CONTENTS Corporate Information Directors' Review Interim Condensed Statement of Financial Position Interim Condensed Profit and Loss

Account Interim Condensed Statement of Comprehensive Income Interim Condensed Statement of Changes in Equity Interim Condensed Cash Flow Statement Notes to the Interim Condensed Financial Statements Consolidated Financial Statements 2 3 4 5 6 7 8 9 23

CORPORATE INFORMATION

Board of Directors

Ali Raza D. Habib Abbas D. Habib Anwar Haji Karim Hasnain A. Habib Imtiaz Alam Hanfi Murtaza H. Habib Qumail R. Habib Shameem Ahmed Syed Mazhar Abbas Wazir Ali Khoja Syed Mazhar Abbas Ali Raza D. Habib Anwar Haji Karim Shameem Ahmed Murtaza H. Habib

Chairman Chief Executive & Managing Director

Executive Director

Audit Committee

Chairman Member Member Member Member

Company Secretary Statutory Auditors Legal Advisor Registered Office Principal Office

A. Saeed Siddiqui Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants Liaquat Merchant Associates Advocates and Corporate Legal Consultants 126-C, Old Bahawalpur Road, Multan 2nd Floor, Mackinnons Building, I.I. Chundrigar Road, Karachi M/s. Gangjees Registrar Services (Pvt) Ltd. 516, Clifton Centre, Khayaban-e-Roomi, Block - 5, Clifton, Karachi-75600. www.bankalhabib.com
2

Share Registrar

Website

DIRECTORS REVIEW On behalf of the Board of Directors of the Bank, it is my pleasure to present the un-audited financial statements of Bank AL Habib Limited along with the un-audited consolidated financial statements of Bank AL Habib Limited and the Banks Subsidiary M/s. AL Habib Capital Markets (Private) Limited for the quarter ended March 31, 2012. Alhamdolillah, during the period under review, the performance of the Bank continued to be satisfactory. The deposits increased to Rs. 313.9 billion as compared to Rs. 302.1 billion on December 31, 2011. In the same period, advances increased to Rs. 125.9 billion from Rs. 114.9 billion, while investments increased to Rs. 224.8 billion from Rs. 223.0 billion. The pre-tax profit of the Bank for the quarter ended March 31, 2012 was Rs. 2,017.0 million as compared to Rs. 1,650.9 million during the corresponding period last year. Your Bank now has a network of 360 offices, comprising 294 branches, 64 sub-branches, and two Representative Offices. Our network includes three overseas offices (a Wholesale Branch in the Kingdom of Bahrain and Representative Offices in Dubai and Istanbul) and eleven Islamic Banking Branches. Continuing with our branch expansion policy, the Bank intends to open more branches and sub-branches during the year 2012. Pakistan Credit Rating Agency Limited (PACRA) has maintained the Banks long term and short term entity ratings at AA+ (Double A plus) and A1+ (A One plus), respectively. The ratings of our unsecured, subordinated TFCs have also been maintained at AA (Double A). These ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments. We wish to thank our customers for their continued support and confidence, the State Bank of Pakistan for their guidance, and local and foreign correspondents for their cooperation. We also thank all our staff members for their sincere and dedicated services, which enabled the Bank to achieve these satisfactory results.

On behalf of the Board of Directors

Karachi: April 24, 2012

ALI RAZA D. HABIB Chairman

INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2012

Note 31-March 31-December 2012 2011 (Un-Audited) (Audited) (Rupees in '000) 23,040,988 9,161,939 00 224,817,314 125,903,730 10,715,978 00 5,211,474 398,851,423 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities Other liabilities 22,957,986 6,743,337 000 222,958,574 114,872,252 10,743,753 000 6,006,559 384,282,461

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

4 5 6

7 8 9

4,859,053 45,343,823 313,864,799 6,940,826 00 1,190,763 7,894,009 380,093,273

4,979,720 43,441,594 302,098,594 7,390,358 000 1,231,486 5,287,157 364,428,909 19,853,552

NET ASSETS REPRESENTED BY : Share capital Reserves Unappropriated profit

18,758,150

10,103,868 5,572,235 1,189,610 16,865,713

8,785,972 5,324,689 3,726,098 17,836,759 2,016,793 19,853,552

Surplus on revaluation of assets - net of tax

10

1,892,437 18,758,150

CONTINGENCIES AND COMMITMENTS

11

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

ALI RAZA D. HABIB Chairman

ABBAS D. HABIB Chief Executive and Managing Director

SYED MAZHAR ABBAS ANWAR HAJI KARIM Director Director

INTERIM CONDENSED PROFIT AND LOSS ACCOUNT (UN-AUDITED) FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012
Note Three months period ended 31-March 31-March 2012 2011 (Rupees in '000) 10,537,888 (6,789,891) 3,747,997 (269,178) 00 00 (269,178) 3,478,819 370,674 91,490 121,922 3 00 108,620 692,709 4,171,528 NON MARK-UP / INTEREST EXPENSES Administrative expenses Other provisions / write-offs Other charges Total non mark-up / interest expenses Extra-ordinary / unusual items PROFIT BEFORE TAXATION Taxation - Current - Prior years - Deferred (2,109,210) 00 (45,357) (2,154,567) 2,016,961 00 2,016,961 (784,821) 00 (21,460) (806,281) 1,210,680 (1,756,483) (5,063) (33,764) (1,795,310) 1,650,879 00 1,650,879 (524,462) 00 (91,598) (616,060) 1,034,819 Restated Basic and diluted earnings per share Rupees 1.20 1.02 8,251,171 (4,942,038) 3,309,133 (484,189) 00 00 (484,189) 2,824,944 326,885 34,452 160,410 (1,523) 00 101,021 621,245 3,446,189

Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / return / interest income Provision against non-performing loans and advances Provision for diminution in the value of investments Bad debts written-off directly

12 13

5.3

Net mark-up / return / interest income after provisions NON MARK-UP / INTEREST INCOME Fees, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain / (loss) on sale / redemption of securities - net Unrealised gain / (loss) on revaluation of investments classified as held for trading Other income Total non mark-up / interest income

14

PROFIT AFTER TAXATION

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

ALI RAZA D. HABIB Chairman

ABBAS D. HABIB Chief Executive and Managing Director

SYED MAZHAR ABBAS ANWAR HAJI KARIM Director Director 5

INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED) FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012
Three months period ended 31-March 31-March 2012 2011 (Rupees in '000) Net profit for the period Other comprehensive income Effect of foreign currency translation of net investment in foreign branch Total comprehensive income for the period 1,210,680 1,034,819

5,410 1,216,090

(1,651) 1,033,168

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

ALI RAZA D. HABIB Chairman

ABBAS D. HABIB Chief Executive and Managing Director

SYED MAZHAR ABBAS ANWAR HAJI KARIM Director Director

INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY (UN-AUDITED) FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012 Share Capital Statutory Reserve Revenue Reserves Special General Foreign Currency UnappReserve Reserve Translation ropriated Reserve Profit (Rupees in 000) Balance as at 01 January 2011 Total comprehensive income for the period Transfer from surplus on revaluation of fixed assets - net of tax Transfer to statutory reserve Cash dividend (Rs. 2 per share) Issue of bonus shares in the ratio of 20 shares for every 100 shares held Balance as at 31 March 2011 Total comprehensive income for the period Transfer from surplus on revaluation of fixed assets - net of tax Transfer to statutory reserve Balance as at 31 December 2011 Total comprehensive income for the period Transfer from surplus on revaluation of fixed assets - net of tax Transfer to statutory reserve Cash dividend (Rs. 2.5 per share) Issue of bonus shares in the ratio of 15 shares for every 100 shares held Balance as at 31 March 2012 7,321,643 00 00 00 00 1,464,329 8,785,972 00 00 00 8,785,972 00 00 00 00 1,317,896 10,103,868 3,634,173 00 00 206,964 00 00 3,841,137 00 00 699,732 4,540,869 00 00 242,136 00 00 4,783,005 126,500 00 00 00 00 00 126,500 00 00 00 126,500 00 00 00 00 00 126,500 540,000 00 00 00 00 00 540,000 00 00 00 540,000 00 00 00 00 00 540,000 91,591 2,992,475 14,706,382 1,033,168 7,678 00 Total

