ZARAI TARAQIATI BANK LIMITED BALANCE SHEET AS AT 31 DECEMBER 2005

ASSETS Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loan Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities Deferred income NET ASSETS REPRESENTED BY Share capital Advance against equity Statutory reserve Contingencies reserve Unappropriated profit Surplus on revaluation of assets Notes 6 7 8 9 10 11 12 2005 2004 (Rupees in thousand) 1,585,421 7,813,844 12,820,668 52,925,286 8,010,698 690,141 1,829 83,847,887 235,741 51,257,213 2,644,647 3,204,323 13,441,518 2,048 70,785,490 13,062,397 1,593,898 14,791,268 2,849,677 54,335,440 9,381,766 976,985 1,222 83,930,256 197,434 51,257,213 3,122,206 3,204,323 13,048,358 17,105 70,846,639 13,083,617

13 14 15 16 17 18

19 20 21 22 23

11,869,612 215,387 30,000 702,355 12,817,354 245,043 13,062,397

11,869,611 1 215,387 861,549 12,946,548 137,069 13,083,617

CONTINGENCIES AND COMMITMENTS

24

The annexed notes 1 to 45 and annexure-1 form an integral part of these financial statements.

PRESIDENT

DIRECTOR

DIRECTOR

DIRECTOR

ZARAI TARAQIATI BANK LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2005
Notes Mark-up/ return/ interest earned Mark-up/ return/ interest expensed Net mark-up/ interest income Provision against non-performing loans and advances (Reversal)/provision for impairment in the value of investments Reversal against Portfolio audit Provision against other assets Bad debts written off directly Net mark-up/ interest income after provisions NON MARK-UP/INTEREST INCOME Fee, commission and brokerage income Dividend income Deferred income Income from dealing in foreign currencies Other income Total non-markup/ interest income NON MARK-UP/INTEREST EXPENSES Administrative expenses Amortization of deferred income Other provisions/write offs Other charges Total non-markup/interest expenses Extra ordinary/ unsual items PROFIT/(LOSS) BEFORE TAXATION Taxation Current year Prior years Deferred 30 PROFIT/(LOSS) AFTER TAXATION Unappropriated profit brought forward Profit available for appropriation APPROPRIATIONS: Transfer to statutory reserve Transfer to contingencies reserves Unappropriated profit carried forward Basic earnings per share 3,157 6,458 32,178 796,341 838,134 2,524,772 2,580,159 32,178 3,802 2,616,139 (91,367) (91,367) 38,434 (607) 37,827 (129,194) 861,549 732,355 30,000 702,355 (0.11) 2,410 6,028 6,349 939,990 954,777 3,613,021 2,437,251 6,349 2,196 2,445,796 1,167,225 1,167,225 503,234 5 503,239 663,986 330,360 994,346 132,797 861,549 0.62 25 26 2005 2004 (Rupees in thousand) 6,822,719 391,738 6,430,981 4,731,992 (585) 12,936 4,744,343 1,686,638 8,105,383 3,135,736 4,969,647 3,406,277 998 (1,098,570) 2,698 2,311,403 2,658,245

27

28 29

31

The annexed notes 1 to 45 and annexure-1 form an integral part of these financial statements.

PRESIDENT

DIRECTOR

DIRECTOR

DIRECTOR

ZARAI TARAQIATI BANK LIMITED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005
Notes CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Dividend income Adjustments for non-cash charges Depreciation Amortization of deferred income Amortization of preliminary expenses Provision against non-performing loans and advances Reversal against portfolio audit Reversal for employees post retirement medical benefits Provision against other assets (Gain)/ loss on sale of fixed assets 2005 2004 (Rupees in thousand) (91,367) (6,458) (97,825) 85,806 (32,178) 6,570 4,731,992 (79,692) 12,936 (23,591) 4,701,843 4,604,018 (3,321,839) 1,600,661 (1,721,178) 38,307 (477,558) 592,889 2,040 155,678 (157,864) 2,880,654 (9,863,017) 6,458 (24,945) 14,949 (9,866,555) (6,985,901) 16,385,166 9,399,265 1,167,225 (6,028) 1,161,197 88,403 (6,349) 2,190 3,406,277 (1,098,570) (151,537) 2,698 14 2,243,126 3,404,323 (2,470,762) (624,688) (3,095,450) 7,153 844,877 3,304,495 17,105 4,173,630 (151,274) 4,331,229 (75,874) 6,028 (23,027) 2,894 (89,979) 4,241,250 12,143,916 16,385,166

(Increase)/ decrease in operating assets Advances Others assets (excluding advance taxation) Increase/ (decrease) in operating liabilities Bills payable Deposits and other accounts Other liabilities (excluding current taxation) Deferred income Income tax paid Net cash flow from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investments in held to maturity securities Dividend received Investments in operating fixed assets Sale proceeds of property and equipment disposed off Net cash flow used in investing activities CASH FLOW FROM FINANCING ACTIVITIES Advance against equity Dividend paid Reserves Net cash flow from financing activities Increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year

32

The annexed notes 1 to 45 and annexure-1 form an integral part of these financial statements.

PRESIDENT

DIRECTOR

DIRECTOR

DIRECTOR

ZARAI TARAQIATI BANK LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2005

Share capital

Advance Statutory Contingencies Un-appropriated against equity reserve reserve profit ( R u p e e s i n t h o u s a n d ) 30,000 30,000 330,360 663,986 (132,797) 861,549 (129,194) (30,000) 702,355

Total

Balance as at 31 December 2003 as reported earlier Adjustment during the year Transfer to share capital Profit after taxation for the current year Transfer to statutory reserve Balance as at 31 December 2004 Transfer to share capital Profit after taxation for the current year Transfer to statutory reserve Transfer to contingencies reserve Balance as at 31 December 2005

8,950,656 2,918,955 11,869,611 1 11,869,612

2,918,954 2 (2,918,955) 1 (1) -

82,590 132,797 215,387 215,387

12,282,560 2 663,986 12,946,548 (129,194) 12,817,354

The annexed notes 1 to 45 and annexure-1 form an integral part of these financial statements.

PRESIDENT

DIRECTOR

DIRECTOR

DIRECTOR

ZARAI TARAQIATI BANK LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2005
1. STATUS AND NATURE OF BUSINESS

1.1 Reorganization and conversion The Federal Government in its cabinet meeting held on 28 August 2002 decided for the reorganization and conversion of Agricultural Development Bank of Pakistan into a public limited company for the purposes of ensuring good governance, autonomy, delivering high quality and viable financial services to a greater number of rural clientele and adequate returns to stake holders. Accordingly the Agricultural Development Bank of Pakistan (Reorganization and Conversion) Ordinance, 2002 was promulgated for taking over the entire undertaking of Agricultural Development Bank of Pakistan and for matters connected therewith or incidental thereto. 1.2 Status Thus as required under section 3 of the Agricultural Development Bank of Pakistan (Reorganization and Conversion) Ordinance, 2002, Zarai Taraqiati Bank Limited was incorporated as public limited company under the Companies Ordinance, 1984 on 23 October 2002. Consequently, under SRO 823 (1)/2002 dated 18 November 2002, all the assets, contracts, liabilities, proceedings and undertakings of Agricultural Development Bank of Pakistan were transferred to, and vested in Zarai Taraqiati Bank Limited on 14 December 2002.The Bank's principal office is situated at 1-Faisal Avenue (Zero Point), Islamabad.The Bank operates 345 (31 December 2004:345) branches in Pakistan as at close of the year. 1.3 The main purpose of the Bank is to provide sustainable rural finance and services particularly to small farmers and low income houses to strengthen the rural and agricultural sector, mitigate poverty, capital market and investment activities and other Banking business. 2. BASIS OF PRESENTATION These financial statements have been presented in accordance with the revised form of Accounts and Balance Sheet under BSD Circular No. 36 dated 10 October 2001 issued by the Banking Supervision Department of Sate Bank of Pakistan. 3. STATEMENT OF COMPLIANCE These financial statements are prepared in accordance with the approved International Accounting Standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984 and the Banking Companies Ordinance,1962. Approved accounting standards comprise of such International Accounting Standards as notified under the provisions of the Companies Ordinance,1984. Wherever the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance,1962 or the directives issued by the Securities and Exchange Commision of Pakistan (SECP) and the State Bank of Pakistan differ with the requirements of these standards, the requirements of the Companies Ordinance,1984, Banking Companies Ordinance, 1962 or the requirements of the said directives take precedence. The Securities and Exchange Commission of Pakistan (SECP) has approved and notified the adoption of International Accounting Standard 39, Financial Instruments; Recognition and Measurement and International Accounting Standard 40, Investment Property. The requirements of these standards have not been followed in preparation of these financial statements as the State Bank of Pakistan has deferred the implementation of these standards in Pakistan till further instructions. However, investments have been classified in accordance with the requirments of the format prescribed by the State Bank of Pakistan for the financial statements. 4. BASIS OF MEASUREMENT These financial statements have been prepared on the historical cost convention as modified for the revaluation of certain investments (note 8) and in conformity with the accepted accounting practices of the banking institutions in Pakistan.

5.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5.1 Staff Retirement Benefits Pension Scheme The Bank operates defined benefits funded pension scheme approved by income tax authorities, for its eligible employees who opted for the new employees benefits scheme, introduced in 1975 and 1977 for clerical/non-clerical staff and for executives/officers, respectively. The bank's costs are determined on the basis of actuarial valuation carried out by independent actuaries by using 'Projected Unit Credit Method'. Any surplus/deficit arising on actuarial valuation in excess of the higher of 10% of present value of defined benefits obligations or 10% of the fair value of plan assets is recognized as income or expense over the estimated working lives of the employees. Gratuity Scheme The Bank operates defined benefits funded gratuity scheme approved by income tax authorities, for its eligible employees who did not opt for the new employees benefits scheme, introduced in 1975 and 1977 for clerical/non-clerical staff and for executives/officers, respectively. Annual contributions are made on the basis of actuarial recommendations. Any surplus/deficit arising on actuarial valuation by independent actuaries in excess of the higher of 10% of present value of defined benefit obligation or 10% of the fair value of plan assets is recognized as income or expense over the estimated working lives of the employees. Provident Fund Scheme The Bank operates a defined contribution funded provident fund scheme for its employees who did not opt for the new employees benefits scheme introduced in 1975 and 1977 for clerical/non clerical staff and for executives/officers respectively. Under this scheme, equal contributions at defined rates are made by the member employees and the bank. The bank also operates non-contributory provident fund for its employees who opted for the new employees benefits scheme, as mentioned above. Under this, non contributory provident fund, contributions at defined rates are made by its member employees only. Both of these provident funds are approved by the income tax authorities. Benevolent Scheme The Bank also has two funded defined benefits benevolent fund schemes for its employees, separately for officers and for clerical and non-clerical staff. Contribution to these schemes are made by employees and the bank. The employee's contribution is matched by an equal contribution by the bank which is also liable to meet any shortfall in the fund, determined on the basis of actuarial valuation. Transitional liability arising on first adoption of International Accounting Standard - 19 (revised 2000) "Employee Benefits" is recognized as an expense on straight line basis over five years from the date of its adoption. Post retirement medical benefits The Bank operates an unfunded defined benefit post retirement medical benefit scheme for all of its employees . Provision is made in the accounts for the benefit based on actuarial valuation. Actuarial gains/losses are accounted for in the manner similar to pension scheme. The Bank operates an unfunded defined benefit post retirement medical benefit scheme for all of its employees. Provision is made in the financial statements for the benefit based on actuarial valuation. Actuarial gains/losses are accounted for in the manner similar to pension scheme. Employees Compensated Absences The Bank accounts for all accumulating compensated absences when the employees render service that increases their entitlement to future compensated absences. Provision is made in the financial statements for the benefit based on entitled unavailed leave balances carried forwarded to the next year. 5.2 Cash and cash equivalents Cash and cash equivalents comprise of cash, balances with treasury banks and balances with other banks.

5.3 Revenue recognition Markup/interest on advances and returns on investments are recognized on an accrual basis except markup/interest on classified advances which is recognized on a receipt basis, in accordance with the Prudential Regulations issued by the State Bank of Pakistan. Commission is recognized when earned. Profit/(loss) on sale of investments is credited/charged to profit and loss account currently. Dividend income is recognized when the Bank's right to receive has been established. 5.4 Advances Advances are stated at net of provision for non-performing advances. Provision for non-performing advances is determined on the basis of Prudential Regulations issued by the State Bank of Pakistan and charged to profit and loss account. Advances are written off when there is no realistic prospect of recovery. As a further prudence, value of mortgage land and buildings relating to non-performing loans and advances is treated as nil. 5.5 Investments In accordance with BSD circular No. 10 and 14 dated 13 July 2004 and 24 September 2004 respectively, issued by the State Bank of Pakistan, the bank classifies its investment portfolio into 'Held for Trading', 'Held to Maturity' and 'Available for Sale Securities' as follows: Held for trading These are investments acquired principally for the purpose of generating profits from short term fluctuations in price. Held to maturity These are investments with fixed or determinable payments and fixed maturity and the Bank has the positive intent and ability to hold them till maturity. Available for sale These are investments which do not fall under the held for trading and held to maturity categories. Quoted securities where ready quotes are available on Reuters Page (PKRV) or Stock Exchange, other than investments classified as held to maturity, are valued at fair value. Investments classified as held to maturity are carried at amortised cost. Investment in un quoted securities are carried at cost less impairment loss, if any. The difference between the face value and purchase price is amortised over the remaining life of the investment using effective yield method, in order to determine amortised cost. The surplus/deficit arising as a result of revaluation at fair value on trading portfolio is taken to income and that relating to the available for sale portfolio is kept in a seperate account and shown below equity. Gains or losses on disposals of investments are dealt with through profit and loss account in the year in which they arise. All purchases and sales of investments that requires delivery within the timeframe established by regulation or market convention are recognized using the trade date method of accounting. 5.6 Impairment The carrying amount of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment of any asset or group of assets. If such indication exists, the recoverable amount of the assets is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in profit and loss account.

