independent auditors’ report audited financial statements stateme… · annual report 2014 169...

Annual Report 2014 169

Independent Auditors’ Report&

Audited Financial Statementsof

Islami Bank Bangladesh Limitedand its Subsidiaries

Annual Report 2014170

Independent Auditors’ ReportTo the Shareholders of Islami Bank Bangladesh Limited

We have audited the accompanying consolidated financial statements of Islami Bank Bangladesh Limited and its subsidiaries (the “Group”) as well as the separate financial statements of Islami Bank Bangladesh Limited (the “Bank”), which comprise the consolidated and separate balance sheets as at 31 December 2014, and the consolidated and separate profit and loss accounts, consolidated and separate statements of changes in equity and consolidated and separate cash flow statements 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 consolidated financial statements of the Group and also separate financial statements of the Bank that give a true and fair view in accordance with Bangladesh Financial Reporting Standards (BFRS) as explained in note 2.1 and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements of the Group and also the separate financial statements of the Bank that are free from material misstatement, whether due to fraud or error. The Bank Company Act, 1991 as amended 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.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements of the Group and the separate financial statements of the Bank based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements of the Group and the separate financial statements of the Bank are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements of the Group and separate financial statements of the Bank. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements of the Group and the separate financial statements of the Bank, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated financial statements of the Group and the separate financial statements of the Bank that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements of the Group and also the separate financial statements of the Bank.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements of the Group and also the separate financial statements of the Bank give a true and fair view of the consolidated financial position of the Group and the separate financial position of the Bank as at 31 December 2014, and of its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS) as explained in note 2.1.

Report on Other Legal and Regulatory Requirements

In accordance with the Companies Act 1994, Securities and Exchange Rules 1987, the Bank Company Act 1991 as amended 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 Auditors’ Responsibility section in forming the above opinion on the consolidated financial statements of the Group and the separate financial statements of the Bank and considering the reports of the management to the 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 Control:

i) internal audit, internal control and risk management arrangements of the Group and the Bank as disclosed in note 3.31 appeared to be adequate;

ii) nothing has come to our attention regarding material instances of forgery or irregularity or administrative error and exception or anything detrimental committed by employees of the Bank and its related entities other than matters disclosed in note 3.31.8;

(c) financial statements of subsidiary companies of the Bank namely Islami Bank Securities Limited have been audited by Howladar Yunus & Co., Chartered Accountants and Islami Bank Capital Management Limited have been audited by Hussain Farhad & Co., Chartered Accountants and have been properly reflected in the consolidated financial statements;

(d) in our opinion, proper books of accounts as required by law have been kept by Islami Bank Bangladesh Limited so far as it appeared from our examination of those books and proper returns adequate for the purpose of our audit have been received from 225 branches not visited by us;

(e) the consolidated balance sheet and consolidated profit and loss account of the Group and the separate balance sheet and separate profit and loss account of the Bank dealt with by the report are in agreement with the books of account;

(f) the expenditure incurred was for the purposes of the Bank’s business;

(g) the consolidated financial statements of the Group and the separate financial statements of the Bank have been drawn up in conformity with prevailing rules, regulations and Bangladesh Financial Reporting Standards as explained in note 2.1 as well as with related guidance, circulars issued by Bangladesh Bank and decision taken in tripartite meeting amongst Inspection Team of Bangladesh Bank, External Auditors and the Management of Islami Bank Bangladesh Limited held on 03 March 2015;

(h) adequate provisions have been made for the investments, other assets and off-Balance Sheet items which are, in our opinion, doubtful of recovery;

(i) the records and statements submitted by the branches have been properly maintained and consolidated in the financial statements;

(j) the information and explanation required by us have been received and found satisfactory;

(k) we have reviewed over 80% of the risk weighted assets of the Bank and we have spent around 9,000 person hours for the audit of the books and accounts of the Bank.

Aziz Halim Khair ChoudhuryChartered Accountants

Syful Shamsul Alam & Co.Chartered Accountants

Howladar Yunus & Co.Chartered Accountants

Date: 21 March, 2015Place: Dhaka


Islami Bank Bangladesh Limited and its SubsidiariesConsolidated Balance Sheet

As at 31 December 2014

Particulars Notes31.12.2014 31.12.2013

Taka TakaProperty and AssetsCash in hand 7(a) 46,219,359,839 44,291,523,619 Cash in hand (including foreign currency) 7(a)(i) 7,696,844,962 8,180,346,965 Balance with Bangladesh Bank & its agent bank(s) (including foreign currency) 7(a)(ii) 38,522,514,877 36,111,176,654 Balance with other banks & financial institutions 8(a) 23,615,218,198 12,700,116,779 In Bangladesh 8(a)(i) 21,205,895,651 7,950,737,265 Outside Bangladesh 8(a)(ii) 2,409,322,547 4,749,379,514 Placement with banks & other financial institutions 9.0 2,000,000,000 -

Investments in shares & securities 10(a) 99,677,400,553 66,098,953,627

Government 10(a)(i) 97,435,777,770 63,698,877,770 Others 10(a)(ii) 2,241,622,783 2,400,075,857 Investments 460,385,467,466 402,994,804,977

General investments etc. 11.1(a) 433,004,101,205 375,000,298,497 Bills purchased & discounted 11.2(a) 27,381,366,261 27,994,506,480 Fixed assets including premises 12(a) 15,930,479,589 15,738,858,683 Other assets 13(a) 3,751,558,076 4,545,107,670 Non - banking assets - - Total property and assets 651,579,483,721 546,369,365,355

Liabilities and Capital

Liabilities

Placement from banks & other financial institutions 46 (a) 7,657,500,743 -

Deposits & other accounts 14(a) 559,713,580,029 472,121,971,348

Mudaraba savings deposits 183,125,942,453 155,191,605,056 Mudaraba term deposits 169,288,934,029 130,523,371,328 Other mudaraba deposits 149,300,904,194 130,276,510,230 Al- wadeeah current and other deposit accounts 54,347,905,252 52,000,826,777 Bills payable 3,649,894,101 4,129,657,957 Mudaraba perpetual bond 15.0 3,000,000,000 3,000,000,000 Other liabilities 16(a) 34,220,763,730 27,289,134,160 Deferred tax liabilities 17(a) 403,081,867 194,189,314

Total liabilities 604,994,926,369 502,605,294,822

Capital/shareholders’ equity 46,584,557,352 43,764,070,533 Paid - up capital 18.0 16,099,906,680 14,636,278,800 Statutory reserve 20.0 16,099,906,680 14,638,613,627 Other reserves 21.0 11,998,012,969 11,851,258,703 Retained earnings 39(a) 2,386,670,563 2,637,858,071 Non-controlling interest 39(b) 60,460 61,332

Total liabilities & shareholders’ equity 651,579,483,721 546,369,365,355


Islami Bank Bangladesh Limited and its SubsidiariesConsolidated Balance Sheet



Taka TakaOff-balance sheet items

Contingent liabilities

Acceptances & endorsements - -

Letters of guarantee 22.0 8,839,985,590 7,354,594,651

Irrevocable letters of credit (including back to back bills) 99,102,373,685 83,946,725,635 Bills for collection 4,853,286,313 22,390,676,317 Other contingent liabilities 23,581,701 23,581,701 Total 112,819,227,289 113,715,578,304

Other commitments

Documentary credits, short term and trade related transactions - - Forward assets purchased and forward deposits placed - - Undrawn note issuance, revolving and underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - Total - -

Total off-balance sheet items including contingent liabilities 112,819,227,289 113,715,578,304

The annexed notes form an integral part of these financial statements.

Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Director Director

Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Managing Director

This is the consolidated balance sheet referred to in our separate report of even date.

Aziz Halim Khair Choudhury Syful Shamsul Alam & Co Howladar Yunus & Co. Chartered Accountants Chartered Accountants Chartered Accountants

Dhaka21 March 2015


Islami Bank Bangladesh Limited and its SubsidiariesConsolidated Profit & Loss Account

For the year ended 31 December 2014Particulars Notes 2014 2013

Taka TakaOperating incomeInvestment income 23(a) 49,109,956,379 48,145,464,380 Profit paid on mudaraba deposits 24(a) (30,592,937,508) (30,900,279,562)Net investment income 18,517,018,871 17,245,184,818 Income from investments in shares & securities 25(a) 1,847,241,058 2,112,029,193 Commission, exchange & brokerage income 26(a) 5,883,332,280 4,978,658,614 Other operating income 27(a) 1,223,373,942 985,819,291 Total operating income 27,470,966,151 25,321,691,916 Operating expensesSalary & allowances 28(a) 8,197,568,114 7,552,761,347 Rent, taxes, insurances, electricity etc. 29(a) 1,000,045,580 825,130,483 Legal expenses 30(a) 16,206,043 35,285,323 Postage, stamps and telecommunication etc. 31(a) 47,306,134 44,536,896 Stationery, printing and advertisement etc. 32(a) 317,612,092 330,098,889 Chief executive’s salary & fees 33.0 8,400,000 7,323,548 Directors’ fees & expenses 34(a) 13,183,767 11,875,334 Shari’ah supervisory committee’s fees & expenses 35.0 2,562,124 1,401,423 Auditors’ fees 36(a) 2,344,118 2,168,000 Charges on investment losses - - Depreciation and repair to bank’s assets 37(a) 866,506,137 729,987,642 Zakat expenses 425,985,241 385,750,934 Other expenses 38(a) 1,205,550,108 1,138,621,359 Total operating expenses 12,103,269,458 11,064,941,178 Profit/ (loss) before provision 15,367,696,693 14,256,750,738 Provision for investments & off- balance sheet exposures 16.1.4 4,670,784,729 3,015,633,502 Provision for diminution in value of investments in shares 16.2(a) 36,184,361 45,627,899 Other provisions 16.4 117,049,502 13,201,000 Total provision 4,824,018,592 3,074,462,401 Total profit/(loss) before taxes 10,543,678,101 11,182,288,337 Provision for taxation for the periodCurrent tax 16.7(a) 6,367,368,688 6,195,969,079 Deferred tax 17(b) 208,892,553 (44,439,537)Net profit/ (loss) after tax 3,967,416,860 5,030,758,795 Net profit after tax attributable to: 3,967,416,860 5,030,758,795 Equity holders of IBBL 3,967,415,282 5,030,757,057 Non-controlling interest 39(b) 1,578 1,738 Retained earnings from previous year 2,637,858,071 3,073,402,299 Add: Net profit after tax (attributable to equity holders of IBBL) 3,967,415,282 5,030,757,057 Profit available for appropriation 6,605,273,353 8,104,159,356

Appropriation: 6,605,273,353 8,104,159,356 Statutory reserve 20.0 1,461,293,053 2,214,951,285 General reserve 122,779,553 123,940,000 Dividend 2,634,530,184 3,127,410,000 Retained earnings 39(a) 2,386,670,563 2,637,858,071 Consolidated earnings per share 41(a) 2.46 3.12


Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Director Director Managing DirectorThis is the consolidated profit & Loss account referred to in our separate report of even date.

Aziz Halim Khair Choudhury Syful Shamsul Alam & Co Howladar Yunus & Co. Chartered Accountants Chartered Accountants Chartered AccountantsDhaka21 March 2015


Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Director Director Managing DirectorThis is the consolidated cash flow statement referred to in our separate report of even date.


Islami Bank Bangladesh Limited and its SubsidiariesConsolidated Cash Flow Statement

For the year ended 31 December 2014

Particulars Note 2014 2013Taka Taka

Cash flows from operating activitiesInvestment income 49,004,594,914 49,302,935,930 Profit paid on mudaraba deposits (31,722,869,528) (30,718,018,746)Income/ dividend receipt from investments in shares & securities 1,870,699,544 2,112,029,193 Fees & commission receipt in cash 5,883,332,280 4,978,658,614 Recovery from written off investments 39,350,296 43,918,185 Payments to employees (8,100,074,962) (7,130,884,895)Cash payments to suppliers (326,348,124) (306,150,694)Income tax paid (5,648,297,930) (5,763,293,016)Receipts from other operating activities 1,213,407,361 985,205,915 Payments for other operating activities (2,594,835,403) (2,977,864,593)(i) Operating profit before changes in operating assets 9,618,958,448 10,526,535,893

Changes in operating assets and liabilities Increase/(decrease) of statutory deposits - - (Increase)/decrease of net trading securities - - (Increase)/decrease of placement to other banks - - (Increase)-decrease of investments to customers (57,190,662,489) (30,274,082,090)(Increase)/decrease of other assets 1,013,868,776 (1,475,585,020)Increase/(decrease) of placement from other banks 7,657,500,743 -Increase/(decrease) of deposits from other banks (193,547,298) (1,023,989)Increase/(decrease) of deposits received from customers 86,764,748,509 52,892,382,596 Increase/(decrease) of other liabilities account of customers - -Increase/(decrease) of trading liabilities - - Increase/(decrease) of other liabilities 2,872,167,220 2,132,072,253 (ii) Cash flows from operating assets and liabilities 40,924,075,461 23,273,763,750

Net cash flows from operating activities (A)=(i+ii) 50,543,033,909 33,800,299,643 Cash flows from investing activitiesProceeds from sale of securities 1,175,692,382 836,868,609 Payment for purchase of securities/BGIIB (34,768,348,787) (41,393,061,898)Placement to Islamic Refinance Fund Account (2,000,000,000) - Payment for purchase of securities/membership - - Purchase/sale of property, plants & equipments (941,612,274) (1,555,262,018)Purchase/sale of subsidiaries - - Net cash flows from investing activities (B) (36,534,268,679) (42,111,455,307)

Cash flows from financing activitiesReceipts from issue of debt instruments - - Payment for redemption of debt instruments - - Receipts from issuing ordinary share/ rights share - - Dividend paid in Cash (1,170,902,304) (1,000,771,200)Net cash flows from financing activities (C) (1,170,902,304) (1,000,771,200)

Net increase/(decrease) in cash (A+B+C) 12,837,862,926 (9,311,926,864)Add/(less): effects of exchange rate changes on cash & cash equivalent 5,074,713 4,621,542 Add: cash & cash equivalents at beginning of the year 56,991,640,398 66,298,945,720 Cash & cash equivalents at the end of the year 44(a) 69,834,578,037 56,991,640,398 The annexed notes form an integral part of these financial statements.


Isla

mi B

ank

Bang

lade

sh L

imite

d an

d its

Sub

sidi

arie

sCo

nsol

idat

ed S

tate

men

t of C

hang

es in

Equ

ityFo

r the

year

end

ed 3

1 De

cem

ber 2

014

(Am

ount

in Ta

ka)

Parti

cula

rsPa

id-u

p ca

pita

lSh

are

prem

ium

Stat

utor

y re

serv

e

Gene

ral/

othe

r re

serv

es *

Asse

ts

reva

luat

ion

rese

rve

Reva

luat

ion

rese

rve

of

secu

ritie

s

Reta

ined

ea

rnin

gs

Non-

cont

rolli

ng

inte

rest

Tota

l

12

34

56

78

910

(2+3

+4+5

+6+7

+8+9

)

Balan

ce as

at 0

1 Jan

uary

2014

14,63

6,278

,800

1,98

9,633

14

,638,6

13,62

7 28

7,697

,750

11,49

8,971

,320

62,60

0,000

2,

637,8

58,07

1 61

,332

43,76

4,070

,533

Chan

ges i

n acc

ount

ing po

licy r

esta

ted b

alanc

e -

- -

- -

- -

- Su

rplus

/ (de

ficit)

on ac

coun

t of r

evalu

ation

of pr

oper

ties

- -

- -

- -

- -

Surp

lus/ (

defic

it) on

acco

unt o

f rev

aluat

ion of

inve

stm

ents

(sha

res

& se

curit

ies)

- -

- -

- 18

,900,0

00

- -

18,90

0,000

Curre

ncy t

rans

lation

diffe

renc

es -

- -

5,07

4,713

-

- -

5,07

4,713

Ne

t gain

and l

osse

s not

reco

gnize

d in t

he in

com

e sta

tem

ent

- -

- -

- -

- -

- Ne

t pro

fit fo

r the

perio

d -

- -

- -

- 3,

967,4

15,28

2 1,

578

3,96

7,416

,860

Tran

sfer t

o res

erve

- -

1,46

1,293

,053

122,7

79,55

3 -

- (1

,584,0

72,60

6) -

- Di

viden

d:

-

- -

- -

- -

B

onus

shar

es 1,

463,6

27,88

0 -

- -

- -

(1,46

3,627

,880)

- -

C

ash d

ivide

nd -

- -

- -

- (1

,170,9

02,30

4)(2

,450)

(1,17

0,904

,754)

Issue

of sh

are c

apita

l -

- -

- -

- -

- -

Tota

l sha

reho

lders

’ equ

ity as

on 31

Dec

embe

r 201

4 16

,099,9

06,68

0 1,

989,6

33

16,09

9,906

,680

415,5

52,01

6 11

,498,9

71,32

0 81

,500,0

00

2,386

,670,5

6360

,460

46,58

4,557

,352

Add:

Muda

raba

perp

etua

l bon

d -

- -

- -

- -

3,00

0,000

,000

Add:

Gene

ral p

rovis

ion fo

r unc

lassifi

ed in

vest

men

ts an

d off-

balan

ce

shee

t ite

ms

- -

- 4,

753,6

80,00

0 -

- -

- 4,

753,6

80,00

0

Adjus

tmen

t for

curre

ncy t

rans

lation

diffe

renc

es -

- -

(6,39

2,484

) -

- -

(6,39

2,484

)Le

ss: 5

0.00%

of as

sets

reva

luatio

n res

erve

- -

- -

(5,74

9,485

,660)

- -

- (5

,749,4

85,66

0)Le

ss: 5

0.00%

of re

valua

tion r

eser

ve of

secu

rities

- -

- -

- (4

0,750

,000)

- -

(40,7

50,00

0)To

tal e

quity

as on

31 D

ecem

ber 2

014

16,09

9,906

,680

1,98

9,633

16

,099,9

06,68

0 5,1

62,83

9,532

5,

749,4

85,66

0 40

,750,0

00

2,386

,670,5

6360

,460

48,54

1,609

,208

*Not

e : G

ener

al / o

ther

rese

rves

01.0

1.20

1401

.01.

2013

Gene

ral r

eser

ve 25

4,379

,979

130,4

39,97

9 Di

viden

d equ

aliza

tion a

ccou

nt 32

,000,0

00

32,00

0,000

Cu

rrenc

y tra

nslat

ion di

ffere

nces

1,31

7,771

(3

,303,7

71)

Tota

l 28

7,697

,750

159,1

36,20

8


Isla

mi B

ank

Bang

lade

sh L

imite

d an

d its

Sub

sidi

arie

sCo

nsol

idat

ed S

tate

men

t of C

hang

es in

Equ

ityFo

r the

year

end

ed 3

1 De

cem

ber 2

013

(Am

ount

in Ta

ka)

Parti

cula

rsPa

id-u

p ca

pita

lSh

are

prem

ium

Stat

utor

y re

serv

e

Gene

ral/

othe

r re

serv

es *

Asse

ts

reva

luat

ion

rese

rve

Reva

luat

ion

rese

rve

of

secu

ritie

s

Reta

ined

ea

rnin

gs

Non-

cont

rolli

ng

inte

rest

Tota

l

12

34

56

78

910

(2+3

+4+5

+6+7

+8+9

)

Balan

ce as

at 0

1 Jan

uary

2013

12,50

9,640

,000

1,98

9,633

12

,423,6

62,34

2 15

9,136

,208

11,49

8,971

,320

34,70

0,000

3,

073,4

02,29

9 59

,594

39,70

1,561

,396

Chan

ges i

n ac

coun

ting

polic

y res

tate

d ba

lanc

e -

- -

- -

- -

- -

Surp

lus/

(defi

cit)

on a

ccou

nt o

f rev

alua

tion

of p

rope

rties

- -

- -

- -

- -

- Su

rplu

s/ (d

efici

t) on

acc

ount

of r

eval

uatio

n of

inve

stm

ents

(sha

res

& se

curit

ies)

- -

- -

- 2

7,90

0,00

0 -

- 2

7,90

0,00

0

Curre

ncy t

rans

latio

n di

ffere

nces

- -

- 4

,621

,542

-

- -

4,6

21,5

42

Net g

ain

and

loss

es n

ot re

cogn

ized

in th

e in

com

e st

atem

ent

- -

- -

- -

- -

- Ne

t pro

fit fo

r the

per

iod

- -

- -

- -

5,0

30,7

57,0

57

1,7

38

5,0

30,7

58,7

95

Tran

sfer

to re

serv

e -

- 2

,214

,951

,285

1

23,9

40,0

00

- -

(2,3

38,8

91,2

85)

- -

Divi

dend

: -

- -

- -

- -

B

onus

shar

es 2

,126

,638

,800

-

- -

- -

(2,1

26,6

38,8

00)

- -

C

ash

divi

dend

- -

- -

- -

(1,0

00,7

71,2

00)

- (1

,000

,771

,200

)Is

sue

of sh

are

capi

tal

- -

- -

- -

- -

- To

tal s

hare

hold

ers’

equi

ty a

s on

31 D

ecem

ber 2

013

14,

636,

278,

800

1,9

89,6

33

14,

638,

613,

627

287

,697

,750

1

1,49

8,97

1,32

0 6

2,60

0,00

0 2

,637

,858

,071

6

1,33

2 4

3,76

4,07

0,53

3 Ad

d: M

udar

aba

perp

etua

l bon

d -

- -

- -

- -

- 3

,000

,000

,000

Ad

d: G

ener

al p

rovi

sion

for u

ncla

ssifi

ed in

vest

men

ts a

nd o

ff- b

alan

ce

shee

t ite

ms

- -

- 4

,508

,800

,000

-

- -

- 4

,508

,800

,000

Adju

stm

ent f

or c

urre

ncy t

rans

latio

n di

ffere

nces

(1,3

17,7

71)

- (1

,317

,771

)Le

ss: 5

0.00

% of

ass

ets r

eval

uatio

n re

serv

e -

- -

- (5

,749

,485

,660

) -

- -

(5,7

49,4

85,6

60)

Less

: 50.

00%

of re

valu

atio

n re

serv

e of

secu

ritie

s -

- -

- -

(31,

300,

000)

(31,

300,

000)

Tota

l equ

ity a

s on

31 D

ecem

ber 2

013

14,

636,

278,

800

1,9

89,6

33

14,

638,

613,

627

4,79

5,17

9,97

9 5

,749

,485

,660

3

1,30

0,00

0 2

,637

,858

,071

6

1,33

2 4

5,49

0,76

7,10

2

Pr

of. N

RM B

orha

n Ud

din

Ph.D

M

d. A

bdus

Sal

am F

CA, F

CS

Barr

iste

r Moh

amm

ed B

elay

et H

ossa

in

Moh

amm

ad A

bdul

Man

nan

Di

rect

or

Dire

ctor

Di

rect

or

Man

agin

g Di

rect

orTh

is is

the

cons

olid

ated

sta

tem

ent o

f cha

nges

in e

quity

refe

rred

to in

our

sep

arat

e re

port

of e

ven

date

.

Az

iz H

alim

Kha

ir Ch

oudh

ury

Syfu

l Sha

msu

l Ala

m &

Co

How

lada

r Yun

us &

Co.

Ch

arte

red

Acco

unta

nts

Char

tere

d Ac

coun

tant

s Ch

arte

red

Acco

unta

nts

Dhak

a21

Mar

ch 2

015


Islami Bank Bangladesh LimitedBalance Sheet



Taka TakaProperty and AssetsCash in hand 7.0 46,219,359,426 44,291,514,939 Cash in hand (including foreign currency) 7.1 7,696,844,549 8,180,338,285 Balance with Bangladesh Bank & its agent bank(s) (including foreign currency) 7.2 38,522,514,877 36,111,176,654

Balance with other banks & financial institutions 8.0 20,199,350,245 12,327,320,344 In Bangladesh 8(i) 17,790,027,698 7,577,940,830 Outside Bangladesh 8(ii) 2,409,322,547 4,749,379,514

Placement with banks & other financial institutions 9.0 2,000,000,000 -

Investments in shares & securities 10.0 100,856,528,896 67,211,398,968 Government 10.1 97,435,777,770 63,698,877,770 Others 10.2 3,420,751,126 3,512,521,198

Investments 11.0 463,475,467,466 403,194,804,977 General investments etc. 11.1 436,094,101,205 375,200,298,497 Bills purchased & discounted 11.2 27,381,366,261 27,994,506,480 Fixed assets including premises 12.0 15,926,361,916 15,732,808,589 Other assets 13.0 3,744,970,802 4,471,783,137 Non - banking assets - - Total property and assets 652,422,038,751 547,229,630,954

Liabilities and Capital

LiabilitiesPlacement from banks & other financial institutions 46.0 7,657,500,743 -

Deposits & other accounts 14.0 560,696,300,836 473,140,955,031 Mudaraba savings deposits 14.1 183,128,708,639 156,072,977,380 Mudaraba term deposits 170,175,086,856 131,412,377,473 Other mudaraba deposits 14.2 149,346,325,824 129,401,794,243 Al- wadeeah current and other deposit accounts 14.3 54,396,285,416 52,124,147,978 Bills payable 14.4 3,649,894,101 4,129,657,957 Mudaraba perpetual bond 15.0 3,000,000,000 3,000,000,000 Other liabilities 16.0 34,052,027,094 27,133,860,568 Deferred tax liabilities 17.0 403,397,747 194,134,041 Total liabilities 605,809,226,420 503,468,949,640

Capital/ shareholders’ equity 46,612,812,331 43,760,681,314 Paid - up capital 18.0 16,099,906,680 14,636,278,800 Statutory reserve 20.0 16,099,906,680 14,638,613,627 Other reserves 21.0 11,998,012,969 11,851,258,703 Retained Earnings 39.0 2,414,986,002 2,634,530,184 Total liabilities & shareholders’ equity 652,422,038,751 547,229,630,954


Islami Bank Bangladesh LimitedBalance Sheet



Taka TakaOff-balance sheet itemsContingent liabilitiesAcceptances & endorsements - - Letters of guarantee 22.0 8,839,985,590 7,354,594,651 Irrevocable letters of credit (including back to back bills) 99,102,373,685 83,946,725,635 Bills for collection 4,853,286,313 22,390,676,317 Other contingent liabilities 23,581,701 23,581,701 Total 112,819,227,289 113,715,578,304

Other commitments

Documentary credits, short term and trade related transactions - - Forward assets purchased and forward deposits placed - - Undrawn note issuance, revolving and underwriting facilities - - Undrawn formal standby facilities, credit lines and other commitments - - Total - -

Total off-balance sheet items including contingent liabilities 112,819,227,289 113,715,578,304


Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Director Director Managing DirectorThis is the balence sheet referred to in our separate report of even date.



Islami Bank Bangladesh LimitedProfit & Loss Account


Particulars Notes2014 2013Taka Taka

Operating incomeInvestment income 23.0 49,109,956,379 48,145,464,380 Profit paid on mudaraba deposits 24.0 (30,650,270,621) (30,975,185,536)Net investment income 18,459,685,758 17,170,278,844 Income from investments in shares & securities 25.0 1,900,248,402 2,047,514,660 Commission, exchange & brokerage income 26.0 5,870,373,508 4,969,126,047 Other operating income 27.0 1,166,448,971 931,638,616 Total operating income 27,396,756,639 25,118,558,167 Operating expensesSalary & allowances 28.0 8,183,199,841 7,538,859,361 Rent, taxes, insurances, electricity etc. 29.0 996,139,867 822,139,328 Legal expenses 30.0 16,206,043 35,067,030 Postage, stamps and telecommunication etc. 31.0 47,130,710 44,343,667 Stationery, printing and advertisement etc. 32.0 317,409,591 329,947,366 Chief executive’s salary & fees 33.0 8,400,000 7,323,548 Directors’ fees & expenses 34.0 12,787,017 11,587,834 Shari’ah supervisory committee’s fees & expenses 35.0 2,562,124 1,401,423 Auditors’ fees 36.0 2,229,118 2,070,000 Charges on investment losses - - Depreciation and repair to bank’s assets 37.0 862,001,406 725,713,644 Zakat expenses 425,985,241 385,750,934 Other expenses 38.0 1,200,083,831 1,134,942,662 Total operating expenses 12,074,134,789 11,039,146,797 Profit/ (loss) before provision 15,322,621,850 14,079,411,370 Provision for investments & off- balance sheet exposures 16.1.4 4,670,784,729 3,015,633,502 Provision for diminution in value of investments in shares 16.2 3,074,883 423,778 Other provisions 16.4 117,049,502 13,201,000 Total provision 4,790,909,114 3,029,258,280 Total profit/(loss) before taxes 10,531,712,736 11,050,153,090 Provision for taxation for the periodCurrent tax 16.7.1 6,323,390,422 6,145,665,449 Deferred tax expense/(income) 17.0 209,263,706 (44,096,951)Net profit/ (loss) after tax 3,999,058,608 4,948,584,592 Retained earnings from previous year 2,634,530,184 3,152,246,877 Add: Net profit after tax 3,999,058,608 4,948,584,592 Profit available for appropriation 6,633,588,792 8,100,831,469 Appropriation: 6,633,588,792 8,100,831,469 Statutory reserve 20.0 1,461,293,053 2,214,951,285 General reserve 122,779,553 123,940,000 Dividend 2,634,530,184 3,127,410,000 Retained earnings 39.0 2,414,986,002 2,634,530,184 Earnings per share (EPS) 41.0 2.48 3.07


Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Director Director Managing DirectorThis is the profit & loss account referred to in our separate report of even date.



Islami Bank Bangladesh LimitedCash Flow Statement


Particulars Note2014 2013Taka Taka

Cash flows from operating activitiesInvestment income 49,004,594,914 49,302,935,930 Profit paid on mudaraba deposits (31,780,202,641) (30,792,924,720)Income/ dividend receipt from investments in shares & securities 1,713,711,788 2,047,514,660 Fees & commission receipt in cash 5,870,373,508 4,969,126,047 Recovery from written off investments 39,350,296 43,918,185 Payments to employees (8,085,706,689) (7,116,982,909)Cash payments to suppliers (326,145,623) (305,999,171)Income tax paid (5,597,112,182) (5,731,916,584)Receipts from other operating activities 1,166,448,971 931,638,616 Payments for other operating activities (2,583,191,009) (2,969,365,539)(i) Operating profit before changes in operating assets 9,422,121,333 10,377,944,515

Changes in operating assets and liabilities

Increase/(decrease) of statutory deposits - - (Increase)/decrease of net trading securities - - (Increase)/decrease of placement to other banks - - (Increase)/decrease of investments to customers (60,280,662,489) (30,274,082,090)(Increase)/decrease of other assets 1,025,213,295 (1,496,849,260)Increase/(decrease) of placement from other banks 7,657,500,743 -Increase/(decrease) of deposits from other banks (193,547,298) (1,023,989)Increase/(decrease) of deposits received from customers 87,748,893,103 53,897,836,775 Increase/(decrease) of other liabilities account of customers - - Increase/(decrease) of trading liabilities - - Increase/(decrease) of other liabilities 2,153,192,172 2,017,256,323 (ii) Cash flows from operating assets and liabilities 38,110,589,526 24,143,137,759 Net cash flows from operating activities (A)=(i+ii) 47,532,710,859 34,521,082,274

Cash flows from investing activities

Proceeds from sale of securities - - Payment for purchase of securities/BGIIB (33,626,229,928) (40,173,425,198)Placement to Islamic Refinance Fund Account (2,000,000,000) - Payment for purchase of securities/membership - - Purchase/sale of property, plants & equipments (940,778,952) (1,555,029,989)Purchase/sale of subsidiaries - - Net cash flows from investing activities (B) (36,567,008,880) (41,728,455,187)

Cash flows from financing activities

Receipts from issue of debt instruments - - Payment for redemption of debt instruments - - Receipts from issuing ordinary share/ rights share - - Dividend paid in Cash (1,170,902,304) (1,000,771,200)Net cash flows from financing activities (C) (1,170,902,304) (1,000,771,200)

Net increase/(decrease) in cash (A+B+C) 9,794,799,675 (8,208,144,113)Add/(Less): effects of exchange rate changes on cash & cash equivalent 5,074,713 4,621,542 Add: cash & cash equivalents at beginning of the year 56,618,835,283 64,822,357,854 Cash & cash equivalents at the end of the year 44.0 66,418,709,671 56,618,835,283


Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Director Director Managing DirectorThis is the cash flow statement referred to in our separate report of even date.



Isla

mi B

ank

Bang

lade

sh L

imite

dSt

atem

ent o

f Cha

nges

in E

quity

For t

he ye

ar e

nded

31

Dece

mbe

r 201

4

(Am

ount

in Ta

ka)

Parti

cula

rsPa

id-u

p ca

pita

lSh

are

prem

ium

Stat

utor

y re

serv

e

Gene

ral/

othe

r re

serv

es *

Asse

ts

reva

luat

ion

rese

rve

Reva

luat

ion

rese

rve

of

secu

ritie

s

Reta

ined

ea

rnin

gsTo

tal

12

34

56

78

9 (2

+3+

4+5+

6+7+

8)

Bala

nce

as a

t 01

Jan

uary

201

414

,636

,278

,800

1,

989,

633

14,6

38,6

13,6

27

287

,697

,750

11

,498

,971

,320

6

2,60

0,00

0 2

,634

,530

,184

4

3,76

0,68

1,31

4 Ch

ange

s in

acco

untin

g po

licy r

esta

ted

bala

nce

Surp

lus/

(defi

cit)

on a

ccou

nt o

f rev

alua

tion

of p

rope

rties

- -

- -

- -

- Su

rplu

s/ (d

efici

t) on

acc

ount

of r

eval

uatio

n of

inve

stm

ents

(sha

res

& se

curit

ies)

- -

- -

- 1

8,90

0,00

0 -

18,

900,

000

Curre

ncy t

rans

latio

n di

ffere

nces

- -

- 5

,074

,713

-

- -

5,0

74,7

13

Net g

ain

and

loss

es n

ot re

cogn

ized

in th

e in

com

e st

atem

ent

- -

- -

- -

- -

Net p

rofit

for t

he p

erio

d -

- -

- -

3,9

99,0

58,6

08

3,9

99,0

58,6

08

Tran

sfer

to re

serv

e -

- 1

,461

,293

,053

1

22,7

79,5

53

- -

(1,5

84,0

72,6

06)

- Di

vide

nd:

-

Bon

us sh

ares

1,4

63,6

27,8

80

- -

- -

- (1

,463

,627

,880

) -

C

ash

divi

dend

- -

- -

- -

(1,1

70,9

02,3

04)

(1,1

70,9

02,3

04)

Issu

e of

shar

e ca

pita

l -

- -

- -

- -

-

Tota

l sha

reho

lder

s’ eq

uity

as o

n 31

Dec

embe

r 201

416

,099

,906

,680

1,

989,

633

16,0

99,9

06,6

80

415

,552

,016

11

,498

,971

,320

8

1,50

0,00

0 2

,414

,986

,002

4

6,61

2,81

2,33

1

Add:

Mud

arab

a pe

rpet

ual b

ond

- -

- -

- -

- 3

,000

,000

,000

Ad

d: G

ener

al p

rovi

sion

for u

ncla

ssifi

ed in

vest

men

ts a

nd o

ff-

bala

nce

shee

t ite

ms

- -

- 4

,753

,680

,000

-

- -

4,7

53,6

80,0

00

Adju

stm

ent f

or c

urre

ncy t

rans

latio

n di

ffere

nces

- -

- (6

,392

,484

) -

- -

(6,3

92,4

84)

Less

: 50.

00%

of a

sset

s rev

alua

tion

rese

rve

- -

- -

(5,7

49,4

85,6

60)

- -

(5,7

49,4

85,6

60)

Less

: 50.

00%

of re

valu

atio

n re

serv

e of

secu

ritie

s -

- -

- -

(40,

750,

000)

- (4

0,75

0,00

0)

Tota

l equ

ity a

s on

31 D

ecem

ber 2

014

16,0

99,9

06,6

80

1,98

9,63

3 16

,099

,906

,680

5

,162

,839

,532

5,7

49,4

85,6

60

40,

750,

000

2,4

14,9

86,0

02

48,

569,

864,

187

*Not

e : G

ener

al /

othe

r res

erve

s01

.01.