(1,651) 1,034,819 00 00 00 00 89,940 27,380 00 00 117,320 5,410 00 00 00 00 122,730 7,678 (206,964)

(1,464,329) (1,464,329) (1,464,329) 899,350 3,498,661 27,819 (699,732) 3,726,098 1,210,680 9,357 (242,136) 00 14,282,899 3,526,041 27,819 00 17,836,759 1,216,090 9,357 00

(2,196,493) (2,196,493) (1,317,896) 1,189,610 00 16,865,713

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

ALI RAZA D. HABIB Chairman

ABBAS D. HABIB Chief Executive and Managing Director

SYED MAZHAR ABBAS ANWAR HAJI KARIM Director Director 7

INTERIM CONDENSED CASH FLOW STATEMENT (UN-AUDITED) FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012
Note CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Dividend income Adjustments for non-cash items: Depreciation Amortisation Provision against non-performing loans and advances (Gain) / loss on sale / redemption of securities Provision for defined benefit plan Provision for compensated absences Gain on sale of operating fixed assets Provision against off-balance sheet items 197,192 7,340 269,178 (3) 30,000 6,130 (16,053) 493,784 2,419,255 (Increase) / decrease in operating assets Lendings to financial institutions Advances Other assets Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities (excluding provision for taxation) (11,300,668 ) 821,400 (10,479,268) (120,667) (2,139,658) 11,766,205 256,043 9,761,923 1,701,910 Income tax paid Net cash flow from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investments in available for sale securities Net investments in held to maturity securities Net investments in associates Dividend received Investments in operating fixed assets Sale proceeds of operating fixed assets Net cash used in investing activities CASH FLOW FROM FINANCING ACTIVITIES Payments of sub-ordinated loans Dividend paid Net cash used in financing activities Exchange adjustment on translation of net investment in foreign branch Decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period ALI RAZA D. HABIB Chairman ABBAS D. HABIB Chief Executive and Managing Director (458,276) 1,243,634 (17,109,674) 15,073,756 63,272 (176,086) 17,286 (2,131,446) (449,532) (208,349) (657,881) 5,410 (1,540,283) 29,652,920 28,112,637 180,904 10,552 484,189 1,523 25,950 10,439 (17,527) 5,063 701,093 2,317,520 (7,691,645) (4,491,523) (783,846) (12,967,014) 463,443 10,305,930 8,398,109 477,221 19,644,703 8,995,209 (541,172) 8,454,037 (14,268,789) 5,731,280 (51,656) 32,535 (195,557) 19,612 (8,732,575) (970) (1,007,558) (1,008,528) (1,651) (1,288,717) 19,916,758 18,628,041 31-March 31-March 2012 2011 (Rupees in '000) 2,016,961 1,650,879 (91,490) (34,452) 1,925,471 1,616,427

The annexed notes 1 to 19 form an integral part of these interim condensed financial statements. SYED MAZHAR ABBAS ANWAR HAJI KARIM Director Director 8

NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS (UN-AUDITED) FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012
1. STATUS AND NATURE OF BUSINESS Bank AL Habib Limited (the Bank) was incorporated in Pakistan on 15 October 1991 as a public limited company under the Companies Ordinance, 1984 having its registered office at 126-C, Old Bahawalpur Road, Multan with principal place of business in Karachi. Its shares are listed on all the Stock Exchanges in Pakistan. It is a scheduled bank principally engaged in the business of commercial banking with a network of 294 branches (31 December 2011: 290 branches), 64 subbranches (31 December 2011: 61) and 02 representative offices (31 December 2011: 02).The branch network of the Bank includes a wholesale branch in the Kingdom of Bahrain (31 December 2011:01), a branch in Karachi Export Processing Zone (31 December 2011:01) and 11 Islamic Banking branches (31 December 2011: 11). 2. STATEMENT OF COMPLIANCE 2.1 These interim condensed financial statements have been prepared, in accordance with the requirements of the International Accounting Standard (IAS) 34 - 'Interim Financial Reporting', provisions of the Companies Ordinance, 1984, the Banking Companies Ordinance,1962 and regulations / directives issued by the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP). In case where requirements differ, the provisions of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the said directives have been followed. 2.2 SBP vide BSD Circular No. 10, dated 26 August 2002 has deferred the applicability of IAS 39, "Financial Instruments: Recognition and Measurement" and IAS 40, "Investment Property" for banking companies till further instructions. Further, according to the notification of SECP dated 28 April 2008, International Financial Reporting Standard (IFRS) - 7 "Financial Instruments: Disclosure" has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these financial statements. However, investments have been classified, accounted for and valued in accordance with the requirement of various circulars issued by SBP. 2.3 The disclosures made in these interim condensed financial statements have been limited based on the format prescribed by SBP vide BSD Circular Letter No. 2, dated 12 May 2004 and IAS 34 "Interim Financial Reporting" and do not include all the information required in the annual financial statements. Accordingly, these interim condensed financial statements should be read in conjunction with the annual financial statements of the Bank for the year ended 31 December 2011. 2.4 These are separate interim condensed financial statements of the Bank in which investments in subsidiary and associates are reported on the basis of direct equity interest and are not consolidated or accounted for by using equity method of accounting. 3. ACCOUNTING POLICIES The accounting policies adopted in the preparation of these interim condensed financial statements are consistent with those applied in the preparation of the annual financial statements of the Bank for the year ended 31 December 2011.

Note

31-March 2012 (Un-Audited) 31-December 2011 (Audited) Held by Given as Total Held by Given as Total Bank Collateral Bank Collateral (Rupees in '000)

4.

INVESTMENTS Available for Sale Securities Market Treasury Bills Pakistan Investment Bonds Foreign Currency Bonds Sukuks Ordinary shares of listed companies Ordinary shares of unlisted companies Listed term finance certificates Unlisted term finance certificates Open ended mutual funds 98,528,454 14,638,279 1,273,782 3,854,029 75,871 39,570 560,261 249,920 4,500,000 123,720,166 Held to Maturity Securities 4.1 Market Treasury Bills Pakistan Investment Bonds Sukuks Listed term finance certificates Unlisted term finance certificates Associates Habib Sugar Mills Limited Habib Asset Management Limited First Habib Income Fund First Habib Stock Fund First Habib Cash Fund Subsidiary AL Habib Capital Markets (Private) Limited Investments at cost Provision for diminution in the value of investments Investments (net of provisions) Surplus on revaluation of available for sale investments - net Investments after revaluation of available for sale investments 61,035,605 13,519,538 264,088 321,503 83,333 75,224,067 180,977 33,750 550,000 50,000 100,000 914,727 200,000 200,058,960 (5,700 ) 200,053,260 40,160 200,093,420 24,633,573 00 00 00 00 00 00 00 00 24,633,573 00 00 00 00 00 00 00 00 00 00 00 00 00 24,633,573 00 24,633,573 90,321 24,723,894 123,162,027 14,638,279 1,273,782 3,854,029 75,871 39,570 560,261 249,920 4,500,000 148,353,739 61,035,605 13,519,538 264,088 321,503 83,333 75,224,067 180,977 33,750 550,000 50,000 100,000 914,727 200,000 224,692,533 (5,700 ) 224,686,833 130,481 224,817,314 78,715,641 14,617,483 979,474 6,947,740 70,918 39,570 584,461 249,920 1,450,000 103,655,207 76,079,520 13,482,722 266,900 343,681 125,000 90,297,823 180,977 33,750 550,000 50,000 100,000 914,727 200,000 195,067,757 (5,700 ) 195,062,057 161,803 195,223,860 27,588,855 106,304,496 00 14,617,483 00 979,474 00 6,947,740 00 70,918 00 39,570 00 584,461 00 249,920 00 1,450,000 27,588,855 131,244,062 00 00 00 00 00 00 00 00 00 00 00 00 00 76,079,520 13,482,722 266,900 343,681 125,000 90,297,823 180,977 33,750 550,000 50,000 100,000 914,727 200,000

27,588,855 222,656,612 00 (5,700)

27,588,855 222,650,912 145,859 307,662

27,734,714 222,958,574

4.1

The aggregate market value of held to maturity securities as on 31 March 2012 amounts to Rs. 75,674 (31 December 2011: 91,084) million.

