Transmission of quarterly report of Meezan Bank limited for the period ended march 31, 2026

Meezan

Thc

Bank

Pa kistan Bariging Awarat

April 29, 2026

The General Manager

Pakistan Stock Exchange Limited Stock Exchange Building

Stock Exchange Road Karachi.

FORM-8

MEBL/CS/PSX-21/048/2026

TRANSMISSION OF QUARTERLY REPORT OF MEEZAN BANK LIMITED FOR THE PERIOD ENDED MARCH 31, 2026

Dear Sir,

We have to inform you that the Quarterly Report of Meezan Bank for the period ended March 31a2026 have been transmitted through PUCARS and is also available on Bank's website.

You may please inform the TRE Certificate Holders of the Exchange accordingly. Yours Sincerely,

'

Muhammad Sohail Khan

Company Secretary

Encl: As above.

Meezan Bank Ltd.

Head Office : Meezan House, C-25, Estate Avenue, SITE, Karachi - Pakistan.

PABX: (92-21) 38103500 UAN: 1 1-331-331 & 111-331-332 https://www.meezanbank.com

C O N T E N T S

01

Board of Directors

Shariah Board

Management

Board Audit Committee

Board Risk

Management Committee

Board Human Resources, Remuneration & Compensation Committee

Board Information Technology Committee

Board IFRS 9 Committee

Riyadh S. A. A. Edrees Bader H. A. M. A. AlRabiah Tariq Mahmood Pasha Irfan Siddiqui

Saad Ur Rahman Khan Faisal Fahad AlMuzaini Zine Elabidine Bachiri Abdulrazzaq T.A.M. Razooqi Mohammad Abdul Aleem Nausheen Ahmad

Dr. Syed Amir Ali

Justice (Retd.) Muhammad Taqi Usmani Dr. Muhammad Imran Ashraf Usmani Sheikh Esam Mohamed Ishaq

Mufti Zubair Ahmed

Mufti Muhammad Naveed Alam

Dr. Syed Amir Ali

Mohammad Abdul Aleem Tariq Mahmmod Pasha Saad Ur Rahman Khan Abdulrazzaq T.A.M. Razooqi Irfan Siddiqui

Saad Ur Rahman Khan Bader H. A. M. A. AlRabiah Zine Elabidine Bachiri Abdulrazzaq T.A.M. Razooqi

Riyadh S. A. A. Edrees Mohammad Abdul Aleem Nausheen Ahmad Abdulrazzaq T.A.M. Razooqi Irfan Siddiqui

Saad Ur Rahman Khan Riyadh S. A. A. Edrees Bader H. A. M. A. AlRabiah Irfan Siddiqui

Riyadh S. A. A. Edrees Faisal Fahad AlMuzaini Tariq Mahmood Pasha

Chairman

Vice Chairman

President & CEO Chairman

Resident Shariah Board Member President & CEO

Resident Shariah Board Member Chief Financial Officer

Company Secretary Auditors

Legal Adviser

Registered Office and Head Office

E-mail Website

Shares Registrar

Mufti Muhammad Naveed Alam Syed Imran Ali Shah Muhammad Sohail Khan

A. F. Ferguson & Co., Chartered Accountants Haidermota & Co. Advocates

Meezan House

C-25, Estate Avenue, SITE, Karachi - 75730, Pakistan

Phone: (92-21) 38103500, 37133500, Fax: (92-21) 36406056

24/7 Call Centre: (92-21) 111-331-331 & 111-331-332

info@meezanbank.com

https://www.meezanbank.com https://www.meezanbank.pk

THK Associates (Pvt.) Ltd

Plot No, 32-C, Jami Commercial, Street 2, DHA, Phase VII, Karachi - 75500, Pakistan Phone: (92-21) 111-000-322, 35310191-6

Email: secretariat@thk.com.pk, sfc@thk.com.pk Website: www.thk.com.pk

03

MEBL MAR-2026

The Board of Directors is pleased to present the condensed interim unaudited unconsolidated and consolidated financial statements of Meezan Bank Limited for the quarter ended March 31, 2026.

While Pakistan's macroeconomic environment had been showing signs of stabilisation following the crises of 2022-2024, the recent escalation of conflict in the Middle East poses risks to this recovery. Disruptions to key shipping routes have driven fuel prices to their highest levels since 2022, increasing the likelihood of renewed inflationary pressures. Notwithstanding these challenges, the Federal Government continues to advance policy measures and structural reforms aimed at sustaining macroeconomic stability and reinforcing investor confidence, particularly through ongoing energy sector reforms to improve long-term efficiency and sustainability.

After a sustained period of disinflation, inflationary pressures have begun to re-emerge, with inflation rising to 7.3% in March 2026 compared to 0.7% in the corresponding period last year. Despite this uptick, the State Bank of Pakistan has maintained the policy rate at 10.5% since the beginning of the calendar year, however, this is likely to change if the status quo persists. Meanwhile, capital markets have responded to heightened global uncertainty, with the Pakistan Stock Exchange declining by 15% to close at 148,743 points, compared to 174,054 points at the end of 2025.

Workers' remittances remained a key source of external support, reaching USD 30.3 billion during the first nine months of FY2026, reflecting a year-on-year increase of 8.2%. During the period, Pakistan received USD 1.2 billion under the IMF's Extended Fund Facility programme, while a staff-level agreement was reached in March 2026 for an additional USD 1.2 billion, subject to IMF Executive Board approval. Supported by these inflows, foreign exchange reserves increased to USD

21.8 billion as at 31 March 2026. These developments, alongside continued measures to strengthen foreign exchange market stability, have contributed to relative exchange rate stability, with the Pakistani Rupee appreciating marginally to Rs 279.2 per US dollar from Rs 280.1 at 31 December 2025.

Looking ahead, prudent policy management will remain critical to containing inflationary pressures, supporting economic growth and sustaining the gradual improvement in the country's fiscal and external positions.

With the grace of Almighty Allah, Meezan Bank delivered solid financial performance for the quarter ended March 31, 2026. The Bank reported a Profit after Tax (PAT) of Rs 23.4 billion, compared to Rs 22.0 billion in the corresponding period last year, reflecting an increase of 6%. Basic Earnings per Share stood at Rs 13.00 for the current quarter, as against Rs 12.28 reported in the same period last year. The Bank's Return on Equity (ROE) was recorded at 34.0%, while Return on Assets (ROA) stood at 2.0% for Q1'26. Alhamdulillah, the Bank has consistently maintained its Return on Equity (ROE) above the industry average, in line with its commitment to delivering sustained value to shareholders. A continued focus on profitability, combined with a prudent approach to balancing dividend pay-outs and profit retention, has supported strong internal capital generation. As a result, the Bank's Capital Adequacy Ratio (CAR) remains robust at above 19%.

