UNCONSOLIDATED CONDENSED INTERIM BALANCE SHEET AS AT JUNE 30, 2008

(Un audited ) (Audited )

Note June 30 December 31
2008 2007
(Rupees in '000)
ASSETS
Cash and balances with treasury banks 75,251,824 57,526,451
Balances with other banks 13,134,646 4,191,128
Lendings to financial institutions 16,524,309 24,781,723
Investments 7 112,591,991 115,585,646
Advances 8 328,551,347 299,354,736
Fixed assets 17,655,274 16,918,844
Other assets 12,305,786 11,925,428
576,015,177 530,283,956

LIABILITIES
Bills payable 5,101,111 6,079,341
Borrowings 9 33,681,345 59,103,350
Deposits and other accounts 10 465,534,964 401,637,816
Sub-ordinated loans 11 11,995,872 5,996,696
Liabilities against assets subject to finance lease - -
Deferred tax liability - net 847,499 2,232,344
Other liabilities 14,234,366 12,813,005
531,395,157 487,862,552
NET ASSETS 44,620,020 42,421,404

REPRESENTED BY
Share capital 12 10,117,188 8,093,750
Reserves 12,819,998 10,261,958
Unappropriated profit 15,837,789 15,653,703
38,774,975 34,009,411

Surplus on revaluation of assets - net 13 5,845,045 8,411,993

44,620,020 42,421,404

CONTINGENCIES AND COMMITMENTS 14 -

The annexed notes 1 to 23 form an integral part of these unconsolidated condensed interim financial statements.

Atif R. Bokhari Dr. Ashfaque Hasan Khan Omar Z. Al Askari Sir Mohammed Anwar Pervez, OBE, HPk
President & Director Director Deputy Chairman
Chief Executive Officer
UNCONSOLIDATED CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED) FOR THE QUARTER & HALF
YEAR ENDED JUNE 30, 2008

Note Apr - Jun Apr - Jun Jan - Jun Jan - Jun

2008 2007 2008 2007
(Rupees in ‘000)

Mark-up / return / interest earned 15 12,013,167 10,084,442 23,169,825 19,731,423

Mark-up / return / interest expensed 16 (5,192,551) (4,022,828) (9,954,021) (7,830,496)
Net mark-up / return / interest income 6,820,616 6,061,614 13,215,804 11,900,927

Provision against non-performing loans and advances - net (1,065,776) (167,100) (1,954,373) (312,276)
General provision against consumer loans 63,908 (47,539) 87,729 (96,964)
Provision for diminution in value of investments - (6,750) - (13,500)
Bad debts written off directly (346,459) (164,819) (677,366) (319,045)
(1,348,327) (386,208) (2,544,010) (741,785)
Net mark-up / return / interest income after provisions 5,472,289 5,675,406 10,671,794 11,159,142

Non mark-up / return / interest income

Fee, commission and brokerage income 1,601,105 1,345,913 3,051,470 2,498,177
Dividend income 218,727 209,695 246,210 339,456
Income from dealing in foreign currencies 477,813 196,129 727,554 423,394
Unrealised gain / (loss) on revaluation of trading securities 3,909 (13,001) (1,202) (3,435)
Other income 17 759,954 416,894 2,010,380 956,670
Total non mark-up / return / interest income 3,061,508 2,155,630 6,034,412 4,214,262
8,533,797 7,831,036 16,706,206 15,373,404
Non mark-up / interest expenses
Administrative expenses 18 (3,936,055) (3,355,426) (7,431,873) (6,270,894)
Other provisions / write offs / reversals (137,823) (76,395) (194,526) (128,617)
Other charges (3,121) (610) (182,272) (1,119)
Total non mark-up / interest expenses (4,076,999) (3,432,431) (7,808,671) (6,400,630)
Profit before taxation 4,456,798 4,398,605 8,897,535 8,972,774

Taxation 19
- Current - for the period (1,805,755) (1,526,591) (3,641,566) (3,154,908)
- Prior (44,986) (438,569) (44,986) (438,569)
- Deferred 86,915 117,324 382,529 251,670
(1,763,826) (1,847,836) (3,304,023) (3,341,807)
Profit after taxation 2,692,972 2,550,769 5,593,512 5,630,967
Unappropriated profit brought forward 13,602,992 11,356,441 15,653,703 12,429,853
16,295,964 13,907,210 21,247,215 18,060,820
Transfer from surplus on revaluation of fixed assets - net of tax 80,420 23,613 160,840 47,227
Profit before appropriations 16,376,384 13,930,823 21,408,055 18,108,047

Appropriations
Transfer to statutory reserve (538,595) (510,220) (1,118,703) (1,126,194)
Final cash dividend for the year ended December 31, 2007
and December 31, 2006 declared in 2008 and 2007
respectively - - (2,428,125) (1,942,500)
Transfer to reserve for issue of bonus shares - - (2,023,438) (1,618,750)
(538,595) (510,220) (5,570,266) (4,687,444)
Unappropriated profit carried forward 15,837,789 13,420,603 15,837,789 13,420,603

(Rupees)
Basic / diluted earnings per share 2.66 2.52 5.53 5.57

The annexed notes 1 to 23 form an integral part of these unconsolidated condensed interim financial statements.

