FOREWORD

It gives me immense pleasure to share with you our Annual Report

especially as we commemorate the 25 years of Meezan Bank, a
milestone that has been achieved through sheer dedication,
unwavering perseverance, and a spirit of innovation.

As we reflect on the journey of the past 25 years, we are filled with

gratitude and awe at the accomplishments we have achieved together
for the cause of Islamic banking. From humble beginnings, Meezan
has grown to become a trailblazer in the industry, a beacon of hope,
and a standard-bearer of excellence, Alhamdulillah.

Our success has been driven by a deep-seated devotion to our values,

a focus on customer-centricity, and a passion for innovation that
constantly pushes us to new heights. We have weathered challenges,
but emerged stronger, wiser, and more determined than ever before.
We are humbled by what we have achieved, but even more excited
about what lies ahead. As we look to the future, we do so with
optimism, confidence, and a steadfast commitment to driving positive
change for our stakeholders, our communities, and our nation.

We look forward to your continued support and patronage over the

coming years and decades of excellence, growth, and prosperity,
Insha'Allah!

Irfan Siddiqui
Founding President & CEO
This is a photograph of a calligraphic painting in the Board room of Meezan Bank’s Head office.

As the idea of setting up Pakistan's first Islamic bank was taking shape, the name "Meezan" was
handpicked from the Holy Quran by Dr. Ghazala Siddiqui, wife of Founding President & CEO,
Mr. Irfan Siddiqui.

The word "Meezan" carries great significance in Islam and appears several times in Surah
Ar Rahman, known to be one of the most beautiful surahs of the Quran. It represents the
principles of balance and justice that are central to the natural world, as well as human affairs.
Within the realm of Islamic finance, "Meezan" embodies the ideals of financial justice and fairness
that are at the core of Shariah-compliant banking.

By Allah's grace, Meezan has now grown into one of the most recognised and reputable brands
in the country. Through this brand, Meezan Bank reaffirms its commitment to upholding its
Values, and providing pragmatic and excellence-driven solutions to those seeking financial
services without compromising their faith. It serves as a reminder to always strive towards
balance and justice in all aspects of life, and to promote the greater good for all.
CONTENTS
Chairman’s Review 04
Chairman Shariah Board’s Message 06
Founding President & CEO’s Message 07 RISK MANAGEMENT
Deputy CEO’s Message 08 Risk Management Framework 86
A Few Memories 10 Risk & Opportunity Report 87
Construction of Meezan House 12 Business Continuity Management 87
A Snapshot of our Growth over the Years 13 Responding to Critical Challenges and Uncertainties 88
In the News 14

ORGANIZATIONAL OVERVIEW
& EXTERNAL ENVIRONMENT GOVERNANCE
Vision 17 Board of Directors 90
Mission 17 Shariah Board 94
Our Culture 17 Terms of Reference of Shariah Board 96
Quaid’s Concept of Islamic Banking 18 Board Committees 97
Our Presence 19 Management Committees 99
Highlights 2022 20 Best Corporate Governance Practices 101
Corporate Profile 22 Board Composition 101
Credit Rating 22 Performance Evaluation of the Board of Directors 102
Calendar of Major Events 22 Roles and Responsibilities 103
Corporate Information 23 Performance Review of the President and CEO 104
Shareholders 24 Election of the Board of Directors 104
Products and Services 25 Other Matters related to Corporate Governance 105
Organization Structure 26 Report of the Board Audit Committee 107
Our Leadership 27 Review Report to the Members 108
History of Meezan Bank 28 Statement of Compliance with Listed Companies
Awards & Recognitions 32 Code of Corporate Governance 109
Directors’ Report to the Members 34 Statement of Internal Controls 111
Directors’ Report to the Members (Urdu) 49 Shariah Board Report 112
Shariah Board Report (Urdu) 119
Policies and Guidelines 120
PERFORMANCE Standard of Ethics, Business Practices &
Business and Operations Review 51 Code of Conduct 120
Key Figures at a Glance 68 Guidelines on Whistle Blowing 122
Six Years’ Horizontal Analysis 70 Guidelines for Safety of Records of the Company 122
Six Years’ Vertical Analysis 71 Summary of Corporate Social Responsibility Policy 122
Review of Six Years’ Performance 72 Summary of Sustainability Policy 123
Financial Analysis 73 Summary of Green Banking Policy 123
Market Statistics of Meezan Bank’s Share 75 Summary of Information Security Policy 123
Allocation of Income and Expenses to Remunerative IT Governance Policy 124
Depositors’ Pool 76 Salient Features - Directors’ Remuneration Policy 125
Statement of Value Added and Distributed 77
How We Distribute the Value Created 78
Statement of Inventory 79
Statement of Financing Portfolio Income 79
STAKEHOLDERS
STRATEGY & RESOURCE RELATIONSHIP &
ALLOCATION ENGAGEMENT
Strategic Objectives 82 How We Engage with Our Stakeholders 127
Strategies in Place 82 Investors’ Relations Section on Corporate Website 129
Resource Allocation 83 Steps to Encourage Minority Shareholders’
Key Performance Indicators and Future Relevance 83 Participation in AGM 129
Competitive Landscape & Market Positioning 84 Summary of Corporate and Analyst Briefings 129
SWOT Analysis 84
ABOUT THIS REPORT
SUSTAINABILITY
The Annual Report has been prepared in accordance with the Integrated
& CORPORATE SOCIAL Reporting Framework to present the Bank’s performance during year
RESPONSIBILITY 2022. The adoption of the integrated framework is in its preliminary
stages and the Bank will continue to improve on the information
Corporate Social Responsibility Report 132 mentioned in this report.
Sustainability Report 138
This report provides an in-depth and transparent disclosure of the
Bank’s financial performance. In preparing this report, the Bank was
guided by the local statutory and regulatory requirements and is also in
compliance with the following:

■ Banking Companies Ordinance, 1962

UNCONSOLIDATED FINANCIAL ■ Companies Act, 2017
STATEMENTS ■ Listed Companies (Code of Corporate Governance) Regulations, 2019
■ International Financial Reporting Standards (IFRS)
Auditors’ Report to the Members 148
Statement of Financial Position 152 ■ Islamic Financial Accounting Standards (IFAS)
Profit and Loss Account 153 ■ Directives issued by the State Bank of Pakistan (SBP) and Securities
Statement of Comprehensive Income 154 & Exchange Commission of Pakistan (SECP)
Statement of Changes in Equity 155
Whenever the requirements of the Banking Companies Ordinance, 1962,
Cash Flow Statement 156
the Companies Act, 2017 or the directives issued by the SBP and the
Notes to and forming part of the Financial SECP differ with the requirements of IFRS or IFAS, the requirements of
Statements 157 the Banking Companies Ordinance, 1962, the Companies Act, 2017 and
Statement showing written-off Financing (Annexure I) 232 the said directives, shall prevail.

Audience
The Annual Report and Financial Statements have been prepared to
provide information to the Bank’s stakeholders including investors
(equity shareholders, Sukuk holders and prospective investors),
employees, customers, regulators, research analysts, credit rating
agencies and society at large. The annual financial statements were
CONSOLIDATED approved by the Board of Directors on February 16, 2023 and signed on
FINANCIAL STATEMENTS its behalf by the Chairman, President & CEO, two Directors and CFO.

Auditors’ Report to the Members 234 Reporting & Publication Period

This report covers the financial and non-financial performance of
Statement of Financial Position 238 Meezan Bank from the period January 01, 2022 to December 31, 2022
Profit and Loss Account 239 and is published within three months of the date of the Statement of
Statement of Comprehensive Income 240 Financial Position.
Statement of Changes in Equity 241
External Assurance
Cash Flow Statement 242 The Bank’s financial statements for the year ended December 31, 2022
Notes to and forming part of the Financial are audited by external auditors, A. F. Ferguson & Co., Chartered
Statements 243 Accountants (a member firm of PwC network); and provide an in-depth
Statement showing written-off Financing (Annexure I) 320 and transparent disclosure of its financial performance. As a regulatory
requisite, the auditors are rotated every five years to ensure their
independence and transparency.

Availability
This report is published for a limited audience and dispatched upon
request. It is available in soft copy (PDF format) on the Bank’s official
website as well as in electronic CD form. All three formats may be
ADDITIONAL INFORMATION considered the audited, legally leading document.

Pattern of Shareholding 322

Categories of Shareholders 324 For further clarification and feedback on this report, please contact
through the following email id: [email protected]
Glossary 325
Notice of Annual General Meeting (AGM) 326 When you see this icon, you will find more
information on another page of this report.
Dividend Mandate Form 331
Proxy Form 333 When you see this icon, you will find more information
on our website.
CHAIRMAN’S
REVIEW

Alhamdulillah, it gives me immense

pleasure to present to you the Annual
Report of Meezan Bank for 2022.
This is also the year which celebrates
completion of the Bank’s first 25
years since its establishment as an
Investment Bank in 1997, and during
this time, Meezan Bank has grown
from its humble beginnings, to its
current position of being one of the
top five banks in Pakistan. As a
Board Member and now as
Chairman, I have had the privilege of
witnessing this journey from the front
seat, and it has been nothing short of
breathtaking to see the Bank grow
into the institution it is today.

Meezan Bank has been a

pioneer in the establishment of
Islamic banking in Pakistan and
we are humbled to have led
this initiative. The success of
Meezan Bank is a testament to
the blessings of Allah (SWT)
and the dedication and hard
work of our team.

04 Meezan Bank Annual Report 2022

By the grace of Allah (SWT), this has been an exciting journey of It gives me great pleasure to inform our shareholders that the
success and fulfilment. Meezan Bank has been a pioneer in the Bank's brand equity, which was ranked sixth in the banking
establishment of Islamic banking in Pakistan and we are humbled industry two years ago, has now risen to become the second
to have led this initiative. The success of Meezan Bank is a highest in the industry, according to a recent survey conducted by
testament to the blessings of Allah (SWT) and the dedication and a leading research company. This remarkable progress is a clear
hard work of our team. indication of the growing confidence, trust and top-of-mind
recognition of our Bank among the general public.
The local and international acclaims that the Bank has received are
outstanding. It has won the Global award for 'Best Islamic Retail Since its inception, Meezan Bank has been at the forefront of the
Bank' this year by Islamic Finance News (IFN), Malaysia, in Islamic banking industry in Pakistan, and our unwavering focus on
addition to winning all the six country-level awards for Pakistan providing exceptional customer service has been integral to our
conferred by IFN. Meezan Bank was also the recipient of ‘Best success. We remain dedicated to our Vision of establishing
Consumer Bank for 2022’ from Pakistan Banking Awards and the ‘Islamic banking as banking of first choice…’ and the best way to
'Best Bank of the Year – Large Size Banks' award by the CFA achieve this, in addition to growing our branch network, is by
Society of Pakistan, which the Bank has won for the third year in a focusing on increasing financial inclusion and using technology to
row, as well as ‘Best Islamic Bank of the Year’ and 'Best Digital enable people to conduct their banking transactions ‘on the go’.
Banking Services Award of the Year' – 2021. It is great to see the Financial inclusion is an important goal of both the Government of
Bank achieve such successes and I pray that Insha’Allah the Bank Pakistan and the State Bank of Pakistan and we are committed to
continues to grow and be recognized for its achievements. supporting this initiative. Despite the current challenges, we are
optimistic about the progress of Pakistan's economy and are
After the pandemic, this was the first full year when the Bank committed to contributing to its growth.
operated in an environment not dampened by the COVID-19
related restrictions. I am pleased to see that the measures the All the success and accolades that the Bank has achieved have
Bank took during the pandemic period such as keeping almost its only been possible by the blessings and rehmat of Allah (SWT) and
entire branch network open and even working extended hours to we bow our heads to Him in thankfulness and gratefulness for
facilitate customers, giving special attention to maintaining branch making our meagre efforts bear such extraordinary fruits.
service levels, promoting an effective work-from-home domain
and strengthening its systems to manage the increased levels of I would like to take this opportunity to congratulate the State Bank
digital transactions, have all borne fruits in the form of both of Pakistan on being recognized as the ‘Best Central Bank in
enhancing operational efficiency as well as strengthening Promoting Islamic Finance’ by Islamic Finance News – Malaysia
customers’ confidence and loyalty – and these are accruing for the third year in a row and the sixth time in the last eight years.
long-term benefits for the organization. This recognition clearly reflects on the commitment and success
of the State Bank of Pakistan towards implementation of the
Alhamdulillah, the Bank achieved one of the highest growths in Islamic banking system in the country.
profitability in the country’s banking sector this year. The Bank’s
Profit After Tax increased by 60% over the previous year with I would like to express my gratitude to the State Bank of Pakistan,
return on equity of over 40%. Also, with market cap of Ministry of Finance and the Securities & Exchange Commission of
Rs 178 billion, Meezan Bank remained the most valuable bank in Pakistan for their continuous efforts to establish a viable Islamic
Pakistan amongst all the listed banks. financial system in the country.

Being cognizant of the United Nations Environmental Social I would also like to express my gratitude to our shareholders,
Governance Framework, the Bank, in addition to actively members of Shariah Board, my fellow Board members and the
extending solar financing to reduce the carbon footprint in the entire Meezan team for their hard work and dedication in making
economy, has also taken the initiative to provide solar energy Meezan Bank a leading financial institution in the country and the
installations to various public interest organizations as a CSR best bank in Pakistan.
initiative.
Finally, I would like to thank our customers for their trust and
Meezan Bank continues to actively support the State Bank-led confidence in Meezan Bank and the cause of Islamic banking.
initiatives such as Prime Minister’s Youth Entrepreneurship Their unwavering support has been crucial to the growth and
Scheme, Islamic SME Asaan Finance (ISAAF), Roshan Apna Ghar success of the Bank and of a Riba-free financial system in
and Roshan Apni Car for Non-Resident Pakistanis. Pakistan.

I would like to commend the Meezan Family on the following key

highlights of the Bank in 2022:

■ The financing portfolio crossing the one trillion Rupee

milestone for the first time.
■ Crossing the two trillion Rupee mark in Trade Finance (Import Riyadh S. A. A. Edrees
and Export)
Chairman
I am also happy to see the Bank's success in facilitating
customers through alternate distribution channels and digitization, February 16, 2023
which is evidenced by:

■ Launch of fully digital account opening App under the name

Meezan Digital Account
■ Debit Cards portfolio growing to 2.8 million cards and Mobile
App Registrations growing to over 1.7 million subscribers
■ A 90% increase in Debit Cards spend
■ An eight-fold increase in NFC transactions
■ More than 80% increase in Inter Bank Fund Transfers (IBFT)
and Utility Bill Payments volumes

Meezan Bank Annual Report 2022 05

CHAIRMAN SHARIAH
BOARD’S MESSAGE

The following is a translation of the body of the above message of Justice (Retd.) Muhammad Taqi Usmani

Alhamdulillah, Meezan Bank has been operational for twenty-five years. It started operations as an
Investment Bank and issued Riba-free Certificates of Islamic Investment. It got the commercial Islamic
Banking licence in 2002 and was named Meezan Bank.
Alhamdulillah, Meezan Bank has progressed much faster compared to other banks. In the beginning it had only four branches and now,
Alhamdulillah, its 950 branches have spread all over Pakistan and Meezan Bank has become the fourth largest bank in Pakistan. During
2018 and 2020, it was also awarded the Best Bank and also won the most Innovative Islamic Bank Global award as well as numerous
other awards.

All this progress is due to the fact that from the very beginning, it ensured following Shariah in everything it does. To my knowledge, it is
also the first bank to establish such a large team for ensuring Shariah-compliance in all its matters and several new products were also
launched, and all this work was done under the supervision and monitoring of its Shariah Board.

Alhamdulillah, in my view, the Bank’s Shariah-compliance standards are very good and where there is an error they try to rectify it. I pay
tribute to Mr. Irfan Siddiqui, Chief Executive Officer of Meezan Bank for his efforts, and congratulate him that the Bank has Masha’Allah
progressed so much in a period of twenty-five years. May Allah Ta'ala help them further improve what they are doing and enable them to
keep ever strengthening the Bank’s Islamic status.

I believe that Mr. Irfan will Insha’Allah focus on the remaining elements with the same level of industry and sincerity that he has shown in
the Bank till now and the Bank will progress further in terms of both performance and Islamic standing. May Allah (SWT) help them in this
with His grace and mercy.

06 Meezan Bank Annual Report 2022

FOUNDING PRESIDENT
& CEO’S MESSAGE
All praise is for the Almighty.
As we commemorate these 25 years of Meezan, it is also an opportunity
for us all to reflect on the past, celebrate our successes, and prepare for the
future.
We started with a simple yet ambitious Vision, "to establish Islamic Twenty-five years ago, Meezan started with one borrowed office
banking as banking of first choice...," and today, Alhamdulillah, we room. Today, Meezan has a nation-wide presence of nearly one
stand proud amongst the largest, the most profitable, the most thousand branches and a family of over 15,000 staff members.
innovative and the highest rated banks in Pakistan. Our journey Masha’Allah, the numbers have been staggering - as you will see
hasn't been easy, but it has been filled with determination, in this report - and the recognition has been overwhelming. But our
perseverance, and unwavering faith - and it is our values and success is about far more than numbers or awards; it is about our
principles that have been the guiding force throughout. impact on people's lives and on their faith; it is about the
businesses we enable and support; and the communities we
We have always been committed to offering Shariah-compliant serve. Indeed, Meezan has played a pivotal role in fulfilling the
banking services and, Alhamdulillah, we have been successful in national priority of increasing financial inclusion.
doing so. We have shown that it is possible to do banking and
business without compromising on our faith or principles. We have Ultimately, Meezan Bank is much more than just a financial
stayed true to our ethos, the ‘Meezan’. institution; Allah (SWT) has helped us become a force for good, a
catalyst for change, and the founder and guardian of the now
We believe that our corporate culture is our greatest asset, and our thriving Islamic finance sector in Pakistan. Islamic banking now
commitment to our Core Values -- Shariah-compliance, Integrity has solid foundations in Pakistan - with six dedicated Islamic
and Service Excellence has helped us work as a focused team banks, and fourteen banks with Islamic windows. It has been an
towards common goals. Moreover, the team’s emphasis on incredible journey from zero to today’s 21% of the total banking
humility, pragmatism, hard work and diligence have played a sector, and this proportion is expected to grow rapidly over the
crucial role in our success. coming years Insha’Allah. As we look to the future, we must
continue to educate, innovate, and digitize to ensure that we
I am grateful to everyone who has been a part of this journey: our remain at the forefront of banking in Pakistan, providing services of
customers, employees and the shareholders have been fuel to the value to all.
stellar growth and achievements, while our Shariah Board, the
Board of Directors and of course, the Management Team have We are grateful for our past, proud of our present, and excited
helped navigate the institution from strength to strength. Together, about our future, Insha'Allah. As our journey continues, we pray
we have created an institution - and a culture - that has placed us that Allah (SWT) grants us the strength to stay true to our Vision
in a league of our own. and ethos, and continue to serve the people of Pakistan with the
finest Shariah-compliant financial services. Ameen!

JazakAllah Khair

We believe that our corporate

culture is our greatest asset, and
our commitment to our Core
Values -- Shariah-compliance, Irfan Siddiqui
Integrity and Service Excellence Founding President and CEO

has helped us work as a

focused team towards
common goals.

Meezan Bank Annual Report 2022 07

DEPUTY CEO’S
MESSAGE
All praise is for the Almighty.
It is indeed gratifying to pen my thoughts on the completion of
25 years of Meezan Bank. This chapter in the history of Meezan Bank may
well be unprecedented in the history of the financial sector in Pakistan, not
only in terms of what the Bank has achieved but also because it has laid the
foundation for a viable Islamic Banking system in the country, undoubtedly
due to the Blessings of Allah (SWT).

As the fastest growing bank in Pakistan, since its inception as a expectations are changing rapidly and as FinTechs scramble to
fledgling Investment Bank in 1997, Meezan has successfully steal a piece of the financial pie, banks that are not able to adapt
delivered on the expectations of its stakeholders and, at the same to the changing landscape will soon be left behind in the race.
time, achieved numerous accolades that are by no means short of Fortunately, we realized early in our journey that technological
being superlative. For me personally, it has been a journey of superiority would be one of the key drivers of success in times to
immense satisfaction. I am especially proud of the founding team come and invested heavily in our technology stack so that we
that has worked seamlessly as one coherent team and has yielded could deliver best in class service to our customers. I believe that
the results that we celebrate today. I would like to thank everyone this will also stand us in good stead in the future, as we embark
who has been a part of this incredible journey for their upon a journey of digital transformation modelled on examples
contributions, no matter how big or small, because it is their such as the Development Bank of Singapore, Ping An in China and
collective effort and unwavering commitment to the Vision and others. We are fully committed to this transformation and
Mission of Meezan that has brought the Bank to where it is today. Insha’Allah will endeavor to remain ahead of the curve in this
And of course, we are thankful to our customers who have regard.
believed in us and have helped us grow.
May Allah (SWT) guide us in the future and help us stay committed
I believe that 2022 – the completion of 20 years of Islamic to the Vision & Mission of Meezan Bank.
commercial banking and 25 years of Meezan’s existence – will be
seen as a watershed year in the Bank’s history. The advent of JazakAllah Khair
technology, accelerated manifold by the onslaught of COVID-19,
brings both challenges and opportunities for banks. Customer

Fortunately, we realized early in Ariful Islam

Deputy CEO
our journey that technological
superiority would be one of the
key drivers of success in times
to come and invested heavily in
our technology stack so that we
could deliver best in class
service to our customers.

08 Meezan Bank Annual Report 2022

For 25 years, we have
led the way, and yet our
journey has just begun
25 years ago, our journey began as an investment bank with the Vision to
‘Establish Islamic banking as banking of first choice...’.
Today, Alhamdulillah, we are well on the way to realizing that Vision, and are
honoured to have been the pioneers of Islamic banking in the country.

The First and Largest Islamic Bank in Pakistan

with over 960 branches in more than 310 cities

Widest Range of Consumer Financing Products

Awarded The Best Bank in Pakistan and

Best Islamic Bank in the World by various
Local and International Platforms

Widest Range of Debit Cards in Pakistan

Highest-Rated Mobile Banking App

Awarded Employer of the Year by

Employers Federation of Pakistan

Millions of Pakistanis have started their Islamic banking journey with us.
Start yours today and discover the better way to bank.
A FEW MEMORIES

Former Chairman, Meezan Bank

First Islamic Commercial Banking license being given H.E.Sheikh Ebrahim Bin Khalifa Al-Khalifa
by the then Governor SBP, Dr. Ishrat Husain (2002) at the HSBC Acquisition launch event (2014)

The Bank’s Inauguration Ceremony by the CFA Society of Pakistan - Best

ex-President of Pakistan Bank of the Year - Large Size
Gen. Pervez Musharraf (Retd.) (2002) Banks by Governor SBP,
Mr. Jameel Ahmad (2022)

Recognition as the ‘Best Bank-2020’

at Pakistan Banking Awards by the then
Governor SBP, Mr. Reza Baqir (2021)

Dr. Shamshad Akhtar, the then Governor Signing Ceremony of Pakistan’s

SBP at Meezan Bank’s 100 branches First Contactless Payments Solution (2017)
milestone ceremony (2007)
Recognition for RDA by
former Prime Minister Onboarding of Meezan Bank as
First Board Meeting (1997) Mr. Imran Khan (2021) Market Maker on PSX (2021)

Approval of HSBC Pakistan Acquisition by the then

Governor SBP, Mr. Ashraf Mahmood Wathra (2014) Meezan Bank’s Senior Management team
at Pakistan Banking Awards ceremony (2021)

Strategy meeting at Sultanahmet masjid

Istanbul, Turkey (2012)

‘Best Bank-2018’ Pakistan Banking Awards by the

then Deputy Governor SBP, Mr. Jameel Ahmed (2018)

‘Best Consumer Bank-2020’

at Pakistan Banking Awards by
Strategy Meeting at Alfalah masjid-Singapore (2015) Governor SBP, Mr. Jameel Ahmed (2022)
CONSTRUCTION OF MEEZAN HOUSE

Commenced on January 10, 2009

Completed on April 11, 2011

A SNAPSHOT OF OUR GROWTH OVER THE YEARS
FROM HUMBLE BEGINNINGS TO THE MOST UNBROKEN DIVIDEND PAYOUT RECORD
PROFITABLE BANK SINCE LISTING ON PSX
IN 20 YEARS Rupees in Billion
45
50 31.36% Dividend Growth
20-year CAGR 20-year
40
30.39% CAGR since inception
Rupees in Million Continuous Dividend History

8.5%
11,714
30 12,000

10,000

20 8,000 2022 Dividend Yield

6,000

10
0.22
4,000

2,000
50
44.6%
0 0 2022 Return on Equity
2002 2007 2012 2017 2022

FROM SMALLEST TO 4TH LARGEST BANK FROM THE SMALLEST TO ONE OF THE
IN TERMS OF DEPOSITS LARGEST BRANCH NETWORKS
Rupees in Billion No. of Branches
962
2,000 1,658
1,000
33.57% CAGR since inception 28.90% CAGR since inception
1,500 800

600
1,000

400

500
200
5 6

0 0
2002 2007 2012 2017 2022 2002 2007 2012 2017 2022

THE YOUNGEST AAA RATED BANK IN PAKISTAN

Long Term Long Term Long Term Long Term Long Term Long Term Long Term Long Term Long Term Long Term Long Term Long Term Long Term Long Term
A+ AA- AA- AA- AA AA AA AA AA AA+ AA+ AA+ AAA AAA
Short Term Short Term Short Term Short Term Short Term Short Term Short Term Short Term Short Term Short Term Short Term Short Term Short Term Short Term
A1 A1 A1+ A1+ A1+ A1+ A1+ A1+ A1+ A1+ A1+ A1+ A1+ A1+

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Meezan Bank has credit rating from VIS Credit Rating Company Limited

OUR DIGITAL LEADERSHIP

HIGHEST LARGEST PROCESSOR LEADING BANK IN
E-COMMERCE SPEND OF IBFT TRANSACTIONS* DIGITAL TRANSACTIONS*
ON DEBIT CARDS IN INDUSTRY AMONG COMMERCIAL BANKS ON 1LINK GRID
Rupees in billion Figures in million Figures in million
12.8 34.7 60.5 16 41 82.3 329.3 356.5 422.8
80 100 500

70
80 400
60

50
60 300

40

30 40 200

20
20 100
10

0 0 0
2020 2021 2022 2020 2021 2022 2020 2021 2022

*AS PER 1LINK RANKING REPORT

We are reimagining banking for our customers
We continue to empower our customers with seamless digital banking channels
making financial services more accessible and user-friendly.

Meezan Bank Annual Report 2022 13

IN THE NEWS
Organizational Overview
& External Environment
VISION
Establish Islamic banking as banking of first choice...

MISSION
To be a premier Islamic bank, offering a one-stop shop for innovative value-added
products and services to our customer within the bounds of Shariah...

OUR CULTURE
Core Values:
■ Shariah-compliance ■ Integrity ■ Service Excellence

Staff: Committed, motivated and professionally trained

employees who are empathic to their customers’ needs.

Brand Personality: A sober and established,

strong, empathic, professional person; who is an
extremely loyal and dependable friend and business
partner, and is committed to offering
comprehensive value-based Shariah-compliant
financial solutions.

Relationships: Our relationships are

long-term. We recognize and value our
customers’ needs above all and strive to
ensure their fulfillment. All customers
are treated with professionalism and
in a friendly manner. It is our
endeavour to ensure that they
receive efficient and timely
service. The Meezan Bank
experience is a unique one.
QUAID’S CONCEPT
OF ISLAMIC BANKING
“I shall watch with keenness the work
of your Research Organization in
evolving banking practices compatible
with Islamic ideas of social and
economic life. The economic system
of the West has created almost
insoluble problems for humanity and to
many of us it appears that only a
miracle can save it from disaster that
is now facing the world. It has failed to
do justice between man and a man
and to eradicate friction from the
international field. On the contrary, it
was largely responsible for the two
world wars in the last half century. The
Western world, inspite of its
advantages of mechanisation and
industrial efficiency is today in a worse
mess than ever before in history. The
adoption of Western economic theory
and practice will not help us in
achieving our goal of creating a happy
and contended people.

We must work our destiny in our own

way and present to the world an
economic system based on true
Islamic concept of equality of
manhood and social justice. We will
thereby be fulfilling our mission as
Muslims and giving to humanity the
message of peace which alone can
save it and secure the welfare,
happiness and prosperity of mankind.”

Quaid-e-Azam Mohammad Ali Jinnah

Founder of the Islamic Republic of Pakistan

On the occasion of the Opening Ceremony of

The State Bank of Pakistan on July 1, 1948.
OUR PRESENCE
Our national footprint of
branch and ATM networks
Gilgit-
Baltistan
Branches
Azad
3 Jammu &
ATMs Kashmir
2 Branches

9
ATMs
Khyber
Pakhtunkhwa 8
Branches

77
ATMs

79

Islamabad Capital Territory

Branches ATMs

Islamabad 52 69
Rawalpindi 41 45

93 114

Punjab
Branches ATMs
Bahawalpur 54 48
Faisalabad 64 74
Balochistan Gujranwala 75 74
Lahore 150 179
Branches
Multan 83 87
39 Sargodha Region 34 32
ATMs

29 460 494

Sindh
Branches ATMs

Karachi 226 277

Hyderabad 55 58
For detailed branch locations,
please visit our
website: www.meezanbank.com
281 335
HIGHLIGHTS 2022

More than

960
in over
branches

300 cities
One of the Largest
Most Valuable Bank by
Market Capitalization
Banks in Pakistan amongst all banks listed on PSX

Launch of Launched
Pakistan’s
1st Digital Supply Chain
Financing Platform
in collaboration with Fintech

Launch of
Highest
Meezan 1,000+ ATMs
VISA Infinite Debit Card
Debit Card spend in the
industry


Rs

Best Consumer CFA Society

Pakistan Best Bank
Bank of the 19th Annual Excellence Awards

Meezan Bank Limited

Best Bank of the Year 2021 - Large Size Bank of the
Year-2022 Year-2021
WINNER

This award is presented by CFA Society Pakistan

at the 19th Annual Excellence Awards Ceremony.

6 December 2022
Karachi

Pakistan Banking Awards Large Size Banks

CFA Society Pakistan
Best Consumer Bank
of the in 2022
CORPORATE PROFILE
Founded with the Vision to ‘Establish Islamic banking as banking of first choice...’, the Bank
commenced operations in 1997 as Al Meezan Investment Bank Limited. It converted to Meezan
Bank Limited, a full-fledged Islamic commercial bank in 2002, when the State Bank of Pakistan
issued it Pakistan’s first Islamic Commercial
Banking license. Concurrently, the Bank
acquired the Pakistan operations of Societe
Generale and started commercial banking with
Credit Rating
a small network of four branches, that has now
The VIS Credit Rating Company Limited has reaffirmed the
grown to become one of the largest banking Bank’s medium to long-term entity rating as AAA (Triple A) and
networks in the country with 962 branches in its short-term rating as A1+ (A One Plus) with stable outlook.
317 cities. The AAA rating denotes highest possible credit quality, with
negligible risk factors, being only slightly more than for
risk-free debt of the Government of Pakistan.
Meezan Bank is a public listed company
Meezan Bank is the only full-fledged Islamic bank with AAA
sponsored by leading financial institutions from
credit rating in the Islamic banking industry of Pakistan.
Pakistan and the Middle East. The Bank offers a
complete range of Islamic banking products
and services through an extensive retail
banking network. 2022 2021

Meezan Bank has a strong Shariah-compliance

setup that comprises a dedicated Shariah
Compliance Department, a Resident Shariah
AAA
Long Term
AAA
Board Member and a Shariah Board comprising
of internationally renowned Shariah scholars.
The Bank is well-recognized for its product 2022 2021
development capability, Islamic banking
research and advisory services at both national
and international levels.
A1+
Short Term
A1+

Calendar January 27, 1997 January 31, 2002 March 20, 2002 October 17, 2014

of Major Date of
Incorporation
Issuance of Scheduled
Islamic Commercial
Commencement of
Operations as
Acquisition of HSBC
Pakistan Operations
Events Bank license Scheduled Islamic
Commercial Bank

Financial
Calendar
2022
1st Quarter Results 2nd Quarter Results 3rd Quarter Results Annual Results 27th Annual General Meeting
April 25, 2022 August 11, 2022 October 19, 2022 February 16, 2023 scheduled on March 29, 2023

22 Meezan Bank Annual Report 2022

CORPORATE INFORMATION
Board of Directors
Riyadh S. A. A. Edrees Chairman
Faisal A.A.A. Al-Nassar Vice Chairman
Bader H.A.M.A. Al-Rabiah
Mubashar Maqbool
Faisal Fahad Al-Muzaini
Naveed Iftikhar Sherwani
Mohamed Guermazi
Mohammad Abdul Aleem
Nausheen Ahmad
Yousef S. M. A. Al-Saad
Irfan Siddiqui President & CEO
Meezan Bank
Shariah Board Share Information
Justice (Retd.) Muhammad Taqi Usmani Chairman
Dr. Muhammad Imran Ashraf Usmani Vice Chairman
Sheikh Esam Mohamed Ishaq Company Name
Mufti Muhammad Naveed Alam Resident Shariah Board Member
Meezan Bank Limited
Management
Irfan Siddiqui President & CEO
Ariful Islam Deputy CEO
Listed on
Chief Financial Officer
Syed Imran Ali Shah

Company Secretary
Muhammad Sohail Khan
Stock Name
Auditors
A. F. Ferguson & Co., Chartered Accountants

Legal Adviser MEBL

Haidermota & Co., Advocates

Registered Office Financial Year End

Meezan House C-25, Estate Avenue,
SITE, Karachi-75730, Pakistan.
31 December
Contacts
PABX: (92-21) 38103500, 37133500, Fax: (92-21) 3640605
24/7 Call Centre: 111-331-331 & 111-331-332 Shares Registrar
Email: [email protected]
Website: www.meezanbank.com, www.meezanbank.pk THK Associates (Pvt.) Ltd.
Plot No. 32-C, Jami Commercial Street 2, D.H.A., Phase VII,
Karachi-75500. Pakistan. PABX: (92-21) 35310191-6
UAN: (92-21) 111-000-322 Fax: 021-35310191
Email: [email protected] ; [email protected]
Website: www.thk.com.pk

Meezan Bank Annual Report 2022 23

SHAREHOLDERS

Shareholding Structure

25.4% 35.3%

9.3%

Noor Financial Investment Company, Kuwait

Pakistan Kuwait Investment Company (Pvt.) Ltd
Islamic Development Bank Jeddah
30%
Others

Noor Financial Investment Company

Noor Financial Investment Company is a Kuwaiti investment company engaged in investment and financial activities primarily in Kuwait,
the Middle East, Asia and other emerging markets. The company was established as the financing arm of the National Industries Group
(NIG), which is one of the largest private sector industrial groups in Kuwait.

Noor Financial Investment Company provides a broad range of financial services through its investment banking department. These
activities /services broadly include private equity, investment strategy & implementation, mergers & acquisition advisory, valuations,
hedging & risk management, local / foreign listing, long-term financial planning and innovative structuring. The asset management
department of the company also engages in managing proprietary and client portfolios of quoted and unquoted securities, real estate
and funds in Kuwait, GCC and the MENA region.

Pakistan Kuwait Investment Company

Pakistan Kuwait Investment Company (Private) Limited (PKIC), a joint venture between the Governments of Pakistan and Kuwait was
established in 1979. PKIC is one of the most respected and profitable institutions in Pakistan. The company, operating for over 30 years
in Pakistan, is engaged in investment and development banking activities in Pakistan. PKIC is the first financial institution in Pakistan that
has been rated AAA (triple A) for the long-term by both PACRA and VIS Credit Rating Company.

Islamic Development Bank (IsDB)

Islamic Development Bank (IsDB) is located in Jeddah and is an International Financial Institution established in 1975 in pursuance of a
declaration by the Conference of Finance Ministers of Muslim countries to foster economic development and social progress in member
(Islamic) countries. IsDB has a subscribed capital of USD 70 Billion and enjoys presence in 57 member countries. The Bank participates
in equity capital and grants loans for productive projects and enterprises besides providing financial assistance in other forms for
economic and social development.

24 Meezan Bank Annual Report 2022

PRODUCTS AND SERVICES
Meezan Bank offers a diverse range of Shariah-compliant banking products and services to cater customer requirements.

Deposit Products Meezan Mastercard Debit Cards I Financing Products

World, Platinum, Titanium & Classic
Meezan Rupee I Current & Savings Murabaha I Short-Term Facility I
Accounts PKR Meezan Visa Debit Cards I Infinite, Procurement of Raw Material &
Platinum, Gold & Classic Stock in Trade
Meezan Asaan I Current & Savings
Accounts PKR Meezan PayPak Debit Card Musawamah I Short-Term Facility I
Meezan Supplementary Debit Cards Procurement of Raw Material and
Meezan Express I Current & Savings Stock in Trade
Accounts PKR Contactless Payments I Debit Cards
Istisna I Short-Term Facility I Working
& Mobile Tap & Go
Meezan Kids Club Capital Finance for Manufacturers
Savings Account PKR
Meezan Teen Club Discounts & Privileges
Commodity Salam I Short-term Facility I
Meezan ATM Network Working Capital Finance for Agri
Meezan Senior Citizen I Savings
Customers
Account PKR Fintech Services
Tijarah I Short-Term Facility I Working
Meezan Labbaik I Savings Account I Meezan Digital Account Opening App Capital Solution for Traders
Hajj and Umrah Pilgrimage Facility PKR
Meezan POS Terminals Ijarah I Long-Term Rental Facility I
Meezan Kafalah I Savings Account PKR Meezan E-Commerce Payment Running Musharakah I Shirkat-Ul-Aqd
Gateway Based Financing
Meezan Bachat I Savings Account PKR
Diminishing Musharakah I Long-Term
Karobari Munafa I Savings Account PKR Rental Facility Based on Joint Ownership
Branchless Banking
Foreign Currency I Current & Savings Structured Finance Solutions I Hybrid
Smart Remittance Wallet I Solutions for CAPEX, BMR & Special
Account USD, GBP, EUR
Wallet Account Financing Requirements
Meezan Roshan Digital I Current & Smart Asaan Mobile Account I
Savings Account PKR, USD, GBP, EUR Letter Of Credit Services I Wakala
Wallet Account Based Facility for Import Facilitation
Meezan Roshan Resident I Current & Smart Disbursement Solution I Short-Term Import Financing I
Savings Account USD, GBP, EUR Employee Salary Account Murabaha I Musawamah Based Facility
Meezan Payroll Partner I Savings Smart Wallet I Wallet Account for Financing Letter of Credit
Account PKR Long-Term Import Financing I
Account Opening Facility for Priority Banking Ijarah I DM Based Facility for Financing
Freelancers I Current & Savings Account Letter of Credit
PKR, USD, GBP, EUR Meezan Premium Banking Shariah-compliant Hedging I
Wa’ad-Based Hedging Facility
Meezan Digi Asaan I
Current & Savings Account PKR Consumer Financing Alternative To Export Bill Discounting I
Car Ijarah I Shariah-compliant Auto Short Term Salam/Musawamah/Tijarah
Meezan Digi Remittance I
Financing based Facility
Current & Savings Account PKR
Roshan Apni Car Islamic Export Refinance Scheme I
Meezan Digi Freelancer I Meezan Women First I Car Ijarah Subsidized Short Term Financing for
Current & Savings Account PKR
Meezan Apni Bike I Shariah-compliant Exporters
Islamic Naya Pakistan Certificate Motorcycle Financing
Islamic Long Term Finance Facility I
(INPC) I PKR, USD, GBP, EUR
Easy Home I Shariah-compliant Home Subsidized Ijarah I Diminishing Musharakah
Monthly Mudarabah Certificate I Financing Based Financing for Exporters
One Month Maturity Easy Home – Mera Pakistan Mera Guarantee Services I Payment &
Ghar I Shariah-compliant Home Performance Guarantees I Kafalah Based
Certificate of Islamic Investment I
Financing Service
3 & 6 Months; 1, 1.5, 2, 3 & 5 Year(s)
Meezan Roshan Apna Ghar I
Retail Supply Chain Financing I
Meezan Aamdan Certificate I Shariah-compliant Home Financing
Working Capital Financing for Small
5.5 & 7 Years Meezan Women First I Scale Retailers
Meezan Aamdan Certificate for Senior Shariah-compliant Home Financing
Digital Supply Chain Financing I
Citizens, Widows & Disabled Persons I Meezan Consumer Ease* I Working Capital Financing using Digital
5.5 & 7 Years platform and FinTech
Meezan Solar I Shariah-compliant Solar
Dollar Mudarabah Certificates I Panel Financing Commercial Vehicles Financing I
3 & 6 Months; 1 & 3 Year(s) USD Shariah-compliant Financing for SME &
Corporate Segments
Transaction Banking
Alternate Distribution Channels *Under improvement & currently being served only to
Meezan eBiz I Business Internet existing active financing limit-holders.
Meezan Mobile Banking App Banking Solution

Meezan Internet Banking Meezan eBiz+ I Payments & Cash Detailed information is
Management Solution available on our website.
SMS Alerts
Meezan eBiz+ LITE I SME
SMS Banking Payments Solution www.meezanbank.com
ORGANIZATION STRUCTURE

Board of Directors Shariah Board

Audit Committee Resident Shariah

Board Member

Shariah Audit
Shariah Compliance

Internal Audit &

Business Risk Review

President & CEO Company Secretariat

Risk Management Compliance

Finance Legal Affairs

Deputy CEO

Human Resources, General Services &

Learning & Development Customer Support

Branch Network Business Segments Support

Bahawalpur Balochistan
Operations
Retail Banking, Commercial,
SME & Agri Finance
Faisalabad Gujranwala

Treasury & Home

Remittances Information Technology
Hyderabad Karachi (East)

Corporate & Institutional

Karachi (North) Karachi (South) Banking Information Security

Karachi (West) Lahore (East) Consumer Finance

Lahore (West) Multan Investment Banking &

Shariah Advisory

Sargodha
Digital Transformation
& Innovation
North

Functional reporting
Islamabad Khyber Pakhtunkhwa Rawalpindi Hunza
Administrative reporting
OUR LEADERSHIP
Senior Management Team
Mr. Irfan Siddiqui President & CEO

Mr. Ariful Islam Deputy CEO

Mr. Ahmed Ali Siddiqui Group Head Shariah Compliance

Mr. Faiz Ur Rehman Group Head Information Technology

Mr. Ijaz Farooq Group Head Retail Banking, Commercial, SME & Agri Finance

Mr. Khalid Zaman Khan Group Head Human Resources, Learning & Development

Mr. Muhammad Abdullah Ahmed Group Head Corporate & Institutional Banking

Mr. Muhammad Raza Group Head General Services & Customer Support

Syed Tariq Hassan Chief Risk Officer & Group Head Risk Management

Mr. Zia Ul Hassan Group Head Operations

Mr. Muhammad Sohail Khan Company Secretary

Mr. Shahzad Abdullah Group Head Treasury & Home Remittances

Syed Iftikhar Ul Haq Group Head Consumer Finance

Mr. Ebrahim Yakoob Head Internal Audit & Business Risk Review

Mr. Javed Ahmed Head Compliance

Mr. Muhammad Farhan Ul Haq Usmani Head Shariah Audit

Mr. Shariq Mubeen Chief Digital Officer

Syed Imran Ali Shah Chief Financial Officer

Mr. Urooj Ul Hasan Khan General Manager Investment Banking & Shariah Advisory

Mr. Muhammad Umar Khan Fareedy Head Legal Affairs

Regions
Mr. Muhammad Saleem Khan General Manager - Islamabad

Mr. Abid Hussain Abid General Manager - Multan

Mr. Anwar Ul Haq General Manager - Lahore East

Syed Salman Ahmed General Manager - Karachi West

Mr. Khurram Behzad Memon Regional Manager - Hyderabad

Mr. Mashkoor A.G. Khan Regional Manager - Karachi East

Mr. Moazzam Saeed Khan Regional Manager - Faisalabad

Mr. Sohail Munir Bana Regional Manager - Karachi North

Syed Mohammed Asad Alvi Regional Manager - Karachi South

Mr. Amir Ali Durrani Regional Manager - Balochistan

Mr. Arif Aslam Khan Regional Manager - Khyber Pakhtunkhwa (KPK )

Mr. Chohdry Asif Javed Regional Manager - Gujranwala

Mr. Muhammad Ejaz Nadeem Regional Manager - Bahawalpur

Mr. Shaikh Raashed Rauf Regional Manager - Lahore West

Mr. Alam Zeb Regional Manager - Hazara

Mr. Aneeq Ejaz Qureshi Regional Manager - Rawalpindi

Mr. Kamran Mahmood Butt Regional Manager - Sargodha

Meezan Bank Annual Report 2022 27

Meezan, the Arabic word for
'Balance' has been taken
from Surah Ar-Rahman.
At Meezan Bank, we believe
in maintaining a balance
between the needs of our
shareholders, our customers,
our staff and other
stakeholders. This approach
will Insha’Allah help us
achieve our Vision of
‘providing a strong foundation
for establishing a fair and just
society for mankind'.
HISTORY OF MEEZAN BANK 2014 2022
428
2021
Branches
117 962 Over

Cities

902 Over
4th Largest Bank
in terms of
Branches
300 Cities

290
2018
Branches

Cities
Deposits
More than 1,000
CFA Society ATMs nationwide

Meezan Bank acquires HSBC

2016 660 180
Branches
Over

Cities
8th Largest Bank
in terms of
Branch Network
Pakistan
Best Bank of the Year
(Large Size Banks
Pakistan Category)
Over Best Islamic Bank of
Total deposits reach Rs. 380 billion 570 145
Branches
Over
the Year Best Consumer
Bank 2022
Cities
Pakistan Banking
Mobile Launch of State Bank of Pakistan - by
Best Islamic Bank in Pakistan Awards
Banking

1997 2012 App

Launched
Awarded ‘Best Bank for 2018’
former Prime Minister Mr. Imran Khan

2003 2006 Corporate

by Pakistan Banking Awards

Launch of Visa
Platinum
CFA Society
Pakistan
Internet banking Launch of Best Bank of the Year
Deposit base grows to & Supplementary Roshan Digital Account
Launched (Large Size Banks Category
Rs. 34 billion
2009
01/ 1 8 0 1 / 2 5

Debit Cards Best Performing Bank (1st Position) Best Digital Bank of the Yea
Launch of
Number of branches Total deposits cross Rs. 230 billion New Corporate Fastest Growing Bank Highest Amount Best Islamic Bank of the Yea
Your one window solution for all your eBanking needs

reaches 62 in 21 cities Website of Deposits RDA (1st Position)

Launch of Meezan Visa Platinum
Internet Banking launched Debit Card Meezan Titanium Launch of Meezan Express Account
Al Meezan Investment
Management Ltd. becomes a
subsidiary of Meezan Bank
Deposit base crosses Rs. 100 billion Launch of Meezan Premium Banking
MasterCard Debit
Card Launched Official Page
crosses 1 Million Fans
2020 IFN
BEST BANKS
2022

through acquisition of & Premium Banking Centers Mera Pakistan Mera Ghar Best Overall
Islamic Bank

majority shares Bank handles more than Rs.100 billion Top performance award for
of Import/Export business Launch of Mock Branches for disbursements
815
Establishment of Al Meezan
Branch network reaches staff training
2015 Launch of New Internet Banking
248 & approvals (2nd Position)
Investment Bank
10 branches nationwide while
the deposit base grows to
Rs. 7.7 billion
Meezan Debit
Cards launched & 2017 Launch of
Fastest Debit Cards
Best Islamic Retail Bank - Glo
Best Islamic Bank - Pakistan
Best Investment Bank - Pakist
Launched
551 Activation Best Corporate Bank - Pakist
Branches
143
2007 Launched Cities over ATM in Pakistan
Best Bank 2020
IFN
BEST BANKS
2021
Best Retail Bank - Pakistan
Most Innovative Bank - Pakist

2002 2013 Best Digital Offering - Pakista

Best Overall

Pakistan's first Shariah- Meezan Bank acquires Pakistan Pakistan Banking Islamic Bank

Adopted Idara Awards

compliant Housing finance operations of HSBC Oman
Top 25 Companies of the Year, 2016 Al-Khair Welfare
product is launched Society School to Launch of

Branch network reaches

2010 Over

350 100
Branches
Over
Most Innovative
Solution Deployed for
Cash Displacement
provide free education
to underprivileged
children
Best Bank of the Year
(Large Size
Best Islamic Bank in Pakistan
Most Innovative Deal of the Year
Syndicated Deal of the Year
Meezan Mobile Tap
Go - Mobile based
contactless paymen
Total deposits reach
Cities
Banks Category)

2004 the milestone number of

100 branches in 31 cities Rs. 131 billion &
Import/Export
8th largest bank in Pakistan in
terms of branch network
Agreement Signing with
Karandaaz Pakistan
CFA Society of
Pakistan
Pakistan Deal of the Year

Al Meezan Investment Bank

acquires Pakistan operations of
Societe Generale and is
Meezan Bank acts as the Shariah
Structuring Advisor for the
historic transaction of international
Business volume
Rs. 143 billion Total deposits reach Rs. 289 billion Total deposits reach
Rs. 472 billion Launch of EMV Chip &
2019 Best Overall Islamic Bank -
Global Award
VIS Credit Rating Company Limited
Credit ratings upgraded to
AAA - the highest possible rating in
Launch of
Wisaaq- Pakistan's first digit
supply chain financing platfor
issued the Sukuk offering for USD 600 million Meezan Bank stands among the NFC enabled Debit Card Most Innovative Islamic Bank - powered by Haball
6th Largest Bank financial industry
under a mandate awarded by the top three auto-finance providers Global Award
Government of Pakistan in the country in terms of
Branch Network
Meezan Upaisa - World's First Top 10 Excellent Places to Work
Deposit base grows to Import/Export business & Deposits
Islamic Branchless Banking Service Best Place to Work in Financial IFN
Rs.13.7 billion reaches Rs. 70 billion Government of Pakistan nominates BEST BANKS

Services Industry
2020
Launch of Meezan Senior

first Islamic Commercial Banking

Number of branches reaches 16

Online Banking is launched

Deposit base grows to
Rs. 54 billion
2011 Mr. Irfan Siddiqui & Dr. Muhammad
Imran Ashraf Usmani as members
of Steering committee of Islamic Best HRM Practices
Employer of the Year 2016
President of Pakistan calls for
adoption of Islamic banking system
for Govt. departments and ministries
Best Overall
Islamic Bank

The first Islamic bank to be

recognized as market maker
Citizen Account
Dedicated account for senio
citizens, widows & differently
license by SBP. Now a banking Centers of Excellence in Islamic abled persons
across all branches 9th largest bank for Shariah-compliant debt
full-fledged scheduled Islamic in Pakistan in terms Finance established at IBA,
LUMS and IMSciences Strongest Islamic Bank in Asia instruments on
commercial bank, it is renamed as
Meezan Bank
2008 of branch network Launch of SMS Banking
(Peshawar) - 2020
Strongest Bank in Pakistan - 2020
Pakistan Stock Exchange (PSX) Launch of Meeza
Payroll Partner
Deposit base stood at
Rs. 5.08 billion
2005 Meezan House
inaugurated Launch of secure online
The Asian Banker 500 Largest
and Strongest Banks Ranking Meezan Bank’s success story
incorporated as a case study in
Exclusive digital employee
banking solution
shopping with 3D secure Launch of New Philip Kotler’s Essentials of
Mobile Banking App Modern Marketing-
Cities
Pakistan edition
Branch Network expands
Meezan Bank wins to 40 cities Launch of SkimGuard protection
Pakistan's first Best Islamic Bank in Pakistan Launch of Two COVID-19

Deposit base grows to on ATMs of other banks

Shariah-compliant Auto Finance Drive-Through Launch of
Deposit base grows to Rs. 70 billion
product is launched Launch of Continuous Vaccination Centres and Meezan Visa Infinite card
Rs. 22 billion Launch of first Improvement Program Mobile Vaccination Vans
Number of branches reaches 28 Government of Pakistan in Karachi, in collaboration
Ijarah Sukuk CONTINUOUS
with Government of Sindh
IMPROVEMENT
AWARDS AND RECOGNITIONS
Over the past 25 years, Meezan Bank has been recognized by its peers as well as national
and international organizations for its industry leadership.
The awards and recognition received by the Bank in financial year 2022 are mentioned below:

Mr. Irfan Siddiqui - President & CEO, Meezan Bank and Mr. Irfan Siddiqui - President & CEO, Meezan Bank while
Meezan Bank wins Fire Safety Award 2022 by National Forum
Mr. Ariful Islam - Deputy CEO, Meezan Bank while receiving the receiving the award from Mr. Miftah Ismail - Former Minister of
for Environment & Health (NFEH) in collaboration with the Fire
awards from Mr. Jameel Ahmed - Governor, State Bank of Pakistan Finance, Pakistan at the Management Association of Pakistan
Protection Industry of Pakistan (FPIP).
at the 19th Annual Excellence Awards, CFA Society of Pakistan. 37th Corporate Excellence Awards.

IFFSA IFFSA
IFFSA
IFN IFN IFN IFN IFN IFN IFN
ISLAMICFINANCEFORUMOFSOUTHASIA ISLAMICFINANCEFORUMOFSOUTHASIA

ISLAMICFINANCEFORUMOFSOUTHASIA CFA Society

CFA Society Pakistan
BEST BANKS BEST BANKS BEST BANKS
Pakistan CFA Society
BEST BANKS BEST BANKS BEST BANKS BEST BANKS Pakistan
GOLD GOLD 2022 2022 2022 2022 2022 2022 2022 19th Annual Excellence Awards 19th Annual Excellence Awards

ISLAMIC BANK
GOLD ISLAMIC FINANCE Meezan Bank Limited
19th Annual Excellence Awards Meezan Bank Limited
OF THE YEAR EDUCATION Best Islamic Bank of the Year 2021 Best Digital Banking Services - 2021
ISLAMIC FINANCE PROVIDER
Most Best Meezan Bank Limited
ENTITY OF THE YEAR
Best Digital Best Retail Best Islamic Best Islamic Best Best Bank of the Year 2021 - Large Size Bank
Investment WINNER WINNER
Offering Innovative
OF THE YEAR
Bank Retail Bank Bank Corporate
Bank
(LARGE CATEGORY)
WINNER
Bank Bank This award is presented by CFA Society Pakistan
at the 19th Annual Excellence Awards Ceremony
This award is presented by CFA Society Pakistan
at the 19th Annual Excellence Awards Ceremony
PRESENTED BY PRESENTED BY This award is presented by CFA Society Pakistan
Meezan Bank Limited at the 19th Annual Excellence Awards Ceremony 6 December 2022
6 December 2022
PRESENTED BY
Shari’a Auditor of the Year 2022
Karachi Karachi
6 December 2022
Karachi

Meezan Bank Limited

Shari’a Authenticity Award 2022 Meezan Bank Limited
Best Islamic Bank
Award 2022 Best
Consumer Bank
2022

Honoured to be recognized by the Islamic Finance Forum of South Asia, Islamic Finance News - Malaysia, Global Islamic Finance Awards,
Pakistan Banking Awards, CFA Society of Pakistan among other local and international platforms.

2022 Best Islamic Bank - Pakistan

Pakistan Banking Awards Best Investment Bank - Pakistan
Best Consumer Bank Best Corporate Bank - Pakistan
Best Retail Bank - Pakistan
CFA Society Pakistan Most Innovative Bank - Pakistan
Best Bank of the Year – Large Size Banks Best Digital Offering - Pakistan
Best Islamic Bank of the Year
Best Digital Banking Services Award of the Year Pakistan Stock Exchange Limited
Top 25 Companies of the Year - 2020 (2nd position)
The Asian Banker
The Asian Banker CEO Leadership Achievement for Pakistan Award - Global Islamic Finance Awards
Mr. Irfan Siddiqui, Founding President & CEO, Meezan Bank Shari’a Authenticity Award
Best Managed Bank in Pakistan – Meezan Bank Shari’a Auditor of the Year
Best Islamic Bank
The Banker
Islamic Bank of the Year, Pakistan Global Finance – New York
Best Islamic Financial Institution in Pakistan
Islamic Finance Forum of South Asia (IFFSA) Awards
Gold Award for Islamic Finance Entity of the Year (Large Category) AsiaMoney
Gold Award for Islamic Bank of the Year Most Outstanding Company in Pakistan - Banking Sector
Gold Award for Islamic Investment Bank of the Year
Asian Banking and Finance Corporate &
Gold Award for Islamic Finance Education Provider of the Year
Investment Banking Awards
Gold Award for Islamic CSR Project
Innovative Islamic Deal of the Year - Pakistan
Asset Triple A – Hong Kong
Employers Federation of Pakistan (EFP)
Islamic Bank of the Year - Pakistan
Employer of the Year - Large National Companies (2nd Position)
Best Trade Finance Bank - Pakistan
Best Islamic Investment Bank - Pakistan MAP - Management Association of Pakistan
Sukuk Adviser of the Year - Pakistan Best Company in Financial Category
Best Green Financing - Pakistan
Cherat Cement Company 1.4 billion rupees facility Mandated lead ICAP and ICMAP
adviser and arranger Best Corporate Reports Awards - Banking Sector (Certificate of Merit)
Best Syndicated Loan - Pakistan
Pakistan Mobile Communications 10.5 billion rupees Islamic 12th Annual Fire Safety Awards
syndicated term finance facility Shariah adviser, mandated lead adviser Fire Safety Award 2022
and arranger
Shaukat Khanum Social Responsibility Awards
Islamic Finance News – Malaysia Shaukat Khanum Corporate Excellence Award
Best Islamic Retail Bank - Global

32 Meezan Bank Annual Report 2022

2021 Islamic Investment Bank of the Year
CFA Society of Pakistan Islamic Finance Advisory Services Provider of the Year
Best Bank of the Year - Large Size Banks
Best Islamic Bank of the Year 2020
Pakistan Banking Awards
Islamic Finance News – Malaysia Best Bank - 2020
Best Islamic Bank in Pakistan
Most Innovative Deal of The Year - Enertech’s PKR 25.5 Billion Sukuk CFA Society Pakistan
Syndicated Deal of The Year - Pakistan Mobile Communications Best Bank of the Year - Large Size Banks
Syndicated Finance Facility Best Islamic Bank of the Year
Pakistan Deal of The Year - Enertech’s PKR 25.5 Billion Sukuk Best Corporate Finance House of the Year - Fixed Income

Asset Triple A Country Awards State Bank of Pakistan

Best Structured Finance Deal, Pakistan - Pakistan Highest amount of Deposits through Roshan Digital Account
Mobile Communications Syndicated Term Finance Facility Highest amount of Investment in Islamic Naya Pakistan Certificates

State Bank of Pakistan The Asian Banker

Best Performing Bank (1st position) *Strongest Bank of Pakistan
Fastest Growing Bank *Fifth Strongest Islamic Bank in the World - 2020 in 500 Largest and
Highest Amount of Remittances through Roshan Digital Account Strongest Banks Ranking
(1st position) *by balance sheet
Top Performance Award - disbursements & approvals in Mera
Pakistan Mera Ghar (2nd Position) Islamic Finance News (IFN) – Malaysia
Best Overall Islamic Bank - Global Award
Employer of Year Awards Most Innovative Islamic Bank - Global Award
Employer of the Year - Diamond Award 2nd Position, Best Islamic Private Bank - Global Award
2nd Position, Best Islamic Retail Bank - Global Award
ICAP and ICMAP Best Islamic Bank in Pakistan
Best Corporate Reports Awards - Banking sector 3rd Position
Global Finance – New York
International Finance Award Best Islamic Financial Institution - Pakistan
Fastest Growing Digital Transformation Bank - Pakistan Best Trade Finance Provider - Pakistan

Asiamoney Asset Triple A – Hong Kong

Most Outstanding Company in Pakistan - Banking Sector Islamic Bank of the Year - Pakistan
Best Islamic Retail Bank - Pakistan
World Finance Magazine Best Islamic Trade Finance Bank - Pakistan
World Finance Banking Awards Best Islamic Investment Bank - Pakistan
Best Banking Group - Pakistan Sukuk Adviser of the Year - Pakistan
Best Retail Bank - Pakistan Best Islamic Loan Adviser - Pakistan
World Finance Islamic Finance Awards Best Islamic Custodian - Pakistan
Best Islamic Bank - Pakistan Best Green Financing - Pakistan, NASDA Green Energy transaction
Best Quasi–Sovereign Sukuk - Pakistan, Power Holding (Pvt) Limited
Asian Banking and Finance Corporate & Investment Banking Best Structured Financing - Pakistan, Avari Hotels syndicated
Awards 2021 Islamic finance facility
Renewable Energy Bank of the Year - Pakistan Best Syndicated Loan - Pakistan, Pakistan Mobile Communications
Green Deal of the Year - Pakistan Limited syndicated term finance facility

Asset Triple A – Hong Kong Asset Triple A Asia Infrastructure Awards

Islamic Bank of the Year - Pakistan Renewable Energy Deal of the Year - Pakistan
Best Islamic Retail Bank - Pakistan Telecom Deal of the Year - Pakistan
Best Islamic Trade Finance Bank - Pakistan
Best Islamic Investment Bank - Pakistan Global Islamic Finance Awards
Sukuk Adviser of the Year - Pakistan Shariah Authenticity Award
Best Islamic Custodian - Pakistan Shariah Auditor of the Year
Sukuk House of the Year
Asset Triple A Asia Infrastructure Awards
Power Deal of the Year - Pakistan for Punjab Islamic Finance Forum of South Asia (IFFSA) Awards
Thermal Power Private Limited US$583 million project finance and Gold Award - Islamic Finance Entity of the Year (Large) Gold Award -
working capital finance facilities Islamic Finance Advisory Services Provider of the Year
Gold Award - Islamic Investment Bank of the Year
Global Islamic Finance Awards Gold Award - Islamic Bank of the Year - Large
Shari'a Authenticity Award Silver Award - Islamic Finance Deal of the Year
Shari’a Auditor of the Year
Islamic Banker of the Year - Mr. Irfan Siddiqui Asian Banking and Finance Corporate & Investment Banking
Awards
The Banker Project Infrastructure Finance Deal of the Year - Pakistan
Islamic Bank of the Year, Pakistan
ICAP and ICMAP
Global Finance – New York Best Corporate Reports Awards - Banking sector 3rd Position
Best Islamic Financial Institution in Pakistan

Islamic Finance Forum of South Asia (IFFSA) Awards

Gold Award - Islamic Finance Entity of the Year (Large)
Islamic Bank of the Year - Large

Meezan Bank Annual Report 2022 33

DIRECTORS' REPORT TO THE MEMBERS

On behalf of the Board of Directors, we are pleased to present the twenty-sixth Annual Report of Meezan Bank for the year ended
December 31, 2022.

25 years of Islamic Banking

Alhamdullillah, 2022 was a year of reflection and celebration for Meezan Bank. Formed with the Vision of establishing ‘Islamic banking
as banking of first choice’ in 1997 as Al Meezan Investment Bank, this year marked the silver jubilee of our organisation as we
completed twenty-five years of providing Riba-free banking services to our customers. As we reflect on our journey from being the
smallest commercial bank in the country to one of the largest and most valued customer franchises, we must, first and foremost thank
Allah SWT for his Blessings without which none of this would have been possible. At the same time, we are grateful for the extraordinary
efforts and dedication of our current and past Directors of the Board, Members of the Shariah Board, Senior Management and
employees in making this Vision a reality. We are fortunate that through Meezan Bank, the seed of Islamic banking has been sowed in
Pakistan, and are proud of our efforts in growing the Islamic Banking Industry (IBI).

Meezan Bank is the youngest bank in Pakistan to have attained the prestigious AAA Credit Rating in just 19 years of operations and also
has the highest market cap amongst all the banks listed on the Pakistan Stock Exchange.

Having laid down the foundations of Islamic banking in Pakistan to eliminate Riba from the country, our Bank’s successful endeavors
have acted as a catalyst for developing landscape for Shariah-compliant banking and financing solutions for customers through
innovation and capacity building across the IBI. We have historically conducted awareness sessions at all forums for the promotion of
the Islamic finance and also played our pioneering role in development of Islamic banking certifications at leading education institutions
to foster and enrich Islamic bankers in the country. As a direct result of these steps, today the Islamic Banking Industry has grown from
a single institution to six full-fledged Islamic banks and fifteen Islamic banking windows of conventional banks. Many of the prominent
Islamic banking ambassadors have been nurtured and trained with us in one way or the other. The market share of dedicated Islamic
banks and Islamic banking windows now stands at 21%.

We sincerely acknowledge and appreciate the efforts of the Government of Pakistan (GoP) and the State Bank of Pakistan (SBP) for
developing the IBI in Pakistan. The Honourable Federal Shariat Court (FSC)’s much awaited verdict on Riba, to complete conversion of
the financial system to a Shariah-compliant interest-free system in five years, is an important milestone for us. We wish to place on
record our appreciation for the formation of Steering Committee by the GoP’s Finance Division for implementation of FSC’s decision. We
feel immense joy in informing you that the Chairman of our Shariah Board, Justice (Retd.) Muhammad Taqi Usmani and our Founding
President and CEO, Mr. Irfan Siddiqui have been nominated as members of this Steering Committee to provide strategic guidance and
support, aid in capacity building and monitor the progress in implementation of the FSC’s verdict on a Riba-free Pakistan. The Board
acknowledges the extraordinary contributions of our Chairman Shariah Board and our President & CEO towards the promotion of Islamic
banking. We firmly believe that we owe our success to the blessings of Allah (SWT) and strong adherence to our Core Values of
Shariah-compliance, Integrity and Service Excellence.

Economic Overview
2022 started on high hopes as the world economy started to rebound on recovery from the COVID-19 pandemic. However, this optimism was
short-lived and soon ended with the emergence of the Russia–Ukraine conflict that trigged a downward spiral in global macroeconomic
environment and led to a commodity super cycle (including oil) affecting economies around the world. For emerging markets like Pakistan, the
economic challenges were further exacerbated due to a turn in the global interest rate cycle. Resultantly, Pakistan’s economy, after posting a
GDP growth of 6.0% in fiscal year 2022, slowed down with significant contraction in latter part of the year.

The economic challenges were further amplified with the convergence of domestic political unrest and unprecedented catastrophic
floods that rendered more than 30 million people homeless and washed away thousands of cattle and agriculture crops, resulting in
balance of payments pressures, fiscal slippages and high inflation. Inflation rose from 12.3% at the beginning of the year to 24.5% in
December 2022. In response to the rising inflation in the country, the State Bank of Pakistan (SBP) also tightened its monetary policy
stance thereby raising the policy rate (benchmark rate) in a staggered manner from 9.75 percent at the beginning of 2022 to 16 percent
by the end of 2022 - a cumulative rise of 625 basis points. In January 2023, the benchmark rate was further increased to 17 percent. The
exit from the FATF grey list was overshadowed by the concerns on macro-economic stability. The national bourse also witnessed a
decline and lost 9 percent of its value, closing at 40,420 points compared to a level of 44,596 points in 2021.

The Federal Government is striving to control non-essential imports, enforcing austerity measures and striking a balance between fiscal
prudence and economic relief for the masses. The resumption of IMF program will unlock the financial support from friendly countries
and other multilateral institutions. In another positive development, Pakistan was able to secure total pledges of around $10 billion in the
International Conference on Climate Resilient Pakistan which took place in January 2023.

Our Performance Profit After Tax

Rupees in Million
By the grace of Allah (SWT), despite deteriorating economic 46,000 45,007
44,000
indicators, we continued our growth trajectory and delivered 42,000
40,000
strong financial results. Profit After Tax increased by 59% over the 38,000
36,000
previous year to Rs 45 billion from Rs 28.4 billion with Return on 32,000
30,000 28,355
Equity clocking at over 40%. We have consistently maintained 28,000
26,000
return on equity above the industry average and have focused on 24,000
22,000
22,166
value creation for our shareholders. The basic earnings per Share 20,000
18,000
– increased to Rs 25.15 from Rs 15.84 per share on enhanced 16,000
14,000
15,232

12,000
share capital of Rs 17.9 billion. 10,000 8,962
8,000
6,000
4,000
2,000
0
2018 2019 2020 2021 2022

34 Meezan Bank Annual Report 2022

Dividend per Share
We are pleased to inform you that the Board has approved Rs 3.00 (30%) per share final cash dividend for the fourth quarter of
2022. This brings the total cash dividend payout for the year to Rs 8.50 (85%) per share including Rs 5.50 (55%) interim cash
dividends paid during the year. This is in addition to the issuance of 10% bonus shares during the year. Alhamdulillah, we have
maintained our tradition of unbroken dividend pay-outs since the date of our listing on the Stock Exchange.

Most Valuable Bank by Market Capitalization

During the year 2022, Meezan Bank remained the most valuable bank in Pakistan, in terms of market capitalization, which highlights
investors’ confidence on our Bank’s management, our performance and growth potential.

Rs in Million

Profit and Loss Account 2022 2021

Profit / return earned on financing, investments and placements 232,121 110,072

Return on deposits and other dues expensed (110,417) (41,151)
Net spread earned 121,704 68,921
Fee, commission and other income 14,553 10,193
Foreign exchange income 3,617 3,158
Dividend income and gain / (loss) on securities - net 933 1,541
Non-funded and other income 19,103 14,892
Total Income 140,807 83,813
Operating and other expenses (48,245) (35,324)
Profit before provisions 92,562 48,489
Provisions and write offs - net (4,177) (993)
Profit before taxation 88,385 47,496
Taxation (43,378) (19,141)
Profit after taxation 45,007 28,355
Earnings per share - on enhanced capital - Rs 25.15 15.84

Profitability
Net Spread
Return on financings, investments, and placements increased to Rs 232 billion from Rs 110 billion last year – higher by 111% driven by
substantial rise in earning assets and a higher underlying benchmark policy rate. The average policy rate during the year increased from
7.29% to 13.20%. The return on deposits and borrowings also increased to Rs 110 billion from Rs 41 billion in 2021 – higher by 168%
due to an increase in average deposits and borrowings volume and an increase in depositors’ profit rates.

28% Growth in Non-funded income - Driven by Rise in Trade Volumes & Digital Initiatives
Fee, commission and other income posted a robust uptick of 43% to Rs 14.6 billion from Rs 10.2 billion last year, led by an increase in
debit cards, trade and branch banking related income. In 2022, more than 400,000 cards were added to our debit card portfolio, growing
the portfolio size to over 2.8 million cards. Overall spend on debit cards also grew from Rs 78 billion to Rs 149 billion, a rise of 90%, with
NFC transactions increasing by 8 times. Similarly, Inter Bank Fund Transfers (IBFT) and Utility Bill Payments (UBP) volumes reached a
total throughput of Rs 2 trillion and Rs 400 billion respectively with transactions count growing by 83% and 82%. Our state-of-the-art
mobile banking app continues to provide a seamless platform for customers to carry out their digital transactions in a secure and
efficient manner. Meezan Bank’s mobile banking application remained the industry leader, with an unbeatable 4.9 rating on both Google
Play Store and Apple App Store throughout the year. Nearly 1.4 million ‘financially active’ customers used our mobile application to
conduct more than 166 million digital transactions in 2022.

Our trade business volume reached Rs 2.2 trillion compared to Rs 1.7 trillion a year ago. We consider trade finance business a key
segment as it not only contributes to fee income but also attracts current account balances which in turn drive higher profitability. Our
extensive network of correspondent banks aids us in aggressively competing for trade business. Foreign exchange income also rose by
15% due to strong trade flows, prudent risk mitigation and concerted sales efforts. On an overall basis, non-funded income recorded a
28% growth, closing at Rs 19.1 billion.

Operating expenses
Operating and other expenses also increased by 37% to Rs 48.2 billion from Rs 35.3 billion, primarily due to an increase in costs
associated with the opening of 60 new branches during the year; a substantial rise in inflation; steep rupee devaluation and investment
in IT-related initiatives. Notwithstanding this increase in expenses, our income efficiency ratio improved to 34% from 42% last year due
to our continued focus on cost rationalization, process automation and an efficient operating cycle.

Taxation – Contribution to the National Exchequer

The Federal Government, through Finance Act 2022, raised the tax rate on banking companies to 49% for the year 2022 (39% normal
tax and 10% Super Tax) versus 39% in 2021 (35% normal tax and 4% Super Tax). As a result of this increase in tax rate and due to
growth in our profitability, we have recorded a higher tax charge of Rs 43.4 billion for 2022 (2021: Rs 19.1 billion).

Meezan Bank Annual Report 2022 35

Furthermore, Federal Government increased additional penal tax rate for banks failing to maintain Gross Advance to Deposit Ratio (ADR)
above 50% level. However, we did not attract this additional penal tax, due to our efficient tax strategy to maintain ADR at 50% plus
levels.

During 2022, we also collected, withheld, and deposited Rs 21.9 billion (2021: Rs 16.4 billion) in the National Exchequer, on account of
Income Tax / Federal Excise Duty / Provincial Sales Tax on Services as withholding tax agent on behalf of the Federal Board of Revenue
and Provincial Tax Authorities.

Balance Sheet Insights

Sizable growth in financings and investment portfolio augmented our total assets, which crossed the Rs 2.5 trillion mark as compared
to Rs 1.9 trillion in 2021- an increase of 35% or Rs 674 billion. A snapshot of key business results achieved during the year is as under:

Key Business Results 2022 2021 Variation

Investments
Sovereign Rs 1.26 trillion Rs 594 billion 112%
Others Rs 22 billion Rs 26 billion (15%)
Rs 1.28 trillion Rs 620 billion 107%
ADR (Gross Advance to Deposits) -% 61% 53% 15%
Islamic Financing and Related Assets - Gross Rs 1.02 trillion Rs 777 billion 31%
Deposits Rs 1.66 trillion Rs 1.46 trillion 14%
Total Assets Rs 2.57 trillion Rs 1.90 trillion 35%
Equity Rs 115.3 billion Rs 86.6 billion 33%
Capital Adequacy ratio 18.42% 17.81% 3%
Dividend per share:
Cash Dividend - Rs 8.50 6.00 42%
Bonus Issue 10% 15% (50%)
Branch Network 962 Branches 902 Branches 7%
Presence 317 Cities 290 Cities 9%
Trade Business (Imports and Exports) Rs 2.18 trillion Rs 1.69 trillion 29%

Gross Financing 31% Growth in Gross Financings Portfolio

In line with our unwavering focus on maintaining a high-quality
Rupees in Million
1100,000
diversified asset portfolio spread across all segments including
1,018,102
Corporate, Commercial & SME and Consumer, this year our gross
1000,000
financing portfolio crossed the Rs 1 trillion milestone and grew by
900,000 31% or Rs 241 billion without compromising on risk-acceptance
800,000 777,295 parameters. Gross advances to deposits ratio (ADR) also rose to a
comfortable level of 61% from 53% last year.
700,000

600,000
531,588 We continued to actively support the SBP-led initiatives for
522,264 506,513
500,000 increasing financial inclusion and overall economic development of
the country through participation under several refinance schemes
400,000
and initiatives. These included Prime Minister’s Kamyab Jawan
300,000 Program, Islamic SME Asaan Finance (ISAAF), and Roshan Apna
200,000 Ghar and Roshan Apni Car schemes for Non-Resident Pakistanis, to
name a few. We have also extended our support to the agriculture
0
2018 2019 2020 2021 2022 sector and exceeded the SBP assigned targets of agriculture credit
disbursement for 2021-22. The total exposure under various SBP
refinance schemes has increased by more than 25%.
To support and promote affordable Islamic housing finance for the masses, we have joined hands with the Pakistan Mortgage Refinance
Company (PMRC) this year. We have also introduced a new product – “Meezan Women First – Car Ijarah” to reduce the gender gap in
financial inclusion. Concerning United Nations Environmental Social Governance Framework, we are actively extending solar financing
to reduce the carbon footprint in the economy.

Non-Performing Financings and Provisions

During 2022, a specific provision charge of Rs 815 million and a reversal of Rs 1.48 billion was recorded against non-performing
financings. In view of recent catastrophic floods and the risk of any potential non-performing financings arising given the current
economic slowdown, an additional general provision of Rs 3.75 billion was made during the year which takes the non-performing
financing coverage ratio to 166% - one of the highest in the banking industry. The portfolio infection ratio (non-performing financing

36 Meezan Bank Annual Report 2022

ratio) remains at one of the lowest levels of 1.3% versus the overall banking industry average of 7.6%. We believe our existing level of
provision adequately covers the impact of IFRS-9 implementation. Accordingly, we do not foresee any financial impact as a result of the
adoption of IFRS-9 with effect from January 01, 2023.

Growth in Investments
Our investment portfolio grew by 107% to Rs 1.28 trillion from Rs 620 billion last year. The issuance of GoP Ijarah Sukuk at regular
intervals enabled us to increase the size of our investment book and reduce dependency on inter-bank secured placements under
Bai Muajjal. During the year, an additional Rs 706 billion were invested in GoP Ijarah Sukuk taking the total GoP Ijarah Sukuk
portfolio to Rs 1.1 trillion from Rs 398 billion. Out of the total investment portfolio, 98% represents investment in Federal
Government / Government Guaranteed Securities.

The implementation of SBP’s Shariah-compliant Open Market Operations (OMO-Injections) and Shariah-compliant Standing Ceiling
Facility has immensely helped the Islamic Banking Industry to manage its day-to-day liquidity more efficiently, for which we remain
grateful to the Government of Pakistan and the SBP.

Growth in Deposits Growth in Deposits

While the banking industry’s deposits recorded a growth of 7% in
Rupees in Million 1,658,490
2022, our deposits grew by 14% to Rs 1.66 trillion from Rs 1.46
trillion as at December 2021, with a market share of 7.4% in the
banking industry. More importantly, the deposit growth stemmed
from Current Account (CA) deposits which grew to Rs 819 billion - 37% 36% 40%
recording a growth of Rs 152 billion or 23% over last year. Current 46% 49%

Accounts now represent 49% of total deposits – almost half of our

total deposit book, while Saving Accounts (SA) represent 39% of
total deposits, reflecting a growth of 18%. The CASA deposits 667,181
36% 38%
36%
now account for 88% of total deposits, amounting to Rs 1.46 37% 39%
trillion. Our focus on continuously innovating our product offering
and ensuring unparalleled and seamless service delivery to our
customers through both digital and physical channels has 27% 26% 24% 17% 12%
enabled us to achieve these milestones and has contributed in the
2018 2019 2020 2021 2022
shape of higher brand loyalty, customers’ trust and satisfaction.
TD SA CA Deposits

Roshan Digital Account (RDA)

Alhamdulillah, we continue to lead the RDA inflows in the industry. Till the end of 2022, we received around USD 1.4 billion since
inception with a market share of around 25% in terms of RDA inflows in the industry and a total of more than 83,000 accounts. We now
have a dedicated Roshan Digital Centre – another industry first, inaugurated by the then SBP Governor (Acting). This Centre is
specifically designed to dedicatedly cater to the ever-growing needs of our overseas customers through innovative means. During 2022,
the following milestones were achieved for RDA:

■ USD $ One billion plus inflow since inception;

■ Highest number of Roshan Equity Accounts – Rs 3 billion worth of deposits; and
■ Over Rs 1 billion disbursement of Car Ijarah to our RDA customers since inception.

We will continue our active engagement with the SBP to create awareness about RDA and offer Shariah-compliant products to overseas
Pakistanis for their banking needs.

Islamic Banking Industry Share of Meezan Bank in Islamic Banking Industry -

Islamic banking continues to strengthen its roots in Pakistan with based on deposits
Meezan Bank as the market leader, offering a complete range of
Islamic banking products and services. The share of Islamic 33%
Banking Industry deposits now stands at 21% of the total banking
33%
industry deposits. Meezan Bank’s share of deposits amongst
dedicated Islamic banks operating in Pakistan is approximately
49% while its share of the Islamic banking industry as a whole,
including Islamic banking windows of conventional banks in
Pakistan is 33%.

Meezan Bank
Dedicated Islamic
Banks (5)
Conventional Banks
Islamic Windows (15)
34%

Meezan Bank Annual Report 2022 37

Growth in Branch Network Branch Network
Our Bank follows a hybrid growth model underpinned by 60
1000
expanding its physical presence in underserved areas of the 87 962
950
country whilst simultaneously augmenting its digital footprint 55 902
900
through innovative offerings and smooth channel migration. With 100
850
this spirit, another sixty branches in twenty-seven new cities were 800
815
59 760
added to our network during the year. Our geographical network 750
now stands at 962 branches in 317 cities (2021: 902 Branches in 700
660
290 cities). We believe that continued expansion in both physical 650

and digital space is important, owing to the large, diversified, and 600

geographically dispersed unbanked population of the country. 550

500

0
2018 2019 2020 2021 2022

ATM Network
In addition to the branch network, we operate with an extensive network of 1,000 plus ATMs across the country. We are the 3rd largest
bank in Pakistan to acquire off-us transactions despite a relatively smaller ATM network compared to other banks. This shows the trust
and confidence of other banks’ customers in the up-time and availability of cash at Meezan Bank’s ATMs at all times.

Merchant Acquiring Business

We continued to deepen our presence in the digital space through its merchant acquiring initiative. In 2022, we processed transactions
worth Rs 22.2 billion through our POS machines and within the first year of launch, expanded its acquiring footprint to over 254 cities in
Pakistan. Our acquiring business also increased to 11,000 plus POS machines deployed with merchants across Pakistan.

Credit Rating
VIS Credit Rating Company Limited has reaffirmed our entity ratings at ‘AAA/A-1+’ (Triple A/ A-One Plus) which denotes the highest
credit quality with negligible risk factors. The outlook on the assigned ratings is ‘Stable’.

Capital Adequacy Ratio

We remain adequately capitalized with Capital Adequacy Ratio (CAR) of 18.42% - significantly above the minimum regulatory
requirement of 12.00% for 2022. It is worth highlighting that our Common Equity Tier-I (CET-I) to total risk weighted assets ratio is almost
twice the minimum regulatory requirement of 8% after witnessing an increase of 189 basis points in 2022 – reflective of the quality of our
regulatory capital:

Capital Adequacy Ratio (CAR) Dec 31, 2022 Dec 31, 2021 Minimum Requirement

Common Equity Tier I – (CET I) 14.78% 12.89% 8.00%

Tier I 15.69% 14.00% 9.50%
CAR 18.42% 17.81% 12.00%

Human Capital
Alhamdulillah, we continued to recognise potential talent in the economy and created 1,300 plus new employment opportunities in both
rural as well as urban areas. Our human capital now comprises more than 15,000 resources. We believe in building a dynamic and
professionally competent workforce capable of providing a world-class banking experience to our customers.

Continuing with the philosophy of developing and nurturing quality talent, we continued our hybrid learning model using a blended
approach (including Virtual Instructor Led Trainings-VILT as well as face-to-face training modules) covering more than 12,000 staff via
1,100 plus internal and over 200 external trainings ranging from Islamic banking to role-based, technical and soft skills workshops. Apart
from this, we have been actively participating in webinars and awareness sessions for our customers, staff and general public at large
to bring Shariah-compliant offerings to the doorstep of every individual.

Performance of Subsidiary – Al Meezan Investment Management Limited

Our subsidiary, Al Meezan Investment Management Limited (Al Meezan) is the largest Asset Management Company (AMC) in Pakistan
with Assets under Management (AUMs) crossing Rs 282 billion as at December 31, 2022, including Separately Managed Accounts
(SMAs) for corporate and high net worth individuals - with an investor base of over 183,000 customers. These AUMs represent over 16%
of the total mutual funds industry and 40% of the Shariah-compliant mutual funds industry. Al Meezan also manages the largest
Voluntary Pension Fund in Pakistan called Meezan Tahaffuz Pension Fund with net assets of around Rs 15 billion as at December 31,
2022.

This year, Al Meezan received the prestigious ‘Best Asset Management Company of the Year 2022’ award at the CFA Society Pakistan’s
19th Annual Excellence Awards. The award was given in recognition of the company’s efforts to provide best in class Shariah-compliant
innovative investment solutions to its investors, further cementing its position as the leading AMC in Pakistan. Al Meezan has a track
record of over 27 years in fund management operations and has the unique privilege of being the first Asset Management Company
(AMC) in Pakistan to be awarded the highest management quality rating of AM1 by both VIS and PACRA.

Al Meezan has made its products and services easily accessible through a physical network of 25 branches across 15 cities in Pakistan
while also utilizing digital avenues and additional distribution network of Meezan Bank branches. Al Meezan offers a comprehensive

38 Meezan Bank Annual Report 2022

product suite of nineteen (19) Open Ended Mutual Funds, one (1) Voluntary Pension scheme and multiple investment plans, managing
investments in multiple asset categories like money market, income, commodity, equity, dedicated equity, balanced and asset
allocation. Al Meezan has recently launched a Shariah-compliant fixed term fund as well, expanding its comprehensive product suite.

Future Outlook and Strategy

Meezan Bank remains committed to contributing to the economic growth and stability of the country by strengthening the IBI and
assisting the government to shift towards Shariah-compliant banking solutions in line with the SBP’s vision to increase the market share
of the IBI to 30% from its current level of around 21% over the next three years.

We intend to maintain our share of IBI deposits and follow a balanced-growth strategy for deposits and financings in the year ahead. We
are ready to further diversify our exposures in different sectors of the economy while keeping all the risk acceptance parameters in
check. Acknowledging our national obligation, active participation in SBP-led initiatives for increasing financial inclusion would also
remain an area of focus. We will continue to maintain our financial stability ratios above the regulatory requirements and will further
strengthen our equity base in line with our future growth plans.

Expansion will continue in line with our hybrid growth strategy – acknowledging the importance of both physical and digital outreach of
the country. We will continue to invest in technology and offer the best-in-class digital services to our customers and maintain our
distinction as the frontrunner in the banking industry in this domain. We will InshaAllah launch our Shariah-compliant alternative to Credit
Card and employ a new high-tech Card Management System which will provide innovative solutions to our customers along with
state-of-the art upgraded version of Customer Relationship Management System.

Auditors
The present auditors, A. F. Ferguson & Co., Chartered Accountants, a member firm of the PwC network, retire and being eligible, offer
themselves for reappointment. As required under the Listed Companies (Code of Corporate Governance) Regulations, 2019 the Board
and the Audit Committee have recommended the appointment of A. F. Ferguson & Co., Chartered Accountants as auditors of the Bank,
for the year ending December 31, 2023.

Awards and Recognitions

Meezan Bank has achieved several prestigious recognitions during the year that include the following:

Best Bank of the Year 2021– Large Size Banks by the CFA Society of Pakistan
Alhamdulillah, Meezan Bank has won the prestigious ‘Best Bank of the Year 2021 – Large Size Banks’ award by the CFA Society of
Pakistan for the third consecutive year. In addition to the above, Meezan Bank has also been recognized with the following awards:

■ Best Islamic Bank of the Year 2021

■ Best Digital Banking Services 2021

Best Islamic Retail Bank – Global Award by Islamic Finance News (IFN) Malaysia
Alhamdulillah, Meezan Bank has been recognized by Islamic Finance News (IFN) of REDmoney Group - Malaysia as the Global Best
Islamic Retail Bank, for the year 2022. Meezan Bank has also swept the IFN 2022 Country Awards by winning all six categories for
Pakistan:

■ Best Islamic Bank in Pakistan

■ Best Investment Bank in Pakistan
■ Best Corporate Bank in Pakistan
■ Best Retail Bank in Pakistan
■ Most Innovative Bank in Pakistan
■ Best Digital Offering in Pakistan

It is worth mentioning that this achievement has made Meezan Bank one of only two banks in the 21 countries participating in these polls
that have the prestigious distinction of winning all local categories.

Best Consumer Bank – 2022 by Pakistan Banking Awards

This year, Meezan has won the highly coveted ‘Best Consumer Bank – 2022’ Award by the Pakistan Banking Awards – one of the most
prestigious recognitions in Pakistan’s banking industry. This award is given to the bank with the most efficient service delivery and
attention to customer requirements. The Bank had previously been recognized as the Best Bank in Pakistan in 2018 and 2020.

The Pakistan Banking Awards are organized by the Institute of Bankers, Pakistan in collaboration with DAWN Media Group and A. F.
Ferguson & Co., Chartered Accountants, a member firm of the PwC network, under the patronage of the State Bank of Pakistan and
adjudicated through an eminent jury of highly respectable luminaries with substantial experience in the financial sector.

We bow our heads to Allah (SWT) in thankfulness for such outstanding rewards for our meager efforts. At the same time, we express our
deepest gratitude to our customers for trusting us with their banking needs.

Endorsements
The Board of Directors is pleased to endorse the following statements in the Annual Report:

■ Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2019;
■ Profit after tax amounting to Rs 4.5 billion has been transferred to Statutory Reserves for the year 2022 as required under Banking
Companies Ordinance, 1962;
■ Risk management framework of the Bank;

Meezan Bank Annual Report 2022 39

■ Statement made by the Management relating to internal controls over financial reporting along with overall internal controls;
■ The pattern of Shareholding as at December 31, 2022; and
■ Corporate Social Responsibility.

Directors
The Board consists of eleven directors, including one female director and the CEO as a deemed director:

S. No. Name of Directors Category

1. Mr. Riyadh S.A.A. Edrees Non-Executive Director

2. Mr. Faisal A.A.A. Al-Nassar Non-Executive Director
3. Mr. Bader H.A.M.A. AlRabiah Non-Executive Director
4. Mr. Mubashar Maqbool Non-Executive Director
5. Mr. Naveed Iftikhar Sherwani Non-Executive Director
6. Mr. Faisal Fahad AlMuzaini Non-Executive Director
7. Mr. Mohamed Guermazi Non-Executive Director
8. Ms. Nausheen Ahmad Independent Director / Female Director
9. Mr. Mohammad Abdul Aleem Independent Director
10. Mr. Yousef S.M.A. AlSaad Independent Director
11. Mr. Irfan Siddiqui - President & CEO Executive Director / Deemed Director

During the year, four meetings of the Board of Directors were held. The record of the Board meetings held during the year and attended
by the Directors is as follows:

Category No. of meetings held No. of meetings

Name of Directors in tenure attended

Mr. Riyadh S.A.A. Edrees – Chairman Non-Executive Director 4 4

Mr. Faisal A.A.A. Al-Nassar – Vice Chairman Non-Executive Director 4 4
Mr. Bader H.A.M.A. Al- Rabiah Non-Executive Director 4 4
Mr. Mubashar Maqbool Non-Executive Director 4 4
Mr. Faisal Fahad AlMuzaini Non-Executive Director 4 4
Mr. Naveed Iftikhar Sherwani Non-Executive Director 4 4
Mr. Mohamed Guermazi Non-Executive Director 4 4
Mr. Mohammad Abdul Aleem Independent Director 4 4
Ms. Nausheen Ahmed Independent / Female Director 4 4
Mr. Yousef S.M.A. AlSaad Independent Director 3 3
Mr. Irfan Siddiqui – President & CEO Executive Director 4 4

The Board has constituted the following five Committees with defined Terms of Reference (ToRs):

1. Human Resources, Remuneration and Compensation Committee

2. Risk Management Committee
3. Audit Committee
4. Information Technology Committee
5. IFRS 9 Implementation Oversight Committee

The names of members and their attendance in Board Committees Meetings held during the year are included in the Annual Report.

Remuneration of Board members is recommended by the Board and approved by shareholders in the General Meeting. However, in
accordance with the Code of Corporate Governance, it is ensured that no director takes part in deciding his / her own remuneration. The
Bank does not pay any remuneration to non-executive directors except fee for attending the meetings. In order to retain the best talent,
the Bank’s remuneration policies are structured in line with the SBP regulations, prevailing industry trends and business practices. For
information on remuneration of Directors and CEO in 2022, please refer notes to the financial statements.

40 Meezan Bank Annual Report 2022

The Bank has a policy in place for dealing with conflicts of interest relating to members of the Board. Under this policy, any director who
has a business interest in a matter being presented at a Board meeting does not participate in either the discussion or the decision on
that matter. This policy is applied consistently and there was no breach of this policy during the year.

Performance Evaluation Mechanism for the Board

Members of the Board of Directors and its sub committees are competent and experienced individuals, representing diversified
educational and vocational backgrounds which are invaluable in determining the overall direction of the organization.

The Board of Directors is keen to ensure that it reviews the effectiveness of its performance periodically. To that end, all individual Board
members answer a comprehensive questionnaire focused on evaluating, from various angles, whether the Board has discharged its
duties diligently and with foresight. A committee of Directors is designated to manage the Board’s self-evaluation exercise and present
its findings to the Board for deliberation and discussion.

During the self-evaluation exercise, the Board evaluates itself from the following perspectives

■ Evaluation of the overall Board

■ Evaluation of the Chairperson
■ Evaluation of Individual Directors
■ Evaluation of Independent Directors
■ Evaluation of Board Committees
■ Evaluation of the CEO

This exercise in critical self-assessment allows the Board to evaluate its performance and overall effectiveness in setting strategies,
devising controls, reading market trends by monitoring micro and macroeconomic factors and responding to adverse unforeseen
situations to further the cause of a learning organization. This process also ensures that the Board is constantly growing intellectually
and the responsibility of steering the Bank to new heights of success is discharged effectively and efficiently.

The SBP Guidelines require that at least once in every three years, the evaluation should be conducted by an external independent
evaluator. The Bank engaged Pakistan Institute of Corporate Governance (PICG) as an independent evaluator to conduct this evaluation
in 2018 and 2021 while for 2022 this exercise is conducted by adopting an in-house approach using quantitative techniques, as per SBP
guidelines.

Acknowledgement
The Board would like to express its sincere thanks and gratitude to the State Bank of Pakistan, the Ministry of Finance and the Securities
and Exchange Commission of Pakistan for their continuous commitment to establish a viable Islamic financial system in the country.

Our landmark achievements would not have been possible without the proactive support of our diversified customer base, for which we
remain indebted to them. We also sincerely thank each one of our team members for their hard work and commitment. May Allah
Almighty bestow His blessings on our entire team and their families. We would also like to thank the Chairman of our Shariah Board,
Justice (Retd.) Muhammad Taqi Usmani, members of the Shariah Board, shareholders, holders of Additional Tier I Sukuk and
Sub-ordinated Sukuk (Tier II) for their continued support towards establishing Meezan Bank as the country’s Premier Islamic Bank.

Most importantly, we are thankful to Allah Almighty for His continued blessings on our Bank which has enabled us to achieve this
outstanding performance in a very short span of time and we pray that He gives us more strength and wisdom to further expand our
Vision of establishing Islamic banking as banking of first choice.

On behalf of the Board

Riyadh S.A.A. Edrees Irfan Siddiqui

Chairman President & CEO

Karachi:
February 16, 2023

Meezan Bank Annual Report 2022 41

Meezan Bank Annual Report 2022 43
44 Meezan Bank Annual Report 2022
Branch Network
60
1000
87 962
950
55 902
900

850 100
815
800 760
59
750

700
660
650

600

550

500

0
2018 2019 2020 2021 2022

2021 2022

Meezan Bank Annual Report 2022 45

Growth in Deposits
Rupees in Million 1,658,490

37% 36% 40%

46% 49%

667,181
36% 38%
36%
37% 39%

27% 26% 24% 17% 12%

2018 2019 2020 2021 2022

TD SA CA Deposits

Share of Meezan Bank in Islamic Banking Industry -

based on deposits

33%
33%

Meezan Bank
Dedicated Islamic
Banks (5)
Conventional Banks
Islamic Windows (15)
34%

46 Meezan Bank Annual Report 2022

(Sovereign)

Gross Financing
Rupees in Million
1100,000
1,018,102

1000,000

900,000

800,000 777,295

700,000

600,000
522,264 531,588
506,513
500,000

400,000

300,000

200,000

0
2018 2019 2020 2021 2022

Meezan Bank Annual Report 2022 47

48 Meezan Bank Annual Report 2022
Profit After Tax
Rupees in Million
46,000
45,007
44,000
42,000
40,000
38,000
36,000
32,000
30,000
28,000
28,355
26,000
24,000
22,166
22,000
20,000
18,000
16,000 15,232
14,000
12,000
10,000 8,962
8,000
6,000
4,000
2,000
0
2018 2019 2020 2021 2022

Meezan Bank Annual Report 2022 49

Performance
BUSINESS AND OPERATIONS REVIEW GROWTH IN 2022
Business Review
Despite deteriorating macroeconomic indicators and political uncertainty, the Bank continued
its growth momentum during the year with total assets crossing Rs 2.5 trillion - a 35% growth 35% 31%
Islamic Financing &
over the preceding year. The supportive liquidity management framework adopted by the Total Assets Related Assets - Gross
State Bank of Pakistan (SBP) enabled the Bank to channel its excess liquidity into Government
of Pakistan (GoP) Ijarah Sukuk which led to an increase in the Bank’s investment book by
approximately Rs 660 billion. The Bank maintained its strategic focus of mobilizing deposits
across all sectors of the economy whilst maintaining its Gross Advances to Deposits Ratio
(ADR) above 50%. Key highlights of the Bank’s business activities are as follows:
107%
Investments
14%
Deposits

2022 2021
Total Assets Rs 2.57 trillion Rs 1.9 trillion 160% 33%
Islamic Financing & Related Assets – Gross Rs 1.0 trillion Rs 777 billion Dues to Financial
Institutions Total Equity
Investments Rs 1.28 trillion Rs 620 billion
Deposits Rs 1.66 trillion Rs 1.46 trillion
Due to Financial Institutions
Total Equity
Rs 573 billion
Rs 115 billion
Rs 220 billion
Rs 87 billion
7%
Total Branches
Total Branches 962 902

Notwithstanding the ongoing economic slowdown as a result of monetary contraction, the Bank was able to grow its financing portfolio
by 31% while keeping all asset quality parameters in check. The Bank’s gross financing assets crossed the Rs 1 trillion mark for the first
time and is now the third largest financing portfolio in the industry. The biggest contributor to this increase was the Bank’s Corporate &
Institutional Banking segment with growth being well distributed across public-sector entities and private sector blue-chip companies.
Commercial and SME portfolio also showed a healthy growth driven by the Bank’s strategy to bring Shariah-compliant banking solutions
to the doorstep of small and medium size enterprises – which represent a sizable share in overall GDP of the country. Consumer
Financing segment of the Bank maintained its growth momentum in early 2022 but showed considerable slow-down in the latter part of
the year due to changes in Prudential Regulations and supply chain disruptions in the automobile sector.

It is pertinent to note that there was no increase in the overall non-performing financing (NPL) portfolio despite a significant rise in overall
size of the financing book with economic headwinds and catastrophic flood plaguing the country during the year. Instead, the Bank
witnessed a decline in NPLs which reduced to Rs 13.6 billion from Rs 14.5 billion last year, with the NPL infection ratio improving further
to 1.3%. This not only demonstrates the resilience of the Bank’s customer base but also the robustness of its credit & risk assessment
process and swift follow-up and prompt recovery mechanism. The Bank continued to build up for any potential NPLs and further beefed
up its additional general provision which now stands at Rs 9.1 billion. The NPL coverage ratio has increased to 166% from 133% last
year, which is one of the highest in the banking industry.

The Bank’s investment portfolio recorded a two-fold increase following fresh investment in GoP Ijarah Sukuk. The Bank’s variable rate
GoP Ijarah Sukuk now amount to Rs 854 billion while it also holds Rs 256 billion of fixed rate Ijarah Sukuk. The Bank’s portfolio of Bai
Muajjal with other financial institutions decreased to Rs 35 billion from Rs 238 billion in 2021 as it deployed its liquidity in GoP Ijarah
Sukuk. The Bank also increased its borrowing from SBP through Shariah-compliant Mudarabah based Open Market Operations (OMO).

The Current and Savings Account (CASA) deposits base of the Bank grew to Rs 1.46 trillion which is even higher than the Bank’s total
deposits a year ago. The Bank’s CASA deposits have grown by 21%, representing 88% of deposit mix. The Bank rationalized its deposit
mix and reduced its fixed deposit portfolio by 20% from last year. Nonetheless, similar to previous years, the Bank’s overall deposits
growth of 14% outpaced the overall industry deposit growth of 7%.

Driven by the growth in the Bank’s business activities and Deposits

increase in underlying SBP policy rate, the Bank’s Profit After Tax Rupees in billion
grew to Rs 45 billion as compared to 28 billion last year – up by
1,658
59%, contributed by rise in both funded and non-funded income. 1,700
1,600
Net spread grew to Rs 122 billion from Rs 69 billion in 2021 with 1,500
1,456
1,254
non-funded income registering a 48% growth, closing at Rs 19.1 1,400
1,300
billion as compared to Rs 14.9 billion in 2021. Trade finance, 1,200 933
1,100
branch banking and debit card related incomes were key drivers 1,000 785
of the increase in non-funded income. The substantial growth in 900
800
profitability enabled the Bank to build up its reserves and 700
667

contributed to its strong equity base, which would enable it to 600

500
sustain its growth trajectory. The Bank’s total equity grew to Rs 450
350
115 billion, up by 33% from last year, after distribution to its 300
shareholders out of current year’s profits. 250
200
150
100
50
0
2017 2018 2019 2020 2021 2022

Meezan Bank Annual Report 2022 51

Credit Rating

AAA
Meezan Bank is the youngest AAA credit rated bank in Pakistan. The Bank’s medium to long-term
rating of ‘AAA’ denotes highest credit quality with negligible risk factors, being only slightly more than
for risk-free debt of Government of Pakistan (GoP). The credit rating agency has acknowledged the
Bank’s liquidity profile as ‘strong’, as reflected by the Bank’s ability to post strong growth in deposits Youngest AAA credit
along with an improvement in deposit composition whilst maintaining the lowest cost of fund rating bank in Pakistan
amongst peers.

Retail Banking
Meezan Bank has achieved impressive growth over the last twenty years as a commercial bank and is recognised as the flag bearer of
Islamic Banking in Pakistan. The key elements behind the Bank’s growth and success have been its ability to provide a wide range of
deposit products, its strong focus on customer services, fast & secure digital banking solutions and zero-tolerance approach to
Shariah-compliance in all areas of its business.

In order to facilitate senior citizens, widows and differently-abled persons, Meezan Bank has launched dedicated bank accounts that
offer higher Shariah-compliant returns on deposits in Pak Rupees only.

PROGRESS IN 2022
Launch of *
88% Meezan Senior USD 1.4 billion
CASA Mix Citizen Account Leading in RDA total inflows

Four Fold Launch of *

Rs 1 billion
Freelancer Account Meezan Digital
Portfolio Accounts Disbursed for Roshan Apni Car
*Since inception

Prime Minister’s Initiative of Roshan Branch Network

Digital Account (RDA) The Bank’s strategy of focusing on financial inclusion by opening
Meezan Bank has maintained its lead position in terms of total branches in remote locations has also contributed to its success
inflows in Roshan Digital Accounts (RDA) and received around by giving Islamic banking a geographically diverse footprint and
USD 1.4 billion since inception, which is 25% of the market share. making it accessible to a large portion of the country’s population
The Bank closed the year 2022 with more than 83,000 accounts. – an approach that is consistent with its Vision of establishing
Major highlights for Roshan Digital Accounts during 2022 were: ‘Islamic banking as banking of first choice...’

■ USD 1 billion plus inflows since inception The Bank added 60 new branches to its network, taking the total
■ Top Bank for achieving the highest number of Roshan Equity network size to 962 branches in 317 cities across Pakistan. The
Accounts growing ‘brick & mortar’ network is complemented by a
■ More than Rs 1 billion disbursed for Roshan Apni Car since comprehensive array of digital services including Meezan Internet
inception Banking and Mobile App, which is the top-rated mobile
application in the country’s banking industry, as well as other
Meezan Digital Accounts Alternate Distribution Channels.
In 2022, Meezan Bank launched an end-to-end digital account
opening facility called Meezan Digital Account, which allows Branch Network
customers to conveniently open an account online without having Branches Cities
to visit a branch. This is a major step towards the Bank’s digital 1,000 962
950 902
journey which will facilitate account opening process in an 900
efficient manner. Over 29,000 accounts were opened during the 850 815
800 760
year, ranging from current to basic savings accounts including: 750
700 660
650 601
■ Meezan Digi Asaan Account 600
■ Meezan Digi Remittance Account 550
500
■ Meezan Digi Freelancer Account 450
400
■ Meezan Rupee Account 350 317
290
■ Meezan Bachat Account 300
223 248
250
181
200 154

Freelancer Accounts 150

100
50
As part of its efforts towards financial inclusion and to support the 0
growing talent pool of entrepreneurs in Pakistan, the Bank is 2017 2018 2019 2020 2021 2022

providing conducive banking services to Freelancers and has

opened more than 12,000 freelancer accounts, quadrupling this
portfolio in 2022.

52 Meezan Bank Annual Report 2022

Alternate Distribution Channels
In addition to the traditional brick-and-mortar banking network, Meezan Bank provides convenient and instant access to banking
services through a wide range of Alternate Distribution Channels (ADCs). Being one of the leading banks in the country, Meezan Bank
has state-of-the-art ADC infrastructure as an integral part of its digital banking infrastructure.

#1 #1
Bank in Pakistan for Rated App on Play Store
#1 Digital Transactions
Volume
and App Store 103%
Debit Card Market Share POS Spend
for E-commerce
1Link Monthly Ranking Report

#1 10,000+
POS Machines
IBF T Income installed

IT IT
DEB DEB

it
deb 90 90 78 78 78
78 90 um 78 78 56 56 56
tin 56 56 34 34 34
34 56 34 34 12 12 12
pla
12 12 01 01 01
53 12 / 25
521 / 25
5 21 25 2
5
25 2
5 25 2
5
/ 2
5
14 14 / 5
17 1 7/ 5 1 7/ 5 01
54 77 50 2 02 03 VALID 0 3 VALID 0 3
THRU 5 THRU4 THRU4 THRU4
VALID VALID VALID
THRU
0 0 A 0 4A
5 0 4A37
5 0 37
4A
5 0 A
26 A 1/ 2 5245
/ 2 5245
/ 2 37
/ 2 / 2 / 2
05/
IL RAZ 0 VALID
0 1 IL RAZVALID 0 1 IL RAZVALID 0 1 IL RAZVALID 0 1 IL RAZVALID 0 1 IL RAZ
HA FROM HA FROM HA FROM
HA FROM HA FROM HA
SO SO SO SO SO SO

21%
Debit Cards
Portfolio 74% NFC
E-commerce Transactions
98% Enabled ATMs
ATM Uptime
47% 95%
IBFT Transactions
Bill Payment
Transactions

The successful launch of Meezan Visa Infinite Debit Card and an effective build-up of Acquiring Business are some of the landmark
achievements in addition to various other initiatives taken in 2022.

RAAST Payments
State Bank of Pakistan launched an instant payments gateway to offer free of cost, faster and safer payments to all citizens
of Pakistan by the name of Raast. Meezan Bank, in line with its efforts to promote and grow digital payments, adopted
Raast and offered it to all customers through its Mobile App and Internet Banking, free of cost. Raast offers world class
Raast convenience to customers whereby they can easily send and receive funds on cell phone numbers in a matter of seconds.
Pakistan’s Instant Payment System
Raast functions on latest payment standards (ISO 20022) that allows for a superior payment experience and real time
settlement between banks. During the year, Meezan Bank processed 276,000 transactions amounting to over Rs. 13 billion.

ATM Network
Meezan Bank’s ATM network crossed 1,000 touchpoints during top-rated banking App in the country throughout the year, having
the year to grow to 1,061 ATMs across Pakistan, including 115 an impressive user rating of 4.9 out of 5.0 third year in the row on
off-site ATMs. Meezan Bank’s ATMs offer an unparalleled both Google Playstore and Apple App Store.
customer experience with 98% up-time throughout the year.
63% of the Bank’s active customers are using Meezan Mobile
All the Bank’s ATMs are biometric enabled and EMV-compliant Banking App for their day-to-day banking needs and have
enabling customers to transact through their thumb impression performed over 166 million financial
even without a physical debit card. NFC acceptance on ATMs transactions amounting to over Rs 6 trillion
was also launched in 2022, permitting customers to withdraw during 2022, making Meezan Bank the
their cash with just a tap of their debit card on Meezan Bank's leading bank in Pakistan in terms of digital
ATMs. Meezan Bank also offers the highest withdrawal limit of transactions as per 1Link’s Monthly Ranking
Rs 100,000 in a single transaction through its ATMs, which is an Reports (a 3rd party switch) published during
additional convenience to its customers. The Bank dispensed the year. Meezan Bank also ranks as the 63%
over Rs 1.4 trillion in cash through its ATM network during 2022, topmost bank in Pakistan for of active
which was 34% higher than the previous year. Meezan Bank also funds transfer & bill customers
use Meezan
acquires the highest number of Cash Withdrawal transactions per payments through Mobile Banking
ATM from other banks’ customers, making it the most favourite digital channels as per App
ATM network for the banking customers of Pakistan. 1Link Monthly
Ranking Report.
4.9 rated
for 3rd consecutive
Mobile App & Internet Banking year
The Bank's customers can access its banking services 24/7 from Over

166 Mn
FY 2022
the comfort of their homes and elsewhere through Meezan Mobile
Banking App and Internet Banking. Meezan Mobile Banking App
has consistently maintained its leadership position as the transactions

Meezan Bank Annual Report 2022 53

Debit Cards
Meezan Bank offers one of the most prolific Debit Card portfolios in the industry in terms of
product offerings and has made available best in class payments-related technology to its
customers, including NFC, Chip & PIN based security, mobile-based contactless payments
and 3D Secure e-commerce payments.

Meezan Bank has been awarded the 'Fastest Growing Debit Cards Portfolio in Pakistan' by
Visa for the year 2022. Visa is the Largest International Payment Scheme operating in
Pakistan.

With a spend volume of Rs. 149 billion during the year, Meezan Bank is the industry leader
in customers’ usage of Debit cards. The Bank is also the market leader in e-commerce
usage on its Debit Cards with more than 38% share of the industry spend as per the SBP’s
Payment Systems Review for fiscal year 2021-22. The Bank’s volume of e-commerce
transactions grew by an impressive 74% over last year. POS spend also surged by 103%
by value during the year whereas the cards portfolio grew by 21%.

Meezan Bank launched Meezan Visa Infinite Card during the year. This card aims to
EXCEPTIONAL. LUXURIOUS.
provide a world-class, Shariah-compliant payment product to its high-net-worth
INCREDIBLE. INFINITE.
customers. This is the top-most debit card available in Pakistan, offering one of the highest
MEEZAN VISA INFINITE DEBIT CARD
limits and a wide range of features and discounts, both locally and internationally, to the WELCOME TO A WORLD OF INFINITE POSSIBILITIES
Bank’s premium customers. The card also offers exclusive travel perks including access to
over 1,000 VIP Airport Lounges globally, 24-hour concierge access and discount on car
rentals, in addition to various other international offers by Visa.

Meezan Aura Card (Shariah-compliant alternative to Credit Card)

The soon to be launched Meezan Aura Card is a state of the art Shariah-compliant
alternative to conventional Credit Cards that will provide best-in-class experience to
customers for their short-term credit and transactional needs. Meezan Aura Card,
developed as a Charge Card, will offer upto 50 days of credit period without any interest. Additionally, customers will be able to earn
reward points and carry out transactions while traveling internationally, which is not possible through a Debit Card. Currently, the
product is in soft launch phase and would soon be available commercially to all customers of Meezan Bank who fulfil the Bank’s
underwriting criteria.

POS Terminals
2022 was the first full year for Merchant Acquiring Business after its launch in late 2021.
MEEZAN ACQUIRING BUSINESS
During the year, Meezan Bank showed tremendous growth in the deployment of POS
machines all across Pakistan. By covering 272 cities within the first year, Meezan Bank
became the fastest bank to expand geographically in this domain. During the year, more

1
st
than 10,000 POS terminals were installed at over 7,000 unique merchants - majority of Islamic bank to launch acquiring
whom started accepting digital payments for the first time. This way the Bank is making a business in Pakistan
significant contribution in digitizing the payments landscape of Pakistan while eliminating
cash and documenting retail transactions in line with the long-term strategic vision of SBP.
Meezan Bank remains committed to growing the footprint of digital acceptance in Pakistan.