10

Note

31-March 2012
(Un-Audited)

31-December 2011
(Audited)

(Rupees in '000) 5. ADVANCES Loans, cash credits, running finances, etc. In Pakistan Outside Pakistan Net investment in finance lease / ijarah financing In Pakistan Outside Pakistan 112,977,075 4,512,980 117,490,055 455,955 00 455,955 251,807 2,334,801 101,971,343 4,325,819 106,297,162 426,351 00 426,351 109,668 2,007,557

Ijarah financing under IFAS 2 Murabaha Bills discounted and purchased (excluding market treasury bills) Payable in Pakistan Payable outside Pakistan

1,730,147 9,040,668 10,770,815

1,928,992 9,233,700 11,162,692 120,003,430 (2,998,847) (32,331) (2,100,000) (5,131,178) 114,872,252

Advances - gross Provision against non-performing loans and advances Specific provision 5.1 General provision against consumer advances (as per SBP regulations) 5.2 General provision 5.3

131,303,433 (2,917,372) (32,331) (2,450,000) (5,399,703) 125,903,730

Advances - net of provisions

5.1 Advances include Rs. 3,190.984 (31 December 2011: Rs. 3,203.630) million which have been placed under non-performing status as detailed below: Classified advances Domestic Overseas Total Category of classification Substandard 17,449 Doubtful 145,545 Loss 3,026,486 3,189,480 31-March 2012 (Un-Audited) Provision required Provision held Domestic Overseas Total Domestic Overseas Total (Rupees in '000) 00 2,960 2,960 00 71,062 71,062 1,504 2,843,350 2,841,846 1,504 2,917,372 2,915,868 00 2,960 00 71,062 1,504 2,843,350 1,504 2,917,372

00 17,449 2,960 00 145,545 71,062 1,504 3,027,990 2,841,846 1,504 3,190,984 2,915,868

11

Classified advances Domestic Overseas Total Category of classification Substandard Doubtful Loss

31-December 2011 (Audited) Provision required Domestic Overseas Total (Rupees in '000)

Provision held Domestic Overseas Total

56,537 100,467 3,045,133 3,202,137

0 56,537 14,134 0 100,467 48,520 1,493 3,046,626 2,934,700 1,493 3,203,630 2,997,354

0 14,134 14,134 0 48,520 48,520 1,493 2,936,193 2,934,700 1,493 2,998,847 2,997,354

0 14,134 0 48,520 1,493 2,936,193 1,493 2,998,847

5.2 The Bank has made general provision for consumer portfolio as required by SBP's Prudential Regulations amounting to Rs. 32.331 (31 December 2011: Rs. 32.331) million. 5.3 In line with its prudent policies, the Bank has also made general provision of Rs. 350 million during the period, bringing the total of such provision to Rs. 2,450 (31 December 2011: Rs. 2,100) million against its loans and advances portfolio. This general provision is in addition to the requirements of the Prudential Regulations. Three months period ended 31-March 31-March 2012 2011 (Un-Audited) (Rupees in 000) 6. OPERATING FIXED ASSETS

6.1 Additions during the period - at cost: Leasehold land Buildings on leasehold land Improvements to leasehold buildings Furniture and fixtures Electrical, office and computer equipments Vehicles Intangible assets 391 30,941 21,425 3,507 42,122 2,171 2,321 102,878 6.2 Deletions during the period - at cost: Furniture and fixtures Electrical, office and computer equipments Vehicles 888 7,703 18,733 27,324 00 361 17,198 17,559
12

12,133 21,393 13,588 6,675 80,332 22,163 340 156,624

31-March 31-December 2012 2011 (Un-Audited) (Audited) (Rupees in 000) 7. BORROWINGS Secured Borrowings from State Bank of Pakistan Export refinance scheme Long term financing for export oriented projects Long term financing for imported and locally manufactured plant and machinery Financing facility for storage of agricultural produce Repurchase agreement borrowings Unsecured Overdrawn nostros Borrowings from financial institutions

12,140,693 514,088 3,406,973 59,628 16,121,382 24,678,843 40,800,225 4,090,290 453,308 4,543,598 45,343,823

11,537,652 568,700 3,322,617 71,554 15,500,523 27,712,777 43,213,300 48,403 179,891 228,294 43,441,594

8.

DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Savings deposits Current accounts - Remunerative Current accounts - Non-remunerative

114,035,089 80,795,119 30,470,134 83,142,764 308,443,106

120,176,785 70,196,707 26,524,367 78,697,621 295,595,480 6,267,220 235,894 6,503,114 302,098,594

Financial Institutions Remunerative deposits Non-remunerative deposits

5,122,202 299,491 5,421,693 313,864,799

13

Note

31-March 31-December 2012 2011 (Un-Audited) (Audited) (Rupees in 000)

9.

SUB-ORDINATED LOANS - unsecured Term Finance Certificates (TFCs) - I (Quoted) Term Finance Certificates (TFCs) - II (Quoted) Term Finance Certificates (TFCs) - III (Unquoted) Term Finance Certificates (TFCs) - IV (Unquoted) 9.1 9.2 9.3 9.4 448,826 1,497,000 1,995,600 2,999,400 6,940,826 897,658 1,497,300 1,996,000 2,999,400 7,390,358

9.1 Term Finance Certificates - I (Quoted) Total issue Rating Rate Floor Ceiling Redemption Tenor Maturity Rupees 1,350 million AA Payable six monthly at average six months KIBOR plus 150 bps 3.50% p.a. 10.00% p.a. 6 - 78th month: 0.25%; 84th, 90th and 96th month: 33.25% each 8 years July 2012

9.2 Term Finance Certificates - II (Quoted) Total issue Rating Rate Redemption Tenor Maturity Rupees 1,500 million AA Payable six monthly at average six months KIBOR plus 1.95% without any floor and cap 6 - 84th month: 0.28%; 90th and 96th month: 49.86% each 8 years February 2015

9.3 Term Finance Certificates - III (Unquoted) Total issue Rating Rate Redemption Tenor Maturity Rupees 2,000 million AA Payable three monthly at 15.50% p.a. for first 5 years and 16.00% p.a. for next 3 years 3rd - 84th month: 0.56%; 87th, 90th, 93rd and 96th month: 24.86% each 8 years June 2017

14

9.4 Term Finance Certificates - IV (Unquoted) Total issue Rating Rate Redemption Tenor Maturity Rupees 3,000 million AA Payable six monthly at 15.00% p.a. for first 5 years and 15.50% p.a. for next 5 years 6th - 108th month: 0.36%; 114th and 120th month: 49.82% each 10 years June 2021 Note 31-March 2012
(Un-Audited)

31-December 2011
(Audited)

(Rupees in 000) 10. SURPLUS ON REVALUATION OF ASSETS - NET OF TAX Operating fixed assets Available for sale investments 10.1 10.2 1,793,921 98,516 1,892,437 10.1Operating fixed assets Surplus on revaluation of land and buildings Related deferred tax liability 2,425,129 (631,208) 1,793,921 10.2Available for sale investments Federal Government Securities Fully paid-up ordinary shares Term finance certificates, sukuks and bonds Open ended mutual funds 117,319 (13,052) (5,091) 31,305 130,481 (31,965) 98,516 319,757 (8,468) (19,380) 15,753 307,662 (94,147) 213,515 2,439,525 (636,247) 1,803,278 1,803,278 213,515 2,016,793

Related deferred tax liability

15

31-March 31-December 2012 2011 (Un-Audited) (Audited) (Rupees in 000) 11. CONTINGENCIES AND COMMITMENTS 11.1 Direct Credit Substitutes Financial institutions Others 111,643 263,599 375,242 11.2 Transaction-related Contingent Liabilities Government Financial institutions Others 8,741,135 127,625 4,311,888 13,180,648 11.3 Trade-related Contingent Liabilities Letters of credit Acceptances 35,046,234 6,324,548 41,370,782 11.4Other Contingencies The income tax returns of the Bank have been submitted upto and including the Bank's financial year 2010. The income tax assessments of the Bank have been made by the tax authorities upto and including the assessment / tax year 2008 and 2010. For the tax year 2009, proceedings u/s 122(5A) of the Income Tax Ordinance, 2001 were initiated against which the Bank has filed writ petition before Lahore High Court, Multan Bench. The Honourable Court has stayed the proceedings. For tax years, 2005 to 2008, the CIT Appeals has passed appellate orders by disallowing certain expenses / deductions (including bad debts written-off directly, improvement in leasehold premises, provision against non-performing loans and advances) having an aggregate tax impact of Rs. 44.256 million. The Bank has preferred an appeal before ITAT against the above referred orders of the CIT Appeals. The management, based on the opinion of its tax advisor, is confident about the favourable outcome of the above matters and hence, no additional provision has been considered necessary in these interim condensed financial statements. 32,838,848 7,104,549 39,943,397 8,008,832 115,461 4,544,785 12,669,078 79,615 446,014 525,629