Atif R. Bokhari Dr. Ashfaque Hasan Khan Omar Z. Al Askari Sir Mohammed Anwar Pervez, OBE, HPk
President & Director Director Deputy Chairman
Chief Executive Officer
UNCONSOLIDATED CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED) FOR THE HALF YEAR ENDED
JUNE 30, 2008

Half year Half year

ended June ended June
30, 2008 30, 2007
(Rupees in '000)
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 8,897,535 8,972,774
Less: Dividend income (246,210) (339,457)
8,651,325 8,633,317
Adjustments:
Depreciation 712,386 349,737
Provision for retirement benefits (48,367) 74,625
Provision against loans and advances 1,866,644 409,240
Provision for diminution in value of investments - 13,500
Gain on sale of fixed assets (1,267) (32,720)
Bad debts written-off directly 677,366 319,045
Unrealized loss on revaluation of investments classified as held for trading 1,202 3,435
Provision against other assets 194,526 6,064
3,402,490 1,142,926
12,053,815 9,776,243
(Increase)/ Decrease in operating assets
Lendings to financial institutions 8,257,414 (5,206,275)
Held-for-trading securities (822,372) (2,331,213)
Advances (31,740,621) (33,199,132)
Other assets (excluding advance taxation and dividend receivable) (819,223) (468,898)
(25,124,802) (41,205,518)
Increase/ (Decrease) in operating liabilities
Bills payable (978,230) (351,584)
Borrowings (25,422,005) 996,957
Deposits and other accounts 63,897,148 67,905,168
Other liabilities (excluding current taxation) (8,607) 946,637
37,488,306 69,497,178
24,417,319 38,067,903
Staff retirement benefits received from the funds 166,071 1,021,735
Income tax paid (2,136,071) (527,744)
Net cash flows from operating activities 22,447,319 38,561,894

CASH FLOWS FROM INVESTING ACTIVITIES

Net investment in securities 416,441 (37,278,039)
Dividend income received 244,907 338,352
Investment in fixed assets (1,480,382) (1,143,815)
Proceeds from disposal of property and equipment 30,218 168,535
Net cash flows on investing activities (788,816) (37,914,967)

CASH FLOWS FROM FINANCING ACTIVITIES

Receipt of sub-ordinated loan 5,999,176 (440)
Dividends paid (2,428,125) (1,942,500)
Net cash flows from financing activities 3,571,051 (1,942,940)
Net cash flows 25,229,554 (1,296,013)
Exchange difference on translation of net investment in foreign branches 1,439,337 (52,827)
Increase / (decrease) in cash and cash equivalents 26,668,891 (1,348,840)

Cash and cash equivalents at beginning of the period 61,717,579 62,974,316

Cash and cash equivalents at end of the period 88,386,470 61,625,476

The annexed notes 1 to 23 form an integral part of these unconsolidated condensed interim financial statements.

Atif R. Bokhari Dr. Ashfaque Hasan Khan Omar Z. Al Askari Sir Mohammed Anwar Pervez, OBE, HPk
President & Director Director Deputy Chairman
Chief Executive Officer
UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED) FOR THE
HALF YEAR ENDED JUNE 30, 2008
Capital Reserves
Reserve for
Share Exchange Unappro-
Statutory Issue of Total
Capital Translation priated Profit
Reserve Bonus
Reserve
Shares
------------------------(Rupees in '000)---------------------

Balance as at December 31, 2006 6,475,000 7,029,233 1,269,640 - 12,429,853 27,203,726

Final cash dividend for the year ended December 31,

2006 declared subsequent to year end @ Rs. 3 per share - - - - (1,942,500) (1,942,500)

Transfer to reserve for issue of bonus shares - - - 1,618,750 (1,618,750) -

Issue of bonus shares 1,618,750 - - (1,618,750) - -

Changes in equity during the half year ended June 30, 2007
Profit after taxation for the half year ended June 30, 2007 - - - - 5,630,967 5,630,967

Transfer from surplus on revaluation of fixed assets

to unappropriated profit - net of tax - - - - 47,227 47,227
Exchange difference on translation of net investment
in foreign branches - - (52,827) - - (52,827)
Net expense and income recognised directly in equity - - (52,827) - 47,227 (5,600)

Total recognised income and expense for the period - - (52,827) - 5,678,194 5,625,367

Transfer to statutory reserve - 1,126,194 - - (1,126,194) -

Balance as at June 30, 2007 8,093,750 8,155,427 1,216,813 - 13,420,603 30,886,593

Changes in equity for the half year ended December 31, 2007
Profit after taxation for half year ended December 31, 2007 - - - - 2,771,623 2,771,623

