ADVICE FOR INVESTORS - BMA CAPITAL...CDS account, investors may contact CDC at phone Number: 0800...

THE ISSUE SIZE OF FULLY PAID-UP, RATED, LISTED, PERPETUAL, UNSECURED, SUBORDINATED, NON-CUMULATIVE AND CONTINGENT

CONVERTIBLE DEBT INSTRUMENTS IN THE NATURE OF TERM FINANCE CERTIFICATES (“TFCs”) IS PKR 10,000 MILLION INCLUSIVE OF A GREEN SHOE OPTION OF PKR 3,000 MILLION, OUT OF WHICH TFCS OF PKR 9,000 MILLION INCLUSIVE OF A GREEN SHOE OPTION OF PKR 3,000 MILLION

(90% OF ISSUE SIZE) ARE ISSUED TO THE PRE-IPO INVESTORS AND PKR 1,000 MILLION (10% OF ISSUE SIZE) ARE BEING OFFERED TO THE GENERAL PUBLIC BY WAY OF INITIAL PUBLIC OFFER THROUGH THIS PROSPECTUS

RATE OF RETURN Perpetual instrument @ 3 MONTH KIBOR* (ASK SIDE) PLUS 1.55% P.A. with no step-up feature,

INSTRUMENT RATING: ”AA+” (Double A PLUS) by JCR-VIS CREDIT RATING COMPANY LIMITED LONG TERM ENTITY RATING: “AAA“ (TRIPLE A)

SHORT TERM ENTITY RATING: ”A-1+” (A DASH ONE PLUS) by

JCR-VIS CREDIT RATING COMPANY LIMITED As per PSX’s Listing of Companies and Securities Regulations, the Draft Prospectus was placed on PSX’s website for seeking public comments for

seven (7) working days starting from XX/XX/2018 to XX/XX/2018. No comments have been received on the draft Prospectus.

DATE OF PUBLIC SUBSCRIPTION: From [month] [day1], 2018 to [month] [day2], 2018 (From: 9:00 am to 5:00 pm) (both days inclusive)

CONSULTANT TO THE ISSUE

Bankers for the Retail portion of the Issue:

Allied Bank Limited Bank Al Habib Limited

JS Bank Limited Summit Bank Limited

Askari Bank Limited Faysal Bank Limited MCB Bank Limited

United Bank Limited

Bank Alfalah Limited Habib Metropolitan Bank Limited

Samba Bank Limited

Underwriters for the Retail portion of the Issue:

BMA Capital Management Limited Arif Habib Limited

**In order to facilitate investors, United Bank Limited (“UBL”), Bank Alfalah Limited (BAFL”) and Summit Bank Limited (“SMBL”) are offering electronic submission of application (e-IPO) to their account holders. UBL account holders can use UBL Net Banking to submit their application via link

http://www.ubldirect.com/corporate/ebank. BAFL account holders can use BAFL Net Banking to submit their application via link https://netbanking.bankalfalah.com. SMBL account holders can use SMBL Net Banking to submit their application via link https://ib.summitbank.com.pk. Furthermore, please note that online applications can be submitted 24 hours a day during the subscription period which will close at midnight on [month]

[day2], 2018.

The Central Depository Company of Pakistan (“CDC”) in collaboration with 1 Link (G) Limited (1 Link) has developed a Centralized e-IPO System (“CES”) through which applications for subscription of securities offered through IPOs can be made electronically. CES has been made available in this IPO which can be accessed through the web link www.cdceipo.com. Payment of subscription money can be made through 1Link’s member banks available for CES, list of which is available on above web link.

For making application though CES, investors must be registered with CES. Registration with CES is onetime and free of cost a nd a self-registration process by filling the CES registration form, which is available 24/7 all around the year.

Investors who have valid Computerized National Identity Card (CNIC), bank account with any of the commercial bank, email address, mobile phone number and CDS Account (Investor Account or sub Account) may register themselves with CES.

Investors who do not have CDS account may visit www.cdcpakistan.com for information and details. For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone Number: 0800 – 23275 (CDCPL) and e-mail: [email protected]. CES is connected to a number of banks through 1 Link for payment of the subscription money. For further details on CES, please refer to para 2.10(i) of this Prospectus or contact Mr. Farooq Ahmed Butt at Phone 021-34326030 and email: [email protected].

For investor education please visit www.jamapunji.pk and read the IPO Investor Guide placed at web link https://www.secp.gov.pk/document/initial-public-offering-ipo-a-concise-guide-for-investors/?wpdmdl=29584 Jama Punji is an investor

education initiative of the Securities & Exchange Commission of Pakistan

Date of Publication of this Prospectus: [month] [day], 2018

Prospectus and Subscription Forms can be downloaded from the following websites: http://www.ubldirect.com http://www.bmacapital.com http://www.psx.com.pk

For further queries, you may contact United Bank Limited: Attir Ghazaal Ali; Phone: +92 21 99033 2310; E-mail: [email protected]

BMA Capital Management Limited: Muhammad Abdullah; Phone: +92 21 3246 1068; E-mail: [email protected]

*Average rate ‘Ask Side’ of the three month Karachi Inter Bank offered Rate (“KIBOR”) as published on Reuters Page KIBR or as published by the Financial Markets Association of Pakistan in case Reuters page is unavailable on the Base Rate setting date.

ADVICE FOR INVESTORS INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THE PROSPECTUS

ESPECIALLY THE RISK FACTORS MENTIONED IN PART 4.12 OF THIS PROSPECTUS BEFORE MAKING ANY INVESTMENT DECISION.

SUBMISSION OF FALSE & FICTITIOUS APPLICATIONS IS PROHIITED AND SUCH APPLICATIONS’ MONEY MAY BE FORFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015

UNITED BANK LIMITED PROSPECTUS

TFC Prospectus | United Bank Limited

Page 2 of 143

UNDERTAKING BY THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER Date:

WE, SIMA KAMIL, THE CHIEF EXECUTIVE OFFICER AND AAMEER M. KARACHIWALLA, THE CHIEF FINANCIAL OFFICER OF UNITED BANK LIMITED CERTIFY THAT: 1. THIS PROSPECTUS CONTAINS ALL INFORMATION WITH REGARD TO THE ISSUER AND THE ISSUE,

WHICH IS MATERIAL IN THE CONTEXT OF THE ISSUE AND NOTHING HAS BEEN CONCEALED IN THIS RESPECT;

2. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS TRUE AND CORRECT TO THE BEST OF OUR KNOWLEDGE AND BELIEF;

3. THE OPINIONS AND INTENTIONS EXPRESSED THEREIN ARE HONESTLY HELD;

4. THERE ARE NO OTHER FACTS, THE OMISSION OF WHICH MAKES THE PROSPECTUS AS A WHOLE OR ANY PART THEREOF MISLEADING;

5. ALL REQUIREMENTS OF THE SECURITIES ACT, 2015; THE DISCLOSURES IN PUBLIC OFFERING REGULATIONS, 2017 FOR PREPARATION OF PROSPECTUS, RELATING TO APPROVAL AND DISCLOSURES HAVE BEEN FULFILLED; AND

6. NO CHARGES, FEE, EXPENSES, PAYMENTS ETC. HAVE BEEN COMMITTED TO BE PAID TO ANY PERSON IN RELATION TO THIS PUBLIC OFFERING EXCEPT FOR THOSE AS DISCLOSED IN PART 3 OF THE PROSPECTUS.

For and behalf of United Bank Limited:

-Sd- ___________________________ Sima Kamil Chief Executive Officer

-Sd- ___________________________ Aameer M. Karachiwalla Chief Financial Officer


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Glossary of Abbreviations and Technical Terms

Additional Tier 1 Capital The additional Tier 1 capital as defined in the Basel III Circular

ALCO Asset Liability Management Committee

Consultant to the Issue BMA Capital Management Limited

UBL or "the Bank" or “the Issuer”

United Bank Limited

Base Rate Setting Date (a) For the first coupon payment, one (1) Business Day prior to the Issue Date; and (b) For each subsequent coupon payment, one (1) Business Day prior to the last coupon payment date

Basel III Circular Instructions for Basel III Implementation in Pakistan issued by the State Bank of Pakistan under BPRD circular # 06 dated August 15, 2013 (as may be amended, modified or replaced from time to time)

BG Bestway Group

Bn Billion

Board / BoD Board of Directors of the Bank

Bps Basis Points

CAGR Compounded Annual Growth Rate

CAR Capital Adequacy Ratio; the amount of risk-based capital (Tier 1 and Tier 2) as a percentage of risk-weighted assets

CDC The Central Depository Company of Pakistan Limited

CDS Central Depository System

Credit Rating Agency JCR-VIS Credit Rating Company Limited (“JCR-VIS”)

CET 1 Common Equity Tier 1

CET 1 Trigger Event As described in Paragraph A-5-2 of Annexure 5 of the Basel III Circular, the pre-specified trigger for loss absorption through conversion shall be the Issuer’s CET 1 ratio falling to or below 6.625% of Risk Weighted Assets. The Issuer shall immediately notify the SBP upon the occurrence of the CET 1 Trigger Event

Conditions The terms and conditions governing and regulating the TFCs

Contingent Convertible TFCs that are subject to Mandatory Conversion only upon the occurrence of the Mandatory Conversion Event

CY Calendar Year

Trust Deed Trust Deed executed between the Bank and the Trustee dated August 8, 2018

DFI Development Financial Institutions

EPS Earnings per Share

FIS Financial Institutions

FY Financial Year

GA Gross Advances

GOP Government of Pakistan

Investment Agreement The Investment Agreement entered into between each pre-IPO Investor and the Issuer, prior to the Issue Date

Issue Date The date on which the TFCs are Issued as communicated to the TFC Holders by the Trustee upon notification by the Issuer

KIBOR Karachi Inter-Bank Offer Rate (Ask Side)


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Lock-in clause Mark-up will only be paid from the Issuer’s current year’s earning and if the Issuer is in compliance of regulatory Minimum Capital Requirement, Capital Adequacy Ratio and Leverage Ratio requirements set by SBP from time to time.

Lock-in Event Failure by the Issuer to comply with the Lock-in clause or the non-cumulative feature of the TFCs

LR Leverage Ratio requirements set by SBP from time to time

Mandatory Conversion Mandatory conversion of the TFCs into ordinary shares in accordance with the Trust Deed and upon the occurrence of a Mandatory Conversion Event

Mandatory Conversion Event

Issuance of a written direction by the SBP to the Issuer to Mandatorily Convert the TFCs on account of: (i) a CET 1 Trigger Event; (ii) the PONV Trigger Event; or (iii) Lock-In Event

Mandatory Write-Off Mandatory write-off (in whole or in part) of the Outstanding Face Value of the TFCs in accordance with the Trust Deed and upon the occurrence of a Mandatory Write Off Event

Mandatory Write-Off Events

Issuance of a written direction of the SBP requiring the Mandatory Write-Off of the TFCs on account of: (i) a PONV Trigger Event; (ii) a CET 1 Trigger Event; (iii) upon the Issuer being unable to Mandatorily Convert the TFCs into ordinary shares upon occurrence of a CET 1 Trigger Event; or (iv) Lock-in Event

Market Maker BMA Capital Management Limited

MCR Minimum Capital Requirement as prescribed under the applicable laws.

Mn Million

NBFC Non-Banking Financial Company

NII Net Interest Income

NPLs Non-Performing Loans

PSE Public Sector Entities

PSX Pakistan Stock Exchange Limited

PKR or Rs. Pakistan Rupee

PONV Point of Non-Viability

PONV Trigger Event As described thereto in Paragraph A-5-3 of Annexure 5 of the Basel III Circular, the PONV Trigger Event shall be the earlier of:

(i) a decision made by the SBP that a conversion or permanent write-off is necessary without which the Issuer would become non-viable; or

(ii) the decision to make a public sector injection of capital, or equivalent support, without which the Issuer would have become non-viable, as determined by SBP.

The SBP will have full discretion in declaring the PONV Trigger Event

ROA Return on Assets

ROE Return on Equity

SBP State Bank of Pakistan

SECP / the Commission Securities & Exchange Commission of Pakistan


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TFC or TFCs Fully paid up, rated, listed, perpetual, unsecured, subordinated, non-cumulative and contingent convertible debt instruments in the nature of Term Finance Certificates issued under Section 66 of the Companies Act, 2017 which will qualify as Additional Tier 1 Capital as outlined by SBP under the Basel III Circular

TFC Holders/ Certificate Holders

Each person registered in the Register of TFC Holders as the holder of TFCs and the persons shown as the holders of the TFCs in the records of the CDS, who shall be the beneficiaries under Declaration of Trust and will include the Pre-IPO investors who have entered into an Investment Agreement and the general public. UBL shall issue TFCs to the successful allottees within 21 days of closure of the subscription list in compliance with the requirements of PSX.

TFC Issue Issuance of TFCs of PKR 10,000 million

Tier 2 Capital The Tier 2 capital shall bear the meaning ascribed to it under the Basel III Circular

Transaction Documents a) The Trust Deed; b) The Investment Agreements

Trustee Pak Oman Investment Company Limited

Trust Assets means and includes the following: (i) the rights of the TFC Holders to the Coupon Payments to in accordance with the terms of the Transaction Documents; (ii) the rights, benefits and entitlements vested in the Trustee and / or to be vested in the Trustee at any time in the future, under and / or arising from the Transaction Documents; (iii) the right to the Proceeds upon occurrence of an Event of Default; and (iv) includes all other rights, title and benefits of the Trustee and the TFC Holders arising directly or indirectly from the TFC Issue and the execution of the Transaction Documents

Transfer Agent & Ballotter THK Associates (Private) Limited

Transaction Legal Counsel HaidermotaBNR & Co.

Voting Rights means the voting rights exercisable by any of the TFC holders in accordance with the trust deed.


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TABLE OF CONTENTS

1 Approvals, Consents and Listing on the Stock Exchange ............................................................ 9

2 TFCs and Related Matters ......................................................................................................... 12

3 Underwriting, Commissions, Brokerage and Other Expenses to the Issue .............................. 30

4 History and Prospects ............................................................................................................... 32

5 Financial Information & Credit Rating Report .......................................................................... 52

6 Trustee and Security ................................................................................................................. 97

7 Management of the Bank ....................................................................................................... 111

8 Miscellaneous Information ..................................................................................................... 124

9 Application and Allotment Instructions .................................................................................. 132

10 Signatories to the Prospectus ................................................................................................. 137

11 Memorandum of Association ................................................................................................. 138

12 Application Form ..................................................................................................................... 142


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SUMMARY OF THE ISSUE

Issue Size : PKR 10,000 million inclusive of a green shoe option of PKR 3,000 million

Pre-IPO Placement : PKR 9,000 million inclusive of a green shoe option of PKR 3,000 million

Initial Public Offering (IPO) (IPO Portion)

: Up to PKR 1,000 million

Purpose : The proceeds of the Issue will contribute towards the Issuer’s Additional Tier 1 Capital for CAR as per guidelines set by SBP.

Utilization of proceeds of the Issue

: The proceeds of the Issue will be utilized in the Issuer’s normal business operations as permitted by its Memorandum & Articles of Association.

Minimum Investment : The TFCs will be offered in denominations of PKR 5,000/- or multiples thereof to the investors subject to a minimum Investment amount of PKR 5,000/-

Issue Date : The date on which the TFCs are Issued as communicated to the TFC Holders by the Trustee upon notification by the Issuer

Tenor : Perpetual

Principal Redemption : Perpetual, hence not applicable.

Coupon Rate / Mark-up Rate

:

The Coupon Rate / Mark-up Rate shall be as follows:

1) for the period at the end of which the Issuer is compliant with the MCR, CAR, and LR Requirements:

Mark-up rate: 3-Month KIBOR (Ask Side) + 1.55% with no step up feature (Indicative Pricing).

2) for the period at the end of which the Issuer is not compliant with the MCR, CAR, and LR Requirements or payment of the Mark-up set out in (1) above for the relevant period may render it non-compliant with such MCR, CAR, and LR Requirements:

Mark-up Rate: 0% (i.e. no mark- up) Cancellation (in whole or in part) by the Issuer of any scheduled mark-up payment will not in any way constitute an event of default, and upon such cancellation, the Issuer’s obligation to pay mark-up on the TFCs shall stand extinguished and the Issuer shall have no obligation to make distributions/payments in kind.

Coupon Payment Date : The first mark-up payment will fall due three (3) months from the Issue Date and subsequently every three (3) months thereafter


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Issue Price : At par

Security : The TFCs will be unsecured.

Transaction Legal Counsel

: HaidermotaBNR and Co.

Listing : Pakistan Stock Exchange Limited

Entity Rating :

Long Term Rating : AAA (Triple A)

Short Term Rating : A-1+ (A Dash One Plus)

Rating by JCR-VIS

Instrument Rating : The instrument is rated AA+ (Double A Plus) by JCR-VIS

Subscription Date : [month] [day], 2018 and [month] [day], 2018

Risk Factors : For details please refer to Part 4.12 of the Prospectus

Trustee to the Issue : Pak Oman Investment Company Limited

Compliance Officer :

Mr. Aqeel Ahmed Nasir Company Secretary & Chief Legal Counsel [email protected] UBL Head Office, I.I. Chundrigar Road, Karachi – 74000, Pakistan. Telephone # +92 21 99033 2960 Fax # +92 21 3241 3492

Underwriters of the Issue : BMA Capital Management Limited Arif Habib Limited

Market Maker to the Issue

: BMA Capital Management Limited

Bankers to the Issue :

Allied Bank Limited Askari Bank Limited

Bank Alfalah Limited Bank Al Habib Limited

Faysal Bank Limited Habib Metropolitan Bank Limited

JS Bank Limited MCB Bank Limited

Samba Bank Limited Summit Bank Limited

United Bank Limited

Transferability : The TFC will be inducted into the CDC, transfer shall be made in accordance with the Central Depository Act, 1997 and CDC Regulations

Governing Law : The TFC shall be subject to the laws of the Islamic Republic of Pakistan and shall submit to the non-exclusive jurisdiction of the Pakistan Courts


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PART I 1 APPROVALS, CONSENTS AND LISTING ON THE STOCK EXCHANGE

APPROVAL OF THE SECURITIES & EXCHANGE COMMISSION OF PAKISTAN

Approval of the Securities and Exchange Commission of Pakistan (the “Commission” or the “SECP”) as required under Section 87(2), read with Section 88(1) of the Securities Act, 2015 (the “Act”) has been obtained for the Issue, circulation and publication of this Prospectus. Disclaimer

It must be distinctly understood that in giving this approval, SECP does not take any responsibility for the financial soundness of the Issuer and any of its schemes stated herein or for the correctness of any of the statements made or opinions expressed by United Bank Limited (“UBL” or “Issuer” or “Bank”) in this Prospectus.

SECP has not evaluated quality of the Issue and its approval for the Issue, circulation and publication of this Prospectus should not be construed as any commitment of the same. The public/investors should conduct their own independent due diligence and analysis regarding the quality of the Issue before investment in the Additional Tier 1 Term Finance Certificates (“TFC” or “TFCs”) being offered through this Prospectus.

APPROVAL OF THE PROSPECTUS BY PAKISTAN STOCK EXCHANGE LIMITED

The Prospectus for the issue of fully paid-up, rated, listed, perpetual, unsecured, non-cumulative, subordinated, and contingent convertible debt instrument in the nature of Additional Tier 1 Term Finance Certificates (“TFC” or “TFCs”) has been approved by the Pakistan Stock Exchange Limited (“PSX") in accordance with the requirements of its Listing Regulations. Disclaimer

PSX has not evaluated the quality of the Issue and its approval should not be construed as any commitment of the same. The public / investors should conduct their own independent investigation and analysis regarding the quality of the Issue before subscribing.

The publication of this document does not represent solicitation by PSX.

The contents of this document do not constitute an invitation to invest in TFCs or subscribe for any securities or other financial instrument by PSX, nor should it or any part of it form the basis of, or be relied upon in any connection with any contract or commitment whatsoever of PSX.

It is clarified that information in this Prospectus should not be construed as advice on any particular matter by PSX and must not be treated as a substitute for specific advice.

PSX disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon this document to any one, arising from any reason, including, but not limited to, inaccuracies, incompleteness, and/or mistakes, for decision and/or actions taken based on this document.

PSX neither takes responsibility for the correctness of contents of this document nor the ability of the Issuer to fulfil its obligations there under.


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Advice from a suitably qualified professional should always be sought by investors in relation to any investment in securities.

APPROVAL OF THE STATE BANK OF PAKISTAN

In-principle approval of the State Bank of Pakistan (“SBP”) has been obtained vide SBP’s letter No. BPRD/BAID/650/9783/2018 dated May 07, 2018, for the issuance of fully paid-up, rated, listed, perpetual, unsecured, subordinated, non-cumulative, and contingent convertible Term Finance Certificates (“TFC”) of PKR 10,000 million, subject to compliance of relevant laws and regulations. SBP has granted in-principle approval to UBL for the issuance of the TFCs of PKR 10 Billion (inclusive of green shoe option of PKR 3 Billion) as eligible for Additional Tier 1 capital subject to following conditions: 1) The subject TFCs will not be eligible for Minimum Paid up Capital Requirements (net of losses) - MCR,

as determined by SBP from time to time.

2) In case of public offering the instrument needs to be rated.

3) The final term sheet should include a clause that any inability to exercise lock-in clause or non-

cumulative feature, will subject these TFCs to mandatory conversion into ordinary shares/ write-off

at the discretion of SBP.

4) The final term sheet should indicate the final profit rate in two tiers:

a) Rate when the bank is compliant with CAR, MCR, and LR requirements;

b) Rate of 0% (i.e. no profit) when the bank is non-compliant with any one of CAR, MCR, and LR

requirements or when the profit payment may render it non-compliant with the aforementioned

regulatory requirements.

5) The bank will submit the Board’s and shareholders’ due approval, covering the maximum number of

shares that can be issued against the conversion of these TFCs, pricing formula etc. in line with the

term sheet and requirements of BPRD Circular no. 6 of 2013.

6) The bank will submit an undertaking to the effect that it will, at all times, maintain sufficient cushion

in the authorized capital at least equal to the “cap on the maximum number of shares to be issued at

PONV or CET-1 trigger event”.

7) The bank shall submit an undertaking that it has obtained all the necessary approvals and fulfilled all

the preconditions (except SECP’s approval) necessary for conversion of these instruments at the PONV

event.

8) The bank will approach SBP for final approval after completion of other legal and regulatory

formalities and finalization of the term sheet.

9) Bank will ensure compliance with all the applicable laws, rules and regulations including BPRD circular

no.6 of 2013.

It may be noted that SBP’s in-principle approval to treat the proposed TFCs as Additional Tier-1 capital cannot be construed as ratification of economic risk and legal aspects of the proposed TFCs that are the sole responsibility of the bank’s management & board of directors. Firm approval of SBP vide letter No. BPRB/BA&CP/650/16536/2018 Dated July 31, 2018 has been obtained for the issuance of fully paid-up, rated, listed, perpetual, unsecured, subordinated, non-cumulative, and contingent convertible Term Finance Certificates (“TFC”) of PKR 10,000 Mn inclusive of a green shoe


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option of PKR 3,000 Bn, and recognition of the same as ADT1 eligible capital subject to compliance with BPRD Circular No. 6 2013 and other relevant laws and regulations.

FILING OF PROSPECTUS AND OTHER DOCUMENTS WITH THE REGISTRAR OF COMPANIES UBL has delivered to the Registrar of Companies as required under Sections 57 (1) of the Act, a copy of this Prospectus signed by all the Directors of UBL.

LISTING ON THE STOCK EXCHANGE Application has been made to PSX for permission to deal in and for quotation of the TFCs of UBL. If for any reason the application for formal listing is not accepted by PSX or approval for formal listing is not granted by PSX before the expiration of twenty-one days from the date of closing of the subscription period / list or such longer period not exceeding forty-two days as may, within the said twenty-one days, be notified to the applicants for permission by the securities exchange, the Issuer undertakes that a notice to that effect will immediately be published in the press and it will refund Application Money to the applicants without surcharge as required under the provisions of Section 69 of the Companies Act, 2017.

If any such money is not repaid within eight (08) days after the Bank becomes liable to repay it, the Directors of the Bank shall be jointly and severally liable to repay that money from the expiration of the eighth day together with surcharge at the rate of two per cent (2.0%) for every month or part thereof from the expiration of the eight day and, in addition, shall be liable to a penalty of level 3 on the standard scale in accordance with the provisions of sub-section (2) of Section 69 of the Companies Act.

COMPLIANCE OFFICER Mr. Aqeel Ahmed Nasir Company Secretary & Chief Legal Counsel CONTACT DETAILS OF COMPLIANCE OFFICER Email: [email protected] Address: UBL Head Office, I.I. Chundrigar Road, Karachi – 74000, Pakistan. Telephone: +92 21 99033 2960 Fax: +92 21 3241 3492


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PART II

2 TFCs AND RELATED MATTERS

THE ISSUE

UBL is issuing the TFCs under the Basel III Circular in the aggregate amount of PKR 10,000 million.

The TFCs will be Fully Paid-up, Rated, Listed, Perpetual, Unsecured, Subordinated, Non-Cumulative and Contingent Convertible. The TFCs will be subordinated to the payment of principal and profit, to all other indebtedness of the Bank, including deposits. The instrument is rated “AA+” (Double A Plus) by JCR-VIS.

The total issue size of the TFCs is PKR 10,000 million and will be offered in denominations of PKR 5,000/- (Pakistani Rupees Five Thousand Only) or in multiples thereof to the investors subject to a minimum investment amount of PKR 5,000/- (Pakistani Rupees Five Thousand Only).