16

31-March 2012 (Un-Audited) 11.5 Commitments in respect of forward lending Commitments to extend credit 11.6 Commitments in respect of forward exchange contracts Purchase Sale 11.7 Commitments for the acquisition of operating fixed assets 22,829,717 15,123,718 1,178,601

31-December 2011 (Audited)

(Rupees in 000) 15,603

28,032,085 25,331,776

256,322

124,899

Three months period ended 31-March 31-March 2012 2011 (Un-Audited) (Rupees in 000) 12. MARK-UP / RETURN / INTEREST EARNED On loans and advances to: Customers Financial institutions On investments: Available for sale securities Held to maturity securities

3,375,328 25,353 3,400,681 3,142,353 3,956,331 7,098,684

3,718,151 63,070 3,781,221 2,176,982 2,207,149 4,384,131 12,738 71,768 1,313 8,251,171

On deposits with financial institutions On securities purchased under resale agreements On call money lendings

14,602 23,534 387 10,537,888

17

Three months period ended Note 31-March 31-March 2012 2011 (Un-Audited) (Rupees in 000) 13. MARK-UP / RETURN / INTEREST EXPENSED Deposits Sub-ordinated loans Repurchase agreement borrowings Borrowings from SBP Others 4,881,173 256,023 1,079,626 380,298 192,771 6,789,891 4,232,191 166,121 113,861 413,113 16,752 4,942,038

14

14. INCOME FROM DEALING IN FOREIGN CURRENCIES Cost of local currency funds generated from FX transactions, amounting to Rs. 185.047 (March 2011: Rs. 3.111) million, is included in mark-up / return / interest expensed others. Comparative figures for corresponding period last year have accordingly been re-classified. 15. BASIC AND DILUTED - EARNINGS PER SHARE The weighted average number of shares for 2011 has been adjusted for the effect of bonus shares issued during the period. 16. RELATED PARTY TRANSACTIONS Related parties of the Bank comprise subsidiary, associates (including entities having directors in common with the Bank), retirement benefit funds, major shareholders, directors and key management personnel and their close family members. Transactions with related parties are carried out on an arm's length basis in terms of the policy as approved by the Board of Directors. The transactions with employees of the Bank are carried out in accordance with the terms of their employment.

18

Transactions with related parties during the period, are summarised as follows: Subsidiary Associates 31-March 2012 (Un-Audited) Non Key Executive Management Directors Personnel (Rupees in 000) Retirement Benefit Funds Total

Deposits At the beginning of the period Placements during the period Withdrawals during the period At the end of the period Advances At the beginning of the period Given during the period Repaid during the period At the end of the period 9,380 82,458 (91,838) 00 1,404,261 680,471 (722,764) 1,361,968 426 710 (1,109) 27 30,252 5,524 (3,931) 31,845 00 00 00 00 1,444,319 769,163 (819,642) 1,393,840 1,494 45,305 (38,743) 8,056 1,438,356 29,300,825 (29,917,868) 821,313 86,815 208,591 (215,094) 80,312 275,992 329,594 (316,755) 288,831 118,882 325,975 (311,384 ) 133,473 1,921,539 30,210,290 (30,799,844) 1,331,985

Contingencies and commitments

00

761,404

00

00

00

761,404

Subsidiary

Associates

31-December 2011 (Audited) Non Key Executive Management Directors Personnel (Rupees in 000)

Retirement Benefit Funds

Total

Deposits At the beginning of the year Placements during the year Withdrawals during the year At the end of the year Advances At the beginning of the year Given during the year Repaid during the year At the end of the year 00 33,542 (24,162) 9,380 369,808 3,131,625 (2,097,172) 1,404,261 214 1,653 (1,441) 426 17,525 29,980 (17,253) 30,252 00 00 00 00 387,547 3,196,800 (2,140,028) 1,444,319 20,009 3,883,764 (3,902,279) 1,494 1,687,940 56,377,143 (56,626,727) 1,438,356 13,638 2,732,759 (2,659,582) 86,815 126,804 657,330 (508,142) 275,992 310,525 3,789,104 (3,980,747) 118,882 2,158,916 67,440,100 (67,677,477) 1,921,539

Contingencies and commitments

00

518,781

00

00

00

518,781

19

Three months period ended 31-March 2012 (Un-Audited) Subsidiary Associates Non Key Executive Management Directors Personnel (Rupees in 000) 00 00 00 1,322 2 00 00 00 00 00 00 00 600 00 00 00 00 00 00 00 410 4,132 12 00 35,953 7,333 1,474 873 00 00 00 00 00 00 00 00 Retirement Benefit Funds 00 00 00 4,073 00 00 00 00 00 00 33,619 30,000 00 00 00 00 00 00 Total

Purchase of fixed assets Sale of securities Mark-up earned Mark-up expensed Bank charges and commission Loss on sale of securities Salaries and allowances Bonus Contribution to defined contribution plan Contribution to defined benefit plan Staff provident fund Staff gratuity fund Directors' fee Insurance claim received Insurance premium paid Dividend income Rental income Commission expensed

00 00 204 154 00 00 00 00 00 00 00 00 00 00 00 00 737 81

551 00 50,184 15,759 998 00 00 00 00 00 00 00 00 3,326 34,435 40,463 00 00

551 00 50,798 25,440 1,012 00 35,953 7,333 1,474 873 33,619 30,000 600 3,326 34,435 40,463 737 81

Three months period ended 31-March 2011 (Un-Audited) Subsidiary Associates Non Key Executive Management Directors Personnel (Rupees in 000) 00 00 00 374 00 00 00 00 00 00 00 00 650 00 00 00 00 00 00 00 264 1,851 11 00 24,978 4,943 974 520 00 00 00 00 00 00 00 00 Retirement Benefit Funds 00 00 00 20,060 00 00 00 00 00 00 27,852 25,950 00 00 00 00 00 00 Total

Purchase of fixed assets Sale of securities Mark-up earned Mark-up expensed Bank charges and commission Loss on sale of securities Salaries and allowances Bonus Contribution to defined contribution plan Contribution to defined benefit plan Staff provident fund Staff gratuity fund Directors' fee Insurance claim received Insurance premium paid Dividend income Rental income Commission expensed

00 00 00 309 13 00 00 00 00 00 00 00 00 00 00 00 610 11

694 37,748 7,303 22,519 1,479 (1,523) 00 00 00 00 00 00 00 3,115 24,639 25,703 00 00

694 37,748 7,567 45,113 1,503 (1,523) 24,978 4,943 974 520 27,852 25,950 650 3,115 24,639 25,703 610 11

20

17. ISLAMIC BANKING BUSINESS The Bank is operating 11 (31 December 2011: 11) Islamic Banking branches in Pakistan. The statement of financial position of these branches as at 31 March 2012 is as follows: 31-March 31-December 2012 2011 (Un-Audited) (Audited) (Rupees in 000) ASSETS Cash and balances with treasury banks Balances with and due from financial institutions Investments Financing and receivables Murabaha Ijarah Diminishing musharika Export refinance murabaha Export refinance istisna Istisna Other assets 257,713 1,606 1,229,665 2,084,563 279,439 1,884,637 250,238 1,105,220 659,341 647,506 8,399,928 270,353 494,968 1,362,945 1,848,829 154,480 2,099,681 158,727 1,086,631 11,102 832,175 8,319,891

LIABILITIES Bills payable 43,007 Due to financial institutions 1,342,886 Deposits and other accounts Current accounts 1,219,488 Saving accounts 493,297 Term deposits 3,658,700 Others 9,225 Deposits from financial institutions-remunerative 317,774 Deposits from financial institutions-non-remunerative 423 Due to head office 154,125 Other liabilities 178,481 7,417,406 NET ASSETS REPRESENTED BY: Islamic banking fund Unremitted profit Surplus on revaluation of assets 900,000 81,922 981,922 600 982,522 982,522

29,886 1,192,491 986,652 519,840 3,612,383 12,832 315,594 562 195,478 180,097 7,045,815 1,274,076

900,000 372,106 1,272,106 1,970 1,274,076

21

18. GENERAL Corresponding figures have been re-arranged / re-classified wherever necessary, for the purpose of comparison. 19. DATE OF AUTHORISATION These interim condensed financial statements were authorised for issue by the Board of Directors in their meeting held on April 24, 2012.