Transfer from surplus on revaluation of fixed assets

to unappropriated profit - net of tax - - - - 15,801 15,801
Exchange difference on translation of net investment
in foreign branches - - 335,394 - - 335,394
Net income recognised directly in equity - - 335,394 - 15,801 351,195

Total recognised income and expense for the period - - 335,394 - 2,787,424 3,122,818

Transfer to statutory reserve - 554,324 - - (554,324) -

Balance as at December 31, 2007 8,093,750 8,709,751 1,552,207 - 15,653,703 34,009,411

Final cash dividend for the year ended December 31,

2007 declared subsequent to year end @ Rs. 3 per share - - - - (2,428,125) (2,428,125)

Transfer to reserve for issue of bonus shares - - - 2,023,438 (2,023,438) -

Issue of bonus shares 2,023,438 - - (2,023,438) - -

Changes in equity during the half year ended June 30, 2008
Profit after taxation for the half year ended June 30, 2008 - - - - 5,593,512 5,593,512

Transfer from surplus on revaluation of fixed assets

to unappropriated profit - net of tax - - - - 160,840 160,840
Exchange difference on translation of net investment
in foreign branches - - 1,439,337 - - 1,439,337
Net income recognised directly in equity - - 1,439,337 - 160,840 1,600,177

Total recognised income and expense for the period - - 1,439,337 - 5,754,352 7,193,689

Transfer to statutory reserve - 1,118,703 - - (1,118,703) -

Balance as at June 30, 2008 10,117,188 9,828,454 2,991,544 - 15,837,789 38,774,975

The annexed notes 1 to 23 form an integral part of these unconsolidated condensed interim financial statements.

Atif R. Bokhari Dr. Ashfaque Hasan Khan Omar Z. Al Askari Sir Mohammed Anwar Pervez, OBE, HPk
President & Director Director Deputy Chairman
Chief Executive Officer
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE HALF YEAR ENDED JUNE 30, 2008

1. STATUS AND NATURE OF BUSINESS

United Bank Limited is a banking company incorporated in Pakistan and is engaged in commercial banking and related services. The bank is listed on all the three stock
exchanges in Pakistan. The bank's registered and principal office is situated in State Life Building No.1, I.I. Chundrigar Road, Karachi. The Bank operates 1,083
(December 31,2007:1078) branches inside Pakistan including the Karachi Export Processing Zone Branch and 17 (December 31, 2007:17) branches outside Pakistan
as at June 30, 2008. The domestic branch network include 5 (December 31,2007:5) Islamic Banking branches.

During 2007, the Bank was admitted to the official list of the UK Listing Authority and London Stock Exchange Professional Securities Market for trading of GDRs issued
by the bank. These GDRs are also eligible for trading on the International Order Book System of the London Stock Exchange. Further, the GDRs constitute an offering in
the United States only to qualified institutional buyers in reliance on Rule 144A under the U.S Securities Act of 1933 and an offering outside the United States in reliance
on Regulation S. Trading in the GDRs on the London Stock Exchange commenced on June 29, 2007.

2. BASIS OF PRESENTATION

In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, the State Bank of Pakistan has issued
various circulars from time to time. Permissible forms of trade-related modes of financing include purchase of goods by banks from their customers and immediate
resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these financial
statements as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon.

The financial results of the Islamic banking branches of the Bank have been consolidated in these unconsolidated condensed interim financial statements for reporting
purposes, after eliminating intra branch transactions / balances. Key financial figures of the Islamic banking branches are disclosed in note 22 to these unconsolidated
condensed interim financial statements.

The disclosures made in these unconsolidated condensed interim financial statements have been limited based on the format prescribed by the State Bank of Pakistan
vide BSD Circular No. 2 dated May 12, 2004 and International Accounting Standard 34, Interim Financial Reporting. They do not include all of the information required for
full annual financial statements, and these unconsolidated condensed interim financial statements should be read in conjunction with the financial statements of the Bank
for the year ended December 31, 2007.

3. STATEMENT OF COMPLIANCE

These unconsolidated condensed interim financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan.
Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board and
Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as are notified under the Companies Ordinance, 1984, the
requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or directives issued by the Securities and Exchange Commission of Pakistan
and the State Bank of Pakistan. Wherever the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or directives issued by the
Securities and Exchange Commission of Pakistan and the State Bank of Pakistan differ with the requirements of IFRS or IFAS, the requirements of the Companies
Ordinance, 1984, Banking Companies Ordinance, 1962 or the requirements of the said directives prevail.

The State Bank of Pakistan has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments: Recognition and Measurement' and
International Accounting Standard (IAS) 40, 'Investment Property' for Banking Companies through BSD Circular No. 10 dated August 26, 2002. Accordingly, the
requirements of these standards have not been considered in the preparation of these financial statements. However, investments have been classified and valued in
accordance with the requirements prescribed by the State Bank of Pakistan through various circulars.

3A. NON-ADJUSTING EVENT

The Board of Directors in its meeting held on July 25, 2008 has announced cash dividend in respect of the half year ended June 30, 2008 of Rs.1.5 per share (June 30, 2007: Nil
).These unconsolidated condensed interim financial information for the period ended June 30, 2008 do not include the effect of this appropriation which will be accounted for
subsequent to the period end.