E-Commerce Payment Gateway

1
st
Meezan Bank launched a state-of-the-art e-commerce Payment Gateway in 2021 and Islamic bank to launch an
enabled over 300 e-commerce merchants during the year 2022. Meezan Bank’s e-commerce Payment Gateway
e-commerce Payment Gateway uses the latest technology and offers a wide range of
checkout experiences on the websites of the Bank’s clients. Meezan Bank also entered
into strategic alliances with various digital payment aggregators who utilize the Bank’s
payments infrastructure to onboard a large number of merchants and thus help in growing
digital payments at a much faster pace in Pakistan.

1
st
Acquirer to launch all four schemes
Digital Fund Transfers simultaneously
Meezan Bank’s customers can transfer funds to both Meezan and other banks’ customers
through its Mobile App and Internet Banking, both of which include the RAAST payment
option as well. During the year, IBFT (Interbank Fund Transfer) transactions through digital
channels increased by over 95%, primarily driven by the Bank’s Mobile App. Meezan Bank
received the highest amount of funds via IBFT during 2022 - amounting to Rs 3.08 trillion.

1
st
Meezan Bank also ranked highest in IBFT income, second highest in IBFT sending Bank with 100% NFC Terminals
transactions by value and third highest in IBFT sending transactions by volume, ahead of across Pakistan
all commercial banks in Pakistan.

Bill Payments
Meezan Bank offers one of the largest bill payments portfolio to its customers, comprising
over 2,000 bill payment options for Utility Bills, Top-ups, Internet Bundles, Challans, FBR
Taxes, School Fees, University Fees, Club Fees, Vouchers, Credit Card payments and 272 cities
many others. In 2022, the Bank processed over 33 million bill payment/top-up transactions, Fastest geographic penetration
amounting to Rs 442 billion.

54 Meezan Bank Annual Report 2022

Collaboration with FinTechs
The Bank believes in active collaboration with FinTech start-ups and has developed a range of API based payment services for its Fintech
partners, including BIN sponsorship services with local and international payment schemes. Meezan Bank serves as the settlement bank
as well as acts as a Trustee for various FinTechs. Some of the Bank’s key Fintech partners are:

Home Remittance
Meezan Bank plays a vital role in driving home remittances through banking channels under both Pakistan Remittance Initiative (PRI) and
non-PRI arrangements. In 2022, the flow of remittances was under pressure amid global economic challenges worldwide. Pakistan was
no exception to this global economic meltdown as remittances steadily dwindled throughout the year. Despite these challenges, Meezan
Bank achieved a revenue growth of 10%. To augment the Home Remittance business, the Bank maintained its focus on improving
customer experience by leveraging technology, digitization and automation of processes and tapping of additional payment corridors.
Additionally, the Bank’s relationship with MTOs, exchange companies and remittance partners helped in fetching Roshan Digital
Accounts (RDA) business which contributed to the Bank’s leadership position in the segment.

Financing Portfolio
The Bank offers a comprehensive array of Shariah-compliant financing solutions to cater to working capital finance, import, export
refinance, commodity operations financing, long-term finance, documentary credit requirements, and project-based financing needs of
a large number of clients. The Bank’s performance in various types of financing segments has been as follows:

PROGRESS IN 2022
Corporate Banking

2022 Rs 763 billion Portfolio NPF under

2021 Rs 573 billion 33% 1.5%

Investment Banking

Rs 1.47trillion Rs 272 billion 7 MW Solar Power

Transactions since inception Transactions during 2022 projects financed during 2022
Commercial Banking
NPF under
Rs 174 billion Rs 1,055 billion
Portfolio Trade Volume 2%
Corporate Banking
Meezan Bank provides Shariah-compliant innovative business solutions to a large number of corporate clienteles comprising private and
public sector entities as well as multinationals. A focused business strategy to diligently build a high quality and well-diversified portfolio
has enabled the Bank to grow its Corporate Banking portfolio from Rs 573 billion in 2021 to Rs 763 billion in 2022 - a substantial growth
of 33%.

Investment Banking Sector Wise Breakdown

Meezan Bank is one of the most active Investment Banking
players in Pakistan. Since its inception, the Bank has led 6% 1%
arrangement and advisory mandates for a significant number of
project finance, syndications and capital market transactions 7%
amounting to over Rs 1.47 trillion. During 2022, the Bank
negotiated and led transactions worth over Rs 272 billion,
comprising debt arrangement and advisory deals (equity
29%
13%
advisory) in diverse sectors including infrastructure, power,
telecommunications, real estate and textiles. Infrastructure
Power
Telecommunication
Sectoral breakdown of the transactions led by the Bank is FI
depicted here: FMCG
Real Estate
18% 26% Others

Meezan Bank Annual Report 2022 55

The Bank executed numerous large-scale infrastructure transactions under public-private partnership structure, thus playing a pivotal
role in paving the path for attracting local and foreign investors for development of much-needed infrastructure projects in the country.
Being mindful of the United Nations Environmental, Social and Governance (ESG) framework, the Bank has always given priority to
initiatives that focus on ESG as a strategic direction and has aligned its focus on renewable energy / green banking projects in line with
its aim of combatting climate change and reducing dependence on costly imported fuels. Meezan Bank is engaged with numerous
clients for providing financing for large and small-scale renewable energy projects, which will contribute in improving the energy mix of
the country. During the year, Meezan Bank extended financing for a total of 7 mega-watt solar power captive projects to various
corporate entities.

Meezan Bank's capabilities in the field of Islamic Finance are widely recognized and acknowledged by numerous local and international
bodies through various awards and accolades. Awards and recognitions and key transactions of the year are highlighted below.

Key Transactions

Din Energy Limited Running Musharaka

Mandated Lead Arranger & Adviso, Musharakah Agent Facility Rs 670 million
Hyundai Nishat Syndicated Long Term
Mandated Lead Arranger & Advisor and Shariah Structuring Agent Islamic Finance Facility Rs 1,000 million
Burj Solar Energy (Private) Limited Syndicated Long Term
Mandated Lead Arranger & Shariah Advisor, Investment Agent Islamic Finance Facility Rs 1,000 million

Globe Residency REIT – Naya Nazimabad

Financial Advisor, Shariah Advisor
Musharaka Rs 1,300 million
Masood Textile Mills Limited Syndicated Short-term
Mandated Lead Arranger & Shariah Structuring Bank, Investment Agent Working Capital Financing Rs 1,500 million
Facility

Ismail Industries Limited Syndicate Islamic

Mandated Lead Advisor & Arranger, Shariah Structuring Bank and
Finance Facility Rs 4,000 million
Investment Agent

Hub Power Company Limited Series of Short

Mandated Lead Arranger & Financial Advisor & Investment Agent Term Sukuk Rs 4,500 million
Ismail Industries Limited
Mandated Lead Advisor & Arranger
Working Capital Facility Rs 5,000 million

Ghotki Kandhkot Road & Bridge Company Private Limited Syndicated Bridge
Mandated Lead Arranger & Advisor, Investment Agent, Shariah Advisor Finance Facility Rs 5,000 million
Pak Gulf Construction Private Limited Syndicated Finance
Mandated Lead Arranger & Financial Advisor, Investment Agent & Facility for Five Star Rs 6,202 million
Accounts Bank Deluxe Hotel

Engro Polymer & Chemicals Limited Syndicated Long Term

Mandated Lead Arranger & Shariah Advisor, Investment Agent Islamic Finance Facility Rs 8,750 million

Transworld Associates Syndicated Long Term

Mandated Lead Advisor & Arranger, Investment Agent and Shariah Islamic Finance Facility Rs 11,100 million
Structuring Bank

Pakistan National Shipping Corporation Limited Syndicated Long Term

Mandated Lead Advisor & Arranger Islamic Finance Facility Rs 11,825 million

Sui Southern Gas Company Limited Syndicated Term

Mandated Lead Advisor & Arranger and Shariah Structuring Agent Finance Facility
Rs 15,000 million
Sui Southern Gas Company Limited Syndicate
Mandated Lead Advisor & Arranger and Shariah Structuring Agent Finance Facility
Rs 21,000 million

56 Meezan Bank Annual Report 2022

K-Electric Limited Series of Rated, Unsecured,
Mandated Lead Advisor & Arranger, Investment Agent and Shariah
Structuring Bank
Privately Placed Short
Term Sukuk
Rs 28,500 million

Pakistan-Kuwait Investment Company (Private) Limited Lead Arranger &

Long Term Islamic Finance Facility Shariah Advisor
Rs 30,000 million

Pakistan Telecommunications Limited Syndicated Term

Mandated Lead Arranger & Arranger and Shariah Structuring Advisor Finance Facility Rs 35,000 million
Pakistan Mobile Communications Limited Syndicated Term
Mandated Lead Advisor & Arranger Finance Facility Rs 40,000 million

Key Awards and Recognitions

Key Awards for the year 2022 are as follows:

Islamic Finance News – Malaysia

Best Investment Bank - Pakistan

Asian Banking and Finance June 2021

June 2021 June 2021

June 2021

Corporate & Investment Banking

22

22
22

22
Awards SUKUK ADVISER BEST ISLAMIC
OF THE YEAR - INVESTMENT
Innovative Islamic Deal of the Year - Pakistan PAKISTAN BEST SYNDICATED
LOAN -
BEST GREEN
FINANCING -
BANK - PAKISTAN
PAKISTAN PAKISTAN
Daniel Yu Daniel Yu

The Asset Triple A Islamic Finance

Editor in Chief Editor in Chief

Daniel Yu Daniel Yu
Editor in Chief Editor in Chief

Awards
Best Islamic Investment Bank - Pakistan
Sukuk Adviser of the Year - Pakistan
Best Green Financing - Pakistan IFFSA
ISLAMICFINANCEFORUMOFSOUTHASIA
Cherat Cement Company 1.4 billion rupees facility
Mandated lead adviser and arranger BEST BANKS

Best Syndicated Loan - Pakistan GOLD 2022

Pakistan Mobile Communications 10.5 billion rupees Gold Award 2022

for Islamic
Islamic syndicated term finance facility Shariah adviser, Investment Bank Best Investment Bank
mandated lead adviser and arranger of the Year in Pakistan

Innovative Islamic
Deal of the
Year - Pakistan
PRESENTED BY

Islamic Finance Forum of South

Asia (IFFSA) Awards
Gold Award for Islamic Investment Bank
of the Year

DEVELOPING
ISLAMIC
CAPITAL MARKETS
Meezan Bank, being an Islamic Financial Institution, does not invest in non-Shariah-compliant shares. However,
investment can be made in companies which are Shariah-compliant as per the criteria set by Shariah scholars.
Islamic Indices are also available at PSX which consist of various Shariah-compliant companies. Currently, there
are two Islamic Indices, under the name of KMI 30 Index and PSX-KMI All Share Index. KMI 30 Index reflects
the performance of thirty most liquid Shariah-compliant stocks, whereas PSX-KMI All Share Index reflects all
available Shariah-compliant stocks.
These Indices have the following objectives:
■ To create awareness for the general public regarding Shariah-compliant shares
■ To provide investors relevant benchmark for returns on Shariah-compliant equity investments.

List of Shariah-compliant companies on PSX website is updates semi-annually.

Meezan Bank Annual Report 2022 57

Commercial Banking
Including Small & Medium Enterprises (SME) and Agriculture Finance

Meezan Bank recognizes the fact that in order to achieve its Vision of establishing ‘Islamic banking as banking of first choice...’ it must
increase the outreach of Islamic banking well beyond the blue-chip corporate sector. In this regard, the Bank has developed a very clear
focus on developing the Small and Medium sized entities (SMEs) as well as commercial and agriculture sector enterprises, which
represent a sizeable sector of the country’s economy and act as the economy’s backbone. The consistent growth of the Bank’s
Commercial Banking business over the years reflects the level of trust and confidence the Bank has built with its customers in this
sector.

Meezan Bank's Commercial Banking portfolio has shown a remarkable growth of 28% during the year and stood at Rs 174 billion at
year-end 2022. Non-performing financings in this segment remained less than 2% during the year despite the supply chain disruption in
the country during the recent floods which highlights the Bank’s prudent credit approach.

Small & Medium Enterprises & Supply Chain SME Trade (import/export) Volume
In the backdrop of economic challenges, Meezan Bank managed to maintain the size of its
SME portfolio in 2022 while simultaneously reducing its portfolio infection ratio. SME Trade
(import/export) volume recorded an uptick of 20% from Rs 435 billion in 2021 to Rs 525
billion in 2022. Rs 435 Rs 525
billion billion
The Bank’s portfolio under Prime Minister’s Youth Entrepreneurship Scheme stood at
Rs 1.26 billion in 2022, while its Supply Chain Financing portfolio grew by 59% to Rs 3.67 billion.

2021 2022
Digital Supply Chain Financing
In 2022, Meezan Bank launched digital financing under supply chain structure in collaboration with a multinational corporation. This is
the first ever Shariah-compliant and end-to-end digital supply chain financing platform in the industry.

Meezan Bank has engaged Islamic B2B FinTechs to

streamline operational capabilities and move
towards digital delivery of supply chain financing. As
a first step, the Bank has integrated with Haball
platform with exclusive product proprietary rights. It
allows over 500 distributors of CCBPL to access
Shariah-compliant financing to improve their
working capital and expand their operations. Such
technology will also provide instant liquidity to SMEs
and rural clients by onboarding sub-distributors and
retailers associated with the value chain. Launch event of 1st Digital Supply Chain Financing Platform.

Commercial Vehicles Financing

The Bank disbursed Rs 3.5 billion in Commercial Vehicle financing, bringing its portfolio to
Rs 6.8 billion. The Bank’s focus was on passenger transportation and Liquid/Dry cargo
Rs 3.5 billion
disbursed
transportation segments. Non performing financings of this segment were lower than 1%.

Agriculture Finance
Meezan Bank provides products that cater to the needs of the entire Agri value chain and
non-crop sector activities such as dairy, livestock, poultry and allied activities. The Bank’s
agriculture financing portfolio grew by 23.28% during the year. 23.28%
Agriculture Financing Portfolio
Meezan Bank’s share among Islamic banks in the Agriculture Credit Market is approximately
50%. The Bank has signed financing programs with rice and sugar mills for providing
banking services to the rural communities of Sindh and Baluchistan so that they can acquire
50% share
among Islamic
new technology that can enable these communities to improve their efficiency in the Agriculture Credit Market
agriculture sector.

Meezan Bank exceeded State Bank’s assigned agriculture credit disbursement and closing portfolio targets for 2021-22. Under Agri
Value Chain finance, Meezan Bank has partnered with sugar mills and crop input providers to ensure proper utilization of financing
without collateral. The Bank has also actively participated in SBP’s initiatives including Regional Agriculture Credit Committees of Sindh,
Baluchistan, KPK, AJK, GB and South Punjab.

Consumer Finance
Meezan Bank is the pioneer in providing Shariah-compliant consumer financing in the country and offers a diverse range of consumer
asset products to its customers. The Bank’s performance of this important business vertical during 2022 is detailed below:

58 Meezan Bank Annual Report 2022

PROGRESS IN 2022
Car Ijarah Portfolio Housing Finance Portfolio
1st Position
12% 21% in Govt. Hajj Application Collection

Car Ijarah Mera Pakistan Mera Ghar

Car Ijarah enjoys market leadership position in Auto Finance During 2021, Government of Pakistan (GoP) launched a
Industry with 12% growth in 2022, the Bank has an active massive drive for the revival of housing industry in the
portfolio of Rs 62.4 billion with more than 34,500 vehicles on Country under the initiative named Mera Pakistan Mera Ghar
road. (MPMG). Meezan Bank has shown excellent performance in
GoP’s MPMG initiative with portfolio size of Rs 6.3 billion as
of December 31, 2022.

Meezan Roshan Apni Car

Launched only a year ago under the State Bank's initiative to
facilitate Non-Resident Pakistanis, the Bank financed over
Roshan Apna Ghar
Launched in late 2021 by the State Bank of Pakistan under
260 units in 2022, amounting to more than Rs 950 million.
the Roshan Digital initiative, Roshan Apna Ghar is a
financing scheme that allows Non-Resident Pakistanis to
avail housing finance without having to visit a bank's branch.
Meezan Bank has developed its Roshan Apna Ghar portfolio
Meezan Easy Home EasyHome to over Rs 300 million as of December 2022 and continues
The Bank witnessed robust growth in regular housing to be one of the leading banks in both number of
finance during the year and was able to increase its portfolio applications and disbursements under this initiative.
by Rs 3.5 billion over the year with an outstanding portfolio
of Rs.20 billion as of Dec 31, 2022.

Meezan Bank and Pakistan Mortgage Refinance Company Meezan Solar Financing
(PMRC), a Mortgage Liquidity Facility established by the Meezan Bank introduced a solar financing product in August
State Bank of Pakistan, have signed a Master Musharakah 2021, called ‘Meezan Solar’ under the State Bank of
agreement to facilitate and promote affordable housing Pakistan's Islamic Finance for Renewable Energy (IFRE)
finance in the country. Under this agreement, PMRC will scheme. The Bank offers financing of complete solar panel
provide Meezan Bank with concessional funds at a fixed rate systems to residential users as part of its efforts to
for a period of five years. These funds will be utilized to contribute towards reduction of carbon emission and has an
support the housing value chain. With the acquisition of active portfolio of more than 300 customers worth more than
Rs 5 billion in funds, Meezan Bank aims to enhance access Rs 270 million.
to affordable and Shariah-compliant housing finance in
Pakistan by offering more favorable rates.
Labbaik Hajj & Umrah
Under the female inclusion initiative of the State Bank, Meezan Labbaik is a Halal & Riba-free travel solution for Hajj
Meezan Bank is providing house finance at preferential rates & Umrah that was initiated by the Bank as a Corporate Social
to female customers along with additional benefits to reduce Responsibility project. Meezan Bank secured 1st position
the gender gap in financial inclusion. More than 200 female among 14 banks in the Government’s Hajj application
customers have availed Easy Home under Meezan Women collection initiative 2022 and also launched the first ever
First with financing amount of over Rs 1.2 billion. Data collection portal for Government Hajj applications with
all types of payments integration (i.e., Internet Banking, ATM,
Mobile App, 1Link & Branch counter).

Trade Business
Islamic banking is ideally suited to cater to the trade finance Trade Business
needs of customers and the Bank’s trade business (Import & Rupees in billion
Export) performed outstandingly during 2022 despite economic 2,200 2,182
challenges. The Bank’s trade business volumes touched an 2,000

all-time high of over Rs 2 trillion which was almost 30% higher 1,800 1,685
than last year. 1,600
1,400
1,200 1,127
1,013 1,085
PROGRESS IN 2022 1,000
800 712
600

Rs 2 trillion 30% 400

200

Trade Business Volume Trade Business Volume 0

2017 2018 2019 2020 2021 2022

Meezan Bank Annual Report 2022 59

Shariah Advisory Services
Meezan Bank regularly facilitates banking as well as non-banking financial institutions (NBFIs) and development financial institutions
(DFIs) including mutual funds, stock exchanges, Takaful companies, microfinance companies and other corporate entities, both locally
and internationally, by providing Shariah advisory and Shariah related technical services and support.

The Bank’s Shariah advisory services include a comprehensive suite of Shariah-compliant product development, pool management, risk
management framework and advisory services related to Sukuk structuring, catering to tailor-made requirements of customers and
meeting complex business needs.

In 2022, the Bank, along with other services, developed and delivered Islamic trade finance and takaful products for Pakistan’s EXIM
Bank, including export credit takaful products for the very first time in the country – a significant highlight of the year.

Meezan Bank is also providing Shariah specific technical advisory services and support to one of the leading DFIs in the country to
launch their Islamic window operations. The scope of these services covers delivery of a complete suite of end-to-end
Shariah-compliant products and services including Shariah-governance framework, credit and risk management policies,
Shariah-compliance manual and Shariah audit framework. The Bank also conducted trainings for their staff on the principles of Islamic
banking and finance.

The Bank has also developed various innovative and first-of-their-kind Sukuk structures, including Asset-light Sukuk based on royalty
payment and purchase and sale of digital inventory of airtime, which received an overwhelming response from the market.

The Bank continues to provide Shariah Advisory services to one of the cooperative finance institutes in Australia and has also developed
a car financing product for them.

Further details about Shariah Advisory initiatives of the Bank are provided
in the Shariah Board Report 2022, which is included in this Annual Report.
Developed and delivered
Developed Islamic trade finance products
Asset Light Sukuk Structures for EXIM Bank of Pakistan

Treasury
Meezan Bank has maintained its dominance in the local foreign exchange and money markets as an active market maker and formidable
player. 2022 was marked with extreme volatility in exchange rate; stemming from the aftermath of the floods, local political uncertainty
and a reeling post-COVID global economy further dampened by the effects of the Russia-Ukraine war. During 2022, the Bank curtailed
potential exchange losses through its prudent exchange rate risk management.

The Bank was able to capture a significant portion of the total Sukuk issued by GoP during the year, which in turn allowed it to optimize
the risk profile of its investment portfolio while maximizing earnings. The implementation of Shariah-compliant Mudarabah based Open
Market Operations - Injections facility (OMO) has enabled Islamic banks to generate funding from the SBP for their requirements.
Meezan Bank was a key player in the introduction of this facility as well as a major participant.

Financial Institutions and Correspondent Banking

In 2022, the Bank’s Correspondent Banking network grew to 661 correspondents in more than 70 countries. The Bank's Nostro network
supports 18 different currencies, facilitating its clients to efficiently conduct trade payments and international remittances. The Bank has
expanded its Nostro network to include another Chinese Yuan account with the Bank of China.

Over
661Correspondents 18 different currencies 70 countries
The Bank's back-to-back guarantee business has grown with a large number of international banks including Credit Industriel et
Commercial Bank (France), Emirates Islamic and Bank of America. Beneficiary of these guarantees include both government and private
entities.

60 Meezan Bank Annual Report 2022

Notwithstanding the foreign exchange difficulties being faced in Pakistan, the Bank was able to meet the expectations of regulators as
well as its customers of having substantial confirmation lines from its correspondents for opening LCs. The Bank managed to leverage
its correspondent banking relationships to provide large-sized import LC confirmation to its customers without placing cash collateral
abroad.

Details of the Bank’s Correspondent Banking Network are available on our website: www.meezanbank.com

Transaction Banking
The Bank has launched a comprehensive payroll management solution that provides features such as payroll
disbursement, pension disbursal, staff reimbursement and bonus processing and provides a one-stop banking solution for
clients’ daily banking and payroll needs.

Meezan Bank's Subsidiary-Al Meezan Investment Management Limited

Meezan Bank’s subsidiary, Al Meezan Investment Management Limited (Al Meezan) is the largest Shariah-compliant Asset
Management Company (AMC) in Pakistan, with Assets Under Management (AUM) of over Rs 283 billion as at December 31,
2022. Al Meezan enjoys one of the longest (over 27 years) and most consistent performance records among AMC’s in Pakistan.
Apart from asset management, Al Meezan is also licensed to render Investment Advisory Services and manage Voluntary Pension
Schemes (VPS).

Over Shariah-compliant Segment Share

54.63%
Assets Under Management 183,000 Investors 40.45%
Recently, Al Meezan has also acquired license to carry out Real Estate Investment Trust (REIT) Management Services.

Al Meezan’s Achievements in 2022 Al Meezan has earned the following accolades during 2022:
■ AUMs increased by 54.63% in CY22
Award Awarded By
■ Funds and Plans launched during the year
● Launched Meezan Fixed Term Fund (MFTF)- Pakistan’s first
Asset Management Company IFFSA Awards
Shariah Compliant Fixed Term Fund.
● Launched Meezan Mahana Munafa Plan (MMMP) under
of The Year
Meezan Daily Income Fund (MDIF)- Exclusively for customers Best Asset Management CFA Society Pakistan
of Meezan Bank Limited Company of Pakistan
■ Investor base of over 183,000 investors
■ Share in Mutual Fund Industry stood at 16.91% as at December Best Islamic Asset Global Business
31, 2022 Manager – Pakistan Outlook (GBO)
■ Share in Shariah-compliant Segment stood at 40.45% as at
December 31, 2022 Brand of the Year Brands Foundation

Al Meezan exhibits a strong Islamic asset management franchise

with a healthy AUM profile with sizeable retail AUMs, adequate Best Income Fund Lipper Award (Refinitiv)
governance & control framework, a stable & professional (Meezan Sovereign Fund MSF)
management team and well-defined investment processes and
strong customer confidence evident from its 183,000 plus strong
investor base. AUMs of Al Meezan have increased significantly over the last few
years, as shown below:
Al Meezan is rapidly growing its presence across Pakistan with 25
Assets Under Management of Al Meezan
branches in 15 cities, supplemented by Meezan Bank’s
countrywide branch network. Investors can conveniently open 5-year CAGR: 23.5% 10-year CAGR: 20.6% Rupees in billion
300
their account through Al Meezan’s account opening service and 283
267
easily manage all their investment needs through their mobile
250
application and online portal (Meezan Funds Online). Al Meezan’s
209
digital reach goes beyond borders with its services being offered 200
208
194
189
digitally to overseas Pakistanis through the RDA initiative.
150

Al Meezan offers a comprehensive product suite of 20 mutual 118

109
funds including a VPS scheme, multiple investment plans 100

spanning across various asset classes and Separately Managed 56 59

Accounts (SMA) customized to the unique needs of the clients. Al 50

17 18
Meezan also maintained the highest Asset Management Quality 1 1 2 5
0
rating of AM1 (AM-One) with stable outlook by both VIS & PACRA 2003 2005 2010 2014 2017 2021 2022 Dec-2022

Credit Rating Companies. Funds Under Management Discretionary Portfolios

Meezan Bank Annual Report 2022 61

Operations Review
An efficient support function infrastructure is a pre-requisite for any organization to deliver products and services that consistently meet the
demands of its customers. At Meezan Bank, the support units work hand in hand with business to ensure that all transactions undertaken
by the Bank are in accordance with the directives of its Resident Shariah Board Member (RSBM) and the Shariah Board (SB) as well as with
the Bank’s policies and procedures. Following is a brief introduction of the support units and their role in the organization.

Service Quality
Service Excellence is one of the three Core Values of Meezan Bank, along with Shariah-compliance and Integrity. Customer-centricity is
also one of the Bank’s core strategic goals as it aspires to be a world-class service-oriented bank.

A Service Board, chaired by the Bank’s President & CEO and comprising senior level representation from key business and support
units, meets regularly to review service delivery performance of the Bank and takes measures to ensure that the Bank delivers a superior
banking experience to its customers. A dedicated Service Quality team, headed by a senior resource, regularly monitors the perfor-
mance of branches on the service standards defined by the Service Board and evaluates branch service quality. The Bank also uses
service evaluation techniques such as mystery shopping and customer satisfaction surveys for obtaining feedback for improving its
products and services.

The Bank has a dedicated complaint management team that handles customer complaints and disputes under the Customer Grievances
Handling policy approved by the Board, in line with the State Bank of Pakistan’s Consumer Grievance Handling Mechanism. Customer
feedback is also taken after closure of complaints and Root Cause Analysis is conducted to drive a complaint prevention action plan.

Information Technology and Digital Banking

A robust and resilient technology infrastructure serves as the backbone of banking business today. With a growing need for innovative
financial solutions, changing customer behavior, emergence of fiercely competitive Fintech Players and a rapidly evolving regulatory
environment, the dependence on technology platforms has grown more than ever before.

PROGRESS IN 2022
Launch of WhatsApp Banking
for Premium Customers
100% up-time
* *
99.2% up-time
Core Network & Data Centers Branch Network
*For ˜100 Branches

Launch of Launch of
WhatsApp Banking Digital Onboarding
Meezan Bank has grown at a very fast pace ever since its inception and its
technology infrastructure has always played a pivotal role in supporting its
growing portfolio of products and services as the Bank grew and became the Best
Bank in Pakistan to maintain a robust IT infrastructure, Bank has invested in
Software Defined Wide Area Network (SD-WAN) Infrastructure in Primary & DR
Data, ensuring 100% Data Center & Core Network uptime.

Today Meezan Bank leverages the power of world-class technology solutions to

successfully process millions of transactions every day to win the confidence and trust of its customers. One of the Bank's key
achievements during the year is the use of mobile technologies, data analytics capabilities and process automation to introduce new
products and services at a faster pace while maintaining excellent customer satisfaction levels. The initiative of Digital Onboarding has
further strengthened the account opening process and is helping customers to open their accounts in a seamless manner through the
mobile app. With the introduction of WhatsApp banking customers can now easily get basic banking services with convenience. The
Bank has also entered in Merchant Acquiring and E-commerce payment gateway services to accelerate the adoption of digital
payments.

Another key area of focus has been FinTech collaboration. The Bank has established partnerships with various FinTech companies to
offer innovative and convenient digital financial services to its customers. These collaborations have resulted in the launch of various
digital products such as mobile wallets, online lending platforms and other digital payment solutions.

62 Meezan Bank Annual Report 2022

The investment in upcoming technologies and partnerships with FinTech companies has helped the Bank to stay ahead of its
competition and meet the evolving needs of its customers. This has further enhanced its business agility - with DevOps and
Agile methods used to accelerate its software development processes. Moreover, with the adoption of automation tools, the
Bank has developed In-house capability of performance testing for core applications.

The Bank is now focusing on the following strategies:

■ Implementing artificial intelligence and machine learning
technologies to improve efficiency and decision-making.
■ Investing in cloud computing to improve scalability,
availability and reduce costs.
■ Continuously monitoring and assessing emerging
technologies to identify new opportunities for innovation
and growth.
■ Implementing an enterprise-wide digital transformation
initiative to improve customer experience and drive
business growth.

Human Resources
Meezan Bank believes in building a dynamic and professionally competent workforce that is fully capable of providing a world-class
banking experience to its customers. The Bank now employs over 15,000 staff members. One additional element of Meezan Bank’s
contribution to the Islamic banking Industry is that a significant number of people working in other Islamic banking institutions, both
locally and internationally, have been trained and groomed in Islamic banking during their association with Meezan Bank and are
therefore Meezan Alumni.

Staff Head Count

Region 2022 2021 3,030 New Hires
Head Office 3,326 2,828 Staff Inducted
Central 4,732 4,363
South 3,233 3,096 905 Male Female
North 1,845 1,723 646
Elevations
Inducted via
Batch Hiring 80% 20%
Total 13,136 12,010

In 2022, the Bank inducted 3,030 staff, out of which 905 were introduced an ex-gratia payment for staff of level SVP & below to
inducted through countrywide batch-hiring. Batch hiring enables help ease the inflationary pressure to some extent. The Bank also
the Bank to develop a pipeline of trained human resources for its announced an ex-gratia payment for all staff members, including
continuously growing network. The Bank also maintained its trainees, on completion of 25 years of Islamic Banking and
focus on induction of female staff to achieve diversity and winning the ‘Best Consumer Bank – 2022’ Award by Pakistan
inclusion in its workforce. Banking Awards and Best Bank of the Year 2021 award by CFA
Society Pakistan.
The Bank firmly believes in providing career growth opportunities
to its staff through internal job placements as well as through The Bank has joined State Bank’s initiative - “Young Islamic
elevations. During the recent restructuring of the Bank’s retail Banking Professionals (Y-IBP) Program" under which the Bank
banking network, 3 new Regions and 26 new Area Offices were and SBP jointly hold Islamic banking awareness sessions at
created and all these positions were filled through internal various universities with the aim to enhance students’ Islamic
placements. A total of 646 elevations were made across the Bank finance knowledge and providing them internship opportunities at
at different levels during the year. various departments of the Bank. The Bank has also launched an
internship program named ‘MEEZANSHIP Program’ that provides
Another new initiative that the Bank has taken is introduction of internships of three to six months, which could lead to permanent
‘Iddat leave With Pay’ for its divorced or widowed female staff. employment, depending on the intern’s performance.
The Bank also provides support to family members of its
deceased staff by giving them a monthly payment for a period of Meezan Bank had launched its Employee Benevolent Fund Trust
5 years from the staff’s passing away. (EBFT) program in November 2012 for providing financial
assistance to its employees and their families for medical,
Considering the inflationary trend in the country, the Bank marriage and education related expenses on need and merit
basis. This year the Bank has helped 272 families through EBFT.

Meezan Bank Annual Report 2022 63

272 families Launch of 1,334
supported via EBFT MEEZANSHIP Program Internal & External Training Sessions

Learning & Development

The Bank continued its learning activities using a blended approach including Virtual Instructor Led Trainings (VILTs) and classroom
trainings and organized 1,334 internal and external training sessions which ranged from induction programs to role-specific technical
skills, Islamic banking knowledge, soft skills and sessions on regulatory compliance.

Internal / External Training Summary Category Wise Staff Covered

100% 92% 94%

85% 3% 12%
80%

60%
21%
40%

20% 15%
8% 6% Induction
Islamic Banking
0% Regulatory
Sessions Hours Staff Covered
31% 33% Role Specific
Soft Skills
Internal External

The Bank also launched several new training programs such as:

■ A three-day Islamic Banking Refresher for Senior Executives.

■ A three-day Islamic Banking Refresher for existing staff.
■ Train The Trainer (TTT) Program for In-house Shariah Trainers
across Pakistan to brush up their training skills.
■ 31 sessions on Banking on Equality (awareness of Gender
sensitization and Persons with Disabilities) were conducted in
main cities across Pakistan and were attended by over 1,600
staff members.

A detailed session on “Global Best Practices of Islamic Banks and

Role of Senior Executives” was conducted by Sheikh Esam
Mohamed Ishaq, Member Shariah Board of Meezan Bank.

The Bank has maintained its focus on function-specific Batch

Trainings such as Compliance, Internal Audit, Operations,
Information Technology, ACCA, Meezanship, etc.

Key Internal Training Programs

523 308 205 75 21

Regulatory Role-specific Islamic banking & Induction Soft skills &

Compliance trainings Shariah knowledge Trainings leadership

64 Meezan Bank Annual Report 2022

Shariah Compliance
Shariah-compliance is a way of life at Meezan Bank and the Bank
has a zero-tolerance policy in this regard. To continually ensure
Shariah-compliance in all its products, services and processes,
the Bank established a dedicated Shariah Compliance
Department (SCD) in 2005. The department works under the
guidance and direct supervision of the Bank’s Shariah Board (SB)
to facilitate product research and development, conduct
Shariah-compliance reviews, provide internal and external
trainings, acts as secretariat to Shariah Board, resolve Shariah
Audit observations and take other initiatives for development of
the Islamic banking industry - both locally and globally.

Some of the key functions that the Shariah Compliance

Department undertakes are:

Secretariat to the Shariah Board

In 2022, the Shariah Compliance Department organized four
meeting of the Shariah Board at regular intervals for obtaining
timely approval of relevant proposals, agreements, manuals,
process flows, contracts etc. The department also liaises between
management and the Shariah Board - reviewing all proposals,
agreements, manuals, process flows contracts, checklists etc
submitted by different units of the Bank. SCD also reviews profit
calculation on deposits pools and its distribution to depositors.

Product Support & Research

All the business functions of the Bank are provided product support by Shariah Compliance Department. The product support process
starts from the initiation of business proposals till the structuring and execution of the solution through Shariah-related research,
interdepartmental coordination and customer engagement. The product support process enables the Bank to continually modify existing
products, identify new market niches and address new customer needs.

Shariah Compliance Review

Shariah Compliance Review is a continuous process of ensuring that all internal and external activities of the Bank are compliant to
Shariah rules. All financing cases are reviewed periodically to monitor adherence with relevant Shariah guidelines. Moreover, industry
visits and random checking by Shariah Compliance Department help identify gaps and subsequently add value through continuous
process and controls improvement.

Scope of Shariah-compliance Review

The SCD ensures compliance to Shariah Guidelines in all areas of the Bank’s business and operation, including the following key areas:

Corporate Banking Fresh Proposals, Renewals, Enhancements, Structured Transactions

SME/Commercial/Agri Finance Fresh Proposals, Renewals, Enhancements, Structured Transactions

Letter of Guarantees, MoUs, Security Agreements, NOCs, Procurement Agreements,

Ancillary Documents
Vendor Agreements, Service Agreements

Investment Banking Term Sheets, Shariah Structure, Legal Agreements, Post Transaction Review

Treasury Placement of Funds, Acceptance of Funds, International Placements, Forex

Transactions, Alternate to Bill Discounting Transactions

Branch Assessment Branch Environment and understanding of employees

Marketing promotions Bank’s Product Promotions, Social Media Posts, Print and Electronic
Media Ads, Sponsorship Proposals, Enlistment of Charitable Institutions

Other Head Office Departments Policies, MoU, Legal Agreements, Understanding and Application of Shariah Guidelines

Industry visits and random reviews are also conducted by the department.

Meezan Bank Annual Report 2022 65

Internal and External Training
The Shariah Compliance and Learning & Development teams work closely to design, implement and reinforce Islamic banking and
financing products knowledge to employees, customers and general public. Training sessions are conducted throughout the year
including orientations, refreshers and specialized courses for staff, based on Training Need Analysis.

The Bank also collaborates with leading educational institutes such as IBA-CEIF towards the common aim of capacity building for
Islamic banking. Major programs include Certified Shariah Auditor AAOIFI certification and Certified Islamic Finance Reporting and
Auditing Course.

Contributions towards the Islamic Banking

Industry in Pakistan
The Bank regularly acts as joint financial advisor for issuance of Government
of Pakistan Sukuk to help address the liquidity management needs of the
Islamic Banking industry. In 2022, the Bank as one of the Joint Financial
Rs 1.35 trillion
GoP Sukuk
One of Joint Financial Advisors
Advisors of the Government of Pakistan issued Sukuk worth Rs 1.35 trillion.

Shariah Audit
Meezan Bank has a dedicated and independent Shariah Audit department that plays a vital role
in ensuring that all of the Bank’s operations are carried out according to the rules and principles
prescribed by its Shariah Board, Resident Shariah Board Member (RSBM) and the State Bank of
Pakistan.

The Bank has a qualified team of Shariah Auditors and Advisers certified by Accounting and
Auditing Organization for Islamic Financial Institutions (AAOIFI), Certified Chartered Accountants
and Shariah Scholars. The Bank’s Shariah Audit expertise and effectiveness have been
consistently recognised at international forums. Global Islamic Finance Awards (GIFA) UK
recognised Meezan Bank as ‘Shariah Auditor of the Year’ for the fifth consecutive year and also
awarded ‘Shariah Authenticity Award’ for 2022.

In line with the Bank’s digital strategy and United Nations' Sustainable Development Goals, the Bank is in the process of digitizing its
Shariah Audit processes, which would both enhance process efficiency and reduce its carbon footprint.

Information Security
Our Focus on Cyber Security
Cybersecurity is a top priority for the Bank and it has implemented strict measures to protect its customers' data and assets from cyber
threats. Various initiatives have been taken to continuously improve the cyber security of the Bank’s digital assets; engaging
departments such as Information Technology, Information Security, Internal Audit, Compliance and Risk Management carrying diverse
responsibilities within their scope. Cyber Security is managed through tools and systems as well as through process-level controls.

The Bank has achieved PCI DSS compliance, which is a global security standard for protecting cardholder data and has implemented
a Standardized IT Network Infrastructure to ensure 100% Compliance Rating for PCI-DSS 3.2.1 certification. Additionally, advanced
security systems such as firewalls, intrusion detection and prevention systems and encryption technologies have been implemented to
safeguard against cyber threats.

There is also a dedicated team of cybersecurity experts which is responsible for monitoring and analysing potential threats and
implementing necessary security measures using powerful security management tools to detect and prevent security attacks in
progress. Local and international experts of security domains are also regularly engaged to review the Bank’s information assets and
controls and to conduct penetration test exercises.

Implementation of a real time fraud detection module that analyses specific transaction patterns
for Mobile App has enabled the Bank to heighten its customers’ trust on its services’ security.
The implementation of CTM 360 platform for digital risk protection has further enhanced the
Bank’s ability to be better equipped in detecting and responding to vulnerabilities and cyber
threats. The Bank has also implemented New State-of-art High Performance Core Data Center
Security Firewalls for protection of Core Business applications from Internal & External threats.

The Bank is fully cognizant of the significance of Cyber Security and will continue to invest in
systems and resources to further strengthen its operations against any Cyber-threat.

66 Meezan Bank Annual Report 2022

Largest fan base
in Pakistan’s banking
industry

20th in World’s
Top 100 Banks First dedicated
on Facebook by
‘The Financial Brand’ Islamic Banking
Channel
in the country
3.5B+ Impressions
143% 12.5M+ Impressions
since 2021

Meezan Careers The highest

Facebook Page number of
48K+ Likes followers
amongst all banks

16% in Pakistan

since 2021
MEEZAN
BANK’S
SOCIAL MEDIA
FOOTPRINT

More than
150 Job Ads
An increase of

44%
since 2021
Find us here
/MeezanBank /MeezanBankLtd /company/meezan-bank-ltd
/MeezanBankLtd1 /meezanbanklimited

Digital Engagement
2.3M+
Facebook Likes

4.4M+ 304K+ 25.7K+

LinkedIn Followers Twitter Followers
unique website visitors (+39% from 2021) (+47% from 2021)

32.2K+ 108K+
YouTube Subscribers Instagram Followers
(+13% from 2021) (+12% from 2021)
KEY FIGURES AT A GLANCE

2022 2021 2020 2019 2018 2017

Profit and Loss Account
Return on financing, investments and placements 232,121 110,073 106,589 94,270 48,625 36,427
Return on deposits and other dues expensed 110,417 41,152 41,740 47,731 20,457 15,684
Net Spread earned 121,704 68,921 64,849 46,539 28,168 20,743
Fee, commission, forex and other income 18,170 13,351 8,765 9,396 6,887 5,622
Gain / (loss) on securities - net and dividend income 933 1,541 1,307 (76) 575 2,002
Total income 140,807 83,813 74,921 55,859 35,630 28,367
Operating and other expenses 48,245 35,324 29,775 25,522 19,670 16,832
Profit before Provisions 92,562 48,489 45,146 30,337 15,960 11,535
Provisions / (reversals) and write offs - net 4,177 993 8,210 4,186 1,168 1,283
Profit before Taxation 88,385 47,496 36,936 26,151 14,792 10,252
Taxation 43,378 19,141 14,770 10,919 5,830 3,939
Profit after Taxation 45,007 28,355 22,166 15,232 8,962 6,313

Statement of Financial Position

Islamic Financing and Related Assets - Gross 1,018,102 777,295 531,588 506,513 522,264 428,833
Total Assets 2,577,397 1,902,971 1,521,560 1,121,258 937,915 788,808
Total Deposits 1,658,490 1,455,886 1,254,431 932,579 785,477 667,181
Share Capital 17,896 16,269 14,147 12,861 11,692 10,629
Sub-ordinated sukuk 20,990 20,990 18,000 14,000 14,000 7,000
Total Shareholders Equity 115,321 86,558 69,155 59,015 40,333 35,077
Market Capitalization 178,139 218,188 147,754 122,348 108,022 71,321
Number of Staff 15,380 14,007 12,423 11,649 10,069 9,551
Number of Branches 962 902 815 760 660 601
Ratios
Book Value (Rs) 64.44 53.2 48.9 45.9 34.5 32.3
Market Value per Share (Rs) 99.54 134.1 104.4 95.1 92.4 67.1
Price to Book Value Ratio 1.54 2.5 2.1 2.1 2.7 2.1
Cash Dividend (%) 85 60 60 50 35 30
Stock Dividend (%) 10 15 10 10 10 -
Right Shares at par (%) - - - - - 6
Price Earning Ratio 3.96 8.46 6.7 8.8 13.3 12.1
Basic Earning per Share (Rs) 25.15 15.84 12.39 8.51 5.01 3.53
Net Spread to Gross Return (%) 52.43 62.6 60.8 49.4 57.9 56.9
Profit Before Tax to Gross Income (%) 35.18 38.0 31.7 25.2 26.4 23.3
Profit After Tax to Gross Income (%) 17.92 22.7 19 14.7 16 14.3
Operating & Other Expenses to Income before provisions (%) 34.26 42.2 39.7 45.7 55.2 59.3

Gross Financing / Advances to Deposit Ratio-ADR (%) 61.4 53.4 42.4 54.3 66.5 64.3
Investment to Deposit Ratio - IDR (%) 77.4 42.6 34.6 24.2 15.8 17.9
Capital Adequacy Ratio (%) 18.42 17.8 17.8 16.6 14.6 12.9
Return on Average Assets (%) 2.01 1.7 1.7 1.5 1 0.9
Return on Average Equity (%) 44.59 36.4 34.6 30.7 23.8 19.3

(Comparitive information has been reclassified / rearranged / restated for better presentation)

68 Meezan Bank Annual Report 2022

Rupees in Million Profit After Taxation
2016 2015 2014 2013 2012 Rupees in Million
46,000 45,007
44,000
42,000
31,027 32,893 28,487 23,016 21,592 40,000
38,000
13,239 15,181 15,539 12,658 11,385 36,000
34,000
17,788 17,712 12,948 10,358 10,207 32,000
30,000 28,355
4,102 3,617 3,387 1,971 1,413 28,000
26,000
24,000
1,622 971 1,432 1,539 986 22,000
22,166

20,000
23,512 22,300 17,767 13,868 12,606 18,000
16,000 15,232
14,787 13,313 10,402 8,128 6,925 14,000
12,000
8,725 8,987 7,365 5,740 5,681 10,000 8,962
8,000 6,313
(218) 535 467 93 451 6,000
4,000
8,943 8,452 6,898 5,647 5,230 2,000
0
2017 2018 2019 2020 2021 2022
3,381 3,429 2,328 1,690 1,722
5,562 5,023 4,570 3,957 3,508 Total Deposits
Rupees in Million
1,800,000
1,658,490

1,600,000
319,617 215,776 183,286 133,475 94,402 1,455,886
1,400,000
662,055 535,864 440,149 332,095 278,084
1,254,431
1,200,000
559,398 468,281 378,744 288,433 229,892
1,000,000
10,027 10,027 10,027 10,027 9,034 932,579

785,477
7,000 - - - - 800,000
667,181
30,474 26,347 23,890 18,913 16,563 600,000

67,422 45,875 47,129 39,488 27,147 400,000

9,168 8,581 7,429 6,248 5,953 200,000

571 551 428 351 310 0

2017 2018 2019 2020 2021 2022

28.1 25.5 23.2 17.9 17.1

Total Assets
67.2 45.7 47 39.4 30.1 Rupees in Million
2,600,000 2,577,397
2.4 1.8 2 2.2 1.8
2,400,000
30 30 27.5 20 15 2,200,000

- - - - 11 2,000,000 1,902,971

1,800,000
- - - - - 1,600,000 1,521,560

12.3 9.1 10.3 10 8.6 1,400,000

1,200,000 1,121,258
3.11 2.81 2.55 2.21 1.96
1,000,000 937,915
57.3 53.9 45.5 45 47.3 800,000 788,808

24.3 22.6 20.7 21.3 21.8 600,000

400,000
15.1 13.4 13.7 14.9 14.6
200,000
62.9 59.7 58.6 58.6 54.9 0
2017 2018 2019 2020 2021 2022

57.1 46.1 48.4 46.3 41.1

Total Shareholders Equity
23.3 31.2 30.1 52.6 66.3 Rupees in Million
120,000
12.9 11 11.9 12.5 14.1 115,321

110,000
0.9 1 1.2 1.3 1.5 100,000

19.6 20 21.4 22.3 23.1 90,000 86,558

80,000
69,155
70,000
59,015
60,000

50,000
40,333
40,000 35,077

30,000

20,000

10,000

0
2017 2018 2019 2020 2021 2022

Meezan Bank Annual Report 2022 69

SIX YEARS’ HORIZONTAL ANALYSIS
Statement of Financial Position / Profit & Loss Account

Rupees in Million
Statement of Financial Position

2022 22 Vs 21 2021 21 Vs 20 2020 20 Vs 19 2019 19 Vs 18 2018 18 Vs 17 2017 17 Vs 16

Assets % % % % % %
Cash and balances with treasury banks 117,743 (31) 170,501 25 136,243 48 92,194 42 65,022 1 64,556 15
Balances with other banks 13,676 (17) 16,420 (16) 19,446 27 15,372 86 8,255 69 4,896 (59)
Due from financial institutions - net 34,964 (85) 238,402 (30) 342,069 53 223,689 21 184,815 26 147,229 14
Investments - net 1,283,210 107 620,132 43 434,208 92 225,646 82 123,743 4 119,238 (8)
Islamic financing and related assets - net 995,508 31 758,086 48 512,532 4 493,775 (4) 512,564 22 420,029 35
Fixed assets 40,427 19 33,958 44 23,568 1 23,285 77 13,129 16 11,364 34
Intangible assets 1,844 23 1,496 39 1,080 38 780 25 625 22 512 13
Deferred tax asset 4,646 2,555 175 (55) 390 100 - (100) 983 - - -
Other assets - net 85,379 34 63,801 23 52,024 12 46,517 62 28,779 37 20,984 47
2,577,397 35 1,902,971 25 1,521,560 36 1,121,258 20 937,915 19 788,808 19

Liabilities
Bills payable 40,175 11 36,141 36 26,494 54 17,187 (28) 23,751 38 17,175 25
Due to financial institutions 573,326 160 220,414 133 94,501 125 42,047 15 36,408 (1) 36,813 15
Deposits and other accounts 1,658,490 14 1,455,886 16 1,254,431 35 932,579 19 785,477 18 667,181 19
Sub-ordinated Sukuk 20,990 - 20,990 17 18,000 29 14,000 - 14,000 100 7,000 -
Deferred tax liabilities - - - - - (100) 2,830 - - (100) 8 (99)
Other liabilities 169,095 104 82,982 41 58,979 10 53,600 41 37,946 48 25,554 42
2,462,076 36 1,816,413 25 1,452,405 37 1,062,243 18 897,582 19 753,731 19

Net Assets 115,321 33 86,558 25 69,155 17 59,015 46 40,333 15 35,077 15

Represented by:
Share capital 17,896 10 16,269 15 14,147 10 12,861 10 11,692 10 10,629 6
Reserves 28,188 20 23,393 15 20,424 12 18,207 20 15,161 13 13,369 38
Unappropriated profit 69,900 63 42,832 48 29,022 56 18,546 37 13,526 31 10,340 23
(Deficit) / surplus on revaluation of assets - net of tax (663) (116) 4,064 (27) 5,562 (41) 9,401 204 times (46) (106) 739 (68)
115,321 33 86,558 25 69,155 17 59,015 46 40,333 15 35,077 15

Profit & Loss Account

2022 22 Vs 21 2021 21 Vs 20 2020 20 Vs 19 2019 19 Vs 18 2018 18 Vs 17 2017 17 Vs 16

% % % % % %
Return on financing, investments
and placements 232,121 111 110,073 3 106,589 13 94,270 94 48,625 33 36,427 17
Return on deposits and other
dues expensed (110,417) 168 (41,152) (1) (41,740) (13) (47,731) 133 (20,457) 30 (15,684) 18
Net spread earned 121,704 77 68,921 6 64,849 39 46,539 65 28,168 36 20,743 17
Fee, commission, forex and other income 18,171 36 13,351 52 8,765 (7) 9,396 36 6,887 23 5,622 37
Gain / (loss) on securities - net and
dividend income 932 (40) 1,541 18 1,307 1,820 (76) (113) 575 (71) 2,002 23
Total income 140,807 68 83,813 12 74,921 34 55,859 57 35,630 26 28,367 21
Operating and other expenses (48,245) 37 (35,324) 19 (29,775) 17 (25,522) 30 (19,670) 17 (16,832) 14
Profit before Provisions 92,562 91 48,489 7 45,146 49 30,337 90 15,960 38 11,535 32
Provisions and write offs - net (4,177) 321 (993) (88) (8,210) 96 (4,186) 258 (1,168) (9) (1,283) (689)
Profit before taxation 88,385 86 47,496 29 36,936 41 26,151 77 14,792 44 10,252 15
Taxation (43,378) 127 (19,141) 30 (14,770) 35 (10,919) 87 (5,830) 48 (3,939) 17
Profit after taxation 45,007 59 28,355 28 22,166 46 15,232 70 8,962 42 6,313 14

(Comparitive information has been reclassified / rearranged for better presentation)

70 Meezan Bank Annual Report 2022

SIX YEARS’ VERTICAL ANALYSIS
Statement of Financial Position / Profit & Loss Account

Rupees in Million
Statement of Financial Position

Assets 2022 % 2021 % 2020 % 2019 % 2018 % 2017 %

Cash and balances with treasury banks 117,743 4 170,501 9 136,243 9 92,194 8 65,022 7 64,556 8
Balances with other banks 13,676 1 16,420 1 19,446 1 15,372 2 8,255 1 4,896 1
Due from financial institutions - net 34,964 1 238,402 12 342,069 22 223,689 20 184,815 20 147,229 19
Investments - net 1,283,210 50 620,132 33 434,208 29 225,646 20 123,743 13 119,238 15
Islamic financing and related assets - net 995,508 39 758,086 40 512,532 34 493,775 44 512,564 55 420,029 53
Fixed assets 40,427 2 33,958 2 23,568 2 23,285 2 13,129 1 11,364 1
Intangible assets 1,844 - 1,496 - 1,080 - 780 - 625 - 512 -
Deferred tax asset 4,646 - 175 - 390 - - - 983 - - -
Other assets - net 85,379 3 63,801 3 52,024 3 46,517 4 28,779 3 20,984 3
Total Assets 2,577,397 100 1,902,971 100 1,521,560 100 1,121,258 100 937,915 100 788,808 100

Liabilities
Bills payable 40,175 2 36,141 2 26,494 2 17,187 2 23,751 3 17,175 3
Due to financial institutions 573,326 22 220,414 12 94,501 6 42,047 4 36,408 4 36,813 5
Deposits and other accounts 1,658,490 64 1,455,886 76 1,254,431 82 932,579 83 785,477 84 667,181 84
Sub-ordinated Sukuk 20,990 1 20,990 1 18,000 1 14,000 1 14,000 1 7,000 1
Deferred tax liabilities - - - - - - 2,830 - - - 8 -
Other liabilities 169,095 7 82,982 4 58,979 4 53,600 5 37,946 4 25,554 3
2,462,076 96 1,816,413 95 1,452,405 95 1,062,243 95 897,582 96 753,731 96
Net Assets 115,321 4 86,558 5 69,155 5 59,015 5 40,333 4 35,077 4

Represented by:
Share capital 17,896 1 16,269 1 14,147 1 12,861 1 11,692 1 10,629 1
Reserves 28,188 1 23,393 2 20,424 2 18,207 2 15,161 2 13,369 2
Unappropriated profit 69,900 2 42,832 2 29,022 2 18,546 2 13,526 1 10,340 1
(Deficit) / surplus on revaluation of assets - net of tax (663) - 4,064 - 5,562 - 9,401 - (46) - 739 -
115,321 4 86,558 5 69,155 5 59,015 5 40,333 4 35,077 4

Profit & Loss Account

2022 % 2021 % 2020 % 2019 % 2018 % 2017 %

Return on financing, investments
and placements 232,121 93 110,073 88 106,589 91 94,270 91 48,625 87 36,427 82
Return on deposits and other
dues expensed (110,417) (44) (41,152) (33) (41,740) (36) (47,731) (46) (20,457) (37) (15,684) (36)
Net spread earned 121,704 49 68,921 55 64,849 55 46,539 45 28,168 50 20,743 46
Fee, commission, forex and
other income 18,171 7 13,351 11 8,765 8 9,396 9 6,887 12 5,622 13
Gain / (loss) on securities - net and
dividend income 932 - 1,541 1 1,307 1 (76) - 575 1 2,002 5
Total income 140,807 56 83,813 67 74,921 64 55,859 54 35,630 63 28,367 64
Operating and other expenses (48,245) (19) (35,324) (28) (29,775) (25) (25,522) (25) (19,670) (35) (16,832) (38)
Profit before Provisions 92,562 37 48,489 39 45,146 39 30,337 29 15,960 28 11,535 26
Provisions and write offs - net (4,177) (2) (993) (1) (8,210) (7) (4,186) (4) (1,168) (2) (1,283) (3)
Profit before taxation 88,385 35 47,496 38 36,936 32 26,151 25 14,792 26 10,252 23
Taxation (43,378) (17) (19,141) (15) (14,770) (13) (10,919) (10) (5,830) (10) (3,939) (9)
Profit after taxation 45,007 18 28,355 23 22,166 19 15,232 15 8,962 16 6,313 14

(Comparitive information has been reclassified / rearranged for better presentation)

Meezan Bank Annual Report 2022 71

REVIEW OF SIX YEARS’ PERFORMANCE
The summary of financial performance of Meezan Bank Limited over the last six years (2017 – 2022) is as under:

Statement of Financial Position

Assets
Total Assets of the Bank crossed Rs 2.5 trillion in 2022 growing To support its robust growth and have a sound regulatory capital
from Rs 789 billion in 2017 - a significant leap, taking Meezan base in line with the strategic direction set by the Board of
Bank from a mid-sized entity to the league of big banks in Directors, the Bank successfully issued subordinated Tier II Sukuk
Pakistan. The net financing portfolio has increased to Rs 995 and the first-ever Shariah-compliant Additional Tier I Sukuk. As of
billion from Rs 420 billion – up by Rs 575 billion representing a five December 31, 2022, the total sub-ordinated Sukuk stood at Rs 21
year CAGR of 19%. Throughout this period, the Bank maintained billion, comprising Rs 7 billion of Additional Tier I Sukuk and Rs 14
its focus on channelising liquidity in all sectors of the economy. billion of Subordinated Tier II Sukuk. Alhamdulillah, all
Corporate book led the growth in financing with the portfolio now subordinated Sukuk issuances of the Bank received an
totaling Rs 754 billion, representing more than 70% of the overwhelming response from the investors and the Bank was able
financing book. The Bank’s SME / Commercial and Consumer to issue these Sukuk at very competitive pricing under the
portfolios also witnessed a healthy growth of 25% and 14% Mudaraba arrangement which is indicative of the strong brand
respectively. The Bank continues to have one of the lowest value and standing of the Bank. Accordingly, despite significant
infection ratio of 1.3% in the industry demonstrating the superior growth in total assets in the period from 2017 to 2022, the Bank’s
quality and resilience of its financing portfolio. Capital Adequacy Ratio has increased to a comfortable level of
18.42% in 2022, compared to a minimum requirement of 12%.
The Bank’s investment portfolio also recorded manifold growth
closing at Rs 1.3 trillion from Rs 119 billion in 2017. As of Equity
December 31, 2022, the Bank’s total investment in GoP Ijarah Equity of the Bank also witnessed a multifold increase reaching
Sukuk amounted to Rs 1.1 trillion and Pakistan Energy Sukuk Rs 115 billion compared to Rs 35 billion in 2017. The Bank is
(guaranteed by the Federal Government) amounted to Rs 120 committed to maintaining a sound balance between
billion. The resumption of Government of Pakistan (GoP) Ijarah depositors' liability and shareholders' funds so that an optimal
Sukuk auctions at regular intervals have addressed the chronic debt to equity ratio is maintained. This optimal debt to equity
liquidity deployment challenges faced by the Islamic Banking ratio provides reasonable assurance to depositors about the
Industry. This enabled the Bank to reduce the dependency on safety and security of their funds and at the same time provides
inter-bank secured placements under Bai Muajjal which impetus to the management to invest these funds into
decreased to Rs 35 billion (around 1% of the Balance sheet) profitable ventures without compromising the risk profile of the
compared to Rs 147 billion (19% of the balance sheet). Bank. The Bank has maintained a record of unbroken payout
since the date of listing on the Stock Exchange.
The Bank’s fixed assets (excluding right-of-use assets recognized
under IFRS 16) have also increased to Rs 29 billion in 2022 from
Profit and Loss account
Rs 11 billion in 2017 primarily due to the Bank’s sizeable
The Bank’s Profit After Tax has recorded seven times increase -
investment in its Branch network which reached 962 branches in
from Rs 6.3 billion in 2017 to Rs 45 billion in 2022 with an average
2022 as compared to 601 branches in 2017 – an increase of 361
Return on Equity (ROE) of more than 30% while maintaining an
branches during the period. This expansion in the branch network
unbroken payout to its shareholders.
has reaped fruits for the Bank, as is evident from the strong
growth in deposits and profits over the years. The Bank’s
In line with the growth in the Bank’s deposit profile and increase in
significant investment in IT infrastructure and digital channels
the underlying SBP policy rate, the net spread of the Bank rose to
(including Internet Banking and Mobile App) also contributed to
Rs 122 billion as compared to Rs 21 billion in 2017. Fee, foreign
this growth in fixed and intangible assets.
exchange and other income also grew significantly from Rs 5.6
billion in 2017 to Rs 18.2 billion in 2022, primarily due to the
Liabilities Bank’s growing trade business which crossed Rs 2.1 trillion as
Deposits of the Bank rose by 2.5 times from Rs 667 billion in 2017 compared to Rs 710 billion in 2017. The Bank’s tremendous
to Rs 1.66 trillion in 2022, representing a five year CAGR of 20%. growth in digital banking business also played a significant role in
The Bank’s commitment towards high standards of customer this growth duly complemented by a significant increase in its
service coupled with a seamless digital banking experience has customer base.
enabled this key achievement. More importantly, Current Account
(CA) deposits recorded growth of Rs 584 billion or 2.47 times The Bank’s operating expenses rose to Rs 48 billion in 2022 from
taking the total CA deposits to Rs 819 billion compared to Rs 236 Rs 17 billion in 2017. High inflation, rupee devaluation and
billion in 2017. The CA mix in total deposits improved to 49% continuous investment in physical and digital banking channels
compared to 35% in 2017. Savings Account (SA) deposits also contributed to the increase in operating costs. The Bank now
grew to Rs 641 billion from Rs 263 billion in December 2017 - a employs more than 15,000 staff across Pakistan, thereby creating
cumulative growth of 1.4 times. The Fixed deposits recorded a more employment opportunities for the country’s population.
nominal growth of Rs 30 billion – representing 12% of the deposit Despite the increase in operating expenses, the Bank’s income
mix as against 25% in 2017. This is in line with Bank's strategic efficiency ratio improved to 34% in 2022 from 59% in 2017.
focus on maintaining an optimal deposit mix focused on
mobilising growth in CASA. In line with prudent practices, the Bank further strengthened its
NPL coverage ratio which stood at 166% in 2022 as compared to
The introduction of SBP’s Shariah Compliant Open Market 133% in 2017. The Bank’s direct contribution to the national
Operation (OMO) and Standing ceiling facility at the start of 2022, exchequer grew by 10 times with the total taxation charge
enabled the Bank to manage its day-to-day liquidity more (including super tax) for the year 2022 increasing to Rs 43.4 billion
efficiently. As of December 31, 2022, the Bank’s total borrowing from Rs 3.9 billion in 2017 on account of higher profitability and
from SBP under the SBP OMO amounted to Rs 364 billion. This taxation rates.
was followed by Rs 135 billion under several SBP-subsidized
refinancing schemes to targeted businesses and export-oriented
industries. The total amount due to financial institutions amounted
to Rs 573 billion compared to Rs 37 billion in 2017.

72 Meezan Bank Annual Report 2022

FINANCIAL ANALYSIS
Statement of Financial Position
The total assets of the Bank grew by 35% or Rs 674 billion to cross the Rs 2.5 trillion landmark from Rs 1.9 trillion in 2021. Investments
and financings both witnessed significant growth during the year.
The Gross Financings portfolio crossed Rs 1 trillion – Rs 241 billion or 31% up from last year with the Gross Advance to Deposits ratio
(ADR) of the Bank hovering above 61% versus 53% last year. This growth was well-distributed across large-sized corporates, small and
medium-sized commercial entities and retail consumers with financial inclusion being a key focus. Active participation in the State Bank
of Pakistan’s (SBP) refinancing schemes also remained a top priority for the Bank as the total exposure under such schemes grew by
more than 25%. The Bank has a market share of around 8.6% of overall banking industry financings.
The Bank’s financing portfolio maintained its exemplary quality with the infection ratio falling to 1.3% compared to an average for the
banking industry of around 7%. The Bank’s coverage ratio stood at 166% - well above the banking industry average of 92%.
Investments portfolio also doubled to Rs 1.3 trillion from Rs 620 billion in 2021 mainly due to sizeable investment in Federal Government
Securities – GoP Ijarah Sukuk which now represent Rs 1.1 trillion as compared to Rs 398 billion a year ago. The Bank’s placements under
Bai Muajjal reduced from Rs 238 billion in 2021 to Rs 35 billion in current year mainly due to surplus liquidity being deployed towards the
regular auction of GoP Ijarah Sukuk.
Continuing our tradition of outpacing the industry, yet again the Bank’s deposits growth surpassed the banking industry deposit growth
and registered an uptick of 14% versus 7% for the banking industry as a whole. Meezan Bank’s deposit book now stands at Rs 1.66
trillion with Current Account (CA) and Savings Account (SA) deposits amounting to Rs 1.46 trillion – which is even higher than the total
deposits of the Bank a year ago. The Bank has a market share of 7.4% of banking industry deposits with a CAGR growth of 34% since
its inception. The major contribution of this growth is due to CASA deposits which grew by 21%, representing 88% of the deposit mix.
The Bank’s deposits depict a high level of granularity with individual depositors representing more than 60% of the deposit portfolio - a
yardstick reflective of customers’ preference and trust for choosing Meezan for their banking needs.
During the year, the Bank added 60 new branches to its network providing a vast coverage of 962 branches spread across 317 cities of the
country supported by a network of 1,000 plus biometric-enabled card less ATMs. Apart from the physical infrastructure, the Bank has a strong
presence in digital channels as well which can be witnessed by the Statement of Financial Position
continuous rise in the Bank’s debit card spent and increase in Inter
Rupees in Million
Bank Fund Transfers (IBFT) and Utility Bill Payments (UBPS)
transactions respectively. The Bank’s Mobile Banking App remained 115,321
the industry leader, with an unbeatable 4.9 rating on both Apple
Store and Google Play Store throughout the year.
The Bank’s equity increased to Rs 115 billion as compared to
2
202

Rs 87 billion a year ago. The Board has approved a final cash

1
202

dividend of Rs 3.00 per share (30%) bringing the total payout 86,558
to Rs 8.50 per share (85%) as Rs 5.50 per share i.e. 55% 1,816,413 2,577,398
interim cash dividend was paid in addition to issuance of 2,462,077
1,902,971
10% Bonus Shares during the year.
The Bank remains adequately capitalized with a Capital Assets
Adequacy Ratio of 18.42% over and above the minimum Liabilities
regulatory requirement of 12%. Equity

Islamic Financing and Related Assets (Gross)

2022 2021
1% 1%
1% 6% 2% Food
2% 2% 2% Textile
20% 3% Power (electricity)
2% 21%
3% 2% Oil and Gas
3% Individuals
3% Wholesale and Retail Trade
2%
3% Transport, Storage and Communication
5%
4% Construction and allied industries
4% Chemical and Pharmaceuticals
4% 17% Automobile and transportation equipment
18% Paper, board and packaging
5% 8%
Fertilizer
Cement
6%
Sugar
9% 12% Services
8%
7% Mining and Quarrying
8% Others
6%
Deposits
2022 2021
1% 1%
1% 1%
1%

33% 30% Individuals

Private Sector
Government
Public Sector Entities
65% 67% Others

Meezan Bank Annual Report 2022 73

Profit and Loss Account
The Bank recorded a profit after tax of Rs 45 billion as Operating and other expenses increased to Rs 48 billion from
compared to Rs 28.4 billion a year ago – a growth of 59%. The Rs 35.3 billion, primarily due to steep inflation, rupee
return on average equity increased to 45% while basic devaluation, increase in costs associated with the opening of
Earnings Per Share – on enhanced share capital of Rs 17.9 60 new branches and investment in IT infrastructure. The
billion clocked Rs 25.15 per share as compared to Rs 15.84 Bank remained focused on cost optimisation by ensuring
per share in 2021. operational efficiencies and automation of processes to bring
down its income efficiency ratio to a satisfactory level of 34%
The Bank’s net spread grew by 77% primarily due to strong compared to 42% a year ago.
balance sheet growth and higher underlying benchmark rates,
complemented by a surge in average current account balance The total tax charge for the year, including super tax,
which enabled the Bank to achieve a healthy net spread. Fee, increased to Rs 43.4 billion as compared to Rs 19.1 billion due
commission and other income, increased by 43% from the to higher profitability and an increase in tax rates through
last year with a major rise in trade, branch banking, and debit Finance Act 2022. The effective tax rate of the Bank increased
card-related fee income. On an overall basis, the Bank’s from 39% in 2021 to 49%. The Bank was able to maintain its
non-funded income recorded a growth of 28% totaling Rs 19 Gross ADR at 50% plus levels which contributed to efficient
billion as compared to Rs 15 billion in 2021. tax management, as the Bank did not attract any ADR-related
additional tax on its income from Federal Government
Securities.

CASA to Total Deposit Profit and Loss

Year-wise trend in %
88
2022 Rupees in million
90
83
Profit after tax
80 75 74 76
73 45,007
70

60

50
Net spread
40 121,704
30 Profit before tax
88,385
20

10
Non funded income
0 19,103
2017 2018 2019 2020 2021 2022
Provisions
4,177 Operating &
other expenses
48,245

NPL and Coverage Ratios 2021

11 166% 170 Profit after tax
Profit before tax 28,355
10 160
47,496
9 150
142%
139%
8 140
133%
7 130
Coverage Ratio

133%
128%
Provisions
NPL Ratio

6 120
993
5 110
Net spread
4 100 68,921
2.81%
3 90
1.78% 1.86% Operating &
2 1.54% 80
1.34% 1.34% other expenses
1 70 35,324
2017 2018 2019 2020 2021 2022
Non funded income
14,892

74 Meezan Bank Annual Report 2022

DuPont Analysis

Description 2022 2021 2020 2019 2018 2017

Profit Margin - % 17.9% 22.7% 19% 14.7% 16% 14.3%

Asset turnover 0.11 0.07 0.09 0.10 0.06 0.06

Equity Multiplier - Times 22.2 22 20.6 20.7 22.9 22.1

ROE 44.6% 36.4% 34.6% 30.7% 23.8% 19.3%

Following are the main DuPont analysis highlights:

■ The Bank’s profit margin depict a decline in 2022 owing to increase in tax rates
■ The asset turnover has increased during the current year
■ The equity multiplier is directly dependent on the Bank’s equity in relation to total assets
■ The Bank’s Return on Equity is dependent on above mentioned three factors

Market Statistics of Meezan Bank’s Share during 2022

Market Capitalisation Share Price Sensitivity
Rupees in Billion Share Price PSX Index
300.00
155 50,000
150 49,000
250.00
145 48,000
Share Price (Rupees)

140 47,000
200.00
130 46,000

PSX Index
125 45,000
150.00 120 44,000
115 43,000
100.00 110 42,000
105 41,000
50.00 100 40,000
95 39,000
0.00 90 38,000
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Share Price Daily Number of Market Capitalisation

High Low Closing average trading days Share Value
volume Capital
Rupees Rupees in Million
Fourth Quarter 117.97 98.20 99.54 871,075 64 17,896 178,139
Third Quarter 138.90 108.90 109.75 1,039,184 61 17,896 196,411
Second Quarter 147.40 109.01 112.98 1,228,058 60 16,269 183,811
First Quarter 148.07 123.15 130.96 646,505 63 16,269 213,063

Below are the key factors that may influence the share price of the Bank:

■ Bank's Performance
■ Regulatory Changes specifically in Banking sector
■ Changes in Macro Economic scenario of Pakistan
■ Changes in Political Environment of Pakistan

Meezan Bank Annual Report 2022 75

ALLOCATION OF INCOME AND EXPENSES TO
REMUNERATIVE DEPOSITORS’ POOL
For the year ended December 31, 2022

2022 2021
Rupees in '000

Income from financing activities 76,628,930 38,409,877

Income from investments 72,946,915 39,750,947
Income from placements with financial institutions 9,202,271 24,654,260
Other income attributable to pools 5,973,096 4,330,174
Total Income 164,751,212 107,145,258
Less: Directly attributable charges to pools including takaful (Note) (2,197,829) (1,794,432)
Less: Profit on assets allocated to IERS and other special pools (48,158,641) (26,729,388)
Less: Profit share allocated to bank's equity and other pools in Mudarabah pools (24,501,071) (23,527,530)

Gross distributable Income 89,893,671 55,093,908

Mudarib (Bank) share of profit before hiba 45,581,851 27,734,239
Less: Hiba from Mudarib (Bank) share (7,846,233) (564,181)
Net Mudarib (Bank) Share of profit 37,735,618 27,170,058
Rab-ul-Maal share of profit 52,158,053 27,923,850

Rab-ul-Maal share of profit is distributed as follows:

Remunerative depositors' profit share in mudarabah pools 52,158,053 27,923,850

The Bank maintain following four remunerative general pools:

Income earned Profit share Mudarib Hiba from Net Mudarib Remunerative
allocated to share of Mudarib (Bank) Share depositors's
bank's equity profit (Bank) of profit share in
and other pools share Mudarabah
in mudarabah pool
pools 2022
Rupees in '000
Rupee deposit pool 110,760,902 23,329,815 43,715,542 7,846,233 35,869,309 51,561,778
Dollar deposit pool 3,423,579 1,090,112 1,750,106 - 1,750,106 583,361
Pound deposit pool 158,838 59,207 89,665 - 89,665 9,966
Euro deposit pool 51,423 21,937 26,538 - 26,538 2,948

114,394,742 24,501,071 45,581,851 7,846,233 37,735,618 52,158,053

2021
Rupees in '000
Rupee deposit pool 77,558,142 23,192,628 27,182,756 564,181 26,618,575 27,746,939
Dollar deposit pool 1,012,471 318,656 520,362 - 520,362 173,453
Pound deposit pool 37,280 9,865 24,673 - 24,673 2,742
Euro deposit pool 13,545 6,381 6,448 - 6,448 716

78,621,438 23,527,530 27,734,239 564,181 27,170,058 27,923,850

Note: Administrative and operating expenses (including salaries and marketing costs) are paid by the Bank and not charged to the
Depositors` pool as per the guidelines.

76 Meezan Bank Annual Report 2022

STATEMENT OF VALUE ADDED AND DISTRIBUTED
2022 2021
% %
Rupees in ‘000 Rupees in ‘000
Value Added

Profit / return on Islamic financings, investments 227,944,571 98.8% 109,079,717 97.4%

and placements-net of provision

Fee and commission income 13,316,054 5.8% 9,352,808 8.3%

Dividend income 987,533 0.4% 1,192,467 1.1%

Foreign exchange income 3,617,274 1.6% 3,158,131 2.8%

Gain on securities and other income 1,182,327 0.5% 1,188,394 1.1%

247,047,759 123,971,517

Operating and other expenses excluding salaries,

depreciation, amortisation and workers welfare fund (16,381,620) (7.1%) (11,950,378) (10.7%)
230,666,139 100% 112,021,139 100%

Value allocated as follows:

To Depositors / Financial Institutions

Profit on deposits and other dues expensed 110,417,606 47.9% 41,151,438 36.7%

To Employees
Salaries, allowances & other benefits 26,327,851 11.4% 19,660,123 17.6%

To Shareholders
Cash Dividend 11,713,905 5.1% 9,514,013 8.5%
Bonus Shares 1,626,931 0.7% 2,122,084 1.9%
13,340,836 5.8% 11,636,097 10.4%

To Government
Workers Welfare Fund 1,910,344 0.8% 939,869 0.8%
Income tax 43,378,218 18.8% 19,140,588 17.1%
45,288,562 19.6% 20,080,457 17.9%

To Expansion
Depreciation & Amortisation - owned assets 3,581,193 1.6% 2,773,452 2.5%
Retained in business 31,665,774 13.7% 16,719,060 14.9%
35,246,967 15.3% 19,492,512 17.4%

To promote development and welfare of the society

Donations 44,317 - 512 -
230,666,139 100% 112,021,139 100%

Statement of Value Added & Distributed 2022 Statement of Value Added & Distributed 2021

15.3% 17.4%

0%
0%

47.9% 36.7%

19.6%
17.9%

5.8% 11.4% 10.4% 17.6%

To Depositors/Financial Insitutions To Employees To Shareholders To Government To Expansion To Society

Meezan Bank Annual Report 2022 77

HOW WE DISTRIBUTE THE VALUE CREATED
In fulfilling our promise to our stakeholders, Meezan Bank distributes the value created in relevant
and meaningful ways – and for some stakeholders, beyond financial means. Stakeholders receive
intangible benefits ranging from employee upskilling programmes to diverse avenues of alternate
Shariah-compliant investments & financings, in our effort to ‘Establish Islamic banking as banking of
first choice...’

Economy 19.6%

Rs 45,289 Million
A total of Rs 45,289 Mn in Income Tax
& Workers Welfare Fund to the Govt.,
contributing to the development of the
country’s economy.

Shareholders 5.8%
Economy
Rs 13,341 Mn
We rewarded our equity shareholders
with a cash dividend of Rs 8.50 (85%)
per share and bonus shares at 10%.

Employees Shareholders
Expansion 15.3%

Rs 35,247 Mn
Depreciation & amortization - owned
Rs 230,666 Mn assets retained in business.

Depositors/Financial
Society Expansion Institutions 47.9%

Rs 110,418 Mn
Profit paid to depositors and financial
Depositors/ institutions.
Financial
Institutions
Society
Rs 44 Mn
Donations to promote development
and welfare of the society.

Employees 11.4%

Rs 26,327 Mn
Salaries, allowances & other benefits to
the Bank’s employees amounted to
Rs 26,327 Mn.

78 Meezan Bank Annual Report 2022

STATEMENT OF INVENTORY
Meezan Bank Limited provides financing through various sale-based modes including Murabaha, Musawamah, Istisna, Tijarah, Salam,
etc. Under these modes, the Bank either purchases the goods or gets them manufactured. Meezan Bank being a premier Islamic bank,
has a diversified portflio, well spread amongst sectors such as Pharmaceutical, Agriculture, Textile and Ship-Breaking, etc. Furthermore,
Meezan Bank is continuously exploring new and untapped sectors of the economy in order to enhance its portfolio.
Islamic banks have expertise in products based on real assets and are involved in the process of trading, renting and construction
contracts using various Islamic modes of financing that are based on risk sharing, owning and handling of physical goods, and
participation on profit and loss basis. It also demonstrates the exposure that the Bank takes in different sectors.
The goods lying unsold at the date of the financial statements are carried as inventory in the financial statements of the Bank. The sector
wise detail of inventory held by the Bank as at December 31, 2022 is as follows:
2022 2021
Sector Nature of Inventory Rs in ‘000 Rs in ‘000
Agriculture & Food Products Corn, Sugar, Soybean, Ghee, Canola, Rice (Grain, Paddy), Wheat, Syrups, Oil Cake, Edible Oil,
Meat, Seed, Flour 13,043,810 10,365,216
Textile Cotton (Raw Cotton, Bales, Fabric, Yarn), Bed Sheets, Garments, Home Textile Products
(Towels, Pillow Covers, etc) 10,050,336 8,863,254
Ship Breaking Ship Scrap 4,207,910 4,526,344
Chemical & Pharmaceutical Chemicals, Medicines, Paints, Fertilizer, Polymers 3,886,820 4,053,760
Construction Iron & Steel, Sanitary items & Fittings, Pipes, Cement Bags, Construction Equipment 3,151,229 2,822,306
Wholesale & Retail Trade Rock Phosphate, Coal, Caps and Corks, Confectionary Items, Medical Machinery 3,000,000 2,698,779
Petroleum Products High Speed Diesel, Low Sulphur Furnace Fuel Oil, High Sulphur Furnace Fuel Oil,
Premium Motor Gasoline 1,878,835 299,953
Others Poultry Feed, Float Glass, Copper Wire, Bottle Caps, Battery Lead Panels, Electronic
Components, Sport Goods, Cars, ATM Machines, Fans, Furniture, Foam, Fiber, Auto Spare,
Tractors, Cleaning Products, Finished Leather, Hardware Parts, Paper, Plastic Products,
Packaging & Material (Chip Boards, Glass Vials, Glass Bottles) 4,626,294 6,696,526
Grand Total 43,845,234 40,326,138

Sector-wise Breakup

10% 30%

4%

7% Agriculture & Food Products

Textile
7% Construction
Chemical & Pharmaceutical
Wholesale & Retail Trade
9% Petroleum Products
Ship Breaking
Others

10% 23%

STATEMENT OF FINANCING PORTFOLIO INCOME

Meezan Bank provides financing to its Corporate, Commercial, SME, Agriculture and Consumer banking customers using a variety of
Shariah-compliant modes of financing. The below mentioned matrix shows the percentage of income earned on different financing
modes, and depicts a well balanced and diversified financing portfolio of the Bank.

The diversification has been achieved by using arrangements based on trade, rent, joint ownership, profit / loss partnership and agency,
to suitably meet the needs of customers and provide a halal return.
Rs in Million
Islamic mode of financing 2022 2021
Amount % Amount %
Running Musharakah 24,652 27.5% 9,123 21%
Diminishing Musharakah 24,563 27.4% 12,297 28.4%
Istisna 8,110 9.0% 3,719 8.6%
Ijarah 7,038 7.8% 5,561 12.9%
Murabaha 6,148 6.9% 2,665 6.2%
Musawamah 4,916 5.5% 3,394 7.8%
Wakalah 4,002 4.5% 3,051 7%
Salam 1,699 1.9% 635 1.5%
Tijarah 1,412 1.6% 713 1.7%
Others 7,194 7.9% 2,173 4.9%
Total 89,734 100% 43,331 100%

Meezan Bank Annual Report 2022 79

A PRODUCT MATRIX THAT
DISTINGUISHES US
Meezan Bank has a unique business model that is based on trade. All our products and services are
application of any of the various trade transactions that are permissible in Shariah, such as sale, rent,
partnership. Based on these modes of trade, Meezan Bank’s product and services can be categorized in the
following broad categories.

SALE-BASED
Murabaha & Musawammah – Murabaha is a sale transaction where the seller discloses the cost and profit to the
buyer at the time of execution of sale. Musawammah is a sale transaction where cost and profit is not disclosed at
the time of sale.
■ Customer Needs – asset-based working capital requirement (e.g. raw material & inventory), Import Financing
■ Key Features – short-term facility, bank sells required asset on deferred or spot payment
■ Variants – Murabaha/Musawammah FIM (Finance Against Imported Merchandize), Murabaha/Musawammah FIM
Spot, Murabaha against Export Usance Bill, Musawammah against Sight LC, etc.

Tijarah – working capital solution where customers sell their inventory on spot basis to Bank to get funds required
for operations. Later the inventory is sold by the Bank in the market.
Istisna – A working capital solution for manufactures where Bank orders its customer to manufacture and deliver
certain specific asset against spot/deferred payment.
Commodity Salam – A working capital solution where homogenous commodities like sugar, wheat, rice are
purchased from customers by the Bank against advance payment and deferred delivery.

PARTNERSHIP-BASED
Running Musharakah – Shirkatul-aqd based financing facility offered to the customers where the Bank participates
in the operating activities of the customer and shares profit and loss as per the actual performance of the business.
It can be used by both service sectors and manufacturing sectors in meeting their day-to-day financing
requirements.

RENT-BASED SERVICE-BASED
Ijarah – technically means to give something on Letter of Credit Services – In order to facilitate
rent. The Bank acquires the asset required by the imports of customers, Meezan Bank offers letter of
customer and then leases it to the customer for a credit establishment services on Wakalah basis.
fixed period
■ Customer Needs – fixed asset financing Hedging Facilities – In order to hedge the risk of
(e.g., plant, machinery, generators, equipment, foreign currency price fluctuations, Meezan Bank
vehicles, etc). offers a Shariah-compliant hedging facility on the
■ Key Features – Long-term facility basis of Wa’ad.

Diminishing Musharakah – Bank and the customer Guarantee Services – In order to facilitate trade,
jointly purchase an asset and create joint ownership Meezan Bank offers Shariah-compliant guarantee
in the asset. The Bank then leases its share in the facility to its customers where the Bank provides
asset to the customer while the customer purchases different types of payment and performance
units of ownership in the asset from the Bank at guarantees on behalf of the customer.
periodic intervals. Upon purchase of all the units, the
customer becomes the owner of the asset.
■ Customer Needs – fixed asset financing (e.g.,
land, house, factory, building, equipment, etc.)
■ Key Features – medium & long-term facility.
Strategy &
Resource Allocation
STRATEGIC OBJECTIVES
Meezan Bank’s strategic focus is geared towards producing optimum performance in the present as well as readying the organization
for the future. A primary strategic objective is to retain the trust of our customers by offering apt financial products and, increasingly
important for today’s competitive landscape, premium customer service round-the-clock. Meezan Bank optimizes its financial earnings
by keeping a keen eye on micro and macroeconomic conditions, the various emerging trends in the financial market, as well as business
opportunities which may be nurtured over time to provide benefit later. The focus, hence, is optimizing for the long run, and developing
business relationships in all sectors that are resilient to market shocks.

The Bank also appreciates the increasingly important role technology is playing in finance and banking, and sizeable investments are
being made in IT infrastructure as well as human resources to aid the organization in riding the wave.

With its focus on formulation and precise execution of strategy, Meezan Bank has identified several key metrics against which the
organization routinely benchmarks its own performance. Ongoing detailed discussions on these metrics force Meezan Bank to compare
each aspect of its organizational life against the very best, and is a constant motivator for pursuing excellence for the organization. This
also allows Meezan Bank to recalibrate its efforts wherever required, redeploy resources, and generally respond to any market dynamic
having an impact on the business. Likewise, Meezan Bank weighs all business decisions against its Vision, Mission and Core Values,
and reaffirms its commitment to these enshrined statements of intent each step of the way.

LONG TERM MEDIUM TERM SHORT TERM

OBJECTIVES OBJECTIVES OBJECTIVES

Establish Islamic banking as Establish itself as the best customer Provide financial solutions to fulfill
banking of first choice... franchise by offering innovative, needs and expectations of an
value-added services increasingly technology-oriented
customer base
Protect and augment Meezan Bank’s
brand by maintaining its Core Values of Collaborate with educational institutes
Shariah-compliance, Integrity and to nurture Islamic bankers Ensure consistent profitability to exceed
Service Excellence shareholder and market expectations

STRATEGIES IN PLACE
Meezan Bank seeks to entrench its mutually beneficial Meezan Bank continues to work towards establishing Islamic
relationship with all customer segments, and hence focuses on banking as banking of first choice. The Bank routinely conducts
increased cross-selling and more meaningful wealth awareness sessions on Islamic banking throughout Pakistan,
management. This is done traditionally as well as digitally, as engaging audiences from all professions and age groups.
digital banking has announced itself less as a disruptor and more Meezan Bank’s efforts are quite evident from the growing Islamic
as a harbinger of opportunities. Meezan Bank has invested banking market and increased demand towards Islamic banking
heavily in digital platforms which allows us to serve customers products.
better, more conveniently and accurately. With digital banking,
both product development and service delivery have come to the
forefront as the real differentiators between the good and the
great. Meezan Bank strives to provide digital services in an
increasingly digital world by looking at what the most dynamic
and purposeful clientele of the Bank could wish for.

Meezan Bank will continue to lend judiciously while maintaining a

good asset-to-deposit ratio. The organization has worked
incredibly hard in cultivating progressive relationships with
business entities in various sectors and industries, and sees itself
as a partner to their commercial activities.

82 Meezan Bank Annual Report 2022

RESOURCE ALLOCATION

Human Capital Natural Capital

■ Enhancing employee base ■ 74 branches including Head Office converted
■ Work-from-home facilitation to Solar Power
■ Employee benefits ■ Cumulative solar capacity in FY22: 1.3 MW

Manufactured Capital Intellectual Capital

■ Highest-rated Mobile App on Google
■ 60 New Branches
Playstore & Apple App Store
■ 1,061 Biometric & Cardless services enabled ATMs
■ Highest Debit Card Spend in the Industry
■ Call Centres, Premium Banking and Consumer Finance
■ Largest E-commerce Share
Centres
■ State-of-the-art Data Centres
■ 38.6% share of e-commerce spend on debit cards in
industry*
■ Deployment of over 10,000 POS machines nationwide in Social and Relational Capital
the launch year and tapped over 250 cities across the ■ CSR initiatives executed through public-private
country partnerships
■ Multiple Security Awareness & Financial Literacy
Campaigns for customers
24.7 million awareness SMS sent in 14 different
Financial Capital ■

awareness campaigns to customers

■ Rs 45,007 million net profit ■ First dedicated Islamic Banking Youtube Channel in
■ Rs 115,321 million total equity the country

*State Bank of Pakistan Report FY22

KEY PERFORMANCE INDICATORS AND FUTURE RELEVANCE

Meezan Bank tracks its Key Performance Indicators at multiple levels so that smart business decisions may be made regarding all
current and future projects.

Future
Category Initiative KPIs Relevance

Maintain growth Maintain upward trajectory in terms of deposits and ■ ROA

momentum and quality financing portfolio; optimize returns on equity and ■ ROE
ensure assets, and maximize the impact of each rupee invested ■ NFI
profitability ■ CASA mix
■ Deposits in PKR
■ Financing mix
■ ADR
■ NPL

Increase brand Ensure meaningful interaction with all business segments; ■ Brand Equity
value, customer protect and augment the organization’s brand value by Index
confidence and adhering to its lofty Shariah-compliance and customer ■ NPS
customer services care standards

Enhance Enhance internal synergies and cross-functional ■ Error rate

interdepartmental coordination for increased efficiencies, ultimately enjoyed ■ Surveys
coordination and by customers as superior customer care ■ Process flows
controls reviewed /
automated

Enrich human and Empower, train and retain employees; provide a learning ■ Retention rate
organizational yet challenging environment for a rich career path ■ Employee
capital Satisfaction
Survey

Meezan Bank Annual Report 2022 83

COMPETITIVE LANDSCAPE AND MARKET POSITIONING
Meezan Bank is part of a very competitive landscape, and the smallest macroeconomic adjustments or subtle microeconomic shifts can
have immense bearing on the Bank’s operations and profitability. Meezan Bank keeps a keen eye on these variables and strives to
respond with alacrity.

SWOT Analysis
The pandemic necessitated the critical need to revisit the organizational SWOT framework, and review it in terms of the symptoms as
well as the underlying causes of change. Meezan Bank is Alhamdulillah poised to make most from strengths and capitalize on
opportunities, and in the same vein, overcome weaknesses to stave off threats. A summary of the analysis is given below:

STRENGTHS WEAKNESSES
Largest Islamic Bank of Pakistan Lack of availability of
human resources having
Shariah credibility specialized knowledge related
to Islamic banking
Dedicated Shariah Board
comprising of world-renowned Surplus liquidity with limited
Shariah scholars investment opportunities
The Highest-rated Mobile Banking
Application in Pakistan
Comprehensive services and
product portfolio

OPPORTUNITIES THREATS
General acceptance and increased Increased competition in Islamic
demand for Islamic banking products banking from conventional banks
Digital banking Increased security concerns with
respect to increase in demand of
Growing local and international digital transactions
Islamic banking market

84 Meezan Bank Annual Report 2022

Risk Management
RISK MANAGEMENT FRAMEWORK
The Bank manages its risks through a framework of sound risk management principles which includes identification of potential risks,
establishment of risk tolerance and control limits, assessment of the impact of potential risks and formulation of policies, procedures and
strategies to mitigate risks to the Bank while ensuring continuous monitoring and reporting to stakeholders as well. While the Board
provides policy framework and sets strategic direction, the Bank’s management is required to formulate procedures, establish
organizational structure, introduce systems and monitoring tools to ensure their implementation.
The Board has constituted a Board Risk Management Committee, comprising Board members with well-defined terms of reference. The
Board of Directors have also constituted a Board IT Committee which, amongst other IT and Digital Banking related matters, ensures
that cyber security risk management strategies are designed and implemented. The Bank’s risk governance is mainly exercised through
the following management committees:

■ Credit Risk Management Committee (CRMC) ■ Business Continuity Steering Committee (BCSC)
■ Asset Liability Management Committee (ALCO) ■ IT Steering Committee (ITSC)
■ Compliance & Operational Risk Management Committee (CORMC) ■ Service Board

The CRMC ensures that credit risk activities of the Bank fall within the ambit of approved policies, regulatory requirements and risk
appetite thresholds. CRMC also provides support and guidance to business units in managing their portfolio with a prudent approach.
ALCO reviews market and liquidity risk exposures, assets and liabilities mix, maturity profile, repricing gaps and sets pricing and takes
decisions for sound liquidity management. The CORMC focuses on issues arising from compliance risk along with operational risk,
Shariah Non-compliance Risk and control issues. The BCSC ensures that adequate business continuity/ disaster recovery plans are
prepared, tested and decision making authority in the event of a crisis is clearly defined. ITSC is responsible for assisting the Senior
Management in implementing IT and digital strategies approved by the Board of Directors and for playing an advisory role to the Senior
Management in all technology-related matters. It is responsible for reviewing significant incidents, major risks and breaches submitted
by Information Security. The purpose of the Service Board is to oversee and monitor performance of all relevant departments involved
directly or indirectly in delivering customer experience and providing services to external as well as internal customers of the Bank.

Meezan Bank has a ‘Three Lines of Defense’ model for risk management with clearly defined roles and responsibilities that are at the
core of the Bank’s operations:

First Line of Defense Second Line of Defense Third Line of Defense

Business Units & Risk Management, Internal Audit, Shariah

Support Groups Compliance & Other Audit & Business
Control Functions Review Functions

Primarily responsible for risk Establishing risk management Provide independent assurance
identification and management in their standards/policies/frameworks and and assessment on adequacy of
respective fields of operations by providing assurance on policy Bank's internal controls.
ensuring compliance to all policies, implementation and quality of
procedures and regulations. controls.

Meezan Bank has been designated as Sample Domestic Systemically Important Bank (D-SIB) by State Bank of Pakistan for 2022-2023,
after being identified as Designated D-SIB for last year. However, the Bank as sample D-SIB requires to hold an additional 0.5% capital,
over and above minimum capital adequacy ratio prescribed by the regulator. The Bank has a comprehensive Recovery Plan in place for
dealing with various crisis scenarios along with early warning signals and appropriate remedial
actions during crises. The Bank has in place Board approved Internal Capital Adequacy
Assessment Process and Risk Appetite Statement which is regularly reviewed and updated. The
Bank has been continuously improving upon its stress testing framework to capture the impact
of various shocks on the Bank’s business portfolio, capital adequacy, liquidity and profitability.
Moreover, Macro Stress Testing scenarios have also been developed to monitor the impact of
change in macro-economic variables on the financial position of the Bank.

Risk Management Group (RMG) is mandated to implement this framework as a function,

independent of commercial lines of business. RMG continued its efforts mainly focusing on
improving policies and procedures, limit structuring and strengthening systems and controls.
Under RMG, the credit risk function caters to corporate, investment banking, commercial & SME,
agriculture, supply chain and consumer business segments. The Bank has in place automated
financing approval system for corporate, commercial, SME, agriculture, and supply chain
customers that has brought significant improvements in customer facilitation. Enterprise Risk
Management (ERM) under RMG caters to market, liquidity, financial institutions, country,
operational and business continuity risks. ERM function also deals with Basel, Capital Strategy
Formulation & IFRS-9 implementation and development of risk related policy framework.

The Bank recognizes the importance of environmental, sustainability, compliance, reputational,

strategic and information security risks as distinct types of risks and continuously improves upon
to cater to these risks. Shariah Non-compliance Risk management principles and practices are
also at the heart of business practices of the Bank.

86 Meezan Bank Annual Report 2022

RISK AND OPPORTUNITY REPORT
Risk assessment, management and oversight is a continuous activity at Meezan Bank. Based on the internal and external environment,
the Bank’s Governance works to identify and mitigate risks to formulate a strategy that is both risk-responsive and opportunity-aware.

Key Sources of Uncertainty

Banks are typically exposed to risks including but not limited to
credit, market, concentration, liquidity, operational, information
security/cyber security, regulatory, reputational, strategic as Types of Risks faced by the Bank
well as Shariah non-compliance risks and with Meezan Bank
being the largest Islamic bank of the country, it is fully aware of
the importance and implication of Shariah non-compliance risk
Shariah
on its business and strategy. Cyber Information
non-compliance
Security risk
risk
Year 2022 was a challenging year due to severe economic
challenges including repayment of external debt, depleting FX
reserves, rising interest rates and supply chain disruptions in
Credit risk Market risk
the last quarter of the year. The challenges were exacerbated
by floods in the country during the second half of the year.

Despite economic challenges, Meezan Bank continued its

journey towards growth by increasing its deposit and financing Liquidity risk Operational risk
base in selected sectors of the economy with prudent selection
of customers, keeping in view the current economic
environment, along with the growth in its branch network
nationwide. Moreover, the Bank continued its role as an active
player in increasing Roshan Digital Accounts deposit base. Continuous flow of GoP Ijarah Sukuk remained an element of relief to the
Islamic banks in managing their excess liquidity.

Year 2023 is expected to be challenging as well. The management of fiscal account, external funding, higher inflation, FX reserve
position and exchange rate coupled with rehabilitation of flood-affected areas, will be the key determinants for the economy of Pakistan
and banking sector. Higher policy rate and economic slowdown may also increase the credit risk and weaken demand for financing and
supply chain disruptions will put further stress on the economy.

Statement of Board of Directors on Risk Assessment

The Board of Directors and its subcommittees comprising of Board members thoroughly assessed all principal risks including but not
limited to credit, market, operational, liquidity, information security, solvency and compliance risks through various reports including
early warning indicators to ensure that the Bank has in place necessary policies, procedures, systems and controls to mitigate risks that
may affect its business objectives, performance, financial viability and sustainability.

Materiality Approach
The Bank gives due consideration to materiality concept while managing its risks. Resources are deployed efficiently in medium to high
risk areas while minor risks are typically managed through transfer and outsourcing arrangements. The Bank manages all its core
operations on its own. Regulatory and Shariah-compliance is at the heart of the Bank’s materiality approach while managing existing
operations and taking new initiatives.

Meezan Bank will continue its journey of growth by exploring opportunities to achieve its strategic objectives, while ensuring effective
risk mitigants and controls in place, Insha’Allah.

BUSINESS CONTINUITY MANAGEMENT

The Bank’s Business Continuity Plans are developed in a way that enable management of the impact of any significant disruptions and
ensure uninterrupted operations. The Bank has implemented well-defined, approved plans, effective decision-making processes,
outlined description of distressed scenarios and roles and responsibilities of various functions, so as to ensure coordinated efforts
among stakeholders and operational continuity in case of any disruption. Simultaneously, the Bank has also been able to leverage on its
technology infrastructure and improve upon its IT Disaster Recovery Set-up, to develop the right contingency plans and mitigating
actions beforehand.

The Business Continuity Management (BCM) framework at the Bank facilitates the continuance of business activities and safeguards the
interests of the Bank’s key stakeholders in the event of crisis situations by ensuring appropriate availability of systems. The
implementation of the BCM Framework ensures safety of human resources, protection of critical assets and resumption of mission
critical activities from alternate processing site(s) in case the primary site(s) are not accessible or available. At Meezan Bank, the first
priority is always to ensure the safety of human life in case of any disaster.

The recent floods wreaked havoc in various parts of Pakistan. In such challenging times, Meezan Bank, through effective BCP structure,
ensured continued banking services in flood-affected areas. Meezan Bank’s ADC channels, strong IT support and Alternative
Processing Sites arrangements enabled continued services to its valued customers.

Meezan Bank Annual Report 2022 87

RESPONDING TO CRITICAL CHALLENGES
AND UNCERTAINTIES
Global economic situation and geopolitical turmoil, mainly Russia and Ukraine War has resulted in massive commodity price volatility,
creating economic challenges world-wide. The global economic conditions have impacted Pakistan adversely. Higher profit benchmark
rates, coupled with economic slowdown and supply chain disruptions, and high rate of inflation will result in adverse impact on paying
capacity of financing customers which may translate into high-risk of Non-Performing Financing. Higher rates will also result in adverse
impact on carrying value of fixed income investments. Moreover, macroeconomic challenges including external debt concerns,
depleting foreign currency reserves, adverse movement in exchange rate and political uncertainty remain key concerns for the banking
industry. Additionally, the country experienced catastrophic floods during the second half of the year which would exacerbate economic
challenges by putting further pressure on foreign currency reserves and inflation due to higher import bill for agriculture produce.

To maintain high level of assets quality, the Bank has equipped itself through robust risk assessment mechanism, effective portfolio
management, limits structuring, four-eye financing approval mechanism, rapid portfolio review and post disbursement monitoring to
minimize the level of its non-performing assets portfolio.

Considering the exponential growth in digital banking, the Bank has state-of-the-art digital platforms in place including mobile app and
internet banking, enabling it to provide efficient platforms to customers for performing their banking transactions hassle-free.
Continuous growth of digital banking, has resulted in elevated cyber security risk for banks. To manage the associated risks, the Bank
has an independent Information Security Department in place, manned with experienced and qualified resources. The Bank conducts
regular cyber security reviews and penetration testing and awareness sessions for its staff.

Information Security Measures

DSS
CERTIFIED

Strengthened the Bank’s Data Security Ensured regular and consistent Cyber Security
Infrastructure Reviews across the Bank

The Bank’s strong focus on learning and development of its staff helps in ensuring their competitiveness and ability to face new
challenges and uncertainties. The Bank has a competitive compensation plan and reward policy to ensure retention of existing staff and
hire the best human resources from the industry.

WHAT
MAKES US
RIBA-FREE
Islamic banks offer products that are fundamentally different from those offered
by conventional banks. While the business model of conventional banks is
simply lending funds on interest, the business model of Islamic banks involves
direct participation in trade, real assets and partnership-based activities.
Moreover, Islamic banks enter into multiple types of multiple trade-based
relationships with the customer by virtue of the underlying contracts unlike
conventional banks, where the only bank-customer relationship is of a lender
and borrower.

88 Meezan Bank Annual Report 2022

Governance
BOARD OF DIRECTORS
Mr. Riyadh S.A.A. Edrees Chairman
Mr. Riyadh S.A.A. Edrees has been a Director of Meezan Bank He holds a B.Sc. degree in Chemical Engineering from Newcastle
since October, 2012. In addition to being the Chairman of the Upon Tyne University, U.K., and M.Sc. in Chemical Engineering
Board, he is also Chairman of the Human Resources, from Kuwait University. His skills and experience encompass a
Remuneration & Compensation Committee and IFRS 9 wide range of industries and various roles.
Implementation Oversight Committee of the Board and a member
of the Information Technology Committee. Mr. Riyadh has also
previously served as the Vice Chairman of Meezan Bank’s Board.

Current Directorships
■ Deputy CEO, National Industries Group Holding - Kuwait. ■ Board Member, Privatization Holding Company - Kuwait.
■ Chairman, Meezan Bank Limited - Pakistan. ■ Board Member, Noor Financial Investment Company - Kuwait.
■ Board Member, Sahara International Petrochemical Company ■ Chairman, IT Partners Information Technology Company - Kuwait.
(SIPCHEM) - KSA. ■ Board Member, Combined National Industries Holding Company
■ Chairman, Middle East Complex for Engineering, Electronics for Energy - Kuwait.
and Heavy Industries Company - Jordan ■ Board Member, Al Durra National Real Estate Company - Kuwait.
■ Chairman & CEO, Ikarus Petroleum Industries Company - Kuwait. ■ Chairman & CEO, Gas & Oil Fields Services Company - Kuwait.
Other Recent Offices held
■ Vice Chairman, Airport International Group Company - Jordan. ■ Advisory Board Member, Markaz Energy Fund - Kuwait.
■ Board member, Kuwait Rock Company - Kuwait. ■ Chairman at K-Electric Company - Pakistan.
■ Vice Chairman, Eastern United Petroleum Services Company - Kuwait. ■ Board Member in Investment Committee of Bunyah Fund of
■ Kuwait Ceramic Company - Kuwait. the Kuwait Investment Company – Bahrain.
■ Director at Sajaa Gas Private Limited Company - UAE. ■ Advisory Board Member, Cleantech I & II Zouk Venture
■ United Gas Transmissions Company Limited Company - UAE. Limited - U.K.

Mr. Faisal A.A.A. Al-Nassar Non-Executive Director

Mr. Faisal A.A.A. Al-Nassar has been a Director of Meezan Bank University and has held many senior management positions in the
since March, 2015. He is Vice Chairman of the Board and finance industry including Corporate Affairs Executive Manager at
Chairman of the Risk Management Committee as well as a National Industries Group Holding Co., Auditor for government
member of the Audit Committee and Information Technology agencies in Kuwait Bureau of Accountancy and Head of Taxation
Committee of the Board. Mr. Faisal A.A.A. Al-Nassar has a Department, Ministry of Finance, Kuwait.
Bachelor’s degree in Accounting and Finance from Kuwait

Current Directorships
■ Deputy CEO, Finance and Administration, National Industries ■ Chairman, Shorfat Al Safwa - KSA
Group Holding Company - Kuwait ■ Chairman, Durrat Al Shameya Investment - KSA
■ Board Member, Al Durra National Real Estate Company - Kuwait ■ Vice Chairman, Abu Dhabi Marina Real Estate Investment - UAE
■ Chairman and Director, Noor Al Salhia Real Estate - Kuwait ■ Director and Chairman Audit Committee, Abu Dhabi Marina
■ Director, Noor Financial Investment Company - Kuwait Real Estate Investment - UAE
■ Member Audit Committee, Noor Financial Investment ■ General Manager, IKARUS Real Estate - UAE
Company - Kuwait ■ Executive Committee Member, ARADI Abu Dhabi Investment -
■ Member Risk Management Committee, Noor Financial UAE
Investment Company - Kuwait ■ Board Member, Hotels Global Group - Jordan
■ Member Nomination & Remuneration Committee, Noor ■ Board Member, Al Ruwad Company - Kuwait
Financial Investment Company - Kuwait ■ Vice Chairman & CEO, Al Manor Financing & Leasing - Kuwait
■ Director, Proclad Group Limited - UAE ■ Chairman of Nomination & Remuneration Committee,
■ Director, Proclad International Investment Limited - UAE Al Manor Financing & Leasing - Kuwait
■ Chairman of Audit and Risk Committee, Proclad Group
Limited - UAE

Other Recent Offices held

■ Vice Chairman, Al Salboukh Trading Company ■ Board Member, Arabic Investment Group (Egypt)
■ Chairman, Noor Telecommunication Company (Noortel), Kuwait

Mr. Bader H.A.M.A Al Rabiah Non-Executive Director

Mr. Bader H.A.M.A. Al Rabiah has been a Director of Meezan in accounting and a focused experience in investments honed
Bank since November, 2015. He is also a member of the Risk over the past 19 years. He was involved in establishing the Real
Management Committee of the Board. Estate Investment Department at Noor Financial Investment
Company and served as the Chairman at Arab Investment, Real
Mr. Bader H.A.M.A. Al Rabiah has a strong academic background Estate and Agricultural Development Group, Egypt.

90 Meezan Bank Annual Report 2022

Current Directorships
■ Director, Savola Group - KSA ■ Director, Palms Agro Production Company - Kuwait
■ Director, Midchem Company - KSA ■ Chairman, Al-Durra National Real Estate Company - Kuwait
■ Director, Noor Financial Investment Company - Kuwait ■ Vice Chairman & CEO Noor Al Salhiya Real Estate Company -
■ Member Audit Committee, Noor Financial Investment Kuwait
Company - Kuwait ■ Board Member, International Hotels Group - Jordan
■ Chairman Risk Management Committee, Noor Financial ■ Director, Ikarus Real Estate (W.L.L.) - UAE
Investment Company - Kuwait

Mr. Mubashar Maqbool Non-Executive Director

Mr. Mubashar Maqbool has been a Director of Meezan Bank since like Citigroup, Samba Financial Group, Habib Bank Limited, etc.
October, 2019. He is also a member of the Risk Management both in Pakistan and abroad.
Committee and Audit Committee as well as Chairman Information
Technology Committee of the Board. Mr. Maqbool started his banking career with Citibank Pakistan
where he held various positions in Corporate Banking Group. In
Mr. Mubashar Maqbool holds an MBA degree in Finance and 1997, he was transferred to Saudi American Bank (Samba), Saudi
International Business from University of Miami, U.S.A. and Arabia. He was Division Head, Corporate Banking in Samba Bank
another MBA in Finance from Quaid-e-Azam University, Pakistan. till 2004. Mr. Mubashar joined Habib Bank Limited in 2004 and
He has a long, diversified and successful track record in held various senior positions there including Corporate Head –
Corporate Banking, Corporate Finance, Project Financing, Central, Group Head – Commercial Banking & Retail Lending,
Commercial Banking, SME Banking as well as General Group Head – Commercial Banking and Country Manager / CEO,
Management. In a career spanning over thirty years, he has held HBL – UAE. He also represented HBL on the Board of Pakistan
senior positions in renowned local and multinational organizations Agricultural Storage and Services Corporation (PASSCO).

Current Directorships
■ Managing Director, Pak Kuwait Investment Company ■ Al Meezan Investment Management Limited
(Private) Limited ■ National Clearing Company Pakistan Limited

Mr. Faisal Fahad Al-Muzaini Non-Executive Director

Mr. Faisal Fahad Al-Muzaini joined the Board of Directors of years experience of working in Investments and Corporate
Meezan Bank in 2021. He is a member of IFRS 9 Implementation Finance and has held various senior management positions.
Oversight Committee of the Board.
Currently, he is working as Deputy Head of Debt Management
Mr. Al-Muzaini holds a Bachelor’s Degree in Business Dept., with Ministry of Finance Debt Management Dept., Kuwait
Administration from Gulf University for Science and Technology since 2018.
and a PLD Harvard Business School Alumni. He has more than 16

Other Recent Offices held

■ Board Member in Arab Monetary Fund ( AMF ) ■ Board Member in Al Soor Financing Company (Al Mulla Group)
■ Board Member in Arab Trade Financing Program ( ATFP ) ■ Board Member in Al-Tijari For Investment Funds Company -
■ Head of Investment in Commercial Bank of Kuwait Kingdom of Bahrain
■ Secretary to the Board in Commercial Bank of Kuwait ■ Board Member in KIC Brokerage Company
■ Board Member in Al Mulla International Financing Company

Mr. Naveed Iftikhar Sherwani Non-Executive Director

Mr. Naveed Sherwani joined the Board of Directors of Meezan for Corporate & Investment Banking and Islamic Banking at Bank
Bank in April, 2021. He has over 38 years of rich and diversified Alfalah Limited, Chief Risk Officer at Dubai Islamic Bank Pakistan
experience in Islamic and conventional banking of local and Limited. Since 2016, he has been working with Pakistan Kuwait
foreign banks. This includes working experience at the front end Investment Company Pvt. Limited (PKIC) as Chief Risk Officer. He
of Corporate, Commercial & SME segments and Enterprise Risk has also represented PKIC as a Nominee Director on the Board of
Management. The General Tyre and Rubber Company of Pakistan Limited from
October 2019 to September 2020.
Mr. Naveed Sherwani has worked at various key senior roles
during his association with different local and foreign banks, such Mr. Naveed Sherwani holds a Master’s degree from Karachi
as, Team Leader CIBG, Faysal Bank Limited; Country Head Risk University and has also attended various international and local
Asset Review, Senior Credit Officer at Union Bank trainings/seminars related with banking and management. Mr.
Limited/Standard Chartered Bank Pakistan Limited; Country Naveed Sherwani is a certified director from Pakistan Institute of
Head Corporate Banking, Country Head Risk-SME/Commercial Corporate Governance (PICG).
during two different stints with NIB Bank Limited; Head of Credits

Meezan Bank Annual Report 2022 91

Mr. Mohamed Guermazi Non-Executive Director
Mr. Mohamed Guermazi joined the Board of Directors of Meezan Markets at Banque de Tunisie, one of the most prominent private
Bank in 2018. He is also a member of the Audit Committee of the commercial banks in Tunisia. Besides his operational
Board. He is currently serving as Lead Awqaf Investment responsibilities within Banque de Tunisie, he also served as
Specialist in the Islamic Development Bank (IsDB). Chairman of the Société de Bourse de Tunisie, a subsidiary of the
bank specializing in brokerage in securities, General Manager and
Mr. Guermazi is also serving as the Islamic Development Bank Chairman of the Board of Placements de Tunisie, an affiliated
representative on the Board of Irada for Microfinance Company investment company, Board Member and Chairman of the Audit
Ltd., which is part of the Bank of Khartoum Group in Sudan, and Committee of Astrée Insurance company, Board Member of the
on the Board of the Waqf BID Guinée (WBG), a not-for-profit Tunis Stock Exchange, as well as Board Member of several
organization to support the development of the education and companies in which Banque de Tunisie holds a participation of
health sectors in Guinea. reference.

