- interest bearing financial instruments

On-balance sheet financial instruments

Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Performing Non-performing Operating fixed assets - Ijara assets Other assets 342,663,339 11,428,374 514,391 12,679,886 593,471,161 5,147,259 35,144,823 492,036,103 11,989,800 12,912,216 557,230,201 36,240,960 25,005,130 60,936,723 5,179,996 57,791,585 9,707,789 97,982,622 107,690,411 6,701,606 122,687,037 7,994,424 137,383,067 2,928,274 3,513,600 6,441,874 71,959,301 112,870,407 143,918,602 195,174,652 51,399,501 68,332,929 6,853,266 11,289,932 6,853,268 8,285,326 12,855,537

0.01% 0.60% 10.80% 10.40% 13.00%

10% - 23% 0%

Liabilities Bills payable Borrowings Deposits and other accounts Subordinated loans Other liabilities

11,428,374 12,679,886 85,837,386 5,147,259 159,877,552 12,912,216 177,937,027 (92,099,641)

0% 11.20% 4.78% 12.60% 0%

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]

On-balance sheet gap

Non financial net assets

Total net assets

Off-balance sheet financial instruments 11,014,381 (11,014,381) 36,372,837 (36,372,837) 2,527,248 (2,527,248) 410,535 (410,535) (46,364,122) 90,952,188 44,588,066 80,829,026 (2,778,427) 2,401,569 2,401,569 30,834,766 88,626,351 91,027,920 19,961,264 44,307,888 135,335,808 1,772,686 17,978,250 153,314,058 7,094,496 (957,598) 5,712,267 (5,712,267) (34,192,008) 25,276,683 175,000 (382,598) 25,438,470 (25,438,470) 2,527,248 (2,527,248) (11,286,064) 42,328,428 421,208 (2,198,481) 5,222,100 (5,222,100) (886,050) 22,624,587 1,050,196 722,490 102,273 (1,000,000) (897,727) 5,208,636 158,522,694 750,000 750,000 6,886,430 165,409,124 1,000,000 (6,054,496) (5,054,496) (2,445,290) 162,963,834 421,208 (421,208) 6,413,663 169,377,497 3,551,170 172,928,667 410,535 (410,535) (92,099,641) 80,829,026

Interest Rate Derivatives - Long position Interest Rate Derivatives - Short position Cross Currency Swap - Long position Cross Currency Swap - Short Position Swaptions - Long Position Swaptions -Short Position FX Options - Long position FX Options - Short position Commodity options - Long position Commodity options - Short position Equity Indices - Long position Equity Indices - Short position Forward Rate Agreements-Short position Forward Rate Agreements-Long position Forward Purchase of Govt. Securities Forward Sale of Govt. Securities Foreign currency forward sales Foreign currency forward purchases

Off-balance sheet gap

Total Yield/Interest Risk Sensitivity Gap

Cumulative Yield/Interest Risk Sensitivity Gap

Annual Report 2010

Yield risk is the risk of decline in earnings due to adverse movement of the yield curve.

Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in market interest rates.

105

106
Total

44.4

Liquidity risk

Liquidity risk is the risk to the Bank arising from either its inability to meet its obligations or to fund increase in assets as they fall due without incurring unacceptable cost or losses.

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]

United Bank Limited


2010 Upto 1 Over 1 month Over 3 months Over 6 months Over 1 year Over 2 years Over 3 years Over 5 years Over month to 3 months to 6 months to 1 year to 2 years to 3 years to 5 years to 10 years 10 years ---------------------------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------------------------62,413,974 18,192,142 5,996,232 11,307,380 108,993,549 215,464 4,766,639 211,885,380 2,679,728 42,175,850 49,121,031 408,990 9,279,214 103,664,813 897,322 60,507,870 32,235,289 880,577 183,940 94,704,998 1,071,050 34,639,810 26,694,559 1,406,380 584,281 4,176,229 68,572,309 1,388,722 16,341,063 8,189,310 1,951,254 714,122 297,012 28,881,483 145,058 22,691,364 13,515,536 986,522 37,338,480 206,666 10,876,835 45,505,611 1,559,780 9,504 58,158,396 12,124,178 40,277,897 2,267,867 650 54,670,592 5,047,694 13,914,206 9,199,390 12,747,238 40,908,528 67,461,668 18,192,142 12,384,778 224,578,556 333,732,172 22,424,072 1,298,403 18,713,188 698,784,979 5,045,815 4,866,536 45,104,849 27,225,236 550,645,767 425,310,960 11,985,748 17,587,735 (1,197,203) 630,369,914 456,205,529 68,415,065 (244,320,149) 179,279 5,499,203 53,655,661 2,028 7,150,286 66,486,457 37,178,356 7,547,247 21,965,865 679,457 30,192,569 64,512,429 544,798 19,939,781 666,640 5,847,004 26,998,223 41,574,086 332,891 5,269,612 1,997,816 2,711,842 10,312,161 18,569,322 761,776 4,073,609 2,667,136 494,052 7,996,573 29,341,907 524,380 4,003,809 670,128 5,198,317 52,960,079 2,669,318 16,426,470 5,982,000 1,902,297 26,980,085 27,690,507 40,908,528 12,241,798 21,688,637 26,250,489 8,234,141 68,415,065

The Assets and Liability Management Committee (ALCO) of the Bank has the responsibility for the formulation overall strategy and oversight of liquidity management and meets on a monthly basis or more frequently, if required.

The Banks approach to liquidity management is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking sustained damage to business franchises. A centralized approach is adopted, based on an integrated framework incorporating an assessment of all material known and expected cash flows and the availability of collateral which could be used to secure additional funding if required. The framework entails careful monitoring and control of the daily liquidity position, and regular liquidity stress testing under a variety of scenarios. Scenarios encompass both normal and stressed market conditions, including general market crises and the possibility that access to markets could be impacted by a stress event affecting some part of the Banks business.

44.4.1 Maturities of assets and liabilities - based on contractual maturity of the assets and liabilities of the bank

The maturity profile set out below has been prepared as required by IAS on the basis of contractual maturities, except for products that do not have a contractual maturity which are shown in the first bucket. The maturity profile disclosed in note 44.4.2 includes maturities of products that do not have a contractual maturity, as determined by the Assets and Liabilities Management Committee (ALCO) keeping in view the historical behavioural pattern of these products.

Assets

Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax asset Other assets

Liabilities

Bills payable Borrowings Deposits and other accounts Subordinated loans Other liabilities

Net assets

Represented by:

Share capital Reserves Unappropriated profit Surplus on revaluation of assets

Total

Assets 61,470,047 5,407,470 23,162,130 136,145,524 354,091,713 21,925,669 608,876 16,905,004 619,716,433 48,369,050 4,679,858 18,323,555 1,397,991 119,816,466 195,205 1,246,295 194,028,420 218,519 2,319,313 19,884,073 44,750,609 364,608 1,781,912 69,319,035 75,630 783,185 19,544,119 37,577,696 749,032 9,618,760 68,348,422 216,592 19,633,800 37,313,539 769,222 273,994 2,133,949 60,341,096 354,485 5,864,771 25,371,579 2,285,090 334,882 1,740,158 35,950,964 1,000,000 7,334,674 6,859,613 907,601 16,101,888 165,001 33,785,590 24,697,592 1,613,853 383,929 60,645,965 24,952,486 50,393,665 2,622,572 77,968,723

2009 Upto 1 Over 1 month Over 3 months Over 6 months Over 1 years Over 2 years Over 3 years Over 5 years Over month to 3 months to 6 months to 1 year to 2 years to 3 years to 5 years to 10 years 10 years ---------------------------------------------------------------------------- (Rupees in '000) ---------------------------------------------------------------------------------13,100,997 433,463 3,748,020 7,310,954 12,418,486 37,011,920

Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax asset Other assets

Liabilities

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]

Bills payable Borrowings Deposits and other accounts Subordinated loans Other liabilities

Net assets

5,147,259 4,953,418 35,144,823 9,707,789 492,036,103 419,323,521 11,989,800 14,461,725 30,545,771 558,779,710 464,530,499 60,936,723 (270,502,079)

193,841 6,701,606 39,126,304 2,024 (26,713,934) 19,309,841 50,009,194

14,366,171 7,717,590 1,729,996 23,813,758 44,534,664

405,496 9,433,776 2,024 7,113,960 16,955,257 43,385,839

526,093 6,712,383 668,667 (126,524) 7,780,619 28,170,345

283,755 702,303 1,997,821 2,983,880 13,118,008

137,058 1,062,379 3,334,864 4,534,301 56,111,665

2,928,274 7,957,846 5,984,400 1,912,455 18,782,975 59,185,748

88,581 88,581 36,923,339

Represented by: 11,128,907 18,959,537 22,187,802 8,660,477 60,936,723

Share capital Reserves Unappropriated profit Surplus on revaluation of assets

Annual Report 2010

107

108
Total 2010 Upto 1 Over 1 month Over 3 months Over 6 months Over 1 year Over 2 years Over 3 years Over 5 years Over month to 3 months to 6 months to 1 year to 2 years to 3 years to 5 years to 10 years 10 years ---------------------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------------------------

44.4.2 Maturities of assets and liabilities - based on working prepared by the Assets and Liabilities Management Committee (ALCO) of the bank

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]

United Bank Limited


67,461,668 18,192,142 12,384,778 224,578,556 318,673,884 15,058,288 18,713,188 22,424,072 1,298,403 698,784,979 32,424,575 16,387,752 5,096,880 12,307,779 95,348,986 576,525 162,142,497 5,961,763 1,804,390 3,579,671 40,816,574 98,192,050 1,484,016 151,838,464 4,315,224 897,322 64,100,679 25,932,792 11,867,123 107,113,140 4,895,167 1,070,458 26,996,398 24,742,350 3,850,892 584,281 62,139,546 5,617,703 1,388,722 7,830,314 5,178,136 297,012 714,122 21,026,009 226,485 145,058 14,295,267 12,017,576 26,684,386 184,107 206,667 28,384,640 20,777,863 9,504 49,562,781 13,836,644 27,742,531 27,702,735 15,058,288 628,116 22,424,072 107,392,386 2,104,374 8,781,396 10,885,770 5,045,815 45,104,849 550,645,767 11,985,748 17,587,735 630,369,914 68,415,065 20,760,488 52,182,205 42,303,054 (1,112,933) (46,803,198) 4,039,238 28,819,625 114,986,109 (6,462,963) 141,382,009 1,006,577 10,041,662 87,333,984 2,028 1,272,008 99,656,259 5,326,026 60,045,885 (561,825) 64,810,086 57,431,382 666,640 5,154,457 63,252,479 63,119,549 1,997,816 2,711,842 67,829,207 4,073,702 2,667,136 494,053 7,234,891 19,449,495 917,536 4,003,813 670,128 10,040,293 15,631,770 33,931,011 159,651,343 5,982,000 2,841,692 168,475,035 (61,082,649) 2,098,178 2,098,178 8,787,592 12,241,798 21,688,637 26,250,489 8,234,141 68,415,065

Current and savings deposits do not have any contractual maturity therefore, current deposits and savings accounts have been classified between all four maturities. Further, it has been assumed that on a going concern basis, these deposits are not expected to fall below the current year's level.

Assets

Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances - Performing - Non-performing Other assets Operating fixed assets Deferred tax assets

Liabilities

Bills payable Borrowings Deposits and other accounts Subordinated loan Deferred tax liability Other liabilities

Net assets

Represented by:

Share capital Reserves Unappropriated profit Surplus on revaluation of assets

Total

2009 Upto 1 Over 1 month Over 3 months Over 6 months Over 1 year Over 2 years Over 3 years Over 5 years Over month to 3 months to 6 months to 1 year to 2 years to 3 years to 5 years to 10 years 10 years ---------------------------------------------------------------------------- (Rupees in '000) ----------------------------------------------------------------------------------

Assets 61,470,047 5,407,470 23,162,130 136,145,524 342,663,339 11,428,374 16,905,004 21,925,669 608,876 619,716,433 30,325,615 5,207,470 20,623,296 16,822,851 112,349,635 2,622,082 187,950,949 5,744,339 2,159,149 19,079,744 53,294,291 1,019,732 81,297,255 3,821,791 169,075 18,917,627 33,947,309 12,540,173 69,395,975 4,031,174 15,623,377 30,505,405 62,799 273,994 50,496,749 5,046,748 210,610 4,625,770 24,355,413 334,882 34,573,423 107,770 3,044,623 8,133,613 11,286,006 294,807 29,472,280 25,331,327 55,098,414 12,097,803 200,000 24,641,335 46,632,514 11,428,374 660,218 21,925,669 117,585,913 3,917,917 8,113,832 12,031,749

Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances - Performing - Non-performing Other assets Operating fixed assets Deferred tax assets

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]

Liabilities 5,147,259 35,144,823 492,036,103 11,989,800 14,461,725 558,779,710 60,936,723 78,079,619 (43,996,606) 14,048,579 (2,995,222) (26,045,154) 3,964,437 13,459,781 92,137,743 309,369 109,871,330 1,182,822 13,572,786 98,482,287 2,024 12,053,942 125,293,861 6,848,198 48,499,198 55,347,396 53,489,947 2,024 53,491,971 59,949,910 668,667 60,618,577 1,826,977 1,997,821 3,824,798 7,461,208 1,264,058 4,593,456 3,334,864 9,192,378 45,906,036 133,056,585 5,984,400 2,098,414 141,139,399 (23,553,486) 12,031,749

Bills payable Borrowings Deposits and other accounts Subordinated loan Deferred tax liability Other liabilities

Net assets

Represented by: 11,128,907 18,959,537 22,187,802 8,660,477 60,936,723

Share capital Reserves Unappropriated profit Surplus on revaluation of assets

Annual Report 2010

109

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
44.5 Operational risk Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The Banks Operational Risk Management implementation framework is based on the advanced risk management architecture. The framework is flexible enough to implement in stages, and permits the overall risk management approach to evolve in response to organizational learning and the future needs of the organization. Following are the high-level strategic initiatives that the Bank has undertaken for the effective implementation of Operational Risk Management: - Recruiting skilled resources for Operational Risk Management. - Developing an operational risk management infrastructure. - Determining the current state of key risks and their controls residing in each business unit. - Developing policies, procedures and defining end-to-end information flow to establish a vigorous governance infrastructure. - Implementing systems for data collection, migration, validation and retention for current and historical reference and calculation. A consolidated Business Continuity Plan is being augmented for the Bank which encompasses roles and responsibilities, recovery strategy, IT and structural backups, scenario and impact analyses and testing directives. There are several IT developments underway in the credit, market and operational risk areas. Specifically for operational risk mitigation and control, an IT infrastructure is being developed along with the other high-level initiatives, including process reengineering and creating an inventory of risks and controls within the Bank. A methodology for Risk and Control Self Assessment has been implemented at all core units of the Bank.

110

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
45. ISLAMIC BANKING BUSINESS The Bank operates 6 (2009: 5) Islamic banking branches and 17 (2009: 15) Islamic banking windows. The statement of financial position of the Bank's Islamic Banking Branches at December 31, 2010 is as follows: 2010 2009 ----- (Rupees in 000) ----ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Financing and receivables - Murabaha - Musharaka - Diminishing Musharaka 389,582 46,654 450,000 2,884,260 203,787 166,667 90,888 461,342 426,052 83,725 297,649 5,039,264 208,180 93,410 100,000 1,563,953 154,650 222,222 261,259 638,131 598,452 548,396 3,750,522

Operating fixed assets including assets given on Ijarah Due from head office Other assets Total Assets LIABILITIES Bills payable Deposits and other accounts - Current accounts - Saving accounts - Term deposits - Deposits from financial institutions - remunerative Due to head office Other liabilities NET ASSETS REPRESENTED BY Islamic Banking Fund Accumulated losses Deficit on revaluation of assets

970 724,750 933,100 1,456,596 1,344,775 4,459,221 101,782 4,561,973 477,291

4,522 429,412 209,676 459,878 1,109,452 2,208,418 948,744 84,544 3,246,228 504,294

681,000 (203,000) 478,000 (709) 477,291

681,000 (174,404) 506,596 (2,302) 504,294

Annual Report 2010

111

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
The profit and loss account of the Bank's Islamic Banking Branches for the year ended December 31, 2010 is as follows:

2010 2009 ----- (Rupees in 000) ----Return earned Return expensed 623,262 (308,015) 315,247 (69,091) 2,930 (66,161) 249,086 484,098 (110,927) 373,171 99,904 (6,177) 93,727 466,898

(Provision) / Reversal for diminution in value of investments Reversal / (Provision) against assets given on Ijarah Net return after provision Other Income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Loss on sale of securities Other income Total other income Other Expenses Administrative expenses Other provision / write offs Total other expenses Net (loss) / profit for the year Accumulated losses brought forward Accumulated losses carried forward

5,996 9,871 1,414 (4,750) 2,184 14,715 263,801 (289,921) (2,476) (292,397) (28,596) (174,404) (203,000)

4,444 12,169 2,904 (14,969) 4,201 8,749 475,647 (304,000) (304,000) 171,647 (346,051) (174,404)

2010 2009 ----- (Rupees in 000) ----Remuneration to Shariah Advisor / Board CHARITY FUND Opening balance Addition during the period Payment / utilization during the period Closing balance 2,615 1,924

20,732 840 (9,780) 11,792

19,609 6,629 (5,506) 20,732

112

United Bank Limited

[ Notes to and forming part of the Unconsolidated Financial Statements For the year ended December 31, 2010 ]
46. NON-ADJUSTING EVENT AFTER THE BALANCE SHEET DATE The Board of Directors in its meeting held on February 21, 2011 has proposed a cash dividend in respect of 2010 of Rs.4 per share (2009: cash dividend Rs.2.50 per share). In addition, the directors have also announced a bonus issue of Nil (2009: 10%). These appropriations will be approved in the forthcoming Annual General Meeting. The unconsolidated financial statements for the year ended December 31, 2010 do not include the effect of these appropriations which will be accounted for in the unconsolidated financial statements for the year ending December 31, 2011. 47. DATE OF AUTHORIZATION These financial statements were authorized for issue on February 21, 2011, by the Board of Directors of the Bank. 48. 48.1 GENERAL Comparatives Comparative information has been re-classified, re-arranged or additionally incorporated in these unconsolidated financial statements for the purposes of better presentation. Major reclassifications made are as follows: Rs.249.990 million has been reclassified from other income - others to mark-up/interest earned on advances to customers (income on ijarah financing) Rs.1,122.772 million has been reclassified from balance with SBP in foreign currency deposit account to balance with SBP in foreign currency current account Rs.1,650.896 million has been reclassified from borrowing in Pakistan to borrowing outside Pakistan. Unrealized mark-up held in suspense account amounting to Rs. 1,087.189 million has been merged with provision against other assets.

48.2

Figures have been rounded off to the nearest thousand rupees unless otherwise stated.

Atif R. Bokhari
President & Chief Executive Officer

Muhammad Sami Saeed


Director

Sir Mohammed Anwar Pervez , OBE, HPk


Deputy Chairman

Nahayan Mabarak Al Nahayan


Chairman

Annual Report 2010

113

[ Annexure 'A' as referred to in note 9.8 of Bank's Unconsolidated Financial Statements ]


1) Particulars of Investment held in listed companies and modarbas Investee Number of shares / certificates held Paid up value per share / certificate (Rupees) Total paid up value Cost

Held for trading securities Investment in ordinary shares Engro Corporation Limited Lotte Pakistan PTA Limited Nishat Chunian Limited Pakistan Telecommunication Company Limited Available for sale securities Investment in ordinary shares Adamjee Insurance Company Limited Arif Habib Corporation Limited Atlas Fund Of Funds Bank Al-Falah Limited BOC Pakistan Limited D.G. Khan Cement Limited Engro Polymer & Chemicals Limited Fauji Cement Company Limited First Dawood Mutual Fund Hira Textile Mills Limited IGI Investment Bank Limited Jahangir Siddiqui & Company Limited KASB Securities Limited Kohat Textile Mills Ltd Lotte Pakistan PTA Limited National Bank Of Pakistan Nishat Mills Limited Nishat Power Limited Pak Oilfields Limited Pakistan Petroleum Limited Pakistan State Oil Company Limited Pakistan Telecommunication Company Limited Sakrand Sugar Mills Limited Saritow Spinning Mills Limited Shell Pakistan Limited Visa Inc. DP World Investments in preference shares Chenab Limited Masood Textile Mills Limited JSC Alliance Bank Investments in units of mutual funds Atlas Stock Market Fund Faysal Asset Allocation Fund Faysal Balance Growth Funds Meezan Islamic Income Funds 17,364 406,890 117,392 2,209,003 7,889,482 11,000,000 95,720 2,006,000 1,810,000 800,000 3,683,029 338,202 3,337,387 3,950,857 105,378,671 491,000 2,000,000 9,986,501 2,000,000 2,342,117 100,000 2,489,771 1,000,000 400,000 3,359,679 300,000 523,148 1,003,000 650,000 1,443,540 409,000 106,672 12,805 138,528 20,000 250,000 50,000 30,000

(Rupees in '000)

10.00 10.00 10.00 10.00

200 2,500 500 300

3,912 3,287 1,150 579 8,928

10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 4,193.83 8.56

20,060 18,100 8,000 36,830 3,382 33,374 39,509 1,053,787 4,910 20,000 99,865 20,000 23,421 1,000 24,898 10,000 4,000 33,597 3,000 5,231 10,030 6,500 14,435 4,090 1,067 53,702 1,186

269,001 78,803 7,619 46,634 44,831 192,199 69,785 1,710,520 4,227 25,000 99,865 91,564 158,093 1,000 33,593 75,073 23,230 53,318 88,111 113,580 301,337 32,800 10,936 4,090 24,966 53,702 15,422 3,629,299 78,895 110,000 275,082 463,977 5,000 38,386 7,201 114,075 164,662

10.00 10.00 3,892.00

78,895 110,000 275,082

100.00 500.00 50.00 50.00

1,736 203,445 5,870 110,450

114

United Bank Limited

[ Annexure 'A' as referred to in note 9.8 of Bank's Unconsolidated Financial Statements ]


2) Particulars of Investment held in unlisted companies
Investee Percentage of holding (%) Number of shares / certificates held Breakup-up value per share Paid up value per share Cost Based on audited accounts as at Name of Chief Executive

(Rupees) Shareholding more than 10% Pakistan Agricultural Storage & Services Corporation Limited World Bridge Connect Inc. Cinepax Limited Khushhali Bank Limited Shareholding upto 10% First Women Bank Limited National Institutional Facilitation Technologies (Pvt.) Limited National Investment Trust Limited News - VIS Credit Information Services (Pvt.) Limited Techlogix International Limited 4.7% 4.4% 32,500 4,455,829 (2) 3 8.4% 8.3% 914,093 79,200 53 12,310 8.9% 2,532,000 37 18.3% 18.1% 14.6% 5,500 1,979,295 5,037,200 20,953 5 12

(Rupees)

(Rupees in '000)

1,000 10 10

5,500 77,606 50,372 200,000

31-Mar-09 30-Jun-10 31-Dec-09

Maj Gen Sohail Shafkat Gurojot Singh Khalsa Arif Baigmohamed Ghalib Nishtar

11.7% 20,000,000

10 10 100 10 0

21,100 1,527 100 325 50,703

31-Dec-09 30-Jun-10 30-Jun-10 30-Jun-10 31-Dec-09

Ms Shafqat Sultana M. M. Khan Wazir Ali Khoja Faheem Ahmad Mr.Salman Akhtar & Kewan Khawaja (Co Chief Executive)

Equity Participation Fund Kay Textile Mills Limited SME Bank Limited SWIFT MasterCard Incorporated The Benefit Company B.S.C

1.7% 1.7% 0.0% 0.0% 0.0%

27,000 377,800 3,975,003 25 461 80

665 10 293,090 2,324 -

100 10 10 0 -

2,700 3,778 26,950 2,905 0 1,817 445,382

31-Dec-08 31-Dec-09 31-Dec-09 31-Dec-09 -

Syed Shabahat Hussain (Executive Director) R. A. Chughtai Lazaro Campos Ajay Banga Abdul Wahid Janahi

Annual Report 2010

115

[ Annexure 'A' as referred to in note 9.8 of Bank's Unconsolidated Financial Statements ]


3) Particulars of Bonds Investee Terms of Redemption Interest/Profit Principal Rate of Interest/Profit Outstanding Amount (Rupees in '000) Held for trading securities Foreign securities Abu Dhabi Islamic Bank 2015 DEWA 2016 Dexia Kommunalbank Dubai Government 2015 EMTN HSBC Bank Middle East IPIC GMTN Limited -2015 Qatar Int'l Finance - QTEL 2025 QNB Finance Limited 2015

At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity

Annually Semi Annually Annually Semi Annually Annually Semi Annually Semi Annually Semi Annually

3.746% 6.375% 1.625% 6.700% 3.000% 3.125% 5.000% 3.125%

256,917 171,278 226,262 86,816 88,683 192,005 254,245 21,199 1,297,405

Available for sale securities Government of Pakistan Islamic Bonds Govt. of Pakistan Ijara Sukuk Bonds Govt. of Pakistan Ijara Sukuk Bonds Govt. of Pakistan Ijara Sukuk Bonds

Maturity Maturity Maturity Maturity

Bi-annually Bi-annually Bi-annually Bi-annually

Weighted average yield of 6M T-Bills plus 45 bps Weighted average yield of 6M T-Bills plus 75 bps Weighted average yield of 6M T-Bills plus 0 bps Weighted average yield of 6M T-Bill plus 0 bps

272,000 750,000 2,400,000 700,000 4,122,000

Government of Pakistan - Eurobond Islamic Republic of Pakistan - 2017 - Eurobond

At Maturity

Bi-annually

6.875%

3,938,516 3,938,516

Foreign securities Atlantic Finance Limited -2014 Bank of Bahrain & Kuwait -2015 USD Bonds DEWA Sukuk - AL IJARA FRN 2013 Dubai Government AED FRN-2014 Dubai Govt EMTN-2015 USD Dubai Govt. USD FRN -2014 IPIC GMTN Limited -2020 Qatar DIAR Finance QSC-2020 State of Qatar-2030 -USD Bonds Tabreed 06 Financing Corporation FRN-2011 TAMWEEL Sukuk FRN 2013

At Maturity At Maturity At Maturity At Maturity At maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity

Semi Annually Semi Annually Semi Annually Quarterly BI Annually Semi Annually Semi Annually Quarterly Quarterly Semi Annually Quarterly

10.750% 4.500% 6M EBOR + 125bps 3M EBOR + 370bps 6.700% 6.396% 5.000% 5.000% 9.750% 6M LIBOR + 125bps 3M EBOR + 225bps

276,163 171,552 6,994,740 514,134 524,096 76,224 69,349 429,937 1,424,175 900,359 3,497,370 14,878,099

116

United Bank Limited

[ Annexure 'A' as referred to in note 9.8 of Bank's Unconsolidated Financial Statements ]


3) Particulars of Bonds Investee Terms of Redemption Interest/Profit Principal Rate of Interest/Profit Outstanding Amount (Rupees in '000) Held to maturity securities Government of Pakistan Islamic Bonds Government of Pakistan Sukuk Bond Government of Pakistan - Guaranteed Bonds Wapda Bonds - Sukuk II Sukuk Bonds Dawood Hercules Chemicals Limited Security Leasing Corporation B.R.R Guardian Modaraba K.S. Suleman Jee - Diminishing Musharika Sitara Energy Limited Sitara Peroxide Limited Pakistan International Airlines Ltd Islamic Sukkuk Bonds - Central Bank of Bahrain At Maturity Half Yearly 6M weighted avg. cutt off yield of T-Bills plus 45 Bps 6M KIBOR minus 25bps * Simple Avg. of 6 months KIBOR ask side Simple Avg. of 6 months KIBOR ask side Simple Avg. of 3 months KIBOR ask side Avg. rate of 6 Month KIBOR ask side plus 1.15% Avg rate of 3 Months KIBOR ask side plus 1.1% 6 month KIBOR plus 1.75% 3.750% 30,000 30,000 At Maturity ^ Bullet Repayment 7 equal installments starting from 2011 Quarterly Repayment after completion of 2 years Quarterly Half Yearly At maturity Half Yearly Half Yearly Half Yearly Half Yearly Quarterly Half Yearly Quarterly Half Yearly BI Annually 51,399 51,399 542,880 43,164 100,000 303,997 73,977 281,250 890,000 313,471 2,548,739

^ Principal redemption on semi annual basis after expiry of twelve months. * Average of 6 months KIBOR ask side plus 120 bps. The rental bench mark rate will be subject to a floor of 3.5% and cap of 25% per annum.

Foreign securities JSC Alliance Bank - US $ Discount Bonds JSC Alliance Bank - US $ Recovery Notes Srilanka Euro Bonds 4) Particulars of Debentures Investee

At Maturity At Maturity At Maturity

Semi Annually N/A Bi-annually

10.500% N/A 8.250%

185,756 283,812 1,714,696 2,184,264

Terms of Redemption Principal Interest/Profit Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue Overdue

Rate of Interest/Profit 12.50% 12.00% 11.00% 14.00% 14.00% 11.00% 14.00%

Outstanding Amount (Rupees in '000) 1,300 825 1,017 379 395 316 160 4,392

Public Sector SDA - Cold Storage Haripur SDA - Cold Storage Haripur Private Sector Effef Ind Limited Effef Ind Limited Khyber Textile Mills Limited Morgah Valey Limited Morgah Valey Limited

Annual Report 2010

117

[ Annexure 'A' as referred to in note 9.8 of Bank's Unconsolidated Financial Statements For the year ended December 31, 2010 ]
5) Particulars of Investments in Term Finance Certificates
Investee No. of Certificates held Paid up value per certificate (Rupees) Unlisted - available for sale Pakistan International Airlines Engro Corporation Limited Faysal Bank Limited Listed - available for sale Allied Bank Limited TFC-II Azgard Nine Limited Bank Al Falah Limited TFC II Bank Al Falah Limited TFC III Bank Al Habib Limited TFC II Bank Al Habib Limited TFC III Engro Corporation Limited TFC III Standard Chartered Bank Pakistan Limited TFC II Unlisted - held to maturity Power Holding (Pvt) Limited Pakistan International Airlines Corporation Orix Leasing Pakistan Limited Crescent Textile Mills Limited Al Abbas Sugar Mills Limited Dewan Farooq Spining Mills Limited Security Leasing Corporation Limited SME Leasing Limited Faysal Bank Limited Al-Azhar Textile Mills Ltd Bachani Sugar Mills Ltd. Bentonite (Pakistan) Ltd Blue Star Textile Mills Ltd Cast-N-Link Products Limited Frontier Ceramics Limited Khairpur Sugar Mills Limited Regency Textile Ltd Tanocrafts Ltd Tharparkar Sugar Mills Listed - held to maturity Allied Bank Limited TFC II Askari Commercial Bank Limited Askari Commercial Bank Limited Bank Al Habib Limited Faysal Bank Limited (Formerly Royal Bank of Scotland) Soneri Bank Limited IGI Investment Bank Limited Pak Arab Fertilizer (Private) Limited 1,700 7,000 46,000 53,000 60,000 3,000 26,200 44,766 46,000 22,562 4,000 4,615,800 408,867 2,000 110,000 12,000 30,000 40,000 24,000 24,000 14 14 17 16 46 28 24 22 5 129,397 43,525 40,000 5,000 22,000 999 31,083 30,000 5,000 100,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 100,000 5,000 5,000 5,000 5,000 5,000 5,000 774,670 268,894 497,020 369,054 370 1,642,964 108,958 156,227 1,754,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Total Paid up value Outstanding Amount Name of Chief Executive

(Rupees in '000) 8,500 700,000 230,000 265,000 300,000 15,000 131,000 223,830 230,000 112,810 20,000 23,079,000 2,044,335 200,000 550,000 60,000 150,000 200,000 120,000 120,000 10,845 3,765 8,449 5,905 17 46,003 2,615 3,437 8,770 646,985 217,625 200,000 25,000 110,000 4,995 155,415 150,000 8,495 702,241 230,000 940,736 273,208 224,694 15,061 133,307 228,860 229,724 113,220 5,000 1,223,074 23,079,000 2,043,518 166,667 99,985 36,000 37,472 60,937 30,000 120,000 5,418 25,500 3,417 3,392 2,549 1,965 2,783 6,165 537 26,238 25,751,543 646,352 217,146 199,600 24,940 82,346 4,984 38,838 141,000 1,355,206 Captain Muhammad Aijaz Haroon Asad Umar Naved A. Khan Khalid A. Sherwani Ahmed H. Shaikh Sirajuddin Aziz Sirajuddin Aziz Abbas D. Habib Abbas D. Habib Asad Umar Mohsin Ali Nathani Fazeel Asif Captain Muhammad Aijaz Haroon Teizoon Kisat Muhammad Anwar Shunaid Qureshi Dewan Abdul Baqi Farooqui Mohammad Khalid Ali Mrs. Arjumand Qazi Naved A. Khan Mirza Muhammad Azhar Baig Noorul Amin Bachani Khalid Shakil Chaudry Ghulam Farid Nisar Ahmed Omer Khalid Mubeen Jumani M. Iqtidar Pervaiz Ashfaq Hussain Irfan Ali Shah Khalid A. Sherwani Mohammad Rafiquddin Mehkari Mohammad Rafiquddin Mehkari Abbas D. Habib Naved A. Khan Atif A. Bajwa Syed Javed Hassan Fawad Ahmad Mukhtar

6) Particulars of Participation Term Certificates Investee No. of Certificates held 17 14 15 11 16 44 12 Paid up value per certificate Total Paid up value Outstanding Amount (Rupees in '000) 2,144 3,897 889 2,523 436 6,955 2,358 19,202 Name of Chief Executive

Brother Steel Industries Limited Crystal Chemicals Limited Leatherite Limited Mass Dairies Limited Morgah Valey Limited Pangrio Sugar Mills Limited Zamrock Fibers Glass Limited

(Rupees) 108,024 2,144,313 145,933 3,897,000 22,200 888,603 136,818 2,523,000 29,250 436,414 64,000 11,198,023 32,833 2,358,000

Mian Yousuf Aziz Maqsood A. Shaikh Mian Mohammad Akhtar Paganwala Air Marshal A. Rahim Khan Aftab Ahmed -

118

United Bank Limited

[ Annexure 'A' as referred to in note 9.8 of Bank's Unconsolidated Financial Statements For the year ended December 31, 2010 ]
7) Quality of Investments classified as Available For Sale (AFS) Investee Market Value
(Rupees in '000)

Credit Rating

Investment in ordinary shares Adamjee Insurance Company Limited Arif Habib Corporation Limited Atlas Fund Of Funds Bank Al-Falah Limited BOC Pakistan Limited D.G. Khan Cement Limited Engro Polymer & Chemicals Limited Fauji Cement Company Limited First Dawood Mutual Fund Hira Textile Mills Limited IGI Investment Bank Limited Jahangir Siddiqui & Company Limited KASB Securities Limited Kohat Textile Mills Ltd Lotte Pakistan PTA Limited National Bank Of Pakistan Nishat Mills Limited Nishat Power Limited Pak Oilfields Limited Pakistan Petroleum Limited Pakistan State Oil Company Limited Pakistan Telecommunication Company Limited Sakrand Sugar Mills Limited Saritow Spinning Mills Limited Shell Pakistan Limited Visa Inc. DP World Investments in preference shares Chenab Limited. Masood Textile Mills Limited JSC Alliance Bank Investments in units of mutual funds AMZ Plus Stock Fund Atlas Stock Market Fund Faysal Balance Growth Funds Meezan Islamic Income Fund 7,040 26,827 8,926 113,366 156,159 2-Star 3-Star 5-Star A(f) 19,724 110,000 129,724 Unrated 175,525 45,051 3,664 41,287 30,810 100,689 56,379 575,600 982 7,800 29,260 21,800 10,469 140 34,110 76,820 25,668 54,528 88,788 113,602 296,066 12,636 4,331 818 22,211 77,078 7,438 1,913,550 AA AA 2-Star A AA A AAA A+ AAAA+ -

Annual Report 2010

119

[ Annexure 'A' as referred to in note 9.8 of Bank's Unconsolidated Financial Statements ]


7) Quality of Investments classified as Available For Sale (AFS) Investee Cost
(Rupees in '000)

Credit Rating

Investment in unlisted shares Shareholding more than 10% Khushhali Bank Limited World Bridge Connect Inc. Cinepax Limited Pakistan Agricultural Storage & Services Corporation Limited National Investment Trust Limited Shareholding upto 10% National Institutional Facilitation Technologies (Pvt.) Limited Techlogix International Limited SME Bank Limited First Women Bank Limited Kay Textile Mills Limited SWIFT Equity Participation Fund News - VIS Credit Information Services (Pvt.) Limited MasterCard Incorporated The Benefit Company B.S.C Particulars Federal Government Securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan Islamic Bonds Government of Pakistan Ijara Sukuk Government of Pakistan - Euro Bond Islamic Republic of Pakistan - 2017 - Euro Bond Foreign securities Atlantic Finance Limited -2014 Bank of Bahrain & Kuwait Bond - 2015 DEWA Sukuk Al Ijara FRN Dubai Government AED FRN-2014 Dubai Govt EMTN-2015 USD Dubai Govt. USD FRN -2014 IPIC GMTN Limited -2020 Qatar DIAR Finance QSC-2020 State of Qatar-2030 -USD Bonds Tabreed 06 Financing Corporation FRN-2011 TAMWEEL Sukuk 2013 FRN 200,000 77,606 50,372 5,500 100 1,527 50,703 26,950 21,100 3,778 2,905 2,700 325 0 1,817 445,382 Market Value (Rupees in '000) 60,159,266 17,586,966 77,746,232 4,122,000 3,947,801 278,112 171,870 6,749,924 552,743 521,476 84,372 68,568 428,224 1,348,894 696,881 2,710,462 13,611,525 Aunrated unrated unrated AM-DS unrated unrated BBB BBB+ unrated unrated unrated unrated unrated unrated Credit Rating

Unrated - Govt Securities Unrated - Govt Securities

B- (S&P) B- (S&P) B1 (Moody's) A3 (Moody's) Ba2 (Moody's) Un-rated N/A Un-rated Aa3 (Moody's) AA AA CCC+ (S&P) Baa3 (Moody's)

120

United Bank Limited

[ Annexure 'A' as referred to in note 9.8 of Bank's Unconsolidated Financial Statements ]


7) Quality of Investments classified as Available For Sale (AFS) Particulars Market Value
(Rupees in '000)

Credit Rating

Term Finance Cerificates Listed Allied Bank Limited TFC-II Azgard Nine Limited Bank Al Falah Limited TFC II Bank Al Falah Limited TFC III Bank Al Habib Limited TFC II Bank Al Habib Limited TFC III Engro Chemicals Pakistan Limited - TFC III Standard Chartered Bank Pakistan Limited TFC II Un Listed Pakistan International Airlines Engro Chemical Pakistan Limited Faysal Bank Limited

259,892 224,694 14,795 128,396 222,418 230,149 110,494 4,993 1,195,832 8,495 702,241 230,000 940,736

AACCC(RW) AAAAAA AA AA AAA

Unrated AA AA-

Annual Report 2010

121

122
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 2,640 1,584 2,300 Total 2,640 2,535 5,175 6,524 Sufi Khurshid Ahmed (Deceseed) Sufi Khurshid Ahmed (Deceseed) Sufi Khurshid Ahmed (Deceseed) Sufi Khurshid Ahmed (Deceseed) 35200-1529763-1 35202-2657225-1 35202-0251493-1 35202-3541828-6 35202-8574317-2 32301-7871996-1 42000-0386072-5 32301-9055437-6 42301-6871316-0 42301-9415323-5 42301-7891091-1 Siraj Jackwala Omar Daraz Feroz Khan Omar Daraz A.Hameed Paracha 136,889 136,889 1,889 60,428 62,317 422013-052098-1 422019-829197-9 42201-0447768-3 42301-7734356-7 Akber Ali Akber Ali W/O Akber Ali D/O Akber Ali Fazal Ahmed Sh. Mian Muhammad Tahir Jehangir W/O Tahir Jehangir Tahir Jehangir 33,080 25,615 148,000 148,000 23,000 64,900 87,900 58,695 25,080 679 24,936 50,695 4,117 4,850 8,967 3,067 9,250 12,317 6,000 6,000 1,166 1,166

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

Apex Fabrics Limited Chunian Disttt. Kasur

Iftikhar Ahmed Nafees-Ur-Rehman Mubashir Baig Barlas Mubarak-Un-Nisa Muzafar Baig Barlas Nisar Ahmed Nasreen Mirza

Saga Sports (Pvt) Limited Daska Road, Sialkot

Mussarar Khurshid Aanum Khurshid Mehreen Khurshid Zainab Khurshid

Hala Enterprises Hala Group 120/E/1, Gulberg-III, Lahore

Tahir Jehangir Fazal Ahmed Jellani Jehangir Saleema Jehangir Munezay Jehangir

Akbarali Yousufali Rambhari Street, Jodia Bazar, Karachi

Sirajuddin Jackwala Moizuddin Kulsoom Nafeesa Ali Asghar Abass Ali

Adam Motor Co. Ltd. DSU - 10, 11, Pakistan Steel Industrial Estate, Bin Qasim, Karachi

Ferozuddin Khan Omar Khan Khan Muhammad Ilyas Shahid Hameed Paracha

Safa Textile Traders 10-B Model Town Lahore

Fazal Qadir (Prop)

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 11,991

Total

Sajjad Textile Mills Ltd Gulberg V,Lahore.

Mehr Allah Yar Sultan Mahmood M.Asim Sajjad Salman M.Aslam Muhammad Amjad Miss Batool Zahra Aftab Anwar 36302-0452624-9 305 302 -

38403-9701620-5 38403-2214042-1 35202-7748317-9 35202-1081956-7 33100-3065319-1 35202-4509799-2 38403-4061922-5

Mehr Ahmed Yar Muhammad Iqbal Sajjad Aslam Sajjad Aslam Muhammad Saeed D/O Ghulam Hussain Muhammad Anwar

75,976

75,976

11,991

Atlantic Carpet Corporation 1347-C/II Outside Pak Gate, Mohallah Kari Dawood Khan, Multan Ghulam Nabi Butt N.A N.A N.A Sh. Daulat Ali Sh. Amir Ali N.A N.A Ghulam Nabi Butt Ghulam Nabi Butt Ghulam Nabi Butt Abdul Majeed (Deceased) W/O Shamsuzaman Shamsuzaman W/O S.Jamil Chaudhryghulam Mohiuddin Malik Mohammad Umer Khan 5,581

Abdul Sattar Nasir

607

788

788

Ali Paper & Board Industries Ltd. 27-KM Lahore Sheikhupura Road, Lahore

Farooq Alam Butt Siraj Din Butt Asad Akhtar M. Saleem Lone Sheikh Amir Ali Sheikh Amir Haider Syed Nisar Ahmed Ghulam Nabi Butt Maqbool Alam Butt Sheikh Yawar Hussain Sheikh Mahmud Hussain

2,070

7,651

5,581

1,666

13,026

20,272

10

State Textile Pvt. Ltd. 3/3-C & B-3/75, Shah Faisal Colony, Karachi.

Shamsuzaman (Deceased) Shamsa Zamani Begum Yasmin Zaman Safdar Jamil(Alias Afshan Jamil) Chaudhry Abdul Majeed 17101-0301470-5

3,655

591

4,246

12,974

12,974

Annual Report 2010

11

Malik Johar & Co Khan Main Bazar Akora Khattak

Malik Mohammad Johar

1,527

1,527

458

133

591

123

124
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 2,366 2,491 2,680 Total 2,366 5,170 7,536 7,536 641-86-180578 508-29-187330 Mian Khan Baloch Haroon 1,483 1,855 3,338 333 1,855 4,093 6,281 31202-3240434-9 Malik Muhammad Buksh 13,000 13,000 5,179 5,179 35202-3050439-5 42201-0268648-7 35202-2778956-0 Muzzaffar Din Peracah Muzzaffar Din Peracah Azhar M.Peracha 101,260 3,184 104,444 3,411 41,195 44,606 91509-0129384-1 Muhammad Abdul Sattar W/O Pervwez Sattar 16,404 1,197 17,601 16,404 1,197 26,786 44,387 502-44-196787 519-88-062463 210-38-394291 Ghulam Haider Qazi Muhammad Ahmeddin Gul Baz Khan 30,749 30,749 30,749 21,476 52,225 368 326 694 1,599 1,599 53404-4677397-3 53404-4678442-3 53404-1494561-5 53202-8920388-9 Pir Buksh Haji Safar Uddin Muhammad Yakoob Fazal Muhammad 24,998 24,998 2,871 2,871

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

12

Alley Hosiery Mills Ltd. 26-D Sanda Road, Lahore

Fazal Elahi Malik (Deceased) Fahmida Malik (Deceased) Sheikh Ghulam Nabi Dr. Bhawal Din Tasneem Ahmed

13

Al-Madina Dairy Farm F-1220, Soomar Village, Hub River Road, Karachi

Ali Muhammad Sajid (Prop) Muhammad Hussain (Mortgagor) (Deceased)

14

Khalid Flour Mills Khanewali Road, Near Wapda Grid Station, Bahawalpur

Malik Muhammad Khalid (Prop.& Mortgagor)

15

Habib Jute Mills Ltd Rehman Plaza,4th Floor, Shahrah-e-Fatima Jinnah, Lahore.

Azhar M.Peracha Javaid M. Peracha Munize Azhar Peracha

16

Faisalabad Lubricant Pvt. Ltd. HAK # 232/R, Resalewala Railway Station, Faisalabad

Perwez Sattar Farhat Sattar

17

Index Commodities Pvt. Ltd. Syed Hussain Abbas Rizvi C-116, Block-2, Muhammad Akbar KDA Scheme # 5, Kehkashan, Naseem Baz Khan Clifton, Karachi

18

Munro & Miller Pakistan Ltd

Yousuf Shaheen Daud Pota M. Saleem Daud Pota K. A. Daud Pota

19

Saleem Flour Mills Mir Wah Road, Jaffarabad, Quetta

Haji Safar Uddin Saleem Akhtar Niaz Muhammad Faiz Muhammad

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 78,561

Total

20

Faruki Pulp Mills Ltd. Mangowal, Tehsil & Distt. Gujrat

Mian Majeed A. Faruki Maj. Nasim Faruki Kaleem A. Faruki Naeem A. Faruki Salim A. Faruki Abdul Sami Parvaiz Aslam Faruki Chaudhry Mehdi Khan Chaudhry Ghulam Mustafa Ahmed Din Kh. Muhammad Safdar W/O Kh. Muhammad Asif Chaudhry Javed Mehdi W/O Chaudhry Mehdi Khan 300-92-187272 300-31-265847 300-26-413252 35202-1675404-3 Shahbaz Din Muhammad Zafar Ellahi Rashad Waseem Rashad Waseem 674 2,320 918 -

34201-0453242-5 34201-0350518-3 35201-1513228-7 35201-1425526-3 35202-7905561-1 35202-4367455-7 35201-6788982-5

Mian Mohammad Akbar Faruki Mian Mohammad Akbar Faruki Mian Mohammad Akbar Faruki Mian Mohammad Akbar Faruki Mian Mohammad Akbar Faruki Mian Abdus Samad Aslam Riaz Faruki

17,550

19,234

36,784

78,561

21

Sialkot Dairies Ltd. 15-KM, Botra Badiana Road, Village, Baidpur, Distt. Sialkot.

Chaudhry Javed Mehdi Chaudhry Mehdi Khan Ehsan Elahi Qureshi Kh. Muhammad Asif Mussarat Asif Naseem Akhtar Ghulam Fatima

3,238

2,320

228

2,361

4,909

22

County Craft Pvt. Ltd. Shahabpur, PO Box # 523, Ugoki Road, Sialkot.

Rashad Waseem Sana Rashad Nusrat Rashad

77

751

748

748

23

Hayyab College Of Commerce Muhammad Arif Imran Hassan Bin Sabat Road, Kasur 421-43-022543 42000-0554567-1

3,000

3,000

928

928

24

Auto Care Industries Pvt. Ltd. Mukhtar Ali Samejo 13/2/A, Khayaban-e-Tanzeem, Suresh Gangwani DHA, Karachi. 42301-1167498-1 42301-4465954-9

Ghulam Nabi Permanad Gangwani

4,187

1,189

5,376

4,187

1,189

569

5,945

25

Medisure Laboratories Pakistan Pvt. Ltd. Dr. Kaiser Waheed Super Highway, Karachi Shabnum Kaiser Raheel Kaiser

M. Anwar Magoon W/O Dr. Kaiser Waheed Dr.Kaiser Waheed Saeed Mohammad Cheema

26,454

26,454

8,786

8,786

Annual Report 2010

26

Associates Fisheries Corporation 3rd Floor, Nadir House, I.I.Chundrigar Road, Karachi

M.M.A. Cheema (Deceased)

983

1,472

2,455

983

245

1,226

2,455

125

126
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 2,004 3,256 11,506 Total 2,004 3,256 5,260 16,766 16101-0718794-7 Syed Muzzaffar Shah 1,735 486 2,221 1,735 486 2,221 702 66 768 337 2,901 3,238 41304-2921447-1 41304-3981737-9 Maqsood Ahmed Khan Maqsood Ahmed Khan 14,182 14,182 2,940 2,940 Late Ataullah Khan M. Mohiuddin Ali Rauf Late Abu Muhammad Late Shirazi Bamdad Dr.Mustafa Shakeel Rauf W/O Dr.Amanullah Khan W/O Shahbaz Shirazi Muhammad Qasim Muhammad Qasim M. B. Ahmed 511 519 1,030 511 383 2,759 3,653 726 473 1,198 582 92 1,844 2,518 34101-6631877-3 Chaudhry Hidyatullah 2,622 2,622 664 664

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

27

Nasim Steel Mills Mominpura Road Daroghawala, Old G.T. Road, Lahore

Mian Muhammad Aslam Kishwar Begum Saeeda Riaz Zahid Naeem Muhammad Zaman Khan

28

Syed Munawar Shah Village Shabaz Bacha Killi Mardan Tehsil & District Mardan.

Syed Munawar Shah

29

National Woolleen Mills Shershah Point, University Road, Dera Ismail Khan

Haji Sher Shah Tariq Jamil Jehangir Shah Jehanzeb Khan Muhammad Arshad

30

Al-Noor Enterprises 160/A, Block-C Unit # 2, Latifabad, Distt. Hyderabad

Waseem Maqsood Farhan Maqsood

31

Hospitex International Products Ltd. Plot # A-421 S.I.T.E. Nooriabad, Sindh

Dr. Amanullah Khan Dr. Mustafa Shakeel Rauf Mohiuddin Ali Rauf Shahbaz Shirazi Ayesha Rauf Jamila Amanullah Khan Asima Shirazi

32

Scan Recycling Pakistan Ltd. Hub Industrial Estate, Lasbella, Balochistan

Mazhar-Ul-Haq Amin Mukaty Fauzan Qasim Ishtiaq Ahmed Khan M.Salim Ahmed Khurshid Ahmed

33

Bismillah Cold Storage Kutcha Paya, Vanianwala, Sialkot Bye Pass, Gujranwala

Riaz Ahmed Cheema

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 3,141

Total

34

Byte Links Flat # 17-21, Shoukat Plaza, Shahrah-e-Hazara, Haripur 33100-0783448-5 270-31-521137 514-58-124971 2,531 Late Zafarullah Khan W/O Kaleemullah Khan 2,528 4,723 Zahoor Ahmed W/O Zahoor Ahmed W/O Dr. Bilal Ahmed 9,500 -

Shoukat Zeb Shahzad Shamim Adil Zeb

122-88-203514 122-59-368740

Aurang Zeb M. Ashraf Khan Aurang Zeb

2,591

2,591

3,141

35

Zahoor Industries Adil Chowk, Sargodha Road, Faisalabad

Dr. Bilal Ahmed Naseem Zaheer Yasmin Bilal

9,500

3,863

3,863

36

Mukhtar Industries

Khawaja Mukhtar Hassan (Deceseed)

2,531 7,251

2,531 -

13,932 16,958

16,462 16,958

37

United Wood Works & Allied Ind. Pvt. Ltd. 37-Garden Road, Saddar, Karachi 34302-9276121-3 Muhammad Khan 3,746

Kaleemullah Khan Marium Khan

38

Dhudhal Precasting Muhammad Abbas Hafizabad Road, Jalalpur Bhattian, Near Peelo Kharal, Hafizabad.