4. ESTIMATES

The preparation of interim financial statements requires management to make judgement, estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

The significant judgements made by the management in applying the accounting policies and the key sources of estimation uncertainty were the same as those applied
to financial statements for the year ended December 31, 2007.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted in the preparation of these condensed interim financial statements are the same as those applied in the preparation of annual financial
statements of the Bank for the year ended December 31, 2007.

6. FINANCIAL RISK MANAGEMENT

The financial risk management objectives and policies are consistent with those disclosed in the financial statements of the bank for the year ended December 31, 2007.

7. INVESTMENTS

June 30, 2008 December 31, 2007

Held by Given as Held by Given as
bank collateral Total bank collateral Total
Rupees in '000

7.1 Held-for-trading securities 7.2.1 1,092,304 - 1,092,304 269,932 - 269,932

Available-for-sale securities 7.2.2 69,702,159 12,410,440 82,112,599 46,144,808 29,426,386 75,571,194
Held-to-maturity securities 7.2.3 27,010,639 1,367,940 28,378,579 32,227,632 - 32,227,632
Investment in Associates 7.2.4 2,915,398 - 2,915,398 6,047,627 - 6,047,627
Investment in Subsidiaries 7.2.5 2,201,948 - 2,201,948 2,201,948 - 2,201,948

Provision for Diminution in

value of investments (327,755) - (327,755) (351,191) - (351,191)
-
Deficit on revaluation
of available for sale investments (3,591,213) (188,667) (3,779,880) (324,632) (41,109) (365,741)
Deficit on revaluation
of held for trading investments (1,202) - (1,202) (15,755) - (15,755)

Investments (net of provisions) 99,002,278 13,589,713 112,591,991 86,200,369 29,385,277 115,585,646

NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE HALF
YEAR ENDED JUNE 30, 2008

June 30, 2008 December 31, 2007

Given as Given as
Held by Bank Total Held by Bank Total
7.2 Investments by types collateral collateral
(Rupees in '000)
7.2.1 Held for trading securities
Market treasury bills 992,266 - 992,266 - - -
Ordinary shares of listed companies 100,038 - 100,038 269,932 - 269,932
1,092,304 - 1,092,304 269,932 - 269,932
7.2.2 Available for sale securities
Market Treasury Bills 33,070,532 11,500,189 44,570,721 19,510,171 27,889,798 47,399,969
Pakistan Investment Bonds 16,110,939 910,251 17,021,190 15,337,793 1,536,588 16,874,381
Ordinary shares of listed companies 5,588,297 - 5,588,297 3,180,028 - 3,180,028
Government of Pakistan Islamic Bonds 1,033,966 - 1,033,966 1,123,894 - 1,123,894
Term Finance Certificates 471,559 - 471,559 644,122 - 644,122
Foreign currency bonds 10,380,466 - 10,380,466 3,475,078 - 3,475,078
Ordinary shares of unlisted companies 441,238 - 441,238 441,106 - 441,106
Euro Bonds 2,393,579 - 2,393,579 2,170,415 - 2,170,415
Units of mutual funds 211,583 - 211,583 262,201 - 262,201
69,702,159 12,410,440 82,112,599 46,144,808 29,426,386 75,571,194
7.2.3 Held to maturity securities
Term Finance Certificates 5,467,003 - 5,467,003 6,341,257 - 6,341,257
Market Treasury Bills 8,497,631 - 8,497,631 12,883,608 - 12,883,608
Pakistan Investment Bonds 4,517,132 - 4,517,132 4,521,049 - 4,521,049
CIRC Bonds 2,900,000 - 2,900,000 2,900,000 - 2,900,000
Government of Pakistan - Guaranteed
Bonds 1,485,444 - 1,485,444 1,433,444 - 1,433,444
Foreign currency bonds 1,164,736 - 1,164,736 1,055,801 - 1,055,801
Sukkuk Bonds 1,104,997 - 1,104,997 685,000 - 685,000
Foreign securities 285,204 1,367,940 1,653,144 1,498,797 - 1,498,797
Certificates of Deposit 1,537,034 - 1,537,034 853,146 - 853,146
Debentures 7,285 - 7,285 8,300 - 8,300
Participation Term Certificates 43,831 - 43,831 46,920 - 46,920
CDC SAARC Fund 342 - 342 310 - 310
27,010,639 1,367,940 28,378,579 32,227,632 - 32,227,632
7.2.4 Associates
United Islamic Income Fund 250,000 - 250,000 250,000 - 250,000
United Stock Advantage Fund 250,000 - 250,000 250,000 - 250,000
United Composite Islamic Fund 523,048 - 523,048 550,000 - 550,000
United Money Market Fund 1,470,294 - 1,470,294 3,150,646 - 3,150,646
United Growth and Income Fund 250,000 - 250,000 1,750,000 - 1,750,000
UBL Insurers Limited 90,000 - 90,000 90,000 - 90,000
United Capital Protected Fund 75,075 - 75,075 - - -
Oman United Exchange Company, Muscat 6,981 - 6,981 6,981 - 6,981
2,915,398 - 2,915,398 6,047,627 - 6,047,627
7.2.5 Subsidiaries
United National Bank, UK 1,482,011 - 1,482,011 1,482,011 - 1,482,011
United Bank AG Zurich, Switzerland 589,837 - 589,837 589,837 - 589,837
Domestic subsidiaries
United Executors and Trustees
Company Limited 30,100 - 30,100 30,100 - 30,100
UBL Fund Managers Limited 100,000 - 100,000 100,000 - 100,000
2,201,948 - 2,201,948 2,201,948 - 2,201,948
102,922,448 13,778,380 116,700,828 86,891,947 29,426,386 116,318,333
Provision for diminution in value of
investments (327,755) - (327,755) (351,191) - (351,191)

