U MICROFINANCE BANK LIMITED

CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)

FOR THE PERIOD

January 01,2020
to
September 30,2020
U MICROFINANCE BANK LIMITED
CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION (UN-AUDITED)
As at 30 September, 2020
(Un-audited) (Audited)
September 30, 2020 December 31, 2019
Note Rupees Rupees

ASSETS

Cash and balances with SBP and NBP 4 2,380,289,184 1,717,205,410

Balances with other Banks/ NBFIs/ MFBs 5 4,978,665,353 3,019,826,466
Investments - net of provisions 6 3,979,658,778 6,969,538,668
Advances - net of provisions 7 27,895,857,824 21,374,079,265
Operating fixed assets 8 2,926,698,516 3,104,521,964
Other assets 9 6,590,212,296 3,828,677,455
Deferred tax asset 10 40,669,537 76,354,529
Total Assets 48,792,051,488 40,090,203,757

LIABILITIES

Deposits and other accounts 11 30,367,873,625 23,290,259,471

Borrowings 12 7,464,059,999 6,733,331,333
Subordinated Debt 13 3,799,280,000 4,599,400,000
Other liabilities 14 2,734,576,345 2,416,350,107
Total Liabilities 44,365,789,969 37,039,340,911
NET ASSETS 4,426,261,519 3,050,862,846

REPRESENTED BY:
-
Share capital 3,085,714,290 2,285,714,290
Discount on issue of share capital (25,714,290) (25,714,290)
Statutory and other reserve 229,644,265 229,644,265
Depositors' protection fund 57,411,066 57,411,066
Accumulated Profit 1,078,928,239 512,586,043
Share capital 4,425,983,570 3,059,641,374
Deficit on revaluation of assets 277,950 (8,778,528)
Deferred grants - -
Total Capital 4,426,261,519 3,050,862,846

MEMORANDUM / OFF BALANCE SHEET ITEMS 16

The annexed notes from 1 to 29 form an integral part of these financial statements.

PRESIDENT / CHIEF EXECUTIVE CHAIRMAN DIRECTOR DIRECTOR

U MICROFINANCE BANK LIMITED
CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2020
Period Ended
September 30, 2020 September 30, 2019
Note Rupees Rupees

Mark-up/ return/ interest earned 17 7,053,184,368 5,289,021,029

Mark-up/ return/ interest expensed 18 (3,226,122,344) (2,770,798,820)
Net mark-up/ interest income 3,827,062,024 2,518,222,209
Provision against non-performing advances 8.3 (965,458,889) (555,044,665)
Net mark-up/ interest income after provisions 2,861,603,135 1,963,177,544

NON MARK-UP/ NON INTEREST INCOME

Fee commission & brokerage income 19 789,850,610 547,667,341
Other income 20 43,492,628 20,499,960
Gain on Sale of AFS Investments 66,217,272 (1,280,741)
899,560,510 566,886,560
3,761,163,645 2,530,064,104

NON MARK-UP/ NON INTEREST EXPENSES

Administrative expenses 21 3,016,501,539 2,152,020,184

Other charges 21.1 5,477,000 5,422,000
3,021,978,539 2,157,442,184
PROFIT BEFORE TAXATION & WWF 739,185,106 372,621,920
Workers Welfare Fund (14,783,513) (7,031,815)
PROFIT BEFORE TAXATION 724,401,593 365,590,105

TAXATION
Current (123,972,608) (125,402,435)
Deferred (34,086,790) 40,454,950
22 (158,059,398) (84,947,485)

PROFIT AFTER TAXATION 566,342,195 280,642,620

Unappropriated Profit brought forward 512,586,043 324,888,330

Profit available for appropriation 1,078,928,239 605,530,951

APPROPRIATIONS:
Transfer to:
Statutory reserve - -
Depositors' Protection Fund - -

Unappropriated Profit carried forward 1,078,928,239 605,530,951

EARNINGS PER SHARE 26 2.05 1.23

The annexed notes from 1 to 29 form an integral part of these financial statements.

PRESIDENT / CHIEF EXECUTIVE CHAIRMAN DIRECTOR DIRECTOR

U MICROFINANCE BANK LIMITED
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2020

September 30, 2020 September 30, 2019

Rupees Rupees

Profit after Taxation for the period 566,342,195 280,642,620

Other comprehensive income/(loss) for period - -

Comprehensive income transferred to equity 566,342,195 280,642,620

Items that may be subsequently reclassified to profit and loss in subsequent periods:

Profit /Loss on revaluation of assets transferred to profit and loss (66,217,272) 1,280,741
Gain on revaluation of assets 106,019,379 (1,545,542)
Tax Impact (30,745,629) 84,460
9,056,478 (180,341)

Total comprehensive income for the period 575,398,673 280,462,279

The annexed notes from 1 to 29 form an integral part of these financial statements.