3,746

778

667

1,445

39 35200-1529763-1 Abdul Ghani Mian Fazl-E-Ahmed

Teejays Corporation Pvt.Ltd. 120-E/1, Gulberg-III, Lahore

Mian Fazl-E-Ahmed Mian Tahir Jahangir

4,895

4,895

6,515

6,515

40

Zafar Islam & Company New Ghallah Mandi Sialkot 36301-0707589-3

Zafar Islam (Proprietor) (Deceseed) 34606-2295752-3

499

499

1,068

1,068

41

Asghar Ali Basti Manik Wali, P.O Ghazi Pur 33100-5610186-9

Asghar Ali

Muhammad Ramzan

5,000

5,000

592

592

42

Al-Inayat International 198-A, Sir Syed Town 3, Dijkot Road, Faisalabad 33100-4887088-3 33102-1778457-5

Muhammad Arif

Muhammad Rafiq

6,000

6,000

855

855

43

Al-Arsh Engineering Ahmed Lodge, Khayaban Colony, Faisalabad

Abdul Hayee (Deceseed) Ahmed Kamal

Chaudhry Ghulam Ahmed Abdul Hayee

2,000

2,000

811

811

Annual Report 2010

44

Mian Ikram Ul Haq House No.94,Khayabana Sehar, Phae 6, Defence Street 28,DHA, Karachi

Mian Ikram Ul Haq

42301-0886200-5

Mian Asghar Ali

37,051

4,060

41,111

1,367

1,367

127

128
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 1,145 Total 35200-1549664-5 Sheikh Nazir Hussain 17,103 17,103 1,145 42201-7448160-4 Nizamuddin 300 103 403 176 464 640 Sarfraz Khan 2,900 2,900 900 900 41303-8738635-9 Muhammad Imran 721 264 110 1,094 206 264 110 579 42501-8176797-5 Ali Asghar Bhatti 676 151 273 1,100 155 151 273 580 35201-1649246-3 Lal Din Butt 496 195 304 995 114 195 304 613 42201-5533300-5 Syed Zul Hussain 475 376 62 913 75 376 62 513 35202-1975429-3 Din Muhammad 500 448 34 983 110 448 34 593 33100-6786141-5 2,715 681 5 3,401 646 4 650 42301-8646639-1 3,411 759 4,170 759 759

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

45

Aslam & Company Siraj Din Park, Amir Road, Shadbagh, Lahore.

Aslam Hussain

46

Yasmeen Begum O-44, Sector O, Korangi, Karachi

Yasmeen Begum

47

Muhammad Akbar Ghanipur

Muhammad Akbar

48

Aijaz Ahmed Aijaz Ahmed By Pass Hyderabad Hala Naka

49

Muhammad Azam Plot Survy # 16 Road # 10 Cattle Colony

Muhammad Azam

50

Mukhtar Ahmed Gulistan Colony No 1, St No 5, Walton Road

Mukhtar Ahmed

51

Syed Zameer Haider House No-69-B Block-2 Gulshan-e-Iqbal Karachi

Syed Zameer Haider

52

Javed Hussain Kachi Kothi, Allaqa Nawab Sahib, 2-KM, Raiwind Road Lahore Lahore

Javed Hussain

53

Muhammad Aslam Muhammad Aslam P-216, Street No. 15, Model Town B, Near Fawara Chowk,

54

Ibrar Hussain Imaging Technologies Pvt Ltd Wheel House 30-C No.1 Baddar Commercial Area Phase 5

Ibrar Hussain Naqvi

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 450 37 26

Total

55

Hameeda Al Hamd General Store Shop No 5 Adeel Mini Square Block 7 Aisha Manzil F B Area, Karachi 42301-4631902-6 Rashid Ahmed 431 57 36

Hameeda

42101-1616682-6

Saleem Abbas

450

37

26

513

513

56

Shagufta Jabee SS Traders 1St Floor H No 34/1 Khayaban-E-Tanzim Phase 5 DHA, Karachi 35202-2114013-9 Sh M Shafiq 455 44

Shagufta Jabee

524

431

57

36

524

57

Tabassum Shafiq Sultan Motors 24/3 Jail Road 35202-1714514-5 Khushi M Akhtar 477

Tabassum Shafiq

16

515

455

44

16

515

58

Fahad Akhtar Fahad Corporation 179 Block M Gulberg III 37405-2850156-7 Ejaz Ahmed Minhas

Fahad Akhtar

24

18

518

477

24

18

518

59

Fayyaz Ahmed Minhas Minhas Chemist 13-Chishitiabad Saidpur 37405-3325896-3 Muhammad Ishaq

Fayyaz Ahmed Minhas

490

41

19

550

490

41

19

550

60

Shamraiz Khan Shamraiz Khan Hassan Garments Shop No B-343 Satellite Town Commercial Market, Rawalpindi 37405-0273616-7

499

62

18

580

499

62

18

580

61

Talib Hussain Talib Hussain H-P-988 D/1 Mohallah Angatpura Said Pur Road Near Tariq Bakery, Rawalpindi 35201-3564531-9

Shamshad Hussain

498

47

44

588

498

47

44

588

62

Faisal Rehmat Faisal Rehmat Rehmat Market Harbans Pura Cantt

Malik Rehmat Ali

480

48

22

550

480

48

22

550

Annual Report 2010

63

Irfan B Qureshi Cafe Zouk Canodies Internatioa S 9/10 Ijaz Centre Main Boulevard Gulberg III

Irfan B Qureshi

61101-5867215-3

Abdul Ghafoor

499

65

22

586

499

65

22

586

64

Muhd Naveed Muhd Naveed Shop # 2 E-18/5 Khayaban-E-Jami Clifton Near Furniture 4 U

42201-0552784-7

Muhammad Naseem

490

42

19

552

490

42

19

552

129

130
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 497 40 21 Total 33100-8536155-5 Ch Saif Ur Rehman 497 40 21 558 558 35202-2680499-9 Malik Hassan Ahmed 481 35 19 535 481 35 19 535 35201-2615522-7 Saleem Akbar Farooqi 433 52 24 509 433 52 24 509 42201-0320956-7 Fakar Uddin 494 46 22 561 494 46 22 561 42201-7061810-3 Abdul Jabbar 476 65 20 561 476 65 20 561 35200-1454124-1 Ch Riasat Ali 494 59 26 579 494 59 26 579 42201-0361123-1 Mohammad Siddiq 478 37 18 533 478 37 18 533 35200-1510430-9 Ch Ghullam Murtaza 498 58 24 580 498 58 24 580 35201-8820070-3 Hameed Ullah 500 53 21 573 500 53 21 573

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

65

Aziz Anjum Anjum Weaving Factory P-1421 St No 3 Fiaz Abad

Aziz Anjum

66

Malik Mohammad Ayub Madina Corporation 8/9 Ali Park Thokar Niaz Baig Multan Road

Malik Mohammad Ayub

67

Kashif Ali Akz International 71-C-3 Gulberg III

Kashif Ali

68

Zeeshan Fakhar Zeeshan Fakhar Khawaja Electronics Amir Elec Mark Shop No 11 12 Surahab Khata Road Saddar

69

Mohammad Farooq Parekh Plastic Ent Ground Floor Am-4 Madina Bldg Burns Road

Mohammad Farooq

70

Zulfiqar Mehmood Inter System E-14/5 Kora Chowk Walton Road

Zulfiqar Mehmood

71

Humayun Siddiq Humayun Siddiq Shop No-9 Amijee Valijee Bldg Shahrah-E-Liaqat New Challi

72

Chaudhry Abid Ali Chaudhry Abid Ali Steel Traders 27/A Peco Road Badami Bagh Nr Baf

Chaudhry Abid Ali

73

Chaudhry Azhar Hameed Madina Motors Charaghia Market Defence Chowk Walton Road

Chaudhry Azhar Hameed

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 498 55 16

Total

74

Naeem Sadiq New Arif Zari House Sultania Centre Shop No 18 St No 7/10 Munshi Muhalla 42301-3516141-9 Abdul Aziz 54 478

Naeem Sadiq

33100-0866720-5

Sadiq Ali

498

55

16

570

570

75

Muhammad Rizwan Music Inn Plot No 10-C Phase 2 Ext Sunset Lane 4 DHA 33100-4119030-5 Abdul Razzaq 498 63

Muhammad Rizwan

532

54

478

532

76

Adeel Razzaq Adeel Razzaq Ahmad Adeel Cloth Room No 14 2Nd Floor Amin Plaz Muhammadi Makki Trail Bazar 42301-1061080-9 M Latif Khan 478

20

581

498

63

20

581

77

Mohammad Iqbal Khan Tni Group Plot No 26-C 1St Floor Stadium Lane No 1 DHA Phase 5 33100-0868498-5 Abdul Sattar

Mohammad Iqbal Khan

14

18

509

478

14

18

509

78

Rahat Javed Qaiser Enterprises P-163 Sabzi Mandi 35202-7365915-3 Mohd Nazir

Rahat Javed

440

57

18

515

440

57

18

515

79

Muhammad Nazim Malik Noor Autos 85-Lytton Road Lahore 42301-3716809-3

Muhammad Nazim

478

59

19

557

478

59

19

557

80

Imran A Dhamee Imran A Dhamee Gac Shipping Pvt Ltd Ground Floor U/6 7 Trade Tower Abdullah Haroon Road Saddar 37401-4151088-1

Amir Hussain Dhamee

474

22

503

474

22

503

81

Raja M Tariq Raja M Tariq New Modren Way Dry Cleaner Shop No 11 Mehran Centre Blk 2 Plot No 10-A Clifton 61101-9641807-9

Raja Muhammad Ashraf

490

43

19

553

490

43

19

553

82

Qaisar Shahzad Qaisar Shahzad Jamil Perfumery Sh No 01 None Bohar Bazar

S Muhammad Sharif

491

40

19

550

491

40

19

550

Annual Report 2010

83

Malik Shahzad M-Y Model High School 36 Empress Park Bibi Pak Daman

Malik Shahzad

35202-1410699-7

Malik Muhammad

458

60

19

537

458

60

19

537

131

132
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 472 24 13 Total 35202-8576098-9 Ghulam Rasool 472 24 13 509 509 42201-0431076-9 Mohammad Ali Khan 485 51 22 558 485 51 22 558 35202-2808334-5 Taj Uddin 489 40 20 550 489 40 20 550 35201-1583333-1 Mian Abdul Hamid 408 57 39 504 408 57 39 504 35201-1617927-1 Malik Barkat Ali 498 62 20 579 498 62 20 579 42101-9818544-5 Sharkand Badshah 603 132 27 762 603 132 27 762 42201-0778608-5 Qamar ul Islam 479 25 30 533 479 25 30 533 37405-0246757-7 Sardar Alam Khan 1,152 300 99 1,551 1,152 300 99 1,551 42101-4192171-9 Javed Anwer Lari 458 59 17 534 458 59 17 534 42201-9977204-9 Anjum Mushtaq 461 55 54 570 461 55 54 570

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

84

Tariq Mehmood Rana And Sons Garments Plot No 46 St No 4 Toheed Park,Mugalpura

Tariq Mehmood

85

Hussain Ali Khan Powerrex Computers,A-148 Blk 2 Gulshan-E-Iqbal Near Rub Medical Centre

Hussain Ali Khan

86

Moazzam Masaud Moazzam Masaud Pentagon Engineers Traders Office No 234 Abid Chamber Fatima Jinah Road Lahore

87

Haroon Ur Rashid M A H Rice Mill Pvt Ltd 433 M Block Model Town Extension

Haroon Ur Rashid

88

Malik Muhammad Ali Malik Muhammad Ali Al Hamd Mobiles Shop No 18 Royal Arcade Ferozpur Road Qanchi Amer Sidhu

89

Zahir Khitab Asmacs Agency M-14 Mezzanine Floor Corniche Residenc Blk 2 Clifton

Zahir Khitab

90

Nazar Ul Islam Saif Enterpries A-756 Eo Society Abul Hasan Asphahni Road

Nazar Ul Islam

91

Sohail Alam Khan Photo Stat Point Shop No 2 Basement Nazar Plaza Commercial Market

Sohail Alam Khan

92

Adnan J Lari United Bank Limited Dept Sales Manager 8Th Flor Slic Bldg No 1 I Chu

Adnan J Lari

93

Farhan Anjum Farhan Leather M-86 Mzn Floor Munir Paradise Block 17 Gulistan-E-Johar

Farhan Anjum

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 400 95 40

Total

94

Shahid Rashid Shahid Rashid H# 94-B, Street#7 I- 10/ 3 Islamabad 42301-4807797-3 Mohammad Farooq 499 66 23

42501-6563666-7

Choudhry Abdul

400

95

40

535

535

95

Sohail Farooq Farooq Sons Suit 905 9T Flr Al Raheem Towe I I Chundrigar Road 35201-1488777-9 Mian Ghulam Ahmed 432 27

Sohail Farooq

587

499

66

23

587

96

Shoaib Ahmad S S Group Of Companies 31 Km Multan Road Near Sundar Lahore 42000-0422308-7 Gul Mohammad Essa 452

Shoaib Ahmad

47

506

432

27

47

506

97

Muhammad Jaffer G M Universal Tractor Pakistan Pvt.Ltd 172-G Ahmed Shopping Mall Pechs Block-2 Main Tariq Road 42201-0855118-5 Shaikh Mushtaq

Muhammad Jaffer G M

54

21

528

452

54

21

528

98

Shaikh Rehan Ellahi Shaikh Rehan Ellahi Link.Net Franchise Shop No 2 Ground Floor Gul Tower I I Chundrigar Road 42201-0430019-9 Wahid Bakhsh

457

60

21

538

457

60

21

538

99

Ghous Bakhsh Ghous Bakhsh Shfay Inter National Shop No 30 Navy Heights Near Kalla Pul 33100-7997516-1 Safdar Azeem

875

231

40

1,146

875

231

40

1,146

100

Muhammad Akram Data Steel Works Shop Sh No 201 Naya Pathak 84/A Resala Road Samanabad 33100-1585852-3

Muhammad Akram

499

56

24

579

499

56

24

579

101

Bilal Iqbal Al-Mustafa Centre Basement Shop # 7 Street # 3 Montgomery Bazar 35202-1195924-5

Bilal Iqbal

Sheikh Muhammad Iqbal

447

50

14

511

447

50

14

511

Annual Report 2010

102

Azam Ali Nizam Fabrics And Zari Shop No 201-G Liberty Plaza Liberty Market Gulberg III

Azam Ali

Nazam Din

498

64

20

582

498

64

20

582

103

Sadiq Nadeem Star Carriers Rahim Steel Mill Stop Shera Ko Bund Road

Sadiq Nadeem

35202-9020972-9

Sheikh Manzoor

479

31

17

527

479

31

17

527

133

134
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 500 52 15 Total 33100-6494863-5 Sh Muhammad Iqbal 500 52 15 567 567 42201-0483211-3 Shaikh M Yousuf 483 64 21 567 483 64 21 567 37405-7470450-5 Haji Muhammad Aslam 450 35 18 503 450 35 18 503 37405-9171508-1 Sheikh M Asgher 442 54 18 514 442 54 18 514 42301-2039704-3 Capt A Q Bhurgri 499 11 22 532 499 11 22 532 42201-9474869-9 Syed Iftikhar Mehdi 429 69 22 519 429 69 22 519 34603-1792850-9 Ch Farooq Ahmed 498 49 24 571 498 49 24 571 61101-4385324-5 Manzoor Hussain 499 29 30 557 499 29 30 557 35202-2384945-9 Mian Muhammad Arshad 484 16 18 518 484 16 18 518 35202-2413206-1 Muhammad Ashraf 455 43 18 515 455 43 18 515

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

104

Muhammad Shiraz Sb International Off No 7 Basement Al Mustafa Center Street No 3 Mantgomry Bazar

Muhammad Shiraz

105

Muhammad Rashid Fabricon 407/B Anam Classic 4Th Floor DCHS Shahrah-E-Fasial

Muhammad Rashid

106

Tanveer Ahmed Future Tech Off No 2 Javed Plaza Mezz Floor Blue Area

Tanveer Ahmed

107

Sheikh Amir Asghar Traders And Mill Store Sh No 352 Babo Mohallah Saddar

Sheikh Amir

108

Nadeem Bhurgri Ubl National Sales Center Schon Circle Br Clifton

Nadeem Bhurgri

109

Syed Hassan Mehdi Shop No M 1 - 11 Hong Kong Centre Dr Daud Pota Road Saddar

Syed Hassan Mehdi

110

Imran Farooq Chema Recto Sports Pvt Ltd Daska Road Sialkot

Imran Farooq Chema

111

Mansour Hussain National Commercial Traders Flat No 8 3Rd Floor United Centre Shamsabad

Mansour Hussain

112

M Junaid Arshad M Junaid Arshad 47-C-1 Agro Square Shadman Market

113

Muhammad Ijaz Muhammad Ijaz Iqra Mobile And Customer Cente Shop No 11,30 Zaildar Road Umer Market Ichra

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 476 56 19

Total

114

Iftikhar Ahmed Iftikhar Ahmed New Abrar Jewellers Plot No 281-A Ground Flr Corp Gate Mehmoodabad Main Road 42301-3496663-3 Nawab Jam Saddiq Ali Khan 474 52 48

42301-0996052-1

Abdul Gani

476

56

19

552

552

115

Jam Saleem Ali Sanghar Farms Sanghar Farms Jam Goth Sanghar 42000-0560374-1 Mansoor Khan 479 47

Jam Saleem Ali

574

474

52

48

574

116

Saif Ul Mansoor Khan Saif Electronics Shop No G-11 Motiwala Mansion Sarmad Road Saddar 42201-8633557-5 Khan Kamal Waris 448

Saif Ul Mansoor Khan

19

545

479

47

19

545

117

Azeem Waris Khan Al Waris Traders H No 175-J Block 2 Pechs 61101-3216595-5 Ch Nizam Ul Din

Azeem Waris Khan

60

23

532

448

60

23

532

118

Chaudhry G Qumais Afaco H No 731 St No 74 None Ali Hassan Sadu Khan

Chaudhry G Qumais

483

65

19

567

483

65

19

567

119

Arabian Gulf Company P.O. Box 1922 Al Ain

Abdul Mohsin Ali Hassan Nazar Hussain Khan

4,453

769

5,223

4,453

769

4,453

9,676

120

Paper Mate. P.O.Box.23257, Sharjah

H.E. Shaikh Saud Khalid Sultan (Sponsor) Vinay Kumar Tandon

4,174

1,516

5,689

4,174

1,516

3,101

8,790

121

Alia Contracting Co Llc P.O.Box.45427 Abu Dhabi

Abdullah Ghaloom Abdullah Mohammad Moinuddin Ghori

1,865

1,865

1,865

1,865

122

Hamad Azan Mohammad Al Mazroui P.O.Box.5025 Abu Dhabi

Hamad Azan Mohammad Al Mazroui

38,821

38,821

38,821

24,785

63,606

123

Khizar Abdullah Ahmed. P.O.Box.791, Abu Dhabi

Khizar Abdullah Ahmed.

979

1,585

2,565

979

1,585

956

3,521

Annual Report 2010

124

Gulf Group Information Issa Aman Obaid Aman P.O.Box.46964, 20, Abu Dhabi Asaad Al Amiri

4,080

4,080

4,080

4,080

135

136
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 7,578 5,503 117 Total 7,578 9040-60-1505447 12,940 Muhammad Shafi 12,940 12,940 12,940 5,503 13,080 13,197 50,199 293-41-098837 293-91-328840 1,376 4,523 Chaudhry Khushi Muhammad Virk Chaudhry Habibullah Virk 5,899 1,376 4,523 1,376 7,275 6,505 56,704 50,199 6,505 71,463 128,167 3,288 7,531 10,819 3,288 7,531 3,288 14,106 20,285 517-56-148247 513-58-057091 Mohammad Ismail Mohammad Ismail 36,699 228-53-384058 42,784 Makhan Lal 8,837 244-42-044038 Akhbar Hussain 56,821 Ghulam Mohyuddin Ghulam Mohyuddin Ghulam Mohyuddin Ghulam Mohyuddin 301-63-154005 Allah Rakha 233 3,054 3,288 233 3,054 3,288 9,047 65,867 56,821 9,047 54,349 120,216 3,777 12,614 8,837 3,777 14,945 27,559 23,013 65,797 42,784 23,013 53,696 119,493 25,577 62,277 36,699 25,577 62,277 5,013 25,298 20,285 5,013 23,759 49,056

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

125

Al Amlaq Engineering Llc P.O.Box.26423 Sharjah

Mohammad Abdul Karim Inayat Ali

126

Al Majid Engg. & Supply Co P.O.Box.313, Abu Dhabi

Marron Kharaish

127

Virk House Trading Llc Dubai P.O.Box.4284, Dubai

Mohammad Jawad Habib Jaffar Chaudhry Habibullah Virk Shehryar Ali Virk

128

Pak Arab Enterprises P.O.Box.77, Ras Al Khaimah

Zaal Bin Sohail Mufta Younis Khan

129

Al Rashid Building Material P.O.Box.5041, Sharjah

Mohammad Hassan Yousaf

130

Sereen Establishment P.O.Box.4231, Dubai

Mohammad Ahmed Hamid Al Humaidi Ahmed Mohammad Ismail Zakria Mohammad Ismail

131

Delmon Transport P.O.Box.52864, Dubai

Abdullah Mirza Hassan Al Rahma Shah Jahan Ghulam Sarwar

132

Al Saigalco Trading Co P.O.Box.7101, Dubai

Abdul Rahim Mohammad Al Mulla Surendar Lal Makhan Lal

133

Agadeer General Trading P.O.Box.20018, Ajman

Ahmed Rashid Abdullah Raja Safdar Hussain

134

Wrsm Trading Co Llc P.O.Box.5305, Dubai

Juma Darwish Salem Abdul Rashid Abdul Waheed Abdul Saeed Abdul Majid

135

Haji Furniture P.O.Box.1422, Dubai

Mohammad Akram

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 4,034 746

Total

136 271-60-005704 6,225 358-64-013176 1,959 1,795 Adam Khan Khatak 3,474 Syed Owais Awais

Chemlink Llc P.O.Box.80610, Dubai

Majeed Jaffar Habib Mehdi Sadegh Syed Mohsin Awais

4,034

4,034

4,780

137

Al Mehran Golds P.O.Box.3893, Sharjah

Sultan Mohammed Ali Riaz Ahmed

9,699

6,225

3,474

6,225

15,925

138

American Furniture Centre Old Airport Road, Abu Dhabi 303

Juma Ali Khalfan

3,754

1,959

1,795

2,052

5,806

139

Major Khalid Abdulla A. Rehman P.O.Box.12863 Dubai

Major Khalid Abdulla A. Rehman

816

1,119

303

816

303

1,422

140

International Lighting Decoration Co. P.O.Box.25845, Abu Dhabi

Mohammad Ahmed Khalfan Mohammad Manzer

3,381

1,632 -

1,632 3,381

3,381

1,632 -

2,705

1,632 6,085

141

Noor Wali Khan Trading Llc P.O.Box. 8906, Al Ain

Muhayer Khamis Al Mazroui Noor Wali Khan Sher Wali 42201-5543809-1 42301-0815377-9 42201-6693980-3 42301-0899462-1 Abdul Sattar Motiwala(Late) Abdul Sattar Motiwala(Late) Abdul Sattar Motiwala(Late) Salim Motiwala

142

Delta Star Industries L.L.C. Plot # 2&3, Sector A-1, Kepz

Ali Mohammed Motiwala. Salim Motiwala Yakub Motiwala. Omar Motiwala

39,307

39,307

4,967

171

5,138

143

Abdul Majid Ebrahim Palangi P.O.Box.150, Sharjah

Abdul Majid Ebrahim Palangi

1,610

488

72

2,170

1,610

488

72

2,170

144

Ravi Kumar P.O.Box.3237 Abu Dhabi

Ravi Kumar

409

358

70

837

409

358

70

837

145

Joe Mar Trinidad Al Faro P.O.Box.121890 Abu Dhabi

Joe Mar Trinidad Al Faro

1,243

278

1,521

1,243

278

1,521

Annual Report 2010

146

Sergio Nitural Sena P.O.Box.15258, Al Ain

Sergio Nitural Sena

4,221

1,336

56

5,613

4,221

1,336

56

5,613

147

Haresh Arjandas Chandiramani Haresh Arjandas Chandiramani P.O.Box.12407, Dubai

1,194

261

26

1,481

1,194

261

26

1,481

137

138
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 520 317 65 Total 520 317 65 902 902 302 134 86 522 302 134 86 522 566 369 39 975 566 369 39 975 1,750 477 2,228 1,750 477 2,228 1,330 579 53 1,962 1,330 579 53 1,962 1,444 457 23 1,924 1,444 457 23 1,924 1,453 812 26 2,291 1,453 812 26 2,291 1,622 574 77 2,272 1,622 574 77 2,272 1,368 287 1,655 1,368 287 1,655 584 685 1,269 584 685 1,269 1,582 651 39 2,272 1,582 651 39 2,272 497 328 37 862 497 328 37 862 388 136 30 554 388 136 30 554

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

148

Aasit Ratanlal Parekh P.O.Box.51591, Dubai

Aasit Ratanlal Parekh

149

Samer Hekmat Meho P.O.Box.33761, Dubai

Samer Hekmat Meho

150

Martha Arcenas Manzanilla P.O.Box.3167, Abu Dhabi

Martha Arcenas Manzanilla

151

Abdul Kharim Abdul Vahab P.O.Box.37564, Dubai

Abdul Kharim Abdul Vahab

152

Jalal Emad P.O.Box.1038, Dubai

Jalal Emad

153

Maha Mohamed Fouad Mohamed P.O.Box.1038, Dubai

Maha Mohamed Fouad Mohamed

154

Sarpudeen Abbas Alias Alias Settu P.O.Box.3258, Duabi

Sarpudeen Abbas Alias Alias Settu

155

Khalid Mahmood P.O.Box.17580, Al Ain

Khalid Mahmood

156

Allan Dimalanta Bansil P.O. Box 1038, Dubai

Allan Dimalanta Bansil

157

Thekiniyedath Prasannakumar P.O.Box.6512, Dubai

Thekiniyedath Prasannakumar

158

Danyal Kraket Adnan P.O.Box.3915, Abu Dhabi

Danyal Kraket Adnan

159

Chin Chin Joy H. Atienza P.O.Box.46713, Abu Dhabi

Chin Chin Joy H. Atienza

160

Jawed Ali P.O.Box.251876, Dubai

Jawed Ali

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 664 278 -

Total

161

Zulfiqar Ali Tahir P.O.Box.894, Dubai 1,743 451 26

Zulfiqar Ali Tahir

664

278

942

942

162

Shrawana Kumar Shukla P.O.Box. 6891, Dubai 1,279 312

Shrawana Kumar Shukla

2,220

1,743

451

26

2,220

163

Yudara Malith De Silva Manam Yudara Malith De Silva Manam P.O.Box. 6891, Dubai 540 222

1,591

1,279

312

1,591

164

Shahul Hameed Syedu Ali P.O.Box.22577, Dubai 560

Shahul Hameed Syedu Ali

56

819

540

222

56

819

165

Chacko Thomas P.O.Box.286, Dubai

Chacko Thomas

187

747

560

187

747

166

Hasan Ahmed Azeri P.O.Box.4017, Abu Dhabi

Hasan Ahmed Azeri

2,421

592

3,013

2,421

592

3,013

167

Brian Jose Ayson Barin P.O.Box.30439, Dubai

Brian Jose Ayson Barin

394

227

622

394

227

622

168

Muhammad Junaid Bawany P.O.Box.1123, Dubai

Muhammad Junaid Bawany

1,701

826

2,527

1,701

826

2,527

169

Nihal Christopher Paul.F.Maln P.O.Box.3668, Abu Dhabi

Nihal Christopher Paul.F.Maln

1,691

464

58

2,213

1,691

464

58

2,213

170

Mohamed Nayef Omar Nour Eldin Besiso P.O.Box.839, Abu Dhabi

Mohamed Nayef Omar Nour Eldin Besiso

656

220

26

902

656

220

26

902

171

Mustafa Turen P.O.Box.898, Abu Dhabi

Mustafa Turen

656

356

65

1,078

656

356

65

1,078

Annual Report 2010

172

Regino Santader Laders P.O.Box.15258, Abu Dhabi

Regino Santader Laders

1,636

376

2,012

1,636

376

2,012

173

Elmer Nagales Dela Cruz P.O.Box.46153, Abu Dhabi

Elmer Nagales Dela Cruz

3,519

574

4,092

3,519

574

4,092

139

140
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 1,215 914 Total 1,215 914 2,129 2,129 543 198 30 771 543 198 30 771 758 232 990 758 232 990 408 229 637 408 229 637 1,270 353 53 1,676 1,270 353 53 1,676 784 743 1,527 784 743 1,527 1,460 297 1,757 1,460 297 1,757 811 355 1,166 811 355 1,166 1,626 1,246 28 2,899 1,626 1,246 28 2,899 3,108 796 3,905 3,108 796 3,905 1,403 496 35 1,934 1,403 496 35 1,934 1,011 786 42 1,839 1,011 786 42 1,839 1,091 878 84 2,053 1,091 878 84 2,053

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

174

Iqbal Ahmed Abdul Rehman P.O.Box.3258, Dubai

Iqbal Ahmed Abdul Rehman

175

Qazi Ghollam Hussain P.O.Box.34164, Sharjah

Qazi Ghollam Hussain

176

Arvind Raina P.O.Box.20212, Sharjah

Arvind Raina

177

Shoukath Pasha P.O.Box.32852, Dubai

Shoukath Pasha

178

Lafir Mohamed Ghouse P.O.Box.135, Sharjah

Lafir Mohamed Ghouse

179

Mohammad Hatmian P.O.Box.17000, Dubai

Mohammad Hatmian

180

Fasmeer Kuillathayi Pullanthol P.O.Box.894, Dubai

Fasmeer Kuillathayi Pullanthol

181

Oscar David Ochieng Ogutu P.O.Box.30439, Dubai

Oscar David Ochieng Ogutu

182

Juan Nestor Ramos Mateo P.O.Box.3258, Dubai

Juan Nestor Ramos Mateo

183

Lorenzo Teng Nulud P.O.Box.16870, Dubai

Lorenzo Teng Nulud

184

Asharaf Kunnummal P.O.Box.16870, Dubai

Asharaf Kunnummal

185

Mohamed Ismail Nishar P.O.Box.3258, Dubai

Mohamed Ismail Nishar

186

Liaquath Hussain Wahab P.O.Box.7000 Abu Dhabi

Liaquath Hussain Wahab

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 937 275 60

Total

187

Amparo Banana Ampey P.O.Box.46713 Abu Dhabi 1,028 338 28

Amparo Banana Ampey

937

275

60

1,272

1,272

188

Chaminda Jayanath Kuruppu G Chaminda Jayanath Kuruppu G P.O.Box.16876, Dubai 350 147

1,394

1,028

338

28

1,394

189

Amir Massoud Ahmed Moezzi Amir Massoud Ahmed Moezzi P.O.Box.27237, Dubai 427 376

26

523

350

147

26

523

190

Muhammad Mobeen P.O.Box.99999, Dubai 748

Muhammad Mobeen

77

879

427

376

77

879

191

Aniceto Morales Gabinete P.O.Box.32835, Abu Dhabi

Aniceto Morales Gabinete

448

49

1,245

748

448

49

1,245

192

Edmon De Jesus Magat P.O.Box.47814, Dubai

Edmon De Jesus Magat

989

643

32

1,665

989

643

32

1,665

193

Margee Joy Garcesa P.O.Box.500220, Dubai

Margee Joy Garcesa

1,215

374

21

1,609

1,215

374

21

1,609

194

Ramil Santos Parinas P.O.Box.44486 Abu Dhabi

Ramil Santos Parinas

357

534

109

1,000

357

534

109

1,000

195

Aghiad Wael Kujan P.O.Box.60772, Dubai

Aghiad Wael Kujan

490

310

49

849

490

310

49

849

196

Sajid Mahmood P.O.Box.115242, Dubai

Sajid Mahmood

748

212

23

983

748

212

23

983

197

Geeta Aasit Parekh P.O.Box.51591, Dubai

Geeta Aasit Parekh

493

191

53

737

493

191

53

737

Annual Report 2010

198

Muhammed Aqeel Khan P.O.Box.42457, Dubai

Muhammed Aqeel Khan

371

120

53

544

371

120

53

544

199

Andoor Nilath Kunju M Musthafa Andoor Nilath Kunju M Musthafa P.O.Box.3258, Dubai

1,443

783

2,226

1,443

783

2,226

141

142
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 1,105 801 21 Total 1,105 801 21 1,927 1,927 624 853 1,477 624 853 1,477 2,004 640 2,644 2,004 640 2,644 1,733 894 2,627 1,733 894 2,627 288 472 53 813 288 472 53 813 1,653 423 49 2,125 1,653 423 49 2,125 840 279 1,119 840 279 1,119 1,485 568 2,053 1,485 568 2,053 1,119 824 1,943 1,119 824 1,943 891 910 1,801 891 910 1,801 960 268 1,228 960 268 1,228 508 256 125 889 508 256 125 889 581 173 26 779 581 173 26 779

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

200

Kochikkaran Kader Abdul Majeed Kochikkaran Kader Abdul Majeed P.O.Box.2149, Dubai

201

Loreto Jr. Sanchez Sunga P.O.Box.3258, Dubai

Loreto Jr. Sanchez Sunga

202

Dennis Vejerano Creencia P.O.Box.47814, Dubai

Dennis Vejerano Creencia

203

Abdul Latiff Mohamed Zahir P.O.Box. 3258, Dubai

Abdul Latiff Mohamed Zahir

204

Yuvraj Gurung P.O.Box.71084, Abu Dhabi

Yuvraj Gurung

205

Mohamed Jiffry Mohamed Zifnaas Mohamed Jiffry Mohamed Zifnaas P.O.Box.44014, Abu Dhabi

206

Mohammed Mahmood Abdul Kareem Mohammed Mahmood Abdul Kareem P.O.Box.18484, Dubai

207

Poojary Ashoka Gopala P.O.Box. 3258, Dubai

Poojary Ashoka Gopala

208

Anwar Hasen Shaikasan P.O.Box. 3258, Dubai

Anwar Hasen Shaikasan

209

Akbar Ali Udumangani P.O.Box. 3258, Dubai

Akbar Ali Udumangani

210

Wilfredo Miranda Casalme P.O.Box.121890, Dubai

Wilfredo Miranda Casalme

211

Rick Manaloto Nitug P.O.Box.15937, Abu Dhabi

Rick Manaloto Nitug

212

Abdul Rauf Edhi P.O.Box.19521, Sharjah

Abdul Rauf Edhi

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 509 125 30

Total

213

Ali Ibrahim Jama P.O.Box.928, Abu Dhabi 509 113 28

Ali Ibrahim Jama

509

125

30

664

664

214

M Shafaqat Shazad P.O.Box. 20814, Sharjah 472 117

M Shafaqat Shazad

650

509

113

28

650

215

Kamal Kanayalal Ahuja P.O.Box.8799, Dubai 278 282

Kamal Kanayalal Ahuja

26

614

472

117

26

614

216

Amapola Arnoco Mayuga P.O.Box.202088 Al Ain 354

Amapola Arnoco Mayuga

560

278

282

560

217

Jaikishan Shyamdas Gamnani Jaikishan Shyamdas Gamnani P.O.Box.46444, Dubai

129

63

546

354

129

63

546

218

Muhammad Nadeem Hameed Puri P.O.Box.40132, Ajman

Muhammad Nadeem Hameed Puri

392

124

26

542

392

124

26

542

219

Abdullah Mohammad Ramkani Abdullah Mohammad Ramkani P.O.Box.15469, Dubai

376

97

26

499

376

97

26

499

220

Hashim Mohammad Jaddoua Al Qurnen P.O.Box.15258, Al Ain

Hashim Mohammad Jaddoua Al Qurnen

2,925

2,175

56

5,155

2,925

2,175

56

5,155

221

Nelia Santezo Tejero P.O.Box.15258, Al Ain

Nelia Santezo Tejero

2,214

895

3,109

2,214

895

3,109

222

Claro Jr Rio Ramirez P.O.Box.3258, Dubai

Claro Jr Rio Ramirez

1,520

1,352

2,872

1,520

1,352

2,872

223

Ibrahim Ramos Uri P.O.Box.3668, Abu Dhabi

Ibrahim Ramos Uri

1,851

529

58

2,438

1,851

529

58

2,438

Annual Report 2010

224

Thandiyakkal R. Radha Krishnan P.O.Box.65948, Dubai

Thandiyakkal R. Radha Krishnan

2,295

1,143

19

3,456

2,295

1,143

19

3,456

225

Muhammad Abdi Ismail P.O.Box.51900 Abu Dhabi

Muhammad Abdi Ismail

2,655

749

3,403

2,655

749

3,403

143

144
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 5,999 2,306 Total 5,999 2,306 8,305 8,305 1,057 521 1,578 1,057 521 1,578 235 404 51 690 235 404 51 690 300 207 21 528 300 207 21 528 320 114 86 520 320 114 86 520 373 105 26 503 373 105 26 503 1,537 381 1,918 1,537 381 1,918 1,404 405 1,809 1,404 405 1,809 502 551 51 1,104 502 551 51 1,104 541 376 93 1,010 541 376 93 1,010 313 409 26 747 313 409 26 747 430 264 694 430 264 694 363 150 2 515 363 150 2 515

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

226

Meiaad Jalal A.J.J.Al Boloushi Meiaad Jalal A.J.J.Al Boloushi P.O.Box.6525, Dubai

227

Aniceta A Cempron P.O.Box.16713, Abu Dhabi

Aniceta A Cempron

228

Ram Shankar P.O.Box.253, Abu Dhabi

Ram Shankar

229

Bhagwan Sadhwani P.O.Box.21967, Ajman

Bhagwan Sadhwani

230

Dipti Mahendra Nagindas P.O.Box.669, Sharjah

Dipti Mahendra Nagindas

231

Moryani Chandru Gobindram P.O.Box.34186, Dubai

Moryani Chandru Gobindram

232

Murugan Veeramuthu P.O.Box.121890, Dubai

Murugan Veeramuthu

233

Remeo Contreras Loalhati P.O.Box. 16785, Dubai

Remeo Contreras Loalhati

234

Sa-Adudin Macarimbang Ala P.O.Box. 12189, Dubai

Sa-Adudin Macarimbang Ala

235

Irfan Haider P.O.Box.1123, Dubai

Irfan Haider

236

Shakeel Ahmed Khan P.O.Box.158, Dubai

Shakeel Ahmed Khan

237

Beverly Mendonza Balingit P.O.Box. 30439, Dubai

Beverly Mendonza Balingit

238

Oswald Milen Johnson P.O.Box. 51304, Dubai

Oswald Milen Johnson

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 1,140 465 21

Total

239

Juraij Punnakkantakkath P.O.Box. 13001, Dubai 1,084 467 26

Juraij Punnakkantakkath

1,140

465

21

1,626

1,626

240

Poikayil Mathai Ginumon P.O.Box 320, Dubai 630 440

Poikayil Mathai Ginumon

1,577

1,084

467

26

1,577

241

Rashid Mehboob P.O.Box. 7631, Dubai 712 219

Rashid Mehboob

21

1,091

630

440

21

1,091

242

Hani Salah E. Ibrahim Mohammad Hani Salah E. Ibrahim Mohammad P.O.Box. 1184, Dubai 643

32

964

712

219

32

964

243

Chidambaram Shenbaga Kumar Chidambaram Shenbaga Kumar P.O.Box. 30165, Sharjah

185

56

884

643

185

56

884

243

Hilariona Rivera Ablalle P.O.Box.502300, Dubai

Hilariona Rivera Ablalle

1,342

570

1,912

1,342

570

1,912

244

Muhammad Yousaf Saeedi P.O.Box. 31308, Dubai

Muhammad Yousaf Saeedi

567

57

23

647

567

57

23

647

245

Eyattu P.A.Rehman Binshad P.O.Box.61450, Dubai

Eyattu P.A.Rehman Binshad

1,173

534

42

1,749

1,173

534

42

1,749

246

Shuban Ali P.O.Box.25672, Abu Dhabi

Shuban Ali

551

249

800

551

249

800

247

Muhammad Imran Chaudhry P.O.Box. 62524, Sharjah

Muhammad Imran Chaudhry

364

192

67

622

364

192

67

622

248

Mary Joseph P.O.Box.62870, Dubai

Mary Joseph

2,659

691

3,350

2,659

691

3,350

Annual Report 2010

250

Agnes Mandocdoc P.O.Box.62532, Dubai

Agnes Mandocdoc

1,675

367

2,043

1,675

367

2,043

251

Reda Abdel Kader. P.O.Box.17000, Dubai

Reda Abdel Kader.

1,260

894

2,155

1,260

894

2,155

145

146
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 276 169 63 Total 276 169 63 507 507 2,326 399 46 2,771 2,326 399 46 2,771 959 911 100 1,970 959 911 100 1,970 224 324 49 597 224 324 49 597 592 184 46 822 592 184 46 822 1,936 1,012 2,949 1,936 1,012 2,949 186 247 118 551 186 247 118 551 530 327 104 961 530 327 104 961 1,408 671 2,079 1,408 671 2,079 1,134 929 37 2,100 1,134 929 37 2,100 1,210 406 1,616 1,210 406 1,616 431 76 42 549 431 76 42 549 521 345 74 939 521 345 74 939

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

252

Jorge Galura Nulud P.O.Box.2222, Dubai

Jorge Galura Nulud

253

Adnan Ali Syed P.O.Box.63111, Abu Dhabi

Adnan Ali Syed

254

Mildred Inocencio Mercado P.O.Box.34491, Abu Dhabi

Mildred Inocencio Mercado

255

Martin Vargheese P.O.Box.2403, Abu Dhabi

Martin Vargheese

256

Amrit Bahadur Khadka P.O.Box.580, Abu Dhabi

Amrit Bahadur Khadka

257

Ali Abd Mohammad Dhaif P.O.Box.3649, Abu Dhabi

Ali Abd Mohammad Dhaif

258

Josephine Orbanan P.O.Box. 3147, Abu Dhabi

Josephine Orbanan

259

Md Azizul Haque P.O.Box.253, Abu Dhabi

Md Azizul Haque

260

John Pius P.O.Box.17322 Abu Dhabi

John Pius

261

Raj Mohammad Haja Mydeen P.O.Box.3147, Abu Dhabi

Raj Mohammad Haja Mydeen

262

Wimala Weera Liyanag P.O.Box.3668, Abu Dhabi

Wimala Weera Liyanag

263

Hamza Mannanthara P.O.Box.95857, Sharjah

Hamza Mannanthara

264

Audrylane Rubia P.O.Box.46713, Abu Dhabi

Audrylane Rubia

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 762 524 77

Total

265

Gloria Cedilla Sepe P.O.Box.3167, Abu Dhabi 1,188 476 -

Gloria Cedilla Sepe

762

524

77

1,362

1,362

266

Dennis Tan Faldan P.O.Box.121890, Dubai 500 137

Dennis Tan Faldan

1,664

1,188

476

1,664

267

Damodaran Nepal P.O.Box.580, Abu Dhabi 958 366

Damodaran Nepal

637

500

137

637

268

Cheryl Cabalar Ecaldre P.O.Box.46713, Abu Dhabi 892

Cheryl Cabalar Ecaldre

1,324

958

366

1,324

269

Christian Mangawang Bautista Christian Mangawang Bautista P.O.Box.3167, Abu Dhabi

443

104

1,439

892

443

104

1,439

270

Said Aghaf P.O.Box. 34216, Dubai

Said Aghaf

1,347

482

1,829

1,347

482

1,829

271

Marilyn Antonio Ruanto P.O.Box.500220, Dubai

Marilyn Antonio Ruanto

1,138

590

56

1,784

1,138

590

56

1,784

272

Nelson Franco Munsayac P.O.Box.3167, Abu Dhabi

Nelson Franco Munsayac

387

421

808

387

421

808

273

Kunhickadan Kunnummal P.O.Box.2692, Abu Dhabi

Kunhickadan Kunnummal

249

295

544

249

295

544

274

Javed Akhtar Raja P.O.Box.2378 Abu Dhabi

Javed Akhtar Raja

571

275

846

571

275

846

275

Surendra Sharma P.O.Box.7125 Abu Dhabi

Surendra Sharma

581

353

67

1,001

581

353

67

1,001

Annual Report 2010

276

Biju Oommen Arayal Ummoottil P.O.Box.1000 Al Ain

Biju Oommen Arayal Ummoottil

4,216

839

5,056

4,216

839

5,056

277

Salim Ghulam Farid P.O.Box.80771, Dubai

Salim Ghulam Farid

456

319

63

838

456

319

63

838

147

148
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 340 299 Total 340 299 639 639 827 400 37 1,264 827 400 37 1,264 679 443 65 1,187 679 443 65 1,187 524 444 37 1,005 524 444 37 1,005 628 276 88 993 628 276 88 993 596 324 58 978 596 324 58 978 405 337 39 781 405 337 39 781 214 507 37 758 214 507 37 758 118 421 56 595 118 421 56 595 2,426 823 90 3,339 2,426 823 90 3,339 1,959 1,102 39 3,101 1,959 1,102 39 3,101 2,024 628 2,652 2,024 628 2,652 1,751 637 37 2,425 1,751 637 37 2,425

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

278

Narayanan Karimbu Valappil P.O.Box 27029, Abu Dhabi

Narayanan Karimbu Valappil

279

Michelle Dones Pancho P.O.Box.500220, Dubai

Michelle Dones Pancho

280

Syed Sajid Ali P.O.Box.66774, Dubai

Syed Sajid Ali

281

Mohammed Abdul Moid P.O.Box.29, Sharjah

Mohammed Abdul Moid

282

Aqeel Ahmed P.O.Box.36010, Sharjah

Aqeel Ahmed

283

Elsa Cristales Arcigal P.O.Box.30439, Dubai

Elsa Cristales Arcigal

284

Mohammad Amanulla Sabrideen P.O.Box 2915 Abu Dhabi

Mohammad Amanulla Sabrideen

285

Usman Gani Musbah P.O.Box.1123 Dubai

Usman Gani Musbah

286

Ganesh Kumar Eramath P.O.Box.13001, Dubai

Ganesh Kumar Eramath

287

Felicidad Talvo Pimentel P.O.Box 370 Abu Dhabi

Felicidad Talvo Pimentel

288

Leelaratne Bope Kananamge P.O.Box 3668 Abu Dhabi

Leelaratne Bope Kananamge

289

Ummer Kutty Mohamdeesa P.O.Box 3668 Abu Dhabi

Ummer Kutty Mohamdeesa

290

Sankaran Bhadran P.O.Box 4017 Abu Dhabi

Sankaran Bhadran

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 1,193 694 81

Total

291

Abdul Saleam Appattillath P.O.Box 1065 Al Ain 1,333 469 60

Abdul Saleam Appattillath

1,193

694

81

1,969

1,969

292

Robina Lasola Martin P.O.Box 23727 Al Ain 1,117 93

Robina Lasola Martin

1,863

1,333

469

60

1,863

293

Hamdan Amed Mohammad Khalid Alafar P.O.Box 1969 Al Ain 568 461

Hamdan Amed Mohammad Khalid Alafar

1,210

1,117

93

1,210

294

Mohammad Ramzan P.O.Box.80771, Dubai 673

Mohammad Ramzan

21

1,050

568

461

21

1,050

295

Ruel Ilao Cuevas P.O.Box.5530, Dubai

Ruel Ilao Cuevas

204

877

673

204

877

296

Abdul Naser Ali Hussein P.O.Box 46231 Abu Dhabi

Abdul Naser Ali Hussein

543

243

70

856

543

243

70

856

297

Ali Fawzi Abdel Rahim Natour P.O.Box.500220, Dubai

Ali Fawzi Abdel Rahim Natour

137

672

42

851

137

672

42

851

298

Sunil Varikkayil Heriya Ayyappan P.O.Box.54372, Dubai

Sunil Varikkayil Heriya Ayyappan

331

388

26

744

331

388

26

744

299

Sultan Mapillai Thambi P.O.Box.22577 Dubai

Sultan Mapillai Thambi

363

340

35

737

363

340

35

737

300

Akber Ali Qureshi P.O.Box 372 Abu Dhabi

Akber Ali Qureshi

460

230

690

460

230

690

301

Ghanem Jumaa Khalfa Al Romaithi P.O.Box 31196 Abu Dhabi

Ghanem Jumaa Khalfa Al Romaithi

633

51

684

633

51

684

Annual Report 2010

302

Poonkaran John Biju P.O.Box 47600 Abu Dhabi

Poonkaran John Biju

300

302

58

660

300

302

58

660

303

Sunny John P.O.Box.2623, Dubai

Sunny John

258

380

638

258

380

638

149

150
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 283 281 51 Total 283 281 51 614 614 137 470 607 137 470 607 1,841 194 28 2,063 1,841 194 28 2,063 659 119 56 834 659 119 56 834 217 324 70 610 217 324 70 610 411 87 49 547 411 87 49 547 1,038 806 100 1,944 1,038 806 100 1,944 1,316 206 1,522 1,316 206 1,522 922 583 1,505 922 583 1,505 1,143 266 95 1,504 1,143 266 95 1,504 578 535 1,113 578 535 1,113 464 598 1,062 464 598 1,062 460 332 72 864 460 332 72 864

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

304

Raja Haroon Saleem Kayani P.O.Box.6597, Sharjah

Raja Haroon Saleem Kayani

305

Syed Mussarat Hussain Shah P.O.Box.27016, Dubai

Syed Mussarat Hussain Shah

306

Saood Mohammed Hassan P.O.Box.67747, Sharjah

Saood Mohammed Hassan

307

Hassan Juma Ahmed P.O.Box. 19280, Sharjah

Hassan Juma Ahmed

308

Obaid Al Mansouri P.O.Box. 1367, Dubai

Obaid Al Mansouri

309

Shaikha Khazal Saed Khair P.O.Box.1367, Dubai

Shaikha Khazal Saed Khair

310

Rajendran Kalliyottu M.Achary Rajendran Kalliyottu M.Achary P.O.Box 46121 Abu Dhabi