The Board of Directors is pleased to announce the approval of an interim cash dividend of Rs 7.50 (75%) for the quarter ended March 31, 2026. The Bank takes pride in its longstanding track record of consistently distributing dividends each year since its listing on the Pakistan Stock Exchange. Meezan Bank continued to rank among the most valuable banks in Pakistan, with a market capitalization of USD 2.92 billion, closing the quarter at Rs 815 billion. This reflects investors' continued confidence in the Bank's management, financial performance and growth outlook. A summary of the Bank's financial highlights is presented below.

04

Returns from financing, investments and placements registered a slight decline, amounting to Rs

105.8 billion compared to Rs 107.6 billion in the corresponding period last year. This reduction is primarily attributable to the lower policy rate environment prevailing during the quarter. The Policy Rate averaged 10.5% during the current period, compared to 12.3% in March 2025, reflecting a decrease of 180 basis points. However, the impact of rate decline was largely offset by increase in assets volume driven by growth in deposit. Returns paid on deposits and other dues also declined modestly to Rs 44.4 billion, as against Rs 45.8 billion in March 2025, representing a decrease of 3%. Consequently, the Bank's net spread remained largely stable at Rs 61.4 billion for the current quarter, compared to Rs 61.8 billion in the corresponding period last year, reflecting a marginal decrease of 1%.

Fee, commission and other income exhibited strong growth during the quarter, increasing by 36% to Rs 11.2 billion, compared to Rs 8.2 billion in March 2025. Core fee and commission income rose by 26% to Rs 6.9 billion, driven primarily by higher contributions from debit card usage, branch banking services and trade-related activities. Foreign exchange income also recorded an improvement over the corresponding period last year, rising to Rs 1.8 billion from Rs 1.6 billion in Q1 2025, mainly supported by increased trade and home remittance flows.

Total expenses have increased to Rs 23.2 billion in Q1 2026 from Rs 19.6 billion in Q1 2025. As a result, the Bank's cost-to-income ratio for March 2026 quarter is 32% which is amongst the lowest in the industry. The rise in expenses from corresponding period last year is attributable to

05

opening of 63 new branches from Q1 2025, higher staff and information technology expenses as well as inflationary impacts. Further customer onboarding and communication expenses have also increased which are directly linked with growth in business volumes. The Bank remains committed to cost rationalization and the implementation of process automation initiatives aimed at enhancing operational efficiency and achieving a more streamlined operating model.

Total assets have remained roughly at the same level since the year-end 2025, closing at Rs 4.79 trillion as at March 2026. Investments portfolio slightly increased by 3% compared to December 2025, reaching Rs 2.68 trillion as opposed to Rs 2.60 trillion at December 2025. The Bank has been able to increase its investments due to the regular Sukuk auctions by the Government of Pakistan which has eased liquidity management challenges historically faced by Islamic Banking Industry (IBI). Gross financing portfolio decreased by 9% from Rs 1.69 trillion as at December 2025 to Rs

1.54 trillion at the end of the current quarter, translating into an Advances to Deposits Ratio (ADR) of 42.5%.

Meezan Bank continues to maintain strong asset quality, outperforming industry benchmarks, with a non-performing financing ratio of 2.0%. The Bank also sustains a prudent level of provisioning against non-performing financings, resulting in a healthy coverage ratio of 151%.

The Bank's deposit portfolio registered strong growth of 10% compared to December 2025, reaching Rs 3.62 trillion as at the end of the quarter. Current Account (CA) deposits constituted slightly over 50% of the total deposit base, amounting to Rs 1.84 trillion, while Savings Account (SA) deposits grew by 6% to close at Rs 1.51 trillion as at March 2026. Collectively, Current and Savings Account (CASA) deposits represented 93% of the total deposit portfolio, aggregating to Rs 3.36 trillion. The Bank's consistent growth in deposits reflects the continued trust and confidence placed in it by its customers.

Meezan Bank remains committed to its digital transformation strategy, focused on enhancing customer experiences and optimizing back-office operations. Adopting a hybrid growth model, the Bank has expanded its physical presence in underserved areas while continuing to onboard customers through digital channels. Strategically distributed across the country, Meezan Bank operates 1,115 branches across 365 cities, complemented by an ATM network exceeding 1,350 touchpoints nationwide.

The VIS Credit Rating Company Limited has reaffirmed Meezan with highest possible credit rating - 'AAA' (Triple A) rating for the Long Term and an 'A1+' (A-One Plus) rating for the Short Term, maintaining a stable outlook.

Meezan Bank remains steadfast in its commitment to fostering economic growth and reinforcing the financial stability of Pakistan through the progressive advancement of the Islamic banking sector. The Bank continues to align its strategic direction with the Government's vision for Islamic finance, consistent with the constitutional mandate, to support the transformation of the national economy towards a fully Shariah-compliant financial system. Its strategy is centred on achieving balanced and sustainable growth, enhancing sectoral diversification and maintaining strong regulatory compliance and financial soundness above the prescribed thresholds. The Bank is also expanding its presence across both physical and digital platforms, with a continued focus on delivering leading-edge digital banking solutions to reinforce its position as an industry leader.

While ongoing geopolitical tensions in the Middle East present potential challenges, including market volatility and inflationary pressures, the Bank's robust capital base, prudent risk management and diversified operations position it to maintain resilience, support economic activity and uphold investor and depositor confidence.

06

The Board conveys its sincere appreciation to the State Bank of Pakistan, the Ministry of Finance and the Securities and Exchange Commission of Pakistan for their ongoing support and dedication to the development of a robust Islamic financial ecosystem in the country. The Board further extends its gratitude to the Bank's valued customers for their continued trust and confidence. It also acknowledges the guidance and support of the Board of Directors, the Shariah Board, shareholders and the holders of Additional Tier I Sukuk and Subordinated Sukuk (Tier II), whose collective contributions have been instrumental in establishing Meezan Bank as Pakistan's premier Islamic banking institution.

The Board also expresses its deep appreciation for the Bank's employees, whose commitment, professionalism and sustained efforts continue to drive the advancement of Islamic banking. Above all, the Board expresses its sincere gratitude to Allah Almighty for His enduring blessings upon the Bank and its people, which have made these achievements possible within a relatively short span of time. The Board prays for His continued guidance and strength as the Bank strives towards its vision of establishing "Islamic banking as the banking of first choice."

Chairman

On behalf of the Board

Karachi:

April 23, 2026

President & CEO

07

09

10

CONDENSED INTERIM UNCONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

The annexed notes 1 to 42 form an integral part of this condensed interim unconsolidated financial information.

Chairman

President & CEO

Director

Director

Chief Financial Officer

CONDENSED INTERIM UNCONSOLIDATED STATEMENT OF PROFIT AND LOSS ACCOUNT (UNAUDITED)

Profit / return earned on Islamic financing and

The annexed notes 1 to 42 form an integral part of this condensed interim unconsolidated financial information.

Chairman

President & CEO

Director

Director

Chief Financial Officer

13

CONDENSED INTERIM UNCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

Profit after taxation for the quarter

• Movement in deficit on revaluation of debt investments through FVOCI - net of tax

• Gain on derecogination of Debt investments at FVOCI reclassified to profit or loss - net of tax

  Items that will not be reclassified to profit and loss account in subsequent periods:

• Movement in surplus on revaluation of equity investments through FVOCI - net of tax

22,047,598

(9,371,091)

(5,180)

116,829

12,788,156

The annexed notes 1 to 42 form an integral part of this condensed interim unconsolidated financial information.