2014

01.0

1.20

13Ge

nera

l res

erve

254

,379

,979

1

30,4

39,9

79

Rese

rve

rela

ted

to D

TA o

n pr

ovis

ion

for B

L -

- Di

vide

nd e

qual

izatio

n ac

coun

t 3

2,00

0,00

0 3

2,00

0,00

0 Cu

rrenc

y tra

nsla

tion

diffe

renc

es 1

,317

,771

(3

,303

,771

)To

tal

287

,697

,750

1

59,1

36,2

08


Isla

mi B

ank

Bang

lade

sh L

imite

dSt

atem

ent o

f Cha

nges

in E

quity

For t

he ye

ar e

nded

31

Dece

mbe

r 201

3

(Am

ount

in Ta

ka)

Parti

cula

rsPa

id-u

p ca

pita

lSh

are

prem

ium

Stat

utor

y re

serv

e

Gene

ral/

othe

r re

serv

es *

Asse

ts

reva

luat

ion

rese

rve

Reva

luat

ion

rese

rve

of

secu

ritie

s

Reta

ined

ea

rnin

gsTo

tal

12

34

56

78

9 (2

+3+

4+5+

6+7+

8)

Bal

ance

as a

t 01

Jan

uary

201

3 12

,509

,640

,000

1,

989,

633

12,4

23,6

62,3

42

159

,136

,208

11

,498

,971

,320

3

4,70

0,00

0 3

,152

,246

,877

3

9,78

0,34

6,38

0 Ch

ange

s in

acco

untin

g po

licy r

esta

ted

bala

nce

- -

Surp

lus/

(defi

cit)

on a

ccou

nt o

f rev

alua

tion

of p

rope

rties

- -

- -

- -

- Su

rplu

s/ (d

efici

t) on

acc

ount

of r

eval

uatio

n of

inve

stm

ents

(sha

res

& se

curit

ies)

- -

- -

- 2

7,90

0,00

0 -

27,

900,

000

Curre

ncy t

rans

latio

n di

ffere

nces

- -

- 4

,621

,542

-

- -

4,6

21,5

42

Net g

ain

and

loss

es n

ot re

cogn

ized

in th

e in

com

e st

atem

ent

- -

- -

- -

- -

Net p

rofit

for t

he p

erio

d -

- -

- -

4,9

48,5

84,5

92

4,9

48,5

84,5

92

Tran

sfer

to re

serv

e -

- 2

,214

,951

,285

1

23,9

40,0

00

- -

(2,3

38,8

91,2

85)

- Di

vide

nd:

-

Bon

us sh

ares

2,1

26,6

38,8

00

- -

- -

- (2

,126

,638

,800

) -

C

ash

divi

dend

- -

- -

- -

(1,0

00,7

71,2

00)

(1,0

00,7

71,2

00)

Issu

e of

shar

e ca

pita

l -

- -

- -

- -

- To

tal s

hare

hold

ers’

equi

ty a

s on

31 D

ecem

ber 2

013

14,6

36,2

78,8

00

1,98

9,63

3 14

,638

,613

,627

2

87,6

97,7

50

11,4

98,9

71,3

20

62,

600,

000

2,6

34,5

30,1

84

43,

760,

681,

314

Add:

Mud

arab

a pe

rpet

ual b

ond

- -

- -

- -

- 3

,000

,000

,000

Ad

d: G

ener

al p

rovi

sion

for u

ncla

ssifi

ed in

vest

men

ts a

nd o

ff-

bala

nce

shee

t ite

ms

- -

- 4

,508

,800

,000

-

- -

4,5

08,8

00,0

00

Adju

stm

ent f

or c

urre

ncy t

rans

latio

n di

ffere

nces

(1,3

17,7

71)

(1,3

17,7

71)

Less

: 50.

00%

of a

sset

s rev

alua

tion

rese

rve

- -

- -

(5,7

49,4

85,6

60)

- -

(5,7

49,4

85,6

60)

Less

: 50.

00%

of re

valu

atio

n re

serv

e of

secu

ritie

s -

- -

- -

(31,

300,

000)

- (3

1,30

0,00

0) To

tal e

quity

as o

n 31

Dec

embe

r 201

3 14

,636

,278

,800

1,

989,

633

14,6

38,6

13,6

27

4,7

95,1

79,9

79

5,7

49,4

85,6

60

31,

300,

000

2,6

34,5

30,1

84

45,

487,

377,

883

Pr

of. N

RM B

orha

n Ud

din

Ph.D

M

d. A

bdus

Sal

am F

CA, F

CS

Barr

iste

r Moh

amm

ed B

elay

et H

ossa

in

Moh

amm

ad A

bdul

Man

nan

Di

rect

or

Dire

ctor

Di

rect

or

Man

agin

g Di

rect

orTh

is is

the

stat

emen

t of c

hang

es in

equ

ity re

ferr

ed to

in o

ur s

epar

ate

repo

rt o

f eve

n da

te.

Az

iz H

alim

Kha

ir Ch

oudh

ury

Syfu

l Sha

msu

l Ala

m &

Co

How

lada

r Yun

us &

Co.

Ch

arte

red

Acco

unta

nts

Char

tere

d Ac

coun

tant

s Ch

arte

red

Acco

unta

nts

Dhak

a21

Mar

ch 2

015


Isla

mi B

ank

Bang

lade

sh L

imite

dLi

quid

ity S

tate

men

tAs

sets

& li

abili

ties a

naly

sis

As a

t 31

Dece

mbe

r 201

4Am

ount

in Ta

kaPa

rticu

lars

Up to

1 M

onth

1 - 3

Mon

ths

3 - 1

2 M

onth

s1

- 5 ye

ars

Mor

e th

an 5

year

sTo

tal 3

1.12

.201

4To

tal 3

1.12

.201

31

23

45

67=

(2 +

3 +

4 +

5

+ 6)

8

ASSE

TSCa

sh in

han

d 1

0,37

5,90

4,07

9 -

- -

35,

843,

455,

347

46,

219,

359,

426

44,

291,

514,

939

Bala

nce

with

oth

er b

anks

& fi

nanc

ial i

nstit

utio

ns (N

ote-

8.2)

10,

994,

350,

245

9,0

25,0

00,0

00

180

,000

,000

-

- 2

0,19

9,35

0,24

5 1

2,32

7,32

0,34

4 Pl

acem

ent w

ith B

anks

& o

ther

Fin

anci

al In

stitu

tions

- 2

,000

,000

,000

-

- -

2,0

00,0

00,0

00

- In

vest

men

ts (i

n sh

ares

& se

curit

ies)

(Not

e-10

.4)

19,

355,

655,

126

35,

460,

000,

000

42,

618,

000,

000

300

,000

,000

3

,122

,873

,770

10

0,85

6,52

8,89

6 6

7,21

1,39

8,96

8 Ge

nera

l inv

estm

ents

etc

. (N

ote-

11.1

.1)

63,

378,

766,

515

79,

432,

061,

802

107,

961,

949,

441

96,

501,

760,

873

88,

819,

562,

574

436,

094,

101,

205

375,

200,

298,

497

Bills

pur

chas

ed &

dis

coun

ted

(Not

e-11

.2.1

) 7

,108

,296

,384

9

,544

,931

,260

1

0,72

8,13

8,61

7 -

- 2

7,38

1,36

6,26

1 2

7,99

4,50

6,48

0 Fi

xed

asse

ts in

clud

ing

prem

ises

(lan

d &

build

ing)

, fur

nitu

re a

nd fi

xtur

es

(Not

e-12

.3)

- -

744

,614

,312

2

,632

,757

,271

1

2,54

8,99

0,33

3 1

5,92

6,36

1,91

6 1

5,73

2,80

8,58

9

Othe

r ass

ets (

Note

-13.

1) 3

09,6

53,2

48

1,6

77,8

39,6

26

919

,707

,427

5

60,2

04,1

50

277

,566

,351

3

,744

,970

,802

4

,471

,783

,137

No

n - b

anki

ng a

sset

s -

- -

- -

- -

Tota

l ass

ets

111

,522

,625

,597

137

,139

,832

,688

16

3,15

2,40

9,79

8 9

9,99

4,72

2,29

4 14

0,61

2,44

8,37

5 6

52,4

22,0

38,7

51

547

,229

,630

,954

LI

ABIL

ITIE

SPl

acem

ent f

rom

ban

ks &

oth

er fi

nanc

ial i

nstit

utio

ns4,

254,

533,

600

869,

506,

935

2,53

3,46

0,20

8 -

- 7,

657,

500,

743

- De

posi

ts (

Note

-14.

6) 9

2,71

6,05

8,87

8 10

8,99

1,48

4,44

5 15

4,55

2,46

3,75

1 9

5,99

7,64

1,17

6 10

8,43

8,65

2,58

6 56

0,69

6,30

0,83

6 47

3,14

0,95

5,03

1 Ot

her a

ccou

nts

- -

- -

- -

- Pr

ovis

ion

& ot

her l

iabi

litie

s (N

ote-

16.9

) 2

,952

,471

,399

1

2,82

1,71

0,54

2 3

,899

,744

,057

1

,811

,279

,527

12

,566

,821

,569

34,0

52,0

27,0

94 2

7,13

3,86

0,56

8 De

ferre

d ta

x lia

bilit

y/ (a

sset

s) -

- -

- 4

03,3

97,7

47

403

,397

,747

1

94,1

34,0

41

Mud

arab

a pe

rpet

ual b

ond

- -

- -

3,0

00,0

00,0

00

3,0

00,0

00,0

00

3,0

00,0

00,0

00

Tota

l lia

bilit

ies

99,9

23,0

63,8

7712

2,68

2,70

1,92

216

0,98

5,66

8,01

6 9

7,80

8,92

0,70

3 12

4,40

8,87

1,90

260

5,80

9,22

6,42

0 5

03,4

68,9

49,6

40

Net l

iqui

dity

gap

11,5

99,5

61,7

2014

,457

,130

,767

2,16

6,74

1,78

2 2

,185

,801

,591

16

,203

,576

,473

46,

612,

812,

331

43,

760,

681,

314

Pr

of. N

RM B

orha

n Ud

din

Ph.D

M

d. A

bdus

Sal

am F

CA, F

CS

Barr

iste

r Moh

amm

ed B

elay

et H

ossa

in

Moh

amm

ad A

bdul

Man

nan

Di

rect

or

Dire

ctor

Di

rect

or

Man

agin

g Di

rect

orTh

is is

the

liqui

dity

sta

tem

ent r

efer

red

to in

our

sep

arat

e re

port

of e

ven

date

.

Az

iz H

alim

Kha

ir Ch

oudh

ury

Syfu

l Sha

msu

l Ala

m &

Co

How

lada

r Yun

us &

Co.

Ch

arte

red

Acco

unta

nts

Char

tere

d Ac

coun

tant

s Ch

arte

red

Acco

unta

nts

Dhak

a21

Mar

ch 2

015


Islami Bank Bangladesh Limited and its SubsidiariesNotes to the consolidated financial statements


1.0 The Bank and its activities

1.1 Islami Bank Bangladesh Limited (hereinafter referred to as “the Bank” or “IBBL”) was established as a Public Limited Banking Company in Bangladesh in 1983 as the first Shari’ah based Scheduled Commercial Bank in the South East Asia. Naturally, its modus operandi is substantially different from those of other conventional Commercial Banks. The Bank conducts its business on the Shari’ah principles of Mudaraba, Musharaka, Bai-Murabaha, Bai-Muajjal, Hire Purchase under Shirkatul Melk, Bai-Salam and Bai-as-Sarf etc. There is a Shari’ah Supervisory Committee in the Bank which ensures that the activities of the Bank are being conducted on the precepts of Islam.

The shares of the Bank are listed with both Dhaka Stock Exchange (DSE) Limited and Chittagong Stock Exchange (CSE) Limited. The Bank carries out its business activities through its Head Office in Dhaka, 14 Zonal Offices, 294 branches including 53 Authorised Dealer (AD) branches and 3 Off-shore Banking Units (OBUs) in Bangladesh. The Principal place of business is the Registered Office of the Bank situated at Islami Bank Tower, 40, Dilkusha Commercial Area, Dhaka-1000, Bangladesh.

These financial statements as at and for the year ended 31 December 2014 include the consolidated and separate financial statements of the Bank. The consolidated financial statements comprise the financial statements of the Bank and its subsidiaries (mentioned in Note - 1.4, together referred to as “the Companies”).

1.2 Nature of business/principal activities of the Bank

1.2.1 Commercial banking services

All kinds of commercial banking services are provided by the Bank to the customers following the principles of Islamic Shari’ah, the provisions of the Bank Company Act, 1991 as amended, Bangladesh Bank’s directives and directives of other regulatory authorities.

1.2.2 ISlAMIC MICRo-FInAnCe

Islamic micro-finance represents micro-finance and the Islamic finance industry. Under Islamic micro-finance, major focus is given on improvement of living standard of poor people. The projects are closely monitored so that the members are really benefited. IBBL provides this services under the umbrella of Rural Development Scheme (RDS) and Urban Poor Development Scheme (UPDS).

1.2.3 Mobile financial services -”mCash”

IBBL has launched mobile financial services on 27 December 2012 under the name “Islami Bank mCash” as per Bangladesh Bank approval (reference no. DCMPS/PSD/37/(W)/2012-321 dated 14 June 2012). Islami Bank mCash offers different services through Mobile phone that include deposit and withdrawal of cash money, fund transfer from one account to another, receiving remittance from abroad, knowing account balance and mini-statement, giving and receiving salary, mobile recharge and payment of utility bill, merchant bill payment etc.

1.3 Off-shore banking unit (OBU)

Bangladesh Bank has approved the operation of Off-Shore Banking Unit (OBU) of Islami Bank Bangladesh Limited located at Head Office Complex Branch- Dhaka, Uttara Branch- Dhaka and Agrabad Branch- Chittagong through letter no. BRPD (P-3)744(111)/2010-1032 dated 28 March, 2010. The Bank commenced the operation of its Off-shore Banking Unit from 08.02.2011 at Head Office Complex Branch, Dhaka, and from 27.09.2011 at Agrabad Branch, Chittagong. Operations of OBU located at Uttara Branch, Dhaka has not yet been started. Due to having different functional currency (Note 2.3), the operation of OBU has been considered as “foreign operation” for reporting purposes and relevant financial reporting standards have been applied accordingly (Note 3.2.2). The financial statements of the OBU are included in the separate financial statements of the Bank and eventually in the consolidated financial statements. The sole financial statements of OBU are shown both in the currency in which it operates (i.e. USD) and in the presentation currency of the Bank (i.e. BDT) in Annexure - E.


1.4 Subsidiaries of the Bank

1.4.1 Islami Bank Securities Limited (IBSL)

As per Bangladesh Securities and Exchange Commission’s (BSEC) Letter No. SEC/Reg/CSE/MB/ 2009/444 dated 20.12.2009 and approval of Bangladesh Bank through Letter No. BRPD (R-1)717/2010-47 dated 07.02.2010; IBBL established a subsidiary Company named “Islami Bank Securities Limited” to operate stock broker and stock dealer activities.

The share capital of Islami Bank Securities Ltd. is Tk. 2,700,000,000/- divided into 2,700,000 shares of Tk.1,000/ each out of which share capital of IBBL is Tk.2,699,946,000/- divided into 2,699,946 shares of Tk.1,000/- each which represent 99.998% of total share of the subsidiary Company.

IBSL was incorporated on 22.03.2010 and date of commencement of business was 23.05.2010. Required capital was transferred to IBSL on 25.05.2010 which is operating business under the license issued by the Bangladesh Securities & Exchange Commission (BSEC). As a stock broker, IBSL acts as an agent in the purchase and sale of Shari’ah approved listed securities and realizes commission on transactions in accordance with approved commission schedule.

1.4.2 Islami Bank Capital Management Limited (IBCML)

As per Bangladesh Bank BRPD Circular No. 12 dated 14.10.2009 and approval of Bangladesh Bank through Letter No. BRPD (R-1)717/2010-47 dated 07.02.2010, IBBL established another subsidiary Company named “Islami Bank Capital Management Limited” to operate portfolio management, underwriting, issue management etc. IBCML was incorporated on 01.04.2010 and required capital was transferred on 06.07.2010.

The share capital of Islami Bank Capital Management Ltd. is Tk.300,000,000/- divided into 300,000 shares of Tk.1,000/ each out of which share capital of IBBL is Tk.299,993,000/- divided into 299,993 shares of Tk.1,000/- each which represent 99.998% of total share of the subsidiary Company. Permission of Bangladesh Securities and Exchange Commission (BSEC) is yet to be received for the core operation of IBCML.

1.4.3 IBBL Exchange Singapore Pte. Ltd.

IBBL Exchange Singapore Pte. Ltd. has been incorporated in Singapore, as a subsidiary of Islami Bank Bangladesh Limited for remittance services and things incidental thereto under the Companies Act, CAP. 50 of the Republic of Singapore. Till 31 December 2014, no share capital of the subsidiary has been paid by its parent company i.e. Islami Bank Bangladesh Limited. Therefore, the financial statements of IBBL Exchange Singapore Pte. Ltd has not been consolidated with that of the parent i.e. IBBL.

2.0 Basis of preparation

2.1 Statement of compliance

The Bank and its subsidiaries are being operated in strict compliance with the rules of Islamic Shari’ah. The consolidated and separate financial statements of the Bank have been prepared basically as per provisions of the “Guidelines for Islamic Banking” issued by Bangladesh Bank through BRPD Circular No. 15 dated 09.11.2009 with reference to the provisions of the Bank Company Act, 1991 as amended and by Bangladesh Bank BRPD Circular No.14 dated 25.06.2003 & Bangladesh Bank’s other circulars/instructions and in accordance with International Financial Reporting Standards (IFRSs) adopted as Bangladesh Financial Reporting Standards (BFRSs) by the Institute of Chartered Accountants of Bangladesh (ICAB); the Companies Act, 1994; the Securities and Exchange Rules, 1987; Dhaka and Chittagong Stock Exchanges’ Listing Regulations and other laws and rules applicable in Bangladesh and Standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), as a member of that organization.

In case the requirements of guidelines and circulars issued by Bangladesh Bank differ with those of other regulatory authorities and financial reporting standards, the guidelines and circulars issued by Bangladesh Bank prevails. As such the Bank has departed from those requirements of BFRSs in order to comply with the rules and regulations of Bangladesh Bank which are disclosed below:


i) Provision on investments and off-balance sheet exposures

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 investments (good/standard investments) has to be maintained regardless of objective evidence of impairment. Also provision for sub-standard, doubtful and bad & loss investments have to be provided at 20%, 50% and 100% respectively (except short-term agricultural and micro-credits where 5% for sub-standard and doubtful investments and 100% for bad & loss investments) depending on the duration of overdue. Again as per BRPD Circular No.14 dated 23 September 2012 and BRPD Circular No.19 dated 27 December 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 “Financial Instruments: Recognition and Measurement”.

ii) Recognition of investment income in suspense

BFRS: Investment to customers are generally classified as ‘loans and receivables’ as per BAS 39 “Financial Instruments: Recognition and Measurement” and investment income is recognised through effective interest rate method over the term of the investment. Once an investment is impaired, investment 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 an investment is classified, investment income on such investment are not allowed to be recognised as income, rather the corresponding amount needs to be credited to an investment income in suspense account, which is presented as liability in the balance sheet.

iii) 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 and loss account” or under “available for sale” where any change in the fair value (as measured in accordance with BFRS 13) at the year-end is taken to profit and loss account or revaluation reserve respectively.

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; otherwise investments are recognised at cost.

iv) Revaluation gains/losses on Government securities

BFRS: As per requirement of BAS 39 “Financial Instruments: Recognition and Measurement” 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) is 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 a 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.

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.

Bangladesh Bank: Bangladesh Bank has issued templates for financial statements which will strictly be followed by all banks. The templates of financial statements issued by Bangladesh Bank do not include Other Comprehensive Income are the elements of Other Comprehensive Income allowed to be included in a single Other Comprehensive Income (OCI) 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.


vi) Financial instruments - presentation and disclosure

In several cases Bangladesh Bank guidelines categorise, recognise, measure and present financial instruments differently from those prescribed in BAS 39 “Financial Instruments: Recognition and Measurement”. As such full disclosure and presentation requirements of BFRS 7 “Financial Instruments: Disclosures” and BAS 32 “Financial Instruments: Presentation” cannot be made in the financial statements.

vii) Financial guarantees

BFRS: As per BAS 39 “Financial Instruments: Recognition and Measurement”, 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 guarantee liabilities are recognised initially at their fair value, and the initial fair value is amortised over the life of the financial guarantee. The financial guarantee liability is subsequently carried at the higher of this amortised amount and the present value of any expected payment when a payment under the guarantee has become probable. Financial guarantees are included within other liabilities. Bangladesh Bank: As per BRPD 14 dated 25 June 2003, financial guarantees such as letter of credit, letter of guarantee will be treated as off-balance sheet items. No liability is recognised for the guarantee except the cash margin.

viii) Balance with Bangladesh Bank: (Cash Reserve Requirement)

BFRS: Balance with Bangladesh Bank that are required to be kept as part of cash reserve requirement, should be treated as other asset as it is not available for use in day to day operations as per BAS 7 “Statement of Cash Flows”.

Bangladesh Bank: Balance with Bangladesh Bank is treated as cash and cash equivalents.

ix) Cash flow statement

BFRS: 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 14 dated 25 June 2003 and BRPD 15 dated 09 November 2009, cash flow statement is to be prepared following a mixture of direct and indirect methods.

x) Non-banking asset

BFRS: No indication of Non-banking asset is found in any BFRS.

Bangladesh Bank: As per BRPD 14 dated 25 June 2003 and BRPD 15 dated 09 November 2009, there must exist a face item named Non-banking asset.

xi) Presentation of intangible asset

BFRS: An intangible asset must be identified and recognised, and the disclosure must be given as per BAS 38 “Intangible Assets”.

Bangladesh Bank: There is no regulation for intangible assets in BRPD 14 dated 25 June 2003 and BRPD 15 dated 09 November 2009.

xii) Off-balance sheet items

BFRS: There is no concept of off-balance sheet items in any BFRS; hence 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 and BRPD 15 dated 09 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.


xiii) Investments net off provision

BFRS: Investments should be presented net off provision.

Bangladesh Bank: As per BRPD 14 dated 25 June 2003 and BRPD 15 dated 09 November 2009, provision on investments are presented separately as liability and can not be netted off against investments.

xiv) Revenue

As per BAS 18 “Revenue”, revenue should be recognized on accrual basis but due to the unique nature of Islamic Banks, income from investment under Mudaraba, Musharaka, Bai-Salam, Bai-as-Sarf and Ujarah modes is accounted for on realization basis as per AAOIFI and Bangladesh Bank guidelines.

[Note 4 includes Compliance with Financial Reporting Standards as applicable in Bangladesh]

2.1.1 Authorization of the financial statements for issue

The consolidated financial statements and the separate financial statements of the Bank have been authorized for issue by the Board of Directors on 21 March, 2015.

2.1.2 Changes in accounting standards

No new International Financial Reporting Standards (IFRSs) have been adopted by The Institute of Chartered Accountants of Bangladesh (ICAB) as Bangladesh Financial Reporting Standards (BFRSs) during the year that are effective for the first time for the financial year 2014 that have a significant impact on the Companies and accordingly no new accounting standards have been applied in preparing these financial statements.

2.1.3 Prior period adjustments

Prior period adjustments, if any, to be recognized retrospectively as per BAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”. Accordingly during the year an adjustment was made regarding the elimination on consolidation of the amount of placement to AD Branches by Off-shore Banking Unit (OBU) shown in the head titled “Mudaraba/Mudaraba Documentary Bills” under investments. OBU started this type of placement from the year 2013 which was kept in a head titled “Cover Fund MDB Investment Account” under other liabilities at AD Branches. As per BFRS 10 “Consolidated Financial Statements”, all intra-company balances should be eliminated on consolidation. Since, this type of transaction and related balances arose only in the year 2013, the adjustment was made retrospectively from the year 2013 and corrected in current year.

Due to the above prior period adjustments, investment and other liabilities have been adjusted by Tk.3,609,750,453 and Tk.3,585,147,117 respectively for the year 2013. Net profit after tax has been adjusted by Tk.24,603,336 and accordingly general reserve has been adjusted by the same amount of that year. The effect in Earnings per Share (EPS) was of Tk.0.015 per share (restated) due to the above adjustments.

2.2 Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following material items:

- Land is recognized at cost at the time of acquisition and subsequently measured at fair value following revaluation model as per BAS 16 “Property Plant & Equipment”.

- Investments in quoted shares are revalued at the year end at market price as per Bangladesh Bank circular.

2.3 Functional and presentation currency

The consolidated and separate financial statements of the Bank are presented in Bangladeshi Taka (Taka/Tk./BDT) which is the functional currency of the Bank and its subsidiaries except Off-shore Banking Unit (OBU) where the functional currency is US Dollar (USD).

All financial information presented in Taka has been rounded to the nearest integer, except otherwise indicated.


2.4 Use of estimates and judgments

The preparation of the consolidated and separate financial statements of the Bank in conformity with BFRSs require management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount 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 recognized prospectively i.e. in the period in which the estimate is revised and in any future period affected.

Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized and presented in the consolidated and separate financial statements of the Bank are included in following notes/statements:

a) Note 16.7 Current tax liabilities

b) Note 17.0 Deferred tax liabilities

c) Note 37.0 Depreciation

d) Note 16.1-16.4 Provisions for investments, diminution in value of investment in shares and other assets

e) Note 21.2 Asset revaluation reserve

f) Liquidity statement Assets & liabilities analysis

2.5 Cash flow statement

Cash Flow Statement is prepared in accordance with BAS 7 “Statement of Cash Flows”, and as per “Guidelines for Islamic Banking” issued by Bangladesh Bank through BRPD Circular No. 15 dated 09.11.2009 and BRPD Circular No.14 dated 25.06.2003. The Statement shows the structure of changes in cash and cash equivalents during the financial year.

2.6 Statement of changes in equity

Statement of Changes in Equity has been prepared in accordance with BAS 1 “Presentation of Financial Statements”, and as per “Guidelines for Islamic Banking” issued by Bangladesh Bank through BRPD Circular No. 15 dated 09.11.2009 and BRPD Circular No.14 dated 25.06.2003.

2.7 Liquidity statement

Liquidity Statement has been prepared in accordance with the residual/remaining maturity of Assets and Liabilities as on 31 December 2014 and as per “Guidelines for Islamic Banking” issued by Bangladesh Bank through BRPD Circular No. 15 dated 09.11.2009 and BRPD Circular No.14 dated 25.06.2003 as per the following basis:

i) Balance with other banks and financial institutions, etc are on the basis of their respective maturity term;

ii) Investments in shares & securities are on the basis of their respective maturity;

iii) General investments are on the basis of their recovery/repayment schedule;

iv) Fixed assets are on the basis of their useful lives;

v) Other assets are on the basis of their realization/amortization;

vi) Deposits and other accounts are on the basis of their maturity and payments;

vii) Provisions and other liabilities are on the basis of their adjustment/settlement;

viii) Due to perpetual in nature/maturity, Mudaraba perpetual bond (MPB) is reported under maturity more than 5 (five) years.

2.8 Reporting period

These financial statements of the Bank and its subsidiaries cover one calendar year from 01 January 2014 to 31 December 2014.


3.0 Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in the consolidated and separate financial statements of the Bank (together referred to as ‘financial statements’) except provision for investment which have been changed due to new circular issued by Bangladesh Bank (Note 3.16.1).

Certain comparative amounts in the financial statements have reclassified and rearranged to conform to the current year’s presentation.

3.1 Basis of consolidation

3.1.1 Subsidiaries

Subsidiaries are investees controlled by the Parent. The Parent ‘controls’ an investee if it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

3.1.2 Transactions eliminated on consolidation

Inter-company balances and transactions, and any unrealized income and expenses (except for foreign currency transaction gains and losses) arising from inter-company transactions are eliminated in preparing consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment. The investments in shares of subsidiaries held by the Bank in the separate financial statements are eliminated against the corresponding share capital of subsidiaries in the consolidated financial statements.

3.2 Foreign currency

3.2.1 Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies (Bangladeshi Taka in case of IBBL Main Operations and US Dollar in case of OBU) at the spot exchange rates ruling at the date of transactions as per BAS 21 “The Effects of Changes in Foreign Exchange Rates”. Monetary assets and liabilities held in US Dollar at the reporting date are retranslated into the functional currency in BDT at the weighted average revaluation rate of inter-bank market as determined by Bangladesh Bank. Monetary assets and liabilities denominated in other foreign currencies at the reporting date are first translated into US Dollar at buying rates of New York closing of the previous day and then retranslated from US Dollar into the functional currencies in the same manner specified above.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Foreign exchange differences (rates at which transactions were initially recorded and the rate prevailing on the reporting date/date of settlements) of the monetary items are recognized in the profit and loss.

3.2.2 Foreign operations

The assets and liabilities of foreign operations (Note - 1.3) are translated to Bangladeshi Taka at spot exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated at spot exchange rates at the date of transactions as long as practicable otherwise average rate of exchange has been used. Foreign currency differences arising on translation are recognized in other comprehensive income and presented directly in the foreign currency translation reserve (translation reserve) in equity. If the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, then foreign currency differences arising on the item form part of the net investment in the foreign operation and are recognized in other comprehensive income and accumulated in the translation reserve within equity.


3.3 Revenue

3.3.1 Investment income

Income from general investments is accounted for on accrual basis except for investments under Musharaka, Mudaraba, Bai-Salam, Bai-as-Sarf and Ujarah (Khidmah Card) modes of Investment where the investment income is accounted for on realization basis. The Bank does not charge any rent during the gestation period of investment against Hire Purchase under Shirkatul Melk (HPSM) mode of investment but it fixes the sale price of the assets at a higher level in such a way to cover its expected rate of return. Such income is recognized on realization basis.

Profit/Rent/Compensation accrued on Classified Investments are suspended and accounted for as per circulars issued by Bangladesh Bank in this regard from time to time. At the time of recovery or regularization of those investments the related income which was suspended and shown as a liability is taken as investment income as per circulars issued by Bangladesh Bank. As a result, all the transferred amount to investment income from suspense during the year has already beed included in the investment income of the Bank

Profit on deposits with other banks & financial statements is accounted for on accrual basis.

3.3.1.1 Sharing of investment income

In case of investment, Mudaraba fund gets preference over cost free fund. The investment income earned through deployment of Mudaraba Fund is shared by the Bank and the Mudaraba depositors at the pre-agreed ratio.

3.3.2 Income from investment in Bangladesh Government Islamic Investment Bond (BGIIB) & Islamic Inter-bank Fund Market (IIFM)

Profit from investment in Bangladesh Government Islamic Investment Bond (BGIIB) & Islamic Inter-bank Fund Market (IIFM) is accounted for on accrual basis.

3.3.3 Fees, commission and exchange income

Fees, Commission and Exchange Income on services provided by the Bank are recognized as and when the related services are rendered. Commission charged to customers on letter of credit and letter of guarantee are credited to Income at the time of effecting the transactions.

3.3.4 Dividend income

Dividend income from investments is accounted for when the right to receive income is established.

3.4 Income tax expenses

Income tax expenses comprise current and deferred taxes. Income taxes are recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

3.4.1 Current tax

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date and any adjustment to the tax payable in respect of previous years. Provision for current income tax has been made on taxable income of the Bank as per following rates:

Type of income 2014 2013

Business income 42.50% 42.50%

Dividend income 20.00% 20.00%


3.4.2 Deferred tax

Deferred tax is recognized in compliance with BAS 12 “Income Taxes” and BRPD Circular no. 11 dated 12 December 2011, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the date of balance sheet. Deferred tax assets and liabilities are offset as there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the deductible temporary difference can be utilized. Deferred tax assets are reviewed at each date of balance sheet and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

3.5 Zakat

Zakat is paid by the Bank at the rate of 2.58% (instead of 2.50% as the Bank maintains its financial statements following Gregorian Year) and calculated on the closing balances of Share Premium, Statutory Reserve, General Reserve and Dividend Equalization Accounts as per guidelines of Shari’ah Supervisory Committee and Bangladesh Bank guidelines.

Zakat is charged in the Profit & Loss Account of the Bank as per “Guidelines for Islamic Banking” issued by Bangladesh Bank through BRPD Circular No. 15 dated 09.11.2009.

Zakat on Paid up Capital and Deposits is not paid by the Bank, since it is the responsibility of the Shareholders and Depositors respectively.

3.5.1 Management and other expenses

Expenses incurred by the Bank are recognized on accrual basis.

3.6 Cash and cash equivalents

Cash and cash equivalents include notes and coins in hand, balances held with Bangladesh Bank and its agent bank and highly liquid financial assets that are subject to an insignificant risk of changes in their fair value.

3.7 Investments

Investments are stated in the Balance Sheet net off profit receivable and unearned income.

Profit Receivable – the amount of unexpired portion of profit charged on murabaha investment at the time of sale of good/ services to customer/ client.

Unearned Income- the amount of unrealized portion of profit/ value addition of fixed assets under Hire Purchase Under Shirkatul Melk (HPSM) investment for gestation period.

However, provision for investments are not net-off with investments.

3.8 Investment in shares and securities

Investment in shares and securities (other than government treasury securities) are initially measured at fair value (which is actually the cost) and subsequently accounted for depending on their classification as either held to maturity, fair value through profit or loss, or available for sale.

Investment in Bangladesh Government Islamic Investment Bond (BGIIB) is measured both initially and subsequently at cost, which is also the fair value.

IBBL can not invest in interest-based government securities like T-bond, T-bill etc. So the instructions and circulars related to accounting for those instruments are not applicable for the Bank.


3.8.1 Held to Maturity (HTM)

Held-to-maturity investments are non-derivative assets with fixed or determinable payments and fixed maturity that the entity has the positive intent and ability to hold to maturity, and which are not designated as at fair value through profit or loss or as available for sale. These are measured at amortized cost at each year end by taking into account any discount or premium on acquisition. Any increase or decrease in value of such investments is recognized in equity.

3.8.2 Held for Trading (HFT)/Fair value through profit or loss (FVTPL)

Some investment in shares and securities are designated at fair value, with fair value changes recognized immediately in profit or loss.

3.8.3 Available-for-sale (AFS)

Available-for-sale investments are non-derivative investments that are designated as available-for-sale or are not classified as another category of financial assets. Available-for-sale investments comprise generally equity securities. Unquoted equity securities whose fair value cannot reliably be measured are carried at cost. All other available-for-sale investments are carried at fair value and changes recognized in equity (Note 3.18.6).

Dividend income is recognized in profit or loss when the right to receive income is established. Other fair value changes, other than impairment losses are presented as reserve in equity.

3.8.4 Derivative investments

The Bank has no investment in any derivative instrument.

3.9 Investment in subsidiaries

Investments in subsidiaries are accounted for under cost method of accounting in the Bank’s Financial Statements in accordance with BFRS 10”Consolidated Financial Statements”.

3.10 Fixed assets

3.10.1 Recognition and measurement

Items of fixed assets excluding land and building are measured at cost less accumulated depreciation and accumulated impairment losses. Land and building is recognized at cost at the time of acquisition and subsequently measured at revalued amounts which is the fair value at the time of revaluation done by independent valuer and any surplus on revaluation is shown as equity component until the disposal of asset, as per BAS 16 “Property, Plant & Equipment” and Bangladesh Bank BCD Circular Letter No. 12 & 18 dated 20 April 1993 & 15 June 1993 respectively and BRPD Circular No.10 dated 25 November 2002 & BRPD Circular No.09 dated 31 December 2008. Deficit arising on subsequent revaluation is adjusted against the balance in the Revaluation reserve account. Revaluation is carried out with sufficient regularity to ensure that the carrying amount of assets does not differ materially from their fair value.

Cost includes expenditures that are directly attributable to the acquisition of assets. The cost of self-constructed assets includes the following:

- the cost of materials and direct labour;

- any other cost directly attributable to bringing the asset to a working condition for the intended use;

- when the Companies have an obligation to remove the asset or restore the site, an estimate of the costs of dismantling and removing the items and restoring the site on which they are located; and

- capitalized borrowing costs.

Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

Any gain or loss on disposal of an item of fixed assets (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognized in profit or loss.


3.10.2 Subsequent costs

Subsequent costs is capitalized only when it is probable that the future economic benefits associated with the costs will flow to the entity. Ongoing repairs and maintenance is expensed as incurred.

3.10.3 Depreciation

Items of fixed assets are depreciated from the date that they are installed and are ready for use, and in respect of internally constructed assets, from the date that the asset is completed and ready for use.

Depreciation is calculated to write-off the cost/revalued amount of items of fixed assets less their estimated residual values using either of straight-line method (SLM) or reducing balance method (RBM) over their estimated useful lives and recognized in profit and loss. Land is not depreciated.