Mr. Guermazi holds a Master’s degree in Engineering from the Previously, Mr. Guermazi had also served as Deputy Managing
National School of Bridges and Roads in Paris, France (Ecole Director of the Investment Loan Department at Banque de Tunisie,
Nationale des Ponts et Chaussées - Ponts ParisTech). Project Officer at the Tunisian Qatari Bank for Investment, and
Senior Engineer in charge of the budget and follow-up of the
Before joining the IsDB in 2010, for over 15 years, he served as activity of the fertilizer plants at the Tunisian Chemical Group.
Director of Equities, Asset Management, Treasury, and Financial
Current Directorships

■ Board of the Waqf BID Guinee (WBG) ■ Irada for Microfinance Company Ltd.

Mr. Mohammad Abdul Aleem Independent Director

Mohammad Abdul Aleem was re-elected as an Independent Ocean territory. Since 2004, he has served in senior positions with
Director on the Board of Meezan Bank in November, 2021. He is large Government-owned organizations in Pakistan. His last
the Chairman of Audit Committee and member of Human assignment was as the Managing Director, Pakistan State Oil
Resources Remuneration and Compensation Committee of the Company Ltd.
Board.
Mr. Abdul Aleem has in the past been a Director of Dawood
Previously, he had served as Director on Meezan Bank’s Board Hercules Corporation, Pakistan Tobacco, LUMS, Pakistan
from October, 2010 till November, 2018. He was Chairman of the Institute of Corporate Governance and Chairman of Faysal Asset
Audit Committee as well as the Information Technology Management Company.
Committee of the Board during his last tenure. Besides Meezan
As a supporter of leading non-profit organizations in the field of
Bank, Mr. Aleem currently is also a Director and Chairman, Audit
education, Mr. Abdul Aleem is currently Vice Chairman of
Committee of the Engro Corporation Limited and Pakistan
Professional Education Foundation and Chairman of Intellect
Refinery Limited.
School Governing Board.
Mr. Abdul Aleem is currently the CEO and Secretary General of
Mohammad Abdul Aleem is a Fellow Chartered Accountant (Gold
Overseas Investors Chambers of Commerce & Industry (OICCI).
Medalist) and a Fellow Member of the Institute of Cost &
He has worked in senior positions within both Exxon Chemicals
Management Accountant. He has also attended extensive
and Engro Corporation, serving in both Singapore and Pakistan.
international management training programs at various institutes
Thereafter, he has worked with British American Tobacco Group
including Stanford University.
UK (BAT) in Pakistan and overseas, where he ultimately served
as CEO of BAT Operations in Cambodia, Mauritius, and Indian

Current Directorships

■ Engro Corporation Limited ■ Sharmeen Khan Memorial Foundation

■ Pakistan Refinery Limited ■ Overseas Investors Chamber of Commerce and Industry
■ Professional Education Foundation (OICCI)

Ms. Nausheen Ahmad Independent Director

Ms. Nausheen Ahmad joined the Board of Directors of Meezan expertise in the legal field, as well as proven leadership skills. She
Bank in April, 2019. She is also a member of the Human began her legal practice with the corporate law firm Surridge and
Resources, Remuneration & Compensation Committee of the Beecheno. Later, she went on to hold the position of Legal Counsel
Board. at Pakistan Petroleum Ltd. and Unilever Pakistan Ltd. She has also
served with ICI Pakistan Ltd. and Habib Bank Limited as the
She holds an LL.B. from Kings College, London, an LL.M. degree Company Secretary and General Counsel.
from the University of London and a degree in the Philosophy of
Religion from Kings College, London. She was called to the Bar Ms. Ahmad left inhouse legal practice in mid-2021 to establish a
from the Honorable Society of Grays Inn London and is registered boutique law firm called the Legal and Governance Advisory to
as an Advocate of the Sindh High Court. She was also accredited provide corporate governance advice and training to businesses.
as a mediator and master trainer by the Centre for Effective She is an executive trainer and teaches the Directors Certification
Dispute Resolution, UK and recently completed a negotiation and Training with PICG and IBA. She also conducts diversity and
conflict resolution course from Harvard Law School. inclusion training and conflict resolution and negotiation skills
courses. Ms. Ahmad is part of the visiting faculty at KSBL and
Having spent over three decades in the corporate sector, Ms. IOBM, Karachi.
Ahmad brings with her a tremendous amount of experience and

92 Meezan Bank Annual Report 2022

Current Directorships

■ International Steels Limited (ISL) ■ Engro Powergen Qadirpur Limited

■ Jubilee General Insurance Company Limited (JGICL) ■ Descon Engineering Limited

Other Recent Offices held

■ First Women Bank Limited (FWBL) ■ Altern Energy Limited

■ Pakistan Stock Exchange Limited (PSX)

Mr. Yousef S. M. A. AlSaad Independent Director

Mr. Yousef Saad AlSaad joined the Board of Directors of Meezan Mr. AlSaad has completed various local and international training
Bank as an Independent Director in November, 2021. He is a courses from institutes including Harvard Kennedy School, SCOR
member of Risk Management Committee of the Board. Global P&C, J.P. Morgan and Chase & Co., Wellington Institute
and The Blackstone Group.
He holds a Bachelor’s in Finance and Financial Institutions from
Kuwait University, College of Business Administration. He is also He brings over fourteen years of investment and finance
a Certified Credit Management professional from IFS School of expertise, having held several key management positions over the
Finance, UK. span of his career, including prior entrepreneurial experience in
various areas.
Current Directorships

■ Board Member & CEO - Al Ahleia Insurance Company ■ Chairman - Al Etihad Co-operative Insurance (P.L.C) K.S.A
(S.A.K.P.) Kuwait ■ Vice Chairman and Managing Director - Trade Union Holding
■ Board Member - Kuwait Reinsurance Company (K.S.C.P.) Company - Bahrain
Kuwait

Mr. Irfan Siddiqui President & CEO

Mr. Irfan Siddiqui is the Founding President and CEO of Meezan positions including Chief Executive Officer at Al Meezan
Bank. He is also a member of the Information Technology Investment Bank Limited, General Manager at Pakistan Kuwait
Committee and of the IFRS 9 Implementation Oversight Investment Company, Chairman, Al Meezan Investment
Committee of the Board. Having articled with Coopers & Lybrand, Management, Advisor to the Managing Director at Kuwait
London from 1975 - 1979, Mr. Siddiqui qualified as a Chartered Investment Authority, Manager Finance and Operations at Abu
Accountant from the Institute of Chartered Accountants in Dhabi Investment Company and Senior Business Analyst at
England and Wales. He has held several senior management Exxon Chemical (Pakistan) Ltd.

Current Directorships

■ Member of Board of Trustees, Accounting and Auditing ■ Member of Steering Committee of Housing & Construction
Organization for Islamic Financial Institutions (AAOIFI), Bahrain Finance
■ Member Steering Committee for providing strategic guidance ■ Chairman of Steering Committee on Media Campaign for
regarding implementation of Federal Shariat Court (FSC)’s Improving Islamic Finance Literacy
judgement on Riba ■ Member of State Bank of Pakistan, Electronic Warehouse
■ Member of Government of Pakistan’s sub-committee on Receipt Financing Implementation Task Force (ETF)
awareness, training and capacity building for Promotion of ■ Member of Securities & Exchange Commission of Pakistan,
Islamic Banking in Pakistan Capital Market Advisory Council
■ Member of IBA Centre of Excellence in Islamic Finance, (CEIF), ■ Member of Ministry of Finance Steering Committee for
Board of Management Establishment of Hajj Fund
■ Council Member, Institute of Bankers Pakistan (IBP) ■ Member of AKU Corporate Committee for University
■ Chairman, Institute of Bankers Pakistan (IBP) HR Committee Advancement

Other Recent Offices held

■ President of the Overseas Investors Chamber of Commerce and ■ Member of Government of Pakistan Steering Committee for
Industry 'Promotion of Islamic Banking in Pakistan' (2013 - 2016)
■ Member of Managing Committee, Overseas Investors Chamber
of Commerce and Industry

Meezan Bank Annual Report 2022 93

SHARIAH BOARD
Justice (Retd.) Muhammad Taqi Usmani Chairman – Shariah Board
Justice (Retd.) Muhammad Taqi Usmani is a renowned figure in the Editor of the monthly Urdu-language magazine ‘Albalagh’ and
field of Shariah, particularly in Islamic finance. He currently holds since 1990, he has been Chief Editor of the monthly
advisory positions in a number of financial institutions practicing English-language magazine ‘Albalagh International’. He has also
Islamic banking and finance. He has vast experience in Islamic contributed articles to leading Pakistani newspapers on a range of
Shariah, teaching various subjects on Islam for more than 50 issues. He has authored more than 60 books in Arabic, English
years. He has served as a Judge in the Shariat Appellate Bench, and Urdu.
Supreme Court of Pakistan from 1982 to 2002. He is also a
permanent member of the International Islamic Fiqh Academy, an Justice (Retd.) Muhammad Taqi Usmani graduated from Punjab
organ of OIC based in Jeddah, Saudi Arabia. He has served as the University, Pakistan in 1970 and also holds an LL.B. from Karachi
Vice Chairman of the above mentioned Academy for nine years. University, Pakistan. Prior to these, he completed the Takhassus
course, which is the specialization course of Islamic Fiqh and
He is generally known as one of the leading Shariah scholars Fatwa (Islamic Jurisprudence) from Jamia Darul Uloom Karachi,
active in the field of Islamic finance. For more than a decade he Pakistan. In March 2004, His Highness Sheikh Mohammad Bin
has served as Chairman or Member of Shariah Supervisory Rashid Al Maktoum (Dubai Crown Prince and UAE Minister of
Boards of a dozen Islamic banks and financial institutions in Defense) presented a special award to Justice (Retd.) Muhammad
various parts of the world. He presently serves as Chairman of the Taqi Usmani in recognition of his lifetime service and achievement
International Shariah Council for the Accounting and Auditing in Islamic finance at the occasion of International Islamic Finance
Organization for Islamic Financial Institutions (AAOIFI) in Bahrain. Forum, Dubai, which is one of the biggest events in the Islamic
He has held many positions in the higher echelons of the finance industry.
education sector of Pakistan and has participated in numerous
commissions set up by the Government of Pakistan in the field of Justice (Retd.) Muhammad Taqi Usmani is the Chairman of
education and economics. Since 1967, he has been the Chief Meezan Bank’s Shariah Board since inception of Meezan Bank.

Current Board Memberships

■ Vice President and Shaikul-Hadith, Jamia Darul Uloom, ■ Member Shariah Board Guidance Financial Group, USA
Karachi ■ Chairman Shariah Board, IFSB, Malaysia
■ President Wifaq ul Madaris, Pakistan
■ Chairman International Shariah Standard Council set up by the Awards Received
Accounting and Auditing Organization for Islamic Financial Sitara-e-Imtiaz from the Government of Pakistan 2020
Institutions (AAOIFI), Bahrain His Highness King Abdullah (of Jordan) Award
■ Permanent Member International Islamic Fiqh Academy, (Royal Aal al Bayt Institute for
Jeddah, sponsored by OIC Islamic Thought, Jordan) 2019
■ Member, Islamic Fiqh Academy of Rabita-al- ’Alam-e-Islami, IDB Prize in Islamic Banking and Finance 2014
Makkah Lifetime Achievement Award presented by the
■ Fellow of the Royal Al al-Bayt Academy, Jordan Islamic Business and Finance Magazine 2011
■ Chairman Centre for Islamic Economics Pakistan since 1991 His Highness King Abdullah (of Jordan) Award
Wisamul Istiqlal Award presented by
■ Chairman Shariah Board, Arif Habib Investments – Pakistan
His Highness King Abdullah of Jordan 2010
International Islamic Fund, Karachi
His Highness Prince Muhammad bin
■ Chairman Unified Shariah Board Islamic Development Bank
Raashid Aal Maktoom Award 2004
Group, Jeddah

Dr. Muhammad Imran Ashraf Usmani Vice Chairman – Shariah Board

Dr. Mufti Muhammad Imran Ashraf Usmani, son of Justice (Retd.) of Shariah Boards of several renowned institutions in various
Mufti Muhammad Taqi Usmani, graduated with specialisation in jurisdictions since 1997 including the State Bank of Pakistan,
Islamic Fiqh (Islamic jurisprudence) from Jamia Darul Uloom, Takaful Pakistan Ltd., Pakistan Mercantile Association,
Karachi, where he has been teaching Fiqh since 1990. He also HSBC-Amanah Finance, UBS-Switzerland, Lloyds TSB Bank-UK,
holds an LL.B. and Ph.D. in Islamic finance. He is a member of the Japan Bank for International Cooperation (JABIC), Credit Suisse
administration board of Jamia Darul Uloom, Karachi. Switzerland, Royal Bank of Scotland Global, Old Mutual
Albarakah Equity & Balanced Funds South Africa, AIG Takaful,
Presently, Dr. Imran Usmani is the Vice Chairman of the Shariah ACR ReTakaful Malaysia, Premier Takaful Pakistan, Capitas Group
Board at Meezan Bank and oversees research and product USA, Bank of London and Middle East Kuwait, BMI Bank Bahrain,
development of Islamic banking products, advisory for Al Khaliji Bank Qatar, AIFA Amana Islamic Finance Australia, DCD
Shariah-compliant banking and supervision of Shariah Audit & Group Dubai, Acumen Fund, Swip Sicave Fund, Old Mutual
Compliance. He is also the President and CEO of Usmani & Co. AlBarakah fund and other mutual and property funds, Takaful
Pvt. Ltd. that provides full suite of Islamic finance consultancy, companies and international Sukuk, etc.
Shariah advisory and related ancillary services to local and
international clients across all legal jurisdictions and financial and He also is serving as an Executive Committee Member of AAOIFI
non-financial sectors. He is serving in ICFAL-Australia, The (Dubai), Shariah Supervisory Board of International Islamic
Zeal-Canada and USA, Astana International Financial Financial Market (IIFM) Bahrain and Academic Board at Institute
Centre-Kazakhstan, Sarasin Bank Switzerland, Amanah of Business Administration (IBA)-Centre for Excellence in Islamic
Bank-SriLanka, Guidance Financial Group USA, Nafa Mutual Finance (CEIF), Karachi and Director at Centre for Islamic
Fund, Al Meezan Investment and other mutual and property Economics (CIE), Hira Foundation School and Hira Institute of
funds, Takaful companies and international Sukuk, etc. Emerging Sciences, Karachi. Dr. Usmani is the author of
numerous publications related to Islamic Finance and other
Dr. Imran Usmani has been engaged with the Government of Shariah related subjects. He has presented papers in numerous
Pakistan in various initiatives and is also a member of the Steering national and international seminars and has delivered lectures at
Committee and implementation committee for promotion of academic institutions including Harvard, LSE, LUMS and IBA.
Islamic banking since 2013. He has served as an advisor/member

94 Meezan Bank Annual Report 2022

Board Memberships

■ CEO - Greens Fin Innovations (Pvt) Ltd. ■ Chairman - Islamic Index Pakistan Stock Exchange (PSX)
■ CEO & Director - Hira Foundation School ■ Shariah Board Member - AAOIFI Shariah Committee
■ Director - Centre for Islamic Economics (CIE) ■ Shariah Advisor / Shariah Board Secretary - Guidance
■ Faculty Member - Jamia Darul Uloom Financial Group USA
■ Research Faculty Member - Department of Economics ■ Shariah Board Member - Sarasin Bank Switzerland
Karachi University ■ Shariah Board Member - AAOIFI Dubai
■ President & Founder Trustee - Ihsan Trust ■ Shariah Board Member - International Islamic Financial Market
■ Academic Committee Chairman / Board Member / Bahrain IIFM
Faculty Member - Centre for Excellence In Islamic ■ Board Member - International Islamic Rating Agency Bahrain
Finance (CEIF) at IBA ■ Chairman Shariah Supervisory Council - Amanah Bank Sri Lanka
■ Shariah Board Member - Chairman Shariah Board NBP ■ President and CEO - Usmani and Company PVT Ltd.
Fullerton Asset Management Company (NAFA) ■ President and CEO - Usmani and Company Shariah Advisors
■ Shariah Board Member - Al Meezan Mutual Funds PVT Ltd.

Sheikh Esam Mohamed Ishaq Board Member – Shariah Board

Sheikh Esam Mohamed Ishaq graduated from McGill University, Furthermore, Sheikh Esam is Chairman of the Muslim Educational
Montreal, Canada. He was born in Bahrain and studied Shariah Society, Vice Chairman & Shariah Advisor for Discover Islam
with a number of Sheikhs in the traditional manner. Centre & member of the Board of Trustees of Al-Iman Islamic
Schools, Bahrain.
He is a member of the High Council of Islamic Affairs of the
Government of Bahrain and holds various Shariah positions in Sheikh Esam Mohamed Ishaq has served as member Shariah
many social, commercial and educational institutions. Currently, Board since inception of Meezan Bank.
he also teaches Fiqh, Aqeeda and Tafseer courses in various
Centers of Islamic studies, supervised by the Ministry of Islamic
Affairs in Bahrain.

Current Board Memberships

■ The Shariah Board of Accounting and Auditing Organization Financial Institutions (IFIs), he is the Chairman of Shariah
for Islamic Financial Institutions (AAOIFI), Bahrain Supervisory Boards of the following IFIs:
■ The Shariah Council of the Maldives Monetary Authority ■ The Family Bank for Microfinance, Bahrain

(MMA), Maldives ■ Islamic Bank of Guinea, Africa

■ The Shariah Panel of International Islamic Financial Market

■ Investment Dar Bank, Bahrain

(IIFM), Bahrain ■ Eco Islamic Bank, Kyrgyzstan

In addition to membership of the Shariah Supervisory Boards ■ Al Barakah Islamic Bank, Pakistan
of a number of local, regional and international Islamic

Mufti Muhammad Naveed Alam Resident Shariah Board Member

Mufti Muhammad Naveed Alam holds a Masters in Islamic He is an active teacher / trainer at Centre for Excellence in Islamic
Banking and Finance from University of Karachi and Shahadat ul Finance (CEIF) of Institute of Business Administration (IBA)
Alamiyah and Takhassus (specialization in Islamic Jurisprudence Karachi, Center of Islamic Economics (CIE) of Jamia Darul Uloom
and Fatwa) from Jamia Darul Uloom, Karachi. He is also a Karachi, as well as several other renowned universities.
Certified Shariah Advisor & Auditor (CSAA) from Accounting and
Auditing Organization for Islamic Financial Institutions (AAOIFI). He is also a member of the Shariah Board of NBP Funds. Prior to
Mufti Muhammad Naveed Alam joined Meezan Bank in 2013 as a joining as RSBM, Mufti Muhammad Naveed Alam served as
member of the Shariah Compliance Department of the Bank. His Shariah Advisor of Premier Window Takaful Operations and also
main responsibilities include Islamic banking training, Shariah as Shariah Coordinator at the Indus Hospital & Health Network.
Compliance review and Shariah Audit of different departments
and branches. Mufti Muhammad Naveed Alam is serving as the Resident
Member of Meezan Bank’s Shariah Board since October 1, 2018.

Meezan Bank Annual Report 2022 95

TERMS OF REFERENCE OF SHARIAH BOARD
Definition of Shariah Board
■ A Shariah Board (SB) is an independent body of specialized jurists in fiqh almua'malat (Islamic commercial jurisprudence). Islamic
Banking Institutions (IBIs) may, in consultation with the SB, also seek services of or engage lawyers, accountants, economists and
such other professionals to assist and advise the SB on banking, legal, financial, economic and other relevant matters. The
engagement of such members shall however be of advisory nature and they shall not have any voting rights in the meetings of the
SB. The Shariah Board is entrusted with the duty of directing, reviewing and supervising the activities of the Islamic financial
institution in order to ensure that they are in compliance with Islamic Shariah Rules and Principles. The fatwas, and rulings of the
Shariah Board are binding on the Bank.
■ Shariah Board would be appointed by the Board of Directors in line with State Bank of Pakistan’s directives.

Composition, Selection and Dismissal of Shariah Board

■ The Shariah Board shall consist of at least THREE members including the in-house Resident Shariah Board Member (RSBM). The
Shariah Board may seek the service of consultants who have expertise in Shariah, business, economics, law, accounting and/or
others. The Shariah Board should not include directors or significant shareholders of the Bank. However, at least two members of
Shariah Board (other than RSBM) must be unique members and shall not be a part of any IBI in Pakistan.

■ Any member can resign from its membership by giving written notice of at least three months to Board of Directors and the copy of
which will be submitted to Islamic Banking Department - State Bank of Pakistan (IBD-SBP).

Functions of the Shariah Board

■ The SB will review, revise, and modify, when necessary, all standard and other agreements of Islamic modes of finance, as and when
used by the Bank, whether with the Bank’s clients, shareholders or others.

■ The SB shall supervise the Shariah review of the Bank through RSBM and will also guide the Shariah Compliance team of the Bank.
SB or RSBM has a right to conduct spot Shariah reviews of the Bank’s operation at their sole discretion.

■ The RSBM through the Shariah Compliance Department shall ensure the implementation of guidelines of SB/RSBM in the Bank.

■ SB or any of its members may represent the Bank in various Islamic Finance Conferences, Symposia, and/or Conventions, if and
when necessary, which shall not be a conflict of interest.

■ The Quorum of SB meeting including that with BOD of the Bank, is at least two third of members of SB and all SB rulings are
majority-based decisions by any properly minuted and logged meeting of the SB.

■ Rulings of the SB are arrived at by voting. However, in case of difference of opinion, the decisions may be made by a majority vote
of the SB members. In the event of equality of votes, the Chairperson shall have a second or casting vote.

■ The SB ordinarily holds at least 4 quarterly meetings every financial year. It may hold an extra-ordinary meeting if and when required
by the Bank/Chairman of SB.

■ The SB has a right to review and modify its former rulings on the basis of factors including but not limited to Internal Shariah Audit
Report, Shariah Compliance Review, new findings/developments in industry, etc.

■ Dates of SB meetings will be finalized by mutual consent of the members and normally each meeting will fix the date of next meeting.

■ All meetings shall be chaired by the Chairperson of the SB and in his absence one of the Shariah Scholar members, other than the
RSBM, shall be elected as the acting Chairperson to preside over the meeting.

■ The agenda of the SB meeting along with sufficient details and documents shall be sent to SB members 05 days before the meeting
to allow them to come prepared to the meeting; the specific timelines shall be set by the SB itself.

■ The SB shall ensure to cause that minutes of its meetings are properly recorded incorporating necessary details of all decisions,
rulings and fatwa issued along with the rationale and difference of opinion or dissenting note, if any. Further, the minutes shall be
signed by all the SB members who attended the meeting and a copy thereof be provided to each member of SB.

■ Any regulations pertaining to Governance of Shariah Board, issued by Islamic Banking Department of State Bank of Pakistan, will
become part of this TOR as and when such regulation becomes applicable.

Name of Shariah Board Member No. of Meetings Attended

Justice (Retd.) Muhammad Taqi Usmani 3

Dr. Muhammad Imran Ashraf Usmani 5

Sheikh Esam Mohamed Ishaq 5

Mufti Muhammad Naveed Alam 5

Total Meetings Held 5

96 Meezan Bank Annual Report 2022

BOARD COMMITTEES
Board Human Resources, Remuneration & Compensation Committee
Mr. Riyadh S.A.A. Edrees (Chairman) – Non-Executive Director
Mr. Mohammad Abdul Aleem – Independent Director
Ms. Nausheen Ahmad – Independent Director

Terms of Reference
The Board Human Resources, Remuneration & Compensation Committee (BHRR&CC) ensures that the Bank manages its Human
Resources in light of the best practices of the industry. It reviews and recommends Human Resource Management policies to the Board
of Directors including but not limited to remuneration practices defined by the State Bank of Pakistan, the selection, evaluation,
compensation (including retirement benefits), succession planning as well as the recommendation of structure of compensation
package of Executive Directors, President & CEO, Key Executives and of any other employee(s) along with ensuring implementation of
the same. The (BHRR&CC) also monitors the training activities, utilization and implementation of training & development budget and
policy of the Bank.

Board Risk Management Committee

Mr. Faisal A.A.A. Al-Nassar (Chairman) – Non-Executive Director
Mr. Bader H.A.M.A Al Rabiah – Non-Executive Director
Mr. Mubashar Maqbool – Non-Executive Director
Mr. Yousef S. M. A. Al-Saad – Non-Executive Director

Terms of Reference
The Board Risk Management Committee (BRMC) is responsible for assessing Bank’s policies on all major risk categories including
credit, market, liquidity and operational risk and adequacy of the risk management function of the Bank. The BRMC reviews adequacy
of the Bank’s capital in accordance with laid down rules and regulations as per Basel Accord. It also reviews the techniques developed
and implemented to measure the Bank’s risk exposure. Its responsibilities include evaluation of the risk profile and appetite of the Bank
and ensuring that systems are in place for monitoring overall risk of the Bank. The Committee reviews exception reports highlighting
deviations from the approved policies as well as deliberates upon risk related reports including Shariah non-compliance and early
warning signals of potential risks emerging from the Bank’s activities.

Board Audit Committee

Mr. Mohammad Abdul Aleem (Chairman) – Non-Executive Director
Mr. Faisal A.A.A. Al-Nassar – Non-Executive Director
Mr. Mohamed Guermazi – Non-Executive Director
Mr. Mubashar Maqbool – Non-Executive Director

Terms of Reference
The Audit Committee is responsible for determination of appropriate measures for safeguarding the Bank’s assets; review of quarterly,
half-yearly and annual financial statements; review of management letter / assurance reports issued by external auditors and
management’s response thereto; review and implementation of the scope, extent and plan of internal audit / Shariah audit; review of
internal audit strategy; consideration of major findings, internal investigations of activities characterized by fraud, corruption and abuse
of power, SBP inspection / supervisory assessment findings and management's response thereto; ascertaining that the internal control
systems are adequate and effective; determination of compliance with relevant statutory requirements; audit observations; monitoring
compliance with the best practices of corporate governance and oversight of implementation of Internal Controls over Financial
Reporting (ICFR) program across the Bank, review effectiveness of whistle blowing procedures; ensure effectiveness of overall
management of compliance and AML risk and consideration of any other issue or matter as may be assigned by the Board of Directors.

Board Information Technology Committee

Mr. Mubashar Maqbool (Chairman) – Non-Executive Director
Mr. Riyadh S.A.A. Edrees – Non-Executive Director
Mr. Faisal A.A.A. Al-Nassar – Non-Executive Director
Mr. Irfan Siddiqui (President & CEO) – Executive Director

Terms of Reference
The Board Information Technology Committee (BoIT) advises and reports to the Board on status of technology activities and digital
initiatives, reviews IT and digital strategies and relevant policies periodically considering major technological / regulatory developments.
The BoIT ensures risk management strategies are designed and implemented to achieve resilience to respond to wide scale disruptions,
including cyber-attacks. It receives periodic updates from IT Steering Committee to monitor major technology-related projects and
ensures technology procurements are aligned with the IT strategy. It also approves cloud-based outsourcing arrangements in line with
the policy approved by the Board. If deemed necessary, the Committee seeks expert opinion from independent sources wherein the
quorum comprises of any two members.

Meezan Bank Annual Report 2022 97

Board IFRS 9 Implementation Oversight Committee
Mr. Riyadh S. A. A. Edrees (Chairman) – Non-Executive Director
Mr. Irfan Siddiqui (President & CEO) – Executive Director
Mr. Faisal Fahad Al-Muzaini – Non-Executive Director

Terms of Reference
The Committee is responsible for reviewing and approving the Bank's transition plan for IFRS 9 implementation. It is required to review
progress against the transition plan on a quarterly basis. The Committee is also responsible to ensure smooth implementation of IFRS 9
within the timelines stipulated by the State Bank of Pakistan. Dates and Attendance of Board Committees during 2022.

Dates and Attendance of Board Committees during 2022

Board Human Resources,
Remuneration Board Risk Management Board Audit Committee Board IT Committee IFRS 9 Implementation
& Compensation Committee Committee Oversight Committee
No. of
Meetings 20-Feb 19-Apr 04-Aug 18-Oct 17-Feb 21-Apr 18-Aug 12-Oct 15-Feb 20-Apr 10-Aug 16-Oct 17-Feb 21-Apr 8-Aug 12-Oct 17-Feb 19-Apr 04-Aug 13-Oct
Name of Director Attended 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022

Mr. Riyadh S.A.A. Edrees 4/4 P P P P - - - - - - - - - - - - - - - -

Mr. Mohammad Abdul Aleem 4/4 P P P P - - - - - - - - - - - - - - - -

Ms. Nausheen Ahmad 4/4 P P P P - - - - - - - - - - - - - - - -

Mr. Faisal A.A.A. Al-Nassar 4/4 - - - - P P P P - - - - - - - - - - - -

Mr. Mohamed Guermazi 1/1 - - - - P - - - - - - - - - - - - - - -

Mr. Bader Al Rabiah 3/3 - - - - - P P P - - - - - - - - - - - -

Mr. Mubashar Maqbool 4/4 - - - - P P P P - - - - - - - - - - - -

Mr. Yousef S.M.A. AlSaad 3/3 - - - - - P P P - - - - - - - - - - - -

Mr. Faisal A.A.A. Al-Nassar 4/4 - - - - - - - - P P P P - - - - - - - -

Mr. Bader Al Rabiah 1/1 - - - - - - - - P - - - - - - - - - - -

Mr. Mohamed Guermazi 3/3 - - - - - - - - - P P P - - - - - - - -

Mr. Mubashar Maqbool 3/3 - - - - - - - - - P P P - - - - - - - -

Mr. Mohammad Abdul Aleem 4/4 - - - - - - - - P P P P - - - - - - - -

Mr. Mubashar Maqbool 4/4 - - - - - - - - - - - - P P P P - - - -

Mr. Riyadh S.A.A. Edrees 4/4 - - - - - - - - - - - - P P P P - - - -

Mr. Faisal A.A.A. Al-Nassar 4/4 - - - - - - - - - - - - P P P P - - - -

Mr. Irfan Siddiqui 4/4 - - - - - - - - - - - - P P P P - - - -

Mr. Riyadh S.A.A. Edrees 4/4 - - - - - - - - - - - - - - - - P P P P

Mr. Irfan Siddiqui 4/4 P P P P

Mr. Faisal Fahad Al-Muzaini 3/3 - P P P

98 Meezan Bank Annual Report 2022

MANAGEMENT COMMITTEES
Asset Liability Management Terms of Reference
Committee The Asset Liability Management Committee (ALCO) is responsible for
President & CEO - Chairman reviewing the Asset and Liability structure of the Bank, transfer pricing,
Deputy CEO - Alternate Chairman monitoring the liquidity situation, evaluating asset classes and taking
Chief Financial Officer decisions with regards to risks and rewards associated with purchasing
CRO & Group Head Risk Management and selling of these assets. Market and liquidity risks are examined based
Group Head Retail Banking, Commercial, SME & Agri Finance on stress testing exercises and gap analysis while considering the overall
Group Head Corporate & Institutional Banking economic environment of the country. The ALCO is also responsible for
Group Head Consumer Finance monitoring policy rate movements and taking necessary steps across all
Group Head Treasury & Home Remittances assets and liabilities to ensure that the overall profitability of the Bank is
maximized. This is mainly performed by alterations in the profit rates
offered across different deposit products. It is also responsible for ensuring
that the Bank’s overall operations are fully compliant with regulatory
framework for the business as provided by the State Bank of Pakistan.

Business Continuity Steering Terms of Reference

Committee The Business Continuity Steering Committee (BCSC) is responsible for
Deputy CEO - Chairman ensuring that adequate business continuity / disaster recovery plans are
prepared, tested and that decision making authority in the event of a crisis
CRO & Group Head Risk Management
is clearly defined. The BCSC reviews and recommends Business
Group Head Operations Continuity Plan for approval of the Board. It facilitates in execution of
Group Head Retail Banking, Commercial, SME & Agri Finance Business Continuity Plan as and when invoked and in resumption of critical
Group Head General Services & Customer Support business activities. BCSC steers BCP project(s) and their implementation
Group Head Information Technology and provides guidance on project direction to ensure that organizational
Chief Compliance Officer requirements are met. It is also responsible for reviewing the findings of
Manager IT Disaster Recovery mock drills / actual disasters and facilitating in removal of identified gaps.
Head Enterprise Risk Management

Credit Risk Management Committee Terms of Reference

President & CEO - Chairman The Credit Risk Management Committee (CRMC) is responsible for
Deputy CEO overseeing credit risk activities on Bank-wide basis while ensuring
Chief Financial Officer compliance with regulatory requirements and internal policies. The CRMC’s
CRO & Group Head Risk Management responsibilities also include providing support and guiding front lines in
Group Head Retail Banking, Commercial, SME & Agri Finance managing their businesses, performing finance portfolio review,
Group Head Corporate & Institutional Banking establishing financing standards and benchmarks, maintaining adequate
Group Head Treasury & Home Remittances industry diversification and deciding upon provisioning. It is also required
Head Credit Risk for delegating financing approving powers and prudential limits on large
financing exposures.

Disciplinary Action Committee - Terms of Reference

The Disciplinary Action Committee - Branch Banking (DAC-BB) is
Branch Banking responsible for taking action on any violation of policies and procedures,
Group Head Human Resources,
acts of fraud and forgery, breaches of discipline and code of conduct,
Learning & Development - Chairman
ethics and business practices, law of the land and statutory regulations of
Group Head Retail Banking, Commercial, SME & Agri Finance SBP by employees related to an incident of misconduct which has
Group Head Operations occurred at Branch / Area / Region / Hub level.
Head Internal Audit & Business Risk Review (Special Invitee)

Disciplinary Action Committee - Terms of Reference

The Disciplinary Action Committee - Head Office (DAC-HO) is responsible
Head Office for taking action on any violation of policies and procedures, acts of fraud
Group Head Risk Management - Chairman
and forgery, breaches of discipline and code of conduct, ethics and
Group Head Human Resources, Learning & Development
business practices, law of the land and statutory regulations of SBP by
Head Compliance
employees related to an incident of misconduct which has occurred at the
Head Internal Audit & Business Risk Review (Special Invitee)
Bank’s Head Office.

Disciplinary Action Review Terms of Reference

The Disciplinary Action Review Committee (DARC) is responsible for
Committee reviewing the appeals of the staff against whom DAC has already taken
Deputy CEO - Chairman
disciplinary action. The DARC is formed with a view to ensure a fresh
Company Secretary
review of each appeal filed against the DAC decision.
Head Legal Affairs

Compliance & Operational Terms of Reference

The Compliance & Operational Risk Management Committee (CORMC) is
Risk Management Committee responsible for overseeing compliance risk by reviewing the adequacy of
President & CEO - Chairman
controls in place to meet regulatory requirements. The Committee is
Deputy CEO
responsible for promoting compliance culture in the Bank, facilitate in
Chief Financial Officer
implementation of Compliance Program and oversee Money Laundering,
Group Head Information Technology
Financing Terrorism and Proliferation Financing risk. In addition, the
Group Head Retail Banking, Commercial, SME & Agri Finance
Committee also oversees Operational Risk Framework by ensuring that
Group Head Operations
policies and procedures are in place in all key risk areas and by reviewing
Group Head Shariah Compliance
Key Risk Indicators. The Committee also monitors level of compliance of
CRO & Group Head Risk Management
major unresolved and recurring issues pointed out in the Internal Audit,
Group Head Human Resources, Learning & Development
Shariah Audit and SBP Inspection Report.
Head Compliance
Head Enterprise Risk Management
Meezan Bank Annual Report 2022 99
IT Steering Committee Terms of Reference
Deputy CEO - Chairman The IT Steering Committee (ITSC) is responsible for assisting the
Group Head Information Technology Senior Management in implementing IT and digital strategies
Group Head Operations approved by the Board of Directors and for playing an advisory role
CRO & Group Head Risk Management to the Senior Management in all technology-related matters. The
Head Digital Transformation & Innovation ITSC monitors implementation of technology-related projects,
Head Compliance ensuring that the IT procurement is in line with the business plan. It
Group Head Consumer Finance shall ensure that the outsourcing to Cloud Service Providers (CSPs)
Group Head Retail Banking, Commercial, SME & Agri Finance is conducted in line with the Service Level Agreement. It shall also
Manager Information Security ensure an efficient IT operating environment that supports the
institution's goals and objectives. The ITSC may also review and
determine the adequacy of training plan(s) and shall review
significant incidents, major risks and breaches submitted by
Information Security. The ITSC may also further review the status of
projects assigned to PMO on periodic basis.

Investment Committee Terms of Reference

Deputy CEO - Chairman The Investment Committee (IC) is responsible for ensuring that the
CRO & Group Head Risk Management Bank's investments in listed equity securities are made in compliance
Chief Financial Officer with the:
(i) Investment Policy of the Bank,
(ii) Limits prescribed under Prudential Regulations issued by the
State Bank of Pakistan, and
(iii) Directives of Shariah Board of the Bank.
The IC also reviews the performance of equity investment portfolio
through its regular meetings and discussions wherein the members
also discuss the forgoing investments and future strategies in line
with investment policy and market dynamics.

Service Board Terms of Reference

President & CEO - Chairman The purpose of the Service Board is to oversee and monitor
Deputy CEO performance of all relevant departments involved directly or indirectly
Group Head Operations in delivering customer experience and providing services to external
Group Head Information Technology as well as internal customers of the Bank. The Service Board is the
Group Head Retail Banking, Commercial, SME & Agri Finance main decision-making body for improving service standards of the
Group Head Consumer Finance Bank.
Group Head General Services & Customer Support
Group Head Human Resources, Learning & Development
Head Service Quality
Unit Head - Service Analytics & Customer Insights

IFRS 9 Project Steering Terms of Reference

Committee The Committee is responsible to ensure compliance with the
Deputy CEO - Chairman requirements of SBP in respect of IFRS 9 implementation. It is also
Chief Financial Officer responsible to perform initial diagnostic and quantitative impact
CRO & Group Head Risk Management analysis to determine gaps and develop transition plan for the
Group Head Information Technology application of IFRS 9. The Committee is required to inform the Board/
Board IFRS 9 Implementation Oversight Committee about the
progress made and key issues that need to be addressed. It is
responsible for developing appropriate staffing and training
strategies, collect data and other risk inputs, assess existing
infrastructure and provide recommendations on the required changes
or upgrades and monitor progress against defined timelines.

100 Meezan Bank Annual Report 2022

BEST CORPORATE GOVERNANCE PRACTICES
Governance practices positively impact long-term corporate performance and therefore, the Bank is careful about their implementation.
The Bank has a system in place to ensure that it is fully compliant to all the legal requirements for e.g. Company Secretary’s Office itself
ensures that all the relevant regulatory requirements are complied with within the given deadlines. Furthermore, a dedicated Compliance
Department is also functional which remains in contact with the regulators as well as with the internal departments to ensure timely
compliance with the legal requirements. The Bank’s Best Corporate Governance Practices include the following:

Build a Strong, Qualified Board of Directors and Evaluate Performance

The Board comprises of Directors who are knowledgeable and have expertise relevant to the business, are qualified and competent, and
have strong ethics and integrity, diverse backgrounds and skill sets. Further, as per regulatory requirement, the Board performance is
evaluated periodically.

Define Roles and Responsibilities

The Board establishes clear lines of roles and responsibilities among the Directors, Chairman and CEO.

Emphasize Integrity and Ethical Dealing

The Directors declare conflicts of interest and refrain from voting on matters in which they have an interest. The Bank has adopted a
Conflict of Interest Policy, a Code of Business Conduct that sets out the Bank’s requirements and a Whistle-blowing Policy.

Formation of Various Board Committees

The Board of Directors has constituted various sub-committees, namely Board Audit Committee, Board Human Resources,
Remuneration and Compensation Committee, Board Risk Management Committee, Board IT Committee and Board IFRS 9
Implementation Oversight Committee to manage the relevant areas and to give their recommendations to the Board. The TORs of these
Committees are approved by the Board of Directors.

Engage in Effective Risk Management

The Board has established its sub-committees, who regularly identify and assess the risks including financial, operational, reputational,
environmental, industry-related and legal risks.

BOARD COMPOSITION
1 Executive Category Names of Directors
director

Non-Executive Mr. Riyadh S.A.A. Edrees – Chairman

Directors Mr. Faisal A.A.A. Al-Nassar
Mr. Bader H.A.M.A. AlRabiah
Mr. Mubashar Maqbool
Mr. Faisal Fahad Al-Muzaini
Board Mr. Naveed Iftikhar Sherwani
7 Non- 3 Independent
executive Composition directors/ Mr. Mohamed Guermazi
directors non-executive
11 Independent
Directors
Mr. Mohammad Abdul Aleem
Ms. Nausheen Ahmad (Female Director)
Mr. Yousef S.M.A.AlSaad
Areas of Expertise
Management 2 Executive Mr. Irfan Siddiqui – President & CEO
Finance/Accounting 6
(Deemed Director)
Law 1
Engineering 2

Directors’ Profiles and their Involvement / Security Clearance of Foreign Directors

Engagement in other Companies Security clearance of Foreign Directors is initially done by the
This information has been incorporated in the Directors’ profiles. sponsor shareholders being their nominee directors.
Subsequently Meezan Bank conducts verification as per FPT
Independent Directors requirements. Finally it is carried out by the Regulators as per law
The Board has three (3) Independent Directors who meet the / regulatory requirements, as their appointment is subject to
criteria of independence under Companies Act 2017 and the clearance by the Regulators.
directive issued by the State Bank of Pakistan.
Payment of Directors’ Remuneration
Representation of Female Director on Board As per Policy, the Board of Directors shall, from time to time,
Ms. Nausheen Ahmad is the female Director on the Board. determine and recommend remuneration of the Non-Executive
Non-Executive Directors Directors (Chairman, Vice Chairman and members of the Board)
At present all Directors on the Board are non-executives except for attending Board/Committees Meetings, for approval by the
the President & CEO. shareholders on a pre or post facto basis in the Annual General
Meeting (AGM), as per State Bank of Pakistan Corporate
Executive Director serving as Non – Governance Regulatory Framework (CGRF).
Executive Director in other Company
The Executive Director does not serve as a Non-Executive Details of Board Meetings held outside
Director in any other company. Pakistan
A total of four meetings were held during the year 2022, and all
were held in Pakistan.

Meezan Bank Annual Report 2022 101

PERFORMANCE EVALUATION OF THE
BOARD OF DIRECTORS
The Board of Directors of Meezan Bank sets the Bank’s strategic direction and ensures that the organization stays true to this direction
- enabling it to achieve its long-term objectives while ensuring regulatory compliance. To discharge its fiduciary responsibility of
safeguarding the stakeholders’ interests, the Board of Directors has developed criteria for its performance evaluation as required by the
State Bank of Pakistan and the Securities and Exchange Commission of Pakistan.

The Board of Directors discusses strategic objectives, budgetary expenses and projected national and international macroeconomic
indicators to ensure that the Bank’s business strategy stays aligned with macroeconomic indicators. The Board of Directors and its sub
committees are competent and experienced, representing diversified educational and vocational backgrounds which are invaluable in
determining the overall direction of the organization.

As per the guidelines issued by the State Bank of Pakistan, the Board decided to opt for an in-house approach with quantitative
technique; and accordingly evaluated performance of overall Board, Board Committees and individual Board Members as per the
following categories:

■ Complete Board ■ Chairman ■ Individual Directors

■ Independent Directors ■ Chief Executive Officer ■ Board Committees

Performance Evaluation by External Consultant

Evaluation of Board of Directors is conducted annually as per the State Bank of Pakistan's requirement. Furthermore, SBP Guidelines
also require that at least once in every three years, the evaluation should be conducted by an external independent evaluator. The Bank
engages an independent evaluator to conduct the Board’s evaluation once in every three years as per regulatory requirement.

Criteria for Performance Evaluation

The Board of Directors, while ensuring regulatory compliance, is categories is compiled and submitted to the Chairman. The
also vested with fiduciary responsibility on behalf of the Chairman discusses the results / findings with each individual
shareholders to protect the Bank’s interests, provide strategic Board Member. The authorized Independent Directors
direction and monitor the achievement of strategic objectives. communicate the feedback in respect of the Chairman for
The Companies Act 2017, Banking Companies Ordinance 1962, incorporation in the consolidated Performance Report.
SBP’s Corporate Governance Regulatory Framework (CGRF) and
Listed Companies (Code of Corporate Governance) Regulations Accordingly, the analysis comprises of consolidated evaluation
2019 describe the role of Board of Directors along with its results and Action Plan forwarded by the Chairman to further
responsibilities and functions. strengthen comparatively weaker areas and is submitted to the
Board of Directors for consideration in its meeting.
To comply with the regulatory requirement, the Board, in the year
This exercise in critical self-assessment allows the Board to
2014, put in place an effective mechanism for Board Evaluation.
evaluate its performance and overall effectiveness in setting
All individual Board members answer a comprehensive
strategies, devising control processes, reading market trends by
questionnaire focused on evaluating, from various angles,
monitoring micro and macroeconomic factors, and responding to
whether the Board has discharged its duties diligently and with
adverse unforeseen situations to further the cause of a learning
foresight. A committee of Directors is designated to collate
organization. This process also ensures that the Board is
individual responses and present them to the Board for
constantly growing intellectually and the responsibility of steering
deliberation and discussion. As per process, the responses /
the Bank to new heights of success is discharged effectively and
feedback from the Directors on each of the above-mentioned
efficiently.

Board Evaluation Process

First Stage Second Stage Third Stage

Collated
feedback from
Board
submitted
to Chairman
Results for evaluation
collated,
Briefing and reported and Performance
Board presented to Report &
Questionnaire Board for Action Plan
deliberation
One-on-one
discussion
with the Board

102 Meezan Bank Annual Report 2022

Induction and Training of Directors Directors Training Program (DTP)
The Bank places keen focus on regular trainings regarding The Bank is compliant to the training requirements of Listed
updates in law / regulations for the Directors. In addition, Shariah Companies (Code of Corporate Governance) Regulations, 2019.
training is also arranged for the Directors as per the State Bank of
Pakistan’s ‘Shariah Governance Framework for Islamic Banking
Institutions’. In compliance to SBP Corporate Governance
Regulatory Framework (CGRF), Board is regularly updated about
any change in law/regulations.

Members of Meezan Bank’s Board are experienced and qualified

professionals who bring a diverse range of professional and
technical expertise to the organization.

ROLES AND RESPONSIBILITIES

Role and Responsibilities of the Board of Directors
The Board of Directors is involved in strategic level decisions to establish and review the strategies and medium to long-term goals of
the Bank, overseeing the business and affairs of the Bank in light of emerging risks and opportunities. The Management of the Bank is
responsible for managing day-to-day business affairs in an effective and ethical manner in conformity with the strategies and goals
approved by the Board and to identify and manage the principal risks and opportunities which could impact the Bank in the course of
carrying out its business. It is also the responsibility of the Management, with the oversight of the Board and its sub-committees, to
produce financial statements that fairly present the financial conditions and results of operations of the Bank in accordance with
applicable accounting standards and to make timely disclosures to investors as required under regulatory requirements. Further, the
Management also stays aware of the business and competitive environment and develops strategies to maintain the Bank’s competitive
business edge.

Role and Responsibilities of the Chairman

The Chairman of the Board of Directors ensures that the organization keeps true to its long-term Vision. Responsible for leadership of
the Board, the Chairman ensures that the Board plays an effective role in fulfilling all its responsibilities. The role entails the following:

Chairman

All members of the Board may participate in all meetings and have the opportunity to express their opinion.

Dissent of Directors, if any, is properly recorded in the minutes.

Minutes truly reflect what transpired during the meeting.

The Board discharges its role effectively and swiftly in line with regulatory requirements.

The Board sub-committees perform their designated functions with due diligence.

Role and Responsibilities of the President & CEO

The President & CEO’s role constitutes an absolutely engaged position, demanding complete involvement and shepherding of the
organization. The role entails the following:

President & CEO

Provide an enabling environment within the Bank to facilitate promulgation of a culture of Shariah-compliance.

Ensure execution of the strategy developed by the Board.

Ensure that the Bank maintains its business position and brand image as the leading Islamic Bank of the country.

Efficiently allocate and manage organizational resources and budgets to ensure achievement of short and medium term objectives that
contribute to the attainment of the long-term strategic goals.

Establish a system of checks and controls to supplement the fast-paced growth of the Bank.

Provide liaison between the Board and the Bank’s management to ensure alignment of managerial efforts with Board’s directives.

Foster a culture of professionalism and high ethical standards within the Bank.

Facilitate an organizational culture of development of innovative products and services to meet the growing needs of a diverse range of
customers.

Meezan Bank Annual Report 2022 103

Role of Shariah Board
The Shariah Board (SB) is entrusted with the duty of directing, reviewing and supervising the activities of the Bank in order to ensure
that they are in compliance with the rules and principles of Shariah. All products and services of the Bank are launched with the approval
of the Shariah Board whose role also entails the following:

Shariah Board

To develop a comprehensive Shariah-compliance framework for all areas of operations of the Bank that serves as a guiding principle to
the Bank for maintaining its commitment towards adherence to principles of Shariah.

Ensure Shariah-compliance of all aspects of the Bank by virtue of having unhindered access to all books of accounts, records and
documents.

Guide and direct the Bank through rigorous deliberation on issues placed before the Shariah Board.

Monitor the Shariah-compliance of the Bank through Shariah Audit and Shariah-compliance reviews and prescribe appropriate
enforcements whenever needed.

PERFORMANCE REVIEW OF THE PRESIDENT & CEO

The President & CEO of Meezan Bank is responsible for supervising and leading the strategic and managerial affairs of the Bank. Various
elements of the President & CEO’s performance are monitored continuously and discussed periodically by the Board. As leader of the
organization and executor of the strategy approved by the Board to further the interests of all stakeholders of the Bank, the President &
CEO is evaluated on parameters such as financial performance and profitability, budget allocation and utilization of resources,
organizational expansion, sustainability of product lines, credit ratings and inculcation of the desired organizational culture which is
conducive to professional and ethical excellence.

ELECTION OF THE BOARD OF DIRECTORS

Procedures for Appointment
Election and Removal of Directors
There are formal, considered and transparent procedures for nominating candidates to stand for election as directors. The process of
composition of the Board is ongoing to ensure that the Board retains its effectiveness at all times. Directors are subject to re-election /
re-appointment at regular intervals defined under the relevant laws and regulations.

The sponsor shareholders of Meezan Bank nominate Directors on the Board as per their respective shareholding. The Independent
Directors also file their nomination and are elected as per law. Minority shareholders are also given the right to participate in election as
per law.

The Board of Directors fixes the number of Directors for the next term of the Board, 35 days before election of the Board as per
Companies Act 2017.

Election of Directors is held as per law and all regulatory requirements are complied with.
Appointment and Election of Directors
Election of Directors at the General Meetings
According to Companies Act, 2017, at General Meeting, the shareholders entitled to vote for the election of directors must elect a
Board for a term of three years, consisting of the number of directors for the time being set, as per provisions of Companies Act.

All of the directors cease to hold office immediately before such election, but are eligible for re-election.

Directors may Fill Casual Vacancies Information on the Directorship Candidates

Any casual vacancy on the Board may be filled by the Directors To enable shareholders to make an informed decision on their
and the person so appointed shall hold office for the remainder of election at a General Meeting, names of all candidates submitted
the term of the Director in whose place he/she is appointed. for election or re-election as a director are set out in a Notice sent
to shareholders prior to the meeting, as per Companies Act, 2017
and also placed on the Bank’s website as per regulatory
requirement.

Removal of Directors
Removal of Director by Shareholders
Shareholders may remove any director by a resolution in General Meeting, as per section 163 of the Companies Act 2017.

104 Meezan Bank Annual Report 2022

Resignation / Removal of Director by Board
The Board may remove any Director before the expiry of his or her term of office, or the Director may resign on his / her own, if the
Director ceases to be qualified to act as a Director of a company as per Companies Act 2017 and the Board may appoint a Director to
fill the resulting casual vacancy as per Companies Act 2017.

OTHER MATTERS RELATED TO

CORPORATE GOVERNANCE
Governance Practices Exceeding Legal Requirements
The Board of Directors, as a whole respects the country laws and ensures meticulous compliance of applicable laws, rules & regulations
and being the Premier Islamic Bank, Meezan Bank always adheres to provide information and disclosures above the minimum
regulatory requirements. The Board never gives room for any sort of non-compliance and takes it as reputational risk for the Bank. The
Management also regularly updates the Board with the latest developments in regulatory environment and maintains stringent control
over regulatory compliance, through designated resources.

Following are some of the practices of the Bank which exceed the minimum legal requirement:
■ The Bank has only one Executive Director (President & CEO) though it has been permitted two executive directors by SBP.
■ The Bank reports additional information in the Annual Report for stakeholders which is not required by law.

Code of Conduct & Ethical Standards

The Bank has also developed ‘Code of Conduct & Ethical Standards’ for Board, Senior Management and other employees as per
requirements of Listed Companies (Code of Corporate Governance) Regulations 2019, which is signed by every Director and employee
of the Bank.

Presence of the Chairman of Audit Committee at the Annual General Meeting (AGM)
The Chairman of the Audit Committee attends the Annual General Meeting (AGM) and this is duly recorded in the minutes of AGM.

Policies for Sustainability and Corporate Social Responsibility (CSR)

Policies for Sustainability and Corporate Social Responsibility (CSR) are annexed in Policies and Guidelines Section of this report.

Statement of Compliance with the Code of Corporate Governance

The Statement of Compliance with Code of Corporate Governance is annexed with this annual report.

Informing the Company Secretary's Diversity

Office on Sale or Purchase of Meezan The Board of Directors firmly believes that the diverse mix of
gender, knowledge, expertise and skill sets of the members/
Shares employees enhances the effectiveness of the Bank.
Directors/Substantial Shareholders/Executives are required to
inform the Company Secretary about any change in the The Bank embraces and encourages employees with a diverse
shareholding in his/her own name, in the name of his/her spouse mix of age, family ethnicity, language, socio-economic status,
and/or dependent/minor children to the Company Secretary physical disability and other characteristics that make its
through a written notice regarding complete details of the actual employees unique.
transaction within seven days of its execution, enabling the
Company Secretary to immediately notify the transaction to
Pakistan Stock Exchange in terms of PSX Regulations and also to
subsequently report the transaction to the Board of Directors as
well.

Investor Grievances
Meezan Bank has established a robust grievance reporting mechanism which seeks to resolve any complaints or unattended
issues if, despite all vigilance, do occur. The mechanism put in place allows for such matters to be reported electronically, in
writing or over the phone. To ensure that the stakeholders may register their complaints conveniently, a multitude of online forms
are available on Meezan Bank’s corporate website (www.meezanbank.com). The Investor Complaints Form, on submission, is
sent directly to the Office of the Company Secretary. Similarly, a general complaints form for reporting and resolution of
business-related complaints are managed by the Customer Care Unit (CCU). A dedicated email ([email protected])
is also in place for the express purpose of reporting issues if the stakeholder feels the need to email rather than use online forms.

Furthermore, grievances may also be lodged by calling the Bank’s Call Center (UAN: 111-331-331 & 111-331-332), which is
functional round the clock, where officers are available to assist stakeholders with their queries and complaints.

Meezan Bank Annual Report 2022 105

Managing Conflict of Interest
The Bank has a policy in place for dealing with conflicts of interest relating to members of the Board. Under this policy, any Director who
has a business interest in a matter being presented at a Board meeting does not participate in neither the discussion nor the decision
on that matter. The policy is applied consistently and there was no breach of this policy during the year.

Board’s Function and Decision Making Stakeholders’ Engagement

The Board plays an effective role and provides entrepreneurial
Stakeholders’ engagement and the steps taken to solicit and
leadership and direction to the Management of the Bank within a
framework of prudent and effective controls. It promotes a understand the views of the shareholders is detailed in
collective Vision of the Bank’s purpose, its culture, values and stakeholders’ engagement section of this report.
also demonstrates ethical leadership.
Accessibility of Annual Report
Matters delegated to the Management
The Board sets the strategic objectives and takes the overall Annual Reports and other information of the Bank are
responsibilities of overseeing its implementation. The Board accessible on Bank’s website: www.meezanbank.com
performs its duties by giving guidelines to the Management,
setting performance targets and monitoring their achievement.
The Management is primarily responsible for implementing
strategies as approved by the Board of Directors in conducting
the operations of the Bank effectively.

Responsibility of the Management and

the Board of Directors towards
preparation and presentation of
Financial Statements
The Management has fulfilled its responsibility for preparation
and fair presentation of the financial statements in accordance
with the financial reporting frameworks as applicable in Pakistan.
These include the requirements of Banking Companies
Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017). The
Management also acknowledges its responsibility for designing,
implementing, and maintaining internal controls relevant to the
preparation and fair presentation of financial statements. The
Bank’s Board of Directors is responsible for overseeing the
financial reporting process.

Unreserved Compliance of International

Financial Reporting Standards
The Management believes in ensuring unreserved compliance
with the applicable International Financial Reporting Standards
(IFRSs) issued by International Accounting Standard Board (IASB)
for true and fair presentation of financial statements of the Bank.

The financial statements of the Bank for the year ended

December 31, 2022 have been prepared in accordance with the
accounting and reporting standards (including IFRSs) as
applicable in Pakistan. For further details, please refer to the
Statement of Compliance in note 3 of the financial statements of
the Bank.

Human Resources Management

Policies and Succession Planning
Human Resources Policies are approved by the Board of
Directors of the Bank on the recommendation of Human
Resources, Remuneration and Compensation Committee of
Board in order to provide clear and definitive directions on Human
Resource (HR) related matters.

Board’s Review of Business

Continuity Plan
The Board of Directors reviewed and approved Business
Continuity Plan. This exercise is being performed on an annual
basis.

106 Meezan Bank Annual Report 2022

REPORT OF THE BOARD AUDIT COMMITTEE
Board Audit Committee (BAC) comprises of four non-executive directors having vast experience and knowledge of finance and
accounting. The Chairman of BAC is an independent director. Bank has adopted Committee of Sponsoring Organizations (COSO)
Integrated Internal Control Framework and the Charter of Internal Audit & BRR department (IAD) provides complete independence to
Head - IAD along with free access to BAC.

BAC has been proactively focusing on effectiveness of internal controls, risk management, compliance and governance processes in
accordance with the requirements of Code of Corporate Governance and Audit Committee Charter (ACC) also referred to as Terms of
Reference (ToRs) of BAC duly approved by the Board of Directors. During the year 2022, four BAC meetings were held and following
major activities were performed by BAC in accordance with its approved Charter.

■ BAC reviewed quarterly, half yearly and annual financial statements of the Bank and recommended the same for approval of the
Board.

■ BAC reviewed management letters/assurance reports issued by the external auditors, management's response and their compliance
status and held discussions with external auditors on major observations. BAC also recommended the appointment of external
auditors and their fees to the Board.

■ BAC reviewed and approved the audit plan, scope and extent of the work to be performed by internal audit (IAD) and Shariah audit
and recommended the audit strategy for approval of the Board. BAC also reviewed adequacy of resources as per the scope.

■ BAC reviewed significant findings of internal audit and Shariah audit along with monitoring of its timely compliance. BAC also
reviewed the whistle blowing mechanism.

■ BAC reviewed major findings of internal investigations with respect to fraud & forgery and whistle blowing along with management’s
action thereto. BAC also reviewed annual review report of fraud, forgeries and robberies.

■ BAC reviewed related party transactions and recommended the same for Board’s approval.

■ BAC reviewed the AML environment, compliance risk assessment and AML activity report, compliance policy, AML policy,
compliance program, bank internal risk assessment, details and action plan of SBP penalty items, composite risk rating and SBP
inspection / supervisory assessment reports along with monitoring of its compliance status. BAC also reviewed minutes of
Compliance and Operational Risk Management Committee meetings.

■ BAC reviewed Internal audit manuals, programs, revision in polices, IAD Charter, ACC and recommended the same for Board’s
approval.

■ BAC reviewed Shariah audit manual and ensured compliance of corrective actions determined by Shariah Supervisory Board on the
reports of Shariah audit.

■ BAC reviewed the independent assurance report on compliance with Shariah rules and principles along with monitoring of its
compliance status.

■ BAC reviewed and had an oversight on implementation of Internal Controls over Financial Reporting (ICFR) program across the bank.

■ BAC reviewed Internal Audit department assessments, internal quality assurance reviews, eaudit system and compliance of SBP
guidelines on Internal Audit function along with progress and implementation status. Focus areas for internal audit were also
discussed.

■ BAC conducted self assessment of its performance to review compliance with SECP Code of Corporate Governance and SBP
circulars. Self-assessment report was also presented to the Board.

■ BAC reviewed statement on internal control system and recommended the same for endorsement by the Board.

■ BAC also held separate meetings with external auditor and internal auditor without the CFO and the management in line with the
Code of Corporate Governance.

Mr. Mohammad Abdul Aleem

Chairman-BAC

Meezan Bank Annual Report 2022 107

STATEMENT OF COMPLIANCE WITH LISTED COMPANIES
(CODE OF CORPORATE GOVERNANCE) REGULATIONS, 2019
Meezan Bank Limited
For the year ended December 31, 2022

The Bank has complied with the requirements of the Code of Corporate Governance Regulations, 2019 (“Regulations” or “Code”) in the
following manner:

1. The total number of directors are eleven including CEO as a deemed director. The directors include ten male directors and one
female director.

2. The composition of the Board is as follows:

Catagory Names

i. Independent Directors Mr. Mohammad Abdul Aleem

Ms. Nausheen Ahmad
Mr. Yousef S.M.A. Al-Saad

ii. Non-Executive Directors Mr. Riyadh S.A.A. Edrees – Chairman

Mr. Faisal A.A.A. Al-Nassar
Mr. Bader H.A.M.A. Al Rabiah
Mr. Mubashar Maqbool
Mr. Naveed Iftikhar Sherwani
Mr. Faisal Fahad Al-Muzaini
Mr. Mohamed Guermazi

iii. Executive Directors Mr. Irfan Siddiqui - President & CEO

iv. Female Independent Director Ms. Nausheen Ahmad

3 The directors have confirmed that none of them is serving as a director on more than seven listed companies, including this Bank.

4. The Bank has prepared a code of conduct and has ensured that appropriate steps have been taken to disseminate it throughout
the Bank along with its supporting policies and procedures.

5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Bank. The Board has
ensured that complete record of particulars of the significant policies along with their date of approval or updating is maintained by
the Bank.

6. All the powers of the Board have been duly exercised and decisions on relevant matters have been taken by the Board/shareholders
as empowered by the relevant provisions of the Companies Act, 2017 (Act) and these Regulations.

7. The meetings of the Board were presided over by the Chairman and the Board has complied with the requirements of the
Companies Act, 2017 (Act) and the Regulations with respect to frequency, recording and circulating minutes of meeting of the
Board.

8. The Board has a formal policy and transparent procedures for remuneration of directors in accordance with the Act and these
Regulations; and directives of the State Bank of Pakistan (SBP).

9. The Bank is compliant to the training requirements of Listed Companies (Code of Corporate Governance) Regulations, 2019.

10. During the year a new Chief Financial Officer (CFO) was appointed by the Board of Directors, on September 9, 2022, upon
retirement of the previous CFO. There was no appointment of Company Secretary and Head of Internal Audit during the year. The
Board has approved their remuneration and terms and conditions of their employment are complied with relevant requirements of
the Regulations.

11. The Chief Financial Officer and the Chief Executive Officer duly endorsed the Financial Statements before approval of the Board.

Meezan Bank Annual Report 2022 109

12. The Board has formed committees comprising of members given below:

Committees Composition

Audit Committee Mr. Mohammad Abdul Aleem (Chairman)

Mr. Faisal A.A.A. Al-Nassar
Mr. Mohamed Guermazi
Mr. Mubashar Maqbool

Human Resources, Remuneration Mr. Riyadh S.A.A. Edrees (Chairman)

and Compensation Committee Mr. Mohammad Abdul Aleem
Ms. Nausheen Ahmad

Risk Management Committee Mr. Faisal A.A.A. Al-Nassar (Chairman)

Mr. Mubashar Maqbool
Mr. Bader H.A.M.A. Al Rabiah
Mr. Yousef S.M.A. Al-Saad

Information Technology Committee Mr. Mubashar Maqbool (Chairman)

Mr. Riyadh S.A.A. Edrees
Mr. Faisal A.A.A. Al-Nassar
Mr. Irfan Siddiqui

IFRS 9 Implementation Oversight Committee Mr. Riyadh S.A.A. Edrees (Chairman)

Mr. Faisal Fahad Al-Muzaini
Mr. Irfan Siddiqui

13. The terms of reference of the aforesaid committees have been formed, documented and advised to the respective committee for
compliance.

14. The frequency of meetings of the Committees was as follows:

a) Audit Committee Quarterly

b) Human Resources, Remuneration and Compensation Committee Quarterly
c) Risk Management Committee Quarterly
d) Information Technology Committee Quarterly
e) IFRS 9 Implementation Oversight Committee Quarterly

15. The Board has set up an effective internal audit function / team that is considered suitably qualified and experienced for the purpose
and is conversant with the policies and procedures of the Bank.

16. The statutory auditors of the Bank have confirmed that they have been given a satisfactory rating under the Quality Control Review
program of the Institute of Chartered Accountants of Pakistan and registered with Audit Oversight Board of Pakistan, that they and
all their partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by
the Institute of Chartered Accountants of Pakistan and that they and the partners of the firm involved in the audit are not a close
relative (spouse, parent, dependent and non-dependent children) of the Chief Executive Officer, Chief Financial Officer, Head of
Internal Audit, Company Secretary or Director of the Bank;

17. The statutory auditors or the persons associated with them have not been appointed to provide other services except in
accordance with the Act, these Regulations or any other regulatory requirement and the auditors have confirmed that they have
observed IFAC guidelines in this regard.

18. We confirm that all requirements of regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the Regulations have been complied.

Irfan Siddiqui Riyadh S.A.A. Edrees

President & CEO Chairman

February 16, 2023

110 Meezan Bank Annual Report 2022

STATEMENT OF INTERNAL CONTROLS
This statement is presented to comply with the requirements of State Bank of Pakistan (SBP)’s BSD Circular No. 7 of 2004 dated May
27, 2004 “Guidelines on Internal Controls”, SBP’s OSED Circular No.01 dated February 07, 2014 and SBP BSD-1 Circular Letter No. 1
of 2021 dated July 06, 2021 on “Instructions on Internal Controls over Financial Reporting (ICFR)”.

The management of the Bank is responsible for establishing and maintaining an adequate and effective system of internal controls which
has the main objective of ensuring effectiveness and efficiency of operations, reliability of financial reporting, safeguarding of assets and
compliance with applicable laws and regulations.

The control activities are being closely monitored across the Bank through Compliance, Risk Management, Shariah and Internal Audit
departments, which covers all banking activities in general and key risk areas in particular. The Management has Compliance and
Operational Risk Management Committee (CORMC) which focuses on compliance risk issues and reviews the adequacy of controls and
systems to meet the regulatory requirements. The Board of Directors has formed an Audit Committee which has direct oversight
responsibility to ensure the independence of the internal and external audit function. The Audit Committee meets atleast once every
quarter to discuss the scope and results of the work performed by the Compliance, Shariah and Internal Audit departments. The Audit
Committee also meets with external auditors prior to approval of half-yearly and annual results of the Bank.

Based on observations and weaknesses found and identified by Internal and External auditors and the Compliance, Risk Management
and Shariah audit teams, improvements are brought about by the management in internal controls to ensure non-recurrence of those
exceptions and elimination of such weaknesses to the maximum possible level. Further, to ensure compliance with regulatory
requirements including AML/CFT requirements, compliance managers alongwith their teams are also placed in major regions.

While the Internal Controls System is effectively implemented and monitored, there are inherent limitations in the effectiveness of any
system, including the possibility of human error or system failure, circumvention and overriding of controls. Accordingly, even an
effective internal control system can provide reasonable but not absolute assurance that the system's objective will be achieved.

Alhamdulillah, the Bank had successfully completed all stages of its ICFR program during 2014 and has been granted exemption from
the requirement of submission of Auditor-issued Long Form Report through SBP OSED letter /SU-12/017(01)/358/15 dated January 05,
2015. As required by the State Bank of Pakistan, the Bank now prepares annual assessment report on efficacy of ICFR duly signed by
the Chairman, Audit Committee. Having successfully achieved closure on ICFR, the Bank remains cognizant of its responsibility to
continuously improve and strengthen its system of Internal Controls on an on-going basis.

Based on the above, the Board of Directors endorses the management's evaluation of Internal Controls.

On behalf of the Board.

Ariful Islam Irfan Siddiqui

Deputy CEO President & CEO

February 16, 2023

Meezan Bank Annual Report 2022 111

SHARIAH BOARD REPORT

All praises to Allah ( ). Th is year was the 20th year of Islamic commercial banking for Meezan Bank and also
the 25 year of the journey that began from the launch of Al-Meezan Investment Bank. On the occasion of 25th
th

anniversary of Shariah-compliant banking in Pakistan, we congratulate the entire Meezan family on this
successful journey. We pray that may this journey be prolonged with true spirit Insha’Allah. May Allah ( ) give
us tawfeeq and more success in the future towards elimination of Riba from the society. Ameen

During the year, the Shariah Board (SB) of Meezan Bank held five meetings to review various issues, referred to them by the Bank.

Alhamdulillah, CFA Society of Pakistan has recognized Meezan Bank as ‘Best Bank of the Year- Large Size Banks’ and ‘Best Islamic
Bank of the Year’ for 2022 which is a recognition of the Bank’s exemplary performance. The Bank has also received the ‘Best Consumer
Bank’ award by Pakistan Banking Awards, which is one of the most prestigious recognitions of merit in Pakistan’s banking industry. In
recognition of the Bank’s efforts towards ensuring Shariah-compliance, the Bank was again given the Shariah Authenticity Award and
the Shariah Auditor of the Year Award by Global Islamic Finance Awards (GIFA 2022).

We are pleased to share that Mr. Irfan Siddiqui - Founding President & CEO, along with Dr. Muhammad Imran Ashraf Usmani - Vice Chairman,
Shariah Board of the Bank have been nominated in the high-power steering committee constituted by the Government of Pakistan for
implementation of Federal Shariat Court judgement on Riba. We extend our warm wishes to them for being selected for this noble cause. May
Allah ( ) accept their efforts in His path.

Meezan Bank has a team of professionals in the Shariah Compliance Department (SCD) working under the guidance of the SB. The main
objective of this department is to facilitate and ensure Shariah-compliance in all processes, procedures and products, refinement of
existing products and procedures, conducting Islamic banking trainings & awareness sessions and Shariah-compliance review of
transactions. The SCD also serves as secretariat to the Bank’s Shariah Board.

We appreciate the efforts of entire staff of the Bank towards promoting and strengthening the environment of Shariah-compliance in the Bank.
It gives us comfort to observe a high level of commitment of the staff, management and the Board members of the Bank. We are pleased to
share the major achievements of Meezan Bank towards the growth of Islamic banking during the year ended December 31, 2022:

Research and New Product Development

We are pleased to inform that the Bank played a leading role as Management Facility for Islamic Financial Institutions’ which was
Joint Financial Advisor of Government of Pakistan (GoP) towards launched last year. This facility has provided a level playing field to
the issuance of Rs 1.35 trillion GoP Sukuk in this year. It is Islamic banks in competing with conventional banks and offers
noteworthy that this is the highest amount of GoP Sukuk issued in additional avenues for short-term liquidity management to Islamic
any business year so far in Pakistan and these issuances have not banks. The Bank entered into a Musharakah arrangement with
only helped the GoP in its budget deficit but have also helped PMRC which will enable it to provide housing finance at competitive
Islamic banks in managing their excess liquidity. We wish and pricing and also to the low-income segment.
pray that year 2023 also proves to be a prolific year in terms of
issuance of GoP Sukuk of various nature to address the country's The Bank, in collaboration with an Islamic fintech named ‘Haball’,
ever-increasing need of Islamic instruments and shall also provide has launched a first-of-its-kind Shariah-compliant digital financing
solution to GoP to convert its existing conventional financings into platform to provide supply chain financing to vendors and
Shariah-compliant financings. distributors of local and multi-national companies. We are hopeful
that the Bank will enter into further collaborations with different
On the deposit side, the Bank has launched a ‘Senior Citizens Shariah-compliant fintechs for launching digital financing
Savings Account’ which would enable elderly people to get solutions and other Shariah-compliant products that address
Shariah-compliant profits on their savings. Also, after a soft genuine needs of the SME sector and other untapped market
launch in 2021, the Bank launched ‘Meezan Payroll Partner’ to segments.
facilitate employers with salary processing and to also encourage
employees to avail banking services from the Bank. The Bank In order to support energy conservation and efficient energy
also joined hands with AMIM to provide a tailor-made plan to the generation alternatives, the Bank continued to provide financing
Bank's customers for an opportunity to earn good Shariah- for solar panels under the SBP’s Refinance Scheme. As of
compliant returns. The Bank also launched Mudarabah based December 2022, total exposure to solar finance stood at over
‘Asaan Mobile Account’ product in collaboration with State Bank Rs 5.83 billion.
of Pakistan (SBP) to provide access to basic banking services by
opening of bank account through any type of mobile phone. At the Alternate Distribution Channels (ADCs) front, the Bank
Meezan Bank is the only bank to offer a Shariah-compliant launched its POS Acquiring Business with over 10,000 POS
remunerative account in this category. terminals installed in 272 cities in its first year. The Bank also
launched Visa Infinite Card, which is a debit card for high-net
The SB is pleased to share that the Bank has successfully worth individuals.
completed implementation of automated management of
Mudarabah General Pool and profit distribution mechanism which During the year, 10 Shariah-compliant syndicated transactions for
would enhance transparency and authenticity in all the functions various private and public sector entities involving diverse
pertaining to profit calculation and distribution. structures such as Ijarah, Diminishing Musharakah and Running
Musharakah were executed for infrastructure development,
The Bank actively utilized the Shariah-compliant ‘SBP Liquidity capital expansion and project financing related needs.

112 Meezan Bank Annual Report 2022

Shariah Compliance
The SB appreciates the efforts of SCD for conducting around 248 customer and industry visits and reviewing more than 4,000 different
types of financing cases as per the guidelines of SB/RSBM.

The SCD conducted a review of more than 121 branches of the Bank to assess basic knowledge of branch staff and general Shariah
environment of the Bank. Based on their assessment, a report is issued to the Regions to improve their performance on certain areas
that were highlighted during these reviews. The SCD also conducted Shariah review of 12 departments of the Bank to ensure that
operations of the departments are in line with the SB guidelines.

During the year, the SB provided guidelines for different matters;

most noteworthy of them were:

■ Guidance on avoidance of qalb ul dain in financing transactions

■ Guidance on trading in KMI scripts where Net Liquid Assets per share
is more than the current share price
■
■
Approval of Shariah Structure of GoP Ijarah Sukuk on new NHA Assets
Approval of Financing Structure for acquiring patents/rights
248 4 ,000 121
customer & financing branch
■ Approval of various policies and manuals of the Bank industry visits reviews reviews
■ Approval of training and audit plans

Training & Development

During the year, 280 training sessions comprising more than enable them to provide knowledge about Islamic banking to their
4,541 man-hours were organized for staff members across the students in an effective manner.
country, catering to around 12,000 employees of the Bank. This
number includes Orientation and Batch Trainings for new joiners, We are pleased to share that the Bank is making considerable
Refresher Programs such as Asset Refresher, Deposit Refresher, efforts towards establishing strong cultural values in the Bank in
Treasury and Trade Refreshers and Certification Programs in line with Islamic cultural values. In this regard, the Bank had
Islamic financial products. We are pleased to inform that SCD, in arranged various ‘experience sharing sessions’ of different
co-ordination with Learning & Development launched 2 digital scholars and motivational speakers. Noteworthy of them were a
learning modules on internal LMS system which was attended by series of sessions from a reputable female scholar for female staff
11,709 and 10,591 number of staff respectively. The Bank also regarding grooming, work-life balance management, time
conducted a ‘Train the Trainer’ program for the internal Shariah management, etc. The Bank also arranged one session for women
trainers of the Bank as well as 3 programs of Advance level with an associate professor of INCEIF, who inspired the audience
interactive training for senior staff of the Bank in Karachi, Lahore to contribute towards Islamic banking.
and Islamabad regions.
The Bank launched 4 training videos where our Shariah Board
member Sheikh Esam Mohamed Ishaq educated the audience
280 4 ,541 12,000 about various misconceptions in the minds of general public
training man-hours employees about Islamic banking.
sessions

In order to create awareness of Islamic banking among general

The Bank had also collaborated with NIBAF and IBA-CEIF for an public, the Bank conducted 160 seminars in major cities, which were
inaugural certificate program on Islamic Finance for the business attended by more than 10,000 participants from different spheres of
faculty of different universities of Karachi. The program was the society. During the year, the Bank conducted 5 workshops for its
attended by more than 45 faculty members and Insha’Allah would Corporate and SME customers across different cities of Pakistan,
two of them were in collaboration with IBA-CEIF.

Shariah Advisory and Industry Support

The SB is also pleased to share that the Bank is actively ■ Facilitation to EXIM Bank for launching of an Islamic window that
supporting the Islamic finance industry at a global level by will support trade business in Pakistan in a Shariah-compliant
providing tailor-made Shariah advisory solutions for their manner.
business needs. Following are the notable advisory services ■ Provide screening facility to PSX in bi-annual re-composition of
provided by the Bank during the year: KMI-30 and PSX-KMI All Share Indices.
■ Assisting many brokerage houses in developing Shariah Trading
■ Advisory support to an Islamic Financial Institute in Australia
Platforms at PSX for Roshan Digital Account holders.
regarding Takaful and other working capital products.
■ Developed Sukuk structures for telecommunication and pharma
■ Technical advisory services related to converting a leading
companies based on digital airtime and royalty payment
consumer electronic goods company into a Shariah-compliant
respectively.
company.
■ Advisory support to a leading asset management company for
■ Technical advisory services to a Shariah-compliant stock trading
launch of Islamic window.
platform for Shariah screening of various foreign companies
listed in different stock markets globally.
■ Advisory support to a leading microfinance company for
investments of funds in asset management company.
■ Technical advisory services to 51 funds and plans, which covers
a major share of the Islamic Mutual Fund industry.

Meezan Bank Annual Report 2022 113

Review of Assets
The Bank has moved towards diversification in the usage of 2022 2021 Increase/
various financing products and has reduced reliance on Financing Modes % in total % in total (Decrease)% in
Murabaha, as is evident from the Bank’s financing portfolio. There portfolio portfolio total portfolio
is a 5.5% growth in Musharakah from the previous year. The Bank
Diminishing Musharakah 27.4 28.4 (1.0)
has mainly focused on financing through Musharakah modes,
which now constitute 54.9% of the Bank’s total financing. The Musharakah &
Bank’s total financing portfolio reached Rs 1,018 billion (gross) as Running Musharakah 27.5 21.0 6.5
of December 31, 2022. Breakup of different financing modes is Istisna 9.0 8.6 0.4
given here.
Ijarah 7.8 12.9 (5.1)
We have noted that as per our guidelines, the Bank reversed the
financing of Rs 501 million provided to its customers under Murabaha 6.8 6.2 0.6
Murabaha & Musawamah without any profit, as those Musawamah 5.5 7.8 (2.3)
transactions could not be converted into real trade due to genuine
business reasons. Salam - Bills 1.3 0.8 0.5
Wakalah Tul Istithmar 4.5 7.0 (2.5)
Tijarah 1.6 1.7 (0.1)

Salam - Commodity 1.9 1.5 0.4

Other 8.0 4.9 3.1

Summary of Direct Payment in Murabaha Financing

During the year 2022, 84% of payments for Murabaha financings to Corporate and SME/Commercial customers were direct payments.
It is highly recommended that efforts be continued to increase this percentage of direct payments in Murabaha transactions.

It is worth mentioning that in order to strengthen the Shariah-compliance control, physical inspection of delivery of goods was carried
out in almost all Istisna and Tijarah transactions.

Liquidity Management
For the purpose of liquidity management, the Bank invested Rs 713 billion in GoP Sukuk which is approximately 1.8 times
more than the Bank’s investment of Rs 398 billion in GoP Sukuk last year. With the increase in Sukuk issuance, the Bank has
reduced its reliance on Bai Muajjal transactions, whose outstandings have decreased remarkably to Rs 60 billion at year
end 2022, which also includes Bai Muajjal transactions of Rs 32 billion with SBP.

Review of Deposits
It is heartening to see the Bank's deposits grow by 13.9% to of allocation of assets and funds to various deposit pools,
reach a sum of Rs 1,658 billion as on December 31, 2022. On the announcement of overall profit-sharing ratios for Mudarabah-based
advice of Shariah Board to explore areas for goods returns in deposits, monthly allocation of weightages, and distribution of
Meezan Bank's savings accounts, the Bank had increased the income to deposit accounts was monitored and reviewed in
weightages of various deposit categories which increased the accordance with the respective pool management guidelines of SBP
returns and rates of those categories. During the year, the process and Meezan Bank.

Shariah Audit
In compliance of the Shariah Governance Framework issued by the During the year under review, Shariah Audit of 736 branches, area
SBP, a dedicated Shariah Audit Department reporting to the Audit offices, consumer & corporate hubs and Head Office departments
Committee of the Board is in place. This department is playing a was conducted as a part of the Bank’s efforts to strengthen the
significant role towards accomplishment of the objective of ensuring internal Shariah control mechanism. These audits not only cover the
Shariah-compliance by evaluating adherence to Shariah guidelines assessment of financial transactions and operational activities that
prescribed by SB, RSBM and Shariah guidelines of Islamic Banking the branches and departments undertake, but also include an
Department of the SBP. The department also submits its report to evaluation of the knowledge of staff pertaining to Islamic finance.
RSBM/SB for information, review and determination of appropriate
corrective actions.

Charity
An amount of Rs 154.85 million was transferred to the Charity Payable Account during the year. This includes Rs 9.32 million to eliminate the
non-compliant income portion which was identified during Shariah audit, Rs 15.36 million to purify the dividend income earned from
investments made in the Shariah-compliant stocks by the Bank and Rs 122.79 million transferred to Charity Payable Account in the normal
course of business on account of non-timely payments by customers in various financial transactions. An amount of Rs 121.43 million was
disbursed from the Charity Account after approval of the RSBM/SB.

Details of charity account are available in the note 20.5 of the financial statements of the Bank.

114 Meezan Bank Annual Report 2022

Suggestions
For the purpose of further improving the business of the Bank and the overall Islamic Banking Industry, the SB suggests the following:

Conversion of Financial System

■ Being the Premier Islamic Bank, Meezan Bank should strive to give maximum support to Government of Pakistan and State Bank of
Pakistan for their efforts towards Islamization of financial system.
■ It is also suggested that the Bank may offer technical support to different public and private sector financial institutions for conversion
of their operations to Shariah-compliant operations.
Economic Outlook of Pakistan
■ It is suggested that the Bank should try to further explore offering better returns to its depositors in these testing times of high inflation,
especially to the small savers.
■ In the current economic landscape of Pakistan, the Bank should target young generation and encourage young entrepreneurs, small
business and startups by way of different forms of capacity building and financing solutions.
Shariah-compliance Environment
■ It is suggested that Bank should make efforts to use digital technology for its capacity building efforts.
■ It is suggested that the Bank should continue its focus on strengthening Shariah controls and accountability culture for Shariah
non-compliance to ensure Shariah-compliance in all spheres of banking.
■ It is strongly suggested that the Bank should explore ways for inducting human resources who possess strong Shariah mindset and
conviction about Islamic banking and who generally practice Islamic values in their personal lives.
■ Conventional insurance is not permissible from a Shariah perspective; therefore, it is again recommended to convert more clients to
Islamic insurance i.e., Takaful as soon as possible.
Green and Sustainable Finance
■ The Bank should continue to play its part in achieving the Sustainable Development Goals set by the United Nations (UN-SDGs) and
as the market leader, it should set targets to go above and beyond these goals.
■ The Bank should endeavor to increase sustainable banking practices, green banking and climate-friendly banking practices.
Awareness
■ To bring SMEs and corporates closer to Islamic banking, the Bank should continue to conduct workshops on Islamic banking products &
services and may collaborate with trade bodies & chambers for Islamic banking awareness in the business community.
■ The Bank should arrange sessions for specific segments of society such as women, children, university students, media persons,
journalists to educate them about Islamic banking & finance.
■ The Bank should continue to work on creating awareness about Islamic finance, accounting and business amongst faculty members of
universities and colleges and other influential leaders how are members of Government bodies and media houses.

Conclusion
As per the charter of the Bank, it is mandatory for the management and employees to ensure application of Shariah principles and guidelines
issued by the SB and RSBM and to ensure Shariah-compliance in all activities of the Bank. The prime responsibility for ensuring Shariah-
compliance of the Bank’s operations thus lies with the Board of Directors and Executive Management.

Based on extensive reviews of sample cases for each class of transaction, related documentations, processes, profit distribution mechanism
for the depositors by SCD, review of Internal Shariah Audit and External Shariah Audit reports and Management’s representation made in this
regard, the Bank, in our opinion, has complied with the rules & principles of Islamic Shariah in light of the guidelines and directives given by the
Shariah Board, Resident Shariah Board Member of Meezan Bank and guidelines issued by Shariah Advisory Committee of the SBP related to
Shariah-compliance. The non-compliant income identified during the review is being transferred to the Charity Account through a well-defined
system and is being utilized properly in accordance with the instructions of the Shariah Board.

Based on the strength and capacity of the full-fledged SC department and policies/guidelines for Shariah-compliance issued at the
Bank, we are of the opinion that an effective mechanism is in place to ensure Shariah-compliance in overall operations of the Bank.

May Allah ( ) bless us with the best tawfeeq to accomplish His cherished tasks, make us successful in this world and in the life
Hereafter and forgive our mistakes.

Wassalam Alaikum WaRahmat Allah Wa Barakatuh.

Mufti Muhammad Naveed Alam Dr. Muhammad Imran Ashraf Usmani

Resident Shariah Board Member Vice Chairman, Shariah Board

Sheikh Esam Mohamed Ishaq Justice (Retd.) Muhammad Taqi Usmani

Member, Shariah Board Chairman, Shariah Board

Dated: 16th Rajab Ul Murajjab 1444 H / February 7, 2023

Meezan Bank Annual Report 2022 115

116 Meezan Bank Annual Report 2022
2021 2022
% % in total % in total
portfolio portfolio

Meezan Bank Annual Report 2022 117

121 4,000 248

12,000 4,541 280

118 Meezan Bank Annual Report 2022

Meezan Bank Annual Report 2022 119
POLICIES AND GUIDELINES
Standards of Ethics, Business Practices & Code of Conduct
The objective of these standards is to ■ Avoid any action on his / her part that of director, consultant, employee,
promote business practices within may be viewed as repugnant, unethical representative or agent with any
Meezan Bank, which are Shariah - or unlawful by customers or public at supplier, competitor, customer,
compliant, fair, reasonable and reflect large or the Bank itself. individual or organization either doing
high standards of ethical behavior. ■ Avoid any activities that could involve or seeking to do business with the
or lead to involvement in any unlawful Bank without prior written consent of
The standards of ethics and business or unethical governance practice. the Bank's President & CEO. If any
practices, which the Bank expects from ■ Avoid participation in any political immediate family member holds a
all of its employees, is a condition of activities. position, with any organization doing or
employment with the Bank and may be ■ Avoid participation in any other seeking to do business with the Bank,
considered at the time of performance subversive activities. a written disclosure must be made
appraisal of an employee. ■ Abstain from gambling, betting and promptly to line manager / HRD.
wagering contracts. ■ An employee may not hold any interest
■ Code of Conduct, during office hours ■ Be exemplary in personal conduct in any organization doing business with
or otherwise, shall always be that of a towards the Bank, other employees the Bank without the written consent of
good citizen. and customers of the Bank. Regional Manager or Department
■ Act with integrity, competence, dignity, ■ Safeguard the confidential information Head, unless it is a company /
and ethically while dealing with the of the Bank and its customers. establishment quoted on a Stock
customers, shareholders, vendors and ■ Avoid actual or potential conflicts of Exchange and the interest is less than
colleagues. interests in transactions on behalf of 1 percent.
■ Understand and comply with the legal / the Bank.
regulatory requirements and internal ■ Provide accurate and reliable Mis-declaration /Concealment
policies and procedures of the Bank information in records submitted. of Facts
that apply to the duties assigned to the An employee shall not make any
employee. Code of Conduct mis-declaration or conceal the facts in
■ Never willingly enter into a business Confidential Information knowledge. The following are illustrative
transaction, which shall violate any law Employees shall maintain strict secrecy examples, but are not all-inclusive:
or principles of Islamic finance. regarding the Bank's affairs and shall not
■ Never use their position to force, (except so far as is necessary and ■ An employee issuing an incorrect
induce, coerce, harass and intimidate appropriate in the normal course of their account statement, salary certificate or
any other person, including employment) disclose to any person, any any other information for any customer
sub-ordinate to provide any force, gift information as to the practice, dealing or or staff member.
or benefit, whether financial or affairs of the Bank or any of their ■ An employee issuing a fake claim for
otherwise, to themselves or others. customers, which may come to their reimbursement of any expenses
■ Avoid professional misconduct knowledge by reason of their whereby either the expenses are
involving dishonesty, fraud, deceit or employment. inflated and/or the difference between
misrepresentation. Any unintentional expenses claimed and actually
mistake, wherever possible, shall be During the course of employment and incurred are pocketed by the staff
immediately rectified and reported to after its termination for whatever reason, member.
the line manager. the employee must not disclose to ■ An employee at the time of induction in
■ Not make use of any information anyone (nor use for any purpose other Meezan Bank (i.e. during interview and
including Bank's trade secrets, than the business of the Bank) any in testimonials) provided a false,
proprietary, confidential information, information relating to the Bank or its forged, misleading information or
gained in the performance of official employees which is not already available concealed, hid, incompletely stated,
Bank duties as a means of making any to the public, unless authorized to do so. any information regarding credentials,
personal profit, gain or benefit for Such information includes customer data, academic record(s), previous
themselves or connected persons. product manuals, technical secrets, employment(s) and demographic
■ Immediately report to the management confidential research work, technical details.
of pre-existing personal relationship processes, operating manuals, marketing
with any existing or potential customer, plans and strategies and other Know Your Customer, Vendors
industry representative or government confidential financial or business and Counter Parties
employee with whom the Bank has a information of the Bank. In order to safeguard the Bank's
business relationship. Pending reputation and integrity, it is not only
clearance from the management, the Recording of Information necessary for employees to discipline
employee shall take no further action No unrecorded fund or assets of Bank their own actions, it is also necessary to
associated with the business in which shall be established or maintained for any be aware of the character and actions of
a personal relationship exists. reason. No false, artificial or misleading customers, vendors and counter parties.
■ Will not use the Bank's services or entries in the books and records of Bank Care must be exercised in selecting those
facilities for private purposes except shall be made for any reason. All with whom we deal. Each Meezan Bank
with prior permission. reporting of information should be business must have processes in place
■ Conduct Bank's business with accurate, honest and timely and should for checking on the credit and character
honesty, integrity and in a professional be a fair representation of the facts. of customers, vendors and counter
manner. parties.
■ Avoid any action on his / her part that Conflict of Interest
may be repugnant, unethical or It is obligatory that: Employees must ensure that the Bank
unlawful. ■ An employee may not hold a position establishes relationship with only those

120 Meezan Bank Annual Report 2022

individuals, businesses, and entities who individuals or firms involved in criminal a citizen's redress to the judiciary and
have a sound reputation and whose true activities and money laundering. The other statutory redresses.
identity has been established. Employees employees are expected to exercise
should conduct maximum caution in maximum caution in this regard. Core Values
opening new accounts and before ■ Shariah Compliance
opening, ensure that due diligence steps The employee should know the customer, ■ Integrity
are completed. be vigilant for unusual circumstances and ■ Service Excellence
immediately report any suspected case to
Gifts & Entertainment the Manager / Area Manager / Regional Meezan Bank's Personality
At certain times of the year, some Manager / Compliance Department/Audit The Bank expects its employees to be:
customers, suppliers, contractors and Department, who will arrange for
consultants to the Bank may present gifts appropriate follow-up action to be taken. ■ Sober
or arrange entertainment for employees. Failure to report any such activity will be ■ Truthful
While the sentiments behind such actions subject to disciplinary action. ■ Committed to excellence
are usually genuine, there is a possibility ■ Empathetic
that others may misconstrue them. In a Courtesy & Manners ■ Professional
minority of cases such actions may not Employees of Meezan Bank shall ■ Extremely loyal
be in the best interest of good working maintain utmost courtesy and exemplary ■ Dependable friend
relationships. Gifts may be presented manners when interacting with clients or ■ Trustworthy business partner
locally or internationally in the form of with each other. Employees are dealing ■ Committed to the cause of
Cash or in kind of Services, either free or on behalf of the Bank, so they are Islamic banking
discounted. required to keep high standards of
professionalism and ethics. Any violations Health & Hygiene
Bribery & Misconduct of this code shall be brought to the
Personal Hygiene is the most important
An employee will be guilty of an offence, attention of supervising officials as well
aspect of our daily life. The personality is
who, without lawful authority or as the Human Resources Department for
perceived by its degree of neatness. The
reasonable excuse: their information, record and remedial
personal hygiene covers care of body
disciplinary action.
odor, bad breath, teeth, nails, ears, nose,
■ Solicits or accepts any advantage as
hair, daily shower, shave (if not keeping
an inducement or reward for doing or Honesty & Integrity
proper beard), daily wear washed, clean,
intending to commit any action in Employees shall serve the Bank, devote
pressed clothes etc.
relation to the Bank's affairs or whole time during office hours and
business. discharge their duties honestly, faithfully
■ Showing or intending to show favors or and use their utmost endeavors to
Computer, E-mail, Information
disfavors to any person in relation to promote the interest of the Bank. They
Security
the Bank's affairs or business. shall behave with decorum, integrity, Meezan Bank computer system contains
■ Offers any advantage to any one as an show courtesy and attention in all an e-mail facility, access rights,
inducement or reward for any dealings with customers, government information and software, which are
favor/disfavor or otherwise. officials, senior officers, colleagues, intended to promote effective
■ Intends to deceive the Bank by using subordinates and general public. communication within and outside the
any receipt, account or other Bank, on matters relating to its business
document which is false or erroneous Participation in Political and facilitate routine information flow and
or defective in any way and which to Organizations smooth and safe transactions.
employee's knowledge is intended to No employee shall take part in, subscribe
mislead the Bank. in aid of, or assist in anyway in any The e-mail system should therefore only
■ Take any cash or near-to-cash benefit political movement in Pakistan during the be used for official/business purpose. All
from any stake holder of the bank to office timing at the office premises. No communication and information are the
provide undue advantage. employee shall use official influence in property of Meezan Bank and the Bank
■ Pay any cash or near-to-cash benefit connection with or take part in any reserves the right to retrieve the contents
to any stake holder of the Bank to take election to a legislative body, whether in of the messages for the purpose of
undue advantage. Pakistan or elsewhere. monitoring. The employee shall be held
accountable for all activities under his/her
Fraud, Theft or Illegal Activities Ideology of Pakistan password.
Employees shall be alert and vigilant with No employee shall express views
respect to frauds, thefts or illegal detrimental to the ideology or integrity of Dress Code & Professional Attire
activities committed within the office. If Pakistan. Attire is a reflection of professionalism as
any such activity comes to the attention well as that of the Bank's brand and
of an employee, the employee must Direct Representations to the personality. A professional business
immediately report the same to the Head High Govt. & Meezan Bank appearance together with a high standard
of Audit, Head of Operations and Head of Officials of personal hygiene is expected from all
Human Resources; who will arrange for No employee shall make any personal employees. The Official Dress Code of
appropriate follow-up action to be taken. representations directly to Chairman, Meezan Bank is professional corporate
Failure to report any such activity will be Directors or Members of the Board, or attire inline with traditional Islamic
subject to disciplinary action. Government functionaries. Such modesty. At Meezan Bank every staff
representations must be addressed to the member is expected to have a
Money Laundering President & CEO through the immediate professional business appearance
The Bank has set its priority not to supervisor of the employee. However this together with a high standard of personal
become implicated, in any way, with policy does not, in any way, seek to block hygiene.

Meezan Bank Annual Report 2022 121

Guidelines on Whistle-Blowing
The purpose of these whistle blowing Scope must immediately report this to Whistle
guidelines is to provide a mechanism to The scope of these guidelines includes, Blowing Unit through various modes
Bank’s stakeholders (employees, without limitation, disclosure of all types including but not limited to Meezan
customers, vendors, etc.) to report any of unlawful acts / orders, fraud, Bank’s website, E-mail, fax, mobile and
activity which in their opinion may cause corruption, misconduct, collusive landline.
financial and/or reputational loss to the practices or any other activity which
Bank. The major objectives of whistle undermines Bank’s operations, financial Confidentiality & protection of
blowing policy can be classified as: position, reputation and mission. whistle blowers
The whistle blowing mechanism has been
■ To provide an environment whereby Who must blow the whistle and designed to ensure complete
stakeholders feel confident to blow the how? confidentiality of the entire process and
whistle without any fear of reprisal, It is the responsibility of each and every also enables the bank to take immediate
subsequent discrimination and of being stakeholder of the Bank, instead of corrective measures. Identification of the
disadvantaged in any way; limiting it to a particular department or whistleblower is kept completely
■ To develop a culture of accountability senior management only, that if any confidential except as required by law or
and integrity; stakeholder observes any suspicious, who have legitimate right to know. The
■ To create awareness amongst fraudulent or unethical activity, bank stands committed to protect
stakeholders regarding the whistle transaction or act that may cause a whistleblowers for whistle blowing and
blowing function; and potential threat to the Bank or could be any subsequent harassment or
■ To be a source of early warning signal. against the interest of the Bank, he/she victimization of the whistleblower is not
tolerated.

Guidelines for Safety of Records of the Company

Comprehensive guidelines are in place at Preservation of Old Records transactions, etc. Relevant Branch
Meezan Bank for ensuring that physical This section deals with maintenance of Manager / Area Manager / Departmental
documents are being archived in an old records in a secured environment and Head is responsible for checking and
organized, efficient and reliable manner. the procedure for documenting their verifying the list of records that need to
These guidelines encompass detailed complete details to facilitate retrieval and be destroyed. For branch records, Head
processes for preservation, organization, destruction after expiry of retention Office operations will finally approve
transfer, retrieval and destruction of timelines. This section also defines the branch's request for destruction of
physical records. The guidelines responsibilities of the Archiving Officer. record, which will be carried out in the
comprise of the following elements: presence of Branch Manager and
Procedures to Handle Records Operations Manager.
General Guidelines at Archives
This section deals with the role of the These are detailed procedures with Retention of Old Records
Administration Department in providing clearly allocated responsibilities of These guidelines outline the various types
an Archive facility outside the branch and Branch / Head Office departments and of records and the recommended period
provides guidelines on when old records archiving officers for transferring/retrieval for their retention and subsequent
will be transferred to the archive, of records to and from Archives. destruction in view of the Banking
signatories that may authorize retrieval of Companies Ordinance, SBP Prudential
records, treatment of records under Destruction of Records Regulations and other regulatory
litigation / dispute, type of records that This section provides guidelines about requirements.
may be kept under fire-proof cabinet, and the type of records that need to be
the convention to be followed for retained permanently or till the time Standardized Formats
allocating serial numbers to archived approval from Regulators is obtained for Formats for forms and registers have
records. their destruction. e.g. cases in litigation, been provided to facilitate
records relating to suspicious standardization and controls across
Meezan Bank's network.

Summary of Corporate Social Responsibility Policy

Scope of Corporate Social Objective of Meezan Bank’s ones mentioned below, as per the
Responsibility Policy CSR initiatives Management’s discretion:
The CSR Policy pertains to all corporate To contribute as a responsible corporate
social responsibility activities undertaken citizen to the community and environment ■ Health
by Meezan Bank and applies to all in which the Bank is operating. ■ Social & Environment Sustainability
employees of the Bank. ■ Education
Areas of Focus ■ Creating awareness about the
Activities undertaken by the Bank may Meezan Bank may contribute in the form prohibition of Riba and the available
include projects being implemented of financial assistance, providing logistic alternatives
independently by Meezan Bank or support and availability of human
The Bank may also encourage its
projects undertaken in coordination with resources for charitable causes in various
employees to volunteer and contribute to
other entities. sectors including, but not limited to the
its own or other organizations’ CSR
initiatives.

122 Meezan Bank Annual Report 2022

Summary of Sustainability Policy
Purpose Scope of Sustainability Policy It is applicable to all of the Bank’s
The Purpose of this Sustainability Policy is The Sustainability Policy shall support organizational units and departments and
to provide framework for incorporating business decision making at all levels of may include projects and business
sustainability into the Bank’s business the Bank and will provide a frame of activities being implemented
operations and to minimize the reference for dealing with direct and independently by Meezan Bank or
environmental, social & ethical risks to indirect sustainability risks. projects undertaken in coordination with
Bank’s stakeholders and to organization other entities.
staff.

Summary of Green Banking Policy

Scope and Objective institutionalize Green Banking across ■ Environmental Risk Management
The Green Banking Policy of Meezan Meezan Bank by focusing on the Framework
Bank has been prepared in light of the following major aspects: ■ Green Business Facilitation
'Green Banking Guidelines' issued vide ■ Own Impact Reduction/In-house
IH & SMEFD Circular # 08 dated October ■ Governance Structure and Environment Management
09, 2017 of State Bank of Pakistan. The Responsibilities ■ General Guidelines
objective of this policy is to ■ Organizational Structure

Summary of Information Security Policy

Information Security relates to protection (CIA) of the information assets and Physical and Environmental
of valuable assets against loss, misuse, services. Security
disclosure or damage. Each asset has to To prevent unauthorized physical access,
be reviewed from the perspective of its Cyber Security Action Plan damage to, and interference with the
Confidentiality, Integrity and its Cyber security action plan is developed Bank's premises (head office and
Availability to the authorized personnel. A to proactively address the likely branches) and information.
number of factors play a critical role in cyber-attacks in order to anticipate,
the successful implementation of withstand, detect and respond to Operations Security
information security. cyber-attacks in line with international To ensure correct and secure operation
standards and best practices. of information processing facilities.
Information Security Policy
The Information Security Policy defines Cyber Crime and Methods of Threat Intelligence and
the policies and procedures to ensure Prevention Industry Collaboration
that information is adequately protected To protect the Bank against the range of Share, gather and interpret Information
against improper and uncontrolled cybercrimes by formulating methods of about technical vulnerabilities and
disclosure. Meezan Bank's Information Prevention. relevant cyber threats arising from
Security Policy is based on ISO 27001. information systems, services, utility
The policy comprises of the following Human Resources Security providers and other banks.
domains: This segment of the policy ensures that
the Bank's employees, contractors and Communications Security
Organization of Information third-party users understand their To maintain the integrity and availability of
Security responsibilities and are suitable for the information and information processing
In order to manage information security roles they are considered for, thereby facilities.
within the Bank, a framework has been reducing the risk of theft, fraud or misuse
established by the Bank's management of facilities. Work from Home
to initiate and control the implementation Work from home facility provision shall
of information security within the Asset Management only be facilitated in a controlled manner
organization. To achieve and maintain appropriate with pre-requisites defined in the
protection of the Bank's Information procedure. The work from home
arrangements is subject to system and
Identification and Prioritization Assets.
VPN provision according to their job-role
of Information System Assets
Access Control and need to use basis.
To ensure the criticality of information
system assets is defined in line with the To control the access to information,
information processing facilities and Information Systems
Tier Classification.
business processes based on business Acquisition, Development and
and security requirements. Maintenance
Risk Assessment & Treatment To ensure that security measures are
To review IT System and Operation for
Cryptography always built into and are an integral part
identifying and mitigating the risk that of all information systems.
could affect Meezan Bank’s infrastructure To protect the confidentiality, authenticity
through internal and external attacks. The and integrity of information by
Cryptography (The conversion of data Supplier Management
basis of these assessments is the To ensure the protection of the
Confidentiality, Integrity and Availability into a secret code for transmission over a
public network.) organization’s information assets that is

Meezan Bank Annual Report 2022 123

accessible by IT suppliers for providing IT Information Security Aspects Compliance
service delivery. of Business Continuity To ensure compliance in order to avoid
Management breaches of any law, statutory, regulatory
Information Security Incident To counteract interruptions to business or contractual obligations, and of any
Management activities and to protect critical business security requirements.
To ensure that information security events processes from the effects of major
and weaknesses associated with the failures of information systems or
Bank's information systems are disasters and to ensure their timely
communicated in a manner that allows resumption of bank Operations.
timely corrective action to be taken.

IT Governance Policy
Scope for project management to assure 11. IT Outsourcing Management defines
This policy creates the governance for that they are accomplished in timely, the framework for outsourcing of IT
the Information Technology Division for cost effective manner. It is governed services.
the Bank under the supervision of IT by PMO Charter.
Steering Committee, Board IT Committee 12. Software Solution Development and
and Board of Directors. This policy 3. Change Management emphasizes on Maintenance Management facilitates
describes and create a framework that managing all changes within the IT the effective development and
will pave the roadmap on which IT environment including emergency maintenance of Software solutions to
Division will provide services to Bank’s changes, fixes and patch compliment business functions.
business functions and to ensure that the management to minimize the
Bank’s business operations are driven disruption in services. 13. IT Infrastructure Management
based on Technology Solutions. determines the process for
4. IT Helpdesk and Problem requirements analysis, planning,
Management ensures incidents and
Objective design, deployment and on-going
problems related to systems are operations management. It also
To put in place the policy framework for
reported, tracked investigated and ensures technology is accessible and
IT Governance at the Bank in order to
resolved in effective and efficient equipped with current hardware and
provide services to the Bank’s Business
manner. software for application management.
functions. This policy framework is also
aligned with the IT Security Policy of the
5. Service Level Agreement 14. Network Management defines the
Bank which is based on the standard ISO
Management ensures the SLA’s are principles covering internal and
27001.
established, agreed between vendors
external network environment
and IT in line with Business needs to
Executive Summary gauge the service delivery
operated by the Bank including
Establish Partnership with business to Logical Access Management,
performance.
enrich Business and IT alignment and by Infrastructure security, Operational
delivering cost effective technology Management and Bandwidth
6. IT System Acquisition Management
solutions and services. Management.
caters the way the IT Systems should
be procured in line with Bank’s
This model describes all functions of the 15. Database Management aims at
expenditure policy.
IT Division in the form of services which ensuring the availability, integrity,
results in business benefits. It consists of 7. Configuration Management covers security, consistency and accuracy of
five core services area (IT Service the rules for configuration of the Bank’s database.
Strategy, IT Service Design, IT Service information technology devices and
Transition, IT service Operations and infrastructure for tracking and 16. Virus and Malware Management
Continual IT Service Improvement) that controlling all changes to information ensures that systems, database and
cover best practices and guidelines systems of the Bank. software are protected against the
within IT management. risk to malicious software and
8. IT Compliance Management defines unauthorized code.
Key Areas – IT Management the way ITD works under compliance
Policy guidelines. 17. Internet and Intranet Usage
Key areas in Meezan Bank IT Management defines the rules for
Management Policy are as follows: 9. IT Continuity Management covers the Internet usage.
aspect of Business Continuity Plan
1. IT Capacity and Performance and Disaster Recovery Plan in case of 18. Desktop Support Management
Management provides guidelines for any service disruption. defines the principle covering the IT
maintaining scalable IT capacity and related Support activities and covers
making the best and optimal use to 10. IT Backup and Restoration the Installation and configuration of
meet the performance requirements Management defines the rules for desktops in branches and providing
expected by the business. backup and storage of electronic first level support.
information within the entity that are
2. IT Project Management defines responsible for electronic data stored 19. Cloud computing management
standard and best practice guidelines in archive. defines the controls of outsourcing IT
services to cloud.

124 Meezan Bank Annual Report 2022

Salient Features - Directors’ Remuneration Policy
1. Remuneration shall be fixed in 2. No single member of the Board of statements of the Bank, as per SBP
Pakistani Rupees (PKR) invariably; Directors shall determine his/her own instructions issued from time to time.
nevertheless, payment of the same remuneration.
can be made to foreign Directors in 4. The Fees for attending the Board and
equivalent foreign currency(ies), where 3. Proper and transparent disclosure of its Committee meetings shall be as
necessary, after obtaining the regula- remuneration and other benefits/facili- follows:
tory approvals as may be required ties provided to the Board members
from time to time. shall be made in the annual financial

Board Meeting Fee Committee Meeting Fee

Rs. per meeting Rs. per meeting

Chairman 960,000 650,000

Other Non-executive Directors 800,000 650,000

5. The Board and Committee meeting Attendance of Board Meeting(s)/ 8. No consultancy or allied work shall be
fees will be approved by the Committee Meetings will be borne by awarded to a Director or to the firm(s),
shareholders in Annual General the Bank at actuals. Expenses such institution(s) or company(ies) etc. in
Meeting on pre or post facto basis on as hotel stay etc. incurred due to which he/she individually and/or in
the recommendation of the Board personal reason or reason other than concert with other Directors of the
and Board Human Resources, performance of Bank’s duties and Bank, holds substantial interest.
Renumeration & Compensation business will be borne by the
Committee. The meeting fee, in any concerned Director. 9. No remuneration under this policy
case, shall not exceed the limits would be paid to the Executive
prescribed by the Regulators. 7. No additional payments or perquisites Directors except travel and boarding
will be paid to the Non-Executive costs as per the Bank’s standard
6. All traveling / boarding / lodging Directors and Chairman except as rules and regulations and relevant
expenses of the Directors related to mentioned in above clauses. laws.

ISLAMIC FINANCE
OUR CONSTITUTIONAL
RESPONSIBILITY
Islamic Banks are transforming Quaid’s vision into reality, simultaneously playing a
crucial role in fulfilling the constitutional responsibility by developing an interest-free
financial infrastructure that is in accordance with the teachings of Holy Quran and
Sunnah. The Preamble of the 1973 Constitution of Islamic Republic of Pakistan states:
The Muslims shall be enabled to order their lives in the individual and collective
spheres in accordance with the teachings and requirements of Islam as set out in
the Holy Quran and Sunnah

Article 38 (f) of the Constitution of Pakistan (1973) clearly states

the State is responsible to eliminate Riba (interest) as early as possible

Meezan Bank Annual Report 2022 125

Stakeholders Relationship
and Engagement
HOW WE ENGAGE WITH OUR STAKEHOLDERS
Meezan Bank maintains active engagement with its stakeholders to drive its business. All stakeholder engagement is driven by the Bank’s
Core Values – Shariah-compliance, Integrity and Service Excellence, to address its business impact and to enhance the value created.

Key Stakeholders Modes of Engagement Frequency Key Initiatives

Customers Online, phone, social media 24.7 million customer awareness SMS
and postal communication sent in 14 different campaigns
160 Islamic banking awareness seminars
Customer satisfaction conducted nationwide, attended by more
surveys and feedback than 10,000 participants
Value Created
Active interaction and prompt follow-up to
queries/feedback received on Bank’s
official channels including social media
Bi-annual customer letters
Promote financial inclusion,
fair treatment and high 12 webinars held for customers
customer satisfaction and
loyalty. Launched Islamic Banking awareness
video with Sign Language

Informative video on Murabaha and

Launched Cyber Security awareness
how it works in sign language campaigns social media

Shareholders Financial statements Consistent payment of dividend

Conducted 3 investor briefing sessions
Conducted 1 corporate briefing session
Annual General Meeting
Participated in Tundra Fonder ESG, Terra
Value Created Nova ESG due diligence questionnaires
Media releases Global Islamic Bankers' Survey and
OICCI CSR report
Investors & Analyst briefing
sessions
Create shareholder value and
build strong corporate Responding to multiple
governance. Minimize queries of institutional
non-compliance resulting in any investors and ESG analysts
potential sanctions, penalties
and/or reputational loss.

