audited financial statements - 2015

Notes to the Financial Statements

1 Background Standard Chartered Bank (SCB), Bangladesh Branches ("the Bank") commenced its banking operations

in Bangladesh in 1948 after obtaining licence from the Central Bank. Standard Chartered Bank is incorporated in England by Royal Charter 1853. The liability of its stockholders is limited.

2 Nature of business The principal activities of the Bank are to provide a comprehensive range of financial services,

commercial banking, trade services, cash management, treasury and securities and custodial services.

Offshore Banking Unit (OBU) of the Bank commenced its banking operations in Bangladesh on 16 August 1994 after obtaining banking licence from Bangladesh Bank on 20 December 1993.

On 18 November 2003, the Bank received permission from Bangladesh Bank to provide Islamic banking services. The Bank commenced providing such services from 26 February 2004 on Islamic Shariah principles based banking which is governed by the SCB Shariah Supervisory Committee based in Dubai.

3 Basis of preparation

3.1 Reporting period These financial statements cover one calendar year from 1 January 2015 to 31 December 2015. These

financial statements are authorised for issue by management of the Bank on 28 April 2016.

3.2 Statement of compliance The Financial Reporting Act 2015 (FRA) has been enacted during the year. Under the FRA, the Financial

Reporting Council (FRC) is to be formed and it is to issue financial reporting standards for public interest entities such as banks. The Bank Companies Act 1991 has been amended to require banks to prepare their financial statements under such financial reporting standards.

The FRC is yet to be formed and as such no financial reporting standards have been issued as per the provisions of the FRA. Hence, the financial statements of the Bank continue to be prepared in accordance with Bangladesh Financial Reporting Standards (BFRS) and the requirements of the Bank Companies Act 1991, the rules and regulations issued by Bangladesh Bank and the Companies Act 1994. In case any requirement of the Bank Companies Act 1991, and provisions and circulars issued by Bangladesh Bank differ with those of BFRS, the requirements of the Bank Companies Act 1991, and provisions and circulars issued by Bangladesh Bank shall prevail. Material deviations from the requirements of BFRS are as follows:

i) Investment in shares and securities BFRS: As per requirements of Bangladesh Accounting Standards (BAS) 39 Financial Instruments:

Recognition and Measurement, investment in shares and securities generally falls either under at Fair Value Through Profit and Loss (FVTPL) or under Available For Sale (AFS) where any change in the fair value (as measured in accordance with BFRS 13 Fair Value Measurement) at the year end is taken to profit and loss account or revaluation reserve, respectively.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003 investments in quoted shares and unquoted shares are revalued at the year end at market price and as per book value of last audited balance sheet, respectively. Provision should be made for any loss arising from diminution in value of investment.

ii) Revaluation gains / losses on Government securities BFRS: As per requirement of BAS 39, where securities fall under the category of Held for Trading

(HFT), any change in the fair value of held for trading securities 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 in the profit and loss account.

Bangladesh Bank: As per DOS circular no. 05 dated 26 May 2008 and DOS circular no. 05 dated 28 January 2009, HFT securities are revalued on the basis of marking to market and at year end any gains on revaluation of securities which have not matured as at the balance sheet date are recognised in other reserves as a part of equity and any losses on revaluation of securities as at the balance sheet date are charged in the profit and loss account. Interest on HFT securities including amortisation of discount is recognised in the profit and loss account. HTM securities which have not matured as at the balance sheet date are amortised at the year end and changes in amortisation are recognised in other reserves as a part of equity.

iii) Repo and reverse repo transactions BFRS: As per BAS 39 when an entity sells a financial asset and simultaneously enters into an

agreement to repurchase the asset (or a similar asset) at a fixed price on a future date (repo), the arrangement is treated as a loan and the underlying asset continues to be recognised in the entity’s financial statements. The difference between selling price and repurchase price will be treated as interest expense. Same rule applies to the opposite side of the transaction (reverse repo).

Bangladesh Bank: As per DOS Circular letter no. 06 dated 15 July 2010 and subsequent clarification in DOS circular no. 02 dated 23 January 2013, 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 a future date (repo or stock lending), the arrangement is accounted for as a normal sale transaction and the financial asset is derecognised in the seller’s book and recognised in the buyer’s book.

However, as per DMD circular letter no. 07 dated 29 July 2012, non primary dealer banks are eligible to participate in the Assured Liquidity Support (ALS) programme, whereby such banks may enter collateralised repo arrangements with Bangladesh Bank. Here the selling bank accounts for the arrangement as a loan, thereby continuing to recognise the asset.

iv) Provision on loans and advances BFRS: 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.

Bangladesh Bank: As per 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, a general provision at 0.25% to 5% under different categories of unclassified loans (standard/SMA loans) has to be maintained regardless of objective evidence of impairment. Also provision for sub-standard loans, doubtful loans and bad/losses loans has to be provided at 5% to 20%, 5% to 50% and 100%, respectively for loans and advances depending on the duration of overdue. Again as per 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.

v) Recognition of interest in suspense BFRS: Loans and advances to customers are generally classified as 'loans and receivables' as per

BAS 39 and interest income is recognised through effective interest 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.

Bangladesh Bank: 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 an interest in suspense account, which is presented as liability in the balance sheet.

vi) Other comprehensive income BFRS: As per BAS 1 Presentation of Financial Statements Other Comprehensive Income (OCI) is a

component of financial statements or the elements of OCI are to be included in a single Other Comprehensive Income Statement.

Bangladesh Bank: Bangladesh Bank has issued templates for financial statements which are to be followed by all banks. The templates for financial statements issued by Bangladesh Bank do not include OCI nor are the elements of OCI allowed to be included in a single other comprehensive income statement. As such the Bank does not prepare the other comprehensive income statement. However, elements of OCI, if any, are shown in the statements of changes in equity.

vii) Financial instruments – presentation and disclosure Bangladesh Bank guidelines categorise, recognise, measure and present financial instruments

differently from those prescribed in BAS 32 Financial Instruments: Presentation, BAS 39 and BFRS 7 Financial Instruments: Disclosures. As such full disclosure and presentation requirements of BFRS 7 and BAS 32 are not made in the financial statements.

viii) Financial guarantees BFRS: As per BAS 39, financial guarantees are contracts that require an entity to make specified

payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantees are recognised initially at fair value, and the initial fair value is amortised over the life of the financial guarantee. The financial guarantees 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.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, financial guarantees such as letter of credit, letter of guarantee etc. are reported as off-balance sheet items.

ix) Cash flow statement BFRS: As per BAS 7 Statement of Cash Flows, the cash flow statement can be prepared using either

the direct method or the indirect method. 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.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, cash flow is the mixture of direct and indirect methods.

x) Off-balance sheet items BFRS: As per BFRS there is no requirement for disclosure of off-balance sheet items on the face of

the balance sheet.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, off-balance sheet items (e.g. letter of credit, letter of guarantee etc.) must be disclosed separately on the face of the balance sheet.

xi) Loans and advances net of provision BFRS: Loans and advances shall be recognised net of impairment loss as per BAS 39.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, provision on loans and advances is presented separately as liability and cannot be netted off against loans and advances.

Standard Chartered BankBangladesh Branches

Notes to the Financial Statementsas at and for the year ended 31 December 2015


Financial Statements 2015Independent Auditor's Report to the Management of


Report on the Financial StatementsWe have audited the accompanying financial statements of Standard Chartered Bank, Bangladesh Branches ("the Bank") which comprise the balance sheet as at 31 December 2015, the profit and loss account, cash flow statement and statement of changes in equity for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements and Internal ControlsManagement is responsible for the preparation of financial statements that give a true and fair view in accordance with Bangladesh Financial Reporting Standards as explained in note 3.2 and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 and 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 ResponsibilityOur responsibility is to express an opinion on these financial statements 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 financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. 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 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.

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of the Bank as at 31 December 2015, and of its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards as explained in note 3.2.

Report on Other Legal and Regulatory RequirementsIn accordance with the Companies Act, 1994, the Bank Company Act, 1991 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 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 Responsibility for the Financial Statements and Internal Controls section:

i) internal audit, internal control and risk management arrangements of the Bank as disclosed in note 30.2 to the financial statements appeared to be materially adequate; and

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.

(c) in our opinion, proper books of account as required by law have been kept by the Bank so far as it appeared from our examination of those books;

(d) the balance sheet and the profit and loss account dealt with by the report are in agreement with the books of account;

(e) the 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;

(f) adequate provisions have been made for advances which are, in our opinion, doubtful of recovery; (g) the records and statements submitted by the branches have been properly maintained and consolidated in

the financial statements; (h) the information and explanation required by us have been received and found satisfactory; and (i) 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.


Balance Sheetas at 31 December 2015

Balance Sheet

PROPERTY AND ASSETS Notes

2015Taka

2014Taka

Cash 6Cash in hand (including foreign currencies) 2,193,451,568 2,572,999,553Balances with Bangladesh Bank (including foreign currencies) 13,977,702,007 13,166,105,596Sonali Bank as an agent of Bangladesh Bank (local currency) 39,996,165 35,296,726 16,211,149,740 15,774,401,875Balance with other banks and financial institutions 8Inside Bangladesh 60,253,787 44,048,634Outside Bangladesh 21,927,082,553 18,621,142,489 21,987,336,340 18,665,191,123

Money at call and short notice - -Investments 9Government securities 60,194,665,155 57,939,355,438Other investments 18,000,000 18,000,000 60,212,665,155 57,957,355,438Loans and advancesLoans, cash credit, overdrafts, etc. 10 99,481,012,603 98,402,884,673Bills purchased and discounted 11 14,959,279,110 12,275,182,362 114,440,291,713 110,678,067,035

Fixed assets including premises, furniture and fixtures 12 692,232,603 1,036,790,794

Other assets 13 8,812,154,232 9,626,603,058

Non banking assets - -

Total assets 222,355,829,783 213,738,409,323

LIABILITIES AND CAPITALLiabilitiesBorrowings from other banks, financial institutions and agents 14 9,388,573,236 12,941,306,899Deposits and other accounts 15Current and other accounts 38,488,266,318 36,042,742,107Bills payable 1,349,446,891 1,434,544,164Savings deposits 48,132,356,047 42,863,248,887Term deposits 40,733,064,549 41,365,955,413Short term deposits 16,511,221,536 18,189,937,859Other deposits 10,708,816,060 9,346,052,544 155,923,171,401 149,242,480,974

Other liabilities 16 22,019,277,346 24,851,567,145

Total liabilities 187,331,021,983 187,035,355,018

EquityFund deposited with Bangladesh Bank 5.1 2,219,501,566 2,207,278,944Other reserves 17 249,443,397 502,518,255Profit and loss account balance 18 32,555,862,837 23,993,257,106Total equity 35,024,807,800 26,703,054,305

Total liabilities and equity 222,355,829,783 213,738,409,323

OFF-BALANCE SHEET ITEMSContingent liabilities 27Acceptances and endorsements 42,082,974,984 50,750,185,710Letters of guarantee 28,860,028,579 27,656,280,400Irrevocable letters of credit 30,197,533,049 29,488,493,006Bills for collection 11,844,709,170 10,955,588,876 112,985,245,782 118,850,547,992Other commitments

Forward contracts 13,549,272,480 17,022,759,090 13,549,272,480 17,022,759,090

Total off-balance sheet items 126,534,518,262 135,873,307,082

The accompanying notes 1 to 30 form an integral part of these financial statements.

Independent Auditor's Report

Dhaka, 28 April 2016

As per our report of same date.

Imtiaz Ibne SattarChief Financial Officer, Bangladesh

Rahman Rahman HuqChartered Accountants

Abrar A. AnwarChief Executive Officer, Bangladesh

Rahman Rahman HuqChartered AccountantsDhaka, 28 April 2016


Statement of Changes in Equityfor the year ended 31 December 2015

Statement of Changes in Equity

Balance as at 1 January 2014 2,203,056,583 1,412,654,908 20,351,589,014 23,967,300,505

Revaluation of foreign currency held 4,222,360 - - 4,222,360as capital during the year 2014

Actuarial gain net of deferred tax - (174,782,488) - (174,782,488)

Equity reserve - amortised discount - (515,998,273) - (515,998,273)on Held to Maturity (HTM) securities

Net profit for the year - - 11,770,562,210 11,770,562,210

Profit remitted to Head Office - - (8,128,894,118) (8,128,894,118)Revaluation reserve account- Held for - (219,355,892) - (219,355,892)Trading (HFT) securities

Balance as at 31 December 2014 2,207,278,943 502,518,255 23,993,257,106 26,703,054,304

Balance as at 1 January 2015 2,207,278,943 502,518,255 23,993,257,106 26,703,054,304Revaluation of foreign currency held 12,222,623 - - 12,222,623as capital during the year 2015Actuarial gain net of deferred tax - (230,061,625) - (230,061,625)Equity reserve - amortised discount - (392,152,454) - (392,152,454)on Held to Maturity (HTM) securitiesnet of deferred taxNet profit for the year - - 9,303,305,731 9,303,305,731

Profit remitted to Head Office - - (740,700,000) (740,700,000)

Revaluation reserve account- Held for - 369,139,221 - 369,139,221Trading (HFT) securities net of deferred taxBalance as at 31 December 2015 2,219,501,566 249,443,397 32,555,862,837 35,024,807,800

ParticularsOther

reserveProfit and Loss

account balance TotalFund deposited withBangladesh Bank

TakaTakaTakaTaka


Profit and Loss Accountfor the year ended 31 December 2015

Profit and Loss Account

Notes

2015Taka

2014Taka

Interest income 19 13,666,780,012 15,571,836,947Interest expense on deposits and borrowings 20 3,785,529,594 6,221,277,393Net interest income 9,881,250,418 9,350,559,554

Income from investments 21 6,005,472,934 6,888,356,351Commission, exchange and brokerage income 22 5,960,740,620 6,128,284,771Other operating income 23 23,153,213 971,317,496 11,989,366,767 13,987,958,618

Total operating income 21,870,617,185 23,338,518,172

Salaries and allowances 3,708,743,027 2,534,834,104Rent, taxes, insurance, lighting, etc. 551,170,116 578,849,176Legal expenses 56,221,063 41,666,999Postage, stamps, telephone, telex, etc. 242,960,094 216,191,453Auditors' fee 1,150,000 1,150,000Printing, stationery and advertisement 250,969,389 244,443,785Chief executive officer's salary 20,765,094 13,526,214Repair, maintenance and depreciation 24 558,877,713 649,486,213Other expenses 25 1,273,432,403 1,213,728,202Total operating expenses 6,664,288,899 5,493,876,146

Profit before provision 15,206,328,286 17,844,642,026

Provision for loans and advances and off-balance sheet exposures 16.1 643,779,513 627,216,861Total profit before income tax 14,562,548,773 17,217,425,165Provision for income tax Current tax 16.4 5,319,784,954 5,969,881,102 Deferred tax 13.3 (60,541,912) (523,018,147) 5,259,243,042 5,446,862,955Net profit after tax 9,303,305,731 11,770,562,210



Cash Flow Statement for the year ended 31 December 2015

Cash Flow Statement

2015Taka

2014Taka

A) Cash flows from operating activities Interest received 13,995,182,318 16,213,789,280 Interest paid (4,341,623,092) (7,472,755,322) Dividend income - 22,500,000 Commission, exchange and brokerage income received 5,810,015,874 6,079,027,526 Cash paid to employees (4,084,822,491) (2,659,633,536) Cash paid to suppliers (3,156,914,692) (1,096,860,705) Income tax paid (6,602,834,244) (5,907,474,535) Operating cash flows before changes in operating assets and liabilities 1,619,003,673 5,178,592,708

Increase / (decrease) in operating assets and liabilities Money at call and short notice - - Loans and advances to customers (4,148,228,526) 8,846,451,082 Other assets 164,247,182 (746,922,302) Customer deposits 6,680,690,427 (20,309,222,218) Borrowing from other banks and financial institutions 1,064,266,335 (2,327,139,756) Other liabilities 202,831,755 (528,563,959) 3,963,807,173 (15,065,397,153) Net cash receipt from operating activities 5,582,810,846 (9,886,804,445)

B) Cash flows from investing activities Income from investments 5,916,506,162 5,374,129,385 Net investment in treasury securities (2,255,309,716) (12,854,633,200) Proceeds from disposal of fixed assets 49,397,584 1,148,193,431 Purchase of fixed assets (204,976,236) (672,898,585) Other income 15,941,819 29,490,012 Net cash used in investing activities 3,521,559,613 (6,975,718,957)

C) Cash flows from financing activities Profit remitted to head office (740,700,000) (8,128,894,118) Repo with Bangladesh Bank (4,617,000,000) 4,617,000,000 Net cash used in financing activities (5,357,700,000) (3,511,894,118)

D) Net increase / (decrease) in cash and cash equivalents (A+B+C) 3,746,670,459 (20,374,417,520)

E) Effects of exchange rate changes on cash and cash equivalents 12,222,623 4,222,360

F) Opening cash and cash equivalents 34,439,592,998 54,809,788,158

F) Closing cash and cash equivalents (D+E+F) (Note - 26) 38,198,486,080 34,439,592,998






4.16 New accounting standards not yet adopted

The Bank has consistently applied the accounting policies as set out in Note 4 to all periods presented in these financial statements. The various amendments to standards, including any consequential amendments to other standards, with the date of initial application of 1 January 2015 have been considered. However, these amendments have no material impact on the financial statements of the Bank.

A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2018 and earlier application is permitted. However, the Bank has not early applied the following new standards in preparing these financial statements:

(a) BFRS 9 Financial lnstruments

BFRS 9 published in July 2014, replaces the existing guidance in BAS 39 Financial lnstruments: Recognition and Measurement. BFRS 9 includes revised guidance on the classification and measurement of the financial instruments, a new expected credit loss model for calculating impairment of financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from BAS 39. BFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Bank is yet to assess the potential impact of BFRS 9 on its financial statements.

(b) BFRS 15 Revenue from Contracts with Customers

BFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing recognition guidance, including BAS 18 Revenue, BAS 11 Construction Contracts and BFRI 13 Customer Loyalty Programmes. BFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Bank is yet to assess the potential impact of BFRS 15 on its financial statements.

5 Capital

The Bank's approach to capital management is driven by a desire to maintain a strong capital base to support the development of its business, to meet regulatory capital requirements at all times and to maintain good credit ratings.

Compliance with capital adequacy regulations

Capital requirements for the Bank at a local level are set and monitored by Bangladesh Bank. The capital that the Bank is required to hold is determined considering its balance sheet and off-balance sheet positions in accordance with guidelines on risk based capital adequacy.

The Bank's capital structure consists of Tier I and Tier II capital which is aligned with regulatory capital structure. Tier I capital is further categorized as Common Equity Tier 1 (CET1) and Additional Tier 1 capital. The computation of the amount of Common Equity Tier I, Additional Tier I and Tier II capital shall be subject to the following conditions:

• The Bank has to maintain at least 4.50% of total Risk Weighted Assets (RWA) as Common Equity Tier I capital.

• Tier I capital will be at least 5.50% of the total RWA.

• Minimum Capital to Risk-weighted Asset Ratio (CRAR) will be 10% of the total RWA.

• Additional Tier I capital can be maximum up to 1.5% of the total RWA or 33.33% of CET 1, whichever is higher.

• Tier II capital can be maximum up to 4% of the total RWA or 88.89% of CET1, whichever is higher.

• In addition to minimum CRAR, Capital Conservation Buffer (CCB) @ 2.5% of the total RWA will be maintained in the form of CET1 in a phased manner from 2016 to 2019.

5.1 As per section 13 (1), subsequent revision and amendments to the Bank Company Act 1991 and BRPD circular no. 18 dated 21 December 2014 and BRPD circular no. 11 dated 14 August 2008, the required amount of the capital and reserves of the bank at the close of the business on 31 December 2015 is Tk. 4,000,000,000 or 10% of risk weighted assets whichever is higher. Accordingly, the required amount of the capital and reserves of the Bank at the close of the business on 31 December 2015 was Tk 19,898,868,302 (2014: Tk 20,939,445,861). The Bank's capital was greater than the amount required as above. The details of the capital as on 31 December are as follows:

2015Taka

2014Taka

2015Taka

2014Taka

2015Taka

2014Taka


Total risk weighted assets 198,988,683,018 209,394,458,614

10% of risk weighted assets 19,898,868,302 20,939,445,861

Total capital held:

Common Equity Tier I

Fund Deposited with Bangladesh Bank 2,219,501,566 2,207,278,944

Retained earnings 32,555,862,837 23,993,257,103

Actuarial gain/(loss) (207,431,414) 22,630,212

Less: Regulatory adjustment for deferred tax assets as

per Bangladesh Bank Guidelines (1,160,742,557) (669,248,065)

33,407,190,432 25,553,918,194

Additional Tier I - -

Total Tier I Capital 33,407,190,432 25,553,918,194

Tier II

General Provision 2,032,164,606 2,112,020,797

Revaluation Reserve for Securities 191,660,856 239,576,070

Total Tier II Capital 2,223,825,462 S2,351,596,867

Total regulatory capital 35,631,015,894 27,905,515,061

Total capital required 19,898,868,302 20,939,445,861

Surplus capital 15,732,147,592 6,966,069,200

Capital Adequacy Ratio 17.91% 13.33%

Tier I Capital Adequacy Ratio 16.79% 12.20%

Tier II Capital Ratio 1.12% 1.12%

Refer to Annexure - F for Disclosures on Risk Based Capital (Basel III) Pillar III.

6 Cash

In hand (including foreign currencies)

Local currency 2,013,847,532 1,980,845,587

Foreign currencies 179,604,036 592,153,966

2,193,451,568 2,572,999,553

Balance with Bangladesh Bank (including foreign currencies)

Local currency 11,363,027,175 10,515,083,211

Foreign currencies 2,614,674,832 2,651,022,385

Foreign currency capital (restricted) - -

13,977,702,007 13,166,105,596

Balance with Sonali Bank as agent of Bangladesh Bank 39,996,165 35,296,726

14,017,698,172 13,201,402,322

16,211,149,740 15,774,401,875

7 Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)

Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are calculated and maintained in accordance with section 33 of the Bank Company Act, 1991 and instructions contained in MPD circular no. 01 dated 23 June 2014 issued by Bangladesh Bank.

The CRR on the Bank's average time and demand liabilities at the rate of 6.5% (bi-weekly basis) and 6% (daily basis) has been calculated and maintained with Bangladesh Bank in current account and 13% SLR, including CRR, on the same liabilities has also been maintained in the form of cash in hand, balance with Bangladesh Bank and Government securities. Both reserves maintained by the Bank as at 31 December, are shown below:

Cash Reserve Ratio ( CRR )

Daily 6% (2014: 6%) of average demand and time liabilities:

Required reserve 10,158,982,560 9,936,492,880

Actual reserve held 11,905,082,703 10,799,737,000

Surplus 1,746,100,143 863,244,120

Bi-weekly 6.5% (2014: 6.5%) of average demand and time liabilities:


Actual reserve held 11,905,082,703 10,799,737,000

Surplus 899,518,263 35,203,050

Statutory Liquidity Ratio ( SLR )

13% (2014: 13%) of Average demand and time liabilities:


Actual reserve held with Bangladesh Bank 63,327,622,986 55,721,064,579

Surplus 41,820,384,938 34,665,766,729

7.1 Actual reserve held for SLR

Cash in hand 2,193,451,568 2,572,999,553

Balance with agent bank (Sonali Bank Ltd.) 39,988,000 35,291,000

Excess reserve 899,518,263 35,203,026

Other eligible securities 1,024,000 665,000

Treasury Bills 16,976,025,299 14,903,964,403

Bangladesh Government Treasury Bonds 43,217,615,856 38,172,941,597

63,327,622,986 55,721,064,579


3.3 Basis of measurement The financial statements of the Bank have been prepared on historical cost basis except for the following:

- Government treasury bills and bonds designated as HFT and subsequently measured at fair value using marking to market concept with gains credited to revaluation reserve as per DOS circular 05 dated 26 May 2008 and DOS circular 05 dated 28 January 2009; and

- Government treasury bills and bonds designated as HTM and subsequently measured using amortisation concept as DOS circular 05 dated 26 May 2008 and DOS circular 05 dated 28 January 2009.

- Net defined benefit (asset) liability in respect of defined benefit plan recognised as the present value of defined benefit obligation less fair value of plan assets as per BAS 19 Employee Benefits.

3.4 Functional and reporting currency The financial statements of the Bank are presented in Bangladeshi Taka (Taka/Tk/BDT) which is the Bank’s

functional and reporting currency.

3.5 Use of estimates and judgements The preparation of financial statements requires management to make judgements, estimates and

assumptions that affect 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 are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the periods in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described below:

(a) Provisions for loans and advances The Bank assesses its loans and advances for objective evidence of impairment on a regular basis and

particularly at year end. While the primary criteria set out in BRPD circular no. 14 dated 23 September 2012 for determining whether a loan is impaired are objective, based on borrower's ability to make timely repayments, loans and advances may also be classified based on qualitative judgement. This involves making assessments regarding the economic environment in which borrowers operate in addition to making judgements about a borrower's financial condition and net realisable value of any underlying collateral.

(b) Taxation The estimation of current tax provision involves making judgements regarding admissibility of certain

expenses as well as estimating the amount of other expenses for tax purposes.

In addition, the recognition of deferred tax assets requires the Bank to estimate the extent to which it is probable that future taxable profits will be available against which the deferred tax assets may be utilised.

(c) Net defined benefit (asset) liability under defined benefit plan The determination of the Bank's net defined benefit (asset) liability in respect of defined benefit plan involves

the use of estimates regarding demographic variables such as employee turnover and mortality and financial variables such as discount rate, future increases in salaries and medical costs that will influence the cost of the benefit.

3.6 Cash flow statement The cash flow statement has been prepared in accordance with the BAS 7 considering the requirements

specified in the BRPD circular no. 14 dated 25 June 2003.

3.7 Liquidity statement The liquidity statement of assets and liabilities as on the reporting date has been prepared on the basis of

residual maturity term which has been given in the statement.

3.8 Consolidation All balances of all branches (including Islamic branch) are included in these financial statements except

those of Offshore Banking Unit (OBU) branch.

4 Significant accounting policies

4.1 Foreign currencies According to BAS 21 The Effects of Changes in Foreign Exchange Rates, tansactions in foreign currencies

are translated into the respective functional currency of the operation at the spot exchange rate at the date of the transaction.

Monetary assets, liabilities and fund deposited with Bangladesh Bank as capital denominated in foreign currencies at the reporting date are translated into the functional currency at the spot exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated into the functional currency at the spot exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on translation are recognised in the profit and loss account except for exchange rate differences on funds deposited with Bangladesh Bank as capital, which is recognised directly in equity.

4.2 Revenue recognition

Interest income on conventional banking Interest income are recognised in the profit and loss account using the effective interest method.

The effective interest rate is the rate that exactly discounts the estimated future receipts through the expected life of the financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or liability.

Interest is accrued on a daily basis and applied to customer accounts every month, quarter and at maturity depending on the product offerings.

In accordance with BRPD circular no. 14 dated 23 September 2012, interest accrued on sub-standard loans and doubtful loans are credited to Interest Suspense Account which is included within Other liabilities. Interest from loans and advances ceases to be accrued when they are classified as bad / loss.

