“if you have any query about this document, you may consult the...

“If you have any query about this document, you may consult the issuer and the trustee”

Date of Issuance of Information Memorandum:

Information Memorandum

Private placement of 400 coupon-bearing non-convertible redeemable unsecured Subordinated

Bonds of BDT 10,000,000 each at par totaling BDT 4,000,000,000.

Coupon Rate / Yield to Maturity: Latest 5-year Bangladesh Government Treasury Bond Cut-off Yield +

3% Margin.

Coupon Range: 11.5% to 13.50% at all times

Issuer:

AB Bank Limited

BCIC Bhaban, 30-31 Dilkusha C/A, Dhaka 1000, Bangladesh

Phone: +88 02 9560312, Fax: +88 02 9564122-23, Website: www.abbl.com

Trustee to the Issue:

IDLC Finance Limited

Type of Security: Coupon-bearing Non-convertible Redeemable Unsecured Subordinated Bond

Face Value: BDT 10,000,000 of Each Bond

Issue Price: BDT 10,000,000 of Each Bond

Total Issue Amount: BDT 4,000,000,000 (divided into 400 number of securities)

Credit Rating to the Issue: A1 (hyb)

Credit Rating Agency of Bangladesh Limited (CRAB)

Lead Arranger:

RSA Capital

R S ACapital

Information Memorandum Subordinated Bonds of up to BDT 4,000 Million

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Disclaimer

AB Bank Limited (hereinafter referred as the “Bank” or the “ABBL” or the “Issuer”) has authorized RSA

Capital (hereinafter referred as “RSAC” or the “Arranger”) to distribute this Information Memorandum

(IM) in connection with the proposed transaction outlined in it (the “Transaction”) and the bonds

proposed to be issued in the Transaction (the “Bonds”).

Nothing in this Information Memorandum constitutes an offer of securities for sale in Bangladesh or any

other jurisdiction where such offer or placement would be in violation of any law, rule or regulation.

This Information Memorandum is provided to prospective investors on a private and confidential basis for

use solely in connection with the issue, offer, sale or invitation to subscribe or purchase the Subordinated

Bonds. This Information Memorandum shall not be, in whole or in part, reproduced or used for any other

purpose without prior written consent of the Lead Arranger.

The Issuer has prepared this Information Memorandum and the Issuer is solely responsible for its

contents. The Issuer will comply with all laws, rules and regulations and has obtained all regulatory,

governmental and corporate approvals for the issuance of the Bonds. All the information contained in this

Information Memorandum has been provided by the Issuer or is from publicly available information, and

such information has not been independently verified by the Lead Arranger. No representation or

warranty, expressed or implied, is or will be made, and no responsibility or liability is or will be accepted,

by the Lead Arranger or its affiliates for the accuracy, completeness, reliability, correctness or fairness of

this Information Memorandum or any of the information or opinions contained therein, and the Lead

Arranger hereby expressly disclaim, to the fullest extent permitted by law, any responsibility for the

contents of this Information Memorandum and any liability, whether arising in tort or contract or

otherwise, relating to or resulting from this Information Memorandum or any information or errors

contained therein or any omissions therefore. By accepting this Information Memorandum, you agree that

the Arranger will not have any such liability.

Investing in the Bonds involves risks. You as Investor should carefully consider the risk factors

mentioned in this Information Memorandum before investing in the Bonds. You should also carefully

consider the representation and warranties to be provided by the Investors before investing in the Bonds.

However, you are not to construe the contents of this Information Memorandum as investment, legal,

accounting, regulatory or tax advice. You should consult with your own advisors as to all legal,

accounting, regulatory, tax, financial and related matters, concerning an investment in the Bonds.

INVESTORS SHOULD RELY ON THEIR OWN EVALUATION TO ASSESS THE MERITS AND

RISKS OF THE INVESTMENT. IT IS RECOMMENDED THAT PROSPECTIVE INVESTORS

CONSULT THEIR FINANCIAL, LEGAL AND OTHER ADVISERS BEFORE PURCHASING OR

ACQUIRING OR INVESTING IN THE SUBORDINATED BONDS.


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Issuer’s Disclaimer

ALL THE FEATURES OF AB BANK SUBORDINATED BOND-II ARE DRAFT ONLY AND

FINALIZATION OF THESE FEATURES ARE SUBJECT TO THE APPROVALS OF CONCERNED

REGULATORS. THESE FEATURES MAY BE MODIFIED AS PER THE DIRECTIONS OF

BANGLADESH BANK AND BANGLADESH SECURITIES AND EXCHANGE COMMISSION OR

ANY OTHER CONCERNED REGULATORS.


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Contact List

AB Bank Limited

(The Issuer)

Mahadev Sarker, FCA,

Chief Financial Officer and Company Secretary

BCIC Bhaban, 30-31

Dilkusha C/A, Dhaka-1000

Cell: +88 0171 1192055

E-mail: [email protected]

Ihsanul Arefin

SAVP, Finance Department

BCIC Bhaban, 30-31

Dilkusha C/A, Dhaka-1000

Cell: +88 01711249032


IDLC Finance Limited

(The Trustee)

Shafkat Mahmud

Manager, Structure Finance Department

Bay's Galleria (1st Floor)

57 Gulshan Avenue, Dhaka-1212

Cell: +88 017 5554 1261


Tanveer Kamal

Manager, Structure Finance Department

Bay's Galleria (1st Floor)

57 Gulshan Avenue, Dhaka-1212

Cell: +88 017 2706 1421


RSA Capital

(The Arranger)

Tarique I Khan

Chief Operating Officer

6, Gulshan Avenue (Level-3)

Block-SW(H), Gulshan-1, Dhaka-1212

Cell: +88 017 5557 4204


Md. Farhad Ahamed

Head of Fixed Income and Equities

6, Gulshan Avenue (Level-3)

Block-SW(H), Gulshan-1, Dhaka-1212

Cell: +88 017 5559 3598



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Table of Contents

1 Report to the Eligible Investors ............................................................................................................ 8

2 Risk Factors and Management’s Perception about the Risks ............................................................. 10

2.1 Interest rate risk ........................................................................................................................... 10

2.2 Exchange rate risk ....................................................................................................................... 10

2.3 Non-repayment risk .................................................................................................................... 11

2.4 Prepayment, call or refunding risk .............................................................................................. 11

2.5 Security risk ................................................................................................................................ 11

2.6 Liquidity risk ............................................................................................................................... 12

2.7 Management risk ......................................................................................................................... 12

2.8 Operational risk ........................................................................................................................... 13

2.9 Business risk ............................................................................................................................... 13

2.10 Industry risk ................................................................................................................................ 13

2.11 Macroeconomic and political risk ............................................................................................... 14

2.12 Market and technology related risk ............................................................................................. 14

2.13 Risk related to potential or existing government regulations ...................................................... 15

2.14 Risk related to potential changes in global or national policies .................................................. 15

3 Use of Proceeds ................................................................................................................................... 16

3.1 Purpose of Issuance of AB Bank Subordinated Bonds ............................................................... 16

3.2 Plan Regarding Use of Proceeds from the Subordinated Bonds ................................................. 16

4 Features of the Bonds .......................................................................................................................... 17

4.1 Basic Features of the Instrument ................................................................................................ 17

4.2 Rate of Return, Yield to Maturity, Coupon/Discount Rate ......................................................... 19

4.3 Transferability/Liquidity ............................................................................................................. 19

4.4 Prepayment, Call Refunding, Conversion Features .................................................................... 19

4.5 Late Redemption ......................................................................................................................... 19

4.6 Tax Features ................................................................................................................................ 19

4.7 Cost Related to the Issue ............................................................................................................. 19

4.8 Repayment Schedule ................................................................................................................... 19

4.9 Enforcement of Charges over Securities ..................................................................................... 20

5 Description of collateral Security ....................................................................................................... 21

6 Rights and Obligations of the Issuer ................................................................................................... 22


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7 Rights and Obligations of the Trustee ................................................................................................. 26

8 Rights and Obligations of the Eligible Investors ................................................................................ 31

9 Description of AB Bank Limited ........................................................................................................ 32

9.1 Subsidiaries of AB Bank Limited ............................................................................................... 32

9.1.1 AB Investment Limited (ABIL) .......................................................................................... 32

9.1.2 AB Securities Limited (ABSL) ........................................................................................... 33

9.1.3 AB International Finance Ltd (ABIFL) .............................................................................. 33

9.1.4 AB Exchange (UK) Limited (ABEL) ................................................................................. 33

9.1.5 Arab Bangladesh Bank Foundation (ABBF) ...................................................................... 33

9.1.6 Cashlink Bangladesh Limited (CBL) .................................................................................. 33

9.2 Capital Structure ......................................................................................................................... 34

9.3 Business based on Solo Financials.............................................................................................. 35

9.3.1 Funding and Liquidity ......................................................................................................... 35

9.3.2 Capital Adequacy ................................................................................................................ 37

9.3.3 Earnings and Performance .................................................................................................. 38

9.3.4 Profitability ......................................................................................................................... 40

9.3.5 Diversification of Business and Franchise .......................................................................... 41

9.3.6 Asset Quality ....................................................................................................................... 43

9.3.7 Investment ........................................................................................................................... 45

9.3.8 Off Balance Sheet Exposure ............................................................................................... 46

9.4 Management Profile .................................................................................................................... 46

9.5 Description of Encumbered and Unencumbered Assets with Value Thereof ............................. 49

9.5.1 Encumbered Assets ............................................................................................................. 49

9.5.2 Unencumbered Assets ......................................................................................................... 49

9.6 Profile of the Directors ................................................................................................................ 50

9.7 Description of Assets and Liabilities .......................................................................................... 53

9.7.1 Description of Assets .......................................................................................................... 53

9.7.2 Description of Liabilities .................................................................................................... 56

9.8 Description of Previously Issued Debt or Equity Securities ....................................................... 59

10 Auditors’ Report Along with Audited Financial Statements of AB Bank Limited ........................ 60

11 Comparative Financial Statements of AB Bank Limited for the Last 3 (Three) Years ................ 181

12 Financial Ratios for last 3 (Three) Years ...................................................................................... 192

13 Credit Rating Report of the Issue .................................................................................................. 193


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14 CREDIT RATING SCALES AND DEFINITIONS - SHORTTERM: BANKS .......................... 217

15 Description of the Trustee ............................................................................................................. 219

15.1 Introduction to the Trustee ........................................................................................................ 219

15.2 Shareholding Structure .............................................................................................................. 220

15.3 Products and Services ............................................................................................................... 220

15.3.1 SME ................................................................................................................................... 220

15.3.2 Consumer .......................................................................................................................... 220

15.3.3 Corporate .......................................................................................................................... 221

15.3.4 Capital Markets ................................................................................................................. 221

15.4 Key Operational Results ........................................................................................................... 221

15.5 Key Financial Ratio .................................................................................................................. 222

16 Modus Operandi of the Issue including ........................................................................................ 223

16.1 Application Procedure: ............................................................................................................. 223

16.2 Allotment: ................................................................................................................................. 223

16.3 Transfer: .................................................................................................................................... 224

16.4 Repayment: ............................................................................................................................... 225


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List of Tables and Figures

Table 1: Basic Features of AB Bank Subordinated Bond-II ....................................................................... 17

Table 2: Repayment Schedule of AB Bank Subordinated Bond-II ............................................................ 20

Table 3: Subsidiaries of AB Bank Limited ................................................................................................. 32

Table 4: Capital Structure of ABBL ........................................................................................................... 34

Table 5: ABBL's Total Capital ................................................................................................................... 34

Table 6: ABBL Funding Mix (Amount in BDT Million) ........................................................................... 35

Table 7: Maturity Profile of Assets (Amount in BDT Million) .................................................................. 36

Table 8: Maturity Profile of Liabilities (Amount in BDT Million) ............................................................ 36

Table 9: Asset Liability Maturity Analysis (Amount in BDT Million) ...................................................... 36

Table 10: Risk Weighted Capital Adequacy Ratio (Amount in BDT Million) .......................................... 38

Table 11: Interest Income Components (Amount in BDT Million) ........................................................... 38

Table 12: ABBL’s Operating Performance (Amount in BDT Million) ...................................................... 40

Table 13: Key Ratios for Last Six years ..................................................................................................... 40

Table 14: Composition of loan portfolio (Amount in BDT Million) .......................................................... 41

Table 15: Loan Portfolio by Types of Loan (Amount in BDT Million) ..................................................... 42

Table 16: Sector Wise Distribution of Loan (Amount in BDT Million) .................................................... 43

Table 17: Composition of Total Assets (Amount in BDT Million) ............................................................ 43

Table 18: Security wise Loans, Advances and Lease/Investments (Amount in BDT Million) .................. 44

Table 19: Asset Quality Status (Amount in BDT Million) ......................................................................... 44

Table 20: Investment Profile (Amount in BDT Million) ............................................................................ 45

Table 21: ABBL's Off Balance Sheet Exposure (Amount in BDT Million) .............................................. 46

Table 22: Composition of Total Assets of ABBL, 2014 ............................................................................. 53

Table 23: Details of Cash ............................................................................................................................ 53

Table 24: Details of Money at Call and Short Notice ................................................................................. 54

Table 25: Details of Investments ................................................................................................................ 54

Table 26: details of Loans and Advances ................................................................................................... 54

Table 27: Details of Fixed Assets ............................................................................................................... 55

Table 28: Details of Other Assets ............................................................................................................... 55

Table 29: Description of Liabilities ............................................................................................................ 56

Table 30: Description of Borrowings.......................................................................................................... 56

Table 31: Description of Deposits and Other Accounts.............................................................................. 57

Table 32: Description of Other Liabilities .................................................................................................. 58

Table 33: Financial Ratios of ABBL for Last Three Years (on solo basis) .............................................. 192

Table 34: Key Operational Results of the Trustee .................................................................................... 221

Table 35: Key Financial Ratios of the Trustee (Consolidated) ................................................................. 222

Figure 1: Loan Deposit Ratio ...................................................................................................................... 37

Figure 2: Components of Total Income ...................................................................................................... 39

Figure 3: Trend of NPL ............................................................................................................................... 45


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1 Report to the Eligible Investors By investing in the Bonds, you are hereby deemed to have acknowledged, represented and warranted to,

and agree (as the case may be) for the benefit of the Lead Arranger, as set out below:

High risk: You are fully aware that investment in the Bonds involves a high degree of risk.

Consultation with Advisers: You have (i) consulted with your own legal, regulatory, tax, business,

investment, financial and accounting advisers in connection herewith to the extent you have deemed

necessary, (ii) collected and reviewed all information that you or your advisers believe is necessary or

appropriate in connection with the purchase of the Bonds, and (iii) made your own investment decisions

based upon your own judgment, due diligence and advice from such advisers as you have deemed

necessary and not upon any view expressed by or on behalf of the Lead Arranger.

No Reliance: You acknowledge and agree that you may not rely on any investigation that the Lead

Arranger or any of its affiliates or any person acting on their behalf may have conducted with respect to

the Issuer or any of their affiliates, and neither the Lead Arranger nor its affiliates, employees, officers,

directors, legal advisers or representatives have made any representation to you, express or implied, with

respect to your investment in the Bonds.

Informed Decision: You are in possession of all the information that you believe is necessary or

appropriate in order to make an informed decision regarding your purchase of the Bonds, including

without limitation, adequate information concerning the Issuer’s business, financial condition, results of

operations and prospects.

Knowledge and Experience: You have such knowledge and experience in financial, business and

international investment matters that you are capable of evaluating the merits and risks of purchasing the

Bonds and are aware that you may be required to bear, and are able to bear, all risks including economic

risk of an investment in the Bonds.

Information of the Company: You acknowledge that the information provided to you with regard to the

Issuer and the Bonds in this Information Memorandum has been supplied to you by the Lead Arranger

only on behalf of the Issuer and that neither the Lead Arranger nor any of its affiliates, employees,

officers, directors, legal advisers or representatives has verified such information or makes any

representation or warranty as to its accuracy or completeness.

Review of Information Memorandum: You have reviewed this Information Memorandum in its entirety,

including the risks associated with investment in the Bonds, and you understand and acknowledge all of

the risks described herein. By investing in the Bonds, you have determined that:

the Bonds are a suitable investment for you and your investment in the Bonds does not and will

not, when consummated, violate any investment or other guidelines, policies or restrictions

(corporate or otherwise), or any law, rule, regulation or order applicable to you; and

you have obtained all approvals and consents (whether internal or external), and have made all

notifications necessary for you to invest in the Bonds as contemplated; and you can bear the

economic risk of the investment and are able to sustain a complete loss in connection with your

investment.

Own Account: You are purchasing the Bonds for your own account and not with a view to any

distribution thereof.


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No Representation or Warranty: The Lead Arranger has not made, and you have not relied upon

any representation, warranty or condition (express and/or implied), and the Lead Arranger shall

not owe any duty whatsoever to you in connection with the Bonds.

No Obligation to Purchase: The Lead Arranger shall have no obligation to purchase or acquire all

or any part of the Bonds purchased by you or to support losses, if any, directly or indirectly

sustained or incurred by you for any reason whatsoever in connection with the Bonds, including

the non-performance by the issuance, whether to you or otherwise.


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2 Risk Factors and Management’s Perception about the Risks

The issuer operates in a cyclical industry and is exposed to several risk factors arising from external as

well as internal matters. All investors should carefully consider all the information in the Information

Memorandum, specially the risk factors both internal and external, before making any investment

decision. This section addresses the possible risks an investor might have to bear by investing in the

bonds and each risk factor is followed by management’s perception regarding the risk. If any of the risks

described below materialize, it could have a serious impact on the Issuer’s financial results, and the ability

of the Issuer to fulfill its obligations under the Bonds to be issued. However, the list of risk factors is not

meant to be a comprehensive description of all risks which may be relevant to a decision to invest in the

Bonds. The sequence in which the risks below are listed is not intended to be indicative of any order of

priority or of the extent of their consequences.

2.1 Interest rate risk

Interest rate risk is the risk that the bank faces due to unfavorable movements of the market and industry

interest rates. The bank may face such unfavorable conditions due to rise in borrowing rates and/or fall in

lending rates. The bank’s financing in different sectors is mostly structured at fixed rates for specified

terms. Volatility in the money market can also raise the cost of funding of the issuer and thus hamper its

profitability. Any change in the government’s monetary policy also might cause unfavorable movement in

interest rates. The risks derived from interest rate fluctuation thus may have a significant impact on the

bank’s business, profitability and financial condition.

Management’s perception

Although the consequences of unusual and abrupt increase in the borrowing rate cannot be fully avoided,

AB Bank takes appropriate measures to minimize the negative consequences. For instance, the bank

currently pursues a policy with emphasis on maintaining an appropriate blend of fixed and floating rates

in the loan portfolio of the bank. Moreover, the bank revises both its lending and borrowing rates

regularly based on current market scenario and future outlook.

2.2 Exchange rate risk

Exchange rate fluctuation may reduce the profitability of AB Bank because it funds foreign trade

commitments from various sources of foreign exchange like exports, imports and remittances and holds

foreign currencies to serve these purposes. If the local currency appreciates against the major foreign

currencies and the bank holds a significant net long position in foreign currencies during that time, the

bank might incur loss. Similarly, if the local currency depreciates against the major foreign currencies

while the bank holds a net short position in foreign currencies, the bank might lose.


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AB Bank manages exchange rate risk by (i) setting specific limits on open foreign exchange position (ii)

monitoring open position against these limits and (iii) setting and monitoring stop loss mechanism. AB

Bank keeps the foreign exchange risks at minimum levels as all of its foreign trade and remittance

transactions are carried out on behalf of the customers. All nostro accounts are reconciled on a regular

basis and outstanding entries are escalated to concerned departments and reported to higher management

for immediate settlement. The Treasury Department is vested with the responsibility to measure and

minimize the risk associated with the bank’s foreign exchange risk. Treasury personnel continuously

monitor price movements of foreign exchange and use various hedging techniques to manage the bank’s

open position in a way that minimizes risk and optimizes return.

2.3 Non-repayment risk

Although AB Bank sets high standards in repaying all its obligations to the depositors and lenders, it is

possible that the bank may fail to repay its obligations arising from the bonds to be issued in extreme

cases. In the event of default the investors might suffer from financial loss.


It is highly unlikely that a reputed organization like AB Bank will risk its reputation by setting an instance

of default. Furthermore, in case of any event of default or non-repayment, the Trustee would give notice

period to the Issuer in protecting the Event of Default and take further steps to ensure the interest of the

investors.

2.4 Prepayment, call or refunding risk

Prepayment, call or refunding risks are the risks associated with the early repayment of the principal

amount of a bond. Such risks exist in a bond that has prepayment or call option.

Management’s Perception

Since there is no provision for early repayment of the principal amount of the Bonds, the bondholders will

not be exposed to prepayment or call risks associated with investing in the Bonds.

2.5 Security risk

Security is the specific revenue sources or assets pledged by an issuer to the bondholder to secure

repayment of the bond. Therefore security risk is all about the process of recovering the investment by the

bond holder by utilizing the charge against the collateral securities in case of Issuer’s inability to repay

the face value of the bond(s).


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AB Bank Tier 2 Subordinated Bond is an unsecured bond. Specific revenue sources or assets are not

being pledged against issuance of the bonds. Investors will have the right on the Bank’s cash flow to get

repaid but rank of a subordinated bond holder is below than other loans (or securities) with regard to

claims on assets or earnings.

2.6 Liquidity risk

The Bank's businesses are subject to liquidity risks and could affect the Bank's ability to meet its financial

obligations. In order for the Bank to continue to meet its funding obligations and to maintain or grow its

business generally, it relies on customer savings/deposits as well as ongoing access to the wholesale

lending markets. The ability of the Bank to access funding sources on favorable economic terms is

dependent on a variety of factors, including a number of factors outside of its control, such as general

market conditions and confidence in the banking system.


The management of AB Bank is well aware of the risks involving liquidity constraint and is capable of

handling such risks by practicing modern Asset Liability Management (ALM) techniques. The ALM

committee regularly monitors the overall liquidity position of the bank and proactively makes policy

changes in due course of time. Therefore, it is very unlikely that the bondholders will face any material

loss from liquidity risk.

2.7 Management risk

Management risk refers to the chance that company managers may put their own interests ahead of the

interest of the company and shareholders. The term signifies the risk of the situation that may occur if the

company or any of its stakeholders other than the management would have been better off without the

choices made by management. The bondholders may suffer financial losses in such an event.


The management of AB Bank comprises a group of highly professional individuals with considerable

experience and reputation in the country’s financial industry. Therefore, it is very unlikely that the

management will conduct in such an unprofessional manner. Moreover, the management of the bank is

constantly supervised by a board of directors consisting of seasoned professionals and entrepreneurs who

work hard to ensure that the interests of all the stakeholders are served by the management. Being

operated in the highly regulated banking industry is also a safeguard against this risk as Bangladesh Bank

monitors the management to ensure best practice in the industry.


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2.8 Operational risk

The business of the bank depends on the ability to process a large number of transactions efficiently and

accurately. Losses may occur from inadequate personnel, inadequate or failed internal control processes

and systems, or from external events that interrupt normal business operations. There can be no assurance

that the Bank will not suffer material losses from operational risk in the future.


AB Bank employs experienced as well as young individuals having both academic and practical

knowledge. The bank organizes both on the job and off the job training facilities so that the employees

can be equipped to properly handle operational challenges. Most importantly, AB Bank has procured

latest sophisticated technology and world class hardware to ensure smooth operation process. The

management is very confident that it has the capability of combatting any future operational challenges.

2.9 Business risk

Business risk refers to the possibility that the bank will have lower than anticipated profits, or that it will

experience a loss rather than a profit. Business risk of the issuer could occur by numerous factors

including interest spread, non-interest income, operating expenses, money & capital market volatility,

competition, government regulations and economic climate. Like all other companies AB Bank is also

exposed to certain business risk factors.


Like all other businesses such risks exist in the banking industry. The Bank scrutinizes all of its clients

and the associated risks systematically using up to date risk evaluation techniques and thereby has been

able to maintain good asset quality so far and expects the same in the future. Some other systematic

(Market) risks might arise from the external environment of the Bank, similar to any other bank.

2.10 Industry risk

The issuer is operating in a highly competitive market as modern banking industry has brought greater

business diversification. Some banks in the industrialized world are entering into investments,

underwriting of securities and portfolio management. The entry of new competitors may also deteriorate

the competitive environment and result in lower profitability of the bank.



14 | P a g e

The Bank has always been careful in offering its products and services at competitive terms and

conditions which in turn minimizes its industry risk exposure. The management also continues to focus

on more diversification of the loan book.

2.11 Macroeconomic and political risk

Being a cyclical industry, the banking industry is highly dependent on the macroeconomic health of a

country as well as the political climate therein. It is very difficult to predict the future political or

macroeconomic scenario with certainty. Economic instability in respect of inflation, interest rate

fluctuations, consumer price volatility, natural disasters etc. can occur at any time and may materially

impact the bank’s business, financial conditions and future growth. Similarly political turmoil slows down

the pace of socio-economic as well as business development and hence affects bank’s profitability and

asset quality.


This kind of situation generically affects all banking financial institutions but capacity to cope with

depends on the strength and prudent policy and strategy being followed. AB Bank in its policy perception

has accorded due importance to this predictable or unpredictable situation in the economic and political

landscapes. The consistent and substantial growth that the AB Bank Limited has experienced during the

last few years bear the testimony of their ability to address the situation with due diligence.

2.12 Market and technology related risk

The financial industry of Bangladesh is currently one of the fastest growing in the country and is

increasingly becoming competitive. Especially the entrance of nine more banks in the industry in 2013

has made the competitive atmosphere more intense. Strong marketing and brand management would be

required to increase the bank’s customer base.

As the banking industry is becoming more and more technology dependent the risks deriving from

technological use is increasing day by day. The bank might be exposed to risks such as virus attack,

system collapse, system hacking, unauthorized electronic fund transfer, etc.


AB Bank focuses on pursuing unexplored market niches in the small and medium enterprise business

which has remained largely untapped within the country. The bank not only makes profit by mobilizing

fund from urban to rural areas but also performs social responsibility by creating an entrepreneurial class.

The bank maintains a strong IT infrastructure to handle the vast technological support to the operational

personnel of the bank as well as its valued clients. The bank uses only the licensed versions of all the


15 | P a g e

software used in the bank’s IT system and the Misys Core Banking Solution used thereon is one of the

most upgraded IT platforms. The IT team is well capable of ensuring reliability and consistency of the

system software as well as the hardware. It is, therefore, very unlikely that the IT infrastructure will fall

victim to any external and/or internal threat.

2.13 Risk related to potential or existing government regulations

The issuer operates its business under the specific guidelines laid by Bangladesh Bank, Bangladesh

Securities and Exchange Commission and other regulatory authorities. The bank is also regulated by

Bank Companies Act 1991, Companies Act 1994, Income Tax Ordinance 1984, Income Tax Rules 1984

and Value Added Tax (VAT) Act 1991. Moreover, Bangladesh Bank changes policy rates including Cash

Reserve Requirement (CRR) and Statutory Liquidity Ratio (SLR) of banking institutions from time to

time. Any abrupt changes in the policies and regulations made by the authorities may adversely affect the

business of the company.


Unless any policy change that may negatively and significantly affect the industry as a whole, the

business of the bank is expected not to be affected materially. Like all scheduled banks in Bangladesh,

AB Bank has been funding their assets from their deposits after maintaining required SLR including CRR

has the bank has been consistently compliant to any such changes. The bank attained contentedly

adequate capital of 10.32% compared to the regulatory requirement of 10.00%. AB bank is capable of

dealing with consequences of unfavorable policy or regulatory changes made by the government.

2.14 Risk related to potential changes in global or national policies

A financial institution’s ability to operate a profitable business is directly related to the monetary and

fiscal policies of the country at any given time. Imposition of restrictive monetary and/or fiscal policy by

the government at any time may affect a company’s profitability. Again, changes in the existing global or

national policies can have either positive or negative impacts on the bank.

Every company operates under the economic policies formulated and imposed by the political

government. The government tends to reshape these policies time to time for the sake of greater interest

of the country’s economy. Sometimes those changes in existing policy or any future policy framework

adversely affect smooth operation of such companies.


The management of the bank is always concerned about the prevailing and upcoming future changes in

the global or national policies and response appropriately and timely to safeguard its interest.


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3 Use of Proceeds

3.1 Purpose of Issuance of AB Bank Subordinated Bonds

AB Bank has decided to raise capital through issuance of subordinated bonds in order to strengthen its

capital base in accordance with Basel III guidelines of Bangladesh Bank.

As on 31st March 2015, AB Bank Limited and its subsidiaries had a Total Capital of BDT 22,936.44

million of which BDT 17,266.93 million was Total Common Equity Tier-I Capital and BDT 5,669.51

million was Total Admissible Tier-2 Capital while the Capital to Risk Weighted Assets Ratio (CRAR)

was 10.15% of the total Risk Weighted Assets (RWA) of the bank.

On a solo basis AB Bank Limited had a Total Capital of BDT 22,342.46 million of which BDT 16,717.31

million was Total Common Equity Tier-I Capital and BDT 5,625.15 million was Tier II Capital

considering the financials as on 31st March 2015. The Capital to Risk Weighted Assets Ratio (CRAR)

was 10.01% of the total Risk Weighted Assets (RWA) of the bank at the same point of time.

The issuance of the Subordinated bonds will allow the Bank to enhance its capital strength and continue

to grow its balance sheet.

3.2 Plan Regarding Use of Proceeds from the Subordinated Bonds

The bonds will qualify as a part of the Bank’s Tier II capital and will help maintain healthy capital

adequacy ratios in next few years. Besides, the fund will also be used for undertaking general business

activities of the bank, which include strengthening the loan portfolio and investment in treasury securities

issued by the government of Bangladesh. The proceeds will primarily be used for:

Growing the loan portfolio of the bank in corporate, SME and retail segments

Investing in government treasury securities and other instruments


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4 Features of the Bonds

A bond is a debt investment through which an investor lends money to an entity that borrows the funds

for a specific period of time at a predetermined interest rate, which can be fixed or floating. Bonds are

used by companies, municipalities and governments to finance a variety of activities. Bonds are

commonly referred to as fixed-income securities and are one of the three main asset classes, along with

stocks and cash equivalents. The basic features 1of the subordinated bonds to be issued by AB Bank Ltd

are:

4.1 Basic Features of the Instrument

Table 1: Basic Features of AB Bank Subordinated Bond-II

Name of the Instrument: AB Bank Subordinated Bond-II

Issuer: AB Bank Limited

Purpose: To raise Tier-II Regulatory Capital and thereby enhancing

Capital Adequacy Ratio (CAR) as per “Guidelines on Risk

Based Capital Adequacy” of Bangladesh Bank

Lead Arranger: RSA Capital

Investors: A group of institutional and individual investors

Issue Size: BDT 4,000,000,000 (Four Billion)

Issue Type: Tier 2 Eligible Subordinated Bond

Tenor: 84 Months from the date of issue, 2 year moratorium and

subsequently annual 20% repayment of the principal

Face Value: BDT 10,000,000 (Ten Million) Per Bond

Lot Size: 1 (One) Bond per lot

Total Bonds to be issued: 400 (Four Hundred)

Mode of Placement: Private Placement

Trustee: IDLC Finance Limited

Coupon Rate: Reference Rate + Coupon Margin

Reference Rate: Latest 5-year Bangladesh Government Treasury Bond Cut-off

Yield as published on Bangladesh Bank website or other

publication sources on the quotation day.

Quotation Day 5 Business Days before the first day of any period for which

Coupon is to be paid.

Coupon Margin: 3.0%

Range of Coupon Rate: 11.5% to 13.50% at all times.

Yield to Maturity / Rate of Return C o u p o n Ra t e

1 All the features of AB Bank Subordinated Bond-II are draft only and finalization of these features are subject to

the approvals of concerned regulators.


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Coupon Payment Dates: Coupon to be paid semi-annually. First coupon will be paid after

six months of the drawdown.

Repayment Schedule: The principal redemptions will be in five tranches, each tranche

being 20% of the principal amount commencing at the end of

third year from the date of the issuance.

Redemption schedule (of Face Value):

Year Redemption

1 Nil

2 Nil

3 20.0%

4 20.0%

5 20.0%

6 20.0%

7 20.0%

Financial Covenants: Capital Adequacy Ratio >10%*

* And as updated by Bangladesh

Bank from time to time

Cost to Income Ratio <70%

Non-convertible: The Bonds are not convertible into Ordinary Shares

Non-callable: The Bonds are not callable

Tax Feature: According to the laws of Bangladesh

Credit Rating: Issuer Rating: AA3 (Long Term), ST-2 (Short Term) as of

December 31, 2014

Issue Rating: A1 (HYB)

Security Unsecured

Transferability/Liquidity: Freely transferable in accordance with the provisions of the

Deed of Trust.

Governing Law: Laws of Bangladesh.

Costs Related to the issue: Costs to Third Parties: Total costs (considering BDT 4,000

million is successfully raised) including Trustee, Bond Rating

Agency (for 7 years), Lead Arranger and Legal Counsel Fees are

BDT 52.05 million.

BSEC Fee:

Application Fee of BDT 10,000 (Ten Thousand)

Consent Fee of 0.10% on the Total Face Value

of the Bonds to be Issued

Printing and Other Expenses: BDT 25,000 (Twenty Five

Thousand)

Others: Any stamp duty, levy or other form of charges

applied by the Government of Bangladesh or any of its

agencies or political subdivisions shall be for the account of

the Issuer.


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4.2 Rate of Return, Yield to Maturity, Coupon/Discount Rate

Rate of return comprises of reference rate and Margin.

Reference Rate: Reference rate means latest 5-Yr Bangladesh Government Treasury Bond Cut-off Yield

as published on Bangladesh Bank website or other publication sources on quotation day.

Coupon Margin: 3.0% p.a.

Coupon Floor Rate: 11.5%

Coupon Ceiling Rate: 13.50%

Coupon to be paid semi-annually. First coupon will be paid after six months of the drawdown.

4.3 Transferability/Liquidity

Freely transferable in accordance with the provisions of the Deed of Trust.

4.4 Prepayment, Call Refunding, Conversion Features

Prepayment: No prepayment option

Call Refunding: Non-callable in nature

Conversion Features: Non-convertible in nature

4.5 Late Redemption

The Issuer shall pay a late payment penalty of 2% (two per cent) higher than the Coupon Rate and be

payable on the amount not paid on the due date up till the date of actual payment.

4.6 Tax Features

As per applicable laws of Bangladesh.

4.7 Cost Related to the Issue

Costs to Third Parties: Total costs (considering BDT 4,000 million is successfully raised) including

Trustee, Bond Rating Agency (for 7 years), Lead Arranger and Legal Counsel Fees are BDT 52.05 million.

BSEC Fee:


Consent Fee of 0.10% on the Total Face Value of the Bonds to be issued

Printing and Other Expenses: BDT 25,000 (Twenty Five Thousand)

Others: Any stamp duty, levy or other form of charges applied by the Government of Bangladesh

or any of its agencies or political subdivisions shall be for the account of the Issuer.

4.8 Repayment Schedule

The principal redemptions will be in five tranches, each tranche being 20% of the principal amount

commencing at the end of third year from the date of the issuance.


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Table 2: Repayment Schedule of AB Bank Subordinated Bond-II

Year Repayment of principal (Single Bond) Repayment of principal (Entire Issue)

1 Nil Nil

2 Nil Nil

3 20.0% (BDT 2 million) 20.0% (BDT 800 million)





4.9 Enforcement of Charges over Securities

At any time after the Bonds have become due and repayable, the Trustee may, without further notice to

Issuer, take any action, remedy or method of judicial proceedings for the enforcement of rights of

Bondholders as may be available under the Governing Law in accordance with this Deed from time to

time (Enforcement Proceedings) against the Issuer. No Bondholder will be entitled to proceed directly

against the Issuer unless the Trustee, having become bound to do so, fails to do so within a reasonable

period and such failure shall be continuing.


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5 Description of collateral Security

Subordinated Bonds are unsecured and rank below deposits, borrowings and secured bonds with regard to

claims on assets or earnings. AB Bank Subordinated Bond-II are unsecured and the claims of the

bondholders are not covered by any collateral or security thereon and therefore no charge against the

issues.

http://www.investopedia.com/terms/e/earnings.asp


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6 Rights and Obligations of the Issuer

1. Covenant to Repay

The Issuer covenants with the Trustee that it will, as and when the Bonds or any of them become due to

be redeemed or any principal on the Bonds or any of them becomes due to be repaid in accordance with

the Conditions, unconditionally pay or procure to be paid to or to the order of the Trustee in Bangladesh

Taka in Dhaka in immediately available freely transferable funds the principal amount of the Bonds or

any of them becoming due for redemption or repayment on that date and shall (subject to the provisions

of the Conditions) until all such payments (both before and after judgment or other order) are duly made

unconditionally pay or procure to be paid to or to the order of the Trustee as aforesaid on the dates

provided for in the Conditions interest on the principal amount of the Bonds or any of them outstanding

from time to time as set out in the Conditions provided that:

1.1. every payment of principal or interest in respect of the Bonds or any of them made to or to the

account of the Paying Agent in the manner provided in the Agency Agreement shall satisfy, to

the extent of such payment, the relevant covenant by the Issuer contained in this Clause except to

the extent that there is default in the subsequent payment thereof to the Bondholders in

accordance with the Conditions;

1.2. if any payment of principal or interest in respect of the Bonds or any of them is made after the

due date, payment shall be deemed not to have been made until either the full amount is paid to

the Bondholders or, if earlier, the[seventh day] after notice has been given to the Bondholders in

accordance with the Conditions that the full amount has been received by the Paying Agent or

the Trustee except, in the case of payment to the Paying Agent, to the extent that there is failure

in the subsequent payment to the Bondholders under the Conditions; and

1.3. in any case where payment of the whole or any part of the principal amount due in respect of any

Bond is improperly withheld or refused upon due presentation of a Bond Certificate, interest

shall accrue at applicable interest rate for the Bond on the whole or such part of such principal

amount from the date of such withholding or refusal until the date either on which such principal

amount due is paid to the Bondholders or, if earlier, the seventh day after which notice is given

to the Bondholders in accordance with the Conditions that the full amount payable in respect of

the said principal amount is available for collection by the Bondholders provided that on further

due presentation thereof such payment is in fact made.

The Trustee will hold the benefit of this covenant and the covenants in Clause 11.3 (Covenant to comply

with Trust Deed, Conditions, Schedules, and Agency Agreement) and Clause 11.4 (Covenants by the

Issuer) on trust for the Bondholders.

2. Following an Event of Default

At any time after any Event of Default shall have occurred, the Trustee may:

2.1. by notice in writing to the Issuer, the Paying Agent and the other Agents, require the Paying

Agent and the other Agents or any of them, until notified by the Trustee to the contrary:


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a) to act thereafter as agents of the Trustee under the provisions of this Trust Deed on the

terms provided in the Agency Agreement (with consequential amendments as

necessary and save that the Trustee's liability under any provisions thereof for the

indemnification, remuneration and payment of out of pocket expenses of the Agents

shall be limited to amounts for the time being held by the Trustee on the trusts of this

Trust Deed in relation to the Bonds on the terms of this Trust Deed and available to

the Trustee for such purpose) and thereafter to hold all Bond Certificates and all sums,

documents and records held by them in respect of Bonds on behalf of the Trustee;

and/or

b) to deliver up all Bond Certificates and all sums, documents and records held by them

in respect of Bonds to the Trustee or as the Trustee shall direct in such notice provided

that such notice shall be deemed not to apply to any document or record which the

relevant Agent is obliged not to release by any law or regulation; and

2.2. by notice in writing to the Issuer, require it to make all subsequent payments in respect of Bonds

to or to the order of the Trustee and with effect from the issue of any such notice until such

notice is withdrawn, sub-clause 11.1.1 of Clause 11.1 (Covenant to Repay) and (so far as it

concerns payments by the Issuer) Clause 19.2 (Payment to Bondholders) shall cease to have

effect.

3. Covenant to comply with Trust Deed, conditions, Schedules, agency agreement and applicable

law

3.1. The Issuer hereby covenants with the Trustee to comply with, perform and observe all those

provisions of this Trust Deed, the Agency Agreement, the Conditions (including, without

limitation, Condition 5 (Covenants)) and the other Schedules which are expressed to be binding

on it and to perform and observe the same. The Bonds are subject to the provisions contained in

this Trust Deed, all of which shall be binding upon the Issuer and the Bondholders and all

persons claiming through or under them respectively. The Bondholders and all persons claiming

under or through them respectively will also be entitled to the benefit of, and will be bound by,

this Trust Deed and the other Bond Documents and will be deemed to have notice of all of the

provisions of the Bond Documents applicable to them.

3.2. The Issuer hereby covenants with the Trustee to comply with, perform and observe all those

provisions of the applicable law including but is not limited to The Securities and Exchange

Commission (Private Placement of Debt Securities) Rules 2012. The Issuer agrees that

Bondholders and all persons claiming under or through them respectively will also be entitled to

the benefit of, and will be bound by, the applicable law and will be deemed to have notice of all

of the provisions of the applicable law applicable to them.

3.3. The Trustee shall itself be entitled to enforce the obligations of the Issuer under the Bonds and

the Conditions and the applicable laws if the same were set out and contained in this Trust Deed

which shall be read and construed as one document with the Bonds.

4. Covenants by the Issuer

The Issuer hereby covenants with the Trustee that, so long as any of the Bonds remain outstanding, it

will:

4.1. Books of account:

At all times keep and procure that all its Subsidiaries keep such books of account as may be

necessary to comply with all applicable laws and so as to enable the financial statements of the


24 | P a g e

Issuer to be prepared and allow, subject to confidentiality obligations under applicable law, the

Trustee and any person appointed by it free access to the same at all reasonable times and to

discuss the same with responsible officers of the Issuer;

4.2. Event of Default:

Give notice in writing to the Trustee forthwith upon becoming aware of any Event of Default

and without waiting for the Trustee to take any further action;

4.3. Corporate Governance:

Comply (and shall ensure that each member of the Group will) in all material respects with the

corporate governance guidelines set out by the Bangladesh Bank and the Securities and

Exchange Commission.

4.4. Information:

So far as permitted by applicable law, at all times give to the Trustee such information, opinions,

certificates and other evidence as it shall require and in such form as it shall require in relation to

Issuer for the performance of its obligations under the Bond Documents;

4.5. Execution of further Documents:

So far as permitted by applicable law, at all times execute all such further documents and do all

such further acts and things as may be necessary at any time or times in the opinion of the

Trustee to give effect to the provisions of this Trust Deed;

4.6. Notices to Bondholders:

Send or procure to be sent to the Trustee not less than 5 (five) business days prior to the date of

publication , one copy of each notice to be given to the Bondholders in accordance with the

Conditions and, upon publication, send to the Trustee two copies of such notice;

4.7. Notification of non-payment:

Notify the Trustee forthwith in the event that it does not, on or before the due date for payment

in respect of the Bonds or any of them, pay unconditionally the full amount in the relevant

currency of the moneys payable on such due date on all such Bonds;

4.8. Notification of late payment:

In the event of the unconditional payment to the Trustee of any sum due in respect of the Bonds

or any of them being made after the due date for payment thereof, forthwith give notice to the

Bondholders that such payment has been made;

4.9. Notification of redemption or repayment:

14 (Fourteen) days prior to the Redemption Dates or purchase in respect of any Bond, give to the

Trustee notice in writing of the amount of such redemption or purchase pursuant to the

Conditions and duly proceed to redeem or purchase such Bonds accordingly;

4.10. Obligations of Agents:

Observe and comply with its obligations and use all reasonable endeavours to procure that the

Agents observe and comply with all their obligations under the Agency Agreement; maintain

the Register; and notify the Trustee immediately it becomes aware of any material breach of

such obligations, or failure by any Agent to comply with such obligations, in relation to the

Bonds;


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4.11. Authorised Signatories:

Upon the execution hereof and thereafter forthwith upon any change of the same, deliver to the

Trustee a list of the Authorised Signatories of the Issuer, together with certified specimen

signatures of the same; and

4.12. Payments:

Pay moneys payable by it to the Trustee hereunder without set off, counterclaim, deduction or

withholding, unless otherwise compelled by law and in the event of any deduction or

withholding compelled by law will pay such additional amount as will result in the payment to

the Trustee of the amount which would otherwise have been payable by it to the Trustee

hereunder.


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7 Rights and Obligations of the Trustee

1. Trustee’s Rights

1.1. Applicable Law: Notwithstanding anything contained in this Trust Deed the Trustee shall have

all such rights and powers granted to it under the applicable law including but is not limited to

The Securities and Exchange Commission (Private Placement of Debt Securities) Rules 2012.

1.2. Advice: The Trustee may in relation to this Trust Deed act on the opinion or advice of or a

certificate or any information obtained from any lawyer, banker, valuer, surveyor, broker,

auctioneer, accountant or other expert (whether obtained by the Trustee, the Issuer, or any

Subsidiary) and which advice or opinion may be provided on such terms (including as to

limitations on liability) as the Trustee may consider in its sole discretion to be consistent with

prevailing market practice with regard to advice or opinions of that nature and shall not be

responsible for any Liability occasioned by so acting; any such opinion, advice, certificate or

information may be sent or obtained by letter, telegram, telex, cablegram or facsimile

transmission;

1.3. Resolution or direction of Bondholders: the Trustee shall not be responsible for acting upon any

resolution purporting to be a Written Resolution or to have been passed at any meeting of the

Bondholders in respect whereof minutes have been made and signed or a direction of a specified

percentage of Bondholders, even though it may subsequently be found that there was some

defect in the constitution of the meeting or the passing of the resolution or the making of the

directions or that for any reason the resolution purporting to be a Written Resolution or to have

been passed at any Meeting or the making of the directions was not valid or binding upon the

Bondholders;

1.4. Trustee not responsible for investigations: save as otherwise provided by applicable law, the

Trustee shall not be responsible for, or for investigating any matter which is the subject of, any

recital, statement, representation, warranty or covenant of any person contained in this Trust

Deed, the Bonds, or any other agreement or document relating to the transactions herein or

therein contemplated or for the execution, legality, effectiveness, adequacy, genuineness,

validity, enforceability or admissibility in evidence thereof;

1.5. Entry on the Register: the Trustee shall not be liable to the Issuer or any Bondholder by reason of

having accepted as valid or not having rejected any entry on the Register later found to be forged

or not authentic and can assume for all purposes in relation hereto that any entry on the Register

is correct;

1.6. Events of Default: save as otherwise provided by applicable law, until it shall have actual

knowledge or express notice to the contrary, the Trustee shall be entitled to assume that no such

Event of Default has happened and that the Issuer is observing and performing all the obligations

on its part contained in the Bonds and under this Trust Deed and no event has happened as a

consequence of which any of the Bonds may become repayable; and

1.7. Right to Deduct or Withhold: notwithstanding anything contained in this Trust Deed, to the

extent required by any applicable law, if the Trustee is or will be required to make any deduction

or withholding from any distribution or payment made by it hereunder or if the Trustee is or will


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be otherwise charged to, or is or may become liable to, tax as a consequence of performing its

duties hereunder whether as principal, agent or otherwise, and whether by reason of any

assessment, prospective assessment or other imposition of liability to taxation of whatsoever

nature and whensoever made upon the Trustee, and whether in connection with or arising from

any sums received or distributed by it or to which it may be entitled under this Trust Deed (other

than in connection with its remuneration as provided for herein) or any investments or deposits

from time to time representing the same, including any income or gains arising therefrom or any

action of the Trustee in connection with the trusts of this Trust Deed (other than the

remuneration herein specified) or otherwise, then the Trustee shall be entitled to make such

deduction or withholding or, as the case may be, to retain out of sums received by it an amount

sufficient to discharge any liability to tax which relates to sums so received or distributed or to

discharge any such other liability of the Trustee to tax from the funds held by the Trustee upon

the trusts of this Trust Deed.

1.8. Liability: Under no circumstance will the Trustee be liable for any special, indirect, punitive or

consequential loss or damage of any kind whatsoever (including but not limited to loss of

business, goodwill, opportunity or profit), whether or not foreseeable, even if the Trustee has

been advised of such loss or damage and regardless of whether the claim for loss or damage is

made in negligence, for breach of contract or otherwise. This Clause shall survive the

termination or expiry of this Trust Deed or the removal or termination of the Trustee.

1.9. Force Majeure: The Trustee shall not be liable for any failure or delay in the performance of its

obligations under this Trust Deed or any other Bond Document because of circumstances beyond

such Trustee's control, including, without limitation, acts of God, flood, war (whether declared

or undeclared), terrorism, fire, riot, embargo, labour disputes, any laws, ordinances, regulations

or the like which restrict or prohibit the performance of the obligations contemplated by this

Trust Deed or any other Bond Document, inability to obtain or the failure of equipment, or

interruption of communications or computer facilities, and other causes beyond such Trustee's

control whether or not of the same class or kind as specifically named above.

1.10. Immunities: The Trustee's immunities and protections from liability and its right to

indemnification in connection with the performance of its duties under this Trust Deed shall

extend to the Trustee's officers, directors and employees. Such immunities and protections and

right to indemnification, together with the Trustee's right to compensation, shall survive the

Trustee's resignation or removal, the defeasance or discharge of this Trust Deed and final

payment of the Bonds. The Issuer acknowledges that in any proceedings taken in relation to this

Trust Deed, it will not be entitled to claim for itself or any of its assets immunity from suit,

execution, attachment or other legal process.

1.11. Professional charges: any trustee being a banker, lawyer, broker or other person engaged in any

profession or business shall be entitled to charge and be paid all usual professional and other

charges for business transacted and acts done by him or his partner or firm on matters arising in

connection with the trusts of this Trust Deed and also his properly incurred charges in addition to

disbursements for all other work and business done and all time spent by him or his partner or

firm on matters arising in connection with this Trust Deed, in each case as agreed pursuant to the


28 | P a g e

Fee Letter (including matters which might or should have been attended to in person by a trustee

not being a banker, lawyer, broker or other professional person);

1.12. Expenditure by the Trustee: nothing contained in this Trust Deed shall require the Trustee to

expend or risk its own funds or otherwise incur any financial liability in the performance of its

duties or the exercise of any right, power, authority or discretion hereunder if it has grounds for

believing the repayment of such funds or adequate indemnity against, or security for, such risk or

liability is not reasonably assured to it; and

1.13. Trustee may enter into financial transactions with the Issuer: no Trustee and no director or

officer of any corporation being a Trustee hereof shall by reason of the fiduciary position of such

Trustee be in any way precluded from making any contracts or entering into any transactions in

the ordinary course of business with the Issuer or any Subsidiary, or any person or body

corporate directly or indirectly associated with the Issuer or any Subsidiary, or from accepting

the trusteeship of any other debenture stock, debentures or securities of the Issuer or any

Subsidiary or any person or body corporate directly or indirectly associated with the Issuer or

any Subsidiary, and neither the Trustee nor any such director or officer shall be accountable to

the Bondholders or the Issuer or any Subsidiary, or any person or body corporate directly or

indirectly associated with the Issuer or any Subsidiary, for any profit, fees, commissions,

interest, discounts or share of brokerage earned, arising or resulting from any such contracts or

transactions and the Trustee and any such director or officer shall also be at liberty to retain the

same for its or his own benefit.

1.14. Trustee Liability: The Trustee shall not be liable to any person for any matter or thing done or

omitted in any way in connection with or in relation to this Trust Deed or the Bonds save in

relation to its own gross negligence, wilful default or fraud.

1.15. Right to Sue: The Trustee may sue and may be sued on behalf of the Bondholders.

2. Trustee's powers and duties

2.1. Applicable Law: Notwithstanding anything contained in this Trust Deed the Trustee shall have

all such responsibility as set out in the applicable law including but is not limited to The

Securities and Exchange Commission (Private Placement of Debt Securities) Rules 2012.

2.2. Act for Bondholders: Subject to applicable law and terms and conditions of this Trust Deed

Trustee shall act on behalf and for the exclusive interest of the Bondholders;

2.3. Monitoring: Trustee shall ensure that Issuer is observing the applicable law for the Bonds and

the terms and conditions of the Bond Documents. As soon as the Trustee is aware of any breach

by the Issuer it shall immediately inform the Bondholders and the Issuer of such breach;

2.4. Report to SEC: Trustee shall submit an annual compliance report to the SEC on the activities of

the Issuer including repayment of dues to the Bondholders. When Trustee shall submit such

report to the SEC it shall provide copy to the Issuer and the Bondholders;

2.5. Grievances of the Bondholders: Upon receipt of a complaint from the Bondholders Trustee shall

take necessary steps for redress of grievances of the Bondholders within one month of the date of

receipt of the complaints and he shall keep the BSEC and the Issuer informed about the number,

nature and other particulars of the complaints received and the manner in which such complaints


29 | P a g e

have been redressed. The Trustee shall act on behalf and for the exclusive interest of the eligible

investors;

2.6. Trustee's determination The Trustee may determine whether or not a default in the performance

or observance by the Issuer of any obligation under the provisions of this Trust Deed or

contained in the Bonds is capable of remedy and if the Trustee shall certify that any such default

is, in its opinion, not capable of remedy, such certificate shall be conclusive and binding upon

the Issuer and the Bondholders;

2.7. Determination of questions: the Trustee as between itself and the Bondholders shall have full

power to determine all questions and doubts arising in relation to any of the provisions of this

Trust Deed and every such determination, whether made upon a question actually raised or

implied in the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee

and the Bondholders;

2.8. Trustee's discretion: the Trustee shall (save as expressly otherwise provided herein) as regards all

the trusts, powers, authorities and discretions vested in it by this Trust Deed or by operation of

law, have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and the

Trustee shall not be responsible for any Liability that may result from the exercise or non-

exercise thereof (save as otherwise provided by applicable law) but whenever the Trustee is

under the provisions of this Trust Deed bound to act at the request or direction of the

Bondholders, the Trustee shall nevertheless not be so bound unless first indemnified and/or

provided with security to its satisfaction against all actions, proceedings, claims and demands to

which it may render itself liable and all costs, charges, damages, expenses and liabilities which it

may incur by so doing;

2.9. Trustee's consent: any consent given by the Trustee for the purposes of this Trust Deed may be

given on such terms and subject to such conditions (if any) as the Trustee may require;

2.10. Application of proceeds: the Trustee shall not be responsible for the receipt or application by the

Issuer of the proceeds of the issue of the Bonds or the delivery of any Bond Certificates to the

Bondholders;

2.11. Error of judgment: the Trustee shall not be liable for any error of judgment made in good faith

by any officer or employee of the Trustee assigned by the Trustee to administer its corporate

trust matters;

2.12. Agents: Subject to the provisions of the Trust Act 1882, the Trustee may, in the conduct of the

trusts of this Trust Deed instead of acting personally, employ and pay an agent on any terms,

whether or not a lawyer or other professional person, to transact or conduct, or concur in

transacting or conducting, any business and to do or concur in doing all acts required to be done

by the Trustee (including the receipt and payment of money) with the consent of Issuer and the

Trustee shall be responsible for any loss, liability, expense, demand, cost, claim or proceedings

incurred by reason of the misconduct, omission or default on the part of any person appointed by

it hereunder or be bound to supervise the proceedings or acts of any such person provided that

the Trustee had exercised reasonable care in the appointment of such person;

2.13. Confidential information: the Trustee shall not (unless required by law or ordered so to do by a

court of competent jurisdiction) be required to disclose to any Bondholder confidential


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information or other information made available to the Trustee by the Issuer in connection with

this Trust Deed and no Bondholder shall be entitled to take any action to obtain from the Trustee

any such information.

3. Exercise of Discretion

3.1. Notwithstanding anything in this Trust Deed to the contrary, the Trustee shall not be obliged to

exercise or consider exercising any discretion or consider making or make any determination

(including, without limitation, any determination as to whether any fact or circumstance or

activity or thing is material or substantial or complies with some such similar quantitative

standard) or to consider taking or take any action whatsoever in connection with or under or

pursuant to the Bonds unless directed to do so by the holders of not less than 66 2/3 percent in

principal amount of the Bonds then outstanding or if so directed by an Extraordinary Resolution

of Bondholders (subject in all cases to the Trustee having been indemnified or provided with

security to its satisfaction and otherwise being satisfied that it is lawful for it to so exercise

discretion, make a determination or otherwise take any action). Such direction shall specify the

way in which the Trustee shall exercise such discretion or, as the case may be, make the

determination or take the action to be taken by the Trustee.