311

Najeeru Deen Sayed Hameed P.O.Box 45553 Abu Dhabi

Najeeru Deen Sayed Hameed

312

Md. Abul Kalam P.O.Box 640,Abu Dhabi

Md. Abul Kalam

313

Walid Fawzy P.O.Box 3167 Abu Dhabi

Walid Fawzy

314

Rayammar Veettil Pulipambil Abdul P.O.Box 97 ,Abu Dhabi

Rayammar Veettil Pulipambil Abdul

315

Elias Bairam P.O.Box 45041, Abu Dhabi

Elias Bairam

316

Vazhavila K.T. John P.O.Box 2378, Abu Dhabi

Vazhavila K.T. John

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 427 316 72

Total

317

Muhammad Iqbal P.O.Box.42, Dubai 363 321 49

Muhammad Iqbal

427

316

72

815

815

318

Noushad Payayil P.O.Box.12848, Dubai 368 279

Noushad Payayil

732

363

321

49

732

319

Reynaldo Galura Nulud P.O.Box.2222, Dubai 180 342

Reynaldo Galura Nulud

21

667

368

279

21

667

320

Khadim Hussain P.O.Box 1828, Al Ain 3,499

Khadim Hussain

522

180

342

522

321

Sidi Ould Mohamed Salem P.O.Box 7644 Al Ain

Mr Sidi Ould Mohamed Salem

889

4,388

3,499

889

4,388

322

Fayaz Ghafoor P.O.Box.1123, Dubai

Fayaz Ghafoor

1,957

1,586

60

3,604

1,957

1,586

60

3,604

323

Kamal Eldin Hamada A.R. Shalabi Kamal Eldin Hamada A.R. Shalabi P.O.Box 2283, Abu Dhabi

2,101

1,316

63

3,479

2,101

1,316

63

3,479

324

Mohammed Israil P.O.Box.3258, Dubai

Mohammed Israil

1,302

1,123

88

2,513

1,302

1,123

88

2,513

325

Mohan Vettiyattil Karappandy P.O.Box 9138 Abu Dhabi

Mohan Vettiyattil Karappandy

1,045

394

1,439

1,045

394

1,439

326

Ghasem Chakeri P.O.Box.29, Sharjah

Ghasem Chakeri

832

561

1,393

832

561

1,393

327

Riyaz Abdul Shukoor Sab P.O.Box.1123, Dubai

Riyaz Abdul Shukoor Sab

406

259

665

406

259

665

Annual Report 2010

328

Christian Ignacio P.O.Box 6258, Abu Dhabi

Christian Ignacio

278

310

588

278

310

588

329

Amjad Ali P.O.Box 124, Abu Dhabi

Amjad Ali

357

185

542

357

185

542

151

152
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 209 325 Total 209 325 534 534 1,568 299 123 1,990 1,568 299 123 1,990 2,667 1,015 3,682 2,667 1,015 3,682 740 761 53 1,554 740 761 53 1,554 789 570 1,358 789 570 1,358 489 243 732 489 243 732 533 22 97 653 533 22 97 653 614 614 614 614 809 1,104 26 1,938 809 1,104 26 1,938 1,069 407 1,475 1,069 407 1,475 582 467 77 1,126 582 467 77 1,126 626 47 168 842 626 47 168 842 653 457 316 221 969 678 653 457 653 457

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

330

Imran Rafiq P.O.Box.12752, Dubai

Imran Rafiq

331

Nissar Thalayillath P.O.Box.4292, Abu Dhabi

Nissar Thalayillath

332

Ali Karama Saeed Saleh P.O.Box 3649, Abu Dhabi

Ali Karama Saeed Saleh

333

Subair Mohammed Rafi P.O.Box.6891, Dubai

Subair Mohammed Rafi

334

Mohammed Javid Iqbal P.O.Box 6365, Abu Dhabi

Mohammed Javid Iqbal

335

Doaa Ziad Bou Mosieh, P.O.Box.888, Dubai

Doaa Ziad Bou Mosieh

336

Awn Eissa Alsayegh P.O.Box 3305, Abu Dhabi

Awn Eissa Alsayegh

337

Annamalai. S. Senthil Kumar P.O.Box 31769, Abu Dhabi

Annamalai. S. Senthil Kumar

338

Mehboob Alam P.O.Box.3258, Dubai

Mehboob Alam

339

Thomas Jose Kavampurathu P.O.Box.7271, Dubai

Thomas Jose Kavampurathu

340

Ratheesh Ariyakkara Rajeev P.O.Box.54372, Dubai

Ratheesh Ariyakkara Rajeev

341

Rafiq Ramzan Ali Panjwani P.O.Box.47246, Abu Dhabi

Rafiq Ramzan Ali Panjwani

342

Fahad Saleh Almawti

Fahad Saleh Almawti

343

Ricardo Sarte Baqorio

Ricardo Sarte Baqorio

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 1,328 -

Total

344 549 503 1,137 1,936 531 1,073 525 435 579 415 379 425 950 475 339 603 750 461 1,022 227 1,097 113 289 399 98 204 150 840 121 354 1,012 783 396 145 220 88

Adriana Natalia

Adriana Natalia

1,349

532

1,881 637 724 1,282 2,397 1,022 758 2,169 638 723 978 513 583 575 1,790 596 692 1,615 783 1,146

1,328 549 503 1,137 1,936 531 1,072 523 433 579 413 379 424 946 473 339 603 745 943 783 549 503 1,137 1,936 943 531 1,072 523 433 579 413 379 424 946 473 339 603 783 745

345

Manal Yousif Farah

Manal Yousif Farah

346

Jonathan Gasper

Jonathan Gasper

347

Ganesh Navaneetha Nambi

Ganesh Navaneetha Nambi

348

Jamal Hussain Saeed

Jamal Hussain Saeed

349

Julia Powell

Julia Powell

350

Shailesh Kumar

Shailesh Kumar

351

Ameer Mohammad Hammooda

Ameer Mohammad Hammood

352

Tuan Taraam Jaliel

Tuan Taraam Jaliel

353

Chempattuvilai Masillamony

Chempattuvilai Masillamony

354

Camilo Jr Daileg Tolention

Camilo Jr Daileg Tolention

355

Hasan Abdulrahman Abu Bakr

Hasan Abdulrahman Abu Bakr

356

Ramyalal De Silva Deva

Ramyalal De Silva Deva

357

Noman Khan Zulfiqar Khan

Noman Khan Zulfiqar Khan

358

Rodrick Joseph Demicoli

Rodrick Joseph Demicoli

359

Prajith Lal Cheeni

Prajith Lal Cheeni

360

Rashid Hussain Haji

Rashid Hussain Haji

Annual Report 2010

361

A. Basit Haji Murad

Abdul Basit Haji Murad

362

Ayman Moosa

Ayman Moosa

153

363

Shirley Joaquin

Shirley Joaquin

154
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 355 998 698 1,787 1,323 1,882 493 191 437 1,647 536 1,012 630 2,300 2,300 26614-40147-6 8,570 394 264 155 276 94 562 554 1,882 990 761 831 1,911 691 1,289 724 2,862 2,855 10,452 500 900 1,217 1,741 497 569 433 1,647 535 1,012 630 2,300 2,300 8,570 1,882 Total 355 998 504 901 1,217 1,741 497 570 141 105 886 194 335 1,334 397 752 355 998 500 900 1,217 1,741 497 569 433 1,647 535 1,012 630 2,300 2,300 10,452 28251-20016-3 7,075 1,060 8,135 7,075 1,060 8,135 27014-40431-0 6,067 1,543 7,611 6,067 1,543 7,611

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

364

Michael Chu Dimaculangan

Michael Chu Dimaculangan

365

Nadeem Ahmed Amirulla

Nadeem Ahmed Amirulla

366

Gilbert Baheej

Gilbert Baheej

367

Anyumba Tony

Anyumba Tony

368

Bassam M.J Alqattan

Bassam M.J Alqattan

369

Hussain Abdulnabi Ahmed

Hussain Abdulnabi Ahmed

370

Tariq Mohammed Salim

Tariq Mohammed Salim

371

Rekha Bhaskaran Nair

Rekha Bhaskaran Nair

372

Priyantha Sanjeewa J. Konara

Priyantha Sanjeewa J. Konara

373

Abdulla A. Rahman Abdul Wahab Abdulla A. Rahman Abdul Wahab

374

Zuhair Mohammed Jaafar

Zuhair Mohammed Jaafar

375

Hijaz Maqbol Ahmed Wahed

Hijaz Maqbol Ahmed Wahed

376

Mohammmad Alawi Sayed Mohsin

Mohammmad Alawi Sayed Mohsin

377

Marjan Mohammed Jawad

Marjan Mohammed Jawad

378

Qassim Mustafa Khalaf Moosa

Qassim Mustafa Khalaf Moosa

379

Nishantha R.A. Arachchige P.O.Box 22550 Doha Qatar

Nishantha R.A. Arachchige

380

Mohammed Mubarak Said Al Breiki Mohammed Mubarak Said Al Breiki P.O.Box No 100001 Doha Qatar

381

Udaya Medduma B.Ratnayake P.O.Box 383 Doha Qatar

Udaya Medduma B.Ratnayake

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 3,770 1,300 -

Total

382

Ibrahim Mohammed Rashid Al Jabri Ibrahim Mohammed Rashid Al Jabri P.O.Box No 50227 Doha Qatar 25960-80329-0 3,675 1,233 -

28351-20020-2

3,770

1,300

5,070

5,070

383

Napoleon Emit Dionzon P.O.Box No 383 Doha Qatar 26005-00238-3 3,908 790

Napoleon Emit Dionzon

4,908

3,675

1,233

4,908

384

Sharif Jahan P.O.Box 22383 Doha Qatar 28551-20016-4 4,034 612

Sharif Jahan

4,698

3,908

790

4,698

385

Khalil I.Salim P.O.Box 90555 Doha Qatar 27235-60391-9 3,649

Khalil I.Salim

4,647

4,034

612

4,647

386

Majeed Khan Khader Khan P.O.Box 22550 Doha Qatar 26458-60204-1

Majeed Khan Khader Khan

883

4,532

3,649

883

4,532

387

Sultan Qamar Ejaz Sultan Qamar Ejaz P.O.Box No 16750 Doha Qatar 26735-60087-7

3,280

1,088

4,368

3,280

1,088

4,368

388

Manoharan Vellian P.O.Box No 383 Doha Qatar 27060-80183-1

Manoharan Vellian

2,970

1,231

4,201

2,970

1,231

4,201

389

Editha Galang Dizon P.O.Box 22550 Doha Qatar 26060-80351-5

Editha Galang Dizon

3,032

952

3,984

3,032

952

3,984

390

Redentor Regala Tolentino P.O.Box 383 Doha Qatar 27542-20023-9

Redentor Regala Tolentino

3,233

659

3,892

3,233

659

3,892

391

Nadia Fawaz Kamhaz P.O.Box No 82 Doha Qatar 26660-80300-9

Nadia Fawaz Kamhaz

2,614

732

3,346

2,614

732

3,346

392

Wilfredo Al Cober Tolibas P.O.Box 3050 Doha Qatar

Wilfredo Al Cober Tolibas

2,467

527

2,995

2,467

527

2,995

Annual Report 2010


25835-60377-5 26735-60015-6

393

Mohanty Abhaya Kumar P.O.Box 50090 Doha Qatar

Mohanty Abhaya Kumar

2,220

677

2,896

2,220

677

2,896

394

Abdul Rahiman M.Ahmad Abdul Rahiman M.Ahmad P.O.Box No 22550 Doha Qatar

2,214

612

2,826

2,214

612

2,826

155

156
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name (PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 1,835 886 Total 26235-60401-8 1,835 886 2,721 2,721 25460-80017-8 2,014 533 2,547 2,014 533 2,547 27351-20008-1 1,573 704 2,277 1,573 704 2,277 27160-80095-6 1,388 802 2,190 1,388 802 2,190 26751-20008-7 1,418 732 2,151 1,418 732 2,151 28660-80006-9 1,583 442 2,026 1,583 442 2,026 26560-80507-6 1,326 512 1,839 1,326 512 1,839 27114-40428-4 1,330 481 1,811 1,330 481 1,811 26860-80262-9 1,256 501 1,757 1,256 501 1,757 26540-00066-8 1,240 298 1,538 1,240 298 1,538 27742-20041-5 1,219 204 1,423 1,219 204 1,423 1,158 112 1,270 1,158 112 1,270 28160-80056-5 930 309 1,239 930 309 1,239 28060-80209-1 594 478 1,072 594 478 1,072

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]

United Bank Limited

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

395

Tauqir Ahmed Khan Tauqir Ahmed Khan P.O.Box No 32140 Doha Qatar

396

Paulino Jr.Talampas Cabrera Paulino Jr.Talampas Cabrera P.O.Box No 50090 Doha Qatar

397

Ibrahim Hassan I. Albalushi P.O.Box 17951 Doha Qatar

Ibrahim Hassan I. Albalushi

398

Mary Ann Dalupang Reys Mary Ann Dalupang Reys P.O.Box No 22550 Doha Qatar

399

Yousuf Khalifa S. Al Sahi P.O.Box 6796 Doha Qatar

Yousuf Khalifa S. Al Sahi

400

Harvey Santos Perez Harvey Santos Perez P.O.Box No 363, Doha Qatar

401

Wilfredo G.San Pedro Wilfredo G.San Pedro P.O.Box No 16750 Doha Qatar

402

Sandaruwan Lankeshwara P.O.Box 4803 Doha Qatar

Sandaruwan Lankeshwara

403

Alberto Rodriguez Rodolfo P.O.Box 7098 Doha Qatar

Alberto Rodriguez Rodolfo

404

Abdel Baset M.Shaker P.O.Box 23024 Doha Qatar

Abdel Baset M.Shaker

405

Imad Yehya Jaber P.O.Box 24798 Doha Qatar

Imad Yehya Jaber

406

Ahmed Abdusattar Alakkoumi Ahmed Abdusattar Alakkoumi 27742-20061-7 P.O.Box No 93116 Doha Qatar

407

Ronald Bobis De La Pasion Ronald Bobis De La Pasion P.O.Box No 1290 Doha Qatar

408

Eduardo Bucol Mansueto Eduardo Bucol Mansueto P.O.Box No 63938 Doha Qatar

[ Annexure 'B' as referred to in note 10.7 of the Bank's unconsolidated and consolidated financial statements ]
Outstanding liabilities at the beginning of the year CNIC Number Principal Markup Others Total Father / Husband Name

Details of loan write-offs of Rs.500,000 and above

S. No.

Name and address

Name of individuals/ partners/proprietors/

(PKR in '000) Write off during the year Principal Markup Other written off written off financial relief provided 604 424 -

Total

409

Hamood Suwaid Juma Al Hooti P.O.Box No 36 Doha Qatar 28081-80112-9 550 424 -

Hamood Suwaid Juma Al Hooti

27651-20015-6

604

424

1,028

1,028

410

Ahmed Hassan El Banna P.O.Box 24798 Doha Qatar 26360-80435-2 681 263

Ahmed Hassan El Banna

974

550

424

974

411

Garry Talenjale Ibanez P.O.Box No 153 Doha Qatar 27160-80499-9 566 271

Garry Talenjale Ibanez

944

681

263

944

412

Alberto Bocala Conda P.O.Box 1290 Doha Qatar 27463-40008-1 706

Alberto Bocala Conda

837

566

271

837

413

Yousef Mohammad.A.Y Yousef Mohammad.A.Y P.O.Box No 80325 Doha Qatar 25484-00013-2

119

824

706

119

824

414

Mustafa Khammash P.O.Box 5164 Doha Qatar 27352-40529-3

Mustafa Khammash

706

108

813

706

108

813

415

Amber Bahadur Shrestha P.O.Box 153 Doha Qatar 26552-40384-9

Amber Bahadur Shrestha

651

116

768

651

116

768

416

Kumar Khadka P.O.Box 153 Doha Qatar 25414-40170-6

Kumar Khadka

483

279

762

483

279

762

417

Udukalage Don Sirikumara P.O.Box No 383 Doha Qatar 26935-61356-4

Udukalage Don Sirikumara

309

451

760

309

451

760

418

Arjunan Veeradiyan P.O.Box No 153, Doha Qatar 27852-40596-7

Arjunan Veeradiyan

380

356

736

380

356

736

419

Moti Lal Pandey P.O.Box No 153, Doha Qatar 26260-80434-3

Moti Lal Pandey

283

360

644

283

360

644

420

Ronald De Lara Pacis Ronald De Lara Pacis P.O.Box No 22247, Doha Qatar

611

611

611

611

Annual Report 2010


26263-40234-9 26035-60702-8

421

Ahmed Mohamed S.A.Al Romaihi Ahmed Mohamed S.A.Al Romaihi P.O.Box No 24571, Doha Qatar

470

64

534

470

64

534

422

Jacob Thottathil Koshy P.O.Box 80303 Doha Qatar

Jacob Thottathil Koshy

521 1,468,696

350,165

521 12,510 1,831,371

521 774,208

277,322

521 748,518 1,800,048

157

[ Annexure 'C' as referred to in note 11.7 of Bank's Unconsolidated Financial Statements ]


Disposals of operating fixed assets during the year 2010

Cost

Accumulated depreciation

Book value

Sale proceeds

Mode of disposal

Particulars of Buyers

------------ (Rupees in '000) -----------Furniture and fixtures Items having book value of less than Rs. 250,000 or cost of less than Rs. 1,000,000 Electrical, office and computer equipment Items having book value of less than Rs. 250,000 or cost of less than Rs. 1,000,000 Vehicles Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 M/Lancer H/Civic M/Lancer T/Corolla S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus H/Accord T/Corolla Items having book value of less than Rs. 250,000 or cost of less than Rs. 1,000,000 T/Corolla T/Corolla T/Corolla T/Corolla S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus 849 849 849 849 620 620 560 560 555 555 849 849 849 849 548 527 392 523 555 555 72 93 168 37 678 650 813 780 532 528 480 516 441 427 Auction Auction Auction Auction Auction Auction Auction Auction Auction Auction Ahmed Hussain Qadri Shahzad Mangi Naveed Sikander Ali Sikander Ali Sikander Ali Nasir & Co. Tariq Ajmeri Tariq Ajmeri Sikander Ali 1,399 1,042 1,439 1,309 652 636 636 636 636 636 636 6,300 1,389 1,399 1,042 1,439 916 337 223 223 223 233 233 223 210 208 393 315 413 413 413 403 403 413 6,090 1,181 550 766 288 633 424 456 456 456 552 570 552 5,573 1,354 Auction Auction Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Insurance Claimed Insurance Claimed Ejaz Ahmed Wasim Mirza Atif Riaz Bokhari Aqeel A. Nasir Zeeshanul Haq Amjad Pervaiz Muhammad Munir Tariq Mumtaz Ali Abro Shaukat Ali Munnawar Ali Javaid Afzal Qazi UBL Insurers UBL Insurers

17,770

14,760

3,010

549

Auction

Various

31,186

29,681

1,505

1,759

Auction

Various

158

United Bank Limited

[ Annexure 'C' as referred to in note 11.7 of Bank's Unconsolidated Financial Statements ]


Disposals of operating fixed assets during the year 2010

Cost

Accumulated depreciation

Book value

Sale proceeds

Mode of disposal

Particulars of Buyers

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

S/Cultus S/Cultus S/Cultus S/Cultus S/Alto S/Bolan S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Alto S/Cultus S/Cultus S/Alto S/Alto S/Alto Various

555 555 555 555 419 367 620 620 615 560 560 560 555 555 419 550 550 419 419 419 215 34,854

555 555 555 555 419 355 393 444 430 355 355 364 500 509 314 550 550 419 419 419 211 22,631

12 227 176 185 205 205 196 55 46 105 4 12,223

423 424 435 416 84 345 362 310 318 391 205 317 241 222 84 5 23,057

Auction Auction Auction Auction Auction Auction Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Write-off Write-off Write-off Write-off Write-off Auction

Wasim Mirza M. Imran Ayub Sikander Ali Imran Shaikh Suhail Ahmed Qazi Khalil Ur Rehman Naveed Khan Anjum Zahid Hamid Mushtaq Ali Zakaria Naseem Mir Mahmood Saeed Siddiqui Hammad Umer Shafiq Toufique Ahmed Shaikh Sheikh Muhammad Tayyab Rasool Bux Soomro

Various

Ijara Assets Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 Commercial Ijarah - Atlas Honda Limited H/Civic T/Corolla T\Altis T/Corolla T/Corolla T/Corolla T/Corolla H/City T/Corolla T/Corolla T/Corolla 3,325 1,564 1,389 1,319 1,286 1,240 1,237 1,225 1,215 1,205 1,205 1,204 210 462 230 402 366 426 412 471 408 422 299 301 3,115 1,102 1,159 917 920 814 825 754 807 783 906 903 3,139 917 1,050 598 886 898 322 278 793 616 987 774 Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Atlas Honda Limited M.Kamran Sabowala Riaz Hussain Mahinder Kumar Muhammad Shoaib Khanzada Abdullah Shaikh Muhammad Aslam Paracha Khader Kheil Sarfaraz Khan Arshad Hussain Maheen Afaq Ghulam Hussain

Annual Report 2010

159

[ Annexure 'C' as referred to in note 11.7 of Bank's Unconsolidated Financial Statements ]


Disposals of operating fixed assets during the year 2010

Cost

Accumulated depreciation

Book value

Sale proceeds

Mode of disposal

Particulars of Buyers

------------ (Rupees in '000) -----------Ijara Assets Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 T/Corolla T/Corolla S/Liana T/Corolla S/Cultus T/Corolla T/Corolla T/Corolla T/Corolla S/Liana H/City T/Belta T/Corolla T/Corolla H/City S/Liana H/City H/City S/Liana T/Vitz K/Sportage S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Bolan S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus T/Vitz S/Cultus 980 980 955 950 940 940 940 925 915 907 907 900 890 890 879 856 852 846 825 811 800 742 704 694 694 694 682 647 644 632 632 632 632 632 632 631 600 600 391 564 456 487 308 486 528 435 511 434 484 460 319 526 343 540 235 451 406 560 494 448 286 211 257 292 252 163 209 208 225 241 274 288 329 302 209 311 589 416 499 463 632 454 412 490 404 473 423 440 571 364 536 316 617 395 419 251 306 294 418 483 437 402 430 484 435 424 407 391 358 344 303 329 391 289 426 256 551 660 442 620 255 559 492 534 461 241 502 476 559 355 674 493 490 151 403 435 424 177 442 379 345 536 380 385 353 380 297 417 358 262 447 365 Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Dahar Junejo Mohammad Ayoob Jamali Muhammad Junaid Ghaffar Muhammad Irfan Talat Mehmood Mohammad Hamid Ali Khan Sharmeen Zindani Yaar Gul Muhammad Kousar Manohar Lal Wadhwani Tarana Zafar Muhammad Naeem Waheed Ahmed Shaikh Mohammad Asmat Paracha Aasima Khan Mohammad Rehan
Syed Muhammad Hasan Qutb

Mohammad Asim Saleem Farooq Ahmed Siddiqui Saqib Khan Noor Ahmed Shahtaj Ahson Iqbal Raza Muhmmad Ashraf Zubair Akram Suman Khurram Muhammad Haroon Syed Javed Akhtar Tanzeel Ul Rehman Syed Fahim Hasan Asif Ali Abbasi Babar Gulzar Butt Khalid Mahmood Mirza Imran Ijaz Syed Asim Uddin Mohammad Buksh Samiullah Fawad Iqbal Maria Noureen

160

United Bank Limited

[ Annexure 'C' as referred to in note 11.7 of Bank's Unconsolidated Financial Statements ]


Disposals of operating fixed assets during the year 2010

Cost

Accumulated depreciation

Book value

Sale proceeds

Mode of disposal

Particulars of Buyers

------------ (Rupees in '000) -----------Ijara Assets Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 S/Alto S/Alto S/Alto S/Alto S/Liana C/Joy S/Alto S/Alto S/Alto D/Cuore S/Alto S/Alto S/Alto S/Alto S/Alto S/Cultus S/Ravi D/Cuore D/Cuore S/Mehran D/Cuore S/Bolan D/Cuore S/Every S/Ravi S/Mehran S/Mehran S/Mehran S/Bolan S/Ravi S/Mehran S/Ravi T/Surf T/Corolla T/Corolla T/Corolla T/Corolla T/Corolla T/Corolla 590 590 590 585 560 555 529 521 521 519 513 508 508 508 504 500 497 497 497 495 492 458 455 450 447 431 431 426 418 372 366 357 2,450 1,336 1,260 1,260 1,205 1,205 915 181 188 191 158 142 251 106 162 219 181 214 151 201 258 88 179 99 145 163 245 217 114 50 160 140 171 171 101 159 118 70 84 918 463 515 516 505 556 472 409 402 399 427 418 304 423 359 302 338 299 357 307 250 416 321 398 352 334 250 275 344 405 290 307 260 260 325 259 254 296 273 1,532 873 745 744 700 649 443 491 157 346 310 377 359 200 147 361 321 296 187 326 262 295 286 282 238 223 372 176 156 140 155 278 308 308 332 261 179 242 338 1,138 713 454 479 702 787 524 Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Sandra Grace Muhammad Raees Javed Akhtar Asif Sami Ullah Mailik Anas Rabbani Sameen Umair Mahmood Ul Haq Atif Syed Muhammad Musawwir Khan Waquar Ahmed Shuja Haider Tariq Qazi Mohammad Ali Siddiqui Muhammad Fasihuddin Khan Shazia Marium Siyal Mohisin Jhangir Amna Akmal Atif Hameed Bajwa Muhammad Ali Iftikhar Muhiuddin Rehan Ahmed Ghaffar Tanveer Imran Niaz Abdul Khaliq Afzaal Khalil Zafar Iqbal Zafar Iqbal Hummad Ali Irfan Shahid Arab Zeeshan Suchwani
Mohammad Rashid Imran Kayani

Amir Hader Butt Syed Arshad Abbas Zaidi M.Saleem Sikander Imran Syed Muhammad Tanzeem Pervaiz Saeed Muhammad Afroze

Annual Report 2010

161

[ Annexure 'C' as referred to in note 11.7 of Bank's Unconsolidated Financial Statements ]


Disposals of operating fixed assets during the year 2010

Cost

Accumulated depreciation

Book value

Sale proceeds

Mode of disposal

Particulars of Buyers

------------ (Rupees in '000) -----------Ijara Assets Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 T/Corolla T/Corolla S/Liana H/City H/City H/City H/City S/Cultus S/Cultus S/Alto Shehzore S/Alto S/Alto D/Cuore S/Alto S/Liana S/Cultus S/Cultus S/Alto S/Alto S/Bolan T/Corolla T/Corolla D/Cuore D/Cuore D/Cuore S/Mehran Items having book value of less than Rs. 250,000 or cost of less than Rs. 1,000,000 T/Corolla T/Vitz S/Cultus S/Cultus T/Corolla T/Corolla Shehzore S/Cultus S/Cultus 879 750 730 704 704 704 699 694 682 769 549 524 504 515 515 477 449 469 110 201 206 200 189 189 222 245 213 191 507 113 492 372 472 307 308 315 Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Masood Textile Abid Hussain Syed Asim Zafar Zaidi Imtiaz Ahmed Imran Ul Hafeez Imran Ul Hafeez Syed Farooq Ali Shah Muhammad Saeed Jamsa Mohammad Aslam Sabri 915 915 906 888 879 854 852 752 687 685 675 601 521 519 508 888 712 632 590 542 520 950 829 587 502 497 409 481 489 543 488 478 456 456 288 345 370 408 247 214 227 254 420 320 201 241 158 125 261 415 95 247 214 115 434 426 363 400 401 398 396 464 342 315 267 354 307 292 254 468 392 431 349 384 395 689 414 492 255 283 294 332 504 449 272 168 470 469 171 111 336 329 344 363 361 301 472 405 343 349 460 457 694 345 360 351 375 115 Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Auction Auction Auction Auction Auction Auction Insurance Claimed Insurance Claimed Insurance Claimed Insurance Claimed Insurance Claimed Insurance Claimed Rashida Khanum Ghulam Sarwar Qureshi Muhammad Aleem Muhammad Ibrar Hussain Saba Zehra Sajid Shabir Fazal Elahii Mian Riffat Baqar Ayaz Mustafa Chaudhry Adeel Anwer M. Khalid Muhammad Umair Mazhar Mustaq Ahmed Mallick Muhammad Afroz Alam Dawoodi Asif-Ur-Rehman Muhammad Rashid Raza Ullah Khaldi Sikander Ali Munaweer Hussain Muhammad Atif Bhatti Muhammad Rashid Pak Qattar Takaful Pak Qattar Takaful Pak Kwait Takaful Pak Qattar Takaful Pak Qattar Takaful Pak Kwait Takaful

162

United Bank Limited

[ Annexure 'C' as referred to in note 11.7 of Bank's Unconsolidated Financial Statements ]


Disposals of operating fixed assets during the year 2010

Cost

Accumulated depreciation

Book value

Sale proceeds

Mode of disposal

Particulars of Buyers

------------ (Rupees in '000) -----------Ijara Assets Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 S/Liana S/Cultus S/Cultus S/Cultus S/Cultus S/Alto S/Alto S/Alto S/Alto S/Alto D/Cuore S/Alto S/Alto S/Alto S/Alto D/Cuore D/Cuore S/Mehran D/Cuore D/Cuore S/Bolan S/Ravi S/Bolan S/Bolan S/Mehran S/Mehran D/Cuore S/Bolan S/Bolan S/Bolan S/Bolan S/Bolan S/Mehran S/Bolan S/Mehran D/Cuore S/Bolan S/Mehran 660 632 600 600 595 590 529 529 529 524 520 519 519 519 521 507 495 497 492 464 458 447 444 444 435 435 430 428 428 418 418 407 408 402 395 390 382 362 476 476 399 474 521 403 283 330 449 292 421 285 404 415 468 387 271 370 416 406 259 223 227 327 190 320 365 182 363 188 264 260 319 289 203 335 315 140 184 156 201 126 74 187 246 199 80 232 99 234 115 104 53 120 224 127 76 58 199 224 217 117 245 115 65 246 65 230 154 147 89 113 192 55 67 222 295 184 252 224 130 415 291 113 147 395 210 225 214 125 163 232 106 170 111 101 142 247 147 138 268 135 141 293 276 225 270 111 216 135 170 162 278 305 Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Muhammad Faisal Muhammad Zeeshan Ali Mohammad Yousuf Ramesh Babu Masood Textile
Muhammad Rizwan Afzal Khan

Mohammad Islam Muhammad Ahsan Akbar Hussain Mohammad Saeed Javed Sofia Paracha Mohammad Shahid Mehboob Alam Mazari Mirza Ahmed Ali Syed Matloob Hussain Rizvi Asif Nisar Abbas Ali Muhammad Umair Abbasi Masood Textile Yahya Khan Niaz Iqbal Siddiq Jamil Ahmed Shaikh Salamat Ali Anjum Syed Ammad Uddin Grami Syed Latif Mirza Saima Malik Muhammad Saleem Iftikhar Ali Khan Ali Ahmed Khan Muhammad Imran Mudasir Hussain
Mohammad Noor-e-Arshi Khan

Mirza Shadab Baig Syeda Safoora Hamid Abdul Waheed Muhammad Akram Noor
Muhammad Fakhar Uz Zaman Khan

Annual Report 2010

163

[ Annexure 'C' as referred to in note 11.7 of Bank's Unconsolidated Financial Statements ]


Disposals of operating fixed assets during the year 2010

Cost

Accumulated depreciation

Book value

Sale proceeds

Mode of disposal

Particulars of Buyers

------------ (Rupees in '000) -----------Ijara Assets Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 D/Cuore T/Premio S/Mehran S/Mehran S/Mehran T/Corolla S/Cultus S/Alto S/Cultus S/Cultus S/Bolan T/Corolla T/Corolla S/Alto S/Alto S/Alto S/Alto D/Cuore S/Bolan D/Cuore S/Ravi S/Ravi S/Ravi S/Ravi S/Alto S/Bolan S/Bolan S/Ravi S/Mehran S/Ravi S/Ravi S/Bolan D/Cuore D/Cuore S/Bolan 360 358 353 352 350 750 632 632 632 617 526 522 522 508 508 504 504 487 483 456 447 447 447 447 425 414 408 402 398 397 397 370 497 519 515 133,066 144 239 142 110 289 510 500 431 496 456 383 468 468 278 466 422 422 238 272 343 222 222 290 290 316 233 371 305 321 349 349 219 275 404 416 65,055 216 119 211 242 61 240 132 201 136 161 143 54 54 230 42 82 82 249 211 113 225 225 157 157 109 181 37 97 77 48 48 151 222 115 99 68,011 351 148 243 235 136 223 226 246 295 190 249 288 277 272 150 373 273 233 131 135 248 248 282 262 138 213 170 160 257 131 231 186 326 255 213 69,285 Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Auction Insurance Claimed Insurance Claimed Denial Christopher Mohammad Arif Khan Muhmmad Shafi
Muhammad Haider Hussain Hashmi

Danish Kazmi Talha Anwar Qasim Mansoor Shahzad Ahmed Khan


Muhammad Suleman Ansari Muhammad Ayaz Imam Rizvi

Muhammad Zubair Khan Yasir Yousaf Yasir Yousaf Wasim Raza Mumtaz Ahmed Saima Anjum Saima Anjum Amina Liaquat Ali Abbasi Hammad Haider Nadeem-Ul-Haq Najmi Nadeem-Ul-Haq Najmi Naeem-Ur-Rehman Shaikh Naeem-Ur-Rehman Shaikh Asif Ali Syed Arshad Iqbal Shabbir Ahmed Memon Riyasat Hussain Tahir Shahab Sharif Jalil-Ur-Rehman Shaikh Jalil-Ur-Rehman Shaikh Syed Ghazanfar Ahmed Muhammad Furrakh Pak Qattar Takaful Pak Kwait Takaful

164

United Bank Limited

[ Annexure 'C' as referred to in note 11.7 of Bank's Unconsolidated Financial Statements ]


Disposals of operating fixed assets during the year 2010

Cost

Accumulated depreciation

Book value

Sale proceeds

Mode of disposal

Particulars of Buyers

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

Buildings on leasehold land Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 Old lifts of Jinnah Ave. Building 5,431 5,431 2,200 Auction Rehmat Ullah

Leasehold Improvement Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 Various Intangibles Items having book value of less than Rs. 250,000 or cost of less than Rs. 1,000,000 Various 5,861 2,691 3,170 Write-off 7,818 5,436 2,382 Write-off

Total

235,986 145,685

90,301

96,850

Annual Report 2010

165

[ Annexure 'D' of the Bank's Unconsolidated Financial Statements ]


Guidelines for mapping of Business Lines Segment Reporting A segment is a distinguishable component of the Bank that is engaged either in providing product or services (business segment), or in providing products or services within a particular economic environment, which is subject to risks and rewards that are different from those of other segments. Business segments (a) Corporate finance Corporate banking includes services provided in connection with mergers and acquisition, underwriting, privatization, securitization, research, debts instruments, equity, syndication, IPO and secondary private placements. (b) Trading and sales Trading and sales includes fixed income, equity, foreign exchange, commodities, credit, funding, own position securities, lending and repos, brokerage debt and prime brokerage. (c) Retail Banking Retail banking includes retail lending and deposits, banking services, trusts and estates, private lending and deposits, investment advice, merchant / commercial / corporate cards. (d) Commercial banking Commercial banking includes project finance, real estate, export finance, trade finance, factoring, leasing, lending, guarantees, bills of exchange and deposits. (e) Others Other includes support functions of the bank which can not be classified in any of the above segment.

166

United Bank Limited

Chartered Accountants 2nd Floor, Block C Lakson Square Building No.1 Sarwar Shaheed Road Karachi 74200

BDO Ebrahim & Co.

Ernst & Young Ford Rhodes Sidat Hyder


Chartered Accountants Progressive Plaza Beaumont Road PO Box 15541 Karachi 75530

Auditors Report to the Members


We have audited the annexed consolidated financial statements comprising consolidated statement of financial position of United Bank Limited (the Bank) as at December 31, 2010 and the related consolidated profit and loss account, consolidated statement of comprehensive income, consolidated cash flow statement and consolidated statement of changes in equity together with the notes forming part thereof, for the year then ended. These financial statements include unaudited certified returns from the branches, except for thirty six branches which have been audited by us and 17 branches audited by auditors abroad. We have also expressed separate opinion on the financial statements of United Bank Limited. The financial statements of United Executors and Trustees Company Limited and UBL Fund Managers Limited were audited by BDO Ebrahim & Co., Chartered Accountants while the financial statements of the remaining subsidiary companies were audited by other firms of auditors, whose reports have been furnished to us and our opinion in so far as it relates to the amounts included for such companies, is based solely on the report of such auditors. These financial statements are responsibility of the Banks management. Our responsibility is to express our opinion on these financial statements based on our audit. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by the management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements present fairly the financial position of the Bank and its subsidiary companies as at December 31, 2010 and the results of their operations, their cash flows and changes in equity for the year then ended in accordance with approved accounting standards as applicable in Pakistan.

BDO Ebrahim & Co. Chartered Accountants Audit Engagement Partner Zulfikar Ali Causer Date : February 21, 2011 Karachi

Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants Audit Engagement Partner Shabbir Yunus

Annual Report 2010

167

[ Consolidated Statement of Financial Position As at December 31, 2010 ]


Note 2010 2009 (Rupees in 000)

ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Performing Non-performing - net of provision Operating fixed assets Deferred tax asset - net Other assets

6 7 8 9 10 10 11 12 13

67,667,226 25,980,928 12,384,778 231,717,214 326,441,450 15,068,962 341,510,412 24,684,566 1,298,247 20,146,272 725,389,643

61,562,141 14,049,990 23,162,130 137,734,578 349,715,209 12,364,387 362,079,596 23,734,082 649,814 17,449,580 640,421,911

LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities

15 16 17 18 19

5,074,700 47,631,814 567,611,258 11,985,748 17,951,943 650,255,463 75,134,180

5,166,361 37,168,277 503,831,672 11,989,800 611 14,946,827 573,103,548 67,318,363

NET ASSETS REPRESENTED BY: Share capital Reserves Unappropriated profit Total equity attributable to the equity holders of the Bank Non-controlling interest Surplus on revaluation of assets - net of deferred tax

20

21

12,241,798 24,101,838 27,576,333 63,919,969 2,207,241 66,127,210 9,006,970 75,134,180

11,128,907 21,167,954 23,617,875 55,914,736 2,279,691 58,194,427 9,123,936 67,318,363

CONTINGENCIES AND COMMITMENTS

22

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

Atif R. Bokhari
President & Chief Executive Officer

Muhammad Sami Saeed


Director

Sir Mohammed Anwar Pervez , OBE, HPk


Deputy Chairman

Nahayan Mabarak Al Nahayan


Chairman

168

United Bank Limited

[ Consolidated Profit and Loss account For the year ended December 31, 2010 ]
Note 2010 2009 (Rupees in 000)
60,100,410 25,433,850 34,666,560 6,838,336 304,026 1,007,896 8,150,258 26,516,302 61,745,462 28,323,272 33,422,190 9,644,927 560,852 1,187,460 1,485,976 12,879,215 20,542,975

Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against loans and advances - net Provision against lending to financial institutions Provision for diminution in value of investments - net Bad debts written off directly Net mark-up / return / 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 - net Unrealized loss on revaluation of investments classified as held for trading Other income Total non mark-up / return / interest income Non Mark-up / Interest Expenses Administrative expenses Other provisions / write offs - net Workers' Welfare Fund Other charges Total non mark-up / interest expenses Share of income of associates Profit before taxation Taxation - Current - Prior years - Deferred

24 25

10.5 8.5 9.3 10.6

26 9.4 27

7,021,661 133,962 1,734,651 188,164 (33,214) 1,569,731 10,614,955 37,131,257 18,996,661 68,113 414,833 240,391 19,719,998 277,364 17,688,623 6,850,854 415,329 (598,485) 6,667,698 11,020,925

6,736,356 214,727 1,275,914 699,275 (2,582) 3,146,810 12,070,500 32,613,475 17,803,338 642,274 401,073 64,552 18,911,237 689,943 14,392,181 6,996,257 78,710 (2,170,738) 4,904,229 9,487,952

28 29 30 31

32 32 32

Profit after taxation Attributable to: Equity shareholders of the Bank Non-controlling interest

11,031,630 (10,705) 11,020,925 (Rupees)

9,521,546 (33,594) 9,487,952 Restated 7.78

Earnings per share - basic and diluted

33

9.01

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

Atif R. Bokhari
President & Chief Executive Officer

Muhammad Sami Saeed


Director

Sir Mohammed Anwar Pervez , OBE, HPk


Deputy Chairman

Nahayan Mabarak Al Nahayan


Chairman

Annual Report 2010

169

[ Consolidated Statement of Comprehensive Income For the year ended December 31, 2010 ]
2009 2010 (Rupees in 000)
Profit after tax for the year attributable to: - Equity shareholders of the Bank - Non-controlling interest 11,031,630 (10,705) 11,020,925 Other comprehensive income / (loss): Exchange differences on translation of net investment in foreign branches and subsidiaries - Equity shareholders of the Bank - Non-controlling interest Net gain on cash flow hedges Related deferred tax liability on cash flow hedges 615,495 (30,568) 118,866 (41,603) 662,190 Comprehensive income transferred to equity - net of tax 11,683,115 2,003,138 351,725 108,028 (37,810) 2,425,081 11,913,033 9,521,546 (33,594) 9,487,952

Surplus / (deficit) arising on revaluation of assets has been reported in accordance with the requirements of the Companies Ordinance, 1984 and the directives of the State Bank of Pakistan in a separate account below equity. The annexed notes from 1 to 48 and annexures form an integral part of these consolidated financial statements.

Atif R. Bokhari
President & Chief Executive Officer

Muhammad Sami Saeed


Director

Sir Mohammed Anwar Pervez , OBE, HPk


Deputy Chairman

Nahayan Mabarak Al Nahayan


Chairman

170

United Bank Limited

[ Consolidated Cash Flow Statement For the year ended December 31, 2010 ]
Note
CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Less: Dividend income Share of profit of associates Adjustments: Depreciation Amortization Workers' welfare fund Provision for retirement benefits Provision against loans and advances Provision against lending to financial institutions Provision for diminution in value of investments Reversal of provision in respect of investments disposed off during the year Provision against off balance sheet items Gain on sale of fixed assets Bad debts written-off directly Amortization of cash flow hedge reserve Unrealized loss on revaluation of investments classified as held for trading Finance charges on leased assets Provision / (reversal of provision) against other assets

2010 2009 (Rupees in 000)


17,688,623 (133,962) (277,364) 17,277,297 1,576,984 224,017 414,833 7,927 6,838,336 304,026 (340,488) (16,248) 1,007,896 118,866 33,214 147 68,113 10,237,623 27,514,920 10,777,352 (12,521,604) 12,722,952 (2,085,878) 8,892,822 (91,661) 10,463,537 63,779,586 2,575,258 76,726,720 113,134,462 986,402 (8,963,257) 105,157,607 14,392,181 (214,727) (689,943) 13,487,511 1,539,028 185,985 401,073 605,672 9,644,927 560,852 1,187,460 (1,208,711) 20,250 (31,829) 1,485,976 108,028 2,582 110 622,024 15,123,427 28,610,938 (917,641) 526,935 4,734,867 1,950,068 6,294,229 (44,509) (7,581,413) 11,563,774 (1,255,808) 2,682,044 37,587,211 (783,198) (9,719,771) 27,084,242

Decrease / (Increase) in operating assets Lendings to financial institutions Held for trading securities Advances Other assets (excluding advance taxation) (Decrease) / Increase in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities (excluding current taxation)

Staff retirement benefits received / (paid) Income taxes paid Net cash flow from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investments in securities Dividend income received Investments in operating fixed assets Sale proceeds from disposal of property and equipment Net cash flow from investing activities CASH FLOW FROM FINANCING ACTIVITIES Repayments of principal of sub-ordinated loans Payments in respect of lease obligations Dividends paid Net cash used in financing activities Exchange adjustment on translation of net assets attributable to non-controlling interest Exchange differences on translation of net investment in foreign branches and subsidiaries Increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 34

(81,899,081) 490,012 (2,393,600) 107,228 (83,695,441)

(16,446,722) 457,237 (1,595,660) 174,458 (17,410,687)

(4,052) (611) (4,006,407) (4,011,070) (30,568) 615,495 18,036,023 75,612,131 93,648,154

(4,048) (1,367) (1,094,748) (1,100,163) 351,725 2,003,138 10,928,255 64,683,876 75,612,131

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

Atif R. Bokhari
President & Chief Executive Officer

Muhammad Sami Saeed


Director

Sir Mohammed Anwar Pervez , OBE, HPk


Deputy Chairman

Nahayan Mabarak Al Nahayan


Chairman

Annual Report 2010

171

[ Consolidated Statement of Changes in Equity For the year ended December 31, 2010 ]
Attributable to ordinary shareholders of the Bank Capital reserves General Statutory Exchange Reserve for Cash flow reserve reserve translation issue of hedge bonus reserve reserve shares (Rupees in '000)
Balance as at January 01, 2009 Final cash dividend for the year ended December 31, 2008 declared subsequent to year end at Re.1.00 per share Transfer to reserve for issue of bonus shares Issue of bonus shares at 10% Changes in equity for 2009 Profit after taxation for the year ended December 31, 2009 Other comprehensive income - net of tax Total comprehensive income Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax Ordinary dividend relating to non-controlling shareholders Preferred dividend relating to non-controlling shareholders Transfer to statutory reserve Balance as at December 31, 2009 Final cash dividend for the year ended December 31, 2009 declared subsequent to year end at Rs.2.50 per share Interim cash dividend for the half year ended June 30, 2010 declared at Re.1.00 per share Transfer to reserve for issue of bonus shares Issue of bonus shares at 10% Changes in equity for 2010 Profit after taxation for the year ended December 31, 2010 Other comprehensive income - net of tax Total comprehensive income Transfer from surplus on revaluation of fixed assets to unappropriated profit - net of tax Preferred dividend relating to non-controlling shareholders Transfer to statutory reserve Balance as at December 31, 2010 12,241,798 3,000 2,241,126 14,462,696 615,495 615,495 9,765,294 77,263 77,263 (129,152) 11,031,630 11,031,630 256,075 31,177 (2,241,126) 27,576,333 11,031,630 692,758 11,724,388 256,075 31,177 63,919,969 (10,705) 11,020,925 (30,568) 662,190 11,128,907 3,000 1,838,537 12,221,570 2,003,138 2,003,138 9,149,799 70,218 70,218 (206,415) 9,521,546 9,521,546 254,977 (1,838,537) 23,617,875 9,521,546 2,073,356 11,594,902 254,977 55,914,736 (33,594) 351,725 318,131 (27,510) (55,519) 2,279,691 9,487,952 2,425,081 11,913,033 254,977 (27,510) (55,519) 58,194,427 10,117,188 3,000 10,383,033 7,146,661 (276,633) 17,703,327 45,076,576 2,044,589 47,121,165

Share Capital

Unappropriated profit

Sub total

Noncontrolling Interest

Total

1,011,719

1,011,719 (1,011,719)

(1,011,719) (1,011,719) -

(1,011,719) -

(1,011,719) -

1,112,891

1,112,891 (1,112,891)

(2,782,227) (1,224,180) (1,112,891) -

(2,782,227) (1,224,180) -

(2,782,227) (1,224,180) -

(41,273) 11,683,115 (31,177) 2,207,241 256,075 66,127,210

Appropriations made by the Directors subsequent to the year ended December 31, 2010 are disclosed in note 46 to these consolidated financial statements. The annexed notes from 1 to 48 and annexures form an integral part of these consolidated financial statements.

Atif R. Bokhari
President & Chief Executive Officer

Muhammad Sami Saeed


Director

Sir Mohammed Anwar Pervez , OBE, HPk


Deputy Chairman

Nahayan Mabarak Al Nahayan


Chairman

172

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
1. STATUS AND NATURE OF BUSINESS The "Group" consists of: Holding Company United Bank Limited (the Bank) is a banking company incorporated in Pakistan and is engaged in commercial banking and related services. The Bank's registered office and principal office are situated at UBL building, Jinnah Avenue, Blue Area, Islamabad and at State Life Building No. 1, I. I. Chundrigar Road, Karachi respectively. The Bank operates 1,123 (2009: 1,120) branches including 6 (2009: 5) Islamic banking branches, 1 (2009: 1) branch in Karachi Export Processing Zone (KEPZ) and 17 (2009: 17) branches outside Pakistan. The Bank's Ordinary shares are listed on all three stock exchanges in Pakistan whereas its Global Depository Receipts (GDRs) are on the list of the UK Listing Authority and the London Stock Exchange Professional Securities Market. These GDRs are also eligible for trading on the International Order Book System of the London Stock Exchange. Further, the GDRs constitute an offering in the United States only to qualified institutional buyers in reliance on Rule 144A under the US Securities Act of 1933 and an offering outside the United States in reliance on Regulation S. Subsidiary Companies The Group is engaged in carrying out the following business activities: United National Bank Limited (UNBL), United Kingdom - 55 percent holding UNBL is an authorised banking institution incorporated in the United Kingdom (UK) and regulated by the Financial Services Authority (FSA). The Bank was formed in 2001 from the merger of the UK branches of United Bank Limited and National Bank Limited. The principal activities of UNBL are to provide retail banking products through its branch network in major cities of the UK, wholesale banking and treasury services to financial institutions and trade finance facilities to businesses of all sizes. United Bank AG (Zurich), Switzerland - 100 percent holding United Bank AG (Zurich) is a commercial bank owned by United Bank Limited, Karachi. Founded in 1967, its main activities are in credit operations and related trade financing. In doing so, it supports its international clientele in their import and export business with Pakistan, the rest of the sub-continent and the Gulf States. United Executors and Trustees Company Limited, Pakistan - 100 percent holding United Executors and Trustees Company Limited ("the Company") was incorporated in Pakistan in 1965 as an unlisted public limited company. The registered office of the Company is situated at State Life Insurance Building No. 1, I.I. Chundrigar Road, Karachi. Currently, the Company is engaged in the business of investments. UBL Fund Managers Limited, Pakistan - 100 percent holding UBL Fund Managers Limited was incorporated as a public limited company in Pakistan under the Companies Ordinance, 1984 on April 03, 2001. The Company is licensed to carry out Asset Management and Investment Advisory Services under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 and the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the NBFC Regulations). The principal activities of the Company are floating and managing mutual funds and providing investment advisory services. The registered office of the Company is situated at 8th Floor, State Life Building No. 1, I. I. Chundrigar Road, Karachi.

Annual Report 2010

173

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2. 2.1 BASIS OF PRESENTATION In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, the State Bank of Pakistan (SBP) has issued various circulars from time to time. Permissible forms of trade-related modes of financing include purchase of goods by banks from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these consolidated financial statements as such, but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. However, the Islamic Banking branches of the Group have complied with the requirements set out under the Islamic Financial Accounting Standards issued by the Institute of Chartered Accountants of Pakistan and notified under the provisions of the Companies Ordinance, 1984. The financial results of the Islamic banking branches of the Group have been included in these consolidated financial statements for reporting purposes, after eliminating material inter-branch transactions / balances. Key financial figures of the Islamic banking branches are disclosed in note 45 to these consolidated financial statements. With effect from the current year, 'Balance Sheet' has been renamed as 'Statement of Financial Position' keeping in view the requirement of BSD Circular letter No.7 of 2010 dated April 20, 2010 issued by the SBP. STATEMENT OF COMPLIANCE These consolidated financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) and interpretations issued by the International Accounting Standards Board and Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan, the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or directives issued by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan. Wherever the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or directives issued by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan differ with the requirements of IFRS or IFAS, the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or said directives prevail. The SBP vide BSD Circular letter No. 10, dated August 26, 2002 has deferred the applicability of International Accounting Standard 39, Financial Instruments: Recognition and Measurement (IAS 39) and International Accounting Standard 40, Investment Property (IAS 40) for banking companies till further instructions. Further, according to the notification of SECP issued vide SRO 411(I)/2008 dated April 28, 2008, 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 financial statements. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP.