The TFCs have a floating rate coupon priced with a spread of 155 bps over 3-month KIBOR with no floor or cap. The Base Rate will be set using the 3-month KIBOR (Ask side), one (1) business day prior to the Issue Date; and thereafter one (1) business day prior to each subsequent profit payment date. Profit will be payable quarterly in arrears calculated on a 365-day year basis on the outstanding principal amount. The first such profit payment will fall due three (3) months from the Issue Date and subsequently every three months thereafter, subject to the Bank meeting regulatory requirements as prescribed by the SBP.

The TFCs may be called with the prior written approval of SBP, starting from and including the fifth anniversary of the Issue Date, or on the occurrence of certain events (refer to section 2.2), subject to not less than 30 calendar days’ prior notice being given to the TFC Holders through the Trustee. The Call Option, once announced, will be irrevocable. No Put Option shall be available to the TFC Holders.

The TFCs shall be subject to a standard Lock-in Clause (refer to section 2.2) which would mean that coupon / markup shall only be paid from the current year’s earning and may not be paid if such payments would result in non-compliance with regulatory MCR or CAR or LR requirements as mandated by the SBP. The TFCs will also be subject to a standard loss absorbency clause (refer to section 2.2) under the Basel III Circular and/or any other amendments thereof.

TERM SHEET OF THE ISSUE

Issuer United Bank Limited (“UBL”)

Instrument

Fully paid-up, rated, listed, perpetual, unsecured, subordinated, non-cumulative and contingent convertible debt instruments in the nature of Term Finance Certificates (“TFCs”) issued under Section 66 of the Companies Act, 2017 which will qualify as Additional Tier I Capital as outlined by State Bank of Pakistan (“SBP”) under BPRD Circular No. 6 dated August 15, 2013 (hereinafter referred to as the “Circular”)

Issue Amount Up to PKR 10,000 million inclusive of an upsize option / green shoe option of PKR 3,000 million

Pre-IPO Amount

PKR 9,000 million with an upsize option / greenshoe option of PKR 3,000 million

IPO Amount Up to PKR 1,000 million

Purpose The Issue Amount will contribute toward the Issuer’s Additional Tier I Capital for capital adequacy ratio as per guidelines set by SBP. The funds so raised will be utilized


Page 13 of 143

in the Issuer’s normal business operations as permitted by its Memorandum & Articles of Association.

Tenor Perpetual (i.e., no fixed or final redemption date).

Coupon Payment

Payment of Mark-Up

Mark-up will be payable quarterly in arrears on the outstanding principal amount, based on 365 days a year basis and on a non-cumulative basis (“Non-Cumulative Feature”).

Lock-in Clause

Mark-up will only be paid from the Issuer’s current year’s earning and if the Issuer is in compliance of regulatory Minimum Capital Requirement, Capital Adequacy Ratio and Leverage Ratio requirements set by SBP from time to time (“MCR, CAR & LR Requirements”).

Coupon Rate/Mark-up Rate

The Issue will carry the Mark – up Rate as follows:

1) for the period at the end of which the Issuer is compliant with the MCR, CAR & LR Requirements:

Mark-up Rate: 3-Month Kibor (Ask Side) + 1.55% with no step-up feature (Indicative Pricing).

2) for the period at the end of which the Issuer is not compliant with the MCR, CAR & LR Requirements or payment of the Mark-up set out in (1) above for the relevant period may render it non-compliant with such MCR, CAR & LR Requirements:

Mark-up Rate: 0% (i.e. no mark- up).

Coupon Payment Date

The first mark-up payment will fall due three (3) months from the Issue Date and subsequently every three (3) months thereafter (“Coupon Payment Date”).

Interim Coupon Payment

Subject to applicable laws, the Issuer shall pay an interim coupon payment within 7 (seven) days of the Issue Date to all Pre-IPO Investors who have injected the investment amounts and subscribed to TFCs prior to the public offering (the “Interim Coupon Payment”).

The Interim Coupon Payment shall be equal to the mark-up (at the Coupon Rate) on the investment amounts invested by each Pre-IPO Investor from the date on which such investment amounts are received by the Issuer until the date which is one day prior to the Issue Date.

Issuer’s Discretion on Coupon Payments

In compliance with the terms of the Circular, the Issuer will have discretion to cancel (in whole or in part) any scheduled mark-up payment and upon such cancellation the Investors shall be deemed to have waived their right to such mark-up payment. Cancellation (in whole or in part) by the Issuer of any scheduled mark-up payment will not in any way constitute an event of default, and upon such cancellation, the Issuer’s obligation to pay mark-up on the TFCs shall stand extinguished and the Issuer shall have no obligation to make distributions/payments in kind.


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In the event that the Issuer determines that it shall not make a payment of mark-up on the TFCs, the Issuer shall notify the Trustee not less than 21 calendar days prior to the relevant Coupon Payment Date of that fact and of the amount that shall not be paid.

Dividend Stopper

The Issuer shall not make any dividend payments on equity/ common shares in the event of a non-payment of mark-up on the TFCs.

Principal Redemption

Perpetual, hence not applicable.

Security The TFCs will be unsecured.

Seniority of Claim

The claims (including principal and mark-up) of the Investors will rank:

a) superior to the claims of ordinary shareholders;

b) junior to all other claims (including depositors and general creditors); and

c) pari passu without preference amongst themselves.

Put Option None

Issuance Mechanism

The instrument will be issued in book entry form through CDS of Central Depository Company of Pakistan Limited (“CDC”)

Call Option (Types)

Issuer’s Call

The Issuer may, at its sole discretion, exercise call option any time after five (5) years from the Issue Date and subject to the satisfaction of Call Option Conditions (defined below)(“Issuer’s Call”).

Tax Event Call

The Issuer may, at its sole discretion, exercise call option upon the trigger or continuation of a Tax Event subject to the satisfaction of Call Option Conditions (defined below)(“Tax Event Call”).

A “Tax Event” shall be deemed to have occurred if, as a result of any change in, or amendment to, the laws affecting taxation (or regulations or rulings promulgated thereunder) of Pakistan or any change in official application of such laws, regulations or rulings, the Issuer will no longer be entitled to claim a deduction in respect of computing its tax liabilities with respect to coupon/mark-up payable on the TFCs.

Capital Event Call

The Issuer may, at its sole discretion, exercise call option upon the trigger of a Capital Event subject to the satisfaction of Call Options Conditions (defined below)(“Capital Event Call”).

A “Capital Event” shall be deemed to have occurred if the TFCs are downgraded in regulatory classification by the SBP. By way of illustration, if the TFCs are excluded by the SBP from the consolidated Additional Tier 1 capital of the Issuer.

Call Option Conditions

The Issuer may exercise a Call Option (Issuer’s Call, Tax Event Call or Capital Event Call, as the case may be) subject to the following conditions (the “Call Option Conditions”):

a) prior approval of the SBP has been obtained for exercise of the Issuer Call; and


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b) the Issuer replaces the TFCs with capital of the same or better quality and demonstrates that the capital position of the Issuer will be well above the minimum capital requirement prescribed by the SBP after the Call Option is exercised.

Call Option (Procedure)

Call Option Notice

If the Issuer decides to exercise the Call Option (Issuer’s Call, Tax Event Call or Capital Event Call, as the case may be), the Issuer shall notify the Trustee and Investors not less than thirty (30) calendar days prior to the date of exercise of such Call Option, which notice shall specify the date fixed for the exercise of the Call Option (the “Call Option Date”).

Call Option Price

Face value of TFC plus coupon/mark up accrued from and including the last Coupon Payment Date up to but excluding the Call Option Date.

Settlement The Issuer will make payment of the Call Option Price within thirty (30) calendar days of the Call Option Date.

Loss Absorbency (Convertibility Provisions)

Mandatory Conversion

In conformity with the Circular, the TFCs shall, if so directed by SBP, be permanently converted into ordinary shares upon: (i) the CET 1 Trigger Event (described below); (ii) the PONV Event (described below); or (iii) failure by the Issuer to comply with the Lock-In Clause or the Non-Cumulative Feature of the TFCs (“Lock-In Event”).

Conversion Amount

In the case of CET 1 Trigger Event, the Issuer will have full discretion to determine the amount of TFCs to be converted into ordinary shares, which amount shall at least be the amount required to immediately return the Issuer’s CET 1 ratio to above the CET 1 Trigger Event but will not exceed the amount required to bring the CET 1 ratio to 8.5% of RWA.

In the case of a PONV Event or Lock-In Event, the amount of TFCs to be converted will be determined by the SBP in its sole discretion.

Conversion Ratio

Number of shares to be issued to Investors at the time of conversion will be equal to the Conversion Amount divided by the Conversion Price, with a maximum cap of 59,000,000 ordinary shares.

“Conversion Price” shall be the market price per ordinary share of the Issuer on the date of declaration by the SBP of CET1 Trigger Event, PONV Event or Lock-In Event, or, in case market price is not available, the break-up value per ordinary share of the Issuer as duly certified by an independent auditor.

Fit & Proper clearance

Investors entitled to 5% or more ordinary shares of the Issuer upon conversion of the TFCs shall require “fit and proper” clearance from the SBP.

Other regulatory approvals

The Bank shall procure all approvals to enable conversion of the TFCs into ordinary shares, including approvals in relation to the increase in authorized capital of the Issuer (to the extent necessary).

Loss Absorbency

Mandatory Write- off

The Issuer shall, if so directed by SBP, write-off the Relevant Amount (defined below) of the TFCs (i) upon the PONV Trigger Event (described


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(Write –Off Provisions)

below), if directed by the SBP; (ii) upon the CET1 Trigger Event (described below); (iii) upon the Lock-In Event (described above); or (iv) if it is not possible to convert the TFCs into ordinary shares upon the CET 1 Trigger Event.

A write off due to PONV Trigger Event shall occur prior to any public sector injection of capital so that the capital provided by the public sector is not diluted.

Permanent Write-off

The Relevant Amount (defined below) of the TFCs shall be permanently written off and the written off amount will not be restored in any circumstances.

Relevant Amount

The outstanding principal amount of the TFCs may be written off partially or in full.

The amount of write off (“Relevant Amount”) shall be:

a) in the case of a PONV Trigger Event or Lock-In Event, such amount as is determined by the SBP in its sole discretion;

b) in case of CET1 Trigger Event, the Issuer will have full discretion to determine the amount which shall at least be the amount required to immediately return the Issuer’s CET1 ratio to above the CET1 Trigger Event but will not exceed the amount required to bring the CET1 ratio to 8.5% of RWA; and

c) where a write-off becomes necessary on account of an impossibility to convert the TFCs, an amount equal to the Conversion Amount.

Effect of Write-Off

Upon write-off:

a) the claim of the Investors on liquidation of the Issuer shall be reduced by the Relevant Amount;

b) the amount to be paid to the Investors on exercise of the Call Option by the Issuer shall be reduced by the Relevant Amount; and

c) the mark-up payable on the TFCs shall be permanently reduced.

SBP’s Discretion

Upon occurrence of the PONV Trigger Event, CET1 Trigger Event or Lock-In Event, the SBP shall have full discretion to determine whether the TFCs shall be converted into ordinary shares or permanently written-off.

CET 1 Trigger Event

The pre-specified trigger for loss absorption through conversion shall be the Issuer’s Common Equity Tier 1 ratio falling to or below 6.625% of Risk Weighted Assets (“CET 1 Trigger Event”).

The Issuer shall immediately notify the SBP upon the occurrence of the CET 1 Trigger Event.

PONV Trigger Event

The Point of Non-Viability Trigger Event (“PONV Trigger Event”) shall be the earlier of:


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(i) a decision made by the SBP that a conversion or permanent write-off is necessary without which the Issuer would become non-viable; or

(ii) the decision to make a public sector injection of capital, or equivalent support, without which the Issuer would have become non-viable, as determined by SBP.

The SBP will have full discretion in declaring the PONV Trigger Event.

Order of claim of TFCs in the event of liquidation of the Issuer

In the event of a liquidation of the Issuer, the claim of the Investors shall be:

(i) superior to the claims of ordinary shareholders;

(ii) junior to all other claims (including depositors and general creditors); and

(iii) pari passu without preference amongst themselves.

Face Value The Face Value of each TFC will be PKR 5,000/- (Pakistani Rupees Five Thousand Only).

Issue Price At Par.

Issuer Rating

Long Term Rating: AAA (Triple A)

Short Term Rating: A-1+ (A Dash One Plus)

Issuer Rating by JCR-VIS.

Instrument Rating

The instrument is rated AA+ (Double A Plus) by JCR-VIS.

Eligible Investors

The TFCs will be offered to the public including retail and institutional investors.

Non-resident investors may subscribe to the TFCs using their Special Convertible Rupee Account as provided in Chapter 20 of the Foreign Exchange Manual.

The Issuer nor any of its related parties over which the Issuer exercises control or significant influence, shall be permitted to purchase the TFCs. Further, the Issuer shall not, directly or indirectly, fund the purchase of the TFCs.

Minimum Investment

PKR 5,000/- (Pakistani Rupees Five Thousand Only) and in multiples thereof.

Placement Mechanism

The TFCs shall be listed on the Pakistan Stock Exchange.

Classification on the Balance Sheet

TFCs shall be classified as ‘Liabilities’ in the Balance Sheet.

Trustee to the Issue

Pak Oman Investment Company Limited

Transfer Agent & Balloter

THK Associates Private Limited

Transaction’s Legal Counsel

HaidermotaBNR & Co.

Market Maker BMA Capital Management Limited

Underwriters to the Issue

BMA Capital Management Limited

Arif Habib Limited


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Bankers to the Issue

Allied Bank Limited Askari Bank Limited

Bank Alfalah Limited Bank Al Habib Limited

Faysal Bank Limited Habib Metropolitan Bank Limited

JS Bank Limited MCB Bank Limited

Samba Bank Limited Summit Bank Limited

United Bank Limited

Consultant to the Issue

BMA Capital Management Limited

Transferability Transfer shall be made in accordance with the Central Depositary Act, 1997 and CDC Regulations.

Applicable Laws

Banking Companies Ordinance, 1962; SBP Circular No. 6 of 2013 dated August 15, 2013 and other SBP Prudential Regulations issued from time to time; Companies Act, 2017, Securities Act, 2015 and rules and regulations issued thereunder by the Securities and Exchange Commission of Pakistan; and rules of the Pakistan Stock Exchange Limited.

Governing Law

Laws of the Islamic Republic of Pakistan.

Issuer’s Registered Office

13th Floor, UBL Building, Jinnah Avenue, Blue Area, Islamabad.

Details of Company Secretary & Chief Legal Counsel

Mr. Aqeel Ahmed Nasir Company Secretary & Chief Legal Counsel [email protected] UBL Head Office, I.I. Chundrigar Road, Karachi – 74000, Pakistan. Telephone # +92 21 99033 2960 Fax # +92 21 3241 3492

Issue Schedule

Subscription Period

From [•], 2018 to [•], 2018

Issue Date

December 31, 2018 or such date on which the TFCs are issued in accordance with the Applicable Laws by the Issuer to the relevant Investors as Book Entry Securities listed on the Pakistan Stock Exchange Limited, and the names of such Investors are entered into the Register.

DISCRETION ON PROFIT PAYMENT In accordance with the terms of the Basel III Circular issued by SBP, the Bank will have discretion to cancel (in whole or in part) any scheduled profit payment and such cancellation shall be deemed to be a waiver by the TFC Holders of their right to receive any scheduled profit payment. Cancellation by the Bank of any scheduled profit payment will not constitute an event of default. On cancellation of the payment of mark-up, the Bank’s obligation to pay mark-up on the TFCs shall stand extinguished and the Bank shall have no obligation to make distributions/payments in kind.


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It is however to be noted here that while the regulatory framework may not consider a missed coupon payment as a default; the credit rating methodology employed by the credit rating agency i.e. JCR-VIS would treat such missed payments as an event of default.

CONVERSION MECHANISM In conformity with Basel III Circular, the TFCs shall, if directed by the SBP, be permanently converted into ordinary shares upon: (i) CET 1 Trigger Event; (ii) PONV Trigger Event; or (iii) the Lock-In Event. In the case of CET 1 Trigger Event, the Issuer will have full discretion to determine the amount of TFCs to be converted into ordinary shares, which amount shall at least be the amount required to immediately return the Issuer’s CET 1 ratio to above the CET 1 Trigger (i.e. 6.625%) but will not exceed the amount required to bring the CET 1 ratio to 8.5% of RWA. In the case of a PONV Trigger Event or Lock-In Event, the amount of TFCs to be converted will be determined by the SBP in its sole discretion. Number of shares to be issued to investors at the time of conversion will be equal to the ‘Outstanding Face Value of the TFCs’ divided by fair value (i.e. market price per Ordinary Share on the date of the CET1 Trigger Event, PONV Trigger Event or Lock-In Event, or, in case market price is not available, the break-up value of share duly certified by the independent auditor) per share of the Bank’s shareholders equity on the date of trigger of the CET1 Trigger Event, PONV Trigger Event or Lock-In Event as declared by SBP, subject to a maximum of 59,000,000 ordinary shares to be issued. The maximum number of shares will not be adjusted on account of any further issue of capital, stock splits, stock dividends or similar corporate actions. Investors entitled to 5% or more ordinary shares of the Issuer upon conversion of the TFCs shall require “fit and proper” clearance from the SBP. The Bank shall, in accordance with directions of the SBP, procure all approvals to enable conversion of the TFCs into ordinary shares, including approvals in relation to the increase in authorized capital of the Issuer (to the extent necessary).

MINIMUM CAPITAL REQUIREMENT The SBP through its BSD Circular No.07 of 2009 dated April 15, 2009 requires the minimum paid up capital (net of losses) for all locally incorporated Banks to be raised to PKR 10 billion in a phased manner from the financial year December 2013. The paid up capital of the Bank for the year ended December 31, 2017 stood at PKR 12.242 billion, remaining unchanged at PKR 12.242 billion as at September 30, 2018, and is in compliance with the minimum paid-up capital requirement of the SBP.

CAR REQUIREMENT The CAR of the Bank is subject to the Basel III capital adequacy guidelines stipulated by the SBP through its Basel III Circular. These instructions are effective from December 31, 2013 in a phased manner with full implementation intended by December 31, 2019. Furthermore, under the SBP’s Framework for Domestic Systemically Important Banks (D-SIBs), introduced via BPRD Circular No. 4 of April 13, 2018, UBL is required to maintain an additional 1.5% CET-1 Capital from the end of March 2019 onwards.


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Under the afore-mentioned guidelines, the Bank is required to maintain the following Capital Adequacy ratios on an ongoing basis:

2013 2014 2015 2016 2017 2018 March 2019

Dec 2019 onwards

10.0% 10.0% 10.25% 10.65% 11.275% 11.90% 13.40% 14.00%

UBL’s CAR stood at 15.4% as of December 31, 2017 and 17.3% as of September 30, 2018 which is compliant with the SBP’s minimum requirement.

MODE OF PAYMENT

The payment of profit shall be credited in TFC Holders’ bank accounts electronically on quarterly basis. The applicants, therefore, must provide their International Bank Account Number (IBAN) in the TFCs Subscription Form.

PRE-IPO INVESTORS The Pre-IPO portion for the TFCs closed at PKR 9 billion out of the total issue size of PKR 10 billion and the disbursement of Pre-IPO portion completed on October 25, 2018. The list of investors in the Pre-IPO portion along with their respective investment amount is provided below:

S. No Name of Investing Entity Pre-IPO Participation

(PKR)

1 AGP Limited - Staff Provident Trust 10,000,000

2 Agriauto Industries Limited Employees Provident Fund 10,000,000

3 Agriauto Stamping Company (Private) Limited Employees Provident Fund 9,000,000

4a Allied Bank Limited 500,000,000

4b Allied Bank Limited 125,000,000

5 Arif Habib Corporation Limited 50,000,000

6 Atlas Group of Companies Management Staff Gratuity Fund 10,000,000

7 Atlas Honda Limited Employees Provident Fund 10,000,000

8 Baluchistan Wheels Limited Employees Gratuity Fund 7,500,000

9 Baluchistan Wheels Limited Executive Provident Fund 10,000,000

10 Baluchistan Wheels Limited Non-Executive Provident Fund 5,000,000

11 Bank AL Habib Limited 275,000,000

12 Bank Alfalah Employees Gratuity Fund 125,000,000

13 BMA Capital Management Company Limited 30,000,000

14 BOP Employees’ Provident Fund Trust 200,000,000

15 Bulleh Shah Packaging Pvt. Ltd Employees Provident Fund 10,000,000

16 Bulleh Shah Packaging Pvt. Ltd Management Staff Pension Fund 10,000,000

17 Crescent Steel and Allied Products Limited - Gratuity Fund 2,500,000

18 Crescent Steel and Allied Products Limited - Pension Fund 2,500,000


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19 Eastern Garments (Private) Limited - Employees Provident Fund 3,000,000

20a EFU Life Assurance Limited 250,000,000

20b EFU Life Assurance Limited 1,000,000,000

21 Escorts Investment Bank Limited 125,000,000

22 Fatima Agri Sales & Services (Private) Limited- Provident Fund Trust 15,500,000

23 Fatima Fertilizer Company Limited - Provident Fund Trust 25,000,000

24 Fatimafert Limited Management Staff Provident Fund 10,000,000

25 Habib Bank Limited 700,000,000

26 Habib Bank Limited Employees Benevolent Fund Trust 70,000,000

27 Habib Education Trust - Staff Provident Fund 11,000,000

28 Habib Metropolitan Bank Limited 150,000,000

29 Hommie & Jamshed Nusserwanjee Charitable Trust 20,000,000

30 Hum Network Limited 80,000,000

31 IGI Life Insurance Limited 75,000,000

32 Jaffer Brothers Private Limited & Associated Companies Staff Provident Fund 5,000,000

33a Jubilee Life Insurance Company Limited 1,000,000,000

33b Jubilee Life Insurance Company Limited 1,000,000,000

34 Lahore University of Management Sciences 40,000,000

35 Liaquat National Hospital Staff Gratuity Fund 6,000,000

36 MCB Bank Limited 200,000,000

37 Mega Conglomerate Private Limited 209,500,000

38 Muller & Phipps Pakistan (Pvt.) Ltd. – Staff Provident Fund 15,000,000

39 National Bank of Pakistan 750,000,000

40 National Clearing Company of Pakistan Limited 100,000,000

41 National Management Foundation 75,000,000

42 Packages Limited Employees Provident Fund 10,000,000

43 Packages Limited Management Staff Pension Fund 10,000,000

44 Pak Brunei Investment Company Limited 300,000,000

45 Pak China Investment Company Limited 500,000,000

46 Pak Suzuki Motor Company Limited – Gratuity Fund 13,000,000

47 Parazelsus Pakistan Employees’ Provident Fund 1,500,000

48 PTCL Employees General Provident Fund 124,000,000

49 Roche Pakistan Limited Employees' Provident Fund 9,000,000

50 Roche Pakistan Limited Management Staff Defined Contribution Pension Fund 2,000,000

51 Roche Pakistan Limited Management Staff Gratuity Fund 3,000,000

52 Roche Pakistan Limited Management Staff Pension Fund 6,000,000

53 Searle Pakistan Limited Provident Fund 15,000,000

54 Soneri Bank Limited 125,000,000

55 Tetra Pak Pakistan Limited Employees Gratuity Fund 5,500,000

56 Tetra Pak Pakistan Limited Employees Pension Fund 8,400,000

57 Tetra Pak Pakistan Limited Employees Provident Fund 7,600,000


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58 The Bank Of Khyber 500,000,000

59 Tourism Promotion Services (Pakistan) Limited Employees Gratuity Fund 11,750,000

60 Tourism Promotion Services (Pakistan) Limited Employees Provident Fund 11,750,000

Total Investment in Pre-IPO Portion 9,000,000,000

IPO Portion 1,000,000,000

Total Tier 1 TFC Issue 10,000,000,000

All the Pre-IPO investors have signed the Investment Agreements for the above mentioned participation amount.

OPENING AND CLOSING OF SUBSCRIPTION LIST The subscription list will open at the commencement of the banking hours on [month] [day], 2018 and close at the end of banking hours on [month] [day], 2018.

PUBLIC SUBSCRIPTION THROUGH E-IPO E-IPO is submission of application for subscription of securities electronically through internet, Automated Teller Machines (ATM) and mobile phones. In order to facilitate the public during IPOs, SECP has introduced the concept of e-IPO. The following two systems are available for e-IPOs: (i) Centralized e-IPO System (CES):

In order to facilitate investors, the CDC in collaboration with 1Link (G) Limited, (“1Link”), has developed a Centralized e-IPO System (“CES”) through which applications for subscription of securities offered to the general public can be made electronically. CES has been made available in this Initial Public Offering (IPO) and can be accessed through the web link www.cdceipo.com. Payment of subscription money can be made through 1LINK’s member banks available for CES, list of which is available on above website. For making application though CES, investors must be registered with CES. Registration with CES is one time, free of cost and can be done under a self-registration process by filling the CES registration form, which is available 24/7 all around the year. Investors who have valid Computerized National Identity Card (CNIC), bank account with any of the commercial bank, email address, mobile phone number and CDS Account (Investor account or sub account) can registered themselves with CES. Investors who do not have a CDS account can visit www.cdcpakistan.com for information regarding opening CDS account. For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone number: 0800 – 23275 (CDCPL) and e-mail: [email protected] or Mr. Farooq Ahmed Butt at Phone 021-34326030 and email: [email protected].


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Investors who are registered with CES can submit their applications through the web link www.cdceipo.com 24 hours a day during the subscription period which will close at midnight on [month] [day], 2018. (ii) e-IPO facilities by Bankers to the Issue:

Currently, United Bank Limited (UBL), Summit Bank Limited (SMBL) and Bank Alfalah (BAFL) are providing e-IPO facilities to their respective accountholders.