PRESIDENT / CHIEF EXECUTIVE CHAIRMAN DIRECTOR DIRECTOR

U MICROFINANCE BANK LIMITED p
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2020
Capital reserve Revenue reserve

Discount on issue of Depositors'

Share capital Statutory reserve Unappropriated profit Total
share capital protection fund

-------------------------------------------------------------Rupees---------------------------------------------------------------
Balance as at January 1, 2019(Audited) 2,285,714,290 (25,714,290) 178,914,625 44,728,656 324,888,330 2,808,531,611
Profit after taxation for the period - - - - - -
Other Comprehensive Income - net of tax - - - - - -

Transactions with owners for the period

Issue of share capital - - - - - -

Transfer to statutory reserve - - - - - -
Contribution to depositors' protection fund - - - - - -
Balance at 30 September 2019 (Un-audited) 2,285,714,290 (25,714,290) 178,914,625 44,728,656 324,888,330 2,808,531,611

Profit after taxation for the period - - - - 253,648,201 253,648,201

-
Other Comprehensive Income - - - - (2,538,438) (2,538,438)
- - - - 251,109,763 251,109,763
Issue of share capital

Transfer to: -
Statutory reserve - - 50,729,640 - (50,729,640) -
Depositors' Protection Fund - - - 12,682,410 (12,682,410) -
Interim cash dividend at 50 paisa per share - - - - - -
Issue of ordinary shares - - - - - -
Balance as at December 31, 2019 (Audited) 2,285,714,290 (25,714,290) 229,644,265 57,411,066 512,586,043 3,059,641,374
Statutory reserve - - - - - -
Depositors' Protection Fund
- - - - - -
Share Issuance
800,000,000 - - - - -
Profit for the period ended September 30, 2020 - - - - 566,342,195 566,342,195
Other Comprehensive Income - - - - - -
Balance as at September 30,2020 (Un-audited) 3,085,714,290 (25,714,290) 229,644,265 57,411,066 1,078,928,239 4,425,983,570

The annexed notes from 1 to 29 form an integral part of these financial statements.

PRESIDENT / CHIEF EXECUTIVE CHAIRMAN DIRECTOR DIRECTOR

U MICROFINANCE BANK LIMITED
CONDENSED INTERIM STATEMENT OF CASHFLOW (UN-AUDITED)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2020

September 30, 2020 September 30, 2019

Note Rupees Rupees

CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation 724,401,593 365,590,105
Less: Dividend income - -

Adjustments for non-cash charges

Depreciation 276,353,515 126,666,491
Amortization 28,484,633 16,644,983
Provisions against non-performing advances 965,458,889 555,044,665
Advances written off against provision (1,193,595,621) -
Provision for gratuity 28,935,250 24,672,321
Operating fixed assets written off - -
Gain on sale of fixed assets 134,359 -
Finance charges on leased assets 4,152,425 2,148,424
109,923,450 725,176,884
834,325,043 1,090,766,990
(Increase)/ decrease in operating assets
Advances (6,293,641,827) (3,325,655,336)
Other assets (excluding advance taxation) (2,697,698,792)
- (1,414,767,128)
Increase/ (decrease) in operating liabilities - -
Bills payables - -
Deposits and other accounts 7,077,614,154 (1,292,970,613)
Other liabilities (excluding current tax, 393,051,870 462,349,877
finance lease and provision for gratuity)
Cash generated from / (used in) operations (686,349,552) (4,480,276,210)

Gratuity paid (27,643,031) (30,638,957)

Income taxes paid (124,312,276) (82,917,788)
Net cash generated used in operating activities (838,304,859) (4,593,832,955)

CASH FLOW FROM INVESTING ACTIVITIES

Net investments in available for sale securities - Government securities 2,989,879,890 (511,521,455)
Net investments in term deposits receipts - 4,900,000,000
Investments in operating fixed assets (291,638,273) (781,915,938)
Net cash (Outflows)/ inflow from investing Activities 2,698,241,618 3,606,562,607
-
CASH FLOW FROM FINANCING ACTIVITIES -
Borrowings obtained/(repaid) during the period 730,608,666 1,134,544,733
Lending to Financial Institutions - (149,433,000)
Payments of lease obligations 31,377,238 (5,209,663)

Net cash inflow from financing activates 761,985,904 979,902,070

Net Increase/ (decrease) in cash and cash equivalents 2,621,922,663 (7,368,278)

Cash and cash equivalents at beginning of the period 4,737,031,876 2,584,697,832

Cash and cash equivalents at the end of period 23 7,358,954,539 2,577,329,554

PRESIDENT / CHIEF EXECUTIVE CHAIRMAN DIRECTOR DIRECTOR

U Microfinance Bank Limited
Notes to the Condensed Interim Financial Statements (Un-audited)
FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2020

1 STATUS AND NATURE OF BUSINESS

On 30 August 2012, Pakistan Telecommunication Company Limited (PTCL) acquired 100% shareholding of Rozgar
Microfinance Bank Limited, incorporated in Karachi on 29 October 2003 under the repealed Companies Ordinance, 1984
(now Companies Act, 2017), and its name was changed to U Microfinance Bank Limited (the Bank) with effect from 07
December 2012. On 31 January 2013, the Bank was granted license by State Bank of Pakistan (SBP) for commencement
of nationwide microfinance banking operations.

On 11 July 2013, approval for the nationwide commercial launch of Branchless Banking Services (BBS) was received
from SBP. The Bank commenced commercial operations of BBS on 23 July 2013.
The Bank's principle business is to assist in stimulating progress, prosperity and social piece in society through creation
of income generating opportunities for the small entrepreneur under the Microfinance Institutions Ordinance, 2001. The
Bank also provides branchless banking services. The Bank's head office and the principal place of business is located at
Jinnah Super Market, F-7 Islamabad Pakistan.