5.7 Operating fixed assets and depreciation/amortization Operating fixed assets are stated at cost less accumulated depreciation except free hold land which is stated at cost. Depreciation is computed over the estimated useful lives of the related assets at the rates set out in note 11. Depreciation is charged on reducing balance method except for vehicles, computer equipment and lease hold land which are depreciated/amortized on straight line method. Depreciation on addition / deletion in fixed assets during the year is charged for the proportionate period for which the asset remained in use. Maintenance and normal repairs are charged to profit and loss account as and when incurred whereas major renewals and improvements are capitalized. Gains/losses, if any, on disposal of fixed assets are charged to profit and loss account during the year. International Accounting Standard (IAS) 16, "Property, Plant and Equipment (revised 2003)" is applicable to financial statements covering annual periods beginning on or after 01 January 2005 and requires a review of residual value of assets, useful lives and depreciation method at each financial year end. Accordingly, based on a review of the above, the management has revised the rate of depreciation on computer equipment from 20 percent to 33.3 percent. The above revision have been accounted for as changed in accounting estimate in accordance with the requirements of International Accounting Standard (IAS) 8, "Accounting Policies, Changes in Accounting Estimates and Errors". Accordingly, the effect of these changes in accounting estimates has been recognised propectively in the profit and loss account of the current year. Had there been no change in these accounting estimates, the loss for the year would have been lower by Rupees 2.270 million. 5.8 Taxation Current Provision for current taxation is based on taxable income at the current rate after taking into account tax credits, exemptions and rebates as laid down in the applicable income tax law. Deferred Deferred tax is provided using the balance sheet liability method, providing for all temporary differences between the carrying amounts of assets and liabilities for the financial reporting purposes and amount used for the taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using the tax rates enacted at the balance sheet date. A deferred tax asset is recognized only to the extent it is probable that future taxable profit will be available and the credits can be utilized. Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefits will be realized. 5.9 Provisions Provisions are recognized when the Bank has a legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and a realiable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and are adjusted to reflect current best estimate. 5.10 Foreign currencies The Bank operates foreign currency transactions through State Bank of Pakistan in local currency by paying exchange fluctuation risk fee to the State Bank of Pakistan. 5.11 Related party transactions All transactions undertaken between the Bank and the related parties are measured at arms' length prices determined in accordance with the methods for determining arms' length prices as prescribed by the Securities and Exchange Commission of Pakistan (SECP). 5.12 Financial instruments

Financial instruments carried on the balance sheet include certain receivables, cash and bank balances, investments, advances, borrowing from financial institutions, deposits and other payables. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

6.

CASH AND BALANCES WITH TREASURY BANKS Note

2005

2004

(Rupees in thousand) Local currency In hand In current accounts with: State Bank of Pakistan National Bank of Pakistan 6.1 7. 395,962 6.1 1,189,047 412 1,585,421 969,443 624,446 9 1,593,898

It represents deposits maintained with State Bank of Pakistan to comply with the regulations issued from time to time. BALANCES WITH OTHER BANKS In Pakistan: On current accounts On deposit accounts Outside Pakistan: On current accounts On deposit accounts 21,673 7,792,171 7,813,844 38,308 14,752,960 14,791,268

7.1

7.1 8. 8.1

These carry a markup ranging from 2% to 12.75%. INVESTMENTS

2005 Investments by types Available for sale securities Listed companies Unlisted companies Held to maturity securities Market treasury bills Pakistan investment bonds Federal investment bonds Certificates of investment Federal Government securities Provincial Government securities 5,940,943 1,148,835 815,342 4,572,758 ######### Total investments Provision for impairment in value of investments in listed shares Surplus on revaluation of securities Investments at revalued amounts - net of provisions ######### 2,866 2,866 2,866 5,940,943 1,148,835 818,208 4,572,758 ######### ######### 595,331 ######## 864,050 ######## ######## 3,037 3,037 3,037 595,331 ######## 867,087 ######## ######## 90,294 5,000 95,294 Held by bank Given as collateral Total i n 90,294 5,000 95,294 Held by bank 90,293 5,000 95,293 2004 Given as collateral Total

( R u p e e s

t h o u s a n d ) 90,293 5,000 95,293

(413) 245,043 #########

2,866

(413) 245,043 #########

(998) 137,069 ########

3,037

(998) 137,069 ########

8.2

Investments by segments Federal Government Securities Market treasury bills Pakistan investment bonds Federal investment bonds Add/(less) : Surplus/(deficit) on revaluation of Government securities Fully Paid up Ordinary Shares: Listed Companies Unlisted Companies Add: Surplus on revaluation of listed shares Certificates of investments Provision for impairment in value of investments in listed shares Investments at revalued amounts - net of provisions

Note 8.3

2005

2004

(Rupees in thousand) 5,940,943 1,148,835 818,208 7,907,986 7,907,986 8.4 8.5 90,294 5,000 95,294 245,043 340,337 4,572,758 12,821,081 (413) 12,820,668 595,331 1,155,895 867,087 2,618,313 2,618,313 90,293 5,000 95,293 137,069 232,362 2,850,675 (998) 2,849,677

8.6 8.7

8.3

Principal terms of investments in Federal Government securities

Name of investment Maturity Principal payment Rate % Market Treasury Bills Pakistan Investment Bonds Federal Investment Bonds January 2006 to August 2006 August 2011 to December 2011 March 2008 On maturity On maturity On maturity 7.68 to 8.68 12 to 13 15 at maturity semi-annually semi-annually Coupon payment

8.3.1 Market Treasury Bills, Federal Investment Bonds and Pakistan Investment Bonds are held by the Bank which also covers statutory liquid reserve requirements. 8.3.2 Federal Investment Bonds having amortised cost of Rupees 2.866 millions (Rupees 3.037 million: 31 December 2004) are pledged/lodged with State Bank of Pakistan as security for TT/DD discounting facility obtained for branches. 8.4 Particulars of investments held in listed companies
No. of Ordinary Shares 2005 280,090 450,000 150,000 300,000 2004 280,090 450,000 150,000 300,000 Paid up value/share Rupees 10 10 10 10 Nestle Milkpak Limited Uqab Breeding Farm Limited Mubarik Dairies Limited Dadabhoy Agricultural Leasing Limited 8.4.1 Name of companies Note 2005 2004

(Rupees in thousand) 89,297 585 412 90,294 89,296 585 412 90,293

8.4.1 Dadabhoy Agricultural Leasing Limited is under suspension since November 2001. At the date of suspension, its market value per share was Rupees 2.50 against its face value of Rupees 10 per share.

8.5

Particulars of investments held in unlisted companies

Percentage Number of of holding shares held Break up value Rupees National Commodity Exchange Limited 12.50% 500,000 1,000,000 2,500 141,970 (2,123,845) 30 June 2005 Mr. Assim Jang Mr. M. Asad Khan Maj.Gen.(R) F.A.Khan Mr. Anwar Majeed Based on audited financial statements as at Name of Chief Executive/ Managing Director

Name of Investee

Notes

Saudi Pak Kala Bagh Livestock Limited8.5.1 33.33% Pakistan Agricultural Storage and Services Corporation Limited Larkana Sugar Mills Limited 8.5.2 8.33% 6.36%

8.5.1 Saudi Pak Kala Bagh Livestock Limited has defaulted in the repayment of loan and the case has been referred to National Accountability Bureau. 8.5.2 Larkana Sugar Mills Limited is in the process of liquidation since February 2000 and there is no probability of any recovery of amount invested on final settlement. 8.5.3 Investment in Saudi Pak Kalabagh Livestock Limited and Larkana Sugar Mills Limited are stated at book value due to nonavailability of required information for the calculation of breakup value. Moreover, these investments are fully provided for in these financial statements. 8.5.4 Market value of listed investment is Rupees 333.046 million and book value of unlisted investments is Rupees 5 million. Face value of investment in unlisted securities is Rupees 31.697 million. 8.6 Particulars of certificates of investments
Name of investee Saudi Pak Industrial and Agricultural Investment Co. (Pvt.) Ltd. Pakistan Industrial Credit and Investment Corporation Ltd. Pakistan Kuwait Investment Company (Pvt.) Ltd. Maturity Principal payment Rate % January 2006 January 2006 February 2006 to March 2006 On maturity On maturity On maturity 11 11 10.25 to 11.10 at maturity at maturity at maturity Coupon payment

2005 2004 (Rupees in thousand) 8.7 Particulars of provision for impairment in value of investments in listed shares Opening balance Charge for the year Reversal for the year Closing balance ADVANCES Loans, cash credits, running finances, etc. In Pakistan Outside Pakistan 9.1.3 Less: Provision for non-performing advances Provision for long outstanding employee advances 9.2 9.4 64,744,526 64,744,526 (11,814,916) (4,324) (11,819,240) 52,925,286 79,902,100 79,902,100 (25,562,137) (4,523) (25,566,660) 54,335,440 998 (585) 413 998 998

9.

2005 2004 (Rupees in thousand) 9.1 9.1.1 Particulars of advances In local currency In foreign currencies Short Term - upto one year Long Term - over one year 52,925,286 52,925,286 32,744,545 20,180,741 52,925,286 54,335,440 54,335,440 20,990,460 33,344,980 54,335,440

9.1.2

9.1.3 Loans and advances have been shown in accordance with the BSD Circular No.9 dated 09 November 2003 issued by the State Bank of Pakistan. 9.2 Advances include Rupees 23,424 million (31 December 2004 : Rupees 40,465 million) which have been placed under nonperforming status as detailed below:
2005 Category of classification Note Domestic Overseas Total i n Provision Provision required held t h o u s a n d ) 1,824,262 1,744,732 5,245,922 8,814,916 8,814,916 1,824,262 1,744,732 5,245,922 8,814,916 3,000,000 11,814,916

( R u p e e s Other Assets Especially Mentioned Substandard Doubtful Loss Add: Provision under portfolio audit 9.3 General Specific 9.2.1 5,567,675 9,121,312 3,489,465 5,245,922 23,424,374 23,424,374 -

5,567,675 9,121,312 3,489,465 5,245,922 23,424,374 23,424,374

9.2.1 Specific provision amounting to Rupees 1,031 million held under portfolio audit has been charged off as required under State Bank of Pakistan's Prudential Regulations for agricultural financing issued vide BPD circular No. 27 dated 22 October 2005. *Maximum total amount of advances including temporary advances granted during the year in thousand) -

9.2.2

Particulars of loans and advances to directors and associated companies etc.

Balance Outstanding as at 31 December 2005

Debts due by directors, executives or officers of the bank or any of them either severally or jointly with any other person Debts due by companies or firms in which the directors of the bank are interested as directors, partners or in the case of private companies as members Debts due by subsidiary companies, controlled firms, managed modarabas and other related parties * The maximum amount has been calculated by reference to month-end balances. 9.3

(Rupees -

34,263

34,263

The Federal Government has decided, in the meeting of the Federal Cabinet on 28 August 2002, to Corporatize / restructure the Agricultural Development Bank of Pakistan (ADBP). ADBP (Reorganization and Conversion) Ordinance, 2002 (LX of 2002) was promulgated by the Federal Government on 04 October 2002 to provide for necessary legal/statutory cover for reorganization and conversion of (ADBP) into a public limited company, incorporated under the Companies Ordinance, 1984. Consequently, under SRO 823(1)/2002 dated 18 November 2002, the Federal Government specified 14 December 2002 to be the effective date on which all the assets, contracts, liabilities, proceedings and undertakings of ADBP shall stand transferred to, and vest in Zarai Taraqiati Bank Limited (ZTBL).

Accordingly State Bank of Pakistan appointed an independent firm of Chartered Accountants who carried out a portfolio audit and recommended a provision of Rupees 10 billion against its non-performing advances to meet the requirement of the Prudential Regulation No. VIII of State Bank of Pakistan. The Bank incorporated a general provision of Rupees 3 billion in the year ended 30 June 2002 on the basis of the provisional portfolio audit Report. Government of Pakistan approved cash support of Rupees 07 billion which will be provided to Zarai Taraqiati Bank Limited over a period of three years. In consequence to this the State Bank of Pakistan vide their revised letter No.BSD/SU-54/4033286/2004 dated 05 June 2004 has allowed that the provision of Rupees 7 billion is to be provided by Zarai Taraqiati Bank Limited in their account in three installments as follows: 1) 2) Provision of Rupees 3 billion be created in the financial statements for the year ending 31 December 2003. Provision of Rupees 3 billion be created in the financial statements for the year ending 31 December 2004.

