Pak Libya is a Joint Venture Financial Institution (JVFI), operating within the framework of commercial and banking laws of Pakistan, regulated by the State Bank of Pakistan.

Pak Libya Holding Company (Pvt.) Limited was formed as a private limited Company in October 1978, owned jointly by the Government of Pakistan and the Government of Libya. It was established with an initial tenure of thirty years. Subsequently, this tenure was extended for further thirty years till October 2038.

The Company's primary objective is to foster the development of the country's industrial and economic infrastructure. Its core avenues are asset building: loans/leases, capital & money market operations, and project financing. The registered office of the Company is located at 5th Floor, Block C, Finance and Trade Centre, Shahrah-e-Faisal, Karachi, Pakistan. The Company has one Sales and Service Center, which is located in Lahore. Effective August 5, 2012, the operations of the Islamabad office were closed following a review of the business strategy.

The Company is equally owned by the Government of the Islamic Republic of Pakistan (GoP), represented through SBP and the Ministry of Finance (MoF), and the Government of Libya, represented through Libyan Foreign Investment Company (LAFICO), implying strong sovereign support.

The ownership structure of the Company has remained unchanged since its inception and is anticipated to persist in its current form in the foreseeable future.

The Company's sovereign ownership reflects the strong business acumen of the sponsors.

The financial muscle of the sponsors is considered very strong.

The overall control of the board is vested with six members, indicating equal representation of the sponsors. The Chairman, Mr. Mohamed Mahmoud Shawsh, is the representative of the Government of Libya, while the Company’s MD & CEO, Mr. Tariq Mahmood, CFA represents the Government of Pakistan.

All board members possess vast knowledge, experience, and requisite competencies necessary for effective decision-making. The Chairman, Mr. Mohamed Mahmoud Shawsh brings with him an extensive experience of over 15 years. He is a graduate in Finance from the National Institute of Business Administration-Tripoli-Libya. Currently, he holds the position of Chief Investment Officer at Libyan Foreign Investment Company (“LAFICO”). Mr. Jehad Jamal El-Barag holds a Master’s degree in Arts and a Diploma in International Finance from Escuela de Alta Dirección y Administración (EADA) in Barcelona, Spain, as well as Bachelor of Arts in Business Administration from SRH Hochschule Berlin in Germany. Presently, he is serving as Deputy Chief Investment Officer at Libyan Foreign Investment Company ("LAFICO"), Tripoli-Libya. Mr. Bashir B. Omer Matok holds an MBA degree in Financial Management from the University of Hull, England, and a Bachelor's in Accounting from Grayounis University, Benghazi, Libya. He brings with him extensive expertise of 28 years in Financial Management, Accounting, Portfolio Management and Stock Market Operations. Mr. Tariq Mahmood holds a Master's degree from New Mexico State University, USA and is also a CFA charter holder. He possesses more than twenty-five years of Corporate & Investment Banking Experience, including international exposure with a U.S. bank. Ms. Nasheeta Maryam Mohsin, Special Secretary Finance has recently been nominated by MoF and her onboarding is currently in process.

In line with best corporate governance practices, the Company has three Board committees in place, namely Audit Committee chaired by Mr. Jehad Jamal Ali El-Barag, Risk Management Committee chaired by Mr. Bashir Blkasm Omer Matok, and Human Resource Management Committee chaired by Mr. Mohamed Mahmoud Shawsh for active monitoring and evaluation. During CY24, the Board convened six meetings to review the Company’s performance and monitor progress toward its strategic objectives. Attendance by the Board members remained strong, and the minutes of all meetings were formally documented.

M/s Yousaf Adil, Chartered Accountants are the external auditors of the Company. They expressed an unqualified opinion on the financial statements of the Company for the period ended December 31, 2024. The Internal Audit Function, serving as the Third Line of Defense (TLD) in the internal control system, is one of the most critical components of the overall control environment. It provides independent assurance to the Board, and/or its Audit Committee regarding the quality, effectiveness, and objective periodic assessment of the adequacy of governance, risk management, and the design and operational effectiveness of internal controls. This includes an evaluation of the work performed by the First and Second Lines of Defense in achieving risk management and control objectives. In line with the regulatory framework, the Internal Audit function of Pak Libya reports functionally to the Board Audit Committee. The Internal Audit Department of Pak Libya is staffed with three Full-Time Equivalent (FTE) employees, including the Chief Internal Auditor, Mr. M. Shakiluddin.