2. BASIS OF PRESENTATION

2.1 Condensed interim financial information has been prepared in accordance with the directives issued by SBP, the
requirements of the Microfinance Institutions Ordinance 2001 (the IMF Ordinance), the Companies Act, 2017 (the
Companies Act), the International Financial Reporting Standards (IFRSs) issued by the International Accounting
Standards Board (IASB) and the Interpretation issued by the Standards Interpretation Committee of IASB as adopted in
Pakistan. In case where provisions of directives issued by the SBP, the MFI Ordinance and the Companies Ordinance
differ with the requirements of these standards, such provisions of SBP directives, the MFI ordinance and the companies’
ordinance shall take precedence.

SBP vide BSD Circular no. 10 dated August 26, 2002 has deferred the applicability of International Accounting Standard
39, “Financial instruments: Recognition and Measurement” and International Accounting Standard 40, till further
instructions. Accordingly, the requirements of these standards have not been considered in the preparation of these
financial statements. However, investments have been measured in accordance with the requirements of SBP BSD
Circular no. 11 dated December 30, 2003 and prudential Regulations for Microfinance banks (the Regulations). Further,
the SECP vide its S.R.O No. 411(I) / 2008 dated April 28, 2008 has deferred the applicability of International Financial
Reporting Standards (IFRS) 7 ‘Financial Instruments’ till further orders, which is applicable for annual years beginning
on or after July 1, 2009.

2.2 The disclosures in this condensed interim financial information do not include that reported for full audited annual
financial statements and should therefore be read in conjunction with the audited annual financial statements for the year
ended December 31, 2019. Comparative statement of financial position is extracted from the audited annual financial
statements as of December 31, 2019, whereas comparative condensed statement of profit and loss account, condensed
interim statement of other comprehensive income, condensed interim cash flow statement and condensed interim
statement of changes in equity are stated from unaudited condensed interim financial information for the Nine months
period ended September 30, 2019.
3. SIGNIFICANT ACCOUNTING POLICIES AND FINANCIAL RISK MANAGEMENT

3.1 The accounting policies, significant judgments made in the application of accounting policies, key sources of estimations, the
methods of computation adopted in preparation of this condensed interim financial information and financial risk management
are the same as those applied in preparation of audited annual financial statements for the year ended December 31, 2019 and
June 30,2019 half year review.

3.2 The financial risk management objectives and policies adopted by the bank are consistent with those disclosed in the annual
financial statements.
(Un-audited) (Audited)
September 30, 2020 December 31, 2019
Note Rupees Rupees
4. CASH AND BALANCES WITH SBP AND NBP

Cash in hand
Local currency 936,995,894 618,822,600
Balances with State Bank of Pakistan (SBP)
Local currency current accounts 1,442,517,104 1,097,601,624
Balances with National Bank of Pakistan (NBP)
Local currency current accounts 776,186 781,186
2,380,289,184 1,717,205,410

4.1 This includes balance held with SBP in current account to meet the requirement of maintaining minimum balance equivalent to
5% (2019: 5%) of the Bank's time and demand deposits with the tenure of less than one year, in accordance with R-3A of the
regulations and Rs. 57,411,066 (2019: 57,411,066) placed for the Depositors' Protection Fund.

(Un-audited) (Audited)
September 30, 2020 December 31, 2019
Note Rupees Rupees
5. BALANCES WITH OTHER BANKS/ NBFIs/ MFBs

In Pakistan - Local currency

Current accounts 5.1 11,284,238 10,341,102
Deposit accounts 5.2 967,381,115 909,485,364
Term deposit receipts 4,000,000,000 2,100,000,000
4,978,665,353 3,019,826,466

5.1 This includes Rs. 9,600,000 (2019: Rs. 9,600,000) held as deposit under lien in respect of standby letter of guarantee issued to
China Union Pay International.

5.2 Deposit accounts carried interest at rates ranging from 5.50% to 9% (2019: 5.25% to 14.19%) per annum.

5.3 Term Deposit Receipts (TDR) carries markup at rate ranging between 11.50% to 12% (2019: 14.50%) per annum with
maturities upto 1 year.
(Un-audited) (Audited)
September 30, 2020 December 31, 2019
Rupees Rupees
6. INVESTMENTS
Available for Sale
Market Treasury Bills (T-Bills) 3,979,331,778 6,979,866,348
Unrealised loss on revaluation of investments 327,000 (10,327,680)
Add: Interest Receivable - -
3,979,658,778 6,969,538,668
7 ADVANCES - NET OF PROVISIONS (Un-audited) (Audited)
September 30, 2020 December 31,2019
Number of
Number of loans Amount outstanding Amount outstanding
Loan type loans
outstanding Rupees Rupees
outstanding
Micro credit
Secured 74,053 11,741,086,689 51,414 5,660,089,977
Unsecured 255,122 16,434,861,693 262,650 16,222,216,578
329,175 28,175,948,382 314,064 21,882,306,555
Accrued Interest
Provisions held
Specific provision 757 (14,608,020) 15,141 (353,264,391)
General provision 7.1 (265,482,537) (154,962,899)
(280,090,557) (508,227,290)
Advances - net of provisions 27,895,857,824 21,374,079,265

7.1 General provision is maintained at the rate of 1% (2019: 1%) of unsecured micro credit balance net of specific provision in accordance with the Regulations.