3.2. The Trustee will be responsible for any loss, expense, damage, claim, cost, charge or liability

which may be suffered as a result of any exercise or non-exercise of a discretion or the making

or failure to make any determination or the taking or failure to take any action by the Trustee,

acting on the directions of the Bondholders as aforesaid or pending the provision of such a

direction.


31 | P a g e

8 Rights and Obligations of the Eligible Investors

1. Each Bondholder has the right to demand information from the Issuer as set out in this Trust Deed

and the Condition attached in Schedule 1 Part B (Terms and Conditions of the Bonds) of the Trust

Deed.

2. Each Bondholder has the right to received payment of principal amount of the Bond on the

Redemption Date as set out in the Condition attached in Schedule 1 Part B (Terms and Conditions of

the Bonds) of the Trust Deed.

3. Each Bondholder has the right to receive interest on the Bond on the Interest Payment Date as set out

in the Condition attached in Schedule 1 Part B (Terms and Conditions of the Bonds) of the Trust

Deed.

4. Each Bondholder has the right to attend meeting of the Bondholders and vote there in in accordance

with Condition 12 (Meetings of Bondholders, Modification, Waiver and Substitution) the Trust Deed.


32 | P a g e

9 Description of AB Bank Limited

AB Bank Limited, the first private sector bank in Bangladesh, was incorporated on 31st December 1981

as Arab Bangladesh Bank Limited and started its operation with effect from April 12, 1982. The Bank

was renamed as AB Bank Limited and Bangladesh Bank put its confirmatory stamp on November 14,

2007. AB Bank is known as one of leading banks in the country since inception.

AB Bank offers a wide range of commercial banking products and services, both regular and innovative,

in the fields of Corporate Finance, Small and Medium Enterprise (SME) Finance, Consumer Finance,

Debit and Credit Cards, ATMs, Internet and SMS Banking, Remittance Services, Treasury Products and

Services, Structured Finance, Islamic Banking activities, specialized products and services for NRBs,

Priority Banking, Customer Care, etc.

During the last 33 years AB Bank extended services at home and abroad. Currently AB Bank has 88

(eighty eight) local branches across the country and 1 (one) foreign branch in Mumbai, India. The Bank

has an Off-shore Banking Unit (OBU) and also operates two Representative Offices at Yangon, Myanmar

and London, UK. The Bank has 6 (six) subsidiaries and has significant shareholding (15%) in Amana

Bank, Sri Lanka.

9.1 Subsidiaries of AB Bank Limited

There are 6 (six) subsidiary companies of AB Bank including one merchant bank, one brokerage house,

two exchange houses in UK and Hong Kong. Below is a brief introduction to the subsidiaries of AB Bank

Limited.

Table 3: Subsidiaries of AB Bank Limited

SL. Name of the Subsidiary Type of Business

1 AB Investment Limited (ABIL) Merchant Banking

2 AB Securities Limited (ABSL) Brokerage

3 AB International Finance Ltd (ABIFL) Investment Company (Hong Kong)

4 AB Exchange (UK) Ltd (ABEL) Exchange House (United Kingdom)

5 Arab Bangladesh Bank Foundation (ABBF) Philanthropy

6 Cashlink Bangladesh Limited (CBL) ATM and POS Installation and Operation

9.1.1 AB Investment Limited (ABIL)

AB Investment Limited (ABIL), a Subsidiary of AB Bank Limited, was incorporated under the

Companies Act, 1994 on 24 December 2009 with a view to run and manage the operations of Merchant

Banking Wing of AB Bank Limited independently. AB Investment Limited started its operation on 10

March 2010. ABIL's Registered Office is located at Motijheel, Dhaka and ABIL has two branch offices at


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Agrabad, Chittagong and Chowhatta, Sylhet. AB Investment Limited has achieved reputation as a leading

Merchant Bank by providing professional portfolio management services and conducting other merchant

banking operations.

9.1.2 AB Securities Limited (ABSL)

Brokerage business of Arab Bangladesh Bank Foundation was transferred to AB Securities Limited

(ABSL) vide Bangladesh Bank approval letter BRPD(R-1)717/2009-493 dated 08 November 2009. The

main objective of the company is to act as a stock broker to buy and sell Securities, Bond, and Debenture

etc. on behalf of clients. ABSL also manages its own portfolio under Stock Dealer License. ABSL is a

member of both Dhaka Stock Exchange Ltd and Chittagong Stock Exchange Ltd. ABSL started its

operations independently on 02 August 2010.

9.1.3 AB International Finance Ltd (ABIFL)

AB International Finance Limited (ABIFL) is a fully owned (100%) Subsidiary of AB Bank Limited

incorporated and domiciled in Hong Kong and has its registered office and principal place of business at

Unit 1201-B, 12/F, Admiralty Centre, Tower One, 18 Harcourt, Hong Kong.

9.1.4 AB Exchange (UK) Limited (ABEL)

AB Exchange (UK) Limited (ABEL) is a company incorporated and domiciled in United Kingdom (UK)

and has its registered office 69 Whitechapel High Street, London, E1 7PL. Its registration number is

07272766 (England & Wales). ABEL is fully owned (100%) Subsidiary of AB Bank Limited.

9.1.5 Arab Bangladesh Bank Foundation (ABBF)

The Bank also has a Subsidiary (99.60% owned) for philanthropic/CSR activities known as Arab

Bangladesh Bank Foundation (ABBF). It came to operation in 2002 and obtained brokerage licenses from

BSEC for Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) in 2006. In view of the

decision of Bangladesh Bank and upon due agreement to that effect the Board of Directors of ABBL and

ABBF respectively, a new subsidiary company AB Securities Limited is launched for the operation of

brokerage business.

9.1.6 Cashlink Bangladesh Limited (CBL)

Cashlink Bangladesh Limited (CBL) was incorporated on 24 September 2008 in Bangladesh under the

Companies Act 1994 as a private company limited. AB Bank Limited presently holds 90% shares in

CBL. The principal activity of the company is to install and operate a switched Automated Teller

Machines (ATM) and Point of Sales (POS) network on behalf of a number of local and foreign banks

enabling these member bank customers who are active cardholders to withdraw cash, make utility bill


34 | P a g e

payments (e.g. water, gas, electricity and telephone bills) and to purchase commodity goods from any of

the ATM and POS terminals established under the network.

9.2 Capital Structure

AB Bank Limited, the issuer of the Sub-ordinated Bonds, is a commercial bank and most (92.72%) of its

assets are financed by deposits and other liabilities. The largest source of fund of the Issuer is Deposit and

other accounts, which funds around 76.58% of the total assets.

Table 4: Capital Structure of ABBL

Particulars As of March 31, 2015

BDT Million % of Total Assets

Liabilities 246,439.77 92.72%

Borrowings from other banks, FIs and agents 12,292.17 4.62%

AB Bank Subordinated Bond 2,500.00 0.94%

Deposits and other accounts 203,556.29 76.58%

Other liabilities 28,091.31 10.57%

Capital/Shareholders' Equity 19,355.49 7.28%

Paid-up capital 5,324.59 2.00%

Statutory reserve 5,585.78 2.10%

Other reserve 1,826.22 0.69%

Retained earnings 6,626.47 2.49%

Minority interest (7.57) 0%

Total Liabilities and Shareholders' Equity 265,795.26

The Issuer maintains appropriate capital adequacy, which enables it to confront various risk factors it may

be exposed to. The Total Eligible Capital of the bank, on consolidated basis, was BDT 22,936.44 million

as on 31st March, 2015 against the regulatory requirement of BDT 22,599.70 million.

Table 5: ABBL's Total Capital

Particulars

As of March 2015

Consolidated Solo

BDT Million BDT Million

Total assets including off-Balance Sheet items 338,626.48 336,191.00

Total Risk Weighted Assets (RWA) 225,996.95 223,272.94

Total Common Equity Tier-I Capital 17,266.93 16,717.31

Additional Tier-I Capital - -

Total admissible Tier 2 Capital 5,669.51 5,625.15

Total Eligible Capital 22,936.44 22,342.46

Total required capital (10% of Total RWA) 22,599.70 22,327.29

Capital Surplus / (Shortfall) [A-B] 336.75 15.16

Capital to Risk Weighted Assets Ratio (CRAR) 10.15% 10.01%


35 | P a g e

2008 2009 2010 2011 2012 2013 2,014

Deposits 67,383.82 81,792.77 93,439.30 114,573.67 138,440.90 161,846.28 198,189.20

Growth 21.38% 14.24% 22.62% 20.83% 16.91% 22.46%

0%

5%

10%

15%

20%

25%

-

50,000

100,000

150,000

200,000

250,000

Deposits & Other Accounts and Growth

9.3 Business based on Solo Financials

9.3.1 Funding and Liquidity

9.3.1.1 Funding Structure

Deposit of AB Bank Limited increased at CAGR 19.70% over the last six years and stood at BDT

198,189.20 million in 2014 against BDT 161,846.28 million in previous year registering y-o-y growth of

22.46% (2013: 16.91%).

The borrowed fund (interbank borrowing) of the Issuer increased to BDT 10,976.81 million in 2014 from

BDT 9,987.49 million in 2013 of which BDT 7,313.32 million (66.63%) from Bangladesh and the rest

BDT 3,663.49 million (33.37%) from aboard.

Table 6: ABBL Funding Mix (Amount in BDT Million)

2014 2013

Amount in BDT Million Amount % of Liability Amount % of Liability

Borrowings 10,976.81 4.64% 9,987.49 5.23%

In Bangladesh 7,313.32 3.09% 4,230.70 2.21%

Outside Bangladesh 3,663.49 1.55% 5,756.80 3.01%

Deposits 198,189.20 83.80% 161,846.28 84.71%

Demand Deposits 20,583.32 8.70% 18,420.61 9.64%

Time Deposits 177,605.88 75.09% 143,425.66 75.07%

Other Liabilities 24,845.03 10.50% 19,231.73 10.07%

AB Bank Subordinated Bond 2,500.00 1.06% - -

Total Liability 236,511.04

191,065.49

The Issuer’s total liabilities stood at BDT 236,511.04 million in 2014 of which around 83.80% came from

deposits.


36 | P a g e

9.3.1.2 Liquidity Position

ABBL maintains liquid assets to carry out the day-to-day operations and fulfill the statutory requirements

in relation to business as imposed by the regulator from time to time. Asset & Liabilities Committee

(ALCO) of the Issuer monitors the evolving business situation and provides a direction to maintain an

optimum trade-off between liquidity and profitability.

Table 7: Maturity Profile of Assets (Amount in BDT Million)

2014

2013 2012

Amount % Amount % Amount %

upto 1 months 27,747.0 10.90% 33,673.5 16.2% 30,006.1 17.3%

over 1 month but within 3 months 66,329.0 26.05% 39,554.1 19.0% 36,799.3 21.2%

over 3 months but within 1 year 75,895.5 29.80% 68,408.2 32.9% 33,986.2 19.6%

over 1 year but within 5 years 46,336.8 18.19% 29,440.4 14.2% 32,935.3 18.9%

over 5 years 38,359.9 15.06% 36,929.3 17.8% 40,115.4 23.1%

Total Assets 254,668.2

208,005.5

173,842.4

In 2014, out of the total assets of ABBL, 66.78% (BDT 169,971.4 million) belongs to the first three

maturity buckets that are highly liquid. Assets within the 3-12 months bucket hold the highest portion or

29.80% of total assets. Only 15.09% of total assets fell within the bucket of over 5 years.

Table 8: Maturity Profile of Liabilities (Amount in BDT Million)

2014

2013 2012

Amount % Amount % Amount %

upto 1 months 24,897.57 10.53% 28,395.8 13.7% 26,695.1 15.4%

over 1 month but within 3 months 65,865.18 27.85% 39,055.8 18.8% 48,500.7 27.9%

over 3 months but within 1 year 75,655.68 31.99% 73,778.1 35.5% 55,619.3 32.0%

over 1 year but within 5 years 66,975.33 28.32% 48,447.9 23.3% 24,888.6 14.3%

over 5 years 3,117.28 1.32% 1,387.9 0.7% 2,104.8 1.2%

Total Liabilities 236,511

191,065.5

157,808.6

Table 9: Asset Liability Maturity Analysis (Amount in BDT Million)

Particulars up to 1

months

1-3

months

3-12

months 1-5 years

above 5

years total

Assets 27,747.0 66,329.0 75,895.5 46,336.8 38,359.9 254,668.2

Liabilities 24,897.6 65,865.2 75,655.7 66,975.3 3,117.3 236,511.0

Liquidity gap 2,849.4 463.8 239.8 (20,638.5) 35,242.6 18,157.1

Cumulative liquidity gap 2,849.4 3,313.2 3,553.0 (17,085.5) 18,157.1 36,314.2

Gap as % of total assets (TA) 1.1% 0.2% 0.1% -8.1% 13.8% 7.1%

Cumulative liquidity gap as % of TA 1.1% 1.3% 1.4% -6.7% 7.1% 14.3%


37 | P a g e

85.31%

91.95%

81.48%

75.75%

86.58% 89.60%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

2009 2010 2011 2012 2013 2014

Loan Deposit Ratio

Figure 1: Loan Deposit Ratio

At the end of December 31, 2014 large volume of liquidity gaps was observed only in 4th maturity bucket.

But cumulative positive gaps were observed in all the buckets except the 4th buckets where liabilities

exceeded by BDT 20,638.5 million over assets,

AB Bank Limited also follows a well-defined strategy and plan to mobilize resources such as deposits and

borrowings, besides the capital, cost effective market responsive measures of fund mobilization are also

adopted for the purpose with due consideration of profitable investments for bottom line growth. The

Issuer has maintained an average loan to deposit ratio of 85.11% over the last six years which indicates

bank’s prudent utilization of funds.

ABBL maintained Cash Reserve Requirement (CRR) and Statutory Liquidity Ratio (SLR) well above the

regulatory requirement. ABBL maintained CRR amounting to BDT 11,716.56 million in 2014 (BDT

9252.44 million in 2013) against required BDT 11,138.54 million (BDT 8941.24 million in 2013). On the

other hand ABBL maintained SLR amounting BDT 27,005.01 million in 2014 (BDT 32,904.21 million in

2013) against required BDT 22,277.07 million (2013 required: BDT 28,313.93 million).

9.3.2 Capital Adequacy

Risk Based Capital Adequacy Ratio

AB Bank Limited maintained Risk Weighted Capital Adequacy Ratio above the regulatory requirement.

RWCA ratio of the Issuer was 10.32% (Tier I: 7.50% and Tier II: 2.82%). Risk weighted assets out of

total assets (including off-Balance Sheet items) was 66.58% in 2014. Out of total capital, ABBL

maintained 72.64% as core capital in December 2014 and 82.94% in 2013. ABBL’s capital adequacy is

thus a fundamental consideration which ensures the Issuer’s creditworthiness.


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Table 10: Risk Weighted Capital Adequacy Ratio (Amount in BDT Million)

Particulars 2014 2013 2012 2011 2010

BDT mn BDT mn BDT mn BDT mn BDT mn

Total Asset (Incl. off-BS) 331,736.66 291,222.1 233,432.9 205,558.3 177,473.4

Risk weighted assets 220,862.24 173,871.2 146,492.2 140,235.9 147,948.6

Eligible Tier I 16,561.05 15,569.6 14,629.8 13,409.6 12,411.3

Eligible Tier II 6,237.57 3,202.6 2,551.7 2,533.7 2,249.0

Regulatory capital 22,086.22 17,387.1 14,649.2 14,023.6 14,794.9

Ratios: % % % % %

RWA of Total Assets 66.58% 59.70% 62.76% 68.22% 83.36%

Tier I CAR 7.50% 8.95% 9.99% 9.56% 8.39%

Tier II CAR 2.82% 1.84% 1.74% 1.81% 1.52%

CAR 10.32% 10.80% 11.73% 11.37% 9.91%

9.3.3 Earnings and Performance

Earnings determine the ability of a bank to increase capital (through retained earnings), absorb loan

losses, support the future growth of assets, and provide a return to investors. The largest source of income

for the Issuer is net interest income (interest income from lending activity less interest paid on deposits

and debt). The second most important source is income from Commission, Exchange, and Brokerage. The

Issuer also generates significant income from investment in government and corporate securities.

Revenue generating ability with sustained growth was the outcome of its diversified sources, which is

reflected in the following exhibit. Total income of the Issuer was BDT 27,474.8 million (2013: BDT

23,928.7 million) of which 77.79% (2013: 76.7%) came from its core business i.e. interest income.

Interest income stood at BDT 21,398.8 million in 2014 registering 19.2% growth from previous year

(2013: interest income BDT 17,953 million).

Table 11: Interest Income Components (Amount in BDT Million)

2014 2013 Growth

Amount % of TR Amount % of TR

(2014-

2013)

Interest Income 21,398.8 77.9% 17,953.0 76.7% 19.2%

Loans and Advances 20,251.1

16,788.7

Bills purchased and discounted 671.9

459.4

Calla and placements 466.2

688.7

Balance with foreign banks 8.7

15.6

Reverse Repo 0.3

-

Balance with Bangladesh Bank 0.5

0.7


39 | P a g e

-

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

6,000.0

7,000.0

2009 2010 2011 2012 2013 2014

Components of Total Revenue

Net Interest income Investment Income Commission, exchange and brokerage Other income

Figure 2: Components of Total Income

Income from investment 2,878.4 10.5% 2,841.5 12.1% 1.3%

Sale of shares 66.2

90.6

Interest on treasury bills 277.9

554.4

Dividend on shares 170.6

203.3

Interest on debentures 2.9

2.9

Interest on treasury bonds 2,076.0

1,881.4

Gain/(loss) on treasury bills and treasury bonds 261.9

79.7

Interest on other bonds and others 23.0

29.3

Commission, exchange and brokerage 3,067.5 11.2% 2,461.3 10.5% 24.6%

Other operating income 130.1 0.5% 137.0 0.6% -5.1%

Total Revenue (TR) 27,474.8

23,392.9

17.45%

Investment income grew at 1.3% rate from previous year largely and stood at BDT 2,878.4 million

against BDT 2,842.5 million in 2013. Income from commission, exchange and brokerage which is 11.2%

of total income grew at 24.6% from previous year.

The income from investments and fees income among all the components of total income were volatile

over the last six years. But the core component i.e. net interest income (NII) increased to BDT 6,078.78

million in 2014 from BDT 3,779.52 million in 2013.


40 | P a g e

9.3.4 Profitability

ABBL’s profit before provisions stood at BDT 6,924.84 million in 2014 registering a growth of 30.91%

from previous year. Following 30.91% increase in ABBL’s operating profit, the bottom line profit

increased by 24.63% in 2014 from previous year. Total provisions for loans and advances increased by

27.82% from previous year to stand at BDT 2,946.22 million against BDT 2,305.03 million in 2013.

Table 12: ABBL’s Operating Performance (Amount in BDT Million)

2009 2010 2011 2012 2013 2014

Operating income 8,269.00 10,898.00 7,743.00 8,435.00 9,755.14 12,154.81

Operating expenses 2,466.00 3,489.00 3,431.00 4,072.00 4,465.48 5,229.96

Profit before provisions 5,802.00 7,409.00 4,312.00 4,363.00 5,289.66 6,924.84

Total provisions 598.00 1,052.00 1,355.00 1,173.00 2,305.03 2,946.22

Profit before tax 5,205.00 6,357.00 2,957.00 3,190.00 2,984.63 3,978.63

Profit after tax 3,363.00 3,696.00 1,328.00 1,439.00 1,011.00 1,260.03

ABBL’s net interest margin (NIM) increased to 3.10% in 2014 from 2.36% in previous year. Net interest

income increased to BDT 6,078.78 million in 2014 from BDT 3,779.52 million in previous year

registering 60.83% year to yearr growth.

Cost income ratio decreased to 43.03% in 2014 after an increasing trend from 2009. The average cost

income ratio is 40.54% over the period from 2009 to 2014.

ABBL made 32.72% return on its average investments in 2010 which is highest rate of return over the

period from 2009 to 2014 period. After then return on investment plummeted due to the capital market

turmoil.

Return on assets (ROA) and return on equity (ROE) decreased significantly from their peak in 2009 in the

following years. In 2014, ROA and ROE stood at 0.54% and 7.18% respectively.

Diluted Earnings per Share (EPS) and Diluted Net Asset Value per Share (NAV) increased to BDT 2.37

and BDT 34.13 in 2014 respectively.

Table 13: Key Ratios for Last Six years

Particulars 2009 2010 2011 2012 2013 2014

Net Interest Margin (NIM) 3.74% 3.53% 2.03% 2.32% 2.36% 3.10%

Loan Deposit Ratio 85.31% 91.95% 81.48% 75.75% 86.58% 89.60%

Cost Income Ratio 29.82% 32.02% 44.31% 48.28% 45.78% 43.03%

Return on Investments (ROI) 21.06% 32.72% 14.62% 11.39% 10.37% 9.68%

Return Avg. Assets 3.52% 3.09% 0.93% 0.88% 0.53% 0.54%


41 | P a g e

Return on Avg. Equity 39.84% 30.77% 9.25% 9.32% 6.13% 7.18%

Diluted Earnings Per Share (BDT) 6.32 6.95 2.50 2.70 1.90 2.37

Diluted NAV per Share (BDT) 19.09 26.07 27.92 30.14 31.84 34.13

9.3.5 Diversification of Business and Franchise

Table 14: Composition of loan portfolio (Amount in BDT Million)

Particulars 2014 2013 Growth

(2014-2013) BDT mn % BDT mn %

Corporate 129,626.68 73.00% 97,433.94 69.54% 33.04%

SME 42,826.99 24.12% 37,382.37 26.68% 14.56%

Retail 4,389.09 2.47% 4,662.14 3.33% -5.86%

Others 728.04 0.41% 642.85 0.46% 13.25%

Total 177,570.80 100.00% 140,121.30 100.00% 26.73%

Corporate Business occupied largest pie of the Issuer’s business mix representing 73.0% of total loan

portfolio of the Issuer. Corporate presence of ABBL had been in all the major industrial and business

houses of the country. Corporate & Structured Finance Division, one of the major strategic business units

of the Issuer, has been striving hard to provide concerted efforts and intimate care to this major revenue

generating segment. Corporate loans grew by 33.04% in 2014 from previous year.

In view of complexities and intricacies of corporate financing the Issuer maintains close relationship with

the clients to provide customized products and services including working capital facilities, trade finance,

post import finance, etc. the bank also provides loan & equity syndication, corporate advisory services

and structured trade solution through Structured Finance.

With slow revival of the economy, AB Bank has been following growth strategy for corporate portfolio

with robust presence in manufacturing particularly in RMG, Textiles, Food as well as Steel & Trading.

Steel, Ship building, Ship scrapping, Real estate, Pharmaceuticals, Telecommunication, Power, etc. has

been other areas of interest for corporate business.

The role of Small and Medium Enterprises (SMEs) is becoming more and more important as the SMEs

have become a key driving force of the country’s economic growth. There is a broad consensus that a

vibrant SME sector is one of the principal driving forces in the development of the economy of

Bangladesh. SMEs stipulate private ownership and entrepreneurial skills and can adapt quickly to

changing market conditions, generate employment, help diversify economic activities and make

significant contribution to exports and trade. Further, the government’s drive through the central bank for

inclusion has provided impetus to supporting this key sector. Keeping pace with the ongoing aggressive

changes in the SME sector in Bangladesh, AB Bank has been relentlessly serving the entrepreneurs


42 | P a g e

establishing a separate division named “SME Banking Division” since 2008 to emphasize SME

financing, regulation, supervision and monitoring. AB Bank’s SME business has been growing

substantially and contributed 24.12% of its total loan portfolio as on December 2014. SME financing

provided by ABBL grew by 14.56% from previous year.

Retail business of ABBL includes Consumer Banking, e-banking and Liability Marketing. ABBL’s Retail

Banking Division always remains prepared to take new challenges in order to become the most preferred

bank among target market by creating an even more competitive edge over the others with focus on:

Quality of service

Strong relationship management

“Any where”, “Any time” banking

Improved processes

Bundled product offerings

Customer specific products/offerings on a regular basis

Retail Banking Division was set up with a view to increasing the customers’ reach in terms of products

and services in terms of both asset and liability. In 2014, the portfolio under retail business was BDT

4,389.09 million which is 5.86% lower than the previous year (2013: BDT 4,662.14 million).

Table 15: Loan Portfolio by Types of Loan (Amount in BDT Million)

Particulars 2014 2013

Growth BDT mn % of Total BDT mn % of Total

Overdraft 24,258.2 13.7% 20,344.5 14.5% 19.2%

Cash Credit 38.0 0.0% 12.4 0.0% 206.8%

Time Loan 54,883.9 30.9% 41,464.8 29.6% 32.4%

Term Loan 76,409.6 43.0% 53,937.7 38.5% 41.7%

Bills Under LC 597.5 0.3% 315.5 0.2% 89.4%

Trust Receipt 12,033.3 6.8% 13,153.6 9.4% -8.5%

Packing Credit 469.1 0.3% 403.2 0.3% 16.3%

Loan Against Accepted Bills 5,659.7 3.2% 7,353.9 5.2% -23.0%

Consumer Loan 1,315.6 0.7% 1,439.0 1.0% -8.6%

Staff Loan 722.7 0.4% 643.2 0.5% 12.4%

Bills Purchased & Discounted 1,183.4 0.7% 1,053.6 0.8% 12.3%

Total 177,570.8 100.0% 140,121.3 100.0% 26.7%

Loan portfolio of ABBL in terms of industry sector is diversified. Loan portfolio of the bank spreads over

different sectors like RMG, textile, spinning, dying, pharmaceuticals, telecommunication, steel, ship

building, ship scrapping, edible oil, cement, real estate, agriculture and other commercial products.

Overall sectoral mix of the business amply shows bank’s predominant presence in corporate business and


43 | P a g e

trading mentioned earlier. It also manifests varied loan concentration addressing the risk aspect of

ABBL’s exposures.

Table 16: Sector Wise Distribution of Loan (Amount in BDT Million)

Particulars 2014

2012

Growth BDT mn % of Total BDT mn % of Total

Agriculture 2,801.65 1.58% 2,803.25 2.00% -0.06%

Large and Medium Scale Industry 47,768.70 26.90% 30,111.84 21.49% 58.64%

Working Capital 35,187.55 19.82% 27,645.07 19.73% 27.28%

Export 1,091.17 0.61% 1,329.84 0.95% -17.95%

Commercial Lending 40,693.65 22.92% 35,030.32 25.00% 16.17%

Small and Cottage Industry 1,010.62 0.57% 626.42 0.45% 61.33%

Others 49,017.46 27.60% 42,574.57 30.38% 15.13%

Total 177,570.80 100.00% 140,121.30 100.00% 26.73%

The concentration of large and medium scale industry embodies 26.90% of total lending which is

followed by the commercial lending in industry with 22.92% share of total lending.

9.3.6 Asset Quality

Total asset of ABBL stood at BDT 254,668.16 million in 2014 which was BDT 208,005.54 million in

2013 registering a growth of 22.43%. All components of assets increased during the last year having no

abrupt shift in the composition of total assets. Money at call and short notice experienced the highest

growth 0f 71.58% which is followed by loans & advances with 26.73% growth.

Table 17: Composition of Total Assets (Amount in BDT Million)

Particulars 2014 2013 Growth

BDT mn % BDT mn %

Cash & cash equivalent 20,436.40 8.02% 17,338.49 8.34% 17.87%

Money at call and short notice 3,862.96 1.52% 2,251.40 1.08% 71.58%

Investment 30,778.58 12.09% 28,675.70 13.79% 7.33%

Loan & advances 177,570.80 69.73% 140,121.30 67.36% 26.73%

Fixed assets 4,404.99 1.73% 4,172.56 2.01% 5.57%

Other assets 17,614.43 6.92% 15,446.09 7.43% 14.04%

Total Assets 254,668.16

208,005.54

22.43%

In 2014, loan & advances represents the highest part of total assets with 69.73% share, an increase from

the 67.36% share in 2013, registering a 26.73% growth. Investments in government securities, shares and


44 | P a g e

bonds which contributed 12.09% to total assets grew by 7.33% from previous year. Cash & cash

equivalent significantly increased from previous year representing 17.87% of total assets.

Table 18: Security wise Loans, Advances and Lease/Investments (Amount in BDT Million)

Nature of Security 2013 2012

BDT mn % of Total BDT mn % of Total

Collateral of movable/immovable assets 142,142.10 80.05% 107,514.20 76.73%

Cash Collateral 4,186.31 2.36% 2,978.77 2.13%

Banks and Fis guarantee 1,146.80 0.65% 736.91 0.53%

Personal Guarantee 9,533.34 5.37% 7,209.91 5.15%

Corporate Guarantee 3,236.28 1.82% 444.39 0.32%

Other Securities 17,325.96 9.76% 21,237.12 15.16%

Total Assets 177,570.80 100.00% 140,121.30 100.00%

80.05% of ABBL’s loan portfolio is backed by collateral of movable/immovable assets whereas 2.36%

are backed by cash collateral. More than 7% of loan portfolio is backed by various guarantees (i.e. 0.65%

by Banks and Financial Institutions Guarantee, 5.37% by Personal Guarantee and 1.82% by Corporate

Guarantee).

Table 19: Asset Quality Status (Amount in BDT Million)

Particulars 2014 2013 2012

BDT mn % BDT mn % BDT mn %

Unclassified 170,714.85 96.14% 135,401.38 96.63% 102,543.49 96.68%

Standard 170,296.35 [99.75%] 134,898.92 [99.63%] 102,038.49 [99.51%]

SMA 418.50 [0.25%] 502.46 [0.37%] 505.00 [0.49%]

Classified 6,855.95 3.86% 4,719.92 3.37% 3,522.27 3.32%

Sub-Standard 793.06 [11.57%] 211.31 [4.48%] 521.58 [14.81%]

Doubtful 331.10 [4.83%] 761.61 [16.14%] 524.89 [14.90%]

Bad/Loss 5,731.79 [83.60%] 3,747.01 [79.39%] 2,475.80 [70.29%]

Total 177,570.80

140,121.30 100.00% 106,065.76 100.00%

More than 96% of ABBL’s total asset is categorized as unclassified out of which only 0.25% is

categorized as Special mention Account (SMA). Total non-performing loan of ABBL stood at BDT

6,855.95 million in 2014 which was BDT 4,719.92 million and BDT 3,522.27 million in 2013 and 2012

respectively. Classified loan in 2014 increased by 45.26% from previous year where the loan portfolio in

the same time horizon increased by 26.73%. Out of the total classified loan, 83.60% fall in the bad loan

category.


45 | P a g e

4.02%4.31%

2.99%2.75%

2.11%

2.82%3.32% 3.37%

3.86%

2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4

NPL

Figure 3: Trend of NPL

ABBL’s NPL was in decreasing trend since 2007 until 2011. ABBL’s lowest NPL was 2.11% in 2010

from where it increased at 3.86% in 2014. High NPLs in 2011, 2012 and 2013 are largely attributed to

capital market turmoil, political unrest, slowdown in real estate sector and ship building industry and

obviously the revised stringent loan provisioning rules of Bangladesh Bank.

9.3.7 Investment

Total investments (investments in government securities, shares and bonds) of the Bank stood at BDT

30,778.58 million in 2014 which was BDT 28,675.70 million in 2013 registering a growth of 7.33%.

Among total investment, 82.22% (2013: 77.86%) was made on highly liquid and risk-less government

securities where 88.87% (2012: 87.83%) of investments was made in Treasury bonds. Other investments

which constitute 16.58% of total investments were largely made in capital market.

Table 20: Investment Profile (Amount in BDT Million)


BDT mn % BDT mn %

Government sector investments 25,305.84 82.22% 22,327.87 77.86%

Treasury bills 2,612.98 [10.33%] 2,011.67 [9.01%]

30 days Bangladesh Bank bills - [0.00%] 499.36 [2.24%]

Treasury bonds 22,488.63 [88.87%] 19,610.96 [87.83%]

Debentures-BHBFC 5.00 [0.02%] 10.00 [0.04%]

Bangladesh Bank Islami Investments bonds 196.00 [0.77%] 192.00 [0.86%]

Prize bonds 3.23 [0.01%] 3.87 [0.02%]

Other investments 5,102.94 16.58% 5,984.76 20.87%

Shares 4,972.94 [97.45%] 5,844.76 [97.66%]

Bond 130.00 [2.55%] 140.00 [2.34%]

Investments -ABBl, Mumbai Branch 369.80 1.20% 363.07 1.27%

Treasury bills 335.15 [90.63%] 327.55 [90.22%]

Debentures and Bonds 34.64 [9.37%] 35.52 [9.78%]

Total Investment 30,778.58

28,675.70


46 | P a g e

9.3.8 Off Balance Sheet Exposure

Total off-balance sheet items of ABBL decreased by 7.39% from preceding year and stood at BDT

77,068.51 million. Total contingent liabilities as percent of total assets decreased over the years and stood

at only 30.26% in 2014 which was 40.01% in 2013.

Table 21: ABBL's Off Balance Sheet Exposure (Amount in BDT Million)


BDT mn % of Total BDT mn % of Total

Acceptances and endorsements 27,020.99 35.06% 26,948.99 32.38%

Letters of guarantee 13,845.33 17.96% 16,393.08 19.70%

Irrevocable letters of credit 21,987.32 28.53% 30,225.13 36.32%

Bills for collection 7,738.45 10.04% 9,649.35 11.60%

Other contingent liabilities 6,476.42 8.40% - 0.00%

Total 77,068.51 100.00% 83,216.54 100.00%

Among the items of ABBL’s off-balance sheet, acceptances and endorsements decreased by 0.27% in

2014 from previous year. Letters of guarantee decreased by 15.54% in 2014 from previous year.

Irrevocable letters of credit and bills for collection decreased by 27.25% and 19.80% respectively in 2014

from preceding year.

9.4 Management Profile

AB Bank’s Core-Management Team consists of the following officials:

SL Designation Name

1 President & Managing Director Shamim A. Chaudhury

2 Deputy Managing Director Moshiur Rahman Chowdhury

3 Deputy Managing Director Sajjad Hussain

4 EVP, Chief Financial Officer & Company Secretary Mahadev Sarker Sumon FCA

5 SEVP, Head of Financial Institutions & Treasury Abu Hena Mustafa Kamal


47 | P a g e

Profiles:

a) Mr. Shamim Ahmed Chaudhury: President & Managing Director

Mr. Shamim Ahmed Chaudhury has been working as the President & Managing Director of AB Bank

since 23 February 2014. Mr. Chaudhury joined the Bank on 16th March, 2008 as Deputy Managing

Director and promoted to the rank of Additional Managing Director on 20th October 2013. After

completing his MBA from IBA, University of Karachi Mr. Chaudhury started his career with

American Express Bank Limited in 1980 as Management Trainee.

During last 33 years, he served Bank of Credit & Commerce International (Overseas) Limited, Bank

of Small Industries & Commerce, Union Bank of Zambia Limited, Al Rajhi Banking & Investment

Corporation, CIT Financial Limited, BPB North American Financial Services from 1988 to 2005. He

also served One Bank Limited as Deputy Managing Director from October 2005 to March 2008.

b) Mr. Moshiur Rahman Chowdhury: Deputy Managing Director ( Credit )

Mr. Moshiur Rahman Chowdhury is a veteran banker with 30 years of banking experience in both

home and abroad. The current Deputy Managing Director (Credit) joined AB Bank Ltd. in 2003 and

in recognition to his contribution to the Bank; Mr. Rahman was promoted to Deputy Managing

Director with effect from 1st April, 2013. He started his banking career with the Sonali Bank

Limited, the largest public sector bank in Bangladesh, in November 1984 and served as Branch

Manager, ‘Credit controller & In-charge Customer Service & Administration’ of its UK operations.

After joining ABBL, he served as Senior Credit Initiator of Head Office Credit Risk Management

(CRM) Division and also served other portfolios i.e. Head of SME Banking, Head of CRM division,

Head of Corporate Finance Division.

Mr. Chowdhury holds a B.Com (with Honors) and M.Com in Accounting from the University of

Dhaka and completed MBA from Victoria University, Australia. He also completed Banking

Diploma (Part I and II) from the Institute of Bankers.

The Senior Banker has vast exposure attending different training programs, workshops, seminars in

home and abroad on Credit Risk Management, Credit Operation, Corporate Governance, SME

Banking, Lending Strategies etc.

c) Mr. Sajjad Hussain: Deputy Managing Director (Operations)

Mr. Sajjad Hussain joined AB Bank Limited on 3rd February, 2014 as Deputy Managing Director

(Head of Operations and Chief Risk Officer). Mr. Hussain has thirty years of experiences in the

banking arena and worked with leading local and multi-national commercial banks in Bangladesh and

abroad.


48 | P a g e

Mr. Hussain joined American Express Bank Ltd. Bangladesh as Head of Credit Operations (Loan

Administration) in 1984. He worked in different capacities over a period of 14 (fourteen) years and

lastly, he held the position of Senior Director & Country Operations Officer of the same Bank. Mr.

Hussain also worked with the American Express Bank Ltd., USA from 1999 to 2005 where he served

as Operation Consultant in New York and Manager Operations in Miami. Mr. Hussain joined ONE

Bank Ltd. in 2008 as Sr. Executive Vice President & Head of Operations and later served as Deputy

Managing Director - Operation in Dhaka Bank Ltd. since 2011 Mr. Hussain holds a BA (with

Honors) and MA in English Literature from the University of Dhaka.

d) Mr. Mahadev Sarker Sumon: CFO & Company Secretary

Mr. Mahadev Sarker Sumon joined AB Bank Limited in March 2003. Prior to joining AB he worked

as Senior Audit and Accounts Officer in Rural Employment Sector Program (RESP), financed and

administered by Swedish Sida as a technical staff from 1997 to 2002.

Mr. Sarker completed his post-graduation in Management and is a Fellow member of the Institute of

Chartered Accountants of Bangladesh (ICAB). He is currently holding dual responsibility of Chief

Financial Officer and Company Secretary.

Mr. Sarker attended different training programs, workshops, seminars in home and abroad. He also

completed a certification course on Basel II in the UK.

e) Mr. Abu H M Kamal: Head of Financial Institution’s and Treasury

Mr. Abu Hena Mustafa Kamal is a veteran banker with substantial expertise in the field of Treasury

and Foreign Trade in Bangladesh banking sector. He has over 25 years of experiences. Currently, he

holds the portfolio of Head of Financial Institutions & Treasury and one of the Business Heads

(Corporate A2) and also member of the Core Management Committee (MANCOM) of the Bank.

During his long banking career, he has been serving many local private commercial banks and

foreign commercial banks operating in Bangladesh. Prior to joining AB Bank, he was the Treasurer

of Commercial Bank of Ceylon, Credit Agricole Indosuez and Treasury Manager of Standard

Chartered Bank. He also served Dhaka Bank limited, Prime Bank Limited and Uttara Bank Limited

in various positions. He has participated in many training programs, workshops and seminars both at

home and abroad.


49 | P a g e

9.5 Description of Encumbered and Unencumbered Assets with Value Thereof

9.5.1 Encumbered Assets

AB Bank Ltd held the following encumbered securities as on 31st March 2015.

91 Days Treasury Bill

Instrument ID Issue Date Maturity Date Face Value Yield Remarks

BD0909132153 16-Feb-15 18-May-15 225,800,000.00 7.40% Liquid Support, BB

BD0909136154 16-Mar-15 15-Jun-15 253,500,000.00 7.35% Liquid Support, BB



BD0918224157 15-Dec-14 15-Jun-15 460,000,000.00 7.84% REPO, Janata Bank



BD0936452152 30-Jun-14 29-Jun-15 380,700,000.00 8.00% REPO, Janata Bank

BD0936411158 22-Sep-14 21-Sep-15 200,000,000.00 7.77% REPO, Janata Bank

BD0936414152 9-Oct-14 8-Oct-15 500,000,000.00 7.88% REPO, Prime Bank

BD0936425158 22-Dec-14 21-Dec-15 420,000,000.00 8.40% REPO, Basic Bank

02 Years BGTB


BD0917291025 4-Feb-15 4-Feb-17 200,000,000.00 8.50% Liquid Support, BB

BD0917331029 4-Mar-15 4-Mar-17 270,000,000.00 8.50% Liquid Support, BB

9.5.2 Unencumbered Assets

All the other assets of the Issuer (excluding above mentioned encumbered assets) including the fixed

assets are unencumbered.


50 | P a g e

9.6 Profile of the Directors

M. Wahidul Haque, Chairman

Mr. M. Wahidul Haque joined the Board of Directors of AB Bank Limited on December 12, 2007 as

Director. He was unanimously elected as the Chairman of the Board of Directors in July 2008 and

continues to be the Chairman of the bank.

Mr. Haque is also the Managing Director of Deundi Tea Company (UK) Ltd. and The Noyapara Tea

Company (UK) Ltd. both of which are UK registered companies. He had been the Chairman of

Bangladesh Tea Association for six (6) years, representing tea plantation owners in Bangladesh.

He is a member of the Executive Committee of Bangladesh Tea Board- a Government body to regulate

tea/coffee plantation in Bangladesh. Mr. Haque also represents owners on the Board of Trustees of

Plantation Employees Provident Fund, managed by Government of Bangladesh (Labour Ministry).

He is also a Trustee in the Tea Workers Welfare Trust constituted by the Government for the welfare and

enhancing education etc. for the tea plantation workers. He is the office bearer of Bangladesh Employers

Federation (Dhaka) as well.

Mr. Haque also holds the position of the Chairman of the Board of the following subsidiary companies of

AB Bank Limited:

• AB Investment Limited

• AB Securities Limited

• Cashlink Bangladesh Limited

• AB Exchange (UK) Limited

He is a nominated Director by AB Bank Limited, to the Board of Amana Bank Limited, Sri Lanka, which

is the first Islamic bank of Sri Lanka. AB Bank has 15% equity in Amana Bank Limited.

Mr. Haque has been awarded the prestigious "Atish Dipanker Gold Medal Award" for his contribution to

the Tea Industry of Bangladesh in 2010.

Mr. Haque is a graduate of Dhaka University and also holds a Law Degree. Mr. Haque is married with

three daughters. He takes active part in social activities and in organizing small & medium sized

businesses in Bangladesh.

Salim Ahmed, Vice Chairman

Mr. Salim Ahmed is one of the most renowned & successful entrepreneurs and Industrialists in

Bangladesh since last three decades. He is the Vice Chairman of Elite Paints & Chemical Industries

Limited and earlier he was the Chairman of the same group.

He is also the Managing Director of Super Group of Companies, Chittagong wherein Super Refinery

(Pvt.) Limited is the Industry which is the poineer in manufacturing of Hydro Carbon Solvents from

Natural Gas Condensate in the private sector and has been rewarded as CIP (Commercially Important


51 | P a g e

Person) for several times by the Government of Bangladesh in the Large Industrial Category in

recognition of his remarkable contribution to the National economy.

Mr. Ahmed is the Vice-Chairman of the Board of Directors of the Bank since 2008. He is a member of

the Executive body of FBCCI & a Director of Imperial Hospital Limited.

He is the President of Bangladesh Paint Manufacturers' Association (BPMA) and earlier he lead this

association as President for consecutive 7 (seven) years. He is an elected Director of Chittagong

Metropolitan Chamber of Commerce & Industry (CMCC&I) and Vice President of Chittagong

Metropolitan Krira Sangstha.

Mr. Ahmed is also involved with many business apex forums, sports bodies and socio-cultural

organizations.

M. A. Awal, Director

M. A. Awal joined in AB Bank Limited as Director on July 16, 2008. He has over 40 years of banking

experience serving in senior responsible positions in different Banks including AB Bank. Prior to his

Directorship, Mr. Awal served as the Advisor and also the Chief Consultant of the Issuer for about three

years. He is also the director of ABIFL, Hong Kong.

Feroz Ahmed, Director

Mr. Feroz Ahmed is a Director of AB Bank Limited and also the former Vice Chairman of the Board. He

is also the Chairman of Elite Paint Group and the Managing Director of Elite International Ltd., Hexagon

Chemical Complex Ltd. and Ahmed Securities Services Ltd. among others. Apart from business

activities, Mr. Feroz is also involved with various Socio-Cultural, Philanthropic and Sports organizations.

He was associated with the Bangladesh Cricket Board (BCB) as its AD-HOC Executive Committee

Member. He is also Member, Board of Trustees, Chittagong Independent University, life member of

Chittagong Zila Krira Sangstha and member of Chattagram Mohanagari Krira Sangstha. He is also life

member of Red Crescent Society, Chittagong, Maa O Shishu Haspatal, Chittagong.

Syed Afzal Hasan Uddin, Director

Syed Afzal Hasan Uddin is a Director of AB Bank Limited. He graduated from King's College, London in

1993 and was called to the Bar from Lincoln’s Inn, London in March 1996. Mr. Afzal Hasan Uddin is the

Managing Partner of Syed Ishtiaq Ahmed & Associates, one of the prominent law firms of the country.

Prior to joining Syed Ishtiaq Ahmed & Associates, he worked for the Civil Litigation Department of Price

Waterhouse in London. He enrolled as Advocate of the High Court Division of the Supreme Court of

Bangladesh in 2001. Mr. Afzal Hasan Uddin’s area of expertise include advising clients in the areas of

telecommunication, energy and power generation, mergers and acquisitions, due diligence of companies

and general corporate and commercial affairs. Mr. Afzal also serves on the Board of other prominent

listed companies as an Independent Director.

Md. Mesbahul Hoque, Director

Md. Mesbahul Hoque, Director, started his career in Country’s Pharmaceutical Sector in 1969 by joining

May & Baker (UK) Ltd. presently known as Aventys (BD) Ltd. At present, he is the Managing Director

of Therapeutics (BD) Ltd. and an active member of Bangladesh Pharmaceuticals Society; and the Former

Chairman, Reptiles Farm Ltd. (first crocodile captive breeding farm in Bangladesh).


52 | P a g e

Faheemul Huq, Director

Faheemul Huq, Barrister-at-Law, a distinguished legal practitioner in the country is vastly known for his

profound knowledge in Corporate and Banking Sector. Apart from his legal profession, the contribution

of Mr. Huq in the policy matter of the bank is significantly conspicuous. Mr. Huq's wide amplitude of

knowledge in Banking Sector has assisted the bank in deciding various complicated issues.

B.B. Saha Roy, Director

B.B Saha Roy has completed his MBA from the renowned IBA, DU and has worked as a general

manager for Berger Paints Ltd. for twenty years. He currently holds the position of Managing Director

and CEO of Elite Paint Group of Companies.

Gholam Sarwar, Director

Mr. Gholam Sarwar has held the position of a Director of AB Bank Limited from January 10, 2001 to

July 16, 2008 and had been re-appointed for the post again on December 24, 2012. He is also the director

of Pacific Industries Limited, Pacific Traders Ltd. and Therapeutics (BD) Ltd. He has about 46 years of

experience in Automobile Sector.

Shishir Ranjan Bose, FCA, Independent Director

A fellow of Institute of Chartered Accountants of Bangladesh, Mr. Bose joined AB Bank Limited on July

16, 2008 as a Director of the Board. Having a long 34 years of experience in the field of chartered

accountancy profession, Mr. Bose is the Chairman of the Audit Committee of the Board effective from

July 22, 2008. He has been nominated as the Independent Director of the Board. He is also the

Independent Director of AB Securities Ltd. and Cash Link Bangladesh Ltd.

Prof. Dr. M. Imtiaz Hossain, Independent Director

Prof. Dr. M. Imtiaz Hossain is an Independent Director of AB Bank Limited. A PhD holder from the

University of Manchester Institute of Science and Technology, Manchester, UK, Mr. Hossain is currently

the Vice Chancellor of Islamic University of Technology, Gazipur, Bangladesh. He is a Fellow of the

Institution of Engineers, life Fellow of Bangladesh Society of Mechanical Engineers and also a life

Member of National Oceanographic and Maritime Institute, Bangladesh.

Shamim A. Chaudhury, President & Managing Director

Shamim A. Chaudhury was appointed as the President and Managing Director of AB Bank Limited on

February 23, 2014. Mr. Chaudhury joined the Bank on March 16, 2008 as Deputy Managing Director and

has been promoted to the rank of Additional Managing Director effective from October 20, 2013. After

completing MBA, Mr. Chaudhury started his career with American Express Bank Limited in 1980 as

Management Trainee. During his over 33 years of experience, he also served in Bank of Credit &

Commerce International (Overseas) Limited, Bank of Small Industries & Commerce, Union Bank of

Zambia Limited, Al Rajhi Banking & Investment Corporation, CIT Financial Limited, BPB North

American Financial Services from 1988 to 2005. He served in ONE Bank Limited as Deputy Managing

Director from October 2005 to March 2008.


53 | P a g e

9.7 Description of Assets and Liabilities

9.7.1 Description of Assets

Since AB Bank Ltd is a commercial bank, most of its assets are financial assets like loans & advances,

bills discounted, government treasury securities, debt and equity securities issued by corporates, etc.

while loans & advances comprises the lion-share of the bank’s total assets.

Table 22: Composition of Total Assets of ABBL, 2014

Types of Assets Amount (BDT million) %

Cash & cash equivalent 20,436.40 8.02%

Money at call and short notice 3,862.96 1.52%

Investment 30,778.58 12.09%

Loan & advances 177,570.80 69.73%

Fixed assets 4,404.99 1.73%

Other assets 17,614.43 6.92%

Total Assets 254,668.16 100%

Cash:

Table 23: Details of Cash

Particulars 2014

BDT mn % of Total

In Hand (Including foreign currency) 1,137.94 5.57%

Local Currency 1,110.82

Foreign Currency 27.12

Balance with Bangladesh Bank and its Agent Bank 12,809.77 62.68%

Local Currency with Bangladesh Bank 11,858.15

Foreign Currency with Bangladesh Bank 563.85

With Sonali Bank (as agent of Bangladesh Bank-Local Currency) 387.78

Balance with other banks and financial institutions 6,488.69 31.75%

In Bangladesh 4,171.81

Outside Bangladesh 2,316.88

Total Cash as on December 31, 2014 20,436.40 100%


54 | P a g e

Money at Call and Short Notice:

Table 24: Details of Money at Call and Short Notice

Particulars 2014

BDT mn % of Total

In Bangladesh 600.00 15.53%

Industrial and Infrastructure Development Finance Company (IIDFC) 50.00

People's Leasing and Financial Services Ltd. 100

International Leasing & Financial Services Ltd. 450.00

Outside Bangladesh 3,262.96 84.47%

Pinnacle Global Fund Pte Limited 1,558.99

AB International Finance Limited 1,405.97

Kotak Mahindra Bank 88.75

HDFC Bank Limited 209.24

Total 3,862.96

Investments:

Table 25: Details of Investments

Particulars Amount (BDT Million) % of Total

Government sector investments 25,305.84 82.22%

Treasury bills 2,612.98

30 days Bangladesh Bank bills -

Treasury bonds 22,488.63

Debentures-BHBFC 5.00

Bangladesh Bank Islami Investments bonds 196.00

Prize bonds 3.23

Other investments 5,102.94 16.58%

Shares 4,972.94

Bond 130.00

Investments -ABBl, Mumbai Branch 369.80 1.20%

Treasury bills 335.15

Debentures and Bonds 34.64

Total Investment 30,778.58

Loans and Advances:

Table 26: details of Loans and Advances

Particulars Amount (BDT Million) % of Total

Overdraft 24,258.2 13.7%


55 | P a g e

Cash Credit 38.0 0.0%

Time Loan 54,883.9 30.9%

Term Loan 76,409.6 43.0%

Bills Under LC 597.5 0.3%

Trust Receipt 12,033.3 6.8%

Packing Credit 469.1 0.3%

Loan Against Accepted Bills 5,659.7 3.2%

Consumer Loan 1,315.6 0.7%

Staff Loan 722.7 0.4%

Bills Purchased & Discounted 1,183.4 0.7%

Total 177,570.8 100.0%

Fixed assets:

Table 27: Details of Fixed Assets

Particulars Amount in BDT million

Land and Building 3,341.68

Furniture and fixtures 219

Office appliances 62.061284

Electrical appliances 1,443.50

Motor vehicles 567.752028

Intangible Assets 571.032453

Total Before Accumulated depreciation and amortization 6,204.54

Less: Accumulated depreciation and amortization 1,799.54

Total 4,404.99

Other Assets:

Table 28: Details of Other Assets

Particulars BDT mn

Income generating-Equity Investment

In Bangladesh: 512.38

AB Investment Limited 99.90

AB Securities Limited 199.90

Cashlink Bangladesh Limited (CBL) 212.58

Outside Bangladesh: 55.63

AB International Finance Ltd., Hong Kong 5.20

AB Exchange (UK) Limited 50.42

Non-income generating 17046.43

Advance corporate income tax 9,357.44

Arab Bangladesh Bank Foundation 19.92

Share Money Deposits - AB Investment Limited 4,900.10


56 | P a g e

Share Money Deposits - AB Securities Limited -

Accounts receivable 730.28

Preliminary, formation, organisational, renovation, development, prepaid expenses and

others 507.33

Exchange for clearing 459.66

Interest accrued on investment but not collected, commission and brokerage receivable

on shares and debentures, and other income receivables 695.10

Security deposits 175.58

Advance rent and advertisement 171.60

Stationery, stamps, printing materials, etc. 29.27

Inter-branch adjustment 0.15

Total 17,614.43

9.7.2 Description of Liabilities

At the of December 2014, total liabilities of AB Bank Limited stood at BDT 236,511.04 million.

Description of these liabilities are given below;

Table 29: Description of Liabilities

Particulars BDT Million

Borrowings from other banks, financial institutions and agents 10,976.81

AB Bank Subordinated Bond 2,500.00

Deposits and other accounts 198,189

Other liabilities 24,845.03

Total 236,511.04

Borrowings from other banks, financial institutions and agents:

Table 30: Description of Borrowings

Particulars BDT Mn

A. In Bangladesh 7,313.32

Bangladesh Bank 748.92

ADB loan 17.11

Islamic Investment Bonds 500.00

Refinance against IPFF 105.18

Refinance against Women Entr., Small Enterprise, ETP & Others 126.63

Call & Term Borrowing from 6,564.40

Basic Bank Limited 950.00

Dutch Bangla Bank Limited 1,565.29

CITI Bank NA 420.00


57 | P a g e

HSBC 300.00

ICB Islami Bank Limited 470.00

Brac Bank Limited 1,000.00

United Commercial Bank Limited 1,300.00

Commercial Bank of Ceylon 390.42

Bangladesh Commerce Bank Limited 155.96

Accrued interest 12.73

B. Outside Bangladesh 3,663.49

Sonali Bank UK 616.89

International Finance Corporation 2,732.72

Banca UBAE 313.88

Total (A+B) 10,976.81

AB Bank Subordinated Bond:

The Board of Directors of AB Bank Limited in its 546th meeting held on March 12, 2014 approved the 7

years Non-Convertible Subordinated Bond BDT 250 crore for enhancing the Bank capital strength and

subsequently approved by the shareholders in an Extra-ordinary General Meeting on April 21, 2014.

Accordingly, Bangladesh Securities and Exchange Commission vide their letter # BSEC/CI/DS –

12/2014/471 dated July 01, 2014 and Bangladesh Bank vide their letter # BRPD (BIC) 661/14B(P)/2014-

4724 dated July 21, 2014 gave consent to raise capital of AB Bank Limited through issuance of Non-

convertible Subordinated Bond.

Deposits and other accounts:

Table 31: Description of Deposits and Other Accounts


A. Demand Deposits 20,583.32

Current accounts and other accounts 17,639.79

Savings Deposits (9%) 1,748.48

Bills Payable 1,195.05

B. Time Deposits 177,605.88

Savings Deposits (91%) 17,679.04

Short Notice Deposits 27,253.78

Fixed Deposits 117,532.92

Other Deposits 15,140.14

Total (A+B) 198,189.20

Other Liabilities:


58 | P a g e

Table 32: Description of Other Liabilities


Accumulated provision against loans and advances 4,853.67

Provision for current tax 12,339.19

Deferred tax liabilities 136.22

Interest suspense account 2,889.55

Provision against other assets 614.23

Provision for outstanding debit entries in NOSTRO accounts 0.20

Accounts payable - Bangladesh Bank 163.91

Accrued expenses 361.53

Provision for off balance sheet items 1,010.00

Provision against investments 1,995.05

Others 481.48

Total 24,845.03


59 | P a g e

9.8 Description of Previously Issued Debt or Equity Securities

SL Type of Issue Year of Issue Brief Description of the Issue

1 IPO 1984

ABBL Issued 150,000 shares of BDT 100 each through Initial

Public Offering in 1984. These shares were offered at par for

purchase by the general public. ABBL collected BDT 15

million in cash as IPO proceedings.