UBL account holders can use UBL Net Banking to submit their application via link http://www.ubldirect.com/corporate/ebank

SMBL account holders can use SMBL Net Banking to submit their application via link https://ib.summitbank.com.pk and

BAFL account holders can use BAFL Net Banking to submit their application via link: https://netbanking.bankalfalah.com

BENEFITS OF E-IPO E-IPO has the following benefits:

1) It enables the investors to make application for subscription of securities including TFCs through the internet without going to the bank, and waiting in long queues.

2) It is efficient and simultaneously facilitative for both the Issuer and the investors.

3) It is available for use 24 hours during the subscription period.

4) If you are registered with CES or accountholder of a bank providing e-IPO facility, you may get SMS for new IPOs.

By applying through CES you can also track your application status.

INVESTORS ELIGIBILITY a) Pakistani citizens resident in Pakistan

b) Pakistani citizens residing outside Pakistan

c) Persons holding two nationalities including Pakistani nationality

d) Foreign nationals whether living in or outside Pakistan

e) Companies, bodies corporate or other legal entities incorporated or established in or outside

Pakistan (to the extent permitted by their constitutive documents and existing regulations, as the

case may be)

f) Mutual funds, provident/pension/gratuity funds/trusts (subject to the terms of their trust deeds

and existing regulations; and

g) Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan

FACILITIES AVAILABLE TO FOREIGN/NON-RESIDENT PAKISTANI INVESTORS Companies are permitted under paragraph 6 (with specific reference to sub para (B) (I)) of Chapter 20 of the SBP’s Foreign Exchange Manual (the “Manual”) to issue TFCs on repatriation basis to non-residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual, i.e. (I) A Pakistan national resident


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outside Pakistan, (II) A person who holds dual nationality including Pakistan nationality, whether living in or outside Pakistan, (III) A foreign national, whether living in or outside Pakistan and (IV) A firm (including a partnership) or trust or mutual fund registered and functioning outside Pakistan, excluding entities owned or controlled by a foreign government, provided the issue price, is paid in foreign exchange through normal banking channel by remittance from abroad or out of foreign currency account maintained by the subscriber/purchaser in Pakistan.

Non-residents who wish to subscribe TFCs out of the general public portion may contact any of the bankers to the issue (retail portion) for taking instructions regarding payment of subscription money against TFCs offered to general public / retail investors. List of bankers to the issue for retail portion is available on page 1 and para 8.7 of this Prospectus.

The TFCs issued to non-resident investors shall be intimated by the Company to the designated Authorized Dealer, along with the documents prescribed in the Manual within 30 days of issue.

Non-residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual do not require SBP’s approval to invest in the TFCs being issued in terms of this Prospectus. Furthermore, under paragraph 7 (vii) of Chapter 20 of the Manual the Authorized Dealer shall allow repatriation of profit, net of applicable taxes and proceeds on sale of listed TFCs (i.e. divestment proceeds) not exceeding the market value less brokerage/commission on provision of prescribed documents.

Payments made by non-residents shall be supported by proof of receipt of foreign currency through normal banking channels. Such proof shall be submitted along with the Application by the non-residents.

MINIMUM AMOUNT OF APPLICATION AND BASIS OF ALLOTMENT OF TFCS The basis and conditions of allotment shall be as follows: a) Face value of the TFC is PKR 5,000/-.

b) The minimum amount of application for subscription of TFCs is PKR. 5,000/-.

c) Applications for TFCs below the aggregate face value of PKR. 5,000/- shall not be

entertained.

d) Applications for TFCs by the general public, including institutions and individuals, must be for a

minimum of the aggregate face value of PKR. 5,000/- and in multiples of PKR 5,000/- thereof.

e) If the TFCs to be issued to the general public are sufficient for the purpose, all applications shall

be accommodated.

f) If the issue is oversubscribed in terms of amount, then all applications shall be accommodated

initially for TFCs of face value of PKR 5,000/- each and the balance TFCs shall be allotted on pro-

rata basis to all applicants who applied for TFCs in multiple of PKR. 5,000/-.

g) If the issue is over-subscribed in terms of number of applications and the amount, the TFCs shall

be allotted through computer balloting in the presence of representatives of PSX.

h) Allotment of TFCs shall be subject to scrutiny of applications for subscription.

REFUND OF MONEY TO UNSUCCESSFUL APPLICANTS UBL shall take a decision within ten (10) days of the closure of subscription list as to which applications have been accepted or are successful and refund the money in cases of unaccepted or unsuccessful


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applications within ten (10) days of the date of such decision as required under the regulation 5B 4.19 read with regulation 5B 4.20 of the PSX Rule Book as amended from time to time. As per sub-section (2) of Section 68 of the Companies Act, 2017 if a refund is not made within the time specified, the Directors of the Company shall be jointly and severally liable to repay the money with surcharge at the rate of 2.00%, for every month or part thereof from the expiration of the 15th day and, in addition, shall be liable to a penalty of level 3 on the standard scale.

MINIMUM SUBSCRIPTION

The minimum amount of subscription on which the Directors will proceed to allot TFCs is the full amount of the Issue i.e. PKR 7,000 million.

ISSUE AND CREDIT OF TFCS UBL shall issue TFCs to the successful allottees within twenty one (21) days of closure of subscription list in compliance with the requirements of PSX. TFCs will be issued only in the Book-Entry Form through credit in their CDS Accounts. The applicants, therefore, must provide their CDS Account Number (Investor Account Number or Sub-Account Number) in the TFCs Subscription Form.

The TFCs issued shall be subject to the terms & conditions for the issuance of the TFCs specified in the Trust Deed dated August 8, 2018.

If the Bank defaults on complying with the requirements of the Listing Regulations, it will pay to the PSX a penalty of PKR. 5,000/- per day during which the default continues. The PSX may also notify the fact of such default and the name of the Bank by notice and also by publication, in the Daily Quotations.

REDEMPTION RESERVE No redemption reserve is being created for redemption of TFCs as the instrument is perpetual in nature.

DEDUCTION OF ZAKAT Zakat is withheld at 2.5% of the redeemed principal. Zakat is deductible where the TFC is held by a Muslim citizen, except where a statutory declaration of exemption is filed. For persons other than individuals, Zakat is deductible except in case of certain corporate entities as well as certain non-corporate entities such as Trusts, Funds, etc. (subject to qualification for exclusion from collection of Zakat under the Zakat and Ushr Ordinance, 1980).

INCOME TAX Any income derived from the TFCs shall be subject to income tax as per the Income Tax Ordinance, 2001 (“the Ordinance”). Withholding tax under section 151 of the Ordinance shall be deemed to be the final discharge of tax liability on the profit arising to a tax payer other than a company under subsection 3(a) of section 151 of the Ordinance.

DEDUCTION OF WITHHOLDING TAX


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Profit or markup paid to TFC Holders will be subject to withholding tax under section 151(1)(d) of the Ordinance, rates specified in Part III Division IA of the First Schedule of the said Ordinance or any time to time amendments therein. The rate of tax to be deducted shall be:

(a) For filer of Income Tax Returns: 10.00 % (b) For non‐filer of Income Tax Return: 17.5%

Provided that for a non-filer, if the profit or markup paid is rupees five hundred thousand or less, the rate shall be 10%.

CAPITAL GAINS

Any capital gain derived from the sale of TFCs shall be subject to capital gain tax as per section 37A of the Ordinance, as under:

Tax Rate FY 2019

Holding Period of Securities

Category Tax Year Applicable Tax Rate

Filer FY 19 15.00%

Non – Filer FY 19 20.00%

MARKET MAKING

BMA Capital Management Limited will act as Market Maker for the TFCs. The Market Maker will at all times hold at least [] of TFCs only.

The Market Maker shall mandatorily make available two way quotes on daily basis with a maximum spread of 2.50% till complete redemption of the TFCs.

The Market Maker shall be bound to purchase or sell a maximum of [] of the TFCs during a business day, provided that at any given time the Market Maker shall not hold more than 2% of the IPO Portion on its books as inventory. However the Market Maker may upon its discretion purchase or sell such other amount above the aforementioned size as it may deem fit.

The Market Maker will be obligated to replenish its orders/quotes within 90 seconds following full execution, withdrawal, expiration or any change in the price of either bid or offer.

The Market Making Orders/Quotes are to be maintained on both sides during Market Making period as per Market Making agreement which shall be for the tenure of the Debt Security.

The Market Maker shall be allowed to Blank Sale in Debt Security subject to sufficient pre-existing interest at the end of each Blank Sale day to validate that the Market Maker can deliver the quantity sold blank during the trading day.

Market Marker shall make available copy of the Prospectus to the investors at all times.

DISCLOSURE OF DEFERRED TAXATION Deferred tax is recognised using the balance sheet liability method on all temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for the taxation purposes. The amount of deferred tax provided is based on the expected manner of


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realisation or settlement of the carrying amounts of assets and liabilities using the tax rates enacted or substantively enacted at the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available and the credits can be utilised. Deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefits will be realised. Deferred tax liability is not recognised in respect of taxable temporary differences associated with exchange translation reserves of foreign branches, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. The balance of deferred tax liability as of December 31, 2017 was PKR 2,612 million, with a deferred tax asset of PKR 4,468 million as of September 30,2018.

TFCS ISSUED IN PRECEEDING YEARS

Previous Issue TFCs

Amount (PKR mn)

Issue Date

Maturity Date

Tenor Markup Type Security Rating Outstanding Amount (PKR mn)

TFC-I (listed)

2,000 Aug-04 Aug-12 8 yrs 8.45% Fixed Unsecured AA Fully redeemed

TFC-II (listed)

2,000 Mar-05 Mar-13 8 yrs 9.49% Fixed Unsecured AA Fully redeemed

TFC-III (listed)

2,000 Sep-06 Sep-14 8 yrs KIBOR +

1.70%

Floating Unsecured AA Fully redeemed

TFC-IV (listed)

6,000 Sep-06 Sep-14 8 yrs KIBOR +

1.70%

Floating Unsecured AA Fully redeemed

INTEREST OF PRE-IPO INVESTORS

The Pre-IPO Investors only have interest in this TFC as TFC holders. Allied Bank Limited, Bank AL Habib Limited, and Habib Metropolitan Bank Limited are Bankers to the Issue for the TFC and have also participated in the Pre-IPO portion. Furthermore, BMA Capital Management Limited, in addition to being one of the pre-IPO investors, is Consultant, Market Maker and Underwriter to the Issue.


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STATEMENT BY THE ISSUER The General Manager Pakistan Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi On behalf of United Bank Limited (“UBL” or the “Bank”), we hereby confirm that all material information as required under the Securities Act, 2015, the Public Offering Regulations, 2017 and the Listing of Companies and Securities Regulations of the Pakistan Stock Exchange Limited has been disclosed in the Prospectus and that whatever is stated in Prospectus and the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed. For and on behalf of United Bank Limited: -Sd- ___________________________ Sima Kamil Chief Executive Officer

-Sd- ___________________________ Aameer M. Karachiwalla Chief Financial Officer


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STATEMENT BY THE CONSULTANT TO THE ISSUE The General Manager Pakistan Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi Dear Sir, Being mandated as the Consultant to the Issue to this Initial Public Offering of UBL ADT 1 TFC, we hereby confirm that all material information as required under the Securities Act, 2015, the Listing of Companies and Securities Regulation of Pakistan Stock Exchange Limited and the Public Offering Regulations, 2017 has been disclosed in this prospectus and that whatever is stated in the prospectus and in the supporting documentations is true and correct to the best of our knowledge and belief and that nothing has been concealed. For and on behalf of BMA Capital Management Limited: -sd- ___________________________________ Zain Abbas Analyst – Investment Banking

-sd- ___________________________________ Muhammad Abdullah Associate – Investment Banking


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PART III

3 UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES TO THE ISSUE

UNDERWRITING

The present Public Issue of TFCs of up to PKR 1,000 million has been fully underwritten as follows:

S. no Underwriter No. of TFCs Amount in Rupees

1. BMA Capital Management Limited 100,000 500,000,000

2. Arif Habib Limited 100,000 500,000,000

Total 200,000 1,000,000,000

If and to the extent that the TFCs offered to the general public shall not have been subscribed and paid for in full by the closing date, the underwriters shall subscribe or procure subscribers (within the timeframe stipulated in the Underwriting Agreement) to subscribe and pay in ready available funds in accordance with their underwriting commitments.

In the opinion of the Directors of the Bank, the resources of the underwriters are sufficient to discharge their underwriting obligations.

NO BUY BACK / REPURCHASE AGREEMENT THE UNDERWRITERS NOR ANY OF THEIR ASSOCIATES HAVE ENTERED INTO ANY BUYBACK OR REPURCHASE AGREEMENT WITH THE SPONSORS, THE BANK OR ANY OTHER PERSON IN RESPECT OF THIS PUBLIC ISSUE.

ALSO, NEITHER THE BANK NOR ANY OF ITS ASSOCIATES HAVE ENTERED INTO ANY BUY BACK / RE-PURCHASE AGREEMENT WITH THE UNDERWRITERS OR THEIR ACCOCIATES.

THE BANK AND ITS ASSOCIATES SHALL NOT BUY BACK / RE-PURCHASE CERTIFICATES FROM THE UNDERWRITERS AND THEIR ASSOCIATES.

UNDERWRITING EXPENSES

The underwriters will be paid an underwriting expense of upto 0.25% on the amount of the public issue underwritten by them. Further in case of take-up, a take-up commission of upto 0.25% of the take-up amount will be paid to the underwriters.

FEES AND EXPENSES FOR CENTRALISED E-IPO SYSTEM (CES) The commission on application received through CES will be paid to CDC, which shall not be more than 0.80% of the amount of successful applications. CDC will share the fee with other participants of CES at a ratio agreed amongst them.

COMMISSION TO THE BANKERS TO THE ISSUE

A commission at the rate of 0.25% of the amount collected, in respect of successful applications will be paid to the Bankers to the Issue for services to be rendered by them in connection with the Public Offer.


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No commission shall be paid to the Bankers in respect of the TFCs actually taken up by the underwriters by virtue of their respective underwriting commitments.

BROKERAGE COMMISSION Brokerage shall be paid to the TREC holders of PSX, at the rate of 1.0% of paid-up value of TFCs actually sold through them. No brokerage shall be payable in respect of TFCs taken up by the Underwriters by virtue of their underwriting commitment.

EXPENSES TO THE ISSUE

The initial expenses of the issue paid or payable by the Bank inclusive of commission to the Underwriters, Bankers to the Issue and members of the PSX, etc., are estimated to be as follows:

Details of the expenses of the Issue, assuming a pre-IPO portion of PKR 9 billion and the IPO portion of PKR 1 billion, are as under:

Expenses to the Issue Rate Amount (PKR)

Commission to the Bankers to the Issue Including Out of Pocket Expenses*

0.25% 3,100,000

E-IPO Services* 0.80% 8,000,000

Underwriting Commission - General Public 0.25% 2,500,000

Take-up Commission1 0.25% 2,500,000

Commission to the TREC Holders of PSX 1.00% 10,000,000

Consultant to the Issue Fee1 0.20% 20,000,000

Participation Fee1 0.50% 45,000,000

Trustee Fee p.a 500,000

Rating Fee 2,000,000

Legal Counsel 2,500,000

CDC Annual Fee for Eligible Security p.a 700,000

CDC Security Deposit 100,000

CDC Fresh Issue Fee 0.08% 8,000,000

PSX Initial Listing Fee 500,000

PSX Annual Listing Fee 50,000

SECP Processing Fee 100,000

SECP Supervisory Fee 55,000

Auditors fee for preparation of various certificates 2,000,000

Printing, Publication of Prospectus / Application Forms 6,000,000

Balloter & Share Registrar Fee etc 200,000

Market Making p.a 1,500,000

Miscellaneous Costs 1,000,000

Total 116,305,000

Note: Stamp duty fee (if any) will be calculated based on the advice of Transaction Legal Counsel * CDC E-IPO fee is 0.80% of the general portion. Currently only 3 banks are offering E-IPO in addition to CDC. The Actual cost is dependent on the subscriptions received through E-IPO.

1 The fees is based on maximum fee applicable for the Issue Size.


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PART IV 4 HISTORY AND PROSPECTS

BACKGROUND

United Bank Limited is a banking company incorporated in Pakistan and is engaged in the business of commercial banking and related services. UBL is the second largest private bank in Pakistan in terms of total assets. It was set up in 1959 and quickly emerged as a key player in the country’s banking space through aggressive growth and pioneering initiatives. In 1974, the Bank was nationalized along with other private banks as part of the Government of Pakistan’s (GoP) nationalization program. During the 1990s, the GoP embarked upon a plan to privatize entities that were nationalized in 1974. Efforts were made to turnaround the Bank to make it viable for privatization. In October 2002, UBL was privatized with the sale of 51% shareholding, along with management control, to a consortium consisting of Abu Dhabi Group, UAE (ADG) and Bestway Group, UK (BG). In 2005, the SBP, which held 48.98% of the Bank’s shares on behalf of the GoP, divested approximately 4.2% to the public through listing the Bank on the Stock Exchanges. In 2007, an additional 25% shareholding was divested by the GoP to international investors through a GDR offering, thereby reducing the government shareholding to 19.78%. BG subsequently acquired ADG’s stake in UBL, thus bringing the Bestway Group at the helm, with a current holding of 61.5%. In June 2014, the GoP divested its remaining 19.78% stake in UBL through a secondary public offering. One of the largest capital market transactions in the country’s history, the offering was heavily subscribed by international and domestic investors. The Bank’s ordinary shares are listed on the Pakistan Stock Exchange and its GDRs are listed internationally on the London Stock Exchange. UBL has undergone significant transformation in the years following privatization. Its asset base stood at PKR 1.86 trillion as of September 30, 2018 (PKR 2 trillion as of 31 December 2017). A premier Retail Banking operation, the Bank’s network spans across 1,382 branches globally, with presence in Asia, Europe, Africa and USA. The Bank serves over 5 million customers, built upon a deposits base of PKR 1.3 trillion and an advances portfolio of PKR 673 billion at the end of September 2018. UBL’s product suite is vast offering end to end coverage of customer’s financial needs, ranging from Corporate and Investment Banking to Treasury and Capital Markets, Commercial Banking, Consumer Banking, Islamic Banking and Digital Banking. The Bank has delivered strong profitability growth, with the 2012-2017 PBT CAGR at 8.4%, the highest among peer banks. Moreover, the return on equity has been among the highest in the industry in the range of 20-26% during the last 5 years. The Bank is rated “AAA/A-1+” by JCR-VIS. The rating depicts UBL’s strong performance across core areas including asset quality, capitalization and profitability bolstered by its well-diversified business model and continuous focus on innovation. UBL remains an industry leader in innovation with the following breakthrough initiatives:

First Commercial Bank in Pakistan to launch Branchless Banking (UBL OMNI) First Bank in Pakistan to launch QR code based payments system, MasterPass QR First Bank in the world to issue VISA Debit Cards for G2P assistance to flood affectees


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First Bank to provide Instantaneous ATM/Debit cards to branchless banking customers at the time of account opening (UBL Omni)

First Bank in Pakistan to offer Prepaid VISA Debit Card First Bank in Pakistan where customer’s inward remittances are deposited automatically on

an ATM and VISA enabled debit card (UBL Tezraftaar Pardes Card) UBL’s position as a leading institution in the banking industry and its progressive vision continues to be acknowledged by the market. The Bank has been the recipient of the following major accolades:

Best Bank 2016 at the first Pakistan Banking Awards Top 25 Companies Award by the Pakistan Stock Exchange for 2010-2012, 2015 and 2016 Best Bank for Corporate Finance & Capital Market Development Award at the Pakistan

Banking Awards 2017 Innovation Award at the Mastercard Innovation Forum 2016 National Medal of Innovation Award 2016 for Pioneering G2P Payments – Pakistan

Innovation Foundation

BUSINESS SEGMENTS, PRODUCTS AND SERVICES

UBL’s dominant position in the banking industry is driven by the following business segments: a. Branch Banking Group – The core of UBL’s domestic franchise UBL is a leading player in the banking industry with a market share of over 8.0% in domestic deposits. Through its vast network of 1,364 domestic branches, the Bank reaches over 5 million customers. The network has deep penetration in various segments, being present in major urban centers as well as the underbanked areas of the country. The Branch Banking Group has maintained strong deposits momentum with domestic deposits growing at a 14% CAGR over 2012-2017. 2017 was a landmark year for the Bank as it crossed the PKR 1 trillion mark in domestic deposits. The Bank’s focus has remained on aggressive current deposits growth through active solicitation of New to Bank (NTB) customers in order to improve deposits mix and minimize the cost of deposits. Domestic current deposits have grown at a 2012-2017 CAGR of 16% (average volumetric growth of 16% in 9M’18). The Bank has one of the highest current to total deposits ratio in the financial sector averaging at 44.4% during 9M’18 (Dec’17: 44.3%, Dec’16: 41.5%) and one of the most efficient cost of deposits of 2.74% during 9M’18 (9M’17: 2.76%). In addition to the branch network, the Bank continues to evolve its Alternate Delivery Channels in order to expand and diversify its revenue profile. UBL has the country’s largest network of over 45,000 customer touchpoints that, in addition to brick and mortar, include 1,426 ATMs, 5,086 POS terminals, over 480 phone banking agents and more than 37,000 Omni agents. UBL continues to grow its lead in the home remittances area with a market share of nearly 30% in 9M’18. The Bank has re-emerged as an active player in the Consumer Banking segment by gearing up the acquisition of secured loan products mainly autos. The average Consumer loan portfolio grew by 35% year on year to reach PKR 13.0 billion during 9M’18. Furthermore, the Bank also provides Islamic Banking services through its network of 94 Islamic branches and 157 Islamic Banking windows.


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b. Corporate and Investment Banking Group (CIBG) – Building on its upscale positioning The Corporate Banking Group is a key business partner to top tier corporates and public sector enterprises. The Group has targeted quality asset acquisition across diversified industries including fertilizers, chemicals, engineering, telecom and pharmaceutical sectors. The focus remains on capturing large-ticket public sector financing mandates particularly those related to new projects in the energy and infrastructure sectors. As a result, the loan book size stood at PKR 427 billion at Sep’18 end. Driven by CIBG, the Bank maintains an active presence in trade business with an overall market share of 7% in imports and 4% in exports. The Financial Institutions Group is at the forefront of the Bank’s China Business Initiative and continues to expand its outreach by entering into new strategic alliances. Focus remains on active participation in syndicated financing and debt capital markets as well as enhancing transactional banking coverage. UBL is the bank of choice for transactional escrow arrangements and back to back guarantees in Pakistan. Global FIs continue to demonstrate their confidence in UBL in the form of larger exposures against bilateral funding, swaps, FX and other Treasury and FI related products. UBL’s Investment Banking Group is among the largest in Pakistan with presence in the GCC region as well. In 2017, the Group successfully closed 14 transactions with a cumulative value of PKR 346 billion. Project Finance and Advisory closed 4 project financing transactions with a total value of over PKR 180 billion. During 2017, International Investment Banking closed two Syndicated Financing Facilities amounting to USD 650 million and USD 255 million for the Government of Pakistan, acting as Mandated Lead Arranger and Agent Bank. In 2017, the Bank was awarded the “Best Bank in Corporate Finance and Capital Market Development” Award at the Pakistan Banking Awards 2017 in recognition of its significant role in developing the local capital market, deepening secondary markets and providing advisory services for the optimization of industrial, commercial and infrastructural assets. c. Treasury and Capital Markets Division (TCM) – Proactive ALM strategy driving core earnings The Treasury and Capital Markets Division is a major player in Pakistan’s financial markets given balance sheet size and market position. The Bank is a leading primary dealer in the GoP debt market as well a key market maker with development role in the secondary market. TCM has strategically built the Bank’s portfolio of long-term bonds since 2013 that has positioned the Bank well to protect its margins in the current low interest rate environment. UBL holds one of the largest equity books in the industry and continues to enhance yields through active trading in capital markets. The Bank participates actively in the FX market with sizable business volumes generated from corporates, SMEs and individual across the wide branch network. The Bank is also one of the first authorized derivatives dealers appointed by the SBP in the local derivatives market. d. UBL Omni – A key strategic advantage with immense potential UBL’s branchless banking proposition, ‘UBL Omni’, is a leader in providing basic banking services to the unbanked and enhancing financial inclusion in Pakistan. Omni is a telco agnostic technology platform that has introduced every customer to mobile banking irrespective of SIM ownership. The outreach of the Omni network extends to over 37,000 Omni agents in more than 850 cities and towns. UBL Omni also maintains market leadership in Government-to-Person (G2P) payments and cash management services. The Bank’s cash management proposition offers customized solutions for loan disbursements, collections, payroll processing and retail payments for mid-tier clients and micro finance institutions.


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e. Digital Bank – Transforming UBL into a Bank of the Future UBL is a leader in innovation, taking a number of ground breaking initiatives that have raised new standards for the industry. In 2017, UBL opened Pakistan’s first digital lab in collaboration with IBM. This lab will provide a futuristic design thinking environment to develop ground-breaking and unique customer experiences in collaboration with leading technology players including start-ups, Fin-techs and ecosystem partners. During the year, the Bank also inaugurated its first “Branch of the Future” that provides customers state of the art financial solutions within a hi-tech branch setting. After the successful pilot launch of this branch, the Bank intends to set up such branches nationwide. UBL’s net banking app, “UBL Digital” has also been developed with enhanced security and unique features such as facial recognition, QR code and augmented reality. In June 2018, the Bank carried out the nationwide launch of the app

launch backed by an effective TV campaign as well as ads on the radio, print and digital media. Moreover, recently the Bank also launched the “Selfie Account”, a self-account opening feature through the UBL Omni Mobile App. This initiative will provide further impetus to the NTB acquisitions drive, allowing the Bank to further strengthen its foothold across the vast underbanked segment.