2.2

2.3

3. 3.1

3.2

174

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
3.3 Standards, interpretations and amendments to approved accounting standards that are not yet effective The following revised standards, amendments and interpretations with respect to approved accounting standards as applicable in Pakistan would be effective from the dates mentioned below against the respective standard or interpretation: Standard or Interpretation Effective date (annual periods beginning on or after)

IAS 32 - Financial Instruments: Presentation Classification of Rights Issues (Amendment) IAS 24 - Related Party Disclosures (Revised) IAS 12 - Income Taxes: Deferred Tax Amendment Recognition of Underlying Assets IFRIC 14 - IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (Amendments) IFRIC 19 - Extinguishing Financial Liabilities with Equity Instruments

February 01, 2010 January 01, 2011

January 01, 2012

January 01, 2011 July 01, 2010

The Group expects that the adoption of the above revisions, amendments and interpretations of the standards will not affect the Group's financial statements in the period of initial application. In addition to the above, amendments to various accounting standards have also been issued by the IASB. Such improvements are generally effective for accounting periods beginning on or after January 01, 2011. The Group expects that such improvements to the standards will not have any material impact on the Group's financial statements in the period of initial application. 4. 4.1 BASIS OF MEASUREMENT Accounting convention These consolidated financial statements have been prepared under the historical cost convention except that certain operating fixed assets have been stated at revalued amounts and certain investments and derivative financial instruments have been stated at fair value. 4.2 Critical accounting estimates and judgements The preparation of these consolidated financial statements in conformity with approved accounting standards requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and income and expenses. It also requires management to exercise judgment in application of its accounting policies. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

Annual Report 2010

175

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Significant accounting estimates and areas where judgments were made by the management in the application of accounting policies are as follows: i) ii) iii) iv) v) vi) vii) 5. 5.1 classification of investments (notes 5.5 and 9) provision against investments (notes 5.5 and 9.3) and advances (notes 5.6 and 10.5) income taxes (notes 5.9 and 32) staff retirement benefits (note 5.11 and 36) fair value of derivatives (note 5.16 and 19.4) operating fixed assets, depreciation and amortization (note 5.7 and 11) impairment (note 5.8)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of consolidation The consolidated financial statements include the financial statements of UBL - Holding Company and its subsidiary companies - "the Group". Subsidiary companies are fully consolidated from the date on which more than 50% of voting rights are transferred to the Group or the power to control the company is established and are excluded from consolidation from the date of disposal or when the control is lost. The financial statements of subsidiaries are prepared for same reporting period as the holding company using consistent accounting policies except for the non-banking subsidiaries in Pakistan which follow the requirements of IAS 39 and overseas subsidiaries which are required to comply with local regulations enforced within the respective jurisdiction. The assets and liabilities of subsidiary companies have been consolidated on a line by line basis and the carrying value of investments in the subsidiary companies held by the Bank is eliminated against the subsidiaries' share capital and pre acquisition reserves in the consolidated financial statements. Non-controlling interest represents that part of the net results of operations and of net assets of the subsidiary companies that is not owned by the Group. All material intra-group balances and transactions have been eliminated in full.

5.2

Significant accounting policies The accounting policies adopted in the preparation of these financial statements are consistent with those of the previous financial year except as follows: The Group has adopted the following new and amended IFRS and related interpretations which became effective during the year: IFRS 2 Share-based Payments: Amendments relating to Group Cash-settled Share-based Payment Transactions IFRS 3 Business Combinations (Revised) IAS 27 - Consolidated and Separate Financial Statements (Amendment) IFRIC 17 - Distributions of Non-cash Assets to owners

176

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
In May 2008 and April 2009, International Accounting Standards Board issued amendments to various standards primarily with a view to removing inconsistencies and clarifying wording. These improvements are listed below: Issued in May 2008 IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations Issued in April 2009 IFRS 2 Share-based Payments (note 37.3) IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations IFRS 8 Operating Segments IAS 1 Presentation of Financial Statements IAS 7 Statement of Cash Flows IAS 17 Leases IAS 36 Impairment of Assets IAS 38 Intangible Assets IAS 39 Financial Instruments: Recognition and measurement IFRIC 9 Reassessment of Embedded Derivatives IFRIC 16 Hedges of a Net Investment in a Foreign Operation The adoption of the above standards, amendments / improvements and interpretations did not have a material effect on the financial statements. 5.3 Cash and cash equivalents Cash and cash equivalents for the purpose of the cash flow statement represent cash and balances with treasury banks and balances with other banks in current and deposit accounts. 5.4 Lendings to / borrowings from financial institutions The Group enters into transactions of repos and reverse repos at contracted rates for a specified period of time. These are recorded as under: 5.4.1 Sale under repurchase agreements Securities sold subject to a re-purchase agreement (repo) are retained in the consolidated financial statements as investments and the counter party liability is included in borrowings from financial institutions. The differential in sale and re-purchase value is accrued over the period of the agreement and recorded as an expense. 5.4.2 Purchase under resale agreements Securities purchased under agreement to resell (reverse repo) are included in lendings to financial institutions. The differential between the purchase price and resale price is amortized over the period of the agreement and recorded as income. Securities held as collateral are not recognized in the consolidated financial statements, unless these are sold to third parties, in which case the obligation to return them is recorded at fair value as a trading liability under borrowings from financial institutions.

Annual Report 2010

177

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
5.5 Investments Investments of the Group, other than investments in associates are classified as held for trading, held-to-maturity and available for sale. Held for trading These are securities which are either acquired for generating a profit from short-term fluctuations in market prices, interest rate movements, dealer's margin or are securities included in a portfolio in which a pattern of short-term profit taking exists. Held to maturity These are securities with fixed or determinable payments and fixed maturity in respect of which the Group has the positive intent and ability to hold to maturity. Available for sale These are investments, other than those in associates, that do not fall under the held for trading or held to maturity categories. Initial measurement All regular way purchases and sales of investments are recognized on the trade date, i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of investments that require delivery of assets within the time frame generally established by regulation or convention in the market place. Investments are initially recognized at fair value which, in the case of investments other than held-for-trading, includes transaction costs associated with the investments. Subsequent measurement Held-for-trading These are measured at subsequent reporting dates at fair value. Gains and losses on re-measurement are included in the profit and loss account. Held-to-maturity These are measured at amortized cost using the effective interest rate method, less any impairment loss recognized to reflect irrecoverable amounts. Available for sale Quoted-securities classified as available-for-sale investments are measured at subsequent reporting dates at fair value. Any surplus / deficit arising thereon is kept in a separate account shown in the balance sheet below equity and taken to the profit and loss account when actually realized upon disposal or when the investment is considered to be impaired. Unquoted equity securities are valued at the lower of cost and break-up value. A decline in the carrying value is charged to the profit and loss account. The break-up value of these equity securities is calculated with reference to the net assets of the investee company as per the latest available audited financial statements. Investments in other unquoted securities are valued at cost less impairment losses.

178

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Provision for diminution in the value of securities (except term finance certificates) is made for impairment, if any. Provision for diminution in the value of term finance certificates is made as per the aging criteria prescribed by the Prudential Regulations issued by the SBP. Associates Associates are all entities over which the Group has a significant influence, but control does not exist. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment in the associate is initially recognised at cost and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss of the investee subsequent to the date of acquisition. Increase / decrease in share of profit or loss of associates is accounted for in the consolidated profit and loss account. The Group applies equity accounting for UBL Insurers Limited, Oman United Exchange Company Limited and its own investment in mutual funds managed by UBL Fund Managers Limited that are categorized as associates. 5.6 Advances Advances are stated net of specific and general provisions. Specific provision against domestic advances is determined on the basis of the Prudential Regulations and other directives issued by the SBP and is charged to the profit and loss account. General provision against consumer loans is made in accordance with the requirements of the Prudential Regulations issued by the SBP. General and specific provisions pertaining to overseas advances are made in accordance with the requirements of the monetary agencies and the regulatory authorities of the respective countries. The Group, from time to time, makes general provision against weaknesses in its portfolio if circumstances warrant on the basis of management's estimation. Advances are written off when there is no realistic prospect of recovery. The amount so written off is a book entry without prejudice to the Group's right of recovery against the customer. The Bank determines write-offs in accordance with the criteria prescribed by the SBP vide BPRD Circular No. 06 dated June 05, 2007. 5.7 Operating fixed assets and depreciation

5.7.1 Owned Property and equipment, other than freehold land (which is not depreciated) and capital work-in-progress, are stated at cost or revalued amount less accumulated depreciation and accumulated impairment losses (if any). Freehold land is carried at revalued amount less impairment losses while capital work-in-progress is stated at cost less impairment losses. The cost of property and equipment of foreign branches and subsidiaries includes exchange difference arising on currency translation at the year-end rates of exchange. Depreciation is calculated so as to write off the depreciable amount of the assets over their expected economic lives at the rates specified in note 11.2 to these consolidated financial statements. The depreciation charge for the year is calculated after taking into account residual value, if any, and using methods depending on the nature of the asset and the country of its location. The residual values, useful lives and depreciation methods are reviewed and adjusted, if appropriate, at each statement of financial position date. Depreciation on additions is charged from the month the asset is available for use. No depreciation is charged in the month of disposal. Land and buildings are revalued by professionally qualified valuers with sufficient regularity to ensure that their net carrying value does not differ materially from their fair value.

Annual Report 2010

179

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Surplus arising on revaluation is credited to the surplus on revaluation of fixed assets account. Deficit arising on subsequent revaluation of fixed assets is adjusted against the balance in the above-mentioned surplus account as allowed under the provisions of the Companies Ordinance, 1984. The surplus on revaluation of fixed assets, to the extent of incremental depreciation charged on the related assets, is transferred to unappropriated profit. Gains and losses on sale of fixed assets are included in income currently, except that the related surplus on revaluation of fixed assets (net of deferred taxation) is transferred directly to unappropriated profit. Major renewals and improvements are capitalized and the assets so replaced, if any, are retired. Normal repairs and maintenance are charged to the profit and loss account as and when incurred. 5.7.2 Leased (Ijarah) Assets leased out under Ijarah are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Assets under Ijarah are depreciated over the period of the lease term. Ijarah income is recognized on an accrual basis as and when the rental becomes due. 5.7.3 Intangible assets Intangible assets having a finite useful life are stated at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized using the straight line method, from the month when these assets are available for use, whereby the cost of the intangible asset is amortized on the basis of the estimated useful life over which economic benefits are expected to flow to the Group. The residual values and useful lives are reviewed and adjusted, if appropriate, at each statement of financial position date. 5.8 Impairment Impairment in available for sale equity investments Available for sale equity investments are impaired when there has been a significant or prolonged decline in the fair value below its cost. The determination of what is significant or prolonged requires judgment. In making this judgment, the Group evaluates among other factors, the normal volatility in share price. Impairment in investments in associates The Group considers that a decline in the recoverable value of investment in associates below their cost may be evidence of impairment. Recoverable value is calculated as the higher of fair value less costs to sell and value in use. An impairment loss is recognized when the recoverable value falls below the carrying value and is charged to the profit and loss. Subsequent reversal of impairment loss, upto the cost of investment in associates is credited to the profit and loss account. Impairment in non-financial assets (excluding deferred tax) The carrying amounts of non-financial assets are reviewed at each reporting date for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. If such indication exists, and where the carrying value exceeds the estimated recoverable amount, assets are written down to their recoverable amount. The resulting impairment loss is taken to the profit and loss account except for impairment loss on revalued assets, which is adjusted against the related revaluation surplus to the extent that the impairment loss does not exceed the surplus on revaluation of the revalued assets.

180

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
5.9 Taxation

5.9.1 Current Provision for current taxation is based on taxable income for the year determined in accordance with the prevailing laws for taxation on income earned from local as well as foreign operations, as applicable to the respective jurisdictions. The charge for current tax is calculated using prevailing tax rates. The charge for current tax also includes, where considered necessary, adjustments relating to prior years, arising from assessments made during the year. 5.9.2 Deferred Deferred tax is recognized using the liability method on all major temporary differences between the amounts attributed to assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. In addition, the Group also records a deferred tax asset on available tax losses. Deferred tax is calculated at the rates that are expected to apply to the period when the differences are expected to reverse, based on tax rates that have been enacted or substantively enacted at the statement of financial position date. Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the assets can be utilized. The carrying amount of the deferred tax asset is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized. The Bank also recognizes a deferred tax asset / liability on deficit / surplus on revaluation of fixed assets, cash flow hedge reserve and securities which is adjusted against the related deficit / surplus in accordance with the requirements of the revised International Accounting Standard (IAS) 12, Income Taxes. 5.10 Provisions Provisions are recognized when the Group has a legal or constructive obligation as a result of past events which makes it probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provision against identified non-funded losses is recognized when intimated and reasonable certainty exists for the Group to settle the obligation. The loss is charged to the profit and loss account net of expected recovery and the provision is classified under other liabilities. Provisions are reviewed at each statement of financial position date and are adjusted to reflect the current best estimate.

Annual Report 2010

181

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
5.11 Staff retirement and other benefits

5.11.1 United Bank Limited (UBL) The Bank operates the following staff retirement schemes for its employees: a) For new employees and for those who opted for the new scheme introduced in 1991, the Bank operates an - approved contributory provident fund (defined contribution scheme); and - approved gratuity scheme (defined benefit scheme). b) For employees who have not opted for the new scheme introduced in 1991, the Bank operates an - approved funded pension scheme, introduced in 1986 (defined benefit scheme); and - approved non-contributory provident fund in lieu of the contributory provident fund. In the year 2001, the Bank modified the pension scheme and introduced a conversion option for employees covered under option (b) above to move to option (a). This conversion option ceased on December 31, 2003. The Bank also operates a contributory benevolent fund for all its eligible employees (defined benefit scheme). Annual contributions towards the defined benefit schemes are made on the basis of actuarial advice using the Projected Unit Credit Method. For defined contribution plans, the Bank pays contributions to the Fund on a periodic basis. The Bank has no further payment obligation once the contributions have been paid. The contributions are recognized as an expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction of the future payments is available. Other benefits a) Employees' compensated absences The Bank makes provisions for compensated vested and non-vested absences accumulated by its eligible employees on the basis of actuarial advice under the Projected Unit Credit Method. b) Post retirement medical benefits (defined benefit scheme) The Bank provides post retirement medical benefits to eligible retired employees. Provision is made annually to meet the cost of such medical benefits on the basis of actuarial advice under the Projected Unit Credit Method. c) Employee motivation and retention scheme The Bank operates a long term motivation and retention scheme for its employees with the objective of rewarding, motivating and retaining its high performing executives and officers. The liability of the Bank is fixed and is determined each year based on the performance of the Bank.

182

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Actuarial gains and losses Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in excess of the greater of 10% of the value of the plan assets or 10% of the defined benefit obligation at the end of the last reporting year are charged or credited to income over the employees' expected average remaining working lives. These limits are calculated and applied separately for each defined benefit plan. Actuarial gains and losses pertaining to long term compensated absences are recognized immediately. 5.11.2 United National Bank Limited (UNBL) Defined benefit scheme UNBL operates a pension scheme (defined benefit scheme) for certain staff. This scheme is closed for new members and the accrual of benefits has ceased from January 01, 2010. The amount charged to the profit and loss account are the gains and losses on settlements and curtailments. The interest cost and the expected return on assets are included in interest payable and interest receivable. Acturial gains and losses are recognised immediately in the profit and loss account. The defined benefit scheme is funded, with the assets of the scheme held separately from those of UNBL, in separate trustee administered funds. Pension scheme assets are measured at fair value and liabilites are measured on an actuarial basis using the Projected Unit Credit Method and discounted at a rate equivalent to the current rate of return on a high-quality corporate bond of equivalent currency and term to the scheme liabilities. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. The resulting defined benefit asset or liability is presented separately on the face of the statement of financial position. Defined contribution scheme UNBL operates a defined contributory pension scheme, the amount charged to the profit and loss account in respect of pension costs and other post-retirement benefits is the contribution payable in the year. Differences between the contribution payable in the year and contribution actually paid are shown as either accruals or prepayments in the statement of financial position. 5.11.3 UBL Fund Managers Limited (UFML) Defined benefit plan UFML operates an approved gratuity fund for all employees. Annual contributions to the Fund are made on the basis of actuarial advice using the Projected Unit Credit Method. The net cumulative actuarial gains / losses, in excess of the higher of the following corridor limits are recognised over the expected remaining average working lives of employees on a straight line basis: 10% of the present value of the defined benefit obligation (before deducting plan assets); or 10 percent of the fair value of plan assets.

Defined contribution plan UFML operates an approved contributory provident fund (Defined Contribution Scheme) for all eligible employees.

Annual Report 2010

183

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
5.11.4 United Bank AG (Zurich) (UBAG) UBAG maintains a contribution-oriented pension scheme for employees who have reached the age of 25. It bears a large share of the costs of the occupational pension plan for all employees as well as their surviving dependants pursuant to legal requirements. The employee benefit obligations and the assets serving as coverage are outsourced to a collective insurance firm. Organisation, management and financing of the pension plan comply with the legal regulations, the deed of foundation and the applicable regulations of the benefit plan. 5.12 Sub-ordinated Debt Sub-ordinated debt is initially recorded at the amount of proceeds received. Mark-up accrued on subordinated debt is recognised separately as part of other liabilities and is charged to the profit and loss account over the period on an accrual basis. 5.13 Borrowings / deposits and their cost a) Borrowings / deposits are recorded at the proceeds received. b) Borrowings / deposits costs are recognized as an expense in the period in which these are incurred. 5.14 Revenue recognition Revenue is recognized to the extent that the economic benefits will flow to the Group and the revenue can be reliably measured. The following recognition criteria must be met before revenue is recognized. 5.14.1 Advances and investments Mark-up / return on performing advances and investments is recognized on a time proportionate basis over the term of the advances and investments. Where debt securities are purchased at premium or discount, such premium / discount is amortized through the profit and loss account over the remaining period of maturity. Interest or mark-up recoverable on non-performing advances and classified investments is recognized on receipt basis. Interest / return / mark-up on rescheduled / restructured loans and advances and investments is recognized as permitted by the regulations of the SBP or overseas regulatory authorities of the countries where the branches and subsidiaries operate, except where, in the opinion of the management, it would not be prudent to do so. 5.14.2 Dividend income Dividend income is recognised when the right to receive the dividend is established. 5.14.3 Fee, brokerage and commission Fee, brokerage, commission and other income is recognized on an accrual basis. 5.15 Foreign currencies

5.15.1 Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the Group operates. The financial statements are presented in Pakistani Rupees, which is the Group's functional and presentation currency.

184

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
5.15.2 Foreign currency transactions Transactions in foreign currencies are translated to rupees at the foreign exchange rates prevailing on the transaction date. Monetary assets and liabilities in foreign currencies are expressed in rupee terms at the rates of exchange prevailing at the statement of financial position date. Forward foreign exchange contracts and foreign bills purchased are valued at forward rates applicable to their respective maturities. 5.15.3 Foreign operations and subsidiaries The assets and liabilities of foreign operations and subsidiaries are translated to rupees at exchange rates prevailing at the statement of financial position date. The results of foreign operations and subsidiaries are translated at the average rate of exchange for the year. 5.15.4 Translation gains and losses Translation gains and losses are taken to the profit and loss account, except those arising on the translation of net investment in foreign branches and subsidiaries which are taken to capital reserve (Exchange Translation Reserve) until the disposal of the net investment at which time these are recognised in the profit and loss account. 5.15.5 Commitments Commitments for outstanding forward foreign exchange contracts are disclosed in the consolidated financial statements at contracted rates. Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in rupee terms at the rates of exchange prevailing at the date of the statement of financial position. All other commitments are disclosed in the consolidated financial statements at the committed amount. 5.16 Financial instruments

5.16.1 Financial assets and liabilities Financial instruments carried on the statement of financial position include cash and bank balances, lendings to financial institutions, investments, advances, certain receivables, bills payable, borrowings from financial institutions, deposits, subordinated loans and certain other payables. The particular recognition methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy notes associated with them. 5.16.2 Derivative financial instruments Derivative financial instruments are initially recognized at fair value on the date on which the derivative contract is entered into and are subsequently re-measured at fair value using appropriate valuation techniques. All derivative financial instruments are carried as assets when their fair value is positive and liabilities when their fair value is negative. Any change in the fair value of derivative financial instruments is taken to the profit and loss account. 5.16.3 Hedge accounting The Group makes use of derivative instruments to manage exposures to interest rate, foreign currency and credit risks, including exposures arising from forecast transactions. In order to manage particular risks, the Group applies hedge accounting for transactions which meet the specified criteria. At the inception of the hedge relationship, the Group formally documents the relationship between the hedged item and the hedging instrument, including the nature of the risk, the objective and strategy for undertaking the hedge and the method that will be used to assess the effectiveness of the hedging relationship.

Annual Report 2010

185

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Also, at the inception of the hedge relationship, a formal assessment is undertaken to ensure the hedging instrument is expected to be highly effective in offsetting the designated risk in the hedged item. Hedges are formally assessed each quarter. A hedge is regarded as highly effective if the changes in fair value or cash flows attributable to the hedged risk during the period for which the hedge is designated are expected to offset in a range of 80% to 125%. For situations where the hedged item is a forecast transaction, the Group assesses whether the transaction is highly probable and presents an exposure to variations in cash flows that could ultimately affect the profit and loss account. (a) Fair value hedges For designated and qualifying fair value hedges, the change in the fair value of a hedging derivative is recognised in the profit and loss account within other income. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in the profit and loss account within other income. (b) Cash flow hedges For qualifying cash flow hedges, the fair value gain or loss associated with the effective portion of the cash flow hedge is recognised initially in the statement of changes in equity, and recycled to the profit and loss account in the periods when the hedged item will affect profit or loss. Any ineffective portion of the gain or loss on the hedging instrument is recognised in the profit and loss account immediately. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the hedged item is ultimately recognised in the profit and loss account. When a forecast transaction occurs or is no longer expected to occur, the cumulative gain or loss that was recognised in equity is immediately transferred to the profit and loss account. 5.16.4 Off setting Financial assets and financial liabilities are set off and the net amount is reported in the consolidated financial statements when there is a legally enforceable right to set off and the Group intends to either settle on a net basis, or to realize the assets and to settle the liabilities simultaneously. 5.17 Assets acquired in satisfaction of claims The Group occasionally acquires assets in settlement of certain advances. These are stated at the lower of the carrying value of the related advances and the current fair value of such assets. 5.18 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing particular products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. 5.18.1 Business segments (a) Corporate finance Corporate banking includes services provided in connection with mergers and acquisition, underwriting, privatization, securitization, research, debts instruments, equity, syndication, IPO and secondary private placements.

186

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
(b) Trading and sales Trading and sales includes fixed income, equity, foreign exchange, commodities, credit, funding, own position securities, lending and repos, brokerage debt and prime brokerage. (c) Retail banking Retail banking includes retail lending and deposits, banking services, trusts and estates, private lending and deposits, investment advice, merchant / commercial / corporate cards. (d) Commercial banking Commercial banking includes project finance, real estate, export finance, trade finance, factoring, leasing, lending, guarantees, bills of exchange and deposits. (e) Asset management It includes discretionary and non discretionary fund management activities in the form of pooled, segregated, retail, institutional, private equity, open, close ended funds etc. (f) Others It includes results of support functions of the Group and subsidiary which cannot be classified in any of the above segments. 5.18.2 Geographical segments The Group operates in five geographical regions being: 5.19 Pakistan Karachi Export Processing Zone United States of America Middle East Europe

Dividend and appropriation to reserves Dividends and appropriations to reserves are recorded in the year in which these are approved, except appropriations required by the law which are recorded in the period to which they pertain.

5.20

Earnings per share The Group presents basic and diluted earnings per share (EPS) for its shareholders. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the year.

Annual Report 2010

187

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Note 6. CASH AND BALANCES WITH TREASURY BANKS In hand Local currency Foreign currency 2010 2009 (Rupees in 000)

11,680,346 2,594,433 14,274,779

10,911,350 3,153,898 14,065,248

With State Bank of Pakistan in Local currency current account Local currency deposit account Foreign currency current account Foreign currency deposit account

6.1 6.2 6.3

22,362,478 3,864 1,287,860 3,781,588 27,435,790 12,111,644 13,798,332 46,681 67,667,226

18,937,149 3,864 1,125,581 3,365,199 23,431,793 15,398,540 8,609,162 57,398 61,562,141

With other central banks in foreign currency current account With National Bank of Pakistan in local currency current account National Prize Bonds

6.4

6.1

This represents current accounts maintained with the SBP under the requirements of section 22 (Cash Reserve Requirement) of the Banking Companies Ordinance, 1962. This represents US Dollar Settlement Account maintained with SBP and includes current accounts maintained with SBP to meet cash reserve requirement of 5% on FE 25 deposits, under the requirements of BSD Circular No. 18 dated March 31, 2001 and OSED Circular No. 1 dated November 13, 2006. This represents special cash reserve requirement maintained with SBP under the requirements of BSD Circular No. 14 of 2008 dated June 21, 2008. The return on this account is declared by SBP on a monthly basis and, as at December 31, 2010 carries, mark-up at the rate of 0% (2009: 0%) per annum. Deposits with other central banks are maintained to meet the minimum cash reserves and capital requirements pertaining to the foreign branches and subsidiaries of the Group. Note 2010 2009 (Rupees in 000) BALANCES WITH OTHER BANKS Inside Pakistan In current accounts In deposit accounts

6.2

6.3

6.4

7.

7.1

1,609 1,609

26,715 124,151 150,866

Outside Pakistan In current accounts In deposit accounts

7.1

5,277,503 20,701,816 25,979,319 25,980,928

5,200,157 8,698,967 13,899,124 14,049,990

7.1

These carry mark-up at rates ranging from 0.10% to 12.50% (2009: 0.12% to 11.50%) per annum.

188

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Note 2010 2009 (Rupees in 000)

8.

LENDINGS TO FINANCIAL INSTITUTIONS Call money lendings Repurchase agreement lendings Other lendings to financial institutions Provision against lendings to financial institutions 8.2 8.3 8.4 8.5 450,000 4,431,877 7,502,901 12,384,778 12,384,778 1,110,610 17,941,216 4,671,156 23,722,982 (560,852) 23,162,130

8.1

Particulars of lendings to financial institutions In local currency In foreign currencies 6,466,878 5,917,900 12,384,778 21,140,954 2,021,176 23,162,130

8.2

These are unsecured lendings carrying mark-up at rates ranging from 10.25% to 11.75% per annum (2009: 11.95% to 12.65% per annum) and are due to mature latest by March 2011. Securities held as collateral against repurchase agreement lendings 2010 Further given as collateral / sold 2009 Further given as collateral / sold

8.3

Held by Group

Total

Held by Group

Total

(Rupees in '000) Market Treasury Bills Pakistan Investment Bonds 2,881,877 650,000 3,531,877 900,000 900,000 2,881,877 1,550,000 4,431,877 16,691,063 159,587 16,850,650 990,566 100,000 1,090,566 17,681,629 259,587 17,941,216

These carry mark-up at rates ranging from 11.75% to 13.50% per annum (2009: 10.75% to 12.35% per annum) and are due to mature latest by February 2011. 8.4 Lendings pertaining to domestic operations carry mark-up at rates ranging from 3.00% to 15.34% per annum (2009: 3.00% to 15.87% per annum) and are due to mature latest by April 2014, whereas lendings pertaining to overseas operations carry mark-up at rates ranging from 0.75% to 3.8% per annum (2009: 1.03% to 3.46% per annum) and are due to mature latest by December 2012. This represents provision made against lendings to overseas financial institutions with movement as follows: Note 2010 2009 (Rupees in 000) 560,852 (560,852) 560,852 560,852

8.5

Opening balance Charged during the year Transferred during the year Closing balance

8.5.1

8.5.1 The balance has been transferred to 'Investments' on issuance of recovery notes and preference shares by the financial institution. Annual Report 2010 189

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
9. INVESTMENTS
Note Held by Group 2010 Given as collateral Total Held by Group (Rupees in '000) 2009 Given as collateral Total

9.1 Investments by types

Held for trading securities Market Treasury Bills Pakistan Investment Bonds Ordinary shares of listed companies Foreign securities Term Finance Certificate Government of Pakistan - Eurobonds Units of Mutual Funds Sukuk Bonds Available for sale securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan - Sukuk Government of Pakistan - Eurobonds Ordinary shares of listed companies Preference shares Ordinary shares of unlisted companies Term Finance Certificates Units of mutual funds Foreign securities Held to maturity securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan - Sukuk Government of Pakistan - Eurobonds Government of Pakistan - Guaranteed Bonds Term Finance Certificates Sukuk Bonds Participation Term Certificates Debentures Foreign securities CDC SAARC Fund Associates United Growth and Income Fund UBL Liquidity Plus Fund United Composite Islamic Fund United Islamic Income Fund United Stock Advantage Fund UBL Participation Protected Plan UBL Capital Protected Fund - II UBL Savings Income Fund UBL Islamic Savings Fund UBL Islamic Retirement Savings Fund UBL Retirement Savings Fund UBL Capital Protected Fund - I UBL Insurers Limited Oman United Exchange Company, Muscat 9.9.1 9.9.2 9.9.3 9.9.4 9.9.5 9.9.6 9.9.7 9.9.8 9.9.9 9.9.10 9.9.11 9.9.12 9.9.13 9.9.14 9.9 9.3 21.2 9.4 3,023,430 2,613,475 338,110 196,425 354,897 184,639 108,757 174,469 197,224 98,310 99,681 61,652 150,038 65,108 7,666,215 215,301,480 (2,649,005) 212,652,475 (3,311,399) (33,050) 209,308,026 3,023,430 5,279,234 2,613,475 749,831 338,110 539,012 196,425 249,850 354,897 305,297 184,639 170,136 108,757 174,469 197,224 98,310 99,681 61,652 90,299 150,038 67,583 65,108 71,399 7,666,215 7,522,641 22,421,070 237,722,550 138,850,932 (2,649,005) (2,146,794) 22,421,070 235,073,545 136,704,138 (11,718) (3,323,117) (3,045,011) (164) (33,214) (1,862) 22,409,188 231,717,214 133,657,265 5,279,234 749,831 539,012 249,850 305,297 170,136 90,299 67,583 71,399 7,522,641 4,075,629 142,926,561 (2,146,794) 4,075,629 140,779,767 2,404 (3,042,607) (720) (2,582) 4,077,313 137,734,578 58,843,648 4,392,225 30,000 696,506 51,399 27,106,749 2,548,739 19,202 4,392 9,772,562 428 103,465,850 58,843,648 4,392,225 30,000 696,506 51,399 27,106,749 2,548,739 19,202 4,392 9,772,562 428 103,465,850 11,611,110 2,497,301 30,000 922,505 1,485,057 25,289,199 2,640,040 26,838 4,592 4,001,718 421 48,508,781 11,611,110 2,497,301 30,000 922,505 1,485,057 25,289,199 2,640,040 26,838 4,592 4,001,718 421 48,508,781 39,519,598 18,988,194 4,122,000 3,938,516 3,629,335 472,097 445,632 2,163,818 164,662 15,285,049 88,728,901 20,695,498 60,215,096 536,428 19,524,622 4,122,000 3,938,516 3,629,335 472,097 445,632 2,163,818 164,662 - 15,285,049 21,231,926 109,960,827 35,572,747 16,728,759 3,470,000 3,870,557 3,644,398 197,015 441,824 1,948,702 191,299 12,740,879 78,806,180 3,978,323 3,978,323 39,551,070 16,728,759 3,470,000 3,870,557 3,644,398 197,015 441,824 1,948,702 191,299 12,740,879 82,784,503 12,984,400 805,257 8,928 1,392,186 106,431 73,494 46,966 22,852 15,440,514 1,189,144 1,189,144 14,173,544 805,257 8,928 1,392,186 106,431 73,494 46,966 22,852 16,629,658 3,268,035 438,505 76,206 214,865 15,719 4,013,330 97,306 97,306 3,268,035 535,811 76,206 214,865 15,719 4,110,636

9.7

Provision for diminution in value of investments Investments (net of provisions) Deficit on revaluation of available for sale securities Deficit on revaluation of held for trading securities Total investments

190

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Note 2010 2009 (Rupees in 000)

9.2

Investments by segments Federal Government Securities Market Treasury Bills Pakistan Investment Bonds Government of Pakistan - Sukuks Government of Pakistan - Euro Bonds Government of Pakistan - Guaranteed Bonds

127,315,215 24,722,104 4,152,000 4,708,516 51,399 160,949,234

48,577,758 19,761,871 3,500,000 4,869,268 1,485,057 78,193,954

Foreign Securities Market Treasury Bills Government securities CDC SAARC Fund Other securities

5,917,073 5,043,926 428 21,405,871 32,367,298

5,852,457 3,214,893 421 13,527,704 22,595,475

Ordinary Shares Listed companies Unlisted companies Preference Shares Units of Mutual Funds Term Finance Certificates Listed Unlisted Sukuk Bonds Debentures Participation Term Certificates Investment in associates Total investments at cost Provision for diminution in value of investments Investments (net of provisions) Deficit on revaluation of available for sale securities Deficit on revaluation of held for trading securities Total investments

9.7

3,638,263 445,632 4,083,895 472,097 211,628

3,644,398 441,824 4,086,222 197,015 406,164

9.9

2,437,296 26,939,702 29,376,998 2,571,591 4,392 19,202 31,972,183 7,666,215 237,722,550 (2,649,005) 235,073,545 (3,323,117) (33,214) 231,717,214

2,667,787 24,570,114 27,237,901 2,655,759 4,592 26,838 29,925,090 7,522,641 142,926,561 (2,146,794) 140,779,767 (3,042,607) (2,582) 137,734,578

9.3

21.2 9.4

Annual Report 2010

191

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in 000) 9.3 Particulars of provision for diminution in value of investments: 2,146,794 346,263 (25,394) (16,843) 304,026 (340,488) 548,318 207,830 (9,645) 2,649,005 2,188,793 1,162,066 25,394 1,187,460 (1,208,712) (1,208,712) (20,747) 2,146,794

9.3.1 Opening balance Charged during the year (Reversal) / impairment loss on associate Reversed during the year Reversed on disposal Transfers Written off during the year Closing balance 9.3.2 Particulars of provision for diminution in value of investments by type Available for sale securities Ordinary shares of listed companies Ordinary shares of unlisted companies Preference shares Foreign securities

2,017,861 141,761 6,090 281,585 2,447,297

1,832,026 150,524 2,436 1,984,986

Held to maturity securities Term Finance Certificates Sukuk Debentures Participation Term Certificates Associates

100,448 77,667 4,391 19,202 201,708 2,649,005

104,985 4,591 26,838 136,414 25,394 2,146,794

9.3.3 Particulars of provision for diminution in value of investments by segment Ordinary Shares Listed companies Unlisted companies Foreign securities

2,017,861 141,761 281,585 2,441,207 6,090

1,832,026 150,524 1,982,550 2,436

Preference shares Term Finance Certificates, Debentures and Participation Term Certificates Term Finance Certificates Sukuk Debentures Participation Term Certificates Associates

100,448 77,667 4,391 19,202 201,708 2,649,005

104,985 4,591 26,838 136,414 25,394 2,146,794

192

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in 000) 9.4 Unrealized loss on revaluation of investments classified as held for trading Market Treasury Bills Pakistan Investment Bonds Ordinary shares of listed companies Foreign Securities Term Finance Certificates Mutual Funds

(353) 2,440 91 (40,543) 7,834 (2,683) (33,214)

1,416 (4,422) 424 (2,582)

9.5

Investments include certain approved / government securities which are held by the Group to comply with the Statutory Liquidity Requirement as set out under Section 29 of the Banking Companies Ordinance, 1962. Investments include Rs.282 million (2009: Rs.282 million) held by the State Bank of Pakistan and National Bank of Pakistan as pledge against demand loan, TT / DD discounting facilities and foreign exchange exposure limit sanctioned to the Group and Rs.5 million (2009: Rs.5 million) held by the Controller of Military Accounts (CMA) under Regimental Fund Arrangements. This includes the Group's subscription towards the paid-up capital of Khushhali Bank Limited amounting to Rs.200 million (2009: Rs.200 million). Pursuant to Section 10 of the Khushhali Bank Ordinance, 2000 strategic investors including the Group could not sell or transfer their investment before a period of five years that has expired on October 10, 2005. Thereafter, such sale/ transfer would be subject to the prior approval of the SBP. In addition, the profit of Khushhali Bank Limited cannot be distributed as dividend under clause 35(i) of the Khushhali Bank Ordinance, 2000. The SBP prepared a conversion structure for Khushhali Bank Limited to operate as a Microfinance Bank under the Microfinance Institutions Ordinance, 2001 which was approved by the Ministry of Finance. The scheme of conversion was also approved by the shareholders of Khushhali Bank Limited in an Extra-Ordinary General Meeting held on December 17, 2007. Accordingly, an application for incorporation was submitted to the SECP on February 15, 2008. The SECP has incorporated Khushhali Bank Limited under the Microfinance Institutions Ordinance, 2001 and issued a Certificate of Incorporation on February 28, 2008 under section 32 of the Companies Ordinance, 1984. In a meeting between SBP and the Board of Directors of Khushhali Bank Limited held on June 12, 2008, it was agreed that since Khushhali Bank Limited has a majority of private sector commercial banks as its shareholders and is legally a private sector bank, it is required to be managed as a private sector institution. In order to achieve the strategic restructuring of Khushhali Bank Limited, a consortium of commercial banks including the Group decided to completely divest their shareholding in Khushhali Bank Limited. Thereafter, the Consortium appointed Advisors (financial, legal and accounting) for conducting preliminary due diligence for valuation and preparing a data room for the prospective purchasers. Khushhali Bank Limited, on behalf of the Consortium of the Commercial Banks has sought prior clearance/approval of the SBP for appointment of Advisors to conduct due diligence of Khushhali Bank Limited. SBP has conveyed its, in principle, no objection to the consortium of selling shareholders of Khushhali Bank Limited for conducting due diligence/valuation of Khushhali Bank Limited subject to compliance with all the applicable laws/rules/regulations etc. The due diligence / valuation is in the process of being carried out. The establishment of a data room and due diligence report/ valuation from Accounting and Financial Advisor is in process.

9.6

9.7

Annual Report 2010

193

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
9.8 Information relating to investments in Ordinary and Preference shares / certificates of listed and unlisted companies / modarabas / mutual funds, term finance certificates, debentures and bonds, required to be disclosed as part of the financial statements under State Bank of Pakistan's BSD Circular No. 4 dated February 17, 2006, is given in Annexure 'A' to these consolidated financial statements. Details in respect of quality of available for sale securities are also disclosed in Annexure 'A'. Investment in associates This includes investment in the seed capital aggregating to Rs.630 million (2009: Rs.1,100 million) which is required to be kept for a period of two years. 2010 2009 (Rupees in 000) 9.9.1 United Growth and Income Fund Investment as at January 01 (Redemption) / investment during the year Transfer Share of profit Dividend distribution Share of unrealised (deficit) / surplus on assets Balance as at December 31 Percentage holding as at December 31 5,279,234 (1,993,891) 42,202 (250,385) (53,730) 3,023,430 70.85% 327,193 2,984,094 1,836,533 239,488 (118,083) 10,009 5,279,234 35.68%

9.9

9.9.1.1 United Growth and Income Fund is an open ended mutual fund, listed on the Karachi Stock Exchange. Being an open ended mutual fund, the fund offers units for public subscription on a continuous basis. 9.9.1.2 The details of assets, liabilities, revenues and profits of the Fund as of December 31, based on reviewed financial statements are as follows: Assets Liabilities Revenue (Rupees in '000) 7,717 48,940 871,447 1,568,234 Profit

United Growth and Income Fund

2010 2009

4,275,118 14,844,857

324,134 1,137,702

194

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in 000) 9.9.2 United Liquidity Plus Fund Investment as at January 01 Investment during the year Share of profit Dividend distribution Share of unrealised (deficit) / surplus on assets Balance as at December 31 Percentage holding as at December 31 749,831 1,874,833 64,591 (75,421) (359) 2,613,475 21.39% 745,469 7,016 (2,661) 7 749,831 17.59%

9.9.2.1 United Liquidity Plus Fund is an open ended mutual fund, listed on the Islamabad Stock Exchange. Being an open ended mutual fund, the fund offers units for public subscription on a continuous basis. 9.9.2.2 The details of assets, liabilities, revenues and profits of the Fund as of December 31, based on reviewed financial statements are as follows: Assets Liabilities Revenue Profit (Rupees in '000) United Liquidity Plus Fund 2010 2009 12,295,334 4,267,245 75,871 3,571 1,126,713 218,554 933,133 187,547

2010 2009 (Rupees in 000) 9.9.3 United Composite Islamic Fund Investment as at January 01 (Redemption) / investment during the year Share of profit Share of unrealised (deficit) / surplus on assets Balance as at December 31 Percentage holding as at December 31 539,012 (262,811) 70,735 (8,826) 338,110 69.94% 338,024 6,547 189,412 5,029 539,012 66.83%

9.9.3.1 United Composite Islamic Fund is an open ended mutual fund, listed on the Islamabad Stock Exchange. Being an open ended mutual fund, the fund offers units for public subscription on a continuous basis. 9.9.3.2 The details of assets, liabilities, revenues and profits of the Fund as of December 31, based on reviewed financial statements are as follows: Assets Liabilities Revenue Profit (Rupees in '000) United Composite Islamic Fund 2010 2009 489,848 808,306 6,369 1,704 134,181 394,105 78,441 360,516

Annual Report 2010

195

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in 000) 9.9.4 United Islamic Income Fund Investment as at January 01 Redemption during the year Share of profit Dividend distribution Share of unrealised (deficit) / surplus on assets Balance as at December 31 Percentage holding as at December 31 249,850 (50,000) 33,783 (8,075) (29,133) 196,425 48.08% 308,700 (83,852) 12,338 (9,575) 22,239 249,850 19.80%

9.9.4.1 United Islamic Income Fund is an open ended mutual fund, listed on the Islamabad Stock Exchange. Being an open ended mutual fund, the fund offers units for public subscription on a continuous basis. 9.9.4.2 The details of assets, liabilities, revenues and profits of the Fund as of December 31, based on reviewed financial statements are as follows: Assets Liabilities Revenue Profit (Rupees in '000) United Islamic Income Fund 2010 2009 411,540 1,265,397 2,974 3,652 141,110 172,447 84,842 71,325

2010 2009 (Rupees in 000) 9.9.5 United Stock Advantage Fund Investment as at January 01 (Redemption) / investment during the year Share of profit Share of unrealised surplus on assets Balance as at December 31 Percentage holding as at December 31 305,297 (1,075) 40,421 10,254 354,897 31.70% 142,766 35,200 121,231 6,100 305,297 16.04%

9.9.5.1 United Stock Advantage Fund is an open ended mutual fund, listed on the Karachi Stock Exchange. Being an open ended mutual fund, the fund offers units for public subscription on a continuous basis. 9.9.5.2 The details of assets, liabilities, revenues and profits of the Fund as of December 31, based on reviewed financial statements are as follows: 9.9.5.3 The share of profit includes gain on account of redemption made in the Fund during the year. Assets Liabilities Revenue (Rupees in '000) 4,808 47,966 427,056 904,450 Profit

United Stock Advantage Fund

2010 2009

1,124,139 1,951,232

(629,162) 835,578

196

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in 000) 9.9.6 UBL Participation Protected Plan Investment as at January 01 Share of profit Balance as at December 31 170,136 14,503 184,639 138,887 31,249 170,136

9.9.6.1 UBL Participation Protected Plan is an open ended administrative plan with the objective of earning potentially high returns through dynamic asset allocation between equity and fixed income investments. The life of the plan is 3 years. 2010 2009 (Rupees in 000) 9.9.7 UBL Capital Protected Fund - II Investment as at January 01 Investment during the year Share of profit Balance as at December 31 Percentage holding as at December 31 103,459 5,298 108,757 53.04% -

9.9.7.1 UBL Capital Protected Fund II is an open ended capital protected fund, listed on the Islamabad Stock Exchange. Being an open ended mutual fund, the fund offers units for public subscription on a continuous basis. 9.9.7.2 The details of assets, liabilities, revenues and profits of the Fund as of December 31, based on reviewed financial statements are as follows: Assets Liabilities Revenue Profit (Rupees in '000) UBL Capital Protected Fund - II 2010 206,169 1,133 14,305 10,594

2010 2009 (Rupees in 000) 9.9.8 UBL Savings Income Fund Investment as at January 01 Investment during the year Share of profit Share of unrealised deficit on assets Balance as at December 31 Percentage holding as at December 31 169,577 4,898 (6) 174,469 19.22% -

9.9.8.1 UBL Savings Income Fund is an open ended mutual fund, listed on the Islamabad Stock Exchange. Being an open ended mutual fund, the fund offers units for public subscription on a continuous basis. 9.9.8.2 The details of assets, liabilities, revenues and profits of the Fund as of December 31, based on reviewed financial statements are as follows: Assets Liabilities Revenue Profit (Rupees in '000) UBL Savings Income Fund 2010 923,788 16,222 28,611 21,305

Annual Report 2010

197

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in 000) 9.9.9 UBL Islamic Savings Fund Investment as at January 01 Investment during the year Share of profit Share of unrealised surplus on assets Balance as at December 31 Percentage holding as at December 31 195,376 1,775 73 197,224 15.93% -

9.9.9.1 UBL Islamic Savings Fund is an open ended Shariah Compliant (Islamic) Income fund listed on the Islamabad Stock Exchange. Being an open ended mutual fund, the fund offers units for public subscription on a continuous basis. 9.9.9.2 The details of assets, liabilities, revenues and profits of the Fund as of December 31, based on reviewed financial statements are as follows: Assets Liabilities Revenue Profit (Rupees in '000) UBL Islamic Savings Fund 2010 1,241,983 3,624 14,192 20,244

2010 2009 (Rupees in 000) 9.9.10 UBL Islamic Retirement Savings Fund Investment as at January 01 Investment during the year Share of profit Share of unrealised deficit on assets Balance as at December 31 Percentage holding as at December 31 90,000 8,720 (410) 98,310 96.09% -

9.9.10.1 UBL Islamic Retirement Savings Fund is an open ended pension fund and offers units for public subscription on a continuous basis. 9.9.10.2 The details of assets, liabilities, revenues and profits of the Fund as of December 31, based on reviewed financial statements are as follows: Assets Liabilities Revenue Profit (Rupees in '000) UBL Islamic Retirement Savings Fund 2010 103,218 852 10,796 9,130

198

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in 000) 9.9.11 UBL Retirement Savings Fund Investment as at January 01 Investment / (redemption) during the year Share of profit Share of unrealised surplus on assets Balance as at December 31 Percentage holding as at December 31 90,000 9,665 16 99,681 89.84% -

9.9.11.1 UBL Retirement Savings Fund is an open ended pension fund and offers units for public subscription on a continuous basis. 9.9.11.2 The details of assets, liabilities, revenues and profits of the Fund as of December 31, based on reviewed financial statements are as follows: Assets Liabilities Revenue Profit (Rupees in '000) UBL Retirement Savings Fund 2010 111,488 813 12,303 10,476

2010 2009 (Rupees in 000) 9.9.12 UBL Capital Protected Fund - I Investment as at January 01 (Redemption) / Investment during the year Share of (loss) / profit Share of unrealised deficit on assets Reversal / (impairment) loss Balance as at December 31 Percentage holding as at December 31 64,905 (1,105) (27,523) (19) 36,258 25,394 61,652 11.61% 75,500 1,122 13,677 90,299 (25,394) 64,905 11.61%

9.9.12.1 UBL Capital Protected Fund (UCPF-1) is a closed ended mutual fund, listed on the Islamabad Stock Exchange. 9.9.12.2 The details of assets, liabilities, revenues and profits of the Fund as of December 31, based on reviewed financial statements are as follows: Assets Liabilities Revenue Profit (Rupees in '000) UBL Capital Protected Fund - I 2010 2009 856,256 782,298 10,283 4,605 85,644 134,019 68,440 121,250

Annual Report 2010

199

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in 000) 9.9.13 UBL Insurers Limited Investment as at January 1 Investment during the year Share of loss Balance as at December 31 Percentage holding as at December 31 67,583 90,000 (7,545) 150,038 30.00% 52,154 60,000 (44,571) 67,583 30.00%

9.9.13.1 UBL Insurers Limited is an unquoted public company . The principal objective of the Company is to conduct general insurance business 9.9.13.2 The details of assets, liabilities, revenues and profits of the insurance company as at December 31, based on unaudited financial statements are as follows: Assets Liabilities Revenue Loss (Rupees in '000) UBL Insurers Limited 2010 2009 1,075,333 824,430 575,205 599,154 270,760 264,095 (26,717) (129,148)

2010 2009 (Rupees in 000) 9.9.14 Oman United Exchange Company Investment as at January 01 Share of profit Dividend distribution Balance as at December 31 Percentage holding as at December 31 71,399 15,838 (22,129) 65,108 25.00% 72,307 22,586 (23,494) 71,399 25.00%

9.9.14.1 Oman United Exchange Company LLC is incorporated in the Sultanate of Oman as a limited liability company and is primarily engaged in money changing, issuing of drafts and the purchase and sale of travellers cheques. 9.9.14.2 The details of assets, liabilities, revenues and profits of the company as of December 31, based on reviewed financial statements are as follows: Assets Liabilities Revenue Profit (Rupees in '000) Oman United Exchange Company 2010 2009 307,397 340,644 46,965 55,048 159,390 173,265 58,775 87,134

200

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Note Performing 2010 2009 Non-performing 2010 2009 (Rupees in '000) Total 2010 2009

10.

ADVANCES Loans, cash credits, running finances, etc. In Pakistan Outside Pakistan Bills discounted and purchased (excluding government treasury bills) Payable in Pakistan Payable outside Pakistan Advances - gross Provision against advances - Specific - General Advances - net of provision 10.5 (1,425,496) (1,425,496) 326,441,450 (713,507) (713,507) 349,715,209 (33,544,116) (33,544,116) 15,068,962 (27,700,850) (27,700,850) 12,364,387 (33,544,116) (1,425,496) (34,969,612) 341,510,412 (27,700,850) (713,507) (28,414,357) 362,079,596 12,429,950 4,489,485 16,919,435 327,866,946 11,607,055 5,061,796 16,668,851 350,428,716 2,235,582 431,925 2,667,507 48,613,078 2,400,013 416,683 2,816,696 40,065,237 14,665,532 4,921,410 19,586,942 376,480,024 14,007,068 5,478,479 19,485,547 390,493,953 10.2 228,034,418 82,913,093 310,947,511 244,389,450 89,370,415 333,759,865 40,726,130 5,219,441 45,945,571 32,220,534 5,028,007 37,248,541 268,760,548 88,132,534 356,893,082 276,609,984 94,398,422 371,008,406

Performing 2010 10.1 Particulars of advances - gross 10.1.1 In local currency In foreign currencies 235,079,268 92,787,678 327,866,946 10.1.2 Short term Long term 247,828,594 80,038,352 327,866,946 253,182,865 97,245,851 350,428,716 232,398,519 118,030,197 350,428,716 2009

Non-performing 2010 2009 2010 (Rupees in '000)

Total 2009

42,816,359 5,796,719 48,613,078 48,613,078 48,613,078

33,781,868 6,283,369 40,065,237 40,065,237 40,065,237

277,895,627 98,584,397 376,480,024 247,828,594 128,651,430 376,480,024

286,964,733 103,529,220 390,493,953 232,398,519 158,095,434 390,493,953

10.2 This includes performing advances given under various Islamic financing modes amounting to Rs.461.342 million (2009: Rs.638.131 million). 10.3 Non-performing advances include advances having gross book value of Rs.5,774.675 million (2009: Rs.1,596.136 million) and net book value of Rs.2,110.614 million (2009: Rs.919.006 million) which, though restructured and performing have been placed under non-performing status as required by the revised Prudential Regulations issued by the SBP, which requires monitoring for at least one year before any upgradation is considered.