2 Right Share 1991

AB Bank Limited issued right shares in 1991, which was

approved in 1990. Brief overview is as follows;

Total paid up Share before Right issue was – 10,000,00

shares of Tk. 100/- each.

Right Shares were issued @ 2:1 (1 right share against 2

original shares)

Total Right Shares issued were 5,000,00 of Tk.100/-

each.

3 Bond Issue 2014

In 2014, ABBL issued 250 subordinated bonds through private

placement of BDT 10,000,000 each at par totalling BDT

2,500,000,000. These bonds were raised by ABBL to raise

Tier-2 capital and subsequently increase the capital base of the

bank. The maturity of this instrument is seven (7) years

including two (2) years moratorium period. Trustee to this

Issue was IDLC Finance Limited.


60 | P a g e

10 Auditors’ Report Along with Audited Financial Statements of AB

Bank Limited

AB Bank Limited & its Subsidiaries

Auditor's Report and Audited Consolidated & Separate Financial Statements

For the period from 01 January 2015 to 31 March 2015


61 | P a g e

INDEPENDENT AUDITOR’S REPORT

TO THE SHAREHOLDERS OF AB BANK LIMITED

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of AB Bank Limited and its

subsidiaries (“the Group”) as well as the separate financial statements of AB Bank Limited (“the

Bank”), which comprise the consolidated balance sheet and the separate balance sheet as at 31 March

2015 and the consolidated and separate Profit & Loss Accounts, consolidated and separate Statements

of Changes in Equity and consolidated and separate Cash Flow Statements for the period from 01

January 2015 to 31 March 2015 and a summary of significant accounting policies and other explanatory

information.

Management’s Responsibility for the Financial Statements and Internal Controls

Management is responsible for the preparation of consolidated financial statements of the Group and

also separate financial statements of the Bank that give a true and fair view in accordance with

Bangladesh Financial Reporting Standards as explained in note # 1.13 and for such internal control as

management determines is necessary to enable the preparation of consolidated financial statements of

the Group and also separate financial statements of the Bank that are free from material misstatement,

whether due to fraud or error. The Bank Company Act, 1991 (Amended in 2013) and the Bangladesh

Bank Regulations require the Management to ensure effective internal audit, internal control and risk

management functions of the Bank. The Management is also required to make a self-assessment on the

effectiveness of anti-fraud internal controls and report to Bangladesh Bank on instances of fraud and

forgeries.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements of the Group and

the separate financial statements of the Bank based on our audit. We conducted our audit in accordance

with Bangladesh Standards on Auditing. Those standards require that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance about whether the

consolidated financial statements of the Group and separate financial statements of the Bank are free

from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in

the consolidated financial statements of the Group and separate financial statements of the Bank. The

procedures selected depend on the auditor’s judgment, including the assessment of the risks of material

misstatement of the consolidated financial statements of the Group and separate financial statements of

the Bank, whether due to fraud or error. In making those risk assessments, the auditor considers internal


62 | P a g e

control relevant to the entity’s preparation of consolidated financial statements of the Group and

separate financial statements of the Bank that give a true and fair view in order to design audit

procedures that are appropriate in the circumstances. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of accounting estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements of

the Group and also separate financial statements of the Bank.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our audit opinion.

Opinion

In our opinion, the consolidated financial statements of the Group and also separate financial statements

of the Bank give a true and fair view of the consolidated financial position of the Group and the

separate financial position of the Bank as at 31 March 2015, and of its consolidated and separate

financial performance and its consolidated and separate cash flows for the period from 01 January 2015

to 31 March 2015 in accordance with Bangladesh Financial Reporting Standards as explained in note #

1.13.

Report on Other Legal and Regulatory Requirements

In accordance with the Companies Act 1994, Securities and Exchange Rules 1987, the Bank Company

Act, 1991 (Amended in 2013) and the rules and regulations issued by Bangladesh Bank, we also report

the following:

(a) we have obtained all the information and explanation which to the best of our knowledge and

belief were necessary for the purpose of our audit and made due verification thereof;

(b) to the extent noted during the course of our audit work performed on the basis stated under the

Auditor’s Responsibility section in forming the above opinion on the consolidated financial

statements of the Group and the separate financial statements of the Bank and considering the

reports of the Management to Bangladesh Bank on anti-fraud internal controls and instances of

fraud and forgeries as stated under the Management’s

(i) internal audit, internal control and risk management arrangements of the Group and the

Bank as disclosed in note # 1.15 to the financial statements appeared to be materially

adequate;

(ii) nothing has come to our attention regarding material instances of forgery or irregularity

or administrative error and exception or anything detrimental committed by employees

of the Bank and its related entities;

(c) financial statements of the subsidiaries of the Bank as reflected in the consolidated financial

statements have not been audited;

(d) in our opinion, proper books of account as required by law have been kept by the Group and the

Bank so far as it appeared from our examination of those books;

(e) the consolidated balance sheet and consolidated profit and loss account of the Group and the

separate balance sheet and separate profit and loss account of the Bank dealt with by the report

are in agreement with the books of account;


63 | P a g e

(f) the expenditure incurred was for the purposes of the Bank’s business;

(g) the consolidated financial statements of the Group and the separate financial statements of the

Bank have been drawn up in conformity with prevailing rules, regulations and accounting

standards as well as with related guidance issued by Bangladesh Bank;

(h) adequate provisions have been made for advances which are, in our opinion, doubtful of

recovery;

(i) the records and statements submitted by the branches have been properly maintained and

consolidated in the financial statements;

(j) the information and explanation required by us have been received and found satisfactory; and

(k) we have reviewed over 80% of the risk weighted assets of the Bank and we have spent around

2,000 person hours for the audit of the books and accounts of the Bank.

Dhaka, ACNABIN

15 May 2015 Chartered Accountants


64 | P a g e

AB Bank Limited & its Subsidiaries

Consolidated Balance Sheet

As at 31 March 2015

Notes 31.03.2015

31.12.2014

PROPERTY AND ASSETS

Taka

Taka

Cash 3(a)

14,844,257,158

13,950,476,378

In hand (including foreign currencies) 3.1(a)

1,389,749,249

1,140,708,758

Balance with Bangladesh Bank and its agent bank(s) 3.2(a)

13,454,507,909

12,809,767,620

(including foreign currencies)

Balance with other banks and financial institutions 4(a)

5,154,038,389

6,555,722,116

In Bangladesh 4.1(a)

3,115,698,463

4,214,889,208

Outside Bangladesh 4.2(a)

2,038,339,925

2,340,832,909

Money at call and on short notice 5(a)

4,359,773,696

2,456,985,298

Investments 6(a)

32,743,817,889

31,717,883,909

Government 6.1(a)

26,282,112,162

25,305,839,814

Others 6.2(a)

6,461,705,726

6,412,044,095

Loans, advances and lease/investments

190,755,136,368

184,737,891,930

Loans, cash credits, overdrafts, etc./Investments 7(a)

188,388,696,686

181,936,611,502

Bills purchased and discounted 8(a)

2,366,439,682

2,801,280,428

Fixed assets including premises, furniture and fixtures 9(a)

4,990,068,015

4,940,112,222

Other assets 10(a)

12,948,165,894

12,455,465,235

Non-banking assets

-

-

Total Assets

265,795,257,408

256,814,537,088

LIABILITIES AND CAPITAL

-

Liabilities

Borrowings from other banks, financial institutions and agents 11(a)

12,292,171,577

11,385,667,525

AB Bank Subordinated Bond

12

2,500,000,000

2,500,000,000

Deposits and other accounts 13(a)

203,556,287,655

198,116,757,714

Current account and other accounts

19,009,314,501

17,645,003,388

Bills payable

2,092,130,404

1,195,054,117

Savings bank deposits

19,606,245,394

19,427,515,775

Fixed deposits

121,799,713,816

117,532,923,933

Other deposits

41,048,883,540

42,316,260,501

Other liabilities 14(a)

28,091,308,697

26,062,452,062

Total Liabilities

246,439,767,930

238,064,877,301

Capital/Shareholders' Equity

(0)

7768885.422

Equity attributable to equity holders of the parent company

19,363,063,503

18,759,103,871

Paid-up capital 15

5,324,591,520

5,324,591,520

Statutory reserve 16

5,585,777,244

5,582,440,229

Other reserve 17(a)

1,826,224,618

1,817,451,907

Retained earnings 18(a)

6,626,470,121

6,034,620,214

Minority interest

18(b)

(7,574,025)

(9,444,084)

Total Equity

19,355,489,478

18,749,659,787

Total Liabilities and Shareholders' Equity

265,795,257,408

256,814,537,088


65 | P a g e

Notes 31.03.2015

31.12.2014

Taka

Taka

Off-Balance Sheet Items

Contingent liabilities - 19

72,831,218,640

77,068,505,153

Acceptances and endorsements

26,927,763,134

27,020,988,453

Letters of guarantee

14,594,679,106

13,845,332,265

Irrevocable letters of credit

20,993,252,116

21,987,317,194

Bills for collection

7,543,046,935

7,738,447,692

Other contingent liabilities

2,772,477,349

6,476,419,550

Other commitments

-

-

Documentary credits and short term trade-related transactions

-

-

Forward assets purchased and forward deposits placed

-

-

Undrawn note issuance and revolving underwriting facilities

-

-

Undrawn formal standby facilities, credit lines and other commitments

-

-

Total

72,831,218,640

77,068,505,153

The annexed notes form an integral part of these financial statements.

Shamim Ahmed Chaudhury Feroz Ahmed Dr. M. Imtiaz Hossain M. Wahidul Haque

President & Managing Director Director Director Chairman

This is the consolidated balance sheet referred to in our separate report of even date.

Dhaka,

ACNABIN

15 May 2015

Chartered Accountants


66 | P a g e

AB Bank Limited and its Subsidiaries

Consolidated Profit and Loss Account


Notes

Jan'15- Mar'15

Jan'14- Mar'14

OPERATING INCOME

Taka

Taka

Interest income/profit on investments

21(a)

5,348,766,488

5,109,041,579

Interest/profit paid on deposits and borrowings, etc.

22(a)

(4,070,408,021)

(3,891,127,438)

Net interest income

2,804,543

1,278,358,467

1,217,914,141

Investment income

23(a)

742,239,184

694,129,240

Commission, exchange and brokerage

24(a)

766,547,622

934,991,847

Other operating income

-

25(a)

41,918,434

41,765,422

1,550,705,239

1,670,886,510

Total operating income (a)

(0)

2,829,063,707

2,888,800,651

OPERATING EXPENSES

2,804,543

Salary and allowances

26(a)

551,898,320

535,143,806

Rent, taxes, insurance, electricity, etc.

27(a)

136,110,903

121,246,632

Legal expenses

28(a)

2,854,720

1,622,964

Postage, stamps, telecommunication, etc.

29(a)

36,003,189

34,370,383

Stationery, printing, advertisement, etc.

30(a)

35,734,457

36,829,983

Chief executive's salary and fees

3,000,000

1,243,560

Directors' fees

31(a)

2,302,235

1,640,270

Auditors' fees

32(a)

2,423,626

502,596

Depreciation and repairs of Bank's assets

33(a)

141,706,804

135,919,050

Other expenses

34(a)

320,294,878

263,884,823

Total operating expenses (b)

(0)

1,232,329,133

1,132,404,067

Profit before provision (c = (a-b))

1,596,734,574

1,756,396,584

Provision against loans and advances

35(a)

450,000,000

430,000,065

Provision for diminution in value of investments

36(a)

11,707,055

22,902,865

Other provisions

37(a)

26,000,000

120,842,985

Total provision (d)

-

487,707,055

573,745,915

Profit before tax (c-d)

1,109,027,519

1,182,650,669

Provision for taxation

530,555,752

768,403,793

Current tax

532,817,220

766,654,428

Deferred tax

(2,261,468)

1,749,365

Net profit after tax

(0)

578,471,767

414,246,876

Appropriations

-

Statutory reserve

-

-

General reserve

-

-

Dividends, etc.

-

-

-

-

Retained surplus

578,471,767

414,246,876

Minority interest

1,870,059

(225,093)

Net Profit attributable to the shareholders of parent company

576,601,707

414,471,969

Earnings Per Share (EPS)

38(a)

1.08

0.78


Shamim Ahmed Chaudhury Feroz Ahmed

Dr. M. Imtiaz Hossain

M. Wahidul Haque

President & Managing Director Director

Director

Chairman

This is the consolidated profit & loss account referred to in our separate report of even date.

Dhaka,

ACNABIN

15 May 2015



67 | P a g e


Consolidated Cash Flow Statement


Jan'15- Mar'15

Jan'14- Mar'14

Cash Flows from Operating Activities

Taka

Taka

Interest receipts

5,268,651,649

4,813,130,029

Interest payments

(3,307,232,717)

(3,127,818,318)

Dividend receipts

10,249,800

19,663,326

Fee and commission receipts

453,967,240

594,065,906

Recoveries on loans previously written off

148,000

-

Payments to employees

(554,898,320)

(536,387,366)

Payments to suppliers

(35,734,457)

(36,829,983)

Income taxes paid

(498,880,064)

(508,133,608)

Receipts from other operating activities

1,086,340,199

1,057,157,279

Payments for other operating activities

(548,790,169)

(465,327,531)

Operating profit before changes in operating assets & liabilities 1,873,821,160

1,809,519,734

Increase/decrease in operating assets and liabilities

Loans and advances to customers

(5,937,129,598)

(11,204,200,817)

Other assets

(156,150,622)

(1,692,859,627)

Deposits from other banks

(1,763,109,019)

886,110,027

Deposits from customers

6,439,463,656

11,184,751,568

Trading liabilities (short-term borrowings)

893,883,947

1,440,508,316

Other liabilities

1,075,463,256

361,906,034

552,421,620

976,215,502

Net cash flow from operating activities (a)

2,426,242,781

2,785,735,236

Cash Flows from Investing Activities

Purchase of government securities

(965,398,982)

(277,581,890)

(Purchase)/Sale of trading securities, shares, bonds, etc.

(49,661,631)

400,928,229

Purchase of property, plant and equipment

(28,612,122)

(98,527,658)

Net cash (used in)/ flow from investing activities (b)

(1,043,672,735)

24,818,681

Cash Flows from Financing Activities

Increase/(decrease) of long-term borrowings

12,620,105

(45,108,111)

Dividend paid

-

(34,992)

Net cash flow from/(used in) financing activities (c)

12,620,105

(45,143,103)

Net increase in cash (a+b+c)

1,395,190,151

2,765,410,814

Effects of exchange rate changes on cash and cash equivalents

-

-

Cash and cash equivalents at beginning of the period

22,966,416,693

18,341,599,343

Cash and cash equivalents at end of the period (*)

24,361,606,844

21,107,010,158

(*) Cash and cash equivalents:

Cash

1,389,749,249

1,276,917,646

Prize bonds

3,537,600

3,834,500

Money at call and on short notice

4,359,773,696

2,964,201,000

Balance with Bangladesh Bank and its agent bank(s)

13,454,507,909

10,133,268,691

Balance with other banks and financial institutions

5,154,038,389

6,728,788,321

24,361,606,844

21,107,010,158

Net Operating Cash Flow Per Share (NOCFPS)

4.56

5.23


(1)

(0)


President & Managing Director Director Director

Chairman

This is the consolidated cash flow statement referred to in our separate report of even date.

Dhaka,

ACNABIN

15 May 2015



Subordinated Bonds of up to BDT 4,000 Million

68 | P a g e


Consolidated Statement of Changes in Equity

For the period ended 31 March 2015

(Amounts in Taka)

Particulars Paid-up

capital

Statutory

reserve

General

reserve

Assets

revaluation

reserve

Foreign exchange

revaluation

reserve on

investment in

foreign operation

Investment

revaluation

reserve

Minority

interest

Retained

earnings Total

Balance at 01 January 2015 5,324,591,520 5,582,440,229 118,175,719 1,323,567,485 1,281,307 374,427,395 (9,444,084) 6,034,620,214 18,749,659,786

Net profit after taxation for the

period ended - - - - - - 1,870,059 576,601,707 578,471,767

Addition/(Adjustment) made

during the period - - - - - 10,568,667

6,975,216 17,543,883

Foreign Exchange Rate Fluctuation

- 3,337,015 (130,065) - (1,665,891) - - 8,272,983 9,814,042

Balance at 31 March 2015 5,324,591,520 5,585,777,244 118,045,654 1,323,567,485 (384,584) 384,996,062 (7,574,025) 6,626,470,121 19,355,489,478

Balance at 31 March 2014 4,976,253,760 5,570,831,273 117,912,563 1,326,815,807 6,527,348 219,324,197 (15,865,519) 5,625,121,134 17,826,920,564

- - 0 (0) - 0 (0) (0) (0)

- - 0 (0) - 0 (0) (0) (0)

Shamim Ahmed Chaudhury

President & Managing Director

Feroz Ahmed

Director


Director

M. Wahidul Haque

Chairman

Dhaka, ACNABIN

April 23, 2015




69 | P a g e

AB Bank Limited

Balance Sheet

As at 31 March 2015

Notes 31.03.2015

31.12.2014

PROPERTY AND ASSETS

Taka

Taka

Cash 3

14,841,513,463

13,947,708,945

In hand (including foreign currencies) 3.1

1,387,005,554

1,137,941,325

Balance with Bangladesh Bank and its agent bank(s) 3.2

13,454,507,909

12,809,767,620


Balance with other banks and financial institutions 4

5,055,339,829

6,488,688,322

In Bangladesh

3,029,119,597

4,171,808,425

Outside Bangladesh

2,026,220,231

2,316,879,897

Money at call and on short notice 5

5,316,091,296

3,862,958,626

Investments 6

31,823,991,821

30,778,575,066

Government 6.1

26,282,112,162

25,305,839,814

Others 6.2

5,541,879,659

5,472,735,252

Loans, advances and lease/investments

183,850,663,718

177,570,797,390

Loans, cash credits, overdrafts, etc./Investments 7.2

182,806,526,484

176,387,446,062

Bills purchased and discounted 8

1,044,137,234

1,183,351,328

Fixed assets including premises, furniture and fixtures 9

4,353,252,689

4,404,994,528

Other assets 10

18,118,924,151

17,614,433,173

Non-banking assets

-

-

Total Assets

263,359,776,969

254,668,156,050


Liabilities

22,867,128,694

180,762,496,907

Borrowings from other banks, financial institutions and agents 11

11,875,080,780

10,976,810,430

AB Bank Subordinated Bond

12

2,500,000,000

2,500,000,000

Deposits and other accounts 13

203,629,625,601

198,189,197,221

Current accounts and other accounts

19,010,436,204

17,639,785,113

Bills payable

2,092,130,404

1,195,054,117

Savings bank deposits

19,606,245,394

19,427,515,775

Fixed deposits

121,799,713,816

117,532,923,933

Other deposits

41,121,099,783

42,393,918,283

Other liabilities 14

26,660,714,221

24,845,034,825

Total Liabilities

244,665,420,602

236,511,042,476


0

-0.182277679

Total Shareholders' Equity (0)

18,694,356,366

18,157,113,573

Paid-up capital 15

5,324,591,520

5,324,591,520

Statutory reserve 16

5,585,777,244

5,582,440,229

Other reserve 17

1,648,827,822

1,638,259,155

Retained earnings 18

6,135,159,781

5,611,822,670


263,359,776,969

254,668,156,050


70 | P a g e

Notes 31.03.2015

31.12.2014

Taka

Taka

Off-Balance Sheet Items

Contingent liabilities

19

72,831,218,640

77,068,505,153

Acceptances and endorsements

26,927,763,134

27,020,988,453

Letters of guarantee

19.1

14,594,679,106

13,845,332,265

Irrevocable letters of credit

20,993,252,116

21,987,317,194

Bills for collection

7,543,046,935

7,738,447,692

Other contingent liabilities

2,772,477,349

6,476,419,550

Other commitments

-

-

Documentary credits and short term trade-related transactions

-

-


-

-


-

-

Undrawn formal standby facilities, credit lines and other commitments

-

-

Total

72,831,218,640

77,068,505,153


Shamim Ahmed Chaudhury Feroz Ahmed Dr. M. Imtiaz Hossain

M. Wahidul Haque


This is the balance sheet referred to in our separate report of even date.

Dhaka,

ACNABIN

15 May 2015



71 | P a g e

AB Bank Limited

Profit and Loss Account


Notes Jan'15- Mar'15

Jan'14- Mar'14

Taka

Taka

OPERATING INCOME

2,804,543

Interest income/profit on investments

21

5,258,892,923

4,997,955,622

Interest paid/profit on deposits and borrowings, etc.

22

(4,052,122,486)

(3,865,780,292)

Net interest income

1,206,770,437

1,132,175,330

Investment income

23

740,545,205

680,913,585


24

719,278,558

893,689,441


25

30,551,557

28,005,346

1,490,375,320

1,602,608,373

Total operating income (a) 2,804,543

2,697,145,757

2,734,783,703

OPERATING EXPENSES


- 26

535,992,285

519,895,842

Rent, taxes, insurance, electricity, etc. - 27

132,911,643

117,485,426

Legal expenses

- 28

2,848,827

1,529,214

Postage, stamps, telecommunication, etc. - 29

34,274,209

36,705,390

Stationery, printing, advertisement, etc. - 30

35,536,201

36,265,369

Chief executive's salary and fees

3,000,000

1,243,560

Directors' fees

- 31

2,197,735

1,529,770

Auditors' fees

- 32

2,370,585

444,451

Depreciation and repairs of Bank's assets 0 33

135,118,271

122,054,103

Other expenses

34

316,726,152

263,194,100

Total operating expenses (b) 44.53%

1,200,975,907

1,100,347,224

Profit before provision (c = (a-b)) (0)

1,496,169,850

1,634,436,478


35

450,000,000

430,000,065


36

-

-

Other provisions

37

26,000,000

120,842,985

Total provision (d)

-

476,000,000

550,843,050

Profit before taxation (c-d)

1,020,169,850

1,083,593,428


503,800,000

503,800,000

727,300,570

Current tax

(0)

506,505,985

728,311,099

Deferred tax

(2,705,985)

(1,010,529)

Net profit after taxation

(0)

516,369,850

356,292,858

Appropriations

Statutory reserve

12,569,850

-

-

General reserve

-

-

Dividends, etc.

-

-

-

-

Retained surplus

516,369,850

356,292,858

Earnings Per Share (EPS)

39

0.97

0.67



Dhaka,

ACNABIN

April 23, 2015



72 | P a g e

AB Bank Limited

Cash Flow Statement


Notes Jan'15- Mar'15

Jan'14- Mar'14

Taka

Taka

Cash Flows from Operating Activities

Interest receipts

5,178,778,083

4,702,044,072

Interest payments

(3,288,947,182)

(3,102,471,172)

Dividend receipts

6,208,399

15,476,688

Fee and commission receipts

444,021,221

552,163,281


148,000

-

Payments to employees

(538,992,285)

(521,139,402)

Payments to suppliers

(35,536,201)

(36,265,369)

Income taxes paid

(443,367,548)

(490,523,248)

Receipts from other operating activities 40

1,039,997,699

1,034,968,404

Payments for other operating activities 41

(539,867,074)

(430,068,087)

Operating profit before changes in operating assets & liabilities

1,822,443,112

1,724,185,166

Increase/decrease in operating assets and liabilities

Loans and advances to customers

(6,199,751,489)

(11,405,589,111)

Other assets

42

(61,123,430)

(1,281,618,526)

Deposits from other banks

(1,763,109,019)

886,110,027

Deposits from customers

6,440,362,095

11,124,501,717

Trading liabilities (short-term borrowings)

885,650,245

1,453,912,149

Other liabilities

43

840,015,282

184,947,307

142,043,685

962,263,564

Net cash flow from operating activities (a)

1,964,486,797

2,686,448,730

Cash Flows from Investing Activities

Purchase of government securities

(965,398,982)

(277,581,890)

(Purchase)/Sale of trading securities, shares, bonds, etc.

(69,144,406)

401,890,929

Purchase of property, plant and equipment

(28,612,122)

(98,527,658)

Net cash used in investing activities (b)

(1,063,155,510)

25,781,381

Cash Flows from Financing Activities

Increase/(decrease) of long-term borrowings

12,620,105

(45,108,111)

Dividend paid

(57,997)

(34,992)

Net cash used in financing activities (c)

12,562,108

(45,143,103)

Net Increase/(decrease) in cash (a+b+c)

913,893,395

2,667,087,007

Effects of exchange rate changes on cash and cash equivalents

-

-

Cash and cash equivalents at beginning of the year

24,302,588,793

19,593,765,610

Cash and cash equivalents at end of the period (*)

25,216,482,188

22,260,852,617

(*) Cash and cash equivalents:

Cash

1,387,005,554

1,273,615,755

Prize bonds

3,537,600

3,834,500

Money at call and on short notice

5,316,091,296

2,964,201,000

Balance with Bangladesh Bank and its agent bank(s)

13,454,507,909

10,133,268,691

Balance with other banks and financial institutions

5,055,339,829

7,885,932,672

25,216,482,188

22,260,852,617

Net Operating Cash Flow Per Share (NOCFPS)

3.69

5.05



Dhaka,

ACNABIN

April 23, 2015




73 | P a g e

AB Bank Limited

Statement of Changes in Equity


(Amounts in Taka)

Particulars Paid-up

capital

Statutory

reserve

General

reserve

Assets

revaluation

reserve

Foreign

Exchange

revaluation

reserve on

investment in

foreign operation

Investment

revaluation

reserve

Retained

earnings Total

Balance at 01 January 2015 5,324,591,520 5,582,440,229 42,199,200 1,323,567,486 - 272,492,469 5,611,822,670 18,157,113,573

Net profit after taxation for the period ended - - - - - - 516,369,850 516,369,850

Addition/(Adjustment) made during the

period - - - - - 10,568,667 (26,450) 10,542,217

Foreign Exchange Rate Fluctuation - 3,337,015 - - - - 6,993,712 10,330,727

Balance at 31 March 2015 5,324,591,520 5,585,777,244 42,199,200 1,323,567,486 - 283,061,136 6,135,159,781 18,694,356,366

Balance at 31 March 2014 4,976,253,760 5,570,831,273 42,199,200 1,326,815,807 813,610 117,299,837 5,371,127,838 17,405,341,326

- - - -

- - -



Dhaka, ACNABIN

April 23, 2015 Chartered Accountants


74 | P a g e

AB Bank Limited

Liquidity Statement

Analysis of Maturity of Assets and Liabilities


(Amount in Taka)

Assets Up to 1 month's

maturity

1-3 months'

maturity

3-12 months'

maturity

1-5 years'

maturity

More than 5 years'

maturity Total

Cash in hand & with banks 2,312,216,374 - - - 12,529,297,089 14,841,513,463

Balance with Other banks and financial institutions 3,616,743,090 810,000,000 628,596,738 - - 5,055,339,828

Money at Call & Short Notice 2,117,106,450 478,182,246 1,164,802,600 1,556,000,000 - 5,316,091,296

Investments 1,786,957,659 437,074,091 8,097,693,667 6,910,661,470 14,591,604,932 31,823,991,821

Loans & advances 33,451,629,864 66,828,596,752 68,268,840,000 9,323,293,340 5,978,303,764 183,850,663,718

Fixed assets including premises, furniture and fixture - - - - 4,353,252,690 4,353,252,690

Other assets 1,733,966,032 702,514,329 4,764,683,973 5,275,083,107 5,642,676,710 18,118,924,152

Non-banking assets - - - - - -

Total Assets 45,018,619,469 69,256,367,418 82,924,616,978 23,065,037,917 43,095,135,185 263,359,776,969

Liabilities

Borrowing from Bangladesh Bank, other banks, financial

institutions and agents 3,024,919,539 6,870,502,110 1,589,452,889 1,640,053,275 1,250,152,967 14,375,080,780

Deposit and other accounts 26,875,347,017 57,005,687,529 67,956,313,016 50,135,244,183 1,657,033,857 203,629,625,601

Provision and other Liabilities 382,586,234 497,963,543 7,695,449,027 18,072,773,499 11,941,918 26,660,714,221

Total Liabilities 30,282,852,790 64,374,153,182 77,241,214,932 69,848,070,957 2,919,128,742 244,665,420,602

Net Liquidity Excess/(shortage) 14,735,766,679 4,882,214,237 5,683,402,046 (46,783,033,040) 40,176,006,444 18,694,356,366




This is the liquidity statement referred to in our separate report of even date.

Dhaka,

ACNABIN

15 May 2015 Chartered Accountants


75 | P a g e

AB Bank Limited

Notes to the Financial Statements


1.1 The Bank and its activities

AB Bank Limited (the Bank) is one of the first generation Private Commercial Banks (PCBs) incorporated in

Bangladesh on 31 December 1981 as a public limited company under the Companies Act 1913, subsequently replaced

by the Companies Act 1994, and is governed by the Bank Company (Amendment upto 2013) Act 1991. The Bank

went for public issue of its shares on 28 December 1983 and its shares are listed with Dhaka Stock Exchange Ltd. and

Chittagong Stock Exchange Ltd. AB Bank Limited has 93 Branches including one (1) Islami Banking Branch and one

(1) Overseas Branch in Mumbai, India. The Bank has six subsidiary companies namely AB Investment Limited, AB

Securities Limited, Cashlink Bangladesh Limited, Arab Bangladesh Bank Foundation all incorporated in Bangladesh,

AB International Finance Limited, incorporated in Hong Kong and AB Exchange (UK) Limited, incorporated in

United Kingdom.

AB Investment Limited (ABIL) and AB Securities Limited (ABSL) were incorporated as subsidiary companies after

obtaining the approvals from Bangladesh Bank following guidelines of the Bangladesh Securities and Exchange

Commission (BSEC). These two subsidiaries are being put into operations to cater the merchant banking and

brokerage business which were previously carried out by the Bank itself.

The Bank through its Branches and non-banking subsidiaries provides a diverse range of financial services and

products in Bangladesh and in certain international markets. The Bank has expanded its capital market oriented

service horizon to its customers through AB Investment Limited. The Bank obtained permission from BSEC to

embark upon merchant banking vide its certificate no. MB-1.02/2001-30 dated 15 May 2001 under the Securities and

Exchange Commission Act 1993. Subsequently, the Bank has formed a subsidiary company named AB Investment

Limited in accordance with the approval of Bangladesh Bank vide letter no. BRPD(R-1)717/2009-538 dated 09

December 2009 and the Bangladesh Securities and Exchange Commission vide letter no. Sec/Reg/MB-79/2010/73

dated 10 March 2010 for dealing the Merchant Banking business.

Brokerage business of Arab Bangladesh Bank Foundation (ABBF) was transferred on 01 August 2010 to AB

Securities Limited (ABSL) vide Bangladesh Bank approval letter BRPD(R-1)717/2009-493 dated 08 November 2009.

AB Bank Limited started its Islami Banking operation through its Dilkusha Islami Banking Branch, Dhaka on 23

December 2004 following the permission of Bangladesh Bank vide letter no. BRPD (P) 745 (12)/2004-2702 dated 08

July 2004. Subsequently the Branch was shifted to Kakrail, Dhaka on 18 October 2006.

The Bank obtained permission to work as a security custodian from the Bangladesh Securities and Exchange

Commission vide its certificate no. SC-05/2007 dated 22 January 2007 under the Securities and Exchange

Commission (Securities Custodian Service) Rules 2003.

In the year 2009, the Bank obtained permission to operate Off Shore Banking Unit (OBU) vide letter # BRPD (P-

3)744/(106)/2009-4486 dated 06 December 2009 of Bangladesh Bank. OBU operation has been carried out from 28

April 2010 through the Bank's EPZ Branch, Chittagong.

The Bank has a dedicated philanthropic unit named Arab Bangladesh Bank Foundation (the Foundation) which has

been operating since 2002. Foundation has obtained brokerage licenses from BSEC on 15 August 2006 and 23

October 2006 for Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) respectively and started its

operation from 28 August 2006 and 05 December 2006 on DSE and CSE respectively. However, in view of the

decision of Bangladesh Bank and upon due agreement to that effect the Board of Directors of ABBL and ABBF

respectively, launched a new subsidiary company AB Securities Limited for the operation of brokerage business. The

business of ABBF is now being conducted by AB Securities Limited.

1.2 Significant accounting policies and basis of preparation of the financial statements

Presentation of the financial statements

Consolidated financial statements and separate financial statements of the Bank comprise of Balance Sheet, Profit and

Loss Account, Cash Flow Statement, Statement of Changes in Equity, Liquidity Statement and relevant notes and

disclosures.


76 | P a g e

AB Bank Limited

Notes to financial statements for the period from 01 January 2015 to 31 March 2015

Presentation of the financial statements (Cont.)

Consolidated financial statements and financial statements of the Bank were made as at 31 March 2015 and were

prepared under the historical cost convention except investments categorised under held for trading and in accordance

with Bank Company (Amendment upto 2013) Act 1991, BRPD circular no. 14 dated 25 June 2003, the Companies

Act 1994, the Securities and Exchange Ordinance 1969, Securities and Exchange Rules 1987 and other laws and rules

applicable for the Bank.

Consolidated financial statements and financial statements of the Bank have been prepared in accordance with the

measurement and recognition requirements of International Accounting Standards (IAS) and International Financial

Reporting Standards (IFRS) as adopted by the Institute of Chartered Accountants of Bangladesh as Bangladesh

Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS).

Basis of consolidation

Separate set of records for consolidating the financial statements of the Branches including Mumbai Branch, India,

AB Investment Limited, AB Securities Limited, Cashlink Bangladesh Limited, AB International Finance Limited,

Hong Kong and AB Exchange (UK) Limited are maintained at the Head Office of the Bank, based on which these

financial statements have been prepared. The consolidated financial statements have been prepared in accordance with

the BFRS 10 "Consolidated Financial Statements". The Consolidated Financial Statements have been prepared to a

common reporting period ending on 31 March 2015.

Mumbai Branch, India

The assets and liabilities of Mumbai Branch, India have been incorporated in the accounts at year end exchange rate.

Income and expenditures have been incorporated in the accounts by each line item. The Balance Sheet and Profit and

Loss Account of the Mumbai Branch have been shown separately in Annex-F.

Islami Banking Branch

Islami Banking Branch has been maintaining separate set of books and records for its operations following

Bangladesh Bank guidelines. All assets-liabilities and income-expenses of this Branch have been incorporated in

similar heads of account of the Bank's financial statements. Balance Sheet and Profit and Loss Account of Islami

Banking Branch is shown separately in Annex-G as per Bangladesh Bank BRPD Circular No. 15 dated 09 November

2009.

Custodian Wing

Financial statements of Custodian Wing have been separately audited by the auditors of the Bank. Income-

expenditures of Custodian Wing have been incorporated in similar heads of account of the Bank's Profit and Loss

Account. Profit and Loss Account of Custodian Wing has been shown separately in Annex-H.

Off-Shore Banking Unit (OBU)

This particular unit of the Bank started its operation in the year 2010. Assets-liabilities and income-expenditures of

Off- Shore Banking Unit are incorporated in similar heads of account of the Bank's Balance Sheet and Profit and Loss

Account. The Balance Sheet and Profit and Loss Account of the Off- Shore Banking Unit (OBU) have been shown

separately in Annex-I.

Subsidiaries Operation

The financial statements of subsidiaries (except Arab Bangladesh Bank Foundation-ABBF) have been consolidated

following BFRS 10 "Consolidated Financial Statements". ABBF operated only for philanthropic purpose and its profit

is not distributable to the shareholders. Thus, for ensuring the fair presentation of the Financial Statements of the

Parent Company (the Bank), the Financial Statements of ABBF has not been consolidated.


77 | P a g e

AB Bank Limited


AB Investment Limited (ABIL)

AB Investment Limited (ABIL) started its operation from 10 March 2010 for Merchant Banking Operation. AB Bank

Limited holds 99.99% shares in ABIL.

The Balance Sheet and Profit and Loss Account of the ABIL have been shown separately in Annex-J.

AB Securities Limited (ABSL)

Brokerage business of Arab Bangladesh Bank Foundation has been transferred to AB Securities Limited (ABSL) vide

Bangladesh Bank approval letter BRPD(R-1)717/2009-493 dated 08 November 2009. AB Bank Limited at present

holds 99.91% shares in ABSL.

The Balance Sheet and Profit and Loss Account of the ABSL have been shown separately in Annex-K.

Cashlink Bangladesh Limited (CBL)

Cashlink Bangladesh Limited (CBL) was incorporated on 24 September 2008 with an authorised capital of Taka

1,000,000,000 divided into 100,000,000 ordinary shares of Taka 10 each. The Bank at present holds 90% shares in

CBL.

The Financial Position and Profit & Loss Account and Other Comprehensive Income of the CBL have been shown

separately in Annex-L.

AB International Finance Limited (ABIFL)

AB International Finance Limited (ABIFL) is a company incorporated in Hong Kong. Its registered office and

principal place of business is situated at Unit 1201-B, 12/F, Admiralty Centre, Tower One, 18 Harcourt, Hong Kong.

It is a fully owned (100%) Subsidiary of AB Bank Limited.

The Balance Sheet and Profit and Loss Account of the ABIFL have been shown separately in Annex-M.

AB Exchange (UK) Limited

AB Exchange (UK) Limited (ABEL) is a company incorporated and domiciled in United Kingdom (UK) vide

registration no. 07272766 (England & Wales). The registered office is situated at 69 Whitechapel High Street,

London, E1 7PL. ABEL is a fully owned (100%) Subsidiary of AB Bank Limited.

The Balance Sheet and Profit and Loss Account of the ABEL have been shown separately in Annex-N.

Arab Bangladesh Bank Foundation (ABBF)

Arab Bangladesh Bank Foundation (ABBF) has maintained separate set of books and records for its operation. The

Balance Sheet and Profit and Loss Account of the ABBF have been shown separately in Annex -O.

Use of estimates and judgments

The preparation of consolidated financial statements and financial statements of the Bank required management to

make judgments, estimates and assumptions that affected the application of accounting policies and the reported

amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions have been reviewed considering business realities. Revisions of accounting

estimates have been recognised in the period in which the estimates have been revised and in the future periods

affected, if applicable.

All intergroup balances, transactions, income and expenses are fully eliminated while preparing the consolidated

financial statements.


78 | P a g e

AB Bank Limited


Materiality, aggregation and offsetting

The Bank aggregates each material class of similar items and separately which are dissimilar in nature or function

unless those are immaterial. The Bank did not offset assets and liabilities or income and expense, unless required or

permitted by BAS/ BFRS.

Foreign currency transactions

Functional and presentational currency

Financial statements of the Bank have been presented in Taka, which is the Bank’s functional and presentational

currency.

Foreign currency translation

Foreign currency transactions have been converted into equivalent Taka currency at the ruling exchange rates on the

respective date of such transactions as per BAS 21 “The Effects of Changes in Foreign Exchange Rates”.

Assets and liabilities in foreign currencies as at 31 March 2015 have been converted into Taka currency at the average

of the prevailing buying and selling rates of the relevant foreign currencies at that date except "balances with other

banks and financial institutions" which have been converted as per directives of Bangladesh Bank vide its circular no.

BRPD (R) 717/2004-959 dated 21 November 2004.

Differences arising through buying and selling transactions of foreign currencies on different dates of the period have

been adjusted by debiting /crediting exchange gain or loss account.

Commitment

Commitments for outstanding forward foreign exchange contracts disclosed in the consolidated financial statements

and financial statements of the Bank have been translated at contracted rates. Contingent liabilities/commitments for

letter of credit, letter of guarantee and acceptance denominated in foreign currencies have been expressed in Taka

terms at the rates of exchange ruling on the balance sheet date.

Translation gain and losses

Gains or losses arising out of translation of foreign exchange have been included in the Profit and Loss Account,

except those arising on the translation of net investment in foreign branch and subsidiaries.

Foreign operations

The results of financial statements of the Bank whose functional currency is not Bangladesh Taka are translated into

Bangladesh Taka as follows:

a.

assets and liabilities for each items of Balance Sheet have been translated at the closing rate on the date of

Balance sheet.

b. income and expenses for Profit and Loss Account have been translated at an monthly average rate of the year;

and

c.

all resulting exchange differences have been recognized in the P&L or as a separate components of equity,

where appropriate.

Cash flow statement

Cash Flow Statement is prepared principally in accordance with BAS 7 “Statement of Cash Flows” under direct

method as per the guidelines of BRPD circular no. 14 dated 25 June 2003. The Statement of Cash Flows show the

structure of and changes in cash and cash equivalents during the year. Cash Flows during the period have been

classified as operating activities, investing activities and financing activities.


79 | P a g e

AB Bank Limited


Statement of changes in equity

Statement of Changes in Equity has been prepared in accordance with BAS 1 “Presentation of Financial Statements”

and following the guidelines of Bangladesh Bank BRPD circular no.14 dated 25 June 2003.

Liquidity statement

The basis of the liquidity statement of assets and liabilities as on the reporting date is given below:

Particulars Basis used

Balance with other banks and financial institutions Maturity term

Investments Respective maturity terms

Loans and advances Repayment schedule basis

Fixed assets Useful life

Other assets Realization/ amortization basis

Borrowing from other banks, financial institutions and agents Maturity/ repayments terms

Deposits and others accounts Maturity term/ Previous trend

Other liabilities Payments/ adjustments schedule basis

1.3 Assets and basis of their valuation

Cash and cash equivalents

Cash comprises cash in hand and demand deposits in the banks.

Cash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash

and which are subject to an insignificant risk of changes in value.

Loans and advances

i. Loans and advances/investments in Islamic Banking Branch are stated at gross amounts at 31 March 2015.

ii. Interest/profit is calculated on a daily product basis but charged and accounted for on accrual basis.

Interest/profit on classified loans and advances/ investment is kept in suspense account as per Bangladesh Bank

instructions and such interest/ profit is not accounted for as income until realized from borrowers. Interest/profit

is not charged on bad and loss loans/ investments as per guideline of Bangladesh Bank.

iii. Commission and discounts on bills purchased and discounted are recognised at the time of realisation.

iv. Provision for loans and advances is made on the basis of quarter-end review by the management and as per

instructions contained in BRPD circular no. 14 dated 23 September 2012, BRPD circular no. 19 dated 27

December 2012, BRPD circular no. 05 dated 29 May 2013 and BRPD Circular No. 16 dated 18 November,

2014. The rates for provisions are stated below:

Types of loans and advances General Provision Specific Provision

UC SMA SS DF BL

Consumer

House Financing and

professionals to setup

business

2% 2% 20% 50% 100%

Other than housing

finance & professionals to

setup business

5% 5% 20% 50% 100%

Loan to brokerage house, merchant

banks, stock dealers 2% 2% 20% 50% 100%

Short-term agri-credit and micro credit 2.50% - 5% 5% 100%

Small and medium enterprise finance 0.25% 0.25% 20% 50% 100%

Other advances 1% 1% 20% 50% 100%

Off balance sheet items 1% - - - -


80 | P a g e

AB Bank Limited


Investment

Investments have been initially recognised at cost, including acquisition charges associated with the investment. Premium

have been amortised and discount accredited, using the effective or historical yield method. Government Treasury Bills

and Bonds (categorized as HFT or/and HTM) are accounted for as per Bangladesh Bank DOS circular letter no. 05 dated

26 May 2008 and DOS circular no. 05 dated 28 January 2009.

The valuation methods of investment used are:

Government securities

Held to Maturity (HTM)

Investments which are intended to be held to maturity are classified as “Held to Maturity”. These are measured at

amortised cost at each year end by taking into account any discount or premium in acquisition. Amortised amount of such

premium are booked into Profit and Loss Account or discount is booked to reserve until maturity/disposal.

Held for Trading (HFT)

Investment primarily held for selling or trading is classified in this category. After initial recognition, investments are

mark to market weekly. Decrease in the book value is recognised in the Profit and Loss Account and any increase is

transferred to revaluation reserve account.

Value of investments has been enumerated as follows:

Investment class Initial recognition

Measurement after initial

recognition Recording of changes

Treasury Bill / Bond (HFT) Cost Market value

Loss to Profit and Loss

Account (P&L), gain to

revaluation reserve

Treasury Bill / Bond (HTM) Cost Amortised value

Increase in value to equity and

decrease in value to P&L

Debenture Face value None None

Prize bond Cost None None

Shares Cost Lower of cost and market

value

Realised gain or loss,

recognised in P&L.

Unrealized gain is not

recognized in accounts.

Provision is maintained for

unrealized loss, if any.

Investment in listed securities

These securities are brought and held primarily for the purpose of selling them in future or held for dividend income.

These are reported at cost. Unrealised gains are not recognised in the Profit and Loss Account as per BAS 18 "Revenue". In Accordance with BRPD Circular no. 14 dated 25 June 2003, provisions should be made for any loss arising from the

diminution in value of investments. Subsequently as per DOS Circular No.04 dated 24 November 2011, provisions may

be made for any loss arising from the diminution in value of investments after netting of gain.

Investment in unlisted securities

Investment in unlisted securities is reported at cost under cost method.

Investment in subsidiaries

Investment in subsidiaries is accounted for under the cost method of accounting in the Bank’s financial statements in

accordance with the BAS 27 "Separate Financial Statements".


81 | P a g e

AB Bank Limited


Fixed assets

i. All fixed assets are stated at cost less accumulated depreciation as per BAS 16 "Property, Plant and Equipment".

The cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire

an asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when

initially recognised in accordance with the specific requirements of the BFRS.

ii. The cost of an item of property, plant and equipment is recognised as an asset if-

it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item

can be measured reliably.

iii.

Depreciation on fixed assets is charged using reducing balance method except motor vehicles, computers &

computer equipments and photocopiers for which straight-line method is used. The rates of depreciation are as

follows:

Category of asset

Rate of depreciation

Land

Nil

Building

2.5%

Furniture and fixtures 10%

Electrical appliances

20%

Motor vehicles 20%

Leasehold assets - vehicles 20%

iv. Depreciation on fixed assets acquired during the year is charged from the month of their acquisition. Full month's

depreciation is charged in the month of addition irrespective of the date of acquisition and no depreciation is

charged in the month of their disposal.

v. The cost and accumulated depreciation of disposed assets are eliminated from the fixed assets schedule and gain or

loss on such disposal is reflected in the Profit and Loss Account.

vi. Useful lives and method of depreciation of fixed assets are reviewed periodically. If useful lives of assets do not

differ significantly as these were previously estimated, revaluation of assets does not consider to be done.

vii. Bank capitalised items value of which is over Taka 50,000 and the items below Taka 50,000 were booked as non-

capitalised items under the broader head of other expenses with effect from 01 March 2009 in accordance with the

relevant policy of the Bank.

viii

. Bank also follows a policy for amortisation of expenditure considering the durability and useful lives of items.

These are treated as intangible assets and are booked under the head “Fixed Assets” and amortised over their

estimated useful lives by charging under the broad head “Depreciation”.

Intangible assets

An intangible asset is recognised if-

a. It is probable that the expected future economic benefits that are attributable to the assets will flow to the entity;

and

b. The cost of the assets can be measured reliably.

Other assets

Other assets include all balance sheet items not covered specifically in other areas.

Leasing

Where property, plant and equipment have been financed by lease arrangement under which substantially all the risks and

rewards of ownership are transferred to the lessees are treated as finance leases as per BAS 17 "Leases". All other leases

are classified as operating leases as per BAS 17 "Leases"


82 | P a g e

AB Bank Limited


Bank as lessee

Assets held under finance lease are recognised as assets of the Bank at their fair value at the date of acquisition or if

lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the

balance sheet as a finance lease obligation.

Assets held under finance lease are depreciated over their expected useful lives on the same basis as owned assets.

Bank as lessor

The Bank did not grant any lease finance.

Stock of stationery

Stock of stationery has been shown under other assets and is valued at cost.

1.4 Capital, reserve, liabilities and provision and basis of their valuation

Share capital

Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets.

Statutory reserve

As per Section 24 of the Bank Company (Amendment upto 2013) Act 1991, 20% of current year’s profit of the Bank is

required to be transferred to Statutory Reserve until such reserve together with share premium account equals to its paid

up capital. The Statutory Reserve of AB Bank Limited (excluding mumbai Branch) was higher than the paid up capital as

of 31 March 2015. So, the Bank did not transfer any amount to Statutory Reserve for the period. The Mumbai Branch of

the Bank has maintained Statutory Reserve according to Reserve Bank of India's (RBI) guidelines/instructions.

Revaluation reserve

When an asset’s carrying amount is increased as a result of revaluation, the increased amount should be credited directly

to equity under the head revaluation surplus/ reserve as per BAS 16 "Property, Plant and Equipment".

Deposits and other accounts

Deposits are recognised when the Bank enters into contractual arrangements with the counterparties, which are generally

on trade date and initially measured at the amount of consideration received.

Borrowing

Borrowed funds include call money, term borrowings and re-finance from different commercial banks, non-banking

financial institutions and central bank.


Income tax represents the sum of the current tax and deferred tax.

Current Tax

The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the

income statement because it excludes items of income or expense that are taxable or deductible in other years and it

further excludes items that are never taxable or deductible. The Bank’s liability for current tax is calculated using tax

rates that have been enacted or substantively enacted by the balance sheet date.

Provision for current income tax has been made @ 42.5% on the accounting profit made by the Bank after considering

taxable allowances and disallowances as per income tax laws applicable for the Bank.


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Deferred Tax

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements

and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet

liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax

assets are recognised to the extent that it is probable that taxable profits will be available against which deductible

temporary differences, unused tax losses or unused tax credits can be utilised. Such assets and liabilities are not

recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business

combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and

associates, and interests in joint ventures, except where the Bank is able to control the reversal of the temporary

difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no

longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is

realised, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is

charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in

which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against

current tax liabilities and when they relate to income taxes levied by the same taxation authority and the company intends

to settle its current tax assets and liabilities on a net basis.

The impact on the account of changes in the deferred tax assets and liabilities has also been recognized in the Profit and

Loss Account as per BAS-12 "Income Taxes" (note 14.3).

Retirement benefits to the employees

The retirement benefits accrued for the employees of the Bank as on the reporting date have been accounted for in

accordance with the provision of BAS 19 "Employee Benefits". Bases of enumerating the retirement benefits schemes

operated by the Bank are outlined below:

Provident fund

There is a provident fund scheme under the defined contribution plan. The fund is operated by a separate board of trustees

approved by the National Board of Revenue as per Income Tax Ordinance, 1984. All eligible employees contribute 10%

of their basic pay to the fund. The Bank also contributes equal of employee’s contribution to the fund. These

contributions are invested separately. Benefits from the fund are given to eligible employees at the time of

retirement/resignation as per approved rules of the fund.

Staff gratuity

The Bank has a separate Board of Trustees for operating the staff gratuity fund approved by the National Board of

Revenue. Employees of the Bank, who served the Bank for ten years or above are entitled to get gratuity benefit at rates

determined by the Service Rules of the Bank.

Superannuation fund

The Bank operates a Superannuation Fund as death-cum-retirement benefit for its employees. The fund is operated by a

separate Board of Trustees.

Provision for liabilities

A provision is recognised in the balance sheet when the Bank has a legal or constructive obligation as a result of past

event and it is probable that an outflow of economic benefit will be required to settle the obligations, in accordance with

BAS 37 “Provisions, Contingent Liabilities and Contingent Assets”.


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Provision for liabilities (cont..)

No provision is recognised for any possible obligation that arises from past events and the existence of which will be

confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control

of the Bank, or any present obligation that arises from past events and it is not probable that an outflow of resources

embodying economic benefits will be required to settle the obligation, or a reliable estimates of the amount of obligation

cannot be made.

However, certain provisions on assets and liabilities are maintained in accordance with relevant Bangladesh Bank

Circulars issued from time to time.

Provision for nostro accounts

Provision for nostro accounts is maintained as per circular letter no. FEPD(FEMO)/01/2005-677 dated 13 September

2005 issued by Foreign Exchange Policy Department of Bangladesh Bank.

Minority Interest

Minority Interest is the equity in a subsidiary not attributable, directly or indirectly, to parent.

As per BFRS 10 ‘Consolidated Financial Statements’ Bank presents Minority Interest separately in financial statements.

Profit or loss and each component of other shareholders equity are attributed to the owners of the parent and to the

Minority Interest. Total shareholders equity is attributed to the owners of the parent and to the Minority Interest even if

this result in the Minority Interest having a deficit balance.

1.5 Revenue recognition

Interest income

According to the BAS 18 "Revenue", the interest income is recognised on accrual basis. Interest on loans and advances

ceases to be taken into income when such advances are classified or treated as Sub Standard (SS) as per BRPD circular

no. 14 dated 23 September 2012 and is kept in interest suspense account. Interest on classified advances is accounted for

as income when realised.

Profit on investment (Islami Banking Branch)

Profit on investment is taken into income account from profit receivable account. Overdue charges/ compensation on

classified investment is transferred to profit suspense/ compensation receivable account instead of income account.

Investment income

Interest income on investments is recognised on accrual basis except treasury bills. Capital gains on investments in shares

are also included in investment income. Capital gains are recognized when these are realised.

Fees and commission income

Fees and commission income on services provided by the Bank are recognised as and when the services are rendered.

Commission charged to customers on letters of credit and letters of guarantee are credited to income at the time of

affecting the transactions.

Dividend income on shares

As per BAS 18 "Revenue", dividend income from investment in shares is recognised when the Bank's right to receive

dividend is established. It recognised when:

a. It is probable that the economic benefits associated with the transaction will flow to the entity; and

b. the amount of the revenue can be measured reliably.

Interest paid on deposits and borrowings

Interest paid on deposits, borrowings, etc. is accounted for on accrual basis according to the BAS 1 “Presentation of

Financial Statements”.


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Other operating expenses

All other operating expenses are provided for in the books of the account on accrual basis according to the BAS 1

“Presentation of Financial Statements”.

1.6 Reconciliation of books of account

Books of account with regard to inter-bank (in Bangladesh and outside Bangladesh) and inter-branch transactions are

reconciled and no material difference was found which may affect the financial statements significantly. There exist no

un-reconciled items in NOSTRO accounts as at 31 March 2015.

1.7 Earnings Per Share (EPS)

Basic earnings per share

Basic earnings per share have been calculated in accordance with BAS 33 "Earnings per Share" which has been shown in

the face of the Profit and Loss Account. This has been calculated by dividing the basic earnings by the total ordinary

outstanding shares.

Diluted earnings per share

No diluted earnings per share is required to be calculated for the year as there was no scope for dilution during the year

under review.

1.8 Off-balance sheet items

Off-Balance Sheet items have been disclosed under contingent liabilities and other commitments as per Bangladesh

Bank's guidelines.

In accordance with BRPD circular no.14 dated 23 September 2012, general provision @ 1% has been made on the

outstanding balances of Off-Balance Sheet exposure of the Bank as at 31 March 2015. Provision is made on the total

exposure and amount of cash margin or value of eligible collateral is not deducted while computing Off-Balance sheet

exposure.

1.9 Memorandum items

Memorandum items are maintained for those items for which the Bank has only a business responsibility and no legal

commitment.

2.0 Reporting period

These financial statements cover for the period from 01 January 2015 to 31 March 2015 . Segmental reporting period is

shown below:

Sl

no. Name of the entity/segment Reporting period

1 AB Bank Limited 01 January 2015 to 31 March 2015

2 Off Shore Banking Unit 01 January 2015 to 31 March 2015

3 Mumbai Branch, India 01 January 2015 to 31 March 2015

4 AB Investment Limited 01 January 2015 to 31 March 2015

5 AB Securities Limited 01 January 2015 to 31 March 2015

6 Cashlink Bangladesh Limited 01 January 2015 to 31 March 2015

7 AB International Finance Limited 01 January 2015 to 31 March 2015

8 AB Exchange (UK) Limited 01 January 2015 to 31 March 2015

9 Arab Bangladesh Bank Foundation 01 January 2015 to 31 March 2015


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1.11 Segment Reporting

The Bank reports its operations under the following two business segments as per Bangladesh Financial Reporting Standards (BFRS)-8 "Operating Segment".