Profit on Saadiq investments Profit on investments is recognised, on an accrual basis, over the lifetime of the investments so as to reflect

a constant rate of return on their carrying amounts. Overdue / late payment charge on investment is transferred to charity suspense account instead of income account.

Interest income from investment Interest on investment securities other than the amount of amortisation of premium and discount on

securities classified as HTM which is recognised directly in equity in accordance with DOS circular no. 05 dated 26 May 2008, is recorded in the profit and loss account.

Commission and fee income The Bank earns commission and fee income from a diverse range of services (e.g. LC operations, accounts

maintenance, custodial services, credit card renewal etc.) provided to its customers. Commission and fee income is accounted for as follows:

- income earned on the execution of a significant act is recognised as revenue when the act is completed,

- income earned from services provided is recognised as revenue as the services are provided.

Exchange income Exchange income includes all gains and losses from foreign currency transactions.

Dividend income Dividend income is recognised when it is received.

4.3 Loans and advances to customers Loans and advances are non-derivative financial assets with fixed or determinable payments that are not

quoted in an active market and that the Bank does not intend to sell immediately or in the near term.

Loans and advances are initially measured at fair value, and subsequently measured at amortised cost. These are stated gross with accumulated specific and general provisions for loans and advances being shown under other liabilities.

4.3.1 Provisions on loans and advances At each balance sheet date and periodically throughout the year, the Bank reviews loans and advances to

assess whether objective evidence that impairment of a loan or portfolio of loans has arisen supporting a change in the classification of loans and advances, which may result in a change in the provision required in accordance with 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 guidance in the circulars follow a formulaic approach whereby specified rates are applied to the various categories of loans as defined in the circular. The provisioning rates are as follows:

General provision on:

Unclassified loans under small and medium enterprise financing (SMEF) 0.25% 0.25%

Unclassified loans under housing finance (HF) and on loans for professionals (LP) 2.00% 2.00%

Unclassified loans under consumer financing (CF) other than housing finance (HF) and 5.00% 5.00%

loans for professionals (LP)

Unclassified loans to brokerage houses (BH), merchant banks (MB), stock dealers (SD) 2.00% 2.00%

All unclassified loans except under SMEF, HF, LP, CF, BH, MB, SD and short-term 1.00% 1.00%

agricultural and micro-credit scheme

Unclassified loans under short-term agricultural and micro-credit scheme 2.50% 5.00%

Off-balance sheet exposures 1.00% 1.00%

In accordance with BRPD circular no. 05 dated 29 May 2013, the rate of provision on the outstanding amount of loans kept in the 'Special Mention Account' will be the same as the rates stated above depending on the types of loans and advances.

Specific provision on:

Substandard loans and advances 20% 20%

Doubtful loans and advances 50% 50%

Bad / loss loans and advances 100% 100%

Short-term agricultural and micro-credits:

Substandard and Doubtful loans and advances 5% 5%


The above rates are the minimum prescribed rates. BRPD circular no. 14 dated 23 September 2012 provides scope for further provisioning based on qualitative judgements. If the specific provisions assessed under the qualitative methodology are higher than the specific provisions assessed under the formulaic approach above, the higher of the two is recognised.

4.3.2 Loan write-off

Loans are normally written off when there is no realistic prospect of recovery of these amounts and in accordance with BRPD circular no. 02 dated 13 January 2003 and BRPD circular no. 13 dated 7 November 2013.

2015 2014

2015 2014


4.4 Investments Investments in treasury bills and Government bonds are accounted for in accordance with DOS Circular

Letter No. 05 dated 26 May 2008 subsequently amended by DOS circular letter no. 05 dated 28 January 2009, which allow banks to use both HTM and HFT securities for fulfilment of Statutory Liquidity Reserve (SLR) requirements.

In accordance with the requirements of the aforementioned circulars, amortised discount or premium on HTM securities is recognised directly in equity. However, coupon interests are recognised in profit or loss.

Gains arising from revaluation of HFT securities on 'Marking to Market' basis are recognised in revaluation reserve account while losses from revaluation of the same securities are recognised in profit or loss.

Bank's investments in shares (unquoted) are recorded at cost and income thereon is accounted for when cash is received.

4.5 Provisions for other assets BRPD circular no. 14 dated 25 June 2001 requires a provision of 100% on other assets which are

outstanding for one year and above. The Bank maintains provisions in line with this circular unless it assesses there is no doubt of recovery on items of other assets in which case no provision is kept.

4.6 Provisions on nostro accounts Unsettled debit transactions (as per Bank's book and nostro statements) for more than three months on

nostro accounts are reviewed at each balance sheet date by management and provisions are kept in accordance with Bangladesh Bank Foreign Exchange Policy Department, circular no. FEPD (FEMO)/01/2005-677 dated 13 September 2005.

4.7 Fixed assets including premises, furniture and fixtures Items of fixed assets, other than land, are measured at cost less accumulated depreciation and impairment

losses, as per BAS 16 Property, Plant and Equipment. Cost includes expenditures that are directly attributable to the acquisition of the asset. Land is carried at cost.

Subsequent costs The cost of replacing part of an item of fixed assets is recognised in the carrying amount of the item if it is

probable that the future economic benefits embodied within the part will flow to the Bank and its cost can be measured reliably. The cost of day-to-day servicing of fixed assets are expensed when incurred.

Depreciation Depreciation on premises other than freehold land, and other fixed assets, is recognised in profit or loss on

a straight line basis over the expected useful life of the assets based on cost. The estimated useful lives and the rate of depreciation for the current and comparative periods are as follows:

Estimated useful life Rate of depreciation

Freehold premises 50 years 2%

Fixed equipments 3 to 15 years 7% - 33%

Computer and office equipments 5 years 20%

Furniture and fittings 5 years 20%

Motor Vehicle 5 years 20%

Depreciation on additions to fixed assets is charged from the month in which such assets are capitalised, and adjustments to accumulated depreciation for disposals / write offs are made up to the month in which the relevant assets are disposed / written off.

Retirement and disposals

An asset is derecognised on disposal or when no future economic benefits are expected from its use. Gains or losses arising from the retirement or disposal of an asset is determined as the difference between the net disposal proceeds and the carrying amount of the asset which is recognised as gain or loss from disposal of asset under other operating income.

4.8 Leases

In accordance with BAS 17 Leases, leases in terms of which the Bank assumes substantially all the risks and rewards of ownership are classified as finance leases.

When the Bank is a lessee under finance leases, the leased assets are capitalised and included in fixed assets and the corresponding liability to the lessor is included in other liabilities. A finance lease and its corresponding liability are recognised initially at the fair value of the asset or, if lower, the present value of the minimum lease payments. Finance charges payable are recognised as interest expense over the period of the lease based on the interest rate implicit in the lease so as to give a constant rate of interest on the remaining balance of the liability.

All other leases are classified as operating leases. When the Bank is the lessee under an operating lease, leased assets are not recognised in the balance sheet. Rentals payable and paid in advance under operating leases are accounted for on a straight-line basis over the period of the lease, unless another systematic basis is more representative of the time pattern of the user’s benefit, and are included in rent expenses.

4.9 Borrowings from other banks, financial institutions and agents

Borrowings from other banks, financial institutions and agents include both interest-bearing borrowings against securities from Bangladesh Bank and other banks, vostro accounts balances and call borrowing from other banks. These items are brought to financial statements at the gross value of the outstanding balance.

4.10 Deposits by customers and banks

Deposits are the Bank’s principal source of debt funding. Deposits are initially measured at fair value and subsequently measured at amortised cost.

Interest expense on deposits

Interest expense for all deposits are recognised in the profit and loss account using the effective interest method.

4.11 Provisions for liabilities and charges

A provision is recognised if, as a result of a past event, the Bank has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Contingent liabilities are not recognised but disclosed in the financial statements unless the possibility of an outflow of resources embodying economic benefits is reliably estimated.

4.12 Offsetting financial assets and financial liabilities

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

4.13 Cash and cash equivalents

For the purpose of the cash flow statement, cash and cash equivalents include notes and coins on hand and balances held with other banks and financial institutions and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

4.14 Employee benefits

Short term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A provision is recognised for the amount expected to be paid under performance bonus plans if the Bank has a present constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Defined contribution plans - Provident fund

The Bank contributes to a locally registered provident fund scheme which is approved by the National Board of Revenue (NBR) for employees of the Bank eligible to be members of the fund in accordance with the rules of the provident fund constituted under an irrevocable trust. Obligations for contributions to the provident fund are recognised as an expense in profit or loss when they are due.

Defined benefit plans - Gratuity fund

The Bank operates a funded gratuity scheme which is of the nature of a defined benefit scheme for its permanent employees. The fund has been formed under an irrevocable trust deed and is approved by the NBR. It is managed by a Board of Trustees comprising of employees of the Bank. Gratuity is payable at the rate of one month's salary last drawn for each completed year of service or any part thereof in excess of six months.

In accordance with the requirements of BAS 19 Employee Benefits, the Bank’s net obligation in respect of its gratuity fund is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; discounting the benefit to determine its present value; and deducting the fair value of any plan assets. The calculation is performed by a qualified actuary using the Projected Unit Credit method.

The net interest expense / (income) on the net defined benefit liability / (asset) for the period is determined by applying discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability / (asset), taking into account any changes in the net defined benefit liability / (asset) during the period as a result of contributions and benefit payments. Consequently, the net interest on the net defined benefit liability / (asset) comprises interest cost on defined benefit obligation, interest income on plan assets, and interest on the effect on the asset ceiling.

Actuarial gains or losses that arise are recognised in equity and presented in the statement of changes in equity in the period they arise. Past service costs are recognised in the period in which the plan amendment or curtailment occurs.

4.15 Taxation

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit & loss account except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of prior years.

Provision for taxation for the year ended 31 December 2015 has been made on the basis of the provisions of the Income Tax Ordinance 1984 and the Finance Act 2015. Currently the tax rate applicable for banks is 42.5%. Additionally, banks may have to pay excess profit tax at 15% on so much of their profits as exceed fifty percent of the aggregate of their capital and reserves as defined in section - 16C of Income Tax Ordinance 1984.

Deferred tax assets / (liabilities) As per BAS 12 Income Taxes, deferred tax assets / (liabilities) are calculated using the balance sheet

method, providing for temporary differences between the carrying amount of assets and liabilities and their tax bases. The tax base of assets is the amount that will be deductible for tax purposes against any taxable economic benefits that will flow to an entity (in this case, the Bank) when it recovers the carrying amount of the assets. The tax base of liabilities is their carrying amount, less any amount that will be deductible for tax purposes in respect of the liabilities in future periods. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on laws that have been enacted or substantively enacted by the reporting date. Deferred tax is calculated using the tax rates as prescribed in the Income Tax Ordinance (ITO) 1984 and relevant Statutory Regulatory Orders (SRO) and BRPD circular no. 11 dated 12 December 2011.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.


2015Taka

2014Taka9.3 Residual maturity grouping of Treasury Bills, Bangladesh

Bank Bills and Government Bonds

On demand - -

Up to 1 month 10,988,403,064 820,626,181

Over 1 month but not more than 3 months 707,552,449 8,011,206,703

Over 3 months but not more than 1 year 24,169,984,047 10,461,133,222

Over 1 year but not more than 5 years 22,902,935,347 35,761,165,500

Over 5 years 1,424,766,248 2,884,558,832

60,193,641,155 57,938,690,438

9.4 Face value and market value of Treasury Bills, Bangladesh Bank Bills and Government Bonds

Treasury Bills and Bangladesh Bank Bills:

Face value of Treasury Bill (including Bangladesh Bank Bills) 17,213,200,000 15,243,300,000

Unamortised amount of Treasury Bills (252,320,124) (321,491,727)

MTM gain / (loss) from Treasury Bills - HFT 15,145,423 (17,843,870)

Market value 16,976,025,299 14,903,964,403

Government bonds:

Face value of Government Bond 41,447,300,000 42,481,000,000

Unamortised amount of Government Bonds 801,623,638 356,888,937

MTM gain / (loss) from Government Bonds - HFT 968,692,218 196,837,098

Market value 43,217,615,856 43,034,726,035

Total 60,193,641,155 57,938,690,438

10 Loans, cash credit, overdrafts, etc.

Secured cash credits 535,404,842 720,254,243

Personal credit 22,508,414,030 21,870,513,719

Loans against property 2,575,036,304 1,835,067,108

Term loans 35,110,778,208 37,472,091,036

Revolving loans 9,031,844,769 3,820,920,270

Loans against trust receipts 5,238,693,783 7,890,851,248

Auto loans 520,401,209 465,149,137

House building loans 6,322,294,763 6,790,878,481

Credit cards 5,904,698,076 5,654,295,202

Overdraft 3,654,482,363 3,947,984,547

Staff loans 2,227,929,206 2,137,074,328

Islamic - Credit cards 630,410,196 700,098,721

Islamic - Instalment finance (Murabaha) 202,502,941 322,983,194

Islamic - Auto finance 359,728,227 381,070,648

Islamic - Mortgage finance 3,164,185,795 3,064,598,510

Islamic - Finance against property 245,298,739 242,872,073

Islamic - Corporate Short Term Finance 500,000,000 385,000,000

Islamic - Import invoice financing 748,909,152 701,182,208

99,481,012,603 98,402,884,673

10.1 Loans, cash credit, overdrafts, etc.- inside and

outside Bangladesh

Inside Bangladesh 99,481,012,603 98,402,884,673

Outside Bangladesh - -

99,481,012,603 98,402,884,673

10.2 Loans, cash credit, overdrafts, etc.- residual maturity grouping

Repayable on demand 14,711,805,538 11,623,449,731

Less than three months 35,668,092,260 37,806,196,070

More than three months but less than 1 year 20,020,043,167 18,191,498,075

More than 1 year but less than 5 years 22,617,348,711 23,827,684,351

More than 5 years 6,463,722,927 6,954,056,446

99,481,012,603 98,402,884,673

10.3 Loans and advances- significant concentration

Advances to allied concerns of Directors - -

Advances to chief executive, other senior executives and staff 2,227,929,206 2,137,074,328

2,227,929,206 2,137,074,328

10.3.1 Details of large loans

Total number of customers having facilities of more than 10% of

the Bank's capital: 2015 2014

Number of the clients 66 63

Amount of outstanding loans and advances (BDT) 39,075,169,704 32,079,841,228

Amount of classified loans and advances (BDT) - -


2015Taka

2014Taka

8 Balance with other banks and financial institutions

Inside Bangladesh 60,253,787 44,048,634

Outside Bangladesh 21,927,082,553 18,621,142,489

21,987,336,340 18,665,191,123

Inside Bangladesh

Current account:

Sonali Bank Ltd 44,428,180 41,000,130

IFIC Bank Ltd 78,847 48,504

National Bank Ltd 3,000,000 3,000,000

Prime Bank Ltd 3,000,020 -

Islami Bank Bangladesh Ltd 9,746,740 -

Total inside Bangladesh 60,253,787 44,048,634

Outside Bangladesh

Non Group Nostro

Current account with:

Nordea Bank Norge, OSLO- NOK 4 1,459,561

Credit Suisse, Zurich - CHF 1,335,987 104,768,044

Royal Bank of Canada, Toronto - CAD 9,757,128 7,580,457

Svenska Handelsbanken - SEK 107,972 744,704

Westpac Banking Corporation - AUD 7,522,450 2,663,192

18,723,541 117,215,958

Group Nostro

Current account with:

SCB Hong Kong - HKD 25,829 1,028,918

SCB Bombay ACU - USD 377,671,533 179,831,514

SCB Nepal - USD 10,743,970 8,253,920

SCB London - GBP - 259,714,662

SCB London - USD 37,663,374 34,176,414

SCB Bombay ACU - EUR 2,296,260 4,691,874

SCB Karachi ACU - USD 94,500,833 100,385,664

SCB Colombo ACU - USD 27,969,760 58,332,960

SCB Frankfurt - EUR - 154,243,618

SCB Singapore - SGD - 6,256,765

SCB Tokyo - JPY 47,453 2,360,222

550,919,012 809,276,531

Short term deposit account with:

SCB Dhaka OBU - USD 13,505,440,000 17,694,650,000

SCB London - USD 7,852,000,000 -

21,357,440,000 17,694,650,000

Total outside Bangladesh 21,927,082,553 18,621,142,489

Refer to Annexure - B for currency wise balances.

8.1 Residual maturity analysis of balance with other banks and financial institutions

Not more than one month 21,987,336,340 18,665,191,123

Over one month but not more than three months - -

Over three months but not more than one year - -

Over one year but not more than five years - -

Over five years - -

21,987,336,340 18,665,191,123

9 Investments

Government securities

Treasury Bills 5,987,622,235 14,804,304,893

Bangladesh Bank Bills 10,988,403,064 99,659,510


Bangladesh Government Islamic Bonds - 360,000,000

Prize Bonds 1,024,000 665,000

60,194,665,155 57,939,355,438

Other investments* 18,000,000 18,000,000

Total 60,212,665,155 57,957,355,438

*Represent investments in 9,000,000 shares of Central Depository Bangladesh Limited (CDBL) of Taka 10 each which is inclusive of 7,200,000 bonus shares. As per last audited financial statement of CDBL, book value per share is higher than the cost price of the investment.

9.1 Classification of Treasury Bills and Government Treasury Bonds

Held to Maturity (HTM)

Treasury Bills 4,245,373,441 6,078,060,496

Bangladesh Bank Bills - -

Bangladesh Government Islamic Bonds - 360,000,000


23,301,506,428 24,642,185,873

Held for Trading (HFT)

Treasury Bills 1,742,248,794 8,726,244,397

Bangladesh Bank Bills 10,988,403,064 99,659,510

Bangladesh Government Islamic Bonds - -


36,892,134,727 33,296,504,565

60,193,641,155 57,938,690,438

9.2 Tenor wise grouping of Treasury Bills, Bangladesh Bank Bills and Government Bonds

Treasury Bills and Bangladesh Bank Bills

Held to Maturity (HTM) Securities

30 Day Bangladesh Bank Bills - -

28 Day Treasury Bills - -


182 Day Treasury Bills - 148,858,751

1 Year Treasury Bills 4,245,373,441 5,929,201,745

4,245,373,441 6,078,060,496

Held For Trading (HFT) Securities

30 Day Bangladesh Bank Bills 10,988,403,064 99,659,510


91 Day Treasury Bills - 3,513,610,648

182 Day Treasury Bills 790,817,331 2,449,628,599

1 Year Treasury Bills 951,431,463 2,763,005,150

12,730,651,858 8,825,903,907

Total Treasury Bills and Bangladesh Bank Bills 16,976,025,299 14,903,964,403

Government Bonds

Held to Maturity (HTM) Securities

6 Month Bonds- Islamic - 360,000,000

1 Year Bonds- Islamic - -

2 Year Bonds 3,056,693,992 3,923,210,347

5 Year Bonds 10,594,466,179 13,900,181,341

10 Year Bonds 5,270,518,038 246,291,220

15 Year Bonds 79,606,604 79,597,896

20 Year Bonds 54,848,174 54,844,573

19,056,132,987 18,564,125,377

Held For Trading (HFT) Securities

6 Month Bonds- Islamic - -

1 Year Bonds- Islamic - -

2 Year Bonds 16,636,511,171 17,938,665,426

5 Year Bonds 5,985,164,961 4,028,110,088

10 Year Bonds 743,119,684 1,891,372,438

15 Year Bonds 390,906,961 303,100,642

20 Year Bonds 405,780,092 309,352,064

24,161,482,869 24,470,600,658

Total Government Bonds 43,217,615,856 43,034,726,035


2015Taka

2014Taka

10.3.2 Customers' group wise classification of loans

and advances

Consumer loans and advances 32,575,139,634 34,089,812,946

Loans and advances to small and medium enterprises 12,050,952,700 10,866,450,387

Loans and advances to large enterprises 2,438,397,796 2,092,762,998

Loans and advances to corporate customers 67,375,801,583 63,629,040,704

114,440,291,713 110,678,067,035

Consumer loans and advances - product wise classification

Credit cards 5,873,322,569 5,654,295,202

Overdraft 537,560,892 715,983,927

Personal Loan 13,082,591,377 14,269,686,772

Loan to Professional 7,943,888 13,218,700

Auto loans 522,940,686 465,553,552

Mortgage Loan 6,066,249,872 6,610,210,638

Staff loans 2,298,350,835 2,137,074,329

Revolving Loan 40,134 35,688

Cheque Purchased 174,635 635,607

Islamic - Credit Card Issuing 630,410,196 700,098,721

Islamic - Personal Finance 31,640,528 77,350,652

Islamic - Auto Finance 359,728,227 381,070,648

Islamic - Mortgage Finance 3,164,185,795 3,064,598,510

32,575,139,634 34,089,812,946

Small and Medium Enterprises - product wise classification

Business Overdraft 141,568,652 391,911,657

Loans against property 2,168,937,017 1,433,276,954

Business Instalment Loan 8,758,054,576 7,169,359,035

Term loans 121,734,460 188,161,982

Revolving loans 258,924,980 360,356,368

Loans against trust receipts 100,524,515 328,869,190

Import Invoice Finance 154,025,700 536,013,346

Islamic - Instalment Finance-Murabah 101,884,061 215,629,782

Islamic - Finance Against Property 245,298,739 242,872,073

Islamic - Finance Against Trust Receipt - -

Islamic - Import Invoice Financing - -

12,050,952,700 10,866,450,387

Large Enterprises - product wise classification

Overdraft 193,991,865 213,793,680

Loans against property 406,099,287 401,790,154

Business Instalment Loan 871,695,476 602,312,999

Term loans - 51,374,673

Revolving loans 464,411,091 515,808,766


Import Invoice Finance 362,845,565 271,879,988

2,438,397,796 2,092,762,998

Loans and advances to corporate customers -

product wise classification

Overdraft 3,318,921,846 3,342,279,210

Term Loan 3,776,677,562 5,284,037,987

Cheque Purchased 146,487,129 313,551,163

Credit Bill Negotiation 2,215,972,724 2,195,174,395

Export Invoice Finance 4,738,707,402 1,608,196,044

Import Invoice Finance 7,341,065,955 7,337,561,710

Import Loan 6,138,466,895 2,444,724,513

Loan Against Trust Receipt 4,998,814,753 7,526,179,320

Preshipment Finance 2,170,000,000 500,000,000

Outward Bill - 12,170,109

Short Term Loan 31,212,367,856 31,948,511,331

Islamic Import Invoice Finance 748,909,152 701,182,208

Islamic Short Term Loan 500,000,000 385,000,000

Islamic Term Loan 69,410,309 30,472,714

67,375,801,583 63,629,040,704

10.3.3 Loans and advances - sector wise classification

(Corporate customers only)

Agriculture, hunting, forestry and fishing 6,695,136,690 3,675,833,029

Manufacturing 35,279,471,958 39,891,833,633

Electricity, gas and water 374,150,810 1,417,226,265

Commerce 6,010,517,357 4,539,550,539

Transport and communications 11,050,244,958 6,834,376,764

Community, social and personal services 6,363,179,763 5,795,414,112

Financing, insurance and business service 1,603,100,047 1,474,806,362

67,375,801,583 63,629,040,704

10.3.4 Loans and advances - geographical location wise classification

Dhaka 94,474,289,121 93,450,096,991

Chittagong 17,472,084,701 14,819,406,670

Narayangonj 581,297,714 489,610,259

Khulna 300,788,873 308,491,025

Sylhet 524,657,097 589,754,728

Bogra 1,087,174,207 1,020,707,362

114,440,291,713 110,678,067,035

10.4 Loans and advances - unclassified and classified classification

Unclassified

Standard 108,273,628,404 103,850,220,359

Special Mention Account (SMA) 1,404,972,068 886,276,127

109,678,600,472 104,736,496,486

Classified

Substandard 834,915,490 831,045,169

Doubtful 217,440,445 234,930,532

Bad / loss 3,709,335,306 4,875,594,848

4,761,691,241 5,941,570,549

114,440,291,713 110,678,067,035

10.5 Particulars of loans and advances

i) Loans considered good in respect of which the Bank is

fully secured (unclassified loans and advances); 14,776,736,371 14,484,924,197

ii) Loans considered good against which the Bank holds

no security other than the debtor's personal guarantee; 28,738,698,886 26,676,563,582

iii) Loans considered good secured by the personal

undertakings of one or more parties in addition to the

personal guarantee of the debtor - -

iv) Loans adversely classified; provision not maintained there against; 703,859 49,499,933

v) Loans taken by directors or officers of the Bank or any

of these either separately or jointly with any other persons; 2,298,350,835 2,137,074,329

vi) Loans due from companies or firms in which the directors

of the Bank have interests as directors, partners or managing

agents or in case of private companies as members; - -

vii) Maximum total amount of advance including temporary

advance 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 person; 2,298,350,835 2,137,074,329

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 have interest as directors, partners

or managing agents or in case of private companies as members; - -

ix) Due from banking companies; - -

x) Classified loans for which interest has not been charged:

a) Increase / (decrease) of provision (specific) (1,056,694,941) 357,462,446

Amount of loans written off 1,673,693,193 286,165,947

Amount realised against the loan previously written off 291,829,880 264,288,550

b) Amount of provision kept against the amount classified

as bad / loss as at the Balance Sheet date 3,006,943,856 4,046,200,096

(c) Amount of interest charged in suspense account 226,023,654 476,754,518

xi) Loans written off:

Cumulative amount of written off loans 4,145,590,730 2,240,697,849

Amount written off during the current year 1,673,693,193 286,165,947

Amount of written off loan for which lawsuit has been filed 1,652,583,381 231,674,531

11 Bills purchased and discounted

i) Inside and outside Bangladesh


Outside Bangladesh 39,631,422 133,451,654

14,959,279,110 12,275,182,362

ii) Classification on residual maturity basis

Payable within one month 11,871,401,833 1,591,302,620

Payable over one month but within three months 2,677,664,080 7,939,601,422

Payable over three months but within six months 394,133,197 2,744,278,320

Payable over six months 16,080,000 -

14,959,279,110 12,275,182,362

12 Fixed assets including premises, furniture and fixtures

Freehold premises - -

Fixed equipments 1,074,936,224 1,079,448,206

Computer and office equipments 1,209,934,864 1,185,316,676

Furniture and fittings 485,020,450 480,557,789

Motor vehicle 52,162,687 35,491,013

Capitalised leased vehicles 547,061,988 666,195,488

3,369,116,213 3,447,009,172

Less: Accumulated depreciation (2,676,883,610) (2,410,218,378)

692,232,603 1,036,790,794

Refer to Annexure - A for detailed analysis.

13 Other assets

Stationery and stamps in hand 3,648,865 3,260,899

Interest receivable - Loans and advances 533,833,468 1,076,479,000

Interest receivable - Central Bank and Government 1,116,461,534 1,280,569,621

Interest receivable - SCB Branches 215,090 98,304

Accrued commission receivable 430,823,641 280,098,897

Security deposits 11,820,660 16,820,660

Advance rent 1,103,655,193 1,199,135,871

Prepaid expenses 1,307,760 -

Items in course of collection-cheques in till 1,514,311,625 2,318,207,977

Suspense account 11,213,590 531,066

Sundry debtors 28,381,976 37,385,531

Intra branch balances with OBU Dhaka 1,908,395,186 1,406,350,486

Guarantee claim awaiting reimbursement - 159,001,521

Project awaiting completion (branch renovation) 7,022,601 8,350,965

Unrealised gain on forward contracts 56,243,121 77,224,912

Deferred tax asset 1,175,543,963 1,014,702,439

Cross border recharge receivable 26,503,321 19,915,631

Sundry receivable from Bangladesh Bank 882,772,638 728,455,352

Others - 13,926

8,812,154,232 9,626,603,058

Other assets have been assessed by management and are not doubtful of recovery and hence no provision is required.