Annual Report 2010

201

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
10.4 Advances include Rs.48,613 million (2009: Rs.40,065 million) which have been placed under non-performing status as detailed below: 2010
Category of Classification Classified Advances Domestic Other Assets Especially Mentioned * Substandard Doubtful Loss 336,651 6,320,318 5,716,839 30,587,904 42,961,712 1,037,361 3,005,088 336,651 7,357,679 8,721,927 1,414,035 1,530,397 259,344 1,502,546 1,673,379 3,032,943 1,414,035 1,530,397 259,344 1,502,546 1,673,379 3,032,943 Overseas Total Provision Required Domestic Overseas Total Domestic (Rupees in '000) Provision Held Overseas Total

1,608,917 32,196,821 27,239,551 5,651,366 48,613,078 30,183,983

1,598,243 28,837,794 27,239,551 3,360,133 33,544,116 30,183,983

1,598,243 28,837,794 3,360,133 33,544,116

2009
Category of Classification Classified Advances Domestic Other Assets Especially Mentioned * Substandard Doubtful Loss 386,517 3,802,275 6,007,332 24,424,423 34,620,547 923,161 1,474,283 1,696,401 1,309,678 5,276,558 7,703,733 891,498 2,651,589 368,571 848,206 1,260,069 3,499,795 891,498 2,651,589 368,571 848,206 1,260,069 3,499,795 Overseas Total Provision Required Domestic Overseas Total Domestic (Rupees in '000) Provision Held Overseas Total

1,350,845 25,775,268 21,602,032 5,444,690 40,065,237 25,145,119

1,338,954 22,940,986 21,602,032 2,555,731 27,700,850 25,145,119

1,338,954 22,940,986 2,555,731 27,700,850

* The Other Assets Especially Mentioned category includes agricultural finance inside Pakistan and finances relating to overseas subsidiaries.

10.5 Particulars of provision against advances


2010 Note Specific General Total Specific (Rupees in '000) Opening balance Exchange adjustments Charge / (Reversals) Charge for the year Reversals Transfers Amounts written off Closing balance 10.6 8,078,140 (1,956,300) 6,121,840 86,812 (562,247) 33,544,116 910,973 (194,477) 716,496 (4,507) 1,425,496 8,989,113 (2,150,777) 6,838,336 82,305 (562,247) 34,969,612 11,552,516 (944,245) 10,608,271 (464,064) (1,285,082) 27,700,850 (963,344) (963,344) 464,064 713,507 11,552,516 (1,907,589) 9,644,927 (1,285,082) 28,414,357 27,700,850 196,861 713,507 28,414,357 196,861 18,567,383 274,342 1,223,697 (10,910) 19,791,080 263,432 2009 General Total

10.5.1 General provision represents provision amounting to Rs.375.327 million (2009: Rs.569.195 million) against consumer finance portfolio as required by the Prudential Regulations issued by the SBP, Rs.415.169 million (2009: Rs.144.311 million) pertaining to overseas advances to meet the requirements of monetary agencies and regulatory authorities of the respective countries in which the overseas branches operate. General provisions also include an amount of Rs.635 million (2009: Rs.Nil) which the Group carries as matter of prudence given the current economic environment prevailing in Pakistan and is based on management estimates. 10.5.2 Particulars of provision against advances 2010 Specific General Total Specific (Rupees in '000) In local currency In foreign currencies 30,183,984 3,360,132 33,544,116 1,010,327 415,169 1,425,496 31,194,311 3,775,301 34,969,612 24,327,702 3,373,148 27,700,850 569,195 144,312 713,507 24,896,897 3,517,460 28,414,357 2009 General Total

202

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Note 10.6 Particulars of write-offs 10.5 562,247 1,007,896 1,570,143 764,563 17,221 788,359 1,570,143 1,285,082 1,485,976 2,771,058 1,588,946 1,182,112 2,771,058 2010 2009 (Rupees in 000)

10.6.1 Against provisions Directly charged to profit and loss account

10.6.2 Write-offs of Rs.500,000 and above Write-offs of Rs.500,000 and above - subsidiaries Write-offs of below Rs.500,000

10.7 10.6.3

10.6.3 Due to restriction in local regulations of foreign subsidiaries on disclosure, the name of parties written off cannot be disclosed. 10.7 Details of loan write-offs of Rs.500,000 and above In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the statement in respect of writtenoff loans or any other financial relief of five hundred thousand rupees or above allowed to a person during the year ended December 31, 2010 is given in Annexure 'B' to these financial statements. These loans are written off as a book entry without prejudice to the Bank's right of recovery against the customers. Note 10.8 Particulars of loans and advances to executives, directors, associated companies etc. Debts due by directors or executives of the Group or any of them either severally or jointly with any other persons Balance at the beginning of the year Loans granted during the year Repayments made during the year Exchange adjustment Balance at end of the year 11. OPERATING FIXED ASSETS Capital work-in-progress Property and equipment Intangible assets 11.1 11.2 11.3 1,337,697 22,405,859 941,010 24,684,566 1,006,331 22,236,240 491,511 23,734,082 1,536,523 717,242 (633,956) 1,228 1,621,037 1,057,982 1,020,264 (555,826) 14,103 1,536,523 2010 2009 (Rupees in 000)

11.1

Capital work-in-progress Civil works Equipment Software Advances to suppliers and contractors 11.1.1 11.1.2 537,257 268,949 519,651 11,840 1,337,697 484,612 202,119 306,590 13,010 1,006,331

11.1.1 This includes Rs.437.916 million (2009: Rs.297.430 million) paid in respect of construction of the Head Office building of the Bank. 11.1.2 This includes Rs.516.081 million (2009: Rs.221.56 million) paid in respect of the Core Banking Software of the Bank.

Annual Report 2010

203

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
11.2 Property and equipment
2010 COST/ REVALUATION ACCUMULATED DEPRECIATION At Additions / Surplus on Reclassif- Exchange At At Charge for Reversal Exchange At Net book January (deletions) revaluation / ication Adjustment / December January the year / due to Adjustment / December value at 01, 2010 (Reversal of Other 31, 2010 01, 2010 (Reversal on revaluation Other 31, 2010 December accumulated adjustments deletions) adjustments 31, 2010 depreciation) (Rupees in '000) 125,305 9,865 59,015 90,124 (5,431) 169,079 (7,818) 92,933 (24,555) 729,829 (33,732) 48,937 (34,854) 59,658 (133,066) (560) 1,384,745 (240,016) - 1,090,717 - 3,041,776 22 11,721,185 - (1,090,717) 458,837 173,900 - 2,560,340 - (39,706) 8,788 - 2,093,272 (8,707) (173,900) (600) 4,911 1,661,185 1,601 1,048,078 3,772 1,052 145,647 39,675 415,414 530,004 291,697 38,217 106,090 (5,431) 153,380 (5,436) 97,562 (16,639) 717,413 (31,234) 35,162 (22,631) (8,707) (8,707) 18 (2,074) 317 (502) 2,730 (820) - 3,041,776 292,767 11,428,418 181,790 2,378,551 131,944 1,961,328 562,856 1,098,329 612,837 435,242

Annual rate of depreciation %

Owned Freehold land Leasehold land Buildings on freehold land Buildings on leasehold land Leasehold improvements Furniture and fixtures Electrical, office and computer equipment Vehicles Assets held under operating lease Ijarah assets - note 11.8 Finance lease Vehicles 2010

1,825,754 12,802,015 1,908,294 2,182,998 1,495,013 978,099 4,155,052 268,342 810,456 4,332 26,430,355

1 - 3.33 5 5 10 10 20-25 20

- 4,841,450 2,604,119 (9,699) 174 286,371 159,287 -

2,767 3,265,339 1,576,111 (27,726) 2,501 171,770 114,601 (2,549)

(3,772) 467,625 1,268,389 (8,707) (1,268,389)

2,931 739,979 296,066 137,463 (65,055) 2,852 (26) 9,639 27,993,636 4,194,115 1,576,984 (50,005) (146,452)

- 368,474 371,505 20 - 33.33 20 (2,826) 8,333 5,587,777 22,405,859 (36,497)

Owned Freehold land Leasehold land Buildings on freehold land Buildings on leasehold land Lease hold improvement Furniture and fixtures Electrical, office and computer equipment Vehicles Assets held under operating lease Ijarah assets - note 11.8 Finance lease Vehicles 2009

2009 COST/ REVALUATION ACCUMULATED DEPRECIATION At Additions / Surplus on Reclassif- Exchange At At Charge for Other Exchange At Net book January (deletions) revaluation / ication Adjustment / December January the year / adjustments Adjustment December value at 01, 2009 (Reversal of Other 31, 2009 01, 2009 (Reversal on 31, 2009 December accumulated adjustments deletions) 31, 2009 depreciation) (Rupees in '000) 1,502,746 10,092,131 1,856,780 1,931,510 1,169,850 917,948 3,377,168 273,266 895,217 5,280 22,021,896 1,724 (11,142) 9,470 (106,551) 3,823 (112) 1,661 (5,240) 305,714 107,900 (28,986) 808,870 (52,476) 51,958 (59,579) 332,426 3,328,235 (523,063) (363,272) (7,840) 434,008 (184,470) (27,508) (12,476) 1,825,754 307,447 68,027 128,822 255,760 464,913 - 1,825,754

Annual rate of depreciation %

1 - 3.33 5 5 10 10 20-25 20

1,793 12,802,015 418,915 5,529 19,449 8,745 33,966 2,697 1,908,294 2,182,998 1,495,013 978,099

305,640 (87,760) (523,063) 29,341 (112) (7,840) 97,074 (1,965) (184,470) 149,724 83,230 (22,734) 643,969 (42,430) 58,744 (43,971) -

63 1,052 12,800,963 (1,275) 56,232 145,647 1,762,647 697 39,675 2,143,323 (483) 9,929 415,414 1,079,600 4,595 530,004 448,095

4,155,052 1,987,369 268,342 810,456 142,353 153,297

15,211 2,604,119 1,550,933 2,161 159,287 296,066 2,852 109,055

39,648 (104,750) (19,659) 70 (1,018) 1,330,838 4,094,669 (369,854) (1,138,288)

170,285 (27,516) 4,332 2,644 1,022 (814) 491,094 26,430,355 3,510,632 1,539,029 (227,302) (715,373)

514,390 20 - 33.33 1,480 20

88,888 4,194,115 22,236,240 (1,758)

204

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
11.3 Intangible assets
2010 Cost Accumulated Amortization Additions/ Exchange At At Charge for Exchange At Net book Annual (deletions) Adjustment/ December 31, January 01, the year / Adjustment/ December 31, value at rate of Other 2010 2010 (reversal on Other 2010 December 31, amortiadjustments deletion) adjustments 2010 sation % (Rupees in '000) 672,056 (4,140) 19,899 1,739,887 560,561 224,017 (2,691) 16,990 798,877 941,010 10-25

At January 01, 2010

Software

1,052,072

At January 01, 2009

2009 Cost Accumulated Amortization Additions/ Exchange At At Charge for Exchange At Net book Annual (deletions) Adjustment/ December 31, January 01, the year / Adjustment/ December 31, value at rate of Other 2009 2009 (reversal on Other 2009 December 31, amortiadjustments deletion) adjustments 2009 sation % (Rupees in '000) 268,895 (8,825) 8,144 1,052,072 378,611 185,985 (8,825) 4,790 560,561 491,511 10-25

Software

783,858

11.4

Revaluation of properties The properties of the Bank were last revalued by independent professional valuers as at December 31, 2009. The revaluation was carried out by M/s. Pirsons Chemicals Engineering (Private) Limited, M/s. Sadruddin Associates, M/s. Maricon Consultants (Private) Limited and M/s. Engineering Pakistan International (Private) Limited. These revaluations were based on professional assessment of present market values and resulted in a surplus of Rs.4,139.592 million. The properties of UNBL were last revalued by an independent professional valuer as at December 31, 2010 by King Sturge. These revaluations were based on present market values and resulted in a surplus of Rs.414.843 million. Had there been no revaluation, the carrying amount of revalued assets at December 31, 2010 would have been as follows: 2010 2009 (Rupees in 000) Freehold land Leasehold land Buildings on freehold land Buildings on leasehold land 1,484,906 9,168,903 1,134,537 1,584,701 126,717 1,484,906 9,472,729 1,179,068 1,679,280 158,927

11.5 11.6

Carrying amount of temporarily idle properties of the Group The cost of fully depreciated assets still in use Furniture and fixtures Electrical, office and computer equipment Vehicles

267,283 1,772,687 69,474 2,109,444

251,347 1,329,088 33,601 1,614,036

Annual Report 2010

205

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
11.7 Details of disposals of operating fixed assets The information relating to operating fixed assets disposed off during the year is given in Annexure 'C' and is an integral part of these consolidated financial statements. 11.8 The Islamic Banking Branches of the Group have entered into Ijarah transactions with customers during the year. The majority of Ijarah transactions entered into are in respect of vehicles. The ijarah payments receivable from customers for each of the following periods under the terms of the respective arrangements are given below: Note 2010 2009 (Rupees in 000) 103,811 242,387 94 346,292 270,864 436,129 3,020 710,013

Not later than one year Later than one year but not later than five years Later than five years

12.

DEFERRED TAX ASSET - NET Deferred tax asset - net 12.1 1,298,247 649,814

12.1

Movement in temporary differences during the year Note At January 01 2010 Recognised in Others profit and loss (Rupees in '000) At December 31

Deductible temporary differences on - Recognized tax losses on subsidiary - Deficit on revaluation of investments - Ijarah financing - Workers' Welfare Fund - Cash flow hedge reserve - Provision against off balance sheet items, post retirement medical benefits and advances

21.2

41,473 1,066,434 52,314 139,142 111,148

(39,519) (66,685) 5,598 -

(1,225) 95,868 (41,603)

729 1,162,302 (14,371) 144,740 69,545

4,665,734 6,076,245

542,187 441,581

53,040

5,207,921 6,570,866

Taxable temporary differences on - Surplus on revaluation of fixed assets 21.1 - Accelerated tax depreciation

(5,275,900) (150,531) (5,426,431) 649,814

136,794 20,110 156,904 598,485

(3,092) (3,092) 49,948

(5,142,198) (130,421) (5,272,619) 1,298,247

206

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Note At January 01 2009 Recognised in Others profit and loss (Rupees in '000) At December 31

Deductible temporary differences on - Recognized tax losses on subsidiary - Deficit on revaluation of investments - Ijarah financing - Workers' Welfare Fund - Cash flow hedge reserve - Provision against off balance sheet items, post retirement medical benefits and advances

21.2

114,713 3,201,075 118,653 117,950 148,956

(66,339) 21,192 -

(73,240) (2,134,641) (37,808)

41,473 1,066,434 52,314 139,142 111,148

2,659,482 6,360,829 (3,972,755) (223,926) (4,196,681) 2,164,148

2,006,252 1,961,105 136,238 73,395 209,633 2,170,738 Note

(2,245,689) (1,439,383) (1,439,383) (3,685,072)

4,665,734 6,076,245 (5,275,900) (150,531) (5,426,431) 649,814

Taxable temporary differences on - Surplus on revaluation of fixed assets 21.1 - Accelerated tax depreciation

2010 2009 (Rupees in 000)

13.

OTHER ASSETS Income / mark-up accrued in local currency Income / mark-up accrued in foreign currency Advance taxation - net of provision for taxation Receivable from staff retirement funds Receivable on account of encashment of savings certificates Receivable in respect of derivative transactions Receivable against sale of securities Receivable from other banks against telegraphic transfers and demand drafts Unrealized gain on forward foreign exchange contracts Unrealized gain on derivative financial instruments Advance against Murabaha Suspense accounts Stationery and stamps on hand Advances, deposits, advance rent and other prepayments Non-banking assets acquired in satisfaction of claim Receivable from non-controlling interest Others Provision held against other assets Other assets (net of provisions) 13.1 11,753,658 1,227,402 12,981,060 3,693,123 66,595 43,086 31,121 1,219,425 145,346 693,675 237,439 151,528 768,894 1,192,095 1,275,329 22,498,716 (2,352,444) 20,146,272 11,036,265 361,643 11,397,908 1,996,049 1,045,899 74,406 124,977 897,457 836,556 141,324 499,671 383,929 187,143 143,825 805,474 330,029 10,312 1,208,513 20,083,472 (2,633,892) 17,449,580

19.4.1 & 23.2

13.2

13.3

Annual Report 2010

207

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
13.1 The Income Tax returns of the Bank have been filed up to the tax year 2010 (accounting year ended December 31, 2009) and were deemed to be assessed under section 120 of the Income Tax Ordinance, 2001 (Ordinance) unless amended by the Commissioner of Inland Revenue. The tax authorities have issued the amended assessment orders for the tax years 2003 to 2010 (accounting year ended December 31, 2002 to 2009) determining additional tax liability of Rs.7,308 million. The amount has been fully paid as required under the law. For the tax years 2004 to 2009, appeals have been decided by the Commissioner of Inland Revenue [CIR(A)] by allowing relief on certain issues. For the remaining issues, the Bank has filed an appeal before the Appellate Tribunal Inland Revenue (ATIR). For the tax years 2003 and 2010, the hearing is still pending with CIR (A). The management is confident that the appeals will be decided in favor of the Bank. During the year, the tax authorities have further amended the assessment order for the tax year 2009 adding back unrealized losses on derivative transactions resulting in a demand of Rs.146 million, which has been paid. CIR(A) has upheld the order of the taxation officer, however, the Bank is in the process of filing an appeal before ATIR. The Management is confident that this matter will be decided in favor of the Bank. The tax returns for Azad Kashmir (AK) Branches have been filed for tax years 2005 to 2010 (financial years ended December 31, 2004 to 2009) under the provisions of section 120(1) read with section 114 of the Ordinance and in compliance with the terms of agreement between banks and the Azad Kashmir Council in May 2005. The returns filed are considered as deemed assessment orders under the law. The Seventh Schedule to the Ordinance has been amended through the Finance Act, 2010. Through this amendment, provision for advances and off balance sheet exposures would be allowed @ 5% of advances to consumer and small and medium enterprises (SMEs), and 1% for other advances. The said change will be applicable from current year. A deferred tax asset of Rs.2,574 million has been recognized relating to amounts in excess of the allowable limits which is carried forward to future years. The Bank also carries a tax asset amounting to Rs.5,454 million (2009: Rs.5,454 million), representing disallowance of provisions against advances and off balance sheet obligations, for the periods prior to the applicability of the Seventh schedule. The Management, in consultation with its tax advisors, is confident that these would be allowed to the Bank at appellate levels. Note 2010 2009 (Rupees in 000) 1,221,295 359,908

13.2 13.3

Market value of non-banking assets acquired in satisfaction of claims Provision against other assets Opening balance Exchange adjustments

2,633,892 8,638 2,642,530 40,598 (162,859) (122,261) 221,772 (389,597) 2,352,444

2,473,775 32,381 2,506,156 361,391 (22,260) 339,131 117,690 (329,085) 2,633,892

Charge for the year Reversals 29 Transfers Amounts written off Closing balance

208

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
14. CONTINGENT ASSETS There were no contingent assets as at the balance sheet date. Note 2010 2009 (Rupees in 000)

15.

BILLS PAYABLE In Pakistan Outside Pakistan 4,136,487 938,213 5,074,700 4,944,903 221,458 5,166,361

16.

BORROWINGS In Pakistan Outside Pakistan 43,401,942 4,229,872 47,631,814 30,953,356 6,214,921 37,168,277

16.1

Particulars of borrowings with respect to currencies In local currency In foreign currencies 43,401,942 4,229,872 47,631,814 30,953,356 6,214,921 37,168,277

16.2

Details of borrowings from financial institutions Secured Borrowings from the State Bank of Pakistan under - Export refinance scheme - Refinance facility for modernization of SME - Long-term fixed finance - Long-term financing under export oriented projects Repurchase agreement borrowings

16.3 16.4 16.5 16.6 16.7

14,840,163 27,500 2,444,872 2,770,789 20,083,324 22,412,235 42,495,559

14,666,570 1,018,535 3,705,568 19,390,673 5,066,098 24,456,771

Unsecured Call borrowings Overdrawn nostro accounts Trading liabilities Other borrowings 16.8 428,195 452,682 806,942 3,448,436 5,136,255 47,631,814 8,679,283 688,082 96,586 3,247,555 12,711,506 37,168,277

16.9

Annual Report 2010

209

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
16.3 The Bank has entered into agreements with the SBP for extending export finance to customers. As per the terms of the agreement, the Bank has granted the SBP the right to recover the outstanding amounts from the Bank at the date of maturity of the finances by directly debiting the current account maintained by the Bank with the SBP. These borrowings are repayable within six months, latest by June 2011. These carry markup rates at 9% per annum (2009: 7.5% per annum). These borrowings have been obtained from the SBP for modernization of Small and Medium Enterprises (SMEs) by providing financing facilities for purchase of new plant and machinery for BMR of existing units and setting up of new units. In addition, financing for import /local purchase of new generators upto a maximum capacity of 500 KVA shall also be eligible under this Scheme. These borrowings are repayable within a period ranging from 3 years to 10 years and the Scheme will remain effective up to December 31, 2012. These carry markup rates ranging from 5.5% to 7.0% per annum. These borrowings have been obtained from the SBP for providing financing facilities to exporters for adoption of new technologies and modernizing their plant and machinery. These borrowings are repayable within a period ranging from 3 years to 10 years. These carry markup rates ranging from 8.2% to 9.5% per annum (2009: 7.2% to 7.7% per annum). These borrowings have been obtained from the SBP for providing financing facilities to customers for import of machinery, plant, equipment and accessories thereof by export oriented units. These carry markup rates ranging from 4% to 5% per annum (2009: 4% to 5% per annum). These repurchase agreement borrowings are secured against Market Treasury Bills and Pakistan Investment Bonds and carry mark-up at rates ranging from 12.50% to 13.25% per annum (2009: 11.50% to 12.40% per annum). These borrowings are repayable latest by January 2011. The carrying value of securities given as collateral is given in note 9.1. These are borrowings pertaining to overseas operations which carry mark-up at rates ranging from 0.35% to 1.58% per annum (2009: 0.5% to 0.6% per annum) and are due to mature latest by June 2011. This includes borrowing from an overseas bank for the development of Small and Medium Sized Enterprises (SMEs) in Pakistan, carries mark-up at the rate of six months LIBOR + 1.2% (2009: six months LIBOR + 1.2%) and is repayable by June 2013. 2010 2009 (Rupees in 000) 17. DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Savings deposits Sundry deposits Margin deposits Current accounts - remunerative Current accounts - non-remunerative Financial Institutions Remunerative deposits Non-remunerative deposits

16.4

16.5

16.6

16.7

16.8 16.9

169,880,101 195,535,049 4,767,873 3,696,330 4,235,253 184,647,813 562,762,419 2,359,999 2,488,840 4,848,839 567,611,258

155,634,121 179,752,604 4,643,923 4,319,476 2,820,934 154,283,090 501,454,148 1,529,551 847,973 2,377,524 503,831,672

17.1

Particulars of deposits and other accounts In local currency In foreign currencies 415,661,258 151,950,000 567,611,258 368,267,813 135,563,859 503,831,672

210

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
18. SUB-ORDINATED LOANS - UNSECURED Note Issue Date Tenor Rate % per annum Maturity Frequency of principal redemption

2010

2009

(Rupees in '000) Term Finance Certificates - I Term Finance Certificates - II Term Finance Certificates - III Term Finance Certificates - IV August 2004 March 2005 September 2006 February 2008 August 2012 March 2013 Semi Annual Semi Annual Semi Annual Semi Annual

18.1

8 years

8.45%

1,995,388 1,996,160

18.1

8 years

9.49%

1,999,560 1,999,640

18.1

8 years

September 6 months KIBOR+1.70% 2014 For the first five years February 6 months 2018 KIBOR+0.85% and for the remaining term, 6 months KIBOR+1.35%

1,996,800 1,997,600

18.2

10 Years

5,994,000 5,996,400

11,985,748 11,989,800 18.1 These represent listed Term Finance Certificates (TFCs) issued by the Group. The liability of the Group is subordinated as to the payment of principal and profit to all other indebtedness of the Group (including deposits) and is not redeemable before maturity without approval of the State Bank of Pakistan. This represents listed Term Finance Certificates (TFCs) issued by the Group. The liability of the Group is subordinated as to the payment of principal and profit to all other indebtedness of the Group (including deposits). The Group has the right to exercise a call option after a period of 5 years from the issue date. Note 19. OTHER LIABILITIES Mark-up / return / interest payable in local currency Mark-up / return / interest payable in foreign currency Accrued expenses Branch adjustment account Payable against purchase of securities Payable under severance scheme Unearned commission Provision against off - balance sheet obligations Unrealized loss on forward foreign exchange contracts Deferred liabilities Unrealised loss on derivative financial instruments Workers' Welfare Fund payable Insurance payable against consumer assets Others 8,427,554 334,899 2,283,207 1,399,052 236,683 32,563 151,611 669,891 664,027 2,113,439 753,854 418,384 183,095 283,684 17,951,943 7,015,580 349,630 1,686,129 839,346 197,722 33,452 221,434 682,141 207,567 2,098,414 557,414 404,622 393,288 260,088 14,946,827 2010 2009 (Rupees in 000)

18.2

19.1

19.2 19.3 19.4.1 & 23.2

Annual Report 2010

211

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
19.1 This includes an accrual of Rs.255 million (2009: Rs.216 million) for the year ended December 31, 2010 in respect of employee benefit scheme. The objective of the scheme is to reward, motivate and retain high performing executives and officers of the Bank by way of bonus in the form of shares of the Bank. The liability of the Group in respect of this scheme is fixed and is approved each year by the Board of Directors of the Bank. The scheme for each year is managed by a separate Trust formed for this purpose. Note 19.2 Provision against off - balance sheet obligations Opening balance Charge during the year Transfers during the year Payments during the year 29 682,141 (12,250) 669,891 651,697 20,250 10,194 30,444 682,141 2010 2009 (Rupees in 000)

19.3

Deferred liabilities Provision for post retirement medical benefits Provision for gratuity Provision for compensated absences 36.1.5 36.1.5 1,139,616 296,671 677,152 2,113,439 1,147,095 219,411 731,908 2,098,414

19.4

Unrealized gain / (loss) on derivative financial instruments Contract/ Notional amount Unrealised gain / (loss) 2010 2009 2010 2009 (Rupees in '000) Derivatives held for trading - Interest rate swaps - Cross currency swaps - Swaptions - Fx options - Forward sale contracts of government securities 19.4.1

6,985,703 35,570,843 4,110,884 441,981 47,109,411

11,014,381 36,372,837 2,527,248 821,070 50,735,536 Note

(111,793) 51,100 514 (60,179)

(187,593) 143,894 (14,044) (57,743)

2010 2009 (Rupees in 000)

19.4.1 Unrealized loss on derivative financial instruments - net Unrealized gain on derivative financial instruments Unrealized loss on derivative financial instruments 13 19 23.2 693,675 (753,854) (60,179) 499,671 (557,414) (57,743)

212

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
20. 20.1 SHARE CAPITAL Authorized Capital 2010 2009 Number of shares 2,000,000,000 20.2 2,000,000,000 Ordinary shares of Rs.10 each

2010 2009 (Rupees in '000) 20,000,000 20,000,000

Issued, subscribed and paid-up capital Fully paid-up ordinary shares of Rs. 10 each 2010 2009 Number of shares 518,000,000 706,179,687 1,224,179,687 518,000,000 594,890,625 1,112,890,625 Fully paid-up ordinary shares of Rs.10 each Issued for cash Issued as bonus shares 2010 2009 (Rupees in '000) 5,180,000 7,061,798 12,241,798 5,180,000 5,948,907 11,128,907

20.3

During the year 2007, the Bank was admitted to the official list of the UK Listing Authority and to the London Stock Exchange Professional Securities Market for trading of Global Depository Receipts (GDRs), each representing four ordinary equity shares issued by the Bank. The GDRs constitute an offering in the United States only to qualified institutional buyers in reliance on Rule 144A under the U.S Securities Act of 1933 and an offering outside the United States in reliance on Regulation S. Holders of GDRs are entitled, subject to the provision of the depository agreement, to receive dividends, if any, and rank pari passu with other equity shareholders in respect of such entitlement to receive dividends. However, the holders of GDRs have no voting rights or other direct rights of shareholders with respect to the equity shares underlying such GDRs. Subject to the terms and restrictions set out in the offering circular dated June 25, 2007, the deposited equity shares in respect of which the GDRs were issued may be withdrawn from the depository facility. Upon withdrawal, the holders will rank pari passu with other equity shareholders in respect of voting powers. As at December 31, 2010: 78,503,082 (2009: 92,519,435) GDR shares were in issue.

20.4

Major shareholders (holding more than 5% of total paid-up capital) Number of shares held 238,567,381 222,775,183 93,649,744 78,942,102 67,492,392 62,433,163 2010 Percentage of shareholding 19.49% 18.20% 7.65% 6.45% 5.51% 5.10% Number of shares held 216,879,438 202,522,894 85,136,131 71,765,548 61,356,720 56,757,421 2009 Percentage of shareholding 19.49% 18.20% 7.65% 6.45% 5.51% 5.10%

Name of shareholders Government of Pakistan Bestway (Holdings) Limited Bestway Cement Limited His Highness Shaikh Nahayan Mabarak Al Nahayan H.E. Dr. Mana'a Saeed Al Otaiba Sir Mohammed Anwar Pervez, OBE, HPk

As at December 31, 2010 the Abu Dhabi Group (ADG) held 30.30% (2009: 30.30%) shareholding (including GDRs) and the Bestway Group (Bestway) held 31.07% (2009: 31.07%) shareholding of the Bank. ADG and Bestway (Holdings) Limited had entered into a Share Purchase Agreement dated December 28, 2010 for the sale of 20% of the issued and outstanding ordinary shares of the Bank held by ADG to Bestway (Holdings) Limited. Subsequent to the statement of financial position date, Bestway held 51.07% of the issued and outstanding ordinary shares of the Bank whereas control shall continue to rest with the consortium of ADG and Bestway for which all regulatory approvals have been obtained.

Annual Report 2010

213

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Note 21. SURPLUS / (DEFICIT) ON REVALUATION OF ASSETS NET OF DEFERRED TAX Surplus arising on revaluation of assets - net of tax : Fixed assets - Group's share - Non-controlling interest 21.1 Securities - Group's share - Non-controlling interest 21.2 (Deficit) / Surplus arising on revaluation of assets of associates 21.1 Surplus on revaluation of fixed assets Surplus on revaluation of fixed assets at January 01 Revaluation of fixed assets during the year / adjustments Exchange adjustments Written off during the year Transferred to unappropriated profit in respect of incremental depreciation charged during the year Related deferred tax liability on incremental depreciation charged during the year 16,331,741 467,625 (12,251) (256,075) 12.1 (136,794) 62,505 16,394,246 5,275,900 3,092 (136,794) 5,142,198 11,252,048 12,957,920 3,646,052 146,055 (27,071) (254,977) (136,238) 3,373,821 16,331,741 3,972,755 1,448,858 (9,475) (136,238) 5,275,900 11,055,841 2010 2009 (Rupees in 000)

10,865,342 386,706 11,252,048 (2,159,801) (1,014) (2,160,815) (84,263) 9,006,970

10,870,484 185,357 11,055,841 (1,976,173) (1,976,173) 44,268 9,123,936

Less: Related deferred tax liability on: Revaluation as on January 01 Revaluation of fixed assets during the year Written off during the year Incremental depreciation charged on related assets 12.1 21.2 Surplus / (Deficit) on revaluation of available-for-sale securities Market Treasury Bills Pakistan Investment Bonds Listed shares Mutual fund units Term Finance Certificates, Sukuk, other Bonds etc Overseas securities Related deferred tax asset 12.1

(55,830) (1,937,605) (34,452) (709) (27,242) (1,267,279) (3,323,117) 1,162,302 (2,160,815)

20,995 (1,129,224) 95,326 (2,302) (41,213) (1,986,189) (3,042,607) 1,066,434 (1,976,173)

214

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in 000) 22. 22.1 CONTINGENCIES AND COMMITMENTS Direct credit substitutes Contingent liabilities in respect of guarantees given favouring Government Banking companies and other financial institutions Others 22.2 Transaction-related contingent liabilities Contingent liabilities in respect of performance bonds, bid bonds, warranties, etc. given favouring Government Banking companies and other financial institutions Others 22.3 Trade-related contingent liabilities Contingent liabilities in respect of letters of credit opened favouring Government Banking companies and other financial institutions Others 22.4 Other contingencies Claims against the Group not acknowledged as debts 22.5 Commitments in respect of forward lending The Group makes commitments to extend credit in the normal course of its business but these being revocable commitments do not attract any significant penalty or expense if the facility is unilaterally withdrawn. 22.6 Commitments in respect of forward foreign exchange contracts Sale Purchase 22.7 Commitments in respect of derivatives Interest rate swaps Cross currency swaps Swaptions FX Options - purchased FX Options - sold Forward sale contracts of government securities 22.8 22.9 Commitments in respect of capital expenditure For contingencies relating to taxation refer note 13.1 6,985,703 35,570,843 2,055,442 2,055,442 441,981 576,398 11,014,381 36,372,837 2,527,248 410,535 410,535 575,176 85,906,329 131,134,706 47,499,455 92,086,590 29,938,014 20,670,923 58,188,686 760,593 69,387,773 128,337,052 56,186,541 62,787,741 118,974,282 8,742,208 5,766,641 6,124,874 20,633,723 10,831,974 2,910,518 7,396,201 21,138,693

82,423,478 2,470,740 14,018,380 98,912,598

77,448,985 3,311,075 18,521,775 99,281,835

Annual Report 2010

215

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
23. DERIVATIVE INSTRUMENTS Derivatives are a type of financial contract, the value of which is determined by reference to one or more underlying assets or indices. The major categories of such contracts include forwards, futures, swaps and options. Derivatives also include structured financial products that have one or more characteristics of forwards, futures, swaps and options. The Bank as an Authorized Derivative Dealer (ADD) is an active participant in the Pakistan derivatives market. Although the ADD license covers the below mentioned transactions only (permitted under Financial Derivatives Business Regulations issued by the SBP), the Group offers a wide variety of derivative products to satisfy customers needs, specific approval for which is sought from the SBP on a transaction by transaction basis: (a) (b) (c) (d) (e) (f) Foreign Currency Options Forward Rate Agreements Interest Rate Swaps Cross Currency Swaps Equity indices Commodity options

These transactions cover both the aspects of market making and hedging. The authority for approving policies lies with the Board of Directors (BoD) and Board Risk Management Committee (BRMC), who has delegated its powers to the Market Risk Committee (MRC). With regard to derivatives, the MRC is authorized to: Review the derivatives business with reference to market risk exposure and assign various limits in accordance with the risk appetite of the Bank. Review and approve the Derivatives Business Policy Review and sign off derivatives product programs Authorize changes in procedures and processes regarding derivatives and structured products

Overall responsibility for derivatives trading activity lies with the Treasury and Capital Markets Group (TCM). Identifying and quantifying market risk on derivatives, coordinating approvals on temporary or permanent market risk limits, formulation of policies and procedures with respect to market risk arising from derivatives, formal monitoring of market and credit risk exposure and limits and its reporting to the senior management and BoD is done by the Treasury and Market Risk (TMR) Department. Treasury Operations records derivative activity in the Group's books, and handles its reporting to the SBP. Derivative Risk Management There are a number of risks undertaken by the Group, which need to be monitored and assessed, which include:

216

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Credit Risk Credit risk refers to the risk of non-performance or default by a party (a customer, guarantor, trade counterparty, third party, etc.), resulting in an adverse impact on the Groups profitability. Credit risk associated with derivative transactions is categorized into settlement risk and pre-settlement risk. Credit limit proposals for derivative transactions are reviewed by Head Market and Treasury Risk who recomends the appropriate limits to the Credit Committee for approval. Credit exposure of each counterparty is estimated and monitored by Treasury Middle Office on daily basis. Settlement risk is also mitigated by netting off the amounts receivable and payable i.e., the net amount is either received or paid. Market Risk The Group, as a policy, hedges back-to-back all Options transactions. The Group also does not carry any exchange risk on its Cross Currency Swaps portfolio as it hedges the exposure in the interbank market. To manage interest rate risk of Interest Rate Derivatives the Group has implemented various limits which are monitored and reported by Treasury Middle Office on daily basis. Liquidity Risk Derivative transactions, usually being non-funded in nature, do not involve funds therefore there is no specific risk of liquidity. However, there is another aspect of liquidity which is the availability of certain instruments or hedges in the market. This is relevant to the Pakistan market, as interest rate derivatives have a uni-directional demand, and no perfect hedge is available. The Group mitigates its risk, on one side, by limiting the portfolio in terms of tenor, notional and sensitivity limits, and on the other side by taking on and off balance sheet positions in the interbank market, where available. Operational Risk The staff involved in the process of trading, settlement and risk management of derivatives are carefully trained to deal with the complexities involved in the process. A state-of-the-art system has been put in place which handles derivative transactions. Each transaction is processed in accordance with the product program or transaction memo, which contains detailed accounting and operational aspects of the transaction to further mitigate operational risk. In addition, the Treasury Middle Office and the Compliance and Control Department are assigned the responsibility of monitoring any deviation from the policies and procedures. The Groups Audit and Inspection Group also reviews this function, which covers regular review of systems, transactional processes, accounting practices, end-user roles and responsibilities. The Bank has installed a state of the art derivatives system called 'Super Derivatives' which provides an end-to-end solution. Other than supporting the routine transactional process it also provides analytical tools to measure various risk exposures, stress tests and sensitivity analysis. Treasury Middle Office produces various reports for higher management (BoD, BRMC, MRC, etc) on a periodic basis. These reports provide details of the derivatives business profile and various risk exposures.

Annual Report 2010

217

218
Cross currency swaps Number of contracts Notional principal (Rupees in '000) Number of contract Notional principal (Rupees in '000) Number of contracts Notional principal (Rupees in '000) 2010 Swaptions FX options Forward sale contracts of government securities Number of Notional Total contracts principal Notional (Rupees in '000) (Rupees in '000) National principal (Rupees in '000) 4 3 7 3,475,777 1,871,064 5,346,841 4 2 6 14,996,850 2,201,000 17,197,850 82 82 2,055,442 2,055,442 20,528,069 4,072,064 24,600,133 4 1,638,862 9 18,372,993 82 2,055,442 2 441,981 22,509,278

23.1

Product Analysis

Interest rate swaps

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]

United Bank Limited


4 7 11 3,475,777 3,509,926 6,985,703 4 11 15 14,996,850 20,573,993 35,570,843 82 82 164 2,055,442 2,055,442 4,110,884 2 2 441,981 441,981 20,528,069 26,581,342 47,109,411 Cross currency swaps Number of contracts Notional principal (Rupees in '000) Number of contract Notional principal (Rupees in '000) Number of contracts 2009 Swaptions FX options Notional principal (Rupees in '000) National principal (Rupees in '000) Forward sale contracts of government securities Number of Notional Total contract principal Notional (Rupees in '000) (Rupees in '000) 8 4 12 8 1,067,273 8 19,465,353 7,740,900 2,206,208 9,947,108 4 5 9 14,571,600 2,335,884 16,907,484 1 1 2,527,248 2,527,248 4 4 4 410,535 410,535 410,535 22,723,035 7,069,340 29,792,375 20,943,161 8 12 20 7,740,900 3,273,481 11,014,381 4 13 17 14,571,600 21,801,237 36,372,837 1 1 2,527,248 2,527,248 4 4 8 410,535 410,535 821,070 22,723,035 28,012,501 50,735,536

Number of contracts

With Banks for Hedging Market making

With other entities Market Making

Total Hedging Market making

Interest rate swaps

Number of contracts

With Banks for Hedging Market making

With other entities Market Making

Total Hedging Market making

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
23.2 Maturity analysis of derivatives 2010 Remaining Maturity No. of contracts Notional principal Mark to market (Loss) Gain (Rupees in '000) 514 117 220,133 195,625 254,858 22,428 693,675 Net

Upto 1 Month 1 to 3 Month 3 to 6 Month 6 Month to 1 Year 1 to 2 Year 2 to 3 Year 3 to 5 Year 5 to 10 Year Above 10 Year

66 101 1 2 2 8 4 8 192

1,152,095 3,425,771 (360) 9,091 (264) 1,050,000 (27,191) 6,921,500 (19,363) 6,039,258 (60,313) 8,883,870 (816) 19,627,826 (645,547) 47,109,411 (753,854)

514 (360) (264) (27,074) 200,770 135,312 254,042 (623,119) (60,179)

Remaining Maturity

No. of contracts

Notional principal

2009 Mark to market (Loss) Gain (Rupees in '000) (918) (8,367) (61,448) (32,171) (145,045) (309,465) (557,414) 2,150 21,138 57 119,516 215,404 141,406 499,671

Net

Upto 1 Month 1 to 3 Month 3 to 6 Month 6 Month to 1 Year 1 to 2 Year 2 to 3 Year 3 to 5 Year 5 to 10 Year Above 10 Year

2 11 7 4 2 14 6 46

40,000 979,704 1,225,196 1,202,273 6,975,000 17,317,094 22,996,269 50,735,536

(918) 2,150 12,771 (61,391) 87,345 70,359 (168,059) (57,743)

Annual Report 2010

219

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in 000) 24. MARK-UP / RETURN / INTEREST EARNED On loans and advances to customers On lending to financial institutions - Call money lending - Securities purchased under resale agreements - Advances to financial institutions On investments in - Held for trading securities - Available for sale securities - Held to maturity securities - Associates On deposits with financial institutions Discount income 40,375,630 75,784 930,386 243,905 1,250,075 798,013 8,118,652 9,169,756 3,828 18,090,249 351,454 33,002 60,100,410 45,815,220 300,863 1,115,663 348,117 1,764,643 942,613 9,419,796 3,510,314 18,532 13,891,255 250,014 24,330 61,745,462

25.

MARK-UP / RETURN / INTEREST EXPENSED On deposits On securities sold under repurchase agreements On other short - term borrowings On long - term borrowings Discount expense 19,138,026 1,686,337 3,009,529 1,428,292 171,666 25,433,850 22,335,927 1,622,552 2,615,138 1,514,905 234,750 28,323,272

26.

GAIN ON SALE OF SECURITIES - NET Federal Government Securities Market Treasury Bills Pakistan Investment Bonds Ordinary shares Listed companies Other securities

(598) (12,899) (13,497) 118,090 83,571 188,164

108,683 46,290 154,973 331,362 212,940 699,275

27.

OTHER INCOME Charges recovered from customers Rent on properties Income from dealing in derivatives Others 768,840 155,590 501,118 144,183 1,569,731 1,162,018 166,361 1,721,740 96,691 3,146,810

220

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Note 2010 2009 (Rupees in 000)

28.

ADMINISTRATIVE EXPENSES Personnel cost Salaries, allowances etc. Charge for compensated absences Medical expenses Contribution to defined contribution plan Reversal in respect of defined benefit obligations

28.1 36.1.8

7,799,700 152,261 384,422 132,641 (276,975) 8,192,049

7,586,763 418,143 377,104 517,083 (329,554) 8,569,539

Premises cost Rent, taxes, insurance, electricity etc. Depreciation Repairs and maintenance Other operating cost Outsourced service charges including sales commission Advertisement and publicity Communications Depreciation Legal and professional charges Banking service charges Stationery and printing Travelling Cash transportation charges Repairs and maintenance Maintenance contracts Insurance expense Vehicle expense Amortization Training and seminars Office running expense Entertainment Cartage, freight and conveyance Auditors' remuneration Subscriptions Brokerage expenses Sub-ordinated debt related costs Donations Non-executive Directors' fee and allowances Finance charges on leased assets Miscellaneous expenses

11.2

2,336,782 589,384 95,852 3,022,018 1,520,532 794,271 783,934 987,600 300,169 407,414 450,659 192,471 292,392 143,726 509,225 94,477 132,446 224,017 53,390 199,895 104,718 68,378 61,257 32,665 17,153 7,086 82,696 42,993 147 278,883 7,782,594 18,996,661

2,090,735 581,780 98,038 2,770,553 1,313,164 231,939 764,049 957,249 233,312 336,749 354,134 178,392 343,558 130,702 362,105 174,956 107,213 185,985 53,887 152,455 98,112 68,553 62,662 37,417 19,772 7,990 58,020 54,090 110 176,672 6,463,247 17,803,338

11.2

11.3

28.3

28.2

Annual Report 2010

221

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
28.1 This includes employee benefits in the form of awards / bonus to all permanent staff including the Chief Executive Officer and is determined on the basis of employees' evaluation and the Bank's performance during the year. The aggregate benefit determined in respect of all permanent staff amounted to Rs.571.276 million (2009: Rs.318.812 million).

Note

2010 2009 (Rupees in 000)

28.2

Donations exceeding Rs.0.1 million Karachi Education Initiative UBL Flood Relief Campaign Police Hospital Fund The Citizens Foundation Hisaar Foundation Friends of Burns Centre Family Education Services Foundation Marie Adelaide Leprosy Centre Lahore University of Management Sciences Patient Welfare Association SOS Childrens' Villages of Sindh Edhi Foundation Glckskette - Switzerland Special Olympics Pakistan Umeed-e-Noor Karachi City Police Shalamar Hospital Sun Development Foundation Institute of Business Administration 28.2.1 40,000 28,142 5,000 2,200 1,086 1,008 900 850 815 800 581 550 410 200 150 82,692 40,000 550 1,728 900 850 315 451 9,793 545 483 360 55,975

28.2.1 The President is a Director on the Board of the Karachi Education Initiative, a sponsoring and fund raising entity of the Karachi School for Business and Leadership. 28.3 Auditors' remuneration 2010 BDO Overseas Ebrahim Auditors & Co. (Rupees in '000) 5,738 502 1,709 7,949 45,361 234 45,595

Ernst & Young Ford Rhodes Sidat Hyder

Total

Audit fee Fee for audit of EPZ branch Fee for audit of domestic subsidiaries Out of pocket expenses

5,738 250 1,725 7,713

56,837 250 502 3,668 61,257

222

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Ernst & Young Ford Rhodes Sidat Hyder 2009 BDO Overseas Ebrahim Auditors & Co. (Rupees in '000) 5,738 328 1,682 7,748 47,087 47,087 Total

Audit fee Fee for audit of EPZ branch Fee for audit of domestic subsidiaries Out of pocket expenses

5,738 221 1,868 7,827

58,563 221 328 3,550 62,662

Note

2010 2009 (Rupees in 000)

29.

OTHER PROVISIONS / WRITE OFFS - Net (Reversal) / provision against other assets - net Provision against off - balance sheet obligations Other provisions / write offs (Reversal) / provision against Ijarah assets - specific Reversal against Ijarah assets - general 13.3 19.2 (122,261) 193,304 (803) (2,127) 68,113 339,131 20,250 276,716 9,191 (3,014) 642,274

30.

WORKERS WELFARE FUND Certain members of the Group are liable to pay Workers' Welfare Fund @ 2% of profit before tax as per the accounts or declared income as per the income tax return, whichever is higher, under the Workers' Welfare Ordinance, 1971. 2010 2009 (Rupees in 000)

31.

OTHER CHARGES Penalties imposed by the SBP Pertaining to current year Pertaining to prior year Other penalties

107,491 128,000 235,491 4,900 240,391

25,535 39,000 64,535 17 64,552

Annual Report 2010

223

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
32. TAXATION 2010 Overseas Azad Kashmir Domestic Total (Rupees in '000) Current tax Prior year tax Deferred tax 1,034,572 414,937 37,176 1,486,685 22,653 (239) 22,414 2009 Overseas Azad Kashmir Domestic Total (Rupees in '000) Current tax Prior year tax Deferred tax 906,230 78,598 (7,677) 977,151 113,181 (684) 112,497 5,976,846 112 (2,162,377) 3,814,581 6,996,257 78,710 (2,170,738) 4,904,229 5,793,629 392 (635,422) 5,158,599 6,850,854 415,329 (598,485) 6,667,698

2010 2009 (Rupees in 000) 32.1 Relationship between tax expense and accounting profit Accounting profit for the year Tax on income @ 35% (2009: 35%) Tax effect of items that are either not included in determining taxable profit or taxed at reduced rates / permanent difference Prior year tax charge Other charges Tax charge 17,688,623 6,191,018 14,392,181 5,037,263

(58,487) 415,329 119,838 6,667,698

(316,009) 78,710 104,265 4,904,229

224

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in 000) 33. EARNINGS PER SHARE Profit after tax attributable to equity shareholders of the Bank 11,031,630 9,521,546

(Number of shares) Weighted average number of ordinary shares 1,224,179,687 1,224,179,687

(Rupees) Earnings per share - basic and diluted 9.01 7.78

33.1

Diluted earnings per share has not been presented as the Group does not have any convertible instruments in issue at December 31, 2010 and 2009 which would have any effect on the earnings per share if the option to convert is exercised. Earnings per share for the year 2009 has been restated for the effect of bonus shares issued during the current year. Note 2010 2009 (Rupees in 000)

33.2

34.

CASH AND CASH EQUIVALENTS Cash and balances with treasury banks Balances with other banks 6 7 67,667,226 25,980,928 93,648,154 61,562,141 14,049,990 75,612,131

35.

STAFF STRENGTH (Number) Permanent Contractual basis Group's own staff strength at the end of the year Outsourced Total number of employees at the end of the year 8,669 104 8,773 3,074 11,847 8,648 90 8,738 2,905 11,643

Annual Report 2010

225

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
36. 36.1 EMPLOYEE BENEFITS United Bank Limited

36.1.1 Defined benefit plan 36.1.2 General description The Bank operates a funded pension scheme established in 1986. The Bank also operates a funded gratuity scheme for new employees and those employees who have not opted for the pension scheme. The Bank also operates a contributory benevolent fund scheme and provides post retirement medical benefits to eligible retired employees. The benevolent fund plan and the post-retirement medical plan cover all regular employees of the Bank who joined the Bank pre-privatisation. The Bank also maintains an employee compensated absences scheme. The liability of the Bank in respect of long-term employee compensated absences is determined based on actuarial valuation carried out using the Projected Unit Credit Method. Actuarial valuation of the defined benefit plan scheme is carried out every year and the latest valuation was carried out as at December 31, 2010.