SUBSIDIARIES AND ASSOCIATES

The Bank’s holdings in its subsidiaries and associates as of September 30, 2018 stood as under:-

Company Name Subsidiary/Associate Percentage of holding

UBL National bank Limited (UBL UK) Subsidiary 55.00%

UBL (Switzerland) AG Subsidiary 100.00%

United Executors and Trustees Company Limited Subsidiary 100.00%

UBL Fund Managers Limited Subsidiary 98.87%

Al Ameen Financial Services Limited Subsidiary 98.87%

UBL Bank (Tanzania) Limited Subsidiary 100.00%

UBL Insurers Limited Associate 30.00%

Khushhali Bank Limited Associate 29.69%

Oman United Exchange Company, Muscat Associate 25.00%

DHA Cogen Limited* Associate 20.99%

UBL Liquidity Plus Fund Associate 0.09%

UBL Money Market Fund Associate 1.78%

UBL Stock Advantage Fund Associate 3.42%

UBL Financial Sector Fund Associate 30.64%

UBL Income Opportunity Fund Associate 63.31%

Al Ameen Islamic Financial Planning Fund Associate 1.82%

* As a result of exercise of a pledge in 2013, the Bank holds 20.99% of the issued and paid up capital of DHA Cogen Limited without any consideration having been paid. Consequently, DHA Cogen Limited is classified as an associated company.

ORGANIZATIONAL STRUCTURE


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SHAREHOLDING STRUCTURE The Bank is majority owned and operated by the Bestway Group, which, led by its Chairman Sir Mohammad Anwar Pervez, OBE HPk, owns 61.47% shareholding in the Bank.

Pattern of Shareholding as on September 30, 2018 is as follows:

Shareholders No. of Shares Percentage

Bestway Group (BG) 752,514,602 61.47

General Public & Others 373,568,468 30.52

Banks, DFIs & NBFIs 25,788,840 2.11

Insurance Companies 40,273,435 3.29

Modarabas & Mutual Funds 29,934,062 2.45

International GDRs (non-voting shares) 2,098,566 0.17

Privatization Commission of Pakistan 1,714 0.00

TOTAL OUTSTANDING SHARES 1,224,179,687 100.00

* There were no shares held by the spouses or minor children of the Directors and CEO of the Bank.

ISSUER RATING


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On June 29, 2018, JCR-VIS Credit Rating Company Limited re-affirmed the entity ratings of UBL at ‘AAA’ (Triple A) for the long term and ‘A-1+’ (A Dash One Plus) for the short term. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on June 30, 2017. As per the aforementioned ratings report, the ratings assigned to the Bank incorporate the sustained soundness in key performance areas including asset quality, capitalization and profitability. The ratings reflect UBL’s strong domestic franchise, dominant market share and a well-diversified business model.

INSTRUMENT RATING The instrument is rated AA+ (Double A Plus) by JCR-VIS as of June 13, 2018.

AWARDS AND ACCOLADES UBL’s position as a leading institution in the banking industry and its progressive vision continues to be acknowledged by the market. The Bank has been the recipient of the following major awards and accolades:

Best Corporate Finance House of the Year (Fixed Income) 2017 at 15th Annual Excellence Awards of CFA Society Pakistan

Best Bank for Corporate Finance & Capital Market Development Award at the Pakistan Banking Awards 2017

Best Bank 2016 at the first Pakistan Banking Awards Top 25 Companies Award by the Pakistan Stock Exchange for 2010-2012, 2015 and 2016 Innovation Award at the MasterCard Innovation Forum 2016 National Medal of Innovation Award 2016 for Pioneering G2P Payments – Pakistan

Innovation Foundation

INDUSTRY ANALYSIS & PEER COMPARISON The Pakistan banking industry constitutes a total of around thirty banks, of which five are public- banks “National Bank of Pakistan, The Bank of Khyber, The Bank of Punjab, Sindh Bank Limited and First Women Bank Limited”, 21 private sector banks (including 6 Islamic banks) and 4 foreign banks.

1. Commercial Banks: Provide services such as maintaining deposits, disbursing payments, collecting funds, maintaining accounts and extending loans. They can also provide secondary services such as financial advisory, foreign exchange and asset management.

2. Foreign Banks: The principal activities of foreign banks are generally the same as private

commercial banks, except that some foreign banks may be licensed to provide custodian services to foreign investment funds.

3. Islamic Banks: Islamic banks provide Shariah compliant banking services. Most of the private

sector commercial banks in Pakistan have established Islamic banking divisions. The banking sector has followed a sustained growth path in recent years. Overall asset base has grown at a 2012-2017 CAGR of 13.5% to close at PKR 18.3 trillion, a significant YoY growth of 15.9% in CY17 alone. Net advances have grown at a 2012-2017 CAGR of 11.3%. CY17 witnessed strong credit offtake as the


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portfolio grew by 19.5% YoY, with private sector credit expanding by 15%. Resultantly, industry ADR has strengthened to surpass 50% at the end of CY17. Net investments closed CY17 at PKR 6.5 trillion, a CAGR of 16.8% against 2012, led primarily by balance sheet leveraging to build positions in GoP securities. On the funding side, deposits have grown at a CAGR of 12.3%, contributed mainly by CASA deposits that grew by an average 14.8% over the same period. The growth in the banking sector has been supported by the expanding banking sector infrastructure. Banks have added 4,496 branches and 7,177 ATMs since 2012 (494 branches and 875 ATMs during CY17). POS terminals have increased from 34,724 in 2012 to 52,506 in 2017. With enhanced focus on digitization of financial services, net banking transactions have grown at a CAGR of 29.45% while mobile banking transactions at a CAGR of 18.71% FY17 vs FY12. Overall return on equity remained strong at 19.5% in CY17, albeit lower than the 23.9% level achieved in the prior year. The sector’s earnings were moderated largely due to the low interest rate regime and one-off settlement payment made by a large bank during Q3CY17. Headwinds to earnings are expected to persist in 2HCY18 whereby one-off pension costs impact, re-imposition of super tax and deposit insurance costs are likely to constrict earnings. However, with the recent rate reversal cycle, net interest margins are expected to see an improvement going forward. The overall soundness of the banking sector has been satisfactory as depicted by a robust capital position, improving asset quality and adequate loan loss coverage. Capital Adequacy Ratio (CAR) has increased to 15.8%, well above the minimum regulatory requirement of 11.275%. The NPLs to loan ratio has reduced to a 10-year low of 8.3%, with coverage levels comfortable at over 87%. 4.9.1 SECTOR FINANCIALS The following summary of banking sector covers data related to Public sector banks, Local Private banks, Foreign banks and Specialized banks taken from banking Compendium of March 2018 released by the State Bank of Pakistan.1

(Amounts in PKR Billion) CY12 CY13 CY14 CY15 CY16 CY17 CAGR /

Total Assets 9,720 10,487 12,106 14,143 15,831 18,342 13.54%

Investments (Net) 4,013 4,313 5,310 6,881 7,509 8,729 16.82%

Advances (Net) 3,805 4,110 4,447 4,816 5,449 6,512 11.35%

Deposits 7,291 8,311 9,230 10,389 11,798 13,012 12.28%

ADR 52.20% 49.50% 48.20% 46.40% 46.60% 50.10% -2.10%

CAR 15.60% 14.90% 17.10% 17.30% 16.20% 15.80% 0.20%

Gross NPL Ratio 14.60% 13.30% 12.30% 11.40% 10.10% 8.40% -6.20%

Coverage Ratio 71.50% 77.30% 79.80% 85.00% 85.00% 87.20% 15.70%

ROA (Before Tax) 2.00% 1.60% 2.20% 2.50% 2.10% 1.60% -0.40%

ROE (Before Tax) 21.20% 17.90% 24.30% 25.80% 23.90% 19.50% -1.70%

1 Source: State Bank of Pakistan, Quarterly Compendium: Statistics of the Banking System, March 2018


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4.9.2 PEER ANALYSIS UBL is one of the top five banks operating in Pakistan, which collectively own 52.1% assets of the banking sector and have 52.0% share in total deposits of the sector. UBL’s comparison with its peer group is illustrated in the following charts.

Dec ‘17 Branches (Number)

Advances (PKR Bn)

Deposits (PKR Bn)

ROE (%)

CAR (%)

NPL Ratio (%)

FUTURE OUTLOOK UBL maintains its position as one of the leading financial institutions in Pakistan. Looking ahead, the Bank’s strategy is to maximize its franchise value through expansion in core segments, diversifying the business model and continuous focus on innovation. Branch Banking remains the cornerstone of UBL’s operations, where the Bank seeks to invest more to scale up the acquisition of NTB customer relationships and maximize network performance. The focus remains on rigorous cross sell to liability relationships in order to deliver a larger product suite and expand revenue streams. In addition, UBL is continuing its efforts to improve network visibility by relocating underperforming branches to high potential areas as well as upgrading existing branches to elevate service standards. Growing its lending capabilities is a key element of UBL’s Branch Banking strategy with the aim build quality portfolio across Consumer, Islamic and SME. The Bank is committed to expanding its Alternate Distribution Channels (ADC) in order to provide customers a holistic product offering as well as deepen relationships.

UBL shall continue to diversify its revenue streams in order to supplement its core earnings. The Bank is eyeing leadership position in the bancassurance segment, with focus on increasing client penetration and broadening the product suite. Furthermore, it seeks to maintain its lead in the home remittances space by capturing market share from the competition, capitalizing on its international footprint, strong agent network and technological edge. The Bank shall also continue to improve its cash management coverage with technology led product development and aggressive marketing to SMEs and large corporates to re-establish itself as a dominant player in this segment. UBL’s loan book is driven by the Corporate Banking Group (CBG) with over 80% contribution to the domestic loan portfolio. The Bank is keen to play a larger intermediation role in the economy through


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active participation in upcoming power and infrastructure projects particularly opportunities arising under CPEC. The Group shall target quality asset acquisition across diversified industries including fertilizers, chemicals, engineering, telecom and pharmaceutical sectors. Credit expansion is driven by a two-tiered focus on aggressively pursuing financing opportunities from new to bank clients as well as deepening existing relationships to enhance share in core business groups. UBL’s Investment Banking Group is among the largest in Pakistan with presence in the GCC region as well. The Bank’s aspiration is to work towards market leadership position in this segment. Focus is directed towards Infrastructure Project Finance (IPF) assets as well as power and infrastructure financing opportunities arising under CPEC. Moreover, taking advantage of its international network, the Bank shall continue to partner with large local corporates to facilitate their overseas expansion plans. With innovation at the core of its identity, UBL aims to serve its customers with the best in class digital offerings that create a niche from the competition. UBL is a leader in providing banking access to the unbanked and increasing financial inclusion through its flagship branchless banking proposition, UBL Omni. The Bank is committed to bringing convenient and cost-effective financial solutions within the reach of the unbanked population. It shall continue to enter into new strategic alliances in order to expand the scope of digital payment services in addition to deepening existing partnerships with the Pakistan Railways and National Bank of Pakistan. Moreover, the Bank shall maintain its lead in the G2P and P2G transaction volumes and cash management business. The Bank’s strategy is to build a sound capital base in order to support future business development requirements as opposed to higher leveraging. Furthermore, in view of enhanced capital requirements going forward under the current Basel regime and the SBP’s Framework for Domestic Systematically Important Banks (D-SIBs), it is imperative to further strengthen the capital base in order to provide a strong platform future growth initiatives. The proceeds from the issuance of the ADT 1 TFCs will enable UBL to materialize its growth plans while maintaining an optimal capital position.

FINANCIAL PERFORMANCE

UBL’s diversification and depth is depicted in its consistent performance track record. Profit before tax growth has outpaced that of peer banks with a 2012-2017 CAGR of 8.4%. The return on equity has stood strong in the 20 - 26% range over this period, among the highest in the industry. Earnings per share have grown from PKR 14.61 in 2012 to PKR 20.77 in 2017, with dividend payouts maintained at around the 60% level. Share price has more than doubled since 2012, the price to earnings at over 9x at the end of 2017, reflecting strong investor confidence in the Bank. In 2017, the Bank offered the highest, 24%, 5 year compounded annual return on its shares consisting of cash dividends and share price appreciation. The Bank remained well-capitalized as it overall CAR stood at 17.3% at September 30, 2018, a buffer of over 6% over the regulatory minimum.


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4.11.1 SIX YEARS FINANCIAL SUMMARY – UNCONSOLIDATED Quarter / Year ended 30-Sep-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12

BALANCE SHEET (PKR Mn)

Assets

Cash and balances with treasury and other banks 158,378 177,099 146,428 128,870 87,573 114,388 109,396

Lendings to financial institutions 58,992 33,664 34,168 24,095 21,872 28,835 21,953

Investments - gross 865,104 1,095,555 808,959 721,651 499,060 425,253 351,002

Advances - gross 725,034 646,552 550,636 497,032 479,998 436,749 409,090

Operating fixed assets 47,368 46,205 35,582 31,630 30,303 24,608 24,431

Other assets 59,295 54,065 44,731 41,124 40,067 27,317 26,800

Total assets - gross 1,914,171 2,053,140 1,620,504 1,444,402 1,158,874 1,057,150 942,673

Provisions against non-performing advances (51,588) (41,990) (40,525) (41,618) (45,734) (45,936) (44,727)

Provisions against diminution in value of investments

(5,515) (3,769) (2,428) (2,133) (1,726) (1,476) (1,412)

Total assets - net of provisions 1,857,068 2,007,381 1,577,551 1,400,651 1,111,414 1,009,739 896,535

Liabilities & Equity

Deposits & other accounts 1,334,677 1,289,247 1,179,887 1,051,235 895,083 827,848 698,430

Borrowings from financial institutions 304,097 512,650 201,550 163,132 53,065 40,574 68,720

Subordinated loans 6,117 - - - - 665 9,319

Bills payable 18,507 13,388 11,756 13,392 9,554 16,591 7,601

Other liabilities 43,423 32,789 32,571 30,757 28,196 23,147 20,226

Total liabilities 1,706,821 1,848,074 1,425,764 1,258,516 985,898 908,825 804,296

Net assets 150,247 159,307 151,787 142,135 125,516 100,914 92,238

Share capital 12,242 12,242 12,242 12,242 12,242 12,242 12,242

Reserves 49,039 43,847 40,455 38,402 34,130 33,681 29,044

Unappropriated profit 65,880 70,912 64,246 55,223 48,217 42,635 37,416

Equity - Tier I 127,161 127,001 116,943 105,867 94,589 88,558 78,702

Surplus on revaluation of assets - net of deferred tax

23,087 32,306 34,844 36,268 30,927 12,356 13,537

Total equity 150,247 159,307 151,787 142,135 125,516 100,914 92,238

Total liabilities & equity 1,857,068 2,007,381 1,577,551 1,400,651 1,111,414 1,009,739 896,535

PROFITABILITY (PKR Mn)

Markup / return / interest earned 83,885 107,206 98,219 94,353 82,735 72,846 73,507

Markup / return / interest expensed (42,001) (50,781) (41,177) (38,511) (37,769) (34,910) (34,948)

Net markup / return / interest income 41,883 56,425 57,042 55,842 44,967 37,936 38,560

Fee, commission, brokerage and exchange income

12,679 14,496 14,020 14,474 14,418 12,205 10,025

Capital gains & dividend income 6,071 6,762 8,629 6,442 3,806 4,845 3,131

Other income 669 904 960 1,070 1,071 1,064 3,975

Total non-interest income 19,419 22,162 23,609 21,986 19,296 18,114 17,131

Gross income 61,303 78,587 80,651 77,828 64,263 56,050 55,691

Administrative expenses and other charges (28,534) (36,109) (32,809) (31,776) (29,597) (26,718) (24,306)

Profit before donations and provisions 32,769 42,478 47,842 46,052 34,666 29,332 31,385

Donations (82) (110) (87) (167) (112) (77) (35)

Provisions (7,446) (2,450) (1,740) (3,710) (1,156) (1,448) (4,499)

Profit before extra-ordinary / unusual item and taxation

25,240 39,918 46,015 42,175 33,398 27,807 26,851

Extra ordinary / unusual item - (Pension cost) (8,747) - - - - - -

Profit before taxation 16,494 39,918 46,015 42,175 33,398 27,807 26,851

Taxation (6,762) (14,739) (18,285) (16,448) (11,469) (9,193) (8,960)

Profit after taxation 9,731 25,180 27,730 25,727 21,930 18,614 17,891

CASH FLOW STATEMENT - SUMMARY (PKR Mn)

Cash flow from operating activities (128,626) 253,459 130,777 266,960 49,134 95,737 64,812


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Cash flow from investing activities 119,236 (208,158) (96,241) (211,420) (59,936) (73,236) (42,910)

Cash flow from financing activities (9,331) (15,480) (16,257) (15,942) (14,266) (20,267) (15,464)

Cash and cash equivalents at the beginning of the year

177,099 146,428 128,870 87,573 114,388 109,396 100,602

Effect of exchange rate changes on cash and cash equivalents

4,219 850 (721) 1,699 (1,747) 2,758 2,356

Cash and cash equivalents at the end of the year 158,378 177,099 146,428 128,870 87,573 114,388 109,396

FINANCIAL RATIOS

Return on equity (RoE) - normalized (*) 15.9% 20.6% 24.9% 25.7% 23.9% 22.3% 23.8%

Return on assets (RoA) - normalized (*) 1.0% 1.4% 1.9% 2.0% 2.1% 2.0% 2.1%

Profit before tax ratio - normalized 41.2% 50.8% 57.1% 54.2% 52.0% 49.6% 48.2%

Gross spread ratio 49.9% 52.6% 58.1% 59.2% 54.4% 52.1% 52.5%

Return on capital employed (RoCE) (*) 15.5% 20.6% 24.9% 25.7% 23.9% 21.0% 20.9%

Advances to deposits ratio (ADR) - gross 51.4% 47.3% 44.4% 45.2% 51.3% 50.7% 56.2%

Advances to deposits ratio (ADR) - net 47.6% 44.0% 41.0% 41.3% 46.2% 45.1% 49.8%

Income to expense ratio 2.15 2.18 2.46 2.45 2.17 2.10 2.29

Cost to revenue ratio 45.9% 45.0% 39.6% 39.7% 45.2% 46.5% 42.6%

Growth in gross income (**) 5.2% -2.6% 3.6% 21.1% 14.7% 0.6% 6.8%

Growth in net profit after tax (*)(**) -21.1% -9.2% 7.8% 17.3% 17.8% 4.0% 15.4%

Total assets to shareholders’ funds 12.36 12.60 10.39 9.85 8.85 10.01 9.72

Intermediation cost ratio (*) 2.9% 2.9% 2.9% 3.3% 3.4% 3.5% 3.7%

Asset quality (NPL ratio) 7.9% 7.9% 8.1% 9.4% 11.2% 12.1% 14.0%

Net infection ratio 1.4% 1.5% 0.8% 1.1% 1.9% 1.7% 3.5%

Weighted average cost of debt (*) 4.2% 4.2% 4.4% 5.0% 5.6% 5.6% 6.1%

Capital adequacy ratio (CAR) 17.3% 15.4% 15.1% 14.6% 13.9% 13.3% 15.0%

SHARE INFORMATION PKR

Cash dividend per share 8.00 13.00 13.00 13.00 11.50 10.00 8.50

Proposed bonus issue per share - - - - - - -

Dividend yield (based on cash dividend) (*) 6.4% 5.4% 8.4% 7.4% 8.7% 12.0% 16.2%

Dividend payout ratio (total payout) (*) 65.0% 63.2% 57.4% 61.9% 64.2% 65.8% 58.2%

Earning per share (EPS) (*) 16.46 20.57 22.65 21.02 17.91 15.21 14.61

Price earnings ratio 9.36 9.14 10.55 7.37 9.86 8.72 5.72

Market value per share - at the end of the year 154.00 187.97 238.90 154.95 176.71 132.55 83.67

Market value per share - highest during the year / period

215.16 283.00 243.72 186.75 198.39 154.21 91.99

Market value per share - lowest during the year / period

151.51 162.01 137.31 141.25 130.36 81.24 52.00

Breakup value per share - without surplus on revaluation of assets

103.87 103.74 95.53 86.48 77.27 72.34 64.29

Breakup value per share - with surplus on revaluation of assets

122.73 130.13 123.99 116.10 102.53 82.43 75.35

OTHER INFORMATION (PKR Mn)

Non-performing advances (NPLs) - Rs in million 57,288 51,073 44,567 46,833 53,853 52,630 57,347

Import business - Rs in million 668,224 720,496 575,991 607,496 655,881 641,866 515,638

Export business - Rs in million 155,793 294,428 255,287 220,701 259,259 249,006 180,434

Number of employees 14,343 14,771 14,153 14,623 13,382 13,270 13,056

Number of branches - Domestic 1,364 1,361 1,341 1,312 1,295 1,283 1,278

Number of branches - International 18 18 18 18 18 18 18

Number of branches - Total 1,382 1,379 1,359 1,330 1,313 1,301 1,296

* Ratios for Sep'18 are on an annualized basis, based on normalized profit before extraordinary items in 9M'18 where applicable ** Year on year growth for 9M'18 versus 9M'17 Note: Change in accounting policy made subsequent to December 31, 2017


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The results for 2017 have been restated pursuant to a change in accounting policy in respect of the accounting for a deficit on revaluation of fixed assets under the newly enacted Companies Act, 2017. The requirement was only made applicable for reporting periods starting from January 1, 2018. For further details, please refer to note 4.1.1. to the interim financial statements for the nine months ended September 30, 2018.