13.1 Other assets which are not capable of earning income

(non interest bearing)

Stationery and stamps in hand 3,648,865 3,260,899


Security deposits 11,820,660 16,820,660

Advance rent 1,103,655,193 1,199,135,871

Prepaid expenses 1,307,760 -

Interest receivable - loans and advances 533,833,468 1,076,479,000

Interest receivable - Central Bank and Government 1,116,461,534 1,280,569,621

Interest receivable - SCB Branches 215,090 98,304

Sundry debtors 28,381,976 37,385,531

Intra branch balances with OBU Dhaka 1,908,395,186 1,406,350,486

Items in course of collection - cheques in till 1,514,311,625 2,318,207,977

Suspense account 11,213,590 531,066


Project awaiting completion (branch renovation) 7,022,601 8,350,965

Unrealised gain on forward contracts 56,243,121 77,224,912

Deferred tax asset 1,175,543,963 1,014,702,439

Cross border recharge receivable 26,503,321 19,915,631

Others - 13,926

7,929,381,594 8,898,147,706

Notes to the Financial Statements Notes to the Financial Statements Notes to the Financial Statements

2015Taka

2014Taka

2015Taka

Base for provision2015 only

Taka2014Taka

13.2 Deferred tax Deferred Tax Assets (Taka) Deferred Tax Liabilities (Taka)

2015 2014 2015 2014

Fixed assets 150,208,398 110,552,940 - -

Accrued interest on - - (474,496,152) (544,241,689)

Government securities

Gratuity provision 321,711,446 10,577,238 - -

Operating lease rent adjustment 108,363,404 95,137,139 - -

Actuarial loss during the year 299,232,606 129,187,057 - -

Specific provision 296,028,109 669,248,065 - -

Equity and revaluation reserve - - (337,145,748) -

HTM and HFT securities

1,175,543,963 1,014,702,439 (811,641,900) (544,241,689)

Deferred tax assets / (liabilities) are calculated using the tax rate expected to apply in the periods in which the assets will be realised or the liabilities settled, based on tax rates and laws enacted by the balance sheet date. Following are the descriptions for individual items of the deferred tax asset / (liabilities) that are recognised by the bank as temporary difference with expected realisation / (settlement).

Fixed assets

As per tax rules, accounting depreciation is not tax allowable. However, tax authorities allow the tax depreciation. Therefore temporary differences arise on such different depreciation methodology. The Bank recognises deferred tax assets / (liabilities) on such differences. This is an ongoing item and there is a difference between tax depreciation and accounting depreciation rate. However the outstanding amount of deferred tax will be automatically released with the expiry of the economic useful life of the assets.

Accrued interest on Government securities

As per tax law, interest income on Government securities are taxed on cash basis whereas interest income from Government securities have been accounted for on accrual basis in these financial statements. This difference of interest income recognition has created temporary difference on which the Bank recognises deferred taxes. This is an ongoing item and the outstanding deferred tax will be adjusted upon maturity of the respective Government securities.

Gratuity provision

The Bank recognises deferred tax assets / (liabilities) on the temporary difference for gratuity provision and actual payment to the recognised gratuity fund. The temporary differences would eventually be eliminated on the payment of such provision to the fund.

Operating lease rent adjustment

The Bank recognises deferred tax assets / (liabilities) on the temporary differences for actual contractual liability on long-term premises lease rent as opposed to straight line expense recognition over the period of lease term (BAS 17.25). This temporary difference will be settled or adjusted on the expiry of lease agreement.

Specific provisions on loans and advances

As per tax law, provisions for loans and advances are not allowable. As a result, provision charged to profit or loss is added back while computing taxable income. However, for loans that are written off with cases being filed the tax authority allows the amount of such loans as deductions from taxable income.

As per the provision of BAS 12, the Bank recognises a deferred tax asset on specific provision relating to loan customers other than retail and small enterprise customers for the deductible temporary difference to the extent it is probable that taxable profit will be available against which such temporary difference can be utilised.

Equity and revaluation reserve - HTM and HFT securities

Deferred tax relating to amortised discount on Held to Maturity (HTM) securities and the revaluation of Held for Trading (HFT) securities is recognized directly in other reserves as a part of equity and is subsequently recognized in the profit and loss account on the maturity of the securities. The deferred tax recognized against this will be fully reversed at the maturity of all related securities.

13.3 Movement of deferred tax assets / (liabilities)

Net deferred tax assets / (liabilities) as at 1 January 470,460,750 (181,744,454)

(Charged) / Credit to Profit and Loss account 60,541,912 523,018,147

Recognised in equity (Note- 13.3.1) (167,100,599) 129,187,057

Net balance as at 31 December 363,902,063 470,460,750

13.3.1 Deferred tax recognised in equity

Actuarial gain / (loss) for gratuity (400,107,174) (303,969,545)

Equity and revaluation reserve - HTM and HFT securities 793,285,054 -

393,177,880 (303,969,545)

Deferred tax @ 42.5 % (167,100,599) 129,187,057

Transfers to reserve 226,077,281 (174,782,488)

14 Borrowings from other banks, financial institutions and agents

Repo (Annex G) - 4,617,000,000

Foreign currency borrowing from Bangladesh Bank (EDF) 5,073,603,287 4,092,663,777

Others (Note 14.1) 4,314,969,948 4,231,643,122

9,388,573,236 12,941,306,899

14.1 Others

A. Group Vostro:

Current Deposit

SCB Bombay - ACU USD 1,718,512 1,706,471

SCB Colombo - ACU USD 71,811,471 8,575,036

SCB Pakistan - USD 54,002,008 28,836,933

SCB London - BDT 111,612,244 31,973,230

SCB New York - BDT 1,046,600 2,778,206

SCB Singapore - BDT 15,467,776 13,338,485

SCB Singapore - SGD 21,835 -

SCB Kuala Lumpur - BDT 838,956 278,895

SCB Dubai - BDT 13,230,947 16,840,180

SCB Dubai (International Financial Center) - BDT 98,988 99,108

SCB London - GBP 20,843,924 -

SCB Frankfurt - EUR 49,786,328 -

340,479,589 104,426,544

Fixed Deposit

SCB Dhaka OBU - USD 2,367,291,232 2,226,273,059

2,367,291,232 2,226,273,059

Total Group Vostro 2,707,770,821 2,330,699,603

B. Non Group Vostro:

Current Deposit

People's Bank Colombo, Sri Lanka 10,857,943 31,402,034

Seylan Bank Plc 7,876,371 13,646,224

The Standard Bank, South Africa 24,619,000 24,624,000

Bank of New Zealand 161,250 161,600

UAE Exchange Centre Llc 3,612,235 7,384,261

Askari Bank Ltd 61,486,149 38,995,385

Faysal Bank 68,960,915 58,716,568

Habib Metropolitan Bank 52,013,956 41,903,077

Soneri Bank ltd 17,234,391 11,794,533

Allahabad bank - 1,120,654

Allied Bank Ltd-Karachi 13,130,451 10,202,764

United Bank Ltd-Karachi 83,577,205 62,442,279

Royal Bank of Scotland plc- London - 1,497,000

Oman & UAE exchange centre & Co. Llc 1,677,455 1,722,053

Nordea bank Plc, Finland 753,642 564,642

Cimb Bank Berhad 4,581,897 5,943,044

Punjab National bank - ACU 59,258,288 52,517,462

Alliance Bank Malaysia Berhad 922,446 923,446

National Australia Bank Ltd 22,458,636 7,075,042

Public Bank - Berhad 1,741,880 445,264

RHB Bank Berhad Malaysia - BDT 2,156,597 1,077,070

OCBC Bank Malaysia - BDT 1,232,065 718,905

Hong Leong Bank Malaysia - BDT 2,041,431 1,283,440

Affin Bank 7,416,850 3,151,880

United Overseas Bank (Malaysia) BHD - BDT 22,185 22,535

Gulf Bank KSC Kuwait - BDT 244,098 1,434,914

Ahli United Bank K.S.C. 739,966 809,664

Kuwait Finance House 1,958,580 1,959,580

Emirates NBD Bank PJSC 23,034,023 4,318,177

Ahli United Bank BSC 1,078,857 195,115

Nordea Bank Norge ASA 30,511 267,040

Barclays Bank PLC, London 5,000,453 5,001,453

Credit Agricole Corporate & Investment Bank - 21,384

2015Taka

2014Taka

2015Taka

2014Taka

DFCC Vardhana Bank LTD. 9,460,044 23,429,530

Bank Muamalat Malaysia Berhad 313,725 51,268

UAE Exchange Center LLC 1,444,575 11,558,494

Indusind Bank LTD. 42,473,530 23,000,635

Bank AlBilad - -

Hatton National Bank LTD. 6,843,259 5,758,896

Sampath Bank Ltd, Colombo 9,344,525 13,243,664

UCO Bank Treasury Branch, Mumbai 24,214,725 26,410,488

RHB Islamic Bank Berhed 1,710,601 2,320,120

National Development Bank PLC. 53,388,613 36,006,567

MCB Bank Ltd. Colombo 1,441,043 975,872

Meezan Bank Limited 80,245,805 88,011,996

Agrani Bank Ltd. 1,066,635 1,225,161

Bank of America Merrill Lynch 4,679,253 20,729,378

Svenska Handelsbanken - -

Nordea Bank Norge, Oslo 3 4

Sonali Bank, NBR tax collection - 66

Samba Bank limited 3,566,793 479,129

Druk PNB Bank Limited, Bhutan 14,489,853 11,892,142

Bank Islam Malaysia Berhad 2,126,794 780,500

NMB Bank Ltd 21,914,934 1,881,210

Kotak Mahindra Bank Limited 11,617,281 40,580,553

Bank of Kathmandu Ltd 464,757 2,802,817

Citizens Bank International Limited 1,847,659 4,095,604

IBBL NCS - 4,468,586

Bank AlJazira 7,943,288 7,944,288

Nations Trust Bank 9,277,474 -

Total Non Group Vostro 789,754,895 720,989,457

C. Overdrawn Nostro Account Balances

SCB New York - USD 816,482,561 1,179,954,062

816,482,561 1,179,954,062

D. Margin Deposit from Banks

SCB London 46,694 -

Bank of China 626,315 -

KBC Bank NV, Belgium 288,662 -

961,671 -

E. Total Vostro (A+B+C+D) 4,314,969,948 4,231,643,122

14.2 Borrowings from other banks, financial institutions and agents - inside and outside Bangladesh


Outside Bangladesh 4,313,903,313 4,225,949,309

9,388,573,236 12,941,306,899

14.3 Borrowings from other banks, financial institutions and agents - secured and unsecured

Secured 5,073,603,287 8,709,663,776

Unsecured 4,314,969,948 4,231,643,123

9,388,573,235 12,941,306,899

14.4 Borrowings from other banks, financial institutions and agents - residual maturity grouping

Payable on demand 1,946,717,045 6,622,883,245

Payable within 1 month 3,029,139,550 2,859,168,245

Payable within 1 to 3 months 1,946,865,850 1,982,813,373


Payable within 1 to 5 years - -

Payable over 5 years 914,977 -

9,388,573,235 12,941,306,899

15 Deposits and other accounts

Current and other accounts 38,488,266,318 36,042,742,107

Bills payable 1,349,446,891 1,434,544,164

Savings deposits 48,132,356,047 42,863,248,887

Term deposits 40,733,064,549 41,365,955,413

Short term deposits 16,511,221,536 18,189,937,859

Other deposits (payable on demand)* 10,708,816,060 9,346,052,544

155,923,171,401 149,242,480,974

*Other deposits include BDT 40,096,905 which had remained unclaimed for more than 10 years. The entire amount was subsequently deposited to Bangladesh Bank on 8 February 2016.

15.1 Residual maturity grouping of deposits and other accounts (other than bank deposit)


Payable within 1 month 24,137,384,577 26,061,494,885



Payable within 1 to 5 years 3,049,418,859 686,475,828

Payable within 5 to 10 years 283,678,293 78,047,438

155,923,171,401 149,242,480,974

16 Other liabilities

Obligation under finance lease 186,653,248 344,496,960

Interest payable 712,173,271 1,268,266,768

Specific provision for loans and advances (Note 16.1) 3,412,721,625 4,469,416,566

General provisions (Note 16.1) 3,185,298,694 3,158,387,114

Interest suspense account (Note - 16.2) 437,097,991 651,341,216

Net defined benefit (asset) liability (Note - 16.3) 1,157,075,282 328,857,163

Provision for income tax (Note - 16.4) 3,457,048,475 4,740,097,765

Accruals for performance bonus 439,348,120 411,702,579

Other provisions 204,497,890 140,819,109

Accrued expenditure 416,157,495 317,113,088

Suspense account 994,674,307 1,623,236,995

Sundry creditors 118,794,251 86,288,658

Deferred tax liability (Note - 13.2) 811,641,900 544,241,689

VAT payable 87,978,530 88,166,937

Tax deducted at source 182,753,383 124,904,938

Disputed tax on profit remittance 5,274,817,522 5,163,712,522


Unamortised fees 10,948,320 176,119,522

Unrealised loss on forward contracts 53,821,716 28,456,037

Accrued bonus points 34,168,184 131,557,277

Funds held from clients 401,589,279 625,104,016

Rental payable 254,972,716 223,852,092

Adjustment due to use of Bangladesh Bank conversion rate 5,570,509 257,130

Others 179,474,638 46,169,483

22,019,277,346 24,851,567,145

16.1 Provision for loans and advances and

off-balance sheet exposures

General provision

Opening balance 3,158,387,114 3,174,753,626

Provision charged / (released) during the year 5,371,070 (207,182,153)

Provision on off-balance sheet exposures charged / (released) 21,540,510 190,815,641

Charge in profit and loss account 26,911,580 (16,366,512)

Total general provision (a) 3,185,298,694 3,158,387,114

Specific provision

Opening balance 4,469,416,566 4,111,954,121

Add: Provision made during the year 1,209,130,223 1,179,560,541

Less: Release / Recoveries during the year (592,262,290) (535,977,168)

Charge in profit and loss account 616,867,933 643,583,373

Less : Written-Off during the year (1,673,693,193) (286,165,947)

Add : Transfer from other provisions Translation increase (decrease) 130,319 45,019

Total specific provisions (b) 3,412,721,625 4,469,416,566

Total provisions (a+b) 6,598,020,319 7,627,803,680

16.1.1 Adequacy of provision vis a vis provision

required to be maintained

General provision

On off-balance sheet exposures at 1% 126,534,518,262 1,265,345,183 1,243,804,672

On standard loans (excluding SMA)

at various rates 108,273,628,403 1,879,343,569 1,884,811,390

On special mention accounts (SMA)

at various rates 1,404,972,068 40,609,942 29,771,052

236,213,118,733 3,185,298,694 3,158,387,114

Specific provision

On sub-standard loans and advances 373,723,193 74,744,639 76,414,030

On doubtful loans and advances 152,669,059 76,334,531 87,891,980

On bad / loss loans and advances 3,006,943,856 3,006,943,856 4,046,200,096

3,533,336,108 3,158,023,026 4,210,506,106

Total provision required to be maintained 6,343,321,720 7,368,893,220

Total provision maintained 6,598,020,319 7,627,803,680

Excess / (deficit) provision at 31 December 254,698,599 258,910,460

16.2 Interest suspense account

Opening balance 651,341,216 567,366,071

Addition during the year 226,023,654 476,754,518

Amount of recovery during the year (209,067,191) (378,284,675)

Waived during the year (71,548) (1,982,083)

Written off during the year (231,128,140) (12,512,615)

437,097,991 651,341,216

16.3 Net defined benefit (asset) liability

Latest actuarial valuation of the gratuity scheme was performed by an actuary as at 31 December 2015. The valuation reported a funding deficit of Taka 1,157 million.

Present value of defined benefit obligation (Note - 16.3.1) 2,466,680,282 1,239,152,000

Fair value of plan assets (Note - 16.3.1) (1,309,605,000) (910,294,837)

Net defined benefit (asset) / liability 1,157,075,282 328,857,163

16.3.1 Movement in net defined benefit (asset) liability

Changes in the present value of defined benefit obligations

Opening balance 1,239,152,000 874,797,000

Current service cost 134,401,000 91,952,000

Interest cost 127,333,282 97,678,000

Past service costs 719,087,000 -

Remeasurement losses / (gain) 445,936,000 303,326,000

Benefit paid (199,229,000) (128,601,000)

Closing balance 2,466,680,282 1,239,152,000

Changes in the fair value of plan assets

Opening balance 910,301,000 828,445,000

Expected returns on plan assets 97,947,000 97,949,000

Contribution received 454,757,000 113,152,000

Remeasurement (losses) / gain 45,829,000 (650,163)

Benefit paid (199,229,000) (128,601,000)

Closing balance 1,309,605,000 910,294,837

16.4 Provision for income tax

Opening balance 4,740,097,765 4,677,691,198

Provision made during the year 5,319,784,954 5,969,881,102

Amount paid during the year (6,602,834,244) (5,907,474,535)

Closing balance 3,457,048,475 4,740,097,765

17 Other reserves

General reserve 735,905 735,905

Actuarial gain (207,431,414) 22,630,211

Revaluation reserve account 570,188,507 201,049,286

Equity reserve - amortisation on HTM securities (114,049,601) 278,102,853

249,443,397 502,518,255

18 Appropriation of net income

Movement in profit and loss account balance has been detailed in statement of changes in equity.

Opening balance 23,993,257,106 20,351,589,014

Profit remitted to Head Office (740,700,000) (8,128,894,118)

Net profit for the year 9,303,305,731 11,770,562,210

32,555,862,837 23,993,257,106

19 Interest income

Secured cash credits 62,111,471 141,012,837

Personal Credit 3,529,598,281 3,812,287,925

Loans against property 330,056,894 268,775,441

Term loans 3,847,269,771 4,902,591,812

Revolving loans 490,714,524 366,836,745


Auto loans 66,714,771 93,090,194

House building loan 948,737,455 1,108,893,957

Credit cards 1,286,638,268 1,281,922,127

Overdraft 428,508,714 615,519,275

Islamic auto finance 56,376,253 72,313,031

Islamic personal finance 37,433,468 80,132,899

Islamic mortgage 406,718,623 399,739,899

Islamic SME finance against property 34,477,949 42,121,305

Islamic finance against trust receipt 266,941 17,485,306

Islamic import invoice financing 42,550,373 43,304,605

Islamic corporate short term finance 51,684,375 3,352,709

Bills discounted and purchased 1,435,524,617 1,373,356,584

Money market loan 7,000,556 109,032,556

Bank placement 22,713,441 29,335,768

Nostro account balances 3,032,047 7,248,413

Bangladesh Bank - FCY 5,681,180 4,077,202

Reverse repo 115,952,701 103,324,201

13,666,780,012 15,571,836,947

20 Interest expense on deposits and borrowings

Fixed deposit 2,162,987,075 4,124,670,009

Call deposit 376,483,332 602,637,371

Savings account 1,108,690,445 1,303,198,968

Money market deposit 14,369,756 45,765,385

Repo 12,411,789 20,217,966

Nostro account balances 241,433 212,594

Deposit insurance premium 98,691,561 107,118,563

Others 11,654,203 17,456,537

3,785,529,594 6,221,277,393

21 Income from investments

Interest from Government Bonds and Treasury Bills 5,247,052,154 5,576,757,043

Gain / (loss) arising from disposal of government securities 758,420,780 1,289,099,308

Dividend from CDBL shares - 22,500,000

6,005,472,934 6,888,356,351

22 Commission, exchange and brokerage income

Commission income** 3,652,542,946 3,384,909,146

Exchange income 2,308,197,674 2,743,375,625

5,960,740,620 6,128,284,771

**Commission Includes export income BDT 452,933,544 (2014: BDT 532,663,118) and custodial service income for stock exchange BDT 113,480,722 (2014: BDT 117,414,384).

23 Other operating income

Gain on sale of fixed assets 7,211,417 941,827,462

Miscellaneous income 15,941,796 29,490,034

23,153,213 971,317,496

24 Repair, maintenance and depreciation

Repair and maintenance 209,373,166 263,852,829

Depreciation (Annexure - A) 349,504,547 385,633,384

558,877,713 649,486,213


2015Taka

2014Taka

2015Taka

2014Taka

25 Other expenses

Non lending losses 49,644,158 5,586,773

Travelling and transportation 86,085,001 90,621,150

Support services 242,680,725 257,232,644

Subscription 6,454,773 3,842,440

Entertainment 76,863,193 76,742,129

Security services 54,829,485 66,851,470

Computer expenses 74,259,080 18,672,053

Interest on leases 41,822,456 66,590,045

Sundry expenses 640,793,532 627,589,498

1,273,432,403 1,213,728,202

26 Cash and cash equivalents

Cash in hand (including foreign currencies) 2,193,451,568 2,572,999,553

Balance with Bangladesh Bank 14,017,698,172 13,201,402,322

Balance with other banks and financial institutions 21,987,336,340 18,665,191,123

38,198,486,080 34,439,592,998

27 Contingent liabilities and commitments

Acceptances and endorsements 42,082,974,984 50,750,185,710

Letters of guarantee (Note 27.1) 28,860,028,579 27,656,280,400

Irrevocable letters of credit 30,197,533,049 29,488,493,006

Bills for collection 11,844,709,170 10,955,588,876

Other commitments

Forward contracts 13,549,272,480 17,022,759,090

126,534,518,262 135,873,307,082

27.1 Claims against the Bank not acknowledged as loan for which the Bank is contingently liable in respect of guarantee issued favouring:

Directors - -

Government - -

Bank and financial institution 24,348,940,268 21,968,191,234

Others 4,511,088,311 5,688,089,166

Total 28,860,028,579 27,656,280,400

28 Tax provision on head office allocated expenses

The Bank claims full amount of Head Office Allocated Expenses (HOAE) as deductible expense for tax purposes in line with provisions of the Double Taxation Avoidance Agreement between the Government of Bangladesh and United Kingdom. The claim has been disallowed by the NBR. The matter was pending with the High Court division of the Supreme Court of Bangladesh for a number of years.

"On 10 January 2013 High Court division of the Supreme Court ruled (on Income Tax reference application no. 190 of 2009 and Income Tax reference application no. 345 of 2008 and 190 of 2009) in favour of SCB that full claim is deductible for tax purposes.

29 Related party transactions

29.1 Related parties

The related parties of the Bank include Standard Chartered (SC) Plc, other group entities, key management personnel of SC Plc and the Bank as well as their close family members and its post-employment benefit plans.

The Bank, not being incorporated in Bangladesh, operates in Bangladesh under the banking licence issued by Bangladesh Bank and therefore the key management personnel of the Bank for the purpose of BAS 24 are defined as those persons having authority and responsibility for planning, directing, controlling the Bank, being members of the Country Management Team (CMT) of the Bank, and close members of their families and companies they control, or significantly influence, or for which significant voting power is held.

29.2 Transactions with group entities

The Bank provides and receives certain banking and financial services to / from entities within the Group. As at the year end the balances with these entities are disclosed in Note - 8 under Group Nostro and in Note - 14.2 under Group Vostro and Overdrawn Nostro Account Balances.

The disclosure of the year end balance is considered to be the most meaningful information to represent transactions during the year. The outstanding balances include deposits kept with or by the Bank and arise in the ordinary course of business and are on substantially the same terms as for comparable transactions with third parties.

29.3 Transactions with key management personnel of the Bank and of its parent (SC Plc)

During the year, transactions with the key management

personnel of the Bank include the following:

Salaries and other short-term employee benefits 151,174,144 149,518,614

Bonuses paid or payable 59,530,106 75,989,807

Post employment benefits - provident fund and gratuity fund 14,979,801 10,799,450

225,684,051 236,307,872

Loans to senior management (CMT) of the Bank amounted to Tk. 172,933,912 as at 31 December 2015 (2014: Tk. 125,126,971) and were at rates applicable to employees of the Bank. No impairment losses have been recorded against balances outstanding during the period with key management personnel, and no specific allowance has been made for impairment losses on balances with key management personnel and their immediate relatives at the period end.

29.4 Transactions with post employment benefit plans

The Bank has two post employment benefit plans, a provident fund which is of the nature of a defined contribution scheme and a funded gratuity scheme which is of the nature of a defined benefit plan as described in Note 4.14 Employee benefits. The Bank contributes to the provident fund in accordance with the requirements of the Trust Deed of the fund while its contributions to the gratuity scheme are determined by a professional actuary.

The responsibility for management and administration of these plans resides with the Trustees of these schemes. The Trustees are selected from among employees of the Bank. The Bank does not charge these schemes any fees for management or administrative purposes.

In 2015, the Bank contributed BDT 454,757,000 to the gratuity fund and BDT 113,195,705 to the provident fund. As at 31 December 2015, the provident fund had a balance of BDT 77,765,647 (2014: BDT 51,804,831) and the gratuity fund had a balance of BDT 405,326,140 (2014: BDT 7,491,718) deposited with the Bank. The Bank pays interest at the rate of 5% on these deposits. Interest expense incurred by the Bank on deposit maintained with it in 2015 by the provident fund amounted to BDT 2,456,900 (2014: BDT 2,924,989) and on deposit maintained with it in 2015 by the gratuity fund amounted to BDT 3,051,035 (2014: BDT 2,517,888).

29.5 Transactions with the off-shore banking unit

The off-shore banking unit (OBU) operates under a separate licence issued by Bangladesh Bank.

Transactions with the off-shore banking unit comprise of inter-unit fund transfers in the normal course of business as well as the payment of certain expenses by the Bank on behalf of the OBU. These include income taxes paid by the Bank on behalf of OBU as well as expenses incurred for administrative purposes. The balance of the OBU with the Bank at the year end is disclosed in Note 13 Other Assets. The year end balances of transactions with OBU are disclosed in Notes - 8, 13 and 14.

30 General

30.1 Reconciliation of books of accounts

There were no unidentified balances in the inter-branch accounts (inside and outside Bangladesh) as at 31 December 2015. Of these the total number of unadjusted entries were 16 amounting to a total of EUR 257.56 and JPY 2,086. Entries up to 31 December 2015 are yet to be adjusted.

30.2 Core risk management

30.2.1 Credit risk

Being branches of Standard Chartered Plc ("Group"), Standard Chartered Bank (SCB), Bangladesh Branches ("the Bank") has historically sought to maintain a conservative, yet constructive and competitive credit risk culture. This has served the Bank well through successive economic cycles and remains valid today. This culture is determined and underpinned by the disciplined credit risk control environment which the Bank has put in place to govern and manage credit risk, and is embodied in the formal policies and procedures adopted by the Bank. These are articulated through SCB credit policies together with Bangladesh Bank regulations and guidelines. Formal policies and procedures cover all areas of credit lending and monitoring processes including:

• The Group credit risk policy framework

• Governance and authorities

• Risk appetite and evaluation of facilities

• Key lending constraints, higher risk sectors and sustainability risk

• Risk rating systems

• Facility structures

• Lending to banks and non-banks

• Personal lending

• Corporate and commercial lending

• Portfolio management and stress testing

• Monitoring, control and the management of problem exposures

• Impairments and allowances

At the heart of these processes is a robust framework of accountability. The Bank operates a system of personal credit authorities, rather than credit committee structures. However, the Bank has set up a Country Risk Committee (CRC) comprising most of the members of the Asset and Liability Management Committee (ALCO) and other risk related function Heads to manage various risks within the bank including credit risk. Relationship managers are held accountable for both the profitability and growth of their loan portfolios as well as the losses that may arise within them.

