Contents

Corporate Information 1

2

4

5

6

7

8

9

Directors' Report to the Shareholders

Balance Sheet

Profit and Loss Account

Cash Flow Statement

Statement of Changes In Equity

Notes to the Financial Statements

for the Period Ended March 31, 2010

Statement of Comprehensive Income

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

CORPORATE INFORMATION

1 2

Board of Directors

Ghulam Dastgir Akhtar ChairmanSahibzada Saeed AhmadMuhammad AsifMuhammad Maqsood KhanMaqsood Ismail Mir Javed HashmatAmjad Pervez

Managing Director / CEO

Bilal Mustafa

Audit Committee

Muhammad Asif ChairmanSahibzada Saeed AhmadMuhammad Maqsood KhanMir Javed HashmatAmjad Pervez

Chief Financial Officer

Rahat Gul

Company Secretary

Zahid Sahibzada

Registered Office / Head Office

The Bank of Khyber, 24-The Mall, Peshawar Cantt.UAN# 00-92-91-111 95 95 95URL: www.bok.com.pk

Auditors

Delloite M. Yousaf Adil Saleem & Co.Chartered Accountants

Legal Advisors

Mr. Nisar Ahmed Khan Advocate, Peshawar

M/s. Mohsin Tayebaly & Co., Karachi

Registrar and Share Registration Office

THK Associates (Pvt) LtdGround Floor, State Life Building No. 3Dr. Ziauddin Ahmed Road Karachi – 75530. Pakistan.

On behalf of the Board of Directors, I am pleased to present the financial statements of the Bank for the quarter ended March 31, 2010. The results are inclusive of the results of Islamic Banking Operations.

Financial Highlights

Financial Highlights of the Bank for the period under review are as follows:

(Rs. in millions)

Operating Profit 289.503

Provision against non-performing advances,investments & others 142.474

Profit/(loss) before taxation 147.029

Taxation 39.719

Profit/(loss) after tax 107.310

Total Assets 36,575.639

Advances (Gross) 15,047.463

Investments 16,641.594

Deposits 25,576.227

Financial Overview

Due to Bank's focus on core banking activities, assets and deposit base remained stable while markup based income continues to grow. The Bank was able to post an operating profit of Rs. 289.503 million and an after tax profit of Rs. 107.310 million reversing the trend as at year end 2009. At the same time the Bank was able to recoup some of the losses taken against equity.

As the stock market stabilizes, the value of investments held by the Bank will gradually appreciate and the losses booked on account of diminution in value of investments will be minimized under a well planned strategy. During the quarter the Banks non-markup / interest income showed considerable increase as against the same quarter last year. The Bank is also making efforts to contain growth of Non Performing loans as well as increase its recoveries which should ease burden of provision on the operating profits.

The Bank's sponsor shareholders have taken a number of initiatives for increase in the paid-up capital of the Bank. These steps are being taken both to ensure the long term financial viability of the Bank as well as meeting the

DIRECTORS' REPORT TO THE SHAREHOLDERS

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

CORPORATE INFORMATION

1 2

Board of Directors

Ghulam Dastgir Akhtar ChairmanSahibzada Saeed AhmadMuhammad AsifMuhammad Maqsood KhanMaqsood Ismail Mir Javed HashmatAmjad Pervez

Managing Director / CEO

Bilal Mustafa

Audit Committee

Muhammad Asif ChairmanSahibzada Saeed AhmadMuhammad Maqsood KhanMir Javed HashmatAmjad Pervez

Chief Financial Officer

Rahat Gul

Company Secretary

Zahid Sahibzada

Registered Office / Head Office

The Bank of Khyber, 24-The Mall, Peshawar Cantt.UAN# 00-92-91-111 95 95 95URL: www.bok.com.pk

Auditors

Delloite M. Yousaf Adil Saleem & Co.Chartered Accountants

Legal Advisors

Mr. Nisar Ahmed Khan Advocate, Peshawar

M/s. Mohsin Tayebaly & Co., Karachi

Registrar and Share Registration Office

THK Associates (Pvt) LtdGround Floor, State Life Building No. 3Dr. Ziauddin Ahmed Road Karachi – 75530. Pakistan.

On behalf of the Board of Directors, I am pleased to present the financial statements of the Bank for the quarter ended March 31, 2010. The results are inclusive of the results of Islamic Banking Operations.

Financial Highlights

Financial Highlights of the Bank for the period under review are as follows:

(Rs. in millions)

Operating Profit 289.503

Provision against non-performing advances,investments & others 142.474

Profit/(loss) before taxation 147.029

Taxation 39.719

Profit/(loss) after tax 107.310

Total Assets 36,575.639

Advances (Gross) 15,047.463

Investments 16,641.594

Deposits 25,576.227

Financial Overview

Due to Bank's focus on core banking activities, assets and deposit base remained stable while markup based income continues to grow. The Bank was able to post an operating profit of Rs. 289.503 million and an after tax profit of Rs. 107.310 million reversing the trend as at year end 2009. At the same time the Bank was able to recoup some of the losses taken against equity.

As the stock market stabilizes, the value of investments held by the Bank will gradually appreciate and the losses booked on account of diminution in value of investments will be minimized under a well planned strategy. During the quarter the Banks non-markup / interest income showed considerable increase as against the same quarter last year. The Bank is also making efforts to contain growth of Non Performing loans as well as increase its recoveries which should ease burden of provision on the operating profits.

The Bank's sponsor shareholders have taken a number of initiatives for increase in the paid-up capital of the Bank. These steps are being taken both to ensure the long term financial viability of the Bank as well as meeting the

DIRECTORS' REPORT TO THE SHAREHOLDERS

3 4

CONDENSED INTERIM BALANCE SHEET AS AT MARCH 31, 2010

(Un-audited) (Audited)

March 31, December 31,

NOTE 2010 2009

ASSETS

Cash and balances with treasury banks 1,512,314 1,542,102

Balances with other banks 2,109,092 2,403,698

Lendings to financial institutions 6 476,500 1,810,846

Investments 7 16,641,594 17,925,911

Advances 8 11,938,955 11,835,962

Operating fixed assets 9 1,050,438 1,013,670

Deferred tax assets 10 500,912 456,420

Other assets 2,345,834 1,821,961

36,575,639 38,810,570

LIABILITIES

Bills payable 209,429 229,973

Borrowings from financial institutions 3,753,836 5,147,036

Deposits and other accounts 11 25,576,227 26,285,794

Sub-ordinated loans - -

Liabilities against assets subject to finance lease - -

Deferred tax liabilities - -

Other liabilities 1,187,802 1,185,470

30,727,294 32,848,273

NET ASSETS 5,848,345 5,962,297

REPRESENTED BY

Share capital 12 5,004,001 5,004,001

Reserves 456,804 435,342

Unappropriated (loss)/profit (312,862) (398,710)

5,147,943 5,040,633

Share Subscription Money 224,000 224,000

5,371,943 5,264,633

Surplus/ (Deficit) on revaluation of assets-net of tax 13 476,402 697,6645,848,345 5,962,297

CONTINGENCIES AND COMMITMENTS 14 - -

The annexed notes 1 to 21 form an integral part of these condensed interim financial statements.

Rupees in '000'

Managing Director Director Director Director

regulatory requirements. The Bank's capital is required to be increased by Rs. 1.00 billion (net of losses) each year. We are confident that the shareholders will be able to arrange the required capital within the stipulated time frame.

Future Outlook

The overall national economic conditions remain susceptible to various uncertainties regarding the security situation, power shortages, surge in commodity prices and promised foreign inflows. These conditions are likely to result in lower private sector demand. At the same time the public sector's demand is expected to remain high due to budgetary requirements and circular debt of public sector enterprises. The Banking sector is expected to see a shift from core lending to investment in Government paper and growth in the Banking sector in likely to remain modest.

In spite the various challenges the Bank has maintained its assets and deposits base and is expected to make slow but steady progress. While the nine branches opened in 2009 become fully functional, ten new branches are to be opened in 2010 which besides growth in the client base of the Bank will also help in better service delivery.

Improvements in systems and control, strengthening of the Human Resource base and strong support of the Provincial Government and other sponsor shareholders will help the Bank strengthen its fragile financial position and maintain stability, enabling the Bank to ride out of the current crisis both internal and external. We see the Bank's position improving with each passing quarter.

Credit Rating

The JCR-VIS has maintained the Bank's credit ratings of 'BBB+' (Triple B plus) for long term whereas short term rating has been revised to 'A-3' (A-Three) from 'A-2' (A-Two). Outlook on the ratings is 'Stable'.

The Pakistan Credit Rating Agency Limited (PACRA) has assigned 'BBB' (Triple B) for long term rating whereas 'A2' has been given for short term rating.

Acknowledgement

The Board is grateful to the Government of Khyber Pukhtunkhwa (previously NWFP) for its enduring support, the State Bank of Pakistan for its worthy guidance, the valued customers for their continued patronage and trust and the staff for their untiring efforts to make this organization a success.

