Financial Statements - United Bank Limited

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NOTES TO AND FORMING PART OF THE UNCONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012 44. RISK MANAGEMENT This section presents information about the Bank’s exposure to and its management and control of risks, in particular, the primary risks associated with its use of financial instruments such as credit, market, liquidity, and operational risks. Managing risk is one of the major challenges for the banking industry. The main goal is not to eliminate risk, but rather to be proactive in identifying, assessing and managing risks to the organisation’s strategic advantage. The Bank has an integrated risk management structure in place. The Board Risk Management Committee (BRMC) oversees the entire risk management process of the Bank. The Risk and Credit Policy Group is responsible for the implementation of policies as approved by the BoD / BRMC. The group is organized into the functions of Market and Treasury Risk, Commercial and FIRMU Credit Policy, Consumer and Retail Credit, Credit Risk Management and Operational Risk and Basel II. Each risk function is headed by a senior manager who reports directly to the Group Executive, Risk and Credit Policy. The role of the Risk and Credit Policy Group includes: - Determining guidelines relating to the Bank’s appetite for risk. - Recommending risk management policies in accordance with the Basel II framework and international best practices. - Reviewing policies/ manuals and ensuring that these are in accordance with BoD / BRMC approved risk management policies. - Developing systems and resources to review the key risk exposures of the Bank. - Approving credits and granting approval authority to qualified and experienced individuals. - Reviewing the adequacy of credit training across the Bank. - Organizing portfolio reviews focusing on quality assessment, risk profiles, industry concentrations, etc. - Setting systems to identify significant portfolio indicators, problem credits and level of provisioning required. 44.1 Credit risk Credit risk is the risk that a customer or counterparty may not settle an obligation for full value, either when due or at any time thereafter. This risk arises from the potential that a customer or counterparty’s willingness to meet an obligation or its ability to meet such an obligation is impaired, resulting in an economic loss to the Bank. The credit risk management process is driven by the Bank's Credit Policy, which provides policies and procedures in relation to credit initiation, approval, documentation and disbursement, credit maintenance and remedial management. Individual credit authorities are delegated to credit officers by the Board according to their seasoning/maturity. Approvals for Corporate and Consumer loans are centralized, while approval authorities for Commercial and SME exposures are delegated to a Regional level. All credit policy functions are centrally organized. The Bank manages, limits and controls concentrations of credit risk to individual counterparties and groups, and to industries, where appropriate. Concentrations of credit risk exist if clients are engaged in similar activities, or are located in the same geographical region, or have comparable economic characteristics such that their ability to meet contractual obligations would be similarly affected by changes in economic, political or other conditions. Limits are also applied to portfolios or sectors where the Bank considers it appropriate to restrict credit risk concentrations, or to areas of higher risk, or to control the rate of portfolio growth. 45
NOTES TO AND FORMING PART OF THE UNCONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012 44.2 Segmental information 44.2.1 Segments by class of business 2012 Gross advances Deposits Contingencies and commitments (Rupees in '000) Percent (Rupees in '000) Percent (Rupees in '000) Percent Chemical and pharmaceuticals 6,436,929 1.57% 15,784,908 2.25% 4,053,394 0.79% Agri business 54,820,003 13.40% 37,837,882 5.41% 75,359 0.01% Textile spinning 16,023,464 3.92% 1,754,995 0.25% 2,329,641 0.45% Textile weaving 6,264,208 1.53% 2,632,554 0.38% 1,441,050 0.28% Textile composite 21,485,938 5.25% 2,923,552 0.42% 48,404 0.01% Textile others 15,983,229 3.91% 2,048,785 0.29% 1,905,932 0.37% Cement 2,393,256 0.59% 2,916,842 0.42% 523,919 0.10% Sugar 12,019,995 2.94% 5,347,923 0.76% 353,274 0.07% Shoes and leather garments 2,141,611 0.52% 3,903,157 0.56% 338,963 0.07% Automobile and transportation equipment 6,134,194 1.50% 6,265,499 0.90% 2,642,414 0.51% Financial 9,310,324 2.28% 13,075,579 1.87% 270,842,309 52.74% Insurance - 0.00% 14,416,808 2.06% 24,413 0.00% Electronics and electrical appliances 2,892,224 0.71% 2,644,787 0.38% 7,848,109 1.53% Production and transmission of energy 56,734,730 13.87% 20,191,121 2.88% 38,220,380 7.44% Paper and allied 815,020 0.20% 990,948 0.14% 711,440 0.14% Surgical and metal 371,234 0.09% 2,052,536 0.29% 131,086 0.03% Contractors 8,943,375 2.19% 28,960,618 4.14% 24,567,559 4.78% Wholesale traders 17,509,375 4.28% 41,656,054 5.95% 2,489,743 0.48% Fertilizer dealers 4,437,555 1.08% 7,160,535 1.02% 1,755,309 0.34% Sports goods 286,356 0.07% 1,926,353 0.28% 22,535 0.00% Food industries 12,739,862 3.11% 11,108,262 1.59% 4,583,676 0.89% Airlines 7,557,065 1.85% 5,413,479 0.77% 186,170 0.04% Cables 832,925 0.20% 79,424 0.01% 186,093 0.04% Construction 16,563,478 4.05% 10,765,408 1.54% 7,401,252 1.44% Containers and ports 1,883,000 0.46% 762,599 0.11% 3,323,884 0.65% Engineering 1,127,890 0.28% 2,093,081 0.30% 1,827,272 0.36% Glass and allied 131,094 0.03% 648,509 0.09% 21,028 0.00% Hotels 3,960,279 0.97% 3,610,021 0.52% 66,063 0.01% Infrastructure 638,644 0.16% 5,652,867 0.81% - 0.00% Media 486,273 0.12% 594,501 0.08% 51,535 0.01% Polyester and fiber 4,514,939 1.10% 195,858 0.03% 364 0.00% Telecommunication 9,959,155 2.43% 10,557,710 1.51% 3,751,277 0.73% Individuals 47,552,654 11.62% 351,027,689 50.15% 23,904,802 4.66% Others 56,140,166 13.72% 82,934,674 11.84% 107,879,832 21.03% 409,090,444 100.00% 699,935,518 100.00% 513,508,481 100.00% 46
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United Bank Limited UNCONSOLIDATED
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U N I T E D B A N K L I M I T E D i
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U N I T E D B A N K L I M I T E D B
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U N I T E D B A N K L I M I T E D n
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U N I T E D B A N K L I M I T E D
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U N I T E D B A N K L I M I T E D A
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U N I T E D B A N K L I M I T E D d
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U N I T E D B A N K L I M I T E D T
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BOO EBRAHIM a: CO. CHARTERED ACCOUN
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U N I T E D B A N K L I M I T E D m
Page 21 and 22: BOO EBRAHIM ft CO. CHARTERED ACCOUN
Page 23 and 24: UNCONSOLIDATED STATEMENT OF FINANCI
Page 25 and 26: UNCONSOLIDATED STATEMENT OF COMPREH
Page 27 and 28: UNCONSOLIDATED STATEMENT OF CHANGES
Page 29 and 30: NOTES TO AND FORMING PART OF THE UN
Page 71: NOTES TO AND FORMING PART OF THE UN
Page 87 and 88: Annexure 'A' as referred to in note
Page 95 and 96: Sr. No. 1 Commercial Reprsentation
Page 97 and 98: Sr. No. Annexure 'B' as referred to
Page 111 and 112: Disposals of operating fixed assets
Page 113 and 114: Disposals of operating fixed assets
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Financial Statements - United Bank Limited

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