30.2.2 Internal control and compliance

Standard Chartered Bank Group intranet (iConnect) is the host of relevant policies and procedures, laws, regulations, Group code of conduct and Group requirements applicable to its banking activities across the globe. Group policies are to be read in conjunction with Country Addendum which covers any country specific requirements. The Group Operational Risk Manual recognises compliance risks under its risk management framework and has implemented necessary policies and procedures to promote good compliance culture, practices and standards which are outlined in the Group Code of Conduct.

Notes to the Financial Statements Compliance is recognised as one of the core functions in the Internal Control and Compliance Guideline

under Managing Core Risks Guideline of Bangladesh Bank. The compliance function in the Bank is aligned with this guideline. The compliance team is adequately resourced and the Head of Compliance reports to Head of Regional Compliance and Chief Executive Officer. The unit ensures the Bank’s local level activities are performed in full compliance with local laws and regulations. It is responsible to provide guidance and clarification relating to regulatory directives. It also supports in staff training on regulatory issues. The team has necessary independence in terms of interpretation of rules and regulations and can restrict transactions that are not in line with regulatory directive. The compliance function supports country management to ensure regulatory compliance in all its activities.

Within the Bank there are three lines of defence in the overall internal control environment. Group Internal Audit (GIA) operates as the third line of defence in providing independent assurance of the effectiveness of management’s control of its own business activities (the first line) and of the processes maintained by the Risk Control Functions (the second line). GIA provides assurance that the overall system of control effectiveness operates as required within the Risk Management Framework. In addition to its audit planning and execution, GIA works in a co-ordinated manner with the Group's other control functions to determine the overall adequacy of controls throughout the Group, placing emphasis on risk identification and design of those controls. The Group Head of Internal Audit reports to the Group Chief Executive Officer and the Chairman of the Audit Committee. In the country, there is a Country Head of Audit who reports to regional Head of Audit, South Asia and locally to the CEO for governance purpose only. This ensures that GIA has the necessary authority to exercise judgement, express opinions and make recommendations in an impartial manner.

30.2.3 Foreign exchange risk The Bank has developed strategies based on Bangladesh Bank regulations and its internal policies to

manage foreign exchange risk from dealings in foreign exchange products such as spot, forward and derivatives with clients. Foreign exchange risk is defined as the potential change in earnings arising due to change in market price and the position in foreign currencies. Foreign exchange risk is managed through various risk limits which are monitored and reported daily to management and through several regulatory reports. The proper escalation of any management directive is also tracked and any action plans are monitored by the Bank’s risk management structure. Changes in policy, limits and regulations are escalated and adhered to timely. Settlement of foreign exchange trades and management of nostro accounts are also subject to limits set by management. These are also tracked and escalated as part of the overall foreign exchange risk management process.

30.2.4 Asset liability management risk For better management of asset and liability risk, the Bank has an established Asset & Liability Committee

(ALCO) which meets at least once in a month. The role of ALCO is to maintain a strong balance sheet (Capital & Liquidity) which supports business objectives and to comply with regulatory requirements and Group policy. The members of ALCO as at year end were as follows:

• Chief Executive Officer (Chairman) • Chief Financial Officer (Secretary) • Country Chief Risk Officer • Head of International Corporates • Head of Financial Markets • Head of Financial Institutions • Head of Retail Banking • Head of Commercial Banking • Chief Information Officer The ALCO's primary function is to ensure the efficient implementation of balance sheet management

policies as directed by Bangladesh Bank, Group ALCO and its sub committees and also to review reports on liquidity, interest rate risk and capital management and ensure adherence to applicable limits, policies and regulatory requirements. ALCO regularly reviews the Bank’s overall asset and liability position, forward looking asset and liability pipeline, overall economic position, the Bank's liquidity position, capital adequacy, balance sheet risk, interest rate risk and makes necessary changes in its mix as and when required.

The Bank has a Group specified liquidity and funding ratio to be maintained to ensure financial flexibility to cope with unexpected future cash demands. ALCO monitors the liquidity and funding ratio on an ongoing basis and ascertains liquidity requirements under various stress situations. In order to ensure liquidity against all commitments, the Bank reviews the behavioural patterns of liquidity requirements. The Bank has an approved Liquidity Contingency Plan (LCP) which is reviewed and updated on an annual basis by the ALCO. All regulatory requirements including CRR, SLR and capital adequacy are reviewed by ALCO.

30.2.5 Prevention of money laundering and terrorist financing The Bank follows the mandatory Group-wide standards for anti money laundering (AML) and combating

financing of terrorism (CFT) based on the requirements of the UK Financial Conduct Authority and Prudential Regulation Authority and industry guidance such as the Joint Money Laundering Steering Group (JMLSG). The Bank has amended these standards to conform to local Money Laundering Prevention Act 2012, Anti-Terrorism (Amendment) Act 2013 and Bangladesh Bank Guidance Notes / Directives (issued time-to-time).

The Bank has Country-Addenda and operational procedures, e.g. Departmental Operating Instructions (DOI), on AML and CFT that address the requirements of local legislation and regulations. These operational procedures are also revised time-to-time and formally reviewed by respective stake-holders including compliance team on an annual basis and tabled in Country Operational Risk Committee (CORC) or Business Operational Risk Forum (BORF) as appropriate to ensure senior management support.

The Bank has robust customer due diligence (CDD), transaction monitoring procedures & automated systems that are under dual control and continuous surveillance by a dedicated team. Besides this, both local and global internal audit teams conduct periodic reviews / independent quality assurance to ensure the Bank is in compliance with the regulatory standards.

It performs risk based due diligence on all new customers, including verification of their identity and, where appropriate, an assessment of the source of their wealth and funds. It uses sophisticated software systems to monitor transactions for suspicious behaviour associated with AML and CFT.

The Bank provides training for its employees on its customer due diligence policies and procedures, including how to detect and report suspicious activity. It also has mandatory on line training modules on AML and CFT which all staff have to complete with pass marks and annual refresher training needs to be done by all customer facing and relevant processing staff. There are standard record retention and retrieval procedures to assist regulatory investigations in this regard.


2015Taka

2014Taka

30.2.6 Information technology The Bank has local IT team to provide technology services and support to all the departments of the Bank. IT

team manages Country Data Centre, desktop and server support, application support and network support. It also manages all technology projects, vendor management, cost and IT risk based on the Bank's standards and processes. All day to day activities are performed by online problem, change and request management system. IT team provides monthly reports to local and Group Senior Managements, which cover the following:

• Major technology projects • Major incidents • Technology activities and achievements • Technology cost • Current technology risks

The Bank has a robust Business Continuity and Disaster Recovery Plan in place to ensure smooth business in case of any major disaster. This plan is reviewed and tested as per yearly schedule.

Technology team also facilitates information security awareness and takes necessary measures to prevent data leakage. There are different global teams supporting country technology. Software development / enhancement and production system supports are provided by these teams.

30.2.7 Audit committee According to BRPD circular no. 12 dated 23 December 2002, all banks are advised to constitute an audit

committee comprising members of the Board. The audit committee will assist the Board in fulfilling its oversight responsibilities including implementation of the objectives, strategies and overall business plans set by the Board for effective functioning of the Bank. The committee will review the financial reporting process, the system of internal control and management of financial risks, the internal audit process, and the Bank's process for monitoring compliance with laws and regulations and its own code of business conduct.

Being a branch of a foreign bank, the Bank does not have a local Board of Directors from whom to select an audit committee. However, the Bank has received a dispensation from Bangladesh Bank on 24 March 2011 with regards to this requirement. At the country level, the Bank has the Country Management Group, Business Operations Risk and Country Operations Risk Forums which are responsible and empowered to oversee the overall control issues of the bank. These committees review / monitor the business risks and control issues and provide necessary directives in this regard as well as escalate significant issues to the Group Audit and Risk Committee through the relevant regional committees. The Bank has an internal audit department. In addition to this, the Bank is subject to audit by the internal auditors of the Group.

30.3 The bank has sought external legal opinion, whereby it was stated that there is significant ambiguity around the inclusion of Banking Institutions within the scope of Chapter XV: Workers’ Profit Participation Fund (WPPF) under the Bangladesh Labour Act, 2006 (the ‘Act’) and the subsequent amendments thereof. As per the Act and amendments thereof, an employer is required to pay 5% of its net profit (as defined under the Act) to the 1) Workers’ Participation Fund 2) Workers’ Welfare Fund and 3) Labour Trust Foundation Fund for further appropriate disbursement of the funds to all members (i.e., ‘Beneficiaries’, as defined under the Act) as prescribed under the Act.

As per the external legal opinion sought by the Bank, the inclusion of Banks within the scope of the WPPF under the Bangladesh Labour Act, 2006 is in contradiction with the relevant provisions under the bank Companies Act, 1991. These ambiguities are yet to be settled and the Bank is seeking clarifications from appropriate Authorities. On the basis of the facts currently known and external legal opinions, management believes that the possibility of a legal obligation for payments out of WPPF is low at the current stage and hence, no provision has been made for the same.

30.4 Post balance sheet events There were no material events that occurred after the balance sheet date, which could affect the values

stated in the financial statements or warrant disclosure.30.5 The net amount of foreign currency exposures/position as at 31 December 2015 was BDT (103,932,901).30.6 The figures appearing in these financial statements have been rounded off to the nearest BDT.30.7 Last year's figures have been rearranged, wherever necessary, to conform to current year's presentation.30.8 The assets and liabilities (except for the items mentioned in Annexure - B) as of 31 December 2015 in

foreign currencies have been converted into Taka at the following rates:

GBP 1 = 116.4234 121.0680 EUR 1 = 85.7495 94.7853 USD 1 = 78.5000 77.9500 CAD 1 = 56.5562 67.0437 AUD 1 = 57.4581 63.6774 SGD 1 = 55.5752 58.8880 SAR 1 = 20.9110 20.7701 MYR 1 = 24.4793 24.4793 DKK 1 = 11.4926 12.7342 NOK 1 = 8.9198 10.4793 HKD 1 = 10.1278 10.0492 SEK 1 = 9.3490 9.9626 JPY 1 = 0.6521 0.6513 CHF 1 = 79.2569 78.8050




Schedule of fixed assets including premises, furniture and fixturesStandard Chartered Bank

Bangladesh BranchesSchedule of fixed assets including premises, furniture and fixtures

as at 31 December 2015 Figures in Taka

Own assetsFree hold premises - - - - - - - - -Fixed equipments 1,079,448,206 1,380,000 (5,891,982) 1,074,936,224 824,056,062 87,959,913 (3,994,591) 908,021,384 166,914,840Computer and office equipment 1,185,316,676 24,618,188 - 1,209,934,864 963,019,361 80,440,921 - 1,043,460,282 166,474,582Furniture and fittings 480,557,789 4,462,661 - 485,020,450 242,750,792 67,440,182 - 310,190,974 174,829,476Motor vehicle 35,491,013 16,671,674 - 52,162,687 11,257,444 8,400,014 - 19,657,458 32,505,229Sub-total 2,780,813,684 47,132,523 (5,891,982) 2,822,054,225 2,041,083,659 244,241,030 (3,994,591) 2,281,330,098 540,724,127Leased assetsCapitalised leased vehicles 666,195,488 - (119,133,500) 547,061,988 369,134,719 105,263,517 (78,844,724) 395,553,512 151,508,476Sub-total 666,195,488 - (119,133,500) 547,061,988 369,134,719 105,263,517 (78,844,724) 395,553,512 151,508,476Total 2015 3,447,009,172 47,132,523 (125,025,482) 3,369,116,213 2,410,218,378 349,504,547 (82,839,315) 2,676,883,610 692,232,603

Figures in Taka

Own assetsFree hold premises 170,665,000 - (170,665,000) - 175,981 10,667 (186,648) - -Fixed equipments 982,459,579 96,988,627 - 1,079,448,206 734,326,636 89,729,426 - 824,056,062 255,392,144Computer and office equipment 982,930,052 202,386,624 - 1,185,316,676 858,804,902 104,214,459 - 963,019,361 222,297,315Furniture and fittings 289,009,438 191,548,351 - 480,557,789 187,345,987 55,404,805 - 242,750,792 237,806,997Motor vehicle 14,808,151 25,982,862 (5,300,000) 35,491,013 5,350,739 6,260,038 (353,333) 11,257,444 24,233,569Sub-total 2,439,872,220 516,906,464 (175,965,000) 2,780,813,684 1,786,004,245 255,619,395 (539,981) 2,041,083,659 739,730,025Leased assetsCapitalised leased vehicles 795,143,488 2,050,000 (130,998,000) 666,195,488 339,188,447 130,013,989 (100,067,717) 369,134,719 297,060,769Sub-total 795,143,488 2,050,000 (130,998,000) 666,195,488 339,188,447 130,013,989 (100,067,717) 369,134,719 297,060,769Total 2014 3,235,015,708 518,956,464 (306,963,000) 3,447,009,172 2,125,192,692 385,633,384 (100,607,698) 2,410,218,378 1,036,790,794

Balance as at31 December

2015 Particulars

Cost Depreciation Net book value as at

31 December 2015

Balance as at1 January 2015

Additions during the

year

Disposals/ adjustments during

the year Balance as at

31 December 2015 Balance as at1 January 2015

Charge for the year

On disposals /adjustments

Particulars

Cost Depreciation Net book value as at

31 December 2014

Balance as at1 January 2014

Additions during the

year

Disposals/ adjustments during

the year Balance as at

31 December 2014 Balance as at1 January 2014

Charge for the year

On disposals /adjustments

Balance as at31 December

2014

Schedule of fixed assets including premises, furniture and fixturesas at 31 December 2014

Annexure - A

Balance with other banks and financial institutions (Outside Bangladesh)

Foreign currency

Exchange rate

Equivalent local currency

Foreign currency

Exchange rate


Non Group NostroRoyal Bank of Canada, Toronto CAD 172,558 56.54 9,757,128 112,958.05 67.04 7,580,457Nordea Bank Norge, OSLO NOK 1 8.93 4 139,000.05 10.48 1,459,561Credit Suisse Zurich CHF 16,879 79.15 1,335,987 1,329,525.97 78.81 104,768,044Svenska Handelsbanken SEK 11,567 9.33 107,972 74,475.21 9.96 744,704Westpac Banking Corporation AUD 130,977 57.43 7,522,450 41,848.83 63.68 2,663,192Al Rajhi Bank SAR 1 0.66 0 - 20.77 -Total 18,723,541 117,215,958

ParticularsCurrency

name

2015 2014


Balance with other banks and financial institutions (Outside Bangladesh)as at 31 December 2015

Annexure - B

Balance with other banks and financial institutions (Outside Bangladesh)Standard Chartered Bank

Bangladesh BranchesBalance with other banks and financial institutions (Outside Bangladesh)

as at 31 December 2015

Foreign currency

Exchange rate


Foreign currency

Exchange rate


Group NostroSCB HongKong -HKD HKD 2,550 10.13 25,829 102,390 10.05 1,028,918SCB Nepal Nostro -USD USD 136,831 78.52 10,743,970 105,887 77.95 8,253,920SCB London -GBP GBP - 116.38 - 2,143,471 121.07 259,714,662SCB Bombay ACU -EUR EUR 26,801 85.68 2,296,260 49,491 94.79 4,691,874SCB Bombay ACU -USD USD 4,809,877 78.52 377,671,533 2,307,011 77.95 179,831,514SCB Karachi ACU -USD USD 1,203,526 78.52 94,500,833 1,287,821 77.95 100,385,664SCB Colombo ACU -USD USD 356,212 78.52 27,969,760 748,338 77.95 58,332,960SCB Frankfurt -EUR EUR - 85.68 - 1,626,995 94.79 154,243,618SCB Dhaka OBU -USD USD 172,000,000 78.52 13,505,440,000 227,000,000 77.95 17,694,650,000SCB London -USD USD 100,000,000 78.52 7,852,000,000 - 77.95 -SCB Singapore -SGD SGD - 55.57 - 106,120 58.89 6,256,765SCB Tokyo -JPY JPY 72,730 0.65 47,453 3,615,879 0.65 2,360,222SCB London -USD USD 479,666 78.52 37,663,374 438,440 77.95 34,176,414SCB Mauritius -USD USD - 78.52 - - 77.95 -Total 21,908,359,012 18,503,926,531

Particulars Currency name

2015 2014

Annexure - B

Disclosures on Risk Based Capital (Basel III) C. Capital Adequacy

Qualitative Disclosures:

The Bank's approach to capital management is driven by its desire to maintain a strong capital base to support the development of its business, to meet regulatory capital requirements at all times and to maintain good credit ratings.

Strategic, business and capital plans are drawn up annually covering a three year horizon and are approved by the Country Management Team (CMT). The capital plan ensures that adequate levels of capital and an optimum mix of the different components of capital are maintained to support its strategy.

The capital plan takes the following into account:

• Regulatory capital requirements

• Forecast demand for capital to support the credit ratings

• Increases in demand for capital due to business growth, market shocks or stresses

• Available supply of capital and capital raising options

• Internal controls and governance for managing the Bank’s risk, performance and capital

The bank uses a capital model to assess the capital demand for material risks, and support its internal capital adequacy assessment. Each material risk is assessed, relevant mitigants are considered, and the appropriate level of capital is determined. The capital modelling process is a key part of the Bank's management disciplines.

A strong governance and process framework is embedded in the Bank’s capital planning and assessment methodology. Overall responsibility for the effective management of risks rests with the Management Committee.

Standardized Approach is followed for computation of capital charge for credit risk, market risk, while Basic Indictor Approach for operational risk.

Quantitative Disclosures:

Details of Risk Weighted Assets as on 31 December:

Risk Weighted Assets 2015 (Taka) 2014 (Taka)

On balance sheet exposures 105,587,896,352 106,737,266,305

Off-balance sheet exposures 56,985,272,146 62,224,397,460

Total Credit risk 162,573,168,498 168,961,663,765

Market risk 2,861,793,013 6,644,770,628

Operational risk 33,553,721,507 33,788,024,221

Total Risk Weighted Assets 198,988,683,018 209,394,458,614

Capital requirement for Credit risk 16,257,316,850 16,896,166,377

Capital requirement for Market risk 286,179,301 664,477,063

Capital requirement for Operational risk 3,355,372,151 3,378,802,422

Minimum Capital Requirement 19,898,868,302 20,939,445,861

Total Tier I Capital 33,407,190,430 25,553,918,194

Total Tier II Capital 2,223,825,462 2,351,596,867

Total Regulatory Capital 35,631,015,892 27,905,515,061

Surplus Capital 15,732,147,590 6,966,069,200

2015 2014

Capital Adequacy Ratio 17.91% 13.33%

Tier I Capital Adequacy Ratio 16.79% 12.20%

Tier II Capital Adequacy Ratio 1.12% 1.12%

Risk management

Effective risk management is fundamental to being able to generate profits consistently and sustainably and is thus a central part of the financial and operational management of the Bank. Through the risk management framework, the Bank manages enterprise-wide risks with the objective of maximising risk adjusted returns while remaining within its risk appetite. As part of this framework, the Bank uses a set of principles that describe the risk management culture it wishes to sustain:

• Balancing risk and return: Risk is taken in support of the requirements of the Bank's stakeholders, in line with its strategy and within its risk appetite

• Responsibility: It is the responsibility of all employees to ensure that risk-taking is disciplined and focused. The Bank takes account of its social responsibilities and its commitments to customers in taking risk to produce a return.

• Accountability: Risk is taken only within agreed authorities and where there is appropriate infrastructure and resource. All risk-taking must be transparent, controlled and reported.

• Anticipation: The Bank seeks to anticipate future risks and ensure awareness of all known risks.

• Competitive advantage: The Bank seeks to achieve competitive advantage through efficient and effective risk management and control.

D. Credit Risk


Credit risk is the potential for loss due to failure of a counterparty to meet its obligations to pay the Bank in accordance with agreed terms.

Credit risk is managed through a framework which sets out policies and procedures covering the measurement and management of credit risk. There is a clear segregation of duties between transaction originators in the business and approvers in the Risk function. All credit exposure limits are approved within a defined credit approval authority framework.

A comprehensive framework is in place for the management of counterparty credit risk. This includes a structured process for the delegation of credit approval authority and for monitoring compliance with credit appetite. Policy and procedures are defined to support credit underwriting activities at all levels of the Group. These policies are defined at 3 levels-Group, Business and Country level.

All credit decisions are subject to underwriting standards which mandate defined processes and procedures for performing credit checks and detailed due diligence reviews. Systems and controls are in place to monitor collateral value and loan covenants. Each counterparty is also required to have an approved limit in place prior to drawdown of funds. Limit excesses are actively managed and subject to reporting and escalation.

Counterparties are subject to credit rating and these ratings are reviewed on a regular basis. Active monitoring of account level activity and limit utilization trends help to inform the early alert and risk trigger mechanisms. Potential problem accounts are investigated, monitored and appropriate action is taken. Standing Committees dedicated to account and portfolio monitoring supported by portfolio information reports are a well established discipline. The portfolio is monitored from the point of view of industry concentrations, risk grade distribution and tenor and security profiles amongst other parameters.

Credit risk from traded products is managed within the overall credit risk appetite for corporates and financial institutions. The credit risk exposure from traded products is derived from the positive mark-to-market value of the underlying instruments, and an additional component to cater for potential market movements.

Past dues and impaired exposures are defined in accordance with the relevant Bangladesh Bank regulations. Specific and general provisions are computed periodically in accordance with the Bangladesh Bank regulations.


Details of Credit Risk as on 31 December:

2015 (Taka) 2014 (Taka)

Gross Credit risk exposures:

Funded 185,463,694,904 180,441,904,761

Non-funded 126,534,518,262 135,873,307,082

Total 311,998,213,166 316,315,211,843

Distribution of risk exposure by claims:

Cash and cash equivalents 2,193,451,568 2,572,999,553

Claims on Sovereigns and Central Bank 14,017,698,172 13,166,105,596

Claims on banks 21,987,336,340 18,700,487,849

Investments 23,301,506,428 24,642,185,873

Claims on corporate 67,375,801,583 63,629,040,704

Claims on Consumer and SME Loan 47,064,490,132 47,049,026,331

Fixed Assets 692,232,603 1,036,790,794

Others assets 8,831,178,078 9,645,268,058

Off-balance sheet items 126,534,518,262 135,873,307,082

Total 311,998,213,166 316,315,211,840

Credit risk mitigation:

Claims secured by financial collateral 1,236,096,931 1,818,474,849

Net exposures after the application of haircuts 703,360,209 1,094,808,734

Claims secured by eligible Guarantee - -

Reconciliation between Bangladesh Bank's statement and the Bank's statement Disclosures on Risk Based Capital (Basel III)


Disclosures on Risk Based Capital (Basel III)

The following detailed qualitative and quantitative disclosures are provided in accordance with Guidelines on Risk Based Capital Adequacy published by Bangladesh Bank. The purpose of these requirements is to complement minimum capital requirement and Supervisory Review Process. These disclosures are intended for a more transparent and disciplined financial market where the participants can assess key information about the Bank's exposure to various risks.

The bank has an approved disclosure policy to observe the disclosure requirements set out by the Bangladesh Bank and International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB) into Bangladesh Financial Reporting Standards (BFRS) and Bangladesh Accounting Standards (BAS) where relevant to the bank.

Guidelines on Risk Based Capital Adequacy are structured around the following three aspects or pillars of Basel III:

• Minimum capital requirements to be maintained by a bank against credit, market and operational risk;

• Supervisory Review Process for assessing overall capital adequacy in relation to a bank's risk profile and a strategy for maintaining its capital at an adequate level;

• Market Discipline to make public disclosure of information on the bank's risk profiles, capital adequacy and risk management.

Disclosure Framework

The disclosure requirements are as per the Guidelines on Risk Based Capital Adequacy (RBCA) for Banks.

A. Scope of Application


Bank has no subsidiaries and Basel III is applied at the Bank level only.

B. Capital Structure


Standard Chartered Bank Bangladesh's capital structure consists of Tier I and Tier II capital which is aligned with regulatory capital structure. Tier I capital is further categorized as Common Equity Tier 1 (CET1) and Additional Tier 1 capital. The computation of the amount of Common Equity Tier I, Additional Tier I and Tier II capital shall be subject to the following conditions:

• The Bank has to maintain at least 4.50% of total Risk Weighted Assets (RWA) as Common Equity Tier I capital.

• Tier I capital will be at least 5.50% of the total RWA.

• Minimum Capital to Risk-weighted Asset Ratio (CRAR) will be 10% of the total RWA.

• Additional Tier I capital can be maximum up to 1.5% of the total RWA or 33.33% of CET 1, whichever is higher.

• Tier II capital can be maximum up to 4% of the total RWA or 88.89% of CET1, whichever is higher.

• In addition to minimum CRAR, Capital Conservation Buffer (CCB) @ 2.5% of the total RWA will be maintained in the form of CET1 in a phased manner from 2016 to 2019.

Tier I capital of the Bank includes funds deposited with Bangladesh Bank, actuarial gain/(loss) and retained earnings. Tier 1 capital is also called ‘Core Capital’ of the Bank. According to BRPD letter ref no. BRPD (BFIS)661/14B(P)/2015-18014 dated 24 December 2015, 5% of deferred tax recognised on specific provision shall be allowable as CET 1 capital whilst all other deferred tax assets created on other items shall be deducted from the retained earnings when calculating the capital adequacy ratio.

Tier II capital consists of general provision and revaluation reserve for Held to Maturity (HTM) and Held for Trading (HFT) securities. General provision for inclusion in Tier II capital is limited to a maximum 1.25% of Credit RWA calculated under the standardized approach. Revaluation reserve for securities shown as Tier II capital as on 31 December 2014 is being nullified in a phased manner at the rate of 20% from 2015 and will be fully adjusted by 2020.