On behalf of the Board of Directors

Bilal MustafaApril 28, 2010 Managing Director

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

3 4

CONDENSED INTERIM BALANCE SHEET AS AT MARCH 31, 2010

(Un-audited) (Audited)

March 31, December 31,

NOTE 2010 2009

ASSETS

Cash and balances with treasury banks 1,512,314 1,542,102

Balances with other banks 2,109,092 2,403,698

Lendings to financial institutions 6 476,500 1,810,846

Investments 7 16,641,594 17,925,911

Advances 8 11,938,955 11,835,962

Operating fixed assets 9 1,050,438 1,013,670

Deferred tax assets 10 500,912 456,420

Other assets 2,345,834 1,821,961

36,575,639 38,810,570

LIABILITIES

Bills payable 209,429 229,973

Borrowings from financial institutions 3,753,836 5,147,036

Deposits and other accounts 11 25,576,227 26,285,794

Sub-ordinated loans - -

Liabilities against assets subject to finance lease - -

Deferred tax liabilities - -

Other liabilities 1,187,802 1,185,470

30,727,294 32,848,273

NET ASSETS 5,848,345 5,962,297

REPRESENTED BY

Share capital 12 5,004,001 5,004,001

Reserves 456,804 435,342

Unappropriated (loss)/profit (312,862) (398,710)

5,147,943 5,040,633

Share Subscription Money 224,000 224,000

5,371,943 5,264,633

Surplus/ (Deficit) on revaluation of assets-net of tax 13 476,402 697,6645,848,345 5,962,297

CONTINGENCIES AND COMMITMENTS 14 - -

The annexed notes 1 to 21 form an integral part of these condensed interim financial statements.

Rupees in '000'

Managing Director Director Director Director

regulatory requirements. The Bank's capital is required to be increased by Rs. 1.00 billion (net of losses) each year. We are confident that the shareholders will be able to arrange the required capital within the stipulated time frame.

Future Outlook

The overall national economic conditions remain susceptible to various uncertainties regarding the security situation, power shortages, surge in commodity prices and promised foreign inflows. These conditions are likely to result in lower private sector demand. At the same time the public sector's demand is expected to remain high due to budgetary requirements and circular debt of public sector enterprises. The Banking sector is expected to see a shift from core lending to investment in Government paper and growth in the Banking sector in likely to remain modest.

In spite the various challenges the Bank has maintained its assets and deposits base and is expected to make slow but steady progress. While the nine branches opened in 2009 become fully functional, ten new branches are to be opened in 2010 which besides growth in the client base of the Bank will also help in better service delivery.

Improvements in systems and control, strengthening of the Human Resource base and strong support of the Provincial Government and other sponsor shareholders will help the Bank strengthen its fragile financial position and maintain stability, enabling the Bank to ride out of the current crisis both internal and external. We see the Bank's position improving with each passing quarter.

Credit Rating

The JCR-VIS has maintained the Bank's credit ratings of 'BBB+' (Triple B plus) for long term whereas short term rating has been revised to 'A-3' (A-Three) from 'A-2' (A-Two). Outlook on the ratings is 'Stable'.

The Pakistan Credit Rating Agency Limited (PACRA) has assigned 'BBB' (Triple B) for long term rating whereas 'A2' has been given for short term rating.

Acknowledgement

The Board is grateful to the Government of Khyber Pukhtunkhwa (previously NWFP) for its enduring support, the State Bank of Pakistan for its worthy guidance, the valued customers for their continued patronage and trust and the staff for their untiring efforts to make this organization a success.

On behalf of the Board of Directors

Bilal MustafaApril 28, 2010 Managing Director

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

5 6

Managing Director Director Director DirectorManaging Director Director Director Director

CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2010

Three months Three months Three months Three months

period ended period ended period ended period ended

March 31, March 31, March 31, March 31,

2010 2010 2009 2009

----------------------------------------Rupees in '000'---------------------------------------

Mark-up/return /interest earned 875,326 875,326 857,764 857,764

Mark-up/return /interest expensed 640,355 640,355 595,404 595,404

Net mark-up/interest income 234,971 234,971 262,360 262,360

Provision against non-performing loans and advances-net 123,724 123,724 131,325 131,325

Provision for diminution in the value of investments 18,750 18,750 176,368 176,368

142,474 142,474 307,693 307,693

Net mark-up/interest income after provisions 92,497 92,497 (45,333) (45,333)

NON MARK-UP/INTEREST INCOME

Fee, commission and brokerage income 31,089 31,089 24,108 24,108

Dividend income 28,756 28,756 2,359 2,359

Income from dealing in foreign currencies 2,206 2,206 287 287

Gain on sale of securities 192,136 192,136 8,941 8,941

Unrealised gain on revaluation of

investments classified as held for trading 1,095 1,095 - -

Other income 13,664 13,664 16,587 16,587

Total non mark-up/interest income 268,946 268,946 52,282 52,282

361,443 361,443 6,949 6,949

NON MARK-UP/INTEREST EXPENSES

Administrative expenses 212,454 212,454 158,155 158,155

Other charges 1,960 1,960 185 185

Total non mark-up/interest expenses 214,414 214,414 158,340 158,340

147,029 147,029 (151,391) (151,391)

Extra ordinary/unusual item - - - -

PROFIT/(LOSS) BEFORE TAXATION 147,029 147,029 (151,391) (151,391)

Taxation

Current 60,717 60,717 236 236

Prior years - - - -

Deferred (20,998) (20,998) - -

39,719 39,719 236 236

PROFIT/(LOSS) AFTER TAXATION 107,310 107,310 (151,627) (151,627)

Unappropriated (loss)/ profit brought forward (398,710) 238,473

Unappropriated (loss)/profit carried forward (291,400) 86,846

Earnings/(loss) per share- Basic and Diluted (in Rupees) 0.21 (0.30)

The annexed notes 1 to 21 form an integral part of these condensed interim financial statements.

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2010

March 31, March 31,

2010 2009

Profit / (loss) after taxation for the period 107,310 (151,627)

Other comprehensive income- -

Total comprehensive income for the period 107,310 (151,627)

The annexed notes 1 to 21 form an integral part of these condensed interim financial statements.

Rupees in ‘000

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

5 6

Managing Director Director Director DirectorManaging Director Director Director Director

CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2010

Three months Three months Three months Three months

period ended period ended period ended period ended

March 31, March 31, March 31, March 31,

2010 2010 2009 2009

----------------------------------------Rupees in '000'---------------------------------------

Mark-up/return /interest earned 875,326 875,326 857,764 857,764

Mark-up/return /interest expensed 640,355 640,355 595,404 595,404

Net mark-up/interest income 234,971 234,971 262,360 262,360

Provision against non-performing loans and advances-net 123,724 123,724 131,325 131,325

Provision for diminution in the value of investments 18,750 18,750 176,368 176,368

142,474 142,474 307,693 307,693

Net mark-up/interest income after provisions 92,497 92,497 (45,333) (45,333)

NON MARK-UP/INTEREST INCOME

Fee, commission and brokerage income 31,089 31,089 24,108 24,108

Dividend income 28,756 28,756 2,359 2,359

Income from dealing in foreign currencies 2,206 2,206 287 287

Gain on sale of securities 192,136 192,136 8,941 8,941

Unrealised gain on revaluation of

investments classified as held for trading 1,095 1,095 - -

Other income 13,664 13,664 16,587 16,587

Total non mark-up/interest income 268,946 268,946 52,282 52,282

361,443 361,443 6,949 6,949

NON MARK-UP/INTEREST EXPENSES

Administrative expenses 212,454 212,454 158,155 158,155

Other charges 1,960 1,960 185 185

Total non mark-up/interest expenses 214,414 214,414 158,340 158,340

147,029 147,029 (151,391) (151,391)

Extra ordinary/unusual item - - - -

PROFIT/(LOSS) BEFORE TAXATION 147,029 147,029 (151,391) (151,391)

Taxation

Current 60,717 60,717 236 236

Prior years - - - -

Deferred (20,998) (20,998) - -

39,719 39,719 236 236

PROFIT/(LOSS) AFTER TAXATION 107,310 107,310 (151,627) (151,627)

Unappropriated (loss)/ profit brought forward (398,710) 238,473

Unappropriated (loss)/profit carried forward (291,400) 86,846

Earnings/(loss) per share- Basic and Diluted (in Rupees) 0.21 (0.30)

The annexed notes 1 to 21 form an integral part of these condensed interim financial statements.

CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2010

March 31, March 31,

2010 2009

Profit / (loss) after taxation for the period 107,310 (151,627)

Other comprehensive income- -

Total comprehensive income for the period 107,310 (151,627)

The annexed notes 1 to 21 form an integral part of these condensed interim financial statements.