Chairman

14

President & CEO

Director

Director

Chief Financial Officer

CONDENSED INTERIM UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Balance as at January 01, 2025

Profit after taxation for the quarter

17,947,407

3,104,253

40,767,834

3,117,547

945,867

66,766

22,141,192

- 158,893,426 246,984,292

ended March 31, 2025

Other Comprehensive loss for the quarter ended March 31, 2025 - net of tax

• Movement in deficit on revaluation of

  investments in debt instruments at FVOCI - net of tax

• Gain on sale of debt investments carried at FVOCI reclassified to profit or loss account - net of tax

• Movement in surplus on revaluation of equity investments carried at FVOCI - net of tax

  Total other comprehensive loss - net of tax

  Transfer from surplus on revaluation of assets to unappropriated profit - net of tax

  Recognition of share based compensation

  Other appropriations

  Transfer to statutory reserve*

  Transactions with owners recognised directly in equity

  - - -

  -

  -

  -

  -

  -

  -

  -

  -

  -

  - - -

  - - -

  - - -

  - - 2,204,760

  - -

  -

  -

  -

  -

  -

  -

  - -

  - -

  - 157,299

  - -

  - -

  (9,371,091)

  (5,180)

  116,829

  -

  -

  -

  - (9,259,442)

  - (218,813)

  - -

  - -

  - 22,047,598

  -

  -

  -

  -

  -

  -

  - -

  - 218,813

  - -

  - (2,204,760)

  22,047,598

  (9,371,091)

  (5,180)

  116,829

  (9,259,442)

  -157,299

  -

  Final cash dividend for the year 2024 @ Rs 7 per share

  - - - - - -

  - - (12,563,185) (12,563,185)

  Balance as at March 31, 2025

  17,947,407

  3,104,253 42,972,594

  3,117,547

  1,103,166

  66,766

  12,662,937

  - 166,391,892 247,366,562

  Profit after taxation for the nine months period ended December 31, 2025

  Other comprehensive income for the nine months period ended December 31, 2025 - net of tax

• Movement in surplus on revaluation of investments in debt instruments at FVOCI - net of tax

• Gain on sale of debt investments carried at FVOCI reclassified to profit or loss account - net of tax

• Remeasurement loss on valuation of employee retirement benefits

• Movement in surplus on revaluation of equity investments carried at FVOCI - net of tax

  Total other comprehensive income - net of tax

  Transfer from surplus on revaluation of assets to unappropriated profit - net of tax

  Recognition of share based compensation

  Other appropriations

  Transfer to statutory reserve*

  Transactions with owners recognised directly in equity First interim cash dividend for the year 2025 @ Rs 7 per share Second interim cash dividend for the year 2025 @ Rs 7 per share Third interim cash dividend for the year 2025 @ Rs 7 per share

  Issue of 5,813,938 shares under the Employees shares option scheme

  -

  -

  -

  -

  -

  -

  -

  -

  -

  -

  -

  -

  -58,139

  -

  -

  -

  -

  -

  -

  -

  -

  -

  -

  -

  -

  -774,981

  -

  -

  -

  -

  -

  -

  -

  -6,699,365

  -

  -

  -

  -

  -

  - -

  -

  -

  -

  -

  -

  -

  -

  -

  - -

  - -

  - 591,599

  -

  -

  -

  - -

  -

  -

  -

  - -

  - (469,823)

  - -

  716,417

  (450,333)

  -1,471,531

  -

  -

  -

  -

  - 1,737,615

  - (20,442)

  - -

  -

  -

  -

- -

-

-

-

- -

- -

- 66,993,652

-

-(78,863)

-

-

-

-

-

- (78,863)

- 20,442

- -

-

-

-

- (6,699,365)

(12,563,185)

(12,603,883)

(12,603,883)

- (37,770,951)

- 54,212

66,993,652

716,417

(450,333)

(78,863)

1,471,531

1,658,752

-591,599

-

(12,563,185)

(12,603,883)

(12,603,883)

(37,770,951)

417,509

Balance as at December 31, 2025

18,005,546

3,879,234

49,671,959

3,117,547

1,224,942

66,766

14,380,110

- 188,911,019 279,257,123

15

CONDENSED INTERIM UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Balance as at December 31, 2025

Profit after taxation for the quarter ended

18,005,546

3,879,234

49,671,959

3,117,547

1,224,942

66,766

14,380,110

- 188,911,019 279,257,123

March 31, 2026 -

Other Comprehensive income for the quarter ended March 31, 2026 - net of tax

• Movement in deficit on revaluation of investments in debt instruments at FVOCI - net of tax

• Gain on derecognition of Debt investments at FVOCI reclassified to profit or loss - net of tax

• Movement in surplus on revaluation of investments in equity instruments at FVOCI - net of tax

Total other comprehensive loss - net of tax -

Transfer from surplus on revaluation of assets to unapprorpriated profit - net of tax -

Recognition of share based compensation -

Other appropriations

Transfer to statutory reserve* -

Transactions with owners recognised directly in equity

Final cash dividend for the year 2025 @ Rs 7 per share -

- -

- -

- -

- -

- 2,340,468

- -

- -

- -

- -

- 200,057

- -

- -

- -

- (11,241,636)

- (22,667)

- -

- -

- -

- 23,404,677

- -

- 22,667

- -

- (2,340,468)

- (12,603,883)

23,404,677

(11,241,636)

-200,057

-

(12,603,883)

Balance as at March 31, 2026

18,005,546 3,879,234 52,012,427 3,117,547 1,424,999 66,766

3,115,807 - 197,394,012 279,016,338

*This represents reserve created under section 21(i)(b) of the Banking Companies Ordinance, 1962.

The annexed notes 1 to 42 form an integral part of this condensed interim unconsolidated financial information.

Chairman

16

President & CEO

Director

Director

Chief Financial Officer

CONDENSED INTERIM UNCONSOLIDATED C ASH FLOW STATEMENT (UNAUDITED)

Profit before taxation Less: Dividend income

Depreciation

Net profit / return Amortisation

Non cash items related to right-of-use assets Credit loss allowance and write offs - net Share based compensation expense Unrealised gain - FVTPL

Gain on sale of property and equipment

Due from financial institutions Islamic financings and related assets Other assets

Bills payable

Due to financial institutions Deposits and other accounts Other liabilities

Net profit / return received Net profit / return paid Income tax paid

Net (investments) / redemption in amortised cost securities Net (investments) / redemption in securities classified as FVOCI Net (investments) / redemption in securities classified as FVTPL Dividends received

Investments in property and equipment Investments in intangible assets

Proceeds from sale of property and equipment

Payment of lease liability against right-of-use assets Dividend paid

Cash and cash equivalents at the beginning of the quarter

Impact of net credit loss allowance on cash and cash equivalents during the quarter

29

29

25 & 29

31

38

27

28

35

35

48,978,578

(1,116,328) 47,862,250

(57,870,510)

(10,008,260)

159,528,898

(12,636,384) 136,884,254

48,959,347

(44,337,806)

(28,357,979) 113,147,816

(107,698,861)

(12,575,809)

(7,126,854)

343,157,486

(989)

336,029,643

48,478,588

(707,136) 47,771,452

(57,412,916)

(9,641,464)

101,252,665

108,782,064 200,393,265

55,645,222

(46,447,074)

(11,862,759) 197,728,654

(201,312,524)

(1,148,424)

(4,732,294)

272,075,918

(1,990)

267,341,634

The annexed notes 1 to 42 form an integral part of this condensed interim unconsolidated financial information.

