The Bank of Punjab ("BoP" or the "Bank") was established under the BoP Act 1989 (the Act), as a non-scheduled bank, and was subsequently converted into a scheduled bank in 1994. The Bank has its registered office at BOP Tower, 10-B, Block E-II, Main Boulevard, Gulberg III, Lahore. As of end-Sep25, the Bank operates with a network of 900 branches (end-Dec24: 900 branches) and employs 15,148 employees at end-Sep25 (end-Dec24: 14,656). BoP offers a wide range of services across retail, corporate, SME, agriculture, and Islamic banking. Its retail products include deposit accounts, loans, and card services, while corporate and SME clients benefit from various financing and advisory solutions. BoP began Islamic banking in 2013 under the brand name “Taqwa Islamic Banking”. At end-Sep25, there are 210 (end-Dec24: 210) fully functional Islamic Banking Branches and 534 (end-Dec24: 258) Islamic banking windows, offering Shariah-compliant products like Murabaha and Ijarah. The Bank also supports agriculture finance and has enhanced customer convenience through robust digital banking platforms.

The Government of Punjab (GoPb) holds a controlling stake of 57.47% in the Bank of Punjab. The rest of the shareholding is by individuals at 25.56% and institutions at 16.97%. The ownership structure of the Bank is seen as stable, as no ownership changes are expected in the future. The majority stake will rest with the Government of Punjab. Sponsor's business acumen is considered good, as BoP has been achieving milestones by successfully making the right business decisions. Over the last few years, it has sustained being a profitable institution. BoP, being one of the flagship entities under the umbrella of the Government of Punjab, willingness to support the Bank in case the need arises is considered high; also supplemented by access to the capital markets.

The control of the Bank vests with a seven-member Board of Directors (Board) comprising three independent directors, three non-executive directors, and one executive director, the Chief Executive Officer (CEO). Four members represent the GoPb. Mr. Syed Ghazanfar Abbas Jilani, Chairperson of the Board, is a retired Federal Secretary with extensive experience in finance, international cooperation, and public service since 1984. He holds an MBA and an Economics degree, and currently serves as a director at Jilani Organic (Pvt) Limited. The Board exercises close monitoring of the management’s policies and the Bank’s operations via six sub-committees. M/s. A.F. Ferguson & Co, Chartered Accountants, classified in category 'A' by SBP and having a satisfactory QCR rating, are the external auditors for BoP. They expressed an unqualified opinion on the financial statement for the year ended 31st December 2024.

The Bank operates with a streamlined organizational framework, where experienced senior management leads each functional area and/or unit. This structure incorporates essential segregation of duties, ensuring a robust control environment. The Bank's operations are further specialized across various groups, each dedicated to distinct banking functions and support services. Mr. Zafar Masud, President and CEO of the Bank, is a seasoned banker with 27 years of leadership experience in both public and private sectors. He has held key roles in the Ministry of Finance and serves on multiple high-profile boards, including the State Bank of Pakistan and major corporations. The senior management consists of seasoned bankers having diversified experience. The Bank has various committees in place at the management level to oversee its day-to-day operational matters and make decisions to implement the strategy outlined for it by the Board. A comprehensive IT security policy has been put in place along with risk mitigation protocols. The Bank has been using the internationally renowned Oracle-based Core Banking System (CBS) ‘Flexcube,’ with all branches migrated to the new system. The Bank follows a disciplined and comprehensive risk management approach, using self-assessments, stress testing, and early warning indicators to monitor and mitigate risks. Led by CRO - Mr. Arsalan Muhammad Iqbal, the Risk Management Division oversees various risk areas, with specialized units handling credit, market, operational, and other risks.

During 9MCY25, Pakistan's Banking sector's total assets posted growth of ~9.5% YTD whilst investments surged by ~23.4% to PKR ~36.7trln (CY24: PKR ~29.8trln). Net Advances of the sector recorded a decline of ~16.3% to stand at PKR ~13.2trln (CY24: PKR ~15.8trln). Non-Performing Loans (NPLs) witnessed a decrease of 11.2% YTD to PKR ~948bln (CY24: PKR ~1,068bln). The Capital Adequacy Ratio (CAR) averaged at 22.1% (CY24: 20.6%). Given the low monetary rate and high cost environment, Banks are likely to show some dilution in profitability by the end of CY25. (Source: SBP Compendium). BoP, a medium-sized Bank, holds a customer deposit base of PKR 1,875.7bln other than financial institutions at end-Sep25 (end-Dec24: PKR 1,693.4bln). On such basis, the market share of deposits of the Bank stood at 5.6% (end-Dec24: 5.8%). During 9MCY25, BoP’s NIMR increased by 90.7% YoY to PKR 58.5bln (9MCY24: PKR 30.7bln), primarily driven by a decline in mark-up expenses, which were reported at PKR 143.7bln (9MCY24: PKR 234.8bln), down 38.8% YoY. While the mark-up income stood at PKR 202.2bln (9MCY24: PKR 265.5bln), representing a decrease of 23.8% YoY. The mark-up income came from investments, debt instruments, and other earning assets, totaling PKR 130.6bln (9MCY24: PKR 172.9bln), down 24.5% YoY, while mark-up earned from advances amounted to PKR 71.5bln (9MCY24: PKR 92.5bln), a 22.6% YoY decrease. The Bank’s asset yield was reported at 12.4% (9MCY24: 19.1%), while the cost of funds decreased to 8.6% (9MCY24: 16%). Consequently, the net interest spread stood at 3.8% (9MCY24: 3.1%). During 9MCY25, the non-markup income was reported at PKR 15.1bln (9MCY24: PKR 15.7bln), with major contributions from FCY income, which increased by 146.6% YoY, and fee & commission income, which grew by 30.6% YoY. Subsequently, non-markup income to total income declined to 20.5% (9MCY24: 33.9%). The non-markup expenses increased by 27.6% YoY to PKR 45bln (9MCY24: PKR 35.3bln). The total provisioning reversals of the Bank stood at PKR -2.1bln (9MCY24: PKR 3.5bln). The net profitability increased by 41.9% YoY to PKR 11.9bln (9MCY24: PKR 8.4bln). The management envisages growth in the deposit base while bringing granularity to the customer base through further private-sector deposits, which will optimize the cost of funding. Growth in advances is also the focus of the management, wherein the criteria are higher margins and a sustainable risk profile. Implementation of modern technological tools would help in improving the control regime and bringing efficiency to the operation.