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4.11.2 SIX YEARS FINANCIAL SUMMARY – CONSOLIDATED Quarter / Year ended 30-Sep-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14 31-Dec-13 31-Dec-12

BALANCE SHEET (PKR Mn)

Assets

Cash and balances with treasury and other banks 143,716 161,119 133,468 113,762 75,660 89,592 94,766

Balances with other banks 34,651 35,549 32,267 27,714 21,948 32,659 22,843

Lendings to financial institutions 59,967 35,894 35,485 25,914 23,435 29,858 21,953

Investments 901,935 1,124,921 838,262 752,990 519,602 458,846 381,246

Advances 711,374 642,507 537,782 488,061 467,365 415,283 385,834

Operating fixed assets 51,815 50,384 39,299 35,982 33,336 28,038 27,461

Deferred Tax Asset - net 4,110 0 0 0 0 0 0

Other assets 55,858 54,986 45,180 41,764 41,106 29,357 26,106

Total assets 1,963,426 2,105,361 1,661,742 1,486,187 1,182,453 1,083,633 960,210

Liabilities & Equity

Bills payable 18,518 13,393 11,759 13,396 9,559 16,601 7,601

Borrowings 312,823 517,082 205,865 164,232 53,249 41,078 67,215

Deposits & other accounts 1,415,052 1,366,158 1,245,792 1,119,953 951,902 889,526 755,264

Subordinated loans 6,117 0 0 0 0 665 9,319

Liabilities against assets subject to finance lease 12 4 4 5 0 1 2

Deferred tax liability 0 2,980 5,231 4,515 2,140 1,395 279

Other liabilities 44,522 31,249 29,363 28,487 28,098 23,094 19,676

Total liabilities 1,797,043 1,930,867 1,498,013 1,330,588 1,044,949 972,360 859,356

Net assets 166,383 174,494 163,729 155,599 137,505 111,273 100,854

Share capital 12,242 12,242 12,242 12,242 12,242 12,242 12,242

Reserves 53,511 47,204 42,615 41,625 37,286 38,049 32,299

Unappropriated profit 71,365 76,652 68,939 59,955 52,508 45,208 38,232

Total equity attributable to the equity holders of the Bank

137,118 136,097 123,796 113,822 102,036 95,499 82,772

Non-controlling interest 4,972 4,811 4,228 5,224 4,553 3,488 2,827

Surplus on revaluation of assets - net of deferred tax 24,294 33,586 35,706 36,554 30,916 12,286 15,255

Total equity 166,383 174,494 163,729 155,599 137,505 111,273 100,854

PROFITABILITY (PKR Mn)

Markup / return / interest earned 86,991 110,580 101,755 97,574 85,761 75,709 75,380

Markup / return / interest expensed (43,553) (52,488) (42,934) (39,715) (38,847) (36,200) (35,737)

Net markup / return / interest income 43,438 58,092 58,821 57,859 46,914 39,509 39,643

Provisions (7,515) (2,776) (1,605) (3,822) (1,336) (1,594) (4,247)

Net markup / return / interest income after provisions 35,922 55,316 57,216 54,037 45,577 37,915 35,396

Fee, commission, brokerage and exchange income 11,447 14,832 14,378 14,239 13,292 11,444 9,450

Dividend income 1,046 1,734 2,276 2,350 1,819 1,612 540

Income from dealing in foreign currencies 2,844 2,150 1,956 2,588 3,092 2,212 1,926

Gain on sale of securities - net 4,793 4,798 5,610 3,195 2,063 3,026 1,259

Unrealized gain / (loss) on revaluation of investments classified as held for trading

0 2 (1) 16 (29) (4) (1)

Other income 632 780 916 1,299 1,119 1,127 4,021

Total non-mark-up / return / interest income 20,763 24,296 25,134 23,687 21,356 19,416 17,195

56,685 79,612 82,350 77,724 66,934 57,331 52,591

Non mark-up / return / interest expenses

Administrative expenses 30,734 38,455 35,022 34,005 31,752 28,571 25,449

Other provisions / write-off - net 473 (389) 231 79 276 326 489

Workers' Welfare Fund 425 815 930 852 673 503 536

Other charges 43 60 70 202 10 249 104

Total non-mark-up / return / interest expenses 31,675 38,941 36,253 35,138 32,712 29,649 26,578

Share of income / loss of associates 455 460 1,057 862 1,395 1,282 2,398


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Profit before extraordinary / unusual item and taxation 25,465

Extra ordinary / unusual item - (Pension cost) (8,747)

Profit before taxation 16,718 41,131 47,154 43,447 35,616 28,965 28,410

Taxation 7,225 14,934 19,152 16,438 11,592 9,234 9,131

Profit after taxation 9,493 26,197 28,002 27,010 24,025 19,731 19,280

Attributable to

Equity shareholders of the Bank 9,748 26,190 27,783 26,154 23,648 19,286 19,228

Non-controlling interest (255) 6 220 855 377 445 52

CASH FLOW STATEMENT - SUMMARY (PKR Mn)

Cash flow from operating activities (113,005) 252,660 135,283 281,429 37,971 99,784 94,242

Cash flow from investing activities 98,257 (208,809) (91,754) (223,179) (46,061) (78,154) (67,462)

Cash flow from financing activities (9,325) (15,618) (16,409) (16,045) (13,143) (20,268) (15,465)

Cash and cash equivalents at the beginning of the year 196,668 165,735 141,476 97,609 122,250 116,815 102,889

Exchange differences on translation of net investment in foreign branches and subsidiaries

5,354 2,032 (1,830) 1,759 (2,965) 3,860 2,956

Exchange differences on translation of net assets attributable to non-controlling interest

417 669 (1,030) (97) (444) 214 450

Cash and cash equivalents at the end of the year 178,367 196,668 165,735 141,476 97,609 122,250 117,610


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RISK FACTORS 4.12.1 GENERAL RISKS 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's or counterparty’s willingness or ability to meet such an obligation is impaired, resulting in an economic loss to the Bank. Credit risk management philosophy is based on the Bank’s overall business strategy / direction as set by its Board of Directors. The Bank is committed to the appropriate level of due diligence to ensure that credit risks have been properly identified and analyzed, fully disclosed to the approving authorities and appropriately rated, also ensuring that the credit commitment is aptly structured and priced, in line with market best practices, and adequately documented. The credit risk management process is driven by the Bank's Risk Management Policy, Credit Policy for Corporate, Commercial, SME and Agri and Credit Manual, 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 Group Executive - Risk & Credit Policy (authorized by the BoD), according to their seasoning / maturity. Approvals for Consumer loans are centralized, while approval authorities for International, Corporate, Commercial, SME and Agri exposures are delegated at a Country / Regional level. Furthermore, credit authorities are also delegated to business teams in various regions for Commercial, SME & Agri lending. All credit policy functions for domestic and international are centrally organized. The Bank also manages and monitors its portfolio of loan assets with a view to limit concentrations in terms of risk quality, industry, maturity and per party exposures. Risk weighted assets / capital allocated is also regularly monitored against approved benchmarks whereas routine internal rating-based analysis is also conducted to timely identify deviations. Being a highly regulated industry, the Bank also conducts regulatory stress testing of the credit portfolio on a periodic basis under the guidelines issued by the SBP and continues to improve upon its review process to achieve the highest level of risk compliance. In the event of delinquencies, despite the aforementioned control systems, the Bank has a specialized Special Assets Management (SAM) unit to actively pursue recovery and protect the interests of the bank’s depositors and stakeholders. Market Risk Market risk is the risk that the fair value of a financial instrument will fluctuate due to movements in market prices. It results from changes in interest rates, exchange rates and equity prices as well as from changes in the correlations between them. Each of these components of market risk consists of a general market risk and a specific market risk that is driven by the nature and composition of the portfolio. Measuring and controlling market risk is usually carried out at a portfolio level. However, certain controls are applied, where necessary, to individual risk types, to particular books and to specific exposures.


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Controls are also applied to prevent any undue risk concentrations in trading books, taking into account variations in price, volatility, market depth and liquidity. These controls include limits on exposure to individual market risk variables as well as limits on concentrations of tenors and issuers. Trading activities are centered in the Treasury and Capital Markets Group, which facilitates clients and also runs proprietary positions. The Bank is active in the cash and derivative markets for equity, interest rate and foreign exchange. The Market and Treasury Risk division performs market risk management activities. Within this division, the Market Risk Management unit is responsible for the development and review of market risk policies and processes, and is involved in research, financial modeling and testing / implementation of risk management systems, while Treasury Middle Office is responsible for implementation and monitoring of market risk and other policies, escalation of deviations to senior management, and MIS reporting. The functions of the Market Risk Management unit are as follows: - To keep the market risk exposure within the Bank’s risk appetite as assigned by the BoD and the Board

Risk and Compliance Committee (“BRCC”).

- To develop, review and upgrade procedures for the effective implementation of market risk management policies approved by the BoD and BRCC.

- To review new product proposals and propose / recommend / approve procedures for the management of their market risk. Various limits are assigned to different businesses on a product / portfolio basis. The products are approved through product programs, where risks are identified and limits and parameters are set. Any transactions / products falling outside these product programs are approved through separate transaction / product memos.

To maintain a comprehensive database for performing risk analysis, stress testing and scenario analysis. Stress testing activities are performed on a quarterly basis on both the Banking and Trading books. Foreign Exchange Risk Foreign Exchange Risk is the risk that the fair value of a financial instrument will fluctuate due to changes in foreign exchange rates. Exposures are monitored by currency to ensure that they remain within the established limits for each currency. Exposures are also monitored on an overall basis to ensure compliance with the Bank’s SBP approved Foreign Exchange Exposure Limit. The Bank is an active participant in the cash and derivatives markets for currencies and carries currency risk from these trading activities, conducted primarily by the Treasury and Capital Markets Group (“TCM”). These trading exposures are monitored through prescribed stress tests and sensitivity analyses. The Bank's reporting currency is the Pakistan Rupee, but its assets, liabilities, income and expenses are denominated in multiple currencies. From time to time, TCM proactively hedges foreign currency exposures resulting from its market making activities, subject to pre-defined limits.


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Equity Investment Risk Equity position risk is the risk that the fair value of a financial instrument will fluctuate due to changes in the prices of individual stocks or the levels of equity indices. The Bank’s equity book comprises of held for trading (HFT) and available for sale (AFS) portfolios. The objective of the HFT portfolio is to make short-term capital gains, whilst the AFS portfolio is maintained with a medium term view of earning both capital gains and dividend income. Product program manuals have been developed to provide guidelines on the objectives and policies, risks and mitigants, limits and controls for the equity portfolios of the Bank. Investible universe is in place that sets out high-quality liquid stocks that the Bank targets investments in and less liquid / illiquid stocks. Management action triggers (MAT) are also in force based on price fluctuations over the start of the quarter for individual scrips as well as the overall portfolio. Any breach of pre-defined limits is taken up with the Treasury and Capital Markets Desk and escalated to the Global Investment Committee (GIC) and the BRCC. Interest Rate Risk Interest rate risk is the risk that fair value of a financial instrument will fluctuate as a result of changes in interest rates, including changes in the shape of yield curves. Interest rate risk is inherent in many of the Bank's businesses and arises from mismatches between the contractual maturities or the re-pricing of on and off balance sheet assets and liabilities. The interest rate sensitivity profile is prepared on a quarterly basis based on the re-pricing or contractual maturities of assets and liabilities. Interest rate risk is monitored and managed by performing periodic gap analysis, sensitivity analysis and stress testing and taking appropriate actions where required. Liquidity Risk Liquidity risk is the risk that the Bank may be unable to meet its obligations or to fund increases in assets as they fall due without incurring unacceptable cost or losses. The Assets and Liabilities Management Committee (“ALCO”) of the Bank is responsible for the oversight of liquidity management and meets on a monthly basis or more frequently, if required. The Bank’s approach to liquidity management is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking sustained damage to business franchises. A centralized approach is adopted, based on an integrated framework incorporating an assessment of all material known and expected cash flows and the availability of collateral which could be used to secure additional funding if required. The framework entails careful monitoring and control of the daily liquidity position, and regular liquidity stress testing under a variety of scenarios. These encompass both normal and stressed market conditions, including general market crises and the possibility that access to markets could be impacted by a stress event affecting some part of the Bank’s business.


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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 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. New products, systems, activities and processes are subject to comprehensive operational risk assessments, before implementation. 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. 4.12.2 RISKS SPECIFIC TO THE ISSUE Non-performance Risk / Lock-In Clause A key risk consideration for investors is the security of the principal investment due to the instrument being perpetual, unsecured, subordinated and subject to loss absorbency upon pre-specified triggers. The TFCs shall be subject to a lock-in clause which would mean that profit on investment in the TFCs may not be paid, if the payment of such profits would result in the Bank falling below its minimum MCR, CAR, or LR as mandated by the SBP. In case of the Issuer’s inability to exercise the lock-in clause, the TFC will be subjected to Mandatory Conversion into ordinary shares and/or Mandatory Write-off at the sole discretion of SBP in accordance with the Loss Absorbency Clause discussed below. The Lock-In Clause is in addition, and without prejudice to the Bank’s right to cancel profit payment as discussed under the ‘Discretion on Profit Payment Clause’.

- UBL is one of the most profitable Pakistani banks with an average return on equity (RoE) of 23.5%

during the last 5 years.

- UBL has maintained consistent dividend payouts of around 60% in the last 5 years.

- The Bank’s CAR stood at 16.3% at the end of Jun’18, a buffer of 4.4% over the regulatory minimum, which would be strengthened further with the issuance of the ADT 1 instrument.


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- The instrument contains a dividend stopper clause that prevents the Bank from making any dividend

payments to equity holders in the event of non-payment of mark-up on the instrument.

- UBL has been assigned the highest credit rating of ‘AAA/A-1+’ (Triple A/A-One Plus) by JCR-VIS Credit

Rating Company Limited (JCR-VIS). The rating reflects superior credit standing of the Bank backed by a strong ability to meet short-term as well as long-term obligations.

Liquidity Risk The perpetual nature of the instrument means that investors would not be able to recoup their investment through principal redemption. Any recovery would only be possible through the instrument’s sale in the market. However, market liquidity might not be sufficient to allow investors an exit without incurring a loss. - The TFCs shall be listed on the Pakistan Stock Exchange via mainboard listing which would enhance

its marketability.

- The instrument has been rated ‘AA+’ by JCR-VIS and offers competitive returns in relation to other ADT 1 issues in the market.

- A market maker has also been appointed in order to facilitate market trading activity. Interest Rate Risk An increase in market interest rates might make yields on the instrument unattractive compared to other investment avenues. - The issue has been priced attractively in relation to other ADT 1 instruments in the market. - The floating rate nature of the instrument will ensure that investor returns track market returns. While the above instrument features insulate investors from market risks to some extent, the TFC’s price will be determined by market forces. Therefore, there is no guarantee that market prices will always be favorable to the investors.

Loss Absorbency Clause The following loss absorbency conditions apply to all Additional Tier 1 instruments issued by banks including the Issue: Upon the occurrence of the CET-1 Trigger Event, PONV Trigger Event or Lock-in Event, the SBP may, in its sole discretion, require the Issuer to permanently convert the TFCs into ordinary shares of the Bank and / or have them immediately written off (either partially or in full). In case of occurrence of a CET-1 Trigger Event, the Issuer will have full discretion to determine the amount to be converted into ordinary shares and / or to be written off, which amount shall at least be the amount


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required to immediately return the Issuer’s CET 1 ratio to above the CET-1 Trigger Event but will not exceed the amount required to bring the CET 1 ratio to 8.5% of RWAs. In the case of a PONV Trigger Event or Lock-in Event, the amount to be converted into ordinary shares and / or to be written off will be determined by the SBP. Subject to the direction of the SBP, the TFCs will be converted into ordinary shares by the Issuer on occurrence of a CET 1 Trigger Event, PONV Trigger Event or Lock-in Event in accordance with the Basel III Circular in the following manner: Number of Ordinary shares to be issued to Investors at the time of conversion will be equal to the ‘Outstanding Face Value of the TFCs’ divided by Fair value (i.e. market price per Ordinary Share on the date of declaration of CET 1 Trigger Event, PONV Trigger Event or Lock-in Clause, or in case market price is not available, the break-up value of share duly certified by the independent auditor) per share of the Bank’s Shareholders Equity on the date of CET 1 trigger event, PONV trigger event or Lock-in Clause as declared by SBP, subject to a maximum of 59,000,000 ordinary shares to be issued. The maximum number of shares to be issued will not be subject to any adjustment on account of any issue of further capital, stock splits, stock dividends or similar corporate actions. In the event of conversion into ordinary shares, any shareholder who directly or indirectly becomes holder of more than 5% or more of paid up capital of the Bank as a result of such conversion shall be required to procure all consents under applicable laws including, without limitation, consent of the SBP and satisfaction of the fit and proper criteria of SBP. Other consents under foreign exchange laws may also be attracted in the case of non-resident shareholders. IT IS STATED THAT ALL MATERIAL RISK FACTORS HAVE BEEN DISCLOSED IN THIS PARAGRAPH 4.12 AND THAT NOTHING HAS BEEN CONCEALED IN THIS RESPECT. HOWEVER, THERE MAY BE ADDITIONAL RISK FACTORS, WHICH ARE NOT DISCLOSED HEREIN, THAT ARE NOT PRESENTLY KNOWN TO US OR THAT ARE CURRENTLY DEEMED TO BE LESS SIGNIFICANT, WHICH MAY MATERIALLY AND ADVERSELY AFFECT THE BANK’S BUSINESS, ITS FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS.


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PART V 5 FINANCIAL INFORMATION & CREDIT RATING REPORT

AUDITORS’ CERTIFICATE UNDER SECTION 2 OF THE FIRST SCHEDULE TO THE PUBLIC OFFERING

REGULATIONS, 2017 FOR THE PURPOSE OF INCLUSION IN THE PROSPECTUS FOR PROPOSED ISSUE OF ADDITIONAL TIER 1 TERM FINANCE CERTIFICATES BY THE BANK


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AUDITOR CERTIFICATE FOR BREAK-UP VALUE OF SHARES


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BREAK-UP VALUE OF SHARES BASED ON UN-AUDTIED ACCOUNTS AS OF SEPTEMBER 2018

(Rupees in '000)

Share Capital 12,241,798

Reserves 49,039,186

Unappropriated profit 65,879,943

127,160,927

Surplus on revaluation of assets-net of tax 23,086,520

150,247,447

Number of Ordinary Shares 1,224,179,687

Break-up value per ordinary shares of Rs. 10 each (including surplus on revaluation of fixed assets-net of tax)

122.73

Break-up value per ordinary shares of Rs. 10 each (excluding surplus on revaluation of fixed assets-net of tax)

103.87


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AUDITOR CERTIFICATE ON ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL


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UNITED BANK LIMITED – UNCONSOLIDATED SEPTEMBER 2018 FINANCIAL STATEMENTS (UN-AUDITED)


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UNITED BANK LIMITED – CONSOLIDATED SEPTEMBER 2018 FINANCIAL STATEMENTS (UN-

AUDITED)


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ENTITY RATING REPORT


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INSTRUMENT RATING REPORT


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PART VI 6 TRUSTEE AND SECURITY

TRUSTEE AND SECURITY

6.1.1 THE SECURITY By virtue of the Basel III Circular, the TFC Issue for Additional Tier 1 Capital is being issued without any security. Further, the TFCs are being issued as subordinated debt as per the guidelines set by the SBP under the Basel III Circular read with the Banking Supervision Department Circular No. 8 dated June 27, 2006. At any time after the occurrence of one or more of the Events of Default (refer to section 6.1.9), the Trustee may at its discretion or upon being instructed by the TFC Holders, through an Ordinary Resolution (refer to section 6.1.6 ii), take such proceedings against the Issuer as it may deem fit or as instructed by the TFC Holders, subject to the terms of Trust Deed dated August 8, 2018. 6.1.2 THE TRUSTEE In order to safeguard the interests of the TFC Holders, Pak Oman Investment Company Limited has been appointed to act as Trustee for the Issue. The Issuer shall pay to the Trustee in respect of its acting as Trustee a fixed fee of PKR 500,000/- per annum. The fee shall be payable at the beginning of each year commencing from the date of signing of the Trust Deed and on each subsequent anniversary thereof. Although the TFCs are unsecured, the rights of the TFC holders are still protected as per the terms of the Trust Deed. The Trust Deed between the Company and the Trustee specifies the functions and obligations of the Trustee. Furthermore, the Trustee has all the powers available to it under the Trusts Act, 1882 and the Debt Securities Trustee Regulations, 2017. 6.1.3 THE TRUST DEED The Trust Deed signed between the Bank and Pak Oman Investment Company Limited specifies the rights and the obligations of the Trustee. In the event of Issuer defaulting on any of its obligations under the terms of the Trust Deed, the Trustee may enforce Issuer’s obligations in accordance with the terms of the Trust Deed. The proceeds of any such enforcement shall be distributed to the TFC Holders at the time on a pari passu basis in proportion to the amounts owed to them pursuant to the TFCs. 6.1.4 POWERS OF THE TRUSTEE The Trustee shall have all the powers and discretions conferred upon trustees by the Trust Act, 1882 (to the extent not inconsistent with the Trust Deed) and any other Applicable Laws and in addition thereto it is expressly declared as follows: i. the Trustee shall in terms of the Trust Deed, for the benefit of the TFC Holders, seek the enforcement

and implementation of the Issuer’s Covenants, in case of an Event of Default;


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ii. the Trustee may in relation to any of the provisions of the Trust Deed pay for the advice or services of, and act on the opinion or advice of, or any information obtained (whether by the Trustee or any other person duly authorized by the Trustee), from any lawyer, accountant, banker, broker, surveyor, valuer or other professional advisor or other expert whose advice, services, opinion or information may to it seem reasonably necessary, expedient or desirable and shall not be responsible for any loss occasioned by so acting;

iii. any such advice or opinion or information referred to in the previous clause may be sent or obtained by letter, telegram, telex, cable or facsimile transmission and the Trustee shall not be liable for acting on any such advice, opinion or information purporting to be conveyed by any such letter, telegram, telex, cable or facsimile transmission although the same shall contain some error or shall not be authentic provided that such error or lack of authenticity is not manifest;

iv. the Trustee shall be at liberty to place the Trust Deed and any other instrument, documents or deed

delivered to it pursuant to or in connection with the Trust Deed for the time being in its possession in any safe deposit selected by the Trustee or with any bank, any company whose business includes undertaking the safe custody of documents or any firm of lawyers and the Trustee shall not be responsible for any loss thereby incurred (save that the Trustee shall take reasonable steps to pursue any person who may be liable to it in connection with such loss);

v. the Trustee shall (without any consent or sanction of the TFC Holders) have full authority, on behalf

of the TFC Holders’, to give any form of consent or authorization, where requested by the Issuer, unless the Trust Deed specifically provides otherwise. Such consent or authorization shall bind the TFC Holders accordingly;

vi. save as otherwise expressly provided in the Trust Deed and unless directed to the contrary by the TFC

Holders in accordance with the terms of the Trust Deed, the Trustee shall as regards all rights, trusts, powers, authorities and discretions vested in it by the Trust Deed have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and as to the manner and time of any such exercise thereof and provided it shall have acted lawfully, it shall be in no way responsible for any loss, costs, damages, expenses or inconveniences resulting from the exercise or non-exercise thereof;

vii. the Trustee (or any of its directors or officers) shall not be precluded by reason of its acting as Trustee

hereunder from underwriting, guaranteeing the subscription of, subscribing of or otherwise acquiring, holding or dealing with any debentures, TFCs, shares or securities whatsoever of the Issuer or any subsidiary thereof or any other company in which the Issuer may be interested or from entering into any contract or financial or other transaction with or from engaging in any other business with, or from accepting or holding the trusteeship of any other declaration constituting or securing any securities issued by or relating to, the Issuer or any subsidiary thereof or any other company in which the Issuer or any such subsidiary may be interested. The Trustee shall not be liable to account for any profit made or payment received by it thereby or in connection therewith provided that the Trustee shall ensure that, as far as practicable, the personnel assigned to deal with normal administrative matters in relation to such other trusteeship shall not be assigned to deal with any functions in relation to the trusteeship of the Trust Deed and vice versa;

viii. the Trustee may assume that no event which entitles the TFC Holders to exercise any of their rights under the Trust Deed has occurred and that the Issuer is not in breach of any of its obligations under the Trust Deed, unless it has received either a written notice to the contrary from the Issuer or a notice


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or information which the Trustee believes to be accurate regarding an occurrence of an Event of Default;

ix. the Trustee shall not be liable for acting in relation to the Trust Deed or any related documents or any

notice, request, certificate, direction or other communication or other document purporting to emanate from the Issuer or any other person notwithstanding that the same shall include some error or omission or not be authentic;

x. the Trustee may call for and rely as to any matters of fact in relation to the TFCs which might

reasonably be expected to be within the knowledge of the Issuer upon a certificate signed by authorized signatories of the Issuer, the names of whom shall be conveyed to the Trustee pursuant to the signing of the Trust Deed, as sufficient evidence thereof and shall not be bound in any such case to call for further evidence or be responsible for any loss that may be occasioned by the Trustee failing to do so; and

xi. the Trustee shall not be responsible for any recitals or statements, warranties or representations of

any party (other than the Trustee) contained herein or for the execution, effectiveness, genuineness, validity, admissibility in evidence or enforceability of any such agreement or other document or any obligations or rights created or purported to be created thereby (nor shall it be responsible or liable to any person because of any invalidity of any provision of such documents, whether arising from statute, law or decision of any court or otherwise).

6.1.5 OBLIGATIONS OF THE TRUSTEE The Trustee shall:

(a) within three (3) Business Days of receipt by the Trustee, inform the TFC Holders of any notice in writing received by it or any information received by it which it believes to be accurate of: (i) any general meeting of the Issuer convened for the purpose of considering any resolution of the winding-up of the Issuer; (ii) any such resolution of the winding up of the Issuer being proposed (whether in general meeting or otherwise); or (iii) any petition for the winding-up of the Issuer or for the appointment of an administrator of the Issuer or a receiver in respect of the property / assets of the Issuer; and (iv) any actual breach by itself or the Issuer of any of its or the Issuer’s obligations under this Trust Deed (including the steps taken by it or the Issuer to remedy the same);

(b) for the purposes of the Article, “Obligations of the Trustee” of the Trust Deed, the Trustee may inform the TFC Holders of the notice or notices referred to above in the manner set out in the Trust Deed. In addition, the Trustee may make available at its offices during business hours a copy of the notice, or notices, for the inspection of TFC Holders;

(c) except as herein otherwise expressly provided, be authorized to assume without enquiry, and it is hereby declared to be the intention that it shall assume without enquiry, in the absence of express written notice to the contrary, that the Issuer is duly performing and observing all the provisions contained in the Trust Deed and that all covenants, warranties and undertakings contained in the Trust Deed are being complied with and that no event or circumstances which might constitute an Event of Default has occurred or exists;


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(d) subject to Article “Powers of the Trustee” of the Trust Deed, be entitled to refrain from exercising any right, power or discretion vested in it hereunder unless and until the Trustee is indemnified or granted security in accordance with Article ‘Indemnification of the Trustee” of the Trust Deed; and

(e) duly perform and comply with all functions, duties and obligations set out under the Applicable Laws, in particular the Debt Securities Trustee Regulations, 2017.

The Trustee shall not:

(a) be bound to disclose to any other person any information relating to the Issuer if such disclosure would or might in its sole opinion constitute a breach of any law or regulation or be otherwise actionable at the suit of any person unless otherwise required to be disclosed by law or under any direction or order of any competent Authority or Court. The Trustee shall give prior notice to the Issuer and cooperate with the Issuer to enable the Issuer to invoke any remedies that are available under law to prevent such disclosure if legally possible;

(b) under the Trust Deed be concerned with the interests of or owe any duty whatsoever to any persons other than the TFC Holders; or

(c) be under any duty to disclose to any person interested hereunder any confidential information supplied to it which comes to its knowledge through any of its affiliates, directors, employees, delegates or agents and shall not be liable to any person for not doing so.

6.1.6 TRUSTEE AND TFC HOLDERS

i. Subject to the provisions of the Trust Deed, the Trustee shall:

a) act in accordance with any instructions given to it by the TFC Holders; and

b) if so instructed by the TFC Holders in accordance with the terms of the Trust Deed, refrain from

exercising a right, power or discretion vested in it as trustee under the Trust Deed.

ii. Save as otherwise required by Applicable Laws, all instructions to the Trustee under the Trust Deed, shall be given by passing a simple majority resolution (the “Ordinary Resolution”) at a meeting of the TFC Holders or by an instrument in writing signed by the TFC Holders holding at least 51% of the total Outstanding Face Value of the TFC Issue; provided that any instructions in respect of any of the matters regarding the Provisions for Meetings of TFC Holders shall be given to the Trustee by passing an Extraordinary Resolution or by an instrument in writing in accordance with the Trust Deed.

iii. The Issuer will, on request from the Trustee, promptly give to the Trustee a written certificate in such form as the Trustee may reasonably require setting out all information available to them to facilitate the performance by the Trustee of its rights, trusts, powers, authorities, discretions, duties and obligations under the Trust Deed.

iv. Notwithstanding any other provision of the Trust Deed the Trustee shall not be obliged to provide any indemnity to, or in favour of, any receiver.