Chairman

President & CEO

Director

Director

Chief Financial Officer

17

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

Meezan Bank Limited (the Bank) was incorporated in Pakistan on January 27, 1997, as a public limited company under the Companies Act, 2017 (previously Companies Ordinance, 1984), and its shares are quoted on the Pakistan Stock Exchange Limited. The Bank was registered as an 'Investment Finance Company' on August 8, 1997, and carried on the business of investment banking as permitted under SRO 585(I)/87 dated July 13, 1987, in accordance and in conformity with the principles of Islamic Shariah. A 'Certificate of Commencement of Business' was issued to the Bank on September 29, 1997.

The Bank was granted a 'Scheduled Islamic Commercial Bank' license on January 31, 2002 and formally commenced operations as a Scheduled Islamic Commercial Bank with effect from March 20, 2002, on receiving notification in this regard from the State Bank of Pakistan (the SBP) under section 37 of the State Bank of Pakistan Act, 1956. Currently, the Bank is engaged in corporate, commercial, consumer, investment and retail banking activities.

The Bank was operating through One thousand one hundred and fifteen branches as at March 31, 2026 (December 31, 2025: One thousand one hundred and five branches). Its registered office is at Meezan House, C-25, Estate Avenue, SITE, Karachi, Pakistan.

'The VIS Credit Rating Company Limited (VIS) has reaffirmed the Bank's medium to long-term rating as 'AAA' and short-term rating as 'A1+' on June 30, 2025 based on unconsolidated financial statements for the year ended December 31, 2024.

1. BASIS OF PRESENTATION

   The Bank provides Islamic financing and related assets mainly through Murabaha, Istisna, Tijarah, Ijarah, Diminishing Musharakah, Running Musharakah, Bai Muajjal, Musawammah, Service Ijarah, Wakalah, Wakalah Tul Istithmar including under Islamic Export Refinance Scheme and various long term islamic refinancing facilities of the State Bank of Pakistan respectively.

   The purchases and sales arising under these arrangements are not reflected in these unconsolidated financial statements as such but are restricted to the amount of facility actually utilised and the appropriate portion of profit thereon. The income on such financing is recognised in accordance with the principles of Islamic Shariah. However, income, if any, received which does not comply with the principles of Islamic Shariah is recognised as charity payable if so directed by the Resident Shariah Board Member (RSBM) of the Bank.

2. STATEMENT OF COMPLIANCE

   1. This condensed interim financial information (here-in-after referred to as "financial information") has been prepared in accordance with the accounting and reporting standards as applicable in Pakistan for interim financial reporting. The accounting and reporting standards as applicable in Pakistan for interim financial reporting comprise of:

      • International Accounting Standard (IAS) 34, International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as are notified under the Companies Act, 2017;

      • Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as are notified under the Companies Act, 2017;

      • Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017; and

      • Directives issued by the State Bank of Pakistan (SBP) and the Securities Exchange Commission of Pakistan (SECP).

      Whenever the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 or the directives issued by the SBP and the SECP differ with the requirements of IFRS or IFAS, the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 and the said directives, shall prevail.

      18

      NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

      FOR THE QUARTER ENDED MARCH 31, 2026
   3. 3.3.1

The disclosures made in these unconsolidated condensed interim financial statements have been limited based on the format prescribed by the SBP through BPRD Circular Letter No. 02 dated February 09, 2023 and the requirements of International Accounting Standard 34, "Interim Financial Reporting". They do not include all the information and disclosures required for annual financial statements, and therefore should be read in conjunction with the annual audited unconsolidated financial statements of the Bank for the year ended December 31, 2025.

There are certain new and amended standards, interpretations and amendments that have become applicable for the Bank's accounting periods beginning on January 1, 2026 but are considered not to be relevant or do not have any significant effect on the Bank's operations and are therefore not detailed in these condensed interim unconsolidated financial statements.

The SBP has directed the Banks through its BPRD Circular Letter No. 01 dated January 22, 2025 to continue the existing revenue recognition methodology, including the requirements of IFAS 1 and IFAS 2 until further instructions. Had IFRS 9 been adopted in its entirety for revenue recognition from Islamic operations, profit / return earned on Islamic financing and related assets in unconsolidated statement of profit and loss account for the quarter ended March 31, 2026 would have been lower by Rs 2,123 million and taxation would have been lower by Rs 1,104 million. Further, unappropriated profit in unconsolidated statement of changes in equity would have been higher by Rs 2,130 million (December 31, 2025: Rs. 3,149 million).

In addition, the SBP in a separate instructions BPRD/RPD/822456/25 dated January 22, 2025 allowed extension for application of Effective Profit Rate up to December 31, 2025. Based on management assessment and in light of other applicable SBP's instructions, the Bank has implemented EIR during the quarter on its investment in GoP sukuk.

The following revised standards, amendments and interpretations with respect to the accounting and reporting standards would be effective from the dates mentioned below against the respective standards, amendments or interpretations:

- IFRS 18 - 'Presentation and Disclosure in Financial Statements' January 1, 2027

The management is in the process of assessing the impact of these standards and amendments on the condensed interim unconsolidated financial statements of the Bank.

These unconsolidated financial statements have been prepared under the historical cost convention, except for certain non banking assets acquired in satisfaction of claims which are stated at revalued amounts, investment classified at fair value through profit or loss and fair value through other comprehensive income, commitments in respect of certain foreign exchange contracts which are measured at fair value, staff retirement benefits and compensated absences which are carried at present value.

Items included in these condensed interim unconsolidated financial statements are measured using the currency of the primary economic environment in which the Bank operates. These condensed interim unconsolidated financial statements are presented in Pakistani Rupees, which is the Bank's functional and presentation currency.

Figures have been rounded off to the nearest thousand rupees unless otherwise stated.

The basis for accounting estimates adopted in the preparation of these condensed interim unconsolidated financial statements are the same as that applied in the preparation of the annual audited unconsolidated financial statements of the Bank for the year ended December 31, 2025.

19

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

1. SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL RISK MANAGEMENT POLICIES

   The accounting policies applied in the preparation of these condensed interim unconsolidated financial statements are the same as applied in the preparation of the annual audited unconsolidated financial statements of the Bank for the year ended December 31, 2025.