By Geographical Location & Segment Business

Profit and Loss Account for the period ended 31 March 2015

Particulars

AB Bank Limited Subsidiaries

Adjustment

AB Bank &

it's

subsidiaries

Inside Bangladesh

India

(Mumbai

Branch)

Adjustment Total

Inside Bangladesh

AB

Exchange

(UK) Ltd.

AB Int.

Finance

Ltd. (Hong

Kong)

Conventional

Banking

Islamic

Banking

Investment

Banking

AB

Investment

Limited

AB

Securities

Ltd.

Cash Link

Banglades

h Ltd.

(CBL)

Interest income 5,100,550,418 177,135,366 - 19,606,830 (138,279,228) 5,258,892,923 107,686,431 21,180,485 - - 14,755,584 (53,748,934) 5,348,766,488

Interest paid on deposits

and borrowings, etc. 3,854,482,003 133,686,018 114,226,228 5,120,785 (138,279,228) 4,052,122,486 55,901,307 16,601,234 - - 253,815 (54,470,821) 4,070,408,021

Net interest income 1,246,068,416 43,449,348 (114,226,228) 14,486,045 - 1,206,770,437 51,785,124 4,579,250 - - 14,501,769 721,887 1,278,358,467

Investment income 724,888,057 1,077,807 6,396,923 8,182,418 - 740,545,205 502,101 1,191,878 - - - - 742,239,184

Commission, exchange and

brokerage 621,892,399 6,128,959

90,492,869 - 719,278,558 9,243,629 7,274,343 18,918,855 766,978 11,846,180 (780,922) 766,547,622

Other operating income 29,726,006 60,600 - 642,027 - 30,551,557 2,102,299 162,038 - - 11,203,557 (2,101,017) 41,918,434

Total operating income 2,622,574,878 50,716,714 (107,829,305) 113,803,358 - 2,697,145,757 63,633,153 13,207,509 18,918,855 766,978 37,551,507 (2,160,052) 2,829,063,707

OPERATING EXPENSES

Salary and allowances 526,845,883 6,071,839 - 4,701,826 - 538,992,285 3,341,176 5,690,724 50,625 914,392 5,909,118 - 554,898,320

Rent, taxes, insurance,

electricity, etc. 128,320,807 391,250 - 4,191,676 - 132,911,643 467,320 1,879,038 - 553,109 1,678,923 (1,379,130) 136,110,903

Legal expenses 2,848,827 - - - - 2,848,827 - - - 5,893 - - 2,854,720

Postage, stamps,

telecommunication, etc. 30,910,460 89,934 - 3,205,280 - 34,274,209 173,674 395,397 4,606 87,078 1,068,225 - 36,003,189

Stationery, printing,

advertisement, etc. 33,978,214 131,959 - 1,422,736 - 35,536,201 23,403 174,853 - - - - 35,734,457

Directors' fees 2,167,499 30,236 - - - 2,197,735 34,500 - 70,000 - - - 2,302,235

Auditors' fees 2,005,969 - - 364,616 - 2,370,585 - - - 53,041 - - 2,423,626

Depreciation and repairs of

Bank's assets 131,443,498 717,358 34,197 2,634,645 - 135,118,270 4,340,328 1,497,527 18,171 648,479 84,029 - 141,706,804

Other expenses 283,978,635 1,942,858 9,151 30,106,324 - 316,726,152 1,435,850 1,950,644 15,123 292,742 655,289 (780,922) 320,294,878

Total operating expenses 1,142,499,791 9,375,434 43,348 46,627,103 - 1,200,975,907 9,816,251 11,588,182 158,524 2,554,736 9,395,584 (2,160,052) 1,232,329,132

Profit before provision 1,480,075,086 41,341,280 (107,872,653) 67,176,255 - 1,496,169,850 53,816,902 1,619,327 18,760,331 (1,787,757) 28,155,923 - 1,596,734,574


450,000,000

450,000,000


-

11,707,055

Other provisions

26,000,000

26,000,000

Total provision

476,000,000

487,707,055

Profit before taxation

1,020,169,850

1,109,027,519


503,800,000

530,555,752


516,369,850

578,471,767


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AB Bank Limited


Balance Sheet

Amount in Taka

Particulars

AB Bank Limited Subsidiaries

Adjustment AB Bank & it's

subsidiaries

Inside Bangladesh India

(Mumbai

Branch)

Adjustment Total

Inside Bangladesh AB

Exchange

(UK) Ltd.

AB Int. Finance

Ltd. (Hong

Kong) Conventional

Banking

Islamic

Banking

Investment

Banking

AB Investment

Limited

AB Securities

Ltd.

Cash Link

Bangladesh

Ltd. (CBL)

Cash 14,550,354,266 288,287,370 - 2,871,827 - 14,841,513,463 25,000 34,550 5,855 2,678,290 - - 14,844,257,158

Balance with other

banks and fina. instit. 1,116,896,154 2,912,603,139 - 1,100,370,556 (140,087,089) 5,055,339,829 3,112,433 147,067,924 9,248,829 2,647,418 9,959,479 (73,337,523) 5,154,038,389

Money at call and on

short notice 7,918,771,610 - - 147,973,696 (5,262,971,610) 5,316,091,296 - - - - - (956,317,600) 4,359,773,696

Investments 26,787,848,077 241,000,000 4,353,341,238 441,802,506 - 31,823,991,821 727,401,710 168,307,740 24,116,618 - -

32,743,817,889

Loans and advances 169,200,623,795 3,666,786,302 - 871,362,784 - 183,850,663,718 6,861,517,539 1,008,192,120 - - 1,322,302,448 (2,287,539,458) 190,755,136,368

Fixed assets 4,312,138,175 10,673,186 1,324,311 25,054,946 - 4,353,252,689 627,395,566 6,097,916 231,704 2,959,100 131,039

4,990,068,015

Other assets 17,997,463,480 52,401,364 28,263,230 483,132,833 (483,466,720) 18,118,924,151 354,926,635 52,627,319 29,156,752 1,081,114 7,595,714 (5,616,145,792) 12,948,165,894

Non-banking assets - - - - - - - - - - - - -

241,884,095,558 7,171,751,361 4,382,928,779 3,072,569,147 (5,886,525,419) 263,359,776,969 8,574,378,883 1,382,327,567 62,759,758 9,365,922 1,339,988,680 (8,933,340,373) 265,795,257,408

Borrowings from other

banks, financial

institutions and agents

7,068,314,615 814,384

- (5,267,629,007) 14,375,080,780 2,097,478,335 307,523,172 168,241,029 - 960,890,494 (3,117,042,232) 14,792,171,578

Deposits and other

accounts 194,905,726,250 7,118,470,077 432 1,610,711,755 (151,209,788) 203,629,625,601 - - - - - (73,337,946) 203,556,287,655

Other liabilities 21,619,911,918 52,466,899 4,420,079,773 299,807,495 268,448,136 26,660,714,221 835,971,870 596,343,577 12,327,300 2,687,848 257,290,222 (274,026,343) 28,091,308,697

Total Liabilities 223,593,952,782 7,171,751,361 4,420,080,205 1,910,519,250 (5,150,390,659) 244,665,420,602 2,933,450,205 903,866,749 180,568,329 2,687,848 1,218,180,716 (3,464,406,522) 246,439,767,930

-

Total Shareholders'

Equity 18,290,142,775

(37,151,426) 1,162,049,897 (736,134,761) 18,694,356,366 5,640,928,677 478,460,819 (117,808,572) 6,678,074 121,807,965 (5,461,359,827) 19,363,063,503

Minority Interest -

- - - - - - - - (7,574,025) (7,574,025)

Total Liabilities and

Shareholders' Equity 241,884,095,558 7,171,751,361 4,382,928,779 3,072,569,147 (5,886,525,419) 263,359,776,969 8,574,378,883 1,382,327,567 62,759,758 9,365,922 1,339,988,680 (8,933,340,373) 265,795,257,408


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1.12 Compliance of Bangladesh Accounting Standard (BAS) and Bangladesh Financial Reporting Standards

(BFRS)

While preparing the financial statements, Bank applied most of the Bangladesh Accounting Standards (BAS) and

Bangladesh Financial Reporting Standards (BFRS) as adopted by the Institute of Chartered Accountants of

Bangladesh as applicable to the Bank:

Sl # Name of BAS No. of BAS Status

1 Presentation of Financial Statements 1 Complied

2 Inventories 2 Complied

3 Statement of Cash Flows 7 Complied

4 Accounting Policies, Changes in Accounting Estimates and Errors 8 Complied

5 Events after the Reporting Period 10 Complied

6 Construction Contracts 11 N/A

7 Income Taxes 12 Complied

8 Property, Plant and Equipment 16 Complied

9 Leases 17 Complied

10 Revenue 18 Complied

11 Employee Benefits 19 Complied

12 Accounting for Government Grants and Disclosure of Government Assistance 20 N/A

13 The Effects of Changes in Foreign Exchanges Rates 21 Complied

14 Borrowing Costs 23 Complied

15 Related Party Disclosures 24 Complied

16 Accounting and Reporting by Retirement Benefit Plans 26 Complied

17 Separate Financial Statements 27 Complied

18 Investments in Associates and Joint Ventures 28 N/A

19 Interests in Joint Ventures 31 N/A

20 Financial Instruments: Presentation 32 *

21 Earnings Per Share 33 Complied

22 Interim Financial Reporting 34 Complied

23 Impairment of Assets 36 Complied

24 Provisions, Contingent Liabilities and Contingent Assets 37 Complied

25 Intangible Assets 38 Complied

26 Financial Instruments: Recognition and Measurement 39 *

27 Investment Property 40 Complied

28 Agriculture 41 N/A

Sl # Name of the BFRS

No. of

BFRS Status

1 First-time Adoption of International Financial Reporting Standards 1 N/A

2 Share Based Payment 2 N/A

3 Business Combinations 3 Complied

4 Insurance Contracts 4 N/A

5 Non-Current Assets Held for Sale and Discontinued Operations 5 N/A

6 Exploration for and Evaluation of Mineral Resources 6 N/A

7 Financial Instruments: Disclosures 7 *

8 Operating Segments 8 Complied

9 Consolidated Financial statements 10 Complied

10 Joint Arrangements 11 Complied

11 Disclosure of interests in other Entities 12 Complied

12 Fair Value Measurement 13 Complied

* Relevant disclosures are made according to the requirement of Bangladesh Bank.


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1.13 Compliance of Bangladesh Bank regulations over BAS/BFRS:

Sl

No. Issues BAS/BFRS Bangladesh Bank

1 Presentation As per BAS 1 Other Comprehensive Income is a

component of financial statements or the

elements of Other Comprehensive Income are to

be included in a single Comprehensive income

statement and there is no requirement to show

appropriation of profit in the face of statement of

comprehensive income. Again, Intangible assets

must be identified, recognished, presented in the

face of the balance sheet and the disclosures to

be given as per BAS 38.

In accordance with BRPD Circular no. 14 dated

25 June 2003 financial statements do not require

to include the statement of Other Comprehensive

Income and appropriation of profit is provided in

the face of Profit and Loss Account. Intangible

assets are provided under the head Fixed Assets.

2 Cash and cash

equivalent

As per BAS-7 cash comprises cash in hand &

demand deposits and Cash equivalents

recognises the short-term, highly liquid

investments that are readily convertible to known

amounts of cash and which are subject to an

insignificant risk of changes in value. Therefore,

some items like- Balance with Bangladesh Bank

on account of CRR/ SLR are not part of cash and

cash equivalents as those are not readily

available.

Balance with Bangladesh Bank is treated as cash

and cash equivalents as per BRPD Circular no.

14 dated 25 June 2003.

3 Investment in

shares and

securities

As per requirements of BAS 39 investment in

shares and securities generally falls either under

“at fair value through profit and loss account” or

under “available for sale” where any change in

the fair value (as measured in accordance with

BFRS 13) at the year-end is taken to profit and

loss account or revaluation reserve respectively.

As per BRPD Circular no. 14 dated 25 June

2003, provisions should be made for any loss

arising from the diminution in value of

investments. But, as per DOS Circular No.04

dated 24 November 2011, provisions can be

made for any loss arising from the diminution in

value of investments after netting of gain.

4 Revaluation

gains/losses on

Government

securities

As per requirement of BAS 39 where securities

will fall under the category of Held for Trading

(HFT), any change in the fair value of Held For

Trading (HFT) assets is recognised through

profit and loss account. Securities designated as

Held to Maturity (HTM) are measured at

amortised cost method and interest income is

recognised through the profit and loss account.

As per Bangladesh Bank DOS circular letter no.

05 dated 26 May 2008 and DOS circular no. 05

dated 28 January 2009. HTM measured at

amortised cost at each year end by taking into

account any discount or premium in acquisition.

Amortised amount of such premium are booked

into Profit and Loss Account or discount is

booked to reserve until maturity/disposal. In case

of HFT after initial recognition, investments are

revalued at mark to market on weekly basis.

Decrease in the book value is recognised in the

Profit and Loss Account and any increase is

transferred to revaluation reserve account.

5 Repo and

reverse repo

transactions

When an entity sells a financial asset and

simultaneously enters into an agreement to

repurchase the asset (or similar asset) at a fixed

price on a future date (REPO), the arrangements

is accounted for as a deposit as oppose to a sale,

and the underlying asset continues to be

recognized in the entity's financial statements.

Such transaction do not satisfy derecognition

criteria specified in BAS 39. Same rule applies to

the opposite side of the transaction (reverse

REPO).

As per Bangladesh bank Circulars / guidelines,

when a Bank sells a financial asset and

simultaneously enters into an agreement to

repurchase the asset (or a similar asset) at a fixed

price on future date (REPO), the arrangement is

accounted for as a normal sales transactions and

the financial assets should be derecognized in the

seller's book and recognized in the buyer's book.


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1.13 Compliance of Bangladesh Bank regulations over BAS/BFRS (cont.)

Sl No. Issues BAS/BFRS Bangladesh Bank

6 Provision on

loans and

advances/

investments

As per BAS 39 an entity should start the

impairment assessment by considering whether

objective evidence of impairment exists for

financial assets that are individually significant.

For financial assets that are not individually

significant, the assessment can be performed on

an individual or collective (portfolio) basis. Such

provision shall be netted off against loans and

advances.

As per BRPD circular No.14 (23 September

2012), BRPD circular No. 19 (27 December

2012) and BRPD circular No. 05 (29 May 2013)

a general provision at 0.25% to 5% under

different categories of unclassified loans

(good/standard loans) has to be maintained

regardless of objective evidence of impairment.

Also provision for sub-standard loans, doubtful

loans and bad losses has to be provided at 20%,

50% and 100% respectively for loans and

advances depending on the duration of overdue.

Again as per BRPD circular no. 10 dated 18

September 2007 and BRPD circular no. 14 dated

23 September 2012, a general provision at 1% is

required to be provided for all off-balance sheet

exposures. Such provision policies are not

specifically in line with those prescribed by BAS

39. Also for disclosure such provision shall be

shown as liability as opposed to netting of against

loans and advances.

7 Recognition

of interest in

suspense

Loans and advances to customers are generally

classified as 'loans and receivables' as per BAS

39 and interest income is recognised through

effective interest rate method over the term of the

loan. Once a loan is impaired, interest income is

recognised in profit and loss account on the same

basis based on revised carrying amount.

As per BRPD circular no. 14 dated 23 September

2012, once a loan is classified; interest on such

loans are not allowed to be recognised as income,

rather the corresponding amount needs to be

credited to interest suspense account, which is

presented as liability in the balance sheet.

8 Non-banking

asset

No indication of Non-banking asset is found in

any BFRS.

As per BRPD circular No. 14, dated 25 June

2003 there must exist a face item named Non-

banking asset.

9 Cash flow

statement

The cash flow statement can be prepared using

either the direct method or the indirect method as

per BAS-7. The presentation is selected to

present these cash flows in a manner that is most

appropriate for the business or industry. The

method selected is applied consistently.

As per BRPD circular No. 14, dated 25 June

2003 cash flow is the mixture of direct and

indirect methods.

10 Financial

Guarantee

Financial guarantee liabilities are recognised

initially at their fair value (as measured in

accordance with BFRS 13), and the initial fair

value is amortised over the life of the financial

guarantee. The financial guarantee liability is

subsequently carried at the higher of this

amortised amount and the present value of any

expected payment when a payment under the

guarantee has become probable. Financial

guarantees are included under other liabilities.

As per BRPD Circular no. 14 dated 25 June

2003, financial guarantees such as Letter of

Credit, Letter of Guarantee, Acceptance and

Endorsement, etc. will be treated as off balance

sheet items.

1.14 Regulatory and legal compliance

The Bank complied with the requirement of the following regulatory and legal authorities:

i. The Bank Company (Amendment upto 2013) Act, 1991

ii. The Companies Act, 1994

iii. Rules, regulations and circulars issued by the Bangladesh Bank from time to time

iv. The Securities and Exchange Rules, 1987

v. The Securities and Exchange Ordinance, 1969


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vi. The Securities and Exchange Commission Act, 1993

vii. The Securities and Exchange Commission (Public Issues) Rules, 2006

viii. The Income Tax Ordinance, 1984 and Rules

ix. The Value Added Tax (VAT) Act, 1991 and Rules

x. Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE) and Central Depository Bangladesh Limited

(CDBL) rules and regulations.


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1.15 Risk management

As a financial intermediary, the Bank is exposed to various types of risks. Risk is defined as uncertainties resulting in

adverse variation of profitability or in losses, financial or otherwise. The risk management of the Bank covers core risk

areas of banking as defined by Bangladesh Bank as well as Pillar 2 risks. The core risks are credit risk, asset liability

risks, money laundering risks, internal control and compliance risks, information technology risks and foreign exchange

risks. Some other risks those also affect banking business are liquidity risk, market risk interest rate risk, equity risk,

operational risk, reputation risk, strategic risks, credit concentration risks, environmental and climate change risks etc.

The objective of the risk management framework at the bank is that the Bank understands, evaluates and takes well

calculative risks and thereby safeguarding the Bank's capital, its financial resources and profitability from various

business risks through its own measures, policies and procedures established to address these risks and also

implementing Bangladesh Bank's guidelines and following some of the best practices as under:

Credit risk

It arises mainly from lending, trade finance and treasury businesses. This can be described as potential loss arising from

the failure of a counter party to perform as per contractual agreement with the Bank. The failure may result from

unwillingness of the counter party or decline in his/ her financial condition. Therefore, the Bank's credit risk

management activities have been designed to address all these issues.

The Bank has segregated duties of the officers / executives involved in credit related activities. A separate Corporate

Division has been formed at Head Office which is entrusted with the duties of maintaining effective relationship with

the customers, marketing of credit products, exploring new business opportunities, etc. Moreover, credit approval,

administration, monitoring and recovery functions have been segregated. For this purpose, two separate divisions have

been formed within the Credit Division. These are (a) Credit Risk Management Division and (b) Credit Administration

Division. Credit Risk Management Division is entrusted with the duties of maintaining asset quality, assessing risk in

lending to a particular customer, sanctioning credit, formulating policy / strategy for lending operation, etc. Adequate

provision has been made on classified loans / investments.

A thorough assessment is done before sanction of any credit facility at Credit Risk Management Division. The risk

assessment includes borrower risk analysis, financial analysis, industry analysis, historical performance of the customer,

security of the proposed credit facility, etc. The assessment process starts at Corporate Division by the Relationship

Manager / Officer and ends at Credit Risk Management Division when it is approved / declined by the competent

authority. Credit approval authority has been delegated to the credit committee.

In determining single borrower / large loan limit, the instructions of Bangladesh Bank are strictly followed. Internal

audit is conducted at periodical intervals to ensure compliance of Bank’s and Regulatory polices. Loans are classified as

per Bangladesh Bank’s guidelines. Concentration of single borrower / large loan limit is shown in note-7.6.

Operational risk

Operational risk address the risk associated with fraud, forgery, unauthorised activities, error, omission, system failure

and external events among others. Bank is managing these risk through written procedures, regular training and

awareness programs. Departmental Control Function Checklist (DCFCL), Quarterly Operations Report, Loan

Documentation Checklist etc. are in place covering all probable risks associated with bank’s business and operations.

Surprise inspections are also made on a regular basis to make sure that all control tools are functioning properly.

Market risk

The exposure of market risk of the Bank is restricted to foreign exchange risk, interest rate risk and equity position risk.

Foreign exchange risk

Foreign exchange risk is defined as the potential change in earnings due to change in market prices. The foreign

exchange risk of the Bank is minimal as all the transactions are carried out on behalf of the customers against underlying

L/C commitments and other remittance requirements.


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Financial Institution and Treasury (FIT) Division independently conducted the foreign exchange transactions and the

Mid office and the Back office of Treasury is responsible for verification of the deals and passing of their entries in the

books of account. All foreign exchange transactions are revalued at Market rate as determined by Bangladesh Bank at

the month end. All nostro accounts are reconciled on a monthly basis and outstanding entry is reviewed by the

management for its settlement. The position maintained by the Bank at the end of day was within the stipulated limit

prescribed by the Bangladesh Bank.

Interest rate risk

Interest rate risk may arise from trading portfolio and non- trading portfolio. The trading portfolio of the bank consists of

government treasury bills, bond, etc. The short term movement in interest rate is negligible or nil. Interest rate risk of

non trading business arises from mismatches between the future yield of an asset and its funding cost. Asset Liability

Committee (ALCO) monitors the interest rate movement on a regular basis.

Equity risk

Equity risk arises from movement in market value of equities held. The risks are monitored by the Investment Banking

Division under a well designed policy framework. Adequate provision was maintained by the Bank for diminution of

market value of Investments.

Liquidity risk

The objective of liquidity risk management is to ensure that all foreseeable funding commitments and deposit

withdrawals can be met when due. To this end, the Bank is maintaining a diversified and stable funding base comprising

of core retail and corporate deposits and institutional balance. Management of liquidity and funding is carried out by

Financial Institution and Treasury (FIT) Division under approved guidelines. FIT front office is supported by a very

structured Mid Office and Back Office. The liquidity management is monitored by Asset Liability Committee (ALCO)

on a regular basis. A written contingency plan is in place to manage extreme situation.

Risk arising from money laundering

AB Bank Limited considers prevention of money laundering risk not only as a compliance requirement imposed by the

law of the country but also as one of its core business values. The board of directors and senior management are firmly

committed to combat money laundering. Every year, a message from the President and Managing Director’s office goes

to all employees' of the Bank reiterating the importance of the issue. There is a high profile Central Compliance Unit

(CCU) in place to oversee the anty money laundering activities. The president and managing director himself supervise

the function of CCU's. Operation has separated and dedicated headcount for surveillance of the anti money laundering

functions across the bank. Training and awareness programs are regularly held to make all employees' aware of the

issue. Bank has also undertaken campaign against money laundering in electronic media.

Internal Control and Compliance Risk

Internal Control and Compliance Division (ICCD) of the bank performs three core functions - Internal Audit,

Monitoring and Compliance in order to mitigate the internal control and compliance risk. ICCD conducts Risk Based

Audit and Annual Audit of the Branches. Audit of Head Office Divisions also come under ICCD. ICCD monitors

compliance of Internal as well as Bangladesh Bank Audit Reports including Bangladesh Bank Special Audit Reports on

Core Risks. Besides, Special Audit on some specific issues like year-end Cash Position, Security Stock verification etc.

are also done by ICCD.

Information and Communication Technology (ICT) Security Risk

IT division of AB Bank took several initiatives to minimize the ICT related risk. Among those ATM Switch Migration

from Euronet iTM to ECS iTx, Automatic Voltage Regulator for Head Office Data Center and Disaster Recovery Site,

CISCO IronPort Web Security implementation to protect Internet threat, Building Management System (BMS)

expanded to protect AB Bank Data Center and Disaster Recovery Site from fire and water and Implemented CISCO

Nexus 7009 Switch into DC and DR which is the first time for any financial institution in Bangladesh.


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1.16 Environment Risk Management (ERM)

Bangladesh Bank issued Guidelines on Environment Risk Management (ERM) to streamline solutions for managing the

environmental risks in the financial sector – Ref: BRPD Circular No.01/2011 dated 30.01.2011 and BRPD Circular

no.02 dated 27 February, 2011 respectively. Bank accordingly introduced the Guideline on Environment Risk

Management on June 15, 2011. These ERM guidelines are an attempt to incorporate the environmental impact of a

business into the lending process, so that the environment gets due consideration in the appraisal process.

Environmental risk is a facilitating element of credit risk arising from such environmental issues. These can be due to

environmental impacts caused by and / or due to the prevailing environmental conditions. These increase risks as they

bring an element of uncertainty or possibility of loss in the context of a financing transaction.

The Bank is complying with Bangladesh Bank Guidelines to the above effect from time to time and reporting activities

on ERM and Green Banking every quarter.

1.17 Credit Rating of the Bank

Credit rating of the Bank in last five years are:

Year Date of Rating Long term Short term

Jan to Dec 2014 April 30, 2015 AA3 ST-2

Jan to Dec 2013 March 27, 2014 AA3 ST-2

Jan to Dec 2012 May 26, 2013 AA3 ST-2

Jan to Dec 2011 June 21, 2012 AA3 ST-2

Jan to Dec 2010 May 26, 2011 AA3 ST-2

1.18 Events after reporting period

As per BAS -10 "Events after the Reporting Period" events after the reporting period are those events, favorable and

unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorised

for issue. Two types of events can be identified:

(a) those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the

reporting period); and

(b) those that are indicative of conditions that arose after the reporting period (no adjusting events after the reporting

period).

There was no material events which have occurred after the reporting period which could affect the values stated in the

financial statements.

1.19 Related party disclosures

A party is related to the company if:

(i) directly or indirectly through one or more intermediaries, the party controls, is controlled by, or is under common

control with, the company; has an interest in the company that gives it significant influence over the company; or

has joint control over the company;

(ii) the party is an associate;

(iii) the party is a joint venture;

(iv) the party is a member of the key management personnel of the Company or its parent;

(v) the party is a close member of the family of any individual referred to in (i) or (iv);

(vi)

the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant

voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or

(vii) the party is a post-employment benefit plan for the benefit of employees of the company, or of any entity that is a

related party of the company.


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Related party disclosures (cont.)

a) Significant contracts where the Bank is a party and wherein Directors have interest:

Name of contract

Name of the

Party

Name of Director

and Related by Relationship

Lease agreement with AB Bank Limited

Elite

International

Ltd.

Salim Ahmed, Feroz

Ahmed & B.B. Saha

Roy

Common Director

b) Related party transactions:

Name of related party Relationship Nature of transaction Amount in Taka

Elite International Ltd. Common Director Office Rent 299,205

1.20 Audit Committee of the Board of Directors

i) Particulars of Audit Committee

The Audit Committee of the Board was duly constituted by the Board of Directors of the Bank in accordance with the

BRPD Circular No. 11 dated October 27, 2013 issued by Bangladesh Bank. The Committee was formed comprising 5

(five) members of the Board:

Sl

no. Name Status with Bank

Status with

Committee Duration

Educational/

Professional

Qualification

1

Mr. Shishir Ranjan

Bose, FCA

Independent

Director Chairman

With effect from 16

July 2008

Fellow of

Chartered

Accountants

2

Mr. M. Wahidul

Haque Chairman Member

With effect from 04

February 2008 B.A., LLB

3 Mr. Salim Ahmed Vice Chairman Member

With effect from 08

May 2014

B.A (Hons.) M.A.

(History)

4 Mr. M.A. Awal Director Member

With effect from 12

July 2011 B.Com.

5

Mr. Prof. Dr. M.

Imtiaz Hossain

Independent

Director Member

With effect from 12

April 2015

Phd from

University of

Manchester,UK

The Company Secretary acts as Secretary of the Audit Committee of the Board.

ii) Meeting held with Audit Committee

During the 1st quarter ended 31 March 2015, the Audit Committee conducted 05 (five) meetings in which, among

others, the following issues were reviewed and discussed:

- inspection report of branches/Head Office conducted by Bank's internal inspection team;

- financial statements of the Bank;

- 1st quarter accounts of the Bank for the year 2015;

- review of the financial statements of the subsidiary companies; and

- status of compliance of different rules and regulations.

iii) Steps taken for implementation on effective internal control procedure of the Bank

The Committee placed its report regularly to the Board of Directors of the Bank mentioning its review results and

recommendations on internal control system, compliance of rules and regulations and establishment of good governance

within the organization.


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1.21 Shariah Council

Members of AB Bank Shariah Supervisory Committee are as under:

Sl

no. Name

Status with the

Committee Educational/ Professional Qualification

1 Jb. M. Azizul Huq Chairman

Prominent Islamic Scholar & Banker.

M.A (Economics) Dhaka University.

2

Jb. Md. Shouquat Ali

Advocate, Bangladesh Suprerme Court Vice-Chairman

B.A (Hons.) M.A (Eco.), LLB (Ist class).

Ex-Company Secretary & Head of Law

Division, IBBL

3 Jb. Mukhlesur Rahman Member

Kamil, Madrasah Edu. Board, B.A (Hons) &

M.A in Islamic Studies, Dhaka University.

Higher Diploma in Arabic Language, Dhaka

University.

4 Jb. Mawlana Muhammad Musa Member

Prominent author and research Scholar in

Quran & Hadith. Kamil, Madrasah Edu.

Board, B.Com (Hons) M.Com, Dhaka

University,

5

Jb. M. Wahidul Haque

(Chairman, Board of Directors, ABBL) Member BA, LLB

6

Jb. Shamim Ahmed Chaudhury (President

& MD, ABBL) Member MBA with Major in Finance

7 Jb. Mohd. Haroon Rashid

Member

Secretary

M.A, M. Phil PhD Aligor University, India.

Mufti (1st Class) Darul Ulum Dewband, India

During the 1st quarter of 2015 (i.e January-March'15) AB Bank Shariah Supervisory Committee met in 01 (one)

meeting and reviewed different operational issues among which important ones are as under:

-

Reviewing the Yearly Shariah Audit Report (January-December, 2014) of Islami Banking Branch and its

observations.

- Approving the Financial Statements of 2014 of Islami Banking Branch.

-

Approving the Annual Report of Shariah Supervisory Committee for the year 2014 on Islamic banking operation

of the Bank.

2. General

i.

Figures relating to the previous year included in this report have been rearranged, wherever considered

necessary, to make them comparable with those of the current period without, however, creating any impact on

the operating result and value of assets and liabilities as reported in the financial statements for the current

period.

ii. Figures in these notes and in the annexed financial statements have been rounded off to the nearest Taka.

iii. These notes form an integral part of the annexed financial statements and accordingly are to be read in

conjunction therewith.


97 | P a g e

31.03.2015

31.12.2014

Taka

Taka

3. Cash

Cash in hand

(Note: 3.1) 1,387,005,554

1,137,941,325

Balance with Bangladesh Bank and its agent bank(s) (Note: 3.2) 13,454,507,909

12,809,767,620

1 4,841,513,463

1 3,947,708,945

3(a) Consolidated Cash

AB Bank Limited

14,841,513,463

13,947,708,945

AB Investments Limited

25,000

25,000

AB International Finance Limited

-

-

AB Securities Limited

34,550

6,190


5,855

23,096

AB Exchange (UK) Ltd.

2,678,290

2,713,147

0 1 4,844,257,158

1 3,950,476,378

3.1 Cash in hand

In local currency

1,354,934,487

1,110,821,477

In foreign currency

32,071,067

27,119,848

1,387,005,554

1,137,941,325

3.1(a) Consolidated Cash in hand

AB Bank Limited

1,387,005,554

1,137,941,325


25,000

25,000


-

-


34,550

6,190


5,855

23,096


2,678,290

2,713,147

1,389,749,249

1,140,708,758

3.2 Balance with Bangladesh Bank and its agent bank(s)

Balance with Bangladesh Bank

In local currency

12,936,703,246

11,858,151,070

In foreign currency

262,396,229

563,838,581

13,199,099,474

12,421,989,650

Sonali Bank Limited

(as an agent bank of Bangladesh Bank)-local

currency 255,408,435

387,777,970

1 3,454,507,909

1 2,809,767,620

3.2.1 Balance with Bangladesh Bank- local currency

Balance as per Bank Ledger

12,936,703,246

11,858,151,070

Unresponded debit entries:

273,295,681

26,767,121

Bangladesh Bank statement

273,295,681

26,767,121

AB Bank's ledger

-

-

Unresponded credit entries:

44,775,486

132,747,435


44,585,486

40,815,281

AB Bank's ledger

190,000

91,932,154

1 2,708,183,051

1 1,964,131,384


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Bangladesh Bank Account represents outstanding transactions (net) originated but yet to be responded at the Balance

Sheet date. However, the status of unresponded entries as of 31.03.2015 is given below:

Period of Unreconciliation

Number of

unresponded entry Unresponded Amount

Dr. Cr. Dr. Cr.

Less than 3 months

29 13 272,795,681 44,585,486

3 months to less than 6 months - - - -

6 months to less than 12 months - - - -

12 months and more 1 1 500,000 190,000

Total 30 14 273,295,681 44,775,486

31.03.2015

31.12.2014

3.2.2 Balance with Bangladesh Bank-Foreign currency Taka

Taka

Balance as per Bank Ledger

262,396,229

563,838,581

Unresponded debit entries:

38,005,561

4,985,182


37,031,123

4,985,182

AB Bank's ledger

974,439

-

Unresponded credit entries:

428,217,234

242,379,951


117,527,839

71,164,115

AB Bank's ledger

310,689,396

171,215,836

Balance as per Bangladesh Bank Statement

652,607,902

801,233,350

Bangladesh Bank Account represents outstanding transactions (net) originated but yet to be responded at the

Balance sheet date. However the status of unresponded entries as of 31.03.2015 is given below:

Period of Unreconciliation

Number of

unresponded entry Unresponded Amount

Dr. Cr. Dr. Cr.

Less than 3 months 30 283 38,005,561 424,469,959

3 months to less than 6 months

1 - 46,671

6 months to less than 12 months

2 - 98,339

12 months and more - 6 - 3,602,265

Total 30 292 38,005,561 428,217,234

3.2(a) Consolidated Balance with Bangladesh Bank and its agent bank(s)

AB Bank Limited

13,454,507,909

12,809,767,620


-

-


-

-


-

-


-

-


-

-

13,454,507,909

12,809,767,620

3.3 Statutory deposits

Conventional Banking (Inside Bangladesh)

Cash Reserve Requirement and Statutory Liquidity Ratio

Cash reserve requirement and statutory liquidity ratio have been calculated and maintained in accordance with section

33 of the Bank Company Act, 1991 (Amendment up to 2013) and Bangladesh Bank's MPD circular no. 05 dated 01

December 2010, MPD circular no. 01 dated 23 June 2014 and DOS circular no. 01 dated 19 January 2014.

The statutory cash reserve reqirement is on the Bank's time and demand liabilities at the rate of 6.50% and has been

calculated and maintained with Bangladesh Bank in current account while statutory liquidity ratio of 13.00% is

required, on the same liabilities is also maintained in the form of treasury bills, bonds and debentures including foreign

currency balance with Bangladesh Bank. Both the reserves are maintained by the Bank in excess of the statutory

requirements, as shown below:


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(a) Cash Reserve Requirement (CRR)

As per Bangladesh Bank MPD Circular No. 01 dated 23 June 2014, Bank has to maintain CRR @ 6.5% on fortnightly

cumulative average basis and minimum CRR @ 6% on daily basis.

31.03.2015

31.12.2014

Taka

Taka

i. Daily Position as on the reporting date

Required reserve

12,244,747,931

11,138,537,332

Actual reserve maintained

12,407,249,113

11,716,558,324

Surplus

162,501,182

578,020,992

As per Bank ledger, balance with Bangladesh Bank (local currency) is Tk 12,651,169,310 while as per Bangladesh

Bank Statements balance is Tk. 12,422,649,116. Difference between the balance as per Bank Ledger and as per the

Bangladesh Bank Statement is properly reconciled and adjusted accordingly.

ii. Fortnightly cumulative Position

As per Bangladesh Bank MPD Circular No. 01 dated 23 June 2014, Bank has to maintain CRR @ 6.5% on fortnightly

cumulative average basis.

Required reserve (6.5% of total time & demand liabilities) 208,160,714,827

189,355,134,644


208,915,181,511

191,003,842,243

Surplus

754,466,684

1,648,707,599

(b) Statutory Liquidity Ratio (SLR)

Required reserve (13% of total time & demand liabilities) 24,489,495,862

22,277,074,664


27,750,088,115

27,005,008,364

Total surplus

3,260,592,253

4,727,933,700

As per Bangladesh Bank MPD circular no. 05 dated 01 December 2010, MPD circular no. 01 dated 23 June 2014 and

Bangladesh Bank DOS circular no. 01 dated 19 January 2014 all scheduled Banks have to maintain CRR and SLR @

6.50% and @ 13.00% respectively of their total time and demand liabilities on bi-weekly average basis, where the

Bank maintained @ 6.59% and @ 14.73% respectively at the 1st quarter end 2015.

(c) Components of Statutory Liquidity Ratio (SLR)

Cash in hand

1,381,400,000

1,131,735,000

Balance with Sonali Bank

255,400,000

387,777,000

HTM Securities

15,576,268,661

15,973,346,093

HFT Securities

10,374,518,657

8,929,129,280

Excess Reserve of CRR

162,500,797

578,020,992

Other Eligible Security

-

5,000,000

27,750,088,115

27,005,008,364

Islamic Banking

24,489,495,862

Cash Reserve Requirement and Statutory Liquidity Ratio

Cash Reserve Requirement (CRR) and Statutory Liquidity Ratio (SLR) have been calculated and maintained in

accordance with section 33 of the Banking Company Act, 1991 (Amendment up to 2013) and subsequent Bangladesh

Bank (BB) MPD's circular no. 01 dated: 23 June 2014.

The Statutory Cash Reserve is required on the Bank's Time and Demand Liabilities at the rate of 6.50% which has been

calculated and maintained with Bangladesh Bank in Al-Wadeeah Current Account while Statutory Liquidity Ratio of

5.50% is required including excess amount of CRR on the same liabilities. The required amount maintained in the form

of Bangladesh Government Islami Investment Bond (BGIIB), Cash Balance in the Vault and Foreign Currency (FC)

Balance with Bangladesh Bank. Both the reserves (CRR & SLR) are maintained in excess, as shown below:


100 | P a g e

31.03.2015

31.12.2014

Taka

Taka

(a) Cash Reserve Requirement (CRR)

Required reserve

284,578,920

229,438,260


285,533,935

231,953,093

Surplus

955,015

2,514,833


Total required reserve

240,797,550

194,140,070

Total actual reserve held

244,708,450

201,739,017

Total surplus

3,910,900

7,598,947

Mumbai Branch

Cash reserve ratio and statutory liquidity ratio

Cash reserve ratio and statutory liquidity ratio have been calculated and maintained in accordance with Section 24 of

the Banking Companies Act 1949, Section 42 (2) of the RBI Act 1934 and RBI circular nos. DBOD. No.Ret.

BC.22/12.01.001/2012-13.

The statutory cash reserve ratio is required on the Bank's time and demand liabilities at the rate of 4.00% for the 1st

quarter 2015 & 31.12.2014 and has been maintained with RBI in current account while statutory liquidity ratio of

21.50% for 31.03.2015 & 22.00% for 31.12.2014 is required, on the same liabilities is also maintained in the form of

treasury bills, and bonds including foreign currency balance with RBI. Both the reserves are maintained by the Bank in

excess of the statutory requirements, as shown below:

(a) Cash Reserve Ratio (CRR)

Required reserve

13,184,922

10,522,167


17,163,302

16,866,506

Surplus

3,978,381

6,344,338


Required reserve

413,474,013

302,149,255


512,964,653

335,151,337

Surplus

99,490,640

33,002,082

Total required reserve

426,658,934

312,671,422

Total actual reserve held

530,127,955

352,017,842

Total surplus

103,469,021

39,346,420

4. Balance with other banks and financial institutions

In Bangladesh

(Note: 4.1) 3,029,119,597

4,171,808,425

Outside Bangladesh

(Note: 4.2) 2,026,220,231

2,316,879,897

5,055,339,829

6,488,688,322

4(a) Consolidated balance with other banks and financial institutions

In Bangladesh

(Note: 4.1.a) 3,115,698,463

4,214,889,208

Outside Bangladesh (Nostro Accounts)

(Note: 4.2.a) 2,038,339,925

2,340,832,909

5,154,038,389

6,555,722,116


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31.12.2014

4.1 In Bangladesh

Taka

Taka

Current Deposits

Standard Chartered Bank, Dhaka City Centre Branch 642,863

3,695,559

Agrani Bank Ltd., VIP Road Branch, Sylhet 6,194

18,214

Agrani Bank Ltd., Local Office, Dhaka 24,885

24,885

Islami Bank Bangladesh Ltd., Local Office 17,277

17,277

Agrani Bank Ltd., Bhairab Bazar Branch 534

30,000,534

Janata Bank Ltd., Jessore Branch 8,137

5,049

Agrani Bank Ltd., Mymensingh Branch 3,139

10,030,464

Janata Bank Ltd., Corporate Branch, Bogra 7,778

2,328

Rupali Bank Ltd., Bogra Branch 2,005

4,425

Agrani Bank Ltd., Thana Road Branch, Bogra 4,984

4,580

RAKUB, Bogra Branch 6,505

13,620

Agrani Bank Ltd., Shaheb Bazar Branch, Rajshahi 4,876

5,000

Janata Bank Ltd., Rajshahi Branch 5,288

5,000

IFIC Bank Ltd., Rajshahi Branch 840

840

Rupali Bank Ltd., Rajshahi Branch 11,150

10,000

Janata Bank Ltd., Rangpur Branch 511,969

59,041,800

RAKUB, Rangpur Branch 111,818

111,818

Rupali Bank Ltd., Rangpur Branch 41,904

169,394

Janata Bank Ltd., Chapai Nawabganj Branch 1,316

1,316

Agrani Bank Ltd., Brahmanbaria Branch 3,850

1,970

Agrani Bank Ltd., Pabna Branch 1,000

-

Janata Bank Ltd., Pabna Branch 1,000

-

1,419,312

103,164,073

Special Notice Deposits

Agrani Bank Ltd., Rangpur Branch 100,492,032

85,396,350

Agrani Bank Ltd., Saidpur Branch 15,307

15,307

Agrani Bank Ltd., VIP Road Branch, Sylhet 33,836

33,756

Agrani Bank Ltd., Bogra Branch 7,530

7,530

Agrani Bank Ltd., Jhikargachha Branch 7,106,001

50,955,001

Agrani Bank Ltd., Sir Iqbal Road Branch, Khulna 2,216

7,622

Agrani Bank Ltd., Naogaon Branch 15,422,631

12,802,674

Agrani Bank Ltd., Jessore Branch 35,560

12,015,582

Agrani Bank Ltd., Moulvi Bazar Branch 1,411,671

12,158,103

Agrani Bank Ltd., Satkhira Branch 11,168

11,168

Agrani Bank Ltd., Court Road Branch, Narayanganj -

-

Southeast Bank Ltd., Principal Branch 48,120

48,120

Agrani Bank Ltd., Principal Branch, Dhaka 902

90,683

Agrani Bank Ltd., Barisal Branch 21,547

72,077

Bangladesh Krishi Bank, Barisal Branch 45,563

3,356

Janata Bank Ltd., Barisal Branch 4,845

4,735

Standard Chartered Bank, Dhaka City Centre Branch 1,042,033

1,042,033

Islami Bank Bangladesh Ltd., Head Office Complex Corporate Br. 492,453

448,957

Bank Asia Ltd., Islami Banking Window, Shantinagar Branch 1,320,235

1,320,235

First Security Islami Bank Ltd, Dilkusha Br.

155,198

154,289

Al-Arafah Islami Bank Ltd, Dilkusha Branch

12,677,378

208,835,048

Shahjalal Islami Bank Ltd, Dhaka Main Branch

79,769

78,359

The City Bank Ltd, Islamic Banking Br, Paltan, Dhaka 976,520

967,141

Bank Alfalah Ltd, Main Branch, Dhaka

150,000,000

255,805,569

Southeast Bank Ltd., Motijheel Branch (Islami Banking) 112,716,674

110,608,819

ICB Islamic Bank Ltd., Principal Br, Motijheel

103,024,433

100,000,000

Agrani Bank Ltd., Islami Banking Window, Amin Court Corp. Br. 735,493,021

725,493,021

Jamuna Bank Ltd. Nayabazar Islami Banking Br.

34,226

17,534,226

Union Bank Ltd., Dilkusha Branch 385,867

384,082

1,243,056,735

1,596,293,843


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31.03.2015

31.12.2014

Taka

Taka

Mudaraba Special Notice Deposit

Social Islamic Bank Ltd. Principal Branch

3,281,900

2,080,821

EXIM Bank Ltd, Motijheel Branch

1,361,651

269,689

4,643,551

2,350,510

Fixed Deposits

Trust Bank Ltd.

80,000,000

-

Hajj Finance Company Ltd.

230,000,000

250,000,000

Southeast Bank Ltd.

200,000,000

200,000,000

Social Islami Bank Ltd.

200,000,000

200,000,000

Phoenix Finance and Investment Ltd.

100,000,000

100,000,000

Al-Arafah Islami Bank Limited

-

300,000,000

EXIM Bank Ltd.

-

500,000,000

The City Bank Ltd.

200,000,000

200,000,000

ICB Islamic Bank Ltd.

50,000,000

50,000,000

Union Bank Ltd.

450,000,000

450,000,000

Islamic Finance & Investment Ltd.

120,000,000

120,000,000

Union Capital Ltd.

150,000,000

100,000,000

1,780,000,000

2,470,000,000

3,029,119,597

4,171,808,425

4.1.a Consolidated In Bangladesh

(0)

(0)

AB Bank Limited

3,029,119,597

4,171,808,425

AB Investment Limited

3,112,433

544,019


-

-


147,067,924

114,444,709


9,248,829

6,384,834


-

-

3,188,548,783

4,293,181,988

Less: Inter company transaction

72,850,320

78,292,780

3,115,698,463

4,214,889,208

4.2 Outside Bangladesh

Current Deposits

The Bank of Tokyo Mitsubishi Ltd.

1,057,509

707,665

HSBC Plc

-

-

HSBC AUST

1,607,857

923,416

JP Morgan Chase Bank

212,716,774

198,961,345

Sonali Bank (Kolkata)

3,436,589

3,279,358

Sonali Bank (UK)

78,735,308

123,120,793

Sonali Bank (UK)

12,585,344

-

Myanmar Economic Bank

31,898

31,959

Citibank NA

59,900,559

50,449,931

Hatton National Bank Ltd.

3,324,608

8,160,962

Commerz Bank AG

25,087,754

40,148,266

HABIB Zuric

4,189,482

4,719,240

NIB Bank Ltd.

8,590,266

6,017,517

Mashreq Bank Psc

63,851,813

36,560,861


103 | P a g e

31.03.2015

31.12.2014

Taka

Taka

Outside Bangladesh (cont..)

Nepal Bangladesh Bank Ltd.

1,961,902

2,054,142

Bank of Bhutan

5,358,138

24,440,385

Wachovia Bank/Wells Fargo N.A

4,614,294

35,987,587

Habib America Bank

64,883,945

37,454,925

Commerz Bank AG

113,731,126

34,496,508

Hypovereins Bank

5,758,439

4,499,051

National Commercial Bank Ltd.

29,809,545

29,866,788

Habib Metro Bank

20,796,142

13,408,724

Habib Bank AG

1,596,793

703,347

COMMERZ BK CAD

4,597,254

3,594,551

COMMERZ BK CHF

3,836,099

10,098,144

JPMC NY-OBU

59,756,622

34,796,121

HSBC, New York

45,690,749

768,564,087

Reserve Bank of India

17,162,759

16,866,506

HDFC BANK CSGL

398,844

303,823

HDFC Bank Ltd.

75,091,630

7,836,735

Commerz Bank AG (Euro)

5,770,437

10,560,432

Commerz Bank AG (ACU)

2,070,059

7,966,631

Kotak Mahindra Bank

24,050,818

9,585,173

HSBC (USD)

47,173,565

69,269,827

HSBC (ACUD)

920,845,887

526,831,239

Habib American Bank Ltd.

384,548

7,313,278

HSBC NY (OBU)

5,645,867

103,738,518

Standard Chartered Bank

76,661,543

79,026,001

Standard Chartered Bank

6,035,456

JP Morgan Chase Bank

7,422,009

4,536,060

(Details are given in Annex - A)

2,026,220,231

2,316,879,897

(0)

4.2.a Consolidated Outside Bangladesh (Nostro Accounts) (0)

0

AB Bank Limited

2,026,220,231

2,316,879,897


-

-


9,959,479

20,114,404


-

-


-

-


2,647,418

4,003,394

2,038,827,128

2,340,997,695

Less: Inter company transactions

487,203

164,787

2,038,339,925

2,340,832,909

4.3

Account-wise/grouping of balance with other banks and financial

institutions

Current deposits

2,027,639,543

2,420,043,970

Savings deposits

4,643,551

2,350,510

Short-Notice Deposits

1,243,056,735

1,596,293,843

Fixed deposits

1,780,000,000

2,470,000,000

5,059,829 5,055,339,829

6,488,688,322


104 | P a g e

31.03.2015

31.12.2014

Taka

Taka

4.4 Maturity grouping of balance with other banks

Repayable – on demand

2,027,639,544

2,420,043,970

– up to 3 months

2,399,103,547

3,658,644,353

– over 3 months but below 1 year

628,596,738

410,000,000

– over 1 year but below 5 years

-

-

– over 5 years

-

-

5,055,339,829

6,488,688,322

5. Money at call and on short notice

In Bangladesh

(Note: 5.1) 2,655,800,000

600,000,000

Outside Bangladesh

(Note: 5.2) 2,660,291,296

3,262,958,626

5,316,091,296

3,862,958,626

5.1 In Bangladesh

With banking companies

The City Bank Limited

1,205,600,000

-

Eastern Bank Limited

389,000,000

-

BRAC Bank Limited

311,200,000

-

1,905,800,000

-

With non-banking financial institutions

Industrial and Infrastructure Development Finance Company (IIDFC) -

50,000,000

Prime Finance & Investment Ltd.

100,000,000

-

People's Leasing and Financial Services Ltd.

200,000,000

100,000,000

International Leasing & Financial Services Ltd.

450,000,000

450,000,000

750,000,000

600,000,000

2,655,800,000

600,000,000

At short notice

-

-

On calls and placements

Industrial and Infrastructure Development Finance Company (IIDFC) -

50,000,000

Prime Finance & Investment Ltd.