Rupees in ‘000

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

Change in equity during the year ended December 31, 2009

7 8

Managing Director Director Director Director

CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2010

Three months Three months

period ended period ended

March 31, March 31,

2010 2009

Note

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(Loss) before taxation 147,029 (151,391)

Less: Dividend income 28,756 2,359

118,273 (153,750)

Adjustments for non-cash charges:

Depreciation 6,829 5,284

Provision against non-performing advances 123,724 131,325

Provision against diminution in the value of investments 18,750 176,368

Unrealized gain on revaluation of investments classified as held for trading (1,095) -

Gain on sale of fixed assets (267) -

147,941 312,977

266,214 159,227

(Increase) / decrease in operating assets :

Lendings to financial institutions 1,334,346 91,118

Net investments in held for trading securities 624,135 -

Advances (226,717) 1,236,080

Others assets (excluding advance taxation) (584,104) (211,599)

1,147,660 1,115,599

Increase/ (decrease) in operating liabilities :

Bills payable (20,544) 16,472

Borrowings (1,393,200) 1,252,063

Deposits and other accounts (709,567) (2,966,778)

Other liabilities (excluding current taxation) 2,332 100,653

(2,120,979) (1,597,590)

Cash generated from operations (707,105) (322,764)

Income tax paid (486) (65)

Net cash flows from operating activities (707,591) (322,829)

CASH FLOWS FROM INVESTING ACTIVITIES

Net investments in available-for-sale securities 394,437 (71,094)

Net investments in held-to-maturity securities 3,334 (1,354,349)

Dividend received 28,756 2,359

Investments in operating fixed assets (43,381) (12,297)

Sale proceeds of property and equipment disposed-off 51 -

--

Net cash used in investing activities 383,197 (1,435,381)

(Decrease)/ increase in cash and cash equivalents (324,394) (1,758,210)

Cash and cash equivalents at beginning of the period

Effect of exchange rate changes on cash & cash equivalents

3,945,800 5,092,869

Cash and cash equivalents at end of the period 15 3,621,406 3,334,659

The annexed notes 1 to 21 form an integral part of these condensed interim financial statements.

Rupees in '000

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2010

Balance as at January 01, 2009 4,002,984 1,001,017 435,342 238,473 5,677,816

- - - -

Total comprehensive income for the year ended december 31, 2009 - - - (637,183) (637,183)

Transfer to statutory reserve - - - --

Transactions with owners

Issue of bonus shares 1,001,017 (1,001,017) - - -

Balance as at December 31, 2009 5,004,001 - 435,342 (398,710) 5,040,633

Change in equity during the period ended March 31, 2010 - - - - -

Total comprehensive income for the period ended March 31, 2010

- - - 107,310 107,310

Transfer to statutory reserve - - 21,462 (21,462) -

Transactions with owners -

Issue of bonus shares - - - - -

Balance as at March 31, 2010 5,004,001 - 456,804 (312,862) 5,147,943

-

The annexed notes 1 to 21 form an integral part of these condensed interim financial statements.

Bonus

issue

reserve

Statutory

reserve

--------------------------------------------Rupees in '000'--------------------------------------

Share

capital TOTAL

(Accumulated

loss)/

Unappropriated

profit

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

Change in equity during the year ended December 31, 2009

7 8

Managing Director Director Director Director

CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2010

Three months Three months

period ended period ended

March 31, March 31,

2010 2009

Note

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(Loss) before taxation 147,029 (151,391)

Less: Dividend income 28,756 2,359

118,273 (153,750)

Adjustments for non-cash charges:

Depreciation 6,829 5,284

Provision against non-performing advances 123,724 131,325

Provision against diminution in the value of investments 18,750 176,368

Unrealized gain on revaluation of investments classified as held for trading (1,095) -

Gain on sale of fixed assets (267) -

147,941 312,977

266,214 159,227

(Increase) / decrease in operating assets :

Lendings to financial institutions 1,334,346 91,118

Net investments in held for trading securities 624,135 -

Advances (226,717) 1,236,080

Others assets (excluding advance taxation) (584,104) (211,599)

1,147,660 1,115,599

Increase/ (decrease) in operating liabilities :

Bills payable (20,544) 16,472

Borrowings (1,393,200) 1,252,063

Deposits and other accounts (709,567) (2,966,778)

Other liabilities (excluding current taxation) 2,332 100,653

(2,120,979) (1,597,590)

Cash generated from operations (707,105) (322,764)

Income tax paid (486) (65)

Net cash flows from operating activities (707,591) (322,829)

CASH FLOWS FROM INVESTING ACTIVITIES

Net investments in available-for-sale securities 394,437 (71,094)

Net investments in held-to-maturity securities 3,334 (1,354,349)

Dividend received 28,756 2,359

Investments in operating fixed assets (43,381) (12,297)

Sale proceeds of property and equipment disposed-off 51 -

--

Net cash used in investing activities 383,197 (1,435,381)

(Decrease)/ increase in cash and cash equivalents (324,394) (1,758,210)

Cash and cash equivalents at beginning of the period

Effect of exchange rate changes on cash & cash equivalents

3,945,800 5,092,869

Cash and cash equivalents at end of the period 15 3,621,406 3,334,659

The annexed notes 1 to 21 form an integral part of these condensed interim financial statements.

Rupees in '000

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2010

Balance as at January 01, 2009 4,002,984 1,001,017 435,342 238,473 5,677,816

- - - -

Total comprehensive income for the year ended december 31, 2009 - - - (637,183) (637,183)

Transfer to statutory reserve - - - --

Transactions with owners

Issue of bonus shares 1,001,017 (1,001,017) - - -

Balance as at December 31, 2009 5,004,001 - 435,342 (398,710) 5,040,633

Change in equity during the period ended March 31, 2010 - - - - -

Total comprehensive income for the period ended March 31, 2010

- - - 107,310 107,310

Transfer to statutory reserve - - 21,462 (21,462) -

Transactions with owners -

Issue of bonus shares - - - - -

Balance as at March 31, 2010 5,004,001 - 456,804 (312,862) 5,147,943

-

The annexed notes 1 to 21 form an integral part of these condensed interim financial statements.

Bonus

issue

reserve

Statutory

reserve

--------------------------------------------Rupees in '000'--------------------------------------

Share

capital TOTAL

(Accumulated

loss)/

Unappropriated

profit

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

9 10

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2010

1. STATUS AND NATURE OF BUSINESS

1.1 The Bank of Khyber ("The Bank") was established under The Bank of Khyber Act, 1991 (N.W.F.P. Act No. XIV of 1991) and is principally engaged in the business of commercial, investment and development banking. The Bank acquired the status of a scheduled bank in 1994. The Bank is listed on the Karachi Stock Exchange (KSE). The registered office of the Bank is situated at 24-The Mall, Peshawar Cantt, Peshawar. The Bank is operating 41 branches as at March 31, 2010 (December 31, 2009: 41 branches). The long term credit ratings of the Bank assigned by The Pakistan Credit Rating Agency Limited (PACRA) and JCR-VIS are 'BBB' and 'BBB+' respectively and the short-term credit ratings assigned are 'A2' and 'A3' respectively.

1.2 As at March 31, 2010, the paid-up capital (net of losses) of the Bank amounts to Rs. 4,691.139 million which is below the minimum regulatory capital requirement of Rs. 7,000 million for the year ending December 31, 2010 as prescribed by State Bank of Pakistan (SBP) vide BSD Circular No. 07 dated April 15, 2009. The management is working on a plan to raise additional funds from Government/ Shareholders for meeting Minimum Capital Requirement (MCR) of Rs. 7 billion and in this regard the Bank has received Rs. 224 million from the Government of Khyber Pukhtunkhwa (previously NWFP) as advance against share subscription. Further, The State Bank of Pakistan (SBP) through their letter dated January 6, 2010 has granted extension till June 30, 2010 in meeting minimum capital requirment (MCR) of Rs 6 billion for the year ended December 31, 2009.

2. BASIS OF PRESENTATION

2.1 In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, the State Bank of Pakistan (SBP) has issued various circulars from time to time. Permissible forms of trade-related modes of financing include purchase of goods by the banks from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under the respective arrangements (except for murabaha financings accounted for under Islamic Financial Accounting

Standard - 1 "Murabaha") are not reflected in these financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of rental / profit thereon. Following the setting up of the Islamic Banking Division, the Bank also provides financing through Shariah compliant modes of financing.

2.2 The financial results of the Islamic Banking Division have been consolidated in these financial statements for reporting purpose, after eliminating the effects of intra-bank transactions and balances. The Bank is conducting Islamic Banking in 18 (December 31, 2009:18) of its branches. Key financial figures of the Islamic Banking Division are disclosed in Note "16" to these financial statements.

2.3 These financial statements have been presented in Pakistani Rupee, which is the Bank's functional and reporting currency.

3. BASIS OF MEASUREMENT

These financial statements have been prepared under the historical cost convention except that certain assets and derivative financial instruments are stated at revalued amounts / fair values.

4. STATEMENT OF COMPLIANCE

4.1 These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) and interpretations issued by the International Accounting Standards Board and Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as are notified under the Companies Ordinance, 1984, the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or directives issued by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan. Wherever, the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or directives issued by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan differ with the requirements of IFRS or IFAS, the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or the requirements of the said directives prevail.