3) The balance of provision of Rupees 1 billion in the financial statements for the year ending 31 December 2005. Subsequently the Ministry of Finance, Government of Pakistan has directed the Bank vide their letter No. (6)-3 IF-I/2005 dated 08 June 2005 to reverse the specific provision created on the basis of portfolio audit against loans and advances which have been subsequently recovered in the financial statements for the year ended 2004 and comply with the State Bank of Pakistan's Prudential Regulations for making the necessary time based provisions. In complying with Ministry of Finance, Government of Pakistan's directives, the Bank has reversed the specific provision to the extent of recoveries against the specific provision of Rupees 3,000.799 million made in the accounts for the year 2003 over and above the Prudential Regulations provisioning pursuant to portfolio audit carried out as a part of restructuring process of the Bank. 9.4
Particulars of provision against non-performing loans and advances 2005 Note Specific General Total in Specific thousand) 20,992,982 3,406,277 (734,029) (1,098,570) 22,566,660 3,000,000 3,000,000 23,992,982 3,406,277 (734,029) (1,098,570) 25,566,660 2004 General Total

(Rupees 22,566,660 4,731,992 (18,479,412) 8,819,240 3,000,000 3,000,000

Opening balance Net charge for the year Amounts written off Reversals under portfolio audit Closing balance

9.5

25,566,660 4,731,992 (18,479,412) 11,819,240

9.4.1 The State Bank of Pakistan has issued Prudential Regulations for Agriculture Financing during the current year vide BPD Circular No. 27 dated 22 October 2005. These regulations require agricultural advances overdue by 90 days, one year, one and a half years and two years to be classified as OAEM, substandard, doubtful and loss respectively. In addition, these regulations specify that provision should be made in the financial statements equal to 20 percent, 50 percent, and 100 percent, in respect of overdue agricultural advances classified as substandard, doubtful and loss respectively, of the outstanding balance of principal and value of mortgaged land and building as valued at the time of sanctioning of loan. No provision is required to be made against the outstanding balance of principal relating to overdue agricultural advances classified as OAEM. These regulations also require that in any case the loan account shall be fully charged off after three years from the date of default. However, as a matter of prudence the Bank has not applied the adjustment factor of the value of mortgaged land and building in determining the provisioning requirement against the non-performing loans and advances portfolio. Had the value of mortgaged land and building been discounted strictly in accordance with the requirement of the Prudential Regulation, the specific provision against non-performing advances as at 31 December 2005 would have been lower and consequently the loss for the year and advances would have been lower and higher by Rupees 5,633 million respectively. Previously, provision was determined in respect of non performing agricultural advances in accordance with the guidelines given in the Prudential Regulations for Corporate / Commercial banking. Had the provision against agricultural advances been determined on previous year basis, the specific provision against non-performing loans and advances would have been lower by Rupees 2,573 million. 9.5 9.5.1 Particulars of write offs Against provisions Directly charged to profit and loss account Write offs of Rupees 500,000 and above Write offs of below Rupees 500,000 9.6 Note 2005 2004 (Rupees in thousand) 18,479,412 18,479,412 5,729,521 12,749,891 18,479,412 734,029 734,029 698,456 35,573 734,029

9.5.2

9.6

In terms of sub-section (3) of section 33 (A) of the Banking Companies Ordinance, 1962 the statement of amount in respect of written-off loans or any other financial relief of Rupees 500,000 or above allowed to a person(s) during the year ended 31 December 2005 is given at Annexure-1 in respect of project loans only. Further an additional amount of Rupees 13,705 million has been charged off as required under State Bank of Pakistan's prudential regulations for agricultural financing issued vide BPD Circular No.27 dated 22 October 2005 which has not been shown at annexure-1. However, this write off does not affect the Bank's right to recover these debts from the customers. Note 2005 2004 (Rupees in thousand) 2,085,487 178,026 63,902 10,970 308,053 939,468 792,819 1,936,411 14,640 1,343,235 2,643 117,901 17,250 3,848 209,574 15,208 8,039,435 (28,737) 8,010,698 3,537,383 152,168 73,396 10,114 308,053 3,849,290 1,741,162 6,570 593,184 1,564,267 14,808 1,313,865 1,532,217 237,901 41,092 12,784 8,789 14,997,043 (5,615,277) 9,381,766

10.

OTHER ASSETS Income/mark-up accrued on loans and advances Income/mark-up accrued on investments Other advances, deposits, advance rent and other prepayments Stationery and stamps on hand Tax recoverable Amount recoverable from Federal Government Presidential relief package Relief Packages Preliminary expenses Branch adjustment account Receivable from defined benefit plans Stock in hand Assets relating to Bangladesh Receivable from Federal Government against Golden Hand Shake Scheme Receivable from Pension Trust Fund against Golden Hand Shake Scheme Receivable from Benevolent Trust Fund against Golden Hand Shake Scheme Suspense account Non-banking assets acquired in satisfaction of claims Others Less: Provision held against other assets 10.1

10.2 10.3 10.4 10.5 10.6 10.7 10.7 10.8 10.9 10.10

10.1

This includes an amount of Rupees 1,756 million in respect of agricultural loans and advances which has been arrived at after netting off interest suspense of Rupees 6,119 million ( 31 December 2004: 23,234 million). Further, the interest suspense account amounting to Rupees 11,550 million has been charged off as required under State Bank of Pakistan's Prudential Regulations for agricultural financing issued vide BPD circular No. 27 dated 22 October 2005. This includes an amount of Rupees 297.149 million receivable on account of minimum income tax levied by the income tax authorities under Section 80-D of Income Tax Ordinance, 1979, for assessment years 1991-92 to 1998-99. The income of the Bank was exempt from tax upto income year ended 30 June 1999. The Bank paid, under protest, the disputed tax demand and also filed writ petition in this respect in Lahore High Court, Rawalpindi Bench, Rawalpindi. Later on, the bank withdrew the petition on directions of the Federal Government and the case was referred to the Law and Justice division of the Government of Pakistan which decided the reference in Banks favour. The Central Board of Revenue disagreed with the aforesaid decision and has further taken up the matter with Federal Cabinet for its review. Federal cabinet has referred the case to the Attorney General for final decision.The advice/decision of the Attorney General is still awaited. Since the Bank is very confident for a favourable decision from the Attorney General, no provision in this respect has been made by the Bank in its books of account. Preliminary expenses are recognized as expense in compliance with the requirement of International Accounting Standard-38 "Intangible Assets". The Bank has been allowing remissions, under the instructions of the Federal Government from time to time, which aggregates to Rupees 5,599.476 million (31 December 2004: Rupees 5,590.397 million) including Rupees 1,741.162 million allowed under the Presidential Relief Package 2002. The amount has now been off-setted against the provision held as desired by the Audit Committee of the Board of Directors.

10.2

10.3 10.4

10.5

Receivable from defined benefit plans Pension scheme Benevolent scheme - officers / executives Benevolent scheme-clerical/non-clerical Gratuity scheme

778,701 552,942 156,435 140,418 (34,760) (43,643) 1,036,035 914,550 1,936,411 1,564,267 10.5.1 It represents assets recognized by the Bank as required by International Accounting Standard-19 "Employee Benefits " against its defined benefit schemes on the recommendation of independent actuaries. 10.6 It represents the amount relating to the activities of the Bank in Bangladesh (former East Pakistan) before its separation. In line with the decision contained in Finance Division letter No.F.5(12)PEC(op-FR)/78-236 dated 06 May 1979, the Bank is accruing interest at the rate of 8% on its loans and advances made in Bangladesh (former East Pakistan) with contra increase in its liabilities (note-17) relating to its activities in Bangladesh. It represents the amount receivable from Pension Fund Trust and Benevolent Fund Trusts against Golden Hand Shake Scheme. Market value of non-banking assets acquired in satisfaction of claims is Rupees 358.680 million. Market value of non-banking assets acquired in satisfaction of claims for the year ended 31 December 2004, having book value of Rupees 217.472 million, was not available. 2005 2004 (Rupees in thousand) Others Defence Saving Certificate Advance for purchase of machinery/goods in transit Legal charges recoverable on suits filed against loan defaulters Others 10.10 Provision against other assets Opening balance Charge for the year Receivable from Federal Government written off against provisions Closing balance 11. OPERATING FIXED ASSETS
C O S T AS AT Particulars 01 January 2005 276,195 10,640 137,511 415,794 68,871 245,917 ######## ######## (Disposals Additions )/ (transfers) 375 45 9,268 15,257 24,945 21,802 (105,234) (112,107) (4,321) (18,744) (240,406) (2,908) ACCUMULATED DEPRECIATION AS AT 31 01 Charge Adjustme December January for nt for the 2005 2005 the year year ( R u p e e s i n t h o u s a n d ) 170,961 10,640 137,886 303,732 73,818 242,430 939,467 1,154,928 796 13,719 41,674 20,751 101,003 177,943 90,765 398 6,208 13,103 17,611 48,486 85,806 88,403 (1,302) (13,121) (14,423) 1,225 31 December 2005 1,194 19,927 54,777 37,060 136,368 249,326 177,943 Book Value as at 31 December 2005 170,961 9,446 117,959 248,955 36,758 106,062 690,141 976,985 Rate of Depreciatio n % 5 5 10/33 20

Note 34.3 34.9 34.14 34.19 10.5.1

2005 2004 (Rupees in thousand)

10.7 10.8

10.9

17 17 15,174 15,208 5,615,277 12,936 (5,599,476) 28,737

17 17 8,748 8 8,790 5,612,579 2,698 5,615,277

Land - freehold Land - leasehold Building on freehold land Building on leasehold land Furniture, fixture and office equipment Vehicles 2005 2004

11.1 11.2

The detail of disposal of assets whose original cost or the book value exceed one million and two hundred fifty thousand Rupees respectively, whichever is lower is NIL. Acquired Land and building having a book value of Rupees 217.341 million has been transferred to other assets being the assets acquired in satisfaction of claims.

11

Detail of disposals of operating fixed assets. Particulars of Assets TLC-5 Door IDF-1149 TLC-5 Door IDE-8871 TLC-5 Door IDF-1306 TLC-5 Door IDF-1147 TLC-5 Door IDF-1499 TLC-5 Door IDF-1320 TLC-5 Door IDF-1146 TLC-5 Door RIU-1457 TLC-5 Door RIU-1458 TLC-5 Door RIU-1414 TLC-5 Door RIU-1440 TLC-5 Door IDF-1042 TLC-5 Door IDF-1308 T.Coastar IDE-5048 TLC-3 Door MDAA-540 TLC-3 Door GP-2043 TLC-3 Door GP-2041 TLC-3 Door MNQ-4406 TLC-3 Door LSA-8801 TLC-3 Door A-2036 TLC-3 Door A-1884 TLC-3 Door FDP-6510 TLC-3 Door MNQ-4238 TLC-3 Door LOR-5098 S/Mehran IDF-4685 Cost 700,001 700,001 700,001 Accumulated Depreciation 490,000 490,000 490,000 Book Value 210,000 210,000 210,000 Sale proceeds 1,250,000 1,400,000 1,160,000 Gain/(loss) 1,040,000 1,190,000 950,000 Particulars of buyers Mian Allah Ditta S/O Mian Nawab R/O Mati Sau The. K/Wala, Khanwal M.Aslam Tahir R/O. H.No.P-1566-2, Asghar Mall Scheme, RWP. Awais Ali Khan R/O H.No.B-150, St.No.4, Mohalla Lala Rukh, Wah Cantt. Raja M.Aftab Satti R/O H.No.B-6-150, Mohammadi Colony, Shakrial Rwp. Qamar Naseer Ahmed R/O H.No.67168, Army Colony, No.2 Rwalpindi M.Aurang Zeb Khan R/O H.No. P-1547A/1, Naseern House Asghar Mall Scheme, Rawalpindi Moharam Khan Raja R/O H.No.Z 670-A, Dhoke Rata, Raja St. Babu Lal Hussain Road, Rawalpindi Zahid Akbar R/O H.No.987 St.No.96, I10/1, Islamabad M.Yousaf Amjad S/O Abdul Ghafoor,R/O H.No. E-1/4, St.No.10,G/7-2, Islamabad Sarda Sajid Ahmed, R/OH.No.5-A, St.42 Moh. Quaid-e-Azam Colony Dhomial Road, Rawalpindi Tariq Mehmood R/O Near Mian Bazar Bara Kahu, Mohallad Rafiqabad, Islamabad. Masood Ahmed Arif R/O Garden Town Highway, H.No.Kh-1376 Khana Dak Islamabad. Rana M.Nawaz R/O Chak No.17 Vcc, The Ferozwala, Sheikhupura Imtiaz A.Warriach R/O Near Moon Light School, Shahzed, St. Mohalla Margazar Colony, Gujrat Mumtaz Mohammad Khan R/O Tibba Sultanpur, The. Mailsi, Distt. Vehari Malik Sikandar Khan Awan R/O Club Road H.No.102 Bukhari St.Sargodha. ABDUL Rashid Khan R/O H.No.9-A, Circular, Road Abbottabad Cantt. Masood-ur-Rehman Khan R/O H.No.Nw1012, Rehmanabad S/Town Rawalpindi Abid Ansar R/O H.No.80 Badar Block, Allama Iqbal Town, Lahore Raja M.Asif Khan R/O Hotel Lalazar, Shaheed Road GPO Murree Mumtaz Muhammad Khan R/O Tibba Sultanpura, The. Mailsi Distt. Vehari Shaukat Iqbal R/O H.No.80 Badar Block, Allama Iqbal Town, Lahore Abid Ansar R/O H.No.80 Badar Block, Allama Iqbal Town, Lahore Raja M.Asif Khan R/O Hotel Lalazar, Shaheed Road GPO Murree Liaquat Hussain Shah, Haji Camp Road, Nai Abadi Islamabad