The details of capital structure as at 31 December are provided as under:

Common Equity Tier I 2015 (Taka) 2014 (Taka)

Fund Deposited with Bangladesh Bank 2,219,501,566 2,207,278,944

Retained earnings 32,555,862,837 23,993,257,103

Actuarial gain/(loss) (207,431,414) 22,630,212 Less: Regulatory Adjustment for Deferred Tax Assets as per

Bangladesh Bank Guidelines (1,160,742,557) (669,248,065)

33,407,190,432 25,553,918,194

Additional Tier I capital - -

Total Tier I capital 33,407,190,432 25,553,918,194

Tier II

General Provision 2,032,164,606 2,112,020,797

Revaluation Reserve for Securities 191,660,856 239,576,070

Total Tier II capital 2,223,825,462 2,351,596,867

Total Capital 35,631,015,892 27,905,515,061

Liquidity Statement

Financial Highlights 2015

Maturity up to Maturity within Maturity within Maturity within Maturity overParticulars 1 month 1 to 3 months 3 to 12 months 1 to 5 years 5 years Total

AssetsCash in hand 16,211,149,740 - - - - 16,211,149,740

Balance with Bangladesh Bank, agent bank,other banks and financial institutions 21,987,336,340 - - - - 21,987,336,340

Money at call or short notice - - - - - -

Investments 10,988,403,064 707,552,449 24,169,984,045 22,902,935,349 1,443,790,248 60,212,665,155

Loans and advances 39,362,899,480 25,566,064,234 20,414,176,360 22,617,348,712 6,479,802,927 114,440,291,713

Fixed assets including premises, furniture and fixtures - - - - 692,232,603 692,232,603

Other assets 7,636,610,271 - - - 1,175,543,961 8,812,154,232Non-banking assets - - - - - -Total assets 96,186,398,895 26,273,616,683 44,584,160,405 45,520,284,061 9,791,369,739 222,355,829,783LiabilitiesBalance with Bangladesh Bank, agent bank,other banks and financial institutions 4,975,856,595 1,946,865,850 2,464,935,813 - 914,978 9,388,573,236Deposits and other accounts 125,445,652,677 12,250,794,610 14,893,626,962 3,049,418,859 283,678,293 155,923,171,401Provision and other liabilities (including equity) 15,932,817,925 - 7,850,000,000 - 33,261,267,221 57,044,085,146Total liabilities 146,354,327,197 14,197,660,460 25,208,562,775 3,049,418,859 33,545,860,492 222,355,829,783Net Liquidity Gap (50,167,928,302) 12,075,956,223 19,375,597,630 42,470,865,202 (23,754,490,753) 0

Sl. no. 2015 20141 Capital - fund deposited with Bangladesh Bank Taka 2,219,501,566 2,207,278,9442 Total regulatory capital Taka 35,631,015,894 27,905,515,0613 Capital surplus / deficit Taka 15,732,147,592 6,966,069,2004 Total assets Taka 222,355,829,783 213,738,409,3235 Total deposits Taka 155,923,171,401 149,242,480,9746 Total loans and advances Taka 114,440,291,713 110,678,067,0357 Total contingent liabilities and commitments Taka 126,534,518,262 135,873,307,0828 Advances / deposit ratio % 73.40% 74.16%9 Classified advances as (%) of total advances % 4.16% 5.37%

10 Net profit after tax and provisions Taka 9,303,305,731 11,770,562,21011 Amount of classified loans during current year Taka 1,623,476,201 1,905,141,78912 Amount of provisions against classified loans Taka 3,412,721,625 4,469,416,56613 Provision surplus / shortage Taka 254,698,599 258,910,46014 Interest expenses Taka 3,785,529,594 6,221,277,39315 Interest bearing assets Taka 176,379,458,436 165,730,916,88816 Non-interest bearing assets Taka 45,976,371,347 48,007,492,43517 Return on investment (ROI) % 26.56% 44.08%18 Return on assets (ROA) % 4.18% 5.51%19 Income from investment Taka 6,005,472,934 6,888,356,351

Particulars


Liquidity Statement(Asset and Liability Maturity Analysis)


Annexure - C



Annexure - D

Annexure - E

As perBangladesh

Bank statement

As perthe Bank's

general ledgerReconcilingdifference

Taka Taka Taka

As perBangladesh

Bank statement

As per the Bank'sgeneral ledger

Reconcilingdifference

USD Taka USDUSD

As perBangladesh

Bank statement



GBP Taka GBPGBP

As perBangladesh

Bank statement



JPY Taka JPYJPY

As perBangladesh

Bank statement



EUR Taka EUREUR


Reconciliation between Bangladesh Bank's statement and the Bank's statementas at 31 December 2015

In order to comply with the CRR and SLR requirements, the Bank considers the actual balances held with Bangladesh Bank according to their (Bangladesh Bank) books of accounts. However, when preparing the statutory accounts the Bank considers the actual balances held with Bangladesh Bank according to the Bank's books of accounts. This results in reconciling differences between the Bank's statutory accounts and CRR and SLR requirements.

Local currency

Bangladesh Bank Dhaka 10,315,274,213 9,788,168,601 527,105,612

Bangladesh Bank Chittagong 414,219,042 400,870,062 13,348,980

Bangladesh Bank Sylhet 77,814,829 77,561,364 253,465

Bangladesh Bank Khulna 36,327,531 34,994,809 1,332,721

Bangladesh Bank Bogra 41,447,088 41,432,338 14,750

Bangladesh Bank Dhaka - Al Wadia C/A- BDT 1,020,000,000 1,020,000,000 -

11,905,082,703 11,363,027,175 542,055,528

Credited by the Bank but not debited by Bangladesh Bank 5,375,404,982

Debited by the Bank but not credited by Bangladesh Bank 3,102,781,870

Credited by Bangladesh Bank but not debited by the Bank 1,585,964,314

Debited by Bangladesh Bank but not credited by the Bank 3,316,531,898

542,055,528

Foreign currency

USD clearing account 39,345,123 32,308,929 2,536,250,927 7,036,194

USD capital account - - - -

39,345,123 32,308,929 2,536,250,927 7,036,194

Credited by the Bank but not debited by Bangladesh Bank 5,352,990

Debited by the Bank but not credited by Bangladesh Bank 4,259,388

Credited by Bangladesh Bank but not debited by the Bank 6,504,110

Debited by Bangladesh Bank but not credited by the Bank 561,518

7,036,194

GBP clearing account 472,230 472,059 54,958,758 171

472,230 472,059 54,958,758 171

The Bank credited but Bangladesh Bank had not debited -

The Bank debited but Bangladesh Bank had not credited -

Bangladesh Bank credited but the Bank had not debited 171

Bangladesh Bank debited but the Bank had not credited -

171

JPY clearing account 566,388 566,388 369,342 -

566,388 566,388 369,342 -

The Bank credited but Bangladesh Bank had not debited -


Bangladesh Bank credited but the Bank had not debited -


-

EUR clearing account 269,767 269,340 23,095,805 426

269,767 269,340 23,095,805 426

The Bank credited but Bangladesh Bank had not debited 426


Bangladesh Bank credited but the Bank had not debited -


426

Total (Taka) 13,977,702,007

Industry Distribution of Exposure:

Maturity Breakdown of Credit Exposure:

Disclosures on Risk Based Capital (Basel III)Geographical Distribution of Credit Exposure:

Dhaka Chittagong Narayangonj Khulna Sylhet Bogra TotalBDT BDT BDT BDT BDT BDT BDT

Cash and cash equivalents 1,737,262,184 303,114,176 21,629,566 64,600,218 34,205,982 32,639,442 2,193,451,568Claims on Sovereigns and Central Bank 14,017,698,172 - - - - - 14,017,698,172Claims on Banks 21,987,336,340 - - - - - 21,987,336,340Investments 23,301,506,428 - - - - - 23,301,506,428Claims on Corporate 54,403,477,765 12,072,323,818 - - - 900,000,000 67,375,801,583Claims on Consumer and SME Loans 40,070,811,356 5,399,760,883 581,297,714 300,788,874 524,657,097 187,174,208 47,064,490,132Fixed Assets 686,617,656 3,523,700 495,902 280,845 270,367 1,044,133 692,232,603Others Assets 5,822,346,542 2,007,897,531 567,541,557 525,354,676 521,154,815 (613,117,043) 8,831,178,078Total on-balance sheet Items 162,027,056,443 19,786,620,108 1,170,964,739 891,024,613 1,080,288,261 507,740,740 185,463,694,904Off-balance Sheet Items 106,577,851,753 19,956,666,509 - - - - 126,534,518,262Total 268,604,908,196 39,743,286,617 1,170,964,739 891,024,613 1,080,288,261 507,740,740 311,998,213,166

Dhaka Chittagong Narayangonj Khulna Sylhet Bogra TotalBDT BDT BDT BDT BDT BDT BDT

Cash and cash equivalents 1,959,601,669 408,593,074 29,313,799 100,915,827 51,487,183 23,088,001 2,572,999,553Claims on Sovereigns and Central Bank 13,166,105,596 - - - - - 13,166,105,596Claims on Banks 18,700,487,849 - - - - - 18,700,487,849Investments 24,642,185,873 - - - - - 24,642,185,873Claims on Corporate 55,055,818,030 7,788,222,674 - - - 785,000,000 63,629,040,704Claims on Consumer and SME Loans 38,394,278,961 7,031,183,996 489,610,259 308,491,025 589,754,728 235,707,362 47,049,026,331Fixed Assets 1,023,135,160 8,401,598 1,827,553 1,337,849 1,994,659 93,975 1,036,790,794Others Assets (578,314,282) 9,019,660,765 601,691,951 506,195,816 576,362,359 (480,328,551) 9,645,268,058Total on-balance sheet Items 152,363,298,856 24,256,062,107 1,122,443,562 916,940,517 1,219,598,929 563,560,787 180,441,904,758Off-balance Sheet Items 104,154,287,536 31,719,019,546 - - - - 135,873,307,082Total 256,517,586,392 55,975,081,653 1,122,443,562 916,940,517 1,219,598,929 563,560,787 316,315,211,840

2015

2014

Industry Distribution of Exposure:

2015 Banks & FI Agriculture,

hunting, forestry and fishing

Manufacturing Electricity, gas and water Commerce Transport and

communications Community, social and

personal services

Financing, insurance and

business service

Retail and SME Others Total

BDT BDT BDT BDT BDT BDT BDT BDT BDT BDT BDTCash and cash equivalents 2,193,451,568 - - - - - - - - - 2,193,451,568Claims on Sovereigns and Central Bank 14,017,698,172 - - - - - - - - - 14,017,698,172Claims on Banks 21,987,336,340 - - - - - - - - - 21,987,336,340Investments - - - - - - - - - 23,301,506,428 23,301,506,428Claims on Corporate - 6,695,136,690 35,279,471,958 374,150,810 6,010,517,357 11,050,244,958 6,363,179,763 1,603,100,047 - - 67,375,801,583Claims on Consumer and SME Loans - - - - - - - - 47,064,490,132 - 47,064,490,132Fixed Assets - - - - - - - - - 692,232,603 692,232,603Others Assets - - - - - - - - - 8,831,178,078 8,831,178,078Total on-balance sheet Items 38,198,486,080 6,695,136,690 35,279,471,958 374,150,810 6,010,517,357 11,050,244,958 6,363,179,763 1,603,100,047 47,064,490,132 32,824,917,109 185,463,694,904Off-balance Sheet Items 22,590,111,545 - - - - - - - - 103,944,406,717 126,534,518,262Total 60,788,597,625 6,695,136,690 35,279,471,958 374,150,810 6,010,517,357 11,050,244,958 6,363,179,763 1,603,100,047 47,064,490,132 136,769,323,826 311,998,213,166

2014 Banks & FI Agriculture,

hunting, forestry and fishing

Manufacturing Electricity, gas and water Commerce Transport and

communications Community, social and

personal services

Financing, insurance and

business service

Retail and SME Others Total

BDT BDT BDT BDT BDT BDT BDT BDT BDT BDT BDT

Cash and cash equivalents 2,572,999,553 - - - - - - - - - 2,572,999,553Claims on Sovereigns and Central Bank 13,166,105,596 - - - - - - - - - 13,166,105,596Claims on Banks 18,700,487,849 - - - - - - - - - 18,700,487,849Investments - - - - - - - - - 24,642,185,873 24,642,185,873Claims on Corporate - 3,675,833,029 39,891,833,633 1,417,226,265 4,539,550,539 6,834,376,764 5,795,414,112 1,474,806,362 - - 63,629,040,704Claims on Consumer and SME Loans - - - - - - - - 47,049,026,331 - 47,049,026,331Fixed Assets - - - - - - - - - 1,036,790,794 1,036,790,794Others Assets - - - - - - - - - 9,645,268,058 9,645,268,058Total on-balance sheet Items 34,439,592,998 3,675,833,029 39,891,833,633 1,417,226,265 4,539,550,539 6,834,376,764 5,795,414,112 1,474,806,362 47,049,026,331 35,324,244,725 180,441,904,758Off-balance Sheet Items 22,590,111,545 - - - - - - - - 113,283,195,537 135,873,307,082Total 57,029,704,543 3,675,833,029 39,891,833,633 1,417,226,265 4,539,550,539 6,834,376,764 5,795,414,112 1,474,806,362 47,049,026,331 148,607,440,262 316,315,211,840

Maturity Breakdown of Credit Exposure:2015 Maturity up to 1 month Within 1 to 3months Within 3 to 12 months Within 1 to 5 Years Over 5 Years Total

Details BDT BDT BDT BDT BDT BDTCash and cash equivalents 2,193,451,568 - - - - 2,193,451,568Claims on Sovereigns and Central Bank 14,017,698,172 - - - - 14,017,698,172Claims on Banks 21,987,336,340 - - - - 21,987,336,340Investments - - 6,508,988,827 16,411,736,805 380,780,796 23,301,506,428Claims on Corporate 29,213,560,139 22,756,908,868 11,426,924,478 3,407,398,162 571,009,936 67,375,801,583Claims on Consumer and SME Loans 10,149,339,341 2,809,155,366 8,987,251,882 19,209,950,550 5,908,792,993 47,064,490,133Fixed Assets - - - - 692,232,603 692,232,603Others Assets 7,655,634,115 - - - 1,175,543,963 8,831,178,078Total on-balance sheet Items 85,217,019,675 25,566,064,234 26,923,165,187 39,029,085,517 8,728,360,291 185,463,694,905Off-balance Sheet Items 82,823,117,833 18,593,387,883 14,621,194,778 10,496,817,768 - 126,534,518,262Total 168,040,137,508 44,159,452,117 41,544,359,965 49,525,903,285 8,728,360,291 311,998,213,167

2014 Maturity up to 1 month Within 1 to 3months Within 3 to 12 months Within 1 to 5 Years Over 5 Years Total Details BDT BDT BDT BDT BDT BDT

Cash and cash equivalents 2,572,999,553 - - - - 2,572,999,553Claims on Sovereigns and Central Bank 13,166,105,596 - - - - 13,166,105,596Claims on Banks 18,700,487,849 - - - - 18,700,487,849Investments 720,966,670 3,218,506,654 6,421,797,520 13,900,181,341 380,733,688 24,642,185,873Claims on Corporate 22,761,309,864 23,858,136,627 11,150,155,324 5,122,935,569 736,503,320 63,629,040,704Claims on Consumer and SME Loans 9,291,776,574 3,049,326,778 9,785,621,071 18,704,748,782 6,217,553,126 47,049,026,331Fixed Assets 1,036,790,794 1,036,790,794Others Assets 8,630,565,619 - - - 1,014,702,439 9,645,268,058Total on-balance sheet Items 75,844,211,725 30,125,970,059 27,357,573,915 37,727,865,692 9,386,283,367 180,441,904,758Off-balance Sheet Items 92,913,606,870 22,811,298,292 12,157,502,238 7,990,899,682 - 135,873,307,082Total 168,757,818,595 52,937,268,351 39,515,076,153 45,718,765,374 9,386,283,367 316,315,211,840

2015 2014Gross non-performing assets (NPAs)Non-performing asset (NPAs) to outstanding loans and advances 4.16% 5.37%

2015 (Taka) 2014 (Taka)Movement of non-performing assets (NPAs)Opening balance 5,941,570,555 5,688,363,272Net movement during the year (1,179,879,308) 253,207,283Closing balance 4,761,691,247 5,941,570,555Movement of specific provision for (NPAs)Opening balance of specific provision 4,469,416,566 4,111,954,121Written off during the period (1,673,693,193) (286,165,947)Recoveries during the period (592,262,290) (535,977,168)Provision made during the period 1,209,130,223 1,179,560,541Translation increase / (decrease) 130,319 45,019Closing balance of specific provision 3,412,721,625 4,469,416,566

Disclosures on Risk Based Capital (Basel III) E. Equities: Disclosures for Banking Book Positions The Bank does not hold trading position in equities.

F. Interest rate risk in the banking book Discussed in the next section under Market risk.

G. Market risk

Qualitative Disclosures: Market risk is the potential for loss of earnings or economic value due to adverse changes in financial market

rates or prices. The Bank’s exposure to market risk arises principally from customer-driven transactions. Under Pillar 1, market risk relates mainly to the trading book. The primary categories of Pillar 1 market risk for the Bank are: interest rate risk, foreign exchange risk, commodity price risk and equity position risk. Pillar 2 market risk comprises of two elements: market risk in the trading book and interest rate risk in the banking book (“IRRBB”).

The Bank’s internal market and traded credit risk analysis model for Pillar 2 is based on the Bank’s internal assessment of market risk shocks which are effectively built from assessing the variables from three sources:

- developing ad hoc shocks to risk factors using the changes to the economic variables in the stress scenario but adjusting for the fact that the economic variables are usually expressed over the longer term;

- stress shocks from the Financial Market weekly Stress Loss Trigger report for the trading book; or - using regulatory prescribed shocks when required. The Market Risk Limits Policy sets the parameters for managing market risk. The Credit Risk Committee, in

conjunction with Country Market and Traded Credit Risk (“MTCR”) team , provides market risk oversight, reporting and management of the market risk profile.

The Bank’s internal market risk analysis is based on the Bank’s value at risk (“VaR”) models. The Bank measures the risk of losses arising from future potential adverse movements in market rates, prices and volatilities using VaR methodology. VaR is calculated for expected movements over a minimum of one business day at a confidence level of 99% for regulatory capital purposes. VaR and stressed VaR models are used to calculate Pillar 1 market risk capital requirements on portfolios which have been approved as being compliant with the Internal Model Approach under CRD IV and the Capital Requirements Regulation ("CRR"). Where the models are not approved, Pillar 1 capital requirements are based on standard rules that are less risk sensitive.


Details of Market Risk as on 31 December: 2015 (Taka) 2014 (Taka) Capital requirements for: Interest rate risk 275,786,012 482,216,529 Equity position risk - - Foreign exchange risk 10,393,289 182,260,534 Commodity risk - - Total 286,179,301 664,477,063

Disclosures on Risk Based Capital (Basel III) H. Operational Risk Qualitative Disclosures: Operational risk is the potential for loss arising from the failure of people, process or technology or the

impact of external events. It is the Bank’s objective to minimize exposure to operational risks, subject to cost trade-offs. This objective is ensured through a framework of policies and procedures that drive risk identification, assessment, control and monitoring at business / function and country levels.

Responsibility for the management of operational risks rests with the business and functional management as an integral part of their role. An independent Operational Risk function within the Group Risk function works alongside business and functional management, to ensure operational risk exposures are managed within acceptable risk tolerance limits. Group Operational Risk is responsible for setting the operational risk policy, defining standards for measurement and for the operational risk capital calculation.

Governance over operational risks is ensured through a defined structure of risk committees at group, business function and country levels. Country Operational Risk Forum (“CORF”) have the responsibility for oversight of operational risks and significant issues at a country level. The monthly CORF process ensures that operational risks, losses and results of assurance reviews are managed within acceptable risk tolerance limits.

The bank’s Pillar I approach is Basic Indicator Approach (BIA) as set out in the Guidelines on Risk Based Capital Adequacy.

The bank proactively monitors its exposure to material loss events by leveraging on internal experience (via risks and losses) and industry experience. The types of events that could result in a material operational risk loss / business disruption include:

• Internal and external fraud. • Damage to physical assets. • Business disruption and system failures. • Failure in execution, delivery and process management.

Quantitative Disclosures: Capital requirement for Operational risk as on 31 December 2015 was BDT 3,355,372,151 (2014: 3,378,802,422).

I. Leverage Ratio: Leverage ratio is the ratio of Tier 1 capital to total on and off-balance sheet exposures. The leverage ratio

was introduced into the Basel III framework as a non-risk based backstop limit, to supplement risk-based capital requirements.

In order to avoid building-up excessive on and off-balance sheet leverage in the banking system, a simple, transparent, non-risk based leverage ratio has been introduced by the Bangladesh Bank. The leverage ratio is calibrated to act as a credible supplementary measure to the risk based capital requirements. The leverage ratio is intended to achieve the following objectives:

• Constrain the build-up of leverage in the banking sector which can damage the broader financial system and the economy; and

• Reinforce the risk based requirements with an easy to understand and a non-risk based measure.

Geographical Distribution of Credit Exposure: The Bank has calculated the regulatory leverage ratio as per the guideline of Basel III. The numerator, capital

measure, is calculated using the new definition of Tier I capital applicable from 01 January 2015. The denominator, exposure measure, is calculated on the basis of the Basel III leverage ratio framework as adopted by the Bangladesh Bank. The exposure measure generally follows the accounting value, adjusted as follows:

• On-balance sheet, non derivative exposures are included in the exposure measure net of specific provision; • Physical or financial collateral is not considered to reduce on-balance sheet exposure; • Loans are not netted with deposits;

Off balance sheet items are converted into credit exposure equivalents through the use of credit conversion factors (CCFs). Depending on the risk category of the exposure a CCF of 20%, 50% or 100% is applied. A CCF of 10% is applied on commitments that are unconditionally cancellable at any time by the bank without prior notice;

• Item deducted from Tier I capital such as deferred tax assets is excluded.

Quantitative disclosures: 2015 Leverage Ratio (%) 11.80%

A. On Balance Sheet Exposure 218,943,108,002

B. Off Balance Sheet Exposure 65,215,729,044

C. Total Deduction from on and off balance sheet exposure/ Regulatory

adjustment made to Tier I Capital 1,160,742,557

Total Exposure (A+B-C) 282,998,094,489

J. Liquidity Ratio Qualitative disclosures: Liquidity risk is the potential that the Bank either does not have sufficient liquid financial resources available

to meet all its obligations as they fall due, or can only access these financial resources at excessive cost. Liquidity is managed by the Country Asset Liability Management Committee (ALCO) within the pre-defined liquidity limits set by and in compliance with Group liquidity policies and local regulatory requirements.

Liquidity management of the Bank is centered around the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) based on BASEL III. The Bank has an Asset Liability Management (ALM) desk to manage this risk with active monitoring and management from Market and Traded Credit Risk (MTCR) Department.

Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) has been adopted by the bank for liquidity risk management. LCR ensures that banks maintain enough high quality unencumbered liquid assets to meet its liquidity needs for 30 calendar time-line whereas NSFR ensures availability of stable funding is greater than required funding over 1 year period.

ALCO monitors the liquidity risk on a monthly basis. Based on the detailed recommendations from ALM desk, ALCO takes appropriate action to manage the liquidity risk. These ratios are regularly monitored at ALCO. The Bank also has internal risk control framework which outlines clear and consistent policies and principles for liquidity risk management.

Quantitative disclosures: 2015 Liquidity Coverage Ratio (%) 233.35% Net Stable Funding Ratio (%) 116.98% Stock of High Liquid Assets 53,062,428,713 Total Net Cash Outflows over the next 30 Calendar days 10,079,659,780 Available Amount of Stable Funding 191,392,969,054 Required Amount of Stable Funding 163,612,351,603

K. Remuneration Qualitative disclosures: The Group specified remuneration policy governs the local remuneration with due consideration of local

regulatory framework which is designed to reward competitively the achievement of sustainable performance and attract and motivate the very best people who are committed to maintaining a long-term career with Standard Chartered Bank. The Group Remuneration Committee oversees the remuneration policy and is responsible for setting the overarching principles, parameters and governance framework of the remuneration policy. All members of the Committee are independent non-executive Directors of Standard Chartered Plc. The Committee has oversight of all reward policies for Standard Chartered employees. It is responsible for setting the principles and governance framework for all remuneration decisions. In particular, the Committee:

• Determines and agrees with the Board the framework and broad policy for the remuneration of the Group Chairman, Group Chief Executive, the executive directors and other designated senior executives;

• Approves any proposal to award a high remuneration package to new recruit • Oversees the remuneration of material risk takers (MRT) • Ensures that the remuneration policy is appropriate and consistent with effective risk management • Approves the Group variable remuneration each year

Salaries (Fixed Pay): • Salaries reflect individuals’ skills and experience and are reviewed annually against market information

and in the context of the annual performance assessment and affordability; • Increases may occur where there is a role change, increased responsibility or to ensure market

competitiveness.

Benefits: • Benefits are provided, with the details depending on local market practice. Employees have access to

country-specific, company-funded benefits such as pension schemes, private medical insurance, permanent health insurance, life insurance and cash allowances. The cost of providing the benefits is defined and controlled.

Variable Remuneration: • Variable remuneration rewards and incentivises the achievement of business and individual objectives

as well as adherence to the Group’s values; • The proportion of variable to fixed remuneration paid to employees is carefully monitored • For MRT the deferral rate is a minimum of 40 per cent (for incentives up to £500,000) or 60 per cent (for

incentives of £500,000 or more) – see next section for more information • For non-MRT employees, variable remuneration over a defined threshold is subject to a graduated level

of deferral • Deferred incentives are usually delivered in a combination of cash and shares • Incentives are subject to the Group’s claw-back policy, which enables the Group, in specified

circumstances, to apply malus and claw-back at its discretion

Quantitative disclosures: 2015 Number of meetings held by the main body overseeing remuneration during the financial year N.A

Remuneration paid to the main body overseeing remuneration during the financial year N.A

Number of employees having received a variable remuneration during the financial year

(Covers senior management and other material risk takers only) 35

Guaranteed bonuses awarded during the financial year: Number of employee 35

Total amount of guaranteed bonuses 10,680,083

Sign-on awards made during the financial year: Number of employee N.A

Total amount of sign-on awards N.A

Severance payment made during the financial year: Number of employee 1

Total amount of severance payments 9,560,843

Total amount of outstanding deferred remuneration (in cash) -

Total amount of deferred remuneration paid out in financial year 20,707,124

Breakdown of amount of remuneration awards for the financial year: Fixed and Variable 476,662,843

Variable Pay 154,553,135

Deferred 20,707,124

Non-Deferred 133,846,011

Disclosures on Repo and Reverse repo

(a) Disclosure regarding outstanding Repo as on 31 December 2015

Sl. No. Counter party name Agreement Date

Reversal Date

Amount (1st leg cash

consideration)

NIL N/A N/A-

(b) Disclosure regarding outstanding Reverse Repo as on 31 December 2015

Sl. No. Counter party name AgreementDate

Reversal Date

Amount(1st leg cash

consideration)Nil N/A N/A -

-(c ) Disclosure regarding overall transaction of Repo and Reverse repo

1 Securities sold under repo(i) Bangladesh bank* - 4,370,000,000 131,873,205(ii) Other banks & FIs - 1,998,295,149 36,786,859

2 Securities purchased under reverse repo(i) Bangladesh bank - 4,900,000,000 822,249,315(ii) Other banks & FIs - 8,094,182,369 1,253,409,103

*All repos were under the ALS (Assured Liquidity Support) arrangement.

Total

Total

Sl. No. Particulars Minimum

outstandingMaximum

outstandingDaily average outstanding


Disclosures on Repo and Reverse repo

Annexure - G

Credit Rating

Long term Short term1-TSAAA1502 raeY1-TSAAA4102 raeY

Outlook Stable

Date of current Rating 4 May, 2016Credit Rating Information and Services Limited (CRISL) reaffirms AAA (pronounced as triple A) in long term and ST-1 rating on short term to Standard Chartered Bank (Bangladesh Operation).

