Meezan Bank : TRANSMISSION OF ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2023 - MEEZAN BANK LIMITED

What makes the

Best Bank

ANNUAL REPORT 2023

Best Bank 2018

Best Bank 2020

Best Bank 2023

FROM THE SMALLEST BANK IN PAKISTAN TO THE

BEST BANK OF PAKISTAN

FOR THE 3RD TIME

Mr. Irfan Siddiqui - Founding President & CEO, Meezan Bank and Mr. Ariful Islam - Deputy CEO, Meezan Bank receiving the

'Best Bank' award from Mr. Jameel Ahmed - Governor, State Bank of Pakistan at Pakistan Banking Awards - 2023.

The Best Bank award is the most prestigious award in Pakistan's banking sector. This award holistically assesses the competing banks on all aspects and is awarded to the bank that has demonstrated the most significant contribution to national development and the most effective management of its resources, including its employees, clients, franchise, community and financials.

Lastly, I would like to acknowledge & dedicate this award to a dear colleague of mine who has been

with me for 24 years now - Mr. Ariful Islam.

Arif has been with me, helping the Bank grow and excel, especially in the areas of strategy,

digitalization and service excellence, and I have always considered him to be a co-CEO with me.

I would like to request our Chief Guest, Governor State Bank, to kindly present this award to Arif as well.

Irfan Siddiqui

Founding President & CEO, Meezan Bank

On the occasion of the 8th Pakistan Banking Awards ceremony held on November 24, 2023.

CONTENTS

ORGANIZATIONAL OVERVIEW & EXTERNAL ENVIRONMENT

Vision	11
Mission	11
Our Culture	11
Quaid's Concept of Islamic Banking	12
Our Presence	13
Highlights 2023	14
Corporate Profile	16
Credit Rating	16
Calendar of Major Events	16
Corporate Information	17
Shareholders	18
Products and Services	19
Organization Structure	20
Our Leadership	21
History of Meezan Bank	22
Awards & Recognitions	26
Chairman's Review	28
Directors' Report to the Members	30
Directors' Report to the Members (Urdu)	47

PERFORMANCE

Business and Operations Review	49
Key Figures at a Glance	70
Six Years' Horizontal Analysis	72
Six Years' Vertical Analysis	73
Review of Six Years' Performance	74
Financial Analysis	75
Market Statistics of Meezan Bank's Share	78
Allocation of Income and Expenses to Remunerative
Depositors' Pool	79
Statement of Value Added and Distributed	80
How We Distribute the Value Created	81
Statement of Inventory	82
Statement of Financing Portfolio Income	82

STRATEGY & RESOURCE

ALLOCATION

Strategic Objectives	86
Strategies in Place	87
Key Performance Indicators and Future Relevance	87
Resource Allocation	88
Competitive Landscape & Market Positioning	89
SWOT Analysis	89

RISK MANAGEMENT

Risk Management Framework	91
Risk & Opportunity Report	92
Business Continuity Management	92
Responding to Critical Challenges and Uncertainties	93

GOVERNANCE

Board of Directors	95
Shariah Board	99
Terms of Reference of Shariah Board	102
Board Committees	103
Management Committees	105
Best Corporate Governance Practices	107
Board Composition	107
Performance Evaluation of the Board of Directors	108
Roles and Responsibilities	109
Performance Review of the President and CEO	110
Election of the Board of Directors	110
Other Matters related to Corporate Governance	111
Report of the Board Audit Committee	113
Review Report to the Members	114
Statement of Compliance with Listed Companies
Code of Corporate Governance	115
Statement of Internal Controls	117
Shariah Board Report	118
Shariah Board Report (Urdu)	127
Policies and Guidelines	128
Standard of Ethics, Business Practices &
Code of Conduct	128
Guidelines on Whistle Blowing	130
Guidelines for Safety of Records of the Company	130
Summary of Sustainability & Corporate Social
Responsibility Policy	130
Summary of Green Banking Policy	131
Summary of Information Security Policy	131
IT Governance Policy	132
Salient Features - Directors' Remuneration Policy	133
Material Risk Takers (MRTs) & Material Risk
Controllers (MRCs) - Remuneration Policy	133

STAKEHOLDERS RELATIONSHIP & ENGAGEMENT

How We Engage with Our Stakeholders	136
Investor Relations Section on Corporate Website	138
Steps to Encourage Minority Shareholders'
Participation in AGM	138
Summary of Corporate and Analyst Briefings	138

CORPORATE SOCIAL

RESPONSIBILITY &

SUSTAINABILITY

Corporate Social Responsibility Report	140
Sustainability Report	144

UNCONSOLIDATED FINANCIAL STATEMENTS

Auditors' Report to the Members	157
Statement of Financial Position	161
Profit and Loss Account	162
Statement of Comprehensive Income	163
Statement of Changes in Equity	164
Cash Flow Statement	165
Notes to and forming part of the Financial
Statements	166