ALI RAZA D. HABIB Chairman

ABBAS D. HABIB Chief Executive and Managing Director

SYED MAZHAR ABBAS ANWAR HAJI KARIM Director Director

22

Consolidated Financial Statements

Bank AL Habib Limited

and Subsidiary Company

23

CONSOLIDATED INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2012

Note 31-March 31-December 2012 2011 (Un-Audited) (Audited) (Rupees in '000) 23,040,989 9,163,730 00 224,930,659 125,904,020 10,762,814 00 5,231,319 399,033,531 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities Other liabilities 22,957,988 6,744,643 000 223,105,101 114,863,132 10,791,345 000 6,063,405 384,525,614

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

4 5 6

7 8 9

4,859,053 45,343,823 313,857,924 6,940,826 00 1,191,464 7,892,815 380,085,905

4,979,720 43,441,594 302,097,187 7,390,358 28 1,232,433 5,373,006 364,514,326 20,011,288

NET ASSETS REPRESENTED BY : Share capital Reserves Unappropriated profit Equity attributable to the shareholders of the Holding company Non-controlling interest Total equity Surplus on revaluation of assets - net of tax 10

18,947,626

10,103,868 5,572,235 1,262,866 16,938,969 109,948 17,048,917 1,898,709 18,947,626

8,785,972 5,324,689 3,767,998 17,878,659 109,782 17,988,441 2,022,847 20,011,288

CONTINGENCIES AND COMMITMENTS

11

The annexed notes 1 to 19 form an integral part of these consolidated interim condensed financial statements. ALI RAZA D. HABIB Chairman ABBAS D. HABIB Chief Executive and Managing Director SYED MAZHAR ABBAS ANWAR HAJI KARIM Director Director

24

CONSOLIDATED INTERIM CONDENSED PROFIT AND LOSS ACCOUNT (UN-AUDITED) FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012
Note Three months period ended 31-March 31-March 2012 2011 (Rupees in '000) 10,542,933 (6,789,737) 3,753,196 (269,178) 14 00 (269,164) 3,484,032 374,577 54,609 121,922 355 00 68,657 107,988 728,108 4,212,140 NON MARK-UP / INTEREST EXPENSES Administrative expenses Other provisions / write-offs Other charges Total non mark-up / interest expenses Extra-ordinary / unusual items PROFIT BEFORE TAXATION Taxation - Current - Prior years - Deferred PROFIT AFTER TAXATION Attributable to: Shareholders of the Holding company Non-controlling interest 1,242,036 166 1,242,202 1,035,250 105 1,035,355 Restated Basic and diluted earnings per share attributable to shareholders of the Holding company Rupees 1.23 1.02 (2,118,357) 00 (45,357) (2,163,714) 2,048,426 00 2,048,426 (785,010) 00 (21,214) (806,224) 1,242,202 (1,765,954) (5,063) (33,764) (1,804,781) 1,651,684 00 1,651,684 (524,772) 00 (91,557) (616,329) 1,035,355 8,257,624 (4,941,729) 3,315,895 (484,189) 5 00 (484,184) 2,831,711 330,082 9,376 160,410 133 00 24,327 100,426 624,754 3,456,465

Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / return / interest income Provision against non-performing loans and advances Provision for diminution in the value of investments Bad debts written-off directly Net mark-up / return / interest income after provisions NON MARK-UP / INTEREST INCOME Fees, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale / redemption of securities - net Unrealised gain / (loss) on revaluation of investments classified as held for trading Share of profit from associates Other income Total non mark-up / interest income

12 13

5.3

14

The annexed notes 1 to 19 form an integral part of these consolidated interim condensed financial statements. ALI RAZA D. HABIB Chairman ABBAS D. HABIB Chief Executive and Managing Director SYED MAZHAR ABBAS ANWAR HAJI KARIM Director Director 25

CONSOLIDATED INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED) FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012
Three months period ended 31-March 31-March 2012 2011 (Rupees in '000) Net profit for the period Other comprehensive income Effect of foreign currency translation of net investment in foreign branch Total comprehensive income for the period Attributable to: Shareholders of the Holding Company Non-controlling interest 1,247,446 166 1,247,612 1,033,599 105 1,033,704 1,242,202 1,035,355

5,410 1,247,612

(1,651) 1,033,704

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

ALI RAZA D. HABIB Chairman

ABBAS D. HABIB Chief Executive and Managing Director

SYED MAZHAR ABBAS ANWAR HAJI KARIM Director Director

26

CONSOLIDATED INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY (UN-AUDITED) FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012
Attributable to the shareholders of the Holding Company Revenue Reserves Statutory Special General Foreign Currency Unappro Reserve Reserve Reserve Translation -priated Reserve Profit (Rupees in 000) 3,634,173 00 00 206,964 00 00 3,841,137 00 00 699,732 4,540,869 00 00 242,136 00 00 4,783,005 126,500 00 00 00 00 00 126,500 00 00 00 126,500 00 00 00 00 00 126,500 540,000 00 00 00 00 00 540,000 00 00 00 540,000 00 00 00 00 00 540,000 91,591 (1,651) 00 00 00 00 89,940 27,380 00 00 117,320 5,410 00 00 00 00 122,730

Share Capital

Total

Noncontrolling interest

Total Equity

Balance as at 01 January 2011 Total comprehensive income for the period Transfer from surplus on revaluation of fixed assets - net of tax Transfer to statutory reserve Cash dividend (Rs. 2 per share) Issue of bonus shares in the ratio of 20 shares for every 100 shares held Balance as at 31 March 2011 Total comprehensive income for the period Transfer from surplus on revaluation of fixed assets - net of tax Transfer to statutory reserve Balance as at 31 December 2011 Total comprehensive income for the period Transfer from surplus on revaluation of fixed assets - net of tax Transfer to statutory reserve Cash dividend (Rs. 2.5 per share) Issue of bonus shares in the ratio of 15 shares for every 100 shares held Balance as at 31 March 2012

7,321,643 00 00 00 00 1,464,329 8,785,972 00 00 00 8,785,972 00 00 00 00 1,317,896 10,103,868