700,001 700,001

490,000 490,000

210,000 210,000

1,110,000 1,250,000

900,000 1,040,000

700,001

490,000

210,000

1,450,000

1,240,000

700,001

490,000

210,000

1,190,000

980,000

700,001 700,001

490,000 490,000

210,000 210,000

1,420,000 1,120,000

1,210,000 910,000

700,001

490,000

210,000

1,430,000

1,220,000

700,001

490,000

210,000

1,210,000

1,000,000

700,001

490,000

210,000

1,300,000

1,090,000

700,001 700,001

490,000 490,000

210,000 210,000

1,400,000 1,300,000

1,190,000 1,090,000

600,001 600,001 600,001 600,001

420,000 420,000 420,000 420,000

180,000 180,000 180,000 180,000

780,786 720,000 856,000 866,666

600,786 540,000 676,000 686,666

600,001 600,001 600,001 600,001 600,001 600,001 100,001

420,000 420,000 420,000 420,000 420,000 420,000 70,000

180,000 180,000 180,000 180,000 180,000 180,000 30,000

707,707 916,786 786,786 731,313 706,707 722,000 160,260

527,707 736,786 606,786 551,313 526,707 542,000 130,260

Particulars of Assets S/Mehran IDF-4757 S/Mehran IDF-4785 Suzuki Van IDB-9376 Honda accord IDD991 T/Pick-up IDA-9788 N-Pick-up IDB-2185 T Hiace IDF6391 T.Corolla IDD-4070 S/Car IDD6460 S/Mehran IDE-9707 S/Mehran LOM-24 S/Mehran PRP-2638 Toyota Corolla Car LSA-5507 Yamaha 100 CC MRF1927 Yamaha 100 CC MRF1930 Yamaha 100 CC SB-6501 SKE-763 Yamaha SKE-772 Yamaha Yamaha 100 CC BRF8082 Yamaha 100 CC BRF8835 Yamaha 100 CC BRF8813 Yamaha 100 CC FDU7513 SAD-1795 Yamaha SAD-2822 Yamaha SAC-9842 Yamaha TSA-5972 yamaha

Cost 100,001 100,001

Accumulated Depreciation 70,000 70,000

Book Value 30,000 30,000

Sale proceeds 185,766 192,000

Gain/(loss) 155,766 162,000

Particulars of buyers Farakh Saleem Khan R/O H.No.5, St. No.34, Korang Town, Islamabad Qazi Ahmed Haroon S/O Shamim Ahmed R/O, H.No.75-b Commercial Market S/Town Rawalpindi Sheikh Muhammad Nazir, H.No.k-606, Sarfraz Road, Rawalpindi Muhammad Pervez R/O H.No.599 St.No.14, G-10/1, Islamabad Abdul Aziz Shah R/O Shah Street Behind superior, Science College, Mohallah Hafizabad Peshawar Muhammad Shah R/O Quarter No.1-V-3 , Civil Colony Cantt. Road Peshawar Muhammad Hasaq R/O Haju Ghabi Road, Shaldara Quetta Sahib Nawaz Khan, SED (Rtd.) Sher Zaman Khan Director (Rtd.) Anwar Shirani, Director (Rtd.) RA Mazhar Director (Rtd) Sultan Muhd Khan Director (Retired) Mr.M.Rafiq Saroya, ED (Retired) HO, Ibd. Mr.Iftikharullah PP.No 081123, EAD/ Credited Officer, ZTBL, Shergarh Br. Mr.Azam Khan, PP.No.061908, AD/, Accouts Officer ZTBL, Takht Bhai Mr.Azam Khan, PP.No.061908, AD/, Accouts Officer ZTBL, Takht Bhai Mr.Abdul Hakim Sheikhupura Mr.Zulfiqar Ali Kandhkot Br. Mr.M.Ramazan, Bahawalpur Mr.Abdul Bahawalpur Mr.Shakil Branch Soomro, Shaikh N/Qasid, N/Qasid, EAD/MCO RMO, RMO,

80,001 400,001

56,000 280,000

24,000 120,000

151,000 555,556

127,000 435,556

250,001

175,000

75,000

472,999

397,999

95,001

66,500

28,500

176,787

148,287

300,001 400,001 90,001 90,001 90,001 90,001 400,001

210,000 280,000 63,000 63,000 63,000 63,000 280,000

90,000 120,000 27,000 27,000 27,000 27,000 120,000

490,000 195,325 94,590 71,936 72,330 89,044 277,636

400,000 75,325 67,590 44,936 45,330 62,044 157,636

30,001

21,000

9,000

28,520

19,520

30,001

21,000

9,000

26,168

17,168

30,001

21,000

9,000

24,679

15,679

22,001 22,001 30,001 30,001 30,001

15,400 15,400 21,000 21,000 21,000

6,600 6,600 9,000 9,000 9,000

9,999 18,200 15,800 15,700 19,747

3,399 11,600 6,800 6,700 10,747

Ghaffar,Driver, Ahmed,

Driver,Bahawalpur

30,001

21,000

9,000

27,899

18,899

G.H. Shahzad/EAD/MCO, Chiniot Branch

27,001 27,001 25,001 26,001 #########

18,900 18,900 17,500 18,200 13,120,800

8,100 8,100 7,500 7,800 5,623,200

11,769 13,799 13,949 18,000 29,214,209

3,669 5,699 6,449 10,200 23,591,009

Shoukat Ali, Sheikhupura

Driver,

RM

Office

Noor Mohd, AD, RM Office Sheikhupura Waqar Aslam, N/Qasid RM Offoce Sheikhupura Mr.Abdul Waheed, Sr.Asstt., Rajana Town Br.

Note 12. DEFERRED TAX ASSETS Deferred tax arising in respect of Tax depreciation

2005 2004 (Rupees in thousand)

1,829 1,829

1,222 1,222 197,434 197,434 51,257,213 51,257,213 51,257,213 51,257,213

13

BILLS PAYABLE In Pakistan Outside Pakistan 235,741 235,741 51,257,213 51,257,213 51,257,213 51,257,213

14

BORROWINGS FROM FINANCIAL INSTITUTIONS In Pakistan Outside Pakistan

14.1 Particulars of borrowings from financial institutions In local currency In foreign currencies Secured Borrowings from State Bank of Pakistan Agricultural loans Agri-Project loans

14.2 14.3

50,174,089 1,083,124 51,257,213

50,174,089 1,083,124 51,257,213

14.2 As per agreement with the State Bank of Pakistan, these loans were obtained for providing finance to customers for agriculture purposes. Three credit lines amounting to Rupees 1.577 billion carry interest rate of 4% per annum while remaining thirty two credit lines amounting to Rupees 49.680 billion are based on profit and loss sharing subject to maximum share of profit to State Bank of Pakistan ranging from 4% to 10% per annum. These loans are secured by way of guarantee of Government of Pakistan.The bank has submitted a proposals to State Bank of Pakistan for restructuring the debt according to which the State Bank of Pakistan's debt of Rupees 51.257 billion and State Bank of Pakistan's subordinated debt of Rupees 3.204 billion is repayable in 15 years in 30 bi-annual installment with a grace period of 3 years starting from July 2003 i.e. the period of 15 years for repayment of State Bank of Pakistan debts will start from July 2006. State Bank of Pakistan vide its letter No. ACD/3104/Loans-15-A/2004 dated 16 December 2004 has approved the above said proposal except for the terms and conditions in respect of markup rate which is still under negotiation. In view of the critical importance of debt pricing for the future finacial viability and sustainability of Zarai Taraqiati Bank Limited the matter has been referred to Ministry of Finance for a considered Government decision. Keeping in view the above stated facts mark-up has been charged on these loans as per existing contractual rates in respective credit lines. 14.3 These loans were given by the State Bank of Pakistan for the purpose of providing finance to agro based industry. These are subject to profit and loss sharing with a maximum share of profit to State Bank of Pakistan ranging from 4% to 6 % per annum. These are secured by guarantee given by the Government of Pakistan. The bank has submitted a proposal to State Bank of Pakistan for restructuring of the debt as stated in note 14.2.

Note 15 DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Saving deposits Current accounts - remunerative Current accounts - non-remunerative Others - unclaimed deposits 15.1 15.1 Particulars of deposits In local currency In foreign currencies 16 SUB-ORDINATED LOAN

2005 2004 (Rupees in thousand)

64,742 111,724 297,174 2,136,334 34,673 2,644,647 2,644,647 2,644,647

69,665 160,886 245,459 2,622,759 23,437 3,122,206 3,122,206 3,122,206

As per restructuring plan of the Bank approved by the ECC of the cabinet, State Bank's Equity holding of Rupees 3.204 billions was converted into sub-ordinated loan on terms to be agreed with State Bank of Pakistan. Accordingly, the Bank has submitted a proposal to State Bank of Pakistan for repayment of the loan in 15 years in 30 bi-annual installments starting from July 2006 and rate of mark up to be pegged at weighted average yield of 12 months treasury bill rate at the rate of 2.3558% per annum as per treasury bill auction dated 12 June 2003 and capped at the aforesaid markup rate for an initial period of five years. State Bank of Pakistan vide its letter No. ACD/3104/Loans-15-A/2004 dated 16 December 2004 has agreed with proposed terms except the proposed capping of markup rate which has been fixed on last auction's weighted yield of Government Treasury bill of 12 months maturity on floating basis every year. Since the capping of markup charges at 2.3558% has not been agreed by SBP which is of critical importance for the future financial viability and sustainability of Bank, the matter has been referred to Ministry of Finance for considered government decision. However the markup on sub-ordinated debt at the rate of 2.3558% (from 14 December 2002 to 30 June 2004), 2.1867% (from 01 July 2004 to 30 June 2005) and at the rate of 8.4009% (from 01 July 2005 to 31 December 2005) has been charged which is subject to adjustment on finalization of debt restructuring/repricing agreement with State Bank of Pakistan. Note 17 OTHER LIABILITIES Mark-up/ return/ interest payable in local currency Accrued expenses Taxation Payable to Ministry of Food Agriculture and Livestock Profit payable on deposits and other accounts Liabilities relating to Bangladesh Provision for employees' post retirement medical benefits Provision for employees' compensated absences Payable to employees' against Golden handshake scheme Security deposits Sundry deposits Others 6,624,360 37,512 672,032 352,715 19,282 1,343,424 3,649,671 355,011 33,133 209,153 140,919 4,306 13,441,518 6,301,937 37,370 792,069 332,527 19,207 1,314,054 3,586,925 300,672 75,628 95,852 180,048 12,069 13,048,358 2005 2004 (Rupees in thousand)

17.1 10.6

17.1

18

It represents the amount of Rupees 9.715 million, Rupees 168.000 million and Rupees 175.000 million payable to Ministry of Food Agriculture and Livestock under Japanies KR-II grant-1996, Crop Maximization Project-Productivity enhancement on sustainable basis and incentive for Baluchistan respectively. 2005 2004 (Rupees in thousand) DEFERRED INCOME Opening balance Receipt during the year against Senior Management Team Remuneration Amortization during the year Closing balance 17,105 17,121 32,178 2,048 23,454 6,349 17,105

19 19.1

SHARE CAPITAL Authorized Capital 2,500,000,000 Ordinary Shares of Rupees 10 each (31 December 2004: 2,500,000,000 ordinary shares of Rupees 10 each) 25,000,000 11,869,612 11,869,612 Paid-up value per share Rupees 10 10 10 10 10 10 11,859,612 2,771 1,190 680 359 5,000 11,869,612 11,859,611 2,771 1,190 680 359 5,000 11,869,611 25,000,000 11,869,611 11,869,611

19.2

Issued, subscribed and paid up 1,186,961,201 ordinary shares of Rupees 10 each fully paid (31 December 2004: 1,186,961,100 shares of Rupees 10 each fully paid) Shareholder Government of Pakistan Government of Punjab Government of Sindh Government of NWFP Government of Balochistan Erstwhile East Pakistan Number of ordinary shares 1,185,961,201 277,100 119,000 68,000 35,900 500,000 1,186,961,201

20

ADVANCE AGAINST EQUITY An amount of Rupees 2,918,955,000 was transferred by the Federal Government as cash equity against which the shares amounting to Rupees 2,918,953,990 have been issued during the year ended 31 December 2004 and the balance of Rupees 1,010 have been issued during the year ended 31 December 2005.