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

9 10

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2010

1. STATUS AND NATURE OF BUSINESS

1.1 The Bank of Khyber ("The Bank") was established under The Bank of Khyber Act, 1991 (N.W.F.P. Act No. XIV of 1991) and is principally engaged in the business of commercial, investment and development banking. The Bank acquired the status of a scheduled bank in 1994. The Bank is listed on the Karachi Stock Exchange (KSE). The registered office of the Bank is situated at 24-The Mall, Peshawar Cantt, Peshawar. The Bank is operating 41 branches as at March 31, 2010 (December 31, 2009: 41 branches). The long term credit ratings of the Bank assigned by The Pakistan Credit Rating Agency Limited (PACRA) and JCR-VIS are 'BBB' and 'BBB+' respectively and the short-term credit ratings assigned are 'A2' and 'A3' respectively.

1.2 As at March 31, 2010, the paid-up capital (net of losses) of the Bank amounts to Rs. 4,691.139 million which is below the minimum regulatory capital requirement of Rs. 7,000 million for the year ending December 31, 2010 as prescribed by State Bank of Pakistan (SBP) vide BSD Circular No. 07 dated April 15, 2009. The management is working on a plan to raise additional funds from Government/ Shareholders for meeting Minimum Capital Requirement (MCR) of Rs. 7 billion and in this regard the Bank has received Rs. 224 million from the Government of Khyber Pukhtunkhwa (previously NWFP) as advance against share subscription. Further, The State Bank of Pakistan (SBP) through their letter dated January 6, 2010 has granted extension till June 30, 2010 in meeting minimum capital requirment (MCR) of Rs 6 billion for the year ended December 31, 2009.

2. BASIS OF PRESENTATION

2.1 In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, the State Bank of Pakistan (SBP) has issued various circulars from time to time. Permissible forms of trade-related modes of financing include purchase of goods by the banks from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under the respective arrangements (except for murabaha financings accounted for under Islamic Financial Accounting

Standard - 1 "Murabaha") are not reflected in these financial statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of rental / profit thereon. Following the setting up of the Islamic Banking Division, the Bank also provides financing through Shariah compliant modes of financing.

2.2 The financial results of the Islamic Banking Division have been consolidated in these financial statements for reporting purpose, after eliminating the effects of intra-bank transactions and balances. The Bank is conducting Islamic Banking in 18 (December 31, 2009:18) of its branches. Key financial figures of the Islamic Banking Division are disclosed in Note "16" to these financial statements.

2.3 These financial statements have been presented in Pakistani Rupee, which is the Bank's functional and reporting currency.

3. BASIS OF MEASUREMENT

These financial statements have been prepared under the historical cost convention except that certain assets and derivative financial instruments are stated at revalued amounts / fair values.

4. STATEMENT OF COMPLIANCE

4.1 These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) and interpretations issued by the International Accounting Standards Board and Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as are notified under the Companies Ordinance, 1984, the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or directives issued by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan. Wherever, the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or directives issued by the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan differ with the requirements of IFRS or IFAS, the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or the requirements of the said directives prevail.

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

11 12

4.2 The SBP, vide BSD Circular No. 10, dated August 26, 2002 has deferred the applicability of International Accounting Standard 39, Financial Instruments: Recognition and Measurement (IAS 39) and International Accounting Standard 40, Investment Property (IAS 40) for banking companies till further instructions. Further, according to a notification of Securities and Exchange Commission of Pakistan dated April 28, 2008, International Financial Reporting Standard (IFRS) 7 "Financial Instruments Disclosure" has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these financial statements. However, investments have been classified and valued in accordance with the requirements prescribed by SBP through various circulars.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted in the preparation of these financial statements are the same as those applied in the preparation of the financial statements of the Bank for the year ended December 31, 2009.

(Un-audited) (Audited)

6. LENDINGS TO FINANCIAL INSTITUTIONS March 31, December 31,

2010 2009

Note

Call money lendings - 20,000Repurchase agreement lendings (Reverse Repo) - 1,311,846

Placements with financial institutions 757,824 760,324757,824 2,092,170

Less: Provision for doubtful placements with financial institutions 6.1 281,324 281,324

476,500 1,810,846

6.1 Particulars of provision for doubtful placement with financial institutions

Opening balance 281,324 194,074

Charge for the period/ year - 135,500

Reversal during the period/ year - (48,250)

Closing balance 281,324 281,324

Rupees in '000'

7. INVESTMENTSHeld by Given as Total

Note bank Collateral

As at March 31, 2010 7.1 13,686,285 2,955,309 16,641,594

As at December 31, 2009 7.1 14,149,756 3,776,155 17,925,911

7.1 Investments by types Held by bank

Given as

collaterals Total Held by bank

Given as collaterals

Total

Held for trading securities

Pakistan Investment Bonds - - - 333,980 48,760 382,740

Market Treasury Bills 133,605 133,605- -- -

Term Finance Certificates Listed -- -- 150,000 150,000

Term Finance Certificates Unlisted -- -- 200,000 200,000

Units in open ended mutual funds -- -- 25,000 25,000

133,605 - 133,605 708,980 48,760 757,740

Available-for-sale securities

Market Treasury Bills 5,033,624 694,982 5,728,606 4,126,216 2,170,364 6,296,580

Pakistan Investment Bonds 823,795 2,263,333 3,087,128 1,391,619 1,549,991 2,941,610

National Investment Trust Units 54,246 - -54,246 437,842 437,842

Ordinary shares in listed companies 964,754 964,754- -786,230 786,230

Ordinary shares in unlisted companies 80,487 80,487- -80,487 80,487

Listed Term Finance Certificates 999,655 999,655- -638,285 638,285

Unlisted Term Finance Certificates 1,222,333 1,222,333- -943,464 943,464

Units in open ended mutual funds 734,025 734,025- -1,344,818 1,344,818

Units in close ended mutual funds 124,057 124,057- -124,056 124,056

Sukuk certificates 2,304,714 2,304,714- -2,198,937 2,198,937

12,341,690 2,958,315 15,300,005 12,071,954 3,720,355 15,792,309

Held-to-maturity securities

Pakistan Investment Bonds 953,174 - 953,174 793,024 160,150 953,174

Sukuk certificates 1,236,933 - 1,236,933 1,240,267 - 1,240,267

2,190,107 - 2,190,107 2,033,291 160,150 2,193,441

Associate

Ordinary shares in unlisted companies 40,504 - 40,504 40,504 - 40,504

Investment at cost 14,705,906 2,958,315 17,664,221 14,854,729 3,929,265 18,783,994

Less: Provision for diminution in value of investments 611,072 - 611,072 690,189 - 690,189

Investments (net of provisions) 14,094,834 2,958,315 17,053,149 14,164,540 3,929,265 18,093,805

Unrealized loss on revaluation of held for trading securities (199) - (199) (792) (502) (1,294)

Surplus/(deficit) on revaluation of available-for-sale securities (408,350) (3,006) (411,356) (13,992) (152,608) (166,600)

Total investments at market value 13,686,285 2,955,309 16,641,594 14,149,756 3,776,155 17,925,911

March 31, 2010 (Un-audited) December 31, 2009 (Audited)

------------------------------------------Rupees in '000'--------------------------------------------'

Rupees in '000'

(Un-audited) (Audited)

8. ADVANCES March 31, December 31,

2010 2009

Note

Loans, cash credits, running finances, etc. :

In Pakistan 14,196,040 13,939,028

Outside Pakistan - -

14,196,040 13,939,028

Net investment in ijarah :

In Pakistan (8.3) 562,756 582,678

Outside Pakistan - -

562,756 582,678

Bills discounted and purchased (excluding treasury bills)

Payable in Pakistan 178,500 180,418

Payable outside Pakistan 110,167 118,622

288,667 299,040

Advances - gross 15,047,463 14,820,746

Less: Provision for non-performing advances (8.2) 3,108,508 2,984,784

Advances - net of provision 11,938,955 11,835,962

Rupees in '000'

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

11 12

4.2 The SBP, vide BSD Circular No. 10, dated August 26, 2002 has deferred the applicability of International Accounting Standard 39, Financial Instruments: Recognition and Measurement (IAS 39) and International Accounting Standard 40, Investment Property (IAS 40) for banking companies till further instructions. Further, according to a notification of Securities and Exchange Commission of Pakistan dated April 28, 2008, International Financial Reporting Standard (IFRS) 7 "Financial Instruments Disclosure" has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these financial statements. However, investments have been classified and valued in accordance with the requirements prescribed by SBP through various circulars.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted in the preparation of these financial statements are the same as those applied in the preparation of the financial statements of the Bank for the year ended December 31, 2009.