7.2 Particulars of non-performing advances

September 30, 2020 December 31,2019

Category of classification Provision - Provisions Provisions Amount Provisions Provisions
rate required held outstanding required held

-----------------------------------------------------------Rupees------------------------------------------------------

OAEM - 12,332,336 - - 291,695,211 - -

Sub-standard 25% 5,406,916 1,027,829 1,027,829 172,226,413 43,020,028 43,020,028
Loss 100% 10,477,192 9,814,872 9,814,872 187,452,157 187,235,557 187,235,557
37,908,990 14,608,021 14,608,021 897,834,753 353,264,391 353,264,391
7.3 Particulars of provisions against non-performing advances
(Un-audited) (Audited)
September 30, 2020 December 31, 2019
Specific General Total Specific General Total
-----------------------------------------------------------Rupees------------------------------------------------------

Balance at beginning of the period/ year 353,264,391 154,962,899 508,227,290 72,258,960 133,146,543 205,405,503
Provision charge for the period/ year 854,939,250 110,519,638 965,458,888 816,639,880 21,816,356 838,456,236
Reversals - - - (535,634,449) - (535,634,449)
Advances written off against provision (1,193,595,621) - (1,193,595,621) - - -
Balance at end of the period/ year 14,608,020 265,482,537 280,090,557 353,264,391 154,962,899 508,227,290
 (Un-audited) (Audited)
September 30, 2020 December 31, 2019
Note Rupees Rupees
8 OPERATING FIXED ASSETS
Capital work-in-progress 8.1 75,266,953 67,245,962
Property and equipment 8.3 1,455,433,762 1,508,798,675
Intangible assets 8.4 168,748,256 136,738,568
Right of use Asset (ROU) 8.2 1,227,249,545 1,429,341,831
2,926,698,516 3,142,125,036
8.1 Capital work-in-progress
Advances to suppliers/ contractors 10.1.1 27,926,998 29,663,568
Leasehold improvements 47,339,955 37,582,394
8,020,991 75,266,953 67,245,962

8.2 Right of use Asset (ROU)

Right of use Asset (ROU) 1,511,369,627 1,558,434,832
Accumulated Amortization-ROU assets (284,120,082) (129,093,001)
1,227,249,545 1,429,341,831

8.3 Property and equipment

September 30, 2020
Cost Depreciation Book value as at Rate of depreciation
As at January Addition Disposal/ As At Sep 30, As at January Charge for the Disposal/ As At Sep 30, September 30, 2020 %
1, 2020 Transfers 2020 1, 2020 period Transfers 2020 (per annum)

---------------------------------------------------------------------------------------------Rupees---------------------------------------------------------------------------------------------------

Assets Subject to Finance Lease

Vehicle 46,553,028 5,199,972 (6,239,236) 45,513,764 8,949,956 11,023,028 (1,397,342) 18,575,642 26,938,122 20.00%

Furniture and fixture 188,359,184 11,043,726 - 199,402,910 41,799,387 15,225,462 - 57,024,849 142,378,061 10.00%
Computers 200,257,510 54,888,400 - 255,145,910 139,307,999 103,777,495 - 243,085,494 12,060,416 33.33%
Electrical equipment 1,105,358,505 167,270,622 (34,652,577) 1,237,976,550 209,931,259 112,177,161 - 322,108,420 915,868,130 20.00%
Vehicle 31,597,740 - - 31,597,740 21,525,721 3,378,534 - 24,904,255 6,693,485 20.00%
Office improvement 454,119,198 24,080,352 - 478,199,550 95,932,168 30,771,835 - 126,704,003 351,495,547 10.00%

2,026,245,165 262,483,072 (40,891,813) 2,247,836,424 517,446,490 276,353,515 (1,397,342) 792,402,663 1,455,433,762

December 31, 2019

Cost Depreciation Book value as at Rate of depreciation
As at January Additions Deletion As at As at January Charge for the Disposal/ As at December 31, 2018 %
1, 2019 December 31, 1, 2019 year Transfers December 31, (per annum)
2019 2019
---------------------------------------------------------------------------------------------Rupees---------------------------------------------------------------------------------------------------
Vehicle 26,362,716 20,190,312 - 46,553,028 1,026,858 7,923,098 - 8,949,956 37,603,072
Furniture and fixture 137,162,430 51,196,754 - 188,359,184 25,072,232 16,727,155 - 41,799,387 146,559,797 10.00%
Computers 140,503,548 60,939,837 (1,185,875) 200,257,510 107,282,294 33,211,580 (1,185,875) 139,307,999 60,949,511 33.33%
Electrical equipment 306,699,356 798,659,149 - 1,105,358,505 106,812,632 103,118,627 - 209,931,259 895,427,246 20.00%
Vehicle 27,153,042 4,444,698 - 31,597,740 17,519,373 4,006,348 - 21,525,721 10,072,019 20.00%
Office improvement 280,045,330 174,073,868 - 454,119,198 64,626,411 31,305,757 - 95,932,168 358,187,030 10.00%
917,926,422 1,109,504,618 (1,185,875) 2,026,245,165 322,339,800 196,292,565 (1,185,875) 517,446,490 1,508,798,675