The estimated rate of depreciation for the current and comparative years of fixed assets are as follows:

Items Method Rates

Building Reducing balance 2.50%

Furniture and fixtures -Do- 10.00%

Mechanical appliances -Do- 20.00%

Books -Do- 30.00%

Motor vehicles Straight-line 20.00%

Computers -Do- 25.00%

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

3.10.4 Intangible assets

An intangible asset is recognized if it is probable that the future economic benefits that are attributable to the asset will flow to the entity and the cost of the assets can be measured reliably. Intangible assets is amortized using the straight line method over the estimated useful life of 4 (four) years.

3.10.5 Capital work in progress

Fixed assets that is being under construction/acquisition is accounted for as capital work in progress until construction/acquisition is completed and measured at cost. The work in progress is transferred to cost of that fixed assets when the construction is completed and it becomes available for use.

3.10.6 Derecognition

An item of fixed assets is derecognized upon disposal or when no economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

3.11 Lease payments

Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease.

3.12 Other assets

Other assets include all other financial assets, other income receivable, advance against expenses etc.


3.13 Non-banking assets

Non-banking assets are acquired on account of the failure of a client to repay the investment in time after receiving the decree from the court regarding the right and title of the mortgaged property.

3.14 Impairment of non-financial assets

The carrying amounts of the non-financial assets, other than investment property and deferred tax assets, if any are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset or cash-generating unit (CGU) exceeds its recoverable amount. All intangible assets having infinite useful life, if any are tested for impairment at least annually.

3.15 Deposits and other accounts

Deposit and other accounts include Al Wadeeah current deposit as well as savings, term and other Mudaraba deposits. Deposits by customers and banks are recognized when the Bank enters into contractual agreements with the counterparties. These items are brought to Financial Statements at the gross value of the outstanding balance.

3.15.1 Profit paid on deposits

As per Mudaraba principle, agreement between the Mudaraba depositors and the Bank, the Mudaraba depositors are entitled to get minimum 65% of the investment income earned through deployment of Mudaraba Fund as per weightage assigned to each type of Mudaraba deposit. In the year 2014, IBBL paid 71.48% of Investment Income earned through deployment of Mudaraba Fund. In some Mudaraba Deposits, additional rate was allowed over the rate derived as per weightage. Mudaraba Depositors do not share any income derived from various banking services where the their fund is not involved and any income derived from Investing Bank’s Equity and other Cost Free Fund. Al-Wadeeah Depositors do not share any income of the Bank.

Profit is paid/provided to Mudaraba Deposit accounts at provisional rate on half-yearly/yearly/anniversary basis considering overall projected growth, performance and profitability of the Bank during the year. Final Rates of profit of any accounting year are declared after finalization of Shari’ah Inspection report and certifying the Investment Income of the Bank by the statutory auditors.

3.16 Provisions

Provision is recognized if, as a result of a past event, the Companies has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits would be required to settle the obligation, in accordance with the BAS 37 “Provisions, Contingent Liabilities and Contingent Assets”.

3.16.1 Provision for investments and off-balance sheet exposures

Provision for Investment for the year 2014 and 2013 is made as per instruction of Bangladesh Bank through BRPD Circular No.14 dated 23 September 2012 and BRPD Circular No.19 dated 27 December 2012. However, for calculation of provision for the year 2013, the amendments made by BRPD Circular No.05 dated 29 May 2013, BRPD Circular No.06 dated 29 May 2013, BRPD Circular No.14 dated 18 December 2013 and BRPD Circular No.15 dated 23 December 2013 has been considered and for the year 2014, the amendments made by BRPD Circular No.16 dated 18 November 2014 has been considered. Investments have not been classified against which order staying classification has been issued by the Hon’ble High Court.

Provision for off-balance sheet exposures for the year 2014 and 2013 is also made as per latest instruction of Bangladesh Bank through BRPD Circular No.14 dated 23 September 2012 and BRPD Circular No.19 dated 27 December 2012.


The rates of provision for the year 2014 and 2013 are given below:

Particulars

2014 2013

Classification/Percentage (%) of provision requirement

UC SMA SS DF BL UC SMA SS DF BL

Small and Medium Enterprise (SME) Financing 0.25% 0.25% 20% 50% 100% 0.25% 0.25% 20% 50% 100%

Consumer Investment for House Building & Professional 2% 2% 20% 50% 100% 2% 2% 20% 50% 100%

Other than House Building & Professional 5% 5% 20% 50% 100% 5% 5% 20% 50% 100%

All Other (Except Short-term Agricultural and Micro-Credits) 1% 1% 20% 50% 100% 1% 1% 20% 50% 100%

Short-term Agricultural and Micro-Credits 2.50% 5% 100% 5% 100%

Investment to Stock Dealers & Stock Broker 2% 20% 50% 100% 2% 20% 50% 100%

Off Balance Sheet exposures 1% 1%

3.16.2 Provision for other assets

Provision for other assets is made as per instruction of Bangladesh Bank through BRPD circular No.14 dated 25.06.2001.

3.16.3 Provision for nostro accounts

Provision for nostro accounts is to be made on the unreconciled debit balance of nostro account over more than 3 months as on the reporting date in accordance with the guideline of Foreign Exchange Policy Department of Bangladesh Bank, FEPD Circular no. FEPD (FEMO) / 01/2005-677 dated 13 September 2005. There was no unreconciled entries outstanding for more than 3 months and accordingly no provision has been made in this regard.

3.17 Employee benefits

3.17.1 The Bank provides various long-term and short-term benefits to the employees under different schemes.

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions to a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plan are recognized as personnel expense in profit or loss in the periods during which related services are rendered by employees. The Bank maintains one funded defined contribution plan for its employees - Provident fund.

3.17.1.1 Provident fund

The Provident Fund is for the regular and confirmed employees who works for a minimum period of 5(five) years at IBBL and it came into force with effect from 1st day of March 1986. The fund receives contributions @ 10% of the basic pay both from employees and employer.

3.17.2 Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Bank’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. The Bank has two funded defined benefit plans - Gratuity fund and Superannuation fund.


3.17.2.1 Gratuity fund

The Gratuity Fund for the regular and confirmed employees of IBBL was established on 1st day of March 1986. The employees who serve at least 7 (seven) years at IBBL are normally entitled to get gratuity equivalent to 1(one) month’s basic pay. Employees served for minimum 12 years get 1.5 (one and a half) months’ basic pay and employees served for 20 years get 2 (two) months’ basic pay. Adequate contributions have been made as per the recommendation of actuarial valuation report and our analysis during the year. Actuarial valuation of the gratuity fund was conducted up to the year 2014 by professional actuary which shows sufficient amount of surplus fund available at the valuation date.

3.17.2.2 Superannuation fund

The Fund came into force with effect from the 19 June, 2008. It was established for financial help to the members of the IBBL Employees’ Superannuation Fund and their families in case of retirement, death, physical disability of employee while in service or of any incidence of like nature acceptable to the Board of Trustees and retirement from the service. During the year 2014, Tk.20.00 million has been provided by the Bank to the Fund. Actuarial valuation of the superannuation fund was conducted up to the year 2014 by professional actuary which shows sufficient amount of surplus fund available at the valuation date.

3.17.3 Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Companies has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

3.17.4 Other employee benefits

Other employee benefits include which are not included in short-term employee benefits, post-employment benefits and other termination benefits.

3.17.4.1 Benevolent fund

The Benevolent Fund for the regular and confirmed employees of the Bank was established in the year 1986. This Fund is mainly used for payment of scholarship to the meritorious students among the children of IBBL’s officers and sub-staff, to allow short term quard/grant to meet some unexpected and specific needs of the staff of IBBL like accident, clinical treatment, marriage ceremony of the employees and their dependents etc. The Bank contributed Tk.10.00 million to the fund during the year 2014 .

3.17.5 Workers’ Profit Participation Fund (WPPF)

As per Bangladesh Labour Act, 2006 as amended in 2013 all companies fall within the scope of WPPF (which includes Bank) are required to provide 5% of its profit before charging such expense to their eligible employees within the stipulated time. The Bank obtained opinion from its legal advisor regarding this issue which stated that the Bank is not required to make provision for WPPF as the provision of Bangladesh Labour Act 2006 as amended contradicts with that of the Bank Company Act 1991. As such the Bank did not make any provision during the year for WPPF.

3.18 Share capital and reserves

3.18.1 Capital

3.18.1.1 Authorized Capital

Authorized Capital is the maximum amount of share capital that the Bank is authorized to raise as per its Memorandum and Articles of Association.


3.18.2 Share Premium

Share premium arose from sale of some un-subscribed Right Share for the year 1996 at above the par value and can be utilized as per section 57 of the Companies Act, 1994.

3.18.3 Statutory reserve

As per section 24 of the Bank Company Act, 1991 as amended, at least 20% or more of the net profit before tax is transferred to statutory reserve every year until the balance of the reserve equates with the paid-up capital.

3.18.4 Assets revaluation reserve

This represents the difference between the book value and the re-valued amount of premises (Land and Building) of the Bank as assessed by professional valuers in the year 2000, 2002, 2003, 2004, 2005, 2006, 2009 and 2012 as per guideline issued by Bangladesh Bank, which was reviewed by the statutory auditors. This reserve is not distributable. However, to calculate Capital Adequacy Ratio (CAR), 50% of the same is considered as a component of supplementary capital as per Bangladesh Bank BRPD Circular No. 24 dated 03 August 2010.

3.18.5 Revaluation reserve of securities

Investment in shares of Bangladesh Shipping Corporation is held for fulfillment of Statutory Liquidity Reserve (SLR) as per Bangladesh Bank Letter No. BCD (P)744(23)(II)/1030 dated 08.11.1983, BRPD Circular No.15 dated 31.10.2005, DOS Circular Letter No.10 dated 11.09.2006, BRPD Circular No.03 dated 12.03.2008 and DOS Circular Letter No.05 dated 26.05.2008. The shares have been revalued as on 30.12.2014 on the basis of closing market price of Dhaka Stock Exchange Limited (DSE). The surplus is credited to Revaluation Reserve on securities account (Note - 3.8.3) and 50% of the same has been taken as a component of Supplementary Capital as per Bangladesh Bank BRPD Circular No. 24 dated 03 August 2010. and shown in the Statement of Changes in Equity as per Bangladesh Bank guidelines. However, deficit arising on such revaluation is debited to Revaluation reserve on securities account.

3.18.6 non-controlling interest

Non-controlling interest is the portion of the profit or loss and net assets of the subsidiaries of IBBL (Islami Bank Securities Limited & Islami Bank Capital Management Limited) that is not owned by the Parent (IBBL). Non-controlling interest belongs to other investors and is reported on the consolidated balance sheet of the parent Company (IBBL) to reflect the claim on assets belonging to other, non-controlling shareholders. Also, non-controlling interest is reported on the consolidated profit and loss account as a share of profit belonging to non-controlling shareholders.

3.19 Subordinated debt-Mudaraba Perpetual Bond (MPB)

Mudaraba Perpetual Bond (MPB) was issued by the Bank under the mudaraba principles of Islamic Shari’ah as per approval of Bangladesh Bank Letter No. BRPD (P-1)661/14(a)/2006-1437 dated 07.05.2006 and Bangladesh Securities and Exchange Commission Letter No. SEC/CI/CPLC-118/2006/385 & SEC/CI/RPO-01/2007/386 both dated 10.06.2007. The Investment Corporation of Bangladesh (ICB) is the Trustee of the MPB. The MPB is listed with Dhaka Stock Exchange Ltd. & Chittagong Stock Exchange Ltd. and trading of the same started from 25 November 2007. It is treated as a component of Supplementary Capital as Subordinated Debt. The instrument having face value of Tk.1,000 each is subordinated to the claims of other creditors and depositors. In the case of liquidation the subordinated debt holders would be paid just before paying to the shareholders assuming there are assets to distribute after all other liabilities and debts have been paid. The Mudaraba Perpetual Bond (MPB) is perpetual in nature i.e.infinite maturity. Profit paid against Mudaraba Perpetual Bond is at the final profit rate of 8 (eight) years Mudaraba Savings Bond and an additional amount equivalent to 10.00% of the rate of dividend declared for the respective year.

3.20 Other liabilities

Other liabilities comprise items such as provision for investment, provision for taxes, profit/rent suspense, accrued expenses, etc. Other liabilities are recognized in the balance sheet as per guidelines of Bangladesh Bank, Bangladesh Financial Reporting Standards (BFRS) etc.


3.21 Contingent liabilities

Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Bank; or

Any present obligation that arises from past events but is not recognized because, it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, is considered as contingent liability.

Contingent liabilities are not recognized but disclosed in the financial statements unless possibility of an outflow of resources embodying economic benefits is reliably estimated. Contingent assets are not recognized in the financial statements as this may result in the recognition of income which may never be realized.

3.22 Off-balance sheet items

Off-balance sheet items are disclosed under Contingent liabilities & other commitments and required provision on Off-balance sheet exposures have been made in accordance with Bangladesh Bank guidelines (Note 3.16.1).

3.23 Earnings per share (EPS)

The Bank presents basic and diluted (when dilution is applicable) earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank with the weighted average number of ordinary shares outstanding during the period, adjusted for the effect of change in number of shares for bonus issue, share split and reverse split. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares. However, dilution of EPS is not applicable for these financial statements as there was no dilutive potential ordinary shares during the relevant periods. Hence no Diluted EPS has been calculated. Consolidated basic EPS has also been calculated and presented in the same manner.

3.24 Segment reporting

An operating segment is a component of the Bank that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Bank’s other components. All operating segments’ operating results are reviewed regularly by the Bank’s Management (as being the chief operating decision maker) to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

Segment results that are reported to the Management include items directly attributable to a segment as well as the items that can be allocated on a reasonable basis. Segments which are reportable is analyzed at the end of the financial year. Comparative information is provided for newly reportable segments but no current year information is provided for segments which are non-reportable in current year even it was reportable in previous year as per BFRS 8 “Operating Segments”.

Details about segment reporting has been given at Annexure - D

3.25 Off-setting

The value of any asset or liability as shown in the balance sheet is not off-set by way of deduction from another liability or assets unless there exist legal right thereof. Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under BFRS, or for gains or losses arising from a similar transactions.

3.26 Materiality and aggregation

Each material class of similar items is presented separately in the financial statements. Items of dissimilar nature or function are presented separately unless they are immaterial as permitted by BAS 1 “Presentation of Financial Statements”.


3.27 Inter-branch transactions

Transactions with regard to inter-branches and units are reconciled regularly and efforts are taken to minimize the unreconciled entries at the end of the year.

3.28 Revenue, gains, expenses & losses prohibited by Shari’ah

Doubtful income which is prohibited by Shari’ah due to lapses in compliance of Shari’ah principles for investment as per Shari’ah Supervisory Committee report is included in the investment income of the Bank and appropriate amount of corporate tax is paid on it accordingly on these whole amount whether realized or not. It is not distributed to either depositors or shareholders of the Bank rather the amount net of corporate tax is transferred to an account titled “Doubtful income account’ under other liabilities of the Bank. Only realized amount of doubtful income (on which corporate tax has already been paid due to inclusion in investment income) is then expended for charitable purposes.

Bank charges compensation on overdue investments under Bai-modes. The total amount of compensation is not included in investment income rather kept separately under other liabilities. However, tax on these amount duly considered. Realized amount of compensation (on which corporate tax has already been paid due to inclusion in investment income) are expended for charitable purposes.

Interest received from the balances held with foreign banks and from foreign currency clearing account with Bangladesh Bank are not credited to income, since it is not permissible as per Shari’ah. These are expended for charitable purposes after payment of corporate income tax thereon.

3.28.1 Doubtful income account

Doubtful income was temporarily used to create provision as per decision of Shari’ah Supervisory Committee till 2013. And realized amount were transferred/utilized for charitable purposes. However, from the year 2014 the Bank has decided to introduce a separate account after payment of corporate income tax whether realized or not. Accordingly, from this year, net of corporate tax amount of doubtful income has been transferred to “doubtful income account” as a charge in profit & loss account under other provisions (Note 16.3.2).

3.29 Dividend payments

Final dividend is recognized when it is approved by the shareholders in Annual General Meeting (AGM). The proposed dividend for the year 2014, therefore, has not been recognized as a liability however disclosed in the balance sheet in accordance with BAS 10 “Events after the Reporting Period”. Dividend payable to the Bank’s shareholders is recognized as a liability and deducted from the shareholders’ equity in the period in which the shareholders’ right to receive the dividend is established.

3.30 Events after the reporting period

All material events after the reporting period that provide additional information about the Companies’/Bank’s position at the balance sheet date are reflected in the financial statements as per BAS 10 “Events after the Reporting Period”. Events after the reporting period that are not adjusting events are disclosed in the notes when material (Note - 39).


3.31 Risk management

The Bank Company Act, 1991 as amended 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.

Department of Off-site Supervision (DOS) of Bangladesh Bank issued Circular No.-02 dated 15 February 2012 on Risk Management Guidelines for Banks and instructed all scheduled banks operating in Bangladesh to follow this Guidelines for managing various risks which have been complied by the Bank.

In addition, the Bank is also following relevant Bangladesh Bank guidelines on risk based capital adequacy, supervisory review process, stress testing and managing the banking risks in other core risk areas.

The risk of a bank is defined as the possibility of losses, financial or otherwise. The Risk Management of the Bank covers 6 (six) Core Risk Areas of Banking industry i.e. Investment (Credit) Risk , Foreign Exchange Risk, Asset-Liability Management, Prevention of Money Laundering, Internal Control & Compliance Risk and Information & Communication Technology Risk. The risk management procedures in the core risk areas have been devised in line with the core risk management guidelines of Bangladesh Bank. All the Risk Management Guidelines are periodically reviewed by the Bank and Bangladesh Bank periodically inspects the implementation status of these guidelines and as per the reports of Bangladesh Bank, IBBL is well compliant in Core Risk Management activities.

In line with instruction of Bangladesh Bank, IBBL formed a Risk Management Wing (RMW) to formulate risk assessment and management policies, methodologies, guidelines and procedures for risk identification, risk measurement, risk monitoring, deciding acceptable level of risk and risk controlling. Risk management function involves identification, assessing, taking mitigating steps, preparing Risk Management Paper (RMP), conducting monthly risk management meeting, stress testing and reporting the competent authority from time to time. It also reports to Bangladesh Bank on quarterly basis along with the RMP, minutes of the monthly meeting and all other required supporting papers. Moreover, in compliance with the “Bank Company Act 1991 as amended”, Section 15 (Kha) and BRPD Circular No. 11 dated 27 October, 2013 of Bangladesh Bank, the Bank has constituted a Risk Management Committee comprising of 5 (five) directors from the Board to formulate risk management policies, procedures and oversee the risk management activities of the Bank.

The prime objective of the Risk Management is that the Bank takes well calculative Business Risk Policy for safeguarding the Bank’s capital, its financial resources and profitability from various risks. In this context, the Bank implemented all the guidelines of Bangladesh Bank as under:

3.31.1 Internal Control and Compliance

Operational loss may arise from errors and frauds due to lack of internal control and compliance. With a view to overcome such lapses and verification of asset quality, ensure quality of customer service, overall security arrangement, operational efficiency and compliance of regulatory issues as guided through different circulars, manuals from Head Office and other regulatory bodies. Bank organizes its management through Internal Control & Compliance Wing (ICCW) which consists of three Divisions namely (1) Audit & Inspection Division, (2) Compliance Division and (3) Monitoring Division.

(1) Audit & Inspection Division

Internal Audit & Inspection Division undertakes periodical and special audit of the Branches, Divisions and Departments of Head Office to review operational effectiveness and internal & external compliance requirements. The Bank has introduced Risk Based Internal Audit and grading of the branches. The Audit Committee of the Board subsequently reviews the lapses identified by Audit and Inspection Division. The Audit Committee also reviews Bangladesh Bank Inspection Reports and other issues indicated in the guidelines prescribed by Bangladesh Bank. Necessary steps/measures are taken on the basis of observations & suggestions of the Committee.

The Audit & Inspection Division conducts investigations against complaints received from customers, anonymous persons, management & others and submits the reports to the competent authority. Periodical Inspection reports of Zonal Heads, Shari’ah Inspections & Branch Manager’s self Audit are also reviewed by the Division regularly and necessary guidances and suggestions are given with continuous follow-up thereagainst.


(2) Compliance Division

The Compliance Division handles the ‘regulatory issues of Bangladesh Bank as well as other regulatory bodies’ and submits ‘status report on regulatory compliance’ quarterly to the Audit Committee as per BRPD Circular No.12 dated 23.12.2002.

The Compliance Division ensures that the Bank complies with all regulatory requirements while conducting its day to day business. The Compliance Division maintains liaison with the regulatory bodies for any regulatory changes and notify the same to all concerned.

(3) Monitoring Division

This Division performs the following:

i) Assesses the risk of the functional areas of the Branches described in the Departmental Control Function Checklist (DCFCL) and determines the frequency of Audit/Inspection of the branches based on the gravity of risks involved.

ii) Monitors the Internal Control Functions through the Quarterly Operations Report (QOR) and other mechanisms.

iii) Checks the completion/execution of Investment Documentation.

3.31.2 Foreign exchange Risk Management

Foreign Exchange Risk is the current or prospective risk to earnings and capital arising from adverse movements in currency exchange rates. The Bank is exposed to profit rate risk and settlement risk on account of its foreign exchange business. Foreign Exchange business includes trading of foreign currencies relating to import, export, remittances and other ancillary services. IBBL is dealing with a substantial volume of foreign trade and remittance business of the country which exposes the Bank to foreign exchange risk. IBBL has adopted foreign exchange risk manual through which the foreign exchange operations are dealt with.

Foreign Exchange risks are measured and monitored by the Treasury Division. Treasury Division consists of separate Front Office, Back Office and Mid Office. The Treasury Front Office (Dealing Room) independently performs the deals and the Treasury Back Office is responsible for verification of the deals and passing of their entries in the books of account.

The Foreign Exchange Risk is minimized through proper market analysis, real time pricing of Foreign Exchange, fixation of different market related limits (daylight, overnight, stop loss and management action trigger) and counter parties credit limits set by the management and ensure adherence to the limits by the Treasury Front Office. All Foreign Exchange transactions are revalued at weighted average exchange rate as provided by Bangladesh Bank at the end of each month. All Nostro Accounts are reconciled regularly and outstanding entries are reviewed by the management for its settlement/recompilation. The open position maintained by the bank at the end of the day remains within the stipulated limit prescribed by the Bangladesh Bank.

3.31.3 Investment (Credit) Risk Management

Investment (Credit) risk is one of the major risks faced by the Bank. This can be described as potential loss arising from the failure of counter party to perform as per contractual agreement with the Bank. The failure may result from unwillingness or inability of the counter party in discharging his / her financial obligation. Therefore, Bank’s Investment (Credit) risk management activities have been designed to address all these issues. IBBL has designed its own operational manuals for each modes and products. It has also designed its own investment risk management guideline which is compatible with the regulatory guideline and islamic modes of finance. There is a dedicated committee namely “Investment Risk Management Committee” which periodically reviews the operational manuals and risk management guidelines and ensures compliance of the same.

3.31.4 Asset liability Management

The Asset Liability Committee (ALCO) of the Bank monitors balance sheet risk, liquidity risks, investment deposit ratio (IDR), deposit mix, investment mix, gap analysis etc. under the leadership of MD & CEO of the Bank. Asset Liability Committee (ALCO) reviews liquidity requirement of the Bank, the maturity of assets and liabilities, deposit and investment pricing strategy, sensitivity of assets and liabilities, management indicators/ratios and the liquidity contingency plan. The primary objective of the ALCO is to monitor and avert significant volatility in Net Investment Income (NII), investment value and exchange earnings.


3.31.5 Prevention of Money laundering

Money Laundering risk is defined as the loss of reputation and expenses incurred as penalty for being negligent in prevention of money laundering. For mitigating the risks, the Bank has formed 05(five) members Central Compliance Unit (CCU) under the leadership of the Chief Anti Money Laundering Compliance Officer (CAMLCO) at Head Office. Anti Money Laundering Compliance Units are also functioning at Zonal Offices and Branches, where the transactions of the accounts are independently reviewed to verify Suspicious Transaction Reports (STRs). A Manual for prevention of money laundering was developed and approved by the Board of Directors. IBBL has introduced (a) Uniform Account Opening Form (AOF), (b) Know Your Customer (KYC) Profile and (c) Transaction Profile (TP) in the Bank as per instructions of Bangladesh Bank. IBBL had already issued 6 (six) instruction circulars and 11 (eleven) circular letters providing necessary instructions for Prevention of Money Laundering activities and also for combating of Financial Terrorism.

Moreover, IBBL had conducted a good number of training sessions/workshops to create awareness and development of the skill of the officials for identifying suspicious transactions. IBBL introduced a Policy Guideline to combat terrorist financing in the light of Anti Terrorism Act (Amendment) Act, 2012 coupled with the Money Laundering Prevention Act- 2012 approved by the Board of Directors of the Bank.

IBBL has exclusively completed the KYC procedures of Legacy Accounts (accounts opened before 30 April 2002). To establish fruitful Anti Money Laundering drive at branch level, IBBL introduced AML Rating systems such as excellent/good/satisfactory/marginal through self Assessment Report & Independent Testing Procedure as per instruction of Bangladesh Bank.

3.31.6 Information and Communication Technology Risk Management

The Bank has adequately addressed Information and Communication Technology (ICT) Risk Management. It is an in-depth exercise and continual process. The (ICT) Risk Management exercise mainly includes minimizing financial and image loss to the institution in all events such as natural disasters, technological failures, human errors etc. The Bank uses own developed Core Banking Software to perform all types of transactions including local/ online/ internet in a secured way. To take care of its core banking system, a separate security module has been incorporated in the software which manages different roles/privileges for different users. All financial transactions can be tracked for future audit purposes.

The Bank uses Central Data Centre to replicate transactions in branches in case of data failure or inconsistencies. Data travelling through network uses encryption and decryption mechanism.

In line with the Bangladesh Bank directives, the Bank has approved its own ICT policies for its operations and services. Under these policy guidelines, a security policy has also been worked out. To abide by and adhere to what is laid down in the policy; the implementation has been made through Active Directory Services (ADS), Password Policy, Kerberos Policy, Audit Policy, Group Policy, User Rights, Permission Policy etc. In order to secure network resources from public network, the Bank has introduced Virtual Private Network (VPN), Access Control List (ACL), IP filtering and TCP/UDP service blocking through router and firewall devices. It has already centralized the administrative control to access the network, mailing system and internet. IBBL has introduced Business Continuity Plan (BCP) for its entire network and trained the officials to cope up with any contingencies.

3.31.7 Internal audit

Internal Audit is used as an important element to ensure good governance of IBBL. Internal Audit activity of IBBL is effective and it provides senior management with a number of important services. These include detecting and preventing fraud, testing internal control, and monitoring compliance with own policies & procedures, applicable rules & regulations, instructions/ guidelines of regulatory authority etc.

During the year 2014, Audit Division of Internal Control & Compliance Wing conducted inspection on most of the Branches/ Divisions of Head Office of the Bank and submitted reports presenting the findings of the audits/ inspections. Necessary control measures and corrective actions have been taken on the suggestions or observations made in these reports. The reports or key points of the reports have also been discussed in the meetings of the Audit Committee of the Board and necessary steps have been taken according to the decision of the said Committee for correct functioning of Internal Controls & Compliance.


3.31.8 Fraud and forgeries

Fraud means wrongful or criminal deception intended to result in financial or personal gain. It will never be possible to eliminate all frauds and no system is completely fraud proof, since many fraudsters are able to bypass control systems put in place. IBBL continuously pays attention to implement and improve the anti-fraud internal controls for prevention of fraud and forgery. IBBL assesses /evaluates the effectiveness of its Anti-Fraud Internal Control measures on quarterly basis as per the items/ areas mentioned in the prescribed checklist of Bangladesh Bank. During the year 2014, 5 (five) incidents of fraud at 4 (four) different branches have been detected by the Bank and it has duly been reported to Bangladesh Bank. The Bank has already made adequate provision in this regard.

3.32 Credit rating report

Credit Rating Information and Services Ltd. CRISL was engaged by the Bank for the purpose of rating the Bank since 2002 as per Bangladesh Bank BRPD Circular No.06 dated 5 July 2006. CRISL assigned AA+ rating in the long term (indicates high safety and high credit quality) and ST-1 in the short term (highest certainty of timely repayment) to IBBL based on the financials up to 31 December 2013.

3.33 Regulatory and legal compliance

Among others, the Bank complied with the requirements of the following circular, rules and regulations:

a) The Bank Company Act, 1991 as amended

b) The Companies Act, 1994

c) BRPD Circular No. 14 dated 25.06.2003 and “Guidelines for Islamic Banking” issued by Bangladesh Bank through BRPD Circular No. 15 dated 09.11.2009

d) Other circulars, rules and regulations issued by Bangladesh Bank from time to time

e) The Securities and Exchange Rules, 1987

f) The Securities and Exchange Ordinance, 1969

g) The Securities and Exchange Commission Act, 1993

h) Income Tax Ordinance, 1984

i) VAT Act, 1991

j) Standards issued by AAOIFI

k) The Stamp Act-1899

l) The Customs Act-1969

m) The Money Laundering Prevention Act, 2012

n) The Anti Terrorism (Amendment) Act, 2013 etc.


4.0 Compliance with Financial Reporting Standards as applicable in Bangladesh

The Companies/Bank complied, as per Para 12 of Securities & Exchange Rule 1987, with the following Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs) as adopted by The Institute of Chartered Accountants of Bangladesh (ICAB) in preparing the financial statements of IBBL subject to departure described in note - 2.1, where we have followed Bangladesh Bank guidelines:

Sl. No. BFRS No. BFRS Title Compliance Status

1 1 First-time adoption of International Financial Reporting Standards Not Applicable

2 2 Share-based Payment Not Applicable

3 3 Business Combinations Not Applicable

4 4 Insurance Contracts Not Applicable

5 5 Non-current Assets Held for Sale and Discontinued Operations Not Applicable

6 6 Exploration for and Evaluation of Mineral Resources Not Applicable

7 7 Financial Instruments: Disclosures Complied

8 8 Operating Segments Complied

9 10 Consolidated Financial Statements Complied

10 11 Joint Arrangements Not Applicable

11 12 Disclosure of Interests in other Entities Complied

12 13 Fair Value Measurement Complied


Compliance with Bangladesh Accounting Standards as applicable in Bangladesh (Contd…)

Sl. No. BAS No.

BAS Title Compliance Status

1 1 Presentation of Financial Statements Complied

2 2 Inventories Not Applicable

3 7 Statement of Cash Flows Complied

4 8 Accounting Policies, Changes in Accounting Estimates and Errors Complied

5 10 Events after the Reporting Period Complied

6 11 Construction Contracts Not Applicable

7 12 Income Taxes Complied

8 16 Property, Plant & Equipment Complied

9 17 Leases Complied

10 18 Revenue Complied

11 19 Employee Benefits Complied

12 20 Accounting for Government Grants and Disclosure of Government Assistance

Not Applicable

13 21 The Effects of Changes in Foreign Exchange Rates Complied

14 23 Borrowing Costs Not Applicable

15 24 Related Party Disclosures Complied

16 26 Accounting and Reporting by Retirement Benefit Plans Not Applicable

17 27 Separate Financial Statements Complied

18 28 Investments in Associates and Joint Ventures Not Applicable

19 29 Financial Reporting in Hyperinflationary Economics Adopted and effective on or after 01 January 2015 but not applicable for the Bank

20 31 Interest in Joint Ventures Not Applicable (Replaced with IFRS/BFRS 11)

21 32 Financial Instruments: Presentation Complied

22 33 Earnings per Share Complied

23 34 Interim Financial Reporting * Complied

24 36 Impairment of Assets Complied

25 37 Provisions, Contingent Liabilities and Contingent Assets Complied

26 38 Intangible Assets Complied

27 39 Financial Instruments: Recognition and Measurement Complied

28 40 Investment Property Not Applicable

29 41 Agriculture Not Applicable

(*) Complied while the quarterly and half-yearly interim financial reports were prepared during the year as per regulations of Bangladesh Securities and Exchange Commission (BSEC).


5.0 Audit committee

As per Bangladesh Bank BRPD circular No.11 dated 27 October 2013, the Audit Committee was formed by the Board of Directors of the Bank consisting of the Board Members. As at 31 December 2014 the following directors were the members of the Audit Committee:

Sl. No.

Name of the Member Status with the Bank

Status with the Committee

Educational Qualification

1 Prof. NRM Borhan Uddin, Ph.D. Independent Director

Chairman B.Com (Hon’s), M.Com (Management) C.U. MBA, M.S, Ph.D (USA) in Management

2 Janab Md. Abdus Salam, FCA, FCS Independent Director

Member B.Com (Hon’s), M.Com (Accounting) D.U, FCA, FCS

3 Dr. Areef Suleman Director Member Masters in Economics, Masters in Business Leadership & Ph.D. in Economics.

4 Janab Barrister Mohammed Belayet Hossain

Independent Director

Member L.L.B. (Hons), L.L.M, PGDL (UK), Barrister-at-law

Audit Committee of the Board met in 24 occasions in the year 2014. They met in 04 occasions regarding finalization of financial statements for the year 2014 with the Senior Management of the Bank and external auditors in which among others, the following issues were discussed:

(i) The Committee examined the financial statements of 2014 of the Bank to see whether all the disclosures and information have been incorporated in the financial statements & whether the Bank followed Bangladesh Financial Reporting Standards (BFRSs) and other procedures in preparing financial statements.

(ii) In finalizing the financial statements for the year 2014, several alternatives and various pertinent issues, such as impact of doubtful income, dividend, compensation, profit paid on deposits (PPD), Capital Adequacy Ratio (CAR) & Risk Weighted Assets (RWA) etc. were considered by the Audit Committee.

(iii) The Committee discussed the management letter issued by the external auditors and details Inspection Report submitted by Bangladesh Bank, compliance status of those reports, internal check & control systems and provided appropriate guidelines to the Management for overall improvement of the Management and Accounting system and minimization of various types of risks.

(iv) Like previous years, the Committee also exchanged views with the statutory auditors and management of the Bank before finalization of the financial statements of the Bank.

6.0 Related party disclosures

As per BAS 24 “Related Party Disclosures”, a related party is a person or entity that is related to the entity (i.e. IBBL) that is preparing its financial statements. Related party transaction is a transfer of resources, services, or obligations between a reporting entity and a related party, regardless of whether a price is charged as per BAS 24.

Related Parties include the Bank’s Directors, key management personnel, associates, companies under common directorship etc. as per BAS 24 “Related Party Disclosures”. All transactions involving related parties arising in the normal course of business are conducted at arm’s length at normal commercial rates on the same terms and conditions as third party transactions using valuation modes, as admissible.

6.1 Lending policy for transactions with Bank related person/related parties

Transactions with Bank related person/related parties including Directors are made as per rules and regulations of the Bank Company Act 1991 as amended and as per circulars issued by Bangladesh Bank time to time including the following general rules:

i) Terms & conditions for financial transaction with bank related person/related parties will not be easier than other persons i.e. other Investment clients.

ii) Prior approval from the majority of Board of Directors shall be required for all financial transactions with bank related person/related parties.

iii) The Bank shall not allow funded facilities exceeding 10% of Tier -1 capital to the Bank related persons/related parties; real investment facilities shall be considered deducting encashable securities from funded investment.


6.2 Name of the Directors along with all related Firms/ Companies/ Institutions/Parties as at 31 December 2014:

Sl. No Name of the Directors Status with the Bank

Name of the related Firms/ Companies/ Institutions/ Parties etc. Remarks

1 Janab Abu Nasser Muhammad Abduz Zaher, Representative of the Ibn Sina Trust,

Chairman The Ibn Sina Trust, The IBN Sina Pharmaceutical Ind. Ltd. andManarat Trust.

2 Janab Yousif Abdullah Al-RajhiVice – Chairman

Vice-Chairman

Not applicable Foreign Director

3 Engr. Mustafa Anwar, Representative of the Public Institution for Social Security, Kuwait.

Vice-Chairman

Birds Group

4 Janab Abdullah Abdul Aziz-Al-Rajhi Director Not applicable Foreign Director

5 Dr. Areef Suleman Representative of of Islamic Development Bank, K.S.A.

Director Islamic Development Bank, K.S.A. Foreign Director

6 Janab Mohammed Abdullah Al Jalahma, Representative of Kuwait Awqaf Public Foundation, Kuwait.

Director Kuwait Awqaf Public Foundation, Kuwait

Foreign Director

7 Janab Salahuddin Ahmed Representative of Kuwait Finance House, Kuwait.

Director Kuwait Finance House, Kuwait. Foreign Director

8 Dr. Abdulhameed Fouad Al-Khateeb, Representative of Arabsas Travel & Tourist Agency, KSA.

Director Arabsas Travel & Tourist Agency, KSA. Foreign Director

9 Engr. Md. Eskander Ali Khan Representative of Al-Rajhi Co. for Industry & Trade, K.S.A.

Director KEARI Limited,

10 Janab Md. Abul Hossain Representative of Investment Corporation of Bangladesh.

Director Investment Corporation of Bangladesh (ICB).