Regulatory Regular engagement for Actively participated in the

Bodies matters impacting business RDA accounts, Roshan Apni Car, Roshan
and compliance through Apna Ghar and other initiatives of the
face to face, written and government to help NRP and resident
telephonic communication Pakistanis
Value Created 523 Regulatory & Compliance sessions
Audit and annual reports including:
● AML/CFT Training

● Outreach Awareness on ML/TF/PF

(Money Laundering, Terrorist Financing

Enhance capability to adapt & Proliferation of Weapons of Mass
to regulatory compliance and
establish strong risk Destruction)
management and control. ● Information Security and Trade

Compliance
● Gender Sensitization & Banking on

Equality
● Actively participated in SBP Banking

Services Corporation (SBP-BSC)

‘Young Islamic Banking Professionals
(Y-IBP) Program’ and arranged ‘One
Day Branch Visits’ for SZABIST
students and faculty.

Meezan Bank Annual Report 2022 127

Key Stakeholders Modes of Engagement Frequency Key Initiatives

Employees CEO messages on regular Regular cyber security awareness

and topical subjects campaigns for staff

Training initiatives Employee Share Option Scheme (ESOS)

Value Created Introduction of ‘Iddat leave With Pay’ for its

Employee Satisfaction Survey divorced or widowed female staff

Offsite strategy sessions & 1,334 internal and external training

townhall meetings sessions
Manage employee relations
to create an inclusive and 75 Induction Training Programs held
Employee benefits including
learning environment. Train The Trainers (TTT) Program for
Encourage talent attraction compensation, medical,
and retention. performance bonus and In-house Shariah Trainers
end of service benefits Islamic Banking Refresher Program
launched for Senior Executives
Internal newsletter and intranet
5-day Executive Development Program for
Retail Banking Group
Inter-departmental sports
and recreational activities

Community Financial literacy initiatives Enabled job opportunities for people with
special abilities
Hiring individuals with hearing Participated in SBP's National Financial
and visual impairments Literacy Program (NFLP) for financial
Value Created
inclusion in Pakistan
Sponsoring various Launched multiple online campaigns on
fundraising events inculcating early saving habits in childeren
Campaign on International Day of Disabled
Support economic, social Building the Islamic Persons to promote inclusion
and sustainable development Financial industry
and green banking while Launched Dars-e-Quran & Meezan Taleem
ensuring ethical and campaigns for Islamic Finance Education
Shariah-compliant business
Meezanship Program – for last semester
practices.
students and recent graduates.
ACCA Trainee Program – for deputing
ACCA trainees in the Bank

Media Ads through print, electronic, Interacted regularly and frequently with the
social media and website local, regional and international media
through PR, articles and interviews of
senior management
Interviews on print and
Value Created
electronic channels

Encourage positive brand Social media platforms

building, mitigate
reputational risks.

Suppliers Regular meetings

Vendor briefings

Value Created Quarterly

Purchase agreements
Ensure continuous Semi-annually
supplier evaluation
towards ethical practices
Annually
& quality management.
Encourage accessible
whistle-blowing Regularly/Continuous
channels.
On need basis

128 Meezan Bank Annual Report 2022

INVESTOR RELATIONS SECTION ON
CORPORATE WEBSITE
Meezan Bank places great emphasis on ensuring two-way, regular engagement with its investors through various channels. The Bank’s
corporate website is one such channel that is regularly updated with all important business announcements, financial results as well as
regulatory information. The Investor Relations section of the Bank’s website serves to connect its stakeholders with the Bank as per the
applicable regulatory framework.
The Bank’s website also includes all latest information regarding the Bank, including its financial highlights, Board of Directors,
Management Team, External Auditors, Past and Current Financial Data, Shareholding details, investor relations/grievances, dividend
information, investor information as well as such other information and a link to Securities and Exchange Commission of Pakistan’s
(SECP) Service Desk Management System (SDMS).

Further, in order to facilitate our shareholders, the following information has been prominently displayed on the Bank’s corporate website:
■ Contact details of our Share Registrar.

■ Contact information of the focal person of the Bank for dealing with investors’ grievances.

■ Designated email address of the Bank for addressing the queries / complaints relating to shares / dividend.

■ Various documents, such as Notice of AGM, Proxy Form, Dividend Mandate Form, Transfer Deed, etc. for easy access of the

investors
For shareholders, analysts and investors, the Bank also updates contact details for investor relations and Company Secretariat.

The relevant section is available on the Bank’s website: https://www.meezanbank.com/investor-relations/

STEPS TO ENCOURAGE MINORITY SHAREHOLDERS'

PARTICIPATION IN GENERAL MEETINGS
The Bank ensures that the interest of the minority shareholders is protected. In order to ensure their participation in general meetings,
the Bank takes the following measures:

■ All notices of the shareholders’ meetings are timely announced on Pakistan Stock Exchange (PSX), published in nationwide
newspapers.
■ All notices of the shareholders’ meetings are dispatched at the registered addresses of the shareholders as per regulatory
requirement.
■ Annual Reports are sent to each member of the Bank before the AGM in hard copy and/or in electronic form.
■ Shareholders are facilitated in appointing proxies in case they are unable to attend the AGM in person.
■ Shareholders are provided with a detailed overview of the Bank’s performance, future outlook in both English and Urdu languages.
■ Shareholders are encouraged to comment, raise queries and provide feedback related to the Bank’s operations.
■ The Bank also ensures compliance to all the regulatory requirements and takes all possible steps to encourage attendance of
minority shareholders in their meetings.

Matters Raised in the Last Annual General Meeting (AGM)

No significant issue was raised in the last AGM.

SUMMARY OF CORPORATE AND ANALYST BRIEFINGS

Corporate and Analyst briefings provide the Bank, its shareholders and the investor community with an opportunity to share business
updates that are relevant to the shareholders and analysts’ coverage areas. As per the requirements of PSX, all listed companies are
required to hold at least one Corporate Briefing Session (CBS) for the shareholders and analysts during a financial year. The Bank held
one Corporate Briefing Session and one Analyst Briefing session during the year.

The interactive sessions served to apprise the audience of a detailed overview of the Bank’s performance, its business environment as
well as future prospects and strategy.

The audience was also informed about the Bank’s focus on digital transformation and process innovation. The engagement session
served to give the right perspective of the Bank’s business affairs. To facilitate shareholders and to accommodate regional analysts and
fund managers, conference call facilities are provided to ensure full access to all necessary stakeholders. The information and
presentations are subsequently uploaded onto the Investor Relations segments on the Bank’s website. Apart from Corporate and
Analyst Briefing Sessions, the Bank also held Investor Briefing Sessions during the year.

These Investor Presentations are available on the Bank’s website.

Dates:
Investor Briefing Session March, 2022
Corporate Briefing Session (CBS) August, 2022
Investor Briefing Session September, 2022
Investor Briefing Session October, 2022

Meezan Bank Annual Report 2022 129

Sustainability & Corporate
Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY REPORT

Meezan Bank believes in conducting business in a manner that is ethical and contributes
to its stakeholders, environment and society in a positive manner. Meezan Bank's
consciousness of its responsibility towards society and stakeholders is also expressed in
its Vision and Mission statements. The Bank’s focus on CSR includes its participation in
charity and donations, social welfare in terms of health and education as well as ensuring
transparency in its CSR initiatives.

EDUCATION
48 TCF classrooms The Citizens Foundation (TCF)

in 8 school units The Citizens Foundation (TCF) is one of Pakistan’s leading

non-profit organizations in the field of education for the less
privileged. It was set up in 1995 by a group of citizens concerned
Fundraising supported by Meezan Bank
with the dismal state of education in the country. Meezan Bank
supported TCF by participating in a fundraiser event held at
Karachi Golf Club, Karsaz. With these efforts, TCF aimed to raise
funds for 48 TCF classrooms in 8 school units.

HEALTHCARE
Indus Hospital & Health Network (IHHN)
The Indus Hospital & Health Network (IHHN) provides quality
healthcare absolutely free-of-cost to millions of deserving patients
through its countrywide network of hospitals in Pakistan. With an
exponential increase in the patient volume over the past few
years, the IHHN is further expanding its services and facilities
while maintaining its quality standards.

Meezan Bank supported IHHN through participating in its 7th

Indus Annual Golf Tournament, 2023 that engaged more than 100
golfers and top CEOs of several organizations. The fundraiser not
only helped create awareness about the network and
philanthropic activities of IHHN, Karachi, but also helped collect
voluntary financial support to expand and continue providing free
quality healthcare to all.

Layton Rahmatulla Benevolent Trust (LRBT)

40 wheelchairs Layton Rahmatulla Benevolent Trust (LRBT) is Pakistan's largest
non-governmental organization working to fight blindness in the
country. Meezan Bank strongly believes in giving back to the
donated through Dawood Global Foundation
community and donated forty wheelchairs to Layton Rahmatulla
Benevolent Trust through Dawood Global Foundation.

Meezan Bank also participated in the 6th Layton Rahmatulla

Benevolent Trust Golf Tournament fundraiser event. This event
was held to create awareness and raise funds for the free
treatment of eye diseases
such as cataract, glauco-
ma, retinal and corneal
diseases in Pakistan.

132 Meezan Bank Annual Report 2022

Donation of
Rs 35 Million
to Finance Solar Panels System
for Indus Hospital &
Health Network (IHHN) INDUS HOSPITAL
&
HEALTH NETWORK

Meezan Bank has long understood its responsibility

towards the planet, its customers, its communities and the
country. The Bank has therefore committed itself to
sustainable energy and reducing the carbon footprint of its
activities.

During 2022, the Bank donated Rs 35 million to Indus

Hospital & Health Network (IHHN) for installation of a solar
panels system. The initiative is part of the Bank’s
Corporate Social Responsibility and Sustainability
initiatives and will provide financing to cover part of the
1.2MW solar power project being installed on the
hospital’s rooftop. Mr. Ariful Islam – Deputy CEO, Meezan Bank at the cheque handing over
ceremony with Dr. Abdul Bari Khan – Founder, Indus Hospital & Health Network.

The system financed by the Bank will generate nearly 250

KW of electricity, reducing approximately 75 tons of Carbon dioxide emissions per annum, which is equivalent to taking over 20
gasoline-powered vehicles off the road for one year.

With this solar panel system installation, IHHN would be able to reduce its rising electricity expenses while channelling those funds
towards patients’ welfare. The collaboration between both the parties promises a shared sustainable future for the community at
large, benefitting healthcare of individuals – thus fulfilling one of the core objectives defined in the Bank’s CSR policy.

Reduces environmental
footprint

Promotes safe workplace

Environmental &
Social Impact
Enables decarbonization

Ensures sustainable and

clean energy transition

250 KW 75 tonnes Carbon footprint

Electricity Generation of CO2 reduced reduced equivalent to
20 vehicles for a year

Meezan Bank Annual Report 2022 133

Lady Dufferin Hospital (LDH)
Over the years, Lady Dufferin Hospital (LDH) has been providing
high quality, free of charge / highly subsidized health care to a
large population of low-income women and children. In an effort
to create awareness and raise funds for fighting maternal mortality
in Pakistan amongst the marginalized women of society,
Meezan Bank supported Lady Dufferin Hospital by
contributing towards the Dr. Faridon Setna - 3rd LDH
Golf Tournament Fundraiser that took place at
Karachi Golf Club, Karsaz.

Lady Dufferin
Hospital

Karachi Down Syndrome Program (KDSP)

The Karachi Down Syndrome Program (KDSP) is a non-profit
organization formed by a group of parents and individuals
who, due to limited support and resources available locally,
realized a need for a platform for those with Down syndrome.
Meezan Bank supported KDSP in its Annual Fundraiser Golf
Tournament at Karachi Golf Club.

kdsp
Karachi Down Syndrome Program

OTHER INITIATIVES
Supporting the Community
Meezan Bank sponsored The Food Project Trust's (FPT) kitchens
in Ghazi Goth, Data Nagar and Northern Bypass, Karachi,
providing freshly cooked meals to underprivileged families.

Initiated in 2009, FPT is a voluntary organization which aims to

provide wholesome cooked meals to underprivileged families in
low-income areas of Karachi. The trust has a total of three
kitchens, which are all run by women from the local community
with the vegetables and other items for the kitchen sourced from
a leading superstore as well as local vendors, helping in providing
livelihood to these women and supporting the economy.

Tree Plantation Drives

Meezan Bank conducted tree plantation drives at Garrison
Public Library, Multan and at Molana Tariq Jamil
Foundation in Tulamba, Punjab. These efforts form part of
the Bank’s initiatives to restore landscapes and mitigate the
impacts of climate change in the country.

134 Meezan Bank Annual Report 2022

MODEL BRANCH INAUGURATION TO FACILITATE PERSONS WITH DISABILITIES (PWDs)

Mr. Riyadh S. A. A. Edrees - Chairman, Meezan Bank inaugurating the first PWD branch at Boat Basin in the presence of Mr. Irfan Siddiqui - Founding
President & CEO, Meezan Bank and other Senior Executives.

Meezan Bank inaugurated a model branch designed to facilitate Persons With Disabilities (PWDs) in order to make banking more
accessible and to tackle the barriers PWDs can face. Mr. Riyadh S. A. A. Edrees - Chairman, Meezan Bank inaugurated the branch at
Boat Basin, Karachi. The branch features special adjustments and includes:

■ Ramps and locker areas with wheelchair accessibility

■ Reduced height cash counter
■ Tactile floor for visually impaired
■ Support bars in washrooms
■ Dedicated parking space
■ Talking ATMs for easy usage by visually impaired

This model will be replicated in other branches, covering

all major cities/districts of Pakistan, making banking easier
and convenient for PWDs.

International Day of Disabled Persons

To further spread awareness on this important issue, the Bank also
observed International Day of Disabled Persons, encouraging a
more inclusive Islamic banking space for everyone.

Watch the video on our PWD friendly branch

Facilitating Persons with Disabilities (PWDs):

Numerous training Issuance of Account opening form, Virtual training of 75% of branches
sessions on ‘Gender priority token deposit slip, remittance 10,000 staff members equipped with
Sensitization and in multiple form along with Terms & on treatment of PWD wheelchair ramps for
Handling PWD branches Conditions converted to customers easier access to
Customers’ Braille script and available branches
in numerous branches

Meezan Bank Annual Report 2022 135

Blood Donation Drive
Meezan Bank held a Blood Donation Drive at its
Head office in collaboration with Indus Hospital &
Health Network, where the Bank’s employees
contributed wholeheartedly to this noble
cause. All blood donors were screened
for general health and blood group
type, reports of which were provided
by the hospital management.

Raising Awareness of Social Causes on Social Media

Meezan Bank has regularly been raising awareness about various social causes such as financial literacy, giving back to society,
inclusion of disabled persons, etc. on social media. The Bank released a detailed video on its PWD-friendly branches to encourage a
more inclusive Islamic banking system in Pakistan. In addition, the Bank created awareness about breast cancer and the ways to reduce
the risk of breast cancer and also about the different ways we can conserve energy in order to combat the energy crisis in our country.

Meezan Bank acknowledged by Shaukat Khanum

Meezan Bank was conferred with the Shaukat Khanum
Corporate Excellence Award at the Shaukat Khanum Social
Responsibility Awards 2021 held in Lahore.

Dr. Faisal Sultan - CEO, Shaukat Khanum Memorial Trust

presented the award to Mr. Anwar Ul Haq - General Manager
Lahore East Region, Meezan Bank, who received the award
on the Bank's behalf. This award is a testament to Meezan
Bank's commitment to giving back to the society and contrib-
uting to the welfare of the general public.

SUKUK
Since 2020 Pakistan has issued Sukuk,
worth more than PKR 2.6 trillion!
This collaborative effort of the Islamic banking industry in
Pakistan lead by the Ministry of Finance is reflective of the
volume and potential of Islamic Banking. Not only is this a
step away from Riba, closer to the constitution of Pakistan
and making Quaid-e-Azam’s dream a reality but has also
resulted in significant cost savings for the Government.

136 Meezan Bank Annual Report 2022

FLOODS 2022
RELIEF ACTIVITIES AND INITIATIVES
Pakistan is going through a difficult time as devastating floods have affected
the lives of millions of people across the country. Meezan Bank stands with
the flood-affected people during these trying times.
Areas Covered

Ration Distribution Drive in Flood-Affected Areas

As a part of its ongoing relief efforts, the Bank and its
Balochistan
Sibbi, Bagbana Khuzdar,
employees across Pakistan initiated a ration distribution drive Areas Covered Village Dosa & Mithri,
to help the flood-affectees.
Sindh Naseerabad division,
Tando Adam
Collaboration with Akhuwat Foundation Umer Kot, Badin,
Meezan Bank, besides providing donation for ration, also helped Nawabshah,
Akhuwat Foundation in its donations appeal through various mediums Hyderabad, Latifabad
including its social media pages and alternate distribution channels & Mirpurkhas
such as internet banking and Mobile App. The Bank’s staff members
accompanied the Akhuwat team during their donation drive in various
parts of the country.

Donations to Organizations
The Bank made donations from its charity fund
to organizations that are ceaselessly working to
help the flood-affected people; including Alamgir
Welfare Trust International, Baitussalam Welfare
Trust and Saylani Welfare International Trust.

Meezan Bank Annual Report 2022 137

SUSTAINABILITY REPORT
For twenty-five years, Meezan Bank has centered its
core business model on enabling access to Islamic

INDUSTRY
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are aligned with the Islamic principle of ‘Ihsan’. EQ GE S U

SU
9 10 ON OD
UA ND
7 8

D
LI ER 11 SP PR
TY 6 RE ND TIO
N
ED QUA A AC
As the country’s leading Islamic bank and one of the largest banks UC LIT TE

12
ATI Y IMA

5
ON C L

13 16
in the country, Meezan is contributing to the implementation of AND

2 4
ZERO H JUSTICE S
UNER PEACE,G INSTITUTION
United Nations Sustainable Development Goals (UN SDGs) by STRON
integrating ESG matters into its decision-making through multiple
business activities as well as stakeholder engagement:

Stakeholder Engagement
Meezan Bank's stakeholders are the people and organizations that affect or are affected by its operations. The Bank’s commitment to
its stakeholders is central to its sustainability strategy and reflects the values that allow it to create shared success with its clients,
communities and other stakeholders.

Meezan Bank’s personality embodies how all Meezan professionals think, operate and make decisions. These behaviours define how
the Bank does its business and interacts with its stakeholders.

Meezan Bank’s Personality

Sober & Truthful Committed to Empathetic Professional Extremely loyal Dependable friend Trustworthy Committed to
excellence business partner the cause of
Islamic banking

For further details on how we engage with our stakeholders, refer Section Stakeholders Relationship & Engagement.

Our Focus on Sustainable Finance

Climate Action
Amount disbursed in Solar Financing

Rs 1.68 billion
Meezan Bank is committed to driving growth for green banking
initiatives and is therefore continuously exploring opportunities
to support and finance environment friendly projects.
to SMEs
Amount disbursed in Green Financing Renewable Energy
43
Financing Projects
Rs 1.7 billion
to SMEs

Islamic Finance Facility for Renewable Energy (IFRE)

Meezan Bank is amongst the most active banks in supporting the State Bank of Pakistan’s Islamic Finance Facility for Renewable Energy
(IFRE) scheme.

■ The Bank has a comprehensive ‘Green Banking Policy’ in line with the guidelines of
the State Bank of Pakistan duly approved by the Bank’s Board of Directors. Meezan’s Commitment to Wind and
■ The Board of Directors has also implemented a policy framework that delineates Solar Power Projects Financing
broader guidelines to the Management for ensuring that adequate controls are
maintained and risk is managed within acceptable limits. Rs 15 billion
Meezan Bank secured and closed the maximum number of renewable energy
mandates amongst all local banks amounting to USD 272 million. These mandates
have reduced the financing cost of the projects and thus benefit the end consumer in
200+ MW
Combined Capacity
the form of reduced tariff.

138 Meezan Bank Annual Report 2022

Highlights of Wind and Solar Projects
Significance of Renewable
NASDA Green Energy Limited I Mandated Lead Advisor & Energy Projects
Arranger, Intercreditor Agent, Project Monitoring Bank, Shariah Rs 4,601 ■ The projects are a step towards
Structuring Bank, Onshore Trustee and Accounts Bank million
changing the energy mix of the
country which is currently tilted
Gul Ahmed Electric Limited I Mandated Lead Advisor &
Arranger, Musharakah Agent
Rs 4,500 significantly towards thermal sources
million of energy.
Din Energy Limited I Mandated Lead Advisor & Arranger,
Project Monitoring Bank, Musharakah Agent, Shariah Structuring Rs 2,250 ■ The projects will further contribute to
production of cleaner and cheaper
Advisor and Accounts Bank million
power resulting in reduction in
Artistic Wind Power Private Limited I Mandated Lead reliance on expensive imported fossil
Advisor & Arranger, Project Monitoring Bank, Musharakah Rs 2,250 fuels and emission reductions and at
Agent and Shariah Structuring Advisor million
the same time meet the country’s
increasing demand for electricity.
Cherat Cement Company Limited I Mandated Lead
Advisor & Arranger, Investment Agent
Rs 1,400
million ■ Power generated by these projects
are expected to be at the lowest cost
Burj Solar Energy Private Limited I Mandated Lead
Advisor & Arranger, Investment Agent
Rs 203 as compared to any other power
million project in the country to date.

Cherat Packaging I Mandated Lead Advisor &

Arranger, Investment Agent
Rs 120 Commissioned Projects
million It is pertinent to mention that the
perspective projects are now
Total Rs 15,324 commissioned and are expected to
million generate over 600 gigawatt hours of
electricity per annum.
Projects in Pipeline
Meezan Bank has also been mandated with additional deals pertaining to the utilisation of
SBP subsidised development schemes. These include:

M/s. Prism Energy (Pvt.) Ltd

M/s. Prism Energy (Pvt.) Ltd intends to develop, construct and operate multiple distributed solar (rooftop and ground-mounted)
sub-projects of different capacities on residential, commercial and industrial sites across Pakistan over the next 24 months under
Category III of IFRE scheme.

United States Agency for International Development (USAID) Development Credit Authority (DCA) Guarantee Program for
Clean Energy
Meezan Bank along with other players has partnered with The United States Agency for International Development (USAID)
Development Credit Authority (DCA) Guarantee Program for specific financing extended by these banks for clean energy value chain.
In Pakistan, the DCA program supports smaller scale clean energy projects and companies in the clean energy value chain. The DCA
Guarantee is for clean energy projects and therefore encourages environment friendly and sustainable green projects which will help
reduce the present energy shortfall in the country.

Meezan Bank’s guarantee limit under this program is USD 5,000,000 which may cover 25% to 50% of any clean energy financing
exposure under the DCA program.

Green Energy Initiatives

The Bank’s main energy sources include electricity, fuel and solar power. In an effort to reduce dependence on fuel-based energy
sources, the Bank is gradually shifting a portion of its branches to solar power. In line with SBP Green Banking Guidelines, the Bank has
designed a Green Sustainability Drive.

equivalent
with a to planting
74 Branches
cumulative 2,300
including 386 tons of
capacity of fully grown
Head office CO2 saved
1.3 MW annually trees
shifted to
Solar Energy

Meezan Bank Annual Report 2022 139

Donation of Solar Power Systems
40 KW Solar Power System Donated to Citizens-Police Liaison Committee (CPLC)

generating
approx.
40 KW 55,000 Kwh,
solar system, equivalent to
saving planting 65
11 tons of CO2 fully grown
annually trees

Mr. Irfan Siddiqui - President & CEO, Meezan Bank with Mr. M. Zubair Habib - Chief CPLC Sindh.

250 KW Solar System Donated to

Indus Hospital & Health Network (IHHN)

Rs 11 million
per annum
250 KW solar savings for
system, eliminating IHHN
approx.
75 tons of CO2
annually

Mr. Ariful Islam - Deputy CEO, Meezan Bank with Dr. Abdul Bari - Founder, IHHN

Our Focus on Responsible Development

Meezan Bank’s environmental commitment to build and operate sustainable properties also applies to its
development project. The Bank has therefore incorporated Green Building design at its new regional office
building being constructed in Islamabad and is getting LEEDS certifications (Gold category review submitted) for
it. An overview of the main initiatives is as follows:

■ Curtain wall glass is of 1.2 UV rating for better sunlight utilization and less energy losses (heat inflows/cooling
out flows), saving approx. 30% in HVAC power consumption
■ LEED compliant faucets and sanitary fixtures, in terms of water flow control/usage
■ Energy efficient lighting
■ Incorporation of energy recovery wheel
■ State-of-the-art energy efficient HVAC system & equipment
■ Noise pollution target level below 75 dB

Safe & Affordable Housing

Meezan Bank played an active role in the Government of Pakistan’s program for low-cost housing construction in
the country. The Scheme aimed to boost the construction sector by offering affordable housing for low-income
households.

The Bank has financed 1,393 housing units worth more than Rs 6.6 billion in Mera Pakistan Mera Ghar as of
Dec 31, 2022.

Facilitating Persons With Disabilities (PWDs)

To facilitate Persons With Disabilities (PWDs), Meezan Bank has introduced its first PWD model branch at Boat
Basin, Karachi. The Bank is also facilitating PWDs through the following:

■ Conversion of Account Opening Form, Deposit Slip, Remittance Form along with T&Cs to Braille script
■ Issuance of priority token at numerous branches
■ 75% of branches are equipped with wheelchair ramps, making it easier for PWDs to access branches
■ Conducted training sessions on ‘Gender Sensitization and Handling PWD customers’
■ Over 10,000 staff trained on this topic via the Bank’s Learning Management System

140 Meezan Bank Annual Report 2022

Employment of Special Persons

Meezan Bank provides merit-based opportunities to special persons who face challenges such as lack of speech, visual impairment,
inadequate or no hearing and physical deformity; providing them with livelihood and self-reliance opportunities.

Standardization of Office Space

As the Bank goes from strength to strength, it is making efforts to standardize the configuration and optimize the workplace across its
network. As an example of modified office space and to further help reduce the building’s Carbon footprint, workstations at the Head
Office have been standardized according to three variations. The Bank has also shifted from a triangular based set-up to a straight-line
design that has helped in the following:
■ Optimized space usage
■ Helped increase staff seating capacity by 30% - 40% within the same space
■ Reduced usage of valuable materials such as wood, electric wiring/copper in wires
■ Eliminated additional construction costs

As the Bank continues to implement better controls on paper usage, it is also reducing space wastage by enabling paperless
environment, thus no longer needing the extra storage for files and paper records.

Our Focus on Clean Water and Sanitation

Water Conservation at Head Office

Meezan Bank acknowledges the importance of water conservation and is taking steps to ensure sustainable
consumption and production patterns, to minimize its impact on the natural environment and resources.

■ Ablution water from the masjid is reused for watering plants

■ Water TDS monitoring & chlorination

Water Conservation at Meezan Tower

With the new Meezan Tower currently under construction in the country’s capital city, the Bank has made use of
harvesting tanks to augment the fresh water resources and to harvest rainwater.

■ 30,000 gallons specific tank for rain water harvesting

■ 45,000 gallons at UGWT and 15,000 gallons of water reserved at OHWT to meet water demand during fire
events
■ 85,000 gallons of water conserved
■ Addition of chlorine to purify water for usage as grey water

Water Infrastructure Projects

With respect to development of water and infrastructure projects, Meezan Bank has been playing a pivotal role in terms of financing of
these projects. In this regards, the Bank has been engaged with various water infrastructure developers in order to streamline the water
related issues currently being faced by the country.

E-waste Paper Recycling

The Bank is responsibly recycling/disposing and selling obsolete The Bank has in place a stringent paper recycling and discarding
IT equipment for reuse in an effort to reduce its environmental policy to ensure privacy and information security of its operations
impact. A major component of the Bank’s e-waste includes as well as customers information.
desktops, laptops and screens.
Paper Recycling & Disposal Mechanism
With the extended life plan, the Bank has introduced a buy-back
option for employees for further personal use of laptops. 05
Collection Transportation Shredding De-Inking Drying
and Sorting and Pulping

Approx. 38% PCs, laptops and screens are re-used 33,195 kgs paper recycled

Meezan Bank Annual Report 2022 141

The Bank is working to ensure proper implementation of Green Sustainability drive in every region of Its network, focusing on the
following areas:

Issuance of Energy Conservation Guidelines and targets Re-designed energy-saving branch signage

Guidelines to switch-off electricity in case of non-usage Maintaining a large plantation section at the Head Office that
utilizes recycled ablution water from the in-house mosque
Employee capacity-building workshops and trainings on
Occupational Health, Emergency Response, Employee Coaching Implementation of electronic process flows, eco-printing
& Environmental Compliance, Fire Drills and how to be a safety campaign, tracking system for photocopied documents and
warden e-statements

Installation of auto fire extinguishers Deployment of energy efficient ATMs

Energy efficient building designs for new buildings

Our Focus on Managing Customer Relations ■ Highest-Rated Mobile App on Google

Playstore & Apple App Store
■ Highest Debit Card Spend in the Industry
Digital Leadership ■ Largest E-commerce Share in the
Industry
Meezan Bank is leveraging the latest technologies to strategically expand its reach,
■ Highest No. of Transactions passing
bring in newer product innovations, digitize its customers journeys and offer newer and
through 1Link Grid in Industry
simpler payment solutions. Today, the Bank enjoys digital leadership in multiple areas.
■ Largest Processor of Bill Payments by
Value on 1Link
Launch of First-ever Digital Hajj Portal ■ Highest receivers of IBFT in Pakistan
■ Highest No. of Fintech Partnerships in
During 2022, the Bank launched the first-ever Hajj Portal that allowed digital collection
Pakistan
of Govt. Hajj applications and all types of payment integration (i.e. Internet Banking,
■ Fastest Geographic Penetration in
ATM, Mobile App, 1Link & branch counter).
Acquiring Business
■ Most Popular Choice of ATMs for other
banks’ cards

Our Focus on Financial Literacy & Islamic Banking Awareness

Islamic Banking Awareness

Seminars
The Bank continued its efforts towards conducting Islamic finance education
programmes through public events, webinars, social media as well as SMS campaigns.
The content of these campaigns is carefully designed by Islamic finance experts to help
160
individuals understand various concepts of Islamic finance and dispel misunderstandings No. of Participants
about this field.
10,000+
Publications by Employees
The Bank fosters a culture of
learning and continuous
development which is
evident from the various
papers and articles
published by its employees
some of which are
mentioned here. Over the
years, the Bank’s employees
have played a significant role
in developing the Islamic
finance industry.
(From L to R)
The rise of Sukuk Soodi Nizaam ka Khaatma
Ahmed Ali Siddiqui Muhammad Raza
Dawn, The Business and Dunya News, 2022
Finance Weekly 2022
sion:
al Inclu t
Financi not so distan The need for a Shariah-compliant counter at PSX
A dream an Faraz Ahmed Ali Siddiqui
d H as – 20 15 Dawn, The Business and
Sye
Review
Banking Economy, Welfare, and Reforms in Pakistan Finance Weekly 2022
Essays in Honour of Dr Ishrat Husain
Chapter 12 - Islamic Banking and Finance in Pakistan
Ahmed Ali siddiqui

142 Meezan Bank Annual Report 2022

Centers for Excellence in Islamic Finance
Through its strategic initiatives; Centers for Excellence in Islamic Finance at Lahore University of Management Sciences (LUMS), Institute
of Business Administration (IBA) and IM Sciences (Peshawar), the Bank is making a substantial contribution in increasing the relevant
skills for employment and entrepreneurship of youth in the country.

Young Islamic Banking Meezanship Program ACCA Trainee Program

Professionals (Y-IBP) Program
To address the shortage of qualified In 2022, the Bank initiated a structured Meezan Bank established ‘ACCA
Islamic finance professionals, the SBP internship program titled ‘Meezanship Trainee Program’ in 2006 to hire
Banking Services Corporation (BSC) Program’, which offers last semester ACCA trainees who wish to grow in
has launched ‘Young Islamic Banking students and recent graduates with an the field of Finance and Accounting.
Professionals (Y-IBP) Program’ under internship program of three to six This year, the Bank relaunched this
which students of different universities months, leading to performance-based program in view of market needs and
are provided with Islamic finance employment opportunity. inducted 49 trainees to develop a
education. As a first step, Meezan pipeline of potentially qualified ACCA
Bank and SBP visited Shaheed Zulfikar Meezanship Program is designed to individuals to be hired as regular
Ali Bhutto Institute of Science and allow qualified and motivated students employees of the Bank.
Technology (SZABIST) to offer them with diverse backgrounds exposure to
internship opportunities. the Bank’s projects and corporate
functions. The main goal is to allow
The Bank also arranged ‘One Day potential candidates to improve their
Branch Visits’ for the students and analytical and technical skills in a
faculty members to help them professional environment under the
understand the different operations of supervision of field experts.
Islamic banking.

Our Focus on Our Employees

Considered as Meezan Bank’s most valuable asset; the Bank provides its employees an inclusive environment that provides them
multiple growth opportunities, recognizes and rewards their performance and supports them in ensuring their financial, physical and
emotional wellness.

Staff Benefits
The Bank provides multiple benefits to its employees including medical assistance, hospitalization coverage, vehicle maintenance and
travel allowance, among others. The Bank has also instituted outpatient, hospitalization and maternity benefit plans (including pre and
post hospitalization expenses) for its employees by providing coverage for these eventualities.

2022 Human Capital Management Highlights:

Cafeteria at Free Daycare Facility State-of-the-art Gym Staff Relocation Allowance to

Subsidized Cost for Working Parents encourage deployment in rural
& unbanked areas

Ex-Gratia Inflationary Ex-Gratia 25-Year Additional Introduction

Bonus for approx. Anniversary Bonus Performance Bonus of Iddat Leaves with Pay
12,500 employees for eligible employees

Meezan Bank Annual Report 2022 143

Employee Share Option Scheme (ESOS)
To recognize the contribution of staff members towards the Bank’s success and to incentivize
Scheme duration
retention of talented team members, the Bank introduced Employee Share Option Scheme in
2021, pursuant to which employees meeting certain criteria are given the option of purchasing
shares of the Bank at a 30% discount to market price. This Scheme is designed to run for a 10 years
period of 10 years.

Approximately 7,500,000 shares were granted to staff during 2022 under this
scheme. 30%
discount on
7.5 Mn
Shares Granted

shares market
price

Helping in the moments that matter

Stepping up to provide help and support in times of need is the sign of a true friend. To help its employees cope with situations
where they need financial support, Meezan Bank had launched its Employee Benevolent Fund Trust (EBFT) program in November
2012. EBFT is a joint employee and company-funded program that allows employees to seek financial support for themselves
and for their families during difficult times.
Employee Benevolent Fund Trust
The Bank provides financial assistance to its employees and their families for medical, marriage and education related expenses
on need and merit basis;

Medical Exigencies:
■ 100% Grant given for hospitalization cases of staff Education:
(as well as immediate family) ■ 100% Qarz given for Self-education.
■ 90% Grant & 10% Qarz given for hospitalization cases ■ 100% Qarz given Children's Professional Education
for parents' medical cases
Marriage:
Financial Support to the Family of Deceased Staff: ■ Rs.300,000/- provided as 100% Qarz for self,
■ Rs.50,000/- for funeral of deceased staff daughter & sister marriage
■ Between Rs. 30,000 to Rs. 100,000 per month for five
years to support the family of deceased staff

Flood Relief via EBFT

This year many employees have endured impacts of the devastating flood that hit the country.
Meezan Bank took steps to ensure safety and provide financial support to those team
members who had been effected by the floods.

Employee Fitness
During 2022, the Bank launched a holistic incentive-based fitness drive that promoted employee well-being. The
program supported employees through general health and stress-management guidance to help them create and
achieve personalized goals. Incentives were built into the program to help them with weight management, while also
providing consistent coaching on health. Employees who chose to participate in the program were asked to complete
a health assessment to help them understand their current health and potential risks. With manageable goals,
employees then competed organization-wide in the program that also offered financial incentives.

2022 Meezan Fitness Drive Highlights:

650 kgs
lost overall by

Physical Exam Lifestyle Coaching Achieve Goals Receive Incentives

160
employees

144 Meezan Bank Annual Report 2022

Preparing a Workforce for the Future Complaint Management
Meezan Bank realizes that its success is dependent on its people. It is therefore investing in The Bank continues to strive towards
working with stakeholders not only to
its employees to help foster a culture of innovation and personal development. The Bank
expedite the resolution, but also to
offers an extensive range of training opportunities to employees for their professional identify and address underlying causes
development. because of which customer
dissatisfaction emanates.
In order to achieve these objectives,
1,334 training 1,384 training days & 34,440 staff trained dedicated units are in place to resolve
programs 37,537 learners days (12,377 unique staff)
customer complaints, disputes and
allegations of fraud. The Bank also has
Customer Grievance Handling Policy in
31 Sessions on banking and equality (awareness of gender sensitization and persons with place and is fully committed towards
disabilities). complying with regulations of the SBP
related to customer grievance handling.
Total Complaints Directly Received:
Training of Trainers Program
A Session by our 350,343
Shariah Board In-house Shariah trainers
Member, Average TAT: 7.8 days
Sheikh Esam
Mohamed Ishaq
Business Ethics & Anti-Corruption
Measures
3 Days Islamic Meezan Bank has a comprehensive
Banking Refresher
70% staff trained
Code of Conduct and Standard of
Ethics that form part of its Human
Resource Policy. The Code of Conduct
applies to all employees, from Senior
Management to front-line staff across
Executive Development all verticals of the Bank. In addition to
Program for Retail
Disciplinary Action Committee for
Banking Group
78 area managers trained branch banking and head office and
Disciplinary Action Review Committee,
the Bank has also established an
Anti-Harassment Committee that deals
with instances of sexual harassment
reported either verbally or in writing.

Our Focus on Compliance & Fair Banking

Shariah Audit & Compliance Check

As the country’s leading Islamic bank, Meezan takes pride
in adopting ethical screening and assessment in its
523
Regulatory & Compliance
operations. A stringent Shariah-compliance check and Training Sessions
Audit ensures that the Bank’s activities are as per Islamic
principles. Meezan Bank is also playing its part in helping
its employees understand the growing scope of regulatory
9,720
compliance and maintaining robust and sustainable
Employees trained
operations.

Our Focus on Supporting Our Communities

Financial Inclusion through Farmers Literacy Program - Kissan Baithak

Kissan Baithak aims to develop collaboration between farmers and Meezan Bank. Through
Kissan Baithak, the Bank is enhancing its outreach and building capacity of rural households
in non-financial areas by sharing information from qualified agriculture graduates serving as
Agriculture Finance Officers (AFOs). Numerous sessions of Farmer’s Literacy Program for No. of farmers
Islamic financial solutions were organised in the rural villages of Bahawalpur, Naseerabad,
Badin, Hyderabad, Sahiwal, Sadiqabad, Depalpur, Okara, Yazman, Shorkot, Kunri, Layyah,
Kasur, Chistiyan, Multan, Rahimyar Khan and D.I. Khan that aimed to:
2,418
■ Provide advisory services on better agriculture farm management both in crop & non-crop
sectors 31
■ Share information on innovation in agriculture Sessions
■ Resolve farmers’ queries about Islamic banking

Meezan Bank Annual Report 2022 145

Our Focus on Diversity & Inclusion

Board’s Policy on Diversity

As an equal opportunity employer, Meezan Bank understands the importance of diversity at
work place. With diversity high on its agenda, there has been an increase of 27% in female Female Employees
approx.
population compared to last year. The Board Human Resources, Remuneration and
Compensation Committee (BHRR&CC) and Board of Directors have also approved a policy
named Banking on Equality, which caters financial inclusion with respect to female customers
27%
and gender diversity at workplace.

Employees’ Average Years of Services Ratio of Annual Paid Leave Taken Human Capital

*Graduate Workforce

4.66 4.76 97.6%

5
4.58
4
4.13 4.15 2022 80.1% Workforce below age of 33
3
53.8%
2

Return to work after Maternity Leaves

1 Ratio of Annual Paid Leaves Taken = (Total staff who
have availed the Leaves / Total staff who are eligible for
annual leave as of the year)
96.8%
0
2018 2019 2020 2021 2022 *Certifications Excluded

Asian Development Bank (ADB) Women’s Finance Exchange (WFX) Program

The Women’s Finance Exchange (WFX) is a new ADB initiative to support financial institutions and their women borrowers through
innovative tech-enabled solutions, digital support and capacity building. During 2022, the Bank remained involved in ADB WFX in an
effort to increase access to finance for women entrepreneurs including digitalization and green finance goals.

Our Focus on Employee & Customer Safety

Data Protection and Cyber Security

The Bank remains committed to the safety of its customers, employees and other stakeholders.
Some of our practices in this respect include:

A Robust Information Security Policy

24.7 million
Regular Awareness Campaigns for Customer Awareness SMS sent
Employees & Customers through
Regular Testing & Assessments to
Identify System Vulnerabilities
14 Campaigns
The Bank has invested in protecting its employees and customers through the following means

Employees Customers
■ Medical and Life Takaful coverage The Bank has invested in protecting its customers through the
■ Shuttle transportation with security at subsidized cost following means:
for travelling to and from Meezan House (Head Office) ■ Strong compliance of regulations for the security of Internet

■ High-tech security systems and security guards are Banking.

deployed at the Bank's premises ■ First bank to introduce EMV CHIP and PIN security on its debit

■ Well-designed fire-fighting system, with availability of cards which is complemented with no-fallback mechanism.
trained fire fighters at the location ■ Implementation of various checks to detect frauds against

■ Regular fire training and evacuation drills to help Internet Banking and Mobile App.
employees become aware of the safety steps in case ■ Blocking and unblocking of debit cards

of an emergency via Mobile App and Internet Banking.

■ Provision of a trained and assigned team to provide ■ Setup of 24/7 monitoring team to detect

assistance to staff in the case of a fire or natural and respond to any fraud attempts
calamity through Meezan Bank’s digital banking
channels.

146 Meezan Bank Annual Report 2022

Unconsolidated
Financial Statements
UNCONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at December 31, 2022

Note 2022 2021

ASSETS Rupees in ‘000

Cash and balances with treasury banks 7 117,743,106 170,500,698

Balances with other banks 8 13,676,159 16,420,036
Due from financial institutions 9 34,964,299 238,401,637
Investments 10 1,283,210,287 620,132,043
Islamic financing and related assets 11 995,508,354 758,086,120
Fixed assets 12 40,426,520 33,957,947
Intangible assets 13 1,843,984 1,495,810
Deferred tax asset 14 4,646,002 175,555
Other assets 15 85,378,800 63,801,554
2,577,397,511 1,902,971,400
LIABILITIES

Bills payable 16 40,175,122 36,141,378

Due to financial institutions 17 573,326,439 220,414,234
Deposits and other accounts 18 1,658,490,118 1,455,886,468
Sub-ordinated sukuk 19 20,990,000 20,990,000
Deferred tax liabilities - -
Other liabilities 20 169,095,139 82,981,545
2,462,076,818 1,816,413,625
NET ASSETS 115,320,693 86,557,775

REPRESENTED BY

Share capital 21 17,896,243 16,269,312

Reserves 22 28,187,821 23,393,198
(Deficit) / surplus on revaluation of assets - net of tax 23 (663,671) 4,063,610
Unappropriated profit 69,900,300 42,831,655
115,320,693 86,557,775

CONTINGENCIES AND COMMITMENTS 24

The annexed notes 1 to 51 and Annexure I form an integral part of these unconsolidated financial statements.

Riyadh S. A. A. Irfan Siddiqui Faisal A. A. A. Mohammad Abdul Aleem Syed Imran Ali Shah
Edrees President & Al-Nassar
Chairman CEO Director Director Chief Financial Officer

152 Meezan Bank Annual Report 2022

UNCONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000
Profit / return earned on Islamic financing and related assets,
investments and placements 25 232,121,232 110,072,547
Profit / return on deposits and other dues expensed 26 110,417,606 41,151,438
Net profit / return 121,703,626 68,921,109

OTHER INCOME

Fee and Commission Income 27 13,316,054 9,352,808

Dividend income 987,533 1,192,467
Foreign Exchange Income 3,617,274 3,158,131
(Loss) / gain on securities 28 (55,075) 348,884
Other income 29 1,237,402 839,510
Total other income 19,103,188 14,891,800

Total income 140,806,814 83,812,909

OTHER EXPENSES

Operating expenses 30 46,239,831 34,356,293

Workers Welfare Fund 20.9 1,910,344 939,869
Other charges 31 95,150 28,172
Total other expenses 48,245,325 35,324,334

Profit before provisions 92,561,489 48,488,575

Provisions and write offs - net 32 4,176,661 992,830
Extra ordinary / unusual items - -

PROFIT BEFORE TAXATION 88,384,828 47,495,745

Taxation 33 43,378,218 19,140,588

PROFIT AFTER TAXATION 45,006,610 28,355,157

Rupees
Restated
Basic earnings per share 34 25.15 15.84

Diluted earnings per share 34 25.14 15.84

The annexed notes 1 to 51 and Annexure I form an integral part of these unconsolidated financial statements.

Riyadh S. A. A. Irfan Siddiqui Faisal A. A. A. Mohammad Abdul Aleem Syed Imran Ali Shah
Edrees President & Al-Nassar
Chairman CEO Director Director Chief Financial Officer

Meezan Bank Annual Report 2022 153

UNCONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000

Profit after taxation for the year 45,006,610 28,355,157

Other comprehensive income

Items that may be reclassified to profit and loss account in

subsequent periods:

Movement in deficit on revaluation of investments - net of tax 23 (4,706,426) (1,502,274)

Items that will not be reclassified to profit and loss account in

subsequent periods:

Remeasurement loss on defined benefit obligations - net of tax 37.6.2 (96,555) (73,503)

Movement in (deficit) / surplus on revaluation of non - banking assets - net of tax 23 (20,768) 3,685

Total comprehensive income for the year 40,182,861 26,783,065

The annexed notes 1 to 51 and Annexure I form an integral part of these unconsolidated financial statements.

Riyadh S. A. A. Irfan Siddiqui Faisal A. A. A. Mohammad Abdul Aleem Syed Imran Ali Shah
Edrees President & Al-Nassar
Chairman CEO Director Director Chief Financial Officer

154 Meezan Bank Annual Report 2022

UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended December 31, 2022

Capital Revenue reserves (Deficit) / surplus on

reserves revaluation of
Share Share Statutory Non - Employee General Investments Non-banking Unappropriated Total
capital premium reserve* Distributable share option reserve Assets profit
Capital Reserve - compensation
Gain on Bargain reserve
Purchase

Rupees in ‘000
Balance as at January 01, 2021 14,147,228 2,406,571 14,833,341 3,117,547 - 66,766 5,542,351 19,941 29,021,521 69,155,266
Profit after taxation for the year - - - - - - - - 28,355,157 28,355,157
Other Comprehensive (loss) / income for the year -
net of tax - - - - - - (1,502,274) 3,685 (73,503) (1,572,092)
- - - - - - (1,502,274) 3,685 28,281,654 26,783,065
Transfer from surplus in respect of incremental depreciation
of Non-banking assets to unappropriated profit - net of tax - - - - - - - (93) 93 -
Recognition of share based compensation (Note 39) - - - - 133,457 - - - - 133,457
Other appropriations
Transfer to statutory reserve* - - 2,835,516 - - - - - (2,835,516) -
Transactions with owners recognised directly in equity
Issue of bonus shares @ 15% 2,122,084 - - - - - - - (2,122,084) -
Final cash dividend for the year 2020 @ Rs 2 per share - - - - - - - - (2,829,446) (2,829,446)
First interim cash dividend for the year 2021
@ Rs 1.5 per share - - - - - - - - (2,122,085) (2,122,085)
Second interim cash dividend for the year 2021
@ Rs 1.5 per share - - - - - - - - (2,122,085) (2,122,085)
Third interim cash dividend for the year 2021
@ Rs 1.5 per share - - - - - - - - (2,440,397) (2,440,397)
- - - - - - - - (9,514,013) (9,514,013)
Balance as at December 31, 2021 16,269,312 2,406,571 17,668,857 3,117,547 133,457 66,766 4,040,077 23,533 42,831,655 86,557,775
Profit after taxation for the year - - - - - - - - 45,006,610 45,006,610
Other Comprehensive loss for the year - net of tax - - - - - - (4,706,426) (20,768) (96,555) (4,823,749)
- - - - - - (4,706,426) (20,768) 44,910,055 40,182,861
Transfer from surplus in respect of incremental depreciation of
Non-banking assets to unappropriated profit - net of tax - - - - - - - (87) 87 -
Recognition of share based compensation (Note 39) - - - - 293,962 - - - - 293,962
Other appropriations
Transfer to statutory reserve* - - 4,500,661 - - - - - (4,500,661) -

Transactions with owners recognised directly in equity

Issue of bonus shares @ 10% 1,626,931 - - - - - - - (1,626,931) -

Final cash dividend for the year 2021 @ Rs 1.5 per share - - - - - - - - (2,440,397) (2,440,397)
First interim cash dividend for the year 2022
@ Rs 1.75 per share - - - - - - - - (2,847,130) (2,847,130)
Second interim cash dividend for the year 2022
@ Rs 1.75 per share - - - - - - - - (2,847,130) (2,847,130)
Third interim cash dividend for the year 2022
@ Rs 2 per share - - - - - - - - (3,579,248) (3,579,248)
- - - - - - - - (11,713,905) (11,713,905)
Balance as at December 31, 2022 17,896,243 2,406,571 22,169,518 3,117,547 427,419 66,766 (666,349) 2,678 69,900,300 115,320,693

*This represents reserve created under section 21(i)(b) of the Banking Companies Ordinance ,1962.
The annexed notes 1 to 51 and Annexure I form an integral part of these unconsolidated financial statements.

Riyadh S. A. A. Irfan Siddiqui Faisal A. A. A. Mohammad Abdul Aleem Syed Imran Ali Shah
Edrees President & Al-Nassar
Chairman CEO Director Director Chief Financial Officer

Meezan Bank Annual Report 2022 155

UNCONSOLIDATED CASH FLOW STATEMENT
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000
CASH FLOW FROM OPERATING ACTIVITIES
Profit before taxation 88,384,828 47,495,745
Less: Dividend income (987,533) (1,192,467)
87,397,295 46,303,278
Adjustments:
Depreciation 30 3,122,609 2,416,407
Amortisation 30 458,584 357,045
Non cash items related to right-of-use assets 26 & 30 4,577,794 3,163,032
Provisions and write offs - net 32 4,176,661 992,830
Charge for defined benefit plan 30 605,247 462,114
Share based compensation expense 39 293,962 133,457
Unrealised gain - held for trading 28 (18) -
Gain on sale of operating fixed assets 29 (214,797) (145,657)
13,020,042 7,379,228
100,417,337 53,682,506
(Increase) / decrease in operating assets
Due from financial institutions 203,437,338 103,667,162
Islamic financings and related assets (240,666,103) (246,289,233)
Other assets (21,805,041) (11,798,016)
(59,033,806) (154,420,087)
Increase / (decrease) in operating liabilities
Bills payable 4,033,744 9,647,372
Due to financial institutions 352,912,205 125,913,594
Deposits and other accounts 202,603,650 201,455,934
Other liabilities 75,759,222 13,250,521
635,308,821 350,267,421
676,692,352 249,529,840
Contribution to defined benefit plan 37.5 (537,715) (304,163)
Income tax paid (38,071,645) (14,658,852)
Net cash generated from operating activities 638,082,992 234,566,825

CASH FLOW FROM INVESTING ACTIVITIES

Net investments in available for sale securities (531,153,574) (121,925,177)
Net investments in held to maturity securities (140,520,461) (66,116,795)
Net investments in held for trading securities (2,470) -
Net (investments) / redemption in associates (514) 28
Dividends received 990,676 1,196,551
Investments in operating fixed assets (10,872,466) (6,180,303)
Investments in intangible assets (806,758) (772,894)
Proceeds from sale of fixed assets 372,429 248,168
Net cash used in investing activities (681,993,138) (193,550,422)

CASH FLOW FROM FINANCING ACTIVITIES

Payment of lease liability against right-of-use assets (3,683,278) (3,258,301)
Issuance of sub-ordinated Sukuk - Tier II - 9,990,000
Redemption of sub-ordinated Sukuk - Tier II - (7,000,000)
Dividend paid (7,908,045) (9,515,742)
Net cash used in financing activities (11,591,323) (9,784,043)

(Decrease) / increase in cash and cash equivalents (55,501,469) 31,232,360

Cash and cash equivalents at the beginning of the year 35 186,920,734 155,688,374
Cash and cash equivalents at the end of the year 35 131,419,265 186,920,734

The annexed notes 1 to 51 and Annexure I form an integral part of these unconsolidated financial statements.

Riyadh S. A. A. Irfan Siddiqui Faisal A. A. A. Mohammad Abdul Aleem Syed Imran Ali Shah
Edrees President & Al-Nassar
Chairman CEO Director Director Chief Financial Officer

156 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

1 LEGAL STATUS AND NATURE OF BUSINESS

1.1 Meezan Bank Limited (the Bank) was incorporated in Pakistan on January 27, 1997, as a public limited company under
the Companies Act, 2017 (previously Companies Ordinance, 1984), and its shares are quoted on the Pakistan Stock
Exchange Limited. The Bank was registered as an ‘Investment Finance Company’ on August 8, 1997, and carried on the
business of investment banking as permitted under SRO 585(I)/87 dated July 13, 1987, in accordance and in conformity
with the principles of Islamic Shariah. A ‘Certificate of Commencement of Business' was issued to the Bank on September
29, 1997.

1.2 The Bank was granted a ‘Scheduled Islamic Commercial Bank’ license on January 31, 2002 and formally commenced
operations as a Scheduled Islamic Commercial Bank with effect from March 20, 2002, on receiving notification in this
regard from the State Bank of Pakistan (the SBP) under section 37 of the State Bank of Pakistan Act, 1956. Currently,
the Bank is engaged in corporate, commercial, consumer, investment and retail banking activities.

1.3 The Bank was operating through nine hundred and sixty two branches as at December 31, 2022 (2021: nine hundred
and two branches). Its registered office is at Meezan House, C-25, Estate Avenue, SITE, Karachi, Pakistan.

1.4 Based on the unconsolidated financial statements of the Bank for the year ended December 31, 2021, the VIS Credit
Rating Company Limited has reaffirmed the Bank's medium to long-term rating as 'AAA' and the short-term rating as
'A1+'.

2 BASIS OF PRESENTATION

The Bank provides Islamic financing and related assets mainly through Murabaha, Istisna, Tijarah, Ijarah, Diminishing Musharakah,
Running Musharakah, Bai Muajjal, Musawammah, Service Ijarah, Wakalah, Wakalah Tul Istithmar including under Islamic Export
Refinance Scheme and various long term islamic refinancing facilities of the State Bank of Pakistan respectively as briefly explained
in note 6.3.

The purchases and sales arising under these arrangements are not reflected in these unconsolidated financial statements as
such but are restricted to the amount of facility actually utilised and the appropriate portion of profit thereon. The income on such
financing is recognised in accordance with the principles of Islamic Shariah. However, income, if any, received which does not
comply with the principles of Islamic Shariah is recognised as charity payable if so directed by the Resident Shariah Board
Member (RSBM) of the Bank.

The Bank believes that there is no significant doubt on the Bank’s ability to continue as a going concern, Insha'Allah. Therefore,
the unconsolidated financial statements continue to be prepared on the going concern basis.

3 STATEMENT OF COMPLIANCE

3.1 These unconsolidated financial statements (here-in-after referred to as "financial statements") have been prepared in
accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting
standards comprise of:

- International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board
(IASB) as are notified under the Companies Act, 2017;

- Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as
are notified under the Companies Act, 2017;

- Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act,
2017; and

- Directives issued by the State Bank of Pakistan (SBP) and the Securities Exchange Commission of Pakistan
(SECP).

Whenever the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 or the directives
issued by the SBP and the SECP differ with the requirements of IFRS or IFAS, the requirements of the Banking
Companies Ordinance, 1962, the Companies Act, 2017 and the said directives, shall prevail.

3.2 The SBP vide its BPRD Circular No. 04 dated February 25, 2015 has clarified that the reporting requirements of IFAS-3,
'Profit and loss sharing on deposits' for Institutions offering Islamic Financial Services (IIFS) relating to annual, half yearly
and quarterly financial statements would be notified by the SBP through issuance of specific instructions and uniform
disclosure formats in consultation with IIFS. These reporting requirements have not been notified to date. Accordingly,
the disclosure requirements under IFAS 3 have not been considered in these unconsolidated financial statements.

3.3 The SBP has deferred the applicability of International Accounting Standard (IAS) 40, 'Investment property' for Banking
Companies through BSD Circular Letter No. 10 dated August 26, 2002 till further instructions. Further, the SECP has also
deferred the applicability of International Financial Reporting Standard (IFRS) 7, 'Financial instruments: disclosures'
through its S.R.O. 633(I)/2014 dated July 10, 2014. Accordingly, the requirements of these standards have not been
considered in the preparation of these unconsolidated financial statements.

3.4 The SECP through S.R.O. 56(1)/2016 dated January 28, 2016, has directed that the requirements of IFRS 10,

Meezan Bank Annual Report 2022 157

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

'Consolidated financial statements' are not applicable in case of investments by companies in mutual funds established
under Trust Deed structure. Accordingly, implications of IFRS 10 in respect of investment in mutual funds are not
considered in these unconsolidated financial statements.

3.5 Standards, interpretations of and amendments to the published accounting and reporting standards that are effective in
the current year:

3.5.1 There are certain new and amended standards, interpretations and amendments that are mandatory for the
Bank's accounting periods beginning on January 1, 2022 but are considered not to be relevant or do not have
any significant effect on the Bank's operations and are therefore not detailed in these unconsolidated financial
statements.

3.6 Standards, interpretations of and amendments to the published accounting and reporting standards that are not yet
effective:

3.6.1 The following revised standards, amendments and interpretations with respect to the accounting and reporting
standards would be effective from the dates mentioned below against the respective standards, amendments or
interpretations:
Effective date (accounting
Standard and Amendments periods beginning on or after)

- IFRS 9 - 'Financial instruments' January 1, 2023

- IAS 1 - 'Accounting policy disclosures' (amendments) January 1, 2023
- IAS 1 - Non current liabilities with covenants (amendments) January 1, 2024
- IFRS 16 - Sale and leaseback (amendments) January 1, 2024
- IAS 8 - 'Accounting policies, changes in accounting estimates
and errors' (amendments) January 1, 2023
- IAS 12 - 'Income taxes' (amendments) January 1, 2023

The management is in the process of assessing the impact of these standards and amendments on the
unconsolidated financial statements of the Bank except IFRS 9 (Financial Instruments), the impact of which is as
follows:

IFRS 9 - 'Financial Instruments'

As directed by the SBP via BPRD Circular no 3 of 2022, (IFRS) 9, 'Financial Instruments' is effective for periods
beginning on or after January 1, 2023 for banks having asset base of more than Rs. 500 billion as at December
31, 2021. SBP via the same circular has finalized the instructions on (IFRS) 9 (Application Instructions) for ensuring
smooth and consistent implementation of the standard in the banks.

During 2022, the management of the Bank has performed an impact assessment of (IFRS) 9 taking into account
the SBP’s (IFRS) 9 application instructions. The assessment is based on available information and may be subject
to changes arising from further reasonable and supportable information being made available to the Bank at the
time of finalizing the impact for initial application of (IFRS) 9. In addition, the Bank will implement changes in
classification of certain financial instruments.

An overview of the (IFRS) 9 requirements that are expected to have significant impact are discussed below along
with the additional requirements introduced by the SBP:

Classification and measurement

The classification and measurement of financial assets will base on the business model within which they are
held and their contractual cash flow characteristics. Financial assets that do not meet the solely payments of
principal and profit (SPPI) criteria are measured at FVTPL regardless of the business model in which they are
held. The Bank’s business model in which financial assets are held will determine whether the financial assets
are measured at amortised cost, fair value through other comprehensive income (‘FVOCI’) or fair value through
profit or loss (‘FVTPL’).

The business model reflects how groups of financial assets are managed to achieve a particular business objective.
Financial assets can only be held at amortised cost if the instruments are held in order to collect the contractual
cash flows (‘hold to collect’), and where those contractual cash flows are solely payments of principal and profit
(SPPI).

Debt instruments where the business model objectives are achieved by collecting the contractual cash flows and
by selling the assets (‘hold to collect and sell’) and that have SPPI cash flows are held at FVOCI, with unrealised
gains or losses deferred in reserves until the asset is derecognised.

The classification of equity instruments is generally measured at FVTPL unless the Bank, at initial recognition,
irrevocably designates as FVOCI but both unrealized and realized gains or losses are recognized in reserves and
no amounts other than dividends received are recognized in the income statement.

158 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

All other financial assets will mandatorily be held at FVTPL. Financial assets may be designated at FVTPL only if
doing so eliminates or reduces an accounting mismatch.

Impairment

The impairment requirements apply to financial assets measured at amortised cost and FVOCI (other than equity
instruments), lease receivables, and certain loan commitments and financial guarantee contracts. At initial
recognition, an impairment allowance (or provision in the case of commitments and guarantees) is required for
expected credit losses (‘ECL’) resulting from default events that are possible within the next 12 months (’12-month
ECL’). In the event of a significant increase in credit risk, an allowance (or provision) is required for ECL resulting
from all possible default events over the expected life of the financial instrument (‘lifetime ECL’). Financial assets
where 12-month ECL is recognised are in ‘stage 1’; financial assets that are considered to have experienced a
significant increase in credit risk are in ‘stage 2’; and financial assets for which there is objective evidence of
impairment, so are considered to be in default or otherwise credit impaired, are in ‘stage 3’.

The assessment of credit risk and the estimation of ECL are required to be unbiased and probability-weighted
and should incorporate all available information which is relevant to the assessment including information about
past events, current conditions and reasonable and supportable forecasts of economic conditions at the reporting
date. In addition, the estimation of ECL should take into account the time value of money.

Based on the requirement of (IFRS) 9 and SBP’s (IFRS) 9 application instructions, the Bank has performed an
ECL assessment taking into account the key elements such as assessment of SCIR, Probability of Default, Loss
Given Default and Exposure at Default.

Under the SBP’s instructions, credit exposure (in local currency) guaranteed by the Government and Government
securities are exempted from the application of ECL Framework. Moreover, until implementation of IFRS 9 has
stabilised, stage 1 and stage 2 provisions would be made as per IFRS 9 ECL and stage 3 provision would be
made considering higher of (IFRS) 9 ECL or provision computed under existing PRs’ requirements.

Presentation and disclosure

(IFRS) 9 also introduces expanded disclosure requirements and changes in presentation. These are expected to
change the nature and extent of Bank’s disclosure about its financial instruments particularly in the year of adoption
of the (IFRS) 9.

Impact of adoption of IFRS 9

The Bank will adopt IFRS 9 in its entirety effective January 01, 2023 with modified retrospective approach for
restatement. The cumulative impact of initial application will be recorded as an adjustment to equity at the
beginning of the accounting period. The actual impact of adopting IFRS 9 on the Bank’s financial statements in
the year 2023 will be dependent on the financial instruments that the Bank would hold during next year and
economic conditions at that time as well as accounting elections and judgements that it will make in future.

Nevertheless, the Bank has performed a preliminary assessment of the potential impact of adoption of IFRS 9
and based on this assessment, the Bank does not expect any material effect on the Bank’s Capital Adequacy
Ratio (CAR) and equity as of December 31, 2022.

3.6.2 The SBP vide its BPRD Circular No. 02 of 2023 dated February 9, 2023 has specified the new reporting format
for financial statements of Banking Companies. The new format has revised the disclosure requirements and will
become applicable for the financial statements of the Bank for the quarter ending March 31, 2023.

4 BASIS OF MEASUREMENT

These unconsolidated financial statements have been prepared under the historical cost convention except that certain available
for sale investments, foreign currency balances, non-banking assets acquired in satisfaction of claims and certain foreign exchange
commitments have been marked to market and carried at fair value in accordance with the requirements of the SBP.

4.1 Critical accounting estimates and judgments

The preparation of the financial statements in conformity with the accounting and reporting standards requires management
to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and income
and expenses. It also requires management to exercise judgments in application of its accounting policies. The estimates
and associated assumptions are based on historical experience and various other factors that are believed to be reasonable
under the circumstances. These estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimates are revised if the revision affects only that period, or in the
period of revision and future periods if the revision affects both current and future periods.

Significant accounting estimates and areas where judgments were made by the management in the application of the
accounting policies are as follows:

Meezan Bank Annual Report 2022 159

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

i) classification and valuation of investments (notes 6.4.1, 6.4.4 and 10);

ii) provision against non-performing advances (notes 6.3.2 and 11.12);
iii) income taxes (notes 6.6 and 33);
iv) defined benefit plans (notes 6.11 and 37);
v) valuation and depreciation of fixed assets (notes 6.5.1, 6.5.5 and 12.2);
vi) valuation and amortisation of intangible assets (note 6.5.3, 6.5.5 and 13.1);
vii) valuation of right-of-use assets and their related lease liability (notes 6.5.2, 12.3 and 20.8);
viii) impairment (note 6.4.5);
ix) valuation of non-banking assets acquired in satisfaction of claims (note 6.7 and 23.1); and
x) assumptions and estimates used in valuation of options under share-based payments (note 39).

5 FUNCTIONAL AND PRESENTATION CURRENCY

5.1 Items included in these unconsolidated financial statements are measured using the currency of the primary economic
environment in which the Bank operates. These unconsolidated financial statements are presented in Pakistani Rupees,
which is the Bank's functional and presentation currency.

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

6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in the preparation of these unconsolidated financial statements are set out below.
These policies have been consistently applied to all the years presented.

6.1 Cash and cash equivalents

Cash and cash equivalents comprise of cash and non-restricted balances with treasury banks and balances with other
banks in current and deposit accounts.

6.2 Due to / from financial institutions

Bai Muajjal

In Bai Muajjal, the Bank sells sukuk on credit to other financial institutions. The credit price is agreed at the time of sale
and such proceeds are received at the end of the credit period. Bai Muajjal with the Federal Government is classified as
investment.

Musharaka / Mudaraba

In Musharaka / Mudaraba, the Bank (or the counterparty financial institutions / the SBP) invests in the shariah compliant
business pools of the counterparty financial institutions / the SBP (or the Bank) at the agreed profit and loss sharing ratio.

Musharaka from the SBP under IERS

Under IERS, the Bank accepts funds from the SBP under Shirkat-ul-aqd to constitute a pool for investment in export
refinance portfolio of the Bank under the guidelines issued by the SBP. The profit of the pool is shared as per the agreed
weightages between the partners.

Mudaraba investment from the SBP under various long term Islamic refinance schemes

Under various long term Islamic refinance schemes of the SBP, the Bank accepts funds from the SBP which are received
on Mudaraba basis for investment in general pool of the Bank. The profit of the pool is shared as per the announced
profit sharing ratio of the pool and the weightages assigned to these investments.

6.2.1 These are initially recognised at amount of funds disbursed / accepted (in case of Bai Muajjal, at sale price of the
Sukuk net of deferred profit) and subsequently measured at amount receivable / payable under the contractual
terms of the underlying agreement (in case of Bai Muajjal, at sale price of the Sukuk net of remaining deferred
profit at reporting date, if any).

6.3 Islamic financing and related assets

Murabaha

In Murabaha transactions, the Bank purchases the goods and after taking the possession, sells them to the customer
on cost plus disclosed profit basis either in a spot or credit transaction.

Ijarah

Ijarah assets are stated at cost less depreciation and are disclosed as part of 'Islamic financing and related assets'. The
rental received / receivable on Ijarah under Islamic Financial Accounting Standard - 2 ‘Ijarah’ (IFAS 2) are recorded as
income / revenue. The Bank charges depreciation from the date of recognition of Ijarah of respective assets to mustajir.
Ijarah assets are depreciated over the period of Ijarah using the straight line method. Ijarah rentals outstanding are

160 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

disclosed in 'other assets' on the Statement of Financial Position at amortised cost. Impairment of Ijarah assets is
determined in accordance with the Prudential Regulations issued by the SBP. The provision for impairment of Ijarah assets
is shown as part of 'Islamic financing and related assets'.

Istisna

In Istisna financing, the Bank places an order to purchase some specific goods / commodities from its customers to be
delivered to the Bank within an agreed time. The goods are then sold by the customer on behalf of the Bank and the
amount hence financed along with profit realised net of agency fee and incentives is paid to the Bank.

Tijarah

In Tijarah financing, the Bank purchases specific goods / commodities on cash basis from its customers which is then
onward sold by the customer on behalf of the Bank and on subsequent sale, the financed amount along with profit realised
net of agency fee and incentives is paid by the customer to the Bank.

Diminishing Musharakah

In Diminishing Musharakah financing, the Bank enters into Musharakah based on Shirkat-ul-milk for purchasing an agreed
share of fixed asset (e.g. house, land, plant or machinery) with its customers. The customers pay periodic profit as per
the agreement for the utilisation of the Bank's Musharakah share and also periodically purchase the Bank's share over
the tenure of the transaction.

Running Musharakah

In Running Musharakah financing, the Bank enters into financing with the customer based on Shirkatul Aqd or business
partnership in the customer's operating business. Under this mechanism the customer can withdraw and return funds
to the Bank subject to his Running Musharakah Financing limit during the Musharakah period. At the end of each quarter
/ half year the customer pays the provisional profit as per the desired profit rate which is subject to final settlement based
on the relevant quarterly / half yearly / annual accounts of the customer.

Bai Muajjal

In Bai Muajjal financing, the Bank sells Shariah compliant sukuk on credit to customers. The credit price is agreed at the
time of sale and such proceeds are received at the end of the credit period.

Service Ijarah

In Service Ijarah financing, the Bank provides financing by acquiring certain agreed services from the customer. After the
purchase of services, the Bank appoints the customer to sell these services in the market over a period and provide a
sale confirmation of such sale. The profit is only accrued from the date of receipt of such confirmation.

Wakalah

Wakalah is an agency or a delegated authority where the Muwakkil (principal) appoints the Wakil (agent) to carry out a
specific job on behalf of the Muwakkil. Funds disbursed are initially recorded as ‘Advance against Wakalah'. On culmination,
the same are recorded as financings.

Wakalah tul Istithmar

In Wakalah tul Istithmar financing, the Bank enters into investment agency transaction with customer acting as an agent
of the Bank. Under this mechanism, the funds disbursed are invested by the customer on behalf of the Bank and are
recorded as financing upon their investment in the business. At the end of each quarter / half year / other defined period,
the customer pays the provisional profit which is subject to adjustment upon actual declaration of wakala business
performance by the agent.

Musawammah

In Musawammah financing, the Bank purchases the goods and after taking the possession, sells them to the customer
either in spot or credit transaction, without disclosing the cost.

6.3.1 Islamic financing and related assets are stated net of specific and general provisions against non-performing
Islamic financing and related assets which are charged to the unconsolidated profit and loss account.

Funds disbursed, under financing arrangements for purchase of goods / assets are recorded as advance. On
culmination, financing are recorded at the deferred sale price net of profit. Goods purchased but remaining unsold
at the unconsolidated statement of financial position date are recorded as inventories.

6.3.2 Provision against non-performing Islamic financing and related assets

Specific provision

The Bank determines provisions against Islamic financing and related assets on a prudent basis in accordance
with the requirements of the Prudential Regulations issued by the SBP.

Meezan Bank Annual Report 2022 161

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

General provision

In accordance with Prudential Regulations issued by the SBP, general provision against consumer financing and
house financing are maintained at varying percentages based on the non-performing loan ratio present in the
portfolio. These percentages range from 0.5% to 2.5% for secured and 4% to 7% for unsecured portfolio.

In addition to the above mentioned requirements, the Bank has also maintained a general provision in respect of
financing against potential losses as may be present in the portfolio. This provision is based on management's
best estimate and is approved by the Board of Directors of the Bank.

The net provisions made / reversed during the year is charged to the unconsolidated profit and loss account and
accumulated provision is netted off against Islamic financing and related assets. Islamic financing and related
assets are written off when there are no realistic prospects of recovery.

6.3.3 Inventories

The Bank values its inventories at the lower of cost and net realisable value.

The net realisable value is the estimated selling price in the ordinary course of business less the estimated cost
necessary to make the sale.

Cost of inventories represents actual purchases made by the Bank / customers as an agent of the Bank for
subsequent sale. Inventory against each contract is maintained on specific identification method.

6.4 Investments

6.4.1 Classification

The Bank classifies its investments as follows:

- Held for trading

These are investments which are either acquired for generating profits from short-term fluctuations in
market prices or are securities included in a portfolio for which there is evidence of a recent actual pattern
of short-term profit taking.

- Held to maturity

These are investments with fixed or determinable payments and maturity that the Bank has the positive
intent and ability to hold till maturity.

- Available for sale

These are investments, other than those in associates and subsidiaries, which do not fall under either
'held for trading' or 'held to maturity' categories.

- Associates

Associates are all entities over which the Bank has significant influence but not control. Certain mutual
funds are managed by the subsidiary company of the Bank and hence, the Bank has significant influence
over such funds and therefore, investment in these mutual funds are considered as investment in
associates in these unconsolidated financial statements.

- Subsidiary

Subsidiary is an entity over which the Bank has control.

6.4.2 Regular way contracts

All purchases and sales of investments that require delivery within the time frame established by regulation or
market convention are recognised at the trade date, which is the date on which the Bank commits to purchase
or sell the investments.

6.4.3 Initial recognition and measurement

Investments other than those categorised as 'held for trading' are initially recognised at fair value which includes
transaction costs associated with the investments. Investments classified as 'held for trading' are initially recognised
at fair value and transaction costs are expensed in the unconsolidated profit and loss account.

6.4.4 Subsequent measurement

Subsequent to initial recognition investments are valued as follows:

162 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

- Held for trading

These are measured at subsequent reporting dates at fair value. Gains and losses on remeasurement are
included in the net profit and loss for the year.

- Held to maturity

These are measured at amortised cost less any impairment loss recognised to reflect irrecoverable amount.
Premium / discount (if any) is amortised over the remaining maturity.

- Available for sale

In accordance with the requirements specified by the SBP, quoted securities (other than those classified
as 'held to maturity' and 'investments in associates and subsidiary'), are subsequently re-measured to
market value. Unquoted equity securities are valued at the lower of cost and break-up value. Break-up
value of unquoted equity securities is calculated with reference to the net assets of the investee company
as per the latest available audited financial statements. Investment in other unquoted securities are valued
at cost less impairment losses, if any.

Surplus / deficit arising on revaluation of quoted securities which are classified as 'available for sale', is
included in the Other Comprehensive Income. On derecognition or impairment of available for sale
investments, the cumulative gain or loss previously reported in other comprehensive income is transferred
to profit and loss for the period.

- Investments in associates and subsidiary

Investment in associates and subsidiary is carried at cost less accumulated impairment losses, if any.

The carrying amount of associates and subsidiary are tested for impairment in accordance with the policy
described in note 6.4.5 to these unconsolidated financial statements.

6.4.4.1 Details of valuation techniques used in determination of fair value is included in note 41 to these unconsolidated
financial statements.

6.4.5 Impairment

Available for sale and Held to maturity investments

Impairment loss in respect of investments classified as available for sale and held to maturity (except sukuk
certificates) is recognised based on management's assessment of objective evidence of impairment as a result
of one or more events that may have an impact on the estimated future cash flows of the investments. A significant
or prolonged decline in fair value of an equity investment below its cost is also considered an objective evidence
of impairment. The determination of "significant or prolonged" requires judgment.

Provision for diminution in the value of sukuk certificates is made as per the Prudential Regulations issued by
the SBP. In case of impairment in available-for-sale investments, the related loss previously reported in other
comprehensive income is transferred to profit and loss account for the period. For investments classified as held
to maturity, the impairment loss is recognised in the profit and loss account.

Investment in associates and subsidiary

In respect of investment in associates and subsidiary, the Bank reviews their carrying values at each reporting
date to assess whether there is an indication of impairment. The amount of impairment loss would be determined
based on the higher of value in use and fair value less cost to sell. Impairment loss is recognised in the
unconsolidated profit and loss account.

6.5 Operating fixed assets

6.5.1 Tangible assets

Tangible fixed assets are stated at cost less accumulated depreciation and any identified impairment loss. Items
of fixed assets costing Rs 25,000 or less are not capitalised and are charged off in the month of purchase. An
item of property and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. Profit or loss on disposal of fixed assets is included in the unconsolidated profit and loss
account currently.

6.5.2 Right-of-use assets and Lease liabilities

At the inception of the contract, the Bank assesses whether a contract is, or contains, a lease. The Bank applies
a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value
assets. The Bank recognises lease liabilities to make lease payments and right-of-use assets representing the
right to use the underlying assets. Right-of-use assets are measured at cost, less any accumulated depreciation

Meezan Bank Annual Report 2022 163

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

and impairment losses, and adjusted for any remeasurement of lease liabilities. Right-of-use assets are depreciated
on a straight-line basis over the lease term. The right-of-use assets are presented within note 12 and are subject
to impairment in line with the Bank’s policy as described in note 6.5.8.

At the commencement date of the lease, the Bank recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The Bank determines the lease term as the non-cancellable term
of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be
exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
After the commencement date, the Bank reassesses the lease term if there is a significant event or change in
circumstances that is within its control that affects its ability to exercise or not to exercise the option to renew or
to terminate. The Bank cannot readily determine the interest rate implicit in the lease, therefore, it uses its
incremental fund acceptance rate to measure lease liabilities.

6.5.3 Intangible assets

Intangible assets comprise of computer software. Intangible assets with definite useful lives are stated at cost
less accumulated amortisation and impairment losses (if any).

6.5.4 Subsequent costs

Subsequent costs are included in the asset's carrying amounts or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost
of the item can be measured reliably. All other repairs and maintenance expenditure are charged to the
unconsolidated profit and loss account as and when incurred.

6.5.5 Depreciation / amortisation

Depreciation / amortisation is charged to the unconsolidated profit and loss account by applying the straight line
method in accordance with the rates specified in notes 12.2 and 13.1 whereby the depreciable value of an asset
is written off over its estimated service life. The Bank charges depreciation / amortisation from the month of
acquisition and up to the month preceding the disposal. Right-of-use assets are depreciated on a straight line
basis over the lease term specified in note 12.3.

6.5.6 Capital work-in-progress

Capital work-in-progress is stated at cost less accumulated impairment losses, if any.

6.5.7 Useful lives and residual values

Useful lives, residual values and depreciation method are reviewed at each reporting date and adjusted if impact
on depreciation / amortisation is significant.

6.5.8 Impairment

The Bank assesses at each reporting date whether there is any indication that the operating fixed assets may be
impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are
recorded in excess of their recoverable amounts. Where carrying values exceed the respective recoverable
amounts, assets are written down to their recoverable amounts and the resulting impairment charge is recognised
in the unconsolidated profit and loss account.

6.6 Taxation

Income tax expense comprises of current and deferred tax. Income tax expense is recognised in the unconsolidated
profit and loss account except to the extent that it relates to items recognised directly in equity, in which case it is
recognised in equity.

Current

The charge for current taxation is based on expected taxable income for the year in accordance with the prevailing laws
of taxation. The charge for current tax also includes adjustments to tax payable in respect of previous years including
those arising from assessments finalised during the year and are separately disclosed.

Deferred

Deferred tax is recognised using the balance sheet liability method on all temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes. Deferred tax
is not recognised for the temporary differences relating to initial recognition of goodwill, initial recognition of assets or
liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits and
differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable
future.

164 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the assets can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefits will be realised.

In making the estimates for current and deferred taxes, the management considers the income tax law and the decisions
of appellate authorities on certain issues in the past.

6.7 Non-banking assets acquired in satisfaction of claims

The non-banking assets acquired in satisfaction of claims are carried at revalued amounts less accumulated depreciation.
The useful lives are reviewed annually and adjusted, if appropriate. These assets are revalued by professionally qualified
valuers with sufficient regularity to ensure their net carrying value does not differ materially from their fair value. Surplus
arising on revaluation of property, if any, is credited to the 'surplus on revaluation of assets' account in the statement of
other comprehensive income. Any deficit arising on revaluation is taken to unconsolidated profit and loss account directly.
On derecognition of the assets, the cumulative gain or loss previously reported in other comprehensive income is transferred
directly to unappropriated profit in the unconsolidated statement of changes in equity. Legal fees, transfer cost and direct
cost of acquiring title to property is charged to the unconsolidated profit and loss account.

6.8 Deposits

Deposits are generated on the basis of two modes i.e. Qard and Mudaraba.

Deposits taken on Qard basis are classified as 'Current accounts' and Deposits generated on Mudaraba basis are classified
as 'Savings deposits' and 'Fixed deposits'. No profit or loss is passed on to current account depositors, however the
funds of current accounts are treated as equity for the purpose of profit calculation and any profit earned / loss incurred
on those funds are allocated to the equity of the Bank. While the product features of each product differ, there is usually
no restriction on withdrawals or number of transactions in current and savings accounts. In case of fixed deposits,
pre-mature withdrawals can be made as per approved terms only.

Profits realised in investment pools are distributed in pre-agreed profit sharing ratio between Rab-ul-Maal and Mudarib.
Rab-ul-Maal share is distributed among depositors according to weightages assigned at the inception of profit calculation
period. Mudarib can distribute its share of profit to Rab-ul-Maal up to a maximum of 50% of their profit as Incentive
profits (Hiba).

Profits are distributed from the pool such that the depositors (remunerative) only bear the risk of assets in the pool during
the profit calculation period. In case of loss in a pool during the profit calculation period, the loss is distributed among
the depositors (remunerative) according to their ratio of Investments.

Asset pools are created at the Bank’s discretion and the Bank can add, amend or transfer an asset to any other pool in
the interests of the deposit holders.

6.9 Sub-ordinated Sukuk

The Bank records sub-ordinated sukuk initially at the amount of proceeds received. Profit accrued on sub-ordinated
sukuk is charged to the unconsolidated profit and loss account. These are subsequently measured at amount outstanding.

6.10 Pool Management

The Bank operates general and specific pools for deposits and inter-bank funds accepted / acquired under Mudaraba
and Musharakah modes.

Under the general deposits pools, the Bank accepts funds on Mudaraba basis from depositors (Rab-ul-Maal) where the
Bank acts as Manager (Mudarib) and invests the funds in the Shariah Compliant modes of financing, investments and
placements. When utilising investing funds, the Bank prioritizes the funds received from depositors over the funds
generated from own sources after meeting the regulatory requirement relating to such deposits.

Specific pools are operated for funds acquired / accepted from the State Bank of Pakistan and other banks for Islamic
Export Refinance to the Bank's customers and liquidity management respectively under the Musharakah / Mudaraba
modes.

The profit of each deposit pool is calculated on all the remunerative assets booked by utilising the funds from the pool
after deduction of expenses directly incurred in earning the income of such pool along with related fee income, if any.
The directly related costs comprise of depreciation on ijarah assets, takaful premium, documentation charges etc. No
expense of general or administrative nature is charged to the pools. No provision against any non-performing asset of
the pool is passed on to the pool except on the actual loss / write-off of such non-performing asset. The profit of the
pool is shared between equity and other members of the pool on the basis of Musharakah at gross level (before charging
of mudarib fee) as per the investment ratio of the equity. The profit of the pool is shared among the members of the pool
on pre-defined mechanism based on the weightages announced before the profit calculation period after charging of

Meezan Bank Annual Report 2022 165

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

mudarib fee. During the year, the Bank has given General Hiba to the depositors of Rupee General Pool, keeping in view
the prescribed guidelines of Pool Management provided by the SBP and with the approval of the Bank's Resident Shariah
Board Member. However, Hiba are given at the sole discretion of the Bank without any contractual commitment and can
be withdrawn or reduced by the Bank at its sole discretion.

The risk characteristic of each pool mainly depends on the assets and liabilities profile of each pool. As per the Bank's
policy, relatively low risk / secured financing transactions and assets are allocated to general depositors pool of Rupee,
USD, GBP and Euro. The Bank maintains General Pools (Rupee, USD, EUR, GBP), FI Pools, IERS pool and Equity pool.
The general pools are exposed to general credit risk, asset ownership risk and profit rate risk of the underlying assets
involved.

General Pools:

For General Pools (Rupee, USD, EUR, GBP), the Bank allocates PKR financing to Corporate, Commercial, SME and
Consumer Finance customers in diversified sectors and avenues of the economy / business as mentioned in note 47.1.1.3.
Investments in Sovereign Guaranteed Sukuk, and Bai Muajjal with the State Bank of Pakistan / Government of Pakistan,
are also done through General Pools. All remunerative deposits are tagged to these general pools and their funds generated
from the depositors are invested on priority basis. Investments from the SBP under various long term Islamic refinance
schemes, and sub-ordinated sukuks are also remunerated through the Rupee General Pool. Due to limited investment
options in USD, GBP and EURO pool, funds from foreign currency pools are invested in available International Sukuk,
Shariah Compliant Nostro accounts, foreign currency financing and the remaining funds are taken out and invested in
Rupee general pool as part of equity. In such cases, return from Rupee General Pool is given back to foreign currency
pools, so that returns can be passed on to foreign currency pool customers accordingly. The Bank as Mudarib in the
general pools is responsible for financing costs / assets such as land, building, furniture, fixtures, computers and IT
system from its own sources / equity.

IERS Pools:

The IERS pool assets comprise of sovereign guaranteed sukuk, and financing to / sukuk of mainly blue chip companies
and exporters as allowed under the applicable rules and regulations, and as such are exposed to lower credit risk. The
Musharakah with SBP under IERS is tagged to the IERS pool.

FI Pools:

The FI pool assets generally comprise of sovereign guaranteed sukuk and financing under diminishing musharakah mode
only and the related liability of the FI pool comprise of Musharakah / Mudarabah from other banks and financial institutions.
These pools are created to meet the liquidity requirements of the Bank.

Equity Pools:

All other assets including fixed assets, exposure in shares, Rupee bai-salam financing and subsidized financing to the
Bank's employees are tagged to equity pool. To safeguard the interest of customers, all high risk investments are also
done through equity pool. The Bank as Mudarib in the equity pools is responsible for financing costs / assets such as
land, building, furniture, fixtures, computers and IT system from its own sources / equity.

6.11 Staff retirement benefits

Defined benefit plan

The Bank operates an approved Gratuity Funded Scheme for its permanent employees. The scheme was approved by
the tax authorities in April 2000. The liability recognised in respect of Gratuity Funded Scheme is the present value of the
defined benefit obligation at the reporting date less the fair value of plan assets. Contributions to the fund are made on
the basis of actuarial recommendations. The defined benefit obligation is calculated periodically by an independent
actuary using the projected unit credit method. The last valuation was conducted as on December 31, 2022.

The Bank also operates End of Service Unfunded Defined Benefit Scheme as approved by the Board of Directors for the
benefit of the founding President and Chief Executive Officer of the Bank. The defined benefit obligation for this benefit
has been calculated by an independent actuary using the projected unit credit method. The valuation has been conducted
as on December 31, 2022.

Amounts arising as a result of "Remeasurements", representing the actuarial gains and losses and the difference between
the actual investment returns and that implied by the net return cost are recognised in the unconsolidated Statement of
Financial Position immediately, with a charge or credit to "Other Comprehensive Income" in the periods in which they
occur. The actuarial valuations involve assumption and estimates of discount rates, expected rates of return on assets,
future salary increases and future inflation rates as disclosed in note 37.

Defined contribution plan

The Bank also operates a recognised contributory Provident Fund for all permanent employees. Equal monthly contributions
are made, both by the Bank and the employees, to the fund at a rate of 10% of basic salary.

166 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

6.12 Compensated absences

The Bank recognises liability in respect of employees compensated absences in the period in which these are earned up
to the date of Statement of Financial Position. The provision is recognised on the basis of actuarial valuation conducted
on December 31, 2022 using the projected unit credit method.

6.13 Share-based compensation

The Bank has granted share options to its employees under the Meezan Bank Employees Share Option Scheme, 2021
as approved by the shareholders and SECP. The cost of these share options is determined by the fair value at the date
when the grant is made using a valuation model by an independent valuer and is recognized as expense over the vesting
period together with a corresponding credit in equity - Employee share option compensation reserve (Note 39). The
dilutive effect of outstanding options (if any) is reflected as share dilution in the computation of diluted earnings per share.
When the options are exercised, employee stock option compensation reserve relating to these options is transferred to
share capital and share premium.

6.14 Dividend and reserves

Dividend declared and appropriations, except for transfer to statutory reserve, made subsequent to the reporting date
are considered as non adjusting events and are recorded as a liability in the unconsolidated financial statements in the
year in which these are approved by the directors / shareholders as appropriate.

6.15 Foreign currency transactions

Transactions and balances

Foreign currency transactions are recorded in rupees at exchange rates prevailing on the date of transaction. Monetary
assets, monetary liabilities and contingencies and commitments in foreign currencies except forward commitments
(promises) are reported in Rupees at exchange rates prevalent on the reporting date.

Forward commitments other than those with the SBP relating to the foreign currency deposits are valued at forward rates
applicable to the respective maturities of the relevant foreign exchange commitments. Forward commitments with the
SBP relating to foreign currency deposit, are valued at spot rate prevailing at the reporting date. Exchange gains and
losses are included in the current year profit and loss account.

Commitments

Commitments for outstanding forward foreign exchange transactions are disclosed at the rates applicable at the reporting
date. Contingent liabilities / commitments for letters of credit, and letters of guarantee denominated in foreign currencies
are expressed in rupee terms at the exchange rates prevailing on the reporting date.

Translation gains and losses are included in the unconsolidated profit and loss account.

6.16 Provisions and contingent assets and liabilities

Provisions are recognised when the Bank has a present legal or constructive obligation arising as a result of past events,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate of the amount of the obligation can be made.

Contingent assets are not recognised, and are also not disclosed unless an inflow of economic benefits is probable.
Contingent liabilities are not recognised but are disclosed unless the probability of an outflow of resources embodying
economic benefits are remote.

6.17 Acceptances, guarantees and letters of credit

Acceptances comprise undertakings by the Bank to pay bills of exchange drawn on customers. The Bank expects most
acceptances to be settled simultaneously with the reimbursement from the customers. Acceptances are accounted for
as on-balance sheet transactions and related balances are disclosed under other assets and other liabilities.

The Bank issues guarantees and letters of credit. These are disclosed in the unconsolidated statement of financial position
as part of contingencies and commitments.

6.18 Offsetting and derecognition

Financial assets and financial liabilities are offset and the net amount is reported in the unconsolidated Statement of
Financial Position when there is a legally enforceable right to set off the recognised amounts and there is an intention to
settle on a net basis or realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted by the accounting and reporting standards as
applicable in Pakistan.

A financial asset (or, where applicable, a part of a financial asset or a part of a group of similar financial assets) is

Meezan Bank Annual Report 2022 167

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

derecognised where the rights to receive cash flows from the asset have expired, or the Bank has transferred its rights
to receive cash flows from the asset. The Bank derecognises a financial liability when the obligation under the liability is
discharged, cancelled or expired.

6.19 Revenue recognition

i) Profit on Murabaha (including Commodity Murabaha) and Musawammah is recognised on an accrual basis. Profit on
Murabaha and Musawammah transactions for the period from the date of disbursement to the date of culmination of
Murabaha and Musawammah is recognised immediately upon the later date in line with IFAS requirements.

ii) Rentals on Ijarah contracts are recognised as income on an accrual basis in line with IFAS requirements.

iii) Profit on Bai Muajjal transaction is recognised on an accrual basis.

iv) Profit on Diminishing Musharakah financing is recognised on an accrual basis.

v) Profit on Running Musharakah financing is recognised on an accrual basis and is adjusted upon declaration of
profit by Musharakah partners.

vi) Profit on Tijarah and Istisna financing is recognised on an accrual basis commencing from time of sale of goods
till the realisation of sale proceeds by the Bank.

vii) Profit on Service Ijarah is recognised on an accrual basis commencing from the date of confirmation of sale.

viii) Profit on Wakalah tul Istithmar / Wakalah is recognised on an accrual basis and is commensurate with the
Wakalah business performance/ work done by the agent.

ix) Profit on Sukuk is recognised on an accrual basis. Where Sukuk (excluding held for trading securities) are
purchased at a premium or discount, those premiums / discounts are amortised through the unconsolidated
profit and loss account over the remaining maturity.

x) Commission on letters of credit, acceptances and guarantees is recognised on receipt basis, except for
commission on guarantees in excess of Rs 250,000 which is recognised over the period of the guarantee. Fee
and brokerage income are recognised when earned.

xi) The Bank earns fee and commission income from certain non-funded banking services. The related fee and
commission income is recognised at an amount that reflects the consideration to which the Bank expects to be
entitled in exchange for providing the services. The Bank recognises fees earned on transaction-based
arrangements at a point in time when the Bank has fully provided the service to the customer. Where the contract
requires services to be provided over time, the income is recognised on a systematic basis over the life of the
related service. Unearned fees and commissions are included under Other liabilities.

xii) Dividend income is recognised when the Bank’s right to receive dividend is established.

xiii) Gain or loss on sale of investments is included in the unconsolidated profit and loss account in the period in
which they arise.

xiv) Gain or loss on disposal of fixed assets, intangible assets, Ijarah assets and Musharakah assets is taken to the
profit and loss account in the period in which they arise.

xv) Profit suspended in compliance with the Prudential Regulations issued by the SBP is recognised on receipt
basis. Profit on rescheduled / restructured financing and investments is recognised as permitted by the SBP.

6.20 Segment reporting

A segment is a distinguishable component of the Bank that is engaged in providing products or services (business
segment) or in providing products or services within a particular economic environment (geographical segment), which
is subject to risks and rewards that are different from those of other segments. The Bank's primary format of reporting
is based on business segments. Operating segments are reported in a manner consistent with the internal reporting
provided to the management. Management monitors the operating results of its business segments separately for the
purpose of making decisions about resource allocation and performance assessment.

6.20.1 Business segments

Corporate and Commercial Banking

It includes trade finance, export finance, project finance, Ijarah, guarantees and bills of exchange relating to its
Corporate and Commercial customers, investment banking, syndications, IPO related activities (excluding
investments), secondary private placements, underwriting and securitisation.

168 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Retail Banking

It includes retail financing, deposits and banking services offered to its retail customers and small and medium
enterprises.

Trading and Sales

It includes equity, foreign exchanges, commodities, own securities and placements.

Others

It includes functions which cannot be classified in any of the above segments.

6.20.2 Geographical segments

The Bank operates only in Pakistan.

6.21 Earnings per share

The Bank presents basic and diluted earnings per share (EPS). Basic EPS is calculated by dividing profit after tax for the
year attributable to equity holders of the Bank by the weighted average number of ordinary shares outstanding during
the year. EPS is retrospectively adjusted for the effect of bonus shares issued.

Diluted EPS is calculated by dividing the net profit of Bank (after adjusting for return and related tax impact) on the
convertible instruments / share options by the weighted average number of ordinary shares outstanding during the year
plus the weighted average number of ordinary shares that would be issued on the conversion / exercise of all the dilutive
potential ordinary shares into ordinary shares.

Note 2022 2021

7 CASH AND BALANCES WITH TREASURY BANKS
Rupees in ‘000

In hand
- local currency 40,142,380 36,028,760
- foreign currencies 1,120,217 2,821,769
41,262,597 38,850,529
With the State Bank of Pakistan in
- local currency current accounts 69,747,152 70,308,704
- foreign currency current accounts 6,433,593 10,259,746
7.1 76,180,745 80,568,450
With the National Bank of Pakistan in
- local currency current accounts 222,839 50,668,296

National Prize Bonds 7.2 76,925 413,423

117,743,106 170,500,698

7.1 These include local and foreign currency amounts required to be maintained by the Bank with the SBP under the Banking
Companies Ordinance, 1962 and /or stipulated by the SBP. These accounts are non-remunerative in nature.

7.2 These represent the national prize bonds received from customers for onward surrendering to SBP. The Bank, as a matter of
Shariah principle, does not deal in prize bonds.

Note 2022 2021

8 BALANCES WITH OTHER BANKS
Rupees in ‘000

In Pakistan
- in current accounts 4,770,402 14,901,943

Outside Pakistan
- in current accounts 4,080,128 1,275,566
- in deposit accounts 8.1 4,825,629 242,527
13,676,159 16,420,036

Meezan Bank Annual Report 2022 169

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

8.1 It represent the balance in the remunerative account maintained with financial institutions outside Pakistan. The return
on these balances ranges from 0.20% to 2.25% (2021: 0.0001%) per annum.

Note 2022 2021

9 DUE FROM FINANCIAL INSTITUTIONS
Rupees in ‘000
Bai Muajjal receivable:
- from scheduled banks / financial institutions - Secured 9.1 34,964,299 238,401,637
- from other Financial Institution 15,500 15,500
9.2 34,979,799 238,417,137

Commodity Murabaha 26,066 26,066

9.3 35,005,865 238,443,203
Less: Provision held against due from financial
institutions 9.4 (41,566) (41,566)
Due from financial institutions - net of provision 34,964,299 238,401,637

9.1 The effective average return on this product is 11.25% (2021: 8.10%) per annum. The balances have maturities in July 2025
(2021: ranging between January 2022 to July 2025). These Bai Muajjal are secured against Federal Government securities
received as collateral and having market value of Rs 36,915 million as at December 31, 2022 (2021: Rs 240,575 million).

2022 2021

Rupees in ‘000

9.2 Bai Muajjal Placements 52,821,177 270,204,082

Less: Deferred income (9,878,329) (18,895,001)
Profit receivable shown in other assets (7,963,049) (12,891,944)
Bai Muajjal Placements 34,979,799 238,417,137

9.3 Particulars of due from financial institutions

In local currency 35,005,865 238,443,203
In foreign currency - -
35,005,865 238,443,203

2022 2021
Non-performing Provision Non-performing Provision
due from financial held due from financial held
institutions institutions
9.4 Category of classification Rupees in ‘000

Loss 41,566 41,566 41,566 41,566

170 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

10 INVESTMENTS - NET

10.1 Investments by types

Note 2022 2021
Cost / Provision Surplus / Carrying Cost / Provision Surplus / Carrying
Amortised for (Deficit) Value Amortised for (Deficit) Value
cost diminution cost diminution
Rupees in ‘000
Held for trading securities
- Federal Government Securities 2,470 - 18 2,488 - - - -

Available for sale securities

- Federal Government Securities 10.5.1 925,056,827 - (7,185,753) 917,871,074 387,898,392 - (1,300,655) 386,597,737
- Shares 10.5.2 & 10.5.3 10,205,678 3,128,805 1,035,172 8,112,045 9,662,370 2,322,124 1,928,965 9,269,211
- Non Government Sukuk 10.5.4 125,481,220 75,892 5,123,927 130,529,255 130,407,390 75,892 5,624,000 135,955,498
- Foreign Securities 10.5.5 8,721,244 - (142,380) 8,578,864 10,343,243 - 370,768 10,714,011
1,069,464,969 3,204,697 (1,169,034) 1,065,091,238 538,311,395 2,398,016 6,623,078 542,536,457

Held to maturity securities

- Federal Government Securities 10.6 217,208,259 - - 217,208,259 76,687,798 - - 76,687,798

In related parties

Associates (listed)
- Units of mutual funds 10.1.1 & 10.2 845,252 - - 845,252 844,738 - - 844,738

Subsidiary
- Shares 10.1.1 & 10.2 63,050 - - 63,050 63,050 - - 63,050

Total Investments 1,287,584,000 3,204,697 (1,169,016) 1,283,210,287 615,906,981 2,398,016 6,623,078 620,132,043

10.1.1 Details of investment in subsidiary and associates

2022
Percentage Assets Liabilities Revenue Profit/(loss) Total Market
of after taxation comprehensive Value/Net
holding income/(loss) Asset
Share
Rupees in ‘000
Subsidiary (unlisted)
Al Meezan Investment Management Limited 65.00% 4,177,658 736,567 1,630,866 584,448 572,465 N/A

Associates (open ended - listed)

Meezan Balanced Fund 12.43% 2,500,588 72,183 98,518 (13,271) (13,271) 301,980
Al Meezan Mutual Fund 8.86% 4,136,249 82,010 (236,436) (416,828) (416,828) 359,226
Meezan Islamic Fund 3.31% 21,250,501 472,320 (1,700,775) (2,667,417) (2,667,417) 688,124
Meezan Sovereign Fund 0.01% 6,786,165 119,363 765,454 686,421 686,421 548
Meezan Gold Fund 16.64% 758,030 4,607 153,382 135,535 135,535 125,369
KSE Meezan Index Fund 5.07% 2,732,821 72,794 (114,498) (166,830) (166,830) 134,841
38,164,354 823,277 (1,034,355) (2,442,390) (2,442,390) 1,610,088

Meezan Bank Annual Report 2022 171

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2021
Percentage Assets Liabilities Revenue Profit/(loss) Total Market
of after taxation comprehensive Value/Net
holding income/(loss) Asset
Share
Rupees in ‘000
Subsidiary (unlisted)
Al Meezan Investment Management Limited 65.00% 4,191,720 773,094 1,819,984 800,081 805,735 N/A

Associates (listed and open ended)

Meezan Balanced Fund 6.99% 4,431,599 92,017 290,185 119,539 119,539 303,321
Al Meezan Mutual Fund 7.79% 5,146,860 96,918 233,770 119,575 119,575 393,266
Meezan Islamic Fund 2.52% 31,105,508 626,613 1,954,186 1,208,948 1,208,948 767,340
Meezan Gold Fund 17.05% 604,535 3,366 43,574 35,022 35,022 102,503
KSE Meezan Index Fund 5.22% 2,782,962 18,943 11,270 (18,189) (18,189) 144,164
44,071,464 837,857 2,532,985 1,464,895 1,464,895 1,710,594

Subsidiary and associates are incorporated / registered in Pakistan. Shares in subsidiary are placed in custody account with Central Depository of Pakistan
and cannot be sold without the prior approval of SECP in accordance with the SECP's circular No. 9 of 2006 dated June 15, 2006.

10.2 Investments by segments

Note 2022 2021
Cost / Provision Surplus / Carrying Cost / Provision Surplus / Carrying
Amortised for (Deficit) Value Amortised for (deficit) Value
cost diminution cost diminution
Rupees in ‘000
Federal Government Securities
- Ijarah Sukuks 1,111,102,059 - (7,185,735) 1,103,916,324 398,857,572 - (1,300,655) 397,556,917
- Bai Muajjal with Government of 10.5.1
Pakistan (through State Bank of &
Pakistan) 10.6 23,224,694 - - 23,224,694 64,443,192 - - 64,443,192
- Islamic Naya Pakistan Certificates 7,940,803 - - 7,940,803 1,285,426 - - 1,285,426
1,142,267,556 - (7,185,735) 1,135,081,821 464,586,190 - (1,300,655) 463,285,535
Shares
Listed Companies 10.5.2 9,600,999 3,070,304 1,035,172 7,565,867 9,057,691 2,268,371 1,928,965 8,718,285
Unlisted Companies 10.5.3 604,679 58,501 - 546,178 604,679 53,753 - 550,926
10,205,678 3,128,805 1,035,172 8,112,045 9,662,370 2,322,124 1,928,965 9,269,211
Non Government Sukuk
Listed 10.2.1 & 10.5.4 114,385,781 - 5,123,927 119,509,708 114,404,511 - 5,624,000 120,028,511
Unlisted 10.5.4 11,095,439 75,892 - 11,019,547 16,002,879 75,892 - 15,926,987
125,481,220 75,892 5,123,927 130,529,255 130,407,390 75,892 5,624,000 135,955,498

Foreign Securities
Government Sukuk 10.5.5 5,314,367 - (134,204) 5,180,163 7,684,473 - 300,073 7,984,546
Non Government Sukuk 10.5.5 3,396,488 - (8,176) 3,388,312 2,648,381 - 70,695 2,719,076
Shares 10.5.5 10,389 - - 10,389 10,389 - - 10,389
8,721,244 - (142,380) 8,578,864 10,343,243 - 370,768 10,714,011
Associates
Meezan Balanced Fund 161,345 - - 161,345 161,345 - - 161,345
Al Meezan Mutual Fund 312,371 - - 312,371 312,371 - - 312,371
Meezan Islamic Fund 221,050 - - 221,050 221,050 - - 221,050
Meezan Sovereign Fund 514 - - 514 - - - -
Meezan Gold Fund 49,972 - - 49,972 49,972 - - 49,972
KSE Meezan Index Fund 100,000 - - 100,000 100,000 - - 100,000
845,252 - - 845,252 844,738 - - 844,738
Subsidiary
Al Meezan Investment Management
Limited 10.7 63,050 - - 63,050 63,050 - - 63,050

Total Investments 1,287,584,000 3,204,697 (1,169,016) 1,283,210,287 615,906,981 2,398,016 6,623,078 620,132,043

10.2.1 This represents investment in Pakistan Energy Sukuk-I and Pakistan Energy Sukuk-II issued by Power Holding Limited,
wholly owned by the Government of Pakistan. These Energy Sukuk are guaranteed by the Government of Pakistan
and are eligible for Statutory Liquidity Requirements. These Energy Sukuk are based on Islamic mode of Ijarah with
semi-annual rental payments and are due to mature in 2029-30.

172 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

10.2.2 Investments given as collateral

2022 2021

Cost / Amortised Market Cost / Amortised Market

Cost value Cost value
Rupees in ‘000
Federal Government Securities
- Sukuk 404,000,000 401,903,600 30,000,000 30,054,000
- Bai Muajjal with Government of
Pakistan (through State Bank
of Pakistan) - - 28,150,000 28,150,000
404,000,000 401,903,600 58,150,000 58,204,000

2022 2021
10.3 Provision against diminution in value of investments Rupees in ‘000

Opening balance 2,398,016 2,183,393

Charge / (reversals)
Charge for the year 970,287 305,016
Reversals for the year - (3,456)
Reversals on disposals (163,606) (86,937)
806,681 214,623
Closing balance 3,204,697 2,398,016

10.4 Particulars of provision against Sukuk

2022 2021
Non-performing Provision Non-performing Provision
investment investment

Category of classification Rupees in ‘000

Domestic

Loss 75,892 75,892 75,892 75,892

10.5 Quality of Available for Sale Securities

Details regarding quality of Available for Sale (AFS) securities are as follows:
2022 2021
Cost
10.5.1 Federal Government Securities Rupees in ‘000

Bai Muajjal with Government of Pakistan (through State Bank of Pakistan) 23,224,694 64,443,192

Federal Government securities - Government guaranteed

Government of Pakistan Ijarah Sukuk
GIS VRR-18 10,680,852 10,704,268
GIS VRR-19 25,624,975 25,639,965
GIS VRR-20 16,982,294 16,982,211
GIS VRR-21 50,792,803 50,761,174
GIS FRR-04 9,979,161 9,951,546
GIS VRR-22 81,626,220 81,132,277
GIS FRR-07 2,625,000 2,625,000
GIS VRR-23 24,960,971 25,007,215
GIS VRR-24 283,874,972 87,866,118
GIS VRR-25 319,555,078 -
GIS VRR-26 40,225,999 -
GIS-FRR 08 5,000,000 5,000,000
GIS-FRR 11 21,963,005 6,500,000
893,891,330 322,169,774
Islamic Naya Pakistan Certificate
Islamic Naya Pakistan Certificate - PKR 741,885 58,724
Islamic Naya Pakistan Certificate - USD 6,506,281 907,167
Islamic Naya Pakistan Certificate - GBP 376,155 56,346
Islamic Naya Pakistan Certificate - EUR 316,482 263,189
7,940,803 1,285,426
925,056,827 387,898,392

Meezan Bank Annual Report 2022 173

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2022 2021
10.5.2 Shares - Listed Rupees in ‘000

Automobile Assembler 113,964 112,532

Automobile parts and accessories 55,908 55,908
Construction and materials (cement) 1,642,867 1,360,148
Power Generation and Distribution 198,419 193,729
Commercial Banks 40,922 -
Refinery 124,827 124,827
Oil and Gas Marketing Companies 773,163 618,263
Oil and Gas Exploration Companies 1,949,872 1,623,690
Fertilizers 950,977 890,114
Chemicals 163,557 402,861
Pharmaceuticals 748,869 748,869
Leather & Tanneries 19,336 19,336
Miscellaneous 26,974 26,974
Modarabas 66,390 66,390
Technology and Communication 642,311 445,542
Paper and Board 710,838 685,941
Glass and Ceramics 106,833 -
Textile (Composite) 464,327 516,520
Vanaspati and Allied Industries - 174,923
Food and Personal Care Products 9,691 9,691
Engineering 790,954 981,433
9,600,999 9,057,691

2022 2021
10.5.3 Shares - Unlisted
Cost Breakup Cost Breakup
value* value*
Rupees in ‘000

Sapphire Electric Company Limited 318,638 993,415 318,638 920,535

Daewoo Pakistan Express Bus Service Limited 253,240 231,720 253,240 251,080
Pakistan Corporate Restructuring Company Limited 32,801 26,011 32,801 30,767
604,679 1,251,146 604,679 1,202,382

* Based on latest available audited financial statements

10.5.4 Non Government Sukuk 2022 2021

Cost
Rupees in ‘000
Listed
- Government guaranteed 114,385,781 114,404,511

Unlisted
- Government guaranteed 6,716,920 10,786,560

Unlisted
Credit Ratings
- AAA / AAA 1,241,831 1,307,190
- AA / AA+, AA, AA- 1,756,333 1,596,667
- A / A+, A, A- 1,304,463 2,236,570
- Unrated 75,892 75,892
4,378,519 5,216,319
125,481,220 130,407,390

2022 2021
10.5.5 Foreign Securities
Cost Rating Cost Rating
Government Sukuk
Rupees in ‘000

Saudi Arabia 1,916,491 A 4,150,186 A

Qatar 1,132,295 Aa3 885,035 Aa3
Indonesia 2,265,581 Baa2 2,649,252 Baa2
5,314,367 7,684,473

174 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2022 2021
Cost
Rupees in ‘000

Non Government Sukuk - Unlisted

- Aa3 / A 2,264,229 1,764,736
- Baa2 1,132,259 883,645
3,396,488 2,648,381
Equity securities - Unlisted
S.W.I.F.T. SCRL 10,389 10,389

8,721,244 10,343,243

10.6 Particulars relating to Held to Maturity securities are as follows:

Federal Government Securities - Government guaranteed

GIS FRR-04 10,566,210 10,562,798

GIS FRR-07 2,625,000 2,625,000
GIS FRR-08 5,000,000 5,000,000
GIS FRR-11 199,017,049 58,500,000
217,208,259 76,687,798

The market value of securities classified as held-to-maturity as at December 31, 2022 amounted to Rs 203,805 million
(2021: Rs 76,651 million).