100,000,000

-


1,205,600,000

-

Eastern Bank Limited

389,000,000

-

BRAC Bank Limited

311,200,000

-

People's leasing and financial services Limited

200,000,000

100,000,000

International Leasing & Financial Services Limited

450,000,000

450,000,000

2,655,800,000

600,000,000

2,655,800,000

600,000,000


Pinnacle Global Fund Pte Limited

1,556,000,000

1,558,988,000


956,317,600

1,405,973,328

Kotak Mahindra Bank

46,680,000

88,754,500

HDFC Bank Limited

101,293,696

209,242,798

2,660,291,296

3,262,958,626

5(a) Consolidated money at call and on short notice

AB Bank Limited

5,316,091,296

3,862,958,626


-

-


-

-


-

-


-

-


-

-

5,316,091,296

3,862,958,626

Less: Inter-group transaction

(956,317,600)

(1,405,973,328)

4,359,773,696

2,456,985,298


105 | P a g e

31.03.2015

31.12.2014

Taka

Taka

6. Investments

Nature wise (Bangladesh Operation):

Held for Trading

10,374,518,657

8,929,129,280

Held to Maturity

15,817,268,661

16,169,346,093

Others

5,190,401,998

5,310,303,497

31,382,189,316

30,408,778,870

Nature wise (Mumbai Branch):

Held for Trading

-

-

Held to Maturity

441,802,506

369,796,197

Others

-

-

441,802,506

369,796,197

Claim wise:

Government securities

(Note: 6.1) 26,282,112,162

25,305,839,814

Other investments

(Note: 6.2) 5,541,879,659

5,472,735,252

31,823,991,821

30,778,575,066

6 (a) Consolidated investments

AB Bank Limited

31,823,991,821

30,778,575,066


-

-


727,401,710

746,884,485


168,307,740

168,307,740


24,116,618

24,116,618


-

-

32,743,817,889

31,717,883,909

6.1 Government securities

Treasury bills

4,431,870,412

2,612,978,291

30 days Bangladesh Bank bills

-

Treasury bonds

21,605,704,150

22,488,628,622

Debentures - Bangladesh House Building Finance Corporation -

5,000,000

(Maturity date: 14 March 2015, interest rate: 5.50%)

Bangladesh Bank Islami Investment bonds

241,000,000

196,000,000

Prize bonds

3,537,600

3,232,900

26,282,112,162

25,305,839,814

6.1.1 Maturity wise Treasury Bills & Bonds

(a) 30 Days Bangladesh Bank Bill

1,558,073,837

499,364,774

(b) Treasury Bill

(i) 91 Days Treasury Bill

-

343,307,751

(ii) 182 Days Treasury Bill

267,504,801

-

(iii) 364 Days Treasury Bill

2,606,291,775

2,269,670,540

Total Treasury Bill

2,873,796,576

2,612,978,291

(c) Treasury Bond

(i) 02 Years Treasury Bond

1,003,914,989

975,367,599

(ii) 05 Years Treasury Bond

3,214,245,454

3,709,863,326

(iii) 10 Years Treasury Bond

11,375,419,582

11,380,898,191

(iv) 15 Years Treasury Bond

3,762,276,674

3,919,230,562

(v) 20 Years Treasury Bond

2,163,060,206

2,304,137,404

Total Treasury Bond

21,518,916,905

22,289,497,082

Treasury Bond Adjustment

86,787,245

199,131,541

Total (a)+(b)+(c)

26,037,574,563

25,600,971,688


106 | P a g e

31.03.2015

31.12.2014

Taka

Taka

6.1(a) Consolidated Government securities

AB Bank Limited

26,282,112,162

25,305,839,814


-

-


-

-


-

-


-

-


-

-

26,282,112,162

25,305,839,814

6.2 Other investments

Shares

(Note: 6.2.1) 4,970,077,153

4,972,939,056

Bond

(Note: 6.2.2) 130,000,000

130,000,000

5,100,077,153

5,102,939,056

Investments -ABBL, Mumbai Branch

Treasury bills

406,574,666

335,151,337

Debentures and Bonds

35,227,840

34,644,860

441,802,506

369,796,197

Total Other investments

5,541,879,659

5,472,735,252

6.2 (a) Consolidated other investments

AB Bank Limited

5,541,879,659

5,472,735,252


727,401,710

746,884,485


-

-


168,307,740

168,307,740


24,116,618

24,116,618


-

-

6,461,705,726

6,412,044,095

6.2.1 Investments in shares

Quoted (Publicly Traded)

4,072,070,308

4,074,932,211

Unquoted

898,006,845

898,006,845

4,970,077,153

4,972,939,056

Details are given in Annexure-B

6.2.2 Investment in subordinated bonds

Prime Bank Limited

90,000,000

90,000,000

Trust Bank Limited

40,000,000

40,000,000

130,000,000

130,000,000

6.3 Maturity grouping


110,020,145

-

– upto 3 months

2,114,011,605

1,185,193,085


8,097,693,667

7,300,588,163


6,910,661,470

7,238,903,591

– over 5 years

14,591,604,932

15,053,890,227

31,823,991,821

30,778,575,066


107 | P a g e

6.4 Disclosure of uniform accounting procedures for REPO transactions under DOS circular no 06 dated 15 July

2010 is given below :

a.(i) Disclosure regarding outstanding Repo as on 31 March 2015:

Counter party name

Agreement

Date Reversal Date

Amount (1st leg

cash

consideration)

Bangladesh Bank (Liquidity Support) 3/31/2015 1/Apr/15 853,905,000

Basic Bank Ltd (Interbank REPO) 3/31/2015 1/Apr/15 396,447,660

Janata Bank Ltd (Interbank REPO) 3/31/2015 1/Apr/15 1,019,540,755

Prime Bank Ltd (Interbank REPO) 3/31/2015 1/Apr/15 479,969,500

Total 1,730,322,160

(ii) Disclosure regarding outstanding Reverse Repo as on 31 March 2015:

Counter party name

Agreement

Date Reversal Date

Amount (1st leg

cash

consideration)

None N/A N/A N/A

b. Disclosure regarding overall transaction of Repo and Reverse repo:

Minimum outstanding

during the period

Maximum

outstanding during

the period

Daily average

outstanding

during the period

Securities sold under repo:

i) with Bangladesh Bank - 2,281,400,000 1,130,417,222

ii) with other banks & FIS - 4,849,200,000 1,753,136,222

Securities purchased under reverse repo:

i) from Bangladesh Bank NIL - -

ii) from other banks & FIS NIL 777,464,203 5,121,113

31.03.2015

31.12.2014

Taka

Taka

7. Loans, advances and lease/investments

183,850,663,718

177,570,797,390



2,909,712,635

3,121,047,452

– upto 3 months

97,370,513,980

77,338,284,669


68,268,840,000

62,598,062,666


9,323,293,340

32,638,991,004

– over 5 years

5,978,303,764

1,874,411,599

183,850,663,718

177,570,797,390

7.2 Broad category-wise breakup

(0.11)

In Bangladesh

Loans

159,768,649,339

151,973,642,894

Overdrafts

22,880,126,958

24,257,058,709

Cash credits

-

-

182,648,776,297

176,230,701,603

Outside Bangladesh: ABBL, Mumbai Branch

Loans

137,428,556

118,290,492

Overdrafts

2,947,293

173,447

Cash credits

17,374,340

38,280,520

157,750,188

156,744,459

182,806,526,484

176,387,446,062


108 | P a g e

AB Bank Limited

Notes to the financial statements for the period ended 31 March 2015

31.03.2015

31.12.2014

Taka

Taka

7.3 Product wise Loans and Advances

Overdraft

22,867,169,014

24,258,189,159

Cash Credit

17,374,340

37,995,893

Time loan

54,600,563,593

54,883,861,279

Term loan

86,248,539,648

76,409,640,764

Bills under LC

175,205,900

597,494,835

Trust Receipt

10,856,581,240

12,033,291,210

Packing credit

491,365,450

469,070,866

Loan against accepted bills

5,433,511,285

5,659,662,347

Consumer Loan

1,347,610,715

1,315,552,111

Staff Loan

768,605,300

722,687,599

Bills Purchased & Discounted

1,044,137,234

1,183,351,328

183,850,663,718

177,570,797,390

(810,386,002)

7.4 Net loans, advances and lease/investments

Gross loans and advances

183,850,663,718

177,570,797,390

Less:

Interest suspense

3,690,843,275

2,889,551,303

Provision for loans and advances

5,304,285,837

4,853,671,957

8,995,129,112

7,743,223,260

174,855,534,606

169,827,574,130

7.5 Significant concentration

Advances to industries

87,738,548,125

84,929,595,774

Advances to customer groups

96,112,115,593

92,641,201,616

Advances to allied concerns of Directors - -

Advances to Chief Executive

-

-

183,850,663,718

177,570,797,390

7.6 Advances to customers for more than 10% of Bank's total capital

Total capital of the Bank

22,342,455,373

22,798,623,509

Number of clients

34

34

Amount of outstanding advances 61,234,212,000

60,681,015,326

60,681,015,326

Amount of classified advances

-

-

Measures taken for recovery

Not applicable

Not applicable

7.7 Industry-wise loans, advances and lease/investments

Agriculture

2,196,523,420

2,801,651,097

Large and medium scale industry 43,717,606,523 47,768,695,594

Working capital

42,428,433,800

35,187,549,617

Export

821,904,526

1,091,168,593

Commercial lending

44,743,108,457

40,693,652,705

Small and cottage industry

2,941,015,263

1,010,622,049

Others

47,002,071,729

49,017,457,735

183,850,663,718

177,570,797,390

0

0


109 | P a g e

AB Bank Limited


31.03.2015

31.12.2014

Taka

Taka

7.8 Geographical location-wise (division) distribution

In Bangladesh

Urban Branches

Dhaka

120,649,927,189

117,399,668,828

Chittagong

44,715,495,124

41,645,368,181

Khulna

4,858,730,635

4,812,452,773

Sylhet

2,094,742,035

2,126,304,984

Barisal

361,523,008

390,486,202

Rajshahi

3,398,575,194

3,466,971,019

Rangpur

3,198,632,933

3,172,244,903

179,277,626,119

173,013,496,891

Rural Branches

Dhaka

3,197,602,179

3,141,994,538

Chittagong

444,193,084

461,678,607

Khulna

-

-

Sylhet

59,879,553

60,156,085

Barisal

-

-

Rajshahi

-

-

Rangpur

-

-

3,663,829,229

3,663,829,229

Outside Bangladesh

ABBL, Mumbai Branch

871,362,784

893,471,270

183,850,663,718

177,570,797,390

7.9 Classification of loans, advances and lease/investments

In Bangladesh

Unclassified

Standard

174,124,660,645

169,504,238,421

Special Mention Account

1,412,062,408

418,500,342

175,536,723,054

134,779,934,140

Classified

Sub-Standard

1,231,600,000

691,700,000

Doubtful

410,886,000

331,100,000

Bad/Loss

5,800,081,881

5,731,787,357

7,442,577,881

6,754,587,357

182,979,300,935

139,416,802,140

Outside Bangladesh-Mumbai Branch

Unclassified Loan

768,295,109

792,109,246

Classified Loan

103,067,674

101,362,024

871,362,784

704,495,365

183,850,663,718

140,121,297,505


110 | P a g e

AB Bank Limited


31.03.2015 31.12.2014

Taka Taka

7.10 Particulars of Loans, advances and lease/investments

(i) Loans considered good in respect of which the Bank is fully

secured 175,159,211,239 169,292,299,227

(ii) Loans considered good against which the Bank holds no

security other than the debtors’ personal guarantee - -

(iii)

Loans considered good and secured by the personal

undertaking of one or more parties in addition to the personal

guarantee of the debtors

8,691,452,479 8,278,498,163

(iv) Loans adversely classified but provision not maintained

there against - -

(v) Loans due by directors or officers of the Bank or any of them

either separately or jointly with any other persons 768,605,300 722,687,599

(vi)

Loans due from companies or firms in which the directors of

the Bank are interested as directors, partners or managing

agents or, in case of private companies, as members

- -

(vii)

Maximum total amount of advances, including temporary

advances made at any time during the year to directors or

managers or officers of the Bank or any of them either

separately or jointly with any other persons [note 7.10 (a)]

768,605,300 7 29,638,094

(viii)

Maximum total amount of advances, including temporary

advances granted during the year to the companies or firms

in which the directors of the Bank are interested as directors,

partners or managing agents or, in the case of private

companies, as members

- -

(ix) Due from other banking companies - -

(x) Amount of classified loans on which interest has not been

charged:

- -

a) Increase/(decrease) of provision (specific)

29,818,000 2,119,762,675

b) Amount of loan written off - 1,723,925,000

c) Amount realised against loan previously written

off 1 48,000 16,283,000

d) Provision kept against loans classified as bad /loss

on the date of preparing the balance sheet 2,740,900,000 2,711,082,000

e) Interest creditable to interest suspense account 5,789,474,844 5,537,277,863

(xi) Written off loan:

During the year 1,723,925,000

Cumulative to-date (as per Bangladesh Bank

guidelines) 7,188,963,000 7,188,963,000

Cumulative to-date (in amicable settlement) 2,699,929,000 2,696,192,000

The amount of written off loans for which lawsuits

have been filed for its recovery 2,699,929,000 2,696,192,000

10.7 (a) The amount represents loans Tk. 768,605,300 crore due by the employees of the Bank.


111 | P a g e

AB Bank Limited


31.03.2015

31.12.2014

Taka

Taka

7.11 Securities wise Loans, advances and lease/investments

Nature of security

Collateral of movable/immovable assets 147,227,611,505 142,142,104,460

Cash collateral

4,357,260,730

4,186,307,061

Banks and financial institutions guarantee 1,103,103,982 1,146,804,952

Personal guarantee

9,927,935,840

9,533,339,592

Corporate guarantee

3,309,311,946

3,236,279,187

Other securities

17,925,439,715

17,325,962,138

183,850,663,718

177,570,797,390

7(a) Consolidated Loans, advances and lease/investments

AB Bank Limited

182,806,526,484

176,387,446,062


6,861,517,539

7,107,095,221


-

-


1,008,192,120

1,046,831,154

Cashlink Bangladesh Limited (CBL) - -


-

-

190,676,236,144

184,541,372,437

Less: Inter company transaction

2,287,539,458

2,604,760,935

188,388,696,686

181,936,611,502

8 Bills purchased and discounted

In Bangladesh 330,524,638 446,624,517

Outside Bangladesh - ABBL, Mumbai Branch 713,612,596 736,726,811

1,044,137,234

1,183,351,328


Repayable – within 1 month

3 65,448,031

419,259,690

– over 1 month but within 3 months 4 59,420,382 515,478,050

– over 3 months but within 6 months 2 19,268,821 248,598,380

– over 6 months

-

-

1,044,137,234

1,183,336,120

8 (a) Consolidated Bills purchased and discounted

AB Bank Limited

1,044,137,234

1,183,351,328


-

-


1,322,302,448

1,617,929,100


-

-

Cashlink Bangladesh Limited (CBL) - -


-

-

2,366,439,682

2,801,280,428


112 | P a g e

AB Bank Limited


31.03.2015 31.12.2014

Taka Taka

9. Fixed assets including premises, furniture and fixtures

Cost:

Land and Building

3,341,682,082

3,341,682,082

Furniture and fixtures

220,418,495

218,512,340

Office appliances

61,723,246

62,061,284


1,453,196,698

1,443,497,994

Motor vehicles

577,393,554

567,752,028

Intangible Assets

547,722,620

571,032,453

6,202,136,695

6,204,538,180

Less: Accumulated depreciation and amortization 1,848,884,006 1,799,543,653

4,353,252,689

4,404,994,528

A schedule of fixed assets is given in Annexure-C

9(a) Consolidated Fixed assets including premises, furniture and fixtures

Cost:

AB Bank Limited

6,202,136,695

6,204,538,180


682,564,941

574,374,720


7,610,544

7,623,595


28,432,297

29,069,045

Cashlink Bangladesh Limited (CBL) 250,270,879 250,270,879


15,192,864

15,359,298

7,186,208,221

7,081,235,717

Accumulated depreciation:

AB Bank Limited

1,848,884,006

1,799,543,653


55,169,375

50,853,564


7,479,505

7,452,313


22,334,381

21,667,677



12,233,764

11,585,284

2,196,140,206

2,141,123,495

4,990,068,015

4,940,112,222

10. Other assets

Income generating-Equity Investment

In Bangladesh:


99,899,000

99,899,000

(99.99% owned subsidiary company of ABBL)


199,898,000

199,898,000



(90% owned subsidiary company of ABBL)

512,378,228

512,378,228


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31.03.2015 31.12.2014

Taka Taka

Outside Bangladesh:

AB International Finance Ltd., Hong Kong 5,203,944

5,203,944

(wholly owned subsidiary company of ABBL)


50,423,392

50,423,392

(wholly owned subsidiary company of ABBL)

55,627,337

55,627,337

568,005,565

568,005,565

Non-income generating

Advance corporate income tax (note: 10.1) 9,800,808,312 9,357,440,764

Arab Bangladesh Bank Foundation 19,920,000 19,920,000


Share Money Deposits - AB Investment Limited 4,900,100,000 4,900,100,000

Share Money Deposits - AB Securities Limited - -

Accounts receivable

655,760,893

730,277,969

Preliminary, formation, organisational, renovation,

development, prepaid expenses and others 598,372,371 507,327,670

Exchange for clearing

557,934,912

459,660,909

Interest accrued on investment but not collected,

commission and brokerage receivable on shares

and debentures, and other income receivables 623,196,321 695,096,286

Security deposits

180,770,713

175,578,647

Advance rent and advertisement 182,630,478 171,597,362

Stationery, stamps, printing materials, etc. 31,424,589 29,273,384

Inter-branch adjustment

-

154,618

17,550,918,587

17,046,427,609

18,118,924,151

17,614,433,173

10(a) Consolidated Other assets

AB Bank Limited

18,118,924,151

17,614,433,173


354,926,635

461,991,430


7,595,714

13,749,068


52,627,319

97,885,973



1,081,114

1,319,511

18,564,311,686

18,217,784,520


5,616,145,792

5,762,319,285

12,948,165,894

12,455,465,235

10.1 Advance corporate income tax

In Bangladesh:

Balance at 01 January 2015

9,125,367,470

6,925,302,663

Add: Paid during the year

3 75,000,000

1,948,549,059

Tax withheld during the year 23,883,895 251,607,320

398,883,895

2,200,156,379


114 | P a g e

AB Bank Limited


31.03.2015 31.12.2014

Taka Taka

Less: Transfer/Adjustment during the year - 91,572

Balance at 31 March

9,524,251,365

9,125,367,470

Advance tax of ABBL, Mumbai Branch 276,556,947 232,073,293

9,800,808,312

9,357,440,763

11. Borrowings from other banks, financial institutions and

agents

In Bangladesh (Note: 11.1)

7,302,983,720

7,313,322,021

Outside Bangladesh (Note: 11.2)

4,572,097,060

3,663,488,409

11,875,080,780

10,976,810,430

11.1 In Bangladesh:

11.1.1 Bangladesh Bank

ADB loan 14,739,000 17,107,125

Islamic Investment Bonds 814,384 500,000,000

Refinance against IPFF 351,119,019 105,176,850

Refinance against Women Entr. Small Enterprise, ETP & Others 1 41,621,527 17,107,125

508,293,930

748,917,272

11.1.2 Call & Term Borrowing from

Basic Bank Limited

750,000,000

950,000,000

Citibank NA

450,000,000

420,000,000

Dutch Bangla Bank Limited

1,562,202,697

1,565,293,240

One Bank Limited

250,000,000

-

HSBC

290,000,000

300,000,000

ICB Islami Bank Limited

500,000,000

470,000,000

Brac Bank Limited

1,781,101,349

1,000,000,000

United Commercial Bank Limited 1,190,550,674 1,300,000,000

Commercial Bank of Ceylon

-

390,422,237

Bangladesh Commerce Bank Limited - 155,957,262

Accrued interest

20,835,070

12,732,010

6,794,689,790

6,564,404,749

7,302,983,720

7,313,322,021


Sonali Bank UK

595,080,008

616,893,327

ICICI BK LTD,HK

933,600,000

-

International Finance Corporation 2,727,224,885 2,732,718,832

Banca UBAE 316,192,167 313,876,251

4,572,097,060

3,663,488,409

A schedule of borrowings from other banks, financial institutions and agents outside Bangladesh is given in Annex - D.


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31.03.2015

31.12.2014

Taka

Taka

11.3 Analysis by security

Secured (assets pledge as security for liabilities) - -

Unsecured

11,875,080,780

10,976,810,430

11,875,080,780

10,976,810,430

11.4 Repayment pattern

Repayable on demand

2,673,600,000

1,670,000,000

Repayable on maturity (Note: 11.4.1)

9,201,480,780

9,306,810,430

11,875,080,780

10,976,810,430

11.4.1 Repayable on maturity

-

-

Bangladesh Bank refinance:

ADB loan 14,739,000 17,107,125

Refinance against IPFF 351,119,019 105,176,850

Refinance against Women Entr., Small Enterprise, ETP & Others 141,621,527 126,633,297

507,479,545

248,917,272

Term borrowings:

Islamic Investment Bonds

814,384

500,000,000

International Finance Corporation 2,727,224,885 2,732,718,832

Banca UBAE

316,192,167

313,876,251

Commercial Bank of Ceylon

-

390,422,237

Bangladesh Commerce Bank Ltd - 155,957,262

ICB Islami Bank Ltd

500,000,000

470,000,000

Brac Bank Limited

1,781,101,349

1,000,000,000

United Commercial Bank Ltd. 1,190,550,674 1,300,000,000

Sonali Bank UK

595,080,008

616,893,327

Dutch Bangla Bank Ltd

1,562,202,697

1,565,293,240

Accrued interest

20,835,070

12,732,010

8,694,001,234

9,057,893,158

9,201,480,780

9,306,810,430

11(a) Consolidated Borrowings from other banks, financial institutions and

agents

AB Bank Limited

11,875,080,780

10,976,810,430


2,097,478,335

2,406,573,816


960,890,494

1,407,722,530


307,523,172

299,693,825



-

-

15,409,213,809

15,274,041,630

3,117,042,232 3,888,374,105

12,292,171,577

11,385,667,525


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AB Bank Limited


31.03.2015 31.12.2014

Taka Taka

12 AB Bank Subordinated Bond

Subordinated Bond

2,500,000,000

2,500,000,000

The Board of Directors of AB Bank Limited in its 546th meeting held on March 12, 2014 approved the 7 years Non-

Convertible Subordinated Bond BDT 250 crore for enhancing the Bank capital strength and subsequently approved by

the shareholders in an Extra-ordinary General Meeting on April 21, 2014.

Accordingly, Bangladesh Securities and Exchange Commission vide their letter # BSEC/CI/DS – 12/2014/471 dated

July 01, 2014 and Bangladesh Bank vide their letter # BRPD (BIC) 661/14B(P)/2014-4724 dated July 21, 2014 gave

consent to raise capital of AB Bank Limited through issuance of Non-convertible Subordinated Bond.


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AB Bank Limited


31.03.2015

31.12.2014

Taka

Taka

13. Deposit and other accounts

Inter-bank deposits

8,244,629,848

10,007,738,867

Other deposits

195,384,995,752

188,181,458,354

203,629,625,602

198,189,197,221

13(a) Consolidated Deposit and other

accounts

AB Bank Limited

203,629,625,602

198,189,197,221


-

-


-

6,018,236


-

-


-

-


-

-

203,629,625,602

198,195,215,457


73,337,946

78,457,744

203,556,287,656

198,116,757,714

13.1 Maturity analysis of inter-bank

deposits


1,374,181,318

1,098,483,242

– within 1 month

2,502,248,530

3,060,220,903

– over 1 month but within 3 months

4,368,200,000

5,646,584,722

– over 3 months but within 1 year

-

202,450,000

– over 1 year but within 5 years

-

-

– over 5 years but within 10 years

-

-

– over 10 years

-

-

8,244,629,848

10,007,738,867

13.2 Maturity analysis of other deposits


2,248,581,705

1,750,254,292

– within 1 month

20,750,335,464

15,403,477,078

– over 1 month but within 3 months

52,637,487,529

52,797,934,646

– over 3 months but within 1 year

67,956,313,013

68,482,947,994

– over 1 year but within 5 years

50,135,244,183

47,761,942,498

– over 5 years

1,657,033,860

1,984,901,847

195,384,995,754

188,181,458,354

13.3 Demand and time deposits

a) Demand Deposits

22,867,128,694

20,583,315,650

Current accounts and other

accounts

19,010,436,204

17,639,785,113

Savings Deposits (9%)

1,764,562,085

1,748,476,420

Bills Payable

2,092,130,404

1,195,054,117

b) Time Deposits

180,762,496,907

177,605,881,571

Savings Deposits (91%)

17,841,683,309

17,679,039,355

Short Notice Deposits

26,032,760,320

27,253,775,501

Fixed Deposits

121,799,713,816

117,532,923,933

Other Deposits

15,088,339,462

15,140,142,782

Total Demand and Time

Deposits

203,629,625,601

198,189,197,221


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AB Bank Limited


31.03.2015

31.12.2014

Taka

Taka

13.4 Sector-wise break up of deposits

and other accounts

Government

2,234,210,750

897,413,533

Deposit money Banks

8,244,629,848

10,007,738,867

Autonomous & Semi-

Autonomous Bodies

4,816,166,376

4,264,224,627

Public Non-Financial

Organisation

38,104,049,629

32,677,381,012

Other Public

2,808,039,805

2,256,073,419

Foreign Currency

5,062,912,254

4,765,892,912

Private

142,359,616,940

143,320,472,851

203,629,625,602

198,189,197,221

14. Other liabilities

Accumulated provision against loans and advances (Note 14.1) 5,304,285,837

4,853,671,957

Provision for current tax (Note 14.2) 12,849,159,053

12,339,190,786

Deferred tax liabilities (Note 14.3) 133,513,077

136,219,062

Interest suspense account (Note 14.4) 3,690,843,275

2,889,551,303

Provision against other assets (Note 14.5) 640,228,969

614,228,969

Provision for outstanding debit entries in NOSTRO accounts 200,000

200,000

Accounts payable - Bangladesh Bank 446,961,198

163,907,636

Accrued expenses 278,334,317

361,528,702

Provision for off balance sheet items (Note 14.6) 1,010,000,000

1,010,000,000

Provision against investments (Note 14.7) 1,995,053,000

1,995,053,000

Inter branch adjustment 194,858

-

Others (*) 311,940,638

481,483,411

26,660,714,221

24,845,034,825

(*) Others includes provision for audit fee, excise duty, income tax and VAT deducted at source, unclaimed dividend,

accounts payable for safe keeping, earnest and security money.

14.1 Accumulated provision against loans and advances

The movement in specific provision for bad and doubtful debts

Balance at 01 January

2,891,323,484

2,244,104,159

Fully provided debts written off

during the year

(-) -

1,412,080,675

Recovery of amounts previously

written off

(+) -

-

Specific provision made for the year

(+) 50,000,000

2,059,300,000

Transferred from other assets

provisions

(+) -

-

Transfer from general provision

(+) -

-

Recoveries and provision no longer

required

(-) -

-

Net charge to Profit and Loss

Account

(+) -

-

50,000,000

647,219,325

Balance at 31 December

2,941,323,484

2,891,323,484

Provision made by ABBL, Mumbai Branch

33,360,640

32,808,560

Total provision on classified loans and advances

2,974,684,124

2,924,132,044

On unclassified loans


1,925,867,313

1,703,660,313

Recoveries and provision no longer required (-) -

-

Transfer to specific provision during the year (-)


119 | P a g e

AB Bank Limited


31.03.2015 31.12.2014

Taka Taka

General provision made for the year (+) 400,000,000

222,207,000

400,000,000

222,207,000

Balance at the year ended

2,325,867,313

1,925,867,313

Provision made by ABBL, Mumbai

Branch

3,734,400

3,672,600

Total provision on un-classified loans and advances

2,329,601,713

1,929,539,913

Total provision on loans and advances

5,304,285,837

4,853,671,957

31.03.2015

Provision for

Required

Maintained

Excess

Un-classified loans and advances

1,686,234,400

2,329,601,713

643,767,313

Classified loans and advances

2,966,560,640

2,974,684,124

9,523,484

4,652,795,040

5,304,285,837

653,290,797

14.1.1 Details of provision for loans and

advances

31.03.2015

Required

Maintained

General Provision

1,685,834,400

2,329,601,713

Standard

1,607,434,400

2,251,201,713

Special Mention Account

78,400,000

78,400,000

Specific Provision

2,966,560,640

2,974,684,124

Substandard

125,760,640

125,860,640

Doubtful

99,900,000

99,900,000

Bad/Loss

2,740,900,000

2,748,923,484

Excess provision maintained at 31 March 2015

651,490,797

14.2 Provision for current tax


12,133,437,043

9,519,523,785

Add: Provision made during the year

478,546,120

2,613,913,258

Balance at the year ended

12,611,983,163

12,133,437,043

Provision held by ABBL, Mumbai

Branch

237,175,890

205,753,743

12,849,159,054

12,339,190,786

Corporate income tax assessment of the Bank is completed up to the income year ended 31 December 2012

(Assessment Year 2013-14). Corporate income tax return for the year 2013 submitted under section 82BB

corresponding to Assessment Year 2014-15. Tax assessment for income years 2010, 2011 and 2012 are under appeal.

Tax assessments for income years 1995,1996,1997,2007 and 2009 were completed but these were referred to the

Hon'ble High Court on the application made by the Bank for some disputed points.

14.3 Deferred tax liabilities


136,219,062

109,050,939

Add/(less): Provision made during the year

(2,705,985)

27,091,990

Add/(Less): Adjustment/Rate Fluctuation during the year

-

76,133

133,513,077

136,219,062


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AB Bank Limited


31.03.2015 31.12.2014

Taka Taka

14.4 Interest suspense account


2,866,769,441

1,751,626,029

Transfer during the year

(+)

807,816,598

1,605,582,737

Recovery during the year

(-)

6,820,000

178,595,000

Waiver during the period 3,737,000 -

Write off during the year

(-)

-

311,844,325

Balance at 31 December

3,664,029,039

2,866,769,441

Mumbai Branch

26,814,235

22,781,862

3,690,843,275

2,889,551,303

14.5 Provision against other assets

Provision for

Prepaid legal expenses

67,030,000

66,030,000

Protested bills

26,065,610

26,065,610

Others

547,133,359

522,133,359

640,228,969

614,228,969

Provision against other assets was made as per BRPD Circular # 14 dated 25 June 2001 issued by Bangladesh Bank.

14.5.1 Calculation of Provision against other assets

Outstanding

amount

Base for

Provision

Rate Provisions

Requirement

Provisions

Maintained

Prepaid legal expenses 66,527,534 66,527,534

50% &

100% -

67,030,000

Protested bills 23,223,989 23,223,989 100% 23,223,989

26,065,610

Others 80,000,000 80,000,000 100% 80,000,000

547,133,359

Required provision for other assets

103,223,989

640,228,969

Total provision requirement

103,223,989

Total provision maintained

640,228,969

Excess provision maintained at 31 March 2015

537,004,979

14.6 Provision for off balance sheet

items


1,010,000,000

810,000,000


-

200,000,000

1,010,000,000

1,010,000,000

14.6.1 Particulars of required provision for Off-Balance Sheet Items

Base for Provision Rate

(%) 31.03.2015

31.12.2014

Acceptances and endorsements 26,691,068,401 1% 266,910,684

268,384,334

Letters of guarantee 14,594,679,106 1% 145,946,791

163,930,767

Irrevocable letters of credit 20,993,252,116 1% 209,932,521

302,251,327

Bills for collection 5,450,360,054 1% 54,503,601

75,372,764


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AB Bank Limited


31.03.2015 31.12.2014

Taka Taka

Others 2,772,477,349 1% 27,724,773

-

Total Off Balance Sheet Items &

required provision 70,501,837,027 705,018,370 809,939,192

Total provision maintained

1,010,000,000

1,010,000,000

Excess provision at 31 March 2015

304,981,630

200,060,808

No provision has been maintained against Off Balance Sheet items of Mumbai Branch amounting Tk.

2,329,381,613.43 as per Reserve Bank of India (RBI) guidelines.

14.7 Provision against investments


1,995,053,000

1,995,053,000


-

-

1,995,053,000

1,995,053,000

14(a) Consolidated Other liabilities

AB Bank Limited

26,660,714,221

24,845,034,825


835,971,870

814,831,811


257,290,222

58,743,830


596,343,577

656,127,920


12,327,300

12,450,906


2,687,848

2,959,224

28,365,335,038

26,390,148,516


274,026,340

327,696,455

28,091,308,697

26,062,452,061

15. Share Capital

5,324,591,520

5,324,591,520

15.1 Authorised Capital

600,000,000 ordinary shares of

Taka 10 each

6,000,000,000

6,000,000,000

15.2 Issued, Subscribed and Paid-up

Capital

10,000,000 ordinary shares of Taka

10 each issued for cash

100,000,000

100,000,000

5,000,000 ordinary shares of Taka 10

each issued for rights

50,000,000

50,000,000

517,459,152 ordinary shares of Taka 10 each issued

as bonus shares

5,174,591,520

5,174,591,520

5,324,591,520

5,324,591,520

15.3 Percentage of shareholding

As at 31 March 2015

As at 31 December 2014

No. of shares %

No. of shares

%

Sponsors and public 529,407,041 99.43

529,407,041

99.43

Government 3,052,111 0.57

3,052,111

0.57

532,459,152 100.00

532,459,152

100


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AB Bank Limited


31.03.2015 31.12.2014

Taka Taka

15.4 Classification of shareholders by holding

Holding No. of holders % of total holding

31.03.2015 31.12.2014 31.03.2015 31.12.2014

Upto 500 59,812 65,079 64.87 66.06

501 to 5,000 27,572 28,380 29.91 28.81

5,001 to 10,000 2,507 2,626 2.72 2.67

10,001 to 20,000 1,179 1,252 1.28 1.27

20,001 to 30,000 377 395 0.41 0.40

30,001 to 40,000 173 184 0.19 0.19

40,001 to 50,000 103 110 0.11 0.11

50,001 to 100,000 205 218 0.22 0.22

100,001 to 1,000,000 216 224 0.23 0.23

Over 1,000,000 52 52 0.06 0.05

92,196 98,520 100 100

15.5 Names of the Directors and their shareholding as at 31 December 2014

Name of the Director Status No of Shareholding

As at 31 Dec 2014

As at 31 Dec 2014

Mr. M. Wahidul Haque Chairman 115,196

115,196

Mr. Salim Ahmed Vice-Chairman 12,576,868

12,576,868

Mr. Feroz Ahmed Director 11,047,823

11,047,823

Mr. M. A. Awal Director 3,336

3,336

Mr. Shishir Ranjan Bose FCA Independent Director -

-

Mr. Faheemul Huq, Barrister - at-Law Director 456,851

456,851

Mr. Syed Afzal Hasan Uddin,

Barrister - at -Law Director 2,368

2,368

Mr. Gholam Sarwer Director 12,768

12,768

Mr. Md. Mesbahul Hoque Director 2,368

2,368

Mr. B. B. Saha Roy Director 2,065

2,065

Dr. M. Imtiaz Hossain Independent Director -

-

Mr. Shamim Ahmed Chaudhury President & Managing Director -

-

15.6 Capital to Risk Weighted Assets Ratio (CRAR) - As per BASEL III

Consolidated – CRAR Ratio

In terms of section 13(2) of the Bank Company (Amendment upto 2013) Act, 1991 and Bangladesh Bank BRPD

Circular no. 18 dated 21 December 2014, required capital of the Bank on Consolidated basis at the close of business on

31 March 2015 is Taka 22,599,695,166 as against available Total Common Equity Tier-I Capital of Taka

17,266,932,170 and Total Tier-2 Capital Available of Taka 5,669,511,586 that is, a total of Taka 22,936,443,756

thereby showing surplus capital/equity of Taka 336,748,590 at that date. Details are shown below:


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AB Bank Limited


31.12.2014

31.12.2014

Taka

Taka

Basel-III Basel-III

Core capital (Tier I)

Fully Paid-up Capital/Capital Deposited with BB

5,324,591,520

5,324,591,520

Statutory Reserve

5,585,777,244

5,582,440,229

Non-repayable share premium account

-

-

General Reserve

118,045,654

118,175,719

Retained earnings

6,626,470,121

6,034,620,214

Minority interest in Subsidiaries

(7,574,025)

(9,444,084)

Non-Cumulative irredeemable Preferences shares

-

-

Dividend Equalization Account

-

-

17,647,310,514

17,050,383,599

Regulatory Adjustment:

Goodwill and all other Intangible Assets

367,345,540

-

Shortfall in provisions required against Non-Performing Loans (NPLs) -

-

Shortfall in provisions required against investment in shares - -

Remaining deficit on account of revaluation of investments in securities

after netting off from any other surplus on the securities. - -

Deferred Tax Assets (DTA) - -

Defined benefit pension fund assets - -

Gain on sale related to securitization transactions - -

Investment in own CET-1 Instruments/Shares - -

Reciprocal crossholdings in the CET-1 capital of Banking, Financial and

Insurance Entities 3,072,804 -

Any investment exceeding the approved limit under section 26(2) of

Bank Company Act, 1991 - -

Investments in subsidiaries which are not consolidated- 50% of

Investment -

-

Other if any

9,960,000

9,960,000

380,378,344

9,960,000

Total Common Equity Tier-I Capital

17,266,932,170

17,040,423,599

Additional Tier-I Capital

Tier-2 Capital (Gone concern Capital)

General Provision (Eligible for inclusion in Tier 2 will be limited to a

maximum 1.25 percentage points of credit risk-weighted assets

calculated under the standardized approach)

2,496,200,000

3,037,313,116

All other preference shares

Subordinated debt/Instruments issued by the banks that meet the

qualifying criteria for Tier 2 capital (as per Annex 4 of Basel III

Guidelines)

2,500,000,000

Minority Interest

HO borrowings in foreign currency received that meet the criteria of Tier

2 debt capital

Revaluation Reserves as on 31 March, 2015 (50% of Fixed Assets and

Securities & 10% of Equities) 854,089,482

Other (if any item approved by Bangladesh Bank)

Sub-Total 5,850,289,482 6,386,951,210


124 | P a g e

AB Bank Limited


31.12.2014 31.12.2014

Taka Taka

Regulatory Adjustments:

Revaluation Reserves for Fixed Assets, Securities & Equity Securities 170,817,896

-

Investment in own T-2 Instruments/Shares - -

Reciprocal crossholdings in the T-2 capital of Banking, Financial and

Insurance Entities - -


Bank Company Act, 1991. (50% of Investment) - -


Investment 9,960,000 9,960,000

Other (if any ) - -

Total Tier-2 Capital Available 5,840,329,482 6,376,991,210

Total admissible Tier 2 Capital 5,669,511,586 6,376,991,210

Total Eligible Capital

22,936,443,756

23,417,414,809

Total assets including off-Balance Sheet items

338,626,476,049

333,883,042,242

Total risk-weighted assets (RWA)

225,996,951,661

223,746,284,916

B. Total required capital (10% of Total RWA)

22,599,695,166

22,374,628,492

Capital Surplus / (Shortfall) [A-B]

336,748,590

1,042,786,317

Capital Adequacy Ratio

10.15%

10.47%

Solo - CRAR

In terms of section 13(2) of the Bank Company (Amendment upto 2013) Act, 1991 and Bangladesh Bank BRPD

Circular no. 18 dated 21 December 2014, required capital of the Bank on Solo basis at the close of business on 31

March 2015 is Taka 22,327,294,372 as against available Common Equity Tier-I capital of Taka 16,717,309,401 and

Total Tier-2 Capital Available capital of Taka 5,625,145,972 that is, a total of Taka 22,342,455,373 thereby showing

surplus capital/equity of Taka 15,161,001 at that date. Details are shown below:

Core capital (Tier I)

Fully Paid-up Capital/Capital Deposited with BB

5,324,591,520

5,324,591,520

Statutory Reserve

5,585,777,244

5,582,440,229

Non-repayable share premium account

-

-

General Reserve

42,199,200

42,199,200

Retained earnings

6,135,159,781

5,611,822,670

Minority interest in Subsidiaries

-

-

Non-Cumulative irredeemable Preferences shares

-

-

Dividend Equalization Account

-

-

17,087,727,744

16,561,053,618


125 | P a g e

AB Bank Limited


31.12.2014 31.12.2014

Taka Taka

Regulatory Adjustment:

Goodwill and all other Intangible Assets

367,345,540

-

Shortfall in provisions required against Non-Performing Loans

(NPLs)

-

-

Shortfall in provisions required against investment in shares

-

-

Remaining deficit on account of revaluation of investments in

securities after netting off from any other surplus on the

securities.

-

-

-

-

Deferred Tax Assets (DTA)

-

-

Defined benefit pension fund assets - -

Gain on sale related to securitization transactions - -

Investment in own CET-1 Instruments/Shares - -

Reciprocal crossholdings in the CET-1 capital of Banking,

Financial and Insurance Entities 3,072,804 -

Any investment exceeding the approved limit under section 26(2)

of Bank Company Act, 1991. - -


Investment - -

Other if any

-

-

370,418,344

-

Total Common Equity Tier-I Capital

16,717,309,401

16,561,053,618

Additional Tier-I Capital

Tier-2 Capital (Gone concern Capital)

General Provision (Eligible for inclusion in Tier 2 will be limited to a

maximum 1.25 percentage points of credit risk-weighted assets

calculated under the standardized approach)

2,482,494,523

2,939,539,913

All other preference shares - -

Subordinated debt/Instruments issued by the banks that meet the

qualifying criteria for Tier 2 capital (as per Annex 4 of Basel III

Guidelines)

2,500,000,000

2,500,000,000

Minority Interest -

136,246,235

HO borrowings in foreign currency received that meet the criteria of Tier

2 debt capital -

-

Revaluation Reserves as on 31 December, 2015 (50% of Fixed Assets

and Securities & 10% of Equities) 803,314,311

798,029,977

Other (if any item approved by Bangladesh Bank) -

-

Sub-Total 5,785,808,834

6,237,569,890

Regulatory Adjustments:

Revaluation Reserves for Fixed Assets, Securities & Equity Securities 160,662,862 -

Investment in own T-2 Instruments/Shares - -

Reciprocal crossholdings in the T-2 capital of Banking, Financial and

Insurance Entities - -


Bank Company Act, 1991. (50% of Investment) - -


126 | P a g e

AB Bank Limited


31.12.2014 31.12.2014

Taka Taka


Investment - -

Other (if any ) - -

Total Tier-2 Capital Available 5,625,145,972

6,237,569,890

Total Eligible Capital

22,342,455,373

22,798,623,509

Total assets including off-Balance Sheet items 336,190,995,609

331,736,661,203

Total risk-weighted assets (RWA) 223,272,943,722

220,862,243,100

B. Total required capital (10% of Total RWA) 22,327,294,372

22,086,224,310

Capital Surplus / (Shortfall) [A-B] 15,161,001

712,399,199

Capital to Risk Weighted Assets Ratio (CRAR) 10.01%

10.32%

Detailed Disclosure under Pillar III of Basel II is presented in (Annex- E).

16. Statutory reserve

In Bangladesh

Opening balance

5,384,130,846

5,384,130,846

Add: Addition during the year

-

-

5,384,130,846

5,384,130,846

Outside Bangladesh - ABBL, Mumbai Branch

Opening balance

198,309,382

180,668,545


22,074,774

Add: Transferred from Investment fluctuation reserve

-

-

Add/(Less): Adjustment for Foreign Exchange Rate Fluctuation

3,337,015

(4,433,937)

201,646,397

198,309,382

5,585,777,244

5,582,440,229

17. Other reserve

General reserve

(Note 17.1) 42,199,200

42,199,200

Assets revaluation reserve

(Note 17.2) 1,323,567,486

1,323,567,486

Investment revaluation reserve

(Note 17.3) 283,061,136

272,492,469

1,648,827,822

1,638,259,155

17.1 General reserve

Opening balance

42,199,200

42,199,200


-

-

42,199,200

42,199,200


127 | P a g e

AB Bank Limited


31.12.2014 31.12.2014

Taka Taka

17.2 Assets revaluation reserve

Opening balance

1,323,567,486

1,326,815,807


-

-

Less: Adjustment during the year

3,248,321

1,323,567,486

1,323,567,486

17.3 Investment revaluation reserve (Treasury Bills & Treasury Bonds)

In Bangladesh

Revaluation Reserve for:

Held to Maturity (HTM)

Note (17.3.1) 2,851,578

3,946,258

Held for Trading (HFT)

Note (17.3.2) 280,209,558

268,546,211

283,061,136

272,492,469

Outside Bangladesh

ABBL, Mumbai Branch

-

-

283,061,136

272,492,469

17.3.1 Revaluation Reserve for Held to Maturity (HTM)

Opening balance

3,946,258

2,589,612


-

1,356,646

3,946,258

3,946,258


1,094,680

-

2,851,578

3,946,258

17.3.2 Revaluation Reserve for Held for Trading (HFT)

Opening balance

268,546,211

41,024,648


11,663,347

227,521,563

280,209,558

268,546,211


-

-

280,209,558

268,546,211

Revaluation reserve of HTM and HFT securities transferred to Revaluation Reserve Account as per Bangladesh Bank

DOS Circular No. 05 dated 26 May 2008 of which 50% of revaluation reserve is treated as Supplementary Capital.

17(a) Consolidated Other reserve

AB Bank Limited

1,648,827,822

1,638,259,155


-

-


75,461,870

77,257,827


101,934,926

101,934,926


-

-


-

-

1,826,224,618

1,817,451,907


128 | P a g e

AB Bank Limited


31.12.2014 31.12.2014

Taka Taka

18. Retained earnings

Opening balance

5,611,822,670

4,986,366,647

Add: Post-tax profit for the period

516,369,850

1,260,033,729

Less: Transfer to statutory reserve

-

22,074,774

Cash dividend

-

248,812,688

Bonus shares issued

-

348,337,760

6,128,192,519

5,627,175,154

Add/(Less): Retained earnings adjustment

(26,450)

-

Add: Foreign Exchange Translation gain/(loss) 6,993,712

(15,352,484)

6,135,159,781

5,611,822,670

18(a) Consolidated Retained earnings

AB Bank Limited

6,135,159,781

5,611,822,670


466,103,677

443,830,684


35,931,511

93,455,537


141,436,459

142,031,030


(360,008,572)

(378,712,146)


(39,363,966)

(39,518,318)

6,379,258,890

5,872,909,457


(211,339,022)

(123,968,489)

Minority Interest

(35,872,209)

(37,742,268)

6,626,470,121

6,034,620,214

18(b) Minority Interest


7,416

7,193


419,417

419,938

Cashlink Bangladesh Limited

(8,000,857)

(9,871,215)

(7,574,025)

(9,444,084)

19. Contingent liabilities

72,831,218,640

77,068,505,153

19.1 Letters of guarantee

Money for which the Bank is contingently liable in respect of

guarantees issued favoring:

Directors

-

-

Government

-

-

Banks and other financial institutions

227,000,000

258,800,000

Others

14,367,679,106

13,586,532,265

14,594,679,106

13,845,332,265


129 | P a g e

AB Bank Limited


Jan'15- Mar'15

Jan'14- Mar'14

Taka

Taka

20. Profit and loss account

Income:

Interest, discount and

similar income

5,888,444,787

5,582,757,186

Dividend income

6,208,399

15,476,688

Fee, commission and

brokerage

444,021,221

552,163,281

Gains less losses arising

from investment securities

188,524

26,330,723


from dealing in foreign

currencies

275,257,337

341,526,160


30,551,557

28,005,346


from dealing securities

104,596,418

54,304,611

Income from non-banking

assets

-

-

Profit less losses on interest

rate changes

-

-

6,749,268,242

6,600,563,995

Expenses:

Interest, fee and commission

4,052,122,486

3,865,780,292

Administrative expenses

797,669,408

756,809,766


316,726,152

263,194,100

Depreciation and

amortization on banking

assets

86,580,347

80,343,358

Losses on loans and

advances

-

-

5,253,098,393

4,966,127,516

1,496,169,850

1,634,436,478

21. Interest income/profit on investments

-

-

Interest on loans and advances:

Loans and advances

5,063,596,392

4,685,702,461

Bills purchased and

discounted

85,850,343

165,779,375

5,149,446,735

4,851,481,836

Interest on:

Calls and placements

107,779,583

144,743,815

Balance with foreign banks

724,915

1,605,173

Reverse Repo

796,381

-

Balance with Bangladesh

Bank

145,308

124,797

109,446,187

146,473,785

5,258,892,923

4,997,955,622


130 | P a g e

AB Bank Limited


Jan'15- Mar'15

Jan'14- Mar'14

Profit and Loss Statement

Taka

Taka

21(a). Consolidated Interest income/profit on investments

AB Bank Limited

5,258,892,923

4,997,955,622


14,755,584

21,620,369


107,686,431

130,898,744


21,180,485

23,050,846


-

-


-

-

5,402,515,422

5,173,525,580

Less: Intercompany Transactions

53,748,934

64,484,001

5,348,766,488

5,109,041,579

22. Interest/profit paid on deposits, borrowings, etc.

Interest on deposits:

Fixed deposits

2,819,865,924

2,667,096,280

Savings deposits

165,470,063

187,361,458

Special notice deposits

355,493,372

455,077,235

Other deposits

415,350,039

394,727,348

3,756,179,399

3,704,262,321

Interest on borrowings:

Local banks, financial institutions including Bangladesh Bank 216,915,689

161,517,971

Subordinated Bond

79,027,397

-

4,052,122,486

3,865,780,292

22(a). Consolidated Interest/profit paid on deposits, borrowings, etc.

AB Bank Limited

4,052,122,486

3,865,780,292


55,901,307

73,766,013


253,815

845,119


16,601,234

15,941,902


-

-


-

-

4,124,878,842

3,956,333,326


54,470,821

65,205,888

(2,804,543) 4,070,408,021

3,891,127,438

23. Investment income

Capital gain on sale of shares

188,524

26,330,723

Interest on treasury bills

75,793,724

99,455,664

Dividend on shares

6,208,399

15,476,688

Interest on debentures

641,671

2,887,500

Interest on treasury bonds

547,654,567

476,466,598

Gain/(Loss) on treasury bills and treasury bonds 104,596,418

54,304,611

Interest on other bonds & others

5,461,902

5,991,803

740,545,205

680,913,585


131 | P a g e

AB Bank Limited


Jan'15- Mar'15 Jan'14- Mar'14

Taka Taka

23(a). Consolidated Investment income

AB Bank Limited

740,545,205

680,913,585


502,101

11,085,373


-

-


1,191,878

2,130,282


-

-


-

-

742,239,184

694,129,240

24. Commission, exchange and brokerage

Other fees, commission and service charges 230,439,115

275,580,215

Commission on letters of credit

173,695,352

240,567,005

Commission on letters of guarantee

39,886,755

36,016,062

Exchange gains less losses arising from dealings in foreign currencies 275,257,337

341,526,160

719,278,558

893,689,441

24(a). Consolidated Commission, exchange and brokerage

AB Bank Limited

719,278,558

893,689,441


9,243,629

19,437,470


11,846,180

10,848,876


7,274,343

15,528,803


18,918,855

5,094,832


766,978

877,868

767,328,544

945,477,289


780,922

10,485,442

766,547,622

934,991,847

25. Other income

Locker rent, insurance claim and others

1,187,155

717,498


148,000

-

Recoveries on telex, telephone, fax, etc.

20,561,698

20,514,988

Recoveries on courier, postage, stamp, etc.

6,645,176

6,687,141

Gain on sale of Bank property

-

-

Non-operating income (*)

2,009,527

85,719

30,551,557

28,005,346

(*) Non-operating income includes sale of scrap items.

25(a). Consolidated other income

AB Bank Limited

30,551,557

28,005,346


2,102,299

2,189,553


11,203,557

13,121,072


162,038

550,468


132 | P a g e

AB Bank Limited



Taka Taka


-

-


-

-

44,019,451

43,866,439


2,101,017

2,101,017

41,918,434

41,765,422

26. Salary and allowances

Basic salary, provident fund contribution and all other allowances 535,700,623

519,894,204

Festival and incentive bonus

291,662

1,638

535,992,285

519,895,842

26(a). Consolidated salary and allowances

AB Bank Limited

535,992,285

519,895,842


3,341,176

3,297,842


5,909,118

5,608,476


5,690,724

5,226,567


50,625

42,954


914,392

1,072,124

551,898,320

535,143,806

27. Rent, taxes, insurance, electricity, etc.

Rent, rates and taxes

81,119,246

72,523,311

Electricity, gas, water, etc.

35,623,155

15,565,603

Insurance

16,169,242

29,396,512

132,911,643

117,485,426

27(a). Consolidated Rent, taxes, insurance, electricity, etc.

AB Bank Limited

132,911,643

117,485,426


467,320

1,006,731


1,678,923

1,638,976


1,879,038

1,900,692


-

-


553,109

593,937

137,490,033

122,625,762


1,379,130

1,379,130

136,110,903

121,246,632

28. Legal expenses

Legal expenses

2,848,827

1,529,214


133 | P a g e

AB Bank Limited



Taka Taka

28(a). Consolidated Legal expenses

AB Bank Limited

2,848,827

1,529,214


-

93,750


-

-


-

-


-

-


5,893

-

2,854,720

1,622,964

29. Postage, stamp, telecommunication, etc.

Telex, fax, internet, wireless link, SWIFT, etc. 23,868,900

25,687,829

Telephone

2,918,725

3,146,246

Postage, stamp and shipping

7,486,583

7,871,315

34,274,209

36,705,390

29(a). Consolidated Postage, stamp, telecommunication, etc.

AB Bank Limited

34,274,209

36,705,390


173,674

162,052


1,068,225

839,945


395,397

400,476


4,606

59,746


87,078

93,906

36,003,189

38,261,515


-

3,891,132

36,003,189

34,370,383

30. Stationery, printing, advertisements, etc.

Printing and stationery

27,182,082

27,056,271

Publicity, advertisement, etc.

8,354,120

9,209,098

35,536,201

36,265,369

30(a). Consolidated Stationery, printing, advertisements, etc.

AB Bank Limited

35,536,201

36,265,369


23,403

102,955


-

150,221


174,853

310,370


-

1,068


-

-

35,734,457

36,829,983


134 | P a g e

AB Bank Limited



Taka Taka

31. Directors' fees

Directors' fees

312,800

523,250

Meeting expenses

1,884,935

1,006,520

2,197,735

1,529,770

Directors' fees includes fees for attending the meeting of the Board, Executive Committee, Audit Committee and

Shariah Council. Each director was remunerated @ Tk.5,000 per meeting.

31(a). Consolidated Directors' fees

AB Bank Limited

2,197,735

1,529,770


34,500

34,500


-

-


-

46,000


70,000

30,000


-

-

2,302,235

1,640,270

32. Auditors' fees

Statutory

263,935

284,323

Others

2,106,650

160,127

2,370,585

444,451

32(a). Consolidated Auditors' fees

AB Bank Limited

2,370,585

444,451


-

-


-

-


-

-


-

-


53,041

58,146

2,423,626

502,596

33. Depreciation and repairs of Bank's assets

Depreciation :


37,052,488

42,124,043


3,106,608

3,128,200

Office appliances

571,348

610,642

Building

4,882,618

4,507,335

Motor vehicles

14,462,471

13,092,150

60,075,532

63,462,370


135 | P a g e

AB Bank Limited


Jan'15- Mar'15

Jan'14- Mar'14

Taka

Taka

Repairs:

Motor vehicles

6,668,567

4,973,831


17,793,571

16,599,836

Office premises and others

22,646,036

18,486,343


506,898

559,220

Office appliances

924,823

1,091,514

48,539,895

41,710,745

108,615,428

105,173,114

Amortization of Intangible Assets

26,502,844

16,880,988

135,118,271

122,054,103

33(a). Consolidated Depreciation and repairs of Bank's assets

AB Bank Limited

135,118,271

122,054,103


4,340,328

4,077,315


84,029

83,174


1,497,527

1,520,665


18,171

7,329,642


648,479

854,151

141,706,804

135,919,050

34. Other expenses

Contractual service

102,569,210

87,671,214

Amortization of deferred revenue expenses

12,162,826

19,572,253

Petrol, oil and lubricant

15,283,051

14,975,566

Software expenses

37,592,745

37,670,482

Entertainment

11,577,170

12,227,893

Travelling

8,080,093

11,974,087

Subscription, membership and sponsorship

41,257,577

17,205,032

Training, seminar and workshop

18,771,462

3,976,577

Local conveyance

2,567,192

2,351,682

Professional charges

6,206,656

70,700

Books, newspapers and periodicals

364,887

346,483

Branch opening expenses

58,760

-

Bank Charges

2,804,543

10,182,723

Sundry expenses (*)

57,429,980

44,969,410

316,726,152

263,194,100

(*) Sundry expenses includes business promotion, rebate to foreign correspondents, donation & dress employees etc.

34(a). Consolidated other expenses

AB Bank Limited

316,726,152

263,194,100


1,435,850

3,087,663


655,289

979,636


1,950,644

2,939,831


15,123

46,777


136 | P a g e

AB Bank Limited



Taka Taka


292,742

231,126

321,075,800

270,479,133


780,922

6,594,310

320,294,878

263,884,823

35. Provision against loans and advances

On un-classified loans

400,000,000

234,707,000

On classified loans

50,000,000

195,293,065

450,000,000

430,000,065

35(a). Consolidated provision against loans and advances

AB Bank Limited

450,000,000

430,000,065


-

-


-

-


-

-


-

-


-

-

450,000,000

430,000,065

36. Provisions for diminution in value of investments

In quoted shares

-

-

36(a). Consolidated provisions for diminution in value of investments

AB Bank Limited

-

-


11,362,570

22,279,070


-

-


344,485

623,795


-

-


-

-

11,707,055

22,902,865

37. Other provision

Provision for off balance sheet items

-

40,000,000

Provision for Other assets

26,000,000

80,842,985

26,000,000

120,842,985

Provision for other assets included prepaid legal expenses,protested bills and others has been made as per Bangladesh

Bank BRPD Circular # 14 dated 25 June 2001.


137 | P a g e

AB Bank Limited



Taka Taka

37(a). Consolidated other provisions

AB Bank Limited

26,000,000

120,842,985


-

-


-

-


-

-


-

-


-

-

26,000,000

120,842,985

38. Earnings Per Share (EPS)

Profit after taxation

516,369,850

356,292,858

Number of ordinary shares outstanding

532,459,152

532,459,152

Earnings Per Share

0.97

0.67

38.(a) Consolidated Earnings Per Share

Net Profit attributable to the shareholders of parent company 576,601,707

414,471,969

Number of ordinary shares outstanding

532,459,152

532,459,152

Earnings Per Share

1.08

0.78

Earnings Per Share (EPS) has been computed by dividing the basic earnings by the number of ordinary shares

outstanding as of 31 March 2015 in terms of Bangladesh Accounting Standard (BAS)-33.

39. Receipts from other operating activities

Interest on treasury bills, bonds, debenture and others 734,336,806

665,436,898

Exchange earnings

275,257,337

341,526,160

Recoveries on telex, telephone, fax, etc.

20,561,698

20,514,988

Recoveries on courier, postage, stamp, etc.