Standard Chartered BankOffshore Banking Unit, Bangladesh

Financial Statements 2015

Independent Auditor's Report to the Management ofStandard Chartered Bank

Offshore Banking Unit


Report on the Financial Statements

We have audited the accompanying financial statements of the Offshore Banking Unit ("the Bank"/ OBU) of Standard Chartered Bank, Bangladesh Branches which comprise the balance sheet as at 31 December 2015, and the profit and loss account, cash flow statement and statement of changes in equity for the year then ended 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 financial statements that give a true and fair view in accordance with Bangladesh Financial Reporting Standards as explained in note 3.2 and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 and 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 financial statements 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 financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. 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 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 financial statements give a true and fair view of the financial position of the Bank as at 31 December 2015, and of its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards as explained in note 3.2.

Report on Other Legal and Regulatory Requirements

In accordance with the Companies Act, 1994, the Bank Company Act, 1991 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 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 Responsibility for the Financial Statements and Internal Controls section:

i) internal audit, internal control and risk management arrangements of the Bank appeared to be materially adequate; and

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.




(f) adequate provisions have been made for advances which are, in our opinion, doubtful of recovery;(g) the records and statements submitted by the branches have been properly maintained and

consolidated in the financial statements;(h) the information and explanation required by us have been received and found satisfactory; and(i) w e

have reviewed over 80% of the risk weighted assets of the Bank and we have spent around 150 person hours for the audit of the books and accounts of the Bank.


Balance Sheetas at 31 December 2015


Balance Sheet

Balance Sheet

2014TakaUSD

2015TakaUSD

CashCash in hand (including foreign currencies) - - - -Balance with Bangladesh Bank and its agent banks(including foreign currencies) - - - - - - - -

Balance with other banks and financial institutions 5Inside Bangladesh 30,156,576 2,367,291,232 28,560,270 2,226,273,058Outside Bangladesh 17,542,603 1,377,094,370 4,418,254 344,402,887 47,699,179 3,744,385,602 32,978,524 2,570,675,945

Money at call and short notice - - - -

InvestmentsGovernment securities - - - -Other investments - - - - - - - -

Loans and advancesLoans, cash credit, overdrafts, etc. 6 100,793,169 7,912,263,770 83,707,017 6,524,961,984Bills purchased and discounted 7 386,590,510 30,347,355,016 424,067,617 33,056,070,710 487,383,679 38,259,618,786 507,774,634 39,581,032,694

Fixed assets including premises, furniture and fixtures - - - -

Other assets 8 4,509,312 353,980,839 5,133,245 400,136,566

Non banking assets - - - -Total assets 539,592,170 42,357,985,227 545,886,403 42,551,845,206

LIABILITIES AND CAPITALLiabilities

Borrowings from other banks, financial institutions and agents 9 438,156,540 34,395,288,388 481,273,304 37,515,254,078

Deposits and other accounts 10Current and other accounts 32,353,773 2,539,771,182 15,196,167 1,184,541,240Term deposits - - - -Other deposits 252,838 19,847,767 452,831 35,298,147 32,606,611 2,559,618,949 15,648,998 1,219,839,387

Other liabilities 11 43,104,324 3,383,676,375 35,719,919 2,784,367,716Total liabilities 513,867,475 40,338,583,712 532,642,221 41,519,461,181

EquityFund deposited with Bangladesh Bank as capital - - - -Other reserve - - - -Profit and loss account balance 25,724,695 2,019,401,515 13,244,182 1,032,384,025Total equity 25,724,695 2,019,401,515 13,244,182 1,032,384,025Total liabilities and equity 539,592,170 42,357,985,227 545,886,403 42,551,845,206

OFF-BALANCE SHEET ITEMSContingent liabilitiesAcceptances and endorsements 12,754,131 1,001,199,305 9,009,326 702,276,985Letters of guarantee 52,114 4,090,964 8,273 644,859Irrevocable letters of credit 16,634,214 1,305,785,786 7,888,470 614,906,199Bills for collection 77,493,370 6,083,229,541 67,489,067 5,260,772,792 106,933,829 8,394,305,596 84,395,136 6,578,600,835Other commitments - - - -Total off-balance sheet items 106,933,829 8,394,305,596 84,395,136 6,578,600,835




Notes

2014TakaUSD

2015TakaUSD

Interest income 12 22,328,299 1,740,045,894 20,278,293 1,573,984,358

Interest expense on deposits and borrowings 13 2,416,037 188,303,903 1,181,025 91,647,008

Net interest income 19,912,262 1,551,741,990 19,097,268 1,482,337,350

Income from investments - - - -

Commission, exchange and brokerage 14 1,683,831 143,472,901 1,556,687 127,585,206

Other operating income - - - -

Total operating income 21,596,093 1,695,214,892 20,653,955 1,609,922,556

Salaries and allowances 140,350 10,962,173 85,058 6,602,215

Rent, taxes, insurance, electricity, etc. 15,115 1,177,093 17,467 1,355,572

Legal expenses 244 19,059 89 6,933

Postage, stamps, telephone, telex, etc. 2,569 200,153 3,874 300,391

Stationery, printing, advertisements, etc. 399 30,937 979 75,832

Repairs and maintenance 25,221 1,970,019 12,524 972,059

Other expenses 15 31,412 2,450,993 37,341 2,897,454

Total operating expenses 215,310 16,810,427 157,332 12,210,456

Profit before provision 21,380,784 1,678,404,465 20,496,623 1,597,712,100

Provision for loans and advances and off balance sheet exposures 11.1 63,770 5,005,914 1,043,146 81,313,240

Provision for diminution in value of investments - - - -

Total provision 63,770 5,005,914 1,043,146 81,313,240

Total profit before tax 21,317,014 1,673,398,551 19,453,477 1,516,398,860

Provisions for income tax 11.2 9,059,801 711,194,385 8,711,067 679,027,951

Net profit after tax 12,257,213 962,204,166 10,742,410 837,370,909



Cash Flow Statementfor the year ended 31 December 2015

Cash Flow Statement

2014TakaUSD

2015TakaUSD

A) Cash flows from operating activities Interest receipts in cash 22,938,523 1,785,137,442 18,958,886 1,470,416,146 Interest payments (2,308,452) (179,713,781) (927,846) (71,909,760) Fee and commission received 1,683,716 143,463,810 1,556,572 127,576,242 Cash payments to employees (140,350) (10,962,173) (88,660) (6,881,729) Cash payments to suppliers (8,711,067) (679,028,143) (68,666) (5,329,030) Income taxes paid (111,881) (8,670,925) (6,841,299) (531,979,859) Operating profit before changes in operating assets and liabilities 13,350,490 1,050,226,231 12,588,987 981,892,010

Increase/decrease in operating assets and liabilities Loans and advances to customers 20,477,010 1,331,425,737 (96,701,697) (7,615,074,351) Other assets 13,827 1,073,278 1,866 152,399 Deposits from customers 16,957,612 1,339,779,562 2,603,049 205,386,317 Borrowing from other banks and financial institutions (43,116,764) (3,119,965,690) 95,187,970 7,493,258,501 Other liabilities 6,815,180 546,357,215 4,326,910 340,406,647 1,146,865 98,670,102 5,418,098 424,129,513 Net cash from operating activities 14,497,355 1,148,896,333 18,007,085 1,406,021,523

B) Cash flows from investing activities Proceeds from sale of securities - - - - Payments for purchase of securities - - - - Purchase of fixed assets - - - - Proceeds from sale of assets - - - - Net cash from investing activities - - - -

C) Cash flows from financing activities Profit remitted to Head Office - - (7,390,104) (573,693,737)

D) Net increase/(decrease) in cash and cash equivalents (A+B+C) 14,497,355 1,148,896,333 10,616,981 832,327,786

E) Effects of exchange rate changes on cash and cash equivalents 223,300 24,813,324 54,041 3,716,804

F) Opening cash and cash equivalents 32,978,524 2,570,675,945 22,307,502 1,734,631,355

G) Closing cash and cash equivalents (D+E+F) (Note - 16) 47,699,179 3,744,385,602 32,978,524 2,570,675,945
















TakaUSDTakaUSDTakaUSDTakaUSD

Funddeposited

withBangladesh

Bank

Profit and lossaccount balance

TotalOtherreserve


1 Background

Offshore Banking Unit ("the Bank"/OBU) of Standard Chartered Bank (SCB), Bangladesh Branches commenced its banking operations in Bangladesh on 16 August 1994 after obtaining license from Bangladesh Bank, the Central Bank of Bangladesh on 20 December 1993. Standard Chartered Bank (SCB), Bangladesh Branches commenced its banking operations in Dhaka, in 1948 after obtaining licence from Central Bank.

2 Nature of business

The Bank is engaged in offshore banking under a licence granted by Bangladesh Bank. It provides banking services to EPZ customers.


3.1 Reporting period

These financial statements cover one calendar year from 1 January 2015 to 31 December 2015. These financial statements are authorised for issue by management of the Bank on 28 April 2016.

3.2 Statement of compliance

The Financial Reporting Act 2015 (FRA) has been enacted during the year. Under the FRA, the Financial Reporting Council (FRC) is to be formed and it is to issue financial reporting standards for public interest entities such as banks. The Bank Companies Act 1991 has been amended to require banks to prepare their financial statements under such financial reporting standards.

The FRC is yet to be formed and as such no financial reporting standards have been issued as per the provisions of the FRA. Hence, the financial statements of the Bank continue to be prepared in accordance with Bangladesh Financial Reporting Standards (BFRS) and the requirements of the Bank Companies Act 1991, the rules and regulations issued by Bangladesh Bank and the Companies Act 1994. ln case any requirement of the Bank Companies Act 1991, and provisions and circulars issued by Bangladesh Bank differ with those of BFRS, the requirements of the Bank Companies Act 1991, and provisons and circulars issued by Bangladesh Bank shall prevail. Material deviations from the requirements of BFRS are as follows:

i) Provision on loans and advances

BFRS: As per BAS 39 Financial Instruments: Recognition and Measurement, 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.

Bangladesh Bank: As per 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, a general provision at 0.25% to 5% under different categories of unclassified loans (standard/SMA loans) has to be maintained regardless of objective evidence of impairment. Also provision for sub-standard loans, doubtful loans and bad/losses loans 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. 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.

ii) Recognition of interest in suspense

BFRS: Loans and advances to customers are generally classified as loans and receivables as per BAS 39 and interest income is recognised through effective interest method over the term of the loan. Once a loan is impaired, interest income is recognised in the profit and loss account in the same basis based on revised carrying amount.

Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, once a loan is classified, interest on such loan is not allowed to be recognised as income, rather the corresponding amount needs to be credited to interest in suspense account, which is presented as liability in the balance sheet.

iii) Other comprehensive income

BFRS: As per BAS 1 Presentation of Financial Statements, Other Comprehensive Income (OCI) is a component of financial statements or the elements of OCI are to be included in a single Other Comprehensive Income Statement.


iv) Financial instruments – presentation and disclosure

Bangladesh Bank guidelines categorise, recognise, measure and present financial instruments differently from those prescribed in BAS 32 Financial Instruments: Presentation, BAS 39 and BFRS 7 Financial Instruments: Disclosures. As such full disclosure and presentation requirements of BFRS 7 and BAS 32 are not made in the financial statements.

v) Financial guarantees

BFRS: As per BAS 39, financial guarantees are contracts that require an entity to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantees are recognised initially at fair value, and the initial fair value is amortised over the life of the financial guarantee. The financial guarantees 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.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, financial guarantees such as letter of credit, letter of guarantee etc. are treated as off-balance sheet items.

vi) Cash flow statement

BFRS: As per BAS 7 Statement of Cash Flows, the cash flow statement can be prepared using either the direct method or the indirect method. 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.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, cash flow is the mixture of direct and indirect methods.

vii) Off-balance sheet items

BFRS: As per BFRS, there is no requirement for disclosure of off-balance sheet items on the face of the balance sheet.

Bangladesh Bank: As per BRPD 14 dated 25 June 2003, off-balance sheet items (e.g. letter of credit, letter of guarantee etc.) must be disclosed separately on the face of the balance sheet.

viii) Loans and advances net of provision

BFRS: Loans and advances shall be recognised net of impairment loss as per BAS 39.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, provision on loans and advances is presented separately as liability and can not be netted off against loans and advances.

3.3 Basis of measurement

The financial statements of the Bank have been prepared on historical cost basis.

3.4 Functional and reporting currency

The financial statements of the OBU are presented in USD which is the OBU’s functional and presentation currency. The balance sheet and the profit and loss accounts are also presented in Taka using the exchange rate prevailing at the balance sheet date and average exchange rate of the month during which the transactions incurred, respectively.

3.5 Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect 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 are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the periods in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is described below:

(a) Provisions for loans and advances

The Bank assesses its loans and advances for objective evidence of impairment on a regular basis and particularly at year end. While the primary criteria set out in BRPD circular no. 14 dated 23 September 2012, for determining whether a loan are impaired are objective, based on borrower's ability to make timely repayments, loans and advances may also be classified based on qualitative judgement. This involves making assessments regarding the economic environment in which borrowers operate in addition to making judgements about a borrower's financial condition and net realisable value of any underlying collateral.

(b) Taxation

The estimation of current tax provision involves making judgements regarding admissibility of certain expenses as well as estimating the amount of other expenses for tax purposes.



Balance as at 1 January 2014 9,837,835 764,990,049 9,837,835 764,990,049

Currency translation differences - - - - 54,041 3,716,804 54,041 3,716,804

Net profit for the year - - - - 10,742,410 837,370,909 10,742,410 837,370,909

Profit remitted to Head Office - - - - (7,390,104) (573,693,737) (7,390,104) (573,693,737)

Balance as at 31 December 2014 13,244,182 1,032,384,025 13,244,182 1,032,384,025

Balance as at 1 January 2015 - - 13,244,182 1,032,384,025 13,244,182 1,032,384,025

Currency translation differences - - - - 223,300 24,813,324 223,300 24,813,324

Net profit for the year - - - - 12,257,213 962,204,166 12,257,213 962,204,166

Profit remitted to Head Office - - - -

Balance as at 31 December 2015 - - - - 25,724,695 2,019,401,515 25,724,695 2,019,401,515


3.6 Cash flow statement

The cash flow statement has been prepared in accordance with the BAS 7 considering the requirements specified in the BRPD circular no. 14 dated 25 June 2003.

3.7 Liquidity statement

The liquidity statement of assets and liabilities as on the reporting date has been prepared on the basis of residual maturity term.


4.1 Foreign currencies

Transactions in foreign currencies are translated into the functional currency of the operation at the spot exchange rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the spot exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated into the functional currency at the spot exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on translation are recognised in the profit and loss account.


Interest income on loans and advances

Interest income is recognised in profit and loss using the effective interest method.

The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability (or, where appropriate, a shorter period) to the carrying amount of the financial asset or liability.

Interest is accrued on a daily basis and applied to customer accounts every month, quarter and at maturity depending on the product offerings.

In accordance with BRPD circular no. 14 dated 23 September 2012, interest accrued on sub-standard loans and doubtful loans are credited to an interest suspense account which is included within other liabilities. Interest from loans and advances ceases to be accrued when they are classified as bad/loss loans. It is then kept in interest suspense in a memorandum account.

Commission and fee income

The Bank earns commission and fee income from a diverse range of services provided to its customers. Commission and fee income is accounted for as follows:

- income earned on the execution of a significant act is recognised as revenue when the act is completed

- income earned from services provided is recognised as revenue as the services are provided

Exchange income

Exchange income includes all gains and losses from foreign currency transactions.

4.3 Loans and advances to customers

Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and that the Bank does not intend to sell immediately or in the near term.

Loans and advances are initially measured at fair value, and subsequently measured at amortised cost. These are stated gross, with accumulated specific and general provisions for loans and advances being shown under other liabilities.

4.3.1 Provisions on loans and advances

At each balance sheet date and periodically throughout the year, the Bank reviews loans and advances to assess whether objective evidence that impairment of a loan or portfolio of loans has arisen supporting a change in the classification of loans and advances, which may result in a change in the provision required in accordance with BRPD circular no. 14 dated 23 September 2012, BRPD circular no. 19 dated 27 December 2012 and BRPD circular no. 05 dated 29 May 2013 and BRPD circular no. 16 dated 18 November 2014. The guidance in the circulars follow a formulaic approach whereby specified rates are applied to the various categories of loans as defined in the circular. The provisioning rates are as follows:

2015 2014


Unclassified loans under small and medium enterprise financing (SMEF) 0.25% 0.25%

Unclassified loans under housing finance (HF) and on loans for professionals (LP) 2.00% 2.00%

Unclassified loans under consumer financing (CF) other than housing

finance (HF) and loans for professionals (LP) 5.00% 5.00%

Unclassified loans to brokerage houses (BH), merchant banks (MB), stock dealers (SD) 2.00% 2.00%

All unclassified loans except under SMEF, HF, LP, CF, BH, MB, SD and

short-term agricultural and micro-credit scheme 1.00% 1.00%

Unclassified loans under short-term agricultural and micro-credit scheme 2.50% 5.00%


In accordance with BRPD circular no. 05 dated 29 May 2013, the rates of provision on the outstanding amount of loans kept in the 'Special Mention Account' will be the same as the rates stated above depending on the types of loans and advances.

2015 2014


Substandard loans and advances 20% 20%

Doubtful loans and advances 50% 50%

Bad / loss and advances 100% 100%

Short-term agricultural and micro-credits:

Substandard and Doubtful loans and advances 5% 5%


The above rates are the minimum prescribed rates. BRPD circular no. 14 dated 23 September 2012 also provides scope for further provisioning based on qualitative judgements. If the specific provisions assessed under the qualitative methodology are higher than the specific provisions assessed under the formulaic approach above, the higher of the two is recognised.

4.3.2 Loan write-off

Loans are normally written off, when there is no realistic prospect of recovery of these amounts and in accordance with BRPD circular no. 02 dated 13 January 2003 and BRPD circular no. 13 dated 7 November 2013.

4.4 Provisions for other assets

BRPD circular no. 14 dated 25 June 2001 requires a provision of 100% on other assets which are outstanding for one year and above. The Bank maintains provisions in line with this circular unless it assesses there is no doubt of recovery on items of other assets in which case no provision is kept.

4.5 Provisions on nostro accounts

Unsettled debit transactions (as per Bank's book and nostro statements) for more than three months on nostro accounts are reviewed at each balance sheet date by management and provisions are kept in accordance with Bangladesh Bank Foreign Exchange Policy Department, circular no. FEPD (FEMO)/01/2005-677 dated 13 September 2005.

4.6 Borrowings from other banks, financial institutions and agents

Borrowings from other banks, financial institutions and agents includes interest-bearing borrowings from Bangladesh Bank and other banks and call borrowing from other banks. These items are brought to financial statements at the gross value of the outstanding balance.



Interest expense on deposits

Interest expenses for all deposits are recognised in the profit and loss account on an accrual basis.




4.9 Off setting financial assets and financial liabilities

Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when there is a legally enforceable right to offset the recognised amounts; there is an intention either to settle on a net basis, or realise the asset and settle the liability simultaneously.



2014TakaUSD

2015TakaUSD

2014TakaUSD

2015TakaUSD


For the purpose of the cash flow statement, cash and cash equivalents include notes and coins on hand and balances held with other banks and financial institutions and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

4.11 Taxation

Income tax expense comprises current tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of prior years.



number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2018 and earlier application is permitted. However, the Bank has not early applied the following new standards in preparing these financial statements:


BFRS 9 published in July 2014, replaces the existing guidance in BAS 39 Financial lnstruments: Recognition and Measurement. BFRS 9 includes revised guidance on the classification and measurement of the financial instruments, a new expected credit loss model for calculating impairment of financial assets, and the new general hedge accounting requirements. lt also carries forward the guidance on recognition and derecognition of financial instruments from BAS 39. BFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Bank is yet to assess the potential impact of BFRS 9 on its financial statements,


BFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. lt replaces existing recognition guidance, including BAS 18 Revenue, BAS 11 Construction Contracts and BFRI 13 Customer Loyalty Programmes. BFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Bank is yet to assess the potential impact of BFRS 15 on its financial statements.

5 Balance with other banks and financial institutions

In Bangladesh 30,156,576 2,367,291,232 28,560,270 2,226,273,058

Outside Bangladesh 17,542,603 1,377,094,370 4,418,254 344,402,887

47,699,179 3,744,385,602 32,978,524 2,570,675,945

Inside Bangladesh

Short term deposit account:

Standard Chartered Bank - Onshore, Dhaka 30,156,576 2,367,291,232 28,560,270 2,226,273,058

Outside Bangladesh

Group nostro- current account:

Standard Chartered Bank- London 2,292,749 179,980,813 107,785 8,401,857

Standard Chartered Bank- Frankfurt 709,054 55,660,759 571,007 44,509,995 Standard Chartered Bank- Tokyo - - - -

Standard Chartered Bank- New York 14,540,800 1,141,452,798 3,739,462 291,491,035

17,542,603 1,377,094,370 4,418,254 344,402,887

5.1 Residual maturity

Repayable on demand 17,542,603 1,377,094,370 4,418,254 344,402,887

Not more than one month 30,156,576 2,367,291,232 28,560,270 2,226,273,058

Over one month but not more than three months - - - -

Over three months but not more than one year - - - -

Over one year but not more than five years - - - -

Over five years - - - -

47,699,179 3,744,385,602 32,978,524 2,570,675,945

6 Loans, cash credit, overdrafts, etc.

Term loans 36,544,641 2,868,754,325 27,107,132 2,113,000,900

Revolving loans 21,742,987 1,706,824,459 2,279,411 177,680,092

Loans against trust receipts 40,165,391 3,152,983,166 50,913,215 3,968,685,146

Overdraft 2,340,150 183,701,820 3,407,259 265,595,846

100,793,169 7,912,263,770 83,707,017 6,524,961,984

6.1 Loans, cash credit, overdraft, etc. - inside and outside Bangladesh

Inside Bangladesh 100,793,169 7,912,263,770 83,707,017 6,524,961,984

Outside Bangladesh - - - -

100,793,169 7,912,263,770 83,707,017 6,524,961,984

6.2 Loans, cash credit, overdraft, etc. - residual maturity grouping

Repayable on demand 5,010,378 393,314,683 3,808,289 296,856,115

Not more than 3 months 41,444,094 3,253,361,378 39,665,227 3,091,904,434

More than 3 months but not more than 1 year 20,836,879 1,635,695,026 13,837,133 1,078,604,486

More than 1 year but not more than 5 years 33,501,818 2,629,892,683 18,371,400 1,432,050,634

More than 5 years - - 8,024,968 625,546,315

100,793,169 7,912,263,770 83,707,017 6,524,961,984

6.3 Loans and advances - significant concentration classification

6.3.1 Customers' group wise classification

Loans and advances to small and medium enterprises 11,380,413 893,362,421 2,550,180 198,786,516

Loans and advances to corporate customers 476,003,266 37,366,256,366 505,224,454 39,382,246,178

487,383,679 38,259,618,787 507,774,634 39,581,032,694

Loans and advances to small and medium enterprises - product wise classification

Term loans 642,315 50,421,760 - -

Revolving Loan 629,006 49,376,948 - -

Loans against trust receipts 716,279 56,227,913 - -

Overdraft 581,623 45,657,427 1,655,134 129,017,712

Bill purchased and discounted 8,811,189 691,678,372 895,046 69,768,804

11,380,413 893,362,421 2,550,180 198,786,516

Loans and advances to corporate customers - product wise classification

Term loans 35,902,326 2,818,332,564 27,107,132 2,113,000,900

Revolving loans 21,113,981 1,657,447,511 2,279,411 177,680,092

Loans against trust receipts 39,449,112 3,096,755,253 50,913,215 3,968,685,146

Overdraft 1,758,527 138,044,394 1,752,125 136,578,134

Bill purchased and discounted 377,779,320 29,655,676,644 423,172,571 32,986,301,906

476,003,266 37,366,256,366 505,224,454 39,382,246,178

6.3.2 Loans and advances - sector wise classification

Agriculture, hunting, forestry and fishing - - - -

Manufacturing 105,938,792 8,316,195,190 104,436,255 8,140,806,085

Electricity, gas and water - - - -

Construction - - - -

Commerce / trading - - - -

Transport and communications 3,960,000 310,860,000 - -

Community, social and personal services - - - -

Financing, insurance and business service - - - -

Banks 377,484,887 29,632,563,597 403,338,379 31,440,226,609

487,383,679 38,259,618,787 507,774,634 39,581,032,694

6.3.3 Loans and advances - geographical location wise classification

Dhaka 487,383,679 38,259,618,787 507,774,634 39,581,032,694

487,383,679 38,259,618,787 507,774,634 39,581,032,694

6.4 Loans and advances - unclassified and

classified classification

Unclassified

Standard 487,383,679 38,259,618,787 507,774,634 39,581,032,694

Special mention account (SMA) - - - -

487,383,679 38,259,618,787 507,774,634 39,581,032,694

Classified

Substandard - - - -

Doubtful - - - -

Bad/loss - - - -

- - - -

487,383,679 38,259,618,787 507,774,634 39,581,032,694

6.5 Particulars of loans and advances

i) Loans considered good in respect of which

the Bank is fully secured; 300,000 23,550,000 - -

ii) Loans considered good against which the Bank holds

no security other than the debtor's personal guarantee; 7,746,502 608,100,428 2,550,180 198,786,517

iii) Loans considered good secured by the personal

undertakings of one or more parties in addition to

the personal guarantee of the debtor; - - - -

iv) Loans adversely classified; provision not maintained

there against; - - - -

v) Loans due by directors or officers of the Bank or any of

these either separately or jointly with any other persons; - - - -

vi) Loans due from companies or firms in which the directors

of the Bank have interests as directors, partners or managing

agents or in case of private companies as members; - - - -

vii) Maximum total amount of advance including temporary

advance 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 person; - - - -

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 have interest as

directors, partners or managing agents or in the case

of private companies as members; - - - -

ix) Due from banking companies 377,484,887 29,632,563,597 403,338,379 31,440,226,610

x) Classified loans for which interest has not been charged:

a) Increase / decrease of provision (specific) - - - -

Amount of loans written off - - - -

Amount realised against loan previously written off - - - -

b) Provision against the loan classified as bad / loss

on the date of preparing the balance sheet 1 79 1 78

c) Amount of interest charged in suspense account - - - -

xi) Loans written off:

Current year - - - -

Cumulative to-date 44,804 3,517,141 45,120 3,517,141

The amount of written off loan for which law suit has been filed - - - -

7 Bills purchased and discounted

(i) Inside and outside Bangladesh

Repayable in Bangladesh 386,590,510 30,347,355,016 424,067,617 33,056,070,710

Repayable outside Bangladesh - - - -

386,590,510 30,347,355,016 424,067,617 33,056,070,710

(ii) Maturity wise

Repayable within 1 month 11,332,002 889,562,148 4,779,974 372,598,984

Over 1 month but less than 3 months 237,695,921 18,659,129,818 251,571,838 19,610,024,739

Over 3 months but less than 6 months 137,562,587 10,798,663,050 167,715,805 13,073,446,987

6 months or more - - - -

386,590,510 30,347,355,016 424,067,617 33,056,070,710

8 Other assets

Stationery, stamps, printing materials in stock 3,613 283,580 4,232 330,128

Interest receivable - loans and advances 4,500,828 353,314,921 5,111,052 398,406,470