The Company operates within a well-structured organizational framework designed to ensure the smooth execution of operations. To address the diverse functional requirements efficiently, the organization has been strategically divided into ten specialized departments namely (i) Corporate and Investment Banking, (ii) Private Equity & Strategic Initiatives, (iii) Treasury & Fund Management, (iv) Risk Management & Regulatory Compliance, (v) Legal Affairs & Special Assets, (vi) Operations, (vii) Finance, (viii) Human Resource & Admin, (ix) Information Technology, and (x) Internal Audit.

The MD & CEO, Mr. Tariq Mahmood holds a Master's degree from New Mexico State University USA and is also a CFA charter holder. He possesses more than twenty-five years of Corporate & Investment Banking Experience, including international exposure with a U.S. bank and the DMD, Mr. Bashir B. Omer Matok is a distinguished investment banker with diversified international exposure spanning 28 years. They are supported by a team of highly qualified and experienced professionals.

The management has multiple committees, namely Credit Committee, Asset & Liability Committee, Risk Review & Compliance Committee, IT Steering Committee, Human Resource Committee and Management Committee to ensure the smooth flow of operations. All these committees comprise of the heads of various departments.

The Company's MIS system fully implements IFRS-9 to calculate expected credit loss (ECL). The Company has an Oracle database system. The credit and treasury module is implemented on Dot.net and general ledgers and others on Oracle.

Pak Libya has an independent Risk Management & Regulatory Compliance Department that monitors credit, market, operational, and liquidity risks along with the Regulatory Compliance function. This department directly reports to the Executive Committee. The role of the ALCO, Risk Review & Compliance Committee and Credit Committee has been strengthened through monthly meetings and regular monitoring of the portfolio.

CY24 was a challenging year for the DFI industry in terms of Net Interest Margin (NIM) generation. However, consequent to interest rate cuts by SBP, NIMs started to improve from 4QCY24, primarily driven by prudent duration matching and effective market risk management, evidenced by the strategic reallocation of investment portfolios from fixed-rate to floating-rate PIBs and the non-rollover of maturing T-bills. As a result, repo borrowings were significantly reduced to PKR 179bln in CY24 from PKR 1.8trn in CY23. The DFI industry’s investment portfolio stood at PKR 1.6trn, primarily comprising PKR 1.1trn in federal government floating-rate PIBs, followed by PKR 323bln in fixed-rate PIBs. During the period, the Central Bank maintained an expansionary monetary policy stance to stimulate economic growth and support aggregate demand.

As of end-Dec24, with approximately 6% share in Advances, the Company falls in the low tier of the respective industry.

During CY24, the Company generated markup income of PKR 78.85bln (CY23: PKR 69.40bln; 1QCY25: PKR 11.22bln). A significant portion of this income was derived from treasury & fund management operations, followed by contributions from corporate & investment banking, as well as private equity & strategic initiatives. The investment yield slightly decreased following a reduction in the interest rates. The downward trend also extended to advances yields, although the income from advances remained stable. As a result, the Company's asset yield and the cost of funds moderated slightly during the period.