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v. Nothing contained in the Trust Deed shall be deemed to relieve and / or in any manner exonerate

and / or be interpreted to relieve and / or exonerate the Trustee from any liability for breach of trust or any liability which by virtue of any rules of law would attach to the Trustee in respect of any negligence, default, breach of duty or breach of trust for which the Trustee may be liable in relation to its duties under the Trust Deed, in any case in which the Trustee has failed to show the degree of care and diligence required of it as trustee having regard to the provisions of the Trust Deed imposing or conferring on the Trustee any obligations, powers, duties, authorities or discretions.

6.1.7 OBLIGATION TO ACT WITH DUE CARE Both the Issuer and the Trustee agree to act in good faith and with due diligence and with all reasonable care which is in the circumstances required in the performance of their duties and obligations under the Trust Deed or when exercising any power, authority or discretion which is vested in them under the Trust Deed. 6.1.8 COVENANTS OF THE ISSUER Covenant to Pay

i. Subject to the Trust Deed and Applicable Laws, the Issuer shall pay the Coupon Payments to the TFC Holders or Trustee for onward payment to the TFC Holders or to the order of the Trustee (as may be determined by the Issuer) on the relevant Coupon Payment Date(s), without exercising any counterclaim, lien, right of set-off or similar claim in respect thereof in accordance the provisions of the Trust Deed and payment by the Issuer of the amounts due on any Coupon Payment Date to the TFC Holders or Trustee for onward payment to the TFC Holders or to the order of the Trustee (as may be determined by the Issuer), in accordance with the Conditions, shall operate in satisfaction to the extent of the relative covenant of the Issuer contained in this Article.

ii. Notwithstanding anything to the contrary stated herein, the Issuer shall have the discretion to cancel (in whole or in part) any Coupon Payments scheduled to be paid on any Coupon Payment Date and upon such cancellation the TFC Holders shall be deemed to have waived their right to such Coupon Payments. Any cancellation of a Coupon Payment by the Issuer in terms hereof shall not constitute an Event of Default. In the event the Issuer determines that a Coupon Payment shall be cancelled (in whole or in part) as afore-said, the Issuer shall notify the Trustee and the SBP not less than twenty one (21) calendar days prior to the relevant Coupon Payment Date of that fact and of the amount that shall not be paid. It is clarified that in the event any Coupon Payments are cancelled (in whole or in part) as afore-said, the Issuer’s obligation to make such payments shall ipso facto stand extinguished and will not accumulate and neither the Trustee nor the TFC Holders shall have any claim in respect thereof.

iii. Notwithstanding anything to the contrary stated herein, and as required by the Circular, the Issuer shall only pay Coupon Payments on the TFCs, if it is in compliance with the Lock-In Clause. Any Coupon Payments made in violation of the Lock-In Clause shall, at the discretion of the SBP, result in the Mandatory Conversion and/or Mandatory Write-off of the TFCs.


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iv. Notwithstanding anything to the contrary stated herein, Coupon Payments shall cease on the Issuer exercising the Call Option in accordance with the terms of the Transaction Documents.

Positive Covenants The Issuer further covenants with the Trustee that:

i. the Issuer shall ensure that: (a) the approval of the shareholders and SECP under Section 83 of the Companies Act, 2017 will be procured in accordance with the directions of the SBP ; and (ii) it will, at all times maintain, sufficient cushion in its authorized and unused share capital to give effect to the Mandatory Conversion in accordance with the Trust Deed;

ii. the Issuer shall ensure that the Issuer or its appointed registrar will, at all times maintain a correct Register of TFC Holders showing their names and addresses, the amount of TFCs held by each and the date on which such TFC Holder was registered as the holder and the date on which he ceased to be so registered;

iii. that the Issuer shall maintain proper records of its books of accounts and shall subject to Applicable Laws, allow the Trustee during working hours on the Business Day to inspect its books of accounts, provided that the Trustee has provided the Issuer at least ten (10) calendar days notice of its intention to inspect the books of accounts of the Issuer;

iv. the Issuer shall conduct and manage its business affairs with due diligence and efficiency in accordance with sound financial practices;

v. the Issuer will duly perform and observe the obligations imposed upon it by the Transaction Documents and the Applicable Laws;

vi. the Issuer shall promptly inform the Trustee of: (i) any material change in its shareholding structure or its Board of Directors; and (ii) any change in the nature and conduct of the business of the Issuer in breach of the Memorandum and Articles of Association;

vii. the issuer shall ensure that all information provided to the Trustee in relation to the TFC Issue in terms of the Transaction Documents is accurate and the Issuer has not concealed any material facts/information;

viii. the Issuer shall furnish to the Trustee, copies of all documents, reports, notices and circulars which the Issuer provides to its creditors;

ix. the Issuer shall furnish to the Trustee, any document or information related to the TFC Issue, including copies of its financial reports, report on conversion or redemption of the TFCs in terms of the Trust Deed and report on dividend payments to its shareholders (unless such information is otherwise available in the public domain) and contracts related to the TFC Issue;

x. as and when requested by the Trustee, the Issuer shall ensure that the Issuer or registrar shall provide to the Trustee the Register of and/or extracts therefrom as well as any other document or information pertaining to the TFCs and the TFC Holders at no cost and / or charge to the Trustee;


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xi. on each Coupon Payment Date and subject to the Trust Deed, the Issuer shall confirm to the Trustee that the Coupon Payments have been credited to the account designated by each TFC Holder or to an account designated by the Trustee for onward payment to the TFC Holders (as the case may be);

xii. the Issuer shall immediately inform the Trustee of:

a. any general meeting of the Issuer convened for the purpose of considering any resolution for the winding up of the Issuer;

b. any resolution being proposed (whether in general meeting or otherwise) for the winding up of the Issuer;

c. occurrence of any Mandatory Conversion Event or a Mandatory Write-off Event and also inform the SBP of occurrence of such event;

d. any petition for the winding up of the Issuer or for the appointment of an administrator of the Issuer or a receiver in respect of its assets is submitted with any authority or of any order, any notice or direction of a court of law that is passed and affects or is likely to affect the interests of the TFC Holders or of any breach by the Issuer of any of its obligations under the Trust Deed and / or the Transaction Documents; or

e. the occurrence of any Event of Default.

xiii. The issuer shall reschedule or restructure the TFCs subject to fulfilment of the conditions stipulated under the Debt Securities Trustee Regulations, 2017.

Negative Covenants

The Issuer hereby covenants to the Trustee that while the obligations or any part thereof is outstanding, the Issuer shall not, without the prior written consent of the Trustee:

i. sell, transfer or otherwise dispose of, except in the ordinary course of business, more than twenty

(20) percent of its undertakings or assets or permit any merger, consolidation, dismantling or reorganization;

ii. take any action which is likely to have a material adverse change;

iii. change its Memorandum and Articles of Association constitutional documents in a manner that may adversely affect its ability to perform its obligations in respect of the TFC Issue;

iv. in the event that the Issuer is unable to pay, or otherwise cancels, a Coupon Payment, then from the date of such non-payment until the time the Issuer pays any subsequent Coupon Payments when due in terms of the Transaction Documents (the “Dividend Stopper Period”), the Issuer undertakes not to declare or pay any distribution or dividend or make any other payment on, and will procure that no distribution or dividend or other payment is made on, Ordinary Shares (other than to the extent that any such distribution, dividend or other payment is declared before the Dividend Stopper Period). For avoidance of doubt, the Issuer may declare dividends or other


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payments on its Ordinary Shares after resuming Coupon Payment(s) in accordance with the terms of the Transaction Documents;

v. declare or pay any dividends after the occurrence of an Event of Default;

vi. use any proceeds of the TFC Issue other than to meet the applicable regulatory requirements and for its normal banking business and operations; and

vii. finance (directly or indirectly) the purchase of any TFC by any person or entity or grant any advances against the security of any TFCs issued hereunder to any TFC Holder.

Information and Reporting Undertakings The Issuer covenants with the Trustee that it shall, in form and substance acceptable to the Trustee (and where so directed by the TFC Holders through an Ordinary Resolution) share periodical reports on semi-annual basis with the Trustee, and shall make such reports available to the TFC Holders, as concern the following:

i. details of the Register;

ii. number and nature of grievances received by the Issuer from the TFC Holders and status of resolution thereof; and

iii. amount of Coupon Payments which were waived (in whole or in part, at the discretion of the Issuer) and reasons for waiving such payments and detail of unclaimed / undelivered Coupon Payments (if any).

The Issuer shall provide to the Trustee (in a form acceptable to the Trustee):

i. audited annual accounts within thirty (30) calendar days from the date of the general meeting of the Issuer in which such accounts are approved and semi-annual and quarterly accounts within fifteen (15) calendar days of its publication;

ii. all accounts and financial statements to be provided by the Issuer shall reflect the true and fair view of the financial position of the Issuer and shall be drawn in conformity with generally accepted accounting principles consistently applied; and

iii. promptly provide to the Trustee such other information (including information related to its financial condition, business and operations) as the Trustee (acting on behalf of the TFC Holders) may from time to time request.

6.1.9 EVENTS OF DEFAULT Subject to the Trust Deed, each of the following events shall constitute an Event of Default:

i. the failure to redeem the TFCs upon exercise of a Call Option in accordance with the terms of the

Transaction Documents and such default is not rectified within fifteen (15) Business Days of the date of such failure as afore-stated;


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ii. the Issuer does not comply with any provision of the Transaction Documents or the TFCs (other

than those referred to in (i) above and such non-compliance continues for thirty (30) calendar days after the written notice is received by the Issuer from the Trustee; or

iii. the Issuer becomes insolvent or any liquidator trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or the like is appointed in respect of the Issuer or any part of its assets and is not discharged within ninety (90) calendar days of such appointment.

iv. the Issuer ceases to carry on all or substantial part of its business or its banking license is suspended or cancelled;

v. it becomes unlawful for the Issuer to perform any of its material obligations under this Trust Deed or the TFCs and the Issuer and Trustee have been unable to agree, within a period of sixty (60) days from the receipt of a notice from the Trustee, on an appropriate replacement provision containing such terms so as not to relegate either Party to a detrimental or less favourable position than that held under the Trust Deed or TFCs.

vi. the occurrence of any of the following and provided, in each case has, or is likely to have, a Material Adverse Change

i. the acceleration of any Financial Indebtedness upon an event of default (howsoever described) under any document relating to Financial Indebtedness of the Issuer;

ii. the enforcement of any security interest in respect of Financial Indebtedness; or iii. any Financial Indebtedness of the Issuer is not paid when due, including any grace period

that may be applicable thereto 6.1.10 CONSEQUENCES OF EVENT OF DEFAULT

i. At any time after the occurrence of one or more of the Events of Default, the Trustee may at its

discretion or upon being instructed by the TFC Holders through an Ordinary Resolution, take such proceedings against the Issuer as it may deem fit or as instructed by the TFC Holders in terms hereof, and may also exercise any other right for the purposes of recovering the obligations, including, without limitation, the right to: (i) inspect any document of the Issuer relating to the TFC Issue including the books of accounts, Register and register of shareholders etc. and to take copies and extracts thereof; (ii) subject to applicable laws, appoint nominee directors on the Board of Directors of the Issuer; and (iii) approach a court of competent jurisdiction for the enforcement and implementation of the Issuer’s Covenants.

ii. The Trustee shall be entitled to prove in any winding-up of the Issuer in respect of any amounts payable in relation to the TFCs or other moneys payable under any provision of the Trust Deed and any such claim shall be subject to conditions set out in the Trust Deed.


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6.1.11 APPLICATION OF PROCEEDS

i. Upon enforcement of the obligations in terms of the Trust Deed, any proceeds recovered / received by the Trustee from such enforcement shall be applied by the Trustee in the following manner: a. firstly, in payment of all costs, charges, expenses and liabilities lawfully incurred and

payments made by the Trustee, receiver, any attorney, agent, delegate, sub-delegate or other person appointed by the Trustee in the execution of any powers, authorities or discretions vested in the Trustee pursuant to the Trust Deed including (without limitation upon the foregoing) the remuneration of the Trustee under the Trust Deed and of every such receiver or such other person;

b. secondly, in or towards payment of the obligations to the TFC Holders on a pari passu basis in proportion to the amount owed to the respective TFC Holders pursuant to the TFCs; and

c. Lastly, the surplus (if any) after the payment of all obligations in full shall be paid to or to the order of the Issuer.

ii. Payment of the Proceeds to the TFC Holders shall be made by the Trustee net of any deductions required under applicable law. If the full amount of the obligations is not paid, then the record of ownership of such TFCs (which are held as book entry securities) for which such payment shall be made will be produced to the Trustee, who shall cause a memorandum of the amount and date of payment to be recorded on the Register against the name of each TFC Holder. The Trustee may dispense with the production of the record of ownership of TFCs in any particular case, on such indemnity being given as it shall think sufficient.

6.1.12 MANDATORY CONVERSION Mandatory Conversion

i. Upon the occurrence of a Mandatory Conversion Event, the TFCs shall, subject to the Trust Deed, be forthwith converted by the Issuer in accordance with the direction given by the SBP under applicable laws: (a) in whole, in the case of a conversion in whole; or (b) on a pro rata basis in case of a conversion in part in accordance with the terms set forth in the Trust Deed. Upon occurrence of a Mandatory Conversion Event, the Issuer shall, as soon as reasonably practicable and no later than thirty (30) calendar days from the date of receipt of the SBP direction, provide a written notice to the TFC Holders and the Trustee containing details of the Mandatory Conversion Event, the Outstanding Face Value and the Face Value (for each TFC Holder) which will be converted, the aggregate Ordinary Shares to be issued as part of the Mandatory Conversion and the number of Ordinary Shares to be allotted to each TFC Holder based on the Conversion Price, as defined in the Trust Deed.

ii. Notwithstanding anything contained herein and / or any other instrument and / or document pertaining to the TFCs, a TFC Holder who becomes entitled to 5% or more of the paid up share capital of the Issuer, as a direct and / or indirect result of the Mandatory Conversion, shall be required to procure all consents / approvals required under applicable laws for holding such


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percentage of shareholding in the Issuer (including, without limitation, the approval of the SBP and satisfaction of the fit and proper criteria of the SBP).

Conditions for Conversion Mandatory Conversion of the TFCs into Ordinary Shares shall be subject to the following conditions:

a. the Outstanding Face Value of the TFCs to be Mandatorily Converted into Ordinary Shares

(“Conversion Amount”) will: (i) where the Mandatory Conversion is due to occurrence of a CET 1 Trigger Event, be determined by the Issuer in its sole discretion, provided that such amount is at least equal to the amount required to immediately return the Issuer’s CET 1Ratio to above the CET 1Ratio which triggered the CET 1 Trigger Event but will not exceed the amount required to bring the CET 1Ratio to 8.5%; or (ii) where the Mandatory Conversion is due to occurrence of PONV Trigger Event or Lock-In Event, be determined by the SBP in its sole discretion;

b. the Issuer shall determine the aggregate number of Ordinary Shares to be issued to the TFC Holders by dividing the Conversion Amount with the Conversion Price, provided that the number of Ordinary Shares to be issued in respect of a Mandatory Conversion of the TFCs shall not, at any time and notwithstanding any capitalization issue, or any sub-division, consolidation, or reduction of its share capital, or any purchase of its own shares or any other variation in its issued share capital, exceed 191,000,000 Ordinary Shares. Accordingly, the Outstanding Face Value of the TFCs remaining after completion of the Mandatory Conversion shall be Written-off in accordance with the terms of the Transaction Documents.

c. the Issuer shall issue fully paid Ordinary Shares in the form of book entry securities in accordance with applicable laws (including the CDC Laws) in the name of the relevant TFC Holder within thirty (30) calendar days of issuance of the conversion notice (as defined in the Trust Deed), and accordingly register the name of such TFC Holder in the register of members of the Issuer;

d. The Issuer covenants that: (i) the Ordinary Shares, when issued pursuant to the Mandatory Conversion will be duly and validly issued, fully paid and free from all taxes, liens, and charges with respect to the issuance thereof and shall in all respect rank pari passu with the Ordinary Shares already existing, issued and allotted; (ii) the Issuer will reserve from its authorized and unissued share capital sufficient Ordinary Shares from the Issue Date in order to perform its obligations hereunder in relation to the Mandatory Conversion; and (iii) all stamp duty relating to issuance of Ordinary Shares in terms hereof shall be borne by the Issuer;

e. No fractional Ordinary Shares will be issued upon any Mandatory Conversion in terms hereof, but in lieu of such fractional Ordinary Shares, the Issuer shall round the number of such Ordinary Shares to be issued up to the nearest whole number; and

f. TFCs converted pursuant to this Article shall stand cancelled forthwith in accordance with the CDC Laws.

6.1.13 FAILURE TO CONVERT In accordance with the requirements of the Basel III Circular, if the Issuer fails to convert the TFCs in accordance with the terms of the Trust Deed or such conversion becomes impossible for any reason


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whatsoever, the Conversion Amount which could not be converted shall be Written-off in accordance with the terms of the Trust Deed. 6.1.14 Permanent Write Off Permanent Write-off Upon the occurrence of a Mandatory Write-off Event, the TFCs shall, subject to the Trust Deed, be forthwith cancelled or written down by the Issuer in accordance with the direction given by the SBP under applicable laws: (a) in whole, in the case of a Write-off in whole; or (b) on a pro rata basis in case of a Write-off in part. Upon such cancellation the following rights of TFC Holders shall, irrevocably and unconditionally, be cancelled or written-down into the extent of the Written-off Amount (defined below):

i. the rights of the TFC Holders against the Issuer upon liquidation of the Issuer;

ii. the rights of the TFC Holders to the amount to be paid on exercise of the same manner as Call Option by the Face Value of Issuer;

iii. the rights of the TFC Holders to the Coupon Payments (including accrued and unpaid Coupon Payments); and

iv. any other rights of the TFC Holders in relation to, or arising from the TFC Issue,

it being clarified that a Write-off in terms of the Trust Deed shall not constitute an Event of Default. Upon occurrence of a Mandatory Write-off Event, the Issuer shall send a notice to the TFC Holders, the Trustee and, to the extent applicable, the SBP, which shall state the details of the Mandatory Write-off Event, the Write-off Amount (including, for the avoidance of doubt, details of cancellation of accrued (and unpaid) Coupon Payments)), the pro rata Written -off Amount on the Face Value of each TFC and the date on or by which the Write-off pursuant to the Mandatory Write-off Event shall take effect (such statement of which shall, in the absence of manifest error, be binding on all parties). Write-off Amount The Outstanding Face Value of the TFCs which will be Written-off in terms of the Trust Deed shall be equal to:

(i) if the Write-off is due to occurrence of a PONV Trigger Event or failure by the Issuer to comply with the Lock In Requirement, the amount determined by the SBP in its sole discretion;

(ii) if the Write-off is due to occurrence of a CET 1 Trigger Event, the Issuer will have full

discretion to determine the amount provided that such amount is at least equal to the amount required to immediately return the Issuer’s CET 1 Ratio to above the CET 1 Ratio which triggered the CET 1 Trigger Event but will not exceed the amount required to bring the CET 1 Ratio to 8.5%; or


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(iii) if the Write-off is on account of an impossibility of the Issuer to Mandatorily Convert the TFCs upon occurrence of a Mandatory Conversion Event, the amount equal to the Conversion Amount or part thereof, as the case may be.

6.1.15 EXERCISE OF THE CALL OPTION Exercise of Call Option by the Issuer The Outstanding Face Value of the TFCs may, be redeemed by the Issuer in accordance with the terms herein (the “Call Option”): (a) in whole, in the case the Issuer exercises the Call Option in whole; or (b) on a pro rata basis in case the Issuer exercises the Call Option in part, provided that the Call Option may be exercised by the Issuer on or after:

(a) expiry of the period commencing on the Issue Date and ending on the fifth (5th) anniversary thereof;

(b) occurrence of any change in, or amendment to, the applicable laws affecting taxation (or

regulations or rulings promulgated thereunder) of Pakistan or any change in official application of such laws, regulations or rulings, as a result of which the Issuer will no longer be entitled to claim a deduction in respect of computing its tax liabilities with respect to Coupon Payments payable on the TFCs (the “Tax Event”), provided that the Issuer must exercise the Call Option within one hundred and fifty (150) calendar days of the Tax Event; or

(c) receipt of notification by the SBP to the effect that the Outstanding Face Value of the TFCs

does not qualify as, or is excluded (in full or in part) from, the ADT 1 Capital of the Issuer (the “Capital Event”), provided that the Issuer must exercise the Call Option within one hundred and fifty (150) calendar days of the Capital Event.

((a), (b) and (c) shall collectively be referred to as the “Call Option Events”)

The Call Option shall only be exercised by the Issuer subject to fulfillment of the following conditions (the “Call Option Conditions”):

(a) the Issuer shall obtain prior written approval of the SBP before exercising the Call Option; and

(b) the Issuer replaces the TFCs with capital of the same or better quality and demonstrates that

the capital position of the Issuer, after redeeming the TFCs in terms hereof, will be in compliance with the Applicable Regulatory Requirements.

The Issuer shall exercise the Call Option by providing at least thirty (30) calendar days prior written notice to each of the TFC Holders and the Trustee (the “Call Option Notice”) specifying therein the Redemption Date, the Outstanding Face Value subject to redemption, the Call Option Price and the aggregate redemption amount payable to the TFC Holder (the “Redemption Amount”). Upon issuance of the Call Option Notice in terms of the forgoing, the Issuer shall be irrevocably bound to redeem the TFCs at the Redemption Price on the relevant Redemption Date as specified in the Call Option Notice. The Issuer shall pay the aggregate Redemption Amount to each TFC Holder as a bullet payment in accordance with the terms set out in the Trust Deed.


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Call Option Price The price per TFC at which the Issuer will redeem the TFCs (or part thereof) upon exercise of a Call Option shall be the Face Value of each TFC plus any accrued Coupon Payment thereon (as may be waived (in whole or in part), at the discretion of the Issuer), which has accrued from the last Coupon Payment Date up to but excluding the Redemption Date (the “Call Option Price”).

Redemption If the TFCs are redeemed, such TFCs shall be cancelled forthwith in accordance with the applicable CDC Laws. Once redeemed and cancelled as aforesaid, the TFCs may not be re-issued and the obligations of the Issuer in respect of the TFCs shall be discharged.


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PART VII

7 MANAGEMENT OF THE BANK

BOARD OF DIRECTORS OF THE BANK

The Board of Directors of the Bank consists of nine (9) directors, out of which, three are independent directors, five are non-executive directors, and one is an executive director i.e. the CEO of the Bank. The details of current serving directors are mentioned below.

Sr. #

Name of Director Designation Directorships in other Companies

1 Sir Mohammad Anwar Pervez, OBE, HPk

Chairman / Non-Executive Director

Chairman, Bestway Holdings Limited

Chairman, Bestway Cement Limted

Chairman, Bestway Northern Limited

Director, Buybest Limited

Chairman, Bestway Foundation UK

Patron-in-chief, Bestway Foundation Pakistan

2 Mr. Zameer Mohammed Choudrey, CBE, FCA

Non-Executive Director

Chief Executive, Bestway Holdings Limited

Chief Executive, Bestway Northern Limited


Chairman, Bestway Foundation Pakistan

Chief Executive, Bestway Wholesale Limited

Chief Executive, Batleys Limited

Chief Executive, Batleys Properties Limited

Chief Executive, Bellevue Cash and Carry Limited

Chief Executive, Benson (Grocers) Limited

Chief Executive, Palmbest Limited

Chief Executive, Bestway Direct Limited

Chief Executive, Euroimpex Limited

Chief Executive, MAP Trading Limited

Chief Executive, Bestway Cement Limited

Director, Bestway Panacea Holding Limited

Director, Batleys Glasgow Limited

Director, Bestway Securities Limited

Director, Bestway UK Holdco Limited

Director, UBL Insurers Limited

Governor, Rainbow Foundation

Co-Chairman, Conservative Friends of Pakistan

Trustee - Bestway Foundation, UK

Trustee - GroceryAid, UK

Trustee - Crimestoppers, UK

3 Mr. Haider Zameer Choudrey

Non-Executive Director

Director, Bestway Cement

4 Mr. Rizwan Pervez Non-Executive Director

Director, Bestway Holdings Limited

Director, Bestway Northern Limited


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The Board plays a leadership role and guides the Management on key strategic issues/matters, without getting involved in day-to-day operations of the Bank. The Board assumes its role independent of the influence of the Management and knows its responsibilities and powers. The Board focuses on policy making and general direction, oversight and supervision of the affairs and business of the Bank. The Board approves and monitors the objectives, strategies and overall business plans of the Bank and oversees that the affairs of the Bank are carried out prudently within the framework of existing laws and regulations and high business ethics. The Board defines the authorities and key responsibilities of the Management without delegating its policy-making powers to the Management and ensures that the Management is in the hands of qualified personnel. The Board also approves and ensures implementation of policies, including but not limited to, in the areas of Risk Management, Credit, Treasury & Investment, Internal Control Systems, and Audit, IT Security, Human Resources, Expenditure, Accounting & Disclosure, and any other operational area which the Board


Director, Bestway Wholesale Limited

Director, Batleys Limited

Director, Batleys Properties Limited

Director, Bellevue Cash and Carry Limited

Director, Benson (Grocers) Limited

Director, Palmbest Limited

Director, Bestway Direct Limited

Director, Euroimpex Limited

Director, MAP Trading Limited

Director, UBL Insurers Limited

Director, RP Investments Limited

Trustee - Bestway Foundation, UK 5 Mr. Arshad Ahmad

Mir Non-Executive Director

-

6 Mr. Khalid Ahmed Sherwani

Independent Director

-

7 Mr. Amar Zafar Khan

Independent Director

-

8 Mr. Tariq Rashid Independent Director

-

9 Ms. Sima Kamil President / CEO and Director

Chairperson of Board of Governors, Karachi Grammar School

Vice Chairperson, IBTIDA Member, Holy Family Hospital

Director, Council of Pakistan Banks

Chairperson, UBL Switzerland AG

Chairperson, UBL Bank (Tanzania) Limited

Director, United Bank UK

Director, Karachi School of Business & Leadership


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and/or the Management may deem appropriate from time to time. The Board is also responsible to review and update existing policies periodically and/or whenever circumstances justify. The Board has formed following specialized committees with well-defined objectives, authorities and tenure, in order to ensure effective governance of the Bank’s activities.