(Un-audited) (Audited)

6. LENDINGS TO FINANCIAL INSTITUTIONS March 31, December 31,

2010 2009

Note

Call money lendings - 20,000Repurchase agreement lendings (Reverse Repo) - 1,311,846

Placements with financial institutions 757,824 760,324757,824 2,092,170

Less: Provision for doubtful placements with financial institutions 6.1 281,324 281,324

476,500 1,810,846

6.1 Particulars of provision for doubtful placement with financial institutions

Opening balance 281,324 194,074

Charge for the period/ year - 135,500

Reversal during the period/ year - (48,250)

Closing balance 281,324 281,324

Rupees in '000'

7. INVESTMENTSHeld by Given as Total

Note bank Collateral

As at March 31, 2010 7.1 13,686,285 2,955,309 16,641,594

As at December 31, 2009 7.1 14,149,756 3,776,155 17,925,911

7.1 Investments by types Held by bank

Given as

collaterals Total Held by bank

Given as collaterals

Total

Held for trading securities

Pakistan Investment Bonds - - - 333,980 48,760 382,740

Market Treasury Bills 133,605 133,605- -- -

Term Finance Certificates Listed -- -- 150,000 150,000

Term Finance Certificates Unlisted -- -- 200,000 200,000

Units in open ended mutual funds -- -- 25,000 25,000

133,605 - 133,605 708,980 48,760 757,740

Available-for-sale securities

Market Treasury Bills 5,033,624 694,982 5,728,606 4,126,216 2,170,364 6,296,580

Pakistan Investment Bonds 823,795 2,263,333 3,087,128 1,391,619 1,549,991 2,941,610

National Investment Trust Units 54,246 - -54,246 437,842 437,842

Ordinary shares in listed companies 964,754 964,754- -786,230 786,230

Ordinary shares in unlisted companies 80,487 80,487- -80,487 80,487

Listed Term Finance Certificates 999,655 999,655- -638,285 638,285

Unlisted Term Finance Certificates 1,222,333 1,222,333- -943,464 943,464

Units in open ended mutual funds 734,025 734,025- -1,344,818 1,344,818

Units in close ended mutual funds 124,057 124,057- -124,056 124,056

Sukuk certificates 2,304,714 2,304,714- -2,198,937 2,198,937

12,341,690 2,958,315 15,300,005 12,071,954 3,720,355 15,792,309

Held-to-maturity securities

Pakistan Investment Bonds 953,174 - 953,174 793,024 160,150 953,174

Sukuk certificates 1,236,933 - 1,236,933 1,240,267 - 1,240,267

2,190,107 - 2,190,107 2,033,291 160,150 2,193,441

Associate

Ordinary shares in unlisted companies 40,504 - 40,504 40,504 - 40,504

Investment at cost 14,705,906 2,958,315 17,664,221 14,854,729 3,929,265 18,783,994

Less: Provision for diminution in value of investments 611,072 - 611,072 690,189 - 690,189

Investments (net of provisions) 14,094,834 2,958,315 17,053,149 14,164,540 3,929,265 18,093,805

Unrealized loss on revaluation of held for trading securities (199) - (199) (792) (502) (1,294)

Surplus/(deficit) on revaluation of available-for-sale securities (408,350) (3,006) (411,356) (13,992) (152,608) (166,600)

Total investments at market value 13,686,285 2,955,309 16,641,594 14,149,756 3,776,155 17,925,911

March 31, 2010 (Un-audited) December 31, 2009 (Audited)

------------------------------------------Rupees in '000'--------------------------------------------'

Rupees in '000'

(Un-audited) (Audited)

8. ADVANCES March 31, December 31,

2010 2009

Note

Loans, cash credits, running finances, etc. :

In Pakistan 14,196,040 13,939,028

Outside Pakistan - -

14,196,040 13,939,028

Net investment in ijarah :

In Pakistan (8.3) 562,756 582,678

Outside Pakistan - -

562,756 582,678

Bills discounted and purchased (excluding treasury bills)

Payable in Pakistan 178,500 180,418

Payable outside Pakistan 110,167 118,622

288,667 299,040

Advances - gross 15,047,463 14,820,746

Less: Provision for non-performing advances (8.2) 3,108,508 2,984,784

Advances - net of provision 11,938,955 11,835,962

Rupees in '000'

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

13 14

8.1

Provision Provision

Required Held

Category of classification Domestic Overseas Total

Other assets especially mentioned* 6,310 - 6,310 - -

Substandard 1,060,421 - 1,060,421 200,649 200,649

Doubtful 815,751 - 815,751 321,539 321,539

Loss 3,118,317 - 3,118,317 2,575,068 2,575,068

5,000,799 - 5,000,799 3,097,256 3,097,256

Provision Provision

Required Held

Category of classification Domestic Overseas Total

Other assets especially mentioned* 6,765 - 6,765 - -

Substandard 626,842 - 626,842 106,220 106,220

Doubtful 775,308 - 775,308 300,033 300,033

Loss 3,048,244 - 3,048,244 2,566,525 2,566,525

4,457,159 - 4,457,159 2,972,778 2,972,778

* Other assets especially mentioned category pertains to agricultural finance only.

December 31, 2009 (Audited)

Classified Advances

Classified Advances

Advances include amounts aggregating to Rs. 5,000,799 (December 31, 2009: 4,457,159) thousands which have been placed under non-performing status as detailed below:-

March 31, 2010 (Un-audited)

------------------------------------------------Rupees in '000------------------------------------------------

------------------------------------------------Rupees in '000------------------------------------------------

8.1.1 The SBP vide BSD Circular No. 10 dated October 20, 2009 amended Prudential Regulations in respect of provisioning against non-performing advances. The revised regulations allow the benefit of 40 percent of Forced Sale Value (FSV) of pledged stocks and mortgaged residential, commercial and industrial properties (land and building only) held as collateral by the Bank in determining the amount of provision against non-performing advances. Had there been no such relaxation from SBP, the provision would have been higher by Rs. 661.400 million. However, the impact on profit due to the benefit of FSV is not available for payment of cash or stock dividend.

8.2 Particulars of provision against

non-performing advancesSpecific General Total Specific General Total

Opening balance 2,972,778

12,006

2,984,784 2,309,414 20,141 2,329,555

Charge for the period / year 185,991

-

185,991 945,549 - 945,549

Reversals (61,513)

(754) (62,267) (277,656) (8,135) (285,791)124,478

(754) 123,724 667,893 (8,135) 659,758

Amounts written off -

- - (4,529) - (4,529)

Closing balance 3,097,256 11,252 3,108,508 2,972,778 12,006 2,984,784

(Un-audited) (Audited)

Note March 31, December 31,

2010 2009

8.3 Net investment in Ijarah

Ijarah under finance method (8.3.1) 380,521 404,211

Ijarah under IFAS-2 (8.3.2) 182,235 178,467

562,756 582,678

----------------------------------------------------------Rupees in '000------------------------------------------------------------

March 31, 2010 (Un-audited) December 31, 2009 (Audited)

8.3.1 Ijarah under finance method

Later than Not later one and Overthan one less than five

year five years years Total

Ijarah rentals receivable 54,625 226,922 93,711 375,258

Residual value 1,448 69,323 4,300 75,071Minimum ijarah rentals 56,073 296,245 98,011 450,329Profit for future periods 7,410 35,458 26,940 69,808

Net investment in ijarah 48,663 260,787 71,071 380,521

Later than Not later one and Overthan one less than five

year five years years Total

Ijarah rentals receivable 82,829 201,991 102,990 387,810Residual value 1,383 80,127 6,527 88,037Minimum ijarah rentals 84,212 282,118 109,517 475,847Profit for future periods 2,152 35,074 34,410 71,636

Net investment in ijarah 82,060 247,044 75,107 404,211

8.3.2 Ijarah under IFAS-2

9. OPERATING FIXED ASSETS

9.1 Intangible assets

The gross carrying amount of fully amortized assets that are still in use is Rs. 1,000.

10. DEFERRED TAX ASSET

(Un-audited) (Audited)March 31, December 31,

2010 2009Deferred tax asset arising in-respect of:

Provision for balances with other banks 3,510 3,510

Deficit on revaluation of investments 72,681 70,806

Provision for diminution in the value of investments 124,571 117,531

Provision against NPL 292,237 279,070

Provision for other assets 4,367 4,367

Stabilization reserve 23,563 17,703

520,929 492,987 Taxable temporary differences

Accelerated depreciation for tax purposes (17,464) (17,560)

Surplus on revaluation of investment (2,553) (19,007)

(20,017) (36,567) 500,912 456,420

11. DEPOSITS AND OTHER ACCOUNTS (Un-audited) (Audited)March 31, December 31,

2010 2009

Customers

Fixed deposits 11,516,569 11,832,378

Savings deposits 9,112,177 9,247,831

Current accounts - Non-remunerative 3,588,298 3,907,114

Call deposits 389,544 409,980

Margin and sundry deposits 572,966 618,405

25,179,554 26,015,708

Financial Institutions

Remunerative deposits 396,518 269,500

Non-remunerative deposits 155 586

396,673 270,08625,576,227 26,285,794

Rupees in '000'

March 31, 2010 (Un-audited)

December 31, 2009 (Audited)

---------------------------------------Rupees in '000---------------------------------------

---------------------------------------Rupees in '000---------------------------------------

Rupees in '000'

During the current period, additions and disposals in operating fixed assets amounted to Rs. 43,381 thousand (March 31, 2009: 12,297thousand) and Rs. 1,512 thousand (March 31, 2009: Nil), respectively.

Ijarah assets under IFAS-2 are stated at cost of Rs. 247.352 million less accumulated depreciation of Rs. 65.117 million (December Rs.201.878 million less

accumulated depreciation of Rs. 23.411).