36.1.3 Number of Employees under the scheme The number of employees covered under the following defined benefit scheme / plans are: 2010 (Number) 2009

Pension fund Gratuity fund Benevolent fund Employee' compensated absences Post retirement medical benefit scheme

7,723 5,589 7,490 6,708 4,480

7,845 5,416 7,888 6,942 4,790

The Pension fund, benevolent fund and post retirement medical benefit schemes include 5,384 (2009: 5,372), 3,010 (2009: 3,098) and 2,228 (2009: 2,152) members respectively who have retired or whose widows are receiving the benefits. 36.1.4 Principal actuarial assumptions The actuarial valuations were carried out as at December 31, 2010 based on the Projected Unit Credit Actuarial Cost Method, using the following significant assumptions: 2010 (Per annum) Discount rate Expected rate of return on plan assets Expected rate of salary increase Expected rate of pension increase 14.50% 14.50% 12.50% 6.75% 12.75% 12.75% 10.50% 5.00% 2009

226

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
36.1.5 Reconciliation of (receivable from) / payable to defined benefit plans
2010 Benevolent fund

Pension fund

Gratuity fund

Employee Post retirement compensated medical benefit absences (Rupees in '000) 420,778 (799,917) (379,139) 198,356 (180,783) 2009 Benevolent fund 826,088 313,528 1,139,616 677,152 677,152

Present value of funded obligations Fair value of plan assets Present value of unfunded obligation Net actuarial gains or (losses) not recognized (Receivable) / payable

3,598,231 (5,527,239) (1,929,008) 1,925,416 (3,592)

417,733 (325,781) 91,952 (100,137) (8,185)

Pension fund

Gratuity fund

Post Employee retirement compensated medical benefit absences (Rupees in '000) 459,080 (796,302) (337,222) 205,656 (131,566) 852,603 294,492 1,147,095 731,908 731,908

Present value of funded obligations Fair value of plan assets Present value of unfunded obligation Net actuarial gains or (losses) not recognized (Receivable) / payable 36.1.6 Movement in defined benefit obligation

3,585,208 (6,107,212) (2,522,004) 2,119,273 (402,731)

365,292 (301,174) 64,118 (79,620) (15,502)

Note

Pension fund

Gratuity fund

Post Employee retirement compensated medical benefit absences (Rupees in '000) 459,080 6,694 48,347 (73,242) (20,101) 420,778 852,603 6,430 112,903 (100,658) (45,190) 826,088 731,908 41,106 104,760 (207,017) 6,395 677,152

2010 Benevolent fund

Obligation at the beginning of the year Current service cost Interest cost Benefits paid by the Bank Recognition of prior service cost Return allocated to other funds Early retirement liability Actuarial (gain) / loss on obligation Obligation at the end of the year

36.1.9

3,585,208 10,788 118,861 (333,708) 232,232 (15,150) 3,598,231

365,292 48,711 48,331 (61,513) 16,912 417,733

Annual Report 2010

227

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Pension fund Gratuity fund Employee Post retirement compensated medical benefit absences (Rupees in '000) 529,647 7,103 62,995 (127,518) (13,147) 459,080 875,509 5,914 103,084 (125,019) (24,242) 17,357 852,603 613,602 34,461 110,245 (299,837) 62,201 211,236 731,908 2009 Benevolent fund

Obligation at the beginning of the year Current service cost Interest cost Benefits paid by the Bank Recognition of prior service cost Return allocated to other funds Early retirement liability Actuarial (gain) / loss on obligation Obligation at the end of the year

3,625,280 10,051 156,655 (653,986) 322,253 124,955 3,585,208

384,786 46,619 53,312 (86,446) (32,979) 365,292

36.1.7 Movement in fair value of plan assets Pension fund Gratuity fund Employee Post retirement compensated medical benefit absences (Rupees in '000) 796,302 87,822 5,450 5,450 (85,232) (9,875) 799,917 2009 Benevolent fund 2010 Benevolent fund

Fair value at the beginning of the year Expected return on plan assets Contribution by the Bank Contribution by the employees Amount paid by the fund to the Bank Actuarial gain / (loss) on plan assets Fair value at the end of the year

6,107,212 642,077 (1,214,658) (7,392) 5,527,239

301,174 40,904 68,631 (77,251) (7,677) 325,781

Pension fund

Gratuity fund

Employee Post retirement compensated medical benefit absences (Rupees in '000) 739,180 90,031 5,979 5,979 (122,924) 78,057 796,302 -

Fair value at the beginning of the year Expected return on plan assets Contribution by the Bank Contribution by the employees Amount paid by the fund to the Bank Actuarial gain / (loss) on plan assets Fair value at the end of the year

6,526,828 843,551 (1,272,621) 9,454 6,107,212

291,292 41,702 75,044 (119,390) 12,526 301,174

228

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
36.1.8 Movement in (receivable from) / payable to defined benefit plans Pension fund Gratuity fund Employee Post retirement compensated medical benefit absences (Rupees in '000) (131,566) (1,773) (53,984) (5,450) 85,232 (73,242) (180,783) 2009 Benevolent fund 1,147,095 93,179 (100,658) 1,139,616 731,908 152,261 (207,017) 677,152 2010 Benevolent fund

Opening balance Mark-up receivable on Bank's balance Charge / (reversal) for the year Contribution by the Bank Amount paid by the Fund to the Bank Benefits paid by the Bank Closing balance

(402,731) (13,046) (468,765) 1,214,658 (333,708) (3,592)

(15,502) (237) 60,447 (68,631) 77,251 (61,513) (8,185)

Pension fund

Gratuity fund

Employee Post retirement compensated medical benefit absences (Rupees in '000) (89,177) (99) (31,717) (5,979) 122,924 (127,518) (131,566) 1,219,400 52,714 (125,019) 1,147,095 613,602 418,143 (299,837) 731,908

Opening balance Mark-up receivable on Bank's balance Charge / (reversal) for the year Contribution by the Bank Amount paid by the Fund to the Bank Benefits paid by the Bank Closing balance

(414,783) (22,731) (583,852) 1,272,621 (653,986) (402,731)

(40,318) (846) 67,762 (75,044) 119,390 (86,446) (15,502)

36.1.9 Charge for defined benefit plans 2010 Benevolent fund

Note

Pension fund

Gratuity fund

Employee Post retirement compensated medical benefit absences (Rupees in '000) 6,694 48,347 (87,822) (15,753) (5,450) (53,984) 6,430 112,903 (26,154) 93,179 41,106 104,760 6,395 152,261

Current service cost Interest cost Expected return on plan assets Recognition of prior service cost Actuarial (gains) and losses Return allocated to other funds Employees' contribution Settlement loss / gains

36.1.9.1

10,788 118,861 (642,077) (188,569) 232,232 (468,765)

48,711 48,331 (40,904) 4,309 60,447

Annual Report 2010

229

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Pension fund Gratuity fund Employee Post retirement compensated medical benefit absences (Rupees in '000) 7,103 62,995 (90,031) (5,805) (5,979) (31,717) 5,914 103,084 (32,042) (24,242) 52,714 34,461 110,245 62,201 211,236 418,143 2009 Benevolent fund

Current service cost Interest cost Expected return on plan assets Recognition of prior service cost Actuarial (gains) and losses Return allocated to other funds Employees' contribution Settlement loss / gains

10,051 156,655 (843,551) (229,260) 322,253 (583,852)

46,619 53,312 (41,702) 9,533 67,762

36.1.9.1 This represents return allocated to those employees who exercised the conversion option offered in the year 2001 as referred to in note 5.11.1. 36.1.10 Actual return on plan assets Amongst the defined benefit plans, the pension, gratuity and benevolent fund plans are funded. The actual return earned on the assets during the year are: 2010 Employee Pension Gratuity Benevolent Post fund fund fund retirement compensated medical benefit absences (Rupees in '000) Expected return on plan assets Actual gain / (loss) on plan assets 642,077 (7,392) 634,685 40,904 (7,677) 33,227 87,822 (9,875) 77,947 2009 Benevolent fund -

Pension fund

Gratuity fund

Employee Post retirement compensated medical benefit absences (Rupees in '000) 90,031 78,057 168,088 -

Expected return on plan assets Actual gain / (loss) on plan assets

843,551 9,454 853,005

41,702 12,526 54,228

230

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
36.1.11 Five year data on surplus/ (deficit) of the plans and experience adjustments Pension Fund 2010 2009 2008 (Rupees in '000) 2007 2006

Present value of defined benefit obligation Fair value of plan assets Surplus Experience adjustments on plan liabilities [loss / (gain)] Experience adjustments on plan assets [loss / (gain)] Gratuity Fund Present value of defined benefit obligation Fair value of plan assets Surplus / (deficit) Experience adjustments on plan liabilities [loss / (gain)] Experience adjustments on plan assets [loss / (gain)] Benevolent Fund Present value of defined benefit obligation Fair value of plan assets Surplus / (deficit) Experience adjustments on plan liabilities [loss / (gain)] Experience adjustments on plan assets [loss / (gain)] Post retirement medical benefit Present value of defined benefit obligation Experience adjustments on plan liabilities [loss / (gain)] Employee compensated absences Present value of defined benefit obligation Experience adjustments on plan liabilities [loss / (gain)] 36.1.12 Effects of a 1% movement in assumed medical cost trend rates

(3,598,231) 5,527,239 1,929,008 (214,828) 57,726

(3,585,208) (3,625,280) 6,107,212 2,522,004 89,216 (282,376) 6,526,828 2,901,548 (87,141) (1,195)

(4,343,529) 7,260,256 2,916,727 126,265 (11,848)

(4,433,583) 7,116,577 2,682,994 238,500 (411,713)

(417,733) 325,781 (91,952) 36,338 6,400

(365,292) 301,174 (64,118) 137,106 96,896

(384,786) 291,292 (93,494) 43,905 55,290

(399,289) 356,676 (42,613) 27,782 (5,179)

(437,373) 335,449 (101,924) 33,547 10,979

(420,778) 799,917 379,139 1,505 2,737

(459,080) 796,302 337,222 (8,798) (56,670)

(529,647) 739,180 209,533 138,712 144,550

(564,591) 914,356 349,765 (90,203) (45,638)

(670,979) 917,522 246,543 (11,064) (64,187)

(826,088) (26,232)

(852,603) 37,473

(875,509) 761

(1,202,462) (67,904)

(1,298,048) (37,633)

677,152 -

731,908 -

613,602 -

843,193 -

1,074,258 -

Annual medical expense limit is based on frozen non-monetized basic pay of employees as on June 30, 2001. Accordingly, movement in medical cost trend rates would not affect current service cost, interest cost and defined benefit obligations.

Annual Report 2010

231

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
36.1.13 Components of plan assets as a percentage of total plan assets Pension fund Gratuity fund 2010 Benevolent fund (Percentage) Government securities Units of mutual funds Ordinary shares of listed companies Term finance certificates Others (including bank balances) 6.58% 5.20% 0.68% 9.72% 77.82% 100.00% 98.51% 0.00% 0.75% 0.73% 0.01% 100.00% 95.35% 0.00% 2.55% 1.99% 0.11% 100.00% 2009 Benevolent fund (Percentage) Government securities Units of mutual funds Ordinary shares of listed companies Term finance certificates Others (including bank balances) 15.95% 24.98% 0.62% 7.23% 51.22% 100.00% 51.14% 17.84% 0.77% 29.35% 0.90% 100.00% 41.32% 45.40% 3.63% 9.65% 100.00% Employee Post retirement compensated medical benefit absences

Pension fund

Gratuity fund

Employee Post retirement compensated medical benefit absences

As per the actuarial recommendations the expected return on plan assets was taken as 14.5% per annum on Pension Fund Assets, Gratuity Fund Assets and Benevolent Fund Assets. The expected return on plan assets was determined by considering the expected returns available on the assets underlying the current investment policy. 36.1.14 Expected contributions to be paid to the funds in the next financial year The Bank contributes to the pension and gratuity funds according to the actuary's advice. Contribution to the benevolent fund is made by the Bank as per the rates set out in the benevolent scheme. Based on actuarial advice, the management estimates that the charge in respect of defined benefit plans for the year ended December 31, 2011 would be as follows: 2011 Benevolent fund

Pension fund

Gratuity fund

Employee Post retirement compensated medical benefit absences (Rupees in '000) (59,992) 96,810 190,540

Expected charge for the year

(410,926)

71,743

232

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
36.2 United National Bank Limited Pension and Life Assurance Scheme for U.K Employees. As part of the Shareholders Agreement (the Agreement) signed on November 09, 2001 between UNBL and the shareholders, United Bank Limited and National Bank of Pakistan, it was agreed that UNBL may participate as an associated employer in the United Bank Limited Pension and Life Assurance Scheme (the Scheme) with effect from completion of the transfer of the businesses (November 19, 2001) (the Completion Date). The Scheme is classified as a defined benefit scheme providing benefits based on final pensionable salary. Under the terms of the Agreement, UNBL is responsible for the funding requirements of the active members whose employment was transferred to UNBL on the Completion Date and for any new members admitted to the scheme after this date. United Bank Limited remains responsible for the funding of the deferred members as till the Completion Date. No new members have been admitted to the scheme in the year ended December 31, 2010. The last full actuarial valuation of the scheme was carried out at January 01, 2008 and was updated as at January 01, 2010 by a qualified actuary on the basis of triennial valuations using Projected Unit Credit Method. The major assumptions used by the actuary are as follows: 2010 Per annum Discount rate Rate of revaluation of pension in deferment Expected rate of salary increase Expected rate of pension increase Price inflation 5.50% 5.00% 0.00% 3.50% 3.50% 5.60% 5.00% 0.00% 3.70% 3.70% 2009

The assets and liabilities of the scheme noted below relate to those employees for whom the UNBL has a funding liability. The combined assets in the scheme and the expected rate of return were:

2010 Percentage Other - insurance policy Total market value of assets Actuarial value of liability Gross pension liability Related Deferred Tax Relief Net pension liability 5.50% (Rupees '000) 512,198 512,198 (610,152) (97,954) 27,475 (70,479)

2009 Percentage (Rupees '000) 5.60% 510,254 510,254 (654,625) (144,371) 40,473 (103,898)

The asset value supplied by the insurance company for 2009 is on an ongoing basis. If the policy had been surrendered at December 31, 2010 the surrender value would have been Rs.512.198 million (2009: Rs.510.250 million). It is not UNBL's intention to surrender the policy.

Annual Report 2010

233

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in '000) 36.2.1 Movement in surplus / (deficit) during the year Obligation at the beginning of the year Current service cost Past service cost Interest (expense) / income Employer`s contribution Actuarial losses / (gains) Exchange adjustment Related deferred tax relief Obligation at the end of the year (103,897) (8,431) 51,631 (37,257) 27,475 (70,479) 4,703 (14,089) (28,178) 1,281 21,262 (121,679) (5,366) 38,169 (103,897)

No directors were members of the defined benefit scheme during the year or as at December 31, 2010. 2010 2009 (Rupees in '000) 36.2.2 Analysis of the amount charged to operating profit Current service cost Past service cost Total operating charge 14,089 28,178 42,267

The defined benefit scheme is now closed to new entrants and future accrual has ceased from January 01, 2010. As a result of the curtailment in benefits UNBL recognised a past service cost of Rs.28.178 million in prior year. 2010 2009 (Rupees in '000) 36.2.3 Analysis of the amount credited / (debited) to net interest income Expected return on pension scheme assets Interest on pension scheme liabilities Net return 36.3 UBL Fund Managers Limited The latest actuarial valuation of the Company's gratuity fund has been carried out as at December 31, 2010 using the Projected Unit Credit Method. The main assumption used in the actuarial valuation are as follows: 36.3.1 Principal actuarial assumptions The key assumptions used for actuarial valuation were as follows: 2010 Per annum Discount rate Expected rate of return on plan assets Expected rate of salary increase 14.50% 14.50% 14.50% 12.75% 12.75% 12.75% 2009 26,609 (35,040) (8,431) 29,331 (28,050) 1,281

234

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in '000) 36.3.2 Reconciliation of payable to defined benefit plan Present value of defined benefit obligations Fair value of plan assets Net actuarial losses not recognized 19,776 (11,619) 8,157 (2,749) 5,408 13,168 (7,246) 5,922 (1,131) 4,791

36.3.3 Movement in defined benefit obligation Obligation at the beginning of the year Current service cost Interest cost Benefits paid Actuarial losses / (gains) Obligation at the end of the year 36.3.4 Movement in the fair value of plan assets Fair value of plan assets at the beginning of the year Expected return on plan assets Contributions to the plan Benefits paid Actuarial gains 7,246 1,270 4,791 (1,701) 13 11,619 3,061 828 2,930 (250) 677 7,246 13,168 4,730 1,948 (1,701) 1,631 19,776 8,041 4,045 1,491 (250) (159) 13,168

36.3.5 Plan assets are comprise as follows: Debt Cash Equity Others 7,936 592 2,582 509 11,619 2,809 847 3,575 15 7,246

36.3.6 Charge for defined benefit plan Current service cost Interest cost Expected return on plan asset Amortization of loss 4,730 1,948 (1,270) 5,408 1,301 4,045 1,491 (828) 83 4,791 1,433

Actual return on plan assets

Annual Report 2010

235

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 2010 (Rupees in '000) 36.3.7 Movement in net liability recognised Opening net asset Expense recognised Contribution to the fund made during the year Closing net assets 37 37.1 OTHER EMPLOYEE BENEFITS Defined contribution plan The Bank operates a contributory provident fund scheme for 5,209 (2009: 5,356) employees who are not in the pension scheme. The employer and employee both contribute 8.33% of the basic salary to the funded scheme every month. 37.2 Employee Motivation and Retention Scheme The Bank operates a long term motivation and retention scheme for its employees. The objective of the scheme is to reward, motivate and retain high performing executives and officers of the Bank by way of bonus in the form of shares of the Bank .The liability of the Bank in respect of this scheme is fixed and approved each year by the Board of Directors of the Bank .The scheme is managed by separate Trusts formed in respect of each year. During the year, Rs.206.819 million (2009: Rs.40.212 million) and Rs.33.817 million (2009: Rs.6.409 million) were received by the executives and the chief executive respectively from the scheme. For further details, refer note 19.1. 37.3 Benazir Employees Stock Option Scheme The Government of Pakistan (GoP), being one of the shareholders of the Bank, decided to launch the Benazir Employees Stock Option Scheme on August 14, 2009, whereby the GoP intends to transfer free of cost 26,391,483 shares of the Bank, including 26,025,533 shares held by the SBP as at December 31, 2010, to UBL Employees Empowerment Trust [the Trust]. As per the Trust Deed such shares will be allocated through Unit Certificates to eligible employees in proportion to their entitlement which will be based on length of service subject to certain restrictions. The Trust is entitled to receive dividends declared, of which 50 percent will be distributed amongst employees on the basis of units held. The balance 50 percent would be remitted to a Central Revolving Fund of the Privatization Commission of Pakistan for payment to employees at the time of end of service settlement on fulfilment of vesting conditions, against surrendered units with the shares underlying such surrendered units being transferred back to the GoP. This generalized scheme being a government policy to provide empowerment to employees of State Owned Enterprises and other entities where the GoP has a shareholding, may attract the provisions of amended IFRS-2 (Share-based Payments). However, keeping in view the nature, characteristics, exceptions and manner of operation of the generalized scheme, the applicability of IFRS-2 to the said scheme is under consideration of the Institute of Chartered Accountants of Pakistan and the Securities and Exchange Commission of Pakistan. 4,791 5,408 (4,791) 5,408 2,930 4,791 (2,930) 4,791

236

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
38. COMPENSATION OF DIRECTORS AND EXECUTIVES President / Chief Executive
2010 2009

Directors
2010 2009 (Rupees in '000)

Executives
2010 2009

Fees Managerial remuneration Charge for defined benefit plan Charge for defined contribution plan Rent and house maintenance Utilities Medical Conveyance Reimbursement of children's education fees Others

61,349 1,001 1,880 4,750 269 65 1,106 3,133 73,553

61,287 1,001 1,880 2,375 148 56 5,928 1,880 74,555 1

42,993 42,993 9

54,090 54,090 7

7,935 2,899,401 215,447 77,172 399,407 176,827 86,505 306,773 196,209 4,365,676 1,360

9,163 2,691,546 231,579 62,835 345,490 110,030 74,326 292,845 184,724 4,002,538 1,246

Number of persons

The Bank's President / Chief Executive Officer and certain Executives are provided with free use of Group maintained cars and household equipment. In addition to the above, all executives including Chief Executive Officer of the Bank, are also entitled to certain short and long term employee benefits which are disclosed in notes 36 and 37 to these financial statements. 39. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of traded investments other than those classified as held to maturity is based on quoted market price. Fair value of unquoted equity investments, is determined on the basis of break-up value of these investments as per the latest available audited financial statements. The provision for impairment of associates and other investments has been determined in accordance with the Group's accounting policy as stated in notes 4.2 and 5.8 to these consolidated financial statements respectively. The fair value of fixed term loans, other assets, other liabilities and fixed term deposits cannot be calculated with sufficient reliability due to the absence of a current and active market for assets and liabilities and reliable data regarding market rates for similar instruments. The provision for impairment of loans and advances has been calculated in accordance with the Group's accounting policy as stated in note 5.6 to these consolidated financial statements. The repricing profile, effective rates and maturity of financial instruments are stated in note 44 to these consolidated financial statements. In the opinion of the management, the fair value of the remaining financial assets and liabilities are not significantly different from their carrying values since these are either short-term in nature or, in the case of customer loans and deposits, are frequently repriced.

Annual Report 2010

237

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
40. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES
For the year ended December 31, 2010 Trading and Retail Commercial Asset Sales Banking Banking Management (Rupees in '000) 2,647,783 (690,072) 1,957,711 0.7% 8.0% 32,132,512 (21,703,895) 10,428,617 1.1% 4.0% 9,208,767 (4,291,011) 4,917,756 1.8% 10.7% 370,918 (315,443) 55,475 7.4% -

Corporate Finance

Others

Total income Total expenses Profit / (loss) before tax Segment return on assets (ROA) (%) Segment cost of funds (%)

471,169 (102,402) 368,767 5.4% 0.3%

764,339 (804,042) (39,703) -

Corporate Finance

Trading and Sales

For the year ended December 31, 2009 Retail Commercial Asset Banking Banking Management (Rupees in '000) 30,605,367 (21,643,892) 8,961,475 1.0% 4.9% 9,456,906 (7,302,410) 2,154,496 1.0% 10.0% 464,019 (300,779) 163,240 21.6% -

Others

Total income Total expenses Profit / (loss) before tax Segment return on assets (ROA) (%) Segment cost of funds (%)

187,140 (641,566) (454,426) -5.4% 6.6%

3,860,120 (831,738) 3,028,382 1.4% 9.3%

1,609,080 (1,070,066) 539,014 -

Corporate Finance

Trading and Sales

As at December 31, 2010 Retail Commercial Banking Banking (Rupees in '000) 199,958,760 21,787,039 16,691,950 170,683,576 265,008,433 24,810,869 16,828,908 245,510,597

Asset Management

Others

Segment assets (gross of NPL provisions) Segment non performing loans (NPL) Segment provision required against NPL Segment liabilities

5,004,302 4,665,722

257,667,931 2,002,017 10,105 258,459,687

483,062 37,560

30,811,271 13,153 13,153 (29,101,679)

Corporate Finance

Trading and Sales

As at December 31, 2009 Retail Commercial Banking Banking (Rupees in '000) 219,950,038 19,342,444 13,546,998 203,523,777 247,434,473 20,709,293 14,140,352 221,518,027

Asset Management

Others

Segment assets (gross of NPL provisions) Segment non performing loans (NPL) Segment provision required against NPL Segment liabilities

7,166,858 6,410,759

166,715,474 161,934,319

495,052 51,050

26,360,866 13,500 13,500 (20,334,384)

41. TRUST ACTIVITIES The Group is not engaged in any significant trust activities. However, it acts as custodian for some of the Term Finance Certificates it arranges and distributes on behalf of its customers.

238

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
42. RELATED PARTY TRANSACTIONS The Group has related party transactions with its associates, employee benefit plans (refer notes 36 and 37) and its directors and executive officers (including their associates). Details of loans and advances to key management personnel, the companies or firms in which the Directors of the Group are interested as directors, partners or in case of private companies as members are given in note 10.8 to these consolidated financial statements. Contributions to and accruals in respect of staff retirements and other benefit plans are made in accordance with the actuarial valuations / terms of the contribution plan (refer note 36 to these consolidated financial statements for the details of plans). 42.1 RELATED PARTY TRANSACTIONS Details of transactions with related parties during the year, other than those which have been disclosed elsewhere in these financial statements, are as follows:
2010 Key management personnel Associates Other Key related management parties personnel (Rupees in '000) 2009 Associates Other related parties

Balances with other banks In saving accounts Lendings to financial institutions Call Money Lendings Investments In shares / mutual funds Opening balance Investment made during the year Investment sold / liquidated during the year Equity method adjustment Closing balance Ordinary Shares Term Finance Certificates Advances Opening balance Addition during the year Repaid during the year Closing balance 102,750 170,447 (131,435) 141,762 148,875 38,092 (84,217) 102,750 . 7,522,641 2,738,412 (2,434,051) (160,787) 7,666,215 50,372 50,372 46,634 148,368 2,905,831 4,481,858 (380,751) 515,703 7,522,641 50,372 50,372 13,950 41,534 350,000 2,773 -

Annual Report 2010

239

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2010 Key management personnel Associates Other Key related management parties personnel (Rupees in '000) 2009 Associates Other related parties

Other Assets Interest markup accrued Receivable from staff retirement funds Prepaid insurance Remuneration receivable from management of fund Sales load receivable Other receivable Borrowings Opening balance Borrowings during the year Settled during the year Closing balance Overdrawn nostros Deposits and other accounts Opening balance Received during the year Withdrawn during the year Closing balance Sub-ordinated loans Other Liabilities Interest / markup payable on deposits Interest / markup payable on borrowings Interest / markup payable on sub-ordinated loans Unrealised loss on derivative transactions Provision for employee benefit scheme Other payable 41 17,769 167 1,024 618,818 250,000 174 449 814 36,497 26,851 1,095 1,899 307,241 210,000 19,365 444,766 (439,274) 24,857 5 164,877 31,725,811 (28,111,680) 3,779,008 5,999 56,453 34,749,151 (34,742,618) 62,986 20,149 258,920 (259,704) 19,365 5 147,701 15,508,596 (15,491,420) 164,877 761,987 308,347 1,151,870 (1,403,764) 56,453 300,000 2,100,000 (2,400,000) 533 100,000 (100,000) 1,650,000 (1,350,000) 300,000 319 1,100,000 (1,000,000) 100,000 1,368 14,398 304 4,656 66,595 18,759 15,256 3,913 108,522 2,103 1,045,899 -

240

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2010 Key management personnel Associates Other Key related management parties personnel (Rupees in '000) 75,321 1,600 2,127,895 23 8,984 42,993 104,035 (402,939) 210,000 7,398 389 268,383 10,286 2009 Associates Other related parties

Mark-up / return / interest earned Dividend received Net gain on sale of investment Realised gain on derivative transactions Remuneration received from management of fund Sales load received Other income Mark-up / return / interest paid Remuneration paid Post employment benefits Non-executive directors' fee and allowances Net charge for defined contribution plans Net reversal for the defined benefit plans Payment for employee motivation and retention scheme Other expenses Insurance premium paid Insurance claims settled

9,238 528 716 336,588 12,224 -

356,010 2,393 319,268 9,130 749 242,488 -

228,516 376,969 18,486 576 69,402 -

29,597 1,662,595 816 54,090 416,114 (493,415) 50,005

204,492 164,859

215,804 217,907

43. CAPITAL ADEQUACY 43.1 The Basel II Framework is applicable to the Bank whereby the Standardized Approach for reporting Capital Adequacy is currently implemented. Under the said approach, credit risk and market risk exposures are measured using the Standardized Approach and operational risk is measured using the Basic Indicator Approach. The Groups capital adequacy is reported using the rules and ratios provided by the State Bank of Pakistan. The subsidiaries comply with the capital adequacy and risk management frameworks prescribed by their respective regulations in their jurisdictions. The capital adequacy ratio is a measure of the amount of Group's capital expressed as a percentage of its risk weighted assets. Measuring capital adequacy requires risk mitigants to be applied to the amount of assets shown on a Group's balance sheet. These assets are then applied weightages according to the degree of inherent risk. The capital adequacy ratios compares the amount of eligible capital with the total of risk-weighted assets (RWAs). The Group has developed Internal Capital Adequacy Assessment Process (ICAAP) as per the guidelines provided by the SBP. This framework has been approved by the Groups Board of Directors and submitted to the SBP. The Group additionally covers risk not yet included under Pillar I, so as to carry adequate capital to cater for any future business requirements. The Group will review the ICAAP framework on an annual basis and changes/updates will be recommended to the Basel II committee for onward submission to the Board of Directors. The Group plans to move towards the Advanced Approach for Basel II, including the Foundation Internal Ratings Based Approach for credit risk, Internal Models Approach for market risk and the Alternate Standardized Approach for operational risk.

Annual Report 2010

241

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
43.2 Capital Management The objective of managing capital is to safeguard the Group's ability to continue as a going concern. It is the policy of the Group to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The impact of the level of capital on shareholders return is also recognized and the Group recognizes the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position. Statutory minimum capital and capital adequacy requirements The SBP through its BSD Circular No. 07 dated April 15, 2009 has prescribed the minimum paid-up capital (net of accumulated losses) for Banks / Development Finance Institutions to be raised to Rs.10 billion by the year ending December 31, 2013. The paid-up capital of the Group for the year ended December 31, 2010 stood at Rs.12,241.798 million (2009: Rs.11,128.907 million) and is in compliance with SBP requirements. In addition, banks are also required to maintain a minimum Capital Adequacy Ratio (CAR) of 10% of the risk weighted exposure of the Banks. The Groups CAR as at December 31, 2010 was 15.04% (2009: 14.03%). The Group and its individually regulated operations have complied with all capital requirements throughout the year. Tier 1 capital, includes fully paid-up capital, balance in share premium account, general reserves as per the financial statements and net un-appropriated profits after deduction of book value of goodwill / intangibles, deficit on revaluation of available for sale investments and 50% of investments in equity and other regulatory capital of majority owned securities or other financial subsidiaries not consolidated in the statement of financial position as per the guidelines laid under the Basel II framework. Tier 2 capital includes general provisions for loan losses, reserves on the revaluation of fixed assets and equity investments, foreign exchange translation reserves and subordinated debts (upto maximum of 50% of total eligible tier 1 capital) after deduction of 50% of investments in equity and other regulatory capital of majority owned securities or other financial subsidiaries not consolidated in the statement of financial position as per the guidelines laid under the Basel II Framework. Tier 3 capital has also been prescribed by the SBP for managing market risk; however, the Group does not have any Tier 3 capital. Banking operations are categorized as either trading book or banking book and risk-weighted assets are determined according to specified requirements of the SBP that seek to reflect the varying levels of risk attached to assets and off-balance sheet exposures. The total risk-weighted exposures comprise of credit risk, market risk and operational risk.

242

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
43.3 Capital Adequacy Ratio The capital adequacy ratio, calculated in accordance with the SBP's guidelines on capital adequacy was as follows: 2010 Regulatory capital base Tier I Capital Fully paid up capital Statutory and general reserves as disclosed on the balance sheet Unappropriated profits Non-controlling interest (Rupees in 000) 2009

Deductions: Book value of intangibles Shortfall in provisions irrespective of relaxation provided Reciprocal cross holdings by banks 50 % of Investments in equity and other regulatory capital of majority owned securities or other financial subsidiaries not consolidated in the statement of financial position Total eligible Tier 1 Capital Supplementary Capital Tier II Capital General provisions or general reserves for loan losses-up to maximum of 1.25% of risk weighted assets Revaluation reserves up to 45% Foreign exchange translation reserve Subordinated debt - upto maximum of 50% of total eligible Tier 1 capital Cash flow hedge reserve Total Tier II Capital Deductions: 50 % of Investments in equity and other regulatory capital of majority owned securities or other financial subsidiaries not consolidated in the statement of financial position Total eligible Tier 2 Capital Total Eligible Capital Capital requirements 2010 2009 Risk weighted exposures Credit risk Claims on: Federal and Provincial Government, SBP and Other Sovereigns in foreign currency Public Sector Enterprises Banks Corporate Retail portfolio Secured by residential property Past due loans Listed equity investments Unlisted equity investments Investments in fixed assets Other assets Market risk Interest rate risk Equity exposure risk Foreign exchange risk Operational risk Capital adequacy ratio Total eligible regulatory capital held Total risk weighted assets Capital adequacy ratio 2,355,478 305,596 949,623 3,610,697 6,524,466 50,169,463 79,273,904 527,032,530 15.04% 1,830,566 337,635 673,653 2,841,854 5,980,740 49,389,557 72,374,429 515,952,043 14.03%

12,241,798 14,465,696 27,576,333 2,207,241 56,491,068 1,460,661 261,637 5,999 107,573 1,835,870 54,655,198

11,128,907 12,354,984 23,617,874 2,279,691 49,381,456 491,511 33,792 525,303 48,856,153

1,425,496 5,882,008 9,765,294 7,852,176 (198,695) 24,726,279

569,195 5,980,110 9,019,387 8,300,938 (317,562) 23,552,068

107,573 107,573 24,618,706 79,273,904

33,792 33,792 23,518,276 72,374,429

(Rupees in '000)

Risk weighted assets 2010 2009

1,910,721 1,285,319 3,588,852 23,688,885 3,428,589 174,425 1,945,383 932,518 83,345 2,322,391 673,872 40,034,300

1,304,341 1,197,023 2,591,925 25,181,850 4,683,906 196,697 1,429,507 908,622 66,274 2,324,257 682,561 40,566,963

19,107,205 12,853,191 35,888,515 236,888,847 34,285,894 1,744,250 19,453,834 9,325,181 833,448 23,223,905 6,738,724 400,342,994 29,443,475 3,819,945 11,870,288 45,133,708 81,555,828 527,032,530

13,043,410 11,970,232 25,919,253 251,818,497 46,839,059 1,966,966 14,295,066 9,086,220 662,736 23,242,572 6,825,606 405,669,617 22,882,079 4,220,436 8,420,665 35,523,180 74,759,246 515,952,043

Annual Report 2010

243

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
43.4. Credit Risk - General Disclosures The Group follows the standardized approach for all its Credit Risk Exposures. The standardized approach to credit risk sets out fixed risk weights corresponding, where appropriate, to external credit assessment levels. Where no external rating is available, a 100% risk weight is used. Under the standardized approach, the capital requirement is based on the credit rating assigned to counterparties by External Credit Assessment Institutions (ECAIs) duly recognized by SBP for capital adequacy purposes. The Group selects particular ECAI(s) for each type of claim. In this connection, the Group utilizes the credit ratings assigned by ECAIs such as PACRA (Pakistan Credit Rating Agency), JCRVIS (Japan Credit Rating Company Limited Vital Information Systems), Fitch, Moodys and Standard & Poors. The Group also utilizes rating scores of Export Credit Agencies (ECA) participating in the Arrangement on Officially Supported Export Credits. Mapping to SBP Rating Grades The selected final ratings (after application of the principles stated above) for all exposures need to be translated to the standard rating grades given by the SBP. In this regard, the mapping tables to be used for converting ECAI ratings to SBP rating grades are given below: Long Term Rating Grades Mapping SBP Rating grade 1 Fitch AAA AA+ AA AAA+ A ABBB+ BBB BBBBB+ BB BBB+ B BCCC+ and below Moodys Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3 B1 B2 B3 Caa1 and below S&P AAA AA+ AA AAA+ A ABBB+ BBB BBBBB+ BB BBB+ B BCCC+ and below PACRA AAA AA+ AA AAA+ A ABBB+ BBB BBBBB+ BB BBB+ B BCCC CC C JCR-VIS AAA AA+ AA AAA+ A ABBB+ BBB BBBBB+ BB BBB+ B BCCC CC C D ECA Scores 0 1

5 6 7

Short Term Rating Grades Mapping SBP Rating Grade S1 S2 S3 S4 Types of exposures and ECAI's used JCR-VIS Corporate Banks Sovereigns PSE PACRA FITCH Moody's ECA scores Fitch F1 F2 F3 Others Moodys P-1 A-1 P-2 P-3 Others S&P A-1+ A-1 A-2 A-3 Others PACRA A-1+ A-1 A-2 A-3 Others JCR-VIS A-1+ A-2 A-3 Others

244

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Credit exposures subject to Standardized Approach
Exposures Rating category Amount outstanding 14,472,104 2010 (Rupees in '000) Deduction CRM Net amount Amount outstanding 13,813,277 2009 (Rupees in '000) Deduction CRM Net amount

Cash and Cash Equivalents Claims on Government of Pakistan (Federal or Provincial Governments) and SBP, denominated in PKR Foreign Currency claims on SBP arising out of statutory obligations of banks in Pakistan Claims on other sovereigns and on Government of Pakistan or provincial governments or SBP denominated in currencies other than PKR

14,472,104

13,813,277

121,556,124

12,686,226

108,869,898

62,121,705

6,228,951

55,892,754

1 2 3 4,5 6 Unrated 0 1 2 3,4 5,6 Unrated 0 1 2,3 4,5 6 Unrated

Corporate

Banks

5,043,830 207,144 3,063,371 7,766,882 9,743,058 20,780,455 24,189,772 22,955,606 1,081,533 1,456,141 235,683,438 285,366,490 46,327,423 36,295,927 7,171,065 14,559,116 104,353,531

2,332 2,332 2,437,971 191 75,002 17,775,900 20,289,064 17,890,757 2,470,749 1,162,030 21,523,536

5,043,830 207,144 3,063,371 7,766,882 9,740,726 20,778,123 21,751,801 22,955,415 1,081,533 1,381,139 217,907,538 265,077,426 28,436,666 33,825,178 6,009,035 14,559,116 82,829,995

4,487,971 1,946,332 12,669,156 6,668,157 2,528,342 26,338 23,838,325 15,388,248 6,182,276 1,679,117 1,182,235 270,537,693 294,969,569 37,788,122 26,124,854 3,506,514 12,899,955 80,319,445

(22,570) (22,570) 9,092 107,907 28,284,682 28,401,681 22,769,911 47,116 576 158,346 22,975,949

4,487,971 1,946,332 12,669,156 6,690,727 2,528,342 26,338 23,860,895 15,379,156 6,074,369 1,679,117 1,182,235 242,253,011 266,567,888 15,018,211 26,077,738 3,505,938 12,741,609 57,343,496

Claims on banks with maturity less than 3 months and denominated in foreign currency

1,2,3 4,5 6 Unrated 0 1 2,3 4,5 6 Unrated 75% 35%

Public sector

Retail

89,861 4,666 81,359,035 81,453,562 48,894,320 4,983,571 53,877,891 9,325,181 555,632 9,880,813 4,923,887 11,380,748 3,677,090 19,981,725

193 2,678 55,690,508 55,693,379 3,179,795 3,179,795 1,450,172 9,844 1,460,016

89,668 1,988 25,668,527 25,760,183 45,714,525 4,983,571 50,698,096 9,325,181 555,632 9,880,813 3,473,715 11,370,904 3,677,090 18,521,709

6,656,459 66,982,129 73,638,588 65,720,344 5,619,903 71,340,247 9,086,220 441,824 9,528,044 3,576,454 11,399,342 25,846,230 40,822,026

589,581 45,468,416 46,057,997 3,268,265 3,268,265 212,420 4,191,246 23,347,721 27,751,387

6,066,878 21,513,713 27,580,591 62,452,079 5,619,903 68,071,982 9,086,220 441,824 9,528,044 3,364,034 7,208,096 2,498,509 13,070,639

Equity Investments - Listed - Unlisted Past due loans - Less than 20% - Between 20% to 50% - More than 50% Past due loans secured against mortgage of residential property: - past due for more than 90 days - past due by 90 days All Fixed Assets Others Total

100% 150%

150% 100% 50%

100% 50% 100%

560,433 946,757 1,507,190 23,223,905 6,738,724 748,236,344

114,834,348

560,433 946,757 1,507,190 23,223,905 6,738,724 633,401,996

626,876 891,713 1,518,589 23,242,572 8,372,309 708,012,667

80,912 400,312 481,224 1,546,703 136,689,587

545,964 491,401 1,037,365 23,242,572 6,825,606 571,323,080

Annual Report 2010

245

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Credit Risk: Disclosures with respect to Credit Risk Mitigation for Standardized Approach The Group has adopted the Comprehensive Approach of Credit Risk Mitigation for the Banking Book. No credit risk mitigation benefit is taken in the Trading Book. In instances where the Groups exposure on an obligor is secured by collateral that conforms to the eligibility criteria under the Comprehensive Approach of CRM, then the Group reduces its exposure under that particular transaction by taking into account the risk mitigating effect of the collateral for the calculation of capital requirement i.e. the risk weight of the collateral instrument securing the exposure is substituted for the risk weight of the counter party. Cash, lien on deposits, government securities and eligible guarantees etc. are considered as eligible collateral under the Comprehensive Approach of Credit Risk Mitigation. The Group has in place detailed guidelines with respect to valuation and management of these types of collateral. In order to be prudent, the Group calculates the Credit Risk Mitigation benefit using the realizable value of eligible collateral. 44. RISK MANAGEMENT This section presents information about the Banks exposure to and its management and control of risks, in particular, the primary risks associated with its use of financial instruments: Credit risk is the risk of loss resulting from client or counterparty default Market risk is the risk of loss arising from adverse movements in market variables such as interest rates, exchange rates and equity indices Liquidity risk is the risk that the Bank may be unable to meet its payment obligations when due Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, and therefore includes legal risk Equity position risk is the risk that arises due to changes in prices of individual stocks or levels of equity indices.

Managing risk continues to present a major challenge to the entire banking industry. Success in the banking business depends on how well an institution manages its risks. The main goal is not to eliminate risk, but rather to be proactive in identifying, assessing and managing risks to the organisations strategic advantage at the optimum. The Bank has an integrated risk management structure in place. The Board Risk Management Committee oversees the whole risk management process of the Bank. The Risk & Credit Policy Group assists the Board Risk Management Committee. The Bank is organized into the functions of Credit Administration, Market and Treasury Risk, Commercial and FIRMU Credit Policy, Consumer and Retail Credit, Credit Risk Management and Operational Risk and Basel II. Each risk category is headed by a senior manager who reports directly to the Group Executive, Risk and Credit Policy. The role of the Risk and Credit Policy Group includes:

246

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
44.1 Determining guidelines relating to Banks appetite for risk. Recommending risk management policies in accordance with the Basel-II framework and international best practices. Reviewing policies/ manuals and ensuring that these are in accordance with the risk management policies. Developing systems and resources to review the key risk exposures of the Group. Approving credits. Granting approval authority to qualified and experienced individuals. Reviewing the adequacy of credit training across the Group. Organizing portfolio reviews focusing on quality assessment, risk profiles, industry concentrations, etc. Setting systems to identify significant portfolio indicators, problem credits and level of provisioning required.

Credit risk Credit risk is the risk that a customer or counterparty may not settle an obligation for full value, either when due or at any time thereafter. This risk arises from the potential that a customer or counterparty is either unwilling to perform an obligation or its ability to perform such an obligation is impaired resulting in an economic loss to the Group. The credit risk management process is driven by the Group's Credit Policy, which provides policies and procedures in relation to credit initiation, approval, documentation and disbursement, credit maintenance and remedial management. The Credit risk function is organized into Corporate, Commercial/SME and Retail credit. Corporate and Retail credit functions are centrally organized while the Commercial credit function is organized regionally across the network. Individual credit authorities are delegated by the Board according to seasoning/maturity of respective credit officers. The Group manages, limits and controls concentrations of credit risk as identified, in particular, to individual counterparties and groups, and to industries, where appropriate. Concentrations of credit risk exist if clients are engaged in similar activities, or are located in the same geographical region or have comparable economic characteristics such that their ability to meet contractual obligations would be similarly affected by changes in economic, political or other conditions. Limits are also applied in a variety of forms to portfolios or sectors where the Group considers it appropriate to restrict credit risk concentrations or areas of higher risk, or to control the rate of portfolio growth.

Annual Report 2010

247

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
44.2 Segmental information

44.2.1 Segments by class of business


2010 Deposits Rupees in '000 8,389,268 33,824,201 1,289,002 2,477,437 330,764 2,182,465 1,908,802 3,078,292 2,216,787 3,027,770 16,853,440 22,443,630 3,265,744 17,157,862 2,189,563 1,450,750 16,640,821 36,074,167 8,494,701 840,738 3,931,436 308,457 96,185 8,675,833 1,543,051 3,472,111 385,593 1,223,853 4,285,714 365,056 623,175 3,894,923 278,129,372 76,540,295 567,611,258 Percent 1.48% 5.96% 0.23% 0.44% 0.06% 0.38% 0.34% 0.54% 0.39% 0.53% 2.97% 3.95% 0.58% 3.02% 0.39% 0.26% 2.93% 6.36% 1.50% 0.15% 0.69% 0.05% 0.02% 1.53% 0.27% 0.61% 0.07% 0.22% 0.76% 0.06% 0.11% 0.69% 49.00% 13.48% 100.00%

Gross Advances Rupees in '000 Chemical and pharmaceuticals Agri business Textile spinning Textile weaving Textile composite Textile others Cement Sugar Shoes and leather garments Automobile and transportation equipment Financial Insurance Electronics and electrical appliances Production and transmission of energy Paper and allied Surgical and metal Contractors Wholesale traders Fertilizer dealers Sports goods Food industries Airlines Cables Construction Containers and ports Engineering Glass and Allied Hotels Infrastructure Media Polyester and fibre Telecommunication Individuals Others 6,217,583 53,034,196 17,497,654 6,722,278 23,145,685 13,780,445 6,803,468 8,153,681 2,447,523 4,516,043 4,989,842 2,399,152 39,057,078 789,310 2,265,932 4,263,223 20,811,787 6,823,565 803,919 6,858,339 6,033,039 661,900 21,866,860 1,813,903 1,531,426 301,653 2,708,633 2,273,671 620,575 1,980,509 11,333,927 68,881,652 25,091,573 376,480,024 Percent 1.65% 14.09% 4.65% 1.79% 6.15% 3.66% 1.81% 2.17% 0.65% 1.20% 1.33% 0.00% 0.64% 10.37% 0.21% 0.60% 1.13% 5.53% 1.81% 0.21% 1.82% 1.60% 0.18% 5.81% 0.48% 0.41% 0.08% 0.72% 0.60% 0.16% 0.53% 3.01% 18.30% 6.66% 100.00%

Contingencies and commitments Rupees in '000 Percent 6,082,131 315,807 5,058,213 4,289,442 814,737 3,740,450 2,801,403 358,817 298,515 4,940,641 299,486,924 43,143 1,541,579 58,716,619 660,772 335,306 19,463,140 1,319,555 677,458 17,885 3,699,826 108,106 744,510 10,260,326 2,974,909 1,618,692 220,958 438,627 31,461,991 40,879 78,234 1,167,952 18,590,080 59,604,206 541,971,833 1.12% 0.06% 0.93% 0.79% 0.15% 0.69% 0.52% 0.07% 0.06% 0.91% 55.26% 0.01% 0.28% 10.83% 0.12% 0.06% 3.59% 0.24% 0.12% 0.00% 0.68% 0.02% 0.14% 1.89% 0.55% 0.30% 0.04% 0.08% 5.81% 0.01% 0.01% 0.22% 3.43% 11.00% 100.00%

248

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Gross Advances Rupees in '000 Chemical and pharmaceuticals Agri business Textile spinning Textile weaving Textile composite Textile others Cement Sugar Shoes and leather garments Automobile and transportation equipment Financial Insurance Electronics and electrical appliances Production and transmission of energy Paper and allied Surgical and metal Contractors Wholesale traders Fertilizer dealers Sports goods Food industries Airlines Cables Construction Containers and ports Engineering Glass and Allied Hotels Infrastructure Media Polyester and fibre Telecommunication Individuals Others 44.2.2 Segment by Sector Gross Advances Rupees in '000 Public / Government Private 64,910,148 311,569,876 376,480,024 Percent 17.24% 82.76% 100.00% 2010 Deposits Rupees in '000 73,257,674 494,353,584 567,611,258 Percent 12.91% 87.09% 100.00% Contingencies and commitments Rupees in '000 Percent 84,238,317 457,733,516 541,971,833 15.54% 84.46% 100.00% 6,081,931 50,894,347 19,541,766 7,788,745 21,246,034 13,090,077 6,508,094 7,068,609 2,200,397 5,574,069 5,679,937 2,159,288 41,179,308 1,125,589 567,366 2,600,466 11,749,311 5,729,029 432,121 7,470,504 5,569,645 379,600 26,087,924 95,855 1,496,050 444,982 2,747,484 2,507,584 3,403,956 8,557,307 81,411,045 39,105,533 390,493,953 Percent 1.56% 13.03% 5.00% 1.99% 5.44% 3.35% 1.67% 1.81% 0.56% 1.43% 1.45% 0.00% 0.55% 10.55% 0.29% 0.15% 0.67% 3.01% 1.47% 0.11% 1.91% 1.43% 0.10% 6.68% 0.02% 0.38% 0.11% 0.70% 0.64% 0.00% 0.87% 2.19% 20.85% 10.01% 100.00% 2009 Deposits Rupees in '000 11,971,327 21,026,267 1,225,983 804,049 965,467 1,981,459 988,097 2,360,348 1,827,377 4,318,840 11,835,140 13,802,720 7,076,567 19,932,300 1,016,292 1,553,961 18,104,119 26,658,663 9,516,985 868,470 3,231,634 1,621,206 225,097 7,793,699 1,223,696 3,124,994 914,092 1,018,965 4,547,147 448,233 409,196 3,526,634 269,979,202 47,933,446 503,831,672 Percent 2.38% 4.17% 0.24% 0.16% 0.19% 0.39% 0.20% 0.47% 0.36% 0.86% 2.35% 2.74% 1.40% 3.96% 0.20% 0.31% 3.59% 5.29% 1.89% 0.17% 0.64% 0.32% 0.04% 1.55% 0.24% 0.62% 0.18% 0.20% 0.90% 0.09% 0.08% 0.70% 53.59% 9.51% 100.00% Contingencies and commitments Rupees in '000 Percent 1,235,141 48,362 3,153,486 3,307,899 244,588 2,521,137 1,471,077 16,915 11,522 1,306,428 262,516,211 37,673 1,931,037 20,328,644 267,165 95,659 20,133,503 1,383,149 1,461,840 70,510 2,241,180 118,910 255,330 7,829,209 1,036,486 3,093,417 316,022 303,976 32,018 77,411 117,122 25,329,025 3,361,186 84,734,076 450,387,314 0.27% 0.01% 0.70% 0.73% 0.05% 0.56% 0.33% 0.00% 0.00% 0.29% 58.29% 0.01% 0.43% 4.51% 0.06% 0.02% 4.47% 0.31% 0.32% 0.02% 0.50% 0.03% 0.06% 1.74% 0.23% 0.69% 0.07% 0.07% 0.01% 0.02% 0.03% 5.62% 0.75% 18.81% 100.00%

Gross Advances Rupees in '000 Public / Government Private 66,948,105 323,545,848 390,493,953 Percent 17.14% 82.86% 100.00%

2009 Deposits Rupees in '000 50,369,132 453,462,540 503,831,672 Percent 10.00% 90.00% 100.00%

Contingencies and commitments Rupees in '000 Percent 63,563,612 386,823,702 450,387,314 14.11% 85.89% 100.00%

Annual Report 2010

249

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
44.2.3 Details of non performing advances and specific provisions by class of business segment 2010 Classified Advances Specific Classified Provision Held Advances (Rupees in '000) 196,114 903,057 4,479,514 873,022 2,337,315 1,937,098 33,638 224,110 650,422 64,132 345,164 2,981,719 113,240 881,274 6,878 128,325 964,667 1,134,507 410,139 12,264 113,086 1,743,679 9,817,528 3,193,224 33,544,116 309,349 1,508,525 5,017,860 888,722 998,902 2,935,380 4,450 33,638 241,948 1,019,508 59,305 542,892 2,927,748 173,212 1,775 1,024,613 6,182 280,675 795,442 4,106,175 353,454 29,796 489,493 1,702,376 11,145,588 3,468,229 40,065,237 2009 Specific Provision Held

Chemical and pharmaceuticals Agri business Textile spinning Textile weaving Textile composite Textile others Cement Sugar Shoes and leather garments Automobile and transportation equipment Financial Electronics and electrical appliances Production and transmission of energy Paper and allied Surgical and metal Wholesale traders Fertilizer dealers Sports goods Food industries Construction Engineering Glass and Allied Hotels Polyester and fibre Individuals Others

226,502 1,430,020 5,417,208 910,470 5,210,214 2,282,350 33,638 226,903 726,577 2,166,734 365,354 3,049,109 179,264 1,167,377 7,490 128,325 1,258,725 3,885,120 440,297 24,527 485,993 1,751,479 13,241,553 3,997,849 48,613,078

177,596 862,526 3,927,267 867,460 765,271 2,365,528 4,450 33,638 180,321 704,676 22,348 428,957 1,942,137 116,438 1,775 648,018 4,364 279,310 781,194 1,249,378 353,454 14,899 116,586 1,668,561 8,073,785 2,110,913 27,700,850

44.2.4 Details of non performing advances and specific provision by sector 2010 Classified Advances Specific Classified Provision Held Advances (Rupees in '000) 33,544,116 33,544,116 40,065,237 40,065,237 2009 Specific Provision Held

Public / Government Private

48,613,078 48,613,078

27,700,850 27,700,850

250

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
44.2.5 Geographical segment analysis Profit before taxation 2010 Total assets Net assets employed employed (Rupees in '000) 553,501,773 138,860,848 3,158,076 487,149 29,381,797 171,887,870 725,389,643 39,841,245 24,430,003 1,322,216 331,686 9,209,030 35,292,935 75,134,180 Contingencies & commitments

Pakistan operations Middle East United States of America Karachi Export Processing Zone Europe

14,702,642 2,655,182 173,800 34,109 122,890 2,985,981 17,688,623

428,490,945 108,368,163 2,586,153 232,152 2,294,420 113,480,888 541,971,833

Profit before taxation

2009 Total assets Net assets employed employed (Rupees in '000) 484,433,342 130,479,211 2,138,970 708,459 22,661,929 155,988,569 640,421,911 32,231,500 25,356,043 1,259,785 321,518 8,149,517 35,086,863 67,318,363

Contingencies & commitments

Pakistan operations Middle East United States of America Karachi Export Processing Zone Europe

11,804,300 2,322,795 111,414 58,448 95,224 2,587,881 14,392,181

368,991,478 77,206,577 320,870 166,269 3,702,120 81,395,836 450,387,314

Total assets employed include intra group items of Rs.Nil. 44.3 Market Risk Market risk is the uncertainity that the Group may experience due to movements in market prices. It results from changes in interest rates, exchange rates, equity prices and volatilities of individual market factors as well as the correlations between them. Each component of risk includes a general market risk and a specific aspect of market risk that originates in the portfolio structure of a bank. Measuring and controlling market risk is usually carried out at the portfolio level. However, certain controls are applied, where necessary, to individual risk types, to particular books and to specific exposures. Controls are also applied to prevent any undue risk concentrations in trading books, taking into account variations in price, volatility, market depth and liquidity. These controls also include limits on exposure to individual market risk variables ('risk factors') as well as on concentrations of tenors, issuers etc. Trading activities are centered in the Treasury and Capital Markets (TCM) Group to facilitate clients as well as run proprietary positions. The Group is active in the cash and derivative markets for equity, interest rate and foreign exchange.