11 Janab Md. Abdus Salam, FCA, FCS Director Not applicable Independent Director

12 Janab Humayun Bokhteyar, FCA. Director Not applicable Independent Director

13 Prof. NRM Borhan Uddin Ph.D Director Not applicable Independent Director

14 Prof. Dr. A.K.M Sadrul Islam Director The Ibn Sina Trust. Independent Director

15 Barrister Mohammed Belayet Hossain Director Jurists Consortium Independent Director

16 Janab Mohammad Abdul Mannan Ex-Officio Director

Not applicable Managing Director


6.3 Related party balances and transactions

6.3.1 Related party balances

a) Nature and type of balances and transactions of related parties (Directors) of the Bank are as follows:

Amount in Taka

SL. No.

Name of the Account/Firm/

Trust etc.

Name of the Director Relationship of the

Director with the Firm/Trust etc.

Purpose Classified Position

Outstanding balance

as on 01.01.2013

Disbursement/charged during

the year

Realised during the

year

Outstanding balance

as on 31.12.2014

1 2 3 4 5 6 7 8 9 10=7+8-9

1 Fouad Al-Khateeb Hospital

Prof. Abu Nasser Muhammad Abduz Zaher (Chairman)

Director HPSM (Project)

Un Classified

17,774,009 1,453,443 3,401,000 15,826,452

2 Ibn Sina Trust Prof. Abu Nasser Muhammad Abduz Zaher (Chairman) and Prof. Dr. A.K.M Sadrul Islam (Independent Director).

Member of Board of Trustee

Purchase of House, BMRE &

Import of Machinery

- do- 417,145,385 45,468,344 98,811,472 363,802,257

3 Ibn Sina Pharmaceutical Ind. Ltd.

Prof. Abu Nasser Muhammad Abduz Zaher (Chairman), Prof. Dr. A.K.M Sadrul Islam (Independent Director) and Md. Abdus Salam, (Independent Director)

Director Bank Guarantee

- do- 244,036 - - 244,036

4 Mrs. Shahanara Begum

Engr. Md. Eskander Ali Khan (Director)

Husband Housing - do- 1,643,834 142,683 366,600.00 1,419,917

5 Mohammad Abdul Mannan

Jb. Mohammad Abdul Mannan Managing Director & Ex - Officio Director

Himself Housing - do- 4,297,265 494,593 852,000.00 3,939,858

6 Barrister Mohammed Belayet Hossain

Independent Director Himself Purchase of Commercial

Flat

- do- 3,163,520 185,446 234,640.00 3,114,326

Total 444,268,049 47,744,509 103,665,712 388,346,846

(b) Other type of balances of related parties of the Bank are as follows:

SL. No.

Name of the related parties Nature of relationship

Nature of transactions Closing balance (Taka)

31.12.2014 31.12.2013

1 Islami Bank Securities Limited (IBSL) Parent- subsidiary Investment in Share capital by IBBL 2,699,946,000 2,699,946,000

Bank balance 39,970,915 112,512,177

MTDR balance 886,152,827 889,006,145

Quard balance 90,000,000 200,000,000

Profit receivable 11,218,112 15,075,838

Mudaraba investment 3,000,000,000 -

Accounts payable 7,023,067 93,055,051

Office rent payable 67,689 -

2 Islami Bank Capital Management Limited

Parent- subsidiary Investment in Share capital by IBBL 299,993,000 299,993,000

Bank balance 45,421,630 3,813,310

Dividend payable 104,997,550 -


6.3.2 Related party transactions

Nature and type of related party transactions of the Bank during the year 2014 are as follows:

SL. No.

Name of the related party

Nature of relationship Nature of transaction 2014 (Taka)

1 Islami Bank Securities Limited (IBSL)

Parent- subsidiary Deposit to Savings account maintained with IBBL 3,630,708,197

Withdraw from Savings account maintained with IBBL

3,630,323,619

Deposit to Current account maintained with IBBL 621,004,225

Withdraw from Current account maintained with IBBL

692,190,267

Bank charge paid to IBBL 3,829

Payment against office rent 406,134

Profit against MTDR 57,286,496

Profit against SND 5,297

Profit withdrawn against MTDR 57,950,000

Quard availed from IBBL 210,000,000

Payment against Quard 320,000,000

2 Chief Executive Officer Key management personnel

Short-term employee benefits (Salary and allowance)

1,887,852

3 Islami Bank Capital Management Limited

Parent- subsidiary Payment of interim dividend to IBBL 104,997,550

Profit against SND 41,320

4 Directors of the Bank Director Fees , TA/DA/hotel fare and other expenses 12,787,017

6.4 other related party disclosures

1. There was no contracts of significance wherein a director has interests subsisted at any time during the year or at the end of the year.

2. Investment to related parties is effected as per requirement of section 27 of Bank Company Act, 1991 as amended.

3. Share issued to Directors and Executives without consideration or exercisable at discount is Nil.

4. Other disclosures are not applicable as required by BRPD Circular No. 14 dated 25 June, 2003 and BRPD Circular No. 15 dated 09 November, 2009.


31.12.2014 31.12.2013Taka Taka

7.0 Cash in hand Cash in hand (including foreign currency) (Note. 7.1) 7,696,844,549 8,180,338,285 Balance with Bangladesh Bank & its agent bank(s) (including foreign currency) (Note. 7.2)

38,522,514,877 36,111,176,654

Total 46,219,359,426 44,291,514,939 7.1 Cash in hand (including foreign currency)

In local currency 7,647,881,565 8,155,182,740 In foreign currency 48,962,984 25,155,545 Total 7,696,844,549 8,180,338,285

7.2 Balance with Bangladesh Bank & its agent bank(s) (including foreign currency)Balance with Bangladesh Bank (a)In local currency 35,871,455,347 32,900,993,908 In foreign currency 664,220,218 1,129,186,220 Sub-total 36,535,675,565 34,030,180,128 Balance with Sonali Bank Ltd. (as agent of Bangladesh Bank) (b)In local currency 1,986,839,312 2,080,996,526 In foreign currency - - Sub-total 1,986,839,312 2,080,996,526 Total (a+b) 38,522,514,877 36,111,176,654

7.3 Cash Reserve Requirement (CRR) & Statutory Liquidity Ratio (SLR)Cash Reserve Requirement (CRR) and Statutory Liquidity Ratio (SLR) have been calculated and maintained in accordance with the Section 25 & 33 of the Bank Company Act, 1991 as amended and the Instruction of Bangladesh Bank Order 1972, Article 36, clause (1).

7.3.1 Cash Reserve Requirement (CRR) The Cash Reserve Requirement (CRR) of the Bank was 6.00% of average total demand and time liabilities on bi-weekly basis with a provision of minimum 5.5% on daily basis from 15.12.2010 as per Bangladesh Bank MPD Circular No.4 dated 01 December 2010 and DOS Circular No.-01 dated on 19.01.2014. The requirement has been revised at 6.50% of average total demand and time liabilities on bi-weekly basis with a provision of minimum 6.00% on daily basis from 24.06.2014 as per Bangladesh Bank MPD Circular No.01 dated 23 June 2014. The cash reserve maintained by the Bank was in excess of the statutory requirement throughout the year.Position of Cash Reserve Requirement (CRR) Required CRR (6.50% of average total time and demand liabilities) 35,830,701,560 27,255,981,640 Actual reserve held with Bangladesh Bank in local currency (Note 7.2) * 35,843,455,347 32,872,993,908 Excess/(shortfall) 12,753,787 5,617,012,268 * Lien against TT discounting facilities of Tk. 2,80,00,000/- has not been considered as CRR.

7.3.2 Statutory Liquidity Ratio (SLR) The requirement of Statutory Liquidity Ratio (SLR) of the Bank was 11.50% including CRR from 15.12.2010 to 31.01.2014 as per Bangladesh Bank MPD Circular No.05 dated 01 December 2010. The required SLR has been revised at minimum 5.50% on daily basis excluding CRR wherein the excess CRR amount shall be included while calculating SLR from 01.02.2014 as per DOS Circular No. 01 dated 19 January 2014. The reserve maintained by the Bank was in excess of the statutory requirement throughout the year.

Position of Statutory Liquidity Ratio (SLR) *Required Reserve (5.50% of average total time and demand liabilities) 30,318,285,930 52,240,631,470 Actual reserve maintained (Note 7.3.2.1) 109,115,937,648 106,816,928,719 Excess/(shortfall) 78,797,651,718 54,576,297,249 * Position of SLR as on 31.12.2013 includes CRR.

7.3.2.1 Components of Statutory Liquidity Ratio (SLR)Cash in hand including foreign currency (Note- 7.1) 7,696,844,549 8,180,338,285 Excess CRR amount (Note-7.3.1) 12,753,787 - Balance with Sonali Bank as Agent Bank of BB (Note-7.2.b) 1,986,839,312 34,953,990,434 Balance with Islamic Refinance Fund A/c (Note-9) 2,000,000,000 - Unencumbered approved securities :Bangladesh Shipping Corporation (Note -10) 101,500,000 82,600,000 Bangladesh Government Islamic Investment Bond (Note -10) 97,318,000,000 63,600,000,000 Total 109,115,937,648 106,816,928,719


31.12.2014 31.12.2013Taka Taka

7(a) Consolidated cash in handi) Cash in hand (including foreign currency)Islami Bank Bangladesh Limited 7,696,844,549 8,180,338,285 Islami Bank Securities Limited 19 4,660 Islami Bank Capital Management Limited 394 4,020 Sub total 7,696,844,962 8,180,346,965 ii) Balance with Bangladesh Bank & its agent bank(s) (including foreign currency)Islami Bank Bangladesh Limited 38,522,514,877 36,111,176,654 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Sub total (ii) 38,522,514,877 36,111,176,654 Total (i+ii) 46,219,359,839 44,291,523,619

8.0 Balance with other banks & financial institutions

i) In BangladeshIn current account 619,469,727 1,484,506,514 OBU’s balance with treasury division, IBBL (Note-2.0 _OBU) 69,601,591 - In Mudaraba savings & MTDR account with other islamic banks / financial institutions

17,170,557,971 6,093,434,316

Sub total 17,859,629,289 7,577,940,830 Less: OBU’s balance with treasury division, IBBL 69,601,591 - Sub total (i) 17,790,027,698 7,577,940,830 ii) Outside Bangladesh (Note 8.1)In current account 2,409,322,547 4,749,379,514 In Mudaraba savings & MTDR account with other islamic banks / financial institutions

- -

Sub total (ii) 2,409,322,547 4,749,379,514 Grand total (i+ii) 20,199,350,245 12,327,320,344

8.1 Currency-wise amount and exchange rate of Balance with other banks & financial institutions outside Bangladesh

Foreign currency Amount in F.C Exchange rate 31.12.2014 31.12.2013US Dollar 14,847,644.74 77.9494 1,157,364,999 3,667,751,841 Great Britain Pound 2,165,952.18 120.915 1 261,896,324 97,715,292 Saudi Riyal 431,860.35 20.767 1 8,968,487 6,555,633 EURO 6,364,386.90 94.7007 602,711,894 263,884,950 YEN 3,059,162.00 0.6459 1,975,913 97,780,935 Canadian Dollar 188,754.49 66.9323 12,633,772 2,916,579 Swiss Franc 204,228.27 78.7288 16,078,647 3,527,540 Singapore Dollar 5,277,143.41 58.8831 310,734,563 314,374,989 Australian Dollar 7,308.53 63.3807 463,220 127,780,133 ACU Dollar 351,912.53 77.9494 27,431,371 164,181,379 AED 427,079.67 21.2217 9,063,357 2,910,244 Total 2,409,322,547 4,749,379,514

8.2 Maturity - wise classification Balance with other banks & financial institutions

Repayable on demand

4,194,350,245 6,307,320,344

With a residual maturity ofUp to 1 Month 6,800,000,000 - Over 1 month but not more than 3 months 9,025,000,000 6,020,000,000 Over 3 months but not more than 1 year 180,000,000 - Over 1 year but not more than 5 years - - More than 5 years - - Total 20,199,350,245 12,327,320,344


31.12.2014 31.12.2013Taka Taka

8(a) Consolidated Balance with other banks & financial institutions

i) In BangladeshIslami Bank Bangladesh Limited 17,790,027,698 7,577,940,830 Islami Bank Securities Limited 3,982,477,266 1,082,818,348 Islami Bank Capital Management Limited 413,070,405 388,364,770 Inter-company balances (979,679,718) (1,098,386,683)Sub-total (i) 21,205,895,651 7,950,737,265 ii) Outside BangladeshIslami Bank Bangladesh Limited 2,409,322,547 4,749,379,514 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Sub-total (ii) 2,409,322,547 4,749,379,514 Total (i+ii) 23,615,218,198 12,700,116,779

9.0 Placement with banks & other financial institutions

Placement to OBU by Treasury Division, IBBL (Note-6.0 _OBU) 7,606,631,085 16,213,482,904 Placement to AD Branches for MDB in FC by OBU (Note-3.0 _OBU) 2,859,555,231 3,609,750,453 Placement to Islamic Refinance Fund Account (*) 2,000,000,000 -

12,466,186,316 19,823,233,357 Less: Placement to OBU by Treasury Division, IBBL 7,606,631,085 16,213,482,904 Less: Placement to AD Branches for MDB in FC by OBU 2,859,555,231 3,609,750,453 Total 2,000,000,000 -

(*) The fund is placed to Bangladesh Bank for Re-finance Scheme as per Bangladesh Bank BRPD Circular No. 13 dated 18 September 2014.

10.0 Investments in shares & securities

Particulars No. of shareBook value as

at 31 Dec. 2014 (Taka)

Book value as at 31 Dec. 2013 (Taka) Remarks

10.1 Government Bangladesh Shipping Corporation 200,000 101,500,000 82,600,000 QuotedKarmasangsthan Bank 100,000 10,000,000 10,000,000 Un-QuotedCentral Depository Bangladesh Ltd. 2,284,721 6,277,770 6,277,770 Un-QuotedBangladesh Government Islamic Investment Bond (Islamic Bond) 34 97,318,000,000 63,600,000,000 Un-QuotedTotal government (10.1) 2,584,755 97,435,777,770 63,698,877,770

10.2 Other than Government i) Subsidiary companiesIslami Bank Securities Limited 2,699,946 2,699,946,000 2,699,946,000 Un-QuotedIslami Bank Capital Management Limited 299,993 299,993,000 299,993,000 Un-QuotedSub total (i) 2,999,939 2,999,939,000 2,999,939,000 ii) OthersBangladesh Aroma Tea Ltd. 1,570 157,000 157,000 De-listedInvestment in Financial Institutions & Investors Portfolio Management Co. Ltd. 500,000 5,000,000 5,000,000 Un-QuotedMudaraba Subordinated Debt of First Security Islami Bank Ltd. 800 400,000,000 500,000,000 Un-QuotedAl- Arafah Islami Bank Ltd. 25,500 385,139 - QuotedExim Bank Ltd. 21,635 241,263 - QuotedIbn Sina Pharmaceutical Ltd 3,500 365,806 918,984 Quoted


Particulars No. of shareBook value as

at 31 Dec. 2014 (Taka)

Book value as at 31 Dec. 2013 (Taka) Remarks

Shahjalal Islami Bank Ltd. 17,028 193,512 - Quoted

United Airways (BD) Ltd. 61,600 766,413 62,359 Quoted

Fareast Islami Life Insurance Co. Ltd 20,000 2,033,763 690,156 Quoted

Power Grid Company of Bangladesh Ltd. 4,000 161,302 422,512 Quoted

Takaful Islami Insurance Ltd. 24,000 716,641 417,491 Quoted

Apex Tannery Ltd. 250 35,407 - Quoted

Prime Textile Ltd. 10,000 189,272 - Quoted

Summit Power Ltd 2,000 76,190 - Quoted

Confidence Cement 15,000 1,973,817 - Quoted

Premier Cement Mills Limited 25,000 2,440,893 - Quoted

Apex Foods Ltd. 1,000 99,518 - Quoted

Meghna Petroleum Ltd. 13,450 3,423,868 - Quoted

Tallu Spinning Ltd. 55,000 1,906,378 - Quoted

Meghna Cement Ltd. 500 62,155 - Quoted

Social Islami Bank Limited. 20,000 275,859 - Quoted

AMCL(Pran) 550 108,733 - Quoted

Rangpur Foundry 2,000 199,197 - Quoted

Khulna power Company Ltd. - - 701,946 Quoted

ICB Islamic Mutual Fund - - 391,928 Quoted

BEXIMCO - - 340,350 Quoted

Square Textile - - 1,098,139 Quoted

Titas Gas Company Ltd - - 2,381,332 Quoted

Sub total (ii ) 824,383 420,812,126 512,582,198

Sub total Other than Government (i+ii) 3,824,322 3,420,751,126 3,512,521,198

Total (10.1+10.2) 6,409,077 100,856,528,896 67,211,398,968

10.3 Revaluation of shares & securities

All Shares and Securities are shown at cost price other than the Shares of Bangladesh Shipping Corporation which have been recognized at closing market price as on 30.12.2014 of Dhaka Stock Exchange Ltd. (DSE) as per BRPD Circular No.14 dated 25.06.2003 and DOS Circular No. - 05 dated 26 May 2008. 100% provision was made against probable losses in shares of Bangladesh Aroma Tea Ltd. and adequate provision have been kept for diminution in value of investment in shares for all quoted shares. Changes in revaluation of shares of BSC has been shown as revaluation reserve of securities. Provision for diminution in value of investment in shares is not netted off with investment in shares and securities rather shown under other liabilities.

31.12.2014 Taka 31.12.2013 Taka

10.4 Maturity grouping of investments in shares & securitiesRepayable on demand - - With a residual maturity of Up to 1 Month 19,355,655,126 7,870,025,198 Over 1 month but not more than 3 months 35,460,000,000 3,110,000,000 Over 3 months but not more than 1 year 42,618,000,000 32,230,000,000 Over 1 year but not more than 5 years 300,000,000 20,980,000,000 More than 5 years 3,122,873,770 3,021,373,770 Total 100,856,528,896 67,211,398,968


31.12.2014 31.12.2013Taka Taka

10(a) Consolidated investments in shares & securities

i) GovernmentIslami Bank Bangladesh Limited 97,435,777,770 63,698,877,770 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Sub total (i) 97,435,777,770 63,698,877,770

ii) OthersIslami Bank Bangladesh Limited 3,420,751,126 3,512,521,198 Islami Bank Securities Limited 1,820,810,657 1,887,493,659 Islami Bank Capital Management Limited - - Inter-company balances (2,999,939,000) (2,999,939,000)

Sub total (ii) 2,241,622,783 2,400,075,857 Total (i+ii) 99,677,400,553 66,098,953,627

11.0 Investments

General investments etc. (Note-11.1) 436,094,101,205 375,200,298,497 Bills purchased & discounted (Note-11.2) 27,381,366,261 27,994,506,480 Total 463,475,467,466 403,194,804,977

11.1 General investments etc.

i) In BangladeshBai - Murabaha 253,916,688,852 223,243,721,234 Bai - Muajjal 29,797,755,704 24,052,604,799 Hire Purchase under Shirkatul Melk 103,940,758,328 95,481,083,230 Bai-Murabaha Import Bills 5,861,479,708 3,864,715,763 Baim- FC Bills 9,498,987,204 7,627,708,774 Musharaka 484,381,392 427,678,772 Mudaraba investment 3,000,010,000 - Bai - Salam 4,807,597,612 4,200,400,363 Murabaha Foreign Currency Investment 6,952,880,221 2,632,516,647 Quard 15,478,085,584 13,669,868,915 Investment in Khidmah Card (KC) 16,994,600 - Sub total (i) 433,755,619,205 375,200,298,497

ii) Out side BangladeshBai - Murabaha - - Bai - Muajjal - - Hire Purchase under Shirkatul Melk - - Musharaka - - Overseas Investment 2,338,482,000 - Bai - Salam - - Quard - - Others - - Sub total (ii) 2,338,482,000 -

Grand total (i+ii) 436,094,101,205 375,200,298,497


31.12.2014 31.12.2013Taka Taka

11.1.1 Maturity-wise classification

Repayable on demand - - With a residual maturity of Up to 1 Month 63,378,766,515 54,528,901,100 Over 1 month but not more than 3 months 79,432,061,802 74,363,159,919 Over 3 months but not more than 1 year 107,961,949,441 95,467,827,785 Over 1 year but not more than 5 years 96,501,760,873 76,143,857,496 More than 5 years 88,819,562,574 74,696,552,197 Total 436,094,101,205 375,200,298,497

11.1(a) Consolidated general investments

Islami Bank Bangladesh Limited 436,094,101,205 375,200,298,497 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Inter-company balances (3,090,000,000) (200,000,000)Total 433,004,101,205 375,000,298,497

11.2 Bills purchased & discounted

i) In BangladeshMusharaka Doc. Bill (MDB) 9,640,143,708 9,912,995,710 ii) Outside Bangladesh Mudarba Doc Bill (UPAS)-OBU 12,317,356,285 12,603,732,451 Bai- As- Sarf (FDB) 2,564,171,038 1,980,004,979 MDB in FC 2,859,695,230 3,497,773,340 Sub-total (ii) 17,741,222,553 18,081,510,770 Total (i+ii) 27,381,366,261 27,994,506,480

11.2.1 Maturity-wise classification of bills purchased & discounted

Payable within 1 month 7,108,296,384 7,266,972,145 Over 1 month but less than 3 months 9,544,931,260 9,757,999,083 Over 3 months but less than 6 months 6,197,718,873 6,336,068,163 6 months or more 4,530,419,744 4,633,467,089 Total 27,381,366,261 27,994,506,480

11.2(a) Consolidated bills purchased & discounted

Islami Bank Bangladesh Limited 27,381,366,261 27,994,506,480 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Total 27,381,366,261 27,994,506,480

11.3 Geographical location wise classification of investments

Within Bangladesh In rural areas 23,737,344,960 57,950,730,825 In urban areas 437,399,640,506 345,244,074,152 Sub total 461,136,985,466 403,194,804,977 Outside Bangladesh 2,338,482,000 - Total 463,475,467,466 403,194,804,977


31.12.2014 31.12.2013Taka Taka

11.4 Division wise classification of investments (*)

Name of the divisionDhaka division 272,135,187,835 235,306,564,951 Chittagong division 92,698,693,385 82,622,005,208 Khulna division 29,491,568,454 27,662,709,769 Rajshahi division 40,518,230,905 33,602,056,279 Barisal division 6,194,634,336 4,963,015,576 Sylhet division 9,364,320,744 8,298,812,931 Rangpur division 13,072,831,807 10,739,640,263 Total 463,475,467,466 403,194,804,977 (*) Division wise classification was made on the basis of the location of the respective branch not on the basis of where the client’s business actually located.

11.5 Investment on the basis of significant concentration including bills purchased and discounted

Investment to directors 388,103,000 444,024,039 Investment to chief executive & other senior executives 932,323,000 709,713,000 Sector wise other investments:Trade & commerce 129,544,045,291 125,788,547,816 Real estate 37,680,385,849 27,126,960,967 Transport 6,435,450,233 6,679,236,366 Agriculture (including fertilizer & agriculture implements) 11,131,087,642 20,384,772,976 Industrial investment (Note-11.5.1) 247,350,986,911 193,549,881,241 Others 30,013,085,540 28,511,668,572 Total 463,475,467,466 403,194,804,977

11.5.1 Classification of industrial investments

Textile- spinning, weaving & dyeing 87,159,601,548 65,376,404,677 Steel, re-rolling & engineering 17,068,455,427 29,987,979,981 Agro-based industry 49,839,002,427 19,794,827,022 Garments & garments accessories 20,675,772,163 12,795,660,097 Food & beverage 3,760,121,383 8,813,035,537 Cements industry 3,598,514,014 2,109,608,059 Pharmaceuticals 2,885,125,681 2,405,347,507 Poultry, poultry feed & hatchery 822,844,373 946,366,232 Sanitary wares 49,095,993 295,739,448 Chemicals, toiletries & petroleum 7,812,668,913 8,497,580,126 Printing & packaging 1,086,738,101 3,470,009,518 Power (electricity) 5,056,579,437 4,514,955,566 Ceramic & bricks 2,566,593,448 2,898,246,586 Health care ( hospital & others) 1,280,794,799 2,149,039,985 Plastic industries 573,062,291 1,951,880,354 Petrol pump & CNG filling station 468,972,758 1,104,093,937 Information technology 394,475,062 492,899,079 Hotel & restaurant 62,263,592 788,638,527 Other industries 42,190,305,501 25,157,569,003 Total 247,350,986,911 193,549,881,241


31.12.2014 31.12.2013Taka Taka

11.6 Details of investment to customers group (10.00% of regulatory equity and above)

Number of clients with amount of sanctioned limit of investments exceeding 10.00% of total regulatory equity of the Bank & classified amount thereon are given below:

Number of clients 15 15

Amount of investments 122,271,000,000 119,260,000,000

Classified amount thereon Nil Nil

Measures taken for recovery Not Applicable Not Applicable

Total regulatory capital of the Bank was Tk. 48,569.86 million as at 31 December 2014 (Tk. 45,487.38 million as on 31 December 2013).

(Taka in million)

Sl. No. Name of clients Sanctioned limitOutstanding as on 31.12.2014

31.12.2013Funded Non-funded Total

1 Noman Group 18,275.00 13,507.00 4,367.00 17,874.00 19,333.00 2 S. Alam Group 16,825.00 14,378.00 2,168.00 16,546.00 14,372.00 3 Aman Group 8,672.00 6,594.00 3,359.00 9,953.00 5,529.00 4 Farzana Group 12,000.00 5,755.00 4,016.00 9,771.00 9,083.00 5 Badsha Group 7,537.00 4,020.00 4,060.00 8,080.00 5,786.00 6 MSA Group 8,456.00 5,715.00 1,987.00 7,702.00 7,088.00 7 Delta Group 5,948.00 4,968.00 1,919.00 6,887.00 5,593.00 8 Nur-e-Madina Group 5,348.00 5,223.00 1,458.00 6,681.00 7,515.00 9 Patromax Refinery 4,550.00 3,135.00 3,156.00 6,291.00 6,120.00

10 Ananda Group 7,099.00 6,168.00 13.00 6,181.00 5,711.00 11 Mosharraf Group 6,767.00 4,947.00 1,094.00 6,041.00 7,195.00 12 Nassa Group 7,850.00 3,570.00 2,127.00 5,697.00 6,331.00 13 BRB Group 8,121.00 3,243.00 2,376.00 5,619.00 5,806.00 14 Abul Khair Group 7,181.00 2,534.00 2,237.00 4,771.00 8,134.00 15 Abdul Monem Group 6,291.00 4,177.00 - 4,177.00 5,664.00

Total 87,934.00 34,337.00 122,271.00 119,260.00

31.12.2014 31.12.201311.7 Classification status - wise investments Taka Taka

Unclassified :i) Unclassified including staff investment 424,231,589,013 371,539,189,061 ii) Special mention account (SMA) 16,436,640,275 16,713,715,269

Total unclassified (i+ii) 440,668,229,288 388,252,904,330 Classified :

iii) Substandard 2,235,222,352 1,707,265,721 iv) Doubtful 1,513,000,505 653,099,020 v) Bad and Loss 19,059,015,321 12,581,535,906

Total classified (iii+iv+v) 22,807,238,178 14,941,900,647 Grand total ( i to v) 463,475,467,466 403,194,804,977

11.8 Pledged collaterals against investments

Land & building 656,240,012,983 526,482,176,344 MTDR, securities, etc. 34,816,740,707 16,942,474,643 Share certificates 56,140,000 140,992,500 Total 691,112,893,690 543,565,643,487


31.12.2014 31.12.2013Taka Taka

11.9 Particulars of investments

i) Investments considered good in respect of which the bank is fully secured 442,129,601,677 389,317,407,158 ii) Investments considered good in respect of which the Bank holds debtors’ personal

security 16,994,600 -

iii) Investments considered good and secured by personal security of one or more persons in addition to personal security of debtors

21,328,871,189 13,877,397,819

iv) Investments considered bad or doubtful not provided for - - Total 463,475,467,466 403,194,804,977

v) Investments due by directors or employees of the bank or any of them either severally or jointly with any other persons

12,086,232,123 9,087,895,956

vi) Investments due by directors or employees of the bank are interested as directors, partners, managing agents or in the case of private companies as members

379,628,709 434,919,394

vii) Total amount of investments, including temporary investments, made any time during the year to directors or employees of the bank or any of them either severally or jointly with any other persons

3,756,720,608 3,577,165,708

viii) 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, managing agents or, in the case of private companies as members

- -

ix) Investments due from other banks - - x) Classified investments:

a) Classified investments on which profit has not been charged 19,059,015,321 12,581,535,906 b) Provision for classified investments 13,354,720,000 9,037,800,000 c) Provision kept against investments classified as bad & loss 12,997,864,539 8,794,188,000 d) Amount credited to profit/ rent /compensation suspense account 4,637,284,546 2,483,769,765

xi) Particulars of written off investmentsa) Cumulative amount of investment written off since inception to 31st December last year 5,318,286,468 5,148,936,721 b) Amount of investment written off during this year (*) 259,980,017 169,349,747 c) Total amount written Off (a + b) 5,578,266,485 5,318,286,468 d) Amount recovered against written off investment up to this year (**) 1,322,391,025 1,283,040,729 e) Amount waived against written off investment up to this year 939,801,797 913,271,547 f) Amount of investment written off against which suit has been filed to recover the same 3,316,073,663 3,121,974,192

(*) Out of the total amount of investment written-off during the year of 2014, Tk.72,44,117/- was written-off from profit/rent suspense and Tk.11,16,09,013/- was from compensation suspense .(**) During the year of 2014, Tk.39,350,296/- (2013 Tk. 43,918,185/-) was recovered from the clients in cash.

12.0 Fixed assets (Annexure-A)12.1 Tangible assets

Land 7,593,266,550 7,592,598,419 Building 6,317,393,834 6,234,391,377 Construction/ capital work-in-process 197,106,998 103,812,967 Furniture and fixtures 811,688,722 719,377,288 Mechanical appliances 3,098,463,563 2,721,050,008 Motor vehicles 599,438,630 525,169,792 ATM 632,874,804 482,830,169 Books 5,875,956 4,773,584 Total cost of tangible assets including revaluation 19,256,109,057 18,384,003,604 Less: Accumulated depreciation 3,607,189,972 2,934,615,074 Net book value of tangible assets at the end of the year 15,648,919,085 15,449,388,530


31.12.2014 31.12.2013Taka Taka

12.2 Intangible assets Computer software 386,329,162 309,480,952 Total cost of intangible assets 386,329,162 309,480,952 Less: Accumulated amortization 108,886,331 26,060,893 Net book value of intangible assets at the end of the year 277,442,831 283,420,059 Total net book value at the end of the year (12.1+12.2) 15,926,361,916 15,732,808,589

12.3 Maturity-wise classificationRepayable on demand - - With a residual maturity of Up to 1 MonthOver 1 month but not more than 3 months - - Over 3 months but not more than 1 year 744,614,312 736,244,555 Over 1 year but not more than 5 years 2,632,757,271 1,120,024,635 More than 5 years 12,548,990,333 13,876,539,399 Total 15,926,361,916 15,732,808,589

12.4 Revaluation of land & building

As per Bangladesh Bank BCD Circular Letter No. 12 & 18 dated April 20, 1993; June 15, 1993; BRPD Circular No.10 dated November 25, 2002; circular No. 09 dated 31 December 2008 and circular No. 24 dated 03 August 2010, the Bank revalued its land and building by the professional valuers for the year 2000, 2002, 2003, 2004, 2005, 2006, 2009 & 2012 respectively which was reviewed by the statutory auditors.

12(a) Consolidated fixed assets (Annexure-B)

12(a).1 Tangible assets Islami Bank Bangladesh Limited 15,648,919,085 15,449,388,530 Islami Bank Securities Limited 3,757,475 5,326,024 Islami Bank Capital Management Limited - - Sub-total 15,652,676,560 15,454,714,554

12(a).2 Intangible assets Islami Bank Bangladesh Limited 277,442,831 283,420,059 Islami Bank Securities Limited 360,198 724,070 Islami Bank Capital Management Limited - - Sub-total 277,803,029 284,144,129

Total (12.a.1+12.a.2) 15,930,479,589 15,738,858,683 13.0 Other assets

i) Income generating other assets - - ii)Non-income generating other assetsStock of stationery in hand 119,939,381 95,667,966 Stamps in hand 12,550,769 9,147,405 Advance rent paid 525,644,682 544,345,583 Security deposits paid account 18,351,705 14,091,298 Suspense 501,345,335 1,739,115,350 Advance against expenses 15,430,338 12,988,634 Pre-paid expense-OBU 26,680,339 - Accrued income 2,009,498,611 1,822,961,997 IB General account (Note - 13.3) 119,780,146 - F.C. clearing adjustment 358,648,429 180,027,615 mCash System A/c 6,800,258 23,136,480 Receivables from Seylon Bank PLC * 30,300,809 30,300,809 Sub-total (ii) 3,744,970,802 4,471,783,137 Total (i+ii) 3,744,970,802 4,471,783,137 *100% provision was made against probable losses for Receivables from Seylon Bank PLC


31.12.2014 31.12.2013Taka Taka

13.1 Maturity-wise classification

Repayable on demand - - With a residual maturity of Up to 1 Month 309,653,248 311,682,569 Over 1 month but not more than 3 months 1,677,839,626 2,391,104,960 Over 3 months but not more than 1 year 919,707,427 925,734,755 Over 1 year but not more than 5 years 560,204,150 563,875,463 More than 5 years 277,566,351 279,385,390 Total 3,744,970,802 4,471,783,137

13.2 Classification status of other assets

Unclassified 3,657,138,574 4,359,009,787 Doubtful - 6,185,928 Bad/ Loss 87,832,228 106,587,422 Total 3,744,970,802 4,471,783,137

13.3 IB General account

13.3.1 Un-reconciled entries of Inter branch transactions in Bangladesh

Age Number Amount in Taka Amount in TakaUpto 3 months (*) 13 119,780,146 - Over 3 months but not more than 6 months - - - Total 13 119,780,146 - (*) All the outstanding entries in the above mentioned IB General Account have been fully adjusted within 8 March 2015.