8.3.1 The cost of fully depreciated property and equipment that are still in use is Rs. 215,615,820 (2018: Rs. 198,483,015).
8.4 Intangible assets (Un-audited)
September 30, 2020
Cost Amortization Book value as at Rate of
As at January Additions Disposal/ As At Sep 30, As at January Charge for On As At Sep 30, September 30, amortization
1, 2020 Transfers 2020 1, 2019 the period deletions 2020 2020 %
(per annum)
---------------------------------------------------------------------------------------------Rupees-------------------------------------------------------------------------------------------
Branchless
banking software 229,957,645 25,841,744 34,652,577 290,451,966 93,219,077 28,484,633 - 121,703,710 168,748,256 10.00%
Licenses - - - - - - - - - 20.00%
Mail server - - - - - - - - - 33.33%

229,957,645 25,841,744 34,652,577 290,451,966 93,219,077 28,484,633 - 121,703,710 168,748,256

Cost Amortization Book value as at Rate of

As at January Additions Deletion As at As at January Charge for On As at December 31, amortization
1, 2019 December 31, 1, 2019 the year deletions December 31, 2019 %
2019 2019
---------------------------------------------------------------------------------------------Rupees------------------------------------------------------------------------------------------- (per annum)
Branchless
banking software 165,878,303 51,606,225 - 217,484,528 57,277,885 23,468,075 - 80,745,960 136,738,568 10.00%
Licenses 12,394,739 - - 12,394,739 11,994,749 399,990 - 12,394,739 - 20.00%
Mail server 78,378 - - 78,378 78,378 - - 78,378 - 33.33%

114,788,355 31,267,500 - 229,957,645 69,351,012 23,868,065 - 93,219,077 136,738,568

8.4.1 This includes operating system and microsoft office licenses.

 (Un-audited) (Audited)
Note September 30, 2020 December 31, 2019
Rupees Rupees

9. OTHER ASSETS

Income/ mark-up accrued 5,648,191,629 3,016,072,476

Advances, deposits and other prepayments 304,500,780 152,669,104
Advance taxation (payments less provisions) - 19,183,051
Receivable from Pak Telecom Mobile 3,055,477 -
Inventory of ATM cards & Stationery 14,884,639 8,472,151
Advance to employees 75,704,460 38,280,632
Receivable from SBP 9.1 459,149,770 497,710,786
Insurance claims receivable 77,450,305 78,298,383
Others 7,275,235 17,990,872
6,590,212,296 3,828,677,455

9.1 This represents the amount receiveable from SBP in respect of insurance premium paid by Ubank for livestock and crop loans
under AC&MFD circular no. 01 of 2013 dated November 01, 2013.

(Un-audited) (Audited)
September 30, 2020 December 31, 2019
Rupees Rupees
10. DEFFERED TAX ASSET

Deductable temporary differences arising in respect of

Provision against advances 81,226,262 147,385,914
Surplus/(Deficit) on revaluation of available for sale securities (49,050) 1,549,152
Remeasurements of employees’ retirement benefits 3,259,061 3,259,061
Minimum Tax over Normal tax -
Lease finance facilities 56,797,104 34,200,832
Accelerated tax depreciation / amortization (84,266,754) (97,299,842)
Treasury Bills (16,297,086) (12,740,588)
40,669,537 76,354,529
 (Un-audited) (Audited)
September 30, 2020 December 31, 2019
Number of Number of
accounts Rupees accounts Rupees
11. DEPOSITS
Fixed deposits 2,414 18,810,784,561 2,678 14,836,423,300
Saving deposits 13,996 9,446,669,928 12,652 6,071,321,337
Current deposits 1,201,072 2,110,419,136 824,179 2,382,514,834
1,217,482 30,367,873,625 839,509 23,290,259,471

(Un-audited) (Audited)
Note September 30, 2020 December 31, 2019
12. BOROWINGS
Borrowings from Banks/Financial Institutions in Pakistan
Borrowings from Allied Bank Ltd 12.1 249,999,998 750,000,000
Borrowings from Faysal Bank Ltd 12.2 500,000,000 833,333,333
Loan Allied Bank Ltd-2 12.3 3,333,333,334 2,000,000,000
NBP-Running Finance 12.4 500,000,000 500,000,000
Loan Faysal Bank Ltd-2 12.5 833,331,667 999,998,000
Bank of Punjab 12.6 50,000,000 150,000,000
State Bank of Pakistan (LOC) 12.7 1,500,000,000 1,500,000,000
Repo Borrowing 12.8 497,395,000 -
7,464,059,999 6,733,331,333