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

13 14

8.1

Provision Provision

Required Held

Category of classification Domestic Overseas Total

Other assets especially mentioned* 6,310 - 6,310 - -

Substandard 1,060,421 - 1,060,421 200,649 200,649

Doubtful 815,751 - 815,751 321,539 321,539

Loss 3,118,317 - 3,118,317 2,575,068 2,575,068

5,000,799 - 5,000,799 3,097,256 3,097,256

Provision Provision

Required Held

Category of classification Domestic Overseas Total

Other assets especially mentioned* 6,765 - 6,765 - -

Substandard 626,842 - 626,842 106,220 106,220

Doubtful 775,308 - 775,308 300,033 300,033

Loss 3,048,244 - 3,048,244 2,566,525 2,566,525

4,457,159 - 4,457,159 2,972,778 2,972,778

* Other assets especially mentioned category pertains to agricultural finance only.

December 31, 2009 (Audited)

Classified Advances

Classified Advances

Advances include amounts aggregating to Rs. 5,000,799 (December 31, 2009: 4,457,159) thousands which have been placed under non-performing status as detailed below:-

March 31, 2010 (Un-audited)

------------------------------------------------Rupees in '000------------------------------------------------

------------------------------------------------Rupees in '000------------------------------------------------

8.1.1 The SBP vide BSD Circular No. 10 dated October 20, 2009 amended Prudential Regulations in respect of provisioning against non-performing advances. The revised regulations allow the benefit of 40 percent of Forced Sale Value (FSV) of pledged stocks and mortgaged residential, commercial and industrial properties (land and building only) held as collateral by the Bank in determining the amount of provision against non-performing advances. Had there been no such relaxation from SBP, the provision would have been higher by Rs. 661.400 million. However, the impact on profit due to the benefit of FSV is not available for payment of cash or stock dividend.

8.2 Particulars of provision against

non-performing advancesSpecific General Total Specific General Total

Opening balance 2,972,778

12,006

2,984,784 2,309,414 20,141 2,329,555

Charge for the period / year 185,991

-

185,991 945,549 - 945,549

Reversals (61,513)

(754) (62,267) (277,656) (8,135) (285,791)124,478

(754) 123,724 667,893 (8,135) 659,758

Amounts written off -

- - (4,529) - (4,529)

Closing balance 3,097,256 11,252 3,108,508 2,972,778 12,006 2,984,784

(Un-audited) (Audited)

Note March 31, December 31,

2010 2009

8.3 Net investment in Ijarah

Ijarah under finance method (8.3.1) 380,521 404,211

Ijarah under IFAS-2 (8.3.2) 182,235 178,467

562,756 582,678

----------------------------------------------------------Rupees in '000------------------------------------------------------------

March 31, 2010 (Un-audited) December 31, 2009 (Audited)

8.3.1 Ijarah under finance method

Later than Not later one and Overthan one less than five

year five years years Total

Ijarah rentals receivable 54,625 226,922 93,711 375,258

Residual value 1,448 69,323 4,300 75,071Minimum ijarah rentals 56,073 296,245 98,011 450,329Profit for future periods 7,410 35,458 26,940 69,808

Net investment in ijarah 48,663 260,787 71,071 380,521

Later than Not later one and Overthan one less than five

year five years years Total

Ijarah rentals receivable 82,829 201,991 102,990 387,810Residual value 1,383 80,127 6,527 88,037Minimum ijarah rentals 84,212 282,118 109,517 475,847Profit for future periods 2,152 35,074 34,410 71,636

Net investment in ijarah 82,060 247,044 75,107 404,211

8.3.2 Ijarah under IFAS-2

9. OPERATING FIXED ASSETS

9.1 Intangible assets

The gross carrying amount of fully amortized assets that are still in use is Rs. 1,000.

10. DEFERRED TAX ASSET

(Un-audited) (Audited)March 31, December 31,

2010 2009Deferred tax asset arising in-respect of:

Provision for balances with other banks 3,510 3,510

Deficit on revaluation of investments 72,681 70,806

Provision for diminution in the value of investments 124,571 117,531

Provision against NPL 292,237 279,070

Provision for other assets 4,367 4,367

Stabilization reserve 23,563 17,703

520,929 492,987 Taxable temporary differences

Accelerated depreciation for tax purposes (17,464) (17,560)

Surplus on revaluation of investment (2,553) (19,007)

(20,017) (36,567) 500,912 456,420

11. DEPOSITS AND OTHER ACCOUNTS (Un-audited) (Audited)March 31, December 31,

2010 2009

Customers

Fixed deposits 11,516,569 11,832,378

Savings deposits 9,112,177 9,247,831

Current accounts - Non-remunerative 3,588,298 3,907,114

Call deposits 389,544 409,980

Margin and sundry deposits 572,966 618,405

25,179,554 26,015,708

Financial Institutions

Remunerative deposits 396,518 269,500

Non-remunerative deposits 155 586

396,673 270,08625,576,227 26,285,794

Rupees in '000'

March 31, 2010 (Un-audited)

December 31, 2009 (Audited)

---------------------------------------Rupees in '000---------------------------------------

---------------------------------------Rupees in '000---------------------------------------

Rupees in '000'

During the current period, additions and disposals in operating fixed assets amounted to Rs. 43,381 thousand (March 31, 2009: 12,297thousand) and Rs. 1,512 thousand (March 31, 2009: Nil), respectively.

Ijarah assets under IFAS-2 are stated at cost of Rs. 247.352 million less accumulated depreciation of Rs. 65.117 million (December Rs.201.878 million less

accumulated depreciation of Rs. 23.411).

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

15 16

12. SHARE CAPITAL

12.1 Authorized Capital (Un-audited) (Audited)

March 31, December 31,

2010 2009 2010 2009Number of shares Note

800,000,000

800,000,000

Ordinary shares of Rs.10 each 8,000,000 8,000,000

12.2 Issued, subscribed and paid up capitalFully paid ordinary shares of Rs. 10/- each

Ordinary shares

500,400,148

400,298,448

Fully paid in cash 5,004,001 4,002,984

-

100,101,700

Issued as fully paid bonus shares - 1,001,017

500,400,148

500,400,148

(12.2.1) 5,004,001 5,004,001

12.2.2

12.3

12.4

Note (Un-audited) (Audited)

March 31, December 31,

2010 200913. SURPLUS / (DEFICIT) ON REVALUATION OF ASSETS

Deficit on revaluation of available for sale securities

Deficit on revaluation of:Federal government securities

- Market Treasury Bills (4,299) (4,140)

- Pakistan Investment Bonds (290,093) (298,248)

Fully paid up ordinary shares - quoted (65,750) (29,200)

Term Finance Certificates - listed (33,809) (28,442)

Sukuk Certificates 4,670 3,500

Units in open ended mutual funds 9,188 197,990

Units in close ended mutual funds (31,263) (8,060)

(411,356) (166,600)

Surplus on revaluation of fixed assets

Freehold land 765,740 765,740

354,384 599,140Deferred tax assets 122,018 98,524

476,402 697,664

14. CONTINGENCIES AND COMMITMENTS

14.1 Direct credit substitutes

(Un-audited) (Audited)

March 31, December 31,

2010 2009

Banks - -

Others 138,731 163,812

138,731 163,812

Rupees in '000'

At March 31, 2010 the Government of Khyber Pukhtunkhwa (previously NWFP), held 255,259,396 (December 31 2009:255,259,396) ordinary shares of Rs. 10 each.

The Bank is required to raise its paid up capital (net of losses) at Rs. 7 billion by the close of financial year 2010 inaccordance with the requirements of BSD Circular No. 7 dated April 15, 2009.

Rupees in '000'

SBP through their letter dated January 6, 2010 has granted the extension till June 30, 2010 for meeting Minimum Capital Requirement (MCR) of Rs. 6 billion for the year ended December 31, 2009.

12.2.1

Includes general guarantee of indebtedness, bank acceptance guarantee and standby letters of credit serving asfinancial guarantees for loans and securities issued in favor of:

The Bank as at September 10, 2009 has received Rs. 224.000 million from the Government of the

Khyber Pukhtunkhwa (previously NWFP) as advance Requirement (MCR).

subscription money to meet shortfall in Minimum Capital

Rupees in '000'

14.2 Transaction-related contingent liabilities

(Un-audited) (Audited)

March 31, December 31,

2010 2009Note

Guarantees favoring:Government 2,500,877 2,495,029

Others 2,414,012 2,497,713

(14.2.1) 4,914,889 4,992,742

14.2.1

(Un-audited) (Audited)

March 31, December 31,

2010 200914.3 Trade-related contingent liabilities

Letters of creditSight 901,892 829,811Usance 318,989 322,824

1,220,881 1,152,635Acceptances 27,324 201,587

1,248,205 1,354,222

14.4 Commitments in respect of forward exchange contracts

Purchase 205,913 211,076

Sale 24,455 52,924

(Un-audited) (Audited)

March 31, December 31,

2010 2009

14.5 Other commitments

Bills for collectionInland bills 24,505 46,461Foreign bills 120,898 145,105

145,403 191,566

14.6 Commitments to extend credit

14.7

(Un-audited) (Un-Audited)

March 31, March 31,15. CASH AND CASH EQUIVALENTS 2010 2009

Cash and Balance with Treasury Banks 1,512,314 1,233,655

Balance with other banks 2,109,092 2,101,004

3,621,406 3,334,659

Rupees in '000'

Rupees in '000'

There has been no change in the status of other contingencies as disclosed in notes 21.8, 21.9 and 21.10 to annual

financial statements of the Bank for the year ended December 31, 2009.