13.3.2 Un-reconciled entries of inter branch transactions outside Bangladesh

Age Number Amount in Taka Amount in TakaUpto 3 months - - - Over 3 months but not more than 6 months - - - Total - - -

13(a) Consolidated other assets

Islami Bank Bangladesh Limited 3,744,970,802 4,471,783,137 Islami Bank Securities Limited 72,078,330 49,515,699 Islami Bank Capital Management Limited 50,724,606 38,884,672 Inter-company balances (116,215,662) (15,075,838)Total 3,751,558,076 4,545,107,670

14.0 Deposits & other accountsMudaraba savings deposits (Note-14.1) 183,128,708,639 156,072,977,380 Mudaraba term deposits 170,175,086,856 131,412,377,473 Other mudaraba deposits (Note-14.2) 149,346,325,824 129,401,794,243 Al- wadeeah current and other deposit accounts (Note-14.3) 54,396,285,416 52,124,147,978 Bills payable (Note-14.4) 3,649,894,101 4,129,657,957 Total 560,696,300,836 473,140,955,031

14.1 Mudaraba savings deposits

Mudaraba Savings Deposits 177,206,503,531 151,518,685,457 Mudaraba Savings Deposits (RDS) 4,455,720,616 3,670,537,107 Mudaraba Savings Deposit (RDS-RIP) 448,754 4,764,099 Mudaraba School Student Savings 651,387,313 329,734,176 Mudaraba Farmers Savings A/C 814,648,425 549,256,541 Total 183,128,708,639 156,072,977,380


31.12.2014 31.12.2013Taka Taka

14.2 Other mudaraba deposits

Mudaraba Special Notice Deposits 6,071,880,203 5,916,386,559

Mudaraba Hajj Deposits 1,850,748,069 1,528,653,665

Mudaraba Savings Bond 16,820,776,032 15,826,157,593

Mudaraba NRB Savings Bond 858,190,578 725,923,015

Mudaraba Special Savings (Pension) Deposits 93,252,815,277 82,700,530,973

Mudaraba Monthly Profit Deposit Scheme 21,789,339,383 18,988,275,561

Mudaraba Muhor Savings 429,546,767 381,733,723

Mudaraba Waqf Cash Deposit 533,005,487 436,010,591

Mudaraba Upahar Deposit Scheme 12,686,900 11,404,500

Mudaraba FC Deposit 7,725,100,106 2,886,251,563

Mudaraba FC Deposit ERQ 2,237,022 466,500

Total 149,346,325,824 129,401,794,243

14.3 Al Wadeeah current & other deposits accounts

Al Wadeeah Current Deposits 26,276,899,883 24,472,256,739

Convertible Taka Account 151,708 151,708

Non Resident Investors Taka Account 310,807,655 48,860,474

Non Resident FC of Exchange House / Banks 122,651,435 849,140,151

Non Resident FC of Exchange House / Banks-OBU (Note-2.0 _OBU) 69,601,591 -

Non Resident Taka Account 2,135,452,545 1,836,556,742

Foreign Currency Deposit 227,322,404 200,312,993

Foreign Currency Deposit ERQ 753,219,113 479,242,042

Other FC Deposit 37,832,780 39,649,561

Foreign Currency: Security Deposit 108,181,538 90,197,035

Foreign Currency Held against Back to Back L/C 3,797,545,715 3,201,204,154

Foreign Currency held against Cash L/C 474,533,179 527,160,494

Foreign Demand Draft /TT Payable 631,415,387 1,172,175,682

Foreign Currency Deposit against Foreign Bank Guarantee 31,131,042 31,051,406

Profit Payable 10,163,838,731 11,293,770,751

Remittance Card Account 1,473,936 2,338,109

Sundry Deposits (Note-14.3.1) 9,282,404,631 7,855,092,506

FC Deposit of EPZ Enterprises 8,042,291 1,752,237

Mobile Wallet A/C 33,381,443 23,235,194

Sub total 54,465,887,007 52,124,147,978

Less: Non Resident FC of Exchange House / Banks-OBU 69,601,591 -

Total 54,396,285,416 52,124,147,978


31.12.2014 31.12.2013Taka Taka

14.3.1 Break-up of sundry deposits

Sundry creditors 896,843,941 185,866,407

Supervision charge 48,673,117 44,608,406

Security deposit L/G 1,814,160 1,814,160

Security money payable 115,811,065 148,276,146

Security money locker 14,662,095 11,074,697

Marginal deposit 670,929,112 651,756,174

Bank guarantee 7,970,052 2,915,986

Excise duty - 18,026,590

Closed account profit 297,584,883 239,950,693

Sundry deposit others 118,757,267 314,166,544

Govt. tax & VAT 23,066,578 53,058,084

Security Deposit - Investment 17,343,383 8,257,544

Security Deposit - L/C (Wes) 7,582,244 5,371,000

Security Deposit - Foreign L/C General 6,219,958,060 5,274,879,206

Security Deposit - Back to Back L/C (Inland) - 2,050,000

Security Deposit - Bank Guarantee 691,224,104 543,205,590

Security Deposits - Foreign Bill Negotiation( FBN)/ MDB 210,422 210,422

Security Deposit - IBP 145,486 145,486

Security Deposit - Inland L/C 48,831,511 56,388,464

RDS (RIP) 86,519,838 277,965,238

Other earnings (Note-14.3.1.1) 14,477,313 15,105,669

Total 9,282,404,631 7,855,092,506

14.3.1.1 Break-up of other earnings

Opening balance 15,105,669 14,662,181

Received from B. Bank FC clearing A/c 1,994,335 3,960,862

Received from foreign correspondents/banks 252,006 149,552

Total receipt during the year 2,246,341 4,110,414

Total available balance 17,352,010 18,772,595

Less:

Income tax provision @ 42.50% 954,697 1,746,926

Transferred/ paid for charitable activities 1,920,000 1,920,000

Closing balance 14,477,313 15,105,669


31.12.2014 31.12.2013Taka Taka

14.4 Bills payable

P.O. payable 2,916,986,417 2,946,159,689 T.T. payable 18,540,133 27,292,942 D.D. payable 318,699,302 594,694,593 FC bills payable 5,181,274 5,181,274 BEFTN payable 66,657,641 84,460,023 Spot cash payable 323,829,334 471,869,436 Total 3,649,894,101 4,129,657,957

14.5 Maturity wise classification of deposits (other than inter-Bank deposit)

Re-payable on demand 12,674,499,013 10,675,633,571 With a residual maturity ofRe- payable within 1 month 79,719,294,943 67,146,952,355 Over 1 month but not more than 3 months 108,991,484,445 87,591,231,914 Over 3 months but within 6 months 85,303,560,053 71,850,536,143 Over 6 months but not more than 1 year 69,248,903,698 64,223,868,355 Over 1 year but not more than 5 years 95,997,641,176 91,796,376,897 Over 5 years but within 10 years 108,432,499,867 79,323,858,649 Unclaimed Deposits for 10 years or more 6,152,719 16,684,927 Sub-total 560,374,035,914 472,625,142,811

14.6 Maturity grouping of Inter- bank deposits are as under

Re-payable on demand - - With a residual maturity ofRe- payable within 1 month 322,264,922 515,812,220 Over 1 month but within 6 months - - Over 6 months but not more than 1 year - - Over 1 year but not more than 5 years - - Over 5 years but within 10 years - - Sub-total 322,264,922 515,812,220 Total (14.5+14.6) 560,696,300,836 473,140,955,031

14.7 Other banks’ deposits with IBBL

Al Wadeeah Current Deposits 144,716,985 311,608,209

Mudaraba Special Notice Deposits 129,129,207 143,019,736

Mudaraba Savings Account 48,418,730 61,184,275

Total 322,264,922 515,812,220

14.8 Sector wise break up of deposits and other accounts

Government 204,387,000 205,578,000

Other banks’ deposit 322,264,922 515,812,220

Other public 576,694,000 753,318,000

Foreign currency 13,919,212,012 9,478,603,808

Private 545,673,742,902 462,187,642,993

Total 560,696,300,836 473,140,955,031


31.12.2014 31.12.2013

Taka Taka

14(a) Consolidated deposits & other accounts

Islami Bank Bangladesh Limited 560,696,300,836 473,140,955,031 Islami Bank Securities Limited 1,153,956 1,423,787 Islami Bank Capital Management Limited - - Inter-company balances (983,874,763) (1,020,407,470)Total 559,713,580,029 472,121,971,348

15.0 Mudaraba Perpetual Bond (Note - 3.19) 3,000,000,000 3,000,000,000

15.1 Security pledged against Mudaraba Perpetual Bond (MPB) 4,489,100,000 4,489,100,000

16.0 Other liabilities

Provision for classified & unclassified investments and off- balance sheet items (Note- 16.1)

18,108,400,000 13,546,600,000

Provision for diminution in value of investments in shares (Note - 16.2) 3,498,661 423,778 Other provisions (Note - 16.3) 194,527,027 109,681,000 Compensation account (Note-16.5) 171,936,390 - Profit/ rent /compensation suspense (Note - 16.6) 4,637,284,546 2,483,769,765 Current tax (Note-16.7) 8,104,445,048 7,050,182,433 Zakat payable 1,490,415,591 1,115,146,578 Dividend payable - 9,790,440 Foreign correspondents charges 2,433,269 484,485 Incentive bonus payable 1,185,893,152 1,080,000,000 Payable against expenditure 85,384,738 391,192,037 Clearing adjustment 36,341,416 64,782,783 Transfer delivery adjustment 157,569 65,773 Substitute cash assistance - 650 BEFTN adjustment 808,378 14,905,662 Payable to Benevolent Fund & SAF 30,000,000 30,000,000 Deffered/Unearned Airtime Commission 183,800 - F.C. Payable A/c IBBL Travel Card 266,176 - F.C. Payable A/c IBBL Hajj Card 51,333 - IB General account (Note - 16.8) - 1,236,835,184Total 34,052,027,094 27,133,860,568

16.1. Provision for investments including bad & doubtful investments

General provision Unclassified investments excluding OBU 3,307,926,000 3,041,538,171 Unclassified investments -OBU 123,193,000 162,134,829 Special mention account 194,361,000 167,927,000 Sub-total (Note-16.1.1) 3,625,480,000 3,371,600,000 Off-balance sheet items (Note-16.1.2) 1,128,200,000 1,137,200,000 Sub-total (General provision) 4,753,680,000 4,508,800,000 Specific provision (Note-16.1.3)Substandard 101,045,936 130,347,000 Doubtful 255,809,525 113,265,000 Bad and loss 12,997,864,539 8,794,188,000 Sub-total (Specific provision) 13,354,720,000 9,037,800,000 Total provision held at the end of the year 18,108,400,000 13,546,600,000


31.12.2014 31.12.2013

Taka Taka16.1.1 General provision on unclassified investment including OBU

Provision held at the beginning of the year 3,371,600,000 3,935,900,000 Provision made/ (no longer required) during the year 253,880,000 (564,300,000)Total provision held at the end of the year 3,625,480,000 3,371,600,000

16.1.2 General provision on off-balance sheet items

Provision held at the beginning of the year 1,137,200,000 1,100,450,000 Provision made/ (no longer required) during the year (9,000,000) 36,750,000 Total provision held at the end of the year (*) 1,128,200,000 1,137,200,000 Sub-total (16.1.1+16.1.2) 4,753,680,000 4,508,800,000

16.1.3 Provision for classified investmentsProvision held at the beginning of the year 9,037,800,000 6,054,350,000 Fully provided investment written off/waived/transferred (Note-16.1.3.1) (148,335,025) (603,651,687)Recoveries of amounts previously written off 39,350,296 43,918,185 Provision made during the year 4,425,904,729 3,543,183,502 Provision no longer required - - Net charge to profit & loss account for classified investment 4,425,904,729 3,543,183,502 Total provision held at the end of the year 13,354,720,000 9,037,800,000 Total provision for investments (16.1.1+16.1.3) 16,980,200,000 12,409,400,000 Total provision (16.1.1+16.1.2+16.1.3) 18,108,400,000 13,546,600,000

16.1.3.1 Breakup of fully provided investment written off/waived/transferredTransferred to compensation and doubtful income realised account - (372,776,167)Due to waiver during the year - (130,491,017)Due to written-off during the year (148,335,025) (100,384,503)Total (148,335,025) (603,651,687)

16.1.4 Provision made for investments & off- balance sheet items for the year 2014 2013

Provision for classified investments 4,425,904,729 3,543,183,502 General provision for unclassified investment including OBU 253,880,000 (564,300,000)General provision for off-balance sheet items (9,000,000) 36,750,000 Total 4,670,784,729 3,015,633,502

16.1.5 Total Provision Requirement and maintained for investments including off balance sheet items at the end of year 2014

Particulars of Investment Required Provision for 2014

Maintained Provision for 2014

General provision on unclassified investment including OBU 3,625,411,712 3,625,480,000 Provision for classified investments 9,390,919,650 9,391,020,000 Provision for investments considering qualitative judgement 3,963,700,000 3,963,700,000 Total provision for investment 16,980,031,362 16,980,200,000 General provision on off-balance sheet items 1,128,192,273 1,128,200,000 Total provision for investment including off balance sheet items at the end of the year

18,108,223,635 18,108,400,000

Provision surplus/(deficit) for the year 2014 176,365

16.2 Provision for diminution in value of investments in shares31.12.2014

Taka31.12.2013

Taka

Opening balance 423,778 - Add: Provision made during the year 3,074,883 423,778 Closing balance (Note-16.2.1) 3,498,661 423,778


31.12.2014 31.12.2013

Taka Taka16.2.1 Provision for diminution in value of investments in shares

i) Dealing securities

Quoted 3,341,661 266,778

Un-quoted - -

Sub-total (i) 3,341,661 266,778

ii) Investment securities

Quoted - -

Un-quoted 157,000 157,000

Sub-total (ii) 157,000 157,000

Total (i+ii) 3,498,661 423,778

16.2(a) Consolidated provision for diminution in value of investments in shares made during the year

Islami Bank Bangladesh Limited 3,074,883 423,778

Islami Bank Securities Limited 33,109,478 45,204,121

Islami Bank Capital Management Limited - -

Total 36,184,361 45,627,899

16.3 Other provisions

Provision for other assets (Note-16.3.1) 123,369,900 109,681,000

Provision for doubtful income account (Note-16.3.2) 71,157,127 -

Total 194,527,027 109,681,000

16.3.1 Provision for other assets

Opening balance 109,681,000 96,550,000

Less: Transfer for settlement - 70,000

Add: Provision made during the year 13,688,900 13,201,000

Closing balance 123,369,900 109,681,000

16.3.2 Provision for doubtful income account

Opening balance - - Add: Provision made during the year 103,360,602 - Less: Expended for charitable purposes 32,203,475 - Closing balance 71,157,127 -

16.4 Other provisions for the year

Provision for other assets 13,688,900 13,201,000 Provision for doubtful income account 103,360,602 - Total 117,049,502 13,201,000

Adequate provision for the investments, off-balance sheet items and other assets have been made as per the relevant circulars issued by Bangladesh Bank as well as decision taken in tripartite meeting amongst Inspection Team of Bangladesh Bank, External Auditors and the Management of Islami Bank Bangladesh Limited and subsequent communications to the Bank. However, out of cases under writ petitions provisions have been made against cases as per the instruction of Bangladesh Bank and accrued profit on investments under writ petitions cases have been credited to profit/rent suspense accounts instead of investment income on prudence basis.


31.12.2014 31.12.2013

Taka Taka

16.5 Compensation account

Opening balance - - Addition during the year 769,375,628 - Total 769,375,628 - Less: Income tax provision @ 42.50% 326,984,642 - Less: expended for charitable activities 270,454,596 - Closing balance 171,936,390 -

16.6 Profit/rent/compensation suspense

Profit/rent suspense (Note-16.6.1) 1,717,660,073 563,405,586

Compensation suspense (Note-16.6.2) 2,919,624,473 1,920,364,179

Total 4,637,284,546 2,483,769,765

16.6.1 Profit/ rent suspense

Balance at the beginning of the year 563,405,586 499,628,822 Amount transferred to suspense account during the year 2,884,720,516 1,092,592,585 Amount transferred to investment income during the year (1,723,221,912) (886,661,150)Amount written-off during the year (7,244,117) (142,154,671)Amount waived during the year - - Balance at the end of the year 1,717,660,073 563,405,586

16.6.2 Compensation suspense

Balance at the beginning of the year 1,920,364,179 1,115,334,219 Amount transferred to suspense account during the year 1,635,324,839 1,507,028,245 Amount transferred to compensation income during the year (387,287,567) (571,507,268)Amount written-off during the year (111,609,013) (130,491,017)Amount waived during the year (137,167,965) - Balance at the end of the year 2,919,624,473 1,920,364,179

16.7 Current tax liability

Balance of provision on 01 January 10,062,355,707 8,887,170,146

Add: Provision made during the year ( Note 16.7.1) 6,323,390,422 6,145,665,449

Add: Other provision made during the year 327,984,375 134,676,797

Less: Settlement for previous year 5,100,387,470 5,105,156,685

Total (a) 11,613,343,034 10,062,355,707

Advance tax

Balance of advance tax on 01 January 3,012,173,274 2,385,413,375

Add: Payment made during the year 5,597,112,182 5,731,916,584

Less: Settlement for previous year 5,100,387,470 5,105,156,685

Total ( b) 3,508,897,986 3,012,173,274

Net balance as at 31 December (a-b) 8,104,445,048 7,050,182,433


31.12.2014 31.12.2013

Taka Taka16.7.1 Provision for current tax made during the year

Income tax @ 42.50% on taxable profit (A) 6,300,768,396 6,277,417,613

Add: Income tax @ 20% on dividend income 22,622,026 2,924,633

Add: Excess profit tax -

Less: Provision already kept - 134,676,797

Estimated provision required as at 31 December, (i) 6,323,390,422 6,145,665,449

Provision held

Balance at 1st January 10,062,355,707 8,887,170,146

Less: Tax for previous year 5,100,387,470 5,105,156,685

Actual provision for tax held (ii) 4,961,968,237 3,782,013,461

Estimated provision needs to be made (i-ii) 1,361,422,185 2,363,651,988

Provision actually made during the year 6,323,390,422 6,145,665,449

Computation of taxable profit

Profit before tax 10,531,712,736 11,050,153,090

Less: Dividend income 113,110,128 14,623,166

Profit before tax (excluding dividend income) 10,418,602,608 11,035,529,924

Add : Inadmissible expenditure 5,712,242,877 4,771,131,634

Less : Further allowable expenditure 1,305,508,083 1,060,870,511

Estimated taxable profit for the year (A) 14,825,337,402 14,745,791,047

Provision for tax for the year ended on 31.12.2014 has been made as per Income Tax Ordinance, 1984 applying prevailing rates applicable on the net profit. Income tax assessments have been completed by the Deputy Commissioner of Taxes up to the accounting year 2010 and income tax return has been submitted for the year 2013. The Bank filled appeals/ writ petitions against tax assessment orders of different levels of tax authorities to the appropriate tax authorities and High Court on different disputed issues. Adequate provisions for those assessment years have been made in the books of accounts.

16.7.2 Reconciliation of effective tax rate

Particulars2014 2013

% Taka % Taka

Profit before income tax as per profit and loss account

10,531,712,736 11,050,153,090

Income Tax using the domestic corporate tax rate

42.50% 4,475,977,913 42.50% 4,696,315,063

Factors affecting the tax charge for current year:

Non deductible expenses 23.05% 2,427,703,223 18.35% 2,038,187,362

Tax exempt income -5.27% (554,840,935) -5.30% (585,546,764)

Tax savings from reduced tax rates from dividend

-0.24% (25,449,779) -0.03% (3,290,212)

Total income tax expenses 60.04% 6,323,390,422 55.62% 6,145,665,449


31.12.2014 31.12.2013

Taka Taka16.7(a) Consolidated current tax liability

Islami Bank Bangladesh Limited 6,323,390,422 6,145,665,449 Islami Bank Securities Limited 25,368,838 33,362,272 Islami Bank Capital Management Limited 18,609,428 16,941,358 Total 6,367,368,688 6,195,969,079

16.8 IB General account

Un-reconciled entries of inter branch transactions in Bangladesh Maturity Number Amount in Taka Amount in TakaUpto 3 months (*) - - 1,236,835,184Over 3 months but not more than 6 months - - - More than 6 months - - - Total (i+ii+iii) - - 1,236,835,184(*) All the outstanding entries in the above mentioned IB General Account have been fully adjusted within 24.02.2014.

16.9 Maturity-wise classification of other liabilities

Repayable on demand - - With a residual maturity of Up to 1 Month 2,952,471,399 1,960,889,341 Over 1 month but not more than 3 months 12,821,710,542 1,209,892,426 Over 3 months but not more than 1 year 3,899,744,057 2,590,022,229 Over 1 year but not more than 5 years 1,811,279,527 8,508,634,995 More than 5 years 12,566,821,569 12,864,421,577 Total 34,052,027,094 27,133,860,568

16(a) Consolidated other liabilities

Islami Bank Bangladesh Limited 34,052,027,094 27,133,860,568 Islami Bank Securities Limited 3,214,833,187 400,594,220 Islami Bank Capital Management Limited 155,924,066 47,734,423 Inter-company balances (3,202,020,617) (293,055,051)Total 34,220,763,730 27,289,134,160

17.0 Deferred tax (assets)/ liabilities

Deferred tax assets and liabilities have been recognised and measured in accordance with the provision of Bangladesh Accounting Standards (BAS) 12 “Income Taxes” and BRPD circular No. 11 dated 12 December 2011. Calculation of deferred tax has been made on all temporary differences between the tax base and carrying amounts for financial reporting purpose. Deferred tax assets and liabilities are attributable to the following:

i) Deferred tax on fixed assets

Carrying amount 4,180,620,405 4,001,520,552 Tax Base 3,231,449,236 3,218,534,573 Temporary timing difference 949,171,169 782,985,979 Deferred tax (asset)/liability @ 42.50% 403,397,747 332,769,041 Opening balance 332,769,041 238,230,992 Deferred tax (income)/expenses 70,628,706 94,538,049


31.12.2014 31.12.2013

Taka Taka

ii) Deferred tax on provision for gratuity

Carrying amount - -

Tax Base - 326,200,000

Temporary timing difference - (326,200,000)

Deferred tax (asset)/liability @ 42.50% - (138,635,000)

Opening balance (138,635,000) -

Deferred tax (income)/expenses 138,635,000 (138,635,000)

Net deferred tax (income)/expenses (i+ii) 209,263,706 (44,096,951)

Net deferred tax (assets)/liabilities (i+ii) 403,397,747 194,134,041

17(a) Consolidated Deferred tax (assets)/liabilities

Islami Bank Bangladesh Limited 403,397,747 194,134,041

Islami Bank Securities Limited (315,880) 55,273


Total 403,081,867 194,189,314

17(b) Consolidated deferred tax (income)/expenses

Islami Bank Bangladesh Limited 209,263,706 (44,096,951)

Islami Bank Securities Limited (371,153) (342,586)


Total 208,892,553 (44,439,537)

18.0 Share capital

18.1 Authorized capital

The authorized capital of the Bank is Tk.20,000,000,000 divided into 2,000,000,000 ordinary shares of Tk.10 each.

18.2 Paid up capital

The shareholders of the bank in their 31st Annual General Meeting held on May 31, 2014 approved 10% Stock Dividend (Bonus Share) for the year 2013, thus Paid-up Capital of the Bank has increased from Tk.14,636.28 million to Tk.16,099.91 million at the end of the year 2014; as detailed below:

31.12.2014 Taka146,36,27,880 ordinary shares of Tk.10 each 14,636,278,800 14,63,62,778 Ordinary Shares of Tk.10 each issued as Bonus Share 1,463,627,880 Total 16,099,906,680

18.2.1 The Paid-up Capital of the Bank is Tk.1609,99,06,680 divided into 160,99,90,668 ordinary shares of Tk.10 each fully subscribed by:

Particulars No. of Shares as on 31 Dec, 2014 % of Total

31.12.2014 31.12.2013

Amount in Taka Amount in Taka

(i) Sponsors/ promoters 939,778,646 58.3717% 9,397,786,460 8,613,115,660

(ii) General public 670,191,705 41.6270% 6,701,917,050 6,022,978,440

(iii) Government of the People’s Republic of Bangladesh* 20,317 0.0013% 203,170 184,700

Total 1,609,990,668 100.000% 16,099,906,680 14,636,278,800

* The shares have already been sold by the Government of Bangladesh but no transfer has yet been made in share register of the Bank.


18.2.2 Break up of share holding and percentage thereof as on 31.12.2014

Holdings No. of Shareholders

Total Holdings/ No. of Shares Percentage (%)

Less than 500 Shares 35,874 5,211,980 0.32%500 to 5,000 Shares 18,510 32,322,349 2.01%5,001 to 10,000 Shares 2,654 18,847,539 1.17%10,001 to 20,000 Shares 1,691 24,013,505 1.49%20,001 to 30,000 Shares 644 15,691,283 0.98%30,001 to 40,000 Shares 315 10,837,851 0.67%40,001 to 50,000 Shares 221 9,874,581 0.61%50,001 to 100,000 Shares 398 27,967,216 1.74%100,001 to 1,000,000 Shares 452 131,233,400 8.15%Over 1,000,000 Shares 98 1,333,990,964 82.86%Total 60,857 1,609,990,668 100.00%

19.0 Capital adequacy as per Basel - II as on 31 December 2014 (Consolidated)

The Calculation of Capital Adequacy of the Bank has been done as per the revised guidelines on Risk Based Capital Adequacy (RBCA) for Banks (Revised Regulatory Framework in line with Basel-II) issued by Bangladesh Bank vide BRPD Circular No. 09 dated 03.08.2010 and BRPD Circular No. 35 dated 29.12.2010. Detail calculation of Capital Adequacy as per Basel-II as on December 31, 2014 is given below:

(Amount in million Taka)

Particulars 31.12.2014 (Consolidated)

31.12.2014(Solo)

31.12.2013 (Consolidated)

A. Regulatory capital1. Tier-1 (Core capital) (Note-19.1) 34,997.69 35,025.95 32,201.18 2. Tier-2 (Supplementary capital) (Note-19.2) 13,543.92 13,543.92 13,289.59 3. Tier-3 (Additional supplementary capital) (Note-19.3) - - - A. Total regulatory capital (1+2+3) 48,541.61 48,569.86 45,490.77 B. Total Risk Weighted Assets (RWA) (Note-19.4) 378,467.30 378,742.72 318,913.69 C. Capital Adequacy Ratio (CAR) (as against required above 10.00% )

12.83% 12.83% 14.26%

D. Core capital to RWA (as against required minimum 5.00%) 9.25% 9.25% 10.10%E. Supplementary capital to RWA 3.58% 3.58% 4.17%F. Minimum Capital Requirement (MCR) 37,846.73 37,874.27 31,891.37 G. Surplus capital (A-F) 10,694.88 10,695.59 13,599.40

19.1 Tier-1 (Core capital)

1.1 Fully paid-up capital/capital deposited with BB 16,099.91 16,099.91 14,636.28

1.2 Statutory reserve 16,099.91 16,099.91 14,638.61

1.3 Non-repayable share premium account 1.99 1.99 1.99

1.4 General reserve 377.16 377.16 254.38

1.5 Retained earnings 2,386.67 2,414.99 2,637.86

1.6 Non-controlling interest in subsidiaries 0.06 - 0.06

1.7 Non-cumulative irredeemable preferences shares - - -

1.8 Dividend equalization account 32.00 32.00 32.00

1.9 Sub-total: (1.1 to 1.8) 34,997.69 35,025.95 32,201.18


(Amount in million Taka)31.12.2014 31.12.2014 31.12.2013

(Consolidated) (Solo) (Consolidated)Deductions from Tier-1 (Core capital)1.10 Book value of goodwill - - - 1.11 Shortfall in provisions required against classified

assets - - -

1.12 Shortfall in provisions required against investment in shares

- - -

1.13 Remaining deficit on account of revaluation of investment in securities after netting off from any other surplus on the securities.

- - -

1.14 Reciprocal crossholdings of bank capital /subordinated debt

- - -

1.15 Any investment exceeding the approved limit - - - 1.16 Investment in subsidiaries which are not

consolidated - - -

1.17 Others (Specify) - - - 1.18 Sub total (1.10 to 1.17) - - - 1.19 Total eligible tier-1 capital (1.9-1.18) 34,997.69 35,025.95 32,201.18

19.2 Tier-2 (Supplementary capital)2.1 General provision (unclassified investment and off

balance sheet exposure) 4,753.68 4,753.68 4,508.80

2.2 Assets revaluation reserves up to 50% 5,749.49 5,749.49 5,749.49 2.3 Revaluation reserves of securities up to 50% 40.75 40.75 31.30 2.4 Revaluation reserves for equity instruments up to 10% - - - 2.5 All other preference shares - - - 2.6 Perpetual subordinated debt (Mudaraba Perpetual Bond) 3,000.00 3,000.00 3,000.00 2.7 Others (if any item approved by Bangladesh Bank) - - - 2.8 Sub-total (2.1 to 2.7) 13,543.92 13,543.92 13,289.59 2.9 Deductions, if any - - - 2.10 Total Eligible Tier-2 Capital (2.8 - 2.9) 13,543.92 13,543.92 13,289.59

19.3 Tier-3 (Additional supplementary capital)

3.1 Short-term subordinated debt - - - 4. Total supplementary capital (2.10+3) 13,543.92 13,543.92 13,289.59 5. Total regulatory capital (1.19+4) 48,541.61 48,569.86 45,490.77

19.4 Risk Weighted Assets (RWA) for 1. Investment (credit) risk 336,165.95 336,701.42 287,207.41 (i) On-balance sheet 313,692.19 314,227.66 270,318.56 (ii) Off-balance sheet 22,473.76 22,473.76 16,888.85 2. Market Risk 6,394.91 6,394.91 744.20 3.Operational risk 35,906.44 35,646.39 30,962.08 Total Risk Weighted Assets (1+2+3) 378,467.30 378,742.72 318,913.69

31.12.2014 31.12.2013

Taka Taka

20.0 Statutory reserveOpening balance 14,638,613,627 12,423,662,342 Add: Addition made this year 1,461,293,053 2,214,951,285 Closing balance 16,099,906,680 14,638,613,627

At least 20% of net profit before tax is transferred to statutory reserve account each year until the cumulative balance equal to the amount of paid up capital account as per Section 24 of the Bank Company Act 1991 as amended. During the year 2014 the Amount required to be equal to the amount of paid up capital was transferred to statutory reserve.


31.12.2014 31.12.2013Taka Taka

21.0 Others reservesGeneral reserve (Note-21.1) 377,159,532 254,379,979 Assets revaluation reserve (Note-21.2) 11,498,971,320 11,498,971,320 Revaluation reserve of securities (Note-21.3) 81,500,000 62,600,000 Translation reserve (Note-21.4) 6,392,484 1,317,771 Share premium 1,989,633 1,989,633 Dividend equalization account 32,000,000 32,000,000 Total 11,998,012,969 11,851,258,703

21.1 General reserveOpening balance 254,379,979 130,439,979 Add: Addition/(adjustment) made this year 122,779,553 123,940,000 Closing balance 377,159,532 254,379,979

21.2 Assets revaluation reserve Opening balance 11,498,971,320 11,498,971,320 Add: Addition/(adjustment) made this year - - Closing balance 11,498,971,320 11,498,971,320

21.3 Revaluation reserve of securitiesOpening balance 62,600,000 34,700,000 Add: Addition/(adjustment) made this year 18,900,000 27,900,000 Closing balance 81,500,000 62,600,000

21.4 Translation reserveOpening balance 1,317,771 (3,303,771)Add: Addition/ (adjustment) made this year 5,074,713 4,621,542 Closing balance 6,392,484 1,317,771

22.0 Letter of guarantee(a) Claim against the bank which is not acknowledged as debt - -(b) Money for which the bank is contingently liable in respect of guarantees issued favouring : i) Directors - - ii) Government 210,589,850 771,904,461 iii) Bank and other financial institutions 500,000 457,275 iv) Others 8,628,895,740 6,582,232,915 Total 8,839,985,590 7,354,594,651

2014Taka

2013Taka

23.0 Investment incomeIncome from general investment (Note-23.1) 48,521,667,089 47,083,761,335 Profit on deposits with other banks & financial institutions (Note-23.2) 588,289,290 1,061,703,045 Total 49,109,956,379 48,145,464,380

23.1 Income from general investment (*)

Bai Murabaha 29,474,302,572 28,494,774,596 Musharaka /Musharaka Documentary Bills 1,463,048,565 2,013,000,424 Bai Muajjal 4,477,450,761 3,235,748,522 Hire Purchase under Shirkatul Melk 11,755,116,774 11,621,383,638 Bai Salam 312,385,391 306,181,459 Bai -As- Sarf (FDB /FCD), IBP, MFCI and UPAS 285,866,022 221,367,054 Investment income: Off-shore Banking Unit (OBU) 753,497,004 450,098,863 Compensation income (*) - 741,206,779 Sub total 48,521,667,089 47,083,761,335

(*) This amount includes any amount transferred from profit/rent/compensation suspense due to recovery or regularization of investment (i.e. due to declassification of investment) during the year. Amount transferred from profit/rent suspense is included in the “Investment income under respective mode of investment” and amount transferred from compensation suspense is included under “Compensation income”.


2014 2013Taka Taka

23.2 Profit on deposits with other banks & financial institutionsIn Bangladesh 588,289,290 1,061,703,045Outside Bangladesh - - Sub total 588,289,290 1,061,703,045 Grand total (23.1+23.2) 49,109,956,379 48,145,464,380

23.3 Investment income derived from the fund deployed by

Mudaraba deposits 42,524,199,777 42,360,516,514Other deposits/fund 6,585,756,602 5,784,947,866 Total 49,109,956,379 48,145,464,380

23(a) Consolidated investment income

Islami Bank Bangladesh Limited 49,109,956,379 48,145,464,380 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Total 49,109,956,379 48,145,464,380

24.0 Profit paid on mudaraba deposits Profit paid on Mudaraba Savings Deposit 6,753,174,438 6,548,541,394 Profit paid on Mudaraba Term Deposit Account 11,963,579,333 10,933,682,496 Profit paid on other Mudaraba Deposits 11,424,508,214 12,018,664,519 Profit paid on Placement (*) 173,608,636 1,090,297,127 Profit paid on Mudaraba Perpetual Bond (MPB) 335,400,000 384,000,000 Total 30,650,270,621 30,975,185,536

* Profit paid on placement includes Tk 11,17,73,018 for 2014 (in 2013 Tk Nil) against profit paid on placement of off-shore Banking Units (OBUs).

24(a) Consolidated profit paid on mudaraba deposits

Islami Bank Bangladesh Limited 30,650,270,621 30,975,185,536 Islami Bank Securities Limited - - Islami Bank Capital Management Limited - - Inter-company transactions (57,333,113) (74,905,974)Total 30,592,937,508 30,900,279,562

25.0 Income from investments in shares & securities

i. Inside Bangladesh Bangladesh Government Islamic Investment Bond (BGIIB) 1,784,915,681 2,032,412,208 Bangladesh Shipping Corporation (BSC) 2,000,000 - Central Depository Bangladesh Ltd. (CDBL) 5,711,802 14,623,166 Income on Share Securities Trading 2,222,593 479,286 Islami Bank Capital Management Limited 104,997,550 - Other Banks/companies 400,776 - Sub total (i) 1,900,248,402 2,047,514,660 ii. Outside Bangladesh - - Sub total (ii) - - Grand total (i+ii) 1,900,248,402 2,047,514,660

25(a) Consolidated income from investments in shares & securities

Islami Bank Bangladesh Limited 1,900,248,402 2,047,514,660 Islami Bank Securities Limited 51,990,206 64,514,533 Islami Bank Capital Management Limited - - Inter-company transactions (104,997,550) - Total 1,847,241,058 2,112,029,193


2014 2013Taka Taka

26.0 Commission, exchange & brokerage incomeCommission income 3,477,847,228 3,062,812,206 Exchange income (Note 26.1) 2,392,526,280 1,906,313,841Total 5,870,373,508 4,969,126,047

26.1 Exchange incomeGross exchange gain 2,392,526,280 1,906,313,841 Less: exchange loss - - Net exchange gain 2,392,526,280 1,906,313,841

26(a) Consolidated commission, exchange & brokerage incomeIslami Bank Bangladesh Limited 5,870,373,508 4,969,126,047 Islami Bank Securities Limited 12,958,772 9,532,567 Islami Bank Capital Management Limited

- -

Total 5,883,332,280 4,978,658,614 27.0 Other operating income

Rent on locker 11,817,153 9,996,314Telephone/ trunk call charge recovered 647,733 2,199,495 P&T charge recovered - 4,134,575Income from ATM 47,806,594 - E & TA fees recovered 1,195,640 984,515 Income from SWIFT 139,851,387 115,959,435 Account maintenance charges realised 703,099,468 676,603,675 Service charges recovered 37,111,895 29,097,431 Service charges recovered: OBU 13,871,627 8,223,565 Income from Mobile Wallet 4,095,642 1,280,876 Rent on premises realised 2,538,886 2,260,944 Sale proceeds of tender schedule 2,999,500 1,381,000 Profit on sale of bank’s car 21,249,366 3,055,859 MICR cheque charge realised 26,932,254 5,249,147 Others 153,231,826 71,211,785 Total 1,166,448,971 931,638,616

27(a) Consolidated other operating incomeIslami Bank Bangladesh Limited 1,166,448,971 931,638,616 Islami Bank Securities Limited 61,594,225 83,296,318 Islami Bank Capital Management Limited 52,663,859 45,790,331 Inter Company Transactions (57,333,113) (74,905,974)Total 1,223,373,942 985,819,291

28.0 Salary & allowances (*)Basic pay 3,437,505,591 3,141,844,803 Allowances 2,396,531,797 2,231,927,682 Bonus 1,634,071,311 1,543,127,817 Contribution to provident fund 289,091,142 265,759,059 Contribution to Gratuity (**) 396,000,000 326,200,000 Contribution to benevolent fund 10,000,000 10,000,000 Contribution to superannuation fund (**) 20,000,000 20,000,000 Total 8,183,199,841 7,538,859,361

(*) The above salary & allowances includes Tk.36,11,290/- for 2014 (in 2013 Tk.30,70,104/-) against salary and allowances of Off-shore Banking Units (OBUs).(**) As per latest Actuarial valuation report, there was no shortfall in the fund to meet-up the related liability up to 31 December 2014.