2022 2021
10.7 Investment in subsidiary
Cost Breakup Cost Breakup
value* value*
Rupees in ‘000

Al Meezan Investment Management Limited 63,050 3,441,092 63,050 3,447,791

* Based on latest available audited financial statements

Note 2022 2021

11 ISLAMIC FINANCING AND RELATED ASSETS Rupees in ‘000

In Pakistan:
Murabaha financing and related assets
- Murabaha financing 11.1 7,127,282 6,195,161
- Advances against Murabaha 4,888,537 2,224,908
- Murabaha inventory 3,872,679 2,085,908
- Financing under Islamic Export Refinance - Murabaha 11.2 711,413 1,048,988
- Financing against Islamic SME Asaan Finance 11.3 94,018 10,000
- Advance against Islamic SME Asaan Finance - 40,000
- Advance against Islamic Export Refinance - Murabaha 2,465,400 460,014
- Inventory under Islamic Export Refinance - Murabaha - 35,000
19,159,329 12,099,979
Running Musharakah financing
- Running Musharakah financing 240,531,788 193,218,603
- Financing under Islamic Export Refinance - Running Musharakah 50,965,430 37,235,077
291,497,218 230,453,680
Istisna financing and related assets
- Istisna financing 23,081,974 6,534,664
- Advances against Istisna 94,010,017 68,370,720
- Istisna inventory 13,309,627 5,574,727
- Financing under Islamic Export Refinance - Istisna 72,143 266,800
- Advances under Islamic Export Refinance - Istisna 10,957,214 7,985,372
- Inventory under Islamic Export Refinance - Istisna 1,658,523 2,866,783
143,089,498 91,599,066

Meezan Bank Annual Report 2022 175

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000
Tijarah financing and related assets
- Tijarah financing 1,959,394 1,715,312
- Tijarah inventory 9,160,823 10,959,567
- Financing under Islamic Export Refinance - Tijarah 1,056,241 1,549,127
- Financing under Islamic SME Asaan Finance - Tijarah - 2,738
- Inventory under Islamic Export Refinance - Tijarah 1,132,182 413,901
13,308,640 14,640,645
Musawammah financing and related assets
- Musawammah financing 11.4 74,983,110 33,362,530
- Advances against Musawammah 11,073,176 8,621,219
- Musawammah Inventory 12,874,909 15,944,490
- Financing under Islamic Export Refinance - Musawammah 11.5 1,481,762 2,313,610
- Financing under SBP's Islamic Financing Facility for
Renewable Energy (IFRE) - Musawammah 11.6 271,213 90,260
- Advances under Islamic Export Refinance - Musawammah 412,100 647,638
- Inventory under Islamic Export Refinance - Musawammah - 1,215,492
101,096,270 62,195,239
Salam Financing and related assets
- Salam Financing 899,631 990,223
- Advances against Salam 18,705,389 11,204,294
- Salam Inventory 1,836,491 1,230,270
- Advances under Islamic Export Refinance - Salam - 449,206
21,441,511 13,873,993
Financing against bills
- Financing against bills - Salam 5,173,912 9,827,325
- Advance against bills - Salam 1,738 1,947
5,175,650 9,829,272

- Bai Muajjal financing 11.7 35,969,952 39,429,724

Ijarah financing and related assets

- Net investment in Ijarah 74,960 75,042
- Net book value of assets/investment in Ijarah under IFAS 2 63,004,338 54,013,622
- Net book value of assets/investment in Ijarah under IFAS 2
Islamic Long Term Financing Facility (ILTFF) for Plant & Machinery - 11,030
11.8 63,079,298 54,099,694
- Advances against Ijarah 6,508,337 8,865,508
69,587,635 62,965,202
Diminishing Musharakah financing and related assets
- Diminishing Musharakah financing 151,635,702 110,857,954
- Diminishing Musharakah financing - housing 20,132,503 16,670,211
- Diminishing Musharakah financing - SBP's Islamic Financing
Facility for Storage of Agricultural Produce (IFFSAP) 263,206 62,913
- Diminishing Musharakah financing - SBP's Islamic Financing
Facility for Renewable Energy (IFRE) 14,350,196 952,704
- Diminishing Musharakah financing - SBP's Islamic Refinance
Facility for Combating COVID – 19 (IRFCC) 295,145 402,751
- Diminishing Musharakah financing - SBP's Islamic SME
Asaan Finance (I-SAAF) Scheme 80,771 9,900
- Diminishing Musharakah financing - SBP's Islamic Long Term
Financing Facility (ILTFF) for Plant & Machinery 15,771,049 12,881,740
- Diminishing Musharakah financing - SBP's Islamic Temporary
Economic Refinance Facility (ITERF) 10,880,035 1,507,883
- Diminishing Musharakah financing - SBP's Islamic Refinance
Scheme for Payment of Wages & Salaries to the Workers and
Employees of Business Concerns (IRSPWS) 427,780 2,321,293
- Advances against Diminishing Musharakah 29,957,946 11,302,256
- Advances against Diminishing Musharakah under SBP's IFFSAP 57,141 83,939
- Advances against Diminishing Musharakah under SBP's IFRE 2,870,913 15,188,412
- Advances against Diminishing Musharakah under SBP's IRFCC 254,401 327,087
- Advances against Diminishing Musharakah under SBP's ISAAF 4,800 -
- Advances against Diminishing Musharakah under SBP's ITERF 9,030,290 12,148,592
- Advances against Diminishing Musharakah under SBP's ILTFF 9,986,155 4,963,408
265,998,033 189,681,043

176 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000

- Musharakah financing 888,725 -

- Wakalah Tul Istithmar financing 6,375,000 10,625,000
- Advances against Wakalah Tul Istithmar 19,227,133 23,714,700
- Advance against Service Ijarah 14,899,103 7,749,103
- Qard financing under SBP's IRSPWS 5,783 28,914
- Qard financing under SBP's IRFCC 406,027 528,791
- Labbaik (Qard for Hajj and Umrah) 9,714 274
- Staff financing (including under SBP's IFRE) 11.9 8,433,655 6,237,617
- Other financing 1,532,881 1,642,884
Gross Islamic Financing and Related Assets 11.10 1,018,101,757 777,295,126

Less: Provision against non-performing

Islamic financing and related assets - Specific 11.12 (12,812,762) (13,338,988)
Less: Provision against non-performing
Islamic financing and related assets - General 11.12 (9,780,641) (5,870,018)
Islamic financing and related assets - net of provision 995,508,354 758,086,120

11.1 Murabaha receivable - gross 11.1.1 12,435,057 6,944,861

Less: Deferred murabaha income 11.1.3 (164,688) (117,597)
Profit receivable shown in other assets (5,143,087) (632,103)
Murabaha financing 11.1.2 7,127,282 6,195,161

11.1.1 Murabaha Sale Price 12,435,057 6,944,861

Murabaha Purchase Price (7,127,282) (6,195,161)
5,307,775 749,700

11.1.2 The movement in Murabaha financing during the year is as follows:

Opening balance 6,195,161 7,292,120
Sales during the year 68,424,533 72,951,570
Adjusted during the year (67,492,412) (74,048,529)
Closing balance 7,127,282 6,195,161

11.1.3 Deferred murabaha income

Opening balance 117,597 112,171
Arising during the year 10,906,739 2,621,586
Recognised during the year (10,859,648) (2,616,160)
Closing balance 164,688 117,597

11.2 Financing under Islamic Export Refinance - Murabaha - gross 745,114 1,068,203
Less: Deferred income (10,030) (5,937)
Less: Profit receivable shown in other assets (23,671) (13,278)
Financing under Islamic Export Refinance - Murabaha 711,413 1,048,988

11.2.1 The movement in Islamic Export Refinance Murabaha financing

during the year is as follows:
Opening balance 1,048,988 873,321
Sales during the year 3,990,743 3,159,707
Adjusted during the year (4,328,318) (2,984,040)
Closing balance 711,413 1,048,988

11.2.2 Deferred Islamic Export Refinance murabaha income

Opening balance 5,937 5,106
Arising during the year 82,533 51,534
Recognised during the year (78,440) (50,703)
Closing balance 10,030 5,937

Meezan Bank Annual Report 2022 177

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000

11.3 Financing against Islamic SME Asaan Finance - Murabaha - gross 142,590 11,546
Less: Deferred income (37,218) (1,526)
Profit receivable shown in other assets (11,354) (20)
Financing against Islamic SME Asaan Finance - Murabaha 94,018 10,000

11.3.1 The movement in Islamic SME Asaan Finance (Murabaha financing)

during the year is as follows:
Opening balance 10,000 -
Sales during the year 116,957 10,000
Adjusted during the year (32,939) -
Closing balance 94,018 10,000

11.3.2 Deferred Islamic SME Asaan Finance Murabaha income

Opening balance 1,526 -
Arising during the year 47,046 1,546
Recognised during the year (11,354) (20)
Closing balance 37,218 1,526

11.4 Musawammah financing - gross 76,327,808 34,477,153

Less: Deferred income (593,935) (468,449)
Profit receivable shown in other assets (750,763) (646,174)
Musawammah financing 74,983,110 33,362,530

11.5 Financing under Islamic Export Refinance - Musawammah - gross 1,548,225 2,346,068
Less: Deferred income (33,599) (13,048)
Profit receivable shown in other assets (32,864) (19,410)
Financing under Islamic Export Refinance - Musawammah 1,481,762 2,313,610

11.6 Financing under SBP's IFRE - Musawammah - gross 304,510 101,406

Less: Deferred income (29,482) (10,925)
Profit receivable shown in other assets (3,815) (221)
Financing under SBP's IFRE - Musawammah 271,213 90,260

11.7 Bai Muajjal financing - gross 42,504,634 40,373,453

Less: Deferred income (5,283,514) (300,831)
Profit receivable shown in other assets (1,251,168) (642,898)
Bai Muajjal financing 35,969,952 39,429,724

11.8 Net book value of assets / investments in Ijarah under IFAS 2 is net of depreciation of Rs 45,881 million (2021: Rs 41,547
million).

11.9 This includes Rs 699 million (2021: Rs 671 million) representing profit free financing to staff advanced under the
Bank's Human Resource Policies.

11.10 Particulars of financing - gross 2022 2021

Rupees in ‘000
In
- local currency 972,271,359 733,552,562
- foreign currencies 45,830,398 43,742,564
1,018,101,757 777,295,126

178 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

11.11 Islamic financing and related assets include Rs 13,628 million (2021: Rs 14,450 million) which have been placed under
non-performing status as detailed below:

2022 2021
Non Provision Non Provision
Performing Held Performing Held
Amount Amount
Category of classification Rupees in ‘000

Domestic
Other Assets Especially Mentioned 221,234 114 41,771 358
Substandard 318,621 69,740 409,772 82,151
Doubtful 305,332 127,458 1,000,601 356,314
Loss 12,783,100 12,615,450 12,997,394 12,900,165
Total 13,628,287 12,812,762 14,449,538 13,338,988

11.12 Particulars of provision against non-performing Islamic financing and related assets:
2022 2021
Specific General Total Specific General Total
Rupees in ‘000

Opening balance 13,338,988 5,870,018 19,209,006 13,602,974 5,452,711 19,055,685

Exchange Adjustment 219,559 - 219,559 - - -
Charge for the year 815,425 3,910,623 4,726,048 2,186,594 417,307 2,603,901
Less: Reversals (1,476,314) - (1,476,314) (1,859,091) - (1,859,091)
(660,889) 3,910,623 3,249,734 327,503 417,307 744,810
Amount written off (84,896) - (84,896) (591,489) - (591,489)
Closing balance 12,812,762 9,780,641 22,593,403 13,338,988 5,870,018 19,209,006

11.12.1 Particulars of provision against non-performing financing:

2022 2021
Specific General Total Specific General Total
Rupees in ‘000

In local currency 12,344,783 9,780,641 22,125,424 13,090,568 5,870,018 18,960,586

In foreign currencies 467,979 - 467,979 248,420 - 248,420
12,812,762 9,780,641 22,593,403 13,338,988 5,870,018 19,209,006

11.12.2 The Bank maintains general provision in accordance with the applicable requirements of the Prudential
Regulations for Consumer Financing and House Financing issued by the SBP.

In addition, the Bank has also maintained a general provision of Rs 9,100 million (2021: Rs 5,350 million) against
financing made on prudent basis, in view of prevailing economic conditions. This general provision is in addition
to the requirements of Prudential Regulations.

11.12.3 In accordance with BSD Circular No. 2 dated January 27, 2009 issued by the SBP, the Bank has availed the
benefit of Forced Sales Value (FSV) of collaterals against the non-performing financing. The accumulated benefit
availed amounts to Rs 256.30 million (2021: Rs 176.60 million). The additional profit arising from availing the FSV
benefit - net of tax amounts to Rs 130.70 million (2021: Rs 107.70 million). The increase in profit, due to availing
of the benefit, is not available for distribution of cash and stock dividend to share holders.

Meezan Bank Annual Report 2022 179

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

11.13 Particulars of write offs Rupees in ‘000

Against provisions 11.12 84,896 591,489

Directly charged to unconsolidated profit and loss account - 515
84,896 592,004

Write offs Rs 500,000 and above - Domestic 84,896 592,004

Write offs below Rs 500,000 - Domestic - -
84,896 592,004

11.13.1 Details of financing written off of Rs 500,000 and above

In term of sub-section (3) of section 33A of the Banking Companies Ordinance, 1962, the Statement in respect of
written off financing or any other financial relief of rupees five hundred thousand or above allowed to any person(s)
during the year ended December 31, 2022 is given in Annexure I.

Note 2022 2021

12 FIXED ASSETS
Rupees in ‘000

Capital work-in-progress 12.1 6,782,412 5,117,821

Property and equipment 12.2 22,297,092 16,304,643
Right-of-use assets 12.3 11,347,016 12,535,483
40,426,520 33,957,947
12.1 Capital work-in-progress

Advances to suppliers and contractors for:

- civil works 4,767,018 3,600,313
- computer hardware 815,696 583,704
- purchase of vehicles 76,824 346,210
- office machines 993,941 472,467
- furniture and fixtures 128,933 115,127
6,782,412 5,117,821

12.2 Property and equipment

2022
Leasehold Buildings on Leasehold Furniture Electrical, Vehicles Total
Land leasehold improvements and fixtures office and
land computer
equipments
Rupees in ‘000
At January 1, 2022

Cost 5,919,065 2,408,559 8,516,895 1,048,975 8,761,012 3,212,583 29,867,089

Accumulated depreciation - 799,083 4,794,140 578,310 6,030,200 1,360,713 13,562,446
Net book value 5,919,065 1,609,476 3,722,755 470,665 2,730,812 1,851,870 16,304,643

At December 31, 2022

Opening net book value 5,919,065 1,609,476 3,722,755 470,665 2,730,812 1,851,870 16,304,643
Additions 509,619 1,499,517 1,733,755 343,553 3,715,086 1,406,345 9,207,875
Transfer from non-banking assets 64,815 - - - - - 64,815
Disposals - - (26,000) (1,147) (17,576) (112,909) (157,632)
Depreciation charge (note 30) - (152,665) (745,208) (107,459) (1,400,698) (716,579) (3,122,609)
Closing net book value 6,493,499 2,956,328 4,685,302 705,612 5,027,624 2,428,727 22,297,092

At December 31, 2022

Cost 6,493,499 3,908,076 10,172,770 1,378,281 12,241,117 4,161,690 38,355,433
Accumulated depreciation - 951,748 5,487,468 672,669 7,213,493 1,732,963 16,058,341
Net book value 6,493,499 2,956,328 4,685,302 705,612 5,027,624 2,428,727 22,297,092
Rate of depreciation (percentage) - 5 10 10 10 and 20 20

180 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2021
Leasehold Buildings on Leasehold Furniture Electrical, Vehicles Total
Land leasehold improvements and fixtures office and
land computer
equipments
Rupees in ‘000
At January 1, 2021

Cost 4,881,161 2,012,816 7,901,111 921,210 7,628,283 2,597,383 25,941,964

Accumulated depreciation - 691,325 4,075,042 504,963 5,128,924 1,011,545 11,411,799
Net book value 4,881,161 1,321,491 3,826,069 416,247 2,499,359 1,585,838 14,530,165

At December 31, 2021

Opening net book value 4,881,161 1,321,491 3,826,069 416,247 2,499,359 1,585,838 14,530,165
Additions 1,037,904 395,743 616,091 130,810 1,173,501 939,347 4,293,396
Transfer from non-banking assets - - - - - - -
Disposals - - (174) (72) (1,033) (101,232) (102,511)
Depreciation charge (note 30) - (107,758) (719,231) (76,320) (941,015) (572,083) (2,416,407)
Closing net book value 5,919,065 1,609,476 3,722,755 470,665 2,730,812 1,851,870 16,304,643

At December 31, 2021

Cost / Revalued amount 5,919,065 2,408,559 8,516,895 1,048,975 8,761,012 3,212,583 29,867,089
Accumulated depreciation - 799,083 4,794,140 578,310 6,030,200 1,360,713 13,562,446
Net book value 5,919,065 1,609,476 3,722,755 470,665 2,730,812 1,851,870 16,304,643
Rate of depreciation (percentage) - 5 10 10 10 and 20 20

12.2.1 Included in cost of property and equipment are fully depreciated items still in use aggregating Rs 6,529 million (2021:
Rs 5,749 million).

12.2.2 Details of disposal of fixed assets to related parties or other persons having net book value of Rs 500,000 or above
are as follows:

Description Cost Accumulated Net book Sale Mode of Particulars of purchaser

depreciation value proceeds disposal
Rupees in ‘000
Vehicles

Toyota Land Cruiser 11,525 8,644 2,881 5,655 MBL Staff Policy Mr Arshad Majeed (Executive, Ex-employee)
Toyota Prado 8,906 7,391 1,515 3,331 MBL Staff Policy Mr Ahmed Ali Siddiqui (Executive, Employee)
Toyota Fortuner 6,735 4,925 1,810 3,793 MBL Staff Policy Mr Kazi Muhammad Aamir (Late) (Executive,
Ex-employee)
Toyota Fortuner 6,166 5,532 634 2,339 MBL Staff Policy Mr Shabbir Hamza Khandwala (Executive, Employee)
Toyota Revo 4,055 3,514 541 1,921 MBL Staff Policy Mr Urooj Ul Hasan Khan (Executive, Employee)
KIA Sportage 5,020 1,504 3,516 4,036 MBL Staff Policy Mr Imran Taufiq Dhedhi (Executive, Ex-employee)
KIA Sorento 4,195 764 3,431 4,581 MBL Staff Policy Mr Mian Nasir Mehmood (Executive, Ex-employee)
BMW 6,318 5,792 526 2,271 MBL Staff Policy Mr Ariful Islam (Deputy Chief Executive Officer, a
related party)
Honda Civic 3,864 2,438 1,426 2,204 MBL Staff Policy Mr Nizar Diamond Ali (Executive, Employee)
Honda Civic 3,495 2,384 1,111 1,810 MBL Staff Policy Syed Mehdi Abbas Naqvi (Executive, Employee)
Honda Civic 3,491 2,321 1,170 1,896 MBL Staff Policy Mr Mubasher Ahmed (Executive, Employee)
Honda Civic 3,393 2,201 1,192 1,967 MBL Staff Policy Mr Muhammad Amin (Executive, Employee)
Honda Civic 2,933 2,035 898 1,676 MBL Staff Policy Mr Sohail Aslam (Executive, Ex-employee)
Honda Civic 2,864 2,272 592 1,282 MBL Staff Policy Mr Mohammad Adil Sami (Executive, Employee)
Honda Civic 2,822 1,687 1,135 1,636 MBL Staff Policy Mr Shahzad Abdullah (Executive, Employee)
Honda Civic 2,818 2,141 677 1,301 MBL Staff Policy Mr Bashir Ahmed (Executive, Ex-employee)
Honda Civic 2,768 2,147 621 1,551 MBL Staff Policy Mr Kazi Muhammad Aamir (Late) (Executive,
Ex-employee)
Honda Civic 2,767 2,483 284 1,054 MBL Staff Policy Mr Shabbir Hamza Khandwala (Executive, Employee)
Honda Civic 2,632 2,104 528 1,181 MBL Staff Policy Mr Shayan Ahmed Baig (Executive, Employee)

Meezan Bank Annual Report 2022 181

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Description Cost Accumulated Net book Sale Mode of Particulars of purchaser

depreciation value proceeds disposal
Rupees in ‘000
Vehicles

Honda Civic 2,236 1,408 828 1,285 MBL Staff Policy Syed Tanveer Hussain (Executive, Employee)
Honda Civic 1,419 1,007 412 712 MBL Staff Policy Mr Arshad Majeed (Executive, Ex-employee)
Toyota Corolla 3,238 2,148 1,090 1,755 MBL Staff Policy Mr Zeeshan Ahmed (Executive, Employee)
Toyota Corolla 2,997 2,345 652 1,559 MBL Staff Policy Mr Amjad Ayub Khan (Executive, Employee)
Toyota Corolla 2,187 1,384 803 1,268 MBL Staff Policy Mr Nadeem Abdul Razzak (Executive, Employee)
Toyota Corolla 2,095 1,570 525 1,079 MBL Staff Policy Mr Muhammad Adnan Razzak (Executive, Employee)
Honda City 2,621 1,347 1,274 2,525 MBL Staff Policy Mr Munaf Usmani (Executive, Ex-employee)
Honda City 2,373 1,422 951 1,376 MBL Staff Policy Mr Tariq Kamal (Executive, Employee)
Honda City 2,055 1,505 550 1,027 MBL Staff Policy Mr Faisal Yunus (Executive, Employee)
Honda City 2,052 1,369 683 1,116 MBL Staff Policy Mr Yousaf Ijaz (Executive, Employee)
Honda City 1,904 1,206 698 1,593 MBL Staff Policy Mr Ghiyas Ud Din Butt (Late) (Executive,
Ex-employee)
Suzuki Cultus 1,501 974 527 831 MBL Staff Policy Mr Naveed Uz Zaman Khan Sherwani (Executive,
Employee)
Toyota Corolla 2,836 1,312 1,524 2,577 Negotiation Syed Muhammad Naeem
Honda City 2,577 1,238 1,339 2,372 Negotiation M/s Vava Cars Pakistan Limited
Honda City 2,568 849 1,719 2,439 Negotiation Mr Qaiser Ali Awan
Honda City 2,498 498 2,000 2,850 Negotiation M/s Augmentech Business Solution
Honda City 2,496 663 1,833 2,701 Negotiation M/s Augmentech Business Solution
Honda City 2,492 498 1,994 2,620 Negotiation M/s Augmentech Business Solution
Honda City 2,491 579 1,912 2,401 Negotiation M/s Vava Cars Pakistan Limited
Honda City 2,487 663 1,824 2,280 Negotiation Syed Muhammad Naeem
Honda City 2,456 652 1,804 2,160 Negotiation Mr Naveed Ahmad
Honda City 2,386 1,185 1,201 1,807 Negotiation Mr Muhammad Yamin
Honda City 2,362 1,101 1,261 2,058 Negotiation Mr Khurram Ayub
Honda City 1,968 1,145 823 2,173 Negotiation Mr Khurram Ayub
Honda City 1,926 1,283 643 2,150 Negotiation Mr Tanveer Mehmood
Honda City 1,914 1,339 575 2,064 Negotiation Syed Muhammad Naeem
Honda City 1,906 1,237 669 2,166 Negotiation Mr Khurram Ayub
Honda City 1,769 1,267 502 1,927 Negotiation Mr Khurram Ayub
Suzuki Cultus 1,757 849 908 1,442 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,790 446 1,344 1,486 Negotiation Mr Muhammad Chand
Suzuki Cultus 1,790 448 1,342 1,818 Negotiation Mr Adeel Hameed
Suzuki Cultus 1,790 326 1,464 1,865 Negotiation Mr Ahmar Hameed Sheikh
Suzuki Cultus 1,786 327 1,459 1,857 Negotiation Mr Haseeb Tariq
Suzuki Cultus 1,770 825 945 2,125 Negotiation M/s Augmentech Business Solution
Suzuki Cultus 1,768 852 916 1,721 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,757 849 908 1,486 Negotiation M Shahbaz Munawar
Suzuki Cultus 1,757 936 821 1,464 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,757 847 910 1,627 Negotiation Mr Tariq Mehmood
Suzuki Cultus 1,757 842 915 1,655 Negotiation Mr Adeel Hameed
Suzuki Cultus 1,757 849 908 1,387 Negotiation Mr Adnan Naseer Ahmed
Suzuki Cultus 1,757 847 910 1,488 Negotiation Mr Adnan Naseer Ahmed
Suzuki Cultus 1,757 849 908 1,682 Negotiation Mr Ahmar Hameed Sheikh
Suzuki Cultus 1,756 732 1,024 1,726 Negotiation Mr Safeer Ahmed
Suzuki Cultus 1,756 732 1,024 1,756 Negotiation Mr Safeer Ahmed
Suzuki Cultus 1,755 583 1,172 1,684 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,755 640 1,115 1,751 Negotiation Mr Adeel Hameed
Suzuki Cultus 1,755 640 1,115 1,726 Negotiation Mr Adeel Hameed
Suzuki Cultus 1,744 813 931 1,770 Negotiation M/s Augmentech Business Solution
Suzuki Cultus 1,743 668 1,075 1,853 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,743 696 1,047 1,801 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,743 813 930 1,750 Negotiation M/s Augmentech Business Solution
Suzuki Cultus 1,738 578 1,160 1,790 Negotiation M/s Augmentech Business Solution
Suzuki Cultus 1,738 608 1,130 1,851 Negotiation M/s Augmentech Business Solution
Suzuki Cultus 1,720 831 889 1,490 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,720 831 889 1,446 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,720 831 889 1,566 Negotiation Mr Adnan Naseer Ahmed
Suzuki Cultus 1,485 716 769 1,514 Negotiation Mr Adnan Naseer Ahmed

182 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Description Cost Accumulated Net book Sale Mode of Particulars of purchaser

depreciation value proceeds disposal
Rupees in ‘000
Vehicles

Suzuki Cultus 1,471 708 763 1,652 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,443 938 505 1,472 Negotiation Mr Adnan Naseer Ahmed
Suzuki Cultus 1,429 809 620 1,636 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,419 851 568 1,412 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,413 895 518 1,434 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,407 767 640 1,602 Negotiation Mr Riaz Ahmed Khan
Suzuki Cultus 1,404 795 609 1,623 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,404 772 632 1,801 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,385 716 669 1,541 Negotiation Mr Riaz Ahmed Khan
Suzuki Cultus 1,336 801 535 1,470 Negotiation Mr Tariq Mehmood
Suzuki Cultus 1,308 892 416 1,575 Negotiation Mr Adeel Hameed
Toyota Corolla 2,735 1,959 776 2,135 Takaful Claim M/s EFU General Insurance Limited
Toyota Corolla 2,493 1,536 957 2,606 Takaful Claim M/s EFU General Insurance Limited
Honda City 2,492 664 1,828 2,467 Takaful Claim M/s EFU General Insurance Limited
Suzuki Cultus 1,786 587 1,199 1,780 Takaful Claim M/s EFU General Insurance Limited
Suzuki Cultus 1,774 206 1,568 1,780 Takaful Claim M/s EFU General Insurance Limited
Suzuki Cultus 1,773 147 1,626 1,780 Takaful Claim M/s EFU General Insurance Limited
Suzuki Cultus 1,404 794 610 1,425 Takaful Claim M/s EFU General Insurance Limited
231,074 131,114 99,960 178,124

Leasehold improvements

Civil Works 13,616 9,650 3,966 670 Negotiation M/s Mughal Scrap
Civil Works 9,463 7,907 1,556 867 Negotiation M/s Mughal Scrap
Civil Works 6,957 3,635 3,322 4,406 Takaful Claim Ms Adamjee General Insurance Limited
Civil Works 618 108 510 557 Takaful Claim Ms Adamjee General Insurance Limited
30,654 21,300 9,354 6,500

Other disposals

Vehicles 226,164 213,215 12,949 99,504

Electrical, office
and computer
equipment 234,981 217,405 17,576 58,125
Furniture and Fixtures 14,247 13,100 1,147 4,953
Leasehold improvements 47,226 30,580 16,646 25,223
522,618 474,300 48,318 187,805
Total disposals 784,346 626,714 157,632 372,429

2022
Cost Accumulated Net Book
Depreciation Value
12.3 Right-of-use assets Rupees in ‘000

At January 1, 19,050,825 (6,515,342) 12,535,483

Additions during the year 1,439,921 - 1,439,921
Adjusted upon reassessment of useful life (note 12.3.1) 624,880 - 624,880
Depreciation Charge - (3,054,831) (3,054,831)
Derecognition during the year (432,906) 234,469 (198,437)
At December 31, 20,682,720 (9,335,704) 11,347,016
Useful life 5 years

Meezan Bank Annual Report 2022 183

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2021
Cost Accumulated Net Book
Depreciation Value
Rupees in ‘000

At January 1, 9,975,122 (4,167,850) 5,807,272

Additions during the year 942,515 - 942,515
Adjusted upon reassessment of useful life 8,178,322 - 8,178,322
Depreciation Charge - (2,392,626) (2,392,626)
Derecognition during the year (45,134) 45,134 -
At December 31, 19,050,825 (6,515,342) 12,535,483
Useful life 2 - 7 years

12.3.1 During the current year, the Bank has reassessed a number of existing lease agreements resulting in reassessment of
the lease agreements under IFRS 16, 'Leases'.

The Bank has remeasured the lease liabilities by discounting the revised lease payments using the revised discount
rates and making a corresponding adjustment to the right-of-use assets.

2022 2021

13 INTANGIBLE ASSETS Rupees in ‘000

Computer Software 1,421,338 1,235,876

Advance against computer software 422,646 259,934
1,843,984 1,495,810

13.1 At January 1, 2022

Cost 3,178,875 2,331,467
Accumulated amortisation 1,942,999 1,585,954
Net book value 1,235,876 745,513

Year ended December 31,2022

Opening net book value 1,235,876 745,513
Additions - directly purchased 644,046 847,408
Amortisation charge (note 30) (458,584) (357,045)
Closing net book value 1,421,338 1,235,876

At December 31, 2021

Cost 3,822,921 3,178,875
Accumulated amortisation 2,401,583 1,942,999
Net book value 1,421,338 1,235,876
Rate of amortisation (percentage) 10-20 10-20
Useful life 5 - 10 years 5 - 10 years

13.1.1 Included in cost of intangible assets are fully amortised items still in use aggregating Rs 1,449 million (2021: Rs 1,219 million).
Remaining life of intangible assets ranges from 1 to 10 years.

184 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

14 DEFERRED TAX ASSETS / (LIABILITIES)

2022
At January 1, Recognised Recognised At December
2022 in profit and in OCI 31, 2022
loss account
Rupees in ‘000
Taxable temporary differences on:

Excess of accounting book values over tax

written down values of owned assets (136,865) (326,465) - (463,330)
Surplus on revaluation of non-banking
assets acquired in satisfaction of claims (15,045) 66 12,958 (2,021)
(151,910) (326,399) 12,958 (465,351)
Deductible temporary differences on:

(Surplus) / deficit on revaluation of available

for sale investments (2,583,001) - 3,085,686 502,685
Provision for diminution / impairment in value
of investments 1,209,055 168,965 - 1,378,020
Income not accrued due to non-culmination of
financing 1,365,823 1,632,208 - 2,998,031
Provision against non-performing Islamic financing
and related assets 125,678 36,812 - 162,490
Provision against non-banking assets acquired
in satisfaction of claims and others 209,910 (139,783) - 70,127
327,465 1,698,202 3,085,686 5,111,353
175,555 1,371,803 3,098,644 4,646,002

2021
At January 1, Recognised Recognised At December
2021 in profit and in OCI 31, 2021
loss account
Rupees in ‘000
Taxable temporary differences on:

Excess of accounting book values over tax

written down values of owned assets (321,162) 184,297 - (136,865)
Surplus on revaluation of available
for sale investments (2,984,345) - 401,344 (2,583,001)
Surplus on revaluation of non-banking
assets acquired in satisfaction of claims (10,737) 60 (4,368) (15,045)
(3,316,244) 184,357 396,976 (2,734,911)
Deductible temporary differences on:

Provision for diminution / impairment in value

of investments 1,009,932 199,123 - 1,209,055
Income not accrued due to non-culmination of
financing 1,048,537 317,286 - 1,365,823
Provision against non-performing Islamic financing
and related assets 1,474,152 (1,348,474) - 125,678
Provision against non-banking assets acquired
in satisfaction of claims and others 173,276 36,634 - 209,910
3,705,897 (795,431) - 2,910,466

389,653 (611,074) 396,976 175,555

Meezan Bank Annual Report 2022 185

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000
15 OTHER ASSETS

Profit / return accrued in local currency - net of provisions 68,614,403 48,899,926

Profit / return accrued in foreign currencies - net of provisions 390,362 109,199
Acceptances 12,495,872 10,925,144
Advances, deposits, and other prepayments 15.1 2,301,748 2,075,376
Non-banking assets acquired in satisfaction of claims 15.2 50,301 115,269
Mark to market gain on forward foreign exchange contracts 20.7 - 976,644
Receivables on account of sale of securities 61,941 -
Dividends receivable 950 4,093
Stamps 27,400 25,173
Security deposits 427,931 234,949
Advance for Investments - 882
Other 1,111,114 436,175
85,482,022 63,802,830
Less: provision held against other assets 15.3.1 (107,921) (39,854)
Other Assets (net of provision) 85,374,101 63,762,976
Surplus on revaluation of non-banking assets acquired in
satisfaction of claims 23 4,699 38,578
Other assets - total 85,378,800 63,801,554

15.1 This includes prepaid takaful aggregating Rs 826 million (2021: Rs. 847 million) which is being amortised over a period of
one year.

2022 2021
Rupees in ‘000

15.2 Market value of Non-banking assets acquired in satisfaction of claims 55,000 153,847

Market value of the non-banking assets acquired in satisfaction of claims has been carried out by an independent valuers,
M/s K.G. Traders (Private) Limited based on prevailing market values determined through independent market inquiries from
local active realtors as more detailed in note 41.3. The valuer is listed on the panel of Pakistan Banks' Association.

15.2.1 Non-banking assets acquired in satisfaction of claims 2022 2021

Rupees in ‘000

Opening Balance 115,269 115,422

Depreciation (153) (153)
Transfer to fixed assets (64,815) -
Closing Balance 50,301 115,269

15.3 Provision held against other assets

Others 107,921 39,854

107,921 39,854

15.3.1 Movement in provision held against other assets

Opening balance 39,854 53,923

Charge for the year 134,167 61,004
Reversals (8,056) (36,518)
Amount adjusted / written off (58,044) (38,555)
Closing balance 107,921 39,854

186 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

16 BILLS PAYABLE Rupees in ‘000

In Pakistan 40,175,122 36,141,378

Outside Pakistan - -
40,175,122 36,141,378

17 DUE TO FINANCIAL INSTITUTIONS

In Pakistan 573,326,439 220,414,234

Outside Pakistan - -
573,326,439 220,414,234
17.1 Details of due to financial institutions secured / unsecured

Secured
With State Bank of Pakistan
Musharakah under Islamic Export Refinance Scheme 17.1.1 71,610,934 55,181,621
Investment under Islamic Long Term Financing Facility 17.1.2 25,694,774 17,490,047
Investment under Islamic Refinance Facility for Combating COVID-19 17.1.2 955,573 1,244,792
Investment under Islamic Financing for Renewal Energy 17.1.2 17,251,134 12,967,880
Investment under Islamic Temporary Economic Refinance
Facility for Plant and Machinery 17.1.2 19,384,119 13,230,968
Investment under Islamic Refinance Scheme for storage
of agriculture produce 17.1.2 282,324 40,677
Investment under Islamic Refinance Scheme for payment of
wages and salaries 17.1.2 - 2,177,385
Investment under Islamic Refinance Scheme for SME Asaan Finance 17.1.2 201,614 -
Investment under Shariah Compliant Open Market Operations 17.1.3 363,382,155 -
Investment under Shariah Compliant Standing Ceiling Facility - 39,993,944
Total secured 498,762,627 142,327,314

With Scheduled Bank 17.1.4 30,000,000 30,000,000

Other financial institutions 17.1.5 5,856,908 693,096

Unsecured
Overdrawn nostro accounts 496,904 443,824
Musharakah with scheduled banks / financial institutions 17.1.6 37,775,000 46,950,000
Others 435,000 -
573,326,439 220,414,234

17.1.1 These Musharakah are on a profit and loss sharing basis maturing between January 2023 to June 2023 and are secured
against demand promissory notes executed in favour of SBP. A limit of Rs 81,869 million (2021: Rs 58,140 million) has been
allocated to the Bank by SBP under Islamic Export Refinance Scheme. Last announced profit rate on the Musharakah
investment is 7.22% per annum.
17.1.2 These Investments are on profit and loss sharing basis which has been invested in general pool of the Bank and are secured
against demand promissory notes executed in favour of SBP. Last announced profit rate on these investments ranges from
0.18% to 4.90% per annum.
17.1.3 These represents acceptance of funds by the Bank on Mudarabah basis which has been invested in special pools of the Bank
and are secured against lien of the Bank's investment in Federal Government securities. The expected average return on
Open Market Operations is 15.91% (2021: Nil) per annum.
17.1.4 These represents acceptance of funds by the Bank on Musharakah basis which are secured against pledge of the Bank's
investment in Federal Government securities (Note 10.2.2). The expected average return on these Musharakah is around
16.15% (2021: 10.65%) per annum. These balances have matured in January 2023 (2021: January 2022).
17.1.5 These Musharakah are on profit and loss sharing basis with Pakistan Mortgage Refinance Company and Karandaaz with the
objective of promoting low cost consumer housing and growth in SME financing respectively. The expected average return
on Karandaaz Musharakah ranges from 9.02% to 20.26% per annum. The expected profit rate on PMRC borrowing is 12.89%
per annum (2021: Nil) having maturity in November 2027.
17.1.6 These represents acceptance of funds by the Bank on Musharakah basis. The expected average return on these Musharakah
is around 15.51% (2021: 10.37%) per annum. These balances have matured in January 2023 (2021: January 2022).

Meezan Bank Annual Report 2022 187

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2022 2021
17.2 Particulars of due to financial institutions with respect to currencies Rupees in ‘000

In local currency 572,829,535 219,970,410

In foreign currencies 496,904 443,824
573,326,439 220,414,234
17.3 Particulars of due to financial institutions

Short - term 504,444,883 175,358,839

Long - term 68,881,556 45,055,395
573,326,439 220,414,234

18 DEPOSITS AND OTHER ACCOUNTS

2022 2021
In Local In Foreign Total In Local In Foreign Total
currency currencies currency currencies
Rupees in ‘000
Customers
- Current accounts - non-remunerative 736,468,532 38,420,227 774,888,759 622,823,894 30,848,040 653,671,934
- Savings deposits 581,314,505 53,554,524 634,869,029 492,095,194 43,166,844 535,262,038
- Fixed deposits 181,114,576 16,136,130 197,250,706 231,366,955 14,454,313 245,821,268
- Margin 40,429,443 2,005,656 42,435,099 12,003,635 6,566 12,010,201
1,539,327,056 110,116,537 1,649,443,593 1,358,289,678 88,475,763 1,446,765,441

Financial institutions
- Current accounts - non-remunerative 1,770,475 345,846 2,116,321 1,829,027 308,877 2,137,904
- Savings deposits 5,929,062 904 5,929,966 6,096,621 702 6,097,323
- Fixed deposits 1,000,238 - 1,000,238 885,800 - 885,800
8,699,775 346,750 9,046,525 8,811,448 309,579 9,121,027
1,548,026,831 110,463,287 1,658,490,118 1,367,101,126 88,785,342 1,455,886,468

2022 2021
Rupees in ‘000
18.1 Composition of deposits
- Individuals 1,162,218,140 979,782,648
- Government (Federal and Provincial) 8,258,422 6,950,408
- Public Sector Entities 15,684,966 16,747,910
- Banking Companies 4,961 68,346
- Non-Banking Financial Institutions 9,041,564 9,052,681
- Private Sector 463,282,065 443,284,475
1,658,490,118 1,455,886,468
18.2 Particulars of deposits and other accounts in Pakistan
- In local currency
Mudaraba based deposits 780,027,861 737,046,342
Qard based deposits 767,998,970 630,054,784
1,548,026,831 1,367,101,126
- In foreign currencies
Mudaraba based deposits 71,688,818 57,621,859
Qard based deposits 38,774,469 31,163,483
110,463,287 88,785,342
1,658,490,118 1,455,886,468

18.3 Eligible deposits covered under deposit protection scheme (including call deposit receipts disclosed under bills payable)
amount to Rs 1,401,490 million (2021: Rs 1,243,142 million).

188 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000
19 SUB-ORDINATED SUKUK

Additional Tier I Sukuk 19.1 7,000,000 7,000,000

Tier II Sukuk 19.2 13,990,000 13,990,000
20,990,000 20,990,000

19.1 In August 2018, the Bank issued regulatory Shariah compliant unsecured, sub-ordinated privately placed Additional Tier I Sukuk
based on Mudaraba of Rs 7,000 million as instrument of redeemable capital under section 66 of the Companies Act, 2017. The
brief description of Additional Tier I sukuk is as follows:

Credit Rating AA (Double A) by VIS Credit Rating Company Limited.

Issue Date August 01, 2018
Tenor Perpetual
Profit payment frequency Monthly in arrears
Redemption Perpetual. However, the Bank has call option which can be exercised with prior approval
of SBP.
Expected Periodic Profit Amount The Mudaraba Profit is computed under General Pool on the basis of profit sharing ratio
(Mudaraba Profit Amount)-Non- and monthly weightages announced by the Bank under the SBP guidelines of pool
discretionary subject to actual management. Last announced profit rate on the Sukuk is 17.68% per annum.
profit of the pool
Call Option The Bank may call Additional Tier I Sukuk with prior approval of SBP on or after five
years from the date of issue.
Loss Absorbency The Additional Tier I Sukuk, at the option of the SBP, will be fully and permanently
converted into common shares (variable) upon the occurrence of a point of non-viability
trigger event as determined by SBP or for any other reason as may be directed by SBP.
Lock-in-Clause Profit and/or redemption amount can be held back in respect of the Additional Tier I
Sukuk, upon directive of the SBP, if such payment will result in a shortfall in the Bank’s
minimum capital requirement, capital adequacy ratio requirement or leverage ratio
requirement.

19.2 In January 2020 and December 2021, the Bank issued regulatory Shariah compliant unsecured, subordinated privately placed
Tier II Sukuk based on Mudaraba of Rs 4,000 million and Rs 9,990 million respectively as instrument of redeemable capital
under section 66 of the Companies Act, 2017. The brief description of Tier II sukuk is as follows:

Credit Rating AA+ (Double A plus) by VIS Credit Rating Company Limited.
Issue Date January 09, 2020 and December 16, 2021.
Tenor 10 years from the issue date.
Profit payment frequency Semi-annually in arrears.
Redemption Bullet payment at the end of the tenth year.
Expected Periodic Profit Amount The Mudaraba Profit is computed under General Pool on the basis of profit sharing ratio
(Mudaraba Profit Amount)-Non- and monthly weightages announced by the Bank under the SBP guidelines of pool
discretionary subject to actual management. Last announced profit rate on the Sukuk are 16.28% and 16.28% per
profit of the pool annum respectively.
Call Option The Bank may call Tier II Sukuk with prior approval of SBP on or after five years from
the date of issue.
Loss Absorbency The Tier II Sukuk, at the option of the SBP, will be fully and permanently converted into
common shares (variable) upon the occurrence of a point of non-viability trigger event
as determined by SBP or for any other reason as may be directed by SBP.
Lock-in-Clause Profit and/or redemption amount can be held back in respect of the Tier II Sukuk upon
directive of the SBP, if such payment will result in a shortfall in the Bank’s minimum
capital requirement, capital adequacy ratio requirement or leverage ratio requirement.

Meezan Bank Annual Report 2022 189

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

20 OTHER LIABILITIES Rupees in ‘000

Return on deposits and other dues

- payable in local currency 20.1 13,408,460 4,643,447
- payable in foreign currencies 222,900 49,414
Unearned income 20.2 2,123,582 1,449,591
Accrued expenses 20.3 17,360,130 12,187,304
Current taxation (provision less payments) 20,084,580 13,498,972
Acceptances 12,495,872 10,925,144
Unclaimed dividends 3,825,350 19,490
Payable to defined benefit plan 37.3 & 37.15 1,198,444 941,589
Provision against off-balance sheet obligations 20.4 55,167 55,167
Charity payable 20.5 4,159 3,932
Security deposits against Ijarah 21,959,346 20,370,305
Payable on account of credit murabaha / ijarah / musawammah 20.6 53,681,143 24,819
Security deposits against lockers 183,412 160,555
Mark to market loss on forward foreign exchange commitments - net 20.7 214,602 -
Advance against future Diminishing Musharakah 34,987 490,951
Withholding taxes payable 400,426 275,530
Lease liability against right-of-use assets 20.8 12,813,226 13,107,177
Workers Welfare Fund payable 20.9 5,620,598 3,710,254
Others 3,408,755 1,067,904
169,095,139 82,981,545

20.1 This includes Rs 1,226 million (2021: Rs 264 million) in respect of return accrued on acceptances from SBP under the Islamic
Export Refinance Scheme and Rs 365.80 million (2021: Rs 221.30 million) in respect of return accrued on acceptances from
the SBP under various Islamic Long Term Refinance Schemes.

20.2 The Bank expects that the present balance of unearned income will be recognised as income in the next financial year

20.3 This includes Rs 1.99 million (2021: Rs 3.97 million) in respect of payable to Al Meezan Investment Management Limited
(Subsidiary).

Note 2022 2021

Rupees in ‘000
20.4 Provision against off-balance sheet obligations

Opening balance 55,167 36,489

Charge for the year - 18,678
Closing balance 20.4.1 55,167 55,167

20.4.1 This represents provision recognised against guarantees and letter of credit of non-performing customers.

Note 2022 2021

20.5 Reconciliation of charity payable Rupees in ‘000

Balance as at January 1 3,932 989

Additions during the year 147,472 201,777
Less: Transferred to charity savings account
(included in deposits and other accounts) 20.5.1 (147,245) (198,834)
Balance as at December 31 4,159 3,932

190 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

20.5.1 Charity paid through savings account during the year is Rs 121.43 million (2021: Rs 94.20 million). Charity
of Rs 100,000 or higher was paid to the following organisations:
2022 2021
Rupees in ‘000

Ihsan Trust - Related Party 55,000 63,000

Institute of Business Administration - Centre for Excellence in Islamic Finance 17,330 25,800
Alamgir Welfare Trust 8,500 -
Baitussalam Welfare Trust 5,000 -
Saylani Welfare Trust 5,000 -
Patients' Behbud Society for the Aga Khan University Hospital 2,000 -
Bahauddin Zakariya University, Multan 2,500 -
The Indus Hospital, Karachi 2,000 -
Rashid Memorial Welfare Organization 1,000 -
Friends of Burns Centre, Karachi 1,000 -
Transformation International Society, Karachi 1,000 -
Child Life Foundation, Karachi 1,000 -
Patients Welfare Foundation, Creek General Hospital 1,000 -
Diya Pakistan - Related Party 1,000 -
Idara Al-Khair Welfare Society 1,000 -
Pakistan's Childrens' Heart Foundation 1,000 500
Afzaal Memorial Thalassemia Foundation 500 -
Chhipa Welfare Association 500 -
Family Educational Services Foundation 500 -
Bin Qutab Foundation 500 500
The Garage School 500 400
Karigar Training Institute 500 300
Omair Sana Foundation 500 300
Muhammadi Blood Bank 500 -
NICE Welfare Society 500 -
Help of Patients in Exigency by Students (HOPES) 500 -
Patients Aid Foundation, Jinnah Postgraduate Medical Centre, Karachi 500 -
Balochistan University of Information Technology, Engineering and
Management Sciences 500 -
University of Agriculture, Faisalabad 500 -
Islamia University, Bahawalpur 500 -
University of Punjab 500 -
Institute of Business Management, Karachi 500 -
NED University of Engineering & Technology, Karachi 500 -
Jinnah University for Women, Karachi 500 -
Quaid-i-Azam University, Islamabad 500 -
University of Karachi 500 -
Behbud Association, Karachi 500 -
Federal Urdu University of Arts, Science and Technology 500 -
COMSATS University, Islamabad 500 -
The Cancer Foundation, Karachi 500 -
Al Mustafa Welfare Society - Karachi 500 -
Pakistan Disabled Foundation 500 -
Zubaida Machiyara Trust 500 200
Pakistan Eye Bank 500 200
Mukhtaran Rafiq Foundation 500 200
Pakistan Association of Deaf 300 100
Kiran Foundation 300 -
Jamiyat Punjabi Saudagran-e-Delhi 300 -
Life Care Foundation Trust 300 -
Fatimid Foundation 200 -
Read Foundation 100 -
Dua Foundation 100 -
Prevention of Blindness Trust - 500
Burhani Medical Welfare Association - 400
Jamal Noor Hospital - 300
Frontier Foundation Welfare Hospital And Blood Transfusion Service - 200
Women Islamic Lawyer's Forum - 200
Child Aid Association - 200
Women Empowerment Group - 200
Health Education Livelihood Promoters (HELP) - Balochistan - 200
The Kidney Centre, Karachi - 200
Health & Social Welfare Association - 200
The Diabetes Centre - 100
121,430 94,200

20.5.2 The balance in Charity's savings account is Rs 155.79 million (2021: Rs 122.60 million).

Meezan Bank Annual Report 2022 191

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

20.5.3 Movement of charity fund during the year is as under: 2022 2021
Rupees in ‘000

Opening balance 126,535 17,980

Additions during the year

Received from customers on delayed payment 122,793 108,650
Dividend Purification Amount 15,359 16,002
Non-shariah compliance income 9,320 77,125
Profit on charity saving account (net of bank charges) 7,373 978
154,845 202,755

Distribution of Charity
Education (84,030) (89,200)
Health (13,200) (4,000)
Health & Education - (1,000)
Community Development (24,200) -
(121,430) (94,200)
Closing balance 159,950 126,535

20.6 This represents payable on account of credit Musawammah in accordance with the guidelines of the State Bank of Pakistan.

20.7 This is net off gain on forward foreign exchange commitments of Rs 1,787 million (2021: net off loss on forward foreign
exchange commitments of Rs 1,965 million - Note 15).

20.8 The carrying amounts of lease liability against right-of-use assets and the movement during the year are as follows:

2022 2021
Rupees in ‘000

As at January 1, 13,107,177 6,474,235

Additions 1,439,921 942,515
Adjustment upon reassessment of useful life 624,880 8,178,322
Amortisation of lease liability against right-of-use assets 1,522,963 770,406
Derecognition during the year (198,437) -
Payments (3,683,278) (3,258,301)
As at December 31, 12,813,226 13,107,177

20.9 The Bank has made full provision for Workers Welfare Fund (WWF) based on profit for the respective years (2008-2022). In
2016, the Supreme Court of Pakistan vide its order dated November 10, 2016 has held that the amendments made in the
law introduced by the Federal Government for the levy of Workers Welfare Fund were not lawful. The Federal Board of
Revenue filed review petitions against this order which are currently pending. Legal advice obtained on the matter indicates
that consequent to filing of these review petitions the judgment may not be treated as conclusive. Accordingly, the Bank
continues to maintain the provision in respect of WWF.

21 SHARE CAPITAL

21.1 Authorised capital

2022 2021 2022 2021

(Number of Shares) Rupees in ‘000

3,253,860,000 3,253,860,000 Ordinary shares of Rs 10 each 32,538,600 32,538,600

21.2 Issued, subscribed and paid up capital

2022 2021 2022 2021

(Number of Shares) Rupees in ‘000
Fully paid-up ordinary shares of Rs 10 each
516,517,908 516,517,908 Issued for cash 5,165,179 5,165,179
1,273,106,413 1,110,413,293 Issued as bonus shares 12,731,064 11,104,133
1,789,624,321 1,626,931,201 17,896,243 16,269,312

192 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

21.3 Shareholding held by associated companies / entities are as follows:

2022 2021
Number of Percentage of Number of Percentage of
Name of Shareholders shares held Shareholding shares held Shareholding

Noor Financial Investment Company, Kuwait 630,819,684 35.25% 573,472,440 35.25%

Pakistan Kuwait Investment Company (Private) Limited 536,887,288 30.00% 488,079,353 30.00%
Islamic Development Bank, Jeddah 166,863,457 9.32% 151,694,052 9.32%
CDC - Trustee Meezan Islamic Fund 15,079,983 0.84% 15,277,983 0.94%
CDC - Trustee Al Meezan Mutual Fund 2,871,197 0.16% 2,285,548 0.14%
CDC - Trustee Meezan Tahaffuz Pension Fund 2,712,724 0.15% 2,374,743 0.15%
CDC - Trustee KSE Meezan Index Fund 1,658,338 0.09% 1,294,530 0.08%
CDC - Trustee Meezan Balanced Fund 817,023 0.05% 1,149,463 0.07%
CDC - Trustee Meezan Asset Allocation Fund 526,683 0.03% 645,167 0.04%
CDC - Trustee Meezan Dedicated Equity Fund 498,227 0.03% 497,080 0.03%
Trustee Habbah Education Trust 72,532 0.00% 65,939 0.00%
CDC - Trustee Meezan Pakistan Exchange Traded Fund 66,263 0.00% - 0.00%

Note 2022 2021

22 RESERVES
Rupees in ‘000

Share Premium 2,406,571 2,406,571

Statutory reserve 22.1 22,169,518 17,668,857
Non Distributable Capital Reserve - Gain on Bargain Purchase 3,117,547 3,117,547
Employee share option compensation reserve 39 427,419 133,457
General reserve 66,766 66,766
28,187,821 23,393,198

22.1 Under section 21(i)(b) of the Banking Companies Ordinance, 1962, an amount not less than 10.00% of the profit is to be
transferred to create a reserve fund.

23 (DEFICIT) / SURPLUS ON REVALUATION OF ASSETS - NET OF TAX Note 2022 2021

Rupees in ‘000
Available for sale securities
- Listed shares 1,035,172 1,928,965
- Sukuk (2,204,206) 4,694,113
(1,169,034) 6,623,078
Non-banking assets acquired in satisfaction of claims 23.1 4,699 38,578
(1,164,335) 6,661,656
Less: Deferred tax asset / (liability) on
- Available for sale securities 502,685 (2,583,001)
- Non-banking assets acquired in satisfaction of claims 23.1 (2,021) (15,045)
500,664 (2,598,046)
(663,671) 4,063,610

23.1 Surplus on revaluation of non-banking assets acquired in satisfaction of claims

Surplus on revaluation as at January 1 38,578 30,678

Recognised during the year (3,542) 8,053
Adjusted upon transfer to fixed assets during the year (30,184) -
Transferred to unappropriated profit in respect of incremental
depreciation charged during the year (153) (153)
Surplus on revaluation as at December 31 4,699 38,578

Less: related deferred tax liability on:

- Revaluation as at January 1 15,045 10,737
- Impact of change in applicable tax rate 1,544 -
- Revaluation recognised during the year (1,523) 4,368
- Adjusted upon transfer to fixed assets during the year (12,979) -
- Incremental depreciation charged during the year (66) (60)
2,021 15,045
2,678 23,533

Meezan Bank Annual Report 2022 193

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

24 CONTINGENCIES AND COMMITMENTS Note 2022 2021

Rupees in ‘000

-Guarantees 24.1 56,485,801 45,072,765

-Commitments 24.2 1,238,876,726 887,366,094
-Other contingent liabilities 24.3 1,802,000 1,802,000
1,297,164,527 934,240,859
24.1 Guarantees:
Financial guarantees 570,477 930,441
Performance guarantees 33,361,532 23,651,964
Other guarantees 22,553,792 20,490,360
56,485,801 45,072,765
24.2 Commitments:
Documentary letters of credit 221,689,496 175,227,624
Commitments in respect of:
- forward foreign exchange transactions 24.2.1 243,862,470 200,615,279
Commitments for acquisition of:
- fixed assets 640,778 389,225
- intangible assets 291,358 309,824
Other commitments 24.2.2 772,392,624 510,824,142
1,238,876,726 887,366,094

24.2.1 Commitments in respect of forward foreign exchange contracts

Note 2022 2021
Rupees in ‘000

Purchase 139,648,096 114,757,851

Sale 104,214,374 85,857,428
243,862,470 200,615,279
24.2.2 Other Commitments

Commitments in respect of financing 24.2.2.1 772,392,624 510,824,142

24.2.2.1 The Bank makes commitments to extend credit (including to related parties) in the normal course of business
but these being revocable commitments do not attract any significant penalty or the expense if the facility is
unilaterally withdrawn, other than commitments in respect of syndicated / long term financings amounting to
Rs 61,232 million (2021: Rs 70,453 million).

24.3 Other contingent liabilities

The Income Tax Department amended the deemed assessment orders of the Bank for prior years including the tax year
2021. The additions / disallowances were mainly due to allocation of expenses relating to dividends and capital gain,
allowability of provision against loans and advances, provision against investments and provision against other assets.
In the amended order for tax year 2015, additional issues with respect to the taxability of gain on bargain purchase and
non-adjustment of loss pertaining to HSBC Bank Middle East – Pakistan Branches have also been raised. The Bank has
obtained stay order from the High Court of Sindh against the demands raised through the amended order for the tax
year 2015. Both the Bank and the department have filed appeals with the Appellate Authorities in respect of the
aforementioned matters.

The management of the Bank, in consultation with its tax advisors, is confident that the decision in respect of the above
matters would be in Bank’s favour and accordingly no provision has been made in these unconsolidated financial statements
with respect thereto. The additional tax liability in respect of gain on bargain purchase and non-adjustment of loss pertaining
to HSBC Bank Middle East – Pakistan Branches is Rs 1,096 million and Rs 706 million respectively.

25 PROFIT / RETURN EARNED ON FINANCING, Note 2022 2021

INVESTMENTS AND PLACEMENTS Rupees in ‘000

On financing 25.1 89,733,691 43,330,817

On investments in
- Available for sale securities 109,855,350 40,689,074
- Held for trading securities 484 -
- Held to maturity securities 23,329,436 1,391,185

On deposits / placements with financial institutions 9,202,271 24,661,471

232,121,232 110,072,547

25.1 The income on Ijarah under IFAS 2 is net of takaful of Rs 2,164 million (2021: Rs 1,737 million) recovered from
customers.

194 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

26 PROFIT / RETURN ON DEPOSITS AND OTHER DUES EXPENSED Note 2022 2021
Rupees in ‘000

Deposits and other accounts 26.1 59,584,928 33,995,613

Sub-ordinated Sukuk 3,022,277 1,588,467
Shariah Compliant Open Market Operations and Standing Ceiling
Facility from the State Bank of Pakistan 34,969,578 11,781
Other Musharakahs / Mudarabas 26.2 11,317,860 4,785,171
Amortisation of lease liability against right-of-use assets 1,522,963 770,406
110,417,606 41,151,438

26.1 This includes conversion cost of Rs 2,252 million (2021: Rs 2,373 million) against foreign currency deposits.

26.2 This includes Rs 2,478 million (2021: Rs 989 million) paid / payable to SBP under Islamic Export Refinance Scheme and
Rs 1,284 million (2021: Rs 689 million) paid / payable to SBP under the various Islamic Long Term Refinance Schemes.

27 FEE AND COMMISSION INCOME 2022 2021

Rupees in ‘000

Trade related fees and commissions 27.1 3,790,368 3,318,195

Commission on guarantees 174,358 179,041
Branch banking customer fees 2,278,685 1,715,285
Credit related fees 27.2 102,394 124,379
Debit card related fees 5,773,464 3,081,103
Investment banking related fees 347,619 305,304
Commission on cash management 301,411 172,878
Commission on home remittances 259,616 283,302
Others 288,139 173,321
13,316,054 9,352,808

27.1 Trade related income pertain to corporate, commercial and SME segments, branch banking fees pertain to retail banking
segment and debit card fee pertains to alternative delivery channel segment (others).
27.2 This includes consumer processing fees of Rs 46.30 million (2021: Rs 47.70 million).

28 (LOSS) / GAIN ON SECURITIES Note 2022 2021

Rupees in ‘000

Realised - net 28.1 (55,093) 348,884

Unrealised - held for trading - net 18 -
(55,075) 348,884

28.1 Realised (loss) / gain on:

Federal Government Securities 34,033 9,315

Listed Shares 37,056 306,888
Non Government Sukuk (Pakistan Energy Sukuk) - 32,659
Foreign Securities (126,182) -
Associates - 22
(55,093) 348,884

Meezan Bank Annual Report 2022 195

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

29 OTHER INCOME Note 2022 2021

Rupees in ‘000
Gain on termination of
- Ijarah financing 573,794 671,649
- Diminishing Musharakah and other financing 70,935 19,698
Gain on sale of operating fixed assets 214,797 145,657
Liabilities written back - donation to Meezan Foundation (Liquidated) 350,000 -
Others 27,876 2,506
1,237,402 839,510

30 OPERATING EXPENSES

Total compensation expense 30.1 26,327,851 19,625,308

Property expense
Depreciation on right-of-use assets 3,054,831 2,392,626
Rent and taxes 64,112 62,320
Utilities cost (including electricity and diesel) 2,081,765 1,224,763
Security (including guards) 1,197,309 824,785
Repair and maintenance (including janitorial charges) 806,487 589,158
Depreciation 897,873 826,989
Takaful expenses 3,583 4,800
Others 40,835 30,458
8,146,795 5,955,899
Information technology expenses
Software maintenance 875,434 619,499
Hardware maintenance 337,590 312,745
Depreciation 728,752 502,687
Amortisation 458,584 357,045
Network charges 318,459 267,614
2,718,819 2,059,590
Other operating expenses
Stationery and printing (including debit card related cost) 1,501,807 845,771
Repairs and maintenance 439,545 304,655
Local transportation and car running 1,214,852 646,817
Depreciation on vehicles, equipment etc. 1,495,984 1,086,731
Legal and professional charges 122,727 139,513
NIFT and other clearing charges 214,124 197,646
Marketing, advertisement and publicity 954,066 1,005,603
Security charges - cash transportation 720,409 601,360
Communication (including courier) 580,749 468,882
Travelling and conveyance 173,296 71,806
Training and Development 93,542 26,561
Donation 30.4 44,317 512
Fees, subscription and other charges 437,499 347,777
Brokerage and bank charges 267,411 306,749
Office supplies 417,196 304,337
Entertainment 72,861 67,314
Takaful expense 130,718 124,012
Outsourced services costs 30.2 22,537 23,478
Auditors' Remuneration 30.3 25,247 21,856
Fees and allowances to Shariah Board 40 43,403 36,915
Directors' fees and allowances 40 71,490 65,040
Others 2,586 22,161
9,046,366 6,715,496
46,239,831 34,356,293

196 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

30.1 Total compensation expense Note 2022 2021

Rupees in ‘000
Managerial Remuneration
i) Fixed 12,810,754 10,821,768
ii) Cash Bonus / Awards etc. 11,251,653 7,088,789
iii) Share based compensation expense 39 293,962 133,457
Charge for defined benefit plan 605,247 462,114
Contribution to defined contribution plan 538,270 463,194
Compensated absences 190,939 110,097
Others including EOBI, SESSI, uniform, sports etc. 637,026 545,889
Total compensation expense 26,327,851 19,625,308

30.2 Total cost for the year included in other operating expenses relating to outsourced activities is Rs 3,230 million (2021:
Rs 2,689 million). This cost includes outsourced service costs, which are disclosed specifically in note 30. The entire
cost pertains to payments to companies incorporated in Pakistan and mainly on account of security guards, janitorial
staff and courier services. Total cost of outsourced activities on account of portfolio management for the year given to
Al-Meezan Investment Management Limited (a related party) is Rs 22.50 million (2021: Rs 23.5 million) has been
disclosed in outsourced services costs, which has been disclosed above under operating expenses.

30.3 Auditors’ remuneration Note 2022 2021

Rupees in ‘000

Audit fee 7,000 7,000

Fee for interim review 1,170 1,170
Special certifications / review / tax advisory services 13,483 10,500
21,653 18,670

Sindh sales tax on services 2,184 2,275

Out of pocket expenses 1,410 911
25,247 21,856

30.4 Donation

The Indus Hospital 35,000 -

Akhuwat Foundation 5,000 -
Citizen Police Liaison Committee 4,317 -
Idara Al-Khair - 512
44,317 512
None of the directors, executives or their spouses had any interest in the donees.
31 OTHER CHARGES

Penalties imposed by the State Bank of Pakistan 95,150 28,172

32 PROVISIONS AND WRITE OFFS - NET

Provision against non-performing Islamic financing

and related assets - net 11.12 3,249,734 744,810
Provision for diminution in value of investments 10.3 806,681 214,623
Provision against other assets 15.3.1 & 32.1 126,111 24,486
Provision against off-balance sheet obligations 20.4 - 18,678
Bad debts written off directly - 515
Recoveries of written off financings 32.2 (5,865) (10,282)
4,176,661 992,830

Meezan Bank Annual Report 2022 197

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

32.1 This mainly represents provision (net of recoveries) against operational losses incurred by the Bank in the current or prior years.

32.2 This includes recoveries against financing written off by HSBC ME prior to its acquisition by the Bank.

33 TAXATION Note 2022 2021

Rupees in ‘000

Current 33.1 45,118,283 18,529,514

Prior years (368,262) -
Deferred (1,371,803) 611,074
43,378,218 19,140,588

33.1 Through Finance Act 2022, the effective tax rate on banking companies has been increased and consequently for the year
2022, tax rates has been enhanced to 49% (inclusive of 10% Super Tax) from 39% in 2021 (inclusive of 4% Super Tax).
Accordingly, the Bank has recognised super tax charge of Rs 9,210 million (2021: Rs 1,806 million) in the current year based
on taxable income for the year.

33.2 Relationship between tax expense and accounting profit Note 2022 2021
Rupees in ‘000

Profit before taxation 88,384,828 47,495,745

Effects of:
- Tax calculated at the applicable rate of 39% / 35% 34,470,083 16,623,511
- Super tax @ 10% / 4% 9,209,551 1,806,110
- Expenses not deductible for tax purposes (86,979) 198,572
- Other additions / adjustments for tax purposes (284,472) 119,848
- Others 70,035 392,547
Tax charge for the year 43,378,218 19,140,588

34 BASIC AND DILUTED EARNINGS PER SHARE

34.1 Basic Earnings per share

Profit for the year 45,006,610 28,355,157

(Number) Restated
Weighted average number of ordinary shares 1,789,624,321 1,789,624,321

(Rupees)
Restated
Basic earnings per share 34.4 25.15 15.84

34.2 Diluted Earnings per share

Rupees in ‘000

Profit for the year 45,006,610 28,355,157

(Number)
Restated
Weighted average number of ordinary shares 34.3 1,790,444,362 1,789,665,752

(Rupees)
Restated
Diluted earnings per share 34.4 25.14 15.84

34.3 Reconciliation of basic and diluted earning per share (Number)

Weighted average number of ordinary shares 1,789,624,321 1,789,624,321

Add: Diluted impact of Employee stock option scheme 820,041 41,431
Dilutive potential ordinary shares 1,790,444,362 1,789,665,752

198 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

34.4 The Bank has issued bonus shares during the year and accordingly the earnings per share for the comparative year has
been restated.

Note 2022 2021

35 CASH AND CASH EQUIVALENTS Rupees in ‘000
Cash and balances with treasury banks 7 117,743,106 170,500,698
Balances with other banks 8 13,676,159 16,420,036
131,419,265 186,920,734

35.1 Reconciliation of movement of liabilities to cash flows arising from financing activities

2022
Sub-ordinated Lease liability Dividend
Sukuk against right-of-use assets Payable
Rupees in ‘000

Balance as at January 01, 2022 20,990,000 13,107,177 19,490

Changes from financing cash flows

Payment against lease liability against right-of-use assets - (3,683,278) -
Dividend paid - - (7,908,045)
Total changes from financing cash flows - (3,683,278) (7,908,045)

Other changes
Addition to right-of-use-assets - 1,439,921 -
Amortisation of lease liability against right-of-use assets - 1,522,963 -
Adjustment upon reassessment of useful life - 624,880 -
Derecognition during the year - (198,437) -
Cash dividend (Rs 7 per share) - - 11,713,905
- 3,389,327 11,713,905

Balance as at December 31, 2022 20,990,000 12,813,226 3,825,350

2021
Sub-ordinated Lease liability Dividend
Sukuk against right-of-use assets Payable
Rupees in ‘000

Balance as at January 1, 2021 18,000,000 6,474,235 21,219

Changes from financing cash flows

Issuance of Sub-ordinated Sukuk - Tier II 9,990,000 - -
Redemption of Sub-ordinated Sukuk - Tier II (7,000,000) - -
Payment against lease liability against
right-of-use assets - (3,258,301) -
Dividend paid - - (9,515,742)
Total changes from financing cash flows 2,990,000 (3,258,301) (9,515,742)

Other changes
Addition to right-of-use-assets - 942,515 -
Amortisation of lease liability against
right-of-use assets - 770,406 -
Adjustment upon reassesment of useful life - 8,178,322 -
Cash dividend (Rs 6.5 per share) - - 9,514,013
- 9,891,243 9,514,013

Balance as at December 31, 2021 20,990,000 13,107,177 19,490

Meezan Bank Annual Report 2022 199

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

35.2 Additional information on operational cash flows from profit / return 2022 2021
Rupees in ‘000
Profit / Return received on financings, investments and placements 212,125,592 102,096,277
Profit / Return paid on deposits and other dues 101,479,107 40,477,380
313,604,699 142,573,657

36 STAFF STRENGTH Note 2022 2021

(Number of Staff)

Permanent 12,324 11,275

On Bank's contract 920 830
Bank's own staff strength at the end of the year 13,244 12,105

Outsourced 36.1 2,136 1,902

Total Staff Strength 15,380 14,007

36.1 This excludes outsourced security guards and janitorial staff.

37 DEFINED BENEFIT PLAN

37.1 Meezan Bank Gratuity Funded Scheme

The activities of the Gratuity Funded Scheme are governed by Meezan Bank Limited Staff Gratuity Fund established in
2000 under the provisions of a Trust Deed. Plan assets held in trust are governed by the Trust Deed as is the nature of the
relationship between the Bank and the trustees and their composition. Responsibility for governance of the plan including
the investment decisions lies with the Trustees. The Board of Trustees comprise of representatives of the Bank and scheme
participants in accordance with the Fund's Trust Deed.

37.2 Number of Employees under the Gratuity Funded Scheme Note 2022 2021
(Number)
Number of Employees eligible under the Gratuity Funded Scheme 9,941 9,245

37.3 Reconciliation of amount payable to defined benefit plan

Rupees in ‘000

Present value of defined benefit obligations 37.5 3,671,959 2,688,572

Fair value of plan assets 37.5 (3,002,944) (2,150,857)
669,015 537,715
37.4 Components of plan assets
2022 2021
Entity / Rupees in '000 % Rupees in '000 %
Instrument
Credit Rating
GoP Ijarah Sukuk Govt. Guaranteed 2,792,376 92.99 900,000 41.84

Meezan Aamdan Certificates AAA - - 1,078,388 50.13

Mutual Funds managed by

Al Meezan Investment
Management Limited AM1 130,926 4.36 133,530 6.21

Bank Islami Pakistan Limited -

Additional Tier 1 Sukuk A- 5,000 0.17 5,000 0.23

Savings account with Dubai

Islamic Bank Limited AA 141 - 133 0.01

Savings account with Meezan

Bank Limited AAA 74,501 2.48 33,806 1.58
3,002,944 100 2,150,857 100

200 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

37.5 The movement in the defined benefit obligation over the year is as follows:

2022
Present Value Fair Value of Total
of obligation Plan Assets
Rupees in ‘000

At January 1 2,688,572 (2,150,857) 537,715

Current service cost 466,852 - 466,852
Return expense / (income) 314,103 (243,317) 70,786
3,469,527 (2,394,174) 1,075,353
Remeasurements:
-Return on plan assets, excluding amounts included in
return expense / (income) shown as above - (279,586) (279,586)
-Experience gains 410,963 - 410,963
410,963 (279,586) 131,377
3,880,490 (2,673,760) 1,206,730
Contribution - (537,715) (537,715)
Benefit payments (208,531) 208,531 -

At December 31 3,671,959 (3,002,944) 669,015

2021
Present Value Fair Value of Total
of obligation Plan Assets
Rupees in ‘000

At January 1 2,190,677 (1,886,514) 304,163

Current service cost 375,047 - 375,047
Return expense / (income) 217,802 (184,021) 33,781
2,783,526 (2,070,535) 712,991
Remeasurements:
-Return on plan assets, excluding amounts
included in return expense / (income) shown
as above - 102,047 102,047
-Experience gains 26,840 - 26,840
26,840 102,047 128,887
2,810,366 (1,968,488) 841,878
Contribution - (304,163) (304,163)
Benefit payments (121,794) 121,794 -
At December 31 2,688,572 (2,150,857) 537,715

37.6 Charge for defined benefit plan (in respect of the Gratuity Funded Scheme)
2022 2021
Rupees in ‘000
37.6.1 Cost recognised in profit and loss
Current service cost 466,852 375,047
Net return cost 70,786 33,781
537,638 408,828

37.6.2 Re-measurements recognised in OCI during the year

Gain on obligation - Experience adjustment 410,963 26,840

Return on plan assets over expected return (279,586) 102,047
Total re-measurements recognised in OCI 131,377 128,887

Total expense recognised in unconsolidated Profit and Loss Account amounted to Rs 605.248 million (2021:
Rs 462.11 million) of which Rs 537.64 million (2021: Rs 408.83 million) pertains to approved Gratuity Funded
Scheme and Rs 67.61 million (2021: Rs 53.29 million) pertains to End of Service Unfunded Defined Benefit
Scheme. Total expense recognised in Other Comprehensive Income amounted to Rs 189.32 million (2021:
credit of Rs 120.50 million) of which expense of Rs 131.377 million (2021: credit of Rs 128.887 million) pertains
to Gratuity Funded Scheme and charge of Rs 57.946 million (2021: credit of Rs 8.390 million) pertains to End
of Service Unfunded Defined Benefit Scheme.

Meezan Bank Annual Report 2022 201

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

37.7 The plan assets and defined benefit obligations (in respect of the Gratuity Funded Scheme) are based in Pakistan.

37.8 Principal actuarial assumptions 2022 2021

Discount rate 14.25% p.a 12.25% p.a

Expected rate of increase in salaries 14.25% p.a 11.25% p.a
Expected rate of return on investments 14.25% p.a 12.25% p.a
Normal retirement age 60 years 60 years

37.9 Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and
experience in Pakistan. The rates assumed are based on the adjusted SLIC 2001 - 2005 mortality tables.

37.10 The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

Impact on defined benefit

obligation - Increase / (Decrease)
December 31, 2022 December 31, 2021

Change in Increase in Decrease in Increase in Decrease in

assumption assumption assumption assumption assumption
Rupees in ‘000

Discount rate 1.00% (386,264) 455,722 (277,147) 327,488

Salary growth rate 1.00% 469,642 (403,962) 340,683 (292,327)
Withdrawal rate 10.00% (7) 6 1,204 (1,212)

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant.
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method
(present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting
period) has been applied as when calculating the gratuity liability recognised within the unconsolidated Statement of
Financial Position.

37.11 The weighted average duration of the defined benefit obligation is 11.49 years.

37.12 Expected maturity analysis of undiscounted defined benefit obligation for the Gratuity Funded Scheme is as follows:

Less than a Between 1-2 Between 2-5 Over 5 years Total

year years years

Rupees in ‘000

At December 31, 2022 191,654 158,718 702,933 35,224,168 36,277,473

At December 31, 2021 165,485 137,177 429,283 15,785,623 16,517,568

37.13 Funding levels are monitored on an annual basis and are based on actuarial recommendations. Contribution for the next
year works out to Rs 586.373 million as per the actuarial valuation report of the Bank as of December 31, 2022.

202 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

37.14 Through its Gratuity Funded Scheme, the Fund is exposed to a number of risks, the most significant of which are detailed
below:

Asset volatility The plan liabilities are calculated using a discount rate set with reference to corporate
sukuk yields; if plan assets underperform to the yield, this will create a deficit. The Fund
believes that due to long-term nature of the plan liabilities and the Bank's support, the
current investment strategy manages this risk adequately.

Changes in Sukuk yields A decrease in corporate sukuk yields will increase plan liabilities, although this will be
partially offset by an increase in the value of the plans' sukuk holdings.

Inflation risk The majority of the plans' benefit obligations are linked to inflation, and higher inflation
will lead to higher liabilities. However plan assets are variable rate instruments and are
re-priced at regular intervals to off set inflationary impacts.

Life expectancy / The majority of the plans' obligations are to provide benefits on severance with the Bank
Withdrawal rate on achieving retirement. Any change in life expectancy / withdrawal rate would impact
plan liabilities.

37.15 End of Service Unfunded Defined Benefit Scheme

The Bank also operates an End of Service Unfunded Defined Benefit Scheme for the founding President and Chief
Executive Officer.

The charge in respect of current service cost is recognised based on expected period of future service. The net charge for
the year of this benefit amounted to Rs 125.56 million. The charge of Rs 67.61 million has been recognized in the Profit and
Loss Account and the charge of Rs 57.95 million has been recognised in Other Comprehensive Income. The present value
of defined benefit obligation recognised in respect of this scheme amounts to Rs 529.43 million.

The principal actuarial assumptions comprise of discount rate of 14.25 percent and salary increase rate of 8.00 percent.
The sensitivity of the defined benefit obligation due to a one percent change in discount rate would be Rs 10.10 million (in
case the discount rate is increased) and Rs 10.40 million (in case the discount rate is decreased). These sensitivities are
calculated using the same methodology as explained in note 37.10.

37.16 The disclosures made in notes 37.1 to 37.15 are based on the information included in the actuarial valuation reports of the
Bank as of December 31, 2022.

38 DEFINED CONTRIBUTION PLAN

The Bank also operates a recognised contributory provident fund for all permanent employees. Equal monthly contributions
are made, both by the Bank and the employees, to the fund at a rate of 10% of basic salary.

2022 2021
Rupees in ‘000

Contribution from the Bank 538,270 463,194

Contribution from the employees 538,270 463,194
1,076,540 926,388

39 EMPLOYEES STOCK OPTION SCHEME

During the year 2022, the Board Human Resources, Remuneration and Compensation Committee (the Committee) has granted
Share Options to the designated employees under the Meezan Bank Employees Share Option Scheme, 2021 (the Scheme)
approved by the shareholders and Securities and Exchange Commission of Pakistan (SECP) vide its letter no.
SMD/Co.86(1)/3/2001/4 dated April 21, 2021.

Under the scheme, the exercise price has been determined as 70% of the average market closing price of the Bank’s shares
quoted on the Pakistan Stock Exchange during the last forty trading days prior to the date of grant. There are no performance
measures attached to options granted. The options carry neither right to dividends nor voting rights till shares are issued to
employees on exercise of options on completion of the vesting period. The shares will be vested over a period of 4 years, with
one-third being vested after two years from the date of grant, remaining one-third after three years and the remaining one-third
after four years.

Meezan Bank Annual Report 2022 203

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

The value of these equity-settled options have been determined using the Black Scholes Merton (BSM) method using an
independent valuer. The key details of the share options granted during the year on May 01, 2022 and May 01, 2021 are as
under:
Vesting Exercise Options Options Exercise Fair value per Risk Free Standard
Period Date granted outstanding Price (Rs) option (Rs) Rate Deviation

Share options 2 years 01-May-24 2,498,648 2,498,648 94.34 44 13.50% 30.08%

issued in 2022 3 years 01-May-25 2,498,648 2,498,648 94.34 55
4 years 01-May-26 2,498,648 2,498,648 94.34 64
7,495,944 7,495,944

Vesting Exercise Options Options Exercise Fair value per Risk Free Standard
Period Date granted outstanding Price (Rs) option (Rs) Rate Deviation

Share options 2 years 01-May-23 2,340,833 2,340,833 77.43 78 10.50% 31.63%

issued in 2021 3 years 01-May-24 2,340,833 2,340,833 77.43 85
4 years 01-May-25 2,340,834 2,340,834 77.43 90
7,022,500 7,022,500

Expense arising from this scheme is disclosed in Note 30.1.

40 COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL

2022
Directors Members President Key Other Material
Shariah / CEO Management Risk Takers/
Chairman Executives Non-
Board Personnel Controllers
(other than CEO) Executives

Rupees in ‘000
Fees and allowances 11,640 - 59,850 2,500 - - -
Managerial remuneration
i) Fixed - - - 34,903 88,818 402,318 460,947
ii) Cash Bonus - - - 6,000 200,000 460,000 370,350
iii) Share based compensation expense - - - - 4,290 21,375 30,236
Charge for gratuity fund / EOSB - - - - 125,555 12,019 18,691
Contribution to defined contribution plan - - - - - 14,952 22,876
Others - - - - 4,180 1,224 -
11,640 - 59,850 43,403 422,843 911,888 903,100
Number of persons 1 - 9 4 1 22 63

2021
Directors Members President Key Other Material
Shariah / CEO Management Risk Takers/
Chairman Executives Non-
Board Personnel Controllers
(other than CEO) Executives

Rupees in ‘000
Fees and allowances 11,640 - 53,400 2,100 - - -
Managerial remuneration
i) Fixed - - - 18,815 82,239 336,441 394,768
ii) Cash Bonus - - - 16,000 175,000 388,000 330,000
iii) Share based compensation
expense - - - - 1,900 8,134 12,714
Charge for gratuity fund / EOSB - - - - 44,896 10,008 15,962
Contribution to defined
contribution plan - - - - - 12,061 19,615
Others - - - - 2,146 1,434 -
11,640 - 53,400 36,915 306,181 756,078 773,059
Number of persons 1 - 9 4 1 19 55

204 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

40.1 The Chief Executive, the key management personnel, certain members of Shariah board and certain material risk takers /
controllers have been provided with free use of the Bank's cars.

40.2 The amount of cash bonus to the key management personnel, Resident Shariah Board Member and other material risk
takers / controllers, is based on the management's best estimate.

40.3 Remuneration to Directors for participation in Board and Committee Meetings

2022
Meeting Fees and Allowances
For Board Committees
Human Resources, IFRS 9
Sr. Risk Information Remuneration & Implementation
For Board Audit Management Technology Compensation Oversight Total
No. Name of Director Meetings Committee Committee Committee Committee Committee Amount
Rupees in ‘000

1 Mr Riyadh S.A.A. Edrees (Chairman) 3,840 - - 2,600 2,600 2,600 11,640

2 Mr Faisal A.A.A. Al-Nassar (Vice Chairman) 3,200 2,600 2,600 2,600 - - 11,000
3 Mr Bader H.A.M.A. Al-Rabiah 3,200 650 1,950 - - - 5,800
4 Mr Mubashar Maqbool 3,200 1,950 2,600 2,600 - - 10,350
5 Mr Faisal Fahad Al-Muzaini 3,200 - - - - 1,950 5,150
6 Mr Naveed Iftikhar Sherwani 3,200 - - - - - 3,200
7 Mr Mohamed Guermazi 3,200 1,950 650 - - - 5,800
8 Mr Mohammad Abdul Aleem 3,200 2,600 - - 2,600 - 8,400
9 Ms Nausheen Ahmad 3,200 - - - 2,600 - 5,800
10 Mr Yousef S.M.A. Al-Saad 2,400 - 1,950 - - - 4,350
31,840 9,750 9,750 7,800 7,800 4,550 71,490

2021
Meeting Fees and Allowances
For Board Committees
Human Resources, IFRS 9
Sr. Risk Information Remuneration & Implementation
For Board Audit Management Technology Compensation Oversight Total
No. Name of Director Meetings Committee Committee Committee Committee Committee Amount
Rupees in ‘000

1 Mr Riyadh S.A.A. Edrees (Chairman) 3,840 - - 2,600 2,600 2,600 11,640

2 Mr Faisal A.A.A. Al-Nassar (Vice Chairman) 3,200 2,600 2,600 2,600 - - 11,000
3 Mr Bader H.A.M.A. Al-Rabiah 2,400 1,950 - - - - 4,350
4 Mr Mubashar Maqbool 3,200 - 2,600 2,600 - - 8,400
5 Mr Saad Fazil Abbasi 800 - 650 - - - 1,450
6 Mr Mohamed Guermazi 3,200 - 2,600 - - - 5,800
7 Mr Noorur Rahman Abid 3,200 2,600 - - 2,600 - 8,400
8 Ms Nausheen Ahmad 3,200 - - - 2,600 - 5,800
9 Mr Atif Azim 3,200 - - 2,600 - - 5,800
10 Mr Naveed Iftikhar Sherwani 2,400 - - - - - 2,400
28,640 7,150 8,450 10,400 7,800 2,600 65,040

Meezan Bank Annual Report 2022 205

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

40.4 Remuneration to Members Shariah Board 2022 2021

Non Non
Resident Resident Resident Resident
Chairman Member Members Chairman Member Members
Rupees in ‘000

Meeting Fees - - 2,500 - - 2,100

Managerial remuneration and allowances - 6,007 28,896 - 4,157 14,658
Cash Bonus - 6,000 - - 4,000 12,000
- 12,007 31,396 - 8,157 28,758
Total Number of Persons 1 1 2 1 1 2

41 FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of quoted securities other than those classified as held to maturity, is based on quoted market price. Quoted securities
classified as held to maturity are carried at cost. The fair value of unquoted equity securities, other than investments in associates
and subsidiaries, is determined on the basis of the break-up value of these investments as per their latest available audited financial
statements.

The fair value of unquoted debt securities, fixed term loans, other assets, other liabilities, fixed term deposits and borrowings
cannot be calculated with sufficient reliability due to the absence of a current and active market for these assets and liabilities
and reliable data regarding market rates for similar instruments.

41.1 Fair value of financial assets

The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in
making the measurements:

Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Fair value measurements using input for the asset or liability that are not based on observable market data (i.e.
unobservable inputs).
2022
Fair value
Carrying
Level 1 Level 2 Level 3 Total
value
Rupees in ‘000

On balance sheet financial instruments

Financial assets - measured at fair value

Investments
- Federal Government securities 917,873,562 - 917,873,562 - 917,873,562
- Shares 7,565,867 7,565,867 - - 7,565,867
- Non Government Sukuk 119,509,708 119,509,708 - - 119,509,708
- Foreign Securities 8,568,475 - 8,568,475 - 8,568,475
1,053,517,612 127,075,575 926,442,037 - 1,053,517,612
Financial assets - disclosed but not
measured at fair value
Investments
- Federal Government securities 217,208,259 - 203,805,000 - 203,805,000
217,208,259 - 203,805,000 - 203,805,000

1,270,725,871 127,075,575 1,130,247,037 - 1,257,322,612

Off-balance sheet financial instruments -
measured at fair value
Forward purchase and sale of foreign
exchange contracts 244,685,475 - 244,685,475 - 244,685,475

206 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2021
Fair value
Carrying
Level 1 Level 2 Level 3 Total
value
Rupees in ‘000

On balance sheet financial instruments

Financial assets - measured at fair value

Investments
- Federal Government securities 386,597,737 - 386,597,737 - 386,597,737
- Shares 8,718,285 8,718,285 - - 8,718,285
- Non Government Sukuk 120,028,511 120,028,511 - - 120,028,511
- Foreign Securities 10,703,622 - 10,703,622 - 10,703,622
526,048,155 128,746,796 397,301,359 - 526,048,155
Financial assets - disclosed but not
measured at fair value
Investments
- Federal Government securities 76,687,798 - 76,651,000 - 76,651,000
76,687,798 - 76,651,000 - 76,651,000

602,735,953 128,746,796 473,952,359 - 602,699,155

Off-balance sheet financial instruments -

measured at fair value
Forward purchase and sale of foreign
exchange contracts 203,234,909 - 203,234,909 - 203,234,909

41.2 Fair Value of non-financial assets

2022
Fair value
Carrying
Level 1 Level 2 Level 3 Total
value
Rupees in ‘000

Non-banking assets acquired in satisfaction

of claims 55,000 - - 55,000 55,000
55,000 - - 55,000 55,000

2021
Fair value
Carrying
Level 1 Level 2 Level 3 Total
value
Rupees in ‘000

Non-banking assets acquired in satisfaction

of claims 153,847 - - 153,847 153,847
153,847 - - 153,847 153,847

Non-banking assets acquired in satisfactions of claims are carried at revalued amounts (level 3 measurement) determined by
professional valuers based on their assessment of the market values.

Meezan Bank Annual Report 2022 207

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Valuation techniques used in determination of fair values

Item Valuation approach and input used

Listed Securities The valuation has been determined through closing rates of Pakistan Stock Exchange.

GoP Sukuk The fair value of GoP Ijarah Sukuk quoted are derived using PKISRV rates. The PKISRV
rates are announced by FMA (Financial Market Association) through Reuters. The rates
announced are simple average of quotes received from eight different pre-defined/
approved dealers / brokers.

Foreign Sukuk The valuation has been determined through closing rates of Bloomberg.

Forward foreign The valuation has been determined by interpolating the mid rates announced by SBP.
exchange contracts

Mutual Funds The valuation has been determined based on Net asset values declared by respective
funds.

The Bank's policy is to recognise transfers into and out of the different fair value hierarchy levels at the date the event or
change in circumstances that caused the transfer occurred.

There were no transfers between levels 1 and 2 during the year.

Fair value of Islamic financing and related assets, unquoted sukuk, other assets, other liabilities and fixed term deposits and
other accounts and due to financial institutions cannot be calculated with sufficient reliability due to absence of current and
active market for such assets and liabilities and reliable data regarding market rates for similar instruments. The provision for
impairment of Islamic financing and related assets has been made in accordance with the Bank’s accounting policy as stated
in note 6.3.2.

In the opinion of the management, the fair value of the remaining financial assets and liabilities are not significantly different
from their carrying values since these assets and liabilities are short term in nature or in the case of financings and deposits
are frequently repriced.

208 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

42 SEGMENT ANALYSIS

42.1 Segment Details with respect to Business Activities

2022
Corporate and Retail Trading and Others Inter-segment Total
Commercial banking banking sales Eliminations
Rupees in ‘000
Profit and loss account
External funded revenue 83,882,167 7,655,763 140,583,302 - - 232,121,232
External non funded revenue 4,558,746 3,326,592 4,809,368 6,408,482 - 19,103,188
Inter segment revenue - net - 196,667,127 - 173,327 (196,840,454) -
Total Income 88,440,913 207,649,482 145,392,670 6,581,809 (196,840,454) 251,224,420

External cost of funds 6,777,093 61,280,572 42,359,941 - - 110,417,606

Segment direct expenses 1,400,367 44,750,561 165,724 1,928,673 - 48,245,325
Inter segment expense allocation 74,213,540 - 122,626,914 - (196,840,454) -
Total expenses 82,391,000 106,031,133 165,152,579 1,928,673 (196,840,454) 158,662,931
Provisions and write offs - net 3,201,688 124,306 806,681 43,986 - 4,176,661
Profit before tax 2,848,225 101,494,043 (20,566,590) 4,609,150 - 88,384,828

Statement of financial position

Cash and bank balances - 112,300,051 8,905,757 10,213,457 - 131,419,265
Due from financial institutions - net - - 34,964,299 - - 34,964,299
Investments - net 11,019,547 - 1,272,190,740 - - 1,283,210,287
Net inter segment lending - 1,544,149,502 - - (1,544,149,502) -
Islamic financings and related assets - net 902,768,059 92,740,295 - - - 995,508,354
Others 35,208,094 52,596,851 43,932,977 557,384 - 132,295,306
Total Assets 948,995,700 1,801,786,699 1,359,993,773 10,770,841 (1,544,149,502) 2,577,397,511

Due to financial institutions 134,872,920 6,364,466 432,089,053 - - 573,326,439

Deposits and other accounts - 1,658,490,118 - - - 1,658,490,118
Subordinated sukuk 20,990,000 - - - - 20,990,000
Net inter segment borrowing 675,947,666 - 861,843,217 6,358,619 (1,544,149,502) -
Others 74,724,128 125,404,634 5,211,198 3,930,301 - 209,270,261
Total liabilities 906,534,714 1,790,259,218 1,299,143,468 10,288,920 (1,544,149,502) 2,462,076,818
Equity 42,460,986 11,527,481 60,850,305 481,921 - 115,320,693
Total Equity and liabilities 948,995,700 1,801,786,699 1,359,993,773 10,770,841 (1,544,149,502) 2,577,397,511

Contingencies and Commitments 965,252,925 88,049,132 243,862,470 - - 1,297,164,527

Meezan Bank Annual Report 2022 209

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2021
Corporate and Retail Trading and Others Inter-segment Total
Commercial banking banking sales Eliminations
Rupees in ‘000
Profit and Loss Account
External funded revenue 38,904,867 5,784,199 65,383,481 - - 110,072,547
External non funded revenue 3,984,822 2,556,850 5,095,743 3,254,385 - 14,891,800
Inter segment revenue - net - 89,808,493 - - (89,808,493) -
Total Income 42,889,689 98,149,542 70,479,224 3,254,385 (89,808,493) 124,964,347

External cost of funds 3,266,249 34,832,977 3,052,212 - - 41,151,438

Segment direct expenses 1,077,132 32,047,212 762,109 1,437,881 - 35,324,334
Inter segment expense allocation 30,037,728 - 59,760,519 10,246 (89,808,493) -
Total expenses 34,381,109 66,880,189 63,574,840 1,448,127 (89,808,493) 76,475,772
Provisions and write offs - net 642,026 92,940 218,079 39,785 - 992,830
Profit before tax 7,866,554 31,176,413 6,686,305 1,766,473 - 47,495,745

Statement of financial position

Cash and bank balances - 174,828,996 1,518,093 10,573,645 - 186,920,734
Due from financial institutions - net - - 238,401,637 - - 238,401,637
Investments - net 15,926,987 - 604,205,056 - - 620,132,043
Net inter segment lending - 1,267,123,798 - - (1,267,123,798) -
Islamic financings and related assets - net 670,252,106 87,834,014 - - - 758,086,120
Others 18,243,198 40,247,352 40,932,915 7,401 - 99,430,866
Total Assets 704,422,291 1,570,034,160 885,057,701 10,581,046 (1,267,123,798) 1,902,971,400

Due to financial institutions 102,332,649 693,821 117,387,764 - - 220,414,234

Deposits and other accounts - 1,455,886,468 - - - 1,455,886,468
Subordinated sukuk 20,990,000 - - - - 20,990,000
Net inter segment borrowing 533,751,157 - 724,249,670 9,122,971 (1,267,123,798) -
Others 15,307,422 99,675,815 3,162,896 976,790 - 119,122,923
Total liabilities 672,381,228 1,556,256,104 844,800,330 10,099,761 (1,267,123,798) 1,816,413,625
Equity 32,041,063 13,778,056 40,257,371 481,285 - 86,557,775
Total Equity and liabilities 704,422,291 1,570,034,160 885,057,701 10,581,046 (1,267,123,798) 1,902,971,400

Contingencies and Commitments 657,044,559 76,581,021 200,615,279 - - 934,240,859

43 TRUST ACTIVITIES

The Bank provides trustee services in respect of Islamic Financing transactions. The services primarily includes holding of assets as security
trustee / custodian on behalf of investors.

44 RELATED PARTY TRANSACTIONS

44.1 Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the
other party in making financial or operational decisions and includes a subsidiary company, associated companies, retirement
benefit funds, directors, and key management personnel and their close family members.

44.2 The Banks enters into transactions with related parties in the ordinary course of business and on substantially the same terms as
for comparable transactions with person of similar standing. Contributions to and accruals in respect of staff retirement benefits
and other benefit plans are made in accordance with the actuarial valuations / terms of the contribution plan. Remuneration and
other benefit to the key management personnel is determined in accordance with the terms of their appointment.

210 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

44.3 Subsidiary company

- Al Meezan Investment Management Limited

44.4 Associates

Associates include mutual funds managed by Al Meezan Investment Management Limited and entities having common
directorship with the Board. However, entities are not considered related party only if common director is an independent
director working on both the Boards.

44.5 Key management personnel

- President and Chief Executive Officer
- Deputy Chief Executive Officer

44.6 Details of transactions with related parties and balances with them (other than those disclosed in respective notes) as
at the year-end as are follows:

Total Subsidiary Associates Directors Key Management Other Related

Personnel Parties
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Rupees in ‘000
Islamic financing and related assets
At January 1, - - - - - - - - - - - -
Addition during the year 29,972,348 - - - 29,972,348 - - - - - - -
Repayment / redemption / deletion during the year - - - - - - - - - - - -
At December 31 29,972,348 - - - 29,972,348 - - - - - - -

Investments
At January 1, 907,788 908,669 63,050 63,050 844,738 845,619 - - - - - -
Addition during the year 514 - - - 514 - - - - - - -
Repayment / redemption / deletion during the year - (881) - - - (881) - - - - - -
At December 31 908,302 907,788 63,050 63,050 845,252 844,738 - - - - - -

Due from financial institutions

At January 1, 21,858,348 36,671,288 - - 21,858,348 36,671,288 - - - - - -
Addition during the year - 76,546,772 - - - 76,546,772 - - - - - -
Repayment / redemption / deletion during the year (21,858,348) (91,359,712) - - (21,858,348) (91,359,712) - - - - - -
At December 31 - 21,858,348 - - - 21,858,348 - - - - - -

Balances pertaining to parties that were related at the beginning of the year but ceased to be related during any part of the
current year are not reflected as part of the closing balance. However, new related parties have been added during the year. The
same are accounted for through the movement presented above.

Meezan Bank Annual Report 2022 211

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Total Subsidiary Associates Directors Key Management Other Related

Personnel Parties
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Rupees in ‘000
Deposits 4,494,250 7,236,303 20,530 15,388 3,565,923 2,386,870 134,806 131,435 180,487 188,427 592,504 4,514,183

Other Assets
Profit receivable on financing / investments /
placements 684,919 725,460 - - 684,919 725,460 - - - - - -
Fee and Other Receivable 47,936 59,573 24,975 22,111 17,864 9,037 - - 1,745 - 3,352 28,425

Due to financial institutions

At January 1, - - - - - - - - - - - -
Addition during the year 53,500,000 - - - 53,500,000 - - - - - - -
Repayment / redemption / deletion during the year (35,500,000) - - - (35,500,000) - - - - - - -
At December 31 18,000,000 - - - 18,000,000 - - - - - - -

Sub-ordinated Sukuk
At January 1, 200,000 578,000 - - 200,000 578,000 - - - - - -
Addition during the year 10,000 10,000 - - 10,000 10,000 - - - - - -
Repayment / redemption / deletion during the year - (388,000) - - - (388,000) - - - - - -
At December 31 210,000 200,000 - - 210,000 200,000 - - - - - -

Other Liabilities
Profit payable on musharakah acceptance 54,568 - - - 54,568 - - - - - - -
Payable to defined benefit plan 1,198,444 941,589 - - - - - - 529,429 403,874 669,015 537,715
Accrued Expenses 1,992 353,974 1,992 3,974 - - - - - - - 350,000
Unearned Income 16,615 16,648 - - 16,615 16,648 - - - - - -

Contingencies and Commitments

Letters of credit (unfunded) 725,168 - - - 725,168 - - - - - - -
Letters of Guarantee (unfunded) 2,387,177 2,491,377 100 100 2,387,077 2,491,277 - - - - - -

Transactions, income and expenses

Profit earned on financing / investments /
placements 753,103 2,850,799 - - 753,103 2,850,799 - - - - - -
Fees and other income earned 622,220 163,937 98,516 94,734 173,219 69,005 18 20 404 100 350,063 78
Dividend income earned 358,056 650,000 357,500 650,000 556 - - - - - - -
Capital gain - net 2,028 302 - - - 302 - - - - 2,028 -
Return on deposits / acceptance expensed 668,541 581,473 3,273 1,612 497,492 251,625 1,784 733 7,440 7,695 158,552 319,808
Recovery of expenses 3,352 3,155 - - - - - - - - 3,352 3,155
Charge for defined benefit plan 669,015 537,715 - - - - - - - - 669,015 537,715
Contribution to defined contribution plan 538,270 463,194 - - - - - - - - 538,270 463,194
Contribution to staff benevolent fund 65,993 54,418 - - - - - - - - 65,993 54,418
Fees expensed 24,193 24,949 22,537 23,478 1,224 1,471 - - - - 432 -
Charity Paid 56,000 63,000 - - 1,000 - - - - - 55,000 63,000
Purchase of fixed assets 153,417 425,393 - - 153,417 425,393 - - - - - -
Remuneration to key management personnel 631,638 489,318 - - - - - - 631,638 489,318 - -
Fee to non-executive directors (note 40) 71,490 65,040 - - - - 71,490 65,040 - - - -
Proceeds from sale of fixed assets having
net book value of Rs 526 thousands 2,271 - - - - - - - 2,271 - - -

212 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

45 CAPITAL ASSESSMENT AND ADEQUACY BASEL SPECIFIC

Capital structure

The State Bank of Pakistan (SBP) introduced updated guidelines with respect to disclosure of capital adequacy related
information in the financial statements of banks vide its communication dated November 5, 2014. These guidelines are based
on the requirements of Basel III which were introduced earlier by the SBP in August 2013 for implementation by banks in
Pakistan. The SBP had specified a transitional period for implementing new standards which came to its end on December 31,
2019. The disclosures below have been prepared on the basis of these new guidelines. The comparative information is as per
requirements which were applicable last year.

45.1 Capital structure

Under Basel III framework, the Bank's regulatory capital has been analysed into two tiers as follows:

- Tier 1 capital (going concern capital) which is sub divided into:

a) Common Equity Tier 1 (CET1), which includes fully paid up capital, balance in share premium account, statutory and
general reserves, and un-appropriated profits (net of losses), after regulatory deductions for book value of intangibles,
reciprocal cross holdings and deficit on revaluation of AFS investments.

b) Additional Tier 1 capital (AT1), which includes perpetual, unsecured, subordinated, non-cumulative and contingent
convertible Sukuk instrument issued by the Bank.

- Tier II capital, which includes sub-ordinated sukuk, general provisions for loan losses (up to a maximum of 1.25%
of credit risk weighted assets).

Banking operations are categorised in either the trading book or the banking book and risk weighted assets are
determined according to the specified requirements that seek to reflect the varying levels of risk attached to assets and
off balance sheet exposures.

The required capital adequacy ratio is achieved by the Bank through:

(a) Adequate level of paid up capital;

(b) Adequate risk profile of asset mix;
(c) Ensuring better recovery management; and
(d) Maintaining acceptable profit margins.

45.2 Capital adequacy ratio

The main objective of the capital management is to improve the financial position and strengthen the statement of
financial position of the Bank to support the growth in business, provide protection to depositors and enhance
shareholders' value.

The Bank’s Board and the management is committed to maintaining a sound balance between depositors' liability and
shareholders' funds so that optimal capital / debt ratio is maintained. The optimal capital / debt ratio will provide
reasonable assurance to depositor's about safety and security of their funds and at the same time provide impetus to
the management to invest their depositors’ funds into profitable ventures without compromising the risk profile of the
Bank. The capital requirement of the Bank has been determined based on the projected growth plan to be achieved in
the next 3 years in all areas of business operations. Further, it also takes into account a road map for capital
enhancement as directed by the State Bank of Pakistan vide its various circulars issued from time to time.

The Bank prepares Annual Budget and Three Year Plan for purpose of the growth map and future direction. Bottom up
approach is used to prepare annual budget and detailed deliberations are held while preparing Three Year Plan. The
growth prospects takes into consideration prevailing economic and political factors in Pakistan and abroad.

In implementing current capital requirements the State Bank of Pakistan requires banks to maintain minimum Capital
Adequacy Ratio (CAR) of 11.50% as of December 31, 2022 whereas CAR stood at 18.42% at the year ended December
31, 2022.

The Bank calculates capital adequacy ratio for credit risk, market risk and operational risk based upon requirements
under Basel Accord as per guidelines issued by the State Bank of Pakistan from time to time in this regard.

Meezan Bank Annual Report 2022 213

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Sensitivity and stress testing of the Bank under different risk factors namely yield rate, forced sale value of collateral,
non-performing financings and foreign exchange rate depicts that the Bank’s capital adequacy ratio is above the
regulatory requirements.

The Bank has taken into account credit risk, market risk and operational risk when planning its assets.

46 CAPITAL ADEQUACY, LEVERAGE RATIO & LIQUIDITY REQUIREMENTS

2022 2021
Rupees in ‘000

Minimum Capital Requirement (MCR)

Paid-up capital (net of losses) 17,896,243 16,269,312

Capital Adequacy Ratio

Eligible Common Equity Tier 1 (CET 1) Capital 113,339,894 80,903,080
Eligible Additional Tier 1 (ADT 1) Capital 7,000,000 7,000,000
Total Eligible Tier 1 Capital 120,339,894 87,903,080
Eligible Tier 2 Capital 20,962,210 23,900,095
Total Eligible Capital (Tier 1 + Tier 2) 141,302,104 111,803,175

Risk weighted assets (RWAs):

Credit Risk 557,776,813 471,179,745
Market Risk 22,678,235 22,956,751
Operational Risk 186,602,267 133,736,815
Total 767,057,315 627,873,311

Common Equity Tier 1 Capital Adequacy ratio 14.78% 12.89%

Tier 1 Capital Adequacy Ratio 15.69% 14.00%
Total Capital Adequacy Ratio 18.42% 17.81%

Leverage ratio (LR)

Tier-1 Capital 120,339,894 87,903,080
Total Exposures 2,940,154,033 2,244,744,326
Leverage Ratio 4.09% 3.92%

Liquidity coverage ratio (LCR)

Total High Quality Liquid Assets 682,411,975 464,998,495
Total Net Cash Outflow 240,277,969 209,348,310
Liquidity Coverage Ratio 284% 222%

Net stable funding ratio (NSFR)

Total Available Stable Funding 1,628,565,640 1,370,517,865
Total Required Stable Funding 1,038,717,022 829,111,476
Net Stable Funding Ratio 157% 165%

46.1 In the latest assessment carried out by the SBP under the Framework for Domestic Systemically Important Banks (D-SIBs)
introduced vide BPRD Circular No.04 of 2018 dated April 13, 2018, the Bank has been identified as a sample D-SIB. In
line with the framework, the Bank is required to meet the HLA capital surcharge, in the form of additional Common Equity
Tier 1 (CET-1) capital of 0.5% on a standalone and consolidated basis till June 30, 2023.

Full disclosure on Capital Adequacy, Leverage Ratio & Liquidity Requirements prepared as per SBP instructions is available
at https://www.meezanbank.com

214 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

47 RISK MANAGEMENT

During 2022, Pakistan witnessed significant economic headwinds. Rising inflation, increasing fuel prices, depleting foreign
exchange reserves, massive devaluation of the Pakistani rupee, political instability, increasing interest rates, and high budget
deficit made the year more challenging. In this backdrop, Fitch, Moody’s and S&P Global lowered the country’s sovereign credit
rating. In June 2022, Pakistan was hit with a natural catastrophe in the shape of worst ever floods in the history of the country.
The floods resulted in millions of people being displaced and severe damage to both crops and livestock. Additionally,
international commodity prices also remained elevated through the year. The headline inflation increased significantly touching
a multi-year high of 27.32% in August. During the year, SBP increased the benchmark interest rate by a cumulative 625 bps to
16%. This steep increase was aimed at reducing aggregate demand in the economy and also to counter high inflation. This led
to a steep uptick in domestic food prices.

The Bank is regularly conducting assessments of the credit portfolio, with robust post disbursement credit review mechanism to
identify borrowers most likely to be affected in the challenging business and economic environment. Bank is confident that it has
more than sufficient risk bearing capacity to with stand these difficult times.

The wide variety of the Bank’s business activities require the Bank to identify, assess, measure, aggregate and manage risks
effectively which are constantly evolving as the business activities expand in response to the Bank's strategy and growth. The
Bank manages the risk through a framework of risk management encompassing policies and procedures, organisational
structures, risk measurement and monitoring processes and techniques that are closely aligned with business activities of the
Bank.

Risk management principles

- The Board of Directors (the Board) provides overall risk management supervision. The Board Risk Management
Committee regularly reviews the Bank’s risk profile.

- The Bank has set up objectives and policies to manage the risks that arise in connection with the Bank’s activities. The
risk management framework and policies of the Bank are guided by specific objectives to ensure that comprehensive
and adequate risk management tools and techniques are established to mitigate the salient risk elements in the
operations of the Bank.

- The establishment of the overall financial risk management objectives is consistent and in tandem with the strategy to
create and enhance shareholders’ value, whilst guided by a prudent risk management framework.

- The structure of risk management function is closely aligned with the organisational structure of the Bank.

- The risk management function is independent of the Bank’s operations.

Risk management organisation

The Board Risk Management Committee comprises of four non-executive directors. One of the non-executive directors of the
Bank chairs the Risk Management Committee.

Specialized Committees comprising of Senior Management team members perform their functions in line with the strategic
direction set by the Board while ensuring that there is optimal balance between risk reward trade-off. The Committees include:

Name of the sub-committee Chaired by

Credit Risk Management Committee (CRMC) President & CEO
Asset and Liability Management Committee (ALCO) President & CEO
Compliance & Operational Risk Management Committee (CORMC) President & CEO

CRMC is responsible to oversee credit risk activities on bank wide basis while ensuring compliance with regulatory requirements
and internal policies. Its responsibilities also include to provide support and guide front lines in managing their businesses,
perform finance portfolio review, establish financing standards and benchmarks, maintain adequate industry diversification and
decide upon provisioning. It is also required to delegate financing approving powers & prudential limits on large financing
exposures. Credit Committee, a sub-committee of CRMC is the highest level body for approval of financing transactions.

ALCO is responsible for reviewing the Asset and Liability structure of the Bank, monitoring the liquidity situation and overall
changing market scenario. Market and Liquidity risks are examined based on stress testing exercises and gap analysis. ALCO is
also responsible for monitoring policy rate movements and taking necessary steps across various products to ensure that the
overall profitability of the Bank is maximized without compromising on risk appetite. ALCO also ensures that the Banks’ overall
operations are fully compliant with regulatory framework for the business as provided by the State Bank of Pakistan.

The CORMC is responsible for overseeing compliance risk by reviewing the adequacy of controls in place to meet regulatory
requirements. The Committee is responsible for promoting compliance culture in the Bank, facilitate in implementation of
Compliance Program and oversee Money Laundering, and Financing Terrorism and Proliferation risk. In addition, the Committee
also oversees Operational Risk Framework by ensuring that policies and procedures are in place in all Key risk areas and by
reviewing Key Risk Indicators. The Committee also monitors level of compliance of major unresolved and recurring issues
pointed out in the Internal Audit, Shariah Audit and SBP Inspection Report.

Meezan Bank Annual Report 2022 215

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

The Bank’s risk management, compliance, internal audit and legal departments support the risk management function. The role
of the risk management department is to assess, measure, identify risks and established risk mitigants through a detailed policy
and monitoring framework. The compliance department ensures that all the directives and guidelines issued by the SBP are
being complied with in order to mitigate the compliance risk. The internal audit and BRR department reviews the compliance of
internal control procedures with internal and regulatory standards.

47.1 Credit risk

Credit risk arises from the potential that an obligor is either unwilling to perform on an obligation or its ability to perform such
obligations is impaired resulting in economic loss to the Bank. This credit risk arises mainly from both direct financing
activities as well as contingent liabilities.

Credit risk management and structure

The Bank manages credit risk by effective credit appraisal mechanism, approving and reviewing authorities, limit
structures, internal credit risk rating system, collateral management and post disbursement monitoring so as to ensure
prudent financing activities and sound financing portfolio under the umbrella of a comprehensive Financing Policy
approved by the Board of Directors. A comprehensive financing procedural manual approved by the senior management
is also in place. The Bank also ensures diversification of its portfolio into different business segments, products and
sectors. Further, to avoid risk concentration; counterparty limits, counterparty group limits and industry concentration limits
are also established, monitored and assessed in the light of changing counterparty and market conditions.

Watchlist procedure is also functioning which identifies financings with early warning indicators in respect of clients having
the potential to become non performing. The risk management function also monitors the non-performing financing
portfolio of the Bank and reports all significant matters to the Board Risk Management Committee.

The Bank takes into account the risk mitigating effect of the eligible collaterals for the calculation of capital requirement for
credit risk. Use of Credit Risk Mitigation (CRM) resulted in the total credit risk weighted amount of Rs 557,776.81 million
(2021: Rs 471,179.75 million).

Thus, use of CRM resulted in capital adequacy ratio of the Bank of 18.42%.