Investments (net of provisions) 102,594,693 13,778,380 116,373,073 86,540,756 29,426,386 115,967,142

Deficit on revaluation of
available for sale securities (3,591,213) (188,667) (3,779,880) (324,632) (41,109) (365,741)
Deficit on revaluation of
held for trading securities (1,202) - (1,202) (15,755) - (15,755)

Total investments 99,002,278 13,589,713 112,591,991 86,200,369 29,385,277 115,585,646

NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE HALF YEAR ENDED
JUNE 30, 2008
June 30 December 31
8. ADVANCES 2008 2007
(Rupees in '000)
Loans, cash credits, running finances, etc.
In Pakistan 256,355,537 240,420,608
Outside Pakistan 70,097,853 63,322,400
326,453,390 303,743,008
Bills discounted and purchased (excluding treasury bills)
Payable in Pakistan 7,497,747 6,046,767
Payable outside Pakistan 5,353,286 4,316,532
12,851,033 10,363,299
339,304,423 314,106,307
Finance in respect of continuous funding system (CFS) 7,271,251 2,631,139
346,575,674 316,737,446
Provision for non-performing advances - specific 8.1 (16,727,001) (16,030,682)
- general 8.2 (1,297,326) (1,352,028)
328,551,347 299,354,736

8.1 Advances include Rs. 22,793 million (December 31, 2007 : 22,012 million) which have been placed under non-performing status as detailed below:-
June 30, 2008
Category of Classification Domestic Overseas Total Provision Provision
Required Held
(Rupees in '000)
Other Assets Especially Mentioned 900,933 - 900,933 - -
Substandard 5,029,036 14,852 5,043,888 1,214,610 1,214,610
Doubtful 2,340,900 104,532 2,445,432 1,184,531 1,184,531
Loss 11,375,839 3,026,664 14,402,503 14,327,860 14,327,860
19,646,708 3,146,048 22,792,756 16,727,001 16,727,001

December 31, 2007

Category of Classification Domestic Overseas Total Provision Provision
Required Held
(Rupees in '000)
Other Assets Especially Mentioned 631,953 - 631,953 - -
Substandard 4,670,464 301,045 4,971,509 1,136,845 1,136,845
Doubtful 2,756,266 3,866 2,760,132 1,337,843 1,337,843
Loss 10,446,102 3,202,715 13,648,817 13,555,994 13,555,994
18,504,785 3,507,626 22,012,411 16,030,682 16,030,682

8.2 General provision represents provision amounting to Rs 1,209.445 million (December 31, 2007: Rs.1,296.496 million) against consumer financing portfolio
as required by the Prudential Regulations issued by State Bank of Pakistan and Rs.87.881 million (December 31, 2007: Rs. 55.532 million) pertaining to
overseas advances to meet the requirements of monetary agencies and regulating authorities of the respective countries in which the overseas branches
operate.
June 30 December 31
9. BORROWINGS 2008 2007
(Rupees in '000)
Secured
Borrowings from State Bank of Pakistan under
- Export refinance scheme 7,646,985 6,708,853
- Long term finance under export oriented projects 4,510,329 4,945,514
- Locally manufactured machinery refinance scheme 1,082 1,620
12,158,396 11,655,987
Repurchase agreement borrowings 13,242,283 32,269,543
25,400,679 43,925,530
Unsecured
Borrowings from other Central Banks 9.1 4,103,651 -
Call borrowings 2,692,536 13,607,326
Overdrawn nostro accounts 1,118,932 912,190
Trading liabilities 365,547 658,304
33,681,345 59,103,350

9.1 This represents borrowings from Central Bank of the UAE carrying interest at the rate of 2.7% maturing by July 7, 2008.