12.1 This represents outstanding balance of term finance facility under syndicate financing through Allied Bank Limited of Rs. 1,500 million carrying markup of 6-
months KIBOR plus 1.10% (2019: 6-month KIBOR plus 1.10%) per annum payable semi-annually. These facility is secured against first pari passu charge over all
present and future assets of U Microfinance Bank Limited with 25% margin. This loan is repayable in 6 equal semi-annual instalments of Rs. 250 million each.
Repayments have started from September 2018.
This represent term finance loan of Rs. 1 billion carrying markup of 6-months KIBOR plus 1% per annum (2019: 6-Months KIBOR plus 1% per annum) payable
12.2 semi-annually. The Loan is secured against first pari passu charge on book debts, advances and receivable of the Bank with 25% margin and Microfinance Credit
Guarantee Facility from State Bank of Pakistan at 25%. This loan is repayable in 8 equal semi-annual instalments of Rs. 166.67 million each commencing from
August 2019.
12.3 This represents term finance facility under syndicate financing through Allied Bank Limited of Rs. 2 billion carrying markup of 6-months KIBOR plus 0.95% per
annum (2019: 6-Months KIBOR plus 0.95% per annum) payable semi-annually in arrears. This is secured against first pari passu charge over all present and future
assets excluding land and building of the Bank but not limited to advances and investments beyond CRR and SLR requirements of the Bank with 25% margin.
Disbursement was initially made against a ranking charge which was upgraded to 1st pari pasu with in 120 days of first disbursement.This loan is repayable in 06
equal semi-annual instalments with the first principal repayment falling due on eighteenth (18th) month from the first disbursement date. The loan was drawn on 31
December 2018.In accordance with the agreement entered into with Allied Bank Limited,the Bank was required to maintain certain ratios which exceeded the
required threshold as at year end.

12.4 This represents Utilized amoutn of running finance facility through National Bank of Pakistan Limited of Rs. 500 million carrying markup of 3-months KIBOR plus
0.75% per annum (2019: 3-Months KIBOR plus 0.75% per annum). This is secured against first pari passu charge on all current and future book debts, advances
and receivable of the Bank. The initial disbursement was made against ranking charge which was upgraded to first pari passu charge within 120 days from date of
disbursement. Markup is repayable on quarterly basis.

12.5 This represent term finance loan of Rs. 1 Billion carrying markup of 6-months KIBOR plus 0.75% per annum (2019: 6-Months KIBOR plus 0.75% per annum).
This is secured against first pari passu charge on book debts, advances and receivables of the Bank for Rs. 1,333 million (25% margin). Initial disbursement on
ranking charge will be upgraded to first pari passu within 90 days from the date of this offer letter dated 21 December 2018. This loan is repayable in 6 semi-annual
instalments of Rs. 166.66 million each after grace period of 01 year with the notional principle of Rs. 1000 within first two semi-annual mark-up payments.

12.6 This represent term finance loan of Rs. 200 million carrying markup of 6-months KIBOR plus 0.85% per annum (2019: Nil). This is secured against first pari passu
charge on book debts, advances and receivables of the Bank for Rs. 266.67 million (25% margin). This loan is repayable in 4 semi-annual instalments of Rs. 50
million each after grace period of 06 months.The Loan was Disbursed on 12 March 2019.
12.7 This represent term finance loan of Rs. 1,500 million carrying markup of 6-months KIBOR minus 100 bps (2019: 6 Months KIBOR minus 100 bps) for the tenor of
five years. Markup amount is payable on every half year end i.e 30 June and 31 Decemeber, while payment of principle will be made in the last four quarters of the
loan period or in Bullet Form.The loan is provided against the following target set by the SBP;
-the loan should be disbursed to 60% female borrowers
-the Bank should disburse 25,000 loans;and
-all loans disbursed should meet the E&S guidline issued by SBP.
12.8 This represent Repo Borrowing from NBP at the rate of 7.10% amounting to Rs. 497M with the tenor of less than a month.
 (Un-audited) (Audited)
Note September 30, 2020 December 31, 2019
13. SUBORDINATED DEBT
Term Finance Certificates 13.1 599,280,000 599,400,000
Subordinated loan PTCL 13.2 3,200,000,000 4,000,000,000
3,799,280,000 4,599,400,000

This represents term finance certificates (TFCs) of Rs. 600 million distributed in 120,000 TFCs of Rs. 5,000 each issued as subordinated loan in June 2017. The
13.1
loan is availed as TIER-II subordinated debt for inclusion in the Bank's Supplementary Capital. The facility tenure is 7 years and is priced at 6 Month KIBOR +
3.50% (2019: 6 Month KIBOR + 3.50%). The instrument is structured to redeem 0.02% of principal, semi-annually, over the first 60 months and remaining
principal of 24.95% each of the issue amount respectively, in four equal instalments starting from 66th month. The TFCs are subordinated as to the payment of
principal and profit to all other indebtness of the Bank. The rating of these certificates issued by JCR-VIS is A- with an stable outlook.

13.2 This represents unsecured, subordinated debt from PTCL, the Parent Company. The facility tenure is 7 years with grace period of 5 years and is priced at 3 Month
KIBOR + 2% (2019: 3 Month KIBOR + 2%) per annum. The loan is availed as TIER-II subordinated debt for inclusion in the Bank's Supplementary Capital. Loan
is structured to redeem in four equal semi-annual instalments starting from June 2024. The debt will be unsecured, subordinated as to the payment of principle and
profit to all other indebtness of the Bank, including deposit and it is not redeemable before maturity without prior approval of the SBP. During the period, the bank
issued 80 million shares by way of other than right shares under section 83(1)b of the companies act, 2017 at par value of Rs. 10 per share to Pakistan
Telecommunication Company Limited (PTCL) by conversion of Tier-II Unsecured & subordinated debt into common shares amounting to Rs. 800 million.