Interest receivable - SCB Branches 206 16,136 159 12,368

Suspense account - - 13,403 1,044,760

Commission receivable 230 18,055 116 8,980

Security deposits 4,435 348,147 4,283 333,860

4,509,312 353,980,839 5,133,245 400,136,566

8.1 Other assets which are not capable of earning income (non interest bearing other assets)

Interest receivable - loans and advances 4,500,828 353,314,921 5,111,052 398,406,470

Interest receivable - SCB Branches 206 16,136 159 12,368

Suspense account - - 13,403 1,044,760

Stationery, stamps, printing materials in stock 3,613 283,580 4,232 330,128

Commission receivable 230 18,055 116 8,980

Security deposits 4,435 348,147 4,283 333,860

4,509,312 353,980,839 5,133,245 400,136,566

9 Borrowings from other banks, financial institutions and agents

Money market deposits (Note 9.1) 226,124,645 17,750,784,649 154,243,119 12,023,251,185

Other deposits (Vostro account) (Note 9.2) 212,031,895 16,644,503,739 327,030,185 25,492,002,893

438,156,540 34,395,288,388 481,273,304 37,515,254,078

9.1 Money market deposits

(a) Money market deposits - Call - - - -

(b) Money market deposits - Term

Pubali Bank Ltd - Dhaka - - 29,928 2,332,895

Nepal Rastra Bank KTM 155,255,435 12,187,551,665 99,053,469 7,721,217,943

Royal Monetary Authority of Bhutan 70,869,210 5,563,232,984 55,159,722 4,299,700,347

226,124,645 17,750,784,649 154,243,119 12,023,251,185

9.2 Other deposits (Vostro account)

(a) Group Vostro

Standard Chartered Bank - Onshore, Dhaka - - 227,000,000 17,694,650,000

Standard Chartered Bank - London 212,000,000 16,642,000,000 100,000,000 7,795,000,000

Standard Chartered Bank-Tokyo 31,895 2,503,739 30,185 2,352,893

212,031,895 16,644,503,739 327,030,185 25,492,002,893

(b) Non Group Vostro - - - -

212,031,895 16,644,503,739 327,030,185 25,492,002,893

9.3 Borrowings from other banks, financial institutions and agents - inside and outside Bangladesh

(i) Inside Bangladesh - - 227,029,928 17,696,982,895

(ii) Outside Bangladesh 438,156,540 34,395,288,388 254,243,376 19,818,271,183

438,156,540 34,395,288,388 481,273,304 37,515,254,078

9.4 Classification under secured / unsecured borrowing

(i) Secured 212,031,895 16,644,503,739 327,030,185 25,492,002,893

(ii) Unsecured 226,124,645 17,750,784,649 154,243,119 12,023,251,185

438,156,540 34,395,288,388 481,273,304 37,515,254,078

9.5 Residual Maturity - wise classification

Payable on demand - - - -

Payable within 1 month 140,253,997 11,009,938,737 357,060,113 27,832,835,788

Payable within 1 to 3 months 80,475,985 6,317,364,799 69,053,469 5,382,717,943

Payable within 3 to 12 months 217,426,558 17,067,984,852 55,159,722 4,299,700,347

Payable within 1 to 5 years - - - -

Payable over 5 years - - - -

438,156,540 34,395,288,388 481,273,304 37,515,254,078


Current and other accounts 32,353,773 2,539,771,182 15,196,167 1,184,541,240

Term deposits - - - -

Other deposits 252,838 19,847,767 452,831 35,298,147

32,606,611 2,559,618,949 15,648,998 1,219,839,387


2014TakaUSD

2015TakaUSD

10.1 Residual maturity grouping of deposits and other

accounts (Other than bank deposit)

Payable on demand 31,021,647 2,435,199,325 15,644,830 1,219,514,531

Payable within 1 month - - - -

Payable within more than 1 month but less than 6 months - - - -

Payable within more than 6 months but less than 1 year - - - -

Payable within more than 1 year but within 5 years 1,584,964 124,419,624 4,168 324,856

Payable within more than 5 years but within 10 years - - - -

32,606,611 2,559,618,949 15,648,998 1,219,839,387


Interest payable 370,801 29,107,896 263,217 20,517,775

Interest received in advance - - - -

Tax deducted at source 227,959 17,894,786 137,342 10,705,817

Provision for loans and advances and off balance sheet

exposures (Note - 11.1) 5,943,176 466,539,244 5,920,889 461,533,330

Specific Provision for loans and advances 1 79 1 78

Suspense account 15,433 1,211,499 - -

Intra branch balances in Bangladesh 24,179,829 1,898,116,584 17,906,226 1,395,790,320

Income tax provision (Note - 11.2) 9,058,894 711,123,185 8,710,160 678,956,943

VAT payable 21 1,669 19 1,469

Unamortised Fees / Costs - - 9,459 737,296

Disputed tax on profit remittance 2,759,753 216,640,636 2,759,753 215,122,772

Sundry Creditors Client-Manual 519,398 40,759,698 - -

Others 29,059 2,281,100 12,853 1,001,916

43,104,324 3,383,676,375 35,719,919 2,784,367,716

11.1 Provision for loans and advances and off balance sheet exposures

Movement in general provision for unclassified

loans and advances

Opening balance 5,920,890 461,533,330 4,889,661 380,220,090

Provision charged / (released) during the year (167,530) (13,151,134) 988,584 77,060,130

Provision on off-balance sheet exposures

charged / (released) during the year 231,300 18,157,048 54,562 4,253,110

Charge in profit and loss account 63,770 5,005,914 1,043,146 81,313,240

Translation adjustments (41,484) - (11,918) -

Total General provisions 5,943,176 466,539,244 5,920,889 461,533,330

Movement in specific provision for bad and

doubtful debts

Opening balance 1 78 1 78

Provision made during the year - - - -

Recovery against fully provided loans - - - -

Net charge in profit and loss account - - - -

Fully provided loan written off - - - -

Recovery of loans previously written-off - - - -

Translation increase / (decrease) - - - -

Total specific provisions 1 78 1 78

Total provisions 5,943,177 466,539,322 5,920,890 461,533,408

11.1.1 Adequacy of provision vis a vis provision required to be maintained

General provision Base for provision

2015 only

On off balance sheet exposures- @ 1% 8,394,305,596 1,069,338 83,943,056 843,951 65,786,008

On loans and advances (excluding SMA)

- at various rates 38,259,618,787 4,873,837 382,596,188 5,076,938 395,747,322

Special mention accounts- - - - - -

at various rates 5,943,175 466,539,244 5,920,889 461,533,330

Specific provision

On sub-standard loans and advances @ 20% - - - -

On doubtful loans and advances @ 50% - - - -

On bad / loss loans and advances - @ 100% - - - -

- - - -

Total provision required to be maintained 5,943,175 466,539,244 5,920,889 461,533,330

Total provision maintained 5,943,177 466,539,322 5,920,890 461,533,408

Excess / (deficit) provision at 31 December 2015 2 78 1 78

11.2 Provision for income tax

Opening balance 8,649,133 678,956,943 6,840,392 531,908,851

Provision made during the year 9,059,801 711,194,385 8,711,067 679,027,951

Amount paid during the year (8,650,040) (679,028,143) (6,841,299) (531,979,859)

9,058,894 711,123,185 8,710,160 678,956,943

12 Interest income

Term loans 1,453,235 113,305,396 1,351,706 104,912,554

Revolving loans 109,290 8,530,336 54,286 4,209,396

Loans against trust receipts 1,692,580 131,951,801 2,112,170 163,943,207

Overdraft 133,226 10,389,841 171,585 13,325,867

Bills discounted and purchased 18,680,428 1,455,632,281 16,517,996 1,282,114,844

Export finance 222,971 17,384,439 50,090 3,890,674

Bank placement 36,569 2,851,800 20,460 1,587,816

Interest received on money market loans - - - -

22,328,299 1,740,045,894 20,278,293 1,573,984,358

13 Interest expense on deposits and borrowings

Money market deposits 2,416,037 188,303,903 1,181,025 91,647,008

Fixed deposits - - - -

2,416,037 188,303,903 1,181,025 91,647,008

14 Commission, exchange and brokerage

Commission and exchange income (loss)* 1,683,831 143,472,901 1,556,687 127,585,206

1,683,831 143,472,901 1,556,687 127,585,206

*Commission and exchange income (loss) include commission income of Tk 131,265,960 (2014: Tk 120,825,944).

15 Other expenses

Travelling and transportation 1,934 150,752 4,981 386,562

Support services 708 55,100 31 2,418

Subscription 304 23,718 224 17,395

Entertainment 2,005 156,249 1,587 123,162

Security services 8,485 663,918 12,480 968,500

Interest on leases 1,279 99,732 3,397 263,697

Computer expenses - - 54 4,187

Sundry expenses 16,697 1,301,524 14,587 1,131,533

31,412 2,450,993 37,341 2,897,454


Cash in hand (including foreign currencies) - - - -

Balance with Bangladesh Bank and its agent banks - - - -

Balance with other banks and financial institutions 47,699,179 3,744,385,602 32,978,524 2,570,675,945

47,699,179 3,744,385,602 32,978,524 2,570,675,945

17 Related party transactions


The related parties of the off-shore banking unit include Standard Chartered (SC Plc), other SCB group entities including SCB Bangladesh Branches onshore banking unit, key management personnel of SC Plc and the Bank as well as their close family members.

17.2 Transactions with key management personnel

The key management personnel of the Bank for the purposes of BAS 24 are defined as those persons having authority and responsibility for planning, directing and controlling the Bank. SCB offshore banking unit, not being incorporated locally, operate in Bangladesh under the banking licence issued by Bangladesh Bank and therefore for this Bank the key management personnel, who do qualify as related party under BAS 24, refer to SCB officials located outside Bangladesh.

There were no transactions between the Bank and the key management personnel in 2015 (2014 - nil).

17.3 Transactions with group entities other than the SCB Bangladesh on-shore banking unit

The bank provides and receives certain banking and financial services to / from entities within the Group. As at the year end the balances with these entities is disclosed in Notes - 5 and 9.

17.4 Transactions with the on-shore banking unit

Transactions with the on-shore banking unit comprise of inter-unit fund transfers in the normal course of business as well as the defrayal of certain expenses by the on-shore banking unit on behalf of the OBU. These include income taxes paid by the Bank on behalf of the OBU as well as expenses incurred for administrative purposes. The year end balances of transactions with OBU are disclosed in Notes - 5, 9 and 11.

18 Contingencies

There are no material contingent liabilities at the year end, other than those disclosed as off balance sheet Items on the balance sheet.

19 General

19.1 The assets and liabilities as at 31 December 2015 in foreign currencies have been converted to BDT at the following rates:

2015 2014 Taka Taka

USD 1 = 78.5 77.95

EUR 1 = 85.7495 94.7853

JPY 1 = 0.6521 0.6513

GBP 1 = 116.4234 121.068

SGD 1 = 55.5752 58.888

AUD 1 = 57.4581 63.6774

CAD 1 = 56.5562 67.0437

NOK 1 = 8.9198 10.4793

HKD 1 = 10.1278 10.0492

DKK 1 = 11.4926 12.7342

SEK 1 = 9.349 9.9626

SAR 1 = 20.911 20.7701

MYR 1 = 24.4793 24.4793

19.2 Figures of previous year have been rearranged whenever considered necessary to conform to current year's presentation.

19.3 Figures appearing in these accounts have been rounded off to the nearest integer.

20 Highlights on the overall activities

Highlights on the overall activities of the Bank have been furnished in Annexure - C.

21 Events after the balance sheet date

There are no material events that had occurred after reporting period to the date of issue of these financial statements, which could affect the figures stated in the financial statements.




Liquidity Statement




Annexure - A

Balance with other banks and financial institutions

Annexure - B


Annexure - C

USD Taka USD Taka USD Taka USD Taka USD Taka USD Taka

Assets

Cash in hand - - - - - - - - - - - -

Balance with other banksand financial institutions 17,542,603 1,377,094,370 30,156,576 2,367,291,232 - - - - - - 47,699,179 3,744,385,602

Money at call and short notice - - - - - - - - - - - -

Investment - - - - - - - - - - - -

Loans and advances 16,342,380 1,282,876,831 279,140,015 21,912,491,196 158,399,466 12,434,358,076 33,501,818 2,629,892,683 - - 487,383,679 38,259,618,787

Fixed assets including premises, furnitureand fixtures - - - - - - - - - - - -

Other assets 4,509,312 353,980,839 - - - - - - - - 4,509,312 353,980,839

Non-banking assets - - - - - - - - - - - -

Total assets 38,394,295 3,013,952,040 309,296,591 24,279,782,428 158,399,466 12,434,358,076 33,501,818 2,629,892,683 - - 539,592,170 42,357,985,227

Liabilities

Borrowings from other banks and financialinstitutions 140,253,997 11,009,938,737 80,475,985 6,317,364,799 217,426,558 17,067,984,852 - - - - 438,156,540 34,395,288,388

Deposits and other accounts 31,021,647 2,435,199,325 - - - - - - 1,584,964 124,419,624 32,606,611 2,559,618,950

Provision and other liabilities 43,104,324 3,383,676,375 - - 25,724,695 2,019,401,515 - - - - 68,829,019 5,403,077,890(including equity)

Total liabilities 214,379,968 16,828,814,437 80,475,985 6,317,364,799 243,151,253 19,087,386,366 - - 1,584,964 124,419,624 539,592,170 42,357,985,227

Net liquidity gap (175,985,673) (13,814,862,398) 228,820,607 17,962,417,629 (84,751,787) (6,653,028,290) 33,501,818 2,629,892,683 (1,584,964) (124,419,624) 0 0

TotalParticularsMaturity Maturity within Maturity within Maturity within Maturity

over 5 yearsup to 1 month 1 to 3 months 3 to 12 months 1 to 5 years

Foreign currency

Exchange rate


Foreign currency

Exchange rate


Standard Chartered Bank - DBU Dhaka USD 30,156,576 78.50 2,367,291,232 28,560,270 77.95 2,226,273,059Standard Chartered Bank- London GBP 1,545,916 116.42 179,980,813 69,398 121.07 8,401,856Standard Chartered Bank- Frankfut EUR 649,109 85.75 55,660,759 469,588 94.79 44,509,996Standard Chartered Bank- Tokyo JPY - 0.652 - - 0.651 -Standard Chartered Bank- New York USD 14,540,800 78.50 1,141,452,798 3,739,462 77.95 291,491,036

Total 3,744,385,603 2,570,675,947

Particulars Currency name

31-Dec-15 31-Dec-14

Sl. Particulars

USD Taka USD Taka

1 Total assets 539,592,170 42,357,985,227 545,886,403 42,551,845,206

2 Total deposits 32,606,611 2,559,618,949 15,648,998 1,219,839,387

3 Total loans and advances 487,383,679 38,259,618,786 507,774,634 39,581,032,694

4 Total contingent liabilities and commitments 106,933,829 8,394,305,596 84,395,136 6,578,600,835

5 Percentage of classified loans against total loans and advances 0% 0% 0% 0%

6 Net profit after tax 12,257,213 962,204,166 10,742,410 837,370,909

7 Amount of classified loans during current year - - - -

8 Provisions kept against classified loans 1 78 1 78

9 Provision surplus / deficit 2 78 1 78

10 Interest expenses 2,416,037 188,303,903 1,181,025 91,647,008

11 Interest bearing assets 517,540,255 40,626,910,018 536,334,904 41,807,305,752

12 Non-interest bearing assets 22,051,915 1,731,075,209 9,551,499 744,539,453

2015 2014


Balance with other banks and financial institutionsas at 31 December 2015




1 Background

Standard Chartered Bank (SCB), Bangladesh, Islamic Banking Unit (""the Bank"") commenced its banking operations in Bangladesh on 26 February 2004 after obtaining the banking license on 18 November 2003 from Bangladesh Bank, the Central Bank of Bangladesh.

Standard Chartered Bank (SCB), Bangladesh Branches commenced its banking operations in Dhaka in 1948 after obtaining license from the central bank. Standard Chartered Bank is incorporated in England by Royal Charter 1853.

2 Nature of business

Standard Chartered Bank offers Islamic financial solutions under the brand name 'Saadiq'. Currently the Bank is offering both deposit products and financing products.


3.1 Reporting period

These financial statements cover one calendar year from 1 January 2015 to 31 December 2015. These financial statements are authorised for issue by management of Standard Chartered Bank on 28 April 2016.

3.2 Statement of compliance

The Financial Reporting Act 2015 (FRA) has been enacted during the year. Under the FRA, the Financial Reporting Council (FRC) is to be formed and it is to issue financial reporting standards for public interest entities such as banks. The Bank Companies Act 1991 has been amended to require banks to prepare their financial statements under such financial reporting standards.

The FRC is yet to be formed and as such no financial reporting standards have been issued as per the provisions of the FRA. Hence, the financial statements of the Bank continue to be prepared in accordance with Bangladesh Financial Reporting Standards (BFRS) and the requirements of the Bank Companies Act 1991, the rules and regulations issued by Bangladesh Bank and the Companies Act 1994. In case any requirement of the Bank Companies Act 1991, and provisions and circulars issued by Bangladesh Bank differ with those of BFRS, the requirements of the Bank Companies Act 1991, and provisions and circulars issued by Bangladesh Bank shall prevail. Material deviations from the requirements of BFRS are as follows:

i) Investment in shares and securities

BFRS: As per requirements of BAS 39 Financial Instruments: Recognition and Measurement, investment in shares and securities generally falls either under at Fair Value Through Profit or Loss (FVTPL) or under Available For Sale (AFS) where any change in the fair value (as measured in accordance with BFRS 13 Fair Value Measurement) at the year-end is taken to profit and loss account or revaluation reserve, respectively.

Bangladesh Bank: As per BRPD circular no. 14 dated 25 June 2003, investments in quoted shares and unquoted shares are revalued at the year end at market price and as per book value of last audited balance sheet, respectively. Provision should be made for any loss arising from diminution in value of investment.

ii) Revaluation gains/losses on Islamic Bond

BFRS: 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 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.

Bangladesh Bank: HFT securities are revalued on the basis of mark to market and at year end any gains on revaluation of securities which have not matured as at the balance sheet date are recognised in other reserves as part of equity and any losses on revaluation of securities which have not matured as at the balance sheet date are charged in the profit and loss account. Profit on HFT securities including amortisation of discount are recognised in the profit and loss account. HTM securities which have not matured as at the balance sheet date are amortised at the year end and gains or losses on amortisation are recognised in other reserve as a part of equity.

iii) Provision on investments

BFRS: 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.

Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, BRPD circular no. 19 dated 27 December 2012 and BRPD circular no. 05 dated 29 May 2013 and BRPD circular no. 16 dated 18 November 2014, a general provision at 0.25% to 5% under different categories of unclassified investments (standard/SMA investments) has to be maintained regardless of objective evidence of impairment. Also provision for sub-standard investments, doubtful investments and bad / loss investments has to be provided at 20%, 50% and 100%, respectively for investments depending on the duration of overdue. Again as per BRPD circular no. 14 dated 23 September 2012, a general provision at 1% is required to be maintained for all off-balance sheet exposures. Such provision policies are not specifically in line with those prescribed by BAS 39.

iv) Recognition of profit/rent suspense

BFRS: Loans and advances to customers are generally classified as loans and receivables as per BAS 39 and interest income on loans and advances is recognised through effective interest method over the term of the loan. Once a loan is impaired, interest income is recognised in the profit and loss account on the same basis based on revised carrying amount.

Bangladesh Bank: As per BRPD circular no. 14 dated 23 September 2012, once an investment is classified, profit/rent on such investments are not allowed to be recognised as income; rather the corresponding amount needs to be credited to profit/rent suspense account, which is presented as liability in the balance sheet.

v) Other comprehensive income

BFRS: As per BAS 1 Presentation of Financial Statements, Other Comprehensive Income (OCI) is a component of financial statements or the elements of OCI are to be included in a single Other Comprehensive Income Statement.


vi) Financial instruments – presentation and disclosure

Bangladesh Bank guidelines categorise, recognise, measure and present financial instruments differently from those prescribed in BAS 32 Financial Instruments: Presentation, BAS 39 and BFRS 7 Financial Instruments: Disclosures. As such full disclosure and presentation requirements of BFRS 7 and BAS 32 are not made in the financial statements.

vii) Cash flow statement

BFRS: As per BAS 7 Statement of Cash Flow, cash flow statement can be prepared using either the direct method or the indirect method. The presentation is selected to present cash flows in a manner that is the most appropriate for the business or industry. The method selected is applied consistently.

Bangladesh Bank: As per BRPD circular no. 15 dated 9 November 2009, cash flow is the mixture of direct and indirect methods.

viii) Off-balance sheet items

BFRS: As per BFRS there is no requirement for disclosure of off-balance sheet items on the face of the balance sheet.

Bangladesh Bank: As per BRPD circular no. 15 dated 9 November 2009, off-balance sheet items (e.g. letter of credit, letter of guarantee etc.) must be disclosed separately on the face of the balance sheet.

ix) Investments net of provision

BFRS: As per BAS 39, loans and advances should be presented net of impairment loss.

Bangladesh Bank: As per BRPD circular no. 15 dated 9 November 2009, provision on investments is presented separately as liability and can not be netted off against investments.

3.3 Basis of measurement

The financial statements of the Bank have been prepared on the historical cost basis except for the following:

- Government Islamic Bonds designated as HFT and subsequently measured at fair value using marking to market concept with gains credited to revaluation reserve as per DOS circular 05 dated 26 May 2008 and DOS circular 05 dated 28 January 2009; and

- Government Islamic Bonds designated as HTM and subsequently measured using amortisation concept as DOS circular 05 dated 26 May 2008 and DOS circular 05 dated 28 January 2009.

3.4 Functional and reporting currency

The financial statements of the Bank are presented in Bangladeshi Taka (BDT) which is the Bank’s functional and reporting currency.

3.5 Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect 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 are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the periods in which the estimates are revised and in any future periods affected.

In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described below:

Standard Chartered BankSaadiq Branch


Independent Auditor's Report to the Management ofStandard Chartered Bank

Saadiq BranchReport on the Financial StatementsWe have audited the accompanying financial statements of Standard Chartered Bank, Saadiq Branch (“the Bank") which comprise the balance sheet as at 31 December 2015, and the profit and loss account, cash flow statement and statement of changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements and Internal ControlsManagement is responsible for the preparation of financial statements that give a true and fair view in accordance with Bangladesh Financial Reporting Standards as explained in note 3.2, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 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 ResponsibilityOur responsibility is to express an opinion on these financial statements 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 financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. 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 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 financial statements give a true and fair view of the financial position of the Bank as at 31 December 2015, and of its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards as explained in note 3.2.

Report on Other Legal and Regulatory RequirementsIn accordance with the Companies Act, 1994, the Bank Company Act, 1991 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 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 Responsibility for the Financial Statements and Internal Controls section:

i) internal audit, internal control and risk management arrangements of the Bank appeared to be materially adequate; and

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;




(f) adequate provisions have been made for investments which are, in our opinion, doubtful of recovery; (g) the records and statements submitted by the branches have been properly maintained and consolidated in

the financial statements; (h) the information and explanation required by us have been received and found satisfactory; and (i) we have reviewed over 80% of the risk weighted assets of the Bank and we have spent around 100 person

hours for the audit of the books and accounts of the Bank.

Standard Chartered BankSaadiq BranchBalance Sheet



Balance Sheet


2015Taka

2014Taka

Cash 5Cash in hand (including foreign currencies) 2,626,385 2,516,289

Balance with Bangladesh Bank and its agent banks

(including foreign currencies) 1,020,000,000 430,000,000 1,022,626,385 432,516,289

Balance with other banks and financial institutionsIn Bangladesh - -

Outside Bangladesh - -

- -

Placements with banks and other financial institutions - -

Investments in shares and securities 6Government securities - 360,000,000

Other investments - -

- 360,000,000

Investments 7General investments etc. 5,851,467,007 5,798,275,308

Bills purchased and discounted - -

5,851,467,007 5,798,275,308

Fixed assets including premises 8 329,475 633,605

Other assets 9 1,329,125,016 1,098,963,748Non-banking assets - -Total assets 8,203,547,883 7,690,388,950

LIABILITIES AND CAPITALLiabilitiesPlacement from banks and other financial institutions - -Deposits and other accounts 10Current accounts (Quard) 620,977,265 589,409,984

Mudaraba savings deposits 5,333,407,272 4,950,507,049

Mudaraba term deposits 873,431,149 983,490,711

Short term deposits 21,363,873 3,965,069

Other deposits 3,305,566 405,803

6,852,485,125 6,527,778,616

Other liabilities 11 1,351,062,758 1,162,610,334

Total liabilities 8,203,547,883 7,690,388,950

EquityPaid up capital - -

Statutory reserve - -

Other reserve - -

Retained earnings - -

Total equity - -

Total liabilities and equity 8,203,547,883 7,690,388,950

OFF-BALANCE SHEET ITEMSContingent liabilitiesAcceptances and endorsements 1,422,516,477 1,337,216,845

Irrevocable letters of credit 1,063,802,963 779,732,130

2,486,319,440 2,116,948,975Other commitments - -

Total off-balance sheet items 2,486,319,440 2,116,948,975

The annexed notes 1 to 24 form an integral part of these financial statements.


Financial Statements 2015











Cash Flow Statementfor the year ended 31 December 2015

Cash Flow Statement

2015Taka

2014Taka

2015Taka

2014Taka

Investment income 12 630,309,972 658,842,659

Profit paid on deposits 13 208,481,828 271,309,366

Net investment income 421,828,144 387,533,293

Income/(loss) from investments in shares and securities 14 (9,283,012) 10,609,036

Commission, exchange and brokerage 15 279,532,883 252,611,178

Other operating income - -

270,249,871 263,220,214

Total operating income 692,078,015 650,753,507

Salary and allowances 1,492,420 4,895,547

Rent, taxes, insurances, electricity etc. 16 4,833,312 4,677,352

Legal expenses 15,965 -

Postage, stamps and telecommunication etc. 17 164,339 220,322

Stationery, printing and advertisement etc. 18 105,556 545,676

Repair, maintenance and depreciation 19 3,227,646 4,339,804

Other operating expenses 20 1,845,674 2,002,084

Total operating expenses 11,684,912 16,680,785

Profit/(loss) before provision 680,393,103 634,072,722

Provision for investments and off balance sheet exposures 11.1 26,866,283 55,474,918

Other provisions - -

Total provision 26,866,283 55,474,918

Total profit/(loss) before tax 653,526,820 578,597,804

Provision for income tax 11.3 289,167,068 269,480,907

Net profit/(loss) after tax for the year 364,359,752 309,116,897

The annexed notes 1 to 24 form an integral part of these financial statements.