6,645,176

6,687,141

Gain on sale of Bank properties

-

-

Non-operating income

2,009,527

85,719

Others

1,187,155

717,498

1,039,997,699

1,034,968,404

40. Payments for other operating activities


132,911,643

117,485,426


34,274,209

36,705,390

Repairs of Bank's assets

48,537,923

41,710,745

Legal expenses

2,848,827

1,529,214

Auditor's fees

2,370,585

444,451

Directors' fees

2,197,735

1,529,770

Other Expenses

316,726,152

230,663,092

539,867,074

430,068,087


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AB Bank Limited


41. Conversion Rates

Assets and liabilities as at 31 March 2015 denominated in foreign currencies have been converted to local currency

Bangladesh Taka (BDT) at the following exchange rates:

Currency

Abbreviation Unit

Equivalent to BDT

British Pound Sterling

GBP 1.00

115.1051

European Currency

EURO 1.00

84.2107

Indian Rupee

INR 1.00

1.2448

Japanese Yen

JPY 1.00

0.6476

US Dollar

USD 1.00

77.8000

Honkong Dollar

HKD 1.00

10.0300

U.A.E Dirham

DIRHAM 1.00

21.1833


139 | P a g e

42. Highlights of the overall activities of the Bank

Sl # Particulars 31.03.15 31.12.14

Taka Taka

1 Paid-up capital 5,324,591,520 5,324,591,520

2 Total capital 22,342,455,373 22,798,623,509

3 Capital surplus 15,161,001 712,399,199

4 Total assets 263,359,776,969 254,668,156,050

5 Total deposits 203,629,625,601 198,189,197,221

6 Total loans and advances 183,850,663,718 177,570,797,390

7 Total contingent liabilities and commitments 72,831,218,640 77,068,505,153

8 Credit-deposit ratio 90.29 89.60

9 Ratio of classified loans against total loans and advances 4.10% 3.86%

10 Profit after tax and provision 516,369,850 1,260,033,729

11 Loans Classified during the Year 687,990,524 3,841,644,357

12 Provision kept against classified loans 2,974,684,124 2,924,132,044

13 Provision surplus/ (deficit) 651,490,797 278,608,797

14 Cost of fund 9.89% 10.63%

15 Interest earning assets 222,565,522,763 215,691,391,977

16 Non-interest earning assets 40,794,254,206 38,976,764,073

17 Return on investments (ROI) 9.46% 9.68%

18 Return on assets (ROA) 0.80% 0.54%

19 Income from investments 740,545,205 2,878,403,934

20 Earnings per share 0.97 2.37

21 Net Income per share 0.97 2.37

22 Price-earnings ratio (Times) 24.23 12.64

Shamim Ahmed Chaudhury

President & Managing Director

Feroz Ahmed

Director


Director

M. Wahidul Haque

Chairman

Dhaka,

15 May 2015


140 | P a g e

Annexure-A

AB Bank Limited

Currency wise Balances

As at 31 March 2015

Name of the bank Location Name of

currency

As at 31 March 2015

Amounts in

foreign

currency

Conversion

rate

Equivalent

amounts in

Taka

The Bank of Tokyo Mitsubishi Ltd. Japan JPY 1,632,966 0.6476 1,057,508.78

HSBC AUST Australia AUD 27,039.85 59.4625 1,607,857.08

JP Morgan Chase Bank USA USD 2,734,148.76 77.8000 212,716,773.53

Sonali Bank (Kolkata) India ACU 44,172.10 77.8000 3,436,589.38

Sonali Bank (UK) UK,London USD 1,012,021.95 77.8000 78,735,307.71

Sonali Bank (UK) UK,London GBP 109,337.85 115.1051 12,585,344.16

Myanmar Economic Bank Myanmar ACU 410.00 77.8000 31,898.00

Citibank NA USA USD 769,930.06 77.8000 59,900,558.67

Hatton National Bank Ltd. Srilanka ACU 42,732.75 77.8000 3,324,607.95

Commerz Bank AG Germany USD 322,464.70 77.8000 25,087,753.66

NIB Bank Ltd. Pakistan ACU 110,414.73 77.8000 8,590,265.99

Mashreq Bank Psc USA USD 820,717.39 77.8000 63,851,812.94

Nepal Bangladesh Bank Ltd. Nepal ACU 25,217.25 77.8000 1,961,902.05

Bank of Bhutan Bhutan ACU 68,870.67 77.8000 5,358,138.13

HABIB Zuric Germany EUR 49,750.00 84.2107 4,189,482.33

Wachovia Bank/Wells Fargo N.A USA USD 59,309.69 77.8000 4,614,293.88

Habib America Bank USA USD 833,983.87 77.8000 64,883,945.09

Commerz Bank AG Germany EURO 1,350,554.34 84.2107 113,731,126.36

Hypovereins Bank Germany EUR 68,381.32 84.2107 5,758,438.82

National Commercial Bank Ltd KSA USD 383,156.10 77.8000 29,809,544.58

Habib Metro Bank Pakistan ACU 267,302.59 77.8000 20,796,141.50

Habib Bank AG Dubai AED 75,379.82 21.1833 1,596,793.34

COMMERZ BK CAD Germany CAD 75,033.32 61.2695 4,597,254.00

COMMERZ BK CHF Germany CHF 47,699.80 80.4217 3,836,099.01

HSBC-OBU USA USD 72,568.98 77.8000 5,645,866.64

JPMC NY-OBU USA USD 768,079.98 77.8000 59,756,622.44

HSBC, New York USA USD 587,284.70 77.8000 45,690,749.66

Standard Chartered Bank New York USD 945,727.38 77.8000 73,577,590.16

Standard Chartered Bank Singapore SGD 54,532.09 56.5530 3,083,953.29

Standard Chartered Bank UK, London GBP 52,434.31 115.1051 6,035,456.50

Reserve Bank of India Mumbai INR 13,787,563.57 1.2448 17,162,759.13

HDFC Bank Mumbai INR 60,644,661.10 1.2448 75,490,474.14

Kotak Mahindra Bank India INR 19,321,030.02 1.2448 24,050,818.17

JP Morgan Chase - USD New York USD 95,398.57 77.8000 7,422,008.75

Commerz Bank - EURO Frankfurt EURO 68,523.79 84.2107 5,770,436.73

Commerz Bank ACU Frankfurt ACU 26,607.44 77.8000 2,070,059.17

HSBC - USD New York USD 606,344.02 77.8000 47,173,564.76

HABIB AMERICAN BANK LTD New York USD 4,942.77 77.8000 384,547.51

HSBC - ACU - USD New York USD 11,836,065.39 77.8000 920,845,887.35

2,026,220,231


141 | P a g e

Annexure-B

AB Bank Limited

Investment in Shares as at 31 March 2015

Amount in Taka

Particulars Number of

shares

Market

price per

share

Total market

price

Cost per

Share Total cost

Shares (quoted)

Dhaka Bank Ltd. 435,000 17.40 7,569,000 19.81 8,616,210

NBL 1,100,000 10.10 11,110,000 42.28 46,512,850

Uttara Bank Ltd. 47,365 22.90 1,084,659 25.15 1,191,030

AB Bank 1st MF 35,173,750 5.50 193,455,625 8.53 300,000,000

LR Global Mutual Fund 10,369,343 4.00 41,477,372 9.64 100,000,000

Popular Life 1st MF 2,222,852 4.40 9,780,549 6.77 15,041,000

Pragati Insurance 1,054,416 35.50 37,431,768 119.10 125,579,297

Desco 5,850,098 65.90 385,521,458 95.18 556,787,791

Khulna Power 5,174,884 64.70 334,814,995 97.34 503,738,804

Meghna Petrolium 22,000 204.20 4,492,400 231.78 5,099,138

Padma Oil 305,000 248.50 75,792,500 306.07 93,352,149

Powergrid Com. 3,366,500 34.00 114,461,000 81.61 274,723,472

Beacon Pharma 6,642,500 14.60 96,980,500 73.96 491,289,694

Beximco Pharma 6,186,920 56.30 348,323,596 66.53 411,596,943

Orion Pharma 1,200,000 42.00 50,400,000 83.33 100,000,001

Fuwang Foods Ltd. 497,310 20.60 10,244,586 31.50 15,666,128

Lafarge Surma Cement 125,000 114.50 14,312,500 134.50 16,812,600

BSRM Steel 3,177,000 72.30 229,697,100 108.63 345,132,565

GPH Ispat 694,050 43.00 29,844,150 57.99 40,245,292

Union Capital Ltd. 1,880,340 16.20 30,461,508 79.26 149,037,204

Beximco 3,057,950 32.30 98,771,785 110.24 337,094,014

SP Ceramics 1,143,962 11.60 13,269,959 58.13 66,501,146

Argon Denims Ltd. 1,200,000 31.80 38,160,000 56.71 68,052,980

2,177,457,010

4,072,070,308

Shares/Bond (unquoted)

Particulars Number of

shares Cost per Share

Book

Value/Cost

CDBL 5,000,000 2.00 10,000,000

CDBL (Placement) 711,804 8.00 5,694,430

Fiber @ home Ltd. 500,000 100.00 50,000,000

IIDFCL 105,765 100.00 10,576,495

Amana Bank Limited, Srilanka 180,562,010 3.42 616,735,920

Bangladesh Fund 2,000,000 100.00 200,000,000

Stock Market Stablization Fund 500,000 10.00 5,000,000

898,006,845


142 | P a g e

Annexure-C

AB Bank Limited

Schedule of Fixed Assets

As at 31 March 2015

(Amount in Taka)

Particulars Land and

Building

Furniture

and

Fixtures

Office

Appliances Electrical

Appliances Motor

Vehicles Intangible

Assets

Total

Cost/ Revaluation


3,341,682,083

218,512,340

62,061,284

1,443,497,993

567,752,028

571,032,451

6,204,538,180

Addition during the period

-

2,832,245

181,539

18,114,899

9,600,000

4,661,279

35,389,962

Less: Disposal/Adjustment during the period

-

988,526

659,323

8,724,574

-

28,709,853

39,082,276

Adjustment for FX Rate Fluctuation

-

62,435

139,747

308,378

41,526

738,743

1,290,829

At 31 March 2015

3,341,682,083

220,418,494

61,723,247

1,453,196,696

577,393,554

547,722,620

6,202,136,695

Accumulated Depreciation


92,723,741

103,655,201

50,952,269

970,866,615

412,986,916

168,358,909

1,799,543,651

Addition during the period

4,882,618

3,106,608

571,348

37,052,487

14,462,472

26,502,843

86,578,376

Less: Disposal/Adjustment during the period

-

875,863

629,149

7,940,204

-

28,709,853

38,155,069

Adjustment for FX Rate Fluctuation

32,206

132,991

183,987

29,509

538,356

917,049

At 31 March 2015

97,606,359

105,918,152

51,027,459

1,000,162,885

427,478,897

166,690,255

1,848,884,007

Net Book Value

At 31 March 2015

3,244,075,723

114,500,343

10,695,788

453,033,811

149,914,657

381,032,366

4,353,252,689

At 31 December 2014

3,248,958,342

114,857,140

11,109,015

472,631,377

154,765,112

402,673,543

4,404,994,528


143 | P a g e

Annexure-D

AB Bank Limited

Borrowings from other banks, financial institutions and agents-outside Bangladesh

Name of the bank Location Currency

At 31 March 2015 At 31 December 2014

Amounts in

foreign

currency

Conversion

rate

Equivalent

amount in

Taka

Amounts in

foreign

currency

Conversion

rate

Equivalent

amount in

Taka

Sonali Bank UK UK USD 7,648,843 77.80 595,080,008 7,914,023 77.95 616,893,327

ICICI BK LTD,HK HK USD 12,000,000 77.80 933,600,000 - - -

International Finance Corporation USA USD 35,054,304 77.80 2,727,224,885 35,057,599 77.95 2,732,718,832

Banca UBAE Italy USD 4,064,167 77.80 316,192,167 4,026,667 77.95 313,876,251

4,572,097,060

3,663,488,409

(1,184,699,957)


144 | P a g e

Annexure-E

AB Bank Limited

Details of Risk Weighted Assets under Basel III at 31 March 2015

Amount in Taka

Risk Weighted Assets (RWA) for

31.03.2015 31.12.2014

Exposure Risk Weighted

Asset Exposure

Risk Weighted

Asset

A. Credit Risk

On- Balance sheet (as shown below) 246,122,740,361 168,703,172,307 237,697,458,701 165,950,350,974

Off-Balance sheet (as shown below) 38,716,791,387 29,896,389,571 38,557,345,629 30,919,980,327

B. Market Risk

7,252,810,058

7,374,692,523

C. Operational Risk

17,420,571,786

16,617,219,276

Total RWA (A+B+C) 284,839,531,748 223,272,943,722 276,254,804,330 220,862,243,100

Credit Risk - On Balance Sheet

Sl. Exposure Type

31.03.2015 31.12.2014


Asset Exposure

Risk Weighted

Asset

a) Cash and Cash Equivalents 1,390,543,154 - 1,141,174,225 -

b) Claims on Bangladesh Government and Bangladesh Bank 29,211,009,676 - 28,640,030,266 -

c) Claims on other Sovereigns & Central Banks* 406,574,666 203,287,333 335,151,337 167,575,668

d) Claims on Bank for International Settlements,

International Monetary Fund and European Central Bank - - - -

e) Claims on Multilateral Development Banks (MDBs): - - - -

f) Claims on Public Sector Entities (other than Government)

in Bangladesh 76,166,200 38,083,100 88,249,959 44,124,980

g)

Claims on Banks and Non-bank Financial Institution

(NBFI):

i) Original maturity over 3 months 2,551,827,840 908,917,840 2,360,690,773 611,642,408

ii) Maturity less than 3 months 14,717,888,079 2,943,577,616 15,386,368,831 3,077,273,766

h) Claims on Corporate (excluding equity exposure) 109,369,257,304 93,648,758,032 105,843,843,157 95,303,984,716

hi) Claims on SME 37,770,116,999 33,840,257,028 35,913,019,877 31,968,812,309

i) Claims under Credit Risk Mitigation 4,974,225,887 1,265,740,355 4,987,292,299 1,229,578,167

Fixed Risk Weight Groups:

j) Claims categorized as retail portfolio (excluding consumer loan )

3,034,668,294 2,276,001,221 2,957,039,428 2,217,779,571

k) Consumer Loan 983,439,249 983,439,249 950,934,586 950,934,586

l) Claims fully secured by residential property 1,294,254,700 647,127,350 1,266,649,049 633,324,524

m) Claims fully secured by commercial real estate 5,169,463,000 5,169,463,000 5,022,991,699 5,022,991,699

n) Past Due Claims (Risk weights are to be assigned net of

specific provision): 4,509,471,999 5,385,453,367 3,934,770,173 4,630,499,029

o) Investments in venture capital 1,135,712,017 1,703,568,026 1,135,712,017 1,703,568,026

p) Claim on Capital Market Exposure 6,968,448,313 8,710,560,391 7,609,189,641 9,511,487,051

q)

Unlisted equity investments and regulatory capital

instruments issued by other banks (other than those

deducted from capital) held in banking book

350,220,392 437,775,490 185,220,392 231,525,490

r) Investments in premises, plant and equipment and all

other fixed assets 4,353,252,689 4,353,252,689 4,404,994,528 4,404,994,528

s) Claims on all fixed assets under operating lease - - - -

t) All other assets 17,856,199,903 6,187,910,221 15,534,136,465 4,240,254,456

Total 246,122,740,361 168,703,172,307 237,697,458,701 165,950,350,974


145 | P a g e

Annex-E

AB Bank Limited

Detailed of Risk Weighted Assets under Basel III at 31 March 2015

Credit Risk - Off Balance Sheet

Sl. Exposure Type

31.03.2015 2014


Asset Exposure

Risk Weighted

Asset

1 2 3 4 5 6

a) Claims on Bangladesh Government and Bangladesh Bank - - - -

b) Claims on other Sovereigns & Central Banks* - - - -

c) Claims on Bank for International Settlements,

International Monetary Fund and European Central Bank - - - -

d) Claims on Multilateral Development Banks (MDBs): - - - -

e) Claims on Public Sector Entities (other than Government)

in Bangladesh - - - -

f) Claims on Banks: - - - -

i) Maturity over 3 months - - - -

ii) Maturity less than 3 months 113,500,000 22,700,000 129,400,000 25,880,000

g) Claims on Corporate (excluding equity exposure) 36,543,783,231 28,147,509,614 35,977,298,869 28,839,721,111

h) Against retail portfolio (excluding consumer loan) 352,390,296 264,292,722 344,369,791 258,277,343

hi) Claims on SME 1,701,149,508 1,455,918,882 2,101,937,072 1,791,761,976

i) Consumer Loan 5,968,352 5,968,352 4,339,897 4,339,897

j) Claims fully secured by residential property - - - -

k) Claims fully secured by commercial real estate - - - -

l) Investments in venture capital - - - -

m) Capital Market Exposure - - - -

n) All other assets - - - -

Total 38,716,791,387 29,896,389,571 38,557,345,629 30,919,980,327


146 | P a g e

Annexure-E/1

AB Bank Limited

Disclosures on Risk Based Capital (Basel III) based on 31 March 2015

These disclosures have been made in accordance with the Bangladesh Bank BRPD Circular no. 18 of 21 December 2014 as to Guidelines on 'Risk Based Capital Adequacy for Banks' in line with Basel III.

1. Capital Adequacy under Basel-III

To cope with the international best practices and to make the Bank’s capital more risk sensitive as well as more shock resilient, ‘Guidelines

on Risk Based Capital Adequacy (RBCA) for Banks’ (Revised regulatory capital framework in line with Basel III) have been introduced

from January 01, 2015. The guidelines were issued by Bangladesh Bank (BB) under section 13 and section 45 of the Bank Company (Amendment upto 2013) Act, 1991 and also in accordance with “Basel III: A global regulatory framework for more resilient banks and

banking systems" of December 2010 (rev June 2011) (popularly known as `Basel III Capital Adequacy Framework’) released by Basel

Committee on Banking Supervision (BCBS).

Basel III guidelines are structured on the following aspects:

a) Minimum capital requirements to be maintained by a Bank against credit, market, and operational risks.

b) Process for assessing the overall capital adequacy aligned with risk profile of a Bank as well as capital growth plan.

c) Framework of public disclosure on the position of a Bank’s risk profiles, capital adequacy, and risk management system.

2. Scope of application

Basel III guidelines apply to all scheduled banks on ‘Solo’ basis as well as on ‘Consolidated’ basis where-

- Solo Basis’ refers to all position of the bank and its local and overseas branches/offices; and

-

Consolidated Basis’ refers to all position of the bank (including its local and overseas branches/offices) and its subsidiary

company(ies) engaged in financial (excluding insurance) activities like merchant banks, brokerage firms, discount houses, etc. (if any).

AB Bank followed the scope narrated above. Bank has Tier 1 Capital (Going concern) and tier 2 Capital (Gone concern) structure

at the moment.

3. Capital base

Regulatory capital has been categorized into following way:

1) Tier 1 Capital (going-concern capital)

a) Common Equity Tier I

b) Additional Tier I

2) Tier 2 Capital (Gone concern)

1. (a) Common Equity Tier 1 Capital

For the local banks, Common Equity Tier 1 (CET1) capital shall consist of sum of the following items:

a) Paid up capital

b) Non-repayable share premium account

c) Statutory reserve

d) General reserve

e) Retained earnings

f) Dividend equalization reserve

g) Minority interest in subsidiaries

Less: Regulatory adjustments applicable on CET1

1. (b) Additional Tier 1 Capital

For the local banks, Additional Tier 1 (AT1) capital shall consist of the following items:

a) Instruments issued by the banks that meet the qualifying criteria for AT1 as specified at Annex4.

b) Minority Interest i.e. AT1 issued by consolidated subsidiaries to third parties (for consolidated reporting only);

Less: Regulatory adjustments applicable on AT1 Capital


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AB Bank Limited


2. Tier 2 Capital

Tier 2 capital, also called ‘gone-concern capital’, represents other elements which fall short of some of the characteristics of the core

capital but contribute to the overall strength of a bank. For the local banks, Tier 2 capital shall consist of the following items:

a)

General Provisions; (General provisions/general loan-loss reserve eligible for inclusion in Tier 2 will be limited to a maximum 1.25 percentage points of credit risk-weighted assets calculated under the standiardised approach)

b) Subordinated debt / Instruments issued by the banks that meet the qualifying criteria for Tier 2 capital;

c) Minority Interest i.e. Tier-2 issued by consolidated subsidiaries to third parties as specified

Less: Regulatory adjustments applicable on Tier-2 capital;

4. Limits (Minima and Maxima)

These instructions will be adopted in a phased manner starting from the January 2015, with full implementation of capital ratios from the

beginning of 2019. Banks will be required to maintain the following ratios on an ongoing basis:

a) Common Equity Tier 1 of at least 4.5% of the total RWA.

b) Tier-1 capital will be at least 6.0% of the total RWA.

c) Minimum CRAR of 10% of the total RWA.

d) Additional Tier 1 capital can be admitted maximum up to 1.5% of the total RWA or 33.33% of CET1, whichever is higher

e) Tier 2 capital can be admitted maximum up to 4.0% of the total RWA or 88.89% of CET1, whichever is higher

f)

In addition to minimum CRAR, Capital Conservation Buffer (CCB) of 2.5% of the total RWA is being introduced which will be

maintained in the form of CET1.

Following is the phase-in arrangement for the implementation of minimum capital requirements

Phase-in arrangement of minimum capital requirements

2015 2016 2017 2018 2019

Minimum Common Equity Tier-1 Capital Ratio 4.50% 4.50% 4.50% 4.50% 4.50%

Capital Conservation Buffer - 0.63% 1.25% 1.88% 2.50%

Minimum CET-1 plus Capital Conservation Buffer 4. 5% 5.13% 5.75% 6.38% 7.00%

Minimum T-1 Capital Ratio 5.50% 5.50% 6.00% 6.00% 6.00%

Minimum Total Capital Ratio 10.00% 10.00% 10.00% 10.00% 10.00%

Minimum Total Capital plus Capital Conservation Buffer 10.00% 10.63% 11.25% 11.88% 12.50%

5. Capital Conservation Buffer

Banks are required to maintain a capital conservation buffer of 2.5%, comprised of Common Equity Tier 1 capital, above the regulatory minimum capital requirement of 10%. Banks should not distribute capital (i.e. pay dividends or bonuses in any form) in case capital level

falls within this range. However, they will be able to conduct business as normal when their capital levels fall into the conservation range

as they experience losses. Therefore, the constraints imposed are related to the distributions only and are not related to the operations of banks. The distribution constraints imposed on banks when their capital levels fall into the range increase as the banks’ capital levels

approach the minimum requirements. The Table below shows the minimum capital conservation ratios a bank must meet at various levels

of the Common Equity Tier 1 capital ratios.

Bank’s minimum capital conservation standards

CET-1 Ratio

Minimum Capital Conservation Ratio

(expressed as percentage of earnings)

4.5% - 5.125% 100%

>5.125% - 5.75% 80%

>5.75% - 6.375% 60%

>6.375% - 7.0% 40%

>7.0% 0%


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6 Regulatory Adjustments / Deductions

In order to arrive at the eligible regulatory capital for the purpose of calculating CRAR, banks are required to make the following

deductions from CET1/Capital:

* Shortfall in provisions against NPLs and Investments

* Goodwill and all other Intangible Assets

* Deferred tax assets (DTA)

* Defined benefit pension fund assets

* Gain on sale related to securitization transactions

* Investment in own shares

* Investments in the Capital of Banking, Financial and Insurance Entities

(Reciprocal crossholdings in the Capital of Banking, Financial and Insurance Entities)

Transitional Arrangements for Capital Deductions

Currently, 10% of revaluation reserves for equity instruments and 50% of revaluation reserves for fixed assets and securities are eligible

for Tier 2 capital. However, Bangladesh Bank, in the light of Basel III proposals, has harmonized deductions from capital which will mostly be applied at the level of Tier 2. The regulatory capital adjustment will start in a phased manner from January, 2015 in the

following manner:

Transitional Arrangements for Capital Deductions

Phase-in of deductions from Tier 2 2015 2016 2017 2018 2019

RR for Fixed Assets

20% 40% 60% 80% 100%

RR for Securities

20% 40% 60% 80% 100%

RR for Equity Securities

20% 40% 60% 80% 100%

Bank complied with the conditions as embodied in this respect wherever applicable.

7. Leverage Ratio

A minimum Tier 1 leverage ratio of 3% is being prescribed both at solo and consolidated level

The banks will maintain leverage ratio on quarterly basis. The calculation at the end of each calendar quarter will be submitted to BB showing the average of the month end leverage ratios based on the following definition of capital and total exposure.

Leverage Ratio = Tier 1 Capital (after related deductions)

Total Exposure (after related deductions)

Transitional Arrangements

The parallel run period for leverage ratio will commence from January, 2015 and run until December 31, 2016. During this period, the

leverage ratio and its components will be tracked to assess whether the design and calibration of the minimum tier 1 leverage ratio of 3% is appropriate over a credit cycle and for different types of business models, including its behavior relative to the risk based requirements.

Bank level disclosure of the leverage ratio and its components will start from January 1, 2015. However, banks should report their Tier 1 leverage ratio to the BB (Department of Off-Site Supervision) along with CRAR report from the quarter ending March, 2015.Based on the

results of the parallel run period, any final adjustments to the definition and calibration of the leverage ratio will be made by BB in 2017,

with a view to setting the leverage ratio requirements as a separate capital standard from January 1, 2018.

Bank complied with the conditions as embodied in this respect wherever applicable.

8. a) Credit Risk

Credit risk is the potential that a bank borrower or counterparty fails to meet its obligation in accordance with agreed term.

Bank followed the suggested methodology, process as contained in the Guidelines.


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AB Bank Limited


b) Methodology

Bangladesh Bank adopted Standardized Approach for calculating Risk Weighted Assets. The capital requirement for credit risk is

based on the risk assessment made by external credit assessment institutions (ECAIs) recognized by BB for capital adequacy purposes. Banks are required to assign a risk weight to all their on-balance sheet and off-balance sheet exposures. Risk weights are

based on external credit rating (solicited) which was mapped with the BB rating grade or a fixed weight that is specified by

Bangladesh Bank.

c) Credit Risk Mitigation

AB Bank uses a number of techniques to reduce its credit risk to which the Bank is exposed. For example, exposures may be

collateralized by first priority claims, in whole as in part with cash or securities, a loan exposure may be guaranteed by a third party.

Additionally, Bank may agree to net loans owed to them against deposits from the same counterparty.

Bank uses Comprehensive Approach as adopted by the Central Bank. In this approach when taking collateral, Bank will need to

calculate adjusted exposure to a counterparty for capital adequacy purposes in order to take account of the effects of that collateral.

Using haircut, Bank is required to adjust both the amount of the exposure to the counterparty and the value of any collateral received

in support of that counterparty to take account of possible future fluctuations in the value of either, occasioned by market movements. This will produce volatility adjusted amounts for both exposure and collateral.

9. a) Market Risk

Market risk is defined as the risk of losses in on and off-balance sheet positions arising from movements in market prices. The

market risk positions subject to this requirement are:

i) The risks pertaining to interest rate related instruments and equities in the trading book; and

ii) Foreign exchange risk and commodities risk throughout the bank (both in the banking and in the trading book).

b) Methodology

In Standardized Approach, the capital requirement for various market risks (interest rate risk, equity price risk, commodity price

risk, and foreign exchange risk) is determined separately. The total capital requirement in respect of market risk is the sum of capital

requirement calculated for each of these market risk sub-categories. The methodology to calculate capital requirement under Standardized Approach for each of these market risk categories is as follows:

a) Capital Charge for Interest Rate Risk = Capital Charge for Specific Risk + Capital Charge for General Market Risk.

b) Capital Charge for Equity Position Risk = Capital Charge for Specific Risk + Capital Charge for General Market Risk.

c) Capital Charge for Foreign Exchange Risk = Capital Charge for General Market Risk

d) Capital Charge for Commodity Position Risk = Capital Charge for General Market Risk


10. a) Operational Risk

Operational Risk is defined as the risk of losses resulting from inadequate or failed internal processes, people and systems or from

external events. This definition includes legal risk, but excludes strategic and reputation risk.

b) Measurement Methodology

Banks operating in Bangladesh shall compute the capital requirements for operational risk under the Basic Indicator Approach

(BIA). Under BIA, the capital charge for operational risk is a fixed percentage, denoted by (alpha), of average positive annual gross

income of the bank over the past three years. Figures for any year in which annual gross income is negative or zero, should be excluded from both the numerator and denominator when calculating the average.



150 | P a g e

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11. Disclosure under Pillar III

Disclosure given below as specified by RBCA Guidelines dated 21 December 2014:

A) Scope of Application

Qualitative Disclosure

(a) The name of the top corporate entity in the group to which

this guidelines applies. AB Bank Limited

(b) An outline of differences in

the basis of consolidation for accounting and regulatory

purposes, with a brief

description of the entities within the group (a) that are

fully consolidated; (b) that are

given a deduction treatment; and (c) that are neither

consolidated nor deducted

(e.g. where the investment is risk-weighted).

The consolidated financial statements of the Bank include the financial statements of (a) AB Bank

Limited (b) AB Investment Limited (c) AB Securities Limited (d) Cash Link Bangladesh Limited (e) AB International Finance Limited and (f) AB Exchange (UK) Limited. A brief description of

these are given below:

AB Bank Limited (ABBL)

AB Bank Limited is one of the first generation private commercial banks (PCBs), incorporated in

Bangladesh on 31 December 1981 as a public limited company under the Companies Act 1913,

subsequently replaced by the Companies Act 1994, and governed by the Bank Company (Amendment upto 2013) Act 1991. The Bank went for public issue of its shares on 28 December

1983 and its shares are listed with Dhaka Stock Exchange and Chittagong Stock Exchange

respectively. AB Bank Limited has 92 Branches including 1 Islami Banking Branch, 1 Overseas Branch in Mumbai, India. The Bank has six (06) subsidiary companies, AB Investment Limited,

AB Securities Limited, CashLink Bangladesh Limited, AB International Finance Limited,

incorporated in Hong Kong, AB Exchange (UK) Limited and Arab Bangladesh Bank Foundation.


AB Investment Limited (ABIL), a Subsidiary of AB Bank Limited was incorporated under the

Companies Act, 1994 on 24 December 2009 with a view to run and manage the operations of Merchant Banking Wing of AB Bank Limited independently. AB Investment Limited started its

operation on 10 March 2010. AB Investment Limited has achieved an unparallel reputation as a

leading Merchant Banker through providing portfolio management services by maintaining a high level of professional expertise and integrity in client relationship. ABIL's Registered Office is

located at WW Tower (Level 7), 68 Motijheel C.A., Dhaka. ABIL has two branch offices at

Agrabad, Chittagong and Chowhatta, Sylhet.


Brokerage business of Arab Bangladesh Bank Foundation has been transferred to the newly

formed AB Securities Limited (ABSL) vide Bangladesh Bank approval letter BRPD(R-

1)717/2009-493 dated 08 November 2009. Main objective of the company is to act as a stock

broker to buy and sell Securities, Bond, Debenture, etc. on behalf of clients. ABSL also manages its own portfolio under Stock Dealer License. ABSL is a member of both Dhaka Stock Exchange

Ltd. and Chittagong Stock Exchange Ltd. ABSL started it’s operation independently on 02 August

2010, before that it was operated under the ABBF License.

Cashlink Bangladesh Limited

Cashlink Bangladesh Limited (CBL) was incorporated on 24 September 2008 in Bangladesh

under the Companies Act 1994 as a private company limited. AB Bank Limited presently holds 90% shares in CBL. The principal activity of the company is to install and operate a switched

Automated Teller Machines (ATM) and Point of Sales (POS) network on behalf of a number of

local and foreign banks enabling these member bank customers who are active cardholders to withdraw cash, make utility bill payments (e.g. water, gas, electricity and telephone bills) and to

purchase commodity goods from any of the ATM and POS terminals established under the

network.


AB International Finance Limited (ABIFL) is a company incorporated and domiciled in Hong

Kong and has its registered office and principal place of business at Unit 1201-B, 12/F, Admiralty Centre, Tower One, 18 Harcourt, Hong Kong.


AB Exchange (UK) Limited (ABEL) is a company incorporated and domiciled in United

Kingdom (UK) and has its registered office 69 Whitechapel High Street, London, E1 7PL. Its

registered number is 07272766 (England & Wales). ABEL is fully owned (100%) Subsidiary of

AB Bank Limited.


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Disclosures on Risk Based Capital (Basel II) based on 31 March 2015

Scope of Application (cont..)

Arab Bangladesh Bank Foundation

Bank also has a Subsidiary (99.60% owned by AB Bank) for philanthropic/ CSR activities known

as Arab Bangladesh Bank Foundation (ABBF). This has not been included in the Consolidation as ABBF operated only for philanthropic purpose and its profit is not distributable to the

shareholders. Thus, for ensuring the fair presentation of the Financial Statements of the Parent

Company (the Bank), the Financial Statements of ABBF has not been consolidated.

(c) Any restrictions, or other

major impediments, on

transfer of funds or regulatory

capital within the group

Not Applicable

(d) The aggregate amount of surplus capital of insurance

subsidiaries (whether deducted

or subjected to an alternative method) included in the

capital of the consolidated

group.

Not Applicable

B) Capital Structure


(a) Summary information on the

terms and conditions of the main features of all capital

instruments, especially in the

case of capital instruments eligible for inclusion in CET

1, Additional Tier 1 or Tier 2.

The terms and conditions of the main features of all capital instruments have been segregated in

line with of the eligibility criteria set forth vide BRPD Circular No. 18 dated 21 December 2014 and other relevant instructions given by Bangladesh Bank from time to time. The main features of

the capital instruments are as follows:

Common Equity Tier 1 capital instruments

Paid-up share capital: Issued, subscribed and fully paid up share capital of the Bank. It represents

Paid up Capital, Right Shares as well as Bonus Shares issued from time to time. Statutory Reserve: As per Section 24(1) of the Bank Company (Amendment upto 2013) Act,

1991, an amount equivalent to 20% of the profit before taxes for each year of the Bank has been

transferred to the Statutory Reserve Fund.

General reserve: Any reserve created through Profit and Loss Appropriation Account for fulfilling

any purpose.

Retained Earnings: Amount of profit retained with the banking company after meeting up all

expenses, provisions and appropriations.

In this respect, Bank is complied.

Additional Tier 1 Capital

Bank has no any type of Additional Tier I Capital.

Tier 2 Capital

a) General Provisions; (General provisions/general loan-loss reserve eligible for inclusion in Tier 2 will be limited to a maximum 1.25 percentage points of credit risk-weighted assets calculated

under the standiardised approach)

b) Subordinated debt / Instruments issued by the banks that meet the qualifying criteria for Tier 2 capital;

c) Minority Interest i.e. Tier-2 issued by consolidated subsidiaries to third parties as specified

Less: Regulatory adjustments applicable on Tier-2 capital;


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Qualitative Disclosure (cont.)

Taka in Crore

31.03.2015 31.12.2014

Solo Conso Solo Conso

(b) The amount of Regulatory

capital, with separate disclosure of:

CET 1 Capital

> Paid up Capital 532 532 532 532

> Non- repayable share premium account - - - -

> Statutory reserve 559 559 558 558

> General reserve 4 12 4 12

> Retained earnings 614 663 561 603

> Minority Interest in Subsidiaries - (1) - (1)

> Non- cumulative irredeemable preference

shares - - - -

> Dividend equalization account - - - -

1,709 1,765 1,656 1,705

Additional Tier 1 Capital

- - - -

Total Tier 1 Capital

1,709 1,765 1,656 1,705

Tier 2 Capital

563 568 624 638

(c) Regulatory Adjustments/Deductions from capital

37 37 - 2

(d) Total eligible capital

2,234 2,296 2,280 2,341

C) Capital Adequacy


(a) A summary discussion of the

Bank's approach to assessing the adequacy of its capital to

support current and future

activities.

Capital Adequacy is the cushion required to be maintained for covering the Credit risk, Market

risk and Operational risk so as to protect the depositors and general creditors interest against such losses. In line with BRPD Circular No. 18 dated 21 December, 2014, the Bank has adopted

Standardized Approach for Credit Risk, Standardized (Rule Based) Approach for Market Risk and

Basic Indicator Approach for Operational Risk for computing Capital Adequacy.

Taka in Crore 31.03.2015 31.12.2014

Solo Conso Solo Conso

(b) Capital requirement for Credit Risk:

1,986 1,998 1,969 1,979

(C) Capital requirement for Market Risk:

73 82 74 85

(d) Capital requirement for Operational Risk:

174 181 166 173

(e) Total capital, CET 1 capital, Total Tier 1 capital and Tier 2 capital ratio:

> For the Bank alone

76.48% - 72.64% -

> For the consolidated group

- 76.87% - 72.77%

(f) Capital Conservation Buffer

N/A N/A N/A N/A

(g) Available Capital under Pillar 2 Requirement

N/A

D) Credit Risk


(a) The general qualitative

disclosure requirement with

respect to credit risk, including:

> Definitions of past due and

impaired (for accounting purposes)

Bank classifies loans and advances (loans and bill discount in the nature of an advance) into

performing and non-performing loans (NPL) in accordance with the Bangladesh Bank guidelines in this respect.

An NPA (impaired) is defined as a loan or an advance where interest and/ or installment of

principal remain overdue for more than 90 days in respect of a Continuous credit, Demand loan or a Term Loan etc.


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Classified loan is categorized under following 03 (three) categories:

> Sub-standard

> Doubtful

> Bad & Loss

Any continuous loan will be classified as:

> Sub-standard' if it is past due/over due for 3 months or beyond but less than 6 months.

> "Doubtful' if it is past due/over due for 6 months or beyond but less than 9 months.

> ‘Bad/Loss' if it is past due/over due for 9 months or beyond.

Any Demand Loan will be classified as:

> Sub-standard' if it remains past due/overdue for 3 months or beyond but not over 6 months from

the date of claim by the bank or from the date of creation of forced loan.

> Doubtful' if it remains past due/overdue for 6 months or beyond but not over 9 months from the date of claim by the bank or from the date of creation of forced loan.

> Bad/Loss' if it remains past due/overdue for 9 months or beyond from the date of claim by the

bank or from the date of creation of forced loan. In case of any installment(s) or part of installment(s) of a Fixed Term Loan is not repaid within

the due date, the amount of unpaid installment(s) will be termed as `defaulted installment'.

> Definitions of past due and

impaired (for accounting

purposes)

i. In case of Fixed Term Loans :

> If the amount of 'defaulted installment' is equal to or more than the amount of installment(s) due

within 3 (three) months, the entire loan will be classified as ''Sub-standard''. > If the amount of 'defaulted installment' is equal to or more than the amount of installment(s) due

within 6 (six) months, the entire loan will be classified as ''Doubtful".

> If the amount of 'defaulted installment' is equal to or more than the amount of installment(s) due within 9 (nine) months, the entire loan will be classified as ''Bad/Loss''.

If any Fixed Term Loan is repayable on monthly installment basis, the amount of installment(s)

due within 06 (six) months will be equal to the sum of 06 monthly installments. Similarly, if the loan is repayable on quarterly installment basis, the amount of installment(s) due within 06 (six)

months will be equal to the sum of 2 quarterly installments.

> Description of approaches

followed for specific and

general allowances and

statistical methods

Types of loans and

advances

Provision

UC SMA SS DF BL

Consu

mer

House building

and professionals

to setup business

2% 2% 20% 50% 100%

Other than

Housing Finance

& Professionals to setup business

5% 5% 20% 50% 100%

Provision for loan to

Brokerage House, Merchant

Banks, Stock dealers

2% 2% 20% 50% 100%

Short-term agri-credit and

micro credit 2.50% - 5% 5% 100%

Small & Medium Enterprise

Finance 0.25% 0.25% 20% 50% 100%

Others 1% 1% 20% 50% 100%


154 | P a g e

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> Discussion of the Bank's credit

risk management policy

The Board approves the credit policy keeping in view relevant Bangladesh Bank guidelines to

ensure best practice in credit risk management and maintain quality of assets. Authorities are

properly delegated in ensuring check and balance in credit operation at every stage i.e. screening, assessing risk, identification, management and mitigation of credit risk as well as monitoring,

supervision and recovery of loans with provision for early warning system. There is a separate

Credit Risk Management Division for ensuring proper risk management of Loans and Credit Monitoring and Recovery Division for monitoring and recovery of irregular loans. Internal control

& compliance division independently assess quality of loans and compliance status at least once

in a year. Adequate provision is maintained against classified loans as per Bangladesh Bank

Guidelines. Status of loans are regularly reported to the Board/ Board Audit Committee. Besides,

Credit risk management process involves focused on monitoring of Top- 30 Loans, Top- 20

Defaulters, Sectoral exposures viz-a-viz among others limit.

Quantitative Disclosure

Taka in Crore

31.03.2015 31.12.2014

In % Taka In % Taka

(b) Total gross credit risk

exposures broken down by major types of credit exposure

Overdraft 12.45% 2,288 13.66% 2,426

Cash Credit 0.00% - 0.02% 4

Time loan 29.70% 5,460 30.91% 5,488

Term loan 46.91% 8,625 43.03% 7,641

Blc 0.10% 18 0.34% 60

TR 5.91% 1,086 6.78% 1,203

Packing credit 0.27% 49 0.26% 47

Loan-accp bills 2.96% 543 3.19% 566

Consumer Loan 0.73% 135 0.74% 132

Staff Loan 0.42% 77 0.41% 72

Bills Purchased & Discounted 0.57% 104 0.67% 118

Total 100% 18,385 100% 17,757

(C) Geographical distribution of

exposures, broken down in

significant areas by major types of credit exposure

Urban Branches

Dhaka

67.30% 12,065 67.86% 11,740

Chittagong

24.94% 4,472 24.07% 4,165

Khulna

2.71% 486 2.78% 481

Sylhet

1.17% 209 1.23% 213

Barisal

0.20% 36 0.23% 39

Rajshahi

1.90% 340 2.00% 347

Rangpur

1.78% 320 1.83% 317

100% 17,928 100% 17,301

Rural Branches

Dhaka

86.38% 320 85.76% 314

Chittagong

12.00% 44 12.60% 46

Khulna

0.00% - 0.00% -

Sylhet

1.62% 6 1.64% 6

Barisal

0.00% - 0.00% -

Rajshahi

0.00% - 0.00% -

Rangpur

0.00% - 0.00% -

100% 370 100% 366

Outside Bangladesh

ABBL, Mumbai Branch

0.47% 87 0.50% 89

100% 18,385 100% 17,757

(d) Industry or counterparty type

distribution of exposures,

broken down by major types of credit exposure.

Agriculture

1.19% 220 1.6% 280

Large and medium scale industry 23.78% 4,372 26.9% 4,777

Working capital

23.08% 4,243 19.8% 3,519

Export

0.45% 82 0.6% 109

Commercial lending

24.34% 4,474 22.9% 4,069

Small and cottage industry

1.60% 294 0.6% 101

Others

25.57% 4,700 27.6% 4,902

100% 18,385 100% 17,757


155 | P a g e

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Quantitative Disclosure (cont.)

(e) Residual contractual maturity breakdown of the whole

portfolio, broken down by major types of credit

exposure.


1.58% 291 1.76% 312

– upto 3 months 52.96% 9,737 43.55% 7,734

– over 3 months but below 1 year 37.13% 6,827 35.25% 6,260

– over 1 year but below 5 years 5.07% 932 18.38% 3,264

– over 5 years

3.25% 598 1.06% 187

100% 18,385 100% 17,757

(f) By major industry or counterparty type:

i.

Amount of impaired loans and if available, past due loans, provided

separately 4.10% 755 3.86% 686

ii. Specific and general provisions

530

485

iii. Charges for specific allowances and charge-offs during the period

45

229

(g) Gross Non Performing Assets

(NPAs)

Non Performing Assets

(NPAs) to Outstanding Loans & advances

31.03.15 31.12.14

Non Performing Assets (NPAs)

755 686

Non Performing Assets (NPAs) to Outstnading Loans & Advances 4.10% 3.86%

Movement of Non Performing Assets

(NPAs)-Bangladesh Operations:

Opening Balance

675.46 463.69

Additions

88.46 443.52

Reductions

19.65 231.75

Closing balance

744.27 675.46

Movement of Specific Provision for Non

Performing Assets (NPAs)

Opening Balance

289.13 224.41

Provision made during the period

5.00 205.93

Write - off

- 141.21

Transferred from other assets provisions

- -

Transfer from General Provisions

- -

Closing balance

294.13 289.13

Provision held by Mumbai Branch

3.34 3.28

297.47 292.41

E) Equities: Disclosures for Banking Book Positions


(a) The general qualitative disclosure requirement with respect to the equity risk, including:

> differentiation between holdings on which capital

gains are expected and those taken under other objectives including for relationship and strategic

reasons

Investment in equity mainly for capital gain purpose but Bank has some investment for relationship and strategic reasons.

> discussion of important policies covering the valuation and accounting of equity holdings in the

banking book. This includes the accounting

techniques and valuation methodologies used, including key assumptions and practices affecting

valuation as well as significant changes in these

practices

Quoted shares are valued at cost. Necessary provision is maintained if market

price fall below the cost price. Unquoted shares are valued at cost.

(b) Value disclosed in the balance sheet of investment, as well as the fair value of those

investments; for quoted securities, a comparison

to publicly quoted share values where the share price is materially different from fair value.

Not Applicable


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(C) The cumulative realized gains (losses) arising

from sales and liquidations in the reporting period

(2014)

Taka in

Crore

0.019

(d) > Total unrealized gains (losses)

(189.46)

> Total latent revaluation gains (losses)

Nil

>

Any amounts of the above included in Tier

2 capital Nil

(e) Capital requirements broken down by appropriate

equity grouping, consistent with the bank's

methodology, as well as the aggregate amounts

and the type of equity investments subject to any supervisory provisions regarding regulatory

capital requirements

Nil

F) Interest rate risk in the banking book (IRRBB)


(a) The general qualitative disclosure requirement

including the nature of IRRBB and key

assumptions, including assumptions regarding loan prepayments and behavior of non-maturity

deposits, and frequency of IRRBB measurement.

Interest rate risk is the potential that the value of the On Balance Sheet and the

Off Balance Sheet position of the Bank would be negatively effected with the

change in the Interest rate. The vulnerability of an institution towards the advance movement of the interest rate can be gauged by using Duration GAP

under Stress Testing Analysis.

AB Bank has also been exercising the Stress Testing using the Duration GAP

for measuring the Interest Rate Risk on its On Balance Sheet exposure for

estimating the impact of the net change in the market value of equity on the

Capital Adequacy Ratio (CAR) due to change in interest rates only on its On Balance Sheet position (as the Bank holds no interest bearing Off Balance

Sheet positions and or Derivatives). Under the assumption of three different

interest rate changes i.e. 1%, 2% and 3%.


(b)

The increase (decline) in earnings or economic

value (or relevant measure used by management) for upward and downward rate shocks according

to management’s method for measuring IRRBB,

broken down by currency (as relevant).

Taka in Crore

31.03.15 2014

Market Value of Assets 25,754 25,024

Market Value of Liability 24,260 23,467

Weighted Avg. Duration GAP 0.61 0.59

CAR after different level of Shocks:

Minor

Level 9.44% 9.78%

Moderate Level

8.86% 9.23%

Major Level

8.28% 8.68%

G) Market Risk


(a) >

Views of BOD on trading/ investment activities The Board approves all policies related to market risk, sets limits and reviews

compliance on a regular basis. The objective is to provide cost effective

funding last year to finance asset growth and trade related transaction.

> Methods used to measure Market risk Standardized approach has been used to measure the market risk. The total

capital requirement in respect of market risk is the aggregate capital

requirement calculated for each of the risk sub-categories. For each risk category minimum capital requirement is measured in terms of two separately

calculated capital charges for 'specific risk' and 'general market risk'.


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> Market risk Management system

The Treasury Division manage market risk covering liquidity, interest rate and

foreign exchange risks with oversight from Asset-Liability Management Committee (ALCO) comprising senior executives of the Bank. ALCO is

chaired by the Managing Director. Alco meets at least once in a month.

> Policies and process for mitigating market

risk

There are approved limits for Market risk related instruments both on-balance

sheet and off-balance sheet items. The limits are monitored and enforced on a regular basis to protect against market risks. The exchange rate committee of

the Bank meets on a daily basis to review the prevailing market condition,

exchange rate, forex position and transactions to mitigate foreign exchange risks.


(b) The capital requirements for:

Taka in Crore

31.03.15 2014

Interest rate risk

22.12 25.78

Equity position risk

43.55 47.21

Foreign exchange risk

6.86 0.76

Commodity risk

- -

72.53 73.75

H) Operational Risk


(a) > Views of BOD on system to reduce

Operational Risk The policy for operational risks including internal control & compliance risk is

approved by the board taking into account relevant guidelines of Bangladesh Bank. Audit Committee of the Borad oversees the activities of Internal Control

& Compliance Division (ICCD) to protect against all operational risk.

> Performance gap of executives and staffs AB has a policy to provide competitive package and best working environment

to attract and retain the most talented people available in the industry. AB's

strong brand image plays an important role in employee motivation. As a result, there is no significant performance gap.

> Potential external events

No potential external events is expected to expose the Bank to significant

operational risk.

> Policies and processes for mitigating

operational risk The policy for operational risks including internal control & compliance risk is approved by the Board taking into account relevant guidelines of Bangladesh

bank. Policy guidelines on Risk Based Internal Audit system is in operation as

per RBA branches are rated according to their risk status and branches scoring more on risk status are subjected to more frequent audit by Internal Control &

Compliance Division (ICCD). It is the policy of the bank to put all the

branches of the bank under any form of audit at least once in a year. ICCD directly report to Audit Committee of the Board. In addition there is a

Vigilance Cell established in 2009 to reinforce operational risk management of

the bank. Bank's Anti-Money laundering activities are headed by CAMELCO and their activities are devoted to protect against all money laundering and

terrorist finance related activities. Apart from that, there is adequate check &

balance at every stage of operation, authorities are properly segregated and there is at least dual control on every transaction to protect against operational

risk.

>

Approach for calculating capital charge for

operational risk

Basic Indicator Approach was used for calculating capital charge for

operational risk as of the reporting date.


Taka in Crore

(b) The capital requirements for Operational Risk

31.03.15 2014

174.21 166.17


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AB BANK LIMITED


Balance Sheet

As at 31 March 2015

31.03.2015

31.12.2014

PROPERTY AND ASSETS INR

INR

Cash 16,094,623

16,213,338

In hand (including foreign currencies) 2,307,059

2,435,764

Balance with Reserve Bank India 13,787,564

13,777,574


Balance with other banks and financial institutions 870,186,212

526,223,818

In India 79,965,691

14,479,440

Outside India 790,220,521

511,744,377

Money at call and on short notice 118,873,471

243,422,070

Investments 354,918,465

302,071,718

Government 326,618,465

273,771,718

Others 28,300,000

28,300,000

Loans and advances 697,416,645

729,840,933

Loans, cash credits, overdrafts, etc 124,141,745

126,884,221

Bills purchased and discounted 573,274,900

602,956,712

Fixed assets including premises, furniture and fixtures 20,127,688

17,318,592

Other assets 396,553,821

361,660,068

Non-banking assets -

-

Total Assets 2,474,170,925

2,196,750,536


Liabilities

Borrowings from other banks, financial institutions and agents -

-

Deposits and other accounts 1,293,952,246

1,073,102,772

Current deposits 1,194,649,269

883,848,435

Demand deposits 496,596

514,067

Bills payable 1,206,343

499,498

Savings deposits 8,120,277

8,752,783 Fixed deposits 89,479,761

179,487,989

Other deposits -

-

Other liabilities 246,695,305

221,111,875

Total Liabilities 1,540,647,550

1,294,214,647


Total Shareholders' Equity 933,523,375

902,535,888

Paid-up capital 369,822,602

369,822,602

Statutory reserve 161,991,000

161,991,000 Other reserve -

-

Retained earnings 401,709,773

370,722,286

Total Liabilities and Shareholders' Equity 2,474,170,925

2,196,750,536


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AB BANK LIMITED




Jan'15-Mar'15

Jan'14-Mar'14

INR

INR

OPERATING INCOME

Interest income

15,600,183

21,821,019

Interest paid on deposits and borrowings, etc.

(4,074,355)

(4,355,583)

Net interest income

11,525,828

17,465,436

Investment income

6,510,344

5,881,484


72,000,691

65,610,969


510,829

731,435

79,021,864

72,223,888

Total operating income (a)

90,547,692

89,689,325

OPERATING EXPENSES


3,741,010

3,820,392


3,335,109

3,211,281

Legal expenses

-

1,236


2,550,283

2,631,381

Stationery, printing, advertisement, etc.

1,132,001

834,691

Auditors' fees

290,107

351,280

Depreciation and repairs of Bank's assets

2,096,256

1,884,163

Other expenses

23,954,110

30,082,553

Total operating expenses (b)

37,098,875

42,816,976

Profit before provision (c = a-b)

53,448,817

46,872,349


-

3,850,000

Provision for investments Fluctuation reserve

-

-

Other provisions

-

650,000

Total provision (d)

-

4,500,000

Profit before taxation (c-d)

53,448,817

42,372,349


22,461,331

20,119,956


30,987,486

22,252,393


160 | P a g e

Annex-G

AB BANK LIMITED


Balance Sheet

As at 31 March 2015

31.03.2015

31.12.2014

Taka

Taka

PROPERTY AND ASSETS

Cash

288,287,370

235,177,277

Cash in Hand (Including foreign currencies)

2,753,435

3,224,184

Balance with Bangladesh Bank and its Agent Banks (Incl. FC)

285,533,935

231,953,093

Balance with Other Banks and Financial Institutions

2,912,603,139

3,968,649,633

In Bangladesh

2,912,603,139

3,968,649,633

Outside Bangladesh

-

-

Placement with other Banks & Financial Institutions

-

-

Investment in shares & other financial institutions

241,000,000

196,000,000

Government (BGIIB For SLR)

241,000,000

196,000,000

Others

-

-

Investments

3,666,786,302

3,581,597,033

General Investments etc.

3,666,786,302

3,581,597,033

Bills Purchased & Negotiated

-

Fixed Assets including Premises

10,673,186

10,999,011

Other Assets

52,401,364

59,063,570

Non-Banking Assets

-

-

7,171,751,361

8,051,486,525


Liabilities

Placement from Banks (BGIIB)& Other Financial Institutions

814,384

500,000,001

Deposits and Other Accounts

7,118,470,077

7,498,571,575

Mudaraba Savings Deposits

86,343,966

66,403,373

Mudaraba Term Deposits

4,294,879,630

4,194,982,174

Other Mudaraba Deposits

2,613,557,248

3,135,169,285

Al-Wadeeah Current and Other Deposit Accounts

118,475,764

94,481,895

Bills Payable

5,213,469

7,534,848

Other Liabilities

52,466,899

52,914,949

Total Liabilities

7,171,751,361

8,051,486,525


161 | P a g e

31.03.2015

31.12.2014

Taka

Taka

Contingent Liabilities

Acceptances & Endorsements

-

-

Letter of Guarantee

305,351,391

306,310,980

Irrevocable Letters of Credit (including Back to Back Bills)

-

-

Inland Bills for collection

-

-

Other Contingent Liabilities

-

-

Total

305,351,391

306,310,980

Other Commitments

Documentary Credits and short term trade related transactions

-

-


-

-


-

-

Undrawn formal standby facilities, credit lines and other-commitments -

-

-

-

Total Off-Balance Sheet items including Contingent Liabilities 305,351,391

306,310,980


162 | P a g e

Annex-G-1

AB BANK LIMITED




Jan'15-Mar'15

Taka

Jan'14-Mar'14

Taka

Investment Income

177,135,366

201,953,436

Profit paid on Deposits

133,686,018

166,810,667

Net Investment Income

43,449,348

35,142,769

Income from Investments in Shares/Securities

1,077,807

1,265,000

Commission, Exchange and Brokerage

6,128,959

6,697,739

Other Operating Income

60,600

62,025

Total Operating Income

50,716,714

43,167,534

Operating Expenses

Salaries and Allowances

6,071,839

5,886,447

Rent, Taxes, Insurance, Electricity etc.

391,250

333,654

Legal Expenses

-

-

Postage, Stamps, Telecommunication etc.

89,934

96,990

Stationeries, Printing and Advertisement etc.