Annual Report 2010

251

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
Market and Treasury Risk (MTR) division performs market risk management activities. The division is composed of two units, i.e., Market Risk Management and Treasury Middle Office. The Market Risk Management unit is responsible for the development and review of market risk policies and processes, and is involved in research, financial modeling and testing / implementation of risk management systems. Treasury Middle Office is responsible for monitoring and implementation of market risk and other policies, escalation of any deviation to senior management, and MIS reporting. The scope of market risk management is as follows: To keep the market risk exposure within the Groups risk appetite as assigned by the Board of Directors (BoD) and the Board Risk Management Committee (BRMC). To implement Risk Management policies approved by the BoD and BRMC jointly with the senior management through Market Risk Committee (MRC). To review new product proposals, propose/recommend/approve procedures for market risk management. Various limits are assigned to different businesses on a product-portfolio basis. The products are approved through product programs, where risks are identified and limits and parameters are set. Any transaction/ product falling beyond the Product Policy Manual are approved through separate transaction / product memos. To develop, review and upgrade procedures for effective implementation of market risk management policy. It also includes implementation of an Enterprise Risk Management solution for market risk. To maintain a comprehensive database for performing risk analysis, stress testing and scenario analysis. Stress testing activities are performed on a quarterly basis which also includes banking book along-with trading book.

44.3.1 Foreign Exchange Risk 2010 Assets Liabilities Off - balance sheet items Net foreign currency exposure

(Rupees in '000) Pakistan Rupee US Dollar Pound Sterling Japanese Yen Euro UAE Dirham Bahrain Dinar Qatari Riyal Other Currencies 543,967,513 51,721,592 25,215,268 10,406 2,731,292 73,556,548 9,079,631 3,541,983 15,565,410 725,389,643 469,783,294 39,509,427 24,991,638 7,916 5,970,493 82,624,436 11,750,538 3,746,636 11,871,085 650,255,463 (10,416,912) (12,599,803) 7,056,742 1,053 3,414,013 8,968,295 2,654,725 256,878 665,009 63,767,307 (387,638) 7,280,372 3,543 174,812 (99,593) (16,182) 52,225 4,359,334 75,134,180

252

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
2009 Assets Liabilities Off - balance sheet items Net foreign currency exposure

(Rupees in '000) Pakistan Rupee US Dollar Pound Sterling Japanese Yen Euro UAE Dirham Bahrain Dinar Qatari Riyal Other Currencies 544,326,154 33,366,944 18,293,044 315,278 1,040,133 3,078,195 18,850,218 795,762 20,356,183 640,421,911 477,308,787 33,073,859 18,760,474 275,066 4,601,339 2,121,758 18,874,901 18,087,364 573,103,548 (11,086,237) (544,997) 9,339,081 (41,117) 3,497,421 (1,061,846) (842,508) 740,202 55,931,130 (251,912) 8,871,651 (905) (63,785) (105,409) (24,683) (46,746) 3,009,021 67,318,363

Foreign Exchange Risk is the uncertainty that the Group is exposed to due to changes in exchange rates. Foreign exchange positions are reported on a consolidated basis and limits are used to monitor exposure in individual currencies. The Group is an active participant in currency cash and derivatives markets and carries currency risk from these trading activities, conducted primarily by Treasury and Capital Markets Group. These trading exposures are subject to prescribed stress tests and sensitivity analysis. The Group's reporting currency is the Pakistani Rupee, but its assets, liabilities, income and expenses are denominated in different currencies. Treasury and Capital Markets Group from time to time, proactively hedges significant expected foreign currency earnings / costs within a time horizon of up to one year, in accordance with the instructions of the SBP and subject to pre-defined limits. 44.3.2 Equity position risk Equity position risk arises due to changes in prices of individual stocks or levels of equity indices. The Groups equity book comprises of Held for Trading (HFT) & Available for Sale (AFS) portfolios. The objective of the HFT portfolio is to make shortterm capital gains, whilst the AFS portfolio is maintained with a medium-term view of capital gains and dividend income. Separate product program manuals have been developed to discuss in detail the objectives and policies, risks and mitigants, limits and controls for the equity portfolios of the Group. 44.3.3 Yield / Interest Rate Risk Interest rate risk is the uncertainty resulting from changes in interest rates, including changes in the shape of yield curves. Interest rate risk is inherent in many of the Group's businesses and arises from factors such as mismatches between contractual maturities or re-pricing of on and off balance sheet assets and liabilities. Interest rate risk arises mainly through HTM investments, advances and deposits. The interest sensitivity profile is prepared on a quarterly basis based on the repricing or maturities of assets and liabilities. The objective of yield / interest rate risk management is to minimize adverse variances in the Group's profitability. Interest rate risk in the banking book is managed by performing periodic gap analysis, sensitivity analysis and stress testing.

Annual Report 2010

253

254
Total Upto 1 month Over 1 month to 3 months Over 3 months to 6 months 2010 Exposed to Yield / Interest risk Over Over Over 6 months to 1 year to 2 year to 1 year 2 years 3 years (Rupees in '000) Over 3 year to 5 years Over 5 year to 10 years Over 10 years Non- interest bearing financial instruments 67,667,226 25,980,928 12,384,778 231,717,214 19,533,240 5,170,604 14,349,668 4,239,309 2,679,720 75,393,453 211,360 732,223 82,847,477 1,284,550 15,846,289 2,165,956 3,619,142 145,058 3,650,019 206,667 4,572,191 17,912,130 3,961,636 67,667,226 1,997,019 9,565,209 326,441,450 15,068,962 692,584 14,227,854 694,180,996 5,074,700 47,631,814 567,611,258 11,985,748 15,747,885 648,051,405 46,129,591 29,004,589 75,134,180 (49,820,426) 126,091,596 70,058,492 (23,677,464) 5,305,326 6,407,724 141,955,755 142,917,864 71,074,290 52,743,990 4,707,327 5,136,672 2,928,630 7,806,504 28,608,736 113,347,019 5,596,108 129,330,528 7,991,228 7,670,247 63,404,043 544,798 51,534,152 665,040 332,891 3,044,356 1,330,080 855,859 2,281,413 1,999,400 569,933 2,358,697 3,336,625 8,692,490 12,029,115 5,953,103 4,036,228 52,735,525 346,292 92,135,329 186,687,213 9,765 269,009,460 57,323,119 18,603 141,132,782 11,909,154 26,533 29,066,526 4,178,645 48,910 10,012,653 7,623,532 125,787 11,544,396 5,875,584 80,692 10,735,134 34,180 35,908 17,982,218 74,498 94 4,036,228 15,068,962 14,227,854 108,526,270 5,074,700 116,617 193,618,560 15,747,885 214,557,762 (106,031,492)

44.3.4 Mismatch of interest rate sensitive assets and liabilities

Effective yield/ Interest rate %

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]

United Bank Limited


6,985,703 (6,985,703) 35,570,843 (35,570,843) 2,055,442 (2,055,442) (441,981) (85,906,329) 131,134,706 44,786,396 90,915,987 (43,864,380) (43,864,380) 5,956,046 17,584,812 143,676,408 99,812,028 20,076,663 90,135,155 189,947,183 123,488 (23,553,976) 166,393,207 2,000,000 5,255,285 (5,255,285) (48,388,154) 52,344,200 1,129,713 (1,629,713) 24,893,088 (24,893,088) (441,981) (32,245,519) 50,772,312 380,183 (1,880,183) 5,422,470 (5,422,470) (5,246,944) 26,823,607 (1,000,000) (25,712) 1,149,200 500,000 45,387 545,387 5,850,713 172,243,920 1,000,000 (1,000,000) 6,407,724 178,651,644 7,806,504 186,458,148 1,975,807 (1,475,807) 500,000 6,453,103 192,911,251 4,036,228 196,947,479 2,055,442 (2,055,442) (106,031,492) 90,915,987

On-balance sheet financial instruments

Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Performing Non Performing Operating fixed assets - Ijarah assets Other assets

0.28% 0.7% 9.2% 11.0% 11.7%

6.55%-25.00% 0%

Liabilities Bills payable Borrowings Deposits and other accounts Subordinated loans Liabilities against assets subject to finance lease Other liabilities

0% 11.0% 4.0% 11.91%

0.00% 0%

On-balance sheet gap

Non financial net assets

Total net assets

Off-balance sheet financial instruments

Interest Rate Derivatives - Long position Interest Rate Derivatives - Short position Cross Currency Swap - Long position Cross Currency Swap - Short Position Swaptions - Long Position Swaptions -Short Position FX Options - Long position FX Options - Short position Commodity options - Long position Commodity options - Short position Equity Indices - Long position Equity Indices - Short position Forward Rate Agreements-Short position Forward Rate Agreements-Long position Forward Purchase of Govt. Securities Forward Sale of Govt. Securities Foreign currency forward sales Foreign currency forward purchases

Off-balance sheet gap

Total Yield/Interest Risk Sensitivity Gap

Cumulative Yield/Interest Risk Sensitivity Gap

Yield risk is the risk of decline in earnings due to adverse movement of the yield curve. Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in market interest rates.

Effective yield/ Interest rate % (Rupees in '000)

Total

Upto 1 month

Over 1 month to 3 months

Over 3 months to 6 months

2009 Exposed to Yield / Interest risk Over Over Over 6 months to 1 year to 2 year to 1 year 2 years 3 years Over 3 year to 5 years Over 5 year to 10 years Over 10 years Non- interest bearing financial instruments

On-balance sheet financial instruments 61,562,141 14,049,990 23,162,130 137,734,578 15,707,909 6,546,749 18,483,354 6,054,477 2,029,733 2,773,622 49,292,312 680,099 385,669 28,353,250 143,875 17,014,397 1,210,610 3,252,847 165,000 4,407,582 1,432,058 13,138,356 3,639,751 45,854,232 4,793,409 11,149,548

Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Performing Non Performing Operating fixed assets - Ijarah assets Other assets 349,715,209 12,364,387 514,391 13,108,576 612,211,402 5,166,361 37,168,277 503,831,672 11,989,800 611 13,358,662 571,515,383 40,696,019 26,622,344 67,318,363 11,014,381 (11,014,381) 36,372,837 (36,372,837) 2,527,248 (2,527,248) 410,535 (410,535) (47,499,455) 92,086,590 44,587,135 85,283,154 6,182,795 6,182,795 (2,779,358) 30,834,766 91,014,274 97,197,069 19,961,264 45,406,946 142,604,014 1,772,687 17,772,547 160,376,561 7,094,496 (957,598) 5,712,267 (5,712,267) (35,327,341) 26,411,085 175,000 (382,598) 25,438,470 (25,438,470) 2,527,248 (2,527,248) (11,286,064) 42,328,428 421,208 (2,198,481) 5,222,100 (5,222,100) (886,050) 22,624,587 1,050,196 722,491 102,273 (1,000,000) (897,727) 5,419,563 165,796,124 750,000 750,000 7,022,347 172,818,471 1,000,000 (6,054,496) (5,054,496) (2,445,291) 170,373,180 421,208 (421,208) 6,696,482 177,069,662 3,551,170 180,620,832 8,962,153 60,179,508 25,445,682 15,999,860 6,317,290 6,272,347 115,372,662 137,968,282 478 57,077,726 133 52,651,560 8,426,067 5,153,502 5,676,120 2,609,205 11,691,719 103,680,943 6,701,606 123,272,252 7,994,424 14,316,171 42,761,077 455,496 52,195,507 424 526,093 7,234,507 665,467 283,755 3,539,662 1,330,085 137,058 3,539,662 1,999,400 2,928,274 3,513,600 6,441,874 6,696,482 77,542,326 124,334,815 144,052,123 198,147,790 52,589,999 514,391 82,523,408 51,493,148 68,651,420 10,279,900 14,743,357 6,853,267 11,425,849 6,853,267 8,285,325 13,138,356 3,639,751 88,581 88,581 3,551,170

0.01% 0.6% 10.8% 10.4% 13.0%

10% - 23% 0%

51,179 12,364,387 13,108,576 87,321,331 5,166,361 39,524 164,094,462 13,358,662 182,659,009 (95,337,678)

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]

Liabilities Bills payable Borrowings Deposits and other accounts Subordinated loans Liabilities against assets subject to finance lease Other liabilities

0% 11.2% 4.8% 12.60%

11.5-14.5% 0%

On-balance sheet gap

Non financial net assets

Total net assets

Off-balance sheet financial instruments 410,535 (410,535) (95,337,678) 85,283,154

Interest Rate Derivatives - Long position Interest Rate Derivatives - Short position Cross Currency Swap - Long position Cross Currency Swap - Short Position Swaptions - Long Position Swaptions -Short Position FX Options - Long position FX Options - Short position Commodity options - Long position Commodity options - Short position Equity Indices - Long position Equity Indices - Short position Forward Rate Agreements-Short position Forward Rate Agreements-Long position Forward Purchase of Govt. Securities Forward Sale of Govt. Securities Foreign currency forward sales Foreign currency forward purchases

Off-balance sheet gap

Total Yield/Interest Risk Sensitivity Gap

Annual Report 2010

Cumulative Yield/Interest Risk Sensitivity Gap

Yield risk is the risk of decline in earnings due to adverse movement of the yield curve. Interest rate risk is the risk that the value of the financial instrument will fluctuate due to changes in market interest rates.

255

256

44.4

Liquidity Risk

Liquidity risk is the risk to the Group arising from either its inability to meet its obligations or to fund increase in assets as they fall due without incurring unacceptable cost or losses.

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]

United Bank Limited


Total Upto 1 month 2010 Over 1 month Over 3 months Over 6 months Over 1 years to 3 months to 6 months to 1 year to 2 years (Rupees in '000) Over 2 years to 3 years 4,239,309 2,679,728 43,738,459 49,421,817 410,927 9,279,214 109,769,454 211,360 897,322 63,448,607 33,330,206 883,482 183,940 98,954,917 1,071,050 36,103,690 27,112,702 1,414,936 584,125 4,176,229 70,462,732 1,388,722 17,925,607 9,935,324 1,970,618 714,122 297,012 32,231,405 145,058 22,700,516 13,886,891 998,142 37,730,607 Over 3 years to 5 years Over 5 years to 10 years Over 10 years 67,667,226 25,980,928 12,384,778 231,717,214 341,510,412 24,684,566 1,298,247 20,146,272 725,389,643 62,619,532 21,530,259 5,996,233 11,853,741 110,803,529 2,408,336 6,199,723 221,411,353 206,665 11,281,533 45,929,735 1,583,020 9,504 59,010,457 12,838,951 40,953,470 2,267,867 650 56,060,938 5,047,694 11,826,110 10,136,738 12,747,238 39,757,780 5,074,700 47,631,814 567,611,258 11,985,748 4,895,421 29,655,296 435,033,340 179,279 5,596,108 56,131,986 2,028 7,547,247 25,441,292 544,798 21,159,934 666,640 332,891 5,323,709 1,997,816 761,776 4,090,718 2,667,136 524,380 4,003,809 670,128 2,669,318 16,426,470 5,982,000 17,951,943 (832,995) 650,255,463 468,751,062 75,134,180 (247,339,709) 7,150,286 69,059,687 40,709,767 679,457 33,667,996 65,286,921 5,847,004 28,218,376 42,244,356 2,711,842 10,366,258 21,865,147 494,052 8,013,682 29,716,925 5,198,317 53,812,140 1,902,297 26,980,085 29,080,853 39,757,780 12,241,798 24,101,838 27,576,333 2,207,241 9,006,970 75,134,180

The Assets and Liability Management Committee (ALCO) of the Group has the responsibility for the formulation overall strategy and oversight of liquidity management and meets on a monthly basis or more frequently, if required.

The Groups approach to liquidity management is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking sustained damage to business franchises. A centralized approach is adopted, based on an integrated framework incorporating an assessment of all material known and expected cash flows and the availability of collateral which could be used to secure additional funding if required. The framework entails careful monitoring and control of the daily liquidity position, and regular liquidity stress testing under a variety of scenarios. Scenarios encompass both normal and stressed market conditions, including general market crises and the possibility that access to markets could be impacted by a stress event affecting some part of the Groups business.

44.4.1 Maturities of assets and liabilities - based on contractual maturity of the assets and liabilities of the Group

The maturity profile set out below has been prepared as required by IAS on the basis of contractual maturities, except for products that do not have a contractual maturity which are shown in the first bucket. The maturity profile disclosed in note 44.4.2 includes maturities of products that do not have a contractual maturity, as determined by the Assets and Liabilities Management Committee (ALCO) keeping in view the historical behavioural pattern of these products.

Assets

Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax asset Other assets

Liabilities

Bills payable Borrowings Deposits and other accounts Subordinated loans Liabilities against assets subject to finance leases Other liabilities

Net assets

Represented by:

Share capital Reserves Unappropriated profit Non-controlling interest Surplus on revaluation of assets

Total

Upto 1 month

2009 Over 1 month Over 3 months Over 6 months Over 1 years to 3 months to 6 months to 1 year to 2 years (Rupees in '000) Over 2 years to 3 years Over 3 years to 5 years Over 5 years to 10 years Over 10 years

Assets 61,562,141 14,049,990 23,162,130 137,734,578 362,079,596 23,734,082 649,814 17,449,580 640,421,911 48,461,144 9,836,577 18,323,555 2,132,842 122,194,667 1,940,947 40,744 1,790,871 204,721,347 2,662,509 2,319,313 20,045,826 44,938,461 364,608 1,781,912 72,112,629 899,726 783,185 19,544,119 37,724,332 749,032 9,618,760 69,319,154 180,043 216,592 20,076,565 37,850,760 769,222 273,858 2,133,950 61,500,990 37,672 354,485 6,708,279 27,098,325 2,347,761 335,212 1,740,158 38,621,892 1,000,000 8,084,089 7,526,873 907,601 17,518,563 165,000 33,793,777 25,376,341 1,613,853 383,929 61,332,900 25,404,237 51,269,189 2,622,572 79,295,998 13,100,997 433,463 1,944,844 8,100,648 12,418,486 35,998,438

Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax asset Other assets

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]

Liabilities 5,166,361 37,168,277 503,831,672 11,989,800 4,972,520 11,700,809 426,804,901 193,841 6,732,040 42,046,318 2,024 14,366,171 8,488,651 405,496 9,957,838 2,024 526,093 6,811,436 668,667 283,755 702,303 1,997,821 137,058 1,062,379 3,334,864 2,928,274 7,957,846 5,984,400 88,581 -

Bills payable Borrowings Deposits and other accounts Subordinated loans Liabilities against assets subject to finance leases Other liabilities 611 14,946,827 573,103,548 67,318,363 30,693,887 474,172,117 (269,450,770) (26,713,934) 22,260,289 49,852,340 1,729,996 24,584,818 44,734,336 611 7,450,947 17,816,916 43,684,074 (126,524) 7,879,672 30,742,220 2,983,879 14,534,684

Net assets

4,534,301 56,798,599

1,912,455 18,782,975 60,513,023

88,581 35,909,857

Represented by: 11,128,907 21,167,954 23,617,875 2,279,691 9,123,936 67,318,363

Share capital Reserves Unappropriated profit Non-controlling Interest Surplus on revaluation of assets

Annual Report 2010

257

258
Total Upto 1 month 2010 Over 1 month Over 3 months Over 6 months Over 1 years to 3 months to 6 months to 1 year to 2 years (Rupees in '000) Over 2 years to 3 years Over 3 years to 5 years Over 5 years to 10 years Over 10 years

44.4.2 Maturities of assets and liabilities - based on working prepared by the Assets and Liabilities Management Committee (ALCO) of the Group

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]

United Bank Limited


67,667,226 25,980,928 12,384,778 231,717,214 326,441,450 15,068,962 20,146,272 24,684,566 1,298,247 725,389,643 32,630,131 19,725,869 5,096,880 12,854,140 97,158,964 2,009,611 2,192,872 171,668,467 5,961,763 4,315,224 6,043,699 211,360 3,579,671 897,322 42,379,183 67,041,417 98,492,837 27,027,709 1,484,016 11,867,123 1,937 2,905 157,943,106 111,363,060 4,895,168 1,070,458 28,460,278 25,160,493 3,850,892 8,556 584,125 64,029,970 5,617,703 1,388,722 9,414,858 6,924,150 297,012 19,364 714,122 24,375,931 226,485 145,058 14,304,419 12,388,931 11,620 27,076,513 184,107 206,667 28,789,336 21,201,986 9,504 23,240 50,414,840 13,836,645 26,360,101 28,367,635 15,068,962 628,114 22,424,072 106,685,529 2,113,482 9,718,745 11,832,227 5,074,700 47,631,814 567,611,258 11,985,748 17,951,943 650,255,463 75,134,180 17,740,924 55,713,617 43,077,547 (6,098,754) 153,927,543 1,272,008 102,229,489 (561,825) 68,285,513 5,154,457 64,472,631 (442,661) 2,711,842 67,883,306 (43,507,375) 4,068,123 31,249,685 124,708,489 1,006,577 10,138,567 89,810,309 2,028 5,326,026 63,521,312 58,651,534 666,640 63,173,648 1,997,816 4,090,812 2,667,136 494,053 7,252,001 19,824,512 917,536 4,003,812 670,128 10,040,293 15,631,769 34,783,071 159,651,342 5,982,000 2,841,691 168,475,033 (61,789,504) 2,098,178 2,098,178 9,734,049 12,241,798 24,101,838 27,576,333 2,207,241 9,006,970 75,134,180

Current and savings deposits do not have any contractual maturity therefore, current deposits and savings accounts have been classified between all four maturities. Further, it has been assumed that on a going concern basis, these deposits are not expected to fall below the current year's level.

Assets

Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances - Performing - Non Performing Other assets Operating fixed assets Deferred tax Assets

Liabilities

Bills payable Borrowing Deposits and other accounts Subordinated loan Liabilities against assets subject to finance leases Other liabilities

Net assets

Represented by:

Share capital Reserves Unappropriated profit Non-controlling interest Surplus on revaluation of assets

Total

Upto 1 month

2009 Over 1 month Over 3 months Over 6 months Over 1 years to 3 months to 6 months to 1 year to 2 years (Rupees in '000) Over 2 years to 3 years Over 3 years to 5 years Over 5 years to 10 years Over 10 years

Assets 61,562,141 30,417,709 14,049,990 10,364,189 23,162,130 20,623,296 137,734,578 17,557,963 349,715,209 113,791,821 12,364,387 17,449,580 3,166,659 23,734,082 1,745,741 649,814 40,744 640,421,911 197,708,122 5,744,339 2,443,990 2,159,149 19,241,497 53,482,143 1,019,732 84,090,850 3,821,791 824,096 169,075 18,917,627 34,093,945 12,540,173 70,366,707 4,031,174 180,043 16,066,142 31,042,626 62,799 274,188 51,656,972 5,046,748 37,672 210,610 5,469,278 26,082,159 62,671 334,882 37,244,020 107,770 3,794,038 8,800,873 12,702,681 294,807 29,480,465 26,010,075 55,785,347 12,097,803 200,000 25,093,085 47,508,041 12,364,387 660,217 21,925,670 119,849,203 2,114,483 8,903,526 11,018,009

Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances - Performing - Non Performing Other assets Operating fixed assets Deferred tax Assets

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]

Liabilities 5,166,361 37,168,277 503,831,672 11,989,800 611 14,946,827 485,102 573,103,548 119,540,564 67,318,363 78,167,558 (44,462,828) 14,248,250 (2,359,672) 12,363,311 128,553,678 56,118,457 611 54,016,644 60,717,630 (23,473,610) 3,983,539 15,452,801 99,619,122 1,182,822 13,603,220 101,402,301 2,024 6,848,198 49,270,259 54,014,009 2,024 60,048,963 668,667 1,826,977 1,997,821 3,824,798 8,877,883 1,264,058 4,593,456 3,334,864 9,192,378 46,592,969 133,056,585 5,984,400 2,098,414 141,139,399 (21,290,196) 11,018,009

Bills payable Borrowing Deposits and other accounts Subordinated loan Liabilities against assets subject to finance leases Other liabilities

Net assets

Represented by: 11,128,907 21,167,954 23,617,875 2,279,691 9,123,936 67,318,363

Share capital Reserves Unappropriated profit Non-controlling interest Surplus on revaluation of assets

Annual Report 2010

259

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
44.5 Operational Risk Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The Groups Operational Risk Management implementation framework is based on the advanced risk management architecture. The framework is flexible enough to implement in stages, and permits the overall risk management approach to evolve in response to organizational learning and the future needs of the organization. Following are the high-level strategic initiatives that the Group has undertaken for the effective implementation of Operational Risk Management: Recruiting skilled resources for Operational Risk Management. Developing an operational risk management infrastructure. Determining the current state of key risks and their controls residing in each business unit. Developing policies, procedures and defining end-to-end information flow to establish a vigorous governance infrastructure. Implementing systems for data collection, migration, validation and retention for current and historical reference and calculation.

A consolidated Business Continuity Plan is being augmented for the Group which encompasses roles and responsibilities, recovery strategy, IT and structural backups, scenario and impact analyses and testing directives. There are several IT developments underway in the credit, market and operational risk areas. Specifically for operational risk mitigation and control, an IT infrastructure is being developed along with the other high-level initiatives, including process reengineering and creating an inventory of risks and controls within the Group. A methodology for Risk and Control Self Assessment has been implemented at all core units of the Group.

260

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
45. ISLAMIC BANKING BUSINESS The Group operates 6 (2009: 5) Islamic banking branches and 17 (2009: 15) Islamic banking windows. The statement of financial position of the Group's Islamic Banking Branches at December 31, 2010 is as follows: 2010 2009 (Rupees in 000) ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Financing and receivables - Murabaha - Musharaka - Diminishing Musharaka

389,582 46,654 450,000 2,884,260 203,787 166,667 90,888 461,342 426,052 83,725 297,649 5,039,264

208,180 93,410 100,000 1,563,953 154,650 222,222 261,259 638,131 598,452 548,396 3,750,522

Operating fixed assets including assets given on Ijarah Due from head office Other assets Total Assets LIABILITIES Bills payable Deposits and other accounts - Current accounts - Saving accounts - Term deposits - Deposits from financial institutions - remunerative

970 724,750 933,100 1,456,596 1,344,775 4,459,221 101,782 4,561,973 477,291

4,522 429,412 209,676 459,878 1,109,452 2,208,418 948,744 84,544 3,246,228 504,294

Due to head office Other liabilities NET ASSETS REPRESENTED BY Islamic Banking Fund Accumulated losses Deficit on revaluation of assets

681,000 (203,000) 478,000 (709) 477,291

681,000 (174,404) 506,596 (2,302) 504,294

Annual Report 2010

261

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
The profit and loss account of the Group's Islamic Banking Branches for the year ended December 31, 2010 is as follows: 2010 2009 (Rupees in 000) Return earned Return expensed 623,262 (308,015) 315,247 (69,091) 2,930 (66,161) 249,086 484,098 (110,927) 373,171 99,904 (6,177) 93,727 466,898

(Provision) / reversal for diminution in value of investment Reversal / (provision) against assets given on Ijarah Net return after provision Other Income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Loss on sale of securities Other income Total other income

5,996 9,871 1,414 (4,750) 2,184 14,715 263,801

4,444 12,169 2,904 (14,969) 4,201 8,749 475,647

Other Expenses Administrative expenses Other provision / write offs Total other Expenses Net (loss) / profit for the year Accumulated losses brought forward Accumulated losses carried forward

(289,921) (2,476) (292,397) (28,596) (174,404) (203,000)

(304,000) (304,000) 171,647 (346,051) (174,404)

Remuneration to Shariah Advisor / Board Charity Fund Opening balance Addition during the period Payment / utilization during the period Closing balance

2,615

1,924

20,732 840 (9,780) 11,792

19,609 6,629 (5,506) 20,732

262

United Bank Limited

[ Notes to and forming part of the Consolidated Financial Statements For the year ended December 31, 2010 ]
46. NON-ADJUSTING EVENT AFTER THE BALANCE SHEET DATE The Board of Directors in its meeting held on February 21, 2011 has proposed a cash dividend in respect of 2010 of Rs. 4.00 per share (2009: cash dividend Re.2.50 per share). In addition, the directors have also announced a bonus issue of Nil (2009: 10%). These appropriations will be approved in the forthcoming Annual General Meeting. The consolidated financial statements for the year ended December 31, 2010 do not include the effect of these appropriations which will be accounted for in the consolidated financial statements for the year ending December 31, 2011. 47. DATE OF AUTHORIZATION These financial statements were authorized for issue on February 21, 2011, by the Board of Directors of the Group. 48. 48.1 GENERAL Comparatives Comparative information has been re-classified, re-arranged or additionally incorporated in these consolidated financial statements for the purposes of better presentation. Major reclassifications made are as follows: Rs.249.990 million has been reclassified from other income - others to mark-up/interest earned on advances to customers (income on ijarah financing). Rs.1,122.772 million has been reclassified from balance with SBP in foreign currency deposit account to balance with SBP in foreign currency current account. Rs.1,650.896 million has been reclassified from borrowing in Pakistan to borrowing outside Pakistan. Unrealized mark-up held in suspense account amounting to Rs.1,087.189 million has been merged with provision against other assets.

48.2

Figures have been rounded off to the nearest thousand rupees unless otherwise stated.

Atif R. Bokhari
President & Chief Executive Officer

Muhammad Sami Saeed


Director

Sir Mohammed Anwar Pervez , OBE, HPk


Deputy Chairman

Nahayan Mabarak Al Nahayan


Chairman

Annual Report 2010

263

[ Annexure 'A' as referred to in note 9.8 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
1) Particulars of Investment held in listed companies and modarbas Investee Number of shares / certificates held Paid up value per share / certificate (Rupees) Held for trading securities Investment in ordinary shares Engro Corporation Limited Lotte Pakistan PTA Limited Nishat Chunian Limited Pakistan Telecommunication Company Limited Investment in units of mutual funds Aberdeen Money Market Funds Available for sale securities Investment in ordinary shares Adamjee Insurance Company Limited Arif Habib Corporation Limited Atlas Fund Of Funds Bank Al-Falah Limited BOC Pakistan Limited D.G. Khan Cement Limited Engro Polymer & Chemicals Limited Fauji Cement Company Limited First Dawood Mutual Fund Hira Textile Mills Limited IGI Investment Bank Limited Jahangir Siddiqui & Company Limited KASB Securities Limited Kohat Textile Mills Ltd Lotte Pakistan PTA Limited National Bank Of Pakistan Nishat Mills Limited Nishat Power Limited Pak Oilfields Limited Pakistan Petroleum Limited Pakistan State Oil Company Limited Pakistan Telecommunication Company Limited Sakrand Sugar Mills Limited Saritow Spinning Mills Limited Shell Pakistan Limited Visa Inc. DP World PICIC Growth Fund 1st Fidelity Leasing Modaraba Investments in preference shares Chenab Limited Masood Textile Mills Limited JSC Alliance Bank Chenab Ltd.(Pref) Investments in units of mutual funds Atlas Stock Market Fund Faysal Asset Allocation Fund Faysal Balance Growth Funds Meezan Islamic Income Funds 20,000 250,000 50,000 30,000 313 10.00 10.00 10.00 10.00 141 200 2,500 500 300 44,283 3,912 3,287 1,150 579 8,928 46,966 46,966 269,001 78,803 7,619 46,634 44,831 192,199 69,785 1,710,520 4,227 25,000 99,865 91,564 158,093 1,000 33,593 75,073 23,230 53,318 88,111 113,580 301,337 32,800 10,936 4,090 24,966 53,702 15,422 10 26 3,629,335 78,895 110,000 275,082 8,120 472,097 5,000 38,386 7,201 114,075 164,662 Total paid up value Cost

(Rupees in '000)

2,006,000 1,810,000 800,000 3,683,029 338,202 3,337,387 3,950,857 105,378,671 491,000 2,000,000 9,986,501 2,000,000 2,342,117 100,000 2,489,771 1,000,000 400,000 3,359,679 300,000 523,148 1,003,000 650,000 1,443,540 409,000 106,672 12,805 138,528 600 997 7,889,482 11,000,000 95,720 812,000 17,364 406,890 117,392 2,209,003

10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 4,193.83 8.56 10.00 10.00 10.00 10.00 3,892.00 10.00 100.00 500.00 50.00 50.00

20,060 18,100 8,000 36,830 3,382 33,374 39,509 1,053,787 4,910 20,000 99,865 20,000 23,421 1,000 24,898 10,000 4,000 33,597 3,000 5,231 10,030 6,500 14,435 4,090 1,067 53,702 1,186 6 10 78,895 110,000 275,082 8,120 1,736 203,445 5,870 110,450

264

United Bank Limited

[ Annexure 'A' as referred to in note 9.8 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
2) Particulars of Investment held in unlisted companies
Investee Percentage of holding (%) Number of shares / certificates held Break-up value per share (Rupees) Paid up value per share Cost Based on audited accounts as at Name of Chief Executive

(Rupees) (Rupees in '000)

Held for trading securities


Shareholding more than 10% Pakistan Agricultural Storage and Services Corporation Limited World Bridge Connect Inc. Cinepax Limited Khushhali Bank Limited Shareholding upto 10% First Women Bank Limited National Institutional Facilitation Technologies (Pvt.) Limited National Investment Trust Limited News - VIS Credit Information Services (Pvt.) Limited Techlogix International Limited 8.9% 2,532,000 37 10 21,100 31-Dec-09 Ms Shafqat Sultana

18.3% 18.1% 14.6% 11.7%

5,500 1,979,295 5,037,200 20,000,000

20,953 5 12

1,000 10 10

5,500 77,606 50,372 200,000

31-Mar-09 30-Jun-10 31-Dec-09

Maj Gen Sohail Shafkat Gurojot Singh Khalsa Arif Baigmohamed Ghalib Nishtar

8.4% 8.3%

914,093 79,200

53 12,310

10 100

1,527 100

30-Jun-10 30-Jun-10

M. M. Khan Wazir Ali Khoja

4.7% 4.4%

32,500 4,455,829

(2) 3

10 0

325 50,703

30-Jun-10 31-Dec-09

Faheem Ahmad Mr.Salman Akhtar & Kewan Khawaja (Co Chief Executive) Syed Shabahat Hussain (Executive Director) R. A. Chughtai Lazaro Campos Ajay Banga Abdul Wahid Janahi N/A

Equity Participation Fund

1.7%

27,000

665

100

2,700

31-Dec-08

Kay Textile Mills Limited SME Bank Limited SWIFT MasterCard Incorporated The Benefit Company B.S.C Tri Star Shipping Company

1.7% 0.0% 0.0% 0.0% 0.0%

377,800 3,975,003 25 461 80 15,000

10 293,090 2,324 -

10 10 0 -

3,778 26,950 2,905 0 1,817 250 445,632

31-Dec-09 31-Dec-09 31-Dec-09 -

Annual Report 2010

265

[ Annexure 'A' as referred to in note 9.8 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
3) Particulars of Bonds Investee Terms of Redemption Interest / Profit Principal Rate of Interest / Profit Outstanding Amount (Rupees in '000) Held for trading securities Sukuk bonds Mapple Leaf Cement Limited

Half Yearly

Half Yearly

6 month KIBOR plus 1.70%

22,852 22,852 256,917 171,278 226,262 86,816 88,683 192,005 254,245 21,199 94,781 1,392,186 73,494 73,494

Foreign securities Abu Dhabi Islamic Bank 2015 DEWA 2016 Dexia Kommunal Bank Dubai Government 2015 EMTN HSBC Bank Middle East IPIC GMTN Limited -2015 Qatar International Finance - QTEL 2025 QNB Finance Limited 2015 Zurich Insurance Government of Pakistan- Euro Bonds Government of Pakistan - Euro Bonds Available for sale securities Government of Pakistan Islamic Bonds Government of Pakistan Ijarah Sukuk Bonds

At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity

Annually Half Yearly Annually Half Yearly Annually Half Yearly Half Yearly Half Yearly Annually

3.746% 6.375% 1.625% 6.700% 3.000% 3.125% 5.000% 3.125% 4.250%

At Maturity

Half Yearly

6.88%

At Maturity

Half Yearly

Weighted average yield of 6M T-Bills plus 45 bps Weighted average yield of 6M T-Bills plus 75 bps Weighted average yield of 6M T-Bills plus 0 bps Weighted average yield of 6M T-Bill plus 0 bps

272,000

Government of Pakistan Ijarah Sukuk Bonds

At Maturity

Half Yearly

750,000

Government of Pakistan Ijarah Sukuk Bonds

At Maturity

Half Yearly

2,400,000

At Maturity

Half Yearly

700,000 4,122,000 3,938,516 3,938,516

Government of Pakistan - Eurobond Islamic Republic of Pakistan - 2017 - Eurobond

At Maturity

Half Yearly

6.875%

266

United Bank Limited

[ Annexure 'A' as referred to in note 9.8 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
3) Particulars of Bonds Investee Terms of Redemption Interest / Profit Principal Rate of Interest / Profit Outstanding Amount (Rupees in '000) Foreign securities Atlantic Finance Limited -2014 Bank of Bahrain and Kuwait -2015 USD Bonds DEWA Sukuk - AL IJARAH FRN 2013 Dubai Government AED FRN-2014 Dubai Government EMTN-2015 USD Dubai Government USD FRN -2014 IPIC GMTN Limited -2020 Qatar DIAR Finance QSC-2020 State of Qatar-2030 -USD Bonds Tabreed 06 Financing Corporation FRN-2011 Tamweel Sukuk FRN 2013 UK Government European Investment Bank

At Maturity At Maturity At Maturity At Maturity At maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity

Half Yearly Half Yearly Half Yearly Quarterly Half Yearly Half Yearly Half Yearly Quarterly Quarterly Half Yearly Quarterly Quarterly Quarterly

10.750% 4.500% 6M EBOR + 125bps 3M EBOR + 370bps 6.700% 6.396% 5.000% 5.000% 9.750% 6M LIBOR + 125bps 3M EBOR + 225bps 2.25% 0.81%

276,163 171,552 6,994,740 514,134 524,096 76,224 69,349 429,937 1,424,175 900,359 3,497,370 273,848 133,101 15,285,049

Held to maturity securities Government of Pakistan Islamic Bonds Government of Pakistan Sukuk Bond

At Maturity

Half Yearly

6M weighted avg. cutt off yield of T-Bills plus 45 Bps

30,000 30,000

Government of Pakistan - Guaranteed Bonds Wapda Bonds - Sukuk II

At Maturity

Half Yearly

6M KIBOR minus 25bps

51,399 51,399

Government of Pakistan - Euro Bonds Government of Pakistan - Euro Bonds Government of Pakistan - Euro Bonds Government of Pakistan - Euro Bonds Government of Pakistan - Euro Bonds Sukuk Bonds Dawood Hercules Chemicals Limited Security Leasing Corporation

At Maturity At Maturity At Maturity At Maturity

Half Yearly Half Yearly Half Yearly Half Yearly

6.88% 6.88% 6.88% 6.88%

154,343 297,321 165,870 78,973 696,506 542,880

^ Bullet Repayment

Half Yearly Half Yearly

B.R.R Guardian Modaraba

7 equal installments starting from 2011

Half Yearly

* Simple Avg. of 6 months KIBOR ask side Simple Avg. of 6 months KIBOR ask side

43,164

100,000

Annual Report 2010

267

[ Annexure 'A' as referred to in note 9.8 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
3) Particulars of Bonds Investee Terms of Redemption Principal Interest / Profit Rate of Interest / Profit Outstanding Amount (Rupees in '000) K.S. Sulemanji - Diminishing Musharika Quarterly Quarterly Simple Avg. of 3 months KIBOR ask side Avg. rate of 6 Month KIBOR ask side plus 1.15% Avg rate of 3 Months KIBOR ask side plus 1.1% 6 month KIBOR plus 1.75% 3.750%

303,997

Sitara Energy Limited

Repayment after completion of 2 years

Half Yearly

73,977

Sitara Peroxide Limited

Quarterly

Quarterly

281,250 890,000 313,471 2,548,739

Pakistan International Airlines Limited Islamic Sukkuk Bonds - Central Bank of Bahrain

Half Yearly At maturity

Half Yearly Half Yearly

^ Principal redemption on semi annual basis after expiry of twelve months. * Average of 6 months KIBOR ask side plus 120 bps. The rental bench mark rate will be subject to a floor of 3.5% and cap of 25% per annum. Investee Terms of Redemption Principal Interest / Profit Rate of Interest / Profit Outstanding Amount (Rupees in '000) 185,756 283,812 1,714,696 66,079 66,261 64,686 106,027 52,815 198,436 248,409 51,280 254,019 129,379 130,143 75,982 127,740 83,718 87,363 169,698 89,171 110,180

Foreign securities JSC Alliance Bank - US $ Discount Bonds JSC Alliance Bank - US $ Recovery Notes Srilanka Euro Bonds Bank of America Bank of America Bancaja Emisiones Jackson Life Bancaja Emisiones GE Capital UK Funding Caja de Ahorras del Mediterraneo Bank of Ireland Allied Irish Bank Bank of America Banco Santander Bank of Ireland Kuwait Projects Company Old Mutual plc Emirates Bank Emirates Bank SLM Corporation Alpha Credit

At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity

Half Yearly N/A Half Yearly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly

10.500% N/A 8.250% 0.83% 0.83% 0.87% 0.87% 0.89% 0.77% 0.89% 0.79% 0.82% 0.90% 0.84% 0.81% 1.19% 0.80% 0.56% 4.79% 1.30% 1.24%

268

United Bank Limited

[ Annexure 'A' as referred to in note 9.8 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
3) Particulars of Bonds Investee Terms of Redemption Interest / Profit Principal Rate of Interest / Profit Outstanding Amount (Rupees in '000) Foreign securities Bank of Bahrain and Kuwait Bank of Bahrain and Kuwait Mashreq Bank Mashreq Bank Mashreq Bank Emirates Bank Emirates Bank Abu Dhabi Commercial Bank Marks and Spencer Morgan Stanley Morgan Stanley Bank of America Bank of America Citi Group Citi Group Citi Group Unicredit Bank of Austria Unicredit Bank of Austria First Gulf Bank Bank of America Nationwide Mutual Finance for Danish Industry EIDG EIDG CS 4) Particulars of Debentures Investee Terms of Redemption Principal Interest / Profit Rate of Interest / Profit Outstanding Amount (Rupees in '000) Public Sector SDA - Cold Storage Haripur SDA - Cold Storage Haripur Private Sector Effef Ind Ltd Effef Ind Ltd Khyber Textile Mills Ltd Morgah Valey Ltd Morgah Valey Ltd Overdue Overdue Overdue Overdue 12.50% 12.00% 1,300 825 At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Quarterly Annually Annually Annually Annually Annually Annually Annually Annually Annually Annually Annually Annually Annually Annually Annually Annually Annually Annually 0.75% 0.75% 0.67% 0.67% 0.67% 1.33% 1.33% 5.63% 5.88% 7.50% 7.50% 5.13% 5.13% 5.25% 5.25% 5.25% 5.63% 5.63% 4.00% 5.13% 6.25% 6.00% 4.00% 3.00% 4.00% 290,342 170,917 84,897 169,528 425,321 254,071 213,598 203,133 131,800 424,496 141,670 172,868 277,952 382,599 215,723 222,737 692,008 144,598 87,239 347,478 278,358 109,053 9,109 18,267 9,152 9,772,562

Overdue Overdue Overdue Overdue Overdue

Overdue Overdue Overdue Overdue Overdue

11.00% 14.00% 14.00% 11.00% 14.00%

1,017 379 395 316 160 4,392

Annual Report 2010

269

[ Annexure 'A' as referred to in note 9.8 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
5) Particulars of Investments in Term Finance Certificates
Investee No. of Certificates held Paid up value per certificate (Rupees) Held for trading securities Worldcall Telecom Limited Pakistan Mobile Communication Limited Engro Fertilizer Limited Total Paid up value Outstanding Amount Name of Chief Executive

(Rupees in '000)

4,855 10,000 10,000

5,000 5,000 5,000

24,275 50,000 50,000

19,416 42,750 44,265 106,431

Baber Ali Syed Rashid Khan Khalid Siraj Subhani

Unlisted - available for sale Pakistan International Airlines Engro Corporation Limited Faysal Bank Limited Standard Chartered Bank Pakistan Limited TFC II

1,700 7,000 46,000 2

5,000 100,000 5,000 5,000

8,500 700,000 230,000 10

8,495 702,241 230,000 3 940,739

Captain Muhammad Aijaz Haroon Asad Umar Naved A. Khan Mohsin Ali Nathani

Listed - available for sale Allied Bank Limited TFC-II Azgard Nine Limited Bank Al Falah Limited TFC II Bank Al Falah Limited TFC III Bank Al Habib Limited TFC II Bank Al Habib Limited TFC III Engro Corporation Limited TFC III Standard Chartered Bank Pakistan Limited TFC II Allied Bank Limited TFC-II

53,000 60,000 3,000 26,200 44,766 46,000 22,562 4,000 1

5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000

265,000 300,000 15,000 131,000 223,830 230,000 112,810 20,000 5

273,208 224,694 15,061 133,307 228,860 229,724 113,220 5,000 5 1,223,079

Khalid A. Sherwani Ahmed H. Shaikh Sirajuddin Aziz Sirajuddin Aziz Abbas D. Habib Abbas D. Habib Asad Umar Mohsin Ali Nathani Khalid A. Sherwani

Unlisted - held to maturity Power Holding (Pvt) Limited Pakistan International Airlines Corporation Orix Leasing Pakistan Limited Crescent Textile Mills Limited Al Abbas Sugar Mills Limited Dewan Farooq Spining Mills Limited Security Leasing Corporation Limited SME Leasing Limited Faysal Bank Limited Al-Azhar Textile Mills Ltd Bachani Sugar Mills Ltd. Bentonite (Pakistan) Ltd Blue Star Textile Mills Ltd Cast-N-Link Products Limited Frontier Ceramics Limited Khairpur Sugar Mills Limited Regency Textile Ltd Tanocrafts Ltd Tharparkar Sugar Mills

4,615,800 408,867 2,000 110,000 12,000 30,000 40,000 24,000 24,000 14 14 17 16 46 28 24 22 5

5,000 5,000 100,000 5000 5,000 5,000 5,000 5,000 5,000 774,670 268,894 497,020 369,054 370 1,642,964 108,958 156,227 1,754,000

23,079,000 2,044,335 200,000 550,000 60,000 150,000 200,000 120,000 120,000 10,845 3,765 8,449 5,905 17 46,003 2,615 3,437 8,770

23,079,000 2,043,518 166,667 99,985 36,000 37,472 60,937 30,000 120,000 5,418 25,500 3,417 3,392 2,549 1,965 2,783 6,165 537 26,238 25,751,543

Fazeel Asif Captain Muhammad Aijaz Haroon Teizoon Kisat Muhammad Anwar Shunaid Qureshi Dewan Abdul Baqi Farooqui Mohammad Khalid Ali Mrs. Arjumand Qazi Naved A. Khan Mirza Muhammad Azhar Baig Noorul Amin Bachani Khalid Shakil Chaudry Ghulam Farid Nisar Ahmed Omer Khalid Mubeen Jumani M. Iqtidar Pervaiz Ashfaq Hussain Irfan Ali Shah

270

United Bank Limited

[ Annexure 'A' as referred to in note 9.8 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
5) Particulars of Investments in Term Finance Certificates
Investee No. of Certificates held Paid up value per certificate (Rupees) Listed - held to maturity Allied Bank Limited TFC II Askari Commercial Bank Limited Askari Commercial Bank Limited Bank Al Habib Limited Faysal Bank Limited (Formerly Royal Bank of Scotland) Soneri Bank Limited IGI Investment Bank Limited Pak Arab Fertilizer (Private) Limited 22,000 999 31,083 30,000 5,000 5,000 5,000 5,000 110,000 4,995 155,415 150,000 82,346 4,984 38,838 141,000 1,355,206 6) Particulars of Participation Term Certificates Investee No. of Certificates held Paid up value per certificate (Rupees) Brother Steel Industries Limited Crystal Chemicals Limited Leatherite Limited Mass Dairies Limited Morgah Valey Limited Pangrio Sugar Mills Limited Zamrock Fibers Glass Limited 17 14 15 11 16 44 12 108,024 145,933 22,200 136,818 29,250 64,000 32,833 Total Paid up value Outstanding Amount Name of Chief Executive Naved A. Khan Atif A. Bajwa Syed Javed Hassan Fawad Ahmad Mukhtar 129,397 43,525 40,000 5,000 5,000 5,000 5,000 5,000 646,985 217,625 200,000 25,000 646,352 217,146 199,600 24,940 Khalid A. Sherwani Mohammad Rafiquddin Mehkari Mohammad Rafiquddin Mehkari Abbas D. Habib Total Paid up value Outstanding Amount Name of Chief Executive

(Rupees in '000)