(Un-audited) (Audited)
September 30, 2020 December 31, 2019
Rupees Rupees
14. OTHER LIABILITIES

Mark-up / return / interest payable 987,735,972 491,831,224

Accrued expenses 12,365,901 301,681,149
Payable to Utility Companies for utility bills collection - 11,512,274
Payable to Pak Telecom Mobile Limited (PTML),an associated company 182,164,078 63,427,705
Uncollected remittances 58,979,812 62,260,334
Payable to defined contribution plan - provident fund 2,513,963 3,517,822
Payable to staff retirement benefit - gratuity 2,528,021 1,235,802
Sales tax / federal excise duty 19,522,719 -
Lease Liability 1,251,163,716 1,350,956,711
Bills payable 89,908,247 70,834,204
Others 80,460,357 26,642,836
Workers' Welfare Fund 47,233,559 32,450,046
2,734,576,345 2,416,350,107
15. SHARE CAPITAL

15.1 Authorized capital

(Un-audited) (Audited) (Un-audited) (Audited)

September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019
Number Number Rupees Rupees

800,000,000 800,000,000 Ordinary shares of Rs. 10 each 8,000,000,000 8,000,000,000

15.2 Issued, subscribed and paid-up capital

`
September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019
Number Number Rupees Rupees

Ordinary shares of Rs. 10 each fully

20,000,000 20,000,000 paid in cash 200,000,000 200,000,000

Fully paid shares of Rs. 10 each issued

8,571,429 8,571,429 as right shares at discounted rate of Rs. 85,714,290 85,714,290
7 each
Fully paid ordinary shares of Rs.10
200,000,000 200,000,000 each in cash issued as right shares at 2,000,000,000 2,000,000,000
par
Fully paid ordinary shares of Rs.10
each in cash issued as other than right
80,000,000 - shares at par 800,000,000 -
308,571,429 228,571,429 3,085,714,290 2,285,714,290

16. MEMORANDUM / OFF BALANCE SHEET ITEMS

16.1 Contingencies

There are no material contingencies as at 30 September 2020 (2019: Nil).

16.2 Commitments - (Un-audited) (Audited)

September 30, 2020 December 31, 2019
Rupees Rupees
Standby letter of guarantee 5.1 9,600,000 9,600,000
Property and equipment 11,668,850 78,008,400
Intangible assets - 1,162,500

(Un-audited) (Un-audited)

PERIOD ENDED
September 30, 2019 September 30, 2019
Rupees Rupees
17. MARK-UP/ RETURN/ INTEREST EARNED
Mark-up / return / interest on advances 6,285,151,442 4,255,002,434
Interest on investments in government securities 356,997,977 175,919,787
Interest on deposit accounts / TDRs with other
banks / financial institutions 411,034,949 858,098,808
7,053,184,368 5,289,021,029

18. MARK-UP/ RETURN/ INTEREST EXPENSED

Mark-up / return / interest expense on deposits 2,132,495,880 1,709,346,417
Mark-up expense on borrowings from banks / financial institutions 1,093,626,464 1,061,452,403
3,226,122,344 2,770,798,820
19. OTHER CHARGES COLLECTED FROM CUSTOMERS
Loan processing fee 699,305,667 491,770,004
Other fee income collected from customers 90,544,943 55,897,337
789,850,610 547,667,341

(Un-audited) (Un-audited)
September 30, 2019 September 30, 2019
Rupees Rupees
20 OTHER INCOME
Recovery against advances written off 42,340,189 20,013,105
21. Miscellaneous
Loss on sale of income
fixed assets 1,152,439
- - 486,855
43,492,628 20,499,960
 (Un-audited) (Un-audited)
September 30, 2019 September 30, 2019
21 ADMINISTRATIVE EXPENSES
Staff salaries and benefits 1,370,850,838 1,076,394,637
Charge for defined benefit plan - gratuity 28,935,250 24,672,321
Contribution to defined contribution plan - provident fund 26,572,999 20,783,378
Insurance 103,781,421 61,455,052
Rent, rate and taxes 56,304,699 163,095,264
Marketing Expenses 31,061,876 15,675,310
Travelling and conveyance 29,811,655 63,197,228
Postage and courier 14,793,059 14,376,818
Utilities 99,011,843 69,450,388
Repair and maintenance 156,262,689 108,804,512
Depreciation and amortization 469,695,428 191,269,605
Software support and maintenance fee 97,206,748 45,470,758
Stationery and printing 70,911,014 28,819,794
Auditors' remuneration 3,244,499 2,277,655
Legal and professional fee 21,607,832 18,316,343
Security services 158,767,501 135,175,192
Interest expense on ROU liability 121,648,907 24,904,601
Financial charges on leased assets 4,152,425 2,148,424
Office supplies 17,541,597 22,617,352
Internet and connectivity charges 83,687,640 21,361,318
NADRA verification charges 27,739,483 19,742,779
Bank and Collection charges 18,045,488 8,546,341
Other 4,866,648 13,465,115
3,016,501,539 2,152,020,184

21.1 SBP penalty 5,477,000 5,422,000

5,477,000 5,422,000

22. TAXATION
Current - for the period (123,972,608) (123,889,251)
- for prior period - (1,513,184)

Deferred - for the period (34,086,790) 40,454,950

- for prior period -- -
(34,086,790) 40,454,950
(158,059,398) (84,947,485)