131,959

155,636

Directors' Fees & Expenses

-

-

Shariah Supervisory Committee's Fees & Expenses

30,236

90,040

Auditors' Fees

-

-

Charges on investment Losses

-

-

Depreciation and repair to Bank's Assets

717,358

745,540

Zakat Expenses

-

-

Other Expenses

1,942,858

1,221,732

Total Operating Expenses

9,375,434

8,530,039

Profit before Provisions

41,341,280

34,637,495


163 | P a g e

Annex-H

AB Bank Limited

Custodian Wing

Balance Sheet

As at 31 March 2015

31.03.2015

31.12.2014

Taka

Taka

ASSETS

Non-Current Assets

Property, Plant and Equipment 44,837

47,475

Intangible Assets -

-

Total Non Current Assets 44,837

47,475

Current Assets

Cash and Bank Balances -

-

Advance, Deposit and Prepayments -

-

Accounts Receivables 17,159,327

17,159,327

Total Current Assets 17,159,327

17,159,327

Total Assets 17,204,165

17,206,802

LIABILITIES

Non-Current Liabilities -

-

Current Liabilities

Payable to AB Bank 13,497,098

13,473,285

Accounts Payable 3,654,167

3,654,167

Provision for Audit Fees 52,900

79,350

Total Current Liabilities 17,204,165

17,206,802

Total Liabilities 17,204,165

17,206,802

-

-


164 | P a g e

Annex-H-1

AB Bank Limited

Custodian Wing



Jan'15-Mar'15

Jan'14-Mar'14

Taka

Taka

Operating Income

Commission, exchange and brokerage -

-

Total Operating Income (a) -

-

Operating Expenses

Rent, taxes and insurance 6,400

-

Auditor's fees 2,638

-

Depreciation and repair of bank's assets 5,275

-

Other expenses 1,005

2,005

Total operating expenses (b) 15,318

2,005

Net loss (15,318)

(2,005)


165 | P a g e

Annex-I

AB BANK LIMITED

Offshore Banking Unit (OBU)

Balance Sheet

As at 31 March 2015

31.03.2015

31.12.2014

BDT USD

BDT USD

PROPERTY AND ASSETS

Cash

-

- -

Balance with Other Banks and Financial Institutions 65,557,068 842,636

138,607,520 1,778,173

In Bangladesh

154,579 1,987

72,881 935

Outside Bangladesh

65,402,489 840,649

138,534,639 1,777,238

Money at call and on short notice (Placement)

2,512,317,600 32,292,000

2,964,961,328 38,037,000

Loans and Advances

10,111,890,838 129,972,890

8,257,900,272 105,939,241

Loans & Advances - Regular

10,111,890,838 129,972,890

8,257,900,272 105,939,241

Premises and Fixed Assets (WDV)

4,062,072 52,212

2,962,668 38,008

Other Assets

41,129,965 528,663

1,663,022 21,335

Accrued Interest

1,388,652 17,849

1,516,377 19,453

Pre-paid Advances

63,313 814

146,645 1,881

Miscellaneous

39,678,000 510,000

- -

Total Assets

12,734,957,543 163,688,400

11,366,094,811 145,813,756


Liabilities

Borrowing from Bank & Financial Institutions

12,573,580,785 161,614,149

11,110,821,567 142,538,898

In Bangladesh

8,001,483,726 102,846,835

7,447,333,158 95,540,609

Outside Bangladesh

4,572,097,059 58,767,314

3,663,488,409 46,998,289

Deposits and Other Accounts

145,926,877 1,875,667

90,097,304 1,155,843

Demand Deposits

60,707,509 780,302

7,575,604 97,186

Demand Deposits - Others

85,219,368 1,095,365

82,521,701 1,058,657

Other Term Deposit - NFCD

- -

- -

Other Deposits

- -

- -

Total Liabilities

12,719,507,662 163,489,816

11,200,918,871 143,694,741

Capital and Shareholders' Equity

Retained Earnings

15,449,881 198,585

165,175,939 2,119,015

Total Shareholders' Equity

15,449,881 198,585

165,175,939 2,119,015


12,734,957,543 163,688,400

11,366,094,811 145,813,756


166 | P a g e

Annex-I-1

AB Bank Limited

Off-Shore Banking Unit (OBU)



Jan'15-Mar'15

Jan'15-Mar'15

Jan'14-Mar'14

Jan'14-Mar'14

Taka

USD

Taka

USD

Interest income

99,879,537

1,283,799

138,904,104

1,788,367

Interest paid on deposits and borrowing etc. 82,886,680

1,065,381

80,125,758

1,031,606

Net Interest income

16,992,857

218,417

58,778,346

756,761


764,332

9,824

1,181,393

15,210


122,924

1,580

89,379

1,151

Total operating income (A)

17,880,113

229,821

60,049,118

773,122

Salaries and allowances

1,372,737

17,644

1,141,838

14,701

Rent, taxes, insurance, electricity etc.

7,911

102

30,708

395

Postage, stamps, telecommunication etc.

68,534

881

70,672

910

Stationeries, printing, advertisement etc.

3,292

42

1,033

13

Depreciation and repair of bank's assets

288,573

3,709

2,547

33

Other expenses

689,184

8,858

66,805

860

Total operating expenses (B)

2,430,232

31,237

1,313,603

16,912

Profit before provisions (C=A-B)

15,449,881

198,585

58,735,515

756,210


167 | P a g e

Annex-J


Statement of Financial Position (Balance Sheet)

As at 31 March 2015

31.03.2015

31.12.2014

ASSETS

Taka

Taka

Non-Current Assets

Property, plant and equipment

627,395,566

523,521,156

Investment in shares

727,401,710

746,884,485

Office renovation

1,283,459

1,604,318

Total non-current assets

1,356,080,735

1,272,009,959

Current Assets

Loans to clients

6,861,517,539

7,107,095,221

Advances, deposits and prepayments

21,103,227

115,197,599

Receivable from brokers

15,903,745

60,075,510

Advance income tax

316,636,204

285,114,003

Cash and cash equivalents

3,137,433

569,019

Total current assets

7,218,298,148

7,568,051,352

Total assets

8,574,378,883

8,840,061,311

EQUITY AND LIABILITES

Capital and reserve

Share capital

274,725,000

274,725,000

Retained earnings

466,103,678

443,830,684

Share money deposit

4,900,100,000

4,900,100,000

Total capital and reserve

5,640,928,678

5,618,655,684

Non-current liabilities

Provident fund, gratuity fund and recreation club

5,856,858

5,576,047

Deferred tax

13,998,390

13,294,336

Current Liabilities

Borrowing from banks

2,093,883,891

2,400,973,816

Liabilities for expenses

3,761,194

6,322,656

Payable against sales proceeds of shares

12,551,129

57,545,124


407,808,033

388,330,749

Provision for unclassified loans and investment

305,643,622

294,281,052

Credit balance with clients' accounts

89,947,088

55,081,847

Other liability

-

-

Total current liabilities

2,913,594,957

3,202,535,244

Total liabilities

2,933,450,205

3,221,405,627

Total shareholders' equity and liability

8,574,378,883

8,840,061,311


168 | P a g e

Annex-J-1


Statement of Comprehensive Income (Profit and Loss Statement)


Jan'15-Mar'15

Jan'14-Mar'14

Taka

Taka

Operating income

Interest income

107,686,431

130,898,744

Management fee

5,025,735

3,700,565

Transaction/Settlement fee

4,217,894

15,728,905


-

8,000

Total operating income (A)

116,930,060

150,336,214

Operating expenses


3,341,176

3,297,842

Audit and consultancy

-

-


6,475,075

8,564,966

Financial expense

55,901,307

73,766,013

Total operating expenses (B)

65,717,558

85,628,821

Net- operating income (C=A-B)

51,212,502

64,707,393

Non operating income (D)

2,102,299

2,189,553

Investment income/(loss) (E)

502,101

11,085,373

Profit before provision for loans and investment (F=C+D+E) 53,816,902

77,982,319

Provision for investment

11,362,570

22,279,070

Net profit before tax for the period

42,454,332

55,703,249


20,181,338

29,243,370

Current tax

19,477,284

26,339,573

Deferred tax

704,054

2,903,797

Net profit after tax for the period

22,272,994

26,459,879


169 | P a g e

Annex-K


Statement of Financial Position

As at 31 March 2015

31.03.2015

31.12.2014

Sources of Fund

Taka

Taka

Shareholders' Equity:

478,460,819

479,055,390

Share Capital

235,000,000

235,000,000

Revaluation Reserve

102,024,360

102,024,360

Retained Earnings

141,436,459

142,031,030

Non Current Liabilities:

381,175,543

380,542,795

Liabilities for Other Finance

370,263,485

370,263,485

Deferred Liability-Gratuity

4,192,830

4,006,734

Provision for Provident Fund

6,719,228

6,272,576

Total Source of Fund (A+B)

859,636,362

859,598,185

Application of Fund

Non Current Assets:

8,232,463

9,276,378

Property, Plant & Equipment

6,097,916

7,401,368

Preliminary Expenses

-

-

Deferred Tax Assets

2,134,547

1,875,010

Investments:

168,307,740

168,307,740

Current Assets:

1,207,921,914

1,259,168,026

Cash and Cash Equivalents

147,102,475

114,450,899

Advance, Deposit & Prepayment

2,876,139

2,764,809

Advance Income Tax

23,034,545

20,926,698

Accounts Receivable

1,033,006,017

1,120,114,875

Other Current Asset

1,902,738

910,745

Current Liabilities and Provisions:

524,825,755

577,153,959

Accounts Payable

125,991,837

167,711,760

Bank Overdraft

299,429,422

299,693,825

Liabilities for Expense

11,887,306

24,147,909

Provision for Income Tax

28,540,312

26,411,362

Other Liabilities

58,976,878

59,189,103

Net Current Assets (C-D)

683,096,159

682,014,067

Total Application of Fund (A+B+E)

859,636,362

859,598,185


170 | P a g e

Annex-K-1


Statement of Comprehensive Income


Jan'15-Mar'15

Jan'14-Mar'14

Taka

Taka

A) OPERATING INCOME

13,207,510

25,318,496

Brokerage Commission

7,274,343

15,528,803

Interest Income

4,579,251

7,108,944

Investment Income

1,191,878

2,130,282

Other Operating Income

162,038

550,468

B) OPERATING & OTHER EXPENSE

11,588,183

12,344,601

Operating Expenses

10,278,043

11,037,880

Other Financial Expenses

6,689

15,738

Depreciation on Property, Plant & Equipment

1,303,451

1,290,983

C) Profit Before Provision (A-B)

1,619,327

12,973,896

D) Provision

344,485

623,795

For Diminution in Value of Investments

344,485

623,795

For Diminution in Value of Loan

-

-

E) Profit Before Taxation (C-D)

1,274,842

12,350,101

F) Provision for Taxation

1,869,413

5,987,335

Current Tax

2,128,950

6,131,238

Deferred Tax

(259,537)

(143,903)

Net (Loss)/Profit After Taxation (E-F)

(594,571)

6,362,766


171 | P a g e

Annex-L

Cashlink Bangladesh Limited and its Subsidiary

Consolidated Statement of Financial Position

As of 31 March 2015

31.03.2015

31.12.2014

ASSETS

Taka

Taka

Non Current Assets

Property, Plant and Equipment

231,701

249,872

Intangible Assets

3

3

Total Non Current Assets

231,704

249,874

Current Assets

Cash & Bank Balances

9,254,684

6,407,930

Investment in Shares

24,116,618

24,116,618

Advance, Deposit & Prepayment

278,884

278,884

Advance Tax

28,390,990

27,435,220

Accounts Receivable

486,878

691,262

Total Current Assets

62,528,053

58,929,914

Total Assets

62,759,753

59,179,783

EQUITY AND LIABILITIES

Equity

Share Capital

238,000,000

238,000,000

Share Money Deposit

4,200,000

4,200,000

Retained Loss

(360,008,572)

(378,712,146)

Total Equity

(117,808,572)

(136,512,146)

Liabilities

Non-Current Liabilities

Long Term Loan

9,742,006

9,742,006

Current Liabilities

Accrued Expenses

-

172,500

VAT Deducted at Source

17,920

25,781

Provision for Taxation

1,584,968

1,528,212

Short Term Loan from Bank

168,241,029

183,241,029

Provision for decrease in Market Value of Investment in Share 982,396

982,396

Total Current Liabilities

170,826,313

185,949,918

Total Liabilities

180,568,319

195,691,924

Total Equity and Liabilities

62,759,753

59,179,783


172 | P a g e

Annex-L-1

Cashlink Bangladesh Limited and its Subsidiary

Consolidated statement of profit or loss and other comprehensive income


Jan'15-Mar'15

Jan'14-Mar'14

Taka

Taka

Revenue

18,918,855

5,094,832

Less: Operating Expenses

13,715

7,329,642

General and Administration Expenses

144,809

180,545

Operating Profit

18,760,331

(2,415,355)

Add: Other Income/(Loss)

-

-

18,760,331

(2,415,355.43)

Less: Other Expenses

-

-

Profit Before Provision

18,760,331

(2,415,355.43)

Provision for decrease in Market Value of Investment in Share -

-

Profit Before Taxation

18,760,331

(2,415,355.43)

Income Tax Expenses

56,757

25,474.16

Net Profit After Tax

18,703,574

(2,440,829.59)

Other Comprehensive Income

-

-

18,703,574

(2,440,829.59)


173 | P a g e

Annex-M


Balance Sheet

As at 31 March 2015

31.03.2015

31.12.2014

HK$

HK$

NON-CURRENT ASSETS

Property, plant and equipment

13,065

17,048

CURRENT ASSETS

Discounted bills receivable

131,834,741

161,032,835

Deposits, prepayments and other receivable

757,300

823,645

Tax refundable

-

544,803

Cash and bank balances

992,969

2,001,991

133,585,009

164,403,274

CURRENT LIABILITIES

Accrued liabilities and other payables

25,142,577

4,674,413

Deferred interest income

-

1,586,061

Provision for long service payments

509,489

509,489

Due to ultimate holding company

95,801,644

139,786,750

Tax payable

-

-

121,453,710

146,556,713

NET CURRENT ASSETS

12,131,299

17,846,562

12,144,363

17,863,609

EQUITY

Share capital

1,000,000

1,000,000

Retained earnings

3,582,404

563,904

Proposed final dividend

-

8,737,746

Capital Reserve

7,561,960

7,561,960

12,144,363

17,863,609


174 | P a g e

Annex-M-1




Jan'15-Mar'15

Jan'14-Mar'14

HK$

HK$

Interest income

1,471,942

2,158,863

Interest expenses

(25,319)

(84,388)

Net interest income

1,446,623

2,074,475


2,299,325

2,393,476

Total operating income

3,745,948

4,467,952

Staff costs

(589,464)

(560,024)

Depreciation

(3,983)

(4,689)


(343,809)

(363,965)

Total operating expenses

(937,256)

(928,678)

Profit before taxation

2,808,692

3,539,274

Income tax

(463,434)

(583,980)

Net Profit for the period

2,345,258

2,955,294


175 | P a g e

Annex-N

AB Exchange (UK) Limited (ABEL)

Balance Sheet

As at 31 March 2015

31.03.2015

31.12.2014

GBP

GBP

FIXED ASSETS

Tangible Assets

25,708

31,210

25,708

31,210

Current Assets

Debtors

9,392

10,912

Cash at Bank and in Hand

46,268

55,543

55,661

66,455

Creditors

Amounts falling due within one year

(23,342)

(24,471)

Net Current Assets

32,319

41,984

Total Assets less Current Liabilities

58,027

73,194

Creditors

Amounts falling due after more than one year

-

-

Net Assets

58,027

73,194

CAPITAL AND RESERVES

58,027

73,194

Called up share capital

400,000

400,000

Profit and loss account

(341,973)

(326,806)

SHAREHOLDERS' FUND

58,027

73,194


176 | P a g e

Annex-N-1

AB Exchange (UK) Limited (ABEL)



Jan'15-Mar'15

Jan'14-Mar'14

GBP

GBP

Turnover

6,507

6,794


(21,674)

(22,470)

Loss on ordinary activities before taxation

(15,167)

(15,676)

Tax on loss on ordinary activities

-

-

Net Loss for the period

(15,167)

(15,676)


177 | P a g e

Annex - O


Statement of Financial Position

As at 31 March 2015

31.03.2015

31.12.2014

Taka

Taka

Sources of Funds

Shareholders' Equity:

Share Capital

20,000,000

20,000,000

Retained Earning

442,384,280

438,713,138

Total Shareholders' Equity 462,384,280

458,713,138

Application of Funds

Fixed Assets less accumulated depreciation 13,543,492

13,543,492

Current Assets, Loans and Advances

Balance with other Bank 53,407,256

55,920,970

Other current assets

350,000,000

350,000,000

Advances, deposit and prepayment 140,258,633

140,189,258

Accrued interest on FDR 8,308,078

215,832

Accrued interest on Investment in ABSL -

-

551,973,968

546,326,060

Current Liabilities and Provisions:

Liabilities for expenses

247,100

247,100

Other Liabilities

468,656

468,656

Provision for Tax

102,417,424

100,440,656

103,133,180

101,156,412

Net Current Assets 448,840,788

445,169,647

Total Application of Fund 462,384,280

458,713,138


178 | P a g e

Annex- O-1


Statement of Comprehensive Income


Jan'15-Mar'15

Jan'14-Mar'14

Taka

Taka

Income

8,785,995

11,971,760

Interest Income

8,785,995

11,971,760

Other Operating Income -

-

Less: Operating and Other Expenses 3,138,088

38,083,986

Operating Expenses 81,588

81,588

Financial Charge

6,000

345

Other Expenses (CSR) 3,050,500

38,002,053

Depreciation on Fixed Assets -

-

Profit/ (Loss) before Tax 5,647,908

(26,112,226)

Provision for Taxation

Current Tax

1,976,768

879,220

Net Profit/(Loss) after taxation 3,671,140

(26,991,445)


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Annex-P

Name of the Directors and Entities in which they had interest

As of 31 March 2015

Sl.

Name Status

Name of Firms / Companies in which interested as pro-

proprietor/partner/director/managing

agent/guarantor/employees etc. No

.

1 Mr. M. Wahidul Haque Chairman

Chairman:

- AB Bank Limited

- AB Investment Limited

- AB Securities Limited

- Cashlink Bangladesh Limited

- AB Exchange(UK) Ltd., London, UK.

Director:

-Amana Bank PLC, Colombo, SriLanka.

Managing Director:

-Deundi Tea Company (UK) Ltd.

-Noyapara Tea Co. Limited.

2 Mr. Salim Ahmed Vice-Chairman

1. Super Refinery (Pvt.) Ltd.

2. Elite Super Plastic Ind.(pvt.) Ltd.

3. Super Sea Fish (Pvt.) Ltd.

4. Super Share & Securities Ltd.

5. Elite Properties Management Ltd.

6. Elite Paint & Chemical Industries Ltd.

7. Hexagon Chemical Complex Ltd.

8. Elite International Ltd.

9. Supertel Ltd.

10. Bangladesh General Insurance Company Ltd.

11. AB Securities Ltd.-As director,(nominated by AB Bank Ltd.)

12. AB Investment Limited -As director, (nominated by AB Bank

Ltd.)

13. CashLink Bangladesh Ltd -As director (nominated by AB Bank

Ltd.)

3 Mr. Feroz Ahmed Director

1. AB International Finance Ltd., Hong Kong - as Chairman

(Nominated by AB Bank Ltd.)

2. Hexagaon Chemical Complex Ltd.- as Chairman

3. Elite Paint & Chemical Ind. Ltd.

4. Elite International Ltd.

5. FDN Energy Ltd.

6. Ahmed Securities Services Ltd.

7. Universal Shipping & Trawling Company

8. Bangladesh General Insurance Company Ltd.

9. Holy Crescent Hospital

4 Mr. M. A. Awal Director AB International Finance Ltd., Hong Kong, - as Director


5 Mr. Shishir Ranjan Bose,

FCA

Independent

Director

1. S .R. Bose & Co. - Chartered Accountants as Proprietor

2. AB Securities Ltd. - as Independent Director. *

3. Cashlink Bangladesh Ltd. - as Independent Director *

4. AB Exchange (UK) - as Independent Director *

5. Therapeutics (Bangladesh) Ltd. -as Independent Director


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(* Nominated by AB Bank Ltd. for Sl. No. 2, 3 & 4)

6 Mr. Faheemul Huq,

Barrister-at-Law Director N/A

7 Mr. Syed Afzal Hasan

Uddin, Barrister-at-Law Director

1) Syed Ishtiaq Ahmed & Associates

2) AB Exchange (UK) Ltd.- Nominee Director


3) Square Textiles Ltd. - Independent Director

4) Western Marine Shipyard Ltd - Independent Director

5) Color City Ltd.- Independent Director

6) Millennium Aviation Ltd. - Nominee Director

7) Managewell Media Ltd.- Nominee Director

8) Forward Air Aviation Ltd- Nominee Director

9) Managewell Holdings Ltd.

10) Managewell Investment Ltd.

11) Managewell Service Ltd.

8 Mr. Gholam Sarwar Director

1) Pacific Industries Limited

2) Pacific Traders Ltd.

3) Therapeutics (Bd.) Limited

9 Mr. Md. Mesbahul Hoque Director Therapeutics (BD) Ltd. -as Managing Director

10 Mr. B.B. Saha Roy Director 1) Elite Paint & Chemical Industries Ltd.

2) Hexagaon Chemical Complex Ltd.

11 Dr. M. Imtiaz Hossain Independent

Director

AB Investment Ltd. - As Independent Director (Nominated by AB

Bank Ltd.)

12 Mr. Shamim Ahmed

Chaudhury

President &

Managing

Director

1) AB Securities Ltd. - As Director

2) Cashlink Bangladesh Ltd. - As nominee Director



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11 Comparative Financial Statements of AB Bank Limited for the Last 3

(Three) Years

AB Bank Limited & Its Subsidiaries

Consolidated Balance Sheet

As on December 31, 2014

BALANCE SHEET BDT Million


PROPERTY AND ASSET

Cash 9,622.89 11,362.38 13,950.48

In hand (including foreign currencies) 1,231.72 1,328.23 1,140.71

Balance with Bangladesh Bank and its agent bank(s) (including

foreign currencies) 8,391.17 10,034.15 12,809.77

Balance with others bank and financial institutions 7,473.56 5,983.96 6,555.72

In Bangladesh 5,621.79 4,746.24 4,214.89

Outside Bangladesh 1,851.77 1,237.72 2,340.83

Money at call and on short notice 3,671.79 991.39 2,456.99

Investment 26,949.60 29,617.30 31,717.88

Government 19,743.45 22,327.87 25,305.84

Others 7,206.14 7,289.43 6,412.04

Lease, advances and lease/investments 113,662.98 147,128.88 184,737.89

Loans, cash credits, overdrafts, etc./Investments 111,311.73 144,545.64 181,936.61

Bills purchased and discounted 2,351.26 2,583.24 2,801.28

Fixed assets including premises, furniture and fixtures 4,868.65 4,741.80 4,940.11

Other Asset 9,267.84 9,923.07 12,455.47

Non-banking assets - - -

Total Assets 175,517.31 209,748.77 256,814.54


Liabilities

Borrowings from other banks & financial institutions and

agents 4,116.98 10,391.32 11,385.67

AB Bank Subordinated Bond - - 2,500.00

Deposits and other accounts 139,908.04 161,609.89 198,116.76

Current account and other accounts 13,487.22 15,746.42 17,645.00

Bills payable 1,467.15 1,140.18 1,195.05

Savings bank deposits 14,860.54 17,093.46 19,42752

Fixed deposit 80,452.71 91,742.14 117,532.92


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Other deposits 29,640.42 35,887.70 42,316.26

Other Liability 15,290.01 20,454.51 26,062.45

Total Liabilities 159,315.04 192,455.72 238,064.88


Paid-up Capital 4,423.34 4,976.25 5,324.59

Statutory Reserve 5,005.31 5,564.80 5,582.44

Retained Earnings 5,261.73 1,596.51 1,817.45

Other Reserve 1,532.12 5,171.13 6,034.62

Minority Interest (20.23) (15.64) (9.44)

Total Equity 16,202.27 17,293.05 18,749.66

Total Liability and Equity 175,517.31 209,748.77 256,814.54


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Consolidated Profit and Loss Account

As at December 31, 2014

BDT Million


Operating

OPERATING INCOME

Interest income/profit on investments 16,497.56 18,365.00 21,920.29

Interest Expenses 12,686.93 14,281.08 15,461.35

Net interest income 3,810.63 4,083.92 6,458.94

Income from Investment 2,326.18 2,715.06 2,807.06

Commission, exchange and brokerage 2,689.96 3,159.60 3,338.08

Other operating income 191.68 163.21 174.25

5,207.81 6,037.87 6,319.39

Total operating income 9,018.45 10,121.79 12,778.34

OPERATING EXPENSES

Salary and allowances 1,951.19 2,146.76 2,690.42

Rent, taxes, insurance, electricity, etc 429.86 481.60 595.08

Legal expenses 11.09 14.04 18.85

Postage, stamps, telecommunication, etc 136.87 132.46 140.42

Stationery, printing, advertisement, etc 159.18 166.31 164.38

Chief executive's salary and fees 8.68 11.43 12.14

Directors' fees 3.19 3.06 9.85

Auditors' fees 6.03 3.40 3.23

Charges on loan losses - - -

Depreciation and repairs of Bank's assets 459.76 650.70 550.59

Other expenses 1,133.21 967.03 1,219.96

Total operating expenses 4,299.07 4,576.81 5,404.92

Profit before provision 4,719.38 5,544.98 7,373.42

Provision against loans and advances 712.18 1,667.13 2,290.25

Provision for diminution in value of investments 426.57 464.45 42.43

Other provisions 84.36 240.15 660.09

Total provision 1,223.10 2,371.72 2,992.76

Profit before tax 3,496.27 3,173.26 4,380.65

Provision for taxation 2,034.46 2,074.82 2,879.07

Current Tax 1,975.21 2,065.63 2,849.44

Deferred Tax 59.25 9.19 29.63

Net Profit 1,461.81 1,098.44 1,501.58

Appropriations

Statutory Reserve 624.07 574.48 22,07

General Reserve - - -


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Dividends, etc - - -

624.07 574.48 22.07

Retained surplus 837.75 523.96 1,489.51

Minority interest (5.14) 4.74 6.37

Net Profit attributable to the shareholders of parent

company 842.89 519.22 1,473.14

Consolidated Earnings Per Share (EPS) 2.94 2.21 2.81


185 | P a g e


Consolidated Cash Flow Statement

As at December 31, 2014 BDT Million


Cash flows from operating activities

Interest receipts in cash 16,110.25 17,868.91 21,143.54

Interest payments (12,084.82) (13,660.16) (15,281.17)

Dividend receipts 428.30 92.38 90.78

Fees and commission receipts in cash 1,917.64 2,302.35 2,299.04

Recoveries of loans previously written off 35.17 4.15 16.28

Payments to employees (1,959.87) (2,158.19) (2,702.56)

Payments to suppliers (165.21) (166.31) (164,38)

Income taxes paid (1,255.46) (1,694.16) (2,379.02)

Receipts from other operating activities 2,826.71 3,638.98 3,913.29

Payments for other operating activities (1,780.62) (1,862.63) (2,182.60)

Operating profit before changes in operating assets & liabilities 4,072.08 4,365.31 4,753.20

Increase / (decrease) in operating assets and liabilities

Loans and advances to customers (10,805.53) (32,969.80) (38,555.98)

Other assets (50.42) 1,045.63 (345.95)

Deposits from other banks / borrowings (1,518.31) 601.24 5,977.46

Deposits from customers 24,998.75 20,479.70 30,349.23

Trading liabilities (6,611.57) 6,278.48 1,055.81

Other liabilities (964.28) 711.48 1,617.61

5,048.64 (3,853.27) 98.18

Net cash from operating activities 9,120.73 512.04 4,851.39

Cash flows from investing activities

Purchase of government securities (3,630.13) (2,585.56) (2,749.73)

Purchases of trading securities, shares, bonds, etc. (835.64) (83.29) 877.39

Purchase of property, plant and equipment (461.91) (269.77) (553.68)

Net cash used in investing activities (4,927.68) (2,938.62) (2,426.03)

Cash flows from financing activities

Increase /(decrease) of long-term borrowings 30.36 (4.14) 2,438.54

Dividend paid (178.01) (0.94) (239.08)

Net cash used in financing activities (147.65) (5.08) 2,199.46

Net increase / (decrease) in cash and cash equivalents 4,045.39 (2,431.66) 4,624.82

Effects of exchange rate changes on cash and cash Equivalents - - -

Cash and cash equivalents at beginning of the year 16,727.87 20,773.26 18,341.60

Cash and cash equivalents at end of the year * 20,773.26 18,341.60 22,966.42


186 | P a g e

*Cash and cash equivalents:

Cash 1,231.72 1,328.23 1,140.71

Prize bonds 5.02 3.87 3.23

Money at call and short notice 3,671.79 991.39 2,456.99

Balance with Bangladesh Bank and its agent bank(s) 8,391.17 10,034.15 12,809.77

Balance with other banks and financial institutions 7,473.56 5,983.96 6,555.72

20,773.26 18,341.60 22,966.42


187 | P a g e

AB Bank Limited

Balance Sheet


BDT Million


PROPERTY AND ASSET

Cash 9,622.84 11,359.52 13,947.71

In hand (including foreign currencies) 1,231.67 1,325.37 1,137.94

Balance with Bangladesh Bank and its agent bank(s) (including

foreign currencies) 8,391.17 10,034.15 12,809.77

Balance with others bank and financial institutions 8,877.07 5,978.97 6,488.69

In Bangladesh 5,616.08 4,744.16 4,171.81

Outside Bangladesh 3,260.99 1,234.81 2,316.88

Money at call and on short notice 3,671.79 2,251.40 3,862.96

Investment 26,114.79 28,675.70 30,778.58

Government 19,743.45 22,327.87 25,305.84

Others 6,371.33 6,347.83 5,472.74

Lease, advances and lease/investments 106,065.76 140,121.30 177,570.80

Loans, cash credits, overdrafts, etc/Investments 105,373.79 139,067.74 176,387.45

Bills purchased and discounted 691.97 1,053.56 1,183.35

Fixed assets including premises, furniture and fixtures 4,229.52 4,172.56 4,404.99

Other Asset 15,260.66 15,446.09 17,614.43

Non-banking assets - - -

Total Assets 173,842.43 208,005.54 254,668.16


Liabilities

Borrowings from other banks & financial institutions and

agents 3,649.26 9,987.49 10,976.81

AB Bank Subordinated Bond - - 2,500.00

Deposits and other accounts 140,025.95 161,846.28 198,189.20

Current account and other accounts 13,487.69 15,742.02 17,639.79

Bills payable 1,467.15 1,140.18 1,195.05

Savings bank deposits 14,860.54 17,093.46 19,427.52

Fixed deposits 80,452.71 91,742.14 117,532.92

Other deposits 29,757.87 36,128.48 42,393.92

Other Liability 14,133.41 19,231.73 24,845.03


188 | P a g e

Total Liabilities 157,808.62 191,065.49 236,511.04


Paid-up Capital 4,423.34 4,976.25 5,324.59

Statutory Reserve 5,005.31 5,564.80 5,582.44

Other Reserve 1,446.25 1,412.63 1,638.26

Retained Earnings 5,158.90 4,986.37 5,611.82

Total Equity 16,033.81 16,940.05 18,157.11

Total Liability and Equity 173,842.43 208,005.54 254,668.16


189 | P a g e

AB Bank Limited



BDT Million


Operating

OPERATING INCOME

Interest income/profit on investments 15,714.01 17,953.05 21,398.79

Interest Expenses 12,591.50 14,173.53 15,320.01

Net interest income 3,122.51 3,779.52 6,078.78

Investment Income 2,714.13 2,841.54 2,878.40

Commission, exchange and brokerage 2,461.27 3,020.52 3,067.52

Other operating income 137.04 113.56 130.10

5,312.44 5,975.61 6,076.03

Total operating income 8,434.94 9,755.14 12,154.81

OPERATING EXPENSES

Salary and allowances 1,868.14 2,081.59 2,613.95

Rent, taxes, insurance, electricity, etc. 409.53 467.49 579.34

Legal expenses 10.11 13.26 17.95

Postage, stamps, telecommunication, etc. 146.33 139.47 131.29

Stationery, printing, advertisement, etc. 175.41 164.68 161.99

Chief executive's salary and fees 8.68 11.43 12.14

Directors' fees 2.84 2.51 9.25

Auditors' fees 4.92 2.46 2.31

Depreciation and repairs of Bank's assets 617.64 576.30 514.52

Other expenses 828.31 1,006.29 1,187.21

Total operating expenses 4,071.92 4,465.48 5,229.96

Profit before provision 4,363.03 5,289.66 6,924.84

Provision against loans and advances 712.18 1,667.13 2,286.22

Provision for diminution in value of investments 376.40 397.90 -

Other provisions 84.16 240.00 659.99

Total provision 1,172.74 2,305.03 2,946.22

Profit before tax 3,190.29 2,984.63 3,978.63

Provision for taxation 1,751.75 1,973.64 2,718.60

Current Tax 1,708.29 1,976.44 2,691.50

Deferred Tax 43.46 (2.81) (27.09)

Net Profit 1,438.54 1,011.00 1,260.03

Appropriations

Statutory Reserve 624.07 574.48 22.07

General Reserve - - -

Dividends, etc. - - -

624.07 574.48 22.07

Retained surplus 814.47 436.52 1,237.96

Earnings Per Share (EPS) 2.89 1.90 2.37


190 | P a g e

AB Bank Limited

Cash Flow Statement


BDT Million


Cash flows from operating activities

Interest receipts 15,326.69 17,456.95 20,622.04

Interest payments (11,989.39) (13,552.61) (15,139.84)

Dividend receipts 428.30 203.26 170.58

Fees and commission receipts in cash 1,679.20 2,157.33 2,016.79

Recoveries of loans previously written off 35.17 4.15 16.28

Payments to employees (1,876.83) (2,093.03) (2,626.10)

Payments to suppliers (157.49) (164.68) (161.99)

Income taxes paid (1,548.94) (1,489.85) (2,300.91)

Receipts from other operating activities 3,169.78 3,610.87 3,872.38

Payments for other operating activities (1,721.79) (1,911.52) (2,120.70)

Operating profit before changes in operating assets &

liabilities 3,344.70 4,220.88 4,348.54

Increase / (decrease) in operating assets and liabilities

Loans and advances to customers (11,040.23) (33,559.44) (38,396.47)

Other assets 565.68 1,202.07 (7,49)

Deposits from other banks / borrowings (1,518.31) 601.24 5,977.46

Deposits from customers 24,790.28 20,598.17 30,185.28

Trading liabilities (6,629.29) 6,342.37 1,050.78

Other liabilities (364.70) 845.32 1,779.58

5,803.45 (3,970.27) 589.15

Net cash from operating activities 9,148.15 250.61 4,937.69

Cash flows from investing activities

Purchase of government securities (3,630.13) (2,585.56) (2,749.73)

Purchases of trading securities, shares, bonds, etc. (928.91) 23.50 875.10

Purchase of property, plant and equipment (459.66) (266.43) (553.68)

Net cash used in investing activities (5,018.70) (2,828.49) (2,428.32)

Cash flows from financing activities

Increase/(decrease of long-term borrowings) 30.36 (4.14)

2,438.54

Dividend paid (178.01) (0.94)

(239.08)

Net cash used in financing activities (147.65) (5.08)

2,199.46

Net increase / (decrease) in cash and cash equivalents 3,981.80 (2,582.96) 4,708.82

Effects of exchange rate changes on cash and cash Equivalents - - -


191 | P a g e

Cash and cash equivalents at beginning of the year 18,194.92 22,176.72 19,593.77

Cash and cash equivalents at end of the year * 22,176.72 19,593.77 24,302.59

*Cash and cash equivalents:

Cash 1,231.67 1,325.37 1,137.94

Prize bonds 5.02 3.87 3.23

Money at call and short notice 3,671.79 991.39

3,862.96

Balance with Bangladesh Bank and its agent bank(s) 8,391.17 10,034.15 12,809.77

Balance with other banks and financial institutions 8,877.07 7,238.99 6,488.69

22,176.72 19,593.76 24,302.59


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12 Financial Ratios for last 3 (Three) Years

Table 33: Financial Ratios of ABBL for Last Three Years (on solo basis)

SL. Financial Ratios 2012 2013 2014

1 Current Ratio (Times) 0.77 1.002 1.02

2 Quick Ratio* N/A N/A N/A

3 Times Interest Earned Ratio* N/A N/A N/A

4 Break-Even Point* N/A N/A N/A

5 Debt to Equity Ratio (Times) 9.84 11.28 13.03

6 Debt to Total Asset Ratio (%) 90.78% 91.86% 92.87%

7 Accounts Receivable Turnover Ratio* N/A N/A N/A

8 Inventory Turnover Ratio* N/A N/A N/A

9 Asset Turnover Ratio* N/A N/A N/A

10 Debt Service Coverage Ratio* N/A N/A N/A

11 Gross Margin Ratio* N/A N/A N/A

12 Operating Income Ratio* N/A N/A N/A

13 Net Income Ratio* N/A N/A N/A

14 Net Interest Margin (MII) 2.32% 2.36% 3.10%

15 Loan Deposit Ratio 75.75% 86.58% 89.60%

16 Cost Income Ratio 48.28% 45.78% 43.03%

17 Return on Investments (ROI) 11.39% 10.37% 9.68%

18 Return on Avg. Assets 0.88% 0.53% 0.54%

19 Capital Adequacy Ratio (CAR) 10.70% 11.57% 10.77%

20 Non-performing Loan Ratio 3.32% 3.37% 3.86%

21 Return on Avg. Equity 9.32% 6.13% 7.18%

22 Diluted Earnings Per Share 2.70 1.90 2.37

23 Diluted NAV per Share 30.14 31.84 34.13

* The Issuer of Subordinated Bond i.e. AB Bank Limited operates in banking industry which is a service

industry. Considering the business nature of the Issuer, only relevant financial ratios have been presented

above.


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13 Credit Rating Report of the Issue

Rating Report

Subordinated Bond-II (up to BDT 4,000.0 million) of AB Bank Ltd

Bond Ratings

Long Term : A1(hyb)

Outlook : Stable

Entity Rating

Date of Rating Long Term Short Term Outlook

30 April 2015 AA3 ST-2 Stable

Date of Rating: 4 June 2015

Rating Based on: Audited financial statements of the Bank as of 31 March 2015, audited financial

statements of the Bank as of 31 December 2014 and other relevant information up to the date of rating

declaration.

Methodology: CRAB’s Rating Methodology (www.crab.com.bd)

Analysts:

Shahtaj Noor

[email protected]

Shayla Afsari Lubna

[email protected]

ISSUER PROFILE

AB Bank Limited (hereafter also called ABBL or the Bank) was incorporated on 31st December 1981 and

started its operation from April 12, 1982 as the first private sector bank of the country. It was formerly

known as Arab Bangladesh Bank Limited. The Bank went into IPO in 1983. ABBL provides all kinds of

commercial banking products and services to the customers through its wide network of branches.

Presently the Bank has 93 branches including one Islamic banking branch and one overseas branch

(Mumbai). The paid up capital of ABBL reached BDT 5,324.6 million at the end of March 2015. The

Bank has six subsidiary companies, namely AB Investment Limited, AB Securities Limited, Cashlink

Bangladesh Limited, AB International Finance Limited, AB Exchange (UK) Limited and Arab

Bangladesh Bank Foundation.

ABBL is planning to issue Tier II Bond (subordinated coupon bonds worth BDT 4,000.0 million have

denomination of each BDT 10.0 million with 14 coupons). Coupons will be paid semi-annually at

reference rate plus interest margin on outstanding principal. The principal of the Bonds will be redeemed

in 5 installments at 20% at the end of third to seventh year from Settlement Date. The final maturity of the

Bonds will be at the end of seventh year of the Bonds from the Issue Date.

RATIONALE

Credit Rating Agency of Bangladesh Limited (CRAB) has assigned AB Bank Limited’s issue of

subordinated Bond-II of BDT 4,000 million an “A1 (Hyb)” (pronounced Single A One Hybrid) expected

rating, in line with CRAB’s standard notching practices. The assignment of the final rating follows the

http://www.crab.com.bd/


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completion of the bond issuance and receipts of documents conforming to the information received at the

time of issuing this rating. According to the Term Sheet provided to CRAB, the bonds will be permanently

redeemed to zero and no contractual loss absorption to the bondholders upon the point of non-viability

which is consistent with Bangladesh Bank’s Basel II bank capital regulations. The rating is positioned one

notch below AB Bank’s AA3 adjusted baseline credit assessment (adjusted BCA). The rating outlook is

stable, reflecting the outlook on the bank’s credit rating.

Key Rating Drivers:

The subordinated bond-II has been structured for Tier 2 own fund eligibility according to BB regulation.

According to CRAB methodology, the subordinated bond is classified as capital due to regulatory override

within CRAB’s risk based capital calculation and is classified as debt for the agency’s financial leverage

calculations. The new issue is expected by CRAB to increase financial leverage on a pro-forma basis to

11.9X from 11.7X based on 31 December2014 figures, which remains strong for AB Bank’srating.

As the A1 (Hyb) rating is linked to AB Bank’s BCA, the rating could be upgraded when AB’s BCA is

upgraded. Going forward, the bank’s BCA could be revised upwards when the bank consistently maintain

: [1] gross non-performing loans (NPL) below 2.0% of total loans; and/or [2] net income of more than

2.0% of average risk weighted assets; and or [3] high level of loss absorption capacity reflected by Tier 1

ratio of above 10.5%

Conversely, the rating could be downgraded when ABBL's BCA is downgraded, particularly if: [1]

aggressive organic expansion or acquisitions result in a significant increase in its risk profile; and/or [2] the

operating environment weakens significantly or underwriting practices become loose, resulting in the gross

NPL ratio exceeding 4%; and/or [3] an increase in NPLs without a corresponding increase in loan loss

provisions, resulting in the NPL coverage falling below 80%; and/or [4] a material decline in its capital

buffer, such that Tier 1 ratio falls below 8.5%.

KEY FEATURES OF THE INSTRUMENT

Issuer: AB Bank Limited

Issue Type: Tier-2 Eligible Subordinated Bond

Purpose: To raise Tier-2 Capital and thereby enhancing Capital to Risk

Weighted Assets Ratio (CRAR) as per “Guidelines on Risk Based

Capital Adequacy” of Bangladesh Bank

Mode of Placement: Private Placement

Currency: Bangladeshi Taka

Investors: A group of institutional and individual investors

Issue Size: BDT 4,000,000,000 (Four Billion)

Face Value: BDT 10,000,000 (Ten Million) Per Bond

Total Bonds to be issued: 400 (Four Hundred)

http://www.reuters.com/finance/bonds?lc=int_mb_1001


195 | P a g e

Lot Size: 1 (One) Bond per lot

Tenor: 84 Months from the date of issue, 2 year moratorium and

subsequently annual 20% repayment of the principal

Trustee: IDLC Finance Limited

Lead Arranger: RSA Capital

Coupon Rate: Reference Rate + Coupon Margin

Reference Rate: Latest 5-year Bangladesh Government Treasury Bond Cut-off Yield

as published on Bangladesh Bank website or other publication

sources on the quotation day

Quotation Day 5 Business Days before the first day of any period for which Coupon

is to be paid

Coupon Margin: 3.00%

Range of Coupon Rate: 11.50% to 13.50% at all times

Yield to Maturity / Rate of

Return

Coupon Rate

Coupon Payment Dates: Coupon to be paid semi-annually. First coupon will be paid after six

months of the drawdown.

Repayment Schedule: The principal redemptions will be in five tranches, each tranche

being 20% of the principal amount commencing at the end of third

year from the date of the issuance.


Year Redemption

1 Nil

2 Nil

3 20.0%

4 20.0%

5 20.0%

6 20.0%

7 20.0%

Financial Covenants: Capital to Risk Weighted Assets Ratio

(CRAR)

>10%*

* And as updated by

Bangladesh Bank from

time to time

Cost to Income Ratio <70%

Non-convertible: The Bonds are not convertible into Ordinary Shares


196 | P a g e

Non-callable: The Bonds are not callable

Tax Feature: According to the laws of Bangladesh

Security Unsecured

Transferability/Liquidity: Freely transferable in accordance with the provisions of the Deed of

Trust

Governing Law: Laws of Bangladesh.

Costs Related to the issue: Costs to Third Parties: Trustee fees, Bond Rating fees, Lead

Arranger fees and Legal Counsel fees.

BSEC Fee:


Consent Fee of 0.10% on the Total Face Value of the

Bonds to be Issued

Printing and Other Expenses: BDT 25,000 (Twenty Five

Thousand)

Others: Any stamp duty, levy or other form of charges applied by the

Government of Bangladesh or any of its agencies or political

subdivisions shall be for the account of the Issuer.

Transaction Structure

Table 2

Transaction Structure of the Bond for Single denomination of BDT 10.0 million

Semi-

Annually

Coupon No

Outstanding

Amount

of the

Principal2

Each Coupon

Amount

@11.5%

Each Coupon

Amount

@12.5%

Each Coupon

Amount

@13.5%

Redemption

Amount of

Principal

1st-5th 10,000,000 575,000 625,000 675,000

6th 10,000,000 575,000 625,000 675,000 2,000,000

7th 8,000,000 460,000 500,000 540,000

8th 8,000,000 460,000 500,000 540,000 2,000,000

9th 6,000,000 345,000 375,000 405,000

10th 6,000,000 345,000 375,000 405,000 2,000,000

11th 4,000,000 230,000 250,000 270,000

12th 4,000,000 230,000 250,000 270,000 2,000,000

13th 2,000,000 115,000 125,000 135,000

14th 2,000,000 115,000 125,000 135,000 2,000,000

2 Principal outstanding is shown just at the day of coupon payment


197 | P a g e

ABBL is going to issue subordinated coupon bonds worth BDT 4,000.0 million have denomination of

each BDT 10.0 million with 14 coupons. Coupons will be paid semi-annually at the rate of reference rate

plus interest margin on outstanding principal. Coupon rate of the Bank will be determined as 5 years

Bangladesh Govt T-bond yield +3%, ranging 11.5%~13.5% which can be verified upon regulatory

approval. The principal of the Bonds will be redeemed in 5 installments at 20% at the end of third to

seventh year from settlement Date. The final maturity of the Bonds will be at the end of seventh year of

the Bonds from the Issue Date.

Interest Rate Risk of the Bond

Redemption of the bonds will start at the

third anniversary from the date of issuance

as the bond is not listed in any bourses, these

can only be traded privately. However, yield

of the bond may be affected by interest rate

movement of the country considering the long

term nature of the bond. Last 18 months 5-

years T-bond yield shows that highest yield

was 11.8% in Sept’13 and the lowest figure

was 9.5% in Mar’15. On the other hand,

highest fixed deposit rate of AB Bank for 24

months and more terms is now 9.75%.

Risk Factors

Credit Risk

The stress test for credit risk assessed the impact of increase level of non- performing loans of the issuer.

This involves two types of shocks.

1) Increase in NPL Amount

Table 2

Credit Risk – Increase in NPL Amount

Mil.BDT --As of 31 December 2014--

Magnitude of Shock After Shock Additional Provision

Required

Tax Adjusted Loss

5% 337.7 143.5

10% 675.5 287.1

20% 1,350.9 574.1

Increased NPLs directly downgraded to bad & loss category having 100% provisioning requirement.

Shocks are given to NPL amount of BDT 6,754.6 million as of 31 December 2014.

2) Shift in NPLs categories

Table 3

Credit Risk – Shift in NPL categories

Mil.BDT --As of 31 December 2014--

Magnitude of

Shock

After Shock Additional Provision

Required

Tax adjusted

Loss 50% 186.5 107.3

80% 298.4 171.6

100% 373.1 214.5

Graph 1

Yield Curve of 5 Years T-Bond

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Sep

-13

Oct

-13

No

v-1

3

De

c-13

Jan

-14

Feb

-14

Ma

r-14

Ap

r-1

4

Ma

y-1

4

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

De

c-14

Jan

-15

Feb

-15

Ma

r-15

Yield (%)


198 | P a g e

The three scenarios explained the impact of 50%, 80% and 100% downward shift in the NPLs categories

without changing the total NPL. For 50% shift in NPL category tax adjusted loss of ABBL would be BDT

107.3 million whereas for 100% shift in next NPL categories, tax adjusted loss would be BDT 214.5

million. Shocks are given to BDT 6,035.7 million weighted base for provision3 (required).

Equity Price Risk

Table 4

Equity Price Risk – Fall in Stock Market Prices

Mil. BDT --As of 31 December 2014--

Magnitude of Shock Tax adjusted Loss

10% 447.6

20% 895.1

40% 1,790.2

The stress test equity price risk assessed the impact of the fall in the stock market index. In this regard,

total exposure in stock market was given shocks of 10%, 20% and 40% fall from their cost value for all

three scenarios respectively. Shocks are given to Company’s BDT 4,972.9 million exposures in stock

market as of 31 December 2014.

Key Rating Drivers

Return on average assets before tax (ROAA) of

Bank was in the line with PCB average for the

last four years. In 2014, ROAA was 1.7%.

Net interest margin (NIM) of the Bank shown a

zigzag trend for the last couple of years. In

2014, NIM increased by 0.8 percentage points to

3.6% which was close to PCB industry average.

3 Weighted base for provision is the sum of weighted base for provisions in each category of classified loans where weights being the

rate of provision required against each category.

Graph 1

Return on Average Asset (Before Tax)

Graph 2

Net Interest Margin

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2009 2010 2011 2012 2013 2014

Industry Avg Industry Percentile 25

Industry Percentile 75 AB Bank

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2009 2010 2011 2012 2013 2014

Industry Median Industry Percentile 25



199 | P a g e

Risk weighted capital adequacy ratio

(RWCAR) of the Bank dropped below just in

line with the regulatory requirement (10.0%),

but lower than the PCB average for the last two

years.

The Bank’s cost to income ratio was 43.0% in

2014 which was slightly lower than PCB

industry average (45.5%).

The Bank’s gross NPL ratio of the Bank lower

than that of the PCB median for the last three

years on the back of substantial loan growth as

well as from high loan rescheduling. In 2014,

gross NPL ratio of the Bank was 3.8%.

Over the years ABBL’s average cost of deposit and

borrowings was in line with the PCB industry

median. In 2014, average cost of deposit and

borrowings of the bank was 8.0% which was

slightly higher than PCB industry average.

Graph 3

Risk Weighted Capital Adequacy Ratio

Graph 4

Cost to Income Ratio

Graph 5

Gross NPL Ratio

Graph 6

Average Cost of Deposit and Borrowing

8.0

9.0

10.0

11.0

12.0

13.0

14.0

15.0

2009 2010 2011 2012 2013 2014



0.0

10.0

20.0

30.0

40.0

50.0

60.0

2009 2010 2011 2012 2013 2014



0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2009 2010 2011 2012 2013 2014



4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

2009 2010 2011 2012 2013




200 | P a g e

1st Quarter Performance of the Bank

Table 3

1st Quarter Performance of the Bank Month (3) Growth (%) (12)

(Mil. BDT) 2015 2014

Loans 183,850.7 3.5 177,570.8

Deposit 203,629.6 2.7 198,189.2

Gross NPL 7,442.6 10.2 6,754.6

Loans to Deposit Ratio (%) 90.3 89.6

Gross NPL Ratio (%) 4.0 3.8

RWCAR (%) 10.0 10.3

As of 31 March 2015, total loans portfolio of the Bank reached BDT 183,850.7 million, whereas the

deposit was BDT 177,570.8 million registering a growth of 3.5%. Loans to deposit ratio of the Bank was

90.3% at the end of March 2015 (2014: 896%). The gross NPL increased to BDT 7,442.6 million by the

end of March 2015 from BDT 6,754.6 million in December 2014. Therefore, gross NPL ratio of the Bank

increased to 4.0% at the end of 31 March 2015. Profit before provision reached BDT 1,496.2 million at

the end of March 2015. Profit after tax reached BDT 516.4 million by the end of March 2015.

Table 4

1st Quarter Performance of the Bank Month (3) (3)

(Mil. BDT) 2015 2014

Net Interest Income 1,206.8 1,132.2

Total Operating Income 2,697.1 2,734.8

Profit before Provision 1,496.2 1,634.4

Profit After Tax 516.4 356.3

OPERATIONAL PERFORMANCE AS OF 31 DECEMBER 2014

(All data disclosed below relate specifically to the Bank including the Offshore Banking Unit and all the

comparison are based on 2013 unless specifically mentioned.)

Earnings and Volatility

Table 1

Income Segregation of the Bank

--Year ended December 31--

(Mil. BDT) 2014 2013

Amount % Growth (%) Amount % Growth

(%) Net Interest Income 6,078.8 50.0 60.8 3,779.5 38.7 21.0

Investment Income 2,878.4 23.7 1.3 2,841.5 29.1 4.7

Commission/Fees Income 3,067.5 25.2 1.6 3,020.5 31.0 22.7

Other Operating Income 130.1 1.1 14.6 113.6 1.2 (17.1)

Total Operating Income 12,154.8 100.0 24.6 9,755.1 100.0 15.7


201 | P a g e

The revenue trend of the Bank for the last five years showed that, net interest income dominated the

revenue stream on an average of 37.7% followed by commission and fee based income (on an average

26.7%). In 2014, total operating income of the Bank was dominated by net interest income (50.0% of

total) followed by commission/fees & exchange (25.2% of total) and investment income (23.7% of total).

In 2014, contribution of net interest income increased by 11.3 percentage points mainly resulted from

increased interest spread due to 26.7% growth of loans & advances. Other operating income was BDT

130.1 million which consists of miscellaneous income and recoveries of assets.

Table 2

Key Performance Indicator of the Bank


(Mil. BDT) 2014 2013 2012

Amount Growth Amount Growth Amount Growth

Interest Income 8.893212 .318 ..839911 ..18 .98...11 8819

Interest Expense .9898111 21. ..8..919 .811 .8893.19 8111

Net Interest Income 8.876,6 1112 5.777,3 8.11 5.211,3 911.

Investment Income 882.21. .19 882..19 .1. 88...1. 812

Comm./fees & Exchange Income 9811.19 .11 9818119 881. 88.1.19 ..18

Other Operating Income .911. ..11 ..911 (..1.) .9.11 (.819)

Total Operating Income 21.23,,6 1,,8 7.733,2 23,7 6.,5,,7 6,7

Personnel Expense 881811. 8919 8813911 ..19 .82.112 .81.

Overhead Expense 8811913 312 889.81. 21. 88.391. 8.11

Total Operating Expense 3.158,8 27,2 ,.,83,3 7,7 ,.872,7 26,7

Pre Provision Profit 8.71,,6 58,7 3.167,7 12,1 ,.585,8 2,1

Provision 883.118 8.12 8891911 3111 .8..81. (.91.)

Profit Before Taxes 983.211 9919 8832.11 (11.) 98.3119 .13

Provision for tax 88..211 9.1. .83.911 .81. .8.9.1. .19

Profit After Tax 2.188,8 1,,8 2.822,8 (17,7) 2.,56,3 6,5

In 2014, interest income of the Bank increased by 19.2% mainly resulted from 26.7% of loan growth. On

the other hand, interest expense grew by 8.1% during the same period resulted from 22.5% increased

deposit base. As an overall effect, net interest income soared by 60.8% in 2014 and reached BDT 6,078.8

million. The interest income of the Bank was mainly dominated by interest on loans and advances

followed by interest on call market operation. Investment income of the Bank increased marginally (by

1.3%) in 2014 and reached BDT 2,878.4 million. Commission, fees & exchange income of the Bank also

remained almost stable in 2014 compared to 2013. Major drivers of commission, fees & exchange income

were commission on LC and dealing profit. Total operating income of the Bank grew by 24.6% and

reached BDT 12,154.8 million in 2014.

Total operating expense of the Bank increased by 17.1% in 2014 and reached BDT 5,230.0 million. On an

average round 51.3% of operating expenses comprised of infrastructure and overhead expense and the

rest are personnel expenses for the last five years. The Bank’s staff cost increased by 25.5% in 2014,

whereas overhead & administrative expenses increased by 9.8%. The cost to income ratio of the Bank

improved by 2.8 percentage points to 43.0% in 2014 resulted from the higher operating income. The

Bank’s cost to income ratios was lower than the banking industry average.


202 | P a g e

Table 3

Efficiency Ratios of the Bank


Particulars 2014 2013 2012 2011 2010

Cost to Income Ratio4 (%) 43.0 45.8 48.3 44.3 32.0

Staff Cost to Income Ratio

(%) 21.6 21.5 22.3 21.6 16.6

The Bank’s pre provision profit reached BDT 6,924.8 million at the end of 2014 registering growth of

30.9% resulted from higher growth in operating income. However, provision expense grew significantly

(by 27.8%) in 2014 resulted from increased classified loans. The Bank’s tax expense was BDT 2,718.6

million in 2014. As an overall effect, profit after tax of the Bank grew by 24.6% in 2014 and reached

BDT 1,260.0 million.

Profitability

Table 4

Profitability Ratios of the Bank


Particulars 2014 2013 2012 2011 2010

Net Interest Margin 3.6 2.8 2.8 2.4 4.1

Return on Average Asset (after

tax) 0.5 0.5 0.9 0.9 3.1

Return on Average Equity (after

tax) 7.2 6.1 9.3 9.2 30.8

Return on Risk Weighted Asset 0.6 0.6 1.0 0.9 2.5

Asset Utilization 10.4 10.4 17.1 17.2 33.9

Net Profit Margin 5.3 5.1 5.2 5.4 9.1

Leverage Multiplier (times) 13.2 11.6 10.6 10.0 10.0

In spite of stable interest spread, net interest margin of the Bank increased by 0.8 percentage point and

reached 3.6% in 2014 resulted from high growth of loan portfolio. The Bank’s NIM was slightly higher

than the banking industry in 2014. ROAA of the Bank was stable at 0.5% in 2014, whereas ROAE

increased to 7.2%. However, net profit margin of the Bank increased marginally resulted from higher

provision expense. Return on risk weighted assets of the Bank was 0.6% in 2014.