During CY24, the Company's net markup income reflected a slight compression at PKR 1.01bln (CY23: PKR 1.37bln). The Company witnessed a remarkable growth in its non-markup income at PKR 2.01bln (CY23: PKR 60.52mln) primarily on the back of a robust realized gain of PKR 1.82bln (CY23: PKR 2.39mln) from federal government securities. This was further supplemented by the fee and commission income and gain on modification loans, which has provided a cushion to the bottom line. The dividend income exhibited a dilution and was recorded at PKR 46.67mln (CY23: PKR 80.98mln). The Company’s non-markup expenses remained largely stable and clocked in at PKR 787.07mln (CY23: PKR 792.03mln), attributed to the controlled compensation expense. The Company booked a credit loss allowance of PKR 402.76mln primarily due to the prudent recognition of expected credit losses on the advances and investments portfolio. The Company’s net profitability reflected a slight improvement on a YoY basis and clocked in at PKR 357.62mln (CY23: PKR 329.94mln). During 1QCY25, the Company's NIM demonstrated a notable increase and clocked in at PKR 1.55bln. This growth was primarily driven by a strategic shift in the investment portfolio from fixed-rate PIBs to floating-rate PIBs, effective duration matching of the funding matrix, and the utilization of long-term bank credit lines alongside the reduction of reliance on OMO facilities. Consequently, the Company’s bottom line reflected an improvement clocking in at PKR 543.44mln.

Looking ahead, the management intends to establish a foothold in the Islamic banking domain. As part of its strategic initiative, the Company also aims to diversify its investment portfolio through strategic partnerships in the agri-export and fintech sectors.

During CY24, the gross lending mix tilted towards two sectors: Textile and Sugar while the top five sector concentration accounted for approximately 61% of the total gross advances portfolio with the highest concentration in the Textile sector at ~22%, followed by Sugar at ~11%, Construction at ~10%, Chemical & Pharmaceuticals at ~9%, and Agriculture, Forestry, Hunting & Fishing at ~8%. The Company’s top 10 exposures (funded & non-funded) continued to be primarily driven by funded exposures, amounting to PKR 3.16bln, reflecting the Company’s ongoing strategy of extending direct credit facilities to key obligors. In addition, there was a notable increase in non-funded exposures, which rose to PKR 2.34bln, indicating enhanced utilization of contingent credit facilities such as letters of credit (LCs) and guarantees issued mainly to FI’s. As of 1QCY25, the gross performing advances posted a considerable growth of 9.6%, reaching PKR 11.40bln (CY24: PKR 10.41bln) predominantly vested in the corporate and investment banking segment. Asset quality portrayed a slight improvement, as evidenced by a decline in the gross infection ratio to 17.8% (CY24: 19.6%). This improvement was supported by a stringent risk assessment framework and an in-house credit risk model, which contributed to a reduction in the gross NPLs. Correspondingly, the net NPLs-to-equity ratio was reported at 5.8% (CY24: 8.8%).

The Company’s investment portfolio is predominantly concentrated in federal government securities (Floater - Pakistan Investment Bonds) as a part of its strategy to mitigate the material impact of interest rate volatility. During 1QCY25, the Company prudently reduced the investment portfolio as a result of decline in the Policy Rate, amidst prevailing interest rate volatility, which reached PKR 302.30bln (CY24: PKR 340.16bln), comprising a substantial portion of the total earning assets. This high allocation to sovereign investments reflects the prudent investment strategy by the management, which yielded positive outcomes in contributing to a positive NIM supported by stable returns.

As of 1QCY25, the Company’s funding structure remained heavily reliant on borrowings, which accounted for a significant portion of the total liabilities. This borrowing base primarily comprised borrowings from financial institutions at PKR 169.50bln (CY24: PKR 204.50bln) and repurchase agreement borrowings (Repo) at PKR 131.15bln (CY24: PKR 109.58bln). Furthermore, the Company’s deposit base has a minimal contribution to the overall funding mix and is primarily composed of Certificates of Investment (COIs), which stood at PKR 7.75bln (CY24: PKR 10.13bln) due to low deposit mobilization, particularly from the private sector. The Net Stable Funding Ratio (NSFR) of the Company exhibited a notable improvement and was reported at 126% (CY24: 119%).

As of 1QCY25, the Company’s equity base was enhanced to PKR 6.88bln (CY24: PKR 6.08bln), remaining compliant with the Minimum Capital Requirement (MCR). This improvement was reflected in the equity-to-total assets ratio, which rose to 2.1% (CY24: 1.6%). The Capital Adequacy Ratio (CAR) also improved to 32.49% in 1QCY25 (CY24: 30.31%), reflecting a substantial buffer over the minimum regulatory requirement of approximately 11.5% set by the State Bank of Pakistan.