3,030,199 14,744,106 1,035,250 7,678 (206,964) 1,033,599 7,678 00

110,334 14,854,440 105 00 00 00 00 1,033,704 7,678 00 (1,464,329) 00

(1,464,329) (1,464,329) (1,464,329) 00

937,505 14,321,054 3,502,406 27,819 (699,732) 3,529,786 27,819 00

110,439 14,431,493 (657) 3,529,129 00 00 27,819 00

3,767,998 17,878,659 1,242,036 9,357 (242,136) 1,247,446 9,357 00

109,782 17,988,441 166 00 00 00 00 1,247,612 9,357 00 (2,196,493) 00

(2,196,493) (2,196,493) (1,317,896) 00

1,262,866 16,938,969

109,948 17,048,917

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

ALI RAZA D. HABIB Chairman

ABBAS D. HABIB Chief Executive and Managing Director

SYED MAZHAR ABBAS ANWAR HAJI KARIM Director Director 27

CONSOLIDATED INTERIM CONDENSED CASH FLOW STATEMENT (UN-AUDITED) FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012
Note CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation Dividend income Adjustments for non-cash items: Depreciation Amortisation Provision against non-performing loans and advances Reversal for diminution in the value of investments Gain on sale / redemption of securities Provision for defined benefit plan Provision for compensated absences Gain on sale of operating fixed assets Share of profit form associates Provision against off-balance sheet items Financial charges on leased assets 198,061 7,340 269,178 (14) (355) 30,000 6,130 (16,066) (68,657) 1 425,618 (Increase) / decrease in operating assets Lendings to financial institutions Advances Other assets Increase / (decrease) in operating liabilities Bills payable Borrowings Deposits and other accounts Other liabilities (excluding provision for taxation) 2,419,435 (11,310,078 ) 858,401 (10,451,677) (120,667) (2,139,658) 11,760,737 169,092 9,669,504 1,637,262 Income tax paid Net cash flow from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investments in available for sale securities Net investments in held to maturity securities Net investments in associates Dividend received Investments in operating fixed assets Sale proceeds of operating fixed assets Net cash used in investing activities CASH FLOW FROM FINANCING ACTIVITIES Payments of sub-ordinated loans Payments of lease obligations Dividend paid Net cash used in financing activities Exchange adjustment on translation of net investment in foreign branch Decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period ALI RAZA D. HABIB Chairman ABBAS D. HABIB Chief Executive and Managing Director (458,575) 1,178,687 (17,039,719) 15,068,537 37,702 26,391 (176,196) 17,299 (2,065,986) (449,532) (29) (208,349) (657,910) 5,410 (1,539,799) 29,654,228 28,114,429 181,887 10,570 484,189 (5) (133) 25,950 10,439 (17,527) (24,327) 5,063 13 676,119 2,318,427 (7,691,645) (4,491,248) (689,320) (12,872,213) 463,443 10,305,930 8,408,324 380,664 19,558,361 9,004,575 (541,463) 8,463,112 (14,263,229) 5,724,832 (32,714) 7,459 (195,641) 19,612 (8,739,681) (970) (203) (1,007,558) (1,008,731) (1,651) (1,286,951) 19,917,173 18,630,222 31-March 31-March 2012 2011 (Rupees in '000) 2,048,426 1,651,684 (54,609) (9,376) 1,993,817 1,642,308

The annexed notes 1 to 19 form an integral part of these consolidated interim condensed financial statements. SYED MAZHAR ABBAS ANWAR HAJI KARIM Director Director 28

NOTES TO THE CONSOLIDATED INTERIM CONDENSED FINANCIAL STATEMENTS (UN-AUDITED) FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2012
1. STATUS AND NATURE OF BUSINESS The Group consists of : - Bank AL Habib Limited (Holding Company) - AL Habib Capital Markets (Private) Limited (Subsidiary Company) Bank AL Habib Limited (the Bank) was incorporated in Pakistan on 15 October 1991 as a public limited company under the Companies Ordinance, 1984 having its registered office at 126-C, Old Bahawalpur Road, Multan with principal place of business in Karachi. Its shares are listed on all the Stock Exchanges in Pakistan. It is a scheduled bank principally engaged in the business of commercial banking with a network of 294 branches (31 December 2011: 290 branches), 64 subbranches (31 December 2011: 61) and 02 representative offices (31 December 2011: 02).The branch network of the Bank includes a wholesale branch in the Kingdom of Bahrain (31 December 2011:01), a branch in Karachi Export Processing Zone (31 December 2011:01) and 11 Islamic Banking branches (31 December 2011: 11). The Bank has invested in 66.67% shares of AL Habib Capital Markets (Private) Limited. The principal objective of the company is to engage in the business of equity, money market and foreign exchange, brokerage, equity research and corporate financial advisory and consultancy services. AL Habib Capital Markets (Private) Limited (the Company) was incorporated in Pakistan as a (Private) Limited Company on 23 August 2005 under the Companies Ordinance, 1984 and started operations from 14 December 2005. 2. STATEMENT OF COMPLIANCE 2.1 These consolidated interim condensed financial statements have been prepared, in accordance with the requirements of the International Accounting Standard (IAS) 34 - 'Interim Financial Reporting', provisions of the Companies Ordinance, 1984, the Banking Companies Ordinance,1962 and regulations / directives issued by the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP). In case where requirements differ, the provisions of the Companies Ordinance, 1984, the Banking Companies Ordinance, 1962 and the said directives have been followed. 2.2 SBP vide BSD Circular No. 10, dated 26 August 2002 has deferred the applicability of IAS 39, "Financial Instruments: Recognition and Measurement" and IAS 40, "Investment Property" for banking companies till further instructions. Further, according to the notification of SECP dated 28 April 2008, International Financial Reporting Standard (IFRS) - 7 "Financial Instruments: Disclosure" has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these financial statements. However, investments have been classified, accounted for and valued in accordance with the requirement of various circulars issued by SBP. 2.3 The disclosures made in these consolidated interim condensed financial statements have been limited based on the format prescribed by SBP vide BSD Circular Letter No. 2, dated 12 May 2004 and IAS 34 "Interim Financial Reporting" and do not include all the information required in the annual financial statements. Accordingly, these consolidated interim condensed financial statements should be read in conjunction with the annual financial statements of the Group for the year ended 31 December 2011. 3. ACCOUNTING POLICIES 3.1 The accounting policies adopted in the preparation of these consolidated interim condensed financial statements are consistent with those applied in the preparation of the annual financial statements of the Group for the year ended 31 December 2011. 3.2 The basis of consolidation of the financial statements of subsidiary is same as that applied in the preparation of the consolidated financial statements of the Group for the year ended 31 December 2011. 29

Note

31-March 2012 (Un-Audited) 31-December 2011 (Audited) Held by Given as Total Held by Given as Total Bank Collateral Bank Collateral (Rupees in '000)

4.

INVESTMENTS Available for Sale Securities Market Treasury Bills Pakistan Investment Bonds Foreign Currency Bonds Sukuks Ordinary shares of listed companies Ordinary shares of unlisted companies Listed term finance certificates Unlisted term finance certificates Open ended mutual funds 98,528,454 14,638,279 1,273,782 3,854,029 86,474 39,570 560,261 249,920 4,528,000 123,758,769 Held to Maturity Securities 4.1 Market Treasury Bills Pakistan Investment Bonds Sukuks Listed term finance certificates Unlisted term finance certificates Associates Habib Sugar Mills Limited Habib Asset Management Limited First Habib Income Fund First Habib Stock Fund First Habib Cash Fund 61,221,436 13,519,538 264,088 321,503 83,333 75,409,898 271,789 36,280 538,888 51,620 103,783 1,002,360 Investments at cost Provision for diminution in the value of investments Investments (net of provisions) Surplus on revaluation of available for sale investments - net Investments after revaluation of available for sale investments 200,171,027 (6,586 ) 200,164,441 42,324 200,206,765 24,633,573 00 00 00 00 00 00 00 00 24,633,573 00 00 00 00 00 00 00 00 00 00 00 00 24,633,573 00 24,633,573 90,321 24,723,894 123,162,027 14,638,279 1,273,782 3,854,029 86,474 39,570 560,261 249,920 4,528,000 148,392,342 61,221,436 13,519,538 264,088 321,503 83,333 75,409,898 271,789 36,280 538,888 51,620 103,783 1,002,360 224,804,600 (6,586 ) 224,798,014 132,645 224,930,659 78,715,641 14,617,483 979,474 6,947,740 151,110 39,570 584,461 249,920 1,478,000 103,763,399 76,260,132 13,482,722 266,900 343,681 125,000 90,478,435 248,315 35,254 541,283 44,149 104,094 973,095 195,214,929 (6,600 ) 195,208,329 162,058 195,370,387 27,588,855 106,304,496 00 14,617,483 00 979,474 00 6,947,740 00 151,110 00 39,570 00 584,461 00 249,920 00 1,478,000 27,588,855 131,352,254 00 00 00 00 00 00 00 00 00 00 00 00 76,260,132 13,482,722 266,900 343,681 125,000 90,478,435 248,315 35,254 541,283 44,149 104,094 973,095

27,588,855 222,803,784 00 (6,600)

27,588,855 222,797,184 145,859 307,917

27,734,714 223,105,101

4.1

The aggregate market value of held to maturity securities as on 31 March 2012 amounts to Rs. 75,860 (31 December 2011: 91,265) million.