A) Cash flows from operating activities

Investment income 636,564,760 663,277,780

Profit paid on deposits (216,958,474) (318,411,069)

Commission, exchange and brokerage received 286,904,176 242,828,318

Cash paid to employees (1,492,420) (4,895,547)

Cash paid to suppliers (13,007,328) (11,481,107)

Income tax paid (269,480,907) (212,597,803)

Operating profit before changes in operating assets and liabilities 422,529,807 358,720,571

Increase/decrease in operating assets and liabilities

General investments (102,936,602) (1,091,917,139)

Investments to customers - 726,139,299

Other assets (255,285,570) -

Investments to other banks and financial institutions - -

Deposits received from customers 324,706,510 360,745,194

Deposits from other banks and financial institutions - -

Other liabilities 201,720,346 (737,076,048)

Net cash receipt/(payment) from changes in operating assets and liabilities 168,204,684 (742,108,694)

Net cash from operating activities 590,734,491 (383,388,122)

B) Cash flow from investing activities

Income from investments - -

Investment in Islamic bond 363,735,356 251,758,430

Proceeds from disposal of fixed assets - -

Purchase of fixed assets - -

Net cash used in investing activities 363,735,356 251,758,430

C) Cash flow from financing activities

Profit transferred to Onshore Banking Unit (364,359,752) (309,116,897)

Net cash flow from financing activities (364,359,752) (309,116,897)

D) Net increase/(decrease) in cash and cash equivalents (A+B+C) 590,110,094 (440,746,590)

E) Effect of exchange rate changes on cash and cash equivalents - -

F) Opening cash and cash equivalents 432,516,289 873,262,879

G) Closing cash and cash equivalents (D+E+F) (Note 21) 1,022,626,385 432,516,289




Balance as at 01 January 2014 - - - - Net profit for the year 2014 - - 309,116,897 309,116,897 Profit transferred to DhakaOnshore Banking Unit - - (309,116,897) (309,116,897)

Balance as at 31 December 2014 - - - - Balance as at 01 January 2015 - - - - Net profit for the year 2015 - - 364,359,752 364,359,752 Profit transferred to DhakaOnshore Banking Unit - - (364,359,752) (364,359,752)

Balance as at 31 December 2015 - - - -

ParticularsOther reserve

Taka

Retainedearnings

Taka

TotalTaka

CapitalTaka

Notes







2015Taka

2014Taka

7.3 Maturity grouping of investments

Repayable on demand 657,978,414 607,960,161

Residual maturity of

Not more than three months 1,209,090,367 1,084,760,192

More than 3 months but not more than 1 year 935,616,554 1,187,621,937

More than 1 year but not more than 5 years 2,933,085,293 2,782,830,428

More than 5 years 115,696,379 135,102,590

5,851,467,007 5,798,275,308

7.4 Division-wise classification of investments

Dhaka division 5,851,467,007 5,798,275,308

5,851,467,007 5,798,275,308

7.5 Group-wise classification of investments

a) Investment to Directors - -

b) Investment to Chief Executive and other senior executives - -

c) Investment to customers group (15% of equity and above) - -

Sub Total (a+b+c) - -

d) Industry-wise classification of investments category of industry

i) Garments 59,932,680 -

ii) Textiles - -

iii) Agro based industry 9,477,630 30,472,714

(iv) Pharmaceutical Industries 500,000,000 387,245,532

(v) Milk Processing Industries - 322,145,190

(vi) Other Business Institutions - 376,791,485

vii) Other industry * 5,282,056,697 4,681,620,387

Sub Total (i+ii+iii+iv+v+vi+vii) 5,851,467,007 5,798,275,308

Grand Total (a+b+c+d) 5,851,467,007 5,798,275,308

*This includes investments disbursed to individuals and small and medium enterprise customers.

7.6 Status-wise classification of investments

a) Unclassified:

Standard 5,412,138,372 5,534,259,383

Special mention account 102,633,885 59,164,900

Sub Total (a) 5,514,772,257 5,593,424,283

b) Classified:

Substandard 169,872,165 44,981,937

Doubtful 15,790,659 9,585,169

Bad/loss 151,031,926 150,283,919

Sub Total (b) 336,694,750 204,851,025

Grand Total (a+b) 5,851,467,007 5,798,275,308

7.7 Particulars of investments

a) Investments considered good in respect of

which the Bank is fully secured; 3,197,085,709 3,245,917,264

b) Investments considered good in respect of which

the Bank holds debtor's personal security; 999,367,087 1,230,852,097

c) Investments considered good and secured by

personal security of one or more persons in addition

to the personal security of debtors; - -

d) Investments considered bad or doubtful not provided for; - -

e) Investments due by directors or employees of

the Bank or any of them either severally or jointly

with any other persons; - -

f) Investments due by director or employees of the Bank

are interested as directors, partners or managing

agents or in case of private companies as members; - -

g) Total amount of investments, including temporary

investments, 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 person; - -

h) Total amount of investments, including temporary

investments 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 case - -

i) Investment due from other banks - -

j) Classified investment on which profit has not

been charged 336,694,750 204,851,025

k) Particulars of cumulative written off investments

i) Cumulative amount of investment written off

since inception to 31 December 22,422,014 17,568,906

ii) Amount written off during the year 50,159,612 4,853,108

Total amount of investments written off 72,581,626 22,422,014

iii) Amount recovered against such written

off investment up to this year 12,191,424 5,286,500

iv) The amount of written off investment for which

law suit has been filed - -

8 Fixed assets including premises

Premises fixed equipment 2,795,370 2,795,370

Computer and office equipment 76,350 76,350

Furniture and fittings 1,967,672 1,967,672

4,839,392 4,839,392

Less : Accumulated depreciation 4,509,917 4,205,787

329,475 633,605

Refer to Annexure - A for detailed analysis.

9 Other assets

Profit receivable on investment 28,825,561 46,578,569

Sundry debtors - -

Unamortised Fees / Costs 170,790 1,829,144

Intra branch balances in Bangladesh 1,285,146,922 1,028,202,998


1,329,125,016 1,098,963,748


Current accounts (Quard) 620,977,265 589,409,984

Mudaraba savings deposits 5,333,407,272 4,950,507,049

Mudaraba term deposits 873,431,149 983,490,711

Short term deposits 21,363,873 3,965,069

Other deposits 3,305,566 405,803

6,852,485,125 6,527,778,616

10.1 Maturity analysis of deposits and other accounts



Not more than one month 86,098,346 108,268,510

More than 1 month but not more than 6 months 402,969,102 475,059,362

More than 6 months but not more than 1 year 400,584,436 396,962,880

More than 1 year but not more than 5 years 3,000,000 -

More than 5 years but less than 10 years - -

Unclaimed deposits for 10 years or more - -

6,852,485,125 6,527,778,616


2015 2014

2015 2014

i) Provision on investments

The Bank assesses its investments for objective evidence of impairment on a regular basis and particularly at year end. While the primary criteria set out in BRPD circular no. 14 dated 23 September 2012, for determining whether an investment is impaired is objective, based on borrower's ability to make timely repayments, investment may also be classified based on qualitative judgement. This involves making assessments regarding the economic environment in which borrowers operate in addition to making judgements about a borrower's financial condition and net realisable value of any underlying collateral.

ii) Taxation

The estimation of current tax provision involves making judgements regarding admissibility of certain expenses as well as estimating the amount of other expenses for tax purposes.

3.6 Cash flow statement

The cash flow statement has been prepared in accordance with the BAS 7 Statements of Cash Flow considering the requirements specified in the BRPD circular no. 15 dated 9 November 2009.

3.7 Liquidity statement

The liquidity statement of assets and liabilities as on the reporting date has been prepared on the basis of residual maturity term which has been given in the statement.


4.1 Foreign currencies

Transactions in foreign currencies are translated into the respective functional currency of the operation at the spot exchange rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the spot exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated into the functional currency at the spot exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on translation are recognised in the profit and loss account.


Profit on investment

Profit on investments is recognised on an accrual basis (as an approximation of realisation basis) over the lifetime of the investments so as to reflect a constant rate of return on their carrying amounts. Overdue / late payment charge on investment is transferred to charity suspense account instead of income account.

Commission and fee income

The Bank earns commission and fee income from a diverse range of services provided to its customers. Commission and fee income is accounted for as follows:

- income earned on the execution of a significant act is recognised as revenue when the act is completed

- income earned from services provided is recognised as revenue as the services are provided

Exchange income

Exchange income includes all gains and losses from foreign currency transactions.

4.3 Investments to customers

Investments are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and that the Bank does not intend to sell immediately or in the near term.

Investments are initially measured at fair value and subsequently measured at amortised cost. These are stated gross with accumulated specific and general provisions for investments being shown under other liabilities.

4.3.1 Provisions on investments

At each balance sheet date and periodically throughout the year, the Bank reviews investments to assess whether objective evidence that impairment of an investment or portfolio of investments has arisen supporting a change in the classification of investments, which may result in a change in the provision required in accordance with BRPD circular no.14 dated 23 September 2012, BRPD circular no. 19 dated 27 December 2012 and BRPD circular no. 05 dated 29 May 2013 and BRPD circular no. 16 dated 18 November 2014. The guidance in the circulars follows a formulaic approach whereby specified rates are applied to the various categories of investment as defined in the circular. The provisioning rates are as follows:


Unclassified investments under small and medium enterprise

financing (SMEF) 0.25% 0.25%

Unclassified investments under housing finance (HF) and on

investments for professionals (IP) 2.00% 2.00%

Unclassified investments under consumer financing (CF) other than

housing finance (HF) and investments for professionals (IP) 5.00% 5.00%

Unclassified investments to brokerage houses (BH), merchant

banks (MB), stock dealers (SD) 2.00% 2.00%

All unclassified investments except under SMEF, HF, IP, CF, BH, MB and SD 1.00% 1.00%


In accordance with BRPD circular no. 05 dated 29 May 2013 the rate of provision on the outstanding amount of investments kept in the 'Special Mention Account' will be the same as the rates stated above i.e. 0.25% against all unclassified investments of Small and Medium Enterprise (SME), 5% on the unclassified amount for Consumer Financing, 2% on the unclassified amount for Housing Finance and 1% against all other unclassified investments.


Substandard investments 20% 20%

Doubtful investment 50% 50%

Bad / loss investments 100% 100%

The above rates are the minimum prescribed rates. BRPD circular no.14 dated 23 September 2012 also provides scope for further provisioning based on qualitative judgements. If the specific provisions assessed under the qualitative methodology are higher than the specific provisions assessed under the formulaic approach above, the higher of the two is recognised.

4.3.2 Investments write-off

Investments are normally written off when there is no realistic prospect of recovery of these amounts and in accordance with BRPD circular no. 02 dated 13 January 2003 and BRPD circular no. 13 dated 07 November 2013.

4.4 Provisions for other assets

BRPD circular no.14 dated 25 June 2001 requires a provision of 100% on other assets which are outstanding for one year and above. The Bank maintains provisions in line with this circular unless it assesses there is no doubt of recovery on items of other assets in which case no provision is kept.



Profit paid on deposits

Profit paid for all deposits is recognised in the profit and loss account using the effective interest method.




4.7 Fixed assets including premises, furniture and fixtures

Items of fixed assets, other than land, are measured at cost less accumulated depreciation and impairment losses, as per BAS 16: Property, Plant and Equipment. Cost includes expenditures that are directly attributable to the acquisition of the asset. Land is carried at cost.

Subsequent costs

The cost of replacing part of an item of fixed assets is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Bank and its cost can be measured reliably. The cost of day-to-day servicing of fixed assets is expensed when incurred.

Depreciation

Depreciation on premises other than freehold land, and other fixed assets, is recognised in profit or loss on a straight line basis over the expected useful life of the assets based on cost. The estimated useful life and rate of depreciation for the current and comparative period is as follows:

Useful life Rate of depreciation

Fixed equipments 3 to 15 years 7% - 33%

Computer and office equipments 5 years 20%

Furniture and fittings 5 years 20%


2015Taka

2014Taka

Depreciation on additions to fixed assets is charged from the month in which such assets are capitalised, and adjustments to accumulated depreciation for disposals / write offs are made up to the month in which the relevant assets are disposed/written off.

4.8 Off setting financial assets and financial liabilities

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.


For the purpose of the cash flow statement, cash and cash equivalents include notes and coins on hand, highly liquid investments, etc. that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

4.10 Taxation

Income tax expense comprises current tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of prior years. Currently the tax rate applicable for banks is 42.5%.

For purposes of taxation, the Bank is not assessed separately as it is considered to be an integral part of the onshore banking operations of Standard Chartered Bank, Bangladesh. Tax liability is assessed on Standard Chartered Bank as a whole; likewise tax payments are made by the onshore banking unit as a whole.



A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2018 and earlier application is permitted. However, the Bank has not early applied the following new standards in preparing these financial statements:


BFRS 9 published in July 2014, replaces the existing guidance in BAS 39 Financial lnstruments: Recognition and Measurement. BFRS 9 includes revised guidance on the classification and measurement of the financial instruments, a new expected credit loss model for calculating impairment of financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from BAS 39. BFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Bank is yet to assess the potential impact of BFRS 9 on its financial statements.


BFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing recognition guidance, including BAS 18 Revenue, BAS 11 Construction Contracts and BFRI 13 Customer Loyalty Programmes. BFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Bank is yet to assess the potential impact of BFRS 15 on its financial statements.

5 Cash

a) Cash in hand (including foreign currencies)

Local currency 1,221,235 1,651,044

Foreign currencies 1,405,150 865,245

Sub Total (a) 2,626,385 2,516,289

b) Balance with Bangladesh Bank and its agent banks (including foreign currencies)

Balance with Bangladesh Bank (local currency) 1,020,000,000 430,000,000

Balance with agent banks of Bangladesh Bank - -

Sub Total (b) 1,020,000,000 430,000,000

Grand Total (a+b) 1,022,626,385 432,516,289

5.1 Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)

Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are calculated and maintained in accordance with section 33 of the Bank Company Act, 1991 and MPD circular no. 1 dated 23 June 2014.

The CRR on the Bank's time and demand liabilities at the rate of 6.5% (bi-weekly) and 6% (daily) has been calculated and maintained with Bangladesh Bank in current account and 5.5% SLR on the same liabilities has also been maintained in the form of cash in hand, balances with Bangladesh Bank and Government Islamic Bonds. Both reserves maintained by the Bank as at 31 December, are shown below:

5.2 Cash Reserve Ratio (CRR)

Daily 6% (2014: 6%) of average demand and time liabilities:

Required reserve 403,112,660 379,016,040

Actual reserve held with Bangladesh Bank 1,020,000,000 430,000,000

Surplus 616,887,340 50,983,960

Bi-weekly 6.5% (2014: 6.5%) of average demand and time liabilities:


Actual reserve held with Bangladesh Bank 1,020,000,000 430,000,000

Surplus 583,294,610 19,399,290

5.3 Statutory Liquidity Ratio (SLR)

5.5% (2014: 5.5%) of Average demand and time liabilities


Actual reserve held (Note 5.3.1) 585,920,999 381,915,579

Surplus 216,401,059 34,484,209

5.3.1 Actual reserve held

Cash in hand 2,626,385 2,516,289

Balance with Bangladesh Bank as per statement - -

Excess reserve 583,294,614 19,399,290

Government Islamic Bonds - 360,000,000

585,920,999 381,915,579

6 Investments in shares and securities

6.1 Maturity - wise classification 2015 2014 Taka Taka

Repayable on demand - -


Not more than one month - -

More than 1 month but not more than 3 months - 200,000,000

More than 3 months but not more than 1 year - 160,000,000

More than 1 year but not more than 5 years - -

More than 5 years - -

- 360,000,000

7 Investments

7.1 Mode-wise investments

a) In Bangladesh

Bai-murabaha (Saadiq Finance against Trust Receipt etc.) 951,844,050 1,024,635,356

Diminishing musharaka (Saadiq Auto Finance) 359,728,227 381,070,648

Shirkatul melk (Saadiq Housing Finance) 3,409,484,534 3,307,470,583

Ujrah (Saadiq Islamic Credit Card) 630,410,196 700,098,721

Musharaka 500,000,000 385,000,000

5,851,467,007 5,798,275,308

b) Outside Bangladesh - -

Total (a+b) 5,851,467,007 5,798,275,308

7.2 Geographical location-wise classification of investments

a) In Bangladesh

In rural areas - -

In urban areas 5,851,467,007 5,798,275,308

5,851,467,007 5,798,275,308

b) Outside Bangladesh - -

Total (a+b) 5,851,467,007 5,798,275,308

Face value Market valueHolding as at Purchase as at

Particulars number 31 Dec 2015 value 31 Dec 2015 RemarksTaka Taka Taka

Government Islamic bond - - - - -


22 Related party transaction


The related parties of the Bank includes SCB Bangladesh Branch Onshore Banking Unit and Offshore Banking Unit (OBU), the ultimate parent company Standard Chartered Bank (SC) Plc, other SCB group entities, key management personnel of SC Plc and SCB Bangladesh as well as their close family members. Since the branch is considered an integral part of the Bank for management purposes, key management personnel of the branch for the purposes of BAS 24 are considered to be Country Management Team (CMT) members of the Bank and close members of their families and companies they control, or significantly influence, or for which significant voting power is held, as ultimately it is CMT members of the Bank who have the authority and responsibility for planning, directing and controlling the branch activities.

22.2 Transactions with group entities

The Bank provides and receives certain banking and financial services to/from entities within the SCB Bangladesh Onshore Banking Unit. As at the year end, the balances with these entities are disclosed as intra-branch transit account under Notes - 9 and 11.

The disclosure of the year end balance is considered to be the most meaningful information to represent transactions during the year.

Other than the above, the branch did not have any material transactions with other SCB group entities and there were no balances outstanding at the year end with these entities.

22.3 Transactions with key management personnel

During 2015 there were no transactions between the branch and key management personnel of SCB Plc (2014 : BDT Nil). Neither were there any transactions between the branch and key management personnel of the Bank. No portion of compensation paid to the Bank's key management personnel (CMT members) has been attributed to the branch for purposes of preparing these financial statements as per the Bank's policy.

22.4 Transactions with post employment benefit plans

As with the conventional banking branches of the Bank, employees of the Islamic branch are entitled to receive benefits from two post-employment benefit plans: a provident fund which is in the nature of a defined contribution plan and a gratuity fund which is in the nature of a defined benefit plan. These funds are maintained for all eligible employees of the Bank as a whole, with contributions made on a pan-Bank basis and managed through inter branch transaction.

23 Events after the balance sheet date

There were no material adjusting events after the balance sheet date.

24 General

24.1 Audit committee

SCB Bangladesh does not have any "Audit Committee" at a country level as it is a branch, but there is a Country Operational Risk Forum (CORF) where all risk issues are discussed, action points set to mitigate risks identified and documented. The CORF covers SCB Bangladesh's Islamic banking operations in addition to its conventional banking operations. SCB Bangladesh has received a dispensation from Bangladesh Bank on 19 December 2006 with regards to the requirement of audit committee.

24.2 Exchange rates

The assets and liabilities as at 31 December in foreign currencies have been converted to Taka at the following rates:

USD 1 = 78.5000 77.9500

GBP 1 = 116.4234 121.0680

EUR 1 = 85.7495 94.7853

24.3 Figures appearing in these financial statements have been rounded off to the nearest Taka.

24.4 Previous year's figures have been rearranged, where necessary, to conform with the current year's presentation.

2015Taka

2014Taka

2015Taka

2014Taka


Provision for investments including

bad & doubtful investments (Note- 11.1) 276,055,865 298,934,486

Profit/rent suspense account (Note - 11.2) 8,462,654 6,942,507

Income tax liability (Note - 11.3) - -

Profit payable on deposit 19,773,821 28,250,467

Excise duty, VAT, tax payable 2,971,405 5,053,403

Suspense account 1,190,796 1,341,640

Charity payable 30,666,821 37,474,752

Internal investment/deposit 1,007,023,558 780,011,841

Accrued bonus points 3,561,930 4,598,897

Others 1,355,908 2,341

1,351,062,758 1,162,610,334

11.1 Provision for investments and off balance sheet exposures

a) Current year provision for investments

Unclassified:

Standard 114,999,370 122,856,423

Special mention account 2,881,302 1,361,826

117,880,672 124,218,249

Classified:

Substandard 13,724,279 6,427,905

Doubtful 2,210,766 2,283,618

Bad / loss 135,180,051 144,835,223

151,115,096 153,546,746

268,995,768 277,764,995

b) General provision against unclassified investments

Opening balance 145,387,739 118,718,448

Provision made during the year (4,699,058) 10,119,812

Provision on off-balance sheet exposures 3,693,704 16,549,479

Net charge to profit & loss account (1,005,354) 26,669,291

Sub Total (b) 144,382,385 145,387,739

c) Specific provision against classified investments

Opening balance 153,546,747 129,299,712

Add: Provision made during the year 61,419,928 50,497,285

Less: Release / Recoveries during the year (33,548,291) (21,691,658)

Net charge to profit & loss account 27,871,637 28,805,627

Less : Written-Off during the year (49,744,904) (4,558,592)

Add : Transfer from other provisions Translation increase (decrease) - -

Sub Total (c) 131,673,480 153,546,747

Grand Total (b+c) 276,055,865 298,934,486

11.1.1 Adequacy of provision vis a vis provision required to be maintained

General provision

On off-balance sheet exposures @ 1%2, 486,319,440 24,863,194 21,169,490

On standard loans (excluding SMA)

at various rates 5,412,138,371 117,885,443 122,856,423

On special mention accounts (SMA) @ various rates 102,633,885 1,633,746 1,361,826

8,001,091,696 144,382,384 145,387,738

Specific provision

On sub-standard loans and advances 46,136,874 9,227,375 3,925,660

On doubtful loans and advances 6,209,411 3,104,705 1,436,090

On bad / loss loans and advances 114,354,866 114,354,866 128,911,190

166,701,152 126,686,947 134,272,941

Total provision required to be maintained 271,069,331 279,660,679

Total provision maintained 276,055,865 298,934,486

Excess / (deficit) provision at 31 December 4,986,534 19,273,807

11.2 Profit/rent suspense account

Balance as at 1 January 6,942,506 6,249,595

Amount transferred to suspense account during the year 17,549,888 8,721,577

Amount recovered from suspense account during the year (15,615,033) (7,734,149)

Amount written off during the year (414,707) (294,516)

Amount waived during the year - -

Balance as at 31 December 8,462,654 6,942,507

11.3 Income tax liability

Opening balance - -

Provision made during the year 289,167,068 269,480,907

Amount paid during the year (289,167,068) (269,480,907)

- -

12 Investment income

Bai-murabaha (Saadiq Finance against Trust Receipt etc.) 80,364,479 140,984,702

Diminishing musharaka (Saadiq Auto Finance) 56,703,758 72,526,169

Shirkatul melk (Saadiq House Finance) 441,557,360 441,979,079

Musharaka 51,684,375 3,352,709

630,309,972 658,842,659

13 Profit paid on deposits

Profit paid on Mudaraba savings deposits 161,657,936 192,739,069

Profit paid on Mudaraba term deposits 46,823,892 78,570,297

208,481,828 271,309,366

14 Income/(Loss) from investments in shares and securities

Profit/ (Loss) on Govt. Islamic bond (9,283,012) 10,609,036

(9,283,012) 10,609,036

15 Commission, exchange and brokerage

Commission 280,915,291 252,707,921

Exchange (1,382,408) (96,743)

279,532,883 252,611,178

16 Rent, taxes, insurances, electricity etc.

Rent, rates and taxes 4,302,003 4,302,003

Electricity and lighting 531,309 375,349

4,833,312 4,677,352

17 Postage, stamps and telecommunication etc.

LAN and IT infrastructure cost - -

Telephone 158,949 157,193

Courier and air freight 5,390 63,129

164,339 220,322

18 Stationery, printing and advertisement etc.

Printing and stationery (computer and others) 105,556 545,676

Advertisement and publicity - -

105,556 545,676

19 Repair, maintenance and depreciation

Repair and maintenance 2,923,515 4,035,673

Depreciation (Annexure A) 304,131 304,131

3,227,646 4,339,804

20 Other operating expenses

Travelling and transportation - 1,408

Entertainment 10,873 4,553

Subscription expenses - 3,314

Security services 1,293,388 1,623,761

Interest on leases 200,425 90,249

Support service costs 9,802 -

Other office expenses 331,186 278,799

1,845,674 2,002,084


Cash in hand (including foreign currencies) 2,626,385 2,516,289

Balance with Bangladesh Bank and its agent banks 1,020,000,000 430,000,000

Balance with other banks and financial institutions - -

1,022,626,385 432,516,289




2015Taka

Base for provision2015 only

Taka2014Taka

Schedule of Fixed Assets


Schedule of Fixed Assetsas at 31 December 2015

Annexure - A

Own assetsFreehold premises - - - - - - - - -Fixed equipments 2,795,370 - - 2,795,370 2,795,370 - - 2,795,370 -Computer and office equipments 76,350 - - 76,350 76,350 - - 76,350 -Furniture and fittings 1,967,673 - - 1,967,673 1,334,067 304,131 - 1,638,198 329,475

Sub-total 4,839,393 - - 4,839,393 4,205,787 304,131 - 4,509,918 329,475

Leased assetsCapitalised leased equipments - - - - - - - - -

Sub-total - - - - - - - - -

Total 2015 4,839,393 - - 4,839,393 4,205,787 304,131 - 4,509,918 329,475

Own assetsFreehold premises - - - - - - - - -Fixed equipments 2,795,370 - - 2,795,370 2,795,370 - - 2,795,370 -Computer and office equipments 76,350 - - 76,350 76,350 - - 76,350 -Furniture and fittings 1,967,673 - - 1,967,673 1,029,936 304,131 - 1,334,067 633,606

Sub-total 4,839,393 - - 4,839,393 3,901,656 304,131 - 4,205,788 633,605

Leased assetsCapitalised leased equipments - - - - - - - - -

Sub-total - - - - - - - - -

Total 2014 4,839,393 - - 4,839,393 3,901,656 304,131 - 4,205,788 633,605

Amount in Taka

Particulars

Cost Depreciation

Net book value as at

31 December 2014

Balance as at 1 January 2014

Balance as at 31 December

2014

Additions during

the year

Disposals/ adjustments

during the year

Balance as at 31 December 2014

Balance as at 1 January

2014

Charge for the year

On disposals/

adjustments

On disposals/

adjustments

Balance as at 31 December

2015

Amount in Taka

Particulars

Cost Depreciation

Net book value as at

31 December 2015

Balance as at 1 January 2015

Additions during

the year

Disposals/ adjustments

during the year

Balance as at 31 December 2015

Balance as at 1 January

2015

Charge for the year

Schedule of Fixed Assetsas at 31 December 2014




Liquidity Statement (Asset and Liability Maturity Analysis)

Annexure - B

Up to More than Total1 month 5 years 2015

Taka Taka Taka Taka Taka Taka

Assets

Cash in hand 1,022,626,385 - - - - 1,022,626,385Balance with other banks and financial institutions - - - - - -Placement with other banks and financial institutions - - - - - -Investment in Shares and Securities - - - - - -Investments 1,487,256,096 379,812,685 935,616,554 2,933,085,293 115,696,379 5,851,467,007Fixed assets - - - - 329,475 329,475Other assets 1,329,125,016 - - - - 1,329,125,016Non-banking assets - - - - - -

Total assets 3,839,007,497 379,812,685 935,616,554 2,933,085,293 116,025,854 8,203,547,883

Liabilities

Placement from other banks and financial institutions - - - - - -Deposits and other accounts 5,959,833,241 354,382,339 535,269,545 3,000,000 - 6,852,485,125Other liabilities (including equity) 1,066,544,239 - - - 284,518,519 1,351,062,758

Total liabilities 7,026,377,480 354,382,339 535,269,545 3,000,000 284,518,519 8,203,547,883

Net liquidity difference (3,187,369,983) 25,430,346 400,347,009 2,930,085,293 (168,492,665) 0

Particulars 1 to 3 months 3 to 12 months 1 to 5 years

audited financial statements - 2015

Documents