   The financial risk management objectives and policies adopted by the Bank are consistent with those disclosed in the annual audited unconsolidated financial statements for the year ended December 31, 2025.

2. CASH AND BALANCES WITH TREASURY BANKS Note March 31, 2026 (Unaudited) December 31, 2025 (Audited)

   In hand
   - local currency		80,604,407		53,186,875
   - foreign currencies		4,127,976		2,774,219
   With the State Bank of Pakistan in:		84,732,383		55,961,094
   - local currency current accounts		111,353,973		177,334,102
   - foreign currency current accounts		16,768,378		17,725,572
   	6.1	128,122,351		195,059,674
   With the National Bank of Pakistan in:
   - local currency current accounts		75,518,211	79,533,880
   National Prize Bonds	6.2	270	270

   Rupees in 000

   Less: Credit loss allowance held against cash and balances with treasury banks

   (4,027)

   (12,100)

   Cash and balances with treasury banks - net of

   credit loss allowance

   288,369,188

   330,542,818

   6.1 6.2

   These include local and foreign currency amounts required to be maintained by the Bank with the SBP under the Banking Companies Ordinance, 1962 and / or stipulated by the SBP. These accounts are non-remunerative in nature.

   These represent the national prize bonds received from customers for onward surrendering to SBP. The Bank, as a matter of Shariah principle, does not deal in prize bonds.

   March 31, 2026 (Unaudited) December 31, 2025 (Audited)
3. BALANCES WITH OTHER BANKS

   In Pakistan

   Rupees in 000

   6,843,087

   19,673,459

• in current accounts

  Outside Pakistan

• in current accounts

  	26,516,546	3,542,098
  Less: Credit loss allowance held against balances with other banks	(31,757)	(22,695)
  Balances with other banks - net of credit loss allowance	47,894,934	15,388,174

• in deposit accounts

7.1

11,868,771

It represent the balance in the remunerative account maintained with financial institutions outside Pakistan. The return on these balances ranges from 1.37% to 2.50% (December 31, 2025: Nil) per annum.

20

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

1. DUE FROM FINANCIAL INSTITUTIONS Rupees in 000

   Bai Muajjal receivable from other Financial Institution		15,500		15,500
   Musharakah placements - outside Pakistan - unsecured	8.1	5,583,066		12,325,416
   		5,598,566		12,340,916
   Less: Credit loss allowance held against due from financial institutions	8.2	(15,838)		(15,691)
   Due from financial institutions - net of provision		5,582,728		12,325,225

   1. The effective average return on this product is 3.65% (December 31, 2025: 3.83%) per annum. The balance has matured in April 2026 (December 31, 2025: January 2026).

      March 31, 2026 (Unaudited) December 31, 2025 (Audited) Due from financial institutions Credit loss allowance held Due from financial institutions Credit loss allowance held

      8.2	Category of classification
      	Performing - Stage 1	-	-	8,403,693	13
      	Under performing - Stage 2	5,583,066	338	3,921,723	178
      	Non-performing - Stage 3 (Loss)	15,500	15,500	15,500	15,500
      	Total	5,598,566	15,838	12,340,916	15,691

      Rupees in 000

      21

      NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

      FOR THE QUARTER ENDED MARCH 31, 2026
2. INVESTMENTS March 31, 2026 (Unaudited) December 31, 2025 (Audited)

   1,236,865	-	-	1,236,865
   76,761	-	10,450	87,211
   933,000	-	6,131	939,131

   cost					cost
   2,246,626	-	16,581	2,263,207		1,919,244	-	26,158	1,945,402
   2,217,250,091	318,565	6,491,265	2,223,422,791		2,108,784,785	318,783	29,958,562	2,138,424,564
   451,913,998	-	-	451,913,998		454,544,838	-	-	454,544,838

   1. Investments by types: Cost / amortised Credit loss allowance Surplus / (deficit) Cost / amortised Credit loss allowance Surplus / (deficit) FVTPL securities

      • Federal Government securities

      • Units of mutual funds

      • Non Government Sukuk

        FVOCI securities

        2,184,610,920	-	1,855,343	2,186,466,263
        11,553,652	-	4,488,451	16,042,103
        10,293,472	317,379	235,217	10,211,310
        10,792,047	1,186	(87,746)	10,703,115

      • Federal Government Securities

      • Shares

      • Non Government Sukuk

      • Foreign Securities

        Amortized Cost securities

      • Federal Government Securities

        In related parties Associates

      • Units of mutual funds

        Subsidiaries

      • Shares

      859,286 - 1,063,050 -
      
      - 859,286 - 1,063,050

      909,861	-	-	909,861
      76,383	-	19,594	95,977
      933,000	-	6,564	939,564

      2,078,057,070	-	22,244,965	2,100,302,035
      9,552,908	-	7,628,487	17,181,395
      10,355,525	317,597	22,659	10,060,587
      10,819,282	1,186	62,451	10,880,547

      859,286 -

      1,063,050 -

      - 859,286

      - 1,063,050

      Total Investments 2,673,333,051 318,565 6,507,846 2,679,522,332 2,567,171,203 318,783 29,984,720 2,596,837,140
      1. Details of investment in subsidiary and associates

         Percentage

         March 31, 2026 (Unaudited)

         Profit /

         Total

         Market

         	of holding %	Assets	Liabilities	Revenue	(loss) after taxation	comprehensive income / (loss)	value / net asset share
         Subsidiaries (unlisted) Al Meezan Investment Management Limited	65.00%	9,183,145	3,225,322	1,611,789	250,036	250,036	N/A
         Meezan Exchange Company (Private) Limited Associates (open ended - listed)	100.00%	1,535,441	21,729	(16,117)	(17,787)	(17,787)	N/A
         Meezan Balanced Fund	10.82%	4,562,414	85,066	(407,248)	(455,216)	(455,216)	484,581
         Al Meezan Mutual Fund	4.79%	21,013,763	215,827	(3,881,967)	(4,143,427)	(4,143,427)	996,396
         Meezan Islamic Fund	3.13%	58,178,946	704,383	(9,594,148)	(10,278,496)	(10,278,496)	1,798,893
         Meezan Rozana Amdani Fund	0.00%	21,365,427	40,682	597,828	515,467	515,467	517
         Meezan Gold Fund	3.20%	11,196,706	77,923	1,522,630	1,450,198	1,450,198	355,862
         KSE Meezan Index Fund	5.35%	6,469,685	57,051	(989,656)	(1,016,387)	(1,016,387)	342,938
         Meezan Cash Fund	0.00%	243,682,366	367,662	6,382,182	5,574,417	5,574,417	5,395
         Meezan Islamic Income Fund	0.03%	18,125,102	84,979	477,701	379,478	379,478	5,345

         384,594,409 1,633,573 (5,892,678) (7,973,966) (7,973,966) 3,989,927

         22

         
         
         

         NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

         FOR THE QUARTER ENDED MARCH 31, 2026

         Percentage

         December 31, 2025

         Profit /

         Total

         Market

         Subsidiaries (unlisted)

         of holding

         %

         Assets Liabilities Revenue

         (loss) after taxation

         comprehensive income / (loss)

         value / net asset share

         Al Meezan Investment Management Limited Meezan Exchange Company (Private) Limited

         Associates (open ended - listed)

         65.00%

         100.00%

         10,399,202

         1,058,545

         3,191,415

         27,109

         10,077,316

         167,241

         4,157,600

         836

         4,157,600

         836

         N/A N/A

         Meezan Balanced Fund	10.74%	5,020,372	72,632	984,672	818,563	818,563	531,295
         Al Meezan Mutual Fund	4.68%	25,560,147	283,334	5,926,327	5,232,036	5,232,036	1,183,791
         Meezan Islamic Fund	3.26%	65,642,680	1,143,199	18,137,753	16,030,819	16,030,819	2,103,655
         Meezan Rozana Amdani Fund	-	31,568,686	78,788	4,581,601	3,977,978	3,977,978	517
         Meezan Gold Fund	3.69%	8,555,689	272,526	2,145,387	1,998,729	1,998,729	305,515
         KSE Meezan Index Fund	6.31%	6,318,519	52,679	1,772,382	1,669,653	1,669,653	395,467
         Meezan Cash Fund	-	264,997,361	927,468	22,905,987	20,112,947	20,112,947	5,278
         Meezan Islamic Income Fund	0.03%	20,034,591	89,311	2,586,956	2,044,770	2,044,770	5,239
         		427,698,045	2,919,937 59,041,065 51,885,495 51,885,495 4,530,757

         Subsidiary and associates are incorporated / registered in Pakistan. Shares in subsidiary are placed in custody account with Central Depository of Pakistan and cannot be sold without the prior approval of SECP in accordance with the SECP's circular No. 9 of 2006 dated June 15, 2006.

      2. Investments given as collateral March 31, 2026 (Unaudited) December 31, 2025 (Audited) Cost / amortised cost Market value Cost / amortised cost Market value Federal Government Securities

         - Sukuk

         381,800,000 384,027,220 628,000,000 635,567,800
   2. Credit loss allowance against investments March 31, 2026 (Unaudited) December 31, 2025 (Audited)

      ECL charge for the quarter / year	-		1,460
      ECL reversals for the quarter / year	(218)		(27,543)
      	(218)		(26,083)

      Opening balance Charge / (reversals)

      318,783

      344,866

      Closing balance

      318,565

      318,783

      23

      
      
      

      NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

      FOR THE QUARTER ENDED MARCH 31, 2026
   3. Particulars of provision against March 31, 2026 (Unaudited) December 31, 2025 (Audited) Debt securities Category of classification Domestic

      Performing - Stage 1

      Under performing - Stage 2

      Non-performing - Stage 3 Substandard

      Doubtful Loss

      Investment -Cost / amortised cost 11,959,526 -

      -

      -313,319

12,272,845

318,565

12,048,814

-

313,319

12,362,133

5,464

-

313,319

318,783

The debt securities amounting to Rs 2,636,525 million (December 2025: Rs 2,532,602 million) and Rs 8,802 million (December 2025: Rs 8,802 million) pertains to Government securities and Government guaranteed exposure respectively. The exposure is exempted for the calculation of ECL by the SBP.

1. ISLAMIC FINANCING AND RELATED ASSETS

24

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

• Tijarah financing

• Tijarah inventory

• Financing under Islamic Export Refinance - Tijarah

• Inventory under Islamic SME Asaan Finance

• Inventory under Islamic Export Refinance - Tijarah

  Musawammah financing and related assets

• Musawammah financing

• Financing under Islamic Export Refinance - Musawammah

• Financing under SBP's Islamic Financing Facility for Renewable Energy (IFRE) - Musawammah

• Financing against Islamic SME Asaan Finance

• Advances against Musawammah

• Musawammah Inventory

• Advance against Islamic SME Asaan Finance

• Advances under Islamic Export Refinance - Musawammah

• Inventory under Islamic Export Refinance - Musawammah

  Salam Financing and related assets

• Salam Financing

• Advances against Salam

• Salam Inventory

  Financing against bills

• Financing against bills - Salam

• Advance against bills - Salam

  Ijarah financing and related assets

• Net investment in Ijarah

• Net book value of assets / investment in Ijarah under IFAS 2

• Advances against Ijarah

  Diminishing Musharakah financing and related assets

• Diminishing Musharakah financing

• Diminishing Musharakah financing - housing

• Diminishing Musharakah financing - SBP's Islamic Financing Facility for Storage of Agricultural Produce (IFFSAP)

• Diminishing Musharakah financing - SBP's Islamic Financing Facility for Renewable Energy (IFRE)

• Diminishing Musharakah financing - SBP's Islamic Refinance Facility for Combating COVID - 19 (IRFCC)

• Diminishing Musharakah financing - SBP's Islamic SME Asaan Finance (I-SAAF) Scheme

• Diminishing Musharakah financing - SBP's Islamic Long Term Financing Facility (ILTFF) for Plant & Machinery

• Diminishing Musharakah financing - SBP's Islamic Temporary Economic Refinance Facility (ITERF)

• Diminishing Musharakah financing - under SBP's Islamic Refinance Facility for Modernization of SMEs (IRFMS)

• Diminishing Musharakah financing - SBP's Islamic Refinance and Credit Guarantee Scheme for Women Entrepreneurs (IRCGSWE)

• Advances against Diminishing Musharakah

• Advances against Diminishing Musharakah under SBP's IFFSAP

• Advances against Diminishing Musharakah under SBP's IFRE

• Advances against Diminishing Musharakah under SBP's IRFCC

• Advances against Diminishing Musharakah under SBP's ISAAF

• Advances against Diminishing Musharakah under SBP's ITERF

• Advances against Diminishing Musharakah under SBP's IRCGSWE

• Advances against Diminishing Musharakah under SBP's ILTFF

10.2

10.2

10.2

10.2

10.3

10.4

501,213,057

28,563,264

64,947,534

44,228,948

1,028,946

76,319,397

99,026,235

14,316,223

113,342,458

494,675,881

25

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

Bai Muajjal financing - gross Less: Deferred income

Profit receivable shown in other assets Bai Muajjal financing

70,589,391

111,931,910

(34,533,347)

(1,079,166)

76,319,397

28

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

1. PROPERTY AND EQUIPMENT

   Capital work-in-progress Property and equipment

   Less: Provision against capital work-in-progress

   11.1

   March 31, 2026 (Unaudited) 6,591,626 44,333,229 50,924,855

   (300,000)

   50,624,855

   December 31, 2025 (Audited)

   5,999,282

   44,338,969 50,338,251

   (300,000)

   50,038,251

   1. Capital work-in-progress

      Advances to suppliers and contractors for:

      • civil works

      • computer hardware

      • purchase of vehicles

      • office machines

      • furniture and fixtures

        3,289,526 786,642 895,287 1,253,904

        366,267

        6,591,626

        3,293,823

        713,539

        273,940

        1,373,279

        344,701

        5,999,282

   2. Additions / transfers to property and equipment

      The following additions / transfers from non banking assets have been made to property and equipment during the quarter:

      Capital work-in-progress

      Leasehold land	126,568		51,851
      Building on leasehold land	227,179		370,535
      Leasehold improvements	476,722		457,194
      Furniture and fixture	191,410		441,750
      Electrical, office and computer equipment	828,109		735,273
      Vehicles	236,575		620,400

      Property and equipment March 31, 2026 (Unaudited) 592,344 March 31, 2025 (Unaudited)

      (130,656)

   3. Disposal of property and equipment

      The net book value of property and equipment disposed off during the quarter is as follows:

      2,086,563

      2,678,907

      2,677,003

      2,546,347

      Leasehold improvements	8,353		391
      Furniture and fixture	330		34
      Electrical, office and computer equipment	1,646		2,415
      Vehicles	77,783		167,599
      	88,112		170,439

2. RIGHT-OF-USE ASSETS March 31, 2026 (Unaudited) Cost Accumulated Depreciation Net Book Value

   At January 1,	36,965,569	(15,188,376)	21,777,193
   Additions during the quarter	1,925,596	-	1,925,596
   Depreciation Charge	-	(763,112)	(763,112)

   Derecognition during the quarter (610,860) 610,860 -

   At March 31,

   38,280,305 (15,340,628)

   22,939,677

   29

   
   
   

   NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

   FOR THE QUARTER ENDED MARCH 31, 2026 December 31, 2025 (Audited)

   Cost Accumulated Depreciation

   Net Book Value

   At January 1,

   Additions during the year Depreciation Charge

   33,624,561

   3,423,389

   -

   (12,394,364)

   -(2,876,393)

   21,230,197

   3,423,389

   (2,876,393)

   Derecognition during the year At December 31,

   (82,381) 82,381 -

   36,965,569 (15,188,376) 21,777,193

3. INTANGIBLE ASSETS March 31, 2026 (Unaudited) December 31, 2025 (Audited)

   Computer Software	2,266,718	2,356,915
   Advance against computer software	1,074,177	1,072,847
   	3,340,895	3,429,762

   1. Additions to intangible assets

Additions (Net) during the quarter 121,500 166,868

30

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

Closing balance

448,765

459,512

31

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

1. BILLS PAYABLE

   In Pakistan Outside Pakistan

2. DUE TO FINANCIAL INSTITUTIONS

   In Pakistan Outside Pakistan

   March 31, 2026 (Unaudited) 66,865,337

   -

   66,865,337

   593,788,742

   -

   593,788,742

   December 31, 2025 (Audited)

   73,767,955

   -

   73,767,955

   887,048,227

   -

   887,048,227

   1. Details of due to financial institutions - secured / unsecured Secured With State Bank of Pakistan

      Musharakah under Islamic Export Refinance Scheme Investment under Islamic Long Term Financing Facility

      Investment under Islamic Refinance Facility for Combating COVID-19 Investment under Islamic Financing for Renewal Energy

      Investment under Islamic Temporary Economic Refinance Facility for Plant and Machinery

      Investment under Islamic Refinance Scheme for storage of agriculture produce

      Investment under Islamic Refinance and Credit Guarantee for Women Entrepreneurs (IRCGSWE)

      Investment under Islamic Refinance Scheme for Working Capital Finance Investment under Islamic Refinance Scheme for modernization of

      SMEs (IRFMS)

      Investment under Islamic Refinance Scheme for SME Asaan Finance Investment under Shariah Compliant Open Market Operations Investment under Shariah Compliant Standing Ceiling Facility

      Total secured With Scheduled Bank Other financial institutions Unsecured

      Overdrawn nostro accounts

      Musharakah with scheduled banks / financial institutions

      17.1.1

      17.1.1

      17.1.2

      March 31, 2026 (Unaudited)

      34,725,044

      15,288,861

      24,380

      14,689,487

      10,613,383

      1,008,988

      38,199

      50,000

      389,943

      4,683,293

      275,830,327

      107,578,022

120,346,746

593,788,742

562,771,385

155,000,000

7,973,336

2,773,506

158,530,000

887,048,227

32

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

1. DEPOSITS AND OTHER ACCOUNTS March 31, 2026 (Unaudited) December 31, 2025 (Audited) Customers

   • Current accounts - non-remunerative

   • Savings deposits

   • Fixed deposits

   • Margin

     Financial institutions

   • Current accounts - non-remunerative

   • Savings deposits

   • Fixed deposits

   3,407,464,035

   1,733,186,077	76,044,795	1,809,230,872	1,492,909,032	73,740,245	1,566,649,277
   1,411,117,219	88,617,800	1,499,735,019	1,327,066,220	86,367,358	1,413,433,578
   245,869,048	14,584,300	260,453,348	268,077,826	14,512,825	282,590,651
   17,291,691	72,853	17,364,544	20,623,920	246,738	20,870,658

   16,996,922	56,327	17,053,249	1,588,353	200,949	1,789,302
   13,100,733	174,034	13,274,767	12,653,980	344,154	12,998,134
   2,403,600	-	2,403,600	4,510,600	-	4,510,600

   32,501,255 3,439,965,290 179,319,748 230,361 179,550,109 3,586,783,783 32,731,616 3,619,515,399

   3,108,676,998

   18,752,933

   3,127,429,931

   174,867,166

   545,103

   175,412,269

   3,283,544,164

   19,298,036

   3,302,842,200

2. LEASE LIABILITY AGAINST RIGHT-OF-USE ASSETS March 31, 2026 (Unaudited) December 31, 2025 (Audited)

   	As at January 1,	28,428,316		25,848,322
   	Additions	1,925,596		3,423,389
   	Amortisation of lease liability against right-of-use assets	1,109,306		4,176,644
   	Derecognition during the quarter / year	-		-
   	Payments	(1,305,580)		(5,020,039)
   	As at March 31 / December 31,	30,157,638		28,428,316

3. SUB-ORDINATED SUKUK

   Additional Tier I Sukuk Tier II Sukuk

   20.1

   20.2

   7,000,000 9,990,000

   16,990,000

   7,000,000

   9,990,000

   16,990,000

   33

   
   
   

   NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

   FOR THE QUARTER ENDED MARCH 31, 2026

   1. In August 2018, the Bank issued regulatory Shariah compliant unsecured, sub-ordinated privately placed Additional Tier I Sukuk based on Mudaraba of Rs. 7,000 million as instrument of redeemable capital under section 66 of the Companies Act, 2017. The brief description of Additional Tier I sukuk is as follows:

      	AA+ (Double A Plus) by VIS Credit Rating Company Limited
      	The Mudaraba Profit is computed under General Pool on the basis of profit sharing ratio and monthly weightages announced by the Bank under the SBP guidelines of pool management. Last announced profit rate on the Sukuk is 12.23% per annum.
      	The Bank may call Additional Tier I Sukuk with prior approval of SBP on or after five years from the date of issue.
      	The Additional Tier I Sukuk, at the option of the SBP, will be fully and permanently converted into common shares (variable) upon the occurrence of a point of non-viability trigger event as determined by SBP or for any other reason as may be directed by SBP.
      	Profit and/or redemption amount can be held back in respect of the Additional Tier I Sukuk, upon directive of the SBP, if such payment will result in a shortfall in the Bank's minimum capital requirement, capital adequacy ratio requirement or leverage ratio requirement.