30

Note

31-March 2012
(Un-Audited)

31-December 2011
(Audited)

(Rupees in '000) 5. ADVANCES Loans, cash credits, running finances, etc. In Pakistan Outside Pakistan Net investment in finance lease / ijarah financing In Pakistan Outside Pakistan 112,977,365 4,512,980 117,490,345 455,955 00 455,955 251,807 2,334,801 101,962,223 4,325,819 106,288,042 426,351 00 426,351 109,668 2,007,557

Ijarah financing under IFAS 2 Murabaha Bills discounted and purchased (excluding market treasury bills) Payable in Pakistan Payable outside Pakistan

1,730,147 9,040,668 10,770,815

1,928,992 9,233,700 11,162,692 119,994,310 (2,998,847) (32,331) (2,100,000) (5,131,178) 114,863,132

Advances - gross Provision against non-performing loans and advances Specific provision 5.1 General provision against consumer advances (as per SBP regulations) 5.2 General provision 5.3

131,303,723 (2,917,372) (32,331) (2,450,000) (5,399,703) 125,904,020

Advances - net of provisions

5.1 Advances include Rs. 3,190.984 (31 December 2011: Rs. 3,203.630) million which have been placed under non-performing status as detailed below: Classified advances Domestic Overseas Total Category of classification Substandard 17,449 Doubtful 145,545 Loss 3,026,486 3,189,480 31-March 2012 (Un-Audited) Provision required Provision held Domestic Overseas Total Domestic Overseas Total (Rupees in '000) 00 2,960 2,960 00 71,062 71,062 1,504 2,843,350 2,841,846 1,504 2,917,372 2,915,868 00 2,960 00 71,062 1,504 2,843,350 1,504 2,917,372

00 17,449 2,960 00 145,545 71,062 1,504 3,027,990 2,841,846 1,504 3,190,984 2,915,868

31

Classified advances Domestic Overseas Total Category of classification Substandard Doubtful Loss

31-December 2011 (Audited) Provision required Provision held Domestic Overseas Total Domestic Overseas Total (Rupees in '000) 14,134 0 14,134 14,134 0 14,134 48,520 0 48,520 48,520 0 48,520 2,934,700 1,493 2,936,193 2,934,700 1,493 2,936,193 2,997,354 1,493 2,998,847 2,997,354 1,493 2,998,847

56,537 0 56,537 100,467 0 100,467 3,045,133 1,493 3,046,626 3,202,137 1,493 3,203,630

5.2 The Bank has made general provision for consumer portfolio as required by SBP's Prudential Regulations amounting to Rs. 32.331 (31 December 2011: Rs. 32.331) million. 5.3 In line with its prudent policies, the Bank has also made general provision of Rs. 350 million during the period, bringing the total of such provision to Rs. 2,450 (31 December 2011: Rs. 2,100) million against its loans and advances portfolio. This general provision is in addition to the requirements of the Prudential Regulations. Three months period ended 31-March 31-March 2012 2011 (Un-Audited) (Rupees in 000) 6. OPERATING FIXED ASSETS

6.1 Additions during the period - at cost: Leasehold land Buildings on leasehold land Improvements to leasehold buildings Furniture and fixtures Electrical, office and computer equipments Vehicles Intangible assets 391 30,941 21,425 3,507 42,232 2,171 2,321 102,988 6.2 Deletions during the period - at cost: Furniture and fixtures Electrical, office and computer equipments Vehicles 888 7,703 18,776 27,367 00 361 17,198 17,559
32

12,133 21,393 13,588 6,675 80,416 22,163 340 156,708

31-March 31-December 2012 2011 (Un-Audited) (Audited) (Rupees in 000) 7. BORROWINGS Secured Borrowings from State Bank of Pakistan Export refinance scheme Long term financing for export oriented projects Long term financing for imported and locally manufactured plant and machinery Financing facility for storage of agricultural produce Repurchase agreement borrowings Unsecured Overdrawn nostros Borrowings from financial institutions

12,140,693 514,088 3,406,973 59,628 16,121,382 24,678,843 40,800,225 4,090,290 453,308 4,543,598 45,343,823

11,537,652 568,700 3,322,617 71,554 15,500,523 27,712,777 43,213,300 48,403 179,891 228,294 43,441,594

8.

DEPOSITS AND OTHER ACCOUNTS Customers Fixed deposits Savings deposits Current accounts - Remunerative Current accounts - Non-remunerative

114,035,089 80,795,119 30,470,134 83,142,764 308,443,106

120,176,785 70,196,707 26,524,367 78,697,621 295,595,480 6,267,159 234,548 6,501,707 302,097,187

Financial Institutions Remunerative deposits Non-remunerative deposits

5,116,704 298,114 5,414,818 313,857,924

33

Note

31-March 31-December 2012 2011 (Un-Audited) (Audited) (Rupees in 000)

9.

SUB-ORDINATED LOANS - unsecured Term Finance Certificates (TFCs) - I (Quoted) Term Finance Certificates (TFCs) - II (Quoted) Term Finance Certificates (TFCs) - III (Unquoted) Term Finance Certificates (TFCs) - IV (Unquoted) 9.1 9.2 9.3 9.4 448,826 1,497,000 1,995,600 2,999,400 6,940,826 897,658 1,497,300 1,996,000 2,999,400 7,390,358

9.1 Term Finance Certificates - I (Quoted) Total issue Rating Rate Floor Ceiling Redemption Tenor Maturity Rupees 1,350 million AA Payable six monthly at average six months KIBOR plus 150 bps 3.50% p.a. 10.00% p.a. 6 - 78th month: 0.25%; 84th, 90th and 96th month: 33.25% each 8 years July 2012

9.2 Term Finance Certificates - II (Quoted) Total issue Rating Rate Redemption Tenor Maturity Rupees 1,500 million AA Payable six monthly at average six months KIBOR plus 1.95% without any floor and cap 6 - 84th month: 0.28%; 90th and 96th month: 49.86% each 8 years February 2015

9.3 Term Finance Certificates - III (Unquoted) Total issue Rating Rate Redemption Tenor Maturity Rupees 2,000 million AA Payable three monthly at 15.50% p.a. for first 5 years and 16.00% p.a. for next 3 years 3rd - 84th month: 0.56%; 87th, 90th, 93rd and 96th month: 24.86% each 8 years June 2017

34

9.4 Term Finance Certificates - IV (Unquoted) Total issue Rating Rate Redemption Tenor Maturity Rupees 3,000 million AA Payable six monthly at 15.00% p.a. for first 5 years and 15.50% p.a. for next 5 years 6th - 108th month: 0.36%; 114th and 120th month: 49.82% each 10 years June 2021 Note 31-March 2012
(Un-Audited)

31-December 2011
(Audited)

(Rupees in 000) 10. SURPLUS ON REVALUATION OF ASSETS - NET OF TAX Operating fixed assets Available for sale investments 10.1 10.2 1,793,921 104,788 1,898,709 10.1Operating fixed assets Surplus on revaluation of land and buildings Related deferred tax liability 2,425,129 (631,208) 1,793,921 10.2Available for sale investments Federal Government Securities Fully paid-up ordinary shares Term finance certificates, sukuks, bonds and others Open ended mutual funds 117,319 (11,806) (983) 32,223 136,753 (31,965) 104,788 319,757 (2,610) (19,380) 15,949 313,716 (94,147) 219,569 2,439,525 (636,247) 1,803,278 1,803,278 219,569 2,022,847

Related deferred tax liability

35

31-March 31-December 2012 2011 (Un-Audited) (Audited) (Rupees in 000) 11. CONTINGENCIES AND COMMITMENTS 11.1 Direct Credit Substitutes Financial institutions Others 111,643 263,599 375,242 11.2 Transaction-related Contingent Liabilities Government Financial institutions Others 8,741,135 127,625 4,311,888 13,180,648 11.3 Trade-related Contingent Liabilities Letters of credit Acceptances 35,046,234 6,324,548 41,370,782 11.4Other Contingencies The income tax returns of the Bank have been submitted upto and including the Bank's financial year 2010. The income tax assessments of the Bank have been made by the tax authorities upto and including the assessment / tax year 2008 and 2010. For the tax year 2009, proceedings u/s 122(5A) of the Income Tax Ordinance, 2001 were initiated against which the Bank has filed writ petition before Lahore High Court, Multan Bench. The Honourable Court has stayed the proceedings. For tax years, 2005 to 2008, the CIT Appeals has passed appellate orders by disallowing certain expenses / deductions (including bad debts written-off directly, improvement in leasehold premises, provision against non-performing loans and advances) having an aggregate tax impact of Rs. 44.256 million. The Bank has preferred an appeal before ITAT against the above referred orders of the CIT Appeals. The management, based on the opinion of its tax advisor, is confident about the favourable outcome of the above matters and hence, no additional provision has been considered necessary in these consolidated interim condensed financial statements. 32,838,848 7,104,549 39,943,397 8,008,832 115,461 4,544,785 12,669,078 79,615 446,014 525,629