Asset Evaluation

Table 5

Asset Composition of the Bank


(Mil. BDT) 2014 2013

Amount % Growth (%) Amount % Growth

(%) Money at Call 3,863.0 1.5 71.6 2,251.4 1.1 (38.7)

Cash in hand and with BB 13,947.7 5.5 22.8 11,359.5 5.5 18.0

Balance with other Bank & FI's 6,488.7 2.5 8.5 5,979.0 2.9 (32.6)

4 Excluding interest expense


203 | P a g e

Investment 30,778.6 12.1 7.3 28,675.7 13.8 9.8

Loans and advances 177,570.8 69.7 26.7 140,121.3 67.4 32.1

Fixed Assets 4,405.0 1.7 5.6 4,172.6 2.0 (1.3)

Other Assets 17,614.4 6.9 14.0 15,446.1 7.4 1.2

Total 254,668.2 100.0 22.4 208,005.5 100.0 19.7

The Bank’s total asset grew 22.4% in 2014 and reached BDT 254,668.2 million on the back of high

growth of loans & advances. On an average, loans and advances dominated the asset structure by 65.3%

of total for the last five years. In 2014, asset composition was dominated by loans & advances (69.7% of

total) followed by investment (12.1% of total) and other asset (6.9% of total). BDT 12,809.8 million was

cash with BB which was kept with Bangladesh Bank to fulfill regulatory requirement. Other assets of the

Bank was BDT 17,614.4 million at the end of December 2014 which are different advance, prepayments

etc. The Bank’s Risk weighted asset was 86.7% of total asset in 2014 (2013: 83.6%).

Investment

Table 6

Investment Portfolio of Bank

Year Ended December 31

(Mil. BDT) 2014 2013

Amount % of Total Amount % of Total

Government Securities & Bonds 25,305.8 82.2 22,327.9 77.9

Others 5,472.7 17.8 6,347.8 22.1

Quoted Shares 4,074.9 13.2 4,546.8 15.9

Unquoted Shares 898.0 2.9 1,298.0 4.5

Debentures & Bonds 130.0 0.4 140.0 0.5

Others 369.8 1.2 363.1 1.3

Total 30,778.6 100.0 28,675.7 100.0

The Bank’s investment portfolio increased by 7.3% in 2014 and reached BDT 30,778.6 million from

BDT 28,675.7 million in 2013. In 2014, the Bank’s investment portfolio was dominated by high quality

liquid asset (like Government Securities) followed by quoted and unquoted shares etc. In 2014, 82.2% of

total investment was in Government securities (BDT 25,305.8 million). The purpose of the investment in

government security was mainly to meet regulatory requirement as well as remain liquid. The Bank

operates as primary dealers of government securities for which it had to hold substantial amount of

Government securities. ABBL held quoted shares of 24 companies at the end of 2014. The market value

of quoted shares was BDT 2,360.3 million against the cost price of BDT 4,074.9 million as of 31

December 2014. The Bank kept BDT 1,995.1 million provisions for these diminishing values of

investment. The Bank earned BDT 66.2 million capital gain from the quoted investment in 2014. AB

Bank also held unquoted shares of 6 different companies and funds amounting BDT 898.0 million at the

end of 2014 including 15.0% equity investment in Amanah Bank, Sri Lanka. AB Bank also had

investment in subordinated bonds of Prime Bank and Trust Bank amounting BDT 130.0 million. Other

investment of the Bank includes investment by ABBL, Mumbai Branch. Investment yield of the Bank

reduced to 9.7% in 2014 from 10.4% in 2013 mainly resulted from reduced interest income in

government securities due to lower yield as well as from lower capital gain from shares.


204 | P a g e

Credit Risk

CRAB reviews the fundamentals of managing credit risk including qualitative and quantitative analysis as

a part of credit risk evaluation. Qualitative evaluation includes credit policy, credit approval and credit

monitoring. CRAB addresses intrinsic risk, concentration risk as well as risk arising from large loan

exposures.

Credit Approval Process

The Bank has its structured and established process for approving new credits as well as

renewal/enhancement of existing credits. Board of Directors is the supreme authority to approve all sorts

of credit policies and maximum lendable credit facility as per Bangladesh Bank’s directives. Management

can approve credit facility up to certain limit for speedy disposal of client’s proposal as per delegation

allowed by the Board. Credit proposals are generally initiated by the relationship manager of Branch.

After detailed analysis of the proposal and documentation, branch forward the proposals to head office. In

head office, credit risk management division thoroughly scrutinizes the proposal from risk weighted point

of view and process the proposal for approval.

Credit Quality

CRAB analyzes Bank’s credit quality in terms of past trend, present scenario as well as future aspects.

Table 6

NPL Movement of the Bank


Mil. BDT 2014 2013 2012

Particulars Amount

% of

Total

Loans Amount

% of

Total

Loans Amount

% of

Total

Loans

Opening balance of

NPL

4,719.9 2.7 3,522.3 2.5 2,671.8 2.5 Add: NPL generation 4,771.2 2.7 6,300.1 4.5 3,500.9 3.3 Less: Cash recovery 384.0 0.2 456.9 0.3 448.3 0.4 Less: Rescheduling 508.5 0.3 4,639.9 3.3 2,202.1 2.1 Less: Write off 1,742.7 1.0 5.7 0.0 - - Closing Balance of

NPL 6,855.9 3.9 4,719.9 3.4 3,522.3 3.3

The Bank’s gross NPL (in absolute amount) soared by 45.3% in 2014 and reached BDT 6,855.9 million

resulted from increased fresh NPL. However, the Bank managed to limit the gross NPL ratio to 3.9% at

the end of 2014 on the back of high write-off as well as from high growth of loans & advances (26.7%).

The Bank had written off loan amounting BDT 1,742.7 million (including BDT 18.8 million interest

waivers) in 2014 which was 1.0% of total loan portfolio. The Bank had reschedule loans amounting BDT

508.5 million in 2014. Recovery during was BDT 384.0 million. As an overall effect, gross NPL ratio of

the Bank was 3.9% at the end of 2014. It is to be mentioned that for the last three years, gross NPL ratio

of the Bank was below industry average on the back of high write-off and substantial loan growth. Out of

total NPL, 83.6% belonged to bad & loss category followed by sub-standard category (11.6%) and


205 | P a g e

doubtful category (4.8%) in 2014. SMA to total loans and advances of the Bank was 0.2% at the end of

2014 (2013: 0.4%). In 2014, net NPL of the Bank was 5.7% of Tier I capital (2013: 3.8%).

Table 7

Loan Loss Provision of the Bank


Mil. BDT 2014 2013

Particulars Amount % of

Total

Loans (%)

Amount % of Total

Loans (%) General Provision Held 2,939.5 1.7 2,517.4 1.8

Specific Provision Held 2,924.1 1.6 2,272.9 1.6

Total Provision Held 5,863.7 3.3 4,790.3 3.4

Required Provision 5,585.1 3.1 4,431.0 3.2

Provision surplus 278.6 0.2 359.4 0.3

In 2014, the Bank’s provision requirement for classified loans and advances was BDT 2,921.2 million

against which the Bank kept BDT 2,924.1 million specific provision. In addition, the Bank maintained

BDT 2,939.5 million as general provision against unclassified loans and advances as well as off balance

sheet exposures. There was an excess provision of BDT 278.6 million at the end of 2014. The gross NPL

coverage ratio of the Bank decreased to 85.5% in 2014 from 101.5% in 2013 resulted from increased

classified asset.

CRAB looks at pre-provision profit (PPP) to net loans for assessing the Bank’s ability to survive against

unfavorable circumstances in future. The Bank’s PPP to net loan ratio was 4.0% in 2014 (2013: 3.9%).

Pre-provision profit to net loans of the Bank indicates that 4.0% of currently performing loans can be

written off without charging on reserves and equity.

Loan Portfolio Analysis

The Bank’s loans and advances portfolio grew significantly (by 26.7%) and reached BDT 177,570.8

million in 2014. Concentration distribution shows that loans and advances portfolio was dominated by

term loans followed by time loans and overdraft. Industry wise loan distribution shows that, large &

medium scale industry financing dominated the loans and advance portfolio followed by commercial

lending.

Large Loan Exposure

At the end of December 2014, the Bank’s top 50 outstanding large loans exposures (both funded & non-

funded) amounted to BDT 121,837.1 million against approved facilities of BDT 159,449.9 million. The

Bank’s top 50 funded loans and advances in 2014 held 45.8% of total loan portfolio (2013: 37.9%). All of

these loans were reported as unclassified at the end of 2014. The Bank had sanctioned 34 large loans

amounting BDT 60,681.0 million each above 10% of the total capital of the Bank in 2014.


206 | P a g e

Capital Adequacy

Table 9

Capital Structure of the Bank


Mil. BDT 2014 2013 2012

Particulars Amount

% of

RWA Amount

% of

RWA Amount

% of

RWA

Tier 1 Capital 16,561.1 7.5 15,569.6 9.0 14,629.8 10.0

Tier 2 Capital 6,237.6 2.8 3,202.6 1.8 2,551.7 1.7

Total Capital 22,798.6 10.3 18,772.3 10.8 17,181.4 11.7

Required Capital 22,086.2 10.0 17,387.1 10.0 14,649.2 10.0

Capital Surplus/

(shortfall) 712.4 0.3 1,385.1 0.8 2,532.2 1.7

The Bank’s equity to total deposit & borrowing was 8.6% in 2014. The Bank issued subordinated

convertible bond (BDT 2,500.0 million) which was allowed to be accounted for Tier II capital as per BB

regulation. In spite of that, the risk weighted capital adequacy ratio of the Bank was 10.3% at the end of

2014 which was just in line with the regulatory requirement (10.0%), whereas RWCAR of PCB average

was 11.7% in 2014. RWCAR was mainly affected by high growth of risk weighted asset due to increased

fresh NPL as well as for 26.7% growth of loan portfolio. Core capital to total exposure (on and off

balance sheet) of the Bank was 5.0% at the end of 2014 (2013: 5.3%). The Bank conducted stress testing

based on “Simple Sensitivity and Scenario Analysis”. Stress test revealed that the Bank’s capital

adequacy ratio would be highly affected from increase in NPLs due to default of top large loan borrowers.

Table 10

RWA Distribution of the Bank as per Basel II


Mil. BDT 2014 2013


Total

Amount % of Total

Credit Risk 196,870.3 89.1 153,377.5 88.2

Market Risk 7,374.7 3.3 6,639.9 3.8

Operational Risk 16,617.2 7.5 13,853.8 8.0

Total Risk Weighted

Asset

220,862.2 100.0 173,871.2 100.0

The Bank’s risk weighted asset composition under credit risk was dominated by corporate loans &

advances followed by retail & SME financing. About 63.8% of total corporate loans (including NBFI)

were rated at the end of 2014, whereas at the end of December 2013, 75.5% of total corporate loans

(including NBFI) were rated. However, the amount of rated loan exposure increased to BDT 67,333.2

million at the end of 2014 from BDT 59,740.0 million in 2013. The risk weighted asset of the rated client

was BDT 47,165.7 million as of December 2014 against actual exposure of BDT 67,333.2 million. It is

also observed that 53.9% of the rated clients belong to AA and single A categories.


207 | P a g e

Table 11

List of rated clients (corporate and NBFI)

(Mil. BDT) --At the end of 31 December--

2014 2013

BB Rating

No of

rated

Clients

Loan

Outstanding RWA

BB

rating

No of

rated

Clients

Loan

Outstanding RWA

1 37 7,564.2 1,512.8 1 32 5,310.0 1,060.0

2 143 28,728.7 14,364.3 2 221 38,090.0 19,040.0

3 83 21,794.6 21,794.6 3 50 9,410.0 9,410.0

4 25 8,749.5 8,749.5 4 32 6,720.0 6,720.0

5 3 496.3 744.5 5 1 210.0 320.0

Total 291 67,333.2 47,165.7 Total 336 59,740.0 36,550.0

Funding and Liquidity

Table 12

Deposit Mix of the Bank


(Mil. BDT) 2014 2013

Particulars Amount % Growth Amount % Growth

Current Deposit 17,639.8 8.9 12.1 15,742.0 9.7 16.7

Bills payable 1,195.1 0.6 4.8 1,140.2 0.7 (22.3)

Savings Deposit 19,427.5 9.8 13.7 17,093.5 10.6 15.0

Term Deposit/Fixed deposit 117,532.9 59.3 28.1 91,742.1 56.7 14.0

Other Deposit 42,393.9 21.4 17.3 36,128.5 22.3 21.4

Total Deposit & Other Account 198,189.2 100.0 22.5 161,846.3 100.0 15.6

Total deposit of the Bank grew by 22.5% in 2014 and reached BDT 198,189.2 million. In 2014, the

Bank’s total deposit was dominated by term deposit (59.3% of total) followed by other deposit (21.4% of

total) and savings deposit (9.8% of total). The average cost of deposit & borrowing was in line with the

PCB industry average. However, the Bank’s low cost deposit base was low (on an average 21.7% for the

last five years) compared to its large network of branches. About 78.3% of total deposit has maturity

within twelve months. It is to be mentioned that the Bank issued subordinated convertible bond worth

Table 13

Mil.BDT

Particulars Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Call Lending

(Monthly Average)521.6 485.0 533.9 772.3 825.2 850.0 686.8 512.9 481.7 - 18.3 106.5

Avg. Interest Rate (%) 7.8 7.8 7.7 7.8 6.6 6.6 6.2 6.6 6.2 - 7.7 8.2

Call Borrowing

(Monthly Average)3,081.6 2,808.6 3,099.7 1,746.3 1,020.0 3,002.7 1,178.1 1,807.7 3,168.3 5,782.3 5,660.3 1,879.0

Avg. Interest Rate (%) 6.9 6.8 6.8 6.9 6.1 5.9 6.6 5.9 6.9 8.1 7.4 7.5

Net

Lending/(Borrowing) (2,560.0) (2,323.6) (2,565.8) (974.0) (194.8) (2,152.7) (491.3) (1,294.8) (2,686.7) (5,782.3) (5,642.0) (1,772.6)

Month wise Call Market Operation of the Bank

--For the Year 2014--


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BDT 2,500.0 million which will act as a source of fund for the Bank.

The Bank maintained a monthly average loan to deposit ratio of 89.4% during 2014. The Bank actively

participated in call money market and was the net borrower throughout the year 2014, where interest rate

average ranges from 5.9% to 8.1%. The Bank earned BDT 466.2 million as interest from call market

operation whereas interest expense was BDT 869.5 million for the same period.

Table 14

Liquidity Profile of the Bank

Mil.BDT --As of December 31, 2014--

Particulars Up to 1

month

1-3

months

3-12

months

1 to 5

years

More

than 5

years Total

Assets 27,747.0 66,329.0 75,895.5 46,336.8 38,359.9 254,668.2

Liabilities 24,897.6 65,865.2 75,655.7 66,975.3 3,117.3 236,511.0

Net Liquidity Gap 2,849.4 463.8 239.8 (20,638.5) 35,242.6 18,157.1

Cumulative Liquidity

Gap 2,849.4 3,313.2 3,553.0 (17,085.5) 18,157.1 -

Gap as % of Liability

(%) 11.4 0.7 0.3 (30.8) 1,130.6 7.7

The Bank’s asset-liability maturity bucket shows that the Bank possessed positive net liquidity gap for all

the maturity buckets except up to 12 months. The Bank’s liquid asset to deposit and borrowings ratio was

23.4% in 2014.

Foreign Exchange Risk

Table 16

Foreign Currency Exposure of the Bank


Particulars Assets Liabilities

Overall Net

Positions

Overall Net Position*/Core

Capital (%)

USD 7,912.1 7,893.8 18.3 0.1

EURO 59.1 64.1 (5.0) (0.0)

AED 0.7 - 0.7 0.0

CAD 3.6 - 3.6 0.0

GBP 49.4 12.9 36.5 0.2

CHF 10.1 - 10.1 0.1

JPY 3.1 0.2 2.9 0.0

SGD 2.8 - 2.8 0.0

AUD 0.9 - 0.9 0.0

Considering absolute value

As a commercial bank, the Bank is exposed to potential changes in earnings arising due to changes in

market price of currency and the position in the currency that is held during the changes. In addition to

Bangladesh Bank guide line, the Bank has also developed and follow different strategies to handle foreign


209 | P a g e

exchange risk by setting limits on net open positions by currencies, mismatch limits by currencies and

time buckets of forward foreign exchange transactions, over-all gross limit for FWD transaction,

maximum loss limit per day, per month and value at risk limits. As of 31st December 2014, the Bank

possessed sum of overall net positions in different currencies resulted in net asset position of BDT 70.7

million which was 0.4% of core capital of the Bank. The Bank’s overall net open position was dominated

by GBP having 0.2% of core capital.

Off Balance Sheet Exposures

Table 17

Contingent Liabilities/Off Balance Sheet Exposure of the Bank

--Year ended December 31-- Mil. BDT 2014 2013


Total

Asset

Amount % of

Total

Asset

Acceptance & Endorsement 27,021.0 10.6 26,949.0 13.0

Letter of Guarantee 13,845.3 5.4 16,393.1 7.9

Letter of Credit 21,987.3 8.6 30,225.1 14.5 Bills for Collection 7,738.4 3.0 9,649.3 4.6

Other Commitments 6,476.4 2.5 - -

Total 77,068.5 30.3 83,216.5 40.0

In 2014, the Bank’s total contingent liabilities reduced to BDT 77,068.5 million from BDT 83,216.5

million in 2013. In 2014, total contingent liabilities portfolio was 30.3% of total asset of the Bank.

Contingent liabilities portfolio was mainly dominated by acceptance & endorsement (35.1% of total)

followed by letter of credit (28.5% of total). Total off balance sheet exposures of the Bank was 3.4 times

of its total capital by the end of December 2014 (2013: 4.4 times).

MARKET SHARE AND GROWTH

Table 18

Market Share of the Bank

Particulars 2014 2013 2012 2011

Deposit (%) 3.0 2.8 2.9 2.8

Loans and Advances (%) 3.3 3.0 2.5 2.5

In 2014, market share of the Bank in term deposit grew by 0.2 percentage points to 3.0% resulted from

the 22.5% growth of deposit of the Bank. The market share of loans also increased by 0.3 percentage

points and reached 3.3% during the same period at the growth of loans portfolio of the Bank was higher

than that of the industry.

BRANCH NETWORK

Presently ABBL has 93 branches (including 1 Islamic banking branch and 1 overseas branch in Mumbai)

among which 76 branches were located in urban areas and the rest are in rural areas. The Bank also has

SME service centers to support the growth of SME. The Bank has countrywide network of 239 own

ATM’s. Besides these, the Bank also has countrywide network of shared ATM’s. The selection of


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location for expanding the distribution network depends on products, customer segments. The Bank

provides online banking facilities to its clients. AB has successfully introduced internet banking, SMS

banking, cutting edge ICT, state-of-art network solution, 24/7 ATM service and many other e-products.

MANAGEMENT

Senior Management

The management of the Bank is headed by the President & Managing Director Mr. Shamim Ahmed

Chaudhury. Mr. Chaudhury took over the responsibility of President & Managing Director in January

2014. The MD is supported by a group of senior professionals comprising of 2 deputy managing

directors, Company Secretary and other departmental Heads.

Management Committee (MANCOM); core management committee is consisted of top five officials of

the bank and is headed by the President & Managing Director of the Bank. They meet regularly to discuss

relevant matter of the business. The extended management committee includes other

divisional/departmental heads.

Asset Liability Management Committee (ALCO); comprised of eight members and is headed by the

President & Managing Director. The committee meets regularly to monitor market risk and liquidity risks

of the Bank. The committee meets regularly to monitor market risk and liquidity risks of the Bank. It

discusses latest position of deposits, cost of deposits, L/D ratio, interbank dependence, mobilization of

wholesale funds, interest rate of peer banks, NPA position etc. The Bank held 14 meetings in 2014

(2013: 15).

Credit Committee; headed by the Managing Director, is responsible for review of all credit proposals

originated by the CRM Division and accord decision and recommend as per delegation guidelines, review

business strategies and performance, status of loans and advance, furnish credit related MIS to Board or

EC for review etc. The committee consists of 3 members.

Human Resource Management

The HR division of the Bank comprises of 15 members and is headed by a senior level executive of the

Bank. The Bank has defined HR policies including recruitment, training and Development, promotion and

disciplinary action policy. Usually the Bank employ consultancy firm to professionally conduct and

assess of fresh recruitment, whereas internal recruitment procedures are considered to fill up the mid and

top management positions. Total human resources strength of the Bank reached 2,220 at the end of 2014

(2013: 2,179). The Bank also has commission based employees to sell its deposit and loan products. In

2014, 114 new employees were recruited, whereas 70 employees left their job. The Bank’s employee

benefits are moderate compared to the leading private sector banks.

The Bank has its training center “AB Bank Training Academy” located at Dhanmondi Residential Area,

Dhaka. The Bank organizes both internal and external training programs to enhance the skills and

knowledge of the employees. Main training activities consists of in-depth foundation programs for entry

level Management Trainees. Specialized training programs in the areas like general banking, advance,

foreign exchange, information technology, marketing and accounts etc. are also organized by the

Academy depending on need. IT and e-Biz Division of the Bank also provides training activities for the

employees. In addition, the Bank also sends its employees for external training in home and abroad. In

2014, 3,185 participants of the Bank got training in 145 different courses.


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Management Information System (MIS)

Management Information System (MIS) The IT & eBiz Division of the Bank comprises of 97 members

including Divisional Head, Departmental Heads, system analyst, engineer, network administrator,

programmer, Business support staff, Tecno-Business Team etc. The division is headed by an Executive

Vice President. The Bank uses real time on-line core banking system named “Equation‟ (developed by

MISYS International Banking System Ltd.) which has been implemented in all of its branches including

Mumbai, India. The Bank’s network is connected by LAN and WAN having two links for connectivity at

each branch for reducing disruption of network connectivity. The Bank uses optical fiber and radio link

for its network connectivity. The Bank also uses Data Loss Prevention (DLP) techniques for protection of

its data resources from malware attack or simple mistakes made by people within the Bank. The network

connectivity and bandwidth performance is continuously monitored and two employees of the IT and e-

Biz Division are employed for physical monitoring of connectivity. Furthermore, the Bank uses MacAfee

web gate for monitoring and restricting of internet usage. The Bank established an in-house data model

outside the core banking system, to generate different MIS reports for middle and top management. Apart

from using a world class real time on-line core banking system, the Bank also provides real time internet

banking and SMS banking to customers. The Bank also has a plan to Automate Business Process

Management, Document Digitalization and Archiving Enterprise Content Management, Customer

Relationship Management Solution, Implement Business Analytics and Business Intelligence Software,

solution for Anti-Money Laundering, Enhance HR Solution etc.

The Bank established an in-house data model outside the core banking system, to generate different MIS

reports for middle and top management. Apart from using a world class real time on-line core banking

system, the Bank also provides real time internet banking and SMS banking to customers. The Bank also

has a plan to Automate Business Process Management, Document Digitalization and Archiving

Enterprise Content Management, Customer Relationship Management Solution, Implement Business

Analytics and Business Intelligence Software, solution for Anti-Money Laundering, Enhance HR

Solution etc.

CORPORATE GOVERNANCE

To assess the Bank’s corporate governance practices CRAB evaluates the quality of financial reporting

and disclosures, strength of internal control system and internal audit function; the inclusion of

appropriate qualified independent non-executive directors on Board of Directors, the formation of audit

committee; delegation of power to executives and staff and protection of shareholders rights. CRAB

evaluates how the Bank complies with these corporate governance requirements.

Financial Reporting and Disclosures

The financial statement of the Bank was audited by a reputed chartered accountant firm ACNABIN.

According to them the financial statements of the Bank were prepared and presented in accordance with

Bangladesh Financial Reporting Standards, the Bank Company (Amendment up to 2013) Act 1991, the

Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.

According to the auditor, the financial statements gave a true and fair view of the state of the Bank as at

December 31, 2014. AB Bank has complied with all conditions applicable to them imposed by the

Bangladesh Securities & Exchange Commission as of December 2014.


212 | P a g e

Board of Directors

The Bank’s Board comprises of 12 members including the President & Managing Director of the

Company. Presently Mr. M. Wahidul Haque is the chairman and Mr. Salim Ahmed is the vice chairman

of the Bank. The Bank’s Board of Directors meets twice; but may hold more meetings in case there are

special needs. The Board held 29 meetings in 2014 (2013: 30 meetings). Board is involved in policy

formulations, strategic direction setting, business plan approval and review of various activities and also

providing necessary direction to the management for conducting businesses in a competitive and

profitable manner. Board also ensures effective risk management across the Bank as per the central

bank’s guidelines.

Executive Committee

The Executive Committee of the Board has 6 members. Presently, Mr. Feroz Ahmed is the chairman of

the committee. The Executive Committee reviews all the proposals for loans and advances that do not fall

within the discretion of the Managing Director. The Board confirms the decision of all Executive

Committee meetings. In 2014, the committee held 1 meeting.

Audit Committee

The Audit Committee of the Board comprises of five members of the BOD of the Bank in accordance to

BRPD Circular No. 12 of 23 December 2002. The Committee is headed by Mr. Shishir Ranjan Bose,

FCA who is an independent director of the Bank. During 2014, the committee met 17 times to review and

monitor regulatory compliance, financial reporting, internal control & internal audit functions, and other

operational activities.

Risk Management Committee

The Bank has formed Risk Management Committee as per the direction of the central Bank. The

committee consists of 5 members and is headed by Mr. M. Wahidul Haque as Chairperson. The

responsibilities of the committee are to identify different risks and introduce or implement proper

strategies to control those risks, review existing risk management principles & procedures and take

corrective measures if necessary. The committee held 6 meetings in 2014.

Corporate Social Responsibility

Presently, the Bank CSR activities are conducted in the area of education, health, natural disaster, cultural

program, sports and other issues. In 2014, the Bank’s major portion of CSR contribution was in

community, health, education, national disaster, cultural promotion and sports.

Internal Control and Compliance

In line with the Bangladesh Bank guidelines on the ‘Internal Control and Compliance’ the Bank has

prepared and implemented appropriate guidelines. Internal control and compliance division is headed by a

senior executive of the Bank. The division verifies compliance with all approved risk management and

internal control policies. Deviations and irregularities are reported and corrected to ensure proper risk

mitigation. ICC division always endeavors to ensure that the Bank’s operations are in proper compliance


213 | P a g e

with the governing rules, regulations and policies. ICC is directly accountable to the Audit Committee of

the Board. In 2014, the division conducted comprehensive audit in 88 branches of the Bank.

Subsidiaries


AB Investment Limited (ABIL) was incorporated on 24 December, 2009 to run and manage the operation

of merchant banking wing of AB Bank Limited independently. The principal activity of the Company

includes issue management, portfolio management, underwriting and corporate advisory etc. Paid up

capital of the Company reached BDT 274.7 million at the end of 2014 with equity of BDT 5,618.6

million. Profit after tax of the Company was BDT 169.2 million in 2014. The Company made a provision

of BDT 40.9 million in 2014 for margin loans and diminishing values of quoted investment.

AB Securities Ltd. (ABSL)

AB Securities Limited was established to carry out the business of stock brokers/stock dealers and other

related business in connection with the dealing of listed securities. It started operation from November

2009. Capital of the Company was BDT 235.0 million at the end of 2014. Profit after tax of the Company

reached BDT 15.0 million in 2014. The Company made a provision of BDT 4.5 million in 2014 for

diminishing values of quoted investment.


Cashlink Bangladesh Limited (CBL) started its operation on September 2008. Presently the Bank holds

90.0% shares of CBL. Share capital of the Company was BDT 238.0 million in 2014. The Company

made BDT 63.5 million PAT at the end of 2014.

AB International Finance Ltd. (ABIFL)

AB International Finance Ltd is incorporated and domiciled in Hong Kong. Share capital of the Company

was HKD 1.0 million in 2014 with equity of HKD 17.8 million. Profit after tax was HKD 8.7 million in

2014.


AB Exchange (UK) Ltd. was incorporated and domiciled in UK to provide full range of money transfer

services for Non Resident Bangladeshis to their homeland. Capital of the Company was BDT GBP 0.4

million.

Arab Bangladesh Bank Foundation (ABBF) Arab Bangladesh Bank Foundation (99.6% owned) is a subsidiary of ABBL which is formed for

philanthropic activities. The Company experienced BDT 3.0 million losses in 2014.


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APPENDIX 1: Definitions of Selected Ratios

Definitions of Selected Ratios

1. Loans and advances include Loans, Cash Credit, Overdrafts, Bill purchased and discounted

unless mentioned otherwise.

2. Deposits include Deposits & other accounts and bills payables unless mentioned otherwise.

3. Average Assets, Average investment assets, Average Earning Assets and Average equity are

calculated on the basis of opening and year end balances.

4. Interest Earning Assets include total loans & advances, money at call & short notice, balance with

other banks & FIs, foreign currency balance with Bangladesh Bank and interest earning assets in

Offshore Unit.

5. Net Loans & Advances has been calculated by deducting Specific Provision and Interest

Suspense Accounts from Gross Loans & Advances.

6. Net Interest Margin = Net interest income / Average Interest Earning Assets.

7. Net Profit Margin = Net Profit after Tax / Operating Income

8. Asset Utilization = Operating Income / Average Assets

9. Leverage Multiplier = Average assets / Average Equity

10. Yield on Average Investment = Income from Investment / Average Investment Assets

APPENDIX 2: Assumptions for Interest Risk Exposure

1. Assets and liabilities are re-priced on the first day of the re-pricing interval and, therefore, that

interest rate change affects the whole period.

2. Assets and liabilities are rolled over into the same types of instruments with the same maturities.

Appendix 3: Related Tables

Table 2

Structural Liquidity Profile of the Bank


Particulars Up to 1

month 1-3 months 3-12 months 1-5 years

Above 5

years

Net Mismatch 9,867.6 (20,897.0) (37,911.7) 10,205.7 38,736.1

Cumulative Net

Mismatch 9,867.6 (11,029.4) (48,941.1) (38,735.4) 0.7

Table 1

Mil.BDT

Particulars Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Loans 14,265.0 14,835.0 15,094.0 15,102.0 15,461.0 15,800.0 15,913.0 16,000.0 16,438.0 16,927.0 17,369.0 17,757.0

Deposit 16,620.0 17,121.0 17,311.0 17,027.0 17,696.0 17,941.0 18,403.0 18,053.0 17,677.0 17,715.0 18,213.0 19,819.0

Loans to Deposit (%) 85.8 86.6 87.2 88.7 87.4 88.1 86.5 88.6 93.0 95.6 95.4 89.6

Month wise Loans to Deposit Ratio of the Bank

--For the Year 2014--


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CREDIT RATING SCALES AND DEFINITIONS – LONG TERM: DEBT INSTRUMENTS

Rating Definition

A

Triple

A(Extremely

Strong Capacity)

Debt instruments rated AAA have extremely strong capacity to meet financial

commitments. These are judged to be of the highest quality, with minimal

credit risk.

AA1, AA2, AA3*

Double A

Very Strong

Capacity)

Debt instruments rated AA have very strong capacity to meet financial

commitments. These are judged to be of very high quality, subject to very low

credit risk.

A1, A2, A3

Single A

(Strong Capacity)

Debt instruments rated A have strong capacity to meet financial commitments,

but susceptible to the adverse effects of changes in circumstances and

economic conditions. These are judged to be of high quality, subject to low

credit risk.

BBB1, BBB2,

BBB3

Triple B

(Adequate

Capacity)

Debt instruments rated BBB have adequate capacity to meet financial

commitments but more susceptible to adverse economic conditions or

changing circumstances. They are subject to moderate credit risk. Such rated

projects possess certain speculative characteristics.

BB1, BB2, BB3

Double B

(Inadequate

Capacity)

Debt instruments rated BB have inadequate capacity to meet financial

commitments. They have major ongoing uncertainties and exposure to adverse

business, financial, or economic conditions. Such projects have speculative

elements, and are subject to substantial credit risk.

B1, B2, B3

Single B

(Weak Capacity)

Debt instruments rated B have weak capacity to meet financial commitments.

They have speculative elements and are subject to high credit risk.

CCC1, CCC2,

CCC3

Triple C

(very Weak

Capacity)

Debt instruments rated CCC have very weak capacity to meet financial

obligations. They have very weak standing and are subject to very high credit

risk.

CC

Double C

(Extremely Weak

Capacity)

Debt instruments rated CC have extremely weak capacity to meet financial

obligations. They are highly speculative and are likely in, or very near, default,

with some prospect of recovery of principal and interest.

C

Single C

(Near to Default)

Debt instruments rated C are highly vulnerable to non-payment, have payment

arrearages allowed by the terms of the documents, or subject of bankruptcy

petition, but have not experienced a payment default. Payments may have been

suspended in accordance with the instrument's terms. They are typically in

default, with little prospect for recovery of principal or interest.

D(Default) D rating will also be used upon the filing of a bankruptcy petition or similar

action if payments on an obligation are jeopardized.


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CRAB RATING SCALES AND DEFINITIONS - LONG TERM: BANKS

RATING DEFINITION

AAA

Triple A

(Extremely Strong Capacity &

Highest Quality)

Commercial Banks rated 'AAA' have extremely strong capacity to

meet their financial commitments. 'AAA' is the highest issuer credit

rating assigned by CRAB. AAA is judged to be of the highest quality,

with minimal credit risk.

AA1, AA2, AA3*

Double A

(Very Strong Capacity & Very

High Quality)

Commercial Banks rated 'AA' have very strong capacity to meet their

financial commitments. They differ from the highest-rated

Commercial Banks only to a small degree. AA is judged to be of very

high quality and is subject to very low credit risk.

A1, A2, A3

Single A

(Strong Capacity & High

Quality)

Commercial Banks rated 'A' have strong capacity to meet their

financial commitments but are somewhat more susceptible to the

adverse effects of changes in circumstances and economic conditions

than Commercial Banks in higher-rated categories. A is judged to be

of high quality and are subject to low credit risk.

BBB1, BBB2, BBB3

Triple B

(Adequate Capacity &

Medium Quality)

Commercial Banks rated 'BBB' have adequate capacity to meet their

financial commitments. However, adverse economic conditions or

changing circumstances are more likely to lead to a weakened

capacity of the Commercial Banks to meet their financial

commitments. BBB is subject to moderate credit risk.

BB1, BB2, BB3

Double B

(Inadequate Capacity &

Substantial Credit Risk)

Commercial Banks rated 'BB' are less vulnerable in the near term than

other lower-rated Commercial Banks. However, they faces major

ongoing uncertainties and exposure to adverse business, financial, or

economic conditions, which may lead to the Commercial Bank’s

inadequate capacity to meet their financial commitments. BB is

judged to have speculative elements and is subject to substantial credit

risk.

B1, B2, B3

Single B

(Weak Capacity & High

Credit Risk)

Commercial Banks rated 'B' are more vulnerable than the Commercial

Banks rated 'BB', but the Commercial Banks currently have the

capacity to meet their financial commitments. Adverse business,

financial, or economic conditions are likely to impair the Banks’

capacity or willingness to meet their financial commitments. B is

considered speculative and weak capacity and is subject to high credit

risk.

CCC1, CCC2, CCC3

Triple C

(Very Weak Capacity & Very

High Credit Risk)

Commercial Banks rated 'CCC' are currently vulnerable, and are

dependent on favorable business, financial, and economic conditions

to meet their financial commitments. CCC is judged to be of very

weak standing and is subject to very high credit risk.

CC

Double C

(Extremely Weak Capacity &

Extremely High Credit Risk)

Commercial Banks rated 'CC' are currently highly vulnerable. CC is

highly speculative and is likely in, or very near, default, with some

prospect of recovery of principal and interest.

C

Single C

A 'C' rating is assigned to Banks that are currently highly vulnerable

to non-payment of obligations, or in the verge of default or faced with


217 | P a g e

(Near to Default) insolvency petition or bankruptcy petition or similar actions, but have

not yet experienced a payment default with external support.

D

(Default)

'D' is in default. The 'D' rating also will be used upon the filing of a

bankruptcy petition or the taking of a similar action if payments on an

obligation are jeopardized.

*Note: CRAB appends numerical modifiers 1, 2, and 3 to each generic rating classification from AA

through CCC. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating

category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower

end of that generic rating category.

14 CREDIT RATING SCALES AND DEFINITIONS - SHORTTERM: BANKS

RATING DEFINITION

ST-1

Highest Grade

Commercial Banks rated in this category are considered to have the highest

capacity for timely repayment of obligations. Commercial Banks rated in this

category are characterised with excellent position in terms of liquidity, internal

fund generation, and access to alternative sources of funds is outstanding.

ST-2

High Grade

Commercial Banks rated in this category are considered to have strong

capacity for timely repayment. Commercial Banks rated in this category are

characterised with commendable position in terms of liquidity, internal fund

generation, and access to alternative sources of funds is outstanding.

ST-3

Average Grade

Commercial Banks rated in this category are considered to average capacity for

timely repayment of obligations, although such capacity may impair by

adverse changes in business, economic, or financial conditions. Commercial

Banks rated in this category are characterised with satisfactory level of

liquidity, internal fund generation, and access to alternative sources of funds is

outstanding.

ST-4

Below Average

Grade

Commercial Banks rated in this category are considered to have below average

capacity for timely repayment of obligations. Such capacity is highly

susceptible to adverse changes in business, economic, or financial conditions

than for obligations in higher categories. Commercial Banks rated in this

category are characterised with average liquidity, internal fund generation, and

access to alternative sources of funds is outstanding.

ST-5

Inadequate

Grade

Commercial Banks rated in this category are considered to have inadequate

capacity for timely repayment of obligations susceptible to adverse changes in

business, economic, or financial conditions. Commercial Banks rated in this

category are characterised with risky position in terms of liquidity, internal

fund generation, and access to alternative sources of funds is outstanding.


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ST-6

Lowest Grade

Commercial Banks rated in this category are considered to have obligations

which have a high risk of default or which are currently in default. Commercial

Banks rated in this category are characterised with risky position in terms of

liquidity, internal fund generation, and access to alternative sources of funds is

outstanding.

The Rating Committee of CRAB is the final authority to award a rating. The Rating Committee of CRAB

is comprised of external independence persons who are not members of the Board of the Company and

they ensure the independence of rating.

© Copyright 2015, CREDIT RATING AGENCY OF BANGLADESH LIMITED ("CRAB"). All rights reserved.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF

SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER

TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR

SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER

OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT CRAB’S PRIOR WRITTEN

CONSENT. All information contained herein is obtained by CRAB from sources believed by it to be accurate and

reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information

is provided “as is” without warranty of any kind and CRAB, in particular, makes no representation or warranty,

express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose

of any such information. Under no circumstances shall CRAB have any liability to any person or entity for (a) any

loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or

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incidental damages whatsoever (including without limitation, lost profits), even if CRAB is advised in advance of

the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings

and financial reporting analysis observations, if any, constituting part of the information contained herein are, and

must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell

or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS,

COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY

SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY CRAB IN ANY

FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any

investment decision made by or on behalf of any user of the information contained herein, and each such user must

accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each

provider of credit support for, each security that it may consider purchasing, holding or selling.


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15 Description of the Trustee

IDLC Finance Limited is the trustee for the Bond subject to necessary regulatory approval.

15.1 Introduction to the Trustee

IDLC Finance Limited is the largest multi-product multi-segment Non-Banking Financial Institution in

Bangladesh with a BDT 58,926.59Million balance sheet size (As on December 31, 2014, consolidated).

The company offers a wide range of products and services to its clients including consumer finance,

corporate finance, SME finance, etc.

The company also provides capital market services through two fully owned subsidiaries namely IDLC

Investments Limited and IDLC Securities Limited. IDLC Investments is a full-fledged merchant bank

offering issue management, underwriting, portfolio management, etc. services to its clients while IDLC

Securities offers full range brokerage services.

IDLC Finance Limited was incorporated in May 1985 as Industrial Development Leasing Company of

Bangladesh Limited and subsequently commenced its business in February 1986. The company was

established by a group of highly reputed local and international institutions including International

Finance Corporation (IFC), German Investment and Development Company (DEG), Kookmin Bank,

Korea Development Financing Corporation, The Aga Khan Fund for Economic Development, The City

Bank limited, IPDC of Bangladesh Limited, Sadharan Bima Corporation.

The company is listed on both Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE).

IDLC Finance Limited: Key Milestones

23 May 1985 Incorporation of the Company

22 Feb 1986 Commencement of the leasing business

1 Oct 1990 Establishment of a branch in Chittagong, the main port city of Bangladesh

20 Mar 1993 Listed on the Dhaka Stock Exchange Limited

7 Feb 1995 Licensed as a Non-Banking Financial Institution under the Financial Institutions Act,

1993

25 Nov 1996 Listed on the Chittagong Stock Exchange Limited

27 May 1997 Commencement of home finance and short term finance operations

22 Jan 1998 Licensed as a merchant banker by the Bangladesh Securities and Exchange

Commission

18 Sep 2006 Commencement of operations of IDLC Securities Limited, a wholly-owned subsidiary

of IDLC

5 Aug 2007 Company name changed to ‘IDLC Finance Limited’ from ‘Industrial Development

Leasing Company of Bangladesh Limited’

16 Aug 2011 Commencement of operations of IDLC Investments Limited, a wholly-owned

subsidiary of IDLC


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15.2 Shareholding Structure

IDLC Finance Limited increased its paid-up share capital from BDT 1,608,750,000 to BDT

2,010,937,500 by issuing 40,218,750 bonus share to the shareholder as approved in 29th Annual General

Meeting (AGM) held on 30 March 2014. Total number of shares stood at 201,093,750 at the end of

December, 2014.

SL

Name of Sharehoders

Number of Shares

% of Total Shares

1

Sponsors / Directors:


50,283,246

25.00%

Transcom Group

26,812,355

13.33%

Eskayef Bangladesh Limited

16,087,500

8.00%

Transcraft Limited

8,070,418

4.01%

Bangladesh Lamps Limited

2,654,437

1.32%

Sadharan Bima Corporation

15,321,331

7.62%

Mercantile Bank Limited

15,082,031

7.50%

Reliance Insurance Co. Limited

14,076,562

7.00%

Sub Total

121,575,525

60.46%

2

General

Institutions other than Sponsors/ Directors

32,265,079

16.04%

Bangladesh Fund

6,432,600

3.20%

Other Institutions

25,832,479

12.85%

Individuals:

General Public (Individuals)

47,253,146

23.50%

Sub Total

79,518,225

39.54%

Total (1+2)

201,093,750

100.00%

15.3 Products and Services

IDLC Finance Limited offers varied and wide range of products and services to its customer through its

four arms; SME, Consumer, Corporate and Capital Markets.

15.3.1 SME The SME division provides specialist lending to small and medium-sized businesses across a broad range

of industries including steel, cement, light engineering, plastics and textiles, among others, geographically

spread across Bangladesh. The division’s operations include term loans, working capital loans and lease

financing, customized around customer requirements. The division also supports and encourages women

entrepreneurship by providing them loans at attractive covenants.

15.3.2 Consumer


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The Consumer division offers retail finance for homes and cars with a small proportion of personal loans

and loans against deposits. The division enjoys among the highest market shares and growth rates within

the home loan industry of Bangladesh. The Consumer division also acts as the deposit mobilization arm

of the Group, providing multiple retail savings products spread across interest rates and maturities.

15.3.3 Corporate

The Corporate division provides lease financing, term loans and other financing options for capital

expenditure and working capital to a broad range of corporates across the country. The division also

offers Structured Finance (SF) solutions that include corporate bond issuances and debt syndication.

15.3.4 Capital Markets

IDLC Finance operates two wholly-owned subsidiaries, IDLC Securities Limited and IDLC Investments

Limited. These provide trading services to customers and institutions through robust trading facilities and

infrastructure, offering the best execution experience to its clients. It also offers underwriting, primary

issuances and merchant banking services. The division has also initiated Discretionary Portfolio

Management services and is looking to grow this portfolio, especially by leveraging inter-divisional

synergistic opportunities, especially with its Consumer division.

15.4 Key Operational Results

IDLC Finance Limited is one of the strongest and fastest growing financial institutions in Bangladesh.

The following table shows the financial strength of the company.

Table 34: Key Operational Results of the Trustee

Particulars

December 31, 2014

(Consolidated)

December 31, 2013

(Consolidated) Growth

BDT Million BDT Million

Total Assets 58,926.59 50,429.38 16.85%

Shareholders’ Equity 6,527.83 5,362.76 21.73%

Paid up Capital 2,010.94 1,608.75 25.00%

Loans and Advances 47,068.96 40,941.26 14.97%

Deposits and Other Accounts 36,595.12 30,187.44 21.23%

Net Interest Income 2,888.77 2,077.18 39.07%

Total Operating Income 3,657.72 2,761.46 32.46%

Total Operating Expenses 1,463.64 1,243.41 17.71%

Profit Before Provision 2,194.08 1,518.04 44.53%

Profit Before Tax 2,186.53 1,325.20 65.00%

Net Profit After Tax 1,245.51 669.47 86.04%


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15.5 Key Financial Ratio

Table 35: Key Financial Ratios of the Trustee (Consolidated)

Financial Ratios 2012 2013 2014

Debt equity ratio (Times) 7.05 8.40 8.03

Financial expenses coverage ratio (Times) 1.40 1.32 1.48

Return on total assets (%) 2.07 1.52 2.28

Non-performing loan ratio (%) 2.09 1.63 2.02

Return on shareholders’ equity (%) 16.44 13.31 20.95

Earnings per share* (Taka) 3.54 3.33 6.19

Dividend payout ratio (%) 52.08 72.09 56.51


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16 Modus Operandi of the Issue including

16.1 Application Procedure:

The Bonds shall be distributed through private placement.

Each investor (Bondholder) shall enter into a separate Subscription Agreement with the Issuer and

shall be bound by the terms and conditions contained in such Subscription Agreement which

includes detail rights and obligations of the investors.

Closing: Subject to the conditions precedent contained in the Subscription Agreement, the closing

of the issue of the Bonds shall take place on or before the Closing Date.

Investor Representation Letter: On the date indicated in the Subscription Agreement, the

Bondholders will execute and deliver a letter addressed to the Issuer.

Payment of net issue proceeds: On Closing Date(s) the Bondholders shall pay the purchase price of

Bonds to the Issuer in Bangladesh Taka via BB cheque or pay order by 12 noon.

Bond Certificates: Each series of Bonds will be represented by Bond Certificates. On the date on

which any Bond Certificates are issued, the Register shall be completed by or on behalf of the

Issuer by the Registrar. On or promptly following the date of issuance, the Registrar shall procure

delivery of the duly executed and authenticated Bond Certificates to the registered Bondholders.

The Bond Certificates will be printed in accordance with applicable legal requirements

substantially in the forms set out in Part A of Schedule 1 of the Trust Deed.

16.2 Allotment:

Bond Certificates: Each series of Bonds will be represented by Bond Certificates. On the date on

which any Bond Certificates are issued, the Register shall be completed by or on behalf of the

Issuer by the Registrar. On or promptly following the date of issuance, the Registrar shall procure

delivery of the duly executed and authenticated Bond Certificates to the registered Bondholders.

The Bond Certificates will be printed in accordance with applicable legal requirements

substantially in the forms set out in Part A of Schedule 1 of the Trust Deed.

Signature: The Bond Certificates will be signed manually by a duly authorised person(s)

designated by the Issuer and will be authenticated manually by or on behalf of the Registrar. The

Issuer may use the signature of a person(s) who at the date of this Trust Deed is such a duly

authorised person even if at the time of issue of any Bond Certificates he is no longer so authorised.

Bond Certificates so executed and authenticated will be binding and valid obligations of the Issuer.

Entitlement to treat Registered Holder as owner: The Register shall be prima facie evidence of

any matter in relation to the ownership of the Bonds. Each of the Issuer, the Trustee and any Agent

may deem and treat the registered holder of a Bond as the absolute owner of such Bond, free of any

equity, set-off or counterclaim on the part of the Issuer against the original or any intermediate

Holder of such Bond (whether or not the Bond shall be overdue and notwithstanding any notation


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of ownership or other writing thereon or any notice of previous loss or theft of the Bond Certificate

issued in respect of that Bond) for all purposes and, except as ordered by a court of competent

jurisdiction or as required by applicable law, the Issuer, the Trustee and the Agents shall not be

affected by any notice to the contrary. All payments made to any such Holder shall be valid and, to

the extent of the sums so paid, effective to satisfy and discharge the liability for the moneys

payable upon the Bonds.

16.3 Transfer:

Register: The Issuer will maintain an authoritative Register and will procure that the Registrar will

maintain the Duplicate Register in respect of the Bonds, in accordance with the provisions of the

Agency Agreement. In these Conditions, the “Holder” of a Bond means the person in whose name

such Bond is for the time being registered in the Register (or, in the case of a joint holding, the first

named thereof) and “Bondholder” shall be construed accordingly. The Register shall be prima

facie evidence of any matter in relation to the rights under the Bonds. Bondholders and the Trustee

shall be entitled to inspect the Register and take copies therefrom upon payment of fees as may be

prescribed by the Issuer from time to time.

Transfer: Subject to Conditions 4(E) (Closed Periods) and 4(F) (Regulations concerning transfers

and registration), a Bond may be transferred to another Person in Bangladesh (a “Transferee”)

upon surrender of the Bond Certificate issued in respect of that Bond, together with a duly

completed and executed instrument of transfer (in the form attached to the Bond Certificate, a

“Instrument of Transfer”) by the registered holder of the Bond, as transferor (the “Transferor”)

or the proposed Transferee. A valid Instrument of Transfer shall be duly stamped, completed and

executed by both the Transferor and the Transferee. If the Transferor or the Transferee is a body

corporate, such Instrument of Transfer shall be executed by the authorised persons of the

Transferor or the Transferee, as the case may be. Upon receipt of the Bond Certificate issued in

respect of the Bond to be transferred along with the duly completed and executed Instrument of

Transfer at the Specified Office of the Transfer Agent, together with such evidence as such

Transfer Agent may reasonably require to prove (i) the title of the Transferor and (ii) the signature

and authority of each of the individuals who have executed the Instrument of Transfer on behalf of

the Transferor and the Transferee. Upon receipt of the Bond Certificate, the Instrument of Transfer

and the other supporting documents named above, the Transfer Agent, as the duly authorized

delegate of the Issuer’s Board of Directors, shall approve and certify the transfer on behalf of the

Board of Directors of the Issuer. If the Transfer Agent refuses to register the transfer of any Bond it

shall immediately provide notice of such refusal to the Issuer. If the Issuer does not agree with the

Transfer Agent’s refusal to approve and certify such transfer, it shall within 3 (three) Business

Days of receipt of such notice from the Transfer Agent, direct the Transfer Agent to approve and

certify the transfer as requested in the relevant Instrument of Transfer. If the Issuer agrees with

Transfer Agent that the requested transfer should be refused, the Issuer shall, within 30 (thirty)

days from the date on which the relevant Instrument of Transfer was lodged with the Transfer

Agent, send or cause to be sent notice of such refusal to both the Transferor and the Transferee.

Where it is proved to the satisfaction of the Issuer that a duly completed and executed Instrument

of Transfer has been lost, the Issuer may, in its discretion, on application in writing made by the


225 | P a g e

Transferee and bearing such stamp as is required by an Instrument of Transfer, register such

transfer on such terms as to indemnity as the Issuer may think fit. Where not all the Bonds

represented by the surrendered Bond Certificate are the subject of the transfer, a new Bond

Certificate in respect of the balance of the Bonds will be issued to the transferor.

Registration and delivery of Bond Certificates: Within 5 (five) Business Days of the approval of

a transfer of Bonds by the Transfer Agent or the Issuer in accordance with Condition 4(B)

(Transfers), the Registrar shall (a) register the transfer in question in the Duplicate Register and

procure the registration of such transfer in the Register; (b) make any necessary endorsements on

the reverse of a Bond Certificate transferred in whole but not in part and (c) deliver a new Bond

Certificate (or, in case of a transfer of Bonds in whole but not in part, the existing Bond Certificate,

in each case in respect of which entries have been made in the Duplicate Register and the Register,

of a like principal amount to the Bonds transferred to each relevant Bondholder (i) at its Specified

Office or (ii) (at the request and risk of any such Bondholder) by uninsured first class mail to the

address specified for the purpose by such relevant Bondholder.

Registration and delivery of Bond Certificates: The transfer of a Bond will be effected without

charge by or on behalf of the Issuer, the Registrar or the Transfer Agent but against such indemnity

as the Registrar or such Transfer Agent may require in respect of any tax or other duty or

governmental charges of whatsoever nature which may be levied or imposed in connection with

such transfer.

Closed Periods: Bondholders may not require transfers to be registered:

(i) within 15 (fifteen) Business Days of the due date for any payment of principal or interest in

respect of the Bonds, save in the case of a payment which falls due as a result of an Event

of Default; or

(ii) in the case of a payment of principal or interest as a result of an Event of Default, during

the period from the later of (i) 15 (fifteen) Business Days prior to the due date of such

payment and (ii) the date on which the Trustee provides a notice pursuant to Condition 10

(Events of Default) to and including the due date for such payment of principal or interest;

or

(iii) on the due date for any payment of principal or interest in respect of such Bond.

Regulations concerning transfers and registration: All transfers of Bonds and entries in the

Register are subject to the detailed regulations concerning the transfer of Bonds scheduled to the

Agency Agreement. The regulations may only be changed by the Issuer with the prior written

approval of the Trustee and the Registrar. A copy of the current regulations will be mailed by the

Registrar to any Bondholder who requests in writing a copy of such regulations.

16.4 Repayment:

Calculation of Interest:


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(i) The Bonds bear interest from the Issue Date at the Applicable Interest Rate on the

principal amount of the Bonds. Interest is payable in arrear on each “Interest Payment

Date”. The Trustee shall notify the Bondholders in accordance with Condition Error!

Reference source not found. (Notices) not less than 5 business days after the

commencement of each Interest Period of the Applicable Interest Rate for such Interest

Period. Interest will be paid on actual number of days divided by 365.

(ii) Each Bond will cease to bear interest from the due date for redemption thereof unless

payment of the full amount due in accordance with Condition 8(Redemption Purchase

and Cancellation) is improperly withheld or refused or default is otherwise made in

respect of any such payment. In such event, interest will continue to accrue at the Default

Interest Rate specified in Condition 7 (G) (Default Interest Rate and Delay In Payment)

hereto above the rate aforesaid (after as well as before any judgment) up to but excluding

the date on which all sums due in respect of any Bond are received by or on behalf of the

relevant holder.

(iii) If interest is required to be paid in respect of a Bond on any date other than an Interest

Payment Date, it shall be calculated by applying the Interest Rate to the outstanding

principal amount of such Bond, multiplying the product by the relevant Day Count

Fraction and rounding the resulting figure to the nearest taka (half a taka being rounded

upwards), where "Day Count Fraction" means, in respect of any period for which

interest is to be calculated, the actual number of days in the relevant period divided by

365.

Redemption:

On any scheduled or early redemption of the Bonds (in whole or in part) pursuant to Condition (Schedule

Redemption), the Issuer shall:

(a) accept for payment on a pro rata basis of Bonds or portions thereof that are being redeemed in

accordance with that Condition; and

(b) deposit with the Paying Agent money sufficient to redeem all the Bonds or portions thereof so

accepted together with any interest thereon.

Scheduled redemption: Unless previously redeemed, or purchased and cancelled as specified in this

Condition, each Bond shall be redeemed in the amount of each Redemption Installment as specified

below on the following Redemption Dates on a pro rata basis:

Redemption Installment Redemption Date


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20 percent of the outstanding principal amount of the Bonds [●] 2018




all of the remaining Outstanding Principal Amount of the Bonds Maturity Date (2022)

The Redemption Installment stated above cannot be changed or amended without prior approval of the

Bangladesh Bank and consent of the Issuer.

The principal redemptions will be in five tranches, each tranche being 20.0% of the principal amount

commencing at the end of the third year from the date of the issuance.

Year Redemption (%) Redemption Entire Issue

(BDT)

Redemption Per Bond

(BDT)

1 Nil Nil Nil

2 Nil Nil Nil

3 20.0% 800,000,000 2,000,000

4 20.0% 800,000,000 2,000,000

5 20.0% 800,000,000 2,000,000

6 20.0% 800,000,000 2,000,000

7 20.0% 800,000,000 2,000,000