10. DEPOSITS AND OTHER ACCOUNTS

Customers
Fixed deposits 163,369,266 127,317,589
Savings deposits 160,676,230 153,001,867
Sundry Deposits 6,000,581 4,645,873
Margin Deposits 3,633,933 2,746,824
Current Accounts - Remunerative 1,810,825 5,641,419
Current Accounts - Non-remunerative 128,387,737 108,116,175
463,878,572 401,469,747
Financial Institutions
Remunerative deposits 1,617,724 143,603
Non-remunerative deposits 38,668 24,466
1,656,392 168,069
465,534,964 401,637,816
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE HALF YEAR ENDED
JUNE 30, 2008

11. SUBORDINATED DEBT

In February 2008, the Bank issued listed, rated and unsecured 4th Term Finance Certificates of Rs. 6,000 million having a tenor of 10 years. The principal is
redeemable semi-annually and interest is payable at KIBOR+0.85% per annum for the first 5 years and KIBOR+1.35% for the remaining term. The liability of
the Bank is sub-ordinated as to the repayment of principal and profit to all other indebtedness of the Bank (including deposits). The Bank has the right to
exercise the call option after a period of 5 years.
12. SHARE CAPITAL
The Bank in its 49th Annual General Meeting resolved to increase its authorized capital from Rs. 10.2 billion to Rs. 20 billion.

December 31,
June 30, 2008
13. SURPLUS ON REVALUATION OF ASSETS 2007
(Rupees in '000)
Surplus arising on revaluation of assets - net of tax:
Fixed assets 8,480,505 8,641,370
Securities 13.1 (2,635,460) (229,377)
5,845,045 8,411,993
13.1 (Deficit) / surplus on revaluation on available-for-sale securities
Market Treasury Bills (184,094) (70,202)
Pakistan Investment Bonds (1,927,936) (105,316)
Quoted Securities (Shares, Listed TFCs, Mutual funds) (1,082,585) 22,209
Overseas securities (585,265) (212,432)
(3,779,880) (365,741)
Related deferred tax asset 1,144,420 136,364
(2,635,460) (229,377)
14. CONTINGENCIES AND COMMITMENTS
14.1 Direct Credit Substitutes

Contingent liabilities in respect of guarantees given favouring:

Government 9,991,697 5,509,109
Banking companies and other financial institutions 4,204,659 3,939,226
Others 6,644,613 5,687,068
20,840,969 15,135,403
14.2 Transaction-related Contingent Liabilities

Contingent liabilities in respect of performance bonds,

bid bonds, warranties, etc. given favouring
Government 54,725,448 43,946,035
Banking companies and other financial institutions 3,226,549 3,031,393
Others 15,137,449 13,992,900
73,089,446 60,970,328
14.3 Trade-related Contingent Liabilities
Contingent liabilities in respect of letters of credit opened favouring:
Government 59,746,302 60,431,464
Banking companies and other financial institutions 12,958,583 -
Others 88,510,460 88,054,726
161,215,345 148,486,190
14.4 Other Contingencies

Claims against the bank not acknowledged as debts 17,827,377 17,733,578

14.5 Commitments in respect of forward lending

The bank makes commitments to extend credit in the normal course of its business but these being revocable commitments do not attract any significant
penalty or expense if the facility is unilaterally withdrawn.

December 31,
June 30, 2008
2007
(Rupees in '000)
14.6 Other commitments

Forward sale contracts of government securities 40,500 -

Interest rate swaps 14,633,589 3,960,485
Cross currency swaps 14,437,528 9,948,001
Equity futures 13,377 -
Forward rate agreements 2,550,000 -
Sales of securities not yet purchased 364,484 657,226
Commitments in respect of capital expenditure 775,461 128,328

14.7 Commitments in respect of forward exchange contracts

Sale 81,902,804 85,401,033

Purchase 81,482,067 80,877,278
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE HALF YEAR ENDED
JUNE 30, 2008

Jan - Jun Jan - Jun

2008 2007
15. MARK-UP / RETURN / INTEREST EARNED (Rupees in ‘000)

On loans and advances

- Customers 17,527,040 14,722,128
- Financial institutions 317,449 381,020
17,844,489 15,103,148
On investments in
- Securities 4,372,665 3,540,590
- Associates 637 13,666
4,373,302 3,554,256
On deposits with financial institutions 231,506 409,477
On securities purchased under resale agreements 711,522 656,484
Discount income 9,006 8,058
23,169,825 19,731,423
16. MARK-UP / RETURN / INTEREST EXPENSED

On deposits 7,286,198 6,133,181

On securities sold under repurchase agreements 1,239,423 674,026
On other short - term borrowings 715,039 681,090
On other long - term borrowings 612,177 297,402
Discount expense 101,184 44,797
9,954,021 7,830,496

17. OTHER INCOME

Other income includes a sum of Rs. 963.1 million (June 30, 2007:Rs.21.8 million) in respect of income from derivatives.