All forward exchange contracts are backed by trade related transactions to meet the needs of the Bank's clients togenerate trading revenues and, as part of its asset and liability management activity, to hedge its own exposure tocurrency risk. At the period end, all foreign exchange contracts have a remaining maturity of less than one year.

The Bank makes commitments to extend credit in the normal course of its business but these being revocablecommitments do not attract any significant penalty if the facility is unilaterally withdrawn.

Rupees in '000'

Includes performance bonds, bid bonds, warranties, advance payment guarantees, shipping guarantees and standbyletter of credits related to particular transactions issued in favor of:

The above amounts include expired letters of guarantee aggregating to Rs.928.045 million as at March 31, 2010(December 31, 2009: Rs.785.307 million) for which the formalities relating to return of the original documents are inprocess.

Rupees in '000'

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

15 16

12. SHARE CAPITAL

12.1 Authorized Capital (Un-audited) (Audited)

March 31, December 31,

2010 2009 2010 2009Number of shares Note

800,000,000

800,000,000

Ordinary shares of Rs.10 each 8,000,000 8,000,000

12.2 Issued, subscribed and paid up capitalFully paid ordinary shares of Rs. 10/- each

Ordinary shares

500,400,148

400,298,448

Fully paid in cash 5,004,001 4,002,984

-

100,101,700

Issued as fully paid bonus shares - 1,001,017

500,400,148

500,400,148

(12.2.1) 5,004,001 5,004,001

12.2.2

12.3

12.4

Note (Un-audited) (Audited)

March 31, December 31,

2010 200913. SURPLUS / (DEFICIT) ON REVALUATION OF ASSETS

Deficit on revaluation of available for sale securities

Deficit on revaluation of:Federal government securities

- Market Treasury Bills (4,299) (4,140)

- Pakistan Investment Bonds (290,093) (298,248)

Fully paid up ordinary shares - quoted (65,750) (29,200)

Term Finance Certificates - listed (33,809) (28,442)

Sukuk Certificates 4,670 3,500

Units in open ended mutual funds 9,188 197,990

Units in close ended mutual funds (31,263) (8,060)

(411,356) (166,600)

Surplus on revaluation of fixed assets

Freehold land 765,740 765,740

354,384 599,140Deferred tax assets 122,018 98,524

476,402 697,664

14. CONTINGENCIES AND COMMITMENTS

14.1 Direct credit substitutes

(Un-audited) (Audited)

March 31, December 31,

2010 2009

Banks - -

Others 138,731 163,812

138,731 163,812

Rupees in '000'

At March 31, 2010 theGovernment of Khyber Pukhtunkhwa (previously NWFP), held 255,259,396 (December 31 2009:255,259,396) ordinary shares of Rs. 10 each.

The Bank is required to raise its paid up capital (net of losses) at Rs. 7 billion by the close of financial year 2010 inaccordance with the requirements of BSD Circular No. 7 dated April 15, 2009.

Rupees in '000'

SBP through their letter dated January 6, 2010 has granted the extension till June 30, 2010 for meeting Minimum Capital Requirement (MCR) of Rs. 6 billion for the year ended December 31, 2009.

12.2.1

Includes general guarantee of indebtedness, bank acceptance guarantee and standby letters of credit serving asfinancial guarantees for loans and securities issued in favor of:

The Bank as at September 10, 2009 has received Rs. 224.000 million from the Government of the

Khyber Pukhtunkhwa (previously NWFP) as advance Requirement (MCR).

subscription money to meet shortfall in Minimum Capital

Rupees in '000'

14.2 Transaction-related contingent liabilities

(Un-audited) (Audited)

March 31, December 31,

2010 2009Note

Guarantees favoring:Government 2,500,877 2,495,029

Others 2,414,012 2,497,713

(14.2.1) 4,914,889 4,992,742

14.2.1

(Un-audited) (Audited)

March 31, December 31,

2010 200914.3 Trade-related contingent liabilities

Letters of creditSight 901,892 829,811Usance 318,989 322,824

1,220,881 1,152,635Acceptances 27,324 201,587

1,248,205 1,354,222

14.4 Commitments in respect of forward exchange contracts

Purchase 205,913 211,076

Sale 24,455 52,924

(Un-audited) (Audited)

March 31, December 31,

2010 2009

14.5 Other commitments

Bills for collectionInland bills 24,505 46,461Foreign bills 120,898 145,105

145,403 191,566

14.6 Commitments to extend credit

14.7

(Un-audited) (Un-Audited)

March 31, March 31,15. CASH AND CASH EQUIVALENTS 2010 2009

Cash and Balance with Treasury Banks 1,512,314 1,233,655

Balance with other banks 2,109,092 2,101,004

3,621,406 3,334,659

Rupees in '000'

Rupees in '000'

There has been no change in the status of other contingencies as disclosed in notes 21.8, 21.9 and 21.10 to annual

financial statements of the Bank for the year ended December 31, 2009.

All forward exchange contracts are backed by trade related transactions to meet the needs of the Bank's clients togenerate trading revenues and, as part of its asset and liability management activity, to hedge its own exposure tocurrency risk. At the period end, all foreign exchange contracts have a remaining maturity of less than one year.

The Bank makes commitments to extend credit in the normal course of its business but these being revocablecommitments do not attract any significant penalty if the facility is unilaterally withdrawn.

Rupees in '000'

Includes performance bonds, bid bonds, warranties, advance payment guarantees, shipping guarantees and standbyletter of credits related to particular transactions issued in favor of:

The above amounts include expired letters of guarantee aggregating to Rs.928.045 million as at March 31, 2010(December 31, 2009: Rs.785.307 million) for which the formalities relating to return of the original documents are inprocess.

Rupees in '000'

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

(Un-audited) (Audited)

March 31, December 31,

2010 200916. KEY FINANCIAL FIGURES OF ISLAMIC BANKING DIVISION

ASSETS

Cash and balances with treasury banks 475,629 534,375

Balances with and due from Financial Institutions 1,463,666 1,377,610

lendings to financial institutions - 20,000

Investments 3,142,089 3,040,878

Financing and receivables

Murabaha 554,848 635,353

Ijarah 380,521 404,211

Ijarah under IFAS-2 182,235 178,467

Musharaka 31,064 31,025

Diminishing musharaka 732,006 700,975

Others 3,000 3,000

1,883,674 1,953,031

Less: Provision against non-performing facilities 65,322 65,968

1,818,352 1,887,063

Operating fixed assets 71,937 67,947

Other assets 233,093 508,876

7,204,766 7,436,749

LIABILITIES

Bills payable 49,826 74,134

Due to Financial Institutions - -

Deposits and other accounts

Current accounts - Non-remunerative 1,584,512 1,711,853

Saving Deposits 3,286,631 3,560,648

Term Deposits 472,497 473,606

Others 93,156 81,815

5,436,796 5,827,922

Deposits from Financial Institutions- Remunerative 395,217 263,825

Deposits from Financial Institutions - Non-remunerative 1 1

Other liabilities 288,642 323,889

6,170,482 6,489,771

NET ASSETS 1,034,284 946,978

REPRESENTED BY

Islamic Banking Fund 460,000 460,000

Reserves - -

Unappropriated profit 574,227 486,853

1,034,227 946,853

Surplus on revaluation of assets 55 125

1,034,282 946,978

REMUNERATION TO SHARIAH ADVISOR DURING THE PERIOD/ YEAR 152 594

Rupees in '000(Un-audited) (Un- audited)

March 31, March 31,

2010 2009

Mark-up/return /interest earned 186,307 157,864

Mark-up/return /interest expensed 53,231 55,548

Net mark-up/interest income 133,076 102,316

Provision against non-performing facilities and financing-net (646) 11,118

Provision for diminution in the value of investments - 498

(646) 11,616

NON MARK-UP/INTEREST INCOME

Fee, commission and brokerage income 4,991 5,239

Income from dealing in foreign curreny (242) -

Other income 3,064 1,520

7,813 6,759

141,535 97,459

NON MARK-UP/INTEREST EXPENSES

Administrative expenses 54,161 40,686

Other charges - 144

54,161 40,830

Profit for the period 87,374 56,629

Unappropriated profit brought forward 486,853 186,936

574,227 243,565

The profit and loss account of the Bank's Islamic Banking Branches for the period ended March 31, 2010 is

as follows;

Rupees in '000

17 18

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

(Un-audited) (Audited)