21 22 23

STATUTORY RESERVE This represent reserve maintained as per requirement of Section 21 of the Banking Companies Ordinance ,1962. CONTINGENCIES RESERVE The Bank has set aside contingencies reserve for insurance of cash, building and vehicles. SURPLUS/(DEFICIT) ON REVALUATION OF ASSETS Surplus on revaluation of fixed assets Less: Surplus on disposal Incremental depreciation Surplus on revaluation of securities i) Federal and Provincial Government securities ii) Quoted shares iii) Other securities 242,543 2,500 245,043 245,043 134,569 2,500 137,069 137,069

24 24.1 24.2

CONTINGENCIES AND COMMITMENTS Contingent liability in respect of 15 cases (31 December 2004: 14 cases) filed against the Bank by various parties is estimated at Rupees 11,307 million (31 December 2004: Rupees 10,600 million). Contingent liability in respect of 05 cases (31 December 2004: 24 cases) filed against the Bank in various courts of law by the employees is estimated at Rupees 0.572 million (31 December 2004: Rupees 3.022 million).

24.3

Income tax of Rupees 929.632 million was levied by the income tax department for assessment year 2001-2002, against provision of Rupees 326.281million in the books of account of the Bank for that assessment year. The Bank has paid Rupees 785,103 million and also filed appeal before the Commissioner of Income Tax (Appeals) agaist the aforesaid order. The commissioner has setaside the aforesaid order. However, the tax department preferred an appeal against the order of CIT(A) before the ITAT which is pending for hearing. Income tax of Rupees 1,928.362 million was levied by the income tax department for assessment year 2002-2003, against provision of Rupees 1,919.929 million in the books of account of the Bank for that assessment year. The Bank has paid Rupees 577.092 million against the said demand and also filed an appeal before the Commissioner of Income Tax (Appeals). The commissioner has setaside the aforsaid order and now tax department preferred an appeal against the order of CIT(A) before the ITAT. The Government of Pakistan has reduced the markup rates on ZTBL advances from 14% to 9% vide Presidential Releif Package 2004 w.e.f. 01 July 2004. As per the directive of the bank's Board of Directors, the bank has requested the Ministry of Finance to compensate the loss of revenue due to this reduction in rate of markup. The total claim in this respect has provisionally been worked out at Rupees 3,640 millions for the period from 01 July 2004 to 31 December 2005. However, this amount has not been accounted for in the accounts as the formal approval from Ministry of Finance has not been received by the bank. Note 2005 2004 (Rupees in thousand)

24.4

24.5

25

MARK UP/RETURN/INTEREST EARNED On loans and advances to i) Customers On investments in: i) Held for trading securities ii) Available for sale securities iii) Held to maturity securities On deposits with financial institutions 5,479,450 290,496 1,052,773 6,822,719 7,911,216 599 193,568 8,105,383

26

MARK UP/RETURN/INTEREST EXPENSED Deposits Short term borrowings - State Bank of Pakistan Long term borrowings - State Bank of Pakistan Bank commission and other charges 5,115 385,502 1,121 391,738 4,641 3,129,062 2,033 3,135,736

27

OTHER INCOME Rent on property Net profit/ (loss) on sale of property and equipment Loan application fee Excess provision relating to defined benefit plans Others 7,326 23,591 309,875 270,279 185,269 796,341 1,777 (14) 310,629 305,018 322,580 939,990

27.1 27.2

27.1 27.2

Excess provision in respect of defined benefit plans has been written back on the basis of actuarial valuation carried out by an independent actuarial valuer. OTHERS Recovery of loans transferred to proforma ledger Sale proceeds of forms Recovery charges Postal charges received from loanees Recovery of private use of vehicles Miscellaneous income 15,250 3,771 41,062 44,226 753 80,207 185,269 3,529 3,975 217,325 45,755 685 51,311 322,580

Note 28 ADMINISTRATIVE EXPENSES Salaries, allowances etc. Contribution to defined contribution plan - Provident Fund Non-executive directors' fees, allowances and other expenses Rent, taxes, insurance, electricity, etc. Legal and professional charges Communications Repairs and maintenance Motor vehicles expenses Traveling expenses Stationery and printing Advertisement and publicity Auditors' remuneration Depreciation Amortization of preliminary expenses Others 28.1 Auditors' remuneration Audit fee Fee for audit of foreign branches TA/DA for auditors Special certifications and sundry advisory services Tax services Out of pocket expenses 28.2 28.2 Particulars of auditors' remuneration 2005 RIAZ AHMAD & COMPANY Audit fee Tax services Other certification Out of pocket expenses 600 200 1,014 1,814 KMRSRIR* Total

2005 2004 (Rupees in thousand) 2,062,107 240 649 75,231 3,800 35,275 10,534 162,920 72,579 21,968 14,142 3,386 85,806 6,570 24,952 2,580,159 1,200 1,333 400 227 226 3,386 2004 1,945,280 389 134 72,011 2,661 37,240 10,785 143,594 77,588 22,699 13,194 2,814 88,403 2,190 18,269 2,437,251 924 240 742 908 2,814

28.1

RIAZ AHMAD KMRSRIR* & COMPANY ( R u p e e s in t h o u s a n d ) 600 1,200 462 462 227 227 742 200 400 120 120 545 1,559 454 454 1,572 3,386 1,036 1,778

Total 924 742 240 908 2,814

* Khalid Majid Rahman Sarfaraz Rahim Iqbal Rafiq 29 OTHER CHARGES Penalties imposed by State Bank of Pakistan 30 TAXATION For the year Current Deferred For the prior year(s) Current Deferred 38,434 (607) 37,827 37,827 503,234 5 503,239 503,239 3,802 3,802 2,196 2,196

Note 30.1 Relationship between tax expense and accounting profit Accounting profit / (loss) for the current period Add: Deferred cost Accounting depreciation Less: Tax depreciation Tax - excluding dividend income Tax on dividend income Tax for the current period Applicable tax rate 31 BASIC EARNINGS PER SHARE Profit / (loss) for the period Number of ordinary shares Earnings per share 32 CASH AND CASH EQUIVALENTS Cash and balance with treasury banks Balance with other banks 33 34 34.1 STAFF STRENGTH Total number of employees at the end of the year Number of Employees Rupees in thousand Numbers in thousand Rupees

2005 2004 (Rupees in thousand) (91,367) 85,806 23,129 (28,689) 38,111 323 38,434 0.5% (129,194) 1,186,961 (0.11) 1,585,421 7,813,844 9,399,265 5,727 1,167,225 88,403 22,936 1,232,692 502,932 301 503,234 41% 663,986 1,065,338 0.62 1,593,898 14,791,268 16,385,166 5,801

DEFINED BENEFIT PLANS Pension scheme For new employees and for those who opted for the new scheme introduced in 1975 for clerical staff and in 1977 for officers, the Bank operates an approved funded pension scheme on which monthly contributions are made on the basis of actuarial recommendation. Principal actuarial assumption The latest actuarial valuation is carried out as at 31 December 2005. The actuarial valuations were made using the Projected Unit Credit Actuarial Cost method based on the following significant assumption: Valuation discount rate Expected rate of increase in salary Expected rate of return on investments 9% per annum 8% per annum 9% per annum 2,794,466 (4,057,773) 484,606 (778,701) (552,942) (138,553) (87,206) (778,701) 52,126 176,730 (310,861) (56,548) (138,553) 2,209,128 (3,885,766) 1,123,696 (552,942) (415,267) (51,500) (86,175) (552,942) 48,823 161,107 (241,153) (20,277) (51,500)

34.2

34.3

Reconciliation of payable/ (recoverable) to/ (from) pension fund Present value of obligation Fair value of assets Unrecognized actuarial gain/(loss)

34.4

Movement in payable/ (recoverable) to/ (from) pension fund Opening liability Charge for the period Contribution to fund made during the period Closing liability/(asset) 34.5

34.5

Charge for pension fund Current service cost Interest cost Expected return on plan assets Adjusted for outgoing employees

Benevolent scheme - officers / executives 34.6 General Description For all officers/executives, the Bank operates an approved funded benevolent scheme to which contributions are made at the rate 2% of basic pay to a maximum of Rupees 100, by each officer/executive. Employee contributions are matched by an equal amount of contributions by the Bank which is also liable to meet any shortfall in the fund. 34.7 Principal actuarial assumption The latest actuarial valuation is carried out as at 31 December 2005. Actuarial valuation was made using the following significant assumption: Expected rate of increase in salary Expected rate of return on investments 8% per annum 9% per annum Note 34.8 Reconciliation of payable/(receivable) to /(from) benevolent fund Present value of obligation Fair value of plan assets Unrecognized part of transitional liability Unrecognized actuarial gain/(loss) 34.9 Movement in payable/(recoverable) to/ (from) benevolent fund Opening liability Charge for the period Contribution to fund made during the period Closing liability/(asset) 34.10 Charge for benevolent fund Current service cost Interest cost Expected return on plan assets Acturial (gain)/losses recognized Transitional liability recognized Contributions from employees Benevolent scheme-clerical/non-clerical 34.11 General Description For all clerical/non-clerical staff, the Bank operates an approved funded benevolent scheme to which contributions are made at different rates but not exceeding Rupees 100 by each employee. Employee contributions are matched by an equal amount of contributions by the Bank which is also liable to meet any shortfall in the fund. 34.12 Principal actuarial assumption The latest actuarial valuation is carried out as at 31 December 2005. Actuarial valuation was made using the following significant assumption: Expected rate of increase in salary Expected rate of return on investments Present value of obligation Fair value of plan assets Unrecognized part of transitional liability Unrecognized actuarial gain/(loss) 8% per annum 9% per annum 49,297 (171,473) (7,606) 164,542 34,760 54,794 (173,028) 184,661 (22,784) 43,643 9,015 15,504 (30,505) (689) (4,671) (11,346) 8,168 13,952 (26,650) (9,686) (4,408) (18,624) 34.10 (140,418) (11,346) (4,671) (156,435) (117,386) (18,624) (4,408) (140,418) 187,332 (386,738) 42,971 (156,435) 193,799 (381,310) 47,093 (140,418) 2005 2004 (Rupees in thousand)

34.13 Reconciliation of payable/(receivable) to /(from) benevolent fund

Note 34.14 Movement in payable/(recoverable) to/ (from) benevolent fund Opening liability Charge for the period Contribution to fund made during the period Closing liability/(asset) 34.15 Charge for benevolent fund Current service cost Interest cost Expected return on plan assets Acturial (gain)/losses recognized Contributions from employees Transitional liability recognized Gratuity scheme 34.16 General description 34.15

2005 2004 (Rupees in thousand) 43,643 (6,247) (2,636) 34,760 3,544 4,384 (13,842) (12,874) (2,637) 15,178 (6,247) 49,275 (3,146) (2,486) 43,643 4,028 4,610 (12,399) (12,078) (2,485) 15,178 (3,146)

For all employees and for those who did not opt for the new scheme introduced in 1975 for clerical/non-clerical staff and in 1977 for officers, the Bank operates an approved funded gratuity scheme on which monthly contributions are made by the Bank on the basis of actuarial recommendation. 34.17 Principal actuarial assumption The latest actuarial valuation is carried out as at 31 December 2005. The Projected Unit Credit Actuarial Cost method with the following significant assumption was used for actuarial valuation purposes: Expected rate of increase in salary Expected rate of return on investments 8% per annum 9% per annum

34.18 Reconciliation of payable/(recoverable) to/ (from) gratuity fund Present value of obligation Fair value of plan assets Unrecognized actuarial gains/(loss) 34.19 Movement in Payable /(recoverable) to/ (from) gratuity fund Opening liability Charge for the year Contribution to fund made during the period Closing liability/(asset) 34.20 Charge for gratuity fund Current service cost Interest cost Expected return on plan assets Recognized actuarial (gains) / losses Adjusted for outgoing employees 79 51 (98,994) (15,269) (114,133) 136 81 (92,684) (17,487) (109,954) 34.20 (914,550) (114,133) (7,352) (1,036,035) (796,873) (109,954) (7,723) (914,550) 275 (1,296,996) 260,686 (1,036,035) 635 (1,237,421) 322,236 (914,550)

35

DEFINED CONTRIBUTION PLAN For all the employees of the Bank who have opted new retirement benefits scheme announced in 1975 and 1977 for clerical/non-clerical staff and for executives/officers, respectively, the Bank operates an approved non-contributory provident fund through an independent trust. Contributions to the fund are made by the employees only at the rate of 8% of mean of pay scale per month. For employees who have not opted for aforesaid new retirement benefit scheme, the Bank operates an approved contributory provident fund where contributions are made by the Bank and employees at the rate of 8.33% of basic salary per month.