   2. In December 2021, the Bank issued regulatory Shariah compliant unsecured, subordinated privately placed Tier II Sukuks based on Mudaraba of Rs. 9,990 million as instrument of redeemable capital under section 66 of the Companies Act, 2017. The brief description of Tier II sukuks is as follows:

      Expected Periodic Profit Amount (Mudaraba Profit Amount) - Non-discretionary subject to actual profit of the pool	The Mudaraba Profit is computed under General Pool on the basis of profit sharing ratio and monthly weightages announced by the Bank under the SBP guidelines of pool management. Last announced profit rate on the Sukuks is 11.60% per annum.
      	The Bank may call Tier II Sukuk with prior approval of SBP on or after five years from the date of issue.
      	The Tier II Sukuk, at the option of the SBP, will be fully and permanently converted into common shares (variable) upon the occurrence of a point of non-viability trigger event as determined by SBP or for any other reason as may be directed by SBP.
      	Profit and/or redemption amount can be held back in respect of the Tier II Sukuk upon directive of the SBP, if such payment will result in a shortfall in the Bank's minimum capital requirement, capital adequacy ratio requirement or leverage ratio requirement.

      34

      NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

      FOR THE QUARTER ENDED MARCH 31, 2026 March 31, 2026
4. (Unaudited) December 31, 2025 (Audited)

   Return on deposits and other dues
   - payable in local currency	12,018,769		11,957,873
   - payable in foreign currencies Unearned income	367,371 9,927,379		361,916 8,975,298
   Accrued expenses	21.1	29,053,628	35,756,050
   Current taxation (provision less payments)		5,018,021	8,444,986
   Acceptances		23,787,743	25,440,891
   Dividend payable (including unclaimed dividend) Payable to defined benefit plan Credit loss allowance against off-balance sheet obligations	21.2	1,377,975 509,210 565,171	44,321 2,624,413 275,119
   Charity payable		12,588	2,135
   Security deposits against Ijarah		40,230,647	34,228,937
   Payable on account of credit murabaha / ijarah / musawammah		198,839	837,998
   Security deposits against lockers		263,584	257,649
   Mark to market loss on forward foreign exchange commitments - net		2,238,792	1,731,205
   Withholding taxes payable		347,050	1,295,863
   Workers Welfare Fund payable		19,080,770	18,128,068
   Payable under Alternate Delivery Channel		32,989,829	62,915,680
   Others		4,078,767	3,294,199
   		182,066,133	216,572,601

   1. During the quarter, the Bank reversed Rs 3,000 million on account of an estimate for variable remuneration relating to prior years based on the assessment finalised during the current quarter.

   2. ECL against off-balance sheet obligations

Opening balance

Charge for the quarter / year Reversals for the quarter / year Closing balance

(83,153)

565,171

302,882

222,750

(250,513)

275,119

35

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

23.1

23.2

23.3

1,836,188,993

Documentary letters of credit Commitments in respect of:

• forward foreign exchange transactions

  Commitments for acquisition of:

• property and equipment

• intangible assets

Other commitments

23.2.1

23.2.2

1,935,272,982

94,577,231

1,739,809,762

Commitments in respect of financing (including irrevocable commitments)

1,155,477,242

380,719,312

1,045,147,269

The Income Tax Department amended the deemed assessment orders of the Bank for prior years including the tax year 2025. The additions / disallowances were mainly due to allocation of expenses relating to dividends and capital gain, allowability of provision against Islamic financing and related assets, provision against investments and provision against other assets. In the amended order for tax year 2015, additional issues with respect to the taxability of gain on bargain purchase, non-adjustment of loss pertaining to HSBC Bank Middle East - Pakistan Branches and the levy of super tax were also raised. The matter has been decided in Bank's favour by Appellate Tribunal Inland Revenue. Both the Bank and the tax department filed a reference with the High Court of Sindh in respect of the aforementioned matters.

The management of the Bank, in consultation with its tax advisors, is confident that the decision in respect of the above matters would be in Bank's favour and accordingly no provision has been made in these unconsolidated financial statements with respect thereto. The additional tax liability in respect of gain on bargain purchase and non-adjustment of loss pertaining to HSBC Bank Middle East - Pakistan Branches is Rs 1,096 million and Rs 706 million respectively.

36

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

On financing On investments

On deposits / placements with financial institutions

24.1

36,091,597

69,616,997

122,353 105,830,947

43,686,706

62,816,897

1,112,926 107,616,529

The income on Ijarah under IFAS 2 is net of takaful of Rs 1,096 million (March 31, 2025: Rs 773 million) recovered from customers.

- Amortized Cost

37,922,322

105,830,947

47,715,644

107,616,529

This includes conversion cost of Rs 160 million (March 31, 2025: conversion cost of Rs 253 million) against foreign currency deposits.

Trade related fees and commissions Commission on guarantees

Branch banking customer fees Credit related fees

Debit card related fees Investment banking related fees

Commission on cash management Commission on home remittances Wealth management related fees Others

Realised - net

Unrealised - FVTPL / held for trading - net

Federal Government securities Listed shares

27.1

1,588,279

107,767

1,212,081

56,862

3,209,354

328,076

164,308

119,055

167,366

1,606

6,954,754

960,599

(9,577)

951,022

960,599

-

960,599

1,503,033

86,316

948,742

25,809

2,222,389

98,201

129,469

233,618

280,922

2,063

5,530,562

11,021

144

11,165

11,021

-

11,021

37

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM UNCONSOLIDATED FINANCIAL INFORM ATION (UNA UDITED )

960,599

(9,577)

951,022

11,021

144

11,165

Gain on termination of Islamic financing Gain on sale of operating fixed assets Others

Total compensation expense

Depreciation on right-of-use assets Rent and taxes

Utilities cost (including electricity and diesel) Security (including guards)

Repair and maintenance (including janitorial charges) Depreciation

Others (including takaful expense)

840

330,288

179,850

152,749

442

333,041

8,901,009

2,676,081

Stationery and printing (including debit card related cost) Repairs and maintenance

Local transportation and car running Depreciation on vehicles, equipment etc. Legal and professional charges

NIFT and other clearing charges Marketing, advertisement and publicity Security charges - cash transportation Communication (including courier) Travelling and conveyance

Training and development

Fees, subscription and other charges Brokerage and bank charges

Office supplies Entertainment Takaful expense

Outsourced services costs Auditors' Remuneration

Fees and allowances to Shariah Board Directors' fees and allowances

Others

6,506,929

22,196,893

5,501,549

18,610,639

38