JS Bank : Transmission of Quarterly Report of JS Bank Limited for the Period Ended September 30, 2023

Quarterly Report

September 30, 2023 (Un-audited)

Bank as free as a bird

Content

02 Company Information

03 Directors' Report

06 Directors' Report Urdu

10 Condensed Interim Unconsolidated Statement of Financial Position

11 Condensed Interim Unconsolidated Profit and Loss Account

12 Condensed Interim Unconsolidated Statement of Comprehensive Income

13 Condensed Interim Unconsolidated Statement of Changes in Equity

14 Condensed Interim Unconsolidated Cash Flow Statement

15 Notes to the Condensed Interim Unconsolidated Financial Statements

44 Condensed Interim Consolidated Statement of Financial Position

45 Condensed Interim Consolidated Profit and Loss Account

46 Condensed Interim Consolidated Statement of Comprehensive Income

47 Condensed Interim Consolidated Statement of Changes in Equity

48 Condensed Interim Consolidated Cash Flow Statement

49 Notes to the Condensed Interim Consolidated Financial Statements

1

Company Information

Board of Directors
Mr. Adil Matcheswala	Chairman
Ms. Nargis Ghaloo	Independent Director
Lt. Gen. (R) Sadiq Ali	Independent Director
Mr. Shahnawaz Haider Nawabi*	Independent Director
Syed Mumtaz Ali Shah	Independent Director
Mr. Usman Yousaf Mobin	Independent Director
Mr. Basir Shamsie	President & CEO / Director
Audit Committee
Ms. Nargis Ghaloo	Chairperson
Mr. Shahnawaz Haider Nawabi*	Member
Lt. Gen. (R) Sadiq Ali	Member
Human Resource, Remuneration
& Nomination Committee
Syed Mumtaz Ali Shah	Chairman
Mr. Adil Matcheswala	Member
Mr. Usman Yousaf Mobin	Member
Risk Management Committee
Syed Mumtaz Ali Shah	Chairman
Lt. Gen. (R) Sadiq Ali	Member
Mr. Shahnawaz Haider Nawabi*	Member
Mr. Basir Shamsie	Member
Board IT Committee
Mr. Usman Yousaf Mobin	Chairman
Ms. Nargis Ghaloo	Member
Mr. Basir Shamsie	Member

Chief Financial Officer

Mr. Amin Muhammad Virani

Company Secretary

Mr. Hasan Shahid

Auditors

KPMG Taseer Hadi & Co.

Chartered Accountants

Sheikh Sultan Trust Building No. 2

Beaumont Road

Karachi.

Legal Advisors

Bawaney & Partners

Haidermota & Co.

Liaquat Merchant Associates

Share Registrar

CDC Share Registrar Services Limited

CDC House, 99 - B, Block 'B'

S.M.C.H.S., Main Shahra-e-Faisal

Karachi

Registered office

JS Bank Limited

Shaheen Commercial Complex Dr. Ziauddin Ahmed Road

P.O. Box 4847, Karachi-74200, Pakistan UAN: +92 21 111 JS Bank (572-265)

[phone]www.jsbl.com

*Mr. Shahnawaz Haider Nawabi (Independent Director) has resigned w.e.f. October 12, 2023.

2

DIRECTORS' REPORT

We are pleased to present the unaudited financial statements of JS Bank Limited ("JSBL") along with the consolidated financial statements for the nine-month period ended September 30, 2023.

Economy Review

The Current Account Balance turned negative in Jul-Aug 2023 (US$935 million), which was in surplus during 2Q-2023. The deficit was led by imports beginning to normalize, while exports and remittances both remaining sticky around US$2.1 billion.

The impact of negative Current Account Balance and debt repayment outflows was more than offset by the inflow under IMF's fresh US$3 billion Stand-By Agreement. As a result, SBP's foreign exchange reserves increased by US$3 billion to US$7.6 billion during the quarter. This, along with the administrative measures taken to correct the foreign exchange market, resulted in improvement in exchange rate. Although Exchange Rate depreciated by 7% during first two months of the 3rd quarter, it sharply regained value during September to close the quarter just 1% down on QoQ basis. In the following months, Rupee continued to gain strength and is currently trading around 278 per USD.

SBP's Monetary Policy Committee (MPC) kept the Policy Rate unchanged at 22% in both meetings held during the quarter. On the inflation front, 3QCY23 CPI averaged 29% as compared to 35% during 2QCY23. Moreover, SBP also views economy entering positive interest rate zone on forward looking basis.

Banking Sector Review

While the Policy Rate remained unchanged at 22% during 3QCY23, the banking sector's weighted average spreads took a slight sequential dip from 7.73% in June 2023 to 7.63% in August, with increase in cost of deposits outpacing loan yields. During the same period, banking sector deposits touched PKR 26.11 trillion in August (up 18% YoY). Gross ADR levels continued to slip reaching 45% in Aug-2023 as Advances witnessed only 8% YoY increase. The sector's Investments touched PKR 22.02 trillion (up 21% YoY), taking IDR up to 84%.