2014 2013Taka Taka

28(a) Consolidated salary & allowances Islami Bank Bangladesh Limited 8,183,199,841 7,538,859,361 Islami Bank Securities Limited 14,368,273 13,901,986 Islami Bank Capital Management Limited - - Total 8,197,568,114 7,552,761,347

29.0 Rent, taxes, insurances, electricity etc.

Rent, rates and taxes 362,139,320 288,073,881 Insurance 343,706,938 296,574,014 Electricity and lighting 290,293,609 237,491,433 Total 996,139,867 822,139,328

29(a) Consolidated rent, taxes, insurances, electricity etc.

Islami Bank Bangladesh Limited 996,139,867 822,139,328 Islami Bank Securities Limited 3,905,713 2,491,390 Islami Bank Capital Management Limited - 499,765 Total 1,000,045,580 825,130,483

30.0 Legal expensesLegal charges 16,206,043 35,067,030

30(a) Consolidated legal expenses

Islami Bank Bangladesh Limited 16,206,043 35,067,030 Islami Bank Securities Limited - 218,293 Islami Bank Capital Management Limited - - Total 16,206,043 35,285,323

31.0 Postage, stamps, telecommunications etc.Telephone (*) 38,613,447 35,162,708 Postage 387,577 - Fax & internet 8,072,366 9,176,881 Stamps charges 57,320 4,078 Total 47,130,710 44,343,667

(*) Telephone expenses includes Tk.3,010/- for 2014 (in 2013 Tk.Nil ) against Telephone bill of Off-shore Banking Units (OBUs).

31(a) Consolidated postage, stamps, telecommunications etc.

Islami Bank Bangladesh Limited 47,130,710 44,343,667 Islami Bank Securities Limited 175,424 193,229 Islami Bank Capital Management Limited

- -

Total 47,306,134 44,536,896 32.0 Stationery, printing and advertisement etc.

Paper & table stationery 27,516,110 24,559,569 Printing and stationery (registers and forms)

125,352,068 125,226,110

Advertisement & publicity 164,541,413 180,161,687 Total 317,409,591 329,947,366

32(a) Consolidated stationery, printing and advertisement etc.

Islami Bank Bangladesh Limited 317,409,591 329,947,366 Islami Bank Securities Limited 202,501 151,523 Islami Bank Capital Management Limited - - Total 317,612,092 330,098,889


2014 2013Taka Taka

33.0 Chief executive’s salary & fees

Basic pay 4,800,000 4,112,903 House rent allowance 480,000 480,000 Medical allowance 1,200,000 810,645 Utilities 120,000 120,000 Festival bonus 800,000 800,000 Incentive bonus 1,000,000 1,000,000 Total 8,400,000 7,323,548

34.0 Directors’ fees and expenses

Directors’ fees for attending board/ executive committee/ other committees meeting 2,431,100 3,554,150TA/DA/hotel fare for local & foreign directors 8,973,833 7,040,132 Others 1,382,084 993,552 Total 12,787,017 11,587,834

34.1 Rate of fees for attending board/ executive committee/ other committees meeting

For board meeting 5,000 5,000 For executive committee/ other committees meeting 4,000 4,000

34(a) Consolidated directors’ fees and expensesIslami Bank Bangladesh Limited 12,787,017 11,587,834 Islami Bank Securities Limited 396,750 287,500 Islami Bank Capital Management Limited - - Total 13,183,767 11,875,334

35.0 Shari’ah supervisory committee’s fees & expenses

Shari’ah supervisory members’ fees for attending meeting 727,800 276,000 TA/DA./hotel fare 1,566,024 944,508 Others 268,300 180,915 Total 2,562,124 1,401,423

35.1 Rate of fees for attending shariah supervisory meeting

For shariah supervisory meeting 5,000 5,000For sub-committee meeting 4,000 4,000

36.0 Auditors’ feesAuditors’ fees 2,229,118 2,070,000

36(a) Consolidated auditors’ feesIslami Bank Bangladesh Limited 2,229,118 2,070,000 Islami Bank Securities Limited 92,000 75,000 Islami Bank Capital Management Limited 23,000 23,000 Total 2,344,118 2,168,000

37.0 Depreciation/amortization and repair to bank's assetsi) Depreciation/amortizationPremises (building) 140,627,745 139,324,573 Furniture & fixtures 48,274,318 44,271,448 Mechanical appliances 360,487,678 313,530,783 Motor vehicles 57,513,847 61,064,705 Books 644,035 473,073 ATM 77,925,469 61,535,459 Amortization: Intangible assets 82,825,438 26,060,893 Sub total (i) 768,298,530 646,260,934 ii) Repair of bank's properties/assets 93,702,876 79,452,710 Grand total (i+ii) 862,001,406 725,713,644


2014 2013Taka Taka

37(a) Consolidated depreciation and repair to bank’s assetsIslami Bank Bangladesh Limited 862,001,406 725,713,644 Islami Bank Securities Limited 4,504,731 4,273,998 Islami Bank Capital Management Limited - - Total 866,506,137 729,987,642

38.0 Other expensesTA/ DA 133,384,530 109,070,556 Repairs to rented premises 6,363,602 6,979,119 Motor car running & maintenance 73,004,044 65,024,893 Periodicals & newspapers 9,983,541 9,909,093 Entertainment Expenses 44,048,136 42,579,158 Reimbursement expense-conveyance 82,598,993 78,905,070 Overtime 55,815,459 48,979,743 Training expenses 40,623,027 33,938,451 Meeting expenses 9,015,645 18,998,913 Bank charges (*) 10,222,740 17,913,449 Uniforms 12,710,324 10,559,151 Conveyance 10,968,375 10,278,692 Honorarium & cash award 18,361,924 21,477,061 Membership fees 5,487,280 3,758,982 Staff welfare 5,756,822 8,682,680 Evening banking allowance 2,592,127 2,470,570 Computer expenses 33,277,076 29,345,864 Wages 41,198,959 32,319,829 Discomfort allowance 17,413,263 14,201,904 Air condition maintenance 1,693,426 1,776,900 WASA / gas expenses 12,328,537 10,357,130 Washing charges 11,257,944 10,225,912 Transportation charges 4,144,936 3,468,423 ATM charges - 14,135,578 Reuters charges 6,260,715 6,525,363 Business development expenses 279,848,759 294,259,895 Photocopy expenses 16,817,513 15,504,196 Upkeep of office premises 18,478,138 15,988,657 Clearing house expenses 314,002 612,779 Bonus share issue expenses 4,599,355 5,403,049 Rating expenses 460,000 460,000 Band width charges 86,915,306 99,239,987 Other regulatory fees and expenses 5,000 177,212 MPB expenses 1,500,000 1,558,800 Recruitment expenses 5,468,222 2,594,456 Professional fees 2,053,424 2,039,500 Loss on sale of bank’s fixed asset 176,461 538,244 Khidmah card expenses 425,064 7,708,857 Mobile wallet expense 10,732,857 1,418,944 BACH Expense 333,529 198,056 Other RDS expenses (Note-38.1) 67,540,903 52,351,857 NPS network transactions charges 113,670 -VISA expenses 13,723,464 - Maintenance of software 23,754,600 - Others 18,312,139 23,005,689 Total 1,200,083,831 1,134,942,662 (*) Bank charges include Tk.14,332/- for 2014 (in 2013 Tk.60,84,364/- ) against Bank charges of Off-shore Banking Units (OBUs).


2014 2013Taka Taka

38.1 Other RDS expenses

Risk allowance 37,147,498 28,556,603 By-cycle allowance 9,455,726 7,699,714 Motor cycle allowance 8,104,908 6,230,532 Field allowance 4,052,454 3,115,266 TA/ DA 1,350,818 1,038,422 Fuel 2,026,227 1,557,633 Stationary 3,377,045 2,596,055 Repairing 2,026,227 1,557,632 Total 67,540,903 52,351,857

38.2 Motor car running and maintenance

As on 31.12.2014 the Bank had 255 (Two hundred fifty five) Motor Vehicles (Cars -206, Jeeps -10, Pickup-36 and Microbuses -3). The Motor Vehicles are used for carrying cash, development works and for other important works of the Bank. Some vehicles are attached with the senior executives of the Bank as per transport policy of the Bank. A sum of Tk.73,004,044/- was incurred during the year ended on 31.12.2014 as against Tk.65,024,893/- incurred during the year 2013 for repairs, maintenance, purchase of fuel & lubricants and insurance etc. for the motor vehicles of the Bank.

38.3 VAT related to expenditures

All the expenditures reported in this Financial Statements are inclusive of VAT except for specific items which are exempted from VAT by appropriate authority.

38(a) Consolidated other expenses

Islami Bank Bangladesh Limited 1,200,083,831 1,134,942,662 Islami Bank Securities Limited 4,787,146 3,588,086 Islami Bank Capital Management Limited 679,131 90,611 Total 1,205,550,108 1,138,621,359

39.0 Retained earnings: movement of surplus in profit & loss account

Retained earnings as on 1 January 2,634,530,184 3,152,246,877 Add: Net profit after tax 3,999,058,608 4,948,584,592 Sub-total 6,633,588,792 8,100,831,469 Less: Transfer to statutory reserve 1,461,293,053 2,214,951,285 Transfer to/(from) general reserve 122,779,553 123,940,000 Dividend paid (Bonus share & cash dividend) 2,634,530,184 3,127,410,000 Sub-total 4,218,602,790 5,466,301,285 Balance of retained earnings as at 31 December 2,414,986,002 2,634,530,184

39(a) Consolidated retained earnings

Retained earnings as on 1 January 2,637,858,071 3,073,402,299 Add: Net profit attributable to equity holders of IBBL 3,967,415,282 5,030,757,057 Sub-total 6,605,273,353 8,104,159,356 Less: Transfer to statutory reserve 1,461,293,053 2,214,951,285 Transfer to/(from) general reserve 122,779,553 123,940,000 Dividend paid (Bonus share & cash dividend) 2,634,530,184 3,127,410,000 Sub-total 4,218,602,790 5,466,301,285 Balance of retained earnings as at 31 December 2,386,670,563 2,637,858,071


39(b) Non-controlling interest Amount in Taka

Particulars As on 01.01.2014Share of profit or (loss) for the year

2014As on 31.12.2014 As on 31.12.2013

Islami Bank Securities Limited 52,476 800 53,276 52,476 Less: Dividend - -Sub-total 53,276 52,476Islami Bank Capital Management Limited 8,856 778 9,634 8,856 Less: Dividend 2,450 -Sub-total 7,184 8,856Total 61,332 1,578 60,460 61,332

The share capital of Islami Bank Securities Ltd. is Tk.2,700,000,000/- divided into 2,700,000 shares of Tk.1,000/ each out of which share capital of minority is Tk.54,000/- divided into 54 shares of Tk.1,000/- each which represent 0.0020% of total share of the subsidiary Company.The share capital of Islami Bank Capital Management Ltd. is Tk.300,000,000/- divided into 300,000 shares of Tk.1,000/ each out of which share capital of minority is Tk.7,000/- divided into 7 shares of Tk.1,000/- each which represent 0.0023% of total share of the subsidiary Company.

40.0 Events after reporting periodThe Board of Directors of the Bank in its 217th meeting held on 21 March 2015 recommended 15% Cash Dividend for the year 2014 subject to approval of the shareholders in the ensuing 32nd Annual General Meeting to be held on 13 June 2015.

2014Taka

2013 Taka

41.0 Earnings per share (EPS)a) Attributable profit for the year 3,999,058,608 4,948,584,592 b) Weighted average number of ordinary share during the year 1,609,990,668 1,609,990,668 Basic earnings per share (EPS) (a ÷ b) 2.48 3.07 Previous year’s figures have been adjusted due to issuance of 14,63,62,788 bonus shares during the year 2014 against 10% Stock Dividend of 2013 as per guidelines of BAS 33, “Earnings per share”. Diluted earnings per share is not applicable since there is no possibility of dilution of shares during the year.

41(a) Consolidated earnings per share Consolidated profit after tax 3,967,416,860 5,030,758,795 Less: Profit attributable to non-controlling interest 1,578 1,738 Attributable profit for distribution to shareholders of IBBL 3,967,415,282 5,030,757,057 Weighted average number of ordinary share during the year 1,609,990,668 1,609,990,668 Consolidated basic earnings per share 2.46 3.12

42.0 Net asset value per share (NAV)a) Capital/shareholders’ equity for the year 46,612,812,331 43,760,681,314 b) Weighted average number of ordinary share during the year 1,609,990,668 1,609,990,668 Net asset value per share (NAV) (a ÷ b) 28.95 27.18

Net asset value per share (NAV) has been disclosed as per the Bangladesh Securities and Exchange Commission’s Notification No.SEC/CMRRCD/2009-193/Admin/03-31 dated June 1, 2009. Previous year’s number of ordinary shares has been adjusted to confirm current year’s presentation due to issuance of 14,63,62,788 bonus shares during the year 2014 against stock dividend of 2013.

43.0 Net operating cash flow per share (NOCFPS)a) Net cash flows from operating activities 47,532,710,859 34,521,082,274 b) Weighted average number of ordinary share during the year 1,609,990,668 1,609,990,668 Net operating cash flow per share (NOCFPS) (a ÷ b) 29.52 21.44 Net operating cash flow per share (NOCFPS) has been disclosed as per the Bangladesh Securities and Exchange Commission’s Notification No.SEC/CMRRCD/2009-193/Admin/03-31 dated June 1, 2009. Previous year’s number of ordinary shares has been adjusted to confirm current year’s presentation due to issuance of 14,63,62,788 bonus shares during the year 2014 against 10% stock dividend of 2013.


31.12.2014 31.12.2013Taka Taka

44.0 Reconciliation of cash and cash equivalent at the end of the yearCash in hand 7,696,844,549 8,180,338,285 Balance with Bangladesh Bank and its agent banks (Sonali Bank Ltd.) 38,522,514,877 36,111,176,654 Balance with other banks and financial institutions 20,199,350,245 12,327,320,344 Total 66,418,709,671 56,618,835,283

44(a) Reconciliation of consolidated cash and cash equivalent at the end of the yearCash in hand 7,696,844,962 8,180,346,965 Balance with Bangladesh Bank and its agent banks (Sonali Bank Ltd.) 38,522,514,877 36,111,176,654 Balance with other banks and financial institutions 23,615,218,198 12,700,116,779 Total 69,834,578,037 56,991,640,398

45.0 Operating lease payments disclosure 2014Taka (in million)

2013Taka (in million)

Non-cancellable operating lease rentals for the Bank are payable as follows:Less than 1 year 406 350 Between 1 and 5 years 2,300 2,515 More than 5 years 4,740 8,750 Total 7,446 11,615

31.12.2014(Taka) 31.12.2013 (Taka)46.0 Placement from banks & other financial institutions

Borrowing from Abroad-OBU 6,098,512,743 -Borrowing from the other Banks in Bangladesh-OBU 1,558,988,000 -Borrowing from Treasury Division, IBBL-OBU (Note-6.0_OBU) 7,606,631,085 16,213,482,904Fund obtained by AD branches from OBU for MDB in FC (Note-3.0_OBU) 2,859,555,231 3,497,773,330Sub total 18,123,687,059 19,711,256,234Less: Borrowing from Treasury Division, IBBL-OBU 7,606,631,085 16,213,482,904Less: Fund obtained by AD branches from OBU for MDB in FC 2,859,555,231 3,497,773,330Sub total 10,466,186,316 19,711,256,234Total 7,657,500,743 -

Fund obtained from OBU for investment in MDB in FC by AD branches is shown under “Cover fund MDB investment” under other liabilities at AD branches whereas Fund provided to AD branches for MDB in FC is shown under “ Placement with banks & other financial institutions” in the assets side at OBU’s balance sheet. As the items are intra-units balance, the amount was fully eliminated while preparing the financial statement of the Bank as a whole.

46(a) Consolidated placement from banks & other financial institutionsIslami Bank Bangladesh Limited 7,657,500,743 -Islami Bank Securities Limited - -Islami Bank Capital Management Limited - -Total 7,657,500,743 -

47.0 Currency wise exposuresCurrency wise exposures are shown at Annexure-C.

Prof. NRM Borhan Uddin Ph.D Md. Abdus Salam FCA, FCS Barrister Mohammed Belayet Hossain Mohammad Abdul Mannan Director Director Director Managing Director

Date : Dhaka21 March 2015


Isla

mi B

ank

Bang

lade

sh L

imite

dFi

xed

Asse

ts S

ched

ule

As a

t 31

Dece

mbe

r 201

4

(Am

ount

in Ta

ka)

Parti

cula

rs

Cost

Depr

ecia

tion/

Amor

tizat

ion

Writ

ten

down

valu

e

Bala

nce

as a

t 01

.01.

2014

Addi

tion

durin

g th

e ye

ar

Sale

/

adju

stm

ent

durin

g th

e ye

ar

Tota

l as a

t 31

.12.

2014

Char

ged

upto

01

.01.

2014

Char

ged

durin

g th

e ye

ar

Adju

stm

ent

durin

g th

e ye

ar

Tota

l as a

t 31

.12.

2014

as a

t 31

.12.

2014

as a

t 31

.12.

2013

12

34

5 (2

+ 3

- 4)

67

89

(6+

7 - 8

)10

(5 -

9)11

A. Ta

ngib

le A

sset

s

i) Pr

emis

es

Land

7,5

92,5

98,4

19

668

,131

-

7,5

93,2

66,5

50

- -

- -

7,5

93,2

66,5

50

7,5

92,5

98,4

18

Build

ing

6,2

34,3

91,3

77

83,

002,

457

- 6

,317

,393

,834

6

74,1

08,5

20

140

,627

,745

-

814

,736

,265

5

,502

,657

,569

5

,560

,282

,857

Cons

truct

ion/

capi

tal w

ork

in p

roce

ss 1

03,8

12,9

67

93,

294,

031

- 1

97,1

06,9

98

- -

- -

197

,106

,998

1

03,8

12,9

67

Sub

tota

l (i)

13,

930,

802,

763

176

,964

,619

-

14,1

07,7

67,3

82

674

,108

,520

1

40,6

27,7

45

- 8

14,7

36,2

65

13,2

93,0

31,1

16

13,2

56,6

94,2

42

ii) O

ther

fixe

d as

sets

Furn

iture

and

fixt

ures

719

,377

,288

9

3,88

6,18

4 1

,574

,750

8

11,6

88,7

22

285

,489

,775

4

8,27

4,31

8 6

11,1

22

333

,152

,971

4

78,5

35,7

51

433

,887

,513

Mec

hani

cal a

pplia

nces

2,7

21,0

50,0

08

382

,712

,680

5

,299

,125

3

,098

,463

,563

1,

478,

796,

723

360

,487

,678

2

,467

,124

1,

836,

817,

277

1,2

61,6

46,2

86

1,2

42,2

53,2

85

Mot

or ve

hicl

es 5

25,1

69,7

92

89,

248,

048

14,

979,

210

599

,438

,630

3

73,9

35,6

83

57,

513,

847

9,7

67,8

68

421

,681

,662

1

77,7

56,9

69

151

,234

,110

Book

s 4

,773

,584

1

,108

,372

6

,000

5

,875

,956

3

,342

,856

6

44,0

35

4,0

80

3,9

82,8

11

1,8

93,1

45

1,4

30,7

28

ATM

482

,830

,169

1

50,1

02,6

35

58,

000

632

,874

,804

1

18,9

41,5

17

77,

925,

469

48,

000

196

,818

,986

4

36,0

55,8

18

363

,888

,652

Sub

Tota

l (ii)

4,4

53,2

00,8

41

717

,057

,919

2

1,91

7,08

5 5

,148

,341

,675

2,

260,

506,

554

544

,845

,347

12

,898

,194

2,

792,

453,

707

2,3

55,8

87,9

69

2,1

92,6

94,2

88

Tota

l (i+

ii) 1

8,38

4,00

3,60

4 8

94,0

22,5

38

21,

917,

085

19,

256,

109,

057

2,93

4,61

5,07

4 6

85,4

73,0

92

12,8

98,1

94

3,60

7,18

9,97

2 1

5,64

8,91

9,08

5 15

,449

,388

,530

B. In

tang

ible

asse

ts 3

09,4

80,9

52

76,

848,

210

- 3

86,3

29,1

62

26,

060,

893

82,

825,

438

- 1

08,8

86,3

31

277

,442

,831

2

83,4

20,0

59

Tota

l (A+

B) 1

8,69

3,48

4,55

6 9

70,8

70,7

48

21,

917,

085

19,

642,

438,

219

2,96

0,67

5,96

7 7

68,2

98,5

30

12,8

98,1

94

3,71

6,07

6,30

3 1

5,92

6,36

1,91

6 15

,732

,808

,589

Anne

xure

- A


Islam

i Ban

k Ban

glad

esh

Lim

ited

Cons

olid

ated

Fixe

d As

sets

Sch

edul

eAs

at 3

1 De

cem

ber 2

014

(Am

ount

in Ta

ka)

Parti

cular

s

Cost

Depr

eciat

ion/A

morti

zatio

nW

ritte

n dow

n valu

e

Balan

ce as

at

01.0

1.20

14Ad

dition

durin

g th

e yea

r

Sale

/ ad

justm

ent

durin

g the

year

Tota

l as a

t 31

.12.

2014

Char

ged u

pto

01.0

1.20

14Ch

arge

d dur

ing

the y

ear

Adjus

tmen

t du

ring t

he

year

Tota

l as a

t 31

.12.

2014

as at

31.1

2.20

14as

at 31

.12.

2013

12

34

5 (2

+ 3

- 4)

67

89

(6+

7 - 8

)10

(5 -

9)11

A. Ta

ngib

le As

sets

i) Pr

emise

s

Land

7,59

2,598

,419

668

,131

- 7

,593,2

66,55

0 -

- -

- 7

,593,2

66,55

0 7

,592,5

98,41

8

Build

ing

6,23

4,391

,377

83,0

02,45

7 -

6,31

7,393

,834

674

,108,5

20

140

,627,7

45

- 8

14,73

6,265

5

,502,6

57,56

9 5

,560,2

82,85

7

Cons

tructi

on/c

apita

l wor

k in p

roce

ss 1

03,81

2,967

9

3,294

,031

- 1

97,10

6,998

-

- -

- 1

97,10

6,998

1

03,81

2,967

Sub t

otal

(i) 13

,930,8

02,76

3 17

6,964

,619

- 14

,107,7

67,38

2 67

4,108

,520

140,6

27,74

5 -

814,7

36,26

5 13

,293,0

31,11

6 13

,256,6

94,24

2

ii) O

ther

fixe

d ass

ets

Furn

iture

and

fixtu

res

721

,573,0

47

93,9

21,22

8 1

,574,7

50

813

,919,5

25

286

,274,3

62

48,4

65,38

8 6

11,12

2 3

34,12

8,628

4

79,79

0,897

4

35,29

8,685

Mec

hani

cal a

pplia

nces

2,72

5,837

,619

383

,311,0

84

5,29

9,125

3

,103,8

49,57

8 1

,481,7

87,04

8 3

61,53

8,852

2

,467,1

24

1,84

0,858

,776

1,26

2,990

,802

1,24

4,050

,572

Mot

or ve

hicle

s 5

30,78

5,792

8

9,428

,067

14,9

79,21

0 6

05,23

4,649

3

77,43

4,117

5

8,653

,619

9,76

7,868

4

26,31

9,868

1

78,91

4,782

1

53,35

1,675

Book

s 4

,773,5

84

1,10

8,372

6

,000

5,87

5,956

3

,342,8

56

644

,035

4,08

0 3

,982,8

11

1,89

3,145

1

,430,7

28

ATM

482

,830,1

69

150

,102,6

35

58,0

00

632

,874,8

04

118

,941,5

17

77,9

25,46

9 4

8,000

1

96,81

8,986

4

36,05

5,818

3

63,88

8,652

Sub T

otal

(ii)

4,46

5,800

,211

717,8

71,38

6 21

,917,0

85

5,16

1,754

,512

2,26

7,779

,900

547,2

27,36

3 12

,898,1

94

2,80

2,109

,069

2,35

9,645

,444

2,19

8,020

,312

Tota

l (i+i

i) 18

,396,6

02,97

4 89

4,836

,005

21,91

7,085

19

,269,5

21,89

4 2,

941,8

88,42

0 68

7,855

,108

12,89

8,194

3,

616,8

45,33

4 15

,652,6

76,56

0 15

,454,7

14,55

4

B. In

tang

ible A

sset

s 31

1,002

,860

76,86

8,065

-

387,8

70,92

5 26

,858,7

31

83,20

9,165

-

110,0

67,89

6 27

7,803

,029

284,1

44,12

9

Tota

l (A+

B) 18

,707,6

05,83

4 97

1,704

,070

21,91

7,085

19

,657,3

92,81

9 2,

968,7

47,15

1 77

1,064

,273

12,89

8,194

3,

726,9

13,23

0 15

,930,4

79,58

9 15

,738,8

58,68

3

Anne

xure

-B


Isla

mi B

ank

Bang

lade

sh L

imite

dCu

rrenc

y wis

e Ex

posu

res

As a

t 31

Dece

mbe

r 201

4

(Amo

unt i

n Tak

a)

ASSE

TSTa

kaEq

uivale

nt Ta

ka of

US

Dolla

rEq

uivale

nt Ta

ka of

GBP

Equiv

alent

Taka

of EU

ROEq

uivale

nt Ta

ka of

Oth

er

Curre

ncy

Tota

l Tak

a

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

12

34

56

78

910

1112

13

Cash

in ha

nd 7,

647,8

81,56

5 8,

155,1

82,74

0 48

,722,8

03

24,34

6,613

41

,111

58,91

6 10

9,379

47

4,284

89

,691

275,7

32

7,69

6,844

,549

8,18

0,338

,285

Balan

ce w

ith B

angla

desh

Ban

k & it

s ag

ent b

ank

37,85

8,294

,659

34,98

1,990

,434

617,7

69,12

5 1,

089,0

58,04

3 11

,307,8

16

10,98

1,155

34

,948,9

37

28,92

4,578

19

4,340

22

2,444

38

,522,5

14,87

7 36

,111,1

76,65

4

Balan

ce w

ith ba

nks &

othe

r fin

ancia

l ins

titut

ions

17,79

0,027

,698

7,57

7,940

,830

1,15

7,364

,999

3,66

7,751

,841

261,8

96,32

4 97

,715,2

92

602,7

11,89

4 26

3,884

,950

387,3

49,33

0 72

0,027

,431

20,19

9,350

,245

12,32

7,320

,344

Plac

emen

t with

othe

r ban

ks &

fina

ncial

ins

titut

ions

2,000

,000,0

00

- -

- -

- -

- -

- 2,

000,0

00,00

0 -

Inves

tmen

ts (in

shar

es &

secu

rities

) 10

0,856

,528,8

96

67,21

1,398

,968

- -

- -

- -

- -

100,8

56,52

8,896

67

,211,3

98,96

8

Inves

tmen

ts

426,8

33,51

2,348

38

2,430

,515,9

05

36,64

1,955

,118

20,76

4,289

,072

- -

- -

- -

463,4

75,46

7,466

40

3,194

,804,9

77

Fixed

asse

ts in

cludin

g pre

mise

s 15

,926,3

61,91

6 15

,732,8

08,58

9 -

- -

- -

- -

- 15

,926,3

61,91

6 15

,732,8

08,58

9

Othe

r ass

ets

3,38

6,322

,373

4,29

1,755

,522

358,6

48,42

9 17

9,188

,902

- 6,

029

- 83

2,684

-

- 3,

744,9

70,80

2 4,

471,7

83,13

7

Non b

ankin

g ass

ets

- -

- -

- -

- -

- -

- -

Total

asse

ts 61

2,298

,929,4

55

520,3

81,59

2,988

38

,824,4

60,47

4 25

,724,6

34,47

1 27

3,245

,251

108,7

61,39

2 63

7,770

,210

294,1

16,49

6 38

7,633

,361

720,5

25,60

7 65

2,422

,038,7

51

547,2

29,63

0,954

LIABI

LITIE

STa

kaEq

uivale

nt Ta

ka of

US

Dolla

rEq

uivale

nt Ta

ka of

GBP

Equiv

alent

Taka

of EU

ROEq

uivale

nt Ta

ka of

Oth

er

Curre

ncy

Tota

l Tak

a

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

Plac

emen

t fro

m B

angla

desh

Ban

k, ot

her

bank

s, fin

ancia

l inst

itutio

ns an

d age

nts

- -

7,657

,500,7

43 -

- -

- -

- -

7,657

,500,7

43 -

Depo

sits

543,1

27,19

4,723

45

9,532

,693,2

56

13,53

5,339

,386

9,22

9,002

,810

27,86

1,803

18

,116,2

54

355,5

00,05

5 23

1,152

,643

510,7

68

332,1

11

557,0

46,40

6,735

46

9,011

,297,0

74

Bills

paya

ble 3,

644,7

12,82

7 4,

129,6

57,95

7 5,

181,2

74

- -

- -

- -

- 3,

649,8

94,10

1 4,

129,6

57,95

7

Othe

r liab

ilities

34,45

5,424

,841

27,32

7,994

,609

- -

- -

- -

- -

34,45

5,424

,841

27,32

7,994

,609

Muda

raba

Per

petu

al Bo

nd 3,

000,0

00,00

0 3,

000,0

00,00

0 -

- -

- -

- -

- 3,

000,0

00,00

0 3,

000,0

00,00

0

Tota

l liab

ilities

584,2

27,33

2,391

493,9

90,34

5,822

21

,198,0

21,40

3 9,

229,0

02,81

0 27

,861,8

03

18,11

6,254

35

5,500

,055

231,1

52,64

3 51

0,768

33

2,111

60

5,809

,226,4

20

503,4

68,94

9,640

Net p

ositi

on28

,071,5

97,06

4 26

,391,2

47,16

6 1,7

626,4

39,07

1 16

,495,6

31,66

1 24

5,383

,448

90,64

5,138

28

2,270

,155

62,96

3,853

38

7,122

,593

720,1

93,49

6 46

,612,8

12,33

1 43

,760,6

81,31

4

Anne

xure

- C


Islam

i Ban

k Ba

ngla

desh

Lim

ited

Cons

olid

ated

segm

ent r

epor

ting

For t

he ye

ar en

ded

31 D

ecem

ber

2014

A. S

egm

enta

l ope

ratin

g pr

ofit a

nd lo

ss(A

moun

t in T

aka)

Parti

cular

sHe

ad O

ffice

Co

ntro

lled

Bran

chs

Dhak

a Cen

tral

Zone

Dhak

a Sou

th

Zone

Dhak

a Nor

th

Zone

Khu

lna Z

one

Com

illa Z

one

Rajsh

ahi Z

one

Chitt

agon

g So

uth

Zone

No

akha

li Zon

e Co

mm

onCo

nsol

idat

ed

Inve

stm

ent i

ncom

e 7

,864,3

41,58

2 8

,164,2

72,64

3 3

,357,0

34,25

1 5

,207,6

71,64

2 2

,214,6

98,26

4 1

,381,1

98,67

9 3

,955,2

41,97

3 5

,048,3

51,98

7 1

,153,1

83,87

6 1

2,611

,202,5

40

50,9

57,19

7,437

Profi

t paid

on

mud

arab

a dep

osits

(1,88

7,603

,968)

(2,63

5,463

,005)

(2,28

8,508

,458)

(3,18

2,566

,357)

(2,04

9,353

,121)

(2,26

5,280

,882)

(1,50

4,269

,560)

(2,80

2,332

,105)

(2,21

0,472

,418)

(9,76

7,087

,634)

(30,5

92,93

7,508

)

Profi

t rec

eived

/(paid

) on

IB G

ener

al Ac

coun

t (2

,995,6

01,68

2) (2

,048,3

41,65

7) 1

,128,3

94,25

1 1

,133,5

24,68

7 1

,301,8

84,65

9 2

,568,2

62,46

8 (4

28,02

1,357

) 4

31,02

3,876

2

,445,3

21,54

7 (3

,536,4

46,79

2) -

Net i

nves

tmen

t inc

ome

2,9

81,1

35,9

32

3,4

80,4

67,9

81

2,1

96,9

20,0

44

3,1

58,6

29,9

72

1,4

67,2

29,8

02

1,6

84,1

80,2

65

2,0

22,9

51,0

56

2,6

77,0

43,7

58

1,3

88,0

33,0

05

(692

,331

,886

) 2

0,36

4,25

9,92

9

Com

miss

ion,

exch

ange

& o

ther

inco

me

1,18

3,114

,261

888

,332,4

65

381

,240,6

43

591

,274,6

28

381

,142,5

43

137

,224,2

65

274

,092,9

73

321

,443,8

79

139

,913,7

91

2,80

8,926

,774

7,10

6,706

,222

Tota

l ope

ratin

g in

com

e 4

,164

,250

,193

4

,368

,800

,446

2

,578

,160

,687

3

,749

,904

,600

1

,848

,372

,345

1

,821

,404

,530

2

,297

,044

,029

2

,998

,487

,637

1

,527

,946

,796

2

,116

,594

,888

2

7,47

0,96

6,15

1

Tota

l ope

ratin

g ex

pens

es (5

38,79

4,877

) (6

95,39

8,051

) (7

80,20

2,766

) (7

92,73

4,809

) (7

70,34

4,629

) (5

11,30

7,729

) (5

56,63

8,624

) (5

36,19

8,974

) (4

43,39

3,362

) (6

,478,2

55,63

7) (1

2,103

,269,4

58)

Oper

atin

g Pr

ofit

3,6

25,4

55,3

16

3,6

73,4

02,3

95

1,7

97,9

57,9

21

2,9

57,1

69,7

91

1,0

78,0

27,7

16

1,3

10,0

96,8

01

1,7

40,4

05,4

05

2,4

62,2

88,6

63

1,0

84,5

53,4

34

(4,3

61,6

60,7

49)

15,

367,

696,

693

Ther

e are

16

oper

atin

g se

gmen

ts in

cludi

ng su

bsid

iaries

as o

n 31

Dec

embe

r 201

4. O

ut o

f whi

ch o

nly 9

are r

epor

tabl

e as p

er B

FRS

8 “O

pera

ting

Segm

ents

”. He

nce o

ther

non

-repo

rtabl

e seg

men

ts h

ave b

een

show

n as

und

er ‘C

omm

on’.

For t

he ye

ar en

ded

31 D

ecem

ber

2013

Amou

nt in

Taka

Parti

cular

sHe

ad O

ffice

Co

ntro

lled

Bran

chs

Dhak

a Cen

tral

Zone

Dhak

a Sou

th

Zone

Dhak

a Nor

th

Zone

Khul

na Z

one

Com

illa Z

one

Rajsh

ahi Z

one

Chitt

agon

g So

uth

Zone

No

akha

li Zon

e Co

mm

onCo

nsol

idat

ed

Inve

stm

ent i

ncom

e 8

,850,0

61,23

1 8

,467,8

33,46

8 3

,300,2

24,63

5 4

,289,5

68,26

4 2

,562,1

32,95

3 1

,132,5

39,64

2 3

,624,8

21,35

4 5

,049,0

03,65

4 1

,035,4

62,68

1 1

1,945

,845,6

91

50,2

57,49

3,573

Profi

t paid

on

mud

arab

a dep

osits

(2,21

3,780

,129)

(2,68

7,852

,731)

(2,19

5,387

,404)

(3,15

2,415

,866)

(1,92

4,440

,219)

(2,08

3,358

,988)

(1,90

5,284

,361)

(2,67

5,451

,636)

(2,18

7,881

,603)

(9,87

4,426

,625)

(30,9

00,27

9,562

)

Profi

t rec

eived

/(paid

) on

IB G

ener

al Ac

coun

t (3

,981,7

03,95

2) (2

,673,9

36,84

2) 6

87,17

2,364

1

,520,5

94,62

7 7

62,88

1,352

2

,438,6

51,34

7 (6

33,70

3,542

) 1

0,434

,682

2,46

3,431

,534

(593

,821,5

70)

-

Net i

nves

tmen

t inc

ome

2,6

54,5

77,1

50

3,1

06,0

43,8

95

1,7

92,0

09,5

95

2,6

57,7

47,0

25

1,4

00,5

74,0

86

1,4

87,8

32,0

01

1,0

85,8

33,4

51

2,3

83,9

86,7

00

1,3

11,0

12,6

12

1,4

77,5

97,4

96

19,

357,

214,

011

Com

miss

ion,

exch

ange

& o

ther

inco

me

1,16

5,664

,361

740

,691,3

52

335

,132,6

21

512

,551,3

52

263

,271,6

52

114

,687,6

52

217

,713,5

64

342

,758,6

51

115

,364,3

67

2,15

6,642

,333

5,96

4,477

,905

Tota

l ope

ratin

g in

com

e 3

,820

,241

,511

3

,846

,735

,247

2

,127

,142

,216

3

,170

,298

,377

1

,663

,845

,738

1

,602

,519

,653

1

,303

,547

,015

2

,726

,745

,351

1

,426

,376

,979

3

,634

,239

,829

2

5,32

1,69

1,91

6

Tota

l ope

ratin

g ex

pens

es (5

32,12

8,438

) (6

49,05

3,469

) (6

95,17

5,209

) (7

07,69

6,301

) (7

07,10

6,124

) (4

45,71

9,291

) (4

26,62

4,352

) (4

59,78

6,061

) (3

91,66

5,388

) (6

,049,9

86,54

5) (1

1,064

,941,1

78)

Oper

atin

g Pr

ofit

3,2

88,1

13,0

73

3,1

97,6

81,7

78

1,4

31,9

67,0

07

2,4

62,6

02,0

76

956

,739

,614

1

,156

,800

,362

8

76,9

22,6

63

2,2

66,9

59,2

90

1,0

34,7

11,5

91

(2,4

15,7

46,7

16)

14,

256,

750,

738

B. S

egm

enta

l ass

ets a

nd li

abili

ties

The n

eces

sary

info

rmat

ion

rega

rdin

g as

sets

and

liabi

lities

of o

pera

ting

segm

ents

(exc

ept s

ubsid

iaries

) are

not

sepa

rabl

e and

indi

vidua

lly id

entifi

able

for t

his p

urpo

se. F

or th

is re

ason

the a

sset

s and

liabi

lities

of t

he re

spec

tive s

egm

ents

hav

e not

be

en p

rese

nted

her

e.