47.1.1 Segmental information

47.1.1.1 Due from financial institutions
Credit risk by public / private sector
Non-performing
Gross amount due from
amount due from Provision held
financial institutions
financial institution
2022 2021 2022 2021 2022 2021

Rupees in ‘000

Public / Government - 112,003,699 - - - -

Private 35,005,865 126,439,504 41,566 41,566 41,566 41,566
35,005,865 238,443,203 41,566 41,566 41,566 41,566

47.1.1.2 Investment in Sukuk and government securities

Credit risk by industry sector

Gross Non-performing
investments investments Provision held

2022 2021 2022 2021 2022 2021

Rupees in ‘000

Automobile and transportation equipment 1,132,254 883,640 - - - -

Chemical and Pharmaceuticals 25,892 25,892 25,892 25,892 25,892 25,892
Construction and allied industries 333,333 416,667 - - - -
Steel and allied industries 868,750 1,100,000 - - - -
Federal Government Securities 1,142,267,556 464,586,190 - - - -
Financial 3,347,228 2,572,735 - - - -
Foreign Government Securities 5,314,367 7,684,473 - - - -
Oil and Gas - 2,950,000 - - - -
Power (electricity) 123,034,537 124,928,266 - - - -
Textile 135,714 178,571 50,000 50,000 50,000 50,000
1,276,459,631 605,326,434 75,892 75,892 75,892 75,892

216 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Credit risk by public / private sector

Non-performing
Gross investments investments Provision held

2022 2021 2022 2021 2022 2021

Rupees in ‘000

Public / Government 1,269,926,455 598,968,924 - - - -

Private 6,533,176 6,357,510 75,892 75,892 75,892 75,892
1,276,459,631 605,326,434 75,892 75,892 75,892 75,892

47.1.1.3 Islamic financing and related assets

Credit risk by industry sector
Non-performing
Gross Amounts amounts Provision held
2022 2021 2022 2021 2022 2021

Rupees in ‘000

Agriculture, Food, Feed Mills, Poultry, Dairy,

Forestry and Fishing 208,073,442 162,478,493 2,270,930 3,395,929 2,270,930 3,165,623
Automobile and transportation equipment 26,072,313 20,719,843 157,974 74,585 82,035 73,158
Cement 19,353,573 13,825,174 - - - -
Chemical and Pharmaceuticals 36,842,695 16,542,558 22,036 22,036 22,036 22,036
Construction 17,530,547 11,737,462 1,367,291 1,278,654 1,283,436 1,278,654
Steel and allied industries 27,836,119 26,145,539 472,264 546,615 378,626 416,337
Plastic products manufacturer 4,539,985 3,994,568 - - - -
Electronics and electrical appliances 7,671,307 8,281,523 - - - -
Exports/Imports 1,522,101 2,016,709 195,415 205,493 195,415 205,493
Fertilizer 28,544,431 19,743,356 - 38,833 - 38,833
Financial 38,074,312 519,309 - - - -
Footwear and Leather garments 4,964,169 4,170,916 - 11,435 - 11,435
Individuals 73,475,097 66,641,606 1,011,366 933,318 534,783 370,138
Takaful / Insurance 654,300 627,760 - - - -
Mining and Quarrying 3,530,578 5,309,238 - - - -
Oil and Gas 85,322,255 44,479,242 4,364,340 4,224,503 4,337,347 4,206,236
Paper, board and packaging 21,977,610 10,388,890 123,435 231,306 121,420 229,291
Power (electricity) 88,675,574 97,775,783 788,840 817,480 788,840 817,480
Services 9,415,229 9,363,039 20,285 84,219 18,071 45,915
Sugar 21,257,976 12,612,935 - - - -
Textile 172,803,936 143,773,181 2,361,930 2,058,162 2,361,930 2,021,650
Transport, Storage and Communication 50,649,542 31,497,141 77,129 77,513 43,697 41,466
Wholesale and Retail Trade 63,955,770 61,749,684 337,378 338,625 317,430 287,482
Others 5,358,896 2,901,177 57,674 110,832 56,766 107,761
1,018,101,757 777,295,126 13,628,287 14,449,538 12,812,762 13,338,988

Credit risk by public / private sector

Non-performing
Gross Amounts amounts Provision held
2022 2021 2022 2021 2022 2021

Rupees in ‘000

Public / Government 318,259,246 237,476,802 - - - -

Private 699,842,511 539,818,324 13,628,287 14,449,538 12,812,762 13,338,988
1,018,101,757 777,295,126 13,628,287 14,449,538 12,812,762 13,338,988

Meezan Bank Annual Report 2022 217

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

47.1.1.4 Contingencies and Commitments

Credit risk by industry sector

2022 2021
Rupees in ‘000

Agriculture, Food, Feed Mills, Poultry, Dairy,

Forestry and Fishing 98,417,326 71,453,206
Automobile and transportation equipment 43,510,460 27,560,120
Cement 24,368,223 14,392,244
Chemical and Pharmaceuticals 37,636,764 36,754,088
Construction 32,544,198 39,002,386
Steel and allied industries 41,774,472 32,541,776
Plastic products manufacturer 7,488,719 6,924,962
Electronics and electrical appliances 16,899,349 11,565,939
Exports/Imports 5,531,431 3,965,076
Fertilizer 18,124,795 16,005,439
Financial 266,595,919 161,294,410
Footwear and Leather garments 7,538,339 5,934,844
Individuals 336,981 7,687,462
Takaful / Insurance 374,450 263,952
Mining and Quarrying 12,314,638 5,654,762
Oil and Gas 92,706,034 41,796,492
Paper, board and packaging 22,947,107 14,058,322
Power (electricity) 146,814,179 76,128,620
Services 66,587,092 63,951,481
Sugar 22,340,850 25,102,487
Textile 217,879,460 214,583,093
Transport, Storage and Communication 23,137,093 23,854,641
Wholesale and Retail Trade 75,625,125 22,649,002
Others 15,671,523 11,116,055
1,297,164,527 934,240,859

Credit risk by public / private sector

Public / Government 271,179,069 92,770,090

Private 1,025,985,458 841,470,769
1,297,164,527 934,240,859

47.1.1.5 Concentration of Top 10 exposures

Top 10 exposures on the basis of total (funded and non-funded) exposures aggregated to Rs 408,589 million (2021:
Rs 301,905 million) as follows:
2022 2021
Rupees in ‘000

Funded Exposure 331,735,662 249,871,722

Non Funded Exposure 76,853,260 52,033,362
Total Exposure 408,588,922 301,905,084

The sanctioned limits against these top 10 exposures aggregated to Rs 518,795 million (2021: Rs 324,895
million). None of the exposure against these top 10 customers is in classified stage.

218 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

47.1.1.6 Islamic Financings and related assets - Province/Region-wise Disbursement & Utilization

2022
Utilization
Disbursements
Punjab Sindh KPK including AJK including
Balochistan Islamabad
FATA Gilgit-Baltistan
Province / Region
Rupees in ‘000
Punjab 664,533,491 664,533,491 - - - - -
Sindh 770,568,389 - 770,568,389 - - - -
KPK including FATA 9,151,023 - - 9,151,023 - - -
Balochistan 2,169,900 - - - 2,169,900 - -
Islamabad 137,770,908 - - - - 137,770,908 -
AJK including Gilgit-Baltistan 399,082 - - - - - 399,082
Total 1,584,592,793 664,533,491 770,568,389 9,151,023 2,169,900 137,770,908 399,082

2021
Utilization
Disbursements
Punjab Sindh KPK including AJK including
Balochistan Islamabad
FATA Gilgit-Baltistan
Province / Region
Rupees in ‘000
Punjab 442,069,392 442,069,392 - - - - -
Sindh 409,068,056 - 409,068,056 - - - -
KPK including FATA 5,683,347 - - 5,683,347 - - -
Balochistan 1,186,334 - - - 1,186,334 - -
Islamabad 41,009,443 - - - - 41,009,443 -
AJK including Gilgit-Baltistan 246,833 - - - - - 246,833
Total 899,263,405 442,069,392 409,068,056 5,683,347 1,186,334 41,009,443 246,833

47.1.2 Credit Risk - General Disclosures

The Bank has adopted Standardised Approach of Basel Accord for calculation of capital charge against credit risk.
Therefore, risk weights for the credit risk related assets (on-balance sheet and off-balance sheet - market and non market
related exposures) are assigned on basis of standardised approach.

The Bank is committed to further strengthen its risk management framework which will enable the Bank to move ahead
for adopting Foundation Internal Ratings Based (IRB) approach of Basel II. Meanwhile, none of the Bank's assets class
is subject to the Foundation IRB or advanced IRB approaches.

47.1.2.1 Credit Risk: Disclosures for portfolio subject to the Standardised Approach

Under standardised approach the capital requirement is based on the credit rating assigned to the
counterparties by the External Credit Assessment Institutions (ECAIs) duly recognised by the SBP for
capital adequacy purposes. In this connection, the Bank utilises the credit ratings assigned by ECAIs and
has recognised agencies such as PACRA (Pakistan Credit Rating Agency) and VIS Credit Rating Company
which are also recognised by the SBP.

In case of foreign currency exposures against banks, ratings assigned by S&P, Fitch and Moody’s have
been applied. In case of exposure against banks, some banks have multiple ratings but those ratings do
not result in mapping with different risk weights.

Types of Exposure and ECAI’s used

2022

Standard &
Exposures VIS PACRA Fitch Moody’s
Poor’s

Corporate √ √ √ √ √

Banks √ √ √ √ √

Public Sector Entities √ √ - - -

Meezan Bank Annual Report 2022 219

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Use of ECAI Ratings

The Bank prefers solicited ratings over unsolicited ratings at all times, owing to the greater degree of accuracy (in general) associated
with solicited ratings. Unsolicited ratings may only be used in cases where a solicited rating is not available.

Mapping to SBP Rating Grades

The alignment of the Alphanumerical scale of each agency used with risk buckets is as per instructions laid down by SBP under
Basel III requirements.

47.1.2.2 Credit exposures subject to standardised approach

2022 2021

On-balance Amount Deduction Amount Deduction

Credit Risk Net amount Credit Risk Net amount
sheet Exposures Outstanding Outstanding
Management Management

Rupees in ‘000
Banks
20% 83,540,160 59,789,988 23,750,172 256,066,796 192,460,283 63,606,513
50% 1,692,525 - 1,692,525 255,474 - 255,474
100% 1,082,999 - 1,082,999 807,999 - 807,999
150% 63,662 - 63,662 53,321 - 53,321
Unrated 1,572,546 - 1,572,546 298,108 - 298,108

Sovereigns
0% 1,254,669,893 50,766,630 1,203,903,263 643,811,199 50,351,600 593,459,599
20% 1,340,122 - 1,340,122 2,779,262 - 2,779,262
50% 2,259,452 - 2,259,452 2,828,610 - 2,828,610
100% - - - 1,624,771 - 1,624,771
Unrated - - - - - -
150% 8,460,046 - 8,460,046 - - -

Public Sector entities

20% 44,501,577 14,769,333 29,732,244 19,201,818 16,463,593 2,738,225
50% 8,875,000 7,124,600 1,750,400 - - -
Unrated (50%) 311,881,517 283,200,020 28,681,497 291,758,453 263,798,927 27,959,526

Corporate
20% 217,913,433 3,147,228 214,766,205 140,474,238 1,626,445 138,847,793
50% 165,544,908 1,225,652 164,319,256 123,360,922 47,298 123,313,624
100% 7,212,656 - 7,212,656 5,196,338 - 5,196,338
Unrated 1 (100%) 130,349,482 9,753,949 120,595,533 103,327,444 7,927,692 95,399,752
Unrated 2 (125%) 74,547,481 12,564,932 61,982,549 85,647,398 13,186,425 72,460,973

Retails
75% 73,405,947 15,669,516 57,736,431 70,160,902 15,910,991 54,249,911

Residential Mortgage
35% 20,728,463 - 20,728,463 19,193,855 - 19,193,855
25% 6,371,277 2,548,049 3,823,228 2,904,311 1,160,239 1,744,072

Past Due
50% 256,255 109,883 146,372 138,686 88,442 50,244
100% 694,837 21,672 673,165 937,088 30,727 906,361
150% 41,733 12,253 29,480 57,362 15,293 42,069

Total 2,417,005,971 460,703,705 1,956,302,266 1,770,884,355 563,067,955 1,207,816,400

220 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

47.1.2.3 Credit Risk: Disclosures with respect to Credit risk mitigation for Standardised approach and IRB

The Bank obtains capital relief for both its on-balance and off-balance sheet non-market related
exposures by using simple approach for credit risk mitigation (CRM). Off-balance sheet items
under the simplified standardised approach are converted into credit exposure equivalents through
the use of credit conversion factors. Under the standardised approach the Bank has taken
advantage of the cash collaterals available with the Bank in the form of security deposits, cash
margins, certificates of Islamic investment, monthly mudaraba certificate, saving accounts,
guarantees, shares and Government securities.

Valuation and management of eligible collaterals for CRM is being done in accordance with the
conditions laid down by the State Bank of Pakistan. Eligible collaterals for CRM purposes do not
expose the Bank to price risk as they are in the form of cash/cash equivalent collaterals. Since
eligible collaterals for CRM purposes are all in the form of cash/cash equivalent collaterals, they
generally do not pose risk to the Bank in terms of change in their valuation due to changes in
the market condition.

The credit equivalent amount of an off-balance sheet market related foreign exchange contracts
are determined by using the current exposure (mark to market) method.

The total benefit of Rs 460,703.71 million was availed through CRM against total on-balance
sheet exposure of Rs 2,576,920.56 million. Under off-balance sheet, total benefit of Rs 25,942.350
million was availed by the Bank through CRM against total off-balance sheet, non-market related
exposure of Rs 1,053,302.06 million. In the year 2022, total CRM benefit was Rs 486,646.05
million as against amount of Rs 577,988.90 million in year 2021.

47.1.2.4 Credit concentration risk

Credit concentration risk arises mainly due to concentration of exposures under various categories
viz., industry, geography, and single / group borrower obligor. Within credit portfolio, as a prudential
measure aimed at better risk management and avoidance of concentration of risks, the SBP has
prescribed regulatory limits on banks’ maximum exposure to single and group obligors. Within the
SBP limits, the Bank has further defined limits to avoid excessive concentration of portfolio.

47.2 Market risk

Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market
prices. Market risk reflects yield rate risk, currency risk and other price risks. Banks could be adversely affected by
movements in market rates or prices such as benchmark rates, deposit rates, foreign exchange rates, equity prices
and market conditions resulting in a loss to earnings and capital.

47.2.1 Equity position in the banking and trading book

The Bank classifies and values its investment portfolio in accordance with the directives of SBP as stated
in note 6.4 to these unconsolidated financial statements.

Trading book

Held for trading and available for sale securities with trading intent;

- They are marked to market daily; and

- Any valuation difference is charged / credited to the profit and loss account in case of held for trading
securities and to surplus on revaluation of investments - net of tax under equity in case of available
for sale securities.

Banking book

Assets outside trading book are part of the banking book. These may include assets classified as available
for sale and held to maturity investments.

Meezan Bank Annual Report 2022 221

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

47.2.2 Balance sheet split by trading and banking books

2022 2021
Banking Trading Banking Trading
Book Book Total Book Book Total

Rupees in ‘000
Cash and balances with
treasury banks 117,743,106 - 117,743,106 170,500,698 - 170,500,698
Balances with other banks 13,676,159 - 13,676,159 16,420,036 - 16,420,036
Due from financial institutions 34,964,299 - 34,964,299 238,401,637 - 238,401,637
Investments 1,274,796,680 8,413,607 1,283,210,287 610,569,020 9,563,023 620,132,043
Islamic financings and
related assets 995,508,354 - 995,508,354 758,086,120 - 758,086,120
Fixed assets 40,426,520 - 40,426,520 33,957,947 - 33,957,947
Intangible assets 1,843,984 - 1,843,984 1,495,810 - 1,495,810
Deferred tax asset 4,646,002 - 4,646,002 175,555 - 175,555
Other assets - net 85,378,800 - 85,378,800 63,801,554 - 63,801,554
2,568,983,904 8,413,607 2,577,397,511 1,893,408,377 9,563,023 1,902,971,400

The Bank uses a number of methods to monitor and control market risk exposures. One of the major tools used by the Bank to
monitor and limit market risk is Value at Risk (VaR). VaR is defined as the estimated loss that will arise on a position or a portfolio
over a particular (holding) period of time from an adverse market movement with a specific probability (confidence level). The VaR
model used by the Bank takes 99% confidence level and assumes a 1 to 10 days holding period whilst using the historical
simulation taking the data of the last three years. Daily VaR figures are circulated to the senior management and regular summaries
are reported in ALCO meetings.

The VaR reports are complemented by various other position and sensitivity limit structures, including stress, sensitivity, gap and
scenario analysis. The capital charge for market risk has been calculated by using Standardized Approach.

47.2.3 Foreign exchange risk

The foreign exchange risk is defined as the current or prospective risk to earnings and capital arising from adverse movements
in currency exchange rates. It refers to the impact of adverse movement in currency exchange rates on the value of open foreign
currency position. The objectives of the foreign exchange risk management is to minimise the adverse impact of foreign exchange
rate movements on the assets and liabilities mismatch (tenor and position) and maximise their earnings.

Whenever a commercial bank deals in foreign currency, it is exposed to risk of exchange rate. The Bank's assets and liabilities
in foreign currencies give rise to foreign exchange risk which has to be managed by the Bank; this risk is mitigated by using
different hedging techniques. Hedging is a way used by a bank to eliminate or minimize its risk exposures. Hedging can be done
using different ways like gap analysis, hedging (forwards), assigning limits in terms of amount, tenor, currency, product, countries,
counterparties etc. The Bank limits its currency exposure to the extent of statutory net open position prescribed by the SBP
except in the cases where exemption is provided by the SBP. Foreign exchange open and mismatch positions are controlled
through close monitoring and are marked to market on a daily basis.

222 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

The analysis below represents the concentration of the Bank's foreign currency risk for on and off balance sheet financial
instruments:
2022
Assets Liabilities Off-balance Net foreign
sheet items currency
exposure
Rupees in ‘000

Pakistan Rupees 2,491,886,514 2,337,854,056 (35,433,722) 118,598,736

United States Dollars 81,666,765 110,417,824 25,453,007 (3,298,052)

Great Britain Pounds 955,161 7,493,793 6,546,533 7,901
Japanese Yen 142,804 88,927 (59,976) (6,099)
Euro 1,474,874 5,437,092 4,019,733 57,515
Singapore Dollars 18,118 - (6,743) 11,375
Australian Dollars 257,134 132 (253,346) 3,656
Canadian Dollars 52,441 976 (33,417) 18,048
United Arab Emirates Dirham 27,242 547 (36,991) (10,296)
Swiss Francs 58,950 - (51,456) 7,494
Saudi Riyal 26,006 - - 26,006
Swedish Krona 5,390 - (6,496) (1,106)
Malaysian Ringgit 3,208 - - 3,208
Hong Kong Dollar 39,714 23 (34,848) 4,843
Thailand Bhat 837 - - 837
Norwegian Krone 10,157 - (4,581) 5,576
Danish Krone 11,968 - - 11,968
Chinese Offshore Spot - - - -
Chinese Yuan 760,228 783,448 (97,697) (120,917)
Total foreign currency exposure 85,510,997 124,222,762 35,433,722 (3,278,043)

Total currency exposure 2,577,397,511 2,462,076,818 - 115,320,693

2021
Assets Liabilities Off-balance Net foreign
sheet items currency
exposure
Rupees in ‘000

Pakistan Rupees 1,826,584,181 1,708,416,423 (28,900,423) 89,267,335

United States Dollars 70,850,151 95,296,400 21,587,004 (2,859,245)

Great Britain Pounds 1,694,459 6,837,618 5,155,365 12,206
Japanese Yen 36,322 72,666 24,528 (11,816)
Euro 2,045,814 4,821,334 2,746,479 (29,041)
Singapore Dollars 6,532 - - 6,532
Australian Dollars 283,338 2,082 (280,530) 726
Canadian Dollars 9,457 1,105 - 8,352
United Arab Emirates Dirham 146,900 37,311 (48,056) 61,533
Swiss Francs 77,144 55,712 (8,687) 12,745
Saudi Riyal 27,791 - - 27,791
Swedish Krona 12,058 - - 12,058
Malaysian Ringgit 2,642 - - 2,642
Hong kong Dollar 4,519 29 - 4,490
Thailand Bhat 1,624 - - 1,624
Norwegian Krone 7,178 - - 7,178
Danish Krone 16,712 - - 16,712
Chinese Offshore Spot - - - -
Chinese Yuan 1,164,578 872,945 (275,680) 15,953
Total foreign currency exposure 76,387,219 107,997,202 28,900,423 (2,709,560)

Total currency exposure 1,902,971,400 1,816,413,625 - 86,557,775

2022 2021
Banking Trading Banking Trading
book book book book
Rupees in ‘000
Impact of 1% change in
foreign exchange rates on

- Profit and Loss Account - 17,526 - 17,997

- Other Comprehensive Income - - - -

Meezan Bank Annual Report 2022 223

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

47.2.4 Equity position risk

Equity position risk is defined as the risk to earnings or capital arising from adverse changes in value of equity portfolios
of Bank. The limits assigned to various individual scripts and total portfolio investments are fixed as per the guidelines
issued by the SBP. The Bank invests in only Shariah compliant equities as advised by the Resident Shariah Board
Member.
2022 2021
Banking Trading Banking Trading
book book book book

Rupees in ‘000
Impact of 5% change in equity prices on

- Profit and Loss Account - - - -

- Other Comprehensive Income - 192,930 - 265,908

47.2.5 Yield / profit rate risk

Yield risk occurs when there is a mismatch between positions, which are subject to profit rate alterations within
a particular time period. The Bank’s financing, placement and investment activities give rise to profit rate risk.
The effect of changes in profit rate is on the Bank’s income, and resultant impact is on the Bank’s net worth.

Profit rate risk is primarily managed by monitoring the rate sensitive gaps and by having the pre-approved limits
for repricing buckets. ALCO is the supervising body for adherence with these, complemented by the monitoring
of sensitivity of the Bank’s financial assets and liabilities to various scenarios.

The Bank estimates changes in the market value of equity due to changes in the yield rates on on-balance sheet
positions and their impact on capital adequacy ratio by conducting stress tests. It also assesses risk on earnings
of the Bank by various shocks.
2022 2021
Banking Trading Banking Trading
book book book book

Rupees in ‘000
Impact of 1% change in discount rates
with other factors remaining constant, on:

- Profit and Loss account 4,378,356 - 3,419,294 -

- Other Comprehensive Income - - - -

224 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

47.2.6 Mismatch of yield rate sensitive assets and liabilities

2022
Exposed to yield risk
Effective Total Non-yield
yield Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 bearing
rate Upto 1 to 3 to 6 months to 1 to 2 to 3 to 5 to 10 Above financial
% month months months year years years years years 10 years instruments
Rupees in ‘000
On-balance sheet financial instruments

Assets
Cash and balances with treasury banks - 117,743,106 - - - - - - - - - 117,743,106
Balances with other banks 0.87 13,676,159 4,825,629 - - - - - - - - 8,850,530
Due from financial institutions 11.25 34,964,299 - - - - - 34,964,299 - - - -
Investments 14.52 1,283,210,287 53,732,129 94,242,965 868,512,735 - 2,005,915 20,459,705 235,226,102 - - 9,030,736
Islamic financing and related assets 13.96 995,508,354 345,002,704 271,683,454 179,853,354 34,107,321 32,096,915 18,916,857 40,236,413 60,119,468 7,616,509 5,875,359
Other assets - 83,102,573 - - - - - - - - - 83,102,573
2,528,204,778 403,560,462 365,926,419 1,048,366,089 34,107,321 34,102,830 74,340,861 275,462,515 60,119,468 7,616,509 224,602,304
Liabilities
Bills payable - 40,175,122 - - - - - - - - - 40,175,122
Due to financial institutions 13.89 573,326,439 275,653,427 204,300,004 23,513,500 46,047 518,145 6,930,569 4,057,809 57,375,034 - 931,904
Deposits and other accounts 3.71 1,658,490,118 847,047,998 4,668,681 - - - - - - - 806,773,439
Sub-ordinated Sukuk 16.75 20,990,000 11,000,000 - 9,990,000 - - - - - - -
Other liabilities - 144,922,057 - - - - - - - - - 144,922,057
2,437,903,736 1,133,701,425 208,968,685 33,503,500 46,047 518,145 6,930,569 4,057,809 57,375,034 - 992,802,522
On-balance sheet gap 90,301,042 (730,140,963) 156,957,734 1,014,862,589 34,061,274 33,584,685 67,410,292 271,404,706 2,744,434 7,616,509 (768,200,218)

Non financial assets

- Fixed assets 40,426,520
- Intangible assets 1,843,984
- Deferred tax asset 4,646,002
- Other assets 2,276,227
49,192,733
Non financial liabilities
- Other liabilities 24,173,082
- Deferred tax liabilities -
24,173,082
Total net assets 115,320,693

Off-balance sheet financial instruments

Guarantees 56,485,801 - - - - - - - - - 56,485,801
Documentary letter of credits 221,689,496 - - - - - - - - - 221,689,496
Forward purchase of foreign exchange contracts 139,648,096 - - - - - - - - - 139,648,096
Forward sale of foreign exchange contracts (104,214,374) - - - - - - - - - (104,214,374)
Off-balance sheet gap 313,609,019 - - - - - - - - - 313,609,019

Total yield risk rate sensitivity gap (730,140,963) 156,957,734 1,014,862,589 34,061,274 33,584,685 67,410,292 271,404,706 2,744,434 7,616,509 (454,591,199)

Cumulative yield risk rate sensitivity gap (730,140,963) (573,183,229) 441,679,360 475,740,634 509,325,319 576,735,611 848,140,317 850,884,751 858,501,260 403,910,061

2021
Exposed to yield risk
Effective Total Non-yield
yield Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 bearing
rate Upto 1 to 3 to 6 months to 1 to 2 to 3 to 5 to 10 Above financial
% month months months year years years years years 10 years instruments
Rupees in ‘000
On-balance sheet financial instruments

Assets
Cash and balances with treasury banks - 170,500,698 - - - - - - - - - 170,500,698
Balances with other banks 0.02 16,420,036 242,527 - - - - - - - - 16,177,509
Due from financial institutions 7.52 238,401,637 21,858,347 24,458,492 113,251,970 43,868,529 - - 34,964,299 - - -
Investments 9.13 620,132,043 54,282,173 127,373,150 294,986,218 904,146 26,851,491 1,678,453 102,017,553 1,851,471 - 10,187,388
Islamic financing and related assets 9.28 758,086,120 197,161,911 259,970,790 141,996,581 19,491,897 10,436,579 17,798,822 32,792,056 67,931,120 - 10,506,364
Other assets - 61,587,012 - - - - - - - - - 61,587,012
1,865,127,546 273,544,958 411,802,432 550,234,769 64,264,572 37,288,070 19,477,275 169,773,908 69,782,591 - 268,958,971
Liabilities
Bills payable - 36,141,378 - - - - - - - - - 36,141,378
Due to financial institutions 5.78 220,414,234 121,110,629 31,267,637 20,301,496 2,235,253 111,303 1,062,131 4,261,659 39,620,302 - 443,824
Deposits and other accounts 2.66 1,455,886,468 793,728,828 762,073 177,300 - - - - - - 661,218,267
Sub-ordinated Sukuk 10.40 20,990,000 11,000,000 - 9,990,000 - - - - - - -
Other liabilities - 60,615,531 - - - - - - - - - 60,615,531
1,794,047,611 925,839,457 32,029,710 30,468,796 2,235,253 111,303 1,062,131 4,261,659 39,620,302 - 758,419,000
On-balance sheet gap 71,079,935 (652,294,499) 379,772,722 519,765,973 62,029,319 37,176,767 18,415,144 165,512,249 30,162,289 - (489,460,029)

Non financial assets

- Fixed assets 33,957,947

- Intangible assets 1,495,810
- Deferred tax asset 175,555
- Other assets 2,214,542
37,843,854
Non financial liabilities

- Other liabilities 22,366,014

- Deferred tax liabilities -
22,366,014
Total net assets 86,557,775

Off-balance sheet financial instruments

Guarantees 45,072,765 - - - - - - - - - 45,072,765

Documentary letter of credits 175,227,624 - - - - - - - - - 175,227,624
Forward purchase of foreign exchange contracts 114,757,851 - - - - - - - - - 114,757,851
Forward sale of foreign exchange contracts (85,857,428) - - - - - - - - - (85,857,428)
Off-balance sheet gap 249,200,812 - - - - - - - - - 249,200,812

Total yield risk rate sensitivity gap (652,294,499) 379,772,722 519,765,973 62,029,319 37,176,767 18,415,144 165,512,249 30,162,289 - (240,259,217)

Cumulative yield risk rate sensitivity gap (652,294,499) (272,521,777) 247,244,196 309,273,515 346,450,282 364,865,426 530,377,675 560,539,964 560,539,964 320,280,747

Meezan Bank Annual Report 2022 225

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

The Bank takes on exposure to the effects of fluctuations in the prevailing levels of market profit rates on both
its fair value and cash flow risks.

Profit margins may increase as a result of such changes but may reduce to losses in the event that unexpected
movement arise.

47.3 Liquidity risk

Liquidity risk is the potential for loss to the Bank arising from either its inability to meet its obligations or to fund
increases in assets as they fall due without incurring an unacceptable cost.

The Bank’s Board of Directors sets the Bank’s policy for managing liquidity risk and entrusts accountability for
supervision of the implementation of this strategy to senior management. Senior management exercises its
responsibilities for managing market & liquidity risk through various committees including the Asset & Liability
Management Committee (ALCO). Treasury department manages the Bank’s liquidity position on daily basis. The
Bank’s main approach of managing the liquidity risk is to make certain that it will always have adequate liquidity
to meet its liabilities when they are due in normal and stressed scenarios without incurring any untoward expenditure
or risking reputational harm. ALCO monitors the maintenance of liquidity ratios, depositor's concentration both
in terms of the overall funding mix and avoidance of undue reliance on large individual deposits. Regular liquidity
stress testing is conducted under a variety of scenarios covering both normal and more severe market conditions.

226 Meezan Bank Annual Report 2022

47.3.1 Maturities of assets and liabilities based on contractual maturity of the assets and liabilities of the bank

2022

Total Upto Over 1 to 7 Over 7 to 14 Over 14 days Over 1 to 2 Over 2 to 3 Over 3 to 6 Over 6 to 9 Over 9 months Over 1 to 2 Over 2 to 3 Over 3 to 5 Over 5
1 Day Days Days to 1 Month Months Months Months Months to 1 Year years years years years

Rupees in ‘000

Assets
Cash and balances with treasury banks 117,743,106 117,743,106 - - - - - - - - - - - -
Balances with other banks 13,676,159 13,676,159 - - - - - - - - - - - -
Due from financial institutions 34,964,299 - - - - - - - - - - 34,964,299 - -
Investments 1,283,210,287 319,671 1,670,524 1,973,944 6,682,242 7,940,803 2,281,694 23,988,326 309,464 763,631 4,298,970 218,041,978 891,620,782 123,318,258
Islamic financing and related assets 995,508,354 288,980,031 8,005,870 15,154,782 25,186,893 81,025,104 38,107,478 143,955,527 25,186,148 12,913,739 73,911,982 57,797,039 84,192,273 141,091,488
For the year ended December 31, 2022

Fixed assets 40,426,520 28,673 172,040 200,715 647,890 1,526,448 857,782 3,119,196 4,352,176 1,828,959 5,258,721 4,772,674 7,664,848 9,996,398
Intangible assets 1,843,984 1,024 6,147 7,171 16,391 30,733 30,733 92,199 92,199 92,199 368,797 368,797 737,594 -
Deferred tax assets 4,646,002 - - - - - - - 580,750 580,750 1,161,500 1,161,501 1,161,501 -
Other assets 85,378,800 277,139 2,306,303 2,105,615 6,358,060 10,891,171 7,582,453 19,610,361 17,752,123 17,802,424 64,942 64,942 563,267 -
2,577,397,511 421,025,803 12,160,884 19,442,227 38,891,476 101,414,259 48,860,140 190,765,609 48,272,860 33,981,702 85,064,912 317,171,230 985,940,265 274,406,144

Liabilities
Bills payable 40,175,122 13,257,790 8,972,444 8,972,444 8,972,444 - - - - - - - - -
Due to financial institutions 573,326,439 2,298,935 105,138,698 23,793,134 145,354,564 120,221,095 84,078,910 23,513,500 26,312 19,735 518,145 1,930,569 9,057,809 57,375,033
Deposits and other accounts 1,658,490,118 1,460,253,236 8,936,398 9,236,718 18,123,288 18,687,094 11,075,804 22,113,911 17,034,887 20,089,632 36,187,302 6,392,202 15,959,780 14,399,866
Sub-ordinated Sukuk 20,990,000 - - - - - - - - - - - - 20,990,000
Deferred tax liabilities - - - - - - - - - - - - - -
Other liabilities 169,095,139 416,931 3,172,103 3,083,369 8,379,443 62,207,493 13,357,315 22,425,414 22,699,152 2,569,673 5,067,092 5,447,003 9,275,417 10,994,734
2,462,076,818 1,476,226,892 126,219,643 45,085,665 180,829,739 201,115,682 108,512,029 68,052,825 39,760,351 22,679,040 41,772,539 13,769,774 34,293,006 103,759,633
NOTES TO AND FORMING PART OF THE

Net assets 115,320,693 (1,055,201,089) (114,058,759) (25,643,438) (141,938,263) (99,701,423) (59,651,889) 122,712,784 8,512,509 11,302,662 43,292,373 303,401,456 951,647,259 170,646,511

Share capital 17,896,243

Reserves 28,187,821
UNCONSOLIDATED FINANCIAL STATEMENTS

Deficit on revaluation of assets (663,671)

Unappropriated profit 69,900,300
115,320,693

Meezan Bank Annual Report 2022

227
228
2021

Total Upto Over 1 to 7 Over 7 to 14 Over 14 days Over 1 to 2 Over 2 to 3 Over 3 to 6 Over 6 to 9 Over 9 months Over 1 to 2 Over 2 to 3 Over 3 to 5 Over 5
1 Day Days Days to 1 Month Months Months Months Months to 1 Year years years years years

Meezan Bank Annual Report 2022

Rupees in ‘000

Assets
Cash and balances with treasury banks 170,500,698 170,500,698 - - - - - - - - - - - -
Balances with other banks 16,420,036 16,420,036 - - - - - - - - - - - -
Due from financial institutions 238,401,637 - 9,136,188 2,075,902 10,646,257 7,433,912 17,024,580 113,251,970 43,868,529 - - - 34,964,299 -
Investments 620,132,043 732,568 1,732,906 2,046,724 4,621,084 42,933,604 146,905 1,504,998 366,607 2,013,046 29,400,035 5,997,866 402,324,802 126,310,898
Islamic financing and related assets 758,086,120 222,414,768 5,656,941 5,563,877 26,406,246 68,076,001 28,083,086 106,257,573 11,059,239 10,946,216 37,499,645 56,775,730 80,633,851 98,712,947
Fixed assets 33,957,947 32,762 196,570 229,331 524,186 1,328,842 838,525 2,932,714 3,850,315 1,979,854 6,313,992 5,894,054 1,945,624 7,891,178
Intangible assets 1,495,810 831 4,986 5,816 13,296 24,930 24,930 74,791 74,791 74,791 299,162 299,162 598,324 -
Deferred tax assets 175,555 488 2,926 3,414 7,802 14,629 14,629 43,889 87,778 - - - - -
For the year ended December 31, 2022

Other assets 63,801,554 2,019,083 1,637,791 1,699,188 4,757,563 7,468,312 5,478,049 13,768,725 13,451,644 12,949,677 542,421 9,700 19,401 -
1,902,971,400 412,121,234 18,368,308 11,624,252 46,976,434 127,280,230 51,610,704 237,834,660 72,758,903 27,963,584 74,055,255 68,976,512 520,486,301 232,915,023

Liabilities
Bills payable 36,141,378 11,926,655 8,070,370 8,070,370 8,073,983 - - - - - - - - -
Due to financial institutions 220,414,234 397,683 118,164,846 690,226 2,301,698 24,271,935 6,995,702 20,301,496 25,387 2,209,866 111,303 1,062,131 4,261,659 39,620,302
Deposits and other accounts 1,455,886,468 1,209,179,399 15,515,306 13,316,714 33,137,209 21,177,259 9,079,052 21,999,364 27,942,075 27,289,340 38,868,341 6,998,947 17,840,254 13,543,208
Sub-ordinated Sukuk 20,990,000 - - - - - - - - - - - - 20,990,000
Deferred tax liabilities - - - - - - - - - - - - - -
Other liabilities 82,981,545 288,430 2,269,956 2,436,382 6,443,515 10,621,946 8,621,633 23,195,302 10,167,730 9,664,976 4,902,615 4,369,060 - -
1,816,413,625 1,221,792,167 144,020,478 24,513,692 49,956,405 56,071,140 24,696,387 65,496,162 38,135,192 39,164,182 43,882,259 12,430,138 22,101,913 74,153,510

Net assets 86,557,775 (809,670,933) (125,652,170) (12,889,440) (2,979,971) 71,209,090 26,914,317 172,338,498 34,623,711 (11,200,598) 30,172,996 56,546,374 498,384,388 158,761,513
NOTES TO AND FORMING PART OF THE

Share capital 16,269,312

Reserves 23,393,198
Surplus on revaluation of assets 4,063,610
Unappropriated profit 42,831,655
86,557,775
UNCONSOLIDATED FINANCIAL STATEMENTS

Current and Savings deposits have been classified under maturity upto one day as these do not have any contractual maturity.
NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

47.3.2 Maturities of assets and liabilities based on expected maturity of the assets and liabilities of the Bank
2022
Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5
Total Upto 1 to 3 to 6 Months to to 2 to 3 to 5 to 10 Above 10
Month Months Months 1 Year Years Years Years Years Years
Rupees in ‘000

Assets
Cash and balances with treasury banks 117,743,106 117,743,106 - - - - - - - -
Balances with other banks 13,676,159 13,676,159 - - - - - - - -
Due from financial institutions 34,964,299 - - - - - 34,964,299 - - -
Investments 1,283,210,287 9,801,129 10,222,498 23,988,325 1,073,095 4,298,970 218,887,230 891,620,782 123,318,258 -
Islamic financing and related assets 995,508,354 109,889,188 170,557,449 191,790,440 166,278,495 73,911,982 57,797,039 84,192,273 116,506,442 24,585,046
Operating fixed assets 40,426,520 1,049,317 2,384,231 3,119,196 6,181,135 5,258,721 4,772,674 7,664,848 2,395,829 7,600,569
Intangible assets 1,843,984 30,733 61,466 92,199 184,398 368,797 368,797 737,594 - -
Deferred tax assets 4,646,002 - - - 1,161,500 1,161,500 1,161,501 1,161,501 - -
Other assets 85,378,800 11,047,116 18,473,625 19,610,361 35,554,547 64,942 64,942 563,267 - -
2,577,397,511 263,236,748 201,699,269 238,600,521 210,433,170 85,064,912 318,016,482 985,940,265 242,220,529 32,185,615
Liabilities
Bills payable 40,175,122 40,175,122 - - - - - - - -
Due to financial institutions 573,326,439 276,585,332 204,300,004 23,513,500 46,047 518,145 1,930,569 9,057,809 56,549,574 825,459
Deposits and other accounts 1,658,490,118 126,858,570 102,452,709 89,729,270 132,747,075 171,418,019 110,158,381 180,509,205 316,778,745 427,838,144
Sub-ordinated Sukuk 20,990,000 - - - - - - - 13,990,000 7,000,000
Deferred tax liabilities - - - - - - - - - -
Other liabilities 169,095,139 16,569,847 78,772,948 27,581,854 15,386,244 5,067,092 5,447,003 9,275,417 10,994,734 -
2,462,076,818 460,188,871 385,525,661 140,824,624 148,179,366 177,003,256 117,535,953 198,842,431 398,313,053 435,663,603
Net assets 115,320,693 (196,952,123) (183,826,392) 97,775,897 62,253,804 (91,938,344) 200,480,529 787,097,834 (156,092,524) (403,477,988)
Share capital 17,896,243
Reserves 28,187,821
Deficit on revaluation of assets (663,671)
Unappropriated profit 69,900,300
115,320,693

2021
Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5
Total Upto 1 to 3 to 6 Months to to 2 to 3 to 5 to 10 Above 10
Month Months Months 1 Year Years Years Years Years Years
Rupees in ‘000

Assets

Cash and balances with treasury banks 170,500,698 170,500,698 - - - - - - - -

Balances with other banks 16,420,036 16,420,036 - - - - - - - -
Due from financial institutions 238,401,637 21,858,347 24,458,492 113,251,970 43,868,529 - - 34,964,299 - -
Investments 620,132,043 9,133,282 43,080,508 1,504,998 2,379,653 29,400,035 5,997,866 402,324,802 122,638,679 3,672,220
Islamic financing and related assets 758,086,120 86,421,934 141,762,960 148,651,817 107,627,237 37,499,645 56,775,730 80,633,851 84,055,913 14,657,033
Operating fixed assets 33,957,947 982,849 2,167,366 2,932,714 5,830,169 6,313,992 5,894,054 1,945,624 1,510,526 6,380,653
Intangible assets 1,495,810 24,930 49,860 74,791 149,581 299,162 299,162 598,324 - -
Deferred tax assets 175,555 - - - 43,889 43,889 43,889 43,888 - -
Other assets 63,801,554 10,113,624 12,946,361 13,768,727 26,401,321 542,421 9,700 19,400 - -
1,902,971,400 315,455,700 224,465,547 280,185,017 186,300,379 74,099,144 69,020,401 520,530,188 208,205,118 24,709,906
Liabilities

Bills payable 36,141,378 36,141,378 - - - - - - - -

Due to financial institutions 220,414,234 121,554,453 31,267,637 20,301,496 2,235,253 111,303 1,062,131 4,261,659 39,620,302 -
Deposits and other accounts 1,455,886,468 141,392,780 94,015,603 81,307,639 139,105,982 157,484,891 98,016,627 162,173,475 308,209,213 274,180,258
Sub-ordinated Sukuk 20,990,000 - - - - - - - 13,990,000 7,000,000
Deferred tax liabilities - - - - - - - - - -
Other liabilities 82,981,545 11,438,283 19,243,579 23,195,302 19,832,706 4,902,615 4,369,060 - - -
1,816,413,625 310,526,894 144,526,819 124,804,437 161,173,941 162,498,809 103,447,818 166,435,134 361,819,515 281,180,258
Net assets 86,557,775 4,928,806 79,938,728 155,380,580 25,126,438 (88,399,665) (34,427,417) 354,095,054 (153,614,397) (256,470,352)

Share capital 16,269,312

Reserves 23,393,198
Surplus on revaluation of assets 4,063,610
Unappropriated profit 42,831,655
86,557,775

Meezan Bank Annual Report 2022 229

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Regarding behaviour of non-maturity deposits (non-contractual deposits), the Bank has carried out a behavioural study
using the Value at Risk (VaR) methodology based on 5 years data. On the basis of its findings, 27.20% of current accounts
and 16.20% of saving accounts are bucketed into 'Upto 1-Year maturity' whereas, 72.80% of current accounts and 83.80%
of savings accounts are bucketed into maturities of above 1-Year.

47.4 Operational risk

The Bank uses Basic Indicator Approach (BIA) for assessing the capital charge for operational risk. Under BIA the capital
charge is calculated by multiplying average positive annual gross income of the Bank over past three years with 15% as per
guidelines issued by SBP under Basel II.

To reduce losses arising from operational risk, the Bank has strengthened its risk management framework by developing
policies, strategies, guidelines and manuals. It also includes set up of functions like operational risk management, prevention
of fraud and forgery and information security function, defining responsibilities of individuals, implementing four eye principle,
enhancing security measures, improving efficiency and effectiveness of operations, outsourcing and improving quality of
human resources through trainings and development.

48 PROFIT / (LOSS) DISTRIBUTION TO DEPOSITORS' POOLS AND SPECIFIC POOLS

48.1 The Bank managed following general and specific pools during the year:
2022
Profit rate return Amount of
Mudarib
Profit Rate and distributed to Percentage of Mudarib Share
Fee Mudarib transferred
General Remunerative Profit rate Profit Sharing remunerative
weightage based on
(Savings and Fixed) return earned - Ratio of deposits Share through Hiba
announcement profit
Depositors' Pools Average Mudarib (Savings and transferred to
period sharing
Fixed) - through Hiba remunerative
ratio deposits
Average
Rupees in ‘000 Rupees in ‘000

PKR Pool Monthly 11.03% 50% 43,715,542 6.57% 18% 7,846,233

USD Pool Monthly 3.78% 75% 1,750,106 0.95% - -
GBP Pool Monthly 2.90% 90% 89,665 0.26% - -
EUR Pool Monthly 1.77% 90% 26,538 0.16% - -

2021
Profit rate return Amount of
Mudarib
Profit Rate and distributed to Percentage of Mudarib Share
Fee Mudarib transferred
General Remunerative Profit rate Profit Sharing remunerative
weightage based on
(Savings and Fixed) return earned - Ratio of deposits Share through Hiba
announcement profit
Depositors' Pools Average Mudarib (Savings and transferred to
period sharing
Fixed) - through Hiba remunerative
ratio deposits
Average
Rupees in ‘000 Rupees in ‘000

PKR Pool Monthly 7.80% 50% 27,182,756 3.98% 2% 564,181

USD Pool Monthly 1.45% 75% 520,362 0.36% - -
GBP Pool Monthly 0.88% 90% 24,673 0.09% - -
EUR Pool Monthly 0.54% 90% 6,448 0.05% - -

2022
Amount of
Percentage of Mudarib share
Profit rate and
Profit rate Profit Investment Profit rate Mudarib transferred
Specific Pools weightage
return earned sharing ratio ratio return share through Hiba
announcement
distributed transferred to
period
through Hiba remunerative
deposits

Islamic Export Refinance

(IERS) Musharaka Pool Monthly 9.18% -* -* 3.63% N/A N/A

Inter Bank Musharaka /

Mudaraba borrowing Pool As required 16.80% - 7.32% -* -* 16.75% - 9.50% N/A N/A

Special Sharikah
Certificate Musharaka /
Mudaraba borrowing Pool As required 19.00% - 7.32% -* -* 16.77% - 2.87% N/A N/A

* The profit sharing ratio and the investment ratio varies on case to case basis.

230 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
UNCONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2021
Amount of
Percentage of Mudarib Share
Profit Rate and
Profit rate Profit Investment Profit rate Mudarib transferred
Specific Pools weightage
return earned Sharing Ratio ratio return Share through Hiba
announcement
distributed transferred to
period
through Hiba remunerative
deposits

Islamic Export Refinance

(IERS) Musharaka Pool Monthly 6.11% -* -* 2.03% N/A N/A

Inter Bank Musharaka /

Mudaraba borrowing Pool As required 11.46% - 5.95% -* -* 4.00% - 10.80% N/A N/A

Special Sharikah Certificate

Musharaka /Mudaraba
borrowing Pool As required 12.04% - 5.95% -* -* 9.20% - 2.75% N/A N/A

* The profit sharing ratio and the investment ratio varies on case to case basis.

48.2 Following weightages have been assigned to different major products under the General pools during the year:

Percentage to Total Mudaraba Maximum Minimum Maximum Minimum

based Deposits Weightage Weightage Weightage Weightage

2022 2021 2022 2022 2021 2021

PKR Pool
Saving Accounts 28.65% 27.25% 0.40 0.36 0.36 0.32
Meezan Bachat Account 17.29% 18.04% 0.41 0.36 0.38 0.32
Karobari Munafa Account 10.71% 8.36% 0.57 0.36 0.60 0.32
Certificate of Islamic Investment 10.96% 13.31% 0.66 0.34 0.80 0.47
Meezan Aamdan Certificate 4.45% 5.30% 0.80 0.57 0.92 0.65

USD Pool
Saving Accounts 4.23% 4.00% 0.45 0.45 0.45 0.45
Certificate of Islamic Investment 1.76% 1.75% 1.35 0.77 1.35 0.77

GBP Pool
Saving Accounts 0.37% 0.38% 0.27 0.27 0.27 0.27

EUR Pool
Saving Accounts 0.18% 0.18% 0.27 0.27 0.27 0.27

48.3 Allocation of Income and Expenses to Depositors' Pools

Following are material items of revenues, expenses, gains and losses 2022 2021
Rupees in ‘000

Profit / return earned on Islamic financing and related assets, investments and placements 158,778,116 102,815,084
Other Income (including other charges and interpool income) 5,973,096 4,330,174
Directly related costs attributable to pool (2,197,829) (1,794,432)

49 GENERAL
Comparative information has been re-classified, re-arranged or additionally incorporated in these unconsolidated financial
statements, wherever necessary, to facilitate comparison and better presentation.
50 NON-ADJUSTING EVENT

The Board of Directors in their meeting held on February 16, 2023 has announced final cash dividend of Rs 3.00 per share (30%).
The financial statements for the year ended December 31, 2022, do not include the effect of this appropriation which will be
accounted for in the unconsolidated financial statements for the year ending December 31, 2023.
51 DATE OF AUTHORISATION

These financial statements were authorised for issue on February 16, 2023 by the Board of Directors of the Bank.

Riyadh S. A. A. Irfan Siddiqui Faisal A. A. A. Mohammad Abdul Aleem Syed Imran Ali Shah
Edrees President & Al-Nassar
Chairman CEO Director Director Chief Financial Officer

Meezan Bank Annual Report 2022 231

STATEMENT SHOWING WRITTEN-OFF FINANCING OR
ANY OTHER FINANCIAL RELIEF OF RUPEES 500,000
OR ABOVE (ANNEXURE I)
During the year ended December 31, 2022
Rupees in ‘000
Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December
31, 2022 as referred in note 11.13 to these unconsolidated financial statements.

S. Name and Name of individuals Father’s / Outstanding liabilities as at January 1, 2022 Principal Profit Other Total
No. address of the / directors (with Husband’s Principal Profit Others Total written-off written-off Financial (9+10+11)
borrower CNIC / Passport No) Name (5+6+7) relief provided
1 2 3 4 5 6 7 8 9 10 11 12

1 Millennium Kalash Lohana Nuko Mal 454,961 93,202 - 548,163 79,618 126,938 - 206,556
Industries 41207-9936424-7
Main National Vinesh Kumar Nuko Mal
Highway, Lohana
Hyderabad 41303-4170015-9
2 Millennium Cotton Kalash Lohana Nuko Mal 29,935 26,670 - 56,605 5,278 21,487 - 26,765
Ginning And Oil 41207-9936424-7
Industries
Main National Vinesh Kumar
Highway, Lohana
Hyderabad 41303-4170015-9
3 Kevin Roy 90406-0152911-1 Kenneth 28,403 3,409 972 32,784 - 6,204 972 7,176
House # 448, Manmouan Roy
Block-B, Phase
12, Sector-EME,
Defence Housing
Authority, Lahore
4 Shoaib Maqsood 35202-3905341-3 Sheikh Maqsood 23,191 4,371 696 28,258 - 5,069 696 5,765
House # 543, Ahmad
Block-D, Phase-6,
Defence Housing
Authority, Lahore
5 Muhammad Riaz 33100-3959669-1 Muhammad Ismail 2,918 5,136 208 8,262 - 3,561 208 3,769
House # 22,
Street # 1,
Mahmoodabad,
Faisalabad

6 Kashif Mehmood 35202-2713326-7 Khalid Mahmood 18,837 3,812 565 23,214 - 2,854 565 3,419
House # 407,
Khewat # 965,
khatooni # 1244,
Khasra # 7995/927,
Hadbast Mouza
Rakh Khamba,
Airline Housing
Society, Tehsil
Raiwind, District
Lahore

7 Farhan Ahmad 33100-4860917-9 Basharat Ahmad 1,942 411 - 2,353 - 2,056 475 2,531
House # P-100,
Canal Road,
Saeed Colony # 1,
Faisalabad

8 Irfan Ali 42201-0383289-1 Ejaz Ali 7,663 2,343 - 10,006 - 2,343 - 2,343
Apartment # 304,
Tayyaba Homes,
Plot # 125/1,
Kharaget Road,
Jamshed Quarters,
Karachi,

9 Nayyar Ghias 35200-6618149-1 Khair Ud Din 5,200 1,914 156 7,270 - 964 156 1,120
Khokhar Khokhar
Plot No 27, Block A-4,
Phase I, Punjab
Government
Employees
Co-Operative
Housing Society,
Lahore

573,050 141,268 2,597 716,915 84,896 171,476 3,072 259,444

232 Meezan Bank Annual Report 2022

Consolidated
Financial Statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at December 31, 2022

Note 2022 2021

ASSETS Rupees in ‘000

Cash and balances with treasury banks 7 117,743,672 170,501,306

Balances with other banks 8 13,710,753 16,465,169
Due from financial institutions 9 34,964,299 238,401,637
Investments 10 1,287,316,423 624,332,881
Islamic financing and related assets 11 995,508,354 758,086,120
Fixed assets 12 40,624,658 34,185,975
Intangible assets 13 1,873,518 1,505,581
Deferred tax assets 14 4,439,835 -
Other assets 15 85,719,066 64,180,378
2,581,900,578 1,907,659,047
LIABILITIES

Bills payable 16 40,175,122 36,141,378

Due to financial institutions 17 573,326,439 220,414,234
Deposits and other accounts 18 1,658,469,588 1,455,871,080
Sub-ordinated sukuk 19 20,990,000 20,990,000
Deferred tax liabilities 14 - 72,189
Other liabilities 20 169,804,739 83,728,554
2,462,765,888 1,817,217,435
NET ASSETS 119,134,690 90,441,612

REPRESENTED BY

Share capital 21 17,896,243 16,269,312

Reserves 22 28,212,137 23,417,514
(Deficit) / surplus on revaluation of assets - net of tax 23 (663,671) 4,063,610
Unappropriated profit 72,485,599 45,494,657
Total equity attributable to the equity holders of the Bank 117,930,308 89,245,093
Non-controlling interest 24 1,204,382 1,196,519
119,134,690 90,441,612
CONTINGENCIES AND COMMITMENTS 25

The annexed notes 1 to 52 and Annexure I form an integral part of these consolidated financial statements.

Riyadh S. A. A. Irfan Siddiqui Faisal A. A. A. Mohammad Abdul Aleem Syed Imran Ali Shah
Edrees President & Al-Nassar
Chairman CEO Director Director Chief Financial Officer

238 Meezan Bank Annual Report 2022

CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000
Profit / return earned on Islamic financing and related
assets, investments and placements 26 232,245,452 110,077,456
Profit / return on deposits and other dues expensed 27 110,426,062 41,171,867
Net profit / return 121,819,390 68,905,589

OTHER INCOME
Fee and commission income 28 14,729,321 10,861,439
Dividend income 629,478 542,467
Foreign exchange income 3,617,274 3,158,131
(Loss) / gain on securities 29 (100,184) 536,390
Other income 30 1,238,374 843,518
Total other income 20,114,263 15,941,945

Total income 141,933,653 84,847,534

OTHER EXPENSES
Operating expenses 31 46,841,953 34,939,071
Workers Welfare Fund 20.8 1,927,520 962,709
Other charges 32 95,150 28,172
Total other expenses 48,864,623 35,929,952

93,069,030 48,917,582
Share of (loss) / profit of associates 10.7 (87,366) 52,006

Profit before provisions 92,981,664 48,969,588

Provisions and write offs - net 33 4,176,661 992,830

Extra ordinary / unusual items - -

PROFIT BEFORE TAXATION 88,805,003 47,976,758

Taxation 34 43,663,751 19,469,170

PROFIT AFTER TAXATION 45,141,252 28,507,588

Attributable to:
Equity holders of the Bank 44,936,695 28,227,560
Non-controlling interest 24 204,557 280,028
45,141,252 28,507,588

Rupees
Restated

Basic earnings per share 35 25.11 15.77

Diluted earnings per share 35 25.10 15.77

The annexed notes 1 to 52 and Annexure I form an integral part of these consolidated financial statements.

Riyadh S. A. A. Irfan Siddiqui Faisal A. A. A. Mohammad Abdul Aleem Syed Imran Ali Shah
Edrees President & Al-Nassar
Chairman CEO Director Director Chief Financial Officer

Meezan Bank Annual Report 2022 239

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000

Profit after taxation for the year 45,141,252 28,507,588

Other comprehensive income

Items that may be reclassified to profit and loss account in

subsequent periods:

Movement in deficit on revaluation of investments - net of tax 23 (4,706,426) (1,502,274)

Items that will not be reclassified to profit and loss account in

subsequent periods:

Remeasurement loss on defined benefit obligations - net of tax (108,537) (67,849)

Movement in (deficit) / surplus on revaluation of non - banking assets

net of tax 23 (20,768) 3,685

Total comprehensive income for the year 40,305,521 26,941,150

Attributable to:
Shareholders of the Holding Company 40,105,158 26,659,143
Non-controlling interest 24 200,363 282,007
40,305,521 26,941,150

The annexed notes 1 to 52 and Annexure I form an integral part of these consolidated financial statements.

Riyadh S. A. A. Irfan Siddiqui Faisal A. A. A. Mohammad Abdul Aleem Syed Imran Ali Shah
Edrees President & Al-Nassar
Chairman CEO Director Director Chief Financial Officer

240 Meezan Bank Annual Report 2022

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended December 31, 2022

Capital Revenue (Deficit) / surplus on

reserves reserves revaluation of
Share Share Statutory Non - Employee General Investments Non-banking Unappropriated Sub total Non- Total
capital premium reserve* Distributable share option reserve Assets profit controlling
Capital Reserve compensation Interest
- Gain on reserve
Bargain
Purchase
Rupees in ‘000
Balance as at January 1, 2021 14,147,228 2,406,571 14,833,341 3,117,547 - 91,082 5,542,351 19,941 31,808,445 71,966,506 1,264,512 73,231,018

Profit after taxation for the year - - - - - - - - 28,227,560 28,227,560 280,028 28,507,588
Other comprehensive (loss) / income for the year -net of tax - - - - - - (1,502,274) 3,685 (69,828) (1,568,417) 1,979 (1,566,438)
- - - - - - (1,502,274) 3,685 28,157,732 26,659,143 282,007 26,941,150
Transfer from surplus in respect of incremental depreciation of
Non-banking assets to unappropriated profit - net of tax - - - - - - - (93) 93 - - -
Recognition of share based compensation (Note 40) - - - - 133,457 - - - - 133,457 - 133,457
Other appropriations
Transfer to statutory reserve* - - 2,835,516 - - - - - (2,835,516) - - -
Transactions with owners recognised directly in equity
Issue of bonus shares @ 15% 2,122,084 - - - - - - - (2,122,084) - - -
Final cash dividend for the year 2020 @ Rs 2 per share - - - - - - - - (2,829,446) (2,829,446) - (2,829,446)
First interim cash dividend for the year 2021 @ Rs. 1.5 per share - - - - - - - - (2,122,085) (2,122,085) - (2,122,085)
Second interim cash dividend for the year 2021 @ Rs. 1.5 per share - - - - - - - - (2,122,085) (2,122,085) - (2,122,085)
Third interim cash dividend for the year 2021 @ Rs 1.5 per share - - - - - - - - (2,440,397) (2,440,397) - (2,440,397)
- - - - - - - - (9,514,013) (9,514,013) - (9,514,013)
Dividend payout by Subsidiary - - - - - - - - - - (350,000) (350,000)
Balance as at December 31, 2021 16,269,312 2,406,571 17,668,857 3,117,547 133,457 91,082 4,040,077 23,533 45,494,657 89,245,093 1,196,519 90,441,612
Profit after taxation for the year - - - - - - - - 44,936,695 44,936,695 204,557 45,141,252
Other comprehensive loss for the year - net of tax - - - - - - (4,706,426) (20,768) (104,343) (4,831,537) (4,194) (4,835,731)
- - - - - - (4,706,426) (20,768) 44,832,352 40,105,158 200,363 40,305,521
Transfer from surplus in respect of incremental depreciation of
Non-banking assets to unappropriated profit - net of tax - - - - - - - (87) 87 - - -
Recognition of share based compensation (Note 40) - - - - 293,962 - - - - 293,962 - 293,962
Other appropriations
Transfer to statutory reserve* - - 4,500,661 - - - - - (4,500,661) - - -

Transactions with owners recognised directly in equity

Issue of bonus shares @ 10% 1,626,931 - - - - - - - (1,626,931) - - -

Final cash dividend for the year 2021 @ Rs 1.5 per share - - - - - - - - (2,440,397) (2,440,397) - (2,440,397)
First interim cash dividend for the year 2022 @ Rs 1.75 per share - - - - - - - - (2,847,130) (2,847,130) - (2,847,130)
Second interim cash dividend for the year 2022 @ Rs 1.75 per share - - - - - - - - (2,847,130) (2,847,130) - (2,847,130)
Third interim cash dividend for the year 2022 @ Rs. 2 per share - - - - - - - - (3,579,248) (3,579,248) - (3,579,248)
- - - - - - - - (11,713,905) (11,713,905) - (11,713,905)

Dividend payout by Subsidiary - - - - - - - - - - (192,500) (192,500)

Balance as at December 31, 2022 17,896,243 2,406,571 22,169,518 3,117,547 427,419 91,082 (666,349) 2,678 72,485,599 117,930,308 1,204,382 119,134,690

* This represents reserve created under section 21(i)(b) of the Banking Companies Ordinance, 1962.
The annexed notes 1 to 52 and Annexure I form an integral part of these consolidated financial statements.

Riyadh S. A. A. Irfan Siddiqui Faisal A. A. A. Mohammad Abdul Aleem Syed Imran Ali Shah
Edrees President & Al-Nassar
Chairman CEO Director Director Chief Financial Officer

Meezan Bank Annual Report 2022 241

CONSOLIDATED CASH FLOW STATEMENT
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000
CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation 88,805,003 47,976,758

Less: Dividend income (629,478) (542,467)
Share of (loss) / profit of associates 10.7 87,366 (52,006)
88,262,891 47,382,285
Adjustments:
Depreciation 31 3,177,882 2,472,917
Amortisation 31 469,666 368,642
Non cash items related to right-of-use assets 27 & 31 4,657,904 3,250,363
Provisions and write offs - net 33 4,176,661 992,830
Charge for defined benefit plan 31.1 629,796 482,378
Share based compensation expense 40 293,962 133,457
Unrealised gain - held for trading (18) -
Gain on sale of operating fixed assets 30 (215,770) (149,406)
13,190,083 7,551,181
101,452,974 54,933,466
(Increase) / decrease in operating assets
Due from financial institutions 203,437,338 103,667,162
Islamic financing and related assets (240,666,103) (246,289,233)
Other assets (21,701,668) (11,906,053)
(58,930,433) (154,528,124)
Increase / (decrease) in operating liabilities
Bills payable 4,033,744 9,647,372
Due to financial institutions 352,912,205 125,913,594
Deposits and other accounts 202,598,508 201,458,838
Other liabilities 75,747,451 13,150,430
635,291,908 350,170,234
677,814,449 250,575,576
Contribution to defined benefit plan 38.5 (557,689) (322,792)
Income tax paid (38,388,893) (14,991,929)
Net cash generated from operating activities 638,867,867 235,260,855

CASH FLOW FROM INVESTING ACTIVITIES

Net investments in available for sale securities (531,153,574) (121,925,177)
Net investments in held to maturity securities (141,110,504) (66,346,047)
Net investments in held for trading securities (2,470) -
Net redemption in associates 596,865 667,733
Dividends received 632,621 546,551
Investments in operating fixed assets (10,999,090) (6,219,443)
Investments in intangible assets (837,603) (782,711)
Proceeds from sale of fixed assets 375,048 253,700
Net cash used in investing activities (682,498,707) (193,805,394)

CASH FLOW FROM FINANCING ACTIVITIES

Payment of lease liability against right-of-use assets (3,780,665) (3,335,554)
Issuance of sub-ordinated Sukuk - Tier II - 9,990,000
Redemption of sub-ordinated Sukuk - Tier II - (7,000,000)
Dividend paid to equity shareholders of the Bank (7,908,045) (9,515,742)
Dividend paid to non-controlling interest (192,500) (350,000)
Net cash used in financing activities (11,881,210) (10,211,296)

(Decrease) / increase in cash and cash equivalents (55,512,050) 31,244,165

Cash and cash equivalents at the beginning of the year 36 186,966,475 155,722,310
Cash and cash equivalents at the end of the year 36 131,454,425 186,966,475

The annexed notes 1 to 52 and Annexure I form an integral part of these consolidated financial statements.

Riyadh S. A. A. Irfan Siddiqui Faisal A. A. A. Mohammad Abdul Aleem Syed Imran Ali Shah
Edrees President & Al-Nassar
Chairman CEO Director Director Chief Financial Officer

242 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

1 STATUS AND NATURE OF BUSINESS

1.1 The "Group" consists of:

(i) Meezan Bank Limited - Holding Company

(ii) Al Meezan Investment Management Limited - Subsidiary Company

1.1.1 Holding Company - Meezan Bank Limited

Meezan Bank Limited (the Bank / Holding Company) was incorporated in Pakistan on January 27, 1997, as a public
limited company under the Companies Act, 2017 (previously Companies Ordinance, 1984), and its shares are
quoted on the Pakistan Stock Exchange Limited. The Bank was registered as an ‘Investment Finance Company’
on August 8, 1997, and carried on the business of investment banking as permitted under SRO 585(I)/87 dated July
13, 1987, in accordance and in conformity with the principles of Islamic Shariah. A ‘Certificate of Commencement
of Business' was issued to the Bank on September 29, 1997.

The Bank was granted a ‘Scheduled Islamic Commercial Bank’ license on January 31, 2002 and formally
commenced operations as a Scheduled Islamic Commercial Bank with effect from March 20, 2002, on receiving
notification in this regard from the State Bank of Pakistan (the SBP) under section 37 of the State Bank of Pakistan
Act, 1956. Currently, the Bank is engaged in corporate, commercial, consumer, investment and retail banking
activities.

The Bank was operating through nine hundred and sixty two branches as at December 31, 2022 (2021: nine
hundred and two branches). Its registered office is at Meezan House, C-25, Estate Avenue, SITE, Karachi,
Pakistan.

Based on the financial statements of the Bank for the year ended December 31, 2021, the VIS Credit Rating
Company Limited has reaffirmed the Bank's medium to long-term rating as 'AAA' and the short-term rating as
"A1+".

1.1.2 Subsidiary Company - Al Meezan Investment Management Limited Percentage of holding

2022 2021
Al Meezan Investment Management Limited - Subsidiary 65% 65%

Al Meezan Investment Management Limited (AMIML) ('the Subsidiary Company') is involved in asset management,
investment advisory, portfolio management, equity research, underwriting and corporate finance.

The principal activities of the Subsidiary Company are floating and managing Collective Investment Schemes,
Voluntary Pension Schemes and providing investment advisory services. The registered office of the Company is
situated at Ground Floor, Block B, Finance and Trade Centre, Shahrah-e-Faisal, Karachi, Pakistan. AMIML is a
subsidiary of Meezan Bank Limited (Holding Company) which owns 65% share capital of AMIML.

The Subsidiary Company has been assigned an Asset Manager rating of 'AM1' by the Pakistan Credit Rating
Agency Limited (PACRA) dated June 23, 2022 (2022: 'AM1' dated June 23, 2021).

1.2 The Group’s associates are as follows:

The Group considers the following open end funds managed by AMIML as its associates:

- Meezan Islamic Fund

- Meezan Balanced Fund
- Meezan Islamic Income Fund
- Al-Meezan Mutual Fund
- KSE Meezan Index Fund
- Meezan Sovereign Fund
- Meezan Tahaffuz Pension Fund
- Meezan Energy Fund
- Meezan Gold Fund
- Meezan Cash Fund
- Meezan Dedicated Equity Fund
- Meezan Strategic Allocation Fund
- Meezan Strategic Allocation Fund II
- Meezan Strategic Allocation Fund III
- Meezan Asset Allocation Fund
- Meezan Financial Planning Fund of Funds
- Meezan Rozana Amdani Fund
- Meezan Daily Income Fund
- Meezan Pakistan Exchange Traded Fund
- Meezan Paidar Munafa Plan II

Meezan Bank Annual Report 2022 243

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

The country of establishment in respect of all of the above funds is Pakistan. Further, all the above funds are individual
open-end schemes and have been established by execution of trust deeds between AMIML and the Central Depository
Company of Pakistan Limited (CDC) as the Trustee.

2 BASIS OF PRESENTATION AND CONSOLIDATION

2.1 These consolidated financial statements have been prepared from the information available in the audited financial
statements of the Meezan Bank Limited (Holding Company) for the year ended December 31, 2022 and the condensed
interim financial statements of Al-Meezan Investment Management Limited (AMIML) (Subsidiary Company) for the six
months period ended December 31, 2022 which have only been subjected to review but are not audited. AMIML prepares
its annual financial statements up to June 30 each year. In preparing the consolidated profit and loss account for the year
ended December 31, 2022 the results for the period from January 1, 2022 to June 30, 2022 have been calculated from
the audited financial statements of AMIML for the year ended June 30, 2022 after eliminating the results for the six months
period ended December 31, 2021.

These consolidated financial statements comprise of the consolidated statement of financial position as at December
31, 2022, the consolidated profit and loss account, the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated cash flow statement together with the notes forming part thereof
for the year ended December 31, 2022.

The associates have been accounted for in these consolidated financial statements under the equity method of accounting.
For applying equity method financial statements of respective funds for the half years ended December 31, 2022 and
2021 (unaudited but subject to a limited review by its statutory auditors) and audited financial statements for the year
ended June 30, 2022 have been used.

2.2 Subsidiaries are those enterprises in which the Holding Company directly or indirectly exercises control over investee,
and / or beneficially owns or holds more than 50 percent of the voting securities or otherwise, has power to elect and
appoint more than 50 percent of its directors. The financial statements of the subsidiary are included in these
consolidated financial statements from the date when the control commenced. The financial statements of AMIML have
been consolidated on a line-by-line basis. The Group applies uniform accounting policies for similar transactions and
events in similar circumstances except where specified otherwise.

Associates are entities over which the Group has a significant influence, but not control, over investee. The Group's
share in an associate is the aggregate of the holding in that associate by the Holding Company and by the Subsidiary.
Investments in associates are accounted for under the equity method of accounting and are initially recognised at cost,
thereafter for the post acquisition change in the Group's share of net assets of the associates. The consolidated profit
and loss account reflects the Group’s share of the results of operations of the associate. Any change in Other
Comprehensive Income (OCI) of associates is presented as part of the Group’s OCI. In addition, when there has been a
change recognised directly in the equity of the associate, the Group recognises its share of any changes, when
applicable, in the statement of changes in equity. These consolidated financial statements include the Group's share of
income and expenses of associates from the date that significant influence commences until the date that such
influence ceases.

Non-controlling interest is that part of the net results of operations and of net assets of the subsidiary attributable to
interests which are not owned by the Holding Company.

All material intra-group balances and transactions have been eliminated.

3 STATEMENT OF COMPLIANCE

3.1 These consolidated financial statements have been prepared in accordance with the accounting and reporting
standards as applicable in Pakistan. The accounting and reporting standards comprise of:

- International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as
are notified under the Companies Act, 2017;

- Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as are
notified under the Companies Act, 2017;

- Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017;
and

- Directives issued by the State Bank of Pakistan (SBP) and the Securities Exchange Commission of Pakistan (SECP).

Whenever the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 or the directives
issued by the SBP and the SECP differ with the requirements of IFRS or IFAS, the requirements of the Banking
Companies Ordinance, 1962, the Companies Act, 2017 and the said directives, shall prevail.

3.2 The SBP vide its BPRD Circular No. 04 dated February 25, 2015 has clarified that the reporting requirements of IFAS-3,
'Profit and loss sharing on deposits' for Institutions offering Islamic Financial Services (IIFS) relating to annual, half yearly
and quarterly financial statements would be notified by the SBP through issuance of specific instructions and uniform
disclosure formats in consultation with IIFS. These reporting requirements have not been notified to date. Accordingly,
the disclosure requirements under IFAS 3 have not been considered in these consolidated financial statements.

244 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

3.3 The SBP has deferred the applicability of International Accounting Standard (IAS) 40, 'Investment property' for Banking
Companies through BSD Circular Letter No. 10 dated August 26, 2002 till further instructions. Further, the SECP has also
deferred the applicability of International Financial Reporting Standard (IFRS) 7, 'Financial instruments: disclosures'
through its S.R.O. 633(I)/2014 dated July 10, 2014. Accordingly, the requirements of these standards have not been
considered in the preparation of these consolidated financial statements.

3.4 The SECP through S.R.O. 56(1)/2016 dated January 28, 2016, has directed that the requirements of IFRS 10,
'Consolidated financial statements' are not applicable in case of investments by companies in mutual funds established
under Trust Deed structure. Accordingly, implications of IFRS 10 in respect of investment in mutual funds are not
considered in these consolidated financial statements.

3.5 Standards, interpretations of and amendments to the published accounting and reporting standards that are effective
in the current year:

3.5.1 There are certain new and amended standards, interpretations and amendments that are mandatory for the
Group's accounting periods beginning on January 1, 2022 but are considered not to be relevant or do not have any
significant effect on the Group's operations and are therefore not detailed in these consolidated financial
statements.

3.6 Standards, interpretations of and amendments to the published accounting and reporting standards that are not yet
effective:
3.6.1 The following revised standards, amendments and interpretations with respect to the accounting and reporting
standards would be effective from the dates mentioned below against the respective standards, amendments or
interpretations:

Effective date (annual periods

Standard, Interpretations and Amendments beginning on or after)

- IFRS 9 - 'Financial instruments' January 1, 2023

- IAS 1 - 'Accounting policy disclosures' (amendments) January 1, 2023
- IAS 1 - Non current liabilities with covenants (amendments) January 1, 2024
- IFRS 16 - Sale and leaseback (amendments) January 1, 2024
- IAS 8 - 'Accounting policies, changes in accounting estimates and errors'
(amendments) January 1, 2023
- IAS 12 - 'Income taxes' (amendments) January 1, 2023

The management is in the process of assessing the impact of these standards and amendments on the consolidated
financial statements of the Group except IFRS 9 (Financial Instruments), the impact of which is as follows:

IFRS 9 - 'Financial Instruments'

As directed by the SBP via BPRD Circular no 3 of 2022, (IFRS) 9, 'Financial Instruments' is effective for periods
beginning on or after January 1, 2023 for banks having asset base of more than Rs. 500 billion as at December
31, 2021. SBP via the same circular has finalized the instructions on (IFRS) 9 (Application Instructions) for ensuring
smooth and consistent implementation of the standard in the banks.

During 2022, the management of the Holding Company has performed an impact assessment of (IFRS) 9 taking
into account the SBP’s (IFRS) 9 application instructions. The assessment is based on available information and
may be subject to changes arising from further reasonable and supportable information being made available to
the Holding Company at the time of finalizing the impact for initial application of (IFRS) 9. In addition, the Holding
Company will implement changes in classification of certain financial instruments.

An overview of the (IFRS) 9 requirements that are expected to have significant impact are discussed below along
with the additional requirements introduced by the SBP:

Classification and measurement

The classification and measurement of financial assets will base on the business model within which they are
held and their contractual cash flow characteristics. Financial assets that do not meet the solely payments of
principal and profit (SPPI) criteria are measured at FVTPL regardless of the business model in which they are
held. The Group’s business model in which they are held. The Group’s business model in which financial assets
are held will determine whether the financial assets are measured at amortised cost, fair value through other
comprehensive income (‘FVOCI’) or fair value through profit or loss (‘FVTPL’).

The business model reflects how groups of financial assets are managed to achieve a particular business objective.
Financial assets can only be held at amortised cost if the instruments are held in order to collect the contractual cash
flows (‘hold to collect’), and where those contractual cash flows are solely payments of principal and profit (SPPI).

Debt instruments where the business model objectives are achieved by collecting the contractual cash flows and
by selling the assets (‘hold to collect and sell’) and that have SPPI cash flows are held at FVOCI, with unrealised
gains or losses deferred in reserves until the asset is derecognised.

Meezan Bank Annual Report 2022 245

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

The classification of equity instruments is generally measured at FVTPL unless the Group, at initial recognition,
irrevocably designates as FVOCI but both unrealized and realized gains or losses are recognized in reserves and
no amounts other than dividends received are recognized in the consolidated profit and loss account.

All other financial assets will mandatorily be held at FVTPL. Financial assets may be designated at FVTPL only if
doing so eliminates or reduces an accounting mismatch.

Impairment

The impairment requirements apply to financial assets measured at amortised cost and FVOCI (other than equity
instruments), lease receivables, and certain loan commitments and financial guarantee contracts. At initial
recognition, an impairment allowance (or provision in the case of commitments and guarantees) is required for
expected credit losses (‘ECL’) resulting from default events that are possible within the next 12 months (’12-month
ECL’). In the event of a significant increase in credit risk, an allowance (or provision) is required for ECL resulting
from all possible default events over the expected life of the financial instrument (‘lifetime ECL’). Financial assets
where 12-month ECL is recognised are in ‘stage 1’; financial assets that are considered to have experienced a
significant increase in credit risk are in ‘stage 2’; and financial assets for which there is objective evidence of
impairment, so are considered to be in default or otherwise credit impaired, are in ‘stage 3’.

The assessment of credit risk and the estimation of ECL are required to be unbiased and probability-weighted
and should incorporate all available information which is relevant to the assessment including information about
past events, current conditions and reasonable and supportable forecasts of economic conditions at the reporting
date. In addition, the estimation of ECL should take into account the time value of money.

Based on the requirement of (IFRS) 9 and SBP’s (IFRS) 9 application instructions, the Group has performed an
ECL assessment taking into account the key elements such as assessment of SCIR, Probability of Default, Loss
Given Default and Exposure at Default.

Under the SBP’s instructions, credit exposure (in local currency) guaranteed by the Government and Government
Securities are exempted from the application of ECL Framework. Moreover, until implementation of IFRS 9 has
stabilised, stage 1 and stage 2 provisions would be made as per IFRS 9 ECL and stage 3 provision would be
made considering higher of (IFRS) 9 ECL or provision computed under existing PRs’ requirements.

Presentation and disclosure

(IFRS) 9 also introduces expanded disclosure requirements and changes in presentation. These are expected to
change the nature and extent of Holding Company’s disclosure about its financial instruments particularly in the
year of adoption of the (IFRS) 9.

Impact of adoption of IFRS 9

The Group will adopt IFRS 9 in its entirety effective January 01, 2023 with modified retrospective approach for
restatement. The cumulative impact of initial application will be recorded as an adjustment to equity at the
beginning of the accounting period. The actual impact of adopting IFRS 9 on the Group’s financial statements in
the year 2023 will be dependent on the financial instruments that the Group would hold during next year and
economic conditions at that time as well as accounting elections and judgements that it will make in future.

Nevertheless, the Group has performed a preliminary assessment of the potential impact of adoption of IFRS 9
and based on this assessment, the Group does not expect any material effect on the Group’s Capital Adequacy
Ratio (CAR) and equity as of December 31, 2022.

3.6.2 The SBP vide its BPRD Circular No. 02 of 2023 dated February 9, 2023 has specified the new reporting format
for financial statements of Banking Companies. The new format has revised the disclosure requirements and will
become applicable for the financial statements of the Group for the quarter ending March 31, 2023.

4 BASIS OF MEASUREMENT

These consolidated financial statements have been prepared under the historical cost convention except that certain available
for sale investments, foreign currency balances, non-banking assets acquired in satisfaction of claims and certain foreign exchange
commitments have been marked to market and carried at fair value in accordance with the requirements of the SBP.

4.1 Critical accounting estimates and judgments

The preparation of the consolidated financial statements in conformity with the accounting and reporting standards
requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and
liabilities and income and expenses. It also requires management to exercise judgments in application of its accounting
policies. The estimates and associated assumptions are based on historical experience and various other factors that are
believed to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects
only that period, or in the period of revision and future periods if the revision affects both current and future periods.
Significant accounting estimates and areas where judgments were made by the management in the application of the
accounting policies are as follows:

246 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

i) classification and valuation of investments (notes 6.4.1, 6.4.4 and 10);

ii) provision against non-performing advances (notes 6.3.2 and 11.12);
iii) income taxes (notes 6.6 and 34);
iv) defined benefit plans (notes 6.11 and 38);
v) valuation and depreciation of fixed assets (notes 6.5.1, 6.5.5 and 12.2);
vi) valuation and amortisation of intangible assets (note 6.5.3, 6.5.5 and 13.1);
vii) valuation of right-of-use assets and their related lease liability (notes 6.5.2, 12.3 and 20.7);
viii) impairment (note 6.4.5);
ix) valuation of non-banking assets acquired in satisfaction of claims (note 6.7 and 23.1); and
x) assumptions and estimates used in valuation of options under share-based payments (note 40).

5 FUNCTIONAL AND PRESENTATION CURRENCY

5.1 Items included in these consolidated financial statements are measured using the currency of the primary economic
environment in which the Group operates. These consolidated financial statements are presented in Pakistani Rupees,
which is the Group's functional and presentation currency.
5.2 Figures have been rounded off to the nearest thousand rupees unless otherwise stated.

6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in the preparation of these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented.

6.1 Cash and cash equivalents

Cash and cash equivalents comprise of cash and non-restricted balances with treasury banks and balances with other
banks in current and deposit accounts.
6.2 Due to / from financial institutions
Bai Muajjal
In Bai Muajjal, the Group sells sukuk on credit to other financial institutions. The credit price is agreed at the time of sale
and such proceeds are received at the end of the credit period. Bai Muajjal with the Federal Government is classified as
investment.
Musharaka / Mudaraba
In Musharaka / Mudaraba, the Group (or the counterparty financial institutions / the SBP) invests in the shariah compliant
business pools of the counterparty financial institutions / the SBP (or the Group) at the agreed profit and loss sharing ratio.
Musharaka from the SBP under IERS
Under IERS, the Group accepts funds from the SBP under Shirkat-ul-aqd to constitute a pool for investment in export
refinance portfolio of the Group under the guidelines issued by the SBP. The profit of the pool is shared as per the agreed
weightages between the partners.
Mudaraba investment from the SBP under various long term Islamic refinance schemes
Under various long term Islamic refinance schemes of the SBP, the Group accepts funds from the SBP which are
received on Mudaraba basis for investment in general pool of the Group. The profit of the pool is shared as per the
announced profit sharing ratio of the pool and the weightages assigned to these investments.
6.2.1 These are initially recognised at amount of funds disbursed / accepted (in case of Bai Muajjal, at sale price of the
Sukuk net of deferred profit) and subsequently measured at amount receivable / payable under the contractual
terms of the underlying agreement (in case of Bai Muajjal, at sale price of the sukuk net of remaining deferred profit
at reporting date, if any).

6.3 Islamic financing and related assets

Murabaha
In Murabaha transactions, the Group purchases the goods and after taking the possession, sells them to the customer
on cost plus disclosed profit basis either in a spot or credit transaction.
Ijarah
Ijarah assets are stated at cost less depreciation and are disclosed as part of 'Islamic financing and related assets'. The
rental received / receivable on Ijarah under Islamic Financial Accounting Standard - 2 ‘Ijarah’ (IFAS 2) are recorded as
income / revenue. The Group charges depreciation from the date of recognition of Ijarah of respective assets to mustajir.
Ijarah assets are depreciated over the period of Ijarah using the straight line method. Ijarah rentals outstanding are disclosed
in 'other assets' on the consolidated statement of financial position at amortised cost. Impairment of Ijarah assets is
determined in accordance with the Prudential Regulations issued by the SBP. The provision for impairment of Ijarah assets
is shown as part of 'Islamic financing and related assets'.

Meezan Bank Annual Report 2022 247

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Istisna
In Istisna financing, the Group places an order to purchase some specific goods / commodities from its customers to be
delivered to the Group within an agreed time. The goods are then sold by the customer on behalf of the Group and the
amount hence financed along with profit realised net of agency fee and incentives is paid to the Group.
Tijarah
In Tijarah financing, the Group purchases specific goods / commodities on cash basis from its customers which is then
onward sold by the customer on behalf of the Group and on subsequent sale, the financed amount along with profit
realised net of agency fee and incentives is paid by the customer to the Group.
Diminishing Musharakah
In Diminishing Musharakah financing, the Group enters into Musharakah based on Shirkat-ul-milk for purchasing an
agreed share of fixed asset (e.g. house, land, plant or machinery) with its customers. The customers pay periodic profit
as per the agreement for the utilisation of the Group's Musharakah share and also periodically purchase the Group's
share over the tenure of the transaction.
Running Musharakah
In Running Musharakah financing, the Group enters into financing with the customer based on Shirkat-ul-Aqd or
business partnership in the customer's operating business. Under this mechanism the customer can withdraw and
return funds to the Group subject to his Running Musharakah Financing limit during the Musharakah period. At the end
of each quarter / half year the customer pays the provisional profit as per the desired profit rate which is subject to final
settlement based on the relevant quarterly / half yearly / annual accounts of the customer.
Bai Muajjal
In Bai Muajjal financing, the Group sells Shariah compliant sukuk on credit to customers. The credit price is agreed at
the time of sale and such proceeds are received at the end of the credit period.
Service Ijarah
In Service Ijarah financing, the Group provides financing by acquiring certain agreed services from the customer. After
the purchase of services, the Group appoints the customer to sell these services in the market over a period and provide
a sale confirmation of such sale. The profit is only accrued from the date of receipt of such confirmation.
Wakalah
Wakalah is an agency or a delegated authority where the Muwakkil (principal) appoints the Wakil (agent) to carry out a
specific job on behalf of the Muwakkil. Funds disbursed are initially recorded as ‘Advance against Wakalah'. On
culmination, the same are recorded as financings.
Wakalah tul Istithmar
In Wakalah tul Istithmar financing, the Group enters into investment agency transaction with customer acting as an agent
of the Group. Under this mechanism, the funds disbursed are invested by the customer on behalf of the Group and are
recorded as financing upon their investment in the business. At the end of each quarter / half year / other defined period,
the customer pays the provisional profit which is subject to adjustment upon actual declaration of wakala business
performance by the agent.
Musawamah

In Musawammah financing, the Group purchases the goods and after taking the possession, sells them to the customer
either in spot or credit transaction, without disclosing the cost.

6.3.1 Islamic financing and related assets are stated net of specific and general provisions against non-performing
Islamic financing and related assets which are charged to the consolidated profit and loss account.

Funds disbursed, under financing arrangements for purchase of goods / assets are recorded as advance. On
culmination, financing are recorded at the deferred sale price net of profit. Goods purchased but remaining
unsold at the consolidated statement of financial position date are recorded as inventories.

6.3.2 Provision against non-performing Islamic financing and related assets

Specific provision

The Group determines provisions against Islamic financing and related assets on a prudent basis in accordance
with the requirements of the Prudential Regulations issued by the SBP.
General provision
In accordance with Prudential Regulations issued by the SBP, general provision against consumer financing and
house financing are maintained at varying percentages based on the non-performing loan ratio present in the
portfolio. These percentages range from 0.5% to 2.5% for secured and 4% to 7% for unsecured portfolio.
In addition to the above mentioned requirements, the Group has also maintained a general provision in respect
of financing against potential losses as may be present in the portfolio. This provision is based on management's

248 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

best estimate and is approved by the Board of Directors of the Holding Company.
The net provisions made / reversed during the year is charged to the consolidated profit and loss account and
accumulated provision is netted off against Islamic financing and related assets. Islamic financing and related
assets are written off when there are no realistic prospects of recovery.

6.3.3 Inventories

The Group values its inventories at the lower of cost and net realisable value.

The net realisable value is the estimated selling price in the ordinary course of business less the estimated cost
necessary to make the sale.

Cost of inventories represents actual purchases made by the Group / customers as an agent of the Group for
subsequent sale. Inventory against each contract is maintained on specific identification method.

6.4 Investments

6.4.1 Classification

The Group classifies its investments as follows:

- Held for trading

These are investments which are either acquired for generating profits from short-term fluctuations in
market prices or are securities included in a portfolio for which there is evidence of a recent actual pattern
of short-term profit taking.

- Held to maturity

These are investments with fixed or determinable payments and maturity that the Group has the positive
intent and ability to hold till maturity.

- Available for sale

These are investments, other than those in associates and subsidiaries, which do not fall under either
'held for trading' or 'held to maturity' categories.

- Associates

Associates are all entities over which the Group has significant influence but not control. Certain mutual
funds are managed by the subsidiary company of the Group and hence, the Group has significant
influence over such funds and therefore, investment in these mutual funds are considered as investment
in associates in these consolidated financial statements.

6.4.2 Regular way contracts

All purchases and sales of investments that require delivery within the time frame established by regulation or
market convention are recognised at the trade date, which is the date on which the Group commits to purchase
or sell the investments.

6.4.3 Initial recognition and measurement

Investments other than those categorised as 'held for trading' are initially recognised at fair value which includes
transaction costs associated with the investments. Investments classified as 'held for trading' are initially
recognised at fair value and transaction costs are expensed in the consolidated profit and loss account.

6.4.4 Subsequent measurement

Subsequent to initial recognition investments are valued as follows:

- Held for trading
These are measured at subsequent reporting dates at fair value. Gains and losses on remeasurement are
included in the net profit and loss for the year.
- Held to maturity
These are measured at amortised cost less any impairment loss recognised to reflect irrecoverable amount.
Premium / discount (if any) is amortised over the remaining maturity.

Meezan Bank Annual Report 2022 249

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

- Available for sale

In accordance with the requirements specified by the SBP, quoted securities (other than those classified
as 'held to maturity' and 'investments in associates and subsidiary'), are subsequently re-measured to
market value. Unquoted equity securities are valued at the lower of cost and break-up value. Break-up
value of unquoted equity securities is calculated with reference to the net assets of the investee company
as per the latest available audited financial statements. Investment in other unquoted securities are valued
at cost less impairment losses, if any.

Surplus / deficit arising on revaluation of quoted securities which are classified as 'available for sale', is
included in the Other Comprehensive Income. On derecognition or impairment of available-for-sale
investments, the cumulative gain or loss previously reported in other comprehensive income is transferred
to profit and loss for the period.

6.4.4.1 Details of valuation techniques used in determination of fair value is included in note 42 to the
consolidated financial statements.

6.4.5 Impairment
Available for sale and Held to maturity investments
Impairment loss in respect of investments classified as available for sale and held to maturity (except sukuk
certificates) is recognised based on management's assessment of objective evidence of impairment as a result
of one or more events that may have an impact on the estimated future cash flows of the investments. A
significant or prolonged decline in fair value of an equity investment below its cost is also considered an
objective evidence of impairment. The determination of "significant or prolonged" requires judgment.
Provision for diminution in the value of sukuk certificates is made as per the Prudential Regulations issued by the
SBP. In case of impairment in available-for-sale investments, the related loss previously reported in other
comprehensive income is transferred to profit and loss for period. For investments classified as held to maturity,
the impairment loss is recognised in the profit and loss account.

Investment in associates
In respect of investment in associates, the Group reviews their carrying values at each reporting date to assess
whether there is an indication of impairment. The amount of impairment loss would be determined based on the
higher of value in use and fair value less cost to sell. Impairment loss is recognised in the consolidated profit and
loss account.

6.5 Operating fixed assets

6.5.1 Tangible assets

Tangible fixed assets are stated at cost less accumulated depreciation and any identified impairment loss. Items
of fixed assets costing Rs 25,000 or less are not capitalised and are charged off in the month of purchase. An item
of property and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. Profit or loss on disposal of fixed assets is included in the consolidated profit and loss
account currently.

6.5.2 Right-of-use assets and Lease liabilities

At the inception of the contract, the Group assesses whether a contract is, or contains, a lease. The Group applies
a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value
assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the
right to use the underlying assets. Right-of-use assets are measured at cost, less any accumulated depreciation
and impairment losses, and adjusted for any remeasurement of lease liabilities. Right-of-use assets are depreciated
on a straight-line basis over the lease term. The right-of-use assets are presented within note 12 and are subject
to impairment in line with the Group’s policy as described in note 6.5.8.

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The Group determines the lease term as the non-cancellable
term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain
to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be
exercised. After the commencement date, the Group reassesses the lease term if there is a significant event or
change in circumstances that is within its control that affects its ability to exercise or not to exercise the option
to renew or to terminate. The Group cannot readily determine the interest rate implicit in the lease, therefore, it
uses its incremental fund acceptance rate to measure lease liabilities.

250 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

6.5.3 Intangible assets

Intangible assets comprise of computer software. Intangible assets with definite useful lives are stated at cost
less accumulated amortisation and impairment losses (if any).

6.5.4 Subsequent costs

Subsequent costs are included in the asset's carrying amounts or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. All other repairs and maintenance expenditure are
charged to the consolidated profit and loss account as and when incurred.

6.5.5 Depreciation / amortisation

Depreciation / amortisation is charged to the consolidated profit and loss account by applying the straight line
method in accordance with the rates specified in notes 12.2 and 13.1 whereby the depreciable value of an asset
is written off over its estimated service life. The Group charges depreciation / amortisation from the month of
acquisition and up to the month preceding the disposal. Right-of-use assets are depreciated on a straight line
basis over the lease term specified in note 12.3.

6.5.6 Capital work-in-progress

Capital work-in-progress is stated at cost less accumulated impairment losses, if any.

6.5.7 Useful lives and residual values

Useful lives, residual values and depreciation method are reviewed at each reporting date and adjusted if impact
on depreciation / amortisation is significant

6.5.8 Impairment

The Group assesses at each reporting date whether there is any indication that the operating fixed assets may
be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they
are recorded in excess of their recoverable amounts. Where carrying values exceed the respective recoverable
amounts, assets are written down to their recoverable amounts and the resulting impairment charge is
recognised in the consolidated profit and loss account.

6.6 Taxation

Income tax expense comprises of current and deferred tax. Income tax expense is recognised in the consolidated profit
and loss account except to the extent that it relates to items recognised directly in equity, in which case it is recognised
in equity.

Current

The charge for current taxation is based on expected taxable income for the year in accordance with the prevailing laws
of taxation. The charge for current tax also includes adjustments to tax payable in respect of previous years including
those arising from assessments finalised during the year and are separately disclosed.

Deferred

Deferred tax is recognised using the balance sheet liability method on all temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes. Deferred tax is
not recognised for the temporary differences relating to initial recognition of goodwill, initial recognition of assets or liabilities
in a transaction that is not a business combination and that affects neither accounting nor taxable profits and differences
relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the assets can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefits will be realised.

In making the estimates for current and deferred taxes, the management considers the income tax law and the decisions
of appellate authorities on certain issues in the past.

6.7 Non-banking assets acquired in satisfaction of claims

The non-banking assets acquired in satisfaction of claims are carried at revalued amounts less accumulated depreciation.

Meezan Bank Annual Report 2022 251

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

The useful lives are reviewed annually and adjusted, if appropriate. These assets are revalued by professionally qualified
valuers with sufficient regularity to ensure their net carrying value does not differ materially from their fair value. Surplus
arising on revaluation of property, if any, is credited to the 'surplus on revaluation of assets' account in the statement of
other comprehensive income. Any deficit arising on revaluation is taken to consolidated profit and loss account directly.
On derecognition of the assets, the cumulative gain or loss previously reported in other comprehensive income is
transferred directly to unappropriated profit in the consolidated statement of changes in equity. Legal fees, transfer cost
and direct cost of acquiring title to property is charged to the consolidated profit and loss account

6.8 Deposits

Deposits are generated on the basis of two modes i.e. Qard and Mudaraba.

Deposits taken on Qard basis are classified as 'Current accounts' and Deposits generated on Mudaraba basis are
classified as 'Savings deposits' and 'Fixed deposits'. No profit or loss is passed on to current account depositors, however
the funds of current accounts are treated as equity for the purpose of profit calculation and any profit earned / loss incurred
on those funds are allocated to the equity of the Group. While the product features of each product differ, there is usually
no restriction on withdrawals or number of transactions in current and saving accounts. In case of fixed deposits,
pre-mature withdrawals can be made as per approved terms only.

Profits realised in investment pools are distributed in pre-agreed profit sharing ratio between Rab-ul-Maal and Mudarib.
Rab-ul-Maal share is distributed among depositors according to weightages assigned at the inception of profit
calculation period. Mudarib can distribute its share of profit to Rab-ul-Maal up to a maximum of 50% of their profit as
Incentive profits (Hiba).

Profits are distributed from the pool such that the depositors (remunerative) only bear the risk of assets in the pool during
the profit calculation period. In case of loss in a pool during the profit calculation period, the loss is distributed among the
depositors (remunerative) according to their ratio of Investments.

Asset pools are created at the Group’s discretion and the Group can add, amend or transfer an asset to any other pool in
the interests of the deposit holders.

6.9 Sub-ordinated Sukuk

The Group records sub-ordinated sukuk initially at the amount of proceeds received. Profit accrued on sub-ordinated
sukuk is charged to the consolidated profit and loss account. These are subsequently measured at amount outstanding.

6.10 Pool Management

The Group operates general and specific pools for deposits and inter-bank funds accepted / acquired under Mudaraba
and Musharakah modes.

Under the general deposits pools, the Group accepts funds on Mudaraba basis from depositors (Rab-ul-Maal) where the
Group acts as Manager (Mudarib) and invests the funds in the Shariah Compliant modes of financing, investments and
placements. When utilising investing funds, the Group prioritizes the funds received from depositors over the funds
generated from own sources after meeting the regulatory requirement relating to such deposits.

Specific pools are operated for funds acquired / accepted from the State Bank of Pakistan and other banks for Islamic Export
Refinance to the Group's customers and liquidity management respectively under the Musharakah / Mudaraba modes.

The profit of each deposit pool is calculated on all the remunerative assets booked by utilising the funds from the pool
after deduction of expenses directly incurred in earning the income of such pool along with related fee income, if any.
The directly related costs comprise of depreciation on ijarah assets, takaful premium, documentation charges etc. No
expense of general or administrative nature is charged to the pools. No provision against any non-performing asset of
the pool is passed on to the pool except on the actual loss / write-off of such non-performing asset. The profit of the pool
is shared between equity and other members of the pool on the basis of Musharakah at gross level (before charging of
mudarib fee) as per the investment ratio of the equity. The profit of the pool is shared among the members of the pool
on pre-defined mechanism based on the weightages announced before the profit calculation period after charging of
mudarib fee. During the year, the Group has given General Hiba to the depositors of Rupee General Pool, keeping in view
the prescribed guidelines of Pool Management provided by the SBP and with the approval of the Group's Resident
Shariah Board Member. However, Hiba are given at the sole discretion of the Group without any contractual commitment
and can be withdrawn or reduced by the Group at its sole discretion.

The risk characteristic of each pool mainly depends on the assets and liabilities profile of each pool. As per the Group's policy,
relatively low risk / secured financing transactions and assets are allocated to general depositors pool of Rupee, USD, GBP
and Euro. The Group maintains General Pools (Rupee, USD, EUR, GBP), FI Pools, IERS pool and Equity pool. The general
pools are exposed to general credit risk, asset ownership risk and profit rate risk of the underlying assets involved.

252 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

General Pools:

For General Pools (Rupee, USD, EUR, GBP), the Group allocates PKR financing to Corporate, Commercial, SME
and Consumer Finance customers in diversified sectors and avenues of the economy / business as mentioned in
note 48.1.1.3. Investments in Sovereign Guaranteed Sukuk, and Bai Muajjal with the State Bank of Pakistan /
Government of Pakistan, are also done through General Pools. All remunerative deposits are tagged to these
general pools and their funds generated from the depositors are invested on priority basis. Investments from the
SBP under various long term Islamic refinance schemes, and sub-ordinated sukuks are also remunerated through
the Rupee General Pool. Due to limited investment options in USD, GBP and EURO pool, funds from foreign
currency pools are invested in available International Sukuk, Shariah Compliant Nostro accounts, foreign currency
financing and the remaining funds are taken out and invested in Rupee general pool as part of equity. In such cases
return from Rupee General Pool is given back to foreign currency pools, so that returns can be passed on to foreign
currency pool customers accordingly. The Group as Mudarib in the general pools is responsible for financing costs
/ assets such as land, building, furniture, fixtures, computers and IT system from its own sources / equity.

IERS Pools:

The IERS pool assets comprise of sovereign guaranteed sukuk, and financing to / sukuk of mainly blue chip
companies and exporters as allowed under the applicable rules and regulations, and as such are exposed to
lower credit risk. The Musharakah with SBP under IERS is tagged to the IERS pool.

FI Pools:

The FI pool assets generally comprise of sovereign guaranteed sukuk and financing under diminishing
musharakah mode only and the related liability of the FI pool comprise of Musharakah / Mudarabah from other
banks and financial institutions. These pools are created to meet the liquidity requirements of the Group.

Equity Pools:

All other assets including fixed assets, exposure in shares, Rupee bai-salam financing and subsidized financing
to the Group's employees are tagged to equity pool. To safeguard the interest of customers, all high risk investments
are also done through equity pool. The Group as Mudarib in the equity pools is responsible for financing costs /
assets such as land, building, furniture, fixtures, computers and IT system from its own sources / equity.

6.11 Staff retirement benefits

Defined benefit plan
The Holding Company operates an approved Gratuity Funded Scheme for its permanent employees. The scheme was
approved by the tax authorities in April 2000. The liability recognised in respect of Gratuity Funded Scheme is the
present value of the defined benefit obligation at the reporting date less the fair value of plan assets. Contributions to the
fund are made on the basis of actuarial recommendations. The defined benefit obligation is calculated periodically by an
independent actuary using the projected unit credit method. The last valuation was conducted as on December 31,
2022.
The Holding Company also operates End of Service Unfunded Defined Benefit Scheme as approved by the Board of
Directors for the benefit of the founding President and Chief Executive Officer of the Holding Company. The defined
benefit obligation for this benefit has been calculated by an independent actuary using the projected unit credit method.
The valuation has been conducted as on December 31, 2022.
Amounts arising as a result of "Remeasurements", representing the actuarial gains and losses and the difference
between the actual investment returns and that implied by the net return cost are recognised in the consolidated
Statement of Financial Position immediately, with a charge or credit to "Consolidated Other Comprehensive Income" in
the periods in which they occur. The actuarial valuations involve assumption and estimates of discount rates, expected
rates of return on assets, future salary increases and future inflation rates as disclosed in (Note 38).
Defined contribution plan
The Group also operates a recognised contributory Provident Fund for all permanent employees. Equal monthly
contributions are made, both by the Group and the employees, to the fund at a rate of 10% of basic salary.
6.12 Compensated absences
The Group recognises liability in respect of employees compensated absences in the period in which these are earned
up to the reporting date. The provision is recognised on the basis of actuarial valuation conducted on December 31,
2022 using the projected unit credit method.
6.13 Share-based compensation
The Holding Company has granted share options to its employees under the Meezan Group Employees Share Option
Scheme, 2021 as approved by the shareholders and SECP. The cost of these share options is determined by the fair
value at the date when the grant is made using a valuation model by an independent valuer and is recognised as
expense over the vesting period together with a corresponding credit in equity - Employee share option compensation

Meezan Bank Annual Report 2022 253

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

reserve (Note 40). The dilutive effect of outstanding options (if any) is reflected as share dilution in the computation of
diluted earnings per share. When the options are exercised, employee stock option compensation reserve relating to
these options is transferred to share capital and share premium.
6.14 Dividend and reserves
Dividend declared and appropriations, except for transfer to statutory reserve, made subsequent to the reporting date are
considered as non adjusting events and are recorded as a liability in the consolidated financial statements in the year in
which these are approved by the directors / shareholders as appropriate.

6.15 Foreign currency transactions

Transactions and balances

Foreign currency transactions are recorded in rupees at exchange rates prevailing on the date of transaction. Monetary
assets, monetary liabilities and contingencies and commitments in foreign currencies except forward commitments
(promises) are reported in Rupees at exchange rates prevalent on the reporting date.

Forward commitments other than those with the SBP relating to the foreign currency deposits are valued at forward rates
applicable to the respective maturities of the relevant foreign exchange commitments. Forward commitments with the
SBP relating to foreign currency deposit, are valued at spot rate prevailing at the reporting date. Exchange gains and
losses are included in the current year profit and loss account.

Commitments
Commitments for outstanding forward foreign exchange transactions are disclosed at the rates applicable at the
reporting date. Contingent liabilities / commitments for letters of credit, and letters of guarantee denominated in foreign
currencies are expressed in rupee terms at the exchange rates prevailing on the reporting date.
Translation gains and losses are included in the consolidated profit and loss account.

6.16 Provisions and contingent assets and liabilities

Provision are recognised when the Group has a present legal or constructive obligation arising as a result of past events
and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and
a reliable estimate of the amount of the obligation can be made.
Contingent assets are not recognised, and are also not disclosed unless an inflow of economic benefits is probable.
Contingent liabilities are not recognised but are disclosed unless the probability of an outflow of resources embodying
economic benefits are remote.
6.17 Acceptances, guarantees and letters of credit
Acceptances comprise undertakings by the Group to pay bills of exchange drawn on customers. The Group expects most
acceptances to be settled simultaneously with the reimbursement from the customers. Acceptances are accounted for as
on-balance sheet transactions and related balances are disclosed under other assets and other liabilities.

The Group issues guarantees and letters of credit. These are disclosed in the consolidated statement of financial position as
part of contingencies and commitments.

6.18 Offsetting and derecognition

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated Statement of
Financial Position when there is a legally enforceable right to set off the recognised amounts and there is an intention to
settle on a net basis or realise the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis only when permitted by the accounting and reporting standards as
applicable in Pakistan.
A financial asset (or, where applicable, a part of a financial asset or a part of a group of similar financial assets) is
derecognised where the rights to receive cash flows from the asset have expired, or the Group has transferred its rights
to receive cash flows from the asset. The Group derecognises a financial liability when the obligation under the liability
is discharged, cancelled or expired.
6.19 Revenue recognition
i) Profit on Murabaha (including Commodity Murabaha) and Musawammah is recognised on an accrual basis.
Profit on Murabaha and Musawammah transactions for the period from the date of disbursement to the date of
culmination of Murabaha and Musawammah is recognised immediately upon the later date in line with IFAS
requirements.
ii) Rentals on Ijarah contracts are recognised as income on an accrual basis in line with IFAS requirements.
iii) Profit on Bai Muajjal transaction is recognised on an accrual basis.
iv) Profit on Diminishing Musharakah financing is recognised on an accrual basis.
v) Profit on Running Musharakah financing is recognised on an accrual basis and is adjusted upon declaration of

254 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

profit by Musharakah partners.

vi) Profit on Tijarah and Istisna financing is recognised on an accrual basis commencing from time of sale of goods
till the realisation of sale proceeds by the Group.
vii) Profit on Service Ijarah is recognised on an accrual basis commencing from the date of confirmation of sale.
viii) Profit on Wakalah tul Istithmar / Wakalah is recognised on an accrual basis and is commensurate with the
Wakalah business performance / work done by the agent.
ix) Profit on Sukuk is recognised on an accrual basis. Where Sukuk (excluding held for trading securities) are
purchased at a premium or discount, those premiums / discounts are amortised through the consolidated profit
and loss account over the remaining maturity.
x) Commission on letters of credit, acceptances and guarantees is recognised on receipt basis, except for
commission on guarantees in excess of Rs 250,000 which is recognised over the period of the guarantee. Fee
and brokerage income are recognised when earned.
xi) The Group earns fee and commission income from certain non-funded banking services. The related fee and
commission income is recognised at an amount that reflects the consideration to which the Group expects to be
entitled in exchange for providing the services. The Group recognises fees earned on transaction-based
arrangements at a point in time when the Group has fully provided the service to the customer. Where the
contract requires services to be provided over time, the income is recognised on a systematic basis over the life
of the related service. Unearned fees and commissions are included under other liabilities.
xii) Dividend income is recognised when the Group’s right to receive dividend is established.
xiii) Gain or loss on sale of investments is included in the consolidated profit and loss account in the period in which
they arise.
xiv) Gain or loss on disposal of fixed assets, intangible assets, Ijarah assets and Musharakah assets is taken to the
profit and loss account in the period in which they arise.
xv) Profit suspended in compliance with the Prudential Regulations issued by the SBP is recognised on receipt
basis. Profit on rescheduled / restructured financing and investments is recognised as permitted by the SBP.
xvi) Remuneration from funds (management fee) is recognised based on the net asset value of the funds calculated
on daily basis.
6.20 Segment reporting
A segment is a distinguishable component of the Group that is engaged in providing products or services (business segment)
or in providing products or services within a particular economic environment (geographical segment), which is subject to
risks and rewards that are different from those of other segments. The Group's primary format of reporting is based on
business segments. Operating segments are reported in a manner consistent with the internal reporting provided to the
management. Management monitors the operating results of its business segments separately for the purpose of making
decisions about resource allocation and performance assessment.
6.20.1 Business segments
Corporate and Commercial Banking
It includes trade finance, export finance, project finance, Ijarah, guarantees and bills of exchange relating to its
Corporate and Commercial customers, investment banking, syndications, IPO related activities (excluding
investments), secondary private placements, underwriting and securitisation.
Retail Banking
It includes retail financing, deposits and banking services offered to its retail customers and small and medium enterprises.
Asset Management
It includes asset management, investment advisory and portfolio management.
Trading and Sales
It includes equity, foreign exchanges, commodities, own securities and placements.
Others
It includes functions which cannot be classified in any of the above segments.

6.20.2 Geographical segments

The Group operates only in Pakistan.

6.21 Earnings per share

The Group presents basic and diluted earnings per share (EPS). Basic EPS is calculated by dividing profit after tax for the
year attributable to equity holders of the Holding company by the weighted average number of ordinary shares outstanding
during the year. EPS is retrospectively adjusted for the effect of bonus shares issued.

Diluted EPS is calculated by dividing the net profit attributable to the equity shareholders of the Holding company (after
adjusting for return and related tax impact) on the convertible instruments / share options by the weighted average number
of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued
on the conversion / exercise of all the dilutive potential ordinary shares into ordinary shares.

Meezan Bank Annual Report 2022 255

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

7 CASH AND BALANCES WITH TREASURY BANKS
Rupees in ‘000
In hand
- local currency 40,142,946 36,029,312
- foreign currencies 1,120,217 2,821,769
41,263,163 38,851,081
With the State Bank of Pakistan in
- local currency current accounts 69,747,152 70,308,704
- foreign currency current accounts 6,433,593 10,259,746
7.1 76,180,745 80,568,450
With the National Bank of Pakistan in
- local currency current accounts 222,839 50,668,352

National Prize Bonds 7.2 76,925 413,423

117,743,672 170,501,306

7.1 These include local and foreign currency amounts required to be maintained with the SBP under the Banking Companies
Ordinance, 1962 and /or stipulated by the SBP. These accounts are non-remunerative in nature.

7.2 These represent the national prize bonds received from customers for onward surrendering to SBP. The Group, as a
matter of Shariah principle, does not deal in prize bonds.

Note 2022 2021

8 BALANCES WITH OTHER BANKS
Rupees in ‘000
In Pakistan
- in current accounts 4,804,996 14,947,076

Outside Pakistan
- in current accounts 4,080,128 1,275,566
- in deposit accounts 8.1 4,825,629 242,527
13,710,753 16,465,169

8.1 It represents the balance in the remunerative account maintained with financial institutions outside Pakistan. The return
on these balances ranges from 0.20% to 2.25% (2021: 0.0001%) per annum.

Note 2022 2021

9 DUE FROM FINANCIAL INSTITUTIONS
Rupees in ‘000
Bai Muajjal receivable:
- from scheduled banks / financial institutions - Secured 9.1 34,964,299 238,401,637
- from other Financial Institution 15,500 15,500
9.2 34,979,799 238,417,137

Commodity Murabaha 26,066 26,066

9.3 35,005,865 238,443,203
Less: Provision held against due from financial
institutions 9.4 (41,566) (41,566)
Due from financial institutions - net of provision 34,964,299 238,401,637

9.1 The effective average return on this product is 11.25% (2021: 8.10%) per annum. The balances have maturities in July
2025 (2021: ranging between January 2022 to July 2025). These Bai Muajjal are secured against Federal Government
securities received as collateral and having market value of Rs 36,915 million as at December 31, 2022 (2021:
Rs 240,575 million).