36

31-March 2012 (Un-Audited) 11.5 Commitments in respect of forward lending Commitments to extend credit 11.6 Commitments in respect of forward exchange contracts Purchase Sale 11.7 Commitments for the acquisition of operating fixed assets 22,829,717 15,123,718 1,178,601

31-December 2011 (Audited)

(Rupees in 000) 15,603

28,032,085 25,331,776

256,322

124,899

Three months period ended 31-March 31-March 2012 2011 (Un-Audited) (Rupees in 000) 12. MARK-UP / RETURN / INTEREST EARNED On loans and advances to: Customers Financial institutions On investments: Available for sale securities Held to maturity securities

3,375,136 25,353 3,400,489 3,142,353 3,961,550 7,103,903 14,620 23,534 387 10,542,933

3,718,151 63,070 3,781,221 2,176,982 2,213,596 4,390,578 12,744 71,768 1,313 8,257,624

On deposits with financial institutions On securities purchased under resale agreements On call money lendings

37

Note

Three months period ended 31-March 31-March 2012 2011 (Un-Audited) (Rupees in 000)

13. MARK-UP / RETURN / INTEREST EXPENSED Deposits Sub-ordinated loans Repurchase agreement borrowings Borrowings from SBP Others 4,881,019 256,023 1,079,626 380,298 192,771 6,789,737 4,231,882 166,121 113,861 413,113 16,752 4,941,729

14

14. INCOME FROM DEALING IN FOREIGN CURRENCIES Cost of local currency funds generated from FX transactions, amounting to Rs. 185.047 (March 2011: Rs. 3.111) million, is included in mark-up / return / interest expensed others. Comparative figures for corresponding period last year have accordingly been re-classified. 15. BASIC AND DILUTED - EARNINGS PER SHARE The weighted average number of shares for 2011 has been adjusted for the effect of bonus shares issued during the period. 16. RELATED PARTY TRANSACTIONS Related parties of the Group comprise associates (including entities having directors in common with the Group), retirement benefit funds, major shareholders, directors and key management personnel and their close family members. Transactions with related parties are carried out on an arm's length basis in terms of the policy as approved by the Board of Directors. The transactions with employees of the Group are carried out in accordance with the terms of their employment.

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Transactions with related parties during the period, are summarised as follows: 31-March 2012 (Un-Audited) Associates Non Executive Directors Key Retirement Management Benefit Personnel Funds (Rupees in 000) Total

Deposits At the beginning of the period Placements during the period Withdrawals during the period At the end of the period Advances At the beginning of the period Given during the period Repaid during the period At the end of the period 1,404,261 680,471 (722,764) 1,361,968 426 710 (1,109) 27 30,252 5,524 (3,931) 31,845 00 00 00 00 1,434,939 686,705 (727,804) 1,393,840 1,438,356 29,300,825 (29,917,868) 821,313 86,815 208,591 (215,094) 80,312 275,992 329,594 (316,755) 288,831 118,882 1,920,045 325,975 30,164,985 (311,384 ) (30,761,101) 133,473 1,323,929

Contingencies and commitments

761,404

00

00

00

761,404

31-December 2011 (Audited) Associates Non Executive Directors Key Retirement Management Benefit Personnel Funds (Rupees in 000) Total

Deposits At the beginning of the year Placements during the year Withdrawals during the year At the end of the year Advances At the beginning of the year Given during the year Repaid during the year At the end of the year 369,808 3,131,625 (2,097,172) 1,404,261 214 1,653 (1,441) 426 17,525 29,980 (17,253) 30,252 00 00 00 00 387,547 3,163,258 (2,115,866) 1,434,939 1,687,940 56,377,143 (56,626,727) 1,438,356 13,638 2,732,759 (2,659,582) 86,815 126,804 657,330 (508,142) 275,992 310,525 2,138,907 3,789,104 63,556,336 (3,980,747 ) (63,775,198) 118,882 1,920,045

Contingencies and commitments

518,781

00

00

00

518,781

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Three months period ended 31-March 2012 (Un-Audited) Associates Non Executive Directors 00 00 00 00 1,322 2 00 00 00 00 00 00 00 600 00 00 00 00 Key Retirement Management Benefit Personnel Funds (Rupees in 000) 00 00 00 410 4,132 12 00 39,533 7,333 1,711 873 00 00 00 00 00 00 00 00 00 00 00 4,073 00 00 00 00 00 00 33,961 30,000 00 00 00 00 00 Total

Purchase of fixed assets Sale of securities Redemption of mutual funds units Mark-up earned Mark-up expensed Bank charges and commission Gain / (loss) on sale of securities Salaries and allowances Bonus Contribution to defined contribution plan Contribution to defined benefit plan Staff provident fund Staff gratuity fund Directors' fee Insurance claim received Insurance premium paid Dividend income Brokerage and advisory income

551 00 59 50,184 15,759 998 9 00 00 00 00 00 00 00 3,326 34,871 40,463 326

551 00 59 50,594 25,286 1,012 9 39,533 7,333 1,711 873 33,961 30,000 600 3,326 34,871 40,463 326

Three months period ended 31-March 2011 (Un-Audited) Associates Non Executive Directors 00 00 00 00 374 00 00 00 00 00 00 00 00 650 00 00 00 00 Key Retirement Management Benefit Personnel Funds (Rupees in 000) 00 00 00 264 1,851 11 00 28,558 4,943 1,211 520 00 00 00 00 00 00 00 00 00 00 00 20,060 00 00 00 00 00 00 27,971 25,950 00 00 00 00 00 Total

Purchase of fixed assets Sale of securities Redemption of mutual funds units Mark-up earned Mark-up expensed Bank charges and commission Gain / (loss) on sale of securities Salaries and allowances Bonus Contribution to defined contribution plan Contribution to defined benefit plan Staff provident fund Staff gratuity fund Directors' fee Insurance claim received Insurance premium paid Dividend income Brokerage and advisory income

694 37,748 00 7,303 22,519 1,479 (1,523) 00 00 00 00 00 00 3,115 25,026 25,703 221

694 37,748 00 7,567 44,804 1,490 (1,523) 28,558 4,943 1,211 520 27,971 25,950 650 3,115 25,026 25,703 221

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17. ISLAMIC BANKING BUSINESS The Bank is operating 11 (31 December 2011: 11) Islamic Banking branches in Pakistan. The statement of financial position of these branches as at 31 March 2012 is as follows: 31-March 31-December 2012 2011 (Un-Audited) (Audited) (Rupees in 000) ASSETS Cash and balances with treasury banks Balances with and due from financial institutions Investments Financing and receivables Murabaha Ijarah Diminishing musharika Export refinance murabaha Export refinance istisna Istisna Other assets 257,713 1,606 1,229,665 2,084,563 279,439 1,884,637 250,238 1,105,220 659,341 647,506 8,399,928 270,353 494,968 1,362,945 1,848,829 154,480 2,099,681 158,727 1,086,631 11,102 832,175 8,319,891

LIABILITIES Bills payable 43,007 Due to financial institutions 1,342,886 Deposits and other accounts Current accounts 1,219,488 Saving accounts 493,297 Term deposits 3,658,700 Others 9,225 Deposits from financial institutions-remunerative 317,774 Deposits from financial institutions-non-remunerative 423 Due to head office 154,125 Other liabilities 178,481 7,417,406 NET ASSETS REPRESENTED BY: Islamic banking fund Unremitted profit Surplus on revaluation of assets 900,000 81,922 981,922 600 982,522 982,522

29,886 1,192,491 986,652 519,840 3,612,383 12,832 315,594 562 195,478 180,097 7,045,815 1,274,076

900,000 372,106 1,272,106 1,970 1,274,076

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18. GENERAL Corresponding figures have been re-arranged / re-classified wherever necessary, for the purpose of comparison. 19. DATE OF AUTHORISATION These consolidated interim condensed financial statements were authorised for issue by the Board of Directors in their meeting held on April 24, 2012.

ALI RAZA D. HABIB Chairman

ABBAS D. HABIB Chief Executive and Managing Director

SYED MAZHAR ABBAS ANWAR HAJI KARIM Director Director

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