Board Audit Committee

Board Risk and Compliance Committee

Board Human Resource and Compensation Committee

Board IT Committee

PROFILE OF THE CHAIRMAN Sir Mohammed Anwar Pervez, OBE HPk Sir Mohammed Anwar Pervez, OBE HPk is the Chairman of the Board of Directors of United Bank Limited since December 2013. He is also the Chairman of Bestway Group & its subsidiaries, which include Batleys Limited, Well Pharmacy and Bestway Cement Limited. He is also Chairman of Bestway Northern Limited in UK. Sir Anwar began his career in the food business in 1963 when he opened a convenience store in London. He ventured into the wholesale business in 1976 and has been responsible for growing Bestway Group into the seventh largest family business in the UK. Today, it is the 2nd largest wholesaler in the UK, the 3rd largest retail pharmacy in the UK, the largest cement producer in Pakistan and the 2nd largest private bank in Pakistan. The Group provides employment to over 33,600 globally. Sir Anwar was awarded the Order of the British Empire (OBE) in 1992 and was conferred the title of Knight’s Bachelor in 1999 by Her Majesty the Queen for his services to the food industry and various charitable causes in the UK. In 2000, he was awarded “Hilal-e-Pakistan”. In 2005, Sir Anwar Pervez was voted winner of the prestigious “Grocer Cup for Outstanding Business Achievement” by the Institute of Grocery Distribution, UK. In 2006, he received “Sitara-e-Essar” by the President of Pakistan. The same year he was chosen as the “Master Entrepreneur – UK” at the Ernst & Young Entrepreneur of the Year 2006 Awards. In 2011, Sir Anwar was awarded with an honorary Doctor of Laws degree by FC College Lahore. In 2012, in recognition of his philanthropic services to the Community, the University of Bradford conferred on Sir Anwar Pervez an honorary Doctor of Laws degree. He is the Chairman of Bestway Foundation UK and Patron-in-Chief of Bestway Foundation Pakistan and a charter member of the Duke of Edinburgh Awards Scheme. .

PROFILE OF THE CHIEF EXECUTIVE OFFICER Ms. Sima Kamil – President / CEO and Director


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Ms. Sima Kamil, the President and CEO of UBL, has over 35 years of experience in the diversified fields of banking, including branch banking, corporate banking and investment banking. She started her banking career from American Express Bank. She also worked with ANZ Grindlays and Standard Chartered Bank in corporate banking and risk management. Before joining UBL, Ms. Kamil was with Habib Bank Limited where she worked for 16 years. At Habib Bank, she worked in diversified fields at senior levels, including as Head of Corporate & Investment Banking and then as Head of Branch Banking. Ms. Kamil had also been associated with microfinance as Director of the First MicroFinance Bank for a number of years. She is the Chairperson of UBL (Switzerland) AG and UBL Bank (Tanzania) Limited. She is also the director on the Board of United Bank UK. In addition to her professional commitments and assignments, Ms. Kamil has interest in the social sector, primarily in education and health. She is the Chairperson of the Board of Governors of Karachi Grammar School. She has a degree in business from Kingston University, UK and an MBA from City University, London. She is a member of the Board Risk & Compliance Committee (BRCC) & Board IT Committee (BITC). She is a certified director from Institute of Business Administration (IBA), Karachi.

PROFILE OF DIRECTORS Mr. Zameer Mohammed Choudrey, CBE, FCA – Non-Executive Director Mr. Zameer Mohammed Choudrey has been a Member of the Board of Directors of United Bank Limited since October 2002. He is a Member of the Board Risk and Compliance Committee (BRCC). He is also a Director of UBL Insurers Limited. He is the Chief Executive of Bestway Group, which is the seventh largest family business in UK with an annual turnover of £3.28 billion. Mr. Zameer is a Chartered Accountant by profession. He joined Bestway Group as a Financial Controller in 1984. In 1990, he was promoted as the Group Finance Director. In 1995, he was given additional responsibilities of business diversication both in UK and Pakistan and was promoted as Chief Executive of Bestway Cement Limited. He was appointed as the Group CEO in 2004. He is a fellow of the Institute of Chartered Accountants of England & Wales and a member of the Institute of Directors. He is the Chairman of Conservative Friends of Pakistan. Mr. Zameer is a trustee of Bestway Foundation UK and Chairman of Bestway Foundation Pakistan. He is also a trustee of GroceryAid and Crimestoppers. Mr. Choudrey is a member of British Asian Trust’s UK Advisory Council and a member of HRH Prince of Wales Pakistan Recovery Fund International Leadership Team. In 2014, Mr. Zameer was awarded an honorary degree by University of Kent in recognition of his philanthropic services to the community.


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In December 2015, he was appointed Commander of the Order of the British Empire (CBE) by Her Majesty the Queen for his services to the UK wholesale industry and various charitable causes in the UK and abroad. In March 2018, he was also conferred with the Sitara-e-Imtiaz, one of Pakistan’s highest civilian honors for public service, by the President of Pakistan, in recognition of his contributions to advancing Pakistan through his services and the wide array of philanthropic work. Mr. Haider Zameer Choudrey – Non-Executive Director Mr. Haider Zameer Choudrey became a Director of United Bank Limited in March 2014. He is a Member of the Board Audit Committee (BAC) and Board IT Committee (BITC) and has the distinction of being the youngest Director of any listed bank in Pakistan. He is a Chartered Accountant by profession. After having distinguished himself at the world renowned Eton College, Mr. Haider read Economics at Gonville & Caius College, University of Cambridge. He also received his Masters in Economics from University of Cambridge. Between October 2009 - 2012, Mr. Haider undertook his accountancy training at KPMG UK LLP. At KPMG he was an integral part of the Consumer Markets Audit; Corporate Tax & Corporate Finance Teams. He gained rich experience of audit; finance; advisory; business strategy and corporate taxation through his exposure to the multinational clients in the FMCG; Financial Services and Telecommunication Sectors. In November 2012, Mr. Haider joined the Bestway Group and is responsible for spearheading the Group’s UK tax; international diversification and operational efficiency strategies and for providing financial / strategic oversight of all Group subsidiaries. In October 2014, Mr. Haider was an integral part of the team that worked on Bestway Group’s £620 million acquisition of The Co-operative Pharmacy, UK’s 3rd largest retail pharmacy. In 2016, he was appointed as Head of Group Finance at Bestway Group. Mr. Haider has been a Director of Bestway Cement Limited since 2016. Mr. Haider is actively involved with the charitable work of the Bestway Foundation in the UK and Pakistan; and is part of the management team that is supervising the construction of two state of the art schools in Chakwal, Punjab. He is a certified Director from the Pakistan Institute of Corporate Governance (PICG). Mr. Rizwan Pervez – Non-Executive Directors Mr. Rizwan Pervez has been a Member of the Board of Directors of United Bank Limited since March 2014. He is a Member of the Board Human Resource & Compensation Committee (HRCC). He is also a Director of UBL Insurers Ltd. Mr. Rizwan graduated from the University of Pittsburgh, USA in 1990 with a BSc in Business Management. He trained with a leading UK firm of Chartered Accountants and qualified in August 1995. Mr. Rizwan is a member of the Institute of Chartered Accountants in England & Wales. He joined Bestway as a Financial Accountant in 1995 and was elected to the Board of Directors in January 2000 as Group Business Development Director. He was responsible for developing the Group’s fascia and


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delivered business. Mr. Rizwan was instrumental in creating the “Best-One” symbol group and Bestway Direct, the Group’s delivered wholesale operation. In 2006, Mr. Rizwan was appointed Operations Director where he led and managed the integration of Bestway and Batleys wholesale operations which created the UK’s largest independent wholesale group. In 2012, Mr. Rizwan was appointed the Group Marketing & PR Director. In 2014, he was appointed as Wholesale Operations Director. In 2016, he was appointed as Customer Liaison Director. Mr. Rizwan has served as Governor of John Kelly Schools in North West London playing a leading role in the school’s attainment of ‘academy’ status and establishing the school as a center of excellence under its new name of The Crest Academy. Mr. Rizwan is a Trustee of Bestway Foundation UK and is a certified Director from the Pakistan Institute of Corporate Governance (PICG). Mr. Arshad Ahmad Mir – Non-Executive Director Mr. Arshad Ahmad Mir, appointed as member of the Board of Directors with effect from 26 October 2009, has over four decades of extensive corporate experience in financial services, oil industry, management consultancy, manufacturing and wholesale distribution businesses. He has served with major corporate entities in areas of general management, corporate planning, project management, compliance and consultancy. Geographical coverage of his corporate roles and responsibilities encompass Pakistan, Middle East, Africa, UK & Europe. Mr. Arshad Mir is a member of Institute of Chartered Accountants and Institute of Bankers UK. He has attended various management courses and conferences including Advanced Management Programme of London Business School. He is a certified Director from Pakistan Institute of Corporate Governance (PICG). He is also Chairman of the Board Risk & Compliance Committee (BRCC) and Member of Human Resources & Compensation Committee (HRCC). Mr. Khalid Ahmed Sherwani – Independent Director Mr. Khalid Ahmed Sherwani was appointed Member, Board of Directors as an Independent Director in October 2014. He is a seasoned professional with vast experience of corporate governance of over two decades, serving as director on various Boards of Directors primarily in the financial services industry of Pakistan, including chairmanship of 5 BODs of public & private sector entities. He also has top management experience of 30 years in diverse areas in major commercial banks as SEVP, CIO, CFO and CEO. He had originally joined United Bank Limited in 1968 as a Trainee in its IT Division, became its IT Head in 1974 and rose to the position of Senior Executive Vice President in 1984. Thereafter, he oversaw the working of numerous banking functions of the Bank and played a pivotal role in its restructuring during 1996-2000. He was appointed President/CEO of Allied Bank Limited, the 5th largest bank of Pakistan, in 2000 where he spear-headed restructuring and recapitalization of the Bank and led its subsequent turnaround after


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being taken over by the new sponsors. He retired from Allied Bank in 2007 but was re-inducted by the sponsors as President/CEO in 2010 for a period of three years for a fast paced growth in business and profitability of the Bank and to further fine tune its systems and controls. He holds a Master’s degree from the University of Karachi and is a Certified Director from the Pakistan Institute of Corporate Governance (PICG). He is a Chairman, Board Human Resources & Compensation Committee (HRCC) and member Board Audit Committee (BAC). Mr. Amar Zafar Khan – Independent Director Mr. Amar Zafar Khan is a Chartered Accountant, with over 30 years’ multi-functional experience at premium international financial institutions, including Price Water House, UK and Citibank NA, covering general management, directing turnarounds and developing new ventures/businesses in commercial banking, investment banking, domestic and cross-border corporate finance and securities trading. As an international staff member of Citibank, he has exposure to markets in Europe, the Middle East and Africa and has knowledge and experience of a wide spectrum of nuancing solutions. In 1992, he set up First Capital Securities Discount House, an IFC investment in Nigeria as the pioneering Managing Director. This institution specialized in market making of Fixed Income securities aimed at liquefying the balance sheets of Nigerian banks. In 1999 he returned to Nigeria as an Executive Director overseeing retail banking, investment banking and international operations of United Bank for Africa, one of Nigeria’s largest banks. Mr. Amar Zafar did his MBA (Major in Marketing) from Cranfield School of Management, Bedford, UK. He is a Fellow, Institute of Chartered Accountants, England & Wales, UK. Mr. Amar Zafar was Chairman and CEO of UBL from the year 2000 to 2004. At the Government’s invitation, he took charge of this nationalized institution in order to accelerate the pace of commercialization and achieve the objective of privatization of the Bank. The entire Bank was turned around along contemporary banking lines. Within the first year, the organization had turned the corner in terms of profitability. Midway the Bank was successfully privatized to multinational owners, for a price which substantially recouped equity injections by the Government. Mr. Amar Zafar was invited by the new owners to continue as the CEO in order to build the momentum achieved and assist the new Board to settle in. Further upgrading of management, staff and network occurred and the Bank built capacity for the launch of its consumer assets activity, and reported record profits for the first full year after privatization. Previously, he was also appointed as Advisor and Director of UBL in 1996 by the State Bank of Pakistan where he played a pivotal role in the multi-dimensional restructuring of the bank. Mr. Amar Zafar is the Chairman of Board Audit Committee (BAC) of UBL. He is a Certified Director from the Pakistan Institute of Corporate Governance (PICG). Mr. Tariq Rashid – Independent Director Mr. Tariq Rashid has more than 25 years’ experience in Management & Information Technology at senior levels. He spearheaded the setup of the IT infrastructure of mobile operator (Mobilink now Jazz) since inception. He led the IT organization of Mobilink through different phases of the telecom industry’s life cycle i.e. infancy, growth and consolidation and served as VP & Chief Strategy Officer for more than 5 years. He also served as a Director of Information Technology at the headquarters of a renowned


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Telecommunication company in Egypt. He successfully led few large business / technology transformation initiatives during his career. He served as a Director on the Board of Mobilink Microfinance Bank and headed the Risk Committee. He served as Director on the Board of Mobile Number Portability Database (Guarantee) Limited. He also served as President on the Board of International School of Islamabad (ISOI) for more than 4 years. Mr. Tariq holds an engineering degree from the University of Engineering & Technology, Lahore and post graduate certificate in Computers from National Academy of Higher Education. He attended different management programs abroad and locally from institutes like IMD, INSEAD, MIT and LUMS. He is a Chairman of the Board IT Committee (BITC) of the UBL.

MANAGEMENT TEAM The Management of the Bank is authorized by the Board to independently run day-to-day affairs / operations of the Bank within the ambit of relevant laws, regulations and policies, duly approved by the Board. In order to enable effective oversight of the Bank’s activities, the Management has constituted various management committees, with the CEO being authorized to nominate the members of the Management Committees and their respective sub-committees. Some of the management committees are mentioned below:

Executive Committee (ExCom)

Credit Committee

Control Committee

Global Asset Liability Committee (ALCO)

Global Investment Committee (GIC)

IT Steering Committee

Risk Management Committee

Portfolio Review Committee

Central Procurement Committee

Real Estate Committee 7.5.1 MANAGEMENT PROFILES UBL’s management team comprises highly experienced individuals with an average of more than 20 years of sector experience and proven abilities to grow the business. Mr. Aameer M. Karachiwalla – Chief Financial Officer Mr. Aameer Karachiwalla is a Chartered Accountant from the Institute of Chartered Accountants of Pakistan with over 37 years of experience. Prior to his current assignment, Mr. Aameer has held roles such as Chief of Staff, Chief Operating Officer, Group Executive Retail Bank and is also the Chairman of UBL Insurers Ltd., Khushhali Microfinance Bank and 1Link (Pvt.) Ltd. He has previously been associated with American Express Bank, Citicorp Investment Bank, and Artal Group of Companies. He has been a part of UBL since 1998.


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Mr. Aqeel Ahmed Nasir – Company Secretary and Chief Legal Counsel Mr. Aqeel Nasir holds a Master’s Degree in Law from the University of London. He has over 27 years of rich experience in the field of Law and Corporate Affairs. Before joining UBL in 2006, Mr. Aqeel has served in various public and private sector industries. He is a qualified solicitor of senior courts of England and Wales. Mr. Zia Ijaz – Group Executive, Head of International

Mr. Zia Ijaz is a fellow member of the Institute of Chartered Accountants of Pakistan, and CPA from the American Institute of Certified Public Accountants, USA, with over 30 years of experience in Pakistan and abroad in organizations such as Askari Bank, Riyadh Bank and Allied Bank. Mr. Zia has held diverse roles such as Chief Financial Officer, Group Chief – Commercial & Retail Banking and Group Chief – Operations. Mr. Zia has been associated with UBL since November 2014. He has recently been assigned the role of Head of International. Mr. Farrukh Zaeem – Group Head, Treasury and Capital Markets Mr. Furrukh Zaeem has a Master’s degree from the Institute of Business Administration and has over 23 years of varied experience in Treasury & Capital markets as well as Corporate Banking. He has been associated with organizations like American Express Bank and Finex Securities. Before joining UBL in 2008, Mr. Furrukh was working as the Head of Treasury in JS Bank. Mr. Imran Sarwar – Group Executive, Risk and Credit Policy Mr. Imran Sarwar has over 26 years of broad based international banking experience with organizations such as ANZ Grindlays Bank and Standard Chartered Bank Pakistan and UAE. Prior to joining UBL, he was Managing Director, Head of Corporate & Institutional Banking at Standard Chartered Bank, UAE. Mr. Aslam Sadruddin – Group Executive, Operations Mr. Aslam Sadruddin has over 33 years of banking experience. Prior to joining UBL in 2007, he has worked on key positions in Operations and Technology at Deutsche Bank AG, Pakistan/Singapore, Union Bank, and Standard Chartered Bank Pakistan. His key achievements include Process Re-Engineering, centralization of Retail and Wholesale Banking processes, development and implementation of Business Continuity Planning Framework, Core Banking and other IT Systems Implementation at various banks. Mr. Aslam is a Commerce Graduate, and holds a Banking Diploma from the Institute of Bankers in Pakistan. Mr. Faisal Anwar – Chief Information Officer Mr. Faisal Anwar possesses over 17 years of diversified experience in Pakistan and Middle East in executing IT strategies, utilizing business intelligence and strategic insights. Prior to joining UBL, he was Head of Technology at Mercury Mena. Mr. Sharjeel Shahid – Group Executive, Digital Banking Group


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Mr. Sharjeel Shahid is a strategic management professional with more than 21 years of experience developing and managing banking operations for some of the world’s largest retails banks. Mr. Sharjeel has been involved in senior management roles with Barclays and Standard Chartered Bank. Before joining UBL, he was Group Head, Retail Bank, at Burj Islamic Bank, and Head of Islamic and Personal Banking at Standard Chartered Bank. Mr. Sharjeel is a qualified Chartered Accountant and a member of the Institute of Chartered Accountants England & Wales, and holds a degree in Finance from Thames Valley University, London. Mr. Sajid Hussain – Group Executive, Compliance Mr. Sajid Hussain is a Chartered Accountant from the Institute of Chartered Accountants of Pakistan and also holds both, CIA and CISA certifications. He has more than 20 years of experience and has been associated with Habib Bank Limited, JS Bank and Samba Bank in senior roles. His last assignment was with Samba Bank as Chief Internal Auditor. Mr. Hussain joined UBL in 2012 in the Audit & Risk Review Group and was deployed as the Head of the Compliance group in 2018. He is now Group Executive Compliance. Mr. Shahid Masood Khan – Group Head, Special Assets Management (SAM) Mr. Shahid Mahmood Khan holds a Master’s degree from the Preston University. He has more than 27 years of experience in Banks like Bank of Khyber, Bank of Punjab and MCB Bank Ltd. in senior roles. He has a diversified experience in banking in areas such as Commercial and Corporate Banking, Syndications and Remedial Assets Groups. His last assignment was with MCB Bank as the Head of SAM Group - South. Mr. Shahid has been associated with UBL since 2015. Mr. Tanveer Farhan Mahmood – Head of Islamic Banking Mr. Tanveer Farhan Mahmood is a BE (Electronics) from the NED University of Engineering & Technology and a certified Islamic Finance Executive. He has more than 19 years of experience in Branch banking with MCB, Meezan Bank, Bank Al Baraka and Bank Alfalah. Mr. Tanveer has been associated with UBL since September 2017. Mr. Tauqeer Mazhar – Group Head Branch Banking Mr. Tauqeer Mazhar has been associated with UBL since 2017. Mr. Tauqeer holds an MBA degree from the Lahore University of Management Sciences (LUMS). He possesses over 26 years of banking experience both in Pakistan and overseas. Mr. Tauqeer has previously worked with the Citigroup, Samba Bank, ABN Amro, KazInvest Bank and HBL in areas of Corporate, Retail and Operations. Ms. Sadia Saeed – Group Executive Human Resources Ms. Sadia Saeed holds a Master’s degree from the Institute of Business Administration (IBA), Karachi and has over 33 years of extensive experience in the field of Credit, Commercial, SME, Wholesale Banking and Human Resources. She has held various key positions within the banking sector in organizations including Standard Chartered Bank (Pakistan and UAE) and MCB where her last assignment was in the role of Group Head HR. Ms. Sadia also holds experience in HR consultancy and has been a member of Country and Regional Management Committees at MCB and SCB. Before joining UBL, she was associated with TD Bank, Canada in the Commercial Banking segment.


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Mr. Irfan Farooq Memon – Group Head Audit & Risk Review Mr. Irfan Farooq Memon is a Fellow Chartered Accountant (FCA) from the Institute of Chartered Accountants of Pakistan as well as a Certified Anti Money Laundering Specialist (CAMS). He brings over 19 years of extensive experience in the field of Audit in various positions with organizations like A. F. Ferguson (PWC), KPMG, EY, Lloyd’s Banking Group and Habib Bank Limited.

OVERDUE LOANS

Save as otherwise disclosed below, the Bank, its Chief Executive and directors, and its associated companies and undertakings have no overdue loans (local and/or foreign currency).

DHA Cogen Limited, an associated company of the Bank, has an amount of PKR 8,000 million (as per last available audited financial statements ended 31 December 2015) as overdue loans payable to financial institutions, including an amount of PKR 2,155 million owed to the Bank. DHA Cogen Limited became an associated company of the Bank as a result of a creditor led petition under Section 286 of the Company Act, 2017 (previously Section 290 of the Companies Ordinance, 1984) pursuant to which a consortium of financial institutions (including the Bank) enforced the pledge created in their favour as security. Upon enforcement of the pledge, the Bank became a shareholder holding 20.99% of the issued and paid up capital of DHA Cogen Limited. The Bank, along with other financial institutions, is also party to the recovery proceedings filed against DHA Cogen Limited which are currently pending.”

POWER OF DIRECTORS As required under clause 47 of Part I of Table A of First Schedule of the Companies Act, 2017; and the Articles of Association of the Company, the authority to conduct business of the Bank is vested with its Board of Directors and they may exercise all such powers of the Bank as are not required by the Companies Act, 2017 or the Articles of Association of the Bank or by a special resolution, required to be exercised by the Bank in the general meeting of the shareholders.

NUMBER OF DIRECTORS Pursuant to section 154 of the Companies Act, 2017, the number of directors of a listed company should not be less than seven (7). At present, the Board consists of nine (9) directors, including the Chief Executive Officer.

QUALIFICATION OF DIRECTORS Pursuant to Article 68, the qualification of a director of the Bank, except for ;

(a) a nominee director; (b) a person representing a member which is not a natural person; (c) a whole-time director who is an employee of the company; (d) a chief executive;


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(e) a person representing a creditor or other special interests by virtue of contractual arrangements; or

(f) such other persons as are defined in section 153 of the Companies Act, 2017 shall be holding shares in the Bank of the nominal value of PKR 25,000.

REMUNERATION OF DIRECTORS Pursuant to Article 70, the remuneration of Directors for attending the meetings of the Board or a Committee shall from time to time be determined by the Board in accordance with the provisions of the Ordinance and the Banking Companies Ordinance, 1962.

AMOUNT OF BENEFITS TO SPONSOR SHAREHOLDERS AND OFFICERS DURING THE LAST YEAR No amount of benefits has been paid or given during the last year or is intended to be paid or given to any sponsor shareholders or to any officer of the Bank other than as remuneration for services rendered as whole-time executives of the Bank or as meeting fee for attending Directors Committee meetings to non-executive directors as per the approved scale of fee.

INTEREST OF DIRECTORS The directors may be deemed to be interested to the extent of fees payable to them for attending Board meetings. The Directors performing whole time services in the Bank may also be deemed interested in the remuneration payable to them by the Bank. The nominee directors have interest in the Bank to the extent of representing the sponsors in the Bank.

ELECTION OF DIRECTORS The Directors of the Bank are elected for a term of 03 years in accordance with the procedure laid down in section 159 of the Companies Act, 2017 and Banking Companies Ordinance, 1962. The Directors shall comply with the provisions of Sections 154 to 159 and Sections 161 and 167 of the Companies Act, 2017 relating to the election of Directors and matters ancillary thereto. Subject to the provisions of the Companies Act, 2017 and Banking Companies Ordinance, 1962, the Company may from time to time increase or decrease the number of Directors. Any casual vacancy occurring on the Board of Directors may be filled up by the Directors, but the person so appointed shall be subject to retirement at the same time as if he / she had become a Director on the day on which the Director in whose place he / she is chosen was last elected as Director. The Company may remove a Director in accordance with the provisions of the Banking Companies Ordinance, 1962 and the Companies Act, 2017. The present Directors of the Company were elected on March 25, 2017 for a period of 03 years.

BORROWING POWERS


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Pursuant to article 36 of the Articles of Association, the Board of Directors may, from time to time at its discretion, raise or borrow or secure the payment of, any sum or sums of money for the purposes of the Bank, subject to any restrictions contained in the Banking Companies Ordinance 1962, any circulars or directives of the State Bank of Pakistan and the conditions as laid down in articles 37 to 41 of the Articles of Association.

VOTING RIGHTS The TFCs shall not carry any voting rights in relation to UBL.