18. ADMINISTRATIVE EXPENSES

Salaries, allowances etc. 3,469,680 3,007,439

Outsourced service charges including sales commission 783,073 683,211
Contribution to retirement benefit plan (112,110) 59,627
Charge for compensated absences 63,743 70,126
Rent, taxes, insurance, electricity etc. 757,658 549,671
Communications 297,843 250,858
Advertisement and publicity 128,147 236,017
Depreciation 712,386 349,736
Stationery and printing 128,683 128,441
Banking service charge 190,807 184,615
Legal and professional charges 102,656 193,126
Cash transportation charges 99,162 78,712
Travelling 67,310 83,541
Repairs and maintenance 105,483 89,409
Donations 2,327 7,956
Insurance expense 46,180 35,095
Vehicle expenses 52,654 42,799
Office running expenses 50,535 37,669
Entertainment 41,714 31,517
Cartage, freight and conveyance 31,526 25,905
Training and seminar 23,326 50,503
Auditors' remuneration 15,226 13,185
Subscriptions 16,083 12,984
Workers welfare fund 202,673 -
Brokerage expenses 12,187 9,178
Miscellaneous expenses 142,921 39,574
7,431,873 6,270,894
19. TAXATION

The income tax assessments of the bank for domestic branches till the assessment year 2002-2003 (financial year ended December 31, 2001)
have been finalized under normal law and as per the provisions of Repealed Income Tax Ordinance, 1979. The returns for the Tax Years 2003
to 2007 (financial years ended December 31, 2002 to 2006) were filed under the provisions of section 114 of the Income Tax Ordinance, 2001
(Ordinance) and are deemed to be assessed under section 120(1) of the said Ordinance, unless amended by the Commissioner of Income Tax.
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE
HALF YEAR ENDED JUNE 30, 2008

The return for the tax year 2003 was selected for audit under section 177 of the Ordinance and the amended
assessment order has been passed on the basis of audit observations by adding / disallowing certain expenses /
deductions resulting in an additional tax liability of Rs 406 million. Notwithstanding the challenging of the assessment
in appeal before the Appellate Commissioner, on the grounds that the additions are arbitrary and uncalled for, the
management has, on account of prudence, decided to create the provision against the above amount in the financial
statements for the year ended December 31, 2007. The appeal against the said order has been heard by the
Appellate Commissioner and the order is awaited.

For the tax years 2005, 2006 and 2007 taxation authorities have initiated proceedings u/s. 122 (5A) read with the
section 122(9) of the Ordinance. The proceedings have been joined and the required information is being provided.
No order has been passed yet. The management is of the view that there may not arise any material tax liability once
these cases attain finality.

In respect of Azad Kashmir Branches for the tax years 2005, 2006 and 2007 (financial years ended December 31,
2004, 2005 and 2006) returns were filed under the provisions of Section 120(1) read with section 114 of the
Ordinance and in compliance with the terms of agreement between the banks and the Azad Kashmir Council which
were agreed in May 2005. The returns so filed qualify as deemed assessment orders.

20. SEGMENT DETAILS WITH RESPECT TO BUSINESS ACTIVITIES

For the Period Ended June 30, 2008

Corporate Trading & Retail Commercial
Finance Sales Banking Banking
(Rupees in '000)

Total income - gross 602,597 6,671,587 13,848,280 8,081,773

Total expenses (82,184) (5,491,785) (9,273,279) (5,459,454)
Net income / (loss) 520,413 1,179,802 4,575,001 2,622,319
Segment return on assets (ROA) (%) 10.00% 7.30% 11.10% 10.70%
Segment cost of funds (%) 9.70% 7.20% 8.40% 8.50%

For the Period Ended June 30, 2007

Corporate Trading & Retail Commercial
Finance Sales Banking Banking
(Rupees in '000)

Total income - gross 448,817 5,054,513 9,676,857 8,765,498

Total expenses (62,897) (3,798,016) (5,444,597) (5,667,401)
Net income / (loss) 385,920 1,256,497 4,232,260 3,098,097
Segment return on assets (ROA) (%) 7.63% 7.35% 11.35% 10.31%
Segment cost of funds (%) 6.10% 7.47% 4.89% 8.14%

As at June 30, 2008

Corporate Trading & Retail Commercial
Finance Sales Banking Banking
(Rupees in '000)

Segment assets (gross of NPL provisions) 6,802,062 189,055,806 180,962,004 215,922,306

Segment non performing loans (NPL) - - 15,845,173 6,947,583
Segment provision required against NPL - - 11,709,398 5,017,603
Segment liabilities 5,973,494 177,979,226 163,101,537 184,340,900

As at December 31, 2007

Corporate Trading & Retail Commercial
Finance Sales Banking Banking
(Rupees in '000)

Segment assets (gross of NPL provisions) 5,720,519 172,758,380 163,827,587 204,008,152

Segment non performing loans (NPL) - - 18,483,044 3,529,367
Segment provision required against NPL - - 14,368,974 1,661,708
Segment liabilities 4,097,169 169,590,306 141,564,544 172,610,533

21. RELATED PARTY TRANSACTIONS

The Bank has related party relationship with its associates, subsidiary companies, employee benefit plans and its
directors and key management personnel (including their associates).

The Bank enters into transactions with the related parties in the normal course of business.