At end-Sep25, the Bank's net advances were reported at PKR 785bln (end-Dec24: PKR 777.4bln). Consequently, the Advance-to-Deposit Ratio (ADR) stood at 41.6% (end-Dec24: 45.4%), indicating an adequate lending approach. Subsequent to the implementation of IFRS-9, Non-Performing Loans (NPLs) stood at PKR 53.9bln (end-Dec24: 53.5bln). The investment portfolio of the Bank has increased by 9.3% to stand at PKR 1,443.9bln (end-Dec24: PKR 1,320.9bln). The Bank’s investment portfolio is primarily composed of Government securities. These mainly include Pakistan Investment Bonds (PIBs), followed by Market Treasury Bills (T-Bills), while the concentration in Ijarah Sukuk has increased. The sharp rise in overall investments, particularly in long-term PIBs and short-term T-Bills, reflects a dual approach to optimize returns while maintaining liquidity. The consistent concentration in government-backed instruments highlights the Bank’s conservative and stability-focused investment strategy, aiming to balance yield enhancement with capital preservation in a changing interest rate environment. At end-Sep25, total deposits increased by 10.2% to stand at PKR 1,885.1bln (end-Dec24: PKR 1,710.3bln). A significant contributor to this growth was 10.6% increase in Current Account (CA) deposits, which rose to PKR 391.8bln (CY24: 354.1) and now constitute 20.8% of total deposits (CY24: 20.7%). These deposits have more than doubled over the past three years. Meanwhile, Savings Account (SA) deposits moderated to 38% (end-Dec24: 41%), suggesting a strategic rebalancing. Additionally, the Bank’s liquidity position strengthened, as the Liquid Assets-to-Deposits and Borrowings Ratio rose to 61.5% (end-Dec24: 59.3%). The Bank remains well-capitalized, maintaining strong buffers above regulatory requirements. As of end-Sep25, the Capital Adequacy Ratio (CAR) stood at 17.43% (CY24: 17.93%), with a Tier I CAR of 13.64% (CY24: 14.26%), in full compliance with SBP’s minimum thresholds. The Bank is committed to sustaining capital ratios significantly above the regulatory benchmarks to ensure robust risk absorption capacity. The Bank has issued five Term Finance Certificates (TFCs) to raise capital.

The Bank of Punjab has issued unsecured, subsequently listed, subordinated, perpetual, rated, and non-cumulative in the nature of additional tier I capital term finance certificates ("TFCs" or the "Instrument") of amount PKR 3.950bln to contribute towards BoP's Tier I Capital. The funds raised are utilized in the Bank's business operations as permitted. The instrument is perpetual. The profit rate is 6M-KIBOR plus 200bps p.a. and payable semiannually in arrears on the outstanding principal. The instrument also bears a call option exercisable after 5 years of disbursement date.

The Instrument is unsecured and subordinated as to payment of principal and profit to all other claims except common shares and is pari passu to other Additional Tier I instruments. In addition to the Lock-In Clause, the Instrument will be subject to 1) Loss absorption upon the occurrence of a Pre-Specified Trigger (“PST”) i.e., issuer’s CET1 ratio falls to/below 6.625% of Risk-Weighted Assets; and 2) Loss absorption and/or any other requirements of SBP upon the occurrence of a Point of Non-Viability (“PONV”). Upon reaching the pre-defined trigger point or point of non-viability (PONV), the TFC may be partially or fully converted into equity/written off as per the discretion/instructions of SBP. Number of shares to be issued to TFC holders at the time of conversion will be equal to the ‘Outstanding Value of the TFCs divided by Market value per share of the Bank’s common share on the date of the trigger event as declared by SBP, subject to a cap of 1,122,394,441 ordinary shares

The instrument is unsecured and subordinated.