36

REMUNERATION OF DIRECTORS AND EXECUTIVES President 2005 2004 Fee Managerial remuneration Charge for defined benefit plan Contribution to defined contribution plan Rent and house maintenance Utilities Medical Conveyance Furnishing allowance Education expenses Leave fare assistance Club facility Others Number of persons 3,600 840 271 Directors Executives 2004 574 48 230 57 63 102 1,074 1 2005 2004 2005 ( R u p e e s i n t h o u s a n d ) 610 20 1,516 2,340 107 334 520 960 207 255 221 25 274 361 100 47 406 99 145 195 113 3,976 610 133 4,136 1 7 7 2

300 5,011 1

Executives mean employees, other than the chief executive and directors, whose basic salary exceeds five hundred thousand Rupees in a financial year. The Chief Executive / Executives are provided with Bank maintained cars. 37 MATURITIES OF ASSETS AND LIABILITIES Assets Cash and balances with treasury banks Balances with other banks Investments Advances Other assets Operating fixed assets Deferred tax assets Liabilities Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred income Total 2005 Upto three Over 3 months Over one year months to one year to five years ( R u p e e s i n t h o u s a n d ) 1,585,421 7,813,844 9,065,149 2,075 8,256 18,474,745 235,741 2,580,662 51,313 2,048 2,869,764 15,604,981 1,448,552 32,742,470 4,955,954 39,146,976 1,818,385 3,149 6,904,007 8,725,541 30,421,435 818,208 4,001,540 3,050,688 261,415 1,222 8,133,073 14,523,076 58,433 4,273,860 18,855,369 (10,722,296) Over five years

1,585,421 7,813,844 12,820,668 52,925,286 8,010,698 690,141 1,829 83,847,887 235,741 51,257,213 2,644,647 3,204,323 13,441,518 2,048 70,785,490 13,062,397

1,488,759 16,179,201 428,726 607 18,097,293 34,915,752 2,404 3,204,323 2,212,338 40,334,817 (22,237,524)

Net assets represented by Share capital Advance against equity Statutory reserve Contingncies reserve Accumulated profit Surplus on revaluation of assets (investments) 11,869,612 215,387 30,000 702,355 245,043 13,062,397

38 Related party transactions Loan made to the General Provident Trust 39 YIELD/INTEREST RATE RISK Yield/Interest rate sensitivity position for on-balance sheet instruments is based on the earlier of contractual re-pricing or maturity date. -

On-balance sheet financial instruments Assets Cash and balances with treasury banks Balances with other banks Investments Advances Other assets Liabilities Bills payable Borrowings from financial institutions Deposits and other accounts Other liabilities Deferred income

Effective Yield/ Interest rate (% p.a)

Total

Upto three months

2005 Exposed to Yield/ Interest risk Over 3 months Over one year to one year to five years ( R u p e e s i n t h o u s a n d )

Over five years

Not exposed to Yield/ Interest Risk

8.24 5.52 8-9

1,585,421 7,813,844 12,820,668 52,925,286 8,010,698 83,155,917 235,741 51,257,213 2,644,647 13,441,518 2,048 67,581,167 15,574,750

2,075 2,075 2,580,662 136,699 2,048 2,719,409 (2,717,334)

32,742,470 32,742,470 1,818,385 3,149 3,534,825 5,356,359 27,386,111

4,001,540 4,001,540 14,523,076 58,433 4,273,860 18,855,369 (14,853,829)

339,714 16,179,201 16,518,915 34,915,752 5,542,038 40,457,790 (23,938,875)

1,585,421 7,813,844 12,480,954 8,010,698 29,890,917 235,741 2,404 238,145 29,652,772

6.09 1-2.5

On-balance sheet gap Off-balance sheet financial instruments Forward Lendings (Including call lending, repurchase agreement lending, commitments to extend credit, etc.) Forward borrowings (Including call borrowing, repurchase agreement borrowing, commitments to extend credit, etc.) Off-balance sheet gap Total Yield/Interest Risk Sensitivity Gap Cumulative Yield/Interest Sensitivity Gap 40 CURRENCY RISK

15,574,750 15,574,750

(2,717,334) 12,857,416

27,386,111 40,243,527

(14,853,829) 25,389,698 2005

(23,938,875) 1,450,823

29,652,772 31,103,595

Assets Pakistan rupee United States dollar Great Britain pound Deutsche mark Japanese yen Euro Other currencies -

Liabilities

Off-Balance sheet items ( R u p e e s i n t h o u s a n d ) -

Net foreign exposure -

41 FAIR VALUE OF FINANCIAL INSTRUMENTS 41.1 On-balance sheet financial Instruments Book value ASSETS Cash and balances with treasury banks Balances with other banks Investments Advances - net Other assets LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loan Other liabilities 41.2 Off-balance sheet financial Instruments Forward purchase of foreign exchange Forward agreements for borrowing Forward sale of foreign exchange Forward agreements for lending 235,741 51,257,213 2,644,647 3,204,323 13,441,518 70,783,442 235,741 51,257,213 2,644,647 3,204,323 13,441,518 70,783,442 197,434 51,257,213 3,122,206 3,204,323 13,048,358 70,829,534 197,434 51,257,213 3,122,206 3,204,323 13,048,358 70,829,534 2005 Fair value Book value ( R u p e e s i n t h o u s a n d ) 1,585,421 7,813,844 12,820,668 52,925,286 8,010,698 83,155,917 1,593,898 14,791,268 2,849,677 54,335,440 9,381,766 82,952,049 2004 Fair value

1,585,421 7,813,844 12,820,668 52,925,286 8,010,698 83,155,917

1,593,898 14,791,268 2,849,677 54,335,440 9,381,766 82,952,049

The fair value of investment is based on quoted market prices and rates at Reuters Pages (PKRV) with the exception of un quoted securities. 42 CONCENTRATION OF CREDIT AND DEPOSITS Out of total financial assets of Rupees 83,155.917 million the financial assets which were subject to credit risk amounted to Rupees 29,652.772 million. The Bank's major credit risk is concentrated in the agriculture sector. To manage credit risk, the Bank applies credit limits to its customers and obtains adequate collaterals. 42.1 Credit Risk Management. Credit risk is the risk that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur financial loss. Credit risk in the Bank's portfolio is monitored, reviewed and analyzed by its credit department and the exposure is controlled through continuous review and conservative provisions for doubtful receivable, credit limits and prudent use of collaterals, as required by prudential regulation framed by the State Bank of Pakistan for banks. 2005 42.2 Segment by class of business Advances Rupees '000' Agribusiness Individuals Others (staff advances) 42.3 Segment by sector 2005 Advances Rupees '000' Public/ Government Private 52,925,286 52,925,286 Percent 100 100 Rupees '000' 35,191 2,609,457 2,644,648 Deposits Percent 99 99 Contingencies and commitments Rupees Percent '000' 572,000 11,307,720 11,879,720 5 95 100 51,083,952 1,841,334 52,925,286 Percent 97 3 100 Rupees '000' 2,644,647 2,644,647 Deposits Percent 100 100 Contingencies and Commitments Rupees Percent '000' 11,307,720 572,000 11,879,720 95 5 100

43 GEOGRAPHICAL SEGMENT ANALYSIS 2005 Profit before taxation Total assets employed Net assets employed Contingencies and commitments

( R u p e e s i n t h o u s a n d ) Pakistan Asia Pacific (including South Asia) Others (91,367) (91,367) 83,847,887 83,847,887 13,062,397 13,062,397 11,879,720 11,879,720

44 DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue on _________________ 2006 by the Board of Directors of the Bank. 45 GENERAL 45.1 Figures have been rounded off to the nearest thousand rupees. 45.2 These financial statements have been prepared in accordance with the revised format of financial statements for banks issued by the State Bank of Pakistan vide BSD Circular No. 36 dated 10 October 2001. 45.3 Captions as prescribed by BSD Circular No. 36 dated 10 October 2001 issued by the State Bank of Pakistan in respect of which there are no amounts have not been reproduced in these financial statements except for the balance sheet and profit and loss account.

PRESEIDENT

DIRECTOR

DIRECTOR

DIRECTOR

Annexure-1

ZARAI TARAQIATI BANK LIMITED

STATEMENT SHOWING WRITTEN OFF LOAN OR ANY OTHER FINANCIAL RELEIF OF FIVE HUNDRED THOUSAND OR ABOVE PROVIDED DURING THE PERIOD ENDED DECEMBER 31 2005 ( Rs. in Million ) Sr. No. 1 Name & Address of the borrower SIRANI INDUSTIRES MOUZA WEESLAN THE. & DISTT.BAHAWALPUR Name of Individual/parteners/ Directors CAP.SHEHREZ LATIF (LATE) CH.MUHAMMAD ASHARF (LATE) CH. MUHAMMAD AFZAL MRS. SHAHNAZ SHAHREZ SURAYYA BEGUM (LATE) QAMAR ELLAHI MEHBOOB ELLAHI MANZOOR ELLAHI AHMED SHAH SHAHZAD ZAHIR SHAH SHAHZAD MRS. LAILA SHAH SHAHZADA SYED SAJJAD HUSSAIN SYED ASGHAR ABBAS ZAIDI MAJ. GEN. RETD. GHULAM UMER TARIQ UMER ASAD UMER WASEEM UD DIN SIDDIQUI AHMED MUSA PAREKH ABDUL SATTAR PARKEH SADIQ ABBAS (LATE) LAEEQ MEHMOOD MUSTAFA ATEEQ MUSTAFA CH. UMER ASADULLAH BAJWA CH. ABDULLAH KHALID BAJWA IRFAN ASAD BAJWA MRS. FARZANA IRFAN BAJWA MST. GHULAM FATIMA MST. SAEED FATIMA MST. SHAFQAT BIBI MST. PERVEEN FATIMA MUHAMMAD QASIM NIC Numbers 155-47-033125 344-20-164554 344-35-164548 155-53-033126 344-32-164555 Father's/Husband Name CH. ABDUL LATIF CH. AHMED DIN BAHAWAL BUX W/O CAP. SHEHREZ LATIF D/O BAHAWAL BUX Outstanding Liabilities at beginning of the year Principal Interest others Total 1.092 0.493 0.000 1.585 Amount Written off Interest others 0.008 0.000

Principal 0.513

NOOR AGRI TECH. VILL.TALWANDI MOOSA KHAN, THE. & DISTT. GUJRANWALA AGRI PROJECT VILLAGE RENALA KHURD OKARA

286-52-170467 MUHAMMAD NAWAZ KHAN 286-57-170468 MUHAMMAD NAWAZ KHAN 286-47-170466 MUHAMMAD NAWAZ KHAN 517-28-118193 517-57-271607 517-36-194508 270-22-046973 269-44-170728 N.A. N.A. N.A. N.A. N.A. N.A. N.A. SHAHZAD SULTAN AZIZ AHMAD SHAH SHAHZADA W/O AHMED SHAH SHAHZADA SYED ARSHAD HUSSAIN S.M. ABBAS ZAIDI M.A.D. QURESHI MAJ.G. R. GHULAM UMER MAJ.G. R. GHULAM UMER FAHIMUDDIN SIDDIQUI MUSSA PARKEH MUSSA PARKEH MAJ.G. R. GHULAM UMER

3.713

6.707

0.138

10.558

0.000

4.389

0.000

10.067

35.396

0.900

46.363

10.067

15.996

0.000

AMSON DAIRIES PLOT NO.447,DEHTHANO NEAR KHOKHARAPAR COLONY KARACHI

0.470

0.117

0.000

0.587

0.000

0.587

0.000

M.A FARM DEH KONKAR,SUPER HIGHWAY KARACHI EAST. AGRO TECH ASSOSIATES VILL.MISSAN KALER THE. FEROZWALA, DISTT SHEIKHUPURA

502-53-253533 GHULAM MEHMOOD MUSTAFA 502-55-253532 GHULAM MEHMOOD MUSTAFA 271-28-072318 312-36-023289 271-54-072320 271-86-241311 N.A. N.A. N.A. N.A. KHURSHID AHMED BAJWA CH. KHURSHID AHMED BAJWA UMER ASAD BAJWA W/O IRFAN ASAD BAJWA W/O CH. KHURSHID AHMED W/O MUSHTAQ AHMED W/O MUHAMMAD IJAZ W/O IMTIAZ AHMED

2.600

2.451

0.021

5.072

1.269

0.000

0.000

4.352

4.217

0.128

8.697

4.352

0.863

0.018

AL QASIM AGRO SERVICES KOT NAZIR THE.FEROZWALA DISTT: SHEIKHUPURA

295-89-383855 RIAZ AHMED

4.229

5.852

0.030

10.111

0.000

3.326

0.000

32 of 52

Sr. No.