Anne

xure

-D


Islami Bank Bangladesh Limited (Off-Shore Banking Unit)Balance Sheet



USD BD.Taka USD BD.Taka Property and assetsCash in hand - - - - Cash in hand (including foreign currency) - - - - Balance with Bangladesh Bank & its agent bank(s) (including foreign currency) - - - - Balance with other banks & financial institutions 892,907.33 69,601,591 - - In Bangladesh 2.0 892,907.33 69,601,591 - - Outside Bangladesh - - - - Placement with banks & other financial institutions 3.0 36,684,763 2,859,555,231 46,427,658.56 3,609,750,453 Investments in shares & securities - - - - Government - - - - Others - - - - Investments 158,017,332.85 12,317,356,285 162,105,883.62 12,603,732,451 General investments etc. - - - - Bills purchased & discounted 4.0 158,017,332.85 12,317,356,285 162,105,883.62 12,603,732,451 Fixed assets - - - - Other assets 5.0 342,277.67 26,680,339 - - Non - banking assets - - - - Total property and assets 195,937,280.41 15,273,193,446 208,533,542.18 16,213,482,904 Liabilities and CapitalLiabilitiesPlacement from banks & other financial institutions 6.0 195,821,030.41 15,264,131,828 208,533,542.18 16,213,482,904 Deposits & other accounts - - - - Mudaraba Savings Deposits - - - - Mudaraba Term Deposits - - - - Other Mudaraba Deposits - - - - Al- Wadeeah Current and other deposit accounts - - - - Bills payable - - - - Other liabilities 7.0 116,250.00 9,061,618 - - Deferred tax liabilities /(assets) - - - - Total liabilities 195,937,280.41 15,273,193,446 208,533,542.18 16,213,482,904 Capital/ share-holders’ equity - - - - Paid - up capital - - - - Statutory reserve - - - - Other /translation reserves 8.0 - 6,392,485 - 1,317,771 Retained earnings 17.0 - (6,392,485) - (1,317,771)Total liabilities & shareholders’ equity 195,937,280.41 15,273,193,446 208,533,542.18 16,213,482,904 Off-balance sheet items - - - - Contingent liabilitiesAcceptances & endorsements - - - - Letters of guarantee - - - - Irrevocable letters of credit (including back to back bills) - - - - Bills for collection - - - - Other contingent liabilities - - - - Total - - - - Other commitmentsDocumentary credits, short term and trade related transactions - - - - Forward assets purchased and forward deposits placed - - - - Undrawn note issuance, revolving and underwriting facilities - - - - Undrawn formal standby facilities, credit lines and other commitments - - - - Total - - - - Total off-balance sheet items including contingent liabilities - - - - The annexed notes form an integral part of these financial statements.

Annexure - E


Islami Bank Bangladesh Limited (Off-Shore Banking Unit)Profit & Loss Account



USD Taka BD.Taka BD.Taka Operating incomeInvestment income 9.0 9,757,668.45 753,497,004 5,805,716.31 450,098,863 Profit paid on mudaraba deposits 10.0 (1,444,438.12) (111,773,018) - - Net investment income 8,313,230.33 641,723,986 5,805,716.31 450,098,863

Income from investments in shares & securities - - - - Commission, exchange & brokerage income - - - - Other operating income 11.0 179,765.00 13,871,627 106,200.00 8,223,565 Total operating income 8,492,995.33 655,595,613 5,911,916.31 458,322,428

Operating expenses

Salary & allowances 12.0 46,786.43 3,611,290 39,565.18 3,070,104 Rent, taxes, insurances, electricity etc. - - - - Legal expenses - - - - Postage, stamps and telecommunication etc. 13.0 38.86 3,010 - - Stationery, printing and advertisement etc. - - - - Chief executive’s salary & fees - - - - Directors’ fees & expenses - - - - Shari’ah supervisory committee’s fees & expenses - - - - Auditors’ fees - - - - Charges on investment losses - - - - Depreciation and repair to bank’s assets - - - - Zakat expenses - - - - Other expenses 14.0 185.00 14,332 78,322.44 6,084,364 Total operating expenses 47,010.29 3,628,632 117,887.62 9,154,468 Profit/ (loss) before provision 8,445,985.04 651,966,981 5,794,028.69 449,167,960

Provision for investments & off- balance sheet items 15.0 - - - - Provision for diminution in value of investments in shares - - - - Other provisions - - - - Total provision - - - - Total profit/(loss) before taxes 8,445,985.04 651,966,981 5,794,028.69 449,167,960

Provision for taxation for the periodCurrent tax 16.0 - - - - Deferred tax 16.0 - - - - Net profit/ (loss) after tax 8,445,985.04 651,966,981 5,794,028.69 449,167,960 Retained earnings from previous year - - - - Less: Interim dividend paid - - - - Add: Net profit after tax 8,445,985.04 651,966,981 5,794,028.69 449,167,960 Profit available for appropriation 8,445,985.04 651,966,981 5,794,028.69 449,167,960 Less: Appropriation - - - - Statutory reserve - - - - General reserve - - - - Transferred to main operation 17.0 8,445,985.04 658,359,466 5,794,028.69 450,485,731 Retained earnings - (6,392,485) - (1,317,771)



Islami Bank Bangladesh Limited (Off-Shore Banking Unit)Cash Flow Statement


Particulars31.12.2014 31.12.2013

USD BD.Taka USD BD.Taka Cash flows from operating activitiesInvestment income 9,757,668.45 753,497,004 5,805,716.31 450,098,863 Profit paid on mudaraba deposits (1,670,465.79) (129,391,739) - - Income/ dividend receipt from investments in shares & securities - - Fees & commission receipt in cash - - - - Recovery from written off investments - - - - Payments to employees (46,786.43) (3,611,290) (39,565.18) (3,070,104)Cash payments to suppliers - - - - Income tax paid - - - - Receipts from other operating activities 179,765.00 13,871,627 106,200.00 8,223,565 Payments for other operating activities (223.86) (17,342) (78,322.44) (6,084,364) i) Operating profit before changes in operating assets & liabilities 8,219,957.37 634,348,260 5,794,028.69 449,167,960 Changes in operating assets and liabilities Increase/decrease of statutory deposits - - - - Increase/decrease of net trading securities - - - - Increase/decrease of placement to other banks 9,742,896.00 750,195,222 (46,427,658.56) (3,609,750,453)Increase/decrease of investments to customers 4,088,550.77 286,376,166 (37,637,578.88) (2,664,950,764)Increase/decrease of other assets - - - - Increase/decrease of deposits from other banks - - - - Increase/decrease of deposits received from customers - - - - Increase/decrease of other liabilities account of customers - - - - Increase/decrease of trading liabilities - - - - Increase/decrease of other liabilities - - - - (ii) Cash flows from operating assets and liabilities 13,831,446.77 1,036,571,388 (84,065,237.44) (6,274,701,217)Net cash flows from operating activities (A)=(i+ii) 22,051,404.14 1,670,919,648 (78,271,208.75) (5,825,533,257)Cash flows from investing activitiesProceeds from sale of securities - - - - Payment for purchase of securities/membership - - - - Purchase/sale of property, plants & equipments - - - - Purchase/sale of subsidiaries - - - - Net cash flows from investing activities (B) - - - - Cash flows from financing activitiesReceipts from issue of debt instruments - - - - Payment for redemption of debt instruments - - - - Fund obtained from banks & other financial institutions (12,712,511.77) (949,351,076) 84,065,237.44 6,274,701,217 Profit transferred to main operation (8,445,985.04) (658,359,466) (5,794,028.69) (450,485,731)Net cash flows from financing activities (C) (21,158,496.81) (1,607,710,542) 78,271,208.75 5,824,215,486

Net increase/(decrease) in cash (A+B+C) 892,907.33 63,209,106 - (1,317,771)

Add/(less) effects of exchange rate changes on cash & cash equivalent

- 6,392,485 - 1,317,771

Add:cash & cash equivalents at beginning of the year - - - - Cash & cash equivalents at the end of the year 892,907.33 69,601,591 - -


Islami Bank Bangladesh Limited (Off-Shore Banking Unit)Notes to the financial statements


1.0 Status of the Company

Off-shore Banking Units (OBU) of Islami Bank Bangladesh Ltd. governed under the rules and guidelines of Bangladesh Bank. The Bank obtained permission from Bangladesh Bank for operating of Off-shore Banking Units located at Head Office Complex Branch, Dhaka, Agrabad Branch, Chittagong and Uttara Branch, Dhaka vide Bangladesh Bank letter no. BRPD (P-3)744 (111)/2010-1032 dated 28 March 2010. The Bank has Commenced the operation of its Off-shore Banking Units from 08.02.2011 at Head Office Complex Branch, Dhaka and from 27.09.2011 at Agrabad Branch, Chittagong.

1.1 Principal activities

The principal activities of the OBU are to provide mudaraba investment against payment of import bills under UPAS (Usance Payment at Sight) to its customers of Off-shore Banking Units in Bangladesh.

1.2 Significant accounting policies and basis of preparation of financial statements

1.2.1 Basis of accounting

The Off-shore Banking Units maintain its accounting records in USD from which accounts are prepared according to the Bank Company Act, 1991 as amended up to 2013, Bangladesh Financial Reporting Standards (BFRSs) and other applicable directives issued by Bangladesh Bank. All the financial statements relating the OBU has already been accounted for in the separate financial statements of the Bank (considering necessary adjustments relating to intra-units transactions and balances). Along with that, this financial statements relating to OBU only is prepared and disclosed in compliance with the requirements of Bangladesh Bank.

1.2.2 Use of estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the report amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The figures (Taka) appearing in these Financial Statements have been rounded off to the nearest integer.

1.2.3 Foreign currency transactions

a. Foreign currency transactions

Foreign currency transactions are converted in to equivalent Taka using the ruling exchange rates on the dates of respective transactions as per BAS-21 “The Effects of changes in Foreign Exchange Rates”. Foreign currency balances held in US Dollars are converted into Taka at weighted average rate of inter-bank market as determined by Bangladesh Bank on the closing date of every month.

b. Transaction gains and losses

The resulting exchange transaction gains and losses are included in the profit and loss account.

1.2.4 Translation reserve

The activities of OBU is considered as foreign operation due to it’s different functional currency other than the non-OBU operation of the Bank. As per BAS/IAS - 21, items of balance sheet of OBU has been translated to presentation currency using closing rate and items of income and expenditure has been translated to presentation currency using spot rate prevailing on the date of actual transaction, otherwise average rate has been used. Due to the above translation using two rates the arising differences have been kept as translation reserve.

1.2.5 Retained earnings/Net profit transferred to main operation

As on 31 December the net income in USD/foreign currency of OBU is transferred to main operation of the Bank at exchange rate prevailing on that date.


1.2.6 Cash flow statementCash flow statement has been prepared as per BRPD Circular No. 14, dated June 25, 2003 issued by the Banking Regulation and Policy Department of Bangladesh Bank.

1.2.7 Reporting period The financial statements cover from 01 January 2014 to 31 December 2014.

1.3 Assets and basis of their valuation

1.3.1 Cash and cash equivalentsCash and cash equivalents include notes and coins on hand, unrestricted balances held with Bangladesh Bank and highly liquid financial assets which are subject to insignificant risk of changes in their fair value, and are used by the unit’s management for its short-term commitments.

1.3.2 InvestmentsInvestment of OBU are stated in the balance sheet on net basis. Profit is calculated on daily product basis but charged and account for on realisation/cash basis.

1.4 Allocation of common expensesEstablishment expenses in the nature of rent, rates, taxes, management expenses, printing and stationery, electricity, postage, stamps, telecommunication and audit fees etc. have not been separately accounted for in the financial statements, but staff costs ( salaries and allowances) are separately accounted for OBU.

1.5 Profit paid on Mudaraba Deposit/placement

OBU obtains fund under placement form abroad (different foreign Banks) and OBUs of different Banks in Bangladesh (BD) based on Mudaraba Agreement and pays proportionate amount of investment income earned through deploying these fund as profit. In some cases OBU pays profit at provisional rate in advance which is shown as “ Prepaid profit on placement” under other assets.

1.6 Placement from banks & other financial institutions

Off-shore Banking Units (OBUs) of IBBL obtains fund under placement from its Head Office (Treasury Division), abroad (different foreign Banks) and OBUs of different Banks in Bangladesh (BD) as per Bangladesh Bank Letter No BCD(P)744(27/1416, dated 17 December 1985.

31.12.2014 31.12.2013

USD BD.Taka USD BD.Taka

2.0 Balance with other banks & financial institutions

In Bangladesh (balance with treasury division) 892,907.33 69,601,591 - -

Outside Bangladesh - - - -

Total 892,907.33 69,601,591 - -

3.0 Placement with banks & other financial institutions

Fund provided to AD Branches for MDB in FC* 36,684,762.56 2,859,555,231 46,427,658.56 3,609,750,453

* This amount has been provided to AD branches to finance investment in MDB in FC as per the requirement of the AD branches as per Bangladesh Bank FE Circular No. - 03 dated 04 February 2013.

4.0 Investments 158,017,332.85 12,317,356,285 124,468,304.74 9,938,781,687

4.1 Bills purchased & discounted

Mudaraba Documentary Import Bills (MDIB-UPAS)* 158,017,332.85 12,317,356,285 162,105,883.62 12,603,732,451

Total 158,017,332.85 12,317,356,285 162,105,883.62 12,603,732,451

OBU allows the facilities as per Bangladesh Bank BRPD circular no 28, dated 05 September-2010

5.0 Other assets

Prepaid profit on placement 342,277.67 26,680,339 - -

Total 342,277.67 26,680,339 - -


31.12.2014 31.12.2013

USD BD.Taka USD BD.Taka

6.0 Placement from banks & other financial institutionsIslami Bank Bangladesh Ltd.-main operation (Treasury Division)

97,584,215.98 7,606,631,085 208,533,542.18 16,213,482,904

Banks (in BD) 20,000,000.00 1,558,988,000 Banks (abroad) 78,236,814.43 6,098,512,743 - - Total 195,821,030.41 15,264,131,828 208,533,542.18 16,213,482,904

7.0 Other liabilitiesProfit payable 116,250.00 9,061,618 - - Total 116,250.00 9,061,618 - -

8.0 Translation reserveBalance as on 1 January - 1,317,771 - (3,303,771)Addition/(adjustment) during the year - 5,074,714 - 4,621,542 Balance as at 31 December - 6,392,485 - 1,317,771

9.0 Investment incomeMudaraba documentary import bills (UPAS) 8,177,416.22 631,589,277 5,621,443.36 435,870,767 Mudaraba documentary bills (MDB in FC) 1,580,252.23 121,907,727 184,272.95 14,228,096 Total 9,757,668.45 753,497,004 5,805,716.31 450,098,863

10.0 Profit paid on mudaraba depositsProfit paid on Placement from Banks (abroad) 1,214,438.12 93,890,518 - - Profit paid on Placement from Banks (in BD) 230,000.00 17,882,500 - - Total 1,444,438.12 111,773,018 - -

11.0 Other Income Service charge realized (MDIB-UPAS) 178,100.00 13,742,126 106,200.00 8,223,565 Service charge realized (Placement to AD Branches) 1,665.00 129,501 - - Total 179,765.00 13,871,627 106,200.00 8,223,565

12.0 Salary & allowances :Basic pay 19,882.79 1,534,687 16,813.98 1,304,700 Allowances 15,173.01 1,171,154 12,662.81 982,584 Bonus 9,742.35 751,980 8,406.99 652,350 Contribution to Provident Fund 1,988.28 153,469 1,681.40 130,470 Total 46,786.43 3,611,290 39,565.18 3,070,104

13.0 Postage, stamps and telecommunication etc.Telephone Bill 38.86 3,010 - -

14.0 Other expensesBank Charges 185.00 14,332 78,322.44 6,084,364.00

15.0 Provision for investmentProvision for investment have not been separately accounted for in the financial statements of OBU. These are accounted for directly in the main financial statements of the Bank.

16.0 Provision for taxProvision for current and deferred tax have not been separately accounted for in the financial statements of OBU. These are accounted for directly in the main financial statements of the Bank.

17.0 Retained earningsRetained earnings as on 1 January - (1,317,771) - -Addition during the year 8,445,985.04 651,966,981 5,794,028.69 449,167,960Effect of translation reserve - 1,317,771 - -Transferred to main operation 8,445,985.04 658,359,466 5,794,028.69 450,485,731Balance as at 31 December - (6,392,485) - (1,317,771)


Islami Bank Securities Limited

• Report of the Directors• Auditors’ Report• Audited Financial Statements


Report of the DirectorsPrincipal Activities

The principal activities of the company are to open beneficiary owner (BO) account under full DP of CDBL, provide Demate & Remate under full DP of CDBL, provide trading facility under brokerage license, provide investment facility under Musharaka Mode and maintain own portfolio under dealer account.

Directors

The following Directors have held the office of the Company as on the reporting date:

1. Engr. Md. Eskander Ali Khan, Chairman (Appointed 29 March, 2010)2. Professor NRM Borhan Uddin, Ph.D.

Vice Chairman (Appointed 07 February, 2013)3. Salahuddin Ahmed (Appointed 22 June, 2013)4. Humayun Bokhteyar FCA (Appointed 22 June, 2013)5. Mohd. Shamsul Haque (Appointed 29 March, 2010)6. Md. Nurul Islam (Appointed 29 March, 2010)7. Muhammad Abul Bashar (Appointed 06 September, 2011)8. Md. Kabir Hossain (Appointed 27 May, 2014)

Auditors

Howladar Yunus & Co. Chartered Accountants were appointed as auditors of the Company.

Statement of directors’ responsibilities

The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations prevailed in the country.

Statement of disclosure to auditors

So far as the directors are aware, there is no relevant audit information of which the company’s auditors are unaware. Additionally, the directors have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditors are aware of that information.

Status of the Company

ISLAMI BANK SECURITIES LIMITED was incorporated on the 22 March 2010 under the Companies Act, 1994 as a public limited company. It is a subsidiary company of Islami Bank Bangladesh Limited (IBBL) that holds all the shares of the company except 54 (Fifty four) shares being held by six individual shareholders. The registered office of the company is situated at 20, Dilkusha, C/A in Dhaka, Bangladesh.On behalf of the Board

Engr. Md. Eskander Ali KhanChairman


Independent Auditors’ Report To the Shareholders of Islami Bank Securities Limited

We have audited the accompanying Financial Statements of Islami Bank Securities Limited, which comprise the statement of financial position as at December 31 2014, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS) 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.


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 (BSA). 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 depended on the auditor’s judgment, including the risks assessment of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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. 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 Islami Bank Securities Limited as at December 31 2014, and of its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS), Companies Act, 1994 and other applicable laws and regulations.

Report on Other Legal and Regulatory Requirements

We also report that:

(a) we have obtained all the material information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof;

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

(c) the Company’s financial position and financial performance dealt with by the report are in agreement with the books of account; and

(d) the expenditure incurred was for the purposes of the Company’s business.

Chartered AccountantsDated: Dhaka

March 9, 2015


ISLAMI BANK SECURITIES LIMITEDStatement of Financial Position

as at 31 December 2014

NotesAmount in Taka

31.12.2014 31.12.2013Assets

Non-current assets 309,483,348 311,696,284 Property, plant and equipment 3 3,757,475 5,326,024 Intangible assets 4 360,198 724,070 Investment in TREC (Membership) 5 304,453,399 304,453,399 Preliminary expenses 6 108,025 216,050 Deferred revenue expenses 7 488,371 976,741 Deferred tax assets 8 315,880 - Current assets 5,570,316,477 2,714,186,176 Cash and cash equivalents 9 346,324,458 193,816,863 Investment in securities 10 1,516,357,258 1,583,040,260 Accounts receivables 11 5,446,630 8,390,347 Advances, deposits and prepayments 12 54,024,522 23,651,723 Investment in MTDR 13 3,636,152,827 889,006,145 Other assets 14 12,010,782 16,280,838 Total assets 5,879,799,825 3,025,882,460

Equity and liabilities

Equity 2,663,812,682 2,623,809,180 Paid up capital 15 2,700,000,000 2,700,000,000 Retained earnings (36,187,318) (76,190,820)

Non-current liabilities 3,000,000,000 55,273 Deferred tax liability 16 - 55,273 Investment from IBBL 17 3,000,000,000 -

Current liabilities 215,987,143 402,018,007 Accounts payables 18 61,158,839 161,216,909 Provision for income tax 19 61,664,633 37,356,636 Accrued expenses 20 1,705,188 1,672,379 Quard against MTDR 21 90,000,000 200,000,000 Other current liabilities 22 1,458,483 1,772,083 Total equity and liabilities 5,879,799,825 3,025,882,460

The annexed notes form an integral part of these Financial Statements

A.K.M. Payer Ahammed Mohd. Shamsul Haque Engr. Md. Eskander Ali Khan Chief Executive Officer Director Chairman

As per our annexed report of even date

Howladar Yunus & Co. Dated: Dhaka

Chartered Accountants 09 March, 2015


ISLAMI BANK SECURITIES LIMITEDStatement of Comprehensive Income for the year ended 31 December 2014

NotesAmount in Taka

2014 2013

Operating incomeInvestment income 23 111,256,118 145,870,272 Brokerage commissions 24 12,958,772 9,532,567 Other operating income 25 2,328,313 1,940,579 Total operating income 126,543,203 157,343,418

Operating expensesSalary and allowances 26 14,368,273 13,901,986 Rent, tax, insurance and electricity 27 3,905,713 2,491,390 BO accounts maintenance expenses 1,570,000 1,283,600 Brokerage expenses 28 708,703 498,773 Postage, stamps and communications 29 198,669 204,782 Stationery, printing and advertisements 30 202,501 151,523 Directors’ fees and expenses 31 396,750 287,500 Repair and maintenances 32 1,142,593 958,550 Legal fees - 142,500 CDS charges 962,971 793,581 Depreciation 33 2,382,016 2,352,384 Amortization 34 980,122 963,064 License expenses 35 160,000 60,600 Other expenses 36 1,362,226 1,015,772 Auditor’s fees 92,000 75,000 Total operating expenses 28,432,537 25,181,005 Operating profit 98,110,666 132,162,413 Provision for unrealized gain/(loss) 37 (33,109,478) (45,204,121)Profit before tax 65,001,187 86,958,292 Less: Tax expensesCurrent tax 25,368,838 33,362,272 Deferred tax (371,153) (342,586)

24,997,685 33,019,686 Net profit after tax 40,003,502 53,938,606

Other comprehensive income - - Total comprehensive income for the year 40,003,502 53,938,606

The annexed notes form an integral part of these Financial Statements


As per our annexed report of even date

Howladar Yunus & Co. Dated: DhakaChartered Accountants 09 March, 2015


ISLAMI BANK SECURITIES LIMITED Statement of Cash Flows

for the year ended 31 December 2014

Amount in Taka2014 2013

A. Cash flows from operating activities:

Net profit after tax 40,003,502 53,938,606 Adjustment for non-cash items: Depreciation 2,382,016 2,352,384 Amortization 980,122 963,064 Provision for unrealized gain/(loss) 33,109,478 45,204,121

36,471,617 48,519,569 Cash flow before working capital changes 76,475,119 102,458,175 Changes in working capital:Increase/(decrease) in accounts payable (100,058,070) 23,906,652 Increase/ (decrease) in provision for income tax 24,307,997 528,921 Increase /(decrease) in provision for expenses 32,809 1,228,197 Increase/ (decrease) in other current liabilities (313,600) 225,749 Increase/ (decrease) in deferred tax liabilities (55,273) (342,586)Decrease/ (increase) in other assets 4,270,056 1,321,117 Decrease /(increase) in deferred tax assets (315,880) - Decrease/ (increase) in advance, deposit & prepayments (30,372,799) (4,452,457)Decrease/ (increase) in accounts receivable 2,943,717 23,340,762

(99,561,043) 45,756,355 Net cash flows from operating activities (23,085,924) 148,214,530 B. Cash flows from investing activities:Acquisition of fixed assets (813,467) (160,029)Acquisition of intangible assets (19,855) (72,000)Investments in securities (1,142,118,859) (1,219,636,700)Sale of investment in securities 1,175,692,382 836,868,609 Investments in MTDR (2,747,146,682) (67,676,666)Net cash used in investment activities (2,714,406,481) (450,676,786)C. Cash flows from financing activities:Investment from IBBL 3,000,000,000 - Quard against MTDR (110,000,000) 200,000,000 Net cash flows from financing activities 2,890,000,000 200,000,000 Net increase/(decrease) in cash & cash equivalents 152,507,595 (102,462,256)Add: Cash & cash equivalents at the beginning of the year 193,816,863 296,279,119 Cash and cash equivalents at the end of the year 346,324,458 193,816,863

The annexed notes form an integral part of these Financial Statements.



ISLAMI BANK SECURITIES LIMITEDStatement of Changes in Equity

for the year ended 31 December 2014

Amount in Taka

Particulars Paid-up Capital RetainedEarnings Total Equity

Opening balance as at 01 January 2013 2,700,000,000 (130,129,426) 2,569,870,574

Total comprehensive income for the year - 53,938,606 53,938,606

Balance as at 31 December 2013 2,700,000,000 (76,190,820) 2,623,809,180

Opening balance as at 01 January 2014 2,700,000,000 (76,190,820) 2,623,809,180

Total comprehensive income for the year - 40,003,502 40,003,502

Balance as at 31 December 2014 2,700,000,000 (36,187,318) 2,663,812,682

A.K.M. Payer Ahammed Mohd. Shamsul Haque Engr. Md. Eskander Ali Khan

Chief Executive Officer Director Chairman


ISLAMI BANK SECURITIES LIMITEDNotes to the Financial Statements

as at and for the year ended 31 December 2014

1.0 Status of the company

ISLAMI BANK SECURITIES LIMITED was incorporated on the March 22, 2010 under the Companies Act, 1994 as a public limited company. It is a subsidiary company of Islami Bank Bangladesh Limited (IBBL) that holds all the shares of the company except 54 (fifty four) shares being held by six individual shareholders. The registered office of the company is situated at 20, Dilkusha C/A, in Dhaka, Bangladesh.

1.1 Nature of business

The main objective of the company is to carry on the business of a stock broker and stock dealer that is to buy, sell and deal in shares, stocks, debenture, bonds and other securities, as well as to carry on any business as permissible for a broker and dealer duly licensed by the Bangladesh Securities and Exchange Commission (BSEC).

2.0 Significant accounting policies and basis of preparation of financial statements

2.1 Statement of compliance

The financial statements have been prepared and presented in accordance with

a) Bangladesh Financial Reporting Standards (BFRS)

b) The Companies act, 1994

c) Securities and Exchange Commission (Stock-Dealer, Stock Broker and Authorized Representative) Rules, 2000

d) Other relevant laws and regulations applicable in Bangladesh

2.2 Basis of preparation

The financial statements have been prepared on a going concern basis following accrual basis of accounting except for statement of cash flows in accordance with the Companies Act 1994, Securities and Exchange Rules 1987, the Listing Rules of Dhaka and Chittagong Stock Exchanges and Bangladesh Financial Reporting Standards and other applicable laws and regulations.

2.3 Basis of measurement

The financial statements have been prepared based on historical cost convention basis. The accounting policies, unless otherwise stated, have been constantly applied by the Company and are consistent with those of the previous year.

2.4 Going concern

The Company has adequate resources to continue in operation for foreseeable future. For this reasons the directors continue to adopt going concern basis in preparing the financial statements. The current credit facilities and adequate resources of the Company provide sufficient funds to meet the present requirements of its existing businesses and operations.

2.5 Components of financial statements

The financial statements referred to here comprise:

a. Statement of Financial Position

b. Statement of Comprehensive Income

c. Statement of Cash Flows

d. Statement of Changes in Equity and

e. Notes to the Financial Statements

2.6 Statement of cash flows

Statement of cash flows is prepared in accordance with the Bangladesh Accounting Standard-7 “Statement of Cash Flows” under indirect method.

2.7 Reporting period

These financial statements cover one calendar year from 1 January 2014 to 31 December 2014.


2.8 Property, plant and equipment

All Property, Plant and Equipment are stated at cost less accumulated depreciation as per BAS-16 “Property, Plant and Equipment”. The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes.

The company recognizes the cost of purchasing new assets or cost of replacing new assets in the carrying amount of an item of property, plant and equipment when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the company and the cost of the item can be measured reliably. Expenditure incurred after the assets have been put into operation, such as repair and maintenance is normally charged off as revenue expenditure in the period in which it is incurred.

2.8.1 Depreciation policy

Depreciation is charged at the following rates on a straight line method on motor vehicles and computers and other assets are depreciated on reducing balance method according to their respective percentage given below. Depreciation is charged from the date of acquisition of particular assets and up to the date of disposal.

Items Rate Method

Mechanical appliances 20-25% Reducing balance

Furniture and fixtures 10-20% Reducing balance

Computers 25% Straight line

Motor vehicles 20% Straight line

2.9 Intangible assets and amortization of intangible assets

Intangible assets acquired separately are measured on initial recognition at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any. Amortization is calculated using the straight line method to write down the cost of intangible assets to their residual values over their estimated useful lives based on the management best estimates. Subsequent expenditure on software assets is capitalized only when it increases the future economic benefits in the specifications to which it relates. All other expenditure is expensed as incurred.

Software

Acquired software licenses are capitalized on the basis of costs incurred to acquire and bring the specific software to use. These costs are amortized over their estimated useful lives of four years.

2.10 Investment in TREC (Membership)

Investment in Stock Exchanges for TREC (Membership) are stated at cost. The cost of acquisition of a TREC (Membership) comprises its purchase price and any directly attributable cost of completing compliance requirements relevant to it inclusive of stamp duty and non-refundable taxes, etc. As per the Demutualization Act, 2013 Membership renamed as Trading Right Entitlement Certificate (TREC) and we have been allotted 7,215,106 and 4,287,330 no. of ordinary shares of Dhaka Stock Exchange Limited (DSE) and Chittagong Stock Exchange Limited (CSE) respectively.

2.11 Preliminary and deferred revenue expenses

All the preliminary and deferred revenue expenses have been recognized as assets and as per Board’s decision all these assets will be amortized over the period of 5 (five) years or at a rate of 20% commencing from the year 2011. All these assets are stated in financial position at cost less accumulated amortization.

2.12 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and cash at bank, which are held and available for use by the company without any restriction and are readily convertible to a known amount of cash and that are subject to an insignificant risk of change in value.

2.13 Investment in securities

Investment in securities means purchase of shares of quoted/listed companies in DSE and CSE through stock dealer account. Investment is made in shariah complied securities. Investment in securities is categorized as held for trading as per BAS 39 and valued at market value on the last date of reporting period and relevant unrealized gain /(loss) is recognized in income statement as per directive # SEC/CMRRCD/2009-193/166 dated January 12, 2015,as per directive # SEC/CMRRCD/2009-193/154 dated December 09, 2013 and as per directive # SEC/CMRRCD/2009-193/144 dated 27 February 2013 respectively of Bangladesh Securities and Exchange Commission.


2.14 Advance, deposits and prepayments

Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments or charges to other account heads. Deposits are measured at payment value. Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to income statement.

2.15 Advance income tax

The amount of advance income tax are (a) Payment made through challan under section 64 and (b) Tax deduction at source (TDS). TDS mainly deduction of tax at sources (i) By bank on profits arisen from bank deposits (SND and MTDR) (ii) By Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited on trading turnover and (iii) against dividend income received from securities owned by the company under portfolio investment.

2.16 Deferred taxation

Deferred tax liabilities are the amount of income taxes payable in future periods in respect of taxable temporary differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible temporary differences. Deferred tax assets and liabilities are recognized for the future tax consequences of timing differences arising between the carrying values of assets, liabilities, income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted at the reporting date. The impact on the account of changes in the deferred tax assets and liabilities have also been recognized in the statement of comprehensive income as per BAS-12 “Income Taxes”.

2.17 Provision for income tax

Provision for current income tax has been made in compliance with relevant provisions of income tax law.

2.18 Share Capital

Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets.

2.19 Investment from IBBL

Investment has taken from its parent company ,Islami Bank Bangladesh Limited under mudaraba mode for investment in stocks, investment in placement share and investment in margin account etc.

2.20 Revenue recognition

Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the company in accordance with the Bangladesh Accounting Standard (BAS) 18 “Revenue Recognition”:

2.21 Dividend income

All dividends received or receivable against the investment in securities held both under dealer account and Musharaka Investment have been considered as dividend income in statement of comprehensive income. Dividend income is recognized on accrual basis.

2.22 Capital gains from direct investment

The difference between cost price and net sales price of the securities is considered as capital gain from direct investment.

2.22.1 Musharaka investment and income

Musharaka investment means the margins (Investment facilities) provided to eligible clients under brokerage operation in Musharaka principle/ mode of finance. As per Musharaka principle, profits arisen through capital gain and dividend from this investment are shared between company and client as per agreed ratio and loss is shared as per equity participation ratio. Investment is valued at market value on the last date of reporting period and relevant unrealized gain (Loss) is recognized in income statements as per directive # SEC/CMRRCD/2009-193/166 dated January 12, 2015, as per directive # SEC/CMRRCD/2009-193/154 dated December 09, 2013 and as per directive # SEC/CMRRCD/2009-193/144 dated 27 February 2013 respectively of Bangladesh Securities and Exchange Commission.

2.23 Brokerage commission

Brokerage commission is recognized as income when selling or buying order executed.

2.24 Provisions

All provision is recognized on the financial statement date if, as a result of past events, the company 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.


2.25 Event after the reporting period

As per BAS - 10 “Events after the Reporting period”, events after the reporting period are those events, favorable and unfavorable, that occur between the end of the reporting period and the date when the financial statements are authorized for issue. Two types of events can be identified:

i) those that provide evidence of conditions that existed at the end of the reporting period (Adjusting events after the reporting period) and

ii) those that are indicative of conditions that arose after the reporting period (Non- adjusting events after the reporting period).

There was no material events which have occurred after the reporting period which could affect the values stated in the financial statements.

2.26 Related party transaction

As per BAS 24 “Related Party Disclosures”, a related party is a person or entity that is related to the entity (i.e. IBSL) that is preparing its financial statements. Related party transaction is a transfer of resources, services, or obligations between a reporting entity and a related party, regardless of whether a price is charged as per BAS 24.

Related Parties include the Company’s Directors, key management personnel, associates, companies under common directorship etc. as per BAS 24 “Related Party Disclosures”. All transactions involving related parties arising in the normal course of business are conducted as arm’s length transactions. Details are given in Note.38

2.27 Authorization of the financial statements for issue

The financial statements of the company have been authorized for issue by the Board of Directors on 09 March 2015.

2.28 General

a)The financial statements are presented in Bangladeshi Taka (BDT) currency, which is the company’s functional currency.

b) The figures appearing in these financial statements are expressed in Taka currency and rounded off to the nearest Taka unless otherwise stated.

c) Previous year’s figures have been rearranged, where necessary, to conform to current year’s presentation.