Performance Overview

The Bank reported an unconsolidated Profit Before Tax of PKR 4,671 million (Profit After Tax of PKR 2,321 million), as compared to a Profit Before Tax of PKR 1,808 million (Profit After Tax of PKR 820 million) during the corresponding period last year. During the period, the Bank's Net Interest Income increased by 40% YoY as share of Non-Remunerative Deposits in total Deposits increased to 31% in 3Q-2023 as compared to 27% in the same period last year.

3

The Bank's Non-Markup Income increased to PKR 6,920 million (up by 60% YoY) owing to higher Foreign Exchange, Fee & Commission Income. This has more than offset the Loss on Securities, which the Bank prudently booked during the first quarter preempting the Policy Rate hike.

During the period, Bank's Operating Expense increased by 27%YoY to reach PKR 15.6 billion primarily on the back of higher inflation and Rupee depreciation. However, improved topline performance has resulted in Bank's Cost-to-Income ratio improving to 72.7% from 83.6% in the corresponding period last year. NII to Operating Cost Ratio has also increased from 84.8% to 93.6% during the period under review.

Lending activities remained cautious owing to economic slowdown and record high interest rates. Advances book therefore witnessed attrition of PKR 28 billion since December 2022 (down 12%). Despite reduction in Advances, Gross Infection Ratio remained at approximately same level as December 2022 (7%). Moreover Coverage Ratio has improved from 41% in September 2022 to 55% in September 2023.

Bank's digitization spree continued as planned. Various digitization initiatives pertaining to Robotic Process Automation and Predictive Modelling have been rolled out in the areas of transformation and Data Sciences. Bank's digital channels have also witnessed substantial growth with customer penetration on JS Mobile App standing at 52% and JS Bot at 63%. Moreover, JS Blink and Roshan Digital Account products have seen steady growth with New to Bank accounts crossing 25,000 accounts. Since its inception in 2022, these Digital Onboarding channels now maintain active deposits of over PKR 1.4 billion. Digitization of the account opening process has also been rolled out across all branches of the Bank. Owing to these improvements, JS Bank was awarded the 'Most Innovative Digital Banking Service Provider' at the International Finance Awards 2023.

During the 9M2023, Zindigi continued its growth trajectory, witnessing over 3.9 million new downloads and acquiring 2.4 million new users. Furthermore, Zindigi successfully launched its Nano loan and instant debit card products. These expansions, combined with our robust transactional activity, processing over 41.8 million transactions worth PKR 104.7 billion, has positioned Zindigi as one of the fastest-growing fintech players in the market.

During the quarter under review, the Bank completed all the formalities related to its acquisition of 67.33% shares of BankIslami Pakistan Limited, taking its total shareholding to 75.12%. With Assets crossing PKR 590 billion, BankIslami is one of the fastest growing Islamic Banks in Pakistan. It has an active presence in more than 150 cities through 415 branches and a deposit base of PKR 463 billion. On the back of its growth, financial performance and improved risk profile, BankIslami's long-term credit rating has recently been upgraded to AA-.

Consolidated Financial Statements

On a consolidated basis, JS Bank along with its subsidiaries BankIslami Pakistan Limited, JS Global Capital Limited, and JS Investments Limited earned a profit before tax of PKR 9,999 million (profit after tax of PKR 6,948 million) for the nine months ended September 30, 2023, as compared to a profit before tax of PKR 1,994 million (profit after tax of PKR 962 million) in the corresponding period last year. The earnings per share stood at PKR 4.74 for the nine months ended September 30, 2023, and the Group remains satisfactorily capitalized with CAR at 16.51%.

4

Credit Ratings

The Pakistan Credit Rating Agency Limited (PACRA) has assigned to the Bank a long-term rating of "AA-" (Double A Minus), and a short-term rating of "A1+" (A One Plus) which is the highest possible rating within the category.

Acknowledgments

On behalf of JS Bank, we would like to extend our gratitude to our customers and stakeholders for their ongoing trust and patronage. We would also like to thank the Ministry of Finance, the State Bank of Pakistan, the Securities & Exchange Commission of Pakistan, and other regulatory bodies for their continued support to our Bank. We also wish to thank our colleagues for their commitment to hard work, excellence, and their drive to succeed.

On behalf of the Board

Basir Shamsie	Adil Matcheswala
President & CEO	Chairman
Karachi: October 24, 2023

5

  202330   



•    2Q-2023 9352023 2.1

3  7.63   1 QoQ7 278

22MPC 35CY2329CPI 3QCY23 SBP



7.732023223QCY23

7.63

452023 ADR(YoY)1826.11

21 22.028  84 (IDR) 

 2,3214,671 408201,808 27313Q-2023 

6

606,920

              

             





                

       15.6  27     

72.7 

93.684.8(NII) 83.6



282022
					
				
					
				
72022 	12
				
						552023412022
		 
		  
		
     
								
						
								
JS Bot52JS   	 
			
	  
25,000											63
						

			
				
1.4	 	2022
			
2023	 
						 	
						
						
						

 2.43.992023

		

	
104.7	

					

   	41.8
		



67.33 590 75.12

463150415 AA- 

7

		 
	
	
			
		  
			

6,9489,999 202330

 2023309621,994 16.51CAR4.74

 

"A1+'"AA-"(PACRA)
	
	
  
	

              

               



 

	
	
	202324

8