Name & Address of the borrower

Name of Individual/parteners/ Directors

NIC Numbers

Father's/Husband Name

Outstanding Liabilities at beginning of the year Principal Interest others Total

Principal

Amount Written off Interest others

COMPACT PARTICLE BOARD 27TH-KM OFF LAHORE, SHEIKHUPURA ROAD, NEAR WAPDA TOWN LAHORE

CH. FAZAL MAHMOOD CH. GHULAM MOHIUDDIN CH. MUNAWAR HUSSAIN CH. MURID HUSSAIN MST. SURRIYA BEGUM MST. ANWAR SULTANA MST. NOOR SULTANA CH. SHAH MUHAMMAD CH. MUHAMMAD ISHAQ ASMAT QADRI M. ANWAR KHAN LODHI RIZWAN AHMED KHAN LODHI MUHAMMAD RAFIQ KHILJEE QASIR JAVED KHILJEE FARUKH JAVAID KHILJEE AHMED SARFRAZ KHILJEE KHUSHNOOD MALIK MRS. NUSRAT PERVAIZ MRS. ROOHI WASIM MUHAMMAD KAMRAN

270-61-312937 270-59-312934 270-66-312939 270-64-312938 270-40-312935 270-56-312936 270-90-312940 270-34-155417 275-43-122518 272-35-145747 213-35-093316 213-63-093318 300-40-155567 300-50-995009 300-54-359978 300-48-349702 300-54-133899 235-51-273558 267-86-429884 286-56-046412

CH. SHAH MUHAMMAD CH. SHAH MUHAMMAD CH. SHAH MUHAMMAD CH. SHAH MUHAMMAD W/O CH. SHAH MUHAMMAD D/O CH. SHAH MUHAMMAD D/O CH. SHAH MUHAMMAD QADAR BAKHSH ABDUL AZIZ D/O ASGHAR ALI M. SULTAN KHAN QADRI M. ANWAR KHAN LODGHI MUHAMMAD AMIN MUHAMMAD AMIN MUHAMMAD AMIN MUHAMMAD AMIN AFZAL MALIK W/O PERVAIZ RASHID W/O MIAN WASIM MUHAMMAD ASLAM

19.480

26.938

0.056

46.474

19.480

13.586

0.000

DIAMOND BREEDERS MOUZA MANGA AUTTAR, 38-KM, MULTAN ROAD, THE & DISTT. LAHORE KHILJEE INDUSTRIES 47-KM MULTAN ROAD VILL. NATHE JAGIR, THE.CHUNIAN DISTT.KASUR.

4.414

9.174

0.345

13.933

4.414

5.850

0.000

10

15.027

50.239

0.564

65.830

15.027

35.474

0.037

11

MONOO DAIRIES MOUZA MEGINEE BHAWANA THE.CHINIOT DISTT, JHANG NEW SHADAB AGRO SERVICES VILL.NABIPUR SHEIKHUPURA ROAD, DISTT.SHEIKHUPURA

MIAN MUHAMMAD IRFAN MONNO 244-55-037446 MIAN MUHAMMAD RAFI MONNO MRS. RUKHSANA SAIGAL 270-55-111978 W/O MIAN MOHD.IRFAN MONNO MUHAMMAD YASIN 295-62-203190 MAQBOOL HUSSAIN

50.065

97.789

3.988

151.842

50.065

86.534

0.043

12

1.700

1.908

0.192

3.800

0.000

1.018

0.000

13

QADRIA POULTRY FARM 1.(HATCHERY)VILL.KHARAK, 8TH KM, MULTAN ROAD LAHORE 2.(FARM)VILL,SUNDAR MULTAN ROAD LAHORE RAVI AGRI & DAIRY PROD. CHAK NO.144 GB,THE.JARANWALA DISTT FAISALABAD

CH. MUHAMMAD ANWAR DR. MUHAMMAD SAEED AHMED

272-42-270752 CH. GHULAM HAIDER 272-40-112605 CH. FATEH DIN

3.500

6.778

0.000

10.278

0.000

6.711

0.000

14

CH. MOHAMMAD AKRAM MST. MURAD BEGUM SH. MUHAMMAD SALEEM MUZAMMIL KHAN LODHI CH. AMJAD MUSTAFA SH.MUHAMMAD NASIM KALEEM HAIDER ZAIDI

275-85-043338 409-38-080100 272-49-138925 244-45-027675 275-62-336241 273-56-128330 270-86-425551

CH. FARZAND ALI W/O AKBER ALI ALVI SH. MUHAMMAD SAEED GHULAM MOHD. KHAN LODHI CH. MUHAMMAD AKRAM SH. MUHAMMAD SAEED SHAMIM HAIDER ZAIDI

99.052

432.007

0.048

531.107

99.052

410.641

0.033

33 of 52

Sr. No. 15

Name & Address of the borrower SARGROH FARM AID VILL.SUNDAR TEHSIL & DISTT. LAHORE TANDLIANWALA SUGAR MILLS KANJWANI, THE. TANDLIANWALA DISTT. FAISALABAD

Name of Individual/parteners/ Directors ASIF SHARIF MIAN TARIQ PERVAIZ HAROON KHALID MIAN SAEED AKHTER HAROON AKHTER GHAZI AKHTER KHAN AKBAR AKHTER BEG RASHEEDA AKHTAR REHMAN MOBINA AKBER KHAN SAEED ULLAH KHAN PARACHA HAMEEDULLAH KHAN PARACHA JEHANGIR KHAN TAREEN SHAUKAT HAYAT SAIFULLAH KHAN PARACHA ZAFAR SAEED QAZI AIZAD HABIB MRS. PARVEEN HABIB KHURAM HAMID GOHER HAMEED MUHAMMAD ASGHAR RANA ALLAH DITTA DR. MUHAMMAD TAYYAB M. ATHER MAQBOOL ASLAM KHAN KHICHI RAB NAWAZ KHAN KHICHI GUL HASSAN KHAN MUHAMMAD YOUNAS MUHAMMAD SAEED

NIC Numbers 337-52-008251 333-85-010774 245-85-023552 253-50-410615 215-88-016631 215-59-096961 215-54-096960 601-31-010709 N.A 517-85-047765 601-85-020036 322-54-035403 293-53-096402 601-31-010709 270-34-044167 274-86-005678 272-88-044343 272-88-044344 272-88-044345 255-89-411154 249-56-071339 273-42-150143 316-69-245529 325-87-064303 325-87-160301 325-87-064307 NA NA

Father's/Husband Name CH. MUHAMMAD SHARIF MIAN SHAUKAT ALI CH. KHALID SHARIF CH. ABDUL WAHID AKHTER ABDUR REHMAN (LATE) AKHTER ABDUR REHMAN (LATE) AKHTER ABDUR REHMAN (LATE) W/O AKHTER A.REHMAN (LATE) AKBER AKHTER KHAN HABIBULLAH KHAN PARACHA HABIBULLAH KHAN PARACHA ALLAH NAWAZ KHAN TAREEN INIAT ALI HABIBULLAH KHAN PARACHA DR. QAZI MUHAMMAD SAEED HAJI HABIB UR REHMAN D/O MEHBOOB HAMEED MEHBOOB HAMEED MEHBOOB HAMEED RAYASAT ALI KHADIM HUSSAIN HAJI GHULAM MUHAMMAD KHAN MAQBOOL AHMED SHER MUHAMMAD KHAN MUHAMMAD KHAN KHICHI MUHAMMAD YAR KHAN ABDUL AZIZ ABDUL AZIZ

Outstanding Liabilities at beginning of the year Principal Interest others Total 1.738 3.069 0.046 4.853

Principal 1.738

Amount Written off Interest others 0.495 0.000

16

89.478

190.940

0.045

280.463

0.000

101.467

0.000

17

TECHNO AGRI IND. (PVT) LTD. VILLAGE RAKH PURA,DISTT. LAHORE

8.997

33.892

0.173

43.062

8.997

25.172

0.025

18

TRANSTECH PVT. LTD. 60-KM, LAHORE-MULTAN ROAD BHAI PHERU, DISTT.KASUR

106.070

327.734

6.971

440.775

106.070

297.314

0.065

19

SYED AGRO SERVICES MOUZA MUSTAFABAD SHERGARAH ROAD DEPALPUR, OKARA GOLDEN CHICKS MOUZA PHULGRAM, NEAR CHATTAR, MURREE ROAD THE. & DISTT. RAWALPINDI

0.165

3.114

0.000

3.279

0.000

2.336

0.000

20

MST. SURRAYA BEGUM ABDUL MOEED KHAN NAVEED KHAN ADIL WADOOD KHAN HUMAIRA WADOOD SUMERA WADOOD SAIRA WADOOD SAIDA WADOOD UZAMA WADOOD ABDUL WADOOD KHAN

NA NA NA NA NA NA NA NA NA NA

W/O ABDUL WADOOD KHAN ABDUL WADOOD KHAN ABDUL WADOOD KHAN ABDUL WADOOD KHAN D/O ABDUL WADOOD KHAN D/O ABDUL WADOOD KHAN D/O ABDUL WADOOD KHAN D/O ABDUL WADOOD KHAN D/O ABDUL WADOOD KHAN

1.300

7.194

0.036

8.530

1.300

6.374

0.000

21

ZAKIA DAIRIES LEHTRAR ROAD, ALIPUR FARASH ISLAMABAD RANA AGRO SERVICES CHAK NO.94/6-R THE, & DISTT SAHIWAL

SHAFIULLAH KHAN (LATE) MRS. ZAKIA SHAFIULLAH KHAN TAIMOOR KHAN ARSHAD KHAN RANA M. MAHFOOZ HUSSAIN SAKHAWAT ALI KHAN MEHMOOD HUSSAIN

136-58-044385 136-32-044384 NA NA

HIDAYATULLAH KHAN (LATE) W/O SHAFIFULLAH KHAN SHAFIULLAH KHAN (LATE) SHAFIULLAH KHAN (LATE)

7.800

70.993

0.024

78.817

7.800

62.785

0.000

22

334-50-027847 SAKHAWAT ALI 334-26-025387 ABDUL WAHID KHAN 334-55-025394 SAKHAWAT ALI KHAN

1.799

4.139

0.000

5.938

0.000

5.354

0.000
34 of 52

Sr. No.

Name & Address of the borrower

Name of Individual/parteners/ Directors RANA SOHAIL IQBAL FARRUKH ABBAS MST. KALSOOM KHANUM

NIC Numbers

Father's/Husband Name

Outstanding Liabilities at beginning of the year Principal Interest others Total

Principal

Amount Written off Interest others

334-62-025390 SAKHAWAT ALI KHAN 334-87-025391 SAKHAWAT ALI KHAN 334-34-025388 W/O SAKHAWAT ALI KHAN 271-35-112405 CH. AMIR ALI 294-20-343237 NAWAB DIN 278-44-414399 W/O SYED MUHAMMAD ZAHEER TOTAL 2.677 20.127 0.000 22.804 0.000 19.817 0.000

23

MODERN SARGODHA S. BOARD CHAK NO.91 SB,THE. & DISTT SARGODHA

CH. MUHAMMAD ASHRAF MUHAMMAD HUSSAIN MST. SHAHZADI IQBAL

439.785

1341.268

13.705

1794.758

330.144

1106.097

0.221

35 of 52

Annexure-1

RAI TARAQIATI BANK LIMITED

OAN OR ANY OTHER FINANCIAL RELEIF OF FIVE HUNDRED THOUSAND ED DURING THE PERIOD ENDED DECEMBER 31 2005

Amount Written off

Total 0.521

4.389

26.063

0.587

1.269

5.233

3.326

36 of 52

Amount Written off

Total

33.066

10.264

50.538

136.642

1.018

6.711

509.726

37 of 52

Amount Written off

Total 2.233

101.467

34.194

403.449

2.336

7.674

70.585

5.354
38 of 52

Amount Written off

Total

19.817

1436.462

39 of 52

ZARAI TARAQIATI BANK LIMITED

CAPITAL ADEQUACY RETURN As on 31.12.2005
(Rupees in thousands) S.No. 1 Equity 1.1 1.2 1.3 1.4 1.5 1.6 1.7 A -Summary /Overall Capital Adequacy Ratio ITEMS Fully Paid-up capital/Capital deposited with SBP Balance in Share Premium Account Reserve for Bonus Shares General Reserves as disclosed on the Balance Sheet Un-appropriated/ unremitted profits (net of accumulated losses, if any) Advance against equity Sub-Total (1.1 to 1.6) AMOUNT 11,869,612 215,387 702,355 12,787,354

Less: Good WILL Investments in equity of subsidiary companies engaged in banking and financial activities (including insurance) not consolidated in the balance sheet 1.10 Shortfall in Provisions required against Classified assets 1.8 1.9 1.11 1.12 1.13 2 Deficit on account of Revaluation of AFS Investments Sub-Total (1.8 to 1.11) TOTAL EQUITY (1.7- 1.12)

12,787,354

Supplementary Capital 2.1 Freely available General Provisions or Reserves for loan losses-upto maximum of 1.25% of Risk Weighted assets (see para 5(b) of part-I of Instructions) 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 Revaluation reserves eligible upto 50% (see para 5 of part-I of Instructions) Contingencies reserves Foreign exchange translation reserves Undisclosed reserves (see para 5 (d) of part-I of Instructions) Subordinated debt upto maximum of 50% of Total Equity Item 1.12 (see para 5 of part-I of the Instructions) Total tier 2 Supplementary Capital (2.1 to 2.5) Eligible tier 3 (As worked out in 3.9 below) Total Supplementary Capital eligible for MCR (Maximum upto 100% of Total Equity-see para 5 of part-I of the Instructions) TOTAL CAPITAL (1.13 + 2.8)