256 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2022 2021

Rupees in ‘000

9.2 Bai Muajjal Placements 52,821,177 270,204,082

Less: Deferred Income (9,878,329) (18,895,001)
Profit Receivable shown in other assets (7,963,049) (12,891,944)
Bai Muajjal Placements 34,979,799 238,417,137

9.3 Particulars of due from financial institutions

In local currency 35,005,865 238,443,203
In foreign currency - -
35,005,865 238,443,203

2022 2021
Non-performing Provision Non-performing Provision
due from financial held due from financial held
institutions institutions
9.4 Category of classification Rupees in ‘000

Loss 41,566 41,566 41,566 41,566

10 INVESTMENTS

10.1 Investments by types

Note 2022 2021
Cost / Provision (Deficit) / Carrying Cost / Provision Surplus / Carrying
Amortised for surplus Value Amortised for (deficit) Value
cost diminution cost diminution
Rupees in ‘000
Held to trading securities
- Federal Government Securities 2,470 - 18 2,488 - - - -

Available for sale securities

- Federal Government Securities 10.5.1 925,056,827 - (7,185,753) 917,871,074 387,898,392 - (1,300,655) 386,597,737
- Shares 10.5.2 & 10.5.3 10,205,678 3,128,805 1,035,172 8,112,045 9,662,370 2,322,124 1,928,965 9,269,211
- Non Government Sukuk 10.5.4 125,483,520 78,192 5,123,927 130,529,255 130,409,690 78,192 5,624,000 135,955,498
- Foreign Securities 10.5.5 8,721,244 - (142,380) 8,578,864 10,343,243 - 370,768 10,714,011
1,069,467,269 3,206,997 (1,169,034) 1,065,091,238 538,313,695 2,400,316 6,623,078 542,536,457
Held to maturity securities
- Federal Government Securities 10.6 217,740,599 - - 217,740,599 76,941,760 - - 76,941,760
- Non Government sukuk 10.6 311,665 - - 311,665

Associates (listed)
- Units of funds 10.7 4,170,433 - - 4,170,433 4,854,664 - - 4,854,664

Total Investments 1,291,692,436 3,206,997 (1,169,016) 1,287,316,423 620,110,119 2,400,316 6,623,078 624,332,881

Meezan Bank Annual Report 2022 257

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

10.2 Investments by segments

2022 2021
Note Cost / Provision (Deficit) / Carrying Cost / Provision Surplus / Carrying
Amortised for surplus Value Amortised for (deficit) Value
cost diminution cost diminution
Rupees in ‘000
Federal Government Securities
- Ijarah Sukuks 10.5.1 & 10.6 1,111,634,399 - (7,185,735) 1,104,448,664 399,111,534 - (1,300,655) 397,810,879
- Bai Muajjal with Government of
Pakistan (through State Bank of 10.5.1 & 10.6 23,224,694 - - 23,224,694 64,443,192 - - 64,443,192
Pakistan)
- Islamic Naya Pakistan Certificates 10.5.1 & 10.6 7,940,803 - - 7,940,803 1,285,426 - - 1,285,426
1,142,799,896 - (7,185,735) 1,135,614,161 464,840,152 - (1,300,655) 463,539,497
Shares
Listed Companies 10.5.2 9,600,999 3,070,304 1,035,172 7,565,867 9,057,691 2,268,371 1,928,965 8,718,285
Unlisted Companies 10.5.3 604,679 58,501 - 546,178 604,679 53,753 - 550,926
10,205,678 3,128,805 1,035,172 8,112,045 9,662,370 2,322,124 1,928,965 9,269,211

Non Government Sukuk

Listed 10.2.1 & 10.5.4 114,385,781 - 5,123,927 119,509,708 114,404,511 - 5,624,000 120,028,511
Unlisted 10.5.4 & 10.6 11,409,404 78,192 - 11,331,212 16,005,179 78,192 - 15,926,987
125,795,185 78,192 5,123,927 130,840,920 130,409,690 78,192 5,624,000 135,955,498

Foreign Securities
Government Sukuk 10.5.5 5,314,367 - (134,204) 5,180,163 7,684,473 - 300,073 7,984,546
Non Government Sukuk 10.5.5 3,396,488 - (8,176) 3,388,312 2,648,381 - 70,695 2,719,076
Shares 10.5.5 10,389 - - 10,389 10,389 - - 10,389
8,721,244 - (142,380) 8,578,864 10,343,243 - 370,768 10,714,011
Associates 10.7
Meezan Balanced Fund 317,124 - - 317,124 318,543 - - 318,543
Al-Meezan Mutual Fund 638,680 - - 638,680 759,161 - - 759,161
Meezan Islamic Fund 761,193 - - 761,193 811,206 - - 811,206
Meezan Strategic Allocation Fund - III - MCPP-IX - - - - 84,820 - - 84,820
Meezan Financial Planning Fund - Conservative 9,255 - - 9,255 8,815 - - 8,815
KSE Meezan Index Fund 1,317,591 - - 1,317,591 1,096,022 - - 1,096,022
Meezan Pakistan Exchange Traded Fund 7,961 - - 7,961 8,800 - - 8,800
Meezan Tahaffuz Pension - Gold sub-fund 37,943 - - 37,943 31,227 - - 31,227
Meezan Tahaffuz Pension - Equity sub-fund 125,958 - - 125,958 136,556 - - 136,556
Meezan Energy Fund 85,737 - - 85,737 85,475 - - 85,475
Meezan Gold Fund 125,370 - - 125,370 102,503 - - 102,503
Meezan Rozana Amdani Fund 174,508 - - 174,508 75,241 - - 75,241
Meezan Daily Income Fund - MDIP - I 271,188 - - 271,188 1,336,295 - - 1,336,295
Meezan Sovereign Fund 115,954 - - 115,954 - - - -
Meezan Paidar Munafa Plan II 181,971 - - 181,971 - - - -
4,170,433 - - 4,170,433 4,854,664 - - 4,854,664
Total Investments 1,291,692,436 3,206,997 (1,169,016) 1,287,316,423 620,110,119 2,400,316 6,623,078 624,332,881

10.2.1 This represents investment in Pakistan Energy Sukuk-I and Pakistan Energy Sukuk-II issued by Power Holding
Limited, wholly owned by the Government of Pakistan. These Energy Sukuk are guaranteed by the Government of
Pakistan and are eligible for Statutory Liquidity Requirements. These Energy Sukuk are based on Islamic mode of
Ijarah with semi-annual rental payments and are due to mature in 2029-30.

10.2.2 Investments given as collateral

2022 2021

Cost / Market Cost / Market

Amortised cost value Amortised cost value
Rupees in ‘000
Federal Government Securities

- Sukuk 404,000,000 401,903,600 30,000,000 30,054,000

- Bai Muajjal with Government of
Pakistan (through State Bank
of Pakistan) - - 28,150,000 28,150,000
404,000,000 401,903,600 58,150,000 58,204,000

258 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2022 2021
10.3 Provision for diminution in value of investments Rupees in ‘000

Opening balance 2,400,316 2,185,693

Charge / (reversals)
- Charge for the year 970,287 305,016
- Reversals for the year - (3,456)
- Reversals on disposals (163,606) (86,937)
806,681 214,623

Closing balance 3,206,997 2,400,316

10.4 Particulars of provision against Sukuk

2022 2021

Non-performing Provision Non-performing Provision

Investment held Investment held
Rupees in ‘000
Category of classification

Domestic
Loss 78,192 78,192 78,192 78,192

10.5 Quality of Available for Sale Securities

Details regarding quality of Available for Sale (AFS) securities are as follows:

10.5.1 Federal Government Securities

2022 2021
Cost
Rupees in ‘000
Bai Muajjal with Government of Pakistan
(through State Bank of Pakistan) 23,224,694 64,443,192

Federal Government securities - Government guaranteed

Government of Pakistan Ijarah Sukuk
GIS VRR-18 10,680,852 10,704,268
GIS VRR-19 25,624,975 25,639,965
GIS VRR-20 16,982,294 16,982,211
GIS VRR-21 50,792,803 50,761,174
GIS FRR-04 9,979,161 9,951,546
GIS VRR-22 81,626,220 81,132,277
GIS FRR-07 2,625,000 2,625,000
GIS VRR-23 24,960,971 25,007,215
GIS VRR-24 283,874,972 87,866,118
GIS VRR-25 319,555,078 -
GIS VRR-26 40,225,999 -
GIS-FRR 08 5,000,000 5,000,000
GIS-FRR 11 21,963,005 6,500,000
893,891,330 322,169,774
Islamic Naya Pakistan Certificate
Islamic Naya Pakistan Certificate - PKR 741,885 58,724
Islamic Naya Pakistan Certificate - USD 6,506,281 907,167
Islamic Naya Pakistan Certificate - GBP 376,155 56,346
Islamic Naya Pakistan Certificate - EUR 316,482 263,189
925,056,827 387,898,392

Meezan Bank Annual Report 2022 259

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2022 2021
Cost
10.5.2 Shares - Listed Rupees in ‘000

Automobile Assembler 113,964 112,532

Automobile parts and accessories 55,908 55,908
Construction and materials (cement) 1,642,867 1,360,148
Power Generation and Distribution 198,419 193,729
Commercial Banks 40,922 -
Refinery 124,827 124,827
Oil and Gas Marketing Companies 773,163 618,263
Oil and Gas Exploration Companies 1,949,872 1,623,690
Fertilizers 950,977 890,114
Chemicals 163,557 402,861
Pharmaceuticals 748,869 748,869
Leather & Tanneries 19,336 19,336
Miscellaneous 26,974 26,974
Modarabas 66,390 66,390
Technology and Communication 642,311 445,542
Paper and Board 710,838 685,941
Glass and Ceramics 106,833 -
Textile (Composite) 464,327 516,520
Vanaspati and Allied Industries - 174,923
Food and Personal Care Products 9,691 9,691
Engineering 790,954 981,433
9,600,999 9,057,691

2022 2021
10.5.3 Shares - Unlisted
Cost Breakup Cost Breakup
value* value*
Rupees in ‘000

Sapphire Electric Company Limited 318,638 993,415 318,638 920,535

Daewoo Pakistan Express Bus Service Limited 253,240 231,720 253,240 251,080
Pakistan Corporate Restructuring Company Limited 32,801 26,011 32,801 30,767
604,679 1,251,146 604,679 1,202,382
* Based on latest available audited financial statements

2022 2021
10.5.4 Non Government Sukuk
Cost
Rupees in ‘000
Listed
- Government guaranteed 114,385,781 114,404,511

Unlisted
- Government guaranteed 6,716,920 10,786,560

Unlisted

Credit Ratings
- AAA / AAA 1,241,831 1,307,190
- AA / AA+, AA, AA- 1,756,333 1,596,667
- A / A+, A, A- 1,304,463 2,236,570
- Unrated 78,192 78,192
4,380,819 5,218,619
125,483,520 130,409,690

2022 2021
10.5.5 Foreign Securities Cost Rating Cost Rating
Government Sukuk Rupees in ‘000

Saudi Arabia 1,916,491 A 4,150,186 A

Qatar 1,132,295 Aa3 885,035 Aa3
Indonesia 2,265,581 Baa2 2,649,252 Baa2
5,314,367 7,684,473

260 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2022 2021
Cost
Rupees in ‘000

Non Government Sukuk - Unlisted

Credit Ratings
- Aa3 / A 2,264,229 1,764,736
- Baa2 1,132,259 883,645
3,396,488 2,648,381
Equity securities - Unlisted
S.W.I.F.T. SCRL 10,389 10,389

8,721,244 10,343,243

10.6 Particulars relating to Held to Maturity securities are as follows:

Federal Government Securities - Government guaranteed

GIS FRR-04 10,566,210 10,562,798

GIS FRR-07 2,625,000 2,625,000
GIS FRR-08 5,000,000 5,000,000
GIS FRR-11 199,395,069 58,500,000
GIS VRR-24 - 253,962
GIS VRR-26 154,320 -
217,740,599 76,941,760
Non Government Sukuk
Lucky Electric Power Sukuk 311,665 -
218,052,264 76,941,760

The market value of securities classified as held-to-maturity as at December 31, 2022 amounted to Rs 204,617 million
(2021: Rs 76,899 million).

Meezan Bank Annual Report 2022 261

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

10.7 Investment in associates

10.7.1 Movement of investment in associates 2022

Country of % Holding Investment at Investment/ Share of Dividend Investment
incorporation the beginning (redemption) profit/(loss) received at the end
of the year during the year in of the year
associates
Rupees in ‘000
Associates

Al Meezan Mutual Fund Pakistan 15.75% 759,161 (62,274) (58,207) - 638,680

Meezan Islamic Fund Pakistan 3.66% 811,206 29,176 (79,189) - 761,193
Meezan Balanced Fund Pakistan 13.06% 318,543 - (1,419) - 317,124
Meezan Tahaffuz Pension -
Gold Sub Fund Pakistan 18.84% 31,227 - 6,716 - 37,943
Meezan Tahaffuz Pension - Equity
Sub Fund Pakistan 3.20% 136,556 - (10,598) - 125,958
KSE Meezan Index Fund Pakistan 49.53% 1,096,022 249,629 (28,060) - 1,317,591
Meezan Rozana Amdani Fund Pakistan 0.19% 75,241 99,267 8,564 (8,564) 174,508
Meezan Daily Income Fund - MDIP - I Pakistan 0.36% 1,336,295 (1,065,107) 43,585 (43,585) 271,188
Meezan Gold Fund Pakistan 16.64% 102,503 - 23,409 (542) 125,370
Meezan Energy Fund Pakistan 15.94% 85,475 346 (84) - 85,737
Meezan Paidar Munafa Plan II Pakistan 7.05% - 174,500 7,471 - 181,971
Meezan Sovereign Fund Pakistan 1.74% - 115,384 584 (14) 115,954
Meezan Financial Planning Fund
of Funds - Conservative Pakistan 12.80% 8,815 286 489 (335) 9,255
Meezan Strategic Allocation
Fund - III - MCPP-IX Pakistan 0.00% 84,820 (85,032) 212 - -
Meezan Pakistan Exchange
Traded Fund Pakistan 10.11% 8,800 - (839) - 7,961
Total 4,854,664 (543,825) (87,366) (53,040) 4,170,433

2021
Country of % Holding Investment at Investment/ Share of Dividend Investment
incorporation the beginning (redemption) profit/(loss) received at the end
of the year during the year in of the year
associates
Rupees in ‘000
Associates

Al Meezan Mutual Fund Pakistan 15.03% 931,058 (171,052) (845) - 759,161

Meezan Islamic Fund Pakistan 2.66% 988,659 (191,480) 14,027 - 811,206
Meezan Balanced Fund Pakistan 7.34% 309,220 - 9,323 - 318,543
Meezan Tahaffuz Pension - Gold Sub Fund Pakistan 23.19% 50,424 (19,912) 715 - 31,227
Meezan Tahaffuz Pension - Equity Sub Fund Pakistan 2.64% 131,589 - 4,967 - 136,556
KSE Meezan Index Fund Pakistan 39.65% 1,130,226 77,495 (111,699) - 1,096,022
Meezan Islamic Income Fund Pakistan 0.00% 51,630 (50,205) (1,425) - -
Meezan Rozana Amdani Fund Pakistan 0.14% 1,574,673 (1,499,432) 91,126 (91,126) 75,241
Meezan Daily Income Fund - MDIP - I Pakistan 10.15% - 1,336,295 36,406 (36,406) 1,336,295
Meezan Gold Fund Pakistan 17.05% 96,116 (28) 6,415 - 102,503
Meezan Energy Fund Pakistan 16.85% 106,803 (20,335) (993) - 85,475
Meezan Sovereign Fund Pakistan 0.00% - (297) 297 - -
Meezan Financial Planning Fund of
Funds - Conservative Pakistan 3.88% 8,276 - 539 - 8,815
Meezan Strategic Allocation Fund - III -
MCPP-IX Pakistan 88.46% 80,977 - 3,843 - 84,820
Meezan Pakistan Exchange
Traded Fund Pakistan 9.96% 10,740 - (690) (1,250) 8,800
Total 5,470,391 (538,951) 52,006 (128,782) 4,854,664

262 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

11 ISLAMIC FINANCING AND RELATED ASSETS Rupees in ‘000

In Pakistan:
Murabaha financing and related assets
- Murabaha financing 11.1 7,127,282 6,195,161
- Advances against Murabaha 4,888,537 2,224,908
- Murabaha inventory 3,872,679 2,085,908
- Financing under Islamic Export Refinance - Murabaha 11.2 711,413 1,048,988
- Financing against Islamic SME Asaan Finance 11.3 94,018 10,000
- Inventory under Islamic Export Refinance - Murabaha - 35,000
- Advance against Islamic SME Asaan Finance - 40,000
- Advance against Islamic Export Refinance - Murabaha 2,465,400 460,014
19,159,329 12,099,979
Running Musharakah financing
- Running Musharakah financing 240,531,788 193,218,603
- Financing under Islamic Export Refinance - Running Musharakah 50,965,430 37,235,077
291,497,218 230,453,680
Istisna financing and related assets
- Istisna financing 23,081,974 6,534,664
- Advances against Istisna 94,010,017 68,370,720
- Istisna inventory 13,309,627 5,574,727
- Financing under Islamic Export Refinance - Istisna 72,143 266,800
- Advances under Islamic Export Refinance - Istisna 10,957,214 7,985,372
- Inventory under Islamic Export Refinance - Istisna 1,658,523 2,866,783
143,089,498 91,599,066
Tijarah financing and related assets
- Tijarah financing 1,959,394 1,715,312
- Tijarah inventory 9,160,823 10,959,567
- Financing under Islamic Export Refinance - Tijarah 1,056,241 1,549,127
- Financing under Islamic SME Asaan Finance - Tijarah - 2,738
- Inventory under Islamic Export Refinance - Tijarah 1,132,182 413,901
13,308,640 14,640,645
Musawammah financing and related assets
- Musawammah financing 11.4 74,983,110 33,362,530
- Advances against Musawammah 11,073,176 8,621,219
- Musawammah Inventory 12,874,909 15,944,490
- Financing under Islamic Export Refinance - Musawammah 11.5 1,481,762 2,313,610
- Financing under SBP's Islamic Financing Facility for
Renewable Energy (IFRE) - Musawammah 11.6 271,213 90,260
- Advances under Islamic Export Refinance - Musawammah 412,100 647,638
- Inventory under Islamic Export Refinance - Musawammah - 1,215,492
101,096,270 62,195,239
Salam Financing and related assets
- Salam Financing 899,631 990,223
- Advances against Salam 18,705,389 11,204,294
- Salam Inventory 1,836,491 1,230,270
- Advances under Islamic Export Refinance - Salam - 449,206
21,441,511 13,873,993
Financing against bills
- Financing against bills - Salam 5,173,912 9,827,325
- Advance against bills - Salam 1,738 1,947
5,175,650 9,829,272

- Bai Muajjal financing 11.7 35,969,952 39,429,724

Ijarah financing and related assets

- Net investment in Ijarah 74,960 75,042
- Net book value of assets/investment in Ijarah under IFAS 2 63,004,338 54,013,622
- Net book value of assets/investment in Ijarah under IFAS 2
Islamic Long Term Financing Facility (ILTFF) for Plant & Machinery - 11,030
11.8 63,079,298 54,099,694
- Advances against Ijarah 6,508,337 8,865,508
69,587,635 62,965,202

Meezan Bank Annual Report 2022 263

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000

Diminishing Musharakah financing and related assets

- Diminishing Musharakah financing 151,635,702 110,857,954
- Diminishing Musharakah financing - housing 20,132,503 16,670,211
- Diminishing Musharakah financing - SBP's Islamic Financing
Facility for Storage of Agricultural Produce (IFFSAP) 263,206 62,913
- Diminishing Musharakah financing - SBP's Islamic Financing
Facility for Renewable Energy (IFRE) 14,350,196 952,704
- Diminishing Musharakah financing - SBP's Islamic Refinance
Facility for Combating COVID – 19 (IRFCC) 295,145 402,751
- Diminishing Musharakah financing - SBP's Islamic SME
Asaan Finance (I-SAAF) Scheme 80,771 9,900
- Diminishing Musharakah financing - SBP's Islamic Long Term
Financing Facility (ILTFF) for Plant & Machinery 15,771,049 12,881,740
- Diminishing Musharakah financing - SBP's Islamic Temporary
Economic Refinance Facility (ITERF) 10,880,035 1,507,883
- Diminishing Musharakah financing - SBP's Islamic Refinance
Scheme for Payment of Wages & Salaries to the Workers and
Employees of Business Concerns (IRSPWS) 427,780 2,321,293
- Advances against Diminishing Musharakah 29,957,946 11,302,256
- Advances against Diminishing Musharakah under SBP's IFFSAP 57,141 83,939
- Advances against Diminishing Musharakah under SBP's IFRE 2,870,913 15,188,412
- Advances against Diminishing Musharakah under SBP's IRFCC 254,401 327,087
- Advances against Diminishing Musharakah under SBP's ISAAF 4,800 -
- Advances against Diminishing Musharakah under SBP's ITERF 9,030,290 12,148,592
- Advances against Diminishing Musharakah under SBP's ILTFF 9,986,155 4,963,408
265,998,033 189,681,043
- Musharakah financing 888,725 -
- Wakalah Tul Istithmar financing 6,375,000 10,625,000
- Advances against Wakalah Tul Istithmar 19,227,133 23,714,700
- Advance against Service Ijarah 14,899,103 7,749,103
- Qard financing under SBP's IRSPWS 5,783 28,914
- Qard financing under SBP's IRFCC 406,027 528,791
- Labbaik (Qard for Hajj and Umrah) 9,714 274
- Staff financing (including under SBP's IFRE) 11.9 8,433,655 6,237,617
- Other financing 1,532,881 1,642,884
Gross Islamic Financing and Related Assets 11.10 1,018,101,757 777,295,126

Less: Provision against non-performing

Islamic financing and related assets - Specific 11.12 (12,812,762) (13,338,988)
Less: Provision against non-performing
Islamic financing and related assets - General 11.12 (9,780,641) (5,870,018)
Islamic financing and related assets - net of provision 995,508,354 758,086,120

11.1 Murabaha receivable - gross 11.1.1 12,435,057 6,944,861

Less: Deferred murabaha income 11.1.3 (164,688) (117,597)
Profit receivable shown in other assets (5,143,087) (632,103)
Murabaha financing 11.1.2 7,127,282 6,195,161

11.1.1 Murabaha Sale Price 12,435,057 6,944,861

Murabaha Purchase Price (7,127,282) (6,195,161)
5,307,775 749,700
11.1.2 The movement in Murabaha financing during the year is as follows:
Opening balance 6,195,161 7,292,120
Sales during the year 68,424,533 72,951,570
Adjusted during the year (67,492,412) (74,048,529)
Closing balance 7,127,282 6,195,161

11.1.3 Deferred Murabaha income

Opening balance 117,597 112,171
Arising during the year 10,906,739 2,621,586
Recognised during the year (10,859,648) (2,616,160)
Closing balance 164,688 117,597

264 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000

11.2 Financing under Islamic Export Refinance - Murabaha - gross 745,114 1,068,203
Less: Deferred income (10,030) (5,937)
Profit receivable shown in other assets (23,671) (13,278)
Financing under Islamic Export Refinance - Murabaha 711,413 1,048,988

11.2.1 The movement in Islamic Export Refinance Murabaha financing

during the year is as follows:
Opening balance 1,048,988 873,321
Sales during the year 3,990,743 3,159,707
Adjusted during the year (4,328,318) (2,984,040)
Closing balance 711,413 1,048,988

11.2.2 Deferred Islamic Export Refinance Murabaha income

Opening balance 5,937 5,106
Arising during the year 82,533 51,534
Recognised during the year (78,440) (50,703)
Closing balance 10,030 5,937

11.3 Financing against Islamic SME Asaan Finance - Murabaha - gross 142,590 11,546
Less: Deferred income 11.3.2 (37,218) (1,526)
Profit receivable shown in other assets (11,354) (20)
Financing against Islamic SME Asaan Finance - Murabaha 94,018 10,000

11.3.1 The movement in Islamic SME Asaan Finance (Murabaha financing)

during the year is as follows:
Opening balance 10,000 -
Sales during the year 116,957 10,000
Adjusted during the year (32,939) -
Closing balance 94,018 10,000

11.3.2 Deferred Islamic SME Asaan Finance Murabaha income

Opening balance 1,506 -
Arising during the year 47,066 1,546
Recognised during the year (11,354) (20)
Closing balance 37,218 1,526

11.4 Musawammah financing - gross 76,327,808 34,477,153

Less: Deferred income (593,935) (468,449)
Profit receivable shown in other assets (750,763) (646,174)
Musawammah financing 74,983,110 33,362,530

11.5 Financing under Islamic Export Refinance - Musawammah - gross 1,548,225 2,346,068
Less: Deferred income (33,599) (13,048)
Profit receivable shown in other assets (32,864) (19,410)
Financing under Islamic Export Refinance - Musawammah 1,481,762 2,313,610

11.6 Financing under SBP's IFRE - Musawammah - gross 304,510 101,406

Less: Deferred income (29,482) (10,925)
Profit receivable shown in other assets (3,815) (221)
Financing under SBP's IFRE - Musawammah 271,213 90,260

11.7 Bai Muajjal financing - gross 42,504,634 40,373,453

Less: Deferred income (5,283,514) (300,831)
Profit receivable shown in other assets (1,251,168) (642,898)
Bai Muajjal financing 35,969,952 39,429,724

11.8 Net book value of assets / investments in Ijarah under IFAS 2 is net of depreciation of Rs 45,881 million (2021: Rs 41,547 million).

11.9 This includes Rs 699 million (2021: Rs 671 million) representing profit free financing to staff advanced under the
Holding Company's Human Resource Policies.

11.10 Particulars of financing - gross 2022 2021

Rupees in ‘000
In
- local currency 972,271,359 733,552,562
- foreign currencies 45,830,398 43,742,564
1,018,101,757 777,295,126

Meezan Bank Annual Report 2022 265

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

11.11 Islamic financing and related assets include Rs 13,628 million (2021: Rs 14,450 million) which have been placed under
non-performing status as detailed below:
2022 2021
Non Provision Non Provision
Category of classification performing held performing held
amount amount
Rupees in ‘000
Domestic

Other Assets Especially Mentioned 221,234 114 41,771 358

Substandard 318,621 69,740 409,772 82,151
Doubtful 305,332 127,458 1,000,601 356,314
Loss 12,783,100 12,615,450 12,997,394 12,900,165
Total 13,628,287 12,812,762 14,449,538 13,338,988

11.12 Particulars of provision against non-performing Islamic financing and related assets:

2022 2021
Specific General Total Specific General Total
Rupees in ‘000

Opening balance 13,338,988 5,870,018 19,209,006 13,602,974 5,452,711 19,055,685

Exchange Adjustment 219,559 - 219,559 - - -
Charge for the year 815,425 3,910,623 4,726,048 2,186,594 417,307 2,603,901
Less: Reversals (1,476,314) - (1,476,314) (1,859,091) - (1,859,091)
(660,889) 3,910,623 3,249,734 327,503 417,307 744,810

Amount written off (84,896) - (84,896) (591,489) - (591,489)

Closing balance 12,812,762 9,780,641 22,593,403 13,338,988 5,870,018 19,209,006

11.12.1 Particulars of provision against non-performing financing:

2022 2021
Specific General Total Specific General Total
Rupees in ‘000

In local currency 12,344,783 9,780,641 22,125,424 13,090,568 5,870,018 18,960,586

In foreign currencies 467,979 - 467,979 248,420 - 248,420
12,812,762 9,780,641 22,593,403 13,338,988 5,870,018 19,209,006

11.12.2 The Holding Company maintains general provision in accordance with the applicable requirements of the
Prudential Regulations for Consumer Financing and House Financing issued by the SBP.

In addition, the Holding Company has also maintained a general provision of Rs 9,100 million (2021: Rs 5,350
million) against financing made on prudent basis, in view of prevailing economic conditions. This general
provision is in addition to the requirements of Prudential Regulations.

11.12.3 In accordance with BSD Circular No. 2 dated January 27, 2009 issued by the SBP, the Holding Company has
availed the benefit of Forced Sales Value (FSV) of collaterals against the non-performing financing. The
accumulated benefit availed amounts to Rs 256.30 million (2021: Rs 176.60 million). The additional profit arising
from availing the FSV benefit - net of tax amounts to Rs 130.70 million (2021: Rs 107.70 million). The increase in
profit, due to availing of the benefit, is not available for distribution of cash and stock dividend to shareholders.

266 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

11.13 Particulars of write offs Rupees in ‘000

Against provisions 11.12 84,896 591,489

Directly charged to consolidated profit and loss account - 515
84,896 592,004

Write offs Rs. 500,000 and above - Domestic 84,896 592,004

Write offs below Rs. 500,000 - Domestic - -
84,896 592,004

11.13.1 Details of financing written off of Rs 500,000 and above

In term of sub-section (3) of section 33A of the Banking Companies Ordinance, 1962, the Statement in respect
of written off financing or any other financial relief of rupees five hundred thousand or above allowed to any
person(s) during the year ended December 31, 2022 is given in Annexure I.

Note 2022 2021

12 FIXED ASSETS Rupees in ‘000

Capital work-in-progress 12.1 6,788,047 5,117,821

Property and equipment 12.2 22,397,767 16,406,063
Right-of-use assets 12.3 11,438,844 12,662,091
40,624,658 34,185,975
12.1 Capital work-in-progress
Advances to suppliers and contractors for:
- civil works 4,767,018 3,600,313
- computer hardware 815,696 583,704
- purchase of vehicles 76,824 346,210
- office machines 999,576 472,467
- furniture and fixtures 128,933 115,127
6,788,047 5,117,821

12.2 Property and equipment 2022

Leasehold Buildings on Leasehold Furniture Electrical, Vehicles Total
Land leasehold improvements and fixtures office and
land computer
equipments
Rupees in ‘000
At January 1, 2022
Cost 5,919,065 2,408,559 8,516,895 1,133,257 9,006,197 3,301,369 30,285,342
Accumulated depreciation - 799,083 4,794,140 648,413 6,230,634 1,407,009 13,879,279
Net book value 5,919,065 1,609,476 3,722,755 484,844 2,775,563 1,894,360 16,406,063

Year ended December 31, 2022

Opening net book value 5,919,065 1,609,476 3,722,755 484,844 2,775,563 1,894,360 16,406,063
Additions 509,619 1,499,517 1,733,755 351,397 3,730,318 1,439,443 9,264,049
Transfer from non-banking assets 64,815 - - - - - 64,815
Disposals - - (26,000) (1,331) (18,146) (113,801) (159,278)
Depreciation charge (note 31) - (152,665) (745,208) (115,051) (1,429,492) (735,466) (3,177,882)
Closing net book value 6,493,499 2,956,328 4,685,302 719,859 5,058,243 2,484,536 22,397,767

At December 31, 2022

Cost 6,493,499 3,908,076 10,172,770 1,468,943 12,499,790 4,271,872 38,814,950
Accumulated depreciation - 951,748 5,487,468 749,084 7,441,547 1,787,336 16,417,183

Net book value 6,493,499 2,956,328 4,685,302 719,859 5,058,243 2,484,536 22,397,767
Rate of depreciation (percentage) - 5 10 10 10, 20 and 33 20

Meezan Bank Annual Report 2022 267

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2021
Leasehold Buildings on Leasehold Furniture Electrical, Vehicles Total
Land leasehold improvements and fixtures office and
land computer
equipments
Rupees in ‘000
At January 1, 2021
Cost 4,881,161 2,012,816 7,901,111 1,004,393 7,855,608 2,684,083 26,339,172
Accumulated depreciation - 691,325 4,075,042 569,478 5,300,335 1,052,254 11,688,434
Net book value 4,881,161 1,321,491 3,826,069 434,915 2,555,273 1,631,829 14,650,738

Year ended December 31, 2021

Opening net book value 4,881,161 1,321,491 3,826,069 434,915 2,555,273 1,631,829 14,650,738
Additions 1,037,904 395,743 616,091 133,164 1,195,076 954,558 4,332,536
Transfer from non-banking assets - - - - - - -
Disposals - - (174) (72) (1,286) (102,762) (104,294)
Depreciation charge (note 31) - (107,758) (719,231) (83,165) (973,498) (589,265) (2,472,917)
Closing net book value 5,919,065 1,609,476 3,722,755 484,842 2,775,565 1,894,360 16,406,063

At December 31, 2021

Cost 5,919,065 2,408,559 8,516,895 1,133,257 9,006,197 3,301,369 30,285,342
Accumulated depreciation - 799,083 4,794,140 648,413 6,230,634 1,407,009 13,879,279

Net book value 5,919,065 1,609,476 3,722,755 484,844 2,775,563 1,894,360 16,406,063
Rate of depreciation (percentage) - 5 10 10 10, 20 and 33 20

12.2.1 Included in cost of property and equipment are fully depreciated items still in use aggregating Rs 6,761 million
(2021: Rs 5,943 million).

12.2.2 Details of disposal of fixed assets to related parties or other persons having net book value of Rs 500,000 or above
are as follows:

Description Cost Accumulated Net book Sale Mode of Particulars of purchaser

depreciation value proceeds disposal
Rupees in ‘000
Vehicles

Toyota Land Cruiser 11,525 8,644 2,881 5,655 Group's Staff Policy Mr Arshad Majeed (Executive, Ex-employee)
Toyota Prado 8,906 7,391 1,515 3,331 Group's Staff Policy Mr Ahmed Ali Siddiqui (Executive, Employee)
Toyota Fortuner 6,735 4,925 1,810 3,793 Group's Staff Policy Mr Kazi Muhammad Aamir (Late) (Executive,
Ex-employee)
Toyota Fortuner 6,166 5,532 634 2,339 Group's Staff Policy Mr Shabbir Hamza Khandwala (Executive, Employee)
Toyota Revo 4,055 3,514 541 1,921 Group's Staff Policy Mr Urooj Ul Hasan Khan (Executive, Employee)
KIA Sportage 5,020 1,504 3,516 4,036 Group's Staff Policy Mr Imran Taufiq Dhedhi (Executive, Ex-employee)
KIA Sorento 4,195 764 3,431 4,581 Group's Staff Policy Mr Mian Nasir Mehmood (Executive, Ex-employee)
BMW 6,318 5,792 526 2,271 Group's Staff Policy Mr Ariful Islam (Deputy Chief Executive Officer, a
related party)
Honda Civic 3,864 2,438 1,426 2,204 Group's Staff Policy Mr Nizar Diamond Ali (Executive, Employee)
Honda Civic 3,495 2,384 1,111 1,810 Group's Staff Policy Syed Mehdi Abbas Naqvi (Executive, Employee)
Honda Civic 3,491 2,321 1,170 1,896 Group's Staff Policy Mr Mubasher Ahmed (Executive, Employee)
Honda Civic 3,393 2,201 1,192 1,967 Group's Staff Policy Mr Muhammad Amin (Executive, Employee)
Honda Civic 2,933 2,035 898 1,676 Group's Staff Policy Mr Sohail Aslam (Executive, Ex-employee)
Honda Civic 2,864 2,272 592 1,282 Group's Staff Policy Mr Mohammad Adil Sami (Executive, Employee)
Honda Civic 2,822 1,687 1,135 1,636 Group's Staff Policy Mr Shahzad Abdullah (Executive, Employee)
Honda Civic 2,818 2,141 677 1,301 Group's Staff Policy Mr Bashir Ahmed (Executive, Ex-employee)
Honda Civic 2,768 2,147 621 1,551 Group's Staff Policy Mr Kazi Muhammad Aamir (Late) (Executive,
Ex-employee)
Honda Civic 2,767 2,483 284 1,054 Group's Staff Policy Mr Shabbir Hamza Khandwala (Executive, Employee)
Honda Civic 2,632 2,104 528 1,181 Group's Staff Policy Mr Shayan Ahmed Baig (Executive, Employee)

268 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Description Cost Accumulated Net book Sale Mode of Particulars of purchaser

depreciation value proceeds disposal
Rupees in ‘000
Vehicles

Honda Civic 2,236 1,408 828 1,285 Group's Staff Policy Syed Tanveer Hussain (Executive, Employee)
Honda Civic 1,419 1,007 412 712 Group's Staff Policy Mr Arshad Majeed (Executive, Ex-employee)
Toyota Corolla 3,238 2,148 1,090 1,755 Group's Staff Policy Mr Zeeshan Ahmed (Executive, Employee)
Toyota Corolla 2,997 2,345 652 1,559 Group's Staff Policy Mr Amjad Ayub Khan (Executive, Employee)
Toyota Corolla 2,187 1,384 803 1,268 Group's Staff Policy Mr Nadeem Abdul Razzak (Executive, Employee)
Toyota Corolla 2,095 1,570 525 1,079 Group's Staff Policy Mr Muhammad Adnan Razzak (Executive, Employee)
Honda City 2,621 1,347 1,274 2,525 Group's Staff Policy Mr Munaf Usmani (Executive, Ex-employee)
Honda City 2,373 1,422 951 1,376 Group's Staff Policy Mr Tariq Kamal (Executive, Employee)
Honda City 2,055 1,505 550 1,027 Group's Staff Policy Mr Faisal Yunus (Executive, Employee)
Honda City 2,052 1,369 683 1,116 Group's Staff Policy Mr Yousaf Ijaz (Executive, Employee)
Honda City 1,904 1,206 698 1,593 Group's Staff Policy Mr Ghiyas Ud Din Butt (Late) (Executive,
Ex-employee)
Suzuki Cultus 1,501 974 527 831 Group's Staff Policy Mr Naveed Uz Zaman Khan Sherwani (Executive,
Employee)
Toyota Corolla 2,836 1,312 1,524 2,577 Negotiation Syed Muhammad Naeem
Honda City 2,577 1,238 1,339 2,372 Negotiation M/s Vava Cars Pakistan Limited
Honda City 2,568 849 1,719 2,439 Negotiation Mr Qaiser Ali Awan
Honda City 2,498 498 2,000 2,850 Negotiation M/s Augmentech Business Solution
Honda City 2,496 663 1,833 2,701 Negotiation M/s Augmentech Business Solution
Honda City 2,492 498 1,994 2,620 Negotiation M/s Augmentech Business Solution
Honda City 2,491 579 1,912 2,401 Negotiation M/s Vava Cars Pakistan Limited
Honda City 2,487 663 1,824 2,280 Negotiation Syed Muhammad Naeem
Honda City 2,456 652 1,804 2,160 Negotiation Mr Naveed Ahmad
Honda City 2,386 1,185 1,201 1,807 Negotiation Mr Muhammad Yamin
Honda City 2,362 1,101 1,261 2,058 Negotiation Mr Khurram Ayub
Honda City 1,968 1,145 823 2,173 Negotiation Mr Khurram Ayub
Honda City 1,926 1,283 643 2,150 Negotiation Mr Tanveer Mehmood
Honda City 1,914 1,339 575 2,064 Negotiation Syed Muhammad Naeem
Honda City 1,906 1,237 669 2,166 Negotiation Mr Khurram Ayub
Honda City 1,769 1,267 502 1,927 Negotiation Mr Khurram Ayub
Suzuki Cultus 1,757 849 908 1,442 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,790 446 1,344 1,486 Negotiation Mr Muhammad Chand
Suzuki Cultus 1,790 448 1,342 1,818 Negotiation Mr Adeel Hameed
Suzuki Cultus 1,790 326 1,464 1,865 Negotiation Mr Ahmar Hameed Sheikh
Suzuki Cultus 1,786 327 1,459 1,857 Negotiation Mr Haseeb Tariq
Suzuki Cultus 1,770 825 945 2,125 Negotiation M/s Augmentech Business Solution
Suzuki Cultus 1,768 852 916 1,721 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,757 849 908 1,486 Negotiation M Shahbaz Munawar
Suzuki Cultus 1,757 936 821 1,464 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,757 847 910 1,627 Negotiation Mr Tariq Mehmood
Suzuki Cultus 1,757 842 915 1,655 Negotiation Mr Adeel Hameed
Suzuki Cultus 1,757 849 908 1,387 Negotiation Mr Adnan Naseer Ahmed
Suzuki Cultus 1,757 847 910 1,488 Negotiation Mr Adnan Naseer Ahmed
Suzuki Cultus 1,757 849 908 1,682 Negotiation Mr Ahmar Hameed Sheikh
Suzuki Cultus 1,756 732 1,024 1,726 Negotiation Mr Safeer Ahmed
Suzuki Cultus 1,756 732 1,024 1,756 Negotiation Mr Safeer Ahmed
Suzuki Cultus 1,755 583 1,172 1,684 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,755 640 1,115 1,751 Negotiation Mr Adeel Hameed
Suzuki Cultus 1,755 640 1,115 1,726 Negotiation Mr Adeel Hameed
Suzuki Cultus 1,744 813 931 1,770 Negotiation M/s Augmentech Business Solution
Suzuki Cultus 1,743 668 1,075 1,853 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,743 696 1,047 1,801 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,743 813 930 1,750 Negotiation M/s Augmentech Business Solution
Suzuki Cultus 1,738 578 1,160 1,790 Negotiation M/s Augmentech Business Solution
Suzuki Cultus 1,738 608 1,130 1,851 Negotiation M/s Augmentech Business Solution
Suzuki Cultus 1,720 831 889 1,490 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,720 831 889 1,446 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,720 831 889 1,566 Negotiation Mr Adnan Naseer Ahmed
Suzuki Cultus 1,485 716 769 1,514 Negotiation Mr Adnan Naseer Ahmed
Suzuki Cultus 1,471 708 763 1,652 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,443 938 505 1,472 Negotiation Mr Adnan Naseer Ahmed
Suzuki Cultus 1,429 809 620 1,636 Negotiation M/s Vava Cars Pakistan Limited

Meezan Bank Annual Report 2022 269

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Description Cost Accumulated Net book Sale Mode of Particulars of purchaser

depreciation value proceeds disposal
Rupees in ‘000
Vehicles

Suzuki Cultus 1,419 851 568 1,412 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,413 895 518 1,434 Negotiation Syed Muhammad Naeem
Suzuki Cultus 1,407 767 640 1,602 Negotiation Mr Riaz Ahmed Khan
Suzuki Cultus 1,404 795 609 1,623 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,404 772 632 1,801 Negotiation M/s Vava Cars Pakistan Limited
Suzuki Cultus 1,385 716 669 1,541 Negotiation Mr Riaz Ahmed Khan
Suzuki Cultus 1,336 801 535 1,470 Negotiation Mr Tariq Mehmood
Suzuki Cultus 1,308 892 416 1,575 Negotiation Mr Adeel Hameed
Toyota Corolla 2,735 1,959 776 2,135 Takaful Claim M/s EFU General Insurance Limited
Toyota Corolla 2,493 1,536 957 2,606 Takaful Claim M/s EFU General Insurance Limited
Honda City 2,492 664 1,828 2,467 Takaful Claim M/s EFU General Insurance Limited
Suzuki Cultus 1,786 587 1,199 1,780 Takaful Claim M/s EFU General Insurance Limited
Suzuki Cultus 1,774 206 1,568 1,780 Takaful Claim M/s EFU General Insurance Limited
Suzuki Cultus 1,773 147 1,626 1,780 Takaful Claim M/s EFU General Insurance Limited
Suzuki Cultus 1,404 794 610 1,425 Takaful Claim M/s EFU General Insurance Limited
Honda Civic 2,507 2,257 250 451 Group's Staff Policy Mr Muhammad Ali Lawai
Toyota Corolla 1,682 1,682 - 135 Group's Staff Policy Mr Anwar Arshad
Toyota Corolla 2,025 1,384 641 813 Group's Staff Policy Mr Muhammad Ali Khan
Toyota Fortuner 5,488 5,488 - 521 Group's Staff Policy Mr Mohammad Shoaib
242,776 141,925 100,851 180,044

Leasehold improvements

Civil Works 13,616 9,650 3,966 670 Negotiation M/s Mughal Scrap
Civil Works 9,463 7,907 1,556 867 Negotiation M/s Mughal Scrap
Civil Works 6,957 3,635 3,322 4,406 Takaful Claim Ms Adamjee General Insurance Limited
Civil Works 618 108 510 557 Takaful Claim Ms Adamjee General Insurance Limited
30,654 21,300 9,354 6,500
Other disposals
Vehicles 226,164 213,215 12,949 99,504
Electrical, office
and computer
equipment 236,724 218,578 18,146 58,653
Furniture and Fixtures 15,711 14,380 1,331 5,124
Leasehold improvements 47,227 30,580 16,647 25,223
525,826 476,753 49,073 188,504
Total Disposals 799,256 639,978 159,278 375,048

2022
Cost Accumulated Net Book
Depreciation Value
12.3 Right-of-use assets Rupees in ‘000

At January 1, 19,340,985 (6,678,894) 12,662,091

Additions during the year 1,473,522 - 1,473,522
Adjusted upon reassessment of useful life (note 12.3.1) 624,880 - 624,880
Depreciation Charge (note 31) - (3,123,212) (3,123,212)
Derecognition during the year (432,906) 234,469 (198,437)
At December 31, 21,006,481 (9,567,637) 11,438,844
Useful life 5 years

270 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2021
Cost Accumulated Net Book
Depreciation Value
Rupees in ‘000

At January 1, 10,266,335 (4,266,112) 6,000,223

Additions during the year 941,462 - 941,462
Adjusted upon reassessment of useful life (note 12.3.1) 8,178,322 - 8,178,322
Depreciation Charge (note 31) - (2,457,916) (2,457,916)
Derecognition during the year (45,134) 45,134 -
At December 31, 19,340,985 (6,678,894) 12,662,091
Useful life 2 - 10 years

12.3.1 During the current year, the Holding Company has reassessed a number of existing lease agreements resulting in a
reassessment of the lease agreements under IFRS 16, 'Leases'.

The Holding Company has remeasured the lease liabilities by discounting the revised lease payments using the revised
discount rates and making a corresponding adjustment to the right-of-use assets.

2022 2021
13 INTANGIBLE ASSETS Rupees in ‘000

Computer software 1,450,872 1,245,647

Advance against computer software 422,646 259,934
1,873,518 1,505,581
13.1 At January 1
Cost 3,272,073 2,414,848
Accumulated amortisation 2,026,426 1,657,784
Net book value 1,245,647 757,064

Year ended December 31

Opening net book value 1,245,647 757,064
Additions - directly purchased 674,891 857,225
Amortisation charge (note 31) (469,666) (368,642)
Closing net book value 1,450,872 1,245,647

At December 31
Cost 3,946,964 3,272,073
Accumulated amortisation 2,496,092 2,026,426
Net book value 1,450,872 1,245,647
Rate of amortisation (percentage) 10 - 33 10, 20 & 33
Useful life 3 - 10 years 3 - 10 years

13.1.1 Included in cost of intangible assets are fully amortised items still in use aggregating Rs 1,529 million (2021: Rs 1,287 million).
Remaining life of intangible assets ranges from 1 to 10 years.

Meezan Bank Annual Report 2022 271

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

14 DEFERRED TAX ASSET / (LIABILITY)

2022
At January 1, Recognised Recognised At December
2022 in profit and in OCI 31, 2022
loss account
Rupees in ‘000
Taxable temporary differences on:

Excess of accounting book values over tax

written down values of owned assets (117,836) (327,954) - (445,790)
Surplus on revaluation of Non-banking
assets acquired in satisfaction of claims (15,045) 66 12,958 (2,021)
Tax on accumulated profit of associates (360,086) 8,805 - (351,281)
(492,967) (319,083) 12,958 (799,092)
Deductible temporary differences on:

(Surplus) / deficit on revaluation of available

for sale investments (2,583,001) - 3,085,686 502,685
Provision for diminution / impairment in value
of investments 1,219,092 164,406 - 1,383,498
Income not accrued due to non-culmination of
financing 1,365,823 1,632,208 - 2,998,031
Provision against non-performing Islamic financing
and related assets 125,678 36,812 - 162,490
Provision against non-banking assets acquired
in satisfaction of claims and others 209,910 (139,783) - 70,127
Others 83,276 38,820 - 122,096
420,778 1,732,463 3,085,686 5,238,927
(72,189) 1,413,380 3,098,644 4,439,835

2021
At January 1, Recognised Recognised At December
2021 in profit and in OCI 31, 2021
loss account
Rupees in ‘000
Taxable temporary differences on:

Excess of accounting book values over tax

written down values of owned assets 308,351 (190,515) - 117,836
Surplus on revaluation of available
for sale investments 2,984,345 - (401,344) 2,583,001
Surplus on revaluation of non-banking
assets acquired in satisfaction of claims 10,737 (60) 4,368 15,045
Tax on accumulated profit of associates 315,211 44,875 - 360,086
3,618,644 (145,700) (396,976) 3,075,968
Deductible temporary differences on:

Provision for diminution / impairment in value

of investments (1,019,969) (199,123) - (1,219,092)
Income not accrued due to non-culmination of
financing (1,048,537) (317,286) - (1,365,823)
Provision against non-performing Islamic financing
and related assets (1,474,152) 1,348,474 - (125,678)
Provision against non-banking assets acquired
in satisfaction of claims and others (173,276) (36,634) (209,910)
Others (76,653) (6,623) - (83,276)
(3,792,587) 788,808 - (3,003,779)
(173,943) 643,108 (396,976) 72,189

272 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000
15 OTHER ASSETS

Profit / return accrued in local currency - net of provisions 68,614,403 48,899,926

Profit / return accrued in foreign currencies - net of provisions 390,362 109,199
Acceptances 12,495,872 10,925,144
Advances, deposits, and other prepayments 15.1 2,382,013 2,319,060
Non-banking assets acquired in satisfaction of claims 15.2 50,301 115,269
Mark to market gain on forward foreign exchange contracts 20.6 - 976,644
Receivables on account of sale of securities 61,941 -
Dividends receivable 950 4,093
Stamps 27,400 25,173
Security deposits 437,257 243,727
Advance for Investments - 882
Other 1,522,017 722,765
85,982,516 64,341,882
Less: provision held against other assets 15.3.1 (268,149) (200,082)
Other Assets (Net of Provision) 85,714,367 64,141,800
Surplus on revaluation of non-banking assets acquired in
satisfaction of claims 23 4,699 38,578
Other Assets - total 85,719,066 64,180,378

15.1 This includes prepaid takaful aggregating Rs 826 million (2021: Rs 847 million) which is being amortized over a period of
one year.
2022 2021
Rupees in ‘000

15.2 Market value of Non-banking assets acquired in satisfaction of claims 55,000 153,847

Market value of the non-banking assets acquired in satisfaction of claims has been carried out by an independent valuers,
M/s K.G. Traders (Private) Limited based on prevailing market values determined through independent market inquiries from
local active realtors as more detailed in note 42.2. The valuer is listed on the panel of Pakistan Banks' Association.

15.2.1 Non-banking assets acquired in satisfaction of claims 2022 2021

Rupees in ‘000

Opening Balance 115,269 115,422

Depreciation (153) (153)
Transfer to fixed assets (64,815) -
Closing Balance 50,301 115,269

15.3 Provision held against other assets

Others 268,149 200,082

268,149 200,082

15.3.1 Movement in provision held against other assets

Opening balance 200,082 214,151

Charge for the year 134,167 61,004
Reversals (8,056) (36,518)
Amount adjusted / written off (58,044) (38,555)
Closing balance 268,149 200,082

16 BILLS PAYABLE

In Pakistan 40,175,122 36,141,378

Outside Pakistan - -
40,175,122 36,141,378

Meezan Bank Annual Report 2022 273

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000
17 DUE TO FINANCIAL INSTITUTIONS

In Pakistan 573,326,439 220,414,234

Outside Pakistan - -
573,326,439 220,414,234

17.1 Details of due to financial institutions secured / unsecured

Secured
With State Bank of Pakistan
Musharakah under Islamic Export Refinance Scheme 17.1.1 71,610,934 55,181,621
Investment under Islamic Long Term Financing Facility 17.1.2 25,694,774 17,490,047
Investment under Islamic Refinance Facility for Combating COVID-19 17.1.2 955,573 1,244,792
Investment under Islamic Financing for Renewal Energy 17.1.2 17,251,134 12,967,880
Investment under Islamic Temporary Economic Refinance
Facility for Plant and Machinery 17.1.2 19,384,119 13,230,968
Investment under Islamic Refinance Scheme for storage
of agriculture produce 17.1.2 282,324 40,677
Investment under Islamic Refinance Scheme for payment of
wages and salaries 17.1.2 - 2,177,385
Investment under Islamic Refinance Scheme for SME Asaan Finance 17.1.2 201,614 -
Investment under Shariah Compliant Open Market Operations 17.1.3 363,382,155 -
Investment under Shariah Compliant Standing Ceiling Facility - 39,993,944
Total secured 498,762,627 142,327,314

With Scheduled Bank 17.1.4 30,000,000 30,000,000

Other financial institutions 17.1.5 5,856,908 693,096

Unsecured
Overdrawn nostro accounts 496,904 443,824
Musharakah with scheduled banks / financial institutions 17.1.6 37,775,000 46,950,000
Others 435,000 -
573,326,439 220,414,234

17.1.1 These Musharakah are on a profit and loss sharing basis maturing between January 2023 to June 2023 and are secured
against demand promissory notes executed in favor of SBP. A limit of Rs 81,869 million (2021: Rs 58,140 million) has
been allocated to the Holding Company by SBP under Islamic Export Refinance Scheme. Last announced profit rate
on the Musharakah investment is 7.22% per annum.
17.1.2 These Investments are on profit and loss sharing basis which have been invested in general pool of the Holding
Company and are secured against demand promissory notes executed in favor of SBP. Last announced profit rate
on these investments ranges from 0.18% to 4.90% per annum.
17.1.3 These represent acceptance of funds by the Holding Company on Mudarabah basis which have been invested in
special pools of the Holding Company and are secured against lien of the Holding Company's investment in Federal
Government securities. The expected average return on Open Market Operations is 15.91% (2021: Nil) per annum.
17.1.4 These represent acceptance of funds by the Bank on Musharakah basis which are secured against pledge of the
Holding Company's investment in Federal Government securities (Note 10.2.2). The expected average return on these
Musharakah is around 16.15% (2021: 10.65%) per annum. These balances have matured in January 2023 (2021:
January 2022).
17.1.5 These Musharakah are on profit and loss sharing basis with Pakistan Mortgage Refinance Company and Karandaaz
with the objective of promoting low cost consumer housing and growth in SME financing respectively. The expected
average return on Karandaaz Musharakah ranges from 9.02% to 20.26% per annum. The expected profit rate on
PMRC borrowing is 12.89% per annum (2021: Nil) having maturity in November 2027.
17.1.6 These represent acceptance of funds by the Holding Company on Musharakah basis. The expected average return
on these Musharakah is around 15.51% (2021: 10.37%) per annum. These balances have matured in January 2023
(2021: January 2022).

274 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2022 2021
17.2 Particulars of due to financial institutions with respect to currencies Rupees in ‘000

In local currency 572,829,535 219,970,410

In foreign currencies 496,904 443,824
573,326,439 220,414,234
17.3 Particulars of due to financial institutions

Short - term 504,444,883 175,358,839

Long - term 68,881,556 45,055,395
573,326,439 220,414,234

18 DEPOSITS AND OTHER ACCOUNTS

2022 2021
In local In foreign Total In local In foreign Total
currency currencies currency currencies
Rupees in ‘000
Customers
- Current accounts -
non-remunerative 736,468,532 38,420,227 774,888,759 622,823,894 30,848,040 653,671,934
- Savings deposits 581,314,505 53,554,524 634,869,029 492,095,194 43,166,844 535,262,038
- Fixed deposits 181,114,576 16,136,130 197,250,706 231,366,955 14,454,313 245,821,268
- Margin 40,429,443 2,005,656 42,435,099 12,003,635 6,566 12,010,201
1,539,327,056 110,116,537 1,649,443,593 1,358,289,678 88,475,763 1,446,765,441

Financial institutions
- Current accounts -
on-remunerative 1,770,475 345,846 2,116,321 1,829,027 308,877 2,137,904
- Savings deposits 5,908,532 904 5,909,436 6,081,233 702 6,081,935
- Fixed deposits 1,000,238 - 1,000,238 885,800 - 885,800
8,679,245 346,750 9,025,995 8,796,060 309,579 9,105,639
1,548,006,301 110,463,287 1,658,469,588 1,367,085,738 88,785,342 1,455,871,080

2022 2021
Rupees in ‘000
18.1 Composition of deposits
- Individuals 1,162,218,140 979,782,648
- Government (Federal and Provincial) 8,258,422 6,950,408
- Public Sector Entities 15,684,966 16,747,910
- Banking Companies 4,961 68,346
- Non-Banking Financial Institutions 9,021,034 9,037,293
- Private Sector 463,282,065 443,284,475
1,658,469,588 1,455,871,080
18.2 Particulars of deposits and other accounts in Pakistan
- in local currency
Mudaraba based deposits 780,007,331 737,046,342
Qard based deposits 767,998,970 630,039,396
1,548,006,301 1,367,085,738
- in foreign currencies
Mudaraba based deposits 71,688,818 57,621,859
Qard based deposits 38,774,469 31,163,483
110,463,287 88,785,342
1,658,469,588 1,455,871,080

18.3 Eligible deposits covered under deposit protection scheme (including call deposit receipts disclosed under bills payable) amount
to Rs 1,401,490 million (2021: Rs 1,243,142 million).

Note 2022 2021

Rupees in ‘000
19 SUB-ORDINATED SUKUK

Additional Tier I Sukuk 19.1 7,000,000 7,000,000

Tier II Sukuk 19.2 13,990,000 13,990,000
20,990,000 20,990,000

Meezan Bank Annual Report 2022 275

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

19.1 In August 2018, the Holding Company issued regulatory Shariah compliant unsecured, sub-ordinated privately placed Additional
Tier I Sukuk based on Mudaraba of Rs 7,000 million as instrument of redeemable capital under section 66 of the Companies
Act, 2017. The brief description of Additional Tier I sukuk is as follows:

Credit Rating AA (Double A) by VIS Credit Rating Company Limited.

Issue Date August 01, 2018.
Tenor Perpetual.
Profit payment frequency Monthly in arrears.
Redemption Perpetual. However, the Holding company has call option which can be exercised with
prior approval of SBP.
Expected Periodic Profit Amount The Mudaraba Profit is computed under General Pool on the basis of profit sharing ratio
(Mudaraba Profit Amount)-Non- and monthly weightages announced by the Holding Company under the SBP guidelines
discretionary subject to actual of pool management. Last announced profit rate on the Sukuk is 17.68% per annum.
profit of the pool
Call Option The Holding company may call Additional Tier I Sukuk with prior approval of SBP on or
after five years from the date of issue.
Loss Absorbency The Additional Tier I Sukuk, at the option of the SBP, will be fully and permanently
converted into common shares (variable) upon the occurrence of a point of non-viability
trigger event as determined by SBP or for any other reason as may be directed by SBP.
Lock-in-Clause Profit and / or redemption amount can be held back in respect of the Additional Tier I
Sukuk, upon directive of the SBP, if such payment will result in a shortfall in the Holding
company’s minimum capital requirement, capital adequacy ratio requirement or leverage
ratio requirement.

19.2 In January 2020 and December 2021, the Holding company issued regulatory Shariah compliant unsecured, subordinated
privately placed Tier II Sukuk based on Mudaraba of Rs 4,000 million and Rs 9,990 million respectively as instrument of
redeemable capital under section 66 of the Companies Act, 2017. The brief description of Tier II sukuk is as follows:

Credit Rating AA+ (Double A plus) by VIS Credit Rating Company Limited.
Issue Date January 09, 2020 and December 16, 2021.
Tenor 10 years from the issue date.
Profit payment frequency Semi-annually in arrears.
Redemption Bullet payment at the end of the tenth year.
Expected Periodic Profit Amount The Mudaraba Profit is computed under General Pool on the basis of profit sharing ratio
(Mudaraba Profit Amount)-Non- and monthly weightages announced by the Bank under the SBP guidelines of pool
discretionary subject to actual management. Last announced profit rate on the Sukuk are 16.28% and 16.28% per
profit of the pool annum respectively.
Call Option The Holding company may call Tier II Sukuk with prior approval of SBP on or after five
years from the date of issue.
Loss Absorbency The Tier II Sukuk, at the option of the SBP, will be fully and permanently converted into
common shares (variable) upon the occurrence of a point of non-viability trigger event
as determined by SBP or for any other reason as may be directed by SBP.
Lock-in-Clause Profit and / or redemption amount can be held back in respect of the Tier II Sukuk upon
directive of the SBP, if such payment will result in a shortfall in the Holding company’s minimum
capital requirement, capital adequacy ratio requirement or leverage ratio requirement.

276 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

20 OTHER LIABILITIES Note 2022 2021

Rupees in ‘000
Return on deposits and other dues
- payable in local currency 20.1 13,408,460 4,643,447
- payable in foreign currencies 222,900 49,414
Unearned income 20.2 2,123,582 1,449,591
Accrued expenses 17,358,140 12,243,534
Current taxation (provision less payments) 20,149,887 13,648,852
Acceptances 12,495,872 10,925,144
Unclaimed dividends 3,825,350 19,490
Payable to defined benefit plan 38.3, 38.15 & 38.16 1,260,213 981,907
Provision against off-balance sheet obligations 20.3 55,167 105,396
Charity payable 20.4 4,159 3,932
Security deposits against Ijarah 21,959,346 20,370,305
Payable on account of credit murabaha / ijarah / musawammah 20.5 53,681,143 24,819
Security deposits against lockers 183,412 160,555
Unrealised loss on forward foreign exchange commitments - net 20.6 214,602 -
Advance against future Diminishing Musharakah 34,987 490,951
Withholding taxes payable 406,724 276,832
Lease liability against right-of-use assets 20.7 12,915,927 13,261,935
Workers Welfare Fund payable 20.8 5,793,172 3,865,653
Others 3,711,696 1,206,797
169,804,739 83,728,554

20.1 This includes Rs 1,226 million (2021: Rs 264 million) in respect of return accrued on acceptances from SBP under the Islamic
Export Refinance Scheme and Rs 365.80 million (2021: Rs 221.30 million) in respect of return accrued on acceptances from
the SBP under various Islamic Long Term Refinance Schemes.

20.2 The Holding Company expects that the present balance of unearned income will be recognised as income in the next
financial year.
Note 2022 2021
Rupees in ‘000
20.3 Provision against off-balance sheet obligations

Opening balance 55,167 36,489

Charge for the year - 18,678
Closing balance 20.3.1 55,167 55,167

20.3.1 This represents provision recognised against guarantees and letter of credit of non-performing customers.

Note 2022 2021

20.4 Reconciliation of charity payable Rupees in ‘000

Balance as at January 1 3,932 989

Additions during the year 147,472 201,777
Less: Transferred to charity savings account
(included in deposits and other accounts) 20.4.1 (147,245) (198,834)
Balance as at December 31 4,159 3,932

Meezan Bank Annual Report 2022 277

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

20.4.1 Charity paid through savings account during the year is Rs 121.43 million (2021: Rs 94.2 million). Charity of Rs 100,000
or higher was paid to the following organizations:
2022 2021
Rupees in ‘000

Ihsan Trust - Related Party 55,000 63,000

Institute of Business Administration - Centre for Excellence in Islamic Finance 17,330 25,800
Alamgir Welfare Trust 8,500 -
Baitussalam Welfare Trust 5,000 -
Saylani Welfare Trust 5,000 -
Patients' Behbud Society for the Aga Khan University Hospital 2,000 -
Bahauddin Zakariya University, Multan 2,500 -
The Indus Hospital, Karachi 2,000 -
Rashid Memorial Welfare Organization 1,000 -
Friends of Burns Centre, Karachi 1,000 -
Transformation International Society, Karachi 1,000 -
Child Life Foundation, Karachi 1,000 -
Patients Welfare Foundation, Creek General Hospital 1,000 -
Diya Pakistan - Related Party 1,000 -
Idara Al-Khair Welfare Society 1,000 -
Pakistan's Childrens' Heart Foundation 1,000 500
Afzaal Memorial Thalassemia Foundation 500 -
Chhipa Welfare Association 500 -
Family Educational Services Foundation 500 -
Bin Qutab Foundation 500 500
The Garage School 500 400
Karigar Training Institute 500 300
Omair Sana Foundation 500 300
Muhammadi Blood Bank 500 -
NICE Welfare Society 500 -
Help of Patients in Exigency by Students (HOPES) 500 -
Patients Aid Foundation, Jinnah Postgraduate Medical Centre, Karachi 500 -
Balochistan University of Information Technology, Engineering and
Management Sciences 500 -
University of Agriculture, Faisalabad 500 -
Islamia University, Bahawalpur 500 -
University of Punjab 500 -
Institute of Business Management, Karachi 500 -
NED University of Engineering & Technology, Karachi 500 -
Jinnah University for Women, Karachi 500 -
Quaid-i-Azam University, Islamabad 500 -
University of Karachi 500 -
Behbud Association, Karachi 500 -
Federal Urdu University of Arts, Science and Technology 500 -
COMSATS University, Islamabad 500 -
The Cancer Foundation, Karachi 500 -
Al Mustafa Welfare Society - Karachi 500 -
Pakistan Disabled Foundation 500 -
Zubaida Machiyara Trust 500 200
Pakistan Eye Bank 500 200
Mukhtaran Rafiq Foundation 500 200
Pakistan Association of Deaf 300 100
Kiran Foundation 300 -
Jamiyat Punjabi Saudagran-e-Delhi 300 -
Life Care Foundation Trust 300 -
Fatimid Foundation 200 -
Read Foundation 100 -
Dua Foundation 100 -
Prevention of Blindness Trust - 500
Burhani Medical Welfare Association - 400
Jamal Noor Hospital - 300
Frontier Foundation Welfare Hospital And Blood Transfusion Service - 200
Women Islamic Lawyer's Forum - 200
Child Aid Association - 200
Women Empowerment Group - 200
Health Education Livelihood Promoters (HELP) - Balochistan - 200
The Kidney Centre, Karachi - 200
Health & Social Welfare Association - 200
The Diabetes Centre - 100
121,430 94,200

20.4.2 The balance in Charity's savings account is Rs 155.79 million (2021: Rs 122.60 million).

278 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

20.4.3 Movement of charity fund during the year is as under: 2022 2021
Rupees in ‘000

Opening balance 126,535 17,980

Additions during the year

Received from customers on delayed payment 122,793 108,650
Dividend Purification Amount 15,359 16,002
Non-shariah compliance income 9,320 77,125
Profit on charity saving account (net of bank charges) 7,373 978
154,845 202,755

Distribution of Charity
Education (84,030) (89,200)
Health (13,200) (4,000)
Health & Education - (1,000)
Community Development (24,200) -
(121,430) (94,200)
Closing balance 159,950 126,535

20.5 This represents payable on account of credit Musawammah in accordance with the guidelines of the State Bank of Pakistan.

20.6 This is net off gain on forward foreign exchange commitments of Rs 1,787 million (2021: net off loss on forward foreign
exchange commitments of Rs 1,965 million - Note 15).

20.7 The carrying amounts of lease liability against right-of-use assets and the movement during the year are as follows:

2022 2021
Rupees in ‘000

As at January 1, 13,261,935 6,685,258

Additions 1,473,522 941,462
Adjustment upon reassesment of useful life 624,880 8,178,322
Amortisation of lease liability against right-of-use assets 1,534,692 792,447
Derecognition during the year (198,437) -
Payments (3,780,665) (3,335,554)
As at December 31, 12,915,927 13,261,935

20.8 The Group has made full provision for Workers Welfare Fund (WWF) based on profit for the respective years (2008-2022).
In 2016, the Supreme Court of Pakistan vide its order dated November 10, 2016 has held that the amendments made in
the law introduced by the Federal Government for the levy of Workers Welfare Fund were not lawful. The Federal Board of
Revenue filed review petitions against this order which are currently pending. Legal advice obtained on the matter indicates
that consequent to filing of these review petitions the judgment may not be treated as conclusive. Accordingly, the Group
continues to maintain the provision in respect of WWF.

21 SHARE CAPITAL

21.1 Authorised capital

2022 2021 2022 2021

(Number of Shares) Rupees in ‘000

3,253,860,000 3,253,860,000 Ordinary shares of Rs 10 each 32,538,600 32,538,600

21.2 Issued, subscribed and paid up capital

2022 2021 2022 2021

(Number of Shares) Rupees in ‘000
Fully paid-up ordinary shares of Rs 10 each
516,517,908 516,517,908 Issued for cash 5,165,179 5,165,179
1,273,106,413 1,110,413,293 Issued as bonus shares 1 12,731,064 11,104,133
1,789,624,321 1,626,931,201 17,896,243 16,269,312

Meezan Bank Annual Report 2022 279

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

21.3 Shareholding held by associated companies / entities are as follows:

2022 2021
Number of Percentage of Number of Percentage of
Name of Shareholders shares held Shareholding shares held Shareholding

Noor Financial Investment Company, Kuwait 630,819,684 35.25% 573,472,440 35.25%

Pakistan Kuwait Investment Company (Private) Limited 536,887,288 30.00% 488,079,353 30.00%
Islamic Development Bank, Jeddah 166,863,457 9.32% 151,694,052 9.32%
CDC - Trustee Meezan Islamic Fund 15,079,983 0.84% 15,277,983 0.94%
CDC - Trustee Al Meezan Mutual Fund 2,871,197 0.16% 2,285,548 0.14%
Cdc - Trustee Meezan Tahaffuz Pension Fund 2,712,724 0.15% 2,374,743 0.15%
CDC - Trustee KSE Meezan Index Fund 1,658,338 0.09% 1,294,530 0.08%
CDC - Trustee Meezan Balanced Fund 817,023 0.05% 1,149,463 0.07%
CDC - Trustee Meezan Asset Allocation Fund 526,683 0.03% 645,167 0.04%
CDC - Trustee Meezan Dedicated Equity Fund 498,227 0.03% 497,080 0.03%
Trustee Habbah Education Trust 72,532 0.00% 65,939 0.00%
CDC - Trustee Meezan Pakistan Exchange Traded Fund 66,263 0.00% - 0.00%

Note 2022 2021

22 RESERVES
Rupees in ‘000

Share Premium 2,406,571 2,406,571

Statutory reserve 22.1 22,169,518 17,668,857
Non Distributable Capital Reserve - Gain on Bargain Purchase 3,117,547 3,117,547
Employee share option compensation reserve 40 427,419 133,457
General reserve 91,082 91,082
28,212,137 23,417,514

22.1 Under section 21(i)(b) of the Banking Companies Ordinance, 1962, an amount not less than 10% of the profit is to be transferred
to create a reserve fund.

23 (DEFICIT) / SURPLUS ON REVALUATION OF ASSETS - NET OF TAX Note 2022 2021

Rupees in ‘000
Available for sale securities
- Listed shares 1,035,172 1,928,965
- Sukuk (2,204,206) 4,694,113
(1,169,034) 6,623,078
Non-banking assets acquired in satisfaction of claims 23.1 4,699 38,578
(1,164,335) 6,661,656
Less: Deferred tax asset / (liability) on
- Available for sale securities 502,685 (2,583,001)
- Non-banking assets acquired in satisfaction of claims 23.1 (2,021) (15,045)
500,664 (2,598,046)
(663,671) 4,063,610

23.1 Surplus on revaluation of non-banking assets acquired in satisfaction of claims

Surplus on revaluation as at January 1 38,578 30,678

Recognised during the year (3,542) 8,053
Adjusted upon transfer to fixed assets during the year (30,184) -
Transferred to unappropriated profit in respect of incremental
depreciation charged during the year (153) (153)
Surplus on revaluation as at December 31 4,699 38,578

Less: related deferred tax liability on:

- Revaluation as at January 1 15,045 10,737
- Impact of change in applicable tax rate 1,544 -
- Revaluation recognised during the year (1,523) 4,368
- Adjusted upon transfer to fixed assets during the year (12,979) -
- Incremental depreciation charged during the year (66) (60)
2,021 15,045
2,678 23,533

280 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

24 NON-CONTROLLING INTEREST Rupees in ‘000

Opening balance 1,196,519 1,264,512

Share of profit for the year 204,557 280,028
Remeasurements of defined benefit plan - net of tax (directly recognised in OCI) (4,194) 1,979
Dividend payout by Subsidiary (192,500) (350,000)
Closing balance 1,204,382 1,196,519

24.1 Subsidiary (unlisted)

Al Meezan Investment Management Limited

Percentage of holding 65% 65%
Assets 4,177,658 4,191,720
Liabilities 736,567 773,094
Revenue 1,630,866 1,819,984
Profit after taxation 584,448 800,081
Total comprehensive income 572,465 805,735
Market Value / Net Asset Value N/A N/A

25 CONTINGENCIES AND COMMITMENTS

-Guarantees 25.1 56,485,701 45,072,765

-Commitments 25.2 1,238,876,726 887,366,094
-Other contingent liabilities 25.3.1 1,802,000 1,802,000
1,297,164,427 934,240,859
25.1 Guarantees:
Financial guarantees 570,477 930,441
Performance guarantees 33,361,532 23,651,964
Other guarantees 22,553,692 20,490,360
56,485,701 45,072,765
25.2 Commitments:
Documentary letters of credit 221,689,496 175,227,624
Commitments in respect of:
- forward foreign exchange transactions 25.2.1 243,862,470 200,615,279
Commitments for acquisition of:
- fixed assets 640,778 389,225
- intangible assets 291,358 309,824
Other commitments 25.2.2 772,392,624 510,824,142
1,238,876,726 887,366,094
25.2.1 Commitments in respect of forward foreign exchange contracts

Purchase 139,648,096 114,757,851

Sale 104,214,374 85,857,428
243,862,470 200,615,279
25.2.2 Other Commitments

Commitments in respect of financing 25.2.2.1 772,392,624 510,824,142

25.2.2.1 The Holding Company makes commitments to extend credit (including to related parties) in the normal
course of business but these being revocable commitments do not attract any significant penalty or
the expense if the facility is unilaterally withdrawn, other than commitments in respect of syndicated
/ long term financings amounting to Rs 61,232 million (2021: Rs 70,453 million).

Meezan Bank Annual Report 2022 281

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

25.3 Other contingent liabilities

25.3.1 Holding Company:

The Income Tax Department amended the deemed assessment orders of the Holding Company for prior years
including the tax year 2021. The additions / disallowances were mainly due to allocation of expenses relating to
dividends and capital gain, allowability of provision against loans and advances, provision against investments and
provision against other assets. In the amended order for tax year 2015, additional issues with respect to the taxability
of gain on bargain purchase and non-adjustment of loss pertaining to HSBC Bank Middle East – Pakistan Branches
have also been raised. The Holding Company has obtained stay order from the High Court of Sindh against the
demands raised through the amended order for the tax year 2015. Both the Holding Company and the department
have filed appeals with the Appellate Authorities in respect of the aforementioned matters.

The management of the Holding Company, in consultation with its tax advisors, is confident that the decision in
respect of the above matters would be in Holding Company’s favour and accordingly no provision has been made in
these consolidated financial statements with respect thereto. The additional tax liability in respect of gain on bargain
purchase and non-adjustment of loss pertaining to HSBC Bank Middle East – Pakistan Branches is Rs 1,096 million
and Rs 706 million respectively.

26 PROFIT / RETURN EARNED ON ISLAMIC FINANCING AND Note 2022 2021

RELATED ASSETS, INVESTMENTS AND PLACEMENTS Rupees in ‘000

On financing 26.1 89,733,691 43,330,817

On investments in
- Available for sale securities 109,855,350 40,689,074
- Held for trading securities 484 -
- Held to maturity securities 23,453,174 1,396,080

On deposits / placements with financial institutions 9,202,753 24,661,485

232,245,452 110,077,456

26.1 The income on Ijarah under IFAS 2 is net of takaful of Rs 2,164 million (2021: Rs 1,737 million) recovered from customers.

27 PROFIT ON DEPOSITS AND OTHER DUES EXPENSED Note 2022 2021

Rupees in ‘000

Deposits and other accounts 27.1 59,581,655 33,994,001

Sub-ordinated Sukuk 3,022,277 1,588,467
Shariah Compliant Open Market Operations and Standing Ceiling
facility from the State Bank of Pakistan 34,969,578 -
Other Musharakahs / Mudarabas 27.2 11,317,860 4,796,952
Amortisation of lease liability against right-of-use assets 1,534,692 792,447
110,426,062 41,171,867

27.1 This includes conversion cost of Rs 2,252 million (2021: Rs 2,373 million) against foreign currency deposits.

27.2 This includes Rs 2,478 million (2021: Rs 989 million) paid / payable to SBP under Islamic Export Refinance Scheme and
Rs 1,284 million (2021: Rs 689 million) paid / payable to SBP under the various Islamic Long Term Refinance Schemes.

282 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

28 FEE AND COMMISSION INCOME Note 2022 2021

Rupees in ‘000

Trade related fees and commissions 28.1 3,790,368 3,318,195

Management fees in respect of Mutual Funds 1,278,477 1,389,143
Commission on guarantees 174,358 179,041
Branch banking customer fees 2,278,685 1,715,285
Credit related fees 28.2 102,394 124,379
Debit card related fees 5,773,464 3,081,103
Investment banking related fees 347,619 305,304
Commission on cash management 301,411 172,878
Commission on home remittances 259,616 283,302
Others 422,929 292,809
14,729,321 10,861,439

28.1 Trade related income pertain to corporate, commercial and SME segments, branch banking fees pertain to retail banking
segment and debit card fee pertains to alternative delivery channel segment (others).

28.2 This includes consumer processing fees of Rs 46.30 million (2021: Rs 47.70 million).

29 (LOSS) / GAIN ON SECURITIES Note 2022 2021

Rupees in ‘000
Realised - net 29.1 (100,202) 536,390
Unrealised gain - held for trading - net 18 -
(100,184) 536,390

29.1 Realised (loss) / gain on:

Federal Government Securities 34,033 9,315

Listed Shares 37,056 306,888
Non Government Sukuk (Pakistan Energy Sukuk) - 32,659
Foreign Securities (126,182) -
Associates (45,109) 187,528
(100,202) 536,390

30 OTHER INCOME

Gain on termination of
- Ijarah financing 573,794 671,649
- Diminishing Musharakah and other financing 70,935 19,698

Gain on sale of operating fixed assets 215,770 149,406

Liabilities written back - donation to Meezan Foundation (Liquidated) 350,000 -
Others 27,875 2,765
1,238,374 843,518

Meezan Bank Annual Report 2022 283

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Note 2022 2021

Rupees in ‘000

31 OPERATING EXPENSES

Total compensation expense 31.1 27,279,446 20,611,489

Property expense
Depreciation on right-of-use assets 3,123,212 2,457,916
Rent and taxes 65,685 63,876
Utilities cost (including electricity and diesel) 2,109,281 1,242,997
Security (including guards) 1,197,309 824,785
Repair and maintenance (including janitorial charges) 806,487 589,158
Depreciation 897,873 826,989
Takaful expenses 3,583 4,800
Others 40,835 67,076
8,244,265 6,077,597
Information technology expenses
Software maintenance 900,836 640,306
Hardware maintenance 337,590 312,745
Depreciation 751,353 528,641
Amortisation 469,666 368,642
Network charges 318,459 267,614
2,777,904 2,117,948
Other operating expenses
Stationery and printing (including debit card related cost) 1,508,506 850,881
Repairs and maintenance 460,908 322,241
Local transportation and car running 1,244,390 673,635
Depreciation on vehicles, equipments etc. 1,528,656 1,117,287
Legal and professional charges 132,571 148,244
NIFT and other clearing charges 214,124 228,141
Marketing, advertisement and publicity 1,010,945 1,005,603
Security charges - cash transportation 720,409 601,360
Communication (including courier) 619,700 503,848
Travelling and conveyance 175,727 72,302
Training and Development 96,396 29,900
Donation 31.3 44,317 512
Fees, subscription and other charges 375,310 273,558
Brokerage and bank charges 267,493 306,871
Office supplies 428,864 313,758
Entertainment 77,994 69,056
Takaful expense 162,384 109,283
Auditors' Remuneration 31.2 26,453 22,808
Fees and allowances to Shariah Board 41 43,403 37,770
Directors' fees and allowances 41 71,490 65,040
Others 142,074 154,410
Reimbursement of expenses from associated funds to the subsidiary 31.4 (811,776) (774,471)
8,540,338 6,132,037
46,841,953 34,939,071

284 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

31.1 Total compensation expense Note 2022 2021

Rupees in ‘000
Managerial Remuneration
i) Fixed 13,510,826 11,399,118
ii) Cash Bonus / Awards etc. 11,439,688 7,430,263
iii) Share based compensation expense 40 293,962 133,457
Charge for defined benefit plan 629,796 482,378
Contribution to defined contribution Plan 569,613 490,717
Compensated absences 195,258 114,831
Others including EOBI, SESSI, uniform, sports etc. 640,303 560,725
Total compensation expense 27,279,446 20,611,489

31.1.1 This also includes outsourced service costs which pertain to payments to companies incorporated in Pakistan.

31.2 Auditors’ remuneration 2022 2021

Rupees in ‘000

Audit fee 7,606 7,441

Fee for interim review 1,520 1,401
Special certifications / review / tax advisory services 13,621 10,625
22,747 19,467
Sindh sales tax on services 2,184 2,430
Out of pocket expenses 1,522 911
26,453 22,808
31.3 Donation

The Indus Hospital 35,000 -

Akhuwat Foundation 5,000 -
Citizen Police Liaison Committee 4,317 -
Idara Al-Khair - 512
44,317 512
None of the directors, executives or their spouses had any interest in the donees.

31.4 In accordance with Regulation 60 of the NBFC Regulations, the Subsidiary Company is entitled to charge fees and
expenses related to registrar services, accounting, operation and valuation services, related to a collective investment
scheme (CIS).
Therefore, the Subsidiary Company is charging the allocated expenses variably keeping in view the overall return of the
fund and subject to the total expense ratio of the funds as defined under the NBFC Regulations.

Note 2022 2021

32 OTHER CHARGES
Rupees in ‘000
Penalties imposed by the State Bank of Pakistan 95,150 28,172

33 PROVISIONS AND WRITE OFFS - NET

Provision against non-performing islamic financing

and related assets - net 11.12 3,249,734 744,810
Provision against diminution in the value of investments 10.3 806,681 214,623
Provision against other assets 33.1 & 15.3.1 126,111 24,486
Provision against off-balance sheet obligations 20.3 - 18,678
Bad debts written off directly - 515
Recovery against written off financings 33.2 (5,865) (10,282)
4,176,661 992,830

Meezan Bank Annual Report 2022 285

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

33.1 This mainly represents provision (net of recoveries) against operational losses incurred by the Holding Company in the
current or prior years.
33.2 This includes recoveries against financing written off by HSBC ME prior to its acquisition by the Holding Company.

34 TAXATION Note 2022 2021

Rupees in ‘000

Current 34.1 45,445,393 18,826,062

Prior years (368,262) -
Deferred (1,413,380) 643,108
43,663,751 19,469,170

34.1 Through Finance Act 2022, the effective tax rate on banking companies has been increased and consequently for the year
2022, tax rates has been enhanced to 49% (inclusive of 10% Super Tax) from 39% in 2021 (inclusive of 4% Super Tax).
Accordingly, the Holding Company has recognised super tax charge of Rs 9,210 million (2021: Rs 1,806 million) in the
current year based on taxable income for the year. Moreover, Super Tax on high earning persons other than banking
companies has been imposed for the year 2021 and onwards at the rates specified in section 4C (Super Tax on high earning
persons). Accordingly, Subsidiary Company has recorded a Super Tax at 4% for the year 2021 and 2022.

34.2 Relationship between tax expense and accounting profit Note 2022 2021
Rupees in ‘000

Profit before taxation 88,805,003 47,976,758

Effects of:
- Tax calculated at the applicable rate of 39% / 35% 34,633,951 16,791,865
- Super tax @ 10% / 4% 9,209,551 1,806,110
- Expenses not deductible for tax purposes (86,979) 198,572
- Other additions for tax purposes (284,472) 119,848
- Income chargeable to tax at reduced rate (48,389) (101,908)
- Others 240,089 654,683
Tax charge for the year 43,663,751 19,469,170

35 BASIC AND DILUTED EARNINGS PER SHARE

35.1 Basic Earnings per share

Profit for the year 44,936,695 28,227,560

(Number)
Restated
Weighted average number of ordinary shares 1,789,624,321 1,789,624,321

(Rupees)
Restated
Basic earnings per share 35.4 25.11 15.77

35.2 Diluted Earnings per share Rupees in ‘000

Profit for the year 44,936,695 28,227,560

(Number)
Restated
Weighted average number of ordinary shares 35.3 1,790,444,362 1,789,665,752

(Rupees)
Restated
Diluted earnings per share 35.4 25.10 15.77

286 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022
35.3 Reconciliation of basic and diluted earning per share 2022 2021
(Number)

Weighted average number of ordinary shares 1,789,624,321 1,789,624,321

Add: Diluted impact of Employee stock option scheme 820,041 41,431
Dilutive potential ordinary shares 1,790,444,362 1,789,665,752

35.4 The Holding Company has issued bonus shares during the year and accordingly the earnings per share for the
comparative year has been restated.

36 CASH AND CASH EQUIVALENTS Note 2022 2021

Rupees in ‘000
Cash and balances with treasury banks 7 117,743,672 170,501,306
Balances with other banks 8 13,710,753 16,465,169
131,454,425 186,966,475

36.1 Reconciliation of movement of liabilities to cash flows arising from financing activities
2022
Sub-ordinated Lease liability Dividend
Sukuk against right-of-use assets Payable
Rupees in ‘000

Balance as at January 01, 2022 20,990,000 13,261,935 19,490

Changes from financing cash flows
Payment against lease liability against
right-of-use assets - (3,780,665) -
Dividend paid to equity shareholders of
the Holding Company - - (7,908,045)
Dividend paid to non controlling interest - - (192,500)
Total changes from financing cash flows - (3,780,665) (8,100,545)

Other changes
Addition to right-of-use-assets - 1,473,522 -
Amortisation of lease liability against
right-of-use assets - 1,534,692 -
Adjustment upon reassessment of useful life - 624,880 -
Derecognition during the year - (198,437)
Cash dividend - equity shareholders of
the Holding Company - - 11,713,905
Cash dividend - non controlling interest - - 192,500
- 3,434,657 11,906,405
Balance as at December 31, 2022 20,990,000 12,915,927 3,825,350

2021
Sub-ordinated Lease liability Dividend
Sukuk against right-of-use assets Payable
Rupees in ‘000
Balance as at January 1, 2021 18,000,000 6,685,258 21,219
Changes from financing cash flows
Issuance of Sub-ordinated Sukuk - Tier II 9,990,000 - -
Redemption of Sub-ordinated Sukuk - Tier II (7,000,000) - -
Payment against lease liability against
right-of-use assets - (3,335,554) -
Dividend paid to equity shareholders of
the Holding Company - - (9,515,742)
Dividend paid to non controlling interest - - (350,000)
Total changes from financing cash flows 2,990,000 (3,335,554) (9,865,742)

Other changes
Addition to right-of-use-assets - 941,462 -
Amortisation of lease liability against
right-of-use assets - 792,447 -
Adjustment upon reassesment of useful life - 8,178,322 -
Cash dividend - equity shareholders of
the Holding Company - - 9,514,013
Cash dividend - non controlling interest - - 350,000
- 9,912,231 9,864,013
Balance as at 31 December 2021 20,990,000 13,261,935 19,490

Meezan Bank Annual Report 2022 287

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

36.2 Additional information on operational cash flows from 2022 2021

profit / return Rupees in ‘000

Profit / Return received on financings, investments and placements 212,125,591 102,096,277

Profit / Return paid on deposits and other dues 101,506,990 40,475,768

37 STAFF STRENGTH Note 2022 2021

(Number of Staff)

Permanent 12,762 11,710

On Group's contract 1,065 958
Group's own staff strength at the end of the year 13,827 12,668

Outsourced 37.1 2,212 1,902

Total staff strength 16,039 14,570

37.1 This excludes outsourced security guards and janitorial staff.

38 DEFINED BENEFIT PLAN

38.1 Meezan Bank Gratuity Funded Scheme

The activities of the Gratuity Funded Scheme are governed by Meezan Bank Limited Staff Gratuity Fund established in
2000 under the provisions of a Trust Deed. Plan assets held in trust are governed by the Trust Deed as is the nature of the
relationship between the Bank and the trustees and their composition. Responsibility for governance of the plan including
the investment decisions lies with the Trustees. The Board of Trustees comprise of representatives of the Bank and scheme
participants in accordance with the Fund's Trust Deed.

38.2 Number of Employees under the Gratuity Funded Scheme Note 2022 2021
(Number)
Number of Employees eligible under the Gratuity Funded Scheme 9,941 9,245

38.3 Reconciliation of amount payable to defined benefit plan 2022 2021

Rupees in ‘000

Present value of defined benefit obligations 38.5 3,671,959 2,688,572

Fair value of plan assets 38.5 (3,002,944) (2,150,857)
669,015 537,715

38.4 Components of plan assets

2022 2021
Entity / Rupees in '000 % Rupees in '000 %
Instrument
Credit Rating
GoP Ijarah Sukuk Govt. Guaranteed 2,792,376 92.99 900,000 41.84
Meezan Aamdan Certificates AAA - 0.00 1,078,388 50.13
Mutual Funds managed by Al Meezan
Investment Management Limited AM1 130,926 4.36 133,530 6.21
Bank Islami Pakistan Limited -
Additional Tier 1 Sukuk A- 5,000 0.17 5,000 0.23
Savings account with Dubai Islamic
Bank Pakistan Limited AA 141 0.00 133 0.01
Savings account with Meezan
Bank Limited AAA 74,501 2.48 33,806 1.58
3,002,944 100 2,150,857 100

288 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

38.5 The movement in the defined benefit obligation over the year is as follows:

2022

Present Value Fair Value of Total

of obligation Plan Assets
Rupees in ‘000

At January 1 2,688,572 (2,150,857) 537,715

Current service cost 466,852 - 466,852
Return expense / (income) 314,103 (243,317) 70,786
3,469,527 (2,394,174) 1,075,353
Remeasurements:
-Return on plan assets, excluding amounts included in
return expense / (income) shown as above - (279,586) (279,586)
-Experience gains 410,963 - 410,963
410,963 (279,586) 131,377
3,880,490 (2,673,760) 1,206,730
Contribution - (537,715) (537,715)
Benefit payments (208,531) 208,531 -
At December 31 3,671,959 (3,002,944) 669,015

2021

Present Value Fair Value of Total

of obligation Plan Assets
Rupees in ‘000

At January 1 2,190,677 (1,886,514) 304,163

Current service cost 375,047 - 375,047
Return expense / (income) 217,802 (184,021) 33,781
2,783,526 (2,070,535) 712,991
Remeasurements:
-Return on plan assets, excluding amounts
included in return expense / (income) shown
as above - 102,047 102,047
-Experience gains 26,840 - 26,840
26,840 102,047 128,887
2,810,366 (1,968,488) 841,878
Contribution - (304,163) (304,163)
Benefit payments (121,794) 121,794 -
At December 31 2,688,572 (2,150,857) 537,715

38.6 Charge for defined benefit plan (in respect of the Gratuity Funded Scheme)
2022 2021
Rupees in ‘000

38.6.1 Cost recognised in Consolidated profit and loss

Current service cost 466,852 375,047
Net return cost 70,786 33,781
537,638 408,828

38.6.2 Re-measurements recognised in OCI during the year

Gain on obligation - Experience adjustment 410,963 26,840

Return on plan assets over expected return (279,586) 102,047
Total re-measurements recognised in OCI 131,377 128,887

Total expense recognised in Profit and Loss Account amounted to Rs 605.25 million (2021: Rs 462.11 million) of which
Rs 537.64 million (2021: Rs 408.83 million) pertains to approved Gratuity Funded Scheme and Rs 67.61 million (2021:
Rs 53.29 million) pertains to End of Service Unfunded Defined Benefit Scheme. Total expense recognised in Other
Comprehensive Income amounted to Rs 189.32 million (2021: credit of Rs 120.50 million) of which expense of
Rs 131.38 million (2021: credit of Rs 128.89 million) pertains to Gratuity Funded Scheme and charge of Rs 57.95 million
(2021: credit of Rs 8.39 million) pertains to End of Service Unfunded Defined Benefit Scheme.

38.7 The plan assets and defined benefit obligations (in respect of the Gratuity Funded Scheme) are based in Pakistan.

Meezan Bank Annual Report 2022 289

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2022 2021
38.8 Principal actuarial assumptions

Discount rate 14.25% p.a 12.25% p.a

Expected rate of increase in salaries 14.25% p.a 11.25% p.a
Expected rate of return on investments 14.25% p.a 12.25% p.a
Normal retirement age 60 years 60 years

38.9 Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and
experience in Pakistan. The rates assumed are based on the adjusted SLIC 2001 - 2005 mortality tables.

38.10 The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

Impact on defined benefit

obligation - Increase / (Decrease)

December 31, 2022 December 31, 2021

Change in Increase in Decrease in Increase in Decrease in

assumption assumption assumption assumption assumption
Rupees in ‘000

Discount rate 1.00% (386,264) 455,722 (277,147) 327,488

Salary growth rate 1.00% 469,642 (403,962) 340,683 (292,327)
Withdrawal rate 10.00% (7) 6 1,204 (1,212)

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant.
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method
(present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting
period) has been applied as when calculating the gratuity liability recognised within the consolidated Statement of
Financial Position.

38.11 The weighted average duration of the defined benefit obligation is 11.49 years.

38.12 Expected maturity analysis of undiscounted defined benefit obligation for the Gratuity Funded Scheme is as follows:

Less than a Between 1-2 Between 2-5 Over 5 years Total

year years years

Rupees in ‘000

At December 31, 2022 191,654 158,718 702,933 35,224,168 36,277,473

At December 31, 2021 165,485 137,177 429,283 15,785,623 16,517,568

38.13 Funding levels are monitored on an annual basis and are based on actuarial recommendations. Contribution for the next year
works out to Rs 586.37 million as per the actuarial valuation report of the Holding Company as of December 31, 2022.

38.14 Through its Gratuity Funded Scheme, the Fund is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility The plan liabilities are calculated using a discount rate set with reference to corporate
sukuk yields; if plan assets underperform to the yield, this will create a deficit. The Fund
believes that due to long-term nature of the plan liabilities and the Bank's support, the
current investment strategy manages this risk adequately.

Changes in Sukuk yields A decrease in corporate sukuk yields will increase plan liabilities, although this will be
partially offset by an increase in the value of the plans' sukuk holdings.

Inflation risk The majority of the plans' benefit obligations are linked to inflation, and higher inflation
will lead to higher liabilities. However plan assets are variable rate instruments and are
re-priced at regular intervals to off set inflationary impacts.

Life expectancy / The majority of the plans' obligations are to provide benefits on severance with the Holding
Withdrawal rate Company on achieving retirement. Any change in life expectancy / withdrawal rate would
impact plan liabilities.

290 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

38.15 Meezan Bank End of Service Unfunded Defined Benefit Scheme

The Holding Company also operates an End of Service Unfunded Defined Benefit Scheme for the founding President and
Chief Executive Officer.

The charge in respect of current service cost is recognised based on expected period of future service. The net charge for
the year of this benefit amounted to Rs 125.56 million. The charge of Rs 67.61 million has been recognised in the
consolidated Profit and Loss Account and the charge of Rs 57.95 million has been recognised in Consolidated Other
Comprehensive Income. The present value of defined benefit obligation recognised in respect of this scheme amounts to
Rs 529.43 million.

The principal actuarial assumptions comprise of discount rate of 14.25 percent and salary increase rate of 8.00 percent.
The sensitivity of the defined benefit obligation due to a one percent change in discount rate would be Rs 10.10 million (in
case the discount rate is increased) and Rs 10.40 million (in case the discount rate is decreased). These sensitivities are
calculated using the same methodology as explained in note 38.10.

The disclosures made in notes 38.1 to 38.15 are based on the information included in the actuarial valuation reports of the Holding
Company as of December 31, 2022.

38.16 Al Meezan Investment Management Limited Gratuity Funded Scheme

The Subsidiary Company operates a defined benefit plan i.e. an approved funded gratuity scheme for all its permanent
employees who have completed the minimum qualifying period of service as defined under the scheme. Actuarial
valuation of the scheme is carried out every year.

Total expense recognised in Profit and Loss Account and Other Comprehensive Income amounted to Rs 24.55 million
(2021: Rs 20.26 million) and Rs 11.98 million (2021: credit of Rs 5.65 million) respectively pertains to approved Gratuity
Funded Scheme.

The present value of defined benefit obligation recognised in Statement of Financial Position amounted to Rs 61.77 million
(2021: Rs. 66.80 million).

39 DEFINED CONTRIBUTION PLAN

The Group also operates a recognised contributory provident fund for all permanent employees. Equal monthly contributions are
made, both by the Group and the employees, to the fund at a rate of 10% of basic salary.

2022 2021
Rupees in ‘000

Contribution from the Group 569,613 490,717

Contribution from the employees 569,613 490,717
1,139,226 981,434

40 EMPLOYEES STOCK OPTION SCHEME OF HOLDING COMPANY

During the year 2022, the Board Human Resources, Remuneration and Compensation Committee of the Holding Company (the
Committee) has granted Share Options to the designated employees under the Meezan Bank Employees Share Option Scheme,
2021 (the Scheme) approved by the shareholders and Securities and Exchange Commission of Pakistan (SECP) vide its letter no.
SMD/Co.86(1)/3/2001/4 dated April 21, 2021.

Under the scheme, the exercise price has been determined as 70% of the average market closing price of the Bank’s shares quoted
on the Pakistan Stock Exchange during the last forty trading days prior to the date of grant. There are no performance measures
attached to options granted. The options carry neither right to dividends nor voting rights till shares are issued to employees on
exercise of options on completion of the vesting period. The shares will be vested over a period of 4 years, with one-third being
vested after two years from the date of grant, remaining one-third after three years and the remaining one-third after four years.

Meezan Bank Annual Report 2022 291

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

The value of these equity-settled options have been determined using the Black Scholes Merton (BSM) method using an independent
valuer. The key details of the share options granted during the year on May 01, 2022 and May 01, 2021 are as under:

Vesting Exercise Options Options Exercise Fair value per Risk Free Standard
Period Date granted outstanding Price (Rs) option (Rs) Rate Deviation

Share options 2 years 01-May-24 2,498,648 2,498,648 94.34 44.43 13.50% 30.08%
issued in 2022 3 years 01-May-25 2,498,648 2,498,648 94.34 54.59
4 years 01-May-26 2,498,648 2,498,648 94.34 63.59
7,495,944 7,495,944

Vesting Exercise Options Options Exercise Fair value per Risk Free Standard
Period Date granted outstanding Price (Rs) option (Rs) Rate Deviation

Share options 2 years 01-May-23 2,340,833 2,340,833 77.43 78.35 10.50% 31.63%
issued in 2021 3 years 01-May-24 2,340,833 2,340,833 77.43 84.59
4 years 01-May-25 2,340,834 2,340,834 77.43 89.72
7,022,500 7,022,500

Expense arising from this scheme is disclosed in Note 31.1.

41 COMPENSATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL

HOLDING COMPANY

2022
Directors Members President Key Other Material
Shariah / CEO Management Risk Takers/
Chairman Executives Non-
Board Personnel Controllers
(other than CEO) Executives

Rupees in ‘000
Fees and allowances 11,640 - 59,850 2,500 - - -
Managerial remuneration
i) Fixed - - - 34,903 88,818 402,318 460,947
ii) Cash Bonus - - - 6,000 200,000 460,000 370,350
iii) Share based compensation expense - - - - 4,290 21,375 30,236
Charge for gratuity fund / EOSB - - - - 125,555 12,019 18,691
Contribution to defined contribution plan - - - - - 14,952 22,876
Others - - - - 4,180 1,224 -
11,640 - 59,850 43,403 422,843 911,888 903,100
Number of persons 1 - 9 4 1 22 63

2021
Directors Members President Key Other Material
Shariah / CEO Management Risk Takers/
Chairman Executives Non-
Board Personnel Controllers
(other than Executives
CEO)
Rupees in ‘000
Fees and allowances 11,640 - 53,400 2,100 - - -
Managerial remuneration
i) Fixed - - - 18,815 82,239 336,441 394,768
ii) Cash Bonus - - - 16,000 175,000 388,000 330,000
iii) Share based compensation
expense - - - - 1,900 8,134 12,714
Charge for gratuity fund / EOSB - - - - 44,896 10,008 15,962
Contribution to defined
contribution plan - - - - - 12,061 19,615
Others - - - - 2,146 1,434 -
11,640 - 53,400 36,915 306,181 756,078 773,059
Number of persons 1 - 9 4 1 19 55

292 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

41.1 The Chief Executive, the key management personnel, certain members of Shariah board and certain material risk takers /
controllers have been provided with free use of the Bank's cars.

41.2 The amount of cash bonus to the key management personnel, Resident Shariah Board Member and other material risk
takers / controllers, is based on the management's best estimate.

41.3 Remuneration to Directors for participation in Board and Committee Meetings

Holding Company
2022
Meeting Fees and Allowances
For Board Committees
Human IFRS 9
Sr. Risk Information Resources, Implementation
For Board Audit Management Technology Remuneration & Oversight Total
No. Name of Director Meetings Committee Committee Committee Compensation
Committee Committee Amount
Rupees in ‘000

1 Mr Riyadh S.A.A. Edrees

(Chairman) 3,840 - - 2,600 2,600 2,600 11,640
2 Mr Faisal A.A.A. Al-Nassar
(Vice Chairman) 3,200 2,600 2,600 2,600 - - 11,000
3 Mr Bader H.A.M.A. Al-Rabiah 3,200 650 1,950 - - - 5,800
4 Mr Mubashar Maqbool 3,200 1,950 2,600 2,600 - - 10,350
5 Mr Faisal Fahad Al-Muzaini 3,200 - - - - 1,950 5,150
6 Mr Naveed Iftikhar Sherwani 3,200 - - - - - 3,200
7 Mr Mohamed Guermazi 3,200 1,950 650 - - - 5,800
8 Mr Mohammad Abdul Aleem 3,200 2,600 - - 2,600 - 8,400
9 Ms Nausheen Ahmad 3,200 - - - 2,600 - 5,800
10 Mr Yousef S.M.A. Al-Saad 2,400 - 1,950 - - - 4,350
31,840 9,750 9,750 7,800 7,800 4,550 71,490

2021
Meeting Fees and Allowances
For Board Committees
Human IFRS 9
Sr. Risk Information Resources, Implementation
For Board Audit Management Technology Remuneration & Oversight Total
No. Name of Director Meetings Committee Committee Committee Compensation
Committee Committee Amount
Rupees in ‘000

1 Mr Riyadh S.A.A. Edrees

(Chairman) 3,840 - - 2,600 2,600 2,600 11,640
2 Mr Faisal A.A.A. Al-Nassar
(Vice Chairman) 3,200 2,600 2,600 2,600 - - 11,000
3 Mr Bader H.A.M.A. Al-Rabiah 2,400 1,950 - - - - 4,350
4 Mr Mubashar Maqbool 3,200 - 2,600 2,600 - - 8,400
5 Mr Saad Fazil Abbasi 800 - 650 - - - 1,450
6 Mr Mohamed Guermazi 3,200 - 2,600 - - - 5,800
7 Mr Noorur Rahman Abid 3,200 2,600 - - 2,600 - 8,400
8 Ms Nausheen Ahmad 3,200 - - - 2,600 - 5,800
9 Mr Atif Azim 3,200 - - 2,600 - - 5,800
10 Mr Naveed Iftikhar Sherwani 2,400 - - - - - 2,400
28,640 7,150 8,450 10,400 7,800 2,600 65,040

Meezan Bank Annual Report 2022 293

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

41.4 Remuneration to Members Shariah Board 2022 2021

Non Non
Resident Resident Resident Resident
Chairman Member Members Chairman Member Members
Rupees in ‘000

Meeting Fees - - 2,500 - - 2,100

Managerial remuneration and allowances - 6,007 28,896 - 4,157 14,658
Cash Bonus - 6,000 - - 4,000 12,000
- 12,007 31,396 - 8,157 28,758
Total Number of Persons 1 1 2 1 1 2

42 FAIR VALUE MEASUREMENTS

The fair value of quoted securities other than those classified as held to maturity, is based on quoted market price. Quoted
securities classified as held to maturity are carried at cost. The fair value of unquoted equity securities, other than investments
in associates is determined on the basis of the break-up value of these investments as per their latest available audited financial
statements.

The fair value of unquoted debt securities, fixed term loans, other assets, other liabilities, fixed term deposits and borrowings
cannot be calculated with sufficient reliability due to the absence of a current and active market for these assets and liabilities
and reliable data regarding market rates for similar instruments.

42.1 Fair value of financial assets

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs used
in making the measurements:

Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Fair value measurements using input for the asset or liability that are not based on observable market data (i.e.
unobservable inputs).

2022
Carrying Fair value
value Level 1 Level 2 Level 3 Total
Rupees in ‘000
On balance sheet financial instruments

Financial assets - measured at fair value

Investments
- Federal Government securities 917,873,562 - 917,873,562 - 917,873,562
- Shares 7,565,867 7,565,867 - - 7,565,867
- Non Government Sukuk 119,509,708 119,509,708 - - 119,509,708
- Foreign Securities 8,568,475 - 8,568,475 - 8,568,475
1,053,517,612 127,075,575 926,442,037 - 1,053,517,612
Financial assets - disclosed but not
measured at fair value
Investments
- Federal Government securities 217,740,599 - 204,305,335 - 204,305,335
- Non Government Sukuk 311,665 - 311,665 - 311,665
218,052,264 - 204,617,000 - 204,617,000

1,271,569,876 127,075,575 1,131,059,037 - 1,258,134,612

Off-balance sheet financial instruments -
measured at fair value
Forward purchase and sale of foreign
exchange contracts 244,685,475 - 244,685,475 - 244,685,475

294 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2021

Carrying Fair value

value Level 1 Level 2 Level 3 Total

On balance sheet financial instruments Rupees in ‘000

Financial assets - measured at fair value
Investments
- Federal Government securities 386,597,737 - 386,597,737 - 386,597,737
- Shares 8,718,285 8,718,285 - - 8,718,285
- Non Government Sukuk 120,028,511 120,028,511 - - 120,028,511
- Foreign Securities 10,703,622 - 10,703,622 - 10,703,622
526,048,155 128,746,796 397,301,359 - 526,048,155
Financial assets - disclosed but not
measured at fair value
Investments
- Federal Government securities 76,687,798 - 76,651,000 - 76,651,000
76,687,798 - 76,651,000 - 76,651,000

602,735,953 128,746,796 473,952,359 - 602,699,155

Off-balance sheet financial instruments -

measured at fair value
Forward purchase and sale of foreign
exchange contracts 203,234,909 - 203,234,909 - 203,234,909

42.2 Fair Value of non-financial assets 2022

Carrying Fair value

value Level 1 Level 2 Level 3 Total
Rupees in ‘000
Non-banking assets acquired in satisfaction
of claims 55,000 - - 55,000 55,000
55,000 - - 55,000 55,000

2021

Carrying Fair value

value Level 1 Level 2 Level 3 Total
Rupees in ‘000
Non-banking assets acquired in satisfaction
of claims 153,847 - - 153,847 153,847
153,847 - - 153,847 153,847

Non-banking assets acquired in satisfactions of claims are carried at revalued amounts (level 3 measurement) determined
by professional valuers based on their assessment of the market values.

Valuation techniques used in determination of fair values

Item Valuation approach and input used

Listed Securities The valuation has been determined through closing rates of Pakistan Stock Exchange.

GoP Sukuk The fair value of GoP Ijarah Sukuk quoted are derived using PKISRV rates. The PKISRV
rates are announced by FMA (Financial Market Association) through Reuters. The rates
announced are simple average of quotes received from eight different pre-defined/
approved dealers / brokers.

Foreign Sukuk The valuation has been determined through closing rates of Bloomberg.

Forward foreign The valuation has been determined by interpolating the mid rates announced by SBP.
exchange contracts

Mutual Funds The valuation has been determined based on Net asset values declared by respective
funds.

Meezan Bank Annual Report 2022 295

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

The Group's policy is to recognise transfers into and out of the different fair value hierarchy levels at the date the event or
change in circumstances that caused the transfer occurred.

There were no transfers between levels 1 and 2 during the year.

Fair value of Islamic financing and related assets, unquoted sukuk, other assets, other liabilities and fixed term deposits and
other accounts and due to financial institutions cannot be calculated with sufficient reliability due to absence of current and
active market for such assets and liabilities and reliable data regarding market rates for similar instruments. The provision
for impairment of Islamic financing and related assets has been made in accordance with the Group’s accounting policy as
stated in note 6.3.2.

In the opinion of the management, the fair value of the remaining financial assets and liabilities are not significantly different
from their carrying values since these assets and liabilities are short term in nature or in the case of financings and deposits
are frequently repriced.

43 SEGMENT ANALYSIS

43.1 Segment Details with respect to Business Activities

2022
Corporate and Retail Trading and Asset Others Inter-segment Total
Commercial banking banking sales Management Eliminations
Rupees in ‘000
Consolidated profit and loss account
External funded revenue 83,882,167 7,655,763 140,707,522 - - - 232,245,452
External unfunded revenue 4,558,746 3,326,592 4,318,838 1,414,239 6,408,482 - 20,026,897
Inter segment revenue - net - 196,667,127 - - 173,327 (196,840,454) -
Total income 88,440,913 207,649,482 145,026,360 1,414,239 6,581,809 (196,840,454) 252,272,349

External cost of funds 6,777,093 61,280,572 42,368,397 - - - 110,426,062

Segment direct expenses 1,400,367 44,750,561 165,724 619,298 1,928,673 - 48,864,623
Inter segment expense allocation 74,213,540 - 122,626,914 - - (196,840,454) -
Total expenses 82,391,000 106,031,133 165,161,035 619,298 1,928,673 (196,840,454) 159,290,685
Provisions and write offs - net 3,201,688 124,306 806,681 - 43,986 - 4,176,661
Profit before tax 2,848,225 101,494,043 (20,941,356) 794,941 4,609,150 - 88,805,003

Consolidated statement of financial position

Cash and bank balances - 112,300,051 8,905,757 35,160 10,213,457 - 131,454,425
Due from financial institutions - net - - 34,964,299 - - - 34,964,299
Investments - net 11,019,547 - 1,272,190,740 4,106,136 - - 1,287,316,423
Net inter segment lending - 1,544,149,502 - - - (1,544,149,502) -
Islamic financings and related assets - net 902,768,059 92,740,295 - - - - 995,508,354
Others 35,208,094 52,596,851 43,932,977 361,771 557,384 - 132,657,077
Total Assets 948,995,700 1,801,786,699 1,359,993,773 4,503,067 10,770,841 (1,544,149,502) 2,581,900,578

Due to financial institutions 134,872,920 6,364,466 432,089,053 - - - 573,326,439

Deposits and other accounts - 1,658,469,588 - - - - 1,658,469,588
Subordinated sukuk 20,990,000 - - - - - 20,990,000
Net inter segment borrowing 675,947,666 - 861,843,217 - 6,358,619 (1,544,149,502) -
Others 74,724,128 125,404,634 5,211,198 709,600 3,930,301 - 209,979,861
Total liabilities 906,534,714 1,790,238,688 1,299,143,468 709,600 10,288,920 (1,544,149,502) 2,462,765,888
Equity 42,460,986 11,548,011 60,850,305 3,793,467 481,921 - 119,134,690
Total Equity and liabilities 948,995,700 1,801,786,699 1,359,993,773 4,503,067 10,770,841 (1,544,149,502) 2,581,900,578

Contingencies and Commitments 965,252,825 88,049,132 243,862,470 - - - 1,297,164,427

296 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2021
Corporate and Retail Trading and Asset Others Inter-segment Total
Commercial banking banking sales Management Eliminations
Rupees in ‘000
Consolidated profit and loss account
External funded revenue 38,904,867 5,784,199 65,383,481 - - - 110,072,547
External non funded revenue 3,984,822 2,556,850 4,445,743 1,851,794 3,159,651 - 15,998,860
Inter segment revenue - net - 89,808,493 - - - (89,808,493) -
Total Income 42,889,689 98,149,542 69,829,224 1,851,794 3,159,651 (89,808,493) 126,071,407

External cost of funds 3,266,249 34,832,977 3,052,212 - - - 41,151,438

Segment direct expenses 1,077,132 32,045,600 667,375 722,393 1,437,881 - 35,950,381
Inter segment expense allocation 30,037,728 - 59,760,519 - 10,246 (89,808,493) -
Total expenses 34,381,109 66,878,577 63,480,106 722,393 1,448,127 (89,808,493) 77,101,819
Provisions and write offs - net 642,026 92,940 218,079 - 39,785 - 992,830
Profit before tax 7,866,554 31,178,025 6,131,039 1,129,401 1,671,739 - 47,976,758

Consolidated statement of financial position

Cash and bank balances - 174,828,996 1,518,093 45,741 10,573,645 - 186,966,475
Due from financial institutions - net - - 238,401,637 - - - 238,401,637
Investments - net 15,926,987 - 604,205,056 4,200,838 - - 624,332,881
Net inter segment lending - 1,267,123,798 - - - (1,267,123,798) -
Islamic financings and related assets - net 670,252,106 87,834,014 - - - - 758,086,120
Others 18,243,198 40,247,352 40,932,915 441,068 7,401 - 99,871,934
Total Assets 704,422,291 1,570,034,160 885,057,701 4,687,647 10,581,046 (1,267,123,798) 1,907,659,047

Due to financial institutions 102,332,649 693,821 117,387,764 - - - 220,414,234

Deposits and other accounts - 1,455,871,080 - - - - 1,455,871,080
Subordinated sukuk 20,990,000 - - - - - 20,990,000
Net inter segment borrowing 533,751,157 - 724,249,670 - 9,122,971 (1,267,123,798) -
Others 15,307,422 99,691,203 3,162,896 803,810 976,790 - 119,942,121
Total liabilities 672,381,228 1,556,256,104 844,800,330 803,810 10,099,761 (1,267,123,798) 1,817,217,435
Equity 32,041,063 13,778,056 40,257,371 3,883,837 481,285 - 90,441,612
Total Equity and liabilities 704,422,291 1,570,034,160 885,057,701 4,687,647 10,581,046 (1,267,123,798) 1,907,659,047

Contingencies and Commitments 657,044,559 76,581,021 200,615,279 - - - 934,240,859

44 TRUST ACTIVITIES

The Holding Company provides trustee services in respect of Islamic Financing transactions. The services primarily includes
holding of assets as security trustee / custodian on behalf of investors.

