On behalf of the Board of Directors and the Management of First Women Bank Limited, I am pleased to present the performance review for the financial year 2005 and the 16th Annual Report of the Bank, together with the Audited Accounts and Auditors' Report thereon for the year ended as at December 31, 2005.

ECONOMY:
Pakistan's economy strengthened with a sharp increase in GDP growth rate of 8.4%, Fiscal deficit decreased to 4%. Foreign exchange Reserves witnessed strong build-up to US Dollar 13 billion by 2005 with stability in the exchange rate at around Rs. 60 per US Dollar. Dependence on domestic debts resulted in sharp decline of external debt balance by US Dollar 3 billion over the period, despite the national tragedy caused by the earthquake in the northern areas of NWFP and Azad Jammu & Kashmir on October 8, 2005.

Karachi Stock Exchange (KSE) showed record performance during the year, as KSE-100 index frossed 11,000 points in 2005 and averaged around 7,500 points during 2005. The market capitalization increased to Rs. 1,346 billion by December 2005.

he banking industry has played a vital role in strengthening the economy. The financial sector is feing liberalized and de-regulated through structural reforms that include enhancing the capital structure & its risk adequacy, strengthening asset quality, internal controls & systems, good overnance and credit rating of financial institutions. Banks are now allowed to set their lending and deposit rates, in line with market trends and economic indicators.

After the recent privatization of Habib Bank Ltd. (HBL) and United Bank Ltd. (UBL) the combined market share of public sector banks, in the total banking assets, has declined to 20%, while it was Over 80% in early 90's.

Pakistan's economy has not only demonstrated greater resilience but also strengthened the economic fundamentals. We too at FWBL have benefited from the trickle down effects of the robust economic growth and the Government's affirmative initiatives for women.

FINANCIAL PERFORMANCE REVIEW 2005:

We would like to present the Bank's performance during the year 2005. The Bank has achieved the highest operational profit of R3. 220.620 million during 1989-2005. The Bank had to further book additional provision of Rs. 13.474 million due to amendment in Regulation R-8 relating to classification and provisioning of assets' in 'Prudential Regulations for Corporate/ Commercial banking'. Had this change not taken place, the profit before taxation for the year would have been Rs.234.094 million. During the years from 2001 to 2005, besides wiping out losses of Rs. 138 million, the Bank had to absorb additional burden of Rs. 146 million due to shortfall in provisions
ertaining to the years prior to 2001.

The year 2005 was the most challenging year for the Bank due to its inability to meet the minimum capital requirements.

Profit from Core Activities during the year was Rs. 220.620 million, which is the highest ever, during the last sixteen years from 1989 to 2005.