Amount in Taka

31.12.2014 31.12.2013

3 Property, plant and equipment

Cost

Opening balance at cost 12,599,370 12,439,341

Add: Assets purchased during the year 813,467 160,029

Less: Sale/Adjustment during the year - -

Closing value at cost (a) 13,412,837 12,599,370

Accumulated depreciation

Opening balance 7,273,346 4,920,962

Add: Depreciation charged during the year 33 2,382,016 2,352,384

Less: Adjustment during the year - -

Closing balance of depreciation (b) 9,655,362 7,273,346

Written down value (a - b) 3,757,475 5,326,024

Details are given in Annexure -A

4 Intangible assets

Cost


Add: Assets purchased during the year 19,855 72,000

Less: Sale/Adjustment during the year - -

Closing value at cost (a) 1,541,763 1,521,908

Accumulated amortization

Opening balance 797,838 431,169

Add: Amortized during the year 34 383,727 366,669

Less: Adjustment during the year - -

Closing balance of Amortization (b) 1,181,565 797,838

Written down value (a - b) 360,198 724,070

Details are given in Annexure -B

5 Investment in TREC (Membership)

DSE 24,453,399 24,453,399

CSE 280,000,000 280,000,000

304,453,399 304,453,399

This represents the acquisition cost of DSE and CSE memberships paid by Islami Bank Securities Limited. According to Exchanges Demutualization Act 2013 and Bangladesh Securities and Exchange Commission (BSEC) approved Demutualization Scheme, Dhaka Stock Exchange Ltd. (DSE) has allotted total 7,215,105 ordinary Shares at a face value of Taka 10.00 each against acquisition cost of Taka 24,453,399 while Chittagong Stock Exchange Ltd. (CSE) allotted total 4,287,330 ordinary shares at face value of Taka 10.00 each against acquisition cost of Taka 280,000,000. Out of the shares allotted DSE has transferred 2,886,042 shares and CSE transferred 1,714,932 shares to BO account of the company. The remaining balance has been kept under blocked account. Since there is no active market for shares of DSE and CSE and the fair value of the said investments could not be reliably measured.

6 Preliminary expenses

Total value at cost as on 31 December 540,125 540,125

Less: Accumulated amortization as on 31 December (432,100) (324,075)

108,025 216,050


Amount in Taka

31.12.2014 31.12.2013

7 Deferred revenue expenses

Total value at cost as on 31 December 2,441,852 2,441,852

Less: Accumulated amortization as on 31 December (1,953,481) (1,465,111)

488,371 976,741

8 Deferred tax assets

Accounting base of fixed assets 3,626,565

Tax base of fixed assets 4,529,081 -

Deductable temporary difference (DTD) 902,515 -

Deferred tax assets ( 35% of DTD) 315,880 -

9 Cash and cash equivalents

Cash in hand 19 4,660

Cash at bank 9.1 346,324,439 193,812,203

346,324,458 193,816,863

9.1 Cash at bank

i) IBSL account 281,966,263 36,585,767

ii) Customer account 64,358,176 157,226,436

346,324,439 193,812,203

10 Investment in securities

Own portfolio 10.1 1,483,281,601 1,551,780,685

Musharaka portfolio 10.2 33,075,657 31,259,575

1,516,357,258 1,583,040,260

10.1 Own portfolio

Opening balance at cost 1,913,693,110 1,533,852,541

Add: Shares purchased during the year 1,138,029,475 1,216,709,179

Less: Cost of shares sold during the year (1,175,692,383) (836,868,610)

Closing balance of investment at cost 1,876,030,202 1,913,693,110

Less: Provision against un-realized gain/(loss) (Note: 10.1.1) (392,748,601) (361,912,425)

1,483,281,601 1,551,780,685

10.1.1 Provision against unrealized gain/(loss)

Opening balance (361,912,425) (318,233,374)

Add: Addition during the year (Note:37.1) (30,836,176) (43,679,051)

Closing balance (392,748,601) (361,912,425)

10.2 Musharaka portfolio


Add: Shares purchased/(sold) during the year 4,089,384 2,927,523

Closing balance of investment at cost 38,687,354 34,597,970

Less: Provision against un-realized gain/(loss) (Note: 10.2.1) (5,611,697) (3,338,395)

33,075,657 31,259,575


Amount in Taka

31.12.2014 31.12.2013

10.2.1 Provision against unrealized gain/(loss)

Opening balance (3,338,395) (1,813,325)

Add: Addition during the year (Note: 37.2) (2,273,302) (1,525,070)

Closing balance (5,611,697) (3,338,395)

11 Accounts receivables

Receivable from clients 1,199,325 1,000,440

Receivable from CSE (Dealer) 16,986 412,435

Receivable from DSE (Broker) 487,449 6,391,272

Receivable from DSE (Dealer) 3,742,870 586,200

5,446,630 8,390,347

12 Advances, deposits and prepayments

Advance office rent for head office 12.1 5,467,000 8,449,000

Prepaid insurance premium 12.2 36,645 36,645

Prepaid motor car maintenance 12.3 35,174 35,500

Advance income tax 12.4 48,485,703 15,130,578

54,024,522 23,651,723

12.1 Advance office rent for head office

Opening balance 8,449,000 1,242,500

Add: paid during the year - 8,946,000

Less: Charged to profit & loss during the year 2,982,000 1,739,500

5,467,000 8,449,000

12.2 Prepaid insurance premium


Add: paid during the year 43,973 43,973

Less: Charged to profit & loss during the year 43,973 51,124

36,645 36,645

12.3 Prepaid motor car maintenance


Add: paid during the year 35,174 35,500

Less: Charged to profit & loss during the year 35,500 42,000

35,174 35,500

12.4 Advance income tax

Opening balance 15,130,578 17,870,970

Add: Income tax paid during the year 12.4.1 33,355,125 15,130,578

Less: Adjustment against tax assessment - (17,870,970)

48,485,703 15,130,578

12.4.1 Income tax paid during the year

Advance income tax 20,914,690 5,047,252

Tax deduction at source (TDS) 12.4.2 12,440,435 10,083,326

33,355,125 15,130,578


Amount in Taka

31.12.2014 31.12.201312.4.2 Tax deduction at source (TDS)

TDS against dividend income 4,879,430 1,871,460 TDS from bank account profit 6,162,135 7,245,536 TDS on brokerage commission by CSE 7,247 9,047 TDS on brokerage commission by DSE 1,391,623 957,283

12,440,435 10,083,326 13 Investment in MTDR

Opening balance 889,006,145 821,329,479 Add: New/reinvestment during the year 2,747,146,682 67,676,666 Less: Encashment during the year - -

3,636,152,827 889,006,145 14 Other asset

Stock in hand 44,650 - Dividend receivable 748,020 1,205,000 Receivable profit from bank on MTDR 11,218,112 15,075,838

12,010,782 16,280,838 15 Share capital

Authorized capital 5,000,000 ordinary shares of Taka 1,000 each. 5,000,000,000 5,000,000,000 Paid- up capital27,00,000 ordinary shares of Taka 1,000 only each:

Name of shareholder No. of shares % Amount in Taka1) IBBL (Represented by four directors) 2,699,946 99.998 2,699,946,000 2,699,946,000

2) Janab Mohd. Shamsul Haque 9 0.0003 9,000 9,000

3) Janab Md. Kabir Hossain 9 0.0003 9,000 9,000

4) Janab Md. Nurul Islam 9 0.0003 9,000 9,000

5) Janab Muhammad Abul Bashar 9 0.0003 9,000 9,000

6) Janab Md. Abdul Jabbar 9 0.0003 9,000 9,000

7) Janab Md. Obaidul Haque 9 0.0003 9,000 9,000

2,700,000 100.00 2,700,000,000 2,700,000,000 16 Deferred tax liability

Accounting base of fixed assets - 5,399,233 Tax base of fixed assets - 5,251,838 Taxable temporary difference (TTD) - 147,395 Deferred tax liabilities( 35% of TTD) - 55,273

17 Investment from IBBL Opening balance - 50,382,297 Add: Investment received during the year 3,000,000,000 - Less: Repayment/adjustment investment - (50,382,297)

3,000,000,000 -

Investment has taken from Islami Bank Bangladesh Limited under mudaraba mode. These amount has been invested in MTDR amounting to Taka 275 crore. The profit sharing ratio between IBBL and IBSL is to be at 50:50 basis.


Amount in Taka

31.12.2014 31.12.201318 Accounts payables

Payable to clients 51,872,809 160,416,135 Payable to clients (IPO) 7,017,000 - Payable to CSE (Dealer) - 744,082 Payable to DSE (Broker) 1,631,549 56,254 Payable to DSE (Dealer) 637,481 438

61,158,839 161,216,909 19 Provision for income tax

Opening balance 37,356,636 36,827,715 Add: Provision for income tax for the year 25,368,838 33,362,272 Less: Adjustment against assessment (1,060,841) (32,833,351) Tax deduction at source (TDS) - (12,870,970) Advance income tax (Under sec. 64 of ITO) - (5,000,000) Payment for tax during the year (1,060,841) (14,962,381)

61,664,633 37,356,636 20 Accrued expenses

Ex gratia bonus 1,200,550 1,080,240 Auditor’s fees 92,000 75,000 CDS charges 106,760 86,213 Electricity bills 13,424 8,601 Holiday allowance 5,400 9,050 Legal fees 85,000 85,000 Network expenses 28,050 28,050 Office maintenance 6,048 2,900 Office rents 67,689 169,222 Professional and consultancy fees 40,250 35,000 Service charges 17,250 17,250 Software annual maintenance fees - 15,000 Telephone bills 24,737 30,781 Wages 12,030 24,072 Water bills 6,000 6,000

1,705,188 1,672,379 21 Quard against MTDR

Opening balance 200,000,000 - Add: Addition during the year 210,000,000 200,000,000 Less: Payment during the year 320,000,000 -

90,000,000 200,000,000 22 Other current liabilities

Security deposit from clients 1,111,279 1,111,279 Security deposits payable on fixed assets 22.1 16,920 289,318 Sundry creditors 25,757 23,190 TDS payable 240,608 347,900 VAT payable 32,769 396 Bank charge payable 31,150 -

1,458,483 1,772,083


Amount in Taka

31.12.2014 31.12.2013

22.1 Security deposits payable on fixed assets

Computer Source - 145,500

Digilog System 5,550 5,550

Gazi Communication - 33,180

Leads Corporation - 66,000

Net Com 11,370 39,088

16,920 289,318

Amount in Taka

23 Investment income 2014 2013

Cash dividend from own investment 28,602,873 8,485,700

Cash dividend from Musharaka investment 274,448 68,592

Profit from bank on SND 1,979,416 7,039,230

Profit from MTDR 57,286,496 74,316,509

Capital gains from direct investment 23.1 23,112,885 55,960,241

111,256,118 145,870,272

23.1 Capital gains from direct investment

Capital gains from sale of securities 23.1.1 22,305,654 55,257,974

Capital gain from Musharaka investment 23.1.2 807,231 702,267

23,112,885 55,960,241

23.1.1 Capital gains from sale of securities

Capital gains 68,499,785 55,257,974

Less: Capital loss 46,194,131 -

22,305,654 55,257,974

23.1.2 Capital gain from musharaka investment

Capital gains 868,407 732,637

Less: Capital loss 61,176 30,370

807,231 702,267

24 Brokerage commissions

Commission on CSE turnover 66,861 89,187

Commission on DSE turnover 12,891,911 9,443,380 12,958,772 9,532,567

25 Other operating income

BO account opening fees 317,100 318,300

BO accounts maintenance fees 1,960,477 1,604,715

Commission from IPO 8,248 -

Documentation fee (Margin account) 3,100 3,100

Miscellaneous income 39,388 14,464

2,328,313 1,940,579


Amount in Taka

2014 201326 Salary and allowances

Salary 11,705,941 10,690,679 Eid bonus 1,142,510 1,001,455 Ex gratia bonus 1,200,550 2,026,680 Holiday allowance 173,100 74,100 Wages 146,172 109,072

14,368,273 13,901,986 27 Rents, taxes, insurance and electricity

Office rents 3,656,514 2,302,189 Renewal of tax token for motor vehicles 14,900 12,714 Insurance premiums 43,973 51,124 Electricity bills 190,326 125,363

3,905,713 2,491,390 28 Brokerage expenses

CSE Howla charges 884 1,120 CSE Laga charges 2,560 3,167 DSE Howla charges 140,392 109,554 DSE Laga charges 561,548 382,914 Investors’ protection fund charges 3,319 2,018

708,703 498,773 29 Postage, stamps and communications

Conveyances 23,245 11,553 Postage 3,517 22,110 Stamps 9,754 10,615 Telephone bills 162,153 160,504

198,669 204,782 30 Stationery, printing and advertisements

Stationeries expenses 120,413 102,487 Printing expenses 58,088 3,036 Advertisements 24,000 46,000

202,501 151,523 31 Directors’ fees and expenses

Directors’ fees 345,000 250,000 Add: Value added tax (VAT) 51,750 37,500

396,750 287,500 32 Repair and maintenances

Motor car running and maintenances 589,622 456,230 Network support 336,600 301,761 Office maintenances 64,435 99,439 Other repair and maintenances 56,936 21,120 Software annual maintenance fees 95,000 80,000

1,142,593 958,550


Amount in Taka

2014 201333 Depreciation

Mechanical Appliances 220,270 242,359 Computer 830,904 767,802 Furniture & fixture 191,070 219,023 Motor vehicles 1,139,772 1,123,200

2,382,016 2,352,384 34 Amortization

Preliminary expense 108,025 108,025 Deferred revenue expenses 488,370 488,370 Intangible assets 383,727 366,669

980,122 963,064 35 License expenses

Renewal fees for depository participant (DP) 4,000 4,000 Renewal fees for DSE (Broker and dealer) 20,000 20,000 Renewal fee for TREC 50,000 - Renewal fees for CSE (Broker and Dealer) 20,000 20,000 Authorized representative expenses 48,500 3,000 Renewal of trade license fees 17,500 13,600

160,000 60,600 36 Other expenses

Annual subscription fees 4,700 9,700 Bank charges 120,529 84,122 Computer accessories 173,360 179,650 Electronic expenses 54,672 25,740 Entertainments 314,311 191,908 Internet bills 99,841 72,448 Govt. fee 3,199 19,436 Reimbursement expenses 31,801 46,132 Miscellaneous expenses 32,377 18,792 Newspaper, magazine and periodicals 23,108 15,684 Professional and consultancy fees 103,638 80,225 Service charges 207,000 197,500 Software expenses 10,000 17,090 Subsidy of BO accounts maintenance exp. 4,290 - Training program expenses 97,300 8,000 Water bills 82,100 49,345

1,362,226 1,015,772 37 Provision against unrealized gain/(loss)

Own portfolio during the year 37.1 (30,836,176) (43,679,051)Musharaka portfolio during the year 37.2 (2,273,302) (1,525,070)

(33,109,478) (45,204,121)


Amount in Taka

2014 2013

37.1 Own portfolio during the year

a) Investment in securities at market price as on 31 December 1,359,936,897 1,406,035,940

b) Investment in securities at cost price as on 31 December 1,876,030,202 1,913,693,110

c) Total unrealized gain/(loss) as on 31 December (a-b) 37.1.1 (516,093,305) (507,657,170)

d) Opening balance of provision (361,912,425) (318,233,374)

e) Provision required to be provided (c-d) (154,180,880) (189,423,796)

f) Less: Provision yet to be provided carry forward in next year* (123,344,704) (145,744,745)

g) Provision for the year (e-f) (30,836,176) (43,679,051)

As per directive # SEC/CMRRCD/2009-193/166 dated January 12, 2015 of Bangladesh Securities and Exchange Commission, it is required to maintain at least 20% provision against unrealized loss .IBSL has made 76% provision against unrealized loss arising to till date (31.12.14) revaluation of share purchase through own portfolio. However, the directives prohibit payments of cash dividend if the company makes less than 100% provision against such unrealized loss.

37.1.1 Unrealized gain/(loss)

Opening balance (507,657,170) (434,858,752)

Add: Addition during the year (8,436,135) (72,798,418)

Closing balance (516,093,305) (507,657,170)

37.2 Musharaka portfolio during the year

a) Investment in securities at market price as on 31 December 23,982,447 22,989,562

b) Investment in securities at cost price as on 31 December 38,687,354 34,597,970

c) Total unrealized gain/(loss) as on 31 December (a-b) 37.2.1 (14,704,907) (11,608,408)

d) Opening balance of provision (3,338,395) (1,813,325)

e) Provision yet to be provided (c-d) (11,366,512) (9,795,083)

f) Less: Provision yet to be provided carry forward in next year* (9,093,210) (8,270,013)

g) Provision for the year (e-f) (2,273,302) (1,525,070)

As per directive # SEC/CMRRCD/2009-193/166 dated January 12, 2015 of Bangladesh Securities and Exchange Commission, it is required to maintain at least 20% provision against unrealized loss.IBSL has made 38% provision against unrealized loss arising to till date (31.12.14) revaluation of share purchase through musharaka portfolio. However, the directives prohibit payments of cash dividend if the company makes less than 100% provision against such unrealized loss.

37.2.1 Unrealized gain/(loss)

Opening balance (11,608,408) (9,066,625)

Add: Addition during the year (3,096,499) (2,541,783)

Closing balance (14,704,907) (11,608,408)


38 Nature and type of related party transaction of the company

38.1 Nature and type of related party transaction disclosure of the company Amount in Taka

Name of related party Relationship Nature of transaction 2014

Islami Bank Bangladesh Limited (IBBL) Parent- subsidiary

Deposit to MSA 3,630,708,197

Withdraw from MSA 3,630,323,619

Deposit to AWCA 621,004,225

Withdraw from AWCA 692,190,267

Bank Charge paid 3,829

Payment against office rent 406,134

Tax deduction at source against MTDR 5,962,541

Profit withdraw against MTDR 57,950,000

Payment against Quard during the year 320,000,000

Quard availed during the year 210,000,000

38.2 Nature and type of balance of related party transaction of the company

Name of related party Relationship Nature of transaction Amount in Taka 2014

Islami Bank Bangladesh Limited (IBBL) Parent- subsidiary

Bank balance 41,082,194

MTDR balance 886,152,827

Quard balance 90,000,000

Receivable profit on MTDR 11,218,112

Investment received under Mudaraba Mode 3,000,000,000

Profit against MTDR 57,286,496

Profit against SND A/C. 5,297

Accounts payable 7,023,067

Office rent payable 67,689

Directors Board Member Board Meeting participation fees 396,750

Chief Executive Officer key management Short-term employee benefits 1,887,852



ISLA

MI B

ANK

SECU

RITI

ES L

IMIT

EDSc

hedu

le o

f Pro

perty

, Pla

nt &

Equ

ipm

ent

as a

t 31

Dece

mbe

r 201

4

Amou

nt in

Taka

Parti

cular

sCo

stDe

prec

iation

W.D.

V. as

at

31.12

.2014

Balan

ce as

at

01.01

.2014

Addit

ionAd

justm

ent

Balan

ce as

at

31.12

.2014

Balan

ce as

at

01.01

.2014

Char

ged d

uring

the

year

Adjus

tmen

tBa

lance

as at

31

.12.20

14

Mech

anica

l App

lianc

es 1,

642,9

76

197,6

69

- 1,

840,6

45

777,0

48

220,2

70

- 99

7,318

84

3,327

Com

pute

r 3,

144,6

35

400,7

35

- 3,

545,3

70

2,21

3,277

83

0,904

-

3,04

4,181

50

1,189

Furn

iture

& fix

ture

2,19

5,759

35

,044

- 2,

230,8

03

784,5

87

191,0

70

- 97

5,657

1,

255,1

46

Moto

r veh

icles

5,61

6,000

18

0,019

-

5,79

6,019

3,

498,4

34

1,13

9,772

-

4,63

8,206

1,

157,8

13

Tota

l ass

ets

12,59

9,370

81

3,467

-

13,41

2,837

7,

273,3

46

2,38

2,016

-

9,65

5,362

3,

757,4

75

Amou

nt in

Taka

Parti

cular

sCo

stDe

prec

iation

W.D.

V. as

at

31.12

.2013

Balan

ce as

at

01.01

.2013

Addit

ionAd

justm

ent

Balan

ce as

at

31.12

.2013

Balan

ce as

at

01.01

.2013

Char

ged d

uring

the

year

Adjus

tmen

tBa

lance

as at

31

.12.20

13

Mech

anica

l App

lianc

es

1,61

2,976

30

,000

- 1,

642,9

76

534,6

89

242,3

59

- 77

7,048

86

5,928

Com

pute

r 3,

053,1

35

91,50

0 -

3,14

4,635

1,

445,4

75

767,8

02

- 2,

213,2

77

931,3

58

Furn

iture

& fix

ture

2,15

7,230

38

,529

- 2,

195,7

59

565,5

64

219,0

23

- 78

4,587

1,

411,1

72

Moto

r veh

icles

5,61

6,000

-

- 5,

616,0

00

2,37

5,234

1,

123,2

00

- 3,

498,4

34

2,11

7,566

Tota

l ass

ets

12,43

9,341

16

0,029

-

12,59

9,370

4,

920,9

62

2,35

2,384

-

7,27

3,346

5,

326,0

24

Anne

xure

-A


ISLA

MI B

ANK

SECU

RITI

ES L

IMIT

EDSc

hedu

le o

f Int

angi

ble

Asse

tsas

at 3

1 De

cem

ber 2

014

Amou

nt in

Taka

Parti

cula

rsCo

stDe

prec

iatio

nW

.D.V

. as

at

31.1

2.20

14Ba

lanc

e as

at

01.0

1.20

14Ad

ditio

nAd

just

men

tBa

lanc

e as

at

31.1

2.20

14Ba

lanc

e as

at

01.0

1.20

14Ch

arge

d du

ring

the

year

Adju

stm

ent

Bala

nce

as a

t 31

.12.

2014

Softw

are

1,5

21,9

08

19,

855

- 1

,541

,763

7

97,8

38

383

,727

-

1,1

81,5

65

360

,198

Tota

l ass

ets

1,5

21,9

08

19,

855

- 1

,541

,763

7

97,8

38

383

,727

-

1,1

81,5

65

360

,198

Amou

nt in

Taka

Parti

cula

rs

Cost

Depr

ecia

tion

W.D

.V.

as a

t 31

.12.

2013

Bala

nce

as a

t 01

.01.

2013

Addi

tion

Adju

stm

ent

Bala

nce

as a

t 31

.12.

2013

Bala

nce

as a

t 01

.01.

2013

Char

ged

durin

g th

e ye

arAd

just

men

tBa

lanc

e as

at

31.1

2.20

13

Softw

are

1,4

49,9

08

72,

000

- 1

,521

,908

4

31,1

69

366

,669

7

97,8

38

724

,070

Tota

l ass

ets

1,4

49,9

08

72,

000

- 1

,521

,908

4

31,1

69

366

,669

-

797

,838

7

24,0

70

Anne

xure

- B


Islami Bank Capital Management Limited

• Report of the Directors• Auditors’ Report• Audited Financial Statements


Report of the DirectorsThe Directors is pleased to submit their report and audited financial statements for the year ended 31 December 2014 as follows:

Status of the company

Islami Bank Capital Management Limited was incorporated on the 01 April 2010 under the Companies Act, 1994 as a public limited company. It is a subsidiary company of Islami Bank Bangladesh Limited that hold all the shares of the company except 07 (Seven) shares being held by 7 (Seven) individual shareholders. The registered office of the company is situated at 20, Dilkusha C/A, Dhaka, Bangladesh.

Principal activities

Islami Bank Capital Management Ltd is yet to start up its operations. The objectives of the company is to carry on Merchant Banking Operations in all its aspects including underwriting and/or management of issue, public offer of shares, stocks, debentures, bonds, etc.; sale or purchase of securities or transfer thereof; fund management for clients, underwriting of shares, stocks, debentures, bonds, etc.; managing portfolio investments of any person or company, by investment in various avenues, etc.

Financial performance

The Company has earned Tk.33,352,300 as Net Profit After Tax (NPAT) in the year 2014 as against Tk.28,235,597 of previous year. Since the Company has not yet started its operation hence the income was generated mainly by investing the available fund in different deposit schemes with Scheduled Islamic Banks.

Dividend

The Board has recommended 35% cash interim dividend i.e. Tk.350 per share amounting to Tk.105,000,000 as final dividend for the year ended 31 December 2014.

Directors

The overall control and management of affairs of Islami Bank Capital Management Limited vests in its Board of Directors. To comply with the requirements of Bangladesh Securities and Exchnage Commission (BSEC), Companies Act 1994, Merchant Banker and Portfolio Manager Rules 1996 as amended and Memorandum of Association (MoA) of the Company Mr. Barrister Mohammed Belayet Hossain, one of the independent directors of Islami Bank Bangladesh Limited has been proposed to be appointed in the Board of the company and 1 (one) new director namely Mr. Nurul Islam Khalifa has been proposed to be elected as Director of the Company in the 5th Annual General Meeting of the Company to be held in 24 January 2015 at 11:00 AM in the Board Room of the Islami Bank Bangladesh Limited at 40 Dilkusha C/A, Dhaka-1000.

Auditor

Hussain Farhad & Co. Chartered Accountants have offered their willingness to be re-appointed and hence the Board recommends their re-appointment for the year 2015 and to continue till the next Annual General Meeting of the Company.

Key Management Personnel

The affairs of the Company mainly co-ordinated by the Director Mr. Abdus Sadeque Bhuiyan and recently there were some changes made in the other Key Management Personnel of the Company. New Chief Executive Officer (CEO) namely Mr. Md. Nasir Uddin ACA and Chief Financial Officer (CFO) namely Mr. Md. Mainudden Khondaker was appointed by the Board of the Company.

Material changes and commitments

There were no other material changes and commitments during the year that may affect financial position of the Company which have occurred between the end of the financial year of the Company to which the balance sheet related and the date of the report.

On Behalf of the Board

Engr. Mustafa Anwar Chairman (C.C.)


Auditors’ ReportTo the shareholders of Islami Bank Capital Management Limited

Introduction

We have audited the accompanying financial statements of Islami Bank Capital Management Limited “(the Company)” which comprise the Statement of Financial Position as at 31 December 2014, the Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows for the year then ended, a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Bangladesh Financial Reporting Standards (BFRS) 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.


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(BAS). 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 judgment, 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.

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 Islami Bank Capital Management Limited as at 31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS) and comply with the applicable sections of the Companies Act, 1994 and other applicable laws and regulations.

We further report that:

i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof;

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

iii) the statement of financial position dealt with by the report are in agreement with the books of account;

iv) the expenditure incurred was for the purpose of company’s business.

Place: DhakaDate: January 07, 2015 Hussain Farhad & Co

Chartered Accountants


Islami Bank Capital Management LimitedStatement of Financial Position


Particulars Note 31.12.2014 Taka

31.12.2013 Taka

ASSETS:

Non-current assets - 537,485

Preliminary expenses 3 - 537,485

Current assets 463,795,405 426,715,977

Advance income tax 4 40,758,025 38,347,187

Prepaid rent 5 - -

Accrued income 10.2 9,966,581 -

Cash & cash equivalents 6 413,070,799 388,368,790

Total assets 463,795,405 427,253,462

SHAREHOLDERS’ EQUITY & LIABILITIES:

Shareholders equity 307,871,339 379,519,039

Share capital 7 300,000,000 300,000,000

Retained earnings 7,871,339 79,519,039

Current liabilities 155,924,066 47,734,423

Accrued expenses 8 23,000 23,000

Dividend payable 13 105,000,000 -

Provision for income tax 9 50,901,066 47,711,423

Total shareholders’ equity & liabilities 463,795,405 427,253,462

The annexed notes 1 to 13 form an integral part of these financial statements.

Director Director Chairman

Signed as per our annexed report of even date

Place: DhakaDate: January 07, 2015

Hussain Farhad & CoChartered Accountants


Islami Bank Capital Management LimitedStatement of Comprehensive IncomeFor the year ended 31 December 2014

Particulars Notes 2014 Taka

2013 Taka

Operating income 10 52,663,859 45,790,331

Less : Operating expenses 702,131 613,376

Audit fees 23,000 23,000

Bank charge 11 2,270 2,710

Conveyance 70 401

Entertainment expenses 5,556 -

Excise duty 10,000 25,000

LTU charge 2,500 3,000

Office rent 12 - 499,765

Professional fees 119,250 34,500

Amortization of preliminary expenses 537,485 24,000

Tribunal fees 2,000 1,000

Profit/(loss) before tax 51,961,728 45,176,955

Less : Provision for income tax 18,609,428 16,941,358

Net profit/(loss) after tax 33,352,300 28,235,597


Director Director Chairman

Signed as per our annexed report of even date

Place: DhakaDate: January 07, 2015

Hussain Farhad & CoChartered Accountants


Islami Bank Capital Management Limited Statement of Changes in Equity


Amount in Taka

Particulars Share capital Retained earnings Total

Balance as at 01 January 2013 300,000,000 51,283,442 351,283,442

Changes in equity during the year:

Issue of share capital - - -

Net profit/(loss) after tax - 28,235,597 28,235,597

Dividend - - -

Balance as at 31 December 2013 300,000,000 79,519,039 379,519,039

Balance as at 01 January 2014 300,000,000 79,519,039 379,519,039

Changes in equity during the year:

Issue of share capital - - -

Net profit/(loss) after tax - 33,352,300 33,352,300

Dividend (Note - 13) - 105,000,000 105,000,000

Balance as at 31 December 2014 300,000,000 7,871,339 307,871,339



Islami Bank Capital Management LimitedStatement of Cash Flows


Particulars 2014 Taka

2013 Taka

Cash flows from operating activities

Profit/(loss) before tax 51,961,728 45,176,955

Adjustment: - -

Amortization of preliminary expenses 537,485 -

Adjusted operating profit before changes in working capital 52,499,213 45,176,955

Changes in working capital: (9,966,581) 458,422

(Increase)/ decrease in prepaid rent - 458,500

Increase/ (decrease) in accrued income (9,966,581) -

Increase/ (decrease) in accrued expenses/other payables - (78)

Less: Tax paid 17,830,623 16,245,854

Net cash (used in)/ generated from operating activities (A) 24,702,009 29,389,523

Cash flow from investing activities (B) - -

Cash flows from financing activities (C) - -

Net Increase/ (decrease) in cash & cash equivalents (D)=(A+B+C) 24,702,009 29,389,523

Add: Opening cash & cash equivalents (E) 388,368,790 358,979,268

Closing cash & cash equivalents (D+E) 413,070,799 388,368,790



Islami Bank Capital Management LimitedNotes to the Financial Statements


1. Establishment and status of Islami Bank Capital Management Limited Islami Bank Capital Management Ltd. was incorporated on 01 April, 2010 under the Companies Act, 1994 as a Public Limited Company. It is a subsidiary company of Islami Bank Bangladesh Limited. Islami Bank Bangladesh Limited holds all the shares of the company except 7 shares which are held by 7 individuals. The company has been established as per Bangladesh Bank letter # BRPD (R-1)717/2010-47 dated 7 February 2010. The registered office of the company is situated at Yousuf Chamber, 20 Dilkusha C/A (6th Floor), Dhaka-1000. The main objectives of the company are to carry on business of Merchant Banking in all its aspects including Underwriting and/or management of issue, public offer of shares, stocks, debentures, bonds, etc.; sale or purchase of securities or transfer thereof; fund management for clients, underwriting of shares, stocks, debentures, bonds, etc.; managing portfolio investments of any person or company, by investment in various avenues, etc. The Company has applied for Registration Certificate as per rule-4 of Securities and Exchange Commission (Merchant Banker and Portfolio Manager) Rule, 1996. The certificate of registration has not been issued yet by the Bangladesh Securities Exchange Commission against the application.

2. Significant accounting Policies2.1 Basis of accounting

The financial statements of the company have been prepared applying accrual basis of accounting under historical cost convention in accordance with Bangladesh Financial Reporting Standards (BFRS) and other applicable laws and regulations.

2.2 Statement of cash flowsThe statement cash flow is prepared using the indirect method as stipulated in Bangladesh Accounting Standard (BAS) 7 “Statement of Cash Flows”.

2.3 Cash and cash equivalentsCash and cash equivalents comprise cash in hand, cash at bank and term deposits that are readily convertible to a known amount of cash and that are subject to an insignificant risk of change in value.

2.4 GeneralThe figures appearing in these Financial Statements have been rounded off to the nearest integer. The financial statements have been authorized for issue in the 19th Meeting of the Board of Directors held on 7 January 2015.

2.5 Profit on bank depositsProfit on bank deposits has been recognized as per accrual basis from the year 2014.

31.12.2014Taka

31.12.2013 Taka

3. Preliminary expenses


Less: Amortization/write-off of preliminary expenses 537,485 -

Closing balance - 537,485 4. Advance income tax

Opening balance 38,347,187 22,101,333

Add: Deducted at source during the year 4,265,595 4,563,728

Shahjalal Islami Bank Ltd. 576,665 721,955

EXIM Bank Bangladesh Ltd. 3,128,998 3,295,771

First Security Islami Bank Ltd. 559,932 546,002

Islami Bank Bangladesh Ltd. - -

Add: Paid through challan during the year 13,565,028 11,682,126

Less: Adjusted during the year due to completion of assessment 15,419,785 -

Closing balance 40,758,025 38,347,187


31.12.2014 31.12.2013

Taka Taka

5. Prepaid rent

Opening balance - 458,500

Less: Adjusted during the year - 458,500

Closing balance - -

6. Cash & cash equivalents

Cash in hand 394 4,020

Cash at bank Note - 6.1 413,070,405 388,364,770

413,070,799 388,368,790

6.1 Cash at bank

Shahjalal Islami Bank Ltd. 7,030,337 3,813,310


First Security Islami Bank Ltd. 310,618,438 282,457,459

Islami Bank Bangladesh Ltd. 45,421,630 47,392,241

413,070,405 388,364,770

7. Share capital

Authorized capital

1,000,000 Ordinary shares @ Tk. 1,000 each 1,000,000,000 1,000,000,000

Issued, subscribed and paid up capital

300,000 Ordinary shares @ Tk.1,000 each fully paid up 300,000,000 300,000,000

Details of shareholders are as under:

Name of the shareholders No. of shares Taka Taka

Islamic Bank Bangladesh Limited 299,993 299,993,000 299,993,000

Mr. M. Fariuddin Ahmad 1 1,000 1,000

Mr. Mohammad Abdul Mannan 1 1,000 1,000

Mr. Md. Setaur Rahman 1 1,000 1,000

Mr. Gulam Moula Choudhury 1 1,000 1,000

Mr. A.K.M Malek Chowdhury 1 1,000 1,000

Mr. Nurul Islam Khalifa 1 1,000 1,000

Mr. Abdus Sadeque Bhuiyan 1 1,000 1,000

Total 300,000 300,000,000 300,000,000

8. Accrued expenses

Audit Fees 20,000 20,000

Add: Value Added Tax (VAT) @15% 3,000 3,000

Total 23,000 23,000

9. Provision for income tax

Opening Balance 47,711,423 30,770,065

Add: Provision made during the year 18,609,428 16,941,358

Less: Adjusted during the year due to completion of assessment 15,419,785 -

Closing balance 50,901,066 47,711,423


2014 2013

Taka Taka

10. Operating income

Income received from profit on bank deposits (Note - 10.1) 42,697,278 45,790,331

Accrued profit on bank deposits (Note - 10.2) 9,966,581 -

52,663,859 45,790,331

10.1 Income received from profit on bank deposits

Shahjalal Islami Bank Ltd. 5,766,661 7,219,548


First Security Islami Bank Ltd. 5,599,321 5,460,025

Islami Bank Bangladesh Ltd. 41,320 153,045

42,697,278 45,790,331

10.2 Accrued profit on bank deposits

EXIM Bank Bangladesh Ltd. 6,433,631 -

Shahjalal Islami Bank Ltd. 1,123,206 -

First Security Islami Bank Ltd. 2,409,743 -

9,966,581 -

11. Bank charge

Account maintenance charge of IBSL 1,000 1,500

Account maintenance charge of Bank 1,270 1,210

2,270 2,710

12. Office rent

Rent - 458,500

Add: VAT - 41,265

- 499,765

13. Dividend

The Board of Directors of the Company declared 35% interim dividend in its 18th meeting held in 22 December 2014. And the Company declared 35% final dividend for the year 2014 in the 19th meeting of the Board of Directors held in 7 January 2015 which will be approved in next AGM of the Company.

independent auditors’ report audited financial statements stateme… · annual report 2014 169...

Documents