March 31, December 31,

2010 200916. KEY FINANCIAL FIGURES OF ISLAMIC BANKING DIVISION

ASSETS

Cash and balances with treasury banks 475,629 534,375

Balances with and due from Financial Institutions 1,463,666 1,377,610

lendings to financial institutions - 20,000

Investments 3,142,089 3,040,878

Financing and receivables

Murabaha 554,848 635,353

Ijarah 380,521 404,211

Ijarah under IFAS-2 182,235 178,467

Musharaka 31,064 31,025

Diminishing musharaka 732,006 700,975

Others 3,000 3,000

1,883,674 1,953,031

Less: Provision against non-performing facilities 65,322 65,968

1,818,352 1,887,063

Operating fixed assets 71,937 67,947

Other assets 233,093 508,876

7,204,766 7,436,749

LIABILITIES

Bills payable 49,826 74,134

Due to Financial Institutions - -

Deposits and other accounts

Current accounts - Non-remunerative 1,584,512 1,711,853

Saving Deposits 3,286,631 3,560,648

Term Deposits 472,497 473,606

Others 93,156 81,815

5,436,796 5,827,922

Deposits from Financial Institutions- Remunerative 395,217 263,825

Deposits from Financial Institutions - Non-remunerative 1 1

Other liabilities 288,642 323,889

6,170,482 6,489,771

NET ASSETS 1,034,284 946,978

REPRESENTED BY

Islamic Banking Fund 460,000 460,000

Reserves - -

Unappropriated profit 574,227 486,853

1,034,227 946,853

Surplus on revaluation of assets 55 125

1,034,282 946,978

REMUNERATION TO SHARIAH ADVISOR DURING THE PERIOD/ YEAR 152 594

Rupees in '000(Un-audited) (Un- audited)

March 31, March 31,

2010 2009

Mark-up/return /interest earned 186,307 157,864

Mark-up/return /interest expensed 53,231 55,548

Net mark-up/interest income 133,076 102,316

Provision against non-performing facilities and financing-net (646) 11,118

Provision for diminution in the value of investments - 498

(646) 11,616

NON MARK-UP/INTEREST INCOME

Fee, commission and brokerage income 4,991 5,239

Income from dealing in foreign curreny (242) -

Other income 3,064 1,520

7,813 6,759

141,535 97,459

NON MARK-UP/INTEREST EXPENSES

Administrative expenses 54,161 40,686

Other charges - 144

54,161 40,830

Profit for the period 87,374 56,629

Unappropriated profit brought forward 486,853 186,936

574,227 243,565

The profit and loss account of the Bank's Islamic Banking Branches for the period ended March 31, 2010 is

as follows;

Rupees in '000

17 18

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

RELATED PARTY TRANSACTIONS17.

Advances:

At January 1, 91,395 - - 91,395 29,590 - - 29,590

Disbursed during the period/ year - - - - 66,475 - - 66,475

Repaid during the period/ year (1,408) - - (1,408) (4,670) - - (4,670)

Balance as at 89,987 - - 89,987 91,395 - - 91,395

Deposits:

At January 1, 4,532 12,547 98,393 115,472 2,823 10,864 12,919 26,606

Deposited during the period/ year 17,221 14,992 23,654 55,867 85,213 170,783 335,422 591,418

Repaid during the period/ year (16,286) (15,875) (15,155) (47,316) (83,504) (169,100) (249,948) (502,552)

Balance as at 5,467 11,664 106,892 124,023 4,532 12,547 98,393 115,472

Mark-up/return /interest earned 398 - - 398 440 - - 440

Mark-up/return /interest expensed 80 48 839 967 319 191 3,357 3,867

Fee/ Remuneration 985 - - - -985 1,522 1,522

The Bank has related party relationships with its majority shareholder (Government of Khyber Pukhtunkhwa, previously N.W.F.P), an associate, directors, key management personnel and staff retirement benefit plans.

For the Period Ended March 31, 2010 (Un-audited)

The details of transactions with related parties during the period/year other than those which have been disclosed elsewhere in these financial statements are as follows:

For The Year Ended December 31, 2009 (Audited)

Total

Total

For The Year Ended December 31, 2009 (Audited)

------------------------------------------------------------------------- 'Rupees in '000 -------------------------------------------------------------------------

Directors and key

management personnel

Associated company

Other related parties

Total

For the Period Ended March 31, 2010 (Un-audited)

Directors

and key

management

personnel

Associated

company

Other

related

parties

Other related parties

Total

Directors and key

management personnel

Associated company

------------------------------------------------------------------------- 'Rupees in '000 ----------------------------------------------------------------------

Directors

and key

management

personnel

Associated

company

Other

related

parties

SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES18.

19.

20.

21.

The segment analysis with respect to business activity is as follows:-

Corporate Trading & Retail Commercial Total

Finance Sales Banking Banking

Total income 91,015

808,807 18,463 225,987 1,144,272

Total expenses 269,810

578,616 14,770 173,766 1,036,962

Net income (loss) (178,795)

230,191 3,693 52,221 107,310

Corporate Trading & Retail Commercial Total

Finance Sales Banking Banking

Total income 112,608 590,906 24,445 182,087 910,046

Total expenses 260,940 660,101 19,312 121,320 1,061,673

Net income (loss) (148,332) (69,195) 5,133 60,767 (151,627)

CORRESPONDING FIGURES

DATE OF AUTHORIZATION FOR ISSUE

GENERAL

Corresponding figures have been reclassified to reflect more appropriate presentation of transactions for the purposes of comparison.

For the Period Ended March 31, 2010 (Un-audited)

………...…………….… Rupees in '000 …………………….

For the Period Ended March 31, 2009 (Un-audited)

………...…………….… Rupees in '000 …………………….

These condensed interim financial statements were authorized for issue on April 28, 2010 by the Board of Directors of the Bank .

Figures have been rounded off to nearest thousands of rupees, unless otherwise stated.

19 20

Managing Director Director Director Director

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010

RELATED PARTY TRANSACTIONS17.

Advances:

At January 1, 91,395 - - 91,395 29,590 - - 29,590

Disbursed during the period/ year - - - - 66,475 - - 66,475

Repaid during the period/ year (1,408) - - (1,408) (4,670) - - (4,670)

Balance as at 89,987 - - 89,987 91,395 - - 91,395

Deposits:

At January 1, 4,532 12,547 98,393 115,472 2,823 10,864 12,919 26,606

Deposited during the period/ year 17,221 14,992 23,654 55,867 85,213 170,783 335,422 591,418

Repaid during the period/ year (16,286) (15,875) (15,155) (47,316) (83,504) (169,100) (249,948) (502,552)

Balance as at 5,467 11,664 106,892 124,023 4,532 12,547 98,393 115,472

Mark-up/return /interest earned 398 - - 398 440 - - 440

Mark-up/return /interest expensed 80 48 839 967 319 191 3,357 3,867

Fee/ Remuneration 985 - - - -985 1,522 1,522

The Bank has related party relationships with its majority shareholder (Government of Khyber Pukhtunkhwa, previously N.W.F.P), an associate, directors, key management personnel and staff retirement benefit plans.

For the Period Ended March 31, 2010 (Un-audited)

The details of transactions with related parties during the period/year other than those which have been disclosed elsewhere in these financial statements are as follows:

For The Year Ended December 31, 2009 (Audited)

Total

Total

For The Year Ended December 31, 2009 (Audited)

------------------------------------------------------------------------- 'Rupees in '000 -------------------------------------------------------------------------

Directors and key

management personnel

Associated company

Other related parties

Total

For the Period Ended March 31, 2010 (Un-audited)

Directors

and key

management

personnel

Associated

company

Other

related

parties

Other related parties

Total

Directors and key

management personnel

Associated company

------------------------------------------------------------------------- 'Rupees in '000 ----------------------------------------------------------------------

Directors

and key

management

personnel

Associated

company

Other

related

parties

SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES18.

19.

20.

21.

The segment analysis with respect to business activity is as follows:-

Corporate Trading & Retail Commercial Total

Finance Sales Banking Banking

Total income 91,015

808,807 18,463 225,987 1,144,272

Total expenses 269,810

578,616 14,770 173,766 1,036,962

Net income (loss) (178,795)

230,191 3,693 52,221 107,310

Corporate Trading & Retail Commercial Total

Finance Sales Banking Banking

Total income 112,608 590,906 24,445 182,087 910,046

Total expenses 260,940 660,101 19,312 121,320 1,061,673

Net income (loss) (148,332) (69,195) 5,133 60,767 (151,627)

CORRESPONDING FIGURES

DATE OF AUTHORIZATION FOR ISSUE

GENERAL

Corresponding figures have been reclassified to reflect more appropriate presentation of transactions for the purposes of comparison.

For the Period Ended March 31, 2010 (Un-audited)

………...…………….… Rupees in '000 …………………….

For the Period Ended March 31, 2009 (Un-audited)

………...…………….… Rupees in '000 …………………….

These condensed interim financial statements were authorized for issue on April 28, 2010 by the Board of Directors of the Bank .

Figures have been rounded off to nearest thousands of rupees, unless otherwise stated.

19 20

Managing Director Director Director Director

for the Period Ended March 31, 2010 for the Period Ended March 31, 2010