822,714 122,521 30,000 3,204,323 4,179,558

4,179,558 16,966,913

Risk Assets and Off-Balance Sheet Items 3.1 Adjusted value of funded risk assets i.e., On-Balance Sheet Items (To tally with total of Schedule B of part-IV) 3.2 Adjusted value of non-funded risk exposure i.e. Off-Balance Sheet Items (To tally with total of Schedule C1 and C2 of part-IV) 3.3 TOTAL CREDIT RISK-WEIGHTED ASSETS (3.1+3.2) 3.4 TOTAL MARKET RISK WEIGHTED ASSETS. To tally with total of 3.5 3.6 3.7 3.8 3.9 part-IV(D). MINIMUM CAPITAL REQUIRED (For credit risk) (8% of Credit Risk-Weighted Assets Item 3.3) Tier 1 and Tier 2 Capital held (1.13 + 2.6) Tier 3 Capital limit (See para 5 of part I of instructions) Actual Tier 3 Capital Eligible Tier 3 Capital (See para 5 of part I of instructions) CAPITAL ADEQUACY RATIO CREDIT RISK TOTAL CAPITAL ADEQUACY RATIO (2.9/3.3+3.4)

65,817,107 65,817,107 5,265,369 16,966,913 -

25.78
25.78

B-RISK-WEIGHTED ASSETS-ON-BALANCE SHEET ITEMS

(Rupees in thousands) ADJUSTED VALUE -

S.NO 1 2

ITEMS Cash (including approved Foreign Currencies and Gold bullions Balances with Central Banks : 2.1 With State Bank of Pakistan 2.2 With Other Central Banks

BOOK VALUE 395,962 1,189,047 -

RISK WEIGHTS % 0% 0% 0%

Balances with other Banks (including Term Deposits /Certificates of Deposit): 3.1 With Scheduled Banks in Pakistan 3.2 With Banks outside Pakistan 22,085 20% 20% 4,417 -

Money at Call & Short notice in Pakistan 4.1 With Scheduled Banks 4.2 Others Investments in : 5.1 Federal Govt. Securities 5.2 Provincial Govt. Securities 5.3 Shares of : a) Enterprises owned or controlled by Fed. Govt. b) Private Sector Enterprises 5.4 Debentures, Bonds, PTCs, TFCs, etc, of: a) Enterprises owned or controlled by Fed. Govt., i) Guaranteed by Federal Govt./ SBP ii) Enterprises other then those having corporate status or being run on commercial basis. iii) Enterprises having corporate status or being run on commercial basis.

7,792,171 7,907,986 -

20% 100% 0% 0% 0% - 50%* 100%

1,558,434 -

0% 20% 50% to 100% To be determined by institution 100% 100% 4,572,758

b) Private Sector Enterprises 5.5 Other Investments (Certificates of Investment) 6 Loans & Advances including Bills Purchased / Discounted (Less Cash Margin and Govt. Securities held) to : 6.1 Federal Government 6.2 Provincial Government 6.3 Loans guaranteed by Federal Govt./SBP 6.4 Enterprises Owned or Controlled by Federal Govt. i) Guaranteed by Federal Govt./ SBP ii) Enterprises other then those having corporate status or being run on commercial basis. iii) Enterprises having corporate status or being run on commercial basis.

339,924 4,572,758

0% 0% 0%

0% 20% 50% to 100% To be determined by institution

6.5 Claims on or guaranteed by banks of international repute incorporated in G-10 countries

20%

6.6 Private Sector Enterprises 6.7 Loans fully secured by mortgage of residential or commercial property (Excluding industrial property) 6.8 Staff loans (Annexure-II) 6.9 Others (Annexure-II) 7 8 Fixed Assets (Net of Accumulated Depreciation) Assets deducted from Capital : 8.1 Good will 8.2 Unconsolidated Investment in subsidiary companies engaged in banking and financial activities (including insurance) 9 Other Assets 9.1 Taxation ( Net of Provisions) 9.2 Accrued Interest/Profit on Govt. Securities 9.3 Others (Annexure-III) Total * 0%, 10%, 20% or 50% as may be prudently determined by the bank/DFI. 1,841,334 51,083,952 690,141

100% 50% 0% 100% 100% 51,083,952 690,141

0% 0%

1,355 103,768 7,907,404 83,847,887

0% 0% 100%

7,907,404 65,817,107

C(1)-WEIGHTED NON-FUNDED EXPOSURES/OFF-BALANCE SHEET ITEMS (Non-Market Related)

(Rupees in thousands) RISK WEIGHTS ADJUSTED % VALUE

S.NO 1

ITEMS Loans Repayment Guarantees & Acceptances (Less Cash Margin) issued on behalf of : 1.1 Federal / Provincial Govts. and SBP or guaranteed by the Federal Govt. / SBP 1.2 Enterprises owned or controlled by the Federal Govt.. 1.3. Banks of international repute incorporated in G-10 countries and domestic banks having at least rating of "A" 1.4 Private Sector Enterprises 1.5 Others ( to be specified) Purchase & Resale Agreements (Reverse Repo) other than those effected through SGL of SBP Performance Bonds, Bid Bonds, Warranties & similar instruments (less Cash Margin & Govt. Securities held) issued on behalf of 3.1 Federal / Provincial Govts. and SBP or guaranteed by the Federal Govt. / SBP. 3.2 Enterprises owned or controlled by the Federal Govt. 3.3. Banks of international repute incorporated in G-10 countries and domestic banks having at least rating of "A" 3.4 Private Sector Enterprises 3.5 Others (to be specified ) Revolving Underwriting Commitments Standby L/Cs & other Standby facilities with an original maturity of over one year and other L/Cs (less cash Margin & Govt. Securities held) Issued on behalf of : 5.1 Federal / Provincial Govts., and SBP or guaranteed by the Federal Govt. / SBP. 5.2 Enterprises owned or controlled by the Federal Govt. 5.3 Banks of international repute incorporated in G-10 countries 5.4 Private Sector Enterprises 5.5 Others (to be specified)

BOOK VALUE

Conversion Factor %

Equivalent Value

100% 100% 100% 100% 100% 100%

0% 0-50%* 20% 100% 100% 0%

50% 50% 50% 50% 50% 50%

0% 0-50%* 20% 100% 100% 100%

4 5

50% 50% 50% 50% 50%

0% 0-50%* 20% 100% 100%

Outstanding Foreign Exchange Contracts 6.1 With SBP 6.2 With other banks TOTAL 3% 3% 0% 20%

* 0%, 10%, 20% or 50% as may be prudently determined by the bank/DFI.

C(2)-WEIGHTED NON-FUNDED EXPOSURES/OFF-BALANCE SHEET ITEMS (Market Related)

(Rupees in thousands) BOOK Conversion Equivalent RISK ADJUSTED VALUE Factor % Value WEIGH VALUE TS % 0%

S.NO

ITEMS

1 2 3 4 5

Outstanding foreign Exchange Contracts with SBP Outstanding foreign Exchange Contracts with other banks. Cross currency Swaps Forward Rate Agreement Single Currency Interest Rate Swaps Total

SUMMARY D-CAPITAL CHARGE FOR MARKET RISK

(Amount in Thousands) 1. Capital Charge for Interest Rate Risk i. Specific Risk ii. General Market Risk 2. Capital Charge for Equity Exposure i. Specific Risk ii. General Market Risk 3. Capital Charge for Foreign Exchange Risk 4. Capital Charge for Position in options 5. Total Capital Charge for Market Risk

D1 (a) D1 (b)

D2 (a) D2 (b) D3 D4 Sum of D1 to D4

Market Risk weighted Assets (5 above*12.5)

D1(a) : INTEREST RATE EXPOSURES (TRADING BOOK)

(Rs. in Thousands)

DEBT SECURITIES AND OTHER DEBT RELATED DERIVATIVES-SPECIFIC RISK

Residual Maturity Over 6 months to 24 months

Positions Nature of items 1. Debt Securities issued by Central Governments or Central Banks 2. Debt Securities eligible for "Qualifying" category. Long Short Long Short 3. Other Debt Securities. Long Short Long Short

6 months or less

Over 24 Total months Exposure

Total Specific Risk Capital Charge

Total (Items 2 & 3 above)

Risk Weight SPECIFIC RISK CAPITAL CHARGE FOR DEBT SECURITIES AND DEBT DERIVATIVES (ON GROSS POSITION-LONG PLUS SHORT)

0.25%

1.00%

1.60%

8.00%

DEBT SECURITIES,DEBT DERIVATIVES AND OTHER INTEREST RATE DERIVATIVES-GENERAL MARKET RISK*. D 1(b).
Time Band Coupon 3% or more Coupon less than 3% 1 month or less 1 to 3 months 3 to 6 months 6 to 12 months 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years 5 to 7 years 7 to 10 years 10 to 15 years 15 to 20 years Over 20 years 1 month or less 1 to 3 months 3 to 6 months 6 to 12 months 1.0 to 1.9 years 1.9 to 2.8 years 2.8 to 3.6 years 3.6 to 4.3 years 4.3 to 5.7 years 5.7 to 7.3 years 7.3 to 9.3 years 9.3 to 10.6 years 10.6 to 12 years 12 to 20 years Over 20 years Individual position Debt Securities & debt dervaties Interest rate dervaties Long Short Long Short Risk Weight 0.00% 0.20% 0.40% 0.70% 1.25% 1.75% 2.25% 2.75% 3.25% 4.50% 5.25% 6.00% 8.00% 12.50% (Rs in Thousands) Weightaged position Long

Zone 1

Total

Short

Total OVERALL NET OPEN POSITION Calculation Vertical Disallowance Horizonatal Disallowances in Horizontal Disallowances between Overall net open postion Total General Market Risk charge

Zone-1 General Market Risk Capital Charge Total Capital Charge for Interest Rate Risk (a+b) * Separate Forms to be used fro differenet currencies

Zone-2

Zone-3

Zone-1&2

Zone-2&3 Zone-1&3

D2-EQUITY EXPOSURES (Trading Book) (Rs in Thousands) Inside Pakistan Outside Pakistan* Total Gross (Long plus Short) Positions Risk Weight a. Specific Risk Charge Net Long/Short Position Risk Weight b. General Market Risk Capital Charge Total Capital Charge for Equity Exposures (a+b) 8% 8%

8%

8%

* Report position on a market-by Market basis i.e. separate column for each national market to be used

D-3 FOREIGN EXCHANGE RISK

(Rs in Thousands)

Currency

Position in F/C

PKR Rate

Position in PKR

Overall Long/Short Position Capital Charge (8% X Net Open Position)

D4-MARKET RISK CAPITAL CHARGE FOR OPTIONS LONG OPTIONS WITH RELATED CHASH POSITION. Specific Risk Charge General Market Risk Charge Long Cash & Long PutShort Cash & Long Call Total 8%

Underlying of the Option Foreign Exchange

LONG CALL or LONG PUT OPTIONS Underlying of the Option Specific Risk Charge General Market Risk Charge Long Put Foreign Exchange 8%

Long Call

Total

ANNEXURE-I ZARAI TARAQIATI BANK LIMITED DETAIL OF INVESTMENT IN PRIVATE SECTOR ENTERPRISES AS AT 31 DECEMBER 2005
(Rupees'000)

S.NO 1

ITEMS QUOTED INVESTMENTS Nestle Milk Pak Limited Uqab Breeding Farms Limited Mubarik Dairies Limited UN QUOTED INVESTMENTS National Commodity Exchange Limited Add: Surplus on revaluation of securities Less Provision for Diminution in value of Investments Total Investment in Quoted/Un Quoted Securities

AMOUNT

89,297 585 412 90,294 5,000 95,294 245,043 (413) 339,924

ANNEXURE-II ZARAI TARAQIATI BANK LIMITED DETAIL OF LOAN AND ADVANCES AS AT 31 DECEMBER 2005
(Rupees'000)

S.NO 1 LOANS

ITEMS

AMOUNT

Loan under Pre-Islamic banking System(PIBS) Loan under Islamic banking System(IBS) Less: Provision for bad and doubtful debts Unrealized Mark-up Total Loans 2 ADVANCES Advances under Pre-Islamic banking System(PIBS) Advance under Islamic banking System(IBS) Less:Provision against Advance to Ex-Employees Total Advances Total Loans and advances

1,222,429 61,676,439 62,898,868 11,814,916 51,083,952

1,018 1,844,640 1,845,658 4,324 1,841,334 52,925,286

ANNEXURE-III ZARAI TARAQIATI BANK LIMITED DETAIL OF OTHER ASSETS AS AT 31 DECEMBER 2005
(Rupees'000)

S.NO

ITEMS Income/ Mark-up accrued on loans and advances Income/ Mark-up accrued on investments Advances, deposits, advance rent and other prepayments Stationery and stamps on hand Tax recoverable Releif Packages Preliminary Expenses Branch adjustment account Receivable from defined benefit plans Stock in hand Assets relating to Bangladesh Receivable from Federal Government against Golden Handshake Scheme Receivable from Trust Funds against Golden Handshake Scheme Receivable from benevolent trust fund against GHSS Suspense Account Assets acquired in satisfaction of bank dues Deferred tax assets Others Less:Provsion held against other assets

AMOUNT 2,085,487 178,026 63,902 10,970 308,053 939,468 792,819 1,936,411 14,640 1,343,235 2,643 117,901 17,250 3,848 209,574 1,829 15,208 8,041,264 (28,737) 8,012,527