(Rupees in '000) 2,144,313 3,897,000 888,603 2,523,000 436,414 11,198,023 2,358,000 2,144 3,897 889 2,523 436 6,955 2,358 19,202 Mian Yousuf Aziz Maqsood A. Shaikh Mian Mohammad Akhtar Paganawala Air Marshal A. Rahim Khan Aftab Ahmed -

Annual Report 2010

271

[ Annexure 'A' as referred to in note 9.8 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
7) Quality of Investments classified as Available For Sale (AFS) Investee Market Value Credit Rating (Rupees in '000)

Investment in ordinary shares 1st Fidelity Leasing Modaraba Adamjee Insurance Company Limited Arif Habib Corporation Limited Atlas Fund Of Funds Bank Al-Falah Limited BOC Pakistan Limited D.G. Khan Cement Limited Engro Polymer & Chemicals Limited Fauji Cement Company Limited First Dawood Mutual Fund Hira Textile Mills Limited IGI Investment Bank Limited Jahangir Siddiqui & Company Limited KASB Securities Limited Kohat Textile Mills Ltd Lotte Pakistan PTA Limited National Bank Of Pakistan Nishat Mills Limited Nishat Power Limited Pak Oilfields Limited Pakistan Petroleum Limited Pakistan State Oil Company Limited Pakistan Telecommunication Company Limited PICIC Growth Fund Sakrand Sugar Mills Limited Saritow Spinning Mills Limited Shell Pakistan Limited Visa Inc. DP World Investments in preference shares Chenab Limited. Masood Textile Mills Limited JSC Alliance Bank

2 175,525 45,051 3,664 41,287 30,810 100,689 56,379 575,600 982 7,800 29,260 21,800 10,469 140 34,110 76,820 25,668 54,528 88,788 113,602 296,066 12,636 8 4,331 818 22,211 77,078 7,438 1,913,560 21,754 110,000 131,754

AA AA 2-Star A AA A AAA A+ AAAA+ -

Unrated

Investments in units of mutual funds AMZ Plus Stock Fund Atlas Stock Market Fund Faysal Balance Growth Funds Meezan Islamic Income Fund Aberdeen Money Market Funds

7,040 26,827 8,926 113,366 44,283 200,442

2-Star 3-Star 5-Star A(f) -

272

United Bank Limited

[ Annexure 'A' as referred to in note 9.8 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
7) Quality of Investments classified as Available For Sale (AFS) Investee Cost (Rupees in '000) Credit Rating

Investment in unlisted shares Shareholding more than 10% Khushhali Bank Limited World Bridge Connect Inc. Cinepax Limited Pakistan Agricultural Storage and Services Corporation Limited National Investment Trust Limited Shareholding upto 10% National Institutional Facilitation Technologies (Pvt.) Limited Techlogix International Limited SME Bank Limited First Women Bank Limited Kay Textile Mills Limited SWIFT Equity Participation Fund News - VIS Credit Information Services (Pvt.) Limited MasterCard Incorporated The Benefit Company B.S.C

200,000 77,606 50,372 5,500 100

Aunrated unrated unrated AM-DS

1,527 50,703 26,950 21,100 3,778 2,905 2,700 325 0 1,817 445,382

unrated unrated BBB BBB+ unrated unrated unrated unrated unrated unrated

Particulars

Market Value (Rupees in '000)

Credit Rating

Federal Government Securities Market Treasury Bills Pakistan Investment Bonds

60,159,266 17,586,966 77,746,232

Unrated - Govt Securities Unrated - Govt Securities

Government of Pakistan Islamic Bonds Government of Pakistan Ijarah Sukuk

4,122,000 4,122,000

B- (S&P)

Government of Pakistan - Euro Bond Islamic Republic of Pakistan - 2017 - Euro Bond

3,947,801 3,947,801

B- (S&P)

Annual Report 2010

273

[ Annexure 'A' as referred to in note 9.8 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
7) Quality of Investments classified as Available For Sale (AFS) Particulars Market Value (Rupees in '000) Credit Rating

Foreign securities Atlantic Finance Limited -2014 Bank of Bahrain and Kuwait Bond - 2015 DEWA Sukuk Al Ijarah FRN Dubai Government AED FRN-2014 Dubai Government EMTN-2015 USD Dubai Government USD FRN -2014 IPIC GMTN Limited -2020 Qatar DIAR Finance QSC-2020 State of Qatar-2030 -USD Bonds Tabreed 06 Financing Corporation FRN-2011 Tamweel Sukuk 2013 FRN

278,112 171,870 6,749,924 552,743 521,476 84,372 68,568 428,224 1,348,894 696,881 2,710,462 13,611,525

B1 (Moody's) A3 (Moody's) Ba2 (Moody's) Un-rated N/A Un-rated Aa3 (Moody's) AA AA CCC+ (S&P) Baa3 (Moody's)

Investee

Market Value (Rupees in '000)

Credit Rating

Term Finance Cerificates Listed Allied Bank Limited TFC-II Azgard Nine Limited Bank Al Falah Limited TFC II Bank Al Falah Limited TFC III Bank Al Habib Limited TFC II Bank Al Habib Limited TFC III Engro Chemicals Pakistan Limited - TFC III Standard Chartered Bank Pakistan Limited TFC II SCB (PAK) Ltd- TFC (20-01-04) Allied Bank Ltd- TFC (06-12-06)

259,892 224,694 14,795 128,396 222,418 230,149 110,494 4,993 2 5 1,195,839

AACCC(RW) AAAAAA AA AA AAA AAA AA-

Un Listed Pakistan International Airlines Engro Chemical Pakistan Limited Faysal Bank Limited

8,495 702,241 230,000 940,736

Unrated AA AA-

274

United Bank Limited

[ Annexure 'C' as referred to in note 11.7 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
Disposals of operating fixed assets during the year 2010

Cost

Accumu- Book Sale lated value proceeds depreciation (Rupees in '000)

Mode of disposal

Particulars of Buyers

Furniture and fixtures Items having book value of less than Rs. 250,000 or cost of less than Rs. 1,000,000 Electrical, office and computer equipment Items having book value of less than Rs. 250,000 or cost of less than Rs. 1,000,000

24,555

16,639

7,916

549

Auction

Various

33,732

31,234

2,498

1,759

Auction

Various

Vehicles Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 M/Lancer H/Civic M/Lancer T/Corolla S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus H/Accord T/Corolla 1,399 1,042 1,439 1,309 652 636 636 636 636 636 636 6,300 1,389 1,399 1,042 1,439 916 337 223 223 223 233 233 223 210 208 393 315 413 413 413 403 403 413 6,090 1,181 550 766 288 633 424 456 456 456 552 570 552 5,573 1,354 Auction Auction Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Insurance Claimed Insurance Claimed Ejaz Ahmed Wasim Mirza Atif Riaz Bokhari Aqeel A. Nasir Zeeshanul Haq Amjad Pervaiz Muhammad Munir Tariq Mumtaz Ali Abro Shaukat Ali Munnawar Ali Javaid Afzal Qazi UBL Insurers UBL Insurers

Annual Report 2010

275

[ Annexure 'C' as referred to in note 11.7 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
Disposals of operating fixed assets during the year 2010

Cost

Accumu- Book Sale lated value proceeds depreciation (Rupees in '000)

Mode of disposal

Particulars of Buyers

Items having book value of less than Rs. 250,000 or cost of less than Rs. 1,000,000 T/Corolla T/Corolla T/Corolla T/Corolla S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Alto S/Bolan S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Alto S/Cultus S/Cultus S/Alto S/Alto S/Alto Various 849 849 849 849 620 620 560 560 555 555 555 555 555 555 419 367 620 620 615 560 560 560 555 555 419 550 550 419 419 419 215 34,854 849 849 849 849 548 527 392 523 555 555 555 555 555 555 419 355 393 444 430 355 355 364 500 509 314 550 550 419 419 419 211 22,631 72 93 168 37 12 227 176 185 205 205 196 55 46 105 4 12,223 678 650 813 780 532 528 480 516 441 427 423 424 435 416 84 345 362 310 318 391 205 317 241 222 84 5 23,057 Auction Auction Auction Auction Auction Auction Auction Auction Auction Auction Auction Auction Auction Auction Auction Auction Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Write-off Write-off Write-off Write-off Write-off Auction Ahmed Hussain Qadri Shahzad Mangi Naveed Sikander Ali Sikander Ali Sikander Ali Nasir & Co. Tariq Ajmeri Tariq Ajmeri Sikander Ali Wasim Mirza M. Imran Ayub Sikander Ali Imran Shaikh Suhail Ahmed Qazi Khalil Ur Rehman Naveed Khan Anjum Zahid Hamid Mushtaq Ali Zakaria Naseem Mir Mahmood Saeed Siddiqui Hammad Umer Shafiq Toufique Ahmed Shaikh Sheikh Muhammad Tayyab Rasool Bux Soomro

Various

276

United Bank Limited

[ Annexure 'C' as referred to in note 11.7 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
Disposals of operating fixed assets during the year 2010

Cost

Accumu- Book Sale lated value proceeds depreciation (Rupees in '000)

Mode of disposal

Particulars of Buyers

Ijarah Assets Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 Commercial Ijarah - Atlas Honda Limited H/Civic T/Corolla T\Altis T/Corolla T/Corolla T/Corolla T/Corolla H/City T/Corolla T/Corolla T/Corolla T/Corolla T/Corolla S/Liana T/Corolla S/Cultus T/Corolla T/Corolla T/Corolla T/Corolla S/Liana H/City T/Belta T/Corolla T/Corolla H/City S/Liana H/City H/City S/Liana T/Vitz 3,325 1,564 1,389 1,319 1,286 1,240 1,237 1,225 1,215 1,205 1,205 1,204 980 980 955 950 940 940 940 925 915 907 907 900 890 890 879 856 852 846 825 811 210 462 230 402 366 426 412 471 408 422 299 301 391 564 456 487 308 486 528 435 511 434 484 460 319 526 343 540 235 451 406 560 3,115 1,102 1,159 917 920 814 825 754 807 783 906 903 589 416 499 463 632 454 412 490 404 473 423 440 571 364 536 316 617 395 419 251 3,139 917 1,050 598 886 898 322 278 793 616 987 774 426 256 551 660 442 620 255 559 492 534 461 241 502 476 559 355 674 493 490 151 Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Atlas Honda Limited M.Kamran Sabowala Riaz Hussain Mahinder Kumar Muhammad Shoaib Khanzada Abdullah Shaikh Muhammad Aslam Paracha Khader Kheil Sarfaraz Khan Arshad Hussain Maheen Afaq Ghulam Hussain Dahar Junejo Mohammad Ayoob Jamali Muhammad Junaid Ghaffar Muhammad Irfan Talat Mehmood Mohammad Hamid Ali Khan Sharmeen Zindani Yaar Gul Muhammad Kousar Manohar Lal Wadhwani Tarana Zafar Muhammad Naeem Waheed Ahmed Shaikh Mohammad Asmat Paracha Aasima Khan Mohammad Rehan Syed Muhammad Hasan Qutb Mohammad Asim Saleem Farooq Ahmed Siddiqui Saqib Khan

Annual Report 2010

277

[ Annexure 'C' as referred to in note 11.7 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
Disposals of operating fixed assets during the year 2010

Cost

Accumu- Book Sale lated value proceeds depreciation (Rupees in '000) 494 448 286 211 257 292 252 163 209 208 225 241 274 288 329 302 209 311 181 188 191 158 142 251 106 162 219 181 214 151 201 258 88 179 99 145 163 245 217 306 294 418 483 437 402 430 484 435 424 407 391 358 344 303 329 391 289 409 402 399 427 418 304 423 359 302 338 299 357 307 250 416 321 398 352 334 250 275 403 435 424 177 442 379 345 536 380 385 353 380 297 417 358 262 447 365 491 157 346 310 377 359 200 147 361 321 296 187 326 262 295 286 282 238 223 372 176

Mode of disposal

Particulars of Buyers

K/Sportage S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Bolan S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus S/Cultus T/Vitz S/Cultus S/Alto S/Alto S/Alto S/Alto S/Liana C/Joy S/Alto S/Alto S/Alto D/Cuore S/Alto S/Alto S/Alto S/Alto S/Alto S/Cultus S/Ravi D/Cuore D/Cuore S/Mehran D/Cuore

800 742 704 694 694 694 682 647 644 632 632 632 632 632 632 631 600 600 590 590 590 585 560 555 529 521 521 519 513 508 508 508 504 500 497 497 497 495 492

Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back

Noor Ahmed Shahtaj Ahson Iqbal Raza Muhmmad Ashraf Zubair Akram Suman Khurram Muhammad Haroon Syed Javed Akhtar Tanzeel Ul Rehman Syed Fahim Hasan Asif Ali Abbasi Babar Gulzar Butt Khalid Mahmood Mirza Imran Ijaz Syed Asim Uddin Mohammad Buksh Samiullah Fawad Iqbal Maria Noureen Sandra Grace Muhammad Raees Javed Akhtar Asif Sami Ullah Mailik Anas Rabbani Sameen Umair Mahmood Ul Haq Atif Syed Muhammad Musawwir Khan Waquar Ahmed Shuja Haider Tariq Qazi Mohammad Ali Siddiqui Muhammad Fasihuddin Khan Shazia Marium Siyal Mohisin Jhangir Amna Akmal Atif Hameed Bajwa Muhammad Ali Iftikhar Muhiuddin

278

United Bank Limited

[ Annexure 'C' as referred to in note 11.7 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
Disposals of operating fixed assets during the year 2010

Cost

Accumu- Book Sale lated value proceeds depreciation (Rupees in '000) 114 50 160 140 171 171 101 159 118 70 84 918 463 515 516 505 556 472 481 489 543 488 478 456 456 288 345 370 408 247 214 227 254 420 320 201 344 405 290 307 260 260 325 259 254 296 273 1,532 873 745 744 700 649 443 434 426 363 400 401 398 396 464 342 315 267 354 307 292 254 468 392 431 156 140 155 278 308 308 332 261 179 242 338 1,138 713 454 479 702 787 524 332 504 449 272 168 470 469 171 111 336 329 344 363 361 301 472 405 343

Mode of disposal

Particulars of Buyers

S/Bolan D/Cuore S/Every S/Ravi S/Mehran S/Mehran S/Mehran S/Bolan S/Ravi S/Mehran S/Ravi T/Surf T/Corolla T/Corolla T/Corolla T/Corolla T/Corolla T/Corolla T/Corolla T/Corolla S/Liana H/City H/City H/City H/City S/Cultus S/Cultus S/Alto Shehzore S/Alto S/Alto D/Cuore S/Alto S/Liana S/Cultus S/Cultus

458 455 450 447 431 431 426 418 372 366 357 2,450 1,336 1,260 1,260 1,205 1,205 915 915 915 906 888 879 854 852 752 687 685 675 601 521 519 508 888 712 632

Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Auction Auction Auction

Rehan Ahmed Ghaffar Tanveer Imran Niaz Abdul Khaliq Afzaal Khalil Zafar Iqbal Zafar Iqbal Hummad Ali Irfan Shahid Arab Zeeshan Suchwani Mohammad Rashid Imran Kayani Amir Hader Butt Syed Arshad Abbas Zaidi M.Saleem Sikander Imran Syed Muhammad Tanzeem Pervaiz Saeed Muhammad Afroze Rashida Khanum Ghulam Sarwar Qureshi Muhammad Aleem Muhammad Ibrar Hussain Saba Zehra Sajid Shabir Fazal Elahii Mian Riffat Baqar Ayaz Mustafa Chaudhry Adeel Anwer M. Khalid Muhammad Umair Mazhar Mustaq Ahmed Mallick Muhammad Afroz Alam Dawoodi Asif-Ur-Rehman Muhammad Rashid Raza Ullah Khaldi Sikander Ali

Annual Report 2010

279

[ Annexure 'C' as referred to in note 11.7 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
Disposals of operating fixed assets during the year 2010

Cost

Accumu- Book Sale lated value proceeds depreciation (Rupees in '000) 241 158 125 261 415 95 247 214 115 349 384 395 689 414 492 255 283 294 349 460 457 694 345 360 351 375 115

Mode of disposal

Particulars of Buyers

S/Alto S/Alto S/Bolan T/Corolla T/Corolla D/Cuore D/Cuore D/Cuore S/Mehran

590 542 520 950 829 587 502 497 409

Auction Auction Auction Insurance Claimed Insurance Claimed Insurance Claimed Insurance Claimed Insurance Claimed Insurance Claimed

Munaweer Hussain Muhammad Atif Bhatti Muhammad Rashid Pak Qattar Takaful Pak Qattar Takaful Pak Kwait Takaful Pak Qattar Takaful Pak Qattar Takaful Pak Kwait Takaful

Items having book value of less than Rs. 250,000 or cost of less than Rs. 1,000,000 T/Corolla T/Vitz S/Cultus S/Cultus T/Corolla T/Corolla Shehzore S/Cultus S/Cultus S/Liana S/Cultus S/Cultus S/Cultus S/Cultus S/Alto S/Alto 879 750 730 704 704 704 699 694 682 660 632 600 600 595 590 529 769 549 524 504 515 515 477 449 469 476 476 399 474 521 403 283 110 201 206 200 189 189 222 245 213 184 156 201 126 74 187 246 191 507 113 492 372 472 307 308 315 295 184 252 224 130 415 291 Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Masood Textile Abid Hussain Syed Asim Zafar Zaidi Imtiaz Ahmed Imran Ul Hafeez Imran Ul Hafeez Syed Farooq Ali Shah Muhammad Saeed Jamsa Mohammad Aslam Sabri Muhammad Faisal Muhammad Zeeshan Ali Mohammad Yousuf Ramesh Babu Masood Textile Muhammad Rizwan Afzal Khan Mohammad Islam

280

United Bank Limited

[ Annexure 'C' as referred to in note 11.7 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
Disposals of operating fixed assets during the year 2010

Cost

Accumu- Book Sale lated value proceeds depreciation (Rupees in '000) 330 449 292 421 285 404 415 468 387 271 370 416 406 259 223 227 327 190 320 365 182 363 188 264 260 319 289 203 335 315 140 144 239 142 110 289 199 80 232 99 234 115 104 53 120 224 127 76 58 199 224 217 117 245 115 65 246 65 230 154 147 89 113 192 55 67 222 216 119 211 242 61 113 147 395 210 225 214 125 163 232 106 170 111 101 142 247 147 138 268 135 141 293 276 225 270 111 216 135 170 162 278 305 351 148 243 235 136

Mode of disposal

Particulars of Buyers

S/Alto S/Alto S/Alto D/Cuore S/Alto S/Alto S/Alto S/Alto D/Cuore D/Cuore S/Mehran D/Cuore D/Cuore S/Bolan S/Ravi S/Bolan S/Bolan S/Mehran S/Mehran D/Cuore S/Bolan S/Bolan S/Bolan S/Bolan S/Bolan S/Mehran S/Bolan S/Mehran D/Cuore S/Bolan S/Mehran D/Cuore T/Premio S/Mehran S/Mehran S/Mehran

529 529 524 520 519 519 519 521 507 495 497 492 464 458 447 444 444 435 435 430 428 428 418 418 407 408 402 395 390 382 362 360 358 353 352 350

Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back

Muhammad Ahsan Akbar Hussain Mohammad Saeed Javed Sofia Paracha Mohammad Shahid Mehboob Alam Mazari Mirza Ahmed Ali Syed Matloob Hussain Rizvi Asif Nisar Abbas Ali Muhammad Umair Abbasi Masood Textile Yahya Khan Niaz Iqbal Siddiq Jamil Ahmed Shaikh Salamat Ali Anjum Syed Ammad Uddin Grami Syed Latif Mirza Saima Malik Muhammad Saleem Iftikhar Ali Khan Ali Ahmed Khan Muhammad Imran Mudasir Hussain Mohammad Noor-E-Arshi Khan Mirza Shadab Baig Syeda Safoora Hamid Abdul Waheed Muhammad Akram Noor Muhammad Fakhar Uz Zaman Khan Denial Christopher Mohammad Arif Khan Muhmmad Shafi Muhammad Haider Hussain Hashmi Danish Kazmi

Annual Report 2010

281

[ Annexure 'C' as referred to in note 11.7 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
Disposals of operating fixed assets during the year 2010

Cost

Accumu- Book Sale lated value proceeds depreciation (Rupees in '000) 510 500 431 496 456 383 468 468 278 466 422 422 238 272 343 222 222 290 290 316 233 371 305 321 349 349 219 275 404 416 65,055 240 132 201 136 161 143 54 54 230 42 82 82 249 211 113 225 225 157 157 109 181 37 97 77 48 48 151 222 115 99 68,011 223 226 246 295 190 249 288 277 272 150 373 273 233 131 135 248 248 282 262 138 213 170 160 257 131 231 186 326 255 213 69,285

Mode of disposal

Particulars of Buyers

T/Corolla S/Cultus S/Alto S/Cultus S/Cultus S/Bolan T/Corolla T/Corolla S/Alto S/Alto S/Alto S/Alto D/Cuore S/Bolan D/Cuore S/Ravi S/Ravi S/Ravi S/Ravi S/Alto S/Bolan S/Bolan S/Ravi S/Mehran S/Ravi S/Ravi S/Bolan D/Cuore D/Cuore S/Bolan

750 632 632 632 617 526 522 522 508 508 504 504 487 483 456 447 447 447 447 425 414 408 402 398 397 397 370 497 519 515 133,066

Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Buy Back Auction Insurance Claimed Insurance Claimed

Talha Anwar Qasim Mansoor Shahzad Ahmed Khan Muhammad Suleman Ansari Muhammad Ayaz Imam Rizvi Muhammad Zubair Khan Yasir Yousaf Yasir Yousaf Wasim Raza Mumtaz Ahmed Saima Anjum Saima Anjum Amina Liaquat Ali Abbasi Hammad Haider Nadeem-Ul-Haq Najmi Nadeem-Ul-Haq Najmi Naeem-Ur-Rehman Shaikh Naeem-Ur-Rehman Shaikh Asif Ali Syed Arshad Iqbal Shabbir Ahmed Memon Riyasat Hussain Tahir Shahab Sharif Jalil-Ur-Rehman Shaikh Jalil-Ur-Rehman Shaikh Syed Ghazanfar Ahmed Muhammad Furrakh Pak Qattar Takaful Pak Kwait Takaful

282

United Bank Limited

[ Annexure 'C' as referred to in note 11.7 of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
Disposals of operating fixed assets during the year 2010

Cost

Accumu- Book Sale lated value proceeds depreciation (Rupees in '000)

Mode of disposal

Particulars of Buyers

Buildings on leasehold land Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 Old lifts of Jinnah Ave. Building Leasehold Improvement Items having book value of more than Rs. 250,000 or cost of more than Rs. 1,000,000 Various Finance lease S/Cultus Intangibles Items having book value of less than Rs. 250,000 or cost of less than Rs. 1,000,000 Various Total 5,861 2,691 3,170 96,734 97,384 Write-off 7,818 5,436 2,382 Write-off 5,431 5,431 2,200 Auction Rehmat Ullah

560

26

534

534

Buy Back

Mohammad Gohar

245,877 149,143

Annual Report 2010

283

[ Annexure 'D' of Group's Consolidated Financial Statements For the year ended December 31, 2010 ]
Guidelines for mapping of Business Lines Segment Reporting A segment is a distinguishable component of the Group that is engaged either in providing particular products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Business segments (a) Corporate finance Corporate banking includes services provided in connection with mergers and acquisition, underwriting, privatization, securitization, research, debts instruments, equity, syndication, IPO and secondary private placements. (b) Trading and sales Trading and sales includes fixed income, equity, foreign exchange, commodities, credit, funding, own position securities, lending and repos, brokerage debt and prime brokerage. (c) Retail Banking Retail banking includes retail lending and deposits, banking services, trusts and estates, private lending and deposits, investment advice, merchant / commercial / corporate cards. (d) Commercial banking Commercial banking includes project finance, real estate, export finance, trade finance, factoring, leasing, lending, guarantees, bills of exchange and deposits. (e) Asset management It includes discretionary and non discretionary fund management activities in the form of pooled, segregated, retail, institutional, private equity, open, close ended funds etc (f) Others It includes results of support functions of the Group and subsidiary which cannot be classified in any of the above segments.

284

United Bank Limited

[ Consolidated Statement of Financial Position As at December 31, 2010 ]


2009 2010 (US Dollars in 000) ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Performing Non-performing - net of provision Operating fixed assets Deferred tax asset - net Other assets 3,811,934 175,964 3,987,898 288,248 15,160 235,253 8,470,546 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities 59,258 556,208 6,628,131 139,960 209,629 7,593,187 NET ASSETS REPRESENTED BY: Share capital Reserves Unappropriated profit Total equity attributable to the equity holders of the Bank Non-controlling interest Surplus on revaluation of assets - net of deferred tax CONTINGENCIES AND COMMITMENTS These has been converted at Rs.85.6367 per US Dollar from the audited financial statements. 142,950 281,443 322,015 746,409 25,774 772,183 105,177 877,360 129,955 247,183 275,792 652,930 26,620 679,550 106,542 786,092 877,360 60,329 434,023 5,883,362 140,008 7 174,538 6,692,266 786,092 4,083,707 144,382 4,228,089 277,148 7,588 203,763 7,478,358 790,166 303,385 144,620 2,705,817 718,876 164,065 270,470 1,608,359

Annual Report 2010

285

[ Consolidated Profit and Loss Account For the year ended December 31, 2010 ]
2009 2010 (US Dollars in 000) Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against loans and advances - net Provision against lending to financial institutions Provision for diminution in value of investments - net Bad debts written off directly Net mark-up / return / 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 - net Unrealized loss on revaluation of investments classified as held for trading Other income Total non mark-up / return / interest income 701,807 296,997 404,810 79,853 3,550 11,769 95,172 309,637 721,016 330,738 390,279 112,626 6,549 13,866 17,352 150,394 239,885

81,994 1,564 20,256 2,197 (388) 18,330 123,953 433,590

78,662 2,507 14,899 8,166 (30) 36,746 140,950 380,835

Non Mark-up / Interest Expenses Administrative expenses Other provisions / write offs - net Workers' Welfare Fund Other charges Total non mark-up / interest expenses Share of income of associates Profit before taxation Taxation - Current - Prior years - Deferred Profit after taxation Attributable to: Equity shareholders of the Bank Non-controlling interest

221,829 795 4,844 2,807 230,275 3,239 206,554 79,999 4,850 (6,989) 77,860 128,694

207,894 7,500 4,683 754 220,831 8,057 168,061 81,697 919 (25,348) 57,268 110,793

128,819 (125) 128,694 (US Dollars)

111,185 (392) 110,793

Earnings per share - basic and diluted These has been converted at Rs.85.6367 per US Dollar from the audited financial statements.

0.11

0.09

286

United Bank Limited

[ Category of Shareholders As at 31-12-2010 ]


Particulrs
DIRECTORS, CEO & CHILDREN NIT & ICP BANKS, DFI & NBFI INSURANCE COMPANIES MODARABAS & MUTUAL FUNDS GENERAL PUBLIC (LOCAL) GENERAL PUBLIC (FOREIGN) OTHERS GOVERNMENT OF PAKISTAN FOREIGN COMPANIES GOVT. OWNED ENTITIES / BANKS JOINT STOCK COMPANIES PUBLIC SECTOR COMPANIES CHARITABLE TRUSTS Company Total

No of Folio
6 2 18 15 39 25,729 1,139 42 1 54 4 147 2 7 27,205

Balance Share
158,805,075 1,307,327 15,267,751 7,355,969 17,482,437 31,548,034 159,687,780 48,113,863 3,354,550 444,187,226 238,569,096 98,000,849 143,628 356,102 122,417,9687

Percentage
12.9724 0.1068 1.2472 0.6009 1.4281 2.5771 13.0445 3.9303 0.2740 36.2845 19.4881 8.0054 0.0117 0.0291 100.0000

Annual Report 2010

287

[ Pattern of Shareholding As at 31-12-2010 ]


NO. OF SHAREHOLDERS 4012 17895 1805 2472 435 145 65 55 33 22 29 17 25 15 4 8 4 4 7 4 3 7 6 1 1 2 6 9 1 1 2 2 3 4 1 3 1 1 1 1 1 1 2 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 2 1 <---- HAVING SHARES ----> From To 1 101 501 1,001 5,001 10,001 15,001 20,001 25,001 30,001 35,001 40,001 45,001 50,001 55,001 60,001 65,001 70,001 75,001 80,001 85,001 90,001 95,001 100,001 105,001 110,001 115,001 120,001 125,001 130,001 135,001 140,001 145,001 150,001 155,001 165,001 175,001 180,001 185,001 190,001 195,001 210,001 220,001 225,001 230,001 235,001 240,001 245,001 250,001 255,001 260,001 265,001 270,001 290,001 295,001 305,001 320,001 340,001 360,001 370,001 395,001 410,001 415,001 420,001 100 500 1,000 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 75,000 80,000 85,000 90,000 95,000 100,000 105,000 110,000 115,000 120,000 125,000 130,000 135,000 140,000 145,000 150,000 155,000 160,000 170,000 180,000 185,000 190,000 195,000 200,000 215,000 225,000 230,000 235,000 240,000 245,000 250,000 255,000 260,000 265,000 270,000 275,000 295,000 300,000 310,000 325,000 345,000 365,000 375,000 400,000 415,000 420,000 425,000

SHARES HELD 2,62,794 7,814,061 1,422,003 5,363,127 3,094,938 1,791,453 1,142,070 1,262,879 931,366 714,508 1,105,650 723,520 1,224,769 807,241 230,670 492,945 274,910 288,654 542,354 332,990 260,110 656,602 593,285 105,000 106,630 227,621 705,962 1,095,171 127,615 135,000 276,125 284,391 446,000 604,277 155,612 502,504 179,000 181,034 187,500 192,000 200,000 211,750 442,965 229,291 467,636 239,450 242,000 250,000 253,000 256,700 262,950 268,021 275,000 294,745 299,475 309,000 324,653 342,028 363,000 372,098 800,000 411,860 834,377 423,918

PERCENTAGE 0.0215 0.6383 0.1162 0.4381 0.2528 0.1463 0.0933 0.1032 0.0761 0.0584 0.0903 0.0591 0.1000 0.0659 0.0188 0.0403 0.0225 0.0236 0.0443 0.0272 0.0212 0.0536 0.0485 0.0086 0.0087 0.0186 0.0577 0.0895 0.0104 0.0110 0.0226 0.0232 0.0364 0.0494 0.0127 0.0410 0.0146 0.0148 0.0153 0.0157 0.0163 0.0173 0.0362 0.0187 0.0382 0.0196 0.0198 0.0204 0.0207 0.0210 0.0215 0.0219 0.0225 0.0241 0.0245 0.0252 0.0265 0.0279 0.0297 0.0304 0.0654 0.0336 0.0682 0.0346

288

United Bank Limited

[ Pattern of Shareholding As at 31-12-2010 ]


NO. OF SHAREHOLDERS 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 27,205 <---- HAVING SHARES ----> From To 430,001 455,001 460,001 495,001 515,001 555,001 605,001 640,001 650,001 655,001 670,001 675,001 705,001 725,001 730,001 755,001 775,001 905,001 930,001 935,001 955,001 1,160,001 1,175,001 1,185,001 1,190,001 1,300,001 1455001 1,470,001 1,495,001 1,500,001 1,710,001 1,855,001 1,965,001 2,055,001 2,245,001 2,775,001 3,340,001 3,350,001 3,715,001 3,830,001 4,595,001 4,765,001 4,810,001 6,565,001 6,965,001 10,180,001 14,995,001 18,365,001 20,930,001 20,995,001 22,495,001 38,700,001 44,990,001 59,990,001 61,205,001 62,430,001 67,490,001 78,500,001 78,940,001 93,645,001 17,735,5001 22,277,5001 435,000 460,000 465,000 500,000 520,000 560,000 610,000 645,000 655,000 660,000 675,000 680,000 710,000 730,000 735,000 760,000 780,000 910,000 935,000 940,000 960,000 1,165,000 1,180,000 1,190,000 1,195,000 1,305,000 1,460,000 1,475,000 1,500,000 1,505,000 1,715,000 1,860,000 1,970,000 2,060,000 2,250,000 2,780,000 3,345,000 3,355,000 3,720,000 3,835,000 4,600,000 4,770,000 4,815,000 6,570,000 6,970,000 10,185,000 15,000,000 18,370,000 20,935,000 21,000,000 22,500,000 38,705,000 44,995,000 59,995,000 61,210,000 62,435,000 67,495,000 78,505,000 78,945,000 93,650,000 177,360,000 222,780,000 Company Total

SHARES HELD 431,786 460,000 461,450 500,000 516,118 559,743 610,000 644,011 654,200 655,387 672,150 676,764 707,850 729,346 732,000 757,991 775,745 909,945 931,519 936,879 960,000 1,161,763 1,175,347 1,187,730 1,193,894 3,908,530 1,458,000 1,473,506 2,997,234 1,504,000 1,714,970 1,858,444 1,969,739 2,059,401 2,249,746 2,777,937 3,340,119 3,354,550 3,717,191 3,830,544 4,597,634 4,767,426 4,810,566 6,568,964 6,967,440 10,184,572 14,998,307 18,366,935 20,934,809 20,997,631 22,497,462 38,704,926 44,994,928 59,993,236 61,208,980 62,433,163 67,492,392 78,501,099 78,942,102 93,649,744 1,7735,8401 222,775,183 1,224,179,687

PERCENTAGE 0.0353 0.0376 0.0377 0.0408 0.0422 0.0457 0.0498 0.0526 0.0534 0.0535 0.0549 0.0553 0.0578 0.0596 0.0598 0.0619 0.0634 0.0743 0.0761 0.0765 0.0784 0.0949 0.0960 0.0970 0.0975 0.3193 0.1191 0.1204 0.2448 0.1229 0.1401 0.1518 0.1609 0.1682 0.1838 0.2269 0.2728 0.2740 0.3036 0.3129 0.3756 0.3894 0.3930 0.5366 0.5692 0.8320 1.2252 1.5003 1.7101 1.7152 1.8378 3.1617 3.6755 4.9007 5.0000 5.1000 5.5133 6.4125 6.4486 7.6500 14.4879 18.1979 100.0000

Annual Report 2010

289

[ Notice of 52nd Annual General Meeting ]


Notice is hereby given that the 52nd Annual General Meeting (AGM) of the Shareholders of United Bank Limited (the Bank) will be held on Tuesday 29 March 2011 at 09:30 a.m. at Islamabad Serena Hotel, Islamabad to transact the following business: Ordinary Business: 1. 2. To confirm the minutes of the Extraordinary General Meeting held on 25 November 2010. To receive, consider and adopt the Annual Audited Accounts (consolidated and unconsolidated), Statement of Compliance with the Code of Corporate Governance of the Bank for the year ended 31 December 2010 together with the Directors Report and Auditors Report thereon. To consider and approve as recommended by the Board of Directors, final cash Dividend at the rate of Rs.4.00 per share i.e. 40%, in addition to 10% interim dividend already declared/paid for the year ended 31 December 2010. To appoint two external auditors to hold office from this AGM till the conclusion of the next AGM of the Bank and to fix their remuneration. The retiring Auditors M/s. Ernst & Young Ford Rhodes Sidat Hyder, Chartered Accountants, and M/s. BDO Ebrahim & Company, Chartered Accountants, being eligible, have offered themselves for reappointment. To elect six Directors as fixed by the Board of Directors of the Bank under Section 178(1) of the Companies Ordinance, 1984 in accordance with the provisions of the said Ordinance for a period of three years to commence from 29 March 2011. The total strength of the Board of Directors of the Bank shall be nine including the two directors nominated by the Government of Pakistan under Section 183 of the Companies Ordinance, 1984 and the President & CEO of the Bank, being deemed director under section 200(2) of the Companies Ordinance 1984. The retiring Directors H.H. Shaikh Nahayan Mabarak Al Nahayan, Sir Mohammed Anwar Pervez, OBE, HPk, Mr. Omar Z. Al Askari, Mr. Zameer Mohammed Choudrey, Mr. Amin Uddin and Mr. Arshad Ahmad Mir, are eligible for re-election. Special Business: 6. To consider and approve disposal of fractional shares created out of the issuance of bonus shares by the Bank for the year 2009 by passing the following resolution with or without amendment: RESOLVED: (i) That the fractional shares created out of the issuance of bonus shares by the Bank in the year 2009 be consolidated into 18,051 shares and sold on the Karachi Stock Exchange and sale proceeds from such disposal be donated to SOS Village, a charitable trust engaged in the welfare of destitute children. (ii) That the President and/or the Company Secretary of the Bank be and are hereby authorized to take such steps as may be necessary in connection with sale of fractional shares. 7. To consider and approve the amount of remuneration paid to the nonexecutive Directors of the Bank for attending the Board and/or Committees meetings held during the year and in that connection to pass the following resolutions, as special resolutions, with or without modification, addition or deletion: RESOLVED: that the remuneration paid to the non-executive directors of UBL including the Chairman and the Deputy Chairman during the year 2010 for attending the Board meetings and/or Committees meetings, as disclosed in note 38 of the Audited Financial Statements of the Bank for the year ended 31 December 2010 be and is hereby confirmed and approved on post facto basis. 8. To approve investment of Rs. 467,974,930/- by subscribing 46,797,493 rights shares at face value of Rs. 10/- per share of United Executors and Trustees Company Limited (UET), a wholly owned subsidiary of UBL. That the following Resolutions be passed as a special resolution as required by Section 208 of the Companies Ordinance, 1984, with or without modification: RESOLVED : (i) That the investment of Rs. 467,974,930/- by subscribing 46,797,493 rights shares of United Executors and Trustees Company Limited (UET) a wholly owned subsidiary of the Bank at the face value of Rs.10/- per share upon completion of all the regulatory requirements including approvals of SBP be and is hereby approved. (ii) That the President and/or the Company Secretary of the Bank be and are hereby authorized to take such steps as may be necessary in connection with subscription of 46,797,493 rights shares offered by UET. 9. To consider and approve investment of up to Rs.800 million in the form of seed capital in open and/or closed end mutual funds and/or investment plans and the units of any scheme(s) to be launched and/or managed by UBL Fund Managers Ltd., a wholly owned subsidiary of the Bank and in this connection to pass the following resolution as a special resolution as required by Section 208 of the Companies Ordinance, 1984, with or without modification: RESOLVED that the Bank be and is hereby authorized to invest up to Rs. 800 million in the form of seed capital in open and/or closed end mutual funds and/or investment plans and the units of any scheme(s) to be launched and/or managed by UBL Fund Managers Ltd., a wholly owned subsidiary of the Bank from the date of the AGM till conclusion of the next AGM of the Bank. 10. To approve investment of up to US$ 8 million in the proposed subsidiary of the Bank to be incorporated in Tanzania subject to the approvals from State Bank of Pakistan and other relevant authorities. That the following resolution be passed as a special resolution as required by Section 208 of the Companies Ordinance, 1984, with or without modification: RESOLVED that the equity injection of up to US$ 8 Million in the proposed subsidiary of the Bank to be incorporated in Tanzania be and is hereby approved subject to all applicable regulatory approvals including approval of State Bank of Pakistan and compliance of all relevant formalities. 11. To transact any other business with the permission of the Chairman.

3.

4.

5.

By order of the Board

Aqeel Ahmed Nasir


Company Secretary & Chief Legal Counsel

Karachi, 7 March 2011

290

United Bank Limited

[ Notice of 52nd Annual General Meeting ]


Notes: 1. The Share Transfer Books of the Bank shall remain closed from 16 March 2011 to 29 March 2011 (both days inclusive). Transfers received at M/s. THK Associates (Pvt.) Limited, Ground Floor, State Life Building No.3, Dr. Ziauddin Ahmed Road, Karachi, the Registrar and Share Transfer Agent of the Bank, by the close of the business on 15 March 2011 will be treated in time for the purposes of the entitlement of cash dividend and bonus shares. A member entitled to attend and vote at the above Annual General Meeting is entitled to appoint another member as a proxy to attend and vote on his/her behalf, save that a corporation being a member may appoint as its proxy an officer of such corporation whether a member of the company or not. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed or a notarized certified copy of the power or authority shall be deposited at the offices of M/s. THK Associates (Pvt.) Limited, Ground Floor, State Life Building No.3, Dr. Ziauddin Ahmed Road, Karachi, the Registrar and Share Transfer Agent of the Bank not later than 48 hours before the time of holding the meeting, and must be duly stamped, signed and witnessed. The CDC Account Holders and Sub-Account Holders, whose registration details are available in the Share Book Details Report shall be required to produce their respective original Computerized National Identity Card (CNIC) or original Passport at the time to attending the Annual General Meeting to facilitate identification. Such Account Holders and Sub-Account Holders should also bring / know their respective participation I.D. No. and the CDC Account No. in case of proxy, he/she must enclose an attested copy of his/her CNIC or Passport. Representative(s) of corporate member(s) should bring usual documents required for such purpose. Members are requested to timely notify any change in their addresses to Banks Registrar / Share Transfer Agent M/s. THK Associates (Pvt) Limited, Ground Floor, State Life Building No. 3, Dr. Ziauddin Ahmed Road, Karachi. The election provisions will not apply to the two Government nominee Directors who have been nominated on the Board of Directors of UBL by the Government of Pakistan under Section 183 of the Companies Ordinance 1984. Any person who seeks to contest the election to the office of a Director, whether he is retiring director or otherwise, shall file the following with the Company Secretary of the Bank at 2nd Floor, State Life Building No.1, I.I.Chundrigar Road, Karachi, not later than fourteen days before the date of the meeting: (i) His intention to offer himself for the election of directors in terms of Section 178(3) of the Companies Ordinance 1984 together with: (a) consent in Form 28 of the Companies Ordinance 1984, (b) a Declaration with consent to act as Director under clause (ii) of the Code of Corporate Governance of the Securities and Exchange Commission of Pakistan to the effect that he is aware of the duties and powers of directors under the Companies Ordinance 1984, and the listing regulations of the Karachi Stock Exchange, Lahore Stock Exchange and Islamabad Stock Exchange and the Memorandum and Articles of Association of the Bank, (c) a Declaration in terms of clauses (iii), (iv) and (v) of the Code of Corporate Governance of the Securities and Exchange Commission of Pakistan, and (d) a Declaration that he is not ineligible to become a director of UBL under any circulars / directives of the State Bank of Pakistan. (ii) A questionnaire duly completed, recent photograph, copy of CNIC / Passport and an Affidavit to, inter-alia, meet the requirement of State Bank of Pakistans Prudential Regulations G-I and the Fit and Proper Test for Appointment of Directors as contained in Annexures VI-A, VI-B and VII-A. 7. In terms of the criteria prescribed by the State Bank of Pakistan, association of the following person as director is undesirable and against public interest: a) A person who is / has been associated with any illegal activity, especially relating to banking business. b) A person who is in his individual capacity or a proprietary concern of any partnership firm or any private limited company or any unlisted public company or any listed public company (of which he has been a proprietor, partner, director or shareholder), has been in default of payment of dues owed to any financial institution and / or in default of payment of any taxes.

2.

3.

4.

5.

6.

Annual Report 2010

291

[ Statement of Material Facts Under Section 160(1)(B) of the Companies Ordinance, 1984 ]
Item No.6: Disposal of Fractional Shares On announcement of 10% bonus shares by the Bank to its shareholders out of the profit for the year 2009, fractional shares were created. On account of high cost of computer printing, post printing, distribution / postage and handling charges on the fractional shares, the Board of Directors of the Bank in its 170th meeting held on February 21, 2011 recommended that fractional shares be consolidated into 18,051 shares and sold in the market and the net sale proceeds of the such shares be donated to SOS Village, a charitable trust engaged in the welfare of destitute children. Item No.7 : Remuneration of the Non-Executive Directors of the Bank As required under SBP Prudential Regulation G-1, total amount of remuneration paid/payable to the non-executive directors including the Chairman and the Deputy Chairman for attending the Board meetings and/or Committee meetings during the year 2010 as disclosed in Note 38 of the Audited Financial Statement is submitted to the shareholders for approval on post facto basis. Item No.8 : Investments in United Executors and Trustees Company Limited (UET) in the form of right shares. The Chief Executive of UET informed that in order to strengthen the balance sheet of the Company to support its business activities and meet financing needs for current and future investment activities, the Board of Directors and shareholders of UET are proposing to increase its authorized share capital from Rs. 40,000,000/- to Rs. 500,000,000/- and paid up share capital from Rs. 32,025,070 to Rs. 500,000,000/- by issuing 46,797,493 right issue at face value of Rs. 10/- per share to UBL. Approval for investment has already been taken from the Board of Directors of UBL. To subscribe the right shares of UET, certain regulatory requirements have to be fulfilled by UBL including approvals of SBP and shareholders of UBL.

i. ii.

Name of Company Nature of investment amount and extent of investment Average Market Price of the Share Break-up value of shares intended to be purchased on the basis of last published financial statement Price at which shares will be purchased Earnings / (Loss) per share of investee company in last three years

United Executors and Trustees Company Limited To subscribe right shares Rs. 467,974,930/Non-Listed Company 2007 2008 2009 Rs.18.79 per share Rs.18.69 per share Rs.18.73 per share

iii. iv.

v. vi.

Rs.10.00 per share 2007 2008 2009 Rs. 0.30 per share Rs. (0.09) per share Rs. 0.03 per share

vii.

Source of Funds from where shares will be purchased Period for which investment will be made Purpose of investment Benefits likely to accrue to the company and the share holders from the proposed investment Interest of directors and their relatives in the investee company

Own sources

viii. ix. x.

N/A To support its business activities and to meet financing needs for current and future investment activities To improve the profitability and capitalization of the company The CEO being deemed Director of UBL is the chairman of the Board of Directors of UET and is to that extent interested

xi.

292

United Bank Limited

[ Statement of Material Facts Under Section 160(1)(B) of the Companies Ordinance, 1984 ]
Item No.9 : Investments in form of Seed Capital/Units/Plans to be launched and/or managed by UBL Fund Managers Limited (UBLFM) from the date of AGM to conclusion of next AGM. UBL Fund Managers Limited, a wholly owned subsidiary of the Bank intends to launch and manage a series of open and/or closed end mutual funds, scheme(s) and investment plans, which amongst others shall also include a series of products offering capital protection, keeping in view the increase in perceived risk on investments in Pakistan emanating from the political and socioeconomic environment in the country. For various open and/or closed end mutual funds, scheme(s) and investment plans to be launched and/or managed by UBLFM will tap the UBL Branch network both within and outside Pakistan to maximize its geographical coverage. For the purpose, UBLFM has approached the Bank for investments of up to Rs.800 million in form of seed capital in the proposed mutual funds, investment in the units of any scheme(s) to be launched and/or managed by UBLFM and investment in plans to be launched and/or managed by UBLFM.

i)

Name of Fund/Units/Plan

Various open-ended and closed end Funds, schemes and investment plans to be launched and/or managed by UBL Fund Managers Limited from time to time Equity/Investment Plan(s) Totaling upto Rs. 800 Million Not Applicable Not Applicable for Fund/Investment Plan(s) Break-up value of UBL Fund Managers share is: 2008 Rs. 23.45/share 2009 Rs. 23.12/share 2010 Rs. 23.10/share

ii)

Nature of investment amount and extent of investment Average Market Price of the Share Break-up value of shares intended to be purchased on the basis of last published financial statement

iii) iv)

v)

Price at which shares will be purchased

For open-end and closed-end funds and schemes at their par value and for investment plans at the then prevailing NAV of the underlying funds Earnings per share (in rupees) of UBL Fund Managers is: 2008 Rs. 6.13/share (Restated) 2009 Rs. 7.50/share 2010 Rs. 2.49/share

vi)

Earning per share of investee company in last three years

vii)

Source of Funds from where shares will be purchased. Period for which investment will be made

Pool of Funds

viii)

Minimum time of Investments is 2 years, however transferable within 2 years Seed Capital and Investment plan(s)

ix)

Purpose of investment

Annual Report 2010

293

[ Statement of Material Facts Under Section 160(1)(B) of the Companies Ordinance, 1984 ]

x)

Benefits likely to accrue to the company and the share holders from the proposed investment

General Professional fund management by UBL Fund Managers Higher expected returns compared to fixed deposit schemes Diversification Capital Protected Schemes Capital protection in case of capital protected series of funds and plans Commodity Fund Tapping the rapidly growing commodity market

xi)

Interests of directors and their relatives in the investee company

None

Item No.10 : Equity Investments in Tanzania : The shareholders are requested to approve the equity investment up to US $ 8 Million in the proposed subsidiary to be incorporated

in Tanzania. The subsidiary will be a wholly owned subsidiary of the Bank for which all applicable regulatory approvals will be sought including the State Bank of Pakistan.

i) ii)

Name of Company Nature of investment amount and extent of investment Average Market Price of the Share Break-up value of shares intended to be purchased on the basis of last published financial statement Price at which shares will be purchased Earning per share of investee company in last three years Source of Funds from where shares will be purchased Period for which investment will be made Purpose of investment

United Bank Tanzania (proposed) 100% Equity investment of up to US$ 8 million by the Bank

iii) vi)

N/A Subsidiary yet to be established N/A

v) vi)

N/A N/A

vii) viii) xi)

Own sources of the Bank A wholly owned subsidiary of the Bank To setup wholly owned subsidiary to start banking operations in Tanzania International expansion and business growth

x)

Benefits likely to accrue to the company and the share holders from the proposed investment Interest of directors and their relatives in the investee company

xi)

None

294

United Bank Limited

[ Form of Proxy 52nd Annual General Meeting of United Bank Limited]


I/We, member of United Bank Limited (UBL) and holder of Folio No. Account No. or failing him and / or CDC Participation I.D. No. hereby appoint of of as of being a ordinary shares as per Share Register and

my/our proxy to vote for me/our and on my/our behalf at the 52nd Annual General Meeting of UBL scheduled to be held on Tuesday, March 29, 2011 at 09:30 a.m. at Islamabad Serena Hotel, Islamabad and at any adjournment thereof.

Signed this

day of

2011.

Witness 1: Signature: Name: CNIC No. or Passport No: Address: Revenue Stamps of Rs. 5/-

Witness 2: Signature: Name: CNIC No. or Passport No: Address: (Signature should agree with the specimen signature registered with the Registrar)

Note: A. General: 1. A member entitled to attend and vote at a General Meeting is entitled to appoint a proxy to attend and vote instead of him/her. No person shall act as a proxy, who is not a member of UBL except that Government of Pakistan / State Bank of Pakistan / Corporation may appoint a person who is not a member. 2. The instrument appointing a proxy should be signed by the member or his/her attorney duly authorized in writing. If the member is a corporation (other than Government of Pakistan and State Bank of Pakistan), its common seal should be affixed on the instrument. 3. The instrument appointing a proxy, together with Power of Attorney, if any, under which it is signed or a notarially certified copy thereof, should be deposited, with our Registrar/Transfer Agents, M/s. THK Associates (Pvt.) Limited, Ground Floor, State Life Building No.3, Dr. Ziauddin Ahmed Road, Karachi, not less than 48 hours before the time of holding the meeting. 4. If a member appoints more than one proxy, and more than one instrument of proxy are deposited by a member with the Registrar, all such instruments of proxy shall be rendered invalid. B. For CDC Account Holders: 1. The proxy form shall be witnessed by two persons whose names, addresses and CNIC / Passport No. shall be mentioned on the form. 2. Attested copies of CNIC or the passport of the beneficial owners of the proxy shall be furnished with the proxy form. 3. The proxy shall produce his/her original CNIC or original passport at the time of the meeting.

Annual Report 2010

Affix correct postage Registrar M/s. THK Associates (Pvt.) Limited, Ground Floor, State Life Building No.3, Dr. Ziauddin Ahmed Road, Karachi, Pakistan.

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