Financial Statements - United Bank Limited

NOTES TO AND FORMING PART OF THE UNCONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2012
44.5 Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.
The Operational Risk & Basel II Division is primarily responsible for the oversight of operational risk management across the Bank. The
operational risk management framework of the Bank is governed by the Operational Risk Management Policy and Procedures, while the
implementation is supported by an operational risk management system and designated operational risk coordinators within different
units across the bank. The framework is in line with international best practices, flexible enough to implement in stages and permits the
overall approach to evolve in response to organizational learning and future requirements.
Loss data, collected through a well defined program, is evaluated and processes are reviewed for improvements in mitigation
techniques. Periodic workshops are conducted for Risk & Control Self Assessment and key risk exposures are identified and assessed
against existing controls to evaluate improvement opportunities. Key Risk Indicators are also defined for monitoring of risk exposures.
Business Continuity Plans have been implemented across the bank, clearly defining the roles and responsibilities of respective
stakeholders, and covering recovery strategy, IT and structural backups, scenario and impact analyses and testing directives. The
outsourcing policy has also been augmented to address risks associated with such arrangements.
45. ISLAMIC BANKING BUSINESS
The Bank operates 19 (2011: 14) Islamic Banking Branches and 15 (2011: 15) Islamic Banking windows.
BSD Circular Letter No. 03 dated January 22, 2013 requires all Islamic Banks and Banks with Islamic banking Branches to present all
financing, advances for assets under Islamic modes of financing and any other related items pertaining to Islamic modes of financing
under the caption "Islamic Financing and Related Assets" in the Statement of Financial Position. Previously, advances for assets under
Islamic modes of financing were reported under "Other Assets" and Ijarah Assets were reported under "Operating Fixed Assets". This
change in presentation is effective from December 31, 2012 and accordingly, the Bank has presented the Statement of Financial
Position of Islamic Banking branches as per the revised regulations.
The statement of financial position of the Bank's Islamic Banking Branches as at December 31, 2012 is as follows:
Note 2012 2011
--------- (Rupees in '000) ---------
ASSETS
Cash and balances with treasury banks 748,333 520,737
Balances with other banks 1,293,290 2,185,282
Due from financial institutions - -
Investments 8,036,026 5,006,664
Islamic financing and related assets 45.1 3,118,266 1,128,458
Operating fixed assets 100,250 62,292
Due from Head Office - -
Other assets 173,481 209,828
Total Assets 13,469,646 9,113,261
LIABILITIES
Bills payable 960 960
Due to financial institutions - -
Deposits and other accounts
Current accounts 1,863,420 1,453,763
Saving accounts 2,533,628 1,233,772
Term deposits 3,141,108 1,652,628
Deposits from financial institutions - remunerative 4,956,027 2,841,225
12,494,183 7,181,388
Due to Head Office 272,971 1,339,874
Other liabilities 162,915 105,099
12,931,029 8,627,321
NET ASSETS 538,617 485,940
REPRESENTED BY
Islamic Banking Fund 681,000 681,000
Accumulated losses (194,579) (199,658)
486,421 481,342
Surplus on revaluation of assets 52,196 4,598
538,617 485,940
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