Contributions to and accruals in respect of staff retirement benefits and other benefit plans are made in accordance
with the actuarial valuations / terms of the contribution plan. Remuneration to the executives are determined in
accordance with the terms of their employment.
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE HALF YEAR
ENDED JUNE 30, 2008

21.1 RELATED PARTY TRANSACTIONS

For the half year ended June 30, 2008 For the year ended December 31, 2007
Key Key
Other
manage- Other related manage-
Subsidiaries Associates Subsidiaries Associates related
ment parties ment
parties
personnel personnel

(Rupees in '000)
Advances
At January 01 92,581 - - - 105,637 - 565 1,000,000
Given during the year 60,681 785,489 - - 46,002 978,224 - -
Repaid during the year (21,995) (785,489) - - (59,058) (978,224) (565) (1,000,000)
At June 30 2008 131,267 - - - 92,581 - - -

Deposits
At January 01 15,340 4,049 231,886 5,865,116 14,337 5,659 11,226 6,160,983
Received during the year 338,173 121,776,678 20,236,252 290,464 294,791 301,007,108 48,419,004 2,432,626
Withdrawn during the year (332,640) (121,776,842) (20,359,940) (2,707,222) (293,788) (301,008,718) (48,198,344) (2,728,493)
At June 30 2008 20,873 3,885 108,198 3,448,358 15,340 4,049 231,886 5,865,116

Outstanding placement at the

end of the year - 351,935 - - - 319,019 - -
Outstanding borrowing at the
end of the period / year - 266,929 - - - - - -
Payable in respect of acquisition
of investment in equity shares - 30,000 - - - 30,000 - -
Distribution commission receivable - 4,978 - - - 7,136 - -
Other receivable - 630 - - - 122 37,954 -
Employee Motivation &
Retention Scheme payable - - - 185,862 - - - 263,181

For the half year ended June 30, 2008 For the half year ended June 30, 2007
Key Key
Other
manage- Other related manage-
Subsidiaries Associates Subsidiaries Associates related
ment parties ment
parties
personnel personnel

(Rupees in '000)

Mark-up / return / interest earned 1,704 363 - - 1,918 23,050 542 18,908
Mark-up / return / interest expensed 39 1,059 47,275 52,281 18 1,602 - 107,191
Reimbursement of liaison office
expenses paid to Bestway and Abu Dhabi Group - - - 19,325 - - - 18,218
Dividend income received - 49,578 - - - 196,888 - -
Other expenses paid - - 112,778 - - 2,586 13,250 -
Other Income - - 962 - - - - -
Insurance Premium - - 94,389 - - - - -
Remuneration paid 181,134 - - - 150,669 - - -
Post employment benefits 5,558 - - - 4,986 - - -
Contribution to defined contribution plan - - - 126,172 - - - 59,298
Contribution to defined benefit plan - - - 176,439 - - - 649,172
Employee Motivation & Retention scheme paid - - - 230,000 131,592
Distribution Commission Income - 1,138 - - - 2,278 - -
Distribution Commission Expense - 3,511 - - - 2,229 - -
Reimbursable Expense Incurred - 2,767 - - - 20 - -
Placements made during the period - 363,099 - - - 6,296,031 - -
Placements settled during the period - 330,182 - - - 6,050,383 - -
Maximum amount of a placement
made during the year - 157,916 - - - 970,644 - -
Borrowing made during the period - 1,220,746 - - - - - -
Borrowing settled during the period - 953,817 - - - - - -
Maximum amount of borrowing
made during the period - 346,800 - - - - - -
Investment made during the period - - 2,159,500 - - 543,600 5,600,000 -
Redemption made during the period - - 5,273,039 - - - 2,069,391 -
Bonus Units received - - 49,578 - - - - -
NOTES TO THE UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED) FOR THE HALF
YEAR ENDED JUNE 30, 2008

22. ISLAMIC BANKING BUSINESS

The balance sheet of the bank's Islamic Banking Branches at June 30, 2008 is as follows:

June 30 December 31
2008 2007
(Rupees in '000)
ASSETS
Cash and balances with treasury banks 328,922 307,448
Lendings to financial institutions - 300,000
Investments 874,711 587,206
Advances 500,075 339,477
Operating fixed assets 804,662 401,909
Other assets 156,352 118,323
Total Assets 2,664,722 2,054,363

LIABILITIES
Bills payable 15,895 17,565
Deposits and other accounts 1,401,351 1,198,688
Other liabilities 962,671 522,034
2,379,917 1,738,287
NET ASSETS 284,805 316,076

REPRESENTED BY
Islamic Banking Fund 470,000 470,000
Unappropriated / Unremitted loss (180,478) (156,130)
289,522 313,870
Surplus / (deficit) on revaluation of assets (4,717) 2,206
284,805 316,076

23. DATE OF AUTHORIZATION

These financial statements were authorised for issue on July 25, 2008 by the Board of Directors of the Bank.

Atif R. Bokhari Dr. Ashfaque Hasan Khan Omar Z. Al Askari Sir Mohammed Anwar Pervez, OBE, HPk
President & Director Director Deputy Chairman
Chief Executive Officer