30-Sep-20 30-Sep-19
Rupees Rupees

23. CASH AND CASH EQUIVALENTS

Cash and balances with SBP and NBP 2,380,289,184 1,409,977,165

Balances with other banks / NBFIs / MFBs 4,978,665,353 1,167,352,389
7,358,954,537 2,577,329,554

(Un-Audited) (Audited)
September 30, 2019 December 31, 2019
Rupees Rupees
24. NUMBER OF EMPLOYEES

Credit sales staff

Permanent 110 127
Contractual 919 915
1,029 1,042
Banking/ support staff
Permanent 688 683
Contractual 911 875
Outsourced - -
1,599 1,558
Total number of employees at the end of the period/ year 2,628 2,600

Average number of employees during the period/ year 2,590 2,376

25. NUMBER OF BRANCHES
Branches at beginning of the period/ year 212 141
Opened during the year
- Branches - 61
- Service Centers / FCs - 10
Closed/ merged during the year - -
Branches at the end of the period/ year 212 212

26. EARNING PER SHARE

(a) Basic
Basic earning per share is calculated by dividing the profit attributable to equity holders of the Bank by the weighted average number of ordinary shares in issue during the year.

YTD YTD
September 30, 2020 September 30, 2019
Rupees Rupees

Profit attributable to equity holders (Rupees) 566,342,195 280,642,620

Depositors' Protection Fund - -

Profit/ (loss) attributable to equity holders (Rupees) 566,342,195 280,642,620

Opening Ordinary shares outstanding (numbers) -

Weighted average number of shares in issue (numbers) 276,162,670 228,571,429
Total shares (numbers) 276,162,670 228,571,429

Earning per share - basic (Rupees) 2.05 1.23

(b) Diluted
There is no dilutive effect on the basic earning per share of the Bank.
U MICROFINANCE BANK LIMITED
NOTES TO THE FINANCIAL STATEMENTS

27 RELATED PARTIES TRANSACTIONS

The Bank is a subsidiary of Pakistan Telecommunication Company Limited ("the Parent Company"). Therefore all
subsidiaries and associated undertakings of the Parent Company are related parties of the Bank. Other related parties
comprise of directors, key management personnel, entities over which the Bank has significant influence, entities having
common directors and entities over which the directors are able to exercise significant influence and employees
retirement benefit funds. Detail of transactions during the year and balances outstanding as at the reporting date are as
follows:

Transactions Sep-20 Sep-19

Transactions Rupees Rupees

Parent Company

Utility Bill collected on behalf of the Parent Company 60,868,199 53,688,696

Payment in regards utility bills collected on behalf of the Parent Company 60,868,199 53,688,696
Utility Bill collection charges 621,309 195,741
Payment for administrative costs and fixed assets 73,577,317 31,421,231

Interest expense on TIER-II subordinated Debt Payment 338,940,550 404,227,927

Interest expense on PTCL employee GP fund 146,794,243 80,189,464
Advance for purchase of ICT hardware - 69,287,244

Associated Company - Pak Telecom Mobile Limited (PTML)

Payment for administrative costs and fixed assets 12,721,710 33,678,672

Payment against branchless banking and bills collected 151,985,754 171,488,100
Amount received against reimbursement of agent's commission 198,804,036 203,626,988
Interest expense on deposits - 45,508,481
-
Associated Company - Pakistan Telecommunication Employees Trust (PTET)
Interest expense on deposits 77,106,137 72,980,137

Employees' provident fund

Contribution to provident fund 26,572,999 20,783,378

Employees' gratuity fund

Payment to gratuity fund 28,935,250 24,672,321

Balances Sep-20 Dec-19

Rupees Rupees
Parent Company

Payable against utility bills collected 1,138,385 35,948

Utility bills collection charges receivable 2,061,426 1,792,839
Employee GP fund 1,825,980,318 1,383,127,074
Subordinated Debt -Tier II 3,200,000,000 4,000,000,000
Interest payable on Tier- II Sub ordinated loan 303,387,103 374
U MICROFINANCE BANK LIMITED
NOTES TO THE FINANCIAL STATEMENTS

Sep-20 Dec-19
Balances Rupees Rupees

Interest payable on deposits - PTCL Employees' GP Fund 146,794,243 7,130,217

Associated Company - Pakistan Telecommunication Employees Trust

Deposits 2,120,269,752 1,050,001,647

Interest payable on deposits 24,109,589 39,378,995

Associated Company - Pak Telecom Mobile Limited

Employees' Gratuity fund 472,657,538 400,088,157
Payable against branchless banking and bills collected 182,164,078 63,427,705
Interest payable on deposits 7,548,630 352,811

Employees' provident fund

Payable to provident fund 2,513,963 3,517,822

Employees' gratuity fund

Payable to gratuity fund 2,528,021 1,235,802

28 GENERAL
Comparative information has been reclassified, rearranged or additionally incorporated in these financial statements for
the purposes of better presentation.
28.1 Captions, as prescribed by BSD Circular No. 11, dated 30 December 2003 issued by SBP, in respect of which there are
no amounts, have not been reproduced in these financial statements, except for the captions of the balance sheet and
profit and loss account.

29 DATE OF APPROVAL

These financial statements were approved by the Board of Directors of the Bank in their meeting held on
___________________ .

PRESIDENT / CHIEF EXECUTIVE CHAIRMAN DIRECTOR DIRECTOR