45 RELATED PARTY TRANSACTIONS

45.1 Parties are considered to be related if one party has the ability to control the other party or exercise significant
influence over the other party in making financial or operational decisions and includes a subsidiary company,
associated companies, retirement benefit funds, directors, and key management personnel and their close family
members.
45.2 Transactions with related parties are entered in the ordinary course of business and on substantially the same terms as
for comparable transactions with person of similar standing. Contributions to and accruals in respect of staff retirement
benefits and other benefit plans are made in accordance with the actuarial valuations / terms of the contribution plan.
Remuneration and other benefit to the key management personnel is determined in accordance with the terms of their
appointment.

45.3 Associates
Associates include mutual funds managed by Al Meezan Investment Management Limited and entities having common
directorship with the Board. However, entities are not considered related party only if common director is an independent
director working on both the Boards.
45.4 Key management personnel
- President and Chief Executive Officer of the Holding Company
- Deputy Chief Executive Officer of the Holding Company

Meezan Bank Annual Report 2022 297

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

45.5 Details of transactions with related parties and balances with them (other than those disclosed in respective notes) as at the year-end
as are follows:
Total Associates Directors Key Management Other Related
Personnel Parties
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Rupees in ‘000
Islamic financing and related assets
At January 1, - - - - - - - - - -
Addition during the year 29,972,348 - 29,972,348 - - - - - - -
Repayment / redemption / deletion during the year - - - - - - - - - -
At December 31 29,972,348 - 29,972,348 - - - - - - -

Investments
At January 1, 4,854,664 5,470,391 4,854,664 5,470,391 - - - - - -
Addition during the year 759,618 1,581,448 759,618 1,581,448 - - - - - -
Repayment / redemption / deletion during the year (1,443,849) (2,197,175) (1,443,849) (2,197,175) - - - - - -
At December 31 4,170,433 4,854,664 4,170,433 4,854,664 - - - - - -

Due from financial institutions

At January 1, 21,858,348 36,671,288 21,858,348 36,671,288 - - - - - -
Addition during the year - 76,546,772 - 76,546,772 - - - - - -
Repayment / redemption / deletion during the year (21,858,348) (91,359,712) (21,858,348) (91,359,712) - - - - - -
At December 31 - 21,858,348 - 21,858,348 - - - - - -

Balances pertaining to parties that were related at the beginning of the year but ceased to be related during any part of the current
year are not reflected as part of the closing balance. However, new related parties have been added during the year. The same are
accounted for through the movement presented above.

298 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Total Associates Directors Key Management Other Related

Personnel Parties
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Rupees in ‘000

Deposits 4,473,715 7,220,915 3,565,923 2,386,870 134,806 131,435 180,487 188,427 592,499 4,514,183

Other Assets
Profit receivable on financing / investments / placements 684,919 725,460 684,919 725,460 - - - - - -
Fee and Other Receivable 22,216 37,462 17,864 9,037 - - 1,745 - 3,352 28,425

Due to financial institutions

At January 1, - - - - - - - - - -
Addition during the year 53,500,000 - 53,500,000 - - - - - - -
Repayment / redemption / deletion during the year (35,500,000) - (35,500,000) - - - - - - -
At December 31 18,000,000 - 18,000,000 - - - - - - -

Sub-ordinated Sukuk
At January 1, 200,000 578,000 200,000 578,000 - - - - - -
Addition during the year 10,000 10,000 10,000 10,000 - - - - - -
Repayment / redemption / deletion during the year - (388,000) - (388,000) - - - - - -
At December 31 210,000 200,000 210,000 200,000 - - - - - -

Other Liabilities
Profit payable on Musharakah acceptance 54,568 - 54,568 - - - - - - -
Payable to defined benefit plan 1,263,565 941,589 - - - - 529,429 403,874 734,136 537,715
Accrued Expenses - 350,000 - - - - - - - 350,000
Unearned Income 16,615 16,648 16,615 16,648 - - - - - -

Contingencies and Commitments

Letters of credit (unfunded) 725,168 - 725,168 - - - - - - -
Letters of Guarantee (unfunded) 2,387,077 2,491,277 2,387,077 2,491,277 - - - - - -

Transactions, income and expenses

Profit earned on financing / investments / placements 753,103 2,850,799 753,103 2,850,799 - - - - - -
Fees and other income earned 2,018,169 1,653,881 1,667,684 1,653,683 18 20 404 100 350,063 78
Dividend income earned 53,041 128,782 53,041 128,782 - - - - - -
Capital (loss)/gain - net (41,390) 187,358 (43,418) 187,358 - - - - 2,028 -

Return on deposits / acceptance expensed 665,268 579,861 497,492 251,625 1,784 733 7,440 7,695 158,552 319,808
Recovery of expenses 3,352 3,155 - - - - - - 3,352 3,155
Charge for defined benefit plan 710,440 594,911 - - - - - - 710,440 594,911
Contribution to defined contribution plan 569,613 490,717 - - - - - - 569,613 490,717
Contribution to staff benevolent fund 65,993 54,418 - - - - - - 65,993 54,418
Fees expensed 1,656 1,471 1,224 1,471 - - - - 432 -
Charity Paid 56,000 63,000 1,000 - - - - - 55,000 63,000
Purchase of fixed assets 153,417 425,393 153,417 425,393 - - - - - -
Remuneration to key management personnel 631,638 489,318 - - - - 631,638 489,318 - -
Fee to non-executive directors (note 41) 71,490 65,040 - - 71,490 65,040 - - - -
Proceeds from sale of fixed assets having
net book value of Rs. 526 thousand 2,271 - - - - - 2,271 - - -

46 CAPITAL ASSESSMENT AND ADEQUACY BASEL SPECIFIC

Capital structure

The State Bank of Pakistan (SBP) introduced updated guidelines with respect to disclosure of capital adequacy related information in
the financial statements of banks vide its communication dated November 5, 2014. These guidelines are based on the requirements of
Basel III which were introduced earlier by the SBP in August 2013 for implementation by banks in Pakistan. The SBP had specified a
transitional period for implementing new standards which came to its end on December 31, 2019. The disclosures below have been
prepared on the basis of these new guidelines. The comparative information is as per requirements which were applicable last year.

Meezan Bank Annual Report 2022 299

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

46.1 Capital structure

Under Basel III framework, the Holding Company's regulatory capital has been analysed into two tiers as
follows:
- Tier 1 capital (going concern capital) which is sub divided into:

a) Common Equity Tier 1 (CET1), which includes fully paid up capital, balance in share premium account,
statutory and general reserves, and un-appropriated profits (net of losses), after regulatory deductions
for book value of intangibles, reciprocal cross holdings and deficit on revaluation of AFS investments.

b) Additional Tier 1 capital (AT1), which includes perpetual, unsecured, subordinated, non-cumulative and
contingent convertible Sukuk instrument issued by the Holding Company.

- Tier II capital, which includes sub-ordinated sukuk, general provisions for loan losses (upto a maximum
of 1.25% of credit risk weighted assets) .

Banking operations are categorised in either the trading book or the banking book and risk weighted
assets are determined according to the specified requirements that seek to reflect the varying levels of risk
attached to assets and off balance sheet exposures.

The required capital adequacy ratio is achieved by the Holding Company through:

(a) Adequate level of paid up capital;

(b) Adequate risk profile of asset mix;
(c) Ensuring better recovery management; and
(d) Maintaining acceptable profit margins.

46.2 Capital adequacy ratio

The main objective of the capital management is to improve the financial position and strengthen the
statement of financial position of the Group to support the growth in business, provide protection to
depositors and enhance shareholders' value.

The Holding Company's Board and the management is committed to maintaining a sound balance
between depositors' liability and shareholders' funds so that optimal capital / debt ratio is maintained. The
optimal capital / debt ratio will provide reasonable assurance to depositor's about safety and security of
their funds and at the same time provide impetus to the management to invest their depositors’ funds into
profitable ventures without compromising the risk profile of the Holding Company. The capital requirement
of the Holding Company has been determined based on the projected growth plan to be achieved in the
next 3 years in all areas of business operations. Further, it also takes into account a road map for capital
enhancement as directed by the State Bank of Pakistan vide its various circulars issued from time to time.

The Holding Company prepares Annual Budget and Three Year Plan for purpose of the growth map and
future direction. Bottom up approach is used to prepare annual budget and detailed deliberations are held
while preparing Three Year Plan. The growth prospects takes into consideration prevailing economic and
political factors in Pakistan and abroad.

In implementing current capital requirements the State Bank of Pakistan requires banks to maintain
minimum Capital Adequacy Ratio (CAR) of 11.50% as of December 31, 2022 whereas CAR stood at
18.64% at the year ended December 31, 2022.

The Group calculates capital adequacy ratio for credit risk, market risk and operational risk based upon
requirements under Basel Accord as per guidelines issued by the State Bank of Pakistan from time to time
in this regard.

Sensitivity and stress testing of the Holding Company under different risk factors namely profit rate,
non-performing financings, equity price and foreign exchange rate depicts that the Bank’s capital
adequacy ratio is above the regulatory requirements.

The Group has taken into account credit risk, market risk and operational risk when planning its assets.

300 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

47 CAPITAL ADEQUACY, LEVERAGE RATIO & LIQUIDITY REQUIREMENTS

2022 2021
Rupees in ‘000

Minimum Capital Requirement (MCR)

Paid-up capital (net of losses) 17,896,243 16,269,312

Capital Adequacy Ratio

Eligible Common Equity Tier 1 (CET 1) Capital 115,968,337 83,697,220
Eligible Additional Tier 1 (ADT 1) Capital 7,027,796 6,981,089
Total Eligible Tier 1 Capital 122,996,133 90,678,309
Eligible Tier 2 Capital 21,007,720 23,962,002
Total Eligible Capital (Tier 1 + Tier 2) 144,003,853 114,640,311

Risk weighted assets (RWAs):

Credit Risk 557,711,426 471,199,111
Market Risk 26,213,803 28,183,530
Operational Risk 188,426,624 135,565,726
Total 772,351,853 634,948,367

Common Equity Tier 1 Capital Adequacy ratio 15.01% 13.18%

Tier 1 Capital Adequacy Ratio 15.92% 14.28%
Total Capital Adequacy Ratio 18.64% 18.06%

Leverage ratio (LR):

Tier-1 Capital 122,996,133 90,678,309
Total Exposures 2,991,568,828 2,303,517,674
Leverage Ratio 4.11% 3.94%

47.1 In the latest assessment carried out by the SBP under the Framework for Domestic Systemically Important Banks (D-SIBs)
introduced vide BPRD Circular No.04 of 2018 dated April 13, 2018, the Bank has been identified as a sample D-SIB. In
line with the framework, the Bank is required to meet the HLA capital surcharge, in the form of additional Common Equity
Tier 1 (CET-1) capital of 0.5% on a standalone and consolidated basis till June 30, 2023.

Full disclosure on Capital Adequacy, Leverage Ratio & Liquidity Requirements prepared as per SBP instructions is
available at https:// www.meezanbank.com

48 RISK MANAGEMENT

During 2022, Pakistan witnessed significant economic headwinds. Rising inflation, increasing fuel prices, depleting foreign exchange
reserves, massive devaluation of the Pakistani rupee, political instability, increasing interest rates, and high budget deficit made the
year more challenging. In this backdrop, Fitch, Moody's and S&P Global lowered the country’s sovereign credit rating. In June 2022,
Pakistan was hit with a natural catastrophe in the shape of worst ever floods in the history of the country. The floods resulted in millions
of people being displaced and severe damage to both crops and livestock. Additionally, international commodity prices also remained
elevated through the year. The headline inflation increased significantly touching a multi-year high of 27.32% in August. During the
year, SBP increased the benchmark interest rate by a cumulative 625 bps to 16%. This steep increase was aimed at reducing
aggregate demand in the economy and also to counter high inflation. This led to a steep uptick in domestic food prices.

The Group is regularly conducting assessments of the credit portfolio, with robust post disbursement credit review mechanism to
identify borrowers most likely to be affected in the challenging business and economic environment. Group is confident that it has
more than sufficient risk bearing capacity to with stand these difficult times.

The wide variety of the Group’s business activities require the Group to identify, assess, measure, aggregate and manage risks
effectively which are constantly evolving as the business activities expand in response to the Group's strategy and growth. The Group
manages the risk through a framework of risk management encompassing policies and procedures, organisational structures, risk
measurement and monitoring processes and techniques that are closely aligned with business activities of the Group.

Meezan Bank Annual Report 2022 301

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Risk management principles

- The Board of Directors (the Board) provides overall risk management supervision. The Board Risk Management
Committee regularly reviews the Group's risk profile.

- The Group has set up objectives and policies to manage the risks that arise in connection with the Group’s activities. The
risk management framework and policies of the Group are guided by specific objectives to ensure that comprehensive
and adequate risk management tools and techniques are established to mitigate the salient risk elements in the
operations of the Group.

- The establishment of the overall financial risk management objectives is consistent and in tandem with the strategy to
create and enhance shareholders’ value, whilst guided by a prudent risk management framework.

- The structure of risk management function is closely aligned with the organisational structure of the Group.

- The risk management function is independent of the Group’s operations.

Risk management organisation

The Board Risk Management Committee comprises of four non-executive directors. One of the non-executive directors of the
Holding Company chairs the Risk Management Committee.

Specialized Committees comprising of Senior Management team members perform their functions in line with the strategic
direction set by the Board while ensuring that there is optimal balance between risk reward trade-off. The Committees include:

Name of the sub-committee Chaired by

Credit Risk Management Committee (CRMC) President & CEO of the Holding Company
Asset and Liability Management Committee (ALCO) President & CEO of the Holding Company
Compliance & Operational Risk Management Committee (CORMC) President & CEO of the Holding Company

CRMC is responsible to oversee credit risk activities on Group wide basis while ensuring compliance with regulatory
requirements and internal policies. Its responsibilities also include to provide support and guide front lines in managing their
businesses, perform finance portfolio review, establish financing standards and benchmarks, maintain adequate industry
diversification and decide upon provisioning. It is also required to delegate financing approving powers & prudential limits on
large financing exposures. Credit Committee, a sub-committee of CRMC is the highest level body for approval of financing
transactions.

ALCO is responsible for reviewing the Asset and Liability structure of the Holding Company, monitoring the liquidity situation and
overall changing market scenario. Market and Liquidity risks are examined based on stress testing exercises and gap analysis.
ALCO is also responsible for monitoring policy rate movements and taking necessary steps across various products to ensure
that the overall profitability of the Group is maximized without compromising on risk appetite. ALCO also ensures that the
Group’s overall operations are fully compliant with regulatory framework for the business as provided by the State Bank of
Pakistan.

The CORMC is responsible for overseeing compliance risk by reviewing the adequacy of controls in place to meet regulatory
requirements. The Committee is responsible for promoting compliance culture in the Group, facilitate in implementation of
Compliance Program and oversee Money Laundering and Financing Terrorism and Proliferation risk. In addition, the Committee
also oversees Operational Risk Framework by ensuring that policies and procedures are in place in all Key risk areas and by
reviewing Key Risk Indicators. The Committee also monitors level of compliance of major unresolved and recurring issues
pointed out in the Internal Audit, Shariah Audit and SBP Inspection Report.

The Group’s risk management, compliance, internal audit and legal departments support the risk management function. The role
of the risk management department is to assess, measure, identify risks and established risk mitigants through a detailed policy
and monitoring framework. The compliance department ensures that all the directives and guidelines issued by the SBP are
being complied with in order to mitigate the compliance risk. The internal audit and BRR department reviews the compliance of
internal control procedures with internal and regulatory standards.

302 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

48.1 Credit risk

Credit risk arises from the potential that an obligor is either unwilling to perform on an obligation or its ability to perform such
obligations is impaired resulting in economic loss to the Group. This credit risk arises mainly from both direct financing activities
as well as contingent liabilities.

Credit risk management and structure

The Group manages credit risk by effective credit appraisal mechanism, approving and reviewing authorities, limit structures,
internal credit risk rating system, collateral management and post disbursement monitoring so as to ensure prudent financing
activities and sound financing portfolio under the umbrella of a comprehensive Financing Policy approved by the Board of
Directors. A comprehensive financing procedural manual approved by the senior management is also in place. The Group also
ensures diversification of its portfolio into different business segments, products and sectors. Further, to avoid risk
concentration; counterparty limits, counterparty group limits and industry concentration limits are also established, monitored
and assessed in the light of changing counterparty and market conditions.

Watchlist procedure is also functioning which identifies financings with early warning indicators in respect of clients having the
potential to become non performing. The risk management function also monitors the non-performing financing portfolio of the
Group and reports all significant matters to the Board Risk Management Committee.

The Group takes into account the risk mitigating effect of the eligible collaterals for the calculation of capital requirement for
credit risk. Use of Credit Risk Mitigation (CRM) resulted in the total credit risk weighted amount of Rs 557,711.43 million (2021:
Rs 471,199.11 million).

Thus, use of CRM resulted in capital adequacy ratio of the Group of 18.64%.

48.1.1 Segmental information

48.1.1.1 Due from financial institutions
Credit risk by public / private sector
Non-performing
Gross amount due from
amount due from Provision held
financial institutions
financial institution
2022 2021 2022 2021 2022 2021

Rupees in ‘000

Public / Government - 112,003,699 - - - -

Private 35,005,865 126,439,504 41,566 41,566 41,566 41,566
35,005,865 238,443,203 41,566 41,566 41,566 41,566

48.1.1.2 Investment in Sukuk and government securities

Credit risk by Industry sector

Gross Investments Non-performing
Provision held
Investments
2022 2021 2022 2021 2022 2021

Rupees in ‘000

Automobile and transportation equipment 1,132,254 883,640 - - - -

Chemical and Pharmaceuticals 25,892 25,892 25,892 25,892 25,892 25,892
Construction and allied industries 333,333 416,667 - - - -
Steel and allied industries 868,750 1,100,000 - - - -
Federal Government Securities 1,142,799,896 464,840,152 - - - -
Financial 3,347,228 2,572,735 - - - -
Foreign Government Securities 5,314,367 7,684,473 - - - -
Oil and Gas - 2,950,000 - - - -
Power (electricity) 123,346,202 124,928,266 - - - -
Textile 138,014 180,871 2,300 52,300 2,300 52,300
1,277,305,936 605,582,696 28,192 78,192 28,192 78,192

Meezan Bank Annual Report 2022 303

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Credit risk by public / private sector

Non-performing
Gross investments Provision held
investments
2022 2021 2022 2021 2022 2021

Rupees in ‘000

Public / Government 1,270,458,795 599,222,886 - - - -

Private 6,847,141 6,359,810 28,192 78,192 28,192 78,192
1,277,305,936 605,582,696 28,192 78,192 28,192 78,192

48.1.1.3 Islamic financing and related assets

Credit risk by industry sector

Non-performing
Gross amounts Provision held
amounts
2022 2021 2022 2021 2022 2021

Rupees in ‘000
Agriculture, Food, Feed Mills, Poultry, Dairy,
Forestry and Fishing 208,073,442 162,478,493 2,270,930 3,395,929 2,270,930 3,165,623
Automobile and transportation equipment 26,072,313 20,719,843 157,974 74,585 82,035 73,158
Cement 19,353,573 13,825,174 - - - -
Chemical and Pharmaceuticals 36,842,695 16,542,558 22,036 22,036 22,036 22,036
Construction 17,530,547 11,737,462 1,367,291 1,278,654 1,283,436 1,278,654
Steel and allied industries 27,836,119 26,145,539 472,264 546,615 378,626 416,337
Plastic products manufacturer 4,539,985 3,994,568 - - - -
Electronics and electrical appliances 7,671,307 8,281,523 - - - -
Exports/Imports 1,522,101 2,016,709 195,415 205,493 195,415 205,493
Fertilizer 28,544,431 19,743,356 - 38,833 - 38,833
Financial 38,074,312 519,309 - - - -
Footwear and Leather garments 4,964,169 4,170,916 - 11,435 - 11,435
Individuals 73,475,097 66,641,606 1,011,366 933,318 534,783 370,138
Takaful / Insurance 654,300 627,760 - - - -
Mining and Quarrying 3,530,578 5,309,238 - - - -
Oil and Gas 85,322,255 44,479,242 4,364,340 4,224,503 4,337,347 4,206,236
Paper, board and packaging 21,977,610 10,388,890 123,435 231,306 121,420 229,291
Power (electricity) 88,675,574 97,775,783 788,840 817,480 788,840 817,480
Services 9,415,229 9,363,039 20,285 84,219 18,071 45,915
Sugar 21,257,976 12,612,935 - - - -
Textile 172,803,936 143,773,181 2,361,930 2,058,162 2,361,930 2,021,650
Transport, Storage and Communication 50,649,542 31,497,141 77,129 77,513 43,697 41,466
Wholesale and Retail Trade 63,955,770 61,749,684 337,378 338,625 317,430 287,482
Others 5,358,896 2,901,177 57,674 110,832 56,766 107,761
1,018,101,757 777,295,126 13,628,287 14,449,538 12,812,762 13,338,988

Credit risk by public / private sector

Non-performing
Gross amounts Provision held
amounts
2022 2021 2022 2021 2022 2021

Rupees in ‘000

Public / Government 318,259,246 237,476,802 - - - -

Private 699,842,511 539,818,324 13,628,287 14,449,538 12,812,762 13,338,988
1,018,101,757 777,295,126 13,628,287 14,449,538 12,812,762 13,338,988

304
000 Meezan Bank Annual Report 2022
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

48.1.1.4 Contingencies and Commitments

Credit risk by industry sector

2022 2021
Rupees in ‘000
Agriculture, Food, Feed Mills, Poultry, Dairy,
Forestry and Fishing 98,417,326 71,453,206
Automobile and transportation equipment 43,510,460 27,560,120
Cement 24,368,223 14,392,244
Chemical and Pharmaceuticals 37,636,764 36,754,088
Construction 32,544,198 39,002,386
Steel and allied industries 41,774,472 32,541,776
Plastic products manufacturer 7,488,719 6,924,962
Electronics and electrical appliances 16,899,349 11,565,939
Exports / Imports 5,531,431 3,965,076
Fertilizer 18,124,795 16,005,439
Financial 266,595,819 161,294,310
Footwear and Leather garments 7,538,339 5,934,844
Individuals 336,981 7,687,462
Takaful / Insurance 374,450 263,952
Mining and Quarrying 12,314,638 5,654,762
Oil and Gas 92,706,034 41,796,492
Paper, board and packaging 22,947,107 14,058,322
Power (electricity) 146,814,179 76,128,620
Services 66,587,092 63,951,481
Sugar 22,340,850 25,102,487
Textile 217,879,460 214,583,093
Transport, Storage and Communication 23,137,093 23,854,641
Wholesale and Retail Trade 75,625,125 22,649,002
Others 15,671,523 11,116,055
1,297,164,427 934,240,759
Credit risk by public / private sector

Public / Government 271,179,069 92,770,090

Private 1,025,985,358 841,470,669
1,297,164,427 934,240,759

48.1.1.5 Concentration of Top 10 exposures

Top 10 exposures on the basis of total (funded and non-funded) exposures aggregated to Rs 408,589 million (2021:
Rs 301,905 million) as follows:

2022 2021
Rupees in ‘000

Funded Exposure 331,735,662 249,871,722

Non Funded Exposure 76,853,260 52,033,362
Total Exposure 408,588,922 301,905,084

The sanctioned limits against these top 10 exposures aggregated to Rs 518,795 million (2021: Rs 324,895
million). None of the exposure against these top 10 customers is in classified stage.

Meezan Bank Annual Report 2022 305

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

48.1.1.6 Islamic Financings and related assets - Province/Region-wise Disbursement & Utilization

2022
Utilization
Disbursements
Punjab Sindh KPK including AJK including
Balochistan Islamabad
Province / Region FATA Gilgit-Baltistan
Rupees in ‘000
Punjab 664,533,491 664,533,491 - - - - -
Sindh 770,568,389 - 770,568,389 - - - -
KPK including FATA 9,151,023 - - 9,151,023 - - -
Balochistan 2,169,900 - - - 2,169,900 - -
Islamabad 137,770,908 - - - - 137,770,908 -
AJK including
Gilgit-Baltistan 399,082 - - - - - 399,082
Total 1,584,592,793 664,533,491 770,568,389 9,151,023 2,169,900 137,770,908 399,082

2021
Utilization
Disbursements
Punjab Sindh KPK including AJK including
Balochistan Islamabad
Province / Region FATA Gilgit-Baltistan
Rupees in ‘000
Punjab 442,069,392 442,069,392 - - - - -
Sindh 409,068,056 - 409,068,056 - - - -
KPK including FATA 5,683,347 - - 5,683,347 - - -
Balochistan 1,186,334 - - - 1,186,334 - -
Islamabad 41,009,443 - - - - 41,009,443 -
AJK including
Gilgit-Baltistan 246,833 - - - - - 246,833
Total 899,263,405 442,069,392 409,068,056 5,683,347 1,186,334 41,009,443 246,833

48.1.2 Credit Risk - General Disclosures

The Group has adopted Standardised Approach of Basel Accord for calculation of capital charge against credit risk.
Therefore, risk weights for the credit risk related assets (on-balance sheet and off-balance sheet - market and non market
related exposures) are assigned on basis of standardised approach.

The Group is committed to further strengthen its risk management framework which will enable the Group to move ahead
for adopting Foundation Internal Ratings Based (IRB) approach of Basel II. Meanwhile, none of the Group's assets class
is subject to the Foundation IRB or advanced IRB approaches.

48.1.2.1 Credit Risk: Disclosures for portfolio subject to the Standardised Approach

Under standardised approach the capital requirement is based on the credit rating assigned to the counterparties
by the External Credit Assessment Institutions (ECAIs) duly recognised by the SBP for capital adequacy
purposes. In this connection, the Group utilises the credit ratings assigned by ECAIs and has recognised
agencies such as PACRA (Pakistan Credit Rating Agency) and VIS Credit Rating Company which are also
recognised by the SBP.

In case of foreign currency exposures against banks, ratings assigned by S&P, Fitch and Moody’s have been
applied. In case of exposure against banks, some banks have multiple ratings but those ratings do not result
in mapping with different risk weights.

Types of Exposure and ECAI’s used

2022

Standard &
Exposures VIS PACRA Fitch Moody’s
Poors (S&P)

Corporate √ √ √ √ √

Banks √ √ √ √ √

Public Sector Entities √ √ - - -

306 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Use of ECAI Ratings

The Group prefers solicited ratings over unsolicited ratings at all times, owing to the greater degree of accuracy (in general) associated
with solicited ratings. Unsolicited ratings may only be used in cases where a solicited rating is not available.

Mapping to SBP Rating Grades

The alignment of the Alphanumerical scale of each agency used with risk buckets is as per instructions laid down by SBP under
Basel III requirements.

48.1.2.2 Credit exposures subject to standardised approach

2022 2021

On-balance Amount Deduction Amount Deduction

Credit Risk Net amount Credit Risk Net amount
sheet Exposures Outstanding Outstanding
Management Management

Rupees in ‘000
Banks
20% 83,574,754 59,789,988 23,784,766 256,111,929 192,460,283 63,651,646
50% 1,692,525 - 1,692,525 255,474 - 255,474
100% 1,082,999 - 1,082,999 807,999 - 807,999
150% 63,662 - 63,662 53,321 - 53,321
Unrated 1,572,546 - 1,572,546 298,108 - 298,108

Sovereigns
0% 1,255,202,233 50,766,630 1,204,435,603 644,065,162 50,351,600 593,713,562
20% 1,340,122 - 1,340,122 2,779,262 - 2,779,262
50% 2,259,452 - 2,259,452 2,828,610 - 2,828,610
100% - - - 1,624,771 - 1,624,771
150% 8,460,046 - 8,460,046 - - -

Public Sector
entities
20% 44,501,577 14,769,333 29,732,244 19,201,818 16,463,593 2,738,225
50% 8,875,000 7,124,600 1,750,400 - - -
Unrated (50%) 311,881,517 283,200,020 28,681,497 291,758,453 263,798,926 27,959,527

Corporate
20% 218,225,099 3,147,228 215,077,871 140,474,238 1,626,445 138,847,793
50% 165,544,908 1,225,652 164,319,256 123,360,922 47,298 123,313,624
100% 7,212,656 - 7,212,656 5,196,338 - 5,196,338
Unrated 1 (100%) 130,349,482 9,753,949 120,595,533 103,327,444 7,927,692 95,399,752
Unrated 2 (125%) 74,547,481 12,564,932 61,982,549 85,647,398 13,186,425 72,460,973

Retails
75% 73,405,947 15,669,516 57,736,431 70,160,902 15,910,991 54,249,911

Residential
Mortgage
35% 20,728,463 - 20,728,463 19,193,855 - 19,193,855
25% 6,371,277 2,548,049 3,823,228 2,904,311 1,160,239 1,744,072

Past Due
50% 256,255 109,883 146,372 138,686 88,442 50,244
100% 694,837 21,672 673,165 937,088 30,727 906,361
150% 41,733 12,253 29,480 57,362 15,293 42,069

Total 2,417,884,571 460,703,705 1,957,180,866 1,771,183,451 563,067,954 1,208,115,497

Meezan Bank Annual Report 2022 307

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

48.1.2.3 Credit Risk: Disclosures with respect to Credit risk mitigation for Standardised approach and IRB

The Group obtains capital relief for both its on-balance and off-balance sheet non-market related exposures
by using simple approach for credit risk mitigation (CRM). Off-balance sheet items under the simplified
standardised approach are converted into credit exposure equivalents through the use of credit conversion
factors. Under the standardised approach the Group has taken advantage of the cash collaterals available
with the Group in the form of security deposits, cash margins, certificates of islamic investment, monthly
mudaraba certificate, saving accounts, guarantees, shares and Government securities.

Valuation and management of eligible collaterals for CRM is being done in accordance with the conditions
laid down by the State Bank of Pakistan. Eligible collaterals for CRM purposes do not expose the Group
to price risk as they are in the form of cash/cash equivalent collaterals. Since eligible collaterals for CRM
purposes are all in the form of cash/cash equivalent collaterals, they generally do not pose risk to the Group
in terms of change in their valuation due to changes in the market condition.

The credit equivalent amount of an off-balance sheet market related foreign exchange contracts are
determined by using the current exposure (mark to market) method.

The total benefit of Rs 460,703.70 million was availed through CRM against total on-balance sheet exposure
of Rs 2,578,068.91 million. Under off-balance sheet, total benefit of Rs 25,942.35 million was availed by the
Group through CRM against total off-balance sheet, non-market related exposure of Rs 1,053,302.06 million.
In the year 2022, total CRM benefit was Rs 486,646.053 million as against amount of Rs 577,988.895 million
in year 2021.

48.1.2.4 Credit concentration risk

Credit concentration risk arises mainly due to concentration of exposures under various categories viz.,
industry, geography and single / group borrower obligor. Within credit portfolio, as a prudential measure
aimed at better risk management and avoidance of concentration of risks, the SBP has prescribed regulatory
limits on banks’ maximum exposure to single and group obligors. Within the SBP limits, the Group has
further defined limits to avoid excessive concentration of portfolio.

48.2 Market risk

Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market
prices. Market risk reflects yield rate risk, currency risk and other price risks. Group could be adversely affected by
movements in market rates or prices such as benchmark rates, deposit rates, foreign exchange rates, equity prices
and market conditions resulting in a loss to earnings and capital.

48.2.1 Equity position in the banking and trading book

The Group classifies and values its investment portfolio in accordance with the directives of SBP as stated
in note 6.4 to these consolidated financial statements.

Trading book

Held for trading and available for sale securities with trading intent;

- They are marked to market daily; and

- Any valuation difference is charged / credited to the profit and loss account in case of held for trading
securities and to surplus on revaluation of investments - net of tax under equity in case of available
for sale securities.

Banking book

Assets outside trading book are part of the banking book. These may include assets classified as available
for sale and held to maturity investments.

308 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

48.2.2 Balance sheet split by trading and banking books

2022 2021
Banking Trading Banking Trading
Book Book Total Book Book Total

Rupees in ‘000
Cash and balances with
treasury banks 117,743,672 - 117,743,672 170,501,306 - 170,501,306
Balances with other banks 13,710,753 - 13,710,753 16,465,169 - 16,465,169
Due from financial institutions 34,964,299 - 34,964,299 238,401,637 - 238,401,637
Investments - net 1,275,033,945 12,282,478 1,287,316,423 610,209,006 14,123,875 624,332,881
Islamic financings and
related assets - net 995,508,354 - 995,508,354 758,086,120 - 758,086,120
Fixed assets 40,624,658 - 40,624,658 34,185,975 - 34,185,975
Intangible assets 1,873,518 - 1,873,518 1,505,581 - 1,505,581
Deferred tax asset 4,439,835 - 4,439,835 - - -
Other assets - net 85,719,066 - 85,719,066 64,180,378 - 64,180,378
2,569,618,100 12,282,478 2,581,900,578 1,893,535,172 14,123,875 1,907,659,047

The Group uses a number of methods to monitor and control market risk exposures. One of the major tools used by the Group
to monitor and limit market risk is Value at Risk (VaR). VaR is defined as the estimated loss that will arise on a position or a portfolio
over a particular (holding) period of time from an adverse market movement with a specific probability (confidence level). The VaR
model used by the Group takes 99% confidence level and assumes a 1 to 10 days holding period whilst using the historical
simulation taking the data of the last three years. Daily VaR figures are circulated to the senior management and regular summaries
are reported in ALCO meetings.

The VaR reports are complemented by various other position and sensitivity limit structures, including stress, sensitivity, gap and
scenario analysis. The capital charge for market risk has been calculated by using Standardized Approach.

48.2.3 Foreign exchange risk

The foreign exchange risk is defined as the current or prospective risk to earnings and capital arising from adverse movements
in currency exchange rates. It refers to the impact of adverse movement in currency exchange rates on the value of open foreign
currency position. The objectives of the foreign exchange risk management is to minimise the adverse impact of foreign exchange
rate movements on the assets and liabilities mismatch (tenor and position) and maximise their earnings.

Whenever a commercial bank deals in foreign currency, it is exposed to risk of exchange rate. The Group's assets and liabilities
in foreign currencies give rise to foreign exchange risk which has to be managed by the Group; this risk is mitigated by using
different hedging techniques. Hedging is a way used by a Group to eliminate or minimize its risk exposures. Hedging can be done
using different ways like gap analysis, hedging (forwards), assigning limits in terms of amount, tenor, currency, product, countries,
counterparties etc. The Group limits its currency exposure to the extent of statutory net open position prescribed by the SBP
except in the cases where exemption is provided by the SBP. Foreign exchange open and mismatch positions are controlled
through close monitoring and are marked to market on a daily basis.

The analysis below represents the concentration of the Group's foreign currency risk for on and off balance sheet financial
instruments:

Meezan Bank Annual Report 2022 309

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

The analysis below represents the concentration of the Bank's foreign currency risk for on and off balance sheet financial
instruments:

2022
Assets Liabilities Off-balance Net foreign
sheet items currency
exposure
Rupees in ‘000

Pakistan Rupees 2,496,389,581 2,338,543,126 (35,433,722) 122,412,733

United States Dollars 81,666,765 110,417,824 25,453,007 (3,298,052)

Great Britain Pounds 955,161 7,493,793 6,546,533 7,901
Japanese Yen 142,804 88,927 (59,976) (6,099)
Euro 1,474,874 5,437,092 4,019,733 57,515
Singapore Dollars 18,118 - (6,743) 11,375
Australian Dollars 257,134 132 (253,346) 3,656
Canadian Dollars 52,441 976 (33,417) 18,048
United Arab Emirates Dirham 27,242 547 (36,991) (10,296)
Swiss Francs 58,950 - (51,456) 7,494
Saudi Riyal 26,006 - - 26,006
Swedish Krona 5,390 - (6,496) (1,106)
Malaysian Ringgit 3,208 - - 3,208
Hong Kong Dollar 39,714 23 (34,848) 4,843
Thailand Bhat 837 - - 837
Norwegian Krone 10,157 - (4,581) 5,576
Danish Krone 11,968 - - 11,968
Chinese Offshore Spot - - - -
Chinese Yuan 760,228 783,448 (97,697) (120,917)
Total foreign currency exposure 85,510,997 124,222,762 35,433,722 (3,278,043)
Total currency exposure 2,581,900,578 2,462,765,888 - 119,134,690

2021
Assets Liabilities Off-balance Net foreign
sheet items currency
exposure
Rupees in ‘000

Pakistan Rupees 1,831,271,828 1,709,220,233 (28,900,423) 93,151,172

United States Dollars 70,850,151 95,296,400 21,587,004 (2,859,245)

Great Britain Pounds 1,694,459 6,837,618 5,155,365 12,206
Japanese Yen 36,322 72,666 24,528 (11,816)
Euro 2,045,814 4,821,334 2,746,479 (29,041)
Singapore Dollars 6,532 - - 6,532
Australian Dollars 283,338 2,082 (280,530) 726
Canadian Dollars 9,457 1,105 - 8,352
United Arab Emirates Dirham 146,900 37,311 (48,056) 61,533
Swiss Francs 77,144 55,712 (8,687) 12,745
Saudi Riyal 27,791 - - 27,791
Swedish Krona 12,058 - - 12,058
Malaysian Ringgit 2,642 - - 2,642
Hong kong Dollar 4,519 29 - 4,490
Thailand Bhat 1,624 - - 1,624
Norwegian Krone 7,178 - - 7,178
Danish Krone 16,712 - - 16,712
Chinese Offshore Spot - - - -
Chinese Yuan 1,164,578 872,945 (275,680) 15,953
Total foreign currency exposure 76,387,219 107,997,202 28,900,423 (2,709,560)
Total currency exposure 1,907,659,047 1,817,217,435 - 90,441,612

310 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2022 2021
Banking Trading Banking Trading
book book book book
Rupees in ‘000
Impact of 1% change in foreign exchange
rates

- Consolidated Profit and Loss Account - 17,526 - 17,997

- Consolidated Other Comprehensive
Income - - - -

48.2.4 Equity position risk

Equity position risk is defined as the risk to earnings or capital arising from adverse changes in value of equity portfolios
of Group. The limits assigned to various individual scripts and total portfolio investments are fixed as per the guidelines
issued by the SBP. The Group invests in only Shariah compliant equities as advised by the Resident Shariah Board
Member.

2022 2021
Banking Trading Banking Trading
book book book book

Rupees in ‘000
Impact of 5% change in equity prices

- Consolidated Profit and Loss Account - 123,028 - 148,067

- Consolidated Other Comprehensive Income - 276,149 - 265,908

48.2.5 Yield / profit rate risk

Yield risk occurs when there is a mismatch between positions, which are subject to profit rate alterations within
a particular time period. The Group’s financing, placement and investment activities give rise to profit rate risk.
The effect of changes in profit rate is on the Group’s income, and resultant impact is on the Group’s net worth.

Profit rate risk is primarily managed by monitoring the rate sensitive gaps and by having the pre-approved limits
for repricing buckets. ALCO is the supervising body for adherence with these, complemented by the monitoring
of sensitivity of the Group’s financial assets and liabilities to various scenarios.

The Group estimates changes in the market value of equity due to changes in the yield rates on on-balance sheet
positions and their impact on capital adequacy ratio by conducting stress tests. It also assesses risk on earnings
of the Group by various shocks.

2022 2021
Banking Trading Banking Trading
book book book book

Rupees in ‘000
Impact of 1% change in discount rates,
with other factors remaining constant, on:

- Consolidated Profit and Loss Account 4,447,366 - 3,437,737 -

- Consolidated Other Comprehensive Income - - - -

Meezan Bank Annual Report 2022 311

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

48.2.6 Mismatch of yield rate sensitive assets and liabilities

2022
Exposed to yield risk
Effective Total Non-yield
yield Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 bearing
rate Upto 1 to 3 to 6 months to 1 to 2 to 3 to 5 to 10 Above financial
% month months months year years years years years 10 years instruments
Rupees in ‘000
On-balance sheet financial instruments

Assets

Cash and balances with treasury banks - 117,743,672 - - - - - - - - - 117,743,672

Balances with other banks 0.87 13,710,753 4,825,629 - - - - - - - - 8,885,124
Due from financial institutions 11.25 34,964,299 - - - - - 34,964,299 - - - -
Investments 14.52 1,287,316,423 53,732,131 94,242,964 868,978,721 - 2,005,914 20,459,704 235,604,122 - - 12,292,867
Islamic financing and related assets 13.96 995,508,354 345,002,703 271,683,454 179,853,354 34,107,321 32,096,915 18,916,857 40,236,414 60,119,468 7,616,509 5,875,359
Other assets - 83,538,015 - - - - - - - - - 83,538,015
2,532,781,516 403,560,463 365,926,418 1,048,832,075 34,107,321 34,102,829 74,340,860 275,840,536 60,119,468 7,616,509 228,335,037
Liabilities

Bills payable - 40,175,122 - - - - - - - - - 40,175,122

Due to financial institutions 13.89 573,326,439 275,653,428 204,300,004 23,513,500 46,047 518,145 6,930,569 4,057,809 57,375,033 - 931,904
Deposits and other accounts 3.71 1,658,469,588 834,360,728 4,668,681 - - - - - - - 819,440,179
Sub-ordinated Sukuk 16.75 20,990,000 11,000,000 - 9,990,000 - - - - - - -
Other liabilities - 145,721,198 - - - - - - - - - 145,721,198
2,438,682,347 1,121,014,156 208,968,685 33,503,500 46,047 518,145 6,930,569 4,057,809 57,375,033 - 1,006,268,403
On-balance sheet gap 94,099,169 (717,453,693) 156,957,733 1,015,328,575 34,061,274 33,584,684 67,410,291 271,782,727 2,744,435 7,616,509 (777,933,366)

Non financial assets

- Fixed assets 40,624,658
- Intangible assets 1,873,518
- Deferred tax asset 4,439,835
- Other assets 2,181,051
49,119,062
Non financial liabilities
- Other liabilities 24,083,541
- Deferred tax liabilities -
24,083,541
Total net assets 119,134,690

Off-balance sheet financial instruments

Guarantees 56,485,801 - - - - - - - - - 56,485,801
Documentary letter of credits 221,689,496 - - - - - - - - - 221,689,496
Forward purchase of foreign exchange contracts 139,648,096 - - - - - - - - - 139,648,096
Forward sale of foreign exchange contracts (104,214,374) - - - - - - - - - (104,214,374)
Off-balance sheet gap 313,609,019 - - - - - - - - - 313,609,019

Total yield risk rate sensitivity gap (717,453,693) 156,957,733 1,015,328,575 34,061,274 33,584,684 67,410,291 271,782,727 2,744,435 7,616,509 (464,324,347)

Cumulative yield risk rate sensitivity gap (717,453,693) (560,495,960) 454,832,615 488,893,889 522,478,573 589,888,864 861,671,591 864,416,026 872,032,535 407,708,188

2021
Exposed to yield risk
Effective Total Non-yield
yield Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5 bearing
rate Upto 1 to 3 to 6 months to 1 to 2 to 3 to 5 to 10 Above financial
% month months months year years years years years 10 years instruments
Rupees in ‘000
On-balance sheet financial instruments

Assets
Cash and balances with treasury banks - 170,501,306 - - - - - - - - - 170,501,306
Balances with other banks 0.02 16,465,169 287,660 - - - - - - - - 16,177,509
Due from financial institutions 7.52 238,401,637 21,858,347 24,458,492 113,251,970 43,868,529 - - 34,964,299 - - -
Investments 9.13 624,332,881 54,282,173 127,373,150 295,240,180 904,146 26,851,491 1,678,453 102,017,553 1,851,474 - 14,134,261
Islamic financing and related assets 9.28 758,086,120 197,161,911 259,970,790 141,996,581 19,491,897 10,436,579 17,798,822 32,792,056 67,931,119 - 10,506,365
Other assets - 61,881,125 - - - - - - - - - 61,881,125
1,869,668,238 273,590,091 411,802,432 550,488,731 64,264,572 37,288,070 19,477,275 169,773,908 69,782,593 - 273,200,566
Liabilities
Bills payable - 36,141,378 - - - - - - - - - 36,141,378
Due to financial institutions 5.78 220,414,234 121,110,629 31,267,638 20,301,496 2,235,253 111,303 1,062,131 4,261,659 39,620,301 - 443,824
Deposits and other accounts 2.66 1,455,871,080 791,004,367 762,073 177,300 - - - - - - 663,927,340
Sub-ordinated Sukuk 10.40 20,990,000 20,990,000 - - - - - - - - -
Other liabilities - 61,362,539 - - - - - - - - - 61,362,539
On-balance sheet gap 1,794,779,231 933,104,996 32,029,711 20,478,796 2,235,253 111,303 1,062,131 4,261,659 39,620,301 - 761,875,081
74,889,007 (659,514,905) 379,772,721 530,009,935 62,029,319 37,176,767 18,415,144 165,512,249 30,162,292 - (488,674,515)

Non financial assets

- Fixed assets 34,185,975
- Intangible assets 1,505,581
- Deferred tax asset -
- Other assets 2,299,253
37,990,809
Non financial liabilities
- Other liabilities 22,366,015
- Deferred tax liabilities 72,189
22,438,204
Total net assets 90,441,612

Off-balance sheet financial instruments

Guarantees 45,072,765 - - - - - - - - - 45,072,765
Documentary letter of credits 175,227,624 - - - - - - - - - 175,227,624
Forward purchase of foreign exchange contracts 114,757,851 - - - - - - - - - 114,757,851
Forward sale of foreign exchange contracts (85,857,428) - - - - - - - - - (85,857,428)
Off-balance sheet gap 249,200,812 - - - - - - - - - 249,200,812

Total yield risk rate sensitivity gap (659,514,905) 379,772,721 530,009,935 62,029,319 37,176,767 18,415,144 165,512,249 30,162,292 - (239,473,703)

Cumulative yield risk rate sensitivity gap (659,514,905) (279,742,184) 250,267,751 312,297,070 349,473,837 367,888,981 533,401,230 563,563,522 563,563,522 324,089,819

The Group takes on exposure to the effects of fluctuations in the prevailing levels of market profit rates on both its fair value and cash flow risks.
Profit margins may increase as a result of such changes but may reduce to losses in the event that unexpected movement arise.

312 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

48.3 Liquidity risk

Liquidity risk is the potential for loss to the Group arising from either its inability to meet its obligations or to fund
increases in assets as they fall due without incurring an unacceptable cost.

The Holding Company’s Board of Directors sets the Group’s policy for managing liquidity risk and entrusts
accountability for supervision of the implementation of this strategy to senior management. Senior management
exercises its responsibilities for managing market & liquidity risk through various committees including the Asset
& Liability Management Committee (ALCO). Treasury department manages the Group’s liquidity position on daily
basis. The Group’s main approach of managing the liquidity risk is to make certain that it will always have adequate
liquidity to meet its liabilities when they are due in normal and stressed scenarios without incurring any untoward
expenditure or risking reputational harm. ALCO monitors the maintenance of liquidity ratios, depositor's concentration
both in terms of the overall funding mix and avoidance of undue reliance on large individual deposits. Regular
liquidity stress testing is conducted under a variety of scenarios covering both normal and more severe market
conditions.

Meezan Bank Annual Report 2022 313

314
48.3.1 Maturities of Assets and Liabilities - based on contractual maturity of the assets and liabilities of the Group

2022

Meezan Bank Annual Report 2022

Total Upto Over 1 to 7 Over 7 to 14 Over 14 days Over 1 to 2 Over 2 to 3 Over 3 to 6 Over 6 to 9 Over 9 months Over 1 to 2 Over 2 to 3 Over 3 to 5 Over 5
1 Day Days Days to 1 Month Months Months Months Months to 1 Year years years years years

Rupees in ‘000

Assets
Cash and balances with treasury banks 117,743,672 117,743,672 - - - - - - - - - - - -
Balances with other banks 13,710,753 13,710,753 - - - - - - - - - - - -
Due from financial institutions 34,964,299 - - - - - - - - - - 34,964,299 - -
Investments 1,287,316,423 430,510 2,335,560 2,749,820 8,455,672 7,940,803 2,281,694 24,299,991 309,464 763,631 4,298,970 218,041,978 892,153,122 123,255,208
For the year ended December 31, 2022

Islamic financing and related assets 995,508,354 288,980,031 8,005,870 15,154,782 25,186,893 81,025,104 38,107,478 143,955,527 25,186,148 12,913,739 73,911,982 57,797,039 84,192,273 141,091,488
Fixed assets 40,624,658 28,720 172,321 201,042 459,524 1,340,171 670,642 2,570,878 3,799,169 1,280,205 3,158,240 3,112,996 13,771,643 10,059,107
Intangible assets 1,873,518 1,041 6,245 7,286 16,653 31,225 31,225 93,676 93,676 93,676 374,704 374,704 749,407 -
Deferred tax assets 4,439,835 - - - - - - - 554,979 554,979 1,109,959 1,109,959 1,109,959 -
Other assets 85,719,066 279,562 2,320,833 2,122,568 6,396,811 10,963,829 7,655,111 19,828,334 17,764,644 17,814,945 34,761 34,761 502,907 -
2,581,900,578 421,174,289 12,840,829 20,235,498 40,515,553 101,301,132 48,746,150 190,748,406 47,708,080 33,421,175 82,888,616 315,435,736 992,479,311 274,405,803
Liabilities

Bills payable 40,175,122 13,257,790 8,972,444 8,972,444 8,972,444 - - - - - - - - -

Due to financial institutions 573,326,439 2,298,935 105,138,698 23,793,134 145,354,564 120,221,095 84,078,910 23,513,500 26,312 19,735 518,145 1,930,569 9,057,809 57,375,033
Deposits and other accounts 1,658,469,588 1,460,232,706 8,936,398 9,236,718 18,123,288 18,687,094 11,075,804 22,113,911 17,034,887 20,089,632 36,187,302 6,392,202 15,959,780 14,399,866
Subordinated sukuk 20,990,000 - - - - - - - - - - - - 20,990,000
Deferred tax liabilities - - - - - - - - - - - - - -
Other liabilities 169,804,739 419,845 3,189,589 3,104,190 8,191,418 62,160,870 13,271,188 22,162,316 22,171,423 2,043,918 2,392,535 2,930,938 16,771,775 10,994,734
NOTES TO AND FORMING PART OF THE

2,462,765,888 1,476,209,276 126,237,129 45,106,486 180,641,714 201,069,059 108,425,902 67,789,727 39,232,622 22,153,285 39,097,982 11,253,709 41,789,364 103,759,633
Net assets 119,134,690 (1,055,034,987) (113,396,300) (24,870,988) (140,126,161) (99,767,927) (59,679,752) 122,958,679 8,475,458 11,267,890 43,790,634 304,182,027 950,689,947 170,646,170
CONSOLIDATED FINANCIAL STATEMENTS

Share capital 17,896,243

Reserves 28,212,137
Unappropriated profit 72,485,599
Deficit on revaluation of assets (663,671)
Non-controlling interest 1,204,382
119,134,690
2021

Total Upto Over 1 to 7 Over 7 to 14 Over 14 days Over 1 to 2 Over 2 to 3 Over 3 to 6 Over 6 to 9 Over 9 months Over 1 to 2 Over 2 to 3 Over 3 to 5 Over 5
1 Day Days Days to 1 Month Months Months Months Months to 1 Year years years years years

Rupees in ‘000

Assets
Cash and balances with treasury banks 170,501,306 56,265,431 38,078,625 38,078,625 38,078,625 - - - - - - - - -
Balances with other banks 16,465,169 8,232,584 8,232,585 - - - - - - - - - - -
Due from financial institutions 238,401,637 - 9,136,188 2,075,902 10,646,257 7,433,912 17,024,580 113,251,970 25,794,599 18,073,930 - - 34,964,299 -
Investments 624,332,881 864,130 2,522,282 2,967,662 6,726,084 42,933,604 146,905 1,504,998 686,256 1,693,397 29,400,035 5,997,866 402,578,763 126,310,899
Islamic financing and related assets 758,086,120 222,414,768 5,656,942 5,563,877 26,406,246 68,076,001 28,083,086 106,257,573 14,546,831 7,458,623 37,499,645 56,775,730 80,633,852 98,712,946
For the year ended December 31, 2022

Fixed assets 34,185,975 32,982 197,890 230,871 527,706 1,337,765 844,155 2,952,407 4,390,015 1,479,304 6,356,391 5,933,633 1,958,687 7,944,169
Intangible assets 1,505,581 836 5,019 5,855 13,383 25,093 25,093 75,279 75,279 75,279 301,116 301,116 602,233 -
Deferred tax assets - - - - - - - - - - - - - -
Other assets 64,180,378 2,031,071 1,647,515 1,709,277 4,785,811 7,512,656 5,510,575 13,850,480 13,260,378 13,297,875 545,640 9,700 19,400 -
1,907,659,047 289,841,802 65,477,046 50,632,069 87,184,112 127,319,031 51,634,394 237,892,707 58,753,358 42,078,408 74,102,827 69,018,045 520,757,234 232,968,014

Liabilities
Bills payable 36,141,378 11,926,655 8,070,370 8,070,370 8,073,983 - - - - - - - - -
Due to financial institutions 220,414,234 397,683 118,164,846 690,226 2,301,698 24,271,935 6,995,702 20,301,496 25,387 2,209,866 111,303 1,062,131 4,261,659 39,620,302
Deposits and other accounts 1,455,871,080 1,209,164,011 15,515,306 13,316,714 33,137,209 21,177,259 9,079,052 21,999,364 27,942,075 27,289,340 38,868,341 6,998,947 17,840,254 13,543,208
Subordinated sukuk 20,990,000 - - - - - - - - - - - - 20,990,000
Deferred tax liabilities 72,189 - - - - - - - - 18,048 18,047 18,047 18,047 -
Other liabilities 83,728,554 291,027 2,290,391 2,458,315 6,501,520 10,717,566 8,699,246 23,404,108 10,259,261 9,751,981 4,946,749 4,408,390 - -
1,817,217,435 1,221,779,376 144,040,913 24,535,625 50,014,410 56,166,760 24,774,000 65,704,968 38,226,723 39,269,235 43,944,440 12,487,515 22,119,960 74,153,510
Net assets 90,441,612 (931,937,574) (78,563,867) 26,096,444 37,169,702 71,152,271 26,860,394 172,187,739 20,526,634 2,809,173 30,158,387 56,530,530 498,637,274 158,814,504

Share capital 16,269,312

NOTES TO AND FORMING PART OF THE

Reserves 23,417,514
Unappropriated profit 45,494,657
Surplus on revaluation of assets 4,063,610
CONSOLIDATED FINANCIAL STATEMENTS

Non-controlling interest 1,196,519

90,441,612

Meezan Bank Annual Report 2022

315
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

48.3.2 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Group

2022
Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5
Total Upto 1 to 3 to 6 Months to to 2 to 3 to 5 to 10 Above 10
Month Months Months 1 Year Years Years Years Years Years
Rupees in ‘000

Assets
Cash and balances with treasury banks 117,743,672 117,743,672 - - - - - - - -
Balances with other banks 13,710,753 13,710,753 - - - - - - - -
Due from financial institutions 34,964,299 - - - - - 34,964,299 - - -
Investments 1,287,316,423 9,801,129 10,222,498 24,299,991 1,073,095 4,298,970 222,212,410 892,153,122 123,255,208 -
Islamic financing and related assets 995,508,354 109,889,188 170,557,448 191,790,440 166,278,496 73,911,982 57,797,039 84,192,273 116,506,442 24,585,046
Fixed assets 40,624,658 861,607 2,010,812 2,570,878 5,079,375 3,158,240 3,112,996 13,771,643 2,458,538 7,600,569
Intangible assets 1,873,518 31,225 62,451 93,675 187,352 374,704 374,704 749,407 - -
Deferred tax assets 4,439,835 - - - 1,109,958 1,109,959 1,109,959 1,109,959 - -
Other assets 85,719,066 11,119,773 18,618,940 19,828,334 35,579,590 34,761 34,761 502,907 - -
2,581,900,578 263,157,347 201,472,149 238,583,318 209,307,866 82,888,616 319,606,168 992,479,311 242,220,188 32,185,615
Liabilities
Bills payable 40,175,122 40,175,122 - - - - - - - -
Due to financial institutions 573,326,439 276,585,331 204,300,004 23,513,500 46,048 518,145 1,930,569 9,057,809 56,549,574 825,459
Deposits and other accounts 1,658,469,588 126,857,647 102,451,968 89,728,580 132,746,100 171,416,640 110,157,322 180,507,526 316,775,661 427,828,144
Subordinated sukuk 20,990,000 - - - - - - - 13,990,000 7,000,000
Deferred tax liabilities - - - - - - - - - -
Other liabilities 169,804,739 16,428,485 78,651,082 27,335,083 14,300,107 2,392,535 2,930,938 16,771,775 10,994,734 -
2,462,765,888 460,046,585 385,403,054 140,577,163 147,092,255 174,327,320 115,018,829 206,337,110 398,309,969 435,653,603
Net assets 119,134,690 (196,889,238) (183,930,905) 98,006,155 62,215,611 (91,438,704) 204,587,339 786,142,201 (156,089,781) (403,467,988)

Share capital 17,896,243

Reserves 28,212,137
Unappropriated profit 72,485,599
Deficit on revaluation of assets (663,671)
Non controlling interest 1,204,382
119,134,690

2021
Over 1 Over 3 Over 6 Over 1 Over 2 Over 3 Over 5
Total Upto 1 to 3 to 6 Months to to 2 to 3 to 5 to 10 Above 10
Month Months Months 1 Year Years Years Years Years Years
Rupees in ‘000

Assets
Cash and balances with treasury banks 170,501,306 170,501,306 - - - - - - - -
Balances with other banks 16,465,169 16,465,169 - - - - - - - -
Due from financial institutions 238,401,637 21,858,348 24,458,492 113,251,970 43,868,528 - - 34,964,299 - -
Investments 624,332,881 13,080,158 43,080,508 1,504,998 2,379,653 29,400,035 5,997,866 402,578,764 122,638,679 3,672,220
Islamic financing and related assets 758,086,120 86,421,934 141,762,960 148,651,817 107,627,236 37,499,645 56,775,730 80,633,851 84,055,913 14,657,034
Fixed assets 34,185,975 989,448 2,181,920 2,952,407 5,869,319 6,356,390 5,933,633 1,958,689 1,520,669 6,423,500
Intangible assets 1,505,581 25,093 50,186 75,280 150,558 301,116 301,116 602,232 - -
Deferred tax assets - - - - - - - - - -
Other assets 64,180,378 10,173,674 13,023,231 13,850,480 26,558,080 545,641 9,757 19,515 - -
1,907,659,047 320,056,106 225,639,248 281,909,878 189,699,227 80,594,534 75,509,809 533,740,763 208,215,261 24,752,754

Liabilities
Bills payable 36,141,378 36,141,378 - - - - - - - -
Due to financial institutions 220,414,234 121,554,453 31,267,637 20,301,496 2,235,253 111,304 1,062,131 4,261,659 39,620,301 -
Deposits and other accounts 1,455,871,080 141,377,392 94,015,603 81,307,639 139,105,982 157,484,892 98,016,627 162,173,475 308,209,213 274,180,257
Subordinated sukuk 20,990,000 - - - - - - - 13,990,000 7,000,000
Deferred tax liabilities 72,189 - - - 18,048 18,047 18,047 18,047 - -
Other liabilities 83,728,554 11,541,252 19,416,811 23,404,108 20,011,242 4,946,749 4,408,392 - - -
1,817,217,435 310,614,475 144,700,051 125,013,243 161,370,524 162,560,992 103,505,197 166,453,181 361,819,514 281,180,257
Net assets 90,441,612 9,441,631 80,939,197 156,896,635 28,328,703 (81,966,458) (27,995,388) 367,287,582 (153,604,253) (256,427,503)

Share capital 16,269,312

Reserves 23,417,514
Unappropriated profit 45,494,657
Surplus on revaluation of assets 4,063,610
Non controlling interest 1,196,519
90,441,612

316 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

Regarding behaviour of non-maturity deposits (non-contractual deposits), the Group has carried out a behavioural study
using the Value at Risk (VaR) methodology based on 5 years data. On the basis of its findings, 27.20% of current accounts
and 16.20% of saving accounts are bucketed into 'Upto 1-Year maturity' whereas, 72.80% of current accounts and 83.80%
of savings accounts are bucketed into maturities of above 1-Year.

48.4 Operational risk

The Group uses Basic Indicator Approach (BIA) for assessing the capital charge for operational risk. Under BIA the capital
charge is calculated by multiplying average positive annual gross income of the Group over past three years with 15% as
per guidelines issued by SBP under Basel II.

To reduce losses arising from operational risk, the Group has strengthened its risk management framework by developing
polices, strategies, guidelines and manuals. It also includes set up of functions like operational risk management, prevention
of fraud and forgery and information security function, defining responsibilities of individuals, implementing four eye principle,
enhancing security measures, improving efficiency and effectiveness of operations, outsourcing and improving quality of
human resources through trainings and development.

49 PROFIT / (LOSS) DISTRIBUTION TO DEPOSITORS' POOLS AND SPECIFIC POOLS

49.1 The Holding Company managed following general and specific pools during the year:

2022
Profit rate Amount of
Mudarib return Percentage Mudarib
General Profit Rate Profit rate Profit Fee distributed to of Mudarib Share
Remunerative and weightage return Sharing based remunerative Share transferred
(Savings and Fixed) announcement earned - Ratio of on profit deposits transferred through Hiba
Depositors' Pools period Average Mudarib sharing (Savings and through to
ratio Fixed) - Hiba remunerative
Average deposits
Rupees in ‘000 Rupees in ‘000

PKR Pool Monthly 11.03% 50% 43,715,542 6.57% 18% 7,846,233

USD Pool Monthly 3.78% 75% 1,750,106 0.95% - -
GBP Pool Monthly 2.90% 90% 89,665 0.26% - -
EUR Pool Monthly 1.77% 90% 26,538 0.16% - -

2021
Profit rate Amount of
Mudarib return Percentage Mudarib
General Profit Rate Profit rate Profit Fee distributed to of Mudarib Share
Remunerative and weightage return Sharing based remunerative Share transferred
(Savings and Fixed) announcement earned - Ratio of on profit deposits transferred through Hiba
Depositors' Pools period Average Mudarib sharing (Savings and through to
ratio Fixed) - Hiba remunerative
Average deposits
Rupees in ‘000 Rupees in ‘000

PKR Pool Monthly 7.80% 50% 27,182,756 3.98% 2% 564,181

USD Pool Monthly 1.45% 75% 520,362 0.36% - -
GBP Pool Monthly 0.88% 90% 24,673 0.09% - -
EUR Pool Monthly 0.54% 90% 6,448 0.05% - -
2022
Amount of
Percentage Mudarib
Profit Rate of Mudarib Share
Profit rate Profit Profit rate
Specific and weightage Investment Share transferred
return Sharing return
Pools announcement ratio transferred through
earned Ratio distributed Hiba to
period through
Hiba remunerativ
e deposits

Islamic Export Refinance

(IERS) Musharaka Pool Monthly 9.18% -* -* 3.63% N/A N/A

Inter Bank Musharaka /

Mudaraba borrowing Pool As required 16.80% - 7.32% -* -* 16.75% - 9.50% N/A N/A

Special Sharikah Certificate

Musharaka / Mudaraba
borrowing Pool As required 19.00% - 7.32% -* -* 16.77% - 2.87% N/A N/A

* The profit sharing ratio and the investment ratio varies on case to case basis.
Meezan Bank Annual Report 2022 317
NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

2021
Amount of
Percentage Mudarib
Profit Rate of Mudarib Share
Profit rate Profit Profit rate
Specific and weightage Investment Share transferred
return Sharing return
Pools announcement ratio transferred through
earned Ratio distributed Hiba to
period through
Hiba remunerativ
e deposits

Islamic Export Refinance

(IERS) Musharaka Pool Monthly 6.11% -* -* 2.03% N/A N/A

Inter Bank Musharaka /

Mudaraba borrowing Pool As required 11.46% - 5.95% -* -* 4.00% - 10.80% N/A N/A

Special Sharikah Certificate

Musharaka / Mudaraba
borrowing Pool As required 12.04% - 5.95% -* -* 9.20% - 2.75% N/A N/A

* The profit sharing ratio and the investment ratio varies on case to case basis.

49.2 Following weightages have been assigned to different major products under the General pools during the year:

Percentage to Total Mudaraba Maximum Minimum Maximum Minimum

based Deposits Weightage Weightage Weightage Weightage

2022 2021 2022 2022 2021 2021

PKR Pool
Saving Accounts 28.65% 27.25% 0.40 0.36 0.36 0.32
Meezan Bachat Account 17.29% 18.04% 0.41 0.36 0.38 0.32
Karobari Munafa Account 10.71% 8.36% 0.57 0.36 0.60 0.32
Certificate of Islamic Investment 10.96% 13.31% 0.66 0.34 0.80 0.47
Meezan Aamdan Certificate 4.45% 5.30% 0.80 0.57 0.92 0.65

USD Pool
Saving Accounts 4.23% 4.00% 0.45 0.45 0.45 0.45
Certificate of Islamic Investment 1.76% 1.75% 1.35 0.77 1.35 0.77

GBP Pool
Saving Accounts 0.37% 0.38% 0.27 0.27 0.27 0.27

EUR Pool
Saving Accounts 0.18% 0.18% 0.27 0.27 0.27 0.27

49.3 Allocation of Income and Expenses to Depositors' Pools

Following are material items of revenues, expenses, gains and losses
2022 2021
Rupees in ‘000

Profit / return earned on islamic financing and related assets, investments and placements 158,778,116 102,815,084
Other Income (including other charges and interpool income) 5,973,096 4,330,174
Directly related costs attributable to pool (2,197,829) (1,794,432)

318 Meezan Bank Annual Report 2022

NOTES TO AND FORMING PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2022

50 GENERAL

Comparative information has been re-classified, re-arranged or additionally incorporated in these consolidated financial statements,
wherever necessary, to facilitate comparison and better presentation.

51 NON-ADJUSTING EVENT

The Board of Directors of the Holding Company in their meeting held on February 16, 2023 has announced final cash dividend
of Rs 3.00 per share (30%). These consolidated financial statements for the year ended December 31, 2022, do not include the
effect of this appropriation which will be accounted for in the consolidated financial statements for the year ending
December 31, 2023.

52 DATE OF AUTHORISATION

These consolidated financial statements were authorised for issue on February 16, 2023 by the Board of Directors of the Holding
Company.

Riyadh S. A. A. Irfan Siddiqui Faisal A. A. A. Mohammad Abdul Aleem Syed Imran Ali Shah
Edrees President & Al-Nassar
Chairman CEO Director Director Chief Financial Officer

Meezan Bank Annual Report 2022 319

Consolidated Statement Showing Written-off Financing or any
other Financial Relief of Rupees 500,000 or Above (Annexure I)
During the year ended December 31, 2022
Rupees in ‘000
Statement showing written-off loans or any other financial relief of five hundred thousand rupees or above provided during the year ended December
31, 2022 as referred in note 11.13 to these consolidated financial statements.

S. Name and Name of individuals Father’s / Outstanding liabilities as at January 1, 2022 Principal Profit Other Total
No. address of the / directors (with Husband’s Principal Profit Others Total written-off written-off Financial (9+10+11)
borrower CNIC / Passport No) Name (5+6+7) relief provided
1 2 3 4 5 6 7 8 9 10 11 12

1 Millennium Kalash Lohana Nuko Mal 454,961 93,202 - 548,163 79,618 126,938 - 206,556
Industries 41207-9936424-7
Main National Vinesh Kumar Nuko Mal
Highway, Lohana
Hyderabad 41303-4170015-9
2 Millennium Cotton Kalash Lohana Nuko Mal 29,935 26,670 - 56,605 5,278 21,487 - 26,765
Ginning And Oil 41207-9936424-7
Industries
Main National Vinesh Kumar Nuko Mal
Highway, Lohana
Hyderabad 41303-4170015-9
3 Kevin Roy 90406-0152911-1 Kenneth 28,403 3,409 972 32,784 - 6,204 972 7,176
House # 448, Manmouan Roy
Block-B, Phase
12, Sector-EME,
Defence Housing
Authority, Lahore
4 Shoaib Maqsood 35202-3905341-3 Sheikh Maqsood 23,191 4,371 696 28,258 - 5,069 696 5,765
House # 543, Ahmad
Block-D, Phase-6,
Defence Housing
Authority, Lahore
5 Muhammad Riaz 33100-3959669-1 Muhammad Ismail 2,918 5,136 208 8,262 - 3,561 208 3,769
House # 22,
Street # 1,
Mahmoodabad,
Faisalabad

6 Kashif Mehmood 35202-2713326-7 Khalid Mahmood 18,837 3,812 565 23,214 - 2,854 565 3,419
House # 407,
Khewat # 965,
khatooni # 1244,
Khasra # 7995/927,
Hadbast Mouza
Rakh Khamba,
Airline Housing
Society, Tehsil
Raiwind, District
Lahore

7 Farhan Ahmad 33100-4860917-9 Basharat Ahmad 1,942 411 - 2,353 - 2,056 475 2,531
House # P-100,
Canal Road,
Saeed Colony # 1,
Faisalabad

8 Irfan Ali 42201-0383289-1 Ejaz Ali 7,663 2,343 - 10,006 - 2,343 - 2,343
Apartment # 304,
Tayyaba Homes,
Plot # 125/1,
Kharaget Road,
Jamshed Quarters,
Karachi,

9 Nayyar Ghias 35200-6618149-1 Khair Ud Din 5,200 1,914 156 7,270 - 964 156 1,120
Khokhar Khokhar
Plot No 27,
Block A-4,
Phase I, Punjab
Government
Employees
Co-Operative
Housing Society,
Lahore

573,050 141,268 2,597 716,915 84,896 171,476 3,072 259,444

320 Meezan Bank Annual Report 2022

Additional Information
PATTERNS OF SHAREHOLDING

No. of No. of Shares ‘Shares held’ Percentage

Shareholders From To
1,997 1 100 70,909 0.0040
1,906 101 500 506,089 0.0283
1,015 501 1,000 764,000 0.0427
1,891 1,001 5,000 4,475,709 0.2501
533 5,001 10,000 3,825,710 0.2138
236 10,001 15,000 2,902,160 0.1622
145 15,001 20,000 2,541,604 0.1420
100 20,001 25,000 2,257,288 0.1261
77 25,001 30,000 2,104,046 0.1176
72 30,001 35,000 2,351,850 0.1314
41 35,001 40,000 1,530,395 0.0855
38 40,001 45,000 1,624,797 0.0908
46 45,001 50,000 2,188,385 0.1223
25 50,001 55,000 1,317,418 0.0736
19 55,001 60,000 1,091,589 0.0610
27 60,001 65,000 1,679,506 0.0938
12 65,001 70,000 808,095 0.0452
16 70,001 75,000 1,167,106 0.0652
10 75,001 80,000 767,725 0.0429
17 80,001 85,000 1,418,220 0.0792
7 85,001 90,000 615,896 0.0344
7 90,001 95,000 644,865 0.0360
10 95,001 100,000 981,263 0.0548
7 100,001 105,000 723,365 0.0404
15 105,001 110,000 1,625,030 0.0908
6 110,001 115,000 672,637 0.0376
6 115,001 120,000 701,159 0.0392
9 120,001 125,000 1,102,136 0.0616
9 125,001 130,000 1,144,365 0.0639
4 130,001 135,000 524,406 0.0293
8 135,001 140,000 1,098,567 0.0614
5 140,001 145,000 711,801 0.0398
3 145,001 150,000 446,120 0.0249
3 150,001 155,000 456,295 0.0255
7 155,001 160,000 1,108,673 0.0620
10 160,001 165,000 1,627,649 0.0909
5 165,001 170,000 835,489 0.0467
6 170,001 175,000 1,033,471 0.0577
3 175,001 180,000 534,486 0.0299
8 180,001 185,000 1,457,282 0.0814
2 185,001 190,000 379,232 0.0212
2 190,001 195,000 386,434 0.0216
8 195,001 200,000 1,586,028 0.0886
3 200,001 205,000 605,176 0.0338
5 205,001 210,000 1,040,644 0.0581
2 210,001 215,000 426,339 0.0238
5 215,001 220,000 1,100,000 0.0615
3 220,001 225,000 667,235 0.0373
6 230,001 235,000 1,392,129 0.0778
3 235,001 240,000 710,614 0.0397
2 240,001 245,000 484,837 0.0271
3 245,001 250,000 745,161 0.0416
2 255,001 260,000 519,000 0.0290
2 260,001 265,000 525,697 0.0294
3 270,001 275,000 818,670 0.0457
1 275,001 280,000 278,838 0.0156
1 280,001 285,000 284,625 0.0159
2 285,001 290,000 574,891 0.0321
1 290,001 295,000 293,981 0.0164
2 295,001 300,000 598,700 0.0335
3 300,001 305,000 905,281 0.0506
1 305,001 310,000 308,311 0.0172
1 315,001 320,000 316,321 0.0177
1 320,001 325,000 324,223 0.0181
4 325,001 330,000 1,315,800 0.0735
1 330,001 335,000 334,151 0.0187
2 335,001 340,000 677,432 0.0379
1 340,001 345,000 344,092 0.0192
1 345,001 350,000 348,991 0.0195
1 350,001 355,000 353,257 0.0197
2 355,001 360,000 716,655 0.0400
1 360,001 365,000 363,670 0.0203
2 365,001 370,000 734,509 0.0410
1 370,001 375,000 371,800 0.0208
2 375,001 380,000 758,876 0.0424
2 380,001 385,000 768,750 0.0430
1 390,001 395,000 393,250 0.0220
1 395,001 400,000 400,000 0.0224
1 400,001 405,000 404,751 0.0226
1 415,001 420,000 417,443 0.0233
1 420,001 425,000 424,758 0.0237
2 445,001 450,000 893,433 0.0499
1 450,001 455,000 455,000 0.0254
1 455,001 460,000 458,984 0.0256
1 460,001 465,000 461,221 0.0258
2 480,001 485,000 963,459 0.0538
2 490,001 495,000 990,000 0.0553
2 495,001 500,000 998,148 0.0558
3 500,001 505,000 1,508,012 0.0843
1 510,001 515,000 510,626 0.0285
3 515,001 520,000 1,557,696 0.0870
1 525,001 530,000 526,683 0.0294
3 565,001 570,000 1,703,947 0.0952
3 570,001 575,000 1,718,875 0.0960
1 575,001 580,000 578,673 0.0323
1 585,001 590,000 585,378 0.0327
1 595,001 600,000 596,000 0.0333
1 600,001 605,000 604,960 0.0338
1 615,001 620,000 619,100 0.0346
1 620,001 625,000 621,664 0.0347
1 625,001 630,000 629,670 0.0352
2 645,001 650,000 1,298,465 0.0726
1 655,001 660,000 657,179 0.0367
2 660,001 665,000 1,324,495 0.0740
1 685,001 690,000 689,494 0.0385
1 695,001 700,000 695,344 0.0389
2 710,001 715,000 1,428,431 0.0798

322 Meezan Bank Annual Report 2022

No. of No. of Shares ‘Shares held’ Percentage
Shareholders From To
1 735,001 740,000 737,495 0.0412
1 740,001 745,000 744,500 0.0416
1 745,001 750,000 750,000 0.0419
1 755,001 760,000 757,102 0.0423
1 770,001 775,000 774,764 0.0433
2 785,001 790,000 1,580,000 0.0883
1 795,001 800,000 795,599 0.0445
1 815,001 820,000 817,023 0.0457
1 820,001 825,000 821,253 0.0459
1 840,001 845,000 841,440 0.0470
1 845,001 850,000 847,550 0.0474
1 850,001 855,000 850,491 0.0475
2 895,001 900,000 1,792,412 0.1002
1 925,001 930,000 927,179 0.0518
1 935,001 940,000 938,096 0.0524
1 955,001 960,000 959,947 0.0536
1 985,001 990,000 988,973 0.0553
1 995,001 1,000,000 1,000,000 0.0559
1 1,030,001 1,035,000 1,030,544 0.0576
1 1,035,001 1,040,000 1,036,358 0.0579
1 1,055,001 1,060,000 1,055,758 0.0590
1 1,120,001 1,125,000 1,124,332 0.0628
1 1,125,001 1,130,000 1,127,210 0.0630
2 1,130,001 1,135,000 2,266,551 0.1266
1 1,165,001 1,170,000 1,167,071 0.0652
1 1,205,001 1,210,000 1,209,968 0.0676
2 1,250,001 1,255,000 2,506,776 0.1401
1 1,265,001 1,270,000 1,268,852 0.0709
1 1,270,001 1,275,000 1,271,339 0.0710
1 1,280,001 1,285,000 1,284,010 0.0717
1 1,345,001 1,350,000 1,346,641 0.0752
1 1,355,001 1,360,000 1,357,294 0.0758
1 1,395,001 1,400,000 1,400,000 0.0782
1 1,400,001 1,405,000 1,402,823 0.0784
1 1,415,001 1,420,000 1,420,000 0.0793
1 1,440,001 1,445,000 1,440,630 0.0805
1 1,455,001 1,460,000 1,459,184 0.0815
1 1,470,001 1,475,000 1,475,000 0.0824
1 1,525,001 1,530,000 1,529,000 0.0854
3 1,540,001 1,545,000 4,624,645 0.2584
1 1,545,001 1,550,000 1,549,588 0.0866
1 1,590,001 1,595,000 1,590,134 0.0889
1 1,595,001 1,600,000 1,600,000 0.0894
1 1,600,001 1,605,000 1,602,515 0.0895
1 1,610,001 1,615,000 1,612,600 0.0901
1 1,625,001 1,630,000 1,628,073 0.0910
1 1,655,001 1,660,000 1,658,338 0.0927
1 1,665,001 1,670,000 1,670,000 0.0933
1 1,680,001 1,685,000 1,683,715 0.0941
1 1,695,001 1,700,000 1,695,650 0.0947
1 1,700,001 1,705,000 1,700,925 0.0950
1 1,880,001 1,885,000 1,881,627 0.1051
1 1,955,001 1,960,000 1,959,523 0.1095
1 1,995,001 2,000,000 2,000,000 0.1118
1 2,030,001 2,035,000 2,031,292 0.1135
1 2,040,001 2,045,000 2,040,661 0.1140
1 2,055,001 2,060,000 2,058,741 0.1150
1 2,085,001 2,090,000 2,087,250 0.1166
1 2,200,001 2,205,000 2,203,122 0.1231
1 2,280,001 2,285,000 2,281,343 0.1275
1 2,495,001 2,500,000 2,498,455 0.1396
1 2,520,001 2,525,000 2,523,512 0.1410
1 2,610,001 2,615,000 2,613,788 0.1461
1 2,670,001 2,675,000 2,670,420 0.1492
1 2,675,001 2,680,000 2,677,565 0.1496
1 2,700,001 2,705,000 2,701,313 0.1509
1 2,710,001 2,715,000 2,712,724 0.1516
1 2,830,001 2,835,000 2,832,197 0.1583
1 2,860,001 2,865,000 2,864,649 0.1601
1 2,870,001 2,875,000 2,871,197 0.1604
1 2,955,001 2,960,000 2,960,000 0.1654
1 3,205,001 3,210,000 3,206,087 0.1791
1 3,260,001 3,265,000 3,261,035 0.1822
1 3,475,001 3,480,000 3,477,466 0.1943
1 3,485,001 3,490,000 3,485,570 0.1948
1 3,550,001 3,555,000 3,550,422 0.1984
1 3,670,001 3,675,000 3,671,779 0.2052
1 3,830,001 3,835,000 3,834,861 0.2143
1 3,935,001 3,940,000 3,939,335 0.2201
1 4,005,001 4,010,000 4,008,303 0.2240
1 4,020,001 4,025,000 4,023,329 0.2248
1 4,110,001 4,115,000 4,112,748 0.2298
1 4,220,001 4,225,000 4,221,957 0.2359
1 4,360,001 4,365,000 4,361,365 0.2437
1 4,915,001 4,920,000 4,916,279 0.2747
1 4,985,001 4,990,000 4,985,290 0.2786
1 5,580,001 5,585,000 5,584,234 0.3120
1 5,740,001 5,745,000 5,743,399 0.3209
1 6,110,001 6,115,000 6,113,262 0.3416
1 6,190,001 6,195,000 6,192,073 0.3460
1 6,235,001 6,240,000 6,236,920 0.3485
1 7,095,001 7,100,000 7,095,987 0.3965
1 8,425,001 8,430,000 8,427,315 0.4709
1 9,070,001 9,075,000 9,071,711 0.5069
1 10,380,001 10,385,000 10,384,471 0.5803
1 10,620,001 10,625,000 10,622,374 0.5936
1 10,770,001 10,775,000 10,772,667 0.6020
1 13,235,001 13,240,000 13,238,751 0.7398
1 14,840,001 14,845,000 14,840,532 0.8293
1 15,075,001 15,080,000 15,079,983 0.8426
1 20,425,001 20,430,000 20,425,552 1.1413
1 28,065,001 28,070,000 28,067,063 1.5683
1 166,860,001 166,865,000 166,863,457 9.3239
1 536,885,001 536,890,000 536,887,288 30.0000
1 630,815,001 630,820,000 630,819,684 35.2487

8,602 Company Total 1,789,624,321 100.0000

Meezan Bank Annual Report 2022 323

CATEGORIES OF SHAREHOLDERS
For the year ended December 31, 2022
Number of Shares held Percentage Number of Shares held Percentage
Particulars Shareholders Shareholders

2022 2021
Directors, Chief Executive,
their spouse and minor children 6 14,861,523 0.83% 6 13,510,477 0.83%

Associated Companies, undertakings

and related parties 11 1,358,800,867 75.93% 10 1,236,770,359 76.02%

Banks, Development Financial Institutions and

Non Banking Finance Companies 26 40,078,136 2.24% 20 17,686,974 1.09%

Insurance Companies 15 25,973,756 1.45% 13 28,218,534 1.73%

Modaraba and Mutual Funds 84 43,307,471 2.42% 77 41,235,096 2.53%

General Public
a.Local 6,802 99,944,182 5.58% 4,615 80,233,754 4.93%
b.Foreign 1,296 22,719,211 1.27% 837 14,835,511 0.91%

Others 362 183,939,175 10.28% 328 194,440,496 11.95%

Total 8,602 1,789,624,321 100.00% 5,906 1,626,931,201 100.00%

Additional Information as at December 31, 2022

Particulars
Number of Shares held Percentage Number of Shares held Percentage
Shareholders Shareholders

2022 2021
Associated Companies & Shareholders
with more than 10% shareholding
Noor Financial Investment Co, Kuwait 1 630,819,684 35.25% 1 573,472,440 35.25%
Pakistan Kuwait Investment Co. (Pvt.) Ltd. 1 536,887,288 30.00% 1 488,079,353 30.00%
Islamic Development Bank, Jeddah 1 166,863,457 9.32% 1 151,694,052 9.32%
CDC Trustee Meezan Islamic Fund 1 15,079,983 0.84% 1 15,277,983 0.94%
CDC Trustee Meezan Balanced Fund 1 817,023 0.05% 1 1,149,463 0.07%
CDC Trustee Meezan Dedicated Equity Fund 1 498,227 0.03% 1 497,080 0.03%
CDC Trustee Meezan Asset Allocation Fund 1 526,683 0.03% 1 645,167 0.04%
CDC - Trustee Al Meezan Mutual Fund 1 2,871,197 0.16% 1 2,285,548 0.14%
CDC - Trustee KSE Meezan Index Fund 1 1,658,338 0.09% 1 1,294,530 0.08%
CDC - Trustee Meezan Tahaffuz Pension Fund - Equity Sub Fund 1 2,712,724 0.15% 1 2,374,743 0.15%
CDC - Trustee Meezan Pakistan Exchange Traded Fund 1 66,263 0.00% - - -

Directors, Chief Executive,

their spouse and minor children

Mr. Mohammad Abdul Aleem 1 689,494 0.04% 1 626,813 0.04%

Ms. Nausheen Ahmad 1 764 0.00% 1 695 0.00%
Mr. Yousef S.M.A. Alsaad 1 550 0.00% 1 500 0.00%
Mr. Irfan Siddiqui 1 5,743,400 0.32% 1 5,221,273 0.32%

Executives 51 5,081,580 0.28% 41 4,609,287 0.28%

Public Sector Companies, Corporations, Banks, 487 293,298,538 16.39% 438 281,581,100 17.31%
DFI's, NBFC's, Insurance Companies, Modaraba,
Mutual Funds and other Organizations

General Public 8,049 126,009,128 7.04% 5,413 98,121,174 6.03%

8,602 1,789,624,321 100.00% 5,906 1,626,931,201 100.00%

324 Meezan Bank Annual Report 2022

GLOSSARY

AAOIFI Ijara/Ijarah Rahn

Accounting and Auditing Organization for Letting on lease; technically, sale of a definite To pledge or lodge a real or corporeal property
Islamic Financial Institutions. usufruct in exchange for a definite reward; of material value, in accordance with the law,
commonly used for wages. It also refers to a as security for a debt or financial obligation, so
Al-‘Aqd mode of financing adopted by Islamic banks. It as to make it possible for the creditor to regain
Contract is an arrangement under which an Islamic bank the debt or some portion of the goods or
Al-Bai leases equipment, a building etc. to a client property in case of default.
A contract of sale which is exchange of thing of against an agreed rental for a definite period.
Riba
value with another thing of value with mutual Ijma‘ Any monetary or non-monetary agreed benefit
consent. Consensus of the Islamic jurists (mujtahidin) on to the lender on a contract of loan
Al-Bai‘ Al-Mu’ajjal a certain Shariah issue. after the demise of the
Holy Prophet (P.B.U.H.) Shariah Audit
It is a contract of sale in which the seller allows Audit of the operations of an Islamic financial
the buyer to pay the price of a commodity at a Islamic Banking institution to assess the extent to which the
future date in lump sum or in instalments. Banking in consonance with the ethics and value institution adhered to the requirements of the
Al-’Ijtihad system of Islam as compared to conventional Shariah.
Endeavour of an Islamic jurist to derive or banking that conducts its business of borrowing
and lending on the basis of interest. Shariah Board
formulate a rule of law pertaining to a matter Committee of Islamic scholars in Islamic Banks
not explicitly mentioned in the Shariah sources. Islamic Credit Card for guidance and supervision and whose
Al-Kafalah It is a Shariah-compliant credit card whereby decisions are binding upon the bank.
A contract of surety in which a person adds to his no riba is involved.
Shariah
responsibility or liability on behalf of another Istisna’a/Istisna Shariah means a pathway to be followed and
person in respect of a demand for a loan or debt. It is a kind of sale where a purchaser orders to can further be explained as a set of divine
Bai‘ Al-Dain a manufacturer to manufacture a specific injunctions and laws that regulates every
Sale of debt. commodity for the purchaser. It is necessary aspect of human beings in their individual and
for the validity of Istisna that the price is fixed collective lives.
Bai‘ Al-‘Inah with the consent of the parties and that
A contract of sale, where a person sells an necessary specification of the commodity Shariah-compliant
asset on credit and then buys back at a less (intended to be manufactured) is fully settled An act or activity that complies with the
price for cash. between them. requirements of the Shariah, or Islamic law.

Bai‘ Al-’Istijrar Mudarabah Shirkah al-‘aqd

A form of sale whereby the buyer keeps on An agreement between two or more persons A joint enterprise formed for conducting some
taking the goods from the seller as and when whereby one or more of them provide finance, business in which all the partners share the profit
needed without settling the price and then while the other provides entrepreneurship and according to a specific ratio while the loss is
settles the account later on. management to carry on the business venture shared according to the ratio of contribution.
whether trade, industry or service, with the Shirkah al-milk
Bai‘ Al-Murabahah
objective of earning profits. They share the It means joint ownership of two or more
Sale of goods with an agreed price by
profit in an agreed proportion. The loss is borne persons in a particular property without
disclosing cost and profit.
only by the financier(s) in proportion to their commercial intention.
Bai‘ Al-Musawamah share in total capital.
Sale of goods at a negotiated price without Sukuk/ Sukook
Mudarabah Al-Muqayyadah Sukuk are certificates of equal value represent-
mentioning the cost to the buyer.
A contract of Mudarabah in which certain ing undivided shares in ownership of tangible
Bai Al-Salam conditions like place, season, commodities, assist, usufruct and services or (in the
It is a kind of sale of specified homogenous credit and techniques of trade are stipulated by ownership of) the assets of particular projects
goods in which full payment is in advance spot the provider of the capital (rabb al-mal). or special investment activity.
while the delivery of goods is deferred to a
Mudarabah Al-Mutlaqah Takaful
future date.
A contact of Mudarabah that does not bind the Islamic Insurance. A scheme of mutual support
Bai‘ Al-Tawliyah mudarib about the place, time, season, based on Islamic concept of waqf, wakalah or
A contract of sale in which the seller agrees to commodities, credit or techniques of trade. Mudarabah that provides insurance to
sell a product at his cost by disclosing the cost. individuals against hazards of falling into
Mudarib
A working partner; the partner who provides unexpected and dire need.
Bai‘ Al-Wad‘Iyah
A sales contract in which a seller informs the entrepreneurship and management in a Tabarru’
buyer his actual cost and then gives a further Mudarabah agreement. It is a gift, the basic purpose of which is to seek
discount on it. the pleasure of Allah
Musha‘
Charity Undivided ownership of two or more persons in Tijarah Financing
Means monetarily helping those in need. In IBIs an asset. Sale & Agency based financing facility for
in order to mitigate the risk of delayed payment customers who sell finished goods on credit
Parallel istisna
customer undertakes to pay an amount to IBI basis. This facility enables customers to sell
If the seller, after entering into a Istisna contract
as charity in case of delay in payment which their finished goods stock to the Bank to meet
with buyer, enters into another separate and
the IBI shall donate on behalf of the customer. their working capital requirements and enjoy
independent Istisna contract with a third party
to manufacture goods of same specification the benefits of cash sales.
Diminishing Musharakah
It is a financing product being practiced by IBIs then this arrangement is called Parallel Istisna Wakalah
in which Bank and customer participate in joint A contract of agency in which one person
Parallel Salam
ownership of a property. The share of the bank appoints someone else to perform a certain
If the seller, after entering into a Salam contract
is divided into number of units and the units task on his behalf, usually against a certain fee.
with buyer, enters into another separate and
owned by the Bank are rented to the customer.
independent Salam contract with a third party Waqf
Customer purchases these units from bank at
to acquire goods of same quality then this In Arabic language the word Waqf means
periodic intervals, thereby increasing his/her
arrangement is called Parallel Salam. preventing something from movement. In
share in the undivided property until all the
units are purchased by the customer. Qard Al-Hasan Shariah terminology, Waqf refers to making a
A loan with the stipulation to return the principal property invulnerable to any disposition that
Fatwa leads to transfer of ownership and donating the
sum in the future without any increase.
A decree by a competent Shariah scholar usufruct of that property to beneficiaries.
qualified to issue decrees (mufti) on a matter Qimar
giving an opinion about the position of a matter Qimar means gambling. Technically, it is an Zakah (zakat)
in the light of the Shariah rules and principles. arrangement in which possession of a property A certain portion of wealth levied on Muslims
is contingent upon the happening of an having wealth above an exemption limit (nisab)
Gharar
uncertain event. at a rate fixed by the Shariah to purify wealth.
It means any element of absolute or excessive
Zakat is one of the five pillars of Islam. The
uncertainty in a contract Qiyas objective is to take away a part of the wealth of
To apply a recognized rule of Shariah expressly the well-to-do and to distribute it among the
Hiba mentioned in the Holy Quran and Sunnah to a poor and the needy.
Gift/Transfer of ownership of an asset without similar situation by way of analogy.
any consideration.
Rabb-ul-Maal
A person who invests capital in a Mudarabah.
Meezan Bank Annual Report 2022 325
NOTICE OF 27TH ANNUAL GENERAL MEETING
Notice is hereby given that the 27th Annual General Meeting of the Members of Meezan Bank Limited (the “Bank”) will be held
Insha-Allah on Wednesday, March 29, 2023 at 09:00 a.m. at Meezan House C-25, Estate Avenue, SITE, Karachi, Pakistan, (physical and
virtual meeting) to transact the following business:

ORDINARY BUSINESS

1. To confirm the minutes of the 26th Annual General Meeting held on March 29, 2022.

2. To receive, consider and adopt the Annual Audited Accounts of the Bank, Audited Consolidated Accounts for the year ended
December 31, 2022, together with the Auditors' Report, Directors' Report and Chairman's Review Report thereon.

3. To appoint auditors of the Bank for the year ending December 31, 2023 and to fix their remuneration. The present auditors,
M/s. A. F. Ferguson & Co., Chartered Accountants, retire and being eligible, offer themselves for reappointment.

4. To consider and, if thought fit, approve as recommended by the Board of Directors, final cash Dividend at the rate of Rs. 3/- per share
i.e. 30% in addition to Rs. 5.50 per share i.e. 55% interim cash Dividend already declared/paid along with 10% Bonus Shares for the
year December 31, 2022.

5. To transact any other business with the permission of the Chair.

By Order of the Board

Karachi Muhammad Sohail Khan

February 16, 2023 Company Secretary

Notes:

1. CLOSURE OF SHARE TRANSFER BOOKS

The Members’ Register will remain closed from March 22, 2023 to March 29, 2023 (both days inclusive). Transfer received at the
Share Registrar office, by the close of business on March 21, 2023 will be treated in time for the purpose of entitlement to receive
the 30% final cash dividend and attend, vote and speak in the 27th Annual General Meeting.

2. COVID-19 RELATED CONTINGENCY PLANNING FOR ANNUAL GENERAL MEETING

• In terms of Securities and Exchange Commission of Pakistan’s (SECP) Circulars No. 5 of 2020 dated March 17, 2020 and No. 4 of
2021 dated February 15, 2021 for the well-being and their safety, the members are encouraged to attend and vote in the Annual
General Meeting via Zoom Link. Accordingly, members are requested to get themselves registered by sending their particulars at
the designated e-mail address [email protected] giving particulars as per the below table by the close of business hours
(1:00 PM) on Friday, March 24, 2023.

Name of CNIC / Folio No./CDC Cell No. Email Address

Shareholders/Proxy Passport No. Participant ID No.

■ Link to video connectivity will be sent to the shareholders on their e-mail addresses after necessary verification from the records.

■ Shareholders will be able to log in and participate in the Annual General Meeting proceedings through their smartphones or
computer devices.

■ The login facility will be available from 08:50 a.m. till the end of the Annual General Meeting on March 29 2023, enabling the
participants to join the proceedings which will start at 09:00 a.m. sharp, Insha-Allah.

■ In addition to the above, Shareholders can also give their suggestions/comments on the proposed agenda of the Annual General
Meeting by e-mailing at the designated e-mail address [email protected]

326 Meezan Bank Annual Report 2022

3. Copies of the Minutes of the 26th Annual General Meeting held on March 29, 2022, of Meezan Bank Limited, are available for
inspection by Members as required under Section 152 of the Companies Act, 2017.

FOR ATTENDING THE GENERAL MEETING

■ A member entitled to attend the Annual General Meeting may appoint any other person as his/her proxy to attend the meeting
through video-link. A proxy form is enclosed.

■ In case of individuals, the account holder or sub-accountholder and/or the person whose securities are in group account and their
registration details are uploaded as per the Regulations, shall authenticate his identity by showing his original Computerized
National Identity Card (“CNIC”) or original passport at the time of attending the Annual General Meeting.

■ In case of a corporate entity, the Board of Directors' resolution/power of attorney with specimen signature of the nominee shall be
produced (unless it has been provided earlier) at the time of the Annual General Meeting.

4. VIDEO CONFERENCE FACILITY FOR ATTENDING GENERAL MEETINGS

If the Bank receives consent from members holding in aggregate 10% or more shareholding residing at a geographical location, to
participate in the meeting through video conference at least 07 days prior to the date of the Annual General Meeting, the Bank will
arrange a video conference facility in that city subject to availability of such facility in that city.

To avail this facility, a request to be submitted to the registered address of the Bank 07 days before holding of the Annual General
Meeting.

5. POSTAL BALLOT FACILITY

In case the Poll is demanded by the shareholders under Section 143 of the Companies Act 2017, the Company shall consider postal
Balloting facility for voting, under the Companies (Postal Ballot) Regulations, 2018.

6. AVAILABILITY OF ANNUAL ACCOUNTS ON BANK’S WEBSITE

As required under Section 223 (7) of the Companies Act 2017, audited Financial Statements of the Bank have been uploaded on
website of the Bank which can be downloaded from the Bank’s website: www.meezanbank.com.

7. TRANSMISSION OF ANNUAL AUDITED FINANCIAL STATEMENTS THROUGH CD:

The Bank has circulated Annual Financial statements to its members through CD at their registered address. A printed copy of the
above referred statements can be provided to members upon request. The request form is available on the website of the Bank and
may be accessed by clicking the following link;
https://www.meezanbank.com/wp-content/themes/mbl/downloads/Annual-Report-Request-Form.pdf.

8. TRANSMISSION OF ANNUAL REPORTS THROUGH E-MAIL

The Securities and Exchange Commission of Pakistan (SECP) through SRO No. 787(I)2014 and SRO No. 470(I) of 2016 dated
September 8, 2014, and May 31, 2016, respectively has provided an option for shareholders to receive Annual Report along with
the notice of Annual General Meeting electronically through E-mail/CD/DVD/USB/ in hard copy. Hence, members who are
interested in receiving the Annual Reports and notice of Annual General meeting electronically in future are requested to send their
request on the prescribed form placed on the Banks website (link as mentioned in Point No. 7), to the Bank’s Share Registrar.

THE FOLLOWING CIRCULARS / NOTIFICATIONS REQUIRE SPECIAL ATTENTION OF THE SHAREHOLDERS:

9. PAYMENT OF CASH DIVIDEND THROUGH ELECTRONIC MODE (E-DIVIDEND) - MANDATORY

Under section 242 of the Companies Act, 2017, and Regulation No. 4 of the Companies (Distribution of Dividends) Regulations,
2017, it is mandatory for a listed company to pay cash dividend to shareholders only through electronic mode directly into the bank
account designated by the entitled shareholders.

In order to receive dividend directly into the bank account, shareholders are requested to fill the “E-Dividend Mandate Form”
available on Bank’s website and send it duly completed and signed along with a copy of his / her valid CNIC to the Bank’s
Share registrar, THK Associates (Pvt.) Ltd., Plot No. 32-C, Jami Commercial Street 2, D.H.A. Phase VII, Karachi -75500,
Pakistan UAN 111-000-322.,(in case of physical shares).

In case shares are held in CDC then the “E-Dividend Mandate Form” must be submitted directly to
shareholder(s)’broker/participant/CDC account services.

Shareholders can directly register for e-Dividend Services by visiting CDC Portal:
https://eservices.cdcaccess.com.pk/public/index.xhtml.

Meezan Bank Annual Report 2022 327

E-Dividend Mandate Form
Folio Number/CDC Sub Account Number
Name of Shareholder
Title of the Bank Account
International Bank Account Number (IBAN)
Name of Bank
Branch Name, Branch Code, Address
Cell and Landline number
CNIC/ Passport No. (Attach copy)
Signature of Shareholder

10. SUBMISSION OF VALID CNIC COPY (MANDATORY)

In terms of Regulation No. 06 of the Companies (Distribution of Dividends) Regulations, 2017 read with Section 243(3) of the
Companies Act, 2017, listed Companies are entitled to withhold payment of dividend, if shareholders have not provided
copies of their valid Computerized National Identity Cards (“CNIC”)/ Passport Number as well as complete and valid details
of designated bank accounts (IBAN) for direct credit of cash dividend.

The shareholders are therefore requested to submit a copy of their valid CNIC/NTN/Passport Number within ten (10) days
from the date of this Notice to the Bank’s Registrar and Share Transfer Agent/CDC (as the case may be). In case the same
have already been provided, then these instructions may be ignored.

The shareholders while sending copies of their CNICs must quote their respective folio numbers and names for identification
purpose.

11. TAX IMPLICATION ON DIVIDENDS

The Government of Pakistan has made certain amendments in Section 150 of the Income Tax Ordinance, 2001 whereby
different rates are prescribed for deduction of withholding tax on the amount of dividend paid by the companies/banks. These
rates are as per law.

To enable the Bank to make tax deduction on the amount of Cash Dividend, all the members whose names are not entered
into the Federal Board of Revenue’s (FBR) Active Tax-Payers List (ATL), despite the fact that they are tax return filers, are
advised to make sure that their names are entered into ATL, before the date of book closure for cash dividend; otherwise, tax
on their cash dividend will be deducted as non-filer.

12. TAX ON JOINT SHAREHOLDING

All shareholders who hold shares jointly are requested to provide shareholding proportions of principal shareholder and
joint-holder(s) in respect of shares held by them to our Shares Registrar, in writing as follows:

Principal Shareholder Joint Shareholder

Folio/CDS Total Shares Name and Shareholding Name and Shareholding

CNIC No. Proportion CNIC No. Proportion
(No. of Shares) (No. of Shares)

The required information must reach our Shares Registrar by the close of business (5:00 pm) on March 21, 2023 otherwise it
will be assumed that the shares are equally held by principal shareholder and joint holder(s) and tax will be deducted
according to the proportionate holding of each shareholder as clarified by the FBR vide its clarification letter No. I(54)
Exp/2014-132872-R, dated September 25, 2014.

328 Meezan Bank Annual Report 2022

13. TAX EXEMPTION CERTIFICATE

Shareholders claiming tax exemption under clause 47(B) of Part IV of the Second Schedule of Income Tax Ordinance, 2001
are requested to provide a valid exemption certificate under section 159 (1) of the Income Tax Ordinance, 2001 latest by
March 21, 2023, to our Shares Registrar before the date of Book closure as required vide FBR clarification letter No. 1(43)
D.G. (W.H.T.) / 2008-Vol.II-66417-R dated May 12, 2015.

14. INTIMATION OF CHANGE OF ADDRESS AND DECLARATION OF NON-DEDUCTION OF ZAKAT

Members are requested to immediately notify regarding the change, if any, in their registered and/or e-mail addresses, in
writing, and their declaration for the non-deduction of Zakat (if applicable), to the Share Registrar and Transfer Agent of the
Bank i.e. THK Associates (Pvt.) Ltd., Plot No. 32-C, Jami Commercial Street 2, D.H.A. Phase VII, Karachi -75500, Pakistan,
UAN 111-000-322 (in case of Physical scrips) whereas Members/CDC Account holders are requested to contact their CDC
Participant/CDC Account Services for the same, but no later than close of business hours (05:00 p.m.) on March 21, 2023.

15. CONVERSION OF PHYSICAL SHARES INTO BOOK-ENTRY FORM

The Securities and Exchange Commission of Pakistan (SECP) through its letter No. CSD/ED/Misc/2016- 639-640 dated
March 26, 2021 has advised the listed companies to adhere with the provisions of section 72 of the Companies Act, 2017 (the
“Act”) by replacing shares issued by them in Physical Form with the shares to be issued in the Book-Entry Form. Meezan
Bank Limited (the “Bank”), being a listed company is also required to comply with aforesaid provisions of Act.

The shareholders of Meezan Bank Limited having physical folios/share certificates are requested to convert their shares from
physical form into Book Entry Form as soon as possible. The shareholders may contact their Broker, a PSX Member, CDC
Participant or CDC Investor Account Service Provider for assistance in opening a CDS Account and subsequent induction of
the physical shares into Book Entry Form

It would facilitate the shareholders in many ways including safe custody of shares, no loss of shares, avoidance of formalities
required for the issuance of duplicate shares and readily available for sale and purchase in open market at better rates. The
shareholders of Bank may contact the Share Registrar and Transfer Agent of the Bank, namely THK Associates (Pvt.) Limited
at the following address for the conversion of physical shares into Book-Entry Form.

THK Associates (Pvt.) Limited,

Plot No. 32-C, Jami Commercial, Street 2, D.H.A,
Phase VII, Karachi -75500. Tel # 021-353101091-6
UAN: 021-111-000-322 Email: [email protected] and
[email protected]

16. UN-CLAIMED DIVIDENDS / SHARES

The shareholders are hereby informed that in accordance with section 244 of the Companies Act, 2017 and the unclaimed
shares, Modaraba certificates, Dividend, other instruments and undistributed Assets Regulations, 2017, the companies are
required to deposit cash dividends to the credit of the Federal Government and shares to the Commission, which are
undelivered/unclaimed for a period of three (3) years or more from the date it is due and payable.

Meezan Bank Annual Report 2022 329

Meezan Bank Limited
E-Dividend Mandate Form

According to Section 242 of Companies Act, 2017 and Circular No. 18/2017 dated August 1, 2017 issued by Securities and Exchange
Commission of Pakistan (SECP), from November 1, 2017 all listed companies are to pay dividend only through electronic mode
directly into the bank accounts designated by the entitled shareholders.

In view of above, Shareholder(s) are advised to provide their complete bank account / IBAN detail as per format given below required
under clause 7,8 and 9 (ii) of the Companies (Distribution of Dividends) Regulations, 2017 issued under S.R.O.1145 (I) / 2017 dated
November 06, 2017 by SECP enabling us to comply with the above Section/Circular.

For physical Shareholder(s): THK Associates (Pvt) Limited, Plot No. 32-C Jami Commercial Street 2, DHA,
Phase VII, Karachi-75500, Pakistan.

For CDC Account holder (s) in case of CDC account holder / Sub-account holder, please provide said
details to CDC / to respective member Stock Exchange.

Company Secretary
E-Dividend Mandate Details
It is requested that all my cash Dividend amounts declared by the Bank may be credited into the following bank account:

Folio Number / CDC Participants ID A/c No.

Name of Shareholder(s)

Title of the Bank Account

Bank Account Number (Complete) / IBAN

Bank’s Name, Branch Name, Branch Code

and Address

Cell Number

Landline Number, if any

Email Address

CNIC Number/
Passport Number (in case of foreign Shareholder)
(attach copy)

It is stated that the above mentioned information is correct, that I will intimate the changes in the above mentioned information
to the Company and the concerned Share Registrar/Participant/CDC Investor Account Services as soon as these occur.

Signature of Shareholder
(Please affix company stamp in case of a corporate entity)
Note:
Please provide complete IBAN, after checking with your concerned bank branch to enable electronic credit directly into your bank account.
The payment of cash dividend will be processed on the basis of the IBAN alone. Meezan Bank is entitled to rely on the IBAN information as per your instructions (provided
by you). The Bank shall not be responsible for any loss, damage, liability or claim arising, directly or indirectly, from any error, delay or failure in performance of any of its
obligations hereunder which is caused by incorrect payment instructions and /or due to any event beyond the control of the Bank.

Meezan Bank Limited, Meezan House C-25, Estate Avenue S.I.T.E., Karachi, Pakistan. PABX: (92-21) 38103500 UAN: 021-111-331-331 & 111-331-332
Website: www.meezanbank.com
FORM OF PROXY
The Company Secretary
Meezan Bank Limited
Meezan House
C-25,Estate Avenue S.I.T.E,
Karachi, Pakistan.

I/We of being a member(s) of Meezan Bank Limited and

holder of ordinary shares as per Share Register Folio No. and/or CDC Investor Account No.

/ Participant I.D No. and Sub Account No. do hereby appoint

of or failing him/her

of as my/our proxy to attend, speak, vote and act for me/us on my/our behalf at the 27th Annual

General Meeting of Meezan Bank Ltd. to be held on Wenesday, March 29, 2023 at 9:00 a.m. at Meezan House, C-25, Estate Avenue,

S.I.T.E., Karachi, Pakistan and at any adjournment thereof.

Please affix
Signed this day of 2023.
revenue
stamp of
appropriate
value

Signature of Member(s)/Attorney
The Signature should agree
with the specimen registered
with the Company
Witness 1 Witness 2

Signature: Signature:

Name: Name:

Address: Address:

CNIC or Passport No: CNIC or Passport No:

NOTES: 2. In case of corporate entity, the Board of Directors’ resolution/power of

1. Proxies in order to be effective must be received by the Company not attorney with specimen signature of the nominee shall be produced
later than 48 hours before the time of the meeting. (unless it has been provided earlier) at the time of Meeting.
2. A member entitled to attend and vote at the Meeting may appoint another
person as his/her proxy to exercise all or any of his rights to attend, For Appointing Proxies:
speak and vote for him/her. 1. The Proxy form be signed by the appointer or his attorney duly authorized
3. Members are required to timely notify any change in their address to in writing, or if the appointer is a body corporate, be under its seal or
Bank’s Shares Registrar THK Associates (Pvt.) Ltd. Plot No. 32-C Jami be signed by an officer or any attorney duly authorized by it.
Commercial Street 2, DHA, Phase VII, Karachi-75500, Pakistan. 2. In case of individuals, the account holder or sub-account holder and
4. Shareholders will further have to follow the guidelines as laid down in /or the person whose securities are in group account and their
Circular 1 dated January 26, 2000 issued by the Securities and Exchange registration details are uploaded as per the regulations, shall submit
Commission of Pakistan. the proxy form as per the above requirement.
5. If any member appoints more than one proxy and more than one 3. In case of corporate entity, the Board of Directors’ resolution/power of
instruments of proxies for any one meeting are deposited with the attorney with specimen signature of the nominee shall be submitted
Company, all such instruments of proxy shall be rendered invalid. along with proxy form to the Company.
4. The proxy form shall be witnessed by two persons whose names,
For Attending the Meeting: addresses and CNIC numbers shall be mentioned on the form.
1. In case of individuals, the account holder or sub-account holder and/or 5. Attested copies of CNIC or the passports of the beneficial owners and
the person whose securities are in group account and their registration the proxy shall be furnished with the proxy form.
detail are uploaded as per the regulations, shall authenticate his/her 6. The proxy shall produce his/her original CNIC or original passport at
identity by showing his/her original Computerized National Identity Card the time of the Meeting.
(CNIC) or original passport at the time of attending the Meeting.
Please affix
correct
postage
The Company Secretary
Meezan Bank Limited
Meezan House, C-25,
Estate Avenue, SITE,
Karachi, Pakistan.
2 1