Statement showing written-off Financing (Annexure 1) 244

CONSOLIDATED FINANCIAL STATEMENTS

Auditors' Report to the Members	247
Statement of Financial Position	251
Profit and Loss Account	252
Statement of Comprehensive Income	253
Statement of Changes in Equity	254
Cash Flow Statement	255
Notes to and forming part of the Financial
Statements	256

Statement showing written-off Financing (Annexure 1) 335

ADDITIONAL INFORMATION

Pattern of Shareholding	338
Categories of Shareholders	340
Glossary	341
Notice of Annual General Meeting (AGM)	342
Directors' Remuneration Policy	346
Dividend Mandate Form	349
Proxy Form	351

ABOUT THIS REPORT

The Annual Report has been prepared in accordance with the Integrated Reporting Framework to present the Bank's performance during year 2023. The adoption of the integrated framework is in its preliminary stages and the Bank will continue to improve on the information mentioned in this report.

This report provides an in-depth and transparent disclosure of the Bank's financial performance. In preparing this report, the Bank was guided by the local statutory and regulatory requirements and is also in compliance with the following:

• Banking Companies Ordinance, 1962
• Companies Act, 2017
• Listed Companies (Code of Corporate Governance) Regulations, 2019
• International Financial Reporting Standards (IFRS)
• Islamic Financial Accounting Standards (IFAS)
• Directives issued by the State Bank of Pakistan (SBP) and 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.

Audience

The Annual Report and Financial Statements have been prepared to provide information to the Bank's stakeholders including investors (equity shareholders, Sukuk holders and prospective investors), employees, customers, regulators, research analysts, credit rating agencies and society at large. The annual financial statements were approved by the Board of Directors on February 15, 2024 and signed on its behalf by the Chairman, President & CEO, two Directors and CFO.

Reporting & Publication Period

This report covers the financial and non-financial performance of Meezan Bank from the period January 01, 2023 to December 31, 2023 and is published within three months of the date of the Statement of Financial Position.

External Assurance

The Bank's financial statements for the year ended December 31, 2023 are audited by external auditors, A. F. Ferguson & Co., Chartered Accountants (a member firm of PwC network); and provide an in-depth and transparent disclosure of its financial performance. As a regulatory requisite, the auditors are rotated every five years to ensure their independence and transparency.

Availability

This report is published for a limited audience and dispatched upon request. It is available in soft copy (PDF format) on the Bank's official website. All formats may be considered the audited, legally leading document.

For further clarification and feedback on this report, please contact through the following email id: [e-mail]

When you see this icon, you will find more information on another page of this report.

When you see this icon, you will find more information on our website.

WHAT MAKES THE BEST BANK?

Meezan Bank holds the unique honour of being the only bank in the country to have received the prestigious title of Best Bank in Pakistan three times, as conferred by the Pakistan Banking Awards. We are grateful to Allah ( ) for His blessings and to our customers for their trust that has enabled us to earn such esteemed recognitions.

In the pages that follow, we take a look at some of

the key elements contributing to the Bank's

success, guiding our transformation from almost a startup in a niche market to one of the largest and most celebrated financial institutions in the country.

WHAT MAKES

THE BEST BANK?

1. COMMITMENT TO SHARIAH EXCELLENCE

Meezan Bank stands as a pillar of trust for its customers, guaranteeing that their investments are carefully managed in full compliance with Shariah principles, ensuring the provision of Halal returns. Our commitment to Shariah compliance permeates every facet of our operations, from our diverse product offerings and processes to our service delivery and management practices. Supported by a team of dedicated Shariah compliance and audit specialists, we maintain rigorous adherence to the Shariah standards set forth by our esteemed Shariah Board as well as the regulators. The Bank is also leading the way in promoting excellence in Islamic banking by offering specialized Islamic finance training programs. These initiatives are designed to raise industry standards and support other organizations in achieving Shariah compliance across their operations. At Meezan Bank, we embrace Shariah compliance not merely as a regulatory mandate but as a fundamental ethos embedded in our corporate culture. This deep-rooted commitment to Shariah principles is a cornerstone of our unparalleled success, distinguishing Meezan Bank as a leader in the Islamic banking sector.

WHAT MAKES THE BEST BANK?

INDUSTRY-LEADING DIGITAL BANKING

Meezan Bank stands as a pioneer in the realm of digital banking, consistently setting higher standards of excellence in the services we provide to our customers. Our dedication to enhancing our customers' digital banking experience has, by the grace of Allah (), positioned us as market leaders across various digital domains. Having the country's highest-rated mobile banking application, Meezan Bank has established its dominance in the digital banking sector. Our customized digital solutions for corporate clients underscore our dedication to enabling smooth banking experiences through the use of technology. Dedicated to a continuous quest for innovation, Meezan Bank is devoted to broadening its range of digital products and services. This dedication is supported by significant investments in strengthening our technological infrastructure and attracting top talent, guaranteeing our enduring position as the preferred banking partner for our customers.