INTERNAL AUDIT The Board Audit Committee comprises of the following members:

Mr. Amar Zafar Khan – Chairman

Mr. Haider Zameer Choudrey – Member

Mr. Khalid A. Sherwani – Member

Mr. Rizwan Pervez – Member

Mr. Aqeel Ahmed Nasir – Secretary

BOARD HUMAN RESOURCE & COMPENSATION COMMITTEE The Board Human Resource & Compensation Committee comprises of the following members:

Mr. Arshad Ahmad Mir – Chairman

Mr. Khalid A. Sherwani – Member

Mr. Amar Zafar Khan – Member

Syed Zulfiqar Hussain – Secretary

BOARD RISK & COMPLIANCE COMMITTEE The Board Risk & Compliance Committee comprises of the following members:

Mr. Zameer Mohammed Choudrey, CBE– Chairman

Mr. Arshad Ahmad Mir – Member

Ms. Sima Kamil – Member

Mr. Imran Sarwar – Secretary

BOARD IT COMMITTEE The Board IT Committee comprises of the following members:

Mr. Tariq Rashid – Chairman

Mr. Haider Zameer Choudrey – Member

Ms. Sima Kamil – Member

Mr. Muhammad Faisal Anwar – Secretary


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PART VIII 8 MISCELLANEOUS INFORMATION

REGISTERED OFFICE

United Bank Limited 13th Floor, UBL Building, Jinnah Avenue, Blue Area, Islamabad Website: www.ubldirect.com

HEAD OFFICE United Bank Limited I.I. Chundrigar Road, Karachi – 74000 UAN: 111-825-111 Fax: +92 21 3241 3492 Website: www.ubldirect.com

TRUSTEE Pak Oman Investment Company Limited First Floor, Tower A, Finance & Trade Center, Shahra-e-Faisal, Karachi Phone: (92-21) 35630971-75 Fax: (92-21) 35630969 Website: http://www.pakoman.com

AUDITORS OF THE COMPANY KPMG Taseer Hadi & Co. Chartered Accountants Sheikh Sultan Trust Building No. 2 Beaumont Road, Karachi. Phone: (92-21) 3568 5847 Fax: (92-21) 3568 5095 Website: home.kpmg.com/pk A.F. Ferguson & Co., Chartered Accountants State Life Building 1-C I.I. Chundrigar Road, Karachi Phone: (92-21) 32426682-5; (92-21) 32426711-5 Fax: (92-21) 32415007 [Assurance]; (92-21) 3247938 [Tax] Website: www.pwc.com.pk

LEGAL ADVISOR TO THE ISSUE Haidermota BNR & Co. Barristers at Law & Corporate Counsellors D-79, Block 5, Clifton, K.D.A. Scheme No.5


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Karachi-75600. Telephone # +92 21 111 520 000 Fax # +92 21 3587 1054 Email # [email protected]

COMPLIANCE OFFICER Mr. Aqeel Ahmed Nasir Company Secretary & Chief Legal Counsel [email protected] UBL Head Office, I.I. Chundrigar Road, Karachi – 74000, Pakistan. Telephone # +92 21 99033 2960 Fax # +92 21 3241 3492

REGISTRAR AND TRANSFER AGENT THK Associates (Pvt) Limited 1ST Floor, 40-C, Block-6 P.E.C.H.S, Karachi – Pakistan Tel: (92 21) 34168270 UAN: (92 21) 111-000-322 Fax: (92 21) 34168271 Website: www.thk.com.pk/

BANKERS TO THE ISSUE

1 Allied Bank Limited 7 JS Bank Limited

2 Askari Bank Limited 8 MCB Bank Limited

3 Bank Alfalah Limited 9 Samba Bank Limited

4 Bank Al Habib Limited 10 Summit Bank Limited

5 Faysal Bank Limited 11 United Bank Limited

6 Habib Metropolitan Bank Limited

CONSULTANT TO THE ISSUE

BMA Capital Management Limited Unitower Level 8, I.I. Chundrigar Road, Karachi, Pakistan UAN: (92 21) 111 262 111 Fax: (92 21) 32430748 Email: [email protected] Website: www.bmacapital.com

MARKET MAKER


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BMA Capital Management Limited Unitower Level 8, I.I. Chundrigar Road, Karachi, Pakistan UAN: (92 21) 111 262 111 Fax: (92 21) 32430748 Email: [email protected] Website: www.bmacapital.com

MATERIAL CONTRACTS / DOCUMENTS RELATED TO THE ISSUE Investment Agreements between the Bank and the respective Pre-IPO investors are set out below:

S. No.

Name of Investing Entity Amounts in PKR

Investment Agreement Date

1 AGP Limited - Staff Provident Trust 10,000,000 August 27, 2018

2 Agriauto Industries Limited Employees Provident Fund 10,000,000 October 8, 2018

3 Agriauto Stamping Company (Private) Limited Employees Provident Fund

9,000,000 October 8, 2018

4a Allied Bank Limited 500,000,000 August 27, 2018

4b Allied Bank Limited 125,000,000 October 25, 2018

5 Arif Habib Corporation Limited 50,000,000 August 27, 2018

6 Atlas Group of Companies Management Staff Gratuity Fund 10,000,000 September 25, 2018

7 Atlas Honda Limited Employees Provident Fund 10,000,000 September 25, 2018

8 Baluchistan Wheels Limited Employees Gratuity Fund 7,500,000 October 22, 2018

9 Baluchistan Wheels Limited Executive Provident Fund 10,000,000 October 22, 2018

10 Baluchistan Wheels Limited Non-Executive Provident Fund 5,000,000 October 22, 2018

11 Bank AL Habib Limited 275,000,000 August 27, 2018

12 Bank Alfalah Employees Gratuity Fund 125,000,000 August 27, 2018

13 BMA Capital Management Company Limited 30,000,000 October 8, 2018

14 BOP Employees’ Provident Fund Trust 200,000,000 August 27, 2018

15 Bulleh Shah Packaging Pvt. Ltd Employees Provident Fund 10,000,000 August 27, 2018

16 Bulleh Shah Packaging Pvt. Ltd Management Staff Pension Fund 10,000,000 August 27, 2018

17 Crescent Steel and Allied Products Limited - Gratuity Fund 2,500,000 October 8, 2018

18 Crescent Steel and Allied Products Limited - Pension Fund 2,500,000 October 8, 2018

19 Eastern Garments (Private) Limited - Employees Provident Fund 3,000,000 October 8, 2018

20a EFU Life Assurance Limited 250,000,000 October 22, 2018

20b EFU Life Assurance Limited 1,000,000,000 August 27, 2018

21 Escorts Investment Bank Limited 125,000,000 August 27, 2018

22 Fatima Agri Sales & Services (Private) Limited- Provident Fund Trust

15,500,000 August 27, 2018

23 Fatima Fertilizer Company Limited - Provident Fund Trust 25,000,000 August 27, 2018

24 Fatimafert Limited Management Staff Provident Fund 10,000,000 August 27, 2018

25 Habib Bank Limited 700,000,000 August 27, 2018

26 Habib Bank Limited Employees Benevolent Fund Trust 70,000,000 October 25, 2018

27 Habib Education Trust - Staff Provident Fund 11,000,000 August 27, 2018

28 Habib Metropolitan Bank Limited 150,000,000 August 27, 2018

29 Hommie & Jamshed Nusserwanjee Charitable Trust 20,000,000 September 25, 2018

30 Hum Network Limited 80,000,000 October 22, 2018

31 IGI Life Insurance Limited 75,000,000 August 27, 2018


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32 Jaffer Brothers Private Limited & Associated Companies Staff Provident Fund

5,000,000 October 8, 2018

33a Jubilee Life Insurance Company Limited 1,000,000,000 October 22, 2018

33b Jubilee Life Insurance Company Limited 1,000,000,000 August 27, 2018

34 Lahore University of Management Sciences 40,000,000 September 25, 2018

35 Liaquat National Hospital Staff Gratuity Fund 6,000,000 October 8, 2018

36 MCB Bank Limited 200,000,000 August 27, 2018

37 Mega Conglomerate Private Limited 209,500,000 October 22, 2018

38 Muller & Phipps Pakistan (Pvt.) Ltd. – Staff Provident Fund 15,000,000 August 27, 2018

39 National Bank of Pakistan 750,000,000 September 19, 2018

40 National Clearing Company of Pakistan Limited 100,000,000 September 25, 2018

41 National Management Foundation 75,000,000 September 25, 2018

42 Packages Limited Employees Provident Fund 10,000,000 August 27, 2018

43 Packages Limited Management Staff Pension Fund 10,000,000 August 27, 2018

44 Pak Brunei Investment Company Limited 300,000,000 August 27, 2018

45 Pak China Investment Company Limited 500,000,000 August 27, 2018

46 Pak Suzuki Motor Company Limited – Gratuity Fund 13,000,000 October 22, 2018

47 Parazelsus Pakistan Employees’ Provident Fund 1,500,000 October 10, 2018

48 PTCL Employees General Provident Fund 124,000,000 August 27, 2018

49 Roche Pakistan Limited Employees' Provident Fund 9,000,000 August 27, 2018

50 Roche Pakistan Limited Management Staff Defined Contribution Pension Fund

2,000,000 August 27, 2018

51 Roche Pakistan Limited Management Staff Gratuity Fund 3,000,000 August 27, 2018

52 Roche Pakistan Limited Management Staff Pension Fund 6,000,000 August 27, 2018

53 Searle Pakistan Limited Provident Fund 15,000,000 October 8, 2018

54 Soneri Bank Limited 125,000,000 August 27, 2018

55 Tetra Pak Pakistan Limited Employees Gratuity Fund 5,500,000 August 27, 2018

56 Tetra Pak Pakistan Limited Employees Pension Fund 8,400,000 August 27, 2018

57 Tetra Pak Pakistan Limited Employees Provident Fund 7,600,000 August 27, 2018

58 The Bank Of Khyber 500,000,000 August 27, 2018

59 Tourism Promotion Services (Pakistan) Limited Employees Gratuity Fund

11,750,000 October 8, 2018

60 Tourism Promotion Services (Pakistan) Limited Employees Provident Fund

11,750,000 October 8, 2018

Total 9,000,000,000

The Trust Deed between the Bank and Pak Oman Investment Company Limited was signed on August 8, 2018 in Karachi. Underwriting between the Bank and the following underwriters:

S. No

Underwriter’s Name Amount (PKR) Agreement Date

1 BMA Capital Management Limited 500,000,000 November 7, 2018

2 Arif Habib Limited 500,000,000 November 8, 2018

Total 1,000,000,000


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TRUST DEED DATED AUGUST 8, 2018 BETWEEN UNITED BANK LIMITED AND PAK OMAN INVESTMENT COMPANY LIMITED

INSTRUMENT CREDIT RATING REPORT BY JCR-VIS DATED JUNE 13, 2018.

ENTITY CREDIT RATING REPORT BY JCR-VIS DATED JUNE 29, 2018

APPROVAL VIDE LETTER REFERENCE NO. [] DATED [] FROM PAKISTAN STOCK EXCHANGE

LIMITED.

APPROVAL LETTER REFERENCE NO. [] DATED [] FROM THE SECURITIES & EXCHANGE COMMISSION OF PAKISTAN.

MARKET MAKING AGREEMENT DATED OCTOBER 22, 2018


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FIRM APPROVAL LETTER REFERENCE NO. BPRD/BAID/650/9783/2018 DATED MAY 7, 2018 FROM

THE STATE BANK OF PAKISTAN


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INSPECTION OF DOCUMENTS AND CONTRACTS

All the Balance Sheets and Profit & Loss Accounts, Copies of the Memorandum and the Articles of Association, the Auditor’s Certificates, Trust Deeds, the Credit Rating Report by JCR-VIS, Clearance letter from PSX and the approval letters from SECP, and the copies of agreements referred to in this Prospectus may be inspected during usual business hours on any working day at the registered office of the Company from the date of publication of this Prospectus until the closing of the Subscription Period.

LEGAL PROCEEDINGS There are no pending legal proceedings other than ordinary routine litigation incidental to banking business.

INDEMNITY As per Articles 132-134 of the Articles of Association, every officer or agent for the time being of the Bank may be indemnified out of the assets of the Bank against any liability incurred by him in defending any proceedings, whether civil or criminal, arising out of his dealings in relation to the affairs of the Bank, except those brought by the Bank against him in which judgment is given in his favor or which he is acquitted or in connection with any application under section 488 of the Companies Ordinance, 1984 (currently section 492 of the Companies Act, 2017) in which relief is granted to him by Court.

CAPITALIZATION OF RESERVES

Year Capitalization Mode Reserves Capitalized (PKR)

2005 Bonus Shares Issue 1,087,190,000






REVALUATION OF FIXED ASSETS The properties of the Bank have been revalued by independent professional valuers as at December 31, 2017. The revaluation was carried out by M/s. Engineering Pakistan Int'l (Pvt) Ltd., M/s. M. J. Surveyors (Pvt) Ltd., Harvestor Services (Pvt) Ltd., and Iqbal A. Nanjee & Co. (Pvt) Ltd. on the basis of professional assessment of present market values and resulted in an increase in surplus by PKR. 6,366.149 million. The total surplus arising against revaluation of fixed assets as at December 31, 2017 amounts to PKR. 26,424.375 million.

MEMORANDUM OF ASSOCIATION The Memorandum of Association, inter alia, contains the objects for which UBL was incorporated and the business, which UBL is authorized to undertake. A copy of the Memorandum of Association annexed to


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this Prospectus is being published with all issues hereof except those released as newspaper advertisement.

INVESTMENT IN SUBSIDIARY AND ASSOCIATED COMPANIES The Bank had investments in the following subsidiaries and associates as of September 30, 2018.

Company Name Subsidiary/Associate Percentage of holding

UBL National bank Limited (UBL UK) Subsidiary 55.00%

UBL (Switzerland) AG Subsidiary 100.00%

United Executors and Trustees Company Limited Subsidiary 100.00%

UBL Fund Managers Limited Subsidiary 98.87%

Al Ameen Financial Services Limited Subsidiary 98.87%

UBL Bank (Tanzania) Limited Subsidiary 100.00%

UBL Insurers Limited Associate 30.00%

Khushhali Bank Limited Associate 29.69%

Oman United Exchange Company, Muscat Associate 25.00%

DHA Cogen Limited* Associate 20.99%

UBL Liquidity Plus Fund Associate 0.09%

UBL Money Market Fund Associate 1.78%

UBL Stock Advantage Fund Associate 3.42%

UBL Financial Sector Fund Associate 30.64%

UBL Income Opportunity Fund Associate 63.31%

Al Ameen Islamic Financial Planning Fund Associate 1.82%

* As a result of exercise of a pledge in 2013, the Bank holds 20.99% of the issued and paid up capital of DHA Cogen Limited without any consideration having been paid. Consequently, DHA Cogen Limited is classified as an associated company.


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PART IX 9 APPLICATION AND ALLOTMENT INSTRUCTIONS

General instructions 1. ELIGIBLE INVESTORS INCLUDE:

a) Pakistani citizens resident in or outside Pakistan or Persons holding dual nationalities including Pakistani nationality;

b) Foreign Nationals whether living in or outside Pakistan;

c) Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent permitted by their constitutive documents and existing regulations, as the case may be);

d) Mutual Funds, Provident / pension / gratuity funds / trusts, (subject to the terms of the Trust Deed and existing regulations); and

e) Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.

2. COPIES OF THE PROSPECTUS

Copies of the Prospectus and applications forms can be obtained from the Trading Rights Entitlement Certificate (TREC) Holders of PSX, the Bankers to the Issue and their Branches, the Consultant to the issue and the registered as well as head office of the United Bank Limited. The Prospectus and the Application Forms can also be downloaded from the following websites:

(i) http://www.ubldirect.com/; (ii) http://www.bmacapital.com/; and (iii) https://eipo.cdcaccess.com.pk/public/index.xhtml

The applicants are required to complete the relevant sections of the application in order to get the Securities in scrip-less form. In accordance with the provisions of the Central Depositories Act, 1997 and the CDCPL Regulations, credit of such securities are allowed ONLY in the applicant’s own CDC account.

3. NAME(S) AND ADDRESS(ES) MUST BE WRITTEN IN FULL BLOCK LETTERS, IN ENGLISH, AND SHOULD NOT BE ABBREVIATED.

4. ALL APPLICATIONS MUST BEAR THE NAME AND SIGNATURE CORRESPONDING WITH THAT RECORDED WITH THE APPLICANT’S BANKER. IN CASE OF DIFFERENCE OF SIGNATURE WITH THE BANK AND COMPUTERIZED NATIONAL IDENTITY CARD (CNIC) OR NATIONAL IDENTITY CARD FOR OVERSEAS PAKISTANI (NICOP) OR PASSPORT, BOTH THE SIGNATURES SHOULD BE AFFIXED ON THE APPLICATION FORM.

5. APPLICATIONS MADE BY INDIVIDUAL INVESTORS

a) In case of individual investors, a photocopy of the CNIC (in case of resident Pakistanis) / NICOP or Passport (in case of non-resident Pakistanis) as the case may be, should be enclosed and the number of CNIC / NICOP / Passport should be written against the name of the applicant.


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b) Original CNIC / NICOP / Passport, along with a photocopy, must be produced for verification to the Banker to the issue and the applicant’s banker (if different from the Banker to the issue) at the time of presenting an application. The photocopy will, after verification, be retained by the branch along with the application.

6. APPLICATIONS MADE BY INSTITUTIONAL INVESTORS

a) Applications made by companies, corporate bodies, mutual funds, provident / pension / gratuity funds / trusts and other legal entities must be accompanied by a photocopy of their memorandum and articles of association or equivalent instrument / document. Where applications are made by virtue of power of attorney, the same should also be submitted along with the application.

b) Photocopies of the documents mentioned in paragraph 6(a) above must be produced for verification to the Banker to the Issue and the applicant’s banker (if different from the banker to the issue) at the time of presenting the application. The copies, will after verification, be retained by the bank branch along with the application.

7. ADDITIONAL INSTRUCTIONS FOR INVESTORS

a) Only one application will be accepted against each account, however, in case of joint accounts, one application may be submitted in the name of each joint account holder.

b) Joint application in name of more than two persons will not be accepted. In case of joint application each applicant must sign the application form and submit copies of their CNICs / NICOP / Passports. The securities will be credited to the CDS account mentioned on the face of the form and where any amount is refundable, in whole or in part, the same will be refunded by cheque or other means by post, or through the bank where the application was submitted, to the person named first on the application form, without interest, profit, or return. Please note that application will be considered as a single application for the purpose of allotment of securities.

c) Subscription money must be paid by cheque drawn on applicants own bank account or pay order / bank draft payable to one of the Bankers to the Issue in favor of “IPO of United Bank Limited - TFC” and crossed “A/C PAYEE ONLY”.

d) For the application made through pay order / bank draft, it would be permissible for a Banker to the Issue to deduct the bank charges while making refund of subscription money to unsuccessful applicants through pay order / bank draft individually for each application.

e) The applicant should have at least one bank account with any of the commercial banks. The applicants not having a bank account at all (non-account holders) are not allowed to submit application for subscription of securities.

f) Applications are not to be made by minors and / or persons of unsound mind.

g) Applicants should ensure that the bank branch, to which the application is submitted, completes the relevant portion of the application form.

h) Applicants should retain the bottom portion of their application forms as provisional acknowledgment of submission of their applications. This should not be construed as an acceptance of the application or a guarantee that the applicant will be allotted the number of securities for which the application has been made.

i) Making of any false statements in the application or willfully embodying incorrect information therein shall make the application fictitious and the applicant or the bank shall be liable for legal action.


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j) Banker to the issue are prohibited to recover any charges from the subscribers for collecting subscription applications. Hence, the applicants are advised not to pay any extra charges to the Bankers to the issue.

k) It would be permissible for a Banker to the issue to refund subscription money to unsuccessful applicants having an account in its bank by crediting such account instead of remitting the same by cheque, pay order or bank draft. Applicants should, therefore, not fail to give their bank account numbers.

l) Submission of false and fictitious applications is prohibited and such Application Money may be forfeited under section 87(8) of Securities Act, 2015.

m)

8. ADDITIONAL INSTRUCTIONS FOR FOREIGN / NON RESIDENT INVESTORS

a) (In case of Foreign investors who are not individuals, applications must be accompanied with a letter on applicant’s letterhead stating the legal status of the applicant, place of incorporation and operations and line of business. A copy of Memorandum of Association or equivalent document should also be enclosed, if available. Where applications are made by virtue of Power of Attorney, the same must be lodged with the applications. Copies of these documents can be attested by the Bank Manager in the country of applicant’s residence.

b) Foreign / Non-resident investors should follow the payment instructions given in Para (2.13) of the prospectus.

9. BASIS OF ALLOTMENT

The basis and conditions of transfer of securities to the General Public shall be as follows:

a) The minimum amount of application for subscription of TFCs is Rs 5,000/- Application for TFCs below the total value of Rs. 5,000/- shall not be entertained.

b) Application for TFCs must be made for Rs. 5,000/- TFCs or in multiple thereof only. Applications, which are neither for Rs. 5,000/- TFCs nor for multiple thereof, shall be rejected.

c) Allotment/Transfer of TFCs to successful applicants shall be made in accordance with the allotment criteria/ instructions disclosed in the Prospectus.

d) Allotment of TFCs shall be subject to scrutiny of applications in accordance with the criteria disclosed in the Prospectus and/or the instructions by the Securities & Exchange Commission of Pakistan.

e) Applications, which do not meet the above requirements, or applications which are incomplete will be rejected. The applicants are, therefore, required to fill in all data fields in the Application Form.

f) The Issuer will credit the respective CDS accounts of the successful applicants.

10. BANKERS TO THE ISSUE

Code Name of Bank Code Name of Bank

01 Allied Bank Limited 02 Askari Bank Limited

03 Bank Alfalah Limited 04 Bank Al Habib Limited

05 Faysal Bank Limited 06 Habib Metropolitan Bank Limited

07 JS Bank Limited 08 MCB Bank Limited

09 Samba Bank Limited 10 Summit Bank Limited


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11 United Bank Limited

11. CODE OF OCCUPATIONS

Code Occupation Code Occupation

01 Business 06 Professional

02 Business Executive 07 Student

03 Service 08 Agriculturist

04 Housewife 09 Industrialist

05 Household 10 Other

12. PUBLIC SUBSCRIPTION THROUGH e-IPO:

e-IPO is submission of application for subscription of securities electronically through internet, Automated Teller Machines (ATM) and mobile phones. In order to facilitate the public during IPOs, SECP has introduced the concept of e-IPO. The following two systems are available for e-IPOs:

(i) Centralized e-IPO System (CES):

The Central Depository Company of Pakistan Limited (CDC) has developed a Centralized e-IPO System (CES) through which applications for subscription of securities offered to the general public can be made electronically. CES has been made available in this IPO and can be accessed through the web link (www.cdceipo.com). Payment of subscription money can be made through 1LINK’s member banks available for CES, list of which is available on above website.

For making application though CES, investors must be registered with CES. Registration with CES is free of cost and a self-registration process by filling the CES registration form, which is available 24/7 all around the year. Investors who have valid Computerized National Identity Card (CNIC), bank account with any of the commercial bank, email address, mobile phone number and CDS Account (Investor Account or sub Account) may registered themselves with CES.

Investors who do not have CDS account may visit www.cdcpakistan.com for information and details.

For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone Number: 0800 – 23275 (CDCPL) and e-mail: [email protected].

For further detail on CES, please refer to para (2.10).

(ii) e-IPO facilities by Bankers to the Issue:

Currently, United Bank Limited (UBL), Summit Bank Limited (SMBL) and Bank Alfalah (BAFL) are providing e-IPO facilities to their respective accountholders.

UBL account holders can use UBL Net Banking to submit their application via link http://www.ubldirect.com/corporate/ebank

SMBL account holders can use SMBL Net Banking to submit their application via link https://ib.summitbank.com.pk and

BAFL account holders can use BAFL Net Banking to submit their application via link: https://netbanking.bankalfalah.com


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13. Nationality Code

CODE NAME OF COUNTRY CODE NAME OF COUNTRY

001. U.S.A 006. Bangladesh

002. U.K 007. China

003. U.A.E. 008. Bahrain

004. K.S.A. 009. Other

005. Oman

For further queries, you may contact:

Contact details of relevant person of the Issuer Contact details of relevant person of Consultant to the Issue

Attir Ghazaal Ali Muhammad Abdullah

P: +92 21 99033 2310 P: +92 213 246 1068

E: [email protected] E: [email protected]


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PART X 10 SIGNATORIES TO THE PROSPECTUS

Director Designation Signature

Sir Mohammed Anwar Pervez, OBE, HPk Director/Chairman Sd/-

Mr. Zameer Mohammed Choudrey, CBE Director Sd/-

Mr. Haider Zameer Choudrey Director Sd/-

Mr. Rizwan Pervez Director Sd/-

Mr. Arshad Ahmad Mir Director Sd/-

Mr. Khalid A. Sherwani Director Sd/-

Mr. Amar Zafar Khan Director Sd/-

Mr. Tariq Rashid Director Sd/-

Ms. Sima Kamil President & CEO Sd/-

Witness 1 Name: Saeed Iqbal Designation: Group Head - Investment Banking Signature: Sd/-

Witness 2 Name: Arif Saifee Designation: Financial Controller, Head Investor Relations Signature: Sd/-

Dated: October 18, 2018


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PART XI 11 MEMORANDUM OF ASSOCIATION


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12 APPLICATION FORM


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ADVICE FOR INVESTORS - BMA CAPITAL...CDS account, investors may contact CDC at phone Number: 0800...

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